<PAGE>
File Nos. 33-82648 and 811-8696
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[_]
PRE-EFFECTIVE AMENDMENT NO. [_]
POST-EFFECTIVE AMENDMENT NO. 4 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 7 [X]
(CHECK APPROPRIATE BOX OR BOXES.)
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT I
(EXACT NAME OF REGISTRANT)
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
JOHN HANCOCK PLACE, BOSTON, MA 02117
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 572-5060
RONALD J. BOCAGE, ESQUIRE
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
JOHN HANCOCK PLACE
BOSTON, MA 02217
(NAME AND ADDRESS OF AGENT FOR SERVICE)
It is proposed that this filing become effective (check appropriate box)
[_] immediately upon filing pursuant to paragraph (b) of Rule 485
[_] on (date) pursuant to paragraph (b) of Rule 485
[X] 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 post-effective amendment
Pursuant to the provisions of Rule 24f-2, Registrant has registered an
indefinite amount of the securities being offered.
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<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT I
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-4 ITEM NO. SECTION IN PROSPECTUS
----------------- ---------------------
<C> <S> <C>
1. Cover Page................... Cover Page
2. Definitions.................. Special Terms; Variable Account Valuation
Procedures
3. Synopsis or Highlights....... Summary Information
4. Condensed Financial
Information................. Not Available
5. General Description of
Registrant, Depositor JHVLICO, John Hancock, The Account and the
and Portfolio Companies..... Series Fund; Voting Privileges
6. Deductions................... Charges Variable Annuity Contracts
7. General Description of
Variable Annuity Contracts.. The Contracts; The Accumulation Period; The
Annuity Period; Miscellaneous Provisions;
Changes in Applicable Law-Funding and
Otherwise
8. Annuity Period............... The Annuity Period
9. Death Benefit................ The Accumulation Period; The Annuity Period
10. Purchases and Contract The Contracts; The Accumulation Period;
Values...................... Variable Account Valuation Procedures;
Performance
11. Redemptions.................. The Accumulation Period; Miscellaneous
Provisions
12. Taxes........................ Federal Income Taxes
13. Legal Proceedings............ Not Applicable
14. Table of Contents of
Statement of Additional Table of Contents of Statement of
Information................. Additional Information
</TABLE>
<PAGE>
The purpose of this Amendment is to add a new prospectus and related materials
to this Registration Statement, but this Amendment does not supersede or delete
the prospectus in the Amendment to this Registration Statement filed April 29,
1997.
<PAGE>
[LOGO OF JOHN HANCOCK APPEAR HERE]
Variable Life
Insurance Company
INDIVIDUAL COMBINATION FIXED/VARIABLE ANNUITY CONTRACTS
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT I
JOHN HANCOCK PLACE
BOSTON, MA 02117
JOHN HANCOCK SERVICING OFFICE
P.O. BOX 111
BOSTON, MA 02117
TELEPHONE 800 REAL LIFE (800-732-5543)
FAX 617-572-5410
PROSPECTUS FEBRUARY ,1998
The individual deferred annuity contracts ("Contracts") described in this
prospectus can be funded, at the discretion of the Owner by, at any one time,
up to ten of the eighteen subaccounts of John Hancock Variable Annuity Account
I ("Account"), a fixed annuity account (the "Fixed Account"), or a combination
of the Fixed Account and up to nine of the subaccounts. The assets of each
subaccount will be invested in a corresponding Portfolio of John Hancock
Variable Series Trust I ("Fund"), a "series type" mutual fund advised by John
Hancock Mutual Life Insurance Company ("John Hancock"). The Fixed Account is a
part of the general account of John Hancock Variable Life Insurance Company
("JHVLICO").
This prospectus sets forth concisely information about the Account that a
prospective investor ought to know before investing. A statement of additional
information for the Account, dated February , 1998, has been filed with the
Securities and Exchange Commission ("Commission") and is incorporated herein
by reference. This statement, the table of contents of which appears at page
37 of this prospectus, is available upon request and without charge from
JHVLICO at the address or telephone number above.
Only the variable features of the Contracts are described in this
prospectus. For a summary of the fixed features, see "Appendix--The Fixed
Account and Fixed Account Value".
For additional information pertaining to the purchase of a Contract as an
Individual Retirement Annuity, see "Appendix--Variable Annuity Information for
Individual Retirement Annuities".
The prospectus for the Fund, which is attached to this prospectus, describes
the investment objectives, policies and risks of investing in the Portfolios
of the Fund: Managed, Growth & Income, Equity Index, Large Cap Value, Large
Cap Growth, Mid Cap Value, Mid Cap Growth, Special Opportunities, Real Estate
Equity, Small Cap Value, Small Cap Growth, International Balanced,
International Equities, International Opportunities, Short-Term U.S.
Government, Sovereign Bond, Strategic Bond, and Money Market.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
IT IS NOT VALID UNLESS ATTACHED TO A CURRENT PROSPECTUS FOR THE FUND.
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SYNOPSIS OF EXPENSE INFORMATION............................................ 4
SPECIAL TERMS.............................................................. 7
SUMMARY INFORMATION........................................................ 8
THE VARIABLE ANNUITY....................................................... 12
JHVLICO, JOHN HANCOCK, THE ACCOUNT AND THE SERIES FUND..................... 12
CHARGES UNDER VARIABLE ANNUITY CONTRACTS................................... 16
Charges For Mortality And Expense Risks.................................. 16
Charges for Administrative Services...................................... 16
Withdrawal Charge........................................................ 16
Variations in Charges.................................................... 18
Nursing Home Waiver...................................................... 18
Premium or Similar Taxes................................................. 18
THE CONTRACTS.............................................................. 20
Purchase of Contracts.................................................... 20
THE ACCUMULATION PERIOD.................................................... 20
Accumulation Shares...................................................... 20
Value of Accumulation Shares............................................. 20
Transfers To or From Subaccounts......................................... 21
Dollar-Cost Averaging.................................................... 21
Surrender of Contract; Partial Withdrawals............................... 21
Systematic Withdrawal.................................................... 22
Death Benefit Before Date of Maturity.................................... 22
THE ANNUITY PERIOD......................................................... 23
Variable Monthly Annuity Payments........................................ 24
Assumed Investment Rate.................................................. 24
Calculation of Annuity Units............................................. 25
Annuity Options.......................................................... 25
Option A: Life Annuity with Five, Ten or Twenty Years Certain............ 25
Option B: Life Annuity Without Refund.................................... 25
Other Conditions......................................................... 25
VARIABLE ACCOUNT VALUATION PROCEDURES...................................... 26
MISCELLANEOUS PROVISIONS................................................... 26
Restriction on Assignment................................................ 26
Deferment of Payment..................................................... 27
Reservation of Rights.................................................... 27
Owner and Beneficiary.................................................... 27
FEDERAL INCOME TAXES....................................................... 27
The Account and JHVLICO.................................................. 27
Contracts Purchased Other Than to Fund a Tax Qualified Plan.............. 28
Diversification Requirements............................................. 28
Contracts Purchased to Fund a Tax Qualified Plan......................... 29
PERFORMANCE................................................................ 33
STATE REGULATION........................................................... 34
REPORTS.................................................................... 34
VOTING PRIVILEGES.......................................................... 34
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
CHANGES IN APPLICABLE LAW--FUNDING AND OTHERWISE.......................... 35
LEGAL MATTERS............................................................. 35
DISTRIBUTION OF THE CONTRACTS............................................. 35
REGISTRATION STATEMENT.................................................... 35
EXPERTS................................................................... 36
FINANCIAL STATEMENTS...................................................... 36
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.................. 37
APPENDIX--THE FIXED ACCOUNT AND FIXED ACCOUNT VALUE....................... 38
APPENDIX--VARIABLE ANNUITY INFORMATION FOR INDIVIDUAL RETIREMENT
ANNUITIES................................................................ 40
APPENDIX--ILLUSTRATIVE ACCUMULATED VALUE AND ANNUITY PAYMENT TABLES....... 41
</TABLE>
THE CONTRACTS OFFERED BY THIS PROSPECTUS MAY NOT BE AVAILABLE IN ALL STATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, SECURITIES IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE OR SOLICIT AN OFFER IN THAT STATE.
3
<PAGE>
SYNOPSIS OF EXPENSE INFORMATION
The purpose of this synopsis is to assist the Owner in understanding the
various costs and expenses that an Owner will bear directly or indirectly.
This synopsis includes expenses of the Account as well as those of the Fund.
This synopsis does not include any premium taxes that may be applicable. For a
more complete description of the Account charges, see "Charges under Variable
Annuity Contracts." For a more complete description of the investment advisory
fee charged each Portfolio and the annual operating expenses of each
Portfolio, see the prospectus for the Fund.
CONTRACT EXPENSES
<TABLE>
<S> <C>
Maximum Withdrawal Charge (as a percentage of amount surrendered)/1/..... 7.00%
Annual Contract Fee (for Contracts having an Accumulated Value of $10,000
or less)/2/............................................................. $30
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Charge........................................ 1.10%
Administrative Services Charge........................................... 0.30%
----
Total Separate Account Annual Expenses................................... 1.40%
</TABLE>
ANNUAL FUND OPERATING EXPENSES (as a percentage of average daily net assets)
The figures in the following chart reflect the investment management fees
currently payable and the 1996 non-advisory expenses that would have been
allocated to the Fund under the allocation rules currently in effect.
<TABLE>
<CAPTION>
OTHER FUND
EXPENSES
OTHER FUND TOTAL EXPENSE
MANAGE- EXPENSES FUND ABSENT
MENT AFTER EXPENSE OPERATING REIMBURSE-
FUND NAME FEE REIMBURSEMENT EXPENSES MENT/3/
--------- ------- ------------- --------- ----------
<S> <C> <C> <C> <C>
Managed.............................. 0.34% 0.03% 0.37% N/A
Growth & Income...................... 0.25% 0.03% 0.28% N/A
Equity Index......................... 0.20% 0.25% 0.45% 1.61%
Large Cap Value...................... 0.75% 0.25% 1.00% 1.89%
Large Cap Growth..................... 0.40% 0.05% 0.45% N/A
Mid Cap Value........................ 0.80% 0.25% 1.05% 2.15%
Mid Cap Growth....................... 0.85% 0.25% 1.10% 2.34%
Special Opportunities................ 0.75% 0.12% 0.87% N/A
Real Estate Equity................... 0.60% 0.11% 0.71% N/A
Small Cap Value...................... 0.80% 0.25% 1.05% 2.06%
Small Cap Growth..................... 0.75% 0.25% 1.00% 1.55%
International Balanced............... 0.85% 0.25% 1.10% 1.44%
International Equities............... 0.60% 0.18% 0.78% N/A
International Opportunities.......... 1.00% 0.25% 1.25% 2.76%
Short-Term U.S. Government........... 0.30% 0.25% 0.55% 0.79%
Sovereign Bond....................... 0.25% 0.06% 0.31% N/A
Strategic Bond....................... 0.75% 0.25% 1.00% 1.57%
Money Market......................... 0.25% 0.07% 0.32% N/A
</TABLE>
The following examples should not be considered representations of past or
future expenses; actual expenses may be greater than or less than those shown
above.
4
<PAGE>
EXAMPLES
If you surrender your contract at the end of the applicable time period, you
would pay the following current expenses on a $1,000 investment, assuming 5%
annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
MANAGED......................................... $82 $102 $126 $215
GROWTH & INCOME................................. $81 $ 99 $121 $205
EQUITY INDEX.................................... $82 $105 $130 $223
LARGE CAP VALUE................................. $88 $121 $158 $280
LARGE CAP GROWTH................................ $82 $105 $130 $223
MID CAP VALUE................................... $88 $123 $160 $285
MID CAP GROWTH.................................. $89 $124 $163 $290
SPECIAL OPPORTUNITIES........................... $87 $117 $151 $267
REAL ESTATE EQUITY.............................. $85 $113 $143 $250
SMALL CAP VALUE................................. $88 $123 $160 $285
SMALL CAP GROWTH................................ $88 $121 $158 $280
INTERNATIONAL BALANCED.......................... $89 $124 $163 $290
INTERNATIONAL EQUITIES.......................... $86 $115 $147 $257
INTERNATIONAL OPPORTUNITIES..................... $90 $129 $170 $304
SHORT-TERM US GOVERNMENT........................ $83 $108 $135 $234
SOVEREIGN BOND.................................. $81 $100 $123 $208
STRATEGIC BOND.................................. $88 $121 $158 $280
MONEY MARKET.................................... $81 $101 $123 $209
If you annuitize at the end of the applicable time period, or if you do not
surrender your Contract, you would pay the following current expenses on a
$1,000 investment, assuming 5% annual return on assets:
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
MANAGED......................................... $19 $ 58 $ 99 $215
GROWTH & INCOME................................. $18 $ 55 $ 94 $205
EQUITY INDEX.................................... $19 $ 60 $103 $223
LARGE CAP VALUE................................. $25 $ 77 $131 $280
LARGE CAP GROWTH................................ $19 $ 60 $103 $223
MID CAP VALUE................................... $25 $ 78 $134 $285
MID CAP GROWTH.................................. $26 $ 80 $136 $290
SPECIAL OPPORTUNITIES........................... $24 $ 73 $125 $267
REAL ESTATE EQUITY.............................. $22 $ 68 $116 $250
SMALL CAP VALUE................................. $25 $ 78 $134 $285
SMALL CAP GROWTH................................ $25 $ 77 $131 $280
INTERNATIONAL BALANCED.......................... $26 $ 80 $136 $290
INTERNATIONAL EQUITIES.......................... $23 $ 70 $120 $257
INTERNATIONAL OPPORTUNITIES..................... $27 $ 84 $143 $304
SHORT-TERM U.S. GOVERNMENT...................... $20 $ 63 $108 $234
SOVEREIGN BOND.................................. $18 $ 56 $ 96 $208
STRATEGIC BOND.................................. $25 $ 77 $131 $280
MONEY MARKET.................................... $18 $ 56 $ 96 $209
</TABLE>
5
<PAGE>
1 Actual Withdrawal Charges may be lower, as the Withdrawal Charge decreases
each year on each anniversary of the date of deposit and limited free partial
withdrawals are allowed.
<TABLE>
<CAPTION>
Years from date
of deposit to Withdrawal
date of withdrawal Charge
------------------ ----------
<S> <C>
7 or more..................................................... 0%
6 but less than 7............................................. 1%
5 but less than 6............................................. 2%
4 but less than 5............................................. 3%
3 but less than 4............................................. 4%
2 but less than 3............................................. 5%
1 but less than 2............................................. 6%
less than 1................................................... 7%
</TABLE>
An Owner may withdraw in any Contract Year up to 10% of the Accumulated
Value of the Contract as of the beginning of the Contract Year without any
charges.
2 The annual contract fee is deducted on Contracts having an Accumulated
Value of less than $10,000. The contract fee is deducted at the beginning of
each Contract year after the first and at a full surrender during a Contract
Year. The contract fee is assessed only during the Accumulation Period. In the
preceding Examples, the annual contract fee has been expressed as an annual
percentage of assets based on past experience concerning Contract fees col-
lected on other variable annuity contracts using the same Contract fee provi-
sion. JHVLICO reserves the right to increase the annual Contract Fee up to
$50, subject to applicable state regulations.
3 John Hancock reimburses a Portfolio when the Portfolio's Other Expenses
exceed 0.25% of its average daily net asset value.
6
<PAGE>
SPECIAL TERMS
As used in this prospectus, the following terms have the indicated meanings:
ACCUMULATION SHARE: a unit of measurement used in determining the value of a
Contract prior to the commencement of annuity payments or, if earlier,
contract lapse. The value of an Accumulation Share for each subaccount will
reflect the investment performance of that subaccount and will vary in dollar
amount.
ACCUMULATED VALUE OF A CONTRACT: total value of the Accumulation Shares in
that Contract plus the Fixed Account Value of that Contract, if any.
ANNUITANT: the person on whose life the Contract is issued.
ANNUITY OPTION: the provisions under which a series of annuity payments is
made to the Annuitant or other payee, such as the Life Annuity with Ten Years
Certain.
ANNUITY UNIT: a unit of measurement used in determining the amount of each
variable annuity payment. The value of an Annuity Unit for each subaccount
will depend upon the assumed investment rate and the investment performance of
that subaccount and will vary in dollar amount.
BENEFICIARY: the person who receives the proceeds in the event of the death of
the Owner or the Annuitant.
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT YEAR: a period between anniversaries of the date of issue of the
Contract.
FIXED ACCOUNT: an account that is part of JHVLICO's general account in which
all or a part of the Accumulated Value may be held for accumulation at fixed
rates of interest (not less than 3%) declared by JHVLICO periodically at its
discretion.
OWNER: the person(s) or entity, usually the person(s) or entity to whom the
Contract is issued, who has the sole right to exercise all rights and
privileges under the Contract except as otherwise provided in the Contract.
DATE OF MATURITY OF A CONTRACT: the date elected by the Owner as of which
annuity payments will commence. The election is subject to certain conditions
described in "The Annuity Period".
MINIMUM DEATH BENEFIT: the undertaking of JHVLICO under a Contract to make a
payment on the death of the Annuitant at any time before the date of maturity
equal to the greatest of (a) the Accumulated Value of the Contract next
determined following JHVLICO's receipt of due proof of death, (b) the
aggregate amount of the purchase payments made under the Contract (reduced to
reflect partial withdrawals and withdrawal charges), or (c) in states where
permitted by law, the highest Accumulated Value of the Contract as of any
fifth interval Contract anniversary preceding the Contract anniversary nearest
the Annuitant's 81st birthday, plus the purchase payments made under the
Contract, adjusted for partial withdrawals and withdrawal charges, since such
Contract anniversary. See "The Accumulation Period--Death Benefit Before Date
of Maturity".
NET PURCHASE PAYMENT: the amount of any purchase payment reduced by applicable
taxes, if any, based on the amount of the purchase payment.
SURRENDER VALUE: a cash payment made prior to a Contract's maturity, equal to
all or part of the Accumulation Shares credited to the Contract, less any
Withdrawal Charge and contract fee.
SERVICING OFFICE: P.O. Box 111, Boston, MA 02117.
7
<PAGE>
SUMMARY INFORMATION
The Contracts are designed both for purchase by individuals doing their own
retirement planning, including plans and trusts that do not qualify for
special tax treatment under the Internal Revenue Code of 1986, as amended
("Code") and for purchase for persons participating in (1) pension and profit-
sharing plans qualified under Section 401(c) of the Code, known as "H.R. 10
plans", (2) pension or profit-sharing plans qualified under Sections 401(a) or
403(a) of the Code, known as "corporate plans", (3) plans qualifying under
Section 401(k) of the Code, (4) annuity purchase plans adopted under the
provisions of Section 403(b) of the Code by public school systems and certain
other tax-exempt organizations, (5) individual retirement annuity plans
satisfying the requirements of Section 408 of the Code, and (6) deferred
compensation plans maintained by a state or political subdivision or tax
exempt organizations under Section 457 of the Code.
In order to accommodate "employer-related" plans funded by the Contracts,
contract forms using "unisex" purchase rates, i.e. rates the same for males
and females, are available. Any questions you have as to whether you are
participating in an employer-related plan should be directed to your employer.
Any other question you or your employer may have with respect to this topic
can be asked JHVLICO by calling 800 REAL LIFE (800-732-5543) or by writing
Servicing Office, P.O. Box 111, Boston, MA 02117.
THE CONTRACTS
The Contracts offered are deferred annuity Contracts under which purchase
payments may be made in a lump sum or at intervals until the maturity date
selected by the Owner, at which time annuity payments by JHVLICO will begin,
if so elected by the Owner.
An application for a Contract is available from a marketing representative.
Upon completion, it is transmitted along with the purchase payment to
JHVLICO's Servicing Office for review. (See "Distribution of the Contracts.")
JHVLICO also issues variable life insurance policies and other annuity
contracts. These policies and contracts are offered by means of other
prospectuses, but use the same underlying Fund.
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT I
The Account is a separate investment account of JHVLICO, operated as a unit
investment trust, which supports benefits payable under its Contracts. There
are currently eighteen subaccounts within the Account: Managed, Growth &
Income, Equity Index, Large Cap Value, Large Cap Growth, Mid Cap Value, Mid
Cap Growth, Special Opportunities, Real Estate Equity, Small Cap Value, Small
Cap Growth, International Balanced, International Equities, International
Opportunities, Short-Term U.S. Government, Sovereign Bond, Strategic Bond, and
Money Market. The assets of each subaccount is invested in a corresponding
Portfolio of the Fund.
8
<PAGE>
Each Portfolio has a different investment objective. As stated below, John
Hancock receives a fee from the Fund for providing investment management
services. In turn, John Hancock pays a fee to certain sub-investment managers
for providing sub-investment management services to the various Portfolios as
follows:
<TABLE>
<CAPTION>
NAME OF FUND NAME OF SUB INVESTMENT MANAGER
------------ ------------------------------
<S> <C>
Managed Independence Investment Associates, Inc.
Growth & Income Independence Investment Associates, Inc.
Equity Index State Street Bank & Trust, N.A.
Large Cap Value T. Rowe Price Associates, Inc.
Large Cap Growth Independence Investment Associates, Inc.
Mid Cap Value Neuberger & Berman Management, LLC
Mid Cap Growth Janus Capital Corporation
Special Opportunities John Hancock Advisers, Inc.
Real Estate Equity Independence Investment Associates, Inc.
Small Cap Value INVESCO Management & Research, Inc.
Small Cap Growth John Hancock Advisers, Inc.
International Balanced Brinson Partners, Inc.
International Equities John Hancock Advisers, Inc.
International Opportunities Rowe Price-Fleming International, Inc.
Short-Term U.S. Government Independence Investment Associates, Inc.
Sovereign Bond John Hancock Advisers, Inc.
Strategic Bond J.P. Morgan Investment Management, Inc.
</TABLE>
Each sub-investment manager receives an annual percentage fee from John
Hancock for these services which in no way increases the costs borne by the
Fund, the Account, or Owners. For a full description of the Fund, see the
prospectus for the Fund following at the end of this prospectus.
PRINCIPAL UNDERWRITER OF THE ACCOUNT
John Hancock Distributors, Inc., a registered broker-dealer since 1968,
makes the Contracts available through its registered representatives licensed
to sell life insurance policies and annuity contracts.
INVESTMENT OF PURCHASE PAYMENTS
Purchase payments received under the Contracts, after deduction of premium
or similar taxes, if applicable, are allocated by JHVLICO to one or more of
the variable subaccounts and the Fixed Account, as directed by the Owner.
Purchase payments should be mailed to the John Hancock Servicing Office,
P.O. Box 111, Boston, MA 02117.
MINIMUM AND MAXIMUM PURCHASE PAYMENTS
The initial purchase payment under a Contract must be at least $5,000
($1,000 for individual retirement accounts and $50 for all other qualified
plans) or $500 if made pursuant to the Annuity Direct Deposit Program;
thereafter any payment must be at least $50.
The maximum amount that can be deposited into a Contract per Contract Year
is $1,000,000. The maximum amount that can be deposited in or transferred to
the Fixed Account per Contract Year is $100,000, exclusive of the initial
deposit which can be as large as $500,000. Deposits in or transfers to the
Fixed Account can only be made during the first 10 Contract Years. No new
deposits may be made after the Annuitant's 85th birthday. These limits may be
waived by JHVLICO.
9
<PAGE>
ACCOUNT FEES
The charges made directly to the Account aggregate 1.40% per annum of the
average daily net asset value of the Account and are made up of daily charges
aggregating 1.10% annually for mortality and expense risks assumed (0.45% on
an annual basis for mortality risks and 0.65% on an annual basis for expense
risks) and 0.30% for certain administrative services. (See "Charges Under
Variable Annuity Contracts--Charges for Administrative Services.")
FUND CHARGES
Investment management fees at annual rates ranging from 0.20% to 1.00% of
average daily net assets are paid by the Portfolios to John Hancock. The
Portfolios also incur charges for other expenses incurred in their operations.
Investment management fees and other expenses are reflected in the net asset
value of each Portfolio's shares. For a description of these charges and
expenses, see the prospectus for the Fund.
SALES DEDUCTIONS UPON WITHDRAWALS
A Withdrawal Charge (a contingent deferred sales charge), if applicable, is
deducted from amounts withdrawn prior to maturity. The aggregate Withdrawal
Charges assessed against a Contract will never exceed 7% of the total purchase
payments received. (See "Charges Under Variable Annuity Contracts--Withdrawal
Charge.")
OTHER CHARGES OR DEDUCTIONS
Deductions are made for any applicable taxes based on the amount of a
purchase payment; currently such taxes in certain states are up to 5% of each
purchase payment. (See Charges Under Variable Annuity Contracts--Premium or
Similar Taxes.")
Charges are made for any taxes or interest expense attributable to the
Account. An annual contract fee of $30 is deducted on Contracts having an
Accumulated Value of less than $10,000. JHVLICO reserves the right to increase
the contract fee up to $50, subject to state regulations. (See Charges Under
Variable Annuity Contracts--Charges for Administrative Services.")
WITHDRAWAL OR SURRENDER PRIOR TO MATURITY
At any time before annuity payments begin, if the Annuitant is living, a
Contract may be surrendered in full for its Surrender Value or a portion of
the value of the Contract may be withdrawn, subject to certain limits. (See
"The Accumulation Period--Surrender of Contract; Partial Withdrawals.") A 10%
penalty tax may be applicable to the taxable portion (earnings) withdrawn
before the Owner attains age 59 1/2.
SYSTEMATIC WITHDRAWALS
The Owner may pre-authorize a periodic withdrawal plan. Payments may be
monthly, quarterly, semi-annual, or annual, and may be for a specific dollar
amount. A minimum Accumulated Value of $25,000 is required to start the
program. (See "The Accumulation Period--Systematic Withdrawal.")
DOLLAR-COST AVERAGING
The Owner may elect to have amounts transferred automatically from any one
of the variable subaccounts into one or more of the other variable
subaccounts. Transfers may be made monthly, quarterly, semi-annually, or
annually for a minimum of $250. A minimum Accumulated Value of $15,000 is
required to start the program. (See "The Accumulation Period--Dollar-Cost
Averaging.")
10
<PAGE>
NURSING HOME WAIVER
If the Owner of the Contract becomes confined to a nursing home facility at
least 90 days after issue and prior to commencement of annuity payments and
such confinement continues for at least 90 consecutive days, then Withdrawal
Charges will be waived on any subsequent surrender or partial withdrawal that
is made prior to 90 days after discharge from the nursing home facility. This
benefit is subject to certain restrictions and may not be available in all
states. The benefit is not available for applicants over age 74.
GUARANTEED MINIMUM DEATH BENEFIT
Contracts include a death benefit payable on the death of the Annuitant
prior to annuitization that is the greatest of (a) the Accumulated Value of
the Contract, (b) the purchase payments made under the Contract, adjusted for
any prior partial withdrawals and withdrawal charges, or (c) in states where
permitted by law, the highest Accumulated Value of the Contract as of any
fifth interval Contract anniversary preceding the Contract anniversary nearest
the Annuitant's 81st birthday, plus the purchase payments made under the
Contract, adjusted for partial withdrawals and withdrawal charges, since such
Contract anniversary. (See "The Accumulation Period--Death Benefit Before Date
of Maturity.")
10 DAY FREE-LOOK PROVISION
An Owner may surrender the Contract for any reason within 10 days after its
receipt and receive in cash the Accumulated Value of the Contract, plus any
deductions previously made from purchase payments for premium or similar
taxes. Owners surrendering Contracts issued in Hawaii, Idaho, Missouri,
Nebraska, North Carolina, Oklahoma, Oregon, South Carolina, Washington, West
Virginia, and Utah, and all Contracts issued under an individual retirement
account, will receive gross purchase payments made. If the Contract is issued
in California to an Owner 60 years of age or older, the Owner may surrender
the Contract within 30 days after its receipt, and, in that event, the gross
purchase payments made will be refunded to the Owner. If the Contract is
issued in North Dakota, the Owner may surrender the Contract within 20 days
after its receipt and, in that event, the gross purchase payments made will be
refunded.
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THE VARIABLE ANNUITY
A variable annuity is significantly different from a fixed annuity in that
it is the Owner and Annuitant under a variable annuity who assume the risk of
investment gain or loss rather than the insurance company. While under a fixed
annuity the insurance company guarantees a specified interest rate and
specified monthly annuity payments, the amounts of annuity payments under a
variable annuity are not guaranteed and will vary with the investment
performance of the portfolio securities in the underlying Fund.
Based upon the Owner's investment objective, the Owner directs the
allocation of purchase payments and Accumulated Values among the subaccounts
on a continuing basis. There can be no assurance that these investment
objectives will be achieved.
JHVLICO, JOHN HANCOCK, THE ACCOUNT AND THE SERIES FUND
JHVLICO AND JOHN HANCOCK
JHVLICO, a stock life insurance company chartered in 1979 under
Massachusetts law, is authorized to transact a life insurance and annuity
business in Massachusetts and all other states, except New York. JHVLICO began
selling variable life insurance policies in 1980.
JHVLICO is a wholly-owned subsidiary of John Hancock, a mutual life
insurance company chartered in Massachusetts in 1862. Its Home Office is at
200 Clarendon Street, Boston, Massachusetts 02117. It conducts a conventional
life insurance business in all of the United States, the District of Columbia
and Puerto Rico. John Hancock sells insurance policies and annuity contracts
directly to customers or through a career agency system, banks, or
broker/dealers. It is anticipated that John Hancock will from time to time
make additional capital contributions to JHVLICO to enable it to meet its
reserve requirements and expenses in connection with its business and John
Hancock is committed to make additional capital contributions if necessary to
ensure that JHVLICO maintains a positive net worth.
THE ACCOUNT
The Account is a separate account established under Massachusetts law on
June 15, 1994. The Account, although an integral part of JHVLICO, meets the
definition of a "separate account" under the Federal securities laws and is
registered as a unit investment trust under the Investment Company Act of
1940, as amended ("1940 Act").
The Account's assets are the property of JHVLICO and the obligations under
the Contracts are the obligations of JHVLICO. Each Contract provides that the
portion of the Account's assets equal to the reserves and other liabilities
under the Contract with respect to the Account shall not be chargeable with
liabilities arising out of any other business JHVLICO may conduct. In addition
to the net assets and other liabilities for Contracts, the Account's assets
include assets derived from charges made by JHVLICO and, possibly, funds
contributed by JHVLICO to commence operation of the subaccounts or their
predecessors. From time to time these additional assets may be transferred in
cash by JHVLICO to its general account. Before making any such transfer,
JHVLICO will consider any possible adverse impact the transfer might have on
any subaccount.
Income, gains and losses, whether or not realized, from assets allocated to
the Account are, in accordance with the Contracts, credited to or charged
against the Account without regard to other income, gains or losses of
JHVLICO.
There currently are eighteen subaccounts in the Account: Managed, Growth &
Income, Equity Index, Large Cap Value, Large Cap Growth, Mid Cap Value, Mid
Cap Growth, Special Opportunities, Real Estate Equity, Small Cap Value, Small
Cap Growth, International Balanced, International Equities, International
Opportunities, Short-Term U.S. Government, Sovereign Bond, Strategic Bond, and
Money Market. The
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<PAGE>
assets in each are invested in a separate class of shares issued by the Fund,
but the assets of one subaccount are not necessarily legally insulated from
liabilities associated with another subaccount. New subaccounts may be added
and made available to Owners.
THE SERIES FUND
The Fund is a "series" type of mutual fund which is registered under the
1940 Act as an open-end diversified management investment company and
organized as a Massachusetts business trust. The Fund serves as the investment
medium for the Account and other unit investment trust separate accounts
established by John Hancock and by JHVLICO for variable life insurance
policies and variable annuity contracts. A full description of the Fund, its
investment objectives, policies and restrictions, its charges and expenses,
and all other aspects of its operation is contained in the attached prospectus
(which should be read carefully before investing) and the statement of
additional information referred to therein, which should be read together with
this prospectus. Among other items, note the description of the need to
monitor events on the part of the Fund's Board of Trustees for possible
conflicts between separate accounts and other consequences.
The following is a brief summary of the investment objectives of each
Portfolio.
Managed Portfolio
The investment objective of this Portfolio is to achieve maximum long-term
total return consistent with prudent investment risk. Investments will be made
in common stocks, convertibles and other equity investments, in bonds and
other fixed income securities and in money market instruments.
Growth & Income Portfolio
The investment objective of this Portfolio is to achieve intermediate and
long-term growth of capital, with income as a secondary consideration. This
objective will be pursued by investments principally in common stocks (and
securities convertible into or with rights to purchase common stocks) of
companies believed to offer growth potential over both the intermediate and
the long term.
Equity Index Portfolio
The investment objective of this Portfolio is to provide investment results
that correspond to the total return of the U.S. market as represented by the
S&P 500 utilizing common stocks that are publicly traded in the United
States.
Large Cap Value Portfolio
The investment objective of this Portfolio is to provide substantial
dividend income, as well as long-term capital appreciation, through
investments in the common stocks of established companies believed to offer
favorable prospects for increasing dividends and capital appreciation.
Large Cap Growth Portfolio
The investment objective of this Portfolio is to achieve above-average
capital appreciation through the ownership of common stocks (and securities
convertible into with rights to purchase common stocks) of companies believed
to offer above-average capital appreciation opportunities. Current income is
not an objective of the Portfolio.
Mid Cap Value Portfolio
The investment objective of this Portfolio is to provide long-term growth of
capital primarily through investment in the common stocks of medium
capitalization companies believed to sell at a discount to their intrinsic
value.
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<PAGE>
Mid Cap Growth Portfolio
The investment objective of this Portfolio is to provide long-term growth of
capital through a non-diversified portfolio investing primarily in common
stocks of medium capitalization companies.
Special Opportunities Portfolio
The investment objective of this Portfolio is to achieve long-term capital
appreciation by emphasizing investments in equity securities of issuers in
various economic sectors.
Real Estate Equity Portfolio
The investment objective of this Portfolio is to provide above-average
income and long-term growth of capital by investment principally in equity
securities of companies in the real estate and related industries.
Small Cap Value Portfolio
The investment objective of this Portfolio is to provide long-term growth of
capital by investing in a well diversified portfolio of equity securities of
small capitalization companies exhibiting value characteristics.
Small Cap Growth Portfolio
The investment objective of this Portfolio is to provide long-term growth of
capital through a diversified portfolio investing primarily in common stocks
of small capitalization emerging growth companies.
International Balanced Portfolio
The investment objective of this Portfolio is to maximize total U.S. dollar
return, consisting of capital appreciation and current income, through
investment in non-U.S. equity and fixed income securities.
International Equities Portfolio
The investment objective of this Portfolio is to achieve long-term growth of
capital by investing primarily in foreign equity securities.
International Opportunities Portfolio
The investment objective of this Portfolio is to provide capital
appreciation through investments in common stocks of primarily well-
established, non-United States companies.
Short-Term U.S. Government Portfolio
The investment objective of this Portfolio is to provide a high level of
current income consistent with the maintenance of principal, through
investment in a portfolio of short-term U.S. Treasury securities and U.S.
Government agency securities.
Sovereign Bond Portfolio
The investment objective of this Portfolio is to provide as high a level of
long-term total rate of return as is consistent with prudent investment risk,
through investment primarily in a diversified portfolio of freely marketable
debt securities. Total rate of return consists of current income, including
interest and discount accruals, and capital appreciation. Although the
Sovereign Bond Portfolio does not have a
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<PAGE>
significant portion of its assets in high yield securities, further
information in this regard may be found under "Investment Objectives and
Policies" in the Fund prospectus.
Strategic Bond Portfolio
The investment objective of this Portfolio is to provide a high total return
consistent with moderate risk of capital and maintenance of liquidity, from a
portfolio of domestic and international fixed income securities.
Money Market Portfolio
The investment objective of this Portfolio is to provide maximum current
income consistent with capital preservation and liquidity. It seeks to achieve
this objective by investing in a managed portfolio of high quality money
market instruments.
John Hancock acts as the investment manager for the Fund. Independence
Investment Associates, Inc. ("IIA"), an indirectly-owned subsidiary of John
Hancock with its principal place of business at 53 State Street, Boston, MA
02109, provides sub-investment advice with respect to the Growth & Income,
Large Cap Growth, Managed, Real Estate Equity, and Short-Term U.S. Government
Portfolios.
John Hancock Advisers, Inc., another directly-owned subsidiary, located at
101 Huntington Avenue, Boston, MA 02199, and its subsidiary, John Hancock
Advisers International, Limited, located at 34 Dover Street, London, England,
provide sub-investment advice with respect to the International Equities
Portfolio. John Hancock Advisers provides sub-investment advice with respect
to the Sovereign Bond, Small Cap Growth, and Special Opportunities Portfolios.
State Street Bank & Trust, N.A., at Two International Place, Boston, MA
02110, is the sub-investment adviser to the Equity-Index Portfolio. T. Rowe
Price Associates, Inc., located at 100 East Pratt St., Baltimore, MD 21202,
provides sub-investment advice with respect to the Large Cap Value Portfolio
and, its subsidiary, Rowe Price-Fleming International, Inc., also located at
100 East Pratt St., Baltimore, MD 21202, provides sub-investment advice with
respect to the International Opportunities Portfolio.
INVESCO Management & Research located at 101 Federal Street, Boston, MA
02110, is the sub-investment adviser to the Small Cap Value Portfolio. Janus
Capital Corporation, with its principal place of business at 100 Filmore
Street, Denver, CO 80206, is the sub-investment adviser to the Mid Cap Growth
Portfolio. Neuberger & Berman, LLC, of 605 Third Avenue, New York, NY 10158,
provides sub-investment advice to the Mid Cap Value Portfolio. J.P. Morgan
Investment Management Inc., located at 522 Fifth Avenue, New York, NY 10036,
provides investment advice with respect to the Strategic Bond Portfolio and
Brinson Partners, Inc., of 209 South LaSalle Street, Chicago, IL 60604, does
likewise with respect to the International Balanced Portfolio.
JHVLICO will purchase and redeem Fund shares for the Account at their net
asset value without any sales or redemption charges. Shares of the Fund
represent an interest in one of the Portfolios of the Fund which corresponds
to the subaccount of the Account. Any dividend or capital gains distributions
received by the Account will be reinvested in Fund shares at their net asset
value as of the dates paid. Any such distribution will result in a reduction
in the value of the Fund shares of the Portfolio from which the distribution
was made. The total net asset value of the Account will not change because of
such distribution, however.
On each Valuation Date, shares of each Portfolio are purchased or redeemed
by JHVLICO for each subaccount based on, among other things, the amount of net
purchase payments allocated to the subaccount, dividends and distributions
reinvested, transfers to, from and among subaccounts, all to be effected as of
that date. Such purchases and redemptions are effected at the net asset value
per Fund share for each Portfolio determined on that same Valuation Date.
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<PAGE>
CHARGES UNDER VARIABLE ANNUITY CONTRACTS
CHARGES FOR MORTALITY AND EXPENSE RISKS
While the variable annuity payments to Annuitants will vary in accordance
with the investment performance of the Account, the amount of such payments
will not be decreased because of adverse mortality experience of Annuitants as
a class or because of an increase in actual expenses of JHVLICO over the
expense charges provided for in the Contracts. JHVLICO assumes the risk that
Annuitants as a class may live longer than expected (necessitating a greater
number of annuity payments) and that its expenses may be higher than the
deductions for such expenses. JHVLICO also provides a minimum death benefit
and waives Withdrawal Charges upon the death of the Annuitant.
In return for the assumption of these mortality and expense risks, JHVLICO
charges the Account daily 0.001233% (0.45% on an annual basis) of the current
value of Account net assets for mortality risks and 0.001781% (0.65% on an
annual basis) for expense risks. JHVLICO reserves the right to revise the
proportionate amounts of the charge as between mortality risks and expense
risks, should estimates change. Nevertheless, the aggregate charge will not
exceed 1.10% on an annual basis.
CHARGES FOR ADMINISTRATIVE SERVICES
JHVLICO maintains an account for each Owner and Annuitant and makes all
disbursements of benefits. JHVLICO also furnishes such administrative and
clerical services, including the calculation of Accumulation Share values and
the values and interests determined thereby, as are required for each
subaccount. JHVLICO makes disbursements from Account funds to pay obligations
chargeable to the Account and maintains the accounts, records, and other
documents relating to the business of the Account required by regulatory
authorities.
For these and other administrative services, JHVLICO makes a daily charge to
the Account of 0.000822% (0.30% on an annual basis) of the current value of
its net assets and assesses, during the Accumulation Period, and a contract
fee of $30 on Contracts having an Accumulated Value of less than $10,000. The
contract fee will be deducted at the beginning of each Contract Year after the
first and at a full surrender during a Contract Year. JHVLICO reserves the
right to increase this fee up to a maximum of $50 subject to state
regulations. The contract fee will be deducted from each subaccount and the
Fixed Account in the same proportion that the Accumulated Value of the
Contract in that subaccount or Fixed Account bears to the full Accumulated
Value of the Contract. However, the portion of the contract fee allocated to
the Fixed Account will not be deducted from the Fixed Account to the extent it
would result in an accumulation of purchase payments or other amounts
allocated to the Fixed Account at less than the guaranteed minimum rate of 3
percent. In such case, the unpaid portion of the contract fee allocable to the
Fixed Account will be deducted proportionally from the subaccounts, if any.
The administrative services charges were not designed, nor are they
expected, to exceed JHVLICO's cost in providing these services.
WITHDRAWAL CHARGE
A Withdrawal Charge, which is a contingent deferred sales charge, may be
assessed whenever a Contract is surrendered for cash prior to maturity
("surrender") or whenever an amount less than the total Accumulated Value of
the Contract is withdrawn from a Contract prior to maturity ("partial
withdrawal"). This charge is used to help defray expenses relating to the
sales of the Contracts, including commissions paid to marketing
representatives and other distribution costs.
An Owner may withdraw in any one Contract Year up to 10% of the Accumulated
Value of the Contract as of the beginning of the Contract Year without the
assessment of any charges. If, in any Contract
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<PAGE>
Year, the Owner withdraws an aggregate amount in excess of 10% of the
Accumulated Value of the Contract as of the beginning of the Contract Year,
the amount withdrawn in excess of 10% subjects the Contract to a Withdrawal
Charge to the extent that the excess is attributable to purchase payments made
within seven years of the date of withdrawal or surrender. Amounts withdrawn
to satisfy the minimum distribution requirements for qualified plans
attributable to any one Contract are not subject to a Withdrawal Charge in any
Contract Year. Amounts above the minimum distribution requirements are subject
to a Withdrawal Charge as described above.
Withdrawal Charges are based upon the purchase payments made to date and are
assessed as follows:
<TABLE>
<CAPTION>
YEARS FROM
DATE OF
DEPOSIT TO
DATE OF WITHDRAWAL
WITHDRAWAL CHARGE
-------------- ----------
<S> <C>
7 or more...................................................... 0%
6 but less than 7.............................................. 1%
5 but less than 6.............................................. 2%
4 but less than 5.............................................. 3%
3 but less than 4.............................................. 4%
2 but less than 3.............................................. 5%
1 but less than 2.............................................. 6%
less than 1.................................................... 7%
</TABLE>
In no event will the aggregate Withdrawal Charges against a Contract ever
exceed 7% of the total purchase payments received.
Whenever a Withdrawal Charge is imposed, it is deducted from each of the
subaccounts and the Fixed Account as described in "Surrender of Contract;
Partial Withdrawals." All amounts withdrawn plus all contract fees and
Withdrawal Charges are assumed to be deducted first from the earliest purchase
payment, and then from the next earliest purchase payment, and so forth until
all payments have been exhausted, satisfying the first in--first out ("FIFO")
method of accounting. Further withdrawals will be deducted from earnings, to
which no Withdrawal Charge will apply. For a discussion of the taxation of
partial withdrawals, see "Federal Income Taxes--Partial Withdrawals Before
Annuity Starting Date."
To the extent that any Withdrawal Charge is applicable when a surrender or
partial withdrawal is requested, the Accumulated Value of the Contract will be
reduced by the amount of the Withdrawal Charge in addition to the actual
dollar amount sent to the recipient. The Withdrawal Charge is calculated based
upon the full amount by which the Accumulated Value is reduced, subject to the
conditions noted above.
For example, assume a Contract is issued on January 1, 1998, that the Owner
makes purchase payments of $5,000 on January 1, 1998, $1,000 on January 1,
1999, and $1,000 on January 1, 2000. Assume that the Accumulated Value of the
Contract on January 1, 2001, is $9,000 and that a partial withdrawal is made
by the Owner in the amount of $6,000 (no tax withholding) on June 1, 2001. The
Withdrawal Charge in this case, assuming no prior partial withdrawals, would
equal $229.57.
In calculating the Withdrawal Charge under the FIFO method, the January 1,
1998, $5,000 purchase payment is first reduced by the three $30 Contract Fees
on January 1, 1999, 2000, and 2001, i.e., to $4,910. Ten percent of the
Accumulated Value on January 1, 2001, i.e., $900 is then deducted.
The remaining balance of the $5,000 January 1, 1998, purchase payment, i.e.,
$4,010, is then withdrawn in its entirety and is assessed a Withdrawal Charge
of $160.40 (.04 x $4,010). All of the $1,000 January 1, 1999, purchase payment
is to be withdrawn and is assessed a Withdrawal Charge of $50 (.05 x $1,000).
To make up the remainder of the $6,000 paid to the Owner, $319.57 is withdrawn
from the January 1, 2000, purchase payment. This is assessed a Withdrawal
Charge of $19.17 (.06 x $319.57).
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<PAGE>
Therefore, the total amount paid to the Owner is $6,000 and the total
Withdrawal Charge is $229.57.
Withdrawals made prior to the Owner attaining age 59 1/2 may be subject to
certain adverse tax consequences. An IRS excise tax of 10% is generally
applicable to the taxable portion (earnings) of a premature withdrawal from
the Contract. (See "Federal Income Taxes--Penalty for Premature Withdrawals.")
To the extent that the proceeds from the Withdrawal Charges may be
insufficient to cover distribution costs, JHVLICO may recover them from its
general account assets which may consist of, among other things, proceeds
derived from mortality and expense risk charges deducted from the Account.
NURSING HOME WAIVER
If the Owner of the Contract becomes confined to a nursing home facility at
least 90 days after issue and prior to commencement of annuity payments and
receives skilled nursing care, intermediate care, or custodial care and such
confinement continues for at least 90 consecutive days, then Withdrawal
Charges will be waived on any subsequent surrender or partial withdrawal that
is made prior to 90 days after discharge from the nursing home facility.
JHVLICO must receive a written request for withdrawal and written proof of
confinement satisfactory to JHVLICO no later than 90 days after discharge from
the nursing home facility. In addition, the confinement must be prescribed by
a physician and medically necessary. The waiver is not available to Contract
applicants 74 years of age or older or to applicants who were confined to a
nursing home facility within the two years prior to the issue date of the
Contract. For a complete description of the terms, conditions, and benefits of
the waiver, reference should be made to the Contract.
VARIATIONS IN CHARGES
In the future, JHVLICO may allow a reduction in or the elimination of the
Withdrawal Charges, the charges for mortality and expense risks, the
administrative services charge, or the annual contract fee assessed on
Contracts sold to groups or classes of individuals in a manner resulting in a
reduction in the expenses associated with the sale of such Contracts or the
costs associated with administering or maintaining such Contracts.
The entitlement to such a reduction in or elimination of charges and fees
will be determined by JHVLICO based upon factors such as the following: (1)
the size of the initial purchase payment, (2) the size of the group or class,
(3) the total amount of purchase payments expected to be received from the
group or class and the manner in which purchase payments are remitted, (4) the
nature of the group or class for which the Contracts are being purchased and
the persistency expected from that group or class as well as the mortality
risks associated with that group or class, (5) the purpose for which the
Contracts are being purchased and whether that purpose makes it likely that
costs and expenses will be reduced, or (6) the level of commissions paid to
selling broker/dealers or marketing representatives with respect to Contracts
within the same group or class.
JHVLICO will make any reduction in charges or fees according to its own
rules in effect at the time an application for a Contract is approved. JHVLICO
reserves the right to change these rules from time to time. Any variation in
charges or fees will reflect differences in costs and services, will apply
uniformly to all prospective Contract purchasers in the group or class, and
will not be unfairly discriminatory to the interests of any Owner.
PREMIUM OR SIMILAR TAXES
Several states and local governments impose a premium or similar tax on
annuities. Currently, such taxes range up to 5% of the Accumulated Value
applied to an Annuity Option. Ordinarily, any state-
18
<PAGE>
imposed premium or similar tax will be deducted from the Accumulated Value of
the Contract only at the time of annuitization.
For Contracts issued in South Dakota, however, JHVLICO pays a tax on each
premium payment at the time it is made. JHVLICO will deduct a charge for these
taxes from the Accumulated Value of the Contract at the time of annuitization,
death, surrender, or withdrawal. Such a charge is equal to the applicable
premium tax percentage stated above times the amount of Accumulated Value that
is applied to an Annuity Option, surrendered, withdrawn, or at death. The net
economic effect of this procedure is not significantly different than if
JHVLICO deducted the premium tax from each premium payment when received.
The charges described above (exclusive of taxes) and the Contracts' annuity
purchase rates will apply for the duration of each Contract and, except as
noted above, will not be increased by JHVLICO. However, these charges do not
include all of the expenses which may be incurred for the account of Owners
and Annuitants. Additional charges will be made directly to the Account for
taxes, if any, based on the income of, capital gains of, assets in, or the
existence of, the Account and interest on funds borrowed. In addition, JHVLICO
reserves the right to deduct premium taxes from premiums when paid. Moreover,
the Account purchases and redeems shares of the Fund at net asset value, a
value which reflects the deduction from the assets of the Fund of its
investment management fee and of certain operating expenses described briefly
under "Summary Information."
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<PAGE>
THE CONTRACTS
The descriptions herein are based on certain provisions of the Contracts
offered by this Prospectus. Reference should be made to the actual Contracts
and to the terms and limitations of any tax qualified plan which is to be
funded by such Contracts. Tax qualified plans are subject to several
requirements and limitations which may affect the terms of any particular
Contract or the advisability of taking certain action permitted thereby.
PURCHASE OF CONTRACTS
The marketing representative will assist in the completion of the
application for the Contract and will be responsible for its transmittal,
together with the necessary purchase payment, to JHVLICO's Servicing Office.
If the application is complete and the Contract applied for is suitable, the
Contract will be issued and thereafter delivered by the marketing
representative. If the completed application is received in proper order, the
initial purchase payment accompanying the completed application is applied
within two business days after receipt. If an initial purchase payment is not
applied within five business days after receipt, it will be refunded unless
JHVLICO has received the consent of the applicant to retain the purchase
payment until receipt of information necessary to complete the issuance of the
Contract.
The initial purchase payment must be at least $5,000 ($1,000 for individual
retirement accounts and $50 for all other qualified plans) or $500 if made
pursuant to the Annuity Direct Deposit Program; subsequent payments must be at
least $50 in amount, except where otherwise permitted by JHVLICO. Maximum
transfers and payments to any one subaccount in a single Contract Year are
$500,000, ($100,000 into the Fixed Account after the initial premium).
Increases in purchase payments beyond the foregoing limits may be made only
with JHVLICO's written consent. While the Annuitant is living and the Contract
is in force, purchase payments may be made at any time before maturity, except
that no new purchase payments may be made after the Annuitant's 85th birthday.
These limits may be waived by JHVLICO.
THE ACCUMULATION PERIOD
ACCUMULATION SHARES
Net purchase payments are allocated by JHVLICO to any one or more of the
subaccounts or the Fixed Account or allocated among the subaccounts and the
Fixed Account in the proportion specified in the application for the Contract
or as directed by the Owner from time to time. Any change in the election will
be effective as to purchase payments made after the receipt by JHVLICO at its
Servicing Office of notice in form satisfactory to JHVLICO.
Each net purchase payment allocated to a subaccount purchases Accumulation
Shares of that subaccount at the value of such shares next determined after
the receipt of such net purchase payment at the Home Office of JHVLICO. See
"Variable Account Valuation Procedures." The number of Accumulation Shares of
a subaccount purchased with a specific purchase payment will be determined by
dividing the net purchase payment by the value of an Accumulation Share in
that subaccount when the net purchase payment is applied. The value of the
Accumulation Shares so purchased will vary in amount thereafter, depending
upon the investment performance of the subaccount and the charges and
deductions made against the subaccount.
VALUE OF ACCUMULATION SHARES
At any date prior to a Contract's maturity date, the total value of the
Accumulation Shares in a subaccount which have been credited to a Contract can
be computed by multiplying the number of such Accumulation Shares by the
appropriate Accumulation Share Value in effect for such date.
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<PAGE>
TRANSFERS TO OR FROM SUBACCOUNTS
The Owner may elect to transfer all or any part of the Accumulation Shares
or Annuity Units credited to a Contract from one subaccount to another
subaccount or from one subaccount to the Fixed Account or from the Fixed
Account to a subaccount. Any such transfer will result in the redemption
and/or purchase of Accumulation Shares or Annuity Units, whichever is
applicable, on the basis of the respective values next determined after
receipt of notice satisfactory to JHVLICO at its Servicing Office. No transfer
described in this paragraph may be made on or within 30 days prior to the date
of maturity. Up to 12 such transfers may be made in any Contract Year without
charge. JHVLICO reserves the right to assess a charge of up to $25 per
transfer for each additional transfer beyond the twelve free transfers.
Currently, the charge for additional transfers is zero. A transfer pursuant to
the dollar-cost averaging feature discussed below counts toward the twelve
free transfers per year. A maximum of $1,000,000 may be transferred from one
subaccount to another in any Contract Year. (For Fixed Account transfers, see
"Appendix--Fixed Account and Fixed Account Value.")
An Owner may request a transfer in writing or, once a written telephone
transfer authorization form is completed by the Owner, the Owner may request a
transfer by telephoning JHVLICO at 800 REAL LIFE (800-732-5543) or sending a
written request via the JHVLICO fax machine at 617-572-5410. Any written
request should include the Owner's name, daytime telephone number, and
Contract number as well as the names of the subaccounts from which and to
which money will be transferred. JHVLICO reserves the right to modify,
suspend, or terminate telephone transfers at any time without notice to the
Owners. If the fax request option becomes unavailable, another means of
telecommunication will be substituted.
An Owner who authorizes telephone transfers will be liable for any loss,
expense or cost arising out of any unauthorized or fraudulent telephone
transfer instructions which JHVLICO reasonably believes to be genuine, unless
such loss, expense or cost is the result of JHVLICO's mistake or negligence.
JHVLICO employs procedures which provide safeguards against the execution of
unauthorized transfers, and which are reasonably designed to confirm that
transfer instructions received by telephone are genuine. These procedures
include requiring personal identification, tape recording calls, and providing
written confirmation to the Owner. If JHVLICO does not employ reasonable
procedures to confirm that instructions communicated by telephone are genuine,
it may be liable for any loss due to unauthorized or fraudulent instructions.
DOLLAR-COST AVERAGING
The Owner may elect to have automatically transferred on a monthly,
quarterly, semi-annual or annual basis, at no cost, part of the Accumulation
Shares from any one of the variable subaccounts into one or more of the other
subaccounts. The minimum amount of each transfer is $250. Automatic transfers
into the Fixed Account are not permitted. To begin the program, the
Accumulated Value of the Contract must be at least $15,000. The program
continues until the earlier of 12, 24, or 36 (as chosen by the Owner) months
and full liquidation of the variable subaccount from which the transfers are
being made. Transfers may be made via telephone or facsimile machine provided
a telephone authorization form has been completed by the Owner. JHVLICO
reserves the right to terminate the dollar-cost averaging program at any time.
The dollar-cost averaging feature cannot be elected if the Owner is currently
participating in the systematic withdrawal plan, discussed below.
SURRENDER OF CONTRACT; PARTIAL WITHDRAWALS
Prior to a Contract's date of maturity, if the Annuitant is living, an Owner
may (i) surrender the Contract for a cash payment representing all of the
Surrender Value of the Contract or (ii) withdraw a portion of Accumulated
Value of the Contract. The appropriate number of Accumulation Shares will be
redeemed at their value next determined after the receipt by JHVLICO at its
Servicing Office of notice in form satisfactory to JHVLICO. Unless directed
otherwise by the Owner, that portion of the Accumulated Value of the Contract
redeemed in a partial withdrawal (which includes any Withdrawal Charge) will
be
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redeemed in each subaccount and in the Fixed Account in the same proportion as
the Accumulated Value of the Contract is then allocated among the subaccounts
and the Fixed Account. The redemption value may be more or less than the net
purchase payments applied under the Contract to purchase the Accumulation
Shares, depending upon the market value of the Fund shares held in the
subaccount at the time. The cash payment the Owner will receive will be equal
to the redemption value minus any applicable Withdrawal Charge and any unpaid
contract fees. The cash payment will be made in a single sum, ordinarily
within seven days after receipt of such notice. As described under
"Miscellaneous Provisions--Deferment of Payment," however, redemption and
payment may be delayed under certain circumstances. See "Federal Income Taxes"
for possible adverse tax consequences of certain surrenders and partial
withdrawals.
Any request for a surrender or partial withdrawal should be mailed to P.O.
Box 111, Boston, MA 02117.
A partial withdrawal is not permitted in an amount less than $100 or if the
total Accumulated Value of a Contract remaining after the withdrawal would be
less than $1,000. A partial withdrawal is not a loan and, once made, cannot be
repaid.
In the event the Accumulated Value of the Contract becomes zero, the
Contract will terminate.
SYSTEMATIC WITHDRAWAL
The Owner may elect to participate in a systematic withdrawal plan, which
enables the Owner to pre-authorize a periodic exercise of the contractual
withdrawal rights described above. Owners entering into such a plan instruct
JHVLICO to withdraw a level dollar amount from the Contract on a monthly,
quarterly, semi-annual, or annual basis. The amount deducted will result in
the cancellation of Accumulation Shares from each applicable subaccount in the
ratio that the value of each subaccount bears to the total Accumulated Value.
Currently, systematic withdrawal is available to Owners who have a Contract
Value of $25,000 or more. The Company reserves the right to modify the
eligibility rules or other terms and conditions of this program at any time,
without notice. The minimum withdrawal is $100. Systematic withdrawals are
subject to the Withdrawal Charge described above. The systematic withdrawal
will terminate upon cancellation by the Owner or in the event that the
Accumulated Value of the Contract becomes $5,000 or less or the minimum
withdrawal amount becomes less than $100. Systematic withdrawal is not
available to Contracts participating in the Dollar-Cost Averaging program.
There may be tax consequences associated with the systematic withdrawal plan.
(See "Federal Income Taxes.")
DEATH BENEFIT BEFORE DATE OF MATURITY
If the Annuitant dies before the date of maturity or the surrender or
termination of a Contract, a death benefit is payable. The death benefit will
be the greatest of (a) the Accumulated Value of the Contract next determined
following receipt at the Servicing Office of JHVLICO of due proof of death,
together with any required instructions as to method of settlement, (b) the
amount of the purchase payments made under the Contract reduced by all prior
partial withdrawals (including Withdrawal Charges), if any, or (c) in states
where permitted by law, the highest Accumulated Value of the Contract as of
any fifth interval Contract anniversary preceding the Contract anniversary
nearest the Annuitant's 81st birthday, plus the purchase payments made under
the Contract, adjusted for partial withdrawals (including any Withdrawal
Charges), since such Contract anniversary.
In making the computation described in clause (c) of the preceding sentence,
the Accumulated Value on the fifth Contract anniversary, and on every fifth
anniversary thereafter (until the Contract anniversary preceding the Contract
anniversary that is closest to the Annuitant's 81st birthday) is adjusted for
subsequent premium payments and withdrawals and Withdrawal Charges. The
highest such adjusted Accumulated Value is then compared to the amounts
described in clauses (a) and (b), above. The greatest of these three amounts
forms a minimum. This minimum or "floor" is first established on the fifth
Contract anniversary and may increase on future fifth interval Contract
anniversaries as a result of additional
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premium payments or favorable investment performance, but it will never
decrease unless partial withdrawals are made. The "stepped-up" death benefit
thus reflected in clause (c) above is provided at no additional cost to the
Owner. In the event that the Owner is different from the Annuitant, the
distribution rules required by the Code will apply, as discussed below.
Payment of the death benefit will be made in a single sum to the beneficiary
designated by the Owner prior to the Annuitant's death unless an optional
method of settlement has been elected by the Owner. If an optional method of
settlement has not been elected by the Owner, the beneficiary may elect an
optional method of settlement in lieu of a single sum. No deduction is made
for sales or other expenses upon such election. Payment will be made in a
single sum in any event if the death benefit is less than $5000. (See "Annuity
Period--Annuity Options".) If there is no surviving beneficiary, the Owner, or
his or her estate is the beneficiary.
The Code requires certain distribution provisions to be included in any
Contract used to fund other than a tax qualified plan (See "Federal Income
Taxes"). Failure to include the required distribution provisions results in
the Contract not being treated as an annuity for Federal tax purposes. The
Code imposes comparable distribution requirements for Contracts used to fund
tax qualified plans. These required provisions for tax qualified plans will be
reflected by means of separate disclosures and endorsements furnished by
JHVLICO to Owners.
The Code distribution requirements are expected to present no practical
problems when the Annuitant and Owner are the same person. Nevertheless, all
Owners of Contracts not used to fund a tax qualified plan and IRA Contract
Owners should be aware that the following distribution requirements are
applicable notwithstanding any provision to the contrary in the Contract (or
in this prospectus) relating to payment of the death benefit or death of the
Annuitant.
If the Owner dies on or after annuity payments have begun, any remaining
benefit must be paid out at least as rapidly as under the method of making
annuity payments then in effect. If the Owner dies before annuity payments
have begun: (a) if the beneficiary is the surviving spouse of the Owner, the
beneficiary may continue the Contract in force as Owner; or (b) if the
beneficiary is not the surviving spouse of the Owner, or if the beneficiary is
the surviving spouse of the Owner but does not choose to continue the
Contract, the entire interest in the Contract on the date of death of the
Owner must be: (i) paid out in full within 5 years of the Owner's death, or
(ii) applied in full towards the purchase of a life annuity on the beneficiary
with payments commencing within 1 year of the Owner's death.
The Code imposes comparable distribution requirements on tax qualified
plans.
If the Owner is not the Annuitant, "the entire interest in the Contract on
the date of death of the Owner" is equal to the Surrender Value if paid out in
full within five years of the Owner's death, or is equal to the Accumulated
Value if applied in full towards the purchase of a life annuity on the
beneficiary with payments commencing within one year of the Owner's death.
Note that "the entire interest in the Contract on the date of death of the
Owner" which is payable if the Owner dies before annuity payments have begun
may be an amount less than the death benefit which would have been payable if
the Annuitant had died instead. Note also that notice should be furnished
promptly to JHVLICO upon the death of the Owner.
THE ANNUITY PERIOD
During the annuity period, the total value of any one Contract must be
allocated among no more than four "accounts" (i.e., the subaccounts and/or the
Fixed Account). Amounts allocated to the Fixed Account will provide annuity
payments on a fixed basis; amounts allocated to the subaccounts will provide
annuity payments on a variable basis. If more than four accounts are being
used on the maturity date, JHVLICO
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will divide the total Accumulated Value of the Contract proportionately among
the four accounts with the largest Accumulated Values. Only variable annuity
payments are described in this prospectus.
Annuity payments will commence on the date of maturity of the Contract if
the Annuitant is then living and the Contract is then in force. Each Contract
will provide at the time of its issuance for a Life Annuity with Ten Years
Certain. Under this form of annuity, variable annuity payments are made
monthly to the Annuitant for life and, if the Annuitant dies within ten years
after the date of maturity of the Contract, the payments remaining in the ten-
year period will be made to the contingent payee, subject to the terms of any
supplementary agreement issued. (NOTE: The terminology used in a supplementary
agreement may differ from that used in a Contract. For example, in a
supplementary agreement, the term "payee" may be used to refer to the
Annuitant or to some other person named by the Annuitant or the Owner to
receive payments under the supplementary agreement in the event of the
Annuitant's death, and the term "contingent payee" may be used to refer to the
beneficiary.) A different form of annuity may be elected by the Owner, as
described in "Annuity Options," prior to the date of maturity of the Contract.
Once a given form of annuity takes effect, it may not be changed.
If the initial monthly annuity payment under a Contract would be less than
$50, JHVLICO may make a single sum payment equal to the total Surrender Value
of the Contract on the date the initial payment would be payable, in place of
all other benefits, or, if agreed to by the Owner, make periodic payments at
quarterly, semi-annual or annual intervals in place of monthly payments.
Each Contract specifies a provisional date of maturity at the time of its
issuance, which date may be no earlier than six months after the date the
first payment is applied to the Contract. The Owner may subsequently elect a
different date of maturity, however. Unless otherwise permitted by JHVLICO,
such subsequently elected date may be no earlier than six months after the
date the first payment is applied to the Contract, nor later than the maximum
maturity age specified in the Contract. The election is made by written notice
received by JHVLICO at its Servicing Office before the provisional date of
maturity and at least 31 days prior to the date of maturity. If a date of
maturity different from the provisional date of maturity is not elected by the
Owner, the provisional date of maturity shall be the date of maturity of the
Contract. Particular care should be taken in electing the date of maturity of
Contracts issued under tax qualified plans. (See "Federal Income Taxes.")
VARIABLE MONTHLY ANNUITY PAYMENTS
Variable monthly annuity payments under a Contract are determined by
converting each subaccount's Accumulation Shares credited to the Contract
(less any applicable premium tax) into the respective Annuity Units of each
subaccount on the date of maturity of the Contract or some other date elected
for commencement of variable annuity payments. See "Calculation of Annuity
Units."
The amount of each annuity payment after the first payment will depend on
the investment performance of the subaccounts being used. If the actual net
investment return (after deducting all charges) of a subaccount during the
period between the dates for determining two monthly payments based on that
subaccount exceeds the "assumed investment rate" (explained below), the latter
monthly payment will be larger than the former. On the other hand, if the
actual net investment return is less than the assumed investment rate, the
latter monthly payment will be smaller than the former.
ASSUMED INVESTMENT RATE
The assumed investment rate for all Contracts will be 3 1/2% per year except
as provided below. The assumed investment rate is significant in determining
the amount of the initial variable monthly annuity payment and the amount by
which subsequent variable monthly payments are more or less than the initial
variable monthly payment.
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Where applicable state law so provides, an Owner may elect a variable
annuity option with a different assumed investment rate, not in excess of 6%,
if such a rate is made available by JHVLICO in the Owner's state. Election of
a higher assumed investment rate produces a larger initial annuity payment but
also means that eventually the monthly annuity payments would be smaller than
if a lower assumed investment rate had been elected.
CALCULATION OF ANNUITY UNITS
Accumulation Shares are converted into Annuity Units by first multiplying
the number of each subaccount's Accumulation Shares credited to the Contract
on the date of conversion by the appropriate Accumulation Share Value as of
ten calendar days prior to the date the initial variable monthly annuity pay-
ment is due. For each subaccount the resulting value (less any applicable pre-
mium tax) is then multiplied by the applicable annuity purchase rate, which
reflects the age and possibly sex of the Annuitant and the assumed investment
rate, specified in the Contract. This computation determines the amount of
each subaccount's initial monthly variable annuity payment to the Annuitant.
The number of each subaccount's Annuity Units to be credited to the Contract
is then determined by dividing the amount of each subaccount's initial vari-
able monthly annuity payment by each subaccount's Annuity Unit Value as of ten
calendar days prior to the date the initial payment is due.
ANNUITY OPTIONS
The Owner may elect an Annuity Option during the lifetime of the Annuitant
by written notice received by JHVLICO at its Servicing Office prior to the
date of maturity of the Contract. If no option is selected, Option A with Ten
Years Certain will be used. A beneficiary entitled to payment of a death
benefit in a single sum may, if no election has been made by the Owner prior
to the Annuitant's death, elect an Annuity Option by written notice received
by JHVLICO at its Servicing Office prior to the date the proceeds become
payable. The Owner may also elect that the Surrender Value be applied to an
Annuity Option at the time of a full surrender of a Contract that has been
outstanding for at least 6 months. However, if the Accumulated Value of the
Contract to be applied is less than $5,000 then (i) in the event of
annuitization, Option A With Ten Years Certain will be used and (ii) in the
event of death or surrender, no annuity option will be available. Among the
options available are the following two basic Annuity Options.
OPTION A: LIFE ANNUITY WITH FIVE, TEN OR TWENTY YEARS CERTAIN
Variable monthly payments will be made for a designated period of 5, 10 or
20 years and thereafter as long as the payee lives, with the guarantee that if
the payee dies prior to the end of the 5, 10 or 20 year period, whichever is
applicable, payments will continue for the remainder of the guaranteed period
to a contingent payee, subject to the terms of any supplementary agreement
issued.
OPTION B: LIFE ANNUITY WITHOUT REFUND
Variable monthly payments will be made to the payee as long as he lives. No
minimum number of payments is guaranteed.
"Option A: Life Annuity With Five Years Certain" and "Option B: Life Annuity
Without Refund" are not available if the Annuitant is more than 85 years of
age on the date of maturity of the Contract.
OTHER CONDITIONS
JHVLICO reserves the right at its sole discretion to make available to
Owners and other payees optional methods of payment in addition to the Annuity
Options described in this Prospectus and the applicable Contract.
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Federal income tax requirements currently applicable to H.R. 10 and
individual retirement annuity plans provide that the period of years
guaranteed under Option A cannot be any greater than the joint life
expectancies of the payee and his or her designated beneficiary.
If the Owner dies on or after annuity payments have begun, any remaining
benefit must be paid out at least as rapidly as under the method of making
annuity payments then in effect. The Code imposes a comparable distribution
requirement for Contracts used to fund tax qualified plans.
VARIABLE ACCOUNT VALUATION PROCEDURES
VALUATION DATE--A Valuation Date is any date on which the New York Stock
Exchange is open for trading and on which the Fund values its shares. On any
date other than a Valuation Date, the Accumulation Share Value or Annuity Unit
Value will be the same as that on the next following Valuation Date.
VALUATION PERIOD--A Valuation Period is that period of time from the beginning
of the day following a Valuation Date to the end of the next following
Valuation Date.
ACCUMULATION SHARE VALUE--The Accumulation Share Value is calculated
separately for each subaccount. The value of one Accumulation Share on any
Valuation Date is determined for each subaccount by multiplying the
immediately preceding Accumulation Share Value by the applicable Net
Investment Factor for the Valuation Period ending on such Valuation Date.
ANNUITY UNIT VALUE--The Annuity Unit Value is calculated separately for each
subaccount. The value of one Annuity Unit on any Valuation Date is determined
for each subaccount by first multiplying the immediately preceding Annuity
Unit Value by the applicable Net Investment Factor for the Valuation Period
ending on such date and then multiplying this product by an adjustment factor
which will neutralize the assumed investment rate used in determining the
amounts of annuity payable. The adjustment factor for a Valuation Period of
one day for Contracts with an assumed investment rate of 3 1/2% per year is
.99990575. The assumed investment rate is neutralized by applying the
adjustment factor so that the variable annuity payments will increase only if
the actual net investment rate of the subaccount exceeds 3 1/2% per year and
will decrease only if it is less than 3 1/2% per year.
NET INVESTMENT FACTOR--The Net Investment Factor for each subaccount for any
Valuation Period is equal to 1 plus the applicable net investment rate for
such Valuation Period. A Net Investment Factor may be more or less than 1. The
net investment rate for each subaccount for any Valuation Period is equal to
(a) the accrued investment income and capital gains and losses, whether
realized or unrealized, of the subaccount for such Valuation Period less (b)
the sum of a deduction for any applicable income taxes and, for each calendar
day in the Valuation Period, a deduction of 0.003886% of the value of each
subaccount at the beginning of the Valuation Period, the result then being
divided by (c) the value of the total net assets of each subaccount at the
beginning of the Valuation Period.
ADJUSTMENT OF UNITS AND VALUES--JHVLICO reserves the right to change the
number and value of the Accumulation Shares or Annuity Units or both credited
to any Contract, without the consent of the Owner or any other person,
provided strict equity is preserved and the change does not otherwise affect
the benefits, provisions or investment return of the Contract.
MISCELLANEOUS PROVISIONS
RESTRICTION ON ASSIGNMENT
In order to qualify for favorable tax treatment, certain Contracts may not
be sold, assigned, discounted or pledged as collateral for a loan or as
security for the performance of an obligation or for any other
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purpose, to any person, unless the Owner is the trustee of a trust described
in Section 401(a) of the Code. Because an assignment, pledge or other transfer
may be a taxable event an Owner should consult a competent tax adviser before
taking any such action.
DEFERMENT OF PAYMENT
Payment of the value of any Accumulation Shares in a single sum upon a
surrender or partial withdrawal will ordinarily be made within seven days
after receipt of the written request therefor by JHVLICO at its Servicing
Office. However, redemption may be suspended and payment may be postponed at
times (a) when the New York Stock Exchange is closed, other than customary
weekend and holiday closings, (b) when trading on that Exchange is restricted,
(c) when an emergency exists as a result of which disposal of securities in a
subaccount is not reasonably practicable or it is not reasonably practicable
to determine the value of the net assets of a subaccount or (d) when a
governmental body having jurisdiction over the Account by order permits such
suspension. Rules and regulations of the Securities and Exchange Commission,
if any are applicable, will govern as to whether conditions described in (b)
or (c) exist.
RESERVATION OF RIGHTS
JHVLICO reserves the right to add or delete subaccounts, to change the
underlying investments of any subaccount, to operate the Account in any form
permitted by law and to terminate the Account's registration under the 1940
Act if such registration should no longer be legally required. Certain changes
may, under applicable laws and regulations, require notice to or approval of
Owners. Otherwise, changes do not require such notice or approval.
OWNER AND BENEFICIARY
The Owner has the sole and absolute power to exercise all rights and
privileges under the Contract, except as otherwise provided by the Contract or
by written notice of the Owner. The Owner and the beneficiary are designated
in the application and may be changed by the Owner, effective upon receipt of
written notice at the Servicing Office, subject to the rights of any assignee
of record, any action taken prior to receipt of the notice and certain other
conditions. While the Annuitant is alive, the Owner may be changed by written
notice. The beneficiary may be changed by written notice no later than receipt
of due proof of the death of the Annuitant. The change will take effect
whether or not the Owner or the Annuitant is then alive.
FEDERAL INCOME TAXES
THE ACCOUNT AND JHVLICO
JHVLICO is taxed as a life insurance company under the Code. The Account is
part of JHVLICO's total operations and is not taxed separately as a "regulated
investment company" or otherwise.
The Contracts permit JHVLICO to charge against the Account any taxes, or
provisions for taxes, attributable to the operation or existence of the
Contracts or the Account. No specific charge is currently made against the
Account for any such taxes. JHVLICO pays such taxes out of its general account
assets which may consist of, among other things, proceeds derived from
mortality and expense risk charges deducted from the Account. Currently,
JHVLICO does not anticipate making a separate charge for income and other
taxes because of the level of such taxes. If the level of current tax is
increased, or is expected to increase in the future, JHVLICO reserves the
right to make such a charge in the future.
JHVLICO assumes no responsibility for determining whether a particular
retirement plan satisfies the applicable requirements of the Code or whether a
particular employee is eligible for inclusion under a plan.
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CONTRACTS PURCHASED OTHER THAN TO FUND A TAX QUALIFIED PLAN
THE OWNER OR OTHER PAYEE
The Contracts are considered annuity contracts under Section 72 of the Code.
Currently no Federal income tax is payable on increases in Contract Value
until payments are made to the Owner or other payee under such Contract.
However, a Contract owned other than by a natural person is not generally an
annuity for tax purposes and any increase in value thereunder is taxable as
ordinary income as accrued.
When payments under a Contract are made in the form of an annuity, the
amount of each payment is taxed to the Owner or other payee as ordinary income
to the extent that such payment exceeds an allocable portion of the Owner's
"investment in the contract" (as defined in the Code). In general, an Owner's
"investment in the contract" is the aggregate amount of purchase payments made
by him, reduced by any amounts previously distributed from the Contract that
were not subject to tax. The portion of each variable annuity payment to be
excluded from income is determined by dividing the "investment in the
contract," adjusted by any refund feature, by the number of periodic payments
anticipated during the time that periodic payments are to be made. In the case
of a fixed annuity payment, the amount to be excluded in each year is
determined by dividing the "investment in the contract," adjusted by any
refund feature, by the amount of "expected return" during the time that
periodic payments are to be made, and then multiplying by the amount of the
payment."
When a payment under a Contract is made in a single sum, the amount of the
payment is taxed as ordinary income to the Owner or other payee to the extent
it exceeds the Owner's "investment in the contract."
PARTIAL WITHDRAWALS BEFORE ANNUITY STARTING DATE
When a payment under a Contract, including a payment under a systematic
withdrawal plan, is less than the amount that would be paid upon the
Contract's complete surrender and such payment is made prior to the
commencement of annuity payments under the Contract, part or all of the
payment (the partial withdrawal) may be taxed to the Owner or other payee as
ordinary income.
On the date of the partial withdrawal, if the cash value of the Contract is
greater than the investment in the Contract, any part of such excess value so
withdrawn is subject to tax as ordinary income.
If an individual assigns or pledges any part of the value of a Contract, the
value so pledged or assigned is taxed as ordinary income to the same extent as
a partial withdrawal.
PENALTY FOR PREMATURE WITHDRAWALS
In addition to being included in ordinary income, the taxable portion of any
withdrawal may be subject to a 10-percent penalty tax. The penalty tax does
not apply to payments made to the Owner or other payee after the Owner attains
age 59 1/2, or on account of the Owner's death or disability. If the
withdrawal is made in substantially equal periodic payments over the life of
the Annuitant or other payee or over the joint lives of the Annuitant and the
Annuitant's beneficiary the penalty will also not apply.
DIVERSIFICATION REQUIREMENTS
Each of the Portfolios of the Fund intends to qualify as a regulated
investment company under Subchapter M of the Code and will have to meet the
investment diversification tests of Section 817(h) of the Code and the
underlying regulations. The Treasury Department and the Internal Revenue
Service may, at some future time, issue a ruling or a regulation presenting
situations in which it will deem "investor control" to be present over the
assets of the underlying Portfolios, causing the Owner to be taxed currently
on income credited to the Contracts. In such a case, JHVLICO reserves the
right to amend the Contract or the choice of underlying Portfolios to avoid
current taxation to the Owners.
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CONTRACTS PURCHASED TO FUND A TAX QUALIFIED PLAN
WITHHOLDING ON ELIGIBLE ROLLOVER DISTRIBUTIONS
Recent legislation requires 20% withholding on certain distributions from
tax qualified plans. An Owner wishing to rollover his entire distribution
should have it paid directly to the successor plan. Otherwise, the Owner's
distribution will be reduced by the 20% mandatory income tax. Consult a
qualified tax adviser before taking such a distribution.
CONTRACTS PURCHASED UNDER INDIVIDUAL RETIREMENT ANNUITY PLANS (IRA)
In general the maximum amount of purchase payments deductible each year with
respect to an individual retirement annuity contract (as defined in Section
408 of the Code) issued on the life of an eligible purchaser is the lesser of
$2,000 or 100% of compensation includible in gross income. A person may also
purchase a contract for the benefit of his or her spouse (including, for
example, a homemaker who does not work outside the home). Where an individual
elects to deduct amounts contributed on his or her own behalf and on behalf of
a spouse, the maximum amount of purchase payments deductible is $2,000 for
each spouse if their combined compensation is at least equal to the
contributed amount. However, not more than $2,000 can be allocated to either
person's account. If an individual or his or her spouse is an active
participant in an employer-sponsored retirement plan, the individual is
permitted to make a deductible purchase payment only if the adjusted gross
incomes of the individual and his or her spouse are below certain amounts.
No deduction is allowed for purchase payments made in or after the taxable
year in which the Owner has attained the age of 70 1/2 years nor is a
deduction allowed for a "rollover contribution" as defined in the Code.
When payments under a Contract are made in the form of an annuity, or in a
single sum such as on surrender of the Contract or by partial withdrawal, the
payment is taxed as ordinary income.
IRS required minimum distributions must begin no later than April 1 of the
year following the year in which the Owner attains age 70 1/2. The Owner may
incur adverse tax consequences if a distribution on surrender of the Contract
or by partial withdrawal is made prior to his attaining age 59 1/2, except in
the event of his death or total disability or certain other circumstances.
CONTRACTS PURCHASED UNDER SIMPLE RETIREMENT ACCOUNTS (SIMPLE IRAS)
In general, premium payments may be made to a SIMPLE IRA retirement plan
established by a small business employee who employs 100 or fewer employees on
any day during the preceding calendar year. An eligible employee may specify
the percentage of compensation the employee elects to contribute not to exceed
$6,000 a year. The employer must elect to make a matching contribution of up
to 3% of the employee's compensation or a non-elective contribution equal to
2% of the employee's compensation.
CONTRACTS PURCHASED UNDER SECTION 403(B) PLANS (TSA)
Purchase payments made by an employer which is a public school system or a
tax-exempt organization described in Section 501(c)(3) of the Code under
annuity purchase arrangements described in Section 403(b) of the Code are not
taxable currently to the Owner, to the extent that the aggregate of such
amounts does not exceed the Owner's "exclusion allowance" (as defined in the
Code). In general, an Owner's "exclusion allowance" is determined by
multiplying 20% of his "includible compensation" (as defined in the Code) by
the number of years of his service with the employer and then subtracting from
that product the aggregate amount of purchase payments previously excluded
from income and certain other employer payments to retirement plans in which
the Owner is a participant. Additional limitations applicable to purchase
payments are described in Section 415 of the Code. Deferrals under all plans
made at the election of the Owner generally are limited to an aggregate of
$9500 annually.
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When payments under a Contract are made in the form of an annuity, such
payments are taxed to the Owner or other payee under the same rules that apply
to such payments under corporate plans (discussed below) except that five-year
averaging and capital gain phase-out are not available.
When payment under a Contract is made in a single sum, such as on surrender
of the contract or by partial withdrawal, the taxable portion of the payment
is taxed as ordinary income and the penalty for premature withdrawals may be
applicable.
Ordinarily an Owner in a Section 403(b) plan does not have any "investment
in the contract" and, thus, any distribution is fully taxed as ordinary
income.
Distributions are prohibited before the Owner is age 59 1/2, except on the
Owner's separation from service, death, or disability and except with respect
to distributions attributable to assets held as of December 31, 1988. This
prohibition does not (1) preclude transfers and exchanges to other products
that qualify under Section 403(b) or (2) restrict withdrawals of certain
amounts attributable to pre-January 1, 1989, premium payments.
CONTRACT LOANS (SECTION 403(B) QUALIFIED CONTRACTS ONLY)
During the Accumulation Period, an Owner may request a loan from the
Accumulated Value of the Contract. If the loan meets the amount and repayment
requirements described below, it will not be reported to the Internal Revenue
Service as a taxable distribution. Forms provided by JHVLICO must be used to
apply for a Contract loan. An Owner can obtain these forms by calling 800-REAL
LIFE (800-732-5543) or writing to the Servicing Office, P.O. Box 111, Boston,
MA 02117. At the time the loan is issued, JHVLICO will provide the Owner with
a detailed loan agreement containing provisions to which the loan will be
subject.
Any loan will be secured by a security interest in the Contract. The loan
amount must be at least $2,500 and may not, at the date of the loan (defined
below), exceed the lesser of: (a) 50% of the Accumulated Value of the
Contract; (b) $50,000; or (c) the sum of 100% of the Accumulated Value of the
Subaccounts and 20% of the Fixed Account Value. That portion of the loan
amount up to 20% of the Accumulated Value of the Contract on the date of the
loan will be deducted from each Subaccount and the Fixed Account in the same
proportion as the Accumulated Value of the Contract is allocated among the
Subaccounts and the Fixed Account on the date of the loan. Any loan amount in
excess of 20% of the Accumulated Value of the Contract will be deducted from
each Subaccount in the same proportion as the Accumulated Value of such
Subaccount bears to the total Accumulated Value of all the Subaccounts on the
date of the loan.
The total loan amount will be transferred to the Loan Collateral Account on
the date of the loan. The Loan Collateral Account is held in JHVLICO's general
investment account and will accrue interest at an effective rate that is 1%
less than the Loan Interest Rate described below. The interest accrued on the
Loan Collateral Account will be transferred back to the Subaccounts and the
Fixed Account on each Contract anniversary and will be allocated to each
Subaccount and the Fixed Account in the same proportion as the Accumulated
Value of the Contract is then allocated among the Subaccounts and the Fixed
Account.
The date of the loan will be the Valuation Date on which JHVLICO receives at
its Servicing Office all necessary documentation assigning the Contract as the
security for the loan. If such receipt occurs on a date other than a Valuation
Date, the date of the loan will be the Valuation Date next following the date
on which such receipt occurs.
The Loan Interest Rate for this Contract will be determined annually by
JHVLICO. Such determination will be made in the calendar month immediately
preceding the calendar month in which the Contract anniversary occurs. The
Loan Interest Rate will apply to any loan made during the Contract year
following the date of determination. Except as otherwise required by
applicable state law, the rate set will
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not exceed the greater of (a) Moody's Corporate Bond Yield Average--Monthly
Average Corporates, (as published by Moody's Investors Service) or any
successor thereto, for the calendar month which is two months before the month
in which the date of determination occurs or (b) 5%. If Moody's Corporate Bond
Yield Average--Monthly Average Corporates is no longer published, JHVLICO
reserves the right to select a substitute that it deems appropriate, subject
to applicable law, regulation, or other state requirement. When a new rate is
determined: (a) JHVLICO may increase the previous rate if the increase would
be at least 1/2%; and (b) JHVLICO must reduce the previous rate if the
decrease would be at least 1/2%. JHVLICO will notify the Owner of the
applicable Loan Interest Rate at the time a loan is made. The Loan Interest
Rate for any given loan will be fixed for the entire loan period. Accrued
interest on a loan will be added to the loan daily and will bear interest from
that date at the Loan Interest Rate.
Repayment of principal and interest will be amortized in level installments
payable no less frequently than quarterly over a period of no more than five
years, except as provided by law. The repayment due dates and installment
amounts will be provided in a repayment schedule sent to the Owner prior to
the first installment due date. The principal portion of each loan repayment
will be transferred back to the Subaccounts and the Fixed Account at the time
of each loan repayment, and will be allocated to each Subaccount and the Fixed
Account in the same proportion as the Accumulated Value of the Contract is
then allocated among the Subaccounts and the Fixed Account.
Prepayment of the entire loan will be permitted. In addition, loan
repayments in excess of regularly scheduled repayments that do not repay the
entire Loan Balance (outstanding loan amount plus loan interest accrued to
date) will be applied to reduce the length of the loan. Such excess loan
repayments do not replace the regularly scheduled loan payments.
If any scheduled loan repayment is not made within 90 calendar days after
the repayment due date, the Loan Balance or such other amount as required by
applicable law shall then be considered in default. To the extent that the
Accumulated Value contains (i) salary reduction contributions made on or
before December 31, 1988 and (ii) earnings credited on such contributions on
or before such date (together referred to as "pre-1988 contributions") at the
time of default, a foreclosure shall be made on such "pre-1988 contributions"
with regard to the default. That is, an amount equal to the amount in default
with respect to such "pre-1988 contributions" (including withdrawal charges
and any accrued and unpaid interest to the date of the default) will be
withdrawn from the Accumulated Value of the Contract to repay the amount in
default. To the extent that the amount in default exceeds the amount of "pre-
1988 contributions," no actual foreclosure on the loan security shall be made
until the earliest of the Owner attaining age 59 1/2, separating from service,
dying or becoming disabled (as defined in IRC section 72(m)(7)) and prior to
the occurrence of such an event, the excess shall be considered a deemed
distribution reportable to the Owner.
If the Contract is surrendered while there is an outstanding Loan Balance or
if the Annuitant dies while there is an outstanding Loan Balance, an amount,
positive or negative, will be determined by subtracting the outstanding Loan
Balance from the Loan Collateral Account on the date of surrender or death. If
such amount is positive, it will be added to the Surrender Value or to the
Death Benefit, as applicable. If such amount is negative, it will be
subtracted from the Surrender Value or the Death Benefit, as applicable. If at
any time the Loan Balance exceeds the sum of the Surrender Value and the Loan
Collateral Account, the loan will be subject to the excessive loan balance
provisions set forth in the loan agreement.
Contract loans are subject to conditions and requirements under the Internal
Revenue Code and, where applicable, ERISA, as well as the terms of any
retirement plan in connection with which the Contract has been acquired. For
example, if loan payments are not made when due, or if JHVLICO otherwise finds
it necessary to exercise its rights to use all or part of the value under a
Contract to repay a Contract loan, serious adverse tax consequences may
result. The tax and ERISA rules relating to Contract loans are complex and in
many cases unclear. For these reasons, and because the rules vary depending on
the
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<PAGE>
individual circumstances of each Contract, JHVLICO cautions that employers and
Owners should take particular care to consult with qualified advisers before
taking action with respect to Contract loans.
CONTRACTS PURCHASED UNDER CORPORATE PLANS
In general, purchase payments made by a corporation under a qualified pen-
sion or profit-sharing plan described in Section 401(a) of the Code or a qual-
ified annuity plan described in Section 403(a) of the Code are deductible by
the corporation and are not taxable currently to the employees.
When payments under a Contract are made in the form of an annuity, the
amount of each payment is taxed to the Annuitant or other payee as ordinary
income except in those cases where the Annuitant has an "investment in the
contract" (as defined in the Code). In general, an Annuitant's "investment in
the contract" is the aggregate amount of purchase payments made by him. If an
Annuitant has an "investment in the contract," a portion of each annuity
payment is excluded from income until the investment in the contract is
recovered. The amount to be excluded in each year, in the case of a variable
annuity payment, is determined by dividing the "investment in the contract,"
adjusted by any refund feature, by the number of periodic payments anticipated
during the time that periodic payments are to be made. The calculation for
fixed annuity payments is somewhat different.
When payment under a Contract is made in a single sum or a total
distribution is made within one taxable year of the Annuitant or other payee,
the amount of the payment is taxed to the Annuitant or other payee to the
extent it exceeds the Annuitant's "investment in the contract." If such
payment is made after the Annuitant has attained age 59 1/2, or on account of
his death, retirement or other termination of employment or on account of his
death after termination of employment, five year averaging and a phase-out of
capital gains treatment for pre-1974 contributions may be available with
respect to one distribution. Other rules may be available to taxpayers who
have attained age 50 prior to January 1, 1986.
IRS required minimum distributions must begin no later than April 1 of the
year following the year in which the Annuitant attains age 70 1/2 even if the
Annuitant has not retired.
CONTRACTS PURCHASED UNDER H.R. 10 PLANS (SELF-EMPLOYED)
Self-employed persons, including partnerships, may establish tax qualified
pension and profit-sharing plans and annuity plans for themselves and for
their employees. Generally, the maximum amount of purchase payments deductible
each year with respect to variable annuity contracts issued on the life of
self-employed persons is $30,000 or 25% of "earned income" (as defined in the
Code), whichever is less. Self-employed persons must also make purchase
payments for their employees (who have met certain eligibility requirements)
at least at the same rate as they do for themselves. In general, such purchase
payments are deductible in full and are not taxable currently to such
employees.
Tax qualified plans may permit self-employed persons and their employees to
make additional purchase payments themselves (which are not deductible) of up
to 10% of earned income or compensation.
When payments under a Contract are made in the form of an annuity, such
payments are taxed to the Annuitant or other payee under the same rules that
apply to such payments under corporate plans (discussed earlier).
The tax treatment of single sum payments is also the same as under corporate
plans except that five year averaging may be unavailable to a self-employed
Annuitant on termination of service for reasons other than disability.
The same rules that apply to commencement of annuity payments under
corporate plans apply to H.R. 10 plans.
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CONTRACTS PURCHASED BY TOP-HEAVY PLANS
Certain corporate and H.R. 10 plans may be characterized under Section 416
of the Code as "top-heavy plans" if a significant portion of the plan assets
is held for the benefit of the "key employees" (as defined in the Code). Care
must be taken to consider the special limitations applicable to top-heavy
plans and the potentially adverse tax consequences to key employees.
CONTRACTS PURCHASED UNDER GOVERNMENT DEFERRED COMPENSATION PLANS (SECTION
457)
Participants in certain deferred compensation plans maintained by a state, a
political subdivision of a state, or their agencies or instrumentalities or by
tax-exempt organizations are permitted to exclude a portion of their
compensation from gross income. Amounts so deferred (including any income
thereon) shall be includible in gross income only for the taxable year in
which such amounts are paid or otherwise made available to the Annuitant or
other payee.
In general, the maximum amount of compensation which may be deferred under
such tax-favored plans is the lesser of $7500 or 33 1/3% of the participant's
"includible compensation" (as defined in the Code). The deferred compensation
plan itself must satisfy several conditions, among which are that the plan
must not permit distributions prior to the participant's separation from
service (except in the case of an unforeseen emergency), and that all
compensation deferred under the plan shall remain solely the employer's
property and may be subject to the claims of its creditors.
When payment under a Contract is made in the form of an annuity, or in a
single sum such as on surrender of the Contract or by partial withdrawal, the
payment is taxed as ordinary income.
WITHHOLDING OF TAXES
JHVLICO is obligated to withhold taxes from certain payments unless the
recipient elects otherwise. The withholding rate varies depending upon the
nature and the amount of the distribution. JHVLICO will notify the Owner or
other payee in advance of the first payment of his or her right to elect out
of withholding and furnish a form on which the election may be made. Any
election must be received by JHVLICO in advance of the payment in order to
avoid withholding.
SEE YOUR OWN TAX ADVISER
The above description of Federal income tax consequences of owning a
Contract and of the different kinds of tax qualified plans which may be funded
by the Contracts is only a brief summary and is not intended as tax advice.
Nor does it include a discussion of Federal estate and gift tax or state tax
consequences. Tax laws and regulations are subject to change and such changes
may be retroactive. The rules governing the provisions of tax qualified plans
are extremely complex and often difficult to understand. Anything less than
full compliance with the applicable rules, all of which are subject to change
from time to time, can have adverse tax consequences. For example, premature
withdrawals are generally subject to a 10-percent penalty tax. The taxation of
an Annuitant or other payee has become so complex and confusing that great
care must be taken to avoid pitfalls. For further information a prospective
purchaser should consult a qualified tax adviser.
PERFORMANCE
The Account may, from time to time, advertise certain performance
information with respect to its subaccounts. THE PERFORMANCE INFORMATION IS
BASED ON HISTORICAL INVESTMENT EXPERIENCE OF THE SUBACCOUNTS AND DOES NOT
INDICATE OR REPRESENT FUTURE PERFORMANCE.
The subaccounts may include total return in advertisements. When a
subaccount advertises its total return, it will usually be calculated for one
year, five years, and ten years or for the life of the applicable
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<PAGE>
portfolio. Total return is the percentage change between the value of a
hypothetical investment in the subaccount at the beginning of the relevant
period to the value of the investment at the end of the period, assuming the
deduction of any Withdrawal Charge which would be payable if the Contract
Owner surrendered the Contract at the end of the period indicated. Total
return at the Account level reflects all Contract charges (other than premium
tax charges)--Withdrawal Charge, mortality and expense risk charges,
administrative service charge, and the annual contract fee--and is therefore
lower than total return at the Fund level where no comparable charges have
been deducted. Because the Contracts were first offered in 1998, a total
return figure does not necessarily correspond to the total return actually
earned by any Contract Owner.
The Money Market Subaccount may advertise "current yield" and "effective
yield." Current yield refers to the income earned by the subaccount over a
seven-day period and then annualized; i.e., the income earned in the period is
assumed to be earned every seven days over a 52-week period and stated as a
percentage of the investment. Effective yield is calculated similarly but,
when annualized, the income earned by the investment is assumed to be
reinvested in the subaccount and thus compounded in the course of a 52-week
period. The effective yield will be slightly higher than the current yield
because of this compounding effect of the assumed reinvestment.
The other subaccounts may also advertise current yield. For these
subaccounts, the current yield will be calculated by dividing the
annualization of the income earned by the subaccount during a recent thirty-
day period by the maximum offering price per unit at the end of such period.
In all cases, current yield and effective yield reflect the recurring charges
on the Account level including the annual contract fee but do not reflect any
premium tax charge or any Withdrawal Charge.
Performance information for the subaccounts may be compared to other
variable annuity separate accounts or other investment products surveyed by
Lipper Analytical Services, Inc., an independent service which monitors and
ranks the performance of investment companies, or tracked by other rating
services, companies, publications, or persons who independently monitor and
rank investment company performance. Performance figures are calculated in
accordance with standardized methods established by each reporting service.
STATE REGULATION
JHVLICO is subject to the provisions of the Massachusetts insurance laws
applicable to stock life insurance companies and to regulation and supervision
by the Massachusetts Commissioner of Insurance. JHVLICO is also subject to the
applicable insurance laws of all the other states and jurisdictions in which
it does an insurance business.
REPORTS
Reports will be furnished at least annually to an Owner showing the number
and value of Accumulation Shares credited to the variable annuity contract and
containing the financial statements of the Fund.
VOTING PRIVILEGES
All of the assets in the subaccounts of the Account are invested in shares
of the corresponding Portfolios of the Fund. JHVLICO will vote the shares of
each of the Portfolios of the Fund which are deemed attributable to qualifying
variable annuity contracts or variable life insurance policies at meetings of
the Fund's shareholders in accordance with instructions received from owners
of such contracts or policies. Shares of the Fund held in the Account which
are not attributable to such contracts or policies and those for which
instructions from owners are not received will be represented by JHVLICO at
the meeting and will be voted for and against each matter in the same
proportion as the votes based upon the instructions received from the owners
of all such contracts and policies funded.
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The number of Fund shares held in each subaccount deemed attributable to
each owner is determined by dividing a Contract's Accumulation Share Value (or
for a Contract under which annuity payments have commenced, the equivalent) in
the subaccount by the net asset value of one share in the corresponding Fund
Portfolio in which the assets of that subaccount are invested. Fractional
votes will be counted. The number of shares as to which the owner may give
instructions will be determined as of the record date for the Fund's meeting.
Owners of Contracts may give instructions regarding the election of the
Board of Trustees of the Fund, ratification of the selection of independent
auditors, approval of the Fund's investment management agreement and other
matters requiring a vote under the 1940 Act. Owners will be furnished
information and forms by JHVLICO in order that voting instructions may be
given.
CHANGES IN APPLICABLE LAW--FUNDING AND OTHERWISE
The voting privileges described in this prospectus are afforded based on
JHVLICO's understanding of applicable Federal securities law requirements. To
the extent that applicable law, regulations or interpretations change to
eliminate or restrict the need for such voting privileges, JHVLICO reserves
the right to proceed in accordance with any such revised requirements. JHVLICO
also reserves the right, subject to compliance with applicable law, including
approval of Owners if so required, to transfer assets determined by JHVLICO to
be associated with the class of contracts to which the Contracts belong from
the Account to another separate account or subaccount by withdrawing the same
percentage of each investment in the Account with appropriate adjustments to
avoid odd lots and fractions.
LEGAL MATTERS
Legal matters in connection with the Contracts and Federal laws and
regulations relating to their issue and sale have been passed upon by Ronald
J. Bocage, Vice President and Counsel for JHVLICO.
DISTRIBUTION OF THE CONTRACTS
John Hancock Distributors, Inc. ("Distributors"), a wholly-owned subsidiary
of John Hancock, located at 197 Clarendon Street, Boston, MA 02117, is
registered as a broker-dealer with the Commission under the Securities
Exchange Act of 1934 and is a member of the National Association of Securities
Dealers, Inc. Distributors acts as principal underwriter and distributor of
the Contracts, pursuant to a distribution agreement it has entered into with
John Hancock and JHVLICO. The Contracts may be purchased through either the
Distributors' registered representatives who are licensed to sell JHVLICO life
insurance policies and annuity contracts or other registered broker-dealers
whose representatives are authorized by applicable law to sell variable
annuity contracts. The compensation paid to such broker-dealers is not
expected to exceed 3% of purchase payments.
Distributors' registered representatives are compensated for sales of the
Contracts on a commission and service fee basis by Distributors, and JHVLICO
reimburses Distributors for such compensation and for other direct and
indirect expenses actually incurred in connection with the marketing and sale
of the Contracts. In addition, John Hancock performs certain insurance
underwriting and determines whether to accept or reject the application for a
Contract.
REGISTRATION STATEMENT
This Prospectus omits certain information contained in the Registration
Statement which has been filed with the Securities and Exchange Commission.
More details may be obtained from the Commission upon payment of the
prescribed fee.
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EXPERTS
The financial statements of JHVLICO and the Account included in the
Statement of Additional Information have been audited by Ernst & Young LLP,
independent auditors, whose reports thereon appear in the Statement of
Additional Information and have been so included in reliance on their reports
given on their authority as experts in accounting and auditing.
FINANCIAL STATEMENTS
Financial statements of JHVLICO and the Account may be found in the State-
ment of Additional Information. The financial statements of JHVLICO should be
distinguished from the financial statements of the Account and should be con-
sidered only as bearing upon the ability of JHVLICO to meet its obligations
under the Contracts.
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<PAGE>
TABLE OF CONTENTS OF STATEMENT
OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
CROSS REFERENCE TO
PAGE PAGE IN PROSPECTUS
---- ------------------
<S> <C> <C>
Business History........................................ 1 12-13
Distribution Agreement and Other Services............... 1 20, 13-15, 35
Distribution Agreement................................ 1 20, 35
Investment Advisory Agreement......................... 1 13-15
Custodian Agreement................................... 2 --
Independent Auditors.................................. 2 36
Calculation of Performance Data......................... 3 33-34
Calculation of Annuity Payments......................... 4 24-26
Financial Statements.................................... 6 36
</TABLE>
37
<PAGE>
Because of exemptive and exclusionary provisions, interests in JHVLICO's
general account have not been registered under the Securities Act of 1933 and
the general account has not been registered as an investment company under the
1940 Act. Accordingly, neither the general account nor any interests therein
are subject to the provisions of these Acts, and JHVLICO has been advised that
the staff of the Commission has not reviewed the disclosure in this Prospectus
relating to the Fixed Account. Disclosure regarding the Fixed Account may,
however, be subject to certain generally-applicable provisions of the Federal
securities laws relating to accuracy and completeness of statements made in
prospectuses. THE FIXED ACCOUNT IS NOT AVAILABLE FOR PURCHASE PAYMENTS
DEPOSITED INTO POLICIES ISSUED IN MARYLAND, WASHINGTON, AND OREGON.
APPENDIX--THE FIXED ACCOUNT AND FIXED ACCOUNT VALUE
INVESTMENTS IN THE FIXED ACCOUNT
Net purchase payments will be allocated to the Fixed Account in accordance
with the selection made by the Owner in the application. The Owner may change
such selection by notice satisfactory to JHVLICO at its Servicing Office. Any
selection must specify what percentage of the purchase payment is to be
allocated to the Fixed Account. The percentage must be a whole number.
The Value in the Fixed Account, at any time prior to annuitization, is equal
to:
(a) net purchase payments allocated to the Fixed Account; plus
(b) Variable Account Value (amounts held in the subaccounts of the
Variable Account) transferred to the Fixed Account; plus
(c) interest credited on amounts held in the Fixed Account; less
(d) any prior partial withdrawals from the Fixed Account; less
(e) amounts transferred out of the Fixed Account to the Variable Account;
less
(f) any applicable charges deducted from the Fixed Account.
INTEREST TO BE CREDITED
Prior to annuitization, JHVLICO will credit interest (calculated on a
compound basis) to purchase payments allocated to the Fixed Account at rates
declared by JHVLICO, subject to a minimum rate of 3%. For purposes of this
section, Variable Account Value transferred to the Fixed Account shall be
treated as a purchase payment.
Under current practice, the interest rate credited to amounts held in the
Fixed Account will be based on the size of the initial payment to the
Contract. If the initial payment was $10,000 or more, a higher interest rate
will be credited. The rate of interest credited on each amount may vary based
upon when that amount was first allocated to the Fixed Account.
TRANSFER AND REDUCTIONS OF FIXED ACCOUNT VALUE
During the accumulation period, the Owner may transfer Fixed Account Value
to one or more subaccounts of the Variable Account or may transfer Variable
Account Value into the Fixed Account. The maximum amount that may be deposited
or transferred to the Fixed Account in a Contract Year is $100,000, exclusive
of any initial deposit made to the Fixed Account at the time the Contract is
issued; such initial deposit may be as large as $500,000. After the tenth
Contract Year, no deposits or transfers may be made into the Fixed Account.
JHVLICO may waive these limits. Sums on deposit in the subaccounts may not be
transferred into the Fixed Account within six months of a transfer out of
the
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Fixed Account. Transfers out of the Fixed Account may be made once in a
Contract Year. During the first Contract Year, one transfer out of the Fixed
Account may be made at any time. During each subsequent Contract Year, one
transfer out of the Fixed Account may be made provided such transfer does not
occur until the later of (a) 180 days after the prior transfer and (b) the
onset of the following Contract Year. No more than 20% of the Fixed Account
Value may be transferred out of the Fixed Account per Contract year. After
annuitization, the amount of any fixed annuity allocation may not be
changed.
Up to 12 transfers into or out of subaccounts may be made in any Contract
Year without charge. (See "Transfers To or From Subaccounts.") Any transfer to
or from the Fixed Account will count toward the twelve free transfer limit.
Currently, the charge for transfers beyond twelve is $0; however, JHVLICO
reserves the right to assess a charge of up to $25 per transfer for each
additional transfer beyond the twelve free transfers.
Transfers will be made after receipt of notice satisfactory to JHVLICO at
its Servicing Office. Transfer requests received by JHVLICO before 4:00 p.m.
Eastern Time on a business day will be valued as of the close of that day. Any
requests received after 4:00 p.m. or on a non-business day will be valued as
of the close of the next business day.
An Owner may request a transfer in writing or, once a written telephone
transfer authorization form is completed by the Owner, the Owner may request a
transfer by telephoning JHVLICO at 800 REAL LIFE (800 732-5543) or sending a
written request via the JHVLICO fax machine at 617-572-5410. Any written
request should include the Owner's name, daytime telephone number, and
contract number as well as the names of the subaccounts or Fixed Account from
which and to which money will be transferred. JHVLICO reserves the right to
modify, suspend, or terminate telephone transfers at any time without notice
to the Owners. If the fax request option becomes unavailable, another means of
telecommunication will be substituted.
An Owner who authorizes telephone transfers will be liable for any loss,
expense or cost arising out of any unauthorized or fraudulent telephone
transfer instructions which JHVLICO reasonably believes to be genuine, unless
such loss, expense or cost is the result of JHVLICO's mistake or negligence.
JHVLICO employs procedures which provide adequate safeguards against the
execution of unauthorized transfers, and which are reasonably designed to
confirm that transfer instructions received by telephone are genuine. These
procedures include requiring personal identification, tape recording calls,
and providing written confirmation to the Owner. If JHVLICO does not employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine, it may be liable for any loss due to unauthorized or fraudulent
instructions.
FIXED ANNUITY PAYMENT VALUES
The dollar amount of each fixed annuity payment will be determined by
dividing the amount applied under the fixed annuity option (net of any
applicable premium taxes) by $1,000 and multiplying the result by the greater
of: (a) the applicable factor shown in the appropriate table in the Contract;
or (b) the factor currently offered by JHVLICO at the time of annuitization.
This current factor may be based on the sex of the payee unless prohibited by
law.
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<PAGE>
APPENDIX--VARIABLE ANNUITY INFORMATION FOR INDIVIDUAL RETIREMENT ANNUITIES
To help you understand your purchase of this Contract as an Individual
Retirement Annuity (IRA), we are providing the following summary.
I. Accumulation Shares--Each net purchase payment you make into your
Contract is allocated to the subaccounts you select, and Accumulation Shares
are purchased. This is the unit of measurement used to determine the value of
your Contract. The number of shares purchased in any subaccount is based on
the share value of that subaccount next determined after receipt of the
payment at our Servicing Office. The values of shares fluctuate with the
daily investment performance of the corresponding subaccount. The growth in
the value of your Contract, to the extent invested in the Separate Account,
is neither guaranteed nor projected and varies with the investment Portfolio
you have selected. Each net purchase payment allocated to the Fixed Account
will be credited interest, as determined by JHVLICO. The minimum guarantee
rate is 3%. More details appear under "Accumulation Shares" in this
Prospectus and in the "Appendix--The Fixed Account and Fixed Account Value."
II. Separate Account and Series Fund Charges--The assets of the Separate
Account are charged for services and guarantees. The annualized charge equals
1.40%. Fees varying by Portfolio are charged against the Series Fund for
investment management and advisory services. Details appear under "Charges
Under the Annuity Contracts" in this Prospectus and "Management of the Fund"
in the accompanying Series Fund prospectus.
III. Deductions from the Contract--The full amount of each deposit is
applied to the Contract. At or after the purchase date, one or more of the
following charges may be made, depending on circumstances.
1. WITHDRAWAL CHARGE--In each Contract Year, you may withdraw as much as
10% of the Accumulated Value of your Contract as of the beginning of the
Contract Year without charge. Withdrawals in excess of this amount will be
subject to the following charges:
<TABLE>
<CAPTION>
YEARS FROM DATE OF
DEPOSIT WITHDRAWAL
TO DATE OF WITHDRAWAL CHARGE
--------------------- ----------
<S> <C>
7 or more...................................................... 0%
6 but less than 7.............................................. 1%
5 but less than 6.............................................. 2%
4 but less than 5.............................................. 3%
3 but less than 4.............................................. 4%
2 but less than 3.............................................. 5%
1 but less than 2.............................................. 6%
less than 1.................................................... 7%
</TABLE>
For the purpose of calculating the withdrawal charge, deposits are
considered to be withdrawn on a "first-in first-out" basis. Earnings are
considered to be withdrawn last and without charge. This is described in
more detail under "Withdrawal Charge" in this Prospectus.
2. CONTRACT FEE--JHVLICO currently deducts $30 from the Accumulated Value
of the Contract as a contract fee if the Accumulated Value is less than
$10,000. This occurs annually or at the time of surrender. Please refer to
"Charges for Administrative Services" in this Prospectus.
3. STATE PREMIUM TAX--Some states and local governments impose a premium
or similar tax on annuities. JHVLICO only deducts this tax when required to
do so. Please refer to "Premium or Similar Taxes" in this Prospectus.
40
<PAGE>
APPENDIX--ILLUSTRATIVE ACCUMULATED VALUE AND ANNUITY PAYMENT TABLES
The following Tables present illustrative periodic Accumulated Values and
annuity payments that would have resulted under a Contract described in this
prospectus had such values and payments been based exclusively upon the
investment experience of the seven specified subaccounts, assuming investment
by each of those subaccounts in the related Portfolio in the Fund and its
predecessors during the periods shown. The other subaccounts are not
illustrated, because of the limited time that they and their related Fund
Portfolios have been available. The Contracts described in this prospectus
were first offered in 1998.
For years ended December 31, 1986, and prior thereto, values have been
calculated based upon the actual investment results of the three corresponding
variable life insurance managed separate accounts which were the predecessors
to the Growth & Income, Sovereign Bond, and Money Market Portfolios, as if the
Fund had been in existence prior to March 28, 1986, the date of its
reorganization.
The Tables assume investment of a single purchase payment of $10,000, net of
any deductions from purchase payments, and that charges under the Contracts
have been made at an annual rate of 1.40% for mortality and expense risks and
administrative services. The tables also reflect actual investment management
fees and other portfolio expenses for the periods illustrated. Absent expense
reimbursements by John Hancock to certain of the Portfolios for some periods,
the values illustrated would have been lower.
WHAT THE TABLES ILLUSTRATE
Subject to the foregoing, each Table I presents for the periods shown the
illustrative periodic Accumulated Values for each Account which would have
resulted at yearly intervals under a Contract where a net single purchase
payment of $10,000 was made, based upon the investment performance of the
applicable funding medium.
Subject to the foregoing, each Table II indicates, at annual intervals,
illustrative monthly variable annuity payments for each subaccount which would
have been received by an Annuitant or other payee, assuming that an initial
annuity payment of $100 was received in the month and year indicated in the
respective Tables. The form of annuity illustrated is a life annuity with
payments guaranteed for 10 years.
The results shown should not be considered a representation of the future. A
program of the type illustrated in the Tables does not assure a profit or
protect against depreciation in declining markets.
41
<PAGE>
GROWTH & INCOME SUBACCOUNT
ILLUSTRATIVE PERIODIC ACCUMULATED VALUES AND ANNUITY PAYMENTS
TABLE I--ACCUMULATION PERIOD--ILLUSTRATIVE ACCUMULATED VALUES WHICH WOULD HAVE
RESULTED IF A $10,000 NET PURCHASE PAYMENT CONTRACT HAD BEEN ISSUED JANUARY 2,
1975
<TABLE>
<CAPTION>
ACCUMULATED VALUE
ON DECEMBER 31
CONTRACT YEAR COMMENCING OF THE SAME YEAR
------------------------ -----------------
<S> <C>
January 1975......................................... $ 12,768.53
January 1976......................................... 14,847.74
January 1977......................................... 13,070.47
January 1978......................................... 13,674.30
January 1979......................................... 15,670.05
January 1980......................................... 20,154.18
January 1981......................................... 20,054.68
January 1982......................................... 25,323.38
January 1983......................................... 30,428.51
January 1984......................................... 31,429.08
January 1985......................................... 41,769.30
January 1986......................................... 47,665.34
January 1987......................................... 49,262.49
January 1988......................................... 56,368.07
January 1989......................................... 71,995.40
January 1990......................................... 72,809.18
January 1991......................................... 90,446.27
January 1992......................................... 97,127.06
January 1993......................................... 108,553.53
January 1994......................................... 106,452.30
January 1995......................................... 140,886.25
January 1996......................................... 166,849.35
January 1997......................................... --
</TABLE>
TABLE II--ANNUITY PERIOD--ILLUSTRATIVE MONTHLY VARIABLE ANNUITY PAYMENTS--
GROWTH & INCOME SUBACCOUNT
This Table shows, at annual intervals, the illustrative monthly variable an-
nuity payments an Annuitant would have received assuming the Annuitant re-
ceived a first annuity payment of $100 in January 1975.
<TABLE>
<CAPTION>
PAYMENT
MONTH FOR MONTH
----- ---------
<S> <C>
January 1975................................................... $100.00
January 1976................................................... 126.05
January 1977................................................... 139.99
January 1978................................................... 121.58
January 1979................................................... 123.59
January 1980................................................... 136.47
January 1981................................................... 168.49
January 1982................................................... 163.12
January 1983................................................... 198.05
January 1984................................................... 227.32
January 1985................................................... 228.10
January 1986................................................... 294.22
January 1987................................................... 331.86
January 1988................................................... 330.06
January 1989................................................... 363.60
January 1990................................................... 429.63
January 1991................................................... 432.97
January 1992................................................... 496.00
January 1993................................................... 543.10
January 1994................................................... 585.08
January 1995................................................... 556.35
January 1996................................................... 706.64
January 1997................................................... 813.93
</TABLE>
The amounts shown are based on the investment performance of the Growth &
Income Subaccount, the Growth & Income Portfolio, and its predecessors. All
amounts reflect the provisions of the Contracts described in this Prospectus,
including annuity tables based on the standard assumed investment rate of 3
1/2% per annum. The amounts shown do not reflect the deduction for any appli-
cable premium tax. See text preceding these Tables.
42
<PAGE>
SOVEREIGN BOND SUBACCOUNT
ILLUSTRATIVE PERIODIC ACCUMULATED VALUES AND ANNUITY PAYMENTS
TABLE I--ACCUMULATION PERIOD--ILLUSTRATIVE ACCUMULATED VALUES WHICH WOULD HAVE
RESULTED IF A $10,000 NET PURCHASE PAYMENT CONTRACT HAD BEEN ISSUED JUNE 2,
1980
<TABLE>
<CAPTION>
ACCUMULATED VALUE
ON DECEMBER 31
CONTRACT YEAR COMMENCING OF THE SAME YEAR
------------------------ -----------------
<S> <C>
June 1980............................................ $10,229.93
June 1981............................................ 10,496.01
June 1982............................................ 13,331.26
June 1983............................................ 13,948.51
June 1984............................................ 15,749.99
June 1985............................................ 18,880.47
June 1986............................................ 21,134.54
June 1987............................................ 21,393.33
June 1988............................................ 22,818.87
June 1989............................................ 25,363.52
June 1990............................................ 26,898.56
June 1991............................................ 30,947.25
June 1992............................................ 32,856.05
June 1993............................................ 35,891.25
June 1994............................................ 34,484.11
June 1995............................................ 40,650.17
June 1996............................................ 41,731.05
June 1997............................................ --
</TABLE>
TABLE II--ANNUITY PERIOD--ILLUSTRATIVE MONTHLY VARIABLE ANNUITY PAYMENTS--
SOVEREIGN BOND SUBACCOUNT
This Table shows, at annual intervals, the illustrative monthly variable
annuity payments an Annuitant would have received assuming the Annuitant
received a first annuity payment of $100 in June 1980.
<TABLE>
<CAPTION>
PAYMENT
MONTH FOR MONTH
----- ---------
<S> <C>
June 1980...................................................... $100.00
June 1981...................................................... 96.02
June 1982...................................................... 104.33
June 1983...................................................... 124.70
June 1984...................................................... 119.06
June 1985...................................................... 142.91
June 1986...................................................... 161.39
June 1987...................................................... 161.44
June 1988...................................................... 166.85
June 1989...................................................... 175.39
June 1990...................................................... 179.74
June 1991...................................................... 192.24
June 1992...................................................... 205.19
June 1993...................................................... 219.34
June 1994...................................................... 212.72
June 1995...................................................... 224.64
June 1996...................................................... 228.63
June 1997...................................................... 235.28
</TABLE>
The amounts shown are based on the investment performance of the Sovereign
Bond Subaccount, the Sovereign Bond Portfolio, and its predecessors. All
amounts reflect the provisions of the Contracts described in this Prospectus,
including annuity tables based on the standard assumed investment rate of 3
1/2% per annum. The amounts shown do not reflect the deduction for any
applicable premium tax. See text preceding these Tables.
43
<PAGE>
MONEY MARKET SUBACCOUNT
ILLUSTRATIVE PERIODIC ACCUMULATED VALUES AND ANNUITY PAYMENTS
TABLE I--ACCUMULATION PERIOD--ILLUSTRATIVE ACCUMULATED VALUES WHICH WOULD HAVE
RESULTED IF A $10,000 NET PURCHASE PAYMENT CONTRACT HAD BEEN ISSUED MAY 13,
1982
<TABLE>
<CAPTION>
ACCUMULATED VALUE
ON DECEMBER 31
CONTRACT YEAR COMMENCING OF THE SAME YEAR
------------------------ -----------------
<S> <C>
May 1982............................................. $10,454.08
May 1983............................................. 11,209.15
May 1984............................................. 12,215.99
May 1985............................................. 13,028.02
May 1986............................................. 13,707.73
May 1987............................................. 14,422.37
May 1988............................................. 15,314.17
May 1989............................................. 16,504.28
May 1990............................................. 17,639.99
May 1991............................................. 18,435.21
May 1992............................................. 18,841.95
May 1993............................................. 19,150.05
May 1994............................................. 19,657.28
May 1995............................................. 20,506.13
May 1996............................................. 21,299.24
June 1997............................................
</TABLE>
TABLE II--ANNUITY PERIOD--ILLUSTRATIVE MONTHLY VARIABLE ANNUITY PAYMENTS--
MONEY MARKET SUBACCOUNT
This Table shows, at annual intervals, the illustrative monthly variable
annuity payments an Annuitant would have received assuming that Annuitant
received a first annuity payment of $100 in May 1982.
<TABLE>
<CAPTION>
PAYMENT
MONTH FOR MONTH
----- ---------
<S> <C>
May 1982....................................................... $100.00
May 1983....................................................... 103.34
May 1984....................................................... 107.59
May 1985....................................................... 112.85
May 1986....................................................... 115.94
May 1987....................................................... 117.28
May 1988....................................................... 119.52
May 1989....................................................... 123.57
May 1990....................................................... 128.27
May 1991....................................................... 131.70
May 1992....................................................... 131.78
May 1993....................................................... 129.76
May 1994....................................................... 127.42
May 1995....................................................... 127.48
May 1996....................................................... 128.26
June 1997...................................................... 128.72
</TABLE>
The amounts shown are based on the investment performance of the Money
Market Subaccount, the Money Market Portfolio, and its predecessors. All
amounts reflect the provisions of the Contracts described in this Prospectus,
including annuity tables based on the standard assumed investment rate of 3
1/2% per annum. The amounts shown do not reflect the deduction for any
applicable premium tax. See text preceding these Tables.
44
<PAGE>
LARGE CAP GROWTH SUBACCOUNT
ILLUSTRATIVE PERIODIC ACCUMULATED VALUES
AND ANNUITY PAYMENTS
TABLE I--ACCUMULATION PERIOD--ILLUSTRATIVE ACCUMULATED VALUES WHICH WOULD HAVE
RESULTED IF A $10,000 NET PURCHASE PAYMENT HAD BEEN ISSUED NOVEMBER 24, 1987
<TABLE>
<CAPTION>
ACCUMULATED VALUE
ON DECEMBER 31
CONTRACT YEAR COMMENCING OF THE SAME YEAR
------------------------ -----------------
<S> <C>
November 1987........................................ $10,239.60
November 1988........................................ 11,531.81
November 1989........................................ 15,108.39
November 1990........................................ 15,668.24
November 1991........................................ 19,383.96
November 1992........................................ 21,015.39
November 1993........................................ 23,586.33
November 1994........................................ 23,031.38
November 1995........................................ 29,897.25
November 1996........................................ 34,867.83
November 1997........................................
</TABLE>
TABLE II--ANNUITY PERIOD--ILLUSTRATIVE MONTHLY VARIABLE ANNUITY PAYMENTS--
LARGE CAP GROWTH SUBACCOUNT
This Table shows, at annual intervals, the illustrative monthly variable
annuity payments an Annuitant would have received assuming the Annuitant
received a first annuity payment of $100 in November 1987.
<TABLE>
<CAPTION>
PAYMENT
MONTH FOR MONTH
----- ---------
<S> <C>
November 1987.................................................. $100.00
November 1988.................................................. 109.59
November 1989.................................................. 135.20
November 1990.................................................. 135.73
November 1991.................................................. 164.04
November 1992.................................................. 168.91
November 1993.................................................. 189.46
November 1994.................................................. 182.81
November 1995.................................................. 218.63
November 1996.................................................. 253.37
November 1997.................................................. 310.32
</TABLE>
The amounts shown are based on the investment performance of the Large Cap
Growth Subaccount and the Large Cap Growth Portfolio. All amounts reflect the
provisions of the Contracts described in this Prospectus, including annuity
tables based on the standard assumed investment rate of 3 1/2% per annum. The
amounts shown do not reflect the deduction for any applicable premium tax. See
text preceding the Tables.
45
<PAGE>
MANAGED SUBACCOUNT
ILLUSTRATIVE PERIODIC ACCUMULATED VALUES AND ANNUITY PAYMENTS
TABLE I--ACCUMULATION PERIOD--ILLUSTRATIVE ACCUMULATED VALUES WHICH WOULD HAVE
RESULTED IF A $10,000 NET PURCHASE PAYMENT HAD BEEN ISSUED NOVEMBER 9, 1987
<TABLE>
<CAPTION>
ACCUMULATED VALUE
ON DECEMBER 31
CONTRACT YEAR COMMENCING OF THE SAME YEAR
------------------------ -----------------
<S> <C>
November 1987........................................ $10,226.76
November 1988........................................ 11,240.26
November 1989........................................ 13,380.15
November 1990........................................ 13,629.51
November 1991........................................ 16,394.96
November 1992........................................ 17,414.83
November 1993........................................ 19,167.24
November 1994........................................ 18,479.74
November 1995........................................ 23,160.13
November 1996........................................ 25,285.76
November 1997........................................
</TABLE>
TABLE II--ANNUITY PERIOD--ILLUSTRATIVE MONTHLY VARIABLE ANNUITY PAYMENTS--
MANAGED SUBACCOUNT
This Table shows, at annual intervals, the illustrative monthly variable
annuity payments an Annuitant would have received assuming the Annuitant
received a first annuity payment of $100 in November 1987.
<TABLE>
<CAPTION>
PAYMENT
MONTH FOR MONTH
----- ---------
<S> <C>
November 1987.................................................. $100.00
November 1988.................................................. 109.87
November 1989.................................................. 121.52
November 1990.................................................. 114.66
November 1991.................................................. 136.05
November 1992.................................................. 142.02
November 1993.................................................. 156.17
November 1994.................................................. 146.42
November 1995.................................................. 168.78
November 1996.................................................. 180.91
November 1997.................................................. 201.84
</TABLE>
The amounts shown are based on the investment performance of the Managed
Subaccount and the Managed Portfolio. All amounts reflect the provisions of
the Contracts described in this Prospectus, including annuity tables based on
the standard assumed investment rate of 3 1/2% per annum. The amounts shown do
not reflect the deduction for any applicable premium tax. See text preceding
the Tables.
46
<PAGE>
REAL ESTATE EQUITY SUBACCOUNT
ILLUSTRATIVE PERIODIC ACCUMULATED VALUES
AND ANNUITY PAYMENTS
TABLE I--ACCUMULATION PERIOD--ILLUSTRATIVE ACCUMULATED VALUES WHICH WOULD HAVE
RESULTED IF A $10,000 NET PURCHASE PAYMENT HAD BEEN ISSUED FEBRUARY 14, 1989
<TABLE>
<CAPTION>
ACCUMULATED VALUE
ON DECEMBER 31
CONTRACT YEAR COMMENCING OF THE SAME YEAR
------------------------ -----------------
<S> <C>
February 1989........................................ $10,442.26
February 1990........................................ 8,035.55
February 1991........................................ 10,579.75
February 1992........................................ 12,103.83
February 1993........................................ 14,001.34
February 1994........................................ 14,202.33
February 1995........................................ 15,728.80
February 1996........................................ 20,639.15
February 1997........................................
</TABLE>
TABLE II--ANNUITY PERIOD--ILLUSTRATIVE MONTHLY VARIABLE ANNUITY PAYMENTS--REAL
ESTATE EQUITY SUBACCOUNT
This Table shows, at annual intervals, the illustrative monthly variable
annuity payments an Annuitant would have received assuming the Annuitant
received a first annuity payment of $100 in February 1989.
<TABLE>
<CAPTION>
PAYMENT
MONTH FOR MONTH
----- ---------
<S> <C>
February 1989.................................................. $100.00
February 1990.................................................. 95.91
February 1991.................................................. 85.47
February 1992.................................................. 99.80
February 1993.................................................. 115.44
February 1994.................................................. 118.80
February 1995.................................................. 112.48
February 1996.................................................. 124.74
February 1997.................................................. 158.12
</TABLE>
The amounts shown are based on the investment performance of the Real Estate
Equity Subaccount and the Real Estate Equity Portfolio. All amounts reflect
the provisions of the Contracts described in this Prospectus, including
annuity tables based on the standard assumed investment rate of 3 1/2% per
annum. The amounts shown do not reflect the deduction for any applicable
premium tax. See text preceding the Tables.
47
<PAGE>
INTERNATIONAL EQUITIES SUBACCOUNT
ILLUSTRATIVE PERIODIC ACCUMULATED VALUES AND ANNUITY PAYMENTS
TABLE I--ACCUMULATION PERIOD--ILLUSTRATIVE ACCUMULATED VALUES WHICH WOULD HAVE
RESULTED IF A $10,000 NET PURCHASE PAYMENT HAD BEEN ISSUED FEBRUARY 10, 1989
<TABLE>
<CAPTION>
ACCUMULATED VALUE
ON DECEMBER 31
CONTRACT YEAR COMMENCING OF THE SAME YEAR
------------------------ -----------------
<S> <C>
February 1989........................................ $11,099.72
February 1990........................................ 10,051.49
February 1991........................................ 12,229.24
February 1992........................................ 11,861.11
February 1993........................................ 15,450.90
February 1994........................................ 14,305.70
February 1995........................................ 15,237.67
February 1996........................................ 16,406.62
February 1997........................................
</TABLE>
TABLE II--ANNUITY PERIOD--ILLUSTRATIVE MONTHLY VARIABLE ANNUITY PAYMENTS--
INTERNATIONAL EQUITIES SUBACCOUNT
This Table shows, at annual intervals, the illustrative monthly variable
annuity payments an Annuitant would have received assuming the Annuitant
received a first annuity payment of $100 in February 1989.
<TABLE>
<CAPTION>
PAYMENT
MONTH FOR MONTH
----- ---------
<S> <C>
February 1989.................................................. $100.00
February 1990.................................................. 96.77
February 1991.................................................. 89.90
February 1992.................................................. 103.84
February 1993.................................................. 98.31
February 1994.................................................. 123.78
February 1995.................................................. 103.66
February 1996.................................................. 114.78
February 1997.................................................. 115.51
</TABLE>
The amounts shown are based on the investment performance of the
International Equities Subaccount and the International Equities Portfolio.
All amounts reflect the provisions of the Contracts described in this
Prospectus, including annuity tables based on the standard assumed investment
rate of 3 1/2% per annum. The amounts shown do not reflect the deduction for
any applicable premium tax. See text preceding the Tables.
48
<PAGE>
JOHN HANCOCK
VARIABLE LIFE INSURANCE COMPANY
[LOGO OF JOHN HANCOCK APPEARS HERE]
ANNUITY TRANSFERLINE
AUTHORIZATION FORM
INSTRUCTIONS: Please complete and sign where indicated. If your Contract
will be jointly owned, each Owner must sign. An acknowledgement letter
will be sent as soon as your Contract is issued.
THIS COMPLETED FORM MUST BE SUBMITTED WITH THE APPLICATION.
( ) Yes! I want TRANSFERLINE, JHVLICO's telephone transfer program that per-
mits fast and toll-free transfers of funds within my Contract, as condi-
tions dictate.
As the applicant for a Contract funded by John Hancock Variable Series Trust I
(the "Fund"), I hereby authorize JHVLICO, on behalf of the Fund, to act upon
my telephone instructions to:
(1) reallocate my then current value held in any one or more subaccounts,
(2) to change the allocation of future purchase payments to the
subaccounts, and
(3) change the allocation of my subaccount elections as they are applied
under the Dollar-Cost Averaging option (if available on my Contract).
I understand that JHVLICO employs the following procedures reasonably designed
to confirm that the instructions received by telephone are genuine: requiring
disclosure of personal identification; tape recording calls; and providing the
Owner with a confirmation of the transfer. As long as JHVLICO follows such
procedures, I will not hold JHVLICO, or the Fund (or any of their successors)
liable for any loss, expense, or cost resulting from any unauthorized or
fraudulent telephone instructions.
I further understand that this authorization is limited by the conditions and
procedures for telephone account transfers and investment option changes set
forth in the prospectus describing my Contract.
I further understand that this authorization will continue in force unless and
until the earlier of (a) written revocation received by JHVLICO at its
Servicing Office or (b) JHVLICO discontinues this service.
Signature(s) of Prospective
Contract Owner(s)
Date: _______________________________ /s/__________________________________
Date: _______________________________ /s/__________________________________
Questions call: 800 REAL LIFE (800-732-5543)
Mail to: P.O. Box 111
Boston, MA 02117
49
<PAGE>
[LOGO OF JOHN HANCOCK APPEARS HERE]
S 2/98
CONTRACTS ISSUED BY JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY 200 CLARENDON
STREET, BOSTON, MASSACHUSETTS 02117
UPDATE
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
INDIVIDUAL COMBINATION VARIABLE/FIXED
ANNUITY CONTRACTS
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT I
STATEMENT OF ADDITIONAL INFORMATION
----------------
This statement of additional information is not a prospectus. It is intended
that this statement of additional information be read in conjunction with the
prospectus of John Hancock Variable Annuity Account I, dated February , 1998.
A copy of the prospectus may be obtained from the John Hancock Servicing
Office, P.O. Box 111, Boston Massachusetts, 02117, telephone number (800) REAL
LIFE (800-732-5543), Fax (617) 572-5410.
This statement of additional information is dated February , 1998.
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT I
CROSS REFERENCE SHEET
----------------
<TABLE>
<CAPTION>
SECTION IN STATEMENT OF
FORM N-4 ITEM NO. ADDITIONAL INFORMATION
----------------- -----------------------
<C> <S>
15. Cover Page............................ Cover Page
16. Table of Contents..................... Table of Contents
17. General Information and History....... Business History
18. Services.............................. Distribution Agreement and Other Services
19. Purchase of Securities Being Offered.. Not Applicable (relevant information in prospectus)
20. Underwriters.......................... Distribution Agreement and Other Services
21. Calculation of Yield Quotations of
Money Market Subaccounts............. Calculation of Performance Data
22. Annuity Payments...................... Calculation of Annuity Payments
23. Financial Statements.................. Financial Statements
</TABLE>
<PAGE>
TABLE OF CONTENTS
----------------
<TABLE>
<CAPTION>
CROSS REFERENCE TO
PAGE PAGE IN PROSPECTUS
---- -------------------
<S> <C> <C>
Business History....................................... 1 12-13
Distribution Agreement and Other Services.............. 1 20, 13-15, 35
Distribution Agreement............................... 1 20, 35
Investment Advisory Agreement........................ 1 13-15
Custodian Agreement.................................. 2 --
Independent Auditors................................. 2 36
Calculation of Performance Data........................ 3 33-34
Calculation of Annuity Payments........................ 4 24-26
Financial Statements................................... 6 36
</TABLE>
<PAGE>
BUSINESS HISTORY
John Hancock Variable Annuity Account I (the "Account") is a separate
account of John Hancock Variable Life Insurance Company ("JHVLICO"),
established under the laws of the Commonwealth of Massachusetts. The Account
is organized as a unit investment trust and registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 (the "Act") and
the Securities Act of 1933. The Account has eighteen separate subaccounts
(Growth & Income, Sovereign Bond, Money Market, Large Cap Growth, Managed,
Real Estate Equity, International Equities, Short-Term U.S. Government,
Special Opportunities, Equity Index, Large Cap Value, Mid Cap Growth, Mid Cap
Value, Small Cap Growth, Small Cap Value, Strategic Bond, International
Opportunities, and International Balanced) through which JHVLICO's individual
combination fixed/variable annuity contracts are funded, at the discretion of
the individual contract owner (the "Owner"). The assets of each subaccount
are, in turn, invested in a corresponding Portfolio of John Hancock Variable
Series Trust I (the "Fund"), a registered open-end diversified management
investment company advised by John Hancock Mutual Life Insurance Company
("John Hancock").
DISTRIBUTION AGREEMENT AND OTHER SERVICES
DISTRIBUTION AGREEMENT
Pursuant to a Distribution Agreement, dated May 1, 1997, John Hancock
Distributors, Inc. ("Distributors"), a registered broker-dealer, acts as
"principal underwriter" for the Account. Distributors is a member of the
National Association of Securities Dealers, Inc., and a member of the
Securities Investors Protection Corporation. Distributors' major
responsibility as underwriter is to perform all sales and marketing functions
relating to the Contracts. The offering of the Account's interests is
continuous, but Distributors is not obligated to sell any particular amount of
the Account's interests.
INVESTMENT ADVISORY AGREEMENT
The Fund, in which the Contracts are invested, has contracted with John
Hancock for investment advisory services. Pursuant to four Investment
Management Agreements (two dated as of April 12, 1988, one dated April 15,
1994, and one dated March 14, 1996) as amended, John Hancock, a registered
investment adviser under the Investment Advisers Act of 1940, advises the Fund
in connection with policy decisions; provides administration of day-to-day
operations; provides personnel, office space, equipment, and supplies for the
Fund; maintains records required by the Act; values assets and liabilities of
the Fund; computes income, net asset value, and yield of each Portfolio; and
supervises activities of the sub-investment managers referred to below.
John Hancock has day-to-day responsibility for making investment decisions
and placing investment orders for the Money Market Portfolio. However, with
respect to the other Portfolios, John Hancock has contracted with the
following registered investment advisors to perform these and certain other
recordkeeping functions as sub-investment manager pursuant to sub-investment
agreements dated as indicated:
<TABLE>
<C> <S> <C>
Growth & Income Independence Investment Associates, Inc. 4/15/88
Sovereign Bond John Hancock Advisers, Inc. 5/01/95
Large Cap Growth Independence Investment Associates, Inc. 4/15/88
Managed Independence Investment Associates, Inc. 4/15/88
Real Estate Equity Independence Investment Associates, Inc. 4/15/94
International Equities John Hancock Advisers, Inc. 4/15/88
John Hancock Advisers International, Inc. 4/15/88
Short-Term U.S. Government Independence Investment Associates, Inc. 4/15/94
Equity Index Independence Investment Associates, Inc. 3/18/97
</TABLE>
1
<PAGE>
<TABLE>
<C> <S> <C>
Large Cap Value T. Rowe Price Associates, Inc. 3/29/96
Mid Cap Growth Janus Capital Corporation 3/29/96
Mid Cap Value Neuberger & Berman L.P. 5/01/96
Small Cap Growth John Hancock Advisers, Inc. 3/29/96
Small Cap Value INVESCO Management & Research 3/22/96
Strategic Bond J.P. Morgan Investment Management, Inc. 3/29/96
International Opportunities T. Rowe Price Associates, Inc. 3/29/96
Rowe Price-Fleming International, Inc. 3/29/96
International Balanced Brinson Partners, Inc. 3/29/96
</TABLE>
John Hancock pays the sub-investment management fees pursuant to the
Agreements and, therefore, the sub-investment management arrangements result
in no additional charge or expense to the Fund or to contractholders. A more
complete description of the Fund's management and the investment advisory fees
is included under "Management of the Fund" in the Fund's Prospectus and under
"Investment Advisory and Other Services" in the Fund's Statement of Additional
Information.
CUSTODIAN AGREEMENT
The Fund's custodian with respect to the Growth & Income, Money Market,
Large Cap Growth, Short-Term U.S. Government, and Real Estate Equity
Portfolios is Chemical Banking Corporation of 4 New York Plaza, New York, New
York, pursuant to a Custodian Agreement, dated January 15, 1986 and amended
April, 1988. The Fund's custodian with respect to the Sovereign Bond Portfolio
is Investors Bank and Trust Company, 24 Federal Street, Boston, pursuant to a
Custodian Agreement dated May 2, 1995. The Fund's custodian with respect to
the other Portfolios is State Street Bank and Trust, 225 Franklin Street,
Boston, Massachusetts, pursuant to a Custodian Agreement, dated January 30,
1995 and amended March 18, 1996. The custodian's duties include safeguarding
and controlling the Fund's cash investments, handling the receipt and delivery
of securities, and collecting interest and dividends on the Fund's
investments.
INDEPENDENT AUDITORS
Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts, has been
selected as the independent auditors of the Account. The firm is responsible
for auditing the financial statements of the Account and JHVLICO.
2
<PAGE>
CALCULATION OF PERFORMANCE DATA
The Account will show the average annual total return for each subaccount,
according to the following formula prescribed by the Securities and Exchange
Commission:
P(1 + T)/n/ = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment,
made at the beginning of a period (or fractional portion
thereof)
Average annual total return is the annual compounded rate of return that
would have produced the cash redemption value under a Contract had the
subaccount been invested in a specified Portfolio of the Fund (or its
predecessor) over the stated period and had the performance remained constant
throughout. The calculation assumes a single $1,000 payment made at the
beginning of the period and full redemption at the end of the period. It
reflects adjustments for all Fund and Contract level charges except premium
taxes, if any.
On that basis, the following table shows the average annual total return for
each subaccount for the periods ended December 31, 1996:
<TABLE>
<CAPTION>
AVERAGE ANNUALIZED
-------------------------------
YEAR TO DATE OF
SUBACCOUNT*** DATE 1 YEAR 5 YEAR* 10 YEAR* INCEPTION**
------------- ------- ------ ------- -------- -----------
<S> <C> <C> <C> <C> <C>
Managed............................. 3.7% 3.7% 8.7% 10.6% 11/09/87
Growth & Income..................... 13.0% 13.0% 12.7% 13.3% 04/03/72
Equity Index........................ 6.8% N/A N/A N/A 04/30/96
Large Cap Value..................... 6.4% N/A N/A N/A 04/30/96
Large Cap Growth.................... 11.2% 11.2% 12.2% 14.6% 11/24/87
Mid Cap Value....................... 8.7% N/A N/A N/A 04/30/96
Mid Cap Growth...................... -4.7% N/A N/A N/A 04/30/96
Special Opportunities............... 23.2% 23.2% 25.1% N/A 09/23/94
Real Estate Equity.................. 25.9% 25.9% 14.0% 9.5% 02/01/89
Small Cap Value..................... 2.9% N/A N/A N/A 04/30/96
Small Cap Growth.................... -7.7% N/A N/A N/A 04/30/96
International Balanced.............. -0.7% N/A N/A N/A 04/30/96
International Equities.............. 2.2% 2.2% 5.7% 6.4% 02/01/89
International Opportunities......... -0.7% N/A N/A N/A 04/30/96
Short Term U.S. Government.......... -3.3% -3.3% 2.9% N/A 09/23/94
Sovereign Bond...................... -2.8% -2.8% 5.8% 7.0% 06/02/80
Strategic Bond...................... -0.7% N/A N/A N/A 04/30/96
Money Market........................ -1.6% -1.6% 2.5% 4.4% 05/13/82
</TABLE>
- --------
* or since inception of the applicable Portfolio or its predecessor.
** of the Portfolio or its predecessor.
*** Absent expense reimbursements from John Hancock to certain Portfolios for
some periods, total return figures for the related subaccounts would have
been lower.
The Account will show current yield and effective yield figures for the
Money Market Subaccount. The current yield of the Money Market Subaccount for
a seven-day period (the "base period") will be computed by determining the
"net change in value" (calculated as set forth below) of a hypothetical
account having a balance of one share at the beginning of the period, dividing
the net change in account sales by the value of the account at the beginning
of the base period to obtain the base period return, and multiplying the base
period return by 365/7 with the resulting yield figure carried to the nearest
hundredth of one percent. Net changes in value of a hypothetical account will
include net investment income of the account (accrued daily dividends as
declared by the Money Market Portfolio, less daily expense charges of the
Account) for the period, but will not include realized gains or losses or
unrealized appreciation or depreciation on the underlying fund shares.
Mortality and expense risk and administrative charges are reflected, but the
Withdrawal Charge and any charge for premium taxes are not.
3
<PAGE>
The effective yield reflects the effects of compounding and represents an
annualization of the current return with all dividends reinvested. The formula
for effective yield, as prescribed by the SEC, is:
Effective yield = [(Base period return + 1)/365/7/] - 1
For the 7-day period ending December 31, 1996, the Money Market Subaccount's
current yield was 3.98% and its effective yield was 4.06%.
The Account will calculate current yield for each of the other Subaccounts
according to the following formula prescribed by the SEC:
Yield = 2 [([ (a - b)/cd] + 1)/6/ - 1]
-----------
where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to received dividends
d = the maximum offering price per share on the last day of the
period.
According to this formula, yield is determined by dividing the net
investment income per Accumulation Share earned during the period (minus the
deduction for mortality and expense risk charge, contract fee, administrative
services charge) by the Accumulation Share Value on the last day of the period
and annualizing the resulting figure. The calculation is based on specified
30-day periods identified in the advertisement. No sales loads are assumed.
CALCULATION OF ANNUITY PAYMENTS
The variable monthly annuity payment to an Annuitant under a Contract is
equal to the sum of the products of the number of each subaccount's "Annuity
Units" credited to the Contract multiplied by the applicable "Annuity Unit
Value," as these terms are defined under "Special Terms" and "Variable Account
Valuation Procedures," respectively, in the Account's prospectus. The number
of each subaccount's Annuity Units credited to the Contract is multiplied by
the applicable Annuity Unit Value as of ten calendar days prior to the date
the payment is due. The value of the Annuity Units varies from day to day,
depending on the investment performance of the subaccount, the deductions made
against the subaccount, and the assumed investment rate used in computing
Annuity Unit Values. Thus, the variable monthly annuity payments vary in
amount from month to month.
The amount of the initial variable monthly payment is determined on the
assumption that the actual net investment rate of each subaccount used in
calculating the Net Investment Factor (as described under "Variable Account
Valuation Procedures--Net Investment Factor" in the Account's prospectus) will
be equal on an annual basis to the assumed investment rate. If the actual net
investment rate between the dates for determining two monthly annuity payments
is greater than the assumed investment rate, the latter monthly payment will
be larger in amount than the former. On the other hand, if the actual net
investment rate between the dates for determining two monthly annuity payments
is less than the assumed investment rate, the latter monthly payment will be
smaller in amount than the former.
The mortality tables used as a basis for the annuity purchase rates are the
1983a Mortality Tables, with projections of mortality improvements and with
certain age adjustments based on the Contract Year of annuitization. The
mortality table used in a Contract purchased in connection with certain
employer-related plans and used in all Contracts issued in Montana and
Massachusetts will be the Female Annuity Table of the 1983a Mortality Tables.
The impact of this change will be lower benefits (5% to 15%) from a male's
viewpoint than would otherwise be the case.
4
<PAGE>
An illustration of the method of calculation of variable monthly annuity
payments and the number of Annuity Units under deferred Contracts is shown in
the outline that follows.
OUTLINE FOR DEFERRED CONTRACTS
A. GENERAL FORMULAE TO DETERMINE ACCUMULATION SHARE VALUES AND ANNUITY UNIT
VALUES
Net Investment Rate =
<TABLE>
<S> <C> <C> <C> <C>
Subaccount Charges (0.003836%
per Day of the Value of the
Investment Capital Capital Taxes Subaccount at the Beginning
Income + Gains - Losses - (if any) - of the Valuation Period)
- -------------------------------------------------------------------------------
Value of the Subaccount at the Beginning of the Valuation Period
Net Investment
Factor = 1.00000000 + Net Investment Rate
Accumulation Accumulation Share Value on Net Investment
Share Value = Preceding Valuation Date X Factor
Annuity Unit Net Factor to Neutralize
Annuity Unit Value on Preceding Investment the Assumed
Value = Valuation Date X Factor X Investment Rate
</TABLE>
B. HYPOTHETICAL EXAMPLE ILLUSTRATING THE CALCULATION OF ACCUMULATION SHARE
VALUES AND ANNUITY UNIT VALUES
Assume at the beginning of the Valuation Period being considered, the value
of the Subaccount was $4,000,000. Investment income during the Valuation
Period totaled $2000 while capital gains were $3000 and capital losses were
$1000. No taxes accrued. Charges against the beginning value of the Subaccount
amount to $153.44 assuming a one day Valuation Period. The $153.44 was
computed by multiplying the beginning Subaccount value of $4,000,000 by the
factor 0.00003836. By substituting in the first formula above, the net
investment rate is equal to $3,846.56 ($2000 + $3000 - $1000 - $153.44)
divided by $4,000,000 or 0.0009616. The Net Investment Factor would then be
1.0009616.
Assume further that each Accumulation Share had a value of $11.250000 on the
previous Valuation Date, and the value of an Annuity Unit on such date was
$1.0850000. Based upon the experience of the Subaccount during the Valuation
Period, the value of an Accumulation Share at the end of the Valuation Period
would be $11.260818 ($11.250000 x 1.0009616). The value of an Annuity Unit at
the end of the Valuation Period would be $1.085941 ($1.0850000 x 1.0009616 x
.99990575). The final figure, .99990575, neutralizes the effect of a 3 1/2%
assumed investment rate so that the Annuity Unit recognizes only the actual
investment experience.
5
<PAGE>
C. GENERAL FORMULAE TO DETERMINE AMOUNT OF MONTHLY VARIABLE ANNUITY PAYMENTS
AND NUMBER OF ANNUITY UNITS FOR DEFERRED CONTRACTS
Amount of the First Variable Annuity Payment =
<TABLE>
<S> <C> <C>
First
Monthly
Number of Annuity
Accumulation Accumulation Share Value Payment
Shares Applied X 10 Days Before Maturity Date X Factor
- -------------------------------------------------------------
$1,000
<CAPTION>
<S> <C>
Number of
Annuity Units = Amount of First Variable Annuity Payment
--------------------------------------------------------
Annuity Unit Value 10 Days Before Maturity Date
<CAPTION>
<S> <C> <C>
Amount of Annuity Unit
Subsequent Variable Value 10 Days Before
Annuity Payment = Number of Annuity Units X Payment Date
</TABLE>
D. HYPOTHETICAL EXAMPLE ILLUSTRATING THE CALCULATION OF THE AMOUNT OF MONTHLY
VARIABLE ANNUITY PAYMENT FOR DEFERRED CONTRACTS
Assume that 10 days before the date of maturity a Contract has credited to
it 4000.000 Accumulation Shares each having a value of $12.000000. Assume also
that the Contract was issued to a male age 65 who elected a life annuity with
10 years guaranteed. The appropriate annuity purchase rate in the Contract for
an assumed investment rate of 3 1/2% is $5.47 per $1000 of proceeds for the
Annuity Option elected. The Annuitant's first monthly payment would then be
$262.56.
<TABLE>
<S> <C> <C> <C> <C>
4000.000 X $12.000000 X 5.47
----------------------------------------------
$1000
</TABLE>
If the value of an Annuity Unit 10 days before the date of maturity was
$1.4000000, the number of Annuity Units represented by the first and
subsequent payments would be $187.543 ($262.56/$1.4000000). If the Annuity
Unit Value 10 days before the due date of the second monthly payment was
$1.405000, the amount of the second payment would be $263.50 (187.543 x
$1.405000).
FINANCIAL STATEMENTS
(Included on next page)
6
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT I
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
LARGE CAP SOVEREIGN INTERNATIONAL SMALL CAP INTERNATIONAL MID CAP LARGE CAP MONEY MID CAP
GROWTH BOND EQUITIES GROWTH BALANCED GROWTH VALUE MARKET VALUE
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ------------- ---------- ------------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value........... $43,320,792 $32,888,901 $11,310,436 $6,352,085 $2,455,434 $6,515,769 $7,916,262 $34,215,131 $3,034,857
Receivable from
John Hancock
Variable Series
Trust I......... 92,496 126,401 58,119 45,628 38,862 56,553 91,178 653,275 27,732
----------- ----------- ----------- ---------- ---------- ---------- ---------- ----------- ----------
Total assets.... 43,413,288 33,015,302 11,368,555 6,397,713 2,494,296 6,572,322 8,007,440 34,868,406 3,062,589
LIABILITIES
Payable to John
Hancock Variable
Life Insurance
Company......... 90,705 125,052 57,660 45,373 38,763 56,291 90,853 651,900 27,609
Assets charges
payable......... 1,791 1,349 459 255 99 262 325 1,375 123
----------- ----------- ----------- ---------- ---------- ---------- ---------- ----------- ----------
Total
liabilities..... 92,496 126,401 58,119 45,628 38,862 56,553 91,178 653,275 27,732
----------- ----------- ----------- ---------- ---------- ---------- ---------- ----------- ----------
Net assets...... $43,320,792 $32,888,901 $11,310,436 $6,352,085 $2,455,434 $6,515,769 $7,916,262 $34,215,131 $3,034,857
=========== =========== =========== ========== ========== ========== ========== =========== ==========
</TABLE>
See accompanying notes.
7
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT I
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHORT-TERM
SPECIAL REAL ESTATE GROWTH & U.S. SMALL CAP INTERNATIONAL EQUITY STRATEGIC
OPPORTUNITIES EQUITY INCOME MANAGED GOVERNMENT VALUE OPPORTUNITIES INDEX BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ----------- ------------ ------------ ----------- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value........... $53,548,769 $7,855,538 $109,642,677 $168,841,593 $12,374,727 $3,453,343 $3,506,957 $5,099,509 $4,104,368
Receivable from
John Hancock
Variable Series
Trust I......... 201,963 55,572 686,049 392,996 47,769 55,910 22,189 24,912 36,856
----------- ---------- ------------ ------------ ----------- ---------- ---------- ---------- ----------
Total assets.... 53,750,732 7,911,110 110,328,726 169,234,589 12,422,496 3,509,253 3,529,146 5,124,421 4,141,224
LIABILITIES
Payable to John
Hancock Variable
Life Insurance
Company......... 199,780 55,255 681,511 386,018 47,262 55,772 22,047 24,701 36,689
Assets charges
payable......... 2,183 317 4,538 6,978 507 138 142 211 167
----------- ---------- ------------ ------------ ----------- ---------- ---------- ---------- ----------
Total
liabilities..... 201,963 55,572 686,049 392,996 47,769 55,910 22,189 24,912 36,856
----------- ---------- ------------ ------------ ----------- ---------- ---------- ---------- ----------
Net assets...... $53,548,769 $7,855,538 $109,642,677 $168,841,593 $12,374,727 $3,453,343 $3,506,957 $5,099,509 $4,104,368
=========== ========== ============ ============ =========== ========== ========== ========== ==========
</TABLE>
See accompanying notes.
8
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT I
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
LARGE CAP SOVEREIGN INTERNATIONAL SMALL CAP INTERNATIONAL MID CAP LARGE CAP MONEY MID CAP
GROWTH BOND EQUITIES GROWTH BALANCED GROWTH VALUE MARKET VALUE
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ---------- ------------- ---------- ------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
income:
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I......... $ 6,235,377 $1,691,372 $ 91,388 $ 2,385 $ 33,662 $17,661 $151,634 $1,110,361 $ 62,336
----------- ---------- -------- --------- -------- ------- -------- ---------- --------
Expenses:
Mortality and
expense risks... 382,802 305,785 108,177 26,391 10,281 26,407 30,911 320,346 10,808
----------- ---------- -------- --------- -------- ------- -------- ---------- --------
Net investment
income (loss).... 5,852,575 1,385,587 (16,789) (24,006) 23,381 (8,746) 120,723 790,015 51,528
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gain (loss)..... 134,575 (13,677) 39,238 (4,702) 1,726 (2,072) 9,223 -- 1,514
Net unrealized
appreciation
(depreciation)
during the year. (1,771,929) (351,203) 487,991 (158,014) 79,450 86,688 349,805 -- 194,847
----------- ---------- -------- --------- -------- ------- -------- ---------- --------
Net realized and
unrealized gain
(loss) on
investments...... (1,637,354) (364,880) 527,229 (162,716) 81,176 84,616 359,028 -- 196,361
----------- ---------- -------- --------- -------- ------- -------- ---------- --------
Net increase
(decrease) in net
assets resulting
from operations.. $ 4,215,221 $1,020,707 $510,440 $(186,722) $104,557 $75,870 $479,751 $ 790,015 $247,889
=========== ========== ======== ========= ======== ======= ======== ========== ========
</TABLE>
* From May 1, 1996 (commencement of operations).
See accompanying notes.
9
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT I
STATEMENT OF OPERATIONS (CONTINUED)
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHORT-TERM
SPECIAL REAL ESTATE GROWTH & U.S. SMALL CAP INTERNATIONAL EQUITY STRATEGIC
OPPORTUNITIES EQUITY INCOME MANAGED GOVERNMENT VALUE OPPORTUNITIES INDEX BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT* SUBACCOUNT* SUBACCOUNT* SUBACCOUNT*
------------- ----------- ----------- ----------- ---------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
income:
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I......... $2,056,928 $ 255,411 $12,913,053 $18,617,198 $448,039 $ 82,927 $ 9,935 $115,771 $133,556
Expenses:
Mortality and
expense risks... 411,163 53,964 946,308 1,566,339 121,176 13,935 14,049 21,689 17,262
---------- ---------- ----------- ----------- -------- -------- -------- -------- --------
Net investment
income (loss).... 1,645,765 201,447 11,966,745 17,050,859 326,863 68,992 (4,114) 94,082 116,294
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gain............ 286,748 29,463 16,783 79,880 8,565 844 2,851 4,980 120
Net unrealized
appreciation
(depreciation)
during the year. 4,480,284 1,127,858 881,743 (6,379,961) (91,939) 151,732 147,562 253,706 3,262
---------- ---------- ----------- ----------- -------- -------- -------- -------- --------
Net realized and
unrealized gain
(loss) on
investments...... 4,767,032 1,157,321 898,526 (6,300,081) (83,374) 152,576 150,413 258,686 3,382
---------- ---------- ----------- ----------- -------- -------- -------- -------- --------
Net increase in
net assets
resulting from
operations....... $6,412,797 $1,358,768 $12,865,271 $10,750,778 $243,489 $221,568 $146,299 $352,768 $119,676
========== ========== =========== =========== ======== ======== ======== ======== ========
</TABLE>
See accompanying notes.
10
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT I
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
SMALL CAP INTERNATIONAL
LARGE CAP GROWTH SOVEREIGN BOND INTERNATIONAL EQUITIES GROWTH BALANCED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------ ----------------------- ----------------------- ---------- -------------
1996 1995** 1996 1995** 1996 1995** 1996* 1996*
----------- ----------- ----------- ---------- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase
(decrease) in net
assets:
From operations:
Net investment
income (loss)... $ 5,852,575 $ 694,884 $ 1,385,587 $ 246,891 $ (16,789) $ (8,075) $ (24,006) $ 23,381
Net realized
gain (loss)..... 134,575 11,293 (13,677) 6,338 39,238 13,734 (4,702) 1,726
Net unrealized
appreciation
(depreciation)
during the year. (1,771,929) 88,865 (351,203) 134,015 487,991 43,772 (158,014) 79,450
----------- ----------- ----------- ---------- ----------- ---------- ---------- ----------
Net increase
(decrease) in net
assets resulting
from operations.. 4,215,221 795,042 1,020,707 387,244 510,440 49,431 (186,722) 104,557
From
contractowner
transactions:
Net
contributions
from
contractowners.. 31,163,064 10,396,210 27,557,895 8,307,701 9,211,941 3,099,590 6,856,133 2,506,215
Net benefits to
contractowners.. (3,141,097) (107,648) (4,175,981) (208,665) (1,488,436) (72,530) (317,326) (155,338)
----------- ----------- ----------- ---------- ----------- ---------- ---------- ----------
Net increase in
net assets from
contractowner
transactions..... 28,021,967 10,288,562 23,381,914 8,099,036 7,723,505 3,027,060 6,538,807 2,350,877
----------- ----------- ----------- ---------- ----------- ---------- ---------- ----------
Net increase in
net assets....... 32,237,188 11,083,604 24,402,621 8,486,280 8,233,945 3,076,491 6,352,085 2,455,434
Net assets at
beginning of
year............. 11,083,604 -- 8,486,280 -- 3,076,491 -- -- --
----------- ----------- ----------- ---------- ----------- ---------- ---------- ----------
Net assets at end
of year.......... $43,320,792 $11,083,604 $32,888,901 $8,486,280 $11,310,436 $3,076,491 $6,352,085 $2,455,434
=========== =========== =========== ========== =========== ========== ========== ==========
<CAPTION>
MID CAP
GROWTH
SUBACCOUNT
-----------
1996*
-----------
<S> <C>
Increase
(decrease) in net
assets:
From operations:
Net investment
income (loss)... $ (8,746)
Net realized
gain (loss)..... (2,072)
Net unrealized
appreciation
(depreciation)
during the year. 86,688
-----------
Net increase
(decrease) in net
assets resulting
from operations.. 75,870
From
contractowner
transactions:
Net
contributions
from
contractowners.. 6,652,263
Net benefits to
contractowners.. (212,364)
-----------
Net increase in
net assets from
contractowner
transactions..... 6,439,899
-----------
Net increase in
net assets....... 6,515,769
Net assets at
beginning of
year............. --
-----------
Net assets at end
of year.......... $6,515,769
===========
</TABLE>
* From May 1, 1996 (commencement of operations).
** From January 26, 1995 (commencement of operations).
See accompanying notes.
11
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT I
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
LARGE CAP MID CAP
VALUE MONEY MARKET VALUE SPECIAL OPPORTUNITIES REAL ESTATE EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ------------------------- ---------- ----------------------- ----------------------
1996* 1996 1995** 1996* 1996 1995** 1996 1995**
---------- ------------ ----------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase
(decrease) in net
assets:
From operations:
Net investment
income.......... $ 120,723 $ 790,015 $ 150,601 $ 51,528 $ 1,645,765 $ 156,812 $ 201,447 $ 40,045
Net realized
gain............ 9,223 -- -- 1,514 286,748 15,263 29,463 4,898
Net unrealized
appreciation
(depreciation)
during the year. 349,805 -- -- 194,847 4,480,284 551,403 1,127,858 54,247
---------- ------------ ----------- ---------- ----------- ---------- ---------- ----------
Net increase in
net assets
resulting from
operations....... 479,751 790,015 150,601 247,889 6,412,797 723,478 1,358,768 99,190
From
contractowner
transactions:
Net
contributions
from
contractowners.. 7,781,378 47,867,152 15,875,093 2,823,812 42,302,080 7,575,238 5,214,852 1,570,268
Net benefits to
contractowners.. (344,867) (25,658,629) (4,809,101) (36,844) (3,413,493) (51,331) (325,484) (62,056)
---------- ------------ ----------- ---------- ----------- ---------- ---------- ----------
Net increase in
net assets from
contractowner
transactions..... 7,436,511 22,208,523 11,065,992 2,786,968 38,888,587 7,523,907 4,889,368 1,508,212
---------- ------------ ----------- ---------- ----------- ---------- ---------- ----------
Net increase in
net assets....... 7,916,262 22,998,538 11,216,593 3,034,857 45,301,384 8,247,385 6,248,136 1,607,402
Net assets at
beginning of
year............. -- 11,216,593 -- -- 8,257,385 -- 1,607,402 --
---------- ------------ ----------- ---------- ----------- ---------- ---------- ----------
Net assets at end
of year.......... $7,916,262 $ 34,215,131 $11,216,593 $3,034,857 $53,548,769 $8,247,385 $7,855,538 $1,607,402
========== ============ =========== ========== =========== ========== ========== ==========
<CAPTION>
GROWTH & INCOME
SUBACCOUNT
--------------------------
1996 1995**
------------- ------------
<S> <C> <C>
Increase
(decrease) in net
assets:
From operations:
Net investment
income.......... $ 11,966,745 $ 2,037,733
Net realized
gain............ 16,783 1,626
Net unrealized
appreciation
(depreciation)
during the year. 881,743 (33,926)
------------- ------------
Net increase in
net assets
resulting from
operations....... 12,865,271 2,005,433
From
contractowner
transactions:
Net
contributions
from
contractowners.. 74,748,036 25,246,577
Net benefits to
contractowners.. (4,938,961) (283,679)
------------- ------------
Net increase in
net assets from
contractowner
transactions..... 69,809,075 24,962,898
------------- ------------
Net increase in
net assets....... 82,674,346 26,968,331
Net assets at
beginning of
year............. 26,968,331 --
------------- ------------
Net assets at end
of year.......... $109,642,677 $26,968,331
============= ============
</TABLE>
* From May 1, 1996 (commencement of operations).
** From January 25, 1995 (commencement of operations).
See accompanying notes.
12
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT I
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS AND PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
SHORT-TERM SMALL CAP INTERNATIONAL EQUITY STRATEGIC
MANAGED U.S. GOVERNMENT VALUE OPPORTUNITIES INDEX BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------- ----------------------- ---------- ------------- ---------- ----------
1996 1995** 1996 1995** 1996* 1996* 1996* 1996*
------------ ----------- ----------- ---------- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets:
From operations:
Net investment income
(loss)................ $ 17,050,859 $ 2,864,123 $ 326,863 $ 63,448 $ 68,992 $ (4,114) $ 94,082 $ 116,294
Net realized gain..... 79,880 6,021 8,565 1,104 844 2,851 4,980 120
Net unrealized
appreciation
(depreciation) during
the year.............. (6,379,961) (322,585) (91,939) 31,002 151,732 147,562 253,706 3,262
------------ ----------- ----------- ---------- ---------- ---------- ---------- ----------
Net increase in net
assets resulting from
operations............. 10,750,778 2,547,559 243,489 95,554 221,568 146,299 352,768 119,676
From contractowner
transactions:
Net contributions from
contractowners........ 123,808,732 41,819,048 10,894,534 4,082,122 3,448,584 3,570,213 4,850,832 4,111,264
Net benefits to
contractowners........ (9,552,488) (532,036) (2,831,934) (109,038) (216,809) (209,555) (104,091) (126,572)
------------ ----------- ----------- ---------- ---------- ---------- ---------- ----------
Net increase in net
assets from
contractowner
transactions........... 114,256,244 41,287,012 8,062,600 3,973,084 3,231,775 3,360,658 4,746,741 3,984,692
------------ ----------- ----------- ---------- ---------- ---------- ---------- ----------
Net increase in net
assets................. 125,007,022 43,834,571 8,306,089 4,068,638 3,453,343 3,506,957 5,099,509 4,104,368
Net assets at beginning
of year................ 43,834,571 -- 4,068,638 -- -- -- -- --
------------ ----------- ----------- ---------- ---------- ---------- ---------- ----------
Net assets at end of
year................... $168,841,593 $43,834,571 $12,374,727 $4,068,638 $3,453,343 $3,506,957 $5,099,509 $4,104,368
============ =========== =========== ========== ========== ========== ========== ==========
</TABLE>
* From May 1, 1996 (commencement of operations).
** From January 26, 1995 (commencement of operations).
See accompanying notes.
13
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT I
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION
John Hancock Variable Annuity Account I (the Account) is a separate
investment account of John Hancock Mutual Life Insurance Company (JHMLICO or
John Hancock). The Account was created on June 15, 1994. The Account commenced
operations on January 26, 1995 with the receipt of purchase payments. The
Account was formed to fund variable annuity contracts (Contracts) issued by
JHMLICO. The Account is operated as a unit investment trust registered under
the Investment Company Act of 1940, as amended, and currently consists of
eighteen subaccounts. The assets of each subaccount are invested exclusively
in shares of a corresponding Portfolio of John Hancock Variable Series Trust I
(the Fund). New subaccounts may be added as new Portfolios are added to the
Fund or as other investment options are developed and made available to
contractowners. The eighteen Portfolios of the Fund which are currently
available are: Large Cap Growth, Sovereign Bond, International Equities, Small
Cap Growth, International Balanced, Mid Cap Growth, Large Cap Value, Money
Market, Mid Cap Value, Special Opportunities, Real Estate Equity, Growth &
Income, Managed, Short-Term U.S. Government, Small Cap Value, International
Opportunities, Equity Index and Strategic Bond. Each Portfolio has a different
investment objective.
The assets of the Account are the property of JHMLICO. The portion of the
Account's assets applicable to the Contracts may not be charged with
liabilities arising out of any other business JHMLICO may conduct.
2. SIGNIFICANT ACCOUNTING POLICIES
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Valuation of Investments
Investment in shares of the Fund are valued at the reported net asset values
of the respective Portfolios. Investment transactions are recorded on the
trade date. Dividend income is recognized on the ex-dividend date. Realized
gains and losses on sales of Fund shares are determined on the basis of
identified cost.
Federal Income Taxes
The operations of the Account are included in the federal income tax return
of JHMLICO, which is taxed as a life insurance company under the Internal
Revenue Code. JHMLICO has the right to charge the Account any federal income
taxes, or provision for federal income taxes, attributable to the operations
of the Account or to the Contracts funded in the Account. Currently, John
Hancock does not make a charge for income or other taxes. JHMLICO retains the
right to charge the Account for any federal income taxes arising from changes
in the tax law. Charges for state and local taxes, if any, attributable to the
Account may also be made.
Expenses
JHMLICO assumes mortality and expense risks of the Contracts and provides
administrative services to the Account for which asset charges are deducted at
an annual rate of 1.5% of net assets of the Account.
JHMLICO makes certain other deductions from contractowner payments for
premium taxes and sales and withdrawal charges, which are accounted for as a
reduction of net assets resulting from contractowner transactions.
14
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT I
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
3. DETAILS OF INVESTMENTS
The details of the shares owned and cost and value of investments in the
Portfolios of the Fund at December 31, 1996 were as follows:
<TABLE>
<CAPTION>
SHARES
OWNED COST VALUE
PORTFOLIO ---------- ------------ ------------
<S> <C> <C> <C>
Large Cap Growth..................... 2,476,644 $ 45,003,857 $ 43,320,792
Sovereign Bond....................... 3,366,073 33,106,088 32,888,901
International Equities............... 672,000 10,778,674 11,310,436
Small Cap Growth..................... 639,409 6,510,099 6,352,085
International Balanced............... 236,256 2,375,984 2,455,434
Mid Cap Growth....................... 637,406 6,429,081 6,515,769
Large Cap Value...................... 713,855 7,566,457 7,916,262
Money Market......................... 3,421,513 34,215,131 34,215,131
Mid Cap Value........................ 267,423 2,840,010 3,034,857
Special Opportunities................ 3,241,076 48,517,081 53,548,769
Real Estate Equity................... 536,752 6,673,433 7,855,538
Growth & Income...................... 7,481,894 110,490,495 109,642,677
Managed.............................. 12,645,124 175,544,138 168,841,593
Short-Term U.S. Government........... 1,231,684 12,435,664 12,374,727
Small Cap Value...................... 321,837 3,301,611 3,453,343
International Opportunities.......... 330,935 3,359,395 3,506,957
Equity Index......................... 459,537 4,845,803 5,099,509
Strategic Bond....................... 404,038 4,101,106 4,104,368
</TABLE>
Purchases, including reinvestment of dividend distributions and proceeds
from sales of shares in the Portfolios of the Fund during 1996, were as
follows:
<TABLE>
<CAPTION>
PURCHASES SALES
PORTFOLIO ----------- ----------
<S> <C> <C>
Large Cap Growth................................... $34,532,544 $ 658,001
Sovereign Bond..................................... 26,676,562 1,909,061
International Equities............................. 8,541,613 834,896
Small Cap Growth................................... 6,716,464 201,663
International Balanced............................. 2,645,957 271,699
Mid Cap Growth..................................... 6,514,639 83,487
Large Cap Value.................................... 7,714,900 157,665
Money Market....................................... 35,753,964 12,755,425
Mid Cap Value...................................... 2,888,273 49,777
Special Opportunities.............................. 41,544,185 1,009,833
Real Estate Equity................................. 5,463,924 373,109
Growth & Income.................................... 83,558,294 86,839
Managed............................................ 132,040,222 733,120
Short-term U.S. Government......................... 10,200,294 1,810,831
Small Cap Value.................................... 3,359,869 59,102
International Opportunities........................ 3,564,680 208,135
Equity Index....................................... 5,016,013 175,190
Strategic Bond..................................... 4,191,037 90,050
</TABLE>
15
<PAGE>
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT I
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. NET ASSETS
Accumulation shares attributable to net assets of contractowners and
accumulation share values for each subaccount at December 31, 1996 were as
follows:
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION
SHARES SHARE VALUES
PORTFOLIO ------------ -------------
<S> <C> <C>
Large Cap Growth................................ 2,911,076 14.881
Sovereign Bond.................................. 2,750,678 11.957
International Equities.......................... 947,816 11.936
Small Cap Growth................................ 644,827 9.851
International Balanced.......................... 232,388 10.566
Mid Cap Growth.................................. 640,918 10.166
Large Cap Value................................. 701,999 11.277
Money Market.................................... 3,168,756 10.798
Mid Cap Value................................... 263,857 11.502
Special Opportunities........................... 3,137,620 17.067
Real Estate Equity.............................. 528,458 14.865
Growth & Income................................. 7,102,432 15.437
Managed......................................... 12,509,325 13.497
Short-Term U.S. Government...................... 1,112,035 11.128
Small Cap Value................................. 316,146 10.923
International Opportunities..................... 331,927 10.565
Equity Index.................................... 450,914 11.309
Strategic Bond.................................. 388,491 10.565
</TABLE>
5. TRANSACTIONS 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 JHMLICO or the Fund.
16
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Contractowners
John Hancock Variable Annuity Account I
of John Hancock Variable Life Insurance Company
We have audited the accompanying statement of assets and liabilities of John
Hancock Variable Annuity Account I (the Account) (comprising, respectively,
the Large Cap Growth, Sovereign Bond, International Equities, Small Cap
Growth, International Balanced, Mid Cap Growth, Large Cap Value, Money Market,
Mid Cap Value, Special Opportunities, Real Estate Equity, Growth & Income,
Managed, Short-Term U.S. Government, Small Cap Value, International
Opportunities, Equity Index, and Strategic Bond Subaccounts) as of December
31, 1996, and the related statement of operations for the year then ended, and
the statements of changes in net assets for each of the periods indicated
therein. These financial statements are the responsibility of the Account's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of each of the respective
subaccounts constituting John Hancock Variable Annuity Account I at December
31, 1996, and the results of their operations for the year then ended, and the
changes in their net assets for each of the periods indicated, in conformity
with generally accepted accounting principles.
Ernst & Young LLP
Boston, Massachusetts
February 7, 1997
17
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
John Hancock Variable Life Insurance Company
We have audited the accompanying statutory-basis statements of financial
position of John Hancock Variable Life Insurance Company as of December 31,
1996 and 1995, and the related statutory-basis statements of operations and
unassigned deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As described in Note 1 to the financial statements, the Company presents its
financial statements in conformity with accounting practices prescribed or
permitted by the Commonwealth of Massachusetts Division of Insurance, which
practices differ from generally accepted accounting principles. The variances
between such practices and generally accepted accounting principles also are
described in Note 1. The effects on the financial statements of these
variances are not reasonably determinable but are presumed to be material.
In our report dated February 7, 1996, we expressed an opinion that the 1995
financial statements of the Company fairly present, in all material respects,
the Company's financial position, results of operations, and cash flows in
conformity with generally accepted accounting principles for a stock life
insurance company wholly-owned by a mutual life insurance company and with
reporting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance. As described in Note 1, the accompanying
statutory-basis financial statements are no longer considered to be prepared
in conformity with generally accepted accounting principles. Accordingly, our
present opinion on the 1995 financial statements, as presented in the
following paragraph, is different from that expressed in our previous report.
In our opinion, because of the effects of the matter described in the second
preceding paragraph, the financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of John Hancock Variable Life Insurance Company at December
31, 1996 and 1995, or the results of its operations or its cash flows for the
years then ended.
Also, in our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of John Hancock
Variable Life Insurance Company at December 31, 1996 and 1995, and the results
of its operations and its cash flows for the years then ended in conformity
with accounting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance.
Ernst & Young LLP
Boston, Massachusetts
February 14, 1997
18
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31
------------------
1996 1995
---- ----
(In millions)
<S> <C> <C>
Assets
Bonds--Note 7.............................................. $ 753.5 $ 552.8
Preferred stocks........................................... 9.6 5.0
Common stocks.............................................. 1.4 1.7
Investment in affiliates................................... 72.0 65.3
Mortgage loans on real estate--Note 7...................... 212.1 146.7
Real estate................................................ 38.8 36.4
Policy loans............................................... 80.8 61.8
Cash items:
Cash in banks............................................ 26.7 11.6
Temporary cash investments............................... 5.2 65.0
-------- --------
31.9 76.6
Premiums due and deferred.................................. 36.8 39.6
Investment income due and accrued.......................... 22.6 18.6
Other general account assets............................... 17.8 20.8
Assets held in separate accounts........................... 3,290.5 2,421.0
-------- --------
TOTAL ASSETS............................................... $4,567.8 $3,446.3
======== ========
Obligations and Stockholder's Equity
OBLIGATIONS
Policy reserves.......................................... $ 877.8 $ 612.3
Federal income and other taxes payable--Note 1........... 29.4 14.2
Other accrued expenses................................... 75.1 138.7
Asset valuation reserve--Note 1.......................... 16.6 15.4
Obligations related to separate accounts................. 3,285.8 2,417.0
-------- --------
TOTAL OBLIGATIONS.......................................... 4,284.7 3,197.6
Stockholder's Equity--Notes 2 and 6
Common Stock, $50 par value; authorized 50,000 shares;
issued and
outstanding 50,000 shares............................... 2.5 2.5
Paid-in capital.......................................... 377.5 377.5
Unassigned deficit......................................... (96.9) (131.3)
-------- --------
TOTAL STOCKHOLDER'S EQUITY................................. 283.1 248.7
-------- --------
TOTAL OBLIGATIONS AND STOCKHOLDER'S EQUITY................. $4,567.8 $3,446.3
======== ========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
19
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT
<TABLE>
<CAPTION>
Year ended December 31
------------------------
1996 1995
---- ----
(In millions)
<S> <C> <C>
Income
Premiums............................................ $ 820.6 $ 570.9
Net investment income--Note 4....................... 76.1 62.1
Other, net.......................................... 406.0 85.7
----------- ----------
1,302.7 718.7
Benefits and Expenses
Payments to policyholders and beneficiaries......... 236.1 213.4
Additions to reserves to provide for future payments
to policyholders and beneficiaries................. 790.1 282.4
Expenses of providing service to policyholders and
obtaining new insurance--Note 6.................... 183.8 150.7
State and miscellaneous taxes....................... 17.3 12.7
----------- ----------
1,227.3 659.2
----------- ----------
GAIN FROM OPERATIONS BEFORE FEDERAL INCOME TAXES
AND NET REALIZED CAPITAL GAINS (LOSSES).......... 75.4 59.5
Federal income taxes--Note 1.......................... 38.6 28.4
----------- ----------
GAIN FROM OPERATIONS BEFORE NET REALIZED CAPITAL
GAINS (LOSSES)................................... 36.8 31.1
Net realized capital gains (losses)--Note 5........... (1.5) 0.5
----------- ----------
NET INCOME........................................ 35.3 31.6
Unassigned deficit at beginning of year............... (131.3) (162.1)
Net unrealized capital gains (losses) and other
adjustments--Note 5.................................. 2.5 (3.0)
Other reserves and adjustments........................ (3.4) 2.2
----------- ----------
UNASSIGNED DEFICIT AT END OF YEAR................. $ (96.9) $ (131.3)
=========== ==========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
20
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATUTORY-BASIS STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31
----------------------
1996 1995
---- ----
(In millions)
<S> <C> <C>
Cash flows from operating activities:
Insurance premiums................................. $ 824.2 $ 574.0
Net investment income.............................. 73.4 59.2
Benefits to policyholders and beneficiaries........ (212.7) (198.3)
Dividends paid to policyholders.................... (15.7) (13.2)
Insurance expenses and taxes....................... (196.6) (161.5)
Net transfers to separate accounts................. (524.2) (257.4)
Other, net......................................... 386.7 55.1
----------- -----------
NET CASH PROVIDED FROM OPERATIONS.............. 335.1 57.9
----------- -----------
Cash flows used in investing activities:
Bond purchases..................................... (489.9) (172.5)
Bond sales......................................... 228.3 18.9
Bond maturities and scheduled redemptions.......... 27.8 36.0
Bond prepayments................................... 31.9 20.6
Stock purchases.................................... (6.5) (1.7)
Proceeds from stock sales.......................... 0.4 1.4
Real estate purchases.............................. (10.5) (16.2)
Real estate sales.................................. 8.5 9.3
Other invested assets purchases.................... 0.0 (0.4)
Proceeds from the sale of other invested assets.... 1.5 0.3
Mortgage loans issued.............................. (84.4) (19.8)
Mortgage loan repayments........................... 17.7 21.1
Other, net......................................... (104.6) 45.7
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES.......... (379.8) (57.3)
----------- -----------
INCREASE (DECREASE) IN CASH AND TEMPORARY CASH IN-
VESTMENTS........................................... (44.7) 0.6
Cash and temporary cash investments at beginning of
year................................................ 76.6 76.0
----------- -----------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR... $ 31.9 $ 76.6
=========== ===========
</TABLE>
The accompanying notes are an integral part of the statutory-basis financial
statements.
21
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES
John Hancock Variable Life Insurance Company (the Company) is a wholly-owned
subsidiary of John Hancock Mutual Life Insurance Company (John Hancock). The
Company, domiciled in the Commonwealth of Massachusetts, principally writes
variable and universal life insurance policies. Those policies primarily are
marketed through John Hancock's sales organization, which includes a career
agency system composed of company-owned, unionized branch offices and
independent general agencies. Policies also are sold through various
unaffiliated securities broker-dealers and certain other financial
institutions. Currently, the Company writes business in all states except New
York.
The preparation of the financial statements requires management to make
estimates and assumptions that affect amounts reported in the financial
statements and accompanying notes. Such estimates and assumptions could change
in the future as more information becomes known, which could impact the
amounts reported and disclosed herein.
Basis of Presentation: The financial statements have been prepared using
accounting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance and in conformity with the practices of
the National Association of Insurance Commissioners (NAIC), which practices
differ from generally accepted accounting principles (GAAP). The 1995
financial statements presented for comparative purposes were previously
described as being prepared in accordance with GAAP for stock life insurance
companies wholly-owned by a mutual life insurance company. Pursuant to
Financial Accounting Standards Board Interpretation 40, "Applicability of
Generally Accepted Accounting Principles to Mutual Life Insurance and Other
Enterprises" (FIN 40), as amended, which is effective for 1996 financial
statements, financial statements based on statutory accounting practices can
no longer be described as prepared in conformity with GAAP. Furthermore,
financial statements prepared in conformity with statutory accounting
practices for periods prior to the effective date of FIN 40 are not considered
GAAP presentations when presented in comparative form with financial
statements for periods subsequent to the effective date. Accordingly, the 1995
financial statements are no longer considered to be presented in conformity
with GAAP.
The significant differences from GAAP include: (1) policy acquisition costs
are charged to expense as incurred rather than deferred and amortized over the
related premium-paying period; (2) policy reserves are based on statutory
mortality, morbidity, and interest requirements without consideration of
withdrawals and Company experience; (3) certain assets designated as
"nonadmitted assets" are excluded from the balance sheet by direct charges to
surplus; (4) reinsurance recoverables are netted against reserves and claim
liabilities rather than reflected as an asset; (5) bonds held as available for
sale are recorded at amortized cost or market value as determined by the NAIC
rather than at fair value; (6) an Asset Valuation Reserve and Interest
Maintenance Reserve as prescribed by the NAIC are not calculated under GAAP.
Under GAAP, realized capital gains and losses are reported in the income
statement on a pretax basis as incurred and investment valuation allowances
are provided when there has been a decline in value deemed other than
temporary; (7) investments in affiliates are carried at their net equity value
with changes in value being recorded directly to unassigned deficit rather
than consolidated in the financial statements; and (8) no provision is made
for the deferred income tax effects of temporary differences between book and
tax basis reporting. The effects of the foregoing variances from GAAP have not
been determined but are presumed to be material.
The significant accounting practices of the Company are as follows:
Pending Statutory Standards: The NAIC currently is in the process of
recodifying statutory accounting practices, the result of which is expected to
constitute the only source of prescribed statutory accounting practices.
Accordingly, that project, which is expected to be completed in 1999 will
likely change, to some
22
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED
extent, prescribed statutory accounting practices, and may result in changes
to the accounting practices that the Company uses to prepare its statutory-
basis financial statements. The impact of any such changes on the Company's
unassigned deficit cannot be determined at this time and could be material.
Revenues and Expenses: Premium revenues are recognized over the premium-paying
period of the policies whereas expenses, including the acquisition costs of
new business, are charged to operations as incurred and policyholder dividends
are provided as paid or accrued.
Cash and Temporary Cash Investments: Cash includes currency on hand and demand
deposits with financial institutions. Temporary cash investments are short-
term, highly-liquid investments both readily convertible to known amounts of
cash and so near maturity that there is insignificant risk of changes in value
because of changes in interest rates.
Valuation of Assets: General account investments are carried at amounts
determined on the following bases:
Bond and stock values are carried as prescribed by the NAIC; bonds
generally at amortized amounts or cost, preferred stocks generally at cost
and common stocks at market. The discount or premium on bonds is amortized
using the interest method.
Investments in affiliates are included on the statutory equity method.
Goodwill is amortized on a straight-line basis over a ten year period.
Mortgage loans are carried at outstanding principal balance or amortized
cost.
Investment real estate is carried at depreciated cost, less encumbrances.
Depreciation on investment real estate is recorded on a straight-line
basis. Accumulated depreciation amounted to $1.2 million in 1996 and $0.5
million in 1995.
Real estate acquired in satisfaction of debt and held for sale is carried
at the lower of cost or market as of the date of foreclosure.
Policy loans are carried at outstanding principal balance, not in excess of
policy cash surrender value.
Asset Valuation and Interest Maintenance Reserves: The Asset Valuation Reserve
(AVR) is computed in accordance with the prescribed NAIC formula and
represents a provision for possible fluctuations in the value of bonds, equity
securities, mortgage loans, real estate and other invested assets. Changes to
the AVR are charged or credited directly to the unassigned deficit.
The Company also records the NAIC prescribed Interest Maintenance Reserve
(IMR) that represents that portion of the after tax net accumulated
unamortized realized capital gains and losses on sales of fixed income
securities,
principally bonds and mortgage loans, attributable to changes in the general
level of interest rates. Such gains and losses are deferred and amortized into
income over the remaining expected lives of the investments sold. At December
31, 1996, the IMR, net of 1996 amortization of $1.2 million, amounted to $5.9
million, which is included in policy reserves. The corresponding 1995 amounts
were $1.2 million and $6.9 million, respectively.
Separate Accounts: Separate account assets and liabilities reported in the
accompanying statements of financial position represent funds that are
separately administered and for which the contractholder, rather than the
Company, generally bears the investment risk. Separate account contractholders
have no claim against the assets of the general account of the Company.
Separate account assets are reported at market value. The operations of the
separate accounts are not included in the summary of operations; however,
income earned on amounts initially invested by the Company in the formation of
new separate accounts is included in other income.
23
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED
Fair Values of Financial Instruments: Statement of Financial Accounting
Standards (SFAS) No. 107, "Disclosure about Fair Value of Financial
Instruments," requires disclosure of fair value information about financial
instruments, whether or not recognized in the statement of financial position,
for which it is practicable to estimate the value. In situations where quoted
market prices are not available, fair values are based on estimates using
present value or other valuation techniques. SFAS No. 107 excludes certain
financial instruments and all nonfinancial instruments from its disclosure
requirements. Therefore, the aggregate fair value amounts presented do not
represent the underlying value of the Company.
The methods and assumptions utilized by the Company in estimating its fair
value disclosures for financial instruments are as follows:
The carrying amounts reported in the statement of financial position for
cash and temporary cash investments approximate their fair values.
Fair values for public bonds are obtained from an independent pricing
service. Fair values for private placement securities and publicly traded
bonds not provided by the independent pricing service are estimated by the
Company by discounting expected future cash flows using current market
rates applicable to the yield, credit quality and maturity of the
investments. The fair values for common and preferred stocks, other than
its subsidiary investments, which are carried at equity values, are based
on quoted market prices.
The fair value of interest rate swaps and currency rate swaps is estimated
using a discounted cash flow method adjusted for the difference between the
rate of the existing swap and the current swap market rate. Discounted cash
flows in foreign currencies are converted to U.S. dollars using current
exchange rates.
The fair value for mortgage loans is estimated using discounted cash flow
analyses using interest rates adjusted to reflect the credit
characteristics of the underlying loans. Mortgage loans with similar
characteristics and credit risks are aggregated into qualitative categories
for purposes of the fair value calculations.
The carrying amount in the statement of financial position for policy loans
approximates their fair value.
The fair value for outstanding commitments to purchase long-term bonds and
issue real estate mortgages is estimated using a discounted cash flow
method incorporating adjustments for the difference in the level of
interest rates between the dates the commitments were made and December 31,
1996. The fair value for commitments to purchase real estate approximates
the amount of the initial commitment.
Capital Gains and Losses: Realized capital gains and losses are determined
using the specific identification basis. Realized capital gains and losses,
net of taxes and amounts transferred to the IMR, are included in net gain or
loss. Unrealized gains and losses, which consist of market value and book
value adjustments, are shown as adjustments to the unassigned deficit.
Policy Reserves: Life reserves are developed by actuarial methods and are
determined based on published tables using statutorily specified interest
rates and valuation methods that will provide, in the aggregate, reserves that
are greater than or equal to the minimum or guaranteed policy cash values or
the amounts required by the Commonwealth of Massachusetts Division of
Insurance. Reserves for variable life insurance policies are maintained
principally on the modified preliminary term method using the 1958 and 1980
Commissioner's Standard Ordinary (CSO) mortality tables, with an assumed
interest rate of 4% for policies issued prior to May 1, 1983 and 4 1/2% for
policies issued on or thereafter. Reserves for single premium policies are
determined by the net single premium method using the 1958 CSO mortality
table, with an assumed interest rate of 4%. Reserves for universal life
policies issued prior to 1985 are equal to the gross account value which at
all times
24
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED
exceeds minimum statutory requirements. Reserves for universal life policies
issued from 1985 through 1988 are maintained at the greater of the
Commissioner's Reserve Valuation Method (CRVM) using the 1958 CSO mortality
table, with 4 1/2% interest or the cash surrender value. Reserves for
universal life policies issued after 1988 and for flexible variable policies
are maintained using the greater of the cash surrender value or the CRVM
method with the 1980 CSO mortality table and 5 1/2% interest for policies
issued from 1988 through 1992; 5% interest for policies issued in 1993 and
1994; and 4 1/2% interest for policies issued in 1995 and 1996.
Federal Income Taxes: Federal income taxes are reported in the financial
statements based on amounts determined to be payable as a result of operations
within the current accounting period. The operations of the Company are
consolidated with John Hancock in filing a consolidated federal income tax
return for the affiliated group. The federal income taxes of the Company are
allocated on a separate return basis with certain adjustments. The Company
made payments of $33.5 million in 1996 and $32.2 million in 1995.
Income before taxes differs from taxable income principally due to tax-exempt
investment income, the limitation placed on the tax deductibility of
policyholder dividends, accelerated depreciation, differences in policy
reserves for tax return and financial statement purposes, capitalization of
policy acquisition expenses for tax purposes and other adjustments prescribed
by the Internal Revenue Code.
No provision is generally recognized for temporary differences that may exist
between financial reporting and taxable income or loss.
Reinsurance: Premiums, commissions, expense reimbursements, benefits and
reserves related to reinsured business are accounted for on bases consistent
with those used in accounting for the original policies issued and the terms
of the reinsurance contracts. Premiums ceded to other companies have been
reported as a reduction of premium income. Amounts applicable to reinsurance
ceded for future policy benefits, unearned premium reserves and claim
liabilities have been reported as reductions of these items.
Reclassifications: Certain 1995 amounts have been reclassified to permit
comparison with the corresponding 1996 amounts.
NOTE 2--CAPITALIZATION
In prior years, the Company received capital contributions from John Hancock,
with a portion of the contributed capital being credited to common stock,
although no additional shares were issued. This practice, which is acceptable
to statutory authorities, has the effect of stating the carrying value of
issued shares of common stock at amounts other than $50 per share par value
with the offset reflected in paid-in capital.
At December 31, 1994, the Company had 50,000 shares authorized with 20,000
shares issued and outstanding. On February 16, 1995, the Company issued the
remaining 30,000 shares to John Hancock and transferred $22.5 million from
common stock to paid-in capital. The par value per share is $50.
NOTE 3--ACQUISITION
On June 23, 1993, the Company acquired all of the outstanding shares of stock
of Colonial Penn Annuity and Life Insurance Company (CPAL) from Colonial Penn
Life Insurance Company for an aggregate purchase price of approximately $42.5
million. At the date of acquisition, assets of CPAL were approximately $648.5
million, consisting principally of cash and temporary cash investments and
liabilities were approximately $635.2 million,
25
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 3--ACQUISITION--CONTINUED
consisting principally of reserves related to a block of interest sensitive
single-premium whole life insurance business assumed by CPAL from Charter
National Life Insurance Company (Charter). The purchase price includes
contingent payments of up to approximately $7.3 million payable between 1994
and 1998 based on the actual lapse experience of the business in force on June
23, 1993. The Company made contingent payments to CPAL of $1.5 million during
each of 1996 and 1995. Unamortized goodwill at December 31, 1996 was $15.2
million and is being amortized over ten years on a straight-line basis.
On June 24, 1993, the Company contributed $24.6 million in additional capital
to CPAL. CPAL was renamed John Hancock Life Insurance Company of America
(JHLICOA) on July 7, 1993. JHLICOA manages the business assumed from Charter
and does not currently issue new business.
NOTE 4--NET INVESTMENT INCOME
Investment income has been reduced by the following amounts:
<TABLE>
<CAPTION>
1996 1995
---- ----
(In millions)
<S> <C> <C>
Investment expenses............................................... $ 7.0 $ 5.1
Depreciation expense.............................................. 0.9 1.0
Investment taxes.................................................. 0.5 0.5
------ ------
$ 8.4 $ 6.6
====== ======
</TABLE>
NOTE 5--NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS
Net realized capital gains (losses) consist of the following items:
<TABLE>
<CAPTION>
1996 1995
---- ----
(In millions)
<S> <C> <C>
Net gains (losses) from asset sales............................. $ (0.2) $ 4.0
Capital gains tax............................................... (1.0) (2.5)
Net capital gains transferred to IMR............................ (0.3) (1.0)
------ ------
Realized Capital Gains (Losses)............................... $ (1.5) $ 0.5
====== ======
</TABLE>
Net unrealized capital gains (losses) and other adjustments consist of the
following items:
<TABLE>
<CAPTION>
1996 1995
---- ----
(In millions)
<S> <C> <C>
Net gains (losses) from changes in security values and book
value adjustments.............................................. $ 3.7 $ (0.2)
Increase in asset valuation reserve............................. (1.2) (2.8)
------ ------
Net Unrealized Capital Gains (Losses) and Other Adjustments... $ 2.5 $ (3.0)
====== ======
</TABLE>
NOTE 6--TRANSACTIONS WITH PARENT
The Company's Parent provides the Company with personnel, property and
facilities in carrying out certain of its corporate functions. The Parent
annually determines a fee for these services and facilities based on a number
of criteria which were revised in 1996 and 1995 to reflect continuing changes
in the Company's operations. The amount of the service fee charged to the
Company was $111.7 million and $97.9 million in 1996 and 1995,
26
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 6--TRANSACTIONS WITH PARENT--CONTINUED
respectively, which has been included in insurance and investment expenses.
The Parent has guaranteed that, if necessary, it will make additional capital
contributions to prevent the Company's stockholder's equity from declining
below $1.0 million.
The service fee charged to the Company by the Parent includes $1.6 million and
$1.8 million in 1996 and 1995, respectively, representing the portion of the
provision for retiree benefit plans determined under the accrual method,
including a provision for the 1993 transition liability which is being
amortized over twenty years, that was allocated to the Company.
Effective January 1, 1994, the Company entered into a modified coinsurance
agreement with John Hancock to reinsure 50% of 1996, 1995 and 1994 issues of
flexible premium variable life insurance and scheduled premium variable life
insurance policies. In connection with this agreement, John Hancock
transferred $24.5 million and $32.7 million of cash for tax, commission, and
expense allowances to the Company, which increased the Company's net gain from
operations by $15.7 million and $20.3 million in 1996 and 1995, respectively.
Effective January 1, 1996, the Company entered into a modified coinsurance
agreement with John Hancock to reinsure 50% of 1995 and 1996 issues of retail
annuity contracts (Independence Preferred and Declaration). In connection with
this agreement, John Hancock transferred $23.2 million of cash for surrender
benefits, tax, reserve increase, commission, expense allowances and premium to
the Company, which increased the Company's net gain from operations by $15.1
million in 1996.
NOTE 7--INVESTMENTS
The statement value and fair value of bonds are shown below:
<TABLE>
<CAPTION>
Gross Gross
Statement Unrealized Unrealized Fair
YEAR ENDED DECEMBER 31, 1996 Value Gains Losses Value
---------------------------- --------- ---------- ---------- -----
(In millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. government corporations and
agencies............................... $ 44.4 $ 0.2 $0.2 $ 44.4
Obligations of states and political
subdivisions........................... 12.6 0.4 0.0 13.0
Debt securities issued by foreign
governments............................ 0.8 0.1 0.0 0.9
Corporate securities.................... 623.2 29.8 3.4 649.6
Mortgage-backed securities.............. 72.5 10.2 0.1 82.6
------ ----- ---- ------
Total bonds........................... $753.5 $40.7 $3.7 $790.5
====== ===== ==== ======
<CAPTION>
Gross Gross
Statement Unrealized Unrealized Fair
YEAR ENDED DECEMBER 31, 1995 Value Gains Losses Value
---------------------------- --------- ---------- ---------- -----
(In millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. government corporations and
agencies............................... $ 89.0 $ 0.5 $0.0 $ 89.5
Obligations of states and political
subdivisions........................... 11.4 1.1 0.0 12.5
Debt securities issued by foreign
governments............................ 1.3 0.2 0.0 1.5
Corporate securities.................... 445.6 44.1 1.6 488.1
Mortgage-backed securities.............. 5.5 0.3 0.1 5.7
------ ----- ---- ------
Total bonds............................. $552.8 $46.2 $1.7 $597.3
====== ===== ==== ======
</TABLE>
27
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 7--INVESTMENTS--CONTINUED
The statement value and fair value of bonds at December 31, 1996, by
contractual maturity, are shown below. Maturities will differ from contractual
maturities because eligible borrowers may exercise their right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Statement Fair
Value Value
--------- -----
(In millions)
<S> <C> <C>
Due in one year or less....................................... $ 51.6 $ 52.9
Due after one year through five years......................... 260.8 267.7
Due after five years through ten years........................ 244.3 253.7
Due after ten years........................................... 124.3 133.6
------ ------
681.0 707.9
Mortgage-backed securities.................................... 72.5 82.6
------ ------
$753.5 $790.5
====== ======
</TABLE>
Proceeds from sales of bonds during 1996 and 1995 were $228.3 million and
$18.9 million, respectively. Gross gains of $1.3 million in 1996 and $0.2
million in 1995 and gross losses of $2.1 million in 1996 and $0.1 million in
1995 were realized on these transactions.
The cost of common stocks was $0.0 million and $0.1 million at December 31,
1996 and 1995, respectively. Gross unrealized appreciation on common stocks
totaled $1.4 million, and gross unrealized depreciation totaled $0.0 million
at December 31, 1996. The fair value of preferred stock totaled $9.6 million
at December 31, 1996 and $5.2 million at December 31, 1995.
Bonds with amortized cost of $11.3 million were nonincome producing for the
twelve months ended December 31, 1996.
At December 31, 1996, the mortgage loan portfolio was diversified by
geographic region and specific collateral property type as displayed below.
The Company controls credit risk through credit approvals, limits and
monitoring procedures.
<TABLE>
<CAPTION>
Statement GEOGRAPHIC Statement
PROPERTY TYPE Value CONCENTRATION Value
------------- --------- ------------- ---------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C>
Apartments.............. $ 96.0 East North Central...... $ 31.1
Industrial.............. 35.0 Middle Atlantic......... 11.5
Office buildings........ 11.3 Mountain................ 7.6
Retail.................. 29.0 New England............. 27.6
Agricultural............ 28.9 Pacific................. 49.9
Other................... 11.9 South Atlantic.......... 58.8
------ West South Central...... 25.6
$212.1 ------
====== $212.1
======
</TABLE>
At December 31, 1996, the fair values of the commercial and agricultural
mortgage loans portfolios were $189.0 million and $30.4 million, respectively.
The corresponding amounts as of December 31, 1995 were approximately $132.1
million and $22.2 million, respectively.
28
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 7--INVESTMENTS--CONTINUED
The maximum and minimum lending rates for mortgage loans during 1996 were
8.69% and 7.04% for agricultural loans and 8.5% and 7.2% for other properties.
Generally, the maximum percentage of any loan to the value of security at the
time of the loan, exclusive of insured or guaranteed or purchase money
mortgages, is 75%. For city mortgages, fire insurance is carried on all
commercial and residential properties at least equal to the excess of the loan
over the maximum loan which would be permitted by law on the land without the
building, except as permitted by regulations of the Federal Housing Commission
on loans fully insured under the provisions of the National Housing Act. For
agricultural mortgage loans, fire insurance is not normally required on land
based loans except in those instances where a building is critical to the
farming operation. Fire insurance is required on all agri-business facilities
in an aggregate amount equal to the loan balance.
NOTE 8--REINSURANCE
The Company cedes business to reinsurers to share risks under variable life,
universal life and flexible variable life insurance policies for the purpose
of reducing exposure to large losses. Premiums, benefits and reserves ceded to
reinsurers in 1996 were $384.3 million, $9.9 million, and $12.1 million,
respectively. The corresponding amounts in 1995 were $72.4 million, $8.7
million, and $12.1 million, respectively.
To the extent that an assuming reinsurance company is unable to meet its
obligations under a reinsurance agreement, the Company remains liable as the
direct insurer on all risks reinsured.
NOTE 9--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Company enters into interest rate swap contracts for the purpose of
converting the interest rate characteristics (fixed or variable) of certain
investments to match those of related insurance liabilities. Maturities of
current agreements range through 2011. These swaps involve, to varying
degrees, interest rate risk in excess of amounts recognized in the statement
of financial position.
The Company enters into currency rate swap agreements to manage exposure to
foreign exchange rate fluctuations. Maturities of current agreements range
through 2006. Should the counterparty fail to meet the terms of the contract,
the Company's market risk is limited to the currency rate differential.
The Company enters into interest rate cap contracts to manage exposure on
underlying security values due to a rise in interest rates. Maturities of
current agreements range through 2006.
The Company also uses financial futures contracts to hedge public bonds
intended for future sale in order to lock in the market value at the date of
contract. The Company is subject to the risks associated with changes in the
value of the underlying securities; however, such changes in value generally
are offset by changes in the value of the hedged items. The contract or
notional amounts of the contracts represent the extent of the Company's
involvement but not in the future cash requirements, as the Company intends to
close the open positions prior to settlement.
29
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 9--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK--CONTINUED
The contract or notional amount of the foregoing financial instruments, which
indicates the Company's involvement and in certain instances, maximum credit
risk related to those instruments, is as follows:
<TABLE>
<CAPTION>
December 31
-------------
1996 1995
---- ----
(In millions)
<S> <C> <C>
Futures contracts to sell securities............................ $ 73.0 $ 0.0
======= =====
Notional amount of interest rate swaps, currency rate swaps, and
interest rate caps to:
Receive variable rates........................................ $ 215.9 $ 0.0
======= =====
Receive fixed rates........................................... $ 26.6 $ 5.0
======= =====
</TABLE>
The Company continually monitors its positions and the credit ratings of the
counterparties to these financial instruments. The Company believes the risk
of incurring losses due to the nonperformance by its counterparties is remote
and that any such losses would be immaterial.
Based on the market rates in effect at December 31, 1996, the Company's
interest rate swaps, currency rate swaps and interest rate caps represented
(assets) liabilities to the Company with fair values of $2.3 million, $(8.2)
million and $(2.0) million, respectively. The corresponding amounts as of
December 31, 1995 were $0.0 million.
NOTE 10--POLICYHOLDERS' RESERVES AND BENEFICIARIES' FUND
The Company's annuity reserves and deposit fund liabilities that are subject
to discretionary withdrawal and subject to discretionary withdrawal (without
adjustment) are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1996 Percent
----------------- -------
(IN MILLIONS)
<S> <C> <C>
Subject to discretionary withdrawal at book value
less surrender charge............................... $441.9 89.3%
Subject to discretionary withdrawal at book value
(without adjustment)................................ 53.0 10.7
------ -----
Total annuity reserves and deposit liabilities....... $494.9 100.0%
====== =====
</TABLE>
NOTE 11--COMMITMENTS AND CONTINGENCIES
The Company has extended commitments to purchase long-term bonds and real
estate and issue real estate mortgages totalling $42.1 million, $0.1 million,
and $33.5 million, respectively, at December 31, 1996. The Company monitors
the creditworthiness of borrowers under long-term bond commitments and
requires collateral as deemed necessary. If funded, loans related to real
estate mortgages would be fully collateralized by the related properties. The
fair value of the commitments described above is $76.2 million at December 31,
1996. The majority of these commitments expire in 1997.
In the normal course of its business operations, the Company is involved in
litigation from time to time with claimants, beneficiaries and others, and a
number of litigation matters were pending as of December 31, 1996. It is the
opinion of management, after consultation with counsel, that the ultimate
liability with respect to these claims, if any, will not materially affect the
financial position of the Company.
30
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED
NOTE 12--FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and fair values of the
Company's financial instruments:
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------
1996 1995
--------------- ---------------
CARRYING Fair CARRYING Fair
AMOUNT Value AMOUNT Value
-------- ------ -------- ------
(In millions)
<S> <C> <C> <C> <C>
Assets
Bonds--Note 7............................... $753.5 $790.5 $552.8 $597.3
Preferred stocks--Note 7.................... 9.6 9.6 5.0 5.2
Common stocks--Note 7....................... 1.4 1.4 1.7 1.7
Mortgage loans on real estate--Note 7....... 212.1 219.4 146.7 154.3
Policy loans--Note 1........................ 80.8 80.8 61.8 61.8
Cash and cash equivalents--Note 1........... 31.9 31.9 76.6 76.6
Derivatives liabilities relating to:--Note 9
Interest rate swaps......................... -- 2.3 -- 0.0
Currency rate swaps......................... -- (8.2) -- 0.0
Interest rate caps.......................... -- (2.0) -- 0.0
Liabilities
Commitments--Note 11........................ -- 76.2 -- 23.8
</TABLE>
The carrying amounts in the table are included in the statutory-basis
statements of financial position. The method and assumptions utilized by the
Company in estimating its fair value disclosures are described in Note 1.
31
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS
<TABLE>
<C> <S>
1. Condensed Financial Information (Part A)
2. Statement of Assets and Liabilities, John Hancock Variable Annuity
Account I, at December 31, 1996. (Part B)
3. Statement of Operations, John Hancock Variable Annuity Account I, for
the period ended December 31, 1996. (Part B)
4. Statement of Changes in Net Assets, John Hancock Variable Annuity I,
for the period ended December 31, 1996. (Part B)
5. Notes to Financial Statements, John Hancock Variable Annuity Account I.
(Part B)
6. Statement of Financial Position, John Hancock Variable Life Insurance
Company, at December 31, 1996 and December 31, 1995. (Part B)
7. Summary of Operations and Unassigned Deficit, John Hancock Variable
Life Insurance Company, for each of the two years in the period ended
December 31, 1996. (Part B)
8. Statement of Cash Flows, John Hancock Variable Life Insurance Company,
for each of the two years in the period ended December 31, 1996. (Part
B)
9. Notes to Financial Statements, John Hancock Variable Life Insurance
Company. (Part B)
(B) EXHIBITS:
1. JHVLICO Board Resolution establishing the John Hancock Variable Annuity
Account I, dated June 15, 1994, included in the initial Form N-4
Registration Statement to this File No. 33-82648, filed August 10,
1994.
2. Not Applicable.
3.(a) Form of Distribution and Servicing Agreement among John Hancock
Distributors, Inc., John Hancock Mutual Life Insurance Company, and John
Hancock Variable Life Insurance Company, incorporated by reference from
Pre-Effective No. 2 to Form S-6 Registration Statement of John Hancock
Variable Life Acount S (File No. 333-15075), filed April 18, 1997.
(b) Specimen Variable Contracts Selling Agreement between John Hancock
Distributors, Inc., and selling broker-dealers, incorporated by
reference from Pre-Effective Amendment No. 1 to Form N-4 Registration
Statement for John Hancock Variable Life Account S (File No. 333-
15075) filed April 18, 1997.
4. Form of periodic payment deferred annuity contract.
5. Form of annuity contract application.
6. Certificate of Incorporation and By-Laws of John Hancock Variable Life
Insurance Company, included in Post-Effective Amendment No. 1 to this
File No. 33-82648, filed April 25, 1995.
</TABLE>
C-1
<PAGE>
<TABLE>
<C> <S>
7. Not Applicable.
8. Not Applicable.
9. Opinion and Consent of Counsel as to legality of interests being
offered, included in the initial Form N-4 Registration Statement to
this File No. 33-82648, filed August 10, 1994.
10.A. Consent of Independent Auditors.
10.B. Representation of Counsel.
11. Not Applicable.
12. Not Applicable.
13. Diagram of Subsidiaries of John Hancock Mutual Life Insurance Company
incorporated by reference from Post-Effective Amendment No. 13 to Form
N-1A Registration Statement of John Hancock Variable Series Trust I
(File No. 33-2081) filed April 24, 1996.
14. Power of Attorney for Ronald J. Bocage, incorporated by reference from
Form 10-K annual report of John Hancock Variable Life Insurance Company
(File No. 33-62895) filed March 28, 1997. Copies of Powers of attorney
for all other directors, included in Post-Effective Amendment No. 1 to
this File No. 33-82648, filed April 25, 1995.
</TABLE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
DIRECTORS
<TABLE>
<CAPTION>
NAME POSITION WITH DEPOSITOR
---- -----------------------
<S> <C>
David F. D'Alessandro............... Chairman of the Board and President
Henry D. Shaw....................... Vice Chairman of the Board and President
Thomas J. Lee....................... Director
Robert R. Reitano................... Director
Ronald J. Bocage.................... Director, Vice President and Counsel
Joseph A. Tomlinson................. Director and Vice President
Michele G. VanLeer.................. Director
John M. DeCiccio.................... Director
Barbara L. Luddy.................... Director and Actuary
Robert S. Paster.................... Director
EXECUTIVE OFFICERS OTHER THAN DIRECTORS
Daniel L. Ouellette................. Vice President, Marketing
Patrick F. Smith.................... Controller
</TABLE>
All of the above-named officers and directors can be contacted at the
following business address: John Hancock Variable Life Insurance Company, John
Hancock Place, P.O. Box 111, Boston, MA 02117.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Registrant is a separate account of JHVLICO, operated as a unit investment
trust. Registrant supports benefits payable under JHVLICO's variable annuity
contracts by investing in shares of John Hancock Variable Series Trust I (the
"Fund") a "series" type of mutual fund, registered under the Investment
Company Act of 1940 (the "Act") as an open-end management investment company.
The Registrant and other separate accounts of John Hancock and JHVLICO own all
of the Fund's outstanding shares. The purchasers of variable annuity and
variable life insurance contracts, in connection with which the Fund is used,
will have the opportunity to instruct John Hancock and JHVLICO with respect to
the voting of the shares of the Series Fund held by Registrant as to certain
matters. Subject to the voting instructions, JHVLICO directly controls
Registrant.
A diagram of the subsidiaries of John Hancock is incorporated by reference
from Exhibit 17 to Post-Effective Amendment No. 13 to Form N-1A Registration
Statement of John Hancock Variable Series Trust I (File No. 33-2081) filed
April 24, 1996.
C-2
<PAGE>
ITEM 27. NUMBER OF CONTRACT OWNERS
Because sales have not yet commenced, there are no Contract Owners.
ITEM 28. INDEMNIFICATION
Article X of the By-Laws of JHVLICO provides indemnification to each present
and former trustee, officer, and employee of JHVLICO against litigation
expenses and liabilities incurred while acting as such, subject to limitations
of law, including under the Act. No indemnification shall be paid if a
director or officer is finally adjudicated not to have acted in good faith in
the reasonable belief that his action was in the best interest of JHVLICO.
JHVLICO may pay expenses incurred in defending an action or claim in advance
of its final disposition, but only upon receipt of an undertaking by the
person indemnified to repay such amounts if he or she should be determined not
be entitled to indemnification.
Reference is made to Article VI of the ByLaws of the Fund, filed as Exhibit
2 to Post Effective Amendment No. 2 to the Fund's Registration Statement (File
No. 33-2081) dated April 12, 1988, which provides that the Fund shall
indemnify or advance any expenses to the trustees, shareholders, officers, or
employees of the Fund to the extent set forth in the Declaration of Trust.
Sections 6.3 through 6.17 of the Declaration of Trust, included as Exhibit 1
to the Fund's Post Effective Amendment No. 2, relate to the indemnification of
trustees, shareholders, officers, and employees. It is provided that the
Registrant shall indemnify any trustee made a party to any proceeding by
reason of service in that capacity if the trustee (a) acted in good faith and
(b) reasonably believed, (1) in the case of conduct in the trustee's official
capacity with the Fund, that the conduct was in the best interest of the Fund
and (2) in all other cases, that the conduct was at least not opposed to the
best interests of the Fund, and (c) in the case of any criminal proceeding,
the Fund shall indemnify the trustee if the trustee acted in good faith and
had no reasonable cause to believe that the conduct was unlawful.
Indemnification may not be made by the Fund unless authorized in each case by
a determination by the Board of Trustees or by special legal counsel or by the
shareholders. Neither indemnification nor advancement of expenses may be made
if the trustee or officer has incurred liability by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of duties
involved in the conduct of his office ("Disabling Conduct"). The means for
determining whether indemnification shall be made shall be (1) a final
decision on the merits by a court or other body before whom the proceeding was
brought that the person to be indemnified was not liable by reason of
Disabling Conduct or (2) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that such person was not
liable by reason of Disabling Conduct. Such latter determination may be made
either (a) by the vote of a majority of a quorum of Trustees of the Fund who
are neither "interested" persons of the Fund (as defined in the Act) nor
parties to the proceeding or (b) by an independent legal counsel in a written
opinion. The advancement of legal expenses may not occur unless the trustee or
officer agrees to repay the advance (unless it is ultimately determined that
he is entitled to indemnification) and at least one of three conditions is
satisfied: (1) he provides security for his agreement to repay, (2) the Fund
is insured against loss by reason of lawful advances, or (3) a majority of a
quorum of the Trustees of the Fund who are not interested persons and are not
parties to the proceedings, or independent counsel in a written opinion,
determine that there is reason to believe that the trustees or officer will be
found entitled to indemnification.
Similar types of provisions dealing with the indemnification of the Fund's
officers and trustees are hereby incorporated by reference from documents
previously filed with the Commission, specifically, Section 14 of the
Investment Management Agreement by and between John Hancock Variable Series
Trust I and John Hancock Mutual Life Insurance Company (Exhibit 5.f. to Post-
Effective Amendment No. 4 to the Registration Statement of the Fund (File No.
33-2081) dated April, 1989), Section 14 of the Investment Management Agreement
by and between John Hancock Variable Series Trust I and John Hancock Mutual
Life Insurance Company (Exhibit 5.a. to the Fund's Registration Statement
(File No. 33-2081) dated December 11, 1985), Section 14 of the Investment
Management Agreement by and between John Hancock Variable Series Trust and
John Hancock Mutual Life Insurance Company (Exhibit 5.g. to Post-Effective
Amendment No. 9 to the Fund's Registration Statement (File No. 33-2081) dated
March 2, 1994, Section 14 of the Investment Management Agreement By and Between
John Hancock Variable Series Trust 1 and John Hancock Mutual Life Insurance
Company (Exhibit 5.k. to Post-Effective Amendment No. 13 to the Fund's
Registration Statement (File No. 33-2081) dated April 30, 1996), Section 7 of
the Underwriting and Administrative Services Agreement by
C-3
<PAGE>
and between John Hancock Variable Series Trust I and John Hancock Mutual Life
Insurance Company (Exhibit 6 to Post-Effective Amendment No. 4 to the
Registration Statement of the Fund (File No. 33-2081) dated April, 1986,
Section 15 of the Transfer Agency Agreement by and between John Hancock
Variable Series Trust I and John Hancock Mutual Life Insurance Company
(Exhibit 9 to Pre-Effective Amendment No. 1 to the Registration Statement of
the Fund (File No. 33-2081) dated March 13, 1986), and Section 6 of the
Underwriting and Indemnity Agreement By and Among John Hancock Series Trust I,
John Hancock Distributors, Inc., and John Hancock Mutual Life Insurance Company,
(Exhibit 6.b. to Post-Effective Amendment No. 14 to Form N-1A Registration
Statement of the Fund (File No. 33-2081) filed February 28, 1997).
Insofar as indemnification for liabilities 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 that 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 a
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether indemnification by it is against public policy as
expressed in that Act and will be governed by the final adjudication of such
issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) John Hancock Distributors, Inc. is also the principal underwriter for
the Fund, John Hancock Variable Annuity Accounts U and V, and John Hancock
Variable Life Accounts U, V, and S, and John Hancock Mutual Variable Life
Insurance Account UV.
(b) In response to this item, the response to Item 25 is hereby incorporated
by reference.
(c) The information under "Distribution Agreements and Other Services--
Distribution Agreement" in the statement of additional information forming
a part of this registration statement is incorporated herein by reference.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The following entities prepare, maintain, and preserve the records required
by Section 31(a) of the Act for the Registrant and the Fund (as indicated
below) through written agreements between the parties to the effect that such
services will be provided to the Registrant and/or the Fund for such periods
prescribed by the Rules and Regulations of the Commission under the Act and
such records will be surrendered promptly on request:
John Hancock Distributors, Inc., John Hancock Place, Boston, Massachusetts
02117, serves as Registrant's distributor and principal underwriter, and, in
such capacities, keeps records regarding shareholders account records, cancelled
stock certificates. JHVLICO (at the same address), in its capacity as
Registrant's depositor, and John Hancock (at the same address), in its
capacities as Registrant's investment adviser and transfer agent, keep all other
records required by Section 31(a) of the Act.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) Registrant hereby undertakes to file a post-effective amendment to
this Registration Statement as frequently as is necessary to ensure that
the audited financial statements in the registration statement are never
more than 16 months old for so long as payments under the variable annuity
contracts may be accepted.
C-4
<PAGE>
(b) Registrant hereby undertakes to include as part of any application to
purchase a contract offered by the prospectus a space that an applicant can
check to request a Statement of Additional Information.
(c) Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under Form N-4 promptly upon written or oral request.
(d) Registrant represents that, in connection with the sale of the
Contracts offered pursuant to this registration statement, it has complied
with the conditions of the SEC no-action letter regarding the purchase of
variable annuity contracts under retirement plans meeting the requirements
of Section 403(b) of the Internal Revenue Code (American Council of Life
Insurance (pub. avail. Nov. 28, 1988)). Specifically, Registrant has (1)
included appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in the prospectus; (b) included appropriate
disclosure regarding the redemption restrictions imposed by Section
403(b)(11) in any sales literature used in connection with the offer of the
Contracts; (3) instructed sales representatives specifically to bring the
redemption restrictions imposed by Section 403(b)(11) to the attention of
potential plan participants; and (4) obtained from each plan participant
who purchases a Section 403(b) annuity contract, prior to or at the time of
such purchase, a signed statement acknowledging the participant's
understanding of (a) the restrictions on redemptions imposed by Section
403(b)(11) and (b) the investment alternatives available under the
employer's Section 403(b) arrangement to which the participant may elect to
transfer his contract value.
(e) John Hancock Variable Life Insurance Company represents that the fees
and charges deducted under the Contracts, 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.
C-5
<PAGE>
SIGNATURES
AS REQUIRED BY THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF
1940, REGISTRANT HAS CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF, IN THE CITY OF BOSTON AND THE COMMONWEALTH OF MASSACHUSETTS ON THIS 12TH
DAY OF DECEMBER, 1997. REGISTRANT CERTIFIES THAT IT MEETS THE REQUIREMENTS OF
RULE 485(B) OF THE 1933 ACT FOR EFFECTIVENESS OF THIS STATEMENT.
John Hancock Variable Annuity
Account I (Registrant)
By John Hancock Variable Life
Insurance Company
By /s/ Henry D. Shaw
----------------------------------
HENRY D. SHAW
VICE CHAIRMAN OF THE BOARD
AND PRESIDENT
John Hancock Variable Life Insurance
Company (Depositor)
By /s/ Henry D. Shaw
----------------------------------
HENRY D. SHAW
VICE CHAIRMAN OF THE BOARD
AND PRESIDENT
AS REQUIRED BY THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF
1940, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THEIR CAPACITIES WITH JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY AND ON THE
DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Patrick F. Smith Controller 12/12/97
- ------------------------------------- (Principal Accounting
PATRICK F. SMITH Officer)
/s/ Robert R. Reitano Director 12/12/97
- ------------------------------------- (Principal Financial
ROBERT R. REITANO Officer)
/s/ Henry D. Shaw Vice Chairman of the 12/12/97
- ------------------------------------- Board and President
HENRY D. SHAW (Principal
FOR HIMSELF AND AS Executive Officer)
ATTORNEY-IN-FACT
</TABLE>
FOR: David F. D'Alessandro Chairman of the Board
Thomas J. Lee Director
Robert R. Reitano Director
Michele G. Van Leer Director
Barbara L. Luddy Director
Ronald J. Bocage Director
C-6
<PAGE>
INDEX TO EXHIBITS
FORM N-4
JOHN HANCOCK VARIABLE ANNUITY ACCOUNT I
<TABLE>
<CAPTION>
EXHIBITS
--------
<C> <S>
4. Form of Contract
5. Form of Application
10.B. Representation of Counsel
10.A. Consent of Independent Auditors.
27 Financial Data Schedule
</TABLE>
C-7
<PAGE>
EXHIBIT 4
<TABLE>
<S> <C> <C>
[LETTERHEAD OF JOHN HANCOCK APPEARS HERE] Variable Life Insurance John Hancock Place
Company Boston, Mass 02117
1-800-732-5543
</TABLE>
OWNER JOHN HANCOCK
ANNUITANT JOHN HANCOCK ANNUITY NUMBER
VA 000 000
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY WITH FIXED AND VARIABLE OPTIONS
The John Hancock Variable Life Insurance Company ("the Company") agrees to
provide the benefits, rights and privileges as stated in this contract.
Benefits available under the contract are not less than those required by any
statute of the state in which the contract is delivered.
If the contract is in force on the Date of Maturity, we will pay an Annuity to
the Annuitant, unless otherwise directed by the Owner. The variable and fixed
portions of each Annuity payment will be determined in accordance with the
"Conversion" provision of this contract. The variable portion may increase or
decrease depending upon the investment experience of the Subaccounts in which
the Net Premiums are invested. Unless otherwise elected, Annuity payments will
be payable at monthly intervals for a period of 10 years and as long thereafter
as the Annuitant lives. The variable portion of Annuity payments will not
decrease if the annual effective rate of investment return earned on assets of
the Subaccounts is at least 3.5% (unless otherwise elected) after deductions
made directly to such Subaccounts of 1.4% per annum.
By written notice, the Owner may elect the Date of Maturity at any time,
provided the Date elected is: (i) not later than the Annuitant's 95th birthday
without our prior approval; (ii) at least 31 days after the written notice; and
(iii) at least six months after the date the first premium is applied to the
contract without our prior approval. If no other election is made, the Date of
Maturity will be the Annuitant's 95th birthday.
A Death Benefit will be payable if the Annuitant's death occurs before the Date
of Maturity and before the Surrender Date, as stated in the "Death Benefit" and
other contract provisions.
We are issuing this contract in consideration of the application and the payment
of premiums.
The Contract Specifications on page 3 and the conditions and provisions on this
and the following pages are part of the contract.
10 DAY RIGHT TO CANCEL - THIS CONTRACT MAY BE RETURNED BY DELIVERING OR MAILING
IT WITHIN 10 DAYS AFTER ITS RECEIPT TO THE COMPANY AT BOSTON, MASSACHUSETTS, OR
TO THE AGENT OR AGENCY OFFICE THROUGH WHICH IT WAS DELIVERED, WITH A WRITTEN
REQUEST FOR CANCELLATION. IMMEDIATELY ON SUCH DELIVERY OR MAILING AND SUCH
WRITTEN REQUEST, THE CONTRACT SHALL BE DEEMED VOID FROM THE BEGINNING AND A
REFUND WILL BE MADE WITHIN 10 DAYS. THE AMOUNT REFUNDED WILL BE THE SUM OF (I)
THE ACCUMULATED VALUE AT THE END OF THE VALUATION PERIOD DURING WHICH WE RECEIVE
THE CONTRACT AND (II) THE SUM OF ALL CHARGES MADE WITH RESPECT TO THE CONTRACT.
Signed for the Company at Boston, Massachusetts.
President Secretary
Flexible Premium Combination Fixed/Variable Deferred Annuity - monthly Annuity
payable to Annuitant beginning on the Date of Maturity for a guaranteed period
of 10 years and thereafter for life, unless otherwise elected.
Nonparticipating
Initial premium is shown on page 3.
THIS POLICY IS A LEGAL CONTRACT BETWEEN THE APPLICANT AND THE INSURER. READ
YOUR POLICY CAREFULLY.
THE BENEFITS, PAYMENTS AND ACCUMULATED VALUE UNDER THIS CONTRACT, WHEN BASED ON
THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND NOT GUARANTEED
AS TO DOLLAR AMOUNT. THE VALUES OF THE SUBACCOUNTS MAY INCREASE OR DECREASE.
SEE SECTION 8 FOR DETAILS.
<PAGE>
CONTRACT PROVISIONS
Section
1. Specifications
2. Definitions
3. Owner, Beneficiary
4. The Contract
5. Payment of Premiums
6. Investment and Account Transfer Options
7. Accumulations in Variable and Fixed Accounts
8. Accumulation Shares and Annuity Unit Valuation
9. Death Benefit
10. Contract Fee and Premium Taxes
11. Partial Withdrawals
12. Withdrawal Charge
13. Surrender Provision
14. Conversion
15. Settlement Options
16. Proof Required for Payment
17. Misstatements
18. Incontestability
19. Assignment
20. Claims of Creditors
21. Right to Make Changes
22. Annual Statement
23. Miscellaneous
<PAGE>
- --------------------------------------------------------------------------------
1. CONTRACT SPECIFICATIONS
- --------------------------------------------------------------------------------
OWNER John Hancock
ANNUITANT John Hancock
ANNUITY NUMBER VA00 000 000
ISSUE AGE 35
DATE OF ISSUE September 1, 1997
DATE OF MATURITY September 1, 2057
INITIAL PREMIUM $11,000.00
SUBSEQUENT PREMIUMS MAY BE PAID IN ACCORDANCE WITH SECTION 5.
CURRENT ANNUAL CONTRACT FEE: $30 APPLICABLE TO CONTRACTS WITH ACCUMULATED VALUE
UNDER $10,000 ONLY. SEE SECTION 10.
3
<PAGE>
- --------------------------------------------------------------------------------
2. DEFINITIONS
- --------------------------------------------------------------------------------
"ACCOUNT", unmodified, means a Subaccount or a Fixed Account.
"ACCUMULATED VALUE", unmodified, means the value of this contract on any date
prior to the commencement of life annuity payments. This value equals the sum of
this contract's (i) accumulated values for all Subaccounts and (ii) accumulated
value in the Fixed Account. The accumulated value for each Subaccount as of any
date will equal the number of Accumulation Shares for that Subaccount then
credited to this contract multiplied by the Accumulation Share Value for that
Subaccount on that date.
"ACCUMULATION SHARE" means a unit of measurement used in determining the value
of this contract prior to the commencement of life annuity payments. The
Accumulation Share Value for each Subaccount will reflect the investment
experience of that Subaccount. It will vary in dollar amount.
"ANNUITY UNIT" means a unit of measurement used in determining the amount of the
variable portion of each Annuity payment. The value of an Annuity Unit for each
Subaccount will depend on the assumed investment rate and the investment
experience of that Subaccount. It will vary in dollar amount.
"FIFTH INTERVAL CONTRACT ANNIVERSARY" means each contract anniversary that is a
multiple of five measured from the Date of Issue.
"FIXED ACCOUNT" means an Account established by us which accumulates at rates,
not less than 3%, which we will determine and declare from time to time.
"FUND" means a series type mutual fund registered under the 1940 Act as an open-
end diversified management investment company.
"IN FORCE" means that the Annuitant is living and the Accumulated Value of the
contract has not become payable.
"MEASURING PERSON" means the person on whose life Annuity payments will be
based.
"NET PREMIUM" means the premium paid less any applicable taxes based on the
amount of premium payment.
"PAYMENT" means, unless otherwise stated, payment at our Home Office in Boston,
Massachusetts.
"PORTFOLIO" means each division of a Fund which has a specific investment
objective.
"SEPARATE ACCOUNT", unmodified, means a separate investment account, established
by us under Massachusetts law, in which you are eligible to invest under this
contract.
"SUBACCOUNT" means each division of a Separate Account. The assets of each
Subaccount are invested solely in shares of the corresponding Portfolio of a
Fund.
"SURRENDER DATE" means the date of receipt of written notice of surrender under
Section 13.
"VALUATION DATE" means any date on which the New York Stock Exchange is open for
trading and on which the Fund values its shares.
"VALUATION PERIOD" means that period of time from the beginning of the day
following a Valuation Date to the end of the next following Valuation Date.
"WE", "US", "OUR" refer only to the Company.
"WRITTEN NOTICE" means, unless otherwise stated, a written notice received at
our Home Office in Boston, Massachusetts.
"YOU" AND "YOUR" refer only to the Owner of this contract.
"1940 ACT" means the Investment Company Act of 1940, as amended.
4
<PAGE>
- --------------------------------------------------------------------------------
3. OWNER, BENEFICIARY
- --------------------------------------------------------------------------------
THE OWNER AND THE BENEFICIARY WILL BE AS SHOWN IN THE APPLICATION UNLESS YOU
CHANGE THEM OR THEY ARE CHANGED BY THE TERMS OF THIS PROVISION.
IF THE ANNUITANT DIES AND THERE IS NO SURVIVING BENEFICIARY, YOU WILL BE THE
BENEFICIARY, BUT IF YOU WERE THE ANNUITANT, YOUR ESTATE WILL BE THE BENEFICIARY.
YOU SHALL HAVE THE SOLE AND ABSOLUTE POWER TO EXERCISE ALL RIGHTS AND PRIVILEGES
WITHOUT THE CONSENT OF ANY OTHER PERSON EXCEPT AS OTHERWISE PROVIDED BY THIS
CONTRACT OR UNLESS YOU PROVIDE OTHERWISE BY WRITTEN NOTICE.
WHILE THE ANNUITANT IS ALIVE, YOU MAY CHANGE THE OWNER BY WRITTEN NOTICE. YOU
MAY CHANGE THE BENEFICIARY BY WRITTEN NOTICE NO LATER THAN RECEIPT OF THE
REQUIRED DUE PROOF OF THE ANNUITANT'S DEATH. A CHANGE WILL TAKE EFFECT WHEN THE
NOTICE IS RECEIVED AND FILED AT OUR HOME OFFICE. THE CHANGE WILL TAKE EFFECT
WHETHER OR NOT YOU OR THE ANNUITANT IS THEN ALIVE. A CHANGE SHALL BE SUBJECT TO
THE RIGHTS OF ANY ASSIGNEE OF RECORD WITH US AND SUBJECT TO ANY PAYMENT MADE OR
OTHER ACTION TAKEN BY US BEFORE WE RECEIVED AND FILED THE NOTICE.
JOINT OWNERS
If joint Owners are named in the application, each joint Owner will be
considered the primary Beneficiary of the other joint Owners. Should another
person or entity be designated as Beneficiary in the application, such
Beneficiary will be deemed a contingent Beneficiary for all Owners with rights
subordinate to the rights of each joint Owner. Signatures of all joint Owners
are required for any exercise of ownership rights requiring written
notification.
- --------------------------------------------------------------------------------
4. THE CONTRACT
- --------------------------------------------------------------------------------
The entire contract between the Applicant and us consists of this contract and
the application, a copy of which is attached.
Contract years, contract months and contract anniversaries are measured from the
Date of Issue.
Only the President, a Vice President, the Secretary, or an Assistant Secretary
of the Company has authority to waive or agree to change in any respect any of
the conditions or provisions of the contract.
- --------------------------------------------------------------------------------
5. PAYMENT OF PREMIUMS
- --------------------------------------------------------------------------------
All premium payments shall be made to us at our Home Office. Premium payments
are subject to the following conditions:
(a) Each premium payment must be at least $50.
(b) The maximum premium that may be deposited to the contract in any
contract year is $1,000,000.
(c) The maximum premium that may be deposited in any Subaccount in any
contract year is $1,000,000 less any amount previously transferred
to such Subaccount in such year.
(d) The maximum premium that may be deposited in the Fixed Account in
any contract year, exclusive of the initial premium payment, is
$100,000 less any amount previously transferred to the Fixed
Account in such year.
(e) No premium payments may be deposited to the Fixed Account after
the end of the tenth contract year.
(f) No premium payments may be made to the contract after the
Annuitant's 85th birthday.
Upon request we will consider waiving any of the above conditions.
5
<PAGE>
- --------------------------------------------------------------------------------
6. INVESTMENT AND ACCOUNT TRANSFER OPTIONS
- --------------------------------------------------------------------------------
INVESTMENT OPTION
The Net Premium will be allocated to the Accounts according to the Investment
Option then in effect. The Initial Investment Option is that elected by you in
the application. You may elect by written notice to change the Investment
Option. The change will be effective as to the allocation of any Net Premium
made on or after the date of receipt at our Home Office of such written notice
satisfactory to us. The minimum percentage that may be allocated to any Account
and the maximum number of Accounts in which amounts may be held will be subject
to our administrative rules in effect at the time of the election. All
percentages you elect must be whole numbers.
ACCOUNT TRANSFER OPTION
You may elect to reallocate amounts among Accounts (i) by written notice
satisfactory to us or (ii) by telephone instructions if you have elected the
Telephone Transfer Option. Such election may be made in the application or at
any time thereafter by written notice satisfactory to us. We reserve the right
to terminate, suspend or modify the Telephone Transfer Option at any time
without notice. We may record any telephone conversation relating to Account
transfers.
Transfers among Accounts will be effective on the date of receipt of the
required written notice or telephone instruction. The number of Accumulation
Shares or Annuity Units and the amount of accumulated value of the Fixed Account
transferred to or from each Account will reflect the respective values in each
Account. Transfers to or from the Fixed Account are prohibited after
commencement of Annuity payments.
If the Accumulated Value is invested in more than four Accounts on the Date of
Maturity or other date elected for commencement of Annuity payments and before
conversion in accordance with Section 14, we will allocate the Accumulated Value
to the four Accounts then having the largest portions of the Accumulated Value.
The Accumulated Value in Accounts other than such four Accounts will be
allocated to the four Accounts in proportion to the amounts in the four
Accounts. Such allocation will be made not withstanding any transfer
restrictions specified in this Section 6. The rules that will be applied as of
any date will be those in effect on that date.
ACCOUNT TRANSFER RESTRICTIONS
General Restrictions
- --------------------
Subject to the limitations below, you may elect to transfer amounts among the
Accounts at any time while the contract is in force. You may elect no more than
12 transfers during any contract year without incurring a transfer charge. We
reserve the right to impose a charge for each transfer that exceeds 12 in any
contract year in an amount not to exceed $25 per transfer. A transfer will be
effective at the end of the Valuation Period in which we receive notice
satisfactory to us. No transfer will be permitted on or within 30 days of the
Maturity Date. The maximum number of Accounts in which Accumulated Value may be
held will be subject to our rules in effect at the time of transfer.
Restrictions on Transfers to Subaccounts
- ----------------------------------------
Without our prior approval, the maximum amount which may be transferred to a
Subaccount in any contract year is $1,000,000 less net premiums previously
deposited to such Subaccount in such contract year.
Restrictions on Transfers out of and to the Fixed Account
- ---------------------------------------------------------
During the first contract year, only one transfer is permitted out of the Fixed
Account, and may be made at any time. In each subsequent contract year, only
one transfer is permitted out of the Fixed Account, and may be made provided
such transfer is at least 180 days subsequent to any prior transfer. If the
accumulated value of the Fixed Account is $2,500 or less, then a transfer made
out of the Fixed Account may not exceed $500 without our prior approval. If the
accumulated value of the Fixed Account exceeds $2,500, then no more than 20% of
that value may be transferred out of the Fixed Account without our prior
approval. Without our prior approval, the maximum amount that may be
transferred to the Fixed Account in any contract year is $100,000 less net
premiums previously deposited to the Fixed Account in such year. A transfer to
the Fixed Account may not be made within 6 months of a transfer out of the Fixed
Account. No transfers may be made to the Fixed Account after the end of the
tenth contract year without our prior approval. No transfers may be made to or
from the Fixed Account after the commencement of Annuity payments.
6
<PAGE>
- --------------------------------------------------------------------------------
7. ACCUMULATIONS IN VARIABLE AND FIXED ACCOUNTS
- --------------------------------------------------------------------------------
PURCHASE OF ACCUMULATION SHARES
The portion of the Net Premium not allocated to the Fixed Account will be
allocated to each elected Subaccount for investment with other funds in each
such Subaccount and applied to the purchase of Accumulation Shares to the credit
of this contract. The number of Accumulation Shares in each Subaccount
purchased by each premium payment will be determined by dividing the applicable
portion of the Net Premium by the applicable Accumulation Share Value of the
Subaccount on the first Valuation Date which is the same as or next follows the
receipt of the premium payment at our Home Office.
ACCUMULATED VALUE IN THE FIXED ACCOUNT
We will accumulate (i) the portion of any Net Premium allocated to the Fixed
Account and (ii) any amount transferred from a Subaccount, from the date the
premium is received or the transfer is made. The accumulated value of the
contract's share of the Fixed Account on any date prior to the date annuity
payments commence is the sum of such Net Premiums and transfers accumulated with
interest to that date less the sum of (a), (b) and (c) accumulated with interest
to that date, where:
(a) is any withdrawal made from the Fixed Account;
(b) is any transfer made from the Fixed Account; and
(c) is any charge deducted from the Fixed Account.
Interest will be credited daily and will then earn interest from that date. The
interest rates used will be the applicable rates that we declare. All such
declared rates will be expressed on an annual effective basis and will never be
less than the guaranteed minimum rate of 3% on an annual effective basis. The
interest credited on any given day will be at a rate which, if compounded daily
for one year, would equal the applicable declared rate.
- --------------------------------------------------------------------------------
8. ACCUMULATION SHARES AND ANNUITY UNIT VALUATION
- --------------------------------------------------------------------------------
ACCUMULATION SHARE VALUE
The Accumulation Share Value is calculated separately for each Subaccount. The
value of one Accumulation Share was set at $10.00 on the date assets were first
allocated to each Subaccount. The value of one Accumulation Share on any
Valuation Date thereafter will be determined for each Subaccount by multiplying
the immediately preceding Accumulation Share Value by the applicable Net
Investment Factor for the Valuation Period ending on that Valuation Date. On
any date other than a Valuation Date, the Accumulation Share Value will be the
same as that on the next following Valuation Date.
ANNUITY UNIT VALUE
The Annuity Unit Value is calculated separately for each Subaccount. The value
of one Annuity Unit was set at $1.00 on the date assets were first allocated to
each Subaccount. The value of one Annuity Unit on any Valuation Date thereafter
will be determined for each Subaccount by multiplying (1) the Immediately
preceding Annuity Unit Value by (2) the applicable Net Investment Factor for the
Valuation Period ending on the Valuation Date reduced by 0.00009425 (assuming
annual effective interest at the rate of 3 1/2%) times the applicable Net
Investment Factor for each calendar day in the Valuation Period. On any date
other than a Valuation Date, the Annuity Unit Value will be the same as that on
the next following Valuation Date.
NET INVESTMENT FACTOR
The Net Investment Factor for each Subaccount for any Valuation Period is equal
to one plus the applicable net investment rate for such period. A Net
Investment Factor may be more or less than one. The net investment rate for
each Subaccount for any Valuation Period will be determined by: (1) taking the
sum of the accrued investment income and capital gains and losses, realized or
unrealized, of the Subaccount for the Valuation Period; (2) subtracting the sum
of (i) an amount for any applicable income taxes and (ii) an amount for
mortality and expense risks and administrative expenses computed by multiplying
0.00003836 times the value of the Subaccount at the beginning of the Valuation
Period times the number of calendar days in the Valuation Period; and (3)
dividing the result by the value of the Subaccount at the beginning of the
Valuation Period.
7
<PAGE>
VALUATION OF ASSETS
The values of the assets in the Subaccounts shall be determined at a fair value
in accordance with applicable law. Liabilities attributable to the Subaccount
will be deducted to determine the value of the Subaccount.
ADJUSTMENT OF UNITS AND VALUES
We reserve the right to change the number and value of the Accumulation Shares
or Annuity Units or both without your consent or the consent of any other
person, provided strict equity is preserved and the change does not affect the
benefits, provisions or investment return of this contract.
- --------------------------------------------------------------------------------
9. DEATH BENEFIT
- --------------------------------------------------------------------------------
If the Annuitant dies before the Date of Maturity, we will pay the Death Benefit
to the Beneficiary. The Death Benefit will equal the greatest of: (i) the
Accumulated Value as of the date of receipt of due proof of the Annuitant's
death; (ii) the amount of the premiums paid less the amount of all withdrawals
made, if any; or (iii) the Accumulated Value as of any Fifth Interval Contract
Anniversary preceding the date of receipt of due proof of the Annuitant's death
and preceding the contract anniversary nearest the Annuitant's 81st birthday
plus any premiums paid since such Fifth Interval Contract Anniversary less any
withdrawals made since such Fifth Interval Contract Anniversary.
Notwithstanding the above, the following will apply upon the death of the Owner
or of any joint Owner, if this contract has not already been converted into an
annuity in accordance with Section 14:
(i) If the Beneficiary is the spouse of the Owner, the Beneficiary may
continue the contract in force as Owner.
(ii) If the Beneficiary is not the spouse of the Owner, or if the
Beneficiary is the spouse of the Owner but does not choose to continue
the contract, we will pay the Death Benefit (or the Surrender Value if
the Owner is not the Annuitant) in full to the Beneficiary within 5
years of the Owner's death or apply the Accumulated Value in full
towards the purchase of a life annuity on the Beneficiary with
payments beginning within 1 year of the Owner's death.
- --------------------------------------------------------------------------------
10. CONTRACT FEE AND PREMIUM TAXES
- --------------------------------------------------------------------------------
We will deduct a contract fee not to exceed $50 (see Section 1 for current
contract fee information), subject to applicable state regulations, on each
contract anniversary prior to the Date of Maturity and on the date of surrender
of the contract, but only if the Accumulated Value on any such date is then less
than $10,000. No contract fee will be deducted if the Accumulated Value is
$10,000 or more.
The contract fee will be deducted from the accumulated value for each Account in
the same proportion as such value bears to the Accumulated Value. However, no
deduction will be made from the accumulated value in the Fixed Account which
results in an accumulation at less than the 3% guaranteed rate.
A deduction for a premium tax, if any, or a similar tax, if any, will be made
either from premiums or from the Accumulated Value if and when such a tax is
incurred by us. However, if premium taxes or similar taxes are incurred by us
at the time premiums are paid and we defer the deduction for such taxes, then a
deduction will be made upon any withdrawal under Section 11 and either on the
Surrender Date, the Date of Maturity, or the date of payment of the Death
Benefit. Such deduction will be equal to the tax percentage multiplied by (i)
in the case of withdrawals, the withdrawal amount requested, (ii) in the case of
surrender or annuitization, the Accumulated Value as of the Surrender Date or
the Date of Maturity as the case may be, or (iii) in the case of death, the
Death Benefit as of the date of receipt of due proof of the Annuitant's death.
The "tax percentage" is equal to the percentage of premium which the premium tax
or similar tax in question constitutes.
8
<PAGE>
- --------------------------------------------------------------------------------
11. PARTIAL WITHDRAWALS
- --------------------------------------------------------------------------------
Subject to the limits described in this section, you may request to withdraw an
amount less than the Surrender Value. Such request must be made in writing and
must be received before the Annuitant's death and before the commencement of
Annuity payments. A withdrawal may or may not be subject to a withdrawal charge
as described in Section 12. The total of the amount you request and any
applicable withdrawal charge will be deducted from the Accumulated Value. The
amount as deducted is referred to as the "partial withdrawal." Unless otherwise
specified by you, any partial withdrawal will be deducted from the accumulated
value of each Account in the same proportion as such value bears to the
Accumulated Value. Without our prior approval, we will not permit a partial
withdrawal of less than $100 nor will we permit a partial withdrawal if the
Accumulated Value after such requested withdrawal would be less than $1,000.
We may defer the payment of any withdrawal in the same manner as described in
the Surrender Provision.
- --------------------------------------------------------------------------------
12. WITHDRAWAL CHARGE
- --------------------------------------------------------------------------------
A withdrawal charge will be computed upon surrender of the policy and upon each
partial withdrawal. In any one contract year, you may withdraw free of any
withdrawal charge an aggregate amount up to 10% of the Accumulated Value of the
contract as of the first day of that contract year. This aggregate amount is
the "free withdrawal amount."
To determine the withdrawal charge, we will first deduct the following amounts
from the premium payments made to date in the order that such payments were
received:
(a) The sum of all contract fees deducted to date;
(b) The sum of all prior partial withdrawals;
We will then withdraw the amount of the surrender or partial withdrawal first
from the remaining premium payments in the order that they were received, and
then from earnings, if necessary. The withdrawal charge table below will be
applied to all premium payments withdrawn in any one contract year that exceed
the free withdrawal amount. A withdrawal charge will not be imposed on
earnings. Earnings is defined as any portion of the Accumulated Value which
exceeds the total of all net premiums received.
Withdrawal Charge Table
-----------------------
<TABLE>
<CAPTION>
Time from premium payment
to date of surrender or partial withdrawal Charge
------------------------------------------ ------
<S> <C>
7 years or more No Charge
At least 6 years, but less than 7 years 1%
At least 5 years, but less than 6 years 2%
At least 4 years, but less than 5 years 3%
At least 3 years, but less than 4 years 4%
At least 2 years, but less than 3 years 5%
At least 1 year, but less than 2 years 6%
Less than 1 year 7%
</TABLE>
- --------------------------------------------------------------------------------
13. SURRENDER PROVISION
- --------------------------------------------------------------------------------
We will determine and pay the Accumulated Value of this contract, less any
withdrawal charge described in Section 12, as a Surrender Value on receipt at
our Home Office before the Annuitant's death and before the commencement of
Annuity payments of written notice requesting payment of the Surrender Value.
We reserve the right to defer the payment of the Surrender Value from the Fixed
Account for a period of six months. We will pay the Surrender Value from the
Subaccounts within 7 days (plus any period of extension under the applicable
laws, rules and regulations governing the redemption of variable Annuities)
after the date of receipt of the written notice unless a different method of
settlement is mutually agreed upon, in writing, between you and us.
9
<PAGE>
- --------------------------------------------------------------------------------
14. CONVERSION
- --------------------------------------------------------------------------------
CONVERSION OF ACCUMULATION SHARES TO ANNUITY UNITS
On the Date of Maturity or other date elected under Section 15 for commencement
of Annuity payments, the Accumulation Shares credited to the contract will be
converted into Annuity Units. Annuity payments will then commence subject to
the limitations specified in Section 15 and all other applicable provisions. The
number of Annuity Units credited to each Subaccount will be determined by: (1)
multiplying the number of Accumulation Shares credited to that Subaccount on the
date of conversion by the Accumulation Share Value for the Subaccount as of 10
days prior to the date the first Annuity payment is due; (2) subtracting
applicable premium tax, if any; (3) dividing the resulting value by 1,000; (4)
multiplying the value from (3) by the applicable factor from the Table of First
Variable Annuity Payment Factors in Section 15 for the option elected, or if no
option is elected the applicable factor for Option A (Variable) with a
guaranteed period of ten years, to determine that Subaccount's portion of the
variable portion of the first monthly Annuity payment, and (5) dividing the
value from (4) by the Annuity Unit Value for the Subaccount as of 10 days prior
to the date the first Annuity payment is due.
VARIABLE ANNUITY PAYMENTS
The amount of the variable portion of the monthly Annuity payment due on the
first payment date is equal to the sum of the portions for each Subaccount
determined as described in the preceding paragraph. The amount of the variable
portion of any monthly Annuity payment subsequent to the first will be
determined by adding together for each Subaccount the product of the number of
Annuity Units credited to the Subaccount and the Annuity Unit Value for the
Subaccount 10 days prior to the date the payment is due. We guarantee that the
Annuity Unit Values used in determining Annuity payments will not be affected by
variations in our mortality experience or our actual expenses from those
assumed.
CONVERSION OF ACCUMULATED VALUE IN FIXED ACCOUNT
On the Date of Maturity or other date elected under Section 15 for commencement
of Annuity payments, we will convert the accumulated value in the Fixed Account
into a fixed monthly Annuity. Annuity payments will then commence subject to
the limitations specified in Section 15 and all other applicable provisions. We
will determine the fixed monthly Annuity by (1) subtracting any applicable
premium tax from the accumulated value in the Fixed Account on the date the
first Annuity payment is due, (2) dividing the resulting value by 1,000, and (3)
multiplying the value from (2) by the greatest of the following; (i) the
applicable Fixed Monthly Annuity Option Rate then in effect for the option
elected, or if no option is elected, the applicable rate for Option A (Fixed)
with a guaranteed period of ten years; (ii) the applicable rate from the Table
of Fixed Annuity Payment Factors in Section 15; or (iii) the current rate for a
single consideration immediate annuity.
10
<PAGE>
- --------------------------------------------------------------------------------
15. SETTLEMENT PROVISIONS
- --------------------------------------------------------------------------------
ANNUITY ON DATE OF MATURITY
We shall make the Annuity payments automatically as a Life Annuity with Payments
for a Guaranteed Period of 10 Years in accordance with the provisions of Option
A unless another option is elected. We shall determine the amounts of the
Annuity payments in accordance with the provisions of this section and of the
"Conversion" provision in Section 14. Amounts in the Subaccounts will be used
to provide variable benefits. Amounts in the Fixed Account will be used to
provide fixed benefits.
If the amount of the first monthly Annuity payment would be less than $20, we
will make a single payment equal to the Accumulated Value on the Date of
Maturity. This single payment shall be in place of all other benefits
provided by this contract. If the amount of the first monthly Annuity payment
would be at least $20 but less than $50, we may make payments at quarterly,
semi-annual or annual intervals.
OPTIONAL METHODS OF SETTLEMENT
In place of (i) the Annuity on the Date of Maturity specified in the first
sentence of this Section 15 or (ii) a single payment in case of death prior to
the date Annuity payments commence or (iii) a single payment in case of
surrender which occurs at least 6 months after the date the first premium is
applied to the contract, proceeds payable under this contract may be left with
us in accordance with one of the optional methods of settlement then available
for contracts of this type and the terms of a supplementary agreement to be
issued when the option becomes effective, but only if (i) such proceeds are in
an amount of $5,000 or more and (ii) the amount of the first monthly Annuity
payment would be $50 or more. The following settlement options will always be
available.
OPTION A
A (Variable) - Life Annuity on a Variable Basis with Payments for a Guaranteed
Period of 5, 10, or 20 Years. If the Measuring Person's death occurs within the
guaranteed period, payments will be made for the remainder of the guaranteed
period in accordance with the terms of the supplementary agreement.
A (Fixed) - Life Annuity with Payments for a Guaranteed Period of 5, 10, or 20
Years. If the Measuring Person's death occurs within the guaranteed period,
payments will be made for the remainder of the guaranteed period in accordance
with the terms of the supplementary agreement.
OPTION B
B (Variable) - Life Annuity on a Variable Basis Without Further Payment on Death
of the Measuring Person.
B (Fixed) - Life Annuity Without Further Payment on Death of the Measuring
Person.
You may elect an option by written notice before the death of the Annuitant and
before the commencement of Annuity payments. If you have made no election
before the death of the Annuitant, the Beneficiary may make an election by
written notice before the proceeds become payable.
11
<PAGE>
ANNUITY PAYMENT AND OPTION LIMITATIONS
While the Annuitant is living (i) the Measuring Person will be the Annuitant;
(ii) the Payee will be the Annuitant unless otherwise directed by you; and (iii)
the Contingent Payee will be the Beneficiary unless otherwise provided by
written notice.
If the Annuitant dies and Death Benefit proceeds are left with us in accordance
with a settlement option election (i) the Measuring Person will be the
Beneficiary; (ii) the Payee will be the Beneficiary unless otherwise designated
in the election; and (iii) the Contingent Payee will be the person or persons so
designated in the election and in accordance with the terms of the supplementary
agreement.
Optional methods of settlement are not available without our consent if the
proceeds are payable to an executor, administrator, trustee, corporation,
partnership or association.
If the Owner of this contract dies on or after annuity payments have begun, any
remaining benefit under such annuity on the date of the Owner's death must be
paid out at least as rapidly as under the method of making annuity payments then
in effect.
FIRST VARIABLE ANNUITY PAYMENT FACTORS
The Table of First Variable Annuity Payment Factors in this Section 15 shows the
amount of the variable portion of the first monthly Annuity payment under Option
A (Variable) and Option B (Variable) for each $1,000 applied. The factors in
this table are based on the 1983a Individual Annuity Mortality Table with
mortality and age adjustments and annual effective interest at the rate of 3
1/2%. The amount of the variable portion of the first payment will depend on
the sex and adjusted age of the Measuring Person. The adjusted age is
determined from the actual age on the Measuring Person's birthday nearest the
date the first Annuity payment is due, by subtracting one year for each complete
10 year period elapsed since the Date of Issue.
FIXED ANNUITY PAYMENTS
The Table of Fixed Annuity Payment Factors in this Section 15 shows the
guaranteed amount of the fixed portion of the monthly Annuity payments for each
$1,000 applied. The factors in the table are based on the 1983 Female Annuity
Mortality Table with mortality and age adjustments and annual effective interest
at the rate of 2 1/2%. The guaranteed amount of the fixed portion of the
Annuity payments will depend on the adjusted age of the Measuring Person. The
adjusted age is determined from the actual age on the Measuring Person's
birthday nearest the date the first Annuity payment is due, by subtracting one
year for each complete 10 year period elapsed since the Date of Issue.
12
<PAGE>
TABLE OF FIRST VARIABLE ANNUITY PAYMENT FACTORS
Monthly life annuity with payments on a variable basis for each $1,000 applied.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Adjusted Option A (Variable) Option B
Age of (Variable)
Measuring Life Annuity with Payments Life Annuity
Person on for a Guaranteed Period Without
----------------------- Further Payment
Birthday on Death
Nearest Date 5 Years 10 Years 20 Years of Measuring
of First Payment ------- -------- -------- ------------
- -----------------
Person
------
Male Female Male Female Male Female Male Female
--------- ----------- ---------- ----------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
55 4.50 4.13 4.46 4.11 4.32 4.05 4.51 4.13
56 4.58 4.19 4.54 4.18 4.38 4.10 4.59 4.20
57 4.67 4.26 4.62 4.24 4.44 4.16 4.68 4.27
58 4.76 4.33 4.71 4.31 4.50 4.22 4.78 4.34
59 4.86 4.41 4.80 4.39 4.57 4.28 4.88 4.42
60 4.96 4.49 4.90 4.46 4.63 4.35 4.98 4.50
61 5.08 4.58 5.00 4.55 4.70 4.41 5.10 4.59
62 5.20 4.67 5.11 4.64 4.77 4.48 5.22 4.69
63 5.32 4.77 5.23 4.73 4.84 4.55 5.36 4.79
64 5.46 4.88 5.35 4.83 4.91 4.62 5.50 4.89
65 5.61 4.99 5.47 4.94 4.97 4.69 5.65 5.01
66 5.76 5.11 5.61 5.05 5.04 4.77 5.81 5.13
67 5.93 5.24 5.74 5.17 5.11 4.84 5.99 5.27
68 6.10 5.38 5.89 5.29 5.17 4.92 6.17 5.41
69 6.29 5.53 6.04 5.43 5.24 5.00 6.37 5.56
70 6.49 5.69 6.20 5.57 5.30 5.07 6.59 5.73
71 6.69 5.86 6.36 5.72 5.35 5.15 6.81 5.91
72 6.91 6.05 6.52 5.88 5.41 5.22 7.05 6.10
73 7.14 6.25 6.69 6.04 5.46 5.29 7.31 6.32
74 7.39 6.46 6.87 6.22 5.50 5.35 7.58 6.55
75 7.65 6.70 7.05 6.40 5.54 5.41 7.88 6.79
76 7.92 6.94 7.23 6.59 5.58 5.47 8.19 7.06
77 8.21 7.20 7.41 6.78 5.61 5.52 8.53 7.35
78 8.52 7.48 7.59 6.98 5.64 5.56 8.90 7.66
79 8.84 7.78 7.78 7.19 5.67 5.61 9.29 8.00
80 9.17 8.10 7.96 7.40 5.69 5.64 9.71 8.36
81 9.52 8.44 8.14 7.61 5.71 5.67 10.16 8.76
82 9.88 8.81 8.31 7.82 5.73 5.70 10.64 9.20
83 0.26 9.19 8.48 8.03 5.74 5.72 11.16 9.67
84 0.65 9.59 8.64 8.23 5.74 5.73 11.71 10.18
85 and over 1.05 10.02 8.79 8.42 5.75 5.74 12.30 10.74
</TABLE>
13
<PAGE>
TABLE OF FIXED ANNUITY PAYMENT FACTORS
Monthly life annuity with payments on a fixed basis for each $1,000 applied.
_______________________________________________________________________________
<TABLE>
<CAPTION>
Adjusted Option A (Fixed) Option B (Fixed)
Age of Measuring
Person on Birthday Life Annuity with Payments Life Annuity Without
Nearest Date for a Guaranteed Period Further Payment on Death
of First Payment ----------------------- of Measuring Person
---------------- -------------------
5 Years 10 Years 20 Years
------------- -------------- -------------
<S> <C> <C> <C> <C>
55 3.55 3.54 3.48 3.55
56 3.62 3.60 3.54 3.62
57 3.69 3.67 3.60 3.69
58 3.76 3.74 3.66 3.77
59 3.82 3.82 3.73 3.85
60 3.92 3.90 3.79 3.93
61 4.01 3.99 3.86 4.02
62 4.11 4.08 3.94 4.12
63 4.21 4.17 4.01 4.22
64 4.32 4.28 4.08 4.33
65 4.43 4.38 4.16 4.45
66 4.55 4.50 4.24 4.57
67 4.68 4.62 4.32 4.70
68 4.82 4.75 4.40 4.85
69 4.97 4.88 4.48 5.00
70 5.14 5.03 4.56 5.17
71 5.31 5.18 4.64 5.35
72 5.50 5.34 4.71 5.54
73 5.70 5.51 4.78 5.75
74 5.91 5.69 4.85 5.98
75 6.14 5.87 4.92 6.23
76 6.39 6.07 4.97 6.49
77 6.65 6.27 5.03 6.78
78 6.93 6.47 5.08 7.09
79 7.23 6.58 5.12 7.42
80 7.55 6.90 5.16 7.79
81 7.90 7.11 5.19 8.18
82 8.26 7.33 5.22 8.62
83 8.65 7.54 5.23 9.08
84 9.05 7.74 5.25 9.59
85 and over 9.48 7.94 5.26 10.15
</TABLE>
14
<PAGE>
- --------------------------------------------------------------------------------
16. PROOF REQUIRED FOR COMMENCEMENT AND FOR CONTINUATION OF ANNUITY PAYMENTS
- --------------------------------------------------------------------------------
Before making the first Annuity payment, we shall have the right to require
proof of the correct age of the Measuring Person. We shall also have the right
to require proof that the Measuring Person is living on the date each Annuity
payment is due.
- --------------------------------------------------------------------------------
17. MISSTATEMENTS
- --------------------------------------------------------------------------------
If the age or sex of the Measuring Person has been misstated, we will adjust the
amount of each Annuity payment and every other benefit to that which the premium
paid would have purchased at the correct age and sex. We will charge any
overpayments and credit any underpayments against future payments we make under
the contract.
- --------------------------------------------------------------------------------
18. INCONTESTABILITY
- --------------------------------------------------------------------------------
This contract shall be incontestable after it has been in force for 1 year from
its Date of Issue.
- --------------------------------------------------------------------------------
19. ASSIGNMENT
- --------------------------------------------------------------------------------
You may assign your interest in this contract, except as otherwise provided,
without the consent of any revocable Beneficiary. Your interest, any interest
of the Annuitant and of any revocable Beneficiary shall be subject to the terms
of the assignment.
We will not be on notice of any assignment unless it is in writing; nor will we
be on notice until a duplicate of the original assignment has been filed at our
Home Office. We assume no responsibility for the validity or sufficiency of any
assignment.
If the application indicates that this contract is issued in a TSA or HR-10
plan, this contact is subject to assignment restrictions for Federal Income Tax
purposes. In such event, this contract shall not be sold, assigned, discounted,
or pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose, to any person other than us.
- --------------------------------------------------------------------------------
20. CLAIMS OF CREDITORS
- --------------------------------------------------------------------------------
The proceeds and all other payments under the contract will be exempt from the
claims of creditors to the extent permitted by law. The proceeds and payments
may not be assigned or withdrawn before becoming payable without our agreement.
15
<PAGE>
- --------------------------------------------------------------------------------
21. RIGHT TO MAKE CHANGES
- --------------------------------------------------------------------------------
We reserve the right to make certain changes if, in our judgment, they would
best serve the interest of the owners of contracts such as this or would be
appropriate in carrying out the purposes of such contracts. Any changes will be
made only to the extent and in the manner permitted by applicable laws. Also,
when required by law, we will obtain your approval of the changes and approval
from any appropriate regulatory authority.
If any changes result in a material change in the underlying investment of
Subaccounts to which the reserves for this contract are allocated, we will
notify you of such change. You may then make a new election under the
Investment Option and the Account Transfer Option provisions.
- --------------------------------------------------------------------------------
22. ANNUAL STATEMENT
- --------------------------------------------------------------------------------
We will furnish you with reports annually, or more frequently, as required by
applicable law. They will include: (i) a statement of the investments held in
each Portfolio; and (ii) a statement of the condition and value of this contract
which will show the number of Accumulation Shares, if any, credited to each
Subaccount, the value of each Accumulation Share, and the Accumulated Value of
this contract.
- --------------------------------------------------------------------------------
23. MISCELLANEOUS
- --------------------------------------------------------------------------------
If the Accumulated Value of the contract becomes zero, we reserve the right to
terminate this contact.
Under applicable law, all income, gains and losses, realized or unrealized, of
the Separate Accounts shall be credited to or charged against the amounts placed
in the Separate Accounts without regard to our other income, gains and losses.
The assets of the Separate Accounts are owned solely by us. We are not a
trustee with respect to any part or the whole of those assets. The portion of
the assets in the Separate Accounts equal to the reserves and other liabilities
under this contract with respect to the Separate Accounts shall not be
chargeable with liabilities arising out of any other business we may conduct.
In place of operating each Separate Account as a unit investment trust, we
reserve the right to make investments directly, operating the Separate 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 us or an
affiliate. The Separate Account assets would be invested as provided with
respect to the investment objectives of the Separate Account.
16
<PAGE>
Communications about this contract should be sent to the Company at John Hancock
Place, Boston, Massachusetts 02117.
Flexible Premium Combination Fixed/Variable Deferred Annuity -- monthly Annuity
payable to Annuitant beginning on Date of Maturity for a guaranteed period of 10
years and thereafter for life, unless otherwise elected.
Nonparticipating
Initial premium is shown on page 3
THE BENEFITS, PAYMENTS AND ACCUMULATED VALUE UNDER THIS CONTRACT, WHEN BASED ON
THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND NOT GUARANTEED
AS TO DOLLAR AMOUNT. THE VALUES OF THE SUBACCOUNTS MAY INCREASE OR DECREASE.
SEE SECTION 8 FOR DETAILS.
<PAGE>
[LOGO OF JOHN INDIVIDUAL ANNUITY APPLICATION
HANCOCK ANNUITIES
APPEARS HERE] See reverse for instructions.
If you have any questions regarding your annuity please call: 1-800-732-5543
Please print. Make checks payable to
John Hancock Mutual Life Insurance Company or
John Hancock Variable Life Insurance Company, Boston, MA 02117
Please select: [ ] John Hancock Mutual Life Insurance Company
[ ] John Hancock Variable Life Insurance Company
================================================================================
1 CONTRACT TYPE
Deferred: [_] Variable
[_] Fixed - 1 Year Initial Interest Guarantee Period
[_] Fixed - 3 Year Initial Interest Guarantee Period
Immediate: [_] Variable: Benchmark: [_] 3.5% [_] 5.0%
(5% not available in TX)
[_] Fixed
================================================================================
2 INITIAL PREMIUM $
----------------
Request for Premium Notices: Amount $ [_] Ann. [_] Semiannual
------------- [_] Qtly [_] Other
Direct Premium Payment (ADD Program)
- - - - - - - - - I authorize John Hancock to begin making automatic
Please staple monthly withdrawals from my account at the financial
your voided institution indicated. I understand that this
check here. authorization does not affect the terms of my annuity
- - - - - - - - - contract.
(Special tax rules apply to IRA contributions.)
$
- --------------------- ------------------------------ ------------------------
Monthly Amount Financial Institution Account Number
================================================================================
3 ANNUITANT
Name:
------------------------------------------------
Date of Birth [_] Male [_] Female
-----------------
Social Security No
-----------------------------------
Residence: Street
------------------------------------
City State Zip
---------------------------------------
Telephone No.
----------------------------------------
================================================================================
4 OWNER (IF OTHER THAN ANNUITANT) (If Joint Owners, see instructions for
Box 4)
Name:
-------------------------------------------------
Date of Birth [_] Male [_] Female
------------------
Social Security No or Tax I.D. No.
--------------------- -----------------
Residence: Street
-------------------------------------
City State Zip
----------------------------------------
Telephone No.
-----------------------------------------
================================================================================
5 BENEFICIARY AND RELATIONSHIP TO ANNUITANT:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
6 THIS ANNUITY IS BEING APPLIED FOR AS: (CHECK ONE)
[_] Non-Qualified [_] IRA Rollover [_] SEP [_] 403(b)
[_] Profit Sharing Plan [_] Pension Plan [_] IRA
[_] IRA Transfer [_] SARSEP [_] 401(k)
[_] Deferred Comp. Public Employees
================================================================================
7 PROVISIONAL DATE OF MATURITY (FOR DEFERRED ANNUITIES)
The Provisional Date of Maturity is the contract anniversary nearest
the Annuitant's:
[_] 85th birthday (Non-Qualified) [_] 70th birthday (Qualified)
[_] Other age
================================================================================
8 WILL THE ANNUITY APPLIED FOR REPLACE OR CHANGE ANY EXISTING ANNUITY OR LIFE
INSURANCE?
[_] Yes If yes, indicate:
[_] No If no indicate source of money
------------------------------
Issuer Contract Type Contract No.
----------------- ----------------- ----------
[ ] 1035 exchange (Please submit cost basis information.)
================================================================================
9 PLEASE SEND STATEMENTS AND NOTICES TO:
[_] Annuitant [_] Owner [_] Other*
*If other, please indicate name and address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
10 INVESTMENT OPTIONS (FOR VARIABLE ANNUITIES)
Please use whole percentages. Total = 100%
No more than 10 accounts (portfolios) may be selected at one time.
Mid Cap/Small Cap Stocks:
_____% Real Estate Equity
_____% Mid Cap Value
_____% Mid Cap Growth
_____% Special Opportunities
_____% Small Cap Value
_____% Small Cap Growth
International Equities:
_____% International Balanced
_____% International Equities
_____% International Opportunities
Large Cap Stocks:
_____% Managed
_____% Growth & Income
_____% Large Cap Value
_____% Equity Index
_____% Large Cap Growth
Bonds:
_____% Short Term US Government Bond
_____% Sovereign Bond
_____% Strategic Bond
Cash Equivalents:
_____% Money Market
Other:
-----% ___________________
-----% ___________________
-----% ___________________
Fixed Account:
_____% Fixed Account (Not available for contracts issued in MD, OR & WA)
Telephone Transfer Option
[_] Yes [_] No I direct the Company to act upon telephone instructions
from the owner (a trustee, if the owner is a trust; or an authorized
business official, if the owner is a business entity) to change future
payment allocations and/or transfer existing funds among the investment
options subject to the provisions of the Contract.
================================================================================
11 SUITABILITY (FOR ALL ANNUITY CONTRACTS)
Estimated Household Annual Income _________ Age ______
Federal Tax Bracket ____% No. of Dependents _____
Estimated Household Net Worth (excluding Home, Auto, Furnishings)___________
Occupation/Employer _________________ Employer Address _____________________
Are you associated with another NASD Member Firm ? [_] Yes [_] No
Firm _____________________________
Investment experience: Do you own Mutual Funds [_] Yes [_] No
Individual Stocks/Bonds [_] Yes [_] No
Annuities [_] Yes [_] No
CD's/Money Market Accounts [_] Yes [_] No
Other [_] Yes [_] No Specify ________________________
Do you understand that the Variable Annuity accumulated values and
annuity payments may increase or decrease depending on market conditions?
[_] Yes [_] No
Investment Objective: [_] Safety of Principal [_] Growth and Income
[_] Growth [_] Aggressive Growth [_] Other (specify)
================================================================================
12 PAYMENT OPTION (FOR IMMEDIATE ANNUITIES)
Option:___________________________ Payment Interval: [_] Annual
[_] Semiannual [_] Quarterly [_] Monthly
First payment date is one interval from the Date of Issue unless otherwise
indicated: _________________________________
If a joint and survivor option is requested, please provide Joint
Annuitant information below:
Name: ________________ Date of Birth ___________ [_] Male [_] Female
Social Security No. ____________________________
Residence: Street ___________________ City _________ State ___ Zip ______
================================================================================
13 SPECIAL REQUEST
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
================================================================================
The following applies to each of the undersigned: To the best of my
knowledge and belief, the statements in this application are true and
complete. The annuity contract will take effect as of its date of issue if
each annuitant is living on that date and the required minimum premium has
been made. Any check tendered is received subject to collection only. I (we)
have discussed the material information in the prospectus, including charges
and expenses, with my representative and I (we) agree with the
recommendation to purchase this product. [_] Check if you wish a statement
of additional information.
Signature
-----------------------------------------------
Applicant(s)
--------------------------------------------------------
Annuitant, if other than applicant
--------------------------------------------------------
Joint Annuitant, if any (Immediate Annuities only)
Signed at
------------------------- ---------- ---------------------------
City and State Date Agent (Reg. Rep.) Signature
- --------------------------------------------------------------------------------
Agent: Is the annuity applied for intended to replace or change any
existing annuity or life insurance? [_] Yes [_] No
Agency _________________________________ ORD CODE ______________
Agent Payroll No. ____________ Name ___________________________
GA Contract Code _____________ Agent SS# ______________________
Agent Payroll No. ____________ Name ___________________________
GA Contract Code _____________ Agent SS# ______________________
- --------------------------------------------------------------------------------
NASD Principal Approval ______________________________ Date __________________
<PAGE>
INSTRUCTIONS
IMPORTANT INFORMATION TO READ BEFORE MAKING ANNUITANT, OWNER AND BENEFICIARY
DESIGNATIONS IN SECTIONS 3, 4 & 5 OF THE APPLICATION. THESE DESIGNATIONS AFFECT
THE PAYMENT OF ANY APPLICABLE DEATH BENEFIT.
DEFINITIONS
Annuitant-The person on whose life annuity payments will be based. Payments
are determined by the age and sex of the Annuitant.
Owner(s)-The person(s) who has total control of the contract and directs who
will receive the annuity payments.
Beneficiary-The person to whom a distribution is made, as described below,
if the Annuitant or any Owner dies.
DEATH OF ANNUITANT
If the Annuitant (whether or not also the Owner) dies before the contract
annuitizes, the death benefit of the contract is paid to the Beneficiary.***
DEATH OF OWNER WHO IS NOT THE ANNUITANT
In most cases, the designated Owner and Annuitant is the same individual.
However, if you choose to have the Owner and Annuitant not be the same
individual and the Owner dies before the Annuitant and before the contract
annuitizes, the surrender value of the annuity (contract value less
surrender charge) is paid to the beneficiary. This is true even if there are
two or more such Owners and only one of them dies.***
*** SPECIAL RULE FOR SPOUSE OF OWNER (Applies to Non-qualified and IRA
Contracts only)
If the surviving spouse of a deceased Owner or Owner/Annuitant is the named
Beneficiary, such surviving spouse will have the option of continuing the
contract in force as the new Owner. If the spouse chooses this option, the
distributions to the Beneficiary that are described above will not be made.
HOW TO DEAL WITH HUSBAND AND WIFE AS JOINT OWNERS
In the case where a husband and wife are joint Owners and the intent is to
have a surviving spouse continue the contract, the designation of Primary
Beneficiary should read: "Survivor of [name], husband, or [name], wife.
Example: OWNERS Husband and Wife
ANNUITANT Husband or Wife
BENEFICIARY Primary-Survivor of Husband or
Wife, Contingent--Any other party
(e.g., children)
In the above example, the surviving spouse would have the option of either
continuing the contract in force as sole Owner or receiving a distribution,
regardless of which spouse dies first. If the spouse who dies first is the
-------------------------------------
Annuitant, the distribution would be the death benefit of the annuity. If
the spouse who dies first is not the Annuitant, the distribution would be
---
the surrender value of the annuity.
If the husband and wife die simultaneously, the Contingent Beneficiary would
receive the death benefit.
================================================================================
2 DIRECT PREMIUM PAYMENT
Direct premium payment is a service which allows you to automatically add
monthly payments to your John Hancock Annuity. The minimum monthly payment
for the ADD Program is $50, with the exception of the Allegiance Preferred
Annuity which is $200. The withdrawal from your checking account will occur
on the fourth Thursday of every month. If this day is a bank holiday, the
withdrawal will occur on the prior business day. You have the right to
change your monthly payment amount or discontinue the service at any time.
John Hancock will provide you with confirmation of the date the first
withdrawal will occur. You can change your Annuity Direct Premium Payment
amount by calling Customer Access toll free at 1-800-732-5543.
================================================================================
4 OWNER
Joint Owners (Non-Qualified only)
. Name one individual as the owner in box 4.
. Enter the joint owner's name and Social Security Number, in box 13.
. Please have both owners sign as applicants.
Note: Read Death of Owner who is not Annuitant information if Joint Owners.
Contract owned by a minor
. In Box 4, insert "[name of custodian of minor], as custodian for [name
of minor]." Also, provide the minor's Social Security Number in box 4.
. Provide the custodian's Social Security Number in box 13.
. Please have the custodian sign as applicant.
================================================================================
5 BENEFICIARY DESIGNATIONS
Wording for common beneficiary designations.
. One beneficiary: John Smith, husband.
. One primary and one secondary beneficiary: John Smith, husband, if
living; otherwise Anne Smith, daughter.
. One primary and unnamed children as secondary beneficiaries: John
Smith, husband, if living; otherwise the children born of the marriage
of or legally adopted by John Smith and Mary Smith.
. Trustee: The ABC Trust effective (date), John Smith as Trustee (If more
than 1 trustee, list all)
<PAGE>
================================================================================
6 FORMS FOR QUALIFIED PLANS
Individual Retirement Annuity (IRA)
12505-Statement of Eligibility
QRP1052-Direct Transfer/Rollover Form
Simplified Employee Pension (SEP) or Salary Reduction (SARSEP)
Without JH Prototype: With JH Prototype (QRP1015):
5305-SEP Copy of Plan Registration Form
5305A-SEP (SARSEP) 12505 (complete section V)
12505 (complete section V)
403(b) Annuity
QRP100 (one per case)
RP1411
QRP1402
QRP1053-403(b) Transfer Form
RP1011 (if employer contributes, new cases only)
Pension, Profit Sharing, 401(k)
Non-JH Prototype: JH Prototype:
QRP1060 Copy of Plan Registration Form
RP1011 RP1011
Deferred Compensation
RP1600 (new cases only)
================================================================================
12 PAYMENT OPTION
Fixed Annuities
Life Income/No Refund*
Payment for life of the annuitant.
Life Income/Cash Refund*
Payments for life of the annuitant. At death, if the deposit exceeds the
total annuity payments made, the difference is refunded to the beneficiary
in lump sum.
Life Income/Installment Refund*
Payment for life of the annuitant. At death, payments are continued to the
beneficiary until total payments equal the amount applied.
Life Income with 5, 10, or 20 Years Guaranteed*
Payments for life with 5, 10, or 20 years guaranteed.
Joint and Last Survivor*
Payments while either annuitant is living.
Joint and 1/2 Survivor*
Payments for the lives of both annuitants. Upon the death of either, 1/2 of
the payment amount continues to the survivor.
Joint and Last Survivor with 5, 10, or 20 Years Guaranteed*
Payments for the lives of both annuitants with 5, 10, or 20 years
guaranteed.
Qualified Joint and Survivor*
Payments for the life of participant; at participant's death, 1/2 of the
payment amount continues to the survivor.
Term Certain (10 to 30 Years)**
Payments guaranteed over a fixed period, not to exceed annuitant's age 96.
Amount Certain
Payments of a fixed amount until the amount applied and interest have been
fully paid, not to exceed annuitant's age 96.
Variable Annuities
Life Income/No Refund*
Life Income with 5, 10, or 20 Years Guaranteed*
Joint and Last Survivor*
* Proof of Age (Immediate Annuities only)
Please submit a copy of one of the following:
. Valid Driver's License
. Birth Certificate
. Marriage Certificate
. Valid Passport
. Policy number and date of birth from application in a John Hancock
Insurance Policy
**Shorter periods available with approval
================================================================================
STATE DISCLOSURES
All jurisdictions except AZ, CT, FL, KS, MD, NJ, NY, OK, OR, PA and VA.
Any person who, with intent to defraud or knowing that he is facilitating a
fraud against an insurer, submits an application or files a claim containing
a false or deceptive statement is guilty of insurance fraud.
New Jersey only
Any person who includes any false or misleading information on an
application for an insurance policy is subject to criminal and civil
penalties.
Oklahoma only
Any policy issued hereunder shall be considered an Oklahoma contract and its
terms, including those concerning the receiving of information by the agent,
shall be construed in accordance with the laws of the State of Oklahoma.
Warning: Any person who knowingly and with intent to injure, defraud or
deceive any insurer, makes a claim for the proceeds of an insurance policy
containing any false, incomplete or misleading information is guilty of
insurance fraud.
Connecticut only
Any person who, with intent to defraud or knowing that he is facilitating a
fraud against an insurer, submits an application or files a claim containing
a false or deceptive statement is guilty of insurance fraud, as determined
by a Court of Competent Jurisdiction.
Arizona, Florida, Pennsylvania, and New York only
Do not use this form. Use state-specific form.
<PAGE>
EXHIBIT 10(B)
[JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY LETTERHEAD]
December 12, 1997
SECURITIES & EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, DC 20549
RE: John Hancock Variable Annuity Account I
File Nos. 33-82648 and 811-8696
Dear Commissioners:
This opinion is being furnished with respect to the filing of Post-Effective
Amendment No. 4 under the Securities Act of 1933 (Post-Effective Amendment No.
7 under the Investment Company Act of 1940) of the Form N-4 Registration
Statement of John Hancock Variable Annuity Account I as required by Rule 485
under the 1933 Act.
I have acted as counsel to Registrant for the purpose of preparing this
Post-Effective Amendment which is being filed pursuant to paragraph (b) of
Rule 485 and hereby represent to the Commission that in my opinion this Post-
Effective Amendment does not contain disclosures which would render it
ineligible to become effective pursuant to paragraph (b).
We hereby consent to the filing of this opinion with and as a part of this
Post-Effective Amendment to Registrant's Registration Statement with the
Commission.
Very truly yours,
/s/ SANDRA M. DaDALT
Sandra M. DaDalt
Counsel
<PAGE>
EXHIBIT 10.A
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Experts" in the
Prospectus and "Independent Auditors" in the Statement of Additional Information
in Post-Effective Amendment No. 4 to the Registration Statement (Form N-4, No.
33-82648) of John Hancock Variable Annuity Account I.
We also consent to the incorporation of our reports dated February 7, 1997,
with respect to the financial statements included in the Annual Report of the
John Hancock Variable Annuity Account I, and February 14, 1997, with respect to
the financial statements included in the Annual Report of the John Hancock
Variable Life Insurance Company for the year ended December 31, 1996.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Boston, Massachusetts
December 12, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> LARGE CAP GROWTH
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 45,003,857
<INVESTMENTS-AT-VALUE> 43,320,792
<RECEIVABLES> 0
<ASSETS-OTHER> 92,496
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 43,413,288
<PAYABLE-FOR-SECURITIES> 1,791
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 90,705
<TOTAL-LIABILITIES> 92,496
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 43,320,792
<DIVIDEND-INCOME> 6,235,377
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 382,802
<NET-INVESTMENT-INCOME> 5,852,575
<REALIZED-GAINS-CURRENT> 134,575
<APPREC-INCREASE-CURRENT> (1,771,929)
<NET-CHANGE-FROM-OPS> 4,215,221
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 34,532,544
<NUMBER-OF-SHARES-REDEEMED> 658,001
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 32,237,189
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 382,802
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> SOVEREIGN BOND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 33,106,088
<INVESTMENTS-AT-VALUE> 32,888,901
<RECEIVABLES> 0
<ASSETS-OTHER> 126,401
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33,015,302
<PAYABLE-FOR-SECURITIES> 1,349
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 125,052
<TOTAL-LIABILITIES> 126,401
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 32,888,901
<DIVIDEND-INCOME> 1,691,372
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 305,785
<NET-INVESTMENT-INCOME> 1,385,587
<REALIZED-GAINS-CURRENT> (13,677)
<APPREC-INCREASE-CURRENT> (351,203)
<NET-CHANGE-FROM-OPS> 1,020,707
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 26,676,562
<NUMBER-OF-SHARES-REDEEMED> 1,909,061
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 24,402,621
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 305,785
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> INTERNATIONAL EQUITIES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 10,778,674
<INVESTMENTS-AT-VALUE> 11,310,436
<RECEIVABLES> 0
<ASSETS-OTHER> 58,119
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11,368,555
<PAYABLE-FOR-SECURITIES> 459
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57,660
<TOTAL-LIABILITIES> 58,119
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 11,310,436
<DIVIDEND-INCOME> 91,388
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 108,177
<NET-INVESTMENT-INCOME> (16,789)
<REALIZED-GAINS-CURRENT> 39,238
<APPREC-INCREASE-CURRENT> 487,991
<NET-CHANGE-FROM-OPS> 510,440
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,541,613
<NUMBER-OF-SHARES-REDEEMED> 834,896
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 8,233,945
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 108,177
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> SMALL CAP GROWTH
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 6,510,099
<INVESTMENTS-AT-VALUE> 6,352,085
<RECEIVABLES> 0
<ASSETS-OTHER> 45,628
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,397,713
<PAYABLE-FOR-SECURITIES> 255
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 45,373
<TOTAL-LIABILITIES> 45,628
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 6,352,085
<DIVIDEND-INCOME> 2,385
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 26,391
<NET-INVESTMENT-INCOME> (24,006)
<REALIZED-GAINS-CURRENT> (4,702)
<APPREC-INCREASE-CURRENT> (158,014)
<NET-CHANGE-FROM-OPS> (186,722)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,716,464
<NUMBER-OF-SHARES-REDEEMED> 201,663
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,352,085
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 26,391
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> INTERNATIONAL BALANCED
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 2,375,984
<INVESTMENTS-AT-VALUE> 2,455,434
<RECEIVABLES> 0
<ASSETS-OTHER> 38,862
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,494,296
<PAYABLE-FOR-SECURITIES> 99
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,763
<TOTAL-LIABILITIES> 38,862
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,455,434
<DIVIDEND-INCOME> 33,662
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 10,281
<NET-INVESTMENT-INCOME> 23,381
<REALIZED-GAINS-CURRENT> 1,726
<APPREC-INCREASE-CURRENT> 79,450
<NET-CHANGE-FROM-OPS> 104,557
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,645,957
<NUMBER-OF-SHARES-REDEEMED> 271,699
<SHARES-REINVESTED> 0
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> MID CAP GROWTH
<S> <C>
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> LARGE CAP VALUE
<S> <C>
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<SENIOR-LONG-TERM-DEBT> 0
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<NUMBER-OF-SHARES-SOLD> 7,714,900
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<SHARES-REINVESTED> 0
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> MONEY MARKET
<S> <C>
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<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
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<NUMBER-OF-SHARES-SOLD> 35,753,964
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> MID CAP VALUE
<S> <C>
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<SENIOR-LONG-TERM-DEBT> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,034,857
<DIVIDEND-INCOME> 62,336
<INTEREST-INCOME> 0
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<EXPENSES-NET> 10,808
<NET-INVESTMENT-INCOME> 51,528
<REALIZED-GAINS-CURRENT> 1,514
<APPREC-INCREASE-CURRENT> 194,847
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<NUMBER-OF-SHARES-SOLD> 2,888,273
<NUMBER-OF-SHARES-REDEEMED> 49,777
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,034,857
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 10,808
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> SPECIAL OPPORTUNITIES
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
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<PAYABLE-FOR-SECURITIES> 2,183
<SENIOR-LONG-TERM-DEBT> 0
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<TOTAL-LIABILITIES> 201,963
<SENIOR-EQUITY> 0
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<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 53,548,769
<DIVIDEND-INCOME> 2,056,928
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<EXPENSES-NET> 411,163
<NET-INVESTMENT-INCOME> 1,645,765
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<NUMBER-OF-SHARES-SOLD> 41,544,185
<NUMBER-OF-SHARES-REDEEMED> 1,009,833
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> REAL ESTATE EQUITY
<S> <C>
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<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
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<TOTAL-LIABILITIES> 55,572
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 7,855,538
<DIVIDEND-INCOME> 255,411
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<NET-INVESTMENT-INCOME> 201,447
<REALIZED-GAINS-CURRENT> 29,463
<APPREC-INCREASE-CURRENT> 1,127,858
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<NUMBER-OF-SHARES-SOLD> 5,463,924
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<SHARES-REINVESTED> 0
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> GROWTH & INCOME
<S> <C>
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<PERIOD-START> JAN-01-1996
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<TOTAL-LIABILITIES> 686,049
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<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 109,642,677
<DIVIDEND-INCOME> 12,913,053
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<EXPENSES-NET> 946,308
<NET-INVESTMENT-INCOME> 11,966,745
<REALIZED-GAINS-CURRENT> 16,783
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<NUMBER-OF-SHARES-SOLD> 83,558,294
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
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<NUMBER> 13
<NAME> MANAGED
<S> <C>
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<EXPENSES-NET> 1,566,339
<NET-INVESTMENT-INCOME> 17,050,859
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<APPREC-INCREASE-CURRENT> (6,379,960)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 14
<NAME> SHORT-TERM U.S. GOVERNMENT
<S> <C>
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 15
<NAME> SMALL CAP VALUE
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 3,301,611
<INVESTMENTS-AT-VALUE> 3,453,343
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<NET-INVESTMENT-INCOME> 68,992
<REALIZED-GAINS-CURRENT> 844
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<NUMBER-OF-SHARES-SOLD> 3,359,869
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<NET-CHANGE-IN-ASSETS> 3,453,343
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<GROSS-EXPENSE> 13,936
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 16
<NAME> INTERNATIONAL OPPORTUNITIES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 3,359,395
<INVESTMENTS-AT-VALUE> 3,506,957
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22,047
<TOTAL-LIABILITIES> 22,189
<SENIOR-EQUITY> 0
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<ACCUMULATED-NET-GAINS> 0
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<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,506,957
<DIVIDEND-INCOME> 9,935
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<NET-INVESTMENT-INCOME> (4,114)
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<APPREC-INCREASE-CURRENT> 147,562
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<NUMBER-OF-SHARES-SOLD> 3,564,680
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<GROSS-EXPENSE> 14,049
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 17
<NAME> EQUITY INDEX
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
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<INVESTMENTS-AT-VALUE> 5,099,509
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 24,701
<TOTAL-LIABILITIES> 24,912
<SENIOR-EQUITY> 0
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 5,099,509
<DIVIDEND-INCOME> 115,771
<INTEREST-INCOME> 0
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<EXPENSES-NET> 21,689
<NET-INVESTMENT-INCOME> 94,082
<REALIZED-GAINS-CURRENT> 4,980
<APPREC-INCREASE-CURRENT> 253,706
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<NUMBER-OF-SHARES-SOLD> 5,016,013
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<NET-CHANGE-IN-ASSETS> 5,099,509
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<GROSS-EXPENSE> 21,689
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 18
<NAME> STRATEGIC BOND
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 4,101,106
<INVESTMENTS-AT-VALUE> 4,104,368
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 36,689
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<SENIOR-EQUITY> 0
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<NET-ASSETS> 4,104,368
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<EXPENSES-NET> 17,261
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<REALIZED-GAINS-CURRENT> 120
<APPREC-INCREASE-CURRENT> 3,262
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<NUMBER-OF-SHARES-SOLD> 4,191,037
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<SHARES-REINVESTED> 0
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<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
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</TABLE>
