As filed with the U.S. Securities and Exchange Commission on June 27, 2001

Registration No. 333-55172
- --------------------------------------------------------------------------------

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------

FORM S-6
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [_]
PRE-EFFECTIVE AMENDMENT NO. 1 [X]
POST-EFFECTIVE AMENDMENT NO. [_]
----------------------

JOHN HANCOCK VARIABLE LIFE ACCOUNT S
(Exact name of trust)

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
(Name of depositor)

JOHN HANCOCK PLACE
INSURANCE & SEPARATE ACCOUNTS DEPT.-LAW SECTOR
BOSTON, MASSACHUSETTS 02117
(Complete address of depositor's principal executive offices)
--------------------

RONALD J. BOCAGE, ESQ.
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
INSURANCE & SEPARATE ACCOUNTS DEPT.-LAW SECTOR
JOHN HANCOCK PLACE, BOSTON, 02117
(Name and complete address of agent for service)
--------------------

Copy to:
THOMAS C. LAUERMAN
Foley & Lardner
3000 K Street N.W.
Washington, D.C. 20007
--------------------

Approximate date of proposed public offering: as soon as practicable after the
effective date of this Registration Statement.

Title and amount of securities being registered: interests under flexible
premium variable life survivorship insurance policies.

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 5(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Sections 8(a),
may determine.

PROSPECTUS DATED JULY 9, 2001
-------------------------------
VARIABLE ESTATE PROTECTION EDGE
-------------------------------

a flexible premium variable life survivorship insurance policy
issued by
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY ("JHVLICO")

The policy provides an investment option with fixed rates of return
declared by JHVLICO and the following variable investment options:

- -----------------------------------------------------------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTION MANAGED BY
-------------------------- ----------

Equity Index.................................................. State Street Global Advisors
Growth & Income............................................... Independence Investment LLC and Putnam Investment Management, LLC
Large Cap Value............................................... T. Rowe Price Associates, Inc.
Large Cap Value CORE (SM)..................................... Goldman Sachs Asset Management
Large Cap Growth.............................................. Independence Investment LLC
Large Cap Aggressive Growth................................... Alliance Capital Management L.P.
Large/Mid Cap Value........................................... Wellington Management Company, LLP
Fundamental Growth............................................ Putnam Investment Management, LLC
Mid Cap Growth................................................ Janus Capital Corporation
Small/Mid Cap CORE (SM)....................................... Goldman Sachs Asset Management
Small/Mid Cap Growth.......................................... Wellington Management Company, LLP
Small Cap Equity.............................................. Capital Guardian Trust Company
Small Cap Value............................................... T. Rowe Price Associates, Inc.
Small Cap Growth.............................................. John Hancock Advisers, Inc.
V.A. Relative Value........................................... John Hancock Advisers, Inc.
AIM V.I. Value................................................ A I M Advisors, Inc.
AIM V.I. Growth............................................... A I M Advisors, Inc.
Fidelity VIP Growth........................................... Fidelity Management and Research Company
Fidelity VIP Contrafund (R).................................. Fidelity Management and Research Company
MFS Investors Growth Stock.................................... MFS Investment Management (R)
MFS Research.................................................. MFS Investment Management (R)
MFS New Discovery............................................. MFS Investment Management (R)
International Equity Index.................................... Independence Investment LLC
International Opportunities................................... T. Rowe Price International, Inc.
International Equity.......................................... Goldman Sachs Asset Management
Emerging Markets Equity....................................... Morgan Stanley Investment Management Inc.
Janus Aspen Worldwide Growth.................................. Janus Capital Corporation
Real Estate Equity............................................ Independence Investment LLC and Morgan Stanley
Investment Management Inc.
Health Sciences............................................... Putnam Investment Management, LLC
V.A. Financial Industries..................................... John Hancock Advisers, Inc.
Janus Aspen Global Technology................................. Janus Capital Corporation
Managed....................................................... Independence Investment LLC and Capital Guardian Trust Company
Global Balanced............................................... Capital Guardian Trust Company
Short-Term Bond............................................... Independence Investment LLC
Bond Index.................................................... Mellon Bond Associates, LLP
Active Bond................................................... John Hancock Advisers, Inc.
V.A. Strategic Income......................................... John Hancock Advisers, Inc.
High Yield Bond............................................... Wellington Management Company, LLP
Global Bond................................................... Capital Guardian Trust Company
Money Market.................................................. Wellington Management Company, LLP
- -----------------------------------------------------------------------------------------------------------------------------------

The variable investment options shown on page 1 are those available as of the
date of this prospectus. We may add, modify or delete variable investment
options in the future.

When you select one or more of these variable investment options, we invest
your money in the corresponding investment option(s) of one or more of the
following: the John Hancock Variable Series Trust I, the John Hancock
Declaration Trust, the AIM Variable Insurance Funds, Fidelity's Variable
Insurance Products Fund (Service Class) and Variable Insurance Products Fund II
(Service Class), the MFS Variable Insurance Trust (Initial Class Shares), and
the Janus Aspen Series (Service Shares Class) (together, "the Series Funds"). In
this prospectus, the investment options of the Series Funds are referred to as
"funds". In the prospectuses for the Series Funds, the investment options may be
referred to as "funds", "portfolios" or "series".

Each Series Fund is a so-called "series" type mutual fund registered with the
Securities and Exchange Commission ("SEC"). The investment results of each
variable investment option you select will depend on those of the corresponding
fund of one of the Series Funds. Each of the funds is separately managed and has
its own investment objective and strategies. Attached at the end of this
prospectus are prospectuses for the Series Funds. The Series Fund prospectuses
contain detailed information about each available fund. Be sure to read those
prospectuses before selecting any of the variable investment options shown on
page 1.

* * * * * * * * * * * *

Please note that the SEC has not approved or disapproved these securities, or
determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.

* * * * * * * * * * * *

JHVLICO LIFE SERVICING OFFICE
-----------------------------

Express Delivery U.S. Mail
---------------- ---------
529 Main Street (X-4) P.O. Box 111
Charlestown, MA 02129 Boston, MA 02117

Phone: 1-800-732-5543

Fax: 1-617-886-3-48

GUIDE TO THIS PROSPECTUS

This prospectus contains information that you should know before you buy a
policy or exercise any of your rights under the policy. However, please keep in
mind that this is a prospectus - - it is not the policy. The prospectus
---
simplifies many policy provisions to better communicate the policy's essential
features. Your rights and obligations under the policy will be determined by the
language of the policy itself. When you receive your policy, read it carefully.

This prospectus is arranged in the following way:

. The section which follows is called "Basic Information". It contains
basic information about the policy in a question and answer format. You
should read the Basic Information before reading any other section of the
prospectus.

. Behind the Basic Information section are illustrations of hypothetical
policy benefits that help clarify how the policy works. These start on
page 25.

. Behind the illustrations is a section called "Additional Information."
This section gives more details about the policy. It generally does not
---
repeat information contained in the Basic Information section. A table of
contents for the Additional Information section appears on page 32.

. Behind the Additional Information section are the financial statements
for us and for the Separate Account that we use for this policy. These
start on page 47.

. Finally, there is an Alphabetical Index of Key Words and Phrases at the
back of the prospectus on page 118.

After the Alphabetical Index of Key Words and Phrases, this prospectus ends and
the prospectuses for the Series Funds begin.

BASIC INFORMATION

This "Basic Information" section provides answers to commonly asked questions
about the policy. Here are the page numbers where the questions and answers
appear:

Question Beginning on page
- -------- -----------------

.What is the policy?........................................ 5

.Who owns the policy?....................................... 5

.How can you invest money in the policy?.................... 5

.Is there a minimum amount you must invest?................. 6

.How will the value of your investment in the policy
change over time?.......................................... 8

.What charges will we deduct from your investment in the
policy?.................................................... 9

.What charges will the Series Funds deduct from your
investment in the policy?.................................. 11

.What other charges can we impose in the future?............ 14

.How can you change your policy's investment allocations?... 14

.How can you access your investment in the policy?.......... 15

.How much will we pay when the last insured person dies?.... 17

.Can you add additional benefit riders?..................... 18

.How can you change your policy's insurance coverage?....... 20

.Can you cancel your policy after it's issued?.............. 21

.Can you choose the form in which we pay out policy
proceeds?.................................................. 21

.To what extent can we vary the terms and conditions of
the policies in particular cases?.......................... 22

.How will your policy be treated for income tax purposes?... 23

.How do you communicate with us?............................ 23

WHAT IS THE POLICY?

This is a so-called "survivorship" policy that provides coverage on two
insured persons. The policy's primary purpose is to provide lifetime protection
against economic loss due to the death of the last surviving insured person. If
the life insurance protection is provided under a master group policy, the term
"policy" as used in this prospectus refers to the certificate you will be issued
and not to the master group policy. The value of the amount you have invested
under the policy may increase or decrease daily based upon the investment
results of the variable investment options that you choose. The amount we pay to
the policy's beneficiary upon the death of the last surviving insured person (we
call this the "death benefit") may be similarly affected.

While either of the insured persons is alive, you will have a number of
options under the policy. Here are some major ones:

. Determine when and how much you invest in the various investment
options

. Borrow or withdraw amounts you have in the investment options

. Change the beneficiary who will receive the death benefit

. Change the amount of insurance

. Turn in (i.e., "surrender") the policy for the full amount of its
surrender value

. Choose the form in which we will pay out the death benefit or other
proceeds

Most of these options are subject to limits that are explained later in this
prospectus.

WHO OWNS THE POLICY?

That's up to the person who applies for the policy. The owner of the policy is
the person who can exercise most of the rights under the policy, such as the
right to choose the investment options or the right to surrender the policy. In
many cases, the person buying the policy is also the person who will be the
owner. However, the application for a policy can name another person or entity
(such as a trust) as owner. Whenever we've used the term "you" in this
prospectus, we've assumed that the reader is the person who has whatever right
or privilege is being discussed. There may be tax consequences if the owner and
the insured person are different, so you should discuss this issue with your tax
adviser.

HOW CAN YOU INVEST MONEY IN THE POLICY?

Premium Payments

We call the investments you make in the policy "premiums" or "premium
payments". The amount we require as your first premium depends upon the
specifics of your policy and the insured person. Except as noted below, you can
make any other premium payments you wish at any time. That's why the policy is
called a "flexible premium" policy.

Maximum premium payments

Federal tax law limits the amount of premium payments you can make relative to
the amount of your policy's insurance coverage. We will not knowingly accept any
amount by which a premium payment exceeds the maximum. If you exceed certain
other limits, the law may impose a penalty on amounts you take out of your
policy. More discussion of these tax law requirements begins on page 40. Also,
we may refuse to accept any amount of an additional premium if:

. that amount of premium would increase our insurance risk exposure,
and

. the insured persons don't provide us with adequate evidence that they
continue to meet our requirements for issuing insurance.

In no event, however, will we refuse to accept any premium necessary to prevent
the policy from terminating or to keep the guaranteed death benefit feature in
effect.

Ways to pay premiums

If you pay premiums by check or money order, they must be drawn on a U.S. bank
in U.S. dollars and made payable to "John Hancock Life." We will not accept
credit card checks. We will not accept starter or third party checks if they
fail to satisfy our administrative requirements. Premiums after the first must
be sent to the JHVLICO Life Servicing Office at the appropriate address shown on
page 2 of this prospectus.

We will also accept premiums:

. by wire or by exchange from another insurance company,

. via an electronic funds transfer program (any owner interested in making
monthly premium payments must use this method), or

. if we agree to it, through a salary deduction plan with your
employer.

You can obtain information on these other methods of premium payment by
contacting your JHVLICO representative or by contacting the JHVLICO Life
Servicing Office.

IS THERE A MINIMUM AMOUNT YOU MUST INVEST?

Planned Premiums

The Policy Specifications page of your policy will show the "Planned Premium"
for the policy. You choose this amount in the policy application. You will also
choose how often to pay premiums-- annually, semi-annually, quarterly or
monthly. The premium reminder notice we send you is based on the amount and
period you choose. However, payment of Planned Premiums is not necessarily
required. You need only invest enough to keep the policy in force (see
"Guaranteed death benefit feature" on page 7 and "Lapse and reinstatement" on
page 8).

Guaranteed death benefit feature

This feature guarantees that your Basic Sum Insured will not terminate (i.e.,
"lapse"), regardless of adverse investment performance, if on each "grace period
testing date" the amount of cumulative premiums you have paid (less all
withdrawals from the policy and all outstanding loans) equals or exceeds the sum
of all Guaranteed Death Benefit Premium ("GDB Premium") due to date. For the
first 5 policy years, the same applies to any amount of Additional Sum Insured.
If the Guaranteed Death Benefit test is not satisfied on any grace period
testing date, the guaranteed death benefit feature will not be "in effect" on
that date. We currently test on a quarterly basis, but reserve the right to test
on each monthly deduction date. (The term "monthly deduction date" is defined on
page 35 under "Procedures for issuance of a policy".)

Your policy will show two types of GDB Premium (or such other types as
permitted by your state):

. 5 Year GDB Premium - This is used on each grace period testing date until
the 5th policy anniversary. The total GDB Premium that is "due to date"
on any grace period testing date during this period is equal to the 5
Year GDB Premium times the number of elapsed policy months from the
policy's date of issue through the grace period testing date.

. Age 100 GDB Premium - This is used on each grace period testing date that
occurs on and after the 5th policy anniversary until the policy
anniversary nearest the younger insured person's 100th birthday
(regardless of whether such younger insured person remains alive until
that policy anniversary). The total GDB Premium that is "due to date" on
any grace period testing date during this period is equal to the Age 100
GDB Premium times the number of elapsed policy months from the policy's
date of issue through the grace period testing date.

The Age 100 GDB Premium is higher than the 5 Year GDB Premium, but neither of
them will ever be greater than the so-called "guideline premium" for the policy
as defined in Section 7702 of the Internal Revenue Code.

For the first 5 policy years, the guaranteed death benefit feature applies to
both the Basic Sum Insured and Additional Sum Insured then in effect and any
riders then in effect. On the 5th policy anniversary and thereafter, the
guaranteed death benefit feature applies only to the Basic Sum Insured in effect
when we issue the policy and does not apply to any amount of Additional Sum
Insured or any rider benefits. If you increase the Total Sum Insured (see "How
much will we pay when the last insured person dies?" on page 17), the guaranteed
death benefit feature will cease to be in effect on the date such increase takes
effect or the 5th policy anniversary, whichever is later. If there is a decrease
in the Total Sum Insured or a change in death benefit option, the 5 Year GDB
Premium and the Age 100 GDB Premium may be changed. In making any "due date"
calculation described above after the effective date of the change, the old GDB
Premium will apply up to the effective date of the change and the new GDB
Premium will be multiplied by the number of elapsed policy months from the
effective date of the change through the grace period testing date.

If there are monthly charges that remain unpaid because of this guaranteed
death benefit feature, we will deduct such charges when there is sufficient
account value to pay them.

If an insufficient amount of GDB Premium has been paid on a grace period
testing date, and your policy would lapse for failure to pay charges then due,
we will provide you with a notification as descibed in the next section, "Lapse
and reinstatement".

Lapse and reinstatement

Either your entire policy or the Additional Sum Insured portion of your Total
Sum Insured can lapse for failure to pay charges due under the policy. During
the first 5 policy years, there can be no lapse of any kind if the guaranteed
death benefit feature is in effect. If the guaranteed death benefit feature is
in effect after the 5th policy year, the Additional Sum Insured and any
additional benefit riders (unless otherwise stated therein) will be in default
and may lapse if the policy's surrender value is not sufficient to pay the
charges on a grace period testing date. If the guaranteed death benefit feature
is not in effect, the entire policy will be in default and may lapse if the
policy's surrender value is not sufficient to pay the charges on a grace period
testing date. In either case, we will notify you of how much you will need to
pay to keep the Additional Sum Insured or the policy in force. You will have a
61 day "grace period" to make these payments. If you pay these amounts during
the grace period, you may also continue the guaranteed death benefit feature by
paying the necessary amount of GDB Premiums.

If you don't pay at least the required amount by the end of the grace period,
the Additional Sum Insured and any additional benefit riders (unless otherwise
stated therein) or your policy, as the case may be, will lapse. If your policy
lapses, all coverage under the policy will cease. Even if the policy or the
Additional Sum Insured terminates in this way, you can still reactivate (i.e.,
"reinstate") it within 3 years from the beginning of the grace period. You will
have to provide evidence that the surviving insured persons still meet our
requirements for issuing coverage. You will also have to pay a minimum amount of
premium and be subject to the other terms and conditions applicable to
reinstatements, as specified in the policy. If the guaranteed death benefit is
not in effect and the last surviving insured person dies during the grace
period, we will deduct any unpaid monthly charges from the death benefit. During
a grace period, you cannot make a partial withdrawal or policy loan.

HOW WILL THE VALUE OF YOUR INVESTMENT IN THE POLICY CHANGE OVER TIME?

From each premium payment you make, we deduct the charges described under
"Deductions from premium payments" below. We invest the rest in the investment
options you've elected. Special investment rules apply to premiums processed
prior to the 20th day after your policy becomes effective. (See "Commencement of
investment performance" beginning on page 35.)

Over time, the amount you've invested in any variable investment option will
increase or decrease the same as if you had invested the same amount directly in
the corresponding fund of a Series Fund and had reinvested all fund dividends
and distributions in additional fund shares; except that we will deduct certain
additional charges which will reduce your account value. We

describe these charges under "What charges will we deduct from your investment
in the policy?" below.

The amount you've invested in the fixed investment option will earn interest
at a rate we declare from time to time. We guarantee that this rate will be at
least 4%. If you want to know what the current declared rate is, just call or
write to us. The current declared rate will also appear in the annual statement
we will send you. Amounts you invest in the fixed investment option will not be
subject to the asset-based risk charge described on page 10. Otherwise, the
charges applicable to the fixed investment option are the same as those
applicable to the variable investment options.

At any time, the "account value" of your policy is equal to:

. the amount you invested,

. plus or minus the investment experience of the investment options
you've chosen,

. minus all charges we deduct, and

. minus all withdrawals you have made.

If you take a loan on the policy, however, your account value will be computed
somewhat differently. This is discussed beginning on page 37.

WHAT CHARGES WILL WE DEDUCT FROM YOUR INVESTMENT IN THE POLICY?

Deductions from premium payments

. Tax charge - A charge to cover state premium taxes we currently expect to
----------
pay, on average, and the increased Federal income tax burden that we currently
expect will result from receipt of premiums. This charge is currently 3.60% of
each premium.

. Premium sales charge - A charge to help defray our sales costs. The
--------------------
charge is 5% of the premium you pay in all policy years. We currently intend
to stop making this charge on premiums received after the 10th policy year,
but this is not guaranteed. Because policies of this type were first offered
for sale in the year 2001, no termination of this charge has yet occurred.

Deductions from account value

. Issue charge - A monthly charge made for the first four policy years to
------------
help defray our sales and administrative costs. Part of the charge is a
percentage of the "Target Premium" and will be the same regardless of the
amount of premium actually paid. The percentage will vary depending upon the
proportion of Additional Sum Insured at issue and will never be greater than
1.833%. The Target Premium is determined at the time the policy is issued and
appears in the "Policy Specifications" section of the policy. In general, the
greater the proportion of Additional Sum Insured at issue, the lower the
Target Premium. The other part of the charge is an amount per thousand of
Basic Sum

Insured at issue. This amount will vary depending upon the proportion of
Additional Sum Insured at issue and will never be greater than 5c. In general,
the greater the proportion of Additional Sum Insured at issue, the lower the
amount per thousand.

. Maintenance charge - A monthly charge to help defray our administrative
------------------
costs. This is a flat dollar charge of up to $12 (currently $9) during all
policy years.

. Insurance charge - A monthly charge for the cost of insurance. To
----------------
determine the charge, we multiply the amount of insurance for which we are at
risk by a cost of insurance rate. The rate is derived from an actuarial table
and the ratio of Basic Sum Insured to Additional Sum Insured on the date we
issue your policy. The table in your policy will show the maximum cost of
insurance rates. The cost of insurance rates that we currently apply are
generally less than the maximum rates. We will review the cost of insurance
rates at least every 5 years and may change them from time to time. However,
those rates will never be more than the maximum rates shown in the policy. The
table of rates we use will depend on the insurance risk characteristics and
(usually) gender of each of the insured persons, the Total Sum Insured and the
length of time the policy has been in effect. Regardless of the table used,
cost of insurance rates generally increase each year that you own your policy,
as each insured person's attained age increases. (An insured person's
"attained age" on any date is his or her age on the birthday nearest that
date.) The insurance charge is not affected by the death of the first insured
person to die. The insurance charge for death benefit Option B will tend to be
higher than the insurance charge for death benefit Option A (see "How much
will we pay when the last insured person dies?" on page 17).

. Extra mortality charge - A monthly charge specified in your policy for
-----------------------
additional mortality risk if either of the insured persons is subject to
certain types of special insurance risk.

. Asset-based risk charge - A monthly charge for mortality and expense
-----------------------
risks we assume. The charge is a percentage of that portion of your account
value allocated to variable investment options. The current percentage on the
first $25,000 of account value allocated to variable investment options is
.0501%. We guarantee that this percentage will never exceed .0501%. The
current percentages on the account value allocated to the variable investment
options in excess of $25,000 are .0501% for policy years 1 through 10, .0167%
for policy years 11 through 20, and .0083% for policy years 21 and thereafter.
We guarantee that these percentages will never exceed .0501 % for all policy
years. This charge does not apply to the fixed investment option.

. Optional benefits charge - Monthly charges for certain optional insurance
------------------------
benefits added to the policy by means of a rider. Some of the riders we
currently offer are described under "Can you add additional benefit
riders?" on page 18.

. Contingent deferred sales charge ("CDSC") - A charge we deduct if the
-----------------------------------------
policy lapses or is surrendered within the first 14 policy years. We deduct
this charge to compensate us for sales expenses that we would otherwise not
recover in the event of early lapse or surrender. The charge is a percentage
of the premiums we received in the first two policy years that do not exceed
the first year Target Premium, as shown in the following table:

POLICY YEAR(S) PERCENTAGE OF PREMIUMS RECEIVED
-------------- -------------------------------

1 100%
2 93%
3 86%
4 79%
5 71%
6 64%
7 57%
8 50%
9 43%
10 36%
11 29%
12 21%
13 14%
14 7%
15 and later 0%

The percentages may be lower for older issue ages due to certain state law
restrictions. A pro-rata portion of the CDSC may also be charged in the case
of certain types of withdrawals (see "Partial withdrawals" on page __)

. Partial withdrawal charge - A $20 charge for each partial withdrawal of
-------------------------
account value to compensate us for the administrative expenses of
processing the withdrawal.

WHAT CHARGES WILL THE SERIES FUNDS DEDUCT FROM YOUR INVESTMENT IN THE POLICY?

The funds must pay investment management fees and other operating expenses.
These fees and expenses are different for each fund and reduce the investment
return of each fund. Therefore, they also indirectly reduce the return you will
earn on any variable investment options you select. We may also receive payments
from a fund or its affiliates at an annual rate of up to approximately 0.35% of
the average net assets that holders of our variable life insurance policies and
variable annuity contracts have invested in that fund. Any such payments do not,
however, result in any charge to you in addition to what is disclosed below.

The following figures for the funds are based on historical fund expenses, as
a percentage (rounded to two decimal places) of each fund's average daily net
assets for 2000, except as indicated in the Notes appearing at the end of this
table. Expenses of the funds are not fixed or specified under the terms of the
policy, and those expenses may vary from year to year.

--------------
Total Fund Total Fund
Investment Distribution and Other Operating Operating Operating
Management Service Expenses With Expenses With Expenses Absent
Fund Name Fee (12b-1) Fees Reimbursement Reimbursement Reimbursemet
- --------- ---------- ---------------- --------------- -------------- ---------------

JOHN HANCOCK VARIABLE SERIES
TRUST I (NOTE 1):
Equity Index............................... 0.13% N/A 0.06% 0.19% 0.19%
Growth & Income............................ 0.68% N/A 0.08% 0.76% 0.76%
--------------

Large Cap Value............................ 0.75% N/A 0.05% 0.80% 0.80%
Large Cap Value CORE (SM).................. 0.75% N/A 0.10% 0.85% 1.09%
Large Cap Growth........................... 0.36% N/A 0.10% 0.46% 0.46%
Large Cap Aggressive Growth................ 0.90% N/A 0.10% 1.00% 1.05%
Large/Mid Cap Value........................ 0.95% N/A 0.10% 1.05% 1.36%
Fundamental Growth*........................ 0.90% N/A 0.10% 1.00% 1.04%
Mid Cap Growth............................. 0.81% N/A 0.04% 0.85% 0.85%
Small/Mid Cap CORE (SM).................... 0.80% N/A 0.10% 0.90% 1.23%
Small/Mid Cap Growth....................... 0.75% N/A 0.10% 0.85% 0.85%
Small Cap Equity*.......................... 0.90% N/A 0.10% 1.00% 1.03%
Small Cap Value*........................... 0.95% N/A 0.10% 1.05% 1.29%
Small Cap Growth........................... 0.75% N/A 0.07% 0.82% 0.82%
International Equity Index................. 0.18% N/A 0.10% 0.28% 0.37%
International Opportunities................ 0.83% N/A 0.10% 0.93% 1.09%
International Equity....................... 1.00% N/A 0.10% 1.10% 1.76%
Emerging Markets Equity.................... 1.22% N/A 0.10% 1.32% 2.49%
Real Estate Equity......................... 1.01% N/A 0.09% 1.10% 1.10%
Health Sciences............................ 1.00% N/A 0.10% 1.10% 1.10%
Managed.................................... 0.66% N/A 0.09% 0.75% 0.75%
Global Balanced............................ 1.05% N/A 0.10% 1.15% 1.44%
Short-Term Bond............................ 0.30% N/A 0.06% 0.36% 0.36%
Bond Index................................. 0.15% N/A 0.10% 0.25% 0.27%
Active Bond................................ 0.62% N/A 0.10% 0.72% 0.74%
High Yield Bond............................ 0.65% N/A 0.10% 0.75% 0.87%
Global Bond................................ 0.85% N/A 0.10% 0.95% 1.05%
Money Market............................... 0.25% N/A 0.04% 0.29% 0.29%

JOHN HANCOCK DECLARATION TRUST
(NOTE 2):
V.A. Relative Value........................ 0.60% N/A 0.19% 0.79% 0.79%
V.A. Financial Industries.................. 0.80% N/A 0.10% 0.90% 0.90%
V.A. Strategic Income...................... 0.60% N/A 0.16% 0.76% 0.76%

AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Value............................. 0.61% N/A 0.23% 0.84% 0.84%
AIM V.I. Growth............................ 0.61% N/A 0.22% 0.83% 0.83%

VARIABLE INSURANCE PRODUCTS FUND
- SERVICE CLASS (NOTE 3):
Fidelity VIP Growth........................ 0.57% 0.10% 0.09% 0.76% 0.76%

VARIABLE INSURANCE PRODUCTS FUND
II - SERVICE CLASS (NOTE 3):
Fidelity VIP Contrafund(R)................. 0.57% 0.10% 0.09% 0.76% 0.76%

MFS VARIABLE INSURANCE TRUST -
INITIAL CLASS SHARES (NOTE 4):
MFS Investors Growth Stock*................ 0.75% 0.00% 0.16% 0.91% 0.92%
MFS Research............................... 0.75% 0.00% 0.10% 0.85% 0.85%
MFS New Discovery.......................... 0.90% 0.00% 0.16% 1.06% 1.09%

JANUS ASPEN SERIES - SERVICE SHARES
CLASS (NOTE 5):
Janus Aspen Worldwide Growth............... 0.65% 0.25% 0.05% 0.95% 0.95%
Janus Aspen Global Technology.............. 0.65% 0.25% 0.04% 0.94% 0.94%
--------------

NOTES TO FUND EXPENSE TABLE

(1) Under its current investment management agreements with the John Hancock
Variable Series Trust I, John Hancock Life Insurance Company reimburses a
fund when the fund's "other fund expenses" exceed 0.10% of the fund's
average daily net assets. Percentages shown for the Health Sciences Fund
are estimates because the fund was not in operation in 2000. Percentages
shown for the Growth & Income, Fundamental Growth, Small Cap Equity, Real
Estate Equity, Managed, Global Balanced, Active Bond and Global Bond funds
are calculated as if the current management fee schedules, which apply to
these funds effective November 1, 2000, were in effect for all of 2000.
Percentages shown for the Small Cap Value and Large Cap Value funds are
calculated as if the current management fee schedules, which apply to
these funds effective May 1, 2001, were in effect for all of 2000.
"CORE/SM/" is a service mark of Goldman, Sachs & Co.

* Fundamental Growth was formerly "Fundamental Mid Cap Growth," Small Cap
Equity was formerly "Small Cap Value," and Small Cap Value was formerly
"Small/Mid Cap Value."

(2) Percentages shown for John Hancock Declaration Trust funds reflect the
investment management fees currently payable and other fund expenses
allocated in 2000. John Hancock Advisers, Inc. has agreed to limit
temporarily other expenses of each fund to 0.25% of the fund's average
daily assets, at least until April 30, 2002.

(3) Actual annual class operating expenses were lower for each of the Fidelity
VIP funds shown because a portion of the brokerage commissions that the
fund paid was used to reduce the fund's expenses, and/or because through
arrangements with the fund's custodian, credits realized as a result of
uninvested cash balances were used to reduce a portion of the fund's
expenses. See the accomanying prospectus of the fund for details.

(4) MFS Variable Insurance Trust funds have an expense offset arrangement
which reduces each fund's custodian fee based upon the amount of cash
maintained by the fund with its custodian and dividend disbursing agent.
Each fund may enter into other such arrangements and directed brokerage
arrangements, which would also have the effect of reducing the fund's
expenses. "Other Operating Expenses" do not take into account these
expense reductions, and are therefore higher than the actual expenses of
the funds. Had these fee reductions been taken into account, total Fund
Operating Expenses with Reimbursement would equal 0.90% for MFS Investors
Growth Stock, 0.84% for MFS Research and 1.05% for MFS New Discovery. MFS
Investment Management(R) (also doing business as Massachusetts Financial
Services Company) has contractually agreed, subject to reimbursement, to
bear expenses for the MFS Investors Growth Stock and New Discovery funds,
such that the funds' "Other Expenses" (after taking into account the
expense offset arrangement describe above) do not exceed 0.15% for
Investors Growth Stock and 0.15% for New Discovery of the average daily
net assets during the current fiscal year.

* MFS Investors Growth Stock was formerly "MFS Growth."

(5) Percentages shown forJanus Aspen funds are based upon expenses for the
fiscal year ended December 31, 2000, restated to reflect a reduction in
the management fee for the Worldwide Growth fund. Expenses are shown
without the effect of any expense offset arrangement.

WHAT OTHER CHARGES COULD WE IMPOSE IN THE FUTURE?

Except for the tax charge deducted from premium payments, we currently make no
charge for our Federal income taxes. However, if we incur, or expect to incur,
income taxes attributable to any subaccount of the Account or this class of
policies in future years, we reserve the right to

make a charge for such taxes. Any such charge would reduce what you earn on any
affected investment options. However, we expect that no such charge will be
necessary.

We also reserve the right to increase the tax charge in order to correspond
with changes in the state premium tax levels or in the Federal income tax
treatment of the deferred acquisition costs for this type of policy.

Under current laws, we may incur state and local taxes (in addition to premium
taxes) in several states. At present, these taxes are not significant. If there
is a material change in applicable state or local tax laws, we may make charges
for such taxes.

HOW CAN YOU CHANGE YOUR POLICY'S INVESTMENT ALLOCATIONS?

Future premium payments

At any time, you may change the investment options in which future premium
payments will be invested. You make the original allocation in the application
for the policy. The percentages you select must be in whole numbers and must
total 100%.

Transfers of existing account value

You may also transfer your existing account value from one investment option
to another. To do so, you must tell us how much to transfer, either as a whole
number percentage or as a specific dollar amount. A confirmation of each
transfer will be sent to you. Without our approval, the maximum amount you may
transfer to or from any investment option in any policy year is $1,000,000.

Under our current rules, you can make transfers out of any variable investment
option anytime you wish. However, we reserve the right to impose limits on the
number and frequency of transfers into or out of variable investment options and
to impose a charge of up to $25 for any transfer beyond an annual limit (which
will not be less than 12). Transfers under the dollar cost averaging program
would not be counted toward any such limit.

Transfers out of the fixed investment option are currently subject to the
following restrictions:

. You can only make such a transfer once in each policy year.

. The most you can transfer at any one time is the greater of $500 or 20% of
the assets in your fixed investment option.

We reserve the right to impose limits on:

. the minimum amount of each transfer out of the fixed investment option;
and

. the maximum amount of any transfer into the fixed investment option after the
second policy year.

Dollar cost averaging

This is a program of automatic monthly transfers out of the Money Market
investment option into one or more of the other variable investment options. You
choose the investment options and the dollar amount and timing of the transfers.
The program is designed to reduce the risks that result from market
fluctuations. It does this by spreading out the allocation of your money to
investment options over a longer period of time. This allows you to reduce the
risk of investing most of your money at a time when market prices are high.
Obviously, the success of this strategy depends on market trends and is not
guaranteed.

HOW CAN YOU ACCESS YOUR INVESTMENT IN THE POLICY?

Full surrender

You may surrender your policy in full at any time. If you do, we will pay you
the account value, less any policy loans and less any CDSC that then applies.
This is called your "surrender value." You must return your policy when you
request a full surrender.

Partial withdrawals

You may make a partial withdrawal of your surrender value at any time after
the first policy year. Each partial withdrawal must be at least $1,000. There is
a charge (usually $20) for each partial withdrawal. We will automatically reduce
the account value of your policy by the amount of the withdrawal and the related
charge. Unless we agree otherwise, each investment option will be reduced in the
same proportion as the account value is then allocated among them. We will not
permit a partial withdrawal if it would cause your surrender value to fall below
3 months' worth of monthly charges (see "Deductions from account value" on page
9). We also reserve the right to refuse any partial withdrawal that would cause
the policy's Total Sum Insured to fall below $250,000, or the policy's Basic Sum
Insured to fall below $250,000. Under the Option A death benefit, the reduction
of your account value occasioned by a partial withdrawal could cause the minimum
insurance amount to become less than your Total Sum Insured (see "How much will
we pay when the last insured person dies?" on page 17). If that happens, we will
automatically reduce your Total Sum Insured. The calculation of that reduction
is explained in the policy, and will be implemented by first reducing any
Additional Sum Insured in effect. If the reduction in Total Sum Insured would
cause your policy to fail the Internal Revenue Code's definition of life
insurance, we will not permit the partial withdrawal. If the withdrawal results
in a reduction in Basic Sum Insured, a pro-rata portion of the applicable CDSC
will be deducted from the account value.

Policy loans

You may borrow from your policy at any time by completing a form satisfactory
to us or, if the telephone transaction authorization form has been completed, by
telephone. The maximum amount you can borrow is determined as follows:

. We first determine the surrender value of your policy.

. We then subtract an amount equal to 12 times the monthly charges then
being deducted from account value.

. We then multiply the resulting amount by.75% in policy years 1 through
10, .50% in policy years 11 through 20, and 0% thereafter (although we
reserve the right to increase the percentage after policy year 20 to as
much as .25%).

. We then subtract the third item above from the result of the second item
above.

The minimum amount of each loan is $1,000. The interest charged on any loan is
an effective annual rate of 4.75% in the first 10 policy years, 4.50% in policy
years 11 through 20, and 4.0% thereafter. However, we reserve the right to
increase the percentage after policy year 20 to as much as 4.25%. Accrued
interest will be added to the loan daily and will bear interest at the same rate
as the original loan amount. The amount of the loan is deducted from the
investment options in the same proportion as the account value is then allocated
among them and is placed in a special loan account. This special loan account
will earn interest at an effective annual rate of 4.0%. However, if we determine
that a loan will be treated as a taxable distribution because of the
differential between the loan interest rate and the rate being credited on the
special loan account, we reserve the right to decrease the rate credited on the
special loan account to a rate that would, in our reasonable judgement, result
in the transaction being treated as a loan under Federal tax law.

You can repay all or part of a loan at any time. Unless we agree otherwise,
each repayment will be allocated among the investment options as follows:

. The same proportionate part of the loan as was borrowed from the fixed
investment option will be repaid to the fixed investment option.

. The remainder of the repayment will be allocated among the investment
options in the same way a new premium payment would be allocated.

If you want a payment to be used as a loan repayment, you must include
instructions to that effect. Otherwise, all payments will be assumed to be
premium payments.

HOW MUCH WILL WE PAY WHEN THE LAST INSURED PERSON DIES?

In your application for the policy, you will tell us how much life insurance
coverage you want on the lives of the insured persons. This is called the "Total
Sum Insured." Total Sum Insured is composed of the Basic Sum Insured and any
Additional Sum Insured you elect. The maximum amount of Additional Sum Insured
you can have when we issue the policy is generally limited to 400% of the Basic
Sum Insured. The application may also give you the option of electing among
various patterns of scheduled increases in Additional Sum Insured. There are a
number of factors you should consider in determining whether to elect coverage
in the form of Basic Sum Insured or in the form of Additional Sum Insured. These
factors are discussed under "Basic Sum Insured vs. Additional Sum Insured" on
page 35.

When the last of the insured persons dies, we will pay the death benefit minus
any outstanding loans. There are two ways of calculating the death benefit. You
choose which one you want in the application. The two death benefit options are:

. Option A - The death benefit will equal the greater of (1) the Total Sum
Insured plus any optional extra death benefit, if elected (as described
below), or (2) the minimum insurance amount (as described below).

. Option B - The death benefit will equal the greater of (1) the Total Sum
Insured amount plus your policy's account value on the date of death of
the last surviving insured person, or (2) the minimum insurance amount.

For the same premium payments, the death benefit under Option B will tend to
be higher than the death benefit under Option A. On the other hand, the monthly
insurance charge will be higher under Option B to compensate us for the
additional insurance risk. Because of that, the account value will tend to be
higher under Option A than under Option B for the same premium payments.

Optional extra death benefit feature

If you elect the Option A death benefit, you may also elect this optional
extra death benefit feature. (This feature is sometimes referred to as "Option
M".) The optional extra death benefit is determined on each monthly processing
date and on the date of death of the last surviving insured person as follows:

. First, we multiply your account value by a factor specified in the
policy.

. We will then subtract your Total Sum Insured.

Any excess is the optional extra death benefit. This feature may result in the
Option A death benefit being higher than the minimum insurance amount. Although
there is no special charge for this feature, your monthly insurance charge will
be based on that higher death benefit amount. Election of this feature must be
made in the application for the policy. If you elect this feature, you must
elect the "cash value accumulation test" for purposes of determining the minimum
insurance amount (see below). You may revoke your election of this feature at
any time, but there may be adverse tax consequences if you do. A "monthly
processing date" is the first business day of a policy month.

The minimum insurance amount

In order for a policy to qualify as life insurance under Federal tax law,
there has to be a minimum amount of insurance in relation to account value.
There are two tests that can be applied under Federal tax law - - the "guideline
premium and cash value corridor test" and the "cash value accumulation test."
When you elect the death benefit option, you must also elect which test you wish
to have applied. As indicated above, the guideline premium and cash value
corridor test is not available if the optional extra death benefit feature is
elected. Under the guideline premium and cash value corridor test, we compute
the minimum insurance amount

each business day by multiplying the account value on that date by the so-called
"corridor factor" applicable on that date. The corridor factors are derived by
applying the guideline premium and cash value corridor test. The corridor factor
starts out at 2.50 for ages at or below 40 and decreases as attained age
increases, reaching a low of 1.0 at age 95. A table showing the factor for each
policy year will appear in the policy. Under the cash value accumulation test,
we compute the minimum insurance amount each business day by multiplying the
account value on that date by the so-called "death benefit factor" applicable on
that date. The death benefit factors are derived by applying the cash value
accumulation test. The death benefit factor decreases as attained age increases.
A table showing the factor for each policy year will appear in the policy.
Regardless of which test is applied, the appropriate factor will be referred to
in the policy as the "Required Additional Death Benefit Factor."

As noted above, you have to elect which test will be applied when you elect
the death benefit option. The cash value accumulation test may be preferable if
you want an increasing death benefit in later policy years and/or want to fund
the policy at the "7 pay" limit for the full 7 years (see "Tax Considerations"
beginning on page 41). The guideline premium and cash value corridor test may be
preferable if you want the account value under the policy to increase without
increasing the death benefit as quickly as might otherwise be required.

When the insured person reaches 100

If the policy is still in effect on the policy anniversary nearest the 100th
birthday of the younger of the two insured persons (the "age 100 adjustment
date"), the following things will happen whether or not the younger insured
person is actually alive on that policy anniversary:

. We will stop deducting any monthly charges (other than the asset-based
risk charge) and will stop accepting any premium payments.

. The death benefit will become equal to the Basic Sum Insured plus a
percentage of the account value on the date of death of the last
surviving insured person. The percentage will be equal to the ratio of
Additional Sum Insured to Total Sum Insured on the day immediately
preceding the age 100 adjustment date. Death benefit Options A and B (as
described above) and the guaranteed minimum death benefit feature will
all cease to apply.

CAN YOU ADD ADDITIONAL BENEFIT RIDERS?

When you apply for a policy, you can request any of the additional benefit
riders that we then make available. Availability and rider benefits may vary by
state. Charges for the selected rider will generally increase the monthly
deductions from your policy's account value. We may change the rates of these
charges, but not above the maximum amounts that will be stated in the Policy
Specifications page of your policy.

Policy split option rider

At the time of policy issue, you may elect a rider that will permit the Total
Sum Insured to be evenly split into two separate policies, one for each insured
person, but only if the insured persons get divorced or certain Federal tax law
changes occur. The rider may be cancelled at any time, but it will automatically
terminate on the date of death of the first insured person to die or on the
policy anniversary nearest the older insured person's 80th birthday, whichever
is earlier. A policy split could have adverse tax consequences, so check with
your tax adviser before electing this rider.

Other riders

We currently offer a number of other optional riders, such as the four year
level term rider.

HOW CAN YOU CHANGE YOUR POLICY'S INSURANCE COVERAGE?

Increase in coverage

You may request an increase in the Additional Sum Insured. As to when such an
increase would take effect, see "Effective date of other policy transactions" on
page 37. Generally, each such increase must be at least $50,000. However, you
will have to provide us with evidence that the insured persons still meet our
requirements for issuing insurance coverage. Unless we consent otherwise, you
may not increase the Additional Sum Insured if the increase would cause the
entire Additional Sum Insured to equal or exceed 800% of the Basic Sum Insured.

Decrease in coverage

After the first policy year, you may request a reduction in the Total Sum
Insured at any time, but only if:

. the remaining Basic Sum Insured will be at least $250,000, and

. the remaining Additional Sum Insured will not exceed 800% of the
Basic Sum Insured, and

. the remaining Total Sum Insured will at least equal the minimum required
by the tax laws to maintain the policy's life insurance status.

We may refuse any reduction in Additional Sum Insured if it would cause the
death benefit to increase pursuant to the optional extra death benefit feature.
As to when any reduction in Total Sum Insured would take effect, see "Effective
date of other policy transactions" on page __.

Change of death benefit option

You may change your coverage from death benefit Option B to Option A on any
policy anniversary, but only if there is no change in the Federal tax law test
used to determine the

minimum insurance amount. A change from death benefit Option A to Option B is
not permitted under our administrative rules.

Please read "The minimum insurance amount" starting on page 17 for more
information about the "guideline premium and cash value corridor test" and the
"cash value accumulation test."

Tax consequences

Please read "Tax considerations" starting on page 40 to learn about possible
tax consequences of changing your insurance coverage under the policy.

CAN YOU CANCEL YOUR POLICY AFTER IT'S ISSUED?

You have the right to cancel your policy within 10 days (or longer in some
states) after you receive it. This is often referred to as the "free look"
period. To cancel your policy, simply deliver or mail the policy to:

. JHVLICO at one of the addresses shown on page 2, or

. the JHVLICO representative who delivered the policy to you.

In most states, you will receive a refund of any premiums you've paid. In some
states, the refund will be your account value on the date of cancellation plus
all charges deducted by JHVLICO or the Series Funds prior to that date. The date
of cancellation will be the date of such mailing or delivery.

CAN YOU CHOOSE THE FORM IN WHICH WE PAY OUT POLICY PROCEEDS?

Choosing a payment option

You may choose to receive proceeds from the policy as a single sum. This
includes proceeds that become payable because of death or full surrender.
Alternatively, you can elect to have proceeds of $1,000 or more applied to any
of a number of other payment options, including the following:

. Option 1 - Proceeds left with us to accumulate with interest

. Option 2A - Equal monthly payments of a specified amount until all
proceeds are paid out

. Option 2B - Equal monthly payments for a specified period of time

. Option 3 - Equal monthly payments for life, but with payments guaranteed
for a specific number of years

. Option 4 - Equal monthly payments for life with no refund

. Option 5 - Equal monthly payments for life with a refund if all of the
proceeds haven't been paid out

You cannot choose an option if the monthly payments under the option would be
less than $50. We will issue a supplementary agreement when the proceeds are
applied to any alternative payment option. That agreement will spell out the
terms of the option in full. We will credit interest on each of the above
options. For options 1 and 2A, the interest will be at least an effective annual
rate of 3 1/2%.

Changing a payment option

You can change the payment option at any time before the proceeds are payable.
If you haven't made a choice, the payee of the proceeds has a prescribed period
in which he or she can make that choice.

Tax impact

There may be tax consequences to you or your beneficiary depending upon which
payment option is chosen. You should consult with a qualified tax adviser before
making that choice.

TO WHAT EXTENT CAN WE VARY THE TERMS AND CONDITIONS OF OUR POLICIES IN
PARTICULAR CASES?

Listed below are some variations we can make in the terms of our policies. Any
variation will be made only in accordance with uniform rules that we apply
fairly to all of our customers.

State law insurance requirements

Insurance laws and regulations apply to us in every state in which our
policies are sold. As a result, various terms and conditions of your insurance
coverage may vary from the terms and conditions described in this prospectus,
depending upon where you reside. These variations will be reflected in your
policy or in endorsements attached to your policy.

Variations in expenses or risks

We may vary the charges and other terms of our policies where special
circumstances result in sales or administrative expenses, mortality risks or
other risks that are different from those normally associated with the policies.
These include the type of variations discussed under "Reduced charges for
eligible classes" on page 38. No variation in any charge will exceed any maximum
stated in this prospectus with respect to that charge.

HOW WILL YOUR POLICY BE TREATED FOR INCOME TAX PURPOSES?

Generally, death benefits paid under policies such as yours are not subject to
income tax. Earnings on your account value are not subject to income tax as long
as we don't pay them out to you. If we do pay out any amount of your account
value upon surrender or partial withdrawal, all or part of that distribution
should generally be treated as a return of the premiums you've paid and should
not be subject to income tax. Amounts you borrow are generally not taxable to
you.

However, some of the tax rules change if your policy is found to be a
"modified endowment contract." This can happen if you've paid more than a
certain amount of premiums that is prescribed by the tax laws. Additional taxes
and penalties may be payable for policy distributions of any kind.

For further information about the tax consequences of owning a policy, please
read "Tax considerations" beginning on page 40.

HOW DO YOU COMMUNICATE WITH US?

General Rules

You should mail or express all checks and money orders for premium payments
and loan repayments to the JHVLICO Life Servicing Office at the appropriate
address shown on page 2.

Under our current rules, certain requests must be made in writing and be
signed and dated by you. They include the following:

. surrenders or partial withdrawals

. change of death benefit option

. increase or decrease in Total Sum Insured

. change of beneficiary

. election of payment option for policy proceeds

. tax withholding elections

. election of telephone transaction privilege.

The following requests may be made either in writing (signed and dated by you)
or by telephone or fax if a special form is completed (see "Telephone
Transactions" below):

. loans

. transfers of account value among investment options

. change of allocation among investment options for new premium
payments

You should mail or express all written requests to our Life Servicing Office
at the appropriate address shown on page 2. You should also send notice of an
insured person's death and related documentation to our Life Servicing Office.
We don't consider that we've "received" any communication until such time as it
has arrived at the proper place and in the proper and complete form.

We have special forms that should be used for a number of the requests
mentioned above. You can obtain these forms from our Life Servicing Office or
your JHVLICO representative. Each communication to us must include your name,
your policy number and the name of the insured persons. We cannot process any
request that doesn't include this required information. Any communication that
arrives after the close of our business day, or on a day that is not a business
day, will be considered "received" by us on the next following business day. Our
business day currently closes at 4:00 p.m. Eastern Standard Time, but special
circumstances (such as suspension of trading on a major exchange) may dictate an
earlier closing time.

Telephone Transactions

If you complete a special authorization form, you can request loans, transfers
among investment options and changes of allocation among investment options
simply by telephoning us at 1-800-732-5543 or by faxing us at 1-617-886-3048.
Any fax request should include your name, daytime telephone number, policy
number and, in the case of transfers and changes of allocation, the names of the
investment options involved. We will honor telephone instructions from anyone
who provides the correct identifying information, so there is a risk of loss to
you if this service is used by an unauthorized person. However, you will receive
written confirmation of all telephone transactions. There is also a risk that
you will be unable to place your request due to equipment malfunction or heavy
phone line usage. If this occurs, you should submit your request in writing.

The policies are not designed for professional market timing organizations or
other persons or entities that use programmed or frequent transfers among
investment options. For reasons such as that, we reserve the right to change our
telephone transaction policies or procedures at any time. We also reserve the
right to suspend or terminate the privilege altogether with respect to all
policies like yours or with respect to any class of such policies.

ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES, SURRENDER VALUES AND
ACCUMULATED PREMIUMS

The following tables illustrate the changes in death benefit and surrender
value of the policy under certain hypothetical circumstances that we assume
solely for this purpose. Each table separately illustrates the operation of a
policy for specified issue ages, premium payment schedule and Total Sum Insured.
The amounts shown are for the end of each policy year and assume that all of the
account value is invested in funds that achieve investment returns at constant
annual rates of 0%, 6% and 12% (i.e., before any fees or expenses deducted from
Series Fund assets). After the deduction of average fees and expenses at the
Series Fund level (as described below) the corresponding net annual rates of
return would be -0.82%, 5.13% and 11.08%. Investment return reflects investment
income and all realized and unrealized capital gains and losses. The tables
assume annual Planned Premiums that are paid at the beginning of each policy
year for a male insured person who is 55 years old and a preferred underwriting
risk when the policy is issued and for a female insured person who is 50 years
old and a preferred underwriting risk when the policy is issued.

Tables are provided for each of the two death benefit options. The tables
headed "Current Charges" assume that the current rates for all charges deducted
by JHVLICO will apply in each year illustrated, including the intended waiver of
the premium sales charge after the tenth policy year. The tables headed "Maximum
Charges" are the same, except that the maximum permitted rates for all years are
used for all charges. The tables do not reflect any charge that we reserve the
right to make but are not currently making. The tables assume that no optional
rider benefits and no Additional Sum Insured have been elected and that no loans
or withdrawals are made.

With respect to fees and expenses deducted from assets of the Series Funds,
the amounts shown in all tables reflect (1) investment management fees
equivalent to an effective annual rate of 0.72%, and (2) an assumed average
asset charge for all other operating expenses of the Series Funds equivalent to
an effective annual rate of 0.10%. These rates are the arithmetic average for
all funds that are available as investment options. In other words, they are
based on the hypothetical assumption that policy account values are allocated
equally among the variable investment options. The actual rates associated with
any policy will vary depending upon the actual allocation of policy values among
the investment options. The charge shown above for all other operating expenses
of the Series Funds reflects reimbursements to certain funds as described in the
footnotes to the table beginning on page 12. We currently expect those
reimbursement arrangements to continue indefinitely, but that is not guaranteed.
Without those arrangements, the assumed average asset charge for all other
operating expenses shown above would be higher. This would result in lower
values than those shown in the following tables.

The second column of each table shows the amount you would have at the end of
each policy year if an amount equal to the assumed Planned Premiums were
invested to earn interest, after taxes, at 5% compounded annually. This is not a
policy value. It is included for comparison purposes only.

Because your circumstances will no doubt differ from those in the
illustrations that follow, values under your policy will differ, in most cases
substantially. Upon request, we will furnish you with a comparable illustration
reflecting the issue age, sex and underwriting risk classification of each of
your proposed insured persons, and the Basic Sum Insured, Additional Sum Insured
and annual Planned Premium amount requested.

PLAN: FLEXIBLE PREMIUM VARIABLE LIFE SURVIVORSHIP
$500,000 TOTAL SUM INSURED AT ISSUE
MALE, ISSUE AGE 55, PREFERRED UNDERWRITING CLASS
FEMALE, ISSUE AGE 50, PREFERRED UNDERWRITING CLASS
OPTION A DEATH BENEFIT
GUIDELINE PREMIUM AND CASH VALUE CORRIDOR TEST
NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $8,156*
USING CURRENT CHARGES

Death Benefit Surrender Value
--------------------------- ---------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at --------------------------- ---------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ------- ------------------ ------- ------- --------- ------- ------- -----------

1 8,564 500,000 500,000 500,000 4,284 4,567 4,851
2 17,556 500,000 500,000 500,000 10,098 11,001 11,939
3 26,998 500,000 500,000 500,000 15,010 16,879 18,894
4 36,912 500,000 500,000 500,000 20,362 23,557 27,134
5 47,322 500,000 500,000 500,000 25,628 30,521 36,213
6 58,252 500,000 500,000 500,000 31,868 38,890 47,369
7 69,728 500,000 500,000 500,000 38,005 47,615 59,659
8 81,779 500,000 500,000 500,000 44,036 56,708 73,199
9 94,432 500,000 500,000 500,000 49,962 66,184 88,111
10 107,717 500,000 500,000 500,000 55,778 76,054 104,534
11 121,667 500,000 500,000 500,000 62,130 87,014 123,336
12 136,314 500,000 500,000 500,000 68,355 98,422 144,036
13 151,694 500,000 500,000 500,000 74,447 110,291 166,825
14 167,843 500,000 500,000 500,000 80,397 122,631 191,911
15 184,799 500,000 500,000 500,000 86,195 135,454 219,525
16 202,603 500,000 500,000 500,000 92,292 149,519 251,186
17 221,297 500,000 500,000 500,000 98,230 164,192 286,223
18 240,926 500,000 500,000 500,000 103,988 179,487 325,009
19 261,536 500,000 500,000 500,000 109,540 195,419 367,966
20 283,177 500,000 500,000 500,000 114,856 212,005 415,574
25 408,735 500,000 500,000 781,214 137,954 307,127 744,013
30 568,983 500,000 500,000 1,354,197 148,447 425,366 1,289,712
35 773,504 500,000 607,346 2,298,834 133,943 578,425 2,189,366

* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy Year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum
Death Benefit after the tenth Policy Year, or optional rider benefits are
elected.

IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE
DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGE 0%, 6%, OR 12% OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR BELOW THE AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RESULTS CAN BE ACHIEVED FOR ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. IN
FACT, FOR ANY GIVEN PERIOD OF TIME, THE INVESTMENT RESULTS COULD BE NEGATIVE.

PLAN: FLEXIBLE PREMIUM VARIABLE LIFE SURVIVORSHIP
$500,000 TOTAL SUM INSURED AT ISSUE
MALE, ISSUE AGE 55, PREFERRED UNDERWRITING CLASS
FEMALE, ISSUE AGE 50, PREFERRED UNDERWRITING CLASS
OPTION B DEATH BENEFIT
GUIDELINE PREMIUM AND CASH VALUE CORRIDOR TEST
NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $8,156*
USING CURRENT CHARGES

1 8,564 504,284 504,567 504,851 4,284 4,567 4,851
2 17,556 509,689 510,593 511,531 10,097 11,001 11,938
3 26,998 515,008 516,877 518,892 15,008 16,877 18,892
4 36,912 520,359 523,554 527,129 20,359 23,554 27,129
5 47,322 525,623 530,515 536,205 25,623 30,515 36,205
6 58,252 531,861 538,880 547,357 31,861 38,880 47,357
7 69,728 537,994 547,601 559,641 37,994 47,601 59,641
8 81,779 544,021 556,687 573,170 44,021 56,687 73,170
9 94,432 549,940 566,153 588,069 49,940 66,153 88,069
10 107,717 555,747 576,010 604,470 55,747 76,010 104,470
11 121,667 562,091 586,955 623,246 62,091 86,955 123,246
12 136,314 568,301 598,339 643,906 68,301 98,339 143,906
13 151,694 574,372 610,171 666,632 74,372 110,171 166,632
14 167,843 580,290 622,456 691,619 80,290 122,456 191,619
15 184,799 586,041 635,195 719,080 86,041 135,195 219,080
16 202,603 592,070 649,136 750,504 92,070 149,136 250,504
17 221,297 597,913 663,627 785,185 97,913 163,627 285,185
18 240,926 603,539 678,660 823,436 103,539 178,660 323,436
19 261,536 608,911 694,222 865,601 108,911 194,222 365,601
20 283,177 613,983 710,288 912,050 113,983 210,288 412,050
25 408,735 634,273 798,438 1,225,998 134,273 298,438 725,998
30 568,983 636,756 890,986 1,727,745 136,756 390,986 1,227,745
35 773,504 604,677 968,775 2,519,344 104,677 468,775 2,019,344

* The illustrations assume that Planned Premiums equal to the Target Premium are
paid at the start of each Policy Year. The Death Benefit and Surrender Value
will differ if premiums are paid in different amounts or frequencies, if
policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum Death
Benefit after the tenth Policy Year, or optional rider benefits are elected.

Death Benefit Surrender Value
--------------------------- --------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at --------------------------- --------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ------- ------------------ ------- ------- --------- ------ ------- -----------

1 8,564 500,000 500,000 500,000 4,131 4,409 4,688
2 17,556 500,000 500,000 500,000 9,765 10,647 11,564
3 26,998 500,000 500,000 500,000 14,450 16,269 18,231
4 36,912 500,000 500,000 500,000 19,521 22,619 26,090
5 47,322 500,000 500,000 500,000 24,439 29,168 34,674
6 58,252 500,000 500,000 500,000 30,257 37,020 45,197
7 69,728 500,000 500,000 500,000 35,882 45,108 56,691
8 81,779 500,000 500,000 500,000 41,302 53,428 69,240
9 94,432 500,000 500,000 500,000 46,502 61,972 82,939
10 107,717 500,000 500,000 500,000 51,463 70,731 97,891
11 121,667 500,000 500,000 500,000 56,644 80,202 114,746
12 136,314 500,000 500,000 500,000 61,528 89,879 133,145
13 151,694 500,000 500,000 500,000 66,081 99,739 153,230
14 167,843 500,000 500,000 500,000 70,255 109,750 175,155
15 184,799 500,000 500,000 500,000 73,998 119,873 199,100
16 202,603 500,000 500,000 500,000 77,251 130,069 225,274
17 221,297 500,000 500,000 500,000 79,921 140,270 253,908
18 240,926 500,000 500,000 500,000 81,983 150,470 285,327
19 261,536 500,000 500,000 500,000 83,333 160,601 319,878
20 283,177 500,000 500,000 500,000 83,875 170,608 357,991
25 408,735 500,000 500,000 650,482 69,426 216,322 619,506
30 568,983 ** 500,000 1,091,304 ** 241,458 1,039,337
35 773,504 ** 500,000 1,777,950 ** 211,499 1,693,285

Plan: FLEXIBLE PREMIUM VARIABLE LIFE SURVIVORSHIP
$500,000 TOTAL SUM INSURED AT ISSUE
MALE, ISSUE AGE 55, PREFERRED UNDERWRITING CLASS
FEMALE, ISSUE AGE 50, PREFERRED UNDERWRITING CLASS
OPTION B DEATH BENEFIT
GUIDELINE PREMIUM AND CASH VALUE CORRIDOR TEST
NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $8,156*
USING MAXIMUM CHARGES

Death Benefit Surrender Value
----------------------------- -------------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at ----------------------------- -------------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ------ ------------------ ------- ------- --------- ------ ------- -----------

1 8,564 504,130 504,409 504,687 4,130 4,409 4,687
2 17,556 509,356 510,238 511,155 9,763 10,646 11,563
3 26,998 514,446 516,265 518,226 14,446 16,265 18,226
4 36,912 519,510 522,607 526,075 19,510 22,607 26,075
5 47,322 524,417 529,141 534,641 24,417 29,141 34,641
6 58,252 530,215 536,968 545,131 30,215 36,968 45,131
7 69,728 535,811 545,015 556,570 35,811 45,015 56,570
8 81,779 541,185 553,271 569,029 41,185 53,271 69,029
9 94,432 546,321 561,720 582,590 46,321 61,720 82,590
10 107,717 551,193 570,343 597,332 51,193 70,343 97,332
11 121,667 556,252 579,620 613,878 56,252 79,620 113,878
12 136,314 560,975 589,028 631,827 60,975 89,028 131,827
13 151,694 565,315 598,519 651,268 65,315 98,519 151,268
14 167,843 569,213 608,028 672,280 69,213 108,028 172,280
15 184,799 572,601 617,479 694,941 72,601 117,479 194,941
16 202,603 575,404 626,782 719,331 75,404 126,782 219,331
17 221,297 577,506 635,802 745,488 77,506 135,802 245,488
18 240,926 578,874 644,481 773,545 78,874 144,481 273,545
19 261,536 579,382 652,661 803,546 79,382 152,661 303,546
20 283,177 578,918 660,190 835,552 78,918 160,190 335,552
25 408,735 556,648 680,649 1,026,556 56,648 180,649 526,556
30 568,983 ** 639,253 1,259,526 ** 139,253 759,526
35 773,504 ** ** 1,504,388 ** ** 1,004,388

Plan: FLEXIBLE PREMIUM VARIABLE LIFE SURVIVORSHIP
$500,000 TOTAL SUM INSURED AT ISSUE
MALE, ISSUE AGE 55, PREFERRED UNDERWRITING CLASS
FEMALE, ISSUE AGE 50, PREFERRED UNDERWRITING CLASS
OPTION A DEATH BENEFIT
CASH VALUE ACCUMULATION TEST
NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $8,156*
USING CURRENT CHARGES

1 8,564 500,000 500,000 500,000 4,284 4,567 4,851
2 17,556 500,000 500,000 500,000 10,098 11,001 11,939
3 26,998 500,000 500,000 500,000 15,010 16,879 18,894
4 36,912 500,000 500,000 500,000 20,362 23,557 27,134
5 47,322 500,000 500,000 500,000 25,628 30,521 36,213
6 58,252 500,000 500,000 500,000 31,868 38,890 47,369
7 69,728 500,000 500,000 500,000 38,005 47,615 59,659
8 81,779 500,000 500,000 500,000 44,036 56,708 73,199
9 94,432 500,000 500,000 500,000 49,962 66,184 88,111
10 107,717 500,000 500,000 500,000 55,778 76,054 104,534
11 121,667 500,000 500,000 500,000 62,130 87,014 123,336
12 136,314 500,000 500,000 500,000 68,355 98,422 144,036
13 151,694 500,000 500,000 500,000 74,447 110,291 166,825
14 167,843 500,000 500,000 500,000 80,397 122,631 191,911
15 184,799 500,000 500,000 500,000 86,195 135,454 219,525
16 202,603 500,000 500,000 500,000 92,292 149,519 251,186
17 221,297 500,000 500,000 532,293 98,230 164,192 286,200
18 240,926 500,000 500,000 585,231 103,988 179,487 324,882
19 261,536 500,000 500,000 641,863 109,540 195,419 367,595
20 283,177 500,000 500,000 702,547 114,856 212,005 414,730
25 408,735 500,000 500,000 1,085,330 137,954 307,127 734,963
30 568,983 500,000 560,913 1,655,287 148,447 423,605 1,250,081
35 773,504 500,000 685,082 2,519,656 133,943 561,419 2,064,837

* The illustrations assume that Planned Premiums equal to the Target Premium are
paid at the start of each Policy Year. The Death Benefit and Surrender Value
will differ if premiums are paid in different amounts or frequencies, if
policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum Death
Benefit after the tenth Policy Year, or optional rider benefits are elected.

Plan: FLEXIBLE PREMIUM VARIABLE LIFE SURVIVORSHIP
$500,000 TOTAL SUM INSURED AT ISSUE
MALE, ISSUE AGE 55, PREFERRED UNDERWRITING CLASS
FEMALE, ISSUE AGE 50, PREFERRED UNDERWRITING CLASS
OPTION B DEATH BENEFIT
CASH VALUE ACCUMULATION TEST
NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $8,156*
USING CURRENT CHARGES

Death Benefit Surrender Value
----------------------------- -------------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at ----------------------------- -------------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ------- ------------------ ------- ------- --------- ------- ------- -----------

* The illustrations assume that Planned Premiums equal to the Target Premium are
paid at the start of each Policy Year. The Death Benefit and Surrender Value
will differ if premiums are paid in different amounts or frequencies, if
policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum Death
Benefit after the tenth Policy Year, or optional rider benefits are elected.

Plan: FLEXIBLE PREMIUM VARIABLE LIFE SURVIVORSHIP
$500,000 TOTAL SUM INSURED AT ISSUE
MALE, ISSUE AGE 55, PREFERRED UNDERWRITING CLASS
FEMALE, ISSUE AGE 50, PREFERRED UNDERWRITING CLASS
OPTION A DEATH BENEFIT
CASH VALUE ACCUMULATION TEST
NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $8,156*
USING CURRENT CHARGES

Death Benefit Surrender Value
----------------------------- -------------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at ----------------------------- -------------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ------- ------------------ ------- ------- --------- ------ ------- -----------

1 8,564 500,000 500,000 500,000 4,131 4,409 4,688
2 17,556 500,000 500,000 500,000 9,765 10,647 11,564
3 26,998 500,000 500,000 500,000 14,450 16,269 18,231
4 36,912 500,000 500,000 500,000 19,521 22,619 26,090
5 47,322 500,000 500,000 500,000 24,439 29,168 34,674
6 58,252 500,000 500,000 500,000 30,257 37,020 45,197
7 69,728 500,000 500,000 500,000 35,882 45,108 56,691
8 81,779 500,000 500,000 500,000 41,302 53,428 69,240
9 94,432 500,000 500,000 500,000 46,502 61,972 82,939
10 107,717 500,000 500,000 500,000 51,463 70,731 97,891
11 121,667 500,000 500,000 500,000 56,644 80,202 114,746
12 136,314 500,000 500,000 500,000 61,528 89,879 133,145
13 151,694 500,000 500,000 500,000 66,081 99,739 153,230
14 167,843 500,000 500,000 500,000 70,255 109,750 175,155
15 184,799 500,000 500,000 500,000 73,998 119,873 199,100
16 202,603 500,000 500,000 500,000 77,251 130,069 225,274
17 221,297 500,000 500,000 500,000 79,921 140,270 253,908
18 240,926 500,000 500,000 513,820 81,983 150,470 285,239
19 261,536 500,000 500,000 557,411 83,333 160,601 319,229
20 283,177 500,000 500,000 603,104 83,875 170,608 356,027
25 408,735 500,000 500,000 869,056 69,426 216,322 588,506
30 568,983 ** 500,000 1,212,163 ** 241,458 915,431
35 773,504 ** 500,000 1,659,249 ** 211,499 1,359,740

PLAN: FLEXIBLE PREMIUM VARIABLE LIFE SURVIVORSHIP
$500,000 TOTAL SUM INSURED AT ISSUE
MALE, ISSUE AGE 55, PREFERRED UNDERWRITING CLASS
FEMALE, ISSUE AGE 50, PREFERRED UNDERWRITING CLASS
OPTION B DEATH BENEFIT
CASH VALUE ACCUMULATION TEST
NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $8,156*
USING MAXIMUM CHARGES

ADDITIONAL INFORMATION

This section of the prospectus provides additional detailed information that
is not contained in the Basic Information section on pages 4 through 24.

CONTENTS OF THIS SECTION BEGINNING ON PAGE
- ------------------------ -----------------

Description of us .......................................... 33

How we support the policy and investment options............ 33

Procedures for issuance of a policy......................... 34

Basic Sum Insured vs. Additional Sum Insured................ 35

Commencement of investment performance...................... 35

How we process certain policy transactions.................. 36

Effects of policy loans..................................... 37

Additional information about how certain policy charges
work........................................................ 38

How we market the policies.................................. 39

Tax considerations.......................................... 40

Reports that you will receive............................... 42

Voting privileges that you will have........................ 42

Changes that we can make as to your policy.................. 42

Adjustments we make to death benefits....................... 43

When we pay policy proceeds................................. 43

Other details about exercising rights and paying benefits... 44

Legal matters............................................... 44

Registration statement filed with the SEC................... 44

Accounting and actuarial experts............................ 44

Financial statements of JHVLICO and the Account............. 45

List of our Directors and Executive Officers of JHVLICO..... 46

DESCRIPTION OF US

We are JHVLICO, a stock life insurance company chartered in 1979 under
Massachusetts law. We are authorized to transact a life insurance and annuity
business in all states other than New York and in the District of Columbia. We
began selling variable life insurance policies in 1980.

We are regulated and supervised by the Massachusetts Commissioner of
Insurance, who periodically examines our affairs. We also are subject to the
applicable insurance laws and regulations of all jurisdictions in which we are
authorized to do business. We are required to submit annual statements of our
operations, including financial statements, to the insurance departments of the
various jurisdictions in which we do business for purposes of determining
solvency and compliance with local insurance laws and regulations. The
regulation to which we are subject, however, does not provide a guarantee as to
such matters.

We are a wholly-owned subsidiary of John Hancock Life Insurance Company ("John
Hancock"), a Massachusetts stock life insurance company. On February 1, 2000,
John Hancock Mutual Life Insurance Company (which was chartered in Massachusetts
in 1862) converted to a stock company by "demutualizing" and changed its name to
John Hancock Life Insurance Company. As part of the demutualization process,
John Hancock became a subsidiary of John Hancock Financial Services, Inc., a
newly formed publicly-traded corporation. John Hancock's home office is at John
Hancock Place, Boston, Massachusetts 02117. As of December 31, 2000, John
Hancock's assets were approximately $88 billion and it had invested
approximately $375 million in JHVLICO in connection with JHVLICO's organization
and operation. It is anticipated that John Hancock will from time to time make
additional capital contributions to JHVLICO to enable us to meet our reserve
requirements and expenses in connection with our business. John Hancock is
committed to make additional capital contributions if necessary to ensure that
we maintain a positive net worth.

HOW WE SUPPORT THE POLICY AND INVESTMENT OPTIONS

Separate Account S

The variable investment options shown on page 1 are in fact subaccounts of
Separate Account S (the "Account"), a separate account established by us under
Massachusetts law. The Account meets the definition of "separate account" under
the Federal securities laws and is registered as a unit investment trust under
the Investment Company Act of 1940 ("1940 Act"). Such registration does not
involve supervision by the SEC of the management of the Account or of us.

The Account's assets are our property. Each policy provides that amounts we
hold in the Account pursuant to the policies cannot be reached by any other
persons who may have claims against us.

The assets in each subaccount are invested in the corresponding fund of one of
the Series Funds. New subaccounts may be added as new funds are added to the
Series Funds and made available to policy owners. Existing subaccounts may be
deleted if existing funds are deleted from the Series Funds.

We will purchase and redeem Series Fund shares for the Account at their net
asset value without any sales or redemption charges. Shares of a Series Fund
represent an interest in one of the funds of the Series Fund which corresponds
to a subaccount of the Account. Any dividend or capital gains distributions
received by the Account will be reinvested in shares of that same fund at their
net asset value as of the dates paid.

On each business day, shares of each fund are purchased or redeemed by us for
each subaccount based on, among other things, the amount of net premiums
allocated to the subaccount, distributions reinvested, and transfers to, from
and among subaccounts, all to be effected as of that date. Such purchases and
redemptions are effected at each fund's net asset value per share determined for
that same date. A "business day" is any date on which the

New York Stock Exchange is open for trading. We compute policy values for each
business day as of the close of that day (usually 4:00 p.m. Eastern Standard
Time).

Our general account

Our obligations under the policy's fixed investment option are backed by our
general account assets. Our general account consists of assets owned by us other
than those in the Account and in other separate accounts that we may establish.
Subject to applicable law, we have sole discretion over the investment of assets
of the general account and policy owners do not share in the investment
experience of, or have any preferential claim on, those assets. Instead, we
guarantee that the account value allocated to the fixed investment option will
accrue interest daily at an effective annual rate of at least 4% without regard
to the actual investment experience of the general account.

Because of exemptive and exclusionary provisions, interests in our fixed
investment option have not been registered under the Securities Act of 1933 and
our general account has not been registered as an investment company under the
1940 Act. Accordingly, neither the general account nor any interests therein are
subject to the provisions of these acts, and we have been advised that the staff
of the SEC has not reviewed the disclosure in this prospectus relating to the
fixed investment option. Disclosure regarding the fixed investment option may,
however, be subject to certain generally-applicable provisions of the Federal
securities laws relating to accuracy and completeness of statements made in
prospectuses.

PROCEDURES FOR ISSUANCE OF A POLICY

Generally, the policy is available with a minimum Basic Sum Insured at issue
of $250,000. At the time of issue, each insured person must have an attained age
of at least 20 and no more than 85. All insured persons must meet certain health
and other insurance risk criteria called "underwriting standards".

Policies issued in Montana or in connection with certain employee plans will
not directly reflect the sex of the insured persons in either the premium rates
or the charges or values under the policy. The illustrations set forth in this
prospectus are sex-distinct and, therefore, may not reflect the rates, charges,
or values that would apply to such policies.

Minimum Initial Premium

The Minimum Initial Premium must be received by us at our Life Servicing
Office in order for the policy to be in full force and effect. There is no grace
period for the payment of the Minimum Initial Premium. The Minimum Initial
Premium is determined by us based on the characteristics of each of the insured
persons, the Basic Sum Insured and the Additional Sum Insured at issue, and the
policy options you have selected.

Commencement of insurance coverage

After you apply for a policy, it can sometimes take up to several weeks for us
to gather and evaluate all the information we need to decide whether to issue a
policy to you and, if so, what the insured persons' rate classes should be.
After we approve an application for a policy and assign an appropriate insurance
rate class, we will prepare the policy for delivery. We will not pay a death
benefit under a policy unless the policy is in effect when the last surviving
insured person dies (except for the circumstances described under "Temporary
insurance coverage prior to policy delivery" on page 35).

The policy will take effect only if all of the following conditions are
satisfied:

. The policy is delivered to and received by the applicant.

. The Minimum Initial Premium is received by us.

. Each insured person is living and still meets our health criteria for issuing
insurance.

If all of the above conditions are satisfied, the policy will take effect on
the date shown in the policy as the "date of issue." That is the date on which
we begin to deduct monthly charges. Policy months, policy years and policy
anniversaries are all measured from the date of issue.

Backdating

In order to preserve a younger age at issue for one or both of the insured
persons, we can designate a date of issue that is up to 60 days earlier than the
date that would otherwise apply. This is referred to as "backdating" and is
allowed under state insurance laws. Backdating can also be used in certain
corporate-owned life insurance cases involving multiple policies to retain a
common monthly deduction date.

The conditions for coverage described above under "Commencement of insurance
coverage" must still be satisfied, but in a backdating situation the policy
always takes effect retroactively. Backdating results in a lower insurance
charge (if it is used to preserve an insured person's younger age at issue), but
monthly charges begin earlier than would otherwise be the case. Those monthly
charges will be deducted as soon as we receive premiums sufficient to pay them.

Temporary coverage prior to policy delivery

If a specified amount of premium is paid with the application for a policy and
other conditions are met, we will provide temporary survivorship term life
insurance coverage on the insured persons for a period prior to the time
coverage under the policy takes effect. Such temporary term coverage will be
subject to the terms and conditions described in the application for the policy,
including limits on amount and duration of coverage.

Monthly deduction dates

Each charge that we deduct monthly is assessed against your account value or
the subaccounts at the close of business on the date of issue and at the close
of the first business day in each subsequent policy month.

BASIC SUM INSURED VS. ADDITIONAL SUM INSURED

As noted earlier in this prospectus, you should consider a number of factors
in determining whether to elect coverage in the form of Basic Sum Insured or in
the form of Additional Sum Insured.

For the same amount of premiums paid, the amount of the issue charge deducted
from account value and the amount of compensation paid to the selling insurance
agent will generally be less if coverage is included as Additional Sum Insured
rather than as Basic Sum Insured. On the other hand, the amount of any
Additional Sum Insured is not included in the guaranteed death benefit feature
after the 5th policy year and is not extended beyond the age 100 adjustment
date. (The "age 100 adjustment date" is defined under "When the younger insured
person reaches 100" on page __.). Therefore, if the policy's surrender value is
insufficient to pay the monthly charges as they fall due (including the charges
for the Additional Sum Insured) after the 5th policy year, the Additional Sum
Insured coverage will lapse, even if the Basic Sum Insured stays in effect
pursuant to the guaranteed death benefit feature.

Generally, you will incur lower issue charges and have more flexible coverage
with respect to the Additional Sum Insured than with respect to the Basic Sum
Insured. If this is your priority, you may wish to maximize the proportion of
the Additional Sum Insured. However, if your priority is to take advantage of
the guaranteed death benefit feature after the 5th policy year, the proportion
of the Policy's Total Sum Insured that is guaranteed can be increased by taking
out more coverage as Basic Sum Insured at the time of policy issuance. In
addition, the death benefit after the age 100 adjustment date will generally be
larger if the proportion of Basic Sum Insured immediately prior to that date is
larger.

Any decision you make to modify the amount of Additional Sum Insured coverage
after issue can

have significant tax consequences (see "Tax Considerations" beginning on page
40).

COMMENCEMENT OF INVESTMENT PERFORMANCE

Any premium payment processed prior to the twentieth day after the policy's
date of issue will automatically be allocated to the Money Market investment
option. On the later of the date such payment is received or the twentieth day
following the date of issue, the portion of the Money Market investment option
attributable to such payment will be reallocated automatically among the
investment options you have chosen.

All other premium payments will be allocated among the investment options you
have chosen as soon as they are processed.

HOW WE PROCESS CERTAIN POLICY TRANSACTIONS

Premium payments

We will process any premium payment as of the day we receive it, unless one of
the following exceptions applies:

(1) We will process a payment received prior to a policy's date of issue as if
received on the day immediately preceding date of issue.

(2) If the Minimum Initial Premium is not received prior to the date of issue,
we will process each premium payment received thereafter as if received on the
day immediately preceding the date of issue until all of the Minimum Initial
Premium is received.

(3) We will process the portion of any premium payment for which we require
evidence of an insured person's continued insurability only after we have
received such evidence and found it satisfactory to us.

(4) If we receive any premium payment that we think will cause a policy to
become a modified endowment or will cause a policy to lose its status as life
insurance under the tax laws, we will not accept the excess portion of that
premium payment and will immediately notify the owner. We will refund the excess
premium when the premium payment check has had time to clear the banking system
(but in no case more than two weeks after receipt), except in the following
circumstances:

. The tax problem resolves itself prior to the date the refund is to be
made; or

. The tax problem relates to modified endowment status and we receive a signed
acknowledgment from the owner prior to the refund date instructing us to
process the premium notwithstanding the tax issues involved.

In the above cases, we will treat the excess premium as having been received
on the date the tax problem resolves itself or the date we receive the signed
acknowledgment. We will then process it accordingly.

(5) If a premium payment is received or is otherwise scheduled to be processed
(as specified above) on a date that is not a business day, the premium payment
will be processed on the business day next following that date.

Transfers among investment options

Any reallocation among investment options must be such that the total in all
investment options after reallocation equals 100% of account value. Transfers
out of any investment option will be effective at the end of the business day in
which we receive at our Life Servicing Office notice satisfactory to us.

We have the right to defer transfers of amounts out of the fixed investment
option for up to six months.

Dollar cost averaging

Scheduled transfers under this option may be made from the Money Market
investment option to not more than nine other variable investment options.
However, the amount transferred to any one investment option must be at least
$100.

Once we receive the election in form satisfactory to us at our Life Servicing
Office, transfers will begin on the second monthly deduction date following its
receipt. If you have any questions with respect to this provision, call
1-800-732-5543.

Once elected, the scheduled monthly transfer option will remain in effect for
so long as you have at least $2,500 of your account value in the Money Market
investment option, or until we receive written notice from you of cancellation
of the option or notice of the death of the last surviving insured person. We
reserve the right to modify, terminate or suspend the dollar cost averaging
program at any time.

Telephone transfers and policy loans

Once you have completed a written authorization, you may request a transfer or
policy loan by telephone or by fax. If the fax request option becomes
unavailable, another means of telecommunication will be substituted.

If you authorize telephone transactions, you will be liable for any loss,
expense or cost arising out of any unauthorized or fraudulent telephone
instructions which we reasonably believe to be genuine, unless such loss,
expense or cost is the result of our mistake or negligence. We employ procedures
which provide safeguards against the execution of unauthorized transactions, and
which are reasonably designed to confirm that instructions received by telephone
are genuine. These procedures include requiring personal identification, tape
recording calls, and providing written confirmation to the owner. If we do not
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, we may be liable for any loss due to unauthorized or
fraudulent instructions.

Effective date of other policy transactions

The following transactions take effect on the policy anniversary on or next
following the date we approve your request:

. Total Sum Insured decreases

. Additional Sum Insured increases.

A change of death benefit Option from B to A is effective on the policy
anniversary on or next following the date we receive the request.

Reinstatements of lapsed policies take effect on the monthly deduction date on
or next following the date we approve your request:

We process loans, surrenders, partial withdrawals and loan repayments as of
the day we receive such request or repayment.

EFFECTS OF POLICY LOANS

The account value, the surrender value, and any death benefit above the Total
Sum Insured are permanently affected by any loan, whether or not it is repaid in
whole or in part. This is because the amount of the loan is deducted from the
investment options and placed in a special loan account. The investment options
and the special loan account will generally have different rates of investment
return.

The amount of the outstanding loan (which includes accrued and unpaid
interest) is subtracted from the amount otherwise payable when the policy
proceeds become payable.

Whenever the outstanding loan equals or exceeds the surrender value, the
policy will terminate 31 days after we have mailed notice of termination to you
(and to any assignee of record at such assignee's last known address) specifying
the minimum amount that must be paid to avoid termination, unless a repayment of
at least the amount specified is made within that period. Also, taking out a
loan on the policy increases the risk that the policy may lapse because of the
difference between the interest rate charged on the loan and the interest rate
credited to the special loan account. Policy loans may also result in adverse
tax consequences under certain circumstances (see "Tax considerations" beginning
on page 36).

ADDITIONAL INFORMATION ABOUT HOW CERTAIN POLICY CHARGES WORK

Sales expenses and related charges

The sales charges (i.e., the premium sales charge and the CDSC) help to
compensate us for the cost of selling our policies. (See "What charges will we
deduct from your investment in the policy?" in the Basic Information section of
this prospectus.) The amount of the charges in any policy year does not
specifically correspond to sales expenses for that year. We expect to recover
our total sales expenses over the life of the policies. To the extent that the
sales charges do not cover total sales expenses, the sales expenses may be
recovered from other sources, including gains from the asset-based risk charge
and other gains with respect to the policies, or from our general assets. (See
"How we market the policies" on page 39.) Similarly, administrative expenses not
fully covered by the issue charge and the maintenance charge may also be
recovered from such other sources.

Effect of premium payment pattern

You may structure the timing of premium payments to minimize the sales
charges, although doing so involves certain risks. Paying less premium in the
first 10 policy years and more in later years could reduce your total sales
charges. For example, if the Target premium was $10,000 and you paid $5,000 in
each of the first 10 policy years, you would pay total sales charges of $2,500
and be subject to a maximum CDSC of $10,000. If you paid $2,500 in each of the
first 10 policy years and $25,000 in policy year 11, you would pay total sales
charges of only $1,250 and be subject to a maximum CDSC of only $5,000. However,
delaying the payment of premiums to later policy years could increase the risk
that the guaranteed death benefit feature will not be in effect and the
surrender value will be insufficient to pay policy charges. As a result, the
policy or any Additional Sum Insured may lapse and eventually terminate.

Monthly charges

Unless we agree otherwise, we will deduct the monthly charges described in the
Basic Information section from your policy's investment options in proportion to
the amount of account value you have in each. For each month that we cannot
deduct any charge because of insufficient account value, the uncollected charges
will accumulate and be deducted when and if sufficient account value becomes
available.

The insurance under the policy continues in full force during any grace period
but, if the last surviving insured person dies during the policy grace period,
the amount of unpaid monthly charges is deducted from the death benefit
otherwise payable.

Reduced charges for eligible classes

The charges otherwise applicable may be reduced with respect to policies
issued to a class of associated individuals or to a trustee, employer or similar
entity where we anticipate that the sales to the members of the class will
result in lower than normal sales or administrative expenses, lower taxes or
lower risks to us. We will make these reductions in accordance with our rules in
effect at the time of the application for a policy. The factors we consider in
determining the eligibility of a particular group for reduced charges, and the
level of the reduction, are as follows: the nature of any association and its
organizational framework; the method by which sales will be made to the members
of the class; the facility with which premiums will be collected from any
associated individuals and the association's capabilities with respect to
administrative tasks; the anticipated lapse and surrender rates of the policies;
the size of the class of associated individuals and the number of years it has
been in existence; the aggregate amount of premiums paid; and any other such
circumstances which result in a reduction in sales or administrative expenses,
lower taxes or lower risks. Any reduction in charges will be reasonable and will
apply uniformly to all prospective policy purchasers in the class and will not
unfairly discriminate against any owner.

HOW WE MARKET THE POLICIES

John Hancock Funds, Inc. ("JHFI") and Signator Investors, Inc.("Signator")
act as principal distributors of the policies sold through this prospectus.
JHFI and Signator are each registered as a broker-dealer under the Securities
Exchange Act of 1934, and each is a member of the National Association of
Securities Dealers, Inc. JHFI's address is 101 Huntington Avenue, Boston,
Massachusetts 02199. Signator's address is 200 Clarendon Street, John Hancock
Place, Boston, Massachusetts 02117. JHFI and Signator are subsidiaries of John
Hancock.

You can purchase a policy through representatives of broker-dealers and
certain financial institutions who have entered into selling agreements with
JHFI and us, or with Signator and us. We pay compensation to these
broker-dealers for promoting, marketing and selling our products through their
representatives who are authorized by applicable law to sell variable life
insurance polices. In turn, the broker-dealers pay a portion of the compensation
to these representatives, under their own arrangements. The most common schedule
of gross commissions (inclusive of overrides and expense allowance payments paid
to such broker-dealers and financial institutions) is as follows:
. 87.75% of first year premiums paid up to the Target Premium plus 5.85% of
any excess premium payments,
. 5% of all premiums paid up to the Target Premium in policy years 2 through 4
plus 3% of any excess premium payments, and
. 3% of all premium payments paid in policy years 5 through 10.

In situations where the broker dealer provides some or all of the additional
marketing services required, we may pay an additional gross first year
commission of up to 20% of premiums paid up to the Target Premium. In such
instances, we may also pay an additional gross renewal commission. The
additional gross renewal commission would not be expected to exceed 0.10% of
account value less policy loans in policy years 2 and thereafter. For limited
periods of time, we may pay additional compensation to broker-dealers as part of
special sales promotions.

Signator also pays its branch office principals, who are also independent
general agents of ours, for sales of the policies to Signator customers. In
turn, the branch office principals pay a portion of their compensation to their
assigned marketing representatives, under their own arrangments. The most common
schedule of gross commission (inclusive of overrides and expense allowance
payments paid to such branch office principals) is as follows:
. 91.6% of the Target Premium paid in the first policy year, 8% of the Target
Premium paid in each of policy years 2 through 4, and 3% of the Target Premium
paid in each of policy years 5 through 10,
. 7.64% of any premium paid in the first policy year in excess of the
Target Premium,
. 4% of any premium paid in each of policy years 2 through 4 in excess of the
Target Premium and 2% of any premium paid in each of policy years 5 through 10
in excess of the Target Premium,

. 0.35% of account value less policy loans in policy years 2 through 10,
and

. 0.15% of account value less policy loans in policy year 11 and thereafter.

Representatives who meet certain productivity and persistency standards may be
eligible for additional compensation. From time to time, JHFI and Signator, at
their expense, may provide significant additional amounts to financial services
firms which sell or arrange for the sale of the policies. Such amounts may
include, for example, financial assistance to financial services firms in
connection with their conferences or seminars, sales or training programs for
invited registered representatives and other employees, payment for travel
expenses, including lodging, incurred by registered representatives and other
employees for such seminars or training programs, seminars for the

public, advertising and sales campaigns regarding the policies, and/or other
events or activities sponsored by the financial services firms.

We offer these contracts on a continuous basis, but neither JHFI nor Signator
is obligated to sell any particular amount of policies. JHFI and Signator also
serve as principal underwriters for John Hancock Variable Annuity Accounts U, I
and V, John Hancock Mutual Variable Life Insurance Account UV and John Hancock
Variable Life Accounts U and V, all of which are registered under the 1940 Act.
Signator is also the principal underwriter for the John Hancock Variable Series
Trust I, and JHFI is the principal underwriter for the John Hancock Declaration
Trust.

We reimburse JHFI and Signator for certain direct and indirect expenses
actually incurred in connection with the marketing of these contracts. John
Hancock (on behalf of JHVLICO) performs insurance underwriting and determines
whether to accept or reject the application for a policy and each insured
person's risk classification. Officers and employees of John Hancock and JHVLICO
are covered by a blanket bond by a commercial carrier in the amount of $25
million.

TAX CONSIDERATIONS

This description of federal income tax consequences is only a brief summary
and is not intended as tax advice. Tax consequences will vary based on your own
particular circumstances, and for further information you should consult a
qualified tax advisor. Federal, state and local tax laws, regulations and
interpretations can change from time to time. As a result, the tax consequences
to you and the beneficiary may be altered, in some cases retroactively.

Policy proceeds

We believe the policy will receive the same federal income and estate tax
treatment as fixed benefit life insurance policies. Section 7702 of the Internal
Revenue Code (the "Code") defines life insurance for federal tax purposes. If
certain standards are met at issue and over the life of the policy, the policy
will satisfy that definition. We will monitor compliance with these standards.

If the policy complies with the definition of life insurance, we believe the
death benefit proceeds under the policy will be excludable from the
beneficiary's gross income under the Code.

Other policy distributions

Increases in account value as a result of interest or investment experience
will not be subject to federal income tax unless and until values are actually
received through distributions. In general, the owner will be taxed on the
amount of distributions that exceed the premiums paid under the policy. But
under certain circumstances within the first 15 policy years, the owner may be
taxed on a distribution even if total withdrawals do not exceed total premiums
paid. Any taxable distribution will be ordinary income to the owner (rather than
capital gains).

Distributions for tax purposes can include amounts received upon surrender or
partial withdrawals. You may also be deemed to have received a distribution for
tax purposes if you assign all or part of your policy rights or change your
policy's ownership.

We also believe that, except as noted below, loans received under the policy
will be treated as indebtedness of an owner and that no part of any loan will
constitute income to the owner. However, if the policy terminates for any
reason, the amount of any outstanding loan that was not previously considered
income will be treated as if it had been distributed to the owner upon such
termination. This could result in a considerable tax bill. Under certain
circumstances involving large amounts of outstanding loans, you might find
yourself having to choose between high premiums requirements to keep your policy
from lapsing and a significant tax burden if you allow the lapse to occur.

It is possible that, despite our monitoring, a policy might fail to qualify
as life insurance under Section 7702 of the Code. This could happen, for
example, if we inadvertently failed to return to you any premium payments that
were in excess of permitted amounts, or if any of the funds failed to meet
certain investment diversification or other requirements of the Code. If this
were to occur, you would be subject to income tax on the income and gains under
the policy for the period of the disqualification and for subsequent periods.

In the past, the United States Treasury Department has stated that it
anticipated issuing guidelines prescribing circumstances in which the ability of
a policy owner to direct his or her investment to particular funds may cause the
policy owner, rather than the insurance company, to be treated as the owner of
the shares of those funds. In that case, any income and gains attributable to
those shares would be included in your current gross income for federal income
tax purposes. Under current law, however, we believe that we, and not the owner
of a policy, would be considered the owner of the fund's shares for tax
purposes.

Tax consequences of ownership or receipt of policy proceeds under federal,
state and local estate, inheritance, gift and other tax laws depend on the
circumstances of each owner or beneficiary.

Because there may be unfavorable tax consequences (including recognition of
taxable income and the loss of income tax-free treatment for any death benefit
payable to the beneficiary), you should consult a qualified tax adviser prior to
changing the policy's ownership or making any assignment of ownership interests.

7-pay premium limit

At the time of policy issuance, we will determine whether the Planned
Premium schedule will exceed the 7-pay limit discussed below. If so, our
standard procedures prohibit issuance of the policy unless you sign a form
acknowledging that fact.

The 7-pay limit is the total of net level premiums that would have been
payable at any time for a comparable fixed policy to be fully "paid-up" after
the payment of 7 equal annual premiums. "Paid-up" means that no further premiums
would be required to continue the coverage in force until maturity, based on
certain prescribed assumptions. If the total premiums paid at any time during
the first 7 policy years exceed the 7-pay limit, the policy will be treated as a
"modified endowment", which can have adverse tax consequences.

The owner will be taxed on distributions and loans from a "modified
endowment" to the extent of any income (gain) to the owner (on an income-first
basis). The distributions and loans affected will be those made on or after, and
within the two year period prior to, the time the policy becomes a modified
endowment. Additionally, a 10% penalty tax may be imposed on taxable portions of
such distributions or loans that are made before the owner attains age 591/2.

Furthermore, any time there is a "material change" in a policy (such as an
increase in the Additional Sum Insured, the addition of certain other policy
benefits after issue, a change in death benefit option, or reinstatement of a
lapsed policy), the policy will have a new 7-pay limit as if it were a
newly-issued policy. If a prescribed portion of the policy's then account value,
plus all other premiums paid within 7 years after the material change, at any
time exceed the new 7-pay limit, the policy will become a modified endowment.

Moreover, if benefits under a policy are reduced (such as a reduction in
the Total Sum Insured or death benefit or the reduction or cancellation of
certain rider benefits), the 7-pay limit will be recalculated based on the
reduced benefits. If the premiums paid to date are greater than the recalculated
7-pay limit, the policy will become a modified endowment.

All modified endowments issued by the same insurer (or its affiliates) to
the owner during any calendar year generally will be treated as one contract for
the purpose of applying the modified endowment rules. A policy received in
exchange for a modified

endowment will itself also be a modified endowment. You should consult your tax
advisor if you have questions regarding the possible impact of the 7-pay limit
on your policy.

Corporate and H.R. 10 plans

The policy may be acquired in connection with the funding of retirement
plans satisfying the qualification requirements of Section 401 of the Code. If
so, the Code provisions relating to such plans and life insurance benefits
thereunder should be carefully scrutinized. We are not responsible for
compliance with the terms of any such plan or with the requirements of
applicable provisions of the Code.

Reports that you will receive

At least annually, we will send you a statement setting forth the following
information as of the end of the most recent reporting period: the amount of the
death benefit, the Basic Sum Insured and the Additional Sum Insured, the account
value, the portion of the account value in each investment option, the surrender
value, premiums received and charges deducted from premiums since the last
report, and any outstanding policy loan (and interest charged for the preceding
policy year). Moreover, you also will receive confirmations of premium payments,
transfers among investment options, policy loans, partial withdrawals and
certain other policy transactions.

Semiannually we will send you a report containing the financial statements
of the Series Funds, including a list of securities held in each fund.

Voting privileges that you will have

All of the assets in the subaccounts of the Account are invested in shares
of the corresponding funds of the Series Funds. We will vote the shares of each
of the funds of the Series Funds which are deemed attributable to variable life
insurance policies at regular and special meetings of the Series Funds'
shareholders in accordance with instructions received from owners of such
policies. Shares of the Series Funds held in the Account which are not
attributable to such policies, as well as shares for which instructions from
owners are not received, will be represented by us at the meeting. We will vote
such shares for and against each matter in the same proportions as the votes
based upon the instructions received from the owners of such policies.

We determine the number of a fund's shares held in a subaccount
attributable to each owner by dividing the amount of a policy's account value
held in the subaccount by the net asset value of one share in the fund.
Fractional votes will be counted. We determine the number of shares as to which
the owner may give instructions as of the record date for the Series Fund's
meeting. Owners of policies may give instructions regarding the election of the
Board of Trustees or Board of Directors of a Series Fund, ratification of the
selection of independent auditors, approval of Series Fund investment advisory
agreements and other matters requiring a shareholder vote. We will furnish
owners with information and forms to enable owners to give voting instructions.

However, we may, in certain limited circumstances permitted by the SEC's
rules, disregard voting instructions. If we do disregard voting instructions,
you will receive a summary of that action and the reasons for it in the next
semi-annual report to owners.

Changes that we can make as to your policy

Changes relating to a Series Fund or the Account

The voting privileges described in this prospectus reflect our
understanding of applicable Federal securities law requirements. To the extent
that applicable law, regulations or interpretations change to eliminate or
restrict the need for such voting privileges, we reserve the right to proceed in
accordance with any such revised requirements. We also reserve the right,
subject to compliance with applicable law, including approval of owners if so
required, (1) to transfer assets determined by JHVLICO to be associated with the
class of policies

to which your policy belongs from the Account to another separate account or
subaccount, (2) to operate the Account as a "management-type investment company"
under the 1940 Act, or in any other form permitted by law, the investment
adviser of which would be JHVLICO, John Hancock, or an affiliate of either, (3)
to deregister the Account under the 1940 Act, (4) to substitute for the fund
shares held by a subaccount any other investment permitted by law, and (5) to
take any action necessary to comply with or obtain any exemptions from the 1940
Act. We would notify owners of any of the foregoing changes and, to the extent
legally required, obtain approval of owners and any regulatory body prior
thereto. Such notice and approval, however, may not be legally required in all
cases.

Other permissible changes

We reserve the right to make any changes in the policy necessary to ensure
the policy is within the definition of life insurance under the Federal tax laws
and is in compliance with any changes in Federal or state tax laws.

In our policies, we reserve the right to make certain changes if they would
serve the best interests of policy owners or would be appropriate in carrying
out the purposes of the policies. Such changes include the following:

. Changes necessary to comply with or obtain or continue exemptions under the
federal securities laws

. Combining or removing investment options

. Changes in the form of organization of any separate account

Any such changes will be made only to the extent permitted by applicable
laws and only in the manner permitted by such laws. When required by law, we
will obtain your approval of the changes and the approval of any appropriate
regulatory authority.

Adjustments we make to death benefits

If either insured person commits suicide within certain time periods, the
amount of death benefit we pay will be limited as described in the policy. Also,
if an application misstated the age or gender of either insured person, we will
adjust the amount of any death benefit as described in the policy.

When we pay policy proceeds

General

We will pay any death benefit, withdrawal, surrender value or loan within 7
days after we receive the last required form or request (and, with respect to
the death benefit, any other documentation that may be required). If we don't
have information about the desired manner of payment within 7 days after the
date we receive documentation of the death of the last surviving insured person,
we will pay the proceeds as a single sum.

Delay to challenge coverage

We may challenge the validity of your insurance policy based on any
material misstatements made to us in the application for the policy. We cannot
make such a challenge, however, beyond certain time limits that are specified in
the policy.

Delay for check clearance

We reserve the right to defer payment of that portion of your account value
that is attributable to a premium payment made by check for a reasonable period
of time (not to exceed 15 days) to allow the check to clear the banking system.

Delay of separate account proceeds

We reserve the right to defer payment of any death benefit, loan or other
distribution that is derived from a variable investment option if (1) the New
York Stock Exchange is closed (other than customary weekend and holiday
closings) or trading on the New York Stock Exchange is restricted; (2) an
emergency exists, as a result of which disposal of securities is not reasonably
practicable or it is not reasonably

practicable to fairly determine the account value; or (3) the SEC by order
permits the delay for the protection of owners. Transfers and allocations of
account value among the investment options may also be postponed under these
circumstances. If we need to defer calculation of separate account values for
any of the foregoing reasons, all delayed transactions will be processed at the
next values that we do compute.

Other details about exercising rights and paying benefits

Joint ownership

If more than one person owns a policy, all owners must join in most
requests to exercise rights under the policy.

Assigning your policy

You may assign your rights in the policy to someone else as collateral for
a loan or for some other reason. Assignments do not require the consent of any
revocable beneficiary. A copy of the assignment must be forwarded to us. We are
not responsible for any payment we make or any action we take before we receive
notice of the assignment in good order. Nor are we responsible for the validity
of the assignment. An absolute assignment is a change of ownership. All
collateral assignees of record must consent to any full surrender, partial
withdrawal or loan from the policy.

Your beneficiary

You name your beneficiary when you apply for the policy. The beneficiary is
entitled to the proceeds we pay following the death of the last surviving
insured person. You may change the beneficiary during that insured person's
lifetime. Such a change requires the consent of any irrevocable named
beneficiary. A new beneficiary designation is effective as of the date you sign
it, but will not affect any payments we make before we receive it. If no
beneficiary is living when the last surviving insured person dies, we will pay
the insurance proceeds to the owner or the owner's estate.

Legal matters

The legal validity of the policies described in this prospectus has been
passed on by Ronald J. Bocage, Vice President and Counsel for JHVLICO. The law
firm of Foley & Lardner, Washington, D.C., has advised us on certain Federal
securities law matters in connection with the policies.

Registration statement filed with the sec

This prospectus omits certain information contained in the Registration
Statement which has been filed with the SEC. More details may be obtained from
the SEC upon payment of the prescribed fee.

Accounting and actuarial experts

Certain of the financial statements of JHVLICO and the Account included in
this prospectus have been audited by Ernst & Young LLP, independent auditors,
for the periods indicated in their reports thereon which appear elsewhere herein
and have been included in reliance on their reports given on their authority as
experts in accounting and auditing. Actuarial matters included in this
prospectus have been examined by Todd G. Engelsen, F.S.A., Vice President and
Illustartion Actuary of JHVLICO and Second Vice President of John Hancock.

Financial statements of JHVLICO and the account

The financial statements of JHVLICO included herein should be distinguished
from the financial statements of the Account and should be considered only as
bearing upon the ability of JHVLICO to meet its obligations under the policies.

In addition to those financial statements of JHVLICO and the Account
included herein that have been audited by Ernst & Young LLP, this prospectus
also contains unaudited financial statements of both JHVLICO and the Account for
a period subsequent to the audited financial statements.

List of Directors and Executive Officers of JHVLICO

The Directors and Executive Officers of JHVLICO and their principal
occupations during the past five years are as follows:

Directors and Executive Officers Principal Occupations
- -------------------------------- ---------------------

David F. D'Alessandro............. Chairman of the Board of JHVLICO; Chairman of
the Board, President and Chief Executive
Officer, John Hancock Life Insurance Company.
Michele G. Van Leer............... Vice Chairman of the Board and President of
JHVLICO; Senior Vice President, John Hancock
Life Insurance Company.
Ronald J. Bocage.................. Director, Vice President and Counsel of
JHVLICO; Vice President and Counsel, John
Hancock Life Insurance Company.
Bruce M. Jones.................... Director and Vice President of JHVLICO; Vice
President, John Hancock Life Insurance
Company.
Barbara L. Luddy.................. Director, Vice President and Actuary of
JHVLICO; Senior Vice President, John Hancock
Life Insurance Company.
Robert S. Paster.................. Director and Vice President of JHVLICO; Vice
President, John Hancock Life Insurance
Company.
Robert R. Reitano................. Director, Vice President and Chief Investment
officer of JHVLICO; Vice President and Chief
Investment Strategist, John Hancock Life
Insurance Company.
Paul Strong....................... Director and Vice President of JHVLICO; Vice
President, John Hancock Life Insurance
Company.
Roger G. Nastou................... Vice President, Investments, of JHVLICO; Vice
President, John Hancock Life Insurance
Company
Todd G. Engelsen.................. Vice President and Illustration Actuary of
JHVLICO; Second Vice President, John Hancock
Life Insurance Company
Julie H. Indge.................... Treasurer of JHVLICO; Assistant Treasurer,
John Hancock Life Insurance Company
Earl W. Baucom.................... Controller of JHVLICO; Senior Vice President
and Controller, John Hancock Life Insurance
Company.
Peter Scavongelli................. Secretary of JHVLICO; State Compliance
Officer, John Hancock Life Insurance Company

The business address of all Directors and officers of JHVLICO is John
Hancock Place, Boston, Massachusetts 02117.

UNAUDITED FINANCIAL STATEMENTS

FOR

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

FIRST QUARTER 2001

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS

March 31
2001 December 31
(Unaudited) 2000
----------- -----------
(in millions)

Assets
Investments
Fixed maturities:
Held-to-maturity--at amortized cost
(fair value: 2001--$82.5; 2000--$686.8)........... $ 83.1 $ 715.4
Available-for-sale--at fair value
(cost: 2001--$1,765.6, 2000--$1,018.8)............ 1,795.8 1,011.8
Equity securities:
Available-for-sale--at fair value
(cost: 2001--$11.0; 2000--$7.1)................... 9.5 8.1
Mortgage loans on real estate........................ 562.2 554.8
Real estate.......................................... 24.5 23.9
Policy loans......................................... 345.0 334.2
Short-term investments............................... 14.8 21.7
Other invested assets................................ 35.0 34.8
--------- ---------
Total Investments................................. 2,869.9 2,704.7
Cash and cash equivalents............................ 166.6 277.3
Accrued investment income............................ 58.6 52.1
Premiums and accounts receivable..................... 2.6 7.0
Deferred policy acquisition costs.................... 1,000.0 994.1
Reinsurance recoverable.............................. 89.9 48.4
Other assets......................................... 57.5 28.2
Separate accounts assets............................. 7,227.1 8,082.9
--------- ---------
Total Assets...................................... $11,472.2 $12,194.7
========= =========

The accompanying notes are an integral part of these unaudited consolidated
financial statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS -- (CONTINUED)

March 31
2001 December 31
(Unaudited) 2000
----------- -----------
(in millions)

Liabilities and Shareholder's Equity
Liabilities
Future policy benefits.............................. $ 2,853.6 $ 2,754.2
Policyholders' funds................................ 8.5 14.2
Unearned revenue.................................... 214.2 212.0
Unpaid claims and claim expense reserves............ 16.4 11.1
Dividends payable to policyholders.................. 0.2 0.1
Income taxes........................................ 100.1 64.2
Other liabilities................................... 204.7 250.4
Separate accounts liabilities....................... 7,227.1 8,082.9
--------- ---------
Total Liabilities............................... 10,624.8 11,389.1
Commitments and contingencies
Shareholder's Equity
Common stock, $50 par value; 50,000 shares
authorized; 50,000 shares issued and outstanding... 2.5 2.5
Additional paid in capital.......................... 572.4 572.4
Retained earnings................................... 263.1 232.9
Accumulated other comprehensive income.............. 9.4 (2.2)
--------- ---------
Total Shareholder's Equity...................... 847.4 805.6
--------- ---------
Total Liabilities and Shareholder's Equity...... $11,472.2 $12,194.7
========= =========

The accompanying notes are an integral part of these unaudited consolidated
financial statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended
March 31
------------------
2001 2000
-------- --------
(in millions)

Revenues
Premiums................................................... $ 15.4 $ 9.9
Universal life and investment-type product charges......... 96.3 95.8
Net investment income...................................... 56.6 49.9
Net realized investment and other gains (losses), net of
related amortization of deferred policy acquisition
costs ($(0.2) and $--, respectively)...................... 0.6 (4.4)
Other revenue.............................................. 0.1 0.1
------ ------
Total revenues......................................... 169.0 151.3
Benefits and expenses
Benefits to policyholders.................................. 61.7 69.5
Other operating costs and expenses......................... 23.5 15.3
Amortization of deferred policy acquisition costs,
excluding amounts related to net realized investment
losses ($(0.2) and $--, respectively)..................... 25.7 6.4
Dividends to policyholders................................. 5.3 6.4
------ ------
Total benefits and expenses............................ 116.2 97.6
------ ------
Income before income taxes and cumulative effect of
accounting change......................................... 52.8 53.7
Income taxes............................................... 21.0 18.3
Income before cumulative effect of accounting change....... 31.8 35.4
Cumulative effect of accounting change, net of
tax--Note 1............................................... (1.6) --
------ ------
Net income................................................. $ 30.2 $ 35.4
====== ======

The accompanying notes are an integral part of these unaudited consolidated
financial statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY

AND COMPREHENSIVE INCOME

Accumulated
Additional Other Total Outstanding
Common Paid In Retained Comprehensive Shareholder's Shares
Stock Capital Earnings Income Equity (in thousands)
------- ---------- -------- ------------- ------------- --------------
(in millions)

Balance at January 1, 2000......... $2.5 $572.4 $133.5 $(13.4) $695.0 50.0
Comprehensive income:
Net income........................ 35.4 35.4
Other comprehensive income,
net of tax:
Net unrealized gains.............. 3.6 3.6
------
Comprehensive income............... 39.0
---- ------ ------ ------ ------ ----
Balance at March 31, 2000.......... $2.5 $572.4 $168.9 $ (9.8) $737.6 50.0
==== ====== ====== ====== ====== ====

Balance at January 1, 2001........ $2.5 $572.4 $232.9 $(2.2) $805.6 50.0
Comprehensive income:
Net income....................... 30.2 30.2
Other comprehensive income,
net of tax:
Net unrealized gains............. 4.4 4.4
------
Comprehensive income.............. 34.6
Change in accounting principle.... 7.2 7.2
---- ------ ------ ----- ------ ----
Balance at March 31, 2001......... $2.5 $572.4 $263.1 $ 9.4 $847.1 50.0
==== ====== ====== ===== ====== ====

The accompanying notes are an integral part of these unaudited consolidated
financial statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED
MARCH 31
-------------------
2001 2000
--------- -----------
(IN MILLIONS)
Cash flows from operating activities:
Net income............................................. $ 30.2 $ 35.4
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of discount--fixed maturities............ (2.7) (0.4)
Net realized investment and other (losses) gains, net. (0.6) 4.4
Change in deferred policy acquisition costs........... (14.8) (35.7)
Depreciation and amortization......................... 0.2 0.2
Increase in accrued investment income................. (6.4) (2.8)
Decrease in premiums and accounts receivable.......... 4.3 9.5
(Increase) Decrease in other assets and other
liabilities, net..................................... (119.6) 16.1
Increase (Decrease) in policy liabilities and
accruals, net........................................ 66.7 (80.4)
Increase in income taxes.............................. 31.9 21.2
------- -------
Net cash used in operating activities................ (10.2) (32.5)
Cash flows from investing activities:
Sales of:
Fixed maturities available-for-sale................... 24.4 80.1
Equity securities available-for-sale.................. 0.1 0.7
Maturities, prepayments and scheduled redemptions of:
Fixed maturities held-to-maturity..................... 0.8 16.2
Fixed maturities available-for-sale................... 26.0 17.1
Short-term investments and other invested assets...... 21.7 10.1
Mortgage loans on real estate......................... 6.4 9.2
Purchases of:
Fixed maturities held-to-maturity..................... -- (29.5)
Fixed maturities available-for-sale................... (162.6) (138.9)
Equity securities available-for-sale.................. (4.7) (0.1)
Real estate........................................... (0.1) (0.1)
Short-term investments and other invested assets...... (16.8) (6.6)
Mortgage loans on real estate issued.................. (14.5) (0.3)
Other, net ........................................... (17.5) (12.7)
------- -------
Net cash used in investing activities................ (136.8) (54.8)
Cash flows from financing activities:
Universal life and investment-type contract deposits... 231.4 261.1
Universal life and investment-type contract maturities
and withdrawals....................................... (195.1) (109.9)
------- -------
Net cash provided by financing activities............ 36.3 151.2
------- -------
Net increase (decrease) in cash and cash equivalents. (110.7) 63.9
Cash and cash equivalents at beginning of period........ 277.3 259.6
------- -------
Cash and cash equivalents at end of period........... $ 166.6 $ 323.5
======= =======

The accompanying notes are an integral part of these unaudited consolidated
financial statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements of John Hancock
Variable Life Insurance Company (the Company), a wholly-owned subsidiary of John
Hancock Life Insurance Company (John Hancock or the Parent), have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, these unaudited consolidated
financial statements contain all adjustments, consisting of only normal and
recurring adjustments, necessary for a fair presentation of the financial
position and results of operations. Operating results for the three-month period
ended March 31, 2001 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2001. These unaudited consolidated
financial statements should be read in conjunction with the Company's annual
audited financial statements as of December 31, 2000 included in the Company's
Form 10-K for the year ended December 31, 2000 filed with the Securities and
Exchange Commission (hereafter referred to as the Company's 2000 Form 10-K.
Prior to 2000, the Company did not prepare its financial statements in
accordance with accounting principles generally accepted in the United States
and financial information on such basis currently is not readily available for
earlier periods. Comparative financial statements prepared on a statutory-basis
are included in the Company's 2000 Form 10-K).

The balance sheet at December 31, 2000 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.

Reorganization and Initial Public Offering

Pursuant to a Plan of Reorganization approved by the policyholders and the
Commonwealth of Massachusetts Division of Insurance, effective February 1, 2000,
John Hancock converted from a mutual life insurance company to a stock life
insurance company (i.e., demutualized) and became a wholly owned subsidiary of
John Hancock Financial Services, Inc., which is a holding company. In connection
with the reorganization, John Hancock changed its name to John Hancock Life
Insurance Company. In addition, on February 1, 2000, John Hancock Financial
Services, Inc. completed its initial public offering and 102 million shares of
common stock were issued at an initial public offering price of $17 per share.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Cumulative Effect of Accounting Change

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." In June 1999, the FASB issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities--Deferral of the
Effective Date of FASB Statement 133." This Statement amends SFAS No. 133 to
defer its effective date for one year, to fiscal years beginning after June 15,
2000. In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities--an amendment of SFAS No.
133". This Statement makes certain changes in the hedging provisions of SFAS No.
133, and is effective concurrent with SFAS No. 133. As amended, SFAS No. 133
requires all derivatives to be recognized on the balance sheet at fair value,
and establishes special accounting for the following three types of hedges: fair
value hedges, cash flow hedges, and hedges of foreign currency exposures of net
investments in foreign operations. Special accounting for qualifying hedges
provides for matching the timing of gain or loss recognition on the hedging
instrument with the recognition of the corresponding changes in value of the
hedged item. If the derivative is a hedge, depending on the nature of the hedge,
changes in the fair value of derivatives will either be offset against the
change in the fair value of the hedged assets, liabilities or firm commitments
through earnings or recognized in other comprehensive income until the hedged
item is recognized in earnings. The ineffective portion of a derivative's change
in fair value will be recognized immediately in earnings and will be included in
net realized and other investment gains. As a result, such amounts will not be
included in the determination of the Company's segment after tax operating
income. The Company believes that its current risk management philosophy will
remain largely unchanged after adoption of the Statement. In addition, SFAS No.
133, as amended, precludes the designation of held-to-maturity fixed maturity
investment securities as hedged items in hedging relationships where the hedged
risk is interest rate risk.

On January 1, 2001, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", as amended. The adoption of SFAS
No. 133, as amended, resulted in a charge to operations of $1.6 million (net of
tax of $0.4 million) as of January 1, 2001. In addition, as of January 1, 2001,
a $7.2 million (net of tax of $3.9 million) cumulative effect of accounting
change was recorded in other comprehensive income for the transition adjustment
in the adoption of SFAS 133, as amended, and the reclassification of certain
securities from the held-to-maturity category to the available-for-sale
category. The transition adjustment for the adoption of SFAS 133 resulted in an
increase in other comprehensive income of $0.8 million (net of tax of $0.4
million) that was accounted for as the cumulative effect of accounting change.
The adjustment for the reclassification of $0.6 billion of the held-to-maturity
fixed maturity investment portfolio to the available-for-sale category resulted
in an increase in other comprehensive income of $6.4 million (net of tax of $3.4
million) as of January 1, 2001.

Codification

In March 1998, the National Association of Insurance Commissioners (NAIC)
adopted codified statutory accounting principles (Codification) effective
January 1, 2001. Codification changes prescribe statutory accounting practices
and results in changes to the accounting practices that the Company's domestic
life insurance subsidiaries use to prepare their statutory-basis financial
statements. The states of domicile of the Company's domestic life insurance
subsidiaries adopted Codification as the prescribed basis of accounting on which
domestic insurers must report their statutory-basis results effective January 1,
2001. The cumulative effect of changes in accounting principles adopted to
conform to the requirements of Codification was reported as an adjustment to
surplus in the statutory-basis financial statements as of January 1, 2001.
Although the implementation of Codification had a negative impact on the
Company's domestic life insurance subsidiaries' statutory-basis capital and
surplus, the Companies remains in compliance with all regulatory and contractual
obligations.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2. TRANSACTIONS WITH PARENT

John Hancock provides the Company with personnel, property and facilities in
carrying out certain of its corporate functions. John Hancock annually
determines a fee (the parent company service fee) for these services and
facilities based on a number of criteria, which are periodically revised to
reflect continuing changes in the Company's operations. The parent company
service fee is included in other operating costs and expenses within the
Company's income statements. John Hancock charged the Company a service fee of
$38.5 million and $48.5 million for the three months ended March 31, 2001 and
2000, respectively. As of March 31, 2001, the Company owed John Hancock $14.6
million related to these services, which is included in other liabilities. John
Hancock has guaranteed that, if necessary, it will make additional capital
contributions to prevent the Company's shareholder's equity from declining below
$1.0 million.

NOTE 3. SEGMENT INFORMATION

The Company's reportable segments are strategic business units offering
different products and services. The reportable segments are managed separately,
as they focus on different products, markets or distribution channels.

RETAIL-PROTECTION SEGMENT. Offers a variety of individual life insurance,
including participating whole life, term life, universal life and variable life
insurance. Products are distributed through multiple distribution channels,
including insurance agents and brokers and alternative distribution channels
that include banks, financial planners, direct marketing and the Internet.

RETAIL-ASSET GATHERING SEGMENT. Offers individual annuities, consisting of
fixed deferred annuities, fixed immediate annuities, single premium immediate
annuities, and variable annuities. This segment distributes its products through
distribution channels including insurance agents and brokers affiliated with the
Company, securities brokerage firms, financial planners, and banks.

The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. Allocations of net investment income
are based on the amount of assets allocated to each segment. Other costs and
operating expenses are allocated to each segment based on a review of the nature
of such costs, cost allocations utilizing time studies, and other relevant
allocation methodologies.

Management of the Company evaluates performance based on segment after-tax
operating income, which excludes the effect of net realized investment and other
gains or losses and other unusual or non-recurring events and transactions.
Segment after-tax operating income is determined by adjusting GAAP net income
for net realized investment and other gains and losses and certain other items
which management believes are not indicative of overall operating trends. While
these items may be significant components in understanding and assessing the
Company's financial performance, management believes that the presentation of
after-tax operating income enhances its understanding of the Company's results
of operations by highlighting net income attributable to the normal, recurring
operations of the business.

Amounts reported as segment adjustments in the tables below primarily relate
to: (i) certain net realized investment and other gains (losses), net of related
amortization adjustment for deferred policy acquisition costs; (ii) benefits to
policyholders and expenses incurred relating to the settlement of a class action
lawsuit against the Company involving certain individual life insurance policies
sold from 1979 through 1996; (iii) restructuring costs related to our
distribution systems and retail operations.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table summarizes selected financial information by segment for
the three months ended March 31, 2001 and 2000, respectively, and reconciles
segment revenues and segment after-tax operating income to amounts reported in
the consolidated statements of income (in millions):

RETAIL
RETAIL ASSET
AS OF OR FOR THE THREE-MONTHS ENDED MARCH 31, 2001: PROTECTION GATHERING CONSOLIDATED
---------- --------- --------------

REVENUES:
Segment revenues...................................... $ 156.9 $ 11.5 $ 168.4
Net realized investment and other gains, net.......... 0.6 -- 0.6
-------- -------- ---------
Revenues.............................................. $ 157.5 $ 11.5 $ 169.0
Net investment income................................. $ 57.2 $ (0.6) $ 56.6
NET INCOME:
Segment after-tax operating income.................... $ 31.7 $ (0.3) $ 31.4
Net realized investment and other gains, net.......... 0.4 -- 0.4
Change in accounting principle........................ (1.6) -- (1.6)
-------- -------- ---------
Net income............................................ 30.5 (0.3) 30.2
======== ======== =========
SUPPLEMENTAL INFORMATION:
Equity in net income of investees accounted for by the
equity method........................................ $ 0.5 -- $ 0.5
Amortization of deferred policy acquisition costs..... 18.6 $ 7.1 25.7
Segment assets......................................... 8,976.7 2,495.5 11,472.2

RETAIL
RETAIL ASSET
AS OF OR FOR THE THREE-MONTHS ENDED MARCH 31, 2001: PROTECTION GATHERING CONSOLIDATED
---------- --------- --------------

REVENUES:
Segment revenues...................................... $ 144.2 $ 11.5 $ 155.7
Net realized investment and other losses, net......... (1.3) (3.1) (4.4)
-------- -------- ---------
Revenues.............................................. $ 142.9 $ 8.4 $ 151.3
======== ======== =========
Net investment income................................. $ 50.8 $ (0.9) $ 49.9
NET INCOME:
Segment after-tax operating income.................... $ 34.1 $ 5.0 $ 39.1
Realized investment losses, net....................... (0.9) (2.0) (2.9)
Restructuring charges................................. (0.2) -- (0.2)
Other demutualization related costs................... (0.5) (0.1) (0.6)
-------- -------- ---------
Net income............................................ $ 32.5 $ 2.9 $ 35.4
======== ======== =========
SUPPLEMENTAL INFORMATION:
Equity in net income of investees accounted for by the
equity method......................................... $ 0.1 -- $ 0.1
Amortization of deferred policy acquisition costs..... 2.6 $ 3.8 6.4
Segment assets......................................... 9,435.5 3,009.4 12,444.9

The Company operates only in the United States and has no reportable major
customers. Revenues are attributed to countries based on the location of
customers.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. DERIVATIVES AND HEDGING INSTRUMENTS

The Company uses various derivative instruments to hedge and manage its
exposure to changes in interest rate levels, foreign exchange rates, and equity
market prices, and to manage the duration mismatch of assets and liabilities.

The fair value of derivative instruments classified as assets at March 31,
2001 was $10.5 million, and appears on the Consolidated Balance Sheet in other
assets. The fair value of derivative instruments classified as liabilities at
March 31, 2001 was $7.3 million, and appears on the Consolidated Balance Sheet
in other liabilities.

In certain of these cases, the Company uses hedge accounting as allowed by
SFAS 133, as amended, by designating derivative instruments as either fair value
or cash flow hedges. For derivative instruments that are designated as fair
value hedges, the change in fair value of the derivative instrument as well as
the offsetting change in fair value of the hedged item are recorded in realized
investment gains and losses. The change in value of the hedged item is used to
adjust its cost basis on a quarterly basis and is amortized into investment
income over its remaining life, beginning either immediately or when the hedge
designation is removed. For derivative instruments that are designated and
qualify as cash flow hedges, the effective portion of the change in fair value
of the derivative instrument is recorded in other comprehensive income, and then
reclassified into income when the hedged item affects income. Hedge
effectiveness is assessed quarterly by a variety of techniques including
regression analysis and cumulative dollar offset. In certain cases zero hedge
ineffectiveness is assumed because the derivative instrument was constructed
such that all the terms of the derivative exactly match the hedged risk in the
hedged item. The ineffective portion is recorded in realized investment gains
and losses.

For derivative instruments not designated as hedges, the change in fair value
of the derivative is recorded in realized investment gains and losses.

In cases where the Company receives or pays a premium as consideration for
entering into a derivative instrument (i.e., interest rate caps and floors,
swaptions, and equity collars), the premium is amortized into investment income
over the useful life of the derivative instrument. The fair value of such
premiums (i.e., the inherent ineffectiveness of the derivative) is excluded from
the assessment of hedge effectiveness and is included in realized investment
gains and losses.

Fair Value Hedges

The Company uses interest rate futures contracts and interest rate swap
agreements as part of its overall strategies of managing the duration mismatch
of assets and liabilities or the average life of certain asset portfolios to
specified targets. Interest rate swap agreements are contracts with a
counterparty to exchange interest rate payments of a differing character (e.g.,
fixed-rate payments exchanged for variable-rate payments) based on an underlying
principal balance (notional principal). The net differential to be paid or
received on interest rate swap agreements and currency rate swap agreements is
accrued and recognized as a component of net investment income.

The Company uses equity collar agreements to reduce its equity market exposure
with respect to certain common stock investments that the Company holds. A
collar consists of a written call option that limits the Company's potential for
gain from appreciation in the stock price as well as a purchased put option that
limits the Company's potential for loss from a decline in the stock price.

Currency rate swap agreements are used to manage the Company's exposure to
foreign exchange rate fluctuations. Currency rate swap agreements are contracts
to exchange the currencies of two different countries at the same rate of
exchange at specified future dates.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the three months ended March 31, 2001, the Company recognized a net loss
of $0.3 million related to the ineffective portion of its fair value hedges, and
a net gain of $0.1 million related to the portion of the hedging instruments
that were excluded from the assessment of hedge effectiveness. For the three
months ended March 31, 2001, none of the Company's hedged firm commitments no
longer qualified as fair value hedges.

Cash Flow Hedges

The Company used interest rate cap floor agreements to hedge the interest rate
risk associated with minimum interest rate guarantees in certain of its life
insurance and annuity businesses.

For the three months ended March 31, 2001, the Company recognized no gains or
losses related to the ineffective portion of its cash flow hedges, and a net
gain of $0.2 million related to the portion of the hedging instruments that was
excluded from the assessment of hedge effectiveness. For the three months ended
March 31, 2001, none of the Company's hedged forecasted transactions no longer
qualified as cash flow hedges.

For the three months ended March 31, 2001, no amounts were reclassified from
other accumulated comprehensive income to earnings and it is anticipated that no
amounts will be reclassified from other accumulated comprehensive income to
earnings within the next twelve months. The Company does not enter into hedging
transaction for variable cash flows thus the Company currently has no maximum
length for which variable cash flows are hedged.

For the three month's ended March 31, 2001, none of the Company's cash flow
hedges have been discontinued because of the probability that the original
forecasted transaction would not occur by the end of the originally specified
time period documented at inception of the hedging relationship.

There was no transition adjustment for the adoption of the statement
representing the accumulation in other comprehensive income of the effective
portion of the Company's cash flow hedges as of January 1, 2001. There were no
losses incurred for the effective portion of the change in fair value of
derivative instruments designated as cash flow hedges and added to accumulated
other comprehensive income.

Derivatives Not Designated as Hedging Instruments

The Company enters into interest rate swap agreements, interest rate futures
contracts, and interest rate cap and floor agreements to manage exposure to
interest rates as described above under Fair Value Hedging without designating
the derivatives as hedging instruments.

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
John Hancock Variable Life Insurance Company

We have audited the accompanying consolidated balance sheet of John Hancock
Variable Life Insurance Company as of December 31, 2000, and the related
consolidated statements of income, changes in shareholder's equity, and cash
flows for the year ended December 31, 2000. Our audit also included the
financial statement schedules listed in the Index at Item 14(a). These financial
statements and schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of John Hancock
Variable Life Insurance Company at December 31, 2000, and the consolidated
results of their operations and their cash flows for the year ended December 31,
2000, in conformity with accounting principles generally accepted in the United
States. Also, in our opinion, the related financial statement schedules, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.

/S/ ERNST & YOUNG LLP
Boston, Massachusetts
March 16, 2001

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED BALANCE SHEET

DECEMBER 31
2000
----------
IN MILLIONS)

ASSETS
Investments--Notes 3 and 4
Fixed maturities:
Held-to-maturity--at amortized cost (fair value: $686.8)......... $ 715.4
Available-for-sale--at fair value (cost: $1,018.8)............... 1,011.8
Equity securities:
Available-for-sale--at fair value (cost: $7.1)................... 8.1
Mortgage loans on real estate..................................... 554.8
Real estate....................................................... 23.9
Policy loans...................................................... 334.2
Short-term investments............................................ 21.7
Other invested assets............................................. 34.8
-----------
Total Investments............................................... 2,704.7
Cash and cash equivalents......................................... 277.3
Accrued investment income......................................... 52.1
Premiums and accounts receivable.................................. 7.0
Deferred policy acquisition costs................................. 994.1
Reinsurance recoverable--Note 7................................... 48.4
Other assets...................................................... 28.2
Separate accounts assets.......................................... 8,082.9
-----------
Total Assets.................................................... $12,194.7
===========

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED BALANCE SHEET -- (CONTINUED)

DECEMBER 31
2000
-----------------
(IN MILLIONS)

LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES
Future policy benefits..................................... $ 2,754.2
Policyholders' funds....................................... 14.2
Unearned revenue........................................... 212.0
Unpaid claims and claim expense reserves................... 11.1
Dividends payable to policyholders......................... 0.1
Income taxes--Note 5....................................... 64.2
Other liabilities.......................................... 250.4
Separate accounts liabilities.............................. 8,082.9
--------------
Total Liabilities........................................ 11,389.1
SHAREHOLDER'S EQUITY--Note 9
Common stock, $50 par value; 50,000 shares authorized;
50,000 shares issued and outstanding...................... 2.5
Additional paid in capital................................. 572.4
Retained earnings.......................................... 232.9
Accumulated other comprehensive loss....................... (2.2)
--------------
Total Shareholder's Equity............................... 805.6
--------------
Total Liabilities and Shareholder's Equity............... $ 12,194.7
==============

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENT OF INCOME

YEAR ENDED
DECEMBER 31
2000
-------------
(IN MILLIONS)

REVENUES
Premiums................................................... $ 28.6
Universal life and investment-type product charges......... 337.1
Net investment income--Note 3.............................. 213.4
Net realized investment losses, net of related amortization
of deferred policy acquisition costs of $3.8--Notes 1, 3,
and 10.................................................... (10.6)
Other revenue.............................................. 0.2
------
Total revenues........................................... 568.7
BENEFITS AND EXPENSES
Benefits to policyholders.................................. 248.6
Other operating costs and expenses......................... 116.8
Amortization of deferred policy acquisition costs,
excluding amounts related to net realized investment
losses of $3.8--Notes 1, 3 and 10......................... 34.0
Dividends to policyholders................................. 26.1
------
Total benefits and expenses.............................. 425.5
------
Income before income taxes................................. 143.2
Income taxes--Note 5....................................... 43.8
------
Net income................................................. $ 99.4
======

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY

AND COMPREHENSIVE INCOME

ACCUMULATED
ADDITIONAL OTHER TOTAL
PAID IN RETAINED COMPREHENSIVE SHAREHOLDER'S
COMMON STOCK CAPITAL EARNINGS LOSS EQUITY
------------ ---------- -------- ------------- ---------------

Balance at December 31, 1999........... $2.5 $572.4 $133.5 ($13.4) $695.0
Comprehensive income:
Net income............................ 99.4 99.4
Other comprehensive income, net of tax:
Net unrealized gains.................. 11.2 11.2
Comprehensive income................... 110.6
---- ------ ------ ------ ------
Balance at December 31, 2000........... $2.5 $572.4 $232.9 ($2.2) $805.6
==== ====== ====== ====== ======

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS

YEAR ENDED
DECEMBER 31
2000
---------------
(IN MILLIONS)

Cash flows from operating activities:
Net income...................................................... $ 99.4
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization of discount--fixed maturities.................... (1.9)
Realized investment losses, net............................... 10.6
Change in deferred policy acquisition costs................... (141.5)
Depreciation and amortization................................. 1.9
Increase in accrued investment income......................... (10.2)
Decrease in premiums and accounts receivable.................. 0.3
Decrease in other assets and other liabilities, net........... 70.7
Decrease in policy liabilities and accruals, net.............. (401.1)
Increase in income taxes...................................... 22.5
--------
Net cash used by operating activities....................... (349.3)
Cash flows from investing activities:
Sales of:
Fixed maturities available-for-sale............................ 194.6
Equity securities available-for-sale........................... 1.0
Real estate.................................................... 0.2
Short-term investments and other invested assets............... 1.3
Maturities, prepayments and scheduled redemptions of:
Fixed maturities held-to-maturity.............................. 79.9
Fixed maturities available-for-sale............................ 91.5
Short-term investments and other invested assets............... 10.1
Mortgage loans on real estate.................................. 85.6
Purchases of:
Fixed maturities held-to-maturity.............................. (127.2)
Fixed maturities available-for-sale............................ (424.7)
Equity securities available-for-sale........................... (0.6)
Real estate.................................................... (0.4)
Short-term investments and other invested assets............... (38.8)
Mortgage loans on real estate issued........................... (100.5)
Other, net..................................................... (41.5)
--------
Net cash used in investing activities....................... (269.5)
Cash flows from financing activities:
Universal life and investment-type contract deposits............ $1,067.2
Universal life and investment-type contract maturities and
withdrawals.................................................... (430.7)
--------
Net cash provided by financing activities................... 636.5
--------
Net increase in cash and cash equivalents................... 17.7
Cash and cash equivalents at beginning of year................... 259.6
--------
Cash and cash equivalents at end of year.................... $ 277.3
========

The accompanying notes are an integral part of these consolidated financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

John Hancock Variable Life Insurance Company (the Company) is a wholly-
owned subsidiary of John Hancock Life Insurance Company (John Hancock or the
Parent). The Company, domiciled in the Commonwealth of Massachusetts, issues
variable and universal life insurance policies, individual whole and term life
policies and variable annuity contracts. Those policies primarily are marketed
through John Hancock's sales organization, which includes a career agency system
composed of Company-supported independent general agencies and a direct
brokerage system that markets directly to external independent brokers. Policies
are also sold through various unaffiliated securities broker-dealers and certain
other financial institutions. Currently, the Company writes business in all
states except New York.

Prior to 2000, the Company did not prepare its financial statements in
accordance with accounting principles generally accepted in the United States
and financial information on such basis currently is not readily available for
earlier periods. Comparative financial statements prepared on a statutory-basis
are included elsewhere in this Form 10-K.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, Investors Partner Life Insurance
Company (IPL). All significant intercompany transactions and balances have been
eliminated.

The preparation of financial statements requires management to make
estimates and assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Actual results could differ from
those estimates.

Investments

In accordance with the provisions of Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity
Securities", the Company is required to classify its investments into one of
three categories: held-to-maturity, available-for-sale or trading. The Company
determines the appropriate classification of debt securities at the time of
purchase and re-evaluates such designation as of each balance sheet date. Fixed
maturity investments include bonds, mortgage-backed securities, and redeemable
preferred stock and are classified as held-to-maturity or available-for-sale.
Bonds and mortgage-backed securities, which the Company has the positive intent
and ability to hold to maturity, are classified as held-to-maturity and carried
at amortized cost. Fixed maturity investments not classified as held-to-maturity
are classified as available-for-sale and are carried at fair value. Unrealized
gains and losses related to available-for-sale securities are reflected in
shareholder's equity, net of related amortization of deferred policy acquisition
costs and applicable taxes. The amortized cost of debt securities is adjusted
for amortization of premiums and accretion of discounts to maturity. Such
amortization is included in investment income. The amortized cost of fixed
maturity investments is adjusted for impairments in value deemed to be other
than temporary.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

For the mortgage-backed bond portion of the fixed maturity investment
portfolio, the Company recognizes income using a constant effective yield based
on anticipated prepayments and the estimated economic life of the securities.
When actual prepayments differ significantly from anticipated prepayments, the
effective yield is recalculated to reflect actual payments to date, and
anticipated future payments and any resulting adjustment is included in net
investment income.

Equity securities include common stock and non-redeemable preferred stock.
Equity securities that have readily determinable fair values are carried at fair
value. For equity securities which the Company has classified as available-for-
sale, unrealized gains and losses are reflected in shareholder's equity as
described above. Impairments in value deemed to be other than temporary are
reported as a component of realized investment gains (losses).

Mortgage loans on real estate are carried at unpaid principal balances
adjusted for amortization of premium or discount, less allowance for probable
losses. When it is probable that the Company will be unable to collect all
amounts of principal and interest due according to the contractual terms of the
mortgage loan agreement, the loan is deemed to be impaired and a valuation
allowance for probable losses is established. The valuation allowance is based
on the present value of the expected future cash flows, discounted at the loan's
original effective interest rate, or on the collateral value of the loan if the
loan is collateral dependent. Any change to the valuation allowance for mortgage
loans on real estate is reported as a component of realized investment gains
(losses). Interest received on impaired mortgage loans on real estate is
included in interest income in the period received. If foreclosure becomes
probable, the measurement method used is collateral value. Foreclosed real
estate is then recorded at the collateral's fair value at the date of
foreclosure, which establishes a new cost basis.

Investment real estate, which the Company has the intent to hold for the
production of income, is carried at depreciated cost, using the straight-line
method of depreciation, less adjustments for impairments in value. In those
cases where it is determined that the carrying amount of investment real estate
is not recoverable, an impairment loss is recognized based on the difference
between the depreciated cost and fair value of the asset. The Company reports
impairment losses as part of realized investment gains (losses).

Real estate to be disposed of is carried at the lower of cost or fair value
less costs to sell. Any changes to the valuation allowance for real estate to be
disposed of is reported as a component of realized investment gains (losses).
The Company does not depreciate real estate to be disposed of.

Policy loans are carried at unpaid principal balances which approximate
fair value.

Short-term investments are carried at amortized cost.

Partnership and joint venture interests in which the Company does not have
control or a majority ownership interest are recorded using the equity method of
accounting and included in other invested assets.

Realized investment gains and losses, other than those related to separate
accounts for which the Company does not bear the investment risk, are determined
on the basis of specific identification and are reported net of related
amortization of deferred policy acquisition costs.

Derivative Financial Instruments

The Company uses futures contracts, interest rate swap, cap and floor
agreements, swaptions and currency rate swap agreements for other than trading
purposes to hedge and manage its exposure to changes in interest rate levels and
foreign exchange rate fluctuations and to manage duration mismatch of assets and
liabilities. The Company also uses equity collar agreements to reduce its
exposure to market fluctuations in certain equity securities.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company uses futures contracts principally to hedge risks associated
with interest rate fluctuations on anticipated fixed income asset acquisitions.
Futures contracts represent commitments to either purchase or sell securities at
a specified future date and at a specified price or yield.

The Company uses interest rate swap, cap and floor agreements and swaptions
for the purpose of converting the interest rate characteristics (fixed or
variable) of certain investments to more closely match its liabilities. Interest
rate swap agreements are contracts with a counterparty to exchange interest rate
payments of a differing character (e.g., fixed-rate payments exchanged for
variable-rate payments) based on an underlying principal balance (notional
principal) to hedge against interest rate changes. Interest rate cap and floor
agreements are contracts with a counterparty which require the payment of a
premium for the right to receive payments for the difference between the cap or
floor interest rate and a market interest rate on specified future dates based
on an underlying principal balance (notional principal) to hedge against rising
and falling interest rates. Swaptions entitle the Company to receive settlement
payments from other parties on specified expiration dates, contingent on future
interest rates. The amount of such settlement payments, if any, is determined by
the present value of the difference between the fixed rate on a market rate swap
and the strike rate multiplied by the notional amount.

The Company invests in common stock that is subject to fluctuations from
market value changes in stock prices. The Company sometimes seeks to reduce its
market exposure to such holdings by entering into equity collar agreements. A
collar consists of a call option that limits the Company's potential for gain
from appreciation in the stock price as well as a put option that limits the
Company's potential for loss from a decline in the stock price.

Futures contracts are carried at fair value and require daily cash
settlement. Changes in the fair value of futures contracts that qualify as
hedges are deferred and recognized as an adjustment to the hedged asset or
liability.

The net differential to be paid or received on interest rate swap
agreements and currency rate swap agreements is accrued and recognized as a
component of net investment income. The related amounts due to or from
counterparties are included in accrued investment income receivable or payable.

Premiums paid for interest rate cap and floor agreements and swaptions are
deferred and amortized to net investment income on a straight-line basis over
the term of the agreements. The unamortized premium is included in other assets.
Amounts earned on interest rate cap and floor agreements and swaptions are
recorded as an adjustment to net investment income. Settlements received on
swaptions are deferred and amortized over the life of the hedged assets as an
adjustment to yield.

Interest rate swap, cap and floor agreements, swaptions and currency rate
swap agreements which hedge instruments designated as available-for-sale are
adjusted to fair value with the resulting unrealized gains and losses, net of
related taxes, included in shareholder's equity.

Equity collar agreements are carried at fair value and are included in
other invested assets, with the resulting unrealized gains and losses included
in realized investment gains (losses).

Hedge accounting is applied after the Company determines that the items to
be hedged expose it to interest or price risk, designates these financial
instruments as hedges and assesses whether the instruments reduce the hedged
risks through the measurement of changes in the value of the instruments and the
items being hedged at both inception and throughout the hedge period.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

From time to time, futures contracts, interest rate swaps, cap and floor
agreements, swaptions and currency rate swap agreements are terminated. If the
terminated position was accounted for as a hedge, realized gains or losses are
deferred and amortized over the remaining lives of the hedged assets or
liabilities. Realized and unrealized changes in fair value of derivatives
designated with items that no longer exist or are no longer probable of
occurring are recorded as a component of the gain or loss arising from the
disposition of the designated item or included in income when it is determined
that the item is no longer probable of occurring. Changes in the fair value of
derivatives no longer effective as hedges are recognized in income from the date
the derivative becomes ineffective until their expiration.

Revenue Recognition

Premiums from participating and non-participating traditional life
insurance and annuity policies with life contingencies are recognized as income
when due.

Premiums from universal life and investment-type contracts are reported as
deposits to policyholders' account balances. Revenues from these contracts
consist of amounts assessed during the period against policyholders' account
balances for mortality charges, policy administration charges and surrender
charges.

Premiums for contracts with a single premium or a limited number of premium
payments, due over a significantly shorter period than the total period over
which benefits are provided, are recorded in income when due. The portion of
such premium that is not required to provide for all benefits and expenses is
deferred and recognized in income in a constant relationship to insurance in
force or, for annuities, the amount of expected future benefit payments.

Future Policy Benefits and Policyholders' Funds

Future policy benefits for participating traditional life insurance
policies are based on the net level premium method. This net level premium
reserve is calculated using the guaranteed mortality and dividend fund interest
rates, which range from 4.5% to 5.0%. The liability for annual dividends
represents the accrual of annual dividends earned. Settlement dividends are
accrued in proportion to gross margins over the life of the contract.

For non-participating traditional life insurance policies, future policy
benefits are estimated using a net level premium method on the basis of
actuarial assumptions as to mortality, persistency, interest and expenses
established at policy issue. Assumptions established at policy issue as to
mortality and persistency are based on the Company's experience, which, together
with interest and expense assumptions, include a margin for adverse deviation.
Benefit liabilities for annuities during the accumulation period are equal to
accumulated contractholders' fund balances and after annuitization are equal to
the present value of expected future payments. Interest rates used in
establishing such liabilities range from 7.5% to 8.0% for life insurance
liabilities and 3.5% to 10.3% for individual annuity liabilities.

Policyholders' funds for universal life and investment-type products are
equal to the policyholder account values before surrender charges. Policy
benefits that are charged to expense include benefit claims incurred in the
period in excess of related policy account balances and interest credited to
policyholders' account balances. Interest crediting rates range from 3.0% to
9.0% for universal life products.

Liabilities for unpaid claims and claim expenses include estimates of
payments to be made on reported individual life claims and estimates of incurred
but not reported claims based on historical claims development patterns.

Estimates of future policy benefit reserves, claim reserves and expenses
are reviewed continually and adjusted as necessary; such adjustments are
reflected in current earnings. Although considerable variability is inherent in
such estimates, management believes that future policy benefit reserves and
unpaid claims and claims expense reserves are adequate.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Participating Insurance

Participating business represents approximately 16.3% of the Company's life
insurance in force and 30.1% of life insurance premiums in 2000.

The amount of policyholders' dividends to be paid is approved annually by
the Company's Board of Directors. The determination of the amount of
policyholder dividends is complex and varies by policy type. In general, the
aggregate amount of policyholders' dividends is related to actual interest,
mortality, morbidity, persistency and expense experience for the year and
judgment as to the appropriate level of statutory surplus to be retained by the
Company.

Deferred Policy Acquisition Costs

Costs that vary with, and are related primarily to, the production of new
business have been deferred to the extent that they are deemed recoverable. Such
costs include commissions, certain costs of policy issue and underwriting, and
certain agency expenses. For participating traditional life insurance policies,
such costs are being amortized over the life of the contracts at a constant rate
based on the present value of the estimated gross margin amounts expected to be
realized over the lives of the contracts. Estimated gross margin amounts include
anticipated premiums and investment results less claims and administrative
expenses, changes in the net level premium reserve and expected annual
policyholder dividends. For universal life insurance contracts and investment-
type products, such costs are being amortized generally in proportion to the
present value of expected gross profits arising principally from surrender
charges and investment results, and mortality and expense margins. The effects
on the amortization of deferred policy acquisition costs of revisions to
estimated gross margins and profits are reflected in earnings in the period such
estimated gross margins and profits are revised. For non-participating term life
insurance products, such costs are being amortized over the premium-paying
period of the related policies using assumptions consistent with those used in
computing policy benefit reserves. Amortization expense was $30.2 million in
2000.

Amortization of deferred policy acquisition costs is allocated to: (1)
realized investment gains and losses for those products that realized gains and
losses have a direct impact on the amortization of deferred policy acquisition
costs; (2) unrealized investment gains and losses, net of tax, to provide for
the effect on the deferred policy acquisition cost asset that would result from
the realization of unrealized gains and losses on assets backing participating
traditional life insurance and universal life and investment-type contracts; and
(3) a separate component of benefits and expenses to reflect amortization
related to the gross margins or profits, excluding realized gains and losses,
relating to policies and contracts in force.

Realized investment gains and losses related to certain products have a
direct impact on the amortization of deferred policy acquisition costs as such
gains and losses affect the amount and timing of profit emergence. Accordingly,
to the extent that such amortization results from realized gains and losses,
management believes that presenting realized investment gains and losses net of
related amortization of deferred policy acquisition costs provides information
useful in evaluating the operating performance of the Company. This presentation
may not be comparable to presentations made by other insurers.

Cash and Cash Equivalents

Cash and cash equivalents include cash and all highly liquid debt
investments with a maturity of three months or less when purchased.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Separate Accounts

Separate account assets and liabilities reported in the accompanying
consolidated balance sheet represent funds that are administered and invested by
the Company to meet specific investment objectives of the contractholders.
Investment income and investment gains and losses generally accrue directly to
such contractholders who bear the investment risk, subject in some cases to
minimum guaranteed rates. The assets of each account are legally segregated and
are not subject to claims that arise out of any other business of the Company.
Separate account assets are reported at fair value. Deposits, net investment
income and realized investment gains and losses of separate accounts are not
included in the revenues of the Company. Fees charged to contractholders,
principally mortality, policy administration and surrender charges, are included
in universal life and investment-type product charges.

Reinsurance

The Company utilizes reinsurance agreements to provide for greater
diversification of business, allow management to control exposure to potential
losses arising from large risks and provide additional capacity for growth.

Assets and liabilities related to reinsurance ceded contracts are reported
on a gross basis. The accompanying statement of income reflects premiums,
benefits and settlement expenses net of reinsurance ceded. 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.

Federal Income Taxes

The provision for federal income taxes includes amounts currently payable
or recoverable and deferred income taxes, computed under the liability method,
resulting from temporary differences between the tax basis and book basis of
assets and liabilities. A valuation allowance is established for deferred tax
assets when it is more likely than not that an amount will not be realized.

Foreign Currency Translation

Gains or losses on foreign currency transactions are reflected in earnings.

Accounting Changes and New Accounting Principles Adopted

SOP 98-7, "Deposit Accounting: Accounting for Insurance and Reinsurance
Contracts That Do Not Transfer Insurance Risk," provides guidance on how to
account for insurance and reinsurance contracts that do not transfer insurance
risk under a method referred to as deposit accounting. SOP 98-7 is effective for
fiscal years beginning after June 15, 1999. SOP 98-7 did not have a material
impact on the Company's consolidated financial statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." In June
1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities--Deferral of the Effective Date of FASB Statement 133." This
Statement amends SFAS No. 133 to defer its effective date for one year, to
fiscal years beginning after June 15, 2000. In June 2000, the FASB issued SFAS
No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities--an amendment of SFAS No. 133." This Statement makes certain changes
in the hedging provisions of SFAS No. 133, and is effective concurrent with SFAS
No. 133. As amended, SFAS No. 133 requires all derivatives to be recognized on
the balance sheet at fair value, and establishes special accounting for the
following three types of hedges: fair value hedges, cash flow hedges, and hedges
of foreign currency exposures of net investments in foreign operations. Special
accounting for qualifying hedges provides for matching the timing of gain or
loss recognition on the hedging instrument with the recognition of the
corresponding changes in value of the hedged item. If the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value of derivatives
will either be offset against the change in the fair value of the hedged assets,
liabilities or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
ineffective portion of a derivative's change in fair value will be recognized
immediately in earnings and will be included in net realized and other
investment gains.

The adoption of SFAS No. 133, as amended, will result in an increase in
other comprehensive income of $0.5 million (net of tax of $0.3 million) as of
January 1, 2001 that will be accounted for as the cumulative effect of an
accounting change. In addition, the adoption of SFAS No. 133, as amended, will
result in an increase to earnings of $4.9 million (net of tax of $2.7 million)
as of January 1, 2001, that will be accounted for as the cumulative effect of an
accounting change. The Company believes that its current risk management
philosophy will remain largely unchanged after adoption of the Statement.

SFAS No. 133, as amended, precludes the designation of held-to-maturity
fixed maturity investment securities as hedged items in hedging relationships
where the hedged risk is interest rates. As a result, in connection with the
adoption of the Statement and consistent with the provisions of the Statement,
on January 1, 2001, the Company will reclassify approximately $550.3 million of
its held-to-maturity fixed maturity investment portfolio to the available-for-
sale category. This will result in an additional increase in other comprehensive
income of $4.7 million (net of tax of $2.5 million) as of January 1, 2001.

In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin 101 (SAB 101), "Revenue Recognition in Financial
Statements." SAB 101 clarifies the SEC staff's views on applying generally
accepted accounting principles to revenue recognition in financial statements.
In March 2000, the SEC issued an amendment, SAB 101A, which deferred the
effective date of SAB 101. In June 2000, the SEC issued a second amendment, SAB
101B, which deferred the effective date of SAB 101 to no later than the fourth
fiscal quarter of fiscal years beginning after December 15, 1999. The Company
adopted SAB 101 in the fourth quarter of fiscal 2000. The adoption of SAB 101
did not have a material impact on the Company's results of operation or
financial position.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Codification

In March 1998, the National Association of Insurance Commissioners (NAIC)
adopted codified statutory accounting principles (Codification) effective
January 1, 2001. Codification changes prescribed statutory accounting practices
and results in changes to the accounting practices that the Company and its
domestic life insurance subsidiary will use to prepare their statutory-basis
financial statements. The states of domicile of the Company and its domestic
life insurance subsidiary have adopted Codification as the prescribed basis of
accounting on which domestic insurers must report their statutory-basis results
effective January 1, 2001. The cumulative effect of changes in accounting
principles adopted to conform to the requirements of Codification will be
reported as an adjustment to surplus as of January 1, 2001. Management believes
that, although the implementation of Codification will have a negative impact on
the Company and its domestic life insurance subsidiary's statutory-basis capital
and surplus, the Company and its domestic life insurance subsidiary will remain
in compliance with all regulatory and contractual obligations.

NOTE 2. TRANSACTIONS WITH PARENT

John Hancock provides the Company with personnel, property and facilities in
carrying out certain of its corporate functions. John Hancock annually
determines a fee for these services and facilities based on a number of
criteria, which were revised in 2000 to reflect continuing changes in the
Company's operations. The amount of the service fee charged to the Company was
$170.6 million, which has been included in other operating costs and expenses.
As of December 31, 2000, the Company owed John Hancock $56.9 million related to
these services, which is included in other liabilities. John Hancock has
guaranteed that, if necessary, it will make additional capital contributions to
prevent the Company's shareholder's equity from declining below $1.0 million.

The Company has a modified coinsurance agreement with John Hancock to reinsure
50% of the Company's 1995 in-force block and 50% of 1996 and all future issue
years of certain retail annuity contracts. In connection with this agreement,
the Company is holding a deposit liability of $102.2 million as of December 31,
2000. This agreement had no impact on the Company's net gain from operations.

Effective January 1, 1997, the Company entered into a stop-loss agreement with
John Hancock to reinsure mortality claims in excess of 100% of expected
mortality claims for all policies that are not reinsured under any other
indemnity agreement. In connection with the agreement, John Hancock received
$1.0 million from the Company in 2000. This agreement increased the Company's
net gain from operations in 2000 by $1.1 million.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS

The following information summarizes the components of net investment income
and realized investment losses, net:

YEAR ENDED
DECEMBER 31
2000
-------------
(IN MILLIONS)
NET INVESTMENT INCOME
Fixed maturities.............................................. $138.5
Equity securities............................................. 0.2
Mortgage loans on real estate................................. 44.3
Real estate................................................... 4.1
Policy loans.................................................. 17.1
Short-term investments........................................ 19.4
Other......................................................... 1.1
------
Gross investment income....................................... 224.7
Less investment expenses..................................... 11.3
------
Net investment income........................................ $213.4
======
NET REALIZED INVESTMENT GAINS (LOSSES), NET OF RELATED
AMORTIZATION OF DEFERRED POLICY ACQUISITION COSTS
Fixed maturities............................................... $(16.0)
Equity securities.............................................. 0.8
Mortgage loans on real estate and real estate.................. (2.3)
Derivatives and other invested assets.......................... 3.1
Amortization adjustment for deferred policy acquisition costs.. 3.8
------
Net realized investment losses, net of related amortization
of deferred policy acquisition costs.......................... $(10.6)
======

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

Gross gains of $1.5 million in 2000 and gross losses of $6.0 million in 2000
were realized on the sale of available-for-sale securities.

The Company's investments in held-to-maturity securities and
available-for-sale securities are summarized below:

GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- --------
(IN MILLIONS)
DECEMBER 31, 2000
HELD-TO-MATURITY:
Corporate securities............. $ 684.2 $23.4 $51.0 $ 656.6
Mortgage-backed securities....... 29.3 0.2 1.2 28.3
Obligations of states and
political subdivisions.......... 1.9 0.0 0.0 1.9
-------- ----- ----- --------
Total........................... $ 715.4 $23.6 $52.2 $ 686.8
======== ===== ===== ========
AVAILABLE-FOR-SALE:
Corporate securities............. $ 751.6 $20.6 $27.8 $ 744.4
Mortgage-backed securities....... 239.1 3.6 3.7 239.0
Obligations of states and
political subdivisions.......... 0.9 0.0 0.0 0.9
Debt securities issued by
foreign governments............. 11.1 0.3 0.6 10.8
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies....... 16.1 0.7 0.1 16.7
-------- ----- ----- --------
Total fixed maturities........... 1,018.8 25.2 32.2 1,011.8
Equity securities................ 7.1 2.8 1.8 8.1
-------- ----- ----- --------
Total........................... $1,025.9 $28.0 $34.0 $1,019.9
======== ===== ===== ========

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

The amortized cost and fair value of fixed maturities at December 31, 2000, by
contractual maturity, are shown below:

AMORTIZED FAIR
COST VALUE
--------- --------
(IN MILLIONS)
HELD-TO-MATURITY:
Due in one year or less............................ $ 71.9 $ 72.1
Due after one year through five years.............. 234.8 235.0
Due after five years through ten years............. 222.5 223.0
Due after ten years................................ 156.9 128.4
-------- --------
686.1 658.5
Mortgage-backed securities......................... 29.3 28.3
-------- --------
Total............................................. $ 715.4 $ 686.8
======== ========
AVAILABLE-FOR-SALE:
Due in one year or less............................ $ 24.9 $ 24.8
Due after one year through five years.............. 332.3 333.0
Due after five years through ten years............. 290.0 281.0
Due after ten years................................ 132.5 134.0
-------- --------
779.7 772.8
Mortgage-backed securities......................... 239.1 239.0
-------- --------
Total............................................. $1,018.8 $1,011.8
======== ========

Expected maturities may differ from contractual maturities because eligible
borrowers may exercise their right to call or prepay obligations with or without
call or prepayment penalties.

The Company participates in a securities lending program for the purpose of
enhancing income on securities held. At December 31, 2000, $1.4 million of the
Company's bonds and stocks, at market value, were on loan to various
brokers/dealers, but were fully collateralized by cash and U.S. government
securities in an account held in trust for the Company. The market value of the
loaned securities is monitored on a daily basis, and the Company obtains
additional collateral when deemed appropriate.

Mortgage loans on real estate are evaluated periodically as part of the
Company's loan review procedures and are considered impaired when, based on
current information and events, it is probable that the Company will be unable
to collect all amounts due according to the contractual terms of the loan
agreement. The allowance for losses is maintained at a level believed adequate
by management to absorb estimated probable credit losses that exist at the
balance sheet date. Management's periodic evaluation of the adequacy of the
allowance for losses is based on the Company's past loan loss experience, known
and inherent risks in the portfolio, adverse situations that may affect the
borrower's ability to repay (including the timing of future payments), the
estimated value of the underlying collateral, composition of the loan portfolio,
current economic conditions and other relevant factors. This evaluation is
inherently subjective as it requires estimating the amounts and timing of future
cash flows expected to be received on impaired loans that may be susceptible to
significant change.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

Changes in the allowance for probable losses on mortgage loans on real estate
were as follows:

BALANCE AT BALANCE AT
BEGINNING END OF
OF YEAR ADDITIONS DEDUCTIONS YEAR
---------- --------- ---------- ----------
(IN MILLIONS)
Year ended December 31, 2000
Mortgage loans on real estate.... $3.8 $1.2 $0.0 $5.0
==== ==== ==== ====

At December 31, 2000 the total recorded investment in mortgage loans that are
considered to be impaired under SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan," along with the related provision for losses were as
follows:

DECEMBER 31
2000
-------------
(IN MILLIONS)
Impaired mortgage loans on real estate with provision for
losses........................................................ $4.2
Provision for losses........................................... 1.2
----
Net impaired mortgage loans on real estate..................... $3.0
====

The average investment in impaired loans and the interest income recognized on
impaired loans were as follows:

YEAR ENDED
DECEMBER 31
2000
-------------
(IN MILLIONS)
Average recorded investment in impaired loans.................. $2.1
Interest income recognized on impaired loans................... 0.3

The payment terms of mortgage loans on real estate may be restructured or
modified from time to time. Generally, the terms of the restructured mortgage
loans call for the Company to receive some form or combination of an equity
participation in the underlying collateral, excess cash flows or an effective
yield at the maturity of the loans sufficient to meet the original terms of the
loans.

Restructured commercial mortgage loans aggregated $3.4 million as of December
31, 2000.The expected gross interest income that would have been recorded had
the loans been current in accordance with the original loan agreements and the
actual interest income recorded were as follows:

YEAR ENDED
DECEMBER 31
2000
-------------
(IN MILLIONS)
Expected....................................................... 0.34
Actual......................................................... 0.27

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. INVESTMENTS (CONTINUED)

At December 31, 2000, the mortgage portfolio was diversified by geographic
region and specific collateral property type as displayed below:

CARRYING GEOGRAPHIC CARRYING
PROPERTY TYPE AMOUNT CONCENTRATION AMOUNT
- ------------- ------------- ------------- -------------
(IN MILLIONS) (IN MILLIONS)
Apartments............. $129.2 East North Central..... $ 68.1
Hotels................. 15.1 East South Central..... 27.6
Industrial............. 77.4 Middle Atlantic........ 27.1
Office buildings....... 99.2 Mountain............... 35.7
Retail................. 45.7 New England............ 44.5
Mixed Use.............. 13.5 Pacific................ 120.7
Agricultural........... 165.6 South Atlantic......... 156.7
Other.................. 14.1 West North Central..... 16.9
West South Central..... 59.3
Canada/Other........... 3.2
Allowance for losses... (5.0) Allowance for losses... (5.0)
------ ------
Total................. $554.8 Total................. $554.8
====== ======

Bonds with amortized cost of $7.0 million were non-income producing for the
year ended December 31, 2000.

Depreciation expense on investment real estate was $0.6 million in 2000.
Accumulated depreciation was $2.5 million at December 31, 2000.

Investments in unconsolidated joint ventures and partnerships accounted for by
using the equity method of accounting totaled $0.4 million at December 31, 2000.
Total combined assets of these joint ventures and partnerships were $28.5
million (consisting primarily of investments), and total combined liabilities
were $8.7 million (including $2.9 million of non-recourse notes payable to
banks) at December 31, 2000. Total combined revenues and expenses of such joint
ventures and partnerships were $77.6 million and $76.3 million, respectively,
resulting in $1.3 million of total combined income from operations before income
taxes in 2000. Net investment income on investments accounted for on the equity
method totaled $0.4 million in 2000.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. DERIVATIVES

The notional amounts, carrying values and estimated fair values of the
Company's derivative instruments are as follows:

NUMBER OF
CONTRACTS/ ASSETS (LIABILITIES)
NOTIONAL --------------------
AMOUNTS 2000
---------- --------------------
CARRYING FAIR
2000 VALUE VALUE
---------- -------- -----
(IN MILLIONS)
ASSET HEDGES:
Futures contracts to sell securities..... 6 -- --
Interest rate swap agreements............
Notional................................ $600.0 -- (10.8)
Average fixed rate--paid................ 6.38% -- --
Average float rate--received............ 6.69% -- --
Currency rate swap agreements............ $ 22.3 (0.6) (0.6)
Equity collar agreements................. -- 0.4 0.4
LIABILITY HEDGES:
Futures contracts to acquire securities.. 43 0.1 0.1
Interest rate swap agreements............
Notional................................ $570.0 9.6
Average fixed rate--received............ 6.43% -- --
Average float rate--paid................ 6.69% -- --
Interest rate cap agreements............. $239.4 2.1 2.1
Interest rate floor agreements........... 485.4 4.5 4.5

Financial futures contracts are used principally to hedge risks associated
with interest rate fluctuations on anticipated fixed income asset acquisitions.
The Company is subject to the risks associated with changes in the value of the
underlying securities; however, such changes in value generally are offset by
opposite changes in the value of the hedged items. The contracts or notional
amounts of the contracts represent the extent of the Company's involvement but
not the future cash requirements, as the Company intends to close the open
positions prior to settlement. The futures contracts expire in March 2001.

The interest rate swap agreements expire in 2001 to 2011. The interest rate
cap agreements expire in 2006 to 2007 and interest rate floor agreements expire
in 2010. The currency rate swap agreements expire in 2006 to 2015. The equity
collar agreements expire in 2005.

Fair values for futures contracts are based on quoted market prices. Fair
values for interest rate swap, cap and floor agreements, swaptions, and currency
swap agreements and equity collar agreements are based on current settlement
values. The current settlement values are based on quoted market prices, which
utilize pricing models or formulas using current assumptions.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. DERIVATIVES (CONTINUED)

The Company's exposure to credit risk is the risk of loss from a counterparty
failing to perform to the terms of the contract. The Company continually
monitors its position and the credit ratings of the counterparties to these
derivative instruments. To limit exposure associated with counterparty
nonperformance on interest rate and currency swap agreements, the Company enters
into master netting agreements with its counterparties. The Company believes the
risk of incurring losses due to nonperformance by its counterparties is remote
and that such losses, if any, would be immaterial. Futures contracts trade on
organized exchanges and, therefore, have minimal credit risk.

NOTE 5. INCOME TAXES

The Company is included in the consolidated federal income tax return of John
Hancock Financial Services, Inc. The federal income taxes of the Company are
allocated on a separate return basis with certain adjustments.

The components of income taxes were as follows:

YEAR ENDED
DECEMBER 31
2000
-------------
(IN MILLIONS)
Current taxes:
Federal..................................................... $15.2
Foreign..................................................... 0.6
-----
15.8
Deferred taxes:
Federal..................................................... 28.0
Foreign..................................................... --
-----
28.0
-----
Total income taxes......................................... $43.8
=====

A reconciliation of income taxes computed by applying the federal income tax
rate to income before income taxes and the consolidated income tax expense
charged to operations follows:

YEAR ENDED
DECEMBER 31
2000
-------------
(IN MILLIONS)

Tax at 35%................................................... $50.1
Add (deduct):
Equity base tax............................................. (5.6)
Tax credits................................................. (0.6)
Foreign taxes............................................... 0.6
Tax exempt investment income................................ (0.7)
-----
Total income taxes......................................... $43.8
=====

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 5. INCOME TAXES (CONTINUED)

The significant components of the Company's deferred tax assets and
liabilities were as follows:

DECEMBER 31
2000
-------------
(IN MILLIONS)
DEFERRED TAX ASSETS:
Policy reserve adjustments.................................. $ 74.6
Other postretirement benefits............................... 23.3
Book over tax basis of investments.......................... 7.8
Interest.................................................... 7.5
Unrealized losses........................................... 1.4
------
Total deferred tax assets.................................. 114.6
------
DEFERRED TAX LIABILITIES:
Deferred policy acquisition costs........................... 199.1
Depreciation................................................ 1.8
Basis in partnerships....................................... 0.4
Market discount on bonds.................................... 0.6
Other....................................................... 9.5
------
Total deferred tax liabilities............................. 211.4
------
Net deferred tax liabilities............................... $ 96.8
======

The Company made income tax payments of $62.9 million in 2000.

NOTE 6. DEBT AND LINE OF CREDIT

At December 31, 2000, the Company had a line of credit with John Hancock
Capital Corporation, an indirect, wholly-owned subsidiary of John Hancock,
totaling $250.0 million. John Hancock Capital Corporation will commit, when
requested, to loan funds at prevailing interest rates as agreed to from time to
time between John Hancock Capital Corporation and the Company. At December 31,
2000, the Company had no outstanding borrowings under the agreement.

NOTE 7. REINSURANCE

The effect of reinsurance on premiums written and earned was as follows:

2000 PREMIUMS
----------------
WRITTEN EARNED
------- ------
(IN MILLIONS)
Life Insurance:
Direct..................................................... $34.1 $34.1
Ceded...................................................... (5.5) (5.5)
----- -----
Net life insurance premiums............................... $28.6 $28.6
===== =====

For the year ended December 31, 2000, benefits to policyholders under life
ceded reinsurance contracts were $3.0 million.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 7. REINSURANCE (CONTINUED)

Reinsurance ceded contracts do not relieve the Company from its obligations to
policyholders. The Company remains liable to its policyholders for the portion
reinsured to the extent that any reinsurer does not meet its obligations for
reinsurance ceded to it under the reinsurance agreements. Failure of the
reinsurers to honor their obligations could result in losses to the Company;
consequently, estimates are established for amounts deemed or estimated to be
uncollectible. To minimize its exposure to significant losses from reinsurance
insolvencies, the Company evaluates the financial condition of its reinsurers
and monitors concentration of credit risk arising from similar characteristics
of the reinsurer.

NOTE 8. COMMITMENTS AND CONTINGENCIES

The Company has extended commitments to purchase long-term bonds, issue real
estate mortgages and purchase other assets totaling $37.0 million, $6.3 million
and $17.4 million, respectively, at December 31, 2000. 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 estimated
fair value of the commitments described above was $62.9 million at December 31,
2000. The majority of these commitments expire in 2001.

In the normal course of its business operations, the Company is involved with
litigation from time to time with claimants, beneficiaries and others, and a
number of litigation matters were pending as of December 31, 2000. It is the
opinion of management, after consultation with counsel, that the ultimate
liability with respect to these claims, if any, will not materially affect the
financial position or results of operations of the Company.

During 1997, John Hancock entered into a court-approved settlement relating to
a class action lawsuit involving certain individual life insurance policies sold
from 1979 through 1996. In entering into the settlement, John Hancock
specifically denied any wrongdoing. The reserve held in connection with the
settlement to provide for relief to class members and for legal and
administrative costs associated with the settlement amounted to $66.3 million at
December 31, 2000. No costs were incurred in 2000. The estimated reserve is
based on a number of factors, including the estimated cost per claim and the
estimated costs to administer the claims.

During 1996, management determined that it was probable that a settlement
would occur and that a minimum loss amount could be reasonably estimated.
Accordingly, the Company recorded its best estimate based on the information
available at the time. The terms of the settlement agreement were negotiated
throughout 1997 and approved by the court on December 31, 1997. In accordance
with the terms of the settlement agreement, the Company contacted class members
during 1998 to determine the actual type of relief to be sought by class
members. The majority of responses from class members were received by the
fourth quarter of 1998. The type of relief sought by class members differed from
the Company's previous estimates, primarily due to additional outreach
activities by regulatory authorities during 1998 encouraging class members to
consider alternative dispute resolution relief. In 1999, the Company updated its
estimate of the cost of claims subject to alternative dispute resolution relief
and revised its reserve estimate accordingly.

Given the uncertainties associated with estimating the reserve, it is
reasonably possible that the final cost of the settlement could differ
materially from the amounts presently provided for by the Company. John Hancock
and the Company will continue to update their estimate of the final cost of the
settlement as claims are processed and more specific information is developed,
particularly as the actual cost of the claims subject to alternative dispute
resolution becomes available. However, based on information available at the
time, and the uncertainties associated with the final claim processing and
alternative dispute resolution, the range of any additional costs related to the
settlement cannot be estimated with precision. If the Company's share of the
settlement increases, John Hancock will contribute additional capital to the
Company so that the Company's total shareholder's equity would not be impacted.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 9. SHAREHOLDER'S EQUITY

(a) Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows:

ACCUMULATED
OTHER
COMPREHENSIVE
INCOME
-------------
Balance at January 1, 2000.................................... $(13.4)
------
Gross unrealized gains (net of deferred income tax expense
of $9.7 million)............................................. 18.0
Less reclassification adjustment for gains, realized in net
income (net of tax expense of $1.6 million).................. (2.9)
Adjustment to deferred policy acquisition costs (net of
deferred income tax benefit of $2.1 million)................. (3.9)
------
Net unrealized gains.......................................... 11.2
------
Balance at December 31, 2000.................................. $ (2.2)
======

Net unrealized investment gains (losses), included in the consolidated balance
sheet as a component of shareholder's equity, are summarized as follows:

2000
-------------
(IN MILLIONS)
Balance, end of year comprises:
Unrealized investment gains (losses) on:
Fixed maturities............................................ $(7.0)
Equity investments.......................................... 1.0
Derivatives and other....................................... 0.3
-----
Total...................................................... (5.7)
Amounts attributable to:
Deferred policy acquisition cost............................ 2.1
Deferred federal income taxes............................... 1.4
-----
Total...................................................... 3.5
-----
Net unrealized investment gains............................ $(2.2)
=====

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 9. SHAREHOLDER'S EQUITY (CONTINUED)

(b) Statutory Results

The Company and its domestic insurance subsidiary prepare their
statutory-basis financial statements in accordance with accounting practices
prescribed or permitted by the state of domicile. Prescribed statutory
accounting practices include state laws, regulations and administrative rules,
as well as guidance published by the NAIC. Permitted accounting practices
encompass all accounting practices that are not prescribed by the sources noted
above. Since 1988, the Commonwealth of Massachusetts Division of Insurance has
provided the Company with approval to recognize a pension plan prepaid expense
in accordance with the requirements of SFAS No. 87, "Employers' Accounting for
Pensions." The Company furnishes the Commonwealth of Massachusetts Division of
Insurance with an actuarial certification of the prepaid expense computation on
an annual basis. The pension plan prepaid expense amounted to $55.6 million at
December 31, 2000.

Statutory net income and surplus include the accounts of the Company and its
wholly-owned subsidiary, Investors Partners Life Insurance Company.

2000
---------------
(IN MILLIONS)
Statutory net income......................................... $ 26.6
Statutory surplus............................................ 527.2

Massachusetts has enacted laws governing the payment of dividends by insurers.
Under Massachusetts insurance law, no insurer may pay any shareholder dividends
from any source other than statutory unassigned funds without the prior approval
of Massachusetts Commissioner of Insurance. Massachusetts law also limits the
dividends an insurer may pay in any twelve month period, without the prior
permission of the Commonwealth of Massachusetts Insurance Commissioner, to the
greater of (i) 10% of its statutory policyholders' surplus as of the preceding
December 31 or (ii) the individual company's statutory net gain from operations
for the preceding calendar year, if such insurer is a life company.

NOTE 10. SEGMENT INFORMATION

Retail-Protection Segment. Offers a variety of individual life insurance,
including participating whole life, term life, universal life and variable life
insurance. Products are distributed through multiple distribution channels,
including insurance agents and brokers and alternative distribution channels
that include banks, financial planners, direct marketing and the Internet.

Retail-Asset Gathering Segment. Offers individual annuities, consisting of
fixed deferred annuities, fixed immediate annuities, single premium immediate
annuities, and variable annuities. This segment distributes its products through
distribution channels including insurance agents and brokers affiliated with the
Company, securities brokerage firms, financial planners, and banks.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. SEGMENT INFORMATION (CONTINUED)

Management of the Company evaluates performance based on segment after-tax
operating income, which excludes the effect of net realized investment gains or
losses and unusual or non-recurring events and transactions. Segment after-tax
operating income is determined by adjusting GAAP net income for net realized
investment gains and losses, including gains and losses on disposals of
businesses and certain other items which management believes are not indicative
of overall operating trends. While these items may be significant components in
understanding and assessing the Company's financial performance, management
believes that the presentation of after-tax operating income enhances its
understanding of the Company's results of operations by highlighting net income
attributable to the normal, recurring operations of the business.

Amounts reported as segment adjustments in the tables below primarily relate
to: (i) certain realized investment gains (losses), net of related amortization
adjustment for deferred policy acquisition costs; (ii) benefits to policyholders
and expenses incurred relating to the settlement of a class action lawsuit
against the Company involving certain individual life insurance policies sold
from 1979 through 1996; (iii) restructuring costs related to our distribution
systems and retail operations; (iv) the surplus tax on mutual life insurance
companies that was allocated by John Hancock to the Company; and (v) a charge
for certain one time costs associated with John Hancock's demutualization
process.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. SEGMENT INFORMATION (CONTINUED)

The following table summarizes selected financial information by segment for
the year ended or as of December 31 and reconciles segment revenues and segment
after-tax operating income to amounts reported in the consolidated statements of
income (in millions):

RETAIL
RETAIL ASSET
PROTECTION GATHERING CONSOLIDATED
---------- --------- --------------
2000
REVENUES:
Segment revenues...................... $ 530.8 $ 48.5 $ 579.3
Realized investment losses, net....... (10.6) -- (10.6)
-------- -------- ---------
Revenues.............................. $ 520.2 $ 48.5 $ 568.7
======== ======== =========
Net investment income................. $ 215.9 ($2.5) $ 213.4
NET INCOME:
Segment after-tax operating income.... 96.0 6.3 102.3
Realized investment losses, net....... (6.8) -- (6.8)
Restructuring charges................. (1.1) -- (1.1)
Surplus tax........................... 5.4 0.2 5.6
Other demutualization related cost....s (0.5) (0.1) (0.6)
-------- -------- ---------
Net income............................ $ 93.0 $ 6.4 $ 99.4
======== ======== =========
SUPPLEMENTAL INFORMATION:
Equity in net income of investees
accounted for by the equity method... $ 1.3 -- $ 1.3
Amortization of deferred policy
acquisition costs.................... 17.6 16.4 34.0
Income tax expense.................... 40.7 3.1 43.8
Segment assets........................ 9,326.9 2,867.8 12,194.7
NET REALIZED INVESTMENT GAINS DATA:
Net realized investment losses........ $ (14.4) -- $ (14.4)
Add capitalization/less amortization of
deferred policy acquisition costs
related to net realized investment
gains (losses)....................... 3.8 -- 3.8
-------- -------- ---------
Net realized investment losses, net of
related amortization of deferred
policy acquisition costs--per
consolidated financial statements.... (10.6) -- (10.6)
Less income tax effect................ 3.8 -- 3.8
-------- -------- ---------
Realized investment losses,
net-after-tax adjustment made to
calculate segment operating income... ($6.8) -- ($6.8)
======== ======== =========

The Company operates only in the United States. The Company has no reportable
major customers and revenues are attributed to countries based on the location
of customers.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following discussion outlines the methodologies and assumptions used to
determine the fair value of the Company's financial instruments. The aggregate
fair value amounts presented herein do not represent the underlying value of the
Company and, accordingly, care should be exercised in drawing conclusions about
the Company's business or financial condition based on the fair value
information presented herein.

The following methods and assumptions were used by the Company to determine
the fair values of financial instruments:

Fair values for publicly traded fixed maturities (including redeemable
preferred stocks) are obtained from an independent pricing service. Fair
values for private placement securities and fixed maturities not provided by
the independent pricing service are estimated by the Company by discounting
expected future cash flows using a current market rate applicable to the
yield, credit quality and maturity of the investments. The fair value for
equity securities is based on quoted market prices.

The fair value for mortgage loans on real estate is estimated using discounted
cash flow analyses using interest rates adjusted to reflect the credit
characteristics of the loans. Mortgage loans with similar characteristics and
credit risks are aggregated into qualitative categories for purposes of the
fair value calculations. Fair values for impaired mortgage loans are measured
based either on the present value of expected future cash flows discounted at
the loan's effective interest rate or the fair value of the underlying
collateral for loans that are collateral dependent.

The carrying amount in the balance sheet for policy loans, short-term
investments and cash and cash equivalents approximates their respective fair
values.

The fair value for fixed-rate deferred annuities is the cash surrender value,
which represents the account value less applicable surrender charges. Fair
values for immediate annuities without life contingencies are estimated based
on discounted cash flow calculations using current market rates.

The Company's derivatives include futures contracts, interest rate swap, cap
and floor agreements, swaptions, currency rate swap agreements and equity
collar agreements. Fair values for these contracts are based on current
settlement values. These values are based on quoted market prices for the
financial futures contracts and brokerage quotes that utilize pricing models
or formulas using current assumptions for all swaps and other agreements.

The fair value for commitments approximates the amount of the initial
commitment.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

The following table presents the carrying amounts and fair values of the
Company's financial instruments:

DECEMBER 31
2000
---------------------------
CARRYING VALUE FAIR VALUE
-------------- -----------
(IN MILLIONS)
ASSETS:
Fixed maturities:
Held-to-maturity.............................. $ 715.4 $ 686.8
Available-for-sale............................ 1,011.8 1,011.8
Equity securities:
Available-for-sale............................ 8.1 8.1
Mortgage loans on real estate.................. 554.8 574.2
Policy loans................................... 334.2 334.2
Short-term investments......................... 21.7 21.7
Cash and cash equivalents...................... 277.3 277.3
LIABILITIES:
Fixed rate deferred and immediate annuities..... 63.8 60.4
Derivatives assets/(liabilities) relating to:
Futures contracts, net........................ 0.1 0.1
Interest rate swap agreements................. (1.2)
Interest rate cap agreements.................. 2.1 2.1
Interest rate floor agreements................ 4.5 4.5
Currency rate swap agreements................. (0.6) (0.6)
Equity collar agreements...................... 0.4 0.4
Commitments..................................... -- 62.9

REPORT OF INDEPENDENT AUDITORS

To the Directors and Policyholders
John Hancock Variable Life Insurance Company

We have audited the accompanying statutory-basis statements of financial
position of John Hancock Variable Life Insurance Company as of December 31,
2000, 1999 and 1998, and the related statutory-basis statements of operations
and unassigned deficit and cash flows for each of the three years in the period
ended December 31, 2000. These financial statements and schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedules based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

As described in Note 1 to the financial statements, the Company presents its
financial statements in conformity with accounting practices prescribed or
permitted by the Commonwealth of Massachusetts Division of Insurance, which
practices differ from accounting principles generally accepted in the United
States. The variances between such practices and accounting principles generally
accepted in the United States and the effects on the accompanying financial
statements also are described in Note 1.

In our opinion, because of the effects of the matter described in the
preceding paragraph, the financial statements referred to above do not present
fairly, in conformity with accounting principles generally accepted in the
United States, the financial position of John Hancock Variable Life Insurance
Company at December 31, 2000, 1999, and 1998, or the results of its operations
or its cash flows for each of the three years in the period ended December 31,
2000.

However, in our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of John Hancock
Variable Life Insurance Company at December 31, 2000, 1999, and 1998, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2000 in conformity with accounting practices
prescribed or permitted by the Commonwealth of Massachusetts Division of
Insurance. Also, in our opinion, the related financial statement schedules, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.

/S/ ERNST & YOUNG LLP
Boston, Massachusetts
March 9, 2001

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF FINANCIAL POSITION

DECEMBER 31
---------------------------------
2000 1999 1998
---------- ---------- --------
(IN MILLIONS)
ASSETS
Bonds--Note 6........................... $ 1,400.5 $ 1,216.3 $1,185.8
Preferred stocks........................ 44.0 35.9 36.5
Common stocks........................... 2.8 3.2 3.1
Investment in affiliates................ 84.8 80.7 81.7
Mortgage loans on real estate--Note 6... 456.0 433.1 388.1
Real estate............................. 24.5 25.0 41.0
Policy loans............................ 218.9 172.1 137.7
Cash items:
Cash in banks.......................... 45.4 27.2 11.4
Temporary cash investments............. 226.6 222.9 8.5
--------- --------- --------
272.0 250.1 19.9
Premiums due and deferred............... 73.0 29.9 32.7
Investment income due and accrued....... 43.3 33.2 29.8
Other general account assets............ 17.6 65.3 47.5
Assets held in separate accounts........ 8,082.8 8,268.2 6,595.2
--------- --------- --------
TOTAL ASSETS........................... $10,720.2 $10,613.0 $8,599.0
========= ========= ========

OBLIGATIONS AND STOCKHOLDER'S EQUITY
OBLIGATIONS
Policy reserves......................... $ 2,207.9 $ 1,866.6 $1,652.0
Federal income and other taxes
payable--Note 1........................ (7.4) 67.3 44.3
Other general account obligations....... 166.3 219.0 150.9
Transfers from separate accounts, net... (198.5) (221.6) (190.3)
Asset valuation reserve--Note 1......... 26.7 23.1 21.9
Obligations related to separate
accounts............................... 8,076.4 8,261.6 6,589.4
--------- --------- --------
TOTAL OBLIGATIONS..................... 10,271.4 10,216.0 8,268.2
========= ========= ========
STOCKHOLDER'S EQUITY
Common Stock, $50 par value; authorized
50,000 shares; issued and outstanding
50,000 shares.......................... 2.5 2.5 2.5
Paid-in capital......................... 572.4 572.4 377.5
Unassigned deficit--Note 10............. (126.1) (177.9) (49.2)
--------- --------- --------
TOTAL STOCKHOLDER'S EQUITY............. 448.8 397.0 330.8
--------- --------- --------
TOTAL OBLIGATIONS AND STOCKHOLDER'S
EQUITY................................. $10,720.2 $10,613.0 $8,599.0
========= ========= ========

The accompanying notes are an integral part of the statutory-basis financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT

YEAR ENDED DECEMBER 31
-------------------------------
2000 1999 1998
--------- --------- --------
(IN MILLIONS)
INCOME
Premiums.................................. $ 945.5 $ 950.8 $1,272.3
Net investment income--Note 3............. 176.7 136.0 122.8
Other, net................................ 475.6 605.4 618.1
-------- -------- --------
1,597.8 1,692.2 2,013.2
BENEFITS AND EXPENSES
Payments to policyholders and
beneficiaries............................ 340.8 349.9 301.4
Additions to reserves to provide for future
payments to policyholders and
beneficiaries............................ 844.4 888.8 1,360.2
Expenses of providing service to
policyholders and obtaining new
insurance--Note 5........................ 363.4 314.4 274.2
State and miscellaneous taxes............. 25.8 20.5 28.1
-------- -------- --------
1,574.4 1,573.6 1,963.9
-------- -------- --------
GAIN FROM OPERATIONS BEFORE FEDERAL INCOME
TAX (CREDIT) EXPENSE AND NET REALIZED
CAPITAL LOSSES............................ 23.4 118.6 49.3
Federal income tax (credit) expense--
Note 1.................................... (18.0) 42.9 33.1
-------- -------- --------
GAIN FROM OPERATIONS BEFORE NET REALIZED
CAPITAL LOSSES............................ 41.4 75.7 16.2
Net realized capital losses--Note 4........ (18.2) (1.7) (0.6)
-------- -------- --------
NET INCOME................................. 23.2 74.0 15.6
Unassigned deficit at beginning of year.... (177.9) (49.2) (58.3)
Net unrealized capital gains (losses) and
other adjustments--Note 4................. 8.0 (3.8) (6.0)
Adjustment to premiums due and deferred.... 21.4 -- --
Other reserves and adjustments--Note 10.... (0.8) (198.9) (0.5)
-------- -------- --------
UNASSIGNED DEFICIT AT END OF YEAR.......... $ (126.1) $ (177.9) $ (49.2)
======== ======== ========

The accompanying notes are an integral part of the statutory-basis financial
statements.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31
-----------------------------
2000 1999 1998
-------- -------- --------
(IN MILLIONS)
Cash flows from operating activities:
Insurance premiums.......................... $ 939.9 $ 958.5 $1,275.3
Net investment income....................... 166.0 134.2 118.2
Benefits to policyholders and
beneficiaries.............................. (315.1) (321.6) (275.5)
Dividends paid to policyholders............. (26.1) (25.6) (22.3)
Insurance expenses and taxes................ (362.4) (344.8) (296.9)
Net transfers to separate accounts.......... (513.0) (705.3) (874.4)
Other, net.................................. 347.4 540.6 551.3
------- ------- --------
NET CASH PROVIDED FROM OPERATIONS......... 236.7 236.0 475.7
------- ------- --------
Cash flows used in investing activities:
Bond purchases.............................. (450.7) (240.7) (618.8)
Bond sales.................................. 148.0 108.3 340.7
Bond maturities and scheduled redemptions... 80.0 78.4 111.8
Bond prepayments............................ 29.4 18.7 76.5
Stock purchases............................. (8.8) (3.9) (23.4)
Proceeds from stock sales................... 1.7 3.6 1.9
Real estate purchases....................... (0.4) (2.2) (4.2)
Real estate sales........................... 0.2 17.8 2.1
Other invested assets purchases............. (13.8) (4.5) --
Mortgage loans issued....................... (85.7) (70.7) (145.5)
Mortgage loan repayments.................... 61.6 25.3 33.2
Other, net.................................. 23.7 (68.9) (435.2)
------- ------- --------
NET CASH USED IN INVESTING ACTIVITIES...... (214.8) (138.8) (660.9)
------- ------- --------
Cash flows from financing activities:
Capital contribution........................ -- 194.9 --
Net (decrease) increase in short-term note
payable.................................... -- (61.9) 61.9
------- ------- --------
NET CASH PROVIDED FROM FINANCING ACTIVITIES -- 133.0 61.9
------- ------- --------
INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS.......................... 21.9 230.2 (123.3)
Cash and temporary cash investments at
beginning of year........................... 250.1 19.9 143.2
------- ------- --------
CASH AND TEMPORARY CASH INVESTMENTS AT END
OF YEAR.................................. $ 272.0 $ 250.1 $ 19.9
======= ======= ========

The accompanying notes are an integral part of the statutory-basis financial
statements.

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 Life Insurance Company (John Hancock). The Company,
domiciled in the Commonwealth of Massachusetts, writes variable and universal
life insurance policies and variable annuity contracts. Those policies primarily
are marketed through John Hancock's sales organization, which includes a career
agency system composed of Company-supported independent general agencies and a
direct brokerage system that markets directly to external independent brokers.
Policies also are sold through various unaffiliated securities broker-dealers
and certain other financial institutions. Currently, the Company writes business
in all states except New York.

The preparation of financial statements requires management to make estimates
and assumptions that affect amounts reported in the financial statements and
accompanying notes. Such estimates and assumptions could change in the future as
more information becomes known, which could impact the amounts reported and
disclosed herein.

Basis of Presentation: The financial statements have been prepared using
accounting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance and in conformity with the practices of the
National Association of Insurance Commissioners (NAIC), which practices differ
from generally accepted accounting principles (GAAP).

The significant differences from GAAP include:(1) policy acquisition costs are
charged to expense as incurred rather than deferred and amortized in relation to
future estimated gross profits; (2) policy reserves are based on statutory
mortality, morbidity, and interest requirements without consideration of
withdrawals and Company experience; (3) certain assets designated as
"nonadmitted assets" are excluded from the balance sheet by direct charges to
surplus; (4) reinsurance recoverables are netted against reserves and claim
liabilities rather than reflected as an asset; (5) bonds held as
available-for-sale are recorded at amortized cost or market value as determined
by the NAIC rather than at fair value; (6) an Asset Valuation Reserve and
Interest Maintenance Reserve as prescribed by the NAIC are not calculated under
GAAP. Under GAAP, realized capital gains and losses are reported in the income
statement on a pretax basis as incurred. The carrying values of investment
securities and real estate are reduced through the income statement when there
has been a decline in value deemed other than temporary and mortgage loan
valuation allowances, if necessary, are established when the Company determines
it is probable that it will be unable to collect all amounts of principal and
interest due according to the contractual terms of the mortgage loan agreement;
(7) investments in affiliates are carried at their net equity value with changes
in value being recorded directly to unassigned deficit rather than consolidated
in the financial statements; (8) no provision is made for the deferred income
tax effects of temporary differences between book and tax basis reporting; and
(9) certain items, including modifications to required policy reserves resulting
from changes in actuarial assumptions, are recorded directly to unassigned
deficit rather than being reflected in income. GAAP net income for the year
ended December 31, 2000 and GAAP shareholder's equity as of December 31, 2000
and 1999 were $99.4 million, $805.6 million and $695.0 million, respectively.
The effects of variances from GAAP on net income for the year ended December 31,
1999 have not been determined but are presumed to be material.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES (CONTINUED)

The significant accounting practices of the Company are as follows:

Permitted Statutory Accounting Practices: In March 1998, the National
Association of Insurance Commissioners (NAIC) adopted codified statutory
accounting principles (Codification) effective January 1, 2001. Codification
changes prescribed statutory accounting practices and results in changes to the
accounting practices that the Company will use to prepare its statutory-basis
financial statements. The Commonwealth of Massachusetts Division of Insurance
has adopted Codification as the prescribed basis of accounting on which domestic
insurers must report their statutory-basis results effective January 1, 2001.
The cumulative effect of changes in accounting principles adopted to conform to
the requirements of Codification will be reported as an adjustment to surplus as
of January 1, 2001. Management believes that, although the implementation of
Codification will have a negative impact on the Company's statutory-basis
capital and surplus, the Company will remain in compliance with all regulatory
and contractual obligations.

Revenues and Expenses: Premium revenues are recognized over the premium-paying
period of the policies whereas expenses, including the acquisition costs of new
business, are charged to operations as incurred and policyholder dividends are
provided as paid or accrued.

Cash and Temporary Cash Investments: Cash includes currency on hand and demand
deposits with financial institutions. Temporary cash investments are short-term,
highly-liquid investments both readily convertible to known amounts of cash and
so near maturity that there is insignificant risk of changes in value because of
changes in interest rates.

Valuation of Assets: General account investments are carried at amounts
determined on the following bases:

Bond and stock values are carried as prescribed by the NAIC; bonds generally
at amortized amounts or cost, preferred stocks generally at cost and common
stocks at fair value. The discount or premium on bonds is amortized using the
interest method.

Investments in affiliates are included on the statutory equity method.

Loan-backed bonds and structured securities are valued at amortized cost using
the interest method including anticipated prepayments. Prepayment assumptions
are obtained from broker dealer surveys or internal estimates and are based on
the current interest rate and economic environment. The retrospective
adjustment method is used to value all such securities except for
interest-only securities, which are valued using the prospective method.

The net interest effect of interest rate and currency rate swap transactions
is recorded as an adjustment of interest income as incurred. The initial cost
of interest rate cap and floor agreements is amortized to net investment
income over the life of the related agreement. Gains and losses on financial
futures contracts used as hedges against interest rate fluctuations are
deferred and recognized in income over the period being hedged. Net premiums
related to equity collar positions are amortized into income on a
straight-line basis over the term of the collars. The interest rate cap and
floor agreements and collars are carried at fair value, with changes in fair
value reflected directly in unassigned deficit.

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 $2.5 million in 2000, $1.9 million in
1999, and $3.0 million in 1998.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES (CONTINUED)

Real estate acquired in satisfaction of debt and real estate held for sale are
carried at the lower of cost or fair value.

Policy loans are carried at outstanding principal balance, not in excess of
policy cash surrender value.

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, 2000, the IMR, net of 2000 amortization of $1.6 million, amounted to $4.2
million, which is included in other general account obligations. The
corresponding 1999 amounts were $2.3 million and $7.4 million, respectively, and
the corresponding 1998 amounts were $2.4 and $10.7 million, respectively.

Goodwill: The excess of cost over the statutory book value of the net assets
of life insurance business acquired was $6.3 million, $8.9 million, and $11.4
million at December 31, 2000, 1999 and 1998, respectively, and generally is
amortized over a ten-year period using a straight-line method.

Separate Accounts: Separate account assets and liabilities reported in the
accompanying statements of financial position represent funds that are
separately administered, principally for variable annuity contracts and variable
life insurance policies, and for which the contractholder, rather than the
Company, generally bears the investment risk. Separate account obligations are
intended to be satisfied from separate account assets and not from assets of the
general account. Separate accounts generally are reported at fair value. The
operations of the separate accounts are not included in the statement of
operations; however, income earned on amounts initially invested by the Company
in the formation of new separate accounts is included in other income.

Fair Value Disclosure of Financial Instruments: Statement of Financial
Accounting Standards (SFAS) No. 107, "Disclosure about Fair Value of Financial
Instruments," requires disclosure of fair value information about certain
financial instruments, whether or not recognized in the statement of financial
position, for which it is practicable to estimate the value. In situations where
quoted market prices are not available, fair values are based on estimates using
present value or other valuation techniques. SFAS No. 107 excludes certain
financial instruments and all nonfinancial instruments from its disclosure
requirements. Therefore, the aggregate fair value amounts presented do not
represent the underlying value of the Company. See Note 11.

The methods and assumptions utilized by the Company in estimating its fair
value disclosures for financial instruments are as follows:

The carrying amounts reported in the statement of financial position for cash
and temporary cash investments approximate their fair values.

Fair values for public bonds are obtained from an independent pricing service.
Fair values for private placement securities and publicly traded bonds not
provided by the independent pricing service are estimated by the 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.

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 for futures contracts are based on quoted market prices. Fair
values for interest rate swap, cap agreements, and currency swap agreements
are based on current settlement values. The current settlement values are
based on brokerage quotes that utilize pricing models or formulas using
current assumptions.

The fair value for mortgage 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, 2000.

Capital Gains and Losses: Realized capital gains and losses are determined
using the specific identification method. Realized capital gains and losses, net
of taxes and amounts transferred to the IMR, are included in net gain or loss.
Unrealized gains and losses, which consist of market value and book value
adjustments, are shown as adjustments to the unassigned deficit.

Policy Reserves: Life reserves are developed by actuarial methods and are
determined based on published tables using statutorily specified interest rates
and valuation methods that will provide, in the aggregate, reserves that are
greater than or equal to the minimum or guaranteed policy cash values or the
amounts required by the Commonwealth of Massachusetts Division of Insurance.
Reserves for variable life insurance policies are maintained principally on the
modified preliminary term method using the 1958 and 1980 Commissioner's Standard
Ordinary (CSO) mortality tables, with an assumed interest rate of 4% for
policies issued prior to May 1, 1983 and 4 1/2% for policies issued on or
thereafter. Reserves for single premium policies are determined by the net
single premium method using the 1958 CSO mortality table, with an assumed
interest rate of 4%. Reserves for universal life policies issued prior to 1985
are equal to the gross account value which at all times exceeds minimum
statutory requirements. Reserves for universal life policies issued from 1985
through 1988 are maintained at the greater of the Commissioner's Reserve
Valuation Method (CRVM) using the 1958 CSO mortality table, with 4 1/2% interest
or the cash surrender value. Reserves for universal life policies issued after
1988 and for flexible variable policies are maintained using the greater of the
cash surrender value or the CRVM method with the 1980 CSO mortality table and
5 1/2% interest for policies issued from 1988 through 1992; 5% interest for
policies issued in 1993 and 1994; and 4 1/2% interest for policies issued in
1995 through 2000.

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
federal income tax payments of $65.1 million in 2000, $10.6 million in 1999, and
$38.2 million in 1998.

Income before taxes differs from taxable income principally due to tax-exempt
investment income, the limitation placed on the tax deductibility of
policyholder dividends, accelerated depreciation, differences in policy reserves
for tax return and financial statement purposes, capitalization of policy
acquisition expenses for tax purposes and other adjustments prescribed by the
Internal Revenue Code.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES (CONTINUED)

Amounts for disputed tax issues relating to the prior years are charged or
credited directly to policyholders' contingency reserve.

Adjustments to Policy Reserves: From time to time, the Company finds it
appropriate to modify certain required policy reserves because of changes in
actuarial assumptions. Reserve modifications resulting from such determinations
are recorded directly to stockholder's equity. No such refinements were made
during 2000, 1999 or 1998.

Reinsurance: Premiums, commissions, expense reimbursements, benefits and
reserves related to reinsured business are accounted for on bases consistent
with those used in accounting for the original policies issued and the terms of
the reinsurance contracts. Premiums ceded to other companies have been reported
as a reduction of premium income. Amounts applicable to reinsurance ceded for
future policy benefits, unearned premium reserves and claim liabilities have
been reported as reductions of these items.

NOTE 2. INVESTMENT IN AFFILIATE

The Company owns all outstanding shares of Investors Partner Life Insurance
Company (IPL). IPL manages a block of single premium whole life insurance
business and began marketing term life and variable universal life products
through brokers in 1999.

Summarized statutory-basis financial information for IPL for 2000, 1999 and
1998 is as follows:

2000 1999 1998
------ ------ --------
(IN MILLIONS)

Total assets........................................ $554.7 $571.0 $587.8
Total liabilities................................... 476.3 499.2 517.5
Total revenues...................................... 42.8 35.6 38.8
Net income.......................................... 3.3 3.5 3.8

NOTE 3. NET INVESTMENT INCOME

Investment income has been reduced by the following amounts:

2000 1999 1998
----- ----- -------
(IN MILLIONS)

Investment expenses.................................... $ 9.0 $ 9.5 $ 8.3
Interest expense....................................... -- 1.7 2.4
Depreciation expense................................... 0.6 0.6 0.8
Investment taxes....................................... 0.5 0.3 0.7
----- ----- -----
$10.1 $12.1 $12.2
===== ===== =====

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS

Net realized capital losses consist of the following items:

2000 1999 1998
------- ------ --------
(IN MILLIONS)

Net (losses) gains from asset sales................ $(19.5) $(2.8) $ 7.6
Capital gains tax.................................. (0.3) 0.2 (2.9)
Amounts transferred to IMR......................... 1.6 0.9 (5.3)
------ ----- -----
Net realized capital losses....................... $(18.2) $(1.7) $(0.6)
====== ===== =====

Net unrealized capital gains (losses) and other adjustments consist of the
following items:

2000 1999 1998
------ ------ --------
(IN MILLIONS)

Net gains (losses) from changes in security values
and book value adjustments......................... $11.6 $(2.6) $(2.7)
Increase in asset valuation reserve................. (3.6) (1.2) (3.3)
----- ----- -----
Net unrealized capital gains (losses) and other
adjustments....................................... $ 8.0 $(3.8) $(6.0)
===== ===== =====

NOTE 5. TRANSACTIONS WITH PARENT

John Hancock provides the Company with personnel, property and facilities in
carrying out certain of its corporate functions. John Hancock annually
determines a fee for these services and facilities based on a number of criteria
which were revised in 2000, 1999 and 1998 to reflect continuing changes in the
Company's operations. The amount of the service fee charged to the Company was
$162.2 million, $188.3 million, $157.5 million, in 2000, 1999, and 1998,
respectively, which has been included in insurance and investment expenses. John
Hancock 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 John Hancock includes $0.7 million,
$0.2 million, and $0.7 million in 2000, 1999, and 1998, respectively,
representing the portion of the provision for retiree benefit plans determined
under the accrual method, including a provision for the 1993 transition
liability which is being amortized over twenty years, that was allocated to the
Company. John Hancock allocates a portion of the activity related to its defined
benefit pension plans to the Company. The pension plan prepaid expense allocated
to the Company amounted to $55.0 million and $41.9 million in 2000 and 1999,
respectively. Since 1988, the Massachusetts Division of Insurance has provided
the Company with approval to recognize the pension plan prepaid expense, if any,
in accordance with the requirements of SFAS No. 87, "Employers' Accounting for
Pensions." The Company furnishes the Division of Insurance with an actuarial
certification of the prepaid expense computation on an annual basis.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)

NOTE 5. TRANSACTIONS WITH PARENT (CONTINUED)

The Company has a modified coinsurance agreement with John Hancock to reinsure
50% of 1994 through 2000 issues of flexible premium variable life insurance and
scheduled premium variable life insurance policies. In connection with this
agreement, John Hancock transferred $24.2 million, $44.5 million, and $4.9
million of cash for tax, commission, and expense allowances to the Company,
which decreased the Company's net gain from operations by $0.9 million in 2000,
and increased the Company's net gain from operations by $20.6 million, and $22.2
million in 1999, and 1998, respectively.

Effective January 1, 1996, the Company entered into a modified coinsurance
agreement with John Hancock to reinsure 50% of the 1995 inforce block and 50% of
1996 and all future issue years of certain variable annuity contracts
(Independence Preferred, Declaration, Independence 2000, MarketPlace, and
Revolution). In connection with this agreement, the Company received a net cash
payment of $17.4 million, $40.0 million, and $12.7 million in 2000, 1999, and
1998, respectively, for surrender benefits, tax, reserve increase, commission,
expense allowances and premium. This agreement increased the Company's net gain
from operations by $5.6 million, $26.9 million, and $8.4 million in 2000, 1999,
and 1998, respectively.

Effective January 1, 1997, the Company entered into a stop-loss agreement with
John Hancock to reinsure mortality claims in excess of 100% of expected
mortality claims in 2000, 1999 and 1998 for all policies that are not reinsured
under any other indemnity agreement. In connection with the agreement, John
Hancock received $1.0 million, $0.8 million, and $1.0 million in 2000, 1999, and
1998, respectively, for mortality claims to the Company. This agreement
decreased the Company's net gain from operations by $1.1 million in 2000 and
$0.5 million in both 1999 and 1998.

The Company had a $200.0 million line of credit with an affiliate, John
Hancock Capital Corp. At December 31, 2000 and 1999, the Company had no
outstanding borrowings under this agreement.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)

NOTE 6. INVESTMENTS

The statement value and fair value of bonds are shown below:

GROSS GROSS
STATEMENT UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
--------- ---------- ---------- ----------
(IN MILLIONS)

December 31, 2000
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies..................... $ 5.7 $ -- $ -- $ 5.7
Obligations of states and
political subdivisions........................ 1.8 -- -- 1.8
Debt securities issued by
foreign governments........................... 10.9 0.3 0.6 10.6
Corporate securities........................... 1,158.8 36.4 68.5 1,126.7
Mortgage-backed securities..................... 223.3 3.4 4.6 222.1
-------- ----- ----- --------
Total bonds.................................. $1,400.5 $40.1 $73.7 $1,366.9
======== ===== ===== ========

December 31, 1999
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies..................... $ 5.9 -- $ 0.1 $ 5.8
Obligations of states and
political subdivisions........................ 2.2 $ 0.1 0.1 2.2
Debt securities issued by
foreign governments........................... 13.9 0.8 0.1 14.6
Corporate securities........................... 964.9 13.0 59.4 918.5
Mortgage-backed securities..................... 229.4 0.5 7.8 222.1
-------- ----- ----- --------
Total bonds.................................. $1,216.3 $14.4 $67.5 $1,163.2
======== ===== ===== ========

December 31, 1998
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies..................... $ 5.1 $ 0.1 -- $ 5.2
Obligations of states and
political subdivisions........................ 3.2 0.3 -- 3.5
Corporate securities........................... 925.2 50.4 $15.0 960.6
Mortgage-backed securities..................... 252.3 10.0 0.1 262.2
-------- ----- ----- --------
Total bonds.................................. $1,185.8 $60.8 $15.1 $1,231.5
======== ===== ===== ========

The statement value and fair value of bonds at December 31, 2000, 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.

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)

NOTE 6. INVESTMENTS (CONTINUED)

STATEMENT FAIR
VALUE VALUE
--------- ----------
(IN MILLIONS)

Due in one year or less................................ $ 72.4 $ 72.5
Due after one year through five years.................. 424.2 427.7
Due after five years through ten years................. 428.5 419.5
Due after ten years.................................... 252.1 225.1
-------- --------
1,177.2 1,144.8
Mortgage-backed securities............................. 223.3 222.1
-------- --------
$1,400.5 $1,366.9
======== ========

Gross gains of $0.9 million in 2000, $0.3 million in 1999, and $3.4 million in
1998 and gross losses of $3.0 million in 2000, $4.0 million in 1999 and $0.7
million in 1998 were realized from the sale of bonds.

At December 31, 2000, bonds with an admitted asset value of $9.6 million were
on deposit with state insurance departments to satisfy regulatory requirements.

The cost of common stocks was $3.1 million at December 31, 2000 and 1999 and
$2.1 million at December 31, 1998. At December 31, 2000, gross unrealized
appreciation on common stocks totaled $1.5 million, and gross unrealized
depreciation totaled $1.8 million. The fair value of preferred stock totaled
$41.6 million, $35.9 million, and $36.5 million at December 31, 2000, 1999, and
1998, respectively.

Bonds with amortized cost of $5.1 million were non-income producing for the
twelve months ended December 31, 2000.

At December 31, 2000, 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.

STATEMENT GEOGRAPHIC STATEMENT
PROPERTY TYPE VALUE CONCENTRATION VALUE
- ------------- ------------- ------------- ---------------
(IN MILLIONS) (IN MILLIONS)

Apartments............ $ 93.7 East North Central..... $ 64.3
Hotels................ 13.0 East South Central..... 20.9
Industrial............ 63.5 Middle Atlantic........ 20.9
Office buildings...... 84.7 Mountain............... 27.0
Retail................ 35.4 New England............ 23.4
Agricultural.......... 142.5 Pacific................ 108.0
Other................. 23.2 South Atlantic......... 120.7
------
West North Central..... 16.0
West South Central..... 51.5
Other.................. 3.3
------
$456.0 $456.0
====== ======

100

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)

NOTE 6. INVESTMENTS (CONTINUED)

At December 31, 2000, the fair values of the commercial and agricultural
mortgage loans portfolios were $317.5 million and $149.8 million, respectively.
The corresponding amounts as of December 31, 1999 were approximately $323.5
million and $98.2 million, respectively.

The maximum and minimum lending rates for mortgage loans during 2000 were
12.84% and 8.29% for agricultural loans, and 8.94% and 8.07% for other
properties. Generally, the maximum percentage of any loan to the value of
security at the time of the loan, exclusive of insured, guaranteed or purchase
money mortgages, is 75%. For city mortgages, fire insurance is carried on all
commercial and residential properties at least equal to the excess of the loan
over the maximum loan which would be permitted by law on the land without the
building, except as permitted by regulations of the Federal Housing Commission
on loans fully insured under the provisions of the National Housing Act. For
agricultural mortgage loans, fire insurance is not normally required on land
based loans except in those instances where a building is critical to the
farming operation. Fire insurance is required on all agri-business facilities in
an aggregate amount equal to the loan balance.

NOTE 7. REINSURANCE

The Company cedes business to reinsurers to share risks under variable life,
universal life and flexible variable life insurance policies for the purpose of
reducing exposure to large losses. Premiums, benefits and reserves ceded to
reinsurers in 2000 were $588.1 million, $187.3 million, and $19.9 million,
respectively. The corresponding amounts in 1999 were $594.9 million, $132.8
million, and $13.6 million, respectively, and the corresponding amounts in 1998
were $590.2 million, $63.2 million, and $8.2 million, respectively.

Neither the Company, nor any of its related parties, control, either directly
or indirectly, any external reinsurers with which the Company conducts business.
No policies issued by the Company have been reinsured with a foreign company
which is controlled, either directly or indirectly, by a party not primarily
engaged in the business of insurance.

The Company has not entered into any reinsurance agreements in which the
reinsurer may unilaterally cancel any reinsurance for reasons other than
nonpayment of premiums or other similar credits. The Company does not have any
reinsurance agreements in effect in which the amount of losses paid or accrued
through December 31, 2000 would result in a payment to the reinsurer of amounts
which, in the aggregate and allowing for offset of mutual credits from other
reinsurance agreements with the same reinsurer, exceed the total direct premiums
collected under the reinsured policies.

101

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The notional amounts, carrying values and estimated fair values of the
Company's derivative instruments were as follows at December 31:

NUMBER OF
CONTRACTS/ ASSETS (LIABILITIES)
NOTIONAL AMOUNTS 2000
---------------- ---------------------
CARRYING FAIR
2000 VALUE VALUE
---------------- ----------- ----------
($ IN MILLIONS)

Futures contracts to sell securities.................. $ -- $ -- $ --
Futures contracts to buy securities................... 43 0.1 0.1
Interest rate swap agreements......................... $1,150.0 --
Interest rate cap agreements ......................... 239.4 2.1 2.1
Currency rate swap agreements......................... 22.3 -- (0.6)
Equity collar agreements.............................. -- 0.4 0.4
Interest rate floor agreements........................ 361.4 1.4 1.4

NUMBER OF
CONTRACTS/ ASSETS (LIABILITIES)
NOTIONAL AMOUNTS 1999
---------------- ---------------------
CARRYING FAIR
1999 VALUE VALUE
---------------- ----------- ----------
($ IN MILLIONS)

Futures contracts to sell securities.................. 362 $0.6 $ 0.6
Interest rate swap agreements......................... $965.0 -- 11.5
Interest rate cap agreements.......................... 239.4 5.6 5.6
Currency rate swap agreements......................... 15.8 -- (1.6)

NUMBER OF
CONTRACTS/ ASSETS (LIABILITIES)
NOTIONAL AMOUNTS 1998
---------------- ---------------------
CARRYING FAIR
1998 VALUE VALUE
---------------- ---------- ----------
($ IN MILLIONS)

Futures contracts to sell securities.................. 947 $(0.5) $ (0.5)
Interest rate swap agreements......................... $365.0 -- (17.7)
Interest rate cap agreements.......................... 89.4 3.1 3.1
Currency rate swap agreements......................... 15.8 -- (3.3)

102

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (CONTINUED)

The Company uses futures contracts, interest rate swap, cap agreements, and
currency rate swap agreements for other than trading purposes to hedge and
manage its exposure to changes in interest rate levels, foreign exchange rate
fluctuations and to manage duration mismatch of assets and liabilities.

The Company invests in common stock that is subject to fluctuations from
market value changes in stock prices. The Company sometimes seeks to reduce its
market exposure to such holdings by entering into equity collar agreements. A
collar consists of a call that limits the Company's potential gain from
appreciation in the stock price as well as a put that limits the Company's loss
potential from a decline in the stock price.

The futures contracts expire in 2001. The interest rate swap agreements
expire in 2000 to 2011. The interest rate cap agreements expire in 2006 to 2008.
The currency rate swap agreements expire in 2006 to 2015. The equity collar
agreements expire in 2005.

The Company's exposure to credit risk is the risk of loss from a
counterparty failing to perform to the terms of the contract. The Company
continually monitors its position and the credit ratings of the counterparties
to these derivative instruments. To limit exposure associated with counterparty
nonperformance on interest rate and currency swap agreements, the Company enters
into master netting agreements with its counterparties. The Company believes the
risk of incurring losses due to nonperformance by its counterparties is remote
and that such losses, if any, would be immaterial. Futures contracts trade on
organized exchanges and, therefore, have minimal credit risk.

NOTE 9. POLICY RESERVES, POLICYHOLDERS' AND BENEFICIARIES' FUNDS AND OBLIGATIONS
RELATED TO SEPARATE ACCOUNTS

The Company's annuity reserves and deposit fund liabilities that are
subject to discretionary withdrawal, with and without adjustment, are summarized
as follows:

DECEMBER 31, 2000 PERCENT
----------------- -------
(IN MILLIONS)

Subject to discretionary withdrawal (with adjustment)
With market value adjustment................................................................. $ 30.3 1.1%
At book value less surrender charge.......................................................... 54.7 2.1
At market value.............................................................................. 2,250.3 84.8
-------- -----
Total with adjustment....................................................................... 2,335.3 88.0
Subject to discretionary withdrawal at book value (without adjustment)........................ 312.8 11.8
Not subject to discretionary withdrawal--general account...................................... 7.1 0.2
-------- -----
Total annuity reserves and deposit liabilities.............................................. $2,655.2 100.0%
======== =====

103

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. COMMITMENTS AND CONTINGENCIES

The Company has extended commitments to purchase long-term bonds issue real
estate mortgages and purchase other assets totaling $33.5 million, $6.3 million
and $14.7 million, respectively, at December 31, 2000. The Company monitors the
creditworthiness of borrowers under long-term bonds commitments and requires
collateral as deemed necessary. If funded, loans related to real estate
mortgages would be fully collateralized by the related properties. The estimated
fair value of the commitments described above is $56.4 million at December 31,
2000. The majority of these commitments expire in 2001.

In the normal course of its business operations, the Company is involved
with litigation from time to time with claimants, beneficiaries and others, and
a number of litigation matters were pending as of December 31, 2000. It is the
opinion of management, after consultation with counsel, that the ultimate
liability with respect to these claims, if any, will not materially affect the
financial position or results of operations of the Company.

During 1997, John Hancock entered into a court-approved settlement relating
to a class action lawsuit involving certain individual life insurance policies
sold from 1979 through 1996. In entering into the settlement, John Hancock
specifically denied any wrongdoing. During 1999, the Company recorded a $194.9
million reserve, through a direct charge to its unassigned deficit, representing
the Company's share of the settlement and John Hancock contributed $194.9
million of capital to the Company. The reserve held at December 31, 2000
amounted to $39.5 million and is based on a number of factors, including the
estimated cost per claim and the estimated costs to administer the claims.

Given the uncertainties associated with estimating the reserve, it is
reasonably possible that the final cost of the settlement could differ
materially from the amounts presently provided for by the Company. John Hancock
and the Company will continue to update their estimate of the final cost of the
settlement as claims are processed and more specific information is developed,
particularly as the actual cost of the claims subject to alternative dispute
resolution becomes available. However, based on information available at this
time, and the uncertainties associated with the final claim processing and
alternative dispute resolution, the range of any additional costs related to the
settlement cannot be estimated with precision. If the Company's share of the
settlement increases, John Hancock will contribute additional capital to the
Company so that the Company's total stockholder's equity would not be impacted.

104

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)

NOTE 11 -- FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents the carrying amounts and fair values of the
Company's financial instruments:

DECEMBER 31
---------------------------------------
2000 1999
------------------ -----------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- --------- -------- -------
(IN MILLIONS)

ASSETS
Bonds--Note 6......................................... $1,400.5 $1,366.9 $1,216.3 $1,163.2
Preferred stocks--Note 6.............................. 44.0 41.6 35.9 35.9
Common stocks--Note 6................................. 2.8 2.8 3.2 3.2
Mortgage loans on real estate--Note
6.................................................... 456.0 467.3 433.1 421.7
Policy loans--Note 1.................................. 218.9 218.9 172.1 172.1
Cash items--Note 1.................................... 272.0 272.0 250.1 250.1

Derivatives assets (liabilities)
relating to: Note 8
Futures contracts..................................... 0.1 0.1 0.6 0.6
Interest rate swaps................................... -- (0.4) -- 11.5
Currency rate swaps................................... -- (0.6) -- (1.6)
Interest rate caps.................................... 2.1 2.1 5.6 5.6
Equity collar agreements.............................. -- 0.4 -- --

LIABILITIES
Commitments--Note 10.................................. -- 56.4 -- 19.4

105

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)

NOTE 11 -- FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

DECEMBER 31
-------------------
1998
-------------------
CARRYING FAIR
AMOUNT VALUE
--------- --------
(IN MILLIONS)
ASSETS
Bonds--Note 6.......................................... $1,185.8 $1,231.5
Preferred stocks--Note 6............................... 36.5 36.5
Common stocks--Note 6.................................. 3.1 3.1
Mortgage loans on real estate--Note 6.................. 338.1 401.3
Policy loans--Note 1................................... 137.7 137.7
Cash items--Note 1..................................... 19.9 19.9

Derivatives assets (liabilities) relating to: Note 8
Futures contracts...................................... (0.5) (0.5)
Interest rate swaps.................................... -- (17.7)
Currency rate swaps.................................... -- (3.3)
Interest rate caps..................................... 3.1 3.1

LIABILITIES
Commitments--Note 10................................... -- 32.1

The carrying amounts in the tables 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.

106

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE I -- SUMMARY OF INVESTMENTS --
OTHER THAN INVESTMENTS IN RELATED PARTIES

AS OF DECEMBER 31, 2000
(IN MILLIONS OF DOLLARS)

AMOUNT AT WHICH
SHOWN IN THE
CONSOLIDATED
TYPE OF INVESTMENT COST (2) VALUE BALANCE SHEET
------------------ -------- ----- ---------------
Fixed maturity securities,
available-for-sale:
Bonds:
United States government and government
agencies and authorities................ 16.1 16.7 16.7
States, municipalities and political
subdivisions............................ 6.8 6.7 6.7
Foreign governments...................... 11.1 10.8 10.8
Public utilities......................... 49.1 50.1 50.1
Convertibles and bonds with warrants
attached................................ 13.7 13.6 13.6
All other corporate bonds................ 877.1 871.5 871.5
Certificates of deposits................. 0.0 0.0 0.0
Redeemable preferred stock............... 44.9 42.4 42.4
------- ------- -------
Total fixed maturity securities,
available-for-sale...................... 1,018.8 1,011.8 1,011.8
------- ------- -------

Equity securities, available-for-sale:
Common stocks:
Public utilities......................... 0.0 0.0 0.0
Banks, trust and insurance companies..... 0.0 0.0 0.0
Industrial, miscellaneous and all other.. 4.0 4.8 4.8
Non-redeemable preferred stock........... 3.1 3.3 3.3
------- ------- -------
Total equity securities,
available-for-sale...................... 7.1 8.1 8.1
------- ------- -------

Fixed maturity securities,
held-to-maturity:
Bonds:
United States government and government
agencies and authorities................ 0.0 0.0 0.0
States, municipalities and political
subdivisions............................ 1.9 1.9 1.9
Foreign governments...................... 0.0 0.0 0.0
Public utilities......................... 42.5 43.4 42.5
Convertibles and bonds with warrants
attached................................ 13.3 11.1 13.3
All other corporate bonds................ 657.7 630.4 657.7
Certificates of deposits................. 0.0 0.0 0.0
Redeemable preferred stock............... 0.0 0.0 0.0
------- ------- -------
Total fixed maturity securities,
held-to-maturity........................ 715.4 686.8 715.4
------- ------- -------

Equity securities, trading:
Common stocks:
Public utilities
Banks, trust and insurance companies
Industrial, miscellaneous and all other
Non-redeemable preferred stock
Total equity securities, trading......... 0.0 0.0 0.0
------- ------- -------
Mortgage loans on real estate, net (1)... 559.8 XXXX 554.8

107

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE I -- SUMMARY OF INVESTMENTS --
OTHER THAN INVESTMENTS IN RELATED PARTIES (CONTINUED)

AS OF DECEMBER 31, 2000
(IN MILLIONS OF DOLLARS)

AMOUNT AT WHICH
SHOWN IN THE
CONSOLIDATED
COST (2) VALUE BALANCE SHEET
-------- ----- ---------------
Real estate, net:
Investment properties (1)............... 23.9 XXXX 23.9
Acquired in satisfaction of debt (1).... 0.0 XXXX 0.0
Policy loans............................ 334.2 XXXX 334.2
Other long-term investments (2)......... 34.8 XXXX 34.8
Short-term investments.................. 21.7 XXXX 21.7
------- ------- -------
Total investments...................... 2,715.7 1,706.7 2,704.7
======= ======= =======

(1) Difference from Column B is primarily due to valuation allowances due to
impairments on mortgage loans on real estate and due to accumulated
depreciation and valuation allowances due to impairments on real estate. See
note 3 to the consolidated financial statements.
(2) Difference from Column B is primarily due to operating gains (losses) of
investments in limited partnerships.

See accompanying independent auditors' report.

108

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION

AS OF DECEMBER 31, 2000, 1999 AND 1998 AND FOR THE YEAR THEN ENDED
(IN MILLIONS OF DOLLARS)

FUTURE POLICY OTHER
DEFERRED BENEFITS, POLICY
POLICY LOSSES, CLAIMS CLAIMS AND
ACQUISITION AND LOSS UNEARNED BENEFITS PREMIUM
SEGMENT COSTS EXPENSES PREMIUMS PAYABLE REVENUE
------- ------------ --------------- --------- ---------- -------

GAAP
2000:
Protection............. $819.3 $2,698.4 $212.0 $11.1 $ 28.6
Asset Gathering........ 174.8 70.0 -- -- --
------ -------- ------ ----- --------
Total................. $994.1 $2,768.4 $212.0 $11.1 $ 28.6
------ -------- ------ ----- --------
STATUTORY BASIS
2000:
Variable Products..... N/A $2,206.0 $ 8.8 $16.4 $ 945.4
------ -------- ------ ----- --------
1999:
Variable Products..... N/A $1,864.9 $ 3.9 $15.4 $ 950.8
------ -------- ------ ----- --------
1998:
Variable Products..... N/A $1,651.7 $ 2.3 $13.1 $1,272.3
------ -------- ------ ----- --------

109

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION (CONTINUED)

AS OF DECEMBER 31, 2000, 1999 AND 1998 AND FOR THE YEAR THEN ENDED
(IN MILLIONS OF DOLLARS)

AMORTIZATION OF
BENEFITS, DEFERRED POLICY
CLAIMS, LOSSES, ACQUISITION COSTS,
NET AND EXCLUDING AMOUNTS OTHER
INVESTMENT SETTLEMENT RELATED TO REALIZED OPERATING
SEGMENT INCOME EXPENSES INVESTMENT GAINS EXPENSES
------- ---------- --------------- ------------------- ---------

GAAP
2000:
Protection............. $215.9 $ 242.2 $17.6 $100.5
Asset Gathering........ (2.5) 6.4 16.4 16.3
------ -------- ----- ------
Total................. $213.4 $ 248.6 $34.0 $116.8
------ -------- ----- ------
STATUTORY BASIS
2000:
Variable Products..... $176.7 $1,185.2 N/A $389.2
------ -------- ----- ------
1999:
Variable Products..... $136.0 $1,238.7 N/A $334.9
------ -------- ----- ------
1998:
Variable Products..... $122.8 $1,661.6 N/A $302.3
------ -------- ----- ------

110

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY AND SUBSIDIARY

SCHEDULE IV -- REINSURANCE

AS OF DECEMBER 31, 2000
(IN MILLIONS OF DOLLARS)

PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
GROSS OTHER FROM OTHER ASSUMED
AMOUNT COMPANIES COMPANIES NET AMOUNT TO NET
------ --------- ---------- ---------- ----------

GAAP
2000
Life insurance in
force........................... $98,737.2 $39,495.8 $37.1 $59,278.5 0.1%
--------- --------- ----- --------- ---
Premiums:
Life insurance................... $ 34.1 $ 5.5 $ -- $ 28.6 0.0%
Accident and health
insurance....................... -- -- -- -- 0.0%
P&C.............................. -- -- -- -- 0.0%
--------- --------- ----- --------- ---
Total.......................... $ 34.1 $ 5.5 $ -- $ 28.6 0.0%
========= ========= ===== ========= ===
STATUTORY BASIS
2000
Life insurance in
force........................... $96,574.3 $38,059.7 $ -- $58,514.6 0.0%
--------- --------- ----- --------- ---
Premiums:
Life insurance................... $ 1,533.6 $ 588.1 $ -- $ 945.5 0.0%
Accident and health
insurance....................... -- -- -- -- 0.0%
P&C.............................. -- -- -- -- 0.0%
--------- --------- ----- --------- ---
Total.......................... $ 1,533.6 $ 588.1 $ -- $ 945.5 0.0%
========= ========= ===== ========= ===
1999
Life insurance in
force........................... $74,831.8 $ 8,995.0 $ -- $55,836.8 0.0%
--------- --------- ----- --------- ---
Premiums:
Life insurance................... $ 1,545.7 $ 594.9 $ -- $ 950.8 0.0%
Accident and health
insurance....................... -- -- -- -- 0.0%
P&C.............................. -- -- -- -- 0.0%
--------- --------- ----- --------- ---
Total.......................... $ 1,545.7 $ 594.9 $ -- $ 950.8 0.0%
========= ========= ===== ========= ===

111

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY AND SUBSIDIARY

SCHEDULE IV--REINSURANCE (CONTINUED)

AS OF DECEMBER 31, 2000
(IN MILLIONS OF DOLLARS)

PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
GROSS OTHER FROM OTHER NET ASSUMED
AMOUNT COMPANIES COMPANIES AMOUNT TO NET
------ --------- ---------- ------ ----------

1998
Life insurance in
force................................... $62,628.7 $15,302.1 $-- $47,326.6 0.0%
--------- --------- --- --------- ---
Premiums:
Life insurance........................... $ 1,862.5 $ 590.2 $-- $ 1,272.3 0.0%
Accident and health
insurance............................... -- -- -- -- 0.0%
P&C...................................... -- -- -- -- 0.0%
--------- --------- --- --------- ---
Total.................................. $ 1,862.5 $ 590.2 $-- $ 1,272.3 0.0%
========= ========= === ========= ===

Note: The life insurance caption represents principally premiums from
traditional life insurance and life-contingent immediate annuities and excludes
deposits on investment products and universal life insurance products.

See accompanying independent auditors' report.

112

UNAUDITED FINANCIAL STATEMENTS

FOR

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

FIRST QUARTER 2001

113

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)

MARCH 31, 2001

INTERNATIONAL
lARGE CAP ACTIVE EQUITY SMALL CAP
GROWTH BOND INDEX GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ------------- ------------

ASSETS
Cash.................................................................. -- -- -- --
Investments in shares of portfolios of John Hancock Variable Series
Trust I, at value.................................................... $99,430,650 $48,592,479 $31,032,184 $29,941,306
Investments in shares of portfolios of
Outside Trust, at value..............................................
Receivable from:
John Hancock Variable Series Trust I................................. -- 243,403 77,034 --
Outside Trust........................................................ -- -- -- --
----------- ----------- ----------- -----------
Total assets.......................................................... 99,430,650 48,835,882 31,109,218 29,941,306
LIABILITIES
Payable to:
John Hancock Variable Life
Insurance Company................................................... 798 264 234 242
Outside Trust........................................................ -- -- -- --
Asset charges payable................................................. -- -- -- --
----------- ----------- ----------- -----------
Total liabilities..................................................... 798 264 234 242
----------- ----------- ----------- -----------
Net assets............................................................ $99,429,852 $48,835,618 $31,108,984 $29,941,064
=========== =========== =========== ===========

GLOBAL MID CAP LARGE CAP MONEY
BALANCE GROWTH VALUE MARKET
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ------------ ------------

ASSETS
Cash.................................................................. -- -- -- --
Investments in shares of portfolios of John Hancock Variable Series
Trust I, at value.................................................... $ 3,714,255 $39,075,697 $58,862,981 $159,403,578
Investments in shares of portfolios of
Outside Trust, at value.............................................. -- -- -- --
Receivable from:
John Hancock Variable Series Trust I................................. 4,670 -- 64,240 65,492
Outside Trust........................................................ -- -- -- --
----------- ----------- ----------- ------------
Total assets.......................................................... 3,718,925 39,075,697 58,927,221 159,469,070
LIABILITIES
Payable to:
John Hancock Variable Life
Insurance Company................................................... 32 322 409 4,674
Outside Trust........................................................ -- -- -- --
Asset charges payable................................................. -- -- -- (389)
----------- ----------- ----------- ------------
Total liabilities..................................................... 32 322 409 4,285
----------- ----------- ----------- ------------
Net assets............................................................ $ 3,718,893 $39,075,375 $58,926,812 $159,464,785
=========== =========== =========== ============

See accompanying notes.

114

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)

MARCH 31, 2001

LARGE/MID CAP SMALL/MID CAP REAL ESTATE GROWTH &
VALUE II GROWTH EQUITY INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ------------- ----------- ------------

ASSETS
Cash..................................................................... -- -- -- --
Investments in shares of portfolios of John Hancock Variable
Series Trust I, at value................................................ $35,544,187 $11,703,215 $18,825,952 $149,964,413
Investments in shares of portfolios of
Outside Trust, at value................................................. -- -- -- --
Receivable from:
John Hancock Variable Series Trust I.................................... 22,909 -- 85,235 --
Outside Trust........................................................... -- -- -- --
----------- ----------- ----------- ------------
Total assets............................................................. 35,567,096 11,703,215 18,911,187 149,964,413
LIABILITIES
Payable to:
John Hancock Variable Life
Insurance Company...................................................... 279 120 111 1,634
Outside Trust........................................................... -- -- -- --
Asset charges payable.................................................... -- -- -- --
----------- ----------- ----------- ------------
Total liabilities........................................................ 279 120 111 1,634
----------- ----------- ----------- ------------
Net assets............................................................... $35,566,817 $11,703,095 $18,911,076 $149,962,779
=========== =========== =========== ============

SHORT-TERM SMALL CAP INTERNATIONAL
MANAGED BOND EQUITY OPPORTUNITIES
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- -------------

ASSETS
Cash..................................................................... -- -- -- --
Investments in shares of portfolios of John Hancock Variable
Series Trust I, at value................................................ $128,568,138 $12,008,650 $23,903,815 $36,956,822
Investments in shares of portfolios of
Outside Trust, at
value................................................................... -- -- -- --
Receivable from:
John Hancock Variable Series Trust I.................................... 233,675 59,706 -- --
Outside Trust........................................................... -- -- -- --
------------ ----------- ----------- -----------
Total assets............................................................. 128,801,813 12,068,356 23,903,815 36,956,822
LIABILITIES
Payable to:
John Hancock Variable Life
Insurance Company...................................................... 1,780 94 197 301
Outside Trust........................................................... -- -- -- --
Asset charges payable.................................................... -- -- -- --
------------ ----------- ----------- -----------
Total liabilities........................................................ 1,780 94 197 301
------------ ----------- ----------- -----------
Net assets............................................................... $128,800,033 $12,068,262 $23,903,618 $36,956,521
============ =========== =========== ===========

See accompanying notes.

115

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)

MARCH 31, 2001

TURNER BRANDES
EQUITY GLOBAL CORE INTERNATIONAL
INDEX BOND GROWTH EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------ ---------- ----------- -------------

ASSETS
Cash..................................................................... -- -- -- --
Investments in shares of portfolios of John Hancock Variable Series
Trust I, at value....................................................... $150,134,459 $8,644,854 -- --
Investments in shares of portfolios of
Outside Trust, at value................................................. -- -- $20,727,690 $41,460,236
Receivable from:
John Hancock Variable Series Trust I.................................... 135,859 -- -- --
Outside Trust........................................................... -- -- -- --
------------ ---------- ----------- -----------
Total assets............................................................. 150,270,318 8,644,854 20,727,690 41,460,236
Liabilities
Payable to:
John Hancock Variable Life
Insurance Company...................................................... 1,185 85 -- --
Outside Trust........................................................... -- -- 110 184
Asset charges payable.................................................... -- -- -- --
------------ ---------- ----------- -----------
Total liabilities........................................................ 1,185 85 110 184
------------ ---------- ----------- -----------
Net assets............................................................... $150,269,133 $8,644,769 $20,727,580 $41,460,052
============ ========== =========== ===========

FRONTIER CLIFTON
CAPITAL ENHANCED EMERGING BOND
APPRECIATION U.S. EQUITY MARKETS EQUITY INDEX
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------ ----------- -------------- -------------

ASSETS
Cash..................................................................... -- -- -- --
Investments in shares of portfolios of John Hancock Variable Series
Trust I, at value....................................................... -- -- $4,783,091 $19,015,509
Investments in shares of portfolios of
Outside Trust, at value................................................. $26,344,095 $15,387,536 -- --
Receivable from:
John Hancock Variable Series Trust I.................................... -- -- -- 99,724
Outside Trust........................................................... -- -- -- --
----------- ----------- ---------- -----------
Total assets............................................................. 26,344,095 15,387,536 4,783,091 19,115,233
LIABILITIES
Payable to:
John Hancock Variable Life
Insurance Company...................................................... -- -- 42 137
Outside Trust........................................................... 132 72 -- --
Asset charges payable.................................................... -- -- -- --
----------- ----------- ---------- -----------
Total liabilities........................................................ 132 72 42 137
----------- ----------- ---------- -----------
Net assets............................................................... $26,343,963 $15,387,464 $4,783,049 $19,115,096
=========== =========== ========== ===========

See accompanying notes.

116

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)

MARCH 31, 2001

HIGH LARGE CAP
SMALL/MID YIELD AGGRESSIVE FUNDAMENTAL
CAP CORE BOND GROWTH GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------- -------------

ASSETS
Cash..................................................................... -- -- -- --
Investments in shares of portfolios of John Hancock Variable Series
Trust I, at value....................................................... $3,022,993 $5,136,253 $556,272 $1,495,448
Investments in shares of portfolios of
Outside Trust, at value................................................. -- -- -- --
Receivable from:
John Hancock Variable Series Trust I.................................... 2,470 36,915 -- --
Outside Trust........................................................... -- -- -- --
---------- ---------- -------- ----------
Total assets............................................................. 3,025,463 5,173,168 556,272 1,495,448
LIABILITIES
Payable to:
John Hancock Variable Life
Insurance Company..................................................... 21 46 6 10
Outside Trust........................................................... -- -- -- --
Asset charges payable.................................................... -- -- -- --
---------- ---------- -------- ----------
Total liabilities........................................................ 21 46 6 10
---------- ---------- -------- ----------
Net assets............................................................... $3,025,442 $5,173,122 $556,266 $1,495,438
========== ========== ======== ==========

LARGE CAP
ACTIVE VALUE AIM V.I. FIDELITY VIP
BOND II CORE II VALUE GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ----------- --------------

ASSETS
Cash..................................................................... -- -- -- --
Investments in shares of portfolios of John Hancock Variable Series
Trust I, at value....................................................... $131,881 $657,993 -- --
Investments in shares of portfolios of
Outside Trust, at value................................................. -- -- $1,387,182 $17,410,110
Receivable from:
John Hancock Variable Series Trust I.................................... 628 1,372 -- --
Outside Trust........................................................... -- -- -- --
-------- -------- ---------- -----------
Total assets............................................................. 132,509 659,365 1,387,182 17,410,110
LIABILITIES
Payable to:
John Hancock Variable Life
Insurance Company..................................................... 1 7 -- --
Outside Trust........................................................... -- -- 10 35
Asset charges payable.................................................... -- -- -- --
-------- -------- ---------- -----------
Total liabilities........................................................ 1 7 10 35
-------- -------- ---------- -----------
Net assets............................................................... $132,508 $659,358 $1,387,172 $17,410,075
======== ======== ========== ===========

See accompanying notes.

117

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)

MARCH 31, 2001

JANUS ASPEN JANUS ASPEN NEW
FIDELITY VIP II GLOBAL WORLDWIDE DISCOVERY TEMPLETON
CONTRAFUND TECHNOLOGY GROWTH SERIES INTERNATIONAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
--------------- ----------- ----------- ---------- -------------

ASSETS
Cash....................................................... -- -- -- -- --
Investments in shares of portfolios of John Hancock
Variable Series Trust I, at value......................... -- -- -- -- --
Investments in shares of portfolios of
Outside Trust, at value................................... $1,198,357 $394,241 $1,048,850 $2,795,153 $3,122,949
Receivable from:
John Hancock Variable Series Trust I...................... -- -- -- -- --
Outside Trust............................................. -- -- -- -- --
---------- -------- ---------- ---------- ----------
Total assets............................................... 1,198,357 394,241 1,048,850 2,795,153 3,122,949
LIABILITIES
Payable to:
John Hancock Variable Life
Insurance Company....................................... -- -- -- -- --
Outside Trust............................................. 9 5 10 12 26
Asset charges payable...................................... -- -- -- -- --
---------- -------- ---------- ---------- ----------
Total liabilities.......................................... 9 5 10 12 26
---------- -------- ---------- ---------- ----------
Net assets................................................. $1,198,348 $394,236 $1,048,840 $2,795,141 $3,122,923
========== ======== ========== ========== ==========

See accompanying notes.

118

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (UNAUDITED)

YEARS AND PERIODS ENDED MARCH 31,

LARGE CAP GROWTH SUBACCOUNT ACTIVE BOND
----------------------------------------- --------------------------------------
2001 2000 1999 2001 2000 1999
------------- ------------- ------------ ----------- ------------ --------------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I.... -- $ 20,421,555 $17,558,034 $ 804,764 $ 2,372,089 $ 2,851,613
Outside Trust........................... -- -- -- -- -- --
------------ ------------ ----------- ---------- ----------- -----------
Total investment income.................. -- 20,421,555 17,558,034 804,764 2,372,089 2,851,613
Expenses:
Mortality and expense risks............. $ 84,875 433,387 324,595 22,844 92,626 126,407
------------ ------------ ----------- ---------- ----------- -----------
Net investment income (loss)............. (84,875) 19,988,168 17,233,439 781,920 2,279,464 2,725,206
Net realized and unrealized gain (loss)
on investments:
Net realized gains (losses).............. (5,633,141) 5,243,833 5,003,007 (94,016) (1,159,229) (1,391,910)
Net unrealized appreciation (depreciation)
during the period....................... (21,582,383) (53,885,375) (2,053,672) 522,142 2,598,926 (1,837,190)
------------ ------------ ----------- ---------- ----------- -----------
Net realized and unrealized gain (loss) on
investments............................. (27,215,524) (48,641,542) 2,949,335 428,126 1,439,697 (3,229,100)
------------ ------------ ----------- ---------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations............... $(27,300,399) $(28,653,374) $20,182,774 $1,210,046 $ 3,719,161 $ (503,894)
============ ============ =========== ========== =========== ===========

INTERNATIONAL EQUITY INDEX SUBACCOUNT SMALL CAP GROWTH SUBACCOUNT
-------------------------------------- ----------------------------------------
2001 2000 1999 2001 2000 1999
------------ ------------ ---------- ------------ ------------- -------------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I.... $ 122,409 $ 1,780,524 $ 936,475 -- $ 3,489,821 $ 3,697,955
Outside Trust........................... -- -- -- -- -- --
----------- ----------- ---------- ----------- ------------ -----------
Total investment income.................. 122,409 1,780,524 936,475 -- 3,489,821 3,697,955
Expenses:
Mortality and expense risks............. 22,345 112,998 81,058 $ 25,156 135,490 60,221
----------- ----------- ---------- ----------- ------------ -----------
Net investment income (loss)............. 100,064 1,667,526 855,417 (25,156) 3,354,331 3,637,734
Net realized and unrealized gain (loss)
on investments:
Net realized gains (losses).............. (1,801,348) 670,269 753,750 (4,688,586) 2,830,901 2,548,944
Net unrealized appreciation (depreciation)
during the period....................... (2,387,503) (8,622,825) 4,871,167 (3,244,997) (17,022,592) 3,920,455
----------- ----------- ---------- ----------- ------------ -----------
Net realized and unrealized gain (loss) on
investments............................. (4,188,851) (7,952,556) 5,624,917 (7,933,583) (14,191,691) 6,469,399
----------- ----------- ---------- ----------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations............... $(4,088,787) $(6,285,030) $6,480,334 $(7,958,739) $(10,837,360) $10,107,133
=========== =========== ========== =========== ============ ===========

See accompanying notes.

119

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)

YEARS AND PERIODS ENDED MARCH 31,

GLOBAL BALANCED SUBACCOUNT MID CAP GROWTH SUBACCOUNT
--------------------------------- -----------------------------------------
2001 2000 1999 2001 2000 1999
---------- ---------- ---------- ------------- ------------- -------------

Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I..... $ 13,198 $ 191,397 $ 372,766 -- $ 9,182,305 $ 6,491,783
Outside Trust....... -- -- -- -- -- --
--------- --------- --------- ------------ ------------ -----------
Total investment
income.............. 13,198 191,397 372,766 - 9,182,305 6,491,783
Expenses:
Mortality and expense
risks.............. 2,943 15,646 13,792 $ 37,362 243,927 102,248
--------- --------- --------- ------------ ------------ -----------
Net investment income
(loss).............. 10,255 175,751 358,974 (37,362) 8,938,378 6,389,535
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses)............ (44,424) (506,008) 15,640 (4,811,558) 8,113,159 5,188,018
Net unrealized
appreciation
(depreciation)
during the period... (222,976) (109,325) (173,912) (14,501,126) (49,252,941) 15,078,681
--------- --------- --------- ------------ ------------ -----------
Net realized and
unrealized gain
(loss) on
investments......... (267,400) (615,333) (158,272) (19,312,684) (41,139,782) 20,266,699
--------- --------- --------- ------------ ------------ -----------
Net increase
(decrease) in net
assets
resulting from
operations.......... $(257,145) $(439,582) $ 200,072 $(19,350,046) $(32,201,404) $26,656,234
========= ========= ========= ============ ============ ===========

LARGE CAP VALUE SUBACCOUNT MONEY MARKET SUBACCOUNT
-------------------------------------- ------------------------------------
2001 2000 1999 2001 2000 1999
------------ ----------- ------------ ------------ ---------- ------------

Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I..... $ 241,955 $2,639,356 $ 1,809,072 $ 2,306,392 $5,785,606 $3,279,928
Outside Trust....... -- -- -- -- -- --
----------- ---------- ----------- ------------ ---------- ----------
Total investment
income.............. 241,955 2,639,356 1,809,072 2,306,392 5,785,606 3,279,928
Expenses:
Mortality and expense
risks.............. 36,652 109,830 88,877 103,449 328,559 291,398
----------- ---------- ----------- ------------ ---------- ----------
Net investment income
(loss).............. 205,343 2,529,526 1,720,195 2,202,943 5,437,047 2,988,530
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses)............ (293,449) (861,398) 705,454 -- -- --
Net unrealized
appreciation
(depreciation)
during the period... (1,587,326) 3,840,473 (2,181,112) -- -- --
----------- ---------- ----------- ------------ ---------- ----------
Net realized and
unrealized gain
(loss) on
investments......... (1,880,775) 2,979,075 (1,475,658) -- -- --
----------- ---------- ----------- ------------ ---------- ----------
Net increase
(decrease) in net
assets
resulting from
operations.......... $(1,675,432) $5,508,601 $ 244,537 $ 2,202,943 $5,437,047 $2,988,530
=========== ========== =========== ============ ========== ==========

See accompanying notes.

120

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)

YEARS AND PERIODS ENDED MARCH 31,

LARGE/MID CAP VALUE II SUBACCOUNT SMALL/MID CAP GROWTH
------------------------------------ --------------------------------------
2001 2000 1999 2001 2000 1999
------------ ---------- ----------- ------------ ----------- --------------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I.... $ 80,843 $3,243,126 $ 110,190 -- $1,246,873 $ 1,421,656
Outside Trust........................... -- -- -- -- -- --
----------- ---------- ---------- ----------- ---------- -----------
Total investment income ................. 80,843 3,243,126 110,190 -- 1,246,873 1,421,656
Expenses:
Mortality and expense risks............. 25,002 84,295 68,611 $ 11,460 39,985 32,995
----------- ---------- ---------- ----------- ---------- -----------
Net investment income (loss)............. 55,841 3,158,831 41,579 (11,460) 1,206,888 1,388,661
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses).............. 355,204 2,578,812 (860,332) (144,975) (652,532) 13,375
Net unrealized appreciation (depreciation)
during the period....................... (2,429,725) 689,275 1,757,919 (1,284,092) 119,763 (1,001,208)
----------- ---------- ---------- ----------- ---------- -----------
Net realized and unrealized gain (loss) on
investments............................. (2,074,521) 3,268,087 897,587 (1,429,067) (532,769) (987,833)
----------- ---------- ---------- ----------- ---------- -----------
Net increase (decrease) in net assets
resulting from operations............... $(2,018,680) $6,426,918 $ 939,166 $(1,440,527) $ 674,119 $ 400,828
=========== ========== ========== =========== ========== ===========

REAL ESTATE EQUITY SUBACCOUNT GROWTH & INCOME SUBACCOUNT
--------------------------------- -----------------------------------------
2001 2000 1999 2001 2000 1999
---------- ---------- ---------- ------------- ------------- --------------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I.... $ 85,235 $1,569,398 $ 544,845 $ 144,754 $ 34,126,174 $23,565,679
Outside Trust........................... -- -- -- -- -- --
--------- ---------- --------- ------------ ------------ -----------
Total investment income.................. 85,235 1,569,398 544,845 144,754 34,126,174 23,565,679
Expenses:
Mortality and expense risks............. 9,644 45,265 29,468 166,247 844,779 715,377
--------- ---------- --------- ------------ ------------ -----------
Net investment income (loss) 75,591 1,524,133 515,377 (21,673) 33,281,395 22,850,302
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses).............. 203,153 1,851,413 (735,504) (5,630,912) 2,197,930 6,207,253
Net unrealized appreciation (depreciation)
during the period....................... (860,127) 1,041,612 80,925 (22,235,750) (63,700,088) (5,814,839)
--------- ---------- --------- ------------ ------------ -----------
Net realized and unrealized gain (loss) on
investments............................. (656,974) 2,893,025 (654,579) (27,866,662) (61,502,158) 392,414
--------- ---------- --------- ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations............... $(581,383) $4,417,158 $(139,202) $(27,888,335) $(28,220,763) $23,242,716
========= ========== ========= ============ ============ ===========

See accompanying notes.

121

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)

YEARS AND PERIODS ENDED MARCH 31,

MANAGED SUBACCOUNT SHORT-TERM BOND SUBACCOUNT
---------------------------------------- --------------------------------
2001 2000 1999 2001 2000 1999
------------ ------------- ------------ -------- ----------- ------------

Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I...... $ 766,432 $ 13,844,402 $11,251,980 $208,406 $ 920,563 $ 957,614
Outside Trust........ -- -- -- -- -- --
----------- ------------ ----------- -------- ---------- ---------
Total investment
income............... 766,432 13,844,402 11,251,980 208,406 920,563 957,614
Expenses:
Mortality and expense
risks............... 163,646 686,633 495,544 8,649 37,022 50,128
----------- ------------ ----------- -------- ---------- ---------
Net investment income
(loss)............... 602,786 13,157,769 10,756,436 199,757 883,541 907,486
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses)............. (819,169) (233,751) 2,233,258 239,799 (210,780) (441,667)
Net unrealized
appreciation
(depreciation)
during the period.... (7,242,148) (13,708,391) (6,419,069) 102,448 451,906 (85,754)
----------- ------------ ----------- -------- ---------- ---------
Net realized and
unrealized gain
(loss) on
investments.......... (8,061,317) (13,942,142) (4,185,811) 342,247 241,126 (527,421)
----------- ------------ ----------- -------- ---------- ---------
Net increase
(decrease) in net
assets
resulting from
operations........... $(7,458,531) $ (784,373) $ 6,570,625 $542,004 $1,124,667 $ 380,065
=========== ============ =========== ======== ========== =========

SMALL CAP EQUITY SUBACCOUNT INTERNATIONAL OPPORTUNITIES SUBACCOUNT
------------------------------------- ---------------------------------------
2001 2000 1999 2001 2000 1999
------------ ------------ ---------- ------------ ------------- ------------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I..... -- $ 2,024,209 $ 409,324 -- $ 2,592,009 $2,096,195
Outside Trust............................ -- -- -- -- -- --
----------- ----------- --------- ----------- ------------ ----------
Total investment income -- 2,024,209 409,324 -- 2,592,009 2,096,195
Expenses:
Mortality and expense risks.............. 19,857 89,912 64,613 $ 29,733 134,950 90,191
----------- ----------- --------- ----------- ------------ ----------
Net investment income (loss).............. (19,857) 1,934,297 344,711 (29,733) 2,457,059 2,006,004
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses)............... $ (414,106) (158,893) (979,002) (4,239,503) 2,209,044 1,907,809
Net unrealized appreciation (depreciation)
during the period........................ (2,671,384) (4,241,216) 325,684 (2,198,539) (11,479,826) 3,818,953
----------- ----------- --------- ----------- ------------ ----------
Net realized and unrealized gain (loss) on
investments.............................. (3,085,490) (4,400,109) (653,318) (6,438,042) (9,270,782) 5,726,762
----------- ----------- --------- ----------- ------------ ----------
Net increase (decrease) in net assets
resulting from operations................ $(3,105,347) $(2,465,812) $(308,607) $(6,467,775) $ (6,813,723) $7,732,766
=========== =========== ========= =========== ============ ==========

See accompanying notes.

122

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)

YEARS AND PERIODS ENDED MARCH 31,

EQUITY INDEX SUBACCOUNT GLOBAL BOND SUBACCOUNT
----------------------------------------- ---------------------------------
2001 2000 1999 2001 2000 1999
------------- ------------- ----------- ---------- ---------- ------------

Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I..... $ 452,358 $ 8,279,123 $ 5,839,023 -- $ 459,052 $ 460,088
Outside Trust....... -- -- -- -- -- --
------------ ------------ ----------- --------- --------- ---------
Total investment
income ............. 452,358 8,279,123 5,839,023 -- 459,052 460,088
Expenses:
Mortality and expense
risks ............. 111,998 552,681 335,573 $ 7,550 28,858 35,321
------------ ------------ ----------- --------- --------- ---------
Net investment income
(loss).............. 340,360 7,726,442 5,503,450 (7,550) 430,194 424,767
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses)............ (1,145,017) 4,357,007 7,681,081 2,596 (302,157) (204,675)
Net unrealized
appreciation
(depreciation)
during the period... (18,080,001) (30,073,491) 4,678,509 (283,798) 688,537 (433,526)
------------ ------------ ----------- --------- --------- ---------
Net realized and
unrealized gain
(loss) on
investments......... (19,225,018) (25,716,484) 12,359,590 (281,202) 386,380 (638,201)
------------ ------------ ----------- --------- --------- ---------
Net increase
(decrease) in net
assets
resulting from
operations.......... $(18,884,658) $(17,990,042) $17,863,040 $(288,752) $ 816,574 $(213,434)
============ ============ =========== ========= ========= =========

TURNER CORE GROWTH SUBACCOUNT BRANDES INTERNATIONAL EQUITY SUBACCOUNT
-------------------------------------- ----------------------------------------
2001 2000 1999 2001 2000 1999
------------ ------------ ---------- ------------- ------------- -------------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I... -- -- -- -- -- --
Outside Trust.......................... -- $ 3,134,021 $1,349,358 -- $ 2,849,758 $ 549,978
----------- ----------- ---------- ----------- ----------- ----------
Total investment income -- 3,134,021 1,349,358 -- 2,849,758 549,978
Expenses:
Mortality and expense risks............ $ 11,226 61,261 33,920 $ 17,512 57,452 34,297
----------- ----------- ---------- ----------- ----------- ----------
Net investment income (loss)............ (11,226) 3,072,760 1,315,438 (17,512) 2,792,306 515,681
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses)............. (1,608,879) 2,749,177 1,038,462 551,429 1,629,793 507,727
Net unrealized appreciation (depreciation)
during the period...................... (3,124,109) (8,773,256) 1,626,646 (4,356,665) (2,602,173) 3,486,097
----------- ----------- ---------- ----------- ----------- ----------
Net realized and unrealized gain (loss) on
investments............................ (4,732,988) (6,024,079) 2,665,108 (3,805,236) (972,380) 3,993,824
----------- ----------- ---------- ----------- ----------- ----------
Net increase (decrease) in net assets
resulting from operations.............. $(4,744,214) $(2,951,319) $3,980,546 $(3,822,748) $ 1,819,926 $4,509,505
=========== =========== ========== =========== =========== ==========

See accompanying notes.

123

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)

YEARS AND PERIODS ENDED MARCH 31,

FRONTIER CAPITAL APPRECIATION SUBACCOUNT CLIFTON ENHANCED US EQUITY SUBACCOUNT
----------------------------------------- --------------------------------------
2001 2000 1999 2001 2000 1999
------------- ------------- ----------- ------------- ------------- -----------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I.... -- -- -- -- -- --
Outside Trust........................... -- $ 5,801,558 $ 487,465 -- $ 1,412,843 $532,067
----------- ----------- ---------- ----------- ----------- --------
Total investment income.................. -- 5,801,558 487,465 -- 1,412,843 532,067
Expenses:
Mortality and expense risks............. $ 13,338 54,938 37,471 6,380 19,820 13,930
----------- ----------- ---------- ----------- ----------- --------
Net investment income (loss)............. (13,338) 5,746,620 449,994 (6,380) 1,393,023 518,137
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses).............. (824,369) 4,402,175 624,068 (2,128,293) 132,736 264,436
Net unrealized appreciation (depreciation)
during the period....................... (1,165,418) (9,587,258) 3,431,408 (18,284) (2,553,428) 151,562
----------- ----------- ---------- ----------- ----------- --------
Net realized and unrealized gain (loss) on
investments............................. (1,989,787) (5,185,083) 4,055,476 (2,146,577) (2,420,692) 415,998
----------- ----------- ---------- ----------- ----------- --------
Net increase (decrease) in net assets
resulting from operations............... $(2,003,125) $ 561,537 $4,505,470 $(2,152,957) $(1,027,669) $934,135
=========== =========== ========== =========== =========== ========

EMERGING MARKETS EQUITY SUBACCOUNT BOND INDEX SUBACCOUNT
-------------------------------------- --------------------------------
2001 2000 1999 2001 2000 1999
------------ ------------ ---------- ---------- --------- ------------

Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I...... -- $ 454,929 $ 137,724 $ 258,998 $514,721 $ 140,772
Outside Trust........ -- -- -- -- -- --
----------- ----------- ---------- ---------- -------- ---------
Total investment
income............... -- 454,929 137,724 258,998 514,721 140,772
Expenses:
Mortality and expense
risks............... $ 4,216 22,702 5,465 10,443 27,209 10,636
----------- ----------- ---------- ---------- -------- ---------
Net investment income
(loss)............... (4,216) 432,227 132,259 248,555 487,512 130,136
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses)............. (1,011,736) (1,410,734) 663,998 109,325 (53,751) (104,174)
Net unrealized
appreciation
(depreciation)
during the period.... 611,505 (2,006,595) 432,248 2,418,535 472,128 (78,192)
----------- ----------- ---------- ---------- -------- ---------
Net realized and
unrealized gain
(loss) on
investments.......... (400,231) (3,417,329) 1,096,246 2,527,860 418,377 (182,366)
----------- ----------- ---------- ---------- -------- ---------
Net increase
(decrease) in net
assets
resulting from
operations........... $ (400,447) $(2,985,102) $1,228,505 $2,776,415 $905,889 $ (52,230)
=========== =========== ========== ========== ======== =========

See accompanying notes.

124

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)

YEARS AND PERIODS ENDED MARCH 31,

SMALL/MID CAP CORE SUBACCOUNT HIGH YIELD BOND SUBACCOUNT
-------------------------------- ---------------------------------
2001 2000 1999 2001 2000 1999
---------- ---------- --------- ---------- ---------- ------------

Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I..... $ 4,826 $ 106,135 $ 54,784 $ 125,980 $ 373,904 $ 352,641
Outside Trust....... -- -- -- -- -- --
--------- --------- -------- --------- --------- ---------
Total investment
income.............. 4,826 106,135 54,784 125,980 373,904 352,641
Expenses:
Mortality and expense
risks.............. 1,919 5,370 2,073 4,168 14,689 12,206
--------- --------- -------- --------- --------- ---------
Net investment income
(loss).............. 2,907 100,765 52,711 121,812 359,215 340,435
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses)............ (25,282) 52,147 65,733 (291,657) (207,326) 42,365
Net unrealized
appreciation
(depreciation)
during the period... (275,790) (145,708) (10,735) 610,233 (650,931) (139,659)
--------- --------- -------- --------- --------- ---------
Net realized and
unrealized gain
(loss) on
investments......... (301,072) (93,561) 54,998 318,576 (858,257) (97,294)
--------- --------- -------- --------- --------- ---------
Net increase
(decrease) in net
assets
resulting from
operations.......... $(298,165) $ 7,204 $107,709 $ 440,389 $(499,042) $ 243,141
========= ========= ======== ========= ========= =========

LARGE CAP AGGRESSIVE GROWTH FUNDAMENTAL GROWTH ACTIVE BOND II
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------------------------- --------------------- --------------------------
2001 2000* 2001 2000* 2001 2000*
--------- ----------------- ---------- ---------- -------- ------------------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I...... -- $ 6,164 -- $ 206,294 $ 1,126 $ 254
Outside Trust............................. -- -- -- -- -- --
-------- -------- --------- --------- -------- ----------------
Total investment income.................... -- 6,164 -- 206,294 1,126 254
Expenses:
Mortality and expense risks............... $ 339 260 $ 1,093 1,175 68 7
-------- -------- --------- --------- -------- ----------------
Net investment income (loss)............... (339) 5,904 (1,093) 205,119 1,058 247
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses)................ (23,534) (11,798) (7,715) (46,349) 913 89
Net unrealized appreciation (depreciation)
during the period......................... (47,192) (37,617) (625,784) (568,635) 325 96
-------- -------- --------- --------- -------- ----------------
Net realized and unrealized gain (loss) on
investments............................... (70,726) (49,415) (633,499) (614,984) 1,238 185
-------- -------- --------- --------- -------- ----------------
Net increase (decrease) in net assets
resulting from operations................. $(71,065) $(43,511) $(634,592) $(409,865) $ 2,296 $ 432
======== ======== ========= ========= ======== ================

- ---------
* From April 24, 2000 (commencement of operations)

See accompanying notes.

125

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)

YEARS AND PERIODS ENDED MARCH 31,

LARGE CAP VALUE CORE II AIM V.I. VALUE FIDELITY VIP GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------ --------------------- -----------------------
2001 2000** 2001 2000** 2001 2000*
------------ ---------- ---------- ---------- ------------ ------------

Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I........ $ 1,372 $ 3,426 -- -- -- --
Outside Trust.......... -- -- -- $ 48,587 $ 1,323,457 --
-------- ------- --------- --------- ----------- ---------
Total investment
income................. 1,372 3,426 -- 48,587 1,323,457 --
Expenses:
Mortality and expense
risks................. 671 682 $ 809 954 3,277 1,420
-------- ------- --------- --------- ----------- ---------
Net investment income
(loss)................. 701 2,744 (809) 47,633 1,320,180 (1,420)
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses)............... (68) 8,325 (72,484) (54,358) (96,979) (8,731)
Net unrealized
appreciation
(depreciation)
during the period...... (41,437) 9,977 (85,787) (101,244) (2,575,614) (156,818)
-------- ------- --------- --------- ----------- ---------
Net realized and
unrealized gain
(loss) on
investments............ (41,505) 18,302 (158,271) (155,602) (2,672,593) (165,549)
-------- ------- --------- --------- ----------- ---------
Net increase
(decrease) in net
assets
resulting from
operations............. $(40,804) $21,046 (159,080) $(107,969) $(1,352,413) $(166,969)
======== ======= ========= ========= =========== =========

FIDELITY VIP JANUS ASPEN JANUS ASPEN
CONTRAFUND GLOBAL TECHNOLOGY WORLDWIDE GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------------- --------------------- ---------------------
2001 2000* 2001 2000** 2001 2000*
---------- --------- ---------- ---------- ---------- ------------

Investment income:
Distributions received
from:
John Hancock Variable
Series Trust I..... -- -- -- -- -- --
Outside Trust....... $ 34,806 -- -- $ 2,686 -- $ 18,937
--------- -------- --------- --------- --------- ---------
Total investment
income.............. 34,806 -- -- 2,686 -- 18,937
Expenses:
Mortality and expense
risks.............. 776 1,017 $ 536 658 $ 966 1,396
--------- -------- --------- --------- --------- ---------
Net investment income
(loss).............. 34,030 (1,017) (536) 2,028 (966) 17,541
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses)............ (4,403) (11,057) (180,598) (69,974) (106,818) (140,835)
Net unrealized
appreciation
(depreciation)
during the period... (147,323) (35,244) 36,766 (98,497) (96,600) (61,721)
--------- -------- --------- --------- --------- ---------
Net realized and
unrealized gain
(loss) on
investments......... (151,726) (46,301) (143,832) (168,471) (203,418) (202,556)
--------- -------- --------- --------- --------- ---------
Net increase
(decrease) in net
assets
resulting from
operations.......... $(117,696) $(47,318) $(144,368) $(166,443) $(204,384) $(185,015)
========= ======== ========= ========= ========= =========

- ---------
* From April 24, 2000 (commencement of operations)
** From June 30, 2000 (commencement of operations)

See accompanying notes.

126

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)

YEARS AND PERIODS ENDED MARCH 31,

MFS NEW DISCOVERY SERIES TEMPLETON INTERNATIONAL
SUBACCOUNT SUBACCOUNT
------------------------- -------------------------
2001 2000* 2001 2000*
------------ ----------- ------------ -----------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I................. -- -- -- --
Outside Trust........................................ -- -- -- --
--------- -------- --------- -------
Total investment income............................... -- -- -- --

Expenses:
Mortality and expense risks.......................... $ 1,247 1,349 $ 2,477 640
--------- -------- --------- -------
Net investment income (loss).......................... (1,247) (1,349) (2,477) (640)
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses)........................... (86,732) 16,026 (69,741) 11,899
Net unrealized appreciation (depreciation)
during the period.................................... (181,150) (94,403) (313,814) 15,320
--------- -------- --------- -------
Net realized and unrealized gain (loss) on
investments.......................................... (267,882) (78,377) (383,555) 27,219
--------- -------- --------- -------
Net increase (decrease) in net assets
resulting from operations............................ $(269,129) $(79,726) $(386,032) $26,579
========= ======== ========= =======

- ---------
* From April 24, 2000 (commencement of operations)

See accompanying notes.

127

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

YEARS AND PERIODS ENDED MARCH 31,

LARGE CAP GROWTH SUBACCOUNT
-------------------------------------------
2001 2000 1999
------------- -------------- -------------

Increase (decrease) in net assets from
operations:
Net investment income (loss)........... $ (84,875) $ 19,988,168 $ 17,233,439
Net realized gains (losses)............ (5,633,141) 5,243,833 5,003,007
Net unrealized appreciation
(depreciation) during the period...... (21,582,383) (53,885,375) (2,053,672)
------------ ------------- ------------
Net increase (decrease) in net assets
resulting from operations.............. (27,300,399) (28,653,374) 20,182,774
From policyholder transactions:
Net premiums from policyholders........ 24,536,922 143,098,730 75,667,981
Net benefits to policyholders.......... (25,989,898) (101,783,680) (45,347,424)
------------ ------------- ------------
Net increase in net assets resulting
from policyholder transactions......... (1,452,976) 41,315,050 30,320,557
------------ ------------- ------------
Net increase (decrease) in net assets... (28,753,375) 12,661,676 50,503,331
Net assets at beginning of period....... 128,183,227 115,521,551 65,018,220
------------ ------------- ------------
Net assets at end of period............. $ 99,429,852 $ 128,183,227 $115,521,551
============ ============= ============

ACTIVE BOND SUBACCOUNT
------------------------------------------
2001 2000 1999
------------- ------------- ---------------

Increase (decrease) in net assets from
operations:
Net investment income (loss)........... $ 781,920 $ 2,279,464 $ 2,725,206
Net realized gains (losses)............ (94,016) (1,159,229) (1,391,910)
Net unrealized appreciation
(depreciation) during the period...... 522,142 2,598,926 (1,837,190)
------------ ------------ ------------
Net increase (decrease) in net assets 1,210,046 3,719,161 (503,894)
resulting from operations..............
From policyholder transactions:
Net premiums from policyholders........ 18,474,249 37,518,244 74,595,720
Net benefits to policyholders.......... (20,207,373) (30,443,585) (68,312,320)
------------ ------------ ------------
Net increase in net assets resulting
from policyholder transactions......... (1,733,124) 7,074,659 6,283,400
------------ ------------ ------------
Net increase (decrease) in net assets... (523,078) 10,793,820 5,779,506
Net assets at beginning of period....... 49,115,293 38,321,473 32,541,967
------------ ------------ ------------
Net assets at end of period............. $ 48,592,215 $ 49,115,293 $ 38,321,473
============ ============ ============

INTERNATIONAL EQUITY INDEX SUBACCOUNT
------------------------------------------
2001 2000 1999
------------- ------------- -------------

Increase (decrease) in net assets from
operations:
Net investment income (loss)........... $ 1,000,674 $ 1,667,526 $ 855,417
Net realized gains (losses)............ (1,801,348) 670,269 753,750
Net unrealized appreciation
(depreciation) during the period...... (2,387,503) (8,622,825) 4,871,167
------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations.............. (4,088,787) (6,285,030) 6,480,334
From policyholder transactions:
Net premiums from policyholders........ 12,301,398 80,381,214 53,332,374
Net benefits to policyholders.......... (12,171,873) (72,181,237) (39,209,664)
------------ ------------ ------------
Net increase in net assets resulting
from policyholder transactions......... 129,525 8,199,977 14,122,710
------------ ------------ ------------
Net increase (decrease) in net assets... (3,959,262) 1,914,947 20,603,044
Net assets at beginning of period....... 35,113,621 33,198,674 12,595,630
------------ ------------ ------------
Net assets at end of period............. $ 31,154,359 $ 35,113,621 $ 33,198,674
============ ============ ============

SMALL CAP GROWTH SUBACCOUNT
-------------------------------------------
2001 2000 1999
------------- -------------- ---------------

Increase (decrease) in net assets from
operations:
Net investment income (loss)........... $ (25,156) $ 3,354,331 $ 3,637,734
Net realized gains (losses)............ (4,688,586) 2,830,901 2,548,944
Net unrealized appreciation
(depreciation) during the period...... (3,244,997) (17,022,592) 3,920,455
------------ ------------- ------------
Net increase (decrease) in net assets (7,958,739) (10,837,360) 10,107,133
resulting from operations..............
From policyholder transactions..........
Net premiums from policyholders........ 22,824,300 135,469,377 52,637,861
Net benefits to policyholders.......... (20,701,815) (119,877,527) (40,800,272)
------------ ------------- ------------
Net increase in net assets resulting
from policyholder transactions......... 2,122,485 15,591,850 11,837,589
------------ ------------- ------------
Net increase (decrease) in net assets... (5,836,254) 4,754,490 21,944,722
Net assets at beginning of period....... 35,777,318 31,022,828 9,078,106
------------ ------------- ------------
Net assets at end of period............. $ 29,941,064 $ 35,777,318 $ 31,022,828
============ ============= ============

See accompanying notes.

128

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)

YEARS AND PERIODS ENDED MARCH 31,

GLOBAL BALANCED SUBACCOUNTA
----------------------------------------
2001 2000 1999
------------ ------------ ------------

Increase (decrease) in net assets from
operations:
Net investment income (loss)............ $ 10,255 $ 175,751 $ 358,974
Net realized gains (losses)............. (44,424) (506,008) 15,640
Net unrealized appreciation
(depreciation) during the period....... (222,976) (109,325) (173,912)
----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations............... (257,145) (439,582) 200,702
From policyholder transactions:
Net premiums from policyholders......... 2,049,975 8,122,728 6,295,052
Net benefits to policyholders........... (1,598,477) (8,741,933) (5,007,225)
----------- ----------- -----------
Net increase in net assets resulting from
policyholder transactions............... 451,498 (619,205) 1,287,827
----------- ----------- -----------
Net increase (decrease) in net assets... 194,353 (1,058,787) 1,488,529
Net assets at beginning of period........ 3,533,069 4,591,856 3,103,327
----------- ----------- -----------
Net assets at end of period.............. $ 3,727,422 $ 3,533,069 $ 4,591,856
=========== =========== ===========

MID CAP GROWTH SUBACCOUNT
--------------------------------------------
2001 2000 1999
------------- -------------- -------------

Increase (decrease) in net assets from
operations:
Net investment income (loss)............ $ (37,362) $ 8,938,378 $ 6,389,535
Net realized gains (losses)............. (4,811,558) 8,113,159 5,188,018
Net unrealized appreciation
(depreciation) during the period....... (14,501,126) (49,252,941) 15,078,681
------------ ------------- ------------
Net increase (decrease) in net assets
resulting from operations............... (19,350,046) (32,201,404) 26,656,234
From policyholder transactions:
Net premiums from policyholders......... 19,268,700 196,712,586 65,183,285
Net benefits to policyholders........... (16,876,300) (171,977,777) (41,018,347)
------------ ------------- ------------
Net increase in net assets resulting from
policyholder transactions............... 2,392,400 24,734,809 24,164,938
------------ ------------- ------------
Net increase (decrease) in net assets... (16,957,646) (7,466,595) 50,821,172
Net assets at beginning of period........ 56,033,021 63,499,616 12,678,444
------------ ------------- ------------
Net assets at end of period.............. $ 39,075,375 $ 56,033,021 $ 63,499,616
============ ============= ============

LARGE CAP VALUE SUBACCOUNT MONEY MARKET SUBACCOUNT
------------------------------------------- ------------------------------------------------
2001 2000 1999 2001 2000 1999
------------- ------------- ------------- -------------- ---------------- --------------

Increase (decrease) in net assets
from operations:
Net investment income (loss)....... 205,343 $ 2,529,526 $ 1,720,195 $ 2,202,943 $ 5,437,047 $ 2,988,530
Net realized gains (losses)........ (293,449) (861,398) 705,454 -- -- --
Net unrealized appreciation
(depreciation) during the period.. (1,587,326) 3,840,473 (2,181,112) -- -- --
------------ ------------ ------------ ------------- --------------- -------------
Net increase (decrease) in net
assets resulting from operations... (1,675,432) 5,508,601 244,537 2,202,943 5,437,047 2,988,530
From policyholder transactions:
Net premiums from policyholders.... 40,608,737 88,007,994 37,432,039 273,121,549 1,369,116,199 890,376,545
Net benefits to policyholders...... (32,491,825) (67,960,426) (27,199,179) (304,903,132) (1,246,419,884) (918,869,964)
------------ ------------ ------------ ------------- --------------- -------------
Net increase in net assets
resulting from policyholder
transactions....................... 8,116,912 20,047,568 10,232,860 (31,781,583) 122,696,315 (28,493,419)
------------ ------------ ------------ ------------- --------------- -------------
Net increase (decrease) in net
assets............................. 6,441,480 25,556,169 10,477,397 (29,578,640) 128,133,362 (25,504,889)
Net assets at beginning of period... 52,663,086 27,106,917 16,629,520 189,140,131 61,006,769 86,511,658
------------ ------------ ------------ ------------- --------------- -------------
Net assets at end of period......... $ 59,104,566 $ 52,663,086 $ 27,106,917 $ 159,561,491 $ 189,140,131 $ 61,006,769
============ ============ ============ ============= =============== =============

See accompanying notes.

129

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)

YEARS AND PERIODS ENDED MARCH 31,

LARGE/MID CAP VALUE II SUBACCOUNT SMALL/MID CAP GROWTH SUBACCOUNT
------------------------------------------- ------------------------------------------
2001 2000 1999 2001 2000 1999
------------- ------------- ------------- ------------- ------------- ------------

Increase (decrease) in net assets from
operations:
Net investment income (loss)........... $ 55,841 $ 3,158,831 $ 41,579 $ (11,460) $ 1,206,888 $ 1,388,661
Net realized gains (losses)............ 355,204 2,578,812 (860,332) (144,975) (652,532) 13,375
Net unrealized appreciation
(depreciation) during the period...... (2,429,725) 689,275 1,757,919 (1,284,092) 119,763 (1,001,208)
------------ ------------ ------------ ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations.............. (2,018,680) 6,426,918 939,166 (1,440,527) 674,119 400,828
From policyholder transactions:
Net premiums from policyholders........ 25,961,512 87,480,655 32,024,751 11,075,605 27,528,989 11,809,133
Net benefits to policyholders.......... (19,858,047) (81,506,140) (29,579,995) (10,044,997) (26,015,925) (9,775,543)
------------ ------------ ------------ ------------ ------------ -----------
Net increase in net assets resulting
from policyholder transactions......... (6,103,465) 5,974,515 2,444,756 1,030,608 1,513,064 2,033,590
------------ ------------ ------------ ------------ ------------ -----------
Net increase (decrease) in net assets... 4,084,785 12,401,433 3,383,922 (409,919) 2,187,183 2,434,418
Net assets at beginning of period....... 31,539,966 19,138,553 15,754,611 12,113,014 9,925,831 7,491,413
------------ ------------ ------------ ------------ ------------ -----------
Net assets at end of period............. $ 35,624,751 $ 31,539,966 $ 19,138,533 $ 11,703,095 $ 12,113,014 $ 9,925,831
============ ============ ============ ============ ============ ===========

REAL ESTATE EQUITY SUBACCOUNT GROWTH & INCOME SUBACCOUNT
-------------------------------------------- ---------------------------------------------
2001 2000 1999 2001 2000 1999
------------- ------------- -------------- -------------- ------------- --------------

Increase (decrease) in net assets
from operations:
Net investment income (loss)........ $ 75,591 $ 1,524,133 $ 515,377 $ (21,673) $ 33,281,395 $ 22,850,302
Net realized gains (losses)......... 203,153 1,851,413 (735,504) (5,630,912) 2,197,930 6,207,253
Net unrealized appreciation
(depreciation) during the period... (860,127) 1,041,612 80,925 (22,235,750) (63,700,088) (5,814,839)
------------ ------------ ------------- ------------- ------------ -------------
Net increase (decrease) in net
assets resulting from operations.... (581,383) 4,417,158 (139,202) (27,888,335) (28,220,763) 23,242,716
From policyholder transactions:
Net premiums from policyholders..... 20,026,473 102,840,441 22,699,314 20,304,553 86,946,862 196,639,863
Net benefits to policyholders....... (18,392,826) (98,637,433) (18,093,640) (25,089,896) (85,615,541) (106,763,955)
------------ ------------ ------------- ------------- ------------ -------------
Net increase in net assets resulting
from policyholder transactions...... 1,633,647 4,203,008 4,605,674 (4,785,343) 1,331,321 89,875,908
------------ ------------ ------------- ------------- ------------ -------------
Net increase (decrease) in net
assets.............................. 1,052,264 8,620,166 4,466,472 (32,673,678) (26,889,442) 113,118,624
Net assets at beginning of period.... 17,858,812 9,238,646 4,772,174 182,636,457 209,525,899 96,407,275
------------ ------------ ------------- ------------- ------------ -------------
Net assets at end of period.......... $ 18,911,076 $ 17,858,812 $ 9,238,646 $ 149,962,779 $182,636,457 $ 209,525,899
============ ============ ============= ============= ============ =============

See accompanying notes.

130

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)

YEARS AND PERIODS ENDED MARCH 31,

MANAGED SUBACCOUNT SHORT-TERM BOND SUBACCOUNT
------------------------------------------- -------------------------------------------
2001 2000 1999 2001 2000 1999
------------- ------------- ------------- ------------- ------------- -------------

Increase (decrease) in net assets from
operations:
Net investment income (loss)........... $ 602,786 $ 13,157,769 $ 10,756,436 $ 199,757 $ 883,541 $ 907,486
Net realized gains (losses)............ (819,169) (233,751) 2,233,258 239,799 (210,780) (441,667)
Net unrealized appreciation
(depreciation) during the period...... (7,242,148) (13,708,391) (6,419,069) 102,448 451,906 (85,754)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets...
resulting from operations.............. (7,458,531) (784,373) 6,570,625 542,004 1,124,667 380,065
From policyholder transactions:
Net premiums from policyholders........ 15,041,360 33,494,293 113,292,872 10,298,195 20,531,773 41,259,110
Net benefits to policyholders.......... (7,139,878) (29,530,890) (34,219,380) (15,182,908) (16,825,756) (49,156,693)
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting
from policyholder transactions......... 7,901,482 3,963,403 79,073,492 (4,884,713) 3,706,017 (7,897,583)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets... 442,951 3,179,030 85,644,117 (4,342,710) 4,830,684 (7,517,518)
Net assets at beginning of period....... 128,889,839 125,710,809 40,066,692 16,559,672 11,728,988 19,246,506
------------ ------------ ------------ ------------ ------------ ------------
Net assets at end of period............. $129,332,790 $128,889,839 $125,710,809 $ 12,216,962 $ 16,559,672 $ 11,728,988
============ ============ ============ ============ ============ ============

SMALL CAP EQUITY SUBACCOUNT INTERNATIONAL OPPORTUNITIES SUBACCOUNT
------------------------------------------- -------------------------------------------
2001 2000 1999 2001 2000 1999
------------- ------------- ------------- ------------- ------------- -------------

Increase (decrease) in net assets from
operations:
Net investment income (loss)........... $ (19,857) $ 1,934,297 $ 344,711 $ (29,733) $ 2,457,059 $ 2,006,004
Net realized gains (losses)............ (414,106) (158,893) (979,002) (4,239,503) 2,209,044 1,907,809
Net unrealized appreciation
(depreciation) during the period...... (2,671,384) (4,241,216) 325,684 (2,198,539) (11,479,826) 3,818,953
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations.............. (3,105,347) (2,465,812) (308,607) (6,467,775) (6,813,723) 7,732,766
From policyholder transactions:
Net premiums from policyholders........ 15,884,488 61,706,400 39,172,672 50,694,070 91,465,296 43,216,216
Net benefits to policyholders.......... (14,968,472) (51,931,035) (30,591,417) (48,635,945) (74,820,451) (38,372,463)
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting
from policyholder transactions......... 916,016 9,775,365 8,581,255 2,058,125 16,644,845 4,843,753
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets... (2,189,331) 7,309,553 8,272,648 (4,409,650) 9,831,122 12,576,519
Net assets at beginning of period....... 26,092,949 18,783,396 10,510,748 41,366,171 31,535,049 18,958,530
------------ ------------ ------------ ------------ ------------ ------------
Net assets at end of period............. $ 23,903,618 $ 26,092,949 $ 18,783,396 $ 36,956,521 $ 41,366,171 $ 31,535,049
============ ============ ============ ============ ============ ============

See accompanying notes.

131

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)

YEARS AND PERIODS ENDED MARCH 31,

EQUITY INDEX SUBACCOUNT
--------------------------------------------
2001 2000 1999
------------- -------------- --------------

Increase (decrease) in net assets from operations:
Net investment income (loss)......................... $ 340,360 $ 7,726,442 $ 5,503,450
Net realized gains (losses).......................... (1,145,017) 4,357,007 7,681,081
Net unrealized appreciation
(depreciation) during the period.................... (18,080,001) (30,073,491) 4,678,509
------------ ------------- -------------
Net increase (decrease) in net assets
resulting from operations............................ (18,884,658) (17,990,042) 17,863,040
From policyholder transactions:
Net premiums from policyholders...................... 58,341,537 155,703,961 225,994,914
Net benefits to policyholders........................ (49,669,687) (126,828,610) (147,909,470)
------------ ------------- -------------
Net increase in net assets resulting
from policyholder transactions....................... 8,671,850 28,875,351 78,085,444
------------ ------------- -------------
Net increase (decrease) in net assets................. 10,212,808 10,885,309 95,948,484
Net assets at beginning of period..................... 160,798,440 149,913,131 53,964,647
------------ ------------- -------------
Net assets at end of period........................... $150,585,632 $ 160,798,440 $ 149,913,131
============ ============= =============

GLOBAL BOND SUBACCOUNT
-----------------------------------------
2001 2000 1999
------------ ------------- ---------------

Increase (decrease) in net assets from operations:
Net investment income (loss)......................... $ (7,550) $ 430,194 $ 424,767
Net realized gains (losses).......................... 2,596 (302,157) (204,675)
Net unrealized appreciation
(depreciation) during the period.................... (283,798) 688,537 (433,526)
----------- ------------ ------------
Net increase (decrease) in net assets
resulting from operations............................ (288,752) 816,574 (213,434)
From policyholder transactions:
Net premiums from policyholders...................... 4,883,968 8,796,366 11,387,398
Net benefits to policyholders........................ (4,100,556) (10,301,347) (10,615,019)
----------- ------------ ------------
Net increase in net assets resulting
from policyholder transactions....................... 783,412 (1,504,981) 772,379
----------- ------------ ------------
Net increase (decrease) in net assets................. 494,660 (688,407) 558,945
Net assets at beginning of period..................... 8,150,109 8,838,516 8,279,571
----------- ------------ ------------
Net assets at end of period........................... $ 8,644,769 $ 8,150,109 $ 8,838,516
=========== ============ ============

TURNER CORE GROWTH SUBACCOUNT BRANDES INTERNATIONAL EQUITY SUBACCOUNT
------------------------------------------ -------------------------------------------
2001 2000 1999 2001 2000 1999
-------------- ------------- ----------- -------------- ------------- ------------

Increase (decrease) in net assets from
operations:
Net investment income (loss).......... $ (11,226) $ 3,072,760 $ 1,315,438 $ (17,512) $ 2,792,306 $ 515,681
Net realized gains (losses)........... (1,608,879) 2,749,177 1,038,462 55,129 1,629,793 507,727
Net unrealized appreciation
(depreciation) during the period..... (3,124,109) (8,773,256) 1,626,646 (4,356,665) (2,602,173) 3,486,097
------------- ------------ ----------- ------------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations............. (4,744,214) (2,951,319) 3,980,546 (3,822,748) 1,819,926 4,509,505
From policyholder transactions:
Net premiums from policyholders....... 7,914,569 57,091,019 23,098,524 24,235,154 34,606,916 12,134,533
Net benefits to policyholders......... (4,993,648) (54,259,832) (9,308,254) (15,730,737) (17,063,755) (5,569,496)
------------- ------------ ----------- ------------- ------------ -----------
Net increase in net assets resulting
from policyholder transactions........ 2,920,921 2,831,187 13,790,270 8,504,417 17,543,161 6,565,037
------------- ------------ ----------- ------------- ------------ -----------
Net increase (decrease) in net assets.. (1,823,923) (120,132) 17,770,816 4,681,669 19,363,087 11,074,542
Net assets at beginning of period...... 22,550,873 22,671,005 4,900,189 36,778,383 17,415,296 6,340,754
------------- ------------ ----------- ------------- ------------ -----------
Net assets at end of period............ $ 20,727,580 $ 22,550,873 $22,671,005 $ 41,460,052 $ 36,778,383 $17,415,296
============= ============ =========== ============= ============ ===========

See accompanying notes.

132

JOHN HANCOCK VARIABLE LIFE ACCOUNTS

STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)

YEARS AND PERIODS ENDED MARCH 31,

FRONTIER CAPITAL APPRECIATION SUBACCOUNT CLIFTON ENHANCED US EQUITY SUBACCOUNT
------------------------------------------ -----------------------------------------
2001 2000 1999 2001 2000 1999
------------- ------------- ------------- ------------- ------------- --------------

Increase (decrease) in net assets from
operations:
Net investment income (loss).......... $ (13,338) $ 5,746,620 $ 449,994 $ (6,380) $ 1,393,023 $ 518,137
Net realized gains (losses)........... (824,369) 4,402,175 624,068 (2,128,293) 132,736 264,436
Net unrealized appreciation
(depreciation) during the period..... (1,165,418) (9,587,258) 3,431,408 (18,284) (2,553,428) 151,562
------------ ------------ ------------ ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations............. (2,003,125) 561,537 4,505,470 (2,152,957) (1,027,669) 934,135
From policyholder transactions:
Net premiums from policyholders....... 17,186,499 40,643,205 25,135,447 22,732,418 15,685,529 6,480,741
Net benefits to policyholders......... (12,471,666) (34,557,509) (22,331,613) (15,937,348) (11,190,723) (3,151,279)
------------ ------------ ------------ ------------ ------------ -----------
Net increase in net assets resulting
from policyholder transactions........ 4,714,833 6,085,696 2,803,834 7,335,070 4,494,806 3,329,462
------------ ------------ ------------ ------------ ------------ -----------
Net increase (decrease) in net assets.. 2,711,708 6,647,233 7,309,304 5,182,113 3,467,137 4,263,597
Net assets at beginning of period...... 23,632,255 16,985,022 9,675,718 10,205,351 6,738,214 2,474,617
------------ ------------ ------------ ------------ ------------ -----------
Net assets at end of period............ $ 26,343,963 $ 23,632,255 $ 16,985,022 $ 15,387,464 $ 10,205,351 $ 6,738,214
============ ============ ============ ============ ============ ===========

EMERGING MARKETS EQUITY SUBACCOUNT BOND INDEX SUBACCOUNT
------------------------------------------ -----------------------------------------
2001 2000 1999 2001 2000 1999
------------ ------------- -------------- ------------- ------------- --------------

Increase (decrease) in net assets
from operations:
Net investment income (loss).......... $ (4,216) $ 432,227 $ 132,259 $ 248,555 $ 487,512 $ 130,136
Net realized gains (losses)........... (1,011,736) (1,410,734) 663,998 109,325 (53,751) (104,174)
Net unrealized appreciation
(depreciation) during the period..... 611,505 (2,006,595) 432,248 2,418,535 472,128 (78,192)
----------- ------------ ------------- ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations............. (404,447) (2,985,102) 1,228,505 2,776,415 905,889 (53,230)
From policyholder transactions:
Net premiums from policyholders....... 8,923,551 72,543,484 18,579,194 12,222,483 14,954,848 6,471,518
Net benefits to policyholders......... (9,014,995) (68,002,822) (16,271,324) (6,286,573) (8,187,184) (2,358,694)
----------- ------------ ------------- ------------ ------------ -----------
Net increase in net assets resulting
from policyholder transactions........ (91,444) 4,540,662 2,307,870 5,935,910 6,767,664 4,112,824
----------- ------------ ------------- ------------ ------------ -----------
Net increase (decrease) in net
assets................................ (495,891) 1,555,560 3,536,375 8,712,325 7,673,553 4,060,594
Net assets at beginning of period...... 5,278,940 3,723,380 187,005 12,779,604 5,126,051 1,065,457
----------- ------------ ------------- ------------ ------------ -----------
Net assets at end of period............ $ 4,783,049 $ 5,278,940 $ 3,723,380 $ 21,491,929 $ 12,799,604 $ 5,126,051
=========== ============ ============= ============ ============ ===========

See accompanying notes.

133

JOHN HANCOCK VARIABLE LIFE ACCOUNTS

STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)

YEARS AND PERIODS ENDED MARCH 31,

SMALL/MID CAP CORE SUBACCOUNT HIGH YIELD BOND SUBACCOUNT
---------------------------------------- ------------------------------------------
2001 2000 1999 2001 2000 1999
------------ ------------- ----------- ------------- ------------ -------------

Increase (decrease) in net assets from
operations:
Net investment income (loss)............ $ 2,907 $ 100,765 $ 52,711 $ 121,812 $ 359,215 $ 340,435
Net realized gains (losses)............. (25,282) 52,147 65,733 (291,657) (207,326) 42,365
Net unrealized appreciation
(depreciation) during the period....... (275,790) (145,708) (10,735) 610,233 (650,931) (139,659)
----------- ------------ ----------- ------------ ----------- ------------
Net increase (decrease) in net assets
resulting from operations............... (298,165) 7,204 107,709 440,389 (499,042) 243,141
From policyholder transactions:
Net premiums from policyholders......... 2,176,242 18,340,255 5,817,483 23,345,330 9,819,846 19,870,990
Net benefits to policyholders........... (1,507,710) (16,306,841) (5,611,532) (23,265,536) (8,852,014) (20,368,501)
----------- ------------ ----------- ------------ ----------- ------------
Net increase in net assets resulting from
policyholder transactions............... 668,532 2,033,414 205,951 79,794 967,832 (497,511)
----------- ------------ ----------- ------------ ----------- ------------
Net increase (decrease) in net assets.... 370,367 2,040,618 313,660 520,183 468,790 (254,370)
Net assets at beginning of period........ 2,657,431 616,813 303,153 4,742,004 4,273,214 4,527,584
----------- ------------ ----------- ------------ ----------- ------------
Net assets at end of period.............. $ 3,027,798 $ 2,657,431 $ 616,813 $ 5,262,187 $ 4,742,004 $ 4,273,214
=========== ============ =========== ============ =========== ============

LARGE CAP AGGRESSIVE GROWTH FUNDAMENTAL GROWTH
SUBACCOUNT SUBACCOUNT
----------------------------- ---------------------------------
2001 2000* 2001 2000*
-------------- ------------- -------------- ----------------

Increase (decrease) in net assets from operations:
Net investment income (loss)....................... $ (339) $ 5,904 $ (1,093) $ 205,119
Net realized gains (losses)........................ (23,534) (11,798) (7,715) (46,349)
Net unrealized appreciation (depreciation)
during the period (47,192) (37,617) (625,784) (568,635)
---------- ---------- ---------- -----------
Net increase (decrease) in net assets resulting from
operations......................................... (71,065) (43,511) (634,592) (409,865)
From policyholder transactions:
Net premiums from policyholders.................... 704,200 3,456,939 2,443,457 9,131,403
Net benefits to policyholders...................... (421,856) (3,068,441) 2,326,561) (6,708,404)
---------- ---------- ---------- -----------
Net increase in net assets resulting from
policyholder transactions.......................... 282,344 388,498 116,896 2,422,999
---------- ---------- ---------- -----------
Net increase (decrease) in net assets............... 211,279 344,987 (517,696) 2,013,134
Net assets at beginning of period................... 344,987 -- 2,013,134 --
---------- ---------- ---------- -----------
Net assets at end of period......................... $ 556,266 $ 344,987 1,495,438 $ 2,013,134
========== ========== ========== ===========

ACTIVE BOND II
SUBACCOUNT
--------------------
2001 2000**
-------- --------

Increase (decrease) in net assets from
operations:
Net investment income (loss).................. $ 1,058 $ 247
Net realized gains (losses)................... 913 89
Net unrealized appreciation
(depreciation) during the period............. 325 96
-------- -------
Net increase (decrease) in net assets
resulting from operations.................... 2,296 432
From policyholder transactions:
Net premiums from policyholders............... 116,750 38,268
Net benefits to policyholders................. (2,102) (22,638)
-------- -------
Net increase in net assets resulting from
policyholder transactions..................... 114,648 15,630
-------- -------
Net increase (decrease) in net assets.......... 116,944 16,062
Net assets at beginning of period.............. 16,062 --
-------- -------
Net assets at end of period.................... $133,006 $ 16,062
======== =======

- ---------
* From April 24, 2000 (commencement of operations)
** From June 30, 2000 (commencement of operations)

See accompanying notes.

134

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)(CONTINUED)

YEARS AND PERIODS ENDED MARCH 31,

LARGE CAP VALUE CORE II AIM V.I. VALUE FIDELITY VIP GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------- ------------------------ -------------------------
2001 2000** 2001 2000* 2001 2000*
----------- ------------- ----------- ------------ ------------ --------------

Increase (decrease) in net assets from
operations:
Net investment income (loss)................ $ 701 $ 2,744 $ (809) $ 47,633 $ 1,320,180 $ (1,420)
Net realized gains (losses)................. (68) 8,325 (72,484) (54,358) (96,979) (8,731)
Net unrealized appreciation (depreciation)
during the period.......................... (41,437) 9,977 (85,787) (101,244) (2,575,614) (156,818)
--------- ----------- ---------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations................... (40,804) 21,046 (159,080) (107,969) (1,352,413) (166,969)
From policyholder transactions:
Net premiums from policyholders............. 517,180 4,269,286 893,645 4,263,052 19,388,546 6,655,609
Net benefits to policyholders............... (370,464) (3,736,885) (511,837) (2,990,639) (820,359) (4,970,882)
--------- ----------- ---------- ----------- ----------- -----------
Net increase in net assets resulting from
policyholder transactions................... 146,716 532,401 381,808 1,272,413 18,568,187 1,684,727
--------- ----------- ---------- ----------- ----------- -----------
Net increase (decrease) in net assets........ 105,912 553,447 222,728 1,164,444 17,215,774 1,517,758
Net assets at beginning of period............ 553,446 -- 1,164,444 -- 1,517,758 --
--------- ----------- ---------- ----------- ----------- -----------
Net assets at end of period.................. $ 659,358 $ 553,447 $1,387,172 $ 1,164,444 $18,733,532 $ 1,517,758
========= =========== ========== =========== =========== ===========

FIDELITY VIP CONTRAFUND JANUS ASPEN GLOBAL TECH JANUS ASPEN WORLDWIDE GR.
SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------------------- -------------------------------- ---------------------------
2001 2000* 2001 2000* 2001 2000**
----------- -------------- --------------- ---------------- -------------- --------------

Increase (decrease) in net assets
from operations:
Net investment income (loss)...... $ 34,030 $ (1,017) $ (536) $ 2,028 $ (966) $ 17,541
Net realized gains (losses)....... (4,403) (11,057) (180,598) (69,974) (106,818) (140,835)
Net unrealized appreciation
(depreciation) during the
period........................... (147,323) (35,244) 36,766 (98,497) (96,600) (61,721)
---------- ------------- -------------- --------------- ------------- -----------
Net increase (decrease) in net
assets resulting from operations.. (117,696) (47,318) (144,368) (166,443) (204,384) (185,015)
From policyholder transactions:
Net premiums from policyholders... 723,343 1,758,982 9,314,421 2,902,504 8,074,773 8,457,498
Net benefits to policyholders..... (379,010) (705,047) (9,218,123) (2,293,755) (7,859,927) (7,234,105)
---------- ------------- -------------- --------------- ------------- -----------
Net increase in net assets
resulting from policyholder
transactions...................... 344,233 1,053,935 96,298 608,749 214,846 1,223,393
---------- ------------- -------------- --------------- ------------- -----------
Net increase (decrease) in net
assets............................ 226,537 1,006,617 (48,070) 442,306 10,462 1,038,378
Net assets at beginning of period.. 1,006,617 -- 442,306 -- 1,038,378 --
---------- ------------- -------------- --------------- ------------- -----------
Net assets at end of period........ $1,233,154 $ 1,006,617 $ 394,236 $ 442,306 $ 1,048,840 $ 1,038,378
========== ============= ============== =============== ============= ===========

- ---------
* From April 24, 2000 (commencement of operations)
** From June 30, 2000 (commencement of operations)

See accompanying notes.

135

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)

YEARS AND PERIODS ENDED MARCH 31,

MFS NEW DISCOVERY SERIES TEMPLETON INTERNATIONAL
SUBACCOUNT SUBACCOUNT
-------------------------- ---------------------------
2001 2000* 2001 2000*
------------ ------------ ------------- -------------

Increase (decrease) in net assets from operations:
Net investment income (loss)......................................... $ (1,247) $ (1,349) $ (2,477) $ (640)
Net realized gains (losses).......................................... (86,732) 16,026 (69,741) 11,899
Net unrealized appreciation (depreciation) during the period......... (181,150) (94,403) (313,814) 15,320
----------- ----------- ------------ ------------
Net increase (decrease) in net assets resulting from operations........ (269,129) (79,726) (386,032) 26,579
From policyholder transactions:
Net premiums from policyholders...................................... 11,429,548 4,148,131 29,780,014 11,365,793
Net benefits to policyholders........................................ (9,543,735) (2,889,948) (27,141,398) (10,522,033)
----------- ----------- ------------ ------------
Net increase in net assets resulting from policyholder transactions.... 1,885,813 1,258,183 2,638,616 843,760
----------- ----------- ------------ ------------
Net increase (decrease) in net assets.................................. 1,616,684 1,178,457 2,252,584 870,339
Net assets at beginning of period...................................... 1,178,457 -- 870,339 --
----------- ----------- ------------ ------------
Net assets at end of period............................................ $ 2,795,141 $ 1,178,457 $ 3,122,923 $ 70,339
=========== =========== ============ ============

- ---------
* From April 24, 2000 (commencement of operations)

See accompanying notes.

136

JOHN HANCOCK VARIABLE LIFE ACCOUNTS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

MARCH 31, 2000

1. ORGANIZATION

John Hancock Variable Life Account S (the Account) is a separate investment
account of John Hancock Variable Life Insurance Company (JHVLICO), a wholly-
owned subsidiary of John Hancock Mutual Life Insurance Company (John Hancock).
The Account was formed to fund variable life insurance policies (Policies)
issued by JHVLICO. The Account is operated as a unit investment trust registered
under the Investment Company Act of 1940, as amended, and currently consists of
thirty-seven subaccounts. The assets of each subaccount are invested exclusively
in shares of a corresponding Portfolio of John Hancock Variable Series Trust I
(the Trust) or of other Outside Investment Trust (Outside Trust). New
subaccounts may be added as new funds are added to the Trust or to the Outside
Trust, or as other investment options are developed, and made available to
policyholders. The thirty-seven Portfolios of the Trust and the Outside Trust
which are currently available are the Large Cap Growth, Active Bond (formerly,
Sovereign Bond), International Equity Index, Small Cap Growth, Global Balanced,
Mid Cap Growth, Large Cap Value, Money Market, Large / Mid Cap Value II
(formerly, Mid Cap Value), Small/Mid Cap Growth (formerly, Diversified Mid Cap
Growth), Real Estate Equity, Growth & Income, Managed, Short-Term Bond, Small
Cap Equity (formerly, Small Cap Value), International Opportunities, Equity
Index, Global Bond (formerly, Strategic Bond), Turner Core Growth, Brandes
International Equity, Frontier Capital Appreciation, Clifton Enhanced US Equity,
Emerging Markets Equity, Bond Index, Small/Mid Cap CORE, High Yield Bond, Large
Cap Aggressive Growth, Fundamental Growth (formerly, Fundamental Mid Cap
Growth), Active Bond II (formerly, Core Bond), Large Cap Value Core II
(formerly, American Leaders Large Cap Value), Aim V.I. Value, Fidelity VIP
Growth, Fidelity VIP Contrafund, Janus Aspen Global Technology, Janus Aspen
Worldwide Growth, MFS New Discovery Series, and Templeton International
Portfolios. Each Portfolio has a different investment objective.

The net assets of the Account may not be less than the amount required
under state insurance law to provide for death benefits (without regard to the
minimum death benefit guarantee) and other policy benefits. Additional assets
are held in JHVLICO's general account to cover the contingency that the
guaranteed minimum death benefit might exceed the death benefit which would have
been payable in the absence of such guarantee.

The assets of the Account are the property of JHVLICO. The portion of the
Account's assets applicable to the policies may not be charged with liabilities
arising out of any other business JHVLICO may conduct.

2. SIGNIFICANT ACCOUNTING POLICIES

Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Valuation of Investments

Investment in shares of the Fund and of M Fund are valued at the reported
net asset values of the respective Portfolios. Investment transactions are
recorded on the trade date. Dividend income is recognized on the ex-dividend
date. Realized gains and losses on sales of respective Portfolio shares are
determined on the basis of identified cost.

137

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Federal Income Taxes

The operations of the Account are included in the federal income tax return
of JHVLICO, which is taxed as a life insurance company under the Internal
Revenue Code. JHVLICO has the right to charge the Account any federal income
taxes, or provision for federal income taxes, attributable to the operations of
the Account or to the policies funded in the Account. Currently, JHVLICO does
not make a charge for income or other taxes. Charges for state and local taxes,
if any, attributable to the Account may also be made.

Expenses

JHVLICO assumes mortality and expense risks of the variable life insurance
policies for which asset charges are deducted at various rates ranging from .50%
to .625%, depending on the type of policy, of net assets (excluding policy
loans) of the Account. In addition, a monthly charge at varying levels for the
cost of insurance is deducted from the net assets of the Account.

JHVLICO makes certain deductions for administrative expenses and state
premium taxes from premium payments before amounts are transferred to the
Account.

Policy Loans

Policy loans represent outstanding loans plus accrued interest. Interest is
accrued (net of a charge for policy loan administration determined at an annual
rate of .75% of the aggregate amount of policyholder indebtedness) and
compounded daily. At March 31, 2001, there were no outstanding policy loans.

3. TRANSACTION WITH AFFILIATES

John Hancock acts as the distributor, principal underwriter and investment
advisor for the Trust.

Certain officers of the Account are officers and directors of JHVLICO, the
Fund or John Hancock.

138

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

4. DETAILS OF INVESTMENTS

The details of the shares owned and cost and value of investments in the
Subaccounts of the Trust and of the Outside Trust at March 31, 2001 were as
follows:

SUBACCOUNT SHARES OWNED COST VALUE
---------- ------------ ------------ -------------
Large Cap Growth................ 6,668,035 $167,557,993 $ 99,429,852
Active Bond..................... 5,077,279 47,418,808 48,835,618
International Equity Index...... 2,291,430 38,107,461 31,108,984
Small Cap Growth................ 2,805,627 45,093,601 29,941,064
Global Balanced................. 429,651 4,143,943 3,718,893
Mid Cap Growth.................. 3,744,105 86,074,194 39,075,375
Large Cap Value................. 4,241,552 58,520,342 58,926,812
Money Market.................... 159,403,578 159,403,578 159,464,785
Large/Mid Cap Value II.......... 2,589,587 36,440,849 35,566,817
Small/Mid Cap Growth............ 957,574 13,829,876 11,703,095
Real Estate Equity.............. 1,427,909 19,049,627 18,911,076
Growth & Income................. 12,495,061 233,761,386 149,962,779
Managed......................... 9,960,703 154,428,192 128,800,033
Short-Term Bond................. 1,201,031 11,837,673 12,068,262
Small Cap Equity................ 2,957,438 31,019,003 23,903,618
International Opportunities..... 3,668,838 45,931,816 36,956,521
Equity Index.................... 9,686,053 187,378,986 150,269,133
Global Bond..................... 863,287 8,642,353 8,644,769
Turner Core Growth.............. 1,475,280 30,387,107 20,727,580
Brandes International Equity.... 3,032,936 44,879,369 41,460,052
Frontier Capital
Appreciation................... 1,631,223 33,596,769 26,343,963
Clifton Enhanced................ 1,082,867 17,711,166 15,387,464
Emerging Markets................ 777,781 $ 5,743,639 $ 4,783,049
Bond Index...................... 1,930,812 18,610,088 19,115,096
Small/Mid Cap CORE.............. 340,789 3,438,864 3,025,442
High Yield Bond................. 661,116 5,256,258 5,173,122
Large Cap Aggressive Growth..... 71,171 641,081 556,266
Fundamental Growth.............. 171,592 2,689,866 1,495,438
Active Bond..................... 12,596 131,959 132,508
Large Cap Value Core II......... 65,619 689,453 659,358
Aim V.I. Value.................. 57,274 1,574,212 1,387,172
Fidelity VIP Growth............. 513,118 21,465,999 17,410,075
Fidelity VIP Contrafund......... 60,219 1,415,730 1,198,348
Janus Aspen Global
Technology..................... 84,966 455,973 394,236
Janus Aspen Worldwide Growth.... 34,310 1,207,171 1,048,840
New Discovery Series........ 194,243 3,070,706 2,795,141
Templeton International......... 187,790 3,421,443 3,122,923

139

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Purchases, including reinvestment of dividend distributions, and proceeds
from sales of shares in the Subaccounts of the Trust and of the Outside Trust
during 2001 were as follows:

SUBACCOUNT PURCHASES SALES
---------- ----------- ------------
Large Cap Growth....................... $10,692,581 $12,229,634
Active Bond............................ 11,475,301 12,426,241
International Equity Index............. 6,847,901 6,740,487
Small Cap Growth....................... 8,452,254 6,354,683
Global Balanced........................ 961,993 513,407
Mid Cap Growth......................... 6,827,547 4,472,187
Large Cap Value........................ 11,367,870 3,287,201
Money Market........................... 47,819,578 79,701,141
Large/Mid Cap Value II................. 8,086,041 2,007,299
Small/Mid Cap Growth................... 3,919,212 2,899,944
Real Estate Equity..................... 4,410,303 2,786,189
Growth & Income........................ 8,733,595 13,538,977
Managed................................ 12,948,675 5,209,059
Short-Term Bond........................ 5,357,486 10,250,754
Small Cap Equity....................... 3,495,248 2,598,892
International Opportunities............ 15,063,800 13,035,107
Equity Index........................... 19,122,183 10,561,146
Global Bond............................ 914,077 138,130
Turner Core Growth..................... 5,983,812 3,074,007
Brandes International Equity........... 11,362,491 2,875,402
Frontier Capital Appreciation.......... 10,357,542 5,655,915
Clifton Enhanced....................... 13,760,199 6,431,437
Emerging Markets....................... 2,564,904 2,660,522
Bond Index............................. 3,768,538 80,493
Small Mid Cap CORE..................... 994,187 327,553
High Yield Bond........................ 7,227,897 7,152,224
Large Cap Aggressive Growth............ 398,206 116,195
Fundamental Growth..................... 133,467 17,654
Active Bond II......................... 182,255 67,674
Large Cap Value Core II................ 325,556 179,504
AIM V.I. Value......................... 645,915 264,906
Fidelity VIP Growth.................... 18,919,794 354,849
Fidelity VIP II Contrafund............. 372,051 28,585
Janus Aspen Global Technology.......... 1,924,570 1,828,803
Janus Aspen Worldwide Growth........... 1,202,952 989,062
New Discovery Series................... 3,488,085 1,603,507
Templeton International................ 7,775,261 5,139,096

140

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

5. NET ASSETS

Accumulation shares attributable to net assets of policyholders and
accumulation share values for each subaccount at March 31, 2001 were as follows:

VEP CLASS #1 VEP CLASS #2 VEP CLASS #3
--------------------------- --------------------------- ---------------------------
ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION
SUBACCOUNT SHARES SHARE VALUES SHARES SHARE VALUES SHARES SHARE VALUES
- ---------- ------------ ------------- ------------ ------------- ------------ ---------------

Large Cap Growth 584,899 $21.99 566,929 $22.07 305,872 $22.15
Active Bond 265,112 15.57 195,133 15.62 75,255 15.68
International Equity Index 281,073 12.68 222,778 12.72 23,200 12.77
Small Cap Growth 240,551 13.39 316,102 13.42 67,133 13.45
Global Balanced 17,189 11.20 19,697 11.23 21,390 11.26
Mid Cap Growth 305,634 15.14 275,423 15.17 85,082 15.21
Large Cap Value 280,655 17.55 251,705 17.59 48,564 17.63
Money Market 705,988 13.99 923,917 14.04 492,243 14.09
Large/Mid Cap Value II 172,166 16.81 99,423 16.85 4,946 16.89
Small/Mid Cap Growth 108,530 19.11 110,518 19.18 25,605 19.25
Real Estate Equity 115,184 18.17 69,600 18.23 2,736 18.30
Growth & Income 1,115,812 22.57 687,894 22.65 226,026 22.73
Managed 629,888 19.46 300,931 19.54 51,444 19.60
Short Term Bond 91,448 14.30 134,058 14.35 15,042 14.40
Small Cap Equity 148,380 9.83 98,039 9.86 25,167 9.88
International Opportunities 204,333 11.65 246,374 11.68 37,755 11.71
Equity Index 705,104 18.31 970,750 18.36 355,137 18.40
Global Bond 69,443 13.07 44,191 13.11 23,957 13.14
Turner Core Growth 29,584 19.96 15,686 20.01 0 20.06
Brandes International Equity 25,870 16.09 33,878 16.13 0 16.18
Frontier Capital Appreciation 23,025 22.75 14,933 22.81 0 22.87
Clifton Enhanced 3,954 13.59 0 13.62 0 13.65
Emerging Markets 84,893 6.97 94,880 6.98 22,253 7.00
Bond Index 141,070 11.78 114,477 11.79 67,094 11.81
Small Mid Cap CORE 26,934 10.11 24,568 10.13 13,781 10.14
High Yield Bond 89,848 9.69 64,329 9.70 4,922 9.72
Large Cap Aggressive Growth 34,178 6.68 2,650 6.68 1,335 6.68
Fundamental Growth 25,049 7.15 0 7.16 0 7.16
Active Bond II 6,511 10.96 0 10.96 0 10.97
Large Cap Value Core II 3,135 10.09 0 10.10 30,372 10.10
Aim V.I. Value 10,059 7.46 32,030 7.46 6,211 7.47
Fidelity VIP Growth 8,365 7.49 41,319 7.50 32,644 7.50
Fidelity VIP Contrafund 9,883 8.37 6,603 8.37 36,384 8.38
Janus Aspen Global Technology 13,104 4.77 29,565 4.78 638 4.78
Janus Aspen Worldwide Growth 5,332 6.91 6,470 6.91 56,648 6.92
MFS New Discovery Series 13,660 8.66 28,413 8.66 0 8.67
Templeton International 554 8.71 98,428 8.71 465 8.72

141

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

V COLI CLASS #4 V COLI CLASS #5 V COLI CLASS #6
-------------------------------- --------------------------- ---------------------------
ACCUMULATION ACCUMULATION SHARE ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION
SUBACCOUNT SHARES VALUES SHARES SHARE VALUES SHARES SHARE VALUES
- ---------- ------------ ------------------ ------------ ------------- ------------ ------------

Large Cap Growth 735,431 $22.31 18,556 $22.34 329,438 $22.36
Active Bond 125,946 16.64 187,100 16.65 546,956 16.67
International Equity
Index 46,371 11.83 16,729 11.85 358,906 11.86
Small Cap Growth 121,452 13.70 175,200 13.71 100,712 13.72
Global Balanced 8,635 11.47 9,358 11.48 44,234 11.48
Mid Cap Growth 176,125 15.50 65,748 15.51 192,603 15.51
Large Cap Value 168,844 17.96 158,811 17.97 476,022 17.98
Money Market 280,015 14.01 161,018 14.02 106,956 14.04
Large/Mid Cap Value II 115,709 17.20 115,498 17.21 264,249 17.22
Small/Mid Cap Growth 13,207 19.25 37,789 19.27 2,416 19.29
Real Estate Equity 99,248 18.95 195,086 18.97 77,529 18.99
Growth & Income 481,244 22.68 376,677 22.70 34,994 22.73
Managed 300,257 20.30 15,127 20.33 27,400 20.35
Short Term Bond 260,249 14.66 1,086 14.68 0 14.70
Small Cap Equity 42,374 10.07 32,521 10.07 387,458 10.08
International
Opportunities 268,139 11.93 326,472 11.93 152,833 11.94
Equity Index 354,228 18.75 334,497 18.76 736,605 18.77
Global Bond 66,838 13.38 7,830 13.39 0 13.40
Turner Core Growth 18,519 20.46 131,552 20.47 0 20.49
Brandes International
Equity 148,025 16.49 267,541 16.51 390,469 16.52
Frontier Capital
Appreciation 103,102 23.32 124,909 23.34 0 23.36
Clifton Enhanced 80,802 13.85 135,858 13.85 0 13.85
Emerging Markets 0 7.08 42,869 7.08 0 7.08
Bond Index 11,022 11.95 220,889 11.95 0 11.95
Small Mid Cap CORE 12,485 10.26 1,160 10.26 14,904 10.26
High Yield Bond 1,822 9.83 5,609 9.83 17,673 9.83
Large Cap Aggressive
Growth 0 6.48 2,637 6.48 0 6.48
Fundamental Growth 0 6.31 0 6.31 0 6.31
Active Bond II 0 11.00 0 11.00 0 11.00
Large Cap Value Core II 0 10.14 1,502 10.14 0 10.14
Aim V.I. Value 1,774 7.25 0 7.25 0 7.25
Fidelity VIP Growth 0 7.23 0 7.23 2,142,473 7.23
Fidelity VIP
Contrafund 0 8.21 0 8.21 0 8.21
Janus Aspen Global
Technology 359 4.80 0 4.80 0 4.80
Janus Aspen Worldwide
Growth 0 6.94 0 6.94 0 6.94
MFS New Discovery
Series 0 8.35 186,298 8.35 0 8.35
Templeton International 0 9.17 1,244 9.17 0 9.17

142

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

MEDALLION EXECUTIVE VLI CLASS #7 MVEP CLASS #8 MVUL CLASS #9
-------------------------------- --------------------------- ---------------------------
ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION
SUBACCOUNT SHARES SHARE VALUES SHARES SHARE VALUES SHARES SHARE VALUES
- ---------- ------------ ------------ ------------ ------------ ----------- ------------

Large Cap Growth 107,865 $51.27 804,903 $16.04 340,519 $14.28
Active Bond 84,128 26.74 353,535 14.10 124,770 13.28
International Equity Index 180,627 19.94 410,922 10.94 203,868 11.30
Small Cap Growth 206,898 13.40 224,290 13.58 188,817 15.27
Global Balanced 66,465 11.21 39,396 11.37 47,984 10.89
Mid Cap Growth 256,794 15.16 319,162 15.36 126,671 17.04
Large Cap Value 399,456 17.57 364,434 17.81 119,869 15.23
Money Market 508,883 19.36 1,060,581 12.83 412,219 12.27
Large/Mid Cap Value II 456,112 16.83 409,115 17.06 0 0
Small/Mid Cap Growth 63,040 19.15 249,760 12.27 50,404 12.48
Real Estate Equity 33,763 27.93 215,118 15.55 53,039 12.09
Growth & Income 771,257 49.72 1,083,175 16.06 312,339 14.03
Managed 2,259,385 36.98 241,446 15.74 106,256 14.40
Short Term Bond 56,867 14.33 52,685 13.21 119,616 12.67
Small Cap Equity 649,994 9.85 393,279 9.98 156,728 9.47
International
Opportunities 683,897 11.67 309,496 11.82 484,946 11.31
Equity Index 582,437 18.34 1,351,852 18.59 614,989 15.85
Global Bond 165,785 13.09 83,411 13.27 71,751 12.52
Turner Core Growth 0 18.58 303,642 18.19 57,374 17.48
Brandes International
Equity 0 16.32 859,981 15.80 93,744 16.89
Frontier Capital
Appreciation 0 21.12 466,890 19.33 230,649 18.71
Clifton Enhanced 0 10.31 152,857 13.75 433,693 13.75
Emerging Markets 66,502 6.98 51,920 7.04 108,630 7.04
Bond Index 65,682 11.79 85,858 11.89 130,909 11.87
Small Mid Cap CORE 9,298 10.12 38,648 10.20 5,571 10.20
High Yield Bond 30,001 9.70 20,221 9.78 100,783 9.78
Large Cap Aggressive
Growth 0 6.45 8,672 6.70 223 6.47
Fundamental Growth 821 6.28 151,754 7.18 1,622 6.30
Active Bond II 0 10.96 0 10.99 0 0
Large Cap Value Core II 6,707 10.09 6,549 10.12 0 0
Aim V.I. Value 530 7.21 14,970 7.49 60,241 7.24
Fidelity VIP Growth 1,566 7.20 1,271 7.52 5,690 7.22
Fidelity VIP Contrafund 1,003 8.17 2,438 8.40 889 8.20
Janus Aspen Global Tech. 4,217 4.76 15,083 4.79 6,481 4.79
Janus Aspen Worldwide Gr. 4,618 6.91 25,689 6.93 5,249 6.93
MFS New Discovery Series 3,438 8.30 39,155 8.69 6,203 8.33
Templeton International 4,379 9.13 242,397 8.74 0 9.16

143

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

MVUL 98 CLASS #10 MVEP 98 CLASS #11 MEVL II CLASS #12
--------------------------- -------------------------- ---------------------------
ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION
SUBACCOUNT SHARES SHARE VALUES SHARES SHARE VALUES SHARES SHARE VALUES
- ---------- ------------ ------------ ------------ ------------ ------------ ------------

Large Cap Growth 464,389 $14.28 385,387 $16.04 79,999 $52.84
Active Bond 278,205 13.28 205,885 14.01 317,843 32.14
International Equity Index 193,408 11.30 134,392 10.94 217,327 21.21
Small Cap Growth 145,718 15.27 166,645 13.58 126,215 13.80
Global Balanced 40,522 10.89 11,256 11.37 3,437 11.55
Mid Cap Growth 248,333 17.04 264,238 15.36 100,685 15.61
Large Cap Value 462,297 15.23 288,915 17.81 266,343 18.09
Money Market 5,588,653 12.27 469,149 12.83 451,536 14.09
Mid Cap Value 0 0 0 0 0 0
Small/Mid Cap Growth 26,792 12.48 24,064 12.27 2,530 19.96
Real Estate Equity 43,415 12.09 55,870 15.55 67,092 29.47
Growth & Income 1,152,557 14.03 362,522 16.06 3,627 59.99
Managed 596,303 14.40 200,317 15.74 21,513 44.03
Short Term Bond 60,655 12.67 47,127 13.21 7,009 14.93
Small Cap Equity 117,055 9.47 173,991 9.98 155,317 10.14
International Opportunities 129,323 11.32 112,798 11.82 145,364 12.01
Equity Index 1,281,212 15.85 858,785 18.59 79,699 18.88
Global Bond 54,854 12.52 51,958 13.27 9,418 13.48
Turner Core Growth 283,038 17.48 289,863 18.19 0 20.62
Brandes International Equity 275,810 16.89 465,117 15.80 0 16.62
Frontier Capital Appreciation 206,536 18.71 154,435 19.33 0 22.59
Clifton Enhanced 228,779 13.75 80,697 13.75 0 13.91
Emerging Markets 88,684 7.04 48,889 7.04 27,642 7.10
Bond Index 310,696 11.89 395,480 11.89 35,080 11.99
Small Mid Cap CORE 26,493 10.20 83,420 10.20 205 10.30
High Yield Bond 77,932 9.78 88,496 9.78 8,918 9.87
Large Cap Aggressive Growth 14,118 6.47 11,246 6.70 1,532 8.02
Fundamental Growth 13,371 6.30 7,120 7.18 71 10.43
Active Bond II 0 0 0 0 0 0
Large Cap Value Core II 0 0 0 0 0 0
Aim V.I. Value 20,188 7.24 8,301 7.49 78 30.15
Fidelity VIP Growth 20,489 7.22 90,142 7.52 1,502 72.03
Fidelity VIP Contrafund 27,731 8.20 10,465 8.40 1,776 27.50
Janus Aspen Global Technology 1,572 4.79 4,596 4.79 241 4.80
Janus Aspen Worldwide Growth 20,300 6.93 11,881 6.93 2,890 6.94
MFS New Discovery Series 4,979 8.33 23,408 8.69 113 15.04
Templeton International 3,600 9.16 3,412 8.74 12.83 22.40

144

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

VEP Class #13

ACCUMULATION ACCUMULATION
SUBACCOUNT SHARES SHARE VALUES
- ---------- ------------ ------------

Large Cap Growth 54,703 $52.84
Active Bond 13,860 32.14
International Equity Index 35,128 21.21
Small Cap Growth 86,495 13.80
Global Balanced 2,141 11.55
Mid Cap Growth 91,170 15.61
Large Cap Value 107,026 18.09
Money Market 884,646 14.09
Mid Cap Value 0 0
Small/Mid Cap Growth 20,347 19.96
Real Estate Equity 4,654 29.47
Growth & Income 23,722 59.99
Managed 25,718 44.03
Short Term Bond 17,902 14.93
Small Cap Equity 32,263 10.14
International Opportunities 55,357 12.01
Equity Index 154,882 18.88
Global Bond 11,990 13.48
Turner Core Growth 0 20.62
Brandes International Equity 0 16.62
Frontier Capital Appreciation 0 22.59
Clifton Enhanced 0 13.91
Emerging Markets 44,426 7.10
Bond Index 31,182 11.99
Small Mid Cap CORE 39,120 10.30
High Yield Bond 19,730 9.87
Large Cap Aggressive Growth 5,698 8.02
Fundamental Growth 7,120 10.43
Active Bond II 0 0
Large Cap Value Core II 0 0
Aim V.I. Value 8,346 30.15
Fidelity VIP Growth 4,176 72.03
Fidelity VIP Contrafund 12,933 27.50
Janus Aspen Global Technology 6,567 4.80
Janus Aspen Worldwide Growth 12,351 6.94
MFS New Discovery Series 13,886 15.04
Templeton International 1,023 22.40

145

REPORT OF INDEPENDENT AUDITORS

To the Policyholders of
John Hancock Variable Life Account S
of John Hancock Variable Life Insurance Company

We have audited the accompanying statement of assets and liabilities of
John Hancock Variable Life Account S (the Account) (comprising, respectively,
the Large Cap Growth, Active Bond (formerly, Sovereign Bond), International
Equity Index, Small Cap Growth, Global Balanced, Mid Cap Growth, Large Cap
Value, Money Market, Mid Cap Value, Small/Mid Cap Growth, Real Estate Equity,
Growth & Income, Managed, Short-Term Bond, Small Cap Equity (formerly, Small Cap
Value), International Opportunities, Equity Index, Global Bond (formerly,
Strategic Bond), Turner Core Growth, Brandes International Equity, Frontier
Capital Appreciation, Clifton Enhanced U.S. Equity, Emerging Markets Equity,
Bond Index, Small/Mid Cap CORE, High Yield Bond, Large Cap Aggressive Growth,
Fundamental Growth (formerly, Fundamental Mid Cap Growth), Core Bond, American
Leaders Large Cap Value, AIM V.I. Value, Fidelity VIP Growth, Fidelity VIP II
Contrafund, Janus Aspen Global Technology, Janus Aspen Worldwide Growth, MFS New
Discovery Series, and Templeton International Subaccounts) as of December 31,
2000, and the related statements of operations and changes in net assets for
each of the periods indicated therein. These financial statements are the
responsibility of the Account's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of each of the respective
subaccounts constituting John Hancock Variable Life Account S at December 31,
2000, the results of their operations and the changes in their net assets for
each of the periods indicated, in conformity with accounting principles
generally accepted in the United States.

/s/ ERNST & YOUNG LLP

Boston, Massachusetts
February 13, 2001

146

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 2000

INTERNATIONAL
LARGE CAP ACTIVE EQUITY SMALL CAP
GROWTH BOND INDEX GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ------------- ----------

ASSETS
Investments in shares of portfolios of John Hancock Variable
Series Trust I, at value........................................ $128,183,227 $49,115,293 $35,113,621 $35,777,318
Investments in shares of portfolios of Outside Trusts, at value... -- -- -- --
Receivable from:
John Hancock Variable Series Trust I............................. 217,824 21,983 34,739 1,066,885
Portfolio of Outside Trusts...................................... -- -- -- --
------------ ----------- ----------- ------------
Total assets...................................................... 128,401,051 49,137,276 35,148,360 36,844,203
LIABILITIES
Payable to:
John Hancock Variable Life Insurance Company..................... 214,814 21,266 33,992 1,065,954
Portfolio of Outside Trusts...................................... -- -- -- --
Asset charges payable............................................. 3,010 717 747 931
------------ ----------- ----------- ------------
Total liabilities................................................. 217,824 21,983 34,739 1,066,885
------------ ----------- ----------- ------------
Net assets........................................................ $128,183,227 $49,115,293 $35,113,621 $ 35,777,318
============ =========== =========== ============

GLOBAL MID CAP LARGE CAP MONEY
BALANCED GROWTH VALUE MARKET
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ----------

ASSETS
Investments in shares of portfolios of John Hancock Variable
Series Trust I, at value......................................... $ 3,533,069 $56,033,021 $52,663,086 $189,140,131
Investments in shares of portfolios of Outside Trusts, at value... -- -- -- --
Receivable from:
John Hancock Variable Series Trust I............................. 166 1,062,123 43,811 5,658,510
Portfolio of Outside Trusts...................................... -- -- -- --
------------ ----------- ----------- ------------
Total assets...................................................... 3,533,235 57,095,144 52,706,897 194,798,641
LIABILITIES
Payable to:
John Hancock Variable Life Insurance Company..................... 69 1,060,694 42,643 5,653,690
Portfolio of Outside Trusts...................................... -- -- -- --
Asset charges payable............................................. 97 1,429 1,168 4,820
------------ ----------- ----------- ------------
Total liabilities................................................. 166 1,062,123 43,811 5,658,510
------------ ----------- ----------- ------------
Net assets........................................................ $ 3,533,069 $56,033,021 $52,663,086 $189,140,131
============ =========== =========== ============

See accompany notes.

147

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 2000

MID CAP SMALL/MID CAP REAL ESTATE GROWTH &
VALUE GROWTH EQUITY INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ------------- ----------- ----------

ASSETS
Investments in shares of portfolios of John Hancock Variable
Series Trust I, at value......................................... $31,539,966 $12,113,014 $17,858,812 $182,636,457
Investments in shares of portfolios of Outside Trusts, at value... -- -- -- --
Receivable from:
John Hancock Variable Series Trust I............................. 14,549 7,592 9,207 184,566
Portfolio of Outside Trusts...................................... -- -- -- --
----------- ----------- ----------- ------------
Total assets...................................................... 31,554,515 12,120,606 17,868,019 182,821,023
LIABILITIES
Payable to:
John Hancock Variable Life Insurance Company..................... 13,735 7,211 8,870 178,590
Portfolio of Outside Trusts...................................... -- -- -- --
Asset charges payable............................................. 814 381 337 5,976
----------- ----------- ----------- ------------
Total liabilities................................................. 14,549 7,592 9,207 184,566
----------- ----------- ----------- ------------
Net assets........................................................ $31,539,966 $12,113,014 $17,858,812 $182,636,457
=========== =========== =========== ============

SHORT-TERM SMALL CAP INTERNATIONAL
MANAGED BOND EQUITY OPPORTUNITIES
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- -------------

ASSETS
Investments in shares of portfolios of John Hancock Variable
Series Trust I, at value......................................... $128,889,839 $16,559,672 $26,092,949 $41,366,171
Investments in shares of portfolios of Outside Trusts, at value... -- -- -- --
Receivable from:
John Hancock Variable Series Trust I............................. 162,149 18,438 469,529 27,592
Portfolio of Outside Trusts...................................... -- -- -- --
------------ ----------- ----------- -----------
Total assets...................................................... 129,051,988 16,578,110 26,562,478 41,393,763
LIABILITIES
Payable to:
John Hancock Variable Life Insurance Company..................... 156,559 18,146 468,842 26,560
Portfolio of Outside Trusts...................................... -- -- -- --
Asset charges payable............................................. 5,590 292 687 1,032
------------ ----------- ----------- -----------
Total liabilities................................................. 162,149 18,438 469,529 27,592
------------ ----------- ----------- -----------
Net assets........................................................ $128,889,839 $16,559,672 $26,092,949 $41,366,171
============ =========== =========== ===========

See accompany notes.

148

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 2000

TURNER BRANDES
EQUITY GLOBAL CORE INTERNATIONAL
INDEX BOND GROWTH EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- -------------

ASSETS
Investments in shares of portfolios of John Hancock Variable
Series Trust I, at value....................................... $160,798,440 $8,150,109 -- --
Investments in shares of portfolios of Outside Trusts,
at value....................................................... -- -- $22,550,873 $36,778,383
Receivable from:
John Hancock Variable Series Trust I........................... 142,079 3,841 -- --
Portfolio of Outside Trusts.................................... -- -- 179,536 109,167
------------ ---------- ----------- -----------
Total assets.................................................... 160,940,519 8,153,950 22,730,409 36,887,550
LIABILITIES
Payable to:
John Hancock Variable Life Insurance Company.................. 138,139 3,610 -- --
Portfolio of Outside Trusts.................................... -- -- 179,137 108,613
Asset charges payable........................................... 3,940 231 399 554
------------ ---------- ----------- -----------
Total liabilities............................................... 142,079 3,841 179,536 109,167
------------ ---------- ----------- -----------
Net assets...................................................... $160,798,440 $8,150,109 $22,550,873 $36,778,383
============ ========== =========== ===========

FRONTIER CLIFTON EMERGING
CAPITAL ENHANCED MARKETS BOND
APPRECIATION U.S. EQUITY EQUITY INDEX
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------ ----------- ---------- ----------

ASSETS
Investments in shares of portfolios of John Hancock Variable
Series Trust I, at value....................................... -- -- $5,278,940 $12,799,604
Investments in shares of portfolios of Outside Trusts,
at value....................................................... $23,632,255 $10,205,351 -- --
Receivable from:
John Hancock Variable Series Trust I........................... -- -- 10,248 593
Portfolio of Outside Trusts.................................... 184,569 882 -- --
----------- ----------- ---------- -----------
Total assets.................................................... 23,816,824 10,206,233 5,289,188 12,800,197
LIABILITIES
Payable to:
John Hancock Variable Life Insurance Company................... -- -- 10,112 285
Portfolio of Outside Trusts.................................... 184,197 743 -- --
Asset charges payable........................................... 372 139 136 308
----------- ----------- ---------- -----------
Total liabilities............................................... 184,569 882 10,248 593
----------- ----------- ---------- -----------
Net assets...................................................... $23,632,255 $10,205,351 $5,278,940 $12,799,604
=========== =========== ========== ===========

See accompany notes.

149

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 2000

HIGH LARGE CAP
SMALL/MID YIELD AGGRESSIVE FUNDAMENTAL
CAP CORE BOND GROWTH GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ----------

ASSETS
Investments in shares of portfolios of John Hancock
Variable Series Trust I, at value....................... $2,657,431 $4,742,004 $ 344,987 $2,013,134
Investments in shares of portfolios of Outside Trusts,
at value................................................ -- -- -- --
Receivable from:
John Hancock Variable Series Trust I.................... 13,675 11,348 11 41
Portfolio of Outside Trusts............................. -- -- -- --
---------- ---------- ---------- ----------
Total assets............................................. 2,671,106 4,753,352 344,998 2,013,175
LIABILITIES
Payable to:
John Hancock Variable Life Insurance Company............ 13,617 11,231 -- --
Portfolio of Outside Trusts............................. -- -- -- --
Asset charges payable.................................... 58 117 11 41
---------- ---------- ---------- ----------
Total liabilities........................................ 13,675 11,348 11 41
---------- ---------- ---------- ----------
Net assets............................................... $2,657,431 $4,742,004 $ 344,987 $2,013,134
========== ========== ========== ==========

AMERICAN
LEADERS LARGE AIM V.I. FIDELITY VIP
CORE BOND CAP VALUE VALUE GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ------------ ---------- ------------

ASSETS
Investments in shares of portfolios of John Hancock
Variable Series Trust I, at value....................... $16,062 $553,446 -- --
Investments in shares of portfolios of Outside Trusts,
at value................................................ -- -- $1,164,444 $1,517,758
Receivable from:
John Hancock Variable Series Trust I.................... 564 21 -- --
Portfolio of Outside Trusts............................. -- -- 25 63,072
------- -------- ---------- ----------
Total assets............................................. 16,626 553,467 1,164,469 1,580,830
LIABILITIES
Payable to:
John Hancock Variable Life Insurance Company............ 564 -- -- --
Portfolio of Outside Trusts............................. -- -- -- 63,030
Asset charges payable.................................... -- 21 25 42
------- -------- ---------- ----------
Total liabilities........................................ 564 21 25 63,072
------- -------- ---------- ----------
Net assets............................................... $16,062 $553,446 $1,164,444 $1,517,758
======= ======== ========== ==========

See accompany notes.

150

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 2000

JANUS JANUS ASPEN MFS NEW
FIDELITY VIP II ASPEN WORLDWIDE DISCOVERY TEMPLETON
CONTRAFUND GLOBAL TECH GROWTH SERIES INTERNATIONAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
--------------- ----------- ----------- ---------- -------------

ASSETS
Investments in shares of portfolios of John Hancock
Variable Series Trust I, at value............................ -- -- -- -- --
Investments in shares of portfolios of Outside Trusts,
at value..................................................... $1,006,617 $442,306 $1,038,378 $1,178,457 $870,339
Receivable from:
John Hancock Variable Series Trust I......................... -- -- -- -- --
Portfolio of Outside Trusts.................................. 40 16 32 32 31
---------- -------- ---------- ---------- --------
Total assets.................................................. 1,006,657 442,322 1,038,410 1,178,489 870,370
LIABILITIES
Payable to:
John Hancock Variable Life Insurance Company................. -- -- -- -- --
Portfolio of Outside Trusts.................................. 14 -- -- 32 --
Asset charges payable......................................... 26 16 32 -- 31
---------- -------- ---------- ---------- --------
Total liabilities............................................. 40 16 32 32 31
---------- -------- ---------- ---------- --------
Net assets.................................................... $1,006,617 $442,306 $1,038,378 $1,178,457 $870,339
========== ======== ========== ========== ========

See accompany notes.

151

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS

YEARS AND PERIODS ENDED DECEMBER 31,

LARGE CAP GROWTH SUBACCOUNT ACTIVE BOND SUBACCOUNT
---------------------------------------- ---------------------------------------
2000 1999 1998 2000 1999 1998
------------- ------------ ------------ ------------- ------------ -------------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I.. $ 20,421,555 $17,558,034 $ 6,312,073 $ 2,372,089 $ 2,851,613 $2,190,901
Portfolio of Outside Trusts........... -- -- -- -- -- --
------------ ----------- ----------- ------------ ----------- ----------
Total investment income................ 20,421,555 17,558,034 6,312,073 2,372,089 2,851,613 2,190,901
Expenses:
Mortality and expense risks........... (433,387) (324,595) (168,652) (92,625) (126,407) (93,556)
------------ ----------- ----------- ------------ ----------- ----------
Net investment income.................. 19,988,168 17,233,439 6,143,421 2,279,464 2,725,206 2,097,345
Net realized and unrealized gain
(loss) on investments:
Net realized gains (losses)........... 5,243,833 5,003,007 1,750,881 (1,159,229) (1,391,910) 185,230
Net unrealized appreciation
(depreciation) during the period..... (53,885,375) (2,053,672) 8,041,022 2,598,926 (1,837,190) (378,058)
------------ ----------- ----------- ------------ ----------- ----------
Net realized and unrealized gain
(loss) on investments................. (48,641,542) 2,949,335 9,791,903 1,439,697 (3,229,100) (192,828)
------------ ----------- ----------- ------------ ----------- ----------
Net increase (decrease) in net assets
resulting from operations............. $(28,653,374) $20,182,774 $15,935,324 $ 3,719,161 $ (503,894) $1,904,517
============ =========== =========== ============ =========== ==========

INTERNATIONAL EQUITY INDEX SUBACCOUNT SMALL CAP GROWTH SUBACCOUNT
-------------------------------------- ---------------------------------------
2000 1999 1998 2000 1999 1998
------------ ----------- ----------- ------------- ------------ -------------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I.. $ 1,780,524 $ 936,475 $1,930,710 $ 3,489,821 $ 3,697,955 --
Portfolio of Outside Trusts........... -- -- -- -- -- --
----------- ---------- ---------- ------------ ----------- ----------
Total investment income................ 1,780,524 936,475 1,930,710 3,489,821 3,697,955 --
Expenses:
Mortality and expense risks........... (112,998) (81,058) (45,651) (135,490) (60,221) $ (22,593)
----------- ---------- ---------- ------------ ----------- ----------
Net investment income (loss)........... 1,667,526 855,417 1,885,059 3,354,331 3,637,734 (22,593)
Net realized and unrealized gain
(loss) on investments:
Net realized gains.................... 670,269 753,750 152,030 2,830,901 2,548,944 58,729
Net unrealized appreciation
(depreciation) during the period..... (8,622,825) 4,871,167 78,480 (17,022,592) 3,920,455 1,070,805
----------- ---------- ---------- ------------ ----------- ----------
Net realized and unrealized gain
(loss) on investments................. (7,952,556) 5,624,917 230,510 (14,191,691) 6,469,399 1,129,534
----------- ---------- ---------- ------------ ----------- ----------
Net increase (decrease) in net assets
resulting from operations............. $(6,285,030) $6,480,334 $2,115,569 $(10,837,360) $10,107,133 $1,106,941
=========== ========== ========== ============ =========== ==========

See accompanying notes.

152

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (CONTINUED)

YEARS AND PERIODS ENDED DECEMBER 31,

GLOBAL BALANCED SUBACCOUNT MID CAP GROWTH SUBACCOUNT
------------------------------------- --------------------------------------
2000 1999 1998 2000 1999 1998
----------- ------------ ---------- ------------- ----------- ------------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I... $ 191,397 $ 372,766 $ 185,760 $ 9,182,305 $ 6,491,783 $1,114,374
Portfolio of Outside Trusts............ -- -- -- -- -- --
---------- ----------- ---------- ------------ ----------- ----------
Total investment income.................. 191,397 372,766 185,760 9,182,305 6,491,783 1,114,374
Expenses:
Mortality and expense risks............ 15,646 13,792 9,687 243,927 102,248 26,123
---------- ----------- ---------- ------------ ----------- ----------
Net investment income.................... 175,751 358,974 176,073 8,938,378 6,389,535 1,088,251
Net realized and unrealized gain on
investments:
Net realized gains (losses)............ (506,008) 15,640 24,206 8,113,159 5,188,018 599,619
Net unrealized appreciation
(depreciation) during the period..... (109,325) (173,912) 147,461 (49,252,941) 15,078,681 1,184,263
---------- ----------- ---------- ------------ ----------- ----------
Net realized and unrealized gain
(loss) on investments.................. (615,333) (158,272) 171,667 (41,139,782) 20,266,699 1,783,882
---------- ----------- ---------- ------------ ----------- ----------
Net increase (decrease) in net
assets resulting from operations....... $ (439,582) $ 200,702 $ 347,740 $(32,201,404) $26,656,234 $2,872,133
========== =========== ========== ============ =========== ==========

LARGE CAP VALUE SUBACCOUNT MONEY MARKET SUBACCOUNT
------------------------------------- ----------------------------------
2000 1999 1998 2000 1999 1998
----------- ------------ ---------- ---------- ---------- ------------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I... $2,639,356 $ 1,809,072 $ 797,874 $5,765,606 $3,279,928 $1,854,829
Portfolio of Outside Trusts............ -- -- -- -- -- --
---------- ----------- ---------- ---------- ---------- ----------
Total investment income................. 2,639,356 1,809,072 797,874 5,765,606 3,279,928 1,854,829
Expenses:
Mortality and expense risks............ 109,830 88,877 41,415 328,559 291,398 167,813
---------- ----------- ---------- ---------- ---------- ----------
Net investment income................... 2,529,526 1,720,195 756,459 5,437,047 2,988,530 1,687,016
Net realized and unrealized gain
(loss) on investments:
Net realized gains (losses)............ (861,398) 705,454 330,827 -- -- --
Net unrealized appreciation
(depreciation) during the period...... 3,840,473 (2,181,112) 145,355 -- -- --
---------- ----------- ---------- ---------- ---------- ----------
Net realized and unrealized gain
(loss) on investments.................. 2,979,075 (1,475,658) 476,182 -- -- --
---------- ----------- ---------- ---------- ---------- ----------
Net increase in net assets resulting
from operations........................ $5,508,601 $ 244,537 $1,232,641 $5,437,047 $2,988,530 $1,687,016
========== =========== ========== ========== ========== ==========

See accompanying notes.

153

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (CONTINUED)

YEARS AND PERIODS ENDED DECEMBER 31,

MID CAP VALUE SUBACCOUNT SMALL/MID CAP GROWTH SUBACCOUNT
------------------------------------ ----------------------------------------
2000 1999 1998 2000 1999 1998
---------- ----------- ------------ ------------- ------------ -----------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I........ $3,243,126 $ 110,190 $ 120,469 $ 1,246,873 $ 1,421,656 $ 142,469
Portfolio of Outside Trusts................. -- -- -- -- -- --
---------- ---------- ----------- ------------ ----------- -----------
Total investment income...................... 3,243,126 110,190 120,469 1,246,873 1,421,656 142,469
Expenses:
Mortality and expense risks................. 84,295 68,611 45,020 39,985 32,995 34,432
---------- ---------- ----------- ------------ ----------- -----------
Net investment income........................ 3,158,831 41,579 75,449 1,206,888 1,388,661 108,037
Net realized and unrealized gain
(loss) on investments:
Net realized gains (losses)................. 2,578,812 (860,332) (538,516) (652,532) 13,375 232,246
Net unrealized appreciation (depreciation)
during the period.......................... 689,275 1,757,919 (830,390) 119,763 (1,001,208) 236,333
---------- ---------- ----------- ------------ ----------- -----------
Net realized and unrealized gain (loss) on
investments................................. 3,268,087 897,587 (1,368,906) (532,769) (987,833) 468,579
---------- ---------- ----------- ------------ ----------- -----------
Net increase (decrease) in net assets
resulting from operations................... $6,426,918 $ 939,166 $(1,293,457) $ 674,119 $ 400,828 $ 576,616
========== ========== =========== ============ =========== ===========

REAL ESTATE EQUITY SUBACCOUNT GROWTH & INCOME SUBACCOUNT
----------------------------------- ----------------------------------------
2000 1999 1998 2000 1999 1998
---------- ---------- ------------ ------------- ------------ -----------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I....... $1,569,398 $544,845 $ 305,783 $ 34,126,174 $23,565,679 $ 9,266,175
Portfolio of Outside Trusts................ -- -- -- -- -- --
---------- --------- ----------- ------------ ----------- -----------
Total investment income..................... 1,569,398 544,845 305,783 34,126,174 23,565,679 9,266,175
Expenses:
Mortality and expense risks................ 45,265 29,468 22,716 844,779 715,377 290,361
---------- --------- ----------- ------------ ----------- -----------
Net investment income....................... 1,524,133 515,377 283,067 33,281,395 22,850,302 8,975,814
Net realized and unrealized gain
(loss) on investments:
Net realized gains (losses)................ 1,851,413 (735,504) (454,979) 2,197,930 6,207,253 2,061,212
Net unrealized appreciation (depreciation)
during the period......................... 1,041,612 80,925 (698,676) (63,700,088) (5,814,839) 7,759,307
---------- --------- ----------- ------------ ----------- -----------
Net realized and unrealized gain (loss) on
investments................................ 2,893,025 (654,579) (1,153,655) (61,502,158) 392,414 9,820,519
---------- --------- ----------- ------------ ----------- -----------
Net increase (decrease) in net assets
resulting from operations.................. $4,417,158 $(139,202) $ (870,588) $(28,220,763) $23,242,716 $18,796,333
========== ========= =========== ============ =========== ===========

See accompanying notes.

154

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (CONTINUED)

YEARS AND PERIODS ENDED DECEMBER 31,

MANAGED SUBACCOUNT SHORT-TERM BOND SUBACCOUNT
--------------------------------------- -----------------------------------------
2000 1999 1998 2000 1999 1998
------------- ------------ ---------- -------------- ------------ -----------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I....... $ 13,844,402 $11,251,980 $3,606,186 $ 920,563 $ 957,614 $ 977,164
Portfolio of Outside Trusts................ -- -- -- -- -- --
------------ ----------- ---------- ---------- ----------- -----------
Total investment income..................... 13,844,402 11,251,980 3,606,186 920,563 957,614 977,164
Expenses:
Mortality and expense risks................ 686,633 495,544 121,905 37,022 50,128 50,947
------------ ----------- ---------- ---------- ----------- -----------
Net investment income....................... 13,157,769 10,756,436 3,484,281 883,541 907,486 926,217
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses)................ (233,751) 2,233,258 278,186 (210,780) (441,667) 24,740
Net unrealized appreciation (depreciation)
during the period......................... (13,708,391) (6,419,069) 1,791,231 451,906 (85,754) (136,999)
------------ ----------- ---------- ---------- ----------- -----------
Net realized and unrealized gain (loss) on
investments................................ (13,942,142) (4,185,811) 2,069,417 241,126 (527,421) (112,259)
------------ ----------- ---------- ---------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations.................. $ (784,373) $ 6,570,625 $5,553,698 $1,124,667 $ 380,065 $ 813,958
============ =========== ========== ========== =========== ===========

SMALL CAP EQUITY SUBACCOUNT INTERNATIONAL OPPORTUNITIES SUBACCOUNT
----------------------------------- ---------------------------------------
2000 1999 1998 2000 1999 1998
------------ ---------- ---------- -------------- ----------- ----------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I........... $2,024,209 $409,324 $ 47,350 $ 2,592,009 $2,096,195 $ 103,399
Portfolio of Outside Trusts.................... -- -- -- -- -- --
----------- --------- --------- ------------ ---------- ----------
Total investment income......................... 2,024,209 409,324 47,350 2,592,009 2,096,195 103,399
Expenses:
Mortality and expense risks.................... 89,912 64,613 33,335 134,950 90,191 50,003
----------- --------- --------- ------------ ---------- ----------
Net investment income........................... 1,934,297 344,711 14,015 2,457,059 2,006,004 53,396
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses).................... (158,893) (979,002) (9,919) 2,209,044 1,907,809 191,495
Net unrealized appreciation (depreciation)
during the period............................. (4,241,216) 325,684 (523,693) (11,479,826) 3,818,953 1,108,416
----------- --------- --------- ------------ ---------- ----------
Net realized and unrealized gain (loss) on
investments.................................... (4,400,109) (653,318) (533,612) (9,270,782) 5,726,762 1,299,911
----------- --------- --------- ------------ ---------- ----------
Net increase (decrease) in net assets resulting
from operations................................ $(2,465,812) $(308,607) $(519,597) $ (6,813,723) $7,732,766 $1,353,307
=========== ========= ========= ============ ========== ==========

See accompanying notes.

155

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (CONTINUED)

YEARS AND PERIODS ENDED DECEMBER 31,

EQUITY INDEX SUBACCOUNT GLOBAL BOND SUBACCOUNT
-------------------------------------- ------------------------------------
2000 1999 1998 2000 1999 1998
------------- ----------- ---------- ------------ ------------ ----------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I..... $ 8,279,123 $ 5,839,023 $1,337,750 $ 459,052 $ 460,088 $303,545
Portfolio of Outside Trusts.............. -- -- -- -- -- --
------------ ----------- ---------- ----------- ----------- --------
Total investment income................... 8,279,123 5,839,023 1,337,750 459,052 460,088 303,545
Expenses:
Mortality and expense risks.............. 552,681 335,573 126,021 28,858 35,321 19,894
------------ ----------- ---------- ----------- ----------- --------
Net investment income..................... 7,726,442 5,503,450 1,211,729 430,194 424,767 283,651
Net realized and unrealized gain
(loss) on investments:
Net realized gains (losses).............. 4,357,007 7,681,081 691,270 (302,157) (204,675) 81,659
Net unrealized appreciation
(depreciation) during the period........ (30,073,491) 4,678,509 6,098,919 688,537 (433,526) 43,608
------------ ----------- ---------- ----------- ----------- --------
Net realized and unrealized gain
(loss) on investments.................... (25,716,484) 12,359,590 6,790,189 386,380 (638,201) 125,267
------------ ----------- ---------- ----------- ----------- --------
Net increase (decrease) in net
assets resulting from operations......... $(17,990,042) $17,863,040 $8,001,918 $ 816,574 $ (213,434) $408,918
============ =========== ========== =========== =========== ========

TURNER CORE GROWTH SUBACCOUNT BRANDES INTERNATIONAL EQUITY SUBACCOUNT
---------------------------------- ----------------------------------------
2000 1999 1998 2000 1999 1998
------------ ---------- -------- -------------- ------------ -------------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I.... $ -- $ -- $ -- $ -- $ -- $ --
Portfolio of Outside Trusts............. 3,134,021 1,349,358 84,940 2,849,758 549,978 32,677
----------- ---------- -------- ----------- ---------- --------
Total investment income.................. 3,134,021 1,349,358 84,940 2,849,758 549,978 32,677
Expenses:
Mortality and expense risks............. 61,261 33,920 7,737 57,452 34,297 7,502
----------- ---------- -------- ----------- ---------- --------
Net investment income.................... 3,072,760 1,315,438 77,203 2,792,306 515,681 25,175
Net realized and unrealized gain
(loss) on investments:
Net realized gains...................... 2,749,177 1,038,462 156,278 1,629,793 507,727 12,541
Net unrealized appreciation
(depreciation) during the period....... (8,773,256) 1,626,646 562,620 (2,602,173) 3,486,097 (26,022)
----------- ---------- -------- ----------- ---------- --------
Net realized and unrealized gain
(loss) on investments................... (6,024,079) 2,665,108 718,898 (972,380) 3,993,824 (13,481)
----------- ---------- -------- ----------- ---------- --------
Net increase (decrease) in net assets
resulting from operations............... $(2,951,319) $3,980,546 $796,101 $ 1,819,926 $4,509,505 $ 11,694
=========== ========== ======== =========== ========== ========

See accompanying notes.

156

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (CONTINUED)

YEARS AND PERIODS ENDED DECEMBER 31,

FRONTIER CAPITAL APPRECIATION SUBACCOUNT CLIFTON ENHANCED U.S. EQUITY SUBACCOUNT
----------------------------------------- ----------------------------------------
2000 1999 1998 2000 1999 1998
-------------- ------------ ------------ -------------- ------------ ------------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I....... $ -- $ -- $ -- $ -- $ -- $ --
Portfolio of Outside Trusts................ 5,801,558 487,465 34,738 1,412,843 532,067 72,302
----------- ----------- --------- ------------ ---------- ---------
Total investment income..................... 5,801,558 487,465 34,738 1,412,843 532,067 72,302
Expenses:
Mortality and expense risks................ 54,938 37,471 24,841 19,820 13,930 4,069
----------- ----------- --------- ------------ ---------- ---------
Net investment income....................... 5,746,620 449,994 9,897 1,393,023 518,137 68,233
Net realized and unrealized gain
(loss) on investments:
Net realized gains (losses)................ 4,402,175 624,068 (445,752) 132,736 264,436 87,723
Net unrealized appreciation
(depreciation) during the period.......... (9,587,258) 3,431,408 432,064 (2,553,428) 151,562 89,677
----------- ----------- --------- ------------ ---------- ---------
Net realized and unrealized gain (loss) on
investments................................ (5,185,083) 4,055,476 (13,688) (2,420,692) 415,998 177,400
----------- ----------- --------- ------------ ---------- ---------
Net increase (decrease) in net assets
resulting from operations.................. $ 561,537 $ 4,505,470 $ (3,791) $ (1,027,669) $ 934,135 $ 245,633
=========== =========== ========= ============ ========== =========

EMERGING MARKETS EQUITY SUBACCOUNT BOND INDEX SUBACCOUNT
--------------------------------------- -------------------------------------
2000 1999 1998* 2000 1999 1998*
------------ ---------- --------- --------- ---------- -----------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I....... $ 454,929 $ 137,724 $ 522 $ 514,721 $ 140,772 $ 23,842
Portfolio of Outside Trusts................ -- -- -- -- -- --
------------ ----------- --------- --------- ---------- --------
Total investment income..................... 454,929 137,724 522 514,721 140,772 23,842
Expenses:
Mortality and expense risks................ 22,702 5,465 387 27,209 10,636 937
------------ ----------- --------- --------- ---------- --------
Net investment income....................... 432,227 132,259 135 487,512 130,136 22,905
Net realized and unrealized gain
(loss) on investments:
Net realized gains (losses)................ (1,410,734) 663,998 (45,975) (53,751) (104,174) 1,002
Net unrealized appreciation
(depreciation) during the period.......... (2,006,595) 432,248 2,289 472,128 (78,192) (10,217)
------------ ----------- --------- --------- ---------- --------
Net realized and unrealized gain (loss) on
investments................................ (3,417,329) 1,096,246 (43,686) 418,377 (182,366) (9,215)
------------ ----------- --------- --------- ---------- --------
Net increase (decrease) in net assets
resulting from operations.................. $ (2,985,102) $ 1,228,505 $ (43,551) $ 905,889 $ (52,230) $ 13,690
============ =========== ========= ========= ========== ========

- ---------
* From May 1, 1998 (commencement of operations).

See accompanying notes.

157

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (CONTINUED)

YEARS AND PERIODS ENDED DECEMBER 31,

SMALL/MID CAP CORE SUBACCOUNT HIGH YIELD BOND SUBACCOUNT
------------------------------- --------------------------------
2000 1999 1998* 2000 1999 1998*
---------- --------- --------- ---------- ---------- --------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I....................... $ 106,135 $ 54,784 -- $ 373,904 $ 352,641 $ 88,721
Portfolio of Outside Trusts................................ -- -- -- -- -- --
--------- -------- -------- --------- --------- --------
Total investment income..................................... 106,135 54,784 -- 373,904 352,641 88,721
Expenses:
Mortality and expense risks................................ 5,370 2,073 $ 535 14,689 12,206 1,962
--------- -------- -------- --------- --------- --------
Net investment income (loss)................................ 100,765 52,711 (535) 359,215 340,435 86,759
Net realized and unrealized gain (loss) on investments:
Net realized gains (losses)................................ 52,147 65,733 (25,196) (207,326) 42,365 64,824
Net unrealized appreciation (depreciation) during the
period................................................... (145,708) (10,735) 18,718 (650,931) (139,659) 149,416
--------- -------- -------- --------- --------- --------
Net realized and unrealized gain (loss) on investments...... (93,561) 54,998 (6,478) (858,257) (97,294) 214,240
--------- -------- -------- --------- --------- --------
Net increase (decrease) in net assets resulting
from operations............................................ $ 7,204 $107,709 $ (7,013) $(499,042) $ 243,141 $300,999
========= ======== ======== ========= ========= ========

AMERICAN
LARGE CAP FUNDAMENTAL LEADERS LARGE
AGGRESSIVE GROWTH GROWTH CORE BOND CAP VALUE
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------------- ----------- ----------- -------------
2000** 2000*** 2000**** 2000****
----------------- ----------- ----------- -------------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I......................... $ 6,164 $ 206,294 $ 254 $ 3,426
Portfolio of Outside Trusts.................................. -- -- -- --
--------- ---------- -------- --------
Total investment income....................................... 6,164 206,294 254 3,426
Expenses:
Mortality and expense risks.................................. 260 1,175 7 682
--------- ---------- -------- --------
Net investment income......................................... 5,904 205,119 247 2,744
Net realized and unrealized gain (loss) on investments:
Net realized gains (losses).................................. (11,798) (46,349) 89 8,325
Net unrealized appreciation (depreciation)
during the period........................................... (37,617) (568,635) 96 9,977
--------- ---------- -------- --------
Net realized and unrealized gain (loss) on investments........ (49,415) (614,984) 185 18,302
--------- ---------- -------- --------
Net increase (decrease) in net assets resulting
from operations.............................................. $ (43,511) $ (409,865) $ 432 $ 21,046
========= ========== ======== ========

- ---------
* From May 1, 1998 (commencement of operations).
** From April 24, 2000 (commencement of operations).
*** From April 28, 2000 (commencement of operations).
**** From June 29, 2000 (commencement of operations).

See accompanying notes.

158

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (CONTINUED)

YEARS AND PERIODS ENDED DECEMBER 31,

AIM V.I. FIDELITY VIP II
VALUE FIDELITY VIP GROWTH CONTRAFUND JANUS ASPEN GLOBAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT TECH SUBACCOUNT
------------ -------------------- ---------------- --------------------
2000** 2000** 2000** 2000***
------------ -------------------- ---------------- --------------------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I.. -- -- -- --
Portfolio of Outside Trusts........... $ 48,587 -- -- $ 2,686
--------- --------- -------- ---------
Total investment income................ 48,587 -- -- 2,686
Expenses:
Mortality and expense risks........... 954 1,420 $ 1,017 658
--------- --------- -------- ---------
Net investment income (loss)........... 47,633 (1,420) (1,017) 2,028
Net realized and unrealized (loss) on
investments:
Net realized (losses)................. (54,358) (8,731) (11,057) (69,974)
Net unrealized (depreciation) during
the period........................... (101,244) (156,818) (35,244) (98,497)
--------- --------- -------- ---------
Net realized and unrealized (loss) on
investments........................... (155,602) (165,549) (46,301) (168,471)
--------- --------- -------- ---------
Net (decrease) in net assets resulting
from operations....................... $(107,969) $(166,969) $(47,318) $(166,443)
========= ========= ======== =========

JANUS ASPEN MFS NEW
WORLDWIDE DISCOVERY TEMPLETON
GROWTH SERIES INTERNATIONAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ---------- ---------------
2000*** 2000** 2000**
----------- ---------- ---------------

Investment income:
Distributions received from:
John Hancock Variable Series Trust I -- -- --
Portfolio of Outside Trusts............................ $ 18,937 -- --
---------- --------- --------
Total investment income................................. 18,937 -- --
Expenses:
Mortality and expense risks............................ 1,396 $ 1,349 $ 640
---------- --------- --------
Net investment income (loss)............................ 17,541 (1,349) (640)
Net realized and unrealized gain (loss) on investments:
Net realized gains (losses)............................ (140,835) 16,026 11,899
Net unrealized appreciation (depreciation) during the
period................................................ (61,721) (94,403) 15,320
---------- --------- --------
Net realized and unrealized gain (loss) on investments.. (202,556) (78,377) 27,219
---------- --------- --------
Net increase (decrease) in net assets resulting from
operations............................................. $(185,015) $(79,726) $26,579
========== ========= ========

- ---------
** From April 24, 2000 (commencement of operations).
*** From June 29, 2000 (commencement of operations).

See accompanying notes.

159

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS

YEARS AND PERIODS ENDED DECEMBER 31,

LARGE CAP GROWTH SUBACCOUNT ACTIVE BOND SUBACCOUNT
------------------------------------------ --------------------------------------------
2000 1999 1998 2000 1999 1998
------------- ------------- ------------ -------------- ------------- ------------

Increase (decrease) in net assets
from operations:
Net investment income.................. $ 19,988,168 $ 17,233,439 $ 6,143,421 $ 2,279,464 $ 2,725,206 $ 2,097,345
Net realized gains (losses)............ 5,243,833 5,003,007 1,750,881 (1,159,229) (1,391,910) 185,230
Net unrealized appreciation
(depreciation) during the
period................................ (53,885,375) (2,053,672) 8,041,022 2,598,926 (1,837,190) (378,058)
------------- ------------ ------------ ------------- ------------ ------------
Net increase (decrease) in net assets
resulting from operations.............. (28,653,374) 20,182,774 15,935,324 3,719,161 (503,894) 1,904,517
From policyholder transactions:
Net premiums from
policyholders......................... 143,098,730 75,667,981 29,859,648 37,518,244 74,595,720 38,567,292
Net benefits to policyholders.......... (101,783,680) (45,347,424) (13,281,028) (30,443,585) (68,312,320) (27,391,317)
------------- ------------ ------------ ------------- ------------ ------------
Net increase in net assets resulting
from policyholder transactions......... 41,315,050 30,320,557 16,578,620 7,074,659 6,283,400 11,175,975
------------- ------------ ------------ ------------- ------------ ------------
Net increase in net assets.............. 12,661,676 50,503,331 32,513,944 10,793,820 5,779,506 13,080,492
Net assets at beginning of period....... 115,521,551 65,018,220 32,504,276 38,321,473 32,541,967 19,461,475
------------- ------------ ------------ ------------- ------------ ------------
Net assets at end of period............. $ 128,183,227 $115,521,551 $ 65,018,220 $ 49,115,293 $ 38,321,473 $ 32,541,967
============= ============ ============ ============= ============ ============

INTERNATIONAL EQUITY INDEX SUBACCOUNT SMALL CAP GROWTH SUBACCOUNT
----------------------------------------- ------------------------------------------
2000 1999 1998 2000 1999 1998
------------- ------------- ------------ -------------- ------------- ------------

Increase (decrease) in net assets from
operations:
Net investment income (loss)........... $ 1,667,526 $ 855,417 $ 1,885,059 $ 3,354,331 $ 3,637,734 $ (22,593)
Net realized gains..................... 670,269 753,750 152,030 2,830,901 2,548,944 58,729
Net unrealized appreciation
(depreciation) during the
period................................ (8,622,825) 4,871,167 78,480 (17,022,592) 3,920,455 1,070,805
------------ ------------ ----------- ------------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations.............. (6,285,030) 6,480,334 2,115,569 (10,837,360) 10,107,133 1,106,941
From policyholder transactions:
Net premiums from
policyholders......................... 80,381,214 53,332,374 10,034,119 135,469,377 52,637,861 12,088,047
Net benefits to policyholders.......... (72,181,237) (39,209,664) (8,344,107) (119,877,527) (40,800,272) (6,621,834)
------------ ------------ ----------- ------------- ------------ -----------
Net increase in net assets resulting
from policyholder transactions......... 8,199,977 14,122,710 1,690,012 15,591,850 11,837,589 5,466,213
------------ ------------ ----------- ------------- ------------ -----------
Net increase in net assets.............. 1,914,947 20,603,044 3,805,581 4,754,490 21,944,722 6,573,154
Net assets at beginning of period....... 33,198,674 12,595,630 8,790,049 31,022,828 9,078,106 2,504,952
------------ ------------ ----------- ------------- ------------ -----------
Net assets at end of period............. $ 35,113,621 $ 33,198,674 $12,595,630 $ 35,777,318 $ 31,022,828 $ 9,078,106
============ ============ =========== ============= ============ ===========

See accompanying notes.

160

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

YEARS AND PERIODS ENDED DECEMBER 31,

GLOBAL BALANCED SUBACCOUNT MID CAP GROWTH SUBACCOUNT
------------------------------------- ---------------------------------------------------
2000 1999 1998 2000 1999 1998
----------- ------------ ------------ ------------------ ---------------- ----------------

Increase (decrease) in net assets
from operations:
Net investment income $ 175,751 $ 358,974 $ 176,073 $ 8,938,378 $ 6,389,535 $ 1,088,251
Net realized gains (losses)....... (506,008) 15,640 24,206 8,113,159 5,188,018 599,619
Net unrealized appreciation
(depreciation) during the
period........................... (109,325) (173,912) 147,461 (49,252,941) 15,078,681 1,184,263
---------- ----------- ----------- ----------------- --------------- -------------
Net increase (decrease) in net
assets resulting from operations.. (439,582) 200,702 347,740 (32,201,404) 26,656,234 2,872,133
From policyholder transactions:
Net premiums from
policyholders.................... 8,122,728 6,295,052 3,163,316 196,712,586 65,183,285 11,323,614
Net benefits to policyholders..... (8,741,933) (5,007,225) (1,882,974) (171,977,777) (41,018,347) (5,132,055)
---------- ----------- ----------- ----------------- --------------- -------------
Net increase (decrease) in net
assets resulting from
policyholder transactions......... (619,205) 1,287,827 1,280,342 24,734,809 24,164,938 6,191,559
---------- ----------- ----------- ----------------- --------------- -------------
Net increase (decrease) in net
assets............................ (1,058,787) 1,488,529 1,628,082 (7,466,595) 50,821,172 9,063,692
Net assets at beginning of period.. 4,591,856 3,103,327 1,475,245 63,499,616 12,678,444 3,614,752
---------- ----------- ----------- ----------------- --------------- -------------
Net assets at end of period........ $3,533,069 $ 4,591,856 $ 3,103,327 $ 56,033,021 $ 63,499,616 $12,678,444
========== =========== =========== ================= =============== =============

LARGE CAP VALUE SUBACCOUNT MONEY MARKET SUBACCOUNT
----------------------------------------- -----------------------------------------------
2000 1999 1998 2000 1999 1998
------------- ------------- ------------ ---------------- -------------- ----------------

Increase (decrease) in net assets
from operations:
Net investment income.............. $ 2,529,526 $ 1,720,195 $ 756,459 $ 5,437,047 $ 2,988,530 $ 1,687,016
Net realized gains (losses)........ (861,398) 705,454 330,827 -- -- --
Net unrealized appreciation
(depreciation) during the
period............................ 3,840,473 (2,181,112) 145,355 -- -- --
------------ ------------ ----------- --------------- ------------- -------------
Net increase in net assets
resulting from operations.......... 5,508,601 244,537 1,232,641 5,437,047 2,988,530 1,687,016
From policyholder transactions:
Net premiums from
policyholders..................... 88,007,994 37,432,039 15,144,316 1,369,116,199 890,376,545 340,377,358
Net benefits to policyholders...... (67,960,426) (27,199,179) (4,937,583) (1,246,419,884) (918,869,964) (269,723,839)
------------ ------------ ----------- --------------- ------------- -------------
Net increase (decrease) in net
assets resulting from
policyholder transactions.......... 20,047,568 10,232,860 10,206,733 122,696,315 (28,493,419) 70,653,519
------------ ------------ ----------- --------------- ------------- -------------
Net increase (decrease) in net
assets............................. 25,556,169 10,477,397 11,439,374 128,133,362 (25,504,889) 72,340,535
Net assets at beginning of period... 27,106,917 16,629,520 5,190,146 61,006,769 86,511,658 14,171,123
------------ ------------ ----------- --------------- ------------- -------------
Net assets at end of period......... $ 52,663,086 $ 27,106,917 $16,629,520 $ 189,140,131 $ 61,006,769 $ 86,511,658
============ ============ =========== =============== ============= =============

See accompanying notes.

161

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

YEARS AND PERIODS ENDED DECEMBER 31,

MID CAP VALUE SUBACCOUNT SMALL/MID CAP GROWTH SUBACCOUNT
----------------------------------------- -------------------------------------------
2000 1999 1998 2000 1999 1998
------------- ------------- ------------ ------------- ------------- ----------------

Increase (decrease) in net assets
from operations:
Net investment income................ $ 3,158,831 $ 41,579 $ 75,449 $ 1,206,888 $ 1,388,661 $ 108,037
Net realized gains (losses).......... 2,578,812 (860,332) (538,516) (652,532) 13,375 232,246
Net unrealized appreciation
(depreciation) during the period.... 689,275 1,757,919 (830,390) 119,763 (1,001,208) 236,333
------------ ------------ ----------- ------------ ------------ -------------
Net increase (decrease) in net assets
resulting from operations............ 6,426,918 939,166 (1,293,457) 674,119 400,828 576,616
From policyholder transactions:
Net premiums from policyholders...... 87,480,655 32,024,751 18,837,112 27,528,989 11,809,133 4,563,154
Net benefits to policyholders........ (81,506,140) (29,579,995) (7,855,945) (26,015,925) (9,775,543) (6,481,542)
------------ ------------ ----------- ------------ ------------ -------------
Net increase (decrease) in net assets
resulting from policyholder
transactions......................... 5,974,515 2,444,756 10,981,167 1,513,064 2,033,590 (1,918,388)
------------ ------------ ----------- ------------ ------------ -------------
Net increase (decrease) in net
assets............................... 12,401,433 3,383,922 9,687,710 2,187,183 2,434,418 (1,341,772)
Net assets at beginning of period..... 19,138,533 15,754,611 6,066,901 9,925,831 7,491,413 8,833,185
------------ ------------ ----------- ------------ ------------ -------------
Net assets at end of period........... $ 31,539,966 $ 19,138,533 $15,754,611 $ 12,113,014 $ 9,925,831 $ 7,491,413
============ ============ =========== ============ ============ =============

REAL ESTATE EQUITY SUBACCOUNT GROWTH & INCOME SUBACCOUNT
----------------------------------------- -------------------------------------------
2000 1999 1998 2000 1999 1998
------------- ------------- ------------ ------------- -------------- ---------------

Increase (decrease) in net assets
from operations:
Net investment income................ $ 1,524,133 $ 515,377 $ 283,067 $ 33,281,395 $ 22,850,302 $ 8,975,814
Net realized gains (losses).......... 1,851,413 (735,504) (454,979) 2,197,930 6,207,253 2,061,212
Net unrealized appreciation
(depreciation) during the period.... 1,041,612 80,925 (698,676) (63,700,088) (5,814,839) 7,759,307
------------ ------------ ----------- ------------ ------------- ------------
Net increase (decrease) in net assets
resulting from operations............ 4,417,158 (139,202) (870,588) (28,220,763) 23,242,716 18,796,333
From policyholder transactions:
Net premiums from policyholders...... 102,840,441 22,699,314 6,964,604 86,946,862 196,639,863 60,975,616
Net benefits to policyholders........ (98,637,433) (18,093,640) (5,513,221) (85,615,541) (106,763,955) (31,360,866)
------------ ------------ ----------- ------------ ------------- ------------
Net increase in net assets resulting
from policyholder transactions....... 4,203,008 4,605,674 1,451,383 1,331,321 89,875,908 29,614,750
------------ ------------ ----------- ------------ ------------- ------------
Net increase (decrease) in net
assets............................... 8,620,166 4,466,472 580,795 (26,889,442) 113,118,624 48,411,083
Net assets at beginning of period..... 9,238,646 4,772,174 4,191,379 209,525,899 96,407,275 47,996,192
------------ ------------ ----------- ------------ ------------- ------------
Net assets at end of period........... $ 17,858,812 $ 9,238,646 $ 4,772,174 $182,636,457 $ 209,525,899 $ 96,407,275
============ ============ =========== ============ ============= ============

See accompanying notes.

162

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

YEARS AND PERIODS ENDED DECEMBER 31,

MANAGED SUBACCOUNT SHORT-TERM BOND SUBACCOUNT
----------------------------------------- -------------------------------------------
2000 1999 1998 2000 1999 1998
------------- ------------- ------------ ------------- ------------- -------------

Increase (decrease) in net assets from
operations:
Net investment income................ $ 13,157,769 $ 10,756,436 $ 3,484,281 $ 883,541 $ 907,486 $ 926,217
Net realized gains (losses)........... (233,751) 2,233,258 278,186 (210,780) (441,667) 24,740
Net unrealized appreciation
(depreciation) during
the period........................... (13,708,391) (6,419,069) 1,791,231 451,906 (85,754) (136,999)
------------ ------------ ----------- ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations............. (784,373) 6,570,625 5,553,698 1,124,667 380,065 813,958
From policyholder transactions:
Net premiums from policyholders....... 33,494,293 113,292,872 21,019,273 20,531,773 41,259,110 27,490,588
Net benefits to policyholders......... (29,530,890) (34,219,380) (8,281,600) (16,825,756) (49,156,693) (21,534,195)
------------ ------------ ----------- ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from policyholder
transactions.......................... 3,963,403 79,073,492 12,737,673 3,706,017 (7,897,583) 5,956,393
------------ ------------ ----------- ------------ ------------ ------------
Net increase (decrease) in net assets.. 3,179,030 85,644,117 18,291,371 4,830,684 (7,517,518) 6,770,351
Net assets at beginning of period...... 125,710,809 40,066,692 21,775,321 11,728,988 19,246,506 12,476,155
------------ ------------ ----------- ------------ ------------ ------------
Net assets at end of period............ $128,889,839 $125,710,809 $40,066,692 $ 16,559,672 $ 11,728,988 $ 19,246,506
============ ============ =========== ============ ============ ============

SMALL CAP EQUITY SUBACCOUNT INTERNATIONAL OPPORTUNITIES SUBACCOUNT
----------------------------------------- -------------------------------------------
2000 1999 1998 2000 1999 1998
------------- ------------- ------------ ------------- ------------- -------------

Increase (decrease) in net assets from
operations:
Net investment income................. $ 1,934,297 $ 344,711 $ 14,015 $ 2,457,059 $ 2,006,004 $ 53,396
Net realized gains (losses)........... (158,893) (979,002) (9,919) 2,209,044 1,907,809 191,495
Net unrealized appreciation
(depreciation) during the period..... (4,241,216) 325,684 (523,693) (11,479,826) 3,818,953 1,108,416
------------ ------------ ----------- ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations............. (2,465,812) (308,607) (519,597) (6,813,723) 7,732,766 1,353,307
From policyholder transactions:
Net premiums from policyholders....... 61,706,400 39,172,672 11,420,833 91,465,296 43,216,216 23,844,756
Net benefits to policyholders......... (51,931,035) (30,591,417) (4,363,378) (74,820,451) (38,372,463) (12,275,087)
------------ ------------ ----------- ------------ ------------ ------------
Net increase in net assets resulting
from policyholder transactions........ 9,775,365 8,581,255 7,057,455 16,644,845 4,843,753 11,569,669
------------ ------------ ----------- ------------ ------------ ------------
Net increase in net assets............. 7,309,553 8,272,648 6,537,858 9,831,122 12,576,519 12,922,976
Net assets at beginning of period...... 18,783,396 10,510,748 3,972,890 31,535,049 18,958,530 6,035,554
------------ ------------ ----------- ------------ ------------ ------------
Net assets at end of period............ $ 26,092,949 $ 18,783,396 $10,510,748 $ 41,366,171 $ 31,535,049 $ 18,958,530
============ ============ =========== ============ ============ ============

See accompanying notes.

163

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

YEARS AND PERIODS ENDED DECEMBER 31,

EQUITY INDEX SUBACCOUNT GLOBAL BOND SUBACCOUNT
-------------------------------------------- -----------------------------------------
2000 1999 1998 2000 1999 1998
-------------- -------------- ------------- ------------- ------------- --------------

Increase (decrease) in net assets from
operations:
Net investment income................ $ 7,726,442 $ 5,503,450 $ 1,211,729 $ 430,194 $ 424,767 $ 283,651
Net realized gains (losses).......... 4,357,007 7,681,081 691,270 (302,157) (204,675) 81,659
Net unrealized appreciation
(depreciation) during the period.... (30,073,491) 4,678,509 6,098,919 688,537 (433,526) 43,608
------------- ------------- ------------ ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations............ (17,990,042) 17,863,040 8,001,918 816,574 (213,434) 408,918
From policyholder transactions:
Net premiums from policyholders...... 155,703,961 225,994,914 60,690,933 8,796,366 11,387,398 9,258,713
Net benefits to policyholders........ (126,828,610) (147,909,470) (31,166,123) (10,301,347) (10,615,019) (3,008,341)
------------- ------------- ------------ ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from policyholder
transactions......................... 28,875,351 78,085,444 29,524,810 (1,504,981) 772,379 6,250,372
------------- ------------- ------------ ------------ ------------ -----------
Net increase (decrease) in net assets. 10,885,309 95,948,484 37,526,728 (688,407) 558,945 6,659,290
Net assets at beginning of period..... 149,913,131 53,964,647 16,437,919 8,838,516 8,279,571 1,620,281
------------- ------------- ------------ ------------ ------------ -----------
Net assets at end of period........... $ 160,798,440 $ 149,913,131 $ 53,964,647 $ 8,150,109 $ 8,838,516 $ 8,279,571
============= ============= ============ ============ ============ ===========

TURNER CORE GROWTH SUBACCOUNT BRANDES INTERNATIONAL EQUITY SUBACCOUNT
---------------------------------------- ----------------------------------------
2000 1999 1998 2000 1999 1998
------------- ------------ ------------ ------------- ------------ --------------

Increase (decrease) in net assets
from operations:
Net investment income................ $ 3,072,760 $ 1,315,438 $ 77,203 $ 2,792,306 $ 515,681 $ 343,646
Net realized gains (losses).......... 2,749,177 1,038,462 156,278 1,629,793 507,727 89,337
Net unrealized appreciation
(depreciation) during the period.... (8,773,256) 1,626,646 562,620 (2,602,173) 3,486,097 91,915
------------ ----------- ----------- ------------ ----------- -----------
Net increase (decrease) in net assets
resulting from operations............ (2,951,319) 3,980,546 796,101 1,819,926 4,509,505 524,898
From policyholder transactions:
Net premiums from policyholders...... 57,091,019 23,098,524 4,779,974 34,606,916 12,134,533 5,520,633
Net benefits to policyholders........ (54,259,832) (9,308,254) (1,690,860) (17,063,755) (5,569,496) (2,041,375)
------------ ----------- ----------- ------------ ----------- -----------
Net increase in net assets resulting
from policyholder transactions....... 2,831,187 13,790,270 3,089,114 17,543,161 6,565,037 3,479,258
------------ ----------- ----------- ------------ ----------- -----------
Net increase (decrease) in net assets. (120,132) 17,770,816 3,885,215 19,363,087 11,074,542 4,004,156
Net assets at beginning of period..... 22,671,005 4,900,189 1,014,974 17,415,296 6,340,754 2,336,598
------------ ----------- ----------- ------------ ----------- -----------
Net assets at end of period........... $ 22,550,873 $22,671,005 $ 4,900,189 $ 36,778,383 $17,415,296 $ 6,340,754
============ =========== =========== ============ =========== ===========

See accompanying notes.

164

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

YEARS AND PERIODS ENDED DECEMBER 31,

FRONTIER CAPITAL APPRECIATION SUBACCOUNT CLIFTON ENHANCED U.S. EQUITY SUBACCOUNT
----------------------------------------- ----------------------------------------
2000 1999 1998 2000 1999 1998
------------- ------------- ------------ ------------- ------------ --------------

Increase (decrease) in net assets from
operations:
Net investment income.................... $ 5,746,620 $ 449,994 $ 9,897 $ 1,393,023 $ 518,137 $ 68,233
Net realized gains (losses).............. 4,402,175 624,068 (445,752) 132,736 264,436 87,723
Net unrealized appreciation
(depreciation) during the period........ (9,587,258) 3,431,408 432,064 (2,553,428) 151,562 89,677
------------ ------------ ----------- ------------ ----------- -----------
Net increase (decrease) in net assets
resulting from operations................ 561,537 4,505,470 (3,791) (1,027,669) 934,135 245,633
From policyholder transactions:
Net premiums from policyholders.......... 40,643,205 25,135,447 13,982,031 15,685,529 6,480,741 3,031,309
Net benefits to policyholders............ (34,557,509) (22,331,613) (9,695,520) (11,190,723) (3,151,279) (1,299,530)
------------ ------------ ----------- ------------ ----------- -----------
Net increase in net assets resulting from
policyholder transactions................ 6,085,696 2,803,834 4,286,511 4,494,806 3,329,462 1,731,779
------------ ------------ ----------- ------------ ----------- -----------
Net increase in net assets................ 6,647,233 7,309,304 4,282,720 3,467,137 4,263,597 1,977,412
Net assets at beginning of period......... 16,985,022 9,675,718 5,392,998 6,738,214 2,474,617 497,205
------------ ------------ ----------- ------------ ----------- -----------
Net assets at end of period............... $ 23,632,255 $ 16,985,022 $ 9,675,718 $ 10,205,351 $ 6,738,214 $ 2,474,617
============ ============ =========== ============ =========== ===========

EMERGING MARKETS EQUITY SUBACCOUNT BOND INDEX SUBACCOUNT
----------------------------------------- --------------------------------------
2000 1999 1998 2000 1999 1998*
------------- ------------- ------------ ------------ ------------ -------------

Increase (decrease) in net assets from
operations:
Net investment income.................... $ 432,227 $ 132,259 $ 135 $ 487,512 $ 130,136 $ 22,905
Net realized gains (losses).............. (1,410,734) 663,998 (45,975) (53,751) (104,174) 1,002
Net unrealized appreciation
(depreciation) during the period........ (2,006,595) 432,248 2,289 472,128 (78,192) (10,217)
------------ ------------ ----------- ----------- ----------- ----------
Net increase (decrease) in net assets
resulting from operations................ (2,985,102) 1,228,505 (43,551) 905,889 (53,230) 13,690
From policyholder transactions:
Net premiums from policyholders.......... 72,543,484 18,579,194 2,434,226 14,954,848 6,472,518 1,176,234
Net benefits to policyholders............ (68,002,822) (16,271,324) (2,203,670) (8,187,184) (2,358,694) (124,467)
------------ ------------ ----------- ----------- ----------- ----------
Net increase in net assets resulting from
policyholder transactions................ 4,540,662 2,307,870 230,556 6,767,664 4,113,824 1,051,767
------------ ------------ ----------- ----------- ----------- ----------
Net increase in net assets................ 1,555,560 3,536,375 187,005 7,673,553 4,060,594 1,065,457
Net assets at beginning of period......... 3,723,380 187,005 -- 5,126,051 1,065,457 --
------------ ------------ ----------- ----------- ----------- ----------
Net assets at end of period............... $ 5,278,940 $ 3,723,380 $ 187,005 $12,799,604 $ 5,126,051 $1,065,457
============ ============ =========== =========== =========== ==========

- ---------
* From May 1, 1998 (commencement of operations).

See accompanying notes.

165

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

YEARS AND PERIODS ENDED DECEMBER 31,

SMALL /MID CAP CORE SUBACCOUNT HIGH YIELD BOND SUBACCOUNT
--------------------------------------- ----------------------------------------
2000 1999 1998* 2000 1999 1998*
------------- ------------ ----------- ------------ ------------- ------------

Increase (decrease) in net assets
from operations:
Net investment income............... $ 100,765 $ 52,711 $ (535) $ 359,215 $ 340,435 $ 86,759
Net realized gains (losses)......... 52,147 65,733 (25,196) (207,326) 42,365 64,824
Net unrealized appreciation
(depreciation) during the period... (145,708) (10,735) 18,718 (650,931) (139,659) 149,416
------------ ----------- ---------- ----------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations........... 7,204 107,709 (7,013) (499,042) 243,141 300,999
From policyholder transactions:
Net premiums from policyholders..... 18,340,255 5,817,483 1,089,030 9,819,846 19,870,990 6,683,673
Net benefits to policyholders....... (16,306,841) (5,611,532) (778,864) (8,852,014) (20,368,501) (2,457,088)
------------ ----------- ---------- ----------- ------------ -----------
Net increase (decrease) in net assets
resulting from policyholder
transactions........................ 2,033,414 205,951 310,166 967,832 (497,511) 4,226,585
------------ ----------- ---------- ----------- ------------ -----------
Net increase in net assets........... 2,040,618 313,660 303,153 468,790 (254,370) 4,527,584
Net assets at beginning of period.... 616,813 303,153 -- 4,273,214 4,527,584 --
------------ ----------- ---------- ----------- ------------ -----------
Net assets at end of period.......... $ 2,657,431 $ 616,813 $ 303,153 $ 4,742,004 $ 4,273,214 $ 4,527,584
============ =========== ========== =========== ============ ===========

LARGE CAP AMERICAN
AGGRESSIVE FUNDAMENTAL LEADERS LARGE AIM V.I. FIDELITY VIP
GROWTH GROWTH CORE BOND CAP VALUE VALUE GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ------------ ---------- ------------- ------------ --------------
2000** 2000*** 2000**** 2000**** 2000** 2000**
----------- ------------ ---------- ------------- ------------ --------------

Increase (decrease) in net assets
from operations:
Net investment income............... $ 5,904 $ 205,119 $ 247 $ 2,744 $ 47,633 $ (1,420)
Net realized gains (losses)......... (11,798) (46,349) 89 8,325 (54,358) (8,731)
Net unrealized appreciation
(depreciation) during the period... (37,617) (568,635) 96 9,977 (101,244) (156,818)
---------- ----------- -------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations........... (43,511) (409,865) 432 21,046 (107,969) (166,969)
From policyholder transactions:
Net premiums from policyholders..... 3,456,939 9,131,403 38,268 4,269,286 4,263,052 6,655,609
Net benefits to policyholders....... (3,068,441) (6,708,404) (22,638) (3,736,885) (2,990,639) (4,970,882)
---------- ----------- -------- ----------- ----------- -----------
Net increase in net assets resulting
from policyholder transactions...... 388,498 2,422,999 15,630 532,401 1,272,413 1,684,727
---------- ----------- -------- ----------- ----------- -----------
Net increase in net assets........... 344,987 2,013,134 16,062 553,447 1,164,444 1,517,758
Net assets at beginning of period.... -- -- -- -- -- --
---------- ----------- -------- ----------- ----------- -----------
Net assets at end of period.......... $ 344,987 $ 2,013,134 $ 16,062 $ 553,447 $ 1,164,444 $ 1,517,758
========== =========== ======== =========== =========== ===========

See accompanying notes.

166

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

YEARS AND PERIODS ENDED DECEMBER 31,

FIDELITY VIP II JANUS ASPEN JANUS ASPEN MFS NEW TEMPLETON
CONTRAFUND GLOBAL TECH WORLDWIDE GROWTH DISCOVERY INTERNATIONAL
SUBACCOUNT SUBACCOUNT SUBACCOUNT SERIES SUBACCOUNT SUBACCOUNT
--------------- ------------ ---------------- ----------------- ---------------
2000** 2000*** 2000*** 2000** 2000**
--------------- ------------ ---------------- ----------------- ---------------

Increase (decrease) in net assets from
operations:
Net investment income.................. $ (1,017) $ 2,028 $ 17,541 $ (1,349) $ (640)
Net realized gains (losses)............ (11,057) (69,974) (140,835) 16,026 11,899
Net unrealized appreciation
(depreciation) during the period...... (35,244) (98,497) (61,721) (94,403) 15,320
---------- ----------- ----------- ----------- ------------
Net increase (decrease) in net assets
resulting from operations.............. (47,318) (166,443) (185,015) (79,726) 26,579
From policyholder transactions:
Net premiums from policyholders........ 1,758,982 2,902,504 8,457,498 4,148,131 11,365,793
Net benefits to policyholders.......... (705,047) (2,293,755) (7,234,105) (2,889,948) (10,522,033)
---------- ----------- ----------- ----------- ------------
Net increase in net assets resulting
from policyholder transactions......... 1,053,935 608,749 1,223,393 1,258,183 843,760
---------- ----------- ----------- ----------- ------------
Net increase in net assets.............. 1,006,617 442,306 1,038,378 1,178,457 870,339
Net assets at beginning of period....... -- -- -- -- --
---------- ----------- ----------- ----------- ------------
Net assets at end of period............. $1,006,617 $ 442,306 $ 1,038,378 $ 1,178,457 $ 870,339
========== =========== =========== =========== ============

- ---------
** From May 1, 2000 (commencement of operations).
*** From June 29, 2000 (commencement of operations).

See accompanying notes.

167

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2000

1. ORGANIZATION

John Hancock Variable Life Account S (the Account) is a separate investment
account of John Hancock Variable Life Insurance Company (JHVLICO), a wholly-
owned subsidiary of John Hancock Life Insurance Company (John Hancock). The
Account was formed to fund variable life insurance policies (Policies) issued by
JHVLICO. The Account is operated as a unit investment trust registered under the
Investment Company Act of 1940, as amended, and currently consists of thirty-
seven subaccounts. The assets of each subaccount are invested exclusively in
shares of a corresponding Portfolio of John Hancock Variable Series Trust I (the
Fund) or of other outside investment trusts (Outside Trusts). New subaccounts
may be added as new funds are added to the Fund or to the Outside Trusts, or as
other investment options are developed, and made available to policyholders. The
thirty-seven funds of the Fund and of the Outside Trusts which are currently
available are the Large Cap Growth, Active Bond (formerly, Sovereign Bond),
International Equity Index, Small Cap Growth, Global Balanced, Mid Cap Growth,
Large Cap Value, Money Market, Mid Cap Value, Small/Mid Cap Growth, Real Estate
Equity, Growth & Income, Managed, Short-Term Bond, Small Cap Equity (formerly,
Small Cap Value), International Opportunities, Equity Index, Global Bond
(formerly, Strategic Bond), Turner Core Growth, Brandes International Equity,
Frontier Capital Appreciation, Clifton Enhanced U.S. Equity, Emerging Markets
Equity, Bond Index, Small/Mid Cap CORE, High Yield Bond, Large Cap Aggressive
Growth, Fundamental Growth (formerly, Fundamental Mid Cap Growth), Core Bond,
American Leaders Large Cap Value, AIM V.I. Value, Fidelity VIP Growth, Fidelity
VIP II Contrafund, Janus Aspen Global Tech, Janus Aspen Worldwide Growth, MFS
New Discovery Series, and Templeton International subaccounts. Each subaccount
has a different investment objective.

The net assets of the Account may not be less than the amount required under
state insurance law to provide for death benefits (without regard to the minimum
death benefit guarantee) and other policy benefits. Additional assets are held
in JHVLICO's general account to cover the contingency that the guaranteed
minimum death benefit might exceed the death benefit which would have been
payable in the absence of such guarantee.

2. SIGNIFICANT ACCOUNTING POLICIES

Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Valuation of Investments

Investment in shares of the Fund and of Outside Trusts are valued at the
reported net asset values of the respective Portfolios. Investment transactions
are recorded on the trade date. Dividend income is recognized on the ex-dividend
date. Realized gains and losses on sales of respective Subaccount shares are
determined on the basis of identified cost.

168

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Federal Income Taxes

The operations of the Account are included in the federal income tax return of
JHVLICO, which is taxed as a life insurance company under the Internal Revenue
Code. JHVLICO has the right to charge the Account any federal income taxes, or
provision for federal income taxes, attributable to the operations of the
Account or to the policies funded in the Account. Currently, JHVLICO does not
make a charge for income or other taxes. Charges for state and local taxes, if
any, attributable to the Account may also be made.

Expenses

JHVLICO makes certain deductions for administrative expenses and state premium
taxes from premium payments before amounts are transferred to the Account.

Policy Loans

Policy loans represent outstanding loans plus accrued interest. Interest is
accrued (net of a charge for policy loan administration determined at an annual
rate of .75% of the aggregate amount of policyholder indebtedness) and
compounded daily. At December 31, 2000, there were no outstanding policy loans.

3. TRANSACTION WITH AFFILIATES

John Hancock acts as the distributor, principal underwriter and investment
advisor for the Fund.

Certain officers of the Account are officers and directors of JHVLICO, the
Fund or John Hancock.

169

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. DETAILS OF INVESTMENTS

The details of the shares owned and cost and value of investments in the
Subaccounts of the Fund and of Outside Trusts at December 31, 2000 were as
follows:

SUBACCOUNT SHARES OWNED COST VALUE
---------- ------------ ------------ --------------
Large Cap Growth............. 6,786,979 $174,728,187 $128,183,227
Active Bond.................. 5,201,185 48,707,166 49,115,293
International Equity Index... 2,280,681 39,761,831 35,113,621
Small Cap Growth............. 2,655,623 47,684,616 35,777,318
Global Balanced.............. 380,929 3,731,252 3,533,069
Mid Cap Growth............... 3,591,624 88,530,392 56,033,021
Large Cap Value.............. 3,662,576 50,555,367 52,663,086
Money Market................. 18,904,221 189,140,131 189,140,131
Mid Cap Value................ 2,152,437 29,948,969 31,539,966
Small/Mid Cap Growth......... 883,924 12,955,583 12,113,014
Real Estate Equity........... 1,306,333 17,222,359 17,858,812
Growth & Income.............. 12,878,763 244,197,680 182,636,457
Managed...................... 9,322,682 146,974,987 128,889,839
Short-Term Bond.............. 1,678,910 16,342,442 16,559,672
Small Cap Equity............. 2,854,342 30,536,754 26,092,949
International Opportunities.. 3,490,460 48,142,626 41,366,171
Equity Index................. 9,113,511 179,646,466 160,798,440
Global Bond.................. 788,308 7,863,809 8,150,109
Turner Core Growth........... 1,284,218 29,088,181 22,550,873
Brandes International Equity. 2,460,102 35,840,852 36,778,383
Frontier Capital
Appreciation................ 1,369,996 29,719,510 23,632,255
Clifton Enhanced U.S. Equity. 625,328 12,510,697 10,205,351
Emerging Markets............. 787,996 6,850,998 5,278,940
Bond Index................... 1,313,892 12,415,885 12,799,604
Small/Mid Cap CORE........... 270,739 2,795,156 2,657,431
High Yield Bond.............. 646,702 5,383,178 4,742,004
Large Cap Aggressive Growth.. 36,253 382,604 344,987
Fundamental Growth........... 160,819 2,581,768 2,013,134
Core Bond.................... 1,555 15,966 16,062
American Leaders Large Cap
Value....................... 51,700 543,469 553,446
AIM V.I. Value............... 42,638 1,265,687 1,164,444
Fidelity VIP Growth.......... 34,891 1,674,576 1,517,758
Fidelity VIP II Contrafund... 42,527 1,041,861 1,006,617
Janus Aspen Global
Technology.................. 67,528 540,803 442,306
Janus Aspen Worldwide Growth. 28,240 1,100,099 1,038,378
MFS New Discovery Series..... 70,949 1,272,860 1,178,457
Templeton International...... 46,617 855,019 870,339

170

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. DETAILS OF INVESTMENTS (CONTINUED)

Purchases, including reinvestment of dividend distributions, and proceeds from
sales of shares in the Subaccounts of the Fund and of the Outside Trusts during
2000 were as follows:

SUBACCOUNT PURCHASES SALES
---------- ------------ --------------
Large Cap Growth...................... $ 89,881,309 $ 28,578,090
Active Bond........................... 24,913,661 15,559,539
International Equity Index............ 37,019,672 27,152,169
Small Cap Growth...................... 53,512,020 34,565,840
Global Balanced....................... 3,858,573 4,302,027
Mid Cap Growth........................ 78,872,015 45,198,828
Large Cap Value....................... 39,021,154 16,444,062
Money Market.......................... 361,256,133 233,122,771
Mid Cap Value......................... 26,740,116 17,606,770
Small/Mid Cap Growth.................. 9,742,479 7,022,527
Real Estate Equity.................... 28,353,777 22,626,636
Growth & Income....................... 61,940,512 27,327,794
Managed............................... 31,161,117 14,039,946
Short-Term Bond....................... 12,904,515 8,314,957
Small Cap Equity...................... 23,694,674 11,985,013
International Opportunities........... 43,962,366 24,860,462
Equity Index.......................... 91,907,277 55,305,432
Global Bond........................... 4,725,013 5,799,799
Turner Core Growth.................... 29,551,898 23,647,952
Brandes International Equity.......... 26,297,624 5,962,158
Frontier Capital Appreciation......... 25,144,184 13,311,868
Clifton Enhanced U.S. Equity.......... 8,663,100 2,775,271
Emerging Markets...................... 23,022,963 18,050,075
Bond Index............................ 11,497,614 4,242,437
Small/Mid Cap CORE.................... 4,788,058 2,653,879
High Yield Bond....................... 5,174,660 3,847,612
Large Cap Aggressive Growth........... 651,649 257,246
Fundamental Growth.................... 4,866,453 2,238,336
Core Bond............................. 59,471 43,594
American Leaders Large Cap Value...... 1,624,447 1,089,303
AIM V.I. Value........................ 2,359,372 1,039,326
Fidelity VIP Growth................... 2,469,800 786,494
Fidelity VIP II Contrafund............ 1,602,045 549,127
Janus Aspen Global Tech............... 1,414,000 803,223
Janus Aspen Worldwide Growth.......... 3,668,964 2,428,030
MFS New Discovery Series.............. 2,107,378 850,544
Templeton International............... 3,872,069 3,028,949

171

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. NET ASSETS

Accumulation shares attributable to net assets of policyholders and
accumulation share values for each Subaccount at December 31, 2000 were as
follows:

VEP CLASS #1 VEP CLASS #2 VEP CLASS #3
--------------------------- -------------------------- --------------------------
ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION
SUBACCOUNT SHARES SHARE VALUES SHARES SHARE VALUES SHARES SHARE VALUES
- ---------- ------------ ------------- ------------ ------------ ------------ ------------

Large Cap Growth 576,862 $27.90 539,812 $27.99 263,808 $28.09
Active Bond 248,741 15.14 191,827 15.20 67,026 15.25
International Equity Index 269,883 14.38 220,068 14.43 7,440 14.48
Small Cap Growth 240,278 16.92 248,242 16.96 116,733 17.00
Global Balanced 16,660 11.99 19,635 12.02 19,573 12.05
Mid Cap Growth 297,198 22.66 245,372 22.72 121,688 22.77
Large Cap Value 254,078 18.13 231,945 18.17 47,243 18.22
Money Market 660,417 13.82 1,143,571 13.86 182,706 13.91
Mid Cap Value 149,652 17.93 70,741 17.97 4,680 18.01
Small/Mid Cap Growth 107,428 21.47 103,477 21.54 15,354 21.61
Real Estate Equity 114,797 18.94 64,302 18.90 2,777 19.07
Growth & Income 1,114,469 26.69 669,845 26.78 215,461 26.87
Managed 603,781 20.76 277,080 20.83 50,153 20.90
Short-Term Bond 88,077 13.92 140,863 13.96 13,527 14.02
Small Cap Equity 135,488 11.14 90,575 11.17 66,286 11.19
International Opportunities 197,742 13.73 232,322 13.76 22,864 13.79
Equity Index 673,288 20.82 885,466 20.87 280,321 20.91
Global Bond 65,916 13.52 41,999 13.55 22,843 13.58
Turner Core Growth 29,366 24.98 15,617 25.05 0 25.11
Brandes International Equity 25,564 17.62 33,738 17.67 0 17.72
Frontier Capital Appreciation 22,811 24.34 14,874 24.40 0 24.46
Clifton Enhanced U.S. Equity 3,970 15.64 0 15.66 0 15.69
Emerging Markets 87,938 7.61 88,815 7.62 17,817 7.63
Bond Index 11,594 11.49 118,087 11.50 64,566 11.51
Small Mid Cap CORE 19,613 11.19 22,620 11.20 13,878 11.22
High Yield Bond 55,965 8.95 74,675 8.96 4,450 8.97
Large Cap Aggressive Growth 14,412 8.14 4,090 8.15 780 8.15
Fundamental Growth 21,231 10.29 0 10.29 0 10.30
Core Bond 404 10.67 0 10.67 0 10.67
American Leaders Large Cap
Value 1,902 10.77 0 10.77 30,438 10.77
AIM V.I. Value 9,203 8.42 16,850 8.43 6,324 8.43
Fidelity VIP Growth 7,934 8.90 34,841 9.00 32,288 9.00
Fidelity VIP II Contrafund 8,536 9.64 1,372 9.64 36,536 9.65
Janus Aspen Global Technology 8,636 6.75 29,088 6.75 349 6.75
Janus Aspen Worldwide Growth 4,861 8.33 501 8.33 56,314 8.33
MFS New Discovery Series 13,615 10.00 28,583 10.01 0 10.02
Templeton International 10,474 9.79 13,869 9.80 292 9.80

172

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. NET ASSETS (CONTINUED)

V COLI CLASS #4 V COLI CLASS #5 V COLI CLASS #6
-------------------------- -------------------------- --------------------------
ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION
SUBACCOUNT SHARES SHARE VALUES SHARES SHARE VALUES SHARES SHARE VALUES
- ---------- ------------ ------------ ------------ ------------ ------------ --------------

Large Cap Growth 722,564 $28.26 253,905 $28.30 326,282 $28.32
Active Bond 125,204 16.16 533,169 16.18 470,773 16.19
International Equity Index 44,439 13.40 150,610 13.42 362,019 13.43
Small Cap Growth 116,754 17.30 140,449 17.31 53,689 17.32
Global Balanced 7,808 12.26 8,507 12.27 18,538 12.28
Mid Cap Growth 180,243 23.17 99,843 23.18 157,443 23.09
Large Cap Value 156,329 18.53 56,957 18.54 441,339 18.55
Money Market 259,729 13.82 88,213 13.83 1,870,854 13.85
Mid Cap Value 102,783 18.32 23,395 18.34 246,353 18.35
Small/Mid Cap Growth 10,660 21.58 16,110 21.60 23,413 21.63
Real Estate Equity 99,831 19.72 143,590 19.74 78,202 19.76
Growth & Income 512,500 26.78 519,576 26.80 24,950 26.84
Managed 302,526 21.62 102,088 21.65 62,704 21.67
Short-Term Bond 243,189 14.25 382,494 14.27 0 14.28
Small Cap Equity 41,155 11.39 26,312 11.39 381,186 11.40
International Opportunities 259,202 14.03 270,816 14.04 101,524 14.05
Equity Index 361,447 21.28 97,069 21.29 740,388 21.30
Global Bond 64,229 13.82 5,886 13.83 0 13.84
Turner Core Growth 8,495 25.57 32,481 25.59 0 25.61
Brandes International
Equity 133,504 18.04 123,280 18.06 87,200 18.07
Frontier Capital
Appreciation 88,869 24.91 92,323 24.93 0 24.95
Clifton Enhanced U.S.
Equity 79,844 15.90 84,628 15.91 0 15.91
Emerging Markets 0 7.71 44,995 7.71 0 7.71
Bond Index 11,474 11.64 987 11.64 0 11.64
Small Mid Cap CORE 8,758 11.34 0 11.34 0 11.34
High Yield Bond 1,837 9.07 2,616 9.07 18,021 9.07
Large Cap Aggressive Growth 0 7.89 2,687 7.89 0 7.89
Fundamental Growth 0 9.06 0 9.06 0 9.06
Core Bond 0 10.70 0 10.70 0 10.70
American Leaders Large Cap
Value 0 10.80 1,530 10.80 0 10.80
AIM V.I. Value 0 8.17 0 8.17 0 8.17
Fidelity VIP Growth 0 8.68 0 8.68 0 8.68
Fidelity VIP II Contrafund 0 9.44 0 9.44 0 9.44
Janus Aspen Global
Technology 0 6.77 0 6.77 0 6.77
Janus Aspen Worldwide
Growth 0 8.35 0 8.35 0 8.35
MFS New Discovery Series 0 9.63 0 9.63 0 9.63
Templeton International 0 10.30 1,268 10.30 0 10.30

173

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. NET ASSETS (CONTINUED)

MEDALLION EXECUTIVE VLI CLASS #7 MVEP CLASS #8 MVUL CLASS #9
--------------------------------- -------------------------- --------------------------
ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION
SUBACCOUNT SHARES SHARE VALUES SHARES SHARE VALUES SHARES SHARE VALUES
- ---------- ---------------- ---------------- ------------ ------------ ------------ --------------

Large Cap Growth 99,358 $65.04 821,225 $20.33 370,930 $18.10
Active Bond 65,607 26.00 321,494 13.70 113,356 12.90
International Equity Index 179,376 22.61 419,432 12.40 216,963 12.80
Small Cap Growth 189,793 16.94 245,064 17.16 228,995 19.29
Global Balanced 65,938 12.01 41,672 12.16 41,962 11.65
Mid Cap Growth 227,414 22.69 333,808 22.98 131,202 25.48
Large Cap Value 400,006 18.15 219,760 18.38 106,731 15.72
Money Market 510,754 19.12 1,184,054 12.66 481,486 12.11
Mid Cap Value 472,391 17.95 298,320 18.17 73,198 15.35
Small/Mid Cap Growth 53,822 21.50 249,517 13.76 44,087 14.00
Real Estate Equity 36,495 29.11 205,780 16.19 47,679 12.59
Growth & Income 783,478 58.85 1,152,308 18.97 422,452 16.58
Managed 2,290,063 39.43 198,704 16.77 82,923 15.33
Short-Term Bond 56,197 13.94 48,937 12.84 112,172 12.31
Small Cap Equity 646,933 11.15 421,327 11.29 135,432 10.72
International Opportunities 699,384 13.75 382,880 13.91 481,048 13.32
Equity Index 656,178 20.84 1,265,453 21.10 875,545 18.00
Global Bond 133,089 13.54 82,325 13.70 67,314 12.93
Turner Core Growth 0 23.25 329,025 22.74 52,862 21.86
Brandes International
Equity 0 17.87 843,562 17.29 91,332 18.48
Frontier Capital
Appreciation 0 22.59 456,703 20.65 57,881 19.99
Clifton Enhanced U.S.
Equity 0 11.85 175,736 15.80 122,746 15.80
Emerging Markets 56,454 7.62 99,942 7.67 106,494 7.67
Bond Index 7,887 11.49 42,141 11.58 113,886 11.58
Small Mid Cap CORE 2,319 11.19 37,148 11.28 3,189 11.28
High Yield Bond 19,184 8.95 105,562 9.01 102,603 9.02
Large Cap Aggressive Growth 824 7.86 3,011 8.17 0 7.88
Fundamental Growth 600 9.03 151,170 10.31 1,628 9.05
Core Bond 0 10.67 0 10.69 0 10.69
American Leaders Large Cap
Value 7,896 10.77 0 10.79 0 10.79
AIM V.I. Value 138 8.14 8,854 8.45 4,024 8.16
Fidelity VIP Growth 1,320 8.64 1,303 9.02 2,489 8.67
Fidelity VIP II Contrafund 225 9.41 0 9.67 893 9.44
Janus Aspen Global
Technology 4,672 6.75 15,119 6.76 2,212 6.76
Janus Aspen Worldwide
Growth 5,171 8.33 24,785 8.34 1,952 8.34
MFS New Discovery Series 2,981 9.60 38,185 10.04 3,465 9.62
Templeton International 29,370 10.26 27,939 9.82 0 10.29

174

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. NET ASSETS (CONTINUED)

MVUL 98 CLASS #10 MVEP 98 CLASS #11 MEVL II CLASS #12
-------------------------- ---------------------------- ----------------------------
ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION ACCUMULATION
SUBACCOUNT SHARES SHARE VALUES SHARES SHARE VALUES SHARES SHARE VALUES
- ---------- ------------ ------------ ------------- ------------- ------------- ---------------

Large Cap Growth 438,723 $18.10 359,866 $20.33 70,905 $66.93
Active Bond 216,736 12.90 189,508 13.70 318,400 31.22
International Equity Index 75,101 12.80 11,061 12.40 218,233 24.02
Small Cap Growth 156,674 19.29 163,473 17.16 114,183 17.43
Global Balanced 40,732 11.65 8,491 12.16 3,467 12.35
Mid Cap Growth 240,925 25.48 249,175 22.98 81,408 23.33
Large Cap Value 415,249 15.72 251,071 18.38 264,965 18.67
Money Market 6,213,151 12.11 537,168 12.66 375,838 13.90
Mid Cap Value 109,787 15.35 91,242 18.17 103,443 18.46
Small/Mid Cap Growth 20,630 14.00 24,135 13.76 1,942 22.38
Real Estate Equity 27967 12.59 43,149 16.19 67,586 30.66
Growth & Income 1,125,909 16.58 329,743 18.97 54 70.82
Managed 103,085 15.33 70,980 16.77 -0 46.88
Short-Term Bond 55,761 12.31 44,540 12.84 4,860 14.51
Small Cap Equity 80,760 10.72 155,016 11.29 156,960 11.47
International Opportunities 60,506 13.32 102,396 13.92 141,250 14.13
Equity Index 1,099,477 18.00 749,323 21.10 64,849 21.43
Global Bond 52,024 12.93 0 0 9,250 13.92
Turner Core Growth 303,264 21.86 223,032 22.74 0 25.77
Brandes International Equity 316,261 18.48 421,949 12.29 0 18.18
Frontier Capital Appreciation 214,263 19.99 153,505 20.65 0 24.13
Clifton Enhanced U.S. Equity 108,049 15.80 69,015 15.80 0 15.98
Emerging Markets 77,825 7.67 43,356 7.67 24,208 7.74
Bond Index 279,686 11.58 310,051 11.58 25,981 11.68
Small/Mid Cap CORE 22,019 11.28 74,020 11.28 115 11.38
High Yield Bond 42,035 9.02 81,616 9.02 5,582 9.10
Large Cap Aggressive Growth 7,949 7.88 6,684 8.17 0 9.76
Fundamental Growth 12,812 9.05 5,303 10.32 0 14.99
Core Bond 72 10.69 0 10.69 0 10.70
American Leaders Large Cap
Value 4,877 10.79 4,511 10.79 0 10.80
AIM V.I. Value 19,002 8.16 3,852 8.45 0 33.99
Fidelity VIP Growth 16,940 8.67 50,180 9.02 0 86.39
Fidelity VIP II Contrafund 27,664 9.44 6,479 9.67 7,784 31.63
Janus Aspen Global Technology 1,631 6.76 374 6.76 0 6.77
Janus Aspen Worldwide Growth 20,046 8.34 4,594 8.34 0 8.35
MFS New Discovery Series 3,260 9.62 13,139 10.04 0 17.36
Templeton International 1,311 10.29 1,862 9.82 0 25.15

175

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. NET ASSETS (CONTINUED)

VEP CLASS #13
---------------------------
ACCUMULATION ACCUMULATION
SUBACCOUNT SHARES SHARE VALUES
- ---------- ------------ -------------
Large Cap Growth 44,609 $66.93
Active Bond 6,930 31.22
International Equity Index 34,018 24.02
Small Cap Growth 72,415 17.43
Global Balanced 2,039 12.35
Mid Cap Growth 71,199 23.33
Large Cap Value 93,108 18.67
Money Market 617,409 13.90
Mid Cap Value 21,876 18.46
Small/Mid Cap Growth 12,878 22.38
Real Estate Equity 2,843 30.66
Growth & Income 15,715 70.82
Managed 39,750 46.88
Short-Term Bond 8,469 14.51
Small Cap Equity 29,596 11.47
International Opportunities 50,192 14.13
Equity Index 169,868 21.43
Global Bond 9,078 13.92
Turner Core Growth 0 25.77
Brandes International Equity 0 18.18
Frontier Capital Appreciation 0 24.13
Clifton Enhanced U.S. Equity 0 15.98
Emerging Markets 40,754 7.74
Bond Index 20,722 11.68
Small/Mid Cap CORE 30,854 11.38
High Yield Bond 12,297 9.10
Large Cap Aggressive Growth 1,890 9.76
Fundamental Growth 2,929 14.99
Core Bond 973 10.70
American Leaders Large Cap Value 205 10.80
AIM V.I. Value 5,506 33.99
Fidelity VIP Growth 1,557 86.39
Fidelity VIP II Contrafund 7,022 31.63
Janus Aspen Global Technology 3,368 6.77
Janus Aspen Worldwide Growth 6,326 8.35
MFS New Discovery Series 8,502 17.36
Templeton International 340 25.15

176

ALPHABETICAL INDEX OF KEY WORDS AND PHRASES

This index should help you locate more information about many of the important
concepts in this prospectus.

KEY WORD OR PHRASE PAGE KEY WORD OR PHRASE PAGE

Account...................... 33 minimum premiums...................... 6
account value................ 9 modified endowment.................... 41
Additional Sum Insured....... 17 monthly deduction date................ 35
asset-based risk charge...... 10 Option A; Option B.................... 17
asset rebalancing............ 15 optional benefits charge.............. 10
attained age................. 10 optional extra death benefit feature
Basic Sum Insured............ 17 owner................................. 5
beneficiary.................. 44 partial withdrawal.................... 15
business day................. 34 partial withdrawal charge............. 11
changing Option A or B....... 20 payment options....................... 21
changing the Total Sum Planned Premium....................... 6
Insured..................... 20 policy anniversary.................... 35
charges...................... 9 policy year........................... 35
Code......................... 40 premium; premium payment.............. 5
contingent deferred premium sales charge.................. 9
sales charge prospectus............................ 2
cost of insurance rates...... 10 receive; receipt...................... 24
date of issue................ 35 reinstate; reinstatement.............. 8
death benefit................ 5 SEC................................... 2
deductions................... 9 Separate Account S.................... 33
dollar cost averaging........ 15 Series Funds.......................... 2
expenses of the Series Funds. 11 Servicing Office...................... 2
fixed investment option...... 34 special loan account.................. 16
full surrender............... 15 subaccount............................ 33
funds........................ 2 surrender............................. 5
grace period................. 8 surrender value....................... 15
guaranteed death Target Premium........................ 9
benefit feature............. 7 tax considerations.................... 40
Guaranteed Death telephone transactions................ 24
Benefit Premium............. 7 Total Sum Insured..................... 17
insurance charge............. 10 tranfers of account value............. 14
insured person............... 5 variable investment options........... 1
investment options........... 1 we; us................................ 33
JHVLICO...................... 33 withdrawal............................ 15
lapse........................ 7 withdrawal charge..................... 11
loan......................... 16 you; your............................. 5
loan interest................ 16
Maximum Monthly Benefit..... 19
maximum premiums............. 6
Minimum Initial Premium...... 34
minimum insurance amount..... 17

177

PART II

UNDERTAKING TO FILE REPORTS

Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that Section.

REPRESENTATION OF REASONABLENESS

John Hancock Variable Life Insurance Company represents that the fees and
charges deducted under the Policies, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by the insurance company.

UNDERTAKING REGARDING INDEMNIFICATION

Pursuant to Section X of JHVLICO's Bylaws and Section 67 of the
Massachusetts Business Corporation Law, JHVLICO indemnifies each director,
former director, officer, and former officer, and his heirs and legal
representatives from liability incurred or imposed in connection with any legal
action in which he may be involved by reason of any alleged act or omission as
an officer or a director of JHVLICO.

Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement comprises the following Papers and Documents:

The facing sheet.

The prospectus containing 46 pages.

The undertaking to file reports.

The representation of reasonableness

The undertaking regarding indemnification.

The signatures.

The following exhibits:

I.A. (1) JHVLICO Board Resolution establishing the separate account included in
Post-Effective Amendment No. 2 to this Form S-6 Registration Statement
filed January 11, 1996, is incorporated by reference.

(2) Not Applicable

(3) (a) Form of Distribution and Servicing Agreement by and among Signator
Investors, Inc. (previously known as "John Hancock Distributors,
Inc."), John Hancock Life Insurance (previously known as "John
Hancock Mutual Life Insurance Company"), and John Hancock Variable
Life Insurance Company, incorporated by reference from Pre-
Effective Amendment No. 2 to Form S-6 Registration Statement of
John Hancock Variable Life Account S (File No. 33-15075) filed
April 18, 1997.

(b) Specimen Variable Contracts Selling Agreement between Signator
Investors, Inc. and selling broker-dealers, incorporated by
reference from Pre-Effective Amendment No. 2 to Form S-6
Registration Statement of John Hancock Variable Life Account S
(File No. 33-15075) filed April 18, 1997.

(4) Not Applicable

(5) Form of flexible premium variable life insurance policy, filed
herewith.

(6) (a) JHVLICO Certificate of Incorporation incorporated by reference to
Post-Effective Amendment No. 2 to this Form S-6 Registration Statement
filed January 11, 1996.

(b) JHVLICO By-laws incorporated by reference to Post-Effective
Amendment No. 2 to this Form S-6 Registration Statement filed January
11, 1996.

(7) Not Applicable.

(8) (a) Participation Agreement Among Variable Insurance Products Fund II,
Fidelity Distributors Corporation and John Hancock Mutual Life
Insurance Company, filed in Post-Effective Amendment No. 1 to file
No. 333-81127, filed May 4, 2000.

(b) Participation Agreement Among Variable Insurance Products Fund,
Fidelity Distributors Corporation and John Hancock Mutual Life
Insurance Company, filed in Post-Effective Amendment No. 1 to file
No. 333-81127, filed May 4, 2000.

(c) Participation Agreement Among MFS Variable Insurance Trust, John
Hancock Mutual Life Insurance Company and Massachusetts Financial
Services Company, filed in Post-Effective Amendment No. 1 to file
No. 333-81127, filed May 4, 2000.

(d) Participation Agreement By And Among AIM Variable Insurance Funds,
Inc., AIM Distributors, Inc., John Hancock Mutual Life Insurance
Company and Certain Of Its Affiliated Insurance Companies, Each On
Behalf Of Itself And Its Separate Accounts, And John Hancock
Funds, Inc., filed in Post-Effective Amendment No. 1 to file No.
333-81127, filed May 4, 2000.

(e) Participation Agreement between Janus Aspen Series, Janus Capital
Corp., and John Hancock Variable Life Insurance Company,
incorporated by reference to File 333-425, filed on Form S-6 on
November 1, 2001.

(9) Not Applicable.

(10) Forms of applications for Policy, incorporated by reference to the
initial filing of this Form S-6 Registration Statement (File No. 33-
79108), filed May 18, 1994.

(11) Not Applicable. The Registrant invests only in shares of open-end
Funds.

2. Included as Exhibit 1.A(5) above.

3. Opinion and consent of counsel as to securities being registered, filed
herewith.

4. Not Applicable

5. Not Applicable

6. Opinion and consent of actuary, incorporated by reference to this file's
(File No.333-55172) Registration Statement, filed on February 27, 2001.

7. Consent of independent auditors, filed herewith.

8. Memorandum describing JHVLICO's issuance, transfer and redemption procedures
for the flexible policy pursuant to Rule 6e-3(T)(b)(12)(iii), incorporated
by reference to the initial filing of this Form S-6 Registration Statement,
filed May 18, 1994.

9. Powers of attorney for D'Alessandro, Shaw, Luddy, Reitano, Van Leer and
Paster, incorporated by reference to Post-Effective Amendment No. 1 to this
Form S-6 Registration Statement, filed April 1995. Power of Attorney for
Ronald J. Bocage, incorporated by reference from Form 10-K annual report of
John Hancock Variable Life Insurance Company (File No. 33-62895) filed March
28, 1997. Powers of Attorney for Bruce M. Jones and Paul Strong,
incorporated by reference from the Post-Effective Amendment No. 2 to file
No. 333-81127, filed May 4, 2000.

10. Representations, Description and Undertaking pursuant to Rule 6e-
3(T)(b)(13)(iii)(F) under the Investment Company Act of 1940, incorporated
by reference to Pre-Effective Amendment No. 1 to Form S-6 Registration
Statement to File No. 33-79108 filed October 10, 1994.

11. Exemptive Relief Relied Upon, incorporated by reference to Pre-Effective
Amendment No. 1 to Form S-6 Registration Statement to File No. 33-
79108, filed October 10, 1994.

Pursuant to the requirements of the Securities Act of 1933, this Pre-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities with John Hancock Variable Life Insurance
Company and on the dates indicated.

Signatures Title Date
- ---------- ----- ----

/s/ EARL W. BAUCOM
- --------------------
Earl W. Baucom Controller (Principal Accounting June 27, 2001
Officer)

/s/ JULIE H. INDGE
- --------------------
Julie H. Indge Treasurer (Principal Financial June 27, 2001
Officer)

/s/ MICHELE G. VAN LEER
- -----------------------
Michele G. Van Leer Vice Chairman of the Board June 27, 2001
for herself and as and President(Acting Principal
Attorney-in-Fact Executive Officer)

For: David F. D'Alessandro Chairman of the Board
Robert S. Paster Director
Bruce M. Jones Director
Paul Strong Director
Barbara L. Luddy Director
Ronald J. Bocage Director
Robert R. Reitano Director

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the John
Hancock Variable Life Insurance Company has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunder
duly authorized, and attested, all in the City of Boston and Commonwealth of
Massachusetts on the 27th day of June, 2001.

JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY

By /s/ MICHELE G. VAN LEER
-----------------------
Michele G. Van Leer
Vice Chairman and President

Attest: /s/ PETER SCAVONGELLI
------------------------
Peter Scavongelli
Secretary