As filed with the Securities and Exchange Commission on June 1, 2001

Registration No. 333-60274
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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 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 June 8, 2001
------------------------------------------------------------
MAJESTIC VARIABLE COLI
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a flexible premium variable life insurance policy issued by

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY ("JHVLICO")

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

- ------------------------------------------------------------------------------------------------------------------------
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
Brandes International Equity................................... Brandes Investment Partners, L.P.
Turner Core Growth............................................. Turner Investment Partners, Inc.
Frontier Capital Appreciation.................................. Frontier Capital Management Company, LLC
Clifton Enhanced U.S. Equity................................... The Clifton Group
- ------------------------------------------------------------------------------------------------------------------------

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), the
Janus Aspen Series (Service Shares Class), and the M Fund, Inc. (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: 1-800-521-1234

Fax: 1-617-572-6956

GUIDE TO THIS PROSPECTUS

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

This prospectus is arranged in the following way:

. The section which follows is called "Basic Information". It is in a
question and answer format. We suggest you read the Basic Information
section before reading any other section of the prospectus.

. Behind the Basic Information section are illustrations of hypothetical
policy benefits that help clarify how the policy works. These start on
page 22.

. Behind the illustrations is a section called "Additional Information"
that gives more details about the policy. It generally does not
---
repeat information that is in the Basic Information section. A table of
contents for the Additional Information section appears on page 27.

. Behind the Additional Information section are the financial statements
for JHVLICO and Separate Account S. These start on page 41.

. Finally, there is an Alphabetical Index of Key Words and Phrases at the
back of the prospectus on page 173.

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

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

BASIC INFORMATION

This part of the prospectus provides answers to commonly asked questions about
the policy. Here are the page numbers where the questions and answers appear:

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

.What is the policy?............................................ 5
.Who owns the policy?........................................... 5
.How can I invest money in the policy?.......................... 5
.Is there a minimum amount I must invest?....................... 6
.How will the value of my investment in the policy change
over time?.................................................... 8
.What charges will JHVLICO deduct from my investment in
the policy?................................................... 9
.What charges will the Series Funds deduct from my
investment in the policy?..................................... 10
.What other charges could JHVLICO impose in the future?......... 13
.How can I change my policy's investment allocations?........... 13
.How can I access my investment in the policy?.................. 14
.How much will JHVLICO pay when the insured person dies?........ 15
.How can I change my policy's insurance coverage?............... 17
.Can I cancel my policy after it's issued?...................... 18
.Can I choose the form in which JHVLICO pays out policy
proceeds?..................................................... 18
.To what extent can JHVLICO vary the terms and conditions
of its policies in particular cases?.......................... 19
.How will my policy be treated for income tax purposes?......... 19
.How do I communicate with JHVLICO?............................. 20

What is the Policy?

The policy's primary purpose is to provide lifetime protection against
economic loss due to the death of the insured person. The value of the amount
you have invested under the policy may increase or decrease daily based upon the
investment results of the variable investment options that you choose. The
amount we pay to the policy's beneficiary if the insured person dies (we call
this the "death benefit") may be similarly affected.

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

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

. Borrow or withdraw amounts you have in the investment options

. Change the beneficiary who will receive the death benefit

. Change the amount of insurance

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

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

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

Who owns the Policy?

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

How can I invest money in the policy?

Premium Payments

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

Minimum premium payment

Each premium payment must be at least $100.

Maximum premium payments

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

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

. the insured person doesn't provide us with adequate evidence that he or
she continues to meet our requirements for issuing insurance.

In no event, however, will we refuse to accept any premium necessary to prevent
the policy or the guaranteed minimum death benefit feature from terminating. We
reserve the right to limit premium payments above the amount of cumulative
Guaranteed Minimum Death Benefit Premiums (whether or not the guaranteed minimum
death benefit feature described on page 7 is in effect).

Ways to pay premiums

If you pay premiums by check or money order, they must be drawn on a U.S. bank
in U.S. dollars and made payable to "John Hancock 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, or

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

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

Is there a minimum amount I must invest?

Planned Premiums

The Policy Specifications page of your policy will show the "Planned Premium"
for the policy. You choose this amount in the policy application. The premium
reminder notice we send you is based on this amount. You will also choose how
often to pay premiums-- annually, semi-annually, quarterly or monthly. The date
on which such a payment is "due" is referred to in the policy as a "modal
processing date." However, payment of Planned Premiums is not necessarily

required. You need only invest enough to keep the policy in force (see "Lapse
and reinstatement" and "Guaranteed minimum death benefit feature" below).

Lapse and reinstatement

Either your entire policy or the Additional Sum Insured portion of your Total
Sum Insured can terminate (i.e., "lapse") for failure to pay charges due under
the policy. If the guaranteed minimum death benefit feature is in effect, only
the Additional Sum Insured, if any, can lapse. If the guaranteed minimum death
benefit feature is not in effect, the entire policy can lapse. In either case,
---
if the policy's surrender value is not sufficient to pay the charges on a
monthly deduction date, we will notify you of how much you will need to pay to
keep any Additional Sum Insured or the policy in force. You will have a 61 day
"grace period" to make that payment. If you don't pay at least the required
amount by the end of the grace period, the Additional Sum Insured or your policy
will lapse. If your policy lapses, all coverage under the policy will cease.
Even if the policy or the Additional Sum Insured terminates in this way, you can
still reactivate (i.e., "reinstate") it within 1 year from the beginning of the
grace period. You will have to provide evidence that the insured person still
meets our requirements for issuing coverage. You will also have to pay a minimum
amount of premium and be subject to the other terms and conditions applicable to
reinstatements, as specified in the policy. If the guaranteed minimum death
benefit is not in effect and the insured person dies during the grace period, we
will deduct any unpaid monthly charges from the death benefit. During such a
grace period, you cannot make a partial withdrawal or policy loan.

Guaranteed minimum death benefit feature

This feature is available only if the insured person meets certain
underwriting requirements and only if you've elected death benefit Option A (see
"How much will JHVLICO pay when the last insured person dies?" on page 15) . The
feature guarantees that your Basic Sum Insured will not lapse during the first
10 policy years, regardless of adverse investment performance, if both of the
following are true:

. any Additional Sum Insured under the policy is not scheduled to
exceed the Basic Sum Insured at any time (see "How much will JHVLICO
pay when the insured person dies?" on page 15), and

. on each monthly deduction date during that 10 year period the amount of
cumulative premiums you have paid accumulated at 4% (less all withdrawals
from the policy accumulated at 4%) equals or exceeds the sum of all
Guaranteed Minimum Death Benefit Premiums due to date accumulated at 4%.

The Guaranteed Minimum Death Benefit Premium (or "GMDB Premium) is defined in
the policy and is "due" on each monthly deduction date. The term "monthly
deduction date" is defined on page 30. On the application for the policy, you
may elect for this feature to extend beyond the tenth policy year. If you so
elect, we will impose a special charge for this feature after the tenth policy
year. You may revoke the election at any time.

No GMDB Premium will ever be greater than the so-called "guideline premium"
for the policy as defined in Section 7702 of the Internal Revenue Code. Also,
the GMDB Premiums may change in the event of any change in the Additional Sum
Insured of the policy or any change in the death benefit option (see "How much
will JHVLICO pay when the insured person dies?" on page 15).

If the guaranteed minimum death benefit test is not satisfied on any monthly
deduction date, we will notify you immediately and tell you how much you will
need to pay to keep the feature in effect. You will have until the second
monthly deduction date after default to make that payment. If you don't pay at
least the required amount by the end of that period, the feature will lapse. The
feature may be reinstated in accordance with the terms of the policy within 5
years after the policy anniversary on which default occurred. If it is
reinstated more than 1 year after such policy anniversary, we will require
evidence that the insured person still meets our requirements for issuing
coverage. We may refuse to reinstate the feature more than once during the life
of the policy.

The guaranteed minimum death benefit feature applies only to the Basic Sum
Insured. It does not apply to any amount of Additional Sum Insured (see "How
---
much will JHVLICO pay when the insured person dies?" on page 15).

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

How will the value of my investment in the policy change over time?

From each premium payment you make, we deduct the charges described under
"Deductions from premium payments" below. We invest the rest in the investment
options you've elected. Special investment rules apply to premiums processed
prior to the 20th day after your policy becomes effective. (See "Commencement of
investment performance" beginning on page 31.)

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 JHVLICO deduct from my investment in the
policy?" below.

The amount you've invested in the fixed investment option will earn interest
at a rate we declare from time to time. We guarantee that this rate will be at
least 4%. If you want to know what the current declared rate is, just call or
write to us. The current declared rate will also appear in the annual statement
we will send you. Amounts you invest in the fixed investment option will not be
---
subject to the asset-based risk charge described on page 9. 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 32.

What charges will JHVLICO deduct from my investment in the policy?

Deductions from premium payments

. Sales charge - A charge to help defray our sales costs. The current charge is
------------
of premiums received in each of the first 10 policy years up to the Target
Premium, and 3.5% of premiums received in each policy year thereafter up to
the Target Premium. We reserve the right to increase the percentages for
policy years 1 through 10 and thereafter up to 10% and 7%, respectively.
Because policies of this type were first offered in 2001, the lower current
rates after the tenth policy year are not yet applicable to any policy. No
charge is currently deducted from premiums received in excess of the Target
Premium, but we reserve the right to impose such a charge of up to 3.5% of
such excess premiums received in any policy year. The "Target Premium" is
determined at the time the policy is issued and will appear in the "Policy
Specifications" section of the policy.

. Optional enhanced cash value rider charge - A charge imposed if you elect
-----------------------------------------
this rider. The charge is 1% of premiums received in the first policy year.

Deductions from account value

. 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 percentages are .03% for
policy years 1 - 20, and .0125% thereafter. These percentages equate to
effective annual rates of .36% and .15%, respectively. The reduction after 20
years has not occurred yet under any policy, since no policy has yet been
outstanding for 20 years. We guarantee that this charge will never exceed .05%
of that portion of your account value allocated to variable investment
options. This percentage equates to an effective annual rate of .60%. This
charge does not apply to the fixed investment option.

. Issue charge - A monthly charge to help defray our administrative costs.
------------
This is a charge per $1,000 of Basic Sum Insured at issue that varies by age
and that is deducted only during the first ten policy years. The charge will
appear in the "Policy Specifications" section of the policy. As an example,
the monthly charge for a 45 year old is 7.65c per $1,000 of Basic Sum Insured.
The maximum monthly charge is for an 85 year old and is 48.60c per $1,000 of
Basic Sum Insured.

. Administrative charge - A monthly charge to help defray our administrative
---------------------
costs. This charge has two parts: (1) a flat dollar charge of up to $5
(currently $2.50), and (2) a charge of up to 6c per $1,000 of Basic Sum
Insured at issue (currently 3c per $1,000 of Basic Sum Insured at issue). The
second part of this charge will not apply to amounts of Basic Sum Insured
greater than $1,000,000.

. Insurance charge - A monthly charge for the cost of insurance. To determine
----------------
the charge, we multiply the amount of insurance for which we are at risk by a
cost of insurance rate. The rate is derived from an actuarial table. The table
in your policy will show the maximum cost of insurance rates. The cost of
-------
insurance rates that we currently apply are generally less than the maximum
rates. We will review the cost of insurance rates at least every 5 years and
may change them from time to time. However, those rates will never be more
than the maximum rates shown in the policy. The table of rates we use will
depend on the insurance risk characteristics and (usually) gender of the
insured person, the Total Sum Insured and the length of time the policy has
been in effect. Regardless of the table used, cost of insurance rates
generally increase each year that you own your policy, as the insured person's
attained age increases. (The insured person's "attained age" on any date is
his or her age on the birthday nearest that date.) Higher current insurance
rates are generally applicable to policies issued on a "guaranteed issue"
basis, where only very limited underwriting information is obtained. This is
often the case with policies issued to trustees, employers and similar
entities.

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

. Guaranteed minimum death benefit charge - A monthly charge beginning in the
---------------------------------------
eleventh policy year if the guaranteed minimum death benefit feature is
elected to extend beyond the first ten policy years. This charge is currently
1c per $1,000 of Basic Sum Insured and is guaranteed not to exceed 2c per
$1,000 of Basic Sum Insured. Because policies of this type were first offered
in 1994, this charge is not yet applicable to any policy at the current rate.

. Optional benefits charge - Monthly charges for any optional insurance
------------------------
benefits added to the policy by means of a rider (other than the optional
enhanced cash value rider).

. Partial withdrawal charge - A charge for each partial withdrawal of account
-------------------------
value to compensate us for the administrative expenses of processing the
withdrawal. The charge is equal to the lesser of $20 or 2% of the withdrawal
amount.

What charges will the Series Funds deduct from my 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 Operating
Investment Distribution and Other Operating Operating Expenses
Management Service Expenses With Expenses With Absent
Fund Name Fee (12b-1) Fees Reimbursement Reimbursement Reimbursement
- --------- ---------- ---------------- --------------- -------------- -------------

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%

M Fund, Inc. (Note 6):
Brandes International Equity............................. 0.80% N/A 0.25% 1.05% 1.19%
Turner Core Growth....................................... 0.45% N/A 0.25% 0.70% 0.91%
Frontier Capital Appreciation............................ 0.90% N/A 0.25% 1.15% 1.23%
Clifton Enhanced U.S. Equity............................. 0.44% N/A 0.25% 0.69% 1.22%
--------------

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 for Janus 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.

(6) Percentages shown for M Fund, Inc. funds reflect the investment management
fees currently payable and other fund expenses allocated in 2000. M
Financial Advisers, Inc. reimburses a fund when the fund's other operating
expenses exceed 0.25% of that fund's average daily net assets.

What other charges could JHVLICO impose in the future?

We currently make no charge for our Federal income taxes. However, if we
incur, or expect to incur, additional income taxes attributable to any
subaccount of the Account or this class of policies in future years, we reserve
the right to make a charge for such taxes. Any such charge would reduce what you
earn on any affected investment options. However, we expect that no such charge
will be necessary.

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

How can I change my policy's investment allocations?

Future premium payments

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

Transfers of existing account value

You may also transfer your existing account value from one investment option
to another. To do so, you must tell us how much to transfer, either as a whole
number percentage or as a specific dollar amount. 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 frequency of transfers into and out of variable
investment options,

. impose a limit of not less than 12 on the number of such transfers in any
policy year, and

. impose a charge of up to $25 on each such transfer in excess of a yearly
limit of not less than 12.

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

. You can only make such a transfer once a year and only during the 31 day
period following your policy anniversary.

. We must receive the request for such a transfer during the period beginning
60 days prior to the policy anniversary and ending 30 days after it.

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

We reserve the right to impose a minimum amount limit on transfers out of the
fixed investment option.

How can I access my investment in the policy?

Full surrender

You may surrender your policy in full at any time. If you do, we will pay you
the account value less any policy loans plus, if surrender occurs in the first
three policy years, a refund of 50% of sales charges deducted from any Target
Premiums paid within 365 days prior to the date of surrender. This is called
your "surrender value." You must return your policy when you request a full
surrender.

Partial withdrawals

You may make a partial withdrawal of your surrender value at any time. Each
partial withdrawal must be at least $1,000. There is a charge (usually $20) for
each partial withdrawal. We will automatically reduce the account value of your
policy by the amount of the withdrawal and the related charge. Each investment
option will be reduced in the same proportion as the account value is then
allocated among them. We will not permit a partial withdrawal if it would cause
your account value to fall below 3 months' worth of monthly charges (see
"Deductions from account value" on page 9). We also reserve the right to refuse
any partial withdrawal that would cause the policy's Total Sum Insured to fall
below $100,000. Any partial withdrawal (other than a Terminated ASI Withdrawal
Amount, as described below) will reduce your death benefit under any of the
death benefit options (see "How much will JHVLICO pay when the insured person
dies?" on page 15) and under the guaranteed death benefit feature (see page 7).
Under Option A, such a partial withdrawal will reduce the Total Sum Insured.
Under Option B, such a partial withdrawal will reduce your account value. Under
the guaranteed death benefit feature, such a partial withdrawal will reduce the
Basic Sum Insured. A "Terminated ASI Withdrawal Amount" is any partial
withdrawal made while there is an Additional Sum Insured under the policy that
later lapses as described on page 7. The total of all Terminated ASI

Withdrawal Amounts cannot exceed the Additional Sum Insured in effect
immediately before the Additional Sum Insured lapses.

Policy loans

You may borrow from your policy at any time by completing a form satisfactory
to us or, if the telephone transaction authorization form has been completed, by
telephone. However, you can't borrow from your policy during a "grace period"
(see "Lapse and reinstatement" on page 7). The maximum amount you can borrow is
determined as follows:

. We first determine the account value of your policy.

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

. We then multiply the resulting amount by .75% in policy years 1 through
20 and .25% thereafter.

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

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

You can repay all or part of a loan at any time. Each repayment will be
allocated among the investment options as follows:

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

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

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

How much will JHVLICO pay when the insured person dies?

In your application for the policy, you will tell us how much life insurance
coverage you want on the life of the insured person. This is called the "Total
Sum Insured." Total Sum Insured

is composed of the Basic Sum Insured and any Additional Sum Insured you elect.
The only limitation on how much Additional Sum Insured you can have is that it
generally cannot exceed 400% of the Basic Sum Insured. There are a number of
factors you should consider in determining whether to elect coverage in the form
of Basic Sum Insured or in the form of Additional Sum Insured. These factors are
discussed under "Basic Sum Insured vs. Additional Sum Insured" on page 30.

When the insured person dies, we will pay the death benefit minus any
outstanding loans. There are ywo 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, or (2) the minimum insurance amount (as described below).

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

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.

The minimum insurance amount

In order for a policy to qualify as life insurance under Federal tax law,
there has to be a minimum amount of insurance in relation to account value.
There are two tests that can be applied under Federal tax law - - the "guideline
premium and cash value corridor test" and the "cash value accumulation test."
When you elect the death benefit option, you must also elect which test you wish
to have applied. Under the guideline premium and cash value corridor test, we
compute the minimum insurance amount each business day by multiplying the
account value on that date (plus any refund of sales charges that might be due
if the policy were surrendered on that date) by the "required additional death
benefit factor" applicable on that date. In this case, the death benefit factors
are derived by applying the guideline premium and cash value corridor test. The
death benefit factor starts out at 2.50 for ages at or below 40 and decreases as
attained age increases, reaching a low of 1.0 at age 95. Under the cash value
accumulation test, we compute the minimum insurance amount each business day by
multiplying the account value on that date (plus any refund of sales charges
that might be due if the policy were surrendered on that date) by the death
benefit factor applicable on that date. In this case, the death benefit factors
are derived by applying the cash value accumulation test. The death benefit
factor decreases as attained age increases. Regardless of which test you elect,
a table showing the required additional death benefit factor for each policy
year will appear in the policy.

As noted above, you have to elect which test will be applied when you elect
the death benefit option. The cash value accumulation test may be preferable if
you want an increasing death benefit in later policy years and/or want to fund
the policy at the "7 pay" limit for the full 7 years

(see "Tax Considerations" beginning on page 35). The guideline premium and cash
value corridor test may be preferable if you want the account value under the
policy to increase without increasing the death benefit as quickly as might
otherwise be required.

Enhanced cash value rider

In the application for the policy, you may elect to purchase the enhanced cash
value rider. This rider provides an enhanced cash value benefit (in addition to
the surrender value) if you surrender the policy within the first seven policy
years and such surrender is not made pursuant to an exchange under Section 1035
of the Internal Revenue Code (or any successor provision). The amount of the
benefit will be shown in the "Policy Specifications" section of the policy. The
benefit is also included in the account value when calculating the death
benefit. Election of this rider could increase your insurance charge since it
affects our amount at risk under the policy. The amount available for partial
withdrawals and loans are based on the surrender value and will in no way be
increased due to this rider.

How can I change my policy's insurance coverage?

Increase in coverage

The Basic Sum Insured generally cannot be increased after policy issue. After
the first policy year, you may request an increase in the Additional Sum
Insured. However, you will have to provide us with evidence that the insured
person still meets our requirements for issuing insurance coverage. As to when
an approved increase would take effect, see "Effective date of other policy
transactions" on page 32.

Decrease in coverage

The Basic Sum Insured generally cannot be decreased after policy issue. After
the first policy year, you may request a reduction in the Additional Sum
Insured, but only if:

. the remaining Total Sum Insured will be at least $100,000, and

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

As to when an approved decrease would take effect, see "Effective date of other
policy transactions" on page 32.

Change of death benefit option

At any time, you may request to change your coverage from death benefit Option
B to Option A. Our administrative systems do not currently permit any other
change of death benefit option. Such changes may be permitted in the future, but
that is not guaranteed.

Tax consequences

Please read "Tax considerations" starting on page 35 to learn about possible
tax consequences of changing your insurance coverage under the policy.

Can I cancel my policy after it's issued?

You have the right to cancel your policy within the latest of the following
periods:

. 10 days after you receive it (this period may be longer in some states);

. 10 days after mailing by JHVLICO of the Notice of Withdrawal Right; or

. 45 days after the date Part A of the application has been completed.

This is often referred to as the "free look" period. To cancel your policy,
simply deliver or mail the policy to JHVLICO at one of the addresses shown on
page 2, or to the JHVLICO representative who delivered the policy to you.

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

Can I choose the form in which JHVLICO pays out policy proceeds?

Choosing a payment option

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

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

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

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

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

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

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

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

Changing a payment option

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

Tax impact

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

To what extent can JHVLICO vary the terms and conditions of its policies in
particular cases?

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

State law insurance requirements

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

Variations in expenses or risks

We may vary the charges and other terms of our policies where special
circumstances result in sales or administrative expenses, mortality risks or
other risks that are different from those normally associated with the policies.
These include the type of variations discussed under "Reduced charges for
eligible classes" on page 33. No variation in any charge will exceed any maximum
stated in this prospectus with respect to that charge.

How will my policy be treated for income tax purposes?

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

However, some of the tax rules change if your policy is found to be a
"modified endowment contract." This can happen if you've paid more than a
certain amount of premiums that is

prescribed by the tax laws. Additional taxes and penalties may be payable for
policy distributions of any kind.

For further information about the tax consequences of owning a policy, please
read "Tax considerations" beginning on page 35.

How do I communate with JHVLICO?

General Rules

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

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

We have special forms that should be used for a number of the requests
mentioned above. You can obtain these forms from the JHVLICO Life Servicing
Office or your JHVLICO

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

Telephone Transactions

If you complete a special authorization form, you can request loans, transfers
among investment options and changes of allocation among investment options
simply by telephoning us at 1-800-521-1234 or by faxing us at 1-617-572-6956.
Any fax request should include your name, daytime telephone number, policy
number and, in the case of transfers and changes of allocation, the names of the
investment options involved. We will honor telephone instructions from anyone
who provides the correct identifying information, so there is a risk of loss to
you if this service is used by an unauthorized person. However, you will receive
written confirmation of all telephone transactions. There is also a risk that
you will be unable to place your request due to equipment malfunction or heavy
phone line usage. If this occurs, you should submit your request in writing.

The policies are not designed for professional market timing organizations or
other persons or entities that use programmed or frequent transfers among
investment options. For reasons such as that, we reserve the right to change our
telephone transaction policies or procedures at any time. We also reserve the
right to suspend or terminate the privilege altogether 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, account value
and surrender value of the policy under certain hypothetical circumstances that
we assume solely for this purpose. Each table separately illustrates the
operation of a policy for a specified issue age, premium payment schedule and
Total Sum Insured. The amounts shown are for the end of each policy year and
assume that all of the account value is invested in funds that achieve
investment returns at constant annual rates of 0%, 6% and 12% (i.e., before any
fees or expenses deducted from 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 -0.84%, 5.11% and 11.06%.
(Investment return reflects investment income and all realized and unrealized
capital gains and losses.) The tables assume annual Planned Premiums that are
paid at the beginning of each policy year for an insured person who is a 45 year
old male standard non-smoker underwriting risk when the policy is issued.

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

With respect to fees and expenses deducted from Series Fund assets, the
amounts shown in all tables reflect (1) investment management fees equivalent to
an effective annual rate of .72%, and (2) an assumed average asset charge for
all other Series Fund operating expenses equivalent to an effective annual rate
of .12%. These rates are the arithmetic average for all funds of the Series
Funds. 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 Series Fund operating expenses reflects reimbursements to certain
funds as described in the footnotes to the table beginning on page 11. 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 your proposed insured person's issue age, sex and underwriting risk
classification, and the Total Sum Insured and annual Planned Premium amount
requested.

Plan: Flexible Premium Variable Life
$100,000 Total Sum Insured at Issue
Male, Issue age 45, Fully Underwritten Nonsmoker Underwriting Class
Option A Death
Benefit No Guaranteed Minimum Death Benefit after tenth Policy Year
Planned Premium: $5,649 for Seven Years*
Using Current Charges

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

1 5,931 100,000 100,000 100,000 5,176 5,481 5,787
2 12,159 100,000 100,000 100,000 10,091 11,013 11,972
3 18,699 100,000 100,000 100,000 14,895 16,754 18,762
4 25,565 100,000 100,000 100,000 19,425 22,551 26,064
5 32,775 100,000 100,000 100,000 24,052 28,788 34,325
6 40,345 100,000 100,000 107,480 28,616 35,318 43,465
7 48,294 100,000 101,218 128,526 33,122 42,160 53,535
8 50,709 100,000 102,091 137,116 32,337 43,784 58,805
9 53,244 100,000 103,008 146,350 31,539 45,470 64,602
10 55,906 100,000 103,968 156,276 30,722 47,217 70,973
11 58,702 100,000 105,260 167,255 30,013 49,159 78,113
12 61,637 100,000 106,604 179,070 29,285 51,176 85,963
13 64,718 100,000 108,001 191,788 28,534 53,268 94,593
14 67,954 100,000 109,458 205,491 27,763 55,444 104,088
15 71,352 100,000 110,980 220,267 26,978 57,712 114,543
16 74,920 100,000 112,553 236,169 26,155 60,060 126,024
17 78,666 100,000 114,163 253,254 25,287 62,490 138,625
18 82,599 100,000 115,822 271,637 24,370 65,003 152,451
19 86,729 100,000 117,541 291,442 23,398 67,603 167,620
20 91,065 100,000 119,326 312,798 22,364 70,291 184,259
25 116,225 100,000 131,769 456,178 17,314 86,741 300,295
30 148,336 100,000 147,156 672,641 10,159 106,782 488,093
35 189,318 ** 166,552 1,004,861 ** 130,762 788,931

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

It is emphasized that the hypothetical investment returns are illustrative only
and should not be deemed a representation of past or future investment results.
Actual investment results may be more or less than those shown and will depend
on a number of factors, including investment allocations made by the Owner. The
death benefit and surrender value for a Policy would be different from those
shown if the actual gross rates of investment return average 0%, 6%, or 12% over
a period of years, but also fluctuate above or below the average for individual
Policy years. No representations can be made that these hypothetical investment
results can be achieved for one year or sustained over any period of time. In
fact, for any given period of time, the investment results could be negative.

Plan: Flexible Premium Variable Life
$100,000 Total Sum Insured At Issue
Male, Issue age 45, Fully Underwritten Nonsmoker Underwriting Class
Option A Death Benefit
No Guaranteed Minimum Death Benefit after tenth Policy Year
Planned Premium: $5,649 for Seven Years*
Using Maximum Charges

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

1 5,931 100,000 100,000 100,000 4,611 4,891 5,170
2 12,159 100,000 100,000 100,000 8,864 9,693 10,556
3 18,699 100,000 100,000 100,000 13,042 14,700 16,494
4 25,565 100,000 100,000 100,000 16,864 19,642 22,769
5 32,775 100,000 100,000 100,000 20,897 25,095 30,013
6 40,345 100,000 100,000 100,000 24,860 30,793 38,026
7 48,294 100,000 100,000 112,452 28,751 36,748 46,839
8 50,709 100,000 100,000 118,671 27,519 37,622 50,894
9 53,244 100,000 100,000 125,277 26,239 38,494 55,300
10 55,906 100,000 100,000 132,294 24,904 39,359 60,082
11 58,702 100,000 100,000 140,030 23,628 40,341 65,398
12 61,637 100,000 100,000 148,240 22,280 41,317 71,163
13 64,718 100,000 100,000 156,960 20,856 42,287 77,415
14 67,954 100,000 100,000 166,216 19,345 43,247 84,194
15 71,352 100,000 100,000 176,035 17,738 44,195 91,542
16 74,920 100,000 100,000 186,463 16,020 45,124 99,500
17 78,666 100,000 100,000 197,509 14,173 46,028 108,112
18 82,599 100,000 100,000 209,220 12,175 46,896 117,420
19 86,729 100,000 100,000 221,631 9,998 47,718 127,470
20 91,065 100,000 100,000 234,789 7,611 48,481 138,307
25 116,225 ** 100,000 313,560 ** 51,009 206,411
30 148,336 ** 100,000 418,757 ** 49,260 303,865
35 189,318 ** 100,000 559,552 ** 35,446 439,313

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

It is emphasized that the hypothetical investment returns are illustrative only
and should not be deemed a representation of past or future investment results.
Actual investment results may be more or less than those shown and will depend
on a number of factors, including investment allocations made by the Owner. The
death benefit and surrender value for a policy would be different from those
shown if the actual gross rates of investment return average 0%, 6%, or 12% over
a period of years, but also fluctuate above or below the average for individual
Policy years. No representations can be made that these hypothetical investment
results can be achieved for one year or sustained over any period of time. In
fact, for any given period of time, the investment results could be negative.

Plan: Flexible Premium Variable Life
$100,000 Total Sum Insured at Issue
Male, Issue age 45, Fully Underwritten Nonsmoker Underwriting Class
Option B Death Benefit
No Guaranteed Minimum Death Benefit after tenth Policy Year
Planned Premium: $5,649 for Seven Years*
Using Current Charges

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

1 5,931 104,990 105,296 105,601 5,173 5,479 5,785
2 12,159 109,899 110,820 111,778 10,083 11,004 11,962
3 18,699 114,684 116,539 118,543 14,868 16,722 18,727
4 25,565 119,363 122,478 125,978 19,363 22,478 25,978
5 32,775 123,935 128,644 134,151 23,935 28,645 34,151
6 40,345 128,426 135,076 143,167 28,426 35,076 43,167
7 48,294 132,842 141,790 153,121 32,842 41,790 53,121
8 50,709 131,962 143,265 158,267 31,962 43,265 58,267
9 53,244 131,063 144,780 163,929 31,063 44,780 63,929
10 55,906 130,137 146,326 170,155 30,137 46,326 70,155
11 58,702 129,315 148,042 177,143 29,315 48,042 77,143
12 61,637 128,467 149,802 184,838 28,467 49,802 84,838
13 64,718 127,588 151,604 193,310 27,588 51,604 93,310
14 67,954 126,686 153,456 202,649 26,686 53,456 102,649
15 71,352 125,767 155,366 217,202 25,767 55,366 112,949
16 74,920 124,800 157,306 232,879 24,800 57,306 124,268
17 78,666 123,779 159,271 249,724 23,779 59,271 136,693
18 82,599 122,697 161,253 267,849 22,697 61,253 150,325
19 86,729 121,552 163,249 287,376 21,552 63,249 165,282
20 91,065 120,336 165,254 308,433 20,336 65,254 181,688
25 116,225 114,483 177,483 449,803 14,483 77,483 296,098
30 148,336 106,516 190,311 663,233 6,516 90,311 481,266
35 189,318 ** 201,476 990,798 ** 101,476 777,890

__________________________

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

It is emphasized that the hypothetical investment returns are illustrative only
and should not be deemed a representation of past or future investment results.
Actual investment results may be more or less than those shown and will depend
on a number of factors, including investment allocations made by the Owner. The
death benefit and surrender value for a policy would be different from those
shown if the actual gross rates of investment return average 0%, 6%, or 12% over
a period of years, but also fluctuate above or below the average for individual
Policy years. No representations can be made that these hypothetical investment
results can be achieved for one year or sustained over any period of time. In
fact, for any given period of time, the investment results could be negative.

1 5,931 104,307 104,586 104,864 4,590 4,868 5,146
2 12,159 108,517 109,339 110,195 8,799 9,621 10,477
3 18,699 112,625 114,264 116,037 12,908 14,546 16,320
4 25,565 116,634 119,366 122,442 16,634 19,366 22,442
5 32,775 120,538 124,650 129,464 20,538 24,650 29,464
6 40,345 124,336 130,118 137,162 24,336 30,118 37,162
7 48,294 128,021 135,771 145,599 28,021 35,771 45,599
8 50,709 126,576 136,297 149,229 26,576 36,297 49,229
9 53,244 125,078 136,770 153,158 25,078 36,770 53,158
10 55,906 123,516 137,176 157,404 23,516 37,176 57,404
11 58,702 122,007 137,632 162,125 22,007 37,632 62,125
12 61,637 120,420 138,007 167,231 20,420 38,007 67,231
13 64,718 118,753 138,292 172,759 18,753 38,292 72,759
14 67,954 117,000 138,476 178,744 17,000 38,476 78,744
15 71,352 115,154 138,546 185,225 15,154 38,546 85,225
16 74,920 113,203 138,484 192,240 13,203 38,484 92,240
17 78,666 111,133 138,267 199,828 11,133 38,267 99,828
18 82,599 108,927 137,869 208,029 8,927 37,869 108,029
19 86,729 106,564 137,259 216,881 6,564 37,259 116,881
20 91,065 104,024 136,404 226,430 4,024 36,404 126,430
25 116,225 ** 127,374 286,681 ** 27,374 186,681
30 148,336 ** 106,002 377,341 ** 6,002 273,812
35 189,318 ** ** 503,980 ** ** 395,682

_________________________

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.

ADDITIONAL INFORMATION

This section of the prospectus provides additional detailed information that
is not contained in the Basic Information section on pages 4 through 21.

Contents of this section Pages to see
- ------------------------ ------------

Description of JHVLICO............................................ 28

How we support the policy and investment options.................. 28

Procedures for issuance of a policy............................... 29

Basic Sum Insured vs. Additional Sum Insured...................... 30

Commencement of investment performance............................ 31

How we process certain policy transactions........................ 31

Effects of policy loans........................................... 32

Additional information about how certain policy charges work...... 33

How we market the policies........................................ 34

Tax considerations................................................ 35

Reports that you will receive..................................... 37

Voting privileges that you will have.............................. 37

Changes that JHVLICO can make as to your policy................... 37

Adjustments we make to death benefits............................. 38

When we pay policy proceeds....................................... 38

Other details about exercising rights and paying benefits......... 39

Legal matters..................................................... 39

Registration statement filed with the SEC......................... 39

Accounting and actuarial experts.................................. 39

Financial statements of JHVLICO and the Account................... 39

List of Directors and Executive Officers of JHVLICO............... 40

Description of JHVLICO

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

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

We are a wholly-owned subsidiary of John Hancock Life Insurance Company ("John
Hancock"), a Massachusetts stock life insurance company. On February 1, 2000,
John Hancock Mutual Life Insurance Company (which was chartered in Massachusetts
in 1862) converted to a stock company by "demutualizing" and changed its name to
John Hancock Life Insurance Company. As part of the demutualization process,
John Hancock became a subsidiary of John Hancock Financial Services, Inc., a
newly formed publicly-traded corporation. John Hancock's home office is at John
Hancock Place, Boston, Massachusetts 02117. As of December 31, 2000, John
Hancock's assets were approximately $88 billion and it had invested
approximately $575 million in JHVLICO in connection with JHVLICO's organization
and operation. It is anticipated that John Hancock will from time to time make
additional capital contributions to JHVLICO to enable us to meet our reserve
requirements and expenses in connection with our business. John Hancock is
committed to make additional capital contributions if necessary to ensure that
we maintain a positive net worth.

How we support the policy and investment options

Separate Account S

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

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

The assets in each subaccount are invested in the corresponding fund of one of
the 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 Total Sum Insured at issue
of $100,000 and a minimum Basic Sum Insured at issue of $50,000. At the time of
issue, the insured person must have an attained age of at least 20 and no more
than 85. All insured persons must meet certain health and other insurance risk
criteria called "underwriting standards".

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

Minimum Initial Premium

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

Commencement of insurance coverage

After you apply for a policy, it can sometimes take up to several weeks for us
to gather and evaluate all the information we need to decide whether to issue a
policy to you and, if so, what the insured person's rate class should be. After
we approve an application for a policy and assign an appropriate insurance rate
class, we will prepare the policy for delivery. We will not pay a death benefit
under a policy unless the policy is in effect when the insured person dies
(except for the circumstances described under "Temporary insurance coverage
prior to policy delivery" on page 30).

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

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

Temporary coverage prior to policy delivery

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

Monthly deduction dates

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

Basic Sum Insured vs. Additional Sum Insured

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

For the same amount of premiums paid, the amount of sales charge deducted from
premiums 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 minimum death benefit feature.
Therefore, if the policy's surrender value is insufficient to pay the monthly
charges as they fall due (including the charges for the Additional Sum Insured),
the Additional Sum Insured coverage will lapse, even if the Basic Sum Insured
stays in effect pursuant to the guaranteed minimum death benefit feature.

Generally, you will incur lower sales charges and have more flexible coverage
with respect to the Additional Sum Insured than with respect to the Basic Sum
Insured. If this is your priority, you may wish to maximize the proportion of
the Additional Sum Insured. However, if your priority is to take advantage of
the guaranteed minimum death benefit feature, the proportion of the Policy's
Total Sum Insured that is guaranteed can be increased by taking out more
coverage as Basic Sum Insured at the time of policy issuance. As stated earlier
in this prospectus, the guaranteed minimum death benefit feature does not apply
if the Additional Sum Insured is scheduled to exceed the Basic Sum Insured at
any time. If such was the case, you would presumably

wish to maximize the proportion of the Additional Sum Insured.

If you want to purchase Additional Sum Insured, you may select from among
several forms of it: a level amount of coverage; an amount of coverage that
increases on each policy anniversary up to a prescribed limit; an amount of
coverage that increases on each policy anniversary to the amount of premiums
paid during prior policy years plus the Planned Premium for the current policy
year, subject to certain limits; or a combination of those forms of coverage.

Any decision you make to modify the amount of Additional Sum Insured coverage
after issue can have significant tax consequences (see "Tax Considerations"
beginning on page 35).

Commencement of investment performance

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

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

How we process certain policy transactions

Premium payments

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

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

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

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

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

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

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

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

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

Transfers among investment options

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

If received on or before the policy anniversary, requests for transfer out of
the fixed investment option will be processed on the policy anniversary (or the
next business day if the policy anniversary does not occur on a business day).
If received after the policy anniversary, such a request will be processed at
the end of the business day in which we receive the request at our Life
Servicing Office. If you request a transfer out of the fixed investment option
61 days or more prior to the policy anniversary, we will not process that
portion of the reallocation, and your confirmation statement will not reflect a
transfer out of the fixed investment option as to such request. Currently, there
is no minimum amount limit on transfers into the fixed investment option, but we
reserve the right to impose such a limit in the future. We have the right to
defer transfers of amounts out of the fixed investment option for up to six
months.

Telephone transfers and policy loans

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

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

Effective date of other policy transactions

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

. Total Sum Insured decreases

. Additional Sum Insured increases

. Change of death benefit option from Option B to Option A

. Any other change of death benefit option, when and if permitted by our
administrative rules (see "Change of death benefit option" on page 17)

Reinstatements of lapsed policies take effect on the monthly deduction date on
or next following the date we approve the request for reinstatement.

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

Effects of policy loans

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

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

Whenever the outstanding loan equals or exceeds the account value, the policy
will terminate 31 days after we have mailed notice of termination to you (and to
any assignee of record at such assignee's last known address) specifying the
minimum amount that must be paid to avoid termination, unless a repayment of at
least the amount specified is made within that period. 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 35).

Additional information about how certain policy charges work

Sales expenses and related charges

The sales charges help to compensate us for the cost of selling our policies.
(See "What charges will JHVLICO deduct from my investment in the policy?" in the
Basic Information section of this prospectus.) The amount of the charges in any
policy year does not specifically correspond to sales expenses for that year. We
expect to recover our total sales expenses over the life of the policies. To the
extent that the sales charges do not cover total sales expenses, the sales
expenses may be recovered from other sources, including gains from the
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 34.) Similarly,
administrative expenses not fully covered by the issue charge and the
administrative charge may also be recovered from such other sources.

Effect of premium payment pattern

You may structure the timing and amount of premium payments to minimize the
sales charges, although doing so involves certain risks. Paying less than one
Target Premium in the first policy year or paying more than one Target Premium
in any policy year could reduce your total sales charges over time. For example,
if the Target Premium was $10,000 and you paid a premium of $10,000 in each of
the first ten policy years, you would pay total sales charges of $6,500. If you
paid $20,000 (i.e., two times the Target Premium amount) in every other policy
year up to the ninth policy year, you would pay total sales charges of only
$3,250. However, delaying the payment of Target Premiums to later policy years
could increase the risk that the guaranteed minimum death benefit feature will
lapse and the account value will be insufficient to pay monthly policy charges
as they come due. As a result, the policy or any Additional Sum Insured may
lapse and eventually terminate. Conversely, accelerating the payment of Target
Premiums to earlier policy years could cause aggregate premiums paid to exceed
the policy's 7-pay premium limit and, as a result, cause the policy to become a
modified endowment, with adverse tax consequences to you upon receipt of policy
distributions. (See "Tax considerations" beginning on page 35.)

Monthly charges

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

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

Reduced charges for eligible classes

The charges otherwise applicable may be reduced with respect to policies
issued to a class of associated individuals or to a trustee, employer or similar
entity where we anticipate that the sales to the

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

How we market the policies

Signator Investors, Inc. ("Signator"), an indirect wholly-owned subsidiary of
John Hancock located at 197 Clarendon Street, Boston, MA 02117, is registered as
a broker-dealer under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc. and the Securities Investor
Protection Corporation. Signator acts as principal underwriter and principal
distributor of the policies pursuant to a sales agreement among John Hancock,
Signator, JHVLICO, and the Account. Signator also serves as principal
underwriter for John Hancock Variable Annuity Accounts U, I and V, John Hancock
Mutual Variable Life Insurance Account UV and John Hancock Variable Life
Accounts U and V, all of which are registered under the 1940 Act. Signator is
also the principal underwriter for John Hancock Variable Series Trust I.

Applications for policies are solicited by agents who are licensed by state
insurance authorities to sell JHVLICO's policies and who are also registered
representatives ("representatives") of Signator or other broker-dealer firms, as
discussed below. John Hancock (on behalf of JHVLICO) performs insurance
underwriting and determines whether to accept or reject the application for a
policy and each insured person's risk classification. JHVLICO will make the
appropriate refund if a policy ultimately is not issued or is returned under the
"free look" provision. Officers and employees of John Hancock and JHVLICO are
covered by a blanket bond by a commercial carrier in the amount of $25 million.

Signator's representatives are compensated for sales of the policies on a
commission and service fee basis by Signator, and JHVLICO reimburses Signator
for such compensation and for other direct and indirect expenses (including
agency expense allowances, general agent, district manager and supervisor's
compensation, agent's training allowances, deferred compensation and insurance
benefits of agents, general agents, district managers and supervisors, agency
office clerical expenses and advertising) actually incurred in connection with
the marketing and sale of the policies.

The maximum commission payable to a Signator representative for selling a
policy is 21% of the Target Premium paid in the first policy year, 12 % of the
Target Premium paid in each of the second through fifth policy years, and 3% of
the Target Premium paid in each policy year thereafter. The maximum commission
on any premium paid in any policy year in excess of the Target Premium is 2%.

Representatives with less than four years of service with Signator and those
compensated on salary plus bonus or level commission programs may be paid on a
different basis. Representatives who meet certain productivity and persistency
standards with respect to the sale of policies issued by JHVLICO and John
Hancock will be eligible for additional compensation.

The policies are also sold through other registered broker-dealers that have
entered into selling agreements with Signator and whose representatives are
authorized by applicable law to sell variable life insurance policies. The
commissions which will be paid by such broker-dealers to their representatives
will be in accordance with their established rules. The commission rates may be
more or less than those set forth above for Signator's representatives. In
addition, their qualified registered representatives may be reimbursed by the
broker-dealers under expense reimbursement allowance programs in any year for
approved voucherable expenses incurred. Signator will compensate the
broker-dealers as provided in the selling agreements, and JHVLICO will reimburse
Signator for such amounts and for certain other direct expenses in connection
with marketing the policies through other broker-dealers.

Representatives of Signator and the other broker-dealers mentioned above may
also earn "credits" toward qualification for attendance at certain business
meetings sponsored by John Hancock.

The offering of the policies is intended to be continuous, but neither JHVLICO
nor Signator is obligated to sell any particular amount of policies.

Tax considerations

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

Policy proceeds

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

If the policy complies with the definition of life insurance, we believe the
death benefit under the policy will be excludable from the beneficiary's gross
income under the Code. In addition, increases in account value as a result of
interest or investment experience will not be subject to federal income tax
unless and until values are actually received through distributions.
Distributions for tax purposes can include amounts received upon surrender or
partial withdrawals. You may also be deemed to have received a distribution for
tax purposes if you assign all or part of your policy rights or change your
policy's ownership.

In general, the owner will be taxed on the amount of distributions that exceed
the premiums paid under the policy. But under certain circumstances within the
first 15 policy years, the owner may be taxed on a distribution even if total
withdrawals do not exceed total premiums paid. Any taxable distribution will be
ordinary income to the owner (rather than capital gains).

We also believe that, except as noted below, loans received under the policy
will be treated as indebtedness of an owner and that no part of any loan will
constitute income to the owner. However, 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 59 1/2.

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

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

All modified endowments issued by the same insurer (or its affiliates) to the
owner during any calendar year generally will be treated as one contract

for the purpose of applying the modified endowment rules. A policy received in
exchange for a modified endowment will itself also be a modified endowment. You
should consult your tax advisor if you have questions regarding the possible
impact of the 7-pay limit on your policy.

Corporate and H.R. 10 plans

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

Reports that you will receive

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

Semiannually we will send you a report containing the financial statements of
each Series Fund, 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 JHVLICO 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 the insured person commits suicide within certain time periods, the amount
of death benefit we pay will be limited as described in the policy. Also, if an
application misstated the age or gender of the insured person, we will adjust
the amount of any death benefit as described in the policy.

When we pay policy proceeds

General

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

Stock Exchange is closed (other than customary weekend and holiday closings) or
trading on the New York Stock Exchange is restricted; (b) an emergency exists,
as a result of which disposal of securities is not reasonably practicable or it
is not reasonably practicable to fairly determine the account value; or (c) the
SEC by order permits the delay for the protection of owners. Transfers and
allocations of account value among the investment options may also be postponed
under these circumstances. If we need to defer calculation of separate account
values for any of the foregoing reasons, all delayed transactions will be
processed at the next values that we do compute.

Other details about exercising rights and paying benefits

Joint ownership

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

Assigning your policy

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

Your beneficiary

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

Legal Matters

The legal validity of the policies described in this prospectus has been
passed on by Ronald J. Bocage, Vice President and Counsel for JHVLICO. 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 Deborah A. Poppel, F.S.A., an Actuary of
JHVLICO and Second Vice President of John Hancock.

Financial statements of JHVLICO and the Account

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

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

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, 2000.................. $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, 2000................... $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

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (continued)

Note 10. Segment Information (continued)

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 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.................................. (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
====== ======

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.

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)

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.

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%
======== =====

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.

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.

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

100

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................. 388.1 401.3
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.

101

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

102

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.

103

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
------ -------- ------ ----- --------

104

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
------ -------- ----- ------

105

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%
========= ========= ===== ========= ===

106

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.

107

UNAUDITED FINANCIAL STATEMENTS

FOR

JOHN HANCOCK VARIABLE LIFE ACCOUNTS

FIRST QUARTER 2001

108

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
Balanced 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.

109

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.

110

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.

111

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.

112

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.

113

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.

114

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.

115

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.

116

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.

117

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.

118

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.

119

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.

120

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.

121

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.

122

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)

Years and periods ended March 31,

Large Cap Growth Subaccount Active Bond Subaccount
------------------------------------------- ------------------------------------------
2001 2000 1999 2001 2000 1999
------------ ------------- ------------ ------------ ------------ ------------

Increase (decrease) in net assets from
operations:
Net investment income (loss).......... $ (84,875) $ 19,988,168 $ 17,233,439 $ 781,920 $ 2,279,464 $ 2,725,206
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 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)
From policyholder transactions:
Net premiums from policyholders....... 24,536,922 143,098,730 75,667,981 18,474,249 37,518,244 74,595,720
Net benefits to policyholders......... (25,989,898) (101,783,680) (45,347,424) (20,207,373) (30,443,585) (68,312,320)
------------ ------------- ------------ ------------ ------------ ------------
Net increase in net assets resulting
from policyholder transactions........ (1,452,976) 41,315,050 30,320,557 (1,733,124) 7,074,659 6,283,400
------------ ------------- ------------ ------------ ------------ ------------
Net increase (decrease) in net assets.. (28,753,375) 12,661,676 50,503,331 (523,078) 10,793,820 5,779,506
Net assets at beginning of period...... 128,183,227 115,521,551 65,018,220 49,115,293 38,321,473 32,541,967
------------ ------------- ------------ ------------ ------------ ------------
Net assets at end of period............ $ 99,429,852 $ 128,183,227 $115,521,551 $ 48,592,215 $ 49,115,293 $ 38,321,473
============ ============= ============ ============ ============ ============

International Equity Index Subaccount Small Cap Growth Subaccount
------------------------------------------ -------------------------------------------
2001 2000 1999 2001 2000 1999
------------- ------------- ------------ ------------ ------------- ------------

Increase (decrease) in net assets from
operations:
Net investment income (loss).......... $ 1,000,674 $ 1,667,526 $ 855,417 $ (25,156) $ 3,354,331 $ 3,637,734
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 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
From policyholder transactions:
Net premiums from policyholders....... 12,301,398 80,381,214 53,332,374 22,824,300 135,469,377 52,637,861
Net benefits to policyholders......... (12,171,873) (72,181,237) (39,209,664) (20,701,815) (119,877,527) (40,800,272)
------------ ------------ ------------ ------------ ------------- ------------
Net increase in net assets resulting
from policyholder transactions........ 129,525 8,199,977 14,122,710 2,122,485 15,591,850 11,837,589
------------ ------------ ------------ ------------ ------------- ------------
Net increase (decrease) in net assets.. (3,959,262) 1,914,947 20,603,044 (5,836,254) 4,754,490 21,944,722
Net assets at beginning of period...... 35,113,621 33,198,674 12,595,630 35,777,318 31,022,828 9,078,106
------------ ------------ ------------ ------------ ------------- ------------
Net assets at end of period............ $ 31,154,359 $ 35,113,621 $ 33,198,674 $ 29,941,064 $ 35,777,318 $ 31,022,828
============ ============ ============ ============ ============= ============

See accompanying notes.

123

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (continued)

Years and periods ended March 31,

Global Balanced Subaccount Mid Cap Growth Subaccount
--------------------------------------- --------------------------------------------
2001 2000 1999 2001 2000 1999
----------- ----------- ----------- ------------ ------------- ------------

Increase (decrease) in net assets from
operations:
Net investment income (loss)............. $ 10,255 $ 175,751 $ 358,974 $ (37,362) $ 8,938,378 $ 6,389,535
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 increase (decrease) in net assets
resulting from operations................ (257,145) (439,582) 200,702 (19,350,046) (32,201,404) 26,656,234
From policyholder transactions:
Net premiums from policyholders.......... 2,049,975 8,122,728 6,295,052 19,268,700 196,712,586 65,183,285
Net benefits to policyholders............ (1,598,477) (8,741,933) (5,007,225) (16,876,300) (171,977,777) (41,018,347)
----------- ----------- ----------- ------------ ------------- ------------
Net increase in net assets resulting from
policyholder transactions................ 451,498 (619,205) 1,287,827 2,392,400 24,734,809 24,164,938
----------- ----------- ----------- ------------ ------------- ------------
Net increase (decrease) in net assets..... 194,353 (1,058,787) 1,488,529 (16,957,646) (7,466,595) 50,821,172
Net assets at beginning of period......... 3,533,069 4,591,856 3,103,327 56,033,021 63,499,616 12,678,444
----------- ----------- ----------- ------------ ------------- ------------
Net assets at end of period............... $ 3,727,422 $ 3,533,069 $ 4,591,856 $ 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.

124

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.

125

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.

126

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (continued)

Years and periods ended March 31,

Equity Index Subaccount Global Bond Subaccount
-------------------------------------------- ------------------------------------------
2001 2000 1999 2001 2000 1999
------------- -------------- -------------- ------------ ------------- -------------

Increase (decrease) in net assets from
operations:
Net investment income (loss)............ $ 340,360 $ 7,726,442 $ 5,503,450 $ (7,550) $ 430,194 $ 424,767
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 (433,52)
------------ ------------- ------------- ----------- ------------ ------------
Net increase (decrease) in net assets
resulting from operations............... (18,884,658) (17,990,042) 17,863,040 (288,752) 816,574 (213,434)
From policyholder transactions:
Net premiums from policyholders......... 58,341,537 155,703,961 225,994,914 4,883,968 8,796,366 11,387,398
Net benefits to policyholders........... (49,669,687) (126,828,610) (147,909,470) (4,100,556) (10,301,347) (10,615,019)
------------ ------------- ------------- ----------- ------------ ------------
Net increase in net assets resulting
from policyholder transactions.......... 8,671,850 28,875,351 78,085,444 783,412 (1,504,981) 772,379
------------ ------------- ------------- ----------- ------------ ------------
Net increase (decrease) in net assets... 10,212,808 10,885,309 95,948,484 494,660 (688,407) 558,945
Net assets at beginning of period........ 160,798,440 149,913,131 53,964,647 8,150,109 8,838,516 8,279,571
------------ ------------- ------------- ----------- ------------ ------------
Net assets at end of period.............. $150,585,632 $ 160,798,440 $ 149,913,131 $ 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.

127

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

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.

128

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

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 Active Bond II
Subaccount Subaccount Subaccount
--------------------------- --------------------------- ---------------------------
2001 2000* 2001 2000* 2001 2000*
------------ ------------- ----------- ------------- ----------- ------------

Increase (decrease) in net assets from
operations:
Net investment income (loss)........... $ (339) $ 5,904 $ (1,093) $ 205,119 $ 1,058 $ 247
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 increase (decrease) in net assets
resulting from operations.............. (71,065) (43,511) (634,592) (409,865) 2,296 432
From policyholder transactions:
Net premiums from policyholders........ 704,200 3,456,939 2,443,457 9,131,403 116,750 38,268
Net benefits to policyholders.......... (421,856) (3,068,441) (2,326,561) (6,708,404) (2,102) (22,638)
----------- ------------ ----------- ------------- ----------- ------------
Net increase in net assets resulting from
policyholder transactions............... 282,344 388,498 116,896 2,422,999 114,648 15,630
----------- ------------ ----------- ------------- ----------- ------------
Net increase (decrease) in net assets... 211,279 344,987 (517,696) 2,013,134 116,944 16,062
Net assets at beginning of period........ 344,987 -- 2,013,134 -- 16,062 --
----------- ------------ ----------- ------------- ----------- ------------
Net assets at end of period.............. $ 556,266 $ 344,987 $ 1,495,438 $ 2,013,134 $ 133,006 $ 16,062
=========== ============ =========== ============= ============ ============

________________________

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

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 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.

130

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.

131

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (Unaudited)

March 31, 2000

1. Organization

John Hancock Variable Life Account S (the Account) is a separate investment
account of John Hancock Variable Life Insurance Company (JHVLICO), a
wholly-owned subsidiary of John Hancock Mutual Life Insurance Company (John
Hancock). The Account was formed to fund variable life insurance policies
(Policies) issued by JHVLICO. The Account is operated as a unit investment trust
registered under the Investment Company Act of 1940, as amended, and currently
consists of 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.

132

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.

133

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

134

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

135

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 6511 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

136

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

137

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

138

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

139

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

140

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

February 13, 2001

141

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.

142

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.

143

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.

144

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.

145

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.

146

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.

147

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.

148

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.

149

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............................... (13,708,391) (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 Trust................... -- -- -- -- -- --
----------- --------- --------- ------------ ---------- ----------
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.

150

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.

151

JOHN HANCOCK VARIABLE LIFE ACCOUNTS

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.

152

JOHN HANCOCK VARIABLE LIFE ACCOUNTS

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.

153

JOHN HANCOCK VARIABLE LIFE ACCOUNTS

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.

154

JOHN HANCOCK VARIABLE LIFE ACCOUNTS

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.

155

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.

156

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.

157

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.

158

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.

159

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.

160

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.

161

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.

162

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.

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.

163

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS (continued)

Federal Income Taxes

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.

164

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

165

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

166

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

167

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

168

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

169

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
- ---------- ---------------- --------------- ------------ ------------ ------------ -------------

Templeton International 29,370 10.26 27,939 9.82 0 10.29

170

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

171

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

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

Account................................................................ 28
account value.......................................................... 8
Additional Sum Insured................................................. 16
asset-based risk charge................................................ 9
attained age........................................................... 10
Basic Sum Insured...................................................... 16
beneficiary............................................................ 39
business day........................................................... 29
changing Option A or B................................................. 17
changing the Total Sum Insured......................................... 17
charges................................................................ 9
Code................................................................... 35
cost of insurance rates................................................ 10
date of issue.......................................................... 30
death benefit.......................................................... 5
deductions............................................................. 9
enhanced cash value rider.............................................. 17
expenses of the Series Funds........................................... 10
fixed investment option................................................ 29
full surrender......................................................... 14
fund................................................................... 2
grace period........................................................... 7
guaranteed minimum death benefit....................................... 7
Guaranteed Minimum Death Benefit Premium............................... 7
insurance charge....................................................... 10
insured person......................................................... 5
investment options..................................................... 1
JHVLICO................................................................ 28
lapse.................................................................. 7
loan................................................................... 15
loan interest.......................................................... 15
maximum premiums....................................................... 6
Minimum Initial Premium................................................ 29
minimum insurance amount............................................... 16
minimum premiums....................................................... 5
modified endowment contract............................................ 36
monthly deduction date................................................. 30
Option A; Option B..................................................... 16
optional extra death benefit feature................................... 16
owner.................................................................. 5
partial withdrawal..................................................... 15
partial withdrawal charge.............................................. 10
payment options........................................................ 18
Planned Premium........................................................ 6
policy anniversary..................................................... 30
policy year............................................................ 30
premium; premium payment............................................... 5
prospectus............................................................. 3
receive; receipt....................................................... 20
reinstate; reinstatement............................................... 7
sales charge........................................................... 9
SEC.................................................................... 2
Separate Account S..................................................... 28
Series Funds........................................................... 2
Servicing Office....................................................... 2
special loan account................................................... 15
subaccount............................................................. 28
surrender.............................................................. 5
surrender value........................................................ 14
Target Premium......................................................... 9
tax considerations..................................................... 35
telephone transfers.................................................... 21
Total Sum Insured...................................................... 15
transfers of account value............................................. 13
variable investment options............................................ 1
we; us................................................................. 28
withdrawal............................................................. 15
withdrawal charges..................................................... 10
you; your.............................................................. 5

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 173 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, incorporated
by reference to the original filing of this Form S-6 to this File No.
333-60274 filed on May 4, 2001.

(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, filed herewith.

(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, filed herewith.

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 May 31, 2001
Officer)

/s/ JULIE H. INDGE
- --------------------
Julie H. Indge Treasurer (Principal Financial May 31, 2001
Officer)

/s/ MICHELE G. VAN LEER
- -----------------------
Michele G. Van Leer Vice Chairman of the Board May 31, 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 31st day of May, 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