485BPOS

As filed with the U.S. Securities and Exchange Commission on April 24, 2009

Registration No. 333-100567

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-6

SEC File No 811-5130

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

POST EFFECTIVE AMENDMENT NO.9 [X]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO. 15 [X]

John Hancock Life Insurance Company (U.S.A.) SEPARATE ACCOUNT N

(Exact Name of Registrant)

John Hancock Life Insurance Company (U.S.A.)

(Name of Depositor)

197 Clarendon Street

Boston, MA 02116

(Complete address of depositor’s principal executive offices)

Depositor’s Telephone Number: 617-572-6000

JAMES C. HOODLET, ESQ.

John Hancock Life Insurance Company (U.S.A.)

U.S. INSURANCE LAW

JOHN HANCOCK PLACE

BOSTON, MA 02117

(Name and complete address of agent for service)

It is proposed that this filing will become effective (check appropriate box)

[ ] immediately upon filing pursuant to paragraph (b) of Rule 485

[X ] on May 1, 2009 pursuant to paragraph (b) of Rule 485

[ ] 60 days after filing pursuant to paragraph (a) (1) of Rule 485

[ ] on (date) pursuant to paragraph (a) (1) of Rule 485

If appropriate check the following box

[ ] this post-effective amendment designates a new effective date for a previously filed amendment

Pursuant to the provisions of Rule 24f-2, Registrant has registered an indefinite amount of the securities under the Securities Act of 1933.

Prospectus dated May 1, 2009

John Hancock Life Insurance Company (U.S.A.)

Separate Account N

Corporate VUL

A Flexible Premium Variable Life Insurance Policy

500 Index	Emerging Small Company
500 Index B	Equity-Income	Mid Value
Active Bond	Financial Services	Money Market
	Franklin Templeton Founding Allocation
All Cap Core	Fundamental Value	Natural Resources
All Cap Growth	Global	Optimized All Cap
All Cap Value	Global Allocation	Optimized Value
Alpha Opportunities	Global Bond	Pacific Rim
American Asset Allocation	Global Real Estate	PIMCO VIT All Asset
American Blue Chip Income and Growth	Health Sciences	Real Estate Securities
American Bond	High Yield	Real Return Bond
American Diversified Growth and Income		Science & Technology
American Fundamental Holdings	International Core	Small Cap Growth
American Global Diversification	International Equity Index A	Small Cap Index
American Growth	International Opportunities	Small Cap Opportunities
American Growth-Income	International Small Cap	Small Cap Value
American International	International Value
American New World	Investment Quality Bond	Small Company Value
Balanced		Strategic Bond
Blue Chip Growth	Large Cap	Strategic Income
Capital Appreciation	Large Cap Value	Total Return
Capital Appreciation Value	Lifestyle Aggressive	Total Stock Market Index
	Lifestyle Balanced	U.S. Government Securities
Core Allocation Plus	Lifestyle Conservative	U.S. High Yield Bond
Core Bond	Lifestyle Growth
	Lifestyle Moderate	Utilities
Core Strategy	Mid Cap Index	Value
Disciplined Diversification	Mid Cap Intersection
	Mid Cap Stock

* * * * * * * * * * *

The SEC has not approved or disapproved these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

CVUL03 5/2009

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TABLE OF CONTENTS

RISKS/BENEFITS SUMMARY	3
Benefits	3
Risks	4
FEE TABLE	4
TABLE OF INVESTMENT OPTIONS AND INVESTMENT SUBADVISERS	13
POLICY SUMMARY	27
General	27
Death Benefits	27
Premiums	27
Policy Value	27
Policy Loans	28
Surrender and Partial Withdrawals	28
Lapse and Reinstatement	28
Charges and Deductions	28
Investment Options and Investment Subadvisers	28
Investment Management Fees and Expenses	28
GENERAL INFORMATION ABOUT JOHN HANCOCK USA, RATINGS AND THE SEPARATE ACCOUNT	29
John Hancock USA	29
Ratings	23
The Separate Account	29
ISSUING A POLICY	29
Use of the Policy	29
Requirements	29
Temporary Insurance Agreement	30
Underwriting	30
Right to Examine the Policy	30
Life Insurance Qualification	31

DEATH BENEFITS	32
Flexible Term Insurance Option Rider	33
Death Benefit Options	34
Changing the Death Benefit Option	34
Changing the Face Amount and Scheduled Death Benefits	30
PREMIUM PAYMENTS	37
Initial Premiums	37
Subsequent Premiums	37
Premium Limitations	37
Premium Allocation	37
CHARGES AND DEDUCTIONS	38
Premium Load	38
Sales Load or Surrender Charge	38
Monthly Deductions	39
Asset Based Risk Charge Deducted from Investment Accounts	40
Investment Management Fees and Expenses	40
Reduction in Charges and Enhanced Surrender Values	40
COMPANY TAX CONSIDERATIONS	41
POLICY VALUE	41
Determination of the Policy Value	41
Units and Unit Values	41
Transfers of Policy Value	41

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POLICY LOANS	43
Interest Charged on Policy Loans	43
Loan Account	43
POLICY SURRENDER AND PARTIAL WITHDRAWALS	44
Policy Surrender	44
Partial Withdrawals	44
LAPSE AND REINSTATEMENT	44
Lapse	44
Reinstatement	44
THE GENERAL ACCOUNT	44
Fixed Account	44
OTHER PROVISIONS OF THE POLICY	45
Policy owner Rights	45
Beneficiary	45
Incontestability	45
Misstatement of Age or Sex	45
Suicide Exclusion	45
Supplementary Benefits	46

TAX TREATMENT OF THE POLICY	46
OTHER INFORMATION	49
Payment of Proceeds	49
Reports to Policy owners	49
Distribution of the Policies	49
Responsibilities of John Hancock USA	50
Voting Rights	51
Substitution of Portfolio Shares	51
Records and Accounts	51
State Regulation	52
Further Information	52
Financial Statements	52
APPENDIX A: DEFINITIONS	53

This prospectus does not constitute an offering in any jurisdiction in which such offering may not lawfully be made. No person is authorized to make any representations in connection with this offering other than those contained in this prospectus, the portfolios prospectuses, or the corresponding Statements of Additional Information.

The purpose of this variable life insurance policy is to provide insurance protection for the beneficiary named therein. No claim is made that this variable life insurance policy is in any way similar or comparable to a systematic investment plan of a mutual fund.

Examine this prospectus carefully. The Policy Summary will briefly describe the policy. More detailed information will be found further in the prospectus.

RISKS/BENEFITS SUMMARY

Benefits

Some of the benefits of purchasing the policy are described below. Death Benefit Protection. This prospectus describes a flexible premium variable life insurance policy, which provides for a death benefit payable to the beneficiary of the policy upon the death of the insured. Variable life insurance is a flexible tool for financial and investment planning for persons needing death benefit protection. You should consider other forms of investments if death benefit protection is not one of your financial planning objectives, as there are additional costs and expenses in providing the insurance.

Access To Your Policy Values. Variable life insurance offers access to Policy Value. You may borrow against your policy, or surrender all, or a portion of your policy through a partial withdrawal. There are limitations on partial withdrawals. See “Policy Surrender and Partial Withdrawals” for further information.

Tax Deferred Accumulation. Variable life insurance has several tax advantages under current tax laws. For example, Policy Value accumulates on a tax-deferred basis and a transfer of values from one sub-account to another within the policy generates no taxable gain or loss. Any investment income and realized capital gains within a sub-account or interest from the Fixed Account are automatically reinvested without current income taxation to the policy owner.

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Investment Options. In addition to the Fixed Account, the policy provides for access to a number of variable investment options, which permit you to reallocate your Policy Value to meet your changing personal objectives, goals, and investment conditions. Information regarding each investment option may be found in the portfolio prospectuses.

Flexibility. The policy is a flexible premium variable life insurance policy in which varying premium payments are permitted. You may select death benefit options and an additional policy rider. You may increase or decrease the amount of death benefit. You are able to select, monitor, and change investment choices within your policy.

Risks

Some of the risks of purchasing the policy are described below.

Fluctuating Investment Performance. Policy Value invested in a sub-account is not guaranteed and will increase and decrease according to investment performance. You assume the investment risk of Policy Value allocated to the sub-accounts. A comprehensive discussion of each sub-account’s objective and risk is found in the portfolio prospectuses. You should review these prospectuses carefully before allocating Policy Value to any sub-accounts.

Unsuitable for Short-Term Investment. The Policy is intended for long-term financial planning, and is unsuitable for short-term goals. Your policy is not designed to serve as a vehicle for frequent trading.

Policy Lapse. Sufficient premiums must be paid to keep a policy in force. There is a risk of lapse if the Policy Value is too low in relation to the insurance amount, if investment results are less favorable than anticipated or if extensive policy loans are taken. A policy lapse could have adverse tax consequences since the amount received (including any loans) less the investment in the policy may be treated as ordinary income subject to tax. Since withdrawals reduce your Policy Value, withdrawals increase the risk of lapse.

Decreasing Death Benefit. Any outstanding policy loans and any amount that you have surrendered or withdrawn will reduce your policy’s death benefit.

Adverse Consequences of Early Surrender. There are surrender charges assessed if you surrender your policy in the first 10 years from the purchase of the policy or the effective date of a Face Amount increase. Depending on the amount of premium paid and the Policy Value at the time of surrender, there may be little or no Net Cash Surrender Value paid to you when the policy is surrendered. In addition, there are adverse consequences associated with partial withdrawals including potential policy lapse and adverse tax consequences. There may also be adverse consequences associated with full surrender of the policy.

Adverse Tax Consequences. You should always consult a tax adviser about the application of federal and state tax law to your individual situation. The federal income tax treatment of life insurance is complex and current tax treatment of life insurance may change.

FEE TABLES

The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the policy. Except where necessary to show a rate greater than zero, all rates shown in the tables have been rounded to two decimal places as required by the prospectus disclosure rules. Consequently, the actual rates charged may be slightly higher or lower than those shown. The first table describes the fees and expenses that you will pay at the time that you buy the policy, surrender the policy, or transfer cash value between investment options.

Transaction Fees
Charge	When Charge is Deducted	Amount Deducted
Maximum Premium Load Charge Imposed on Premium (Load)	Upon receipt of premium	2% of each premium paid
Maximum Sales Load Charge Imposed on Premium/1/	Upon receipt of premium	8% (Coverage Year 1)/2/
Maximum Surrender Charge (Load)/1/	Upon termination or reduction of any Coverage Amount that is subject to a surrender charge including surrender of the policy for its Net Cash Surrender Value, partial withdrawal in excess of the Free Withdrawal Amount, decrease in the Face Amount, or policy lapse.	5% (Coverage Year 1)/3/
Transfer Fees	Upon transfer	$25 (only applies to transfers in excess of 12 in a Policy Year)

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Dollar Cost Averaging	Upon transfer	Guaranteed $5.00 Current $0.00
Asset Allocation Rebalancer	Upon transfer	Guaranteed $15.00 Current $5.00

1 A policy is subject to either a Sales Charge or a Surrender Charge but not both. The policy indicates which charge is applicable.

2 The Sales Load Charge declines in subsequent Coverage Years as noted below:

Coverage Year	Percentage	Coverage Year	Percentage
1	8.00%	4	2.00%
2	6.00%	5	1.00%
3	3.00%	6+	0.00%

3 The Surrender Charge declines in subsequent Policy Years as noted below:

Coverage Year	Percentage	Coverage Year	Percentage
1	5.00%	6	1.50%
2	4.00%	7	1.00%
3	3.00%	8	1.00%
4	2.50%	9	0.50%
5	2.00%	10+	0.00%

The surrender charge are a percentage of the sum of all premium payments attributed to a Coverage Amount in the first five Coverage Years.

The next table describes the fees and expenses that you will pay periodically during the time that you own the policy, not including fees and expenses of the portfolios, the underlying variable investment options for your policy.

Charges Other Than Those of the Portfolios
Charge	When Charge is Deducted	Amount Deducted
Cost of Insurance/1/	Monthly	Minimum and Maximum Charge	The possible range of the cost of insurance is from $0.00 to $83.33 per month per $1,000 of the net amount at risk.
		Charge for a Representative policy owner (a 45 year old non-smoking male) (rating classification is for short form underwriting)	Policy Subject to Sales Charge: The Cost of Insurance rate is $0.16 per month per $1,000 of the net amount at risk.
			Policy Subject to Surrender Charge: The Cost of Insurance rate is $0.35 per month per $1,000 of the net amount at risk.
Cost of Insurance - Optional FTIO Rider (Flexible Term Insurance Option)/1/	Monthly	Minimum and Maximum Charges	The possible range of the cost of insurance is from $0.00 to $83.33 per month per $1,000 of the net amount at risk
		Charge for a Representative policy owner (a 45 year old non-	The Cost of Insurance rate is $0.10 per month

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		smoking male) rating classification is for short form underwriting)	per $1,000 of the net amount at risk
Mortality and Expense Risk Fees	Monthly	0.04% (0.50% annually)/2/
Administration Fees	Monthly	$12 per Policy Month
Loan Interest Rate (Net)	Annually	0.75%/3/

1 The cost of insurance varies based on individual characteristics and the charges shown in the table may not be representative of the charge a particular policy owner will pay. A policy owner may obtain additional information regarding cost of insurance charge by contacting the Company. The election (or failure to elect) the optional FTIO rider will impact the total cost of insurance charges.

2 Currently the Company is charging the following rates:

Policy Year	Annual Rate
1-10	0.50%
11+	0.20%

3 The Loan Interest Rate (Net) is equal to the rate of interest charged on the policy loan less the interest credited to the Loan Account. Currently this rate is 0.75% for Policy Years 1-10 and 0.25% for Policy Years 11 and higher. The maximum loan rate is 4%.

The next table describes the minimum and maximum annual operating expenses of the portfolios that you will pay during the time that you own the policy. The table shows the minimum and maximum fees and expenses charged by any of the portfolios, as a percentage of the portfolio’s average net assets for 2007. More detail concerning each portfolio’s fees and expenses is contained in the prospectus for the portfolios.

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The next table describes the minimum and maximum portfolio level fees and expenses charged by any of the portfolios underlying a variable investment option offered through this prospectus, expressed as a percentage of average net assets (rounded to two decimal places). These expenses are deducted from portfolio assets.

Total Annual Portfolio Operating Expenses	Minimum	Maximum
Range of expenses, including management fees, distribution and/or service (12b-1) fees, and other expenses	0.50%	1.64%

The next table describes the fees and expenses for each of the portfolios. Except as indicated in the footnotes at the end of the table, the expenses are expressed as a percentage of the portfolio’s average net assets for the fiscal year ending December 31, 2008. Except for the 500 Index B and PIMCO VIT All Asset portfolios, all of the portfolios shown in the table are Series 1 shares that are subject to Rule 12b-1 fees. More detail concerning each portfolio’s fees and expenses is contained in the prospectus for the portfolio.

As noted in the footnotes to the table, for certain portfolios John Hancock Investment Management Services, Inc. (the “Adviser”) has agreed to waive a portion of its fees or reimburse the portfolio for expenses when, and to the extent that, the net operating expenses exceed an agreed upon expense limitation. The Adviser may recapture operating expenses reimbursed or fees waived under previous expense limitation or waiver arrangements for a period of three years following the beginning of the month in which such reimbursement or waiver occurred.

Portfolio	Management Fees	12b-1 Fees	Other Expenses	Acquired Fund Fees and Expenses	Total Operating Expenses1
500 Index2, 3	0.46%	0.05%	0.03%	0.00%	0.54%
500 Index B4	0.47%	0.00%	0.03%	0.00%	0.50%
Active Bond3	0.60%	0.05%	0.04%	0.00%	0.69%
All Cap Core3	0.77%	0.05%	0.05%	0.00%	0.87%
All Cap Growth3	0.85%	0.05%	0.10%	0.00%	1.00%
All Cap Value3	0.85%	0.05%	0.09%	0.00%	0.99%
Alpha Opportunities3, 5	1.02%	0.05%	0.04%	0.00%	1.11%
American Asset Allocation6, 7	0.31%	0.60%	0.05%	0.00%	0.96%
American Blue Chip Income and Growth6	0.42%	0.60%	0.07%	0.00%	1.09%
American Bond6	0.39%	0.60%	0.05%	0.00%	1.04%
American Diversified Growth and Income5, 8	0.05%	0.60%	0.04%	0.63%	1.32%
American Fundamental Holdings5, 8	0.05%	0.60%	0.04%	0.40%	1.09%
American Global Diversification5, 8	0.05%	0.60%	0.04%	0.63%	1.32%
American Growth6	0.32%	0.60%	0.05%	0.00%	0.97%
American Growth-Income6	0.27%	0.60%	0.05%	0.00%	0.92%
American International6	0.49%	0.60%	0.07%	0.00%	1.16%
American New World5, 6, 7	0.76%	0.60%	0.18%	0.00%	1.54%
Balanced9	0.84%	0.05%	0.07%	0.00%	0.96%
Blue Chip Growth3, 9	0.81%	0.05%	0.04%	0.00%	0.90%
Capital Appreciation3	0.72%	0.05%	0.04%	0.00%	0.81%
Capital Appreciation Value3, 9, 10	0.95%	0.05%	0.15%	0.00%	1.15%
Core Allocation Plus3, 10	0.92%	0.05%	0.22%	0.00%	1.19%
Core Bond3, 10	0.64%	0.05%	0.07%	0.00%	0.76%
Core Strategy11	0.05%	0.05%	0.05%	0.52%	0.67%
Disciplined Diversification3, 12	0.80%	0.05%	0.19%	0.00%	1.04%

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Emerging Small Company3	0.97%	0.05%	0.08%	0.00%	1.10%
Equity-Income3, 9	0.81%	0.05%	0.05%	0.00%	0.91%
Financial Services3	0.82%	0.05%	0.08%	0.00%	0.95%
Franklin Templeton Founding Allocation13	0.04%	0.05%	0.04%	0.83%	0.96%
Fundamental Value3	0.76%	0.05%	0.05%	0.00%	0.86%
Global3, 10, 14, 15	0.81%	0.05%	0.11%	0.00%	0.97%
Global Allocation3, 10	0.85%	0.05%	0.10%	0.05%	1.05%
Global Bond3, 10	0.70%	0.05%	0.10%	0.00%	0.85%
Global Real Estate3	0.93%	0.05%	0.12%	0.00%	1.10%
Health Sciences3, 9, 10	1.05%	0.05%	0.08%	0.00%	1.18%
High Yield3	0.66%	0.05%	0.06%	0.00%	0.77%
International Core3, 10	0.89%	0.05%	0.14%	0.00%	1.08%
International Equity Index A2, 3	0.53%	0.05%	0.05%	0.00%	0.63%
International Opportunities3, 10	0.87%	0.05%	0.13%	0.00%	1.05%
International Small Cap3, 10	0.94%	0.05%	0.16%	0.00%	1.15%
International Value3, 10, 14	0.81%	0.05%	0.14%	0.00%	1.00%
Investment Quality Bond3	0.59%	0.05%	0.09%	0.00%	0.73%
Large Cap3	0.72%	0.05%	0.03%	0.00%	0.80%
Large Cap Value3	0.81%	0.05%	0.05%	0.00%	0.91%
Lifestyle Aggressive	0.04%	0.05%	0.04%	0.86%	0.99%
Lifestyle Balanced	0.04%	0.05%	0.03%	0.76%	0.88%
Lifestyle Conservative	0.04%	0.05%	0.03%	0.71%	0.83%
Lifestyle Growth	0.04%	0.05%	0.03%	0.76%	0.88%
Lifestyle Moderate	0.04%	0.05%	0.03%	0.74%	0.86%
Mid Cap Index2, 3	0.47%	0.05%	0.03%	0.00%	0.55%
Mid Cap Intersection3	0.87%	0.05%	0.06%	0.00%	0.98%
Mid Cap Stock3	0.84%	0.05%	0.05%	0.00%	0.94%
Mid Value3, 9	0.98%	0.05%	0.10%	0.00%	1.13%
Money Market3	0.47%	0.05%	0.06%	0.00%	0.58%
Natural Resources3	1.00%	0.05%	0.08%	0.00%	1.13%
Optimized All Cap3	0.68%	0.05%	0.06%	0.00%	0.79%
Optimized Value3	0.65%	0.05%	0.05%	0.00%	0.75%
Pacific Rim3, 10	0.80%	0.05%	0.25%	0.00%	1.10%
PIMCO VIT All Asset16	0.43%	0.25%	0.20%	0.76%	1.64%
Real Estate Securities3	0.70%	0.05%	0.05%	0.00%	0.80%
Real Return Bond3, 10, 17	0.68%	0.05%	0.06%	0.00%	0.79%
Science & Technology3, 9, 10	1.05%	0.05%	0.07%	0.00%	1.17%
Small Cap Growth3	1.06%	0.05%	0.08%	0.00%	1.19%
Small Cap Index2, 3	0.49%	0.05%	0.04%	0.00%	0.58%
Small Cap Opportunities3, 14	1.00%	0.05%	0.06%	0.00%	1.11%
Small Cap Value3	1.06%	0.05%	0.06%	0.00%	1.17%
Small Company Value3, 9	1.02%	0.05%	0.06%	0.00%	1.13%
Strategic Bond3, 10	0.67%	0.05%	0.06%	0.00%	0.78%
Strategic Income3	0.69%	0.05%	0.08%	0.00%	0.82%
Total Return3, 17	0.69%	0.05%	0.06%	0.00%	0.80%
Total Stock Market Index2, 3	0.49%	0.05%	0.04%	0.00%	0.58%
U.S. Government Securities3	0.61%	0.05%	0.09%	0.00%	0.75%
U.S. High Yield Bond3	0.73%	0.05%	0.06%	0.00%	0.84%
Utilities3, 10	0.83%	0.05%	0.10%	0.00%	0.98%
Value3	0.74%	0.05%	0.06%	0.00%	0.85%

¹Total Operating Expenses may include fees and expenses incurred indirectly by a portfolio as a result of its investment in other investment companies (each an “Acquired Fund”), and in those cases the Total Operating Expenses will be

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expected to vary based upon an allocation of the portfolio’s assets among the Acquired Fund portfolios and upon the total annual operating expenses of these portfolios, and may be higher or lower than those shown in the table. The Total Operating Expenses shown in the table may not correlate to the portfolio’s ratio of expenses to average net assets shown in the financial highlights section in the prospectus for the portfolios, which does not include Acquired Fund fees and expenses. For the International Equity Index A portfolio, Total Operating Expenses include Acquired Fund fees and expenses which are less than 0.01%.

²The Adviser has voluntarily agreed to reduce its advisory fee for a class of shares of the portfolio in an amount equal to the amount by which the ordinary expenses of such class of the portfolio exceed the expense limit (as a percentage of the average annual net assets of the portfolio attributable to the class) of 0.05% and, if necessary, to remit to that class of the portfolio an amount necessary to ensure that such expenses do not exceed that expense limit. Ordinary expenses means all the expenses of a class of the portfolio excluding advisory fees, 12b-1 fees, transfer agency fees and service fees, blue sky fees, taxes, portfolio brokerage commissions, interest, and litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the Trust’s business. This expense limitation will continue in effect unless otherwise terminated by the Adviser upon notice to the Trust. This voluntary expense limitation may be terminated at any time. The fees shown in the table do not reflect this expense limitation. For more information, please refer to the prospectus for the underlying portfolios.

³Effective January 1, 2006, the Adviser has voluntarily agreed to waive its advisory fee for certain portfolios or otherwise reimburse the expenses of those portfolios. The reimbursement will be equal, on an annualized basis, to 0.02% of that portion of the aggregate net assets of all the participating portfolios that exceeds $50 billion. The amount of the reimbursement will be calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each portfolio. The fees shown in the table do not reflect this waiver. If all applicable waivers or reimbursements had been reflected, the net operating expenses for these portfolios would be as indicated below. For more information, please see the prospectus for the participating portfolios.

Portfolio	Net Operating Expenses
500 Index	0.54%
Active Bond	0.69%
All Cap Core	0.87%
All Cap Growth	1.00%
All Cap Value	0.99%
Alpha Opportunities	1.11%
Blue Chip Growth	0.90%
Capital Appreciation	0.81%
Capital Appreciation Value	1.15%
Core Allocation Plus	1.19%
Core Bond	0.76%
Disciplined Diversification	0.75%
Emerging Small Company	1.10%
Equity-Income	0.91%
Financial Services	0.95%
Fundamental Value	0.86%
Global Allocation	1.05%
Global Bond	0.85%
Global Real Estate	1.10%
Health Sciences	1.18%
High Yield	0.77%
International Core	1.08%
International Equity Index A	0.63%
International Opportunities	1.05%
International Small Cap	1.15%
International Value	0.98%
Investment Quality Bond	0.73%

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Large Cap	0.80%
Large Cap Value	0.91%
Mid Cap Index	0.55%
Mid Cap Intersection	0.98%
Mid Cap Stock	0.94%
Mid Value	1.13%
Money Market	0.58%
Natural Resources	1.13%
Optimized All Cap	0.79%
Optimized Value	0.75%
Pacific Rim	1.10%
Real Estate Securities	0.80%
Real Return Bond	0.79%
Science & Technology	1.17%
Small Cap Growth	1.19%
Small Cap Index	0.58%
Small Cap Opportunities	1.11%
Small Cap Value	1.17%
Small Company Value	1.13%
Strategic Bond	0.78%
Strategic Income	0.82%
Total Return	0.80%
Total Stock Market Index	0.58%
U.S. Government Securities	0.75%
U.S. High Yield Bond	0.84%
Utilities	0.98%
Value	0.85%

⁴John Hancock Trust (the “Trust”) sells shares of these portfolios only to certain variable life insurance and variable annuity separate accounts of ours and our affiliates. Each portfolio is subject to an agreement between the Trust and the Adviser under which the Adviser has agreed to waive its advisory fee (or, if necessary, reimburse expenses of the portfolio) in an amount so that the rate of the portfolio’s Total Operating Expenses does not exceed its net operating expenses as listed below. A portfolio’s Total Operating Expenses includes all of its ordinary operating expenses, including advisory fees and 12b-1 fees, but excludes taxes, brokerage commissions, interest, litigation and indemnification expenses and extraordinary expenses (estimated at 0.01% or less of the portfolio’s average net assets) of the portfolio not incurred in the ordinary course of the portfolio’s business. Under the agreement, the Adviser’s obligation to provide the expense cap with respect to a particular portfolio will remain in effect until May 1, 2010 and will terminate after that date only if the Trust, without the prior written consent of the Adviser, sells shares of the portfolio to (or has shares of the portfolio held by) any person other than the variable life insurance or variable annuity separate accounts of ours or any of our affiliates that are specified in the agreement. The fees shown in the table do not reflect this expense cap. If this expense cap had been reflected, the net operating expense for the portfolio would be 0.25%. For more information, please see the prospectus for the portfolio.

⁵For portfolios that have not commenced operations or have inception dates of less than six months before December 31, 2008, expenses are estimated.

⁶Capital Research Management Company voluntarily waived a portion of its management fee from September 1, 2004 through December 31, 2008. The fees shown in the table do not reflect this waiver. See the financial highlights table in the American Funds Insurance Series’ prospectus or annual report for further information.

⁷The table reflects the fees and expenses of the master and feeder portfolios. The Adviser has contractually limited other ordinary expenses at the feeder portfolio level to 0.03% until May 1, 2010, and the table reflects this limit. Other portfolio level expenses consist of operating expenses of the portfolio, excluding adviser fees, 12b-1 fees, transfer agent fees, blue

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sky fees, taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of business.

⁸The Adviser has contractually agreed to waive its management fee of 0.05% of average annual net assets until May 1, 2010. The fees shown in the table do not reflect this waiver. If all applicable waivers or reimbursements had been reflected, the net operating expenses for the American Diversified Growth and Income, American Fundamental Holdings and American Global Diversification portfolios would be 1.27%, 1.04% and 1.27%, respectively.

⁹T. Rowe Price has voluntarily agreed to waive a portion of its subadvisory fee for certain portfolios. This waiver is based on the combined average daily net assets of these portfolios and the following funds of John Hancock Funds II: Blue Chip Growth, Equity-Income, Mid Value, Small Company Value, Spectrum Income and Real Estate Equity portfolios. The John Hancock Funds II portfolios are not offered under your policy. Based on the combined average daily net assets of the portfolios, the percentage fee reduction (as a percentage of the subadvisory fee) is as follows: 0% for the first $750 million, 5% for the next $750 million, 7.5% for the next $1.5 billion, and 10% if over $3 billion. The Adviser has also voluntarily agreed to reduce the advisory fee for each portfolio by the amount that the subadvisory fee is reduced. These voluntary fee waivers may be terminated by T. Rowe Price or the Adviser at any time. The fees shown in the table do not reflect these waivers. For more information, please see the prospectus for the underlying portfolios.

¹⁰Other Expenses reflect an estimated expense based on a new custody fee pursuant to an agreement between the Trust and its custodian, which became effective on April 1, 2009.

¹¹The Adviser has contractually agreed to reimburse ordinary expenses of the portfolio that exceed 0.02% of the average annual net assets of the portfolio. Expenses include all expenses of the portfolio except 12b-1 fees, underlying portfolio expenses, class specific expenses such as blue sky and transfer agency fees, portfolio brokerage, interest, and litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of business. This reimbursement may be terminated any time after May 1, 2010. The fees shown in the table do not reflect this reimbursement. If all applicable waivers or reimbursements had been reflected, the net operating expenses for the portfolio would be 0.59%. For more information, please see the prospectus for the underlying portfolio.

¹²The Adviser has contractually agreed to reimburse ordinary expenses of the portfolio that exceed 0.70% of the average annual net assets of the portfolio. Expenses include all expenses of the portfolio except 12b-1 fees, class specific expenses such as blue sky and transfer agency fees, portfolio brokerage, interest, and litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of business. This contractual reimbursement will be in effect until May 1, 2010 and thereafter until terminated by the Adviser on notice to the Trust. The fees shown in the table do not reflect this reimbursement. If all applicable waivers or reimbursements had been reflected, the net operating expenses for the portfolio would be 0.75%. For more information, please see the prospectus for the underlying portfolio.

¹³The Adviser has contractually agreed to limit ordinary portfolio expenses to 0.025% until May 1, 2010. Portfolio expenses include advisory fees and other ordinary operating expenses of the portfolio, but exclude 12b-1fees, underlying fund expenses, taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of business. The fees shown in the table do not reflect this waiver. If all applicable waivers or reimbursements had been reflected, the net operating expenses for the portfolio would be 0.91%. For more information, please see the prospectus for the underlying portfolio.

¹⁴The Adviser has contractually agreed to waive its advisory fees so that the amount retained by the Adviser after payment of the subadvisory fees for the portfolio does not exceed 0.45% of the portfolio’s average net assets. This advisory fee waiver will remain in place until May 1, 2010. The fees shown in the table do not reflect this waiver. If all applicable waivers or reimbursements had been reflected, the net operating expenses for the Global, International Value and Small Cap Opportunities portfolios would be 0.96%, 0.98% and 1.11%, respectively. For more information, please see the prospectus for the underlying portfolios.

¹⁵The Adviser has contractually agreed to reduce its advisory fee for a class of shares of the portfolio in an amount equal to the amount by which the ordinary expenses of such class of the portfolio exceed the expense limit (as a percentage of

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the average annual net assets of the portfolio attributable to the class) of 0.15% and, if necessary, to remit to that class of the portfolio an amount necessary to ensure that such expenses do not exceed that expense limit. Ordinary expenses means all the expenses of a class of a portfolio excluding advisory fees, 12b-1 fees, transfer agency fees and service fees, blue sky fees, taxes, portfolio brokerage commissions, interest, and litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the Trust’s business. This contractual reimbursement will be in effect until May 1, 2010 and thereafter until terminated by the Adviser on notice to the portfolio. The fees shown in the table do not reflect this reimbursement. If all applicable waivers or reimbursements had been reflected, the net operating expenses for the portfolio would be 0.96%. For more information, please see the prospectus for the underlying portfolio.

¹⁶Management Fees for the PIMCO VIT All Asset portfolio reflect an advisory fee and supervisory and administrative fee payable by the portfolio to Pacific Investment Management Company LLC (“PIMCO”). Other Expenses reflect a service fee of 0.20%. Acquired Fund fees and expenses for the portfolio are based upon an allocation of the portfolio’s assets among the underlying portfolios and upon the total annual operating expenses of the Institutional Class of these underlying portfolios. Acquired Fund fees and expenses will vary with changes in the expenses of the underlying portfolios, as well as allocation of the portfolio’s assets, and may be higher or lower than those shown in the table. For a listing of the expenses associated with each underlying portfolio for the most recent fiscal year, please refer to the prospectus for the underlying portfolio. PIMCO has contractually agreed through May 1, 2010 to reduce its advisory fee to the extent that the underlying portfolio expenses attributable to advisory, supervisory and administrative fees exceed 0.64% of the total assets invested in the underlying portfolios. PIMCO may recoup these waivers in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. This expense reduction is implemented based on a calculation of Acquired Fund fees and expenses attributable to advisory, supervisory and administrative fees that are different from the calculation of Acquired Fund fees and expenses shown in the table. The fees in the table do not reflect this expense reduction. If all applicable waivers or reimbursements had been reflected, the net operating expenses for the portfolio would be 1.62%. For more information, please see the prospectus for the underlying portfolio.

¹⁷Other Expenses reflect the estimate of amounts to be paid as substitute dividend expenses on securities borrowed for the settlement of short sales.

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Table of Investment Options and Investment Subadvisers

When you select a Separate Account investment option, we invest your money in shares of a corresponding portfolio of the John Hancock Trust (the “Trust” or “JHT”) (or the PIMCO Variable Insurance Trust (the “PIMCO Trust”) with respect to the PIMCO VIT All Asset portfolio) and hold the shares in a subaccount of the Separate Account. The Fee Tables show the investment management fees, Rule 12b-1 fees and other operating expenses for these portfolio shares as a percentage (rounded to two decimal places) of each portfolio’s average net assets for 2008, except as indicated in the footnotes appearing at the end of the table. Fees and expenses of the portfolios are not fixed or specified under the terms of the policies and may vary from year to year. These fees and expenses differ for each portfolio and reduce the investment return of each portfolio. Therefore, they also indirectly reduce the return you will earn on any Separate Account investment options you select.

The John Hancock Trust and the PIMCO Trust are so-called “series” type mutual funds and each is registered under the Investment Company Act of 1940 (“1940 Act”) as an open-end management investment company. John Hancock Investment Management Services, LLC (“JHIMS”) provides investment advisory services to the Trust and receives investment management fees for doing so. JHIMS pays a portion of its investment management fees to other firms that manage the Trust’s portfolios. We are affiliated with JHIMS and may indirectly benefit from any investment management fees JHIMS retains. The PIMCO VIT All Asset portfolio of the PIMCO Trust receives investment advisory services from Pacific Investment Management Company LLC (“PIMCO”) and pays investment management fees to PIMCO.

Each of the American Asset Allocation, American Blue Chip Income and Growth, American Bond, American Diversified Growth and Income, American Global Diversification, American Growth-Income, American Growth, American New World, American Fundamental Holdings, and American International portfolios invests in shares of the corresponding investment portfolio of the Trust and is subject to a 0.60% Rule 12b-1 fee. The American Asset Allocation, American Growth, American International, American Growth-Income, American New World, American Blue Chip Income and Growth and American Bond portfolios operate as “feeder funds,” which means that the portfolios do not buy investment securities directly. Instead, they invest in a “master fund” which in turn purchases investment securities. Each of the American feeder fund portfolios has the same investment objective and limitations as its master fund. The prospectus for the American Fund master fund is included with the prospectuses for the underlying funds. We pay American Funds Distributors, Inc., the principal underwriter for the American Funds Insurance Series, a percentage of some or all of the amounts allocated to the “American” portfolios of the Trust for the marketing support services it provides.

The portfolios pay us or certain of our affiliates compensation for some of the distribution, administrative, shareholder support, marketing and other services we or our affiliates provide to the portfolios. The amount of this compensation is based on a percentage of the assets of the portfolios attributable to the variable insurance products that we and our affiliates issue. These percentages may differ from portfolio to portfolio and among classes of shares within a portfolio. In some cases, the compensation is derived from the Rule 12b-1 fees that are deducted from a portfolio’s assets for the services we or our affiliates provide to that portfolio. These compensation payments do not, however, result in any charge to you in addition to what is shown in the Fee Tables.

The following table provides a general description of the portfolios that underlie the variable investment options we make available under the policy. You bear the investment risk of any portfolio you choose as an investment option for your policy. You can find a full description of each portfolio, including the investment objectives, policies, restrictions, and risks, in the prospectus for that portfolio. You should read the portfolio’s prospectus carefully before investing in the corresponding variable investment option.

The investment options in the Separate Account are not publicly traded mutual funds. The investment options are only available to you as investment options in the policies, or in some cases through other variable annuity contracts or variable life insurance policies issued by us or by other life insurance companies. In some cases, the investment options also may be available through participation in certain qualified pension or retirement plans. The portfolios’ investment advisers and managers (i.e. subadvisers) may manage publicly traded mutual funds with similar names and investment objectives. However, the portfolios are not directly related to any publicly traded mutual fund. You should not compare the performance of any investment option described in this prospectus with the performance of a publicly traded mutual fund.

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The performance of any publicly traded mutual fund could differ substantially from that of any of the investment options of our Separate Account.

The portfolios available under the policies are as described in the following table:

Portfolio	Portfolio Manager	Investment Objective and Strategy
500 Index	MFC Global Investment Management (U.S.A.) Limited	To seek to approximate the aggregate total return of a broad-based U.S. domestic equity market index. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in (a) the common stocks that are included in the S&P 500 Index* and (b) securities (which may or may not be included in the S&P 500 Index) that the subadviser believes as a group will behave in a manner similar to the index. The subadviser may determine that the portfolio’s investments in certain instruments, such as index futures, total return swaps and exchanged traded portfolios (“ETFs”) have similar economic characteristics to investments that are in the S&P 500 Index.
500 Index B	MFC Global Investment Management (U.S.A.) Limited	To seek to approximate the aggregate total return of a broad-based U.S. domestic equity market index. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in (a) the common stocks that are included in the S&P 500 Index* and (b) securities (which may or may not be included in the S&P 500 Index) that the subadviser believes as a group will behave in a manner similar to the index. The subadviser may determine that the portfolio’s investments in certain instruments, such as index futures, total return swaps and exchanged traded portfolios (“ETFs”) have similar economic characteristics to investments that are in the S&P 500 Index.
Active Bond	Declaration Management & Research LLC/ MFC Global Investment Management (U.S.), LLC	To seek to provide income and capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in a diversified mix of debt securities and instruments.
All Cap Core	Deutsche Investment Management Americas Inc.	To seek long-term growth of capital. Under normal market conditions, the portfolio invests in common stocks, other equity securities and other asset classes of those companies within the Russell 3000 Index.*
All Cap Growth	Invesco AIM Capital Management, Inc.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests its assets principally in common stocks of companies of all market capitalizations. The subadviser focuses on stocks of companies exhibiting long-term sustainable earnings and cash flow growth that is not yet reflected in investor expectations or equity valuations.
All Cap Value	Lord, Abbett & Co., LLC	To seek capital appreciation. Under normal market conditions, the portfolio invests in equity securities of U.S. and multinational companies in all capitalization ranges that the subadviser believes are undervalued. The portfolio will invest at least 50% of its net assets in equity securities of large, seasoned companies with

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		market capitalizations at the time of purchase that fall within the market capitalization range of the Russell 1000 Index.* This range varies daily. The portfolio will invest the remainder of its assets in mid-sized and small company securities.
Alpha Opportunities	Wellington Management Company, LLP	To seek long-term total return. The portfolio employs a “multiple sleeve structure” which means the portfolio has several components that are managed separately in different styles. The portfolio seeks to attain its objective by combining these different component styles into a single portfolio.
American Asset Allocation	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to provide high total return (including income and capital gains) consistent with preservation of capital over the long term. The portfolio invests all of its assets in Class 1 shares of the master fund, the Asset Allocation Fund, a series of American Funds Insurance Series. The master fund invests in a diversified portfolio of common stocks and other equity securities, bonds and other intermediate and long-term debt securities, and money market instruments. In addition, the master fund may invest up to 25% of its debt assets in lower quality debt securities (rated Ba or below by Moody’s and BB or below by S&P or unrated but determined to be of equivalent quality). Such securities are sometimes referred to as “junk bonds.” The master fund is designed for investors seeking above-average total return.
American Blue Chip Income and Growth	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to produce income exceeding the average yield on U.S. stocks generally (as represented by the average yield on the S&P 500 Index*) and to provide an opportunity for growth of principal consistent with sound common stock investing. The portfolio invests all of its assets in Class 1 shares of the master fund, the Blue Chip Income and Growth portfolio, a series of American Funds Insurance Series. The master portfolio invests primarily in common stocks of larger, more established companies based in the U.S. with market capitalizations of $4 billion and above. The master fund may also invest up to 10% of its assets in common stocks of larger, non-U.S. companies, as long as they are listed or traded in the U.S. The master portfolio will invest, under normal market conditions, at least 90% of its assets in equity securities. The portfolio is designed for investors seeking both income and capital appreciation.
American Bond	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to maximize current income and preserve capital. The portfolio invests all of its assets in Class 1 shares of the master fund, the Bond portfolio, a series of American Funds Insurance Series. The master fund normally invests at least 80% of its net assets (plus borrowing for investment purposes) in bonds. The master fund will invest at least 65% of its assets in investment-grade debt securities (including cash and cash equivalents) and may invest up to 35% of its assets in bonds that are rated Ba 1 or below by Moody’s and BB+ or below by S&P or that are unrated but determined to be of equivalent quality (so called “junk bonds”). It may invest in bonds of issuers domiciled outside the U.S. The portfolio may also invest up to 20% of its assets in preferred stocks, including convertible and non-convertible preferred stocks. The portfolio is designed for investors seeking income and more price stability than stocks, and capital

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		preservation over the long term.
American Diversified Growth and Income	MFC Global Investment Management (U.S.A.) Limited	To seek long term growth of capital and income. The portfolio invests in underlying portfolios as well as other types of investments. Under normal market conditions, the portfolio will generally invest between 70% and 80% of its assets in equity securities, which include securities held by the underlying portfolios, and between 20% and 30% of its assets in fixed income securities, which include securities held by the underlying portfolios.
American Fundamental Holdings	MFC Global Investment Management (U.S.A.) Limited	To seek long term growth of capital. The portfolio invests in underlying portfolios as well as other types of investments. The portfolio operates as a fund of funds and currently invests primarily in four underlying portfolios of the American Funds Insurance Series: Bond portfolio, Growth portfolio, Growth-Income portfolio, and International portfolio. The portfolio is permitted to invest in six other underlying portfolios of the American Funds Insurance Series: Asset Allocation portfolio, Blue Chip Income and Growth portfolio, Global Growth portfolio, Global Small Capitalization portfolio, High-Income Bond portfolio, and New World portfolio as well as other underlying portfolios. When purchasing shares of the American Funds Insurance Series, the portfolio only purchases Class 1 shares (which are not subject to Rule 12b-1 fees).
American Global Diversification	MFC Global Investment Management (U.S.A.) Limited	To seek long term growth of capital. The portfolio invests in underlying portfolios as well as other types of investments. Under normal market conditions, the portfolio will invest a significant portion of its assets in securities, which include securities held by the underlying portfolios, that are located outside of the U.S.
American Growth	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to make the shareholders’ investment grow. The portfolio invests all of its assets in Class 1 shares of the master fund, the Growth portfolio, a series of American Funds Insurance Series. The Growth portfolio invests primarily in common stocks of companies that appear to offer superior opportunities for growth of capital. The Growth portfolio may also invest up to 15% of its assets in equity securities of issuers domiciled outside the U.S. and Canada. In seeking to pursue its investment objective, the portfolio may invest in the securities of issuers representing a broad range of market capitalizations. The portfolio is designed for investors seeking capital appreciation through stocks. Investors in the portfolio should have a long-term perspective and be able to tolerate potentially wide price fluctuations.
American Growth–Income	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to make the shareholders’ investments grow and to provide the shareholder with income over time. The portfolio invests all of its assets in Class 1 shares of the master portfolio, the Growth-Income portfolio, a series of American Funds Insurance Series. The Growth-Income portfolio invests primarily in common stocks or other securities which demonstrate the potential for appreciation and/or dividends. The Growth-Income portfolio may invest up to 15% of its assets in securities of issuers domiciled outside the U.S. and not included in the S&P 500 Index.* The portfolio is designed for investors seeking both

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		capital appreciation and income.
American International	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to make the shareholders’ investment grow. The portfolio invests all of its assets in Class 1 shares of the master fund, the International portfolio, a series of American Funds Insurance Series. The International portfolio invests primarily in common stocks of companies located outside the U.S. The portfolio is designed for investors seeking capital appreciation through stocks. Investors in the portfolio should have a long-term perspective and be able to tolerate potentially wide price fluctuations.
American New World	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to make the shareholders’ investment grow over time. The portfolio invests all of its assets in Class 1 shares of the master fund, the New World portfolio, a series of American Funds Insurance Series. The New World portfolio invests primarily in stocks of companies with significant exposure to countries with developing economies and/or markets. The New World portfolio may also invest in debt securities of issuers, including issuers of lower rated bonds, with exposure to these countries. Under normal market conditions, the portfolio will invest at least 35% of its assets in equity and debt securities of issuers primarily based in what the subadviser deems qualified countries that have developing economies and/or markets. In addition, the portfolio may invest up to 25% of its assets in nonconvertible debt securities of issuers, including issuers of lower rated bonds (“junk bonds”) and government bonds, primarily based in qualified countries or that have a significant portion of their assets or revenues attributable to developing countries. The portfolio may also, to a limited extent, invest in securities of issuers based in nonqualified developing countries.
Balanced	T. Rowe Price Associates, Inc.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests in both equity and fixed-income securities. The portfolio employs growth, value and core approaches to allocate its assets among stocks of small, medium and large-capitalization companies in both the U.S. and foreign countries. The portfolio may purchase a variety of fixed income securities, including investment grade and below investment grade debt securities with maturities that range from short to longer term, as well as cash. Under normal market conditions, 55-75% of the portfolio will be invested in equity securities and 25-45% of the portfolio will be invested in fixed-income securities. The precise mix of equity and fixed-income securities will depend on the subadviser’s outlook for the markets and generally reflect the subadviser’s long-term, strategic asset allocation analysis. The subadviser anticipates that adjustments to the targeted asset allocation will result primarily from changes to its outlook for the global and domestic economies, industry sectors and financial markets, and its assessment of the relative attractiveness of each asset class.
Blue Chip Growth	T. Rowe Price Associates, Inc.	To seek to provide long-term growth of capital. Current income is a secondary objective. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in the common stocks of large and medium-sized blue chip growth companies. These are firms that,

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		in the subadviser’s view, are well established in their industries and have the potential for above-average earnings growth.
Capital Appreciation	Jennison Associates, LLC	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 65% of its total assets in equity and equity related securities of companies that, at the time of investment, exceed $1 billion in market capitalization and that the subadviser believes have above-average growth prospects. These companies are generally medium to large-capitalization companies.
Capital Appreciation Value	T. Rowe Price Associates, Inc.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests primarily in common stocks of established U.S. companies that have above-average potential for capital growth. Common stocks typically constitute at least 50% of the portfolio’s total assets. The remaining assets are generally invested in other securities, including convertible securities, corporate and government debt, foreign securities, futures and options. The portfolio may invest up to 20% of its total assets in foreign securities.
Core Allocation Plus	Wellington Management Company, LLP	To seek total return, consisting of long-term capital appreciation and current income. Under normal market conditions, the portfolio invests in equity and fixed income securities of issuers located within and outside the U.S. The portfolio will allocate its assets between fixed income securities, which may include investment grade and below investment grade debt securities with maturities that range from short to longer term, and equity securities, based upon the subadviser’s targeted asset mix, which may change over time. Under normal circumstances, the targeted asset mix may range between 50%-75% equity instruments and 25%-50% fixed income instruments and will generally reflect the subadviser’s long term, strategic asset allocation analysis. The subadviser anticipates that adjustments to the targeted asset allocation will result primarily from changes to its outlook for the global and domestic economies, industry sectors and financial markets and, to a lesser extent, its opinion of the relative attractiveness of each asset class.
Core Bond	Wells Capital Management, Incorporated	To seek total return consisting of income and capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in a broad range of investment grade debt securities, including U.S. Government obligations, corporate bonds, mortgage-backed and other asset-backed securities and money market instruments. The subadviser invests in debt securities that the subadviser believes offer attractive yields and are undervalued relative to issues of similar credit quality and interest rate sensitivity. The portfolio may also invest in unrated bonds that the subadviser believes are comparable to investment grade debt securities.
Core Strategy	MFC Global Investment Management (U.S.A.) Limited	To seek long term growth of capital. Current income is also a consideration. Under normal market conditions, the portfolio invests in a number of the other index portfolios of JHT. The portfolio invests approximately 70% of its total assets in underlying portfolios which invest primarily in equity securities

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		and approximately 30% of its total assets in underlying portfolios which invest primarily in fixed income securities.
Disciplined Diversification	Dimensional Fund Advisors LP	To seek total return consisting of capital appreciation and current income. Under normal market conditions, the portfolio invests primarily in equity securities and fixed-income securities of domestic and international issuers, including equities of issuers in emerging markets, in accordance with the following range of allocations: Target Allocation Equity Securities: 70% - Range of Allocation 65%-75% Fixed-Income Securities: - Range of Allocation 25%-35% The portfolio may invest outside these ranges and may invest defensively during unusual or unsettled market conditions.
Emerging Small Company	RCM Capital Management, LLC	To seek long term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in securities of small cap companies. The subadviser defines small cap companies U.S. companies that have a market capitalization that does not exceed the highest market capitalization of any company contained in either the Russell 2000 Index* or the S&P Small Cap Index.*
Equity-Income	T. Rowe Price Associates, Inc.	Seeks to provide substantial dividend income and also long-term growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities, with at least 65% in common stocks of well-established companies paying above-average dividends.
Financial Services	Davis Selected Advisers, L.P.	To seek growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in common stocks of companies that, at the time of investment, are principally engaged in financial services.
Franklin Templeton Founding Allocation	MFC Global Investment Management (U.S.A.) Limited	To seek long-term growth of capital. The portfolio operates as a fund of funds and invests in other portfolios and in other investment companies as well as other types of investments. The portfolio currently invests primarily in three underlying portfolios: Global, Income and Mutual Shares portfolios, as described in the JHT prospectus. The portfolio may purchase any portfolios except other JHT funds of funds and the American feeder funds. When purchasing shares of other JHT funds, the Franklin Templeton Founding Allocation Fund only purchases NAV shares (which are not subject to Rule 12b-1 fees).
Fundamental Value	Davis Selected Advisers, L.P.	To seek growth of capital. Under normal market conditions, the portfolio invests primarily in common stocks of U.S. companies with market capitalizations of at least $10 billion. The portfolio may also invest in companies with smaller capitalizations.
Global	Templeton Global Advisors Limited	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests primarily in the equity securities

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		of companies located throughout the world, including emerging markets.
Global Allocation	UBS Global Asset Management (Americas) Inc.	To seek total return, consisting of long-term capital appreciation and current income. Under normal market conditions, the portfolio invests in equity and fixed income securities of issuers located within and outside the U.S. The portfolio will allocate its assets between fixed income securities and equity securities.
Global Bond	Pacific Investment Management Company LLC	To seek maximum total return, consistent with preservation of capital and prudent investment management. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in fixed income instruments that are economically tied to at least three countries (one of which may be the U.S.), which may be represented by futures contracts (including related options) with respect to such securities, and options on such securities. These fixed income instruments may be denominated in non-U.S. currencies or in U.S. dollars, which may be represented by forwards or derivatives, such as options, futures contracts, or swap agreements.
Global Real Estate	Deutsche Investment Management Americas Inc.	To seek a combination of long-term capital appreciation and current income. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of U.S. real estate investments (“REITs”), foreign entities with tax-transparent structures similar to REITs and U.S. and foreign real estate operating companies. Equity securities include common stock, preferred stock and securities convertible into common stock. The portfolio will be invested in issuers located in at least three different countries, including the U.S.
Health Sciences	T. Rowe Price Associates, Inc.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in common stocks of companies engaged, at the time of investment, in the research, development, production, or distribution of products or services related to health care, medicine, or the life sciences.
High Yield	Western Asset Management Company	To realize an above-average total return over a market cycle of three to five years, consistent with reasonable risk. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in high yield securities, including corporate bonds, preferred stocks, U.S. Government and foreign securities, mortgage-backed securities, loan assignments or participations and convertible securities which have the following ratings (or, if unrated, are considered by the subadviser to be of equivalent quality): Corporate Bonds, Preferred Stocks and Convertible Securities Rating Agency Moody’s38             Ba through C S&P 51                   BB through D
International Core	Grantham, Mayo, Van Otterloo & Co, LLC	To seek high total return. Under normal market conditions, the portfolio invests at least 80% of its total assets in equity

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		investments. The portfolio typically invests in equity investments in companies from developed markets outside the U.S. The portfolio seeks to achieve its objective by outperforming its benchmark, the MSCI EAFE Index.*
International Equity Index A	SSgA Funds Management, Inc.	To seek to track the performance of a broad-based equity index of foreign companies primarily in developed countries and, to a lesser extent, in emerging markets. Under normal market conditions, the portfolio invests at least 80% of its assets in securities listed in the MSCI All CountryWorld Ex U.S. Index* or American Depository Receipts or Global Depository Receipts representing such securities.
International Opportunities	Marsico Capital Management, LLC	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 65% of its total assets in common stocks of foreign companies that are selected for their long-term growth potential. The portfolio may invest in companies of any size throughout the world. The portfolio invests in issuers from at least three different countries not including the U.S. The portfolio may invest in common stocks of companies economically tied to emerging markets. Some issuers or securities in the portfolio may be based in or economically tied to the U.S.
International Small Cap	Franklin Templeton Investment Corp.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in investments of smaller companies outside the U.S., including emerging markets, which have total stock market capitalizations or annual revenues of $4 billion or less.
International Value	Templeton Investment Counsel, LLC	To seek long-term growth of capital. Under normal market conditions, the portfolio invests primarily in equity securities of companies located outside the U.S., including in emerging markets.
Investment Quality Bond	Wellington Management Company, LLP	To provide a high level of current income consistent with the maintenance of principal and liquidity. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in bonds rated investment grade at the time of investment. The portfolio will tend to focus on corporate bonds and U.S. government bonds with intermediate to longer term maturities.
Large Cap	UBS Global Asset Management (Americas) Inc.	To seek to maximize total return, consisting of capital appreciation and current income. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of U.S. large capitalization companies. The portfolio defines large capitalization companies as those with a market capitalization range, at the time of investment, equal to that of the portfolio’s benchmark, the Russell 1000 Index.*
Large Cap Value	BlackRock Investment Management, LLC	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of large cap companies selected from those that are, at the time of

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		purchase, included in the Russell 1000 Value Index.* The portfolio will seek to achieve its investment objective by investing primarily in a diversified portfolio of equity securities of large cap companies located in the U.S. The portfolio will seek to outperform the Russell 1000 Value Index by investing in equity securities that the subadviser believes are selling at below normal valuations.
Lifestyle Aggressive	MFC Global Investment Management (U.S.A.) Limited	To seek long-term growth of capital. Current income is not a consideration. The portfolio operates as a fund of funds and, except as otherwise described below, generally invests approximately 100% of its assets in underlying portfolios that invest primarily in equity securities.
Lifestyle Balanced	MFC Global Investment Management (U.S.A.) Limited	To seek a balance between a high level of current income and growth of capital, with a greater emphasis on growth of capital. The portfolio operates as a fund of funds and generally invests approximately 40% of its assets in underlying portfolios that invest primarily in fixed income securities and approximately 60% in underlying portfolios that invest primarily in equity securities.
Lifestyle Conservative	MFC Global Investment Management (U.S.A.) Limited	To seek a high level of current income with some consideration given to growth of capital. The portfolio operates as a fund of funds and generally invests approximately 80% of its assets in underlying portfolios that invest primarily in fixed income securities and approximately 20% in underlying portfolios that invest primarily in equity securities.
Lifestyle Growth	MFC Global Investment Management (U.S.A.) Limited	To seek long-term growth of capital. Current income is also a consideration. The portfolio operates as a fund of funds and, except as otherwise described below, generally invests approximately 20% of its assets in underlying portfolios that invest primarily in fixed income securities and approximately 80% in underlying portfolios that invest primarily in equity securities.
Lifestyle Moderate	MFC Global Investment Management (U.S.A.) Limited	To seek a balance between a high level of current income and growth of capital, with a greater emphasis on income. The portfolio operates as a fund of funds and, except as otherwise described below, generally invests approximately 60% of its assets in underlying portfolios that invest primarily in fixed income securities and approximately 40% in underlying portfolios that invest primarily in equity securities.
Mid Cap Index	MFC Global Investment Management (U.S.A.) Limited	To seek to approximate the aggregate total return of a mid-cap U.S. domestic equity market index. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in (a) the common stocks that are included in the S&P MidCap 400 Index* and (b) securities (which may or may not be included in the S&P MidCap 400 Index) that the subadviser believes as a group will behave in a manner similar to the index.
Mid Cap Intersection	Wellington Management Company, LLP	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of medium-sized companies with significant capital appreciation

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		potential. For the purposes of the portfolio, “medium-sized companies” are those with market capitalizations, at the time of investment, within the market capitalization range of companies represented in either the Russell MidCap Index* or the S&P MidCap 400 Index.*
Mid Cap Stock	Wellington Management Company, LLP	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of medium-sized companies with significant capital appreciation potential. For the portfolio, “medium-sized companies” are those with market capitalizations within the collective market capitalization range of companies represented in either the Russell MidCap Index* or the S&P MidCap 400 Index.*
Mid Value	T. Rowe Price Associates, Inc.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets in companies with market capitalizations that are within the S&P MidCap 400 Index* or the Russell MidCap Value Index*. The portfolio invests in a diversified mix of common stocks of mid-size U.S. companies that are believed to be undervalued by various measures and offer good prospects for capital appreciation.
Money Market	MFC Global Investment Management (U.S.A.) Limited	To seek to obtain maximum current income consistent with preservation of principal and liquidity. Under normal market conditions, the portfolio invests in high quality, U.S. dollar denominated money market instruments. Certain market conditions may cause the return of the portfolio to become low or possibly negative.
Natural Resources	Wellington Management Company, LLP	To seek long-term total return. Under normal market conditions, the portfolio will invest at least 80% of its net assets (plus any borrowings for investment purposes) in equity and equity-related securities of natural resource-related companies worldwide, including emerging markets. Natural resource-related companies include companies that own or develop energy, metals, forest products and other natural resources, or supply goods and services to such companies.
Optimized All Cap	MFC Global Investment Management (U.S.A.) Limited	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 65% of its total assets in equity securities of U.S. companies. The portfolio will focus on equity securities of U.S. companies across the three market capitalization ranges of large, mid and small.
Optimized Value	MFC Global Investment Management (U.S.A.) Limited	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 65% of its total assets in equity securities of U.S. companies with the potential for long-term growth of capital, with a market capitalization range, at the time of investment, equal to that of the portfolio’s benchmark, the Russell 1000 Value Index.*
Pacific Rim	MFC Global Investment Management (U.S.A.) Limited	To seek to achieve long-term growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in common

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		stocks and equity-related securities of established, larger-capitalization non-U.S. companies located in the Pacific Rim region, including emerging markets, that have attractive long-term prospects for growth of capital. Current income from dividends and interest will not be an important consideration in the selection of portfolio securities.
PIMCO VIT All Asset (a series of PIMCO Variable Insurance Trust) (only Class M is available for sale)	Pacific Investment Management Company LLC	To seek maximum real return consistent with preservation of real capital and prudent investment management. The portfolio invests primarily in a diversified mix of: (a) common stocks of large and mid sized U.S. companies, and (b) bonds with an overall intermediate term average maturity.
Real Estate Securities	Deutsche Investment Management Americas Inc.	To seek to achieve a combination of long-term capital appreciation and current income. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of real estate investments and real estate companies. Equity securities include common stock, preferred stock and securities convertible into common stock.
Real Return Bond	Pacific Investment Management Company LLC	To seek maximum real return, consistent with preservation of real capital and prudent investment management. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus borrowings for investment purposes) in inflation-indexed bonds of varying maturities issued by the U.S. and non-U.S. Governments, their agencies or instrumentalities and corporations, which may be represented by forwards or derivatives such as options, futures contracts, or swap agreements.
Science & Technology	T. Rowe Price Associates, Inc. RCM Capital Management LLC	To seek long-term growth of capital. Current income is incidental to the portfolio’s objective. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in the common stocks of companies expected to benefit from the development, advancement, and/or use of science and technology. For purposes of satisfying this requirement, common stock may include equity linked notes and derivatives relating to common stocks, such as options on equity linked notes.
Small Cap Growth	Wellington Management Company, LLP	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in small-cap companies. For the purposes of the portfolio, “small-cap companies” are those with market capitalizations, at the time of investment, not exceeding the maximum market capitalization of any company represented in either the Russell 2000 Index* or the S&P SmallCap 600.*
Small Cap Opportunities	Invesco AIM Capital Management, Inc. & Dimensional Fund Advisors LP	To seek long-term capital appreciation. Under normal market conditions, Invesco AIM Capital Management, Inc. invests at least 80% of its subadvised net assets (plus any borrowings for investment purposes) in equity securities of small-capitalization companies. Dimensional Fund Advisors LP generally will invest its subadvised net assets in a broad and diverse group of readily marketable common stocks of small and mid cap companies

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		traded on a principal U.S. exchange or on the over-the-counter market that Dimensional Fund Advisers LP determines to be value stocks at the time of purchase.
Small Cap Index	MFC Global Investment Management (U.S.) LLC	To seek to approximate the aggregate total return of a small cap U.S. domestic equity market index. Under normal market conditions, the Fund invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in (a) the common stocks that are included in the Russell 2000 Index* and (b) securities (which may or may not be included in the Russell 2000 Index) that the subadviser believes as a group will behave in a manner similar to the index.
Small Cap Value	Wellington Management Company, LLP	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in small-cap companies that are believed to be undervalued by various measures and offer good prospects for capital appreciation. For the purposes of the portfolio, “small-cap companies” are those with market capitalizations, at the time of investment, not exceeding the maximum market capitalization of any company represented in either the Russell 2000 Index* or the S&P Small Cap 600 Index.*
Small Company Value	T. Rowe Price Associates, Inc.	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in companies with market capitalizations, at the time of investment, that do not exceed the maximum market capitalization of any security in the Russell 2000 Index.* The portfolio invests in small companies whose common stocks are believed to be undervalued.
Strategic Bond	Western Asset Management Company	To seek a high level of total return consistent with preservation of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in fixed income securities.
Strategic Income	MFC Global Investment Management (U.S.) LLC	To seek a high level of current income. Under normal market conditions, the portfolio invests at least 80% of its assets in the following types of securities: foreign government and corporate debt securities from developed and emerging markets, U.S. Government and agency securities, and domestic high-yield bonds.
Total Return	Pacific Investment Management Company LLC	To seek maximum total return, consistent with preservation of capital and prudent investment management. Under normal market conditions, the portfolio invests at least 65% of its total assets in a diversified portfolio of fixed income instruments of varying maturities, which may be represented by forwards or derivatives, such as options, futures contracts, or swap agreements.
Total Stock Market Index	MFC Global Investment Management (U.S.A.) Limited	Seeks to approximate the aggregate total return of a broad U.S. domestic equity market index. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in (a) the common stocks that are included in the Wilshire 5000 Total

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		Market Index* and (b) securities (which may or may not be included in the Wilshire 5000 Total Market Index) that the subadviser believes as a group will behave in a manner similar to the index.
U.S. Government Securities	Western Asset Management Company	To obtain a high level of current income consistent with preservation of capital and maintenance of liquidity. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in debt obligations and mortgage-backed securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities and derivative securities such as collateralized mortgage obligations backed by such securities and futures contracts. The portfolio may invest the balance of its assets in non-U.S Government securities including, but not limited to, fixed rate and adjustable rate mortgage-backed securities, asset-backed securities, corporate debt securities and money market instruments.
U.S. High Yield Bond	Wells Capital Management Incorporated	To seek total return with a high level of current income. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in U.S. corporate debt securities that are, at the time of investment, below investment grade, including preferred and other convertible securities in below investment grade debt securities (sometimes referred to as “junk bonds” or high yield securities). The portfolio also invests in corporate debt securities and may buy preferred and other convertible securities and bank loans.
Utilities	MFS Investment Management	To seek capital growth and current income (income above that available from the portfolio invested entirely in equity securities). Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowing for investment purposes) in securities of companies in the utilities industry. Securities in the utilities industry may include equity and debt securities of domestic and foreign companies (including emerging markets).
Value	Van Kampen Investments	To realize an above-average total return over a market cycle of three to five years, consistent with reasonable risk. Under normal market conditions, the portfolio invests in equity securities of companies with capitalizations, at the time of investment, similar to the market capitalization of companies in the Russell MidCapValue Index.*

*”Wilshire 5000 Total Market Index^®” is a trademark of Wilshire Associates. “MSCI All Country World Ex US Index” is a trademark of Morgan Stanley & Co. Incorporated. “Russell 1000,^®” “Russell 2000,^®” “Russell 1000 Value,^®” “Russell 3000,^®” “Russell MidCap,^®” and “Russell MidCap Value^®” are trademarks of Frank Russell Company.”S&P 500,^®” “S&P MidCap 400,^®” and “S&P SmallCap 600^®” are trademarks of The McGraw-Hill Companies, Inc. None of the portfolios are sponsored, endorsed, managed, advised, sold or promoted by any of these companies, and none of these companies make any representation regarding the advisability of investing in the portfolios.

The indices referred to in the portfolio descriptions track companies having the ranges of approximate market capitalization, as of February 28, 2009, set out below:

  Wilshire 5000 Total Market Index — $1 million to $385 billion

  MSCI All CountryWorld Ex US Index — $199 million to $176 billion

  MSCI EAFE Index — $199 million to $126 billion

  Russell 1000 Index — $41 million to $337.9 billion

  Russell 1000 Value Index — $41 million to $337.9 billion

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  Russell 2000 Index — $3.2 million to $3.7 billion

  Russell 3000 Index — $3 million to $337.9 billion

  Russell MidCap Index — $41 million to $13.8 billion

  Russell MidCap Value Index — $41 million to $13.8 billion

  S&P 500 Index — $224 million to $337.9 billion

  S&P MidCap 400 Index — $42 million to $4.6 billion

  S&P SmallCap 600 Index — $200 million to $1 billion

**The Barclays Capital U.S. Aggregate Bond Index (which represents the U.S. investment grade bond market) is a bond index that relies on indicators such as quality, liquidity, term and duration as relevant measures of performance.

POLICY SUMMARY

General

The policy is a flexible premium variable universal life insurance policy. This summary provides a general description of the important features of the policy. It is not comprehensive and is qualified in its entirety by the more detailed information contained in this prospectus. Unless otherwise stated or implied by the context, the discussions in this prospectus assume that the policy has not gone into default, there is no outstanding Policy Debt and the death benefit is not determined by the Minimum Death Benefit percentage. The policy’s provisions may vary in some states. The terms of the policy and any endorsements or riders will supersede the disclosure in this prospectus.

Death Benefits

The policy provides a death benefit in the event of the death of the Life Insured while the policy is in force. The basic death benefit amount is the Face Amount, which is provided for the lifetime of the Life Insured with no maturity or expiration date. There may be other amounts added to the death benefit as described below.

Flexible Term Insurance Option. You may add a flexible term insurance option rider (the “FTIO Rider”) to the policy to provide additional term life insurance coverage on the Life Insured. Cost of insurance rates are less than or equal to those of the policy and no Sales Loads or surrender charge will apply. However, unlike the Face Amount of the policy, the FTIO Rider will terminate at the Life Insured’s Attained Age 100. The FTIO Rider also offers the flexibility to schedule varying death benefit amounts on future dates (the “Scheduled Death Benefits”).

Death Benefit Options. There are two death benefit Options. Option 1 provides a death benefit equal to the Face Amount of the policy and the Scheduled Death Benefits of the FTIO Rider or, if greater, the Minimum Death Benefit. Option 2 provides a death benefit equal to the Face Amount and the Scheduled Death Benefits, plus the Policy Value or, if greater, the Minimum Death Benefit. You may change the death benefit Option and increase or decrease the Face Amount and Scheduled Death Benefits.

Age 100 Advantage. If the Life Insured is alive on the Policy Anniversary when the Life Insured reaches Attained Age 100, the policy will continue in force subject to the following unless the policy owner chooses to surrender the policy for its Net Cash Surrender Value:

• the policy will be continued until the earlier of the death of the Life Insured or the date the policy owner surrenders the policy;

• no additional premium payments will be accepted although loan repayments will be accepted;

• no additional charges or deductions (described under “Charges and Deductions”) will be assessed;

• interest on any Policy Debt will continue to accrue;

• the policy owner may continue to transfer portions of the Policy Value among the Investment Accounts and the Fixed Accounts as described inthis prospectus.

Premiums

Premium payments may be made at any time prior to Attained Age 100 and in any amount, subject to certain limitations (see “Premium Payments—Premium Limitations”). Net Premiums will be allocated to one or more of the Fixed Account and the sub-accounts of the Separate Account. You may change allocations and make transfers among the accounts subject to limitations described below.

Policy Value

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The Policy Value is the accumulation of premiums paid, less charges and deductions we take for expenses and cost of insurance, plus or minus the investment returns of the accounts to which the Policy Value has been allocated. You may obtain a portion of the Policy Value by taking a policy loan or a partial withdrawal or by full surrender of the policy.

Policy Loans

You may borrow against the Net Cash Surrender Value of the policy. Loan interest will accrue daily and be payable in arrears on each Policy Anniversary. The Policy Debt will be deducted from amounts payable at the Life Insured’s death or upon surrender.

Surrender and Partial Withdrawals

You may make a partial withdrawal of Policy Value. It may result in a decrease in the Face Amount and Scheduled Death Benefits and assessment of a portion of the surrender charge. You may surrender the policy for its Net Cash Surrender Value at any time.

Lapse and Reinstatement

A policy will lapse and terminate without value when the Net Cash Surrender Value is insufficient to pay the next monthly deduction and a grace period of 61 days expires without an adequate premium payment from you. You may reinstate a lapsed policy within five years following lapse if the policy was not surrendered for its Net Cash Surrender Value. Evidence of insurability is required, along with a premium payment described under “Reinstatement.”

The policy differs in two important ways from a conventional life insurance policy. First, failure to make planned premium payments will not itself cause the policy to lapse. Second, the policy can lapse even if planned premiums have been paid.

Charges and Deductions

We assess charges and deductions in connection with the policy, in the form of monthly deductions for the cost of insurance and administrative expenses, charges assessed daily against amounts in the Investment Accounts and loads deducted from premiums paid. See the Fee Tables.

Sales Load or Surrender Charge. You may choose Coverage Amounts with one of two alternative charge structures representing different ways to cover a portion of our marketing and distribution costs. Generally, policy benefits will be approximately equal in present value under either alternative. However, there is no guarantee each alternative will perform the same in all circumstances. Therefore, you should obtain individualized illustrations for both charge structures.

Sales Load coverage features a load deducted immediately from premiums paid and no surrender charge. Surrender Charge coverage features no added sales load with surrender charges assessed upon early surrender, lapse, partial withdrawal or coverage decrease. Current cost of insurance charges in early years are higher for Surrender Charge coverage.

Reduction in Charges and Enhancement of Surrender Values. The policy is designed for employers and other sponsoring organizations that may purchases multiple policies as a Case. The size or nature of the Case may result in expected savings of sales, underwriting, administrative or other costs. If so, we may offer reductions of policy charges and enhancements of surrender value. We may change the nature and amount of reductions and enhancements available from time to time. They will be determined in a way that is not unfairly discriminatory to policyholders.

Investment Options and Investment Subadvisers

You may allocate Net Premiums to the Fixed Account or to one or more of the sub-accounts of the Separate Account. Each of the sub-accounts invests in the shares of one of the portfolios described in the Table of Investment Options and Investment Subadvisers.

The portfolios also employ subadvisers. The Table of Investment Options and Investment Subadvisers shows the subadvisers that provide investment subadvisory services to the indicated portfolios.

Allocating Net Premiums only to one or a small number of the investment options (other than the Lifestyle Trusts) should not be considered a balanced investment strategy. In particular, allocating Net Premiums to a small number of investment options that concentrate their investments in a particular business or market sector will increase the risk that the value of your policy will be more volatile since these investment options may react similarly to business or market specific events. Examples of business or market sectors where this risk historically has been and may continue to be particularly high include: (a) technology related businesses, including internet related businesses, (b) small cap securities and ^© foreign securities. The Company does not provide advice regarding appropriate investment allocations. Please discuss this matter with your financial adviser.

Investment Management Fees and Expenses

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Each sub-account of the Separate Account purchases shares of one of the portfolios at net asset value. The net asset value of those shares reflects investment management fees and certain expenses of the portfolios. The fees and expenses for each portfolio are described in detail in the portfolio prospectuses.

GENERAL INFORMATION ABOUT JOHN HANCOCK USA, RATINGS AND THE SEPARATE ACCOUNT

John Hancock USA

John Hancock Life Insurance Company (U.S.A.) (“John Hancock USA” or “Company”) (formerly, The Manufacturers Life Insurance Company (U.S.A.)) is a stock life insurance company incorporated in Maine on August 20, 1955 by a special act of the Maine legislature and redomesticated under the laws of Michigan. We are a licensed life insurance company in the District of Columbia and all states of the United States except New York. Our ultimate parent is Manulife Financial Corporation (“MFC”), a publicly traded company, based in Toronto, Canada. MFC is the holding company of The Manufacturers Life Insurance Company (“Manufacturers Life”) and its subsidiaries, collectively known as Manulife Financial.

We are ranked and rated by independent financial rating services, which may include Moody’s, Standard & Poor’s, Fitch and A.M. Best. The purpose of these ratings is to reflect the financial strength or claims-paying ability of the company, but they do not specifically relate to its products, the performance (return) of these products, the value of any investment in these products upon withdrawal or to individual securities held in any portfolio. These ratings do not apply to the safety and performance of the Separate Account.

The Separate Account

The Separate Account has been established under Michigan law as a Separate Account of John Hancock USA. The Separate Account holds assets that are segregated from all of John Hancock USA’s other assets. The Separate Account is currently used only to support variable life insurance policies.

Assets of the Separate Account. John Hancock USA is the legal owner of the assets in the Separate Account. The income, gains, and losses of the Separate Account, whether or not realized, are, in accordance with applicable contracts, credited to or charged against the Separate Account without regard to the other income, gains, or losses of John Hancock USA. We will at all times maintain assets in the Separate Account with a total market value at least equal to the reserves and other liabilities relating to variable benefits under all policies participating in the Separate Account. These assets may not be charged with liabilities that arise from any other business we conduct. However, all obligations under the variable life insurance policies are general corporate obligations of John Hancock USA.

Registration. The Separate Account is registered with the SEC under the 1940 Act as a unit investment trust. A unit investment trust is a type of investment company that invests its assets in specified securities, such as the shares of one or more investment companies, rather than in a portfolio of unspecified securities. Registration under the 1940 Act does not involve any supervision by the SEC of the management or investment policies or practices of the Separate Account. For state law purposes the Separate Account is treated as a part or division of John Hancock USA.

ISSUING A POLICY

Use of the Policy

The policy is designed to provide employers or other organizations with life insurance coverage on employees or other individuals in whose lives they have an insurable interest. The policy may be owned by an individual or a corporation, trust, association, or similar entity. The policy may be used for such purposes as funding non-qualified executive deferred compensation or salary continuation liabilities or death benefit liabilities of executive retirement plans, or as a source for funding cash flow obligations under such plans.

Requirements

To purchase a policy, an applicant must submit a completed application. A policy will not be issued until the underwriting process is completed to our satisfaction and we approve issuance of the policy.

Policies may be issued on a basis that does not distinguish between the Life Insured’s sex and/or smoking status, with prior approval from us. A policy will only be issued on the lives of insureds from Issue Ages 20 through 80. Each policy has a Policy Date, an Effective Date and an Issue Date. The Policy Date is the date from which the first monthly deductions are calculated and from which Policy Years, Policy Months and Policy Anniversaries are measured. The Policy Date is also the effective date of the initial Coverage Amount. The Policy Date is the same date as the Effective Date unless the policy is backdated (see “Backdating a Policy”). The Effective Date is the date we become obligated under the policy and when the first monthly deductions are taken. It is the later of

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the date we approve issuance of the policy and the date we receive at least the Minimum Initial Premium. The Issue Date is the date from which the Suicide and Incontestability provisions of the policy are measured.

If we approve issuance of a policy before we receive the Minimum Initial Premium then the Effective Date will be later than the Issue Date. The Minimum Initial Premium must be received by us within 60 days after the Issue Date and the Life Insured must be in good health on the Effective Date. If the Minimum Initial Premium is not paid or if the application is rejected, the policy will be canceled and any premiums paid will be returned to the applicant.

Net Premiums received prior to the Effective Date will be credited with interest at the rate of return earned on amounts allocated to the Money Market portfolio. On the Effective Date, Net Premiums received plus any interest credited will be allocated to Investment Accounts and the Fixed Account according to your instructions, unless first allocated to the Money Market Trust for the duration of the right to examine period (see “Right to Examine the Policy”).

Minimum Face Amount and Scheduled Death Benefit. The minimum Face Amount is $50,000 unless the FTIO Rider is added to the policy. With an FTIO Rider, the minimum Face Amount is $25,000 and the minimum Scheduled Death Benefit is $50,000 at all times.

Backdating a Policy. You may request that we backdate the policy by assigning a Policy Date earlier than the date the application is signed. We will not backdate the policy to a date earlier than that allowed by state law, which is generally three months to one year prior to the date of application for the policy. Monthly deductions will be made for the period the Policy Date is backdated.

Temporary Insurance Agreement

Temporary insurance coverage may be provided under the terms of a Temporary Insurance Agreement, subject to our underwriting practices. Generally, temporary life insurance may not exceed $1,000,000 and may not be in effect for more than 90 days. It is issued on a conditional receipt basis, which means that benefits would only be paid if the Life Insured met our usual and customary underwriting standards for the coverage applied for.

Underwriting

The policies are offered on three underwriting classes that require different types and amounts of information from the applicant and prospective Life Insured. Current cost of insurance charges in early Policy Years will vary by the type of underwriting and charges will generally be lower where underwriting information is more extensive. Under any of the underwriting bases, the acceptance of an application is subject to our underwriting rules and we may request additional information or reject an application for any reason.

Short Form Underwriting. The proposed Life Insured must answer qualifying questions in the application but is not required to provide detailed medical history, submit records or undergo examinations or tests unless requested to do so by us. Availability of Short Form underwriting depends on characteristics of the Case, such as the number of lives to be insured, the amounts of insurance and other factors, and it is generally available only up to Issue Age 65.

Simplified Underwriting. The proposed Life Insured must satisfactorily answer certain health questions in the application and may be required to submit existing medical records, but requirements to undergo examinations and tests are minimized. Availability of Simplified underwriting and the nature of the requirements will depend on characteristics of the Case and the proposed lives to be insured.

Regular (Medical) Underwriting. Where Short Form or Simplified underwriting is unavailable we require satisfactory evidence of insurability under our regular underwriting guidelines for individual applicants. This may include medical exams and other information. A proposed Life Insured who fails to qualify for a standard risk classification may be eligible to be insured with an additional substandard rating.

Right to Examine the Policy

A policy may be returned for a refund within 10 days after you receive it. Some states provide a longer period of time for this right, which will be stated in the policy if applicable. The policy can be mailed or delivered to the John Hancock USA agent who sold it or to the Service Office. Immediately upon such delivery or mailing, the policy shall be deemed void from the beginning. Within seven days after receipt of the returned policy at the Service Office we will refund an amount equal to the value of amounts in the Investment Accounts and the Fixed Account on the date we receive the returned policy, plus all charges deducted prior to that date, not including fees and expenses of the portfolios, minus any partial withdrawals and policy loans.

Some state laws require the refund of premiums paid without adjustment for investment gains and losses of the Separate Account. In these states, all Net Premiums will be allocated to the Money Market Trust during the right to examine period and the refund amount will be equal to all premiums received less any partial withdrawals and policy loans.

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If you request a Face Amount increase that results in new surrender charge or sales loads, you will have the same rights described above to cancel the increase. If canceled, the premiums paid during this right to examine period will be refunded, and the Policy Value and surrender charge or sales loads will be recalculated to be as they would have been had the premiums not been paid.

We reserve the right to delay the refund of any premium paid by check until the check has cleared.

(Applicable to Residents of California Only)

Residents in California age 60 and greater may return the policy for a refund at any time within 30 days after receiving it. The policy can be mailed or delivered to the Company’s agent who sold it or to the Service Office. If you cancel the policy during this 30 day period and your premiums were allocated to a Fixed Account or the Money-Market investment option, we will refund you the amount of all premiums paid. If your premiums were allocated to one or more of the Investment Accounts (other than the Money Market portfolio), we will refund you the value of amounts in the Investment Accounts and the Fixed Account on the date we receive the returned policy plus all charges deducted prior to that date, not including fees and expenses of the portfolios; minus any partial withdrawals and policy loans.

Your premiums will be placed in either (a) the Fixed Account, (b) the Money Market investment option or ^© in one or more of the Investment Accounts, based upon your instructions. If no instructions are given, your premiums will be placed in the Money Market investment option.

Life Insurance Qualification

A policy must satisfy either of two tests to qualify as a life insurance contract as defined in Section 7702 of the Internal Revenue Code of 1986, as amended (the “Code”). At the time of application, you must choose either the Cash Value Accumulation Test (“CVA Test”) or the Guideline Premium Test (“GP Test”) and the test cannot be changed once the policy is issued.

Cash Value Accumulation Test. The CVA Test requires the death benefit at any time to be at least a certain ratio of the Policy Value, based on prescribed calculations. The Minimum Death Benefit provision described below will ensure that the CVA Test is met. There is no restriction on the amount of premiums you may pay, but we will require you to provide satisfactory evidence of insurability before we accept an amount of premium that would increase the death benefit by more than the increase in Policy Value.

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Guideline Premium Test. The GP Test limits the amount of premiums you may pay into the policy, given its death benefit, based on prescribed calculations. In addition, the GP Test requires the death benefit at any time to be at least a prescribed ratio of the Policy Value. These prescribed multiples are generally lower than those calculated under the CVA Test. The Minimum Death Benefit provision described below will ensure that this second requirement is met.

Changes to the policy or FTIO Rider, such as changes in Face Amount, Scheduled Death Benefit, death benefit Option or partial withdrawals, may affect the premium limits under the GP Test. Some changes will reduce future premium limits and may cause premiums already paid to exceed the new limits and force you to make a partial withdrawal.

DEATH BENEFITS

If the policy is in force at the time of the Life Insured’s death we will pay an insurance benefit to the beneficiary. The policy may remain in force for the Life Insured’s entire lifetime and there is no specified maturity or expiration date.

Insurance benefits are only payable when we receive due proof of death at the Service Office, in the form of either a certified copy of the death certificate, a certified copy of a decree of a court of competent jurisdiction as to the finding of death or other proof satisfactory to us.

The amount of the insurance benefit payable will be the death benefit on the date of death, as described below, less any Policy Debt and outstanding monthly deductions on the date of death. The insurance benefit will be paid in one lump sum unless another form of settlement is agreed to by the beneficiary and us. If the insurance benefit is paid in one sum, we will pay interest from the date of death to the date of payment. If the Life Insured should die after our receipt of a request for surrender, no insurance benefit will be payable, and we will pay only the Net Cash Surrender Value.

Minimum Death Benefit. Both the CVA Test and the GP Test require the death benefit to be at least a prescribed ratio of the Policy Value at all times. The Policy’s Minimum Death Benefit ensures that these requirements are met by providing that the death benefit shall be at least equal to the Policy Value multiplied by the applicable Minimum Death Benefit Percentage for the Attained Age of the Life Insured. Tables of Minimum Death Benefit Percentages appear below.

Table of Minimum Death Benefit Percentages.

Age	GP Test Percent	Male	CVA Test Female	Unisex	Age	GP Test Percent	Male	CVA Test Female	Unisex
20	250%	653%	779%	67.4%	60	130%	192%	221%	197%
21	250%	634%	754%	654%	61	128%	187%	214%	192%
22	250%	615%	730%	635%	62	126%	182%	208%	187%
23	250%	597%	706%	616%	63	124%	178%	203%	183%
24	250%	580%	684%	598%	64	122%	174%	197%	178%
25	250%	562%	662%	579%	65	120%	170%	192%	174%
26	250%	545%	640%	561%	66	119%	166%	187%	170%
27	250%	528%	619%	544%	67	118%	162%	182%	166%
28	250%	511%	599%	526%	68	117%	159%	177%	162%
29	250%	494%	580%	509%	69	116%	155%	173%	159%
30	250%	479%	561%	493%	70	115%	152%	169%	156%
31	250%	463%	542%	477%	71	113%	149%	164%	152%
32	250%	448%	525%	461%	72	111%	146%	160%	149%
33	250%	433%	507%	446%	73	109%	144%	156%	146%
34	250%	419%	491%	432%	74	107%	141%	153%	144%
35	250%	406%	475%	418%	75	105%	139%	149%	141%
36	250%	392%	459%	404%	76	105%	136%	146%	139%
37	250%	380%	444%	391%	77	105%	134%	143%	136%
38	250%	367%	430%	378%	78	105%	132%	140%	134%
39	250%	356%	416%	366%	79	105%	130%	138%	132%
40	250%	344%	403%	355%	80	105%	129%	135%	130%
41	243%	333%	390%	343%	81	105%	127%	133%	128%
42	236%	323%	378%	333%	82	105%	125%	130%	127%
43	229%	313%	366%	322%	83	105%	124%	128%	125%
44	222%	303%	355%	312%	84	105%	122%	126%	123%

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Age	GP Test Percent	Male	CVA Test Female	Unisex	Age	GP Test Percent	Male	CVA Test Female	Unisex
45	215%	294%	344%	303%	85	105%	121%	124%	122%
46	209%	285%	333%	294%	86	105%	120%	123%	121%
47	203%	277%	323%	285%	87	105%	119%	121%	119%
48	197%	268%	313%	276%	88	105%	118%	119%	118%
49	191%	260%	304%	268%	89	105%	116%	118%	117%
50	185%	253%	295%	260%	90	105%	116%	117%	116%
51	178%	245%	286%	253%	91	104%	115%	115%	115%
52	171%	238%	278%	245%	92	103%	114%	114%	114%
53	164%	232%	270%	238%	93	102%	112%	113%	113%
54	157%	225%	262%	232%	94	101%	111%	112%	111%
55	150%	219%	254%	225%	95	100%	110%	110%	110%
56	146%	213%	247%	219%	96	100%	109%	109%	109%
57	142%	207%	240%	213%	97	100%	107%	107%	107%
58	138%	202%	233%	208%	98	100%	106%	106%	106%
59	134%	197%	227%	202%	99	100%	105%	105%	105%
100%					100+	100%	100%	100%	100%

Flexible Term Insurance Option Rider

You may add the FTIO Rider to the policy to provide additional death benefit coverage on the Life Insured. The FTIO Rider provides flexible term life insurance to Attained Age 100 with cost of insurance charges less than or equal to those of the policy. The Rider will terminate at the earlier of Attained Age 100, the date the policy lapses or is surrendered, and your request to cancel the FTIO Rider.

You may schedule the death benefit amounts that will apply at specified times (the “Scheduled Death Benefits”). Scheduled Death Benefits may be constant or varying from time to time. The Death Benefit Schedule will be shown in the policy.

The Term Insurance Benefit of the FTIO Rider is equal to (a) minus (b) but not less than zero where:

(a) the Scheduled Death Benefit for the Policy Month, and

(b) the Face Amount of the policy or, if greater, the policy’s Minimum Death Benefit

Even if the Term Insurance Benefit may be zero in a Policy Month, the Rider will not terminate.

Example. A policy is purchased for an executive as part of an employee benefit plan. The death benefit provided by the policy is to be equal to the executive’s salary of $100,000 increasing at 5% per year through age 64. Assuming the executive is currently 55, the policy will be issued with a death benefit Schedule as follows:

Policy Year	Scheduled Death Benefit	Policy Year	Scheduled Death Benefit
1	100,000	6	127,628
2	105,000	7	134,010
3	110,250	8	140,710
4	115,763	9	147,746
5	121,551	10+	155,133

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The FTIO Rider amount will change each year as necessary to provide the benefits shown in the schedule, as follows:

Policy Year	Total Death Benefit	Face Amount	Flexible Term Insurance Amount
1	100,000	100000	0
2	105,000	100000	5,000
3	110,250	100000	10,250
4	115,763	100000	15,763
Policy Year	Total Death Benefit	Face Amount	Flexible Term Insurance Amount
5	121,551	100000	21,551
6	127,628	100000	27,628
7	134,010	100000	34,010
8	140,710	100000	40,710
9	147,746	100000	47,746
10	155,133	100000	55,133

Death Benefit Options

You may choose either of two death benefit Options:

Death Benefit Option 1. The death benefit on any date is the Face Amount of the policy or, if greater, the Minimum Death Benefit, plus the Term Insurance Benefit of the FTIO Rider.

Death Benefit Option 2. The death benefit on any date is the Face Amount plus the Policy Value or, if greater, the Minimum Death Benefit, plus the Term Insurance Benefit of the FTIO Rider.

Changing the Death Benefit Option

You may change the death benefit Option at any time. The change will take effect at the beginning of the next Policy Month that is at least 30 days after your written request is received at the Service Office. We reserve the right to limit changes that could cause the policy to fail to qualify as life insurance for tax purposes.

A change in the death benefit Option will result in a change in the Face Amount and Scheduled Death Benefits to avoid any change in the amount of death benefit, as follows:

Change from Option 1 to Option 2. The new Face Amount will be the Face Amount prior to the change less the Policy Value on the date of the change.

The Scheduled Death benefit amounts for dates on or after the date of the change will be the amounts scheduled prior to the change less the Policy Value on the date of the change.

Coverage Amounts will be reduced or eliminated in the order that they are listed in the policy until the total decrease in Coverage Amounts equals the decrease in Face Amount.

surrender charge will not be assessed for reductions that are solely due to a change in the death benefit Option.

Example. A policy is issued with a Face amount of $100,000, death benefit Option 1, and the following schedule:

Policy Year	Scheduled Death Benefit
1	100,000
2	125,000
3	150,000
4	175,000

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Policy Year	Scheduled Death Benefit
5+	200,000

The death benefit Option is changed to Option 2 at the beginning of Policy Year 3. If the Policy Value at the time of the change is $10,000, then the Face Amount after the change will be $90,000 (the Face Amount prior to the change less the Policy Value) and the Death Benefit Schedule after the change will become:

Policy Year	Scheduled Death Benefit
3	140,000
4	165,000
5+	190,000

Change from Option 2 to Option 1. The new Face Amount will be the Face Amount prior to the change plus the Policy Value on the date of the change (but the new Face Amount will be no greater than the Scheduled Death Benefit on the date of the change.)

The resulting Face Amount increase will be added to the first Coverage Amount listed in the policy.

The Annual Premium Target for this Coverage Amount will not be increased and new surrender charge or Sales Loads will not apply, however, for an increase solely due to a change in the death benefit Option.

Example. A policy is issued with a Face amount of $100,000, death benefit Option 2, and the following schedule:

Policy Year	Scheduled Death Benefit
1	100,000
2	125,000
Policy Year	Scheduled Death Benefit
3	150,000
4	175,000
5+	200,000

The death benefit Option is changed to Option 1 at the beginning of Policy Year 3. If the Policy Value at the time of the change is $10,000, then the Face Amount after the change will be $110,000 (the Face Amount prior to the change plus the Policy Value), and the Death Benefit Schedule after the change will become:

Policy Year	Scheduled Death Benefit
3	160,000
4	185,000
5+	210,000

• Changing the Face Amount and Scheduled Death Benefits

• At any time, you may request an increase or decrease to the Face Amount or any Scheduled Death Benefits effective on or after the date of change. We reserve the right to limit changes that could cause the policy to fail to qualify as life insurance for tax purposes.

• Increases in Face Amount and Scheduled Death Benefits. Increases in Face Amount and Scheduled Death Benefits are subject to the following conditions:

• Increases in Face Amount and Scheduled Death Benefits will require satisfactory evidence of the Life Insured’s insurability.

• Increases will take effect at the beginning of the next Policy Month after we approve the request.

• We may refuse a requested increase that would not meet our requirements for new policy issues at the time due to the Life Insured’s Attained Age or other factors.

• If the Face Amount is increased (other than as required by a death benefit Option change) then all Scheduled Death Benefits effective on or after the date of the change will be increased by the amount of the Face Amount increase.

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New Surrender Charges or Sales Loads for a Face Amount Increase. Coverage Amounts equal to the amount of the increase will be added to the policy as follows:

• First, Coverage Amounts that were reduced or eliminated by a prior Face Amount decrease will be restored.

• Second, if needed, a new Coverage Amount will be added to the policy with an Annual Premium Target and new surrender charge or Sales Loads. Any new Coverage Amount will be based on the Life Insured’s Attained Age and other relevant factors on the effective date of the increase.

Premiums paid on or after the increase may be attributed to the new Coverage Amount and result in surrender charge or Sales Loads (see “Charges and Deductions — Attribution of Premiums”).

Decreases in Face Amount and Scheduled Death Benefits. Decreases in Face Amount and Scheduled Death Benefits are subject to the following conditions:

• Decreases in Face Amount and Scheduled Death Benefits will take effect at the beginning of the next policy Month which is at least 30 days after your written request is received at the Service Office.

• If the Face Amount is decreased then all Scheduled Death Benefits effective on or after the date of the change will be decreased by the same amount.

• If at any time the Scheduled Death Benefit decreases to less than the Face Amount, the Face Amount will be decreased to be equal to the Scheduled Death Benefit at that time.

• Coverage Amounts equal to the amount of the Face Amount decrease will be reduced or eliminated in the reverse order that they are listed in the policy. surrender charge may be assessed (see “Charges and Deductions — Sales Load or Surrender Charge”).

Decreases in Face Amount under Death Benefit Option 1 due to a Partial Withdrawal. If death benefit Option 1 is in effect when a partial withdrawal is made, the Face Amount will be decreased by an amount equal to (a) minus (b) but not less than zero, where:

(a) is the partial withdrawal amount plus any applicable Surrender Charge and

(b) is the excess, if any, of the policy’s Minimum Death Benefit over its Face Amount, immediately prior to the partial withdrawal.

Decreases in Face Amount under death benefit Option 1 due to a Partial Withdrawal are subject to the following conditions:

• Coverage Amounts equal to the amount of the Face Amount decrease will be reduced or eliminated in the reverse order that they are listed in the policy.

• All Scheduled Death Benefits effective on or after the date of the partial withdrawal will be decreased by the amount of the Face Amount decrease, unless you request otherwise and we approve.

• A Face Amount decrease due to a partial withdrawal will not incur any Surrender Charge in addition to that applicable to the partial withdrawal (see “Charges and Deductions — Sales Load or Surrender Charge”).

Example for Face Increases and Decreases. A policy is issued with a Face Amount of $100,000, death benefit Option 1, and a Death Benefit Schedule as follows:

Policy Year	Scheduled Death Benefit
1	100,000
2	125,000
3	150,000
4	175,000
5+	200,000

Assume the following policy activity:

Activity	Effect on Policy	Change in Benefit Schedule
		Policy Year	Scheduled Death Benefit
In Policy Year 2, the Face Amount is reduced to $80,000.	The initial Coverage amount is reduced to $80,000.	2   3   4   5+	105,000 130,000 155,000 180,000

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Activity	Effect on Policy	Change in Benefit Schedule
		Policy Year	Scheduled Death Benefit
Activity	Effect on Policy	Change in Benefit Schedule
		Policy Year	Scheduled Death Benefit
In Policy Year 3, the Face Amount is increased to $ 120,000	The initial Coverage Amount (which earlier was reduced to $80,000) is restored to its original level of $100,000. A new Coverage Amount for $20,000 is added to the policy. This new coverage amount will have its own Annual Premium Target, and if applicable, its own Sales Load or surrender charge. A portion of the future premiums paid will be attributed to this Coverage Amount to determine the amount of the Sales Load or Surrender Charge.	3   4   5+	170,000 195,000 220,000
		Policy Year	Scheduled Death Benefit
In Policy Year 4, a Partial Withdrawal of $30,000 is made.	The Face Amount is reduced to $90,000. The most recent Coverage Amount of $20,000 is reduced to$0, and the initial Coverage Amount is reduced to $90,000.	4 5	165,000 190,000

Factors that Affect the Death Benefit. In the case of death benefit Option 2 where the death benefit is the Face Amount plus the Policy Value, changes in the Policy Value will affect the amount of death benefit. Factors that affect the Policy Value are the investment performance of the variable investment options chosen and the charges deducted. For a discussion of how these factors affect Policy Value see the “Risks/Benefits Summary.” These factors do not affect the Face Amount of the policy. Therefore, the amount of death benefit under Option 1 will not be less than the Face Amount as long as the policy does not lapse.

PREMIUM PAYMENTS

Initial Premiums

No premiums will be accepted prior to receipt of a completed application by us. All premiums received prior to the Effective Date of the policy will be held in the general account and credited with interest from the date of receipt at the rate of return earned on amounts allocated to the Money Market Trust.

On the Effective Date, the Net Premiums paid plus interest credited will be allocated among the Investment Accounts or the Fixed Account in accordance with your instructions, unless first allocated to the Money Market Trust for the duration of the right to examine period (see “Right to Examine the Policy”).

Subsequent Premiums

After the payment of the initial premium, premiums may be paid at any time during the lifetime of the Life Insured prior to Attained Age 100 and in any amount subject to the premium limitations described below. A policy will be issued with a planned premium, which is based on the amount of premium you wish to pay. We will send you notices of your planned premium at the payment interval you select. However, you are under no obligation to make the planned premium payment.

Payment of premiums will not guarantee that the policy will stay in force and failure to pay premiums will not necessarily cause the policy to lapse. The policy will remain in force so long as the Net Cash Surrender Value is sufficient to cover policy charges.

Premium Limitations

If the policy is issued under the GP Test, the total of all premiums paid may not exceed the then-current maximum premium limitations established by federal income tax law for the policy to qualify as life insurance. The GP Test premium limits are stated in the policy. If a premium is received which would result in total premiums exceeding the applicable GP Test limit, we will only accept that portion of the premium that will not exceed the limit. Any premium in excess of that amount will be returned.

If the policy is issued under the CVA Test, there is no restriction on the amount of premiums that may be paid into a policy, but you must provide satisfactory evidence of insurability before we accept any premium that would increase the death benefit by an amount greater than the increase in Policy Value.

Premium Allocation

You may allocate premiums to the Fixed Account and Investment Accounts. Allocations may be made as percentages that are between zero and 100% that sum to exactly 100%. Alternatively, you may allocate a premium in dollar amounts that sum to exactly the Net Premium amount. You may change premium allocations at any time and the change will take effect on the date a request for change satisfactory to us is received at the Service Office.

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CHARGES AND DEDUCTIONS

Premium Load

We will deduct a Premium Load as a percentage of each premium payment that is guaranteed never to exceed 2.0%. Currently, we waive this load in Policy Years 11 and later and charge 0%.

The charge is intended to cover a portion of the aggregate amount of various taxes and fees we pay to federal, state and local governments. It is not based on the actual premium tax rate of your state of residence or any other specific tax.

Sales Load or Surrender Charge

Each Coverage Amount listed in the policy is designated as having either a Sales Load or Surrender Charge. One or the other of these charges will apply to a Coverage Amount, but not both. This designation cannot be changed after a Coverage Amount is effective and, currently, the same alternative must apply to all Coverage Amounts.

Generally, policy benefits will be approximately equal in present value under either alternative. However, there is no guarantee each alternative will perform the same in all circumstances. Therefore, you should obtain individualized illustrations for both charge structures. Current cost of insurance rates in early Policy Years will be higher for the Surrender Charge alternative.

The Sales Load or Surrender Charge is intended to cover a portion of our costs of marketing and distributing the policies.

Attribution of Premiums. An Annual Premium Target is associated with each Coverage Amount. Annual Premium Targets are based on the Coverage Amount and the Life Insured’s Attained Age, sex and smoking status on the effective date of the Coverage Amount. The Annual Premium Targets are listed with the Coverage Amounts in the policy.

Premium payments will be attributed to Coverage Amounts that have been in effect for less than 5 years. Attribution will begin with the first applicable Coverage Amount that is listed in the policy. The sum of all premium amounts attributed to a Coverage Amount in a Coverage Year is limited to the Annual Premium Target shown in the policy. Premium amounts that exceed the Annual Premium Target will be attributed to the next listed Coverage Amount, up to its own Annual Premium Target. Attribution will continue in this manner until either the entire premium is attributed to Coverage Amounts or the Annual Premium Target is exceeded for all applicable Coverage Amounts.

Sales Load. We deduct a Sales Load from all premium amounts attributed to a Coverage Amount designated as having a Sales Load. The Sales Load is a percentage of premiums guaranteed never to exceed the percentages below.

Currently we are charging these percentages.

Coverage Year	Percentage	Coverage Year	Percentage
1	8%	4	2%
2	6%	5	1%
3	3%	6+	0%

• Surrender Charge. We will deduct a Surrender Charge from the Net Policy Value upon elimination or reduction of a Coverage Amount designated as having a Surrender Charge during the first 9 Coverage Years. Coverage Amounts may be eliminated or reduced and a Surrender Charge assessed due to:

• surrender of the policy for its Net Cash Surrender Value,

• a partial withdrawal which exceeds the Free Partial Withdrawal Amount,

• a Face Amount decrease that is not solely due to a death benefit Option change, or

• lapse of the policy.

• The Surrender Charge for an applicable Coverage Amount is a percentage of the sum of all premiums attributed to it since its effective date. Surrender Charge percentages are guaranteed never to exceed those below. Currently, we are charging these percentages:

Coverage Year	Percentage	Coverage Year	Percentage
1	5.0%	6	1.5%
2	4.0%	7	1.0%
3	3.0%	8	1.0%
4	2.5%	9	0.5%
5	2.0%	10+	0.0%

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Although the Surrender Charge percentages remain level or decrease as the Coverage Year increases, the total dollar amount of surrender charge may increase, as the total premium paid increases. Premiums paid in any Coverage Year in excess of the Annual Premium Target and premiums paid after the fifth Coverage Year may not add to the Surrender Charge, so the timing of premium payments may affect the amount of the Surrender Charge.

Depending upon circumstances such as premiums paid and performance of the underlying investment options, there may be a Policy Value but no Cash Surrender Value available due to the existence of the Surrender Charge.

Unless otherwise allowed by us and specified by you, surrender charge will be allocated among the Investment Accounts and the Fixed Account in the same proportion as the Policy Value in each Account bears to the Net Policy Value.

Surrender Charges on a Partial Withdrawal. We will assess a portion of the Surrender Charge if you take a partial withdrawal that exceeds the Free Withdrawal Amount. The Free Withdrawal Amount is 10% of the Net Cash Surrender Value at the time of the withdrawal less the amount of any partial withdrawals already taken in the same Policy Year.

The portion of the policy’s total Surrender Charge that will be assessed is the ratio of (a) to (b), where (a) is the amount being withdrawn in excess of the Free Withdrawal Amount and (b) is the Net Cash Surrender Value immediately prior to the withdrawal. The remaining surrender charge for all Coverage Amounts will be reduced in the same proportion that the Surrender Charge assessed bears to the policy’s total Surrender Charge immediately prior to the partial withdrawal.

Surrender Charges on a Face Amount Decrease. We will assess a portion of the Surrender Charge upon a Face Amount decrease that is not required due to a death benefit Option change or partial withdrawal. For each Coverage Amount that is reduced or eliminated as a result of the decrease, we will assess a portion of any applicable Surrender Charge. The proportion of the Surrender Charge that is assessed will be the ratio of amount by which the Coverage Amount is reduced to the Coverage Amount prior to reduction. The remaining surrender charge for affected Coverage Amounts will be reduced by the same ratio.

Monthly Deductions

On the Policy Date and at the beginning of each Policy Month prior to Attained Age 100, a deduction is due from the Net Policy Value to cover certain charges described below. Monthly deductions due prior to the policy’s Effective Date will be taken on the Effective Date. Unless otherwise allowed by us and specified by you, the monthly deduction will be allocated among the Investment Accounts and the Fixed Account in the same proportion as the Policy Value in each of the Investment Accounts and the Fixed Account bears to the Net Policy Value.

Administration Charge. Currently we deduct a charge of $12 per Policy Month, which is guaranteed never to be exceeded. This charge is intended to cover certain administrative expenses associated with the policy, including maintaining policy records, collecting premiums and processing death claims, surrender and withdrawal requests and various changes permitted under a policy.

Cost of Insurance Charge. A monthly charge for the cost of insurance is paid to the Company and is determined by multiplying a cost of insurance rate by the net amount at risk at the beginning of each Policy Month.

Death Benefit Option 1. The net amount at risk is equal to the greater of zero, or (a) minus (b), where

(a) is the applicable death benefit amount on the first day of the Policy Month, divided by 1.0024663; and

(b) is the Policy Value attributed to that death benefit amount on the first day of the Policy Month.

Death Benefit Option 2. The net amount at risk is equal to the Face Amount of insurance.

Cost of insurance rates and net amounts at risk are determined separately for each Coverage Amount and for the excess of the death benefit over the Face Amount (the Face Amount is the sum of the Coverage Amounts).

Attribution of Policy Value to Net Amounts at Risk. To determine the net amounts at risk, the Policy Value will be attributed to Coverage Amounts in the order listed in the policy. The amount of Policy Value attributed to a Coverage Amount will be limited to the amount that results in zero net amount at risk, and any excess Policy Value will then be attributed to the next listed Coverage Amount. Attribution will continue in this manner until either the entire Policy Value is attributed or the end of the list of Coverage Amounts is reached. Any remaining Policy Value will then be attributed to the excess of the death benefit over the Face Amount.

Current Cost of Insurance Rates. Cost of insurance rates are determined separately for each Coverage Amount and the excess of the death benefit over the Face Amount. There are different current cost of insurance rate bases for:

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• Coverage Amounts having Sales Loads,

• Coverage Amounts having surrender charge, and

• The excess of the death benefit over the Face Amount, including any Term Insurance Benefit under the FTIO Rider.

The cost of insurance rate in a specific Policy Month for an applicable death benefit amount will depend on:

• the cost of insurance rate basis for the applicable death benefit amount,

• the Life Insured’s Attained Age, sex (unless unisex rates are required by law) and smoking status on the effective date of the applicable death benefit amount,

• the underwriting class of the applicable death benefit amount,

• the Coverage Year, or Policy Year for the excess of the death benefit over the Face Amount,

• any extra charges for substandard ratings, as stated in the policy.

Since the net amount at risk for death benefit Option 1 is based on a formula that includes as factors the Policy Value, the net amount at risk is affected by the investment performance of the underlying investment options chosen, payment of premiums and charges assessed.

Cost of insurance rates will generally increase with the Life Insured’s age and the Coverage Year.

Cost of insurance rates reflect our expectation as to future mortality experience. They are also intended to cover our general costs of providing the policy, to the extent that these costs are not covered by other charges. Current cost of insurance rates may be changed by us on a basis that does not unfairly discriminate within the class of lives insured.

Guaranteed Maximum Cost of Insurance Rates. In no event will the cost of insurance rates we charge exceed the guaranteed maximum rates set forth in the policy, except to the extent that an extra charge is imposed for a substandard rating. The guaranteed rates are the based on 1980 Commissioners Standard Ordinary Sex Distinct (unless unisex rates are required by law) ANB Aggregate Ultimate Mortality Tables. Current cost of insurance rates may be less than the guaranteed rates.

Asset Based Risk Charge Deducted from Investment Accounts

We assess a daily charge against amounts in the Investment Accounts. This charge is intended to compensate us for insurance risks we assume under the policy, such as benefit payments and expenses that are higher than we expected. We will realize a gain from this charge to the extent it is not needed to provide benefits and pay expenses under the policy.

The charge is a percentage of amounts in the Investment Accounts, which will reduce Unit Values of the sub-accounts. The charge is guaranteed never to exceed an annual rate of 0.50%. Currently, we charge the following rates:

Policy Year	Annual Rate
1-10	0.50%
11+	0.25%

Investment Management Fees and Expenses

The investment management fees and expenses of the portfolios, the underlying variable investment options for the policy, are set forth in the Fee Tables above and in the portfolio prospectuses.

Reduction in Charges and Enhanced Surrender Values

The policy is designed for employers and other sponsoring organizations that may purchase multiple policies as a Case. The size or nature of the Case may result in expected savings of sales, underwriting, administrative or other costs. If so, we expect to offer reductions of policy charges and enhancements of surrender value. Eligibility for reductions and enhancements and the amounts available will be determined by a number of factors, including the number of lives to be insured, the total premiums expected to be paid, total assets under management for the policy owner, the nature of the relationship among the lives insured, the purpose for which the policies are being purchased, expected persistency of the individual policies, and any other circumstances which we believe to be relevant to the expected reduction of our expenses. Some of reductions and enhancements may be guaranteed and others may be subject to restrictions or to withdrawal or modification, on a uniform case basis. We may change the nature and amount of reductions and enhancements available from time to time. Reductions and enhancements will be determined in a way that is not unfairly discriminatory to policy owners.

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COMPANY TAX CONSIDERATIONS

Currently, we make no specific charge for any federal, state, or local taxes that we incur that may be attributable to such Account or to the policy. We reserve the right in the future to make a charge for any such tax or other economic burden resulting from the application of tax laws that we determines to be attributable to the Separate Account or to the policy.

POLICY VALUE

Determination of the Policy Value

A policy has a Policy Value, a portion of which is available to you by making a policy loan or partial withdrawal, or upon surrender of the policy. The Policy Value may also affect the amount of the death benefit. The Policy Value at any time is equal to the sum of the values in the Investment Accounts, the Fixed Account, and the Loan Account.

The Policy Value is affected by the investment performance of the Investment Account chosen and the rate of interest credited if amounts are allocated to the Fixed Account. The Policy Value is also affected by the charges deducted. For a discussion of how these factors affect Policy Value see the “Risks/Benefits Summary.”

Investment Accounts. An Investment Account is established under each policy for each sub-account of the Separate Account to which Net Premiums or transfer amounts have been allocated. Each Investment Account under a policy measures the interest of the policy in the corresponding sub-account. The value of the Investment Account established for a particular sub-account is equal to the number of units of that sub-account credited to the policy times the value of such units.

Fixed Account. Amounts in the Fixed Account do not vary with the investment performance of any sub-account. Instead, these amounts are credited with interest at a rate determined by John Hancock USA. See “The General Account — Fixed Account”.

Loan Account. Amounts borrowed from the policy are transferred to the Loan Account. Amounts in the Loan Account do not vary with the investment performance of any sub-account. Instead, these amounts are credited with interest at a rate determined by John Hancock USA that is lower than the loan interest rate charged on Policy Debt. See “Policy Loans — Loan Account”.

Units and Unit Values

Crediting and Canceling Units. Units of a particular sub-account are credited to a policy when Net Premiums are allocated to that sub-account or amounts are transferred to that sub-account. Units of a sub-account are cancelled whenever amounts are deducted, transferred or withdrawn from the sub-account. The number of units credited or cancelled for a specific transaction is based on the dollar amount of the transaction divided by the value of the unit on the Business Day on which the transaction occurs. The number of units credited with respect to a premium payment will be based on the applicable unit values for the Business Day on which the premium is received at the Service Office, except for any premiums received before the Effective Date. For premiums received before the Effective Date, the values will be determined on the Effective Date.

Units are valued at the end of each Business Day. When an order involving the crediting or canceling of units is received after the end of a Business Day, or on a day that is not a Business Day, the order will be processed on the basis of unit values determined on the next Business Day. Similarly, any determination of Policy Value, Investment Account value or death benefit to be made on a day that is not a Business Day will be made on the next Business Day.

Unit Values. For each Business Day the unit value for a sub-account is determined by multiplying the unit value for the immediately preceding Business Day by the net investment factor for that sub-account on such subsequent Business Day.

The net investment factor for a sub-account on any Business Day is equal to (a) divided by (b) minus (c), where:

(a) is the net asset value of the underlying portfolio shares held by that sub-account as of the end of such Business Day before any policy transactions are made on that day;

(b) is the net asset value of the underlying portfolio shares held by that sub-account as of the end of the immediately preceding Business Day after all policy transactions were made for that day; and

(c) is a charge not exceeding the daily mortality and expense risk charge shown in the “Charges and Deductions — Asset Based Risk Charge Deducted from Investment Accounts” section.

The value of a unit may increase, decrease, or remain the same, depending on the investment performance of a sub-account from one Business Day to the next.

Transfers of Policy Value

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Subject to the restrictions set forth below, the policy owner may transfer Policy Value from one sub-account to another or to the Fixed Account. Transfers involving the Fixed Account are subject to certain limitations noted below under “Transfers Involving Fixed Account.”

Variable investment options in variable annuity and variable life insurance products can be a prime target for abusive transfer activity because these products value their investment options on a daily basis and allow transfers among investment options without immediate tax consequences. As a result, some investors may seek to frequently transfer into and out of variable investment options in reaction to market news or to exploit a perceived pricing inefficiency. Whatever the reason, long-term investors in a variable investment option can be harmed by frequent transfer activity since such activity may expose a portfolio to increased portfolio transaction costs (affecting the value of the shares), disruption to management of a portfolio (affecting a subadviser’s ability to effectively manage a portfolio’s investments in accordance with the portfolio’s investment objective and policies) and dilution with respect to interests held for long-term investment.

To discourage disruptive frequent trading activity, we impose restrictions on transfers and reserve the right to change, suspend or terminate telephone and facsimile transaction privileges. In addition, we reserve the right to take other actions at any time to restrict trading, including, but not limited to: (i) restricting the number of transfers made during a defined period, (ii) restricting the dollar amount of transfers, and (iii) restricting transfers into and out of certain investment options. We also reserve the right to defer a transfer at any time we are unable to purchase or redeem shares of the underlying portfolio.

Rule 22c-2 under the 1940 Act requires us to provide tax identification numbers and other policy owner transaction information to John Hancock Trust or to other investment companies in which the Separate Account invests, at their request. An investment company will use this information to identify any pattern or frequency of investment account transfers that may violate their frequent trading policy. An investment company may require us to impose trading restrictions in addition to those described above if violations of their frequent trading policy are discovered.

While we seek to identify and prevent disruptive frequent trading activity, it may not always be possible to do so. Therefore, no assurance can be given that the restrictions we impose will be successful in preventing all disruptive frequent trading and avoiding harm to long-term investors.

The Company’s current practice is to restrict transfers into or out of variable investment options to two per calendar month (except with respect to those policies described in the following paragraph). In applying this restriction any transfer request involving the transfer of account value into or out of multiple variable investment options will still count as only one request. No more than one transfer request made be made on any day. The policy owner may, however, transfer to the Money Market investment option even if the two transfer per month limit has been reached, but only if 100% of the value in all variable investment options is transferred to the Money Market investment option. If such a transfer to the Money Market investment option is made, then, for the 30 calendar day period after such transfer, no transfers from the Money Market investment option to any other variable investment options or to the Fixed Account may be made. If a policy offers a dollar cost averaging or automatic asset allocation rebalancing program, any transfers pursuant to such program are not considered transfers subject to these restrictions on frequent trading. The restrictions described in this paragraph will be applied uniformly to all policy owners subject to the restrictions.

Policies may be purchased by a corporation or other entity as a means to informally finance the liabilities created by an employee benefit plan, and to this end the entity may aggregately manage the policies purchased to match its liabilities under the plan. Policies sold under these circumstances are subject to special transfer restrictions. In lieu of the two transfers per month restriction, we will allow the policy owner under these circumstances to rebalance the investment options in its policies within the following limits: (i) during the 10 calendar day period after any account values are transferred from one variable investment option into a second variable investment option, the values can only be transferred out of the second investment option if they are transferred into the Money Market investment option; and (ii) any account values that would otherwise not be transferable by application of the 10 day limit described above and that are transferred into the Money Market investment option may not be transferred out of the Money Market investment option into any other investment options (variable or fixed) for 30 calendar days. The restrictions described in this paragraph will be applied uniformly to all policy owners subject to the restrictions.

Subject to our approval, we may offer policies purchased by a corporation or other entity that has purchased policies to match its liabilities under an employee benefit plan, as described above, the ability to electronically rebalance the investment options in its policies. Under these circumstances, in lieu of imposing any specific limit upon the number or timing of transfers, we will monitor aggregate trades among the sub-accounts for frequency, pattern and size for potentially harmful investment practices. If we detect trading activity that we believe may be harmful to the overall operation of any investment account or underlying portfolio, we may impose conditions on policies employing electronic rebalancing to submit trades, including setting limits upon the number and timing of transfers, and revoking privileges to make trades by any means other than written communication submitted via U.S. mail. The restrictions described in these paragraphs will be applied uniformly to all policy owners subject to the restrictions.

The Company also reserves the right to modify or terminate the transfer privilege at any time in accordance with applicable law. Transfers may also be delayed when any of the events described in “Payment of Proceeds” occurs. Transfer privileges are also subject

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to any restrictions that may be imposed by the portfolios. In addition, the Company reserves the right to defer the transfer privilege at any time that the Company is unable to purchase or redeem shares of a portfolio.

Transfer Requests. Transfer requests may be made in writing in a format satisfactory to us. From time to time we may offer you alternate means of communicating transfer requests to us, such as electronic mail, the Internet or telephone. We will use reasonable procedures to confirm that instructions received by alternate means are genuine and we will not be liable for following instructions we have reasonably determined to be genuine.

Limitations on Transfers From the Fixed Account. The maximum amount that may be transferred from the Fixed Account in any Policy Year is 25% of the Fixed Account Value at the previous Policy Anniversary. Any transfer that involves a transfer out of the Fixed Account may not involve a transfer to the Investment Account for the Money Market Trust. We may allow greater amounts to be transferred from the Fixed Account if a systematic plan of withdrawals is agreed to in advance. For example, we will allow the transfer of 20%, 25%, 33%, 50% and 100% of the remaining balance in the Fixed Account in five successive years provided we agree in advance in writing and that no amounts are transferred into the Fixed Account during the 5 year period.

POLICY LOANS

At any time while the policy is in force, you may borrow against the Policy Value. The policy is the only security for the loan. policy loans may have tax consequences. See “Tax Treatment of Policy Benefits — Policy Loan Interest.”

A policy loan will affect future Policy Values, since the portion of the Policy Value in the Loan Account will receive the loan interest credited rate rather than varying with the performance of the underlying portfolios or increasing at the Fixed Account interest credited rate. A policy loan may cause a policy to be more susceptible to lapse since it reduces the Net Cash Surrender Value from which monthly deductions are taken. A policy loan causes the amount payable upon death of the Life Insured to be reduced by the amount of outstanding Policy Debt.

Maximum Loan. The amount of any loan cannot exceed the amount that would cause the Policy Debt to equal the Policy’s Cash Surrender Value less the monthly deductions due from the date of the loan to the next Policy Anniversary.

Interest Charged on Policy Loans

Interest on the Policy Debt will accrue daily and be payable annually on the Policy Anniversary. The rate of interest charged will be an effective annual rate of 4%.

Loan Account

When a loan is made, an amount equal to the loan will be deducted from the Investment Accounts or the Fixed Account and transferred to the Loan Account. You may designate how this amount is allocated among the Accounts. If you give no instructions, the amount transferred will be allocated among the Investment Accounts and the Fixed Account in the same proportion as the Policy Value in each Investment Account and the Fixed Account bears to the Net Policy Value. A transfer from an Investment Account will result in the cancellation of units of the underlying sub-account equal in value to the amount transferred from the Investment Account. However, since the Loan Account is part of the Policy Value, transfers made in connection with a loan will not change the Policy Value.

Interest Credited to the Loan Account. Policy Value in the Loan Account will earn interest at an effective annual rate guaranteed to be at least 3.25%. We may declare a current interest rate that is greater than this, subject to change at any time. The excess of the loan interest charged rate (4%) over the loan interest credited rates will result in a net charge against the Policy Value with respect to any Policy Debt.

Currently we credit loan interest rates which vary by Policy Year as follows:

Policy Years	Current Loan Interest Credited Rates	Excess of Loan Interest Charged Rate
1-10	3.25%	0.75%
11+	3.75%	0.25%

Loan Account Adjustments. On the first day of each Policy Month the difference between the Loan Account and the Policy Debt is transferred to the Loan Account from the Investment Accounts or the Fixed Account. The amount transferred will be allocated to the Investment Accounts and the Fixed Account in the same proportion as the Policy Value in each Investment Account or the Fixed Account bears to the Net Policy Value.

Loan Repayments. Policy Debt may be repaid, in whole or in part, at any time prior to the death of the Life Insured while the policy is in force. A loan repayment amount will be credited to the Loan Account and transferred to the Fixed Account or the Investment Accounts in the same proportion as the Policy Value in each Account bears to the Net Policy Value.

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Amounts paid to us not specifically designated in writing as loan repayments will be treated as premiums.

POLICY SURRENDER AND PARTIAL WITHDRAWALS

Policy Surrender

A policy may be surrendered for its Net Cash Surrender Value at any time while the Life Insured is living. The Net Cash Surrender Value is equal to the Policy Value less any surrender charge, monthly deductions due and Policy Debt. The Net Cash Surrender Value will be determined at the end of the Business Day on which we receive the policy and a written request for surrender at the Service Office. When a policy is surrendered, the insurance coverage and all other benefits under the policy will terminate.

Partial Withdrawals

You may make a partial withdrawal of the Net Cash Surrender Value at any time. You may designate how the withdrawal amount is allocated among the Investment Account and the Fixed Account. If you give no instructions, the withdrawal amount will be allocated among the Accounts in the same proportion as the Policy Value in each Account bears to the Net Policy Value.

Surrender Charges may be assessed on a Partial Withdrawal. See “Charges and Deductions — Surrender Charges.” The death benefit may be reduced as a result of a Partial Withdrawal. See “Death Benefits — Decreases in Face Amount under death benefit Option 1 due to a Partial Withdrawal”.

LAPSE AND REINSTATEMENT

Lapse

A policy will go into default at the beginning of a Policy Month if the Net Cash Surrender Value would go below zero after deducting the monthly deduction then due. A lapse could have adverse tax consequences as described under “Tax Treatment of the Policy — Tax Treatment of Policy Benefits — Surrender or Lapse.” We will notify you of the default and will allow you a 61-day grace period in which to make a premium payment sufficient to bring the policy out of default. The required payment will be equal to the amount necessary to bring the Net Cash Surrender Value to zero, if it was less than zero on the date of default, plus the monthly deductions due at the date of default and payable at the beginning of each of the two Policy Months thereafter, plus any applicable premium load charge. If the required payment is not received by the end of the grace period, the policy will terminate with no value.

Death During Grace Period. If the Life Insured should die during the grace period, the Policy Value used in the calculation of the death benefit will be the Policy Value on the date of default and the insurance benefit will be reduced by any outstanding monthly deductions due at the time of death.

Reinstatement

You may reinstate a policy that has terminated after going into default at any time within the five-year period following the date of termination subject to the following conditions:

• The policy must not have been surrendered for its Net Cash Surrender Value;

• Evidence of the Life Insured’s insurability satisfactory to us must be provided; and

• A premium equal to the payment required during the grace period following default to keep the policy in force is paid.

THE GENERAL ACCOUNT

The general account of John Hancock USA consists of all assets owned by us other than those in the Separate Account and other Separate Accounts of the Company. Subject to applicable law, we have sole discretion over investment of the assets of the general account.

By virtue of exclusionary provisions, interests in the general account of John Hancock USA have not been registered under the Securities Act of 1933 and the general account has not been registered as an investment company under the Investment Company Act of 1940. Accordingly, neither the general account nor any interests therein are subject to the provisions of these acts, and as a result the staff of the SEC has not reviewed the disclosures in this prospectus relating to the general account. Disclosures regarding the general account may, however, be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in a prospectus.

Fixed Account

You may allocate Net Premiums to the Fixed Account or transfer all or a portion of the Policy Value to the Fixed Account from the Investment Accounts. John Hancock USA will hold the reserves required for any portion of the policy Value allocated to the Fixed Account in our general account. Transfers from the Fixed Account to the Investment Accounts are subject to restrictions.

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Policy Value in the Fixed Account. The Policy Value in the Fixed Account is equal to:

• the portion of the Net Premiums allocated to it; plus

• any amounts transferred to it; plus

• interest credited to it; less

• any charges deducted from it; less

• any partial withdrawals from it; less

• any amounts transferred from it.

Interest on the Fixed Account. An allocation of Policy Value to the Fixed Account does not entitle you to share in the investment experience of the general account. Instead, we guarantee that the Policy Value in the Fixed Account will accrue interest daily at an effective annual rate of at least 3%, without regard to the actual investment experience of the general account. We may declare a current interest rate in excess of the guaranteed rate, subject to change at any time.

OTHER PROVISIONS OF THE POLICY

Policy owner Rights

Unless otherwise restricted by a separate agreement, you may:

• Vary the premiums paid under the policy.

• Change the death benefit Option.

• Change the premium allocation for future premiums.

• Transfer amounts between sub-accounts.

• Take loans and/or partial withdrawals.

• Surrender the contract.

• Transfer ownership to a new owner.

• Name a contingent owner that will automatically become owner if you die before the Life Insured.

• Change or revoke a contingent owner.

• Change or revoke a beneficiary.

Assignment of Rights. We will not be bound by an assignment until we receive a copy of the assignment at the Service Office. We assume no responsibility for the validity or effects of any assignment.

Beneficiary

You may appoint one or more beneficiaries of the policy by naming them in the application. Beneficiaries may be appointed in three classes — primary, secondary, and final. Beneficiaries may also be revocable or irrevocable. Unless an irrevocable designation has been elected, you may change the beneficiary during the Life Insured’s lifetime by giving written notice in a form satisfactory to us. If the Life Insured dies and there is no surviving beneficiary, you, or your estate if you are the Life Insured, will be the beneficiary. If a beneficiary dies before the seventh day after the death of the Life Insured, we will pay the insurance benefit as if the beneficiary had died before the Life Insured.

Incontestability

We will not contest the validity of a policy after it has been in force during the Life Insured’s lifetime for two years from the Issue Date stated in the policy, nor will we contest the validity of an increase in Face Amount after it has been in force during the Life Insured’s lifetime for two years. If a policy has been reinstated, we can contest any misrepresentation of a fact material to the reinstatement for a period of two years after the reinstatement date.

Misstatement of Age or Sex

If the Life Insured’s stated age or sex or both in the policy are incorrect, we will change the Face Amount so that the death benefit will be that which the most recent monthly charge for the cost of insurance would have purchased for the correct age and sex.

Suicide Exclusion

If the Life Insured, whether sane or insane, dies by suicide within two years from the Issue Date stated in the policy (or within the maximum period permitted by the state in which the policy was delivered, if less than two years), we will pay only the premiums

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paid less any partial withdrawals and any Policy Debt. If the Life Insured should die by suicide within two years after a Face Amount increase, the death benefit for the increase will be limited to the monthly deductions for the increase. At our discretion, this provision may be waived.

Supplementary Benefits

Subject to certain requirements, one or more supplementary benefits may be added to a policy, including the FTIO Rider (see “Death Benefits – Flexible erm Insurance Option Rider”) and, in the case of a policy owned by a corporation r other similar entity, a benefit permitting a change in the Life Insured (a taxable event). More detailed information concerning these supplementary benefits may be obtained from us. There is no cost for any supplementary benefit currently offered by us, with the exception of FTIO Rider (see “Charges and Deductions — Monthly Deductions”).

TAX TREATMENT OF THE POLICY

Tax considerations

This description of Federal income tax consequences is only a brief summary and is neither exhaustive nor authoritative. It was written to support the promotion of our products. It does not constitute legal or tax advice, and it is not intended to be used and cannot be used to avoid any penalties that may be imposed on you. Tax consequences will vary based on your own particular circumstances, and for further information you should consult a qualified tax adviser. 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. The policy may be used in various arrangements, including nonqualified deferred compensation or salary continuation plans, split dollar insurance plans, executive bonus plans, retiree medical benefit plans and others. The tax consequences of such plans may vary depending on the particular facts and circumstances of each individual arrangement. Therefore, if the value of using the policy in any such arrangement depends in part on the tax consequences, a qualified tax adviser should be consulted for advice.

General

We are taxed as a life insurance company. Under current tax law rules, we include the investment income (exclusive of capital gains) of the Separate Account in our taxable income and take deductions for investment income credited to our “policy holder reserves”. We are also required to capitalize and amortize certain costs instead of deducting those costs when they are incurred. We do not currently charge the Separate Account for any resulting income tax costs, other than a “DAC tax” charge we may impose against the Separate Account to compensate us for the finance costs attributable to the acceleration of our income tax liabilities by reason of a “DAC tax adjustment”. We also claim certain tax credits or deductions relating to foreign taxes paid and dividends received by the series funds. These benefits can be material. We do not pass these benefits through to the Separate Account, principally because: (i) the deductions and credits are allowed to us and not the policy owners under applicable tax law; and (ii) the deductions and credits do not represent investment return on the Separate Account assets that are passed through to policy owners.

The policies permit us to deduct a charge for any taxes we incur that are attributable to the operation or existence of the policies or the Separate Account. Currently, we do not anticipate making any specific charge for such taxes other than any DAC tax charge and state and local premium taxes. If the level of the current taxes increases, however, or is expected to increase in the future, we reserve the right to make a charge in the future.

Death benefit proceeds and other policy distributions

Generally, death benefits paid under policies such as yours are not subject to income tax. Earnings on your account value are ordinarily 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 would generally be treated as a return of the premiums you’ve paid and not subjected to income tax. However certain distributions associated with a reduction in death benefit or other policy benefits within the first 15 years after issuance of the policy are ordinarily taxable in whole or in part. 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 premiums in excess of limits prescribed by the tax laws. Additional taxes and penalties may be payable for policy distributions of any kind including loans. (See “7-pay premium limit and modified endowment contract status” below.)

We expect the policy to 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 a life insurance contract for Federal tax purposes. For a policy to be treated as a life insurance contract, it must satisfy either the cash value accumulation test or the guideline premium test. These tests limit the amount of premium that you may pay into the policy. We will monitor compliance with these standards. If we determine that a policy does not satisfy section 7702, we may take whatever steps are appropriate and reasonable to bring it into compliance with section 7702.

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If the policy complies with section 7702, the death benefit proceeds under the policy ordinarily should be excludable from the beneficiary’s gross income under section 101 of the Code.

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 received through actual or deemed distributions. In general, unless the policy is a modified endowment contract, the owner will be taxed on the amount of distributions that exceed the premiums paid under the policy. An exception to this general rule occurs in the case of a decrease in the policy’s death benefit or any other change that reduces benefits under the policy in the first 15 years after the policy is issued and that results in a cash distribution to the policy owner. Changes that reduce benefits include partial 42 withdrawals, death benefit option changes, and distributions required to keep the policy in compliance with section 7702. For purposes of this rule any distribution within the two years immediately before a reduction in benefits will also be treated as if it caused the reduction. A cash distribution that reduces policy benefits will be taxed in whole or in part (to the extent of any gain in the policy) under rules prescribed in section 7702. The taxable amount is subject to limits prescribed in section 7702(f)(7). Any taxable distribution will be ordinary income to the owner (rather than capital gain).

Distributions for tax purposes 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.

It is possible that, despite our monitoring, a policy might fail to qualify as a life insurance contract 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 credited to the policy from the date of issue to the date of the disqualification and for subsequent periods.

Tax consequences of ownership or receipt of policy proceeds under Federal, state and local estate, inheritance, gift and other tax laws will depend on the circumstances of each owner or beneficiary. If the person insured by the policy is also its owner, either directly or indirectly through an entity such as a revocable trust, the death benefit will be includible in his or her estate for purposes of the Federal estate tax. If the owner is not the person insured, the value of the policy will be includible in the owner’s estate upon his or her death. Even if ownership has been transferred, the death proceeds or the policy value may be includible in the former owner’s estate if the transfer occurred less than three years before the former owner’s death or if the former owner retained certain kinds of control over the policy. You should consult your tax adviser regarding these possible tax consequences.

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.

Policy loans

We expect that, except as noted below (see “7-pay premium limit and modified endowment contract status”), 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, other than the payment of the death benefit, 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 required to keep your policy from lapsing and a significant tax burden if you allow the lapse to occur.

Diversification rules and ownership of the Account

Your policy will not qualify for the tax benefits of a life insurance contract unless the Account follows certain rules requiring diversification of investments underlying the policy. In addition, the rules require that the policy owner not have “investment control” over the underlying assets.

In certain circumstances, the owner of a variable life insurance policy may be considered the owner, for Federal income tax purposes, of the assets of the separate account used to support the policy. In those circumstances, income and gains from the separate account assets would be includible in the policy owner’s gross income. The Internal Revenue Service (“IRS”) has stated in published rulings that a variable policy owner will be considered the owner of separate account assets if the policy owner possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. A Treasury Decision issued in 1986 stated that guidance would be issued in the form of regulations or rulings on the “extent to which Policyholders may direct their investments to particular sub-accounts of a separate account without being treated as owners of the underlying assets”. As of the date of this prospectus, no comprehensive guidance on this point has been issued. In Rev. Rul. 2003-91, however, the IRS ruled that a contract holder would not be treated as the owner of assets underlying a variable life insurance or annuity contract despite the owner’s ability to allocate funds among as many as twenty subaccounts.

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The ownership rights under your policy are similar to, but different in certain respects from, those described in IRS rulings in which it was determined that policyholders were not owners of separate account assets. Since you have greater flexibility in allocating premiums and policy values than was the case in those rulings, it is possible that you would be treated as the owner of your policy’s proportionate share of the assets of the Account.

We do not know what future Treasury Department regulations or other guidance may require. We cannot guarantee that the funds will be able to operate as currently described in the series funds’ prospectuses, or that a series fund will not have to change any fund’s investment objectives or policies. We have reserved the right to modify your policy if we believe doing so will prevent you from being considered the owner of your policy’s proportionate share of the assets of the Account, but we are under no obligation to do so.

7-pay premium limit and modified endowment contract status

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 contract, which can have adverse tax consequences.

Policies classified as modified endowment contracts are subject to the following tax rules:

• First, all partial withdrawals from such a policy are treated as ordinary income subject to tax up to the amount equal to the excess (if any) of the policy value immediately before the distribution over the investment in the policy at such time. If you own any other modified endowment contracts issued to you in the same calendar year by the same insurance company or its affiliates, their values will be combined with the value of the policy from which you take the withdrawal for purposes of determining how much of the withdrawal is taxable as ordinary income.

• Second, loans taken from or secured by such a policy and assignments or pledges of any part of its value are treated as partial withdrawals from the policy and taxed accordingly. Past-due loan interest that is added to the loan amount is treated as an additional loan.

• Third, a 10% additional income tax is imposed on the portion of any distribution (including distributions on surrender) from, or loan taken from or secured by, such a policy that is included in income except where the distribution or loan:

• is made on or after the date on which the policy owner attains age 59 ¹/2;

• is attributable to the policy owner becoming disabled; or

• is part of a series of substantially equal periodic payments for the life (or life expectancy) of the policy owner or the joint lives (or joint life expectancies) of the policy owner and the policy owner’s beneficiary.

These exceptions to the 10% additional tax do not apply in situations where the policy is not owned by an individual.

Furthermore, any time there is a “material change” in a policy, the policy will begin a new 7-pay testing period as if it were a newly-issued policy. The material change rules for determining whether a policy is a modified endowment contract are complex. In general, however, the determination of whether a policy will be a modified endowment contract after a material change depends upon the relationship among the death benefit of the policy at the time of such change, the policy value at the time of the change, and the additional premiums paid into the policy during the seven years starting with the date on which the material change occurs.

Moreover, if there is a reduction in benefits under a policy (such as a reduction in the death benefit or the reduction or cancellation of certain rider benefits) during a 7-pay testing period, the 7-pay limit will generally be recalculated based on the reduced benefits and the policy will be re-tested from the beginning of the 7-pay testing period using the lower limit. If the premiums paid to date at any point during the 7-pay testing period are greater than the recalculated 7-pay limit, the policy will become a modified endowment contract.

If your policy is issued as a result of a section 1035 exchange, it may be considered to be a modified endowment contract if the death benefit under the new policy is smaller than the death benefit under the exchanged policy, or if you reduce coverage in your new policy after it is issued. Therefore, if you desire to reduce the face amount as part of a 1035 exchange, a qualified tax adviser should be consulted for advice.

All modified endowment contracts issued by the same insurer (or its affiliates) to the same owner during any calendar year generally are required to be treated as one contract for the purpose of applying the modified endowment contract rules. A policy received in exchange for a modified endowment contract will itself also be a modified endowment contract. You should consult your tax adviser if you have questions regarding the possible impact of the 7-pay limit on your policy.

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Corporate and H.R. 10 retirement 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.

Withholding

To the extent that policy distributions to you are taxable, they are generally subject to withholding for your Federal income tax liability. However if you reside in the United States, you can generally choose not to have tax withheld from distributions.

Life insurance purchases by residents of Puerto Rico

In Rev. Rul. 2004-75, 2004-31 I.R.B. 109, the Internal Revenue Service ruled that income received by residents of Puerto Rico under a life insurance policy issued by a United States company is U.S.-source income that is subject to United States Federal income tax.

Life insurance purchases by non-resident aliens

If you are not a U.S. citizen or resident, you will generally be subject to U.S. Federal withholding tax on taxable distributions from life insurance policies at a 30% rate, unless a lower treaty rate applies. In addition, you may be subject to state and/or municipal taxes and taxes imposed by your country of citizenship or residence. You should consult with a qualified tax adviser before purchasing a policy.

OTHER INFORMATION

Payment of Proceeds

As long as the policy is in force, we will ordinarily pay any policy loans, surrenders, partial withdrawals or insurance benefit within seven days after receipt at the Service Office of all the documents required for such a payment. We will ordinarily 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.

We may delay the payment of any policy loans, surrenders, partial withdrawals, or insurance benefit that depends on Fixed Account values for up to six months or in the case of any Investment Account for any period during which (i) the New York Stock Exchange is closed for trading (except for normal weekend and holiday closings), (ii) trading on the New York Stock Exchange is restricted (iii) an emergency exists, as determined by the SEC, as a result of which disposal of securities held in the Separate Account is not reasonably practicable or it is not reasonably practicable to determine the value of the Separate Account’s net assets or (iv) the SEC, by order, so permits for the protection of security holders; provided that applicable rules and regulations of the SEC shall govern as to whether the conditions described in (ii) and (iii) exist.

Reports to Policyholders

Within 30 days after each Policy Anniversary, we will send you a statement showing, among other things:

• the amount of death benefit;

• the Policy Value and its allocation among the Investment Accounts, the Fixed Account and the Loan Account;

• the value of the units in each Investment Account to which the Policy Value is allocated;

• the Policy Debt and any loan interest charged since the last report;

• the premiums paid and other policy transactions made during the period since the last report; and

• any other information required by law.

You will also be sent an annual and a semi-annual report for the portfolios, which will include a list of the securities, held in each portfolio as required by the 1940 Act.

Distribution of Policies

John Hancock Distributors LLC (“JH Distributors”), a Delaware limited liability company affiliated with us, is the principal distributor and underwriter of the securities offered through this prospectus and of other annuity and life insurance products we and our affiliates offer. JH Distributors also acts as the principal underwriter of the John Hancock Trust, whose securities are used to fund certain investment accounts under the policies and under other annuity and life insurance products we offer.

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JH Distributors’ principal address is 200 Bloor Street East, Toronto, Canada M4W 1E5 and it also maintains offices with us at 197 Clarendon Street, Boston, Massachusetts 02116. JH Distributors is a broker-dealer registered under the Securities Exchange Act of 1934 (the “1934 Act”) and a member of the Financial Industry Regulatory Authority (“FINRA”).

We offer the policies for sale through individuals who are licensed as insurance agents and who are registered representatives of broker-dealers that have entered into selling agreements with JH Distributors. These broker-dealers may include our affiliate Signator Investors, Inc. In addition, we, either directly or through JH Distributors, have entered into agreements with other financial intermediaries that provide marketing, sales support and certain administrative services to help promote the policies (“financial intermediaries”). In a limited number of cases, we have entered into loans, leases or other financial agreements with these broker-dealers, financial intermediaries or their affiliates.

Compensation

The broker-dealers and other financial intermediaries that distribute or support the marketing of our policies may be compensated by means of various compensation and revenue sharing arrangements. A general description of these arrangements is set out below under “Standard compensation” and “Additional compensation and revenue sharing”. These arrangements may differ between firms, and not all broker-dealers or financial intermediaries will receive the same compensation and revenue sharing benefits for distributing our policies. Also, a broker-dealer may receive more or less compensation or other benefits for the promotion and sale of our policy than it would expect to receive from another issuer.

Under their own arrangements, broker-dealers determine how much of any amounts received from us is to be paid to their registered representatives. Our affiliated broker-dealer may pay its registered representatives additional compensation and benefits, such as bonus payments, expense payments, health and retirement benefits or the waiver of overhead costs or expenses in connection with the sale of the policies that they would not receive in connection with the sale of policies issued by unaffiliated companies.

Policy owners do not pay any compensation or revenue sharing benefits directly. These payments are made from JH Distributors’ and our own revenues, profits or retained earnings, which may be derived from a number of sources, such as fees received from an underlying fund’s distribution plan (“12b-1 fees”), the fees and charges imposed under the policy and other sources.

You should contact your registered representative for more information on compensation arrangements in connection with your purchase of a policy. We provide additional information on special compensation or reimbursement arrangements involving broker-dealers and other financial intermediaries in the Statement of Additional Information, which is available upon request.

Standard compensation. JH Distributors pays compensation to broker-dealers for the promotion and sale of the policies, and for providing ongoing service in relation to policies that have already been purchased. We may also pay a limited number of broker-dealers commissions or overrides to “wholesale” the policies; that is, to provide marketing support and training services to the broker-dealer firms that do the actual selling.

The compensation JH Distributors pays to broker-dealers may vary depending on the selling agreement. The compensation paid is not expected to exceed 15% of the target premium paid in the first policy year, 9.0% of the target premium in years 2-5, and 2.5% of the target premium paid in years 6 and after. Compensation on any premium paid in excess of target premium in any year will not exceed 2.5%. This schedule of compensation is exclusive of additional compensation and revenue sharing and inclusive of overrides and expense allowances paid to broker-dealers for sale of the policies (not including riders).

Additional compensation and revenue sharing. To the extent permitted by SEC and FINRA rules and other applicable laws and regulations, we may enter into special compensation or reimbursement arrangements (“revenue sharing”), either directly or through JH Distributors, with selected broker-dealers and other financial intermediaries. In consideration of these arrangements, a firm may feature our policy in its sales system, give us preferential access to sales staff, or allow JH Distributors or its affiliates to participate in conferences, seminars or other programs attended by the firm’s sales force. We hope to benefit from these revenue sharing and other arrangements through increased sales of our policies.

Selling broker-dealers and other financial intermediaries may receive, directly or indirectly, additional payments in the form of cash, other compensation or reimbursement. These additional compensation or reimbursement arrangements may include, for example, payments in connection with the firm’s “due diligence” examination of the policies, payments for providing conferences or seminars, sales or training programs for invited registered representatives and other employees, payment for travel expenses, including lodging, incurred by registered representatives and other employees for such seminars or training programs, seminars for public, advertising and sales campaigns regarding the policies, payments to assist a firm in connection with its systems, operations and marketing expenses and/or other events or activities sponsored by the firms. We may contribute to, as well as sponsor, various educational programs, sales promotions, and/or other contests in which participating firms and their sales persons may receive gifts and prizes such as merchandise, cash or other rewards as may be permitted under FINRA rules and other applicable laws and regulations.

Responsibilities of John Hancock USA

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John Hancock USA entered into an agreement with JH Distributors pursuant to which John Hancock USA, on behalf of JH Distributors will pay the sales commissions in respect of the Policies and certain other policies issued by John Hancock USA, prepare and maintain all books and records required to be prepared and maintained by JH Distributors with respect to the Policies and such other policies, and send all confirmations required to be sent by JH Distributors with respect to the Policies and such other policies. JH Distributors will promptly reimburse John Hancock USA for all sales commissions paid by John Hancock USA and will pay John Hancock USA for its other services under the agreement in such amounts and at such times as agreed to by the parties.

Finally, John Hancock USA may, from time to time in its sole discretion, enter into one or more reinsurance agreements with other life insurance companies under which policies issued by it may be reinsured, such that its total amount at risk under a policy would be limited for the life of the insured.

Voting Rights

As stated previously, all of the assets held in each sub-account of the Separate Account will be invested in shares of a particular portfolio. John Hancock USA is the legal owner of those shares and as such has the right to vote upon certain matters that are required by the 1940 Act to be approved or ratified by the shareholders of a mutual fund and to vote upon any other matters that may be voted upon at a shareholders’ meeting. However, John Hancock USA will vote shares held in the sub-accounts in accordance with instructions received from policyholders having an interest in such sub-accounts. Shares held in each sub-account for which no timely instructions from policyholders are received, including shares not attributable to the Policies, will be voted by John Hancock USA in the same proportion as those shares in that sub-account for which instructions are received. Should the applicable federal securities laws or regulations change so as to permit John Hancock USA to vote shares held in the Separate Account in its own right, it may elect to do so.

The number of shares in each sub-account for which instructions may be given by a policyholder is determined by dividing the portion of the Policy Value derived from participation in that sub-account, if any, by the value of one share of the corresponding portfolio. The number will be determined as of a date chosen by John Hancock USA, but not more than 90 ays before the shareholders’ meeting. Fractional votes are counted. Voting instructions will be solicited in writing at least 14 days prior to the meeting.

John Hancock USA may, if required by state officials, disregard voting instructions if such instructions would require shares to be voted so as to cause a change in the sub-classification or investment policies of one or more of the portfolios, or to approve or disapprove an investment management contract. In addition, we may disregard voting instructions that would require changes in the investment policies or investment adviser, provided that we reasonably disapprove such changes in accordance with applicable federal regulations. If John Hancock USA does disregard voting instructions, it will advise policyholders of that action and its reasons for such action in the next communication to policyholders.

Substitution of Portfolio Shares

It is possible that in the judgment of the management of John Hancock USA, one or more of the portfolios may become unsuitable for investment by the Separate Account because of a change in investment policy or a change in the applicable laws or regulations, because the shares are no longer available for investment, or for some other reason. In that event, John Hancock USA may seek to substitute the shares of another portfolio or of an entirely different mutual fund. Before this can be done, the approval of the SEC and one or more state insurance departments may be required.

John Hancock USA also reserves the right (i) to combine other Separate Accounts with the Separate Account, (ii) to create new Separate Accounts, (iii) to establish additional sub-accounts within the Separate Account to invest in additional portfolios of the Trust or another management investment company, (iv) to eliminate existing sub-accounts and to stop accepting new allocations and transfers into the corresponding portfolio, (v) to combine sub-accounts or to transfer assets in one sub-account to another sub-account or (vi) to transfer assets from the Separate Account to another Separate Account and from another Separate Account to the Separate Account. We also reserve the right to operate the Separate Account as a management investment company or other form permitted by law, and to de-register the Separate Account under the 1940 Act. Any such change would be made only if permissible under applicable federal and state law.

Records and Accounts

The Service Office is responsible for performing all administrative functions, such as decreases, increases, surrender and partial withdrawals, and fund transfers although certain of these functions may be delegated to McCamish Systems, L.L.C., 6425 Powers Ferry Road, Atlanta, Georgia 30339.

All records and accounts relating to the Separate Account and the portfolios will be maintained by us. All financial transactions will be handled by us. All reports required to be made and information required to be given will be provided the Company or by McCamish Systems on behalf of us.

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State Regulation

John Hancock USA is subject to the regulation and supervision by the Michigan Department of Insurance, which periodically examines its financial condition and operations. It is also subject to the insurance laws and regulations of all jurisdictions in which it is authorized to do business. The Policies have been filed with insurance officials, and meet all standards set by law, in each jurisdiction where they are sold.

John Hancock USA is required to submit annual statements of its operations, including financial statements, to the insurance departments of the various jurisdictions in which it does business for the purposes of determining solvency and compliance with local insurance laws and regulations.

Further Information

A registration statement under the Securities Act of 1933 has been filed with the SEC relating to the offering described in this prospectus. This prospectus does not include all the information set forth in the registration statement. The omitted information may be obtained from the SEC’s principal office in Washington D.C. upon payment of the prescribed fee. The SEC also maintains a Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC which is located at http://www.sec.gov.

For further information you may also contact John Hancock USA’s Home office, the address and telephone number of which are on the last page of the prospectus.

Financial Statements

The financial statements of the Company and the Separate Account are set forth in the Statement of Additional Information. Our general account is comprised of securities and other investments, the value of which may decline during periods of adverse market conditions. To the extent required, the company intends to rely upon the exemption set forth in Rule 12h-7 of the Securities Exchange Act of 1934 from the periodic reporting requirements under that act.

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APPENDIX A: DEFINITIONS

Annual Premium Target: is an amount set forth in the policy that limits the amount of premium attributable to a Coverage Amount in Surrender Charge or Sales Load calculations.

Attained Age: is the Issue Age of the Life Insured plus the number of completed Policy Years.

Business Day: is any day that the New York Stock Exchange is open for business. A Business Day ends at the close of regularly scheduled trading of the New York Stock Exchange (currently 4:00 p.m. Eastern Time) on that day.

Case: is a group of Policies insuring individual lives with common employment or other relationship, independent of the Policies.

Cash Surrender Value: is the Policy Value less the Surrender Charge and any outstanding monthly deductions due.

Coverage Amount: is an amount of insurance coverage under the policy with a distinct effective date. The Face Amount of the policy at any time is the sum of the Coverage Amounts in effect.

Coverage Year: is a one-year period beginning on a Coverage Amount’s effective date and on each anniversary of this date. For Coverage Amounts in effect on the policy’s Effective Date, the Coverage Year is the same as the Policy Year.

Fixed Account: is the part of the Policy Value that reflects the value you have in our general account.

Investment Account: is the part of the Policy Value that reflects the value you have in one of the sub-accounts of the Separate Account.

Issue Age: is the Life Insured’s age on the birthday closest to the Policy Date.

Loan Account: is the part of the Policy Value that reflects policy loans and interest credited to the Policy Value in connection with such loans.

Minimum Initial Premium: is the sum of the monthly deductions due for the first 3 Policy Months plus the Premium Charges deductible from this amount.

Net Cash Surrender Value: is the Cash Surrender Value less the Policy Debt. Net Policy Value: is the Policy Value less the value in the Loan Account. Net Premium: is the premium paid less the Premium Load and Sales Load.

Policy Date, Policy Anniversary, Policy Month and Policy Year: Policy Date is the date from which the first monthly deductions are calculated and from which Policy Years, Policy Months, and Policy Anniversaries are measured.

Policy Debt: on any date is the aggregate amount of policy loans, including borrowed and accrued interest, less any loan repayments.

Policy Value: is the sum of the values in the Loan Account, the Fixed Account, and the Investment Accounts.

Service Office: is PO Box 192, Boston, MA 02117 or such other address as we specify to you by written notice.

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In addition to this prospectus, John Hancock USA has filed with the SEC a Statement of Additional Information (the “SAI”) which contains additional information about John Hancock USA and the Account, including information on our history, services provided to the Account and legal and regulatory matters. The SAI and personalized illustrations of death benefits, policy values and surrender values are available, without charge, upon request. You may obtain the personalized illustrations from your John Hancock USA representative. The SAI may be obtained by contacting the John Hancock USA Service Office. You should also contact the John Hancock USA Service Office to request any other information about your policy or to make any inquiries about its operation.

SERVICE OFFICE

Express Delivery	Mail Delivery
Specialty Products	Specialty Products and Distribution
197 Clarendon Street, C-6	PO Box 192
Boston, MA 02117	Boston, MA 02117
Phone:	Fax:
1-800-521-1234	1-617-572-7008

Information about the Account (including the SAI) can be reviewed and copied at the SEC’s Public Reference Branch, 100 F Street, NE, Room 1580, Washington, DC, 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 202-551-5850. Reports and other information about the Account are available on the SEC’s Internet website at http://www.sec.gov. Copies of such information may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549-0102.

1940 Act No. 811-5130 1933 Act File No. 333-100567

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Statement of Additional Information

dated May 1, 2009

for interests in

John Hancock Life Insurance Company (U.S.A.) Account N (“Registrant”)

Interests are made available under

CORPORATE VUL

a flexible premium variable universal life insurance policy issued by

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

(“John Hancock USA”)

This is a Statement of Additional Information (“SAI”). It is not the prospectus. The prospectus, dated the same date as this SAI, may be obtained from a John Hancock USA representative or by contacting the John Hancock USA Servicing Office at Specialty Products, 197 Clarendon Street, C-6, Boston, MA 02117 or telephoning 1-800-521-1234.

TABLE OF CONTENTS

Contents of this SAI	Page No.
Description of the Depositor	2
Description of the Registrant	2
Services	2
Independent Registered Public Accounting Firm	2
Legal and Regulatory Matters	2
Principal Underwriter/Distributor	3
Additional Information About Charges	3
Financial Statements of Registrant and Depositor

Description of the Depositor

Under the Federal securities laws, the entity responsible for organization of the registered separate account underlying the variable life insurance policy is known as the “Depositor”. The Depositor is John Hancock USA, a stock life insurance company organized under the laws of Maine on August 20, 1955 by a special act of the Maine legislature and redomesticated under the laws of Michigan. We are a licensed life insurance company in the District of Columbia and all states of the United States except New York. Until 2004, John Hancock USA had been known as The Manufacturers Life Insurance Company (U.S.A.).

Our ultimate parent is Manulife Financial Corporation (“MFC”), a publicly traded company based in Toronto, Canada. MFC is the holding company of The Manufacturers Life Insurance Company and its subsidiaries, collectively known as Manulife Financial.

Description of the Registrant

Under the Federal securities laws, the registered separate account underlying the variable life insurance policy is known as the “Registrant.” In this case, the Registrant is John Hancock Life Insurance Company (U.S.A.) Separate Account N (the “Account”), a separate account established by John Hancock USA under Michigan law. The variable investment options shown on page 1 of the prospectus are subaccounts of the Account. 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 Securities and Exchange Commission (“SEC”) of the management of the Account or of John Hancock USA.

New subaccounts may be added and made available to policy owners from time to time. Existing subaccounts may be modified or deleted at any time.

Services

Administration of policies issued by John Hancock USA and of registered separate accounts organized by John Hancock USA may be provided by other affiliates. Neither John Hancock USA nor the separate accounts are assessed any charges for such services.

Custodianship and depository services for the Registrant are provided by State Street Bank. State Street Bank’s address is 225 Franklin Street, Boston, Massachusetts, 02110.

Independent Registered Public Accounting Firm

The consolidated financial statements of John Hancock Life Insurance Company (U.S.A.) at December 31, 2008 and 2007, and for each of the three years in the period ended December 31, 2008, and the financial statements of Separate Account N of John Hancock Life Insurance Company (U.S.A.) at December 31, 2008, and for each of the two years in the period ended December 31, 2008, appearing in this Statement of Additional Information of the Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.

Legal and Regulatory Matters

There are no legal proceedings to which the Depositor, the Account or the principal underwriter is a party or to which the assets of the Account are subject that are likely to have a material adverse effect on the Account or the ability of the principal underwriter to perform its contract with the Account or of the Depositor to meet its obligations under the policies.

On June 25, 2007, John Hancock Investment Management Services, LLC (the “Adviser”) and John Hancock Distributors LLC (the “Distributor”) and two of their affiliates (collectively, the “John Hancock Affiliates”) reached a settlement with the SEC that resolved an investigation of certain practices relating to the John Hancock Affiliates’ variable annuity and mutual fund operations involving directed brokerage and revenue sharing. Under the terms of the settlement, each John Hancock Affiliate was censured and agreed to pay a $500,000 civil penalty to the United States Treasury. In addition, the Adviser and the Distributor agreed to pay disgorgement of $14,838,943 and prejudgment interest of $2,001,999 to the John Hancock Trust funds that participated in the Adviser’s commission recapture program during the period from

2

2000 to April 2004. Collectively, all John Hancock Affiliates agreed to pay a total disgorgement of $16,926,420 and prejudgment interest of $2,361,460 to the entities advised or distributed by John Hancock Affiliates. The Adviser discontinued the use of directed brokerage in recognition of the sale of fund shares in April 2004.

Principal Underwriter/Distributor

John Hancock Distributors LLC (“JH Distributors”), a Delaware limited liability company that we control, is the principal distributor and underwriter of the securities offered through this prospectus. JH Distributors acts as the principal distributor of a number of other annuity and life insurance products we and our affiliates offer. JH Distributors also acts as the principal underwriter of John Hancock Trust (the “Trust”), whose securities are used to fund certain variable investment options under the policies and under other annuity and life insurance products we offer.

JH Distributors’ principal address is 200 Bloor Street East, Toronto, Canada M4W 1E5 and it also maintains offices with us at 197 Clarendon Street, Boston, Massachusetts 02116. JH Distributors is a broker-dealer registered under the Securities Act of 1934 (the “1934 Act”) and is a member of the Financial Industry Regulatory Authority (“FINRA”).

We offer the policies for sale through individuals who are licensed as insurance agents and who are registered representatives of broker-dealers that have entered into selling agreements with JH Distributors. These broker-dealers may include our affiliate Signator Investors, Inc.

The aggregate dollar amount of underwriting commissions paid to JH Distributors by the Depositor and its affiliates in connection with the sale of variable life products in 2008, 2007, and 2006 was $224,191,519, $236,021,417, and $128,705,303 respectively. JH Distributors did not retain any of these amounts during such periods.

The compensation JH Distributors pays to broker-dealers may vary depending on the selling agreement. Compensation is exclusive of additional compensation and revenue sharing and inclusive of overrides and expense allowances paid to broker-dealers for sale of the policies (not including riders). The compensation paid is not expected to exceed 15% of the target premium paid in the first policy year, 9.0% of the target premium in years 2-5, and 2.5% of the target premium paid in years 6 and after. Compensation on any premium paid in excess of target premium in any year will not exceed 2.5%.

The registered representative through whom your policy is sold will be compensated pursuant to the registered representative’s own arrangement with his or her broker-dealer. Compensation to broker-dealers for the promotion and sale of the policies is not paid directly by policy owners but will be recouped through the fees and charges imposed under the policy.

Additional compensation and revenue sharing arrangements may be offered to certain broker-dealer firms or other financial intermediaries. The terms of such arrangements may differ among firms we select based on various factors. In general, the arrangements involve three types of payments or any combination thereof:

• Fixed dollar payments: The amount of these payments varies widely. JH Distributors may, for example, make one or more payments in connection with a firm’s conferences, seminars or training programs, seminars for the public, advertising and sales campaigns regarding the policies, to assist a firm in connection with its systems, operations and marketing expenses, or for other activities of a selling firm or wholesaler. JH Distributors may make these payments upon the initiation of a relationship with a firm, and at any time thereafter.

• Payments based upon sales: These payments are based upon a percentage of the total amount of money received, or anticipated to be received, for sales through a firm of some or all of the insurance products that we and/or our affiliates offer. JH Distributors makes these payments on a periodic basis.

• Payments based upon “assets under management”: These payments are based upon a percentage of the policy value of some or all of our (and/or our affiliates’) insurance products that were sold through the firm. JH Distributors makes these payments on a periodic basis.

Our affiliated broker-dealer may pay their respective registered representatives additional cash incentives, such as bonus payments, expense payments, health and retirement benefits or the waiver of overhead costs or expenses in connection with the sale of the policies that they would not receive in connection with the sale of policies issued by unaffiliated companies.

Additional Information About Charges

A policy will not be issued until the underwriting process has been completed to the Depositor’s satisfaction. The underwriting process generally includes the obtaining of information concerning your age, medical history, occupation and other personal information. This information is then used to determine the cost of insurance charge.

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Reduction In Charges

The policy is available for purchase by corporations and other groups or sponsoring organizations. Group or sponsored arrangements may include reduction or elimination of withdrawal charges and deductions for employees, officers, directors, agents and immediate family members of the foregoing. John Hancock USA reserves the right to reduce any of the Policy’s charges on certain cases where it is expected that the amount or nature of such cases will result in savings of sales, underwriting, administrative, commissions or other costs. Eligibility for these reductions and the amount of reductions will be determined by a number of factors, including the number of lives to be insured, the total premiums expected to be paid, total assets under management for the policyowner, the nature of the relationship among the insured individuals, the purpose for which the policies are being purchased, expected persistency of the individual policies, and any other circumstances which John Hancock USA believes to be relevant to the expected reduction of its expenses. Some of these reductions may be guaranteed and others may be subject to withdrawal or modifications, on a uniform case basis. Reductions in charges will not be unfairly discriminatory to any policyowners. John Hancock USA may modify from time to time, on a uniform basis, both the amounts of reductions and the criteria for qualification.

4

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

John Hancock Life Insurance Company (U.S.A.)

Years Ended December 31, 2008, 2007, and 2006

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-2
Audited Consolidated Financial Statements
Consolidated Balance Sheets-
As of December 31, 2008 and 2007	F-3
Consolidated Statements of Operations-
For the Years Ended December 31, 2008, 2007, and 2006	F-5
Consolidated Statements of Changes in Shareholder’s Equity and Comprehensive Income (Loss)-
For the Years Ended December 31, 2008, 2007, and 2006	F-6
Consolidated Statements of Cash Flows-
For the Years Ended December 31, 2008, 2007, and 2006	F-7
Notes to Consolidated Financial Statements	F-9

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors

John Hancock Life Insurance Company (U.S.A.)

We have audited the accompanying consolidated balance sheets of John Hancock Life Insurance Company (U.S.A.) (“the Company”) as of December 31, 2008 and 2007, and the related consolidated statements of operations, changes in shareholders’ equity and comprehensive income (loss), and cash flows for each of the three years in the period ended December 31, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of John Hancock Life Insurance Company (U.S.A.) at December 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, in 2007 the Company changed their method of accounting for collateral related to certain derivative activities and in 2006 the Company changed their method of accounting for defined benefit pension and other postretirement benefit plans.

/s/ ERNST & YOUNG LLP

Boston, Massachusetts

April 16, 2009

F-2

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

CONSOLIDATED BALANCE SHEETS

	December 31,
	2008		2007
	(in millions)
Assets
Investments
Fixed maturities:
Available-for-sale—at fair value (amortized cost: 2008—$14,875; 2007—$13,050)	$	14,736	$	13,689
Equity securities:
Available-for-sale—at fair value (cost: 2008—$517; 2007—$781)		415		956
Mortgage loans on real estate		2,629		2,414
Investment real estate		1,719		1,543
Policy loans		2,785		2,519
Short-term investments		3,665		2,723
Other invested assets		398		325
Total Investments		26,347		24,169
Cash and cash equivalents		3,477		3,345
Accrued investment income		319		310
Goodwill		54		54
Deferred policy acquisition costs and deferred sales inducements		8,293		5,928
Amounts due from and held for affiliates		2,622		2,723
Reinsurance recoverable		1,518		1,390
Embedded derivatives recoverable for certain separate account guarantees		4,382		586
Other assets		1,504		619
Separate account assets		77,681		105,380
Total Assets	$	126,197	$	144,504

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

F-3

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

CONSOLIDATED BALANCE SHEETS – (CONTINUED)

	December 31,
	2008		2007
	(in millions)
Liabilities and Shareholder’s Equity
Liabilities
Future policy benefits	$	27,796	$	24,594
Policyholders’ funds		381		300
Unearned revenue		2,178		543
Unpaid claims and claim expense reserves		591		720
Policyholder dividends payable		216		210
Amounts due to affiliates		4,511		4,371
Current income tax payable		142		174
Deferred income tax liability		855		1,000
Embedded derivatives payable for certain separate account guarantees		2,859		567
Other liabilities		3,836		1,261
Separate account liabilities		77,681		105,380
Total Liabilities		121,046		139,120
Commitments, Guarantees, and Legal Proceedings (Note 10)
Shareholder’s Equity
Preferred stock ($1.00 par value; 50,000,000 shares authorized; 100,000 shares issued and outstanding at December 31, 2008 and 2007)		-		-
Common stock ($1.00 par value; 50,000,000 shares authorized; 4,728,937 shares issued and outstanding at December 31, 2008; 4,728,935 issued and outstanding at December 31, 2007)		5		5
Additional paid-in capital		2,704		2,222
Retained earnings		2,534		2,572
Accumulated other comprehensive (loss) income		(92)		585
Total Shareholder’s Equity		5,151		5,384
Total Liabilities and Shareholder’s Equity	$	126,197	$	144,504

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

F-4

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years ended December 31,
	2008		2007		2006
	(in millions)
Revenues
Premiums	$	963	$	875	$	1,014
Fee income		2,688		3,262		2,483
Net investment income		1,435		1,337		1,163
Net realized investment and other gains		426		162		32
Total revenues		5,512		5,636		4,692
Benefits and expenses
Benefits to policyholders		4,500		2,375		1,889
Policyholder dividends		421		416		395
Amortization of deferred policy acquisition costs and deferred sales inducements		(388)		584		536
Other operating costs and expenses		1,320		1,269		1,117
Total benefits and expenses		5,853		4,644		3,937
(Loss) income before income taxes		(341)		992		755
Income tax (benefit) expense		(303)		273		230
Net (loss) income	$	(38)	$	719	$	525

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

F-5

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER’S

EQUITY AND COMPREHENSIVE INCOME (LOSS)

	Capital Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total Shareholder’s Equity		Outstanding Shares
	(in millions, except for shares outstanding)										(in thousands)
Balance at January 1, 2006	$	5	$	2,045	$	1,463	$	525	$	4,038	4,829
Comprehensive income:
Net income						525				525
Other comprehensive income, net of tax:
Net unrealized investment losses								(46)		(46)
Foreign currency translation adjustment								(5)		(5)
Minimum pension liability								5		5
Comprehensive income										479
SFAS No. 158 transition adjustment								(2)		(2)
Employee stock option plan (ESOP)				13						13
Capital contribution from Parent				71						71
Transfer of real estate to affiliate				87						87
Balance at December 31, 2006	$	5	$	2,216	$	1,988	$	477	$	4,686	4,829
Comprehensive income:
Net income						719				719
Other comprehensive income, net of tax:
Net unrealized investment gains								124		124
Foreign currency translation adjustment								(4)		(4)
Amortization of periodic pension costs								1		1
Cash flow hedges								(13)		(13)
Comprehensive income										827
Employee stock option plan (ESOP)				6						6
Dividends paid to Parent						(135)				(135)
Balance at December 31, 2007	$	5	$	2,222	$	2,572	$	585	$	5,384	4,829
Comprehensive income:
Net loss						(38)				(38)
Other comprehensive income, net of tax:
Net unrealized investment losses								(645)		(645)
Foreign currency translation adjustment								(23)		(23)
Change in funded status of pension plan and amortization of periodic pension costs								(15)		(15)
Cash flow hedges								6		6
Comprehensive loss										(715)
Capital contribution from Parent				477						477
Employee stock option plan (ESOP)				5						5
Balance at December 31, 2008	$	5	$	2,704	$	2,534	$	(92)	$	5,151	4,829

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

F-6

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years ended December 31
	2008			2007			2006
	(in millions)
Cash flows from operating activities:
Net (loss) income	$	(38	)	$	719		$	525
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Amortization of premium and accretion of discounts, net—fixed maturities		(28	)		9			13
Net realized investment and other gains		(426	)		(162	)		(32)
Amortization of deferred policy acquisition costs and deferred sales inducements		(388	)		584			536
Capitalization of deferred policy acquisition costs and deferred sales inducements		(1,687	)		(1,700	)		(1,154)
Depreciation and amortization		59			26			26
Increase in accrued investment income		(9	)		(63	)		(1)
Decrease in other assets and other liabilities, net		1,584			448			398
Increase in policyholder liabilities and accruals, net		1,958			781			479
Increase in deferred income taxes		212			50			237
Net cash provided by operating activities		1,237			692			1,027
Cash flows from investing activities:
Sales of:
Fixed maturities		4,008			8,814			9,657
Equity securities		411			304			355
Real estate		-			-			27
Other invested assets		149			-			-
Maturities, prepayments, and scheduled redemptions of:
Fixed maturities		413			485			658
Mortgage loans on real estate		1,221			1,453			1,105
Purchases of:
Fixed maturities		(6,483	)		(11,150	)		(10,327)
Equity securities		(195	)		(229	)		(690)
Real estate		(205	)		(168	)		(16)
Other invested assets		(283	)		(121	)		(74)
Mortgage loans on real estate issued		(1,434	)		(1,409	)		(1,128)
Issuance of notes receivable from affiliates		(295	)		-			-
Cash received on sale of mortgage backed security to affiliate		-			15			-
Net purchases of short-term investments		(939	)		(2,013	)		(162)
Other, net		(161	)		(249	)		(281)
Net cash used in investing activities		(3,793	)		(4,268	)		(876)

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

F-7

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

CONSOLIDATED STATEMENTS OF CASH FLOWS – (CONTINUED)

	Years ended December 31,
	2008		2007		2006
	(in millions)
Cash flows from financing activities:
Capital contribution from Parent	$	477	$	-	$	71
Dividends paid to Parent		-		(135)		-
(Decrease) increase in amounts due to affiliates		(666)		1,768		14
Universal life and investment-type contract deposits		4,760		2,748		2,832
Universal life and investment-type contract maturities and withdrawals		(1,422)		(509)		(1,266)
Net transfers to separate accounts from policyholders’ funds		(1,929)		(881)		(433)
Excess tax benefits related to share-based payments		1		2		2
Cash received on sale of real estate to affiliate		-		-		150
Unearned revenue on financial reinsurance		1,592		(149)		(49)
Net reinsurance recoverable		(125)		(35)		49
Net cash provided by financing activities		2,688		2,809		1,370
Net increase (decrease) in cash and cash equivalents		132		(767)		1,521
Cash and cash equivalents at beginning of year		3,345		4,112		2,591
Cash and cash equivalents at end of year	$	3,477	$	3,345	$	4,112

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

F-8

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Summary of Significant Accounting Policies

Business.  John Hancock Life Insurance Company (U.S.A.) (“JHUSA” or the “Company”) is a wholly-owned subsidiary of The Manufacturers Investment Corporation (“MIC”). MIC is a wholly-owned subsidiary of Manulife Holdings (Delaware) LLC (“MHDLLC”), which is an indirect, wholly-owned subsidiary of The Manufacturers Life Insurance Company (“MLI”). MLI, in turn, is a wholly-owned subsidiary of Manulife Financial Corporation (“MFC”), a Canadian-based, publicly traded stock life insurance company.

The Company provides a wide range of insurance and investment products to both individual and institutional customers located primarily in the United States. These products, including individual life insurance, individual and group fixed and variable annuities, and group pension contracts, are sold through an extensive network of agents, securities dealers, and other financial institutions. The Company also offers investment management services with respect to the Company’s separate account assets and to mutual funds and institutional customers. The Company is licensed in forty-nine states.

Basis of Presentation.  These financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”), which 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.

The accompanying consolidated financial statements include the accounts of the Company and its majority-owned and or controlled subsidiaries and variable interest entities (“VIEs”) in which the Company is the primary beneficiary. Partnerships, joint venture interests, and other equity investments in which the Company does not have a controlling financial interest, but has significant influence, are recorded using the equity method of accounting and are included in other invested assets. All significant intercompany transactions and balances have been eliminated. For further discussion regarding VIEs, see Note 3 — Relationships with Variable Interest Entities.

Reclassifications.  Certain prior year amounts have been reclassified to conform to the current year presentation.

Investments.  The Company classifies its fixed maturity securities, other than leveraged leases, as available-for-sale and records these securities at fair value. Unrealized investment gains and losses related to available-for-sale securities are reflected in shareholder’s equity, net of policyholder related amounts and deferred income taxes. Interest income is generally recognized on the accrual basis. The amortized cost of fixed maturity securities is adjusted for other-than-temporary impairments, amortization of premiums, and accretion of discounts to maturity. Amortization of premiums and accretion of discounts are included in net investment income. Impairments in value deemed to be other-than-temporary are reported as a component of net realized investment and other gains (losses).

For mortgage-backed securities, 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 plus anticipated future payments, and any resulting adjustment is included in net investment income.

Equity securities include common stock and preferred stock. Equity securities that have readily determinable fair values are carried at fair value. For equity securities that the Company classifies as available-for-sale, unrealized investment gains and losses are reflected in shareholder’s equity, as described above for available-for-sale fixed maturity securities. Equity securities that do not have readily determinable fair values are carried at cost and are included in other invested assets. Impairments in value deemed to be other-than-temporary are reported as a component of net realized investment and other gains (losses). Dividends are recorded as income on the ex-dividend date.

Mortgage loans on real estate are carried at unpaid principal balances and are adjusted for amortization of premium or accretion of discount, less allowance for probable losses. Premiums or discounts are amortized over the life of the mortgage loan contract in a manner that results in a constant effective yield. Interest income and amortization amounts and other costs that are recognized as an adjustment of yield are included as components of net investment income. Mortgage loans on real estate are evaluated periodically as part of the Company’s loan review procedures and are considered impaired 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 valuation allowance established as a result of impairment is based on the present value of the expected future cash flows, discounted at the loan’s original effective interest rate, or is based on the collateral value of the loan if higher and the loan is collateral dependent. The Company estimates this level to be adequate to absorb

F-9

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 1 — Summary of Significant Accounting Policies - (continued)

estimated probable credit losses that exist at the balance sheet date. Any change to the valuation allowance for mortgage loans on real estate is reported as a component of net realized investment and other gains (losses). Interest received on impaired mortgage loans on real estate is included in net investment income in the period received. If foreclosure becomes probable, the measurement method used is based on the collateral value. Foreclosed real estate is 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 net realized investment and other gains (losses).

Real estate held-for-sale is carried at the lower of depreciated cost or fair value less expected disposition costs. Any change to the valuation allowance for real estate held-for-sale is reported as a component of net realized investment and other gains (losses). The Company does not depreciate real estate classified as held-for-sale.

Policy loans are carried at unpaid principal balances.

Short-term investments, which include investments with remaining maturities of one year or less, but greater than three months, at the time of purchase, are reported at fair value.

Net realized investment and other gains (losses), other than those related to separate accounts for which the Company does not bear the investment risk, are determined on a specific identification method and are reported net of amounts credited to participating contract holder accounts.

Derivative Financial 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 also to manage the duration of assets and liabilities. All derivative instruments are carried on the Company’s Consolidated Balance Sheets in other assets or other liabilities at fair value.

In certain cases, the Company uses hedge accounting by designating derivative instruments as either fair value hedges or cash flow hedges. For derivative instruments that are designated and qualify as fair value hedges, any changes in fair value of the derivative instruments, as well as the offsetting changes in fair value of the hedged items, are recorded in net realized investment and other gains (losses). Basis adjustments are amortized into income through net realized investment and other gains (losses).

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 accumulated other comprehensive income and then reclassified into income when the hedged item affects income. When a cash flow hedge is terminated, the effective portion of the accumulated derivative gain or loss continues to be reported in accumulated other comprehensive income and then is reclassified into income when the hedged item affects income. If it is determined that the forecasted transaction is not probable of occurring, the balance remaining in accumulated other comprehensive income is immediately recognized in earnings.

Hedge effectiveness is assessed quarterly using a variety of techniques, including regression analysis and cumulative dollar offset. When it is determined that a derivative is not effective as a hedge, the Company discontinues hedge accounting. In certain cases, there is no hedge ineffectiveness because the derivative instrument was constructed such that all the terms of the derivative exactly match the hedged risk in the hedged item.

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 and swaptions), the premium is amortized into net investment income over the term of the derivative instrument. The change in 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 net realized investment and other gains (losses). Changes in fair value of derivatives that are not hedges are included in net realized investment and other gains (losses).

F-10

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 1 — Summary of Significant Accounting Policies - (continued)

The Company is a party to financial instruments that may contain embedded derivatives. The Company assesses each identified embedded derivative to determine whether bifurcation is required. If it is determined that the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract and that a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host contract. Embedded derivatives are carried at fair value with changes in fair value reported in net realized investment and other gains (losses) for derivatives embedded in investment securities, or benefits to policyholders for the reinsurance recoverable related to guaranteed minimum income benefits and certain separate account guarantees related to guaranteed minimum withdrawal benefits.

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

Goodwill.  As a result of the acquisition of Wood Logan Associates, the Company recognized an asset for goodwill representing the excess of the cost over the fair value of the assets acquired and liabilities assumed.

The Company tests goodwill for impairment at least annually, or more frequently if circumstances indicate impairment may have occurred.

Deferred Policy Acquisition Costs and Deferred Sales Inducements.  Deferred policy acquisition costs (“DAC”) are costs that vary with, and are related primarily to, the production of new business and have been deferred to the extent that they are deemed recoverable. Such costs include sales commissions, certain policy issuance and underwriting costs, and certain agency expenses. Similarly, any amounts assessed as initiation fees or front-end loads are recorded as unearned revenue. The Company tests the recoverability of DAC at least annually.

DAC related to participating traditional life insurance is amortized over the life of the policies at a constant rate based on the present value of the estimated gross margin amounts expected to be realized over the lives of the policies. 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 annuity, group pension contracts, universal life insurance, DAC and unearned revenue are amortized generally in proportion to the change in present value of expected gross profits arising principally from surrender charges, investment results, including realized gains (losses), and mortality and expense margins. DAC amortization is adjusted retrospectively when estimates are revised. For annuity, universal life insurance, and investment-type products, the DAC asset is adjusted for the impact of unrealized gains (losses) on investments as if these gains (losses) had been realized, with corresponding credits or charges included in accumulated other comprehensive income.

DAC related to non-participating traditional life insurance is amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves.

The Company offers sales inducements, including enhanced crediting rates or bonus payments, to contract holders on certain of its individual and group annuity products. The Company defers sales inducements and amortizes them over the life of the underlying contracts using the same methodology and assumptions used to amortize DAC.

Reinsurance.  Assets and liabilities related to reinsurance ceded contracts are reported on a gross basis. The accompanying Consolidated Statements of Operations reflect 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 a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. The Company remains liable to its contract holders to the extent that counterparties to reinsurance ceded contracts do not meet their contractual obligations.

Separate Account Assets and Liabilities.  Separate account assets and liabilities reported on the Company’s Consolidated Balance Sheets represent funds that are administered and invested by the Company to meet specific investment objectives of contract holders. Net investment income and net realized investment and other gains (losses) generally accrue directly to

F-11

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 1 — Summary of Significant Accounting Policies - (continued)

such contract holders who bear the investment risk, subject, in some cases, to principal guarantees and minimum guaranteed rates of income. The assets of each separate 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, surrenders, net investment income, net realized investment and other gains (losses), and the related liability changes of separate accounts are offset within the same line item in the Consolidated Statements of Operations. Fees charged to contract holders, principally mortality, policy administration, investment management, and surrender charges, are included in the revenues of the Company.

Future Policy Benefits and Policyholders’ Funds.  Future policy benefits for participating traditional life insurance policies are based on the net level premium method. The net level premium reserve is calculated using the guaranteed mortality and dividend fund interest rates. 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 policies. Participating business represented 27% and 34% of the Company’s traditional life net insurance in-force at December 31, 2008 and 2007, respectively, and 77%, 88%, and 93% of the Company’s traditional life net insurance premiums for the years ended December 31, 2008, 2007, and 2006, respectively.

Benefit liabilities for annuities during the accumulation period are equal to accumulated contract holders’ fund balances and after annuitization are equal to the present value of expected future payments.

For payout annuities in loss recognition, future policy benefits are computed using estimates of expected mortality, expenses, and investment yields as determined at the time these contracts first moved into loss recognition. Payout annuity reserves are adjusted for the impact of net realized investment and other gains (losses) associated with the underlying assets.

For non-participating traditional life insurance policies and reinsurance policies, future policy benefits are estimated using a net level premium method based upon actuarial assumptions as to mortality, persistency, interest, and expenses established at the policy issue date. 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.

Policyholders’ funds for universal life products and group pension contracts are equal to the total of the policyholder account values before surrender charges. Policyholder account values include deposits plus credited interest or change in investment value less expense and mortality fees, as applicable, and withdrawals. Policy benefits are charged to expense and include benefit claims incurred in the period in excess of related policy account balances and interest credited to policyholders’ account balances.

Components of policyholders’ funds were as follows:

	December 31,
	2008		2007
	(in millions)
Individual and group annuities	$	65	$	41
Group pension contracts		78		82
Universal life and other		238		177
Total policyholders’ funds	$	381	$	300

Liabilities for unpaid claims and claim expenses include estimates of payments to be made on reported 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 on a regular basis and adjusted as necessary. Any changes in estimates are reflected in current earnings.

Policyholder Dividends.  Policyholder dividends for the closed block are approved annually by the Company’s Board of Directors. The aggregate amount of policyholder dividends is calculated based upon actual interest, mortality, morbidity, persistency, and expense experience for the year, as well as management’s judgment as to the proper level of statutory surplus to be retained by the Company. For additional information on the closed block, see Note 6 — Closed Block.

F-12

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 1 — Summary of Significant Accounting Policies - (continued)

Revenue Recognition.  Premiums from participating and non-participating traditional life insurance, and reinsurance contracts are recognized as revenue when due. When premiums are due over a significantly shorter period than the period over which benefits are provided, any excess profit is deferred and recognized into income in a constant relationship to insurance in-force or, for annuities, the amount of expected future benefit payments.

Deposits related to universal life contracts are credited to policyholders’ account balances. Revenues from these contracts, as well as annuities and group pension contracts, consist of amounts assessed against policyholders’ account balances for mortality, policy administration, and surrender charges and are recorded in fee income in the period in which the services are provided.

Fee income also includes advisory fees and administration service fees. Such fees and commissions are recognized in the period in which services are performed.

Share-Based Payments.  The Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment,” (“SFAS No. 123(R)”) on January 1, 2006. The standard requires that the costs resulting from share-based payment transactions with employees be recognized in the financial statements utilizing a fair value based measurement method.

Certain Company employees are provided compensation in the form of stock options, deferred share units, and restricted share units in MFC. The fair value of the stock options granted by MFC to the Company’s employees is recorded by the Company over the vesting periods. The fair value of the deferred share units and the intrinsic fair value of the restricted share units granted by MFC to Company employees are recognized in the accounts of the Company over the vesting periods of the units. The share-based payments are a legal obligation of MFC, but in accordance with U.S. GAAP, are recorded in the accounts of the Company in other operating costs and expenses.

Upon adoption of SFAS No. 123(R), the Company was required to determine the portion of additional paid-in capital that was generated from the realization of excess tax benefits prior to the adoption of SFAS No. 123(R) available to offset deferred tax assets that may need to be written off in future periods had the Company adopted the SFAS No. 123 fair value recognition provisions in 2001. The Company elected to calculate this “pool” of additional paid-in capital using the shortcut method as permitted by FASB Staff Position No. 123(R)-3, “Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards.”

SFAS No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow. This requirement reduces net operating cash flows and increases net financing cash flows in periods after adoption. For the years ended December 31, 2008 and 2007, the Company recognized $1 million and $2 million, respectively, of excess tax benefits related to share-based payments in the Consolidated Statement of Cash Flows. Upon adoption in 2006, the Company recognized $2 million of excess tax benefits related to share-based payments, which was reclassified from net operating cash flows to net financing cash flows.

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 and financial statement bases 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.  Assets and liabilities relating to foreign operations are translated into U.S. dollars using current exchange rates as of the balance sheet date. Revenues and expenses are translated using the average exchange rates during the year. The resulting net translation adjustments for each year are included in accumulated other comprehensive income. Gains or losses on foreign currency transactions are reflected in earnings.

F-13

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 1 — Summary of Significant Accounting Policies - (continued)

Recent Accounting Pronouncements

FASB Staff Position No. EITF 99-20-1, “Amendments to the Impairment Guidance of EITF Issue No. 99-20” (“FSP EITF No. 99-20-1”)

In January 2009, the Financial Accounting Standards Board (“FASB”) issued FSP EITF No. 99-20-1 which helps conform the impairment guidance in EITF No. 99-20 to the impairment guidance of SFAS No. 115. EITF No. 99-20 applies to debt securities backed by securitized financial assets (“ABS”), which are of less than high credit quality and can be contractually prepaid in a way that the investor could lose part of its investment. These securities are categorized as available-for-sale and have fair values below their carrying values. FSP EITF No. 99-20-1 allows the Company to consider its own expectations about probabilities that the ABS can and will be held until the fair values recover, while assessing whether the ABS is other-than-temporarily impaired. EITF No. 99-20 formerly required the Company to consider only market participant expectations about the ABS future cash flows in this situation. FSP EITF No. 99-20-1 was effective for the Company on December 31, 2008. Adoption of FSP EITF No. 99-20-1 on January 1, 2009 did not result in any impact to the Company’s Consolidated Balance Sheets or Consolidated Statements of Operations.

FASB Staff Position SFAS No. 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP SFAS No. 132R-1”)

In December 2008, the FASB issued FSP SFAS No. 132R-1 which requires enhanced disclosures of the assets of the Company’s pension and other postretirement benefit plans in the Company’s consolidated financial statements. FSP SFAS No. 132R-1 requires a narrative description of investment policies and strategies for plan assets, and discussion of long term rate of return assumptions for plan assets. FSP SFAS No. 132R-1 requires application of SFAS No. 157 style disclosures to fair values of plan assets, including disclosure of fair values of plan assets sorted by asset category and valuation levels 1, 2 and 3, with roll forward of level 3 plan assets, and discussion of valuation processes used. FSP SFAS No. 132R-1 will be effective for the Company’s consolidated financial statements at December 31, 2009.

FASB Staff Position SFAS No. 140-4 and FIN No. 46(R)-8, “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities” (“FSP SFAS No. 140-4 and FIN No. 46R-8”)

In December 2008, the FASB issued FSP SFAS No. 140-4 and FIN No. 46(R)-8 which requires enhanced disclosures about transfers of financial assets and interests in variable interest entities. While the Company is not involved in securitizing financial assets, it does have significant relationships with VIEs. This FSP was effective for the Company at December 31, 2008 and resulted in enhanced disclosures about the Company’s relationships with VIEs. See Note 3 — Relationships with Variable Interest Entities.

Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133” (“SFAS No. 161”)

In March 2008, the FASB issued SFAS No. 161 which provides extensively expanded disclosure requirements for derivative instruments and hedging activities and applies to all derivative instruments, including bifurcated derivative instruments and related hedged items which are accounted for under SFAS No. 133. SFAS No. 161 will be effective for the Company’s Consolidated Balance Sheets and Consolidated Statements of Operations in 2009. The adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Balance Sheets or Consolidated Statements of Operations.

Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS No. 157”)

Effective January 1, 2008, the Company adopted SFAS No. 157, which provides a single definition of fair value for accounting purposes, establishes a consistent framework for measuring fair value, and expands disclosure requirements about fair value measurements. SFAS No. 157 requires, among other things, an exit value approach for valuing assets and liabilities, using the best available information about what a market would bear. The exit value approach focuses on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Exit values for liabilities should include margins for risk even if they are not observable. SFAS No. 157 provides guidance on how to measure fair value, when required, under existing accounting standards. SFAS No. 157

F-14

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 1 — Summary of Significant Accounting Policies - (continued)

establishes a fair value hierarchy based on the observability of the inputs to valuation techniques used to measure fair value, sorted into three levels (“Level 1, 2, and 3”), with the most observable input level being Level 1. The impact of changing valuation methods to comply with SFAS No. 157 resulted in adjustments to actuarial liabilities, which were recorded as an increase in net income of $60 million, net of tax, as of January 1, 2008.

Effective January 1, 2008, the Company adopted FASB Staff Position No. FAS 157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13 (“SFAS 13”) and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13 (“FSP No. FAS 157-1”).” FSP No. FAS 157-1 amends SFAS No. 157 to provide a scope exception from SFAS No. 157 for the evaluation criteria on lease classification and capital lease measurement under SFAS No. 13, “Accounting for Leases,” and other related accounting pronouncements. As a result of adopting FSP No. FAS 157-1, the Company does not apply the provisions of SFAS No. 157 to its leases.

Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51” (“SFAS No. 160”)

In December 2007, the FASB issued SFAS No. 160 which establishes accounting guidance for non-controlling interests in a subsidiary and for deconsolidation of a subsidiary. SFAS No. 160 will require that non-controlling interests be included in shareholders’ equity and separately reported there, that a consolidated entity’s net income include and present separately amounts attributable to both the controlling and non-controlling interests, that continuity of equity accounts for both controlling interests and non-controlling interests be presented on a company’s statement of changes in equity, and that changes in a parent’s ownership of a subsidiary which do not result in deconsolidation be accounted for as transactions in the company’s own stock. Deconsolidation will result in gain/loss recognition, with any retained non-controlling interest measured initially at fair value. SFAS No. 160 will be effective for the Company’s Consolidated Balance Sheets and Consolidated Statements of Operations in 2009, and will be applied prospectively, except for the presentation and disclosure requirements which will be applied retrospectively. The adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Balance Sheets or Consolidated Statements of Operations.

Statement of Financial Accounting Standards No. 141 (R), “Business Combinations” (“SFAS No. 141(R)”)

In December 2007, the FASB issued SFAS No. 141(R) which replaces SFAS No. 141, “Business Combinations”. SFAS No. 141(R) retains the underlying concepts of SFAS No. 141 in that all business combinations are still required to be accounted for at fair value under the acquisition method of accounting, but SFAS No. 141(R) changes the method of applying the acquisition method in a number of significant aspects. Some of the more significant requirements under SFAS No. 141(R) include; the acquisition date is defined as the date that the acquirer achieves control over the acquiree; any consideration transferred will be measured at fair value as of acquisition date; and all identifiable assets acquired, and liabilities assumed and any non-controlling interest in the acquiree will be recorded at their acquisition date fair value, with certain exceptions. SFAS No. 141(R) will be effective on a prospective basis for all business combinations for which the acquisition date is on or after January 1, 2009, except for accounting for valuation allowances on deferred income taxes and acquired tax contingencies. SFAS No. 141(R) amends SFAS No. 109 such that adjustments made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the effective date of SFAS No. 141(R) would be subject to SFAS No. 141(R).

FASB Staff Position Fin No. 39-1, “Amendment of Offsetting of Amounts Related to Certain Contracts” (“FSP FIN No. 39-1”)

In April 2007, the FASB Staff issued FSP FIN No. 39-1 to amend the reporting standards for offsetting amounts related to derivative instruments with the same counterparty. FSP FIN No. 39-1 specifies that an entity that has in the past elected to offset fair value of derivative assets and liabilities may change its policy election. The Company early adopted FSP FIN No. 39-1 in the quarter ended December 31, 2007, changing its accounting policy from net to gross balance sheet presentation of offsetting derivative balances with the same counterparty. This accounting policy change was applied retrospectively to all periods presented, resulting in an increase in derivative assets equally offset by an increase in derivative liabilities at December 31, 2007 of $57 million.

F-15

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 1 — Summary of Significant Accounting Policies - (continued)

Statement of Financial Accounting Standards No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132R” (“SFAS No. 158”)

In September 2006, the FASB issued SFAS No. 158. SFAS No. 158 requires the Company to recognize in its statement of financial position either assets or liabilities for the overfunded or underfunded status of its defined benefit postretirement plans. Changes in the funded status of a defined benefit postretirement plan are recognized in accumulated other comprehensive income in the year the changes occur.

SFAS No. 158 was effective for the Company on December 31, 2006. As a result of the Company’s adoption of SFAS No. 158, the Company recorded a decrease to accumulated other comprehensive income of $2 million, net of tax, as of December 31, 2006 to recognize the funded status of its defined benefit pension and other postretirement benefit plans.

FASB Financial Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (“FIN No. 48”)

In June 2006, the FASB issued FIN No. 48. FIN No. 48 prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that it has taken or expects to take on a tax return. FIN No. 48 requires evaluation of whether a tax position taken on a tax return is more likely than not to be sustained if challenged, and if so, evaluation of the largest benefit that is more than 50% likely of being realized on ultimate settlement. Differences between these benefits and actual tax positions result in either (a) an increase in a liability for income taxes payable or a reduction of an income tax refund receivable, (b) a reduction in a deferred tax asset or an increase in a deferred tax liability, or both (a) and (b). FIN No. 48 requires recording a cumulative effect of adoption in retained earnings as of beginning of year of adoption.

FIN No. 48 was effective for the Company’s consolidated financial statements beginning January 1, 2007. The Company had no cumulative effect of adoption to its January 1, 2007 consolidated retained earnings. Adoption of FIN No. 48 had no material impact on the Company’s Consolidated Balance Sheets at December 31, 2007 or Consolidated Statements of Operations for the year ended December 31, 2007.

AICPA Statement of Position No. 05-1, “Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection With Modifications or Exchanges of Insurance Contracts” (“SOP No. 05-1”)

In September 2005, the Accounting Standards Executive Committee (“AcSEC”) of the American Institute of Certified Public Accountants (“AICPA”) issued SOP No. 05-1. SOP No. 05-1 provides guidance on accounting for deferred acquisition costs of internal replacements of insurance and investment contracts. An internal replacement that is determined to result in a replacement contract that is substantially changed from the replaced contract should be accounted for as an extinguishment of the replaced contract. Unamortized deferred acquisition costs, unearned revenue liabilities, and deferred sales inducement assets from extinguished contracts should no longer be deferred and should be charged to expense.

SOP No. 05-1 was effective for the Company’s internal replacements occurring on or after January 1, 2007. Retrospective adoption is not permitted. In connection with the Company’s adoption of SOP No. 05-01 as of January 1, 2007, there was no material impact to the Company’s Consolidated Balance Sheets or Consolidated Statements of Operations.

Emerging Issues Task Force Issue No. 04-5, “Determining Whether a General Partner or the General Partners as a Group Controls a Limited Partnership or a Similar Entity When the Limited Partners Have Certain Rights” (“EITF No. 04-5”)

In July 2005, the Emerging Issues Task Force of the FASB issued EITF No. 04-5. EITF No. 04-5 mandates a rebuttable presumption that the general partner of a partnership (or managing member of a limited liability company) controls the partnership and should consolidate it, unless limited partners have either substantive kickout rights (defined as the ability to remove the general partner without cause by action of simple majority) or have substantive participating rights (defined as the ability to be actively involved in managing the partnership) or the partnership is a VIE, in which case VIE consolidation accounting rules should instead be followed.

EITF No. 04-5 was effective for the Company on January 1, 2006. In connection with the Company’s adoption of EITF No. 04-5, there was no impact to the Company’s Consolidated Balance Sheets or Consolidated Statements of Operations.

F-16

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2 — Investments

Fixed Maturities and Equity Securities

The Company’s investments in fixed maturities and equity securities classified as available-for-sale are summarized below:

	December 31, 2008
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in millions)
Fixed maturities and equity securities:
Corporate securities	$	11,765	$	508	$	821	$	11,452
Asset-backed and mortgage-backed securities		1,072		-		143		929
Obligations of states and political subdivisions		201		6		7		200
Debt securities issued by foreign governments		995		209		1		1,203
U.S. Treasury securities and obligations of U.S. government corporations and agencies		793		110		-		903
Fixed maturities		14,826		833		972		14,687
Other fixed maturities (1)		49		-		-		49
Total fixed maturities available-for-sale, at fair value		14,875		833		972		14,736
Equity securities available-for-sale		517		44		146		415
Total fixed maturities and equity securities	$	15,392	$	877	$	1,118	$	15,151
	December 31, 2007
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in millions)
Fixed maturities and equity securities:
Corporate securities	$	10,292	$	574	$	121	$	10,745
Asset-backed and mortgage-backed securities		992		15		2		1,005
Obligations of states and political subdivisions		83		4		-		87
Debt securities issued by foreign governments		893		145		-		1,038
U.S. Treasury securities and obligations of U.S. government corporations and agencies		718		24		-		742
Fixed maturities		12,978		762		123		13,617
Other fixed maturities (1)		72		-		-		72
Total fixed maturities available-for-sale, at fair value		13,050		762		123		13,689
Equity securities available-for-sale		781		193		18		956
Total fixed maturities and equity securities	$	13,831	$	955	$	141	$	14,645

(1) The Company classifies its leveraged leases as fixed maturities and records as its carrying value the net investment of its leveraged leases calculated by accruing income at each lease’s expected internal rate of return.

F-17

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2 — Investments - (continued)

The amortized cost and fair value of available-for-sale fixed maturities at December 31, 2008, by contractual maturity, are shown below:

	Amortized Cost		Fair Value
	(in millions)
Fixed maturities:
Due in one year or less	$	432	$	432
Due after one year through five years		2,364		2,296
Due after five years through ten years		3,626		3,511
Due after ten years		7,332		7,519
		13,754		13,758
Asset-backed and mortgage-backed securities		1,072		929
Total	$	14,826	$	14,687

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. Asset-backed and mortgage-backed securities are shown separately in the table above, as they are not due at a single maturity date.

Fixed Maturities and Equity Securities Impairment Review

The Company has a process in place to identify securities that could potentially have an impairment that is other-than-temporary. This process involves monitoring market events that could impact issuers’ credit ratings, business climate, management changes, litigation and government actions, and other similar factors. This process also involves monitoring late payments, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts, and cash flow projections as indicators of credit issues.

At the end of each quarter, the MFC Loan Review Committee reviews all securities where market value is less than 80 percent of amortized cost for six months or more to determine whether impairments need to be taken. The analysis focuses on each company’s or project’s ability to service its debts in a timely fashion and the length of time the security has been trading below amortized cost. The results of this analysis are reviewed by the Credit Committee at MFC. This committee includes MFC’s Chief Financial Officer, Chief Investment Officer, Chief Risk Officer, Chief Credit Officer, and other senior management. This quarterly process includes a fresh assessment of the credit quality of each investment in the entire fixed maturities portfolio.

The Company considers relevant facts and circumstances in evaluating whether the impairment of a security is other-than-temporary. Relevant facts and circumstances considered include (1) the length of time the fair value has been below cost; (2) the financial position of the issuer, including the current and future impact of any specific events; and (3) the Company’s ability and intent to hold the security to maturity or until it recovers in value. To the extent the Company determines that a security is deemed to be other than temporarily impaired, the difference between amortized cost and fair value would be charged to earnings.

There are a number of significant risks and uncertainties inherent in the process of monitoring impairments and determining if impairment is other-than-temporary. These risks and uncertainties include (1) the risk that its assessment of an issuer’s ability to meet all of its contractual obligations will change based on changes in the credit characteristics of that issuer, (2) the risk that the economic outlook will be worse than expected or have more of an impact on the issuer than anticipated, (3) the risk that fraudulent information could be provided to its investment professionals who determine the fair value estimates and other-than-temporary impairments, and (4) the risk that new information obtained by the Company or changes in other facts and circumstances lead it to change its intent to hold the security to maturity or until it recovers in value. Any of these situations could result in a charge to earnings in a future period.

The cost amounts for both fixed maturity securities and equity securities are net of other-than-temporary impairment charges.

F-18

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2 — Investments - (continued)

The following table shows the carrying value and gross unrealized losses aggregated by investment category and length of time that individual available-for-sale fixed maturity securities and equity securities have been in a continuous unrealized loss position:

Unrealized Losses on Available-For-Sale Fixed Maturity Securities and Equity Securities — By Investment Age

	Year ended December 31, 2008
	Less than 12 months				12 months or more				Total
	Carrying Value		Unrealized Losses		Carrying Value		Unrealized Losses		Carrying Value		Unrealized Losses
					(in millions)
Corporate securities	$	4,400	$	431	$	1,681	$	390	$	6,081	$	821
Asset-backed and mortgage-backed securities		810		116		92		27		902		143
Obligations of states and political subdivisions		92		7		-		-		92		7
Debt securities issued by foreign governments		28		1		-		-		28		1
Total fixed maturities available-for-sale		5,330		555		1,773		417		7,103		972
Equity securities available-for-sale		241		118		34		28		275		146
Total	$	5,571	$	673	$	1,807	$	445	$	7,378	$	1,118

	Year ended December 31, 2007
	Less than 12 months				12 months or more				Total
	Carrying Value		Unrealized Losses		Carrying Value		Unrealized Losses		Carrying Value		Unrealized Losses
					(in millions)
Corporate securities	$	1,521	$	50	$	1,462	$	71	$	2,983	$	121
Asset-backed and mortgage-backed securities		99		2		32		-		131		2
Total fixed maturities available-for-sale		1,620		52		1,494		71		3,114		123
Equity securities available-for-sale		145		18		-		-		145		18
Total	$	1,765	$	70	$	1,494	$	71	$	3,259	$	141

Unrealized losses can be created by rising interest rates or by rising credit concerns and hence widening credit spreads. Credit concerns are apt to play a larger role in the unrealized loss on below investment grade securities. Unrealized losses on investment grade securities principally relate to changes in interest rates or changes in credit spreads since the securities were acquired. Credit rating agencies’ statistics indicate that investment grade securities have been found to be less likely to develop credit concerns. The gross unrealized loss on below investment grade available-for-sale fixed maturity securities increased to $79 million at December 31, 2008 from $19 million at December 31, 2007.

At December 31, 2008 and 2007, there were 753 and 339 available-for-sale fixed maturity securities with an aggregate gross unrealized loss of $972 million and $123 million, respectively, of which the single largest unrealized loss was $22 million and $16 million, respectively. The Company anticipates that these fixed maturity securities will perform in accordance with their contractual terms and currently has the ability and intent to hold these securities until they recover or mature.

At December 31, 2008 and 2007, there were 550 and 174 equity securities with an aggregate gross unrealized loss of $146 million and $18 million, respectively, of which the single largest unrealized loss was $14 million and $1 million, respectively. The Company anticipates that these equity securities will recover in value in the near term.

F-19

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2 — Investments - (continued)

There were no non-income producing available-for-sale securities for the year ended December 31, 2008. Non-income producing assets represent investments that have not produced income for the twelve months preceding December 31, 2008.

Securities Lending

The Company participated in a securities lending program for the purpose of enhancing income on securities held in 2007, but there were no securities on loan and no collateral held as of December 31, 2008. At December 31, 2007, $1,476 million of the Company’s securities, at market value, were on loan to various brokers/dealers and were fully collateralized by cash and highly liquid securities. The market value of the loaned securities was monitored on a daily basis, and the collateral was maintained at a level of at least 102% of the loaned securities’ market value.

Assets on Deposit

As of December 31, 2008 and 2007, fixed maturity securities with a fair value of $9 million and $7 million were on deposit with government authorities as required by law.

Mortgage Loans on Real Estate

At December 31, 2008, the mortgage portfolio was diversified by specific collateral property type and geographic region as displayed below:

Collateral Property Type	Carrying Amount			Geographic Concentration	Carrying Amount
	(in millions)				(in millions)
Apartments	$	356		East North Central	$	323
Industrial		531		East South Central		38
Office buildings		955		Middle Atlantic		463
Retail		468		Mountain		243
Mixed use		120		New England		160
Agricultural		48		Pacific		689
Agri business		42		South Atlantic		551
Other		114		West North Central		14
				West South Central		153
Provision for losses		(5	)	Provision for losses		(5	)
Total	$	2,629		Total	$	2,629

Changes in the allowance for probable losses on mortgage loans on real estate are summarized below:

	Balance at Beginning of Period	Additions		Deductions		Balance at End of Period
	(in millions)
Year ended December 31, 2008	$  3	$	2	$	-	$	5
Year ended December 31, 2007	3		5		5		3
Year ended December 31, 2006	5		1		3		3

Mortgage loans with a carrying value of $11 million were non-income producing for the years ended December 31, 2008 and 2007. At December 31, 2008, mortgage loans with carrying value of $4 million were delinquent by less than 90 days. There were no mortgage loans delinquent by 90 days or more.

F-20

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2 — Investments - (continued)

The total recorded investment in mortgage loans that are considered to be impaired along with the related provision for losses were as follows:

	December 31,
	2008			2007
	(in millions)
Impaired mortgage loans on real estate with provision for losses	$	16		$	12
Provision for losses		(5	)		(3	)
Net impaired mortgage loans on real estate	$	11		$	9

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

	Years ended December 31,
	2008		2007		2006
	(in millions)
Average recorded investment in impaired loans	$	14	$	12	$	16
Interest income recognized on impaired loans		-		-		-

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.

There were no restructured mortgage loans as of December 31, 2008 and 2007.

Investment Real Estate

There was no non-income producing real estate for the years ended December 31, 2008 and 2007, respectively. Depreciation expense on investment real estate was $29 million, $26 million, and $26 million, in 2008, 2007, and 2006, respectively. Accumulated depreciation was $248 million and $218 million at December 31, 2008 and 2007, respectively.

Equity Method Investments

Investments in other assets, which include unconsolidated joint ventures, partnerships, and limited liability corporations, accounted for using the equity method of accounting totaled $392 million and $309 million at December 31, 2008 and 2007, respectively. Total combined assets of such investments were $8,051 million and $5,322 million (consisting primarily of investments) and total combined liabilities were $3,753 million and $2,916 million (including $3,219 million and $2,444 million of debt) at December 31, 2008 and 2007, respectively. Total combined revenues and expenses of these investments in 2008 were $1,423 million and $1,513 million, respectively, resulting in $90 million of total combined loss from operations. Total combined revenues and expenses of these investments in 2007 were $560 million and $582 million, respectively, resulting in $22 million of total combined loss from operations. Total combined revenues and expenses in 2006 were $68 million and $110 million, respectively, resulting in $42 million of total combined loss from operations. Net investment (loss) income on investments accounted for on the equity method totaled $(9) million, $2 million, and $0 in 2008, 2007, and 2006, respectively. Depending on the timing of receipt of the audited financial statements of these other assets, the above investee level financial data may be up to one year in arrears.

F-21

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2 — Investments - (continued)

Net Investment Income and Net Realized Investment and Other Gains (Losses)

The following information summarizes the components of net investment income and net realized investment and other gains (losses):

	Years ended December 31,
	2008			2007		2006
	(in millions)
Net investment income
Fixed maturities	$	913		$	798	$	730
Equity securities		50			38		24
Mortgage loans on real estate		161			145		152
Investment real estate		96			100		98
Policy loans		202			185		166
Short-term investments		93			145		61
Other		12			7		(8	)
Gross investment income		1,527			1,418		1,223
Less investment expenses		92			81		60
Net investment income (1)	$	1,435		$	1,337	$	1,163
Net realized investment and other gains (losses)
Fixed maturities	$	(55	)	$	69	$	(27	)
Equity securities		(151	)		38		44
Mortgage loans on real estate and real estate held-for-sale		1			13		20
Derivatives and other invested assets		631			42		(5	)
Net realized investment and other gains (1)	$	426		$	162	$	32

(1) Includes net investment income and net realized investment and other gains on assets held in trust on behalf of MRBL, which are included in amounts due from and held for affiliates on the Consolidated Balance Sheets. See Note 7 —Related Party Transactions, for information on the associated MRBL reinsurance agreement.

For 2008, 2007, and 2006, net investment income passed through to participating contract holders as interest credited to policyholders’ account balances amounted to $1 million, $2 million, and $1 million, respectively.

Gross gains were realized on the sale of available-for-sale securities of $212 million, $203 million, and $189 million for the years ended December 31, 2008, 2007, and 2006, respectively, and gross losses were realized on the sale of available-for-sale securities of $50 million, $51 million, and $132 million for the years ended December 31, 2008, 2007, and 2006, respectively. In addition, other-than-temporary impairments on available-for-sale securities of $341 million, $74 million, and $64 million for the years ended December 31, 2008, 2007, and 2006, respectively, were recognized in the Consolidated Statements of Operations.

Note 3 — Relationships with Variable Interest Entities

In its capacities as an investor and as an investment manager, the Company has relationships with various types of entities, some of which are considered variable interest entities (“VIEs”) in accordance with FASB Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51 (revised December 2003)” (“FIN No. 46(R)”). Under FIN No. 46(R), the variable interest holder, if any, that will absorb a majority of the VIE’s expected losses, receive a majority of the VIE’s expected residual returns, or both, is deemed to be the primary beneficiary and must consolidate the VIE. An entity that holds a significant variable interest in a VIE, but is not the primary beneficiary, must disclose certain information regarding its involvement with the VIE.

F-22

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 3 — Relationships with Variable Interest Entities - (continued)

The Company determines whether it is the primary beneficiary of a VIE by evaluating the contractual rights and obligations associated with each party involved in the entity, calculating estimates of the entity’s expected losses and expected residual returns, and allocating the estimated amounts to each party. In addition, the Company considers qualitative factors, such as the extent of the Company’s involvement in creating or managing the VIE.

If it is not considered to be the primary beneficiary, the Company assesses the materiality of its relationship with the VIE to determine if it holds a significant variable interest, which requires disclosure. This assessment considers the materiality of the VIE relationship to the Company as, among other factors, a percentage of total investments, percentage of total net investment income, and percentage of total funds under management. For purposes of assessing materiality and disclosing significant variable interests, the Company aggregates similar entities.

Significant Variable Interests in Unconsolidated Variable Interest Entities

The following table presents the total assets of, investment in, and maximum exposure to loss relating to VIEs for which the Company has concluded that it holds significant variable interests, but it is not the primary beneficiary, and which have not been consolidated. The Company does not record any liabilities related to the unconsolidated VIEs.

	December 31,
	2008
	Total Assets		Investment (1)		Maximum Exposure to Loss (2)
	(in millions)
Real estate limited partnerships (3)	$	142	$	100	$	148
Timber funds (4)		205		13		13
Total	$	347	$	113	$	161

	December 31,
	2007
	Total Assets		Investment (1)		Maximum Exposure to Loss (2)
	(in millions)
Real estate limited partnerships (3)	$	103	$	38	$	85
Timber funds (4)		266		17		17
Total	$	369	$	55	$	102

(1) The Company’s investments in unconsolidated VIEs are included in other invested assets on the Consolidated Balance Sheets.

(2) The maximum exposure to loss related to real estate limited partnerships and timber funds is limited to the Company’s investment plus unfunded capital commitments. The maximum loss is expected to occur only upon bankruptcy of the issuer or investee or as a result of a natural disaster in the case of the timber funds.

(3) Real estate limited partnerships include partnerships established for the purpose of investing in real estate that qualifies for low income housing and/or historic tax credits. Limited partnerships are owned by a general partner, who manages the business, and by limited partners, who invest capital, but have limited liability and are not involved in the partnerships’ management. The Company is typically the sole limited partner or investor member of each and is not a general partner or managing member of any.

(4) The Company acts as investment manager for the VIEs owning the timberland properties (the timber funds), which the general account and institutional separate accounts invest in. Timber funds are investment vehicles used primarily by large institutional investors, such as public and corporate pension plans, whose primary source of return is derived from the growth and harvest of timber and long-term appreciation of the property. The primary risks of timberland investing include market uncertainty (fluctuation of timber and timberland investments), relative

F-23

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 3 — Relationships with Variable Interest Entities - (continued)

illiquidity (compared to stocks and other investment assets), and environmental risk (natural hazards or legislation related to threatened or endangered species). These risks are mitigated through effective investment management and geographic diversification of timberland investments. The Company collects an advisory fee from each timber fund and is also eligible for performance and forestry management fees.

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 of assets and liabilities.

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 of assets and liabilities or the average life of certain asset portfolios to specified targets. Interest rate swap agreements are contracts with counterparties 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 is accrued and recognized as a component of net investment income.

Cross currency rate swap agreements are used to manage the Company’s exposure to foreign exchange rate fluctuations. Cross currency rate swap agreements are contracts to exchange the currencies of two different countries at the same rate of exchange at specified future dates. The net differential to be paid or received on cross currency rate swap agreements is accrued and recognized as a component of net investment income.

For the years ended December 31, 2008, and 2006, the Company recognized net losses of $22 million and net gains of $3 million, respectively, related to the ineffective portion of its fair value hedges. These amounts were recorded in net realized investment and other gains (losses). For the year ended December 31, 2007, no gains or losses related to the ineffective portion of its fair value hedges were recognized. For the years ended December 31, 2008, 2007, and 2006, the Company did not recognize any gains or losses related to the portion of the hedging instruments that were excluded from the assessment of hedge effectiveness. In 2008, the Company had no hedges of firm commitments.

Cash Flow Hedges.  The Company uses interest rate swap agreements to hedge the variable cash flows associated with payments that it will receive on certain floating rate fixed income securities. Amounts are reclassified from accumulated other comprehensive income as a yield adjustment when the payments are made.

For the years ended December 31, 2008, 2007, and 2006, no gains or losses related to the ineffective portion of cash flow hedges were recognized. For the years ended December 31, 2008, 2007, and 2006, all of the Company’s hedged forecast transactions qualified as cash flow hedges.

No gains or losses were reclassified from accumulated other comprehensive income to net income in 2008 or 2006. For the year ended December 31, 2007, net gains of $13 million, net of tax, were reclassified from accumulated other comprehensive income to net income. It is anticipated that losses of approximately $4 million will be reclassified from accumulated other comprehensive income to earnings within the next 12 months. The maximum length for which variable cash flows are hedged is 26.4 years.

For the years ended December 31, 2008, 2007, and 2006, no cash flow hedges were discontinued because it was probable that the original forecasted transactions would not occur by the end of the originally specified time period documented at inception of the hedging relationship.

For the years ended December 31, 2008 and 2006, net gains of $6 million, net of tax, and net losses of $10 million, net of tax, respectively, representing the effective portion of the change in fair value of derivative instruments designated as cash flow hedges were added to accumulated other comprehensive income. No gains or losses representing the effective portion of the change in fair value were added to accumulated other comprehensive income in 2007.

Derivatives Not Designated as Hedging Instruments.  The Company enters into interest rate swap agreements, cancelable interest rate swap agreements, total return swaps, interest rate futures contracts, and credit default swaps to manage exposure to interest rates without designating the derivatives as hedging instruments. In addition, the Company uses interest rate floor

F-24

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 4 — Derivatives and Hedging Instruments - (continued)

agreements to hedge the interest rate risk associated with minimum interest rate guarantees in certain of its life insurance and annuity businesses, without designating the derivatives as hedging instruments.

The Company offers certain variable annuity products with a guaranteed minimum withdrawal benefit (“GMWB”) rider. This rider is effectively an embedded option on the basket of the mutual funds, which is sold to contract holders. Beginning in November 2007, for certain contracts, the Company implemented a hedging program to reduce its exposure to the GMWB rider. This dynamic hedging program uses interest rate swaps, equity index futures (including but not limited to the Dow Jones Industrial, Standard & Poor’s 500, Russell 2000, and Dow Jones Euro Stoxx 50 indices), and foreign currency futures to match the sensitivities of the GMWB rider liability to the market risk factors.

For the years ended December 31, 2008 and 2007, net gains of $625 million and $22 million, respectively, related to derivatives in a non-hedge relationship were recognized by the Company. These amounts were recorded in net realized investment and other gains (losses).

Embedded Derivatives.  The Company has certain embedded derivatives that are required to be separated from their host contracts and accounted for as derivatives. These host contracts include reinsurance contracts.

Outstanding derivative instruments were as follows:

	December 31,
	2008						2007
	Notional Amount		Carrying Value		Fair Value		Notional Amount		Carrying Value		Fair Value
	(in millions)
Assets:
Derivatives:
Interest rate swap agreements	$	4,190	$	759	$	759	$	1,653	$	28	$	28
Cross currency rate swap agreements		1,617		321		321		1,214		179		179
Foreign exchange forward agreements		84		3		3		89		9		9
Embedded derivatives—reinsurance contracts		-		36		36		-		-		-
Total Assets	$	5,891	$	1,119	$	1,119	$	2,956	$	216	$	216
Liabilities:
Derivatives:
Interest rate swap agreements	$	1,991	$	325	$	325	$	1,818	$	22	$	22
Cross currency rate swap agreements		1,713		377		377		1,567		277		277
Foreign exchange forward agreements		38		3		3		212		9		9
Credit default swaps		24		1		1		-		-		-
Equity swaps		34		15		15		1		1		1
Embedded derivatives—fixed maturities		2		-		-		2		-		-
Embedded derivatives—reinsurance contracts		-		-		-		-		4		4
Total Liabilities	$	3,802	$	721	$	721	$	3,600	$	313	$	313

F-25

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 4 — Derivatives and Hedging Instruments - (continued)

Credit Risk.  The Company may be exposed to credit-related losses in the event of nonperformance by counterparties to the derivative financial instruments. The current credit exposure of the Company’s derivative contracts is limited to the fair value at the reporting date.

The Company manages its credit risk by entering into transactions with creditworthy counterparties, obtaining collateral where appropriate, and entering into master netting agreements that provide for a netting of payments and receipts with a single counterparty. The Company enters into credit support annexes with its over-the-counter derivative dealers in order to manage its credit exposure to those counterparties. As part of the terms and conditions of those agreements, the pledging and accepting of collateral in connection with the Company’s derivative usage is required. As of December 31, 2008 and 2007, the Company had accepted collateral consisting of various securities with a fair value of $225 million and $52 million, respectively, which is held in separate custodial accounts. In addition, as of December 31, 2008, the Company pledged collateral of $439 million, which is included in fixed maturities on the Consolidated Balance Sheets. The Company had no pledged collateral in 2007.

F-26

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 5 — Income Taxes

JHUSA and its subsidiaries join with MIC and other affiliates in filing a consolidated federal income tax return.

In accordance with the income tax sharing agreements in effect for the applicable tax years, the income tax provision (or benefit) is computed as if each entity filed separate federal income tax returns. The tax charge to each of the respective companies will not be more than that which each company would have paid on a separate return basis. Intercompany settlements of income taxes are made through an increase or reduction to amounts due to or from affiliates. Such settlements occur on a periodic basis in accordance with the tax sharing agreements. Tax benefits from operating losses are provided at the U.S. statutory rate plus any tax credits attributable, provided the consolidated group utilizes such benefits currently.

The components of income taxes were as follows:

	Years ended December 31,
	2008		2007	2006
	(in millions)
Current taxes:
Federal	$  (515	)	$  223	$  (7	)
Deferred taxes:
Federal	212		50	237
Total income tax (benefit) expense	$  (303	)	$  273	$  230

A reconciliation of income taxes at the federal income tax rate to income tax expense charged to operations follows:

	Years ended December 31,
	2008		2007		2006
	(in millions)
Tax at 35%	$  (119	)	$  348		$  264
Add (deduct):
Prior year taxes	(78	)(1)	(43	)	(4	)
Tax credits	(19	)	(35	)	-
Tax-exempt investment income	(88	)	(160	)	(42	)
Unrecognized tax benefits	2		161		9
Other	(1	)	2		3
Total income tax (benefit) expense	$  (303	)	$  273		$  230

(1) During 2008, the Company performed a detailed analysis of its tax-basis balance sheet and related deferred tax balances. This analysis resulted in an $81 million decrease in the 2008 net deferred tax liability balance due to book/tax differences attributable to prior years. This adjustment has been reflected as a reduction of the 2008 tax expense.

F-27

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 5 — Income Taxes - (continued)

Deferred income tax assets and liabilities result from tax effecting the differences between the financial statement values and income tax values of assets and liabilities at each Consolidated Balance Sheet date. Deferred tax assets and liabilities consisted of the following:

	December 31,
	2008		2007
	(in millions)
Deferred tax assets:
Policy reserve adjustments	$	2,348	$	2,408
Net operating loss carryforwards		309		49
Tax credits		145		126
Unearned revenue		756		190
Dividends payable to policyholders		14		12
Unrealized losses on securities		61		-
Other		84		62
Total deferred tax assets		3,717		2,847
Deferred tax liabilities:
Deferred policy acquisition costs		2,394		1,637
Unrealized gains on securities		-		447
Premiums receivable		41		24
Deferred sales inducements		121		92
Deferred gains		609		94
Investments		604		65
Reinsurance		695		1,433
Other		108		55
Total deferred tax liabilities		4,572		3,847
Net deferred tax liabilities	$	855	$	1,000

At December 31, 2008, the Company had $883 million of operating loss carryforwards, which will expire in various years through 2023. The Company believes that it will realize the full benefit of its deferred tax assets.

The Company made income tax payments of $14 million, $28 million, and $9 million in 2008, 2007, and 2006, respectively.

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations by taxing authorities for years before 1998.

The Internal Revenue Service (“IRS”) completed its examinations for years 1998 through 2003 on December 31, 2005. The Company has filed protests with the IRS Appeals Division of various adjustments raised by the IRS in its examinations of these years. The IRS commenced an examination of the Company’s income tax returns for years 2004 through 2005 in the third quarter of 2007. It is anticipated that the examination will be completed by the end of 2009.

The Company adopted the provisions of FIN No. 48 on January 1, 2007. In connection with the adoption of FIN No. 48, the Company did not recognize an increase or decrease in its liability for unrecognized tax benefits.

F-28

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 5 — Income Taxes - (continued)

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	December 31
	2008			2007
	(in millions)
Beginning balance	$	379		$	230
Additions based on tax positions related to the current year		51			77
Reductions based on tax positions related to the current year		-			(7	)
Additions for tax positions of prior years		39			89
Reductions for tax positions of prior years		(58	)		(10	)
Ending balance	$	411		$	379

Included in the balances as of December 31, 2008 and 2007, respectively, are $291 million and $291 million of unrecognized benefits that, if recognized, would affect the Company’s effective tax rate.

Included in the balances as of December 31, 2008 and 2007, respectively, are $120 million and $88 million of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest or penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of taxes to an earlier period.

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense (part of other operating costs and expenses) and penalties in income tax expense. During the years ended December 31, 2008, 2007, and 2006, the Company recognized approximately $4 million, ($24) million, and $17 million in interest expense (benefit), respectively. The Company had approximately $44 million and $39 million accrued for interest as of December 31, 2008 and December 31, 2007, respectively. The Company did not recognize any material amounts of penalties during the years ended December 31, 2008, 2007, and 2006.

Note 6 — Closed Block

The Company operates a separate closed block for the benefit of certain classes of individual or joint traditional participating whole life insurance policies. The closed block was established upon the demutualization of MLI for those designated participating policies that were in-force on September 23, 1999. Assets were allocated to the closed block in an amount that, together with anticipated revenues from policies included in the closed block, was reasonably expected to be sufficient to support such business, including provision for payment of benefits, direct asset acquisition and disposition costs, and taxes, and for continuation of dividend scales, assuming experience underlying such dividend scales continues. Assets allocated to the closed block inure solely to the benefit of the holders of the policies included in the closed block and will not revert to the benefit of the shareholders of the Company. No reallocation, transfer, borrowing, or lending of assets can be made between the closed block and other portions of the Company’s general account, any of its separate accounts, or any affiliate of the Company without prior approval of the Michigan Commissioner of Financial and Insurance Regulation (the “Commissioner”).

If, over time, the aggregate performance of the closed block’s assets and policies is better than was assumed in funding the closed block, dividends to policyholders will be increased. If, over time, the aggregate performance of the closed block’s assets and policies is less favorable than was assumed in the funding, dividends to policyholders will be reduced.

The assets and liabilities allocated to the closed block are recorded in the Company’s Consolidated Balance Sheets and Statements of Operations on the same basis as other similar assets and liabilities. The carrying amount of the closed block’s liabilities in excess of the carrying amount of the closed block’s assets at the date the closed block was established (adjusted to eliminate the impact of related amounts in accumulated other comprehensive income) represents the maximum future earnings from the assets and liabilities designated to the closed block that can be recognized in income over the period the policies in the closed block remain in force. The Company has developed an actuarial calculation of the timing of such maximum future shareholder earnings, and this is the basis of the policyholder dividend obligation.

F-29

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 6 — Closed Block - (continued)

If actual cumulative earnings are greater than expected cumulative earnings, only expected earnings will be recognized in income. Actual cumulative earnings in excess of expected cumulative earnings represents undistributed accumulated earnings attributable to policyholders, which are recorded as a policyholder dividend obligation because the excess will be paid to the closed block’s policyholders as an additional policyholder dividend unless otherwise offset by future performance of the closed block that is less favorable than originally expected. If actual cumulative performance is less favorable than expected, only actual earnings will be recognized in net income.

For all closed block policies, the principal cash flow items that affect the amount of closed block assets and liabilities are premiums, net investment income, purchases and sales of investments, policyholders’ benefits, policyholder dividends, premium taxes, guaranty fund assessments, and income taxes. The amounts shown in the following tables for assets, liabilities, revenues, and expenses of the closed block are those that enter into the determination of amounts that are to be paid to policyholders.

The following tables set forth certain summarized financial information relating to the closed block as of the dates indicated:

	December 31,
	2008			2007
	(in millions)
Liabilities
Future policy benefits	$	8,680		$	8,619
Policyholders’ funds		79			79
Policyholder dividends payable		211			206
Other closed block liabilities		99			99
Total closed block liabilities	$	9,069		$	9,003
Assets
Investments
Fixed maturities:
Available-for-sale—at fair value (amortized cost: 2008—$3,235; 2007—$3,086)	$	3,128		$	3,165
Mortgage loans on real estate		583			562
Policy loans		1,700			1,545
Other invested assets		644			740
Total investments		6,055			6,012
Cash borrowings and cash equivalents		(437	)		(374	)
Accrued investment income		115			106
Amounts due from and held for affiliates		1,752			2,016
Other closed block assets		488			202
Total assets designated to the closed block	$	7,973		$	7,962
Excess of closed block liabilities over assets designated to the closed block	$	1,096		$	1,041
Portion of above representing accumulated other comprehensive income:
Unrealized appreciation, net of deferred income tax expense of $42 million and $174 million, respectively		78			322
Adjustment for deferred policy acquisition costs, net of deferred income tax benefit of $14 million and $48 million, respectively		(26	)		(88	)
Foreign currency translation adjustment		(21	)		(76	)
Total amounts included in accumulated other comprehensive income		31			158
Maximum future earnings to be recognized from closed block assets and liabilities	$	1,127		$	1,199

F-30

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 6 — Closed Block - (continued)

	Years ended December 31,
	2008			2007			2006
	(in millions)
Revenues
Premiums	$	647		$	661		$	678
Net investment income		473			438			423
Net realized investment and other (losses) gains		(9	)		17			81
Total revenues		1,111			1,116			1,182
Benefits and Expenses
Benefits to policyholders		782			799			862
Policyholder dividends		411			409			389
Amortization of deferred policy acquisition costs		(218	)		(50	)		15
Other closed block operating costs and expenses		25			25			27
Total benefits and expenses		1,000			1,183			1,293
Revenues, net of benefits and expenses before income taxes		111			(67	)		(111	)
Income tax expense (benefit)		39			(24	)		(39	)
Revenues, net of benefits and expenses and income taxes	$	72		$	(43	)	$	(72	)

Maximum future earnings from closed block assets and liabilities:

	Years Ended December 31,
	2008			2007
	(in millions)
Beginning of period	$	1,199		$	1,156
End of period		1,127			1,199
Change during period	$	(72	)	$	43

Note 7 — Related Party Transactions

Reinsurance Transactions

Effective October 1, 2008, the Company entered into a reinsurance agreement with an affiliate, Manulife Reinsurance (Bermuda) Limited (“MRBL”), to reinsure 75% of the group pension business in-force. The reinsurance agreement covers all contracts, excluding the guaranteed benefit rider, issued and in-force as of September 30, 2008. As the underlying contracts being reinsured are considered investment contracts, the agreement does not meet the criteria for reinsurance accounting and was classified as a financial instrument. Under the terms of the agreement, the Company received initial consideration of $1,495 million, which was classified as unearned revenue. The amount is being amortized into income through other operating costs and expenses on a basis consistent with the manner in which the deferred policy acquisition costs on the underlying reinsured contracts are recognized. The balance of unearned revenue related to the initial consideration was $1,484 million as of December 31, 2008.

Effective December 31, 2003, the Company entered into a reinsurance agreement with MRBL to reinsure 90% of the non-reinsured risk of the closed block. As approximately 90% of the mortality risk is covered under previously existing contracts with third party reinsurers and the resulting limited mortality risk is inherent in the new contract with MRBL, it was classified as financial reinsurance and given deposit-type accounting treatment. The Company retained title to the invested assets supporting this block of business. These invested assets are held in trust on behalf of MRBL and are included in amounts due from and held for affiliates on the Consolidated Balance Sheets. The amounts held at December 31, 2008 and 2007 were $2,190 million and $2,493 million, respectively, and are accounted for as invested assets available-for-sale.

Effective January 1, 2002, the Company entered into a 90% quota share reinsurance agreement with MRBL to reinsure a block of variable annuity business (the “Original Agreement”). The Original Agreement covered base contracts, but

F-31

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 7 — Related Party Transactions - (continued)

excluded the guaranteed benefit riders. The primary risk reinsured was investment and lapse risk with only limited coverage, of mortality risk. Accordingly, the contract was classified as financial reinsurance and given deposit-type accounting treatment. Under the terms of the Original Agreement, the Company received (paid) a net ceding commission of $113 million, $(23) million, and $(35) million for the years ended December 31, 2008, 2007, and 2006, respectively. These amounts were classified as unearned revenue and were being amortized into income as payments were made to MRBL. The original agreement was amended effective October 1, 2008 as discussed further below. As a result of the amendment, the unearned revenue balance of $580 million as of September 30, 2008 was included in the calculation of cost of reinsurance, which was included with other liabilities on the Consolidated Balance Sheets. The balance of the unearned revenue liability was $437 million as of December 31, 2007.

Effective October 1, 2008, the Company entered into an amended and restated variable annuity reinsurance agreement with MRBL. The base contracts continue to be reinsured on a modified coinsurance basis; however, MRBL now reinsures all substantial risks, including all guaranteed benefits, related to certain specified policies not already reinsured to third parties. Guaranteed benefit reinsurance coverage was apportioned in accordance with the reinsurance agreement provisions between modified coinsurance and coinsurance funds withheld as of December 31, 2008. The assets supporting the reinsured policies remained invested with the Company. As of December 31, 2008, the Company reported a reinsurance payable to MRBL of $781 million, which was included with amounts due to affiliates, a liability for coinsurance funds withheld of $285 million, which was included with other liabilities, and $2,123 million related to the cost of reinsurance, which was included with other liabilities on the Consolidated Balance Sheets. The cost of reinsurance is being amortized into income over the life of the underlying reinsured contracts in proportion to the policyholder fee income received.

Service Agreements

The Company has formal service agreements with MFC and MLI, which can be terminated by either party upon two months notice. Under the various agreements, the Company will pay direct operating expenses incurred by MFC and MLI on behalf of the Company. Services provided under the agreements include legal, actuarial, investment, data processing, accounting, and certain other administrative services. Costs incurred under the agreements were $374 million, $336 million, and $323 million for the years ended December 31, 2008, 2007, and 2006, respectively. As of December 31, 2008 and December 31, 2007, the Company had amounts receivable from MFC and MLI of $8 million and $18 million, respectively.

There are two service agreements, both effective April 28, 2004, between the Company and an affiliate, John Hancock Life Insurance Company (“JHLICO”). Under one agreement, the Company provides services to JHLICO, and under the other, JHLICO provides services to the Company. In both cases, the Provider of the services can also employ a Provider Affiliate to provide services. In the case of the service agreement where JHLICO provides services to the Company, a Provider Affiliate means JHLICO’s parent, John Hancock Financial Services, Inc. (“JHFS”), and its direct and indirect subsidiaries. Net services provided by the Company to JHLICO were $122 million, $126 million, and $111 million for the years ended December 31, 2008, 2007, and 2006, respectively. As of December 31, 2008 and 2007, there were accrued receivables from JHLICO to the Company of $12 million and $87 million, respectively.

Management believes the allocation methods used are reasonable and appropriate in the circumstances; however, the Company’s Consolidated Balance Sheets may not necessarily be indicative of the financial condition that would have existed if the Company operated as an unaffiliated entity.

Debt Transactions

Pursuant to a subordinated surplus note dated September 30, 2008, the Company borrowed $110 million from John Hancock Financial Holdings (Delaware) Inc. (“JHFH”). The interest rate is fixed at 7%, and interest is payable semi-annually. The note matures on March 31, 2033. Interest expense was $2 million for the year ended December 31, 2008.

Pursuant to a subordinated surplus note dated September 30, 2008, the Company borrowed $295 million from JHFH. The interest rate is fixed at 7%, and interest is payable semi-annually. The note matures on March 31, 2033. Interest expense was $5 million for the year ended December 31, 2008.

F-32

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 7 — Related Party Transactions - (continued)

On December 22, 2006, the Company issued a subordinated note to MHDLLC in the amount of $136 million due December 15, 2016 (the “Original Note”). Interest on the Original Note accrued at a variable rate equal to LIBOR plus 0.3% per annum calculated and reset quarterly on March 15, June 15, September 15, and December 15, and payable semi-annually on June 15 and December 15 of each year until December 15, 2011 and thereafter at a variable rate equal to LIBOR plus 1.3% per annum reset quarterly as aforesaid until payment in full. On September 30, 2008 the Original Note was converted to a subordinated surplus note on the same economic terms. Interest on the subordinated surplus note from October 1, 2008 until December 15, 2011 accrues at a variable rate equal to LIBOR plus 0.3% per annum calculated and reset quarterly on March 31, June 30, September 30, and December 31 and payable semi-annually on March 31 and September 30 of each year. Thereafter, interest accrues at a variable rate equal to LIBOR plus 1.3% per annum reset quarterly as aforementioned and payable semi-annually on June 15 and September 15 of each year until payment in full. Interest expense was $5 million, $10 million, and $0 for the years ended December 31, 2008, 2007, and 2006, respectively.

The issuance of surplus notes by the Company was approved by the Commissioner, and any payments of interest or principal on the surplus notes require the prior approval of the Commissioner.

Pursuant to a demand note dated September 30, 2008, the Company loaned $295 million to JHFS. The interest rate is calculated at a fluctuating rate equal to 3 month LIBOR plus 50 basis points. The note matures on December 31, 2009. Interest income was $3 million for the year ended December 31, 2008.

Pursuant to a senior promissory note dated March 1, 2007, the Company borrowed $477 million from MHDLLC. The note was repaid on September 30, 2008. Interest was calculated at a fluctuating rate equal to 3-month LIBOR plus 33.5 basis points. Interest expense was $13 million and $23 million for the years ended December 31, 2008 and 2007, respectively.

Pursuant to a Note Purchase Agreement dated November 10, 2006, the Company borrowed $90 million from JHLICO. The note provides for interest-only payments of $0.4 million per month commencing January 1, 2007 through November 1, 2011. The interest rate for the term of this note is fixed at 5.73%. The note matures on December 1, 2011 and is secured by a mortgage on the Company’s property at 601 Congress Street, Boston, Massachusetts. Interest expense was $5 million, $5 million, and $0 for the years ended December 31, 2008, 2007, and 2006, respectively.

Capital Stock Transactions

On September 30, 2008, the Company issued two shares of common stock to MIC for $477 million in cash.

Other

On December 28, 2006, the Company sold real estate held for investment with a net book value of $17 million to JHILCO for $150 million in cash. Since this sale was accounted for as a transaction between entities under common control, the difference between the net book value and sales price resulted in an increase of $87 million, net of tax, to the Company’s additional paid-in-capital as of December 31, 2006.

On September 2, 2008, John Hancock Variable Life Insurance Company (“JHVLICO”), purchased a $60 million funding agreement from the Company.

F-33

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 7 — Related Party Transactions - (continued)

The Company operates a liquidity pool in which affiliates can invest excess cash. Terms of operation and participation in the liquidity pool are set out in the Liquidity Pool and Loan Facility Agreement effective November 13, 2007. The maximum aggregate amounts that the Company can accept into the Liquidity Pool are $5 billion in U.S. dollar deposits and $200 million in Canadian dollar deposits. Under the terms of the agreement, certain participants may receive advances from the Liquidity Pool up to certain predetermined limits. Interest payable on the funds will be reset daily to the one-month London Interbank Bid Rate.

The following table details the affiliates and their participation in the Company’s Liquidity Pool:

	December 31,
	2008		2007
	(in millions)
The Manufacturers Investment Corporation	$	18	$	25
Manulife Holdings (Delaware) LLC		14		36
Manulife Reinsurance Ltd		144		158
Manulife Reinsurance (Bermuda) Ltd		54		155
Manulife Hungary Holdings KFT		44		48
John Hancock Life & Health Insurance Company		40		31
John Hancock Life Insurance Company		1,733		1,736
John Hancock Variable Life Insurance Company		347		90
John Hancock Insurance Company of Vermont		31		95
John Hancock Reassurance Co, Ltd		37		271
John Hancock Financial Services, Inc		104		550
The Berkeley Financial Group LLC		30		12
John Hancock Subsidiaries LLC		85		68
Total	$	2,681	$	3,275

The balances above are reported on the Consolidated Balance Sheets as amounts due to affiliates.

MFC provides a claims paying guarantee to certain U.S. policyholders.

F-34

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 8 — Reinsurance

The effect of reinsurance on life, health, and annuity premiums written and earned was as follows:

	Years ended December 31,
	2008						2007						2006
	Premiums						Premiums						Premiums
	Written			Earned			Written			Earned			Written			Earned
	(in millions)
Direct	$	1,310		$	1,313		$	1,148		$	1,149		$	1,294		$	1,294
Assumed		529			521			426			420			369			405
Ceded		(871	)		(871	)		(694	)		(694	)		(685	)		(685	)
Net life, health, and annuity premiums	$	968		$	963		$	880		$	875		$	978		$	1,014

For the years ended December 31, 2008, 2007, and 2006, benefits to policyholders under life, health, and annuity ceded reinsurance contracts were $880 million, $725 million, and $423 million, respectively.

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

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 among the reinsurers.

Note 9 — Pension and Other Postretirement Benefit Plans

Effective December 31, 2006, The Company’s Cash Balance Plan was merged into the John Hancock Financial Services, Inc. Pension Plan (the “Plan”), which is a funded qualified defined benefit plan sponsored by JHFS. Pursuant to the merger, all of the assets of the former plans were commingled. The aggregate pool of assets from the former plans is available to meet the obligations of the merged plan. The merger did not have a material impact on the Consolidated Balance Sheets or Statements of Operations of the Company.

Historically, pension benefits were calculated utilizing a traditional formula. Under the traditional formula, benefits are provided based upon length of service and final average compensation. As of July 1, 1998, all defined benefit pension plans were amended to a cash balance basis. Under the cash balance formula, participants are credited with benefits equal to a percentage of eligible pay, as well as interest. In addition, early retirement benefits are subsidized for certain grandfathered employees.

The Company’s funding policy for its qualified defined benefit plans is to contribute annually an amount at least equal to the minimum annual contribution required under the Employee Retirement Income Security Act of 1974, as amended, and other applicable laws and generally, not greater than the maximum amount that can be deducted for federal income tax purposes. In 2008, 2007, and 2006, no contributions were made to the qualified plans. The Company expects that no contributions will be made in 2009.

Pension plan assets of $19 million and $26 million at December 31, 2008 and 2007, respectively, were investments managed by related parties.

The Company also participates in an unfunded non-qualified defined benefit plan, which is also sponsored by JHFS. This plan provides supplemental benefits in excess of the compensation limit outlined in the Internal Revenue Code, for certain employees.

F-35

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 9 — Pension and Other Postretirement Benefit Plans - (continued)

The Company participates in a new non-qualified defined contribution pension plan, maintained by MFC, which was established as of January 1, 2008 with participant directed investment options. The expense for the new plan was $5 million in 2008. The prior plan was frozen as of January 1, 2008, and the benefits accrued under the prior plan continue to be subject to the prior plan provisions.

The Company’s funding policy for its non-qualified defined benefit plans is to contribute the amount of the benefit payments made during the year. The contribution to the non-qualified plans was $1 million, $3 million, and $2 million in 2008, 2007, and 2006, respectively. The Company expects to contribute approximately $2 million to its non-qualified pension plans in 2009.

The Company provides postretirement medical and life insurance benefits for its retired employees and their spouses through its participation in the John Hancock Financial Services, Inc. Employee Welfare Plan, sponsored by JHFS. Certain employees hired prior to 2005 who meet age and service criteria may be eligible for these postretirement benefits in accordance with the plan’s provisions. The majority of retirees contribute a portion of the total cost of postretirement medical benefits. Life insurance benefits are based on final compensation subject to the plan maximum.

The John Hancock Financial Services Inc. Employee Welfare Plan was amended effective January 1, 2007 whereby participants who had not reached a certain age and years of service with the Company were no longer eligible for such Company contributory benefits. Also the number of years of service required to be eligible for the benefit was increased to 15 years for all participants. The future retiree life insurance coverage amount was frozen as of December 31, 2006.

The Company’s policy is to fund its other postretirement benefits in amounts at or below the annual tax qualified limits. The contribution for the other postretirement benefits was $2 million, $1 million, and $2 million in 2008, 2007, and 2006, respectively.

The Company participates in qualified defined contribution plans for its employees who meet certain eligibility requirements, sponsored by JHFS. These plans include the Investment-Incentive Plan for John Hancock Employees and the John Hancock Savings and Investment Plan. The expense for the defined contribution plans was $7 million, $7 million, and $3 million in 2008, 2007, and 2006, respectively.

The Company uses a December 31 measurement date to account for its pension and other postretirement benefit plans.

F-36

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 9 — Pension and Other Postretirement Benefit Plans - (continued)

Obligations and Funded Status of Defined Benefit Plans

The amounts disclosed below represent the Company’s share of the pension and other postretirement benefit plans described above:

	Years Ended December 31,
	Pension Benefits						Other Postretirement Benefits
	2008			2007			2008			2007
	(in millions)
Change in benefit obligation:
Benefit obligation at beginning of year	$	124		$	121		$	30		$	28
Service cost		9			7			-			-
Interest cost		7			7			2			2
Actuarial loss (gain)		-			9			(3	)		1
Plan amendments		-			(7	)		-			-
Curtailments		-			(4	)		-			-
Benefits paid		(4	)		(9	)		(2	)		(1	)
Benefit obligation at end of year	$	136		$	124		$	27		$	30
Change in plan assets:
Fair value of plan assets at beginning of year	$	75		$	75		$	-		$	-
Actual return on plan assets		(22	)		6			-			-
Employer contributions		1			3			2			1
Benefits paid		(4	)		(9	)		(2	)		(1	)
Fair value of plan assets at end of year	$	50		$	75		$	-		$	-
Funded status at end of year	$	(86	)	$	(49	)	$	(27	)	$	(30	)
Amounts recognized on Consolidated Balance Sheets:
Assets	$	-		$	-		$	-		$	-
Liabilities		(86	)		(49	)		(27	)		(30	)
Net amount recognized	$	(86	)	$	(49	)	$	(27	)	$	(30	)
Amounts recognized in accumulated other comprehensive income:
Prior service cost	$	(4	)	$	(5	)	$	-		$	-
Net actuarial loss (gain)		73			48			(14	)		(11	)
Total	$	69		$	43		$	(14	)	$	(11	)

The accumulated benefit obligation for all defined benefit plans was $130 million and $117 million at December 31, 2008 and 2007, respectively.

F-37

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 9 — Pension and Other Postretirement Benefit Plans - (continued)

The following table provides information for pension plans with accumulated benefit obligations in excess of plan assets:

	December 31,
	2008		2007
	(in millions)
Accumulated benefit obligation	$	130	$	117
Projected benefit obligation		136		124
Fair value of plan assets		50		75

Components of Net Periodic Benefit Cost

	Years Ended December 31,
	Pension Benefits									Other Postretirement Benefits
	2008			2007			2006			2008		2007		2006
	(in millions)
Service cost	$	9		$	7		$	6		$	-	$	-	$	-
Interest cost		7			7			6			2		2		2
Expected return on plan assets		(5	)		(6	)		(5	)		-		-		-
Recognized actuarial loss		-			1			3			-		-		-
Net periodic benefit cost	$	11		$	9		$	10		$	2	$	2	$	2

There are no amounts included in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost in 2009.

F-38

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 9 — Pension and Other Postretirement Benefit Plans - (continued)

Assumptions

Weighted–average assumptions used to determine benefit obligations were as follows:

	Years Ended December 31,
	Pension Benefits				Other Postretirement Benefits
	2008		2007		2008		2007
Discount rate	6.00	%	6.00	%	6.00	%	6.00	%
Rate of compensation increase	4.10	%	5.10	%	N/A		N/A
Health care cost trend rate for following year					8.50	%	9.00	%
Ultimate trend rate					5.00	%	5.00	%
Year ultimate rate reached					2016		2016

Weighted-average assumptions used to determine net periodic benefit cost were as follows:

	Years Ended December 31,
	Pension Benefits				Other Postretirement Benefits
	2008		2007		2008		2007
Discount rate	6.00	%	5.75	%	6.00	%	5.75	%
Expected long-term return on plan assets	8.00	%	8.25	%	N/A		N/A
Rate of compensation increase	5.10	%	4.00	%	N/A		N/A
Health care cost trend rate for following year					9.00	%	9.50	%
Ultimate trend rate					5.00	%	5.00	%
Year ultimate rate reached					2016		2016

The expected long-term return on plan assets is based on the rate expected to be earned for plan assets. The asset mix based on the long-term investment policy and range of target allocation percentages of the plans and the Capital Asset Pricing Model are used as part of that determination. Current conditions and published commentary and guidance from U.S. Securities and Exchange Commission (“SEC”) staff are also considered.

Assumed health care cost trend rates have a significant effect on the amounts reported for the healthcare plans. A one-percentage point change in assumed health care cost trend rates would have the following effects:

	One-Percentage Point Increase			One-Percentage Point Decrease
	(in millions)
Effect on total service and interest costs in 2008	$	-		$	-
Effect on postretirement benefit obligation as of December 31, 2008		(2	)		(2	)

F-39

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 9 — Pension and Other Postretirement Benefit Plans - (continued)

Plan Assets

The Company’s weighted-average asset allocations for its defined benefit plans by asset category were as follows:

	Pension Plan Assets at December 31,
	2008		2007
Asset Category
Equity securities	51	%	64	%
Fixed maturity securities	35		26
Real estate	5		3
Other	9		7
Total	100	%	100	%

The target allocations for assets of the Company’s defined benefit plans are summarized below for major asset categories:

Asset Category
Equity securities	50	% - 80%
Fixed maturity securities	23	% - 35%
Real estate	0	% - 5%
Other	5	% - 15%

The plans do not own any of the Company’s or MFC’s common stock at December 31, 2008 and 2007.

Cash Flows

Expected Future Benefit Payments for Defined Benefit Plans

Projections for benefit payments for the next ten years are as follows:

	Pension Benefits		Other Postretirement Benefits Gross Payments		Other Postretirement Benefits- Medicare Part D Subsidy
	(in millions)
2009	$	12	$	2	$	-
2010		12		2		-
2011		13		2		-
2012		14		2		-
2013		11		2		-
2014-2018		62		10		1

F-40

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 10 — Commitments, Guarantees, and Legal Proceedings

Commitments.  The Company has extended commitments to purchase U.S. private debt and to issue mortgage loans on real estate totaling $231 million and $27 million, respectively, at December 31, 2008. If funded, loans related to real estate mortgages would be fully collateralized by the mortgaged properties. The Company monitors the creditworthiness of borrowers under long-term bond commitments and requires collateral as deemed necessary. The majority of these commitments expire in 2009.

The Company leases office space under non-cancelable operating lease agreements of various expiration dates. Rental expenses, net of sub-lease income, were $14 million, $12 million, and $11 million for the years ended December 31, 2008, 2007, and 2006, respectively.

The future minimum lease payments, by year and in the aggregate, under the remaining non-cancelable operating leases along with the associated sub-lease income are presented below.

	Non- cancelable Operating Leases		Sub-lease Income
	(in millions)
2009	$	9	$	1
2010		6		-
2011		5		-
2012		5		-
2013		4		-
Thereafter		196		-
Total	$	225	$	1

Guarantees.  In the course of business, the Company enters into guarantees which vary in nature and purpose and which are accounted for and disclosed under U.S. GAAP specific to the insurance industry. The Company had no material guarantees outstanding outside the scope of insurance accounting at December 31, 2008.

Legal Proceedings.  The Company is regularly involved in litigation, both as a defendant and as a plaintiff. The litigation naming the Company as a defendant ordinarily involves its activities as a provider of insurance protection and wealth management products, as well as an investment adviser, employer, and taxpayer. In addition, state regulatory bodies, state attorneys general, the SEC, the Financial Industry Regulatory Authority, and other government and regulatory bodies regularly make inquiries and, from time to time, require the production of information or conduct examinations concerning the Company’s compliance with, among other things, insurance laws, securities laws, and laws governing the activities of broker-dealers. The Company does not believe that the conclusion of any current legal or regulatory matters, either individually or in the aggregate, will have a material adverse effect on its consolidated financial condition or results of operations.

Note 11 — Shareholder’s Equity

Capital Stock

The Company has two classes of capital stock, preferred stock and common stock. All of the outstanding preferred and common stock of the Company is owned by MIC, its parent.

F-41

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 11 — Shareholder’s Equity - (continued)

Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income were as follows:

	Net Unrealized Investment Gains (Losses)			Net Accumulated Gain (Loss) on Cash Flow Hedges		Foreign Currency Translation Adjustment			Minimum Pension Liability Adjustment			Additional Pension and Postretirement Unrecognized Net Periodic Benefit Cost			Accumulated Other Comprehensive Income
	(in millions)
Balance at January 1, 2006	$	506		$	8	$	36		$	(25	)	$	-		$	525
Gross unrealized investment losses (net of deferred income tax benefit of $32 million)		(60	)													(60	)
Reclassification adjustment for losses realized in net income (net of deferred income tax benefit of $2 million)		5														5
Adjustment for policyholder liabilities, (net of deferred income tax expense of $16 million)		30														30
Adjustment for deferred policy acquisition costs, deferred sales inducements, and unearned revenue liability (net of deferred income tax benefit of $11 million)		(21	)													(21	)
Net unrealized investment losses		(46	)													(46	)
Foreign currency translation adjustment							(5	)								(5	)
Minimum pension liability (net of deferred income tax expense of $3 million)										5						5
SFAS No. 158 transition adjustment (net of deferred income tax benefit of $1 million)										20			(22	)		(2	)
Balance at December 31, 2006	$	460		$	8	$	31		$	-		$	(22	)	$	477

	Net Unrealized Investment Gains (Losses)			Net Accumulated Gain (Loss) on Cash Flow Hedges			Foreign Currency Translation Adjustment			Additional Pension and Postretirement Unrecognized Net Periodic Benefit Cost			Accumulated Other Comprehensive Income
	(in millions)
Balance at January 1, 2007	$	460		$	8		$	31		$	(22	)	$	477
Gross unrealized investment gains (net of deferred income tax expense of $135 million)		250												250
Reclassification adjustment for gains realized in net income (net of deferred income tax expense of $51 million)		(94	)											(94	)
Adjustment for policyholder liabilities (net of deferred income tax expense of $4 million)		6												6
Adjustment for deferred policy acquisition costs, deferred sales inducements, and unearned revenue liability (net of deferred income tax benefit of $20 million)		(38	)											(38	)
Net unrealized investment gains		124												124
Foreign currency translation adjustment								(4	)					(4	)
Amortization of periodic pension costs											1			1
Reclassification of net cash flow hedge gains to net income (net of deferred income tax benefit of $7 million)					(13	)								(13	)
Balance at December 31, 2007	$	584		$	(5	)	$	27		$	(21	)	$	585

F-42

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 11 — Shareholder’s Equity - (continued)

	Net Unrealized Investment Gains (Losses)			Net Accumulated Gain (Loss) on Cash Flow Hedges			Foreign Currency Translation Adjustment			Additional Pension and Postretirement Unrecognized Net Periodic Benefit Cost			Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance at January 1, 2008	$	584		$	(5	)	$	27		$	(21	)	$	585
Gross unrealized investment losses (net of deferred income tax benefit of $360 million)		(668	)											(668	)
Reclassification adjustment for gains realized in net income (net of deferred income tax benefit of $146 million)		(272	)											(272	)
Adjustment for policyholder liabilities (net of deferred income tax benefit of $72 million)		134												134
Adjustment for deferred policy acquisition costs, deferred sales inducements, and unearned revenue liability (net of deferred income tax expense of $86 million)		161												161
Net unrealized investment losses		(645	)											(645	)
Foreign currency translation adjustment								(23	)					(23	)
Change in funded status of pension plan and amortization of periodic pension costs (net of deferred income tax benefit of $8 million)											(15	)		(15	)
Net gains on the effective portion of the change in fair value of cash flow hedges (net of deferred income tax expense of $4 million)					6									6
Balance at December 31, 2008	$	(61	)	$	1		$	4		$	(36	)	$	(92	)

Net unrealized investment gains (losses) included on the Company’s Consolidated Balance Sheets as a component of shareholder’s equity are summarized below:

	December 31,
	2008			2007			2006
	(in millions)
Balance, end of year comprises:
Unrealized investment (losses) gains on:
Fixed maturities	$	(78	)	$	855		$	634
Equity investments		(88	)		435			417
Other investments		3			(6	)		(7	)
Total (1)		(163	)		1,284			1,044
Amounts of unrealized investment (losses) gains attributable to:
Deferred policy acquisition costs, deferred sales inducements, and unearned revenue liability		(58	)		187			129
Policyholder liabilities		(9	)		197			209
Deferred income taxes		(35	)		316			246
Total		(102	)		700			584
Net unrealized investment (losses) gains	$	(61	)	$	584		$	460

(1) Includes unrealized investments gains (losses) on invested assets held in trust on behalf of MRBL, which are included in amounts due from and held for affiliates on the Consolidated Balance Sheets. See Note 7 — Related Party Transactions, for information on the associated MRBL reinsurance agreement.

F-43

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 11 — Shareholder’s Equity - (continued)

Statutory Results

The Company and its domestic insurance subsidiary are required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the insurance departments of their states of domicile, which are Michigan and New York.

At December 31, 2008, JH USA, with the explicit permission of the Commissioner, used the implied forward rates from the rolling average of the swap rates that have been observed over the past three years instead of the implied forward rates from the swap curve observed at December 31, 2008 for purposes of its C-3 Phase II calculation. The impact of using this approach was a $53 million decrease in JH USA’s authorized control level risk-based capital as of December 31, 2008. This permitted practice is effective for reporting periods beginning on or after December 31, 2008 and ending September 30, 2009.

At December 31, 2008, JH USA, with the explicit permission of the Commissioner, recorded an increase in the net admitted deferred tax asset (“DTA”) instead of the deferred tax calculation required by prescribed statutory accounting practices. If the net admitted DTA were reflected on the statutory balance sheet based on prescribed practices the DTA and statutory surplus at December 31, 2008 would both be decreased by $84 million. The permitted practice had no effect on statutory net income. This permitted practice is effective for reporting periods beginning on or after December 31, 2008 and ending September 30, 2009.

The Company’s statutory net (loss) income for the years ended December 31, 2008, 2007, and 2006 was $(2,011) million (unaudited), ($41) million, and $202 million, respectively.

The Company’s statutory capital and surplus as of December 31, 2008 and 2007 was $2,008 million (unaudited) and $1,504 million, respectively.

Under Michigan insurance law, no insurer may pay any shareholder dividends from any source other than statutory unassigned surplus without the prior approval of the Commissioner. Michigan law also limits the dividends an insurer may pay, without the prior permission of the Commissioner, to the greater of (i) 10% of its statutory surplus earnings as of December 31 of the preceding year or (ii) the company’s statutory net gain from operations for the 12 month period ending December 31 of the immediately preceding year, if such insurer is a life company.

Note 12 — Segment Information

The Company operates in the following three business segments: (1) Protection and (2) Wealth Management, which primarily serve retail customers and institutional customers and (3) Corporate and Other, which includes reinsurance operations and the corporate account.

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, and distribution channels.

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

Wealth Management Segment.  Offers individual and group annuities and group pension contracts. Individual annuities consist of fixed deferred annuities, fixed immediate annuities, and variable annuities. This segment distributes its products through multiple distribution channels, including insurance agents and brokers affiliated with the Company, securities brokerage firms, financial planners, pension plan sponsors, pension plan consultants, and banks.

Corporate and Other Segment.  Primarily consists of certain corporate and reinsurance operations. Corporate operations primarily include certain financing activities and income on capital not specifically allocated to the reporting segments. Reinsurance refers to the transfer of all or part of certain risks related to policies issued by the Company to a reinsurer, or to the assumption of risk from other insurers.

F-44

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 12 — Segment Information - (continued)

The accounting policies of the segments are the same as those described in Note 1 — 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.

The following table summarizes selected financial information by segment for the periods indicated. Included in the Protection Segment for all periods presented are the assets, liabilities, revenues, and expenses of the closed block. For additional information on the closed block, see Note 6 — Closed Block.

	Protection			Wealth Management			Corporate and Other			Total
	(in millions)
2008
Revenues from external customers	$	1,436		$	1,964		$	251		$	3,651
Net investment income		857			225			353			1,435
Net realized investment and other (losses) gains		(57	)		719			(236	)		426
Revenues	$	2,236		$	2,908		$	368		$	5,512
Net income (loss)	$	72		$	(113	)	$	3		$	(38	)
Supplemental Information:
Equity in net income (loss) of investees accounted for by the equity method	$	1		$	4		$	(14	)	$	(9	)
Carrying value of investments accounted for under the equity method		17			157			218			392
Amortization of deferred policy acquisition costs and deferred sales inducements		(397	)		4			5			(388	)
Interest expense		-			23			11			34
Income tax expense (benefit)		32			(204	)		(131	)		(303	)
Segment assets	$	21,832		$	90,968		$	13,397		$	126,197
	Protection			Wealth Management			Corporate and Other			Total
	(in millions)
2007
Revenues from external customers	$	1,844		$	2,057		$	236		$	4,137
Net investment income		782			242			313			1,337
Net realized investment and other gains (losses)		68			(6	)		100			162
Revenues	$	2,694		$	2,293		$	649		$	5,636
Net income	$	210		$	318		$	191		$	719
Supplemental Information:
Equity in net (loss) income of investees accounted for by the equity method	$	(1	)	$	(2	)	$	5		$	2
Carrying value of investments accounted for under the equity method		17			90			202			309
Amortization of deferred policy acquisition costs and deferred sales inducements		301			277			6			584
Interest expense		-			27			41			68
Income tax expense		108			55			110			273
Segment assets	$	21,192		$	111,302		$	12,010		$	144,504

F-45

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 12 — Segment Information - (continued)

	Protection			Wealth Management		Corporate and Other			Total
	(in millions)
2006
Revenues from external customers	$	1,483		$	1,632	$	382		$	3,497
Net investment income		712			225		226			1,163
Net realized investment and other gains (losses)		104			20		(92	)		32
Revenues	$	2,299		$	1,877	$	516		$	4,692
Net income (loss)	$	208		$	324	$	(7	)	$	525
Supplemental Information:
Equity in net (loss) income of investees accounted for by the equity method	$	(1	)	$	1	$	-		$	-
Carrying value of investments accounted for under the equity method		17			34		46			97
Amortization of deferred policy acquisition costs and deferred sales inducements		242			303		(9	)		536
Interest expense		-			21		5			26
Income tax expense		111			115		4			230

The Company operates primarily in the United States and has no reportable major customers.

F-46

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13 — Fair Value of Financial Instruments

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments. Fair values have been determined by using available market information and the valuation methodologies described below.

	December 31,
	2008				2007
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in millions)
Assets:
Fixed maturities (1):
Available-for-sale	$	14,687	$	14,687	$	13,617	$	13,617
Equity securities:
Available-for-sale		415		415		956		956
Mortgage loans on real estate		2,629		2,649		2,414		2,424
Policy loans		2,785		2,785		2,519		2,519
Short-term investments		3,665		3,665		2,723		2,723
Cash and cash equivalents		3,477		3,477		3,345		3,345
Derivatives:
Interest rate swap agreements		759		759		28		28
Cross currency rate swap agreements		321		321		179		179
Foreign exchange forward agreements		3		3		9		9
Embedded derivatives		4,418		4,418		586		586
Assets held in trust		2,190		2,190		2,493		2,493
Separate account assets		77,681		77,681		105,380		105,380
Liabilities:
Fixed rate deferred and immediate annuities		1,852		1,843		1,665		1,665
Derivatives:
Interest rate swap agreements		325		325		22		22
Cross currency rate swap agreements		377		377		277		277
Credit default swaps		1		1		-		-
Equity swaps		15		15		1		1
Embedded derivatives		2,859		2,859		572		572
Foreign exchange forward agreements		3		3		9		9

(1) Fixed maturities exclude leveraged leases of $49 million and $72 million for 2008 and 2007, respectively, which are carried at the net investment calculated by accruing income at the lease’s expected internal rate of return in accordance with SFAS No. 13, “Accounting for Leases”.

Effective January 1, 2008, the Company adopted SFAS No. 157, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; that is, an exit value. The exit value assumes the asset or liability is exchanged in an orderly transaction; it is not a forced liquidation or distressed sale.

SFAS No. 157 resulted in effectively creating the following two primary categories of financial instruments for the purpose of fair value disclosure:

• Financial Instruments Measured at Fair Value and Reported in the Consolidated Balance Sheets – This category includes assets and liabilities measured at fair value on a recurring and non recurring basis. Financial instruments measured on a recurring basis include fixed maturities, equity securities, short-term investments, derivatives and separate accounts. Assets and liabilities measured at fair value on a non recurring basis include mortgage loans, joint ventures and limited partnership interests, which are reported at fair value only in a period in which impairment is recognized.

• Other Financial Instruments not Reported at Fair Value – This category includes assets and liabilities which do not require the additional SFAS No. 157 disclosures, as follows:

F-47

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13 — Fair Value of Financial Instruments - (continued)

Mortgage loans on real estate – The fair value of unimpaired mortgage loans is estimated using discounted cash flows and take into account the contractual maturities and discount rates, which were based on current market rates for similar maturity ranges and adjusted for risk due to the property type.

Policy loans – These loans are carried at unpaid principal balances, which approximate their fair values.

Cash and cash equivalents – The carrying values for cash and cash equivalents approximate fair value due to the short-term maturities of these instruments.

Fixed-rate deferred and immediate annuities – The fair value of these financial instruments are estimated by projecting multiple stochastically generated interest rate scenarios under a risk neutral environment reflecting inputs (interest rates, volatility, etc.) observable at the valuation date.

Financial Instruments Measured at Fair Value on the Consolidated Balance Sheets

Valuation Hierarchy

Following SFAS No. 157 guidance, the Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Company’s valuation techniques. A level is assigned to each fair value measurement based on the lowest level input significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows:

• Level 1 – Fair value measurements that reflect unadjusted, quoted prices in active markets for identical assets and liabilities that the Company has the ability to access at the measurement date. Valuations are based on quoted prices reflecting market transactions involving assets or liabilities identical to those being measured. Level 1 securities primarily include exchange traded equity securities and separate account assets.

• Level 2 – Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in inactive markets, inputs that are observable that are not prices (such as interest rates, credit risks, etc.), and inputs that are derived from or corroborated by observable market data. Most debt securities are classified within Level 2. Also included in the Level 2 category are derivative instruments that are priced using models with observable market inputs, including interest rate swaps, equity swaps, and foreign currency forward contracts.

• Level 3 – Fair value measurements using significant non market observable inputs. These include valuations for assets and liabilities that are derived using data, some or all of which is not market observable data, including assumptions about risk. Level 3 securities include structured asset-backed securities (“ABS”), commercial mortgage-backed securities (“CMBS”), other securities that have little or no price transparency, and certain derivatives.

Determination of Fair Value

The valuation methodologies used to determine the fair values of assets and liabilities under SFAS No. 157 reflect market participant assumptions and are based on the application of the fair value hierarchy that prioritizes observable market inputs over unobservable inputs. When available, the Company uses quoted market prices to determine fair value, and classifies such items within Level 1. If quoted market prices are not available, fair value is based upon valuation techniques, which discount expected cash flows utilizing independent market observable interest rates based on the credit quality and duration of the instrument. Items valued using models are classified according to the lowest level input that is significant to the valuation. Thus, an item may be classified in Level 3 even though significant market observable inputs are used.

The following is a description of the valuation techniques used to measure fair value and the general classification of these instruments pursuant to the fair value hierarchy.

F-48

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13 — Fair Value of Financial Instruments - (continued)

Fair Value Measurements on a Recurring Basis

Fixed Maturities

For fixed maturities, including corporate, U.S. Treasury, and municipal securities, fair values are based on quoted market prices when available. When market prices are not available, fair value is generally estimated using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality (matrix pricing). The significant inputs into these models include, but are not limited to, yield curves, credit risks and spreads, measures of volatility and prepayment speeds. These fixed maturities are classified within Level 2. Fixed maturities with significant pricing inputs which are unobservable are classified within Level 3.

Equity Securities

Equity securities with active markets are classified within Level 1 as fair values are based on quoted market prices.

Short-term Investments

Short-term investments are comprised of securities due to mature within one year of the date of purchase that are traded in active markets, and are classified within Level 1 as fair values are based on quoted market prices. Securities such as commercial paper and discount notes are classified within Level 2 because these securities are typically not actively traded due to their short maturities and, as such, their cost generally approximates fair value.

Derivatives

The fair value of derivatives is determined through the use of quoted market prices for exchange-traded derivatives or through the use of pricing models for over-the-counter (“OTC”) derivatives. The pricing models used are based on market standard valuation methodologies and the inputs to these models are consistent with what a market participant would use when pricing the instruments. Derivative valuations can be affected by changes in interest rates, currency exchange rates, financial indices, credit spreads, default risk (including the counterparties to the contract), and volatility. The Company’s derivatives are generally classified within Level 2 given the significant inputs to the pricing models for most OTC derivatives are inputs that are observable or can be corroborated by observable market data. Inputs that are observable generally include: interest rates, foreign currency exchange rates and interest rate curves. However, certain OTC derivatives may rely on inputs that are significant to the fair value that are not observable in the market or cannot be derived principally from or corroborated by observable market data and would be classified within Level 3. Inputs that are unobservable generally include: broker quotes, volatilities and inputs that are outside of the observable portion of the interest rate curve or other relevant market measures. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and consistent with what market participants would use when pricing such instruments. The credit risk of both the counterparty and the Company are considered in determining the fair value for all over-the-counter derivatives after taking into account the effects of netting agreements and collateral arrangements.

Embedded Derivatives

As defined in SFAS Statement No. 133 “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”), the Company holds assets and liabilities classified as embedded derivatives in the Consolidated Balance Sheets. Those assets include guaranteed minimum income benefits that are ceded under modified coinsurance reinsurance arrangements (“Reinsurance GMIB Assets”). Liabilities include policyholder benefits offered under variable annuity contracts such as guaranteed minimum withdrawal benefits with a term certain (“GMWB”) and embedded reinsurance derivatives.

Embedded derivatives are recorded in the Consolidated Balance Sheets at fair value, separately from their host contract, and the change in their fair value is reflected in net income. Many factors including, but not limited to, market conditions, credit ratings, variations in actuarial assumptions regarding policyholder liabilities and risk margins related to non-capital market inputs may result in significant fluctuations in the fair value of these embedded derivatives that could materially affect net income.

F-49

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13 — Fair Value of Financial Instruments - (continued)

The fair value of embedded derivatives is estimated as the present value of future benefits less the present value of future fees. The fair value calculation includes assumptions for risk margins including nonperformance risk.

Risk margins are established to capture the risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, persistency, partial withdrawal, and surrenders. The establishment of these actuarial assumptions, risk margins, nonperformance risk, and other inputs requires the use of significant judgment.

Nonperformance risk refers to the risk that the obligation will not be fulfilled and affects the value of the liability. The fair value measurement assumes that the nonperformance risk is the same before and after the transfer. Therefore, fair value reflects the reporting entity’s own credit risk.

Nonperformance risk for liabilities held by the Company is based on MFC’s own credit risk, which is determined by taking into consideration publicly available information relating to MFC’s debt as well as its claims paying ability. Nonperformance risk is also reflected in the Reinsurance GMIB assets held by the Company. The credit risk of the reinsurance companies is most representative of the nonperformance risk for the Reinsurance GMIB assets, and is derived from publicly available information relating to the reinsurance companies’ publicly issued debt.

The fair value of embedded derivatives related to reinsurance agreements is determined based on a total return swap methodology. These total return swaps are reflected as liabilities on the Consolidated Balance Sheets representing the difference between the statutory book value and fair value of the related modified coinsurance assets with ongoing changes in fair value recorded in income. The fair value of the underlying assets is based on the valuation approach for similar assets described herein.

Separate Account Assets

Separate account assets are reported at fair value and reported as a summarized total on the Consolidated Balance Sheets in accordance with Statement of Position (“SOP 03-1”), “Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts”. The fair value of separate account assets are based on the fair value of the underlying assets owned by the separate account. Assets owned by the Company’s separate accounts primarily include: investments in mutual funds, fixed maturity securities, equity securities, and short-term investments and cash and cash equivalents.

The fair value of mutual fund investments is based upon quoted prices or reported net assets values (“NAV”). Open-ended mutual fund investments are included in Level 1. The fair values of fixed maturity securities, equity securities, short-term investments and cash equivalents held by separate accounts are determined on a basis consistent with the methodologies described herein for similar financial instruments held within the Company’s general account.

F-50

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13 — Fair Value of Financial Instruments - (continued)

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis by SFAS No. 157 fair value hierarchy levels, as of December 31, 2008.

	December 31, 2008
	Total Fair Value		Level 1		Level 2		Level 3
	(in millions)
Assets:
Fixed maturities (1):
Available-for-sale	$	14,687	$	-	$	14,325	$	362
Equity securities:
Available-for-sale		415		415		-		-
Short-term investments		3,665		-		3,665		-
Derivative assets (2)		1,083		-		1,083		-
Embedded derivatives		4,418		-		36		4,382
Assets held in trust (3)		2,190		497		1,693		-
Separate account assets (4)		77,681		77,626		55		-
Total assets at fair value	$	104,139	$	78,538	$	20,857	$	4,744
Liabilities:
Derivative liabilities (2)	$	721	$	-	$	721	$	-
Embedded derivatives		2,859		-		-		2,859
Total liabilities at fair value	$	3,580	$	-	$	721	$	2,859

(1) Fixed maturities excludes leveraged leases of $49 million which are carried at the net investment calculated by accruing income at the lease’s expected internal rate of return in accordance with SFAS No. 13, “Accounting for Leases”.

(2) Derivative assets are presented within other assets and derivative liabilities are presented within other liabilities in the Consolidated Balance Sheets. The amounts are presented gross in the table above to reflect the presentation in the Consolidated Balance Sheets, but are presented net for purposes of the Level 3 roll forward in the following table.

(3) Represents the fair value of assets held in trust on behalf of MRBL, which are included in amounts due from and held for affiliates on the Consolidated Balance Sheets. See Note 7 — Related Party Transactions, for information on the associated MRBL reinsurance agreement. The fair value of the trust assets are determined on a basis consistent with the methodologies described herein for similar financial instruments.

(4) Separate account assets are recorded at fair value. Investment performance related to separate account assets is fully offset by corresponding amounts credited to contract holders whose interest in the separate account assets is recorded by the Company as separate account liabilities. Separate account liabilities are set equal to the fair value of separate account assets as prescribed by SOP 03-1.

F-51

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13 — Fair Value of Financial Instruments - (continued)

Level 3 Financial Instruments

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis are summarized as follows:

	Fixed Maturities			Net Embedded Derivatives
Balance at January 1, 2008	$	447		$	18
Net realized/unrealized gains (losses) included in:
Net income		(161	)(2)		1,505	(4)
Other comprehensive income		79	(3)		-
Purchases, issuances, (sales) and (settlements), net		(12	)		-
Transfers in and/or (out) of Level 3, net (1)		9			-
Balance at December 31, 2008	$	362		$	1,523
Gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at December 31, 2008	$	-		$	1,505

(1) For financial assets that are transferred into and/or out of Level 3, the Company uses the fair value of the assets at the beginning of the reporting period.

(2) This amount is included in net realized investments and other gains (losses) on the Consolidated Statement of Operations.

(3) This amount is included in accumulated other comprehensive income (loss) on the Consolidated Balance Sheet.

(4) This amount is included in benefits to policyholders on the Consolidated Statement of Operations. All gains and losses on Level 3 liabilities are classified as net realized investment and other gains (losses) for the purpose of this disclosure because it is not practicable to track realized and unrealized gains (losses) separately on a contract by contract basis.

The Company may hedge positions with offsetting positions that are classified in a different level. For example, the gains and losses for assets and liabilities in the Level 3 category presented in the tables above may not reflect the effect of offsetting gains and losses on hedging instruments that have been classified by the Company in the Level 1 and Level 2 categories.

Financial Instruments Measured at Fair Value on a Non Recurring Basis

Certain financial assets are reported at fair value on a non recurring basis, including investments such as mortgage loans, joint ventures and limited partnership interests, which are reported at fair value only in a period in which an impairment is recognized. The fair value of these securities is calculated using either models that are widely accepted in the financial services industry or the valuation of collateral underlying impaired mortgages. During the reporting period, there were no material assets or liabilities measured at fair value on a nonrecurring basis.

Note 14 — Goodwill

The changes in the carrying value of goodwill by segment were as follows:

	Protection		Wealth Management		Corporate and Other		Total
	(in millions)
Balance at January 1, 2008	$	-	$	54	$	-	$	54
Dispositions and other, net		-		-		-		-
Balance at December 31, 2008	$	-	$	54	$	-	$	54
	Protection		Wealth Management		Corporate and Other		Total
	(in millions)
Balance at January 1, 2007	$	-	$	54	$	-	$	54
Dispositions and other, net		-		-		-		-
Balance at December 31, 2007	$	-	$	54	$	-	$	54

F-52

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 14 — Goodwill - (continued)

The Company tests goodwill for impairment annually as of December 31 and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit, which is defined as an operating segment or one level below an operating segment, below its carrying amount. There were no impairments recorded in 2008 or 2007.

Note 15 — Certain Separate Accounts

The Company issues variable annuity and variable life contracts through its separate accounts for which investment income and investment gains and losses accrue to, and investment risk is borne by, the contract holder. All contracts contain certain guarantees, which are discussed more fully below.

The assets supporting the variable portion of variable annuities are carried at fair value and reported on the Consolidated Balance Sheets as total separate account assets with an equivalent total reported for separate account liabilities. Amounts assessed against the contract holders for mortality, administrative, and other services are included in revenue, and changes in liabilities for minimum guarantees are included in benefits to policyholders in the Company’s Consolidated Statements of Operations. For the years ended December 31, 2008, and 2007 there were no gains or losses on transfers of assets from the general account to the separate account.

The deposits related to the variable life insurance contracts are invested in separate accounts, and the Company guarantees a specified death benefit if certain specified premiums are paid by the policyholder, regardless of separate account performance.

For guarantees of amounts in the event of death, the net amount at risk is defined as the excess of the initial sum insured over the current sum insured for fixed premium variable life insurance contracts, and, for other variable life insurance contracts, is equal to the sum insured when the account value is zero and the policy is still in force.

The following table reflects variable life insurance contracts with guarantees held by the Company:

	December 31,
	2008		2007
	(in millions, except for age)
Life insurance contracts with guaranteed benefits
In the event of death
Account value	$	559	$	422
Net amount at risk related to deposits		86		56
Average attained age of contract holders		44		43

Many of the variable annuity contracts issued by the Company offer various guaranteed minimum death, income, and/or withdrawal benefits. Guaranteed Minimum Death Benefit (“GMDB”) features guarantee the contract holder either (a) a return of no less than total deposits made to the contract less any partial withdrawals, (b) total deposits made to the contract less any partial withdrawals plus a minimum return, or (c) the highest contract value on a specified anniversary date minus any withdrawals following the contract anniversary.

The Company sold contracts with GMIB riders from 1998 to 2004. The GMIB rider provides a guaranteed lifetime annuity, which may be elected by the contract holder after a stipulated waiting period (7 to 10 years), and which may be larger than what the contract account balance would purchase at then-current annuity purchase rates.

In 2004, the Company introduced a GMWB rider and has since offered multiple variations of this optional benefit. The GMWB rider provides contract holders a guaranteed annual withdrawal amount over a specified time period or in some cases for as long as they live. In general, guaranteed annual withdrawal amounts are based on deposits and may be reduced if withdrawals exceed allowed amounts. Guaranteed amounts may also be increased as a result of “step-up” provisions which increase the benefit base to higher account values at specified intervals. Guaranteed amounts may also be increased if withdrawals are deferred over a specified period. In addition, certain versions of the GMWB rider extend lifetime guarantees to spouses.

F-53

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 15 — Certain Separate Accounts - (continued)

Unaffiliated and affiliated reinsurance has been utilized to mitigate risk related to some of the guarantee benefit riders. Hedging has also been utilized to mitigate risk related to some of the GMWB riders.

For GMDB, the net amount at risk is defined as the current guaranteed minimum death benefit in excess of the current account balance. For GMIB, the net amount at risk is defined as the excess of the current annuitization income base over the current account value. For GMWB, the net amount at risk is defined as the current guaranteed withdrawal amount minus the current account value. For all the guarantees, the net amount at risk is floored at zero at the single contract level.

The Company had the following variable annuity contracts with guarantees. Amounts at risk are shown net of reinsurance. Note that the Company’s variable annuity contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed are not mutually exclusive.

	December 31,
	2008			2007
	(in millions, except for ages and percents)
Guaranteed Minimum Death Benefit
Return of net deposits
In the event of death
Account value	$	15,224		$	17,510
Net amount at risk- net of reinsurance		766			47
Average attained age of contract holders		54			55
Return of net deposits plus a minimum return
In the event of death
Account value	$	428		$	714
Net amount at risk- net of reinsurance		5			-
Average attained age of contract holders		65			65
Guaranteed minimum return rate		5	%		5	%
Highest specified anniversary account value minus withdrawals post anniversary
In the event of death
Account value	$	22,508		$	32,750
Net amount at risk- net of reinsurance		1,248			190
Average attained age of contract holders		54			54
Guaranteed Minimum Income Benefit
Account value	$	5,387		$	9,552
Net amount at risk- net of reinsurance		45			29
Average attained age of contract holders		52			52
Guaranteed Minimum Withdrawal Benefit
Account value	$	24,769		$	28,582
Net amount at risk		1,812			116
Average attained age of contract holders		52			54

F-54

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 15 — Certain Separate Accounts - (continued)

Account balances of variable contracts with guarantees invest in various separate accounts with the following characteristics:

	December 31,
	2008		2007
	(in billions)
Type of Fund
Domestic Equity	$	7	$	13
International Equity		2		3
Balanced		23		30
Bonds		3		4
Money Market		2		1
Total	$	37	$	51

The following table summarizes the liabilities for guarantees on variable contracts reflected in the general account:

	Guaranteed Minimum Death Benefit (GMDB)			Guaranteed Minimum Income Benefit (GMIB)			Guaranteed Minimum Withdrawal Benefit (GMWB)			Total
	(in millions)
Balance at January 1, 2008	$	89		$	156		$	568		$	813
Incurred guarantee benefits		(110	)		(74	)		-			(184	)
Other reserve changes		372			356			2,322			3,050
Balance at December 31, 2008	$	351		$	438		$	2,890		$	3,679
Reinsurance recoverable		(259	)		(2,056	)		(2,352	)		(4,667	)
Net balance at December 31, 2008	$	92		$	(1,618	)	$	538		$	(988	)
Balance at January 1, 2007	$	80		$	208		$	95		$	383
Incurred guarantee benefits		(48	)		(122	)		-			(170	)
Other reserve changes		57			70			473			600
Balance at December 31, 2007	$	89		$	156		$	568		$	813
Reinsurance recoverable		(36	)		(586	)		-			(622	)
Net balance at December 31, 2007	$	53		$	(430	)	$	568		$	191

The GMDB gross and ceded reserves, the GMIB gross reserves, and the life portion of the GMWB reserves were determined in accordance with SOP 03-1, and the GMIB reinsurance recoverable and GMWB gross reserve were determined in accordance with SFAS No. 133.

The Company regularly evaluates estimates used and adjusts the additional liability balance, with a related charge or credit to benefits to policyholders, if actual experience or other evidence suggests that earlier assumptions should be revised.

The following assumptions and methodology were used to determine the amounts above at December 31, 2008 and 2007:

• Data used included 1,000 stochastically generated investment performance scenarios. For SFAS No. 133 calculations, risk neutral scenarios were used.

• For life products, reserves were established using stochastic modeling of future separate account returns and best estimate mortality, lapse, and premium persistency assumptions, which vary by product.

• Mean return and volatility assumptions were determined by asset class. Market consistent observed volatilities were used where available for SFAS No. 133 calculations.

F-55

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 15 — Certain Separate Accounts - (continued)

• Annuity mortality was based on the 1994 MGDB table multiplied by factors varied by rider types (living benefit/GMDB only) and qualified and non-qualified business.

• Annuity base lapse rates vary by contract type and duration and ranged from 2% to 41.5%.

• The discount rate is 7% (in-force issued before 2004) or 6.4% (in-force issued after 2003) in the SOP 03-01 calculations. The discount rates used for SFAS No. 133 calculations are based on the term structure of swap curves with a credit spread based on the credit standing of MFC (for GMWB) and the reinsurers (for GMIB).

Note 16 — Deferred Policy Acquisition Costs and Deferred Sales Inducements

The balance of and changes in deferred policy acquisition costs as of and for the years ended December 31, were as follows:

	December 31,
	2008		2007
	(in millions)
Balance, beginning of year	$	5,664	$	4,655
Capitalization		1,590		1,637
Amortization (1)		405		(550	)
Change in unrealized investment gains and losses		289		(78	)
Balance, end of year	$	7,948	$	5,664

(1) In 2008, DAC amortization includes significant unlocking due to the impact of lower estimated gross profits arising from higher benefits to policyholders related to certain separate account guarantees. This unlocking contributed to the overall negative amortization during the year.

The balance of and changes in deferred sales inducements as of and for the years ended December 31, were as follows:

	December 31,
	2008			2007
	(in millions)
Balance, beginning of year	$	264		$	235
Capitalization		97			63
Amortization		(17	)		(34	)
Change in unrealized investment gains and losses		1			-
Balance, end of year	$	345		$	264

Note 17 — Share-Based Payments

The Company participates in the stock compensation plans of MFC. The Company uses the Black-Scholes-Merton option pricing model to estimate the value of stock options granted to employees. The stock-based compensation is a legal obligation of MFC, but in accordance with U.S. GAAP, is recorded in the accounts of the Company in other operating costs and expenses.

Stock Options (ESOP)

Under MFC’s Executive Stock Option Plan (“ESOP”), stock options are granted to selected individuals. Options provide the holder with the right to purchase common shares at an exercise price equal to the closing market price of MFC’s common shares on the Toronto Stock Exchange on the business day immediately preceding the date the options were granted. The options vest over a period not exceeding four years and expire not more than 10 years from the grant date. A total of 73.6 million common shares have been reserved for issuance under the ESOP.

MFC grants Deferred Share Units (“DSUs”) under the ESOP and the Stock Plan for Non-Employee Directors. Under the ESOP, the holder is entitled to receive cash payment equal to the value of the same number of common shares plus credited dividends on retirement or termination of employment. These DSUs vest over a three-year period and each DSU entitles the holder to receive one common share on retirement or termination of employment. When dividends are paid on MFC’s common shares, holders of DSUs are deemed to receive dividends at the same rate, payable in the form of additional DSUs.

F-56

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 17 — Share Based Payments - (continued)

Under the Stock Plan for Non-Employee Directors, each eligible director may elect to receive his or her annual director’s retainer and fees in DSUs or common shares in lieu of cash. Upon termination of board service, an eligible director who has elected to receive DSUs will be entitled to receive cash equal to the value of the DSUs accumulated in his or her account or, at his or her direction, an equivalent number of common shares. A total of 1 million common shares of MFC have been reserved for issuance under the Stock Plan for Non-Employee Directors. In 2008, 2007 and 2006, 217,000, 191,000, and 181,000 DSUs, respectively, were issued to certain employees who elected to defer receipt of all or part of their annual bonus. Also, in 2008 and 2007, 269,000 and 260,000 DSUs were issued to certain employees who elected to defer payment of all or part of their restricted share units. Restricted share units are discussed below. The DSUs issued in 2008, 2007 and 2006 vested immediately upon grant. The Company recorded compensation expense for stock options granted of $6 million, $5 million, and $5 million for the years ended December 31, 2008, 2007, and 2006, respectively.

Global Share Ownership Plan (GSOP)

Effective January 1, 2001, MFC established the Global Share Ownership Plan (“GSOP”) for its eligible employees and the Stock Plan for Non-Employee Directors. Under the GSOP, qualifying employees can choose to have up to 5% of their annual base earnings applied toward the purchase of common shares of MFC. Subject to certain conditions, MFC will match a percentage of the employee’s eligible contributions to certain maximums. MFC’s contributions vest immediately. All contributions are used by the GSOP’s trustee to purchase common shares in the open market. The Company’s compensation expense related to the GSOP was $1 million for each of the three years ended December 31, 2008, 2007, and 2006.

Restricted Share Unit Plan (RSU)

In 2003, MFC established the Restricted Share Unit (“RSU”) Plan. For the years ended December 31, 2008, 2007, and 2006, 1.8 million, 1.5 million and 1.6 million RSUs, respectively, were granted to certain eligible employees under this plan. For the years ended December 31, 2008, 2007, and 2006, the Company granted 0.4 million, 0.4 million, and 0.4 million RSUs, respectively, to certain eligible employees. RSUs entitle a participant to receive payment equal to the market value of the same number of common shares, plus credited dividends, at the time the RSUs vest. RSUs vest three years from the grant date, subject to performance conditions, and the related compensation expense is recognized over this period, except where the employee is eligible to retire prior to the vesting date, in which case the cost is recognized over the period between the grant date and the date on which the employee is eligible to retire. The Company’s compensation expense related to RSUs was $14 million, $16 million, and $14 million for the years ended December 31, 2008, 2007, and 2006, respectively.

F-57

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Audited Financial Statements

Year ended December 31, 2008 with Report of Independent Registered Public Accounting Firm

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Audited Financial Statements

Year ended December 31, 2008

Contents

Report of Independent Registered Public Accounting Firm	5
Statements of Assets and Contract Owners’ Equity	8
Statements of Operations and Changes in Contract Owners’ Equity	12
Notes to Financial Statements	75
Organization	75
Significant Accounting Policies	76
Mortality and Expense Risks Charge	78
Contract Charges	78
Purchases and Sales of Investments	78
Transaction with Affiliates	81
Diversification Requirements	82
Comparatives	82
Financial Highlights	83

Report of Independent Registered Public Accounting Firm

To the Contract Owners of the sub-accounts of

John Hancock Life Insurance Company (U.S.A.) Separate Account N

“Active” sub-accounts

500 Index Trust B Series 0	Fundamental Value Trust Series 1
500 Index Trust Series 1	Global Allocation Trust Series 0
Active Bond Trust Series 0	Global Allocation Trust Series 1
Active Bond Trust Series 1	Global Bond Trust Series 0
All Cap Core Trust Series 0	Global Bond Trust Series 1
All Cap Core Trust Series 1	Global Real Estate Trust Series 1
All Cap Growth Trust Series 0	Global Trust Series 0
All Cap Growth Trust Series 1	Global Trust Series 1
All Cap Value Trust Series 0	Health Sciences Trust Series 0
All Cap Value Trust Series 1	Health Sciences Trust Series 1
American Asset Allocation Trust Series 1	High Yield Trust Series 0
American Blue Chip Income and Growth Trust Series 1	High Yield Trust Series 1
American Bond Trust Series 1	Income & Value Trust Series 0
American Growth Trust Series 1	Income & Value Trust Series 1
American Growth-Income Trust Series 1	International Core Trust Series 0
American International Trust Series 1	International Core Trust Series 1
Blue Chip Growth Trust Series 0	International Equity Index Trust A Series 1
Blue Chip Growth Trust Series 1	International Equity Index Trust B Series 0
Capital Appreciation Trust Series 0	International Opportunities Trust Series 0
Capital Appreciation Trust Series 1	International Opportunities Trust Series 1
Capital Appreciation Value Trust Series 1	International Small Cap Trust Series 0
Classic Value Trust Series 0	International Small Cap Trust Series 1
Classic Value Trust Series 1	International Value Trust Series 0
Core Bond Trust Series 0	International Value Trust Series 1
Core Bond Trust Series 1	Investment Quality Bond Trust Series 0
Core Equity Trust Series 0	Investment Quality Bond Trust Series 1
Core Equity Trust Series 1	Large Cap Trust Series 0
Disciplined Diversification Trust Series 1	Large Cap Trust Series 1
Emerging Markets Value Trust Series 0	Large Cap Value Trust Series 0
Emerging Markets Value Trust Series 1	Large Cap Value Trust Series 1
Emerging Small Company Trust Series 0	Lifestyle Aggressive Trust Series 0
Emerging Small Company Trust Series 1	Lifestyle Aggressive Trust Series 1
Equity-Income Trust Series 0	Lifestyle Balanced Trust Series 0
Equity-Income Trust Series 1	Lifestyle Balanced Trust Series 1
Financial Services Trust Series 0	Lifestyle Conservative Trust Series 0
Financial Services Trust Series 1	Lifestyle Conservative Trust Series 1
Franklin Templeton Founding Allocation Trust Series 0	Lifestyle Growth Trust Series 0
Fundamental Value Trust Series 0	Lifestyle Growth Trust Series 1

5

Report of Independent Registered Public Accounting Firm

Lifestyle Moderate Trust Series 0	Small Cap Index Trust Series 0
Lifestyle Moderate Trust Series 1	Small Cap Index Trust Series 1
Mid Cap Index Trust Series 0	Small Cap Opportunities Trust Series 0
Mid Cap Index Trust Series 1	Small Cap Opportunities Trust Series 1
Mid Cap Intersection Trust Series 0	Small Cap Value Trust Series 0
Mid Cap Intersection Trust Series 1	Small Cap Value Trust Series 1
Mid Cap Stock Trust Series 0	Small Company Trust Series 1
Mid Cap Stock Trust Series 1	Small Company Value Trust Series 0
Mid Cap Value Trust Series 0	Small Company Value Trust Series 1
Mid Cap Value Trust Series 1	Strategic Bond Trust Series 0
Mid Value Trust Series 0	Strategic Bond Trust Series 1
Money Market Trust B Series 0	Strategic Income Trust Series 0
Money Market Trust Series 1	Strategic Income Trust Series 1
Natural Resources Trust Series 0	Total Bond Market Trust B Series 0
Natural Resources Trust Series 1	Total Return Trust Series 0
Optimized All Cap Trust Series 0	Total Return Trust Series 1
Optimized All Cap Trust Series 1	Total Stock Market Index Trust Series 0
Optimized Value Trust Series 0	Total Stock Market Index Trust Series 1
Optimized Value Trust Series 1	U.S. Government Securities Trust Series 0
Overseas Equity Trust Series 0	U.S. Government Securities Trust Series 1
Pacific Rim Trust Series 0	U.S. High Yield Bond Trust Series 0
Pacific Rim Trust Series 1	U.S. High Yield Bond Trust Series 1
Real Estate Securities Trust Series 0	U.S. Large Cap Trust Series 0
Real Estate Securities Trust Series 1	U.S. Large Cap Trust Series 1
Real Return Bond Trust Series 0	Utilities Trust Series 0
Real Return Bond Trust Series 1	Utilities Trust Series 1
Science & Technology Trust Series 0	Value Trust Series 0
Science & Technology Trust Series 1	Value Trust Series 1
Short-Term Bond Trust Series 0	All Asset Portfolio Series 0
Small Cap Growth Trust Series 0	All Asset Portfolio Series 1
Small Cap Growth Trust Series 1

“Closed” sub-accounts

Dynamic Growth Trust Series 0	Quantitative Mid Cap Trust Series 1
Dynamic Growth Trust Series 1	Small Cap Trust Series 0
Emerging Growth Trust Series 0	Small Cap Trust Series 1
Emerging Growth Trust Series 1	U.S. Core Trust Series 0
Growth & Income Trust Series 0	U.S. Core Trust Series 1
Managed Trust Series 0	U.S. Global Leaders Growth Trust Series 0
Quantitative Mid Cap Trust Series 0	U.S. Global Leaders Growth Trust Series 1

6

Report of Independent Registered Public Accounting Firm

We have audited the accompanying statements of assets and contract owners’ equity of John Hancock Life Insurance Company (U.S.A.) Separate Account N (the “Account”), comprised of the active sub-accounts as of December 31, 2008, and the related statements of operations and changes in contract owners’ equity of the active and closed sub-accounts for each of the two years in the period then ended (or years since inception), and the financial highlights for each of the five years in the period then ended (or years since inception). These financial statements and financial highlights are the responsibility of the Account’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Account’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Account’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian or fund manager of the underlying portfolios. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the active sub-accounts constituting John Hancock Life Insurance Company (U.S.A.) Separate Account N at December 31, 2008, and the results of its operations and changes in contract owners’ equity of the active and closed sub-accounts for each of the two years in the period then ended (or years since inception), and the financial highlights for each of the five years in the period then ended (or years since inception), in conformity with U.S. generally accepted accounting principles.

	/s/ ERNST & YOUNG LLP
Toronto, Canada	Chartered Accountants
April 14, 2009	Licensed Public Accountants

7

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Assets and Contract Owners’ Equity

December 31, 2008

Assets
Investments at fair value:
Sub-accounts invested in John Hancock Trust portfolios:
500 Index Trust B Series 0 - 1,438,228 shares (cost $23,008,953)	$	16,165,681
500 Index Trust Series 1 - 1,592,617 shares (cost $17,705,037)		12,533,893
Active Bond Trust Series 0 - 52,581 shares (cost $476,055)		415,916
Active Bond Trust Series 1 - 103,791 shares (cost $947,637)		820,988
All Cap Core Trust Series 0 - 1,307 shares (cost $14,880)		15,283
All Cap Core Trust Series 1 - 429,383 shares (cost $7,475,481)		5,019,487
All Cap Growth Trust Series 0 - 4,025 shares (cost $61,582)		46,490
All Cap Growth Trust Series 1 - 203,492 shares (cost $3,125,910)		2,348,296
All Cap Value Trust Series 0 - 38,130 shares (cost $229,283)		213,526
All Cap Value Trust Series 1 - 849,088 shares (cost $7,822,804)		4,771,874
American Asset Allocation Trust Series 1 - 25,571 shares (cost $234,817)		215,822
American Blue Chip Income and Growth Trust Series 1 - 299,766 shares (cost $4,088,314)		2,652,929
American Bond Trust Series 1 - 162,281 shares (cost $1,950,395)		1,736,403
American Growth Trust Series 1 - 1,592,001 shares (cost $29,894,480)		18,483,137
American Growth-Income Trust Series 1 - 132,970 shares (cost $2,205,307)		1,533,150
American International Trust Series 1 - 1,572,779 shares (cost $37,027,667)		22,506,461
Blue Chip Growth Trust Series 0 - 166,432 shares (cost $2,759,305)		2,030,472
Blue Chip Growth Trust Series 1 - 871,674 shares (cost $15,337,586)		10,660,570
Capital Appreciation Trust Series 0 - 19,164 shares (cost $147,097)		120,161
Capital Appreciation Trust Series 1 - 730,914 shares (cost $6,213,545)		4,582,828
Capital Appreciation Value Trust Series 1 - 327 shares (cost $2,845)		2,947
Classic Value Trust Series 0 - 3,012 shares (cost $31,100)		19,249
Classic Value Trust Series 1 - 13,966 shares (cost $191,975)		89,243
Core Bond Trust Series 0 - 249 shares (cost $3,093)		3,058
Core Bond Trust Series 1 - 1,823 shares (cost $22,542)		22,482
Core Equity Trust Series 0 - 8,783 shares (cost $80,874)		41,456
Core Equity Trust Series 1 - 29,949 shares (cost $316,642)		141,361
Disciplined Diversification Trust Series 1		—
Dynamic Growth Trust Series 0		—
Dynamic Growth Trust Series 1		—
Emerging Growth Trust Series 0		—
Emerging Growth Trust Series 1		—
Emerging Markets Value Trust Series 0 - 15,119 shares (cost $109,179)		101,749
Emerging Markets Value Trust Series 1 - 41,108 shares (cost $475,590)		277,069
Emerging Small Company Trust Series 0 - 12,006 shares (cost $280,876)		167,240
Emerging Small Company Trust Series 1 - 1,123,544 shares (cost $30,798,071)		15,606,022
Equity-Income Trust Series 0 - 825,982 shares (cost $12,645,611)		8,202,004
Equity-Income Trust Series 1 - 1,664,472 shares (cost $26,476,459)		16,578,137
Financial Services Trust Series 0 - 18,565 shares (cost $221,723)		139,607
Financial Services Trust Series 1 - 199,903 shares (cost $1,835,446)		1,505,269
Franklin Templeton Founding Allocation Trust Series 0 - 21,284 shares (cost $156,413)		156,653

8

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Assets and Contract Owners’ Equity

December 31, 2008

Assets
Investments at fair value:
Sub-accounts invested in John Hancock Trust portfolios:
Fundamental Value Trust Series 0 - 68,983 shares (cost $780,462)	$	673,278
Fundamental Value Trust Series 1 - 652,163 shares (cost $7,812,037)		6,384,680
Global Allocation Trust Series 0 - 9,312 shares (cost $94,206)		63,324
Global Allocation Trust Series 1 - 43,149 shares (cost $432,573)		294,279
Global Bond Trust Series 0 - 416,249 shares (cost $6,341,743)		5,998,144
Global Bond Trust Series 1 - 301,562 shares (cost $4,725,226)		4,354,555
Global Real Estate Trust Series 1 - 402 shares (cost $3,865)		2,480
Global Trust Series 0 - 26,016 shares (cost $416,551)		273,952
Global Trust Series 1 - 198,920 shares (cost $3,146,088)		2,096,612
Growth & Income Trust Series 0		—
Health Sciences Trust Series 0 - 47,798 shares (cost $622,702)		495,670
Health Sciences Trust Series 1 - 376,549 shares (cost $4,781,529)		3,897,285
High Yield Trust Series 0 - 121,022 shares (cost $1,023,280)		709,188
High Yield Trust Series 1 - 634,984 shares (cost $5,694,422)		3,740,054
Income & Value Trust Series 0 - 16,525 shares (cost $180,214)		118,153
Income & Value Trust Series 1 - 1,511,525 shares (cost $15,301,304)		10,807,404
International Core Trust Series 0 - 25,284 shares (cost $295,405)		204,797
International Core Trust Series 1 - 610,640 shares (cost $7,622,641)		4,958,400
International Equity Index Trust A Series 1 - 300,304 shares (cost $5,871,361)		3,585,626
International Equity Index Trust B Series 0 - 278,182 shares (cost $4,935,941)		3,104,506
International Opportunities Trust Series 0 - 254,549 shares (cost $3,786,070)		2,097,481
International Opportunities Trust Series 1 - 217,894 shares (cost $2,953,238)		1,795,448
International Small Cap Trust Series 0 - 36,848 shares (cost $576,113)		305,840
International Small Cap Trust Series 1 - 427,201 shares (cost $6,954,240)		3,562,859
International Value Trust Series 0 - 68,747 shares (cost $945,801)		619,413
International Value Trust Series 1 - 1,256,796 shares (cost $18,824,322)		11,386,567
Investment Quality Bond Trust Series 0 - 24,512 shares (cost $272,346)		253,456
Investment Quality Bond Trust Series 1 - 603,424 shares (cost $6,948,886)		6,251,474
Large Cap Trust Series 0 - 8,248 shares (cost $99,931)		70,272
Large Cap Trust Series 1 - 353,197 shares (cost $5,059,755)		3,019,835
Large Cap Value Trust Series 0 - 34,026 shares (cost $556,048)		478,069
Large Cap Value Trust Series 1 - 378,266 shares (cost $7,528,441)		5,314,642
Lifestyle Aggressive Trust Series 0 - 323,015 shares (cost $2,786,552)		1,753,973
Lifestyle Aggressive Trust Series 1 - 912,475 shares (cost $8,837,943)		4,954,739
Lifestyle Balanced Trust Series 0 - 363,830 shares (cost $4,121,697)		3,128,937
Lifestyle Balanced Trust Series 1 - 1,016,358 shares (cost $12,900,322)		8,730,517
Lifestyle Conservative Trust Series 0 - 33,465 shares (cost $365,208)		344,025
Lifestyle Conservative Trust Series 1 - 347,721 shares (cost $4,264,908)		3,567,617
Lifestyle Growth Trust Series 0 - 537,485 shares (cost $6,256,497)		4,299,878
Lifestyle Growth Trust Series 1 - 1,176,517 shares (cost $15,119,966)		9,400,374
Lifestyle Moderate Trust Series 0 - 131,619 shares (cost $1,546,558)		1,205,627

9

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Assets and Contract Owners’ Equity

December 31, 2008

Assets
Investments at fair value:
Sub-accounts invested in John Hancock Trust portfolios:
Lifestyle Moderate Trust Series 1 - 186,754 shares (cost $2,289,507)	$	1,708,801
Managed Trust Series 0		—
Mid Cap Index Trust Series 0 - 94,355 shares (cost $1,566,930)		1,006,767
Mid Cap Index Trust Series 1 - 1,128,133 shares (cost $19,906,648)		12,037,182
Mid Cap Intersection Trust Series 0 - 4,260 shares (cost $43,516)		28,673
Mid Cap Intersection Trust Series 1		—
Mid Cap Stock Trust Series 0 - 191,699 shares (cost $2,541,048)		1,681,202
Mid Cap Stock Trust Series 1 - 1,032,582 shares (cost $14,343,152)		9,024,765
Mid Cap Value Trust Series 0 - 173,366 shares (cost $1,201,787)		1,263,839
Mid Cap Value Trust Series 1 - 864,274 shares (cost $9,678,025)		6,317,840
Mid Value Trust Series 0 - 178,763 shares (cost $1,148,787)		1,201,290
Money Market Trust B Series 0 - 70,653,639 shares (cost $70,653,639)		70,653,639
Money Market Trust Series 1 - 10,131,444 shares (cost $101,314,436)		101,314,436
Natural Resources Trust Series 0 - 51,795 shares (cost $1,152,162)		690,422
Natural Resources Trust Series 1 - 480,302 shares (cost $11,015,481)		6,450,461
Optimized All Cap Trust Series 0 - 81,373 shares (cost $1,119,985)		703,064
Optimized All Cap Trust Series 1 - 6,505 shares (cost $86,284)		56,007
Optimized Value Trust Series 0 - 3,528 shares (cost $39,484)		25,545
Optimized Value Trust Series 1 - 74 shares (cost $939)		538
Overseas Equity Trust Series 0 - 247,109 shares (cost $3,058,785)		1,831,075
Pacific Rim Trust Series 0 - 77,565 shares (cost $676,757)		467,715
Pacific Rim Trust Series 1 - 760,424 shares (cost $7,287,437)		4,554,939
Quantitative Mid Cap Trust Series 0		—
Quantitative Mid Cap Trust Series 1		—
Real Estate Securities Trust Series 0 - 494,566 shares (cost $3,760,115)		3,491,635
Real Estate Securities Trust Series 1 - 1,798,593 shares (cost $27,438,466)		12,770,010
Real Return Bond Trust Series 0 - 77,949 shares (cost $1,010,010)		900,310
Real Return Bond Trust Series 1 - 449,123 shares (cost $5,858,886)		5,236,778
Science & Technology Trust Series 0 - 58,762 shares (cost $569,808)		485,962
Science & Technology Trust Series 1 - 618,425 shares (cost $7,595,106)		5,102,005
Short-Term Bond Trust Series 0 - 10,431 shares (cost $79,673)		72,706
Small Cap Growth Trust Series 0 - 371,096 shares (cost $3,099,103)		2,293,376
Small Cap Growth Trust Series 1 - 11,125 shares (cost $68,150)		68,532
Small Cap Index Trust Series 0 - 46,478 shares (cost $575,489)		425,740
Small Cap Index Trust Series 1 - 324,880 shares (cost $4,518,024)		2,975,902
Small Cap Opportunities Trust Series 0 - 2,332 shares (cost $37,323)		26,117
Small Cap Opportunities Trust Series 1 - 68,778 shares (cost $1,447,765)		775,813
Small Cap Trust Series 0		—
Small Cap Trust Series 1		—
Small Cap Value Trust Series 0 - 226,614 shares (cost $3,223,930)		2,658,179
Small Cap Value Trust Series 1 - 49,530 shares (cost $676,705)		582,478

10

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Assets and Contract Owners’ Equity

December 31, 2008

Assets
Investments at fair value:
Sub-accounts invested in John Hancock Trust portfolios:
Small Company Trust Series 1 - 191,760 shares (cost $2,077,750)	$	1,225,349
Small Company Value Trust Series 0 - 68,822 shares (cost $1,200,286)		890,555
Small Company Value Trust Series 1 - 732,193 shares (cost $13,551,739)		9,496,541
Strategic Bond Trust Series 0 - 10,679 shares (cost $113,144)		89,594
Strategic Bond Trust Series 1 - 199,539 shares (cost $2,171,809)		1,680,117
Strategic Income Trust Series 0 - 1,403 shares (cost $18,055)		15,689
Strategic Income Trust Series 1 - 102,832 shares (cost $1,236,685)		1,151,717
Total Bond Market Trust B Series 0 - 510,792 shares (cost $5,074,695)		5,041,514
Total Return Trust Series 0 - 212,733 shares (cost $2,959,357)		2,857,007
Total Return Trust Series 1 - 3,232,360 shares (cost $44,663,753)		43,539,894
Total Stock Market Index Trust Series 0 - 25,086 shares (cost $273,561)		199,933
Total Stock Market Index Trust Series 1 - 206,961 shares (cost $2,483,491)		1,649,478
U.S. Core Trust Series 0		—
U.S. Core Trust Series 1		—
U.S. Global Leaders Growth Trust Series 0		—
U.S. Global Leaders Growth Trust Series 1		—
U.S. Government Securities Trust Series 0 - 15,957 shares (cost $198,421)		193,403
U.S. Government Securities Trust Series 1 - 618,365 shares (cost $7,865,630)		7,525,507
U.S. High Yield Bond Trust Series 0 - 18,682 shares (cost $193,771)		171,876
U.S. High Yield Bond Trust Series 1 - 1,881 shares (cost $23,596)		17,289
U.S. Large Cap Trust Series 0 - 5,099 shares (cost $70,104)		48,088
U.S. Large Cap Trust Series 1 - 958,502 shares (cost $12,838,700)		9,057,849
Utilities Trust Series 0 - 80,664 shares (cost $1,044,484)		658,222
Utilities Trust Series 1 - 440,560 shares (cost $5,635,099)		3,594,971
Value Trust Series 0 - 31,764 shares (cost $468,824)		312,241
Value Trust Series 1 - 567,861 shares (cost $9,643,170)		5,587,755
Sub-account invested in Outside Trust portfolios:
All Asset Portfolio Series 0 - 6,271 shares (cost $71,766)	$	57,882
All Asset Portfolio Series 1 - 66,530 shares (cost $764,643)		614,073
Total assets	$	628,790,630
Contract Owners’ Equity
Variable universal life insurance contracts	$	628,790,630

See accompanying notes.

11

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

	Sub-Account
	500 Index Trust B Series 0						500 Index Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	457,185		$	612,671		$	128,911		$	687,947
Total Investment Income		457,185			612,671			128,911			687,947
Expenses:
Mortality and expense risk		43,823			59,199			47,263			76,928
Net investment income (loss)		413,362			553,472			81,648			611,019
Realized gains (losses) on investments:
Capital gain distributions		118,781			—			—			—
Net realized gains (losses)		(1,162,706	)		1,528,898			(2,102,701	)		1,132,219
Realized gains (losses)		(1,043,925	)		1,528,898			(2,102,701	)		1,132,219
Unrealized appreciation (depreciation) during the period		(8,137,464	)		(1,004,526	)		(5,726,377	)		(700,088	)
Net increase (decrease) in assets from operations		(8,768,027	)		1,077,844			(7,747,430	)		1,043,150
Changes from principal transactions:
Transfer of net premiums		1,920,254			2,541,278			635,202			802,682
Transfer on terminations		(1,777,015	)		(1,584,258	)		(2,128,198	)		(3,328,533	)
Transfer on policy loans		31,546			(53,634	)		(509	)		(391,716	)
Net interfund transfers		4,016,864			996,051			(4,499,505	)		16,714,382
Net increase (decrease) in assets from principal transactions		4,191,649			1,899,437			(5,993,010	)		13,796,815
Total increase (decrease) in assets		(4,576,378	)		2,977,281			(13,740,440	)		14,839,965
Assets, beginning of period		20,742,059			17,764,778			26,274,333			11,434,368
Assets, end of period	$	16,165,681		$	20,742,059		$	12,533,893		$	26,274,333

(g) Fund available in prior year but no activity.

See accompanying notes.

12

Sub-Account
Active Bond Trust Series 0						Active Bond Trust Series 1						All Asset Portfolio Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (g)
$	29,424		$	25,828		$	55,886		$	226,884		$	3,073
	29,424			25,828			55,886			226,884			3,073
	—			—			6,132			11,517			—
	29,424			25,828			49,754			215,367			3,073
	—			—			—			—			193
	(60,103	)		(2,590	)		(178,106	)		50,926			(400	)
	(60,103	)		(2,590	)		(178,106	)		50,926			(207	)
	(45,699	)		(14,221	)		(38,964	)		(197,796	)		(13,884	)
	(76,378	)		9,017			(167,316	)		68,497			(11,018	)
	115,887			141,168			16,247			149,449			32,760
	(73,256	)		(13,561	)		(336,374	)		(473,630	)		(4,070	)
	(2	)		—			(91	)		1,101			—
	(15,731	)		220,711			(621,306	)		(2,280,193	)		40,210
	26,898			348,318			(941,524	)		(2,603,273	)		68,900
	(49,480	)		357,335			(1,108,840	)		(2,534,776	)		57,882
	465,396			108,061			1,929,828			4,464,604			—
$	415,916		$	465,396		$	820,988		$	1,929,828		$	57,882

13

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	All Asset Portfolio Series 1						All Cap Core Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	46,385		$	61,232		$	379		$	453
Total Investment Income		46,385			61,232			379			453
Expenses:
Mortality and expense risk		4,554			4,706			—			—
Net investment income (loss)		41,831			56,526			379			453
Realized gains (losses) on investments:
Capital gain distributions		2,145			—			—			—
Net realized gains (losses)		(35,666	)		(2,105	)		(145,418	)		190
Realized gains (losses)		(33,521	)		(2,105	)		(145,418	)		190
Unrealized appreciation (depreciation) during the period		(149,775	)		4,161			576			(193	)
Net increase (decrease) in assets from operations		(141,465	)		58,582			(144,463	)		450
Changes from principal transactions:
Transfer of net premiums		50,836			96,122			140,480			1,010
Transfer on terminations		(93,962	)		(119,987	)		(9,188	)		(5,152	)
Transfer on policy loans		(36,716	)		—			—			—
Net interfund transfers		(31,918	)		39,146			(826	)		32,677
Net increase (decrease) in assets from principal transactions		(111,760	)		15,281			130,466			28,535
Total increase (decrease) in assets		(253,225	)		73,863			(13,997	)		28,985
Assets, beginning of period		867,298			793,435			29,280			295
Assets, end of period	$	614,073		$	867,298		$	15,283		$	29,280

See accompanying notes.

14

Sub-Account
All Cap Core Trust Series 1						All Cap Growth Trust Series 0						All Cap Growth Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	123,987		$	158,567		$	240		$	100		$	10,612		$	1,913
	123,987			158,567			240			100			10,612			1,913
	34,112			45,352			—			—			14,580			19,444
	89,875			113,215			240			100			(3,968	)		(17,531	)
	—			—			—			—			—			—
	(979,727	)		424,416			(5,312	)		16,996			(143,013	)		258,604
	(979,727	)		424,416			(5,312	)		16,996			(143,013	)		258,604
	(2,887,267	)		(381,980	)		(14,620	)		(530	)		(1,585,110	)		201,083
	(3,777,119	)		155,651			(19,692	)		16,566			(1,732,091	)		442,156
	254,938			289,707			5,919			159,857			307,784			230,443
	(795,201	)		(363,196	)		(1,364	)		(5,297	)		(290,608	)		(449,457	)
	35,384			(18,476	)		—			—			30,026			(9,799	)
	(1,985,621	)		6,657,434			38,498			(148,844	)		(58,218	)		(297,579	)
	(2,490,500	)		6,565,469			43,053			5,716			(11,016	)		(526,392	)
	(6,267,619	)		6,721,120			23,361			22,282			(1,743,107	)		(84,236	)
	11,287,106			4,565,986			23,129			847			4,091,403			4,175,639
$	5,019,487		$	11,287,106		$	46,490		$	23,129		$	2,348,296		$	4,091,403

15

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	All Cap Value Trust Series 0						All Cap Value Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	1,781		$	727		$	50,115		$	134,846
Total Investment Income		1,781			727			50,115			134,846
Expenses:
Mortality and expense risk		—			—			26,252			27,087
Net investment income (loss)		1,781			727			23,863			107,759
Realized gains (losses) on investments:
Capital gain distributions		1,093			17,926			153,459			3,486,020
Net realized gains (losses)		(27,421	)		(532	)		(2,371,693	)		17,862
Realized gains (losses)		(26,328	)		17,394			(2,218,234	)		3,503,882
Unrealized appreciation (depreciation) during the period		334			(16,105	)		74,815			(3,114,574	)
Net increase (decrease) in assets from operations		(24,213	)		2,016			(2,119,556	)		497,067
Changes from principal transactions:
Transfer of net premiums		38,320			31,433			48,246			147,292
Transfer on terminations		(7,600	)		(1,203	)		(158,830	)		(226,059	)
Transfer on policy loans		—			—			(4,555	)		—
Net interfund transfers		163,019			11,466			(1,550,963	)		6,140,550
Net increase (decrease) in assets from principal transactions		193,739			41,696			(1,666,102	)		6,061,783
Total increase (decrease) in assets		169,526			43,712			(3,785,658	)		6,558,850
Assets, beginning of period		44,000			288			8,557,532			1,998,682
Assets, end of period	$	213,526		$	44,000		$	4,771,874		$	8,557,532

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

See accompanying notes.

16

Sub-Account
American Asset Allocation Trust Series 1			American Blue Chip Income and Growth Trust Series 1						American Bond Trust Series 1
Year Ended Dec. 31/08 (f)			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	6,546		$	147,528		$	98,701		$	153,895		$	105,828
	6,546			147,528			98,701			153,895			105,828
	167			12,167			15,780			7,476			8,980
	6,379			135,361			82,921			146,419			96,848
	—			39,973			750,767			37			907
	(897	)		(806,387	)		210,915			(129,287	)		5,829
	(897	)		(766,414	)		961,682			(129,250	)		6,736
	(18,995	)		(869,603	)		(926,518	)		(167,503	)		(50,630	)
	(13,513	)		(1,500,656	)		118,085			(150,334	)		52,954
	9,996			357,139			573,618			210,679			222,473
	(14,901	)		(223,639	)		(296,092	)		(94,990	)		(58,267	)
	(144	)		(80,187	)		(1,043	)		—			—
	234,384			559,651			(2,014,428	)		(2,074,303	)		3,221,361
	229,335			612,964			(1,737,945	)		(1,958,614	)		3,385,567
	215,822			(887,692	)		(1,619,860	)		(2,108,948	)		3,438,521
	—			3,540,621			5,160,481			3,845,351			406,830
$	215,822		$	2,652,929		$	3,540,621		$	1,736,403		$	3,845,351

17

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	American Growth Trust Series 1						American Growth-Income Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	496,005		$	256,748		$	46,065		$	82,530
Total Investment Income		496,005			256,748			46,065			82,530
Expenses:
Mortality and expense risk		86,128			89,376			14,394			12,362
Net investment income (loss)		409,877			167,372			31,671			70,168
Realized gains (losses) on investments:
Capital gain distributions		266,326			2,245,134			77,414			184,516
Net realized gains (losses)		(3,123,395	)		4,502,816			(1,624,774	)		317,225
Realized gains (losses)		(2,857,069	)		6,747,950			(1,547,360	)		501,741
Unrealized appreciation (depreciation) during the period		(11,368,782	)		(4,654,694	)		(583,320	)		(528,880	)
Net increase (decrease) in assets from operations		(13,815,974	)		2,260,628			(2,099,009	)		43,029
Changes from principal transactions:
Transfer of net premiums		2,712,535			1,639,928			574,751			709,642
Transfer on terminations		(2,845,634	)		(2,204,015	)		(1,058,090	)		(301,793	)
Transfer on policy loans		(89,358	)		(10,202	)		(67,026	)		(984	)
Net interfund transfers		9,243,795			(14,998,928	)		(149,487	)		872,617
Net increase (decrease) in assets from principal transactions		9,021,338			(15,573,217	)		(699,852	)		1,279,482
Total increase (decrease) in assets		(4,794,636	)		(13,312,589	)		(2,798,861	)		1,322,511
Assets, beginning of period		23,277,773			36,590,362			4,332,011			3,009,500
Assets, end of period	$	18,483,137		$	23,277,773		$	1,533,150		$	4,332,011

See accompanying notes.

18

Sub-Account
American International Trust Series 1						Blue Chip Growth Trust Series 0						Blue Chip Growth Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	1,303,398		$	994,832		$	9,215		$	14,812		$	50,667		$	179,592
	1,303,398			994,832			9,215			14,812			50,667			179,592
	108,659			139,156			—			—			74,489			109,943
	1,194,739			855,676			9,215			14,812			(23,822	)		69,649
	732,433			3,603,268			33,216			—			279,607			—
	(1,851,283	)		1,872,953			(208,963	)		116,889			(544,621	)		1,920,443
	(1,118,850	)		5,476,221			(175,747	)		116,889			(265,014	)		1,920,443
	(19,580,193	)		826,619			(848,688	)		55,154			(8,644,218	)		892,459
	(19,504,304	)		7,158,516			(1,015,220	)		186,855			(8,933,054	)		2,882,551
	2,166,820			2,121,774			255,329			958,141			809,262			1,050,985
	(2,692,364	)		(1,439,599	)		(64,810	)		(76,565	)		(6,868,763	)		(3,369,370	)
	(79,432	)		(1,427	)		(2	)		—			(15,990	)		(141,423	)
	(3,846,066	)		8,004,452			646,042			432,532			642,645			577,572
	(4,451,042	)		8,685,200			836,559			1,314,108			(5,432,846	)		(1,882,236	)
	(23,955,346	)		15,843,716			(178,661	)		1,500,963			(14,365,900	)		1,000,315
	46,461,807			30,618,091			2,209,133			708,170			25,026,470			24,026,155
$	22,506,461		$	46,461,807		$	2,030,472		$	2,209,133		$	10,660,570		$	25,026,470

19

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Capital Appreciation Trust Series 0						Capital Appreciation Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	1,081		$	944		$	29,265		$	22,847
Total Investment Income		1,081			944			29,265			22,847
Expenses:
Mortality and expense risk		—			—			30,942			37,431
Net investment income (loss)		1,081			944			(1,677	)		(14,584	)
Realized gains (losses) on investments:
Capital gain distributions		—			762			—			32,105
Net realized gains (losses)		(215,802	)		13,735			(417,557	)		98,907
Realized gains (losses)		(215,802	)		14,497			(417,557	)		131,012
Unrealized appreciation (depreciation) during the period		(35,883	)		8,726			(2,445,165	)		677,020
Net increase (decrease) in assets from operations		(250,604	)		24,167			(2,864,399	)		793,448
Changes from principal transactions:
Transfer of net premiums		213,970			181,193			348,771			695,381
Transfer on terminations		(29,128	)		(11,341	)		(826,744	)		(1,193,581	)
Transfer on policy loans		—			—			15,356			(42,996	)
Net interfund transfers		(32,349	)		(76,853	)		(57,997	)		(234,158	)
Net increase (decrease) in assets from principal transactions		152,493			92,999			(520,614	)		(775,354	)
Total increase (decrease) in assets		(98,111	)		117,166			(3,385,013	)		18,094
Assets, beginning of period		218,272			101,106			7,967,841			7,949,747
Assets, end of period	$	120,161		$	218,272		$	4,582,828		$	7,967,841

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

See accompanying notes.

20

Sub-Account
Capital Appreciation Value Trust Series 1			Classic Value Trust Series 0						Classic Value Trust Series 1
Year Ended Dec. 31/08 (f)			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	23		$	487		$	430		$	2,485		$	13,926
	23			487			430			2,485			13,926
	3			—			—			989			5,343
	20			487			430			1,496			8,583
	—			259			2,182			2,558			97,324
	(4	)		(6,120	)		(701	)		(196,953	)		12,959
	(4	)		(5,861	)		1,481			(194,395	)		110,283
	102			(7,093	)		(4,798	)		74,329			(227,834	)
	118			(12,467	)		(2,887	)		(118,570	)		(108,968	)
	73			11,310			16,177			11,266			137,096
	(124	)		(2,249	)		(369	)		(8,321	)		(19,630	)
	—			—			—			—			—
	2,880			166			8,885			(542,279	)		(359,547	)
	2,829			9,227			24,693			(539,334	)		(242,081	)
	2,947			(3,240	)		21,806			(657,904	)		(351,049	)
	—			22,489			683			747,147			1,098,196
$	2,947		$	19,249		$	22,489		$	89,243		$	747,147

21

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Core Bond Trust Series 0			Core Bond Trust Series 1
	Year Ended Dec. 31/08 (g)			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	132		$	535		$	57
Total Investment Income		132			535			57
Expenses:
Mortality and expense risk		—			22			4
Net investment income (loss)		132			513			53
Realized gains (losses) on investments:
Capital gain distributions		—			—			—
Net realized gains (losses)		(84	)		(1	)		(2	)
Realized gains (losses)		(84	)		(1	)		(2	)
Unrealized appreciation (depreciation) during the period		(34	)		(62	)		(6	)
Net increase (decrease) in assets from operations		14			450			45
Changes from principal transactions:
Transfer of net premiums		—			389			655
Transfer on terminations		(22	)		(66	)		(30	)
Transfer on policy loans		—			—			—
Net interfund transfers		3,066			20,509			175
Net increase (decrease) in assets from principal transactions		3,044			20,832			800
Total increase (decrease) in assets		3,058			21,282			845
Assets, beginning of period		—			1,200			355
Assets, end of period	$	3,058		$	22,482		$	1,200

(g) Fund available in prior year but no activity.

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

See accompanying notes.

22

Sub-Account
Core Equity Trust Series 0						Core Equity Trust Series 1						Disciplined Diversification Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (f)
$	7,796		$	12		$	28,127			—		—
	7,796			12			28,127			—		—
	—			—			1,540			5,679		—
	7,796			12			26,587			(5,679	)	—
	971			1,464			7,379			49,354		—
	(3,461	)		358			(103,325	)		(56,390	)	(570	)
	(2,490	)		1,822			(95,946	)		(7,036	)	(570	)
	(35,127	)		(5,001	)		(121,893	)		(92,260	)	—
	(29,821	)		(3,167	)		(191,252	)		(104,975	)	(570	)
	35,775			29,132			39,056			98,955		570
	(4,313	)		(1,544	)		(73,525	)		(44,188	)	—
	—			—			—			—		—
	2,941			5,987			(214,904	)		(50,913	)	—
	34,403			33,575			(249,373	)		3,854		570
	4,582			30,408			(440,625	)		(101,121	)	—
	36,874			6,466			581,986			683,107		—
$	41,456		$	36,874		$	141,361		$	581,986		—

23

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Dynamic Growth Trust Series 0					Dynamic Growth Trust Series 1
	Year Ended Dec. 31/08 (ah)		Year Ended Dec. 31/07			Year Ended Dec. 31/08 (ah)		Year Ended Dec. 31/07
Income:
Dividend income distribution	—			—		—			—
Total Investment Income	—			—		—			—
Expenses:
Mortality and expense risk	—			—		2,917			14,484
Net investment income (loss)	—			—		(2,917	)		(14,484	)
Realized gains (losses) on investments:
Capital gain distributions	—			—		—			—
Net realized gains (losses)	(11,410	)		7,157		(87,607	)		228,586
Realized gains (losses)	(11,410	)		7,157		(87,607	)		228,586
Unrealized appreciation (depreciation) during the period	(1,632	)		150		(200,945	)		(16,855	)
Net increase (decrease) in assets from operations	(13,042	)		7,307		(291,469	)		197,247
Changes from principal transactions:
Transfer of net premiums	5,992			94,638		79,850			313,078
Transfer on terminations	(2,654	)		(6,080	)	(285,510	)		(251,687	)
Transfer on policy loans	—			—		22			4,242
Net interfund transfers	(127,395	)		14,489		(1,878,178	)		(1,492,819	)
Net increase (decrease) in assets from principal transactions	(124,057	)		103,047		(2,083,816	)		(1,427,186	)
Total increase (decrease) in assets	(137,099	)		110,354		(2,375,285	)		(1,229,939	)
Assets, beginning of period	137,099			26,745		2,375,285			3,605,224
Assets, end of period	—		$	137,099		—		$	2,375,285

(ah) Terminated as an investment option and funds transferred to Mid Cap Stock Trust on April 28, 2008.

(ab) Terminated as an investment option and funds transferred to Small Cap Growth Trust on November 10, 2008.

(g) Fund available in prior year but no activity.

See accompanying notes.

24

Sub-Account
Emerging Growth Trust Series 0						Emerging Growth Trust Series 1						Emerging Markets Value Trust Series 0
Year Ended Dec. 31/08 (ab)			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (ab)			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (g)
$	394		$	154		$	1,231		$	938		$	3,519
	394			154			1,231			938			3,519
	—			—			1,575			2,718			—
	394			154			(344	)		(1,780	)		3,519
	875			14,087			2,805			173,166			—
	(125,730	)		(691	)		(499,712	)		(129,551	)		(609	)
	(124,855	)		13,396			(496,907	)		43,615			(609	)
	14,553			(14,597	)		121,401			(33,041	)		(7,430	)
	(109,908	)		(1,047	)		(375,850	)		8,794			(4,520	)
	13,608			24,609			4,287			65,009			457
	(12,947	)		(4,370	)		(95,107	)		(55,887	)		(952	)
	—			—			—			—			—
	12,300			77,120			(355,197	)		333,526			106,764
	12,961			97,359			(446,017	)		342,648			106,269
	(96,947	)		96,312			(821,867	)		351,442			101,749
	96,947			635			821,867			470,425			—
	—		$	96,947			—		$	821,867		$	101,749

25

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Emerging Markets Value Trust Series 1						Emerging Small Company Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07 (w)			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	9,502		$	583			—			—
Total Investment Income		9,502			583			—			—
Expenses:
Mortality and expense risk		1,138			83			—			—
Net investment income (loss)		8,364			500			—			—
Realized gains (losses) on investments:
Capital gain distributions		191			1,978			164			51,673
Net realized gains (losses)		(7,510	)		(2	)		(90,398	)		(14,551	)
Realized gains (losses)		(7,319	)		1,976			(90,234	)		37,122
Unrealized appreciation (depreciation) during the period		(192,411	)		(6,110	)		(83,143	)		(33,317	)
Net increase (decrease) in assets from operations		(191,366	)		(3,634	)		(173,377	)		3,805
Changes from principal transactions:
Transfer of net premiums		20,718			210			76,779			163,244
Transfer on terminations		(6,879	)		(744	)		(67,347	)		(20,681	)
Transfer on policy loans		2			—			—			—
Net interfund transfers		361,578			97,184			(27,671	)		86,101
Net increase (decrease) in assets from principal transactions		375,419			96,650			(18,239	)		228,664
Total increase (decrease) in assets		184,053			93,016			(191,616	)		232,469
Assets, beginning of period		93,016			—			358,856			126,387
Assets, end of period	$	277,069		$	93,016		$	167,240		$	358,856

(w) Reflects the period from commencement of operations on April 30, 2007 through December 31, 2007.

See accompanying notes.

26

Sub-Account
Emerging Small Company Trust Series 1						Equity-Income Trust Series 0						Equity-Income Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
	—			—		$	284,177		$	298,313		$	564,897		$	1,016,848
	—			—			284,177			298,313			564,897			1,016,848
	147,940			216,858			—			—			105,250			155,771
	(147,940	)		(216,858	)		284,177			298,313			459,647			861,077
	13,798			8,264,873			266,741			1,143,763			643,428			3,963,935
	(5,092,219	)		596,174			(1,573,014	)		39,095			(3,349,760	)		2,052,777
	(5,078,421	)		8,861,047			(1,306,273	)		1,182,858			(2,706,332	)		6,016,712
	(8,427,006	)		(5,983,529	)		(3,602,306	)		(1,263,386	)		(8,005,491	)		(5,749,846	)
	(13,653,367	)		2,660,660			(4,624,402	)		217,785			(10,252,176	)		1,127,943
	1,346,358			1,756,587			1,050,972			1,769,828			1,353,367			2,101,943
	(5,053,747	)		(5,019,723	)		(388,250	)		(233,978	)		(5,797,178	)		(4,749,908	)
	74,469			282,912			(4	)		(979	)		(807	)		(67,293	)
	(730,772	)		(6,753,775	)		1,432,815			1,982,149			(2,159,696	)		(2,671,380	)
	(4,363,692	)		(9,733,999	)		2,095,533			3,517,020			(6,604,314	)		(5,386,638	)
	(18,017,059	)		(7,073,339	)		(2,528,869	)		3,734,805			(16,856,490	)		(4,258,695	)
	33,623,081			40,696,420			10,730,873			6,996,068			33,434,627			37,693,322
$	15,606,022		$	33,623,081		$	8,202,004		$	10,730,873		$	16,578,137		$	33,434,627

27

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Financial Services Trust Series 0						Financial Services Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	1,854		$	968		$	18,616		$	12,671
Total Investment Income		1,854			968			18,616			12,671
Expenses:
Mortality and expense risk		—			—			4,475			7,108
Net investment income (loss)		1,854			968			14,141			5,563
Realized gains (losses) on investments:
Capital gain distributions		3,444			7,776			74,498			103,714
Net realized gains (losses)		(24,440	)		4,409			(499,847	)		124,791
Realized gains (losses)		(20,996	)		12,185			(425,349	)		228,505
Unrealized appreciation (depreciation) during the period		(71,142	)		(11,097	)		(238,763	)		(299,592	)
Net increase (decrease) in assets from operations		(90,284	)		2,056			(649,971	)		(65,524	)
Changes from principal transactions:
Transfer of net premiums		30,320			96,931			211,962			190,500
Transfer on terminations		(4,155	)		(2,235	)		(280,015	)		(242,540	)
Transfer on policy loans		—			—			(636	)		747
Net interfund transfers		154,761			(48,811	)		1,579,574			(1,750,928	)
Net increase (decrease) in assets from principal transactions		180,926			45,885			1,510,885			(1,802,221	)
Total increase (decrease) in assets		90,642			47,941			860,914			(1,867,745	)
Assets, beginning of period		48,965			1,024			644,355			2,512,100
Assets, end of period	$	139,607		$	48,965		$	1,505,269		$	644,355

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

See accompanying notes.

28

Sub-Account
Franklin Templeton Founding Allocation Trust Series 0			Fundamental Value Trust Series 0						Fundamental Value Trust Series 1
Year Ended Dec. 31/08 (f)			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	5,645		$	7,792		$	1,921		$	70,400		$	65,923
	5,645			7,792			1,921			70,400			65,923
	—			—			—			19,703			20,838
	5,645			7,792			1,921			50,697			45,085
	—			1,975			4,510			40,908			160,619
	(25	)		(17,633	)		1,148			(393,753	)		242,062
	(25	)		(15,658	)		5,658			(352,845	)		402,681
	240			(107,766	)		(3,347	)		(1,608,758	)		(315,949	)
	5,860			(115,632	)		4,232			(1,910,906	)		131,817
	—			50,001			12,404			320,447			243,683
	(13,197	)		(22,496	)		(13,296	)		(386,352	)		(325,251	)
	—			—			—			(41,313	)		(1,163	)
	163,990			647,330			9,582			4,176,335			(283,754	)
	150,793			674,835			8,690			4,069,117			(366,485	)
	156,653			559,203			12,922			2,158,211			(234,668	)
	—			114,075			101,153			4,226,469			4,461,137
$	156,653		$	673,278		$	114,075		$	6,384,680		$	4,226,469

29

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Global Allocation Trust Series 0						Global Allocation Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	4,516		$	2,408		$	21,212		$	170,015
Total Investment Income		4,516			2,408			21,212			170,015
Expenses:
Mortality and expense risk		—			—			3,700			11,465
Net investment income (loss)		4,516			2,408			17,512			158,550
Realized gains (losses) on investments:
Capital gain distributions		80			3,100			1,212			278,512
Net realized gains (losses)		(9,427	)		53			(391,314	)		89,077
Realized gains (losses)		(9,347	)		3,153			(390,102	)		367,589
Unrealized appreciation (depreciation) during the period		(25,928	)		(4,979	)		99,624			(389,569	)
Net increase (decrease) in assets from operations		(30,759	)		582			(272,966	)		136,570
Changes from principal transactions:
Transfer of net premiums		62,769			6,563			35,198			102,556
Transfer on terminations		(6,566	)		(2,517	)		(161,385	)		(159,556	)
Transfer on policy loans		—			—			(29,892	)		—
Net interfund transfers		(9,534	)		42,398			(1,681,054	)		497,937
Net increase (decrease) in assets from principal transactions		46,669			46,444			(1,837,133	)		440,937
Total increase (decrease) in assets		15,910			47,026			(2,110,099	)		577,507
Assets, beginning of period		47,414			388			2,404,378			1,826,871
Assets, end of period	$	63,324		$	47,414		$	294,279		$	2,404,378

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

See accompanying notes.

30

Sub-Account
Global Bond Trust Series 0						Global Bond Trust Series 1						Global Real Estate Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (f)
$	34,656		$	337,166		$	34,756		$	369,675		$	148
	34,656			337,166			34,756			369,675			148
	—			—			27,117			22,345			6
	34,656			337,166			7,639			347,330			142
	—			—			—			—			—
	58,633			48,972			152,391			36,162			(20	)
	58,633			48,972			152,391			36,162			(20	)
	(485,599	)		44,803			(556,309	)		76,192			(1,385	)
	(392,310	)		430,941			(396,279	)		459,684			(1,263	)
	392,353			1,451,488			735,063			404,837			46
	(186,420	)		(86,704	)		(529,424	)		(580,111	)		(62	)
	(1	)		—			(6,570	)		15			—
	974,532			225,227			(791,618	)		(29,508	)		3,759
	1,180,464			1,590,011			(592,549	)		(204,767	)		3,743
	788,154			2,020,952			(988,828	)		254,917			2,480
	5,209,990			3,189,038			5,343,383			5,088,466			—
$	5,998,144		$	5,209,990		$	4,354,555		$	5,343,383		$	2,480

31

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Global Trust Series 0						Global Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	7,529		$	7,731		$	59,845		$	144,895
Total Investment Income		7,529			7,731			59,845			144,895
Expenses:
Mortality and expense risk		—			—			16,347			29,933
Net investment income (loss)		7,529			7,731			43,498			114,962
Realized gains (losses) on investments:
Capital gain distributions		—			30,550			—			352,080
Net realized gains (losses)		(79,881	)		10,784			(717,387	)		505,785
Realized gains (losses)		(79,881	)		41,334			(717,387	)		857,865
Unrealized appreciation (depreciation) during the period		(89,812	)		(58,391	)		(1,047,678	)		(933,430	)
Net increase (decrease) in assets from operations		(162,164	)		(9,326	)		(1,721,567	)		39,397
Changes from principal transactions:
Transfer of net premiums		160,238			324,459			300,054			525,229
Transfer on terminations		(37,388	)		(40,814	)		(362,486	)		(414,465	)
Transfer on policy loans		—			—			(50,596	)		(16,466	)
Net interfund transfers		(241,320	)		178,441			(2,326,846	)		398,617
Net increase (decrease) in assets from principal transactions		(118,470	)		462,086			(2,439,874	)		492,915
Total increase (decrease) in assets		(280,634	)		452,760			(4,161,441	)		532,312
Assets, beginning of period		554,586			101,826			6,258,053			5,725,741
Assets, end of period	$	273,952		$	554,586		$	2,096,612		$	6,258,053

(ag) Terminated as an investment option and funds transferred to Optimized All Cap Trust on April 28, 2008.

See accompanying notes.

32

Sub-Account
Growth & Income Trust Series 0						Health Sciences Trust Series 0						Health Sciences Trust Series 1
Year Ended Dec. 31/08 (ag)			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	7,718		$	29,863			—			—			—			—
	7,718			29,863			—			—			—			—
	—			—			—			—			23,986			22,083
	7,718			29,863			—			—			(23,986	)		(22,083	)
	—			154,320			8,430			68,445			127,861			913,224
	(261,903	)		102,143			(80,639	)		7,734			(979,520	)		174,141
	(261,903	)		256,463			(72,209	)		76,179			(851,659	)		1,087,365
	111,802			(245,541	)		(122,805	)		(4,363	)		(863,853	)		(281,318	)
	(142,383	)		40,785			(195,014	)		71,816			(1,739,498	)		783,964
	9,264			745,023			174,322			506,824			517,247			589,752
	(14,638	)		(57,611	)		(17,777	)		(7,357	)		(602,575	)		(1,093,263	)
	—			—			(1	)		—			(5,039	)		(162	)
	(1,527,793	)		(392,472	)		335,626			(374,834	)		650,182			(649,388	)
	(1,533,167	)		294,940			492,170			124,633			559,815			(1,153,061	)
	(1,675,550	)		335,725			297,156			196,449			(1,179,683	)		(369,097	)
	1,675,550			1,339,825			198,514			2,065			5,076,968			5,446,065
	—		$	1,675,550		$	495,670		$	198,514		$	3,897,285		$	5,076,968

33

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	High Yield Trust Series 0						High Yield Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	86,888		$	79,658		$	489,569		$	1,256,446
Total Investment Income		86,888			79,658			489,569			1,256,446
Expenses:
Mortality and expense risk		—			—			30,385			48,620
Net investment income (loss)		86,888			79,658			459,184			1,207,826
Realized gains (losses) on investments:
Capital gain distributions		—			—			—			—
Net realized gains (losses)		(168,125	)		(6,746	)		(1,401,708	)		94,917
Realized gains (losses)		(168,125	)		(6,746	)		(1,401,708	)		94,917
Unrealized appreciation (depreciation) during the period		(240,999	)		(77,644	)		(1,272,764	)		(1,169,726	)
Net increase (decrease) in assets from operations		(322,236	)		(4,732	)		(2,215,288	)		133,017
Changes from principal transactions:
Transfer of net premiums		159,846			336,761			344,372			871,319
Transfer on terminations		(85,661	)		(24,064	)		(1,066,548	)		(1,655,847	)
Transfer on policy loans		—			—			37,019			(27,463	)
Net interfund transfers		195,350			321,630			(1,646,371	)		(2,183,975	)
Net increase (decrease) in assets from principal transactions		269,535			634,327			(2,331,528	)		(2,995,966	)
Total increase (decrease) in assets		(52,701	)		629,595			(4,546,816	)		(2,862,949	)
Assets, beginning of period		761,889			132,294			8,286,870			11,149,819
Assets, end of period	$	709,188		$	761,889		$	3,740,054		$	8,286,870

See accompanying notes.

34

Sub-Account
Income & Value Trust Series 0						Income & Value Trust Series 1						International Core Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	4,822		$	6,612		$	445,537		$	779,998		$	14,208		$	4,124
	4,822			6,612			445,537			779,998			14,208			4,124
	—			—			92,225			123,584			—			—
	4,822			6,612			353,312			656,414			14,208			4,124
	3,544			15,516			333,032			1,367,856			2,813			24,428
	(28,305	)		1,762			(1,110,614	)		653,109			(68,208	)		3,566
	(24,761	)		17,278			(777,582	)		2,020,965			(65,395	)		27,994
	(36,403	)		(26,545	)		(4,742,168	)		(2,587,856	)		(69,313	)		(21,780	)
	(56,342	)		(2,655	)		(5,166,438	)		89,523			(120,500	)		10,338
	40,256			144,415			1,136,690			1,656,430			83,123			125,863
	(29,103	)		(9,057	)		(2,844,530	)		(2,620,412	)		(24,158	)		(5,213	)
	—			—			(48,525	)		(17,417	)		(138	)		(632	)
	(50,719	)		47,671			(674,040	)		(2,194,036	)		41,706			87,680
	(39,566	)		183,029			(2,430,405	)		(3,175,435	)		100,533			207,698
	(95,908	)		180,374			(7,596,843	)		(3,085,912	)		(19,967	)		218,036
	214,061			33,687			18,404,247			21,490,159			224,764			6,728
$	118,153		$	214,061		$	10,807,404		$	18,404,247		$	204,797		$	224,764

35

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	International Core Trust Series 1						International Equity Index Trust A Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	371,994		$	231,949		$	116,762		$	149,603
Total Investment Income		371,994			231,949			116,762			149,603
Expenses:
Mortality and expense risk		42,859			55,431			19,387			18,941
Net investment income (loss)		329,135			176,518			97,375			130,662
Realized gains (losses) on investments:
Capital gain distributions		116,627			1,374,346			34,426			181,589
Net realized gains (losses)		(781,739	)		624,280			(450,390	)		1,822,415
Realized gains (losses)		(665,112	)		1,998,626			(415,964	)		2,004,004
Unrealized appreciation (depreciation) during the period		(3,625,015	)		(1,113,233	)		(2,649,586	)		(1,614,875	)
Net increase (decrease) in assets from operations		(3,960,992	)		1,061,911			(2,968,175	)		519,791
Changes from principal transactions:
Transfer of net premiums		477,425			487,585			278,455			447,024
Transfer on terminations		(790,943	)		(1,019,670	)		(530,249	)		(804,801	)
Transfer on policy loans		12,764			(109,646	)		17,181			(65	)
Net interfund transfers		(1,266,802	)		447,339			2,725,506			(5,493,628	)
Net increase (decrease) in assets from principal transactions		(1,567,556	)		(194,392	)		2,490,893			(5,851,470	)
Total increase (decrease) in assets		(5,528,548	)		867,519			(477,282	)		(5,331,679	)
Assets, beginning of period		10,486,948			9,619,429			4,062,908			9,394,587
Assets, end of period	$	4,958,400		$	10,486,948		$	3,585,626		$	4,062,908

See accompanying notes.

36

Sub-Account
International Equity Index Trust B Series 0						International Opportunities Trust Series 0						International Opportunities Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	120,462		$	60,175		$	42,977		$	23,219		$	37,849		$	43,950
	120,462			60,175			42,977			23,219			37,849			43,950
	—			—			—			—			12,907			11,945
	120,462			60,175			42,977			23,219			24,942			32,005
	27,377			96,381			123,042			255,441			132,998			528,428
	(505,352	)		21,513			(398,997	)		21,612			(1,142,289	)		106,905
	(477,975	)		117,894			(275,955	)		277,053			(1,009,291	)		635,333
	(1,769,487	)		(82,617	)		(1,587,994	)		(118,291	)		(1,194,932	)		(148,494	)
	(2,127,000	)		95,452			(1,820,972	)		181,981			(2,179,281	)		518,844
	1,594,209			604,351			296,589			239,757			450,136			205,538
	(263,749	)		(69,879	)		(50,097	)		(14,727	)		(253,252	)		(236,347	)
	(129	)		(645	)		(1	)		—			17,145			(19	)
	2,248,905			820,659			1,632,299			1,440,278			464,699			653,485
	3,579,236			1,354,486			1,878,790			1,665,308			678,728			622,657
	1,452,236			1,449,938			57,818			1,847,289			(1,500,553	)		1,141,501
	1,652,270			202,332			2,039,663			192,374			3,296,001			2,154,500
$	3,104,506		$	1,652,270		$	2,097,481		$	2,039,663		$	1,795,448		$	3,296,001

37

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	International Small Cap Trust Series 0						International Small Cap Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	13,225		$	14,798		$	169,272		$	249,949
Total Investment Income		13,225			14,798			169,272			249,949
Expenses:
Mortality and expense risk		—			—			27,370			40,118
Net investment income (loss)		13,225			14,798			141,902			209,831
Realized gains (losses) on investments:
Capital gain distributions		5,521			127,205			92,346			2,412,778
Net realized gains (losses)		(213,551	)		(8,707	)		(2,569,719	)		1,021,133
Realized gains (losses)		(208,030	)		118,498			(2,477,373	)		3,433,911
Unrealized appreciation (depreciation) during the period		(125,153	)		(147,207	)		(1,985,032	)		(2,957,117	)
Net increase (decrease) in assets from operations		(319,958	)		(13,911	)		(4,320,503	)		686,625
Changes from principal transactions:
Transfer of net premiums		184,067			221,024			798,750			650,284
Transfer on terminations		(21,154	)		(13,799	)		(737,947	)		(691,551	)
Transfer on policy loans		(1	)		—			17,022			(712	)
Net interfund transfers		(219,485	)		473,144			(1,499,185	)		1,806,476
Net increase (decrease) in assets from principal transactions		(56,573	)		680,369			(1,421,360	)		1,764,497
Total increase (decrease) in assets		(376,531	)		666,458			(5,741,863	)		2,451,122
Assets, beginning of period		682,371			15,913			9,304,722			6,853,600
Assets, end of period	$	305,840		$	682,371		$	3,562,859		$	9,304,722

(g) Fund available in prior year but no activity.

See accompanying notes.

38

Sub-Account
International Value Trust Series 0						International Value Trust Series 1						Investment Quality Bond Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07 (g)
$	31,720		$	22,821		$	606,848		$	1,334,862		$	20,476		$	13,494
	31,720			22,821			606,848			1,334,862			20,476			13,494
	—			—			87,565			128,751			—			—
	31,720			22,821			519,283			1,206,111			20,476			13,494
	17,558			97,224			635,098			4,840,065			—			—
	(112,494	)		(87,222	)		(5,906,580	)		2,167,602			(16,585	)		(1,966	)
	(94,936	)		10,002			(5,271,482	)		7,007,667			(16,585	)		(1,966	)
	(315,609	)		(10,839	)		(6,425,766	)		(5,559,113	)		(14,739	)		(4,151	)
	(378,825	)		21,984			(11,177,965	)		2,654,665			(10,848	)		7,377
	247,040			934,942			1,611,605			3,035,928			108,452			86,200
	(108,664	)		(22,256	)		(6,407,498	)		(4,533,699	)		(33,975	)		(5,223	)
	(2	)		(1,532	)		277			(2,332	)		—			—
	721,157			(796,697	)		(4,803,200	)		2,926,990			(49,601	)		151,074
	859,531			114,457			(9,598,816	)		1,426,887			24,876			232,051
	480,706			136,441			(20,776,781	)		4,081,552			14,028			239,428
	138,707			2,266			32,163,348			28,081,796			239,428			—
$	619,413		$	138,707		$	11,386,567		$	32,163,348		$	253,456		$	239,428

39

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Investment Quality Bond Trust Series 1						Large Cap Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	436,179		$	725,658		$	1,441		$	302
Total Investment Income		436,179			725,658			1,441			302
Expenses:
Mortality and expense risk		39,157			46,152			—			—
Net investment income (loss)		397,022			679,506			1,441			302
Realized gains (losses) on investments:
Capital gain distributions		—			—			—			2,199
Net realized gains (losses)		(188,580	)		(22,757	)		(6,219	)		(551	)
Realized gains (losses)		(188,580	)		(22,757	)		(6,219	)		1,648
Unrealized appreciation (depreciation) during the period		(346,375	)		(206,802	)		(26,214	)		(3,511	)
Net increase (decrease) in assets from operations		(137,933	)		449,947			(30,992	)		(1,561	)
Changes from principal transactions:
Transfer of net premiums		440,697			442,710			19,734			17,363
Transfer on terminations		(1,024,407	)		(1,015,433	)		(1,953	)		(4,615	)
Transfer on policy loans		(149	)		(29,010	)		(3	)		(2,430	)
Net interfund transfers		(1,122,030	)		(479,239	)		37,365			36,546
Net increase (decrease) in assets from principal transactions		(1,705,889	)		(1,080,972	)		55,143			46,864
Total increase (decrease) in assets		(1,843,822	)		(631,025	)		24,151			45,303
Assets, beginning of period		8,095,296			8,726,321			46,121			818
Assets, end of period	$	6,251,474		$	8,095,296		$	70,272		$	46,121

See accompanying notes.

40

Sub-Account
Large Cap Trust Series 1						Large Cap Value Trust Series 0						Large Cap Value Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	60,664		$	28,531		$	8,727		$	1,199		$	106,359		$	97,818
	60,664			28,531			8,727			1,199			106,359			97,818
	20,407			18,144			—			—			25,167			39,553
	40,257			10,387			8,727			1,199			81,192			58,265
	—			226,024			—			6,421			—			612,030
	(345,781	)		(8,370	)		(31,194	)		511			(771,508	)		222,941
	(345,781	)		217,654			(31,194	)		6,932			(771,508	)		834,971
	(1,545,292	)		(497,632	)		(68,474	)		(9,532	)		(1,906,843	)		(527,200	)
	(1,850,816	)		(269,591	)		(90,941	)		(1,401	)		(2,597,159	)		366,036
	373,096			136,484			93,133			66,531			569,678			612,084
	(374,547	)		(318,431	)		(61,114	)		(6,437	)		(1,138,241	)		(240,840	)
	1,054			6,348			(2	)		(1,966	)		16,671			(5,286	)
	20,108			5,259,757			363,677			113,225			(995,058	)		3,161,645
	19,711			5,084,158			395,694			171,353			(1,546,950	)		3,527,603
	(1,831,105	)		4,814,567			304,753			169,952			(4,144,109	)		3,893,639
	4,850,940			36,373			173,316			3,364			9,458,751			5,565,112
$	3,019,835		$	4,850,940		$	478,069		$	173,316		$	5,314,642		$	9,458,751

41

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Lifestyle Aggressive Trust Series 0						Lifestyle Aggressive Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	42,867		$	42,836		$	155,172		$	887,780
Total Investment Income		42,867			42,836			155,172			887,780
Expenses:
Mortality and expense risk		—			—			44,751			52,940
Net investment income (loss)		42,867			42,836			110,421			834,840
Realized gains (losses) on investments:
Capital gain distributions		160,655			9,702			1,004,823			218,371
Net realized gains (losses)		(107,631	)		797			(1,859,170	)		(111,787	)
Realized gains (losses)		53,024			10,499			(854,347	)		106,584
Unrealized appreciation (depreciation) during the period		(1,007,372	)		(25,728	)		(3,569,085	)		(314,032	)
Net increase (decrease) in assets from operations		(911,481	)		27,607			(4,313,011	)		627,392
Changes from principal transactions:
Transfer of net premiums		907,511			479,497			345,348			426,239
Transfer on terminations		(103,762	)		(32,265	)		(350,783	)		(777,506	)
Transfer on policy loans		—			—			(667	)		(102	)
Net interfund transfers		1,148,891			230,842			(1,257,126	)		2,935,916
Net increase (decrease) in assets from principal transactions		1,952,640			678,074			(1,263,228	)		2,584,547
Total increase (decrease) in assets		1,041,159			705,681			(5,576,239	)		3,211,939
Assets, beginning of period		712,814			7,133			10,530,978			7,319,039
Assets, end of period	$	1,753,973		$	712,814		$	4,954,739		$	10,530,978

See accompanying notes.

42

Sub-Account
Lifestyle Balanced Trust Series 0						Lifestyle Balanced Trust Series 1						Lifestyle Conservative Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	123,077		$	158,970		$	373,924		$	1,095,980		$	16,284		$	2,150
	123,077			158,970			373,924			1,095,980			16,284			2,150
	—			—			60,419			78,893			—			—
	123,077			158,970			313,505			1,017,087			16,284			2,150
	113,776			4,661			505,439			21,458			546			77
	(414,181	)		23,738			(524,701	)		232,388			(4,162	)		(162	)
	(300,405	)		28,399			(19,262	)		253,846			(3,616	)		(85	)
	(960,860	)		(76,055	)		(4,415,987	)		(513,034	)		(20,243	)		(941	)
	(1,138,188	)		111,314			(4,121,744	)		757,899			(7,575	)		1,124
	1,293,251			1,135,396			461,831			573,391			98,256			27,187
	(401,351	)		(181,391	)		(880,448	)		(1,403,765	)		(11,803	)		(1,744	)
	—			—			(12,551	)		(18,174	)		—			—
	490,240			485,462			203,974			(3,133,406	)		232,822			4,471
	1,382,140			1,439,467			(227,194	)		(3,981,954	)		319,275			29,914
	243,952			1,550,781			(4,348,938	)		(3,224,055	)		311,700			31,038
	2,884,985			1,334,204			13,079,455			16,303,510			32,325			1,287
$	3,128,937		$	2,884,985		$	8,730,517		$	13,079,455		$	344,025		$	32,325

43

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Lifestyle Conservative Trust Series 1						Lifestyle Growth Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	166,377		$	308,309		$	150,390		$	185,856
Total Investment Income		166,377			308,309			150,390			185,856
Expenses:
Mortality and expense risk		22,696			15,544			—			—
Net investment income (loss)		143,681			292,765			150,390			185,856
Realized gains (losses) on investments:
Capital gain distributions		122,025			16,012			198,473			10,753
Net realized gains (losses)		(302,006	)		11,699			(419,653	)		45,828
Realized gains (losses)		(179,981	)		27,711			(221,180	)		56,581
Unrealized appreciation (depreciation) during the period		(643,601	)		(104,324	)		(1,890,829	)		(177,371	)
Net increase (decrease) in assets from operations		(679,901	)		216,152			(1,961,619	)		65,066
Changes from principal transactions:
Transfer of net premiums		302,445			176,486			2,297,734			633,937
Transfer on terminations		(133,579	)		(111,796	)		(688,540	)		(428,450	)
Transfer on policy loans		(131	)		(7,793	)		(56,539	)		—
Net interfund transfers		(2,836,453	)		5,403,124			857,964			2,122,448
Net increase (decrease) in assets from principal transactions		(2,667,718	)		5,460,021			2,410,619			2,327,935
Total increase (decrease) in assets		(3,347,619	)		5,676,173			449,000			2,393,001
Assets, beginning of period		6,915,236			1,239,063			3,850,878			1,457,877
Assets, end of period	$	3,567,617		$	6,915,236		$	4,299,878		$	3,850,878

See accompanying notes.

44

Sub-Account
Lifestyle Growth Trust Series 1						Lifestyle Moderate Trust Series 0						Lifestyle Moderate Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	331,099		$	961,732		$	58,876		$	30,282		$	83,687		$	205,822
	331,099			961,732			58,876			30,282			83,687			205,822
	68,334			73,735			—			—			10,646			16,177
	262,765			887,997			58,876			30,282			73,041			189,645
	636,456			60,991			7,811			586			43,424			3,286
	(147,566	)		374,985			(55,215	)		(869	)		(189,557	)		117,402
	488,890			435,976			(47,404	)		(283	)		(146,133	)		120,688
	(6,105,131	)		(565,035	)		(326,532	)		(14,621	)		(534,675	)		(182,124	)
	(5,353,476	)		758,938			(315,060	)		15,378			(607,767	)		128,209
	562,539			747,235			249,854			351,880			746,538			1,030,108
	(746,921	)		(1,181,457	)		(96,772	)		(13,475	)		(206,917	)		(923,062	)
	(47,981	)		(22,419	)		—			—			4,689			(4,570	)
	762,249			2,496,887			919,342			82,397			(722,820	)		(894,286	)
	529,886			2,040,246			1,072,424			420,802			(178,510	)		(791,810	)
	(4,823,590	)		2,799,184			757,364			436,180			(786,277	)		(663,601	)
	14,223,964			11,424,780			448,263			12,083			2,495,078			3,158,679
$	9,400,374		$	14,223,964		$	1,205,627		$	448,263		$	1,708,801		$	2,495,078

45

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Managed Trust Series 0						Mid Cap Index Trust Series 0
	Year Ended Dec. 31/08 (aa)			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	325		$	2,781		$	13,315		$	14,542
Total Investment Income		325			2,781			13,315			14,542
Expenses:
Mortality and expense risk		—			—			—			—
Net investment income (loss)		325			2,781			13,315			14,542
Realized gains (losses) on investments:
Capital gain distributions		339			1,456			29,163			132,974
Net realized gains (losses)		(16,447	)		1,189			(131,065	)		54,482
Realized gains (losses)		(16,108	)		2,645			(101,902	)		187,456
Unrealized appreciation (depreciation) during the period		4,019			(4,718	)		(427,921	)		(162,584	)
Net increase (decrease) in assets from operations		(11,764	)		708			(516,508	)		39,414
Changes from principal transactions:
Transfer of net premiums		44,691			36,974			452,505			606,100
Transfer on terminations		(39,139	)		(19,373	)		(106,769	)		(39,104	)
Transfer on policy loans		(12,774	)		—			—			—
Net interfund transfers		(52,759	)		(6,797	)		110,043			111,405
Net increase (decrease) in assets from principal transactions		(59,981	)		10,804			455,779			678,401
Total increase (decrease) in assets		(71,745	)		11,512			(60,729	)		717,815
Assets, beginning of period		71,745			60,233			1,067,496			349,681
Assets, end of period		—		$	71,745		$	1,006,767		$	1,067,496

(aa) Terminated as an investment option and funds transferred to Lifestyle Balanced Trust on November 10, 2008.

(g) Fund available in prior year but no activity.

(w) Reflects the period from commencement of operations on April 30, 2007 through December 31, 2007.

See accompanying notes.

46

Sub-Account
Mid Cap Index Trust Series 1						Mid Cap Intersection Trust Series 0			Mid Cap Intersection Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (g)			Year Ended Dec. 31/08		Year Ended Dec. 31/07 (w)
$	181,876		$	419,100		$	86		—			—
	181,876			419,100			86		—			—
	84,648			143,625			—		6			1
	97,228			275,475			86		(6	)		(1	)
	578,565			3,740,039			—		—			—
	(3,028,336	)		1,039,592			(413	)	(250	)		—
	(2,449,771	)		4,779,631			(413	)	(250	)		—
	(5,596,709	)		(2,592,269	)		(14,843	)	60			(60	)
	(7,949,252	)		2,462,837			(15,170	)	(196	)		(61	)
	393,934			498,245			8,430		652			132
	(1,167,360	)		(1,413,258	)		(636	)	(1,493	)		(48	)
	(325	)		160			—		1			—
	(6,539,104	)		19,233,839			36,049		—			1,013
	(7,312,855	)		18,318,986			43,843		(840	)		1,097
	(15,262,107	)		20,781,823			28,673		(1,036	)		1,036
	27,299,289			6,517,466			—		1,036			—
$	12,037,182		$	27,299,289		$	28,673		—		$	1,036

47

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Mid Cap Stock Trust Series 0						Mid Cap Stock Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution		—		$	50			—			—
Total Investment Income		—			50			—			—
Expenses:
Mortality and expense risk		—			—			56,538			67,361
Net investment income (loss)		—			50			(56,538	)		(67,361	)
Realized gains (losses) on investments:
Capital gain distributions		48,806			257,810			332,867			3,699,292
Net realized gains (losses)		(452,256	)		8,418			(2,299,470	)		1,041,514
Realized gains (losses)		(403,450	)		266,228			(1,966,603	)		4,740,806
Unrealized appreciation (depreciation) during the period		(728,431	)		(139,160	)		(5,189,302	)		(1,657,566	)
Net increase (decrease) in assets from operations		(1,131,881	)		127,118			(7,212,443	)		3,015,879
Changes from principal transactions:
Transfer of net premiums		364,593			226,930			814,729			655,520
Transfer on terminations		(161,062	)		(26,326	)		(1,670,118	)		(2,096,327	)
Transfer on policy loans		—			—			(28,835	)		214
Net interfund transfers		1,159,352			983,072			1,984,022			280,010
Net increase (decrease) in assets from principal transactions		1,362,883			1,183,676			1,099,798			(1,160,583	)
Total increase (decrease) in assets		231,002			1,310,794			(6,112,645	)		1,855,296
Assets, beginning of period		1,450,200			139,406			15,137,410			13,282,114
Assets, end of period	$	1,681,202		$	1,450,200		$	9,024,765		$	15,137,410

See accompanying notes.

48

Sub-Account
Mid Cap Value Trust Series 0						Mid Cap Value Trust Series 1						Mid Value Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	16,196		$	3,388		$	138,264		$	152,898		$	30,592		$	52,817
	16,196			3,388			138,264			152,898			30,592			52,817
	—			—			36,038			69,565			—			—
	16,196			3,388			102,226			83,333			30,592			52,817
	25,923			82,859			350,374			3,853,599			54,816			460,313
	(403,037	)		(15,601	)		(3,535,003	)		(293,156	)		(1,521,744	)		(45,760	)
	(377,114	)		67,258			(3,184,629	)		3,560,443			(1,466,928	)		414,553
	139,731			(83,969	)		(781,238	)		(3,231,042	)		502,549			(579,073	)
	(221,187	)		(13,323	)		(3,863,641	)		412,734			(933,787	)		(111,703	)
	187,886			298,352			511,710			948,590			254,364			1,065,837
	(105,284	)		(23,129	)		(1,956,587	)		(1,918,205	)		(40,440	)		(67,877	)
	—			—			6,205			(138,971	)		(2	)		—
	1,036,993			3,151			(200,094	)		(19,042,018	)		(471,464	)		556,592
	1,119,595			278,374			(1,638,766	)		(20,150,604	)		(257,542	)		1,554,552
	898,408			265,051			(5,502,407	)		(19,737,870	)		(1,191,329	)		1,442,849
	365,431			100,380			11,820,247			31,558,117			2,392,619			949,770
$	1,263,839		$	365,431		$	6,317,840		$	11,820,247		$	1,201,290		$	2,392,619

49

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Money Market Trust B Series 0						Money Market Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	595,697		$	583,956		$	1,541,266		$	3,884,106
Total Investment Income		595,697			583,956			1,541,266			3,884,106
Expenses:
Mortality and expense risk		—			—			461,520			456,724
Net investment income (loss)		595,697			583,956			1,079,746			3,427,382
Realized gains (losses) on investments:
Capital gain distributions		—			—			—			—
Net realized gains (losses)		—			—			—			—
Realized gains (losses)		—			—			—			—
Unrealized appreciation (depreciation) during the period		—			—			—			—
Net increase (decrease) in assets from operations		595,697			583,956			1,079,746			3,427,382
Changes from principal transactions:
Transfer of net premiums		88,775,784			33,558,643			4,779,155			3,463,604
Transfer on terminations		(2,288,470	)		(1,350,332	)		(12,971,809	)		(15,087,419	)
Transfer on policy loans		(3,470,116	)		(262,401	)		(701,889	)		(728,678	)
Net interfund transfers		(35,667,136	)		(16,755,046	)		25,295,542			6,062,492
Net increase (decrease) in assets from principal transactions		47,350,062			15,190,864			16,400,999			(6,290,001	)
Total increase (decrease) in assets		47,945,759			15,774,820			17,480,745			(2,862,619	)
Assets, beginning of period		22,707,880			6,933,060			83,833,691			86,696,310
Assets, end of period	$	70,653,639		$	22,707,880		$	101,314,436		$	83,833,691

(ae) Fund renamed on April 28, 2008. Previously known as Quantitative All Cap Trust.

See accompanying notes.

50

Sub-Account
Natural Resources Trust Series 0						Natural Resources Trust Series 1						Optimized All Cap Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (ae)			Year Ended Dec. 31/07
$	8,151		$	5,463		$	84,231		$	108,925		$	9,092		$	323
	8,151			5,463			84,231			108,925			9,092			323
	—			—			61,973			45,836			—			—
	8,151			5,463			22,258			63,089			9,092			323
	37,955			249,989			443,615			4,591,998			—			3,277
	(464,414	)		37,102			(7,238,796	)		291,564			(93,242	)		303
	(426,459	)		287,091			(6,795,181	)		4,883,562			(93,242	)		3,580
	(295,921	)		(165,980	)		(3,239,855	)		(1,618,857	)		(413,306	)		(3,726	)
	(714,229	)		126,574			(10,012,778	)		3,327,794			(497,456	)		177
	433,289			275,270			2,409,070			784,784			194,057			24,312
	(58,491	)		(14,309	)		(677,255	)		(833,187	)		(31,740	)		(3,653	)
	(119	)		(670	)		10,775			120			(1	)		—
	215,540			423,710			611,842			3,857,746			997,791			17,532
	590,219			684,001			2,354,432			3,809,463			1,160,107			38,191
	(124,010	)		810,575			(7,658,346	)		7,137,257			662,651			38,368
	814,432			3,857			14,108,807			6,971,550			40,413			2,045
$	690,422		$	814,432		$	6,450,461		$	14,108,807		$	703,064		$	40,413

51

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Optimized All Cap Trust Series 1						Optimized Value Trust Series 0
	Year Ended Dec. 31/08 (ae)			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (af)			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	706		$	85		$	945		$	615
Total Investment Income		706			85			945			615
Expenses:
Mortality and expense risk		329			131			—			—
Net investment income (loss)		377			(46	)		945			615
Realized gains (losses) on investments:
Capital gain distributions		—			11,198			—			2,126
Net realized gains (losses)		(10,406	)		159			(12,034	)		(156	)
Realized gains (losses)		(10,406	)		11,357			(12,034	)		1,970
Unrealized appreciation (depreciation) during the period		(30,216	)		(114	)		(8,404	)		(5,687	)
Net increase (decrease) in assets from operations		(40,245	)		11,197			(19,493	)		(3,102	)
Changes from principal transactions:
Transfer of net premiums		28,253			215			23,745			16,051
Transfer on terminations		(2,672	)		(16,520	)		(8,793	)		(765	)
Transfer on policy loans		16,575			91			—			—
Net interfund transfers		52,896			5,124			(16,516	)		32,731
Net increase (decrease) in assets from principal transactions		95,052			(11,090	)		(1,564	)		48,017
Total increase (decrease) in assets		54,807			107			(21,057	)		44,915
Assets, beginning of period		1,200			1,093			46,602			1,687
Assets, end of period	$	56,007		$	1,200		$	25,545		$	46,602

(ae) Fund renamed on April 28, 2008. Previously known as Quantitative All Cap Trust.

(af) Fund renamed on April 28, 2008. Previously known as Quantitative Value Trust.

See accompanying notes.

52

Sub-Account
Optimized Value Trust Series 1						Overseas Equity Trust Series 0						Pacific Rim Trust Series 0
Year Ended Dec. 31/08 (af)			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	47		$	11,034		$	53,837		$	63,262		$	11,334		$	6,276
	47			11,034			53,837			63,262			11,334			6,276
	505			2,681			—			—			—			—
	(458	)		8,353			53,837			63,262			11,334			6,276
	—			49,981			160,265			327,891			19,103			91,492
	(95,514	)		(34,306	)		(464,275	)		161,116			(294,898	)		831
	(95,514	)		15,675			(304,010	)		489,007			(275,795	)		92,323
	48,112			(48,656	)		(1,082,889	)		(297,702	)		(122,460	)		(86,722	)
	(47,860	)		(24,628	)		(1,333,062	)		254,567			(386,921	)		11,877
	1,616			83,720			354,797			1,196,195			265,653			240,101
	(143,490	)		(11,819	)		(112,294	)		(78,141	)		(37,438	)		(11,947	)
	—			—			—			—			(128	)		(118	)
	(348,827	)		472,016			(27,319	)		329,342			226,738			157,917
	(490,701	)		543,917			215,184			1,447,396			454,825			385,953
	(538,561	)		519,289			(1,117,878	)		1,701,963			67,904			397,830
	539,099			19,810			2,948,953			1,246,990			399,811			1,981
$	538		$	539,099		$	1,831,075		$	2,948,953		$	467,715		$	399,811

53

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Pacific Rim Trust Series 1						Quantitative Mid Cap Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (k)			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	113,465		$	147,775		$	39		$	374
Total Investment Income		113,465			147,775			39			374
Expenses:
Mortality and expense risk		32,487			40,155			—			—
Net investment income (loss)		80,978			107,620			39			374
Realized gains (losses) on investments:
Capital gain distributions		188,653			2,066,544			76			12,207
Net realized gains (losses)		(1,668,533	)		645,668			(16,720	)		(1,480	)
Realized gains (losses)		(1,479,880	)		2,712,212			(16,644	)		10,727
Unrealized appreciation (depreciation) during the period		(2,028,002	)		(2,139,360	)		14,838			(14,880	)
Net increase (decrease) in assets from operations		(3,426,904	)		680,472			(1,767	)		(3,779	)
Changes from principal transactions:
Transfer of net premiums		571,243			422,618			5,610			56,092
Transfer on terminations		(630,146	)		(818,362	)		(790	)		(2,487	)
Transfer on policy loans		37,397			(7,959	)		—			—
Net interfund transfers		102,405			(1,607,183	)		(72,850	)		19,111
Net increase (decrease) in assets from principal transactions		80,899			(2,010,886	)		(68,030	)		72,716
Total increase (decrease) in assets		(3,346,005	)		(1,330,414	)		(69,797	)		68,937
Assets, beginning of period		7,900,944			9,231,358			69,797			860
Assets, end of period	$	4,554,939		$	7,900,944			—		$	69,797

(k) Terminated as an investment option and funds transferred to Mid Cap Index Trust on April 28, 2008.

See accompanying notes.

54

Sub-Account
Quantitative Mid Cap Trust Series 1						Real Estate Securities Trust Series 0						Real Estate Securities Trust Series 1
Year Ended Dec. 31/08 (k)			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	18		$	204		$	179,348		$	178,017		$	670,704		$	898,271
	18			204			179,348			178,017			670,704			898,271
	66			990			—			—			114,257			192,346
	(48	)		(786	)		179,348			178,017			556,447			705,925
	42			23,243			72,992			3,248,799			309,753			17,021,101
	(9,751	)		(13,776	)		(4,843,758	)		(1,210,140	)		(8,785,091	)		250,965
	(9,709	)		9,467			(4,770,766	)		2,038,659			(8,475,338	)		17,272,066
	8,533			6,215			2,593,768			(3,171,369	)		(1,153,762	)		(23,275,772	)
	(1,224	)		14,896			(1,997,650	)		(954,693	)		(9,072,653	)		(5,297,781	)
	6,408			76,603			667,396			1,278,928			1,225,539			1,817,857
	(4,349	)		(92,405	)		(476,369	)		(147,493	)		(3,789,885	)		(4,126,676	)
	(1	)		(2	)		(3	)		(928	)		(80,878	)		(46,487	)
	(44,732	)		(430,103	)		339,776			(1,052,606	)		(2,817,895	)		(6,945,221	)
	(42,674	)		(445,907	)		530,800			77,901			(5,463,119	)		(9,300,527	)
	(43,898	)		(431,011	)		(1,466,850	)		(876,792	)		(14,535,772	)		(14,598,308	)
	43,898			474,909			4,958,485			5,835,277			27,305,782			41,904,090
	—		$	43,898		$	3,491,635		$	4,958,485		$	12,770,010		$	27,305,782

55

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Real Return Bond Trust Series 0						Real Return Bond Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	4,110		$	9,964		$	35,006		$	285,163
Total Investment Income		4,110			9,964			35,006			285,163
Expenses:
Mortality and expense risk		—			—			29,430			15,959
Net investment income (loss)		4,110			9,964			5,576			269,204
Realized gains (losses) on investments:
Capital gain distributions		17,148			—			148,162			—
Net realized gains (losses)		(34,641	)		523			(385,167	)		(9,362	)
Realized gains (losses)		(17,493	)		523			(237,005	)		(9,362	)
Unrealized appreciation (depreciation) during the period		(113,365	)		4,558			(785,132	)		231,840
Net increase (decrease) in assets from operations		(126,748	)		15,045			(1,016,561	)		491,682
Changes from principal transactions:
Transfer of net premiums		194,874			39,134			453,306			120,519
Transfer on terminations		(34,406	)		(13,754	)		(245,717	)		(287,613	)
Transfer on policy loans		—			—			(14,792	)		(125	)
Net interfund transfers		706,799			24,129			484,940			2,736,641
Net increase (decrease) in assets from principal transactions		867,267			49,509			677,737			2,569,422
Total increase (decrease) in assets		740,519			64,554			(338,824	)		3,061,104
Assets, beginning of period		159,791			95,237			5,575,602			2,514,498
Assets, end of period	$	900,310		$	159,791		$	5,236,778		$	5,575,602

See accompanying notes.

56

Sub-Account
Science & Technology Trust Series 0						Science & Technology Trust Series 1						Short-Term Bond Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
	—			—			—			—		$	6,460		$	6,128
	—			—			—			—			6,460			6,128
	—			—			39,564			62,642			—			—
	—			—			(39,564	)		(62,642	)		6,460			6,128
	—			—			—			—			—			—
	(223,586	)		28,332			(361,242	)		1,617,164			(13,931	)		(220	)
	(223,586	)		28,332			(361,242	)		1,617,164			(13,931	)		(220	)
	(109,840	)		25,876			(4,512,146	)		673,580			(2,373	)		(4,642	)
	(333,426	)		54,208			(4,912,952	)		2,228,102			(9,844	)		1,266
	239,383			281,845			596,828			536,530			18,830			41,863
	(40,060	)		(10,669	)		(948,897	)		(1,556,873	)		(7,408	)		(3,991	)
	—			—			37,258			(44,498	)		(2	)		(1,992	)
	173,435			120,260			(2,197,400	)		(5,260,157	)		(38,181	)		47,482
	372,758			391,436			(2,512,211	)		(6,324,998	)		(26,761	)		83,362
	39,332			445,644			(7,425,163	)		(4,096,896	)		(36,605	)		84,628
	446,630			986			12,527,168			16,624,064			109,311			24,683
$	485,962		$	446,630		$	5,102,005		$	12,527,168		$	72,706		$	109,311

57

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Small Cap Growth Trust Series 0						Small Cap Growth Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (ai)
Income:
Dividend income distribution		—			—			—
Total Investment Income		—			—			—
Expenses:
Mortality and expense risk		—			—			169
Net investment income (loss)		—			—			(169	)
Realized gains (losses) on investments:
Capital gain distributions		41,492			683,078			—
Net realized gains (losses)		(942,518	)		86,885			(14,959	)
Realized gains (losses)		(901,026	)		769,963			(14,959	)
Unrealized appreciation (depreciation) during the period		(593,608	)		(407,565	)		382
Net increase (decrease) in assets from operations		(1,494,634	)		362,398			(14,746	)
Changes from principal transactions:
Transfer of net premiums		477,181			1,216,024			2,345
Transfer on terminations		(102,007	)		(88,174	)		(1,965	)
Transfer on policy loans		(3	)		(512	)		—
Net interfund transfers		(13,702	)		95,953			82,898
Net increase (decrease) in assets from principal transactions		361,469			1,223,291			83,278
Total increase (decrease) in assets		(1,133,165	)		1,585,689			68,532
Assets, beginning of period		3,426,541			1,840,852			—
Assets, end of period	$	2,293,376		$	3,426,541		$	68,532

(ai) Reflects the period from commencement of operations on November 10, 2008 through December 31, 2008.

(g) Fund available in prior year but no activity.

See accompanying notes.

58

Sub-Account
Small Cap Index Trust Series 0						Small Cap Index Trust Series 1						Small Cap Opportunities Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07 (g)
$	7,095		$	5,985		$	53,749		$	112,925		$	851		$	625
	7,095			5,985			53,749			112,925			851			625
	—			—			20,216			33,311			—			—
	7,095			5,985			33,533			79,614			851			625
	4,213			43,399			45,538			869,567			1,021			2,324
	(117,695	)		1,705			(782,862	)		1,118,924			(14,724	)		(945	)
	(113,482	)		45,104			(737,324	)		1,988,491			(13,703	)		1,379
	(94,820	)		(62,269	)		(1,103,436	)		(2,242,690	)		(5,647	)		(5,559	)
	(201,207	)		(11,180	)		(1,807,227	)		(174,585	)		(18,499	)		(3,555	)
	188,199			186,297			401,504			522,462			23,270			35,927
	(81,757	)		(33,094	)		(1,071,308	)		(476,934	)		(3,482	)		(1,266	)
	—			—			676			536			—			—
	129,075			70,981			(789,058	)		(6,253,739	)		(17,368	)		11,090
	235,517			224,184			(1,458,186	)		(6,207,675	)		2,420			45,751
	34,310			213,004			(3,265,413	)		(6,382,260	)		(16,079	)		42,196
	391,430			178,426			6,241,315			12,623,575			42,196			—
$	425,740		$	391,430		$	2,975,902		$	6,241,315		$	26,117		$	42,196

59

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Small Cap Opportunities Trust Series 1						Small Cap Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (ab)			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	39,286		$	62,108		$	1			—
Total Investment Income		39,286			62,108			1			—
Expenses:
Mortality and expense risk		8,263			15,978			—			—
Net investment income (loss)		31,023			46,130			1			—
Realized gains (losses) on investments:
Capital gain distributions		71,800			210,888			129			3,049
Net realized gains (losses)		(735,076	)		336,149			(58,485	)		278
Realized gains (losses)		(663,276	)		547,037			(58,356	)		3,327
Unrealized appreciation (depreciation) during the period		(212,545	)		(926,825	)		3,773			(3,773	)
Net increase (decrease) in assets from operations		(844,798	)		(333,658	)		(54,582	)		(446	)
Changes from principal transactions:
Transfer of net premiums		239,870			137,892			4,051			1,303
Transfer on terminations		(377,386	)		(175,114	)		(7,241	)		(378	)
Transfer on policy loans		23,329			2,097			—			—
Net interfund transfers		(1,537,447	)		(3,640,829	)		40,388			16,905
Net increase (decrease) in assets from principal transactions		(1,651,634	)		(3,675,954	)		37,198			17,830
Total increase (decrease) in assets		(2,496,432	)		(4,009,612	)		(17,384	)		17,384
Assets, beginning of period		3,272,245			7,281,857			17,384			—
Assets, end of period	$	775,813		$	3,272,245			—		$	17,384

(ab) Terminated as an investment option and funds transferred to Small Cap Growth Trust on November 10, 2008.

(ac) Reflects the period from commencement of operations on November 12, 2007 through December 31, 2007.

See accompanying notes.

60

Sub-Account
Small Cap Trust Series 1						Small Cap Value Trust Series 0						Small Cap Value Trust Series 1
Year Ended Dec. 31/08 (ab)			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07 (ac)
$	30			—		$	45,198		$	40,058		$	7,381		$	35
	30			—			45,198			40,058			7,381			35
	1,025			539			—			—			1,740			152
	(995	)		(539	)		45,198			40,058			5,641			(117	)
	5,061			19,866			10,773			741,979			1,169			616
	(145,312	)		3,973			(1,347,859	)		(207,138	)		(113,213	)		(4,269	)
	(140,251	)		23,839			(1,337,086	)		534,841			(112,044	)		(3,653	)
	25,794			(26,369	)		294,389			(673,540	)		(93,464	)		(762	)
	(115,452	)		(3,069	)		(997,499	)		(98,641	)		(199,867	)		(4,532	)
	5,462			8,474			48,637			170,060			2,966			6,079
	(12,607	)		(23,770	)		(97,813	)		(85,509	)		(6,165	)		(866	)
	(31,985	)		—			(3	)		(492	)		—			—
	44,586			82,757			195,420			(882,339	)		776,343			8,520
	5,456			67,461			146,241			(798,280	)		773,144			13,733
	(109,996	)		64,392			(851,258	)		(896,921	)		573,277			9,201
	109,996			45,604			3,509,437			4,406,358			9,201			—
	—		$	109,996		$	2,658,179		$	3,509,437		$	582,478		$	9,201

61

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Small Company Trust Series 1						Small Company Value Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution		—			—		$	9,122		$	715
Total Investment Income		—			—			9,122			715
Expenses:
Mortality and expense risk		4,303			4,755			—			—
Net investment income (loss)		(4,303	)		(4,755	)		9,122			715
Realized gains (losses) on investments:
Capital gain distributions		1,544			216,457			19,504			85,389
Net realized gains (losses)		(62,270	)		2,515			(144,308	)		(10,869	)
Realized gains (losses)		(60,726	)		218,972			(124,804	)		74,520
Unrealized appreciation (depreciation) during the period		(573,000	)		(297,453	)		(207,919	)		(105,580	)
Net increase (decrease) in assets from operations		(638,029	)		(83,236	)		(323,601	)		(30,345	)
Changes from principal transactions:
Transfer of net premiums		189,728			39,113			341,086			412,169
Transfer on terminations		(31,118	)		(11,398	)		(107,864	)		(27,850	)
Transfer on policy loans		—			—			(1	)		(499	)
Net interfund transfers		470,712			(28,000	)		312,224			240,611
Net increase (decrease) in assets from principal transactions		629,322			(285	)		545,445			624,431
Total increase (decrease) in assets		(8,707	)		(83,521	)		221,844			594,086
Assets, beginning of period		1,234,056			1,317,577			668,711			74,625
Assets, end of period	$	1,225,349		$	1,234,056		$	890,555		$	668,711

(q) Terminated as an investment option and funds transferred to Small Cap Value Trust on November 12, 2007.

See accompanying notes.

62

Sub-Account
Small Company Value Trust Series 1						Special Value Trust Series 0			Special Value Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/07 (q)			Year Ended Dec. 31/07 (q)
$	92,840		$	33,600		$	1		$	9,525
	92,840			33,600			1			9,525
	59,205			98,045			—			1,521
	33,635			(64,445	)		1			8,004
	236,241			3,411,518			4			139,544
	(3,263,719	)		(55,087	)		(7	)		(111,644	)
	(3,027,478	)		3,356,431			(3	)		27,900
	(1,375,361	)		(3,513,168	)		—			(37,216	)
	(4,369,204	)		(221,182	)		(2	)		(1,312	)
	839,632			1,966,339			136			22,439
	(3,700,509	)		(3,439,628	)		(115	)		(7,423	)
	(80,497	)		(313,996	)		—			—
	(829,732	)		(4,042,523	)		(19	)		(384,302	)
	(3,771,106	)		(5,829,808	)		2			(369,286	)
	(8,140,310	)		(6,050,990	)		—			(370,598	)
	17,636,851			23,687,841			—			370,598
$	9,496,541		$	17,636,851			—			—

63

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Strategic Bond Trust Series 0						Strategic Bond Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	7,167		$	8,978		$	169,582		$	451,804
Total Investment Income		7,167			8,978			169,582			451,804
Expenses:
Mortality and expense risk		—			—			16,945			24,849
Net investment income (loss)		7,167			8,978			152,637			426,955
Realized gains (losses) on investments:
Capital gain distributions		—			—			—			—
Net realized gains (losses)		(8,528	)		(2,957	)		(505,882	)		(27,204	)
Realized gains (losses)		(8,528	)		(2,957	)		(505,882	)		(27,204	)
Unrealized appreciation (depreciation) during the period		(17,649	)		(5,901	)		(196,210	)		(430,287	)
Net increase (decrease) in assets from operations		(19,010	)		120			(549,455	)		(30,536	)
Changes from principal transactions:
Transfer of net premiums		26,523			83,012			378,433			610,024
Transfer on terminations		(6,952	)		(5,821	)		(661,147	)		(1,097,323	)
Transfer on policy loans		—			—			8,159			(59,741	)
Net interfund transfers		(53,087	)		64,809			(1,893,647	)		(484,174	)
Net increase (decrease) in assets from principal transactions		(33,516	)		142,000			(2,168,202	)		(1,031,214	)
Total increase (decrease) in assets		(52,526	)		142,120			(2,717,657	)		(1,061,750	)
Assets, beginning of period		142,120			—			4,397,774			5,459,524
Assets, end of period	$	89,594		$	142,120		$	1,680,117		$	4,397,774

(g) Fund available in prior year but no activity.

(p) Terminated as an investment option and funds transferred to Large Cap Trust on April 30, 2007.

See accompanying notes.

64

Sub-Account
Strategic Income Trust Series 0						Strategic Income Trust Series 1						Strategic Opportunities Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07 (g)			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/07 (p)
$	1,623		$	295		$	130,650		$	5,058		$	874
	1,623			295			130,650			5,058			874
	—			—			4,128			1,643			—
	1,623			295			126,522			3,415			874
	—			—			—			—			—
	(116	)		45			(97,785	)		10,407			2,575
	(116	)		45			(97,785	)		10,407			2,575
	(2,627	)		262			(85,661	)		4,318			(8	)
	(1,120	)		602			(56,924	)		18,140			3,441
	6,163			—			225,946			134,818			155,022
	(5,501	)		(2,577	)		(50,626	)		(17,993	)		(419	)
	—			—			(14	)		(14	)		—
	2,006			16,116			787,477			(401,390	)		(158,150	)
	2,668			13,539			962,783			(284,579	)		(3,547	)
	1,548			14,141			905,859			(266,439	)		(106	)
	14,141			—			245,858			512,297			106
$	15,689		$	14,141		$	1,151,717		$	245,858			—

65

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Strategic Opportunities Trust Series 1			Total Bond Market Trust B Series 0
	Year Ended Dec. 31/07 (p)			Year Ended Dec. 31/08			Year Ended Dec. 31/07 (j)
Income:
Dividend income distribution	$	38,911		$	257,898		$	243,371
Total Investment Income		38,911			257,898			243,371
Expenses:
Mortality and expense risk		9,083			—			—
Net investment income (loss)		29,828			257,898			243,371
Realized gains (losses) on investments:
Capital gain distributions		—			—			—
Net realized gains (losses)		1,279,194			(44,869	)		42,627
Realized gains (losses)		1,279,194			(44,869	)		42,627
Unrealized appreciation (depreciation) during the period		(982,728	)		46,238			(130,360	)
Net increase (decrease) in assets from operations		326,294			259,267			155,638
Changes from principal transactions:
Transfer of net premiums		216,413			83,271			2,053,557
Transfer on terminations		(327,439	)		(189,110	)		(60,872	)
Transfer on policy loans		(7,192	)		—			—
Net interfund transfers		(5,146,934	)		2,229,609			(1,127,631	)
Net increase (decrease) in assets from principal transactions		(5,265,152	)		2,123,770			865,054
Total increase (decrease) in assets		(4,938,858	)		2,383,037			1,020,692
Assets, beginning of period		4,938,858			2,658,477			1,637,785
Assets, end of period		—		$	5,041,514		$	2,658,477

(p) Terminated as an investment option and funds transferred to Large Cap Trust on April 30, 2007.

(j) Renamed on October 1, 2007. Formerly known as Bond Index Trust B.

See accompanying notes.

66

Sub-Account
Total Return Trust Series 0						Total Return Trust Series 1						Total Stock Market Index Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	127,249		$	53,108		$	1,886,321		$	2,494,407		$	6,201		$	5,207
	127,249			53,108			1,886,321			2,494,407			6,201			5,207
	—			—			172,156			131,334			—			—
	127,249			53,108			1,714,165			2,363,073			6,201			5,207
	23,478			—			350,596			—			1,246			10,866
	(11,764	)		2,258			21,475			70,807			(259,800	)		1,848
	11,714			2,258			372,071			70,807			(258,554	)		12,714
	(105,302	)		275			(1,525,099	)		50,338			(58,713	)		(14,907	)
	33,661			55,641			561,137			2,484,218			(311,066	)		3,014
	566,734			250,228			1,275,944			1,868,139			232,821			136,058
	(321,082	)		(66,345	)		(10,167,748	)		(3,682,683	)		(43,195	)		(7,830	)
	—			—			(35,847	)		(21,718	)		(3	)		—
	1,683,178			264,424			17,250,314			5,167,795			(15,392	)		203,811
	1,928,830			448,307			8,322,663			3,331,533			174,231			332,039
	1,962,491			503,948			8,883,800			5,815,751			(136,835	)		335,053
	894,516			390,568			34,656,094			28,840,343			336,768			1,715
$	2,857,007		$	894,516		$	43,539,894		$	34,656,094		$	199,933		$	336,768

67

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Total Stock Market Index Trust Series 1						U.S. Core Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (ad)			Year Ended Dec. 31/07 (g)
Income:
Dividend income distribution	$	34,304		$	65,269		$	9,111		$	12,197
Total Investment Income		34,304			65,269			9,111			12,197
Expenses:
Mortality and expense risk		9,616			13,158			—			—
Net investment income (loss)		24,688			52,111			9,111			12,197
Realized gains (losses) on investments:
Capital gain distributions		3,325			127,940			6,668			60,746
Net realized gains (losses)		(98,422	)		170,840			(333,780	)		(643	)
Realized gains (losses)		(95,097	)		298,780			(327,112	)		60,103
Unrealized appreciation (depreciation) during the period		(957,026	)		(189,260	)		60,013			(60,013	)
Net increase (decrease) in assets from operations		(1,027,435	)		161,631			(257,988	)		12,287
Changes from principal transactions:
Transfer of net premiums		266,178			218,022			157,044			321,185
Transfer on terminations		(195,619	)		(320,985	)		(15,615	)		(13,281	)
Transfer on policy loans		—			—			—			—
Net interfund transfers		(1,095,866	)		775,711			(637,721	)		434,089
Net increase (decrease) in assets from principal transactions		(1,025,307	)		672,748			(496,292	)		741,993
Total increase (decrease) in assets		(2,052,742	)		834,379			(754,280	)		754,280
Assets, beginning of period		3,702,220			2,867,841			754,280			—
Assets, end of period	$	1,649,478		$	3,702,220			—		$	754,280

(ad) Terminated as an investment option and funds transferred to Fundamental Value Trust on November 10, 2008.

(g) Fund available in prior year but no activity.

(x) Terminated as an investment option and funds transferred to Blue Chip Growth Trust on April 28, 2008.

See accompanying notes.

68

Sub-Account
U.S. Core Trust Series 1						U.S. Global Leaders Growth Trust Series 0						U.S. Global Leaders Growth Trust Series 1
Year Ended Dec. 31/08 (ad)			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (x)			Year Ended Dec. 31/07 (g)			Year Ended Dec. 31/08 (x)			Year Ended Dec. 31/07
$	79,788		$	182,489		$	4		$	21		$	2,346		$	7,972
	79,788			182,489			4			21			2,346			7,972
	28,643			48,327			—			—			835			2,472
	51,145			134,162			4			21			1,511			5,500
	60,010			730,959			162			—			84,476			—
	(2,893,003	)		(19,791	)		(6	)		43			(90,007	)		22,653
	(2,832,993	)		711,168			156			43			(5,531	)		22,653
	471,380			(652,744	)		(42	)		42			(13,318	)		(19,163	)
	(2,310,468	)		192,586			118			106			(17,338	)		8,990
	421,611			778,531			48			1,995			11,922			132,935
	(683,542	)		(1,428,296	)		(14	)		(40	)		(4,336	)		(123,012	)
	31,959			(56,814	)		—			—			32			114
	(5,039,383	)		(8,390,669	)		(1,409	)		(804	)		(643,245	)		(56,223	)
	(5,269,355	)		(9,097,248	)		(1,375	)		1,151			(635,627	)		(46,186	)
	(7,579,823	)		(8,904,662	)		(1,257	)		1,257			(652,965	)		(37,196	)
	7,579,823			16,484,485			1,257			—			652,965			690,161
	—		$	7,579,823			—		$	1,257			—		$	652,965

69

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	U.S. Government Securities Trust Series 0						U.S. Government Securities Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	9,916		$	7,242		$	281,445		$	881,826
Total Investment Income		9,916			7,242			281,445			881,826
Expenses:
Mortality and expense risk		—			—			30,234			39,888
Net investment income (loss)		9,916			7,242			251,211			841,938
Realized gains (losses) on investments:
Capital gain distributions		—			—			—			—
Net realized gains (losses)		(13,654	)		(2,455	)		(484,709	)		(102,600	)
Realized gains (losses)		(13,654	)		(2,455	)		(484,709	)		(102,600	)
Unrealized appreciation (depreciation) during the period		(2,587	)		(2,439	)		36,461			(486,293	)
Net increase (decrease) in assets from operations		(6,325	)		2,348			(197,037	)		253,045
Changes from principal transactions:
Transfer of net premiums		141,627			80,763			480,121			546,939
Transfer on terminations		(5,833	)		(2,800	)		(3,844,754	)		(2,113,261	)
Transfer on policy loans		—			—			15,059			(698	)
Net interfund transfers		(34,952	)		18,205			1,619,169			(335,236	)
Net increase (decrease) in assets from principal transactions		100,842			96,168			(1,730,405	)		(1,902,256	)
Total increase (decrease) in assets		94,517			98,516			(1,927,442	)		(1,649,211	)
Assets, beginning of period		98,886			370			9,452,949			11,102,160
Assets, end of period	$	193,403		$	98,886		$	7,525,507		$	9,452,949

See accompanying notes.

70

Sub-Account
U.S. High Yield Bond Trust Series 0						U.S. High Yield Bond Trust Series 1						U.S. Large Cap Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	9,797		$	1,066		$	1,223		$	15,874		$	1,737		$	1,606
	9,797			1,066			1,223			15,874			1,737			1,606
	—			—			581			931			—			—
	9,797			1,066			642			14,943			1,737			1,606
	—			—			—			—			—			—
	(3,880	)		90			(107,194	)		3,113			(23,318	)		6,822
	(3,880	)		90			(107,194	)		3,113			(23,318	)		6,822
	(21,122	)		(972	)		9,418			(15,897	)		(15,907	)		(6,109	)
	(15,205	)		184			(97,134	)		2,159			(37,488	)		2,319
	35,682			7,596			619			46,735			28,187			148,123
	(4,526	)		(795	)		(66,458	)		(5,715	)		(2,366	)		(3,415	)
	—			—			—			—			—			—
	142,603			1,773			(84,986	)		219,288			(58,473	)		(28,799	)
	173,759			8,574			(150,825	)		260,308			(32,652	)		115,909
	158,554			8,758			(247,959	)		262,467			(70,140	)		118,228
	13,322			4,564			265,248			2,781			118,228			—
$	171,876		$	13,322		$	17,289		$	265,248		$	48,088		$	118,228

71

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	U.S. Large Cap Trust Series 1						Utilities Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	305,445		$	248,755		$	25,537		$	4,916
Total Investment Income		305,445			248,755			25,537			4,916
Expenses:
Mortality and expense risk		82,164			127,591			—			—
Net investment income (loss)		223,281			121,164			25,537			4,916
Realized gains (losses) on investments:
Capital gain distributions		—			—			19,690			61,616
Net realized gains (losses)		(832,591	)		1,287,072			(89,305	)		4,312
Realized gains (losses)		(832,591	)		1,287,072			(69,615	)		65,928
Unrealized appreciation (depreciation) during the period		(6,113,582	)		(1,464,005	)		(355,400	)		(31,118	)
Net increase (decrease) in assets from operations		(6,722,892	)		(55,769	)		(399,478	)		39,726
Changes from principal transactions:
Transfer of net premiums		588,505			1,224,784			152,209			154,149
Transfer on terminations		(3,265,163	)		(3,042,908	)		(61,964	)		(10,200	)
Transfer on policy loans		69,450			(59,360	)		(3	)		(1,581	)
Net interfund transfers		(2,584,051	)		(259,278	)		620,933			162,170
Net increase (decrease) in assets from principal transactions		(5,191,259	)		(2,136,762	)		711,175			304,538
Total increase (decrease) in assets		(11,914,151	)		(2,192,531	)		311,697			344,264
Assets, beginning of period		20,972,000			23,164,531			346,525			2,261
Assets, end of period	$	9,057,849		$	20,972,000		$	658,222		$	346,525

(g) Fund available in prior year but no activity.

See accompanying notes.

72

Sub-Account
Utilities Trust Series 1						Value Trust Series 0						Value Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07 (g)			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	147,009		$	87,254		$	6,226		$	4,381		$	85,716		$	169,823
	147,009			87,254			6,226			4,381			85,716			169,823
	20,594			18,211			—			—			36,137			57,649
	126,415			69,043			6,226			4,381			49,579			112,174
	170,522			1,080,333			21,003			110,417			222,090			3,705,196
	(488,003	)		205,830			(370,722	)		(2,858	)		(2,499,733	)		365,053
	(317,481	)		1,286,163			(349,719	)		107,559			(2,277,643	)		4,070,249
	(1,937,882	)		(455,268	)		(48,813	)		(107,770	)		(1,771,616	)		(3,290,492	)
	(2,128,948	)		899,938			(392,306	)		4,170			(3,999,680	)		891,931
	588,555			396,297			294,318			124,878			715,901			1,056,537
	(335,518	)		(349,216	)		(46,768	)		(6,040	)		(1,656,436	)		(1,705,732	)
	6,140			733			—			(507	)		22,101			(126,168	)
	162,059			1,921,060			(57,785	)		392,281			(1,594,764	)		3,572,263
	421,236			1,968,874			189,765			510,612			(2,513,198	)		2,796,900
	(1,707,712	)		2,868,812			(202,541	)		514,782			(6,512,878	)		3,688,831
	5,302,683			2,433,871			514,782			—			12,100,633			8,411,802
$	3,594,971		$	5,302,683		$	312,241		$	514,782		$	5,587,755		$	12,100,633

73

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Total
	Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	16,554,325		$	27,241,180
Total Investment Income		16,554,325			27,241,180
Expenses:
Mortality and expense risk		2,886,436			3,667,954
Net investment income (loss)		13,667,889			23,573,226
Realized gains (losses) on investments:
Capital gain distributions		11,440,432			90,919,821
Net realized gains (losses)		(104,152,880	)		31,919,557
Realized gains (losses)		(92,712,448	)		122,839,378
Unrealized appreciation (depreciation) during the period		(177,855,591	)		(98,575,061	)
Net increase (decrease) in assets from operations		(256,900,150	)		47,837,543
Changes from principal transactions:
Transfer of net premiums		148,569,519			105,541,953
Transfer on terminations		(109,282,384	)		(96,161,286	)
Transfer on policy loans		(4,538,168	)		(2,592,667	)
Net interfund transfers		(10,794,155	)		(4,200,707	)
Net increase (decrease) in assets from principal transactions		23,954,812			2,587,293
Total increase (decrease) in assets		(232,945,338	)		50,424,836
Assets, beginning of period		861,735,968			811,311,132
Assets, end of period	$	628,790,630		$	861,735,968

See accompanying notes.

74

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements

December 31, 2008

1. Organization

John Hancock Life Insurance Company (U.S.A.) Separate Account N (the “Account”) is a separate account administered and sponsored by John Hancock Life Insurance Company (U.S.A.) (“JHUSA” or the “Company”). The Account operates as a Unit Investment Trust registered under the Investment Company Act of 1940, as amended (the “Act”) and has 135 active investment sub-accounts that invest in shares of a particular John Hancock Trust (the “Trust”) portfolio and 2 sub-account that invests in shares of other outside investment trusts. The Trust is registered under the Act as an open-end management investment company, commonly known as a mutual fund, which does not transact with the general public. Instead, the Trust deals primarily with insurance companies by providing the investment medium for variable contracts. The Account is a funding vehicle for the allocation of net premiums under variable universal life insurance contracts (the “Contracts”) issued by the Company.

The Company is a stock life insurance company incorporated under the laws of Michigan in 1979. The Company is a wholly owned subsidiary of Manulife Financial Corporation (“MFC”), a Canadian based publicly traded life insurance company.

The Company is required to maintain assets in the Account with a total fair value at least equal to the reserves and other liabilities relating to the variable benefits under all Contracts participating in the Account. These assets may not be charged with liabilities which arise from any other business the Company conducts. However, all obligations under the Contracts are general corporate obligations of the Company.

Additional assets are held in the Company’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.

Each sub-account that invests in Portfolios of the John Hancock Trust may offer two classes of units to fund the Contracts issued by the Company. These classes, Series 1 and Series 0 represent an interest in the same Trust portfolio but in different share classes of that portfolio. Series 1 represents interests in Series 1 shares of the portfolio and Series 0 represents interests in Series NAV shares of the Trust’s portfolio. Series 1 and Series NAV shares differ in the level of 12b-1 fees and other expenses assessed against the portfolio’s assets.

75

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

The following sub-accounts of the Account were commenced as investment options:

New Fund	Effective Date
American Asset Allocation Trust	April 28, 2008
Capital Appreciation Value Trust	April 28, 2008
Core Allocation Plus Trust	April 28, 2008
Disciplined Diversification Trust	April 28, 2008
Franklin Templeton Founding Allocation Trust	April 28, 2008
Global Real Estate Trust	April 28, 2008
Index Allocation Trust	April 28, 2008
Small Cap Growth Trust Series 1	November 10, 2008

As the result of portfolio changes, the following sub-accounts of the Account were renamed as follows:

Previous Name	New Name	Effective Date
Quantitative All Cap Trust	Optimized All Cap Trust	April 28, 2008
Quantitative Value Trust	Optimized Value Trust	April 28, 2008

The following sub-accounts of the Account were terminated as investment options and the funds were transferred to existing sub-account funds as follows:

Terminated	Transferred To	Effective Date
Dynamic Growth Trust	Mid Cap Stock Trust	April 28, 2008
Emerging Growth Trust	Small Cap Growth Trust	November 10, 2008
Growth & Income Trust	Optimized All Cap Trust	April 28, 2008
Managed Trust	Lifestyle Balanced Trust	November 10, 2008
Quantitative Mid Cap Trust	Mid Cap Index Trust	April 28, 2008
Small Cap Trust	Small Cap Growth Trust	November 10, 2008
U.S. Core Trust	Fundamental Value Trust	November 10, 2008
U.S. Global Leaders Growth Trust	Blue Chip Growth Trust	April 28, 2008

Where a fund has two series, the changes noted above apply to both Series 0 and Series 1 except for Small Cap Growth Trust Series 1 which was added in 2008 (Small Cap Growth Trust Series 0 was added in 2005).

2. Significant Accounting Policies

Investments of each sub-account consist of shares in the respective portfolios of the Trust. These shares are carried at fair value which is calculated using the fair value of the investment securities underlying each Trust portfolio. Transactions are recorded on the trade date. Income from dividends is recorded on the ex-dividend date. Realized gains and losses on the sale of investments are computed on the basis of the specifically identified cost of the investment sold.

76

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

In addition to the Account, a contract holder may also allocate funds to the fixed account contained within the Company’s general account. Because of exemptive and exclusionary provisions, interests in the fixed account have not been registered under the Securities Act of 1933 and the Company’s general account has not been registered as an investment company under the Act. Net interfund transfers include interfund transfers between separate and general accounts.

The operations of the Account are included in the federal income tax return of the Company, which is taxed as a life insurance company under the provisions of the Internal Revenue Code (the “Code”). Under the current provisions of the Code, the Company does not expect to incur federal income taxes on the earnings of the Account to the extent the earnings are credited under the Contracts. Based on this, no charge is being made currently to the Account for federal income taxes. The Company will periodically reassess this position taking into account changes in the tax law. Such a charge may be made in future years for any federal income taxes that would be attributable to the Contracts.

Effective January 1, 2008, the Company adopted SFAS 157, Fair Value Measurements (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; that is, an exit value. An exit value is not a forced liquidation or distressed sale.

Following SFAS 157 guidance, the Account has categorized its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Account’s valuation techniques. A level is assigned to each fair value measurement based on the lowest level input significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows:

• Level 1 – Fair value measurements that reflect unadjusted, quoted prices in active markets for identical assets and liabilities that the Account has the ability to access at the measurement date.

• Level 2 – Fair value measurements using inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.

• Level 3 – Fair value measurements using significant non-market observable inputs.

For all investments in Level 1, 2 or 3, fair value is typically the net asset value (“NAV”) of the underlying investment fund which represents the value at which each sub-account can redeem its investments.

The following table presents the Account’s assets that are measured at fair value on a recurring basis by SFAS 157 fair value hierarchy level, as of December 31, 2008.

	Mutual Funds
Level 1	$	628,790,630
Level 2		—
Level 3		—
	$	628,790,630

77

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

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 amounts reported herein. Actual results could differ from those estimates.

3. Mortality and Expense Risks Charge

The Company deducts from the assets of the Account a daily charge equivalent to annual rates between 0% and 0.70% of the average net value of the Account’s assets for the assumption of mortality and expense risks.

4. Contract Charges

The Company deducts certain charges from gross premiums before placing the remaining net premiums in the sub-account. In the event of a surrender by the contract holder, surrender charges may be levied by the Company against the contract value at the time of termination to cover sales and administrative expenses associated with underwriting and issuing the Contract. Additionally, each month a deduction consisting of an administration charge, a charge for cost of insurance and charges for supplementary benefits is deducted from the contract value. Contract charges are paid through the redemption of sub-account units and are reflected as terminations.

5. Purchases and Sales of Investments

The cost of purchases and proceeds from sales of investments for the year ended December 31, 2008 were as follows:

	Purchases		Sales
Sub-accounts:
500 Index Trust B Series 0	$	14,985,193	$	10,261,400
500 Index Trust Series 1		7,301,419		13,212,781
Active Bond Trust Series 0		639,151		582,829
Active Bond Trust Series 1		2,299,748		3,191,518
All Cap Core Trust Series 0		1,591,106		1,460,261
All Cap Core Trust Series 1		2,204,422		4,605,047
All Cap Growth Trust Series 0		60,713		17,419
All Cap Growth Trust Series 1		1,441,124		1,456,108
All Cap Value Trust Series 0		239,281		42,668
All Cap Value Trust Series 1		1,132,155		2,620,935
American Asset Allocation Trust Series 1		238,841		3,127
American Blue Chip Income and Growth Trust Series 1		3,503,591		2,715,292
American Bond Trust Series 1		3,210,213		5,022,371
American Growth Trust Series 1		19,924,386		10,226,846
American Growth-Income Trust Series 1		4,392,214		4,982,981
American International Trust Series 1		16,803,598		19,327,467
Blue Chip Growth Trust Series 0		1,718,141		839,150
Blue Chip Growth Trust Series 1		8,226,901		13,403,961
Capital Appreciation Trust Series 0		1,018,158		864,584
Capital Appreciation Trust Series 1		3,031,951		3,554,242
Capital Appreciation Value Trust Series 1		2,956		107

78

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

	Purchases		Sales
Sub-accounts:
Classic Value Trust Series 0	$	18,551	$	8,578
Classic Value Trust Series 1		41,748		577,028
Core Bond Trust Series 0		6,038		2,862
Core Bond Trust Series 1		21,443		98
Core Equity Trust Series 0		49,440		6,269
Core Equity Trust Series 1		159,741		375,149
Disciplined Diversification Trust Series 1		55,750		55,180
Dynamic Growth Trust Series 0		18,956		143,012
Dynamic Growth Trust Series 1		195,741		2,282,473
Emerging Growth Trust Series 0		201,843		187,614
Emerging Growth Trust Series 1		750,410		1,193,966
Emerging Markets Value Trust Series 0		110,543		754
Emerging Markets Value Trust Series 1		428,455		44,480
Emerging Small Company Trust Series 0		141,002		159,078
Emerging Small Company Trust Series 1		3,205,558		7,703,392
Equity-Income Trust Series 0		7,788,301		5,141,850
Equity-Income Trust Series 1		9,260,138		14,761,377
Financial Services Trust Series 0		283,617		97,392
Financial Services Trust Series 1		3,381,515		1,781,991
Franklin Templeton Founding Allocation Trust Series 0		157,451		1,012
Fundamental Value Trust Series 0		794,175		109,573
Fundamental Value Trust Series 1		5,873,273		1,712,550
Global Allocation Trust Series 0		112,941		61,678
Global Allocation Trust Series 1		900,543		2,718,952
Global Bond Trust Series 0		4,429,746		3,214,625
Global Bond Trust Series 1		6,083,177		6,668,087
Global Real Estate Trust Series 1		3,954		68
Global Trust Series 0		294,626		405,567
Global Trust Series 1		1,253,500		3,649,876
Growth & Income Trust Series 0		91,128		1,616,577
Health Sciences Trust Series 0		1,159,455		658,854
Health Sciences Trust Series 1		5,207,708		4,544,018
High Yield Trust Series 0		857,360		500,937
High Yield Trust Series 1		2,722,314		4,594,659
Income & Value Trust Series 0		65,531		96,731
Income & Value Trust Series 1		3,937,563		5,681,624
International Core Trust Series 0		306,352		188,797
International Core Trust Series 1		2,796,688		3,918,482
International Equity Index Trust A Series 1		5,066,929		2,444,234
International Equity Index Trust B Series 0		6,269,666		2,542,592
International Opportunities Trust Series 0		3,343,435		1,298,626
International Opportunities Trust Series 1		3,314,345		2,477,676
International Small Cap Trust Series 0		304,437		342,265
International Small Cap Trust Series 1		3,533,434		4,720,546
International Value Trust Series 0		1,288,803		379,994
International Value Trust Series 1		10,082,831		18,527,265
Investment Quality Bond Trust Series 0		267,602		222,249
Investment Quality Bond Trust Series 1		1,661,382		2,970,249
Large Cap Trust Series 0		83,840		27,255
Large Cap Trust Series 1		1,359,704		1,299,736
Large Cap Value Trust Series 0		518,264		113,844

79

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

	Purchases		Sales
Sub-accounts:
Large Cap Value Trust Series 1	$	2,698,290	$	4,164,048
Lifestyle Aggressive Trust Series 0		2,574,647		418,485
Lifestyle Aggressive Trust Series 1		4,306,314		4,454,298
Lifestyle Balanced Trust Series 0		2,925,640		1,306,646
Lifestyle Balanced Trust Series 1		5,669,308		5,077,558
Lifestyle Conservative Trust Series 0		365,412		29,306
Lifestyle Conservative Trust Series 1		3,680,423		6,082,436
Lifestyle Growth Trust Series 0		3,903,916		1,144,435
Lifestyle Growth Trust Series 1		4,361,737		2,932,629
Lifestyle Moderate Trust Series 0		2,233,942		1,094,831
Lifestyle Moderate Trust Series 1		1,510,821		1,572,865
Managed Trust Series 0		80,665		139,981
Mid Cap Index Trust Series 0		917,886		419,628
Mid Cap Index Trust Series 1		3,382,500		10,019,561
Mid Cap Intersection Trust Series 0		50,549		6,620
Mid Cap Intersection Trust Series 1		1,007		1,853
Mid Cap Stock Trust Series 0		2,596,486		1,184,797
Mid Cap Stock Trust Series 1		6,666,328		5,290,202
Mid Cap Value Trust Series 0		2,413,323		1,251,609
Mid Cap Value Trust Series 1		4,935,957		6,122,122
Mid Value Trust Series 0		2,748,379		2,920,514
Money Market Trust B Series 0		83,128,987		35,183,227
Money Market Trust Series 1		55,574,844		38,094,100
Natural Resources Trust Series 0		1,684,322		1,047,996
Natural Resources Trust Series 1		12,387,295		9,566,990
Optimized All Cap Trust Series 0		1,800,322		631,123
Optimized All Cap Trust Series 1		219,469		124,040
Optimized Value Trust Series 0		24,831		25,451
Optimized Value Trust Series 1		147,412		638,570
Overseas Equity Trust Series 0		1,515,909		1,086,622
Pacific Rim Trust Series 0		1,210,183		724,921
Pacific Rim Trust Series 1		4,012,389		3,661,859
Quantitative Mid Cap Trust Series 0		14,870		82,786
Quantitative Mid Cap Trust Series 1		7,145		49,825
Real Estate Securities Trust Series 0		5,838,019		5,054,879
Real Estate Securities Trust Series 1		6,097,606		10,694,525
Real Return Bond Trust Series 0		1,301,672		413,148
Real Return Bond Trust Series 1		7,693,505		6,862,030
Science & Technology Trust Series 0		1,119,092		746,333
Science & Technology Trust Series 1		3,967,377		6,519,152
Short-Term Bond Trust Series 0		245,767		266,067
Small Cap Growth Trust Series 0		2,502,734		2,099,773
Small Cap Growth Trust Series 1		467,340		384,231
Small Cap Index Trust Series 0		744,399		497,573
Small Cap Index Trust Series 1		1,507,605		2,886,720
Small Cap Opportunities Trust Series 0		46,356		42,065
Small Cap Opportunities Trust Series 1		713,899		2,262,710
Small Cap Trust Series 0		258,476		221,147
Small Cap Trust Series 1		561,436		551,914
Small Cap Value Trust Series 0		2,914,146		2,711,935
Small Cap Value Trust Series 1		1,436,535		656,582

80

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

	Purchases		Sales
Sub-accounts:
Small Company Trust Series 1	$	982,041	$	355,478
Small Company Value Trust Series 0		1,040,956		466,886
Small Company Value Trust Series 1		6,484,083		9,985,314
Strategic Bond Trust Series 0		59,072		85,421
Strategic Bond Trust Series 1		1,294,618		3,310,184
Strategic Income Trust Series 0		9,834		5,543
Strategic Income Trust Series 1		2,832,714		1,743,409
Total Bond Market Trust B Series 0		4,748,513		2,366,845
Total Return Trust Series 0		3,145,563		1,066,005
Total Return Trust Series 1		40,197,504		29,810,080
Total Stock Market Index Trust Series 0		1,047,695		866,017
Total Stock Market Index Trust Series 1		1,087,880		2,085,172
U.S. Core Trust Series 0		176,545		657,059
U.S. Core Trust Series 1		1,274,867		6,433,068
U.S. Global Leaders Growth Trust Series 0		2,565		3,774
U.S. Global Leaders Growth Trust Series 1		117,168		666,809
U.S. Government Securities Trust Series 0		791,963		681,204
U.S. Government Securities Trust Series 1		8,155,702		9,634,896
U.S. High Yield Bond Trust Series 0		205,181		21,625
U.S. High Yield Bond Trust Series 1		1,844,264		1,994,449
U.S. Large Cap Trust Series 0		36,569		67,483
U.S. Large Cap Trust Series 1		2,431,507		7,399,486
Utilities Trust Series 0		1,485,679		729,277
Utilities Trust Series 1		3,230,889		2,512,717
Value Trust Series 0		912,748		695,754
Value Trust Series 1		3,449,099		5,690,627
All Asset Portfolio Series 0		75,567		3,402
All Asset Portfolio Series 1		786,230		854,014
	$	539,300,697	$	490,237,551

6. Transaction with Affiliates

John Hancock Distributors LLC, a registered broker-dealer and wholly owned subsidiary of JHUSA, acts as the principal underwriter of the Contracts pursuant to a distribution agreement with the Company. Contracts are sold by registered representatives of either John Hancock Distributors LLC or other broker-dealers having distribution agreements with John Hancock Distributors LLC who are also authorized as variable life insurance agents under applicable state insurance laws. Registered representatives are compensated on a commission basis.

JHUSA has a formal service agreement with its ultimate parent company, MFC, which can be terminated by either party upon two months’ notice. Under this agreement, JHUSA pays for legal, actuarial, investment and certain other administrative services.

The majority of the investments held by the Account are invested in the Trust (Note 1).

Mortality and expense risks charge, as described in Note 3, are paid to JHUSA.

81

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

7. Diversification Requirements

The Internal Revenue Service has issued regulations under Section 817(h) of the Internal Revenue Code. Under the provisions of Section 817(h) of the Code, a variable life contract will not be treated as a life contract for federal tax purposes for any period for which the investments of the Separate Account on which the contract is based are not adequately diversified. The Code provides that the “adequately diversified” requirement may be met if the underlying investments satisfy either a statutory safe harbour test or diversification requirements set forth in regulations issued by the Secretary of Treasury. The Company believes that the Account satisfies the current requirements of the regulations, and it intends that the Account will continue to meet such requirements.

8. Comparatives

The comparative financial statements of certain Sub-accounts have been restated from the prior year financial statements previously presented. The restatement comprises of reclassification between the various line items in the Statement of Operations and Changes in Contract Owners’ Equity. The reclassification did not result in changes to assets and net increase (decrease) in assets from operations.

82

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	500 Index Trust B Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (e)
Units, beginning of period	1,025,869		962,976		1,649,564		—
Units issued	805,900		588,557		497,491		2,372,470
Units redeemed	(612,321	)	(525,664	)	(1,184,079	)	(722,906	)
Units, end of period	1,219,448		1,025,869		962,976		1,649,564
Unit value, end of period $	10.17 to 16.66		16.28 to 26.53		15.57 to 25.20		13.57 to 13.60
Assets, end of period $	16,165,681		20,742,059		17,764,778		22,413,056
Investment income ratio*	2.35	%	3.00	%	1.22	%	0.00	%
Expense ratio, lowest to highest**	0.00% to 0.65	%	0.00% to 0.70	%	0.40% to 0.70	%	0.40% to 0.70	%
Total return, lowest to highest***	(37.60%) to (37.19	%)	4.51% to 5.25	%	14.76% to 15.56	%	8.56% to 8.78	%

(e) Reflects the period from commencement of operations on May 2, 2005 through December 31, 2005.

	Sub-Account
	500 Index Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	1,964,200		895,420		1,012,464		689,458		575,198
Units issued	694,681		2,318,216		705,327		932,154		773,654
Units redeemed	(1,163,749	)	(1,249,436	)	(822,371	)	(609,148	)	(659,394	)
Units, end of period	1,495,132		1,964,200		895,420		1,012,464		689,458
Unit value, end of period $	8.22 to 8.49		13.16 to 13.53		12.47 to 12.91		10.89 to 11.16		10.51 to 10.72
Assets, end of period $	12,533,893		26,274,333		11,434,368		11,226,224		7,356,251
Investment income ratio*	0.68	%	2.26	%	0.90	%	1.22	%	0.81	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.65	%	0.25% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(37.51%) to (37.26	%)	4.39% to 4.83	%	14.52% to 15.15	%	3.60% to 4.09	%	9.54% to 10.05	%

83

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Active Bond Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	10,394		2,511		—
Units issued	13,837		11,919		11,827
Units redeemed	(13,855	)	(4,036	)	(9,316	)
Units, end of period	10,376		10,394		2,511
Unit value, end of period $	40.09		44.78		43.05
Assets, end of period $	415,916		465,396		108,061
Investment income ratio*	5.06	%	12.60	%	22.71	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(10.48%) to (7.37	%)	4.03	%	4.54	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Active Bond Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (e)
Units, beginning of period	141,516		339,657		329,188		—
Units issued	174,296		133,020		111,305		647,762
Units redeemed	(248,102	)	(331,161	)	(100,836	)	(318,574	)
Units, end of period	67,710		141,516		339,657		329,188
Unit value, end of period $	12.06 to 12.21		13.54 to 13.69		13.11 to 13.18		12.64 to 12.67
Assets, end of period $	820,988		1,929,828		4,464,604		4,165,458
Investment income ratio*	4.00	%	9.09	%	2.60	%	0.00	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.70	%
Total return, lowest to highest***	(11.11%) to (10.80	%)	3.30% to 3.73	%	3.70% to 4.05	%	1.14% to 1.36	%

(e) Reflects the period from commencement of operations on May 2, 2005 through December 31, 2005.

84

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	All Asset Portfolio Series 0
	Year Ended Dec. 31/08 (g)
Units, beginning of period	—
Units issued	6,143
Units redeemed	(314	)
Units, end of period	5,829
Unit value, end of period $	9.93
Assets, end of period $	57,882
Investment income ratio*	7.52	%
Expense ratio, lowest to highest**	0.00	%
Total return, lowest to highest***	(16.17%) to (12.60	%)

(g) Fund available in prior year but no activity.

	Sub-Account
	All Asset Portfolio Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04 (b)
Units, beginning of period	52,918		51,984		36,420		5,558		—
Units issued	45,309		29,880		33,107		44,219		5,623
Units redeemed	(53,376	)	(28,946	)	(17,543	)	(13,357	)	(65	)
Units, end of period	44,851		52,918		51,984		36,420		5,558
Unit value, end of period $	13.59 to 13.72		16.32 to 16.45		15.21 to 15.30		14.67 to 14.72		13.94
Assets, end of period $	614,073		867,298		793,435		534,735		77,490
Investment income ratio*	5.30	%	6.92	%	5.36	%	5.84	%	17.85	%
Expense ratio, lowest to highest**	0.45% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%	0.65	%
Total return, lowest to highest***	(16.71%) to (16.54	%)	7.29% to 7.52	%	3.68% to 3.89	%	5.25% to 5.47	%	11.53	%

(b) Reflects the period from commencement of operations on May 3, 2004 through December 31, 2004.

85

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	All Cap Core Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	2,196		23		—
Units issued	207,065		2,544		24
Units redeemed	(207,362	)	(371	)	(1	)
Units, end of period	1,899		2,196		23
Unit value, end of period $	8.05		13.34		12.98
Assets, end of period $	15,283		29,280		295
Investment income ratio*	1.09	%	1.93	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(39.60%) to (26.69	%)	2.70	%	14.77	%

(g) Fund available in prior year but no activity.

	Sub-Account
	All Cap Core Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	556,146		234,795		180,858		192,844		384,083
Units issued	155,444		480,351		126,247		60,566		162,081
Units redeemed	(299,712	)	(159,000	)	(72,310	)	(72,552	)	(353,320	)
Units, end of period	411,878		556,146		234,795		180,858		192,844
Unit value, end of period $	11.98 to 12.31		19.90 to 20.46		10.80 to 19.99		9.46 to 7.43		8.72 to 16.04
Assets, end of period $	5,019,487		11,287,106		4,565,986		3,066,213		3,006,912
Investment income ratio*	1.55	%	1.52	%	0.64	%	0.73	%	0.50	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(40.02%) to (39.81	%)	1.95% to 2.35	%	13.95% to 14.40	%	8.32% to 8.70	%	15.57% to 15.92	%

86

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	All Cap Growth Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	1,662		69		—
Units issued	5,687		23,363		71
Units redeemed	(1,600	)	(21,770	)	(2	)
Units, end of period	5,749		1,662		69
Unit value, end of period $	8.09		13.92		12.42
Assets, end of period $	46,490		23,129		847
Investment income ratio*	0.81	%	0.07	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(41.91%) to (26.41	%)	12.08	%	6.63	%

(g) Fund available in prior year but no activity.

	Sub-Account
	All Cap Growth Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	167,960		192,315		377,588		413,068		507,091
Units issued	90,328		44,827		87,667		136,091		266,106
Units redeemed	(93,845	)	(69,182	)	(272,940	)	(171,571	)	(360,129	)
Units, end of period	164,443		167,960		192,315		377,588		413,068
Unit value, end of period $	14.05 to 14.44		24.27 to 24.95		11.42 to 22.34		10.77 to 20.97		9.94 to 19.31
Assets, end of period $	2,348,296		4,091,403		4,175,639		7,772,423		7,837,329
Investment income ratio*	0.34	%	0.05	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(42.32%) to (42.12	%)	11.27% to 11.72	%	5.83% to 6.25	%	8.23% to 8.61	%	5.83% to 6.14	%

87

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	All Cap Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	3,203		23		—
Units issued	22,505		4,384		24
Units redeemed	(3,877	)	(1,204	)	(1	)
Units, end of period	21,831		3,203		23
Unit value, end of period $	9.78		13.74		12.64
Assets, end of period $	213,526		44,000		288
Investment income ratio*	2.30	%	2.41	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(28.80%) to (19.83	%)	8.68	%	13.82	%

(g) Fund available in prior year but no activity.

	Sub-Account
	All Cap Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	462,488		116,701		112,887		111,377		42,078
Units issued	67,408		390,109		81,884		43,049		149,430
Units redeemed	(165,964	)	(44,322	)	(78,070	)	(41,539	)	(80,131	)
Units, end of period	363,932		462,488		116,701		112,887		111,377
Unit value, end of period $	12.88 to 13.23		18.21 to 18.64		16.92 to 17.21		14.97 to 15.19		14.26 to 14.42
Assets, end of period $	4,771,874		8,557,532		1,998,682		1,705,935		1,596,891
Investment income ratio*	0.80	%	2.02	%	0.80	%	0.52	%	0.33	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(29.25%) to (28.99	%)	7.62% to 8.01	%	12.98% to 13.32	%	5.03% to 5.35	%	15.20% to 15.55	%

88

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	American Asset Allocation Trust Series 1
	Year Ended Dec. 31/08 (f)
Units, beginning of period	—
Units issued	30,140
Units redeemed	(392	)
Units, end of period	29,748
Unit value, end of period $	7.23 to 7.26
Assets, end of period $	215,822
Investment income ratio*	8.19	%
Expense ratio, lowest to highest**	0.00% to 0.65	%
Total return, lowest to highest***	(27.71%) to (27.39	%)

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

	Sub-Account
	American Blue Chip Income and Growth Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	198,959		269,745		141,580		23,565		14,497
Units issued	219,437		117,978		276,354		149,882		24,431
Units redeemed	(182,940	)	(188,764	)	(148,189	)	(31,867	)	(15,363	)
Units, end of period	235,456		198,959		269,745		141,580		23,565
Unit value, end of period $	8.36 to 12.04		13.21 to 19.15		12.99 to 19.17		16.32 to 16.44		15.38 to 15.44
Assets, end of period $	2,652,929		3,540,621		5,160,481		2,325,308		362,839
Investment income ratio*	4.38	%	2.35	%	0.55	%	0.19	%	0.00	%
Expense ratio, lowest to highest**	0.00% to 0.65	%	0.00% to 0.65	%	0.00% to 0.65	%	0.35% to 0.65	%	0.40% to 0.65	%
Total return, lowest to highest***	(37.14%) to (36.72	%)	0.99% to 1.65	%	16.24% to 16.99	%	6.07% to 6.39	%	8.61% to 8.87	%

89

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	American Bond Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	284,176		30,383		—
Units issued	237,329		417,624		34,152
Units redeemed	(374,948	)	(163,831	)	(3,769	)
Units, end of period	146,557		284,176		30,383
Unit value, end of period $	10.02 to 12.27		11.10 to 13.68		10.78 to 13.40
Assets, end of period $	1,736,403		3,845,351		406,830
Investment income ratio*	8.31	%	4.39	%	0.00	%
Expense ratio, lowest to highest**	0.00% to 0.65	%	0.00% to 0.65	%	0.00% to 0.65	%
Total return, lowest to highest***	(10.30%) to (9.72	%)	2.31% to 2.96	%	5.89% to 6.57	%

(g) Fund available in prior year but no activity.

	Sub-Account
	American Growth Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	1,130,158		1,885,429		1,469,444		534,464		106,170
Units issued	1,206,254		653,970		690,357		1,438,001		615,014
Units redeemed	(680,208	)	(1,409,241	)	(274,372	)	(503,021	)	(186,720	)
Units, end of period	1,656,204		1,130,158		1,885,429		1,469,444		534,464
Unit value, end of period $	8.21 to 11.93		14.71 to 21.52		13.15 to 19.59		17.74 to 17.89		15.42 to 15.49
Assets, end of period $	18,483,137		23,277,773		36,590,362		26,189,118		8,261,844
Investment income ratio*	2.08	%	1.23	%	0.29	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.00% to 0.65	%	0.00% to 0.65	%	0.00% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(44.56%) to (44.20	%)	11.20% to 11.94	%	9.09% to 9.80	%	15.04% to 15.44	%	11.38% to 11.71	%

90

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	American Growth-Income Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	246,940		164,133		168,096		114,971		3,474
Units issued	282,920		204,622		71,113		82,686		230,255
Units redeemed	(371,790	)	(121,815	)	(75,076	)	(29,561	)	(118,758	)
Units, end of period	158,070		246,940		164,133		168,096		114,971
Unit value, end of period $	8.17 to 11.77		13.20 to 19.14		12.61 to 18.60		16.14 to 16.26		15.41 to 15.47
Assets, end of period $	1,533,150		4,332,011		3,009,500		2,725,094		1,775,824
Investment income ratio*	1.08	%	2.32	%	1.09	%	0.45	%	0.30	%
Expense ratio, lowest to highest**	0.00% to 0.65	%	0.00% to 0.65	%	0.00% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(38.48%) to (38.08	%)	3.96% to 4.64	%	14.06% to 14.80	%	4.75% to 5.08	%	9.24% to 9.57	%
	Sub-Account
	American International Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	1,766,825		1,393,157		705,780		94,988		7,859
Units issued	777,351		740,354		930,416		664,947		98,310
Units redeemed	(951,628	)	(366,686	)	(243,039	)	(54,155	)	(11,181	)
Units, end of period	1,592,548		1,766,825		1,393,157		705,780		94,988
Unit value, end of period $	10.14 to 17.23		17.60 to 30.09		14.72 to 25.64		21.51 to 21.70		17.88 to 17.96
Assets, end of period $	22,506,461		46,461,807		30,618,091		15,253,954		1,702,860
Investment income ratio*	3.64	%	1.88	%	0.71	%	0.55	%	0.43	%
Expense ratio, lowest to highest**	0.00% to 0.65	%	0.00% to 0.65	%	0.00% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(42.74%) to (42.37	%)	18.80% to 19.58	%	17.77% to 18.54	%	20.29% to 20.70	%	18.11% to 18.47	%

91

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Blue Chip Growth Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	31,993		11,570		—
Units issued	35,457		37,198		11,788
Units redeemed	(16,294	)	(16,775	)	(218	)
Units, end of period	51,156		31,993		11,570
Unit value, end of period $	39.69		69.05		61.21
Assets, end of period $	2,030,472		2,209,133		708,170
Investment income ratio*	0.47	%	0.85	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(42.52%) to (28.71	%)	12.81	%	9.59	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Blue Chip Growth Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	996,389		1,083,341		1,450,904		1,667,853		2,092,515
Units issued	442,153		327,662		544,153		562,542		958,632
Units redeemed	(678,962	)	(414,614	)	(911,716	)	(779,491	)	(1,383,294	)
Units, end of period	759,580		996,389		1,083,341		1,450,904		1,667,853
Unit value, end of period $	15.13 to 15.62		26.40 to 27.25		12.73 to 24.23		11.68 to 22.06		11.12 to 20.96
Assets, end of period $	10,660,570		25,026,470		24,026,155		29,446,370		32,373,276
Investment income ratio*	0.30	%	0.71	%	0.21	%	0.41	%	0.11	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(42.91%) to (42.68	%)	11.96% to 12.46	%	8.82% to 9.30	%	4.86% to 5.23	%	8.33% to 8.65	%

92

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Capital Appreciation Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	15,717		8,132		—
Units issued	80,292		21,870		8,767
Units redeemed	(82,225	)	(14,285	)	(635	)
Units, end of period	13,784		15,717		8,132
Unit value, end of period $	8.72		13.89		12.43
Assets, end of period $	120,161		218,272		101,106
Investment income ratio*	0.21	%	0.48	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(37.24%) to (23.78	%)	11.70	%	2.38	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Capital Appreciation Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	579,428		643,831		177,674		91,845		126,280
Units issued	275,841		206,246		782,997		129,375		65,459
Units redeemed	(321,555	)	(270,649	)	(316,840	)	(43,546	)	(99,894	)
Units, end of period	533,714		579,428		643,831		177,674		91,845
Unit value, end of period $	8.47 to 8.70		13.53 to 13.90		12.21 to 12.46		12.05 to 12.20		10.64 to 10.75
Assets, end of period $	4,582,828		7,967,841		7,949,747		2,156,867		982,755
Investment income ratio*	0.45	%	0.29	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.35% to 0.70	%	0.40% to 0.65	%	0.40% to 0.65	%
Total return, lowest to highest***	(37.63%) to (37.42	%)	10.83% to 11.28	%	1.56% to 1.90	%	13.25% to 13.55	%	8.61% to 8.88	%

93

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Capital Appreciation Value Trust Series 1
	Year Ended Dec. 31/08 (f)
Units, beginning of period	—
Units issued	422
Units redeemed	(15	)
Units, end of period	407
Unit value, end of period $	7.23
Assets, end of period $	2,947
Investment income ratio*	3.95	%
Expense ratio, lowest to highest**	0.65	%
Total return, lowest to highest***	(27.66	%)

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

	Sub-Account
	Classic Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	1,965		52		—
Units issued	2,121		2,669		54
Units redeemed	(997	)	(756	)	(2	)
Units, end of period	3,089		1,965		52
Unit value, end of period $	6.23		11.44		13.09
Assets, end of period $	19,249		22,489		683
Investment income ratio*	2.43	%	6.39	%	2.93	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(45.55%) to (30.65	%)	(12.58	%)	16.14	%

(g) Fund available in prior year but no activity.

94

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Classic Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (g)
Units, beginning of period	49,364		63,050		28,771		—
Units issued	2,623		9,414		45,105		30,518
Units redeemed	(41,142	)	(23,100	)	(10,826	)	(1,747	)
Units, end of period	10,845		49,364		63,050		28,771
Unit value, end of period $	8.16 to 8.27		15.08 to 15.25		17.36 to 17.45		15.06 to 15.11
Assets, end of period $	89,243		747,147		1,098,196		433,522
Investment income ratio*	1.30	%	1.40	%	1.45	%	3.55	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(45.91%) to (45.74	%)	(13.15%) to (12.89	%)	15.29% to 15.51	%	8.72% to 8.92	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Core Bond Trust Series 0
	Year Ended Dec. 31/08 (g)
Units, beginning of period	—
Units issued	523
Units redeemed	(258	)
Units, end of period	265
Unit value, end of period $	11.53
Assets, end of period $	3,058
Investment income ratio*	10.44	%
Expense ratio, lowest to highest**	0.00	%
Total return, lowest to highest***	1.41% to 3.36	%

(g) Fund available in prior year but no activity.

95

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Core Bond Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (e)
Units, beginning of period	87		27		6		—
Units issued	1,518		121		22		6
Units redeemed	(6	)	(61	)	(1	)	—
Units, end of period	1,599		87		27		6
Unit value, end of period $	14.05 to 14.15		13.69 to 13.76		12.97		12.58
Assets, end of period $	22,482		1,200		355		72
Investment income ratio*	15.48	%	8.28	%	2.15	%	0.00	%
Expense ratio, lowest to highest**	0.45% to 0.65	%	0.45% to 0.65	%	0.65	%	0.65	%
Total return, lowest to highest***	2.63% to 2.82	%	5.58% to 5.76	%	3.13	%	0.60	%

(e) Reflects the period from commencement of operations on May 2, 2005 through December 31, 2005.

	Sub-Account
	Core Equity Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	3,181		525		—
Units issued	5,403		3,907		544
Units redeemed	(731	)	(1,251	)	(19	)
Units, end of period	7,853		3,181		525
Unit value, end of period $	5.28		11.59		12.31
Assets, end of period $	41,456		36,874		6,466
Investment income ratio*	20.74	%	0.08	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(54.46%) to (30.69	%)	(5.85	%)	6.73	%

(g) Fund available in prior year but no activity.

96

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Core Equity Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (g)
Units, beginning of period	39,293		43,160		19,069		—
Units issued	12,000		173,345		30,049		25,690
Units redeemed	(30,209	)	(177,212	)	(5,958	)	(6,621	)
Units, end of period	21,084		39,293		43,160		19,069
Unit value, end of period $	6.69 to 6.75		14.78 to 14.89		15.81 to 15.89		14.91 to 14.96
Assets, end of period $	141,361		581,986		683,107		284,444
Investment income ratio*	11.05	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.45% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(54.75%) to (54.67	%)	(6.50%) to (6.31	%)	6.05% to 6.26	%	5.22% to 5.42	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Disciplined Diversification Trust Series 1
	Year Ended Dec. 31/08 (f)
Units, beginning of period	—
Units issued	5,952
Units redeemed	(5,952	)
Units, end of period	—
Unit value, end of period $	7.18
Assets, end of period $	—
Investment income ratio*	0.00	%
Expense ratio, lowest to highest**	0.65	%
Total return, lowest to highest***	(28.19	%)

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

97

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Dynamic Growth Trust Series 0
	Year Ended Dec. 31/08 (ah)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	9,665		2,063		—
Units issued	1,498		12,048		2,331
Units redeemed	(11,163	)	(4,446	)	(268	)
Units, end of period	—		9,665		2,063
Unit value, end of period $	12.82		14.19		12.96
Assets, end of period $	—		137,099		26,745
Investment income ratio*	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(9.61	%)	9.44	%	10.83	%

(ah) Terminated as an investment option and funds transferred to Mid Cap Stock Trust on April 28, 2008.

(g) Fund available in prior year but no activity.

	Sub-Account
	Dynamic Growth Trust Series 1
	Year Ended Dec. 31/08 (ah)		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	371,867		613,046		770,700		544,964		577,167
Units issued	35,438		207,163		940,197		518,036		670,334
Units redeemed	(407,305	)	(448,342	)	(1,097,851	)	(292,300	)	(702,537	)
Units, end of period	—		371,867		613,046		770,700		544,964
Unit value, end of period $	5.67 to 5.85		6.27 to 6.48		05.78 to 05.94		5.24 to 5.34		4.70 to 4.77
Assets, end of period $	—		2,375,285		3,605,224		4,088,844		2,585,369
Investment income ratio*	0.00	%	0.00	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(9.84%) to (9.72	%)	8.51% to 9.01	%	10.25% to 10.76	%	11.62% to 12.00	%	9.29% to 9.62	%

(ah) Terminated as an investment option and funds transferred to Mid Cap Stock Trust on April 28, 2008.

98

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Emerging Growth Trust Series 0
	Year Ended Dec. 31/08 (ab)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	6,985		47		—
Units issued	17,695		13,135		49
Units redeemed	(24,680	)	(6,197	)	(2	)
Units, end of period	—		6,985		47
Unit value, end of period $	7.09		13.88		13.34
Assets, end of period $	—		96,947		635
Investment income ratio*	0.26	%	0.28	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(48.90%) to (38.61	%)	4.02	%	11.59	%

(ab) Terminated as an investment option and funds transferred to Small Cap Growth Trust on November 10, 2008.

(g) Fund available in prior year but no activity.

	Sub-Account
	Emerging Growth Trust Series 1
	Year Ended Dec. 31/08 (ab)		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	38,480		22,791		16,147		3,541		13,715
Units issued	46,068		40,460		23,611		32,098		27,399
Units redeemed	(84,548	)	(24,771	)	(16,967	)	(19,492	)	(37,573	)
Units, end of period	—		38,480		22,791		16,147		3,541
Unit value, end of period $	10.76 to 10.91		21.17 to 21.47		20.51 to 20.74		18.50 to 18.60		17.29 to 17.35
Assets, end of period $	—		821,867		470,425		300,058		61,397
Investment income ratio*	0.32	%	0.16	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.40% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(49.19%) to (49.08	%)	3.20% to 3.52	%	10.88% to 11.21	%	6.96% to 7.17	%	6.20% to 6.41	%

(ab) Terminated as an investment option and funds transferred to Small Cap Growth Trust on November 10, 2008.

99

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Emerging Markets Value Trust Series 0
	Year Ended Dec. 31/08 (g)
Units, beginning of period	—
Units issued	17,760
Units redeemed	(115	)
Units, end of period	17,645
Unit value, end of period $	5.77
Assets, end of period $	101,749
Investment income ratio*	18.41	%
Expense ratio, lowest to highest**	0.00	%
Total return, lowest to highest***	(51.92	%)

(g) Fund available in prior year but no activity.

	Sub-Account
	Emerging Markets Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07 (w)
Units, beginning of period	6,228		—
Units issued	35,677		6,275
Units redeemed	(3,170	)	(47	)
Units, end of period	38,735		6,228
Unit value, end of period $	7.13 to 7.16		14.93
Assets, end of period $	277,069		93,016
Investment income ratio*	4.00	%	2.90	%
Expense ratio, lowest to highest**	0.40% to 0.65	%	0.65	%
Total return, lowest to highest***	(52.25%) to (52.13	%)	19.46	%

(w) Reflects the period from commencement of operations on April 30, 2007 through December 31, 2007.

100

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Emerging Small Company Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	27,963		10,644		—
Units issued	12,888		28,805		11,516
Units redeemed	(17,895	)	(11,486	)	(872	)
Units, end of period	22,956		27,963		10,644
Unit value, end of period $	7.29		12.83		11.87
Assets, end of period $	167,240		358,856		126,387
Investment income ratio*	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(43.23%) to (31.25	%)	8.08	%	2.44	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Emerging Small Company Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	388,892		520,176		669,785		687,402		911,363
Units issued	73,633		64,222		138,895		232,231		273,287
Units redeemed	(136,933	)	(195,506	)	(288,504	)	(249,848	)	(497,248	)
Units, end of period	325,592		388,892		520,176		669,785		687,402
Unit value, end of period $	54.90 to 56.91		97.47 to 100.59		13.50 to 93.33		13.25 to 91.13		12.69 to 86.85
Assets, end of period $	15,606,022		33,623,081		40,696,420		50,949,308		50,607,293
Investment income ratio*	0.00	%	0.00	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.25% to 0.70	%	0.25% to 0.70	%	0.25% to 0.70	%	0.30% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(43.68%) to (43.42	%)	7.29% to 7.78	%	1.70% to 2.15	%	4.31% to 4.73	%	10.80% to 11.13	%

101

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Equity-Income Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	354,274		238,801		—
Units issued	269,861		177,383		271,056
Units redeemed	(201,447	)	(61,910	)	(32,255	)
Units, end of period	422,688		354,274		238,801
Unit value, end of period $	19.40		30.29		29.30
Assets, end of period $	8,202,004		10,730,873		6,996,068
Investment income ratio*	2.71	%	3.15	%	1.68	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(35.94%) to (24.93	%)	3.39	%	19.05	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Equity-Income Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	1,209,463		1,391,728		1,578,724		1,646,238		1,460,643
Units issued	365,614		555,776		690,921		759,963		1,139,513
Units redeemed	(630,869	)	(738,041	)	(877,917	)	(827,477	)	(953,918	)
Units, end of period	944,208		1,209,463		1,391,728		1,578,724		1,646,238
Unit value, end of period $	17.93 to 18.51		28.08 to 28.97		20.31 to 28.11		17.15 to 23.56		16.60 to 22.75
Assets, end of period $	16,578,137		33,434,627		37,693,322		36,227,178		36,760,871
Investment income ratio*	2.35	%	2.82	%	1.49	%	1.25	%	1.22	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(36.38%) to (36.12	%)	2.62% to 3.09	%	18.19% to 18.72	%	3.20% to 3.56	%	14.06% to 14.41	%

102

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Financial Services Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	2,300		45		—
Units issued	14,881		6,446		47
Units redeemed	(5,337	)	(4,191	)	(2	)
Units, end of period	11,844		2,300		45
Unit value, end of period $	11.79		21.29		22.83
Assets, end of period $	139,607		48,965		1,024
Investment income ratio*	1.34	%	1.83	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(44.63%) to (29.96	%)	(6.73	%)	23.16	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Financial Services Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	37,610		135,361		30,934		23,337		31,948
Units issued	251,270		45,254		119,009		17,012		39,967
Units redeemed	(130,877	)	(143,005	)	(14,582	)	(9,415	)	(48,578	)
Units, end of period	158,003		37,610		135,361		30,934		23,337
Unit value, end of period $	9.34 to 9.56		16.99 to 17.33		18.35 to 18.66		15.00 to 15.14		13.75 to 13.85
Assets, end of period $	1,505,269		644,355		2,512,100		466,240		322,026
Investment income ratio*	1.65	%	1.00	%	0.22	%	0.38	%	0.37	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(45.01%) to (44.85	%)	(7.42%) to (7.15	%)	22.32% to 22.69	%	9.07% to 9.28	%	9.66% to 9.87	%

103

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Franklin Templeton Founding Allocation Trust Series 0
	Year Ended Dec. 31/08 (f)
Units, beginning of period	—
Units issued	23,225
Units redeemed	(159	)
Units, end of period	23,066
Unit value, end of period $	6.79
Assets, end of period $	156,653
Investment income ratio*	20.48	%
Expense ratio, lowest to highest**	0.00	%
Total return, lowest to highest***	(32.08%) to (21.32	%)

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

	Sub-Account
	Fundamental Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	8,642		7,976		—
Units issued	84,974		2,280		8,137
Units redeemed	(9,631	)	(1,614	)	(161	)
Units, end of period	83,985		8,642		7,976
Unit value, end of period $	8.02		13.20		12.68
Assets, end of period $	673,278		114,075		101,153
Investment income ratio*	3.24	%	1.77	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(39.27%) to (27.52	%)	4.08	%	14.55	%

(g) Fund available in prior year but no activity.

104

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Fundamental Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	235,968		258,420		194,312		168,396		93,865
Units issued	477,588		64,277		143,105		107,178		205,077
Units redeemed	(122,007	)	(86,729	)	(78,997	)	(81,262	)	(130,546	)
Units, end of period	591,549		235,968		258,420		194,312		168,396
Unit value, end of period $	10.68 to 10.97		17.72 to 18.14		17.14 to 17.49		15.06 to 15.28		13.93 to 14.08
Assets, end of period $	6,384,680		4,226,469		4,461,137		2,943,943		2,356,047
Investment income ratio*	1.75	%	1.58	%	0.79	%	0.42	%	0.48	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(39.71%) to (39.50	%)	3.36% to 3.73	%	13.77% to 14.18	%	8.14% to 8.46	%	11.08% to 11.42	%

	Sub-Account
	Global Allocation Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	3,666		32		—
Units issued	8,903		4,011		33
Units redeemed	(5,127	)	(377	)	(1	)
Units, end of period	7,442		3,666		32
Unit value, end of period $	8.51		12.93		12.31
Assets, end of period $	63,324		47,414		388
Investment income ratio*	6.73	%	11.80	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(34.21%) to (24.39	%)	5.06	%	13.58	%

(g) Fund available in prior year but no activity.

105

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Global Allocation Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	170,839		136,763		26,935		17,767		3,613
Units issued	67,943		130,340		223,082		51,578		66,928
Units redeemed	(206,561	)	(96,264	)	(113,254	)	(42,410	)	(52,774	)
Units, end of period	32,221		170,839		136,763		26,935		17,767
Unit value, end of period $	9.03 to 9.29		13.83 to 14.12		13.24 to 13.48		11.74 to 11.92		11.13 to 11.22
Assets, end of period $	294,279		2,404,378		1,826,871		316,420		197,769
Investment income ratio*	2.76	%	6.32	%	0.91	%	0.65	%	0.40	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(34.71%) to (34.48	%)	4.45% to 4.76	%	12.77% to 13.11	%	5.51% to 5.84	%	11.99% to 12.25	%

	Sub-Account
	Global Bond Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	232,906		156,254		—
Units issued	192,157		144,116		179,125
Units redeemed	(144,526	)	(67,464	)	(22,871	)
Units, end of period	280,537		232,906		156,254
Unit value, end of period $	21.38		22.37		20.41
Assets, end of period $	5,998,144		5,209,990		3,189,038
Investment income ratio*	0.56	%	8.01	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(4.42%) to (1.77	%)	9.61	%	5.27	%

(g) Fund available in prior year but no activity.

106

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Global Bond Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	252,132		263,273		283,511		218,132		196,659
Units issued	279,869		131,138		174,167		195,710		233,486
Units redeemed	(315,421	)	(142,279	)	(194,405	)	(130,331	)	(212,013	)
Units, end of period	216,580		252,132		263,273		283,511		218,132
Unit value, end of period $	19.80 to 20.36		20.79 to 21.38		18.20 to 19.56		17.39 to 18.59		18.71 to 19.96
Assets, end of period $	4,354,555		5,343,383		5,088,466		5,234,432		4,323,117
Investment income ratio*	0.57	%	7.18	%	0.00	%	4.26	%	3.41	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(5.10%) to (4.78	%)	8.86% to 9.30	%	4.53% to 4.96	%	(7.19%) to (6.87	%)	9.53% to 9.85	%

	Sub-Account
	Global Real Estate Trust Series 1
	Year Ended Dec. 31/08 (f)
Units, beginning of period	—
Units issued	457
Units redeemed	(10	)
Units, end of period	447
Unit value, end of period $	5.54
Assets, end of period $	2,480
Investment income ratio*	10.22	%
Expense ratio, lowest to highest**	0.65	%
Total return, lowest to highest***	(44.55	%)

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

107

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Global Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	40,340		7,504		—
Units issued	24,420		44,553		7,736
Units redeemed	(31,830	)	(11,717	)	(232	)
Units, end of period	32,930		40,340		7,504
Unit value, end of period $	8.32		13.75		13.57
Assets, end of period $	273,952		554,586		101,826
Investment income ratio*	2.41	%	2.43	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(39.49%) to (23.39	%)	1.32	%	20.42	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Global Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	261,353		240,688		227,332		226,763		220,709
Units issued	68,244		141,074		148,216		88,843		178,596
Units redeemed	(184,321	)	(120,409	)	(134,860	)	(88,274	)	(172,542	)
Units, end of period	145,276		261,353		240,688		227,332		226,763
Unit value, end of period $	14.30 to 14.71		23.72 to 24.40		18.08 to 24.15		15.10 to 20.08		13.72 to 18.20
Assets, end of period $	2,096,612		6,258,053		5,725,741		4,510,252		4,088,754
Investment income ratio*	1.77	%	2.31	%	1.27	%	1.25	%	1.76	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(39.94%) to (39.73	%)	0.63% to 1.03	%	19.49% to 19.96	%	9.95% to 10.33	%	14.01% to 14.35	%

108

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Growth & Income Trust Series 0
	Year Ended Dec. 31/08 (ag)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (m)
Units, beginning of period	20,384		16,963		—
Units issued	1,104		19,375		17,322
Units redeemed	(21,488	)	(15,954	)	(359	)
Units, end of period	—		20,384		16,963
Unit value, end of period $	75.32		82.20		78.98
Assets, end of period $	—		1,675,550		1,339,825
Investment income ratio*	0.52	%	1.81	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(8.36	%)	4.07	%	12.72	%

(ag) Terminated as an investment option and funds transferred to Optimized All Cap Trust on April 28, 2008.

(m) Fund renamed on May 1, 2006. Previously known as Growth & Income Trust II. Fund available in prior year but no activity.

	Sub-Account
	Health Sciences Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	11,504		141		—
Units issued	73,492		50,077		146
Units redeemed	(44,047	)	(38,714	)	(5	)
Units, end of period	40,949		11,504		141
Unit value, end of period $	12.11		17.26		14.66
Assets, end of period $	495,670		198,514		2,065
Investment income ratio*	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(29.86%) to (21.80	%)	17.73	%	8.44	%

(g) Fund available in prior year but no activity.

109

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Health Sciences Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	235,072		296,297		268,882		228,816		195,742
Units issued	280,570		112,666		210,936		114,558		312,678
Units redeemed	(255,451	)	(173,891	)	(183,521	)	(74,492	)	(279,604	)
Units, end of period	260,191		235,072		296,297		268,882		228,816
Unit value, end of period $	14.82 to 15.23		21.29 to 21.79		18.21 to 18.57		16.91 to 17.15		15.11 to 15.28
Assets, end of period $	3,897,285		5,076,968		5,446,065		4,584,275		3,480,512
Investment income ratio*	0.00	%	0.00	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(30.36%) to (30.11	%)	16.91% to 17.32	%	7.67% to 8.05	%	11.91% to 12.25	%	14.57% to 14.91	%

	Sub-Account
	High Yield Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	58,466		10,318		—
Units issued	64,061		66,712		10,940
Units redeemed	(45,355	)	(18,564	)	(622	)
Units, end of period	77,172		58,466		10,318
Unit value, end of period $	9.19		13.03		12.82
Assets, end of period $	709,188		761,889		132,294
Investment income ratio*	9.25	%	14.49	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(29.48%) to (24.36	%)	1.64	%	10.48	%

(g) Fund available in prior year but no activity.

110

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	High Yield Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	456,353		622,204		1,025,251		747,358		699,961
Units issued	139,507		222,523		335,772		576,968		615,089
Units redeemed	(301,441	)	(388,374	)	(738,819	)	(299,075	)	(567,692	)
Units, end of period	294,419		456,353		622,204		1,025,251		747,358
Unit value, end of period $	12.94 to 13.31		18.42 to 18.94		15.50 to 18.69		14.12 to 16.99		13.69 to 16.40
Assets, end of period $	3,740,054		8,286,870		11,149,819		16,898,635		11,862,447
Investment income ratio*	7.50	%	12.22	%	7.72	%	5.03	%	4.99	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(29.98%) to (29.73	%)	0.91% to 1.32	%	9.61% to 10.05	%	2.98% to 3.39	%	10.34% to 10.68	%

	Sub-Account
	Income & Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	17,941		2,855		—
Units issued	5,398		18,643		2,909
Units redeemed	(9,177	)	(3,557	)	(54	)
Units, end of period	14,162		17,941		2,855
Unit value, end of period $	8.34		11.93		11.80
Assets, end of period $	118,153		214,061		33,687
Investment income ratio*	2.85	%	5.22	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(30.07%) to (17.93	%)	1.11	%	8.77	%

(g) Fund available in prior year but no activity.

111

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Income & Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	917,328		1,076,434		1,373,417		1,679,725		465,991
Units issued	183,110		239,053		143,883		211,726		2,010,940
Units redeemed	(323,973	)	(398,159	)	(440,866	)	(518,034	)	(797,206	)
Units, end of period	776,465		917,328		1,076,434		1,373,417		1,679,725
Unit value, end of period $	13.92 to 14.37		20.06 to 20.63		16.89 to 20.47		15.63 to 18.89		14.94 to 18.01
Assets, end of period $	10,807,404		18,404,247		21,490,159		25,459,694		29,826,597
Investment income ratio*	2.99	%	3.89	%	2.10	%	1.59	%	0.53	%
Expense ratio, lowest to highest**	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.65	%
Total return, lowest to highest***	(30.62%) to (30.33	%)	0.40% to 0.81	%	7.90% to 8.33	%	4.49% to 4.90	%	6.94% to 7.33	%

	Sub-Account
	International Core Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (h)
Units, beginning of period	13,585		454		—
Units issued	20,613		20,258		474
Units redeemed	(14,044	)	(7,127	)	(20	)
Units, end of period	20,154		13,585		454
Unit value, end of period $	10.16		16.55		14.84
Assets, end of period $	204,797		224,764		6,728
Investment income ratio*	6.12	%	2.92	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(38.58%) to (22.22	%)	11.46	%	24.81	%

(h) Fund renamed on May 1, 2006. Previously known as International Stock Trust. Fund available in prior year but no activity.

112

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	International Core Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (i)		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	504,258		513,665		934,920		1,016,696		1,106,364
Units issued	137,701		142,487		408,054		375,227		334,186
Units redeemed	(250,746	)	(151,894	)	(829,309	)	(457,003	)	(423,854	)
Units, end of period	391,213		504,258		513,665		934,920		1,016,696
Unit value, end of period $	12.60 to 12.96		20.60 to 21.18		15.30 to 19.01		12.33 to 15.29		10.69 to 13.23
Assets, end of period $	4,958,400		10,486,948		9,619,429		14,186,941		13,368,772
Investment income ratio*	4.50	%	2.21	%	0.60	%	0.74	%	0.84	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(39.02%) to (38.80	%)	10.64% to 11.08	%	23.91% to 24.33	%	15.14% to 15.55	%	14.84% to 15.19	%

(i) Fund renamed on May 1, 2006. Previously known as International Stock Trust.

	Sub-Account
	International Equity Index Trust A Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (n)		Year Ended Dec. 31/04 (b)
Units, beginning of period	164,962		438,785		343,997		51,012		—
Units issued	231,501		126,457		167,620		392,254		103,970
Units redeemed	(133,259	)	(400,280	)	(72,832	)	(99,269	)	(52,958	)
Units, end of period	263,204		164,962		438,785		343,997		51,012
Unit value, end of period $	13.45 to 13.67		24.37 to 24.73		21.27 to 21.49		17.07 to 17.18		14.74 to 14.77
Assets, end of period $	3,585,626		4,062,908		9,394,587		5,895,407		752,181
Investment income ratio*	2.45	%	3.63	%	0.72	%	0.79	%	0.58	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(44.90%) to (44.71	%)	14.62% to 15.07	%	24.62% to 25.11	%	15.80% to 16.26	%	17.94% to 18.17	%

(n) Fund renamed on May 2, 2005. Previously known as International Equity Index Fund.

(b) Reflects the period from commencement of operations on May 3, 2004 through December 31, 2004.

113

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	International Equity Index Trust B Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	34,648		4,914		—
Units issued	146,008		42,350		169,895
Units redeemed	(63,602	)	(12,616	)	(164,981	)
Units, end of period	117,054		34,648		4,914
Unit value, end of period $	26.52		47.69		41.18
Assets, end of period $	3,104,506		1,652,270		202,332
Investment income ratio*	3.69	%	6.71	%	6.58	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(44.38%) to (27.72	%)	15.82	%	27.11	%

(g) Fund available in prior year but no activity.

	Sub-Account
	International Opportunities Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	110,205		12,483		—
Units issued	202,989		109,273		12,824
Units redeemed	(84,205	)	(11,551	)	(341	)
Units, end of period	228,989		110,205		12,483
Unit value, end of period $	9.16		18.51		15.41
Assets, end of period $	2,097,481		2,039,663		192,374
Investment income ratio*	1.55	%	2.56	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(50.51%) to (34.21	%)	20.10	%	23.96	%

(g) Fund available in prior year but no activity.

114

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	International Opportunities Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (e)
Units, beginning of period	144,407		112,824		469		—
Units issued	175,070		67,598		204,132		1,745
Units redeemed	(159,902	)	(36,015	)	(91,777	)	(1,276	)
Units, end of period	159,575		144,407		112,824		469
Unit value, end of period $	11.15 to 11.27		22.70 to 22.88		19.03 to 19.12		15.46
Assets, end of period $	1,795,448		3,296,001		2,154,500		7,257
Investment income ratio*	1.25	%	1.63	%	0.25	%	0.00	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.65	%
Total return, lowest to highest***	(50.88%) to (50.73	%)	19.32% to 19.68	%	23.04% to 23.40	%	23.71	%

(e) Reflects the period from commencement of operations on May 2, 2005 through December 31, 2005.

	Sub-Account
	International Small Cap Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	43,381		1,115		—
Units issued	25,614		50,754		1,143
Units redeemed	(27,627	)	(8,488	)	(28	)
Units, end of period	41,368		43,381		1,115
Unit value, end of period $	7.39		15.73		14.27
Assets, end of period $	305,840		682,371		15,913
Investment income ratio*	3.02	%	4.61	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(53.00%) to (37.64	%)	10.20	%	27.73	%

(g) Fund available in prior year but no activity.

115

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	International Small Cap Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	323,099		262,400		242,913		254,360		261,096
Units issued	170,062		224,368		115,106		115,857		297,698
Units redeemed	(230,612	)	(163,669	)	(95,619	)	(127,304	)	(304,434	)
Units, end of period	262,549		323,099		262,400		242,913		254,360
Unit value, end of period $	13.43 to 13.82		28.66 to 29.47		16.52 to 26.77		13.00 to 21.03		11.88 to 19.17
Assets, end of period $	3,562,859		9,304,722		6,853,600		4,994,547		4,744,645
Investment income ratio*	2.67	%	2.93	%	1.03	%	0.86	%	0.12	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(53.29%) to (53.12	%)	9.36% to 9.80	%	26.84% to 27.29	%	9.34% to 9.72	%	20.28% to 20.64	%

	Sub-Account
	International Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	8,699		156		—
Units issued	89,308		86,980		157
Units redeemed	(30,289	)	(78,437	)	(1	)
Units, end of period	67,718		8,699		156
Unit value, end of period $	9.15		15.95		14.55
Assets, end of period $	619,413		138,707		2,266
Investment income ratio*	4.68	%	5.23	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(42.64%) to (26.82	%)	9.61	%	29.61	%

(g) Fund available in prior year but no activity.

116

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	International Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	1,343,264		1,282,480		1,151,161		534,492		451,530
Units issued	462,638		635,732		802,307		1,071,184		510,926
Units redeemed	(972,175	)	(574,948	)	(670,988	)	(454,515	)	(427,964	)
Units, end of period	833,727		1,343,264		1,282,480		1,151,161		534,492
Unit value, end of period $	13.35 to 13.79		23.37 to 24.12		21.49 to 22.42		16.70 to 17.40		15.24 to 15.83
Assets, end of period $	11,386,567		32,163,348		28,081,796		19,488,615		8,198,182
Investment income ratio*	3.01	%	4.36	%	1.77	%	0.66	%	1.28	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(43.04%) to (42.81	%)	8.76% to 9.25	%	28.68% to 29.27	%	9.78% to 10.15	%	20.75% to 21.12	%

	Sub-Account
	Investment Quality Bond Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07 (g)
Units, beginning of period	21,474		—
Units issued	22,172		28,300
Units redeemed	(20,542	)	(6,826	)
Units, end of period	23,104		21,474
Unit value, end of period $	10.97		11.15
Assets, end of period $	253,456		239,428
Investment income ratio*	6.27	%	13.41	%
Expense ratio, lowest to highest**	0.00	%	0.00	%
Total return, lowest to highest***	(1.61%) to 0.35	%	6.23	%

(g) Fund available in prior year but no activity.

117

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Investment Quality Bond Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	364,134		417,247		956,608		1,132,045		1,159,780
Units issued	58,613		101,824		255,155		240,139		645,968
Units redeemed	(134,518	)	(154,937	)	(794,516	)	(415,576	)	(673,703	)
Units, end of period	288,229		364,134		417,247		956,608		1,132,045
Unit value, end of period $	21.59 to 22.21		22.03 to 22.66		18.33 to 21.40		17.79 to 20.67		17.50 to 20.28
Assets, end of period $	6,251,474		8,095,296		8,726,321		19,439,556		22,645,826
Investment income ratio*	6.28	%	8.92	%	7.56	%	5.63	%	5.96	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(2.31%) to (1.97	%)	5.47% to 5.88	%	2.84% to 3.26	%	1.55% to 1.91	%	4.13% to 4.45	%

	Sub-Account
	Large Cap Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	3,559		64		—
Units issued	7,799		27,296		66
Units redeemed	(2,389	)	(23,801	)	(2	)
Units, end of period	8,969		3,559		64
Unit value, end of period $	7.84		12.96		12.77
Assets, end of period $	70,272		46,121		818
Investment income ratio*	2.41	%	0.20	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(39.55%) to (28.84	%)	1.53	%	14.38	%

(g) Fund available in prior year but no activity.

118

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Large Cap Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (e)
Units, beginning of period	303,754		2,302		289		—
Units issued	102,040		348,751		2,142		304
Units redeemed	(91,619	)	(47,299	)	(129	)	(15	)
Units, end of period	314,175		303,754		2,302		289
Unit value, end of period $	9.54 to 9.69		15.89 to 16.06		15.80 to 15.85		13.90
Assets, end of period $	3,019,835		4,850,940		36,373		4,019
Investment income ratio*	1.55	%	0.81	%	0.27	%	0.00	%
Expense ratio, lowest to highest**	0.30% to 0.70	%	0.30% to 0.70	%	0.45% to 0.65	%	0.65	%
Total return, lowest to highest***	(39.94%) to (39.70	%)	0.68% to 1.09	%	13.62% to 13.85	%	11.22	%

(e) Reflects the period from commencement of operations on May 2, 2005 through December 31, 2005.

	Sub-Account
	Large Cap Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	12,352		251		—
Units issued	50,484		15,544		251
Units redeemed	(9,695	)	(3,443	)	—
Units, end of period	53,141		12,352		251
Unit value, end of period $	9.00		14.03		13.43
Assets, end of period $	478,069		173,316		3,364
Investment income ratio*	3.76	%	2.11	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(35.89%) to (22.82	%)	4.45	%	16.03	%

(g) Fund available in prior year but no activity.

119

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Large Cap Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	355,022		217,111		174,124		74,430		83,191
Units issued	139,873		249,955		186,497		144,010		156,448
Units redeemed	(182,609	)	(112,044	)	(143,510	)	(44,316	)	(165,209	)
Units, end of period	312,286		355,022		217,111		174,124		74,430
Unit value, end of period $	16.78 to 17.07		26.35 to 26.72		25.41 to 25.69		22.06 to 22.24		19.23 to 19.32
Assets, end of period $	5,314,642		9,458,751		5,565,112		3,866,266		1,435,901
Investment income ratio*	1.77	%	1.03	%	0.45	%	0.00	%	1.43	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(36.33%) to (36.13	%)	3.70% to 4.01	%	15.18% to 15.53	%	14.74% to 15.08	%	21.02% to 21.38	%

	Sub-Account
	Lifestyle Aggressive Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (d)
Units, beginning of period	49,164		534		—
Units issued	193,153		77,108		579
Units redeemed	(33,742	)	(28,478	)	(45	)
Units, end of period	208,575		49,164		534
Unit value, end of period $	8.41		14.50		13.34
Assets, end of period $	1,753,973		712,814		7,133
Investment income ratio*	2.74	%	9.39	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(42.00%) to (28.35	%)	8.66	%	15.48	%

(d) Fund renamed on May 1, 2006. Previously known as Lifestyle Aggressive 1000 Trust. Fund available in prior year but no activity.

120

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Lifestyle Aggressive Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (r)		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	462,444		348,066		316,430		305,615		73,758
Units issued	178,424		197,231		121,063		63,954		350,315
Units redeemed	(262,594	)	(82,853	)	(89,427	)	(53,139	)	(118,458	)
Units, end of period	378,274		462,444		348,066		316,430		305,615
Unit value, end of period $	13.05 to 13.42		22.65 to 23.20		16.82 to 21.44		14.65 to 18.58		13.31 to 16.86
Assets, end of period $	4,954,739		10,530,978		7,319,039		5,802,326		5,093,275
Investment income ratio*	1.90	%	9.52	%	7.38	%	1.79	%	0.78	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(42.37%) to (42.16	%)	7.84% to 8.22	%	14.72% to 15.11	%	9.92% to 10.25	%	15.30% to 15.66	%

(r) Fund renamed on May 1, 2006. Previously known as Lifestyle Aggressive 1000 Trust.

	Sub-Account
	Lifestyle Balanced Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (c)
Units, beginning of period	218,765		107,849		—
Units issued	252,640		129,478		110,597
Units redeemed	(125,900	)	(18,562	)	(2,748	)
Units, end of period	345,505		218,765		107,849
Unit value, end of period $	9.06		13.19		12.37
Assets, end of period $	3,128,937		2,884,985		1,334,204
Investment income ratio*	4.16	%	7.63	%	0.11	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(31.33%) to (21.25	%)	6.60	%	12.80	%

(c) Fund renamed on May 1, 2006. Previously known as Lifestyle Balanced 640 Trust. Fund available in prior year but no activity.

121

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Lifestyle Balanced Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (s)		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	525,031		693,715		934,585		914,120		805,068
Units issued	216,482		116,050		245,346		282,338		639,365
Units redeemed	(228,636	)	(284,734	)	(486,216	)	(261,873	)	(530,313	)
Units, end of period	512,877		525,031		693,715		934,585		914,120
Unit value, end of period $	16.94 to 17.42		24.81 to 25.43		18.61 to 23.96		16.60 to 21.26		15.62 to 19.96
Assets, end of period $	8,730,517		13,079,455		16,303,510		19,581,681		18,039,138
Investment income ratio*	3.23	%	7.44	%	5.76	%	3.96	%	2.05	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(31.74%) to (31.50	%)	5.77% to 6.15	%	12.01% to 12.39	%	6.20% to 6.51	%	12.75% to 13.09	%

(s) Fund renamed on May 1, 2006. Previously known as Lifestyle Balanced 640 Trust.

	Sub-Account
	Lifestyle Conservative Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (a)
Units, beginning of period	2,736		114		—
Units issued	34,420		3,731		115
Units redeemed	(2,714	)	(1,109	)	(1	)
Units, end of period	34,442		2,736		114
Unit value, end of period $	9.99		11.81		11.21
Assets, end of period $	344,025		32,325		1,287
Investment income ratio*	25.38	%	9.49	%	1.13	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(15.43%) to (10.74	%)	5.35	%	8.44	%

(a) Fund renamed on May 1, 2006. Previously known as Lifestyle Conservative 280 Trust. Fund available in prior year but no activity.

122

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Lifestyle Conservative Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (t)		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	289,337		55,589		284,921		268,947		268,987
Units issued	153,526		257,589		66,508		55,265		280,449
Units redeemed	(264,577	)	(23,841	)	(295,840	)	(39,291	)	(280,489	)
Units, end of period	178,286		289,337		55,589		284,921		268,947
Unit value, end of period $	19.84 to 20.40		23.65 to 24.23		18.47 to 23.07		17.13 to 21.23		16.74 to 20.76
Assets, end of period $	3,567,617		6,915,236		1,239,063		5,962,323		5,504,364
Investment income ratio*	3.34	%	9.12	%	6.17	%	5.00	%	3.76	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.30% to 0.65	%	0.40% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(16.12%) to (15.82	%)	4.70% to 5.05	%	7.73% to 8.11	%	2.22% to 2.48	%	7.88% to 8.21	%

(t) Fund renamed on May 1, 2006. Previously known as Lifestyle Conservative 280 Trust.

	Sub-Account
	Lifestyle Growth Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (z)
Units, beginning of period	279,917		113,970		—
Units issued	324,378		198,908		118,278
Units redeemed	(111,828	)	(32,961	)	(4,308	)
Units, end of period	492,467		279,917		113,970
Unit value, end of period $	8.73		13.76		12.79
Assets, end of period $	4,299,878		3,850,878		1,457,877
Investment income ratio*	3.60	%	7.22	%	0.08	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(36.54%) to (24.41	%)	7.55	%	13.58	%

(z) Fund renamed on May 1, 2006. Previously known as Lifestyle Growth 820 Trust. Fund available in prior year but no activity.

123

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Lifestyle Growth Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (u)		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	589,218		507,106		416,491		417,608		178,824
Units issued	167,165		190,193		158,281		130,964		368,911
Units redeemed	(139,411	)	(108,081	)	(67,666	)	(132,081	)	(130,127	)
Units, end of period	616,972		589,218		507,106		416,491		417,608
Unit value, end of period $	15.14 to 15.57		24.03 to 24.63		17.42 to 22.91		15.44 to 20.26		14.28 to 18.71
Assets, end of period $	9,400,374		14,223,964		11,424,780		8,315,803		7,721,710
Investment income ratio*	2.71	%	7.66	%	5.75	%	2.70	%	1.39	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(37.01%) to (36.79	%)	6.82% to 7.20	%	12.76% to 13.11	%	7.96% to 8.28	%	13.85% to 14.19	%

(u) Fund renamed on May 1, 2006. Previously known as Lifestyle Growth 820 Trust.

	Sub-Account
	Lifestyle Moderate Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (y)
Units, beginning of period	36,346		1,032		—
Units issued	185,989		51,669		1,056
Units redeemed	(93,433	)	(16,355	)	(24	)
Units, end of period	128,902		36,346		1,032
Unit value, end of period $	9.35		12.33		11.71
Assets, end of period $	1,205,627		448,263		12,083
Investment income ratio*	7.22	%	9.18	%	0.42	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(24.16%) to (16.44	%)	5.34	%	10.49	%

(y) Fund renamed on May 1, 2006. Previously known as Lifestyle Moderate 460 Trust. Fund available in prior year but no activity.

124

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Lifestyle Moderate Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (v)		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	103,478		137,665		143,857		170,770		105,262
Units issued	61,722		135,935		158,656		66,570		170,447
Units redeemed	(71,273	)	(170,122	)	(164,848	)	(93,483	)	(104,939	)
Units, end of period	93,927		103,478		137,665		143,857		170,770
Unit value, end of period $	18.06 to 18.57		23.99 to 24.59		18.23 to 23.42		16.60 to 21.22		16.03 to 20.45
Assets, end of period $	1,708,801		2,495,078		3,158,679		3,008,972		3,447,752
Investment income ratio*	3.94	%	6.52	%	3.83	%	4.03	%	2.62	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(24.72%) to (24.46	%)	4.61% to 4.98	%	9.70% to 10.09	%	3.48% to 3.79	%	10.32% to 10.65	%

(v) Fund renamed on May 1, 2006. Previously known as Lifestyle Moderate 460 Trust.

	Sub-Account
	Managed Trust Series 0
	Year Ended Dec. 31/08 (aa)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	1,253		1,073		—
Units issued	1,510		1,305		14,325
Units redeemed	(2,763	)	(1,125	)	(13,252	)
Units, end of period	—		1,253		1,073
Unit value, end of period $	45.11		57.27		56.17
Assets, end of period $	—		71,745		60,233
Investment income ratio*	0.67	%	5.37	%	10.94	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(21.22%) to (12.07	%)	1.95	%	7.48	%

(aa) Terminated as an investment option and funds transferred to Lifestyle Balanced Trust on November 10, 2008.

(g) Fund available in prior year but no activity.

125

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Mid Cap Index Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	71,068		25,037		—
Units issued	65,541		85,093		25,693
Units redeemed	(31,295	)	(39,062	)	(656	)
Units, end of period	105,314		71,068		25,037
Unit value, end of period $	9.56		15.02		13.97
Assets, end of period $	1,006,767		1,067,496		349,681
Investment income ratio*	1.14	%	1.69	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(36.36%) to (29.45	%)	7.55	%	9.74	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Mid Cap Index Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	1,227,846		315,280		329,426		411,020		253,416
Units issued	151,549		1,720,087		210,019		329,260		459,051
Units redeemed	(524,290	)	(807,521	)	(224,165	)	(410,854	)	(301,447	)
Units, end of period	855,105		1,227,846		315,280		329,426		411,020
Unit value, end of period $	13.82 to 14.22		21.80 to 22.42		20.42 to 20.92		18.74 to 19.08		16.88 to 17.09
Assets, end of period $	12,037,182		27,299,289		6,517,466		6,231,380		6,984,470
Investment income ratio*	0.91	%	1.22	%	0.63	%	0.76	%	0.34	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(36.82%) to (36.61	%)	6.76% to 7.19	%	8.95% to 9.39	%	11.24% to 11.63	%	15.08% to 15.43	%

126

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Mid Cap Intersection Trust Series 0
	Year Ended Dec. 31/08 (g)
Units, beginning of period	—
Units issued	6,131
Units redeemed	(823	)
Units, end of period	5,308
Unit value, end of period $	5.40
Assets, end of period $	28,673
Investment income ratio*	0.28	%
Expense ratio, lowest to highest**	0.00	%
Total return, lowest to highest***	(42.00%) to (30.76	%)

(g) Fund available in prior year but no activity.

	Sub-Account
	Mid Cap Intersection Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07 (w)
Units, beginning of period	89		—
Units issued	94		89
Units redeemed	(183	)	—
Units, end of period	—		89
Unit value, end of period $	6.67		11.59
Assets, end of period $	—		1,036
Investment income ratio*	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.65	%	0.65	%
Total return, lowest to highest***	(42.43	%)	(7.29	%)

(w) Reflects the period from commencement of operations on April 30, 2007 through December 31, 2007.

127

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Mid Cap Stock Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	29,434		3,497		—
Units issued	61,193		29,526		3,810
Units redeemed	(29,963	)	(3,589	)	(313	)
Units, end of period	60,664		29,434		3,497
Unit value, end of period $	27.71		49.27		39.87
Assets, end of period $	1,681,202		1,450,200		139,406
Investment income ratio*	0.00	%	0.01	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(43.75%) to (29.90	%)	23.59	%	13.66	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Mid Cap Stock Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	690,454		746,822		842,918		1,191,214		439,064
Units issued	379,942		268,501		429,518		832,322		1,709,693
Units redeemed	(334,029	)	(324,869	)	(525,614	)	(1,180,618	)	(957,543	)
Units, end of period	736,367		690,454		746,822		842,918		1,191,214
Unit value, end of period $	12.00 to 12.39		21.39 to 22.00		17.44 to 18.58		15.46 to 16.45		13.62 to 14.44
Assets, end of period $	9,024,765		15,137,410		13,282,114		13,361,473		16,362,126
Investment income ratio*	0.00	%	0.00	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.65	%
Total return, lowest to highest***	(44.13%) to (43.90	%)	22.70% to 23.20	%	12.75% to 13.21	%	13.77% to 14.23	%	18.26% to 18.68	%

128

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Mid Cap Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	28,637		7,923		—
Units issued	298,591		32,428		8,649
Units redeemed	(164,723	)	(11,714	)	(726	)
Units, end of period	162,505		28,637		7,923
Unit value, end of period $	7.78		12.76		12.67
Assets, end of period $	1,263,839		365,431		100,380
Investment income ratio*	2.65	%	1.27	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(39.05%) to (25.96	%)	0.72	%	12.30	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Mid Cap Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	542,856		1,452,791		1,656,848		753,501		445,032
Units issued	278,961		125,745		665,474		1,329,000		675,227
Units redeemed	(343,836	)	(1,035,680	)	(869,531	)	(425,653	)	(366,758	)
Units, end of period	477,981		542,856		1,452,791		1,656,848		753,501
Unit value, end of period $	13.00 to 13.40		21.46 to 22.04		21.46 to 21.94		19.24 to 19.55		17.93 to 18.12
Assets, end of period $	6,317,840		11,820,247		31,558,117		32,162,303		13,585,575
Investment income ratio*	1.73	%	1.00	%	0.69	%	0.38	%	0.49	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.65	%	0.25% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(39.43%) to (39.19	%)	0.04% to 0.44	%	11.55% to 12.00	%	7.31% to 7.68	%	23.65% to 24.03	%

129

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Mid Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	110,206		43,969		—
Units issued	161,497		149,985		46,901
Units redeemed	(187,001	)	(83,748	)	(2,932	)
Units, end of period	84,702		110,206		43,969
Unit value, end of period $	14.18		21.71		21.60
Assets, end of period $	1,201,290		2,392,619		949,770
Investment income ratio*	1.31	%	2.30	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(34.67%) to (27.51	%)	0.51	%	20.34	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Money Market Trust B Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	1,343,526		429,969		—
Units issued	4,806,729		2,530,991		705,113
Units redeemed	(2,056,535	)	(1,617,434	)	(275,144	)
Units, end of period	4,093,720		1,343,526		429,969
Unit value, end of period $	17.26		16.90		16.12
Assets, end of period $	70,653,639		22,707,880		6,933,060
Investment income ratio*	2.02	%	4.54	%	4.82	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	0.40% to 2.12	%	4.82	%	4.70	%

(g) Fund available in prior year but no activity.

130

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Money Market Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	4,025,524		4,383,149		2,786,033		2,174,205		2,120,159
Units issued	2,612,046		1,324,785		4,547,755		2,639,719		2,342,246
Units redeemed	(1,819,338	)	(1,682,410	)	(2,950,639	)	(2,027,891	)	(2,288,200	)
Units, end of period	4,818,232		4,025,524		4,383,149		2,786,033		2,174,205
Unit value, end of period $	21.09 to 21.78		20.80 to 21.46		14.58 to 20.58		14.04 to 19.65		13.75 to 19.21
Assets, end of period $	101,314,436		83,833,691		86,696,310		52,697,960		40,361,843
Investment income ratio*	1.73	%	4.46	%	4.40	%	2.66	%	0.81	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	1.09% to 1.52	%	3.83% to 4.30	%	3.70% to 4.17	%	1.95% to 2.31	%	0.15% to 0.46	%

	Sub-Account
	Natural Resources Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	34,188		228		—
Units issued	80,652		44,794		236
Units redeemed	(54,958	)	(10,834	)	(8	)
Units, end of period	59,882		34,188		228
Unit value, end of period $	11.53		23.82		16.92
Assets, end of period $	690,422		814,432		3,857
Investment income ratio*	0.74	%	1.39	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(51.60%) to (41.22	%)	40.81	%	22.32	%

(g) Fund available in prior year but no activity.

131

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Natural Resources Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	254,942		176,488		161,459		88,358		62,308
Units issued	266,782		145,660		253,308		197,987		108,859
Units redeemed	(279,964	)	(67,206	)	(238,279	)	(124,886	)	(82,809	)
Units, end of period	241,760		254,942		176,488		161,459		88,358
Unit value, end of period $	26.35 to 26.88		54.82 to 55.72		39.22 to 39.65		32.28 to 32.54		22.14 to 22.24
Assets, end of period $	6,450,461		14,108,807		6,971,550		5,420,454		1,963,833
Investment income ratio*	0.59	%	1.07	%	0.50	%	0.00	%	0.07	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(51.93%) to (51.76	%)	39.76% to 40.25	%	21.50% to 21.87	%	45.82% to 46.26	%	23.51% to 23.88	%

	Sub-Account
	Optimized All Cap Trust Series 0
	Year Ended Dec. 31/08 (ae)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	2,943		154		—
Units issued	142,562		3,223		160
Units redeemed	(55,469	)	(434	)	(6	)
Units, end of period	90,036		2,943		154
Unit value, end of period $	7.81		13.73		13.22
Assets, end of period $	703,064		40,413		2,045
Investment income ratio*	1.17	%	1.57	%	3.01	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(43.12%) to (28.05	%)	3.82	%	15.24	%

(ae) Fund renamed on April 28, 2008. Previously known as Quantitative All Cap Trust.

(g) Fund available in prior year but no activity.

132

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Optimized All Cap Trust Series 1
	Year Ended Dec. 31/08 (ae)		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04 (b)
Units, beginning of period	53		50		1,712		164		—
Units issued	10,535		13,530		34,598		3,081		1,784
Units redeemed	(6,231	)	(13,527	)	(36,260	)	(1,533	)	(1,620	)
Units, end of period	4,357		53		50		1,712		164
Unit value, end of period $	12.71 to 12.85		22.51 to 22.72		21.84 to 21.99		19.08 to 19.18		17.69 to 17.75
Assets, end of period $	56,007		1,200		1,093		32,673		2,916
Investment income ratio*	0.96	%	0.31	%	0.01	%	3.08	%	1.30	%
Expense ratio, lowest to highest**	0.45% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(43.55%) to (43.43	%)	3.11% to 3.31	%	14.42% to 14.65	%	7.88% to 8.10	%	14.16% to 14.39	%

(ae) Fund renamed on April 28, 2008. Previously known as Quantitative All Cap Trust.

(b) Reflects the period from commencement of operations on May 3, 2004 through December 31, 2004.

	Sub-Account
	Optimized Value Trust Series 0
	Year Ended Dec. 31/08 (af)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	3,611		124		—
Units issued	2,253		5,310		129
Units redeemed	(2,501	)	(1,823	)	(5	)
Units, end of period	3,363		3,611		124
Unit value, end of period $	7.60		12.91		13.61
Assets, end of period $	25,545		46,602		1,687
Investment income ratio*	2.76	%	3.20	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(41.15%) to (27.37	%)	(5.17	%)	21.36	%

(af) Fund renamed on April 28, 2008. Previously known as Quantitative Value Trust.

(g) Fund available in prior year but no activity.

133

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Optimized Value Trust Series 1
	Year Ended Dec. 31/08 (af)		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (g)
Units, beginning of period	29,814		1,038		—		—
Units issued	8,708		56,475		14,129		1,072
Units redeemed	(38,472	)	(27,699	)	(13,091	)	(1,072	)
Units, end of period	50		29,814		1,038		—
Unit value, end of period $	10.50 to 10.65		17.97 to 18.17		19.08 to 19.18		15.85
Assets, end of period $	538		539,099		19,810		—
Investment income ratio*	0.05	%	2.27	%	0.22	%	0.00	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.45% to 0.65	%	0.65	%
Total return, lowest to highest***	(41.58%) to (41.40	%)	(5.81%) to (5.53	%)	20.38% to 20.63	%	8.48	%

(af) Fund renamed on April 28, 2008. Previously known as Quantitative Value Trust.

(g) Fund available in prior year but no activity.

	Sub-Account
	Overseas Equity Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	137,614		65,482		—
Units issued	75,397		168,518		66,602
Units redeemed	(65,572	)	(96,386	)	(1,120	)
Units, end of period	147,439		137,614		65,482
Unit value, end of period $	12.42		21.43		19.04
Assets, end of period $	1,831,075		2,948,953		1,246,990
Investment income ratio*	2.06	%	2.47	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(42.05%) to (24.67	%)	12.53	%	19.76	%

(g) Fund available in prior year but no activity.

134

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Pacific Rim Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	25,967		141		—
Units issued	85,741		36,865		146
Units redeemed	(61,147	)	(11,039	)	(5	)
Units, end of period	50,561		25,967		141
Unit value, end of period $	9.25		15.40		14.10
Assets, end of period $	467,715		399,811		1,981
Investment income ratio*	1.53	%	2.47	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(39.92%) to (19.85	%)	9.19	%	11.22	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Pacific Rim Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	531,658		677,202		562,685		592,545		487,239
Units issued	299,011		233,026		604,396		242,075		502,648
Units redeemed	(317,530	)	(378,570	)	(489,879	)	(271,935	)	(397,342	)
Units, end of period	513,139		531,658		677,202		562,685		592,545
Unit value, end of period $	8.69 to 8.97		14.58 to 14.99		13.46 to 16.58		12.20 to 15.01		9.79 to 9.91
Assets, end of period $	4,554,939		7,900,944		9,231,358		6,929,233		5,836,323
Investment income ratio*	1.63	%	1.81	%	0.90	%	0.86	%	0.65	%
Expense ratio, lowest to highest**	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(40.43%) to (40.19	%)	8.37% to 8.81	%	10.27% to 10.71	%	24.89% to 25.32	%	16.14% to 16.50	%

135

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Quantitative Mid Cap Trust Series 0
	Year Ended Dec. 31/08 (k)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	5,837		70		—
Units issued	1,328		8,020		73
Units redeemed	(7,165	)	(2,253	)	(3	)
Units, end of period	—		5,837		70
Unit value, end of period $	11.59		11.96		12.17
Assets, end of period $	—		69,797		860
Investment income ratio*	0.06	%	0.71	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(3.07	%)	(1.73	%)	4.10	%

(k) Terminated as an investment option and funds transferred to Mid Cap Index Trust on April 28, 2008.

(g) Fund available in prior year but no activity.

	Sub-Account
	Quantitative Mid Cap Trust Series 1
	Year Ended Dec. 31/08 (k)		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	3,027		32,171		34,103		31,203		14,437
Units issued	531		5,908		30,835		9,698		41,021
Units redeemed	(3,558	)	(35,052	)	(32,767	)	(6,798	)	(24,255	)
Units, end of period	—		3,027		32,171		34,103		31,203
Unit value, end of period $	13.87 to 14.16		14.33 to 14.67		14.73 to 15.02		14.24 to 14.44		12.62 to 12.71
Assets, end of period $	—		43,898		474,909		487,068		394,385
Investment income ratio*	0.04	%	0.13	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(3.23%) to (3.14	%)	(2.72%) to (2.36	%)	3.41% to 3.78	%	12.89% to 13.23	%	17.44% to 17.67	%

(k) Terminated as an investment option and funds transferred to Mid Cap Index Trust on April 28, 2008.

136

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Real Estate Securities Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	61,644		61,253		—
Units issued	95,202		41,795		71,898
Units redeemed	(85,222	)	(41,404	)	(10,645	)
Units, end of period	71,624		61,644		61,253
Unit value, end of period $	48.75		80.44		95.27
Assets, end of period $	3,491,635		4,958,485		5,835,277
Investment income ratio*	3.49	%	2.87	%	2.02	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(39.39%) to (38.33	%)	(15.56	%)	38.17	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Real Estate Securities Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	283,937		366,108		472,983		511,509		445,289
Units issued	73,525		91,471		79,184		132,415		359,425
Units redeemed	(136,022	)	(173,642	)	(186,059	)	(170,941	)	(293,205	)
Units, end of period	221,440		283,937		366,108		472,983		511,509
Unit value, end of period $	57.75 to 59.63		96.01 to 98.74		45.30 to 117.35		32.99 to 85.23		29.65 to 76.43
Assets, end of period $	12,770,010		27,305,782		41,904,090		39,627,992		38,437,806
Investment income ratio*	3.23	%	2.57	%	1.78	%	1.96	%	2.36	%
Expense ratio, lowest to highest**	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.65	%
Total return, lowest to highest***	(39.85%) to (39.60	%)	(16.20%) to (15.86	%)	37.14% to 37.69	%	11.07% to 11.52	%	31.18% to 31.64	%

137

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Real Return Bond Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	14,342		9,519		—
Units issued	115,493		8,989		9,712
Units redeemed	(38,734	)	(4,166	)	(193	)
Units, end of period	91,101		14,342		9,519
Unit value, end of period $	9.88		11.14		10.01
Assets, end of period $	900,310		159,791		95,237
Investment income ratio*	0.58	%	7.43	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(11.50%) to (11.30	%)	11.36	%	0.43	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Real Return Bond Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	350,490		175,568		116,509		111,729		5,873
Units issued	476,953		230,718		103,018		85,239		262,524
Units redeemed	(454,171	)	(55,796	)	(43,959	)	(80,459	)	(156,668	)
Units, end of period	373,272		350,490		175,568		116,509		111,729
Unit value, end of period $	13.86 to 14.10		15.72 to 15.95		14.22 to 14.38		14.25 to 14.37		14.14 to 14.22
Assets, end of period $	5,236,778		5,575,602		2,514,498		1,669,468		1,584,831
Investment income ratio*	0.55	%	7.51	%	2.37	%	0.00	%	0.49	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(11.86%) to (11.59	%)	10.58% to 10.94	%	(0.27%) to 0.05	%	0.78% to 1.09	%	8.35% to 8.69	%

138

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Science & Technology Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	31,366		83		—
Units issued	105,213		44,540		86
Units redeemed	(75,175	)	(13,257	)	(3	)
Units, end of period	61,404		31,366		83
Unit value, end of period $	7.91		14.24		11.90
Assets, end of period $	485,962		446,630		986
Investment income ratio*	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(44.42%) to (29.01	%)	19.62	%	5.60	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Science & Technology Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	857,168		1,326,101		1,728,120		2,513,425		2,816,080
Units issued	370,686		686,435		490,113		687,432		2,720,294
Units redeemed	(592,079	)	(1,155,368	)	(892,132	)	(1,472,737	)	(3,022,949	)
Units, end of period	635,775		857,168		1,326,101		1,728,120		2,513,425
Unit value, end of period $	9.28 to 9.55		16.76 to 17.24		5.41 to 14.46		5.16 to 13.74		5.08 to 13.50
Assets, end of period $	5,102,005		12,527,168		16,624,064		20,287,236		30,223,103
Investment income ratio*	0.00	%	0.00	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.65	%
Total return, lowest to highest***	(44.81%) to (44.61	%)	18.72% to 19.21	%	4.79% to 5.21	%	1.37% to 1.78	%	0.22% to 0.58	%

139

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Short-Term Bond Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	5,739		1,338		—
Units issued	13,807		5,337		42,917
Units redeemed	(14,838	)	(936	)	(41,579	)
Units, end of period	4,708		5,739		1,338
Unit value, end of period $	15.45		19.05		18.45
Assets, end of period $	72,706		109,311		24,683
Investment income ratio*	9.13	%	13.46	%	35.06	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(18.92%) to (15.98	%)	3.25	%	4.55	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Small Cap Growth Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	174,922		107,112		—
Units issued	162,394		178,101		112,610
Units redeemed	(143,660	)	(110,291	)	(5,498	)
Units, end of period	193,656		174,922		107,112
Unit value, end of period $	11.84		19.59		17.19
Assets, end of period $	2,293,376		3,426,541		1,840,852
Investment income ratio*	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(39.54%) to (28.06	%)	13.98	%	13.47	%

(g) Fund available in prior year but no activity.

140

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Small Cap Growth Trust Series 1
	Year Ended Dec. 31/08 (ai)
Units, beginning of period	—
Units issued	46,848
Units redeemed	(39,991	)
Units, end of period	6,857
Unit value, end of period $	9.99 to 10.00
Assets, end of period $	68,532
Investment income ratio*	0.00	%
Expense ratio, lowest to highest**	0.35% to 0.65	%
Total return, lowest to highest***	(0.08%) to (0.04	%)

(ai) Reflects the period from commencement of operations on November 10, 2008 through December 31, 2008.

	Sub-Account
	Small Cap Index Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	25,817		11,525		—
Units issued	53,939		25,127		35,074
Units redeemed	(37,401	)	(10,835	)	(23,549	)
Units, end of period	42,355		25,817		11,525
Unit value, end of period $	10.05		15.16		15.48
Assets, end of period $	425,740		391,430		178,426
Investment income ratio*	1.47	%	2.00	%	2.39	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(33.70%) to (30.20	%)	(2.06	%)	17.64	%

(g) Fund available in prior year but no activity.

141

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Small Cap Index Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	339,311		668,353		728,419		453,968		162,048
Units issued	89,307		81,643		167,253		454,316		586,135
Units redeemed	(183,520	)	(410,685	)	(227,319	)	(179,865	)	(294,215	)
Units, end of period	245,098		339,311		668,353		728,419		453,968
Unit value, end of period $	11.95 to 12.29		18.08 to 18.59		18.61 to 19.06		15.94 to 16.25		15.48 to 15.66
Assets, end of period $	2,975,902		6,241,315		12,623,575		11,739,024		7,067,046
Investment income ratio*	1.23	%	1.61	%	0.49	%	0.53	%	0.34	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(34.14%) to (33.91	%)	(2.85%) to (2.46	%)	16.79% to 17.26	%	3.16% to 3.58	%	16.56% to 16.92	%

	Sub-Account
	Small Cap Opportunities Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07 (g)
Units, beginning of period	3,554		—
Units issued	4,502		5,199
Units redeemed	(4,254	)	(1,645	)
Units, end of period	3,802		3,554
Unit value, end of period $	6.87		11.87
Assets, end of period $	26,117		42,196
Investment income ratio*	2.38	%	2.68	%
Expense ratio, lowest to highest**	0.00	%	0.00	%
Total return, lowest to highest***	(42.13%) to (30.69	%)	(7.60	%)

(g) Fund available in prior year but no activity.

142

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Small Cap Opportunities Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	137,943		282,521		256,511		74,332		28,153
Units issued	31,333		64,717		171,059		314,871		98,813
Units redeemed	(112,213	)	(209,295	)	(145,049	)	(132,692	)	(52,634	)
Units, end of period	57,063		137,943		282,521		256,511		74,332
Unit value, end of period $	13.50 to 13.77		23.42 to 23.86		25.54 to 25.92		23.28 to 23.53		21.77 to 21.88
Assets, end of period $	775,813		3,272,245		7,281,857		6,011,042		1,625,557
Investment income ratio*	2.16	%	1.75	%	0.68	%	0.00	%	0.03	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(42.51%) to (42.30	%)	(8.31%) to (7.94	%)	9.68% to 10.12	%	7.02% to 7.45	%	24.96% to 25.34	%

	Sub-Account
	Small Cap Trust Series 0
	Year Ended Dec. 31/08 (ab)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	1,402		—		—
Units issued	24,844		2,123		5,610
Units redeemed	(26,246	)	(721	)	(5,610	)
Units, end of period	—		1,402		—
Unit value, end of period $	7.27		12.39		12.32
Assets, end of period $	—		17,384		—
Investment income ratio*	0.01	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(41.37%) to (32.38	%)	0.57	%	7.62	%

(ab) Terminated as an investment option and funds transferred to Small Cap Growth Trust on November 10, 2008.

(g) Fund available in prior year but no activity.

143

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Small Cap Trust Series 1
	Year Ended Dec. 31/08 (ab)		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (e)
Units, beginning of period	7,223		2,996		1,196		—
Units issued	42,453		8,887		4,121		1,696
Units redeemed	(49,676	)	(4,660	)	(2,321	)	(500	)
Units, end of period	—		7,223		2,996		1,196
Unit value, end of period $	8.87 to 8.96		15.22 to 15.30		15.22 to 15.27		14.24 to 14.26
Assets, end of period $	—		109,996		45,604		17,031
Investment income ratio*	0.01	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(41.74%) to (41.59	%)	(0.01%) to 0.19	%	6.86% to 7.08	%	13.92% to 14.06	%

(ab) Terminated as an investment option and funds transferred to Small Cap Growth Trust on November 10, 2008.

(e) Reflects the period from commencement of operations on May 2, 2005 through December 31, 2005.

	Sub-Account
	Small Cap Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	102,009		124,341		—
Units issued	94,913		15,444		143,375
Units redeemed	(92,409	)	(37,776	)	(19,034	)
Units, end of period	104,513		102,009		124,341
Unit value, end of period $	25.43		34.40		35.44
Assets, end of period $	2,658,179		3,509,437		4,406,358
Investment income ratio*	1.36	%	0.97	%	0.13	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(27.51%) to (26.07	%)	(2.92	%)	19.32	%

(g) Fund available in prior year but no activity.

144

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Small Cap Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07 (ac)
Units, beginning of period	747		—
Units issued	127,542		31,908
Units redeemed	(63,969	)	(31,161	)
Units, end of period	64,320		747
Unit value, end of period $	9.10 to 9.12		12.26 to 12.39
Assets, end of period $	582,478		9,201
Investment income ratio*	2.10	%	0.02	%
Expense ratio, lowest to highest**	0.45% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(26.56%) to (26.41	%)	(1.88%) to (0.88	%)

(ac) Reflects the period from commencement of operations on November 12, 2007 through December 31, 2007.

	Sub-Account
	Small Company Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (g)
Units, beginning of period	78,273		77,847		2,740		—
Units issued	70,823		9,939		90,180		10,254
Units redeemed	(11,713	)	(9,513	)	(15,073	)	(7,514	)
Units, end of period	137,383		78,273		77,847		2,740
Unit value, end of period $	8.79 to 8.92		15.60 to 15.77		16.80 to 16.93		16.01 to 16.06
Assets, end of period $	1,225,349		1,234,056		1,317,577		43,967
Investment income ratio*	0.00	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(43.61%) to (43.44	%)	(7.15%) to (6.86	%)	4.92% to 5.23	%	5.63% to 5.84	%

(g) Fund available in prior year but no activity.

145

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Small Company Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	50,455		5,566		—
Units issued	80,014		60,594		6,551
Units redeemed	(38,374	)	(15,705	)	(985	)
Units, end of period	92,095		50,455		5,566
Unit value, end of period $	9.67		13.25		13.41
Assets, end of period $	890,555		668,711		74,625
Investment income ratio*	0.86	%	0.17	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(29.59%) to (27.05	%)	(1.14	%)	15.50	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Small Company Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	896,860		1,197,374		1,534,174		1,525,817		1,151,115
Units issued	326,502		494,264		813,580		766,171		1,166,644
Units redeemed	(564,047	)	(794,778	)	(1,150,380	)	(757,814	)	(791,942	)
Units, end of period	659,315		896,860		1,197,374		1,534,174		1,525,817
Unit value, end of period $	13.60 to 14.04		18.69 to 19.29		19.05 to 28.45		16.62 to 24.78		15.67 to 23.28
Assets, end of period $	9,496,541		17,636,851		23,687,841		26,095,828		24,396,927
Investment income ratio*	0.66	%	0.15	%	0.07	%	0.27	%	0.15	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(27.52%) to (27.24	%)	(1.89%) to (1.44	%)	14.62% to 15.13	%	6.29% to 6.66	%	24.38% to 24.76	%

146

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Strategic Bond Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	12,929		—		—
Units issued	4,939		18,075		60
Units redeemed	(8,158	)	(5,146	)	(60	)
Units, end of period	9,710		12,929		—
Unit value, end of period $	9.23		10.99		10.99
Assets, end of period $	89,594		142,120		—
Investment income ratio*	6.78	%	10.56	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(16.07%) to (9.37	%)	0.02	%	7.05	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Strategic Bond Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	201,762		249,209		253,221		238,775		169,132
Units issued	54,133		109,181		138,457		176,347		290,490
Units redeemed	(162,773	)	(156,628	)	(142,469	)	(161,901	)	(220,847	)
Units, end of period	93,122		201,762		249,209		253,221		238,775
Unit value, end of period $	18.07 to 18.59		21.60 to 22.22		19.92 to 22.32		18.71 to 20.86		18.32 to 20.38
Assets, end of period $	1,680,117		4,397,774		5,459,524		5,217,823		4,821,612
Investment income ratio*	5.08	%	9.23	%	6.48	%	2.48	%	3.88	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(16.62%) to (16.33	%)	(0.85%) to (0.45	%)	6.31% to 6.73	%	1.98% to 2.34	%	5.98% to 6.29	%

147

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Strategic Income Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07 (g)
Units, beginning of period	1,248		—
Units issued	766		1,481
Units redeemed	(499	)	(233	)
Units, end of period	1,515		1,248
Unit value, end of period $	10.36		11.33
Assets, end of period $	15,689		14,141
Investment income ratio*	11.82	%	2.57	%
Expense ratio, lowest to highest**	0.00	%	0.00	%
Total return, lowest to highest***	(8.57%) to (8.05	%)	5.85	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Strategic Income Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04 (b)
Units, beginning of period	16,393		35,928		78,004		2,225		—
Units issued	185,983		20,922		37,952		90,668		2,246
Units redeemed	(118,718	)	(40,457	)	(80,028	)	(14,889	)	(21	)
Units, end of period	83,658		16,393		35,928		78,004		2,225
Unit value, end of period $	13.59 to 13.79		14.97 to 15.14		14.24 to 14.35		13.78 to 13.82		13.56 to 13.57
Assets, end of period $	1,151,717		245,858		512,297		1,075,257		30,167
Investment income ratio*	12.21	%	1.70	%	2.03	%	12.20	%	6.19	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(9.22%) to (8.93	%)	5.16% to 5.51	%	3.31% to 3.62	%	1.64% to 1.81	%	8.46% to 8.60	%

(b) Reflects the period from commencement of operations on May 3, 2004 through December 31, 2004.

148

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Total Bond Market Trust B Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07 (j)		Year Ended Dec. 31/06 (g)
Units, beginning of period	156,154		103,058		—
Units issued	259,709		171,563		107,642
Units redeemed	(135,950	)	(118,467	)	(4,584	)
Units, end of period	279,913		156,154		103,058
Unit value, end of period $	18.01		17.03		15.89
Assets, end of period $	5,041,514		2,658,477		1,637,785
Investment income ratio*	6.26	%	11.03	%	2.44	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	3.52% to 5.79	%	7.13	%	4.07	%

(j) Renamed on October 1, 2007. Formerly known as Bond Index Trust B.

(g) Fund available in prior year but no activity.

	Sub-Account
	Total Return Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	72,293		34,283		—
Units issued	237,637		55,834		36,837
Units redeemed	(85,224	)	(17,824	)	(2,554	)
Units, end of period	224,706		72,293		34,283
Unit value, end of period $	12.71		12.37		11.39
Assets, end of period $	2,857,007		894,516		390,568
Investment income ratio*	5.58	%	9.04	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	2.76% to 2.76	%	8.61	%	3.67	%

(g) Fund available in prior year but no activity.

149

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Total Return Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	1,745,005		1,570,478		2,385,781		2,833,935		2,319,152
Units issued	1,884,675		1,105,189		879,060		1,121,316		2,668,560
Units redeemed	(1,486,023	)	(930,662	)	(1,694,363	)	(1,569,470	)	(2,153,777	)
Units, end of period	2,143,657		1,745,005		1,570,478		2,385,781		2,833,935
Unit value, end of period $	19.93 to 20.59		19.46 to 20.09		18.06 to 18.56		17.56 to 17.92		17.28 to 17.53
Assets, end of period $	43,539,894		34,656,094		28,840,343		42,371,818		49,394,073
Investment income ratio*	4.60	%	7.86	%	3.62	%	2.49	%	3.71	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.30% to 0.70	%	0.30% to 0.65	%
Total return, lowest to highest***	2.10% to 2.52	%	7.73% to 8.23	%	2.89% to 3.34	%	1.76% to 2.17	%	4.28% to 4.65	%

	Sub-Account
	Total Stock Market Index Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	6,922		37		—
Units issued	23,133		8,318		37
Units redeemed	(23,516	)	(1,433	)	—
Units, end of period	6,539		6,922		37
Unit value, end of period $	30.58		48.65		46.25
Assets, end of period $	199,933		336,768		1,715
Investment income ratio*	0.93	%	3.08	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(37.15%) to (25.73	%)	5.19	%	15.33	%

(g) Fund available in prior year but no activity.

150

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Total Stock Market Index Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	260,998		212,749		323,999		230,903		371,604
Units issued	90,395		144,535		144,172		313,142		405,051
Units redeemed	(164,947	)	(96,286	)	(255,422	)	(220,046	)	(545,752	)
Units, end of period	186,446		260,998		212,749		323,999		230,903
Unit value, end of period $	8.70 to 8.91		13.90 to 14.29		13.31 to 13.63		11.62 to 11.83		11.10 to 11.23
Assets, end of period $	1,649,478		3,702,220		2,867,841		3,807,527		2,572,128
Investment income ratio*	1.61	%	2.17	%	1.02	%	0.99	%	0.73	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(37.61%) to (37.42	%)	4.44% to 4.86	%	14.49% to 14.95	%	4.96% to 5.32	%	11.02% to 11.35	%

	Sub-Account
	U.S. Core Trust Series 0
	Year Ended Dec. 31/08 (ad)		Year Ended Dec. 31/07 (g)
Units, beginning of period	64,781		—
Units issued	15,336		77,819
Units redeemed	(80,117	)	(13,038	)
Units, end of period	—		64,781
Unit value, end of period $	7.76		11.64
Assets, end of period $	—		754,280
Investment income ratio*	1.34	%	3.58	%
Expense ratio, lowest to highest**	0.00	%	0.00	%
Total return, lowest to highest***	(33.37%) to (21.24	%)	1.31	%

(ad) Terminated as an investment option and funds transferred to Fundamental Value Trust on November 10, 2008.

(g) Fund available in prior year but no activity.

151

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	U.S. Core Trust Series 1
	Year Ended Dec. 31/08 (ad)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (o)		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	398,897		827,753		853,493		899,801		1,151,229
Units issued	79,679		131,686		237,418		549,300		471,319
Units redeemed	(478,576	)	(560,542	)	(263,158	)	(595,608	)	(722,747	)
Units, end of period	—		398,897		827,753		853,493		899,801
Unit value, end of period $	13.68 to 14.06		20.58 to 21.16		11.57 to 20.96		10.66 to 19.25		10.50 to 18.89
Assets, end of period $	—		7,579,823		16,484,485		15,776,383		16,191,548
Investment income ratio*	1.32	%	2.13	%	1.19	%	1.38	%	0.85	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(33.76%) to (33.56	%)	0.56% to 0.97	%	8.42% to 8.84	%	1.32% to 1.72	%	6.08% to 6.39	%

(ad) Terminated as an investment option and funds transferred to Fundamental Value Trust on November 10, 2008.

(o) Fund renamed on May 1, 2006. Previously known as Growth & Income Trust.

	Sub-Account
	U.S. Global Leaders Growth Trust Series 0
	Year Ended Dec. 31/08 (x)		Year Ended Dec. 31/07 (g)
Units, beginning of period	109		—
Units issued	223		429
Units redeemed	(332	)	(320	)
Units, end of period	—		109
Unit value, end of period $	11.60		11.51
Assets, end of period $	—		1,257
Investment income ratio*	0.25	%	1.92	%
Expense ratio, lowest to highest**	0.00	%	0.00	%
Total return, lowest to highest***	0.73	%	3.72	%

(x) Terminated as an investment option and funds transferred to Blue Chip Growth Trust on April 28, 2008.

(g) Fund available in prior year but no activity.

152

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	U.S. Global Leaders Growth Trust Series 1
	Year Ended Dec. 31/08 (x)		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (g)
Units, beginning of period	47,143		51,406		83,180		—
Units issued	2,281		24,267		25,598		104,006
Units redeemed	(49,424	)	(28,530	)	(57,372	)	(20,826	)
Units, end of period	—		47,143		51,406		83,180
Unit value, end of period $	13.80 to 13.94		13.75 to 13.90		13.35 to 13.46		13.20 to 13.27
Assets, end of period $	—		652,965		690,161		1,100,951
Investment income ratio*	0.43	%	1.48	%	0.00	%	0.24	%
Expense ratio, lowest to highest**	0.40% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	0.42% to 0.50	%	2.96% to 3.26	%	1.14% to 1.45	%	0.22% to 0.52	%

(x) Terminated as an investment option and funds transferred to Blue Chip Growth Trust on April 28, 2008.

(g) Fund available in prior year but no activity.

	Sub-Account
	U.S. Government Securities Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	7,826		30		—
Units issued	62,022		13,928		31
Units redeemed	(54,319	)	(6,132	)	(1	)
Units, end of period	15,529		7,826		30
Unit value, end of period $	12.45		12.64		12.24
Assets, end of period $	193,403		98,886		370
Investment income ratio*	3.95	%	8.95	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(1.44%) to 0.56	%	3.25	%	4.39	%

(g) Fund available in prior year but no activity.

153

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	U.S. Government Securities Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	571,273		690,780		649,545		541,692		595,722
Units issued	478,767		356,594		578,659		404,113		625,354
Units redeemed	(585,906	)	(476,101	)	(537,424	)	(296,260	)	(679,384	)
Units, end of period	464,134		571,273		690,780		649,545		541,692
Unit value, end of period $	15.84 to 16.37		16.12 to 16.64		15.74 to 16.94		15.18 to 16.32		15.08 to 16.15
Assets, end of period $	7,525,507		9,452,949		11,102,160		9,984,112		8,245,778
Investment income ratio*	3.56	%	8.20	%	5.48	%	1.72	%	1.95	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(2.05%) to (1.66	%)	2.43% to 2.89	%	3.66% to 4.13	%	0.87% to 1.24	%	2.21% to 2.54	%

	Sub-Account
	U.S. High Yield Bond Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	1,133		400		—
Units issued	19,427		929		414
Units redeemed	(2,092	)	(196	)	(14	)
Units, end of period	18,468		1,133		400
Unit value, end of period $	9.31		11.76		11.42
Assets, end of period $	171,876		13,322		4,564
Investment income ratio*	21.85	%	12.03	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(20.85%) to (19.03	%)	3.00	%	9.60	%

(g) Fund available in prior year but no activity.

154

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	U.S. High Yield Bond Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	18,379		197		—
Units issued	138,980		39,504		201
Units redeemed	(155,836	)	(21,322	)	(4	)
Units, end of period	1,523		18,379		197
Unit value, end of period $	11.33 to 11.46		14.42 to 14.54		14.11
Assets, end of period $	17,289		265,248		2,781
Investment income ratio*	1.00	%	10.24	%	0.00	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.65	%
Total return, lowest to highest***	(21.38%) to (21.14	%)	2.19% to 2.52	%	8.89	%

(g) Fund available in prior year but no activity.

	Sub-Account
	U.S. Large Cap Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	9,555		—		—
Units issued	3,767		19,992		8,184
Units redeemed	(6,967	)	(10,437	)	(8,184	)
Units, end of period	6,355		9,555		—
Unit value, end of period $	7.57		12.37		12.41
Assets, end of period $	48,088		118,228		—
Investment income ratio*	1.94	%	1.35	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(38.85%) to (23.68	%)	(0.26	%)	10.68	%

(g) Fund available in prior year but no activity.

155

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	U.S. Large Cap Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	1,308,474		1,435,047		1,555,399		1,640,031		284,605
Units issued	154,180		313,621		270,247		430,513		1,930,714
Units redeemed	(529,257	)	(440,194	)	(390,599	)	(515,145	)	(575,288	)
Units, end of period	933,397		1,308,474		1,435,047		1,555,399		1,640,031
Unit value, end of period $	9.66 to 9.97		15.86 to 16.36		16.02 to 16.46		14.58 to 14.84		13.91 to 14.07
Assets, end of period $	9,057,849		20,972,000		23,164,531		22,779,517		22,836,763
Investment income ratio*	2.17	%	1.09	%	0.57	%	0.43	%	0.09	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(39.29%) to (39.04	%)	(1.04%) to (0.60	%)	9.88% to 10.38	%	5.08% to 5.45	%	8.68% to 9.01	%

	Sub-Account
	Utilities Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	17,927		149		—
Units issued	78,710		23,920		155
Units redeemed	(41,268	)	(6,142	)	(6	)
Units, end of period	55,369		17,927		149
Unit value, end of period $	11.89		19.33		15.17
Assets, end of period $	658,222		346,525		2,261
Investment income ratio*	2.83	%	2.39	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(38.50%) to (21.20	%)	27.43	%	31.06	%

(g) Fund available in prior year but no activity.

156

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Utilities Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	225,244		131,267		154,810		40,217		12,829
Units issued	156,245		139,373		77,515		154,202		57,841
Units redeemed	(131,682	)	(45,396	)	(101,058	)	(39,609	)	(30,453	)
Units, end of period	249,807		225,244		131,267		154,810		40,217
Unit value, end of period $	14.16 to 14.55		23.22 to 23.70		18.35 to 18.66		14.10 to 14.30		12.15 to 12.26
Assets, end of period $	3,594,971		5,302,683		2,433,871		2,200,446		489,462
Investment income ratio*	3.24	%	2.12	%	2.31	%	0.39	%	0.54	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.40% to 0.65	%
Total return, lowest to highest***	(39.04%) to (38.83	%)	26.57% to 26.95	%	30.15% to 30.55	%	16.07% to 16.41	%	28.57% to 28.91	%

	Sub-Account
	Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07 (g)
Units, beginning of period	34,210		—
Units issued	64,360		43,166
Units redeemed	(63,494	)	(8,956	)
Units, end of period	35,076		34,210
Unit value, end of period $	8.90		15.05
Assets, end of period $	312,241		514,782
Investment income ratio*	0.84	%	2.92	%
Expense ratio, lowest to highest**	0.00	%	0.00	%
Total return, lowest to highest***	(40.84%) to (31.48	%)	8.26	%

(g) Fund available in prior year but no activity.

157

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	395,785		297,227		422,144		1,080,759		720,769
Units issued	134,441		322,269		199,825		208,115		1,280,008
Units redeemed	(219,491	)	(223,711	)	(324,742	)	(866,730	)	(920,018	)
Units, end of period	310,735		395,785		297,227		422,144		1,080,759
Unit value, end of period $	17.74 to 18.24		30.09 to 30.95		25.21 to 28.68		20.94 to 23.77		18.71 to 21.18
Assets, end of period $	5,587,755		12,100,633		8,411,802		9,906,015		22,720,877
Investment income ratio*	1.10	%	1.37	%	0.42	%	0.55	%	0.53	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.65	%
Total return, lowest to highest***	(41.25%) to (41.05	%)	7.46% to 7.89	%	20.20% to 20.68	%	11.78% to 12.22	%	14.43% to 14.83	%

158

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

The Account is a funding vehicle for a number of variable universal life insurance products which have unique combinations of features and fees that are charged against the contract owner’s account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns.

The preceding table was developed by determining which products offered by the Company have the lowest and highest total return. Only product designs within each sub-account that had units outstanding during the period were considered when determining the lowest and highest total return. The summary may not reflect the minimum and maximum mortality and expense risk charge offered by the Company as contract owners may not have selected all available and applicable contract options as discussed in Notes 3 and 4.

(*) These ratios, which are not annualized, represent the dividends, excluding distributions of capital gains, received by the sub-account from the underlying Trust portfolio, net of management fees assessed by the Trust portfolio adviser, divided by the average net assets of the sub-account. These ratios exclude those expenses, such as mortality and expense risk charges, that result in direct reductions in unit values. The recognition of investment income by the sub-account is affected by the timing of the declarations of dividends by the underlying Trust portfolio in which the sub-accounts invest. It is the practice of the Trusts, for income tax reasons, to declare dividends in April for investment income received in the previous calendar year for all sub-accounts of the Trusts except for the Money Market Trust which declares and reinvests dividends on a daily basis. Any dividend distribution received from a sub-account of the Trusts is reinvested immediately, at the net asset value, in shares of that sub-account and retained as assets of the corresponding sub-account so that the unit value of the sub-account is not affected by the declaration and reinvestment of dividends.

(**) These ratios represent the annualized contract expenses of the separate account, consisting primarily of mortality and expense risk charges, for the period indicated. The ratios include only those expenses that result in a direct reduction in unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying Trust portfolio are excluded.

(***) These ratios, which are not annualized, represent the total return for the period indicated, including changes in the value of the underlying Trust portfolio, and reflect deductions for all items included in the expense ratio. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented.

159

Prospectus dated May 1, 2009

John Hancock Life Insurance Company (U.S.A.)

Separate Account N

Corporate VUL

A Flexible Premium Variable Life Insurance Policy

500 Index	Emerging Small Company
500 Index B	Equity-Income	Mid Value
Active Bond	Financial Services	Money Market
	Franklin Templeton Founding Allocation
All Cap Core	Fundamental Value	Natural Resources
All Cap Growth	Global	Optimized All Cap
All Cap Value	Global Allocation	Optimized Value
Alpha Opportunities	Global Bond	Pacific Rim
American Asset Allocation	Global Real Estate	PIMCO VIT All Asset
American Blue Chip Income and Growth	Health Sciences	Real Estate Securities
American Bond	High Yield	Real Return Bond
American Diversified Growth and Income		Science & Technology
American Fundamental Holdings	International Core	Small Cap Growth
American Global Diversification	International Equity Index A	Small Cap Index
American Growth	International Opportunities	Small Cap Opportunities
American Growth-Income	International Small Cap	Small Cap Value
American International	International Value
American New World	Investment Quality Bond	Small Company Value
Balanced		Strategic Bond
Blue Chip Growth	Large Cap	Strategic Income
Capital Appreciation	Large Cap Value	Total Return
Capital Appreciation Value	Lifestyle Aggressive	Total Stock Market Index
	Lifestyle Balanced	U.S. Government Securities
Core Allocation Plus	Lifestyle Conservative	U.S. High Yield Bond
Core Bond	Lifestyle Growth
	Lifestyle Moderate	Utilities
Core Strategy	Mid Cap Index	Value
Disciplined Diversification	Mid Cap Intersection
	Mid Cap Stock

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

The Securities and Exchange Commission (“SEC”) has not approved or disapproved these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

CVUL04 5/2009

1

TABLE OF CONTENTS

SUMMARY OF BENEFITS AND RISKS	4
Benefits	4
Risks	4
FEE TABLES	5
TABLE OF INVESTMENT OPTIONS AND INVESTMENT SUBADVISERS	13
POLICY SUMMARY	29
General	29
Death Benefits	29
Premiums	29
Policy Value	29
Policy Loans	29
Surrender and Partial Withdrawals	30
Lapse and Reinstatement	30
Charges and Deductions	30
Investment Options and Investment Subadvisers	30
Investment Management Fees and Expenses	30
GENERAL INFORMATION ABOUT JOHN HANCOCK USA, RATINGS, AND THE SEPARATE ACCOUNT	30
Description of John Hancock USA	30
Ratings	20
Description of Separate Account N	31
ISSUING A POLICY	32
Use of the Policy	32
Requirements	32
Temporary Insurance Agreement	32
Underwriting	32
Right to Examine the Policy	33

Life Insurance Qualification	33
DEATH BENEFITS	34
Flexible Term Insurance Option Rider	35
Death Benefit Options	36
Changing the Death Benefit Option	36
Changing the Face Amount and Scheduled Death Benefits	37
PREMIUM PAYMENTS	39
Initial Premiums	39
Subsequent Premiums	39
Premium Limitations	40
Premium Allocation	40
CHARGES AND DEDUCTIONS	40
Premium Charge	40
Sales Charge	40
Monthly Deductions	40
Asset Based Risk Charge Deducted from Investment Accounts	42
Investment Management Fees and Expenses	42
Reduction in Charges and Enhanced Surrender Values	42
COMPANY TAX CONSIDERATIONS	42
POLICY VALUE	42
Determination of the Policy Value	42
Units and Unit Values	43
Transfers of Policy Value	43
POLICY LOANS	44
Interest Charged on Policy Loans	45
Loan Account	45

2

POLICY SURRENDER AND PARTIAL WITHDRAWALS	45
Policy Surrender	45
Partial Withdrawals	45
LAPSE AND REINSTATEMENT	46
Lapse	46
Reinstatement	46
THE GENERAL ACCOUNT	46
Fixed Account	46
OTHER PROVISIONS OF THE POLICY	47
Policy Owner Rights	47
Beneficiary	48
Incontestability	48
Misstatement of Age or Sex	48
Suicide Exclusion	48
Supplementary Benefits	48
TAX TREATMENT OF THE POLICY	48
General	48
Death Benefit Proceeds and Other Policy Distributions	49
Policy Loans	50

Diversification Rules and Ownership of the Account	50
7-Pay Premium Limit and Modified Endowment Contract Status	50
Corporate and H.R. 10 Retirement Plans	51
Withholding	51
Life Insurance Purchases by Residents of Puerto Rico	51
Life Insurance Purchases by Non-Resident Aliens	52
OTHER INFORMATION	52
Payment of Proceeds	52
Reports to Policy Owners	52
Distribution of Policies	52
Responsibilities of John Hancock USA	54
Voting Rights	54
Substitution of Portfolio Shares	54
Records and Accounts	55
State Regulation	55
Further Information	55
Financial Statements	55
APPENDIX A: DEFINITIONS	56

The purpose of this variable life insurance policy is to provide insurance protection for the beneficiary named therein. No claim is made that this variable life insurance policy is in any way similar or comparable to a systematic investment plan of a mutual fund.

Examine this prospectus carefully. The Policy Summary will briefly describe the policy. More detailed information will be found further in the prospectus. You should rely on the information contained in this prospectus, the portfolio prospectuses, and the corresponding Statements of Additional Information. The portfolio prospectuses describe the investment objectives, policies and restrictions of, and the risks relating to, investment in the investment options. In the case of any of the portfolios that are operated as “feeder funds,” the prospectus for the corresponding “master fund” is also provided. We have not authorized anyone to provide you with information that is different from the information contained in the aforementioned documents.

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SUMMARY OF BENEFITS AND RISKS

Benefits

Some of the benefits of purchasing the policy are described below.

Death Benefit Protection: This prospectus describes a flexible premium variable life insurance policy, which provides for a death benefit payable to the beneficiary of the policy upon the death of the insured person. Variable life insurance is a flexible tool for financial and investment planning for persons needing death benefit protection. You should consider other forms of investments if death benefit protection is not one of your financial planning objectives, as there are additional costs and expenses in providing the insurance.

Access to Your Policy Values: Your variable life insurance policy offers access to your Policy Value through policy loans, policy surrender and partial withdrawal. There are limitations on partial withdrawals. See “Policy Surrender and Partial Withdrawals” for further information. Policy loans permanently affect the Policy Value, and may also result in adverse tax consequences.

Tax Deferred Accumulation: Variable life insurance has several tax advantages under current tax laws. For example, Policy Value accumulates on a tax-deferred basis and a transfer of values from one sub-account to another within the policy does not generate a taxable gain or loss. Any investment income and realized capital gains within a sub-account or interest from the Fixed Account are automatically reinvested without current income taxation to the policy owner.

Investment Options: In addition to the Fixed Account, the policy provides for access to a number of variable investment options, which permit you to reallocate your Policy Value to meet your changing personal objectives, goals, and investment conditions. Information regarding each investment option may be found in the portfolio prospectuses.

Flexibility: The policy is a flexible premium variable life insurance policy in which varying premium payments are permitted. You may select death benefit options and policy riders. You may increase or decrease the amount of death benefit. You are able to select, monitor, and change investment choices within your policy.

Risks

Some of the risks of purchasing the policy are described below.

Fluctuating Investment Performance: Policy Values invested in a sub-account are not guaranteed. Policy Values will increase and decrease according to investment performance. You assume the investment risk of Policy Value allocated to the sub-accounts. A comprehensive discussion of each sub-account’s objective and risk is found in the portfolio prospectuses. You should review the prospectuses carefully before allocating Policy Values to any sub-accounts.

Unsuitable for Short-Term Investment: The policy is intended for long-term financial planning, and is unsuitable for short-term goals. The policy is not designed to serve as a vehicle for frequent trading.

Policy Lapse: Sufficient premiums must be paid to keep the policy in force. There is a risk of lapse if the Policy Value is too low in relation to the insurance amount, if investment results are less favorable than anticipated or if extensive policy loans are taken. A policy lapse could have adverse tax consequences since the amount received (including any loans) less the investment in the policy may be treated as ordinary income subject to tax. Withdrawals reduce your Policy Value and increase the risk of lapse.

Decreasing Death Benefit: Any outstanding policy loans and any amount that you have surrendered or withdrawn will reduce your policy’s death benefit.

Adverse Consequences of Early Surrender: Depending on the Policy Value at the time of surrender, there may be little or no Net Cash Surrender Value paid to you when the policy is surrendered. In addition, there are adverse consequences associated with partial withdrawals including potential policy lapse and adverse tax consequences. There may also be adverse consequences associated with full surrender of the policy.

Adverse Tax Consequences: You should always consult a tax adviser about the application of federal and state tax law to your individual situation. The federal income tax treatment of life insurance is complex and current tax treatment of life insurance may change.

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FEE TABLES

The following tables describe the fees and expenses (on a guaranteed basis) that you will pay when buying, owning, and surrendering the policy. Except where necessary to show a rate greater than zero, all rates shown in the tables have been rounded to two decimal places as required by the prospectus disclosure rules. Consequently, the actual rates charged may be slightly higher or lower than those shown. The first table describes the fees and expenses that you will pay at the time that you buy the policy, surrender the policy, or transfer cash value between investment options.

Transaction Fees
Charge	When Charge is Deducted	Amount Deducted
Premium Charge	Upon receipt of premium	2.5% of each premium paid
Sales Charge	Upon receipt of premium	13% (Coverage Year 1)1
Transfer Fees	Upon transfer	$25 (only applies to transfers in excess of 12 in a Policy Year)
Dollar Cost Averaging	Upon transfer	Guaranteed	$ 5.00
		Current	$ 0.00
Asset Allocation Balancer	Upon transfer	Guaranteed	$15.00
		Current	$ 0.00

1 The sales charge declines in subsequent Coverage Years as noted below:

Coverage Year	Percentage	Coverage Year	Percentage
1	13.00%	4	2.50%
2	6.25%	5	0.50%
3	3.50%	6	0.50%
		7+	0.00%

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The next table describes the fees and expenses (on a guaranteed basis) that you will pay periodically during the time that you own the policy. These fees and expenses do not include fees and expenses of the portfolios, which are the underlying variable investment options for your policy.

	Charges Other Than Those of the Portfolios
	When Charge is
Charge	Deducted	Amount Deducted
Cost of Insurance1	Monthly	Minimum and Maximum Charge	The possible range of the cost of insurance is from $0.00 to $83.33 per month per $1,000 of the net amount at risk.
		Charge for a Representative Policy Owner (a 45 year old non-smoking male) (rating classification is for short form underwriting)	The cost of insurance rate is $0.08 per month per $1,000 of the net amount at risk.
Cost of Insurance – Optional FTIO Rider (Flexible Term Insurance Option)1	Monthly	Minimum and Maximum Charges	The possible range of the cost of insurance is from $0.00 to $83.33 per month per $1,000 of the net amount at risk.
		Charge for a Representative Policy Owner (a 45 year old non-smoking male) rating classification is for short form underwriting)	The cost of insurance rate is $0.38 per month per $1,000 of the net amount at risk.

Charges Other Than Those of the Portfolios
	When Charge is
Charge	Deducted	Amount Deducted
Mortality and Expense Risk Charge	Monthly	0.50% annually2
Administration Charge	Monthly	$12 per Policy Month
Loan Interest Rate (Net)	Annually	0.75%3

1 The cost of insurance varies based on individual characteristics and the charges shown in the table may not be representative of the charge a particular policy owner will pay. A policy owner may obtain additional information regarding cost of insurance charge by contacting the Company. The election (or failure to elect) the optional FTIO rider will impact the total cost of insurance charges.

2 Currently the Company is charging the following rates:

Policy Years	Annual Rate
1-10	0.45%
11+	0.25%

3 The Loan Interest Rate (Net) is equal to the rate of interest charged on the policy loan less the interest credited to the Loan Account. Currently this rate is 0.75% for Policy Years 1-10 and 0.25% for Policy Years 11 and higher. The maximum loan rate is 4%.

The next table describes the minimum and maximum portfolio level fees and expenses charged by any of the portfolios underlying a variable investment option offered through this prospectus, expressed as a percentage of average net assets (rounded to two decimal places). These expenses are deducted from portfolio assets.

Total Annual Portfolio Operating Expenses	Minimum	Maximum
Range of expenses, including management fees, distribution and/or service (12b-1) fees, and other expenses	0.50%	1.64%

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The next table describes the fees and expenses for each of the portfolios. Except as indicated in the footnotes at the end of the table, the expenses are expressed as a percentage of the portfolio’s average net assets for the fiscal year ending December 31, 2008. Except for the 500 Index B and PIMCO VIT All Asset portfolios, all of the portfolios shown in the table are Series 1 shares that are subject to Rule 12b-1 fees. More detail concerning each portfolio’s fees and expenses is contained in the prospectus for the portfolio.

As noted in the footnotes to the table, for certain portfolios John Hancock Investment Management Services, Inc. (the “Adviser”) has agreed to waive a portion of its fees or reimburse the portfolio for expenses when, and to the extent that, the net operating expenses exceed an agreed upon expense limitation. The Adviser may recapture operating expenses reimbursed or fees waived under previous expense limitation or waiver arrangements for a period of three years following the beginning of the month in which such reimbursement or waiver occurred.

Portfolio	Management Fees	12b-1 Fees	Other Expenses	Acquired Fund Fees and Expenses	Total Operating Expenses 1
500 Index2, 3	0.46%	0.05%	0.03%	0.00%	0.54%
500 Index B4	0.47%	0.00%	0.03%	0.00%	0.50%
Active Bond3	0.60%	0.05%	0.04%	0.00%	0.69%
All Cap Core3	0.77%	0.05%	0.05%	0.00%	0.87%
All Cap Growth3	0.85%	0.05%	0.10%	0.00%	1.00%
All Cap Value3	0.85%	0.05%	0.09%	0.00%	0.99%
Alpha Opportunities3, 5	1.02%	0.05%	0.04%	0.00%	1.11%
American Asset Allocation6, 7	0.31%	0.60%	0.05%	0.00%	0.96%
American Blue Chip Income and Growth6	0.42%	0.60%	0.07%	0.00%	1.09%
American Bond6	0.39%	0.60%	0.05%	0.00%	1.04%
American Diversified Growth and Income5, 8	0.05%	0.60%	0.04%	0.63%	1.32%
American Fundamental Holdings5, 8	0.05%	0.60%	0.04%	0.40%	1.09%
American Global Diversification5, 8	0.05%	0.60%	0.04%	0.63%	1.32%
American Growth6	0.32%	0.60%	0.05%	0.00%	0.97%
American Growth-Income6	0.27%	0.60%	0.05%	0.00%	0.92%
American International6	0.49%	0.60%	0.07%	0.00%	1.16%
American New World5, 6, 7	0.76%	0.60%	0.18%	0.00%	1.54%
Balanced9	0.84%	0.05%	0.07%	0.00%	0.96%
Blue Chip Growth3, 9	0.81%	0.05%	0.04%	0.00%	0.90%
Capital Appreciation3	0.72%	0.05%	0.04%	0.00%	0.81%
Capital Appreciation Value3, 9, 10	0.95%	0.05%	0.15%	0.00%	1.15%
Core Allocation Plus3, 10	0.92%	0.05%	0.22%	0.00%	1.19%
Core Bond3, 10	0.64%	0.05%	0.07%	0.00%	0.76%
Core Strategy11	0.05%	0.05%	0.05%	0.52%	0.67%
Disciplined Diversification3, 12	0.80%	0.05%	0.19%	0.00%	1.04%
Emerging Small Company3	0.97%	0.05%	0.08%	0.00%	1.10%
Equity-Income3, 9	0.81%	0.05%	0.05%	0.00%	0.91%
Financial Services3	0.82%	0.05%	0.08%	0.00%	0.95%
Franklin Templeton Founding Allocation13	0.04%	0.05%	0.04%	0.83%	0.96%

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Fundamental Value3	0.76%	0.05%	0.05%	0.00%	0.86%
Global,3, 10, 14, 15	0.81%	0.05%	0.11%	0.00%	0.97%
Global Allocation3, 10	0.85%	0.05%	0.10%	0.05%	1.05%
Global Bond3, 10	0.70%	0.05%	0.10%	0.00%	0.85%
Global Real Estate3	0.93%	0.05%	0.12%	0.00%	1.10%
Health Sciences3, 9, 10	1.05%	0.05%	0.08%	0.00%	1.18%
High Yield3	0.66%	0.05%	0.06%	0.00%	0.77%
International Core3, 10	0.89%	0.05%	0.14%	0.00%	1.08%
International Equity Index A2, 3	0.53%	0.05%	0.05%	0.00%	0.63%
International Opportunities3, 10	0.87%	0.05%	0.13%	0.00%	1.05%
International Small Cap3, 10	0.94%	0.05%	0.16%	0.00%	1.15%
International Value3, 10, 14	0.81%	0.05%	0.14%	0.00%	1.00%
Investment Quality Bond3	0.59%	0.05%	0.09%	0.00%	0.73%
Large Cap3	0.72%	0.05%	0.03%	0.00%	0.80%
Large Cap Value3	0.81%	0.05%	0.05%	0.00%	0.91%
Lifestyle Aggressive	0.04%	0.05%	0.04%	0.86%	0.99%
Lifestyle Balanced	0.04%	0.05%	0.03%	0.76%	0.88%
Lifestyle Conservative	0.04%	0.05%	0.03%	0.71%	0.83%
Lifestyle Growth	0.04%	0.05%	0.03%	0.76%	0.88%
Lifestyle Moderate	0.04%	0.05%	0.03%	0.74%	0.86%
Mid Cap Index2, 3	0.47%	0.05%	0.03%	0.00%	0.55%
Mid Cap Intersection3	0.87%	0.05%	0.06%	0.00%	0.98%
Mid Cap Stock3	0.84%	0.05%	0.05%	0.00%	0.94%
Mid Value3, 9	0.98%	0.05%	0.10%	0.00%	1.13%
Money Market3	0.47%	0.05%	0.06%	0.00%	0.58%
Natural Resources3	1.00%	0.05%	0.08%	0.00%	1.13%
Optimized All Cap3	0.68%	0.05%	0.06%	0.00%	0.79%
Optimized Value3	0.65%	0.05%	0.05%	0.00%	0.75%
Pacific Rim3, 10	0.80%	0.05%	0.25%	0.00%	1.10%
PIMCO VIT All Asset16	0.43%	0.25%	0.20%	0.76%	1.64%
Real Estate Securities3	0.70%	0.05%	0.05%	0.00%	0.80%
Real Return Bond3, 10, 17	0.68%	0.05%	0.06%	0.00%	0.79%
Science & Technology3, 9, 10	1.05%	0.05%	0.07%	0.00%	1.17%
Small Cap Growth3	1.06%	0.05%	0.08%	0.00%	1.19%
Small Cap Index2, 3	0.49%	0.05%	0.04%	0.00%	0.58%
Small Cap Opportunities3, 14	1.00%	0.05%	0.06%	0.00%	1.11%
Small Cap Value3	1.06%	0.05%	0.06%	0.00%	1.17%
Small Company Value3, 9	1.02%	0.05%	0.06%	0.00%	1.13%
Strategic Bond3, 10	0.67%	0.05%	0.06%	0.00%	0.78%
Strategic Income3	0.69%	0.05%	0.08%	0.00%	0.82%
Total Return3, 17	0.69%	0.05%	0.06%	0.00%	0.80%
Total Stock Market Index2, 3	0.49%	0.05%	0.04%	0.00%	0.58%
U.S. Government Securities3	0.61%	0.05%	0.09%	0.00%	0.75%
U.S. High Yield Bond3	0.73%	0.05%	0.06%	0.00%	0.84%
Utilities3, 10	0.83%	0.05%	0.10%	0.00%	0.98%
Value3	0.74%	0.05%	0.06%	0.00%	0.85%

¹Total Operating Expenses may include fees and expenses incurred indirectly by a portfolio as a result of its investment in other investment companies (each an “Acquired Fund”), and in those cases the Total Operating Expenses will be expected to vary based upon an allocation of the portfolio’s assets among the Acquired Fund portfolios and upon the total annual operating expenses of these portfolios, and may be higher or lower than those shown in the table. The Total Operating Expenses shown in the table may not correlate to the portfolio’s ratio of

8

expenses to average net assets shown in the financial highlights section in the prospectus for the portfolios, which does not include Acquired Fund fees and expenses. For the International Equity Index A portfolio, Total Operating Expenses include Acquired Fund fees and expenses which are less than 0.01%.

² The Adviser has voluntarily agreed to reduce its advisory fee for a class of shares of the portfolio in an amount equal to the amount by which the ordinary expenses of such class of the portfolio exceed the expense limit (as a percentage of the average annual net assets of the portfolio attributable to the class) of 0.05% and, if necessary, to remit to that class of the portfolio an amount necessary to ensure that such expenses do not exceed that expense limit. Ordinary expenses means all the expenses of a class of the portfolio excluding advisory fees, 12b-1 fees, transfer agency fees and service fees, blue sky fees, taxes, portfolio brokerage commissions, interest, and litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the Trust’s business. This expense limitation will continue in effect unless otherwise terminated by the Adviser upon notice to the Trust. This voluntary expense limitation may be terminated at any time. The fees shown in the table do not reflect this expense limitation. For more information, please refer to the prospectus for the underlying portfolios.

³ Effective January 1, 2006, the Adviser has voluntarily agreed to waive its advisory fee for certain portfolios or otherwise reimburse the expenses of those portfolios. The reimbursement will be equal, on an annualized basis, to 0.02% of that portion of the aggregate net assets of all the participating portfolios that exceeds $50 billion. The amount of the reimbursement will be calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each portfolio. The fees shown in the table do not reflect this waiver. If all applicable waivers or reimbursements had been reflected, the net operating expenses for these portfolios would be as indicated below. For more information, please see the prospectus for the participating portfolios.

	Net Operating
Portfolio	Expenses
500 Index	0.54%
Active Bond	0.69%
All Cap Core	0.87%
All Cap Growth	1.00%
All Cap Value	0.99%
Alpha Opportunities	1.11%
Blue Chip Growth	0.90%
Capital Appreciation	0.81%
Capital Appreciation Value	1.15%
Core Allocation Plus	1.19%
Core Bond	0.76%
Disciplined Diversification	0.75%
Emerging Small Company	1.10%
Equity-Income	0.91%
Financial Services	0.95%
Fundamental Value	0.86%
Global Allocation	1.05%
Global Bond	0.85%
Global Real Estate	1.10%
Health Sciences	1.18%
High Yield	0.77%
International Core	1.08%
International Equity Index A	0.63%
International Opportunities	1.05%
International Small Cap	1.15%
International Value	0.98%
Investment Quality Bond	0.73%

9

Large Cap	0.80	%
Large Cap Value	0.91	%
Mid Cap Index	0.55	%
Mid Cap Intersection	0.98	%
Mid Cap Stock	0.94	%
Mid Value	1.13	%
Money Market	0.58	%
Natural Resources	1.13	%
Optimized All Cap	0.79	%
Optimized Value	0.75	%
Pacific Rim	1.10	%
Real Estate Securities	0.80	%
Real Return Bond	0.79	%
Science & Technology	1.17	%
Small Cap Growth	1.19	%
Small Cap Index	0.58	%
Small Cap Opportunities	1.11	%
Small Cap Value	1.17	%
Small Company Value	1.13	%
Strategic Bond	0.78	%
Strategic Income	0.82	%
Total Return	0.80	%
Total Stock Market Index	0.58	%
U.S. Government Securities	0.75	%
U.S. High Yield Bond	0.84	%
Utilities	0.98	%
Value	0.85	%

⁴John Hancock Trust (the “Trust”) sells shares of these portfolios only to certain variable life insurance and variable annuity separate accounts of ours and our affiliates. Each portfolio is subject to an agreement between the Trust and the Adviser under which the Adviser has agreed to waive its advisory fee (or, if necessary, reimburse expenses of the portfolio) in an amount so that the rate of the portfolio’s Total Operating Expenses does not exceed its net operating expenses as listed below. A portfolio’s Total Operating Expenses includes all of its ordinary operating expenses, including advisory fees and 12b-1 fees, but excludes taxes, brokerage commissions, interest, litigation and indemnification expenses and extraordinary expenses (estimated at 0.01% or less of the portfolio’s average net assets) of the portfolio not incurred in the ordinary course of the portfolio’s business. Under the agreement, the Adviser’s obligation to provide the expense cap with respect to a particular portfolio will remain in effect until May 1, 2010 and will terminate after that date only if the Trust, without the prior written consent of the Adviser, sells shares of the portfolio to (or has shares of the portfolio held by) any person other than the variable life insurance or variable annuity separate accounts of ours or any of our affiliates that are specified in the agreement. The fees shown in the table do not reflect this expense cap. If this expense cap had been reflected, the net operating expense for the portfolio would be 0.25%. For more information, please see the prospectus for the portfolio.

⁵For portfolios that have not commenced operations or have inception dates of less than six months before December 31, 2008, expenses are estimated.

⁶Capital Research Management Company voluntarily waived a portion of its management fee from September 1, 2004 through December 31, 2008. The fees shown in the table do not reflect this waiver. See the financial highlights table in the American Funds Insurance Series’ prospectus or annual report for further information.

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⁷The table reflects the fees and expenses of the master and feeder portfolios. The Adviser has contractually limited other ordinary expenses at the feeder portfolio level to 0.03% until May 1, 2010, and the table reflects this limit. Other portfolio level expenses consist of operating expenses of the portfolio, excluding adviser fees, 12b-1 fees, transfer agent fees, blue sky fees, taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of business.

⁸The Adviser has contractually agreed to waive its management fee of 0.05% of average annual net assets until May 1, 2010. The fees shown in the table do not reflect this waiver. If all applicable waivers or reimbursements had been reflected, the net operating expenses for the American Diversified Growth and Income, American Fundamental Holdings and American Global Diversification portfolios would be 1.27%, 1.04% and 1.27%, respectively.

⁹T. Rowe Price has voluntarily agreed to waive a portion of its subadvisory fee for certain portfolios. This waiver is based on the combined average daily net assets of these portfolios and the following funds of John Hancock Funds II: Blue Chip Growth, Equity-Income, Mid Value, Small Company Value, Spectrum Income and Real Estate Equity portfolios. The John Hancock Funds II portfolios are not offered under your policy. Based on the combined average daily net assets of the portfolios, the percentage fee reduction (as a percentage of the subadvisory fee) is as follows: 0% for the first $750 million, 5% for the next $750 million, 7.5% for the next $1.5 billion, and 10% if over $3 billion. The Adviser has also voluntarily agreed to reduce the advisory fee for each portfolio by the amount that the subadvisory fee is reduced. These voluntary fee waivers may be terminated by T. Rowe Price or the Adviser at any time. The fees shown in the table do not reflect these waivers. For more information, please see the prospectus for the underlying portfolios.

¹⁰Other Expenses reflect an estimated expense based on a new custody fee pursuant to an agreement between the Trust and its custodian, which became effective on April 1, 2009.

¹¹The Adviser has contractually agreed to reimburse ordinary expenses of the portfolio that exceed 0.02% of the average annual net assets of the portfolio. Expenses include all expenses of the portfolio except 12b-1 fees, underlying portfolio expenses, class specific expenses such as blue sky and transfer agency fees, portfolio brokerage, interest, and litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of business. This reimbursement may be terminated any time after May 1, 2010. The fees shown in the table do not reflect this reimbursement. If all applicable waivers or reimbursements had been reflected, the net operating expenses for the portfolio would be 0.59%. For more information, please see the prospectus for the underlying portfolio.

¹²The Adviser has contractually agreed to reimburse ordinary expenses of the portfolio that exceed 0.70% of the average annual net assets of the portfolio. Expenses include all expenses of the portfolio except 12b-1 fees, class specific expenses such as blue sky and transfer agency fees, portfolio brokerage, interest, and litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of business. This contractual reimbursement will be in effect until May 1, 2010 and thereafter until terminated by the Adviser on notice to the Trust. The fees shown in the table do not reflect this reimbursement. If all applicable waivers or reimbursements had been reflected, the net operating expenses for the portfolio would be 0.75%. For more information, please see the prospectus for the underlying portfolio.

¹³The Adviser has contractually agreed to limit ordinary portfolio expenses to 0.025% until May 1, 2010. Portfolio expenses include advisory fees and other ordinary operating expenses of the portfolio, but exclude 12b-1fees, underlying fund expenses, taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of business. The fees shown in the table do not reflect this waiver. If all applicable waivers or reimbursements had been reflected, the net operating expenses for the portfolio would be 0.91%. For more information, please see the prospectus for the underlying portfolio.

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¹⁴The Adviser has contractually agreed to waive its advisory fees so that the amount retained by the Adviser after payment of the subadvisory fees for the portfolio does not exceed 0.45% of the portfolio’s average net assets. This advisory fee waiver will remain in place until May 1, 2010. The fees shown in the table do not reflect this waiver. If all applicable waivers or reimbursements had been reflected, the net operating expenses for the Global, International Value and Small Cap Opportunities portfolios would be 0.96%, 0.98% and 1.11%, respectively. For more information, please see the prospectus for the underlying portfolios.

¹⁵The Adviser has contractually agreed to reduce its advisory fee for a class of shares of the portfolio in an amount equal to the amount by which the ordinary expenses of such class of the portfolio exceed the expense limit (as a percentage of the average annual net assets of the portfolio attributable to the class) of 0.15% and, if necessary, to remit to that class of the portfolio an amount necessary to ensure that such expenses do not exceed that expense limit. Ordinary expenses means all the expenses of a class of a portfolio excluding advisory fees, 12b-1 fees, transfer agency fees and service fees, blue sky fees, taxes, portfolio brokerage commissions, interest, and litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the Trust’s business. This contractual reimbursement will be in effect until May 1, 2010 and thereafter until terminated by the Adviser on notice to the portfolio. The fees shown in the table do not reflect this reimbursement. If all applicable waivers or reimbursements had been reflected, the net operating expenses for the portfolio would be 0.96%. For more information, please see the prospectus for the underlying portfolio.

¹⁶Management Fees for the PIMCO VIT All Asset portfolio reflect an advisory fee and supervisory and administrative fee payable by the portfolio to Pacific Investment Management Company LLC (“PIMCO”). Other Expenses reflect a service fee of 0.20%. Acquired Fund fees and expenses for the portfolio are based upon an allocation of the portfolio’s assets among the underlying portfolios and upon the total annual operating expenses of the Institutional Class of these underlying portfolios. Acquired Fund fees and expenses will vary with changes in the expenses of the underlying portfolios, as well as allocation of the portfolio’s assets, and may be higher or lower than those shown in the table. For a listing of the expenses associated with each underlying portfolio for the most recent fiscal year, please refer to the prospectus for the underlying portfolio. PIMCO has contractually agreed through May 1, 2010 to reduce its advisory fee to the extent that the underlying portfolio expenses attributable to advisory, supervisory and administrative fees exceed 0.64% of the total assets invested in the underlying portfolios. PIMCO may recoup these waivers in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. This expense reduction is implemented based on a calculation of Acquired Fund fees and expenses attributable to advisory, supervisory and administrative fees that are different from the calculation of Acquired Fund fees and expenses shown in the table. The fees in the table do not reflect this expense reduction. If all applicable waivers or reimbursements had been reflected, the net operating expenses for the portfolio would be 1.62%. For more information, please see the prospectus for the underlying portfolio.

¹⁷Other Expenses reflect the estimate of amounts to be paid as substitute dividend expenses on securities borrowed for the settlement of short sales.

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Table of Investment Options and Investment Subadvisers

When you select a Separate Account investment option, we invest your money in shares of a corresponding portfolio of the John Hancock Trust (the “Trust” or “JHT”) (or the PIMCO Variable Insurance Trust (the “PIMCO Trust”) with respect to the PIMCO VIT All Asset portfolio) and hold the shares in a subaccount of the Separate Account. The Fee Tables show the investment management fees, Rule 12b-1 fees and other operating expenses for these portfolio shares as a percentage (rounded to two decimal places) of each portfolio’s average net assets for 2008, except as indicated in the footnotes appearing at the end of the table. Fees and expenses of the portfolios are not fixed or specified under the terms of the policies and may vary from year to year. These fees and expenses differ for each portfolio and reduce the investment return of each portfolio. Therefore, they also indirectly reduce the return you will earn on any Separate Account investment options you select.

The John Hancock Trust and the PIMCO Trust are so-called “series” type mutual funds and each is registered under the Investment Company Act of 1940 (“1940 Act”) as an open-end management investment company. John Hancock Investment Management Services, LLC (“JHIMS”) provides investment advisory services to the Trust and receives investment management fees for doing so. JHIMS pays a portion of its investment management fees to other firms that manage the Trust’s portfolios. We are affiliated with JHIMS and may indirectly benefit from any investment management fees JHIMS retains. The PIMCO VIT All Asset portfolio of the PIMCO Trust receives investment advisory services from Pacific Investment Management Company LLC (“PIMCO”) and pays investment management fees to PIMCO.

Each of the American Asset Allocation, American Blue Chip Income and Growth, American Bond, American Diversified Growth and Income, American Global Diversification, American Growth-Income, American Growth, American New World, American Fundamental Holdings, and American International portfolios invests in shares of the corresponding investment portfolio of the Trust and is subject to a 0.60% Rule 12b-1 fee. The American Asset Allocation, American Growth, American International, American Growth-Income, American New World, American Blue Chip Income and Growth and American Bond portfolios operate as “feeder funds,” which means that the portfolios do not buy investment securities directly. Instead, they invest in a “master fund” which in turn purchases investment securities. Each of the American feeder fund portfolios has the same investment objective and limitations as its master fund. The prospectus for the American Fund master fund is included with the prospectuses for the underlying funds. We pay American Funds Distributors, Inc., the principal underwriter for the American Funds Insurance Series, a percentage of some or all of the amounts allocated to the “American” portfolios of the Trust for the marketing support services it provides.

The portfolios pay us or certain of our affiliates compensation for some of the distribution, administrative, shareholder support, marketing and other services we or our affiliates provide to the portfolios. The amount of this compensation is based on a percentage of the assets of the portfolios attributable to the variable insurance products that we and our affiliates issue. These percentages may differ from portfolio to portfolio and among classes of shares within a portfolio. In some cases, the compensation is derived from the Rule 12b-1 fees that are deducted from a portfolio’s assets for the services we or our affiliates provide to that portfolio. These compensation payments do not, however, result in any charge to you in addition to what is shown in the Fee Tables.

The following table provides a general description of the portfolios that underlie the variable investment options we make available under the policy. You bear the investment risk of any portfolio you choose as an investment option for your policy. You can find a full description of each portfolio, including the investment objectives, policies, restrictions, and risks, in the prospectus for that portfolio. You should read the portfolio’s prospectus carefully before investing in the corresponding variable investment option.

The investment options in the Separate Account are not publicly traded mutual funds. The investment options are only available to you as investment options in the policies, or in some cases through other variable annuity contracts or variable life insurance policies issued by us or by other life insurance companies. In some cases, the investment options also may be available through participation in certain qualified pension or retirement plans.

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The portfolios’ investment advisers and managers (i.e. subadvisers) may manage publicly traded mutual funds with similar names and investment objectives. However, the portfolios are not directly related to any publicly traded mutual fund. You should not compare the performance of any investment option described in this prospectus with the performance of a publicly traded mutual fund. The performance of any publicly traded mutual fund could differ substantially from that of any of the investment options of our Separate Account.

The portfolios available under the policies are as described in the following table:

Portfolio	Portfolio Manager	Investment Objective and Strategy
500 Index	MFC Global Investment Management (U.S.A.) Limited	To seek to approximate the aggregate total return of a broad-based U.S. domestic equity market index. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in (a) the common stocks that are included in the S&P 500 Index* and (b) securities (which may or may not be included in the S&P 500 Index) that the subadviser believes as a group will behave in a manner similar to the index. The subadviser may determine that the portfolio’s investments in certain instruments, such as index futures, total return swaps and exchanged traded portfolios (“ETFs”) have similar economic characteristics to investments that are in the S&P 500 Index.
500 Index B	MFC Global Investment Management (U.S.A.) Limited	To seek to approximate the aggregate total return of a broad-based U.S. domestic equity market index. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in (a) the common stocks that are included in the S&P 500 Index* and (b) securities (which may or may not be included in the S&P 500 Index) that the subadviser believes as a group will behave in a manner similar to the index. The subadviser may determine that the portfolio’s investments in certain instruments, such as index futures, total return swaps and exchanged traded portfolios (“ETFs”) have similar economic characteristics to investments that are in the S&P 500 Index.
Active Bond	Declaration Management & Research LLC/ MFC Global Investment Management (U.S.), LLC	To seek to provide income and capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in a diversified mix of debt securities and instruments.
All Cap Core	Deutsche Investment Management Americas Inc.	To seek long-term growth of capital. Under normal market conditions, the portfolio invests in common stocks, other equity securities and other asset classes of those companies within the Russell 3000 Index.*
All Cap Growth	Invesco AIM Capital Management, Inc.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests its assets principally in common stocks of companies of all market capitalizations. The subadviser focuses on stocks of companies exhibiting

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		long-term sustainable earnings and cash flow growth that is not yet reflected in investor expectations or equity valuations.
All Cap Value	Lord, Abbett & Co., LLC	To seek capital appreciation. Under normal market conditions, the portfolio invests in equity securities of U.S. and multinational companies in all capitalization ranges that the subadviser believes are undervalued. The portfolio will invest at least 50% of its net assets in equity securities of large, seasoned companies with market capitalizations at the time of purchase that fall within the market capitalization range of the Russell 1000 Index.* This range varies daily. The portfolio will invest the remainder of its assets in mid-sized and small company securities.
Alpha Opportunities	Wellington Management Company, LLP	To seek long-term total return. The portfolio employs a “multiple sleeve structure” which means the portfolio has several components that are managed separately in different styles. The portfolio seeks to attain its objective by combining these different component styles into a single portfolio.
American Asset Allocation	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to provide high total return (including income and capital gains) consistent with preservation of capital over the long term. The portfolio invests all of its assets in Class 1 shares of the master fund, the Asset Allocation Fund, a series of American Funds Insurance Series. The master fund invests in a diversified portfolio of common stocks and other equity securities, bonds and other intermediate and long-term debt securities, and money market instruments. In addition, the master fund may invest up to 25% of its debt assets in lower quality debt securities (rated Ba or below by Moody’s and BB or below by S&P or unrated but determined to be of equivalent quality). Such securities are sometimes referred to as “junk bonds.” The master fund is designed for investors seeking above-average total return.
American Blue Chip Income and Growth	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to produce income exceeding the average yield on U.S. stocks generally (as represented by the average yield on the S&P 500 Index*) and to provide an opportunity for growth of principal consistent with sound common stock investing. The portfolio invests all of its assets in Class 1 shares of the master fund, the Blue Chip Income and Growth portfolio, a series of American Funds Insurance Series. The master portfolio invests primarily in common stocks of larger, more established companies based in the U.S. with market capitalizations of $4 billion and above. The master fund may also invest up to 10% of its assets in common stocks of larger, non-U.S. companies, as long as they are listed or traded in the U.S. The master portfolio will invest, under normal market conditions, at least 90% of its assets in equity securities. The portfolio is designed for investors seeking both income and capital appreciation.

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American Bond	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to maximize current income and preserve capital. The portfolio invests all of its assets in Class 1 shares of the master fund, the Bond portfolio, a series of American Funds Insurance Series. The master fund normally invests at least 80% of its net assets (plus borrowing for investment purposes) in bonds. The master fund will invest at least 65% of its assets in investment-grade debt securities (including cash and cash equivalents) and may invest up to 35% of its assets in bonds that are rated Ba 1 or below by Moody’s and BB+ or below by S&P or that are unrated but determined to be of equivalent quality (so called “junk bonds”). It may invest in bonds of issuers domiciled outside the U.S. The portfolio may also invest up to 20% of its assets in preferred stocks, including convertible and non-convertible preferred stocks. The portfolio is designed for investors seeking income and more price stability than stocks, and capital preservation over the long term.
American Diversified Growth and Income	MFC Global Investment Management (U.S.A.) Limited	To seek long term growth of capital and income. The portfolio invests in underlying portfolios as well as other types of investments. Under normal market conditions, the portfolio will generally invest between 70% and 80% of its assets in equity securities, which include securities held by the underlying portfolios, and between 20% and 30% of its assets in fixed income securities, which include securities held by the underlying portfolios.
American Fundamental Holdings	MFC Global Investment Management (U.S.A.) Limited	To seek long term growth of capital. The portfolio invests in underlying portfolios as well as other types of investments. The portfolio operates as a fund of funds and currently invests primarily in four underlying portfolios of the American Funds Insurance Series: Bond portfolio, Growth portfolio, Growth-Income portfolio, and International portfolio. The portfolio is permitted to invest in six other underlying portfolios of the American Funds Insurance Series: Asset Allocation portfolio, Blue Chip Income and Growth portfolio, Global Growth portfolio, Global Small Capitalization portfolio, High-Income Bond portfolio, and New World portfolio as well as other underlying portfolios. When purchasing shares of the American Funds Insurance Series, the portfolio only purchases Class 1 shares (which are not subject to Rule 12b-1 fees).
American Global Diversification	MFC Global Investment Management (U.S.A.) Limited	To seek long term growth of capital. The portfolio invests in underlying portfolios as well as other types of investments. Under normal market conditions, the portfolio will invest a significant portion of its assets in securities, which include securities held by the underlying portfolios, that are located outside of the U.S.
American Growth	Capital Research Management Company (Adviser to the American Funds	To seek to make the shareholders’ investment grow. The portfolio invests all of its assets in Class 1 shares of the master fund, the Growth portfolio, a series of American Funds Insurance Series. The Growth portfolio invests

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	Insurance Series)	primarily in common stocks of companies that appear to offer superior opportunities for growth of capital. The Growth portfolio may also invest up to 15% of its assets in equity securities of issuers domiciled outside the U.S. and Canada. In seeking to pursue its investment objective, the portfolio may invest in the securities of issuers representing a broad range of market capitalizations. The portfolio is designed for investors seeking capital appreciation through stocks. Investors in the portfolio should have a long-term perspective and be able to tolerate potentially wide price fluctuations.
American Growth– Income	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to make the shareholders’ investments grow and to provide the shareholder with income over time. The portfolio invests all of its assets in Class 1 shares of the master portfolio, the Growth-Income portfolio, a series of American Funds Insurance Series. The Growth-Income portfolio invests primarily in common stocks or other securities which demonstrate the potential for appreciation and/or dividends. The Growth-Income portfolio may invest up to 15% of its assets in securities of issuers domiciled outside the U.S. and not included in the S&P 500 Index.* The portfolio is designed for investors seeking both capital appreciation and income.
American International	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to make the shareholders’ investment grow. The portfolio invests all of its assets in Class 1 shares of the master fund, the International portfolio, a series of American Funds Insurance Series. The International portfolio invests primarily in common stocks of companies located outside the U.S. The portfolio is designed for investors seeking capital appreciation through stocks. Investors in the portfolio should have a long-term perspective and be able to tolerate potentially wide price fluctuations.
American New World	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to make the shareholders’ investment grow over time. The portfolio invests all of its assets in Class 1 shares of the master fund, the New World portfolio, a series of American Funds Insurance Series. The New World portfolio invests primarily in stocks of companies with significant exposure to countries with developing economies and/or markets. The New World portfolio may also invest in debt securities of issuers, including issuers of lower rated bonds, with exposure to these countries. Under normal market conditions, the portfolio will invest at least 35% of its assets in equity and debt securities of issuers primarily based in what the subadviser deems qualified countries that have developing economies and/or markets. In addition, the portfolio may invest up to 25% of its assets in nonconvertible debt securities of issuers, including issuers of lower rated bonds (“junk bonds”) and government bonds, primarily based in qualified countries or that have a significant portion of their assets or revenues attributable to developing countries. The portfolio may also, to a limited extent, invest

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		in securities of issuers based in nonqualified developing countries.
Balanced	T. Rowe Price Associates, Inc.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests in both equity and fixed-income securities. The portfolio employs growth, value and core approaches to allocate its assets among stocks of small, medium and large-capitalization companies in both the U.S. and foreign countries. The portfolio may purchase a variety of fixed income securities, including investment grade and below investment grade debt securities with maturities that range from short to longer term, as well as cash. Under normal market conditions, 55-75% of the portfolio will be invested in equity securities and 25-45% of the portfolio will be invested in fixed-income securities. The precise mix of equity and fixed-income securities will depend on the subadviser’s outlook for the markets and generally reflect the subadviser’s long-term, strategic asset allocation analysis. The subadviser anticipates that adjustments to the targeted asset allocation will result primarily from changes to its outlook for the global and domestic economies, industry sectors and financial markets, and its assessment of the relative attractiveness of each asset class.
Blue Chip Growth	T. Rowe Price Associates, Inc.	To seek to provide long-term growth of capital. Current income is a secondary objective. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in the common stocks of large and medium-sized blue chip growth companies. These are firms that, in the subadviser’s view, are well established in their industries and have the potential for above-average earnings growth.
Capital Appreciation	Jennison Associates, LLC	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 65% of its total assets in equity and equity related securities of companies that, at the time of investment, exceed $1 billion in market capitalization and that the subadviser believes have above-average growth prospects. These companies are generally medium to large-capitalization companies.
Capital Appreciation Value	T. Rowe Price Associates, Inc.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests primarily in common stocks of established U.S. companies that have above-average potential for capital growth. Common stocks typically constitute at least 50% of the portfolio’s total assets. The remaining assets are generally invested in other securities, including convertible securities, corporate and government debt, foreign securities, futures and options. The portfolio may invest up to 20% of its total assets in foreign securities.
Core Allocation Plus	Wellington	To seek total return, consisting of long-term capital

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	Management Company, LLP	appreciation and current income. Under normal market conditions, the portfolio invests in equity and fixed income securities of issuers located within and outside the U.S. The portfolio will allocate its assets between fixed income securities, which may include investment grade and below investment grade debt securities with maturities that range from short to longer term, and equity securities, based upon the subadviser’s targeted asset mix, which may change over time. Under normal circumstances, the targeted asset mix may range between 50%-75% equity instruments and 25%-50% fixed income instruments and will generally reflect the subadviser’s long term, strategic asset allocation analysis. The subadviser anticipates that adjustments to the targeted asset allocation will result primarily from changes to its outlook for the global and domestic economies, industry sectors and financial markets and, to a lesser extent, its opinion of the relative attractiveness of each asset class.
Core Bond	Wells Capital Management, Incorporated	To seek total return consisting of income and capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in a broad range of investment grade debt securities, including U.S. Government obligations, corporate bonds, mortgage-backed and other asset-backed securities and money market instruments. The subadviser invests in debt securities that the subadviser believes offer attractive yields and are undervalued relative to issues of similar credit quality and interest rate sensitivity. The portfolio may also invest in unrated bonds that the subadviser believes are comparable to investment grade debt securities.
Core Strategy	MFC Global Investment Management (U.S.A.) Limited	To seek long term growth of capital. Current income is also a consideration. Under normal market conditions, the portfolio invests in a number of the other index portfolios of JHT. The portfolio invests approximately 70% of its total assets in underlying portfolios which invest primarily in equity securities and approximately 30% of its total assets in underlying portfolios which invest primarily in fixed income securities.
Disciplined Diversification	Dimensional Fund Advisors LP	To seek total return consisting of capital appreciation and current income. Under normal market conditions, the portfolio invests primarily in equity securities and fixed-income securities of domestic and international issuers, including equities of issuers in emerging markets, in accordance with the following range of allocations:
		Target Allocation
		Equity Securities: 70% - Range of Allocation 65%-75%
		Fixed-Income Securities: - Range of Allocation 25%-35%
		The portfolio may invest outside these ranges and may invest defensively during unusual or unsettled market conditions.
Emerging Small Company	RCM Capital	To seek long term capital appreciation. Under normal

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	Management, LLC	market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in securities of small cap companies. The subadviser defines small cap companies U.S. companies that have a market capitalization that does not exceed the highest market capitalization of any company contained in either the Russell 2000 Index* or the S&P Small Cap Index.*
Equity-Income	T. Rowe Price Associates, Inc.	Seeks to provide substantial dividend income and also long-term growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities, with at least 65% in common stocks of well-established companies paying above-average dividends.
Financial Services	Davis Selected Advisers, L.P.	To seek growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in common stocks of companies that, at the time of investment, are principally engaged in financial services.
Franklin Templeton Founding Allocation	MFC Global Investment Management (U.S.A.) Limited	To seek long-term growth of capital. The portfolio operates as a fund of funds and invests in other portfolios and in other investment companies as well as other types of investments. The portfolio currently invests primarily in three underlying portfolios: Global, Income and Mutual Shares portfolios, as described in the JHT prospectus. The portfolio may purchase any portfolios except other JHT funds of funds and the American feeder funds. When purchasing shares of other JHT funds, the Franklin Templeton Founding Allocation Fund only purchases NAV shares (which are not subject to Rule 12b-1 fees).
Fundamental Value	Davis Selected Advisers, L.P.	To seek growth of capital. Under normal market conditions, the portfolio invests primarily in common stocks of U.S. companies with market capitalizations of at least $10 billion. The portfolio may also invest in companies with smaller capitalizations.
Global	Templeton Global Advisors Limited	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests primarily in the equity securities of companies located throughout the world, including emerging markets.
Global Allocation	UBS Global Asset Management (Americas) Inc.	To seek total return, consisting of long-term capital appreciation and current income. Under normal market conditions, the portfolio invests in equity and fixed income securities of issuers located within and outside the U.S. The portfolio will allocate its assets between fixed income securities and equity securities.
Global Bond	Pacific Investment Management Company LLC	To seek maximum total return, consistent with preservation of capital and prudent investment management. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment

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		purposes) in fixed income instruments that are economically tied to at least three countries (one of which may be the U.S.), which may be represented by futures contracts (including related options) with respect to such securities, and options on such securities. These fixed income instruments may be denominated in non-U.S. currencies or in U.S. dollars, which may be represented by forwards or derivatives, such as options, futures contracts, or swap agreements.
Global Real Estate	Deutsche Investment Management Americas Inc.	To seek a combination of long-term capital appreciation and current income. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of U.S. real estate investments (“REITs”), foreign entities with tax-transparent structures similar to REITs and U.S. and foreign real estate operating companies. Equity securities include common stock, preferred stock and securities convertible into common stock. The portfolio will be invested in issuers located in at least three different countries, including the U.S.
Health Sciences	T. Rowe Price Associates, Inc.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in common stocks of companies engaged, at the time of investment, in the research, development, production, or distribution of products or services related to health care, medicine, or the life sciences.
High Yield	Western Asset Management Company	To realize an above-average total return over a market cycle of three to five years, consistent with reasonable risk. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in high yield securities, including corporate bonds, preferred stocks, U.S. Government and foreign securities, mortgage-backed securities, loan assignments or participations and convertible securities which have the following ratings (or, if unrated, are considered by the subadviser to be of equivalent quality): Corporate Bonds, Preferred Stocks and Convertible Securities
		Rating Agency Moody’s 38            Ba through C S&P 51                  BB through D
International Core	Grantham, Mayo, Van Otterloo & Co, LLC	To seek high total return. Under normal market conditions, the portfolio invests at least 80% of its total assets in equity investments. The portfolio typically invests in equity investments in companies from developed markets outside the U.S. The portfolio seeks to achieve its objective by outperforming its benchmark, the MSCI EAFE Index.*
International Equity Index A	SSgA Funds Management, Inc.	To seek to track the performance of a broad-based equity index of foreign companies primarily in developed countries

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		and, to a lesser extent, in emerging markets. Under normal market conditions, the portfolio invests at least 80% of its assets in securities listed in the MSCI All CountryWorld Ex U.S. Index* or American Depository Receipts or Global Depository Receipts representing such securities.
International Opportunities	Marsico Capital Management, LLC	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 65% of its total assets in common stocks of foreign companies that are selected for their long-term growth potential. The portfolio may invest in companies of any size throughout the world. The portfolio invests in issuers from at least three different countries not including the U.S. The portfolio may invest in common stocks of companies economically tied to emerging markets. Some issuers or securities in the portfolio may be based in or economically tied to the U.S.
International Small Cap	Franklin Templeton Investment Corp.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in investments of smaller companies outside the U.S., including emerging markets, which have total stock market capitalizations or annual revenues of $4 billion or less.
International Value	Templeton Investment Counsel, LLC	To seek long-term growth of capital. Under normal market conditions, the portfolio invests primarily in equity securities of companies located outside the U.S., including in emerging markets.
Investment Quality Bond	Wellington Management Company, LLP	To provide a high level of current income consistent with the maintenance of principal and liquidity. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in bonds rated investment grade at the time of investment. The portfolio will tend to focus on corporate bonds and U.S. government bonds with intermediate to longer term maturities.
Large Cap	UBS Global Asset Management (Americas) Inc.	To seek to maximize total return, consisting of capital appreciation and current income. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of U.S. large capitalization companies. The portfolio defines large capitalization companies as those with a market capitalization range, at the time of investment, equal to that of the portfolio’s benchmark, the Russell 1000 Index.*
Large Cap Value	BlackRock Investment Management, LLC	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of large cap companies selected from those that are, at the time of purchase, included in the Russell 1000 Value Index.* The portfolio will seek to achieve its investment objective by investing primarily in a diversified

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		portfolio of equity securities of large cap companies located in the U.S. The portfolio will seek to outperform the Russell 1000 Value Index by investing in equity securities that the subadviser believes are selling at below normal valuations.
Lifestyle Aggressive	MFC Global Investment Management (U.S.A.) Limited	To seek long-term growth of capital. Current income is not a consideration. The portfolio operates as a fund of funds and, except as otherwise described below, generally invests approximately 100% of its assets in underlying portfolios that invest primarily in equity securities.
Lifestyle Balanced	MFC Global Investment Management (U.S.A.) Limited	To seek a balance between a high level of current income and growth of capital, with a greater emphasis on growth of capital. The portfolio operates as a fund of funds and generally invests approximately 40% of its assets in underlying portfolios that invest primarily in fixed income securities and approximately 60% in underlying portfolios that invest primarily in equity securities.
Lifestyle Conservative	MFC Global Investment Management (U.S.A.) Limited	To seek a high level of current income with some consideration given to growth of capital. The portfolio operates as a fund of funds and generally invests approximately 80% of its assets in underlying portfolios that invest primarily in fixed income securities and approximately 20% in underlying portfolios that invest primarily in equity securities.
Lifestyle Growth	MFC Global Investment Management (U.S.A.) Limited	To seek long-term growth of capital. Current income is also a consideration. The portfolio operates as a fund of funds and, except as otherwise described below, generally invests approximately 20% of its assets in underlying portfolios that invest primarily in fixed income securities and approximately 80% in underlying portfolios that invest primarily in equity securities.
Lifestyle Moderate	MFC Global Investment Management (U.S.A.) Limited	To seek a balance between a high level of current income and growth of capital, with a greater emphasis on income. The portfolio operates as a fund of funds and, except as otherwise described below, generally invests approximately 60% of its assets in underlying portfolios that invest primarily in fixed income securities and approximately 40% in underlying portfolios that invest primarily in equity securities.
Mid Cap Index	MFC Global Investment Management (U.S.A.) Limited	To seek to approximate the aggregate total return of a mid-cap U.S. domestic equity market index. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in (a) the common stocks that are included in the S&P MidCap 400 Index* and (b) securities (which may or may not be included in the S&P MidCap 400 Index) that the subadviser believes as a group will behave in a manner similar to the index.
Mid Cap Intersection	Wellington	To seek long-term growth of capital. Under normal market

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	Management Company, LLP	conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of medium-sized companies with significant capital appreciation potential. For the purposes of the portfolio, “medium-sized companies” are those with market capitalizations, at the time of investment, within the market capitalization range of companies represented in either the Russell MidCap Index* or the S&P MidCap 400 Index.*
Mid Cap Stock	Wellington Management Company, LLP	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of medium-sized companies with significant capital appreciation potential. For the portfolio, “medium-sized companies” are those with market capitalizations within the collective market capitalization range of companies represented in either the Russell MidCap Index* or the S&P MidCap 400 Index.*
Mid Value	T. Rowe Price Associates, Inc.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets in companies with market capitalizations that are within the S&P MidCap 400 Index* or the Russell MidCap Value Index*. The portfolio invests in a diversified mix of common stocks of mid-size U.S. companies that are believed to be undervalued by various measures and offer good prospects for capital appreciation.
Money Market	MFC Global Investment Management (U.S.A.) Limited	To seek to obtain maximum current income consistent with preservation of principal and liquidity. Under normal market conditions, the portfolio invests in high quality, U.S. dollar denominated money market instruments. Certain market conditions may cause the return of the portfolio to become low or possibly negative.
Natural Resources	Wellington Management Company, LLP	To seek long-term total return. Under normal market conditions, the portfolio will invest at least 80% of its net assets (plus any borrowings for investment purposes) in equity and equity-related securities of natural resource-related companies worldwide, including emerging markets. Natural resource-related companies include companies that own or develop energy, metals, forest products and other natural resources, or supply goods and services to such companies.
Optimized All Cap	MFC Global Investment Management (U.S.A.) Limited	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 65% of its total assets in equity securities of U.S. companies. The portfolio will focus on equity securities of U.S. companies across the three market capitalization ranges of large, mid and small.
Optimized Value	MFC Global Investment Management (U.S.A.)	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 65% of its total assets in equity securities of U.S. companies with the

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	Limited	potential for long-term growth of capital, with a market capitalization range, at the time of investment, equal to that of the portfolio’s benchmark, the Russell 1000 Value Index.*
Pacific Rim	MFC Global Investment Management (U.S.A.) Limited	To seek to achieve long-term growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in common stocks and equity-related securities of established, larger-capitalization non-U.S. companies located in the Pacific Rim region, including emerging markets, that have attractive long-term prospects for growth of capital. Current income from dividends and interest will not be an important consideration in the selection of portfolio securities.
PIMCO VIT All Asset (a series of PIMCO Variable Insurance Trust) (only Class M is available for sale)	Pacific Investment Management Company LLC	To seek maximum real return consistent with preservation of real capital and prudent investment management. The portfolio invests primarily in a diversified mix of: (a) common stocks of large and mid sized U.S. companies, and (b) bonds with an overall intermediate term average maturity.
Real Estate Securities	Deutsche Investment Management Americas Inc.	To seek to achieve a combination of long-term capital appreciation and current income. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of real estate investments and real estate companies. Equity securities include common stock, preferred stock and securities convertible into common stock.
Real Return Bond	Pacific Investment Management Company LLC	To seek maximum real return, consistent with preservation of real capital and prudent investment management. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus borrowings for investment purposes) in inflation-indexed bonds of varying maturities issued by the U.S. and non-U.S. Governments, their agencies or instrumentalities and corporations, which may be represented by forwards or derivatives such as options, futures contracts, or swap agreements.
Science & Technology	T. Rowe Price Associates, Inc. RCM Capital Management LLC	To seek long-term growth of capital. Current income is incidental to the portfolio’s objective. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in the common stocks of companies expected to benefit from the development, advancement, and/or use of science and technology. For purposes of satisfying this requirement, common stock may include equity linked notes and derivatives relating to common stocks, such as options on equity linked notes.
Small Cap Growth	Wellington Management Company, LLP	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in

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		small-cap companies. For the purposes of the portfolio, “small-cap companies” are those with market capitalizations, at the time of investment, not exceeding the maximum market capitalization of any company represented in either the Russell 2000 Index* or the S&P SmallCap 600.*
Small Cap Opportunities	Invesco AIM Capital Management, Inc. & Dimensional Fund Advisors LP	To seek long-term capital appreciation. Under normal market conditions, Invesco AIM Capital Management, Inc. invests at least 80% of its subadvised net assets (plus any borrowings for investment purposes) in equity securities of small-capitalization companies. Dimensional Fund Advisors LP generally will invest its subadvised net assets in a broad and diverse group of readily marketable common stocks of small and mid cap companies traded on a principal U.S. exchange or on the over-the-counter market that Dimensional Fund Advisers LP determines to be value stocks at the time of purchase.
Small Cap Index	MFC Global Investment Management (U.S.) LLC	To seek to approximate the aggregate total return of a small cap U.S. domestic equity market index. Under normal market conditions, the Fund invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in (a) the common stocks that are included in the Russell 2000 Index* and (b) securities (which may or may not be included in the Russell 2000 Index) that the subadviser believes as a group will behave in a manner similar to the index.
Small Cap Value	Wellington Management Company, LLP	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in small-cap companies that are believed to be undervalued by various measures and offer good prospects for capital appreciation. For the purposes of the portfolio, “small-cap companies” are those with market capitalizations, at the time of investment, not exceeding the maximum market capitalization of any company represented in either the Russell 2000 Index* or the S&P Small Cap 600 Index.*
Small Company Value	T. Rowe Price Associates, Inc.	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in companies with market capitalizations, at the time of investment, that do not exceed the maximum market capitalization of any security in the Russell 2000 Index.* The portfolio invests in small companies whose common stocks are believed to be undervalued.
Strategic Bond	Western Asset Management Company	To seek a high level of total return consistent with preservation of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in fixed income securities.

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Strategic Income	MFC Global Investment Management (U.S.) LLC	To seek a high level of current income. Under normal market conditions, the portfolio invests at least 80% of its assets in the following types of securities: foreign government and corporate debt securities from developed and emerging markets, U.S. Government and agency securities, and domestic high-yield bonds.
Total Return	Pacific Investment Management Company LLC	To seek maximum total return, consistent with preservation of capital and prudent investment management. Under normal market conditions, the portfolio invests at least 65% of its total assets in a diversified portfolio of fixed income instruments of varying maturities, which may be represented by forwards or derivatives, such as options, futures contracts, or swap agreements.
Total Stock Market Index	MFC Global Investment Management (U.S.A.) Limited	Seeks to approximate the aggregate total return of a broad U.S. domestic equity market index. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in (a) the common stocks that are included in the Wilshire 5000 Total Market Index* and (b) securities (which may or may not be included in the Wilshire 5000 Total Market Index) that the subadviser believes as a group will behave in a manner similar to the index.
U.S. Government Securities	Western Asset Management Company	To obtain a high level of current income consistent with preservation of capital and maintenance of liquidity. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in debt obligations and mortgage-backed securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities and derivative securities such as collateralized mortgage obligations backed by such securities and futures contracts. The portfolio may invest the balance of its assets in non-U.S Government securities including, but not limited to, fixed rate and adjustable rate mortgage-backed securities, asset-backed securities, corporate debt securities and money market instruments.
U.S. High Yield Bond	Wells Capital Management Incorporated	To seek total return with a high level of current income. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in U.S. corporate debt securities that are, at the time of investment, below investment grade, including preferred and other convertible securities in below investment grade debt securities (sometimes referred to as “junk bonds” or high yield securities). The portfolio also invests in corporate debt securities and may buy preferred and other convertible securities and bank loans.
Utilities	MFS Investment Management	To seek capital growth and current income (income above that available from the portfolio invested entirely in equity securities). Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowing for

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		investment purposes) in securities of companies in the utilities industry. Securities in the utilities industry may include equity and debt securities of domestic and foreign companies (including emerging markets).
Value	Van Kampen Investments	To realize an above-average total return over a market cycle of three to five years, consistent with reasonable risk. Under normal market conditions, the portfolio invests in equity securities of companies with capitalizations, at the time of investment, similar to the market capitalization of companies in the Russell MidCapValue Index.*

*“Wilshire 5000 Total Market Index^®” is a trademark of Wilshire Associates. “MSCI All Country World Ex US Index” is a trademark of Morgan Stanley & Co. Incorporated. “Russell 1000,^®” “Russell 2000,^®” “Russell 1000 Value,^®” “Russell 3000,^®” “Russell MidCap,^®” and “Russell MidCap Value^®” are trademarks of Frank Russell Company.”S&P 500,^®” “S&P MidCap 400,^®” and “S&P SmallCap 600^®” are trademarks of The McGraw-Hill Companies, Inc. None of the portfolios are sponsored, endorsed, managed, advised, sold or promoted by any of these companies, and none of these companies make any representation regarding the advisability of investing in the portfolios.

The indices referred to in the portfolio descriptions track companies having the ranges of approximate market capitalization, as of February 28, 2009, set out below:

Wilshire 5000 Total Market Index — $1 million to $385 billion

MSCI All CountryWorld Ex US Index — $199 million to $176 billion

MSCI EAFE Index — $199 million to $126 billion

Russell 1000 Index — $41 million to $337.9 billion

Russell 1000 Value Index — $41 million to $337.9 billion

Russell 2000 Index — $3.2 million to $3.7 billion

Russell 3000 Index — $3 million to $337.9 billion

Russell MidCap Index — $41 million to $13.8 billion

Russell MidCap Value Index — $41 million to $13.8 billion

S&P 500 Index — $224 million to $337.9 billion

S&P MidCap 400 Index — $42 million to $4.6 billion

S&P SmallCap 600 Index — $200 million to $1 billion

**The Barclays Capital U.S. Aggregate Bond Index (which represents the U.S. investment grade bond market) is a bond index that relies on indicators such as quality, liquidity, term and duration as relevant measures of performance.

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POLICY SUMMARY

General

The policy is a flexible premium variable universal life insurance policy. This summary provides a general description of the important features of the policy. It is not comprehensive and is qualified in its entirety by the more detailed information contained in this prospectus. Unless otherwise stated or implied by the context, the discussions in this prospectus assume that the policy is not in default, that there is no outstanding Policy Debt and the death benefit is not determined by the Minimum Death Benefit Percentage. Your policy’s provisions may vary in some states and the terms of the policy, and any endorsements or riders, supersede the disclosure in this prospectus.

Death Benefits

The policy provides a death benefit in the event of the death of the Life Insured while the policy is in force. The basic death benefit amount is the Face Amount, which is provided for the lifetime of the Life Insured with no maturity or expiration date. There may be other amounts added to the death benefit as described below.

Flexible Term Insurance Option. You may add a Flexible Term Insurance Option rider (the “FTIO Rider”) to the policy to provide additional term life insurance coverage on the Life Insured. Cost of insurance rates are less than or equal to those of the policy and no sales charge will apply. However, unlike the Face Amount of the policy, the FTIO Rider will terminate at the Life Insured’s Attained Age 100. The FTIO Rider also offers the flexibility to schedule varying death benefit amounts on future dates (the “Scheduled Death Benefits”).

Death Benefit Options. There are two death benefit options. Option 1 provides a death benefit equal to the Face Amount of the policy or, if greater, the Minimum Death Benefit, plus the term insurance benefit of the FTIO option. Option 2 provides a death benefit equal to the Face Amount plus the Policy Value or, if greater, the Minimum Death Benefit, plus the term insurance benefit of the FTIO option. You may change the death benefit option and increase or decrease the Face Amount and Scheduled Death Benefits.

Age 100 Advantage. If the Life Insured is alive on the Policy Anniversary when the Life Insured reaches Attained Age 100, the policy will continue in force subject to the following unless the policy owner chooses to surrender the policy for its Net Cash Surrender Value:

• the policy will be continued until the earlier of the death of the Life Insured or the date the policy owner surrenders the policy;

• no additional premium payments will be accepted although loan repayments will be accepted;

• no additional charges or deductions (described under “Charges and Deductions”) will be assessed;

• interest on any Policy Debt will continue to accrue;

• the policy owner may continue to transfer portions of the Policy Value among the Investment Accounts and the Fixed Accounts as described in this prospectus.

Premiums

Premium payments may be made at any time prior to Attained Age 100 and in any amount, subject to certain limitations (see “Premium Payments — Premium Limitations”). Net Premiums will be allocated to one or more of the Fixed Account and the sub-accounts of the Separate Account. You may change allocations and make transfers among the accounts subject to limitations described below.

Policy Value

The Policy Value is the accumulation of premiums paid, less charges and deductions we take for expenses and cost of insurance, plus or minus the investment returns of the accounts to which the Policy Value has been allocated. You may obtain a portion of the Policy Value by taking a policy loan or a partial withdrawal or by full surrender of the policy.

Policy Loans

You may borrow against the Net Cash Surrender Value of the policy. Loan interest will accrue daily and be payable in arrears on each Policy Anniversary. The Policy Debt will be deducted from amounts payable at the Life Insured’s death or upon surrender of the policy.

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Surrender and Partial Withdrawals

You may make a partial withdrawal of the Policy Value. It may result in a decrease in the Face Amount and Scheduled Death Benefits. You may surrender the policy for its Net Cash Surrender Value at any time.

Lapse and Reinstatement

Your policy will lapse and terminate without value when the Net Cash Surrender Value is insufficient to pay the next monthly deduction and a grace period of 61 days expires without an adequate premium payment from you. You may reinstate a lapsed policy within five years following lapse if the policy was not surrendered for its Net Cash Surrender Value. Evidence of insurability is required, along with a premium payment described under “Lapse and Reinstatement — Reinstatement.”

The policy differs in two important ways from conventional life insurance policies. First, failure to make planned premium payments will not in itself cause the policy to lapse. Second, a policy can lapse even if planned premiums have been paid.

Charges and Deductions

We assess certain charges and deductions in connection with the policy. These include: (i) charges in the form of monthly deductions for the cost of insurance and administrative expenses, (ii) charges assessed daily against amounts in the Investment Account and (iii) charges deducted from premiums paid. These charges are summarized in the Fee Tables.

In addition, there are charges deducted from each portfolio. These charges are also summarized in the Fee Tables.

Reduction in Charges and Enhancement of Surrender Values: The policy is designed for employers and other sponsoring organizations that may purchase multiple policies as a case. The size or nature of the case may result in expected savings of sales, underwriting, administrative or other costs. If so, we expect to offer reductions of policy charges and enhancements of surrender value. We may change the nature and amount of reductions and enhancements available from time to time. They will be determined in a way that is not unfairly discriminatory to policy owners.

Investment Options and Investment Subadvisers

You may allocate Net Premiums to the Fixed Account or to one or more of the sub-accounts of the Separate Account. Each of the sub-accounts invests in the shares of one of the portfolios described in the Table of Investment Options and Investment Subadvisers.

The Table of Investment Options and Investment Subadvisers describes the portfolios and shows the subadvisers that provide investment subadvisory services.

Allocating Net Premiums only to one or a small number of the investment options (other than the Lifestyle Trusts) should not be considered a balanced investment strategy. In particular, allocating Net Premiums to a small number of investment options that concentrate their investments in a particular business or market sector will increase the risk that the value of your policy will be more volatile since these investment options may react similarly to business or market specific events. Examples of business or market sectors where this risk historically has been and may continue to be particularly high include: (a) technology related businesses, including internet related businesses, (b) small cap securities, and (c) foreign securities. The Company does not provide advice regarding appropriate investment allocations. Please discuss this matter with your financial adviser.

Investment Management Fees and Expenses

Each sub-account of the Separate Account purchases shares of one of the portfolios at net asset value. The net asset value of those shares reflects investment management fees and certain expenses of the portfolios. The fees and expenses for each portfolio are described in the Fee Tables and in the portfolio prospectuses.

GENERAL INFORMATION ABOUT JOHN HANCOCK USA, RATINGS AND

THE SEPARATE ACCOUNT

Description of John Hancock USA

John Hancock Life Insurance Company (U.S.A.) (“John Hancock USA”) is a stock life insurance company incorporated in Maine on August 20, 1955 by a special act of the Maine legislature and redomesticated under the laws of

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Michigan. We are a licensed life insurance company in the District of Columbia and all states of the United States except New York. Our ultimate parent is Manulife Financial Corporation (“MFC”), a publicly traded company, based in Toronto, Canada. MFC is the holding company of The Manufacturers Life Insurance Company.

We are ranked and rated by independent financial rating services, which may include Moody’s, Standard & Poor’s, Fitch and A.M. Best. The purpose of these ratings is to reflect the financial strength or claims-paying ability of the company, but they do not specifically relate to its products, the performance (return) of these products, the value of any investment in these products upon withdrawal or to individual securities held in any portfolio. These ratings do not apply to the safety and performance of the Separate Account.

Description of Separate Account N

The investment accounts shown on page 1 are in fact sub-accounts of Separate Account N (the “Separate Account” or “Account”), a separate account operated by us under Michigan law.

The Separate Account is registered with the SEC under the 1940 Act as a unit investment trust. A unit investment trust is a type of investment company that invests its assets in specified securities, such as the shares of one or more investment companies, rather than in a portfolio of unspecified securities. Registration under the 1940 Act does not involve any supervision by the SEC of the management or investment policies or practices of the Separate Account. For state law purposes the Separate Account is treated as a part or division of John Hancock USA.

The Separate Account’s assets are our property. Each policy provides that amounts we hold in the Separate Account pursuant to the policies cannot be reached by any other persons who may have claims against us and can’t be used to pay any indebtedness of John Hancock USA other than those arising out of policies that use the Separate Account. However, the obligations under the policies are corporate obligations of the Company.

New sub-accounts may be added and made available to policy owners from time to time. Existing sub-accounts may be modified or deleted at any time.

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ISSUING A POLICY

Use of the Policy

The policy is designed to provide employers or other organizations with life insurance coverage on employees or other individuals in whose lives they have an insurable interest. The policy may be owned by an individual or a corporation, trust, association, or similar entity. The policy may be used for such purposes as funding non-qualified executive deferred compensation or salary continuation liabilities or death benefit liabilities of executive retirement plans, or as a source for funding cash flow obligations under such plans.

Requirements

To purchase a policy, you must submit a completed application. Your policy will not be issued until the underwriting process is completed to our satisfaction.

With our prior approval, the policy may be issued on a basis that does not distinguish between the Life Insured’s sex and/or smoking status. A policy will only be issued on the lives of insureds from Issue Ages 20 through 80.

Each policy has a Policy Date, an Effective Date and an Issue Date (see “Definitions” in Appendix A). The Policy Date is the date from which the first monthly deductions are calculated and from which Policy Years, Policy Months and Policy Anniversaries are determined. The Policy Date is also the effective date of the initial Coverage Amount. The Policy Date is the same date as the Effective Date unless the policy is backdated (see “Backdating a Policy”). The Effective Date is the date we become obligated under the policy and when the first monthly deductions are taken. It is the later of the date we approve issuance of the policy and the date we receive at least the Minimum Initial Premium. The Issue Date is the date from which the Suicide and Incontestability provisions of the policy are determined.

If we approve issuance of a policy before we receive the Minimum Initial Premium then the Effective Date will be later than the Issue Date. The Minimum Initial Premium must be received by us within 60 days after the Issue Date and the Life Insured must be in good health on the Effective Date. If the Minimum Initial Premium is not paid or if the application is rejected, the policy will be canceled and any premiums paid will be returned to the applicant.

Net Premiums received prior to the Effective Date will be credited with interest at the rate of return earned on amounts allocated to the Money Market portfolio. On the Effective Date, Net Premiums received plus any interest credited will be allocated to Investment Accounts and the Fixed Account according to your instructions, unless first allocated to the Money Market portfolio for the duration of the right to examine period (see “Right to Examine the Policy”).

Minimum Face Amount and Scheduled Death Benefit. The minimum Face Amount is $50,000 unless the FTIO Rider is added to the policy. With an FTIO Rider, the minimum Face Amount is $25,000 and the minimum Scheduled Death Benefit is $50,000.

Backdating a Policy. You may request that we backdate the policy by assigning a Policy Date earlier than the date the application is signed. We will not backdate the policy to a date earlier than that allowed by state law, which is generally three months to one year prior to the date of application for the policy. Monthly deductions will be made for the period the Policy Date is backdated.

Temporary Insurance Agreement

Temporary insurance coverage may be provided under the terms of a Temporary Insurance Agreement, subject to our underwriting practices. Generally, temporary life insurance may not exceed $1,000,000 and may not be in effect for more than 90 days. It is issued on a conditional receipt basis, which means that benefits would only be paid if the Life Insured met our usual and customary underwriting standards for the coverage applied for.

Underwriting

The policies are offered on three underwriting classes that require different types and amounts of information from the applicant and prospective Life Insured. Current cost of insurance charges in early Policy Years will vary by the type of underwriting, and charges will generally be lower where underwriting information is more extensive. Under any of the underwriting bases, the acceptance of an application is subject to our underwriting rules and we may request additional information or reject an application for any reason.

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Short Form Underwriting. The proposed Life Insured must answer qualifying questions in the application but is not required to provide detailed medical history, submit records or undergo examinations or tests unless requested to do so by us. Availability of short form underwriting depends on characteristics of the case, such as the number of lives to be insured, the amounts of insurance and other factors, and it is generally available only up to Issue Age 65.

Simplified Underwriting. The proposed Life Insured must satisfactorily answer certain health questions in the application and may be required to submit existing medical records, but requirements to undergo examinations and tests are minimized. Availability of simplified underwriting and the nature of the requirements will depend on characteristics of the case and the proposed lives to be insured.

Regular (Medical) Underwriting. Where short form or simplified underwriting is unavailable we require satisfactory evidence of insurability under our regular underwriting guidelines for individual applicants. This may include medical exams and other information. A proposed Life Insured who fails to qualify for a standard risk classification may be eligible to be insured with an additional substandard rating.

Right to Examine the Policy

You may return your policy for a refund within 10 days after you receive it. Some states provide a longer period of time for this right, which will be stated in the policy if applicable. The policy can be mailed or delivered to the Company agent who sold it to you or to our Service Office. Immediately upon such delivery or mailing, the policy shall be deemed void from the beginning. Within seven days after receipt of the returned policy at our Service Office we will refund an amount equal to the value of amounts in the Investment Accounts and the Fixed Account on the date we receive the returned policy, plus all charges deducted prior to that date, not including the fees and expenses of the portfolios, minus any partial withdrawals and policy loans.

Some state laws require the refund of premiums paid without adjustment for investment gains and losses of the Separate Account. In these states, all Net Premiums will be allocated to the Money Market portfolio during the Right to Examine period and the refund amount will be equal to all premiums received less any partial withdrawals and policy loans.

If you request a Face Amount increase that results in new sales charge, you will have the same rights described above to cancel the increase. If canceled the Policy Value and sales charge will be recalculated to be as they would have been had the premiums not been paid.

We reserve the right to delay the refund of any premium paid by check until the check has cleared.

(Applicable to Residents of California Only)

Residents of California, age 60 and greater, may return the policy for a refund at any time within 30 days after receiving it. The policy can be mailed or delivered to the Company’s agent who sold it, or to our Service Office. If you cancel the policy during this 30 day period and your premiums were allocated to a Fixed Account or the Money Market portfolio, we will refund you the amount of all premiums paid. If your premiums were allocated to one or more of the Investment Accounts (other than the Money Market portfolio), we will refund you the value of amounts in the Investment Accounts and the Fixed Account on the date we receive the returned policy plus all charges deducted prior to that date, not including the fees and expenses of the portfolios, minus any partial withdrawals and policy loans. Your premiums will be placed in either (a) the Fixed Account, (b) the Money Market portfolio or (c) in one or more of the Investment Accounts, based upon your instructions. If no instructions are given, your premiums will be placed in the Money Market portfolio.

Life Insurance Qualification

A policy must satisfy either of two tests to qualify as a life insurance contract as defined in Section 7702 of the Internal Revenue Code of 1986, as amended (the “Code”). At the time of application, you must choose either the Cash Value Accumulation Test (“CVA Test”) or the Guideline Premium Test (“GP Test”) and the test cannot be changed once the policy is issued.

Cash Value Accumulation Test. The CVA Test requires the death benefit at any time to be at least a certain ratio of the Policy Value, based on prescribed calculations. The Minimum Death Benefit provision described below will ensure that the CVA Test is met. There is no restriction on the amount of premiums you may pay, but we will require you to provide satisfactory evidence of insurability before we accept an amount of premium that would increase the death benefit by more than the increase in Policy Value.

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Guideline Premium Test. The GP Test limits the amount of premiums you may pay into the policy, given its death benefit, based on prescribed calculations. In addition, the GP Test requires the death benefit at any time to be at least a prescribed ratio of the Policy Value. These prescribed multiples are generally lower than those calculated under the CVA Test. The Minimum Death Benefit provision described below will ensure that this second requirement is met.

Changes to the policy or FTIO Rider, such as changes in Face Amount, Scheduled Death Benefit, death benefit option or partial withdrawals, may affect the premium limits under the GP Test. Some changes will reduce future premium limits and may cause premiums already paid to exceed the new limits and force you to make a partial withdrawal.

DEATH BENEFITS

If the policy is in force at the time of the Life Insured’s death we will pay an insurance benefit to the beneficiary. The policy may remain in force for the Life Insured’s entire lifetime and there is no specified maturity or expiration date.

Insurance benefits are only payable when we receive due proof of death at our Service Office, in the form of either a certified copy of the death certificate, a certified copy of a decree of a court of competent jurisdiction as to the finding of death or other proof satisfactory to us.

The amount of the insurance benefit payable will be the death benefit on the date of death, as described below, less any Policy Debt, accrued interest, and outstanding monthly deductions on the date of death. The insurance benefit will be paid in one lump sum unless another form of settlement is agreed to by the beneficiary and us. If the insurance benefit is paid in one sum, we will pay interest from the date of death to the date of payment. If the Life Insured should die after our receipt of a request for surrender, no insurance benefit will be payable, and we will pay only the Net Cash Surrender Value.

Minimum Death Benefit. Both the CVA Test and the GP Test require the death benefit to be at least a prescribed ratio of the Policy Value at all times. The policy’s Minimum Death Benefit ensures that these requirements are met by providing that the death benefit shall be at least equal to the Policy Value multiplied by the applicable Minimum Death Benefit Percentage for the Attained Age of the Life Insured. Tables of Minimum Death Benefit Percentages appear below.

Table of Minimum Death Benefit Percentages.
	GP Test	CVA Test				GP Test	CVA Test
Age	Percent	Male	Female	Unisex	Age	Percent	Male	Female	Unisex
20	250%	644%	768%	665%	42	236%	319%	372%	328%
21	250%	625%	743%	645%	43	229%	309%	361%	318%
22	250%	607%	720%	626%	44	222%	299%	350%	308%
23	250%	589%	697%	608%	45	215%	290%	339%	299%
24	250%	572%	674%	589%	46	209%	281%	329%	290%
25	250%	554%	652%	571%	47	203%	273%	319%	281%
26	250%	537%	631%	554%	48	197%	265%	309%	272%
27	250%	520%	611%	536%	49	191%	257%	300%	264%
28	250%	504%	591%	519%	50	185%	249%	291%	257%
29	250%	488%	572%	502%	51	178%	242%	282%	249%
30	250%	472%	553%	486%	52	171%	235%	274%	242%
31	250%	457%	535%	470%	53	164%	228%	266%	235%
32	250%	442%	517%	455%	54	157%	222%	258%	229%
33	250%	428%	500%	440%	55	150%	216%	251%	222%
34	250%	414%	484%	426%	56	146%	210%	244%	216%
35	250%	400%	468%	412%	57	142%	205%	237%	210%
36	250%	387%	453%	399%	58	138%	199%	230%	205%
37	250%	375%	438%	386%	59	134%	194%	224%	199%
38	250%	362%	424%	373%	60	130%	189%	218%	194%
39	250%	351%	410%	361%	61	128%	184%	211%	189%
40	250%	340%	397%	350%	62	126%	180%	206%	185%
41	243%	329%	384%	339%	63	124%	175%	200%	180%
64	122%	171%	194%	176%	83	105%	122%	127%	124%
65	120%	167%	189%	172%	84	105%	121%	125%	122%
66	119%	164%	184%	168%	85	105%	120%	123%	121%
67	118%	160%	180%	164%	86	105%	118%	121%	119%

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Table of Minimum Death Benefit Percentages.
	GP Test	CVA Test				GP Test	CVA Test
Age	Percent	Male	Female	Unisex	Age	Percent	Male	Female	Unisex
68	117%	157%	175%	160%	87	105%	117%	120%	118%
69	116%	153%	171%	157%	88	105%	116%	118%	117%
70	115%	150%	166%	154%	89	105%	115%	117%	116%
71	113%	147%	162%	151%	90	105%	114%	115%	115%
72	111%	145%	158%	147%	91	104%	113%	114%	114%
73	109%	142%	154%	145%	92	103%	112%	113%	112%
74	107%	139%	151%	142%	93	102%	111%	112%	111%
75	105%	137%	147%	139%	94	101%	110%	110%	110%
76	105%	135%	144%	137%	95	100%	109%	109%	109%
77	105%	133%	141%	135%	96	100%	107%	107%	107%
78	105%	131%	139%	133%	97	100%	106%	106%	106%
79	105%	129%	136%	131%	98	100%	104%	104%	104%
80	105%	127%	133%	129%	99	100%	103%	103%	103%
81	105%	125%	131%	127%	100+	100%	100%	100%	100%
82	105%	124%	129%	125%

Flexible Term Insurance Option Rider

You may add an FTIO Rider to the policy to provide additional death benefit coverage on the Life Insured. The FTIO Rider provides flexible term life insurance to Attained Age 100 with cost of insurance charges less than or equal to those of the policy. The election of (or failure to elect) the FTIO Rider will impact the total cost of insurance charges. The FTIO Rider will terminate at the earlier of Attained Age 100, the date the policy lapses or is surrendered, and your request to cancel the FTIO Rider.

You may schedule the death benefit amounts that will apply at specified times (the “Scheduled Death Benefits”). Scheduled Death Benefits may be constant or varying from time to time. The Scheduled Death Benefits will be shown in the policy .

The term insurance benefit of the FTIO Rider is equal to (a) minus (b) but not less than zero where:

(a) is the Scheduled Death Benefit for the Policy Month, and

(b) is the Face Amount of the policy or, if greater, the policy’s Minimum Death Benefit.

Even if the term insurance benefit may be zero in a Policy Month, the FTIO Rider will not terminate.

Example. A policy is purchased for an executive as part of an employee benefit plan. The death benefit provided by the policy is to be equal to the executive’s salary of $100,000 increasing at 5% per year through age 64. Assuming the executive is currently 55, the policy will be issued with a Scheduled Death Benefit as follows:

Policy Year	Scheduled Death Benefit	Policy Year	Scheduled Death Benefit
1	100,000	6	127,628
2	105,000	7	134,010
3	110,250	8	140,710
4	115,763	9	147,746
5	121,551	10+	155,133

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The FTIO Rider amount will change each year as necessary to provide the benefits shown in the schedule, as follows:

Policy Year	Total Death Benefit	Face Amount	Flexible Term Insurance Amount
1	100,000	100,000	0
2	105,000	100,000	5,000
3	110,250	100,000	10,250
4	115,763	100,000	15,763
5	121,551	100,000	21,551
6	127,628	100,000	27,628
7	134,010	100,000	34,010
8	140,710	100,000	40,710
9	147,746	100,000	47,746
10	155,133	100,000	55,133

Death Benefit Options

You may choose either of two death benefit options:

Death Benefit Option 1. The death benefit on any date is the Face Amount of the policy or, if greater, the Minimum Death Benefit, plus the term insurance benefit of the FTIO Rider.

Death Benefit Option 2. The death benefit on any date is the Face Amount plus the Policy Value or, if greater, the Minimum Death Benefit, plus the term insurance benefit of the FTIO Rider.

Changing the Death Benefit Option

You may change the death benefit option at any time. The change will take effect at the beginning of the next Policy Month at least 30 days after your written request is received at our Service Office. We reserve the right to limit changes that could cause the policy to fail to qualify as life insurance for tax purposes.

A change in the death benefit option will result in a change in the Face Amount and Scheduled Death Benefits to avoid any change in the amount of death benefit, as follows:

Change from Option 1 to Option 2. The new Face Amount will be equal to the Face Amount prior to the change less the Policy Value on the date of the change.

The Scheduled Death Benefit amounts for dates on or after the date of the change will be the amounts scheduled prior to the change less the Policy Value on the date of the change.

Coverage Amounts will be reduced or eliminated in the order that they are listed in the policy until the total decrease in coverage amounts equals the decrease in Face Amount.

Example. A policy is issued with a Face Amount of $100,000, death benefit Option 1, and the following schedule:

Policy Year	Scheduled Death Benefit
1	100,000
2	125,000
3	150,000
4	175,000
5+	200,000

The death benefit option is changed to Option 2 at the beginning of Policy Year 3. If the Policy Value at the time of the change is $10,000, then the Face Amount after the change will be $90,000 (the Face Amount prior to the change less the Policy Value), and the Scheduled Death Benefit after the change will become:

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Policy Year	Scheduled Death Benefit
3	140,000
4	165,000
5+	190,000

Change from Option 2 to Option 1. The new Face Amount will be the Face Amount prior to the change plus the Policy Value on the date of the change (but the new Face Amount will be no greater than the Scheduled Death Benefit on the date of the change).

The resulting Face Amount increase amount will be added to the first Coverage Amount listed in the policy.

The Annual Premium Target for this Coverage Amount will not be increased and new sales charges will not apply, however, for an increase solely due to a change in the death benefit option.

Example. A policy is issued with a Face amount of $100,000, death benefit Option 2, and the following schedule:

Policy Year	Scheduled Death Benefit
1	100,000
2	125,000
3	150,000
4	175,000
5+	200,000

The death benefit option is changed to Option 1 at the beginning of Policy Year 3. If the Policy Value at the time of the change is $10,000, then the Face Amount after the change will be $110,000 (the Face Amount prior to the change plus the Policy Value), and the Scheduled Death Benefit after the change will become:

Policy Year	Scheduled Death Benefit
3	160,000
4	185,000
5+	210,000

Changing the Face Amount and Scheduled Death Benefits

At any time, you may request an increase or decrease to the Face Amount or any Scheduled Death Benefits effective on or after the date of change. We reserve the right to limit changes that could cause the policy to fail to qualify as life insurance for tax purposes.

Increases in Face Amount and Scheduled Death Benefits. Increases in Face Amount and Scheduled Death Benefits are subject to the following conditions:

• Increases in Face Amount and Scheduled Death Benefits will require satisfactory evidence of the Life Insured’s insurability.

• Increases will take effect at the beginning of the next Policy Month after we approve the request.

• We may refuse a requested increase that would not meet our requirements for new policy issues at the time due to the Life Insured’s Attained Age or other factors.

• If the Face Amount is increased (other than as required by a death benefit option change) then all Scheduled Death Benefits effective on or after the date of the change will be increased by the amount of the Face Amount increase.

New Sales Loads for a Face Amount Increase. Coverage Amounts equal to the amount of the increase will be added to the policy as follows:

• First, Coverage Amounts that were reduced or eliminated by a prior Face Amount decrease will be restored.

• Second, if needed, a new Coverage Amount will be added to the policy with an Annual Premium Target and new sales charges. Any new Coverage Amount will be based on the Life Insured’s Attained Age and other relevant factors on the effective date of the increase.

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Premiums paid on or after the increase may be attributed to the new Coverage Amount and result in sales charges (see “Charges and Deductions — Attribution of Premiums”).

Decreases in Face Amount and Scheduled Death Benefits. Decreases in Face Amount and Scheduled Death Benefits are subject to the following conditions:

• Decreases in Face Amount and Scheduled Death Benefits will take effect at the beginning of the next Policy Month which is 30 days after your written request is received at our Service Office.

• If the Face Amount is decreased then all Scheduled Death Benefits effective on or after the date of the change will be decreased by the same amount.

• If at any time the Scheduled Death Benefit decreases to less than the Face Amount, the Face Amount will be decreased to be equal to the Scheduled Death Benefit at that time.

• Coverage Amounts equal to the amount of the Face Amount decrease will be reduced or eliminated in the reverse order that they are listed in the policy.

Decreases in Face Amount Under Death Benefit Option 1 Due to a Partial Withdrawal. If death benefit Option 1 is in effect when a partial withdrawal is made, the Face Amount will be decreased by an amount equal to (a) minus (b) but not less than zero, where:

(a) is the partial withdrawal amount and

(b) is the excess, if any, of the policy’s Minimum Death Benefit over its Face Amount, immediately prior to the partial withdrawal.

Decreases in Face Amount under death benefit Option 1 due to a partial withdrawal are subject to the following conditions:

• Coverage Amounts equal to the amount of the Face Amount decrease will be reduced or eliminated in the reverse order that they are listed in the policy.

• All Scheduled Death Benefits effective on or after the date of the partial withdrawal will be decreased by the amount of the Face Amount decrease, unless you request otherwise and we approve.

Example for Face Increases and Decreases. A policy is issued with a Face Amount of $100,000, death benefit Option 1, and a Scheduled Death Benefit as follows:

Policy Year	Scheduled Death Benefit
1	100,000
2	125,000
3	150,000
4	175,000
5+	200,000

Assume the following policy activity:

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Activity	Effect on Policy	Change in Benefit Schedule
		Policy Year	Scheduled Death Benefit
In Policy Year 2, the Face Amount is reduced to $80,000.	The initial Coverage Amount is reduced to $80,000.	2	105,000
		3	130,000
		4	155,000
		5+	180,000
		Policy Year	Scheduled Death Benefit
In Policy Year 3, the Face Amount is increased to $120,000	The initial Coverage Amount (which earlier was reduced to $80,000) is restored to its original level of $100,000. A new Coverage Amount for $20,000 is added to the policy. This new Coverage Amount will have its own Annual Premium Target, and its own sales charges. A portion of the future premiums paid will be attributed to this Coverage Amount to determine the amount of the sales charges.	3	170,000
		4	195,000
		5+	220,000
		Policy Year	Scheduled Death Benefit
In Policy Year 4, a partial withdrawal of $30,000 is made.	The Face Amount is reduced to $90,000. The most recent Coverage Amount of $20,000 is reduced to $0, and the initial Coverage Amount is reduced to $90,000.	4	165,000
		5	190,000

Factors that Affect the Death Benefit. In the case of death benefit Option 2 where the death benefit is the Face Amount plus the Policy Value, changes in the Policy Value will affect the amount of death benefit. Factors that affect the Policy Value are the investment performance of the variable investment options chosen and the charges deducted. For a discussion of how these factors affect Policy Value see the “Summary of Benefits and Risks”. These factors do not affect the Face Amount of the policy. Therefore, the amount of death benefit under Option 1 will not be less than the Face Amount as long as the policy does not lapse.

PREMIUM PAYMENTS

Initial Premiums

No premiums will be accepted prior to receipt of a completed application by us. All premiums received prior to the Effective Date of the policy will be held in our general account and credited with interest from the date of receipt at the rate of return earned on amounts allocated to the Money Market portfolio.

On the Effective Date, the Net Premiums paid plus interest credited will be allocated among the Investment Accounts or the Fixed Account in accordance with your instructions, unless first allocated to the Money Market portfolio for the duration of the Right to Examine period (see “Right to Examine the Policy”).

Subsequent Premiums

After the payment of the initial premium, premiums may be paid at any time during the lifetime of the Life Insured prior to Attained Age 100 and in any amount subject to the premium limitations described below.

A policy will be issued with a planned premium, which is based on the amount of premium you wish to pay. We will send you notices of your planned premium at the payment interval you select. However, you are under no obligation to make the planned premium payment.

Payment of premiums will not guarantee that the policy will stay in force and failure to pay premiums will not necessarily cause the policy to lapse. The policy will remain in force so long as the Net Cash Surrender Value is sufficient to cover policy charges.

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Premium Limitations

If the policy is issued under the GP Test, the total of all premiums paid may not exceed the then-current maximum premium limitations established by federal income tax law for the policy to qualify as life insurance. The GP Test premium limits are stated in the policy. If a premium is received which would result in total premiums exceeding the applicable GP Test limit, we will only accept that portion of the premium that will not exceed the limit. Any premium in excess of that amount will be returned to you.

If the policy is issued under the CVA Test, there is no restriction on the amount of premiums that may be paid into a policy, but you must provide satisfactory evidence of insurability before we accept any premium that would increase the death benefit by an amount greater than the increase in Policy Value.

Premium Allocation

You may allocate premiums to the Fixed Account and Investment Accounts. Allocations may be made as percentages that are between zero and 100% that sum to exactly 100%. Alternatively, you may allocate a premium in dollar amounts that sum to exactly the Net Premium amount. You may change premium allocations at any time and the change will take effect on the date a request for change satisfactory to us is received at our Service Office.

CHARGES AND DEDUCTIONS

Premium Charge

We will deduct a premium charge as a percentage of each premium payment that is guaranteed never to exceed 2.5%. Currently, we waive this charge in Policy Years 4 and later and charge 0%.

The charge is intended to cover a portion of the aggregate amount of various taxes and fees we pay to federal, state and local governments. It is not based on the actual premium tax rate of your state of residence or any other specific tax.

Sales Charge

The sales charge is intended to cover a portion of our costs of marketing and distributing the policies.

Attribution of Premiums. An Annual Premium Target is associated with each Coverage Amount. Annual Premium Targets are based on the Coverage Amount and the Life Insured’s Attained Age, sex and smoking status on the effective date of the Coverage Amount. The Annual Premium Targets are listed with the Coverage Amounts in the policy.

Premium payments will be attributed to Coverage Amounts that have been in effect for less than 5 years. Attribution will begin with the first applicable Coverage Amount that is listed in the policy. The sum of all premium amounts attributed to a Coverage Amount in a Coverage Year is limited to the Annual Premium Target shown in the policy. Premium amounts that exceed the Annual Premium Target will be attributed to the next listed Coverage Amount, up to its own Annual Premium Target. Attribution will continue in this manner until either the entire premium is attributed to Coverage Amounts or the Annual Premium Target is exceeded for all applicable Coverage Amounts.

Sales Charge. We deduct a sales charge from all premium amounts attributed to a Coverage Amount designated as having a sales charge. The sales charge is a percentage of premiums guaranteed never to exceed the percentages below. Currently we are charging these percentages.

Coverage Year	Percentage	Coverage Year	Percentage
1	13.00%	4	2.50%
2	6.25%	5	0.50%
3	3.50%	6	0.50%
		7+	0.00%

Monthly Deductions

On the Policy Date and at the beginning of each Policy Month prior to Attained Age 100, a deduction is due from the Net Policy Value to cover certain charges described below. Monthly deductions due prior to the policy’s Effective Date will be taken on the Effective Date. Unless otherwise allowed by us and specified by you, the monthly deduction will be allocated among the Investment Accounts and the Fixed Account in the same proportion as the Policy Value in each of the Investment Accounts and the Fixed Account bears to the Net Policy Value.

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Administration Charge. Currently we deduct a charge of $12 per Policy Month, which is guaranteed never to be exceeded. This charge is intended to cover certain administrative expenses associated with the policy, including maintaining policy records, collecting premiums and processing death claims, surrender and withdrawal requests and various changes permitted under a policy.

Cost of Insurance Charge. A monthly charge for the cost of insurance is paid to us and is determined by multiplying a cost of insurance rate by the net amount at risk at the beginning of each Policy Month.

Death Benefit Option 1. The net amount at risk is equal to the greater of zero, or (a) minus (b), where

(a) is the applicable death benefit amount on the first day of the month, divided by 1.0024663; and

(b) is the Policy Value attributed to that death benefit amount on the first day of the month.

Death Benefit Option 2. The net amount at risk is equal to the Face Amount of insurance.

Cost of insurance rates and net amounts at risk are determined separately for each Coverage Amount and for the excess of the death benefit over the Face Amount (the Face Amount is the sum of the Coverage Amounts).

Attribution of Policy Value for Net Amounts at Risk. To determine the net amounts at risk, the Policy Value will be attributed to Coverage Amounts in the order listed in the policy. The amount of Policy Value attributed to a Coverage Amount will be limited to the amount that results in zero net amount at risk, and any excess Policy Value will then be attributed to the next listed Coverage Amount. Attribution will continue in this manner until either the entire Policy Value is attributed or the end of the list of Coverage Amounts is reached. Any remaining Policy Value will then be attributed to the excess of the death benefit over the Face Amount.

Current Cost of Insurance Rates. Cost of insurance rates are determined separately for each Coverage Amount and the excess of the death benefit over the Face Amount. There are different current cost of insurance rate bases for:

• Coverage Amounts having sales charges, and

• The excess of the death benefit over the Face Amount, including any term insurance benefit under the FTIO Rider.

The cost of insurance rate in a specific Policy Month for an applicable death benefit amount will depend on:

• the cost of insurance rate basis for the applicable death benefit amount,

• the Life Insured’s Attained Age, sex (unless unisex rates are required by law) and smoking status on the effective date of the applicable death benefit amount,

• the underwriting class of the applicable death benefit amount,

• the Coverage Year, or Policy Year for the excess of the death benefit over the Face Amount,

• any extra charges for substandard ratings, as stated in the policy.

Since the net amount of risk for death benefit Option 1 is based on a formula that includes as factors the Policy Value, the net amount at risk is affected by the investment performance of the underlying investment options chosen, payment of premiums and charges assessed.

Cost of insurance rates will generally increase with the Life Insured’s age and the Coverage Year.

Cost of insurance rates reflect our expectation as to future mortality experience. They are also intended to cover our general costs of providing the policy, to the extent that these costs are not covered by other charges. Current cost of insurance rates may be changed by us on a basis that does not unfairly discriminate within the class of lives insured.

Guaranteed Maximum Cost of Insurance Rates. In no event will the cost of insurance rates we charge exceed the guaranteed maximum rates set forth in the policy, except to the extent that an extra charge is imposed for a substandard rating. The guaranteed rates are based on the 1980 Commissioners Standard Ordinary Sex Distinct (unless unisex rates are required by law) ANB Aggregate Ultimate Mortality Tables. Current cost of insurance rates may be less than the guaranteed rates.

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Asset Based Risk Charge Deducted from Investment Accounts

We assess a daily charge against amounts in the Investment Accounts. This charge is intended to compensate us for insurance risks we assume under the policy, such as benefit payments and expenses that are higher than we expected. We will realize a gain from this charge to the extent it is not needed to provide benefits and pay expenses under the policy. The charge is a percentage of amounts in the Investment Accounts, which will reduce unit values of the sub-accounts. The charge is guaranteed never to exceed an annual rate of 0.50%. Currently, we charge the following rates:

Policy Year	Annual Rate
1-10	0.45%
11+	0.25%

Investment Management Fees and Expenses

The investment management fees and expenses of the portfolios, the underlying variable investment options for the policy, are set forth in the Fee Tables and in the portfolio prospectuses.

Reduction in Charges and Enhanced Surrender Values

The policy is designed for employers and other sponsoring organizations that may purchase multiple policies as a case. The size or nature of the case may result in expected savings of sales, underwriting, administrative or other costs. If so, we expect to offer reductions of policy charges and enhancements of surrender value. Eligibility for reductions and enhancements and the amounts available will be determined by a number of factors, including the number of lives to be insured, the total premiums expected to be paid, total assets under management for the policy owner, the nature of the relationship among the lives insured, the purpose for which the policies are being purchased, expected persistency of the individual policies, and any other circumstances which we believe to be relevant to the expected reduction of our expenses. Some of reductions and enhancements may be guaranteed and others may be subject to restrictions or to withdrawal or modification, on a uniform case basis. We may change the nature and amount of reductions and enhancements available from time to time. Reductions and enhancements will be determined in a way that is not unfairly discriminatory to policy owners.

COMPANY TAX CONSIDERATIONS

Currently, we make no specific charge for any federal, state, or local taxes that we incur that may be attributable to the Separate Account or to the policy. We reserve the right in the future, however, to make a charge for any such tax or other economic burden resulting from the application of tax laws that we determine to be properly attributable to the Separate Account or to the policy.

POLICY VALUE

Determination of the Policy Value

A policy has a Policy Value, a portion of which is available to you by making a policy loan or partial withdrawal, or upon surrender of the policy. The Policy Value may also affect the amount of the death benefit. The Policy Value at any time is equal to the sum of the values in the Investment Accounts, the Fixed Account, and the Loan Account.

The Policy Value is affected by the investment performance of the Investment Account chosen and the rate of interest credited if amounts are allocated to the Fixed Account. The Policy Value is also affected by the charges deducted. For a discussion of how these factors affect Policy Value see the “Summary of Benefits and Risks”.

Investment Accounts. An Investment Account is established under each policy for each sub-account of the Separate Account to which Net Premiums or transfer amounts have been allocated. Each Investment Account under a policy measures the interest of the policy in the corresponding sub-account. The value of the Investment Account established for a particular sub-account is equal to the number of units of that sub-account credited to the policy multiplied by the value of such units.

Fixed Account. Amounts in the Fixed Account do not vary with the investment performance of any sub-account. Instead, these amounts are credited with interest at a rate determined by us. See “The General Account — Fixed Account”.

Loan Account. Amounts borrowed from the policy are transferred to the Loan Account. Amounts in the Loan Account do not vary with the investment performance of any sub-account. Instead, these amounts are credited with interest at a rate determined by us that is lower than the loan interest rate charged on Policy Debt. See “Policy Loans — Loan Account”.

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Units and Unit Values

Crediting and Canceling Units. Units of a particular sub-account are credited to a policy when Net Premiums are allocated to that sub-account or amounts are transferred to that sub-account. Units of a sub-account are cancelled whenever amounts are deducted, transferred or withdrawn from the sub-account. The number of units credited or cancelled for a specific transaction is based on the dollar amount of the transaction divided by the value of the unit on the Business Day on which the transaction occurs. The number of units credited with respect to a premium payment will be based on the applicable unit values for the Business Day on which the premium is received at our Service Office, except for any premiums received before the Effective Date. For premiums received before the Effective Date, the values will be determined on the Effective Date.

Units are valued at the end of each Business Day. When an order involving the crediting or canceling of units is received after the end of a Business Day, or on a day that is not a Business Day, the order will be processed on the basis of unit values determined on the next Business Day. Similarly, any determination of Policy Value, Investment Account value or death benefit to be made on a day that is not a Business Day will be made on the next Business Day.

Unit Values. For each Business Day the unit value for each sub-account is determined by multiplying the net investment factor for the that sub-account by the unit value for the immediately preceding Business Day.

The net investment factor for a sub-account on any Business Day is equal to (a) divided by (b) minus (c), where:

(a) is the net asset value of the underlying portfolio shares held by that sub-account as of the end of such Business Day before any policy transactions are made on that day;

(b) is the net asset value of the underlying portfolio shares held by that sub-account as of the end of the immediately preceding Business Day after all policy transactions were made for that day; and

(c) is a charge not exceeding the daily mortality and expense risk charge shown in the “Charges and Deductions — Asset Based Risk Charge Deducted from Investment Accounts” section.

The value of a unit may increase, decrease, or remain the same, depending on the investment performance of a sub-account from one Business Day to the next.

Transfers of Policy Value

Subject to the restrictions set forth below, you may transfer Policy Value from one sub-account to another or to the Fixed Account. Transfers involving the Fixed Account are subject to certain limitations noted below under “Transfers Involving Fixed Accounts.”

Variable investment options in variable life insurance products can be a prime target for abusive transfer activity because these products value their investment options on a daily basis and allow transfers among investment options without immediate tax consequences. As a result, some investors may seek to frequently transfer into and out of variable investment options in reaction to market news or to exploit a perceived pricing inefficiency. Whatever the reason, long-term investors in a variable investment option can be harmed by frequent transfer activity since such activity may expose a portfolio to increased portfolio transaction costs (affecting the value of the shares), disruption to management of a portfolio (affecting a subadviser’s ability to effectively manage a portfolio’s investments in accordance with the portfolio’s investment objective and policies) and dilution with respect to interests held for long-term investment.

To discourage disruptive frequent trading activity, we impose restrictions on transfers and reserve the right to change, suspend or terminate telephone and facsimile transaction privileges. In addition, we reserve the right to take other actions at any time to restrict trading, including, but not limited to: (i) restricting the number of transfers made during a defined period, (ii) restricting the dollar amount of transfers, and (iii) restricting transfers into and out of certain investment options. We also reserve the right to defer a transfer at any time we are unable to purchase or redeem shares of the underlying portfolio.

While we seek to identify and prevent disruptive frequent trading activity, it may not always be possible to do so. Therefore, no assurance can be given that the restrictions we impose will be successful in preventing all disruptive frequent trading and avoiding harm to long-term investors.

Our current practice is to restrict transfers into or out of variable investment options to two per calendar month (except with respect to those policies described in the following paragraph). In applying this restriction any transfer request involving the transfer of account value into or out of multiple variable investment options will still count as only one request. No more than one transfer request may be made on any day. You may, however, transfer to the Money Market portfolio even if the

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two transfer per month limit has been reached, but only if 100% of the Policy Value is transferred to the Money Market portfolio. If such a transfer to the Money Market portfolio is made then, for the 30 calendar day period after such transfer, no transfers from the Money Market portfolio to any other variable investment options or to the Fixed Account may be made. If a policy offers a dollar cost averaging or automatic asset allocation rebalancing program, any transfers pursuant to such program are not considered transfers subject to these restrictions on frequent trading. The restrictions described in this paragraph will be applied uniformly to all policy owners subject to the restrictions.

Policies may be purchased by a corporation or other entity as a means to informally finance the liabilities created by an employee benefit plan, and to this end the entity may aggregately manage the policies purchased to match its liabilities under the plan. Policies sold under these circumstances are subject to special transfer restrictions. In lieu of the two transfers per month restriction, we will allow the policy owner under these circumstances to rebalance the investment options in its policies within the following limits: (i) during the 10 calendar day period after any account values are transferred from one portfolio into a second portfolio, the values can only be transferred out of the second investment option if they are transferred into the Money Market portfolio; and (ii) any account values that would otherwise not be transferable by application of the 10 day limit described above and that are transferred into the Money Market portfolio may not be transferred out of the Money Market portfolio into any other investment options (variable or fixed) for 30 calendar days. The restrictions described in this paragraph will be applied uniformly to all policy owners subject to the restrictions.

Subject to our approval, we may offer policies purchased by a corporation or other entity that has purchased policies to match its liabilities under an employee benefit plan, as described above, the ability to electronically rebalance the investment options in its policies. Under these circumstances, in lieu of imposing any specific limit upon the number or timing of transfers, we will monitor aggregate trades among the sub-accounts for frequency, pattern and size for potentially harmful investment practices. If we detect trading activity that we believe may be harmful to the overall operation of any investment account or underlying portfolio, we may impose conditions on policies employing electronic rebalancing to submit trades, including setting limits upon the number and timing of transfers, and revoking privileges to make trades by any means other than written communication submitted via U.S. mail. The restrictions described in these paragraphs will be applied uniformly to all policy owners subject to the restrictions.

We also reserve the right to modify or terminate the transfer privilege at any time in accordance with applicable law. Transfers may also be delayed when any of the events described in “Other Information — Payment of Proceeds” occurs. Transfer privileges are also subject to any restrictions that may be imposed by the portfolios. In addition, we reserve the right to defer the transfer privilege at any time that we are unable to purchase or redeem shares of a portfolio.

Rule 22c-2 under the 1940 Act requires us to provide tax identification numbers and other policy owner transaction information to John Hancock Trust or to other investment companies in which the Separate Account invests, at their request. An investment company will use this information to identify any pattern or frequency of investment account transfers that may violate their frequent trading policy. An investment company may require us to impose trading restrictions in addition to those described above if violations of their frequent trading policy are discovered.

Transfer Requests. Transfer requests may be made in writing in a format satisfactory to us. From time to time we may offer you alternate means of communicating transfer requests to us, such as electronic mail, the Internet or telephone. We will use reasonable procedures to confirm that instructions received by alternate means are genuine and we will not be liable for following instructions we have reasonably determined to be genuine.

Limitations on Transfers From the Fixed Account. The maximum amount that may be transferred from the Fixed Account in any Policy Year is 25% of the Fixed Account Value at the previous Policy Anniversary. Any transfer that involves a transfer out of the Fixed Account may not involve a transfer to the Investment Account for the Money Market portfolio. We may allow greater amounts to be transferred from the Fixed Account if a systematic plan of withdrawals is agreed to in advance. For example, we will allow the transfer of 20%, 25%, 33%, 50% and 100% of the remaining balance in the Fixed Account in five successive years provided we agree in advance in writing and that no amounts are transferred into the Fixed Account during the 5 year period.

POLICY LOANS

At any time while this policy is in force, you may borrow against the Policy Value. This policy is the only security for the loan. Policy loans may have tax consequences, see “Tax Treatment of Policy Benefits — Policy Loans”.

A policy loan will affect future Policy Values, since the portion of the Policy Value in the Loan Account will receive the loan interest credited rate rather than varying with the performance of the underlying portfolios or increasing at the Fixed Account interest credited rate. A policy loan may cause a policy to be more susceptible to lapse since it reduces the Net Cash

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Surrender Value from which monthly deductions are taken. A policy loan causes the amount payable upon death of the Life Insured to be reduced by the amount of outstanding Policy Debt.

Maximum Loan. The amount of any loan cannot exceed the amount that would cause the Policy Debt to equal the policy’s Cash Surrender Value less the monthly deductions due from the date of the loan to the next Policy Anniversary.

Interest Charged on Policy Loans

Interest on the Policy Debt will accrue daily and be payable annually on the Policy Anniversary. The rate of interest charged will be an effective annual rate of 4%.

Loan Account

When a loan is made, an amount equal to the loan will be deducted from the Investment Accounts or the Fixed Account and transferred to the Loan Account. You may designate how this amount is allocated among the accounts. If you give no instructions, the amount transferred will be allocated among the Investment Accounts and the Fixed Account in the same proportion as the Policy Value in each Investment Account and the Fixed Account bears to the Net Policy Value. A transfer from an Investment Account will result in the cancellation of units of the underlying sub-account equal in value to the amount transferred from the Investment Account. However, since the Loan Account is part of the Policy Value, transfers made in connection with a loan will not change the Policy Value.

Interest Credited to the Loan Account. Policy Value in the Loan Account will earn interest at an effective annual rate guaranteed to be at least 3.25%. We may declare a current interest rate that is greater than this, subject to change at any time. The excess of the loan interest charged rate (4%) over the loan interest credited rates will result in a net charge against the Policy Value with respect to any Policy Debt.

Currently we credit loan interest rates which vary by Policy Year as follows:

Policy Years	Current Loan Interest Credited Rates	Excess Loan Interest Charged Rate
1-10	3.25%	0.75%
11+	3.75%	0.25%

Loan Account Adjustments. On the first day of each Policy Month the difference between the Loan Account and the Policy Debt is transferred to the Loan Account from the Investment Accounts or the Fixed Account. The amount transferred will be allocated to the Investment Accounts and the Fixed Account in the same proportion as the Policy Value in each Investment Account or the Fixed Account bears to the Net Policy Value.

Loan Repayments. Policy Debt may be repaid, in whole or in part, at any time prior to the death of the Life Insured while the policy is in force. A loan repayment amount will be credited to the Loan Account and transferred to the Fixed Account or the Investment Accounts in the same proportion as the Policy Value in each account bears to the Net Policy Value.

Amounts paid to us not specifically designated in writing as loan repayments will be treated as premiums.

POLICY SURRENDER AND PARTIAL WITHDRAWALS

Policy Surrender

A policy may be surrendered for its Net Cash Surrender Value at any time while the Life Insured is living. The Net Cash Surrender Value is equal to the Policy Value less any outstanding monthly deductions due minus the Policy Debt. The Net Cash Surrender Value will be determined at the end of the Business Day on which we receive the policy and a written request for surrender at our our Service Office. After a policy is surrendered, the insurance coverage and all other benefits under the policy will terminate.

Partial Withdrawals

You may make a partial withdrawal of the Net Cash Surrender Value at any time. You may designate how the withdrawal amount is allocated among the Investment Account and the Fixed Account. If you give no instructions, the withdrawal amount will be allocated among the accounts in the same proportion as the Policy Value in each account bears to the Net Policy Value.

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The death benefit may be reduced as a result of a Partial Withdrawal. (See “Death Benefits — Decreases in Face Amount under Death Benefit Option 1 due to a Partial Withdrawal”).

LAPSE AND REINSTATEMENT

Lapse

A policy will go into default at the beginning of a Policy Month if the Net Cash Surrender Value would be zero and below after deducting the monthly deduction then due. A lapse could have adverse tax consequences as described under “Tax Treatment of the Policy — Other Policy Distributions”. We will notify you of the default and will allow you a 61 day grace period in which you may make a premium payment sufficient to bring the policy out of default. The required payment will be equal to the amount necessary to bring the Net Cash Surrender Value to zero, if it was less than zero on the date of default, plus the monthly deductions due at the date of default and payable at the beginning of each of the two Policy Months thereafter, plus any applicable premium charge. If the required payment is not received by the end of the grace period, the policy will terminate with no value.

Death During Grace Period. If the Life Insured should die during the grace period, the Policy Value used in the calculation of the death benefit will be the Policy Value on the date of default and the insurance benefit will be reduced by any outstanding monthly deductions due at the time of death.

Reinstatement

You may reinstate a policy that has terminated after going into default at any time within the five-year period following the date of termination subject to the following conditions:

• The policy must not have been surrendered for its Net Cash Surrender Value;

• Evidence of the Life Insured’s insurability satisfactory to us must be provided; and

• A premium equal to the payment required during the grace period following default to keep the policy in force is paid.

Generally, the suicide exclusion and incontestability provision will apply from the effective date of the reinstatement. Your policy will indicate if this is not the case.

THE GENERAL ACCOUNT

The general account of John Hancock USA consists of all assets owned by us other than those in Separate Account N and other separate accounts of the Company. Subject to applicable law, we have sole discretion over investment of the assets of the general account.

By virtue of exclusionary provisions, interests in the general account of John Hancock USA have not been registered under the Securities Act of 1933 (“1933 Act”) and the general account has not been registered as an investment company under the 1940 Act. Accordingly, neither the general account nor any interests therein are subject to the provisions of these acts, and as a result the staff of the SEC has not reviewed the disclosures in this prospectus relating to the general account. Disclosures regarding the general account may, however, be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in a prospectus.

Fixed Account

You may elect to allocate Net Premiums to the Fixed Account or transfer all or a portion of the Policy Value to the Fixed Account from the Investment Accounts. We will hold the reserves required for any portion of the Policy Value allocated to the Fixed Account in our general account. Transfers from the Fixed Account to the Investment Accounts are subject to restrictions.

Policy Value in the Fixed Account. The Policy Value in the Fixed Account is equal to:

• the portion of the Net Premiums allocated to it; plus

• any amounts transferred to it; plus

• interest credited to it; less

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• any charges deducted from it; less

• any partial withdrawals from it; less

• any amounts transferred from it.

Interest on the Fixed Account. An allocation of Policy Value to the Fixed Account does not entitle you to share in the investment experience of the general account. Instead, we guarantee that the Policy Value in the Fixed Account will accrue interest daily at an effective annual rate of at least 3%, without regard to the actual investment experience of the general account. We may declare a current interest rate in excess of the guaranteed rate, subject to change at any time.

OTHER PROVISIONS OF THE POLICY

Policy Owner Rights

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 accounts in which to invest 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.

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 accounts

Borrow or withdraw amounts you have in the accounts

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 Net Cash surrender value

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

It is possible to name so-called “joint owners” of the policy. If more than one person owns a policy, all owners must join in most requests to exercise rights under the policy.

Policy Cancellation

Unless otherwise restricted by a separate agreement, you may:

• Vary the premiums paid under the policy.

• Change the death benefit option.

• Change the premium allocation for future premiums.

• Take loans and/or partial withdrawals.

• Surrender the policy.

• Transfer ownership to a new owner.

• Name a contingent owner that will automatically become owner if you die before the Life Insured.

• Change or revoke a contingent owner.

• Change or revoke a beneficiary.

Assignment of Rights. We will not be bound by an assignment until we receive a copy of the assignment at our Service Office. We assume no responsibility for the validity or effects of any assignment.

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Beneficiary

You may appoint one or more beneficiaries of the policy by naming them in the application. Beneficiaries may be appointed in three classes — primary, secondary, and final. Beneficiaries may also be revocable or irrevocable. Unless an irrevocable designation has been elected, you may change the beneficiary during the Life Insured’s lifetime by giving written notice in a form satisfactory to us. If the Life Insured dies and there is no surviving beneficiary, you, or your estate if you are the Life Insured, will be the beneficiary. If a beneficiary dies before the seventh day after the death of the Life Insured, we will pay the insurance benefit as if the beneficiary had died before the Life Insured.

Incontestability

We will not contest the validity of a policy after it has been in force during the Life Insured’s lifetime for two years from the Issue Date stated in the policy, nor will we contest the validity of an increase in Face Amount after it has been in force during the Life Insured’s lifetime for two years. If a policy has been reinstated, we can contest any misrepresentation of a fact material to the reinstatement for a period of two years after the reinstatement date.

Misstatement of Age or Sex

If the Life Insured’s stated age or sex or both in the policy are incorrect, we will change the Face Amount so that the death benefit will be that which the most recent monthly charge for the cost of insurance would have purchased for the correct age and sex.

Suicide Exclusion

If the Life Insured, whether sane or insane, dies by suicide within two years from the Issue Date stated in the policy (or within the maximum period permitted by the state in which the policy was delivered, if less than two years), we will pay only the premiums paid less any partial withdrawals and any Policy Debt. If the Life Insured should die by suicide within two years after a Face Amount increase, the death benefit for the increase will be limited to the monthly deductions for the increase. At our discretion, this provision may be waived; for example, with policies purchased in conjunction with certain existing benefit plans.

Supplementary Benefits

Subject to certain requirements, one or more supplementary benefits may be added to a policy, including the FTIO Rider (see “Death Benefits — Flexible Term Insurance Option Rider”) and, in the case of a policy owned by a corporation or other similar entity, a benefit permitting a change in the Life Insured (a taxable event). More detailed information concerning this supplementary benefit may be obtained from us. There is no cost for any supplementary benefit currently offered by us, with the exception of the FTIO Rider (see “Charges and Deductions — Monthly Deductions”).

TAX TREATMENT OF THE POLICY

This description of Federal income tax consequences is only a brief summary and is neither exhaustive nor authoritative. It was written to support the promotion of our products. It does not constitute legal or tax advice, and it is not intended to be used and cannot be used to avoid any penalties that may be imposed on you. Tax consequences will vary based on your own particular circumstances, and for further information you should consult a qualified tax adviser. 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. The policy may be used in various arrangements, including nonqualified deferred compensation or salary continuation plans, split dollar insurance plans, executive bonus plans, retiree medical benefit plans and others. The tax consequences of such plans may vary depending on the particular facts and circumstances of each individual arrangement. Therefore, if the value of using the policy in any such arrangement depends in part on the tax consequences, a qualified tax adviser should be consulted for advice.

General

We are taxed as a life insurance company. Under current tax law rules, we include the investment income (exclusive of capital gains) of the Separate Account in our taxable income and take deductions for investment income credited to our “policy holder reserves.” We are also required to capitalize and amortize certain costs instead of deducting those costs when they are incurred. We do not currently charge the Separate Account for any resulting income tax costs, other than a “DAC tax” charge we may impose against the Separate Account to compensate us for the finance costs attributable to the acceleration of our income tax liabilities by reason of a “DAC tax adjustment.” We also claim certain tax credits or deductions relating to foreign taxes paid and dividends received by the series funds. These benefits can be material. We do

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not pass these benefits through to the Separate Account, principally because: (i) the deductions and credits are allowed to us and not the policy owners under applicable tax law; and (ii) the deductions and credits do not represent investment return on the Separate Account assets that are passed through to policy owners.

The policies permit us to deduct a charge for any taxes we incur that are attributable to the operation or existence of the policies or the Separate Account. Currently, we do not anticipate making any specific charge for such taxes other than any DAC tax charge and state and local premium taxes. If the level of the current taxes increases, however, or is expected to increase in the future, we reserve the right to make a charge in the future.

Death Benefit Proceeds and Other Policy Distributions

Generally, death benefits paid under policies such as yours are not subject to income tax. Earnings on your account value are ordinarily 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 would generally be treated as a return of the premiums you’ve paid and not subjected to income tax. However certain distributions associated with a reduction in death benefit or other policy benefits within the first 15 years after issuance of the policy are ordinarily taxable in whole or in part. 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 premiums in excess of limits prescribed by the tax laws. Additional taxes and penalties may be payable for policy distributions of any kind including loans. (See “7-Pay Premium Limit and Modified Endowment Contract Status” below.)

We expect the policy to 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 a life insurance contract for Federal tax purposes. For a policy to be treated as a life insurance contract, it must satisfy either the cash value accumulation test or the guideline premium test. These tests limit the amount of premium that you may pay into the policy. We will monitor compliance with these standards. If we determine that a policy does not satisfy section 7702, we may take whatever steps are appropriate and reasonable to bring it into compliance with section 7702.

If the policy complies with section 7702, the death benefit proceeds under the policy ordinarily should be excludable from the beneficiary’s gross income under section 101 of the Code.

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 received through actual or deemed distributions. In general, unless the policy is a modified endowment contract, the owner will be taxed on the amount of distributions that exceed the premiums paid under the policy. An exception to this general rule occurs in the case of a decrease in the policy’s death benefit or any other change that reduces benefits under the policy in the first 15 years after the policy is issued and that results in a cash distribution to the policy owner. Changes that reduce benefits include partial 42 withdrawals, death benefit option changes, and distributions required to keep the policy in compliance with section 7702. For purposes of this rule any distribution within the two years immediately before a reduction in benefits will also be treated as if it caused the reduction. A cash distribution that reduces policy benefits will be taxed in whole or in part (to the extent of any gain in the policy) under rules prescribed in section 7702. The taxable amount is subject to limits prescribed in section 7702(f)(7). Any taxable distribution will be ordinary income to the owner (rather than capital gain).

Distributions for tax purposes 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.

It is possible that, despite our monitoring, a policy might fail to qualify as a life insurance contract 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 credited to the policy from the date of issue to the date of the disqualification and for subsequent periods.

Tax consequences of ownership or receipt of policy proceeds under Federal, state and local estate, inheritance, gift and other tax laws will depend on the circumstances of each owner or beneficiary. If the person insured by the policy is also its owner, either directly or indirectly through an entity such as a revocable trust, the death benefit will be includible in his or her estate for purposes of the Federal estate tax. If the owner is not the person insured, the value of the policy will be includible in the owner’s estate upon his or her death. Even if ownership has been transferred, the death proceeds or the policy value may be includible in the former owner’s estate if the transfer occurred less than three years before the former owner’s death

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or if the former owner retained certain kinds of control over the policy. You should consult your tax adviser regarding these possible tax consequences.

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.

Policy Loans

We expect that, except as noted below (see “7-pay premium limit and modified endowment contract status”), 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 other than the payment of the death benefit, 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 required to keep your policy from lapsing and a significant tax burden if you allow the lapse to occur.

Diversification Rules and Ownership of the Account

Your policy will not qualify for the tax benefits of a life insurance contract unless the Account follows certain rules requiring diversification of investments underlying the policy. In addition, the rules require that the policy owner not have “investment control” over the underlying assets.

In certain circumstances, the owner of a variable life insurance policy may be considered the owner, for Federal income tax purposes, of the assets of the separate account used to support the policy. In those circumstances, income and gains from the separate account assets would be includible in the policy owner’s gross income. The Internal Revenue Service (“IRS”) has stated in published rulings that a variable policy owner will be considered the owner of separate account assets if the policy owner possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. A Treasury Decision issued in 1986 stated that guidance would be issued in the form of regulations or rulings on the “extent to which Policyholders may direct their investments to particular sub-accounts of a separate account without being treated as owners of the underlying assets”. As of the date of this prospectus, no comprehensive guidance on this point has been issued. In Rev. Rul. 2003-91, however, the IRS ruled that a contract holder would not be treated as the owner of assets underlying a variable life insurance or annuity contract despite the owner’s ability to allocate funds among as many as twenty subaccounts.

The ownership rights under your policy are similar to, but different in certain respects from, those described in IRS rulings in which it was determined that policyholders were not owners of separate account assets. Since you have greater flexibility in allocating premiums and policy values than was the case in those rulings, it is possible that you would be treated as the owner of your policy’s proportionate share of the assets of the Account.

We do not know what future Treasury Department regulations or other guidance may require. We cannot guarantee that the funds will be able to operate as currently described in the series funds’ prospectuses, or that a series fund will not have to change any fund’s investment objectives or policies. We have reserved the right to modify your policy if we believe doing so will prevent you from being considered the owner of your policy’s proportionate share of the assets of the Account, but we are under no obligation to do so.

7-pay premium limit and modified endowment contract status

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 contract, which can have adverse tax consequences.

Policies classified as modified endowment contracts are subject to the following tax rules:

• First, all partial withdrawals from such a policy are treated as ordinary income subject to tax up to the amount equal to the excess (if any) of the policy value immediately before the distribution over the investment in the policy at such time. If you own any other modified endowment contracts issued to you in the same calendar year by the same insurance company or its affiliates, their values will be combined with the value of the policy from

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which you take the withdrawal for purposes of determining how much of the withdrawal is taxable as ordinary income.

• Second, loans taken from or secured by such a policy and assignments or pledges of any part of its value are treated as partial withdrawals from the policy and taxed accordingly. Past-due loan interest that is added to the loan amount is treated as an additional loan.

• Third, a 10% additional income tax is imposed on the portion of any distribution (including distributions on surrender) from, or loan taken from or secured by, such a policy that is included in income except where the distribution or loan:

• is made on or after the date on which the policy owner attains age 59 ¹/2;

• is attributable to the policy owner becoming disabled; or

• is part of a series of substantially equal periodic payments for the life (or life expectancy) of the policy owner or the joint lives (or joint life expectancies) of the policy owner and the policy owner’s beneficiary.

These exceptions to the 10% additional tax do not apply in situations where the policy is not owned by an individual.

Furthermore, any time there is a “material change” in a policy, the policy will begin a new 7-pay testing period as if it were a newly-issued policy. The material change rules for determining whether a policy is a modified endowment contract are complex. In general, however, the determination of whether a policy will be a modified endowment contract after a material change depends upon the relationship among the death benefit of the policy at the time of such change, the policy value at the time of the change, and the additional premiums paid into the policy during the seven years starting with the date on which the material change occurs.

Moreover, if there is a reduction in benefits under a policy (such as a reduction in the death benefit or the reduction or cancellation of certain rider benefits) during a 7-pay testing period, the 7-pay limit will generally be recalculated based on the reduced benefits and the policy will be re-tested from the beginning of the 7-pay testing period using the lower limit. If the premiums paid to date at any point during the 7-pay testing period are greater than the recalculated 7-pay limit, the policy will become a modified endowment contract.

If your policy is issued as a result of a section 1035 exchange, it may be considered to be a modified endowment contract if the death benefit under the new policy is smaller than the death benefit under the exchanged policy, or if you reduce coverage in your new policy after it is issued. Therefore, if you desire to reduce the face amount as part of a 1035 exchange, a qualified tax adviser should be consulted for advice.

All modified endowment contracts issued by the same insurer (or its affiliates) to the same owner during any calendar year generally are required to be treated as one contract for the purpose of applying the modified endowment contract rules. A policy received in exchange for a modified endowment contract will itself also be a modified endowment contract. You should consult your tax adviser if you have questions regarding the possible impact of the 7-pay limit on your policy.

Corporate and H.R. 10 Retirement 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.

Withholding

To the extent that policy distributions to you are taxable, they are generally subject to withholding for your Federal income tax liability. However if you reside in the United States, you can generally choose not to have tax withheld from distributions.

Life Insurance Purchases by Residents of Puerto Rico

In Rev. Rul. 2004-75, 2004-31 I.R.B. 109, the Internal Revenue Service ruled that income received by residents of Puerto Rico under a life insurance policy issued by a United States company is U.S.-source income that is subject to United States Federal income tax.

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Life Insurance Purchases by Non-Resident Aliens

If you are not a U.S. citizen or resident, you will generally be subject to U.S. Federal withholding tax on taxable distributions from life insurance policies at a 30% rate, unless a lower treaty rate applies. In addition, you may be subject to state and/or municipal taxes and taxes imposed by your country of citizenship or residence. You should consult with a qualified tax adviser before purchasing a policy.

OTHER INFORMATION

Payment of Proceeds

As long as the policy is in force, we will ordinarily pay any policy loans, surrenders, partial withdrawals or insurance benefit within seven days after receipt at our Service Office of all the documents required for such a payment. We will ordinarily 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.

We will ordinarily 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. We may delay the payment of any policy loans, surrenders, partial withdrawals, or insurance benefit that depends on Fixed Account values for up to six months or in the case of any Investment Account for any period during which:

(i) the New York Stock Exchange is closed for trading (except for normal weekend and holiday closings),

(ii) trading on the New York Stock Exchange is restricted

(iii) an emergency exists, as determined by the SEC, as a result of which disposal of securities held in the Separate Account is not reasonably practicable or it is not reasonably practicable to determine the value of the Separate Account’s net assets or

(iv) the SEC, by order, so permits for the protection of security holders; provided that applicable rules and regulations of the SEC shall govern as to whether the conditions described in (ii) and (iii) exist.

Reports to Policy Owners

Within 30 days after each Policy Anniversary, we will send you a statement showing, among other things:

• the amount of death benefit;

• the Policy Value and its allocation among the Investment Accounts, the Fixed Account and the Loan Account;

• the value of the units in each Investment Account to which the Policy Value is allocated;

• • the Policy Debt and any loan interest charged since the last report;

• the premiums paid and other policy transactions made during the period since the last report; and

• any other information required by law.

You will also be sent an annual and a semi-annual report for each portfolio, which will include a list of the securities, held in each portfolio as required by the 1940 Act.

Distribution of Policies

John Hancock Distributors LLC (“JH Distributors”), a Delaware limited liability company affiliated with us, is the principal distributor and underwriter of the securities offered through this prospectus and of other annuity and life insurance products we and our affiliates offer. JH Distributors also acts as the principal underwriter of the John Hancock Trust, whose securities are used to fund certain investment accounts under the policies and under other annuity and life insurance products we offer.

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JH Distributors’ principal address is 200 Bloor Street East, Toronto, Canada M4W 1E5 and it also maintains offices with us at 197 Clarendon Street, Boston, Massachusetts 02116. JH Distributors is a broker-dealer registered under the Securities Exchange Act of 1934 (the “1934 Act”) and is a member of Financial Industry Regulatory Authority (“FINRA”).

We offer the policies for sale through individuals who are licensed as insurance agents and who are registered representatives of broker-dealers that have entered into selling agreements with JH Distributors. These broker-dealers may include our affiliate Signator Investors, Inc. In addition, we, either directly or through JH Distributors, have entered into agreements with other financial intermediaries that provide marketing, sales support and certain administrative services to help promote the policies (“financial intermediaries”). In a limited number of cases, we have entered into loans, leases or other financial agreements with these broker-dealers, financial intermediaries or their affiliates.

Compensation

The broker-dealers and other financial intermediaries that distribute or support the marketing of our policies may be compensated by means of various compensation and revenue sharing arrangements. A general description of these arrangements is set out below under “Standard compensation” and “Additional compensation and revenue sharing”. These arrangements may differ between firms, and not all broker-dealers or financial intermediaries will receive the same compensation and revenue sharing benefits for distributing our policies. Also, a broker-dealer may receive more or less compensation or other benefits for the promotion and sale of our policy than it would expect to receive from another issuer.

Under their own arrangements, broker-dealers determine how much of any amounts received from us is to be paid to their registered representatives. Our affiliated broker-dealer may pay its registered representatives additional compensation and benefits, such as bonus payments, expense payments, health and retirement benefits or the waiver of overhead costs or expenses in connection with the sale of the policies that they would not receive in connection with the sale of policies issued by unaffiliated companies.

Policy owners do not pay any compensation or revenue sharing benefits directly. These payments are made from JH Distributors’ and our own revenues, profits or retained earnings, which may be derived from a number of sources, such as fees received from an underlying fund’s distribution plan (“12b-1 fees”), the fees and charges imposed under the policy and other sources.

You should contact your registered representative for more information on compensation arrangements in connection with your purchase of a policy. We provide additional information on special compensation or reimbursement arrangements involving broker-dealers and other financial intermediaries in the Statement of Additional Information, which is available upon request.

Standard Compensation. JH Distributors pays compensation to broker-dealers for the promotion and sale of the policies, and for providing ongoing service in relation to policies that have already been purchased. We may also pay a limited number of broker-dealers commissions or overrides to “wholesale” the policies; that is, to provide marketing support and training services to the broker-dealer firms that do the actual selling.

The compensation JH Distributors pays to broker-dealers may vary depending on the selling agreement. The compensation paid is not expected to exceed 30% of the target premium paid in policy year 1, 5% of target premium paid in years 2-5, and 2.5% of the target premium paid in years 6 and after. Compensation on any premium paid in excess of target premium in any year will not exceed 2.5%. Broker-dealers may also receive a service fee of up to $100 per policy per year, and an asset trail of up to .10%. This schedule of compensation is exclusive of additional compensation and revenue sharing and inclusive of overrides and expense allowances paid to broker-dealers for sale of the policies (not including riders).

Additional Compensation and Revenue Sharing. To the extent permitted by SEC and FINRA rules and other applicable laws and regulations, we may enter into special compensation or reimbursement arrangements (“revenue sharing”), either directly or through JH Distributors, with selected broker-dealers and other financial intermediaries. In consideration of these arrangements, a firm may feature our policy in its sales system, give us preferential access to sales staff, or allow JH Distributors or its affiliates to participate in conferences, seminars or other programs attended by the firm’s sales force. We hope to benefit from these revenue sharing and other arrangements through increased sales of our policies.

Selling broker-dealers and other financial intermediaries may receive, directly or indirectly, additional payments in the form of cash, other compensation or reimbursement. These additional compensation or reimbursement arrangements may include, for example, payments in connection with the firm’s “due diligence” examination of the policies, payments for providing conferences or seminars, sales or training programs for invited registered representatives and other employees, payment for travel expenses, including lodging, incurred by registered representatives and other employees for such seminars or training programs, seminars for public, advertising and sales campaigns regarding the policies, payments to assist a firm in

53

connection with its systems, operations and marketing expenses and/or other events or activities sponsored by the firms. We may contribute to, as well as sponsor, various educational programs, sales promotions, and/or other contests in which participating firms and their sales persons may receive gifts and prizes such as merchandise, cash or other rewards as may be permitted under FINRA rules and other applicable laws and regulations.

Responsibilities of John Hancock USA

John Hancock USA entered into an agreement with JH Distributors pursuant to which John Hancock USA, on behalf of JH Distributors will pay the sales commissions in respect of the policies and certain other policies issued by John Hancock USA, prepare and maintain all books and records required to be prepared and maintained by JH Distributors with respect to the policies and such other policies, and send all confirmations required to be sent by JH Distributors with respect to the policies and such other policies. JH Distributors will promptly reimburse John Hancock USA for all sales commissions paid by John Hancock USA and will pay John Hancock USA for its other services under the agreement in such amounts and at such times as agreed to by the parties.

Finally, John Hancock USA may, from time to time in its sole discretion, enter into one or more reinsurance agreements with other life insurance companies under which policies issued by it may be reinsured, such that its total amount at risk under a policy would be limited for the life of the Life Insured.

Voting Rights

As stated previously, all of the assets held in each sub-account of the Separate Account will be invested in shares of particular portfolios. John Hancock USA is the legal owner of those shares and as such has the right to vote upon certain matters that are required by the 1940 Act to be approved or ratified by the shareholders of a mutual fund and to vote upon any other matters that may be voted upon at a shareholders’ meeting. However, John Hancock USA will vote shares held in the sub-accounts in accordance with instructions received from policy owners having an interest in such sub-accounts. Shares held in each sub-account for which no timely instructions from policy owners are received, including shares not attributable to the policies, will be voted by John Hancock USA in the same proportion as those shares in that sub-account for which instructions are received. Should the applicable federal securities laws or regulations change so as to permit John Hancock USA to vote shares held in the Separate Account in its own right, it may elect to do so.

The number of shares in each sub-account for which instructions may be given by a policy owner is determined by dividing the portion of the Policy Value derived from participation in that sub-account, if any, by the value of one share of the corresponding portfolio. The number will be determined as of a date chosen by John Hancock USA, but not more than 90 days before the shareholders’ meeting. Fractional votes are counted. Voting instructions will be solicited in writing at least 14 days prior to the meeting.

John Hancock USA may, if required by state officials, disregard voting instructions if such instructions would require shares to be voted so as to cause a change in the sub-classification or investment policies of one or more of the portfolios, or to approve or disapprove an investment management contract. In addition, we may disregard voting instructions that would require changes in the investment policies or investment adviser, provided that we reasonably disapprove such changes in accordance with applicable federal regulations. If John Hancock USA does disregard voting instructions, it will advise policy owners of that action and its reasons for such action in the next communication to policy owners.

Substitution of Portfolio Shares

It is possible that in the judgment of the management of John Hancock USA, one or more of the portfolios may become unsuitable for investment by the Separate Account because of a change in investment policy or a change in the applicable laws or regulations, because the shares are no longer available for investment, or for some other reason. In that event, John Hancock USA may seek to substitute the shares of another portfolio or of an entirely different mutual fund. Before this can be done, the approval of the SEC and one or more state insurance departments may be required.

John Hancock USA also reserves the right (i) to combine other separate accounts with the Separate Account, (ii) to create new separate accounts, (iii) to establish additional sub-accounts within the separate account to invest in additional portfolios of the Trust or another management investment company, (iv) to eliminate existing sub-accounts and to stop accepting new allocations and transfers into the corresponding portfolio, (v) to combine sub-accounts or to transfer assets in one sub-account to another sub-account or (vi) to transfer assets from the separate account to another separate account and from another Separate Account to the separate account. We also reserve the right to operate the Separate Account as a management investment company or other form permitted by law, and to de-register the Separate Account under the 1940 Act. Any such change would be made only if permissible under applicable federal and state law.

54

Records and Accounts

Our Service Office is responsible for performing all administrative functions, such as decreases, increases, surrender and partial withdrawals, and fund transfers although certain of these functions may be delegated to McCamish Systems, L.L.C., 6425 Powers Ferry Road, Atlanta, Georgia 30339.

All records and accounts relating to the Separate Account and the portfolios will be maintained by us. All financial transactions will be handled by us. All reports required to be made and information required to be given will be provided by us or by McCamish Systems on behalf of us.

State Regulation

John Hancock USA is subject to the regulation and supervision by the Michigan Department of Insurance, which periodically examines its financial condition and operations. It is also subject to the insurance laws and regulations of all jurisdictions in which it is authorized to do business. The policies have been filed with insurance officials in each jurisdiction where they are sold.

John Hancock USA is required to submit annual statements of its operations, including financial statements, to the insurance departments of the various jurisdictions in which it does business for the purposes of determining solvency and compliance with local insurance laws and regulations.

Further Information

A registration statement under the 1933 Act has been filed with the SEC relating to the offering described in this prospectus. This prospectus does not include all the information set forth in the registration statement. The omitted information may be obtained from the SEC’s principal office in Washington D.C. upon payment of the prescribed fee. The SEC also maintains a Website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC which is located at http://www.sec.gov.

For further information you may also contact John Hancock USA’s home office, the address and telephone number of which are on the last page of the prospectus.

Financial Statements

The financial statements of the Company and the Separate Account are set forth in the Statement of Additional Information which is available upon request. Our general account is comprised of securities and other investments, the value of which may decline during periods of adverse market conditions. To the extent required, the company intends to rely upon the exemption set forth in Rule 12h-7 of the Securities Exchange Act of 1934 from the periodic reporting requirements under that act.

55

APPENDIX A: DEFINITIONS

Annual Premium Target: is an amount set forth in the policy that limits the amount of premium attributable to a Coverage Amount in Sales Load calculations.

Attained Age: is the Issue Age of the Life Insured plus the number of completed Policy Years.

Business Day: is any day that the New York Stock Exchange is open for business. A Business Day ends at the close of regularly scheduled trading of the New York Stock Exchange (currently 4:00 p.m. Eastern Time) on that day.

Case: is a group of policies insuring individual lives with common employment or other relationship, independent of the policies.

Cash Surrender Value: is the Policy Value less any outstanding monthly deductions due.

Coverage Amount: is an amount of insurance coverage under the policy with a distinct effective date. The Face Amount of the policy at any time is the sum of the Coverage Amounts in effect.

Coverage Year: is a one-year period beginning on a Coverage Amount’s effective date and on each anniversary of this date. For Coverage Amounts in effect on the policy’s Effective Date, the Coverage Year is the same as the Policy Year.

Fixed Account: is the part of the Policy Value that reflects the value you have in our general account.

Investment Account: is the part of the Policy Value that reflects the value you have in one of the sub-accounts of the Separate Account.

Issue Age: is the Life Insured’s age on the birthday closest to the Policy Date.

Loan Account: is the part of the Policy Value that reflects policy loans and interest credited to the Policy Value in connection with such loans.

Minimum Initial Premium: is the sum of the monthly deductions due for the first 3 Policy Months plus the Premium Charges deductible from this amount.

Net Cash Surrender Value: is the Cash Surrender Value less the Policy Debt.

Net Policy Value: is the Policy Value less the value in the Loan Account.

Net Premium: is the premium paid less the Premium Load and Sales Load.

Policy Date, Policy Anniversary, Policy Month and Policy Year: Policy Date is the date from which the first monthly deductions are calculated and from which Policy Years, Policy Months, and Policy Anniversaries are measured.

Policy Debt: on any date is the aggregate amount of policy loans, including borrowed and accrued interest, less any loan repayments.

Policy Value: is the sum of the values in the Loan Account, the Fixed Account, and the Investment Accounts.

Service Office: is PO Box 192, Boston, MA 02117-0192, or such other address as we specify to you by written notice.

56

In addition to this prospectus, John Hancock USA has filed with the SEC a Statement of Additional Information (the “SAI”) which contains additional information about John Hancock USA and the Account, including information on our history, services provided to the Account and legal and regulatory matters. The SAI and personalized illustrations of death benefits, policy values and surrender values are available, without charge, upon request. You may obtain the personalized illustrations from your John Hancock USA representative. The SAI may be obtained by contacting the John Hancock USA Service Office. You should also contact the John Hancock USA Service Office to request any other information about your policy or to make any inquiries about its operation.

SERVICE OFFICE

Express Delivery	Mail Delivery
Specialty Products	Specialty Products and Distribution
197 Clarendon Street, C-6	P.O. Box 192
Boston, MA 02117	Boston, MA 02117

Phone:	Fax:
1-800-521-1234	1-617-572-7008

Information about the Account (including the SAI) can be reviewed and copied at the SEC’s Public Reference Branch, 100 F Street, NE, Room 1580, Washington, DC, 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 202-551-5850. Reports and other information about the Account are available on the SEC’s Internet website at http://www.sec.gov. Copies of such information may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549-0102.

1940 Act No. 811-5130 1933 Act File No. 333-100567

57

Statement of Additional Information

dated May 1, 2009

for interests in

John Hancock Life Insurance Company (U.S.A.) Account N (“Registrant”)

Interests are made available under

CORPORATE VUL

a flexible premium variable universal life insurance policy issued by

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

(“John Hancock USA”)

This is a Statement of Additional Information (“SAI”). It is not the prospectus. The prospectus, dated the same date as this SAI, may be obtained from a John Hancock USA representative or by contacting the John Hancock USA Servicing Office at Specialty Products, 197 Clarendon Street, C-6, Boston, MA 02117 or telephoning 1-800-521-1234.

TABLE OF CONTENTS

Contents of this SAI	Page No.
Description of the Depositor	2
Description of the Registrant	2
Services	2
Independent Registered Public Accounting Firm	2
Legal and Regulatory Matters	2
Principal Underwriter/Distributor	3
Additional Information About Charges	4
Financial Statements of Registrant and Depositor

Description of the Depositor

Under the Federal securities laws, the entity responsible for organization of the registered separate account underlying the variable life insurance policy is known as the “Depositor”. The Depositor is John Hancock USA, a stock life insurance company organized under the laws of Maine on August 20, 1955 by a special act of the Maine legislature and redomesticated under the laws of Michigan. We are a licensed life insurance company in the District of Columbia and all states of the United States except New York. Until 2004, John Hancock USA had been known as The Manufacturers Life Insurance Company (U.S.A.).

Our ultimate parent is Manulife Financial Corporation (“MFC”), a publicly traded company based in Toronto, Canada. MFC is the holding company of The Manufacturers Life Insurance Company and its subsidiaries, collectively known as Manulife Financial.

Description of the Registrant

Under the Federal securities laws, the registered separate account underlying the variable life insurance policy is known as the “Registrant.” In this case, the Registrant is John Hancock Life Insurance Company (U.S.A.) Separate Account N (the “Account”), a separate account established by John Hancock USA under Michigan law. The variable investment options shown on page 1 of the prospectus are subaccounts of the Account. 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 Securities and Exchange Commission (“SEC”) of the management of the Account or of John Hancock USA.

New subaccounts may be added and made available to policy owners from time to time. Existing subaccounts may be modified or deleted at any time.

Services

Administration of policies issued by John Hancock USA and of registered separate accounts organized by John Hancock USA may be provided by other affiliates. Neither John Hancock USA nor the separate accounts are assessed any charges for such services.

Custodianship and depository services for the Registrant are provided by State Street Bank. State Street Bank’s address is 225 Franklin Street, Boston, Massachusetts, 02110.

Independent Registered Public Accounting Firm

The consolidated financial statements of John Hancock Life Insurance Company (U.S.A.) at December 31, 2008 and 2007, and for each of the three years in the period ended December 31, 2008, and the financial statements of Separate Account N of John Hancock Life Insurance Company (U.S.A.) at December 31, 2008, and for each of the two years in the period ended December 31, 2008, appearing in this Statement of Additional Information of the Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.

Legal and Regulatory Matters

There are no legal proceedings to which the Depositor, the Account or the principal underwriter is a party or to which the assets of the Account are subject that are likely to have a material adverse effect on the Account or the ability of the principal underwriter to perform its contract with the Account or of the Depositor to meet its obligations under the policies.

On June 25, 2007, John Hancock Investment Management Services, LLC (the “Adviser”) and John Hancock Distributors LLC (the “Distributor”) and two of their affiliates (collectively, the “John Hancock Affiliates”) reached a settlement with the SEC that resolved an investigation of certain practices relating to the John Hancock Affiliates’ variable annuity and mutual fund operations involving directed brokerage and revenue sharing. Under the terms of the settlement, each John Hancock Affiliate was censured and agreed to pay a $500,000 civil penalty to the United States Treasury. In addition, the Adviser and the Distributor agreed to pay disgorgement of $14,838,943 and prejudgment interest of $2,001,999 to the John Hancock Trust funds that participated in the Adviser’s commission recapture program during the period from

2

2000 to April 2004. Collectively, all John Hancock Affiliates agreed to pay a total disgorgement of $16,926,420 and prejudgment interest of $2,361,460 to the entities advised or distributed by John Hancock Affiliates. The Adviser discontinued the use of directed brokerage in recognition of the sale of fund shares in April 2004.

Principal Underwriter/Distributor

John Hancock Distributors LLC (“JH Distributors”), a Delaware limited liability company that we control, is the principal distributor and underwriter of the securities offered through this prospectus. JH Distributors acts as the principal distributor of a number of other annuity and life insurance products we and our affiliates offer. JH Distributors also acts as the principal underwriter of John Hancock Trust (the “Trust”), whose securities are used to fund certain variable investment options under the policies and under other annuity and life insurance products we offer.

JH Distributors’ principal address is 200 Bloor Street East, Toronto, Canada M4W 1E5 and it also maintains offices with us at 197 Clarendon Street, Boston, Massachusetts 02116. JH Distributors is a broker-dealer registered under the Securities Act of 1934 (the “1934 Act”) and is a member of the Financial Industry Regulatory Authority (“FINRA”).

We offer the policies for sale through individuals who are licensed as insurance agents and who are registered representatives of broker-dealers that have entered into selling agreements with JH Distributors. These broker-dealers may include our affiliate Signator Investors, Inc.

The aggregate dollar amount of underwriting commissions paid to JH Distributors by the Depositor and its affiliates in connection with the sale of variable life products in 2008, 2007, and 2006 was $224,191,519, $236,021,417, and $128,705,303 respectively. JH Distributors did not retain any of these amounts during such periods.

The compensation JH Distributors pays to broker-dealers may vary depending on the selling agreement. Compensation is exclusive of additional compensation and revenue sharing and inclusive of overrides and expense allowances paid to broker-dealers for sale of the policies (not including riders). The compensation paid is not expected to exceed 30% of the target premium paid in policy year 1, 5% of target premium paid in years 2-5, and 2.5% of the target premium paid in years 6 and after. Compensation on any premium paid in excess of target premium in any year will not exceed 2.5%. Broker-dealers may also receive a service fee of up to $100 per policy per year, and an asset trail of up to .10%.

The registered representative through whom your policy is sold will be compensated pursuant to the registered representative’s own arrangement with his or her broker-dealer. Compensation to broker-dealers for the promotion and sale of the policies is not paid directly by policy owners but will be recouped through the fees and charges imposed under the policy.

Additional compensation and revenue sharing arrangements may be offered to certain broker-dealer firms or other financial intermediaries. The terms of such arrangements may differ among firms we select based on various factors. In general, the arrangements involve three types of payments or any combination thereof:

• Fixed dollar payments: The amount of these payments varies widely. JH Distributors may, for example, make one or more payments in connection with a firm’s conferences, seminars or training programs, seminars for the public, advertising and sales campaigns regarding the policies, to assist a firm in connection with its systems, operations and marketing expenses, or for other activities of a selling firm or wholesaler. JH Distributors may make these payments upon the initiation of a relationship with a firm, and at any time thereafter.

• Payments based upon sales: These payments are based upon a percentage of the total amount of money received, or anticipated to be received, for sales through a firm of some or all of the insurance products that we and/or our affiliates offer. JH Distributors makes these payments on a periodic basis.

• Payments based upon “assets under management”: These payments are based upon a percentage of the policy value of some or all of our (and/or our affiliates’) insurance products that were sold through the firm. JH Distributors makes these payments on a periodic basis.

Our affiliated broker-dealer may pay their respective registered representatives additional cash incentives, such as bonus payments, expense payments, health and retirement benefits or the waiver of overhead costs or expenses in connection with the sale of the policies that they would not receive in connection with the sale of policies issued by unaffiliated companies.

3

Additional Information About Charges

A policy will not be issued until the underwriting process has been completed to the Depositor’s satisfaction. The underwriting process generally includes the obtaining of information concerning your age, medical history, occupation and other personal information. This information is then used to determine the cost of insurance charge.

Reduction In Charges

The policy is available for purchase by corporations and other groups or sponsoring organizations. Group or sponsored arrangements may include reduction or elimination of withdrawal charges and deductions for employees, officers, directors, agents and immediate family members of the foregoing. John Hancock USA reserves the right to reduce any of the Policy’s charges on certain cases where it is expected that the amount or nature of such cases will result in savings of sales, underwriting, administrative, commissions or other costs. Eligibility for these reductions and the amount of reductions will be determined by a number of factors, including the number of lives to be insured, the total premiums expected to be paid, total assets under management for the policyowner, the nature of the relationship among the insured individuals, the purpose for which the policies are being purchased, expected persistency of the individual policies, and any other circumstances which John Hancock USA believes to be relevant to the expected reduction of its expenses. Some of these reductions may be guaranteed and others may be subject to withdrawal or modifications, on a uniform case basis. Reductions in charges will not be unfairly discriminatory to any policyowners. John Hancock USA may modify from time to time, on a uniform basis, both the amounts of reductions and the criteria for qualification.

4

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

John Hancock Life Insurance Company (U.S.A.)

Years Ended December 31, 2008, 2007, and 2006

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-2
Audited Consolidated Financial Statements
Consolidated Balance Sheets-
As of December 31, 2008 and 2007	F-3
Consolidated Statements of Operations-
For the Years Ended December 31, 2008, 2007, and 2006	F-5
Consolidated Statements of Changes in Shareholder’s Equity and Comprehensive Income (Loss)-
For the Years Ended December 31, 2008, 2007, and 2006	F-6
Consolidated Statements of Cash Flows-
For the Years Ended December 31, 2008, 2007, and 2006	F-7
Notes to Consolidated Financial Statements	F-9

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors

John Hancock Life Insurance Company (U.S.A.)

We have audited the accompanying consolidated balance sheets of John Hancock Life Insurance Company (U.S.A.) (“the Company”) as of December 31, 2008 and 2007, and the related consolidated statements of operations, changes in shareholders’ equity and comprehensive income (loss), and cash flows for each of the three years in the period ended December 31, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of John Hancock Life Insurance Company (U.S.A.) at December 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, in 2007 the Company changed their method of accounting for collateral related to certain derivative activities and in 2006 the Company changed their method of accounting for defined benefit pension and other postretirement benefit plans.

/s/ ERNST & YOUNG LLP

Boston, Massachusetts

April 16, 2009

F-2

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

CONSOLIDATED BALANCE SHEETS

	December 31,
	2008		2007
	(in millions)
Assets
Investments
Fixed maturities:
Available-for-sale—at fair value (amortized cost: 2008—$14,875; 2007—$13,050)	$	14,736	$	13,689
Equity securities:
Available-for-sale—at fair value (cost: 2008—$517; 2007—$781)		415		956
Mortgage loans on real estate		2,629		2,414
Investment real estate		1,719		1,543
Policy loans		2,785		2,519
Short-term investments		3,665		2,723
Other invested assets		398		325
Total Investments		26,347		24,169
Cash and cash equivalents		3,477		3,345
Accrued investment income		319		310
Goodwill		54		54
Deferred policy acquisition costs and deferred sales inducements		8,293		5,928
Amounts due from and held for affiliates		2,622		2,723
Reinsurance recoverable		1,518		1,390
Embedded derivatives recoverable for certain separate account guarantees		4,382		586
Other assets		1,504		619
Separate account assets		77,681		105,380
Total Assets	$	126,197	$	144,504

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

F-3

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

CONSOLIDATED BALANCE SHEETS – (CONTINUED)

	December 31,
	2008		2007
	(in millions)
Liabilities and Shareholder’s Equity
Liabilities
Future policy benefits	$	27,796	$	24,594
Policyholders’ funds		381		300
Unearned revenue		2,178		543
Unpaid claims and claim expense reserves		591		720
Policyholder dividends payable		216		210
Amounts due to affiliates		4,511		4,371
Current income tax payable		142		174
Deferred income tax liability		855		1,000
Embedded derivatives payable for certain separate account guarantees		2,859		567
Other liabilities		3,836		1,261
Separate account liabilities		77,681		105,380
Total Liabilities		121,046		139,120
Commitments, Guarantees, and Legal Proceedings (Note 10)
Shareholder’s Equity
Preferred stock ($1.00 par value; 50,000,000 shares authorized; 100,000 shares issued and outstanding at December 31, 2008 and 2007)		-		-
Common stock ($1.00 par value; 50,000,000 shares authorized; 4,728,937 shares issued and outstanding at December 31, 2008; 4,728,935 issued and outstanding at December 31, 2007)		5		5
Additional paid-in capital		2,704		2,222
Retained earnings		2,534		2,572
Accumulated other comprehensive (loss) income		(92)		585
Total Shareholder’s Equity		5,151		5,384
Total Liabilities and Shareholder’s Equity	$	126,197	$	144,504

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

F-4

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years ended December 31,
	2008		2007		2006
	(in millions)
Revenues
Premiums	$	963	$	875	$	1,014
Fee income		2,688		3,262		2,483
Net investment income		1,435		1,337		1,163
Net realized investment and other gains		426		162		32
Total revenues		5,512		5,636		4,692
Benefits and expenses
Benefits to policyholders		4,500		2,375		1,889
Policyholder dividends		421		416		395
Amortization of deferred policy acquisition costs and deferred sales inducements		(388)		584		536
Other operating costs and expenses		1,320		1,269		1,117
Total benefits and expenses		5,853		4,644		3,937
(Loss) income before income taxes		(341)		992		755
Income tax (benefit) expense		(303)		273		230
Net (loss) income	$	(38)	$	719	$	525

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

F-5

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER’S

EQUITY AND COMPREHENSIVE INCOME (LOSS)

	Capital Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total Shareholder’s Equity		Outstanding Shares
	(in millions, except for shares outstanding)										(in thousands)
Balance at January 1, 2006	$	5	$	2,045	$	1,463	$	525	$	4,038	4,829
Comprehensive income:
Net income						525				525
Other comprehensive income, net of tax:
Net unrealized investment losses								(46)		(46)
Foreign currency translation adjustment								(5)		(5)
Minimum pension liability								5		5
Comprehensive income										479
SFAS No. 158 transition adjustment								(2)		(2)
Employee stock option plan (ESOP)				13						13
Capital contribution from Parent				71						71
Transfer of real estate to affiliate				87						87
Balance at December 31, 2006	$	5	$	2,216	$	1,988	$	477	$	4,686	4,829
Comprehensive income:
Net income						719				719
Other comprehensive income, net of tax:
Net unrealized investment gains								124		124
Foreign currency translation adjustment								(4)		(4)
Amortization of periodic pension costs								1		1
Cash flow hedges								(13)		(13)
Comprehensive income										827
Employee stock option plan (ESOP)				6						6
Dividends paid to Parent						(135)				(135)
Balance at December 31, 2007	$	5	$	2,222	$	2,572	$	585	$	5,384	4,829
Comprehensive income:
Net loss						(38)				(38)
Other comprehensive income, net of tax:
Net unrealized investment losses								(645)		(645)
Foreign currency translation adjustment								(23)		(23)
Change in funded status of pension plan and amortization of periodic pension costs								(15)		(15)
Cash flow hedges								6		6
Comprehensive loss										(715)
Capital contribution from Parent				477						477
Employee stock option plan (ESOP)				5						5
Balance at December 31, 2008	$	5	$	2,704	$	2,534	$	(92)	$	5,151	4,829

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

F-6

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years ended December 31
	2008			2007			2006
	(in millions)
Cash flows from operating activities:
Net (loss) income	$	(38	)	$	719		$	525
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Amortization of premium and accretion of discounts, net—fixed maturities		(28	)		9			13
Net realized investment and other gains		(426	)		(162	)		(32)
Amortization of deferred policy acquisition costs and deferred sales inducements		(388	)		584			536
Capitalization of deferred policy acquisition costs and deferred sales inducements		(1,687	)		(1,700	)		(1,154)
Depreciation and amortization		59			26			26
Increase in accrued investment income		(9	)		(63	)		(1)
Decrease in other assets and other liabilities, net		1,584			448			398
Increase in policyholder liabilities and accruals, net		1,958			781			479
Increase in deferred income taxes		212			50			237
Net cash provided by operating activities		1,237			692			1,027
Cash flows from investing activities:
Sales of:
Fixed maturities		4,008			8,814			9,657
Equity securities		411			304			355
Real estate		-			-			27
Other invested assets		149			-			-
Maturities, prepayments, and scheduled redemptions of:
Fixed maturities		413			485			658
Mortgage loans on real estate		1,221			1,453			1,105
Purchases of:
Fixed maturities		(6,483	)		(11,150	)		(10,327)
Equity securities		(195	)		(229	)		(690)
Real estate		(205	)		(168	)		(16)
Other invested assets		(283	)		(121	)		(74)
Mortgage loans on real estate issued		(1,434	)		(1,409	)		(1,128)
Issuance of notes receivable from affiliates		(295	)		-			-
Cash received on sale of mortgage backed security to affiliate		-			15			-
Net purchases of short-term investments		(939	)		(2,013	)		(162)
Other, net		(161	)		(249	)		(281)
Net cash used in investing activities		(3,793	)		(4,268	)		(876)

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

F-7

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

CONSOLIDATED STATEMENTS OF CASH FLOWS – (CONTINUED)

	Years ended December 31,
	2008		2007		2006
	(in millions)
Cash flows from financing activities:
Capital contribution from Parent	$	477	$	-	$	71
Dividends paid to Parent		-		(135)		-
(Decrease) increase in amounts due to affiliates		(666)		1,768		14
Universal life and investment-type contract deposits		4,760		2,748		2,832
Universal life and investment-type contract maturities and withdrawals		(1,422)		(509)		(1,266)
Net transfers to separate accounts from policyholders’ funds		(1,929)		(881)		(433)
Excess tax benefits related to share-based payments		1		2		2
Cash received on sale of real estate to affiliate		-		-		150
Unearned revenue on financial reinsurance		1,592		(149)		(49)
Net reinsurance recoverable		(125)		(35)		49
Net cash provided by financing activities		2,688		2,809		1,370
Net increase (decrease) in cash and cash equivalents		132		(767)		1,521
Cash and cash equivalents at beginning of year		3,345		4,112		2,591
Cash and cash equivalents at end of year	$	3,477	$	3,345	$	4,112

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

F-8

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Summary of Significant Accounting Policies

Business.  John Hancock Life Insurance Company (U.S.A.) (“JHUSA” or the “Company”) is a wholly-owned subsidiary of The Manufacturers Investment Corporation (“MIC”). MIC is a wholly-owned subsidiary of Manulife Holdings (Delaware) LLC (“MHDLLC”), which is an indirect, wholly-owned subsidiary of The Manufacturers Life Insurance Company (“MLI”). MLI, in turn, is a wholly-owned subsidiary of Manulife Financial Corporation (“MFC”), a Canadian-based, publicly traded stock life insurance company.

The Company provides a wide range of insurance and investment products to both individual and institutional customers located primarily in the United States. These products, including individual life insurance, individual and group fixed and variable annuities, and group pension contracts, are sold through an extensive network of agents, securities dealers, and other financial institutions. The Company also offers investment management services with respect to the Company’s separate account assets and to mutual funds and institutional customers. The Company is licensed in forty-nine states.

Basis of Presentation.  These financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”), which 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.

The accompanying consolidated financial statements include the accounts of the Company and its majority-owned and or controlled subsidiaries and variable interest entities (“VIEs”) in which the Company is the primary beneficiary. Partnerships, joint venture interests, and other equity investments in which the Company does not have a controlling financial interest, but has significant influence, are recorded using the equity method of accounting and are included in other invested assets. All significant intercompany transactions and balances have been eliminated. For further discussion regarding VIEs, see Note 3 — Relationships with Variable Interest Entities.

Reclassifications.  Certain prior year amounts have been reclassified to conform to the current year presentation.

Investments.  The Company classifies its fixed maturity securities, other than leveraged leases, as available-for-sale and records these securities at fair value. Unrealized investment gains and losses related to available-for-sale securities are reflected in shareholder’s equity, net of policyholder related amounts and deferred income taxes. Interest income is generally recognized on the accrual basis. The amortized cost of fixed maturity securities is adjusted for other-than-temporary impairments, amortization of premiums, and accretion of discounts to maturity. Amortization of premiums and accretion of discounts are included in net investment income. Impairments in value deemed to be other-than-temporary are reported as a component of net realized investment and other gains (losses).

For mortgage-backed securities, 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 plus anticipated future payments, and any resulting adjustment is included in net investment income.

Equity securities include common stock and preferred stock. Equity securities that have readily determinable fair values are carried at fair value. For equity securities that the Company classifies as available-for-sale, unrealized investment gains and losses are reflected in shareholder’s equity, as described above for available-for-sale fixed maturity securities. Equity securities that do not have readily determinable fair values are carried at cost and are included in other invested assets. Impairments in value deemed to be other-than-temporary are reported as a component of net realized investment and other gains (losses). Dividends are recorded as income on the ex-dividend date.

Mortgage loans on real estate are carried at unpaid principal balances and are adjusted for amortization of premium or accretion of discount, less allowance for probable losses. Premiums or discounts are amortized over the life of the mortgage loan contract in a manner that results in a constant effective yield. Interest income and amortization amounts and other costs that are recognized as an adjustment of yield are included as components of net investment income. Mortgage loans on real estate are evaluated periodically as part of the Company’s loan review procedures and are considered impaired 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 valuation allowance established as a result of impairment is based on the present value of the expected future cash flows, discounted at the loan’s original effective interest rate, or is based on the collateral value of the loan if higher and the loan is collateral dependent. The Company estimates this level to be adequate to absorb

F-9

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 1 — Summary of Significant Accounting Policies - (continued)

estimated probable credit losses that exist at the balance sheet date. Any change to the valuation allowance for mortgage loans on real estate is reported as a component of net realized investment and other gains (losses). Interest received on impaired mortgage loans on real estate is included in net investment income in the period received. If foreclosure becomes probable, the measurement method used is based on the collateral value. Foreclosed real estate is 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 net realized investment and other gains (losses).

Real estate held-for-sale is carried at the lower of depreciated cost or fair value less expected disposition costs. Any change to the valuation allowance for real estate held-for-sale is reported as a component of net realized investment and other gains (losses). The Company does not depreciate real estate classified as held-for-sale.

Policy loans are carried at unpaid principal balances.

Short-term investments, which include investments with remaining maturities of one year or less, but greater than three months, at the time of purchase, are reported at fair value.

Net realized investment and other gains (losses), other than those related to separate accounts for which the Company does not bear the investment risk, are determined on a specific identification method and are reported net of amounts credited to participating contract holder accounts.

Derivative Financial 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 also to manage the duration of assets and liabilities. All derivative instruments are carried on the Company’s Consolidated Balance Sheets in other assets or other liabilities at fair value.

In certain cases, the Company uses hedge accounting by designating derivative instruments as either fair value hedges or cash flow hedges. For derivative instruments that are designated and qualify as fair value hedges, any changes in fair value of the derivative instruments, as well as the offsetting changes in fair value of the hedged items, are recorded in net realized investment and other gains (losses). Basis adjustments are amortized into income through net realized investment and other gains (losses).

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 accumulated other comprehensive income and then reclassified into income when the hedged item affects income. When a cash flow hedge is terminated, the effective portion of the accumulated derivative gain or loss continues to be reported in accumulated other comprehensive income and then is reclassified into income when the hedged item affects income. If it is determined that the forecasted transaction is not probable of occurring, the balance remaining in accumulated other comprehensive income is immediately recognized in earnings.

Hedge effectiveness is assessed quarterly using a variety of techniques, including regression analysis and cumulative dollar offset. When it is determined that a derivative is not effective as a hedge, the Company discontinues hedge accounting. In certain cases, there is no hedge ineffectiveness because the derivative instrument was constructed such that all the terms of the derivative exactly match the hedged risk in the hedged item.

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 and swaptions), the premium is amortized into net investment income over the term of the derivative instrument. The change in 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 net realized investment and other gains (losses). Changes in fair value of derivatives that are not hedges are included in net realized investment and other gains (losses).

F-10

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 1 — Summary of Significant Accounting Policies - (continued)

The Company is a party to financial instruments that may contain embedded derivatives. The Company assesses each identified embedded derivative to determine whether bifurcation is required. If it is determined that the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract and that a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host contract. Embedded derivatives are carried at fair value with changes in fair value reported in net realized investment and other gains (losses) for derivatives embedded in investment securities, or benefits to policyholders for the reinsurance recoverable related to guaranteed minimum income benefits and certain separate account guarantees related to guaranteed minimum withdrawal benefits.

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

Goodwill.  As a result of the acquisition of Wood Logan Associates, the Company recognized an asset for goodwill representing the excess of the cost over the fair value of the assets acquired and liabilities assumed.

The Company tests goodwill for impairment at least annually, or more frequently if circumstances indicate impairment may have occurred.

Deferred Policy Acquisition Costs and Deferred Sales Inducements.  Deferred policy acquisition costs (“DAC”) are costs that vary with, and are related primarily to, the production of new business and have been deferred to the extent that they are deemed recoverable. Such costs include sales commissions, certain policy issuance and underwriting costs, and certain agency expenses. Similarly, any amounts assessed as initiation fees or front-end loads are recorded as unearned revenue. The Company tests the recoverability of DAC at least annually.

DAC related to participating traditional life insurance is amortized over the life of the policies at a constant rate based on the present value of the estimated gross margin amounts expected to be realized over the lives of the policies. 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 annuity, group pension contracts, universal life insurance, DAC and unearned revenue are amortized generally in proportion to the change in present value of expected gross profits arising principally from surrender charges, investment results, including realized gains (losses), and mortality and expense margins. DAC amortization is adjusted retrospectively when estimates are revised. For annuity, universal life insurance, and investment-type products, the DAC asset is adjusted for the impact of unrealized gains (losses) on investments as if these gains (losses) had been realized, with corresponding credits or charges included in accumulated other comprehensive income.

DAC related to non-participating traditional life insurance is amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves.

The Company offers sales inducements, including enhanced crediting rates or bonus payments, to contract holders on certain of its individual and group annuity products. The Company defers sales inducements and amortizes them over the life of the underlying contracts using the same methodology and assumptions used to amortize DAC.

Reinsurance.  Assets and liabilities related to reinsurance ceded contracts are reported on a gross basis. The accompanying Consolidated Statements of Operations reflect 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 a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. The Company remains liable to its contract holders to the extent that counterparties to reinsurance ceded contracts do not meet their contractual obligations.

Separate Account Assets and Liabilities.  Separate account assets and liabilities reported on the Company’s Consolidated Balance Sheets represent funds that are administered and invested by the Company to meet specific investment objectives of contract holders. Net investment income and net realized investment and other gains (losses) generally accrue directly to

F-11

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 1 — Summary of Significant Accounting Policies - (continued)

such contract holders who bear the investment risk, subject, in some cases, to principal guarantees and minimum guaranteed rates of income. The assets of each separate 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, surrenders, net investment income, net realized investment and other gains (losses), and the related liability changes of separate accounts are offset within the same line item in the Consolidated Statements of Operations. Fees charged to contract holders, principally mortality, policy administration, investment management, and surrender charges, are included in the revenues of the Company.

Future Policy Benefits and Policyholders’ Funds.  Future policy benefits for participating traditional life insurance policies are based on the net level premium method. The net level premium reserve is calculated using the guaranteed mortality and dividend fund interest rates. 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 policies. Participating business represented 27% and 34% of the Company’s traditional life net insurance in-force at December 31, 2008 and 2007, respectively, and 77%, 88%, and 93% of the Company’s traditional life net insurance premiums for the years ended December 31, 2008, 2007, and 2006, respectively.

Benefit liabilities for annuities during the accumulation period are equal to accumulated contract holders’ fund balances and after annuitization are equal to the present value of expected future payments.

For payout annuities in loss recognition, future policy benefits are computed using estimates of expected mortality, expenses, and investment yields as determined at the time these contracts first moved into loss recognition. Payout annuity reserves are adjusted for the impact of net realized investment and other gains (losses) associated with the underlying assets.

For non-participating traditional life insurance policies and reinsurance policies, future policy benefits are estimated using a net level premium method based upon actuarial assumptions as to mortality, persistency, interest, and expenses established at the policy issue date. 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.

Policyholders’ funds for universal life products and group pension contracts are equal to the total of the policyholder account values before surrender charges. Policyholder account values include deposits plus credited interest or change in investment value less expense and mortality fees, as applicable, and withdrawals. Policy benefits are charged to expense and include benefit claims incurred in the period in excess of related policy account balances and interest credited to policyholders’ account balances.

Components of policyholders’ funds were as follows:

	December 31,
	2008		2007
	(in millions)
Individual and group annuities	$	65	$	41
Group pension contracts		78		82
Universal life and other		238		177
Total policyholders’ funds	$	381	$	300

Liabilities for unpaid claims and claim expenses include estimates of payments to be made on reported 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 on a regular basis and adjusted as necessary. Any changes in estimates are reflected in current earnings.

Policyholder Dividends.  Policyholder dividends for the closed block are approved annually by the Company’s Board of Directors. The aggregate amount of policyholder dividends is calculated based upon actual interest, mortality, morbidity, persistency, and expense experience for the year, as well as management’s judgment as to the proper level of statutory surplus to be retained by the Company. For additional information on the closed block, see Note 6 — Closed Block.

F-12

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 1 — Summary of Significant Accounting Policies - (continued)

Revenue Recognition.  Premiums from participating and non-participating traditional life insurance, and reinsurance contracts are recognized as revenue when due. When premiums are due over a significantly shorter period than the period over which benefits are provided, any excess profit is deferred and recognized into income in a constant relationship to insurance in-force or, for annuities, the amount of expected future benefit payments.

Deposits related to universal life contracts are credited to policyholders’ account balances. Revenues from these contracts, as well as annuities and group pension contracts, consist of amounts assessed against policyholders’ account balances for mortality, policy administration, and surrender charges and are recorded in fee income in the period in which the services are provided.

Fee income also includes advisory fees and administration service fees. Such fees and commissions are recognized in the period in which services are performed.

Share-Based Payments.  The Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment,” (“SFAS No. 123(R)”) on January 1, 2006. The standard requires that the costs resulting from share-based payment transactions with employees be recognized in the financial statements utilizing a fair value based measurement method.

Certain Company employees are provided compensation in the form of stock options, deferred share units, and restricted share units in MFC. The fair value of the stock options granted by MFC to the Company’s employees is recorded by the Company over the vesting periods. The fair value of the deferred share units and the intrinsic fair value of the restricted share units granted by MFC to Company employees are recognized in the accounts of the Company over the vesting periods of the units. The share-based payments are a legal obligation of MFC, but in accordance with U.S. GAAP, are recorded in the accounts of the Company in other operating costs and expenses.

Upon adoption of SFAS No. 123(R), the Company was required to determine the portion of additional paid-in capital that was generated from the realization of excess tax benefits prior to the adoption of SFAS No. 123(R) available to offset deferred tax assets that may need to be written off in future periods had the Company adopted the SFAS No. 123 fair value recognition provisions in 2001. The Company elected to calculate this “pool” of additional paid-in capital using the shortcut method as permitted by FASB Staff Position No. 123(R)-3, “Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards.”

SFAS No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow. This requirement reduces net operating cash flows and increases net financing cash flows in periods after adoption. For the years ended December 31, 2008 and 2007, the Company recognized $1 million and $2 million, respectively, of excess tax benefits related to share-based payments in the Consolidated Statement of Cash Flows. Upon adoption in 2006, the Company recognized $2 million of excess tax benefits related to share-based payments, which was reclassified from net operating cash flows to net financing cash flows.

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 and financial statement bases 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.  Assets and liabilities relating to foreign operations are translated into U.S. dollars using current exchange rates as of the balance sheet date. Revenues and expenses are translated using the average exchange rates during the year. The resulting net translation adjustments for each year are included in accumulated other comprehensive income. Gains or losses on foreign currency transactions are reflected in earnings.

F-13

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 1 — Summary of Significant Accounting Policies - (continued)

Recent Accounting Pronouncements

FASB Staff Position No. EITF 99-20-1, “Amendments to the Impairment Guidance of EITF Issue No. 99-20” (“FSP EITF No. 99-20-1”)

In January 2009, the Financial Accounting Standards Board (“FASB”) issued FSP EITF No. 99-20-1 which helps conform the impairment guidance in EITF No. 99-20 to the impairment guidance of SFAS No. 115. EITF No. 99-20 applies to debt securities backed by securitized financial assets (“ABS”), which are of less than high credit quality and can be contractually prepaid in a way that the investor could lose part of its investment. These securities are categorized as available-for-sale and have fair values below their carrying values. FSP EITF No. 99-20-1 allows the Company to consider its own expectations about probabilities that the ABS can and will be held until the fair values recover, while assessing whether the ABS is other-than-temporarily impaired. EITF No. 99-20 formerly required the Company to consider only market participant expectations about the ABS future cash flows in this situation. FSP EITF No. 99-20-1 was effective for the Company on December 31, 2008. Adoption of FSP EITF No. 99-20-1 on January 1, 2009 did not result in any impact to the Company’s Consolidated Balance Sheets or Consolidated Statements of Operations.

FASB Staff Position SFAS No. 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP SFAS No. 132R-1”)

In December 2008, the FASB issued FSP SFAS No. 132R-1 which requires enhanced disclosures of the assets of the Company’s pension and other postretirement benefit plans in the Company’s consolidated financial statements. FSP SFAS No. 132R-1 requires a narrative description of investment policies and strategies for plan assets, and discussion of long term rate of return assumptions for plan assets. FSP SFAS No. 132R-1 requires application of SFAS No. 157 style disclosures to fair values of plan assets, including disclosure of fair values of plan assets sorted by asset category and valuation levels 1, 2 and 3, with roll forward of level 3 plan assets, and discussion of valuation processes used. FSP SFAS No. 132R-1 will be effective for the Company’s consolidated financial statements at December 31, 2009.

FASB Staff Position SFAS No. 140-4 and FIN No. 46(R)-8, “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities” (“FSP SFAS No. 140-4 and FIN No. 46R-8”)

In December 2008, the FASB issued FSP SFAS No. 140-4 and FIN No. 46(R)-8 which requires enhanced disclosures about transfers of financial assets and interests in variable interest entities. While the Company is not involved in securitizing financial assets, it does have significant relationships with VIEs. This FSP was effective for the Company at December 31, 2008 and resulted in enhanced disclosures about the Company’s relationships with VIEs. See Note 3 — Relationships with Variable Interest Entities.

Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133” (“SFAS No. 161”)

In March 2008, the FASB issued SFAS No. 161 which provides extensively expanded disclosure requirements for derivative instruments and hedging activities and applies to all derivative instruments, including bifurcated derivative instruments and related hedged items which are accounted for under SFAS No. 133. SFAS No. 161 will be effective for the Company’s Consolidated Balance Sheets and Consolidated Statements of Operations in 2009. The adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Balance Sheets or Consolidated Statements of Operations.

Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS No. 157”)

Effective January 1, 2008, the Company adopted SFAS No. 157, which provides a single definition of fair value for accounting purposes, establishes a consistent framework for measuring fair value, and expands disclosure requirements about fair value measurements. SFAS No. 157 requires, among other things, an exit value approach for valuing assets and liabilities, using the best available information about what a market would bear. The exit value approach focuses on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Exit values for liabilities should include margins for risk even if they are not observable. SFAS No. 157 provides guidance on how to measure fair value, when required, under existing accounting standards. SFAS No. 157

F-14

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 1 — Summary of Significant Accounting Policies - (continued)

establishes a fair value hierarchy based on the observability of the inputs to valuation techniques used to measure fair value, sorted into three levels (“Level 1, 2, and 3”), with the most observable input level being Level 1. The impact of changing valuation methods to comply with SFAS No. 157 resulted in adjustments to actuarial liabilities, which were recorded as an increase in net income of $60 million, net of tax, as of January 1, 2008.

Effective January 1, 2008, the Company adopted FASB Staff Position No. FAS 157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13 (“SFAS 13”) and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13 (“FSP No. FAS 157-1”).” FSP No. FAS 157-1 amends SFAS No. 157 to provide a scope exception from SFAS No. 157 for the evaluation criteria on lease classification and capital lease measurement under SFAS No. 13, “Accounting for Leases,” and other related accounting pronouncements. As a result of adopting FSP No. FAS 157-1, the Company does not apply the provisions of SFAS No. 157 to its leases.

Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51” (“SFAS No. 160”)

In December 2007, the FASB issued SFAS No. 160 which establishes accounting guidance for non-controlling interests in a subsidiary and for deconsolidation of a subsidiary. SFAS No. 160 will require that non-controlling interests be included in shareholders’ equity and separately reported there, that a consolidated entity’s net income include and present separately amounts attributable to both the controlling and non-controlling interests, that continuity of equity accounts for both controlling interests and non-controlling interests be presented on a company’s statement of changes in equity, and that changes in a parent’s ownership of a subsidiary which do not result in deconsolidation be accounted for as transactions in the company’s own stock. Deconsolidation will result in gain/loss recognition, with any retained non-controlling interest measured initially at fair value. SFAS No. 160 will be effective for the Company’s Consolidated Balance Sheets and Consolidated Statements of Operations in 2009, and will be applied prospectively, except for the presentation and disclosure requirements which will be applied retrospectively. The adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Balance Sheets or Consolidated Statements of Operations.

Statement of Financial Accounting Standards No. 141 (R), “Business Combinations” (“SFAS No. 141(R)”)

In December 2007, the FASB issued SFAS No. 141(R) which replaces SFAS No. 141, “Business Combinations”. SFAS No. 141(R) retains the underlying concepts of SFAS No. 141 in that all business combinations are still required to be accounted for at fair value under the acquisition method of accounting, but SFAS No. 141(R) changes the method of applying the acquisition method in a number of significant aspects. Some of the more significant requirements under SFAS No. 141(R) include; the acquisition date is defined as the date that the acquirer achieves control over the acquiree; any consideration transferred will be measured at fair value as of acquisition date; and all identifiable assets acquired, and liabilities assumed and any non-controlling interest in the acquiree will be recorded at their acquisition date fair value, with certain exceptions. SFAS No. 141(R) will be effective on a prospective basis for all business combinations for which the acquisition date is on or after January 1, 2009, except for accounting for valuation allowances on deferred income taxes and acquired tax contingencies. SFAS No. 141(R) amends SFAS No. 109 such that adjustments made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the effective date of SFAS No. 141(R) would be subject to SFAS No. 141(R).

FASB Staff Position Fin No. 39-1, “Amendment of Offsetting of Amounts Related to Certain Contracts” (“FSP FIN No. 39-1”)

In April 2007, the FASB Staff issued FSP FIN No. 39-1 to amend the reporting standards for offsetting amounts related to derivative instruments with the same counterparty. FSP FIN No. 39-1 specifies that an entity that has in the past elected to offset fair value of derivative assets and liabilities may change its policy election. The Company early adopted FSP FIN No. 39-1 in the quarter ended December 31, 2007, changing its accounting policy from net to gross balance sheet presentation of offsetting derivative balances with the same counterparty. This accounting policy change was applied retrospectively to all periods presented, resulting in an increase in derivative assets equally offset by an increase in derivative liabilities at December 31, 2007 of $57 million.

F-15

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 1 — Summary of Significant Accounting Policies - (continued)

Statement of Financial Accounting Standards No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132R” (“SFAS No. 158”)

In September 2006, the FASB issued SFAS No. 158. SFAS No. 158 requires the Company to recognize in its statement of financial position either assets or liabilities for the overfunded or underfunded status of its defined benefit postretirement plans. Changes in the funded status of a defined benefit postretirement plan are recognized in accumulated other comprehensive income in the year the changes occur.

SFAS No. 158 was effective for the Company on December 31, 2006. As a result of the Company’s adoption of SFAS No. 158, the Company recorded a decrease to accumulated other comprehensive income of $2 million, net of tax, as of December 31, 2006 to recognize the funded status of its defined benefit pension and other postretirement benefit plans.

FASB Financial Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (“FIN No. 48”)

In June 2006, the FASB issued FIN No. 48. FIN No. 48 prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that it has taken or expects to take on a tax return. FIN No. 48 requires evaluation of whether a tax position taken on a tax return is more likely than not to be sustained if challenged, and if so, evaluation of the largest benefit that is more than 50% likely of being realized on ultimate settlement. Differences between these benefits and actual tax positions result in either (a) an increase in a liability for income taxes payable or a reduction of an income tax refund receivable, (b) a reduction in a deferred tax asset or an increase in a deferred tax liability, or both (a) and (b). FIN No. 48 requires recording a cumulative effect of adoption in retained earnings as of beginning of year of adoption.

FIN No. 48 was effective for the Company’s consolidated financial statements beginning January 1, 2007. The Company had no cumulative effect of adoption to its January 1, 2007 consolidated retained earnings. Adoption of FIN No. 48 had no material impact on the Company’s Consolidated Balance Sheets at December 31, 2007 or Consolidated Statements of Operations for the year ended December 31, 2007.

AICPA Statement of Position No. 05-1, “Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection With Modifications or Exchanges of Insurance Contracts” (“SOP No. 05-1”)

In September 2005, the Accounting Standards Executive Committee (“AcSEC”) of the American Institute of Certified Public Accountants (“AICPA”) issued SOP No. 05-1. SOP No. 05-1 provides guidance on accounting for deferred acquisition costs of internal replacements of insurance and investment contracts. An internal replacement that is determined to result in a replacement contract that is substantially changed from the replaced contract should be accounted for as an extinguishment of the replaced contract. Unamortized deferred acquisition costs, unearned revenue liabilities, and deferred sales inducement assets from extinguished contracts should no longer be deferred and should be charged to expense.

SOP No. 05-1 was effective for the Company’s internal replacements occurring on or after January 1, 2007. Retrospective adoption is not permitted. In connection with the Company’s adoption of SOP No. 05-01 as of January 1, 2007, there was no material impact to the Company’s Consolidated Balance Sheets or Consolidated Statements of Operations.

Emerging Issues Task Force Issue No. 04-5, “Determining Whether a General Partner or the General Partners as a Group Controls a Limited Partnership or a Similar Entity When the Limited Partners Have Certain Rights” (“EITF No. 04-5”)

In July 2005, the Emerging Issues Task Force of the FASB issued EITF No. 04-5. EITF No. 04-5 mandates a rebuttable presumption that the general partner of a partnership (or managing member of a limited liability company) controls the partnership and should consolidate it, unless limited partners have either substantive kickout rights (defined as the ability to remove the general partner without cause by action of simple majority) or have substantive participating rights (defined as the ability to be actively involved in managing the partnership) or the partnership is a VIE, in which case VIE consolidation accounting rules should instead be followed.

EITF No. 04-5 was effective for the Company on January 1, 2006. In connection with the Company’s adoption of EITF No. 04-5, there was no impact to the Company’s Consolidated Balance Sheets or Consolidated Statements of Operations.

F-16

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2 — Investments

Fixed Maturities and Equity Securities

The Company’s investments in fixed maturities and equity securities classified as available-for-sale are summarized below:

	December 31, 2008
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in millions)
Fixed maturities and equity securities:
Corporate securities	$	11,765	$	508	$	821	$	11,452
Asset-backed and mortgage-backed securities		1,072		-		143		929
Obligations of states and political subdivisions		201		6		7		200
Debt securities issued by foreign governments		995		209		1		1,203
U.S. Treasury securities and obligations of U.S. government corporations and agencies		793		110		-		903
Fixed maturities		14,826		833		972		14,687
Other fixed maturities (1)		49		-		-		49
Total fixed maturities available-for-sale, at fair value		14,875		833		972		14,736
Equity securities available-for-sale		517		44		146		415
Total fixed maturities and equity securities	$	15,392	$	877	$	1,118	$	15,151
	December 31, 2007
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in millions)
Fixed maturities and equity securities:
Corporate securities	$	10,292	$	574	$	121	$	10,745
Asset-backed and mortgage-backed securities		992		15		2		1,005
Obligations of states and political subdivisions		83		4		-		87
Debt securities issued by foreign governments		893		145		-		1,038
U.S. Treasury securities and obligations of U.S. government corporations and agencies		718		24		-		742
Fixed maturities		12,978		762		123		13,617
Other fixed maturities (1)		72		-		-		72
Total fixed maturities available-for-sale, at fair value		13,050		762		123		13,689
Equity securities available-for-sale		781		193		18		956
Total fixed maturities and equity securities	$	13,831	$	955	$	141	$	14,645

(1) The Company classifies its leveraged leases as fixed maturities and records as its carrying value the net investment of its leveraged leases calculated by accruing income at each lease’s expected internal rate of return.

F-17

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2 — Investments - (continued)

The amortized cost and fair value of available-for-sale fixed maturities at December 31, 2008, by contractual maturity, are shown below:

	Amortized Cost		Fair Value
	(in millions)
Fixed maturities:
Due in one year or less	$	432	$	432
Due after one year through five years		2,364		2,296
Due after five years through ten years		3,626		3,511
Due after ten years		7,332		7,519
		13,754		13,758
Asset-backed and mortgage-backed securities		1,072		929
Total	$	14,826	$	14,687

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. Asset-backed and mortgage-backed securities are shown separately in the table above, as they are not due at a single maturity date.

Fixed Maturities and Equity Securities Impairment Review

The Company has a process in place to identify securities that could potentially have an impairment that is other-than-temporary. This process involves monitoring market events that could impact issuers’ credit ratings, business climate, management changes, litigation and government actions, and other similar factors. This process also involves monitoring late payments, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts, and cash flow projections as indicators of credit issues.

At the end of each quarter, the MFC Loan Review Committee reviews all securities where market value is less than 80 percent of amortized cost for six months or more to determine whether impairments need to be taken. The analysis focuses on each company’s or project’s ability to service its debts in a timely fashion and the length of time the security has been trading below amortized cost. The results of this analysis are reviewed by the Credit Committee at MFC. This committee includes MFC’s Chief Financial Officer, Chief Investment Officer, Chief Risk Officer, Chief Credit Officer, and other senior management. This quarterly process includes a fresh assessment of the credit quality of each investment in the entire fixed maturities portfolio.

The Company considers relevant facts and circumstances in evaluating whether the impairment of a security is other-than-temporary. Relevant facts and circumstances considered include (1) the length of time the fair value has been below cost; (2) the financial position of the issuer, including the current and future impact of any specific events; and (3) the Company’s ability and intent to hold the security to maturity or until it recovers in value. To the extent the Company determines that a security is deemed to be other than temporarily impaired, the difference between amortized cost and fair value would be charged to earnings.

There are a number of significant risks and uncertainties inherent in the process of monitoring impairments and determining if impairment is other-than-temporary. These risks and uncertainties include (1) the risk that its assessment of an issuer’s ability to meet all of its contractual obligations will change based on changes in the credit characteristics of that issuer, (2) the risk that the economic outlook will be worse than expected or have more of an impact on the issuer than anticipated, (3) the risk that fraudulent information could be provided to its investment professionals who determine the fair value estimates and other-than-temporary impairments, and (4) the risk that new information obtained by the Company or changes in other facts and circumstances lead it to change its intent to hold the security to maturity or until it recovers in value. Any of these situations could result in a charge to earnings in a future period.

The cost amounts for both fixed maturity securities and equity securities are net of other-than-temporary impairment charges.

F-18

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2 — Investments - (continued)

The following table shows the carrying value and gross unrealized losses aggregated by investment category and length of time that individual available-for-sale fixed maturity securities and equity securities have been in a continuous unrealized loss position:

Unrealized Losses on Available-For-Sale Fixed Maturity Securities and Equity Securities — By Investment Age

	Year ended December 31, 2008
	Less than 12 months				12 months or more				Total
	Carrying Value		Unrealized Losses		Carrying Value		Unrealized Losses		Carrying Value		Unrealized Losses
					(in millions)
Corporate securities	$	4,400	$	431	$	1,681	$	390	$	6,081	$	821
Asset-backed and mortgage-backed securities		810		116		92		27		902		143
Obligations of states and political subdivisions		92		7		-		-		92		7
Debt securities issued by foreign governments		28		1		-		-		28		1
Total fixed maturities available-for-sale		5,330		555		1,773		417		7,103		972
Equity securities available-for-sale		241		118		34		28		275		146
Total	$	5,571	$	673	$	1,807	$	445	$	7,378	$	1,118

	Year ended December 31, 2007
	Less than 12 months				12 months or more				Total
	Carrying Value		Unrealized Losses		Carrying Value		Unrealized Losses		Carrying Value		Unrealized Losses
					(in millions)
Corporate securities	$	1,521	$	50	$	1,462	$	71	$	2,983	$	121
Asset-backed and mortgage-backed securities		99		2		32		-		131		2
Total fixed maturities available-for-sale		1,620		52		1,494		71		3,114		123
Equity securities available-for-sale		145		18		-		-		145		18
Total	$	1,765	$	70	$	1,494	$	71	$	3,259	$	141

Unrealized losses can be created by rising interest rates or by rising credit concerns and hence widening credit spreads. Credit concerns are apt to play a larger role in the unrealized loss on below investment grade securities. Unrealized losses on investment grade securities principally relate to changes in interest rates or changes in credit spreads since the securities were acquired. Credit rating agencies’ statistics indicate that investment grade securities have been found to be less likely to develop credit concerns. The gross unrealized loss on below investment grade available-for-sale fixed maturity securities increased to $79 million at December 31, 2008 from $19 million at December 31, 2007.

At December 31, 2008 and 2007, there were 753 and 339 available-for-sale fixed maturity securities with an aggregate gross unrealized loss of $972 million and $123 million, respectively, of which the single largest unrealized loss was $22 million and $16 million, respectively. The Company anticipates that these fixed maturity securities will perform in accordance with their contractual terms and currently has the ability and intent to hold these securities until they recover or mature.

At December 31, 2008 and 2007, there were 550 and 174 equity securities with an aggregate gross unrealized loss of $146 million and $18 million, respectively, of which the single largest unrealized loss was $14 million and $1 million, respectively. The Company anticipates that these equity securities will recover in value in the near term.

F-19

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2 — Investments - (continued)

There were no non-income producing available-for-sale securities for the year ended December 31, 2008. Non-income producing assets represent investments that have not produced income for the twelve months preceding December 31, 2008.

Securities Lending

The Company participated in a securities lending program for the purpose of enhancing income on securities held in 2007, but there were no securities on loan and no collateral held as of December 31, 2008. At December 31, 2007, $1,476 million of the Company’s securities, at market value, were on loan to various brokers/dealers and were fully collateralized by cash and highly liquid securities. The market value of the loaned securities was monitored on a daily basis, and the collateral was maintained at a level of at least 102% of the loaned securities’ market value.

Assets on Deposit

As of December 31, 2008 and 2007, fixed maturity securities with a fair value of $9 million and $7 million were on deposit with government authorities as required by law.

Mortgage Loans on Real Estate

At December 31, 2008, the mortgage portfolio was diversified by specific collateral property type and geographic region as displayed below:

Collateral Property Type	Carrying Amount			Geographic Concentration	Carrying Amount
	(in millions)				(in millions)
Apartments	$	356		East North Central	$	323
Industrial		531		East South Central		38
Office buildings		955		Middle Atlantic		463
Retail		468		Mountain		243
Mixed use		120		New England		160
Agricultural		48		Pacific		689
Agri business		42		South Atlantic		551
Other		114		West North Central		14
				West South Central		153
Provision for losses		(5	)	Provision for losses		(5	)
Total	$	2,629		Total	$	2,629

Changes in the allowance for probable losses on mortgage loans on real estate are summarized below:

	Balance at Beginning of Period	Additions		Deductions		Balance at End of Period
	(in millions)
Year ended December 31, 2008	$  3	$	2	$	-	$	5
Year ended December 31, 2007	3		5		5		3
Year ended December 31, 2006	5		1		3		3

Mortgage loans with a carrying value of $11 million were non-income producing for the years ended December 31, 2008 and 2007. At December 31, 2008, mortgage loans with carrying value of $4 million were delinquent by less than 90 days. There were no mortgage loans delinquent by 90 days or more.

F-20

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2 — Investments - (continued)

The total recorded investment in mortgage loans that are considered to be impaired along with the related provision for losses were as follows:

	December 31,
	2008			2007
	(in millions)
Impaired mortgage loans on real estate with provision for losses	$	16		$	12
Provision for losses		(5	)		(3	)
Net impaired mortgage loans on real estate	$	11		$	9

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

	Years ended December 31,
	2008		2007		2006
	(in millions)
Average recorded investment in impaired loans	$	14	$	12	$	16
Interest income recognized on impaired loans		-		-		-

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.

There were no restructured mortgage loans as of December 31, 2008 and 2007.

Investment Real Estate

There was no non-income producing real estate for the years ended December 31, 2008 and 2007, respectively. Depreciation expense on investment real estate was $29 million, $26 million, and $26 million, in 2008, 2007, and 2006, respectively. Accumulated depreciation was $248 million and $218 million at December 31, 2008 and 2007, respectively.

Equity Method Investments

Investments in other assets, which include unconsolidated joint ventures, partnerships, and limited liability corporations, accounted for using the equity method of accounting totaled $392 million and $309 million at December 31, 2008 and 2007, respectively. Total combined assets of such investments were $8,051 million and $5,322 million (consisting primarily of investments) and total combined liabilities were $3,753 million and $2,916 million (including $3,219 million and $2,444 million of debt) at December 31, 2008 and 2007, respectively. Total combined revenues and expenses of these investments in 2008 were $1,423 million and $1,513 million, respectively, resulting in $90 million of total combined loss from operations. Total combined revenues and expenses of these investments in 2007 were $560 million and $582 million, respectively, resulting in $22 million of total combined loss from operations. Total combined revenues and expenses in 2006 were $68 million and $110 million, respectively, resulting in $42 million of total combined loss from operations. Net investment (loss) income on investments accounted for on the equity method totaled $(9) million, $2 million, and $0 in 2008, 2007, and 2006, respectively. Depending on the timing of receipt of the audited financial statements of these other assets, the above investee level financial data may be up to one year in arrears.

F-21

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 2 — Investments - (continued)

Net Investment Income and Net Realized Investment and Other Gains (Losses)

The following information summarizes the components of net investment income and net realized investment and other gains (losses):

	Years ended December 31,
	2008			2007		2006
	(in millions)
Net investment income
Fixed maturities	$	913		$	798	$	730
Equity securities		50			38		24
Mortgage loans on real estate		161			145		152
Investment real estate		96			100		98
Policy loans		202			185		166
Short-term investments		93			145		61
Other		12			7		(8	)
Gross investment income		1,527			1,418		1,223
Less investment expenses		92			81		60
Net investment income (1)	$	1,435		$	1,337	$	1,163
Net realized investment and other gains (losses)
Fixed maturities	$	(55	)	$	69	$	(27	)
Equity securities		(151	)		38		44
Mortgage loans on real estate and real estate held-for-sale		1			13		20
Derivatives and other invested assets		631			42		(5	)
Net realized investment and other gains (1)	$	426		$	162	$	32

(1) Includes net investment income and net realized investment and other gains on assets held in trust on behalf of MRBL, which are included in amounts due from and held for affiliates on the Consolidated Balance Sheets. See Note 7 —Related Party Transactions, for information on the associated MRBL reinsurance agreement.

For 2008, 2007, and 2006, net investment income passed through to participating contract holders as interest credited to policyholders’ account balances amounted to $1 million, $2 million, and $1 million, respectively.

Gross gains were realized on the sale of available-for-sale securities of $212 million, $203 million, and $189 million for the years ended December 31, 2008, 2007, and 2006, respectively, and gross losses were realized on the sale of available-for-sale securities of $50 million, $51 million, and $132 million for the years ended December 31, 2008, 2007, and 2006, respectively. In addition, other-than-temporary impairments on available-for-sale securities of $341 million, $74 million, and $64 million for the years ended December 31, 2008, 2007, and 2006, respectively, were recognized in the Consolidated Statements of Operations.

Note 3 — Relationships with Variable Interest Entities

In its capacities as an investor and as an investment manager, the Company has relationships with various types of entities, some of which are considered variable interest entities (“VIEs”) in accordance with FASB Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51 (revised December 2003)” (“FIN No. 46(R)”). Under FIN No. 46(R), the variable interest holder, if any, that will absorb a majority of the VIE’s expected losses, receive a majority of the VIE’s expected residual returns, or both, is deemed to be the primary beneficiary and must consolidate the VIE. An entity that holds a significant variable interest in a VIE, but is not the primary beneficiary, must disclose certain information regarding its involvement with the VIE.

F-22

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 3 — Relationships with Variable Interest Entities - (continued)

The Company determines whether it is the primary beneficiary of a VIE by evaluating the contractual rights and obligations associated with each party involved in the entity, calculating estimates of the entity’s expected losses and expected residual returns, and allocating the estimated amounts to each party. In addition, the Company considers qualitative factors, such as the extent of the Company’s involvement in creating or managing the VIE.

If it is not considered to be the primary beneficiary, the Company assesses the materiality of its relationship with the VIE to determine if it holds a significant variable interest, which requires disclosure. This assessment considers the materiality of the VIE relationship to the Company as, among other factors, a percentage of total investments, percentage of total net investment income, and percentage of total funds under management. For purposes of assessing materiality and disclosing significant variable interests, the Company aggregates similar entities.

Significant Variable Interests in Unconsolidated Variable Interest Entities

The following table presents the total assets of, investment in, and maximum exposure to loss relating to VIEs for which the Company has concluded that it holds significant variable interests, but it is not the primary beneficiary, and which have not been consolidated. The Company does not record any liabilities related to the unconsolidated VIEs.

	December 31,
	2008
	Total Assets		Investment (1)		Maximum Exposure to Loss (2)
	(in millions)
Real estate limited partnerships (3)	$	142	$	100	$	148
Timber funds (4)		205		13		13
Total	$	347	$	113	$	161

	December 31,
	2007
	Total Assets		Investment (1)		Maximum Exposure to Loss (2)
	(in millions)
Real estate limited partnerships (3)	$	103	$	38	$	85
Timber funds (4)		266		17		17
Total	$	369	$	55	$	102

(1) The Company’s investments in unconsolidated VIEs are included in other invested assets on the Consolidated Balance Sheets.

(2) The maximum exposure to loss related to real estate limited partnerships and timber funds is limited to the Company’s investment plus unfunded capital commitments. The maximum loss is expected to occur only upon bankruptcy of the issuer or investee or as a result of a natural disaster in the case of the timber funds.

(3) Real estate limited partnerships include partnerships established for the purpose of investing in real estate that qualifies for low income housing and/or historic tax credits. Limited partnerships are owned by a general partner, who manages the business, and by limited partners, who invest capital, but have limited liability and are not involved in the partnerships’ management. The Company is typically the sole limited partner or investor member of each and is not a general partner or managing member of any.

(4) The Company acts as investment manager for the VIEs owning the timberland properties (the timber funds), which the general account and institutional separate accounts invest in. Timber funds are investment vehicles used primarily by large institutional investors, such as public and corporate pension plans, whose primary source of return is derived from the growth and harvest of timber and long-term appreciation of the property. The primary risks of timberland investing include market uncertainty (fluctuation of timber and timberland investments), relative

F-23

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 3 — Relationships with Variable Interest Entities - (continued)

illiquidity (compared to stocks and other investment assets), and environmental risk (natural hazards or legislation related to threatened or endangered species). These risks are mitigated through effective investment management and geographic diversification of timberland investments. The Company collects an advisory fee from each timber fund and is also eligible for performance and forestry management fees.

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 of assets and liabilities.

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 of assets and liabilities or the average life of certain asset portfolios to specified targets. Interest rate swap agreements are contracts with counterparties 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 is accrued and recognized as a component of net investment income.

Cross currency rate swap agreements are used to manage the Company’s exposure to foreign exchange rate fluctuations. Cross currency rate swap agreements are contracts to exchange the currencies of two different countries at the same rate of exchange at specified future dates. The net differential to be paid or received on cross currency rate swap agreements is accrued and recognized as a component of net investment income.

For the years ended December 31, 2008, and 2006, the Company recognized net losses of $22 million and net gains of $3 million, respectively, related to the ineffective portion of its fair value hedges. These amounts were recorded in net realized investment and other gains (losses). For the year ended December 31, 2007, no gains or losses related to the ineffective portion of its fair value hedges were recognized. For the years ended December 31, 2008, 2007, and 2006, the Company did not recognize any gains or losses related to the portion of the hedging instruments that were excluded from the assessment of hedge effectiveness. In 2008, the Company had no hedges of firm commitments.

Cash Flow Hedges.  The Company uses interest rate swap agreements to hedge the variable cash flows associated with payments that it will receive on certain floating rate fixed income securities. Amounts are reclassified from accumulated other comprehensive income as a yield adjustment when the payments are made.

For the years ended December 31, 2008, 2007, and 2006, no gains or losses related to the ineffective portion of cash flow hedges were recognized. For the years ended December 31, 2008, 2007, and 2006, all of the Company’s hedged forecast transactions qualified as cash flow hedges.

No gains or losses were reclassified from accumulated other comprehensive income to net income in 2008 or 2006. For the year ended December 31, 2007, net gains of $13 million, net of tax, were reclassified from accumulated other comprehensive income to net income. It is anticipated that losses of approximately $4 million will be reclassified from accumulated other comprehensive income to earnings within the next 12 months. The maximum length for which variable cash flows are hedged is 26.4 years.

For the years ended December 31, 2008, 2007, and 2006, no cash flow hedges were discontinued because it was probable that the original forecasted transactions would not occur by the end of the originally specified time period documented at inception of the hedging relationship.

For the years ended December 31, 2008 and 2006, net gains of $6 million, net of tax, and net losses of $10 million, net of tax, respectively, representing the effective portion of the change in fair value of derivative instruments designated as cash flow hedges were added to accumulated other comprehensive income. No gains or losses representing the effective portion of the change in fair value were added to accumulated other comprehensive income in 2007.

Derivatives Not Designated as Hedging Instruments.  The Company enters into interest rate swap agreements, cancelable interest rate swap agreements, total return swaps, interest rate futures contracts, and credit default swaps to manage exposure to interest rates without designating the derivatives as hedging instruments. In addition, the Company uses interest rate floor

F-24

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 4 — Derivatives and Hedging Instruments - (continued)

agreements to hedge the interest rate risk associated with minimum interest rate guarantees in certain of its life insurance and annuity businesses, without designating the derivatives as hedging instruments.

The Company offers certain variable annuity products with a guaranteed minimum withdrawal benefit (“GMWB”) rider. This rider is effectively an embedded option on the basket of the mutual funds, which is sold to contract holders. Beginning in November 2007, for certain contracts, the Company implemented a hedging program to reduce its exposure to the GMWB rider. This dynamic hedging program uses interest rate swaps, equity index futures (including but not limited to the Dow Jones Industrial, Standard & Poor’s 500, Russell 2000, and Dow Jones Euro Stoxx 50 indices), and foreign currency futures to match the sensitivities of the GMWB rider liability to the market risk factors.

For the years ended December 31, 2008 and 2007, net gains of $625 million and $22 million, respectively, related to derivatives in a non-hedge relationship were recognized by the Company. These amounts were recorded in net realized investment and other gains (losses).

Embedded Derivatives.  The Company has certain embedded derivatives that are required to be separated from their host contracts and accounted for as derivatives. These host contracts include reinsurance contracts.

Outstanding derivative instruments were as follows:

	December 31,
	2008						2007
	Notional Amount		Carrying Value		Fair Value		Notional Amount		Carrying Value		Fair Value
	(in millions)
Assets:
Derivatives:
Interest rate swap agreements	$	4,190	$	759	$	759	$	1,653	$	28	$	28
Cross currency rate swap agreements		1,617		321		321		1,214		179		179
Foreign exchange forward agreements		84		3		3		89		9		9
Embedded derivatives—reinsurance contracts		-		36		36		-		-		-
Total Assets	$	5,891	$	1,119	$	1,119	$	2,956	$	216	$	216
Liabilities:
Derivatives:
Interest rate swap agreements	$	1,991	$	325	$	325	$	1,818	$	22	$	22
Cross currency rate swap agreements		1,713		377		377		1,567		277		277
Foreign exchange forward agreements		38		3		3		212		9		9
Credit default swaps		24		1		1		-		-		-
Equity swaps		34		15		15		1		1		1
Embedded derivatives—fixed maturities		2		-		-		2		-		-
Embedded derivatives—reinsurance contracts		-		-		-		-		4		4
Total Liabilities	$	3,802	$	721	$	721	$	3,600	$	313	$	313

F-25

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 4 — Derivatives and Hedging Instruments - (continued)

Credit Risk.  The Company may be exposed to credit-related losses in the event of nonperformance by counterparties to the derivative financial instruments. The current credit exposure of the Company’s derivative contracts is limited to the fair value at the reporting date.

The Company manages its credit risk by entering into transactions with creditworthy counterparties, obtaining collateral where appropriate, and entering into master netting agreements that provide for a netting of payments and receipts with a single counterparty. The Company enters into credit support annexes with its over-the-counter derivative dealers in order to manage its credit exposure to those counterparties. As part of the terms and conditions of those agreements, the pledging and accepting of collateral in connection with the Company’s derivative usage is required. As of December 31, 2008 and 2007, the Company had accepted collateral consisting of various securities with a fair value of $225 million and $52 million, respectively, which is held in separate custodial accounts. In addition, as of December 31, 2008, the Company pledged collateral of $439 million, which is included in fixed maturities on the Consolidated Balance Sheets. The Company had no pledged collateral in 2007.

F-26

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 5 — Income Taxes

JHUSA and its subsidiaries join with MIC and other affiliates in filing a consolidated federal income tax return.

In accordance with the income tax sharing agreements in effect for the applicable tax years, the income tax provision (or benefit) is computed as if each entity filed separate federal income tax returns. The tax charge to each of the respective companies will not be more than that which each company would have paid on a separate return basis. Intercompany settlements of income taxes are made through an increase or reduction to amounts due to or from affiliates. Such settlements occur on a periodic basis in accordance with the tax sharing agreements. Tax benefits from operating losses are provided at the U.S. statutory rate plus any tax credits attributable, provided the consolidated group utilizes such benefits currently.

The components of income taxes were as follows:

	Years ended December 31,
	2008		2007	2006
	(in millions)
Current taxes:
Federal	$  (515	)	$  223	$  (7	)
Deferred taxes:
Federal	212		50	237
Total income tax (benefit) expense	$  (303	)	$  273	$  230

A reconciliation of income taxes at the federal income tax rate to income tax expense charged to operations follows:

	Years ended December 31,
	2008		2007		2006
	(in millions)
Tax at 35%	$  (119	)	$  348		$  264
Add (deduct):
Prior year taxes	(78	)(1)	(43	)	(4	)
Tax credits	(19	)	(35	)	-
Tax-exempt investment income	(88	)	(160	)	(42	)
Unrecognized tax benefits	2		161		9
Other	(1	)	2		3
Total income tax (benefit) expense	$  (303	)	$  273		$  230

(1) During 2008, the Company performed a detailed analysis of its tax-basis balance sheet and related deferred tax balances. This analysis resulted in an $81 million decrease in the 2008 net deferred tax liability balance due to book/tax differences attributable to prior years. This adjustment has been reflected as a reduction of the 2008 tax expense.

F-27

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 5 — Income Taxes - (continued)

Deferred income tax assets and liabilities result from tax effecting the differences between the financial statement values and income tax values of assets and liabilities at each Consolidated Balance Sheet date. Deferred tax assets and liabilities consisted of the following:

	December 31,
	2008		2007
	(in millions)
Deferred tax assets:
Policy reserve adjustments	$	2,348	$	2,408
Net operating loss carryforwards		309		49
Tax credits		145		126
Unearned revenue		756		190
Dividends payable to policyholders		14		12
Unrealized losses on securities		61		-
Other		84		62
Total deferred tax assets		3,717		2,847
Deferred tax liabilities:
Deferred policy acquisition costs		2,394		1,637
Unrealized gains on securities		-		447
Premiums receivable		41		24
Deferred sales inducements		121		92
Deferred gains		609		94
Investments		604		65
Reinsurance		695		1,433
Other		108		55
Total deferred tax liabilities		4,572		3,847
Net deferred tax liabilities	$	855	$	1,000

At December 31, 2008, the Company had $883 million of operating loss carryforwards, which will expire in various years through 2023. The Company believes that it will realize the full benefit of its deferred tax assets.

The Company made income tax payments of $14 million, $28 million, and $9 million in 2008, 2007, and 2006, respectively.

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations by taxing authorities for years before 1998.

The Internal Revenue Service (“IRS”) completed its examinations for years 1998 through 2003 on December 31, 2005. The Company has filed protests with the IRS Appeals Division of various adjustments raised by the IRS in its examinations of these years. The IRS commenced an examination of the Company’s income tax returns for years 2004 through 2005 in the third quarter of 2007. It is anticipated that the examination will be completed by the end of 2009.

The Company adopted the provisions of FIN No. 48 on January 1, 2007. In connection with the adoption of FIN No. 48, the Company did not recognize an increase or decrease in its liability for unrecognized tax benefits.

F-28

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 5 — Income Taxes - (continued)

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	December 31
	2008			2007
	(in millions)
Beginning balance	$	379		$	230
Additions based on tax positions related to the current year		51			77
Reductions based on tax positions related to the current year		-			(7	)
Additions for tax positions of prior years		39			89
Reductions for tax positions of prior years		(58	)		(10	)
Ending balance	$	411		$	379

Included in the balances as of December 31, 2008 and 2007, respectively, are $291 million and $291 million of unrecognized benefits that, if recognized, would affect the Company’s effective tax rate.

Included in the balances as of December 31, 2008 and 2007, respectively, are $120 million and $88 million of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest or penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of taxes to an earlier period.

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense (part of other operating costs and expenses) and penalties in income tax expense. During the years ended December 31, 2008, 2007, and 2006, the Company recognized approximately $4 million, ($24) million, and $17 million in interest expense (benefit), respectively. The Company had approximately $44 million and $39 million accrued for interest as of December 31, 2008 and December 31, 2007, respectively. The Company did not recognize any material amounts of penalties during the years ended December 31, 2008, 2007, and 2006.

Note 6 — Closed Block

The Company operates a separate closed block for the benefit of certain classes of individual or joint traditional participating whole life insurance policies. The closed block was established upon the demutualization of MLI for those designated participating policies that were in-force on September 23, 1999. Assets were allocated to the closed block in an amount that, together with anticipated revenues from policies included in the closed block, was reasonably expected to be sufficient to support such business, including provision for payment of benefits, direct asset acquisition and disposition costs, and taxes, and for continuation of dividend scales, assuming experience underlying such dividend scales continues. Assets allocated to the closed block inure solely to the benefit of the holders of the policies included in the closed block and will not revert to the benefit of the shareholders of the Company. No reallocation, transfer, borrowing, or lending of assets can be made between the closed block and other portions of the Company’s general account, any of its separate accounts, or any affiliate of the Company without prior approval of the Michigan Commissioner of Financial and Insurance Regulation (the “Commissioner”).

If, over time, the aggregate performance of the closed block’s assets and policies is better than was assumed in funding the closed block, dividends to policyholders will be increased. If, over time, the aggregate performance of the closed block’s assets and policies is less favorable than was assumed in the funding, dividends to policyholders will be reduced.

The assets and liabilities allocated to the closed block are recorded in the Company’s Consolidated Balance Sheets and Statements of Operations on the same basis as other similar assets and liabilities. The carrying amount of the closed block’s liabilities in excess of the carrying amount of the closed block’s assets at the date the closed block was established (adjusted to eliminate the impact of related amounts in accumulated other comprehensive income) represents the maximum future earnings from the assets and liabilities designated to the closed block that can be recognized in income over the period the policies in the closed block remain in force. The Company has developed an actuarial calculation of the timing of such maximum future shareholder earnings, and this is the basis of the policyholder dividend obligation.

F-29

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 6 — Closed Block - (continued)

If actual cumulative earnings are greater than expected cumulative earnings, only expected earnings will be recognized in income. Actual cumulative earnings in excess of expected cumulative earnings represents undistributed accumulated earnings attributable to policyholders, which are recorded as a policyholder dividend obligation because the excess will be paid to the closed block’s policyholders as an additional policyholder dividend unless otherwise offset by future performance of the closed block that is less favorable than originally expected. If actual cumulative performance is less favorable than expected, only actual earnings will be recognized in net income.

For all closed block policies, the principal cash flow items that affect the amount of closed block assets and liabilities are premiums, net investment income, purchases and sales of investments, policyholders’ benefits, policyholder dividends, premium taxes, guaranty fund assessments, and income taxes. The amounts shown in the following tables for assets, liabilities, revenues, and expenses of the closed block are those that enter into the determination of amounts that are to be paid to policyholders.

The following tables set forth certain summarized financial information relating to the closed block as of the dates indicated:

	December 31,
	2008			2007
	(in millions)
Liabilities
Future policy benefits	$	8,680		$	8,619
Policyholders’ funds		79			79
Policyholder dividends payable		211			206
Other closed block liabilities		99			99
Total closed block liabilities	$	9,069		$	9,003
Assets
Investments
Fixed maturities:
Available-for-sale—at fair value (amortized cost: 2008—$3,235; 2007—$3,086)	$	3,128		$	3,165
Mortgage loans on real estate		583			562
Policy loans		1,700			1,545
Other invested assets		644			740
Total investments		6,055			6,012
Cash borrowings and cash equivalents		(437	)		(374	)
Accrued investment income		115			106
Amounts due from and held for affiliates		1,752			2,016
Other closed block assets		488			202
Total assets designated to the closed block	$	7,973		$	7,962
Excess of closed block liabilities over assets designated to the closed block	$	1,096		$	1,041
Portion of above representing accumulated other comprehensive income:
Unrealized appreciation, net of deferred income tax expense of $42 million and $174 million, respectively		78			322
Adjustment for deferred policy acquisition costs, net of deferred income tax benefit of $14 million and $48 million, respectively		(26	)		(88	)
Foreign currency translation adjustment		(21	)		(76	)
Total amounts included in accumulated other comprehensive income		31			158
Maximum future earnings to be recognized from closed block assets and liabilities	$	1,127		$	1,199

F-30

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 6 — Closed Block - (continued)

	Years ended December 31,
	2008			2007			2006
	(in millions)
Revenues
Premiums	$	647		$	661		$	678
Net investment income		473			438			423
Net realized investment and other (losses) gains		(9	)		17			81
Total revenues		1,111			1,116			1,182
Benefits and Expenses
Benefits to policyholders		782			799			862
Policyholder dividends		411			409			389
Amortization of deferred policy acquisition costs		(218	)		(50	)		15
Other closed block operating costs and expenses		25			25			27
Total benefits and expenses		1,000			1,183			1,293
Revenues, net of benefits and expenses before income taxes		111			(67	)		(111	)
Income tax expense (benefit)		39			(24	)		(39	)
Revenues, net of benefits and expenses and income taxes	$	72		$	(43	)	$	(72	)

Maximum future earnings from closed block assets and liabilities:

	Years Ended December 31,
	2008			2007
	(in millions)
Beginning of period	$	1,199		$	1,156
End of period		1,127			1,199
Change during period	$	(72	)	$	43

Note 7 — Related Party Transactions

Reinsurance Transactions

Effective October 1, 2008, the Company entered into a reinsurance agreement with an affiliate, Manulife Reinsurance (Bermuda) Limited (“MRBL”), to reinsure 75% of the group pension business in-force. The reinsurance agreement covers all contracts, excluding the guaranteed benefit rider, issued and in-force as of September 30, 2008. As the underlying contracts being reinsured are considered investment contracts, the agreement does not meet the criteria for reinsurance accounting and was classified as a financial instrument. Under the terms of the agreement, the Company received initial consideration of $1,495 million, which was classified as unearned revenue. The amount is being amortized into income through other operating costs and expenses on a basis consistent with the manner in which the deferred policy acquisition costs on the underlying reinsured contracts are recognized. The balance of unearned revenue related to the initial consideration was $1,484 million as of December 31, 2008.

Effective December 31, 2003, the Company entered into a reinsurance agreement with MRBL to reinsure 90% of the non-reinsured risk of the closed block. As approximately 90% of the mortality risk is covered under previously existing contracts with third party reinsurers and the resulting limited mortality risk is inherent in the new contract with MRBL, it was classified as financial reinsurance and given deposit-type accounting treatment. The Company retained title to the invested assets supporting this block of business. These invested assets are held in trust on behalf of MRBL and are included in amounts due from and held for affiliates on the Consolidated Balance Sheets. The amounts held at December 31, 2008 and 2007 were $2,190 million and $2,493 million, respectively, and are accounted for as invested assets available-for-sale.

Effective January 1, 2002, the Company entered into a 90% quota share reinsurance agreement with MRBL to reinsure a block of variable annuity business (the “Original Agreement”). The Original Agreement covered base contracts, but

F-31

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 7 — Related Party Transactions - (continued)

excluded the guaranteed benefit riders. The primary risk reinsured was investment and lapse risk with only limited coverage, of mortality risk. Accordingly, the contract was classified as financial reinsurance and given deposit-type accounting treatment. Under the terms of the Original Agreement, the Company received (paid) a net ceding commission of $113 million, $(23) million, and $(35) million for the years ended December 31, 2008, 2007, and 2006, respectively. These amounts were classified as unearned revenue and were being amortized into income as payments were made to MRBL. The original agreement was amended effective October 1, 2008 as discussed further below. As a result of the amendment, the unearned revenue balance of $580 million as of September 30, 2008 was included in the calculation of cost of reinsurance, which was included with other liabilities on the Consolidated Balance Sheets. The balance of the unearned revenue liability was $437 million as of December 31, 2007.

Effective October 1, 2008, the Company entered into an amended and restated variable annuity reinsurance agreement with MRBL. The base contracts continue to be reinsured on a modified coinsurance basis; however, MRBL now reinsures all substantial risks, including all guaranteed benefits, related to certain specified policies not already reinsured to third parties. Guaranteed benefit reinsurance coverage was apportioned in accordance with the reinsurance agreement provisions between modified coinsurance and coinsurance funds withheld as of December 31, 2008. The assets supporting the reinsured policies remained invested with the Company. As of December 31, 2008, the Company reported a reinsurance payable to MRBL of $781 million, which was included with amounts due to affiliates, a liability for coinsurance funds withheld of $285 million, which was included with other liabilities, and $2,123 million related to the cost of reinsurance, which was included with other liabilities on the Consolidated Balance Sheets. The cost of reinsurance is being amortized into income over the life of the underlying reinsured contracts in proportion to the policyholder fee income received.

Service Agreements

The Company has formal service agreements with MFC and MLI, which can be terminated by either party upon two months notice. Under the various agreements, the Company will pay direct operating expenses incurred by MFC and MLI on behalf of the Company. Services provided under the agreements include legal, actuarial, investment, data processing, accounting, and certain other administrative services. Costs incurred under the agreements were $374 million, $336 million, and $323 million for the years ended December 31, 2008, 2007, and 2006, respectively. As of December 31, 2008 and December 31, 2007, the Company had amounts receivable from MFC and MLI of $8 million and $18 million, respectively.

There are two service agreements, both effective April 28, 2004, between the Company and an affiliate, John Hancock Life Insurance Company (“JHLICO”). Under one agreement, the Company provides services to JHLICO, and under the other, JHLICO provides services to the Company. In both cases, the Provider of the services can also employ a Provider Affiliate to provide services. In the case of the service agreement where JHLICO provides services to the Company, a Provider Affiliate means JHLICO’s parent, John Hancock Financial Services, Inc. (“JHFS”), and its direct and indirect subsidiaries. Net services provided by the Company to JHLICO were $122 million, $126 million, and $111 million for the years ended December 31, 2008, 2007, and 2006, respectively. As of December 31, 2008 and 2007, there were accrued receivables from JHLICO to the Company of $12 million and $87 million, respectively.

Management believes the allocation methods used are reasonable and appropriate in the circumstances; however, the Company’s Consolidated Balance Sheets may not necessarily be indicative of the financial condition that would have existed if the Company operated as an unaffiliated entity.

Debt Transactions

Pursuant to a subordinated surplus note dated September 30, 2008, the Company borrowed $110 million from John Hancock Financial Holdings (Delaware) Inc. (“JHFH”). The interest rate is fixed at 7%, and interest is payable semi-annually. The note matures on March 31, 2033. Interest expense was $2 million for the year ended December 31, 2008.

Pursuant to a subordinated surplus note dated September 30, 2008, the Company borrowed $295 million from JHFH. The interest rate is fixed at 7%, and interest is payable semi-annually. The note matures on March 31, 2033. Interest expense was $5 million for the year ended December 31, 2008.

F-32

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 7 — Related Party Transactions - (continued)

On December 22, 2006, the Company issued a subordinated note to MHDLLC in the amount of $136 million due December 15, 2016 (the “Original Note”). Interest on the Original Note accrued at a variable rate equal to LIBOR plus 0.3% per annum calculated and reset quarterly on March 15, June 15, September 15, and December 15, and payable semi-annually on June 15 and December 15 of each year until December 15, 2011 and thereafter at a variable rate equal to LIBOR plus 1.3% per annum reset quarterly as aforesaid until payment in full. On September 30, 2008 the Original Note was converted to a subordinated surplus note on the same economic terms. Interest on the subordinated surplus note from October 1, 2008 until December 15, 2011 accrues at a variable rate equal to LIBOR plus 0.3% per annum calculated and reset quarterly on March 31, June 30, September 30, and December 31 and payable semi-annually on March 31 and September 30 of each year. Thereafter, interest accrues at a variable rate equal to LIBOR plus 1.3% per annum reset quarterly as aforementioned and payable semi-annually on June 15 and September 15 of each year until payment in full. Interest expense was $5 million, $10 million, and $0 for the years ended December 31, 2008, 2007, and 2006, respectively.

The issuance of surplus notes by the Company was approved by the Commissioner, and any payments of interest or principal on the surplus notes require the prior approval of the Commissioner.

Pursuant to a demand note dated September 30, 2008, the Company loaned $295 million to JHFS. The interest rate is calculated at a fluctuating rate equal to 3 month LIBOR plus 50 basis points. The note matures on December 31, 2009. Interest income was $3 million for the year ended December 31, 2008.

Pursuant to a senior promissory note dated March 1, 2007, the Company borrowed $477 million from MHDLLC. The note was repaid on September 30, 2008. Interest was calculated at a fluctuating rate equal to 3-month LIBOR plus 33.5 basis points. Interest expense was $13 million and $23 million for the years ended December 31, 2008 and 2007, respectively.

Pursuant to a Note Purchase Agreement dated November 10, 2006, the Company borrowed $90 million from JHLICO. The note provides for interest-only payments of $0.4 million per month commencing January 1, 2007 through November 1, 2011. The interest rate for the term of this note is fixed at 5.73%. The note matures on December 1, 2011 and is secured by a mortgage on the Company’s property at 601 Congress Street, Boston, Massachusetts. Interest expense was $5 million, $5 million, and $0 for the years ended December 31, 2008, 2007, and 2006, respectively.

Capital Stock Transactions

On September 30, 2008, the Company issued two shares of common stock to MIC for $477 million in cash.

Other

On December 28, 2006, the Company sold real estate held for investment with a net book value of $17 million to JHILCO for $150 million in cash. Since this sale was accounted for as a transaction between entities under common control, the difference between the net book value and sales price resulted in an increase of $87 million, net of tax, to the Company’s additional paid-in-capital as of December 31, 2006.

On September 2, 2008, John Hancock Variable Life Insurance Company (“JHVLICO”), purchased a $60 million funding agreement from the Company.

F-33

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 7 — Related Party Transactions - (continued)

The Company operates a liquidity pool in which affiliates can invest excess cash. Terms of operation and participation in the liquidity pool are set out in the Liquidity Pool and Loan Facility Agreement effective November 13, 2007. The maximum aggregate amounts that the Company can accept into the Liquidity Pool are $5 billion in U.S. dollar deposits and $200 million in Canadian dollar deposits. Under the terms of the agreement, certain participants may receive advances from the Liquidity Pool up to certain predetermined limits. Interest payable on the funds will be reset daily to the one-month London Interbank Bid Rate.

The following table details the affiliates and their participation in the Company’s Liquidity Pool:

	December 31,
	2008		2007
	(in millions)
The Manufacturers Investment Corporation	$	18	$	25
Manulife Holdings (Delaware) LLC		14		36
Manulife Reinsurance Ltd		144		158
Manulife Reinsurance (Bermuda) Ltd		54		155
Manulife Hungary Holdings KFT		44		48
John Hancock Life & Health Insurance Company		40		31
John Hancock Life Insurance Company		1,733		1,736
John Hancock Variable Life Insurance Company		347		90
John Hancock Insurance Company of Vermont		31		95
John Hancock Reassurance Co, Ltd		37		271
John Hancock Financial Services, Inc		104		550
The Berkeley Financial Group LLC		30		12
John Hancock Subsidiaries LLC		85		68
Total	$	2,681	$	3,275

The balances above are reported on the Consolidated Balance Sheets as amounts due to affiliates.

MFC provides a claims paying guarantee to certain U.S. policyholders.

F-34

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 8 — Reinsurance

The effect of reinsurance on life, health, and annuity premiums written and earned was as follows:

	Years ended December 31,
	2008						2007						2006
	Premiums						Premiums						Premiums
	Written			Earned			Written			Earned			Written			Earned
	(in millions)
Direct	$	1,310		$	1,313		$	1,148		$	1,149		$	1,294		$	1,294
Assumed		529			521			426			420			369			405
Ceded		(871	)		(871	)		(694	)		(694	)		(685	)		(685	)
Net life, health, and annuity premiums	$	968		$	963		$	880		$	875		$	978		$	1,014

For the years ended December 31, 2008, 2007, and 2006, benefits to policyholders under life, health, and annuity ceded reinsurance contracts were $880 million, $725 million, and $423 million, respectively.

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

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 among the reinsurers.

Note 9 — Pension and Other Postretirement Benefit Plans

Effective December 31, 2006, The Company’s Cash Balance Plan was merged into the John Hancock Financial Services, Inc. Pension Plan (the “Plan”), which is a funded qualified defined benefit plan sponsored by JHFS. Pursuant to the merger, all of the assets of the former plans were commingled. The aggregate pool of assets from the former plans is available to meet the obligations of the merged plan. The merger did not have a material impact on the Consolidated Balance Sheets or Statements of Operations of the Company.

Historically, pension benefits were calculated utilizing a traditional formula. Under the traditional formula, benefits are provided based upon length of service and final average compensation. As of July 1, 1998, all defined benefit pension plans were amended to a cash balance basis. Under the cash balance formula, participants are credited with benefits equal to a percentage of eligible pay, as well as interest. In addition, early retirement benefits are subsidized for certain grandfathered employees.

The Company’s funding policy for its qualified defined benefit plans is to contribute annually an amount at least equal to the minimum annual contribution required under the Employee Retirement Income Security Act of 1974, as amended, and other applicable laws and generally, not greater than the maximum amount that can be deducted for federal income tax purposes. In 2008, 2007, and 2006, no contributions were made to the qualified plans. The Company expects that no contributions will be made in 2009.

Pension plan assets of $19 million and $26 million at December 31, 2008 and 2007, respectively, were investments managed by related parties.

The Company also participates in an unfunded non-qualified defined benefit plan, which is also sponsored by JHFS. This plan provides supplemental benefits in excess of the compensation limit outlined in the Internal Revenue Code, for certain employees.

F-35

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 9 — Pension and Other Postretirement Benefit Plans - (continued)

The Company participates in a new non-qualified defined contribution pension plan, maintained by MFC, which was established as of January 1, 2008 with participant directed investment options. The expense for the new plan was $5 million in 2008. The prior plan was frozen as of January 1, 2008, and the benefits accrued under the prior plan continue to be subject to the prior plan provisions.

The Company’s funding policy for its non-qualified defined benefit plans is to contribute the amount of the benefit payments made during the year. The contribution to the non-qualified plans was $1 million, $3 million, and $2 million in 2008, 2007, and 2006, respectively. The Company expects to contribute approximately $2 million to its non-qualified pension plans in 2009.

The Company provides postretirement medical and life insurance benefits for its retired employees and their spouses through its participation in the John Hancock Financial Services, Inc. Employee Welfare Plan, sponsored by JHFS. Certain employees hired prior to 2005 who meet age and service criteria may be eligible for these postretirement benefits in accordance with the plan’s provisions. The majority of retirees contribute a portion of the total cost of postretirement medical benefits. Life insurance benefits are based on final compensation subject to the plan maximum.

The John Hancock Financial Services Inc. Employee Welfare Plan was amended effective January 1, 2007 whereby participants who had not reached a certain age and years of service with the Company were no longer eligible for such Company contributory benefits. Also the number of years of service required to be eligible for the benefit was increased to 15 years for all participants. The future retiree life insurance coverage amount was frozen as of December 31, 2006.

The Company’s policy is to fund its other postretirement benefits in amounts at or below the annual tax qualified limits. The contribution for the other postretirement benefits was $2 million, $1 million, and $2 million in 2008, 2007, and 2006, respectively.

The Company participates in qualified defined contribution plans for its employees who meet certain eligibility requirements, sponsored by JHFS. These plans include the Investment-Incentive Plan for John Hancock Employees and the John Hancock Savings and Investment Plan. The expense for the defined contribution plans was $7 million, $7 million, and $3 million in 2008, 2007, and 2006, respectively.

The Company uses a December 31 measurement date to account for its pension and other postretirement benefit plans.

F-36

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 9 — Pension and Other Postretirement Benefit Plans - (continued)

Obligations and Funded Status of Defined Benefit Plans

The amounts disclosed below represent the Company’s share of the pension and other postretirement benefit plans described above:

	Years Ended December 31,
	Pension Benefits						Other Postretirement Benefits
	2008			2007			2008			2007
	(in millions)
Change in benefit obligation:
Benefit obligation at beginning of year	$	124		$	121		$	30		$	28
Service cost		9			7			-			-
Interest cost		7			7			2			2
Actuarial loss (gain)		-			9			(3	)		1
Plan amendments		-			(7	)		-			-
Curtailments		-			(4	)		-			-
Benefits paid		(4	)		(9	)		(2	)		(1	)
Benefit obligation at end of year	$	136		$	124		$	27		$	30
Change in plan assets:
Fair value of plan assets at beginning of year	$	75		$	75		$	-		$	-
Actual return on plan assets		(22	)		6			-			-
Employer contributions		1			3			2			1
Benefits paid		(4	)		(9	)		(2	)		(1	)
Fair value of plan assets at end of year	$	50		$	75		$	-		$	-
Funded status at end of year	$	(86	)	$	(49	)	$	(27	)	$	(30	)
Amounts recognized on Consolidated Balance Sheets:
Assets	$	-		$	-		$	-		$	-
Liabilities		(86	)		(49	)		(27	)		(30	)
Net amount recognized	$	(86	)	$	(49	)	$	(27	)	$	(30	)
Amounts recognized in accumulated other comprehensive income:
Prior service cost	$	(4	)	$	(5	)	$	-		$	-
Net actuarial loss (gain)		73			48			(14	)		(11	)
Total	$	69		$	43		$	(14	)	$	(11	)

The accumulated benefit obligation for all defined benefit plans was $130 million and $117 million at December 31, 2008 and 2007, respectively.

F-37

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 9 — Pension and Other Postretirement Benefit Plans - (continued)

The following table provides information for pension plans with accumulated benefit obligations in excess of plan assets:

	December 31,
	2008		2007
	(in millions)
Accumulated benefit obligation	$	130	$	117
Projected benefit obligation		136		124
Fair value of plan assets		50		75

Components of Net Periodic Benefit Cost

	Years Ended December 31,
	Pension Benefits									Other Postretirement Benefits
	2008			2007			2006			2008		2007		2006
	(in millions)
Service cost	$	9		$	7		$	6		$	-	$	-	$	-
Interest cost		7			7			6			2		2		2
Expected return on plan assets		(5	)		(6	)		(5	)		-		-		-
Recognized actuarial loss		-			1			3			-		-		-
Net periodic benefit cost	$	11		$	9		$	10		$	2	$	2	$	2

There are no amounts included in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost in 2009.

F-38

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 9 — Pension and Other Postretirement Benefit Plans - (continued)

Assumptions

Weighted–average assumptions used to determine benefit obligations were as follows:

	Years Ended December 31,
	Pension Benefits				Other Postretirement Benefits
	2008		2007		2008		2007
Discount rate	6.00	%	6.00	%	6.00	%	6.00	%
Rate of compensation increase	4.10	%	5.10	%	N/A		N/A
Health care cost trend rate for following year					8.50	%	9.00	%
Ultimate trend rate					5.00	%	5.00	%
Year ultimate rate reached					2016		2016

Weighted-average assumptions used to determine net periodic benefit cost were as follows:

	Years Ended December 31,
	Pension Benefits				Other Postretirement Benefits
	2008		2007		2008		2007
Discount rate	6.00	%	5.75	%	6.00	%	5.75	%
Expected long-term return on plan assets	8.00	%	8.25	%	N/A		N/A
Rate of compensation increase	5.10	%	4.00	%	N/A		N/A
Health care cost trend rate for following year					9.00	%	9.50	%
Ultimate trend rate					5.00	%	5.00	%
Year ultimate rate reached					2016		2016

The expected long-term return on plan assets is based on the rate expected to be earned for plan assets. The asset mix based on the long-term investment policy and range of target allocation percentages of the plans and the Capital Asset Pricing Model are used as part of that determination. Current conditions and published commentary and guidance from U.S. Securities and Exchange Commission (“SEC”) staff are also considered.

Assumed health care cost trend rates have a significant effect on the amounts reported for the healthcare plans. A one-percentage point change in assumed health care cost trend rates would have the following effects:

	One-Percentage Point Increase			One-Percentage Point Decrease
	(in millions)
Effect on total service and interest costs in 2008	$	-		$	-
Effect on postretirement benefit obligation as of December 31, 2008		(2	)		(2	)

F-39

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 9 — Pension and Other Postretirement Benefit Plans - (continued)

Plan Assets

The Company’s weighted-average asset allocations for its defined benefit plans by asset category were as follows:

	Pension Plan Assets at December 31,
	2008		2007
Asset Category
Equity securities	51	%	64	%
Fixed maturity securities	35		26
Real estate	5		3
Other	9		7
Total	100	%	100	%

The target allocations for assets of the Company’s defined benefit plans are summarized below for major asset categories:

Asset Category
Equity securities	50	% - 80%
Fixed maturity securities	23	% - 35%
Real estate	0	% - 5%
Other	5	% - 15%

The plans do not own any of the Company’s or MFC’s common stock at December 31, 2008 and 2007.

Cash Flows

Expected Future Benefit Payments for Defined Benefit Plans

Projections for benefit payments for the next ten years are as follows:

	Pension Benefits		Other Postretirement Benefits Gross Payments		Other Postretirement Benefits- Medicare Part D Subsidy
	(in millions)
2009	$	12	$	2	$	-
2010		12		2		-
2011		13		2		-
2012		14		2		-
2013		11		2		-
2014-2018		62		10		1

F-40

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 10 — Commitments, Guarantees, and Legal Proceedings

Commitments.  The Company has extended commitments to purchase U.S. private debt and to issue mortgage loans on real estate totaling $231 million and $27 million, respectively, at December 31, 2008. If funded, loans related to real estate mortgages would be fully collateralized by the mortgaged properties. The Company monitors the creditworthiness of borrowers under long-term bond commitments and requires collateral as deemed necessary. The majority of these commitments expire in 2009.

The Company leases office space under non-cancelable operating lease agreements of various expiration dates. Rental expenses, net of sub-lease income, were $14 million, $12 million, and $11 million for the years ended December 31, 2008, 2007, and 2006, respectively.

The future minimum lease payments, by year and in the aggregate, under the remaining non-cancelable operating leases along with the associated sub-lease income are presented below.

	Non- cancelable Operating Leases		Sub-lease Income
	(in millions)
2009	$	9	$	1
2010		6		-
2011		5		-
2012		5		-
2013		4		-
Thereafter		196		-
Total	$	225	$	1

Guarantees.  In the course of business, the Company enters into guarantees which vary in nature and purpose and which are accounted for and disclosed under U.S. GAAP specific to the insurance industry. The Company had no material guarantees outstanding outside the scope of insurance accounting at December 31, 2008.

Legal Proceedings.  The Company is regularly involved in litigation, both as a defendant and as a plaintiff. The litigation naming the Company as a defendant ordinarily involves its activities as a provider of insurance protection and wealth management products, as well as an investment adviser, employer, and taxpayer. In addition, state regulatory bodies, state attorneys general, the SEC, the Financial Industry Regulatory Authority, and other government and regulatory bodies regularly make inquiries and, from time to time, require the production of information or conduct examinations concerning the Company’s compliance with, among other things, insurance laws, securities laws, and laws governing the activities of broker-dealers. The Company does not believe that the conclusion of any current legal or regulatory matters, either individually or in the aggregate, will have a material adverse effect on its consolidated financial condition or results of operations.

Note 11 — Shareholder’s Equity

Capital Stock

The Company has two classes of capital stock, preferred stock and common stock. All of the outstanding preferred and common stock of the Company is owned by MIC, its parent.

F-41

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 11 — Shareholder’s Equity - (continued)

Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income were as follows:

	Net Unrealized Investment Gains (Losses)			Net Accumulated Gain (Loss) on Cash Flow Hedges		Foreign Currency Translation Adjustment			Minimum Pension Liability Adjustment			Additional Pension and Postretirement Unrecognized Net Periodic Benefit Cost			Accumulated Other Comprehensive Income
	(in millions)
Balance at January 1, 2006	$	506		$	8	$	36		$	(25	)	$	-		$	525
Gross unrealized investment losses (net of deferred income tax benefit of $32 million)		(60	)													(60	)
Reclassification adjustment for losses realized in net income (net of deferred income tax benefit of $2 million)		5														5
Adjustment for policyholder liabilities, (net of deferred income tax expense of $16 million)		30														30
Adjustment for deferred policy acquisition costs, deferred sales inducements, and unearned revenue liability (net of deferred income tax benefit of $11 million)		(21	)													(21	)
Net unrealized investment losses		(46	)													(46	)
Foreign currency translation adjustment							(5	)								(5	)
Minimum pension liability (net of deferred income tax expense of $3 million)										5						5
SFAS No. 158 transition adjustment (net of deferred income tax benefit of $1 million)										20			(22	)		(2	)
Balance at December 31, 2006	$	460		$	8	$	31		$	-		$	(22	)	$	477

	Net Unrealized Investment Gains (Losses)			Net Accumulated Gain (Loss) on Cash Flow Hedges			Foreign Currency Translation Adjustment			Additional Pension and Postretirement Unrecognized Net Periodic Benefit Cost			Accumulated Other Comprehensive Income
	(in millions)
Balance at January 1, 2007	$	460		$	8		$	31		$	(22	)	$	477
Gross unrealized investment gains (net of deferred income tax expense of $135 million)		250												250
Reclassification adjustment for gains realized in net income (net of deferred income tax expense of $51 million)		(94	)											(94	)
Adjustment for policyholder liabilities (net of deferred income tax expense of $4 million)		6												6
Adjustment for deferred policy acquisition costs, deferred sales inducements, and unearned revenue liability (net of deferred income tax benefit of $20 million)		(38	)											(38	)
Net unrealized investment gains		124												124
Foreign currency translation adjustment								(4	)					(4	)
Amortization of periodic pension costs											1			1
Reclassification of net cash flow hedge gains to net income (net of deferred income tax benefit of $7 million)					(13	)								(13	)
Balance at December 31, 2007	$	584		$	(5	)	$	27		$	(21	)	$	585

F-42

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 11 — Shareholder’s Equity - (continued)

	Net Unrealized Investment Gains (Losses)			Net Accumulated Gain (Loss) on Cash Flow Hedges			Foreign Currency Translation Adjustment			Additional Pension and Postretirement Unrecognized Net Periodic Benefit Cost			Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance at January 1, 2008	$	584		$	(5	)	$	27		$	(21	)	$	585
Gross unrealized investment losses (net of deferred income tax benefit of $360 million)		(668	)											(668	)
Reclassification adjustment for gains realized in net income (net of deferred income tax benefit of $146 million)		(272	)											(272	)
Adjustment for policyholder liabilities (net of deferred income tax benefit of $72 million)		134												134
Adjustment for deferred policy acquisition costs, deferred sales inducements, and unearned revenue liability (net of deferred income tax expense of $86 million)		161												161
Net unrealized investment losses		(645	)											(645	)
Foreign currency translation adjustment								(23	)					(23	)
Change in funded status of pension plan and amortization of periodic pension costs (net of deferred income tax benefit of $8 million)											(15	)		(15	)
Net gains on the effective portion of the change in fair value of cash flow hedges (net of deferred income tax expense of $4 million)					6									6
Balance at December 31, 2008	$	(61	)	$	1		$	4		$	(36	)	$	(92	)

Net unrealized investment gains (losses) included on the Company’s Consolidated Balance Sheets as a component of shareholder’s equity are summarized below:

	December 31,
	2008			2007			2006
	(in millions)
Balance, end of year comprises:
Unrealized investment (losses) gains on:
Fixed maturities	$	(78	)	$	855		$	634
Equity investments		(88	)		435			417
Other investments		3			(6	)		(7	)
Total (1)		(163	)		1,284			1,044
Amounts of unrealized investment (losses) gains attributable to:
Deferred policy acquisition costs, deferred sales inducements, and unearned revenue liability		(58	)		187			129
Policyholder liabilities		(9	)		197			209
Deferred income taxes		(35	)		316			246
Total		(102	)		700			584
Net unrealized investment (losses) gains	$	(61	)	$	584		$	460

(1) Includes unrealized investments gains (losses) on invested assets held in trust on behalf of MRBL, which are included in amounts due from and held for affiliates on the Consolidated Balance Sheets. See Note 7 — Related Party Transactions, for information on the associated MRBL reinsurance agreement.

F-43

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 11 — Shareholder’s Equity - (continued)

Statutory Results

The Company and its domestic insurance subsidiary are required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the insurance departments of their states of domicile, which are Michigan and New York.

At December 31, 2008, JH USA, with the explicit permission of the Commissioner, used the implied forward rates from the rolling average of the swap rates that have been observed over the past three years instead of the implied forward rates from the swap curve observed at December 31, 2008 for purposes of its C-3 Phase II calculation. The impact of using this approach was a $53 million decrease in JH USA’s authorized control level risk-based capital as of December 31, 2008. This permitted practice is effective for reporting periods beginning on or after December 31, 2008 and ending September 30, 2009.

At December 31, 2008, JH USA, with the explicit permission of the Commissioner, recorded an increase in the net admitted deferred tax asset (“DTA”) instead of the deferred tax calculation required by prescribed statutory accounting practices. If the net admitted DTA were reflected on the statutory balance sheet based on prescribed practices the DTA and statutory surplus at December 31, 2008 would both be decreased by $84 million. The permitted practice had no effect on statutory net income. This permitted practice is effective for reporting periods beginning on or after December 31, 2008 and ending September 30, 2009.

The Company’s statutory net (loss) income for the years ended December 31, 2008, 2007, and 2006 was $(2,011) million (unaudited), ($41) million, and $202 million, respectively.

The Company’s statutory capital and surplus as of December 31, 2008 and 2007 was $2,008 million (unaudited) and $1,504 million, respectively.

Under Michigan insurance law, no insurer may pay any shareholder dividends from any source other than statutory unassigned surplus without the prior approval of the Commissioner. Michigan law also limits the dividends an insurer may pay, without the prior permission of the Commissioner, to the greater of (i) 10% of its statutory surplus earnings as of December 31 of the preceding year or (ii) the company’s statutory net gain from operations for the 12 month period ending December 31 of the immediately preceding year, if such insurer is a life company.

Note 12 — Segment Information

The Company operates in the following three business segments: (1) Protection and (2) Wealth Management, which primarily serve retail customers and institutional customers and (3) Corporate and Other, which includes reinsurance operations and the corporate account.

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, and distribution channels.

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

Wealth Management Segment.  Offers individual and group annuities and group pension contracts. Individual annuities consist of fixed deferred annuities, fixed immediate annuities, and variable annuities. This segment distributes its products through multiple distribution channels, including insurance agents and brokers affiliated with the Company, securities brokerage firms, financial planners, pension plan sponsors, pension plan consultants, and banks.

Corporate and Other Segment.  Primarily consists of certain corporate and reinsurance operations. Corporate operations primarily include certain financing activities and income on capital not specifically allocated to the reporting segments. Reinsurance refers to the transfer of all or part of certain risks related to policies issued by the Company to a reinsurer, or to the assumption of risk from other insurers.

F-44

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 12 — Segment Information - (continued)

The accounting policies of the segments are the same as those described in Note 1 — 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.

The following table summarizes selected financial information by segment for the periods indicated. Included in the Protection Segment for all periods presented are the assets, liabilities, revenues, and expenses of the closed block. For additional information on the closed block, see Note 6 — Closed Block.

	Protection			Wealth Management			Corporate and Other			Total
	(in millions)
2008
Revenues from external customers	$	1,436		$	1,964		$	251		$	3,651
Net investment income		857			225			353			1,435
Net realized investment and other (losses) gains		(57	)		719			(236	)		426
Revenues	$	2,236		$	2,908		$	368		$	5,512
Net income (loss)	$	72		$	(113	)	$	3		$	(38	)
Supplemental Information:
Equity in net income (loss) of investees accounted for by the equity method	$	1		$	4		$	(14	)	$	(9	)
Carrying value of investments accounted for under the equity method		17			157			218			392
Amortization of deferred policy acquisition costs and deferred sales inducements		(397	)		4			5			(388	)
Interest expense		-			23			11			34
Income tax expense (benefit)		32			(204	)		(131	)		(303	)
Segment assets	$	21,832		$	90,968		$	13,397		$	126,197
	Protection			Wealth Management			Corporate and Other			Total
	(in millions)
2007
Revenues from external customers	$	1,844		$	2,057		$	236		$	4,137
Net investment income		782			242			313			1,337
Net realized investment and other gains (losses)		68			(6	)		100			162
Revenues	$	2,694		$	2,293		$	649		$	5,636
Net income	$	210		$	318		$	191		$	719
Supplemental Information:
Equity in net (loss) income of investees accounted for by the equity method	$	(1	)	$	(2	)	$	5		$	2
Carrying value of investments accounted for under the equity method		17			90			202			309
Amortization of deferred policy acquisition costs and deferred sales inducements		301			277			6			584
Interest expense		-			27			41			68
Income tax expense		108			55			110			273
Segment assets	$	21,192		$	111,302		$	12,010		$	144,504

F-45

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 12 — Segment Information - (continued)

	Protection			Wealth Management		Corporate and Other			Total
	(in millions)
2006
Revenues from external customers	$	1,483		$	1,632	$	382		$	3,497
Net investment income		712			225		226			1,163
Net realized investment and other gains (losses)		104			20		(92	)		32
Revenues	$	2,299		$	1,877	$	516		$	4,692
Net income (loss)	$	208		$	324	$	(7	)	$	525
Supplemental Information:
Equity in net (loss) income of investees accounted for by the equity method	$	(1	)	$	1	$	-		$	-
Carrying value of investments accounted for under the equity method		17			34		46			97
Amortization of deferred policy acquisition costs and deferred sales inducements		242			303		(9	)		536
Interest expense		-			21		5			26
Income tax expense		111			115		4			230

The Company operates primarily in the United States and has no reportable major customers.

F-46

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13 — Fair Value of Financial Instruments

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments. Fair values have been determined by using available market information and the valuation methodologies described below.

	December 31,
	2008				2007
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in millions)
Assets:
Fixed maturities (1):
Available-for-sale	$	14,687	$	14,687	$	13,617	$	13,617
Equity securities:
Available-for-sale		415		415		956		956
Mortgage loans on real estate		2,629		2,649		2,414		2,424
Policy loans		2,785		2,785		2,519		2,519
Short-term investments		3,665		3,665		2,723		2,723
Cash and cash equivalents		3,477		3,477		3,345		3,345
Derivatives:
Interest rate swap agreements		759		759		28		28
Cross currency rate swap agreements		321		321		179		179
Foreign exchange forward agreements		3		3		9		9
Embedded derivatives		4,418		4,418		586		586
Assets held in trust		2,190		2,190		2,493		2,493
Separate account assets		77,681		77,681		105,380		105,380
Liabilities:
Fixed rate deferred and immediate annuities		1,852		1,843		1,665		1,665
Derivatives:
Interest rate swap agreements		325		325		22		22
Cross currency rate swap agreements		377		377		277		277
Credit default swaps		1		1		-		-
Equity swaps		15		15		1		1
Embedded derivatives		2,859		2,859		572		572
Foreign exchange forward agreements		3		3		9		9

(1) Fixed maturities exclude leveraged leases of $49 million and $72 million for 2008 and 2007, respectively, which are carried at the net investment calculated by accruing income at the lease’s expected internal rate of return in accordance with SFAS No. 13, “Accounting for Leases”.

Effective January 1, 2008, the Company adopted SFAS No. 157, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; that is, an exit value. The exit value assumes the asset or liability is exchanged in an orderly transaction; it is not a forced liquidation or distressed sale.

SFAS No. 157 resulted in effectively creating the following two primary categories of financial instruments for the purpose of fair value disclosure:

• Financial Instruments Measured at Fair Value and Reported in the Consolidated Balance Sheets – This category includes assets and liabilities measured at fair value on a recurring and non recurring basis. Financial instruments measured on a recurring basis include fixed maturities, equity securities, short-term investments, derivatives and separate accounts. Assets and liabilities measured at fair value on a non recurring basis include mortgage loans, joint ventures and limited partnership interests, which are reported at fair value only in a period in which impairment is recognized.

• Other Financial Instruments not Reported at Fair Value – This category includes assets and liabilities which do not require the additional SFAS No. 157 disclosures, as follows:

F-47

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13 — Fair Value of Financial Instruments - (continued)

Mortgage loans on real estate – The fair value of unimpaired mortgage loans is estimated using discounted cash flows and take into account the contractual maturities and discount rates, which were based on current market rates for similar maturity ranges and adjusted for risk due to the property type.

Policy loans – These loans are carried at unpaid principal balances, which approximate their fair values.

Cash and cash equivalents – The carrying values for cash and cash equivalents approximate fair value due to the short-term maturities of these instruments.

Fixed-rate deferred and immediate annuities – The fair value of these financial instruments are estimated by projecting multiple stochastically generated interest rate scenarios under a risk neutral environment reflecting inputs (interest rates, volatility, etc.) observable at the valuation date.

Financial Instruments Measured at Fair Value on the Consolidated Balance Sheets

Valuation Hierarchy

Following SFAS No. 157 guidance, the Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Company’s valuation techniques. A level is assigned to each fair value measurement based on the lowest level input significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows:

• Level 1 – Fair value measurements that reflect unadjusted, quoted prices in active markets for identical assets and liabilities that the Company has the ability to access at the measurement date. Valuations are based on quoted prices reflecting market transactions involving assets or liabilities identical to those being measured. Level 1 securities primarily include exchange traded equity securities and separate account assets.

• Level 2 – Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in inactive markets, inputs that are observable that are not prices (such as interest rates, credit risks, etc.), and inputs that are derived from or corroborated by observable market data. Most debt securities are classified within Level 2. Also included in the Level 2 category are derivative instruments that are priced using models with observable market inputs, including interest rate swaps, equity swaps, and foreign currency forward contracts.

• Level 3 – Fair value measurements using significant non market observable inputs. These include valuations for assets and liabilities that are derived using data, some or all of which is not market observable data, including assumptions about risk. Level 3 securities include structured asset-backed securities (“ABS”), commercial mortgage-backed securities (“CMBS”), other securities that have little or no price transparency, and certain derivatives.

Determination of Fair Value

The valuation methodologies used to determine the fair values of assets and liabilities under SFAS No. 157 reflect market participant assumptions and are based on the application of the fair value hierarchy that prioritizes observable market inputs over unobservable inputs. When available, the Company uses quoted market prices to determine fair value, and classifies such items within Level 1. If quoted market prices are not available, fair value is based upon valuation techniques, which discount expected cash flows utilizing independent market observable interest rates based on the credit quality and duration of the instrument. Items valued using models are classified according to the lowest level input that is significant to the valuation. Thus, an item may be classified in Level 3 even though significant market observable inputs are used.

The following is a description of the valuation techniques used to measure fair value and the general classification of these instruments pursuant to the fair value hierarchy.

F-48

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13 — Fair Value of Financial Instruments - (continued)

Fair Value Measurements on a Recurring Basis

Fixed Maturities

For fixed maturities, including corporate, U.S. Treasury, and municipal securities, fair values are based on quoted market prices when available. When market prices are not available, fair value is generally estimated using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality (matrix pricing). The significant inputs into these models include, but are not limited to, yield curves, credit risks and spreads, measures of volatility and prepayment speeds. These fixed maturities are classified within Level 2. Fixed maturities with significant pricing inputs which are unobservable are classified within Level 3.

Equity Securities

Equity securities with active markets are classified within Level 1 as fair values are based on quoted market prices.

Short-term Investments

Short-term investments are comprised of securities due to mature within one year of the date of purchase that are traded in active markets, and are classified within Level 1 as fair values are based on quoted market prices. Securities such as commercial paper and discount notes are classified within Level 2 because these securities are typically not actively traded due to their short maturities and, as such, their cost generally approximates fair value.

Derivatives

The fair value of derivatives is determined through the use of quoted market prices for exchange-traded derivatives or through the use of pricing models for over-the-counter (“OTC”) derivatives. The pricing models used are based on market standard valuation methodologies and the inputs to these models are consistent with what a market participant would use when pricing the instruments. Derivative valuations can be affected by changes in interest rates, currency exchange rates, financial indices, credit spreads, default risk (including the counterparties to the contract), and volatility. The Company’s derivatives are generally classified within Level 2 given the significant inputs to the pricing models for most OTC derivatives are inputs that are observable or can be corroborated by observable market data. Inputs that are observable generally include: interest rates, foreign currency exchange rates and interest rate curves. However, certain OTC derivatives may rely on inputs that are significant to the fair value that are not observable in the market or cannot be derived principally from or corroborated by observable market data and would be classified within Level 3. Inputs that are unobservable generally include: broker quotes, volatilities and inputs that are outside of the observable portion of the interest rate curve or other relevant market measures. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and consistent with what market participants would use when pricing such instruments. The credit risk of both the counterparty and the Company are considered in determining the fair value for all over-the-counter derivatives after taking into account the effects of netting agreements and collateral arrangements.

Embedded Derivatives

As defined in SFAS Statement No. 133 “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”), the Company holds assets and liabilities classified as embedded derivatives in the Consolidated Balance Sheets. Those assets include guaranteed minimum income benefits that are ceded under modified coinsurance reinsurance arrangements (“Reinsurance GMIB Assets”). Liabilities include policyholder benefits offered under variable annuity contracts such as guaranteed minimum withdrawal benefits with a term certain (“GMWB”) and embedded reinsurance derivatives.

Embedded derivatives are recorded in the Consolidated Balance Sheets at fair value, separately from their host contract, and the change in their fair value is reflected in net income. Many factors including, but not limited to, market conditions, credit ratings, variations in actuarial assumptions regarding policyholder liabilities and risk margins related to non-capital market inputs may result in significant fluctuations in the fair value of these embedded derivatives that could materially affect net income.

F-49

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13 — Fair Value of Financial Instruments - (continued)

The fair value of embedded derivatives is estimated as the present value of future benefits less the present value of future fees. The fair value calculation includes assumptions for risk margins including nonperformance risk.

Risk margins are established to capture the risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, persistency, partial withdrawal, and surrenders. The establishment of these actuarial assumptions, risk margins, nonperformance risk, and other inputs requires the use of significant judgment.

Nonperformance risk refers to the risk that the obligation will not be fulfilled and affects the value of the liability. The fair value measurement assumes that the nonperformance risk is the same before and after the transfer. Therefore, fair value reflects the reporting entity’s own credit risk.

Nonperformance risk for liabilities held by the Company is based on MFC’s own credit risk, which is determined by taking into consideration publicly available information relating to MFC’s debt as well as its claims paying ability. Nonperformance risk is also reflected in the Reinsurance GMIB assets held by the Company. The credit risk of the reinsurance companies is most representative of the nonperformance risk for the Reinsurance GMIB assets, and is derived from publicly available information relating to the reinsurance companies’ publicly issued debt.

The fair value of embedded derivatives related to reinsurance agreements is determined based on a total return swap methodology. These total return swaps are reflected as liabilities on the Consolidated Balance Sheets representing the difference between the statutory book value and fair value of the related modified coinsurance assets with ongoing changes in fair value recorded in income. The fair value of the underlying assets is based on the valuation approach for similar assets described herein.

Separate Account Assets

Separate account assets are reported at fair value and reported as a summarized total on the Consolidated Balance Sheets in accordance with Statement of Position (“SOP 03-1”), “Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts”. The fair value of separate account assets are based on the fair value of the underlying assets owned by the separate account. Assets owned by the Company’s separate accounts primarily include: investments in mutual funds, fixed maturity securities, equity securities, and short-term investments and cash and cash equivalents.

The fair value of mutual fund investments is based upon quoted prices or reported net assets values (“NAV”). Open-ended mutual fund investments are included in Level 1. The fair values of fixed maturity securities, equity securities, short-term investments and cash equivalents held by separate accounts are determined on a basis consistent with the methodologies described herein for similar financial instruments held within the Company’s general account.

F-50

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13 — Fair Value of Financial Instruments - (continued)

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis by SFAS No. 157 fair value hierarchy levels, as of December 31, 2008.

	December 31, 2008
	Total Fair Value		Level 1		Level 2		Level 3
	(in millions)
Assets:
Fixed maturities (1):
Available-for-sale	$	14,687	$	-	$	14,325	$	362
Equity securities:
Available-for-sale		415		415		-		-
Short-term investments		3,665		-		3,665		-
Derivative assets (2)		1,083		-		1,083		-
Embedded derivatives		4,418		-		36		4,382
Assets held in trust (3)		2,190		497		1,693		-
Separate account assets (4)		77,681		77,626		55		-
Total assets at fair value	$	104,139	$	78,538	$	20,857	$	4,744
Liabilities:
Derivative liabilities (2)	$	721	$	-	$	721	$	-
Embedded derivatives		2,859		-		-		2,859
Total liabilities at fair value	$	3,580	$	-	$	721	$	2,859

(1) Fixed maturities excludes leveraged leases of $49 million which are carried at the net investment calculated by accruing income at the lease’s expected internal rate of return in accordance with SFAS No. 13, “Accounting for Leases”.

(2) Derivative assets are presented within other assets and derivative liabilities are presented within other liabilities in the Consolidated Balance Sheets. The amounts are presented gross in the table above to reflect the presentation in the Consolidated Balance Sheets, but are presented net for purposes of the Level 3 roll forward in the following table.

(3) Represents the fair value of assets held in trust on behalf of MRBL, which are included in amounts due from and held for affiliates on the Consolidated Balance Sheets. See Note 7 — Related Party Transactions, for information on the associated MRBL reinsurance agreement. The fair value of the trust assets are determined on a basis consistent with the methodologies described herein for similar financial instruments.

(4) Separate account assets are recorded at fair value. Investment performance related to separate account assets is fully offset by corresponding amounts credited to contract holders whose interest in the separate account assets is recorded by the Company as separate account liabilities. Separate account liabilities are set equal to the fair value of separate account assets as prescribed by SOP 03-1.

F-51

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 13 — Fair Value of Financial Instruments - (continued)

Level 3 Financial Instruments

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis are summarized as follows:

	Fixed Maturities			Net Embedded Derivatives
Balance at January 1, 2008	$	447		$	18
Net realized/unrealized gains (losses) included in:
Net income		(161	)(2)		1,505	(4)
Other comprehensive income		79	(3)		-
Purchases, issuances, (sales) and (settlements), net		(12	)		-
Transfers in and/or (out) of Level 3, net (1)		9			-
Balance at December 31, 2008	$	362		$	1,523
Gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at December 31, 2008	$	-		$	1,505

(1) For financial assets that are transferred into and/or out of Level 3, the Company uses the fair value of the assets at the beginning of the reporting period.

(2) This amount is included in net realized investments and other gains (losses) on the Consolidated Statement of Operations.

(3) This amount is included in accumulated other comprehensive income (loss) on the Consolidated Balance Sheet.

(4) This amount is included in benefits to policyholders on the Consolidated Statement of Operations. All gains and losses on Level 3 liabilities are classified as net realized investment and other gains (losses) for the purpose of this disclosure because it is not practicable to track realized and unrealized gains (losses) separately on a contract by contract basis.

The Company may hedge positions with offsetting positions that are classified in a different level. For example, the gains and losses for assets and liabilities in the Level 3 category presented in the tables above may not reflect the effect of offsetting gains and losses on hedging instruments that have been classified by the Company in the Level 1 and Level 2 categories.

Financial Instruments Measured at Fair Value on a Non Recurring Basis

Certain financial assets are reported at fair value on a non recurring basis, including investments such as mortgage loans, joint ventures and limited partnership interests, which are reported at fair value only in a period in which an impairment is recognized. The fair value of these securities is calculated using either models that are widely accepted in the financial services industry or the valuation of collateral underlying impaired mortgages. During the reporting period, there were no material assets or liabilities measured at fair value on a nonrecurring basis.

Note 14 — Goodwill

The changes in the carrying value of goodwill by segment were as follows:

	Protection		Wealth Management		Corporate and Other		Total
	(in millions)
Balance at January 1, 2008	$	-	$	54	$	-	$	54
Dispositions and other, net		-		-		-		-
Balance at December 31, 2008	$	-	$	54	$	-	$	54
	Protection		Wealth Management		Corporate and Other		Total
	(in millions)
Balance at January 1, 2007	$	-	$	54	$	-	$	54
Dispositions and other, net		-		-		-		-
Balance at December 31, 2007	$	-	$	54	$	-	$	54

F-52

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 14 — Goodwill - (continued)

The Company tests goodwill for impairment annually as of December 31 and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit, which is defined as an operating segment or one level below an operating segment, below its carrying amount. There were no impairments recorded in 2008 or 2007.

Note 15 — Certain Separate Accounts

The Company issues variable annuity and variable life contracts through its separate accounts for which investment income and investment gains and losses accrue to, and investment risk is borne by, the contract holder. All contracts contain certain guarantees, which are discussed more fully below.

The assets supporting the variable portion of variable annuities are carried at fair value and reported on the Consolidated Balance Sheets as total separate account assets with an equivalent total reported for separate account liabilities. Amounts assessed against the contract holders for mortality, administrative, and other services are included in revenue, and changes in liabilities for minimum guarantees are included in benefits to policyholders in the Company’s Consolidated Statements of Operations. For the years ended December 31, 2008, and 2007 there were no gains or losses on transfers of assets from the general account to the separate account.

The deposits related to the variable life insurance contracts are invested in separate accounts, and the Company guarantees a specified death benefit if certain specified premiums are paid by the policyholder, regardless of separate account performance.

For guarantees of amounts in the event of death, the net amount at risk is defined as the excess of the initial sum insured over the current sum insured for fixed premium variable life insurance contracts, and, for other variable life insurance contracts, is equal to the sum insured when the account value is zero and the policy is still in force.

The following table reflects variable life insurance contracts with guarantees held by the Company:

	December 31,
	2008		2007
	(in millions, except for age)
Life insurance contracts with guaranteed benefits
In the event of death
Account value	$	559	$	422
Net amount at risk related to deposits		86		56
Average attained age of contract holders		44		43

Many of the variable annuity contracts issued by the Company offer various guaranteed minimum death, income, and/or withdrawal benefits. Guaranteed Minimum Death Benefit (“GMDB”) features guarantee the contract holder either (a) a return of no less than total deposits made to the contract less any partial withdrawals, (b) total deposits made to the contract less any partial withdrawals plus a minimum return, or (c) the highest contract value on a specified anniversary date minus any withdrawals following the contract anniversary.

The Company sold contracts with GMIB riders from 1998 to 2004. The GMIB rider provides a guaranteed lifetime annuity, which may be elected by the contract holder after a stipulated waiting period (7 to 10 years), and which may be larger than what the contract account balance would purchase at then-current annuity purchase rates.

In 2004, the Company introduced a GMWB rider and has since offered multiple variations of this optional benefit. The GMWB rider provides contract holders a guaranteed annual withdrawal amount over a specified time period or in some cases for as long as they live. In general, guaranteed annual withdrawal amounts are based on deposits and may be reduced if withdrawals exceed allowed amounts. Guaranteed amounts may also be increased as a result of “step-up” provisions which increase the benefit base to higher account values at specified intervals. Guaranteed amounts may also be increased if withdrawals are deferred over a specified period. In addition, certain versions of the GMWB rider extend lifetime guarantees to spouses.

F-53

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 15 — Certain Separate Accounts - (continued)

Unaffiliated and affiliated reinsurance has been utilized to mitigate risk related to some of the guarantee benefit riders. Hedging has also been utilized to mitigate risk related to some of the GMWB riders.

For GMDB, the net amount at risk is defined as the current guaranteed minimum death benefit in excess of the current account balance. For GMIB, the net amount at risk is defined as the excess of the current annuitization income base over the current account value. For GMWB, the net amount at risk is defined as the current guaranteed withdrawal amount minus the current account value. For all the guarantees, the net amount at risk is floored at zero at the single contract level.

The Company had the following variable annuity contracts with guarantees. Amounts at risk are shown net of reinsurance. Note that the Company’s variable annuity contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed are not mutually exclusive.

	December 31,
	2008			2007
	(in millions, except for ages and percents)
Guaranteed Minimum Death Benefit
Return of net deposits
In the event of death
Account value	$	15,224		$	17,510
Net amount at risk- net of reinsurance		766			47
Average attained age of contract holders		54			55
Return of net deposits plus a minimum return
In the event of death
Account value	$	428		$	714
Net amount at risk- net of reinsurance		5			-
Average attained age of contract holders		65			65
Guaranteed minimum return rate		5	%		5	%
Highest specified anniversary account value minus withdrawals post anniversary
In the event of death
Account value	$	22,508		$	32,750
Net amount at risk- net of reinsurance		1,248			190
Average attained age of contract holders		54			54
Guaranteed Minimum Income Benefit
Account value	$	5,387		$	9,552
Net amount at risk- net of reinsurance		45			29
Average attained age of contract holders		52			52
Guaranteed Minimum Withdrawal Benefit
Account value	$	24,769		$	28,582
Net amount at risk		1,812			116
Average attained age of contract holders		52			54

F-54

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 15 — Certain Separate Accounts - (continued)

Account balances of variable contracts with guarantees invest in various separate accounts with the following characteristics:

	December 31,
	2008		2007
	(in billions)
Type of Fund
Domestic Equity	$	7	$	13
International Equity		2		3
Balanced		23		30
Bonds		3		4
Money Market		2		1
Total	$	37	$	51

The following table summarizes the liabilities for guarantees on variable contracts reflected in the general account:

	Guaranteed Minimum Death Benefit (GMDB)			Guaranteed Minimum Income Benefit (GMIB)			Guaranteed Minimum Withdrawal Benefit (GMWB)			Total
	(in millions)
Balance at January 1, 2008	$	89		$	156		$	568		$	813
Incurred guarantee benefits		(110	)		(74	)		-			(184	)
Other reserve changes		372			356			2,322			3,050
Balance at December 31, 2008	$	351		$	438		$	2,890		$	3,679
Reinsurance recoverable		(259	)		(2,056	)		(2,352	)		(4,667	)
Net balance at December 31, 2008	$	92		$	(1,618	)	$	538		$	(988	)
Balance at January 1, 2007	$	80		$	208		$	95		$	383
Incurred guarantee benefits		(48	)		(122	)		-			(170	)
Other reserve changes		57			70			473			600
Balance at December 31, 2007	$	89		$	156		$	568		$	813
Reinsurance recoverable		(36	)		(586	)		-			(622	)
Net balance at December 31, 2007	$	53		$	(430	)	$	568		$	191

The GMDB gross and ceded reserves, the GMIB gross reserves, and the life portion of the GMWB reserves were determined in accordance with SOP 03-1, and the GMIB reinsurance recoverable and GMWB gross reserve were determined in accordance with SFAS No. 133.

The Company regularly evaluates estimates used and adjusts the additional liability balance, with a related charge or credit to benefits to policyholders, if actual experience or other evidence suggests that earlier assumptions should be revised.

The following assumptions and methodology were used to determine the amounts above at December 31, 2008 and 2007:

• Data used included 1,000 stochastically generated investment performance scenarios. For SFAS No. 133 calculations, risk neutral scenarios were used.

• For life products, reserves were established using stochastic modeling of future separate account returns and best estimate mortality, lapse, and premium persistency assumptions, which vary by product.

• Mean return and volatility assumptions were determined by asset class. Market consistent observed volatilities were used where available for SFAS No. 133 calculations.

F-55

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 15 — Certain Separate Accounts - (continued)

• Annuity mortality was based on the 1994 MGDB table multiplied by factors varied by rider types (living benefit/GMDB only) and qualified and non-qualified business.

• Annuity base lapse rates vary by contract type and duration and ranged from 2% to 41.5%.

• The discount rate is 7% (in-force issued before 2004) or 6.4% (in-force issued after 2003) in the SOP 03-01 calculations. The discount rates used for SFAS No. 133 calculations are based on the term structure of swap curves with a credit spread based on the credit standing of MFC (for GMWB) and the reinsurers (for GMIB).

Note 16 — Deferred Policy Acquisition Costs and Deferred Sales Inducements

The balance of and changes in deferred policy acquisition costs as of and for the years ended December 31, were as follows:

	December 31,
	2008		2007
	(in millions)
Balance, beginning of year	$	5,664	$	4,655
Capitalization		1,590		1,637
Amortization (1)		405		(550	)
Change in unrealized investment gains and losses		289		(78	)
Balance, end of year	$	7,948	$	5,664

(1) In 2008, DAC amortization includes significant unlocking due to the impact of lower estimated gross profits arising from higher benefits to policyholders related to certain separate account guarantees. This unlocking contributed to the overall negative amortization during the year.

The balance of and changes in deferred sales inducements as of and for the years ended December 31, were as follows:

	December 31,
	2008			2007
	(in millions)
Balance, beginning of year	$	264		$	235
Capitalization		97			63
Amortization		(17	)		(34	)
Change in unrealized investment gains and losses		1			-
Balance, end of year	$	345		$	264

Note 17 — Share-Based Payments

The Company participates in the stock compensation plans of MFC. The Company uses the Black-Scholes-Merton option pricing model to estimate the value of stock options granted to employees. The stock-based compensation is a legal obligation of MFC, but in accordance with U.S. GAAP, is recorded in the accounts of the Company in other operating costs and expenses.

Stock Options (ESOP)

Under MFC’s Executive Stock Option Plan (“ESOP”), stock options are granted to selected individuals. Options provide the holder with the right to purchase common shares at an exercise price equal to the closing market price of MFC’s common shares on the Toronto Stock Exchange on the business day immediately preceding the date the options were granted. The options vest over a period not exceeding four years and expire not more than 10 years from the grant date. A total of 73.6 million common shares have been reserved for issuance under the ESOP.

MFC grants Deferred Share Units (“DSUs”) under the ESOP and the Stock Plan for Non-Employee Directors. Under the ESOP, the holder is entitled to receive cash payment equal to the value of the same number of common shares plus credited dividends on retirement or termination of employment. These DSUs vest over a three-year period and each DSU entitles the holder to receive one common share on retirement or termination of employment. When dividends are paid on MFC’s common shares, holders of DSUs are deemed to receive dividends at the same rate, payable in the form of additional DSUs.

F-56

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Note 17 — Share Based Payments - (continued)

Under the Stock Plan for Non-Employee Directors, each eligible director may elect to receive his or her annual director’s retainer and fees in DSUs or common shares in lieu of cash. Upon termination of board service, an eligible director who has elected to receive DSUs will be entitled to receive cash equal to the value of the DSUs accumulated in his or her account or, at his or her direction, an equivalent number of common shares. A total of 1 million common shares of MFC have been reserved for issuance under the Stock Plan for Non-Employee Directors. In 2008, 2007 and 2006, 217,000, 191,000, and 181,000 DSUs, respectively, were issued to certain employees who elected to defer receipt of all or part of their annual bonus. Also, in 2008 and 2007, 269,000 and 260,000 DSUs were issued to certain employees who elected to defer payment of all or part of their restricted share units. Restricted share units are discussed below. The DSUs issued in 2008, 2007 and 2006 vested immediately upon grant. The Company recorded compensation expense for stock options granted of $6 million, $5 million, and $5 million for the years ended December 31, 2008, 2007, and 2006, respectively.

Global Share Ownership Plan (GSOP)

Effective January 1, 2001, MFC established the Global Share Ownership Plan (“GSOP”) for its eligible employees and the Stock Plan for Non-Employee Directors. Under the GSOP, qualifying employees can choose to have up to 5% of their annual base earnings applied toward the purchase of common shares of MFC. Subject to certain conditions, MFC will match a percentage of the employee’s eligible contributions to certain maximums. MFC’s contributions vest immediately. All contributions are used by the GSOP’s trustee to purchase common shares in the open market. The Company’s compensation expense related to the GSOP was $1 million for each of the three years ended December 31, 2008, 2007, and 2006.

Restricted Share Unit Plan (RSU)

In 2003, MFC established the Restricted Share Unit (“RSU”) Plan. For the years ended December 31, 2008, 2007, and 2006, 1.8 million, 1.5 million and 1.6 million RSUs, respectively, were granted to certain eligible employees under this plan. For the years ended December 31, 2008, 2007, and 2006, the Company granted 0.4 million, 0.4 million, and 0.4 million RSUs, respectively, to certain eligible employees. RSUs entitle a participant to receive payment equal to the market value of the same number of common shares, plus credited dividends, at the time the RSUs vest. RSUs vest three years from the grant date, subject to performance conditions, and the related compensation expense is recognized over this period, except where the employee is eligible to retire prior to the vesting date, in which case the cost is recognized over the period between the grant date and the date on which the employee is eligible to retire. The Company’s compensation expense related to RSUs was $14 million, $16 million, and $14 million for the years ended December 31, 2008, 2007, and 2006, respectively.

F-57

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Audited Financial Statements

Year ended December 31, 2008 with Report of Independent Registered Public Accounting Firm

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Audited Financial Statements

Year ended December 31, 2008

Contents

Report of Independent Registered Public Accounting Firm	5
Statements of Assets and Contract Owners’ Equity	8
Statements of Operations and Changes in Contract Owners’ Equity	12
Notes to Financial Statements	75
Organization	75
Significant Accounting Policies	76
Mortality and Expense Risks Charge	78
Contract Charges	78
Purchases and Sales of Investments	78
Transaction with Affiliates	81
Diversification Requirements	82
Comparatives	82
Financial Highlights	83

Report of Independent Registered Public Accounting Firm

To the Contract Owners of the sub-accounts of

John Hancock Life Insurance Company (U.S.A.) Separate Account N

“Active” sub-accounts

500 Index Trust B Series 0	Fundamental Value Trust Series 1
500 Index Trust Series 1	Global Allocation Trust Series 0
Active Bond Trust Series 0	Global Allocation Trust Series 1
Active Bond Trust Series 1	Global Bond Trust Series 0
All Cap Core Trust Series 0	Global Bond Trust Series 1
All Cap Core Trust Series 1	Global Real Estate Trust Series 1
All Cap Growth Trust Series 0	Global Trust Series 0
All Cap Growth Trust Series 1	Global Trust Series 1
All Cap Value Trust Series 0	Health Sciences Trust Series 0
All Cap Value Trust Series 1	Health Sciences Trust Series 1
American Asset Allocation Trust Series 1	High Yield Trust Series 0
American Blue Chip Income and Growth Trust Series 1	High Yield Trust Series 1
American Bond Trust Series 1	Income & Value Trust Series 0
American Growth Trust Series 1	Income & Value Trust Series 1
American Growth-Income Trust Series 1	International Core Trust Series 0
American International Trust Series 1	International Core Trust Series 1
Blue Chip Growth Trust Series 0	International Equity Index Trust A Series 1
Blue Chip Growth Trust Series 1	International Equity Index Trust B Series 0
Capital Appreciation Trust Series 0	International Opportunities Trust Series 0
Capital Appreciation Trust Series 1	International Opportunities Trust Series 1
Capital Appreciation Value Trust Series 1	International Small Cap Trust Series 0
Classic Value Trust Series 0	International Small Cap Trust Series 1
Classic Value Trust Series 1	International Value Trust Series 0
Core Bond Trust Series 0	International Value Trust Series 1
Core Bond Trust Series 1	Investment Quality Bond Trust Series 0
Core Equity Trust Series 0	Investment Quality Bond Trust Series 1
Core Equity Trust Series 1	Large Cap Trust Series 0
Disciplined Diversification Trust Series 1	Large Cap Trust Series 1
Emerging Markets Value Trust Series 0	Large Cap Value Trust Series 0
Emerging Markets Value Trust Series 1	Large Cap Value Trust Series 1
Emerging Small Company Trust Series 0	Lifestyle Aggressive Trust Series 0
Emerging Small Company Trust Series 1	Lifestyle Aggressive Trust Series 1
Equity-Income Trust Series 0	Lifestyle Balanced Trust Series 0
Equity-Income Trust Series 1	Lifestyle Balanced Trust Series 1
Financial Services Trust Series 0	Lifestyle Conservative Trust Series 0
Financial Services Trust Series 1	Lifestyle Conservative Trust Series 1
Franklin Templeton Founding Allocation Trust Series 0	Lifestyle Growth Trust Series 0
Fundamental Value Trust Series 0	Lifestyle Growth Trust Series 1

5

Report of Independent Registered Public Accounting Firm

Lifestyle Moderate Trust Series 0	Small Cap Index Trust Series 0
Lifestyle Moderate Trust Series 1	Small Cap Index Trust Series 1
Mid Cap Index Trust Series 0	Small Cap Opportunities Trust Series 0
Mid Cap Index Trust Series 1	Small Cap Opportunities Trust Series 1
Mid Cap Intersection Trust Series 0	Small Cap Value Trust Series 0
Mid Cap Intersection Trust Series 1	Small Cap Value Trust Series 1
Mid Cap Stock Trust Series 0	Small Company Trust Series 1
Mid Cap Stock Trust Series 1	Small Company Value Trust Series 0
Mid Cap Value Trust Series 0	Small Company Value Trust Series 1
Mid Cap Value Trust Series 1	Strategic Bond Trust Series 0
Mid Value Trust Series 0	Strategic Bond Trust Series 1
Money Market Trust B Series 0	Strategic Income Trust Series 0
Money Market Trust Series 1	Strategic Income Trust Series 1
Natural Resources Trust Series 0	Total Bond Market Trust B Series 0
Natural Resources Trust Series 1	Total Return Trust Series 0
Optimized All Cap Trust Series 0	Total Return Trust Series 1
Optimized All Cap Trust Series 1	Total Stock Market Index Trust Series 0
Optimized Value Trust Series 0	Total Stock Market Index Trust Series 1
Optimized Value Trust Series 1	U.S. Government Securities Trust Series 0
Overseas Equity Trust Series 0	U.S. Government Securities Trust Series 1
Pacific Rim Trust Series 0	U.S. High Yield Bond Trust Series 0
Pacific Rim Trust Series 1	U.S. High Yield Bond Trust Series 1
Real Estate Securities Trust Series 0	U.S. Large Cap Trust Series 0
Real Estate Securities Trust Series 1	U.S. Large Cap Trust Series 1
Real Return Bond Trust Series 0	Utilities Trust Series 0
Real Return Bond Trust Series 1	Utilities Trust Series 1
Science & Technology Trust Series 0	Value Trust Series 0
Science & Technology Trust Series 1	Value Trust Series 1
Short-Term Bond Trust Series 0	All Asset Portfolio Series 0
Small Cap Growth Trust Series 0	All Asset Portfolio Series 1
Small Cap Growth Trust Series 1

“Closed” sub-accounts

Dynamic Growth Trust Series 0	Quantitative Mid Cap Trust Series 1
Dynamic Growth Trust Series 1	Small Cap Trust Series 0
Emerging Growth Trust Series 0	Small Cap Trust Series 1
Emerging Growth Trust Series 1	U.S. Core Trust Series 0
Growth & Income Trust Series 0	U.S. Core Trust Series 1
Managed Trust Series 0	U.S. Global Leaders Growth Trust Series 0
Quantitative Mid Cap Trust Series 0	U.S. Global Leaders Growth Trust Series 1

6

Report of Independent Registered Public Accounting Firm

We have audited the accompanying statements of assets and contract owners’ equity of John Hancock Life Insurance Company (U.S.A.) Separate Account N (the “Account”), comprised of the active sub-accounts as of December 31, 2008, and the related statements of operations and changes in contract owners’ equity of the active and closed sub-accounts for each of the two years in the period then ended (or years since inception), and the financial highlights for each of the five years in the period then ended (or years since inception). These financial statements and financial highlights are the responsibility of the Account’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Account’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Account’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian or fund manager of the underlying portfolios. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the active sub-accounts constituting John Hancock Life Insurance Company (U.S.A.) Separate Account N at December 31, 2008, and the results of its operations and changes in contract owners’ equity of the active and closed sub-accounts for each of the two years in the period then ended (or years since inception), and the financial highlights for each of the five years in the period then ended (or years since inception), in conformity with U.S. generally accepted accounting principles.

	/s/ ERNST & YOUNG LLP
Toronto, Canada	Chartered Accountants
April 14, 2009	Licensed Public Accountants

7

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Assets and Contract Owners’ Equity

December 31, 2008

Assets
Investments at fair value:
Sub-accounts invested in John Hancock Trust portfolios:
500 Index Trust B Series 0 - 1,438,228 shares (cost $23,008,953)	$	16,165,681
500 Index Trust Series 1 - 1,592,617 shares (cost $17,705,037)		12,533,893
Active Bond Trust Series 0 - 52,581 shares (cost $476,055)		415,916
Active Bond Trust Series 1 - 103,791 shares (cost $947,637)		820,988
All Cap Core Trust Series 0 - 1,307 shares (cost $14,880)		15,283
All Cap Core Trust Series 1 - 429,383 shares (cost $7,475,481)		5,019,487
All Cap Growth Trust Series 0 - 4,025 shares (cost $61,582)		46,490
All Cap Growth Trust Series 1 - 203,492 shares (cost $3,125,910)		2,348,296
All Cap Value Trust Series 0 - 38,130 shares (cost $229,283)		213,526
All Cap Value Trust Series 1 - 849,088 shares (cost $7,822,804)		4,771,874
American Asset Allocation Trust Series 1 - 25,571 shares (cost $234,817)		215,822
American Blue Chip Income and Growth Trust Series 1 - 299,766 shares (cost $4,088,314)		2,652,929
American Bond Trust Series 1 - 162,281 shares (cost $1,950,395)		1,736,403
American Growth Trust Series 1 - 1,592,001 shares (cost $29,894,480)		18,483,137
American Growth-Income Trust Series 1 - 132,970 shares (cost $2,205,307)		1,533,150
American International Trust Series 1 - 1,572,779 shares (cost $37,027,667)		22,506,461
Blue Chip Growth Trust Series 0 - 166,432 shares (cost $2,759,305)		2,030,472
Blue Chip Growth Trust Series 1 - 871,674 shares (cost $15,337,586)		10,660,570
Capital Appreciation Trust Series 0 - 19,164 shares (cost $147,097)		120,161
Capital Appreciation Trust Series 1 - 730,914 shares (cost $6,213,545)		4,582,828
Capital Appreciation Value Trust Series 1 - 327 shares (cost $2,845)		2,947
Classic Value Trust Series 0 - 3,012 shares (cost $31,100)		19,249
Classic Value Trust Series 1 - 13,966 shares (cost $191,975)		89,243
Core Bond Trust Series 0 - 249 shares (cost $3,093)		3,058
Core Bond Trust Series 1 - 1,823 shares (cost $22,542)		22,482
Core Equity Trust Series 0 - 8,783 shares (cost $80,874)		41,456
Core Equity Trust Series 1 - 29,949 shares (cost $316,642)		141,361
Disciplined Diversification Trust Series 1		—
Dynamic Growth Trust Series 0		—
Dynamic Growth Trust Series 1		—
Emerging Growth Trust Series 0		—
Emerging Growth Trust Series 1		—
Emerging Markets Value Trust Series 0 - 15,119 shares (cost $109,179)		101,749
Emerging Markets Value Trust Series 1 - 41,108 shares (cost $475,590)		277,069
Emerging Small Company Trust Series 0 - 12,006 shares (cost $280,876)		167,240
Emerging Small Company Trust Series 1 - 1,123,544 shares (cost $30,798,071)		15,606,022
Equity-Income Trust Series 0 - 825,982 shares (cost $12,645,611)		8,202,004
Equity-Income Trust Series 1 - 1,664,472 shares (cost $26,476,459)		16,578,137
Financial Services Trust Series 0 - 18,565 shares (cost $221,723)		139,607
Financial Services Trust Series 1 - 199,903 shares (cost $1,835,446)		1,505,269
Franklin Templeton Founding Allocation Trust Series 0 - 21,284 shares (cost $156,413)		156,653

8

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Assets and Contract Owners’ Equity

December 31, 2008

Assets
Investments at fair value:
Sub-accounts invested in John Hancock Trust portfolios:
Fundamental Value Trust Series 0 - 68,983 shares (cost $780,462)	$	673,278
Fundamental Value Trust Series 1 - 652,163 shares (cost $7,812,037)		6,384,680
Global Allocation Trust Series 0 - 9,312 shares (cost $94,206)		63,324
Global Allocation Trust Series 1 - 43,149 shares (cost $432,573)		294,279
Global Bond Trust Series 0 - 416,249 shares (cost $6,341,743)		5,998,144
Global Bond Trust Series 1 - 301,562 shares (cost $4,725,226)		4,354,555
Global Real Estate Trust Series 1 - 402 shares (cost $3,865)		2,480
Global Trust Series 0 - 26,016 shares (cost $416,551)		273,952
Global Trust Series 1 - 198,920 shares (cost $3,146,088)		2,096,612
Growth & Income Trust Series 0		—
Health Sciences Trust Series 0 - 47,798 shares (cost $622,702)		495,670
Health Sciences Trust Series 1 - 376,549 shares (cost $4,781,529)		3,897,285
High Yield Trust Series 0 - 121,022 shares (cost $1,023,280)		709,188
High Yield Trust Series 1 - 634,984 shares (cost $5,694,422)		3,740,054
Income & Value Trust Series 0 - 16,525 shares (cost $180,214)		118,153
Income & Value Trust Series 1 - 1,511,525 shares (cost $15,301,304)		10,807,404
International Core Trust Series 0 - 25,284 shares (cost $295,405)		204,797
International Core Trust Series 1 - 610,640 shares (cost $7,622,641)		4,958,400
International Equity Index Trust A Series 1 - 300,304 shares (cost $5,871,361)		3,585,626
International Equity Index Trust B Series 0 - 278,182 shares (cost $4,935,941)		3,104,506
International Opportunities Trust Series 0 - 254,549 shares (cost $3,786,070)		2,097,481
International Opportunities Trust Series 1 - 217,894 shares (cost $2,953,238)		1,795,448
International Small Cap Trust Series 0 - 36,848 shares (cost $576,113)		305,840
International Small Cap Trust Series 1 - 427,201 shares (cost $6,954,240)		3,562,859
International Value Trust Series 0 - 68,747 shares (cost $945,801)		619,413
International Value Trust Series 1 - 1,256,796 shares (cost $18,824,322)		11,386,567
Investment Quality Bond Trust Series 0 - 24,512 shares (cost $272,346)		253,456
Investment Quality Bond Trust Series 1 - 603,424 shares (cost $6,948,886)		6,251,474
Large Cap Trust Series 0 - 8,248 shares (cost $99,931)		70,272
Large Cap Trust Series 1 - 353,197 shares (cost $5,059,755)		3,019,835
Large Cap Value Trust Series 0 - 34,026 shares (cost $556,048)		478,069
Large Cap Value Trust Series 1 - 378,266 shares (cost $7,528,441)		5,314,642
Lifestyle Aggressive Trust Series 0 - 323,015 shares (cost $2,786,552)		1,753,973
Lifestyle Aggressive Trust Series 1 - 912,475 shares (cost $8,837,943)		4,954,739
Lifestyle Balanced Trust Series 0 - 363,830 shares (cost $4,121,697)		3,128,937
Lifestyle Balanced Trust Series 1 - 1,016,358 shares (cost $12,900,322)		8,730,517
Lifestyle Conservative Trust Series 0 - 33,465 shares (cost $365,208)		344,025
Lifestyle Conservative Trust Series 1 - 347,721 shares (cost $4,264,908)		3,567,617
Lifestyle Growth Trust Series 0 - 537,485 shares (cost $6,256,497)		4,299,878
Lifestyle Growth Trust Series 1 - 1,176,517 shares (cost $15,119,966)		9,400,374
Lifestyle Moderate Trust Series 0 - 131,619 shares (cost $1,546,558)		1,205,627

9

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Assets and Contract Owners’ Equity

December 31, 2008

Assets
Investments at fair value:
Sub-accounts invested in John Hancock Trust portfolios:
Lifestyle Moderate Trust Series 1 - 186,754 shares (cost $2,289,507)	$	1,708,801
Managed Trust Series 0		—
Mid Cap Index Trust Series 0 - 94,355 shares (cost $1,566,930)		1,006,767
Mid Cap Index Trust Series 1 - 1,128,133 shares (cost $19,906,648)		12,037,182
Mid Cap Intersection Trust Series 0 - 4,260 shares (cost $43,516)		28,673
Mid Cap Intersection Trust Series 1		—
Mid Cap Stock Trust Series 0 - 191,699 shares (cost $2,541,048)		1,681,202
Mid Cap Stock Trust Series 1 - 1,032,582 shares (cost $14,343,152)		9,024,765
Mid Cap Value Trust Series 0 - 173,366 shares (cost $1,201,787)		1,263,839
Mid Cap Value Trust Series 1 - 864,274 shares (cost $9,678,025)		6,317,840
Mid Value Trust Series 0 - 178,763 shares (cost $1,148,787)		1,201,290
Money Market Trust B Series 0 - 70,653,639 shares (cost $70,653,639)		70,653,639
Money Market Trust Series 1 - 10,131,444 shares (cost $101,314,436)		101,314,436
Natural Resources Trust Series 0 - 51,795 shares (cost $1,152,162)		690,422
Natural Resources Trust Series 1 - 480,302 shares (cost $11,015,481)		6,450,461
Optimized All Cap Trust Series 0 - 81,373 shares (cost $1,119,985)		703,064
Optimized All Cap Trust Series 1 - 6,505 shares (cost $86,284)		56,007
Optimized Value Trust Series 0 - 3,528 shares (cost $39,484)		25,545
Optimized Value Trust Series 1 - 74 shares (cost $939)		538
Overseas Equity Trust Series 0 - 247,109 shares (cost $3,058,785)		1,831,075
Pacific Rim Trust Series 0 - 77,565 shares (cost $676,757)		467,715
Pacific Rim Trust Series 1 - 760,424 shares (cost $7,287,437)		4,554,939
Quantitative Mid Cap Trust Series 0		—
Quantitative Mid Cap Trust Series 1		—
Real Estate Securities Trust Series 0 - 494,566 shares (cost $3,760,115)		3,491,635
Real Estate Securities Trust Series 1 - 1,798,593 shares (cost $27,438,466)		12,770,010
Real Return Bond Trust Series 0 - 77,949 shares (cost $1,010,010)		900,310
Real Return Bond Trust Series 1 - 449,123 shares (cost $5,858,886)		5,236,778
Science & Technology Trust Series 0 - 58,762 shares (cost $569,808)		485,962
Science & Technology Trust Series 1 - 618,425 shares (cost $7,595,106)		5,102,005
Short-Term Bond Trust Series 0 - 10,431 shares (cost $79,673)		72,706
Small Cap Growth Trust Series 0 - 371,096 shares (cost $3,099,103)		2,293,376
Small Cap Growth Trust Series 1 - 11,125 shares (cost $68,150)		68,532
Small Cap Index Trust Series 0 - 46,478 shares (cost $575,489)		425,740
Small Cap Index Trust Series 1 - 324,880 shares (cost $4,518,024)		2,975,902
Small Cap Opportunities Trust Series 0 - 2,332 shares (cost $37,323)		26,117
Small Cap Opportunities Trust Series 1 - 68,778 shares (cost $1,447,765)		775,813
Small Cap Trust Series 0		—
Small Cap Trust Series 1		—
Small Cap Value Trust Series 0 - 226,614 shares (cost $3,223,930)		2,658,179
Small Cap Value Trust Series 1 - 49,530 shares (cost $676,705)		582,478

10

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Assets and Contract Owners’ Equity

December 31, 2008

Assets
Investments at fair value:
Sub-accounts invested in John Hancock Trust portfolios:
Small Company Trust Series 1 - 191,760 shares (cost $2,077,750)	$	1,225,349
Small Company Value Trust Series 0 - 68,822 shares (cost $1,200,286)		890,555
Small Company Value Trust Series 1 - 732,193 shares (cost $13,551,739)		9,496,541
Strategic Bond Trust Series 0 - 10,679 shares (cost $113,144)		89,594
Strategic Bond Trust Series 1 - 199,539 shares (cost $2,171,809)		1,680,117
Strategic Income Trust Series 0 - 1,403 shares (cost $18,055)		15,689
Strategic Income Trust Series 1 - 102,832 shares (cost $1,236,685)		1,151,717
Total Bond Market Trust B Series 0 - 510,792 shares (cost $5,074,695)		5,041,514
Total Return Trust Series 0 - 212,733 shares (cost $2,959,357)		2,857,007
Total Return Trust Series 1 - 3,232,360 shares (cost $44,663,753)		43,539,894
Total Stock Market Index Trust Series 0 - 25,086 shares (cost $273,561)		199,933
Total Stock Market Index Trust Series 1 - 206,961 shares (cost $2,483,491)		1,649,478
U.S. Core Trust Series 0		—
U.S. Core Trust Series 1		—
U.S. Global Leaders Growth Trust Series 0		—
U.S. Global Leaders Growth Trust Series 1		—
U.S. Government Securities Trust Series 0 - 15,957 shares (cost $198,421)		193,403
U.S. Government Securities Trust Series 1 - 618,365 shares (cost $7,865,630)		7,525,507
U.S. High Yield Bond Trust Series 0 - 18,682 shares (cost $193,771)		171,876
U.S. High Yield Bond Trust Series 1 - 1,881 shares (cost $23,596)		17,289
U.S. Large Cap Trust Series 0 - 5,099 shares (cost $70,104)		48,088
U.S. Large Cap Trust Series 1 - 958,502 shares (cost $12,838,700)		9,057,849
Utilities Trust Series 0 - 80,664 shares (cost $1,044,484)		658,222
Utilities Trust Series 1 - 440,560 shares (cost $5,635,099)		3,594,971
Value Trust Series 0 - 31,764 shares (cost $468,824)		312,241
Value Trust Series 1 - 567,861 shares (cost $9,643,170)		5,587,755
Sub-account invested in Outside Trust portfolios:
All Asset Portfolio Series 0 - 6,271 shares (cost $71,766)	$	57,882
All Asset Portfolio Series 1 - 66,530 shares (cost $764,643)		614,073
Total assets	$	628,790,630
Contract Owners’ Equity
Variable universal life insurance contracts	$	628,790,630

See accompanying notes.

11

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

	Sub-Account
	500 Index Trust B Series 0						500 Index Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	457,185		$	612,671		$	128,911		$	687,947
Total Investment Income		457,185			612,671			128,911			687,947
Expenses:
Mortality and expense risk		43,823			59,199			47,263			76,928
Net investment income (loss)		413,362			553,472			81,648			611,019
Realized gains (losses) on investments:
Capital gain distributions		118,781			—			—			—
Net realized gains (losses)		(1,162,706	)		1,528,898			(2,102,701	)		1,132,219
Realized gains (losses)		(1,043,925	)		1,528,898			(2,102,701	)		1,132,219
Unrealized appreciation (depreciation) during the period		(8,137,464	)		(1,004,526	)		(5,726,377	)		(700,088	)
Net increase (decrease) in assets from operations		(8,768,027	)		1,077,844			(7,747,430	)		1,043,150
Changes from principal transactions:
Transfer of net premiums		1,920,254			2,541,278			635,202			802,682
Transfer on terminations		(1,777,015	)		(1,584,258	)		(2,128,198	)		(3,328,533	)
Transfer on policy loans		31,546			(53,634	)		(509	)		(391,716	)
Net interfund transfers		4,016,864			996,051			(4,499,505	)		16,714,382
Net increase (decrease) in assets from principal transactions		4,191,649			1,899,437			(5,993,010	)		13,796,815
Total increase (decrease) in assets		(4,576,378	)		2,977,281			(13,740,440	)		14,839,965
Assets, beginning of period		20,742,059			17,764,778			26,274,333			11,434,368
Assets, end of period	$	16,165,681		$	20,742,059		$	12,533,893		$	26,274,333

(g) Fund available in prior year but no activity.

See accompanying notes.

12

Sub-Account
Active Bond Trust Series 0						Active Bond Trust Series 1						All Asset Portfolio Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (g)
$	29,424		$	25,828		$	55,886		$	226,884		$	3,073
	29,424			25,828			55,886			226,884			3,073
	—			—			6,132			11,517			—
	29,424			25,828			49,754			215,367			3,073
	—			—			—			—			193
	(60,103	)		(2,590	)		(178,106	)		50,926			(400	)
	(60,103	)		(2,590	)		(178,106	)		50,926			(207	)
	(45,699	)		(14,221	)		(38,964	)		(197,796	)		(13,884	)
	(76,378	)		9,017			(167,316	)		68,497			(11,018	)
	115,887			141,168			16,247			149,449			32,760
	(73,256	)		(13,561	)		(336,374	)		(473,630	)		(4,070	)
	(2	)		—			(91	)		1,101			—
	(15,731	)		220,711			(621,306	)		(2,280,193	)		40,210
	26,898			348,318			(941,524	)		(2,603,273	)		68,900
	(49,480	)		357,335			(1,108,840	)		(2,534,776	)		57,882
	465,396			108,061			1,929,828			4,464,604			—
$	415,916		$	465,396		$	820,988		$	1,929,828		$	57,882

13

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	All Asset Portfolio Series 1						All Cap Core Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	46,385		$	61,232		$	379		$	453
Total Investment Income		46,385			61,232			379			453
Expenses:
Mortality and expense risk		4,554			4,706			—			—
Net investment income (loss)		41,831			56,526			379			453
Realized gains (losses) on investments:
Capital gain distributions		2,145			—			—			—
Net realized gains (losses)		(35,666	)		(2,105	)		(145,418	)		190
Realized gains (losses)		(33,521	)		(2,105	)		(145,418	)		190
Unrealized appreciation (depreciation) during the period		(149,775	)		4,161			576			(193	)
Net increase (decrease) in assets from operations		(141,465	)		58,582			(144,463	)		450
Changes from principal transactions:
Transfer of net premiums		50,836			96,122			140,480			1,010
Transfer on terminations		(93,962	)		(119,987	)		(9,188	)		(5,152	)
Transfer on policy loans		(36,716	)		—			—			—
Net interfund transfers		(31,918	)		39,146			(826	)		32,677
Net increase (decrease) in assets from principal transactions		(111,760	)		15,281			130,466			28,535
Total increase (decrease) in assets		(253,225	)		73,863			(13,997	)		28,985
Assets, beginning of period		867,298			793,435			29,280			295
Assets, end of period	$	614,073		$	867,298		$	15,283		$	29,280

See accompanying notes.

14

Sub-Account
All Cap Core Trust Series 1						All Cap Growth Trust Series 0						All Cap Growth Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	123,987		$	158,567		$	240		$	100		$	10,612		$	1,913
	123,987			158,567			240			100			10,612			1,913
	34,112			45,352			—			—			14,580			19,444
	89,875			113,215			240			100			(3,968	)		(17,531	)
	—			—			—			—			—			—
	(979,727	)		424,416			(5,312	)		16,996			(143,013	)		258,604
	(979,727	)		424,416			(5,312	)		16,996			(143,013	)		258,604
	(2,887,267	)		(381,980	)		(14,620	)		(530	)		(1,585,110	)		201,083
	(3,777,119	)		155,651			(19,692	)		16,566			(1,732,091	)		442,156
	254,938			289,707			5,919			159,857			307,784			230,443
	(795,201	)		(363,196	)		(1,364	)		(5,297	)		(290,608	)		(449,457	)
	35,384			(18,476	)		—			—			30,026			(9,799	)
	(1,985,621	)		6,657,434			38,498			(148,844	)		(58,218	)		(297,579	)
	(2,490,500	)		6,565,469			43,053			5,716			(11,016	)		(526,392	)
	(6,267,619	)		6,721,120			23,361			22,282			(1,743,107	)		(84,236	)
	11,287,106			4,565,986			23,129			847			4,091,403			4,175,639
$	5,019,487		$	11,287,106		$	46,490		$	23,129		$	2,348,296		$	4,091,403

15

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	All Cap Value Trust Series 0						All Cap Value Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	1,781		$	727		$	50,115		$	134,846
Total Investment Income		1,781			727			50,115			134,846
Expenses:
Mortality and expense risk		—			—			26,252			27,087
Net investment income (loss)		1,781			727			23,863			107,759
Realized gains (losses) on investments:
Capital gain distributions		1,093			17,926			153,459			3,486,020
Net realized gains (losses)		(27,421	)		(532	)		(2,371,693	)		17,862
Realized gains (losses)		(26,328	)		17,394			(2,218,234	)		3,503,882
Unrealized appreciation (depreciation) during the period		334			(16,105	)		74,815			(3,114,574	)
Net increase (decrease) in assets from operations		(24,213	)		2,016			(2,119,556	)		497,067
Changes from principal transactions:
Transfer of net premiums		38,320			31,433			48,246			147,292
Transfer on terminations		(7,600	)		(1,203	)		(158,830	)		(226,059	)
Transfer on policy loans		—			—			(4,555	)		—
Net interfund transfers		163,019			11,466			(1,550,963	)		6,140,550
Net increase (decrease) in assets from principal transactions		193,739			41,696			(1,666,102	)		6,061,783
Total increase (decrease) in assets		169,526			43,712			(3,785,658	)		6,558,850
Assets, beginning of period		44,000			288			8,557,532			1,998,682
Assets, end of period	$	213,526		$	44,000		$	4,771,874		$	8,557,532

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

See accompanying notes.

16

Sub-Account
American Asset Allocation Trust Series 1			American Blue Chip Income and Growth Trust Series 1						American Bond Trust Series 1
Year Ended Dec. 31/08 (f)			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	6,546		$	147,528		$	98,701		$	153,895		$	105,828
	6,546			147,528			98,701			153,895			105,828
	167			12,167			15,780			7,476			8,980
	6,379			135,361			82,921			146,419			96,848
	—			39,973			750,767			37			907
	(897	)		(806,387	)		210,915			(129,287	)		5,829
	(897	)		(766,414	)		961,682			(129,250	)		6,736
	(18,995	)		(869,603	)		(926,518	)		(167,503	)		(50,630	)
	(13,513	)		(1,500,656	)		118,085			(150,334	)		52,954
	9,996			357,139			573,618			210,679			222,473
	(14,901	)		(223,639	)		(296,092	)		(94,990	)		(58,267	)
	(144	)		(80,187	)		(1,043	)		—			—
	234,384			559,651			(2,014,428	)		(2,074,303	)		3,221,361
	229,335			612,964			(1,737,945	)		(1,958,614	)		3,385,567
	215,822			(887,692	)		(1,619,860	)		(2,108,948	)		3,438,521
	—			3,540,621			5,160,481			3,845,351			406,830
$	215,822		$	2,652,929		$	3,540,621		$	1,736,403		$	3,845,351

17

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	American Growth Trust Series 1						American Growth-Income Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	496,005		$	256,748		$	46,065		$	82,530
Total Investment Income		496,005			256,748			46,065			82,530
Expenses:
Mortality and expense risk		86,128			89,376			14,394			12,362
Net investment income (loss)		409,877			167,372			31,671			70,168
Realized gains (losses) on investments:
Capital gain distributions		266,326			2,245,134			77,414			184,516
Net realized gains (losses)		(3,123,395	)		4,502,816			(1,624,774	)		317,225
Realized gains (losses)		(2,857,069	)		6,747,950			(1,547,360	)		501,741
Unrealized appreciation (depreciation) during the period		(11,368,782	)		(4,654,694	)		(583,320	)		(528,880	)
Net increase (decrease) in assets from operations		(13,815,974	)		2,260,628			(2,099,009	)		43,029
Changes from principal transactions:
Transfer of net premiums		2,712,535			1,639,928			574,751			709,642
Transfer on terminations		(2,845,634	)		(2,204,015	)		(1,058,090	)		(301,793	)
Transfer on policy loans		(89,358	)		(10,202	)		(67,026	)		(984	)
Net interfund transfers		9,243,795			(14,998,928	)		(149,487	)		872,617
Net increase (decrease) in assets from principal transactions		9,021,338			(15,573,217	)		(699,852	)		1,279,482
Total increase (decrease) in assets		(4,794,636	)		(13,312,589	)		(2,798,861	)		1,322,511
Assets, beginning of period		23,277,773			36,590,362			4,332,011			3,009,500
Assets, end of period	$	18,483,137		$	23,277,773		$	1,533,150		$	4,332,011

See accompanying notes.

18

Sub-Account
American International Trust Series 1						Blue Chip Growth Trust Series 0						Blue Chip Growth Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	1,303,398		$	994,832		$	9,215		$	14,812		$	50,667		$	179,592
	1,303,398			994,832			9,215			14,812			50,667			179,592
	108,659			139,156			—			—			74,489			109,943
	1,194,739			855,676			9,215			14,812			(23,822	)		69,649
	732,433			3,603,268			33,216			—			279,607			—
	(1,851,283	)		1,872,953			(208,963	)		116,889			(544,621	)		1,920,443
	(1,118,850	)		5,476,221			(175,747	)		116,889			(265,014	)		1,920,443
	(19,580,193	)		826,619			(848,688	)		55,154			(8,644,218	)		892,459
	(19,504,304	)		7,158,516			(1,015,220	)		186,855			(8,933,054	)		2,882,551
	2,166,820			2,121,774			255,329			958,141			809,262			1,050,985
	(2,692,364	)		(1,439,599	)		(64,810	)		(76,565	)		(6,868,763	)		(3,369,370	)
	(79,432	)		(1,427	)		(2	)		—			(15,990	)		(141,423	)
	(3,846,066	)		8,004,452			646,042			432,532			642,645			577,572
	(4,451,042	)		8,685,200			836,559			1,314,108			(5,432,846	)		(1,882,236	)
	(23,955,346	)		15,843,716			(178,661	)		1,500,963			(14,365,900	)		1,000,315
	46,461,807			30,618,091			2,209,133			708,170			25,026,470			24,026,155
$	22,506,461		$	46,461,807		$	2,030,472		$	2,209,133		$	10,660,570		$	25,026,470

19

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Capital Appreciation Trust Series 0						Capital Appreciation Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	1,081		$	944		$	29,265		$	22,847
Total Investment Income		1,081			944			29,265			22,847
Expenses:
Mortality and expense risk		—			—			30,942			37,431
Net investment income (loss)		1,081			944			(1,677	)		(14,584	)
Realized gains (losses) on investments:
Capital gain distributions		—			762			—			32,105
Net realized gains (losses)		(215,802	)		13,735			(417,557	)		98,907
Realized gains (losses)		(215,802	)		14,497			(417,557	)		131,012
Unrealized appreciation (depreciation) during the period		(35,883	)		8,726			(2,445,165	)		677,020
Net increase (decrease) in assets from operations		(250,604	)		24,167			(2,864,399	)		793,448
Changes from principal transactions:
Transfer of net premiums		213,970			181,193			348,771			695,381
Transfer on terminations		(29,128	)		(11,341	)		(826,744	)		(1,193,581	)
Transfer on policy loans		—			—			15,356			(42,996	)
Net interfund transfers		(32,349	)		(76,853	)		(57,997	)		(234,158	)
Net increase (decrease) in assets from principal transactions		152,493			92,999			(520,614	)		(775,354	)
Total increase (decrease) in assets		(98,111	)		117,166			(3,385,013	)		18,094
Assets, beginning of period		218,272			101,106			7,967,841			7,949,747
Assets, end of period	$	120,161		$	218,272		$	4,582,828		$	7,967,841

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

See accompanying notes.

20

Sub-Account
Capital Appreciation Value Trust Series 1			Classic Value Trust Series 0						Classic Value Trust Series 1
Year Ended Dec. 31/08 (f)			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	23		$	487		$	430		$	2,485		$	13,926
	23			487			430			2,485			13,926
	3			—			—			989			5,343
	20			487			430			1,496			8,583
	—			259			2,182			2,558			97,324
	(4	)		(6,120	)		(701	)		(196,953	)		12,959
	(4	)		(5,861	)		1,481			(194,395	)		110,283
	102			(7,093	)		(4,798	)		74,329			(227,834	)
	118			(12,467	)		(2,887	)		(118,570	)		(108,968	)
	73			11,310			16,177			11,266			137,096
	(124	)		(2,249	)		(369	)		(8,321	)		(19,630	)
	—			—			—			—			—
	2,880			166			8,885			(542,279	)		(359,547	)
	2,829			9,227			24,693			(539,334	)		(242,081	)
	2,947			(3,240	)		21,806			(657,904	)		(351,049	)
	—			22,489			683			747,147			1,098,196
$	2,947		$	19,249		$	22,489		$	89,243		$	747,147

21

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Core Bond Trust Series 0			Core Bond Trust Series 1
	Year Ended Dec. 31/08 (g)			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	132		$	535		$	57
Total Investment Income		132			535			57
Expenses:
Mortality and expense risk		—			22			4
Net investment income (loss)		132			513			53
Realized gains (losses) on investments:
Capital gain distributions		—			—			—
Net realized gains (losses)		(84	)		(1	)		(2	)
Realized gains (losses)		(84	)		(1	)		(2	)
Unrealized appreciation (depreciation) during the period		(34	)		(62	)		(6	)
Net increase (decrease) in assets from operations		14			450			45
Changes from principal transactions:
Transfer of net premiums		—			389			655
Transfer on terminations		(22	)		(66	)		(30	)
Transfer on policy loans		—			—			—
Net interfund transfers		3,066			20,509			175
Net increase (decrease) in assets from principal transactions		3,044			20,832			800
Total increase (decrease) in assets		3,058			21,282			845
Assets, beginning of period		—			1,200			355
Assets, end of period	$	3,058		$	22,482		$	1,200

(g) Fund available in prior year but no activity.

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

See accompanying notes.

22

Sub-Account
Core Equity Trust Series 0						Core Equity Trust Series 1						Disciplined Diversification Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (f)
$	7,796		$	12		$	28,127			—		—
	7,796			12			28,127			—		—
	—			—			1,540			5,679		—
	7,796			12			26,587			(5,679	)	—
	971			1,464			7,379			49,354		—
	(3,461	)		358			(103,325	)		(56,390	)	(570	)
	(2,490	)		1,822			(95,946	)		(7,036	)	(570	)
	(35,127	)		(5,001	)		(121,893	)		(92,260	)	—
	(29,821	)		(3,167	)		(191,252	)		(104,975	)	(570	)
	35,775			29,132			39,056			98,955		570
	(4,313	)		(1,544	)		(73,525	)		(44,188	)	—
	—			—			—			—		—
	2,941			5,987			(214,904	)		(50,913	)	—
	34,403			33,575			(249,373	)		3,854		570
	4,582			30,408			(440,625	)		(101,121	)	—
	36,874			6,466			581,986			683,107		—
$	41,456		$	36,874		$	141,361		$	581,986		—

23

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Dynamic Growth Trust Series 0					Dynamic Growth Trust Series 1
	Year Ended Dec. 31/08 (ah)		Year Ended Dec. 31/07			Year Ended Dec. 31/08 (ah)		Year Ended Dec. 31/07
Income:
Dividend income distribution	—			—		—			—
Total Investment Income	—			—		—			—
Expenses:
Mortality and expense risk	—			—		2,917			14,484
Net investment income (loss)	—			—		(2,917	)		(14,484	)
Realized gains (losses) on investments:
Capital gain distributions	—			—		—			—
Net realized gains (losses)	(11,410	)		7,157		(87,607	)		228,586
Realized gains (losses)	(11,410	)		7,157		(87,607	)		228,586
Unrealized appreciation (depreciation) during the period	(1,632	)		150		(200,945	)		(16,855	)
Net increase (decrease) in assets from operations	(13,042	)		7,307		(291,469	)		197,247
Changes from principal transactions:
Transfer of net premiums	5,992			94,638		79,850			313,078
Transfer on terminations	(2,654	)		(6,080	)	(285,510	)		(251,687	)
Transfer on policy loans	—			—		22			4,242
Net interfund transfers	(127,395	)		14,489		(1,878,178	)		(1,492,819	)
Net increase (decrease) in assets from principal transactions	(124,057	)		103,047		(2,083,816	)		(1,427,186	)
Total increase (decrease) in assets	(137,099	)		110,354		(2,375,285	)		(1,229,939	)
Assets, beginning of period	137,099			26,745		2,375,285			3,605,224
Assets, end of period	—		$	137,099		—		$	2,375,285

(ah) Terminated as an investment option and funds transferred to Mid Cap Stock Trust on April 28, 2008.

(ab) Terminated as an investment option and funds transferred to Small Cap Growth Trust on November 10, 2008.

(g) Fund available in prior year but no activity.

See accompanying notes.

24

Sub-Account
Emerging Growth Trust Series 0						Emerging Growth Trust Series 1						Emerging Markets Value Trust Series 0
Year Ended Dec. 31/08 (ab)			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (ab)			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (g)
$	394		$	154		$	1,231		$	938		$	3,519
	394			154			1,231			938			3,519
	—			—			1,575			2,718			—
	394			154			(344	)		(1,780	)		3,519
	875			14,087			2,805			173,166			—
	(125,730	)		(691	)		(499,712	)		(129,551	)		(609	)
	(124,855	)		13,396			(496,907	)		43,615			(609	)
	14,553			(14,597	)		121,401			(33,041	)		(7,430	)
	(109,908	)		(1,047	)		(375,850	)		8,794			(4,520	)
	13,608			24,609			4,287			65,009			457
	(12,947	)		(4,370	)		(95,107	)		(55,887	)		(952	)
	—			—			—			—			—
	12,300			77,120			(355,197	)		333,526			106,764
	12,961			97,359			(446,017	)		342,648			106,269
	(96,947	)		96,312			(821,867	)		351,442			101,749
	96,947			635			821,867			470,425			—
	—		$	96,947			—		$	821,867		$	101,749

25

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Emerging Markets Value Trust Series 1						Emerging Small Company Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07 (w)			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	9,502		$	583			—			—
Total Investment Income		9,502			583			—			—
Expenses:
Mortality and expense risk		1,138			83			—			—
Net investment income (loss)		8,364			500			—			—
Realized gains (losses) on investments:
Capital gain distributions		191			1,978			164			51,673
Net realized gains (losses)		(7,510	)		(2	)		(90,398	)		(14,551	)
Realized gains (losses)		(7,319	)		1,976			(90,234	)		37,122
Unrealized appreciation (depreciation) during the period		(192,411	)		(6,110	)		(83,143	)		(33,317	)
Net increase (decrease) in assets from operations		(191,366	)		(3,634	)		(173,377	)		3,805
Changes from principal transactions:
Transfer of net premiums		20,718			210			76,779			163,244
Transfer on terminations		(6,879	)		(744	)		(67,347	)		(20,681	)
Transfer on policy loans		2			—			—			—
Net interfund transfers		361,578			97,184			(27,671	)		86,101
Net increase (decrease) in assets from principal transactions		375,419			96,650			(18,239	)		228,664
Total increase (decrease) in assets		184,053			93,016			(191,616	)		232,469
Assets, beginning of period		93,016			—			358,856			126,387
Assets, end of period	$	277,069		$	93,016		$	167,240		$	358,856

(w) Reflects the period from commencement of operations on April 30, 2007 through December 31, 2007.

See accompanying notes.

26

Sub-Account
Emerging Small Company Trust Series 1						Equity-Income Trust Series 0						Equity-Income Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
	—			—		$	284,177		$	298,313		$	564,897		$	1,016,848
	—			—			284,177			298,313			564,897			1,016,848
	147,940			216,858			—			—			105,250			155,771
	(147,940	)		(216,858	)		284,177			298,313			459,647			861,077
	13,798			8,264,873			266,741			1,143,763			643,428			3,963,935
	(5,092,219	)		596,174			(1,573,014	)		39,095			(3,349,760	)		2,052,777
	(5,078,421	)		8,861,047			(1,306,273	)		1,182,858			(2,706,332	)		6,016,712
	(8,427,006	)		(5,983,529	)		(3,602,306	)		(1,263,386	)		(8,005,491	)		(5,749,846	)
	(13,653,367	)		2,660,660			(4,624,402	)		217,785			(10,252,176	)		1,127,943
	1,346,358			1,756,587			1,050,972			1,769,828			1,353,367			2,101,943
	(5,053,747	)		(5,019,723	)		(388,250	)		(233,978	)		(5,797,178	)		(4,749,908	)
	74,469			282,912			(4	)		(979	)		(807	)		(67,293	)
	(730,772	)		(6,753,775	)		1,432,815			1,982,149			(2,159,696	)		(2,671,380	)
	(4,363,692	)		(9,733,999	)		2,095,533			3,517,020			(6,604,314	)		(5,386,638	)
	(18,017,059	)		(7,073,339	)		(2,528,869	)		3,734,805			(16,856,490	)		(4,258,695	)
	33,623,081			40,696,420			10,730,873			6,996,068			33,434,627			37,693,322
$	15,606,022		$	33,623,081		$	8,202,004		$	10,730,873		$	16,578,137		$	33,434,627

27

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Financial Services Trust Series 0						Financial Services Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	1,854		$	968		$	18,616		$	12,671
Total Investment Income		1,854			968			18,616			12,671
Expenses:
Mortality and expense risk		—			—			4,475			7,108
Net investment income (loss)		1,854			968			14,141			5,563
Realized gains (losses) on investments:
Capital gain distributions		3,444			7,776			74,498			103,714
Net realized gains (losses)		(24,440	)		4,409			(499,847	)		124,791
Realized gains (losses)		(20,996	)		12,185			(425,349	)		228,505
Unrealized appreciation (depreciation) during the period		(71,142	)		(11,097	)		(238,763	)		(299,592	)
Net increase (decrease) in assets from operations		(90,284	)		2,056			(649,971	)		(65,524	)
Changes from principal transactions:
Transfer of net premiums		30,320			96,931			211,962			190,500
Transfer on terminations		(4,155	)		(2,235	)		(280,015	)		(242,540	)
Transfer on policy loans		—			—			(636	)		747
Net interfund transfers		154,761			(48,811	)		1,579,574			(1,750,928	)
Net increase (decrease) in assets from principal transactions		180,926			45,885			1,510,885			(1,802,221	)
Total increase (decrease) in assets		90,642			47,941			860,914			(1,867,745	)
Assets, beginning of period		48,965			1,024			644,355			2,512,100
Assets, end of period	$	139,607		$	48,965		$	1,505,269		$	644,355

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

See accompanying notes.

28

Sub-Account
Franklin Templeton Founding Allocation Trust Series 0			Fundamental Value Trust Series 0						Fundamental Value Trust Series 1
Year Ended Dec. 31/08 (f)			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	5,645		$	7,792		$	1,921		$	70,400		$	65,923
	5,645			7,792			1,921			70,400			65,923
	—			—			—			19,703			20,838
	5,645			7,792			1,921			50,697			45,085
	—			1,975			4,510			40,908			160,619
	(25	)		(17,633	)		1,148			(393,753	)		242,062
	(25	)		(15,658	)		5,658			(352,845	)		402,681
	240			(107,766	)		(3,347	)		(1,608,758	)		(315,949	)
	5,860			(115,632	)		4,232			(1,910,906	)		131,817
	—			50,001			12,404			320,447			243,683
	(13,197	)		(22,496	)		(13,296	)		(386,352	)		(325,251	)
	—			—			—			(41,313	)		(1,163	)
	163,990			647,330			9,582			4,176,335			(283,754	)
	150,793			674,835			8,690			4,069,117			(366,485	)
	156,653			559,203			12,922			2,158,211			(234,668	)
	—			114,075			101,153			4,226,469			4,461,137
$	156,653		$	673,278		$	114,075		$	6,384,680		$	4,226,469

29

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Global Allocation Trust Series 0						Global Allocation Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	4,516		$	2,408		$	21,212		$	170,015
Total Investment Income		4,516			2,408			21,212			170,015
Expenses:
Mortality and expense risk		—			—			3,700			11,465
Net investment income (loss)		4,516			2,408			17,512			158,550
Realized gains (losses) on investments:
Capital gain distributions		80			3,100			1,212			278,512
Net realized gains (losses)		(9,427	)		53			(391,314	)		89,077
Realized gains (losses)		(9,347	)		3,153			(390,102	)		367,589
Unrealized appreciation (depreciation) during the period		(25,928	)		(4,979	)		99,624			(389,569	)
Net increase (decrease) in assets from operations		(30,759	)		582			(272,966	)		136,570
Changes from principal transactions:
Transfer of net premiums		62,769			6,563			35,198			102,556
Transfer on terminations		(6,566	)		(2,517	)		(161,385	)		(159,556	)
Transfer on policy loans		—			—			(29,892	)		—
Net interfund transfers		(9,534	)		42,398			(1,681,054	)		497,937
Net increase (decrease) in assets from principal transactions		46,669			46,444			(1,837,133	)		440,937
Total increase (decrease) in assets		15,910			47,026			(2,110,099	)		577,507
Assets, beginning of period		47,414			388			2,404,378			1,826,871
Assets, end of period	$	63,324		$	47,414		$	294,279		$	2,404,378

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

See accompanying notes.

30

Sub-Account
Global Bond Trust Series 0						Global Bond Trust Series 1						Global Real Estate Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (f)
$	34,656		$	337,166		$	34,756		$	369,675		$	148
	34,656			337,166			34,756			369,675			148
	—			—			27,117			22,345			6
	34,656			337,166			7,639			347,330			142
	—			—			—			—			—
	58,633			48,972			152,391			36,162			(20	)
	58,633			48,972			152,391			36,162			(20	)
	(485,599	)		44,803			(556,309	)		76,192			(1,385	)
	(392,310	)		430,941			(396,279	)		459,684			(1,263	)
	392,353			1,451,488			735,063			404,837			46
	(186,420	)		(86,704	)		(529,424	)		(580,111	)		(62	)
	(1	)		—			(6,570	)		15			—
	974,532			225,227			(791,618	)		(29,508	)		3,759
	1,180,464			1,590,011			(592,549	)		(204,767	)		3,743
	788,154			2,020,952			(988,828	)		254,917			2,480
	5,209,990			3,189,038			5,343,383			5,088,466			—
$	5,998,144		$	5,209,990		$	4,354,555		$	5,343,383		$	2,480

31

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Global Trust Series 0						Global Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	7,529		$	7,731		$	59,845		$	144,895
Total Investment Income		7,529			7,731			59,845			144,895
Expenses:
Mortality and expense risk		—			—			16,347			29,933
Net investment income (loss)		7,529			7,731			43,498			114,962
Realized gains (losses) on investments:
Capital gain distributions		—			30,550			—			352,080
Net realized gains (losses)		(79,881	)		10,784			(717,387	)		505,785
Realized gains (losses)		(79,881	)		41,334			(717,387	)		857,865
Unrealized appreciation (depreciation) during the period		(89,812	)		(58,391	)		(1,047,678	)		(933,430	)
Net increase (decrease) in assets from operations		(162,164	)		(9,326	)		(1,721,567	)		39,397
Changes from principal transactions:
Transfer of net premiums		160,238			324,459			300,054			525,229
Transfer on terminations		(37,388	)		(40,814	)		(362,486	)		(414,465	)
Transfer on policy loans		—			—			(50,596	)		(16,466	)
Net interfund transfers		(241,320	)		178,441			(2,326,846	)		398,617
Net increase (decrease) in assets from principal transactions		(118,470	)		462,086			(2,439,874	)		492,915
Total increase (decrease) in assets		(280,634	)		452,760			(4,161,441	)		532,312
Assets, beginning of period		554,586			101,826			6,258,053			5,725,741
Assets, end of period	$	273,952		$	554,586		$	2,096,612		$	6,258,053

(ag) Terminated as an investment option and funds transferred to Optimized All Cap Trust on April 28, 2008.

See accompanying notes.

32

Sub-Account
Growth & Income Trust Series 0						Health Sciences Trust Series 0						Health Sciences Trust Series 1
Year Ended Dec. 31/08 (ag)			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	7,718		$	29,863			—			—			—			—
	7,718			29,863			—			—			—			—
	—			—			—			—			23,986			22,083
	7,718			29,863			—			—			(23,986	)		(22,083	)
	—			154,320			8,430			68,445			127,861			913,224
	(261,903	)		102,143			(80,639	)		7,734			(979,520	)		174,141
	(261,903	)		256,463			(72,209	)		76,179			(851,659	)		1,087,365
	111,802			(245,541	)		(122,805	)		(4,363	)		(863,853	)		(281,318	)
	(142,383	)		40,785			(195,014	)		71,816			(1,739,498	)		783,964
	9,264			745,023			174,322			506,824			517,247			589,752
	(14,638	)		(57,611	)		(17,777	)		(7,357	)		(602,575	)		(1,093,263	)
	—			—			(1	)		—			(5,039	)		(162	)
	(1,527,793	)		(392,472	)		335,626			(374,834	)		650,182			(649,388	)
	(1,533,167	)		294,940			492,170			124,633			559,815			(1,153,061	)
	(1,675,550	)		335,725			297,156			196,449			(1,179,683	)		(369,097	)
	1,675,550			1,339,825			198,514			2,065			5,076,968			5,446,065
	—		$	1,675,550		$	495,670		$	198,514		$	3,897,285		$	5,076,968

33

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	High Yield Trust Series 0						High Yield Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	86,888		$	79,658		$	489,569		$	1,256,446
Total Investment Income		86,888			79,658			489,569			1,256,446
Expenses:
Mortality and expense risk		—			—			30,385			48,620
Net investment income (loss)		86,888			79,658			459,184			1,207,826
Realized gains (losses) on investments:
Capital gain distributions		—			—			—			—
Net realized gains (losses)		(168,125	)		(6,746	)		(1,401,708	)		94,917
Realized gains (losses)		(168,125	)		(6,746	)		(1,401,708	)		94,917
Unrealized appreciation (depreciation) during the period		(240,999	)		(77,644	)		(1,272,764	)		(1,169,726	)
Net increase (decrease) in assets from operations		(322,236	)		(4,732	)		(2,215,288	)		133,017
Changes from principal transactions:
Transfer of net premiums		159,846			336,761			344,372			871,319
Transfer on terminations		(85,661	)		(24,064	)		(1,066,548	)		(1,655,847	)
Transfer on policy loans		—			—			37,019			(27,463	)
Net interfund transfers		195,350			321,630			(1,646,371	)		(2,183,975	)
Net increase (decrease) in assets from principal transactions		269,535			634,327			(2,331,528	)		(2,995,966	)
Total increase (decrease) in assets		(52,701	)		629,595			(4,546,816	)		(2,862,949	)
Assets, beginning of period		761,889			132,294			8,286,870			11,149,819
Assets, end of period	$	709,188		$	761,889		$	3,740,054		$	8,286,870

See accompanying notes.

34

Sub-Account
Income & Value Trust Series 0						Income & Value Trust Series 1						International Core Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	4,822		$	6,612		$	445,537		$	779,998		$	14,208		$	4,124
	4,822			6,612			445,537			779,998			14,208			4,124
	—			—			92,225			123,584			—			—
	4,822			6,612			353,312			656,414			14,208			4,124
	3,544			15,516			333,032			1,367,856			2,813			24,428
	(28,305	)		1,762			(1,110,614	)		653,109			(68,208	)		3,566
	(24,761	)		17,278			(777,582	)		2,020,965			(65,395	)		27,994
	(36,403	)		(26,545	)		(4,742,168	)		(2,587,856	)		(69,313	)		(21,780	)
	(56,342	)		(2,655	)		(5,166,438	)		89,523			(120,500	)		10,338
	40,256			144,415			1,136,690			1,656,430			83,123			125,863
	(29,103	)		(9,057	)		(2,844,530	)		(2,620,412	)		(24,158	)		(5,213	)
	—			—			(48,525	)		(17,417	)		(138	)		(632	)
	(50,719	)		47,671			(674,040	)		(2,194,036	)		41,706			87,680
	(39,566	)		183,029			(2,430,405	)		(3,175,435	)		100,533			207,698
	(95,908	)		180,374			(7,596,843	)		(3,085,912	)		(19,967	)		218,036
	214,061			33,687			18,404,247			21,490,159			224,764			6,728
$	118,153		$	214,061		$	10,807,404		$	18,404,247		$	204,797		$	224,764

35

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	International Core Trust Series 1						International Equity Index Trust A Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	371,994		$	231,949		$	116,762		$	149,603
Total Investment Income		371,994			231,949			116,762			149,603
Expenses:
Mortality and expense risk		42,859			55,431			19,387			18,941
Net investment income (loss)		329,135			176,518			97,375			130,662
Realized gains (losses) on investments:
Capital gain distributions		116,627			1,374,346			34,426			181,589
Net realized gains (losses)		(781,739	)		624,280			(450,390	)		1,822,415
Realized gains (losses)		(665,112	)		1,998,626			(415,964	)		2,004,004
Unrealized appreciation (depreciation) during the period		(3,625,015	)		(1,113,233	)		(2,649,586	)		(1,614,875	)
Net increase (decrease) in assets from operations		(3,960,992	)		1,061,911			(2,968,175	)		519,791
Changes from principal transactions:
Transfer of net premiums		477,425			487,585			278,455			447,024
Transfer on terminations		(790,943	)		(1,019,670	)		(530,249	)		(804,801	)
Transfer on policy loans		12,764			(109,646	)		17,181			(65	)
Net interfund transfers		(1,266,802	)		447,339			2,725,506			(5,493,628	)
Net increase (decrease) in assets from principal transactions		(1,567,556	)		(194,392	)		2,490,893			(5,851,470	)
Total increase (decrease) in assets		(5,528,548	)		867,519			(477,282	)		(5,331,679	)
Assets, beginning of period		10,486,948			9,619,429			4,062,908			9,394,587
Assets, end of period	$	4,958,400		$	10,486,948		$	3,585,626		$	4,062,908

See accompanying notes.

36

Sub-Account
International Equity Index Trust B Series 0						International Opportunities Trust Series 0						International Opportunities Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	120,462		$	60,175		$	42,977		$	23,219		$	37,849		$	43,950
	120,462			60,175			42,977			23,219			37,849			43,950
	—			—			—			—			12,907			11,945
	120,462			60,175			42,977			23,219			24,942			32,005
	27,377			96,381			123,042			255,441			132,998			528,428
	(505,352	)		21,513			(398,997	)		21,612			(1,142,289	)		106,905
	(477,975	)		117,894			(275,955	)		277,053			(1,009,291	)		635,333
	(1,769,487	)		(82,617	)		(1,587,994	)		(118,291	)		(1,194,932	)		(148,494	)
	(2,127,000	)		95,452			(1,820,972	)		181,981			(2,179,281	)		518,844
	1,594,209			604,351			296,589			239,757			450,136			205,538
	(263,749	)		(69,879	)		(50,097	)		(14,727	)		(253,252	)		(236,347	)
	(129	)		(645	)		(1	)		—			17,145			(19	)
	2,248,905			820,659			1,632,299			1,440,278			464,699			653,485
	3,579,236			1,354,486			1,878,790			1,665,308			678,728			622,657
	1,452,236			1,449,938			57,818			1,847,289			(1,500,553	)		1,141,501
	1,652,270			202,332			2,039,663			192,374			3,296,001			2,154,500
$	3,104,506		$	1,652,270		$	2,097,481		$	2,039,663		$	1,795,448		$	3,296,001

37

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	International Small Cap Trust Series 0						International Small Cap Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	13,225		$	14,798		$	169,272		$	249,949
Total Investment Income		13,225			14,798			169,272			249,949
Expenses:
Mortality and expense risk		—			—			27,370			40,118
Net investment income (loss)		13,225			14,798			141,902			209,831
Realized gains (losses) on investments:
Capital gain distributions		5,521			127,205			92,346			2,412,778
Net realized gains (losses)		(213,551	)		(8,707	)		(2,569,719	)		1,021,133
Realized gains (losses)		(208,030	)		118,498			(2,477,373	)		3,433,911
Unrealized appreciation (depreciation) during the period		(125,153	)		(147,207	)		(1,985,032	)		(2,957,117	)
Net increase (decrease) in assets from operations		(319,958	)		(13,911	)		(4,320,503	)		686,625
Changes from principal transactions:
Transfer of net premiums		184,067			221,024			798,750			650,284
Transfer on terminations		(21,154	)		(13,799	)		(737,947	)		(691,551	)
Transfer on policy loans		(1	)		—			17,022			(712	)
Net interfund transfers		(219,485	)		473,144			(1,499,185	)		1,806,476
Net increase (decrease) in assets from principal transactions		(56,573	)		680,369			(1,421,360	)		1,764,497
Total increase (decrease) in assets		(376,531	)		666,458			(5,741,863	)		2,451,122
Assets, beginning of period		682,371			15,913			9,304,722			6,853,600
Assets, end of period	$	305,840		$	682,371		$	3,562,859		$	9,304,722

(g) Fund available in prior year but no activity.

See accompanying notes.

38

Sub-Account
International Value Trust Series 0						International Value Trust Series 1						Investment Quality Bond Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07 (g)
$	31,720		$	22,821		$	606,848		$	1,334,862		$	20,476		$	13,494
	31,720			22,821			606,848			1,334,862			20,476			13,494
	—			—			87,565			128,751			—			—
	31,720			22,821			519,283			1,206,111			20,476			13,494
	17,558			97,224			635,098			4,840,065			—			—
	(112,494	)		(87,222	)		(5,906,580	)		2,167,602			(16,585	)		(1,966	)
	(94,936	)		10,002			(5,271,482	)		7,007,667			(16,585	)		(1,966	)
	(315,609	)		(10,839	)		(6,425,766	)		(5,559,113	)		(14,739	)		(4,151	)
	(378,825	)		21,984			(11,177,965	)		2,654,665			(10,848	)		7,377
	247,040			934,942			1,611,605			3,035,928			108,452			86,200
	(108,664	)		(22,256	)		(6,407,498	)		(4,533,699	)		(33,975	)		(5,223	)
	(2	)		(1,532	)		277			(2,332	)		—			—
	721,157			(796,697	)		(4,803,200	)		2,926,990			(49,601	)		151,074
	859,531			114,457			(9,598,816	)		1,426,887			24,876			232,051
	480,706			136,441			(20,776,781	)		4,081,552			14,028			239,428
	138,707			2,266			32,163,348			28,081,796			239,428			—
$	619,413		$	138,707		$	11,386,567		$	32,163,348		$	253,456		$	239,428

39

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Investment Quality Bond Trust Series 1						Large Cap Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	436,179		$	725,658		$	1,441		$	302
Total Investment Income		436,179			725,658			1,441			302
Expenses:
Mortality and expense risk		39,157			46,152			—			—
Net investment income (loss)		397,022			679,506			1,441			302
Realized gains (losses) on investments:
Capital gain distributions		—			—			—			2,199
Net realized gains (losses)		(188,580	)		(22,757	)		(6,219	)		(551	)
Realized gains (losses)		(188,580	)		(22,757	)		(6,219	)		1,648
Unrealized appreciation (depreciation) during the period		(346,375	)		(206,802	)		(26,214	)		(3,511	)
Net increase (decrease) in assets from operations		(137,933	)		449,947			(30,992	)		(1,561	)
Changes from principal transactions:
Transfer of net premiums		440,697			442,710			19,734			17,363
Transfer on terminations		(1,024,407	)		(1,015,433	)		(1,953	)		(4,615	)
Transfer on policy loans		(149	)		(29,010	)		(3	)		(2,430	)
Net interfund transfers		(1,122,030	)		(479,239	)		37,365			36,546
Net increase (decrease) in assets from principal transactions		(1,705,889	)		(1,080,972	)		55,143			46,864
Total increase (decrease) in assets		(1,843,822	)		(631,025	)		24,151			45,303
Assets, beginning of period		8,095,296			8,726,321			46,121			818
Assets, end of period	$	6,251,474		$	8,095,296		$	70,272		$	46,121

See accompanying notes.

40

Sub-Account
Large Cap Trust Series 1						Large Cap Value Trust Series 0						Large Cap Value Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	60,664		$	28,531		$	8,727		$	1,199		$	106,359		$	97,818
	60,664			28,531			8,727			1,199			106,359			97,818
	20,407			18,144			—			—			25,167			39,553
	40,257			10,387			8,727			1,199			81,192			58,265
	—			226,024			—			6,421			—			612,030
	(345,781	)		(8,370	)		(31,194	)		511			(771,508	)		222,941
	(345,781	)		217,654			(31,194	)		6,932			(771,508	)		834,971
	(1,545,292	)		(497,632	)		(68,474	)		(9,532	)		(1,906,843	)		(527,200	)
	(1,850,816	)		(269,591	)		(90,941	)		(1,401	)		(2,597,159	)		366,036
	373,096			136,484			93,133			66,531			569,678			612,084
	(374,547	)		(318,431	)		(61,114	)		(6,437	)		(1,138,241	)		(240,840	)
	1,054			6,348			(2	)		(1,966	)		16,671			(5,286	)
	20,108			5,259,757			363,677			113,225			(995,058	)		3,161,645
	19,711			5,084,158			395,694			171,353			(1,546,950	)		3,527,603
	(1,831,105	)		4,814,567			304,753			169,952			(4,144,109	)		3,893,639
	4,850,940			36,373			173,316			3,364			9,458,751			5,565,112
$	3,019,835		$	4,850,940		$	478,069		$	173,316		$	5,314,642		$	9,458,751

41

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Lifestyle Aggressive Trust Series 0						Lifestyle Aggressive Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	42,867		$	42,836		$	155,172		$	887,780
Total Investment Income		42,867			42,836			155,172			887,780
Expenses:
Mortality and expense risk		—			—			44,751			52,940
Net investment income (loss)		42,867			42,836			110,421			834,840
Realized gains (losses) on investments:
Capital gain distributions		160,655			9,702			1,004,823			218,371
Net realized gains (losses)		(107,631	)		797			(1,859,170	)		(111,787	)
Realized gains (losses)		53,024			10,499			(854,347	)		106,584
Unrealized appreciation (depreciation) during the period		(1,007,372	)		(25,728	)		(3,569,085	)		(314,032	)
Net increase (decrease) in assets from operations		(911,481	)		27,607			(4,313,011	)		627,392
Changes from principal transactions:
Transfer of net premiums		907,511			479,497			345,348			426,239
Transfer on terminations		(103,762	)		(32,265	)		(350,783	)		(777,506	)
Transfer on policy loans		—			—			(667	)		(102	)
Net interfund transfers		1,148,891			230,842			(1,257,126	)		2,935,916
Net increase (decrease) in assets from principal transactions		1,952,640			678,074			(1,263,228	)		2,584,547
Total increase (decrease) in assets		1,041,159			705,681			(5,576,239	)		3,211,939
Assets, beginning of period		712,814			7,133			10,530,978			7,319,039
Assets, end of period	$	1,753,973		$	712,814		$	4,954,739		$	10,530,978

See accompanying notes.

42

Sub-Account
Lifestyle Balanced Trust Series 0						Lifestyle Balanced Trust Series 1						Lifestyle Conservative Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	123,077		$	158,970		$	373,924		$	1,095,980		$	16,284		$	2,150
	123,077			158,970			373,924			1,095,980			16,284			2,150
	—			—			60,419			78,893			—			—
	123,077			158,970			313,505			1,017,087			16,284			2,150
	113,776			4,661			505,439			21,458			546			77
	(414,181	)		23,738			(524,701	)		232,388			(4,162	)		(162	)
	(300,405	)		28,399			(19,262	)		253,846			(3,616	)		(85	)
	(960,860	)		(76,055	)		(4,415,987	)		(513,034	)		(20,243	)		(941	)
	(1,138,188	)		111,314			(4,121,744	)		757,899			(7,575	)		1,124
	1,293,251			1,135,396			461,831			573,391			98,256			27,187
	(401,351	)		(181,391	)		(880,448	)		(1,403,765	)		(11,803	)		(1,744	)
	—			—			(12,551	)		(18,174	)		—			—
	490,240			485,462			203,974			(3,133,406	)		232,822			4,471
	1,382,140			1,439,467			(227,194	)		(3,981,954	)		319,275			29,914
	243,952			1,550,781			(4,348,938	)		(3,224,055	)		311,700			31,038
	2,884,985			1,334,204			13,079,455			16,303,510			32,325			1,287
$	3,128,937		$	2,884,985		$	8,730,517		$	13,079,455		$	344,025		$	32,325

43

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Lifestyle Conservative Trust Series 1						Lifestyle Growth Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	166,377		$	308,309		$	150,390		$	185,856
Total Investment Income		166,377			308,309			150,390			185,856
Expenses:
Mortality and expense risk		22,696			15,544			—			—
Net investment income (loss)		143,681			292,765			150,390			185,856
Realized gains (losses) on investments:
Capital gain distributions		122,025			16,012			198,473			10,753
Net realized gains (losses)		(302,006	)		11,699			(419,653	)		45,828
Realized gains (losses)		(179,981	)		27,711			(221,180	)		56,581
Unrealized appreciation (depreciation) during the period		(643,601	)		(104,324	)		(1,890,829	)		(177,371	)
Net increase (decrease) in assets from operations		(679,901	)		216,152			(1,961,619	)		65,066
Changes from principal transactions:
Transfer of net premiums		302,445			176,486			2,297,734			633,937
Transfer on terminations		(133,579	)		(111,796	)		(688,540	)		(428,450	)
Transfer on policy loans		(131	)		(7,793	)		(56,539	)		—
Net interfund transfers		(2,836,453	)		5,403,124			857,964			2,122,448
Net increase (decrease) in assets from principal transactions		(2,667,718	)		5,460,021			2,410,619			2,327,935
Total increase (decrease) in assets		(3,347,619	)		5,676,173			449,000			2,393,001
Assets, beginning of period		6,915,236			1,239,063			3,850,878			1,457,877
Assets, end of period	$	3,567,617		$	6,915,236		$	4,299,878		$	3,850,878

See accompanying notes.

44

Sub-Account
Lifestyle Growth Trust Series 1						Lifestyle Moderate Trust Series 0						Lifestyle Moderate Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	331,099		$	961,732		$	58,876		$	30,282		$	83,687		$	205,822
	331,099			961,732			58,876			30,282			83,687			205,822
	68,334			73,735			—			—			10,646			16,177
	262,765			887,997			58,876			30,282			73,041			189,645
	636,456			60,991			7,811			586			43,424			3,286
	(147,566	)		374,985			(55,215	)		(869	)		(189,557	)		117,402
	488,890			435,976			(47,404	)		(283	)		(146,133	)		120,688
	(6,105,131	)		(565,035	)		(326,532	)		(14,621	)		(534,675	)		(182,124	)
	(5,353,476	)		758,938			(315,060	)		15,378			(607,767	)		128,209
	562,539			747,235			249,854			351,880			746,538			1,030,108
	(746,921	)		(1,181,457	)		(96,772	)		(13,475	)		(206,917	)		(923,062	)
	(47,981	)		(22,419	)		—			—			4,689			(4,570	)
	762,249			2,496,887			919,342			82,397			(722,820	)		(894,286	)
	529,886			2,040,246			1,072,424			420,802			(178,510	)		(791,810	)
	(4,823,590	)		2,799,184			757,364			436,180			(786,277	)		(663,601	)
	14,223,964			11,424,780			448,263			12,083			2,495,078			3,158,679
$	9,400,374		$	14,223,964		$	1,205,627		$	448,263		$	1,708,801		$	2,495,078

45

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Managed Trust Series 0						Mid Cap Index Trust Series 0
	Year Ended Dec. 31/08 (aa)			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	325		$	2,781		$	13,315		$	14,542
Total Investment Income		325			2,781			13,315			14,542
Expenses:
Mortality and expense risk		—			—			—			—
Net investment income (loss)		325			2,781			13,315			14,542
Realized gains (losses) on investments:
Capital gain distributions		339			1,456			29,163			132,974
Net realized gains (losses)		(16,447	)		1,189			(131,065	)		54,482
Realized gains (losses)		(16,108	)		2,645			(101,902	)		187,456
Unrealized appreciation (depreciation) during the period		4,019			(4,718	)		(427,921	)		(162,584	)
Net increase (decrease) in assets from operations		(11,764	)		708			(516,508	)		39,414
Changes from principal transactions:
Transfer of net premiums		44,691			36,974			452,505			606,100
Transfer on terminations		(39,139	)		(19,373	)		(106,769	)		(39,104	)
Transfer on policy loans		(12,774	)		—			—			—
Net interfund transfers		(52,759	)		(6,797	)		110,043			111,405
Net increase (decrease) in assets from principal transactions		(59,981	)		10,804			455,779			678,401
Total increase (decrease) in assets		(71,745	)		11,512			(60,729	)		717,815
Assets, beginning of period		71,745			60,233			1,067,496			349,681
Assets, end of period		—		$	71,745		$	1,006,767		$	1,067,496

(aa) Terminated as an investment option and funds transferred to Lifestyle Balanced Trust on November 10, 2008.

(g) Fund available in prior year but no activity.

(w) Reflects the period from commencement of operations on April 30, 2007 through December 31, 2007.

See accompanying notes.

46

Sub-Account
Mid Cap Index Trust Series 1						Mid Cap Intersection Trust Series 0			Mid Cap Intersection Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (g)			Year Ended Dec. 31/08		Year Ended Dec. 31/07 (w)
$	181,876		$	419,100		$	86		—			—
	181,876			419,100			86		—			—
	84,648			143,625			—		6			1
	97,228			275,475			86		(6	)		(1	)
	578,565			3,740,039			—		—			—
	(3,028,336	)		1,039,592			(413	)	(250	)		—
	(2,449,771	)		4,779,631			(413	)	(250	)		—
	(5,596,709	)		(2,592,269	)		(14,843	)	60			(60	)
	(7,949,252	)		2,462,837			(15,170	)	(196	)		(61	)
	393,934			498,245			8,430		652			132
	(1,167,360	)		(1,413,258	)		(636	)	(1,493	)		(48	)
	(325	)		160			—		1			—
	(6,539,104	)		19,233,839			36,049		—			1,013
	(7,312,855	)		18,318,986			43,843		(840	)		1,097
	(15,262,107	)		20,781,823			28,673		(1,036	)		1,036
	27,299,289			6,517,466			—		1,036			—
$	12,037,182		$	27,299,289		$	28,673		—		$	1,036

47

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Mid Cap Stock Trust Series 0						Mid Cap Stock Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution		—		$	50			—			—
Total Investment Income		—			50			—			—
Expenses:
Mortality and expense risk		—			—			56,538			67,361
Net investment income (loss)		—			50			(56,538	)		(67,361	)
Realized gains (losses) on investments:
Capital gain distributions		48,806			257,810			332,867			3,699,292
Net realized gains (losses)		(452,256	)		8,418			(2,299,470	)		1,041,514
Realized gains (losses)		(403,450	)		266,228			(1,966,603	)		4,740,806
Unrealized appreciation (depreciation) during the period		(728,431	)		(139,160	)		(5,189,302	)		(1,657,566	)
Net increase (decrease) in assets from operations		(1,131,881	)		127,118			(7,212,443	)		3,015,879
Changes from principal transactions:
Transfer of net premiums		364,593			226,930			814,729			655,520
Transfer on terminations		(161,062	)		(26,326	)		(1,670,118	)		(2,096,327	)
Transfer on policy loans		—			—			(28,835	)		214
Net interfund transfers		1,159,352			983,072			1,984,022			280,010
Net increase (decrease) in assets from principal transactions		1,362,883			1,183,676			1,099,798			(1,160,583	)
Total increase (decrease) in assets		231,002			1,310,794			(6,112,645	)		1,855,296
Assets, beginning of period		1,450,200			139,406			15,137,410			13,282,114
Assets, end of period	$	1,681,202		$	1,450,200		$	9,024,765		$	15,137,410

See accompanying notes.

48

Sub-Account
Mid Cap Value Trust Series 0						Mid Cap Value Trust Series 1						Mid Value Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	16,196		$	3,388		$	138,264		$	152,898		$	30,592		$	52,817
	16,196			3,388			138,264			152,898			30,592			52,817
	—			—			36,038			69,565			—			—
	16,196			3,388			102,226			83,333			30,592			52,817
	25,923			82,859			350,374			3,853,599			54,816			460,313
	(403,037	)		(15,601	)		(3,535,003	)		(293,156	)		(1,521,744	)		(45,760	)
	(377,114	)		67,258			(3,184,629	)		3,560,443			(1,466,928	)		414,553
	139,731			(83,969	)		(781,238	)		(3,231,042	)		502,549			(579,073	)
	(221,187	)		(13,323	)		(3,863,641	)		412,734			(933,787	)		(111,703	)
	187,886			298,352			511,710			948,590			254,364			1,065,837
	(105,284	)		(23,129	)		(1,956,587	)		(1,918,205	)		(40,440	)		(67,877	)
	—			—			6,205			(138,971	)		(2	)		—
	1,036,993			3,151			(200,094	)		(19,042,018	)		(471,464	)		556,592
	1,119,595			278,374			(1,638,766	)		(20,150,604	)		(257,542	)		1,554,552
	898,408			265,051			(5,502,407	)		(19,737,870	)		(1,191,329	)		1,442,849
	365,431			100,380			11,820,247			31,558,117			2,392,619			949,770
$	1,263,839		$	365,431		$	6,317,840		$	11,820,247		$	1,201,290		$	2,392,619

49

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Money Market Trust B Series 0						Money Market Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	595,697		$	583,956		$	1,541,266		$	3,884,106
Total Investment Income		595,697			583,956			1,541,266			3,884,106
Expenses:
Mortality and expense risk		—			—			461,520			456,724
Net investment income (loss)		595,697			583,956			1,079,746			3,427,382
Realized gains (losses) on investments:
Capital gain distributions		—			—			—			—
Net realized gains (losses)		—			—			—			—
Realized gains (losses)		—			—			—			—
Unrealized appreciation (depreciation) during the period		—			—			—			—
Net increase (decrease) in assets from operations		595,697			583,956			1,079,746			3,427,382
Changes from principal transactions:
Transfer of net premiums		88,775,784			33,558,643			4,779,155			3,463,604
Transfer on terminations		(2,288,470	)		(1,350,332	)		(12,971,809	)		(15,087,419	)
Transfer on policy loans		(3,470,116	)		(262,401	)		(701,889	)		(728,678	)
Net interfund transfers		(35,667,136	)		(16,755,046	)		25,295,542			6,062,492
Net increase (decrease) in assets from principal transactions		47,350,062			15,190,864			16,400,999			(6,290,001	)
Total increase (decrease) in assets		47,945,759			15,774,820			17,480,745			(2,862,619	)
Assets, beginning of period		22,707,880			6,933,060			83,833,691			86,696,310
Assets, end of period	$	70,653,639		$	22,707,880		$	101,314,436		$	83,833,691

(ae) Fund renamed on April 28, 2008. Previously known as Quantitative All Cap Trust.

See accompanying notes.

50

Sub-Account
Natural Resources Trust Series 0						Natural Resources Trust Series 1						Optimized All Cap Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (ae)			Year Ended Dec. 31/07
$	8,151		$	5,463		$	84,231		$	108,925		$	9,092		$	323
	8,151			5,463			84,231			108,925			9,092			323
	—			—			61,973			45,836			—			—
	8,151			5,463			22,258			63,089			9,092			323
	37,955			249,989			443,615			4,591,998			—			3,277
	(464,414	)		37,102			(7,238,796	)		291,564			(93,242	)		303
	(426,459	)		287,091			(6,795,181	)		4,883,562			(93,242	)		3,580
	(295,921	)		(165,980	)		(3,239,855	)		(1,618,857	)		(413,306	)		(3,726	)
	(714,229	)		126,574			(10,012,778	)		3,327,794			(497,456	)		177
	433,289			275,270			2,409,070			784,784			194,057			24,312
	(58,491	)		(14,309	)		(677,255	)		(833,187	)		(31,740	)		(3,653	)
	(119	)		(670	)		10,775			120			(1	)		—
	215,540			423,710			611,842			3,857,746			997,791			17,532
	590,219			684,001			2,354,432			3,809,463			1,160,107			38,191
	(124,010	)		810,575			(7,658,346	)		7,137,257			662,651			38,368
	814,432			3,857			14,108,807			6,971,550			40,413			2,045
$	690,422		$	814,432		$	6,450,461		$	14,108,807		$	703,064		$	40,413

51

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Optimized All Cap Trust Series 1						Optimized Value Trust Series 0
	Year Ended Dec. 31/08 (ae)			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (af)			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	706		$	85		$	945		$	615
Total Investment Income		706			85			945			615
Expenses:
Mortality and expense risk		329			131			—			—
Net investment income (loss)		377			(46	)		945			615
Realized gains (losses) on investments:
Capital gain distributions		—			11,198			—			2,126
Net realized gains (losses)		(10,406	)		159			(12,034	)		(156	)
Realized gains (losses)		(10,406	)		11,357			(12,034	)		1,970
Unrealized appreciation (depreciation) during the period		(30,216	)		(114	)		(8,404	)		(5,687	)
Net increase (decrease) in assets from operations		(40,245	)		11,197			(19,493	)		(3,102	)
Changes from principal transactions:
Transfer of net premiums		28,253			215			23,745			16,051
Transfer on terminations		(2,672	)		(16,520	)		(8,793	)		(765	)
Transfer on policy loans		16,575			91			—			—
Net interfund transfers		52,896			5,124			(16,516	)		32,731
Net increase (decrease) in assets from principal transactions		95,052			(11,090	)		(1,564	)		48,017
Total increase (decrease) in assets		54,807			107			(21,057	)		44,915
Assets, beginning of period		1,200			1,093			46,602			1,687
Assets, end of period	$	56,007		$	1,200		$	25,545		$	46,602

(ae) Fund renamed on April 28, 2008. Previously known as Quantitative All Cap Trust.

(af) Fund renamed on April 28, 2008. Previously known as Quantitative Value Trust.

See accompanying notes.

52

Sub-Account
Optimized Value Trust Series 1						Overseas Equity Trust Series 0						Pacific Rim Trust Series 0
Year Ended Dec. 31/08 (af)			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	47		$	11,034		$	53,837		$	63,262		$	11,334		$	6,276
	47			11,034			53,837			63,262			11,334			6,276
	505			2,681			—			—			—			—
	(458	)		8,353			53,837			63,262			11,334			6,276
	—			49,981			160,265			327,891			19,103			91,492
	(95,514	)		(34,306	)		(464,275	)		161,116			(294,898	)		831
	(95,514	)		15,675			(304,010	)		489,007			(275,795	)		92,323
	48,112			(48,656	)		(1,082,889	)		(297,702	)		(122,460	)		(86,722	)
	(47,860	)		(24,628	)		(1,333,062	)		254,567			(386,921	)		11,877
	1,616			83,720			354,797			1,196,195			265,653			240,101
	(143,490	)		(11,819	)		(112,294	)		(78,141	)		(37,438	)		(11,947	)
	—			—			—			—			(128	)		(118	)
	(348,827	)		472,016			(27,319	)		329,342			226,738			157,917
	(490,701	)		543,917			215,184			1,447,396			454,825			385,953
	(538,561	)		519,289			(1,117,878	)		1,701,963			67,904			397,830
	539,099			19,810			2,948,953			1,246,990			399,811			1,981
$	538		$	539,099		$	1,831,075		$	2,948,953		$	467,715		$	399,811

53

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Pacific Rim Trust Series 1						Quantitative Mid Cap Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (k)			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	113,465		$	147,775		$	39		$	374
Total Investment Income		113,465			147,775			39			374
Expenses:
Mortality and expense risk		32,487			40,155			—			—
Net investment income (loss)		80,978			107,620			39			374
Realized gains (losses) on investments:
Capital gain distributions		188,653			2,066,544			76			12,207
Net realized gains (losses)		(1,668,533	)		645,668			(16,720	)		(1,480	)
Realized gains (losses)		(1,479,880	)		2,712,212			(16,644	)		10,727
Unrealized appreciation (depreciation) during the period		(2,028,002	)		(2,139,360	)		14,838			(14,880	)
Net increase (decrease) in assets from operations		(3,426,904	)		680,472			(1,767	)		(3,779	)
Changes from principal transactions:
Transfer of net premiums		571,243			422,618			5,610			56,092
Transfer on terminations		(630,146	)		(818,362	)		(790	)		(2,487	)
Transfer on policy loans		37,397			(7,959	)		—			—
Net interfund transfers		102,405			(1,607,183	)		(72,850	)		19,111
Net increase (decrease) in assets from principal transactions		80,899			(2,010,886	)		(68,030	)		72,716
Total increase (decrease) in assets		(3,346,005	)		(1,330,414	)		(69,797	)		68,937
Assets, beginning of period		7,900,944			9,231,358			69,797			860
Assets, end of period	$	4,554,939		$	7,900,944			—		$	69,797

(k) Terminated as an investment option and funds transferred to Mid Cap Index Trust on April 28, 2008.

See accompanying notes.

54

Sub-Account
Quantitative Mid Cap Trust Series 1						Real Estate Securities Trust Series 0						Real Estate Securities Trust Series 1
Year Ended Dec. 31/08 (k)			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	18		$	204		$	179,348		$	178,017		$	670,704		$	898,271
	18			204			179,348			178,017			670,704			898,271
	66			990			—			—			114,257			192,346
	(48	)		(786	)		179,348			178,017			556,447			705,925
	42			23,243			72,992			3,248,799			309,753			17,021,101
	(9,751	)		(13,776	)		(4,843,758	)		(1,210,140	)		(8,785,091	)		250,965
	(9,709	)		9,467			(4,770,766	)		2,038,659			(8,475,338	)		17,272,066
	8,533			6,215			2,593,768			(3,171,369	)		(1,153,762	)		(23,275,772	)
	(1,224	)		14,896			(1,997,650	)		(954,693	)		(9,072,653	)		(5,297,781	)
	6,408			76,603			667,396			1,278,928			1,225,539			1,817,857
	(4,349	)		(92,405	)		(476,369	)		(147,493	)		(3,789,885	)		(4,126,676	)
	(1	)		(2	)		(3	)		(928	)		(80,878	)		(46,487	)
	(44,732	)		(430,103	)		339,776			(1,052,606	)		(2,817,895	)		(6,945,221	)
	(42,674	)		(445,907	)		530,800			77,901			(5,463,119	)		(9,300,527	)
	(43,898	)		(431,011	)		(1,466,850	)		(876,792	)		(14,535,772	)		(14,598,308	)
	43,898			474,909			4,958,485			5,835,277			27,305,782			41,904,090
	—		$	43,898		$	3,491,635		$	4,958,485		$	12,770,010		$	27,305,782

55

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Real Return Bond Trust Series 0						Real Return Bond Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	4,110		$	9,964		$	35,006		$	285,163
Total Investment Income		4,110			9,964			35,006			285,163
Expenses:
Mortality and expense risk		—			—			29,430			15,959
Net investment income (loss)		4,110			9,964			5,576			269,204
Realized gains (losses) on investments:
Capital gain distributions		17,148			—			148,162			—
Net realized gains (losses)		(34,641	)		523			(385,167	)		(9,362	)
Realized gains (losses)		(17,493	)		523			(237,005	)		(9,362	)
Unrealized appreciation (depreciation) during the period		(113,365	)		4,558			(785,132	)		231,840
Net increase (decrease) in assets from operations		(126,748	)		15,045			(1,016,561	)		491,682
Changes from principal transactions:
Transfer of net premiums		194,874			39,134			453,306			120,519
Transfer on terminations		(34,406	)		(13,754	)		(245,717	)		(287,613	)
Transfer on policy loans		—			—			(14,792	)		(125	)
Net interfund transfers		706,799			24,129			484,940			2,736,641
Net increase (decrease) in assets from principal transactions		867,267			49,509			677,737			2,569,422
Total increase (decrease) in assets		740,519			64,554			(338,824	)		3,061,104
Assets, beginning of period		159,791			95,237			5,575,602			2,514,498
Assets, end of period	$	900,310		$	159,791		$	5,236,778		$	5,575,602

See accompanying notes.

56

Sub-Account
Science & Technology Trust Series 0						Science & Technology Trust Series 1						Short-Term Bond Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
	—			—			—			—		$	6,460		$	6,128
	—			—			—			—			6,460			6,128
	—			—			39,564			62,642			—			—
	—			—			(39,564	)		(62,642	)		6,460			6,128
	—			—			—			—			—			—
	(223,586	)		28,332			(361,242	)		1,617,164			(13,931	)		(220	)
	(223,586	)		28,332			(361,242	)		1,617,164			(13,931	)		(220	)
	(109,840	)		25,876			(4,512,146	)		673,580			(2,373	)		(4,642	)
	(333,426	)		54,208			(4,912,952	)		2,228,102			(9,844	)		1,266
	239,383			281,845			596,828			536,530			18,830			41,863
	(40,060	)		(10,669	)		(948,897	)		(1,556,873	)		(7,408	)		(3,991	)
	—			—			37,258			(44,498	)		(2	)		(1,992	)
	173,435			120,260			(2,197,400	)		(5,260,157	)		(38,181	)		47,482
	372,758			391,436			(2,512,211	)		(6,324,998	)		(26,761	)		83,362
	39,332			445,644			(7,425,163	)		(4,096,896	)		(36,605	)		84,628
	446,630			986			12,527,168			16,624,064			109,311			24,683
$	485,962		$	446,630		$	5,102,005		$	12,527,168		$	72,706		$	109,311

57

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Small Cap Growth Trust Series 0						Small Cap Growth Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (ai)
Income:
Dividend income distribution		—			—			—
Total Investment Income		—			—			—
Expenses:
Mortality and expense risk		—			—			169
Net investment income (loss)		—			—			(169	)
Realized gains (losses) on investments:
Capital gain distributions		41,492			683,078			—
Net realized gains (losses)		(942,518	)		86,885			(14,959	)
Realized gains (losses)		(901,026	)		769,963			(14,959	)
Unrealized appreciation (depreciation) during the period		(593,608	)		(407,565	)		382
Net increase (decrease) in assets from operations		(1,494,634	)		362,398			(14,746	)
Changes from principal transactions:
Transfer of net premiums		477,181			1,216,024			2,345
Transfer on terminations		(102,007	)		(88,174	)		(1,965	)
Transfer on policy loans		(3	)		(512	)		—
Net interfund transfers		(13,702	)		95,953			82,898
Net increase (decrease) in assets from principal transactions		361,469			1,223,291			83,278
Total increase (decrease) in assets		(1,133,165	)		1,585,689			68,532
Assets, beginning of period		3,426,541			1,840,852			—
Assets, end of period	$	2,293,376		$	3,426,541		$	68,532

(ai) Reflects the period from commencement of operations on November 10, 2008 through December 31, 2008.

(g) Fund available in prior year but no activity.

See accompanying notes.

58

Sub-Account
Small Cap Index Trust Series 0						Small Cap Index Trust Series 1						Small Cap Opportunities Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07 (g)
$	7,095		$	5,985		$	53,749		$	112,925		$	851		$	625
	7,095			5,985			53,749			112,925			851			625
	—			—			20,216			33,311			—			—
	7,095			5,985			33,533			79,614			851			625
	4,213			43,399			45,538			869,567			1,021			2,324
	(117,695	)		1,705			(782,862	)		1,118,924			(14,724	)		(945	)
	(113,482	)		45,104			(737,324	)		1,988,491			(13,703	)		1,379
	(94,820	)		(62,269	)		(1,103,436	)		(2,242,690	)		(5,647	)		(5,559	)
	(201,207	)		(11,180	)		(1,807,227	)		(174,585	)		(18,499	)		(3,555	)
	188,199			186,297			401,504			522,462			23,270			35,927
	(81,757	)		(33,094	)		(1,071,308	)		(476,934	)		(3,482	)		(1,266	)
	—			—			676			536			—			—
	129,075			70,981			(789,058	)		(6,253,739	)		(17,368	)		11,090
	235,517			224,184			(1,458,186	)		(6,207,675	)		2,420			45,751
	34,310			213,004			(3,265,413	)		(6,382,260	)		(16,079	)		42,196
	391,430			178,426			6,241,315			12,623,575			42,196			—
$	425,740		$	391,430		$	2,975,902		$	6,241,315		$	26,117		$	42,196

59

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Small Cap Opportunities Trust Series 1						Small Cap Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (ab)			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	39,286		$	62,108		$	1			—
Total Investment Income		39,286			62,108			1			—
Expenses:
Mortality and expense risk		8,263			15,978			—			—
Net investment income (loss)		31,023			46,130			1			—
Realized gains (losses) on investments:
Capital gain distributions		71,800			210,888			129			3,049
Net realized gains (losses)		(735,076	)		336,149			(58,485	)		278
Realized gains (losses)		(663,276	)		547,037			(58,356	)		3,327
Unrealized appreciation (depreciation) during the period		(212,545	)		(926,825	)		3,773			(3,773	)
Net increase (decrease) in assets from operations		(844,798	)		(333,658	)		(54,582	)		(446	)
Changes from principal transactions:
Transfer of net premiums		239,870			137,892			4,051			1,303
Transfer on terminations		(377,386	)		(175,114	)		(7,241	)		(378	)
Transfer on policy loans		23,329			2,097			—			—
Net interfund transfers		(1,537,447	)		(3,640,829	)		40,388			16,905
Net increase (decrease) in assets from principal transactions		(1,651,634	)		(3,675,954	)		37,198			17,830
Total increase (decrease) in assets		(2,496,432	)		(4,009,612	)		(17,384	)		17,384
Assets, beginning of period		3,272,245			7,281,857			17,384			—
Assets, end of period	$	775,813		$	3,272,245			—		$	17,384

(ab) Terminated as an investment option and funds transferred to Small Cap Growth Trust on November 10, 2008.

(ac) Reflects the period from commencement of operations on November 12, 2007 through December 31, 2007.

See accompanying notes.

60

Sub-Account
Small Cap Trust Series 1						Small Cap Value Trust Series 0						Small Cap Value Trust Series 1
Year Ended Dec. 31/08 (ab)			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07 (ac)
$	30			—		$	45,198		$	40,058		$	7,381		$	35
	30			—			45,198			40,058			7,381			35
	1,025			539			—			—			1,740			152
	(995	)		(539	)		45,198			40,058			5,641			(117	)
	5,061			19,866			10,773			741,979			1,169			616
	(145,312	)		3,973			(1,347,859	)		(207,138	)		(113,213	)		(4,269	)
	(140,251	)		23,839			(1,337,086	)		534,841			(112,044	)		(3,653	)
	25,794			(26,369	)		294,389			(673,540	)		(93,464	)		(762	)
	(115,452	)		(3,069	)		(997,499	)		(98,641	)		(199,867	)		(4,532	)
	5,462			8,474			48,637			170,060			2,966			6,079
	(12,607	)		(23,770	)		(97,813	)		(85,509	)		(6,165	)		(866	)
	(31,985	)		—			(3	)		(492	)		—			—
	44,586			82,757			195,420			(882,339	)		776,343			8,520
	5,456			67,461			146,241			(798,280	)		773,144			13,733
	(109,996	)		64,392			(851,258	)		(896,921	)		573,277			9,201
	109,996			45,604			3,509,437			4,406,358			9,201			—
	—		$	109,996		$	2,658,179		$	3,509,437		$	582,478		$	9,201

61

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Small Company Trust Series 1						Small Company Value Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution		—			—		$	9,122		$	715
Total Investment Income		—			—			9,122			715
Expenses:
Mortality and expense risk		4,303			4,755			—			—
Net investment income (loss)		(4,303	)		(4,755	)		9,122			715
Realized gains (losses) on investments:
Capital gain distributions		1,544			216,457			19,504			85,389
Net realized gains (losses)		(62,270	)		2,515			(144,308	)		(10,869	)
Realized gains (losses)		(60,726	)		218,972			(124,804	)		74,520
Unrealized appreciation (depreciation) during the period		(573,000	)		(297,453	)		(207,919	)		(105,580	)
Net increase (decrease) in assets from operations		(638,029	)		(83,236	)		(323,601	)		(30,345	)
Changes from principal transactions:
Transfer of net premiums		189,728			39,113			341,086			412,169
Transfer on terminations		(31,118	)		(11,398	)		(107,864	)		(27,850	)
Transfer on policy loans		—			—			(1	)		(499	)
Net interfund transfers		470,712			(28,000	)		312,224			240,611
Net increase (decrease) in assets from principal transactions		629,322			(285	)		545,445			624,431
Total increase (decrease) in assets		(8,707	)		(83,521	)		221,844			594,086
Assets, beginning of period		1,234,056			1,317,577			668,711			74,625
Assets, end of period	$	1,225,349		$	1,234,056		$	890,555		$	668,711

(q) Terminated as an investment option and funds transferred to Small Cap Value Trust on November 12, 2007.

See accompanying notes.

62

Sub-Account
Small Company Value Trust Series 1						Special Value Trust Series 0			Special Value Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/07 (q)			Year Ended Dec. 31/07 (q)
$	92,840		$	33,600		$	1		$	9,525
	92,840			33,600			1			9,525
	59,205			98,045			—			1,521
	33,635			(64,445	)		1			8,004
	236,241			3,411,518			4			139,544
	(3,263,719	)		(55,087	)		(7	)		(111,644	)
	(3,027,478	)		3,356,431			(3	)		27,900
	(1,375,361	)		(3,513,168	)		—			(37,216	)
	(4,369,204	)		(221,182	)		(2	)		(1,312	)
	839,632			1,966,339			136			22,439
	(3,700,509	)		(3,439,628	)		(115	)		(7,423	)
	(80,497	)		(313,996	)		—			—
	(829,732	)		(4,042,523	)		(19	)		(384,302	)
	(3,771,106	)		(5,829,808	)		2			(369,286	)
	(8,140,310	)		(6,050,990	)		—			(370,598	)
	17,636,851			23,687,841			—			370,598
$	9,496,541		$	17,636,851			—			—

63

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Strategic Bond Trust Series 0						Strategic Bond Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	7,167		$	8,978		$	169,582		$	451,804
Total Investment Income		7,167			8,978			169,582			451,804
Expenses:
Mortality and expense risk		—			—			16,945			24,849
Net investment income (loss)		7,167			8,978			152,637			426,955
Realized gains (losses) on investments:
Capital gain distributions		—			—			—			—
Net realized gains (losses)		(8,528	)		(2,957	)		(505,882	)		(27,204	)
Realized gains (losses)		(8,528	)		(2,957	)		(505,882	)		(27,204	)
Unrealized appreciation (depreciation) during the period		(17,649	)		(5,901	)		(196,210	)		(430,287	)
Net increase (decrease) in assets from operations		(19,010	)		120			(549,455	)		(30,536	)
Changes from principal transactions:
Transfer of net premiums		26,523			83,012			378,433			610,024
Transfer on terminations		(6,952	)		(5,821	)		(661,147	)		(1,097,323	)
Transfer on policy loans		—			—			8,159			(59,741	)
Net interfund transfers		(53,087	)		64,809			(1,893,647	)		(484,174	)
Net increase (decrease) in assets from principal transactions		(33,516	)		142,000			(2,168,202	)		(1,031,214	)
Total increase (decrease) in assets		(52,526	)		142,120			(2,717,657	)		(1,061,750	)
Assets, beginning of period		142,120			—			4,397,774			5,459,524
Assets, end of period	$	89,594		$	142,120		$	1,680,117		$	4,397,774

(g) Fund available in prior year but no activity.

(p) Terminated as an investment option and funds transferred to Large Cap Trust on April 30, 2007.

See accompanying notes.

64

Sub-Account
Strategic Income Trust Series 0						Strategic Income Trust Series 1						Strategic Opportunities Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07 (g)			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/07 (p)
$	1,623		$	295		$	130,650		$	5,058		$	874
	1,623			295			130,650			5,058			874
	—			—			4,128			1,643			—
	1,623			295			126,522			3,415			874
	—			—			—			—			—
	(116	)		45			(97,785	)		10,407			2,575
	(116	)		45			(97,785	)		10,407			2,575
	(2,627	)		262			(85,661	)		4,318			(8	)
	(1,120	)		602			(56,924	)		18,140			3,441
	6,163			—			225,946			134,818			155,022
	(5,501	)		(2,577	)		(50,626	)		(17,993	)		(419	)
	—			—			(14	)		(14	)		—
	2,006			16,116			787,477			(401,390	)		(158,150	)
	2,668			13,539			962,783			(284,579	)		(3,547	)
	1,548			14,141			905,859			(266,439	)		(106	)
	14,141			—			245,858			512,297			106
$	15,689		$	14,141		$	1,151,717		$	245,858			—

65

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Strategic Opportunities Trust Series 1			Total Bond Market Trust B Series 0
	Year Ended Dec. 31/07 (p)			Year Ended Dec. 31/08			Year Ended Dec. 31/07 (j)
Income:
Dividend income distribution	$	38,911		$	257,898		$	243,371
Total Investment Income		38,911			257,898			243,371
Expenses:
Mortality and expense risk		9,083			—			—
Net investment income (loss)		29,828			257,898			243,371
Realized gains (losses) on investments:
Capital gain distributions		—			—			—
Net realized gains (losses)		1,279,194			(44,869	)		42,627
Realized gains (losses)		1,279,194			(44,869	)		42,627
Unrealized appreciation (depreciation) during the period		(982,728	)		46,238			(130,360	)
Net increase (decrease) in assets from operations		326,294			259,267			155,638
Changes from principal transactions:
Transfer of net premiums		216,413			83,271			2,053,557
Transfer on terminations		(327,439	)		(189,110	)		(60,872	)
Transfer on policy loans		(7,192	)		—			—
Net interfund transfers		(5,146,934	)		2,229,609			(1,127,631	)
Net increase (decrease) in assets from principal transactions		(5,265,152	)		2,123,770			865,054
Total increase (decrease) in assets		(4,938,858	)		2,383,037			1,020,692
Assets, beginning of period		4,938,858			2,658,477			1,637,785
Assets, end of period		—		$	5,041,514		$	2,658,477

(p) Terminated as an investment option and funds transferred to Large Cap Trust on April 30, 2007.

(j) Renamed on October 1, 2007. Formerly known as Bond Index Trust B.

See accompanying notes.

66

Sub-Account
Total Return Trust Series 0						Total Return Trust Series 1						Total Stock Market Index Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	127,249		$	53,108		$	1,886,321		$	2,494,407		$	6,201		$	5,207
	127,249			53,108			1,886,321			2,494,407			6,201			5,207
	—			—			172,156			131,334			—			—
	127,249			53,108			1,714,165			2,363,073			6,201			5,207
	23,478			—			350,596			—			1,246			10,866
	(11,764	)		2,258			21,475			70,807			(259,800	)		1,848
	11,714			2,258			372,071			70,807			(258,554	)		12,714
	(105,302	)		275			(1,525,099	)		50,338			(58,713	)		(14,907	)
	33,661			55,641			561,137			2,484,218			(311,066	)		3,014
	566,734			250,228			1,275,944			1,868,139			232,821			136,058
	(321,082	)		(66,345	)		(10,167,748	)		(3,682,683	)		(43,195	)		(7,830	)
	—			—			(35,847	)		(21,718	)		(3	)		—
	1,683,178			264,424			17,250,314			5,167,795			(15,392	)		203,811
	1,928,830			448,307			8,322,663			3,331,533			174,231			332,039
	1,962,491			503,948			8,883,800			5,815,751			(136,835	)		335,053
	894,516			390,568			34,656,094			28,840,343			336,768			1,715
$	2,857,007		$	894,516		$	43,539,894		$	34,656,094		$	199,933		$	336,768

67

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	Total Stock Market Index Trust Series 1						U.S. Core Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (ad)			Year Ended Dec. 31/07 (g)
Income:
Dividend income distribution	$	34,304		$	65,269		$	9,111		$	12,197
Total Investment Income		34,304			65,269			9,111			12,197
Expenses:
Mortality and expense risk		9,616			13,158			—			—
Net investment income (loss)		24,688			52,111			9,111			12,197
Realized gains (losses) on investments:
Capital gain distributions		3,325			127,940			6,668			60,746
Net realized gains (losses)		(98,422	)		170,840			(333,780	)		(643	)
Realized gains (losses)		(95,097	)		298,780			(327,112	)		60,103
Unrealized appreciation (depreciation) during the period		(957,026	)		(189,260	)		60,013			(60,013	)
Net increase (decrease) in assets from operations		(1,027,435	)		161,631			(257,988	)		12,287
Changes from principal transactions:
Transfer of net premiums		266,178			218,022			157,044			321,185
Transfer on terminations		(195,619	)		(320,985	)		(15,615	)		(13,281	)
Transfer on policy loans		—			—			—			—
Net interfund transfers		(1,095,866	)		775,711			(637,721	)		434,089
Net increase (decrease) in assets from principal transactions		(1,025,307	)		672,748			(496,292	)		741,993
Total increase (decrease) in assets		(2,052,742	)		834,379			(754,280	)		754,280
Assets, beginning of period		3,702,220			2,867,841			754,280			—
Assets, end of period	$	1,649,478		$	3,702,220			—		$	754,280

(ad) Terminated as an investment option and funds transferred to Fundamental Value Trust on November 10, 2008.

(g) Fund available in prior year but no activity.

(x) Terminated as an investment option and funds transferred to Blue Chip Growth Trust on April 28, 2008.

See accompanying notes.

68

Sub-Account
U.S. Core Trust Series 1						U.S. Global Leaders Growth Trust Series 0						U.S. Global Leaders Growth Trust Series 1
Year Ended Dec. 31/08 (ad)			Year Ended Dec. 31/07			Year Ended Dec. 31/08 (x)			Year Ended Dec. 31/07 (g)			Year Ended Dec. 31/08 (x)			Year Ended Dec. 31/07
$	79,788		$	182,489		$	4		$	21		$	2,346		$	7,972
	79,788			182,489			4			21			2,346			7,972
	28,643			48,327			—			—			835			2,472
	51,145			134,162			4			21			1,511			5,500
	60,010			730,959			162			—			84,476			—
	(2,893,003	)		(19,791	)		(6	)		43			(90,007	)		22,653
	(2,832,993	)		711,168			156			43			(5,531	)		22,653
	471,380			(652,744	)		(42	)		42			(13,318	)		(19,163	)
	(2,310,468	)		192,586			118			106			(17,338	)		8,990
	421,611			778,531			48			1,995			11,922			132,935
	(683,542	)		(1,428,296	)		(14	)		(40	)		(4,336	)		(123,012	)
	31,959			(56,814	)		—			—			32			114
	(5,039,383	)		(8,390,669	)		(1,409	)		(804	)		(643,245	)		(56,223	)
	(5,269,355	)		(9,097,248	)		(1,375	)		1,151			(635,627	)		(46,186	)
	(7,579,823	)		(8,904,662	)		(1,257	)		1,257			(652,965	)		(37,196	)
	7,579,823			16,484,485			1,257			—			652,965			690,161
	—		$	7,579,823			—		$	1,257			—		$	652,965

69

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	U.S. Government Securities Trust Series 0						U.S. Government Securities Trust Series 1
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	9,916		$	7,242		$	281,445		$	881,826
Total Investment Income		9,916			7,242			281,445			881,826
Expenses:
Mortality and expense risk		—			—			30,234			39,888
Net investment income (loss)		9,916			7,242			251,211			841,938
Realized gains (losses) on investments:
Capital gain distributions		—			—			—			—
Net realized gains (losses)		(13,654	)		(2,455	)		(484,709	)		(102,600	)
Realized gains (losses)		(13,654	)		(2,455	)		(484,709	)		(102,600	)
Unrealized appreciation (depreciation) during the period		(2,587	)		(2,439	)		36,461			(486,293	)
Net increase (decrease) in assets from operations		(6,325	)		2,348			(197,037	)		253,045
Changes from principal transactions:
Transfer of net premiums		141,627			80,763			480,121			546,939
Transfer on terminations		(5,833	)		(2,800	)		(3,844,754	)		(2,113,261	)
Transfer on policy loans		—			—			15,059			(698	)
Net interfund transfers		(34,952	)		18,205			1,619,169			(335,236	)
Net increase (decrease) in assets from principal transactions		100,842			96,168			(1,730,405	)		(1,902,256	)
Total increase (decrease) in assets		94,517			98,516			(1,927,442	)		(1,649,211	)
Assets, beginning of period		98,886			370			9,452,949			11,102,160
Assets, end of period	$	193,403		$	98,886		$	7,525,507		$	9,452,949

See accompanying notes.

70

Sub-Account
U.S. High Yield Bond Trust Series 0						U.S. High Yield Bond Trust Series 1						U.S. Large Cap Trust Series 0
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	9,797		$	1,066		$	1,223		$	15,874		$	1,737		$	1,606
	9,797			1,066			1,223			15,874			1,737			1,606
	—			—			581			931			—			—
	9,797			1,066			642			14,943			1,737			1,606
	—			—			—			—			—			—
	(3,880	)		90			(107,194	)		3,113			(23,318	)		6,822
	(3,880	)		90			(107,194	)		3,113			(23,318	)		6,822
	(21,122	)		(972	)		9,418			(15,897	)		(15,907	)		(6,109	)
	(15,205	)		184			(97,134	)		2,159			(37,488	)		2,319
	35,682			7,596			619			46,735			28,187			148,123
	(4,526	)		(795	)		(66,458	)		(5,715	)		(2,366	)		(3,415	)
	—			—			—			—			—			—
	142,603			1,773			(84,986	)		219,288			(58,473	)		(28,799	)
	173,759			8,574			(150,825	)		260,308			(32,652	)		115,909
	158,554			8,758			(247,959	)		262,467			(70,140	)		118,228
	13,322			4,564			265,248			2,781			118,228			—
$	171,876		$	13,322		$	17,289		$	265,248		$	48,088		$	118,228

71

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Sub-Account
	U.S. Large Cap Trust Series 1						Utilities Trust Series 0
	Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	305,445		$	248,755		$	25,537		$	4,916
Total Investment Income		305,445			248,755			25,537			4,916
Expenses:
Mortality and expense risk		82,164			127,591			—			—
Net investment income (loss)		223,281			121,164			25,537			4,916
Realized gains (losses) on investments:
Capital gain distributions		—			—			19,690			61,616
Net realized gains (losses)		(832,591	)		1,287,072			(89,305	)		4,312
Realized gains (losses)		(832,591	)		1,287,072			(69,615	)		65,928
Unrealized appreciation (depreciation) during the period		(6,113,582	)		(1,464,005	)		(355,400	)		(31,118	)
Net increase (decrease) in assets from operations		(6,722,892	)		(55,769	)		(399,478	)		39,726
Changes from principal transactions:
Transfer of net premiums		588,505			1,224,784			152,209			154,149
Transfer on terminations		(3,265,163	)		(3,042,908	)		(61,964	)		(10,200	)
Transfer on policy loans		69,450			(59,360	)		(3	)		(1,581	)
Net interfund transfers		(2,584,051	)		(259,278	)		620,933			162,170
Net increase (decrease) in assets from principal transactions		(5,191,259	)		(2,136,762	)		711,175			304,538
Total increase (decrease) in assets		(11,914,151	)		(2,192,531	)		311,697			344,264
Assets, beginning of period		20,972,000			23,164,531			346,525			2,261
Assets, end of period	$	9,057,849		$	20,972,000		$	658,222		$	346,525

(g) Fund available in prior year but no activity.

See accompanying notes.

72

Sub-Account
Utilities Trust Series 1						Value Trust Series 0						Value Trust Series 1
Year Ended Dec. 31/08			Year Ended Dec. 31/07			Year Ended Dec. 31/08			Year Ended Dec. 31/07 (g)			Year Ended Dec. 31/08			Year Ended Dec. 31/07
$	147,009		$	87,254		$	6,226		$	4,381		$	85,716		$	169,823
	147,009			87,254			6,226			4,381			85,716			169,823
	20,594			18,211			—			—			36,137			57,649
	126,415			69,043			6,226			4,381			49,579			112,174
	170,522			1,080,333			21,003			110,417			222,090			3,705,196
	(488,003	)		205,830			(370,722	)		(2,858	)		(2,499,733	)		365,053
	(317,481	)		1,286,163			(349,719	)		107,559			(2,277,643	)		4,070,249
	(1,937,882	)		(455,268	)		(48,813	)		(107,770	)		(1,771,616	)		(3,290,492	)
	(2,128,948	)		899,938			(392,306	)		4,170			(3,999,680	)		891,931
	588,555			396,297			294,318			124,878			715,901			1,056,537
	(335,518	)		(349,216	)		(46,768	)		(6,040	)		(1,656,436	)		(1,705,732	)
	6,140			733			—			(507	)		22,101			(126,168	)
	162,059			1,921,060			(57,785	)		392,281			(1,594,764	)		3,572,263
	421,236			1,968,874			189,765			510,612			(2,513,198	)		2,796,900
	(1,707,712	)		2,868,812			(202,541	)		514,782			(6,512,878	)		3,688,831
	5,302,683			2,433,871			514,782			—			12,100,633			8,411,802
$	3,594,971		$	5,302,683		$	312,241		$	514,782		$	5,587,755		$	12,100,633

73

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Statements of Operations and Changes in Contract Owners’ Equity

(continued)

	Total
	Year Ended Dec. 31/08			Year Ended Dec. 31/07
Income:
Dividend income distribution	$	16,554,325		$	27,241,180
Total Investment Income		16,554,325			27,241,180
Expenses:
Mortality and expense risk		2,886,436			3,667,954
Net investment income (loss)		13,667,889			23,573,226
Realized gains (losses) on investments:
Capital gain distributions		11,440,432			90,919,821
Net realized gains (losses)		(104,152,880	)		31,919,557
Realized gains (losses)		(92,712,448	)		122,839,378
Unrealized appreciation (depreciation) during the period		(177,855,591	)		(98,575,061	)
Net increase (decrease) in assets from operations		(256,900,150	)		47,837,543
Changes from principal transactions:
Transfer of net premiums		148,569,519			105,541,953
Transfer on terminations		(109,282,384	)		(96,161,286	)
Transfer on policy loans		(4,538,168	)		(2,592,667	)
Net interfund transfers		(10,794,155	)		(4,200,707	)
Net increase (decrease) in assets from principal transactions		23,954,812			2,587,293
Total increase (decrease) in assets		(232,945,338	)		50,424,836
Assets, beginning of period		861,735,968			811,311,132
Assets, end of period	$	628,790,630		$	861,735,968

See accompanying notes.

74

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements

December 31, 2008

1. Organization

John Hancock Life Insurance Company (U.S.A.) Separate Account N (the “Account”) is a separate account administered and sponsored by John Hancock Life Insurance Company (U.S.A.) (“JHUSA” or the “Company”). The Account operates as a Unit Investment Trust registered under the Investment Company Act of 1940, as amended (the “Act”) and has 135 active investment sub-accounts that invest in shares of a particular John Hancock Trust (the “Trust”) portfolio and 2 sub-account that invests in shares of other outside investment trusts. The Trust is registered under the Act as an open-end management investment company, commonly known as a mutual fund, which does not transact with the general public. Instead, the Trust deals primarily with insurance companies by providing the investment medium for variable contracts. The Account is a funding vehicle for the allocation of net premiums under variable universal life insurance contracts (the “Contracts”) issued by the Company.

The Company is a stock life insurance company incorporated under the laws of Michigan in 1979. The Company is a wholly owned subsidiary of Manulife Financial Corporation (“MFC”), a Canadian based publicly traded life insurance company.

The Company is required to maintain assets in the Account with a total fair value at least equal to the reserves and other liabilities relating to the variable benefits under all Contracts participating in the Account. These assets may not be charged with liabilities which arise from any other business the Company conducts. However, all obligations under the Contracts are general corporate obligations of the Company.

Additional assets are held in the Company’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.

Each sub-account that invests in Portfolios of the John Hancock Trust may offer two classes of units to fund the Contracts issued by the Company. These classes, Series 1 and Series 0 represent an interest in the same Trust portfolio but in different share classes of that portfolio. Series 1 represents interests in Series 1 shares of the portfolio and Series 0 represents interests in Series NAV shares of the Trust’s portfolio. Series 1 and Series NAV shares differ in the level of 12b-1 fees and other expenses assessed against the portfolio’s assets.

75

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

The following sub-accounts of the Account were commenced as investment options:

New Fund	Effective Date
American Asset Allocation Trust	April 28, 2008
Capital Appreciation Value Trust	April 28, 2008
Core Allocation Plus Trust	April 28, 2008
Disciplined Diversification Trust	April 28, 2008
Franklin Templeton Founding Allocation Trust	April 28, 2008
Global Real Estate Trust	April 28, 2008
Index Allocation Trust	April 28, 2008
Small Cap Growth Trust Series 1	November 10, 2008

As the result of portfolio changes, the following sub-accounts of the Account were renamed as follows:

Previous Name	New Name	Effective Date
Quantitative All Cap Trust	Optimized All Cap Trust	April 28, 2008
Quantitative Value Trust	Optimized Value Trust	April 28, 2008

The following sub-accounts of the Account were terminated as investment options and the funds were transferred to existing sub-account funds as follows:

Terminated	Transferred To	Effective Date
Dynamic Growth Trust	Mid Cap Stock Trust	April 28, 2008
Emerging Growth Trust	Small Cap Growth Trust	November 10, 2008
Growth & Income Trust	Optimized All Cap Trust	April 28, 2008
Managed Trust	Lifestyle Balanced Trust	November 10, 2008
Quantitative Mid Cap Trust	Mid Cap Index Trust	April 28, 2008
Small Cap Trust	Small Cap Growth Trust	November 10, 2008
U.S. Core Trust	Fundamental Value Trust	November 10, 2008
U.S. Global Leaders Growth Trust	Blue Chip Growth Trust	April 28, 2008

Where a fund has two series, the changes noted above apply to both Series 0 and Series 1 except for Small Cap Growth Trust Series 1 which was added in 2008 (Small Cap Growth Trust Series 0 was added in 2005).

2. Significant Accounting Policies

Investments of each sub-account consist of shares in the respective portfolios of the Trust. These shares are carried at fair value which is calculated using the fair value of the investment securities underlying each Trust portfolio. Transactions are recorded on the trade date. Income from dividends is recorded on the ex-dividend date. Realized gains and losses on the sale of investments are computed on the basis of the specifically identified cost of the investment sold.

76

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

In addition to the Account, a contract holder may also allocate funds to the fixed account contained within the Company’s general account. Because of exemptive and exclusionary provisions, interests in the fixed account have not been registered under the Securities Act of 1933 and the Company’s general account has not been registered as an investment company under the Act. Net interfund transfers include interfund transfers between separate and general accounts.

The operations of the Account are included in the federal income tax return of the Company, which is taxed as a life insurance company under the provisions of the Internal Revenue Code (the “Code”). Under the current provisions of the Code, the Company does not expect to incur federal income taxes on the earnings of the Account to the extent the earnings are credited under the Contracts. Based on this, no charge is being made currently to the Account for federal income taxes. The Company will periodically reassess this position taking into account changes in the tax law. Such a charge may be made in future years for any federal income taxes that would be attributable to the Contracts.

Effective January 1, 2008, the Company adopted SFAS 157, Fair Value Measurements (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; that is, an exit value. An exit value is not a forced liquidation or distressed sale.

Following SFAS 157 guidance, the Account has categorized its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Account’s valuation techniques. A level is assigned to each fair value measurement based on the lowest level input significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows:

• Level 1 – Fair value measurements that reflect unadjusted, quoted prices in active markets for identical assets and liabilities that the Account has the ability to access at the measurement date.

• Level 2 – Fair value measurements using inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.

• Level 3 – Fair value measurements using significant non-market observable inputs.

For all investments in Level 1, 2 or 3, fair value is typically the net asset value (“NAV”) of the underlying investment fund which represents the value at which each sub-account can redeem its investments.

The following table presents the Account’s assets that are measured at fair value on a recurring basis by SFAS 157 fair value hierarchy level, as of December 31, 2008.

	Mutual Funds
Level 1	$	628,790,630
Level 2		—
Level 3		—
	$	628,790,630

77

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

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 amounts reported herein. Actual results could differ from those estimates.

3. Mortality and Expense Risks Charge

The Company deducts from the assets of the Account a daily charge equivalent to annual rates between 0% and 0.70% of the average net value of the Account’s assets for the assumption of mortality and expense risks.

4. Contract Charges

The Company deducts certain charges from gross premiums before placing the remaining net premiums in the sub-account. In the event of a surrender by the contract holder, surrender charges may be levied by the Company against the contract value at the time of termination to cover sales and administrative expenses associated with underwriting and issuing the Contract. Additionally, each month a deduction consisting of an administration charge, a charge for cost of insurance and charges for supplementary benefits is deducted from the contract value. Contract charges are paid through the redemption of sub-account units and are reflected as terminations.

5. Purchases and Sales of Investments

The cost of purchases and proceeds from sales of investments for the year ended December 31, 2008 were as follows:

	Purchases		Sales
Sub-accounts:
500 Index Trust B Series 0	$	14,985,193	$	10,261,400
500 Index Trust Series 1		7,301,419		13,212,781
Active Bond Trust Series 0		639,151		582,829
Active Bond Trust Series 1		2,299,748		3,191,518
All Cap Core Trust Series 0		1,591,106		1,460,261
All Cap Core Trust Series 1		2,204,422		4,605,047
All Cap Growth Trust Series 0		60,713		17,419
All Cap Growth Trust Series 1		1,441,124		1,456,108
All Cap Value Trust Series 0		239,281		42,668
All Cap Value Trust Series 1		1,132,155		2,620,935
American Asset Allocation Trust Series 1		238,841		3,127
American Blue Chip Income and Growth Trust Series 1		3,503,591		2,715,292
American Bond Trust Series 1		3,210,213		5,022,371
American Growth Trust Series 1		19,924,386		10,226,846
American Growth-Income Trust Series 1		4,392,214		4,982,981
American International Trust Series 1		16,803,598		19,327,467
Blue Chip Growth Trust Series 0		1,718,141		839,150
Blue Chip Growth Trust Series 1		8,226,901		13,403,961
Capital Appreciation Trust Series 0		1,018,158		864,584
Capital Appreciation Trust Series 1		3,031,951		3,554,242
Capital Appreciation Value Trust Series 1		2,956		107

78

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

	Purchases		Sales
Sub-accounts:
Classic Value Trust Series 0	$	18,551	$	8,578
Classic Value Trust Series 1		41,748		577,028
Core Bond Trust Series 0		6,038		2,862
Core Bond Trust Series 1		21,443		98
Core Equity Trust Series 0		49,440		6,269
Core Equity Trust Series 1		159,741		375,149
Disciplined Diversification Trust Series 1		55,750		55,180
Dynamic Growth Trust Series 0		18,956		143,012
Dynamic Growth Trust Series 1		195,741		2,282,473
Emerging Growth Trust Series 0		201,843		187,614
Emerging Growth Trust Series 1		750,410		1,193,966
Emerging Markets Value Trust Series 0		110,543		754
Emerging Markets Value Trust Series 1		428,455		44,480
Emerging Small Company Trust Series 0		141,002		159,078
Emerging Small Company Trust Series 1		3,205,558		7,703,392
Equity-Income Trust Series 0		7,788,301		5,141,850
Equity-Income Trust Series 1		9,260,138		14,761,377
Financial Services Trust Series 0		283,617		97,392
Financial Services Trust Series 1		3,381,515		1,781,991
Franklin Templeton Founding Allocation Trust Series 0		157,451		1,012
Fundamental Value Trust Series 0		794,175		109,573
Fundamental Value Trust Series 1		5,873,273		1,712,550
Global Allocation Trust Series 0		112,941		61,678
Global Allocation Trust Series 1		900,543		2,718,952
Global Bond Trust Series 0		4,429,746		3,214,625
Global Bond Trust Series 1		6,083,177		6,668,087
Global Real Estate Trust Series 1		3,954		68
Global Trust Series 0		294,626		405,567
Global Trust Series 1		1,253,500		3,649,876
Growth & Income Trust Series 0		91,128		1,616,577
Health Sciences Trust Series 0		1,159,455		658,854
Health Sciences Trust Series 1		5,207,708		4,544,018
High Yield Trust Series 0		857,360		500,937
High Yield Trust Series 1		2,722,314		4,594,659
Income & Value Trust Series 0		65,531		96,731
Income & Value Trust Series 1		3,937,563		5,681,624
International Core Trust Series 0		306,352		188,797
International Core Trust Series 1		2,796,688		3,918,482
International Equity Index Trust A Series 1		5,066,929		2,444,234
International Equity Index Trust B Series 0		6,269,666		2,542,592
International Opportunities Trust Series 0		3,343,435		1,298,626
International Opportunities Trust Series 1		3,314,345		2,477,676
International Small Cap Trust Series 0		304,437		342,265
International Small Cap Trust Series 1		3,533,434		4,720,546
International Value Trust Series 0		1,288,803		379,994
International Value Trust Series 1		10,082,831		18,527,265
Investment Quality Bond Trust Series 0		267,602		222,249
Investment Quality Bond Trust Series 1		1,661,382		2,970,249
Large Cap Trust Series 0		83,840		27,255
Large Cap Trust Series 1		1,359,704		1,299,736
Large Cap Value Trust Series 0		518,264		113,844

79

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

	Purchases		Sales
Sub-accounts:
Large Cap Value Trust Series 1	$	2,698,290	$	4,164,048
Lifestyle Aggressive Trust Series 0		2,574,647		418,485
Lifestyle Aggressive Trust Series 1		4,306,314		4,454,298
Lifestyle Balanced Trust Series 0		2,925,640		1,306,646
Lifestyle Balanced Trust Series 1		5,669,308		5,077,558
Lifestyle Conservative Trust Series 0		365,412		29,306
Lifestyle Conservative Trust Series 1		3,680,423		6,082,436
Lifestyle Growth Trust Series 0		3,903,916		1,144,435
Lifestyle Growth Trust Series 1		4,361,737		2,932,629
Lifestyle Moderate Trust Series 0		2,233,942		1,094,831
Lifestyle Moderate Trust Series 1		1,510,821		1,572,865
Managed Trust Series 0		80,665		139,981
Mid Cap Index Trust Series 0		917,886		419,628
Mid Cap Index Trust Series 1		3,382,500		10,019,561
Mid Cap Intersection Trust Series 0		50,549		6,620
Mid Cap Intersection Trust Series 1		1,007		1,853
Mid Cap Stock Trust Series 0		2,596,486		1,184,797
Mid Cap Stock Trust Series 1		6,666,328		5,290,202
Mid Cap Value Trust Series 0		2,413,323		1,251,609
Mid Cap Value Trust Series 1		4,935,957		6,122,122
Mid Value Trust Series 0		2,748,379		2,920,514
Money Market Trust B Series 0		83,128,987		35,183,227
Money Market Trust Series 1		55,574,844		38,094,100
Natural Resources Trust Series 0		1,684,322		1,047,996
Natural Resources Trust Series 1		12,387,295		9,566,990
Optimized All Cap Trust Series 0		1,800,322		631,123
Optimized All Cap Trust Series 1		219,469		124,040
Optimized Value Trust Series 0		24,831		25,451
Optimized Value Trust Series 1		147,412		638,570
Overseas Equity Trust Series 0		1,515,909		1,086,622
Pacific Rim Trust Series 0		1,210,183		724,921
Pacific Rim Trust Series 1		4,012,389		3,661,859
Quantitative Mid Cap Trust Series 0		14,870		82,786
Quantitative Mid Cap Trust Series 1		7,145		49,825
Real Estate Securities Trust Series 0		5,838,019		5,054,879
Real Estate Securities Trust Series 1		6,097,606		10,694,525
Real Return Bond Trust Series 0		1,301,672		413,148
Real Return Bond Trust Series 1		7,693,505		6,862,030
Science & Technology Trust Series 0		1,119,092		746,333
Science & Technology Trust Series 1		3,967,377		6,519,152
Short-Term Bond Trust Series 0		245,767		266,067
Small Cap Growth Trust Series 0		2,502,734		2,099,773
Small Cap Growth Trust Series 1		467,340		384,231
Small Cap Index Trust Series 0		744,399		497,573
Small Cap Index Trust Series 1		1,507,605		2,886,720
Small Cap Opportunities Trust Series 0		46,356		42,065
Small Cap Opportunities Trust Series 1		713,899		2,262,710
Small Cap Trust Series 0		258,476		221,147
Small Cap Trust Series 1		561,436		551,914
Small Cap Value Trust Series 0		2,914,146		2,711,935
Small Cap Value Trust Series 1		1,436,535		656,582

80

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

	Purchases		Sales
Sub-accounts:
Small Company Trust Series 1	$	982,041	$	355,478
Small Company Value Trust Series 0		1,040,956		466,886
Small Company Value Trust Series 1		6,484,083		9,985,314
Strategic Bond Trust Series 0		59,072		85,421
Strategic Bond Trust Series 1		1,294,618		3,310,184
Strategic Income Trust Series 0		9,834		5,543
Strategic Income Trust Series 1		2,832,714		1,743,409
Total Bond Market Trust B Series 0		4,748,513		2,366,845
Total Return Trust Series 0		3,145,563		1,066,005
Total Return Trust Series 1		40,197,504		29,810,080
Total Stock Market Index Trust Series 0		1,047,695		866,017
Total Stock Market Index Trust Series 1		1,087,880		2,085,172
U.S. Core Trust Series 0		176,545		657,059
U.S. Core Trust Series 1		1,274,867		6,433,068
U.S. Global Leaders Growth Trust Series 0		2,565		3,774
U.S. Global Leaders Growth Trust Series 1		117,168		666,809
U.S. Government Securities Trust Series 0		791,963		681,204
U.S. Government Securities Trust Series 1		8,155,702		9,634,896
U.S. High Yield Bond Trust Series 0		205,181		21,625
U.S. High Yield Bond Trust Series 1		1,844,264		1,994,449
U.S. Large Cap Trust Series 0		36,569		67,483
U.S. Large Cap Trust Series 1		2,431,507		7,399,486
Utilities Trust Series 0		1,485,679		729,277
Utilities Trust Series 1		3,230,889		2,512,717
Value Trust Series 0		912,748		695,754
Value Trust Series 1		3,449,099		5,690,627
All Asset Portfolio Series 0		75,567		3,402
All Asset Portfolio Series 1		786,230		854,014
	$	539,300,697	$	490,237,551

6. Transaction with Affiliates

John Hancock Distributors LLC, a registered broker-dealer and wholly owned subsidiary of JHUSA, acts as the principal underwriter of the Contracts pursuant to a distribution agreement with the Company. Contracts are sold by registered representatives of either John Hancock Distributors LLC or other broker-dealers having distribution agreements with John Hancock Distributors LLC who are also authorized as variable life insurance agents under applicable state insurance laws. Registered representatives are compensated on a commission basis.

JHUSA has a formal service agreement with its ultimate parent company, MFC, which can be terminated by either party upon two months’ notice. Under this agreement, JHUSA pays for legal, actuarial, investment and certain other administrative services.

The majority of the investments held by the Account are invested in the Trust (Note 1).

Mortality and expense risks charge, as described in Note 3, are paid to JHUSA.

81

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

7. Diversification Requirements

The Internal Revenue Service has issued regulations under Section 817(h) of the Internal Revenue Code. Under the provisions of Section 817(h) of the Code, a variable life contract will not be treated as a life contract for federal tax purposes for any period for which the investments of the Separate Account on which the contract is based are not adequately diversified. The Code provides that the “adequately diversified” requirement may be met if the underlying investments satisfy either a statutory safe harbour test or diversification requirements set forth in regulations issued by the Secretary of Treasury. The Company believes that the Account satisfies the current requirements of the regulations, and it intends that the Account will continue to meet such requirements.

8. Comparatives

The comparative financial statements of certain Sub-accounts have been restated from the prior year financial statements previously presented. The restatement comprises of reclassification between the various line items in the Statement of Operations and Changes in Contract Owners’ Equity. The reclassification did not result in changes to assets and net increase (decrease) in assets from operations.

82

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	500 Index Trust B Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (e)
Units, beginning of period	1,025,869		962,976		1,649,564		—
Units issued	805,900		588,557		497,491		2,372,470
Units redeemed	(612,321	)	(525,664	)	(1,184,079	)	(722,906	)
Units, end of period	1,219,448		1,025,869		962,976		1,649,564
Unit value, end of period $	10.17 to 16.66		16.28 to 26.53		15.57 to 25.20		13.57 to 13.60
Assets, end of period $	16,165,681		20,742,059		17,764,778		22,413,056
Investment income ratio*	2.35	%	3.00	%	1.22	%	0.00	%
Expense ratio, lowest to highest**	0.00% to 0.65	%	0.00% to 0.70	%	0.40% to 0.70	%	0.40% to 0.70	%
Total return, lowest to highest***	(37.60%) to (37.19	%)	4.51% to 5.25	%	14.76% to 15.56	%	8.56% to 8.78	%

(e) Reflects the period from commencement of operations on May 2, 2005 through December 31, 2005.

	Sub-Account
	500 Index Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	1,964,200		895,420		1,012,464		689,458		575,198
Units issued	694,681		2,318,216		705,327		932,154		773,654
Units redeemed	(1,163,749	)	(1,249,436	)	(822,371	)	(609,148	)	(659,394	)
Units, end of period	1,495,132		1,964,200		895,420		1,012,464		689,458
Unit value, end of period $	8.22 to 8.49		13.16 to 13.53		12.47 to 12.91		10.89 to 11.16		10.51 to 10.72
Assets, end of period $	12,533,893		26,274,333		11,434,368		11,226,224		7,356,251
Investment income ratio*	0.68	%	2.26	%	0.90	%	1.22	%	0.81	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.65	%	0.25% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(37.51%) to (37.26	%)	4.39% to 4.83	%	14.52% to 15.15	%	3.60% to 4.09	%	9.54% to 10.05	%

83

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Active Bond Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	10,394		2,511		—
Units issued	13,837		11,919		11,827
Units redeemed	(13,855	)	(4,036	)	(9,316	)
Units, end of period	10,376		10,394		2,511
Unit value, end of period $	40.09		44.78		43.05
Assets, end of period $	415,916		465,396		108,061
Investment income ratio*	5.06	%	12.60	%	22.71	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(10.48%) to (7.37	%)	4.03	%	4.54	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Active Bond Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (e)
Units, beginning of period	141,516		339,657		329,188		—
Units issued	174,296		133,020		111,305		647,762
Units redeemed	(248,102	)	(331,161	)	(100,836	)	(318,574	)
Units, end of period	67,710		141,516		339,657		329,188
Unit value, end of period $	12.06 to 12.21		13.54 to 13.69		13.11 to 13.18		12.64 to 12.67
Assets, end of period $	820,988		1,929,828		4,464,604		4,165,458
Investment income ratio*	4.00	%	9.09	%	2.60	%	0.00	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.70	%
Total return, lowest to highest***	(11.11%) to (10.80	%)	3.30% to 3.73	%	3.70% to 4.05	%	1.14% to 1.36	%

(e) Reflects the period from commencement of operations on May 2, 2005 through December 31, 2005.

84

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	All Asset Portfolio Series 0
	Year Ended Dec. 31/08 (g)
Units, beginning of period	—
Units issued	6,143
Units redeemed	(314	)
Units, end of period	5,829
Unit value, end of period $	9.93
Assets, end of period $	57,882
Investment income ratio*	7.52	%
Expense ratio, lowest to highest**	0.00	%
Total return, lowest to highest***	(16.17%) to (12.60	%)

(g) Fund available in prior year but no activity.

	Sub-Account
	All Asset Portfolio Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04 (b)
Units, beginning of period	52,918		51,984		36,420		5,558		—
Units issued	45,309		29,880		33,107		44,219		5,623
Units redeemed	(53,376	)	(28,946	)	(17,543	)	(13,357	)	(65	)
Units, end of period	44,851		52,918		51,984		36,420		5,558
Unit value, end of period $	13.59 to 13.72		16.32 to 16.45		15.21 to 15.30		14.67 to 14.72		13.94
Assets, end of period $	614,073		867,298		793,435		534,735		77,490
Investment income ratio*	5.30	%	6.92	%	5.36	%	5.84	%	17.85	%
Expense ratio, lowest to highest**	0.45% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%	0.65	%
Total return, lowest to highest***	(16.71%) to (16.54	%)	7.29% to 7.52	%	3.68% to 3.89	%	5.25% to 5.47	%	11.53	%

(b) Reflects the period from commencement of operations on May 3, 2004 through December 31, 2004.

85

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	All Cap Core Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	2,196		23		—
Units issued	207,065		2,544		24
Units redeemed	(207,362	)	(371	)	(1	)
Units, end of period	1,899		2,196		23
Unit value, end of period $	8.05		13.34		12.98
Assets, end of period $	15,283		29,280		295
Investment income ratio*	1.09	%	1.93	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(39.60%) to (26.69	%)	2.70	%	14.77	%

(g) Fund available in prior year but no activity.

	Sub-Account
	All Cap Core Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	556,146		234,795		180,858		192,844		384,083
Units issued	155,444		480,351		126,247		60,566		162,081
Units redeemed	(299,712	)	(159,000	)	(72,310	)	(72,552	)	(353,320	)
Units, end of period	411,878		556,146		234,795		180,858		192,844
Unit value, end of period $	11.98 to 12.31		19.90 to 20.46		10.80 to 19.99		9.46 to 7.43		8.72 to 16.04
Assets, end of period $	5,019,487		11,287,106		4,565,986		3,066,213		3,006,912
Investment income ratio*	1.55	%	1.52	%	0.64	%	0.73	%	0.50	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(40.02%) to (39.81	%)	1.95% to 2.35	%	13.95% to 14.40	%	8.32% to 8.70	%	15.57% to 15.92	%

86

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	All Cap Growth Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	1,662		69		—
Units issued	5,687		23,363		71
Units redeemed	(1,600	)	(21,770	)	(2	)
Units, end of period	5,749		1,662		69
Unit value, end of period $	8.09		13.92		12.42
Assets, end of period $	46,490		23,129		847
Investment income ratio*	0.81	%	0.07	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(41.91%) to (26.41	%)	12.08	%	6.63	%

(g) Fund available in prior year but no activity.

	Sub-Account
	All Cap Growth Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	167,960		192,315		377,588		413,068		507,091
Units issued	90,328		44,827		87,667		136,091		266,106
Units redeemed	(93,845	)	(69,182	)	(272,940	)	(171,571	)	(360,129	)
Units, end of period	164,443		167,960		192,315		377,588		413,068
Unit value, end of period $	14.05 to 14.44		24.27 to 24.95		11.42 to 22.34		10.77 to 20.97		9.94 to 19.31
Assets, end of period $	2,348,296		4,091,403		4,175,639		7,772,423		7,837,329
Investment income ratio*	0.34	%	0.05	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(42.32%) to (42.12	%)	11.27% to 11.72	%	5.83% to 6.25	%	8.23% to 8.61	%	5.83% to 6.14	%

87

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	All Cap Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	3,203		23		—
Units issued	22,505		4,384		24
Units redeemed	(3,877	)	(1,204	)	(1	)
Units, end of period	21,831		3,203		23
Unit value, end of period $	9.78		13.74		12.64
Assets, end of period $	213,526		44,000		288
Investment income ratio*	2.30	%	2.41	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(28.80%) to (19.83	%)	8.68	%	13.82	%

(g) Fund available in prior year but no activity.

	Sub-Account
	All Cap Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	462,488		116,701		112,887		111,377		42,078
Units issued	67,408		390,109		81,884		43,049		149,430
Units redeemed	(165,964	)	(44,322	)	(78,070	)	(41,539	)	(80,131	)
Units, end of period	363,932		462,488		116,701		112,887		111,377
Unit value, end of period $	12.88 to 13.23		18.21 to 18.64		16.92 to 17.21		14.97 to 15.19		14.26 to 14.42
Assets, end of period $	4,771,874		8,557,532		1,998,682		1,705,935		1,596,891
Investment income ratio*	0.80	%	2.02	%	0.80	%	0.52	%	0.33	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(29.25%) to (28.99	%)	7.62% to 8.01	%	12.98% to 13.32	%	5.03% to 5.35	%	15.20% to 15.55	%

88

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	American Asset Allocation Trust Series 1
	Year Ended Dec. 31/08 (f)
Units, beginning of period	—
Units issued	30,140
Units redeemed	(392	)
Units, end of period	29,748
Unit value, end of period $	7.23 to 7.26
Assets, end of period $	215,822
Investment income ratio*	8.19	%
Expense ratio, lowest to highest**	0.00% to 0.65	%
Total return, lowest to highest***	(27.71%) to (27.39	%)

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

	Sub-Account
	American Blue Chip Income and Growth Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	198,959		269,745		141,580		23,565		14,497
Units issued	219,437		117,978		276,354		149,882		24,431
Units redeemed	(182,940	)	(188,764	)	(148,189	)	(31,867	)	(15,363	)
Units, end of period	235,456		198,959		269,745		141,580		23,565
Unit value, end of period $	8.36 to 12.04		13.21 to 19.15		12.99 to 19.17		16.32 to 16.44		15.38 to 15.44
Assets, end of period $	2,652,929		3,540,621		5,160,481		2,325,308		362,839
Investment income ratio*	4.38	%	2.35	%	0.55	%	0.19	%	0.00	%
Expense ratio, lowest to highest**	0.00% to 0.65	%	0.00% to 0.65	%	0.00% to 0.65	%	0.35% to 0.65	%	0.40% to 0.65	%
Total return, lowest to highest***	(37.14%) to (36.72	%)	0.99% to 1.65	%	16.24% to 16.99	%	6.07% to 6.39	%	8.61% to 8.87	%

89

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	American Bond Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	284,176		30,383		—
Units issued	237,329		417,624		34,152
Units redeemed	(374,948	)	(163,831	)	(3,769	)
Units, end of period	146,557		284,176		30,383
Unit value, end of period $	10.02 to 12.27		11.10 to 13.68		10.78 to 13.40
Assets, end of period $	1,736,403		3,845,351		406,830
Investment income ratio*	8.31	%	4.39	%	0.00	%
Expense ratio, lowest to highest**	0.00% to 0.65	%	0.00% to 0.65	%	0.00% to 0.65	%
Total return, lowest to highest***	(10.30%) to (9.72	%)	2.31% to 2.96	%	5.89% to 6.57	%

(g) Fund available in prior year but no activity.

	Sub-Account
	American Growth Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	1,130,158		1,885,429		1,469,444		534,464		106,170
Units issued	1,206,254		653,970		690,357		1,438,001		615,014
Units redeemed	(680,208	)	(1,409,241	)	(274,372	)	(503,021	)	(186,720	)
Units, end of period	1,656,204		1,130,158		1,885,429		1,469,444		534,464
Unit value, end of period $	8.21 to 11.93		14.71 to 21.52		13.15 to 19.59		17.74 to 17.89		15.42 to 15.49
Assets, end of period $	18,483,137		23,277,773		36,590,362		26,189,118		8,261,844
Investment income ratio*	2.08	%	1.23	%	0.29	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.00% to 0.65	%	0.00% to 0.65	%	0.00% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(44.56%) to (44.20	%)	11.20% to 11.94	%	9.09% to 9.80	%	15.04% to 15.44	%	11.38% to 11.71	%

90

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	American Growth-Income Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	246,940		164,133		168,096		114,971		3,474
Units issued	282,920		204,622		71,113		82,686		230,255
Units redeemed	(371,790	)	(121,815	)	(75,076	)	(29,561	)	(118,758	)
Units, end of period	158,070		246,940		164,133		168,096		114,971
Unit value, end of period $	8.17 to 11.77		13.20 to 19.14		12.61 to 18.60		16.14 to 16.26		15.41 to 15.47
Assets, end of period $	1,533,150		4,332,011		3,009,500		2,725,094		1,775,824
Investment income ratio*	1.08	%	2.32	%	1.09	%	0.45	%	0.30	%
Expense ratio, lowest to highest**	0.00% to 0.65	%	0.00% to 0.65	%	0.00% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(38.48%) to (38.08	%)	3.96% to 4.64	%	14.06% to 14.80	%	4.75% to 5.08	%	9.24% to 9.57	%
	Sub-Account
	American International Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	1,766,825		1,393,157		705,780		94,988		7,859
Units issued	777,351		740,354		930,416		664,947		98,310
Units redeemed	(951,628	)	(366,686	)	(243,039	)	(54,155	)	(11,181	)
Units, end of period	1,592,548		1,766,825		1,393,157		705,780		94,988
Unit value, end of period $	10.14 to 17.23		17.60 to 30.09		14.72 to 25.64		21.51 to 21.70		17.88 to 17.96
Assets, end of period $	22,506,461		46,461,807		30,618,091		15,253,954		1,702,860
Investment income ratio*	3.64	%	1.88	%	0.71	%	0.55	%	0.43	%
Expense ratio, lowest to highest**	0.00% to 0.65	%	0.00% to 0.65	%	0.00% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(42.74%) to (42.37	%)	18.80% to 19.58	%	17.77% to 18.54	%	20.29% to 20.70	%	18.11% to 18.47	%

91

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Blue Chip Growth Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	31,993		11,570		—
Units issued	35,457		37,198		11,788
Units redeemed	(16,294	)	(16,775	)	(218	)
Units, end of period	51,156		31,993		11,570
Unit value, end of period $	39.69		69.05		61.21
Assets, end of period $	2,030,472		2,209,133		708,170
Investment income ratio*	0.47	%	0.85	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(42.52%) to (28.71	%)	12.81	%	9.59	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Blue Chip Growth Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	996,389		1,083,341		1,450,904		1,667,853		2,092,515
Units issued	442,153		327,662		544,153		562,542		958,632
Units redeemed	(678,962	)	(414,614	)	(911,716	)	(779,491	)	(1,383,294	)
Units, end of period	759,580		996,389		1,083,341		1,450,904		1,667,853
Unit value, end of period $	15.13 to 15.62		26.40 to 27.25		12.73 to 24.23		11.68 to 22.06		11.12 to 20.96
Assets, end of period $	10,660,570		25,026,470		24,026,155		29,446,370		32,373,276
Investment income ratio*	0.30	%	0.71	%	0.21	%	0.41	%	0.11	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(42.91%) to (42.68	%)	11.96% to 12.46	%	8.82% to 9.30	%	4.86% to 5.23	%	8.33% to 8.65	%

92

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Capital Appreciation Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	15,717		8,132		—
Units issued	80,292		21,870		8,767
Units redeemed	(82,225	)	(14,285	)	(635	)
Units, end of period	13,784		15,717		8,132
Unit value, end of period $	8.72		13.89		12.43
Assets, end of period $	120,161		218,272		101,106
Investment income ratio*	0.21	%	0.48	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(37.24%) to (23.78	%)	11.70	%	2.38	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Capital Appreciation Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	579,428		643,831		177,674		91,845		126,280
Units issued	275,841		206,246		782,997		129,375		65,459
Units redeemed	(321,555	)	(270,649	)	(316,840	)	(43,546	)	(99,894	)
Units, end of period	533,714		579,428		643,831		177,674		91,845
Unit value, end of period $	8.47 to 8.70		13.53 to 13.90		12.21 to 12.46		12.05 to 12.20		10.64 to 10.75
Assets, end of period $	4,582,828		7,967,841		7,949,747		2,156,867		982,755
Investment income ratio*	0.45	%	0.29	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.35% to 0.70	%	0.40% to 0.65	%	0.40% to 0.65	%
Total return, lowest to highest***	(37.63%) to (37.42	%)	10.83% to 11.28	%	1.56% to 1.90	%	13.25% to 13.55	%	8.61% to 8.88	%

93

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Capital Appreciation Value Trust Series 1
	Year Ended Dec. 31/08 (f)
Units, beginning of period	—
Units issued	422
Units redeemed	(15	)
Units, end of period	407
Unit value, end of period $	7.23
Assets, end of period $	2,947
Investment income ratio*	3.95	%
Expense ratio, lowest to highest**	0.65	%
Total return, lowest to highest***	(27.66	%)

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

	Sub-Account
	Classic Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	1,965		52		—
Units issued	2,121		2,669		54
Units redeemed	(997	)	(756	)	(2	)
Units, end of period	3,089		1,965		52
Unit value, end of period $	6.23		11.44		13.09
Assets, end of period $	19,249		22,489		683
Investment income ratio*	2.43	%	6.39	%	2.93	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(45.55%) to (30.65	%)	(12.58	%)	16.14	%

(g) Fund available in prior year but no activity.

94

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Classic Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (g)
Units, beginning of period	49,364		63,050		28,771		—
Units issued	2,623		9,414		45,105		30,518
Units redeemed	(41,142	)	(23,100	)	(10,826	)	(1,747	)
Units, end of period	10,845		49,364		63,050		28,771
Unit value, end of period $	8.16 to 8.27		15.08 to 15.25		17.36 to 17.45		15.06 to 15.11
Assets, end of period $	89,243		747,147		1,098,196		433,522
Investment income ratio*	1.30	%	1.40	%	1.45	%	3.55	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(45.91%) to (45.74	%)	(13.15%) to (12.89	%)	15.29% to 15.51	%	8.72% to 8.92	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Core Bond Trust Series 0
	Year Ended Dec. 31/08 (g)
Units, beginning of period	—
Units issued	523
Units redeemed	(258	)
Units, end of period	265
Unit value, end of period $	11.53
Assets, end of period $	3,058
Investment income ratio*	10.44	%
Expense ratio, lowest to highest**	0.00	%
Total return, lowest to highest***	1.41% to 3.36	%

(g) Fund available in prior year but no activity.

95

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Core Bond Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (e)
Units, beginning of period	87		27		6		—
Units issued	1,518		121		22		6
Units redeemed	(6	)	(61	)	(1	)	—
Units, end of period	1,599		87		27		6
Unit value, end of period $	14.05 to 14.15		13.69 to 13.76		12.97		12.58
Assets, end of period $	22,482		1,200		355		72
Investment income ratio*	15.48	%	8.28	%	2.15	%	0.00	%
Expense ratio, lowest to highest**	0.45% to 0.65	%	0.45% to 0.65	%	0.65	%	0.65	%
Total return, lowest to highest***	2.63% to 2.82	%	5.58% to 5.76	%	3.13	%	0.60	%

(e) Reflects the period from commencement of operations on May 2, 2005 through December 31, 2005.

	Sub-Account
	Core Equity Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	3,181		525		—
Units issued	5,403		3,907		544
Units redeemed	(731	)	(1,251	)	(19	)
Units, end of period	7,853		3,181		525
Unit value, end of period $	5.28		11.59		12.31
Assets, end of period $	41,456		36,874		6,466
Investment income ratio*	20.74	%	0.08	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(54.46%) to (30.69	%)	(5.85	%)	6.73	%

(g) Fund available in prior year but no activity.

96

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Core Equity Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (g)
Units, beginning of period	39,293		43,160		19,069		—
Units issued	12,000		173,345		30,049		25,690
Units redeemed	(30,209	)	(177,212	)	(5,958	)	(6,621	)
Units, end of period	21,084		39,293		43,160		19,069
Unit value, end of period $	6.69 to 6.75		14.78 to 14.89		15.81 to 15.89		14.91 to 14.96
Assets, end of period $	141,361		581,986		683,107		284,444
Investment income ratio*	11.05	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.45% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(54.75%) to (54.67	%)	(6.50%) to (6.31	%)	6.05% to 6.26	%	5.22% to 5.42	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Disciplined Diversification Trust Series 1
	Year Ended Dec. 31/08 (f)
Units, beginning of period	—
Units issued	5,952
Units redeemed	(5,952	)
Units, end of period	—
Unit value, end of period $	7.18
Assets, end of period $	—
Investment income ratio*	0.00	%
Expense ratio, lowest to highest**	0.65	%
Total return, lowest to highest***	(28.19	%)

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

97

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Dynamic Growth Trust Series 0
	Year Ended Dec. 31/08 (ah)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	9,665		2,063		—
Units issued	1,498		12,048		2,331
Units redeemed	(11,163	)	(4,446	)	(268	)
Units, end of period	—		9,665		2,063
Unit value, end of period $	12.82		14.19		12.96
Assets, end of period $	—		137,099		26,745
Investment income ratio*	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(9.61	%)	9.44	%	10.83	%

(ah) Terminated as an investment option and funds transferred to Mid Cap Stock Trust on April 28, 2008.

(g) Fund available in prior year but no activity.

	Sub-Account
	Dynamic Growth Trust Series 1
	Year Ended Dec. 31/08 (ah)		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	371,867		613,046		770,700		544,964		577,167
Units issued	35,438		207,163		940,197		518,036		670,334
Units redeemed	(407,305	)	(448,342	)	(1,097,851	)	(292,300	)	(702,537	)
Units, end of period	—		371,867		613,046		770,700		544,964
Unit value, end of period $	5.67 to 5.85		6.27 to 6.48		05.78 to 05.94		5.24 to 5.34		4.70 to 4.77
Assets, end of period $	—		2,375,285		3,605,224		4,088,844		2,585,369
Investment income ratio*	0.00	%	0.00	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(9.84%) to (9.72	%)	8.51% to 9.01	%	10.25% to 10.76	%	11.62% to 12.00	%	9.29% to 9.62	%

(ah) Terminated as an investment option and funds transferred to Mid Cap Stock Trust on April 28, 2008.

98

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Emerging Growth Trust Series 0
	Year Ended Dec. 31/08 (ab)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	6,985		47		—
Units issued	17,695		13,135		49
Units redeemed	(24,680	)	(6,197	)	(2	)
Units, end of period	—		6,985		47
Unit value, end of period $	7.09		13.88		13.34
Assets, end of period $	—		96,947		635
Investment income ratio*	0.26	%	0.28	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(48.90%) to (38.61	%)	4.02	%	11.59	%

(ab) Terminated as an investment option and funds transferred to Small Cap Growth Trust on November 10, 2008.

(g) Fund available in prior year but no activity.

	Sub-Account
	Emerging Growth Trust Series 1
	Year Ended Dec. 31/08 (ab)		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	38,480		22,791		16,147		3,541		13,715
Units issued	46,068		40,460		23,611		32,098		27,399
Units redeemed	(84,548	)	(24,771	)	(16,967	)	(19,492	)	(37,573	)
Units, end of period	—		38,480		22,791		16,147		3,541
Unit value, end of period $	10.76 to 10.91		21.17 to 21.47		20.51 to 20.74		18.50 to 18.60		17.29 to 17.35
Assets, end of period $	—		821,867		470,425		300,058		61,397
Investment income ratio*	0.32	%	0.16	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.40% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(49.19%) to (49.08	%)	3.20% to 3.52	%	10.88% to 11.21	%	6.96% to 7.17	%	6.20% to 6.41	%

(ab) Terminated as an investment option and funds transferred to Small Cap Growth Trust on November 10, 2008.

99

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Emerging Markets Value Trust Series 0
	Year Ended Dec. 31/08 (g)
Units, beginning of period	—
Units issued	17,760
Units redeemed	(115	)
Units, end of period	17,645
Unit value, end of period $	5.77
Assets, end of period $	101,749
Investment income ratio*	18.41	%
Expense ratio, lowest to highest**	0.00	%
Total return, lowest to highest***	(51.92	%)

(g) Fund available in prior year but no activity.

	Sub-Account
	Emerging Markets Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07 (w)
Units, beginning of period	6,228		—
Units issued	35,677		6,275
Units redeemed	(3,170	)	(47	)
Units, end of period	38,735		6,228
Unit value, end of period $	7.13 to 7.16		14.93
Assets, end of period $	277,069		93,016
Investment income ratio*	4.00	%	2.90	%
Expense ratio, lowest to highest**	0.40% to 0.65	%	0.65	%
Total return, lowest to highest***	(52.25%) to (52.13	%)	19.46	%

(w) Reflects the period from commencement of operations on April 30, 2007 through December 31, 2007.

100

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Emerging Small Company Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	27,963		10,644		—
Units issued	12,888		28,805		11,516
Units redeemed	(17,895	)	(11,486	)	(872	)
Units, end of period	22,956		27,963		10,644
Unit value, end of period $	7.29		12.83		11.87
Assets, end of period $	167,240		358,856		126,387
Investment income ratio*	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(43.23%) to (31.25	%)	8.08	%	2.44	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Emerging Small Company Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	388,892		520,176		669,785		687,402		911,363
Units issued	73,633		64,222		138,895		232,231		273,287
Units redeemed	(136,933	)	(195,506	)	(288,504	)	(249,848	)	(497,248	)
Units, end of period	325,592		388,892		520,176		669,785		687,402
Unit value, end of period $	54.90 to 56.91		97.47 to 100.59		13.50 to 93.33		13.25 to 91.13		12.69 to 86.85
Assets, end of period $	15,606,022		33,623,081		40,696,420		50,949,308		50,607,293
Investment income ratio*	0.00	%	0.00	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.25% to 0.70	%	0.25% to 0.70	%	0.25% to 0.70	%	0.30% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(43.68%) to (43.42	%)	7.29% to 7.78	%	1.70% to 2.15	%	4.31% to 4.73	%	10.80% to 11.13	%

101

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Equity-Income Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	354,274		238,801		—
Units issued	269,861		177,383		271,056
Units redeemed	(201,447	)	(61,910	)	(32,255	)
Units, end of period	422,688		354,274		238,801
Unit value, end of period $	19.40		30.29		29.30
Assets, end of period $	8,202,004		10,730,873		6,996,068
Investment income ratio*	2.71	%	3.15	%	1.68	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(35.94%) to (24.93	%)	3.39	%	19.05	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Equity-Income Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	1,209,463		1,391,728		1,578,724		1,646,238		1,460,643
Units issued	365,614		555,776		690,921		759,963		1,139,513
Units redeemed	(630,869	)	(738,041	)	(877,917	)	(827,477	)	(953,918	)
Units, end of period	944,208		1,209,463		1,391,728		1,578,724		1,646,238
Unit value, end of period $	17.93 to 18.51		28.08 to 28.97		20.31 to 28.11		17.15 to 23.56		16.60 to 22.75
Assets, end of period $	16,578,137		33,434,627		37,693,322		36,227,178		36,760,871
Investment income ratio*	2.35	%	2.82	%	1.49	%	1.25	%	1.22	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(36.38%) to (36.12	%)	2.62% to 3.09	%	18.19% to 18.72	%	3.20% to 3.56	%	14.06% to 14.41	%

102

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Financial Services Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	2,300		45		—
Units issued	14,881		6,446		47
Units redeemed	(5,337	)	(4,191	)	(2	)
Units, end of period	11,844		2,300		45
Unit value, end of period $	11.79		21.29		22.83
Assets, end of period $	139,607		48,965		1,024
Investment income ratio*	1.34	%	1.83	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(44.63%) to (29.96	%)	(6.73	%)	23.16	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Financial Services Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	37,610		135,361		30,934		23,337		31,948
Units issued	251,270		45,254		119,009		17,012		39,967
Units redeemed	(130,877	)	(143,005	)	(14,582	)	(9,415	)	(48,578	)
Units, end of period	158,003		37,610		135,361		30,934		23,337
Unit value, end of period $	9.34 to 9.56		16.99 to 17.33		18.35 to 18.66		15.00 to 15.14		13.75 to 13.85
Assets, end of period $	1,505,269		644,355		2,512,100		466,240		322,026
Investment income ratio*	1.65	%	1.00	%	0.22	%	0.38	%	0.37	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(45.01%) to (44.85	%)	(7.42%) to (7.15	%)	22.32% to 22.69	%	9.07% to 9.28	%	9.66% to 9.87	%

103

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Franklin Templeton Founding Allocation Trust Series 0
	Year Ended Dec. 31/08 (f)
Units, beginning of period	—
Units issued	23,225
Units redeemed	(159	)
Units, end of period	23,066
Unit value, end of period $	6.79
Assets, end of period $	156,653
Investment income ratio*	20.48	%
Expense ratio, lowest to highest**	0.00	%
Total return, lowest to highest***	(32.08%) to (21.32	%)

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

	Sub-Account
	Fundamental Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	8,642		7,976		—
Units issued	84,974		2,280		8,137
Units redeemed	(9,631	)	(1,614	)	(161	)
Units, end of period	83,985		8,642		7,976
Unit value, end of period $	8.02		13.20		12.68
Assets, end of period $	673,278		114,075		101,153
Investment income ratio*	3.24	%	1.77	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(39.27%) to (27.52	%)	4.08	%	14.55	%

(g) Fund available in prior year but no activity.

104

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Fundamental Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	235,968		258,420		194,312		168,396		93,865
Units issued	477,588		64,277		143,105		107,178		205,077
Units redeemed	(122,007	)	(86,729	)	(78,997	)	(81,262	)	(130,546	)
Units, end of period	591,549		235,968		258,420		194,312		168,396
Unit value, end of period $	10.68 to 10.97		17.72 to 18.14		17.14 to 17.49		15.06 to 15.28		13.93 to 14.08
Assets, end of period $	6,384,680		4,226,469		4,461,137		2,943,943		2,356,047
Investment income ratio*	1.75	%	1.58	%	0.79	%	0.42	%	0.48	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(39.71%) to (39.50	%)	3.36% to 3.73	%	13.77% to 14.18	%	8.14% to 8.46	%	11.08% to 11.42	%

	Sub-Account
	Global Allocation Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	3,666		32		—
Units issued	8,903		4,011		33
Units redeemed	(5,127	)	(377	)	(1	)
Units, end of period	7,442		3,666		32
Unit value, end of period $	8.51		12.93		12.31
Assets, end of period $	63,324		47,414		388
Investment income ratio*	6.73	%	11.80	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(34.21%) to (24.39	%)	5.06	%	13.58	%

(g) Fund available in prior year but no activity.

105

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Global Allocation Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	170,839		136,763		26,935		17,767		3,613
Units issued	67,943		130,340		223,082		51,578		66,928
Units redeemed	(206,561	)	(96,264	)	(113,254	)	(42,410	)	(52,774	)
Units, end of period	32,221		170,839		136,763		26,935		17,767
Unit value, end of period $	9.03 to 9.29		13.83 to 14.12		13.24 to 13.48		11.74 to 11.92		11.13 to 11.22
Assets, end of period $	294,279		2,404,378		1,826,871		316,420		197,769
Investment income ratio*	2.76	%	6.32	%	0.91	%	0.65	%	0.40	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(34.71%) to (34.48	%)	4.45% to 4.76	%	12.77% to 13.11	%	5.51% to 5.84	%	11.99% to 12.25	%

	Sub-Account
	Global Bond Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	232,906		156,254		—
Units issued	192,157		144,116		179,125
Units redeemed	(144,526	)	(67,464	)	(22,871	)
Units, end of period	280,537		232,906		156,254
Unit value, end of period $	21.38		22.37		20.41
Assets, end of period $	5,998,144		5,209,990		3,189,038
Investment income ratio*	0.56	%	8.01	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(4.42%) to (1.77	%)	9.61	%	5.27	%

(g) Fund available in prior year but no activity.

106

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Global Bond Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	252,132		263,273		283,511		218,132		196,659
Units issued	279,869		131,138		174,167		195,710		233,486
Units redeemed	(315,421	)	(142,279	)	(194,405	)	(130,331	)	(212,013	)
Units, end of period	216,580		252,132		263,273		283,511		218,132
Unit value, end of period $	19.80 to 20.36		20.79 to 21.38		18.20 to 19.56		17.39 to 18.59		18.71 to 19.96
Assets, end of period $	4,354,555		5,343,383		5,088,466		5,234,432		4,323,117
Investment income ratio*	0.57	%	7.18	%	0.00	%	4.26	%	3.41	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(5.10%) to (4.78	%)	8.86% to 9.30	%	4.53% to 4.96	%	(7.19%) to (6.87	%)	9.53% to 9.85	%

	Sub-Account
	Global Real Estate Trust Series 1
	Year Ended Dec. 31/08 (f)
Units, beginning of period	—
Units issued	457
Units redeemed	(10	)
Units, end of period	447
Unit value, end of period $	5.54
Assets, end of period $	2,480
Investment income ratio*	10.22	%
Expense ratio, lowest to highest**	0.65	%
Total return, lowest to highest***	(44.55	%)

(f) Reflects the period from commencement of operations on April 28, 2008 through December 31, 2008.

107

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Global Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	40,340		7,504		—
Units issued	24,420		44,553		7,736
Units redeemed	(31,830	)	(11,717	)	(232	)
Units, end of period	32,930		40,340		7,504
Unit value, end of period $	8.32		13.75		13.57
Assets, end of period $	273,952		554,586		101,826
Investment income ratio*	2.41	%	2.43	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(39.49%) to (23.39	%)	1.32	%	20.42	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Global Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	261,353		240,688		227,332		226,763		220,709
Units issued	68,244		141,074		148,216		88,843		178,596
Units redeemed	(184,321	)	(120,409	)	(134,860	)	(88,274	)	(172,542	)
Units, end of period	145,276		261,353		240,688		227,332		226,763
Unit value, end of period $	14.30 to 14.71		23.72 to 24.40		18.08 to 24.15		15.10 to 20.08		13.72 to 18.20
Assets, end of period $	2,096,612		6,258,053		5,725,741		4,510,252		4,088,754
Investment income ratio*	1.77	%	2.31	%	1.27	%	1.25	%	1.76	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(39.94%) to (39.73	%)	0.63% to 1.03	%	19.49% to 19.96	%	9.95% to 10.33	%	14.01% to 14.35	%

108

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Growth & Income Trust Series 0
	Year Ended Dec. 31/08 (ag)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (m)
Units, beginning of period	20,384		16,963		—
Units issued	1,104		19,375		17,322
Units redeemed	(21,488	)	(15,954	)	(359	)
Units, end of period	—		20,384		16,963
Unit value, end of period $	75.32		82.20		78.98
Assets, end of period $	—		1,675,550		1,339,825
Investment income ratio*	0.52	%	1.81	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(8.36	%)	4.07	%	12.72	%

(ag) Terminated as an investment option and funds transferred to Optimized All Cap Trust on April 28, 2008.

(m) Fund renamed on May 1, 2006. Previously known as Growth & Income Trust II. Fund available in prior year but no activity.

	Sub-Account
	Health Sciences Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	11,504		141		—
Units issued	73,492		50,077		146
Units redeemed	(44,047	)	(38,714	)	(5	)
Units, end of period	40,949		11,504		141
Unit value, end of period $	12.11		17.26		14.66
Assets, end of period $	495,670		198,514		2,065
Investment income ratio*	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(29.86%) to (21.80	%)	17.73	%	8.44	%

(g) Fund available in prior year but no activity.

109

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Health Sciences Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	235,072		296,297		268,882		228,816		195,742
Units issued	280,570		112,666		210,936		114,558		312,678
Units redeemed	(255,451	)	(173,891	)	(183,521	)	(74,492	)	(279,604	)
Units, end of period	260,191		235,072		296,297		268,882		228,816
Unit value, end of period $	14.82 to 15.23		21.29 to 21.79		18.21 to 18.57		16.91 to 17.15		15.11 to 15.28
Assets, end of period $	3,897,285		5,076,968		5,446,065		4,584,275		3,480,512
Investment income ratio*	0.00	%	0.00	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(30.36%) to (30.11	%)	16.91% to 17.32	%	7.67% to 8.05	%	11.91% to 12.25	%	14.57% to 14.91	%

	Sub-Account
	High Yield Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	58,466		10,318		—
Units issued	64,061		66,712		10,940
Units redeemed	(45,355	)	(18,564	)	(622	)
Units, end of period	77,172		58,466		10,318
Unit value, end of period $	9.19		13.03		12.82
Assets, end of period $	709,188		761,889		132,294
Investment income ratio*	9.25	%	14.49	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(29.48%) to (24.36	%)	1.64	%	10.48	%

(g) Fund available in prior year but no activity.

110

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	High Yield Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	456,353		622,204		1,025,251		747,358		699,961
Units issued	139,507		222,523		335,772		576,968		615,089
Units redeemed	(301,441	)	(388,374	)	(738,819	)	(299,075	)	(567,692	)
Units, end of period	294,419		456,353		622,204		1,025,251		747,358
Unit value, end of period $	12.94 to 13.31		18.42 to 18.94		15.50 to 18.69		14.12 to 16.99		13.69 to 16.40
Assets, end of period $	3,740,054		8,286,870		11,149,819		16,898,635		11,862,447
Investment income ratio*	7.50	%	12.22	%	7.72	%	5.03	%	4.99	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(29.98%) to (29.73	%)	0.91% to 1.32	%	9.61% to 10.05	%	2.98% to 3.39	%	10.34% to 10.68	%

	Sub-Account
	Income & Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	17,941		2,855		—
Units issued	5,398		18,643		2,909
Units redeemed	(9,177	)	(3,557	)	(54	)
Units, end of period	14,162		17,941		2,855
Unit value, end of period $	8.34		11.93		11.80
Assets, end of period $	118,153		214,061		33,687
Investment income ratio*	2.85	%	5.22	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(30.07%) to (17.93	%)	1.11	%	8.77	%

(g) Fund available in prior year but no activity.

111

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Income & Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	917,328		1,076,434		1,373,417		1,679,725		465,991
Units issued	183,110		239,053		143,883		211,726		2,010,940
Units redeemed	(323,973	)	(398,159	)	(440,866	)	(518,034	)	(797,206	)
Units, end of period	776,465		917,328		1,076,434		1,373,417		1,679,725
Unit value, end of period $	13.92 to 14.37		20.06 to 20.63		16.89 to 20.47		15.63 to 18.89		14.94 to 18.01
Assets, end of period $	10,807,404		18,404,247		21,490,159		25,459,694		29,826,597
Investment income ratio*	2.99	%	3.89	%	2.10	%	1.59	%	0.53	%
Expense ratio, lowest to highest**	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.65	%
Total return, lowest to highest***	(30.62%) to (30.33	%)	0.40% to 0.81	%	7.90% to 8.33	%	4.49% to 4.90	%	6.94% to 7.33	%

	Sub-Account
	International Core Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (h)
Units, beginning of period	13,585		454		—
Units issued	20,613		20,258		474
Units redeemed	(14,044	)	(7,127	)	(20	)
Units, end of period	20,154		13,585		454
Unit value, end of period $	10.16		16.55		14.84
Assets, end of period $	204,797		224,764		6,728
Investment income ratio*	6.12	%	2.92	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(38.58%) to (22.22	%)	11.46	%	24.81	%

(h) Fund renamed on May 1, 2006. Previously known as International Stock Trust. Fund available in prior year but no activity.

112

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	International Core Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (i)		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	504,258		513,665		934,920		1,016,696		1,106,364
Units issued	137,701		142,487		408,054		375,227		334,186
Units redeemed	(250,746	)	(151,894	)	(829,309	)	(457,003	)	(423,854	)
Units, end of period	391,213		504,258		513,665		934,920		1,016,696
Unit value, end of period $	12.60 to 12.96		20.60 to 21.18		15.30 to 19.01		12.33 to 15.29		10.69 to 13.23
Assets, end of period $	4,958,400		10,486,948		9,619,429		14,186,941		13,368,772
Investment income ratio*	4.50	%	2.21	%	0.60	%	0.74	%	0.84	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(39.02%) to (38.80	%)	10.64% to 11.08	%	23.91% to 24.33	%	15.14% to 15.55	%	14.84% to 15.19	%

(i) Fund renamed on May 1, 2006. Previously known as International Stock Trust.

	Sub-Account
	International Equity Index Trust A Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (n)		Year Ended Dec. 31/04 (b)
Units, beginning of period	164,962		438,785		343,997		51,012		—
Units issued	231,501		126,457		167,620		392,254		103,970
Units redeemed	(133,259	)	(400,280	)	(72,832	)	(99,269	)	(52,958	)
Units, end of period	263,204		164,962		438,785		343,997		51,012
Unit value, end of period $	13.45 to 13.67		24.37 to 24.73		21.27 to 21.49		17.07 to 17.18		14.74 to 14.77
Assets, end of period $	3,585,626		4,062,908		9,394,587		5,895,407		752,181
Investment income ratio*	2.45	%	3.63	%	0.72	%	0.79	%	0.58	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(44.90%) to (44.71	%)	14.62% to 15.07	%	24.62% to 25.11	%	15.80% to 16.26	%	17.94% to 18.17	%

(n) Fund renamed on May 2, 2005. Previously known as International Equity Index Fund.

(b) Reflects the period from commencement of operations on May 3, 2004 through December 31, 2004.

113

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	International Equity Index Trust B Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	34,648		4,914		—
Units issued	146,008		42,350		169,895
Units redeemed	(63,602	)	(12,616	)	(164,981	)
Units, end of period	117,054		34,648		4,914
Unit value, end of period $	26.52		47.69		41.18
Assets, end of period $	3,104,506		1,652,270		202,332
Investment income ratio*	3.69	%	6.71	%	6.58	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(44.38%) to (27.72	%)	15.82	%	27.11	%

(g) Fund available in prior year but no activity.

	Sub-Account
	International Opportunities Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	110,205		12,483		—
Units issued	202,989		109,273		12,824
Units redeemed	(84,205	)	(11,551	)	(341	)
Units, end of period	228,989		110,205		12,483
Unit value, end of period $	9.16		18.51		15.41
Assets, end of period $	2,097,481		2,039,663		192,374
Investment income ratio*	1.55	%	2.56	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(50.51%) to (34.21	%)	20.10	%	23.96	%

(g) Fund available in prior year but no activity.

114

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	International Opportunities Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (e)
Units, beginning of period	144,407		112,824		469		—
Units issued	175,070		67,598		204,132		1,745
Units redeemed	(159,902	)	(36,015	)	(91,777	)	(1,276	)
Units, end of period	159,575		144,407		112,824		469
Unit value, end of period $	11.15 to 11.27		22.70 to 22.88		19.03 to 19.12		15.46
Assets, end of period $	1,795,448		3,296,001		2,154,500		7,257
Investment income ratio*	1.25	%	1.63	%	0.25	%	0.00	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.65	%
Total return, lowest to highest***	(50.88%) to (50.73	%)	19.32% to 19.68	%	23.04% to 23.40	%	23.71	%

(e) Reflects the period from commencement of operations on May 2, 2005 through December 31, 2005.

	Sub-Account
	International Small Cap Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	43,381		1,115		—
Units issued	25,614		50,754		1,143
Units redeemed	(27,627	)	(8,488	)	(28	)
Units, end of period	41,368		43,381		1,115
Unit value, end of period $	7.39		15.73		14.27
Assets, end of period $	305,840		682,371		15,913
Investment income ratio*	3.02	%	4.61	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(53.00%) to (37.64	%)	10.20	%	27.73	%

(g) Fund available in prior year but no activity.

115

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	International Small Cap Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	323,099		262,400		242,913		254,360		261,096
Units issued	170,062		224,368		115,106		115,857		297,698
Units redeemed	(230,612	)	(163,669	)	(95,619	)	(127,304	)	(304,434	)
Units, end of period	262,549		323,099		262,400		242,913		254,360
Unit value, end of period $	13.43 to 13.82		28.66 to 29.47		16.52 to 26.77		13.00 to 21.03		11.88 to 19.17
Assets, end of period $	3,562,859		9,304,722		6,853,600		4,994,547		4,744,645
Investment income ratio*	2.67	%	2.93	%	1.03	%	0.86	%	0.12	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(53.29%) to (53.12	%)	9.36% to 9.80	%	26.84% to 27.29	%	9.34% to 9.72	%	20.28% to 20.64	%

	Sub-Account
	International Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	8,699		156		—
Units issued	89,308		86,980		157
Units redeemed	(30,289	)	(78,437	)	(1	)
Units, end of period	67,718		8,699		156
Unit value, end of period $	9.15		15.95		14.55
Assets, end of period $	619,413		138,707		2,266
Investment income ratio*	4.68	%	5.23	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(42.64%) to (26.82	%)	9.61	%	29.61	%

(g) Fund available in prior year but no activity.

116

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	International Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	1,343,264		1,282,480		1,151,161		534,492		451,530
Units issued	462,638		635,732		802,307		1,071,184		510,926
Units redeemed	(972,175	)	(574,948	)	(670,988	)	(454,515	)	(427,964	)
Units, end of period	833,727		1,343,264		1,282,480		1,151,161		534,492
Unit value, end of period $	13.35 to 13.79		23.37 to 24.12		21.49 to 22.42		16.70 to 17.40		15.24 to 15.83
Assets, end of period $	11,386,567		32,163,348		28,081,796		19,488,615		8,198,182
Investment income ratio*	3.01	%	4.36	%	1.77	%	0.66	%	1.28	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(43.04%) to (42.81	%)	8.76% to 9.25	%	28.68% to 29.27	%	9.78% to 10.15	%	20.75% to 21.12	%

	Sub-Account
	Investment Quality Bond Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07 (g)
Units, beginning of period	21,474		—
Units issued	22,172		28,300
Units redeemed	(20,542	)	(6,826	)
Units, end of period	23,104		21,474
Unit value, end of period $	10.97		11.15
Assets, end of period $	253,456		239,428
Investment income ratio*	6.27	%	13.41	%
Expense ratio, lowest to highest**	0.00	%	0.00	%
Total return, lowest to highest***	(1.61%) to 0.35	%	6.23	%

(g) Fund available in prior year but no activity.

117

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Investment Quality Bond Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	364,134		417,247		956,608		1,132,045		1,159,780
Units issued	58,613		101,824		255,155		240,139		645,968
Units redeemed	(134,518	)	(154,937	)	(794,516	)	(415,576	)	(673,703	)
Units, end of period	288,229		364,134		417,247		956,608		1,132,045
Unit value, end of period $	21.59 to 22.21		22.03 to 22.66		18.33 to 21.40		17.79 to 20.67		17.50 to 20.28
Assets, end of period $	6,251,474		8,095,296		8,726,321		19,439,556		22,645,826
Investment income ratio*	6.28	%	8.92	%	7.56	%	5.63	%	5.96	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(2.31%) to (1.97	%)	5.47% to 5.88	%	2.84% to 3.26	%	1.55% to 1.91	%	4.13% to 4.45	%

	Sub-Account
	Large Cap Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	3,559		64		—
Units issued	7,799		27,296		66
Units redeemed	(2,389	)	(23,801	)	(2	)
Units, end of period	8,969		3,559		64
Unit value, end of period $	7.84		12.96		12.77
Assets, end of period $	70,272		46,121		818
Investment income ratio*	2.41	%	0.20	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(39.55%) to (28.84	%)	1.53	%	14.38	%

(g) Fund available in prior year but no activity.

118

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Large Cap Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (e)
Units, beginning of period	303,754		2,302		289		—
Units issued	102,040		348,751		2,142		304
Units redeemed	(91,619	)	(47,299	)	(129	)	(15	)
Units, end of period	314,175		303,754		2,302		289
Unit value, end of period $	9.54 to 9.69		15.89 to 16.06		15.80 to 15.85		13.90
Assets, end of period $	3,019,835		4,850,940		36,373		4,019
Investment income ratio*	1.55	%	0.81	%	0.27	%	0.00	%
Expense ratio, lowest to highest**	0.30% to 0.70	%	0.30% to 0.70	%	0.45% to 0.65	%	0.65	%
Total return, lowest to highest***	(39.94%) to (39.70	%)	0.68% to 1.09	%	13.62% to 13.85	%	11.22	%

(e) Reflects the period from commencement of operations on May 2, 2005 through December 31, 2005.

	Sub-Account
	Large Cap Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	12,352		251		—
Units issued	50,484		15,544		251
Units redeemed	(9,695	)	(3,443	)	—
Units, end of period	53,141		12,352		251
Unit value, end of period $	9.00		14.03		13.43
Assets, end of period $	478,069		173,316		3,364
Investment income ratio*	3.76	%	2.11	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(35.89%) to (22.82	%)	4.45	%	16.03	%

(g) Fund available in prior year but no activity.

119

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Large Cap Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	355,022		217,111		174,124		74,430		83,191
Units issued	139,873		249,955		186,497		144,010		156,448
Units redeemed	(182,609	)	(112,044	)	(143,510	)	(44,316	)	(165,209	)
Units, end of period	312,286		355,022		217,111		174,124		74,430
Unit value, end of period $	16.78 to 17.07		26.35 to 26.72		25.41 to 25.69		22.06 to 22.24		19.23 to 19.32
Assets, end of period $	5,314,642		9,458,751		5,565,112		3,866,266		1,435,901
Investment income ratio*	1.77	%	1.03	%	0.45	%	0.00	%	1.43	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(36.33%) to (36.13	%)	3.70% to 4.01	%	15.18% to 15.53	%	14.74% to 15.08	%	21.02% to 21.38	%

	Sub-Account
	Lifestyle Aggressive Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (d)
Units, beginning of period	49,164		534		—
Units issued	193,153		77,108		579
Units redeemed	(33,742	)	(28,478	)	(45	)
Units, end of period	208,575		49,164		534
Unit value, end of period $	8.41		14.50		13.34
Assets, end of period $	1,753,973		712,814		7,133
Investment income ratio*	2.74	%	9.39	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(42.00%) to (28.35	%)	8.66	%	15.48	%

(d) Fund renamed on May 1, 2006. Previously known as Lifestyle Aggressive 1000 Trust. Fund available in prior year but no activity.

120

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Lifestyle Aggressive Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (r)		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	462,444		348,066		316,430		305,615		73,758
Units issued	178,424		197,231		121,063		63,954		350,315
Units redeemed	(262,594	)	(82,853	)	(89,427	)	(53,139	)	(118,458	)
Units, end of period	378,274		462,444		348,066		316,430		305,615
Unit value, end of period $	13.05 to 13.42		22.65 to 23.20		16.82 to 21.44		14.65 to 18.58		13.31 to 16.86
Assets, end of period $	4,954,739		10,530,978		7,319,039		5,802,326		5,093,275
Investment income ratio*	1.90	%	9.52	%	7.38	%	1.79	%	0.78	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(42.37%) to (42.16	%)	7.84% to 8.22	%	14.72% to 15.11	%	9.92% to 10.25	%	15.30% to 15.66	%

(r) Fund renamed on May 1, 2006. Previously known as Lifestyle Aggressive 1000 Trust.

	Sub-Account
	Lifestyle Balanced Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (c)
Units, beginning of period	218,765		107,849		—
Units issued	252,640		129,478		110,597
Units redeemed	(125,900	)	(18,562	)	(2,748	)
Units, end of period	345,505		218,765		107,849
Unit value, end of period $	9.06		13.19		12.37
Assets, end of period $	3,128,937		2,884,985		1,334,204
Investment income ratio*	4.16	%	7.63	%	0.11	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(31.33%) to (21.25	%)	6.60	%	12.80	%

(c) Fund renamed on May 1, 2006. Previously known as Lifestyle Balanced 640 Trust. Fund available in prior year but no activity.

121

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Lifestyle Balanced Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (s)		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	525,031		693,715		934,585		914,120		805,068
Units issued	216,482		116,050		245,346		282,338		639,365
Units redeemed	(228,636	)	(284,734	)	(486,216	)	(261,873	)	(530,313	)
Units, end of period	512,877		525,031		693,715		934,585		914,120
Unit value, end of period $	16.94 to 17.42		24.81 to 25.43		18.61 to 23.96		16.60 to 21.26		15.62 to 19.96
Assets, end of period $	8,730,517		13,079,455		16,303,510		19,581,681		18,039,138
Investment income ratio*	3.23	%	7.44	%	5.76	%	3.96	%	2.05	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(31.74%) to (31.50	%)	5.77% to 6.15	%	12.01% to 12.39	%	6.20% to 6.51	%	12.75% to 13.09	%

(s) Fund renamed on May 1, 2006. Previously known as Lifestyle Balanced 640 Trust.

	Sub-Account
	Lifestyle Conservative Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (a)
Units, beginning of period	2,736		114		—
Units issued	34,420		3,731		115
Units redeemed	(2,714	)	(1,109	)	(1	)
Units, end of period	34,442		2,736		114
Unit value, end of period $	9.99		11.81		11.21
Assets, end of period $	344,025		32,325		1,287
Investment income ratio*	25.38	%	9.49	%	1.13	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(15.43%) to (10.74	%)	5.35	%	8.44	%

(a) Fund renamed on May 1, 2006. Previously known as Lifestyle Conservative 280 Trust. Fund available in prior year but no activity.

122

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Lifestyle Conservative Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (t)		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	289,337		55,589		284,921		268,947		268,987
Units issued	153,526		257,589		66,508		55,265		280,449
Units redeemed	(264,577	)	(23,841	)	(295,840	)	(39,291	)	(280,489	)
Units, end of period	178,286		289,337		55,589		284,921		268,947
Unit value, end of period $	19.84 to 20.40		23.65 to 24.23		18.47 to 23.07		17.13 to 21.23		16.74 to 20.76
Assets, end of period $	3,567,617		6,915,236		1,239,063		5,962,323		5,504,364
Investment income ratio*	3.34	%	9.12	%	6.17	%	5.00	%	3.76	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.30% to 0.65	%	0.40% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(16.12%) to (15.82	%)	4.70% to 5.05	%	7.73% to 8.11	%	2.22% to 2.48	%	7.88% to 8.21	%

(t) Fund renamed on May 1, 2006. Previously known as Lifestyle Conservative 280 Trust.

	Sub-Account
	Lifestyle Growth Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (z)
Units, beginning of period	279,917		113,970		—
Units issued	324,378		198,908		118,278
Units redeemed	(111,828	)	(32,961	)	(4,308	)
Units, end of period	492,467		279,917		113,970
Unit value, end of period $	8.73		13.76		12.79
Assets, end of period $	4,299,878		3,850,878		1,457,877
Investment income ratio*	3.60	%	7.22	%	0.08	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(36.54%) to (24.41	%)	7.55	%	13.58	%

(z) Fund renamed on May 1, 2006. Previously known as Lifestyle Growth 820 Trust. Fund available in prior year but no activity.

123

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Lifestyle Growth Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (u)		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	589,218		507,106		416,491		417,608		178,824
Units issued	167,165		190,193		158,281		130,964		368,911
Units redeemed	(139,411	)	(108,081	)	(67,666	)	(132,081	)	(130,127	)
Units, end of period	616,972		589,218		507,106		416,491		417,608
Unit value, end of period $	15.14 to 15.57		24.03 to 24.63		17.42 to 22.91		15.44 to 20.26		14.28 to 18.71
Assets, end of period $	9,400,374		14,223,964		11,424,780		8,315,803		7,721,710
Investment income ratio*	2.71	%	7.66	%	5.75	%	2.70	%	1.39	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(37.01%) to (36.79	%)	6.82% to 7.20	%	12.76% to 13.11	%	7.96% to 8.28	%	13.85% to 14.19	%

(u) Fund renamed on May 1, 2006. Previously known as Lifestyle Growth 820 Trust.

	Sub-Account
	Lifestyle Moderate Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (y)
Units, beginning of period	36,346		1,032		—
Units issued	185,989		51,669		1,056
Units redeemed	(93,433	)	(16,355	)	(24	)
Units, end of period	128,902		36,346		1,032
Unit value, end of period $	9.35		12.33		11.71
Assets, end of period $	1,205,627		448,263		12,083
Investment income ratio*	7.22	%	9.18	%	0.42	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(24.16%) to (16.44	%)	5.34	%	10.49	%

(y) Fund renamed on May 1, 2006. Previously known as Lifestyle Moderate 460 Trust. Fund available in prior year but no activity.

124

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Lifestyle Moderate Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (v)		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	103,478		137,665		143,857		170,770		105,262
Units issued	61,722		135,935		158,656		66,570		170,447
Units redeemed	(71,273	)	(170,122	)	(164,848	)	(93,483	)	(104,939	)
Units, end of period	93,927		103,478		137,665		143,857		170,770
Unit value, end of period $	18.06 to 18.57		23.99 to 24.59		18.23 to 23.42		16.60 to 21.22		16.03 to 20.45
Assets, end of period $	1,708,801		2,495,078		3,158,679		3,008,972		3,447,752
Investment income ratio*	3.94	%	6.52	%	3.83	%	4.03	%	2.62	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(24.72%) to (24.46	%)	4.61% to 4.98	%	9.70% to 10.09	%	3.48% to 3.79	%	10.32% to 10.65	%

(v) Fund renamed on May 1, 2006. Previously known as Lifestyle Moderate 460 Trust.

	Sub-Account
	Managed Trust Series 0
	Year Ended Dec. 31/08 (aa)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	1,253		1,073		—
Units issued	1,510		1,305		14,325
Units redeemed	(2,763	)	(1,125	)	(13,252	)
Units, end of period	—		1,253		1,073
Unit value, end of period $	45.11		57.27		56.17
Assets, end of period $	—		71,745		60,233
Investment income ratio*	0.67	%	5.37	%	10.94	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(21.22%) to (12.07	%)	1.95	%	7.48	%

(aa) Terminated as an investment option and funds transferred to Lifestyle Balanced Trust on November 10, 2008.

(g) Fund available in prior year but no activity.

125

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Mid Cap Index Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	71,068		25,037		—
Units issued	65,541		85,093		25,693
Units redeemed	(31,295	)	(39,062	)	(656	)
Units, end of period	105,314		71,068		25,037
Unit value, end of period $	9.56		15.02		13.97
Assets, end of period $	1,006,767		1,067,496		349,681
Investment income ratio*	1.14	%	1.69	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(36.36%) to (29.45	%)	7.55	%	9.74	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Mid Cap Index Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	1,227,846		315,280		329,426		411,020		253,416
Units issued	151,549		1,720,087		210,019		329,260		459,051
Units redeemed	(524,290	)	(807,521	)	(224,165	)	(410,854	)	(301,447	)
Units, end of period	855,105		1,227,846		315,280		329,426		411,020
Unit value, end of period $	13.82 to 14.22		21.80 to 22.42		20.42 to 20.92		18.74 to 19.08		16.88 to 17.09
Assets, end of period $	12,037,182		27,299,289		6,517,466		6,231,380		6,984,470
Investment income ratio*	0.91	%	1.22	%	0.63	%	0.76	%	0.34	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(36.82%) to (36.61	%)	6.76% to 7.19	%	8.95% to 9.39	%	11.24% to 11.63	%	15.08% to 15.43	%

126

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Mid Cap Intersection Trust Series 0
	Year Ended Dec. 31/08 (g)
Units, beginning of period	—
Units issued	6,131
Units redeemed	(823	)
Units, end of period	5,308
Unit value, end of period $	5.40
Assets, end of period $	28,673
Investment income ratio*	0.28	%
Expense ratio, lowest to highest**	0.00	%
Total return, lowest to highest***	(42.00%) to (30.76	%)

(g) Fund available in prior year but no activity.

	Sub-Account
	Mid Cap Intersection Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07 (w)
Units, beginning of period	89		—
Units issued	94		89
Units redeemed	(183	)	—
Units, end of period	—		89
Unit value, end of period $	6.67		11.59
Assets, end of period $	—		1,036
Investment income ratio*	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.65	%	0.65	%
Total return, lowest to highest***	(42.43	%)	(7.29	%)

(w) Reflects the period from commencement of operations on April 30, 2007 through December 31, 2007.

127

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Mid Cap Stock Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	29,434		3,497		—
Units issued	61,193		29,526		3,810
Units redeemed	(29,963	)	(3,589	)	(313	)
Units, end of period	60,664		29,434		3,497
Unit value, end of period $	27.71		49.27		39.87
Assets, end of period $	1,681,202		1,450,200		139,406
Investment income ratio*	0.00	%	0.01	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(43.75%) to (29.90	%)	23.59	%	13.66	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Mid Cap Stock Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	690,454		746,822		842,918		1,191,214		439,064
Units issued	379,942		268,501		429,518		832,322		1,709,693
Units redeemed	(334,029	)	(324,869	)	(525,614	)	(1,180,618	)	(957,543	)
Units, end of period	736,367		690,454		746,822		842,918		1,191,214
Unit value, end of period $	12.00 to 12.39		21.39 to 22.00		17.44 to 18.58		15.46 to 16.45		13.62 to 14.44
Assets, end of period $	9,024,765		15,137,410		13,282,114		13,361,473		16,362,126
Investment income ratio*	0.00	%	0.00	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.65	%
Total return, lowest to highest***	(44.13%) to (43.90	%)	22.70% to 23.20	%	12.75% to 13.21	%	13.77% to 14.23	%	18.26% to 18.68	%

128

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Mid Cap Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	28,637		7,923		—
Units issued	298,591		32,428		8,649
Units redeemed	(164,723	)	(11,714	)	(726	)
Units, end of period	162,505		28,637		7,923
Unit value, end of period $	7.78		12.76		12.67
Assets, end of period $	1,263,839		365,431		100,380
Investment income ratio*	2.65	%	1.27	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(39.05%) to (25.96	%)	0.72	%	12.30	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Mid Cap Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	542,856		1,452,791		1,656,848		753,501		445,032
Units issued	278,961		125,745		665,474		1,329,000		675,227
Units redeemed	(343,836	)	(1,035,680	)	(869,531	)	(425,653	)	(366,758	)
Units, end of period	477,981		542,856		1,452,791		1,656,848		753,501
Unit value, end of period $	13.00 to 13.40		21.46 to 22.04		21.46 to 21.94		19.24 to 19.55		17.93 to 18.12
Assets, end of period $	6,317,840		11,820,247		31,558,117		32,162,303		13,585,575
Investment income ratio*	1.73	%	1.00	%	0.69	%	0.38	%	0.49	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.65	%	0.25% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(39.43%) to (39.19	%)	0.04% to 0.44	%	11.55% to 12.00	%	7.31% to 7.68	%	23.65% to 24.03	%

129

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Mid Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	110,206		43,969		—
Units issued	161,497		149,985		46,901
Units redeemed	(187,001	)	(83,748	)	(2,932	)
Units, end of period	84,702		110,206		43,969
Unit value, end of period $	14.18		21.71		21.60
Assets, end of period $	1,201,290		2,392,619		949,770
Investment income ratio*	1.31	%	2.30	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(34.67%) to (27.51	%)	0.51	%	20.34	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Money Market Trust B Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	1,343,526		429,969		—
Units issued	4,806,729		2,530,991		705,113
Units redeemed	(2,056,535	)	(1,617,434	)	(275,144	)
Units, end of period	4,093,720		1,343,526		429,969
Unit value, end of period $	17.26		16.90		16.12
Assets, end of period $	70,653,639		22,707,880		6,933,060
Investment income ratio*	2.02	%	4.54	%	4.82	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	0.40% to 2.12	%	4.82	%	4.70	%

(g) Fund available in prior year but no activity.

130

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Money Market Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	4,025,524		4,383,149		2,786,033		2,174,205		2,120,159
Units issued	2,612,046		1,324,785		4,547,755		2,639,719		2,342,246
Units redeemed	(1,819,338	)	(1,682,410	)	(2,950,639	)	(2,027,891	)	(2,288,200	)
Units, end of period	4,818,232		4,025,524		4,383,149		2,786,033		2,174,205
Unit value, end of period $	21.09 to 21.78		20.80 to 21.46		14.58 to 20.58		14.04 to 19.65		13.75 to 19.21
Assets, end of period $	101,314,436		83,833,691		86,696,310		52,697,960		40,361,843
Investment income ratio*	1.73	%	4.46	%	4.40	%	2.66	%	0.81	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	1.09% to 1.52	%	3.83% to 4.30	%	3.70% to 4.17	%	1.95% to 2.31	%	0.15% to 0.46	%

	Sub-Account
	Natural Resources Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	34,188		228		—
Units issued	80,652		44,794		236
Units redeemed	(54,958	)	(10,834	)	(8	)
Units, end of period	59,882		34,188		228
Unit value, end of period $	11.53		23.82		16.92
Assets, end of period $	690,422		814,432		3,857
Investment income ratio*	0.74	%	1.39	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(51.60%) to (41.22	%)	40.81	%	22.32	%

(g) Fund available in prior year but no activity.

131

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Natural Resources Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	254,942		176,488		161,459		88,358		62,308
Units issued	266,782		145,660		253,308		197,987		108,859
Units redeemed	(279,964	)	(67,206	)	(238,279	)	(124,886	)	(82,809	)
Units, end of period	241,760		254,942		176,488		161,459		88,358
Unit value, end of period $	26.35 to 26.88		54.82 to 55.72		39.22 to 39.65		32.28 to 32.54		22.14 to 22.24
Assets, end of period $	6,450,461		14,108,807		6,971,550		5,420,454		1,963,833
Investment income ratio*	0.59	%	1.07	%	0.50	%	0.00	%	0.07	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(51.93%) to (51.76	%)	39.76% to 40.25	%	21.50% to 21.87	%	45.82% to 46.26	%	23.51% to 23.88	%

	Sub-Account
	Optimized All Cap Trust Series 0
	Year Ended Dec. 31/08 (ae)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	2,943		154		—
Units issued	142,562		3,223		160
Units redeemed	(55,469	)	(434	)	(6	)
Units, end of period	90,036		2,943		154
Unit value, end of period $	7.81		13.73		13.22
Assets, end of period $	703,064		40,413		2,045
Investment income ratio*	1.17	%	1.57	%	3.01	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(43.12%) to (28.05	%)	3.82	%	15.24	%

(ae) Fund renamed on April 28, 2008. Previously known as Quantitative All Cap Trust.

(g) Fund available in prior year but no activity.

132

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Optimized All Cap Trust Series 1
	Year Ended Dec. 31/08 (ae)		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04 (b)
Units, beginning of period	53		50		1,712		164		—
Units issued	10,535		13,530		34,598		3,081		1,784
Units redeemed	(6,231	)	(13,527	)	(36,260	)	(1,533	)	(1,620	)
Units, end of period	4,357		53		50		1,712		164
Unit value, end of period $	12.71 to 12.85		22.51 to 22.72		21.84 to 21.99		19.08 to 19.18		17.69 to 17.75
Assets, end of period $	56,007		1,200		1,093		32,673		2,916
Investment income ratio*	0.96	%	0.31	%	0.01	%	3.08	%	1.30	%
Expense ratio, lowest to highest**	0.45% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(43.55%) to (43.43	%)	3.11% to 3.31	%	14.42% to 14.65	%	7.88% to 8.10	%	14.16% to 14.39	%

(ae) Fund renamed on April 28, 2008. Previously known as Quantitative All Cap Trust.

(b) Reflects the period from commencement of operations on May 3, 2004 through December 31, 2004.

	Sub-Account
	Optimized Value Trust Series 0
	Year Ended Dec. 31/08 (af)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	3,611		124		—
Units issued	2,253		5,310		129
Units redeemed	(2,501	)	(1,823	)	(5	)
Units, end of period	3,363		3,611		124
Unit value, end of period $	7.60		12.91		13.61
Assets, end of period $	25,545		46,602		1,687
Investment income ratio*	2.76	%	3.20	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(41.15%) to (27.37	%)	(5.17	%)	21.36	%

(af) Fund renamed on April 28, 2008. Previously known as Quantitative Value Trust.

(g) Fund available in prior year but no activity.

133

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Optimized Value Trust Series 1
	Year Ended Dec. 31/08 (af)		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (g)
Units, beginning of period	29,814		1,038		—		—
Units issued	8,708		56,475		14,129		1,072
Units redeemed	(38,472	)	(27,699	)	(13,091	)	(1,072	)
Units, end of period	50		29,814		1,038		—
Unit value, end of period $	10.50 to 10.65		17.97 to 18.17		19.08 to 19.18		15.85
Assets, end of period $	538		539,099		19,810		—
Investment income ratio*	0.05	%	2.27	%	0.22	%	0.00	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.45% to 0.65	%	0.65	%
Total return, lowest to highest***	(41.58%) to (41.40	%)	(5.81%) to (5.53	%)	20.38% to 20.63	%	8.48	%

(af) Fund renamed on April 28, 2008. Previously known as Quantitative Value Trust.

(g) Fund available in prior year but no activity.

	Sub-Account
	Overseas Equity Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	137,614		65,482		—
Units issued	75,397		168,518		66,602
Units redeemed	(65,572	)	(96,386	)	(1,120	)
Units, end of period	147,439		137,614		65,482
Unit value, end of period $	12.42		21.43		19.04
Assets, end of period $	1,831,075		2,948,953		1,246,990
Investment income ratio*	2.06	%	2.47	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(42.05%) to (24.67	%)	12.53	%	19.76	%

(g) Fund available in prior year but no activity.

134

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Pacific Rim Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	25,967		141		—
Units issued	85,741		36,865		146
Units redeemed	(61,147	)	(11,039	)	(5	)
Units, end of period	50,561		25,967		141
Unit value, end of period $	9.25		15.40		14.10
Assets, end of period $	467,715		399,811		1,981
Investment income ratio*	1.53	%	2.47	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(39.92%) to (19.85	%)	9.19	%	11.22	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Pacific Rim Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	531,658		677,202		562,685		592,545		487,239
Units issued	299,011		233,026		604,396		242,075		502,648
Units redeemed	(317,530	)	(378,570	)	(489,879	)	(271,935	)	(397,342	)
Units, end of period	513,139		531,658		677,202		562,685		592,545
Unit value, end of period $	8.69 to 8.97		14.58 to 14.99		13.46 to 16.58		12.20 to 15.01		9.79 to 9.91
Assets, end of period $	4,554,939		7,900,944		9,231,358		6,929,233		5,836,323
Investment income ratio*	1.63	%	1.81	%	0.90	%	0.86	%	0.65	%
Expense ratio, lowest to highest**	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(40.43%) to (40.19	%)	8.37% to 8.81	%	10.27% to 10.71	%	24.89% to 25.32	%	16.14% to 16.50	%

135

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Quantitative Mid Cap Trust Series 0
	Year Ended Dec. 31/08 (k)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	5,837		70		—
Units issued	1,328		8,020		73
Units redeemed	(7,165	)	(2,253	)	(3	)
Units, end of period	—		5,837		70
Unit value, end of period $	11.59		11.96		12.17
Assets, end of period $	—		69,797		860
Investment income ratio*	0.06	%	0.71	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(3.07	%)	(1.73	%)	4.10	%

(k) Terminated as an investment option and funds transferred to Mid Cap Index Trust on April 28, 2008.

(g) Fund available in prior year but no activity.

	Sub-Account
	Quantitative Mid Cap Trust Series 1
	Year Ended Dec. 31/08 (k)		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	3,027		32,171		34,103		31,203		14,437
Units issued	531		5,908		30,835		9,698		41,021
Units redeemed	(3,558	)	(35,052	)	(32,767	)	(6,798	)	(24,255	)
Units, end of period	—		3,027		32,171		34,103		31,203
Unit value, end of period $	13.87 to 14.16		14.33 to 14.67		14.73 to 15.02		14.24 to 14.44		12.62 to 12.71
Assets, end of period $	—		43,898		474,909		487,068		394,385
Investment income ratio*	0.04	%	0.13	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.30% to 0.65	%	0.30% to 0.65	%	0.35% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(3.23%) to (3.14	%)	(2.72%) to (2.36	%)	3.41% to 3.78	%	12.89% to 13.23	%	17.44% to 17.67	%

(k) Terminated as an investment option and funds transferred to Mid Cap Index Trust on April 28, 2008.

136

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Real Estate Securities Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	61,644		61,253		—
Units issued	95,202		41,795		71,898
Units redeemed	(85,222	)	(41,404	)	(10,645	)
Units, end of period	71,624		61,644		61,253
Unit value, end of period $	48.75		80.44		95.27
Assets, end of period $	3,491,635		4,958,485		5,835,277
Investment income ratio*	3.49	%	2.87	%	2.02	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(39.39%) to (38.33	%)	(15.56	%)	38.17	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Real Estate Securities Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	283,937		366,108		472,983		511,509		445,289
Units issued	73,525		91,471		79,184		132,415		359,425
Units redeemed	(136,022	)	(173,642	)	(186,059	)	(170,941	)	(293,205	)
Units, end of period	221,440		283,937		366,108		472,983		511,509
Unit value, end of period $	57.75 to 59.63		96.01 to 98.74		45.30 to 117.35		32.99 to 85.23		29.65 to 76.43
Assets, end of period $	12,770,010		27,305,782		41,904,090		39,627,992		38,437,806
Investment income ratio*	3.23	%	2.57	%	1.78	%	1.96	%	2.36	%
Expense ratio, lowest to highest**	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.65	%
Total return, lowest to highest***	(39.85%) to (39.60	%)	(16.20%) to (15.86	%)	37.14% to 37.69	%	11.07% to 11.52	%	31.18% to 31.64	%

137

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Real Return Bond Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	14,342		9,519		—
Units issued	115,493		8,989		9,712
Units redeemed	(38,734	)	(4,166	)	(193	)
Units, end of period	91,101		14,342		9,519
Unit value, end of period $	9.88		11.14		10.01
Assets, end of period $	900,310		159,791		95,237
Investment income ratio*	0.58	%	7.43	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(11.50%) to (11.30	%)	11.36	%	0.43	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Real Return Bond Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	350,490		175,568		116,509		111,729		5,873
Units issued	476,953		230,718		103,018		85,239		262,524
Units redeemed	(454,171	)	(55,796	)	(43,959	)	(80,459	)	(156,668	)
Units, end of period	373,272		350,490		175,568		116,509		111,729
Unit value, end of period $	13.86 to 14.10		15.72 to 15.95		14.22 to 14.38		14.25 to 14.37		14.14 to 14.22
Assets, end of period $	5,236,778		5,575,602		2,514,498		1,669,468		1,584,831
Investment income ratio*	0.55	%	7.51	%	2.37	%	0.00	%	0.49	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	(11.86%) to (11.59	%)	10.58% to 10.94	%	(0.27%) to 0.05	%	0.78% to 1.09	%	8.35% to 8.69	%

138

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Science & Technology Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	31,366		83		—
Units issued	105,213		44,540		86
Units redeemed	(75,175	)	(13,257	)	(3	)
Units, end of period	61,404		31,366		83
Unit value, end of period $	7.91		14.24		11.90
Assets, end of period $	485,962		446,630		986
Investment income ratio*	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(44.42%) to (29.01	%)	19.62	%	5.60	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Science & Technology Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	857,168		1,326,101		1,728,120		2,513,425		2,816,080
Units issued	370,686		686,435		490,113		687,432		2,720,294
Units redeemed	(592,079	)	(1,155,368	)	(892,132	)	(1,472,737	)	(3,022,949	)
Units, end of period	635,775		857,168		1,326,101		1,728,120		2,513,425
Unit value, end of period $	9.28 to 9.55		16.76 to 17.24		5.41 to 14.46		5.16 to 13.74		5.08 to 13.50
Assets, end of period $	5,102,005		12,527,168		16,624,064		20,287,236		30,223,103
Investment income ratio*	0.00	%	0.00	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.65	%
Total return, lowest to highest***	(44.81%) to (44.61	%)	18.72% to 19.21	%	4.79% to 5.21	%	1.37% to 1.78	%	0.22% to 0.58	%

139

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Short-Term Bond Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	5,739		1,338		—
Units issued	13,807		5,337		42,917
Units redeemed	(14,838	)	(936	)	(41,579	)
Units, end of period	4,708		5,739		1,338
Unit value, end of period $	15.45		19.05		18.45
Assets, end of period $	72,706		109,311		24,683
Investment income ratio*	9.13	%	13.46	%	35.06	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(18.92%) to (15.98	%)	3.25	%	4.55	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Small Cap Growth Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	174,922		107,112		—
Units issued	162,394		178,101		112,610
Units redeemed	(143,660	)	(110,291	)	(5,498	)
Units, end of period	193,656		174,922		107,112
Unit value, end of period $	11.84		19.59		17.19
Assets, end of period $	2,293,376		3,426,541		1,840,852
Investment income ratio*	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(39.54%) to (28.06	%)	13.98	%	13.47	%

(g) Fund available in prior year but no activity.

140

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Small Cap Growth Trust Series 1
	Year Ended Dec. 31/08 (ai)
Units, beginning of period	—
Units issued	46,848
Units redeemed	(39,991	)
Units, end of period	6,857
Unit value, end of period $	9.99 to 10.00
Assets, end of period $	68,532
Investment income ratio*	0.00	%
Expense ratio, lowest to highest**	0.35% to 0.65	%
Total return, lowest to highest***	(0.08%) to (0.04	%)

(ai) Reflects the period from commencement of operations on November 10, 2008 through December 31, 2008.

	Sub-Account
	Small Cap Index Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	25,817		11,525		—
Units issued	53,939		25,127		35,074
Units redeemed	(37,401	)	(10,835	)	(23,549	)
Units, end of period	42,355		25,817		11,525
Unit value, end of period $	10.05		15.16		15.48
Assets, end of period $	425,740		391,430		178,426
Investment income ratio*	1.47	%	2.00	%	2.39	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(33.70%) to (30.20	%)	(2.06	%)	17.64	%

(g) Fund available in prior year but no activity.

141

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Small Cap Index Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	339,311		668,353		728,419		453,968		162,048
Units issued	89,307		81,643		167,253		454,316		586,135
Units redeemed	(183,520	)	(410,685	)	(227,319	)	(179,865	)	(294,215	)
Units, end of period	245,098		339,311		668,353		728,419		453,968
Unit value, end of period $	11.95 to 12.29		18.08 to 18.59		18.61 to 19.06		15.94 to 16.25		15.48 to 15.66
Assets, end of period $	2,975,902		6,241,315		12,623,575		11,739,024		7,067,046
Investment income ratio*	1.23	%	1.61	%	0.49	%	0.53	%	0.34	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(34.14%) to (33.91	%)	(2.85%) to (2.46	%)	16.79% to 17.26	%	3.16% to 3.58	%	16.56% to 16.92	%

	Sub-Account
	Small Cap Opportunities Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07 (g)
Units, beginning of period	3,554		—
Units issued	4,502		5,199
Units redeemed	(4,254	)	(1,645	)
Units, end of period	3,802		3,554
Unit value, end of period $	6.87		11.87
Assets, end of period $	26,117		42,196
Investment income ratio*	2.38	%	2.68	%
Expense ratio, lowest to highest**	0.00	%	0.00	%
Total return, lowest to highest***	(42.13%) to (30.69	%)	(7.60	%)

(g) Fund available in prior year but no activity.

142

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Small Cap Opportunities Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	137,943		282,521		256,511		74,332		28,153
Units issued	31,333		64,717		171,059		314,871		98,813
Units redeemed	(112,213	)	(209,295	)	(145,049	)	(132,692	)	(52,634	)
Units, end of period	57,063		137,943		282,521		256,511		74,332
Unit value, end of period $	13.50 to 13.77		23.42 to 23.86		25.54 to 25.92		23.28 to 23.53		21.77 to 21.88
Assets, end of period $	775,813		3,272,245		7,281,857		6,011,042		1,625,557
Investment income ratio*	2.16	%	1.75	%	0.68	%	0.00	%	0.03	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(42.51%) to (42.30	%)	(8.31%) to (7.94	%)	9.68% to 10.12	%	7.02% to 7.45	%	24.96% to 25.34	%

	Sub-Account
	Small Cap Trust Series 0
	Year Ended Dec. 31/08 (ab)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	1,402		—		—
Units issued	24,844		2,123		5,610
Units redeemed	(26,246	)	(721	)	(5,610	)
Units, end of period	—		1,402		—
Unit value, end of period $	7.27		12.39		12.32
Assets, end of period $	—		17,384		—
Investment income ratio*	0.01	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(41.37%) to (32.38	%)	0.57	%	7.62	%

(ab) Terminated as an investment option and funds transferred to Small Cap Growth Trust on November 10, 2008.

(g) Fund available in prior year but no activity.

143

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Small Cap Trust Series 1
	Year Ended Dec. 31/08 (ab)		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (e)
Units, beginning of period	7,223		2,996		1,196		—
Units issued	42,453		8,887		4,121		1,696
Units redeemed	(49,676	)	(4,660	)	(2,321	)	(500	)
Units, end of period	—		7,223		2,996		1,196
Unit value, end of period $	8.87 to 8.96		15.22 to 15.30		15.22 to 15.27		14.24 to 14.26
Assets, end of period $	—		109,996		45,604		17,031
Investment income ratio*	0.01	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(41.74%) to (41.59	%)	(0.01%) to 0.19	%	6.86% to 7.08	%	13.92% to 14.06	%

(ab) Terminated as an investment option and funds transferred to Small Cap Growth Trust on November 10, 2008.

(e) Reflects the period from commencement of operations on May 2, 2005 through December 31, 2005.

	Sub-Account
	Small Cap Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	102,009		124,341		—
Units issued	94,913		15,444		143,375
Units redeemed	(92,409	)	(37,776	)	(19,034	)
Units, end of period	104,513		102,009		124,341
Unit value, end of period $	25.43		34.40		35.44
Assets, end of period $	2,658,179		3,509,437		4,406,358
Investment income ratio*	1.36	%	0.97	%	0.13	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(27.51%) to (26.07	%)	(2.92	%)	19.32	%

(g) Fund available in prior year but no activity.

144

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Small Cap Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07 (ac)
Units, beginning of period	747		—
Units issued	127,542		31,908
Units redeemed	(63,969	)	(31,161	)
Units, end of period	64,320		747
Unit value, end of period $	9.10 to 9.12		12.26 to 12.39
Assets, end of period $	582,478		9,201
Investment income ratio*	2.10	%	0.02	%
Expense ratio, lowest to highest**	0.45% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(26.56%) to (26.41	%)	(1.88%) to (0.88	%)

(ac) Reflects the period from commencement of operations on November 12, 2007 through December 31, 2007.

	Sub-Account
	Small Company Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (g)
Units, beginning of period	78,273		77,847		2,740		—
Units issued	70,823		9,939		90,180		10,254
Units redeemed	(11,713	)	(9,513	)	(15,073	)	(7,514	)
Units, end of period	137,383		78,273		77,847		2,740
Unit value, end of period $	8.79 to 8.92		15.60 to 15.77		16.80 to 16.93		16.01 to 16.06
Assets, end of period $	1,225,349		1,234,056		1,317,577		43,967
Investment income ratio*	0.00	%	0.00	%	0.00	%	0.00	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(43.61%) to (43.44	%)	(7.15%) to (6.86	%)	4.92% to 5.23	%	5.63% to 5.84	%

(g) Fund available in prior year but no activity.

145

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Small Company Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	50,455		5,566		—
Units issued	80,014		60,594		6,551
Units redeemed	(38,374	)	(15,705	)	(985	)
Units, end of period	92,095		50,455		5,566
Unit value, end of period $	9.67		13.25		13.41
Assets, end of period $	890,555		668,711		74,625
Investment income ratio*	0.86	%	0.17	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(29.59%) to (27.05	%)	(1.14	%)	15.50	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Small Company Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	896,860		1,197,374		1,534,174		1,525,817		1,151,115
Units issued	326,502		494,264		813,580		766,171		1,166,644
Units redeemed	(564,047	)	(794,778	)	(1,150,380	)	(757,814	)	(791,942	)
Units, end of period	659,315		896,860		1,197,374		1,534,174		1,525,817
Unit value, end of period $	13.60 to 14.04		18.69 to 19.29		19.05 to 28.45		16.62 to 24.78		15.67 to 23.28
Assets, end of period $	9,496,541		17,636,851		23,687,841		26,095,828		24,396,927
Investment income ratio*	0.66	%	0.15	%	0.07	%	0.27	%	0.15	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(27.52%) to (27.24	%)	(1.89%) to (1.44	%)	14.62% to 15.13	%	6.29% to 6.66	%	24.38% to 24.76	%

146

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Strategic Bond Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	12,929		—		—
Units issued	4,939		18,075		60
Units redeemed	(8,158	)	(5,146	)	(60	)
Units, end of period	9,710		12,929		—
Unit value, end of period $	9.23		10.99		10.99
Assets, end of period $	89,594		142,120		—
Investment income ratio*	6.78	%	10.56	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(16.07%) to (9.37	%)	0.02	%	7.05	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Strategic Bond Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	201,762		249,209		253,221		238,775		169,132
Units issued	54,133		109,181		138,457		176,347		290,490
Units redeemed	(162,773	)	(156,628	)	(142,469	)	(161,901	)	(220,847	)
Units, end of period	93,122		201,762		249,209		253,221		238,775
Unit value, end of period $	18.07 to 18.59		21.60 to 22.22		19.92 to 22.32		18.71 to 20.86		18.32 to 20.38
Assets, end of period $	1,680,117		4,397,774		5,459,524		5,217,823		4,821,612
Investment income ratio*	5.08	%	9.23	%	6.48	%	2.48	%	3.88	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(16.62%) to (16.33	%)	(0.85%) to (0.45	%)	6.31% to 6.73	%	1.98% to 2.34	%	5.98% to 6.29	%

147

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Strategic Income Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07 (g)
Units, beginning of period	1,248		—
Units issued	766		1,481
Units redeemed	(499	)	(233	)
Units, end of period	1,515		1,248
Unit value, end of period $	10.36		11.33
Assets, end of period $	15,689		14,141
Investment income ratio*	11.82	%	2.57	%
Expense ratio, lowest to highest**	0.00	%	0.00	%
Total return, lowest to highest***	(8.57%) to (8.05	%)	5.85	%

(g) Fund available in prior year but no activity.

	Sub-Account
	Strategic Income Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04 (b)
Units, beginning of period	16,393		35,928		78,004		2,225		—
Units issued	185,983		20,922		37,952		90,668		2,246
Units redeemed	(118,718	)	(40,457	)	(80,028	)	(14,889	)	(21	)
Units, end of period	83,658		16,393		35,928		78,004		2,225
Unit value, end of period $	13.59 to 13.79		14.97 to 15.14		14.24 to 14.35		13.78 to 13.82		13.56 to 13.57
Assets, end of period $	1,151,717		245,858		512,297		1,075,257		30,167
Investment income ratio*	12.21	%	1.70	%	2.03	%	12.20	%	6.19	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.45% to 0.65	%	0.45% to 0.65	%
Total return, lowest to highest***	(9.22%) to (8.93	%)	5.16% to 5.51	%	3.31% to 3.62	%	1.64% to 1.81	%	8.46% to 8.60	%

(b) Reflects the period from commencement of operations on May 3, 2004 through December 31, 2004.

148

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Total Bond Market Trust B Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07 (j)		Year Ended Dec. 31/06 (g)
Units, beginning of period	156,154		103,058		—
Units issued	259,709		171,563		107,642
Units redeemed	(135,950	)	(118,467	)	(4,584	)
Units, end of period	279,913		156,154		103,058
Unit value, end of period $	18.01		17.03		15.89
Assets, end of period $	5,041,514		2,658,477		1,637,785
Investment income ratio*	6.26	%	11.03	%	2.44	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	3.52% to 5.79	%	7.13	%	4.07	%

(j) Renamed on October 1, 2007. Formerly known as Bond Index Trust B.

(g) Fund available in prior year but no activity.

	Sub-Account
	Total Return Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	72,293		34,283		—
Units issued	237,637		55,834		36,837
Units redeemed	(85,224	)	(17,824	)	(2,554	)
Units, end of period	224,706		72,293		34,283
Unit value, end of period $	12.71		12.37		11.39
Assets, end of period $	2,857,007		894,516		390,568
Investment income ratio*	5.58	%	9.04	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	2.76% to 2.76	%	8.61	%	3.67	%

(g) Fund available in prior year but no activity.

149

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Total Return Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	1,745,005		1,570,478		2,385,781		2,833,935		2,319,152
Units issued	1,884,675		1,105,189		879,060		1,121,316		2,668,560
Units redeemed	(1,486,023	)	(930,662	)	(1,694,363	)	(1,569,470	)	(2,153,777	)
Units, end of period	2,143,657		1,745,005		1,570,478		2,385,781		2,833,935
Unit value, end of period $	19.93 to 20.59		19.46 to 20.09		18.06 to 18.56		17.56 to 17.92		17.28 to 17.53
Assets, end of period $	43,539,894		34,656,094		28,840,343		42,371,818		49,394,073
Investment income ratio*	4.60	%	7.86	%	3.62	%	2.49	%	3.71	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.30% to 0.70	%	0.30% to 0.65	%
Total return, lowest to highest***	2.10% to 2.52	%	7.73% to 8.23	%	2.89% to 3.34	%	1.76% to 2.17	%	4.28% to 4.65	%

	Sub-Account
	Total Stock Market Index Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	6,922		37		—
Units issued	23,133		8,318		37
Units redeemed	(23,516	)	(1,433	)	—
Units, end of period	6,539		6,922		37
Unit value, end of period $	30.58		48.65		46.25
Assets, end of period $	199,933		336,768		1,715
Investment income ratio*	0.93	%	3.08	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(37.15%) to (25.73	%)	5.19	%	15.33	%

(g) Fund available in prior year but no activity.

150

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Total Stock Market Index Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	260,998		212,749		323,999		230,903		371,604
Units issued	90,395		144,535		144,172		313,142		405,051
Units redeemed	(164,947	)	(96,286	)	(255,422	)	(220,046	)	(545,752	)
Units, end of period	186,446		260,998		212,749		323,999		230,903
Unit value, end of period $	8.70 to 8.91		13.90 to 14.29		13.31 to 13.63		11.62 to 11.83		11.10 to 11.23
Assets, end of period $	1,649,478		3,702,220		2,867,841		3,807,527		2,572,128
Investment income ratio*	1.61	%	2.17	%	1.02	%	0.99	%	0.73	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(37.61%) to (37.42	%)	4.44% to 4.86	%	14.49% to 14.95	%	4.96% to 5.32	%	11.02% to 11.35	%

	Sub-Account
	U.S. Core Trust Series 0
	Year Ended Dec. 31/08 (ad)		Year Ended Dec. 31/07 (g)
Units, beginning of period	64,781		—
Units issued	15,336		77,819
Units redeemed	(80,117	)	(13,038	)
Units, end of period	—		64,781
Unit value, end of period $	7.76		11.64
Assets, end of period $	—		754,280
Investment income ratio*	1.34	%	3.58	%
Expense ratio, lowest to highest**	0.00	%	0.00	%
Total return, lowest to highest***	(33.37%) to (21.24	%)	1.31	%

(ad) Terminated as an investment option and funds transferred to Fundamental Value Trust on November 10, 2008.

(g) Fund available in prior year but no activity.

151

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	U.S. Core Trust Series 1
	Year Ended Dec. 31/08 (ad)		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (o)		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	398,897		827,753		853,493		899,801		1,151,229
Units issued	79,679		131,686		237,418		549,300		471,319
Units redeemed	(478,576	)	(560,542	)	(263,158	)	(595,608	)	(722,747	)
Units, end of period	—		398,897		827,753		853,493		899,801
Unit value, end of period $	13.68 to 14.06		20.58 to 21.16		11.57 to 20.96		10.66 to 19.25		10.50 to 18.89
Assets, end of period $	—		7,579,823		16,484,485		15,776,383		16,191,548
Investment income ratio*	1.32	%	2.13	%	1.19	%	1.38	%	0.85	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(33.76%) to (33.56	%)	0.56% to 0.97	%	8.42% to 8.84	%	1.32% to 1.72	%	6.08% to 6.39	%

(ad) Terminated as an investment option and funds transferred to Fundamental Value Trust on November 10, 2008.

(o) Fund renamed on May 1, 2006. Previously known as Growth & Income Trust.

	Sub-Account
	U.S. Global Leaders Growth Trust Series 0
	Year Ended Dec. 31/08 (x)		Year Ended Dec. 31/07 (g)
Units, beginning of period	109		—
Units issued	223		429
Units redeemed	(332	)	(320	)
Units, end of period	—		109
Unit value, end of period $	11.60		11.51
Assets, end of period $	—		1,257
Investment income ratio*	0.25	%	1.92	%
Expense ratio, lowest to highest**	0.00	%	0.00	%
Total return, lowest to highest***	0.73	%	3.72	%

(x) Terminated as an investment option and funds transferred to Blue Chip Growth Trust on April 28, 2008.

(g) Fund available in prior year but no activity.

152

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	U.S. Global Leaders Growth Trust Series 1
	Year Ended Dec. 31/08 (x)		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05 (g)
Units, beginning of period	47,143		51,406		83,180		—
Units issued	2,281		24,267		25,598		104,006
Units redeemed	(49,424	)	(28,530	)	(57,372	)	(20,826	)
Units, end of period	—		47,143		51,406		83,180
Unit value, end of period $	13.80 to 13.94		13.75 to 13.90		13.35 to 13.46		13.20 to 13.27
Assets, end of period $	—		652,965		690,161		1,100,951
Investment income ratio*	0.43	%	1.48	%	0.00	%	0.24	%
Expense ratio, lowest to highest**	0.40% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%
Total return, lowest to highest***	0.42% to 0.50	%	2.96% to 3.26	%	1.14% to 1.45	%	0.22% to 0.52	%

(x) Terminated as an investment option and funds transferred to Blue Chip Growth Trust on April 28, 2008.

(g) Fund available in prior year but no activity.

	Sub-Account
	U.S. Government Securities Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	7,826		30		—
Units issued	62,022		13,928		31
Units redeemed	(54,319	)	(6,132	)	(1	)
Units, end of period	15,529		7,826		30
Unit value, end of period $	12.45		12.64		12.24
Assets, end of period $	193,403		98,886		370
Investment income ratio*	3.95	%	8.95	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(1.44%) to 0.56	%	3.25	%	4.39	%

(g) Fund available in prior year but no activity.

153

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	U.S. Government Securities Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	571,273		690,780		649,545		541,692		595,722
Units issued	478,767		356,594		578,659		404,113		625,354
Units redeemed	(585,906	)	(476,101	)	(537,424	)	(296,260	)	(679,384	)
Units, end of period	464,134		571,273		690,780		649,545		541,692
Unit value, end of period $	15.84 to 16.37		16.12 to 16.64		15.74 to 16.94		15.18 to 16.32		15.08 to 16.15
Assets, end of period $	7,525,507		9,452,949		11,102,160		9,984,112		8,245,778
Investment income ratio*	3.56	%	8.20	%	5.48	%	1.72	%	1.95	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(2.05%) to (1.66	%)	2.43% to 2.89	%	3.66% to 4.13	%	0.87% to 1.24	%	2.21% to 2.54	%

	Sub-Account
	U.S. High Yield Bond Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	1,133		400		—
Units issued	19,427		929		414
Units redeemed	(2,092	)	(196	)	(14	)
Units, end of period	18,468		1,133		400
Unit value, end of period $	9.31		11.76		11.42
Assets, end of period $	171,876		13,322		4,564
Investment income ratio*	21.85	%	12.03	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(20.85%) to (19.03	%)	3.00	%	9.60	%

(g) Fund available in prior year but no activity.

154

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	U.S. High Yield Bond Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	18,379		197		—
Units issued	138,980		39,504		201
Units redeemed	(155,836	)	(21,322	)	(4	)
Units, end of period	1,523		18,379		197
Unit value, end of period $	11.33 to 11.46		14.42 to 14.54		14.11
Assets, end of period $	17,289		265,248		2,781
Investment income ratio*	1.00	%	10.24	%	0.00	%
Expense ratio, lowest to highest**	0.35% to 0.65	%	0.35% to 0.65	%	0.65	%
Total return, lowest to highest***	(21.38%) to (21.14	%)	2.19% to 2.52	%	8.89	%

(g) Fund available in prior year but no activity.

	Sub-Account
	U.S. Large Cap Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	9,555		—		—
Units issued	3,767		19,992		8,184
Units redeemed	(6,967	)	(10,437	)	(8,184	)
Units, end of period	6,355		9,555		—
Unit value, end of period $	7.57		12.37		12.41
Assets, end of period $	48,088		118,228		—
Investment income ratio*	1.94	%	1.35	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(38.85%) to (23.68	%)	(0.26	%)	10.68	%

(g) Fund available in prior year but no activity.

155

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	U.S. Large Cap Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	1,308,474		1,435,047		1,555,399		1,640,031		284,605
Units issued	154,180		313,621		270,247		430,513		1,930,714
Units redeemed	(529,257	)	(440,194	)	(390,599	)	(515,145	)	(575,288	)
Units, end of period	933,397		1,308,474		1,435,047		1,555,399		1,640,031
Unit value, end of period $	9.66 to 9.97		15.86 to 16.36		16.02 to 16.46		14.58 to 14.84		13.91 to 14.07
Assets, end of period $	9,057,849		20,972,000		23,164,531		22,779,517		22,836,763
Investment income ratio*	2.17	%	1.09	%	0.57	%	0.43	%	0.09	%
Expense ratio, lowest to highest**	0.25% to 0.65	%	0.25% to 0.70	%	0.25% to 0.70	%	0.35% to 0.70	%	0.35% to 0.65	%
Total return, lowest to highest***	(39.29%) to (39.04	%)	(1.04%) to (0.60	%)	9.88% to 10.38	%	5.08% to 5.45	%	8.68% to 9.01	%

	Sub-Account
	Utilities Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06 (g)
Units, beginning of period	17,927		149		—
Units issued	78,710		23,920		155
Units redeemed	(41,268	)	(6,142	)	(6	)
Units, end of period	55,369		17,927		149
Unit value, end of period $	11.89		19.33		15.17
Assets, end of period $	658,222		346,525		2,261
Investment income ratio*	2.83	%	2.39	%	0.00	%
Expense ratio, lowest to highest**	0.00	%	0.00	%	0.00	%
Total return, lowest to highest***	(38.50%) to (21.20	%)	27.43	%	31.06	%

(g) Fund available in prior year but no activity.

156

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Utilities Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	225,244		131,267		154,810		40,217		12,829
Units issued	156,245		139,373		77,515		154,202		57,841
Units redeemed	(131,682	)	(45,396	)	(101,058	)	(39,609	)	(30,453	)
Units, end of period	249,807		225,244		131,267		154,810		40,217
Unit value, end of period $	14.16 to 14.55		23.22 to 23.70		18.35 to 18.66		14.10 to 14.30		12.15 to 12.26
Assets, end of period $	3,594,971		5,302,683		2,433,871		2,200,446		489,462
Investment income ratio*	3.24	%	2.12	%	2.31	%	0.39	%	0.54	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.35% to 0.65	%	0.40% to 0.65	%
Total return, lowest to highest***	(39.04%) to (38.83	%)	26.57% to 26.95	%	30.15% to 30.55	%	16.07% to 16.41	%	28.57% to 28.91	%

	Sub-Account
	Value Trust Series 0
	Year Ended Dec. 31/08		Year Ended Dec. 31/07 (g)
Units, beginning of period	34,210		—
Units issued	64,360		43,166
Units redeemed	(63,494	)	(8,956	)
Units, end of period	35,076		34,210
Unit value, end of period $	8.90		15.05
Assets, end of period $	312,241		514,782
Investment income ratio*	0.84	%	2.92	%
Expense ratio, lowest to highest**	0.00	%	0.00	%
Total return, lowest to highest***	(40.84%) to (31.48	%)	8.26	%

(g) Fund available in prior year but no activity.

157

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

9. Financial Highlights

	Sub-Account
	Value Trust Series 1
	Year Ended Dec. 31/08		Year Ended Dec. 31/07		Year Ended Dec. 31/06		Year Ended Dec. 31/05		Year Ended Dec. 31/04
Units, beginning of period	395,785		297,227		422,144		1,080,759		720,769
Units issued	134,441		322,269		199,825		208,115		1,280,008
Units redeemed	(219,491	)	(223,711	)	(324,742	)	(866,730	)	(920,018	)
Units, end of period	310,735		395,785		297,227		422,144		1,080,759
Unit value, end of period $	17.74 to 18.24		30.09 to 30.95		25.21 to 28.68		20.94 to 23.77		18.71 to 21.18
Assets, end of period $	5,587,755		12,100,633		8,411,802		9,906,015		22,720,877
Investment income ratio*	1.10	%	1.37	%	0.42	%	0.55	%	0.53	%
Expense ratio, lowest to highest**	0.30% to 0.65	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.70	%	0.30% to 0.65	%
Total return, lowest to highest***	(41.25%) to (41.05	%)	7.46% to 7.89	%	20.20% to 20.68	%	11.78% to 12.22	%	14.43% to 14.83	%

158

John Hancock Life Insurance Company (U.S.A.) Separate Account N

Notes to Financial Statements (continued)

The Account is a funding vehicle for a number of variable universal life insurance products which have unique combinations of features and fees that are charged against the contract owner’s account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns.

The preceding table was developed by determining which products offered by the Company have the lowest and highest total return. Only product designs within each sub-account that had units outstanding during the period were considered when determining the lowest and highest total return. The summary may not reflect the minimum and maximum mortality and expense risk charge offered by the Company as contract owners may not have selected all available and applicable contract options as discussed in Notes 3 and 4.

(*) These ratios, which are not annualized, represent the dividends, excluding distributions of capital gains, received by the sub-account from the underlying Trust portfolio, net of management fees assessed by the Trust portfolio adviser, divided by the average net assets of the sub-account. These ratios exclude those expenses, such as mortality and expense risk charges, that result in direct reductions in unit values. The recognition of investment income by the sub-account is affected by the timing of the declarations of dividends by the underlying Trust portfolio in which the sub-accounts invest. It is the practice of the Trusts, for income tax reasons, to declare dividends in April for investment income received in the previous calendar year for all sub-accounts of the Trusts except for the Money Market Trust which declares and reinvests dividends on a daily basis. Any dividend distribution received from a sub-account of the Trusts is reinvested immediately, at the net asset value, in shares of that sub-account and retained as assets of the corresponding sub-account so that the unit value of the sub-account is not affected by the declaration and reinvestment of dividends.

(**) These ratios represent the annualized contract expenses of the separate account, consisting primarily of mortality and expense risk charges, for the period indicated. The ratios include only those expenses that result in a direct reduction in unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying Trust portfolio are excluded.

(***) These ratios, which are not annualized, represent the total return for the period indicated, including changes in the value of the underlying Trust portfolio, and reflect deductions for all items included in the expense ratio. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented.

159

PART C

OTHER INFORMATION

Item 26. Exhibits

The following exhibits are filed as part of this Registration Statement:

(a) Resolutions of Board of Directors of the John Hancock Life Insurance Company (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.)) establishing Separate Account N. Incorporated by reference to exhibit A (1) to the pre-effective amendment no. 1 file number 333-71312 filed with the Commission on January 2, 2002.

(b) Not applicable.

(c) (1) Distribution and Servicing Agreement between John Hancock Distributors LLC and John Hancock Life Insurance Company (U.S.A.) dated February 17, 2009. Incorporated by reference to pre-effective amendment number 1 file number 333-157212, filed with the Commission on April 7, 2009.

(2) Specimen General Agent and Broker-Dealer Selling Agreement by and among John Hancock Life Insruance Company, John Hancock Variable Life Insurance Company, John Hancock Life Insurance Company (U.S.A.), John Hancock Life Insurance Company of New York, John Hancock Distributors LLC. Incorporated by reference to pre-effective number 2 file number 333-148991 filed with the Commission on October 7, 2008. List of third party broker-dealer firms (included as attachment A). Incorporated by reference to pre-effective number 1 file number 333-157212, filed with the Commission on April 7, 2009.

(d) Form of Specimen Flexible Premium Variable Life Insurance Policy. Incorporated by reference to post-effective amendment number 6 file number 333-100567 filed with the Commission on April 30, 2007.

(2) Form of Specimen Flexible Term Insurance Option Term Life Rider. Incorporated by reference to post-effective amendment number 6 file number 333-100567 filed with the Commission on April 30, 2007.

(e) (1) Form of Specimen Application for Flexible Premium Variable Life Insurance Policy. Incorporated by reference to Exhibit A(10) to post-effective amendment number 7 file number 33-52310 filed with the Commission on April 26, 1996. (2) Specimen Application Supplement for Flexible Premium Variable Life Insurance Policy. Incorporated by reference to Exhibit A(10) to post-effective amendment number 9 file number 33-52310 filed with the Commission on April 26, 1996.

(f) (1) Restated Articles of Redomestication of the John Hancock Life Insurance Company (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.)) dated December 30, 1992. Incorporated by reference to post-effective amendment number 9 file number 333-85284, filed with the Commission in April, 2007.

(a) Amendment to the Articles of Redomestication of the John Hancock Life Insurance Company (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.)) dated July 16, 2004. Incorporated by reference to pre-effective amendment no. 1 file number 333-126668 filed with the Commission on October 12, 2005.

(b) Amendment to the Articles of Redomestication dated January 1, 2005. Incorporated by reference to post-effective amendment number 9 file number 333-85284, filed with the Commission in April, 2007.

(2) By-laws of the John Hancock Life Insurance Company (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.)) dated December 2, 1992. Incorporated by reference to pre-effective amendment no. 1 file number 333- 126668 filed with the Commission on October 12, 2005.

(a) Amendment to the By-laws of the John Hancock Life Insurance Company (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.)) dated June 7, 2000. Incorporated by reference to pre-effective amendment no. 1 file number 333-126668 filed with the Commission on October 12, 2005.

(b) Amendment to the By-laws of the John Hancock Life Insurance Company (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.)) dated March 12, 1999. Incorporated by reference to pre-effective amendment no. 1 file number 333-126668 filed with the Commission on October 12, 2005.

(c) Amendment to the By-laws of the John Hancock Life Insurance Company (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.)) dated July 16, 2004. Incorporated by reference to post-effective amendment number 9 file number 333-85284, filed with the Commission in April, 2007.

(g) (1) Reinsurance Agreement between John Hancock Life Insurance Company (U.S.A.) and Optimum Re Insurance Company. Incorporated by reference to pre-effective amendment number 2 file number 333-152406, filed with the Commission on November 21, 2008.

(g) (2) Reinsurance Agreement between John Hancock Life Insurance Company (U.S.A.) and Transamerica Occidental Life Insurance Company. Incorporated by reference to pre-effective amendment number 2 file number 333-152406, filed with the Commission on November 21, 2008.

(g) (3) Reinsurance Agreement between John Hancock Life Insurance Company (U.S.A.) and Munich American Reassurance Company. Incorporated by reference to pre-effective amendment number 2 file number 333-152406, filed with the Commission on November 21, 2008.

(g) (4) Reinsurance Agreement between John Hancock Life Insurance Company (U.S.A.) and Generali USA Life Reassurance Company. Incorporated by reference to pre-effective amendment number 2 file number 333-152406, filed with the Commission on November 21, 2008.

(h) (1) Participation Agreement among The Manufacturers Insurance Company (U.S.A.), The Manufacturers Insurance Company of New York, PIMCO Variable Insurance Trust and PIMCO Advisors Distributors LLC dated April 30, 2004. Incorporated by reference to pre-effective amendment no. 1 file number 333-126668 filed with the Commission on October 12, 2005.

(2) Participation Agreement among John Hancock Life Insurance Company (U.S.A.), John Hancock Life Insurance Company of New York, John Hancock Life Insurance Company, John Hancock Variable Life Insurance Company and John Hancock Trust dated April 20, 2005. Incorporated by reference to pre-effective amendment no. 1 file number 333-126668 filed with the Commission on October 12, 2005.

(3) Shareholder Information Agreement between John Hancock Life Insurance Company (U.S.A.), John Hancock Life Insurance Company of New York, John Hancock Life Insurance Company, John Hancock Variable Life Insurance, and John Hancock Trust portfolios (except American Funds Insurance Series) dated April 16, 2007. Incorporated by reference to post- effective amendment number 9 file number 333-85284, filed with the Commission in April, 2007.

(4) Shareholder Information Agreement between John Hancock Life Insurance Company (U.S.A.), John Hancock Life Insurance Company of New York, John Hancock Life Insurance Company, John Hancock Variable Life Insurance, and John Hancock Trust on behalf of series of the Trust that are feeder funds of the American Funds Insurance Series dated April 16, 2007. Incorporated by reference to post-effective amendment number 9 file number 333-85284, filed with the Commission in April, 2007.

(i) (1) Service Agreement between John Hancock Life Insurance Company (U.S.A.) (formerly, The Manufacturers Life Insurance Company (U.S.A.)) and John Hancock Life Insurance Company dated April 28, 2004. Incorporated by reference to post-effective amendment number 9 file number 333-85284, filed with the Commission in April, 2007.

(j) Not applicable.

(k) Opinion and consent of counsel for John Hancock Life Insurance Company (U.S.A.). Incorporated by reference to Exhibit 2 (a) to pre-effective amendment no. 1 file number 333-100597 filed with the Commission on December 16, 2002.

(l) Not Applicable.

(m) Not Applicable.

(n) Consents of Independent Registered Public Accounting Firm are filed herewith.

(n)(1) Opinion of Counsel as to the eligibility of this post-effective amendment pursuant to Rule 485(b) is filed herewith.

(o) Not Applicable.

(p) Not Applicable.

(q) Memorandum Regarding Issuance, Face Amount Increase, Redemption and Transfer Procedures for the Policies. Incorporated by reference to Exhibit A(6) to pre-effective amendment no. 1 file number 333-100597 filed with the Commission on December 16, 2002.

Powers of Attorney

(i) Powers of Attorney for James R. Boyle, John DesPrez III, Rex Schlaybaugh, Jr., and Diana Scott are incorporated by reference to post-effective amendment number 5 file number 333-100567 filed with the Commission on April 28, 2006.

(ii) Powers of Attorneys for Marc Costantini, Steven S. Finch, Katherine MacMillan and Hugh McHaffie are incorporated by reference to post-effective amendment number 7 file number 333-100567 filed with the Commission on April 30, 2007.

(iii) Powers of Attorneys for Scott S. Hartz and Stephen R. McArthur are filed herewith.

Item 27. Directors and Officers of the Depositor

OFFICERS AND DIRECTORS OF JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) as of April 1, 2009.

Name and Principal Business Address	Position with Depositor
Directors

Name and Principal Business Address	Position with Depositor
James R. Boyle**	Director
Marc Costantini*	Director
John D. DesPrez III*	Director
Steven A. Finch**	Director
Scott S. Hartz**	Director
Stephen R. McArthur****	Director
Hugh McHaffie*	Director
Katherine MacMillan*****	Director
Rex Schlaybaugh, Jr.*******	Director
Diana Scott*	Director
Officers
John D. DesPrez III*	Chairman and President
Hugh McHaffie*	Executive Vice President, Wealth Management
James R. Boyle**	Executive Vice President, Life Insurance
Stephen R. McArthur****	Executive Vice President and General Manager, Reinsurance
Steven A. Finch**	Executive Vice President and General Manager, JH Insurance
Katherine MacMillan*****	Executive Vice President and General Manager, JH RPS
Marc Costantini*	Executive Vice President and General Manager, JH Annuities
	Executive Vice President and General Manager, Long Term
Marianne Harrison**	Care Insurance
Jonathan Chiel*	Executive Vice President and General Counsel
Warren Thomson******	Executive Vice President US Investments
	Executive Vice President and Chief Investment Officer, US
Scott Hartz**	Investments
Ronald J. McHugh*	Senior Vice President and General Manager, Fixed Products
Allan Hackney*	Senior Vice President and Chief Information Officer
Lynne Patterson*	Senior Vice President and Chief Financial Officer
Diana Scott*	Senior Vice President, Human Resources
Peter Levitt****	Senior Vice President and Treasurer
Jeffery Whitehead*	Vice President and Controller
Emanuel Alves*	Vice President, Counsel and Corporate Secretary
Mitchell A. Karman**	Vice President, Chief Compliance Officer and Counsel
John Brabazon**	Vice President & CFO, US Investments
Richard Harris**	Vice President, Appointed Actuary
Kris Ramdial*****	Vice President, Treasury
Philip Clarkson**	Vice President, Taxation
Brian Collins****	Vice President, Taxation
John H. Durfey****	Assistant Secretary
Kwong Yiu****	Assistant Secretary
Grace O’Connell*	Assistant Secretary
Deanna Garland**	Assistant Secretary

*Principal Business Office is 601 Congress Street, Boston, MA 02210

**Principal Business Office is 197 Clarendon Street, Boston, MA 02117

***Principal Business Office is 200 Clarendon Street, Boston, MA 02117

****Principal Business Office is 200 Bloor Street, Toronto, Canada M4W1E5

*****Principal Business Office is 250 Bloor Street, Toronto, Canada M4W1E5

******Principal Business Office is 101 Huntington Avenue, Boston, MA 02117

*******Principal Business Office is 400 Renaissance Center, Detroit, MI 48243

Item 28. Persons Controlled by or Under Common Control with the Depositor or the Registrant

Registrant is a separate account of John Hancock USA, operated as a unit investment trust. Registrant supports benefits payable under John Hancock USA’s variable life insurance policies by investing assets allocated to various investment options in shares of John Hancock Trust and other mutual funds registered under the Investment Company Act of 1940 as open-end management investment companies of the “series” type.

A list of persons directly or indirectly controlled by or under common contract with John Hancock USA as of December 31, 2008 appears below:

Subsidiary Name

Cavalier Cable, Inc.

JHUSA CIP Investments, LLC (Delaware)

John Hancock Advisers LLC (Delaware)

John Hancock Distributors LLC

John Hancock Investment Management Services, LLC

John Hancock Life Insurance Company of New York

Manulife Reinsurance (Bermuda) Limited

Manulife Reinsurance Limited (Bermuda)

Manulife Service Corporation

Item 29. Indemnification

The Form of Selling Agreement or Service Agreement between John Hancock Distributors LLC and various broker- dealers may provide that the selling broker-dealer indemnify and hold harmless John Hancock Distributors LLC and the Company, including their affiliates, officers, directors, employees and agents against losses, claims, liabilities or expenses (including reasonable attorney’s fees), arising out of or based upon a breach of the Selling or Service Agreement, or any applicable law or regulation or any applicable rule of any self-regulatory organization or similar provision consistent with industry practice.

Item 30. Principal Underwriter

(a) Set forth below is information concerning other investment companies for which John Hancock Distributors LLC, the principal underwriter of the contracts, acts as investment adviser or principal underwriter.

Name of Investment Company	Capacity in Which Acting
John Hancock Variable Life Separate Account S	Principal Underwriter
John Hancock Variable Life Separate Account U	Principal Underwriter
John Hancock Variable Life Separate Account V	Principal Underwriter
John Hancock Variable Life Separate Account UV	Principal Underwriter
John Hancock Variable Annuity Separate Account I	Principal Underwriter
John Hancock Variable Annuity Separate Account JF	Principal Underwriter
John Hancock Variable Annuity Separate Account U	Principal Underwriter
John Hancock Variable Annuity Separate Account V	Principal Underwriter
John Hancock Variable Annuity Separate Account H	Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account A	Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account N	Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account H	Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account I	Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account J	Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account K	Principal Underwriter
John Hancock Life Insurance Company (U.S.A.) Separate Account M	Principal Underwriter
John Hancock Life Insurance Company of New York Separate Account B	Principal Underwriter
John Hancock Life Insurance Company of New York Separate Account A	Principal Underwriter

(b) John Hancock Life Insurance Company (U.S.A.) is the sole member of John Hancock Distributors LLC and the following comprise the Board of Managers and Officers of John Hancock Distributors LLC as of April 1, 2009.

Name	Title
Edward Eng*****	Board Manager
Barry Evans******	Board Manager
Steven A. Finch**	Board Manager

Name	Title
Lynne Patterson*	Board Manager
Christopher Walker****	Board Manager
Karen Walsh*	Board Manager
Emanuel Alves*	Secretary
Philip Clarkson***	Vice President, U.S. Taxation
Brian Collins****	Vice President, U.S. Taxation
David Crawford****	Assistant Secretary
	Vice President, Product Development Retirement Plan
Edward Eng*****	Services
Steven A. Finch**	President and Chief Executive Officer
Peter Levitt*****	Senior Vice President, Treasurer
Heather Justason****	Chief Operating Officer
Jeff Long*	Financial Operations Principal
Declan O’Beirne**	Chief Financial Officer
Kathleen Pettit**	Vice President and Chief Compliance Officer
Kris Ramdial*****	Vice President, Treasury
Pamela Schmidt**	General Counsel
Karen Walsh*	Vice President, Annuity Distribution

*Principal Business Office is 601 Congress Street, Boston, MA 02210

**Principal Business Office is 197 Clarendon Street, Boston, MA 02116

***Principal Business Office is 200 Clarendon Street, Boston, MA 02116

****Principal Business Office is 200 Bloor Street, Toronto, Canada M4W1E5

*****Principal Business Office is 250 Bloor Street, Toronto, Canada M4W1E5

******Principal Business Office is 101 Huntington Street, Boston, MA 02116

(c) John Hancock Distributors LLC

The information contained in the section titled “Principal Underwriter and Distributor” in the Statement of Additional Information, contained in this Registration Statement, is hereby incorporated by reference in response to Item 31.(c)(2-5).

Item 31. Location of Accounts and Records

The following entities prepare, maintain, and preserve the records required by Section 31(a) of the Act for the Registrant through written agreements between the parties to the effect that such services will be provided to the Registrant for such periods prescribed by the Rules and Regulations of the Commission under the Act and such records will be surrendered promptly on request: John Hancock Distributors LLC, John Hancock Place, Boston, Massachusetts 02117, serves as Registrant’s distributor and principal underwriter, and, in such capacities, keeps records regarding shareholders account records, cancelled stock certificates. John Hancock Life Insurance Company (U.S.A.) (at the same address), in its capacity as Registrant’s depositor keeps all other records required by Section 31 (a) of the Act.

Item 32. Management Services

All management services contracts are discussed in Part A or Part B.

Item 33. Fee Representation

Representation of Insurer Pursuant to Section 26 of the Investment Company Act of 1940.

The John Hancock Life Insurance Company (U.S.A.) hereby represents that the fees and charges deducted under the contracts issued pursuant to this registration statement, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the Company.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has caused this post-effective amendment to the Registration Statement to be signed on their behalf in the City of Boston, Massachusetts, as of the 24th day of April, 2009.

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

SEPARATE ACCOUNT N

(Registrant)

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

By: /s/ James R. Boyle

James R. Boyle

Principal Executive Officer

JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)

(Depositor)

By: /s/ James R. Boyle

James R. Boyle

Principal Executive Officer

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, this amendment to the Registration Statement has been signed by the following persons in the capacities indicated as of the 24th day of April, 2009.

/s/ Lynne Patterson	Senior Vice President and Chief Financial Officer
Lynne Patterson
/s/ Jeffery J. Whitehead	Vice President and Controller
Jeffery J. Whitehead
*	Director
James R. Boyle
*	Director
Marc Costantini
*	Director
John D. DesPrez III
*	Director
Steven A. Finch
*	Director
Scott S. Hartz
*	Director
Katherine MacMillan
*	Director
Stephen R. McArthur
*	Director
Hugh McHaffie
*	Director
Rex Schlaybaugh, Jr.
*	Director
Diana Scott
/s/James C. Hoodlet
James C. Hoodlet
Pursuant to Power of Attorney

May, 2009

This disclosure is distributed to policy owners of variable life insurance policies issued by John Hancock Life Insurance Company (U.S.A.) (“John Hancock USA”) and offering interests in John Hancock Life Insurance Company (U.S.A.) Separate Account N (the “Account” or “Separate Account”). Certain of the investment options described in this disclosure may not be available to you under your policy.

1. Investment Options

Certain of the investment options listed below are offered under variable life insurance policies bearing the title Corporate VUL.

500 Index	Financial Services	Money Market
500 Index B	Franklin Templeton Founding Allocation	Money Market B
Active Bond	Fundamental Value	Natural Resources
All Cap Core	Global	Optimized All Cap
All Cap Growth	Global Allocation	Optimized Value
All Cap Value	Global Bond	Overseas Equity
Alpha Opportunities	Global Real Estate	Pacific Rim
American Asset Allocation	Health Sciences	PIMCO VIT All Asset
American Blue Chip Income and Growth	High Yield	Real Estate Securities
American Bond	International Core	Real Return Bond
American Diversified Growth and Income	International Equity Index A	Science & Technology
American Fundamental Holdings	International Equity Index B	Short-Term Bond
American Global Diversification	International Opportunities	Small Cap Growth
American Growth	International Small Cap	Small Cap Index
American Growth-Income	International Value	Small Cap Opportunities
American International	Investment Quality Bond	Small Cap Value
American New World	Large Cap	Small Company Value
Balanced	Large Cap Value	Strategic Bond
Blue Chip Growth	Lifestyle Aggressive	Strategic Income
Capital Appreciation	Lifestyle Balanced	Total Bond Market B
Capital Appreciation Value	Lifestyle Conservative	Total Return
Core Allocation Plus	Lifestyle Growth	Total Stock Market Index
Core Bond	Lifestyle Moderate	U.S. Government Securities
Core Strategy	Mid Cap Index	U.S. High Yield Bond
Disciplined Diversification	Mid Cap Intersection	Utilities
Emerging Small Company	Mid Cap Stock	Value
Equity-Income	Mid Value

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2. Total annual portfolio operating expenses

The following table shows the minimum and maximum total portfolio level fees and expenses charged by any of the portfolios underlying a variable investment option offered through the VUL Accumulator, EPVUL, VUL Protector, Accumulation VUL, Survivorship VUL, and SPVL policies, expressed as a percentage of average net assets (rounded to two decimal places). These expenses are deducted from portfolio assets. For more information, please see the prospectus for the underlying portfolio.

	Minimum	Maximum
Expenses that are deducted from the portfolio assets, including advisory fees, Rule 12b-1 fees and other expenses	0.50%	1.64%

3. Table of investment options and investment subadvisers

Please note that certain of the investment options described in this table may not be available to you under your policy.

The following table provides a general description of the portfolios that underlie the variable investment options we make available under the policy. You bear the investment risk of any portfolio you choose as an investment option for your policy. You can find a full description of each portfolio, including the investment objectives, policies, restrictions, and risks, in the prospectus for that portfolio. You should read the portfolio’s prospectus carefully before investing in the corresponding variable investment option.

When you select a Separate Account investment option, we invest your money in shares of a corresponding portfolio of the John Hancock Trust (the “Trust” or “JHT”) (or the PIMCO Variable Insurance Trust (the “PIMCO Trust”) with respect to the PIMCO VIT All Asset portfolio) and hold the shares in a subaccount of the Separate Account. The Fee Tables show the investment management fees, Rule 12b-1 fees and other operating expenses for these portfolio shares as a percentage (rounded to two decimal places) of each portfolio’s average net assets for 2008, except as indicated in the footnotes appearing at the end of the table. Fees and expenses of the portfolios are not fixed or specified under the terms of the policies and may vary from year to year. These fees and expenses differ for each portfolio and reduce the investment return of each portfolio. Therefore, they also indirectly reduce the return you will earn on any Separate Account investment options you select.

The John Hancock Trust and the PIMCO Trust are so-called “series” type mutual funds and each is registered under the Investment Company Act of 1940 (“1940 Act”) as an open-end management investment company. John Hancock Investment Management Services, LLC (“JHIMS”) provides investment advisory services to the Trust and receives investment management fees for doing so. JHIMS pays a portion of its investment management fees to other firms that manage the Trust’s portfolios. We are affiliated with JHIMS and may indirectly benefit from any investment management fees JHIMS retains. The PIMCO VIT All Asset portfolio of the PIMCO Trust receives investment advisory services from Pacific Investment Management Company LLC (“PIMCO”) and pays investment management fees to PIMCO.

Each of the American Asset Allocation, American Blue Chip Income and Growth, American Bond, American Diversified Growth and Income, American Global Diversification, American Growth-Income, American Growth, American New World, American Fundamental Holdings, and American International portfolios invests in Series 1 shares of the corresponding investment portfolio of the Trust and is subject to a 0.60% Rule 12b-1 fee. The American Asset Allocation, American Growth, American International, American Growth-Income, American New World, American Blue Chip Income and Growth and American Bond portfolios operate as “feeder funds,” which means that the portfolios do not buy investment securities directly. Instead, they invest in a “master fund” which in turn purchases investment securities. Each of the American feeder fund portfolios has the same investment objective and limitations as its master fund. The prospectus for the American Fund master fund is included with the prospectuses for the underlying funds. We pay American Funds Distributors, Inc., the principal underwriter for the American Funds Insurance Series, a percentage of some or all of the amounts allocated to the “American” portfolios of the Trust for the marketing support services it provides.

The portfolios pay us or certain of our affiliates compensation for some of the distribution, administrative, shareholder support, marketing and other services we or our affiliates provide to the portfolios. The amount of this compensation is based on a percentage of the assets of the portfolios attributable to the variable insurance products that we and our affiliates issue. These percentages may differ from portfolio to portfolio and among classes of shares within a portfolio. In some cases, the compensation is derived from the Rule 12b-1 fees that are deducted from a portfolio’s assets for the services we or our

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affiliates provide to that portfolio. These compensation payments do not, however, result in any charge to you in addition to what is shown in the Fee Tables.

The investment options in the Separate Account are not publicly traded mutual funds. The investment options are only available to you as investment options in the policies, or in some cases through other variable annuity contracts or variable life insurance policies issued by us or by other life insurance companies. In some cases, the investment options also may be available through participation in certain qualified pension or retirement plans. The portfolios’ investment advisers and managers (i.e. subadvisers) may manage publicly traded mutual funds with similar names and investment objectives. However, the portfolios are not directly related to any publicly traded mutual fund. You should not compare the performance of any investment option described in this prospectus with the performance of a publicly traded mutual fund. The performance of any publicly traded mutual fund could differ substantially from that of any of the investment options of our Separate Account.

Portfolio	Portfolio Manager	Investment Objective and Strategy
500 Index	MFC Global Investment Management (U.S.A.) Limited	To seek to approximate the aggregate total return of a broad-based U.S. domestic equity market index. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in (a) the common stocks that are included in the S&P 500 Index* and (b) securities (which may or may not be included in the S&P 500 Index) that the subadviser believes as a group will behave in a manner similar to the index. The subadviser may determine that the portfolio’s investments in certain instruments, such as index futures, total return swaps and exchanged traded portfolios (“ETFs”) have similar economic characteristics to investments that are in the S&P 500 Index.
500 Index B	MFC Global Investment Management (U.S.A.) Limited	To seek to approximate the aggregate total return of a broad-based U.S. domestic equity market index. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in (a) the common stocks that are included in the S&P 500 Index* and (b) securities (which may or may not be included in the S&P 500 Index) that the subadviser believes as a group will behave in a manner similar to the index. The subadviser may determine that the portfolio’s investments in certain instruments, such as index futures, total return swaps and exchanged traded portfolios (“ETFs”) have similar economic characteristics to investments that are in the S&P 500 Index.
Active Bond	Declaration Management & Research LLC/MFC Global Investment Management (U.S.), LLC	To seek to provide income and capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in a diversified mix of debt securities and instruments.
All Cap Core	Deutsche Investment Management Americas Inc.	To seek long-term growth of capital. Under normal market conditions, the portfolio invests in common stocks, other equity securities and other asset classes of those companies within the Russell 3000 Index.*
All Cap Growth	Invesco AIM Capital Management, Inc.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests its assets principally in common stocks of companies of all market capitalizations. The subadviser focuses on stocks of companies exhibiting long-term sustainable earnings and cash flow growth that is not yet reflected in investor expectations or equity valuations.
All Cap Value	Lord, Abbett & Co., LLC	To seek capital appreciation. Under normal market conditions, the portfolio invests in equity securities of U.S. and multinational companies in all capitalization ranges that the subadviser believes are undervalued. The portfolio will invest at least 50% of its net assets in equity securities of large, seasoned companies with market capitalizations at the time of purchase that fall within the market capitalization range of the Russell 1000 Index.* This range varies daily. The portfolio will invest the remainder of its assets in mid-sized and small company securities.
Alpha Opportunities	Wellington Management Company, LLP	To seek long-term total return. The portfolio employs a “multiple sleeve structure” which means the portfolio has several components that are managed separately in different styles. The portfolio seeks to attain its objective by combining these different component styles into a single portfolio.

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Portfolio	Portfolio Manager	Investment Objective and Strategy
American Asset Allocation	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to provide high total return (including income and capital gains) consistent with preservation of capital over the long term. The portfolio invests all of its assets in Class 1 shares of the master fund, the Asset Allocation Fund, a series of American Funds Insurance Series. The master fund invests in a diversified portfolio of common stocks and other equity securities, bonds and other intermediate and long-term debt securities, and money market instruments. In addition, the master fund may invest up to 25% of its debt assets in lower quality debt securities (rated Ba or below by Moody’s and BB or below by S&P or unrated but determined to be of equivalent quality). Such securities are sometimes referred to as “junk bonds.” The master fund is designed for investors seeking above-average total return.
American Blue Chip Income and Growth	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to produce income exceeding the average yield on U.S. stocks generally (as represented by the average yield on the S&P 500 Index*) and to provide an opportunity for growth of principal consistent with sound common stock investing. The portfolio invests all of its assets in Class 1 shares of the master fund, the Blue Chip Income and Growth portfolio, a series of American Funds Insurance Series. The master portfolio invests primarily in common stocks of larger, more established companies based in the U.S. with market capitalizations of $4 billion and above. The master fund may also invest up to 10% of its assets in common stocks of larger, non-U.S. companies, as long as they are listed or traded in the U.S. The master portfolio will invest, under normal market conditions, at least 90% of its assets in equity securities. The portfolio is designed for investors seeking both income and capital appreciation.
American Bond	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to maximize current income and preserve capital. The portfolio invests all of its assets in Class 1 shares of the master fund, the Bond portfolio, a series of American Funds Insurance Series. The master fund normally invests at least 80% of its net assets (plus borrowing for investment purposes) in bonds. The master fund will invest at least 65% of its assets in investment-grade debt securities (including cash and cash equivalents) and may invest up to 35% of its assets in bonds that are rated Ba 1 or below by Moody’s and BB+ or below by S&P or that are unrated but determined to be of equivalent quality (so called “junk bonds”). It may invest in bonds of issuers domiciled outside the U.S.. The portfolio may also invest up to 20% of its assets in preferred stocks, including convertible and non-convertible preferred stocks. The portfolio is designed for investors seeking income and more price stability than stocks, and capital preservation over the long term.
American Diversified Growth & Income	MFC Global Investment Management (U.S.A.) Limited	To seek long term growth of capital and income. The portfolio invests in underlying portfolios as well as other types of investments. Under normal market conditions, the portfolio will generally invest between 70% and 80% of its assets in equity securities, which include securities held by the underlying portfolios, and between 20% and 30% of its assets in fixed income securities, which include securities held by the underlying portfolios.
American Fundamental Holdings	MFC Global Investment Management (U.S.A.) Limited	To seek long term growth of capital. The portfolio invests in underlying portfolios as well as other types of investments. The portfolio operates as a fund of funds and currently invests primarily in four underlying portfolios of the American Funds Insurance Series: Bond portfolio, Growth portfolio, Growth-Income portfolio, and International portfolio. The portfolio is permitted to invest in six other underlying portfolios of the American Funds Insurance Series: Asset Allocation portfolio, Blue Chip Income and Growth portfolio, Global Growth portfolio, Global Small Capitalization portfolio, High-Income Bond portfolio, and New World portfolio as well as other underlying portfolios. When purchasing shares of the American Funds Insurance Series, the portfolio only purchases Class 1 shares (which are not subject to Rule 12b-1 fees).
American Global Diversification	MFC Global Investment Management (U.S.A.) Limited	To seek long term growth of capital. The portfolio invests in underlying portfolios as well as other types of investments. Under normal market conditions, the portfolio will invest a significant portion of its assets in securities, which include securities held by the underlying portfolios, that are located outside of the U.S.

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Portfolio	Portfolio Manager	Investment Objective and Strategy
American Growth	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to make the shareholders’ investment grow. The portfolio invests all of its assets in Class 1 shares of the master fund, the Growth portfolio, a series of American Funds Insurance Series. The Growth portfolio invests primarily in common stocks of companies that appear to offer superior opportunities for growth of capital. The Growth portfolio may also invest up to 15% of its assets in equity securities of issuers domiciled outside the U.S. and Canada. In seeking to pursue its investment objective, the portfolio may invest in the securities of issuers representing a broad range of market capitalizations. The portfolio is designed for investors seeking capital appreciation through stocks. Investors in the portfolio should have a long-term perspective and be able to tolerate potentially wide price fluctuations.
American Growth–Income	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to make the shareholders’ investments grow and to provide the shareholder with income over time. The portfolio invests all of its assets in Class 1 shares of the master portfolio, the Growth-Income portfolio, a series of American Funds Insurance Series. The Growth-Income portfolio invests primarily in common stocks or other securities which demonstrate the potential for appreciation and/or dividends. The Growth- Income portfolio may invest up to 15% of its assets in securities of issuers domiciled outside the U.S. and not included in the S&P 500 Index.* The portfolio is designed for investors seeking both capital appreciation and income.
American International	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to make the shareholders’ investment grow. The portfolio invests all of its assets in Class 1 shares of the master fund, the International portfolio, a series of American Funds Insurance Series. The International portfolio invests primarily in common stocks of companies located outside the U.S. The portfolio is designed for investors seeking capital appreciation through stocks. Investors in the portfolio should have a long-term perspective and be able to tolerate potentially wide price fluctuations.
American New World	Capital Research Management Company (Adviser to the American Funds Insurance Series)	To seek to make the shareholders’ investment grow over time. The portfolio invests all of its assets in Class 1 shares of the master fund, the New World portfolio, a series of American Funds Insurance Series. The New World portfolio invests primarily in stocks of companies with significant exposure to countries with developing economies and/or markets. The New World portfolio may also invest in debt securities of issuers, including issuers of lower rated bonds, with exposure to these countries. Under normal market conditions, the portfolio will invest at least 35% of its assets in equity and debt securities of issuers primarily based in what the subadviser deems qualified countries that have developing economies and/or markets. In addition, the portfolio may invest up to 25% of its assets in nonconvertible debt securities of issuers, including issuers of lower rated bonds (“junk bonds”) and government bonds, primarily based in qualified countries or that have a significant portion of their assets or revenues attributable to developing countries. The portfolio may also, to a limited extent, invest in securities of issuers based in nonqualified developing countries.
Balanced	T. Rowe Price Associates, Inc.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests in both equity and fixed-income securities. The portfolio employs growth, value and core approaches to allocate its assets among stocks of small, medium and large-capitalization companies in both the U.S. and foreign countries. The portfolio may purchase a variety of fixed income securities, including investment grade and below investment grade debt securities with maturities that range from short to longer term, as well as cash. Under normal market conditions, 55-75% of the portfolio will be invested in equity securities and 25-45% of the portfolio will be invested in fixed-income securities. The precise mix of equity and fixed-income securities will depend on the subadviser‘s outlook for the markets and generally reflect the subadviser’s long-term, strategic asset allocation analysis. The subadviser anticipates that adjustments to the targeted asset allocation will result primarily from changes to its outlook for the global and domestic economies, industry sectors and financial markets, and its assessment of the relative attractiveness of each asset class.

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Portfolio	Portfolio Manager	Investment Objective and Strategy
Blue Chip Growth	T. Rowe Price Associates, Inc.	To seek to provide long-term growth of capital. Current income is a secondary objective. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in the common stocks of large and medium-sized blue chip growth companies. These are firms that, in the subadviser’s view, are well established in their industries and have the potential for above-average earnings growth.
Capital Appreciation	Jennison Associates, LLC	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 65% of its total assets in equity and equity related securities of companies that, at the time of investment, exceed $1 billion in market capitalization and that the subadviser believes have above-average growth prospects. These companies are generally medium to large-capitalization companies.
Capital Appreciation Value	T. Rowe Price Associates, Inc.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests primarily in common stocks of established U.S. companies that have above-average potential for capital growth. Common stocks typically constitute at least 50% of the portfolio’s total assets. The remaining assets are generally invested in other securities, including convertible securities, corporate and government debt, foreign securities, futures and options. The portfolio may invest up to 20% of its total assets in foreign securities.
Core Allocation Plus	Wellington Management Company, LLP	To seek total return, consisting of long-term capital appreciation and current income. Under normal market conditions, the portfolio invests in equity and fixed income securities of issuers located within and outside the U.S. The portfolio will allocate its assets between fixed income securities, which may include investment grade and below investment grade debt securities with maturities that range from short to longer term, and equity securities, based upon the subadviser’s targeted asset mix, which may change over time. Under normal circumstances, the targeted asset mix may range between 50%-75% equity instruments and 25%-50% fixed income instruments and will generally reflect the subadviser’s long term, strategic asset allocation analysis. The subadviser anticipates that adjustments to the targeted asset allocation will result primarily from changes to its outlook for the global and domestic economies, industry sectors and financial markets and, to a lesser extent, its opinion of the relative attractiveness of each asset class.
Core Bond	Wells Capital Management, Incorporated	To seek total return consisting of income and capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in a broad range of investment grade debt securities, including U.S. Government obligations, corporate bonds, mortgage-backed and other asset-backed securities and money market instruments. The subadviser invests in debt securities that the subadviser believes offer attractive yields and are undervalued relative to issues of similar credit quality and interest rate sensitivity. The portfolio may also invest in unrated bonds that the subadviser believes are comparable to investment grade debt securities.
Core Strategy	MFC Global Investment Management (U.S.A.) Limited	To seek long term growth of capital. Current income is also a consideration. Under normal market conditions, the portfolio invests in a number of the other index portfolios of JHT. The portfolio invests approximately 70% of its total assets in underlying portfolios which invest primarily in equity securities and approximately 30% of its total assets in underlying portfolios which invest primarily in fixed income securities.
Disciplined Diversification	Dimensional Fund Advisors LP	To seek total return consisting of capital appreciation and current income. Under normal market conditions, the portfolio invests primarily in equity securities and fixed-income securities of domestic and international issuers, including equities of issuers in emerging markets, in accordance with the following range of allocations:
		Target Allocation	Range of Allocations
		Equity Securities: 70%	65% – 75%
		Fixed-Income Securities: 30%	25% – 35%
		The portfolio may invest outside these ranges and may invest defensively during unusual or unsettled market conditions.

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Portfolio	Portfolio Manager	Investment Objective and Strategy
Emerging Small Company	RCM Capital Management, LLC	To seek long term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in securities of small cap companies. The subadviser defines small cap companies as U.S. companies that have a market capitalization that does not exceed the highest market capitalization of any company contained in either the Russell 2000 Index* or the S&P Small Cap Index.*
Equity-Income	T. Rowe Price Associates, Inc.	To seek to provide substantial dividend income and also long-term growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities, with at least 65% in common stocks of well-established companies paying above-average dividends.
Financial Services	Davis Selected Advisers, L.P.	To seek growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in common stocks of companies that, at the time of investment, are principally engaged in financial services.
Franklin Templeton Founding Allocation	MFC Global Investment Management (U.S.A.) Limited	To seek long-term growth of capital. The portfolio operates as a fund of funds and invests in other portfolios and in other investment companies as well as other types of investments. The portfolio currently invests primarily in three underlying portfolios: Global, Income and Mutual Shares portfolios, as described in the JHT prospectus. The portfolio may purchase any portfolios except other JHT funds of funds and the American feeder funds. When purchasing shares of other JHT funds, the Franklin Templeton Founding Allocation Fund only purchases NAV shares (which are not subject to Rule 12b-1 fees).
Fundamental Value	Davis Selected Advisers, L.P.	To seek growth of capital. Under normal market conditions, the portfolio invests primarily in common stocks of U.S. companies with market capitalizations of at least $10 billion. The portfolio may also invest in companies with smaller capitalizations.
Global	Templeton Global Advisors Limited	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests primarily in the equity securities of companies located throughout the world, including emerging markets.
Global Allocation	UBS Global Asset Management (Americas) Inc.	To seek total return, consisting of long-term capital appreciation and current income. Under normal market conditions, the portfolio invests in equity and fixed income securities of issuers located within and outside the U.S. The portfolio will allocate its assets between fixed income securities and equity securities.
Global Bond	Pacific Investment Management Company LLC	To seek maximum total return, consistent with preservation of capital and prudent investment management. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in fixed income instruments that are economically tied to at least three countries (one of which may be the U.S.), which may be represented by futures contracts (including related options) with respect to such securities, and options on such securities. These fixed income instruments may be denominated in non-U.S. currencies or in U.S. dollars, which may be represented by forwards or derivatives, such as options, futures contracts, or swap agreements.
Global Real Estate	Deutsche Investment Management Americas Inc.	To seek a combination of long-term capital appreciation and current income. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of U.S. real estate investments (“REITs”), foreign entities with tax-transparent structures similar to REITs and U.S. and foreign real estate operating companies. Equity securities include common stock, preferred stock and securities convertible into common stock. The portfolio will be invested in issuers located in at least three different countries, including the U.S.
Health Sciences	T. Rowe Price Associates, Inc.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in common stocks of companies engaged, at the time of investment, in the research, development, production, or distribution of products or services related to health care, medicine, or the life sciences.

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Portfolio	Portfolio Manager	Investment Objective and Strategy
High Yield	Western Asset Management Company	To realize an above-average total return over a market cycle of three to five years, consistent with reasonable risk. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in high yield securities, including corporate bonds, preferred stocks, U.S. Government and foreign securities, mortgage-backed securities, loan assignments or participations and convertible securities which have the following ratings (or, if unrated, are considered by the subadviser to be of equivalent quality):
		Corporate Bonds, Preferred Stocks and Convertible Securities
		Rating Agency
		Moody’s	Ba through C
		S&P	BB through D
International Core	Grantham, Mayo, Van Otterloo & Co, LLC	To seek high total return. Under normal market conditions, the portfolio invests at least 80% of its total assets in equity investments. The portfolio typically invests in equity investments in companies from developed markets outside the U.S. The portfolio seeks to achieve its objective by outperforming its benchmark, the MSCI EAFE Index.*
International Equity Index A	SSgA Funds Management, Inc.	To seek to track the performance of a broad-based equity index of foreign companies primarily in developed countries and, to a lesser extent, in emerging markets. Under normal market conditions, the portfolio invests at least 80% of its assets in securities listed in the MSCI All CountryWorld Ex U.S. Index* or American Depository Receipts or Global Depository Receipts representing such securities.
International Equity Index B	SSgA Funds Management, Inc.	To seek to track the performance of a broad-based equity index of foreign companies primarily in developed countries and, to a lesser extent, in emerging markets. Under normal market conditions, the portfolio invests at least 80% of its assets in securities listed in the MSCI All CountryWorld Ex U.S. Index* or American Depository Receipts or Global Depository Receipts representing such securities.
International Opportunities	Marsico Capital Management, LLC	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 65% of its total assets in common stocks of foreign companies that are selected for their long-term growth potential. The portfolio may invest in companies of any size throughout the world. The portfolio invests in issuers from at least three different countries not including the U.S. The portfolio may invest in common stocks of companies economically tied to emerging markets. Some issuers or securities in the portfolio may be based in or economically tied to the U.S.
International Small Cap	Franklin Templeton Investment Corp.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in investments of smaller companies outside the U.S., including emerging markets, which have total stock market capitalizations or annual revenues of $4 billion or less.
International Value	Templeton Investment Counsel, LLC	To seek long-term growth of capital. Under normal market conditions, the portfolio invests primarily in equity securities of companies located outside the U.S., including in emerging markets.
Investment Quality Bond	Wellington Management Company, LLP	To provide a high level of current income consistent with the maintenance of principal and liquidity. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in bonds rated investment grade at the time of investment. The portfolio will tend to focus on corporate bonds and U.S. government bonds with intermediate to longer term maturities.
Large Cap	UBS Global Asset Management (Americas) Inc.	To seek to maximize total return, consisting of capital appreciation and current income. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of U.S. large capitalization companies. The portfolio defines large capitalization companies as those with a market capitalization range, at the time of investment, equal to that of the portfolio’s benchmark, the Russell 1000 Index.*

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Portfolio	Portfolio Manager	Investment Objective and Strategy
Large Cap Value	BlackRock Investment Management, LLC	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of large cap companies selected from those that are, at the time of purchase, included in the Russell 1000 Value Index.* The portfolio will seek to achieve its investment objective by investing primarily in a diversified portfolio of equity securities of large cap companies located in the U.S. The portfolio will seek to outperform the Russell 1000 Value Index by investing in equity securities that the subadviser believes are selling at below normal valuations.
Lifestyle Aggressive	MFC Global Investment Management (U.S.A.) Limited	To seek long-term growth of capital. Current income is not a consideration. The portfolio operates as a fund of funds and, except as otherwise described below, generally invests approximately 100% of its assets in underlying portfolios that invest primarily in equity securities.
Lifestyle Balanced	MFC Global Investment Management (U.S.A.) Limited	To seek a balance between a high level of current income and growth of capital, with a greater emphasis on growth of capital. The portfolio operates as a fund of funds and generally invests approximately 40% of its assets in underlying portfolios that invest primarily in fixed income securities and approximately 60% in underlying portfolios that invest primarily in equity securities.
Lifestyle Conservative	MFC Global Investment Management (U.S.A.) Limited	To seek a high level of current income with some consideration given to growth of capital. The portfolio operates as a fund of funds and generally invests approximately 80% of its assets in underlying portfolios that invest primarily in fixed income securities and approximately 20% in underlying portfolios that invest primarily in equity securities.
Lifestyle Growth	MFC Global Investment Management (U.S.A.) Limited	To seek long-term growth of capital. Current income is also a consideration. The portfolio operates as a fund of funds and, except as otherwise described below, generally invests approximately 20% of its assets in underlying portfolios that invest primarily in fixed income securities and approximately 80% in underlying portfolios that invest primarily in equity securities.
Lifestyle Moderate	MFC Global Investment Management (U.S.A.) Limited	To seek a balance between a high level of current income and growth of capital, with a greater emphasis on income. The portfolio operates as a fund of funds and, except as otherwise described below, generally invests approximately 60% of its assets in underlying portfolios that invest primarily in fixed income securities and approximately 40% in underlying portfolios that invest primarily in equity securities.
Mid Cap Index	MFC Global Investment Management (U.S.A.) Limited	To seek to approximate the aggregate total return of a mid-cap U.S. domestic equity market index. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in (a) the common stocks that are included in the S&P MidCap 400 Index* and (b) securities (which may or may not be included in the S&P MidCap 400 Index) that the subadviser believes as a group will behave in a manner similar to the index.
Mid Cap Intersection	Wellington Management Company, LLP	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of medium-sized companies with significant capital appreciation potential. For the purposes of the portfolio, “medium-sized companies” are those with market capitalizations, at the time of investment, within the market capitalization range of companies represented in either the Russell MidCap Index* or the S&P MidCap 400 Index.*
Mid Cap Stock	Wellington Management Company, LLP	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of medium-sized companies with significant capital appreciation potential. For the portfolio, “medium-sized companies” are those with market capitalizations within the collective market capitalization range of companies represented in either the Russell MidCap Index* or the S&P MidCap 400 Index.*

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Portfolio	Portfolio Manager	Investment Objective and Strategy
Mid Value	T. Rowe Price Associates, Inc.	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets in companies with market capitalizations that are within the S&P MidCap 400 Index* or the Russell MidCap Value Index.* The portfolio invests in a diversified mix of common stocks of mid-size U.S. companies that are believed to be undervalued by various measures and offer good prospects for capital appreciation.
Money Market	MFC Global Investment Management (U.S.A.) Limited	To seek to obtain maximum current income consistent with preservation of principal and liquidity. Under normal market conditions, the portfolio invests in high quality, U.S. dollar denominated money market instruments. Certain market conditions may cause the return of the portfolio to become low or possibly negative.
Money Market B	MFC Global Investment Management (U.S.A.) Limited	To seek to obtain maximum current income consistent with preservation of principal and liquidity. Under normal market conditions, the portfolio invests in high quality, U.S. dollar denominated money market instruments. Certain market conditions may cause the return of the portfolio to become low or possibly negative.
Natural Resources	Wellington Management Company, LLP	To seek long-term total return. Under normal market conditions, the portfolio will invest at least 80% of its net assets (plus any borrowings for investment purposes) in equity and equity-related securities of natural resource-related companies worldwide, including emerging markets. Natural resource-related companies include companies that own or develop energy, metals, forest products and other natural resources, or supply goods and services to such companies.
Optimized All Cap	MFC Global Investment Management (U.S.A.) Limited	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 65% of its total assets in equity securities of U.S. companies. The portfolio will focus on equity securities of U.S. companies across the three market capitalization ranges of large, mid and small.
Optimized Value	MFC Global Investment Management (U.S.A.) Limited	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 65% of its total assets in equity securities of U.S. companies with the potential for long-term growth of capital, with a market capitalization range, at the time of investment, equal to that of the portfolio’s benchmark, the Russell 1000 Value Index.*
Overseas Equity	Capital Guardian Trust Company	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of a diversified mix of large established and medium-sized foreign companies located primarily in developed countries (outside of the U.S.) and, to a lesser extent, in emerging markets.
Pacific Rim	MFC Global Investment Management (U.S.A.) Limited	To seek to achieve long-term growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in common stocks and equity-related securities of established, larger-capitalization non-U.S. companies located in the Pacific Rim region, including emerging markets, that have attractive long-term prospects for growth of capital. Current income from dividends and interest will not be an important consideration in the selection of portfolio securities.
PIMCO VIT All Asset (a series of PIMCO Variable Insurance Trust) (only Class M is available for sale)	Pacific Investment Management Company LLC	To seek maximum real return consistent with preservation of real capital and prudent investment management. The portfolio invests primarily in a diversified mix of: (a) common stocks of large and mid sized U.S. companies, and (b) bonds with an overall intermediate term average maturity.
Real Estate Securities	Deutsche Investment Management Americas Inc.	To seek to achieve a combination of long-term capital appreciation and current income. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of real estate investments and real estate companies. Equity securities include common stock, preferred stock and securities convertible into common stock.

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Portfolio	Portfolio Manager	Investment Objective and Strategy
Real Return Bond	Pacific Investment Management Company LLC	To seek maximum real return, consistent with preservation of real capital and prudent investment management. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus borrowings for investment purposes) in inflation-indexed bonds of varying maturities issued by the U.S. and non-U.S. Governments, their agencies or instrumentalities and corporations, which may be represented by forwards or derivatives such as options, futures contracts, or swap agreements.
Science & Technology	T. Rowe Price Associates, Inc. RCM Capital Management LLC	To seek long-term growth of capital. Current income is incidental to the portfolio’s objective. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in the common stocks of companies expected to benefit from the development, advancement, and/or use of science and technology. For purposes of satisfying this requirement, common stock may include equity linked notes and derivatives relating to common stocks, such as options on equity linked notes.
Short-Term Bond	Declaration Management & Research, LLC	To seek income and capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowing for investment purposes) at the time of investment in a diversified mix of debt securities and instruments. The securities and instruments will have an average credit quality rating of “A” or “AA” and a weighted average effective maturity between one and three years, and no more than 15% of the portfolio’s net assets will be invested in high yield bonds.
Small Cap Growth	Wellington Management Company, LLP	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in small-cap companies. For the purposes of the portfolio, “small-cap companies” are those with market capitalizations, at the time of investment, not exceeding the maximum market capitalization of any company represented in either the Russell 2000 Index* or the S&P SmallCap 600.*
Small Cap Index	MFC Global Investment Management (U.S.A.) Limited	To seek to approximate the aggregate total return of a small-cap U.S. domestic equity market index. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in (a) the common stocks that are included in the Russell 2000 Index* and (b) securities (which may or may not be included in the Russell 2000 Index) that the subadviser believes as a group will behave in a manner similar to the index.
Small Cap Opportunities	Invesco AIM Capital Management, Inc. & Dimensional Fund Advisors LP	To seek long-term capital appreciation. Under normal market conditions, Invesco AIM Capital Management, Inc. invests at least 80% of its subadvised net assets (plus any borrowings for investment purposes) in equity securities of small-capitalization companies. Dimensional Fund Advisors LP generally will invest its subadvised net assets in a broad and diverse group of readily marketable common stocks of small and mid cap companies traded on a principal U.S. exchange or on the over-the-counter market that Dimensional Fund Advisers LP determines to be value stocks at the time of purchase.
Small Cap Value	Wellington Management Company, LLP	To seek long-term capital appreciation. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in small-cap companies that are believed to be undervalued by various measures and offer good prospects for capital appreciation. For the purposes of the portfolio, “small-cap companies” are those with market capitalizations, at the time of investment, not exceeding the maximum market capitalization of any company represented in either the Russell 2000 Index* or the S&P Small Cap 600 Index.*
Small Company Value	T. Rowe Price Associates, Inc.	To seek long-term growth of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in companies with market capitalizations, at the time of investment, that do not exceed the maximum market capitalization of any security in the Russell 2000 Index.* The portfolio invests in small companies whose common stocks are believed to be undervalued.

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Portfolio	Portfolio Manager	Investment Objective and Strategy
Strategic Bond	Western Asset Management Company	To seek a high level of total return consistent with preservation of capital. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in fixed income securities.
Strategic Income	MFC Global Investment Management (U.S.) LLC	To seek a high level of current income. Under normal market conditions, the portfolio invests at least 80% of its assets in the following types of securities: foreign government and corporate debt securities from developed and emerging markets, U.S. Government and agency securities, and domestic high-yield bonds.
Total Bond Market B	Declaration Management & Research LLC	To seek to track the performance of the Barclays Capital U.S. Aggregate Bond Index** (which represents the U.S. investment grade bond market). Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowing for investment purposes) in securities listed in the Barclays Capital U.S. Aggregate Bond Index.
Total Return	Pacific Investment Management Company LLC	To seek maximum total return, consistent with preservation of capital and prudent investment management. Under normal market conditions, the portfolio invests at least 65% of its total assets in a diversified portfolio of fixed income instruments of varying maturities, which may be represented by forwards or derivatives, such as options, futures contracts, or swap agreements.
Total Stock Market Index	MFC Global Investment Management (U.S.A.) Limited	Seeks to approximate the aggregate total return of a broad U.S. domestic equity market index. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in (a) the common stocks that are included in the Wilshire 5000 Total Market Index* and (b) securities (which may or may not be included in the Wilshire 5000 Total Market Index) that the subadviser believes as a group will behave in a manner similar to the index.
U.S. Government Securities	Western Asset Management Company	To obtain a high level of current income consistent with preservation of capital and maintenance of liquidity. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in debt obligations and mortgage-backed securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities and derivative securities such as collateralized mortgage obligations backed by such securities and futures contracts. The portfolio may invest the balance of its assets in non-U.S Government securities including, but not limited to, fixed rate and adjustable rate mortgage-backed securities, asset-backed securities, corporate debt securities and money market instruments.
U.S. High Yield Bond	Wells Capital Management Incorporated	To seek total return with a high level of current income. Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowings for investment purposes) in U.S. corporate debt securities that are, at the time of investment, below investment grade, including preferred and other convertible securities in below investment grade debt securities (sometimes referred to as “junk bonds” or high yield securities). The portfolio also invests in corporate debt securities and may buy preferred and other convertible securities and bank loans.
Utilities	MFS Investment Management	To seek capital growth and current income (income above that available from the portfolio invested entirely in equity securities). Under normal market conditions, the portfolio invests at least 80% of its net assets (plus any borrowing for investment purposes) in securities of companies in the utilities industry. Securities in the utilities industry may include equity and debt securities of domestic and foreign companies (including emerging markets).
Value	Van Kampen Investments	To realize an above-average total return over a market cycle of three to five years, consistent with reasonable risk. Under normal market conditions, the portfolio invests in equity securities of companies with capitalizations, at the time of investment, similar to the market capitalization of companies in the Russell MidCapValue Index.*

*“Wilshire 5000 Total Market Index^®” is a trademark of Wilshire Associates. “MSCI All Country World Ex US Index” is a trademark of Morgan Stanley & Co. Incorporated. “Russell 1000,^®” “Russell 2000,^®” “Russell 1000 Value,^®” “Russell 3000,^®” “Russell MidCap,^®” and “Russell MidCap Value^®” are trademarks of Frank Russell Company.“S&P 500,^®” “S&P MidCap 400,^®” and “S&P SmallCap 600^®” are trademarks of The McGraw-Hill Companies, Inc. None of the portfolios are sponsored, endorsed, managed, advised, sold or promoted by any of these companies, and none of these companies make any representation regarding the advisability of investing in the portfolios.

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The indices referred to in the portfolio descriptions track companies having the ranges of approximate market capitalization, as of February 28, 2009, set out below:

Wilshire 5000 Total Market Index — $1 million to $385 billion MSCI All Country World Ex US Index — $199 million to $176 billion MSCI EAFE Index — $199 million to $126 billion

Russell 1000 Index — $41 million to $337.9 billion Russell 1000 Value Index — $41 million to $337.9 billion Russell 2000 Index — $3.2 million to $3.7 billion Russell 3000 Index — $3 million to $337.9 billion Russell MidCap Index — $41 million to $13.8 billion Russell MidCap Value Index — $41 million to $13.8 billion S&P 500 Index — $224 million to $337.9 billion S&P MidCap 400 Index — $42 million to $4.6 billion S&P SmallCap 600 Index — $200 million to $1 billion

**The Barclays Capital U.S. Aggregate Bond Index (which represents the U.S. investment grade bond market) is a bond index that relies on indicators such as quality, liquidity, term and duration as relevant measures of performance.

4. Tax considerations

This description of Federal income tax consequences is only a brief summary and is neither exhaustive nor authoritative. It was written to support the promotion of our products. It does not constitute legal or tax advice, and it is not intended to be used and cannot be used to avoid any penalties that may be imposed on you. Tax consequences will vary based on your own particular circumstances, and for further information you should consult a qualified tax adviser. 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. The policy may be used in various arrangements, including non- qualified deferred compensation or salary continuation plans, split dollar insurance plans, executive bonus plans, retiree medical benefit plans and others. The tax consequences of such plans may vary depending on the particular facts and circumstances of each individual arrangement. Therefore, if the value of using the policy in any such arrangement depends in part on the tax consequences, a qualified tax adviser should be consulted for advice.

General

We are taxed as a life insurance company. Under current tax law rules, we include the investment income (exclusive of capital gains) of the Separate Account in our taxable income and take deductions for investment income credited to our “policy holder reserves.” We are also required to capitalize and amortize certain costs instead of deducting those costs when they are incurred. We do not currently charge the Separate Account for any resulting income tax costs, other than a “DAC tax” charge we may impose against the Separate Account to compensate us for the finance costs attributable to the acceleration of our income tax liabilities by reason of a “DAC tax adjustment.” We also claim certain tax credits or deductions relating to foreign taxes paid and dividends received by the series funds. These benefits can be material. We do not pass these benefits through to the Separate Account, principally because: (i) the deductions and credits are allowed to us and not the policy owners under applicable tax law; and (ii) the deductions and credits do not represent investment return on the Separate Account assets that are passed through to policy owners.

The policies permit us to deduct a charge for any taxes we incur that are attributable to the operation or existence of the policies or the Separate Account. Currently, we do not anticipate making any specific charge for such taxes other than any DAC tax charge and premium taxes. If the level of the current taxes increases, however, or is expected to increase in the future, we reserve the right to make a charge in the future.

Death benefit proceeds and other policy distributions

Generally, death benefits paid under policies such as yours are not subject to income tax. Earnings on your policy value are ordinarily 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 policy value upon surrender or partial withdrawal, all or part of that distribution would generally be treated as a return of the premiums you’ve paid and not subjected to income tax. However certain distributions associated with a reduction in death benefit or other policy benefits within the first fifteen years after issuance of the policy are ordinarily taxable in whole or in part. Amounts you borrow are generally not taxable to you.

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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 premiums in excess of limits prescribed by the tax laws. Additional taxes and penalties may be payable for policy distributions of any kind, including loans. (See “7-pay premium limit and modified endowment contract status” below.)

We expect the policy to 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 a life insurance contract for Federal tax purposes. For a policy to be treated as a life insurance contract, it must satisfy either the cash value accumulation test or the guideline premium test. These tests limit the amount of premium that you may pay into the policy. We will monitor compliance with these standards. If we determine that a policy does not satisfy section 7702, we may take whatever steps are appropriate and reasonable to bring it into compliance with section 7702.

If the policy complies with section 7702, the death benefit proceeds under the policy ordinarily should be excludable from the beneficiary’s gross income under section 101 of the Code. If your policy offers, and you have elected the Acceleration of Death Benefit for Qualified Long-Term Care Services Rider, the rider’s benefits generally will be excludable from gross income under the Code. The tax-free nature of these accelerated benefits is contingent on the rider meeting specific requirements under section 101 and/or section 7702B of the Code. We have designed the rider to meet these standards.

Increases in policy value as a result of interest or investment experience will not be subject to Federal income tax unless and until values are received through actual or deemed distributions. In general, unless the policy is a modified endowment contract, the owner will be taxed on the amount of distributions that exceed the premiums paid under the policy. An exception to this general rule occurs in the case of a decrease in the policy’s death benefit or any other change that reduces benefits under the policy in the first fifteen years after the policy is issued and that results in a cash distribution to the policy owner. Changes that reduce benefits include partial withdrawals, death benefit option changes, and distributions required to keep the policy in compliance with section 7702. For purposes of this rule any distribution within the two years immediately before a reduction in benefits will also be treated as if it caused the reduction. A cash distribution that reduces policy benefits will be taxed in whole or in part (to the extent of any gain in the policy) under rules prescribed in section 7702. The taxable amount is subject to limits prescribed in section 7702(f)(7). Any taxable distribution will be ordinary income to the owner (rather than capital gain).

Distributions for tax purposes 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. If your policy offers, and you have elected the Acceleration of Death Benefit for Qualified Long-Term Care Services Rider, you may be deemed to have received a distribution for tax purposes each time a deduction is made from your policy value to pay the rider charge. After 2009, such deductions from policy value will be treated as a return of premiums paid, but will not be included in income even if you have recovered all of your premiums.

It is possible that, despite our monitoring, a policy might fail to qualify as a life insurance contract 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 credited to the policy from the date of issue to the date of the disqualification and for subsequent periods.

Tax consequences of ownership or receipt of policy proceeds under Federal, state and local estate, inheritance, gift and other tax laws will depend on the circumstances of each owner or beneficiary. If the person insured by the policy is also its owner, either directly or indirectly through an entity such as a revocable trust, the death benefit will be includible in his or her estate for purposes of the Federal estate tax. If the owner is not the person insured, the value of the policy will be includible in the owner’s estate upon his or her death. Even if ownership has been transferred, the death proceeds or the policy value may be includible in the former owner’s estate if the transfer occurred less than three years before the former owner’s death or if the former owner retained certain kinds of control over the policy. You should consult your tax adviser regarding these possible tax consequences.

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.

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Policy loans

We expect that, except as noted below (see “7-pay premium limit and modified endowment contract status”), 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 other than the payment of the death benefit, 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 required to keep your policy from lapsing and a significant tax burden if you allow the lapse to occur.

Diversification rules and ownership of the Account

Your policy will not qualify for the tax benefits of a life insurance contract unless the Account follows certain rules requiring diversification of investments underlying the policy. In addition, the rules require that the policy owner not have “investment control” over the underlying assets.

In certain circumstances, the owner of a variable life insurance policy may be considered the owner, for Federal income tax purposes, of the assets of the separate account used to support the policy. In those circumstances, income and gains from the separate account assets would be includible in the policy owner’s gross income. The Internal Revenue Service (“IRS”) has stated in published rulings that a variable policy owner will be considered the owner of separate account assets if the policy owner possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. A Treasury Decision issued in 1986 stated that guidance would be issued in the form of regulations or rulings on the “extent to which Policyholders may direct their investments to particular sub-accounts of a separate account without being treated as owners of the underlying assets.” As of the date of this prospectus, no comprehensive guidance on this point has been issued. In Rev. Rul. 2003-91, however, the IRS ruled that a contract holder would not be treated as the owner of assets underlying a variable life insurance or annuity contract despite the owner’s ability to allocate funds among as many as twenty subaccounts.

The ownership rights under your policy are similar to, but different in certain respects from, those described in IRS rulings in which it was determined that policyholders were not owners of separate account assets. Since you have greater flexibility in allocating premiums and policy values than was the case in those rulings, it is possible that you would be treated as the owner of your policy’s proportionate share of the assets of the Account.

We do not know what future Treasury Department regulations or other guidance may require. We cannot guarantee that the funds will be able to operate as currently described in the series funds’ prospectuses, or that a series fund will not have to change any fund’s investment objectives or policies. We have reserved the right to modify your policy if we believe doing so will prevent you from being considered the owner of your policy’s proportionate share of the assets of the Account, but we are under no obligation to do so.

7-pay premium limit and modified endowment contract status

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 seven 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 seven policy years exceed the 7-pay limit, the policy will be treated as a modified endowment contract, which can have adverse tax consequences.

Policies classified as modified endowment contracts are subject to the following tax rules:

• First, all partial withdrawals from such a policy are treated as ordinary income subject to tax up to the amount equal to the excess (if any) of the policy value immediately before the distribution over the investment in the policy at such time. If you own any other modified endowment contracts issued to you in the same calendar year by the same insurance company or its affiliates, their values will be combined with the value of the policy from which you take the withdrawal for purposes of determining how much of the withdrawal is taxable as ordinary income.

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• Second, loans taken from or secured by such a policy and assignments or pledges of any part of its value are treated as partial withdrawals from the policy and taxed accordingly. Past-due loan interest that is added to the loan amount is treated as an additional loan.

• Third, a 10% additional income tax is imposed on the portion of any distribution (including distributions on surrender) from, or loan taken from or secured by, such a policy that is included in income except where the distribution or loan:

• is made on or after the date on which the policy owner attains age 59 ¹/ 2;

• is attributable to the policy owner becoming disabled; or

• is part of a series of substantially equal periodic payments for the life (or life expectancy) of the policy owner or the joint lives (or joint life expectancies) of the policy owner and the policy owner’s beneficiary.

These exceptions to the 10% additional tax do not apply in situations where the policy is not owned by an individual.

Furthermore, any time there is a “material change” in a policy, the policy will begin a new 7-pay testing period as if it were a newly-issued policy. The material change rules for determining whether a policy is a modified endowment contract are complex. In general, however, the determination of whether a policy will be a modified endowment contract after a material change depends upon the relationship among the death benefit of the policy at the time of such change, the policy value at the time of the change, and the additional premiums paid into the policy during the seven years starting with the date on which the material change occurs.

Moreover, if there is at any time a reduction in benefits under the policy (such as a reduction in the death benefit or the reduction or cancellation of certain rider benefits) the 7-pay limit will generally be recalculated based on the reduced benefits and the policy will be re-tested from the beginning of the 7-pay testing period using the lower limit from the date it was issued. If the premiums paid to date at any point during the 7-pay testing period are greater than the recalculated 7-pay limit, the policy will become a modified endowment contract. If your policy is a survivorship policy, the 7-pay limit will generally be recalculated based on the reduced benefits and the policy will be re-tested, using the lower limit, from the date it was issued.

If your policy is issued as a result of a section 1035 exchange, it may be considered to be a modified endowment contract if the death benefit under the new policy is smaller than the death benefit under the exchanged policy, or if you reduce coverage in your new policy after it is issued. Therefore, if you desire to reduce the face amount as part of a 1035 exchange, a qualified tax adviser should be consulted for advice.

All modified endowment contracts issued by the same insurer (or its affiliates) to the same owner during any calendar year generally are required to be treated as one contract for the purpose of applying the modified endowment contract rules. A policy received in exchange for a modified endowment contract will itself also be a modified endowment contract. You should consult your tax adviser if you have questions regarding the possible impact of the 7-pay limit on your policy.

Corporate and H.R. 10 retirement 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.

Withholding

To the extent that policy distributions to you are taxable, they are generally subject to withholding for your Federal income tax liability. However if you reside in the United States, you can generally choose not to have tax withheld from distributions.

Life insurance purchases by residents of Puerto Rico

In Rev. Rul. 2004-75, 2004-31 I.R.B. 109, the Internal Revenue Service ruled that income received by residents of Puerto Rico under a life insurance policy issued by a United States company is U.S.-source income that is subject to United States Federal income tax.

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Life insurance purchases by non-resident aliens

If you are not a U.S. citizen or resident, you will generally be subject to U.S. Federal withholding tax on taxable distributions from life insurance policies at a 30% rate, unless a lower treaty rate applies. In addition, you may be subject to state and/or municipal taxes and taxes imposed by your country of citizenship or residence. You should consult with a qualified tax adviser before purchasing a policy.

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In addition to the disclosure contained herein, John Hancock USA has filed with the SEC a prospectus and a Statement of Additional Information (the “SAI”) which contains additional information about John Hancock USA and the Account, including information on our history, services provided to the Account and legal and regulatory matters. The SAI and personalized illustrations of death benefits, account values and surrender values are available, without charge, upon request. You may obtain the personalized illustrations from your John Hancock USA representative. The SAI may be obtained by contacting the John Hancock USA Servicing Office. You should also contact the John Hancock USA Servicing Office to request any other information about your policy or to make any inquiries about its operation.

Information about the Account (including the SAI) can be reviewed and copied at the SEC’s Public Reference Branch, 100 F Street, NE, Room 1580, Washington, DC, 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 202-551-5850. Reports and other information about the Account are available on the SEC’s Internet website at http://www.sec.gov. Copies of such information may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549-0102.

EX-99.27(N)

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption “Independent Registered Public Accounting Firm” and to the use of our report dated April 16, 2009 with respect to the consolidated financial statements of John Hancock Life Insurance Company (U.S.A.), which are contained in the Statement of Additional Information in Post-Effective Amendment No. 9 in the Registration Statement (Form N-6 No. 333-100567) and related Prospectus of John Hancock Life Insurance Company (U.S.A.) Separate Account N.

Boston, Massachusetts

April 24, 2009

CONSENT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

We consent to the reference to our firm under the caption “Independent Registered Public Accounting Firm” and to the use of our report dated April 14, 2009 with respect to the financial statements of John Hancock Life Insurance Company (U.S.A) Separate Account N, which are contained in the Statement of Additional Information in Post-Effective Amendment No. 9 in the Registration Statement [Form N-6 No. 333- 100567] and related Prospectus of John Hancock Life Insurance Company (U.S.A) Separate Account N.

	/s/ Ernst & Young LLP
Toronto, Canada,	Chartered Accountants
April 24, 2009	Licensed Public Accountants

EX-99.27(N)(1)

John Hancock Financial Services, Inc.

John Hancock Place
Post Office Box 111
Boston, Massachusetts 02117
(617) 572-8050
Fax: (617) 572-9197
E-mail: jchoodlet@jhancock.com

James C. Hoodlet

Vice President and Counsel

April 24, 2009

U.S. Securities and Exchange Commission

100 F St., N.E.

Washington, D.C. 20549

Re: John Hancock Life Insurance Company (U.S.A.) Separate Account N File Nos. 811-5130 and 333-100567

Commissioners:

This opinion is being furnished with respect to the filing of Post-Effective No. 9 under the Securities Act of 1933 (Post-Effective Amendment No. 15 under the Investment Company Act of 1940) on the Form N-6 Registration Statement of John Hancock Life Insurance Company (U.S.A.) Separate Account N as required by Rule 485 under the 1933 Act.

I have acted as counsel to Registrant for the purpose of preparing this Post-Effective Amendment which is being filed pursuant to paragraph (b) of Rule 485 and hereby represent to the Commission that in our opinion this Post-Effective Amendment does not contain disclosures which would render it ineligible to become effective pursuant to paragraph (b).

I hereby consent to the filing of this opinion with and as a part of this Post-Effective Amendment to Registrant’s Registration Statement with the Commission.

Very truly yours,

/s/ James C. Hoodlet

James C. Hoodlet

Vice President and Counsel

EX-99.27

Exhibit 99.27

POWER OF ATTORNEY

I, Stephen R. McArthur, in my capacity as a Director of John Hancock Life Insurance Company (U.S.A.) (the “Company”), do hereby constitute and appoint John D. DesPrez III, Lynne Patterson, Emanuel Alves, John J. Danello, Arnold R. Bergman, Thomas J. Loftus, and James C. Hoodlet or any of them individually, my true and lawful attorneys and agents to execute, in the name of, and on behalf of, the undersigned as a member of said Board of Directors, the Registration Statement listed below filed with the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933 and the Investment Company Act of 1940, and any and all amendments to the Registration Statement listed below filed with the SEC, and the undersigned hereby ratifies and confirms as his or her own act and deed all that each of said attorneys and agents shall do or cause to have done by virtue hereof.

Variable Life Registration Statement filed under the Securities Act of 1933: 333-100567

Each of said attorneys and agents shall have, and may exercise, all of the powers hereby conferred.

This Power of Attorney is intended to supersede any and all prior Power of Attorneys in connection with the above mentioned acts, and is effective April 24, 2008 and remains in effect until revoked or revised.

Signature	Title	Date
/s/ Stephen R. McArthur	Director	April 24, 2008
Stephen R. McArthur

POWER OF ATTORNEY

I, Scott Hartz, in my capacity as a Director of John Hancock Life Insurance Company (U.S.A.) (the “Company”), do hereby constitute and appoint John D. DesPrez III, Lynne Patterson, Emanuel Alves, John Danello, Arnold R. Bergman, Thomas J. Loftus, and James C. Hoodlet or any of them individually, my true and lawful attorneys and agents to execute, in the name of, and on behalf of, the undersigned as a member of said Board of Directors, the Registration Statement listed below filed with the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933 and the Investment Company Act of 1940, and any and all amendments to the Registration Statement listed below filed with the SEC, and the undersigned hereby ratifies and confirms as his or her own act and deed all that each of said attorneys and agents shall do or cause to have done by virtue hereof.

Variable Life Registration Statement filed under the Securities Act of 1933: 333-100567

Each of said attorneys and agents shall have, and may exercise, all of the powers hereby conferred.

This Power of Attorney is intended to supersede any and all prior Power of Attorneys in connection with the above mentioned acts, and is effective March 10, 2009 and remains in effect until revoked or revised.

Signature	Title	Date
/s/ Scott Hartz	Director	March 10, 2009
Scott Hartz