<PAGE>
 
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                 _____________

                                   FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 5(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


For the Quarter Ended June 30, 1997         Commission File No. 33-62895
-------------------------------------------------------------------------

                  John Hancock Variable Life Insurance Company
                  --------------------------------------------
             (Exact name of registrant as specified in its charter)

          Massachusetts                               04-2664016
-------------------------------------------------------------------------
 (State or other jurisdiction of                    I.R.S. Employer
 incorporation or organization)                     Identification No.)
 
 200 Clarendon Street, Boston, Massachusetts             02117
-------------------------------------------------------------------------
 (Address of principal executive offices               (Zip Code)
 
 Registrant's telephone number, including area code    (617)572-9196
                                                       -------------
                                     None
------------------------------------------------------------------------------
    (Former name, former address, and former fiscal year if changed since last
report.)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) been subject to such filing requirements
for the past 90 days.

                              Yes X    No 
                                  -       -  

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE> 
<CAPTION> 

                                      Shares Outstanding
              Class                   at June 30, 1997
              -----                   ------------------
<S>                                   <C> 
     common stock,                           50,000
     $50 par value
</TABLE> 
<PAGE>
 
                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
                  --------------------------------------------
                                   FORM 10-Q
                     FOR THE QUARTER ENDED JUNE 30, 1997

                               TABLE OF CONTENTS

                                                                      Page
                                                                      ----

PART I.   FINANCIAL INFORMATION

Item 1.   Unaudited Financial Statements
<TABLE>
<CAPTION>
<S>                                                     <C> 
          Statements of Financial 
          Position as of June 30, 1997 
          and December 31, 1996                         . . . . . . . .  2
 
          Statements of Operations and
          Unassigned Deficit for the
          Three and Six Months Ended
          June 30, 1997 and 1996                        . . . . . . . .  3
 
          Statements of Cash Flows
          for the Six Months Ended
          June 30, 1997 and 1996                        . . . . . . . .  4
 
          Statements of Stockholder's Equity
          for the Six Months Ended
          June 30, 1997 and 1996                        . . . . . . . .  5
 
          Condensed Notes to Financial
          Statements                                    . . . . . . . .  6
 
Item 2.   Management's Discussion
          and Analysis                                  . . . . . . . .  7
 

PART II   OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K              . . . . . . . . 10

</TABLE>
SIGNATURES

        
<PAGE>
 
                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                        STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
                                         (Unaudited)
                                           June 30   December 31
                                            1997         1996
                                        ------------------------
 
                                               (In millions)
<S>                                       <C>        <C>
ASSETS
 Bonds                                    $  808.8      $  753.5
 Preferred stocks                             17.6           9.6
 Common stocks                                 4.0           1.4
 Investment in affiliates                     77.4          72.0
 Mortgage loans on real                                          
  estate                                     232.8         212.1 
 Real estate                                  40.3          38.8
 Policy loans                                 92.9          80.8
 Cash and temporary cash                                         
  investments                                  0.1          31.9 
 Premiums due and deferred                    42.3          36.8
 Investment income due and                                       
  accrued                                     22.7          22.6 
 Other general account assets                 22.0          17.8
 Assets held in separate                   
  accounts                                 3,954.3       3,290.5
                                         -----------------------
                            TOTAL ASSETS  $5,315.2      $4,567.8
                                         =======================
 
OBLIGATIONS AND STOCKHOLDER'S EQUITY
 
OBLIGATIONS
 Policy reserves                          $  921.1      $  877.8
 Federal income and other             
  taxes payable                                8.7          29.4
 Other accrued expenses                      108.6          75.1
 Asset valuation reserve                      18.0          16.6
 Obligations related to                                          
  separate accounts                        3,949.3       3,285.8 
                                        ------------------------
                     TOTAL OBLIGATIONS     5,005.7       4,284.7
 
STOCKHOLDER'S EQUITY
 Common Stock, $50 par                  
  value; authorized 50,000                                       
  shares; issued and                                               
  outstanding 50,000 shares                    2.5           2.5  
 Paid-in capital                             377.5         377.5
 Unassigned deficit                          (70.5)        (96.9)
                                        ------------------------
 
 
            TOTAL STOCKHOLDER'S EQUITY       309.5         283.1
                                        ------------------------
                       
 
                 TOTAL OBLIGATIONS AND 
                  STOCKHOLDER'S EQUITY    $5,315.2      $4,567.8
                                        ========================
 
</TABLE>



See condensed notes to the financial statements (unaudited).

<PAGE>
 
                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT
<TABLE>
<CAPTION>
 
 
                                                        (Unaudited)
                                           Three months ended    Six months ended
                                                June 30              June 30
                                        -----------------------------------------
                                             1997       1996      1997      1996
                                          ----------  --------  --------  --------
 
                                                        (In millions)
 
<S>                                       <C>         <C>       <C>       <C>
INCOME
  Premiums                                   $236.0   $ 310.0    $420.0   $ 485.4
  Net investment income                        21.5      18.1      41.6      35.9
  Other, net                                   89.4      47.9     170.4      73.9
                                        -----------------------------------------
                                              346.9     376.0     632.0     595.2
 
BENEFITS AND EXPENSES
  Payments to policyholders and                                                   
   beneficiaries                               59.4      57.1     117.0     118.1 
  Additions to reserves to provide for
   future payments to policyholders and
    beneficiaries                             207.1     244.5     364.2     342.4 
  Expenses of providing service to
   policyholders and obtaining new
   insurance                                   52.6      48.7     101.4      94.5
  State and miscellaneous taxes                 5.0       5.7       9.8       8.1
                                        -----------------------------------------
                                              324.1     356.0     592.4     563.1
                                        -----------------------------------------
 
                  GAIN FROM OPERATIONS             
           BEFORE FEDERAL INCOME TAXES
        AND NET REALIZED CAPITAL GAINS         22.8      20.0      39.6      32.1
 
Federal income taxes                            7.6       8.5      17.0      16.6
                                        -----------------------------------------
                  GAIN FROM OPERATIONS
           BEFORE NET REALIZED CAPITAL
                                 GAINS         15.2      11.5      22.6      15.5
 
Net realized capital losses                    (0.3)     (1.0)     (0.1)     (1.0)
                                        -----------------------------------------
                              NET GAIN         14.9      10.5      22.5      14.5
 
Unassigned deficit at beginning of            
 period                                       (89.1)   (126.6)    (96.9)   (131.3) 
Net unrealized capital gains and
 other adjustments                              3.5       0.8       4.5       1.2
Other reserves and adjustments                  0.2       0.5      (0.6)      0.8
                                        -----------------------------------------
 
    UNASSIGNED DEFICIT AT END OF PERIOD      $(70.5)  $(114.8)   $(70.5)  $(114.8)
                                        =========================================
 
</TABLE>


See condensed notes to the financial statements (unaudited).
<PAGE>
 
                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
 
 
                                             (Unaudited)
                                           Six months ended
                                               June 30
                                        -------------------
                                            1997      1996
                                          --------  --------
 
                                            (In millions)
 
<S>                                       <C>       <C>
Cash flows from operating activities:
 Insurance premiums                       $ 415.6   $ 488.5
 Net investment income                       41.9      34.3
 Benefits to policyholders and             
  beneficiaries                            (112.0)   (109.7) 
 Dividends paid to policyholders             (8.8)     (7.7)
 Insurance expenses and taxes              (149.2)   (101.7)
 Net transfers to separate accounts        (318.7)   (234.0)
 Other, net                                 157.5      54.6
                                        -------------------
      NET CASH PROVIDED FROM OPERATIONS      26.3     124.3
                                        -------------------
 
Cash flows used in investing activities:
 Bond purchases                            (170.1)   (263.5)
 Bond sales                                  72.7      84.4
 Bond maturities and scheduled               
  redemptions                                16.9      11.3 
 Bond prepayments                            33.1      12.0
 Stock purchases                            (15.5)     (1.4)
 Proceeds from stock sales                    5.9       0.0
 Real estate purchases                       (0.8)     (6.2)
 Real estate sales                            0.1       0.1
 Other invested assets purchases              0.0      (0.2)
 Proceeds from the sale of other              
  invested assets                             0.0       0.6 
 Mortgage loans issued                      (45.6)    (13.2)
 Mortgage loan repayments                    23.9       9.5
 Other, net                                  21.3     (21.8)
                                        -------------------
  NET CASH USED IN INVESTING ACTIVITIES     (58.1)   (188.4)
                                        -------------------
 
        DECREASE IN CASH AND TEMPORARY
                      CASH INVESTMENTS      (31.8)    (64.1)
Cash and temporary cash investments at       
 beginning of year                           31.9      76.6 
                                        -------------------
 
    CASH AND TEMPORARY CASH INVESTMENTS
       AT THE END OF PERIOD               $   0.1   $  12.5
                                        ===================
 
</TABLE>



See condensed notes to the financial statements (unaudited).
<PAGE>
 
                  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                       STATEMENTS OF STOCKHOLDER'S EQUITY


<TABLE>
<CAPTION>
 
 
                                          Common  Paid-in  Unassigned
                                          Stock   Capital    Deficit     Total
                                        --------------------------------------
<S>                                       <C>     <C>      <C>          <C>
                                                     (In millions)
For the six months
ended June 30, 1996 (unaudited)
Balance at January 1, 1996                  $2.5   $377.5     $(131.3)  $248.7
1996 Transactions:
 Net gain                                                        14.5     14.5
 Net unrealized capital gains and        
  other                                                           1.2      1.2
  adjustments                            
 Other reserves and adjustments                                   0.8      0.8
                                        --------------------------------------
Balance at June 30, 1996                    $2.5   $377.5     $(114.8)  $265.2
                                        ======================================
 
For the six months ended June 30, 1997
(unaudited)
Balance at January 1, 1997                  $2.5   $377.5     $ (96.9)  $283.1
1997 Transactions:
 Net gain                                                        22.5     22.5
 Net unrealized capital gains and        
  other                                                           4.5      4.5
   adjustments                           
 Other reserves and adjustments                                  (0.6)    (0.6)
                                        --------------------------------------
Balance at June 30, 1997                    $2.5   $377.5     $ (70.5)  $309.5
                                        ======================================
 
</TABLE>


See condensed notes to the financial statements (unaudited).
<PAGE>
 
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

CONDENSED NOTES TO FINANCIAL STATEMENTS
(unaudited)


NOTE 1--BASIS OF PRESENTATION


The accompanying unaudited interim financial statements have been prepared on
the basis of accounting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance and in conformity with the practices of the
National Association of Insurance Commissioners, which practices differ from
generally accepted accounting principles (GAAP).  Pursuant to Financial
Accounting Standard Board Interpretation 40, "Applicability of General Accepted
Accounting Principles to Mutual Life Insurance and Other Enterprises" (FIN 40),
as amended which was effective for 1996 financial statements, financial
statements based on statutory accounting practices can no longer be described as
prepared in conformity with GAAP.

In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six months period ended June 30, 1997 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1997.
<PAGE>
 
                     MANAGEMENT DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS


   Financial Condition

     As of June 30, 1997, total assets grew by 16.4% to $5,315.2 million, from
$4,567.8 million at December 31, 1996.  This increase is principally due to the
growth in the separate accounts where assets increased by 20.2% during 1997 from
$3,290.5 million at December 31, 1996, to $3,954.3 million at June 30, 1997.
Total obligations grew by 16.8% to $5,005.7 million from $4,284.7 million at
December 31, 1996.  Most of this growth in total obligations was in the separate
accounts, which grew by $663.5 million during 1997, from $3,285.8 million at
December 31, 1996, to $3,949.3 million at June 30, 1997.  Separate account
assets and liabilities consist primarily of the fund balances associated with
variable life and annuity business.  The asset holdings include fixed income,
equity growth, total return real estate, and global mutual funds, with
liabilities representing amounts due to policyholders. Total stockholder's
equity grew by 9.3% from $283.1 million at December 31, 1996, to $309.5 million
at June 30, 1997.

   Investments

     The Company continues to address industry wide issues of asset quality and
liquidity that have emerged in recent years. JHVLICO's bond portfolio is highly
diversified. It maintains  diversity by geographic region, industry group, and
limiting the size of  individual investments relative to the total portfolio.
The Company's holdings in investment (NAIC SVO classes 1 and 2) and medium (NAIC
SVO class 3) grade bonds are 90.3% and 7.6%, respectively, of total general
account bonds at June 30, 1997. The corresponding percentages at December 31,
1996 were 90.5% and 7.2%, respectively.  Most of the medium grade bonds are
private placements that provide long-term financing for medium size companies.
These bonds typically are protected by individually negotiated financial
covenants and/or collateral.  At June 30, 1997, the balance (NAIC SVO classes 4,
5, and 6) of 2.1% of total general account bonds consists of lower grade bonds
and bonds in default.  Bonds in default represent 0.7% of total general account
bonds.

     Management believes the Company's commercial mortgage lending philosophy
and practices are sound. The Company generally makes mortgage loans against
properties with proven track records and high occupancy levels, and typically
does not make construction or condominium loans nor lend more than 75% of the
property's value at the time of the loan.  To assist in the management of its
mortgage loans, the Company uses a computer-based mortgage risk analysis system.

     The Company has outstanding commitments to purchase long-term bonds, and
issue real estate mortgages totaling $29.1 million, $6.6 million, respectively
at June 30, 1997.  The corresponding amounts at December 31, 1996 were $42.1
million, and $33.5 million, respectively. 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
1997.

   Reserves and Obligations

     The Company's obligations principally consist of aggregate reserves for
life policies and contracts of $921.1 million in the general account and
obligations of $3,949.3 million in the separate accounts at June 30, 1997.  The
corresponding amounts at December 31, 1996 were $877.8 million and $3,285.8
million, respectively. These liabilities are computed in accordance with
commonly accepted actuarial standards and are based on actuarial assumptions
which are in accordance with, or more conservative than, those called for in
state regulations.  All reserves meet the requirements of the insurance laws of
the Commonwealth of Massachusetts.  Intensive asset adequacy testing was
performed in 1996 for the vast majority of reserves.  As a result of

<PAGE>
 
that testing, no additional reserves were established. Adequacy testing is done
annually and generally performed in the fourth quarter.

     The Company's investment reserves include the Asset Valuation Reserve
("AVR") required by the NAIC and state insurance regulatory authorities. The AVR
is included in the Company's obligations. At June 30, 1997, and December 31,
1996, the AVR was $18.0 million and $16.6 million, respectively. Since 1995,
there have been no voluntary contributions made to the AVR. Management believes
the Company's level of reserve is adequate.

     The AVR was established to stabilize statutory surplus from non-interest
related fluctuations in the market value of bonds, stocks, mortgage loans, real
estate and other invested assets.  The AVR generally captures realized and
unrealized capital gains or losses on such assets, other than those resulting
from changes in interest rates.  Each year, the amount of an insurer's AVR will
fluctuate as capital gains or losses are absorbed by the reserve.  To adjust for
such changes over time, an annual contribution must be made to the AVR equal to
20% of the difference between the maximum AVR (as determined annually according
to the type and quality of an insurer's assets) and the actual AVR.  The AVR
provisions permitted a phase-in period whereby the required contribution was 10%
in 1992, 15% in 1993, and the full 20% factor thereafter.

     Such contributions may result in a slower rate of growth of, or a reduction
to, surplus.  Changes in the AVR are accounted for as direct increases or
decreases in surplus.  The impact of the AVR on the surplus position of John
Hancock in the future will depend in part on the composition of the Company's
investment portfolio.

     The Interest Maintenance Reserve ("IMR") captures realized capital gains
and losses (net of taxes) on fixed income investments (primarily bonds and
mortgage loans) resulting from changes in interest rate levels.  These amounts
are not reflected in the Company's capital account and are amortized into net
investment income over the estimated remaining lives of the investments
disposed.  At June 30, 1997 and December 31, 1996  the balance of the IMR was
$7.5 million and $5.9 million, respectively. The impact of the IMR on the
surplus of the Company depends upon the amount of future interest related
capital gains and losses on fixed income investments.


   Results of Operations

     For the six months ending June 30, 1997, the net gain from operations was
$22.5 million, $8.0 million higher than the same period during 1996. For the
quarter ending June 30, 1997, the  net gain from operations was $14.9 million,
$4.4 million higher than the same period during 1996.

For the six months ending June 30, 1997, total revenues increased by 6.2%, or
$36.8 million to $632.0 million as compared to the same period during 1996. For
the quarter ending June 30, 1997, total revenues decreased by 7.7%, or $29.1
million as compared to the same period in 1996. For the six months ending June
30, 1997, premiums, net of premium ceded to reinsurers, decreased by 13.5%, or
$65.4 million to $420.0 million as compared to the same period during 1996. For
the quarter ending June 30, 1997 premiums, net of premium ceded to reinsurers,
decreased by 23.9% or $74.0 million as compared to the same period during 1996.
The decrease in premium is primarily due to large single premium insurance sales
occurring in the second quarter of 1996, which have not recurred. For the six
months ending June 30, 1997, net investment income increased by 15.9% or $5.7
million to $41.6 million as compared to the same period during 1996. For the
quarter ending June 30, 1997, net investment income increased by 18.8% or $3.4
million as compared to the same period during 1996. These increases can be
attributed to an increase in gross income on long-term bonds, and real estate
mortgages for the six and three month periods ended June 30, 1997 of $4.6
million, $3.0 million, and $2.6 million, $1.6 million, respectively. These
increases were the result of an increased asset


<PAGE>
 
base. For the six months ending June 30, 1997, and for the quarter ending June
30, 1997, other income increased by $96.5 million and $41.5 million respectively
compared to the same periods in 1996. These increases were primarily
attributable to the increase in commission and expense allowances and reserve
adjustments on reinsurance ceded.

For the six months ending June 30, 1997, total benefits and expenses increased
by 5.2% or $29.3 million to $592.4 million as compared to the same period during
1996. For the quarter ending June 30, 1997, total benefits and expenses
decreased by 9.0% or $31.9 million as compared to the same period during 1996.
For the six months ending June 30, 1997, benefit payments and additions to
reserves increased by 4.5% or $20.7 million to $481.2 million as compared to the
same period during 1996. For the quarter ending June 30, 1997, benefit payments
and additions to reserves decreased by 11.6% or $35.1 million as compared to the
same period during 1996. For the six months ending June 30, 1997, insurance
expenses increased by 7.3% or $6.9 million to $101.4 million as compared to the
same period during 1996. For the quarter ending June 30, 1997, insurance
expenses increased by 8.0% or $3.9 million as compared to the same period during
1996. These increases in insurance expenses were attributable largely to
commission expense resulting from the sale of new business.



     Liquidity and Capital Resources

     The Company's liquidity resources at June 30, 1997, include cash and short-
term investments of $0.1 million, public bonds of $309.6 million, and investment
grade private placement bonds of $444.6 million.  The corresponding amounts at
December 31, 1996 were $31.9 million, $263.2 million, and $439.7 million,
respectively.  In addition, the Company's separate accounts are highly liquid
and are available to meet most outflow needs for variable life insurance.

     Management believes the liquidity resources above of $754.3 million as of
June 30, 1997, strongly position the Company to meet all its obligations to
policyholders and others.  Generally, the Company's financing needs are met by
means of funds provided by normal operations.  As of June 30, 1997 and year end
1996, the Company had no outstanding borrowings from sources outside its
affiliated group.

     Total surplus, or stockholder's equity, including the AVR, is $327.5
million as of June 30, 1997 compared to $299.7 million as of December 31, 1996.
The current statutory accounting treatment of deferred acquisition cost ("DAC")
taxes results in an understatement of the Company's surplus, which will persist
during periods of growth in new business written.  These taxes result from
federal income tax law that approximates acquisition expenses and then spreads
the corresponding tax deduction over a period of years.  The result is a DAC tax
which is collected immediately and subsequently returned through tax deduction
in later years.

     Since it began its operations, the Company has received a total of $381.8
million in capital contributions from John Hancock, of which $377.5 million is
credited to paid-in capital and $2.5 million is credited to capital stock as of
June 30, 1997.  In 1993, $1.8 million of capital was returned to John Hancock.
To support the Company's operations, for the indefinite future, John Hancock is
committed to make additional capital contributions if necessary to ensure that
the Company maintains a positive net worth.  The Company's stockholder's equity,
net of unassigned deficit, was $309.5 million at June 30, 1997 and $283.1
million at December 31, 1996.
<PAGE>
 
PART II.  OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits
 
               27.  Financial Data Sheet

          (b)  Reports on Form 8-K

               None



                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                              John Hancock Variable
                              Life Insurance Company
                              ----------------------------
                              (Registrant)

Date:  August 13, 1997        /s/ Thomas J. Lee
       ---------------        ----------------------------
                              Vice President


Date:  August 13, 1997        /s/ Paula M. Pashko
       ---------------        ----------------------------
                              Assistant Controller