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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
F O R M
N-8B-2
REGISTRATION STATEMENT OF UNIT INVESTMENT TRUSTS
WHICH ARE CURRENTLY ISSUING SECURITIES
PURSUANT TO SECTION 8(b) OF THE
INVESTMENT COMPANY ACT OF 1940
SEPARATE ACCOUNT A
OF
THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
NAME OF UNIT INVESTMENT TRUST
ISSUER OF PERIODIC PAYMENT PLAN CERTIFICATES
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I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Furnish name of the trust and the Internal Revenue Service Employer
Identification Number.
The name of the trust is The Manufacturers Life Insurance Company
(U.S.A.) Separate Account A (herein referred to as "Separate Account"). The
Separate Account has no employer identification number.
(b) Furnish title of each class or series of securities issued by the
trust.
Flexible Premium Variable Life Insurance Policy (herein referred to
as "Policy").
2. Furnish name and principal business address and ZIP Code and the Internal
Revenue Service Employer Identification Number of each Depositor of the trust.
The name, principal business address and ZIP Code of the depositor
is The Manufacturers Life Insurance Company (U.S.A.) (herein referred to
"Depositor"), 38500 Woodward Avenue, Bloomfield Hills, Michigan, 48304. Its
I.R.S. Employer Identification No. is 01 0233346.
3. Furnish name and principal business address and ZIP Code and the Internal
Revenue Service Employer Identification Number of each custodian or trustee of
the trust indicating for which class or series of securities each custodian or
trustee is acting.
There is no trustee or custodian of the Separate Account.
4. Furnish name and principal business address and ZIP Code and the Internal
Revenue Service Employer Identification Number of each principal underwriter
currently distributing securities of the trust.
No Policies are being distributed currently. ManEquity, Inc., 200
Bloor Street East, Toronto, Ontario, Canada M4W 1E5, (herein referred to as
"Principal Underwriter") will act as the principal underwriter of the Policy.
5. Furnish name of state or other sovereign power, the laws of which govern
with respect to the organization of the trust.
The Separate Account is authorized by Michigan Insurance Law
Section 500.925(1) which states that "[a] life insurer, after adoption of a
resolution by its board of directors and certification thereof to the
commissioner, may allocate to 1 or more separate accounts, in accordance with
the terms of a written agreement or a contract on a variable basis, amounts
which are paid to the insurer, in connection with a pension, retirement or
profit-sharing plan, or in connection with a contract on a variable basis,
whether on an individual or group basis, and which amounts are to be applied to
purchase retirement benefits in fixed or in variable dollar amounts, or both, or
to provide benefits in accordance with a contract on a variable basis.
Section 500.925(1) further states that "[t]he income, if any, and
gains or losses realized or unrealized on each such account allocated to such
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account may be credited to or charged against the amount allocated to such
account in accordance with such agreement, without regard to the other income,
gains or losses of the insurer. The commissioner may prescribe reasonable
limitation on charges against and permissible deductions from the investment
experience credited to life insurance contracts on a variable basis.
Notwithstanding any other provision in the insurer's articles of incorporation
or in this act, the amounts allocated to such accounts and accumulations thereon
may be invested and reinvested in any class of loans or investments specified in
such agreement, or, with respect to life insurance contracts on a variable
basis, as prescribed by the commissioner, and such loans and investments shall
not be considered in applying any limitation in this chapter. The commissioner
may, with respect to a separate accounts for life insurance on a variable basis,
establish reasonable standards for procedures to be used in changing investment
policy and provisions to safeguard the rights of insured persons and
beneficiaries."
6. (a) Furnish the dates of execution and termination of any indenture or
agreement currently in effect under the terms of which the trust was organized
and issued or proposes to issue securities.
There is no indenture or agreement under the terms of which the
Separate Account was organized or proposes to issue securities. The Separate
Account was organized pursuant to a resolution of the Board of Directors of the
Depositor on March 20, 1997, which resolution continues in effect indefinitely
unless terminated by the Board of Directors (see Exhibit A(1)).
(b) Furnish the dates of execution and termination of any indenture or
agreement currently in effect pursuant to which the proceeds of payments on
securities issued or to be issued by the trust are held by the custodian or
trustee.
There is no indenture or agreement relating to a custodian or
trustee holding premiums made pursuant to the Policies.
7. Furnish in chronological order the following information with respect to
each change of name of the trust since January 1, 1930. If the name has never
been changed, so state.
The name of the Separate Account has never been changed.
8. State the date on which the fiscal year of the trust ends.
The fiscal year of the Separate Account ends December 31 of each
year.
MATERIAL LITIGATION
9. Furnish a description of any pending legal proceedings, material with
respect to the security holders of the trust by reason of the nature of the
claim or the amount thereof, to which the trust, the depositor, or the principal
underwriter is a party or of which the assets of the trust are the subject,
including the substance of the claims involved in such proceeding and the title
of the proceeding. Furnish a similar statement with respect to any
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pending administrative proceeding commenced by a governmental authority or any
such proceeding or legal proceeding known to be contemplated by a governmental
authority. Include any proceeding which, although immaterial itself, is
representative of, or one of, a group which in the aggregate is material.
There are no pending administrative proceedings commenced by, or
known to be contemplated by, a governmental authority and no pending legal
proceedings, material with respect to prospective purchasers of the Policies, to
which the Separate Account, the Depositor or the Principal Underwriter is a
party or to which the assets of the Separate Account will be subject.
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
GENERAL INFORMATION CONCERNING THE SECURITIES OF THE TRUST AND THE RIGHTS OF
HOLDERS
10. Furnish a brief statement with respect to the following matters for each
class or series of securities issued by the trust:
(a) Whether the securities are of the registered or bearer type.
The Policy is of the registered type.
(b) Whether the securities are of the cumulative or distributive type.
The Policy is of the cumulative type.
(c) The rights of security holders with respect to withdrawal or
redemption.
A Policy may be surrendered for its Net Cash Surrender
Value while the life insured is living. The Net Cash Surrender Value is equal to
the Policy Value less any surrender charges and outstanding monthly deductions
due (the "Cash Surrender Value") minus the Policy Debt. If there have been any
prior Face Amount increases, the Surrender Charge will be the sum of the
Surrender Charge for the Initial Face Amount plus the Surrender Charge for each
increase. The Net Cash Surrender Value will be determined as of the end of the
Business Day on which the Depositor receives the Policy and a written request
for surrender at its Service Office. After a Policy is surrendered, the
insurance coverage and all other benefits under the Policy will terminate. The
Policy Value is equal to the amount invested in the sub-accounts of the Separate
Account, the "Investment Amount", plus the amount in the Loan Account.
The Depositor will pay the Cash Surrender Value within
seven (7) days after receipt of the signed request for surrender and the Policy
at its Service Office, except that such payment may be postponed for any period
during which (i) the New York Stock Exchange is closed for trading (except for
normal holiday closings), (ii) trading on the New York Stock Exchange is
restricted, and (iii) an emergency exists 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; provided that applicable rules and regulations of the Commission shall
govern as to whether the conditions described in (ii) and (iii) exist.
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(d) The rights of security holders with respect to conversion, transfer,
partial redemption, and similar matters.
Net premiums, which are premiums after the deduction of
the charges assessed against premiums, are allocated to the Fixed Account and/or
Investment Accounts.
Premiums may be allocated to the Fixed Account for
accumulation at a rate of interest equal to at least 4% or to one or more of the
Investment Accounts for investment in the Portfolio shares held by the
corresponding sub-account of the Separate Account. Allocations among the
Investment Accounts and the Fixed Account are made as a percentage of the
premium. The percentage allocation to any account may be any number between zero
and 100, provided the total allocation equals 100. A Policyowner may change the
way in which premiums are allocated at any time without charge. The change will
take effect on the date a written request for change satisfactory to the
Depositor is received at the Service Office.
At any time, a Policyowner 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. Transfer requests
must be in writing in a format satisfactory to the Depositor, or by telephone if
a currently valid telephone transfer authorization form is on file.
The Depositor reserves the right to impose limitations on
transfers, including the maximum amount that may be transferred. The Depositor
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 following events occur: (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, and (iii) an emergency exists 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; provided that applicable rules and regulations of
the Commission shall govern as to whether the conditions described in (ii) and
(iii) exist. Transfer privileges are also subject to any restrictions that may
be imposed by the Trust. In addition, the Depositor reserves the right to defer
the transfer privilege at any time when it is unable to purchase or redeem
shares of the Trust.
A charge of $25 will be imposed on each transfer in excess
of twelve in a Policy Year. The charge will be deducted from the Investment
Account or the Fixed Account to which the transfer is being made. All transfer
requests received by the Depositor on the same Business Day are treated as a
single transfer request.
While the Policy is in force, the Policyowner may transfer
the Policy Value from any of the Investment Accounts to the Fixed Account
without incurring transfer charges:
(a) within eighteen months after the Issue Date; or
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(b) within 60 days of the effective date of a material change in the
investment objectives of any of the sub-accounts or within 60 days of the
date of notification of such change, whichever is later.
Such transfers will not count against the twelve transfers that may be made free
of charge in any Policy Year.
The maximum amount that may be transferred from the Fixed
Account in any one Policy Year is the greater of $500 or 15% of the Fixed
Account Value at the previous Policy Anniversary. Any transfer which involves a
transfer out of the Fixed Account may not involve a transfer to the Investment
Account for the Money Market Trust.
Although failure to follow reasonable procedures may
result in the Depositor being liable for any losses resulting from unauthorized
or fraudulent telephone transfers, the Depositor will not be liable for
following instructions communicated by telephone that it reasonably believes to
be genuine. The Depositor will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Such procedures shall
consist of confirming that a valid telephone authorization form is on file, tape
recording of all telephone transactions and providing written confirmation
thereof.
The Depositor will offer Policyowners a Dollar Cost
Averaging ("DCA") program. Under the DCA program, the Policyowner will designate
an amount which will be transferred monthly from one Investment Account into any
other Investment Account(s) or the Fixed Account. Currently, no charge will be
made for this program, although the Depositor reserves the right to institute a
charge on 90 days' written notice to the policyholder. If insufficient funds
exist to effect a DCA transfer, the transfer will not be effected and the
Policyowner will be so notified. The Depositor reserves the right to cease to
offer this program as of 90 days after written notice is sent to the
Policyowner.
Under the Asset Allocation Balancer program the
Policyowner will designate an allocation of Policy Value among Investment
Accounts. At six-month intervals beginning six months after the Policy Date, the
Depositor will move amounts among the Investment Accounts as necessary to
maintain the Policyowner's chosen allocation. A change to the Policyowner
premium allocation instructions will automatically result in a change in Asset
Allocation Balancer instructions so that the two are identical unless the
Policyowner either instructs the Depositor otherwise or has elected the Dollar
Cost Averaging program. Currently, there is no charge for this program; however,
the Depositor reserves the right to institute a charge on 90 days' written
notice to the Policyowner. The Depositor reserves the right to cease to offer
this program as of 90 days after written notice is sent to the Policyowner.
Transfers under the Dollar Cost Averaging and Asset
Allocation Balancer programs do not count against the number of free transfers
permitted per Policy Year.
The Policyowner may request a surrender of or a withdrawal
from the policy as described in the response to Item 10(c) and may also obtain
loans as described in the response to Item 21.
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(e) If the trust is the issuer of periodic payment plan certificates, the
substance of the provisions of any indenture or agreement with respect to lapses
or defaults by security holders in making principal payments, and with respect
to reinstatement.
It is possible for unfavorable investment performance to
cause a Policy to go into default. A Policy will go into default if at the
beginning of any Policy Month the Policy's Net Cash Surrender Value would be
zero or below after deducting the monthly deduction then due. Therefore, a
Policy could lapse eventually if increases in Policy Value (prior to deduction
of Policy charges) are not sufficient to cover Policy charges. The Depositor
will notify the Policyowner of the default and will allow a 61 day grace period
in which the Policyowner 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.
A Policyowner can reinstate a Policy which has terminated
after going into default at any time within 21 days following the date of
termination without furnishing evidence of insurability, subject to the
following conditions:
(a) The life insured's risk classification is standard or preferred, and
(b) The life insured's Attained Age is less than 46.
A Policyowner can, by making a written request, reinstate
a Policy which has terminated after going into default at any time within the
five-year period following the date of termination subject to the following
conditions:
(a) Evidence of the life insured's insurability, satisfactory to the Depositor
is provided to the Depositor;
(b) A premium equal to the amount that was required to bring the Policy out of
default immediately prior to termination, plus the amount needed to keep
the Policy in force to the next scheduled date for payment of the Planned
Premium must be paid to the Depositor.
If the reinstatement is approved, the date of reinstatement will be the later of
the date the Depositor approves the Policyowner's request or the date the
required payment is received at the Depositor's Service Office. In addition, any
surrender charges will be reinstated to the amount they were at the date of
default. The Policy Value on the date of reinstatement, prior to the crediting
of any Net Premium paid on the reinstatement, will be equal to the Policy Value
on the date the Policy terminated.
In those states where it is permitted, as long as the
No-Lapse Guarantee Cumulative Premium Test is satisfied during the No-Lapse
Guarantee Period, as described below, the Depositor will guarantee that the
Policy will not go into default, even if adverse investment experience or other
factors should cause the Policy's Net Cash Surrender Value to fall to zero or
below during such
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period.
The Monthly No-Lapse Guarantee Premium is one-twelfth of
the No-Lapse Guarantee Premium.
The No-Lapse Guarantee Premium is set at issue and
reflects any Additional Rating and Supplementary Benefits, if applicable. It is
subject to change if (i) the Face Amount of the Policy is changed, (ii) there is
a Death Benefit Option change, (iii) there is a decrease in the Face Amount of
insurance due to a partial withdrawal, or (iv) there is any change in the
supplementary benefits added to the Policy or in the risk classification of the
life insured.
The No-Lapse Guarantee Period is the period, set at issue,
during which the No-Lapse Guarantee is provided. The No-Lapse Guarantee period
is fixed at the lesser of (a) twenty years or (b) the number of years remaining
until the life insured's age is 95, depending upon applicable state law
requirements Certain states may have a shorter guarantee period. The No Lapse
Guarantee Period for a particular Policy is stated in the Policy.
While the No-Lapse Guarantee is in effect, the Depositor
will determine at the beginning of the Policy Month that your policy would
otherwise be in default, whether the No-Lapse Guarantee Cumulative Premium Test,
described below, has been met. If the test has not been satisfied, the Depositor
will notify the Policyowner of that fact and allow a 61-day grace period in
which the Policyowner may make a premium payment sufficient to keep the policy
from going into default. This required payment, as described in the notification
to the Policyowner, will be equal to the lesser of:
(a) the outstanding premium requirement to satisfy the No-Lapse Guarantee
Cumulative Premium Test at the date of default, plus the Monthly No-Lapse
Guarantee Premium due for the next two Policy Months, or
(b) the amount necessary to bring the Net Cash Surrender Value to zero plus
the monthly deductions due, plus the next two monthly deductions plus the
applicable premium charge.
If the required payment is not received by the end of the grace period, the
No-Lapse Guarantee and the Policy will terminate.
The No-Lapse Guarantee Cumulative Premium Test is
satisfied if, as of the beginning of the Policy Month that your policy would
otherwise be in default, the sum of all premiums paid to date less any gross
withdrawals taken on or before the date of the test and less any policy debt is
equal to or exceeds the sum of the Monthly No-Lapse Guarantee Premiums due from
the Policy Date to the date of the test.
(f) The substance of the provisions of any indenture or agreement with
respect to voting rights, together with the names of any persons other than
security holders given the right to exercise voting rights pertaining to the
trust's securities or the underlying securities and the relationship of such
persons to the trust.
All of the assets held in the sub-accounts of the Separate
Account will be invested in shares of a particular Portfolio of the Trust.
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The Depositor 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, the Depositor will
vote shares held in the sub-accounts in accordance with instructions received
from Policyowners having an interest in such sub-accounts. Shares held in each
sub-account for which no timely instructions from Policyowners are received,
including shares not attributable to the Policies, will be voted by the
Depositor 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 the Depositor 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 Policyowner 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 the Depositor, 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.
The Depositor 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, the Depositor itself may disregard voting
instructions that would require changes in the investment policies or investment
adviser, provided that the Depositor reasonably disapproves such changes in
accordance with applicable federal regulations. If the Depositor does disregard
voting instructions, it will advise Policyowners of that action and its reasons
for such action in the next communication to Policyowners.
(g) Whether security holders must be given notice of any change in:
(1) the composition of the assets of the trust.
The Depositor 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. The Depositor also
reserves 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.
(2) the terms and conditions of the securities issued by the trust.
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No change may be made in the terms and conditions of
issued Policies without notice to and the consent of the Policyowners.
(3) the provisions of any indenture or agreement of the trust.
There is no indenture or agreement relating to the
Separate Account except for the Policies (see response to item 10(g)(2) above).
(4) the identity of the depositor, trustee or custodian.
Policy owners would receive notice of any change in the
identity of the Depositor. There is no trustee or custodian of the Separate
Account.
(h) Whether the consent of security holders is required in order for
action to be taken concerning any change in:
(1) the composition of the assets of the trust.
Consent of Policyowners is not required for any change in
the composition of the assets held or to be acquired by the Separate Account.
However, any substitution of securities held by the Separate Account will be
subject to Commission approval pursuant to Section 26(b) of the 1940 Act.
(2) the terms and conditions of the securities issued by the trust.
No change may be made in the terms and conditions of the
issued Policies without the consent of the Policyowners.
(3) the provisions of any indenture or agreement of the trust.
There is no indenture or agreement relating to the
Separate Account except for the Policies (see response to item 10(h)(2) above).
(4) the identity of the depositor, trustee or custodian.
No consent of Policyowners is required for any change
concerning the identity of the Depositor. There is no trustee or custodian of
the Separate Account.
(i) Any other principal feature of the securities issued by the trust or
any other principal right, privilege or obligation not covered by subdivisions
(a) to (g) or by any other item in this form.
(1) Policy Value
A Policy has a Policy Value, a portion of which is
available to the Policyowner 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.
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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.
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 the Depositor.
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 which is equal to the amount charged on the outstanding
Policy Debt less the Loan Spread.
(2) Death Benefit
If the Policy is in force at the time of the death of the
life insured, the Depositor will pay an insurance benefit. The amount payable
will be the death benefit under the selected death benefit option, plus any
amounts payable under any supplementary benefits added to the Policy, less the
Policy Debt and less any outstanding monthly deductions due. The insurance
benefit will be paid in one lump sum unless another form of settlement option is
agreed to by the beneficiary and the Depositor. If the insurance benefit is paid
in one sum, the Depositor will pay interest from the date of death to the date
of payment. If the life insured should die after the Depositor's receipt of a
request for surrender, no insurance benefit will be payable, and the Depositor
will pay only the Net Cash Surrender Value.
There are two death benefit options, described below.
Death Benefit Option 1:
Under Option 1 the death benefit is the Face Amount of the Policy at the date of
death or, if greater, the Minimum Death Benefit.
Death Benefit Option 2:
Under Option 2 the death benefit is the Face Amount plus the Policy Value of the
Policy at the date of death or, if greater, the Minimum Death Benefit.
(3) Maximum Premium Limitations
A Policy must satisfy either one of two tests to qualify
as a life insurance contract for purposes of Section 7702 of the Internal
Revenue Code of 1986, as amended (the "Code"). At the time of application, the
Policyowner must choose either the Cash Value Accumulation Test or the Guideline
Premium Test. The test cannot be changed once the Policy is issued.
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Under the Cash Value Accumulation Test ("CVAT"), the
Policy Value must be less than the Net Single Premium necessary to fund future
Policy benefits, assuming guaranteed charges and 4% net interest. To ensure that
a Policy meets the CVAT, the Depositor will generally increase the death
benefit, temporarily, to the required minimum amount. However, the Depositor
reserves the right to require evidence of insurability should a premium payment
cause the death benefit to increase by more than the premium payment amount. Any
excess premiums will be refunded.
The Guideline Premium Test restricts the maximum premiums
that may be paid into a life insurance policy for a given death benefit. Changes
to the Policy may affect the maximum amount of premiums, such as: a change in
the policy's Face Amount; a change in the death benefit option; partial
Withdrawals; or addition or deletion of supplementary benefits. Any of the above
changes could cause the total premiums paid to exceed the new maximum limit. In
this situation, the Depositor may refund any excess premiums paid. In addition,
these changes could reduce the future premium limitations.
The Guideline Premium Test requires a life insurance
policy to meet minimum ratios of life insurance coverage to policy value. This
is achieved by ensuring that the death benefit is at all times at least equal to
the Minimum Death Benefit. The Minimum Death Benefit on any date is defined as
the Policy Value on that date times the applicable Minimum Death Benefit
Percentage for the Attained Age of the life insured. The Minimum Death Benefit
Percentages for this test appear in the Policy.
If the Policy is issued under the Guideline Premium Test,
in no event may the total of all premiums paid exceed the then current maximum
premium limitations established by federal income tax law for a Policy to
qualify as life insurance.
If, at any time, a premium is paid which would result in
total premiums exceeding the above maximum premium limitation, the Depositor
will only accept that portion of the premium which will make the total premiums
equal to the maximum. Any part of the premium in excess of that amount will be
returned and no further premiums will be accepted until allowed by the then
current maximum premium limitation.
(4) Refund Right
A Policy may be returned for a refund within 10 days after
the Policyowner received it. Some states provide a longer period of time to
exercise this right. The Policy will indicate if a longer time period applies.
The Policy can be mailed or delivered to the Depositor's agent who sold it or to
the Service Office. Immediately on such delivery or mailing, the Policy shall be
deemed void from the beginning. Within seven days after receipt of the returned
Policy at its Service Office, the Depositor will refund to the Policyowner an
amount equal to either:
(1) the amount of all premiums paid or
(2)
(a) the difference between payments made and amounts allocated to the
Separate Account and the Fixed Account; plus
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(b) the value of the amount allocated to the Separate Account and the
Fixed Account as of the date the returned Policy is received by the
Depositor; minus
(c) any partial withdrawals made and policy loans taken.
Whether the amount described in (1) or (2) is refunded depends on the
requirements of the applicable state.
If a Policyowner requests an increase in Face Amount which
results in new surrender charges, he or she will have the same rights as
described above to cancel the increase. If canceled, the Policy Value and the
surrender charges will be recalculated to the amounts they would have been had
the increase not taken place. A Policyowner may request a refund of all or any
portion of premiums paid during the right to examine period, and the Policy
Value and the surrender charges will be recalculated to the amounts they would
have been had the premiums not been paid.
The Depositor reserves the right to delay the refund of
any premium paid by check until the check has cleared.
INFORMATION CONCERNING THE SECURITIES UNDERLYING THE TRUST'S SECURITIES
11. Describe briefly the kind or type of securities comprising the unit of
specified securities in which security holders have an interest. (If the unit
consists of a single security issued by an investment company, name such
investment company and furnish a description of the type of securities
comprising the portfolio of such investment company.)
The Portfolios of the Trust available under the Policies
are as follows:
The PACIFIC RIM EMERGING MARKETS TRUST seeks long-term growth of capital by
investing in a diversified portfolio that is comprised primarily of common
stocks and equity-related securities of corporations domiciled in countries in
the Pacific Rim region.
The INTERNET TECHNOLOGIES TRUST seeks long-term capital appreciation by
investing the portfolio's assets primarily in companies engaged in
Internet-related business (such businesses also include Intranet-related
businesses).
The SCIENCE & TECHNOLOGY TRUST seeks long-term growth of capital. By investing
at least 65% of the portfolio's total assets in common stocks of companies
expected to benefit from the development, advancement, and use of science &
technology. Current income is incidental to the portfolio's objective.
The INTERNATIONAL SMALL CAP TRUST seeks capital appreciation by investing
primarily in securities issued by foreign companies which have total market
capitalization or annual revenues of $1 billion or less. These securities may
represent companies in both established and emerging economies throughout the
world.
The AGGRESSIVE GROWTH TRUST seeks long-term capital appreciation by investing
12
<PAGE> 14
the portfolio's asset principally in common stocks, convertible bonds,
convertible preferred stocks and warrants of companies which in the opinion of
the subadviser are expected to achieve earnings growth over time at a rate in
excess of 15% per year. Many of these companies are in the small and
medium-sized category.
The EMERGING SMALL COMPANY TRUST seeks long-term growth of capital by investing,
under normal market conditions, at least 65% of the portfolio's total assets in
common stock equity securities of companies with market capitalizations that
approximately match the range of capitalization of the Russell 2000 Index
("small cap stocks") at the time of purchase.
The SMALL COMPANY BLEND TRUST seeks long-term growth of capital and income by
investing the portfolio's assets, under normal market conditions, primarily in
equity and equity-related securities of companies with market capitalizations
that approximately match the range of capitalization of the Russell 2000 Index
at the time of purchase.
The DYNAMIC GROWTH TRUST seeks long-term growth of capital by investing the
portfolio's assets primarily in equity securities selected for their growth
potential. Normally at least 50% of its equity assets are invested in
medium-sized companies.
The MID CAP STOCK TRUST seeks long-term growth of capital by investing primarily
in equity securities with significant capital appreciation potential, with
emphasis on medium sized companies.
The ALL CAP GROWTH TRUST (formerly, Mid Cap Growth Trust) seeks long-term
capital appreciation by investing the portfolio's assets, under normal market
conditions, principally in common stocks of companies that are likely to benefit
from new or innovative products, services or processes, as well as those that
have experienced above-average, long-term growth in earnings and have excellent
prospects for future growth.
The OVERSEAS TRUST seeks growth of capital by investing, under normal market
conditions, at least 65% of the portfolio's assets in foreign securities
(including American Depositary Receipts (ADRs) and European Depositary Receipts
(EDRs)). The portfolio expects to invest primarily in equity securities.
The INTERNATIONAL STOCK TRUST seeks long-term growth of capital by investing
primarily in common stocks of established, non-U.S. companies.
The INTERNATIONAL VALUE TRUST seeks long-term growth of capital by investing,
under normal market conditions, primarily in equity securities of companies
located outside the U.S., including emerging markets.
The MID CAP BLEND TRUST seeks growth of capital by investing primarily in common
stocks of U.S. issuers and securities convertible into or carrying the right to
buy common stocks.
The SMALL COMPANY VALUE TRUST seeks long-term growth of capital by investing,
under normal circumstances, at least 65% of the portfolio's assets in common
13
<PAGE> 15
stocks of companies with total market capitalization that approximately match
the range of capitalization of the Russell 2000 Index and are traded principally
in the markets of the United States.
The GLOBAL EQUITY TRUST seeks long-term capital appreciation by investing
primarily in equity securities throughout the world, including U.S. issuers and
emerging markets.
The GROWTH TRUST seeks long-term growth of capital by investing primarily in
large capitalization growth securities (market capitalizations of approximately
$1 billion or greater).
The LARGE CAP GROWTH TRUST seeks long-term growth of capital by investing, under
normal market conditions, at least 65% of the portfolio's assets in equity
securities of companies with large market capitalizations.
The QUANTITATIVE EQUITY TRUST seeks to achieve intermediate and long-term growth
through capital appreciation and current income by investing in common stocks
and other equity securities of well established companies with promising
prospects for providing an above average rate of return.
The BLUE CHIP GROWTH TRUST seeks to achieve long-term growth of capital (current
income is a secondary objective) by investing at least 65% of the portfolio's
total assets in the common stocks of large and medium sized blue chip companies.
Many of the stocks in the portfolio are expected to pay dividends.
The REAL ESTATE SECURITIES TRUST seeks to achieve a combination of long-term
capital appreciation and satisfactory current income by investing in real estate
related equity and debt securities.
The VALUE TRUST seeks to realize an above-average total return over a market
cycle of three to five years, consistent with reasonable risk, by investing
primarily in common and preferred stocks, convertible securities, rights and
warrants to purchase common stocks, ADRs and other equity securities of
companies with equity capitalizations usually greater than $300 million.
The TACTICAL ALLOCATION TRUST seeks total return, consisting of long-term
capital appreciation and current income, by allocating the portfolio's assets
between (i) a stock portion that is designed to track the performance of the S&P
500 Composite Stock Price Index, and (ii) a fixed income portion that consists
of either five-year U.S. Treasury notes or U.S. Treasury bills with remaining
maturities of 30 days.
The EQUITY INDEX TRUST seeks to achieve investment results which approximate the
aggregate total return of publicly traded common stocks which are included in
the Standard & Poor's 500 Composite Stock Price Index. (The Equity Index Trust
is available only for Policies issued for applications dated prior to May 1,
2000).
The GROWTH & INCOME TRUST seeks long-term growth of capital and income,
consistent with prudent investment risk, by investing primarily in a diversified
portfolio of common stocks of U.S. issuers which the subadviser believes are of
high quality.
The U.S. LARGE CAP VALUE TRUST seeks long-term growth of capital and income by
14
<PAGE> 16
investing the portfolio's assets, under normal market conditions, primarily in
equity and equity-related securities of companies with market capitalization
greater than $500 million.
The EQUITY-INCOME TRUST seeks to provide substantial dividend income and also
long-term capital appreciation by investing primarily in dividend-paying common
stocks, particularly of established companies with favorable prospects for both
increasing dividends and capital appreciation.
The INCOME & VALUE TRUST seeks the balanced accomplishment of (a) conservation
of principal and (b) long-term growth of capital and income by investing the
portfolio's assets in both equity and fixed-income securities. The subadviser
has full discretion to determine the allocation between equity and fixed income
securities.
The BALANCED TRUST seeks current income and capital appreciation by investing in
a balanced portfolio of common stocks, U.S. and foreign government obligations
and a variety of corporate fixed income securities.
The HIGH YIELD TRUST seeks to realize an above-average total return over a
market cycle of three to five years, consistent with reasonable risk, by
investing primarily in high yield debt securities, including corporate bonds and
other fixed-income securities.
The STRATEGIC BOND TRUST seeks a high level of total return consistent with
preservation of capital by giving its subadviser broad discretion to deploy the
portfolio's assets among certain segments of the fixed income market as the
subadviser believes will best contribute to achievement of the portfolio's
investment objective.
The GLOBAL BOND TRUST seeks to realize maximum total return, consistent with
preservation of capital and prudent investment management by investing the
portfolio's asset primarily in fixed income securities denominated in major
foreign currencies, baskets of foreign currencies (such as the ECU), and the
U.S. dollar.
The TOTAL RETURN TRUST seeks to realize maximum total return, consistent with
preservation of capital and prudent investment management by investing, under
normal market conditions, at least 65% of the portfolio's assets in a
diversified portfolio of fixed income securities of varying maturities. The
average portfolio duration will normally vary within a three- to six-year time
frame based on the subadviser's forecast for interest rates.
The INVESTMENT QUALITY BOND TRUST seeks a high level of current income
consistent with the maintenance of principal and liquidity, by investing
primarily in a diversified portfolio of investment grade corporate bonds and
U.S. Government bonds with intermediate to longer term maturities. The portfolio
may also invest up to 20% of its assets in non-investment grade fixed income
securities.
The DIVERSIFIED BOND TRUST seeks high total return consistent with the
conservation of capital by investing at least 75% of the portfolio's assets in
fixed income securities.
The U.S. GOVERNMENT SECURITIES TRUST seeks a high level of current income
15
<PAGE> 17
consistent with preservation of capital and maintenance of liquidity, by
investing 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.
The MONEY MARKET TRUST seeks maximum current income consistent with preservation
of principal and liquidity by investing in high quality money market instruments
with maturities of 397 days or less issued primarily by U. S. entities.
The SMALL CAP INDEX TRUST seeks to approximate the aggregate total return of a
small cap U.S. domestic equity market index by attempting to track the
performance of the Russell 2000 Index.*
The INTERNATIONAL INDEX TRUST seeks to approximate the aggregate total return of
a foreign equity market index by attempting to track the performance of the
Morgan Stanley European Australian Far East Free Index (the "MSCI EAFE Index").*
The MID CAP INDEX TRUST seeks to approximate the aggregate total return of a mid
cap U.S. domestic equity market index by attempting to track the performance of
the S&P Mid Cap 400 Index.*
The TOTAL STOCK MARKET INDEX seeks to approximate the aggregate total return of
a broad U.S. domestic equity market index by attempting to track the performance
of the Wilshire 5000 Equity Index.*
The 500 INDEX TRUST seeks to approximate the aggregate total return of a broad
U.S. domestic equity market index by attempting to track the performance of the
S&P 500 Composite Stock Price Index.*
The LIFESTYLE AGGRESSIVE 1000 TRUST seeks to provide long-term growth of capital
(current income is not a consideration) by investing 100% of the Lifestyle
Trust's assets in other portfolios of the Trust ("Underlying Portfolios") which
invest primarily in equity securities.
The LIFESTYLE GROWTH 820 TRUST seeks to provide long-term growth of capital with
consideration also given to current income by investing approximately 20% of the
Lifestyle Trust's assets in Underlying Portfolios which invest primarily in
fixed income securities and approximately 80% of its assets in Underlying
Portfolios which invest primarily in equity securities.
The LIFESTYLE BALANCED 640 TRUST seeks to provide a balance between a high level
of current income and growth of capital with a greater emphasis given to capital
growth by investing approximately 40% of the Lifestyle Trust's assets in
Underlying Portfolios which invest primarily in fixed income securities and
approximately 60% of its assets in Underlying Portfolios which invest primarily
in equity securities.
The LIFESTYLE MODERATE 460 TRUST seeks to provide a balance between a high level
of current income and growth of capital with a greater emphasis given to current
income by investing approximately 60% of the Lifestyle Trust's assets in
Underlying Portfolios which invest primarily in fixed income securities and
approximately 40% of its assets in Underlying Portfolios which invest primarily
in equity securities.
16
<PAGE> 18
The LIFESTYLE CONSERVATIVE 280 TRUST seeks to provide a high level of current
income with some consideration also given to growth of capital by investing
approximately 80% of the Lifestyle Trust's assets in Underlying Portfolios which
invest primarily in fixed income securities and approximately 20% of its assets
in Underlying Portfolios which invest primarily in equity securities.
*"Standard & Poor's(R)," "S&P 500(R)," "Standard and Poor's 500(R)" and
"Standard and Poor's 400(R)" are trademarks of The McGraw-Hill Companies, Inc.
"Russell 2000(R)" is a trademark of Frank Russell Company. "Wilshire 5000(R)" is
a trademark of Wilshire Associates. "Morgan Stanley European Australian Far East
Free" and "EAFE(R)" are trademarks of Morgan Stanley & Co. Incorporated. None of
the Index Trusts 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 Trust.
12. If the trust is the issuer of periodic payment plan certificates and if
any underlying securities were issued by another investment company, furnish the
following information for each such company:
(a) Name of company.
Manufacturers Investment Trust
(b) Name and principal business address of depositor.
There is no Depositor of the Trust.
(c) Name and principal business address of trustee or custodian.
(i) For the Trust:
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
(d) Name and principal business address of principal underwriter.
The Trust sells its shares to the Depositor without the
use of any underwriter.
(e) The period during which the securities of such company have been the
underlying securities.
To date, no shares of the portfolios of the Trust have
been acquired by the Separate Account.
INFORMATION CONCERNING LOADS, FEES, CHARGES AND EXPENSES
13. (a) Furnish the following information with respect to each load, fee,
expense or charge to which (1) principal payments, (2) underlying securities,
(3) distributions, (4) cumulated or reinvested distributions or income, and (5)
redeemed or liquidated assets of the trust's securities are subject:
(A) the nature of such load, fee, expense, or charge;
17
<PAGE> 19
(B) the amount thereof;
(C) the name of the person to whom such amounts are paid and his
relationship to the trust;
(D) the nature of the services performed by such person in
consideration for such load, fee, expense or charge.
(1) Principal Payments. All Net Premiums received
on or after the Effective Date will be allocated among Investment Accounts or
the Fixed Account as of the Business Day the premiums were received at the
Service Office. Monthly deductions are due on the Policy Date and at the
beginning of each Policy Month thereafter. However, if due prior to the
Effective Date, they will be taken on the Effective Date instead of the dates
they were due. Premiums may be allocated to the Fixed Account for accumulation
at a rate of interest equal to at least 4% or to one or more of the Investment
Accounts for investment in the Portfolio shares held by the corresponding
sub-account of the Separate Account. Allocations among the Investment Accounts
and the Fixed Account are made as a percentage of the premium. The percentage
allocation to any account may be any number between zero and 100, provided the
total allocation equals 100. A Policyowner may change the way in which premiums
are allocated at any time without charge. The change will take effect on the
date a written request for change satisfactory to the Depositor is received at
the Service Office.
(2) Underlying securities. The Trust will pay its
investment adviser, Manufacturers Securities Services, LLC, ("MSS" or the
"Adviser") an indirect wholly-owned subsidiary of The Manufacturers Life
Insurance Company ("Manufacturers Life"), daily investment management fees set
forth below. All other expenses of the Trust except for the following are borne
by MSS: brokerage commissions on portfolio transactions (including any other
direct costs related to the acquisition, disposition, lending or borrowing of
portfolio investments), taxes payable by the Trust, interest and any other costs
related to borrowings by the Trust, and any extraordinary or non-recurring
expenses (such as legal claims and liabilities and litigation costs and any
indemnification related thereto.
Trust Annual Expenses
(as a percentage of Trust average net assets for the fiscal year ended December
31, 1999)
<TABLE>
<CAPTION>
Other Expenses
Management (After Total Trust
Trust Portfolio Fees Expense Annual
Reimbursement) Expenses
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Rim Emerging
Markets 0.850% 0.260% 1.110%
Internet Technologies........ 1.150% 0.136%(A) 1.286%
Science & Technology (J) 1.100% 0.060% 1.160%
International Small Cap 1.100% 0.270% 1.370%
Aggressive Growth 1.000%(F) 0.130% 1.130%
Emerging Small Company 1.050% 0.070% 1.120%
Small Company Blend 1.050% 0.250%(A) 1.300%(E)
Dynamic Growth............... 1.000%(F) 0.132%(A) 1.132%
</TABLE>
18
<PAGE> 20
<TABLE>
<S> <C> <C> <C>
Mid Cap Stock................ 0.925% 0.100%(A) 1.025%(E)
All Cap GrowthH.............. 0.950%(F) 0.070% 1.020%
Overseas..................... 0.950% 0.260% 1.210%
International Stock (J)...... 1.050% 0.200% 1.250%
International Value.......... 1.000% 0.230%(A) 1.230%(E)
Mid Cap Blend................ 0.850%(F) 0.060% 0.910%
Small Company Value.......... 1.050% 0.170% 1.220%
Global Equity................ 0.900% 0.160% 1.060%
Growth....................... 0.850% 0.050% 0.900%
Large Cap Growth............. 0.875%(F) 0.100% 0.975%
Quantitative Equity.......... 0.700% 0.060% 0.760%
Blue Chip Growth (J)......... 0.875%(F) 0.050% 0.925%
Real Estate Securities....... 0.700% 0.070% 0.770%
Value........................ 0.800% 0.070% 0.870%
Tactical Allocation.......... 0.900% 0.127%(A) 1.027%
Equity Index I............... 0.250% 0.150%(I) 0.400%(I)
Growth & Income.............. 0.750% 0.050% 0.800%
U.S. Large Cap Value......... 0.875% 0.070%(A) 0.945%(E)
Equity-Income (J)............ 0.875%(F) 0.060% 0.935%
Income & Value............... 0.800%(F) 0.080% 0.880%
Balanced..................... 0.800% 0.070% 0.870%
High Yield................... 0.775% 0.065% 0.840%
Strategic Bond............... 0.775% 0.095% 0.870%
Global Bond.................. 0.800% 0.180% 0.980%
Total Return................. 0.775% 0.060%(A) 0.835%(E)
Investment Quality Bond...... 0.650% 0.120% 0.770%
Diversified Bond............. 0.750% 0.090% 0.840%
U.S. Government Securities... 0.650% 0.070% 0.720%
Money Market................. 0.500% 0.050% 0.550%
Small Cap Index.............. 0.525% 0.075%(A)(G) 0.600%
International Index.......... 0.550% 0.050%(A)(G) 0.600%
Mid Cap Index................ 0.525% 0.075%(A)(G) 0.600%
Total Stock Market Index..... 0.525% 0.075%(A)(G) 0.600%
500 Index.................... 0.525% 0.039%(A)(G) 0.564%
Lifestyle Aggressive 1000(D) 0.075% 1.060%(B) 1.135%(C)
Lifestyle Growth 820(D)...... 0.057% 1.008%(B) 1.065%(C)
Lifestyle Balanced 640(D) 0.057% 0.928%(B) 0.985%(C)
Lifestyle Moderate 460(D) 0.066% 0.869%(B) 0.935%(C)
Lifestyle Conservative 280(D) 0.075% 0.780%(B) 0.855%(C)
</TABLE>
-----------------
(A) Based on estimates to be made during the current fiscal year.
(B) Reflects expenses of the Underlying Portfolios.
(C) MSS has voluntarily agreed to pay certain expenses of each Lifestyle Trust
(excluding the expenses of the Underlying Portfolios) as follows:
If total expenses of a Lifestyle Trust (absent reimbursement) exceed
0.075%, the Adviser will reduce the advisory fee or reimburse expenses of
that Lifestyle Trust by an amount such that total expenses of the Lifestyle
Trust equal 0.075%. If the total expenses of the Lifestyle Trust (absent
reimbursement) are equal to or less than 0.075%, then no expenses will be
reimbursed by the Adviser. (For purposes of the expense reimbursement,
total expenses of a Lifestyle Trust includes the advisory fee but excludes
(a) the expenses of the Underlying Portfolios, (b) taxes, (c) portfolio
brokerage, (d)
19
<PAGE> 21
interest, (e) litigation and (f) indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Trust's
business.)
This voluntary expense reimbursement may be terminated at any time. If such
expense reimbursement was not in effect, Total Trust Annual Expenses would be
higher (based on current advisory fees and the Other Expenses of the Lifestyle
Trusts for the fiscal year ended December 31, 1999) as noted in the chart below:
<TABLE>
<CAPTION>
Management Other Total Trust
Trust Portfolio Fees Expenses Annual Expenses
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Lifestyle Aggressive 1000 0.075% 1.090% 1.165%
Lifestyle Growth 820 0.057% 1.030% 1.087%
Lifestyle Balanced 640 0.057% 0.940% 0.997%
Lifestyle Moderate 460 0.066% 0.900% 0.966%
Lifestyle Conservative 280 0.075% 0.810% 0.885%
</TABLE>
(D) Each Lifestyle Trust will invest in shares of the Underlying Portfolios.
Therefore, each Lifestyle Trust will bear its pro rata share of the fees and
expenses incurred by the Underlying Portfolios in which it invests, and the
investment return of each Lifestyle Trust will be net of the Underlying
Portfolio expenses. Each Lifestyle Portfolio must bear its own expenses.
However, the Adviser is currently paying certain of these expenses as
described in footnote ( C ) above.
(E) Annualized - For the period May 1, 1999 (commencement of operations) to
December 31, 1999.
(F) Management Fees changed effective May 1, 1999. Fees shown are the current
management fees.
(G) MSS has voluntarily agreed to pay expenses of each Index Trust (excluding
the advisory fee) that exceed the following amounts: 0.050% in the case of
the International Index Trust and 500 Index Trust and 0.075% in the case of
the Small Cap Index Trust, the Mid Cap Index Trust and Total Stock Market
Index Trust. If such expense reimbursement were not in effect, it is
estimated that "Other Expenses" and "Total Trust Annual Expenses" would be
0.022% higher for the International Index Trust, 0.014% higher for the
Small Cap Index Trust, 0.060% higher for the Mid Cap Index Trust and 0.005%
higher for the Total Stock Market Index Trust. It is estimated that the
expense reimbursement will not be effective during the year end December
31, 2000 for the 500 Index Trust. The expense reimbursement may be
terminated at any time by MSS.
(H) Formerly, the Mid Cap Growth Trust.
(I) The Equity Index Trust is available only for Policies issued for
applications dated prior to May 1, 2000. Under the Advisory Agreement, MSS
has agreed to reduce its advisory fee or reimburse the Equity Index Trust if
the total of all expenses (excluding advisory fees, taxes, portfolio
brokerage commissions, interest, litigation and indemnification expenses and
other extraordinary expenses not incurred in the ordinary course of the
Trust's business) exceeds an annual rate of 0.15% of the average annual net
assets of the Equity Index Trust. The expense limitation may be terminated
at any time by MSS. If this expense reimbursement had not been in effect,
Total Trust Annual Expenses would have been 0.55%, and Other Expenses would
have been 0.30%, of the average annual net assets of the Equity Index Trust.
20
<PAGE> 22
(J) The Adviser has voluntarily agreed to waive a portion of its advisory fee
for the Science and Technology Trust, the Blue Chip Growth Trust, the
Equity-Income Trust and the International Stock Trust. The fee reduction is
based on the combined asset level of all four portfolios. Once the combined
assets exceed specified amounts, the fee reduction is increased. The
percentage fee reduction for each asset level is as follows:
Combined Asset Levels Fee Reduction
(As a Percentage of the
Advisory Fee)
First $750 million 0.0%
Between $750 million and $1.5 billion 2.5%
Between $1.5 billion and $3.0 billion 3.75%
Over $3.0 billion 5.0%
The fee reductions are applied to the advisory fees of each of the four
portfolios. This voluntary fee waiver may be terminated at any time by the
adviser.
(3) Distributions. No load, fee, expense or charge is assessed
in connection with the payment of the death benefit. The Depositor will deduct a
Surrender Charge if during the first 10 years following the Policy Date, or the
effective date of a Face Amount increase:
- the Policy is surrendered for its Net Cash Surrender Value,
- a partial withdrawal is made, or
- the Policy lapses.
The surrender charge, together with a portion of the premium charge, is designed
to compensate the Depositor for some of the expenses it incurs in selling and
distributing the Policies, including agents' commissions, advertising, agent
training and the printing of prospectuses and sales literature.
The Surrender Charge is determined by the following formula:
Surrender Charge = (Surrender Charge Rate) X (Face Amount associated with the
Surrender Charge / 1000) X (Grading Percentage)
Definitions of the Formula Factors Above:
Face Amount of the Policy Associated with the Surrender Charge
The Face Amount associated with the Surrender Charge equals the Face Amount for
which the Surrender Charge is being applied. The Face Amount may be increased or
decreased as described as follows:
Subject to the limitations stated in this prospectus, a
Policyowner may, upon written request, increase or decrease the Face Amount of
the Policy. The Depositor reserves the right to limit a change in Face Amount so
as to prevent the Policy from failing to qualify as life insurance for tax
purposes.
Increases in Face Amount may be made once each Policy Year after
the first Policy Year. Any increase in Face Amount must be at least $50,000. An
increase will become effective at the beginning of the policy month following
the date the Depositor approves the requested increase. Increases in Face Amount
are subject to satisfactory evidence of insurability. The Depositor reserves the
right to refuse a requested increase if the life insured's Attained Age at the
effective date of the increase would be greater than the maximum issue age for
new Policies at that time.
An increase in face amount will usually result in the Policy
being subject to new surrender charges. The new surrender charges will be
computed as if a new Policy were being purchased for the increase in Face
Amount. The premiums attributable to the new Face Amount will not exceed the
surrender charge premium limit associated with that increase. There will be no
new surrender charges associated with restoration of a prior decrease in Face
Amount. As with the purchase of a Policy, a Policyowner will have a free look
right with respect to any increase resulting in new surrender charges.
An additional premium may be required for a face amount increase,
and a new No-Lapse Guarantee Premium will be determined, if the No-Lapse
Guarantee is in effect at the time of the face amount increase.
21
<PAGE> 23
If, at the time of the increase, there have been prior decreases
in Face Amount, these prior decreases will be restored first. The insurance
coverage eliminated by the decrease of the oldest Face Amount will be deemed to
be restored first.
Decreases in Face Amount may be made once each Policy Year after
the first Policy Year. Any decrease in Face Amount must be at least $50,000. A
written request from a Policyowner for a decrease in the Face Amount will be
effective at the beginning of the Policy Month following the date the Depositor
approves the requested decrease. If there have been previous increases in Face
Amount, the decrease will be applied to the most recent increase first and
thereafter to the next most recent increases successively. Under no
circumstances should the sum of all decreases cause the policy to fall below the
minimum Face Amount of $100,000.
Surrender Charge Rate
Surrender Charge Rate = (X) + (80%) X (Surrender Charge Premium)
Where "X" is equal to:
Table for Rate per $1,000 of Face:
<TABLE>
<CAPTION>
Age at Rate per $1,000 Age at Issue Rate per $1,000
Issue of Face Value ($) or Increase of Face Value ($)
or
Increase
<S> <C> <C> <C>
0 2.00 18 4.25
1 2.13 19 4.38
2 2.25 20 4.50
3 2.38 21 5.00
4 2.50 22 5.50
5 2.63 23 6.00
6 2.75 24 6.50
7 2.88 25 7.00
8 3.00 26 7.20
9 3.13 27 7.40
10 3.25 28 7.60
11 3.38 29 7.80
12 3.50 30 8.00
13 3.63 31 8.04
14 3.75 32 8.08
15 3.88 33 8.12
16 4.00 34 8.16
17 4.13 35 and over 8.20
</TABLE>
The Surrender Charge Premium is the lesser of:
a. the premiums paid during the first Policy Year per $1,000 of Face
Amount at issue or following a Face Amount increase, and
22
<PAGE> 24
b. the Surrender Charge Premium Limit specified in the Policy per $1,000
of Face Amount.
Grading Percentage
The grading percentages during the Surrender Charge Period and set forth in the
table below apply to the initial Face Amount and to all subsequent Face Amount
increases.
The grading percentage is based on the Policy Year in which the transaction
causing the assessment of the charge occurs as set forth in the table below:
<TABLE>
<CAPTION>
----------------------------------------
Surrender Surrender Charge
Charge Period Grading Percentage
<S> <C>
1 100%
2 90%
3 80%
4 70%
5 60%
6 50%
7 40%
8 30%
9 20%
10 10%
11 0%
--------------------------------------
</TABLE>
Within a Policy Year, grading percentages will be interpolated on a monthly
basis. For example, if the Policyowner surrenders the Policy during the fourth
month of Policy Year 4, the grading percentage will be 67.5%.
A partial withdrawal will result in the assessment of a portion of the
Surrender Charges to which the Policy is subject. The portion of the Surrender
Charges assessed will be based on the ratio of the amount of the withdrawal to
the Net Cash Surrender Value of the Policy as at the date of the withdrawal. The
Surrender Charges will be deducted from the Policy Value at the time of the
partial withdrawal on a pro-rata basis from each of the Investment Accounts and
the Fixed Account. If the amount in the accounts is not sufficient to pay the
Surrender Charges assessed, then the amount of the withdrawal will be reduced.
Whenever a portion of the surrender charges is deducted as a result of a
partial withdrawal, the Policy's remaining surrender charges will be reduced in
the same proportion that the surrender charge deducted bears to the total
surrender charge immediately before the partial withdrawal.
(4) Cumulated or Reinvested Distributions or
Income.
All income and other distributions received
by the Separate Account are reinvested at net asset value in shares of the Trust
Portfolio making such distributions.
(5) Redeemed or Liquidated Assets.
23
<PAGE> 25
No load, fee, expense or charge is assessed
in connection with a redemption of Trust Portfolio shares.
(b) For each installment payment type of periodic payment plan certificate
of the trust, furnish the following information with respect to sales load and
other deductions from principal payments.
During the first 10 Policy Years, the Depositor deducts a
premium charge from each premium payment, equal to 6.6% of the premium (7.07% of
the net amount). Thereafter the premium charge is equal to 3.6% of the premium
(3.73% of the net amount). The premium charge is designed to cover a portion of
the Depositor's acquisition and sales expenses and premium taxes. Premium taxes
vary from state to state, ranging from 0% to 3.5%.
(c) State the amount of total deductions as a percentage of the net amount
invested for each type of security issued by the trust. State each different
sales charge available as a percentage of the public offering price and as a
percentage of the net amount invested. List any special purchase plans or
methods established by rule or exemptive order that reflect scheduled variations
in, or elimination of, the sales load and identify each class of individuals or
transactions to which such plans apply.
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. The Depositor 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 the
Depositor 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 modification, on a uniform case basis. Reductions in charges will
not be unfairly discriminatory to any Policyowners. The Depositor may modify
from time to time, on a uniform basis, both the amounts of reductions and the
criteria for qualification.
During the first 10 Policy Years, the Depositor deducts a
premium charge from each premium payment, equal to 6.6% of the premium (X% of
the net amount). Thereafter the premium charge is equal to 3.6% of the premium
(X% of the net amount). The premium charge is designed to cover a portion of the
Depositor's acquisition and sales expenses and premium taxes. Premium taxes vary
from state to state, ranging from 0% to 3.5%.
(d) Explain fully the reasons for any difference in the price at which
securities are offered generally to the public, and the price at which
securities are offered for any class of transactions to any class or group of
individuals, including officers, directors, or employees of the depositor,
trustee custodian or principal underwriter.
24
<PAGE> 26
See response to paragraph (c) above.
(e) Furnish a brief description of any loads, fees, expenses or charges not
covered in Item 13(a) which may be paid by security holders in connection with
the trust or its securities.
Monthly Charges. On the Policy Date and at the beginning
of each Policy Month, a deduction is due from the Net Policy Value to cover
certain charges in connection with the Policy until the Policy Anniversary when
the life insured reaches Attained Age 100, unless certain riders are in effect
in which case such charges may continue. If there is a Policy Debt under the
Policy, loan interest and principal will continue to be payable at the beginning
of each Policy Month. Monthly deductions due prior to the Effective Date will be
taken on the Effective Date instead of the dates they were due. These charges
consist of:
- an administration charge;
- a charge for the cost of insurance;
- a mortality and expense risks charge;
- if applicable, a charge for any supplementary benefits added to the Policy.
Unless otherwise allowed by the Depositor and specified by the
Policyowner, the Monthly Deductions will be allocated among the Investment
Accounts and the Fixed Account in the same proportion as the Policy value in
each bears to the Net Policy Value.
Administration Charge. This charge will be equal to $30 per
Policy Month in the first Policy Year. For all subsequent Policy Years, the
administration charge will be $15 per Policy Month. The charge is designed 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 the
Policy.
Mortality and Expense Risks Charge. A monthly charge is
assessed against the Policy Value equal to a percentage of the Policy Value.
This charge is to compensate the Depositor for the mortality and expense risks
it assumes under the Policy. The mortality risk assumed is that the Life Insured
may live for a shorter period of time than the Depositor estimated. The expense
risk assumed is that expenses incurred in issuing and administering the Policy
will be greater than the Depositor estimated. The Depositor 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 varies by Policy Year as follows:
<TABLE>
<CAPTION>
Policy Year Guaranteed Monthly Mortality and Equivalent Annual
Expense Risks Charge Mortality and Expense
Risks Charge
<S> <C> <C>
1-10 0.0627% 0.75%
11 0.0209% 0.25%
</TABLE>
Cost of Insurance Charge. The monthly charge for the cost
of insurance is determined by multiplying the applicable cost of insurance rate
25
<PAGE> 27
times the net amount at risk at the beginning of each Policy Month. The cost of
insurance rate and the net amount at risk are determined separately for the
initial Face Amount and for each increase in Face Amount. In determining the net
amount at risk, if there have been increases in the Face Amount, the Policy
Value shall first be considered a part of the initial Face Amount. If the Policy
Value exceeds the initial Face Amount, it shall then be considered a part of the
additional increases in Face Amount resulting from the increases, in the order
the increases occurred.
For Death Benefit Option 1, the net amount at risk is equal to the greater of
zero, or the result of (a) minus (b) where:
(a) is the death benefit as of the first day of the Policy Month, divided by
1.0032737; and
(b) is the Policy Value as of the first day of the Policy Month after the
deduction of monthly cost of insurance.
For Death Benefit Option 2, the net amount at risk is equal to the Face Amount
of insurance.
The rates for the cost of insurance are based upon the
issue age, duration of coverage, sex, and Risk Classification of the life
insured.
Cost of insurance rates will generally increase with the
age of the life insured. The first year cost of insurance rate is guaranteed.
The cost of insurance rates reflect the Depositor's
expectations as to future mortality experience. The rates may be re-determined
from time to time on a basis which does not unfairly discriminate within the
class of life insured. In no event will the cost of insurance rates exceed the
guaranteed rates set forth in the Policy except to the extent that an extra
charge is imposed because of an additional rating applicable to the Life
Insured. After the first Policy Year, the cost of insurance will generally
increase on each Policy Anniversary. The guaranteed rates are based on the 1980
Commissioners Smoker Distinct Mortality tables.
Currently, the Depositor makes no charge against the
Separate Account for federal, state or local taxes that may be attributable to
the Separate Account or to the operations of the Depositor with respect to the
Policies. However, if the Depositor incurs any such taxes, it may make a charge
or establish a provision for those taxes.
(f) State whether the depositor, principal underwriter, custodian or
trustee, or any affiliated person of the foregoing may receive profits or other
benefits not included in answer to Item 13(a) or 13(d) through the sale or
purchase of the trust's securities or interests in such securities, or
underlying securities, and describe fully the nature and extent of such profits
or benefits.
Except for the Principal Underwriter and registered
representatives thereof, neither the Depositor nor any affiliated person of the
Depositor will receive any profits or other benefits not included in answer to
items 13(a) or 13(d) through the sale of the Policies or the sale or purchase of
Trust Portfolio shares. For compensation payable to the Principal Underwriter
26
<PAGE> 28
and its registered representatives in connection with sales of the Policies, see
the response to item 38 below.
(g) State the percentage that the aggregate annual charges and
deductions for maintenance and other expenses of the trust bear to the dividend
and interest income from the trust property during the period covered by the
financial statements filed herewith.
Not applicable.
INFORMATION CONCERNING THE OPERATIONS OF THE TRUST
14. Describe the procedure with respect to applications (if any) and the
issuance and authentication of the trust's securities, and state the substance
of the provisions of any indenture or agreement pertaining thereto.
A person desiring to purchase a Policy must complete an
application on a form provided by the Depositor, and, if the applicant meets the
prescribed standards, a Policy will be issued. This process may involve such
procedures as medical examinations and may require that further information be
provided before a determination can be made.
15. Describe the procedure with respect to the receipt of payments from
purchasers of the trust's securities and the handling of the proceeds thereof,
and state the substance of the provisions of any indenture or agreement
pertaining thereto.
All Net Premiums received on or after the Effective Date
will be allocated among Investment Accounts or the Fixed Account as of the
Business Day the premiums were received at the Service Office. Monthly
deductions are due on the Policy Date and at the beginning of each Policy Month
thereafter. However, if due prior to the Effective Date, they will be taken on
the Effective Date instead of the dates they were due.
Premiums may be allocated to the Fixed Account for
accumulation at a rate of interest equal to at least 4% or to one or more of the
Investment Accounts for investment in the Portfolio shares held by the
corresponding sub-account of the Separate Account. Allocations among the
Investment Accounts and the Fixed Account are made as a percentage of the
premium. The percentage allocation to any account may be any number between zero
and 100, provided the total allocation equals 100. A Policyowner may change the
way in which premiums are allocated at any time without charge. The change will
take effect on the date a written request for change satisfactory to the
Depositor is received at the Service Office.
In accordance with the Depositor's underwriting practices,
temporary insurance coverage may be provided under the terms of a Temporary
Insurance Agreement. Generally, temporary life insurance may not exceed
$1,000,000 and may not be in effect for more than 90 days. This temporary
insurance coverage will be issued on a conditional receipt basis, which means
that any benefits under such temporary coverage will only be paid if the life
27
<PAGE> 29
insured meets the Depositor's usual and customary underwriting standards for the
coverage applied for.
The acceptance of an application is subject to the
Depositor's underwriting rules, and the Depositor reserves the right to request
additional information or to reject an application for any reason.
Persons failing to meet standard underwriting
classification may be eligible for a Policy with an additional risk rating
assigned to it.
16. Describe the procedure with respect to the acquisition of underlying
securities and the disposition thereof, and state the substance of the
provisions of any indenture or agreement pertaining thereto.
Purchases and redemptions of Trust Portfolio shares made
in connection with Policy transactions will be made at the net asset value of
such shares determined as of the end of the valuation period in which the Policy
transaction takes place. All other purchases and redemptions of Trust Portfolio
shares will be made at the net asset value next determined after receipt by the
Trust Portfolio or its transfer agent of an order from the Depositor.
17. (a) Describe the procedure with respect to withdrawal or redemption by
security holders.
See the responses to Items 10(c) and (d).
(b) Furnish the names of any persons who may redeem or repurchase, or are
required to redeem or repurchase, the trust's securities or underlying
securities from security holders, and the substance of the provisions of any
indenture or agreement pertaining thereto.
The Depositor is required by the Policies to honor
requests for surrender as described in items 10(c) and 10(d). Procedures
governing the redemption of Trust Portfolio shares from holders thereof are
described in the prospectus of the Trust included in its registration statement
filed pursuant to the Securities Act of 1933, File No.2-94157, which description
is incorporated herein by reference.
(c) Indicate whether repurchased or redeemed securities will be cancelled
or may be resold.
If a Policy is surrendered, it will be cancelled.
18. (a) Describe the procedure with respect to the receipt, custody and
disposition of the income and other distributable funds of the trust and state
the substance of the provisions of any indenture or agreement pertaining
thereto.
All income distributions and all other distributable funds
of each sub-account of the Separate Account are invested in shares of the
applicable Trust Portfolio at net asset value and added to the assets of such
sub-account.
28
<PAGE> 30
(b) Describe the procedure, if any, with respect to the reinvestment of
distributions to security holders and state the substance of the provisions of
any indenture or agreement pertaining thereto.
Not applicable.
(c) If any reserves or special funds are created out of income or
principal, state with respect to each such reserve or fund the purpose and
ultimate disposition thereof, and describe the manner of handling of same.
The Investment Accounts of the Policies, which are held in the
Separate Account, constitute the reserves for the Policy benefits, except for
certain reserves which are supported by the assets held in the Depositor's
general account, such as reserves for Policy loans and the minimum death benefit
guarantees. The Depositor reserves the right to establish a provision for taxes
attributable to the Policies. See response to item 13(d) above.
(d) Submit a schedule showing the periodic and special distributions which
have been made to security holders during the three years covered by the
financial statements filed herewith. State for each such distribution the
aggregate amount and amount per share. If distributions from sources other than
current income have been made identify each other source and indicate whether
such distribution represents the return or principal payments to security
holders. If payments other than cash were made describe the nature thereof, the
account charged and the basis of determining the amount of such charge.
No distributions have been made.
19. Describe the procedure with respect to the keeping of records and accounts
of the trust, the making of reports and the furnishing of information to
security holders, and the substance of the provisions of any indenture or
agreement pertaining thereto.
The Depositor is responsible for keeping all records
respecting the Separate Account and the Policies requires under Rules 31a-1 and
31a-2 under the 1940 Act. The Depositor has entered into a Service Agreement
with Manufacturers Life whereby the latter will provide to the Depositor in
Toronto, Ontario, Canada, all issue, administrative, general services and
recordkeeping functions with respect to all the Policies required under the 1940
Act. Within 30 days after each Policy Anniversary, the Depositor will send the
Policyowner 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.
29
<PAGE> 31
Each Policyowner will also be sent an annual and a semi-annual report for the
Trust which will include a list of the securities held in each Portfolio as
required by the 1940 Act.
20. State the substance of the provisions of any indenture or agreement
concerning the trust with respect to the following:
(a) Amendment to such indenture or agreement.
(b) The extension or termination of such indenture or agreement.
(c) The removal or resignation of the trustees or custodian, or the
failure of the trustee or custodian to perform its duties, obligations and
functions.
(d) The appointment of a successor trustee and the procedure if a
successor trustee is not appointed.
(e) The removal or resignation of the depositor, or the failure of the
depositor to perform its duties, obligations and functions.
(f) The appointment of a successor depositor and the procedure if a
successor depositor is not appointed.
There are no indentures or agreements concerning the
Separate Account except for the Policies, which are described elsewhere herein.
21. (a) State the substance of the provisions of any indenture or agreement
with respect to loans to security holders.
While the Policy is in force and has an available loan
value, the Policyowner may borrow against the Policy Value of his or her Policy.
Borrowing under this provision cannot exceed 90% of the Cash Value. When a loan
is made, an amount equal to the loan principal, plus interest to the next Policy
Anniversary, will be deducted from the Investment Accounts or the Fixed Account
and transferred to the Loan Account. Amounts transferred into the Loan Account
cover the loan principal plus loan interest due to the next Policy Anniversary.
The Policyowner may designate how the amount to be transferred to the Loan
Account is allocated among the accounts from which the transfer is to be made.
In the absence of instructions, the amount to be transferred will be allocated
to each account in the same proportion as the 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.
30
<PAGE> 32
Interest on the Policy Debt will accrue daily and be
payable annually on the Policy Anniversary. During the first 10 Policy Years,
the rate of interest charged will be an effective annual rate of 5.25%.
Thereafter, the rate of interest charged will be an effective annual rate of 4%,
subject to the Depositor's reservation of the right to increase the rate. If the
interest due on a Policy Anniversary is not paid by the Policyowner, the
interest will be borrowed against the Policy.
Interest on the Policy Debt will continue to accrue daily
if there is an outstanding loan when monthly deductions and premium payments
cease when the life insured reaches age 100. The Policy will go into default at
any time the Policy Debt exceeds the Cash Surrender Value. At least 61 days
prior to termination, the Depositor will send the Policyowner a notice of the
pending termination. Payment of interest on the Policy Debt during the 61 day
grace period will bring the policy out of default.
Interest will be credited to amounts in the Loan Account
at an effective annual rate of at least 4.00%. The actual rate credited is equal
to the rate of interest charged on the policy loan less the Loan Interest
Credited Differential, which is currently 1.25% during the first ten policy
years and 0% thereafter, and is guaranteed not to exceed 1.25%. (The Loan
Interest Credited Differential is the difference between the rate of interest
charged on a policy loan and the rate of interest credited to amounts in the
Loan Account.) The Depositor may change the Current Loan Interest Credited
Differential as of 90 days after sending the Policyowner written notice of such
change.
Policy Debt may be repaid in whole or in part at any time
prior to the death of the life insured, provided that the Policy is in force.
When a repayment is made, the amount is credited to the Loan Account and
transferred to the Fixed Account or the Investment Accounts. Loan repayments
will be allocated first to the Fixed Account until the associated Loan
Sub-Account is reduced to zero and then to each Investment Account in the same
proportion as the value in the corresponding Loan Sub-Account bears to the value
of the Loan Account.
Amounts paid to the Depositor not specifically designated
in writing as loan repayments will be treated as premiums. Where permitted by
applicable state law, when a portion of the Loan Account amount is allocated to
the Fixed Account, the Depositor may require that any amounts paid to it be
applied to outstanding loan balances.
A policy loan will have an effect on future Policy Values,
since that portion of the Policy Value in the Loan Account will increase in
value at the crediting interest rate rather than varying with the performance of
the underlying Portfolios or increasing in value at the rate of interest
credited for amounts allocated to the Fixed Account. A policy loan may cause a
Policy to be more susceptible to going into default since a policy loan will be
reflected in the Net Cash Surrender Value. In addition, a policy loan may result
in a Policy's failing to satisfy the No-Lapse Guarantee Cumulative Premium Test
since the Policy Debt is subtracted from the sum of the premiums
31
<PAGE> 33
paid in determining whether this test is satisfied. Finally, a policy loan will
affect the amount payable on the death of the life insured, since the death
benefit is reduced by the Policy Debt at the date of death in arriving at the
insurance benefit.
(b) Furnish a brief description of any procedure or arrangement by which
loans are made available to security holders by the Depositor, principal
underwriter, trustee or custodian, or any affiliated person of the foregoing.
See the response to Item 21(a) above.
(c) If such loans are made, furnish the aggregate amount of loans
outstanding at the end of the last fiscal year, the amount of interest collected
during the last fiscal year allocated to the depositor, principal underwriter,
trustee or custodian or affiliated person of the foregoing and the aggregate
amount of loans in default at the end of the last fiscal year covered by
financial statements filed herewith.
Not applicable.
22. State the substance of the provisions of any indenture or agreement with
respect to limitations on the liabilities of the depositor, trustee or
custodian, or any other party to such indenture or agreement.
There is no indenture or agreement which limits the
liabilities of the Depositor under the Policies. There is no trustee or
custodian of the Separate Account.
23. Describe any bonding arrangement for officers, directors, partners or
employees of the depositor or principal underwriter of the trust, including the
amount of coverage and the type of bond.
Manulife Financial Corporation has Blanket Fidelity Bond
coverage with Chubb Insurance Company of Canada covering Manulife Financial
Corporation, its current and future subsidiaries, including the Depositor and
Principal Underwriter, and all officer, directors and employees of Manulife
Financial Corporation and such subsidiaries to a maximum of $25,000,000
(Canadian) per incident. Except as noted below, the first $750,000 of a claim is
deductible. While the Principal Underwriter is included under Manulife Financial
Corporation's Blanket Fidelity Bond with Chubb Insurance Company of Canada, the
Principal Underwriter's coverage begins after the first $25,000 of any single
claim. The Principal Underwriter has a side agreement to indemnify insurer up to
$750,000.
24. State the substance of any other material provisions of any indenture or
agreement concerning the trust or its securities and a description of any other
material functions or duties of the depositor, trustee or custodian not stated
in Item 10 or Items 14 to 23 inclusive.
(1) The Depositor will not contest a Policy after it has
been in force during the life insured's lifetime for two years from the Policy
32
<PAGE> 34
Date. If the Policy has been reinstated and been in force less than two years
from the reinstatement date, the Depositor can contest any misrepresentations of
a fact material to the reinstatement.
(2) If the life insured's stated age or sex in the Policy
is incorrect, the Depositor 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.
(3) If the life insured dies by suicide within two years
after the Issue Date (or within the maximum period permitted by the state in
which the Policy was delivered, if less than two years), the Policy will
terminate and the Depositor will pay only the premiums paid less any partial Net
Cash Surrender Value withdrawal and less any Policy Debt.
If the life insured dies by suicide within two years
after the effective date of an increase in Face Amount, the Depositor will
credit the amount of any Monthly Deductions taken for the increase and reduce
the Face Amount to what it was prior to the increase. If the insured's death is
by suicide, the Death Benefit for that increase will be limited to the Monthly
Deductions taken for the increase.
The Depositor reserves the right to obtain evidence of the manner and cause of
death of the life insured.
(4) A Policy is assignable by the Policyowner while the
life insured is living. However, the Depositor will not be deemed to know of or
be bound by an assignment unless it receives a copy of it at its Service Office.
(5) One or more beneficiaries of the Policy may be
appointed by the Policyowner 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, the beneficiary may be changed by the Policyowner during the life
insured's lifetime by giving written notice to the Depositor in a form
satisfactory to the Depositor. The change will take effect as of the date such
notice is signed. If the life insured dies and there is no surviving
beneficiary, the Policyowner, or the Policyowner's estate if the Policyowner is
the life insured, will be the beneficiary. If a beneficiary dies before the
seventh day after the death of the life insured, the Depositor will pay the
insurance benefit as if the beneficiary had died before the life insured.
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
ORGANIZATION AND OPERATIONS OF DEPOSITOR
25. State the form of organization of the depositor of the trust, the name of
the state or other sovereign power under the laws of which the depositor was
organized and the date or organization.
The Depositor is a stock life insurance company incorporated
in
33
<PAGE> 35
Maine on August 20, 1955 by a special act of the Maine legislature and
redomesticated under the laws of the State of Michigan.
26. (a) Furnish the following information with respect to all fees received by
the depositor of the trust in connection with the exercise of any functions or
duties concerning securities of the trust during the period covered by the
financial statements filed herewith:
Not applicable.
(b) Furnish the following information with respect to any fee or any
participation in fees received by the depositor from any underlying investment
company or any affiliated person or investment adviser of such company:
(1) The nature of such fee or participation
(2) The name of the person making payment
(3) The nature of the services rendered in consideration
Not applicable.
27. Describe the general character of the business engaged in by the depositor
including a statement as to any business other than that of depositor or the
trust. If the depositor acts or has acted in any capacity with respect to any
investment company or companies other than the trust, state the name or names of
such company or companies, their relationship, if any, to the trust, and the
nature of the depositor's activities therewith. If the depositor has ceased to
act in such named capacity, state the date of and circumstances surrounding such
cessation.
The Depositor is a stock life insurance company. It is
licensed to conduct a life insurance business in the District of Columbia and
all states of the United States except New York. The Depositor has organized the
Separate Account to support variable life insurance contracts issued by the
Depositor. The Separate Account is registered under the 1940 Act.
OFFICIALS AND AFFILIATED PERSONS OF DEPOSITOR
28. (a) Furnish as at latest practicable date the following information with
respect to the Depositor of the trust, with respect to each officer, director,
or partner of the Depositor, and with respect to each natural person directly or
indirectly owning, controlling or holding with power to vote 5 percent or more
of the outstanding voting securities of the Depositor.
As at June 30, 2000: No officer or director of the
Depositor or any natural person owns either beneficially or of record any
securities of the Depositor with the exception of one share held by each
director as a qualifying share. The Depositor is a wholly-owned subsidiary of
The Manufacturers Life
34
<PAGE> 36
Insurance Company of Michigan, which in turn is a wholly-owned subsidiary of
Manufacturers Life.
No officer, director or stockholder of the Depositor owns
any Policies. Positions held by Directors and principal officers of the
Depositor are as follows:
<TABLE>
<CAPTION>
Name Position with Principal Occupation
Depositor
<S> <C> <C>
Felix Chee (53)*** Executive Vice President Executive Vice President &
and Chief Investment Chief Investment Officer, The
Officer; Director Manufacturers Life Insurance
Company; November 1997
to present; Chief
Investment Officer,
The Manufacturers Life
Insurance Company,
June 1997 to present,
Senior Vice President
and Treasurer, The
Manufacturers Life
Insurance Company,
August 1994 to May
1997.
Robert A. Cook (45)** Senior Vice President, Senior Vice President, U.S.
U.S. Insurance; Director Individual Insurance, The
Manufacturers Life
Insurance Company,
January 1999 to
present; Vice
President, Product
Management, The
Manufacturers Life
Insurance Company,
January 1996 to
December 1998; Sales
and Marketing
Director, The
Manufacturers Life
Insurance Company,
1994 to 1995.
Richard Coles (54)*** Executive Vice Executive Vice President,
President, Investments Investments, The
Manufacturers Life
Insurance Company;
December 1998 to
present; Senior Vice
President and General
Manager, Investments,
The Manufacturers Life
Insurance Company;
1995 to 1998; Senior
Vice
</TABLE>
35
<PAGE> 37
<TABLE>
<CAPTION>
Name Position with Principal Occupation
Depositor
<S> <C> <C>
President,
Mortgage and Real
Estate, The
Manufacturers Life
Insurance Company,
1994 to 1995.
Peter Copestake Vice President and Vice President & Treasurer,
(45)*** Treasurer The Manufacturers Life
Insurance Company,
November 1999 to
present; Vice
President, Asset
Liability Management,
Canadian Imperial Bank
of Commerce (CIBC),
1991 to 1999;
Director, Capital
Management, Bank of
Montreal, 1986-1990;
Inspector General of
Banks, Department of
Finance, 1980-1985.
John D. DesPrez III Chairman and President Executive Vice President,
(43)** U.S. Operation, The
Manufacturers Life Insurance
Company, January 1999 to
date; Senior Vice President,
U.S. Annuities, The
Manufacturers Life Insurance
Company, September 1996 to
December 1998; President of
The Manufacturers Life
Insurance Company of North
America, September 1996 to
December, 1998; Vice
President, Mutual Funds,
North American Security Life
Insurance Company, January
1995 to September 1996.
Cindy Forbes (44)*** Chief Financial Officer, Vice President and Chief
Investments Financial Officer,
Investments, The
Manufacturers Life
Insurance Company,
1998 to
</TABLE>
36
<PAGE> 38
<TABLE>
<CAPTION>
Name Position with Principal Occupation
Depositor
<S> <C> <C>
present; Vice
President, Asset
Liability Management,
The Manufacturers Life
Insurance Company,
1994 to 1998; Vice
President and Chief
Financial Officer,
U.S. Group and
Pension, The
Manufacturers Life
Insurance Company,
1980 to 1994.
James D. Gallagher Vice President, Vice President, US Law and
(45)** Secretary and General Government Relations, U.S.
Counsel Operation, The Manufacturers
Life Insurance
Company, January 1996
to present; President,
The Manufacturers Life
Insurance Company of
New York, August 1999
to Present, Vice
President, Secretary
and General Counsel,
The Manufacturers Life
Insurance Company of
America, January 1997
to present; Secretary
and General Counsel,
Manufacturers Adviser
Corporation, January
1997 to present; Vice
President, Secretary
and General Counsel,
The Manufacturers Life
Insurance Company of
North America, 1994 to
present.
Geoffrey Guy (53)*** Director Executive Vice President and
Chief Actuary. The
Manufacturers Life Insurance
Company, February 2000 to
present; Senior Vice
President and Chief Actuary,
The Manufacturers Life
Insurance Company, 1996 to
</TABLE>
37
<PAGE> 39
<TABLE>
<CAPTION>
Name Position with Principal Occupation
Depositor
<S> <C> <C>
2000; Vice President and
Chief Actuary, the
Manufacturers Life Insurance
Company, 1993 to 1996; Vice
President and Chief Financial
Officer, U.S. Operations, The
Manufacturers Life Insurance
Company, 1987 to 1993.
James O'Malley (54)*** Senior Vice President, Senior Vice President, U.S.
U.S. Group Pension; Pensions, The Manufacturers
Director Life Insurance Company,
January 1999 to
present; Vice
President, Systems New
Business Pensions, The
Manufacturers Life
Insurance Company,
1984 to December 1998.
Joseph J. Pietroski Director Senior Vice President and
(61)*** Corporate Secretary, The
Manufacturers Life Insurance
Company, 1999 to present;
Senior Vice President,
General Counsel and Corporate
Secretary, The Manufacturers
Life Insurance Company, 1988
to 1999.
Rex Schaybaugh, Jr. Director Member, Dykema Gossett, PLLC,
(51)**** 1982 to present.
John Ostler (47)** Vice President Vice President and Chief
and Chief Financial Financial Officer,U.S.
Officer Operations,The Manufacturers
Life Insurance
Company, October 1,
2000 to present; Vice
President and
Corporate Actuary, The
Manufacturers Life
Insurance Company,
March 1998 to
September 2000; Vice
President and CFO U.S.
Individual Insurance,
The Manufacturers Life
Insurance Company,
1992 to March 1998;
Vice President, U.S.
Insurance Products,
The Manufacturers Life
Insurance Company,
1990 to 1992;
Assistant Vice
President and Pricing
Actuary, U.S.
Insurance, The
Manufacturers Life
Insurance Company,
1988 to 1990.
</TABLE>
38
<PAGE> 40
<TABLE>
<CAPTION>
Name Position with Principal Occupation
Depositor
<S> <C> <C>
Denis Turner (44)*** Vice President and Vice President and Chief
Treasurer Accountant, U.S. Division,
The Manufacturers Life
Insurance Company, May
1999 to Present; Vice
President and
Treasurer, The
Manufacturers Life
Insurance Company of
America, May 1999 to
present; Assistant
Vice President,
Financial Operations,
Reinsurance Division,
The Manufacturers Life
Insurance Company,
February 1998 to April
1999; Assistant Vice
President &
Controller,
Reinsurance Division,
The Manufacturers Life
Insurance Company,
November 1995, to
January 1998,
Assistant Vice
President, Corporate
Controllers, The
Manufacturers Life
Insurance Company,
January 1989 to
October 1995.
</TABLE>
**Principal business address is Manulife Financial, 73 Tremont Street, Boston,
MA 02108.
***Principal business address is Manulife Financial, 200 Bloor Street, Toronto,
Ontario Canada M4W 1E5.
39
<PAGE> 41
****Principal business address is Dykema Gossett, 800 Michigan National Tower,
Lansing, Michigan 48933.
(b) Furnish a brief statement of the business experience during the last
five years of each officer, director or partner of the depositor.
See the response to Item 28(a).
COMPANIES OWNING SECURITIES OF DEPOSITOR
29. Furnish as at latest practicable date the following information with
respect to each company which directly or indirectly owns, controls or holds
with power to vote 5 percent or more of the outstanding voting securities of the
Depositor.
ManUSA is 100% owned by Manulife Reinsurance Corporation (U.S.A.)
which is 100% owned by The Manufacturers Investment Corporation. The
Manufacturers Investment Corporation is 100% owned by Manufacturers Life which
is a wholly-owned subsidiary of Manulife Financial Corporation.
CONTROLLING PERSONS
30. Furnish as at latest practicable date the following information with
respect to any person, other than those covered by Items 28, 29, and 42 who
directly or indirectly controls the Depositor.
The ultimate parent entity of the Depositor and
Manufacturers Life is Manulife Financial Corporation, a publicly traded company,
based in Toronto, Canada.
COMPENSATION OF OFFICERS AND DIRECTORS OF DEPOSITOR, COMPENSATION OF OFFICERS OF
DEPOSITOR
31. Furnish the following information with respect to the remuneration for
services paid by the Depositor during the last fiscal year covered by financial
statements filed herewith:
(a) directly to each of the officers or partners of the Depositor directly
receiving the three highest amounts of remuneration;
(b) directly to all officers or partners of the Depositor as a group
exclusive of persons whose remuneration is included under Item 31(a), stating
separately the aggregate amount paid by the Depositor itself and the aggregate
amount paid by all the subsidiaries;
(c) indirectly or through subsidiaries to each of the officers or partners
of the Depositor.
Not applicable; as of December 31, 1999, the Separate
Account had not commenced operations.
40
<PAGE> 42
COMPENSATION OF DIRECTORS
32. Furnish the following information with respect to the remuneration for
services, exclusive of remuneration reported under Item 31, paid by the
Depositor during the last fiscal year covered by financial statements filed
herewith:
(a) the aggregate direct remuneration to directors
(b) indirectly or through subsidiaries to directors
Not applicable; see the response to Item 31.
COMPENSATION TO EMPLOYEES
33. (a) Furnish the following information with respect to the aggregate amount
of remuneration for services of all employees of the Depositor (exclusive of
persons whose remuneration is reported it Items 31 and 32) who received
remuneration in excess of $10,000 during the last fiscal year covered by
financial statements filed herewith from the Depositor and any of its
subsidiaries.
Not applicable; see the response to Item 31.
(b) Furnish the following information with respect to the remuneration for
services paid directly during the last fiscal year covered by financial
statements filed herewith to the following classes of persons (exclusive of
those persons covered by Item 33(a)): (1) Sales managers, branch managers,
district managers and other persons supervising the sale or registrant's
securities; (2) Salesmen, sales agents, canvassers and other persons making
solicitations but not in supervisory capacity; (3) Administrative and clerical
employees; and (4) Others (specify). If a person is employed in more than one
capacity, classify according to predominant type of work.
Not applicable; see the response to Item 31.
COMPENSATION TO OTHER PERSONS
34. Furnish the following information with respect to the aggregate amount of
compensation for services paid any person (exclusive of persons whose
remuneration is reported in Items 31, 31 and 33), whose aggregate compensation
in connection with services rendered with respect to the trust in all capacities
exceed $10,000 during the last fiscal year covered by financial statements filed
herewith from the Depositor and any of its subsidiaries.
Not applicable; see the response to Item 31.
IV. DISTRIBUTION AND REDEMPTION OF SECURITIES
DISTRIBUTION OF SECURITIES
35. Furnish the names of the states in which sales of the trust's securities
(A)
41
<PAGE> 43
are currently being made, (B) are presently proposed to be made, and (C) have
been discontinued, indicating by appropriate letter the status with respect to
each state.
No Policies have been sold. It is proposed that Policies
will be sold in all states other than New York.
36. If sales of the trust's securities have at any time since January 1, 1936
been suspended for more than a month describe briefly the reasons for such
suspension.
Not applicable.
37. (a) Furnish the following information with respect to each instance where
subsequent to January 1, 1937, any federal or state governmental officer,
agency, or regulatory body denied authority to distribute securities of the
trust, excluding a denial which was merely a procedural step prior to any
determination by such officer, etc. and which denial was subsequently rescinded.
(1) Name of officer, agency or body.
(2) Date of denial.
(3) Brief statement of reason given for denial.
Not applicable.
(b) Furnish the following information with regard to each instance where,
subsequent to January 1, 1937, the authority to distribute securities of the
trust has been revoked by any federal or state governmental officer, agency or
regulatory body.
(1) Name of officer, agency or body.
(2) Date of revocation.
(3) Brief statement of reason given for revocation.
Not applicable.
38. (a) Furnish a general description of the method of distribution of
securities of the trust.
The Policies will be sold by registered representatives of either
the Principal Underwriter or broker-dealers having distribution agreements with
the Principal Underwriter and who are authorized by state insurance departments
to see the Policies.
(b) State the substance of any current selling agreement between each
principal underwriter and the trust or the Depositor, including a statement as
to the inception and termination dates of the agreement, and renewal and
42
<PAGE> 44
termination provisions, and any assignment provisions.
The Principal Underwriter will continuously offer the
Policies pursuant to a Distribution Agreement with the Depositor. The Principal
Underwriter is registered as a broker-dealer under the Securities Exchange Act
of 1934 and is a member of the National Association of Securities Dealers, Inc.
The Principal Underwriter is located at 200 Bloor Street East, Toronto, Ontario,
Canada, M4W 1E5 and was organized under the laws of Colorado on May 4, 1970.
Pursuant to an Underwriting Agreement with the Depositor, the Principal
Underwriter will act as the principal underwriter of the Policies and will be
responsible for all sales activities of its registered representatives. The
Principal Underwriter will bear the cost of all sales commissions in respect of
the Policies and will receive from the Depositor all sales load deductions. The
Agreement provides that it will continue in effect indefinitely until terminated
by either party thereto on sixty days written notice to the other. The Agreement
is not assignable. The Principal Underwriter has entered into an agreement with
Manufacturers Life pursuant to which Manufacturers Life, on behalf of the
Principal Underwriter, will pay all sales commissions in respect of the
Policies, prepare and maintain all books and records required to be prepared and
maintained by the Principal Underwriter, and send all confirmations required to
be sent by the Principal Underwriter with respect to the Policies. The Principal
Underwriter will reimburse Manufacturers Life for all sales commissions paid by
it and will pay for other services under the agreement in such amounts as shall
be agreed to by the parties.
(c) State the substance of any current agreements or arrangements of each
principal underwriter with dealers, agents, salesmen, etc. with respect to
commissions and overriding commissions, territories, franchises, qualifications
and revocations. If the trust is the issuer of periodic payment plan
certificates, furnish schedules of commissions and the bases thereof. In lieu of
a statement concerning schedules of commissions, such schedules of commissions
may be filed as Exhibit A(3)(c).
The Policies will be sold by registered representatives of
either the Principal Underwriter or other broker-dealers having distribution
agreements with the Principal Underwriter who are also authorized by state
insurance departments to do so. The Policies will be sold in all states of the
United States except New York.
A registered representative will receive commissions not
to exceed 105% of premiums in the first year, 2% of all premiums paid in the
second year and after, and after the second anniversary 0.15% of the Net Policy
Value per year. Representatives who meet certain productivity standards with
regard to the sale of the Policies and certain other Policies issued by the
Depositor will be eligible for additional compensation.
INFORMATION CONCERNING PRINCIPAL UNDERWRITER
39. (a) State the form of organization of each principal underwriter of
securities of the trust, the name of the state or other sovereign power under
the laws of which each underwriter was organized and the dates of organization.
43
<PAGE> 45
The Principal Underwriter is a corporation organized under
the laws of Colorado on May 5, 1970.
(b) State whether any principal underwriter currently distributing
securities of the trust is a member of the National Association of Securities
Dealers, Inc.
The Principal Underwriter is a member of the National Association
of Securities Dealers, Inc.
40. (a) Furnish the following information with respect to all fees received by
each principal underwriter of the trust from the sale of securities of the trust
and any other functions in connection therewith exercised by such underwriter in
such capacity or otherwise during the period covered by the financial statements
filed herewith.
Not applicable.
(b) Furnish the following information with respect to any fee or any
participation in fees received by each principal underwriter from any underlying
investment company or any affiliated person or investment adviser of such
company:
(1) The nature of such fee or participation.
(2) The name of the person making payment.
(3) The nature of the services rendered in consideration for such fee
or participation.
(4) The aggregate amount received during the last fiscal year covered
by the financial statements filed herewith.
Not applicable.
41. (a) Describe the general character of the business engaged in by each
principal underwriter, including a statement as to any business other than the
distribution of securities of the trust. If a principal underwriter acts or has
acted in any capacity with respect to any investment company or companies other
than the trust, state the name or names of such company or companies, their
relationship, if any, to the trust and the nature of such activities. If a
principal underwriter has ceased to act in such named capacity, state the date
of and the circumstances surrounding such cessation.
The Principal Underwriter is a registered broker-dealer engaged
heretofore principally in the business of distributing mutual fund shares,
variable life contracts, variable annuity contracts and direct participation
programs issued by persons un-affiliated with the Principal Underwriter. The
Principal Underwriter also is the principal underwriter for a variable life
insurance policy issued by The Manufacturers Life Insurance Company of America.
44
<PAGE> 46
(b) Furnish as at latest practicable date the address of each branch office
of each principal underwriter currently selling securities of the trust and
furnish the name and residence address of the person in charge of such office.
Not applicable.
(c) Furnish the number of individual salesmen of each principal underwriter
through whom any of the securities of the trust were distributed for the last
fiscal year of the trust covered by the financial statements filed herewith and
furnish the aggregate amount of compensation received by such salesmen in such
year.
Not applicable.
42. Furnish as at latest practicable date information with respect to each
principal underwriter currently distributing securities of the trust and with
respect to each of the officers, directors or partners of such underwriter.
Not applicable.
43. Furnish, for the last fiscal year covered by financial statements filed
herewith, the amount of brokerage commissions received by any principal
underwriter who is a member of a national securities exchange and who is
currently distributing the securities of the trust or effecting transactions for
the trust in the portfolio securities of the trust.
Not applicable.
OFFERING PRICE OR ACQUISITION VALUATION OF SECURITIES OF THE TRUST
44. (a) Furnish the following information with respect to the method of
valuation used by the trust for purpose of determining the offering price to the
public of securities issued by the trust or the valuation of shares or interests
in the underlying securities acquired by the holder of a periodic payment plan
certificate.
(1) The source of quotations used to determine the value of portfolio
securities.
(2) Whether opening, closing, bid, asked or any other price is used.
(3) Whether price is as of the day of sale or as of any other time.
(4) A brief description of the methods used by registrant for
determining other assets and liabilities including accrual for expenses and
taxes (including taxes on unrealized appreciation).
(5) Other items which registrant adds to the net asset value in
computing offering price of its securities.
45
<PAGE> 47
(6) Whether adjustments are made for fractions:
(i) before adding distributor's compensation (load); and
(ii) after adding distributor's compensation (load).
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 canceled whenever amounts are
deducted, transferred or withdrawn from the sub-account. The number of units
credited or canceled 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.
A 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
day-time trading of the New York Stock Exchange (currently 4:00 p.m. Eastern
Time) on that day.
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 which 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 which is not a Business Day will be made on the next
Business Day.
The value of a unit of each sub-account was initially
fixed at $10.00. For each subsequent Business Day the unit value for that
sub-account is determined by multiplying the unit value for the immediately
preceding Business Day by the net investment factor for the 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) 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; and
(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.
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.
46
<PAGE> 48
For information on the method of determining the net asset
value of Trust Portfolio shares, reference should be made to the prospectus of
the Trust included in its registration statement files pursuant to the
Securities Act of 1933, File No.2-94157, which information is incorporated
herein by reference.
(b) Furnish a specimen schedule showing the components of the offering
price of the trust's securities as at the latest practicable date.
No Policies have been offered for sale.
(c) If there is any variation in the offering price of the trust's
securities to any person or classes of persons other than underwriters, state
the nature and amount of such variation and indicate the person or classes of
persons to whom such offering is made.
Not applicable.
45. Furnish the following information with respect to any suspension of the
redemption rights of the securities issued by the trust during the three fiscal
years covered by the financial statements filed herewith:
(a) by whose action redemption rights were suspended.
(b) the number of days' notice given to security holders prior to
suspension of redemption rights.
(c) reason for suspension.
(d) period during which suspension was in effect.
Not applicable.
REDEMPTION VALUATION OF SECURITIES OF THE TRUST
46. (a) Furnish the following information with respect to the method of
determining the redemption or withdrawal valuation of securities issued by the
trust:
(1) The source of quotations used to determine the value of portfolio
securities.
(2) Whether opening, closing, bid, asked or any other price is used.
(3) Whether price is as of the day of sale or as of any other time.
(4) A brief description of the methods used by registrant for
determining other assets and liabilities including accrual for expenses and
taxes (including taxes on unrealized appreciation).
47
<PAGE> 49
(5) Other items which registrant deducts from the net asset value in
computing redemption value of its securities;
(6) Whether adjustments are made for fractions.
For a description of the method of determining the Cash
Surrender Value of the Policies, see the responses to items 10(c) and 10(d)
above.
(b) Furnish a specimen schedule showing the components of the redemption
price to the holders of the trust's securities as at the latest practicable
date.
No Policies have been offered for sale.
PURCHASE AND SALE OF INTERESTS IN UNDERLYING SECURITIES FROM AND TO SECURITY
HOLDERS
47. Furnish a statement as to the procedure with respect to the maintenance of
a position in the underlying securities or interests in the underlying
securities, the extent and nature thereof and the person who maintains such a
position. Include a description of the procedure with respect to the purchase of
underlying securities or interests in the underlying securities from security
holders who exercise redemption or withdrawal rights and the sale of such
underlying securities and interests in the underlying securities to other
security holders. State whether the method of valuation of such underlying
securities or interests in underlying securities differs from that set forth in
Items 44 and 46. If any item of expenditure included in the determination of the
valuation is not or may not actually be incurred or expended, explain the nature
of such item and who may benefit from the transaction.
The Depositor will reinvest distributions from each Trust
Portfolio in additional Trust Portfolio shares, will purchase and redeem Trust
Portfolio shares in connection with transfers between sub-accounts, and will
redeem Trust Portfolio shares for the purpose of meeting Policy obligations,
assessing charges, adjusting Policy reserves or such other purposes as are
consistent with the Policies. All purchases and redemptions of Trust Portfolio
shares will be at their net asset value. There is no procedure for the purchase
of Trust Portfolio shares from Policyowners who exercise their right of
surrender.
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Furnish the following information as to each trustee or custodian of the
trust.
(a) Name and principal business address.
48
<PAGE> 50
(b) Form of organization.
(c) State or other sovereign power under the laws of which the trustee or
custodian was organized.
(d) Name of governmental supervising or examining authority.
Not applicable; there is no trustee or custodian of the
Separate Account.
49. State the basis for payment of fees or expenses of the trustee or custodian
for services rendered with respect to the trust and its securities, and the
aggregate amount thereof for the last fiscal year. Indicate the person paying
such fees or expenses. If any fees or expenses are prepaid, state the unearned
amount.
Not applicable.
50. State whether the trustee or custodian or any other person has or may
create a lien on the assets of the trust, and if so, give full particulars
outlining the substance of the provisions of any indenture or agreement with
respect thereto.
No person has a lien on the assets of the Separate
Account, and no person may create any such lien except a person claiming under
the Policies. Pursuant to Michigan law and the Policies, the assets of the
Separate Account attributable to the Policies are not subject to liabilities of
the Depositor arising out of any other business the Depositor may conduct (see
the response to Item 5).
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OR SECURITIES
51. Furnish the following information with respect to insurance of holders of
securities:
(a) The name and address of the insurance company.
The Depositor's address is stated in the response to Item
2.
(b) The types of policies and whether individual or group policies.
The Policies are individual Policies. Various optional
fixed insurance benefits are provided under the Policies by the Depositor, in
addition to the insurance described in item 51(c).
(c) The types of risks insured and excluded.
Under the Policies the Depositor assumes the risk that
insureds covered by the Policies may die before anticipated and that the charge
for this mortality risk may prove
49
<PAGE> 51
to be insufficient. The Depositor assumes an expense risk that the various
charges for expenses as described in the Policies may prove to be inadequate.
The Depositor also assumes a risk that upon death of the life insured the death
benefit based on the Policy Value might be less than the Face Amount. In such an
event, the Depositor is obligated to pay the Face Amount of the Policy.
(d) The coverage of the Policies.
The Depositor will generally issue a Policy only if it has a Face
Amount of at least $100,000.
(e) The beneficiaries of such policies and the uses to which the proceeds
of policies must be put.
The recipient of the benefits of the insurance
undertakings described in Item 51(c) is the designated beneficiary or
beneficiaries, or if no beneficiary is alive when the life insured dies, the
Policyowner or the estate of the Policyowner if the Policyowner is the life
insured. There is no limitation as to the use of the proceeds.
(f) The terms and manner of cancellation and of reinstatement.
The insurance undertakings described in Item 51(c) are
integral parts of the Policy and may not be terminated while the Policy remains
in force, except to the extent set forth in the response to Item 10(e).
(g) The method of determining the amount of premiums to be paid by holders
of securities.
A Policy will be issued with a planned premium, which is based on
the amount of premium the Policyowner wishes to pay. The Depositor will send
notices to the Policyowner setting forth the planned premium at the payment
interval selected by the Policyowner. However, the Policyowner is under no
obligation to make the indicated payment.
(h) The amount of aggregate premiums paid to the insurance company during
the last fiscal year.
Not applicable.
(i) Whether any person other than the insurance company receives any part
of such premiums, the name of each such person and the amounts involved, and the
nature of the services rendered therefor.
No person other than the Depositor receives any part of
such premiums. The Depositor has entered into a Distribution Agreement with the
Principal Underwriter which provides for the payment of a portion of the
premiums to the Principal Underwriter. Manufacturers Life and the Depositor have
entered into an agreement with ManEquity, Inc. pursuant to which Manufacturers
Life, on behalf of ManEquity, Inc. will pay the sales commissions in respect of
the Policies and certain other Policies issued by the Depositor, prepare and
maintain all books and records required to be prepared and maintained by
ManEquity, Inc. with respect to the Policies and such other Policies, and send
all confirmations required to be sent by ManEquity, Inc.
50
<PAGE> 52
with respect to the Policies and such other Policies. ManEquity, Inc. will
promptly reimburse Manufacturers Life for all sales commissions paid by
Manufacturers Life and will pay Manufacturers Life for its other services under
the agreement in such amounts and at such times as agreed to by the parties.
Manufacturers Life has also entered into a Service
Agreement with the Depositor pursuant to which Manufacturers Life will provide
to the Depositor all issue, administrative, general services and recordkeeping
functions on behalf of the Depositor with respect to all of its insurance
policies including the Policies.
(j) The substance of any other material provisions of any indenture or
agreement of the trust relating to insurance.
None.
VII. POLICY OF REGISTRANT
52. (a) Furnish the substance of the provisions of any indenture or agreement
with respect to the conditions upon which and the method of selection by which
particular portfolio securities must or may be eliminated from assets of the
trust or must or may be replaced by other portfolio securities. If an investment
adviser or other person is to be employed in connection with such selection,
elimination or substitution, state the name of such person, the nature of any
affiliation to the depositor, trustee or custodian, and any principal
underwriter, and the amount of remuneration to be received for such services. If
any particular person is not designated in the indenture or agreement, describe
briefly the method of selection of such person.
It is possible that in the judgment of the management of the
Depositor, 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 regulation, because the shares are no longer available for
investment, or for some other reason. In that event, the Depositor 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 Commission and one or more
state insurance departments may be required.
(b) Furnish information with respect to each transaction involving the
elimination of any underlying securities during the period covered by the
financial statements filed herewith.
Not applicable.
(c) Describe the policy of the trust with respect to the substitution and
elimination of the underlying securities of the trust with respect to:
(1) the grounds for elimination and substitution;
51
<PAGE> 53
(2) the type of securities which may be substituted for any
underlying security;
(3) whether the acquisition of such substituted security or
securities would constitute the concentration of investment in a particular
industry or group of industries or would conform to a policy of concentration of
investment in a particular industry or group of industries;
(4) whether such substituted securities may be the securities of
another investment company; and
(5) the substance of the provisions of any indenture or agreement
which authorize or restrict the policy of the registrant in this regard.
See the response to paragraph (a) of this item.
(d) Furnish a description of any policy (exclusive of policies covered by
paragraphs (a) and (b) herein) of the trust which is deemed a matter of
fundamental policy and which is elected to be treated as such.
None.
(e) Provide a brief statement disclosing whether the trust and its
principal underwriter have adopted codes of ethics under rule 17j-1 of the Act
and whether these codes of ethics permit personnel subject to the codes to
invest in securities, including securities that may be purchased or held by the
trust.
Neither the Separate Account nor the Principal Underwriter is
required to adopt a Code of Ethics under rule 17j-1.
REGULATED INVESTMENT COMPANY
53. (a) State the taxable status of the trust.
The Separate Account is not a separate entity, and for tax
purposes its operations are a part of the Depositor's and are not taxed
separately. The Depositor is taxed as a life insurance company under the Life
Insurance Company Income Tax Act of 1959.
(b) State whether the trust qualified for the last taxable year as a
regulated investment company as defined in Section 851 of the Internal Revenue
Code of 1986, as amended, and state its present intention with respect to such
qualifications during the current year.
Not applicable; see the response to paragraph (a) of this item.
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. If the trust is not the issuer of periodic payment plan certificates
furnish information with respect to each class or series of its securities.
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Not applicable.
55. If the trust is the issuer of periodic payment plan certificates, a
transcript of a hypothetical account shall be filed in approximately the
following form on the basis of the certificate calling for the smallest amount
of payments. The schedule shall cover a certificate of the type currently being
sold assuming that such certificate had been sold at a date approximately ten
years prior to the date of registration or at the approximate date of
organization of the trust.
Not applicable.
56. If the trust is the issuer of periodic payment plan certificates, furnish
by years for the period covered by financial statements filed herewith in
respect of certificates sold during such period, information for each fully paid
type and each installment payment type of periodic payment plan certificates
currently being issued by the trust.
Not applicable.
57. If the trust is the issuer of periodic payment plan certificates, furnish
by years for the period covered by the financial statements filed herewith
information for each installment payment type of periodic payment plan
certificate currently being issued by the trust.
Not applicable.
58. If the trust is the issuer of periodic payment plan certificates furnish
information for each installment payment type of periodic payment plan
certificate outstanding as at the latest practicable date.
Not applicable.
FINANCIAL STATEMENTS OF THE TRUST AND DEPOSITOR
59. Financial statements:
Financial Statements of the Trust
None.
Financial Statements of the Depositor
The financial statements of the Depositor, included in
amendment no. 1 to Registrant's registration statement on Form S-6, file
no.333-41814, filed on November 9, 2000 are incorporated herein by reference.
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IX. EXHIBITS
A. Furnish the most recent form of the following as amended to date and
currently in effect:
(1) The indenture or agreement under the terms of which the trust was
organized or issued securities.
Resolutions of the Board of Directors of The Manufacturers Life
Insurance Company (U.S.A.) ("ManUSA") establishing Separate Account A.
Incorporated herein by reference to Exhibit A(1) to the registration statement
on Form S-6, file no.333-41814, of ManUSA filed on July 20, 2000.
(2) The indenture or agreement pursuant to which the proceeds of
payments of securities are held by the custodian or trustee, if such indenture
or agreement is not the same as the indenture or agreement referred to in
paragraph (1).
None.
(3) Distributing Policies:
(a) Agreement between the trust and principal underwriter or
between the depositor and principal underwriter.
Form of Distribution Agreement between ManUSA and
ManEquity, Inc. Incorporated herein by reference to Exhibit A(3)(a)(i) to the
registration statement on Form S-6, file no.333-66303, of ManUSA filed on
October 29, 1998.
(b) Specimen of typical agreements between principal underwriter
and dealers, managers, sales supervisors and salesmen.
(i) Form of specimen agreement between ManEquity,
Inc. and registered representatives. Incorporated herein by reference to Exhibit
A(3)(b)(i) to the registration statement on Form S-6, file no.333-51293, of
ManUSA filed on August 28, 1998.
(ii) Form of specimen agreement between ManUSA and
registered representatives. Incorporated herein by reference to Exhibit
A(3)(b)(ii) to the registration statement on Form S-6, file no.333-51293, of
ManUSA filed on August 28, 1998.
(iii) Form of specimen agreement between
ManEquity, Inc. and dealers. Incorporated herein by reference to Exhibit
A(3)(b)(iii) to the registration statement on Form S-6, file no.333-51293, of
ManUSA filed on August 28, 1998.
(iv) Form of specimen agreement between ManUSA
and dealers. Incorporated herein by reference to Exhibit A(3)(b)(iv) to the
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registration statement on Form S-6, file no.333-51293, of ManUSA filed on August
28, 1998.
(c) Schedules of sales commissions referred to in Item 38(c).
See response to item 38(c).
(4) Any agreement between the depositor, principal underwriter and the
custodian or trustee other than indentures or agreements set forth in paragraphs
(1), (2) and (3) with respect to the trust or its securities.
None.
(5) The form of each type of security.
Specimen Flexible Premium Variable Life Insurance Policy.
Incorporated herein by reference to Exhibit A(5)(a) to the registration
statement on Form S-6, file no.333-41814, of ManUSA filed on July 20, 2000.
(6) The certificate of incorporation or other instrument of
organization and by-laws of the depositor.
(a) Restated Articles of Redomestication of ManUSA.
Incorporated herein by reference to Exhibit A(6)(a) to the registration
statement on Form S-6, file no.333-41814, of ManUSA filed on July 20, 2000.
(b) By-Laws of ManUSA. Incorporated herein by reference to
Exhibit A(6)(b) to the registration statement on Form S-6, file no.333-41814, of
ManUSA filed on July 20, 2000.
(7) Any insurance policy under a policy between the trust and the
insurance company or between the depositor and the insurance company, together
with the table of insurance premiums.
None.
(8) Any agreement between the trust or the depositor concerning the
trust with the issuer, depositor, principal underwriter or investment adviser of
any underlying investment company or any affiliated person of such persons.
(a) Form of Service Agreement between The Manufacturers Life
Insurance Company and ManUSA. Incorporated herein by reference to Exhibit
A(8)(a)(i) to the registration statement on Form S-6, file no.333-51293, of
ManUSA filed on August 28, 1998.
(i) Form of Amendment to Service Agreement between
The Manufacturers Life Insurance Company and ManUSA. Incorporated herein by
reference to Exhibit A(8)(a)(vii) to the registration statement on Form S-6,
file no. 33-57018, of ManUSA filed on March 1, 1999.
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(b) Service Agreement between The Manufacturers Life
Insurance Company and ManEquity, Inc. Incorporated herein by reference to
Exhibit A(8)(c)(i) to the registration statement on Form S-6, file no.333-51293,
of ManUSA filed on August 28, 1998.
(i) Amendment to Service Agreement between The
Manufacturers Life Insurance Company and ManEquity, Inc. Incorporated herein by
reference to Exhibit A(8)(c)(ii) to the registration statement on Form S-6, file
no.333-51293, of ManUSA filed on August 28, 1998.
(9) All other material policies not entered into in the ordinary
course of business of the trust or of the depositor concerning the trust.
None.
(10) Form of application for a periodic payment plan certificate.
(a)(i) Form of Specimen Application for Flexible Premium
Variable Life Insurance Policy. Incorporated herein by reference to Exhibit
A(10)(a)(i) to the registration statement on Form S-6, file no. 33-52310, of
ManUSA filed on April 26, 1996.
(11) Copies of any codes of ethics adopted under rule 17j-1 under the
Act and currently available to the trust (i.e., the codes of the trust and its
principal underwriters).
Not applicable.
B. Furnish copies of each of the following:
(1) Each notice sent to security holders pursuant to Section 19 of the
Act prior to the date of the filing of this form.
Not applicable.
(2) Each annual report sent to security holders covering each fiscal
year ending after January 1, 1937, exclusive of reports, copies of which have
heretofore been filed with the Commission pursuant to the Act.
Not applicable.
C. Furnish the name and address of each dealer to or through whom any
principal underwriter currently offering securities of the trust, distributed
securities of the trust during the last fiscal year covered by the financial
statements filed herewith.
Not applicable.
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SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
Depositor of the Registrant has caused this Registration to be duly signed on
behalf of the Registrant in the City of Boston, Massachusetts, on the 9th day
of November, 2000.
Separate Account A of The
Manufacturers Life Insurance
Company (U.S.A.)
By: The Manufacturers Life Insurance
Company (U.S.A.)
By: /s/ John D. DesPrez III
-----------------------
Chairman and President
Attest:
/s/James D. Gallagher
--------------------------
James D. Gallagher,
Vice President, Secretary and
General Counsel
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