PANORAMA SEPARATE ACCOUNT
INDIVIDUAL DEFERRED AND IMMEDIATE
VARIABLE ANNUITY CONTRACTS ISSUED BY
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
1295 STATE STREET, SPRINGFIELD, MASSACHUSETTS
1-800-234-5606
ANNUITY SERVICE CENTER
P.O. BOX 13217
KANSAS CITY, MISSOURI 64199
1-800-343-5629
------------------------
QUALIFIED AND NON-QUALIFIED ANNUITY PLANS
The individual variable annuity contracts described in this Prospectus are
offered for use in connection with plans qualified under Section 401(a) or
403(a) of the Internal Revenue Code, amended, ("the Code"), annuity purchase
plans adopted according to Section 403(b) or 408 of the Code, governmental plans
and eligible state and other tax-exempt employer deferred compensation plans
under Sections 414(d) and 457 of the Code, and individual non-tax-qualified
retirement plans.
Persons purchasing these contracts for use in connection with individual
retirement annuity plans sponsored by Massachusetts Mutual Life Insurance
Company ("MML") should see Appendix A for disclosures applicable to them.
This Prospectus sets forth concise information about the Panorama Separate
Account (the "Account") that a prospective investor should know before
investing. A Statement of Additional Information concerning the Account has been
filed with the Securities and Exchange Commission and is incorporated herein by
reference. It may be obtained without charge either by a written request
addressed to the Account at the above address, or by calling 1-800-234-5606, and
asking for the Panorama Separate Account's Statement of Additional Information
dated May 1, 1996.
------------------------
THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE
OPPENHEIMER VARIABLE ACCOUNT FUNDS AND THE PANORAMA SERIES FUND, INC.
WHICH CONTAIN FULL DESCRIPTIONS OF THE RESPECTIVE FUND. THIS
PROSPECTUS SHOULD BE READ AND RETAINED FOR
FUTURE REFERENCE.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE CONTRACTS DESCRIBED IN THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY.
------------------------
THE DATE OF THIS PROSPECTUS IS MAY 1, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
DEFINITIONS........................................................................... iii
SUMMARY............................................................................... 1
PANORAMA SEPARATE ACCOUNT FEE TABLE
Immediate Contracts.................................................................. 3
PANORAMA SEPARATE ACCOUNT FEE TABLE
Deferred Contracts................................................................... 4
PANORAMA SEPARATE ACCOUNT OF
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
CONDENSED FINANCIAL INFORMATION...................................................... 6
THE CONTRACTS AND THE PANORAMA SEPARATE ACCOUNT....................................... 7
What are the Panorama contracts?..................................................... 7
Who can buy these contracts?......................................................... 8
Are there special considerations if I purchase a contract in connection with an
IRA?................................................................................ 8
What is the Panorama Separate Account and how does it operate?....................... 8
May I transfer assets among sub-accounts?............................................ 9
May I make transfers between sub-accounts on a regularly scheduled basis?............ 10
CHARGES UNDER THE CONTRACTS........................................................... 11
How are charges determined under these contracts?.................................... 11
How much are the deductions for sales charges under deferred contracts?.............. 11
What are the deductions for sales charges under immediate contracts?................. 12
What do the sales charges cover?..................................................... 12
What are the Annual Maintenance Charge and the Transaction Charge and what
do they cover?...................................................................... 12
Are all contracts subject to these charges?.......................................... 12
Are the sales charges ever waived?................................................... 12
What is the mortality and expense risk charge?....................................... 12
How much are the deductions for premium taxes on these contracts?.................... 13
OPERATION OF THE CONTRACTS............................................................ 13
How is my Purchase Payment credited?................................................. 13
May I make changes in the amounts of my Purchase Payments?........................... 14
What happens if I fail to make Purchase Payments?.................................... 14
May I assign or transfer my contract?................................................ 14
How do I know what my deferred contract is worth?.................................... 14
How is the Accumulation Unit value determined?....................................... 15
How are the underlying Portfolio shares valued?...................................... 15
PAYMENT OF BENEFITS................................................................... 15
What would my beneficiary receive as death proceeds?................................. 15
What contract options are available if the Annuitant ceases to be eligible under a
retirement plan?.................................................................... 15
How can a deferred contract be redeemed or surrendered?.............................. 15
May I make withdrawals on a regularly scheduled basis?............................... 16
May I surrender my contract once life Annuity Payments have started?................. 16
Are there special restrictions if I participate in the Texas Optional Retirement
Program?............................................................................ 16
Are there restrictions under Section 403(b) plans?................................... 17
Can payment of the redemption or Surrender Value ever be postponed?.................. 17
What Annuity options are available under deferred contracts?......................... 17
What is the minimum amount that I may use for an Annuity option?..................... 17
What are the available Annuity options under deferred contracts?..................... 17
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Are there any other options available at retirement under deferred contracts?........ 18
What are the available optional retirement forms under an immediate contract?........ 18
How are Annuity Payments determined?................................................. 19
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY,
MML DISTRIBUTORS, LLC, AND THE FUNDS................................................. 19
Tell me about Massachusetts Mutual Life Insurance Company............................ 19
Tell me about MML Investor Services, Inc............................................. 19
Tell me about MML Distributors, LLC.................................................. 19
Tell me about the Funds.............................................................. 20
PERFORMANCE DATA...................................................................... 20
How are yields and total returns calculated for the sub-accounts?.................... 20
MISCELLANEOUS......................................................................... 22
What are my voting rights?........................................................... 22
Tell me about the Sub-Administrator.................................................. 22
FEDERAL TAX STATUS.................................................................... 22
Introduction......................................................................... 22
Tax Status Of MML.................................................................... 23
TAXATION OF CONTRACTS IN GENERAL...................................................... 23
Penalty Taxes........................................................................ 23
Annuity Distribution Rules of Section 72(S).......................................... 24
Tax Withholding...................................................................... 24
Tax Reporting........................................................................ 24
Taxation of Qualified Plans, TSAs and IRAs........................................... 24
Taxation of Section 457 Plans........................................................ 25
Are there any material legal proceedings affecting the Account?...................... 26
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS..................................................................... 27
APPENDIX A
IRA DISCLOSURE STATEMENT.............................................................. A-1
</TABLE>
ii
<PAGE>
DEFINITIONS
As used in this Prospectus the following terms have the indicated meanings:
ACCOUNT: Panorama Separate Account.
ACCUMULATED VALUE: the value of all Accumulation Units credited to a
contract.
ACCUMULATION UNIT: an accounting method used to measure the value of a
contract before Annuity Payments begin.
AGE: The age of any Contract Owner or Annuitant on his/her birthday nearest
the date for which age is being determined. For purposes of contract issuance,
age shall be considered that which was achieved on the Contract Owner's or
Annuitant's last birthday ("Attained Age").
ANNUITANT: the person on whose life the Annuity contract is issued.
ANNUITY: a contract promising a series of payments for life; for life with
either a minimum number of payments or a determinable unit refund benefit; for
the joint lifetime of the Annuitant and another person and thereafter during
the lifetime of the survivor (life Annuity Payments) or for a period not
measured by a life or lives (non-life Annuity Payments).
ANNUITY PAYMENTS: the periodic payments made to an Annuitant or other
person.
ANNUITY SERVICE CENTER: The offices of MML's Administrative Agent at P.O.
Box 13217, Kansas City, Missouri 64199.
ANNUITY UNIT: an accounting method used to calculate the amount of variable
life Annuity Payments.
CONTRACT MATURITY DATE: the date on which Annuity Payments are scheduled to
commence.
CONTRACT OWNER: See Owner.
DEFERRED ANNUITY: an Annuity in which Annuity Payments commence at some
time in the future.
FIXED ANNUITY: an Annuity providing for payments which remain fixed
throughout the payment period.
FUNDS: Panorama Separate Account invests in shares of various investment
Portfolios of two investment companies ("Funds"): the Panorama Series Fund,
Inc. ("Panorama Fund") (previously named Connecticut Mutual Financial Services
Series Fund I, Inc.) and the Oppenheimer Variable Account Funds ("OVAF"). Both
Funds are diversified , open-end management investment companies. The following
four (4) Portfolios are available under the Contract: the Oppenheimer Money
Fund ("Money Portfolio") and the Oppenheimer Bond Fund ("Bond Portfolio") of
OVAF, and the Total Return Portfolio and the Growth Portfolio of the Panorama
Fund.
IMMEDIATE ANNUITY: an Annuity in which Annuity Payments commence
immediately.
OWNER: the owner specified in the contract. The owner may be the Annuitant,
an employer, a trust or any other entity.
PLAN: a retirement plan under which benefits are to be provided pursuant to
an Annuity.
PORTFOLIO: one of the classes of common stock of each Fund.
PURCHASE PAYMENTS: amount paid to MML by or on behalf of an Annuitant.
SURRENDER VALUE: the cash value payable to the Contract Owner upon
termination of the contract.
SYSTEMATIC WITHDRAWALS: the withdrawal of fixed dollar amounts from the
contract at regular intervals.
VALUATION DATE: a day on which the common stock of the Portfolios of the
Funds are valued.
VALUATION PERIOD: the period, consisting of one or more days, beginning
with a day following a Valuation Date and ending on the next succeeding
Valuation Date. Generally, any day on which the
iii
<PAGE>
New York Stock Exchange ("NYSE") and Massachusetts Mutual Life Insurance
Company are open for business, except any day on which trading on the NYSE is
restricted due to the existence of an emergency as determined by the SEC or
other regulatory authority.
VARIABLE ANNUITY: an Annuity in which the sum available for payments or the
payments vary in amount in accordance with the investment experience of a
separate account.
iv
<PAGE>
SUMMARY
CONTRACTS OFFERED
The contracts offered by this Prospectus are individual variable Annuity
contracts for use in conjunction with both tax-qualified and non-tax-qualified
plans. They are offered as periodic payment deferred, single payment deferred
and immediate contracts. The maximum issue age for deferred and immediate
contracts is Attained Age 75. The minimum initial purchase payment on a
deferred contract is $500. For an immediate contract the minimum purchase
payment is $10,000. From time to time the required minimum purchase payment may
be reduced. However, this minimum initial purchase payment may be waived in the
case of certain group-billed arrangements or Automatic Investment Plans, in
which case the minimum contribution will be $40 per month per participant. All
contracts allow participation in all of the sub-accounts of the Account.
Each sub-account is invested in a corresponding Portfolio of one of the
Funds. Four Fund Portfolios are available and each has a different investment
policy. OppenheimerFunds, Inc., ("Oppenheimer") is the investment adviser to
both of the Funds and each of the four Portfolios. Oppenheimer is an indirect
subsidiary of Massachusetts Mutual Life Insurance Company ("MML"). Oppenheimer
continuously reviews and, from time to time, changes the portfolio holdings of
each of the Portfolios in pursuit of the objective of each Portfolio. MML is
the sponsor of the Fund and of each Portfolio.
The investment objective of each available Portfolio is as follows:
MONEY PORTFOLIO -- seeks the maximum current income from investments in
"money market" securities consistent with low capital risk and the maintenance
of liquidity. There can be no assurance that the Money Portfolio will maintain
a stable net asset value per share of $1, and the Money Portfolio is not
insured or guaranteed by the U.S. Government.
BOND PORTFOLIO -- seeks a high level of current income from investments in
high-yield fixed-income securities rated "Baa" or better by Moody's or "BBB" or
better by Standard & Poor's. As a secondary investment objective, the Bond Fund
seeks capital growth when consistent with its primary objective.
TOTAL RETURN PORTFOLIO -- to maximize the total investment return (including
capital appreciation and income) by allocating its assets among stocks,
corporate bonds, securities issued by the U.S. Government and its
instrumentalities, and money market instruments according to changing market
conditions.
GROWTH PORTFOLIO -- to achieve long-term growth of capital by investing
primarily in common stocks with low price-earnings ratios and better than
anticipated earnings.
For a more complete description of the investment objectives, underlying
securities and risk considerations of the Portfolios, please see the
accompanying prospectus of the Fund.
SALES CHARGES
No deductions are made from Purchase Payments under deferred contracts,
except for premium taxes where applicable. Rather, a deduction for sales
charges, if applicable, under deferred contracts is taken from the proceeds of
redemptions or amounts applied to provide variable Annuity Payments.
During the first ten (10) 12-month periods ("contract years") that a
deferred contract is in existence, the deduction applies against the total
amount redeemed in excess of 10% of the Accumulated Value of the contract as of
the close of business on December 31st of the prior calendar year. Sales
charges decrease over this ten-year period. If a redemption is made before the
beginning/of the sixth contract year, a sales charge of 5% is assessed on the
redemption proceeds that are in excess of the 10% allowable amount. A 4% sales
charge is assessed in the sixth through the tenth contract year. No sales
charges are assessed after the tenth contract year.
1
<PAGE>
In addition, there are two circumstances where the commencement of variable
Annuity Payments gives rise to a sales charge. First, amounts paid under the
non-life variable Annuity option (Option E on page 18) are treated as partial
redemptions for purposes of deducting sales charges, as set forth above.
Second, if payments under a variable life Annuity option commence during the
first three (3) years after the contract is issued, a reduced sales charge
applies. The maximum sales charge, which would occur if the amount was paid in
the first year, is 3% of the amount applied to provide a variable payout. The
charges decrease to 2% in the second year, 1% in the third year, and are no
longer assessed after the end of the third year.
A deduction for sales charges under single payment immediate Annuity
contracts is taken from the Purchase Payment. A policy fee of $70 is also
deducted from the Purchase Payment, as are any applicable premium taxes. The
deduction for sales charges as a percentage of the amount remaining after
deduction of the Policy Fee and any premium taxes is 3% of the first $10,000,
2% of the next $90,000, and 1% of amounts over $100,000.
Charges assessed in the manner outlined above and paid to MML Distributors,
LLC ("MML Distributors") may not be enough to cover expenses associated with
the sale of the contracts. In this event, expenses will be paid by MML
Distributors, with any shortfall being met from the general corporate funds of
MML Distributors, including any capital contributions made by MML.
OTHER CHARGES
There are other charges and deductions from the current value of the assets
in the Account. These charges include deductions for the mortality and expense
risk, the charge for the Annual Maintenance Fee on a deferred contract, and the
possible imposition of a Transaction Charge which is currently being waived
under certain specified conditions. (See "CHARGES UNDER THE CONTRACTS," page
11, for a detailed discussion of the charges and deductions).
REDEMPTION
Prior to the commencement of life Annuity Payments, a deferred contract may
be surrendered or redeemed in part by a written request from the Owner to MML.
(See "PAYMENT OF BENEFITS -- How can a deferred contract be redeemed or
surrendered?" on page 15).
PENALTY TAX ON PREMATURE DISTRIBUTIONS
An Owner who withdraws the proceeds from the Account may be subject to a 10%
penalty tax. (See "FEDERAL TAX STATUS" on page 22).
TEN-DAY FREE LOOK OPPORTUNITY
Subject to applicable state laws the contract may be surrendered by the
Owner within ten (10) days (unless a different period is specified under
applicable law) after purchase without incurring a sales charge.
2
<PAGE>
PANORAMA SEPARATE ACCOUNT FEE TABLE
IMMEDIATE CONTRACTS
<TABLE>
<CAPTION>
MONEY TOTAL
MARKET INCOME RETURN GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
OWNER TRANSACTION EXPENSES
Sales Load Imposed on Purchase............................. 3% 3% 3% 3%
Transfer Fee............................................... 0 0 0 0
One-Time Policy Fee........................................ ------------------------------------------
(deducted from Purchase Payment).......................... $70 per policy
------------------------------------------
SEPARATE ACCOUNT ANNUAL EXPENSES
(AS A % OF AVERAGE ACCOUNT VALUE)
Mortality and Expense Risk Fees............................ 0.73% 0.73% 0.73% 0.73%
----- ----- ----- -----
Total Separate Account Annual Expenses..................... 0.73% 0.73% 0.73% 0.73%
----- ----- ----- -----
<CAPTION>
TOTAL
MONEY BOND RETURN GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
PORTFOLIO ANNUAL EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management Fee............................................. 0.450% 0.75% 0.553% 0.613%
Other Expenses............................................. 0.060% 0.05% 0.037% 0.047%
----- ----- ------ ------
Total Portfolio Annual Expenses............................ 0.51% 0.80% 0.59% 0.66%
----- ----- ----- ------
----- ----- ----- ------
</TABLE>
Prior to May 1, 1996 the Money Market Sub-Account and the Income Sub-Account
were invested in the corresponding Portfolios of the Panorama Fund. The Total
Portfolio Annual Expenses, the management fee and other expenses for the fiscal
year ended December 31, 1995 were 0.57%, 0.50%, 0.07% respectively for the
Money Market Portfolio and 0.65%, 0.59%, 0.06% respectively for the Income
Portfolio. On May 1, 1996, Massachusetts Mutual Life Insurance Company ("MML")
redeemed those shares of the Money Market and Income Portfolios of the
Panorama Fund and respectively purchased shares of the Money Portfolio and
Bond Portfolio of OVAF with the proceeds. The Portfolio expenses are actual
expenses for each Portfolio for the fiscal year ended December 31, 1995.
The purpose of this table is to assist the Owner in understanding the
various costs and expenses that an Owner will bear directly and indirectly. The
table reflects charges and expenses of the Account as well as the Portfolio for
the year ended December 31, 1995; future expenses may be higher or lower. For
more information on the charges described in this table, see "CHARGES UNDER THE
CONTRACTS" on page 11, and the prospectus for the Fund which accompanies this
Prospectus. Premium taxes will be deducted from some contracts, in accordance
with applicable state law.
3
<PAGE>
PANORAMA SEPARATE ACCOUNT FEE TABLE
DEFERRED CONTRACTS
<TABLE>
<CAPTION>
MONEY TOTAL
MARKET INCOME RETURN GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
OWNER TRANSACTION EXPENSES
Sales Load Imposed on Purchases............................ 0 0 0 0
Maximum Contingent Deferred Sales Load (as a % of Policy
Value Withdrawn).......................................... 5% 5% 5% 5%
Surrender Fees............................................. 0 0 0 0
Transaction Charge......................................... $10 $10 $10 $10
------------------------------------------
ANNUAL MAINTENANCE CHARGE $40 per policy
------------------------------------------
SEPARATE ACCOUNT ANNUAL EXPENSES
(AS A % OF AVERAGE ACCOUNT VALUE)
Mortality and Expense Risk Fees............................ 0.73 % 0.73 % 0.73 % 0.73 %
----- ---- ----- -----
Total Separate Account Annual Expenses..................... 0.73 % 0.73 % 0.73 % 0.73 %
----- ---- ----- -----
<CAPTION>
TOTAL
MONEY BOND RETURN GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
PORTFOLIO ANNUAL EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management Fee............................................. 0.450% 0.75% 0.553% 0.613%
Other Expenses............................................. 0.060% 0.05% 0.037% 0.047%
----- ----- ----- ------
Total Portfolio Annual Expenses............................ 0.51% 0.80% 0.59% 0.66%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
Prior to May 1, 1996 the Money Market Sub-Account and the Income Sub-Account
were invested in the corresponding Portfolios of the Panorama Fund. The Total
Portfolio Annual Expenses, the management fee and other expenses for the fiscal
year ended December 31, 1995 were 0.57%, 0.50%, and 0.07% respectively for the
Money Market Portfolio and 0.65%, 0.59%, and 0.06% respectively for the Income
Portfolio. On May 1, 1996, Massachusetts Mutual Life Insurance Company ("MML")
redeemed those shares of the Money Market and Income Portfolios of the Panorama
Fund and respectively purchased shares of the Money Portfolio and Bond
Portfolio of OVAF with the proceeds. The Portfolio expenses are actual expenses
for each Portfolio for the fiscal year ended December 31, 1995.
The purpose of this table is to assist the Owner in understanding the
various costs and expenses that an Owner will bear directly and indirectly. The
table reflects charges and expenses of the Account as well as the Portfolio for
the year ended December 31, 1995; future expenses may be higher or lower. For
more information on the charges described in this table, see "CHARGES UNDER THE
CONTRACTS" on page 11 and the prospectus for the Fund which accompanies this
Prospectus. Premium taxes will be deducted from some contracts, in accordance
with applicable state law.
4
<PAGE>
EXAMPLES
An Owner of the contract would pay the following expenses on a $1,000
investment, assuming a 5% annual return on assets,
1. If you surrender your contract at the end of the applicable time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Growth Sub-Account.................................................. $ 67.55 $ 99.00 $ 137.99 $ 235.09
Money Market Sub-Account............................................ $ 66.05 $ 94.42 $ 130.22 $ 218.69
Income Sub-Account.................................................. $ 68.94 $ 103.26 $ 145.19 $ 250.17
Total Return Sub-Account............................................ $ 66.85 $ 96.87 $ 134.37 $ 227.47
</TABLE>
2. If you annuitize your contract at the end of the applicable time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Growth Sub-Account..................................................... $ 46.84 $ 60.05 $ 84.48 $ 184.44
Money Market Sub-Account............................................... $ 45.31 $ 55.28 $ 76.30 $ 167.26
Income Sub-Account..................................................... $ 48.26 $ 64.48 $ 92.07 $ 200.24
Total Return Sub-Account............................................... $ 46.13 $ 57.83 $ 80.67 $ 176.45
</TABLE>
3. If you do NOT surrender or annuitize your contract:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Growth Sub-Account..................................................... $ 15.78 $ 48.97 $ 84.48 $ 184.44
Money Market Sub-Account............................................... $ 14.21 $ 44.16 $ 76.30 $ 167.26
Income Sub-Account..................................................... $ 17.25 $ 53.45 $ 92.07 $ 200.24
Total Return Sub-Account............................................... $ 15.04 $ 46.73 $ 80.67 $ 176.45
</TABLE>
THESE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE
EXPENSES AND THE ACTUAL EXPENSES PAID MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
5
<PAGE>
PANORAMA SEPARATE ACCOUNT OF
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
CONDENSED FINANCIAL INFORMATION
(The audited financial statements for the year ended December 31, 1995 are
included in the Statement of Additional Information, which is incorporated by
reference in this Prospectus.)
ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1986 1987 1988 1989 1990 1991 1992
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUB-ACCOUNT
Income
Qualified............. $ 2.033798 $ 2.054562 $ 2.200132 $ 2.487982 $ 2.615843 $ 3.072358 $ 3.267301
Non-Qualified......... 1.907542 1.927016 2.063561 2.333544 2.453465 2.881652 3.064477
Growth
Qualified............. 2.522380 2.510333 2.852420 3.845654 3.516048 4.800445 5.354570
Non-Qualified......... 2.263248 2.252434 2.559376 3.450568 3.154832 4.307275 4.804471
Money-Market
Qualified............. 1.480344 1.562830 1.663746 1.800207 1.929917 2.025824 2.078427
Non-Qualified......... 1.480344 1.562830 1.663746 1.800207 1.929917 2.025824 2.078427
Total Return
Qualified............. 1.898691 1.965243 2.178012 2.659125 2.652928 3.391910 3.710830
Non-Qualified......... 1.810806 1.874284 2.077204 2.536068 2.530171 3.234955 3.539112
ACCUMULATION UNITS OUTSTANDING
Income
Qualified............. 7,357,728 7,840,303 8,653,238 10,203,747 11,292,500 12,036,628 14,143,333
Non-Qualified......... 2,270,079 2,446,575 2,802,336 3,400,958 3,549,129 4,861,572 6,574,546
Growth
Qualified............. 8,644,799 9,880,754 8,982,917 9,141,764 9,509,994 10,641,800 12,433,926
Non-Qualified......... 2,382,439 2,706,988 2,302,616 2,206,724 2,625,671 3,012,101 4,143,844
Money Market
Qualified............. 14,929,594 19,863,472 23,605,954 28,045,051 33,570,489 29,261,142 22,097,803
Non-Qualified......... 3,816,560 5,368,341 6,857,008 8,100,278 9,916,368 8,410,761 6,486,440
Total Return
Qualified............. 56,688,589 66,313,216 66,722,916 66,070,313 68,016,583 70,304,994 79,608,133
Non-Qualified......... 16,109,741 19,331,433 18,528,604 17,350,244 18,906,950 20,117,223 26,163,888
<CAPTION>
DEC. 31, DEC. 31, DEC. 31,
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
SUB-ACCOUNT
Income
Qualified............. $ 3.636070 3.465955 4.078803
Non-Qualified......... 3.410353 3.250807 3.825614
Growth
Qualified............. 6.441387 6.374619 8.706503
Non-Qualified......... 5.779640 5.719724 7.812045
Money-Market
Qualified............. 2.118784 2.183169 2.287780
Non-Qualified......... 2.118784 2.183169 2.287780
Total Return
Qualified............. 4.275618 4.183148 5.171950
Non-Qualified......... 4.077758 3.989561 4.932613
ACCUMULATION UNITS OUTST
Income
Qualified............. 15,073,893 13,871,625 12,557,687
Non-Qualified......... 7,908,608 7,418,128 6,881,942
Growth
Qualified............. 14,737,084 17,220,047 19,024,051
Non-Qualified......... 5,804,690 8,112,342 10,364,426
Money Market
Qualified............. 17,590,977 16,994,675 16,334,145
Non-Qualified......... 5,512,931 6,528,538 6,227,229
Total Return
Qualified............. 89,157,511 95,758,769 96,555,427
Non-Qualified......... 34,510,874 41,329,166 41,857,538
</TABLE>
The Condensed Financial Information reflects the Separate Account's
investment in the Money Market and Income Portfolios of the Panorama Fund.
However, these two Portfolios are no longer available for investment. The
financial information does not reflect investment in either the Money Portfolio
or the Bond Portfolio of OVAF because the Separate Account began investing in
these Portfolios on May 1, 1996.
6
<PAGE>
THE CONTRACTS AND THE PANORAMA SEPARATE ACCOUNT
WHAT ARE THE PANORAMA CONTRACTS?
The variable Annuity contracts offered through the Panorama Separate
Account (the "Account") are designed to help Contract Owners reach their
retirement goals. There are no deductions from Purchase Payments under a
deferred contract so the entire Purchase Payment is invested in the sub-account
selected. In a single premium immediate contract, the Purchase Payment net of
the sales charge is used to provide an immediate Annuity. Four Portfolios, each
with a distinct investment objective, are available. The Money Market
Sub-Account invests in the OVAF Money Portfolio, the Income Sub-Account invests
in the OVAF Bond Portfolio. The Total Return Sub-Account and the Growth
Sub-Account invest in the Panorama Fund, Total Return Portfolio and Growth
Portfolio. You pick the Portfolio you wish. You may use any or all of them.
You determine the percentage of your Purchase Payments that are put into each
Portfolio. You may transfer assets among the Portfolios. The result is an
investment program selected to meet your specific and, perhaps, changing
investment needs.
Shares of the Funds are also offered to certain separate accounts funding
variable life insurance policies offered by MML or C.M. Life or by unaffiliated
insurance companies. Although we do not anticipate any inherent difficulties
arising from the Fund offering its shares to issuers of both variable annuities
and variable life insurance policies, it is possible that due to differences in
tax treatment or other considerations, the interest of owners of various
contracts participating in the Fund might at some time be in conflict. The
Board of Directors of the Fund, the Fund's Investment Advisors and the
insurance companies whose separate accounts are investing in the Fund are
required to monitor events to identify any material conflicts that arise.
During the payout or Annuity phase of the contract, Annuity Payments will
vary in accordance with the investment performance of the Portfolios selected.
The contract allows the Owner to change Portfolios after Annuity Payments have
commenced. This means the Owner is not required to pick a set of investment
objectives in advance and hope they remain valid for the life of the contract.
There are some limitations on the frequency with which selections may be
made and there are administrative charges for transferring assets from one
Portfolio to another. These limitations are described below and in the
Statement of Additional Information. (See "CHARGES UNDER THE CONTRACTS" on
page 11 for a description of the charges for redeeming a contract and other
charges made under the contracts.)
Annuity Payments under a deferred contract normally commence on a Contract
Maturity Date which you elect on your application. The earliest Contract
Maturity Date you may choose is presented in the following table.
<TABLE>
<CAPTION>
ANNUITANT'S AGE EARLIEST CONTRACT
PLAN TYPE AT ISSUE MATURITY DATE
- ----------------- -------------------- ----------------------
<S> <C> <C>
Non-Qualified Under age 60 Age 65
Age 60 or older 5 years after the
contract issue date
Qualified Under age 54 1/2 Age 59 1/2
Age 54 1/2 or older 5 years after the
contract issue date
</TABLE>
Regardless of the Contract Maturity Date elected on your application, you
may choose to receive Annuity Payments at any time prior to the elected
Contract Maturity Date, or you may delay the commencement up to ten (10) years
after that date. Such a change must be made in writing prior to the Contract
Maturity Date elected on your application. The maximum Contract Maturity Date
which may be elected is Attained Age 80.
7
<PAGE>
WHO CAN BUY THESE CONTRACTS?
Variable Annuity contracts are offered for use in connection with plans
qualified under Sections 401(a) or 403(a) of the Code, including plans
established by persons entitled to the benefits of the Self-Employed
Individuals Tax Retirement Act of 1962, as amended, known as "Keogh" or "H.R.
10 Plans" ("Qualified Plans"); annuity purchase plans ("TSAs") adopted by
public school systems and certain tax-exempt organizations according to Section
403(b) of the Code; Individual Retirement Annuities ("IRAs") under Section 408
of the Code; and governmental plans as defined in Section 414(d) of the Code,
including employee pension plans established for employees by a state, a
political subdivision of a state, or an agency or instrumentality of either a
state or a political subdivision of a state, and certain eligible deferred
compensation plans of those and other tax-exempt entities as defined in
Section 457 of the Code. These contracts may also be used in conjunction with
retirement plans which are not qualified under these sections. Joint ownership
of a contract is not permitted. The maximum issue age for immediate and
deferred contracts is age 75. The Purchase Payment for the immediate contract
may not exceed $1,000,000 without the prior approval of MML.
ARE THERE SPECIAL CONSIDERATIONS IF I PURCHASE A CONTRACT IN CONNECTION WITH AN
IRA?
The contract can be used to establish a contributory IRA, or a contribution
may represent a transfer or rollover from an existing IRA. Annual contributions
can also be made in conjunction with an IRA established to accept rollovers
from other types of tax-qualified plans, but all amounts will be commingled.
As a result, such an IRA would not be considered a conduit IRA, and no future
transfer or rollover could be made to any tax-qualified plan other than another
IRA.
If you wish to set up a spousal IRA, subject to the $500 minimum, you will
need to purchase a separate Panorama contract for the spousal IRA. After the
Tax Reform Act of 1986, the tax-deductibility of IRA contributions depends on
certain factors, such as participation in other tax-qualified plans. You should
consult a competent tax adviser for rules regarding deductibility. (See also
the "IRA DISCLOSURE STATEMENT" on page A-1 of the Appendix to this Prospectus
for more information.)
WHAT IS THE PANORAMA SEPARATE ACCOUNT AND HOW DOES IT OPERATE?
Panorama Separate Account was established on June 23, 1981, in accordance
with authorization by the Board of Directors of Connecticut Mutual Life
Insurance Company ("CML"). On February 29, 1996, CML merged with and into
Massachusetts Mutual Life Insurance Company ("MML"). CML was a Connecticut
mutual life insurance company originally chartered by a special act of the
Connecticut General Assembly in 1846. Prior to the merger CML was the nation's
sixth oldest life insurance company. Upon the merger, CML's existence ceased
and MML became the surviving company under the name Massachusetts Mutual Life
Insurance Company. As a result of the merger, the Separate Account became a
separate account of MML. In approving the merger, the boards of directors of
MML and CML determined that the merger of two financially strong mutual life
insurance companies would result in an overall enhanced capital position and
reduced expenses, which, together, would be in the long-term interests of
policyholders. On January 26, 1996, 95.76% of the policyholders of MML and
95.75% of the insured of MML, each voting as a separate class, voted to approve
the merger. On January 27, 1996, 94.0% of the policyholders of CML and 94.27%
of the members of CML, each voting as a separate class, voted to approve the
merger. In addition, the Connecticut Insurance Department and the Massachusetts
Division of Insurance have approved the merger.
All of the Contracts issued by CML before the merger were, at the time of
the merger, assumed by MML. The merger did not affect any provisions of, or
rights or obligations under, those Contracts. The Separate Account is the
separate account to which MML allocates Purchase Payments (net of charges). The
Account is registered as a unit investment trust under the Investment Company
Act of 1940, as amended, (the "1940 Act").
Under Massachusetts law, the assets of the Account are held for the benefit
of the Owners of, and the persons entitled to payments under, the contracts. The
assets in the Account are not chargeable with liabilities arising out of other
businesses conducted by MML. In addition, the assets of the
8
<PAGE>
Account will not be affected by the income, gains or losses from assets in the
general account of MML, nor by the investment performance of any of the other
separate accounts created by MML. However, all obligations arising under the
contracts are general corporate obligations of MML.
Purchase Payments are allocated to one or more sub-accounts of the Account.
Each sub-account is invested exclusively in the assets of one of the Portfolios
of the Funds. Assets of tax-qualified and non tax-qualified contracts will be
placed in separate sub-accounts for each Portfolio, except the Money Market
Portfolio.
MML does not guarantee the investment results of the sub-accounts or of any
Portfolio. There is no assurance that the value of a contract during the years
prior to the commencement of Annuity Payments, or the aggregate amount of the
variable Annuity Payments, will equal the total of Purchase Payments made under
the contract. Since each Portfolio has different investment objectives, each is
subject to different risks. These risks are more fully described in the
accompanying prospectus of the Fund. This assumption of investment risk by the
Owner of a contract is the chief difference between this type of Annuity (a
variable Annuity) and a fixed Annuity, where MML places Purchase Payments in
its general account and guarantees the investment results.
Since the contract may not be surrendered once variable Annuity Payments
commence under a life Annuity, investment must be carefully considered prior to
the purchase of an immediate Annuity or the election of a variable Annuity
payout under a deferred Annuity.
MML reserves the right, subject to applicable law, to substitute the shares
of any other registered investment company for the shares of any Portfolio held
in a sub-account of the Account, to offer additional sub-accounts with
differing investment objectives, to operate the Account as a different form of
registered investment company or unregistered entity, or to transfer contracts
to a different separate account. Current law may require notification to the
contract holders of any such change or substitution, and approval of the
Securities and Exchange Commission.
MAY I TRANSFER ASSETS AMONG SUB-ACCOUNTS?
Yes, you may transfer the values credited to your contract in one or more
sub-accounts to one or more other sub-accounts. The transfer must be requested
using the Notification of Change Authorization form or by telephone after
completing the Panorama Telephone Authorization form. These forms are available
from your registered representative or from the Annuity Service Center, and
must be signed by the Owner.
By completing the Panorama Telephone Authorization form the Owner and, if
authorized by the Owner, the Annuitant, may request transfers of contract
values among the available sub-accounts of the Account, and changes in the
allocation of future Purchase Payments (but only in combination with a
transfer). To effect these changes, call the Annuity Service Center, at
1-800-343-5629, between the hours of 8:30 a.m. and 4:00 p.m., Eastern Time.
The Annuity Service Center will use the social security number or tax
identification number of the Owner or of the Annuitant as a personal
identification code. All telephone requests must include the personal
identification code and will be recorded on voice recorder equipment. The
Annuity Service Center will honor telephone requests believed to be authentic,
and will employ reasonable procedures to confirm that instructions communicated
by telephone are genuine, but neither the Account nor the Annuity Service
Center is responsible for determining the authenticity of such calls, nor will
either be liable for any loss, cost, expense or liability for acting in
accordance with such instructions believed to be genuine. The Account may,
however, be liable for any losses due to unauthorized or fraudulent telephone
transactions if it, in fact, does not employ such reasonable procedures to
confirm the genuineness of telephone instructions given.
9
<PAGE>
Telephone requests must be received at the Annuity Service Center no later
than 4:00 p.m., Eastern Time, to assure same-day pricing. Telephone requests
will not be accepted at the Annuity Service Center after that time, nor will
telephone requests be accepted at MML at any time. The ability to transfer
among sub-accounts by telephone may be discontinued at any time.
Transfer requests prior to the Contract Maturity Date are generally subject
to a $10 charge for each sub-account from which funds are withdrawn. A certain
number of transfers may not be subject to this charge. (See "Are all contracts
subject to these charges?" on page 12.) Only one transfer request per calendar
year may be made after the life Annuity commencement date. There is no limit
on the number of transfers which may be made during the accumulation period or
during a period in which non-life Annuity Payments are being made.
Transfers between sub-accounts during the accumulation period are based on
the Accumulated Values on the Valuation Date coincident with or next following
the date the transfer instructions are received at the Annuity Service Center.
MAY I MAKE TRANSFERS BETWEEN SUB-ACCOUNTS ON A REGULARLY SCHEDULED BASIS?
Yes. The Contract Owner may direct the transfer of fixed dollar amounts at
regular intervals from any one sub-account to one or more other sub-account(s).
Transfers must be at least $100 per transferee sub-account. This election is
called Dollar Cost Averaging ("DCA").
Upon written request, a Contract Owner may elect DCA to begin at any time
prior to the Contract Maturity Date. There is currently no charge for DCA.
However, MML reserves the right to charge for DCA in the future. A Contract
Owner may not simultaneously participate in both DCA and Systematic Withdrawals
or Option E Specified Payments for a Variable Period. (See "May I make
withdrawals on a regularly scheduled basis?" on page 16.)
DCA will begin when a properly completed written request from the Contract
Owner is received by MML at least five (5) business days prior to the transfer
start date selected by the Contract Owner. If the DCA start date is less than
five (5) days after the date the written request is received by MML, MML may
defer the DCA start date for one month. If no start date has been selected, MML
will automatically start DCA within five (5) business days after the written
request is received.
DCA changes may only be made by written request to terminate the existing
DCA, along with a written request providing new DCA elections. DCA will
terminate when any of the following occurs:
(1) the number of designated transfers has been completed;
(2) the value of the sub-account is insufficient to complete the next
transfer;
(3) written request from the Contract Owner is received at least five
(5) business days prior to the next transfer date;
(4) on the Contract Maturity Date; or
(5) the contract is terminated.
Except as otherwise provided, DCA is subject to the transfer provisions of
the contract. (See "May I transfer assets among sub-accounts?" on page 9.)
10
<PAGE>
CHARGES UNDER THE CONTRACTS
HOW ARE CHARGES DETERMINED UNDER THESE CONTRACTS?
The charges under the contracts offered by this Prospectus are assessed in
various ways. Listed below are the charges and the source of payment for each
charge.
<TABLE>
<CAPTION>
CHARGES SOURCES
- --------------------------------------------------- ---------------------------------------------------
<S> <C>
Sales charges on deferred contracts Payout proceeds
(These charges diminish over time.)
Sales charge on immediate contracts Purchase Payment
Mortality and expense risk charges Daily charge to each sub-account
Annual Maintenance Charge on deferred contracts Deduction from the Accumulated Value of each
contract
Policy fee on immediate contracts Purchase Payment
Transaction charge on deferred contracts Deducted from certain partial redemptions and
certain transfers
Premium taxes proceeds Purchase Payments or payout (Surrender or at
Maturity Date)
</TABLE>
In addition, the Portfolios of the Funds in which the sub-accounts are
invested are subject to charges for investment advisory services and other
expenses. (See the accompanying Fund prospectus for a discussion of these
fees.)
HOW MUCH ARE THE DEDUCTIONS FOR SALES CHARGES UNDER DEFERRED CONTRACTS?
During the first ten (10) contract years that a deferred contract is in
existence, a sales charge will be applied to any redemption amount in excess of
10% of the closing contract value as of December 31st of the previous year. The
deduction for sales charges, expressed as a percentage of the amount redeemed
in excess of the 10% allowable amount (which will be zero for the remainder of
the calendar year during which the first Purchase Payment is received), and
after any Transaction Charge or Annual Maintenance Charge, is as follows:
<TABLE>
<CAPTION>
CONTRACT YEARS DEDUCTION
- --------------------------------------------------------------------------------------------- ---------------
<S> <C>
1-5.......................................................................................... 5%
6-10......................................................................................... 4%
11 and over.................................................................................. 0%
</TABLE>
In addition, there are two circumstances under which the commencement of
Annuity Payments gives rise to a sales charge. First, amounts paid under the
non-life Variable Annuity option (See "Option E" on page 18) are treated as
partial redemptions for purposes of deducting sales charges, as set forth
above. Second, if payments under a variable life Annuity option commence during
the first three (3) years after the contract is issued, a reduced sales charge
applies. This deduction, expressed as a percentage of the amount applied to
provide for payments, is as follows:
<TABLE>
<CAPTION>
YEARS DEDUCTION
- --------------------------------------------------------------------------------------------- ---------------
<S> <C>
1............................................................................................ 3%
2............................................................................................ 2%
3............................................................................................ 1%
4 and over................................................................................... 0%
</TABLE>
There is no sales charge on redemptions made after the Contract Maturity
Date elected on your application. (See "What are the Panorama contracts?" on
page 7.)
11
<PAGE>
No sales charge will be imposed on the redemption of "excess contributions"
to a plan qualifying for special income tax treatment ("Qualified Plan"), TSAs
or IRAs. "Excess contributions" (including excess aggregate contributions) will
be defined as provided in the Internal Revenue Code and applicable regulations.
WHAT ARE THE DEDUCTIONS FOR SALES CHARGES UNDER IMMEDIATE CONTRACTS?
The deduction for sales charges under an immediate contract as a percentage
of the Purchase Payment remaining (after the policy fee of $70) is 3% of the
Purchase Payment up to $10,000, 2% of the next $90,000 of the Purchase Payment,
and 1% of any Purchase Payment over $100,000. On the minimum $10,000 Purchase
Payment, the sales charge of 3% plus the policy fee of $70 is 3.83% of the net
amount invested.
WHAT DO THE SALES CHARGES COVER?
The sales charges are designed to cover the commissions payable to the
registered representatives who sell the contracts, in addition to certain costs
allocated to the promotion of sales of the contract.
WHAT ARE THE ANNUAL MAINTENANCE CHARGE AND THE TRANSACTION CHARGE AND WHAT DO
THEY COVER?
The Annual Maintenance Charge (currently $40) is designed to offset the
administrative costs attributable to deferred contracts, including providing
Owners with periodic reports and other communications, as well as maintaining
contract holder records. It is deducted each contract year, or portion thereof,
that a contract is outstanding.
The Transaction Charge (currently $10) is designed to offset the costs of
processing requests for transfers of the Accumulated Value of a contract among
sub-accounts during the accumulation period, and requests for partial
redemptions.
The Annual Maintenance Charge and the Transaction Charge may be increased
to amounts not in excess of $60 and $20, respectively. The Transaction Charge
with respect to a partial redemption may not be increased without approval of
the Securities and Exchange Commission. These charges are designed not to
exceed the actual expenses incurred in administering the contracts.
ARE ALL CONTRACTS SUBJECT TO THESE CHARGES?
All deferred contracts are subject to the Annual Maintenance Charge and the
Transaction Charge prior to the commencement of Annuity Payments. These charges
do not apply to immediate contracts or to deferred contracts after the date
that Annuity Payments begin. The Transaction Charge is currently being waived
for up to four (4) sub-account withdrawals made in conjunction with transfers,
and one sub-account withdrawal made in conjunction with a partial redemption in
any one calendar year. Annuity Payments made under the non-life Annuity option
are not treated as partial redemptions for purposes of this charge.
Proceeds of individual variable annuity contracts, or accumulation annuity
contracts issued by MML, which were previously held by, or for the benefit of,
the Contract Owner or Annuitant, may not be subject to sales charges.
Also, the net proceeds of a surrender of a contract may be reinvested
without being subject to further sales charges within a limited period of time
after surrender. Please see the Statement of Additional Information for a
further discussion of the reinvestment privilege.
ARE THE SALES CHARGES EVER WAIVED?
Until April 30, 1997, no sales charge will be imposed upon redemption of a
Contract where the proceeds of such redemption are applied to the purchase of a
new MML group annuity contract. This does not eliminate applicable charges
under the particular group contract, and upon surrender of the group contract,
charges may apply.
WHAT IS THE MORTALITY AND EXPENSE RISK CHARGE?
MML has set out certain life Annuity tables in each deferred contract, and
promises to continue to make Annuity Payments, determined according to those
tables and other provisions contained in the
12
<PAGE>
contract, regardless of how long the Annuitant lives and regardless of how long
all Annuitants as a group live. The same promise is made to Annuitants in
immediate contracts regarding the table upon which their payments are based.
This assures you, as Annuitant, that neither your own longevity nor an
improvement in life expectancy generally will have any adverse effect on the
Annuity Payments received under the contract, and relieves you from the risk of
outliving monies accumulated for retirement. It transfers that risk to MML.
This is termed the mortality risk.
In addition, MML assumes the risk that the maximum charges permitted under
the contract may be insufficient to cover the actual costs incurred by MML
Distributors, LLC ("MML Distributors") for providing administrative services to
the Account and to the Contract Owners and Annuitants, or to cover actual costs
incurred by MML Distributors or MML Investors Services, Inc. for distribution
expenses.
For assuming these risks, MML makes a daily charge equal to .002% (.73% on
an annual basis) of the value of the assets in the Account attributable to the
contracts. (Approximately .13% annually may be viewed as covering the mortality
risk and .60% annually for the expense risk, which includes the risk of a
shortfall in meeting distribution expenses.) If this charge is insufficient to
cover the actual cost of the mortality and expense risk, the loss will fall on
MML. Conversely, if the charge proves more than sufficient, any excess would be
retained by MML.
Further information concerning charges under the contract is contained in
the Statement of Additional Information.
HOW MUCH ARE THE DEDUCTIONS FOR PREMIUM TAXES ON THESE CONTRACTS?
Deductions for premium taxes payable on contracts issued to residents of
certain states range from 0% to 3.5% of the purchase price of the contract. MML
may pay premium taxes in connection with Purchase Payments under the contract.
Depending upon applicable state law, MML will deduct the premium taxes paid
with respect to a particular contract from the Purchase Payments, from the
Accumulated Value on the Contract Maturity Date (thus reducing the Accumulated
Value), or upon the full surrender of a contract.
OPERATION OF THE CONTRACTS
HOW IS MY PURCHASE PAYMENT CREDITED?
The balance of each Purchase Payment remaining after the deduction of any
applicable premium taxes (and sales charges in the case of immediate contracts)
is credited to your contract as of the Valuation Date on which the payment is
received, unless it is received after the close of business on the New York
Stock Exchange. In that case it will be credited to your contract on the next
Valuation Date. Amounts are credited to the sub-accounts(s) elected by you. The
election may be changed at any time in writing, and the change will be
effective when received at the Annuity Service Center. (See "May I transfer
assets among sub-accounts?" on page 9, for circumstances under which telephone
requests will be honored.)
In a deferred contract, the number of Accumulation Units to be credited is
determined by dividing the net Purchase Payment being credited to each
sub-account by the value of an Accumulation Unit in that sub-account on that
date. (See "How is the Accumulation Unit value determined?" on page 15.)
In an immediate contract, the number of Annuity Units to be credited is
determined by first multiplying the net Purchase Payment credited to each
sub-account, as of the date of issue, by the Annuity purchase rate. This
product is then divided by the value of an Annuity Unit in that sub-account on
the date of issue to determine the number of Annuity Units in each sub-account
on which payments will be based. (See the Statement of Additional Information
for a more complete description of this procedure.)
13
<PAGE>
No funds are invested until the effective date of your contract. Therefore,
if your contract has not been issued on the date your Purchase Payment is
received, your Purchase Payment will be credited in the manner described above,
using the issue date as the Valuation Date. Ordinarily your contract will be
issued within two (2) business days of the date your application is received.
If your contract cannot be so issued, you will be notified of the reasons, and
any necessary additional information will be requested within five (5) business
days of the date the application is received. If you at that time so authorize,
your Purchase Payment shall not be refunded and shall be held until the
contract can be issued. Within a reasonable time, if it appears the necessary
prerequisites to issuance will not be met, any Purchase Payments received will
be refunded.
MAY I MAKE CHANGES IN THE AMOUNTS OF MY PURCHASE PAYMENTS?
Yes. Subject to the provisions of any plan to which your contract may be
subject, the amount of Purchase Payments under a periodic Purchase Payment
deferred contract may be increased in any year to an amount not in excess of
twice the total Purchase Payments made in the first contract year, or decreased
to an amount of not less than $10 on any date a Purchase Payment is made.
Purchase Payments should be made payable to Massachusetts Mutual Life Insurance
Company and sent to the Annuity Service Center at the address given on page 1
of this Prospectus. Purchase Payments in excess of the previously described
limit may be made, however, with the consent of MML. MML's current
administrative practice is not to accept cumulative Purchase Payments in excess
of $3 million dollars. Acceptance of such excess payment shall not be construed
as a waiver by MML of its right to restrict or deny such excess Purchase
Payments in the future.
WHAT HAPPENS IF I FAIL TO MAKE PURCHASE PAYMENTS?
You may discontinue Purchase Payments under a periodic Purchase Payment
contract, and unless surrendered or otherwise reduced to zero value by
redemptions, the contract shall continue in force as a paid-up Annuity
contract. The Annual Maintenance Fee will continue to be charged. Additional
periodic (one or more) Purchase Payments may be made within a three-year
period from receipt of the last Purchase Payment, or at the discretion of the
principal underwriter, at any time thereafter; but in any event any such
Purchase Payment must be received prior to the commencement of Annuity
Payments.
MAY I ASSIGN OR TRANSFER MY CONTRACT?
If your contract does not have an endorsement limiting transferability, it
may be assigned or transferred according to its terms. Contracts issued under
tax-qualified plans ordinarily are required to have an endorsement limiting
transferability. A transfer of ownership may result in certain adverse tax
consequences to the Contract Owner that are not discussed herein. The Contract
Owner contemplating any such transfer or assignment of a contract should
contact a competent tax adviser with respect to the potential effects of such a
transaction.
HOW DO I KNOW WHAT MY DEFERRED CONTRACT IS WORTH?
The Accumulated Value of a deferred contract at any time prior to the
commencement of Annuity Payments can be determined by multiplying the total
number of Accumulation Units credited to the contract in each sub-account by
the then current Accumulation Unit values in each. Each Owner will be advised
at least semi-annually of the number of Accumulation Units credited to his or
her contract, the current Accumulation Unit Value and the total value of the
contract. Accumulation Units are valued each day that shares of the Portfolios
are valued. Contract Owners may at any time obtain the most recent Accumulation
Value from the Annuity Service Center. Any applicable charges for surrendering
a contract must be deducted from this Accumulated Value to determine the amount
that would be received upon a surrender.
14
<PAGE>
HOW IS THE ACCUMULATION UNIT VALUE DETERMINED?
The value of an Accumulation Unit in each sub-account was set at $1.00 on
the Valuation Date on which funds were first placed in the sub-account. The
value of an Accumulation Unit on any subsequent Valuation Date is determined by
multiplying the value of an Accumulation Unit on the immediately preceding
Valuation Date by the net investment factor for the Valuation Period just
ended.
The net investment factor is calculated in order to determine the daily
fluctuations of the Accumulation Value due to the investment performance of the
Fund, expenses and fees paid by the Fund, and any charges made against the
Account. An explanation of how the net investment factor is determined, and an
example of how it works, is included in the Statement of Additional
Information.
HOW ARE THE UNDERLYING PORTFOLIO SHARES VALUED?
The shares of each Portfolio are valued at net asset value on each day the
New York Stock Exchange is open for business. A description of the valuation
method used in valuing shares of each Portfolio may be found in the
accompanying Fund's prospectus.
PAYMENT OF BENEFITS
WHAT WOULD MY BENEFICIARY RECEIVE AS DEATH PROCEEDS?
In the event an Annuitant dies prior to the commencement of Annuity
Payments, MML will pay the named beneficiary the Accumulated Value of the
contract determined as of the Valuation Date on which, or next following, both
due proof of death and an election of a single sum cash payment are received at
the Annuity Service Center. If a single sum payment is not elected, an Annuity
option may be elected during the 90-day period following receipt of due proof
of death. If no election has been made, a single sum cash payment will be made
at the end of the 90-day period in an amount equal to the then Accumulated
Value.
WHAT CONTRACT OPTIONS ARE AVAILABLE IF THE ANNUITANT CEASES TO BE ELIGIBLE
UNDER A RETIREMENT PLAN?
Subject to whatever restrictions may be placed on the exercise of the
contract options by the retirement plan, all the Annuity contract options are
available to the Owner of a deferred contract.
If for any reason the Annuitant ceases to be eligible to make further
contributions or to participate in a retirement plan, the Contract Owner may
make one or more of the following elections to the extent permitted under the
retirement plan: (A) the Accumulated Value of the contract may be applied to
provide a fixed or variable Annuity, provided that the amount applied satisfies
the minimum requirements for an Annuity option; (B) the contract may be
redeemed for cash, in whole or in part; or (C) the contract may be transferred
to the Annuitant free from all provisions of the plan; or (D) the contract will
continue to participate in the investment results of the Account.
Upon the Contract Maturity Date, the Annuitant will begin to receive
Annuity Payments under the selected retirement option. At any time in the
interim, the Owner can exercise elections (A) or (B) described in the previous
paragraph.
HOW CAN A DEFERRED CONTRACT BE REDEEMED OR SURRENDERED?
A deferred contract may be redeemed in part or surrendered by a written
request for redemption from the Contract Owner. The Contract Owner will be
entitled to the redemption or Surrender Value computed as of the next valuation
of Accumulation Units following receipt of the request in good order at the
Annuity Service Center. Payment will be made promptly. At the present time MML
remits premium taxes to the states quarterly or annually when due. Therefore,
no refund of previously deducted premium taxes will be made in the event of
either a partial redemption or a surrender. Surrender or partial redemption of
a contract may result in adverse tax consequences. Some of these are described
under "FEDERAL TAX STATUS" on page 22.
15
<PAGE>
MAY I MAKE WITHDRAWALS ON A REGULARLY SCHEDULED BASIS?
Upon written request, a Contract Owner may elect Systematic Withdrawals
($100 minimum per withdrawal) to begin at any time prior to the Contract
Maturity Date. There is currently no service charge for Systematic Withdrawals.
However, MML reserves the right to charge for Systematic Withdrawals in the
future. "A Contract Owner may not simultaneously participate in both Systematic
Withdrawals and Dollar Cost Averaging or Option E Specified Payments for a
Variable Period." (See "May I make transfers between sub-accounts on a
regularly scheduled basis?" page 10.)
If a Systematic Withdrawals plan is elected, the Contract Owner may
withdraw fixed dollar amounts at regular intervals from the Accumulated Value
of the contract.
Systematic Withdrawals will begin when a properly completed written request
from the Contract Owner is received by MML at least five (5) business days
prior to the Systematic Withdrawals start date selected by the Contract Owner.
If the Systematic Withdrawals start date is less than five (5) days after the
date the written request is received by MML, MML may defer the Systematic
Withdrawals start date for one month. If no Systematic Withdrawals start date
has been selected, MML will automatically start Systematic Withdrawals within
five (5) business days after the written request is received.
Systematic Withdrawals changes may only be made by written request from the
Contract Owner to terminate the existing Systematic Withdrawals election, along
with a written request identifying a new Systematic Withdrawals election.
Systematic Withdrawals will terminate when any of the following occurs:
(1) the number of designated Systematic Withdrawals has been completed;
(2) the value of the sub-account is insufficient to complete the next
withdrawal;
(3) a written request from the Contract Owner is received at least five
(5) business days prior to the next withdrawal date;
(4) the Contract Maturity Date arrives; or
(5) the contract is terminated.
Except as otherwise provided, Systematic Withdrawals are subject to all of
the provisions of the contract. Further, withdrawals may result in tax
liabilities. (See "FEDERAL TAX STATUS" on page 22.)
MAY I SURRENDER MY CONTRACT ONCE LIFE ANNUITY PAYMENTS HAVE STARTED?
No. Once life Annuity Payments have commenced a contract cannot be
surrendered, and no further payments will be accepted under that contract.
However, you will be allowed to exchange Annuity Units among sub-accounts.
One such exchange may be made in any calendar year. Under the Specified
Payments for a Variable Period option (Option E), the contract may be
surrendered in part or in full during the payment period, or its value may be
applied under a life Annuity option subject to the applicable charges.
ARE THERE SPECIAL RESTRICTIONS IF I PARTICIPATE IN THE TEXAS OPTIONAL
RETIREMENT PROGRAM?
Yes. Participants in the Texas Optional Retirement Program may not receive
the proceeds of a redemption in whole or in part or apply them to provide
annuity options prior to retirement, except in the case of death or termination
of employment in all institutions of higher education as defined under Texas
law. Such proceeds may, however, be used to fund another eligible retirement
vehicle.
16
<PAGE>
ARE THERE RESTRICTIONS UNDER SECTION 403(B) PLANS?
Similar restrictions apply to annuity contracts used in connection with
Code Section 403(b) retirement plans. Section 403(b) of the Code provides for
tax-deferred retirement savings plans for employees of certain non-profit and
educational organizations. In accordance with the requirements of the Code,
Section 403(b) annuities generally may not permit distribution of (i) elective
contributions made in years beginning after December 31, 1988, and
(ii) earnings on those contributions, and (iii) earnings on amounts
attributable to elective contributions held as of the end of the last year
beginning before January 1, 1989. Distributions of such amounts will be allowed
only upon death of the employee, on or after attainment of age 59 1/2,
separation from service, disability, or financial hardship, except that income
attributable to elective contributions may not be distributed in the case of
hardship.
CAN PAYMENT OF THE REDEMPTION OR SURRENDER VALUE EVER BE POSTPONED?
Yes. It may be postponed whenever (a) the New York Stock Exchange is
closed, or trading on the New York Stock Exchange is restricted as determined
by the Securities and Exchange Commission (the "SEC"); (b) the SEC permits
postponement and so orders; or (c) the SEC determines that an emergency exists
making valuation of the Portfolios or disposal of securities not reasonably
practicable.
WHAT ANNUITY OPTIONS ARE AVAILABLE UNDER DEFERRED CONTRACTS?
Deferred contracts provide five (5) variable Annuity retirement options.
The Owner may select, in accordance with any retirement plan that may be in
effect, a retirement date and a retirement option. Subsequent changes in either
may be made up to the date Annuity payments are to commence. Because of certain
Code requirements, each plan will ordinarily specify a minimum and maximum
retirement age, and may limit the number of monthly payments certain which may
be elected, or the election of a joint and last survivor Annuity where the
contingent beneficiary is other than a spouse. If the Owner does not elect
otherwise, the life Annuity option with 120 monthly payments certain will be
effective.
WHAT IS THE MINIMUM AMOUNT THAT I MAY USE FOR AN ANNUITY OPTION?
The minimum amount which may be applied under such an option is $2,000 and
the minimum Annuity Payment is $20.00. If at any time the Annuity Payments are
or become less than $20.00, MML has the right to change the frequency of
payment to intervals that will result in payments of at least $20.00. If
proceeds payable on the retirement date are less than $2,000, MML may discharge
its obligation by paying the proceeds in one lump sum.
WHAT ARE THE AVAILABLE ANNUITY OPTIONS UNDER DEFERRED CONTRACTS?
OPTION A. LIFE ANNUITY. A variable Annuity payable monthly while the
Annuitant is alive. Payments will cease with the last monthly payment due
preceding the Annuitant's death.
OPTION B. LIFE ANNUITY WITH 60, 100, 120 OR 240 MONTHLY PAYMENTS
GUARANTEED. A variable Annuity payable monthly while the Annuitant is alive.
Payments will cease after the later of:
(1) the last monthly payment due preceding the Annuitant's death; or
(2) the end of 60, 100, 120 or 240 payments, as elected by the
Annuitant.
OPTION C. UNIT REFUND LIFE ANNUITY. A variable Annuity payable monthly
while the Annuitant is alive. Payments will cease with the last monthly payment
due preceding the Annuitant's death. Upon receipt of proof of the Annuitant's
death, an additional payment may be made. The additional payment will be the
then dollar value of the number of Annuity Units equal to the excess of
(a) over (b).
(a) The total amount applied under the option divided by the value of an
Annuity Unit Value at the date Annuity Payments begin.
17
<PAGE>
(b) The product of the number of Annuity Units represented by each
monthly Annuity Payment and the number of Annuity Payments made prior to
death.
OPTION D. JOINT LIFE INCOME FOR ANNUITANT AND ONE OTHER PERSON WITH
TWO-THIRDS ANNUITY UNITS TO SURVIVOR. (One Hundred and Twenty Months Certain).
A joint variable Annuity payable monthly to the Annuitant and one other person
designated at the exercise of this option. MML will pay the income for 120
months certain and as long afterwards as the Annuitant and such other person
are living. After the death of the Annuitant and after payment of any remaining
payments certain, monthly payments will continue for life to the designated
person. Such payments will be computed on the basis of two-thirds of the number
of Annuity Units in effect during the joint lifetime.
OPTION E. SPECIFIED PAYMENTS FOR A VARIABLE PERIOD. MML will make equal
payments in the amount specified until the remaining balance is less than the
amount of one payment. Payments may be made on an annual, semiannual, quarterly
or monthly basis.
The remaining balance in the Separate Account at the end of any Valuation
Period is equal to the product of (a) and (b).
(a) The balance at the end of the previous period decreased by the
amount of any payments made during the period.
(b) The net investment factor for the period.
If the remaining balance at any time is less than the amount of one
payment, the balance will be paid as the final payment under this option. You
may surrender this contract for the remaining balance, or redeem a portion
thereof, at any time. Amounts paid under this option during the first ten (10)
years a contract is in existence prior to the Contract Maturity Date are
subject to sales charges.
Upon the request of the Contract Owner, MML will endorse the contract to
eliminate any option thereunder, or in such other fashion as may be required to
maintain qualification of a plan under the Code, provided that such change is
not otherwise contrary to law. Contract Owners who have not purchased this
contract under a qualified plan should consult with their tax adviser prior to
electing this option.
ARE THERE ANY OTHER OPTIONS AVAILABLE AT RETIREMENT UNDER DEFERRED CONTRACTS?
Yes. In addition to those retirement options specified in the contract, any
mode of payment or other joint option agreed to by MML, and not in conflict
with the contract, may be selected. MML will generally allow the proceeds of a
partial redemption or a surrender (less any applicable sales or other charges)
to be applied under the retirement options set forth in any fixed Annuity
contract offered by MML at the time of selection, and for which the purchaser
would have been eligible. In the event such a selection is made on the Contract
Maturity Date, the Accumulated Value of the contract less the Annual
Maintenance Fee will be applied in accordance with the terms of such other
contract. Certain options are subject to a policy fee, but no other sales
or administrative charges will be imposed under the fixed option.
WHAT ARE THE AVAILABLE OPTIONAL RETIREMENT FORMS UNDER AN IMMEDIATE CONTRACT?
The single premium immediate contracts are used to provide life Annuities,
joint life Annuities and unit refund life Annuities.
The life Annuity may be in any of the forms outlined as Options A or B for
deferred contracts. The computed value at 3.5% interest compounded annually of
the current dollar amount of any remaining payments certain would constitute
the equivalent lump sum payment to be made to the designated beneficiary if the
remaining payments certain are not to be continued.
The joint life Annuity is as described under Option D for deferred
contracts.
The unit refund life Annuity is as described under Option C for deferred
contracts.
18
<PAGE>
HOW ARE ANNUITY PAYMENTS DETERMINED?
The Statement of Additional Information contains a detailed description of
how the Annuity Payments under the contracts are determined.
In that calculation, an assumed investment return of 3.5% is used. This is
not an expected rate of return for the Account. Rather it is an annual interest
rate assumption used in constructing the Annuity table used to determine the
first Annuity Payment. The interest rate assumption of 3.5% would produce level
Annuity Payments if the net investment return remained level at 3.5% on an
annual basis. The actual net investment return will, of course, vary. If higher
than 3.5%, the payments will rise, and if lower than 3.5%, the payments will
fall. If a higher interest rate assumption were used, the initial payment would
be higher but subsequent payments would rise more slowly or fall faster as the
actual investment return varies from that higher assumed rate. A lower
assumption would create the opposite effect.
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY,
MML DISTRIBUTORS, LLC, AND THE FUNDS
TELL ME ABOUT MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
Massachusetts Mutual Life Insurance Company ("MML") is a mutual life
insurance company specially chartered by the Commonwealth of Massachusetts on
May 14, 1851. It is currently licensed to transact life (including variable
life), accident, and health insurance business in all states, the District of
Columbia and certain provinces of Canada. As of March 1, 1996, the Company had
total assets of $50 billion.
On February 29, 1996, Connecticut Mutual Life Insurance Company ("CML")
merged with and into the Company. CML was a Connecticut mutual life insurance
company originally chartered by a special act of the Connecticut General
Assembly in 1846. Prior to the merger CML was the nation's sixth oldest life
insurance Company. Upon the merger, CML's existence ceased and the Company
became the surviving company under the name Massachusetts Mutual Life Insurance
Company. In approving the merger, the boards of directors of the Company and
CML determined that the merger would result in a combined company that would be
stronger and more efficient and therefore more competitive than either the
Company or CML alone. On January 26, 1996, 95.76% of the policyholders of the
Company and 95.75% of the insured of the Company, each voting as a separate
class, voted to approve the merger. On January 27, 1996, 94.0% of the
policyholders of CML and 94.27% of the members of CML, each voting as a
separate class, voted to approve the merger. In addition, the Connecticut
Insurance Department and the Massachusetts Division of Insurance have approved
the merger.
All of the Contracts were issued by CML and, at the time of the merger,
were assumed by the Company. The merger did not affect any provisions of, or
rights or obligations under, the Contracts as originally issued by CML.
TELL ME ABOUT MML INVESTORS SERVICES, INC.
MML Investors Services, Inc. ("MMLISI"), a wholly-owned subsidiary of MML,
is located at 1414 Main Street, Springfield, MA 01144-1013. MMLISI acts as
co-underwriter and distributor of the Contracts. MMLISI is registered as a
broker-dealer with the U.S. Securities and Exchange Commission (the
"Commission") and is a member of the National Association of Securities
Dealers, Inc. ("NASD"). Contracts will be sold by registered representatives of
MMLISI who are also licensed to sell MML insurance products under applicable
state insurance laws.
TELL ME ABOUT MML DISTRIBUTORS, LLC
MML Distributors, LLC ("MML Distributors") was organized under the laws of
the State of Connecticut as a limited liability company on November 10, 1994.
It is 99% owned by MML and 1% owned by CM Strategic Ventures, Inc., an MML
subsidiary. MML Distributors does business under different variations of its
name including: "MML Distributors, L.L.C." in Delaware, Idaho, Illinois,
19
<PAGE>
Michigan, North Dakota, Oklahoma, Oregon, and South Dakota, "MML Distributors
Limited Liability Company", in Maine, New Mexico, Ohio and West Virginia, and
"MML Distributors, LLC, L.C." in Florida. MML Distributors is registered with
the Commission as a broker-dealer and is a member of the NASD.
MML Distributors serves as the co-underwriter and wholesale distributor of
the contracts. It will enter into agreements with other broker-dealers whose
registered representatives will sell the contracts. It is located at 1414 Main
Street, Springfield, MA 01144. Sales charges assessed under contracts described
in this Prospectus may be paid to MML Distributors.
MML will accept, by agreement with a limited number of broker-dealers,
electronic data transmissions of Application information, along with wire
transmittals of initial Purchase Payments from the broker-dealers to the
Annuity Service Center for purchase of the Contract. Please contact the Annuity
Service Center to receive more information about electronic data transmission
of Application information.
TELL ME ABOUT THE FUNDS
The Panorama Series Fund, Inc. is an open-end diversified investment
company which has six (6) Portfolios, two (2) of which are available for
contracts offered by this Prospectus. Each Portfolio issues a separate series
of stock. Oppenheimer Variable Account Funds is a diversified open-end
investment company consisting of nine (9) separate portfolios, two (2) of which
are available for contracts offered by this Prospectus. Oppenheimer is the
investment adviser to the Funds. Oppenheimer is an indirect subsidiary of MML
and is registered with the Securities and Exchange Commission as an investment
adviser. It is located at Two World Trade Center, New York, New York, and also
has offices at 3410 South Galena Street, Denver, Colorado 80231.
A full description of each Fund, their investment policies and
restrictions, risks, charges and expenses and all other aspects of their
operations, is contained in the accompanying Fund prospectuses which should be
read in conjunction with this Prospectus.
PERFORMANCE DATA
HOW ARE YIELDS AND TOTAL RETURNS CALCULATED FOR THE SUB-ACCOUNTS?
From time to time the yield and the effective yield of the Money Market
sub-account may be advertised. In addition, total returns for all of the
sub-accounts may be advertised. These figures will be based on historical
performance for deferred contracts prior to the maturity date, and are not
intended to, and do not indicate, future performance.
The yield of the Money Market sub-account refers to the annualized income
generated by an investment in that sub-account over a specified seven-day
period. The yield is "annualized" by assuming that the income generated for
that seven-day period is generated each seven-day period over a 52-week period,
and is shown as a percentage of that investment. The effective yield is
calculated similarly, but, when annualized, the income earned by an investment
in that sub-account is assumed to be reinvested. The effective yield will be
slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
Total return for the Money Market, Income, Total Return, and Growth
sub-accounts may be calculated pursuant to a standardized formula or in
non-standardized formulas. The standardized total return of the Money Market,
Income, Total Return and Growth sub-accounts refers to return quotations,
assuming an investment has been held in the sub-account for various periods of
time including, but not limited to, one year, five years, ten years, and a
period measured from the date the sub-account commenced operations. The total
return quotations will represent the average annual compounded rates of return
that would equate an initial investment of $1,000 to the redemption value of
that investment as of the last day of each of the periods for which total
return quotations are
20
<PAGE>
provided. Accordingly, the total return quotations will reflect not only income
but also changes in principal value (that is, changes in the Accumulation Unit
values), whereas the Money Market sub-account yield figures will only reflect
income.
The standardized total return quotations for the Income, Total Return, and
Growth sub-accounts will reflect the sales charges imposed on redemptions. For
the Money Market sub-account, the standardized total return figures will
reflect sales charges, but the standardized yield figures will not.
In addition, the sub-accounts may from time to time also disclose total
returns in non-standard formats. The sub-accounts may also disclose cumulative
total returns. The non-standard average annual total return and cumulative
total return would not reflect the sales charge, which if reflected would lower
the performance figures for periods of less than ten (10) years.
The Fund may from time to time also disclose standard total returns and
non-standard total returns for the sub-accounts based on or covering periods of
time other than those indicated above. All non-standard performance data will
only be disclosed if the standard total return is also disclosed. For
additional information regarding the calculation of performance data, please
refer to the Statement of Additional Information.
Also from time to time, in advertisements, sales literature, or in reports
to shareholders, the Account may compare the performance of one or more
sub-accounts to that of other variable accounts or investment vehicles with
similar investment objectives, or to relevant indices published by recognized
mutual funds, or variable annuity statistical rating services or publications
of general interest such as FORBES or MONEY magazines. For example, a
sub-account's performance might be compared to that of other accounts or
investments with a similar investment objective as compiled by Lipper
Analytical Services, Inc., or by others. In addition, a sub-account's
performance might be compared to that of recognized stock market indicators
including, but not limited to, the Standard & Poor's 500 Stock Index (which is
a group of unmanaged securities widely regarded by investors as representative
of the stock market in general), and the Dow Jones Industrial Average (which is
a price-weighted average of 30 large, well-known industrial stocks that are
generally the leaders in their industry). Performance comparisons should not be
considered representative of the future performance of a sub-account.
Performance data may also be calculated for shorter or longer base periods.
The Account may use various base periods as may be deemed necessary or
appropriate to provide investors with the most informative performance data
information, depending on the then-current market conditions.
Performance will vary from time to time and historical results will not be
representative of future performance. Performance information may not provide a
basis for comparison with other investments, or other investment companies
using a different method of calculating performance. Current yield is not
fixed and varies with changes in investment income and Accumulation Unit
values. The Money Market sub-account's yield will be affected if it experiences
a net inflow of new money which is invested at interest rates different from
those being earned on its then-current investments. An investor's principal in
a sub-account and a sub-account's return are not guaranteed and will fluctuate
in value according to market conditions. As noted above, advertised performance
data figures will be historical figures, for a deferred contract, during the
accumulation period.
The Account may also from time to time, in advertisements, sales
literature, or in reports to shareholders, discuss the Account's fees and
compare those fees to industry averages and other variable accounts. The
Account also may discuss the total amount of money invested in variable
annuities.
21
<PAGE>
MISCELLANEOUS
WHAT ARE MY VOTING RIGHTS?
You as a Contract Owner will be entitled to instruct MML how to vote at
meetings of Fund shareholders in each sub-account in which you participate on:
(i) any change in the investment restrictions relative to that Portfolio in
which the sub-account invests requiring shareholder approval; (ii) approval of
the investment advisory agreement and any amendments thereto which is relevant
to that Portfolio; (iii) election of the Board of Directors of the Fund; (iv)
ratification of an independent public accountant for the Fund; and, (v) any
other matters that require a shareholder vote.
The number of votes as to which you as Contract Owner of a deferred
contract may give instructions is equal to the number of shares of a Portfolio
underlying the Accumulation Units credited to the contract in each sub-account.
Assets may also be maintained in the Funds with respect to contracts other than
those offered by this Prospectus. Votes attributable to such other contracts
are determined in the same manner as is provided for contracts described in
this Prospectus.
The number of votes as to which you as Contract Owner in the Annuity payout
phase may give instructions is equal to: (i) the value of the reserve
maintained in each sub-account to meet the Annuity obligations related to that
contract, divided by (ii) the value of a Portfolio share underlying that
sub-account. This number of votes will decrease over the period the Annuity is
payable.
Votes attributable to any shares underlying assets directly placed in a
Portfolio by MML shall be entitled to be cast but only in the same manner and
proportion in which all other votes are cast. Such will also be true as to
shares not covered by instructions.
The number of votes which each Contract Owner may cast shall be determined
as of the record date for shareholders of each Portfolio as determined by the
Board of Directors of the appropriate Fund.
MML Distributors shall ensure that each Contract Owner is furnished with
such proxy forms and instructions as may be necessary to enable you as Contract
Owner to exercise your voting rights.
TELL ME ABOUT THE SUB-ADMINISTRATOR
MML Distributors has contracted with Continuum Company, Inc., Dwight
Building, Second Floor, 1004 Baltimore, Kansas City, Missouri 64105 to
administer the Contracts on its behalf at the Annuity Service Center. In this
capacity, Continuum Company, Inc. is responsible for the following: processing
purchase payments, annuity payments, death benefits, surrenders, withdrawals
and transfers; preparing confirmation notices and periodic reports; calculating
mortality and expense risk charges; and generally assisting Contract Owners.
FEDERAL TAX STATUS
INTRODUCTION
The ultimate effect of federal income taxes on the value of the Contract,
on annuity payments, and on the economic benefit to the Contract Owner,
Annuitant or Beneficiary depends on a variety of factors including the type of
retirement plan for which the Contract is purchased and the tax and employment
status of the individual concerned. The discussion contained herein is general
in nature and is not intended as tax advice. Each person concerned should
consult a competent tax adviser for complete information and advice. No attempt
is made to consider any applicable state or other local tax laws. Moreover, the
discussion herein is based upon MML's understanding of current federal income
tax laws as they are currently interpreted. No representation is made regarding
the likelihood of continuation of those current federal income tax laws or of
the current interpretations by the Internal Revenue Service ("IRS").
22
<PAGE>
TAX STATUS OF MML
Under existing federal law, no taxes are payable by MML on investment
income and realized capital gains of the Account credited to the contracts.
Accordingly, MML does not intend to make any charge to the Account to provide
for company income taxes. MML may, however, make such a charge in the future if
an unanticipated construction of current law or a change in law results in a
company tax liability attributable to the Account.
MML may incur state and local taxes (in addition to premium taxes) in
several sates. At present, these taxes are not significant. If they increase,
however, charges for such taxes attributable to the Separate Account may be
made.
TAXATION OF CONTRACTS IN GENERAL
Under Section 817(h) of the Internal Revenue Code (the "Code") a Contract
(other than one used in a tax-qualified retirement plan) will not be treated as
an annuity contract and will be taxed on the annual increase in earnings if, as
of the end of any quarter, the Portfolios, or the Portfolio on which the
Contract is based are not adequately diversified in accordance with regulations
prescribed by the Treasury Department.
Subject to certain annuity distribution rules (see "Annuity Distribution
Rules of Section 72(s)") annuity payments under the Contracts are taxable under
Section 72 of the Code. For contributions made after February 28, 1986, a
Contract Owner that is not a natural person will be taxed on the annual
increase in the earnings of a Contract unless the Contract Owner holds the
Contract as agent for a natural person. Otherwise, increases in the value of a
Contract are not subject to tax until actually or constructively received.
Amounts received prior to the Contract Maturity Date from Contracts not
under tax qualified arrangements (see "Taxation of Qualified Plans TSAs and
IRAs" for a discussion of Contracts used in the qualified plan market) are
subject to tax to the extent of any earnings or gains in the Contract; amounts
received which are in excess of such earnings or gains are considered a return
of capital. Similarly, amounts borrowed upon the Contract will be treated as
amounts received under the Contract and will be taxable to the same extent. If
an individual Contract Owner transfers ownership, for other than full and
adequate consideration, the Contract Owner will be taxed on the transfer as
though he or she had taken a full redemption of the Contract. For Contracts
entered into after October 21, 1988, all annuity contracts issued by the same
insurer and its affiliates to the same Contract Owner within the same calendar
year must be aggregated in determining the amount of gain realized on a
withdrawal from any one.
If the Contract is obtained in a tax-free exchange of contracts under
Section 1035 of the Code, different tax rules may apply. If a distribution
prior to the Contract Maturity Date of a contract obtained in such an exchange
is entirely attributable to investments in the surrendered contract prior to
August 14, 1982, the distribution will first be considered a return of capital
to the extent of those investments and only the amounts received in excess of
those investments will be regarded as taxable earnings or gains.
PENALTY TAXES
In addition to the foregoing tax consequences, certain distributions under
the Contract will be subject to a penalty tax under the Code Section 72(q) (for
non-tax qualified Contracts) or 72(t) (for Contracts in tax qualified plans see
"Taxation of Qualified Plans, TSAs and IRAs") of 10% of the amount of the
distribution that is includable in gross income. However, the following
distributions from non-tax qualified Contracts currently are not subject to the
penalty tax: (1) withdrawals made after the Contract Owner is 59 1/2 years old;
(2) payments made to a beneficiary (or to the estate of the Contract Owner) on
or after the death of the Contract Owner; (3) payments attributable to a
Contract
23
<PAGE>
Owner becoming disabled; or (4) substantially equal periodic payments made (at
least annually) for the lifetime (or life expectancy) of the Contract Owner or
for the joint lifetimes (or joint life expectancies) of the Contract Owner and
the beneficiary.
When monthly annuity payments commence, they are taxable as ordinary income
in the year of receipt to the extent that they exceed that portion of the
"investment in the Contract" allocable to that year. The investment in the
contract will equal the gross amount of purchase payments made under the
Contract less any amount that was previously received under the Contract but
was not included in gross income. The investment in the contract would also be
increased by any amount that was previously included in gross income under the
Contract but was not received. This amount, divided by the anticipated number
of monthly annuity payments, gives the "excludable amount," which is the
portion of each annuity payment considered to be a return of capital and,
therefore, not taxable. Under this exclusion ratio, the total amount excluded
from payments actually received is limited to the investment in the contract.
The rules for determining the excludable amount are contained in Section 72 of
the Code and regulations thereunder and require adjustment when the payment
option elected provides a feature such as a guaranteed number of payments.
ANNUITY DISTRIBUTION RULES OF SECTION 72(S)
Annuity distribution requirements are imposed under Section 72(s) of the
Code. MML understands that these requirements do not apply to Contracts issued
to or under Qualified Plans, TSAs and IRAs.
Under Section 72(s), a Contract will not be treated as an annuity subject
to Section 72 of the Code, unless it provides for certain required
distributions from and after the date of death of the Contract Owner.
TAX WITHHOLDING
Certain tax withholding is imposed on payments that are made under the
Contracts (for Contracts in tax qualified plans, see "Taxation of Qualified
Plans, TSAs and IRAs"). Withheld amounts do not constitute an additional tax,
but are fully creditable on the individual tax return of each payee who is
subject to withholding. In addition, no payment will be subject to the
withholding if (1) it is reasonable to believe that the payments are not
includable in gross income, or (2) the payee elects not to have withholding
apply. The payee may make such an election either by filing an election form
with MML or, in the case of redemptions, by following procedures that MML has
established to afford payees an opportunity to elect out of withholding. These
forms and procedures will be provided to payees by MML upon a request for
payment.
Unless the Payee elects not to have withholding apply, MML is required to
withhold, for federal income tax purposes, 10% of the taxable portion of any
redemption payment or non-periodic distribution under the Contracts. Periodic
annuity payments under the Contracts are subject to withholding at the payee's
wage base rate. If the payee of these annuity payments does not file an
appropriate withholding certificate (obtainable from any local IRS office) with
MML, it will be presumed that the payee is married claiming three exemptions.
TAX REPORTING
MML is required to report all taxable payments and distributions to the IRS
and to the payees. Payees will receive reports of taxable payments and
distributions by January 31 of the year following the year of payments.
TAXATION OF QUALIFIED PLANS, TSAS AND IRAS
The tax rules applicable to participants in retirement plans that qualify
for special federal income tax treatment vary according to the type of plan and
its terms and conditions.
Increases in the value of a Contract are not subject to tax until received
by the employee or his beneficiary. Monthly annuity payments under Qualified
Plans, TSAs and IRAs are taxed as described
24
<PAGE>
above (see "TAXATION OF CONTACTS IN GENERAL"), except that the "investment in
the Contract" under a Qualified Plan is normally the gross amount of purchase
payment made by the employee under the Contract or made by the employer on the
employee's behalf and included in the employee's taxable income when made.
If the Annuitant receives a distribution that qualifies as a "lump sum
distribution" under the Code, he or she may be eligible for special "5-year
averaging" treatment of the funds received (or "10-year averaging" treatment if
he or she was age 50 or older on January 1, 1986). TSAs and IRAs are not
eligible for the special treatment under the "lump sum distribution" rules.
Certain TSA contributions may not be distributed to the Annuitant until age
59 1/2, death, disability, separation of service or hardship. Distributions
from Qualified Plans, IRAs and TSAs may be subject to a 10% penalty tax on
amounts withdrawn before age 59 1/2. However, the following distributions from
Qualified Plans (and TSAs and IRAs except as otherwise noted) are not subject
to the penalty: (1) payments made to a beneficiary (or the estate of an
Annuitant) on or after the death of the Annuitant; (2) payments attributable to
an Annuitant becoming disabled; (3) substantially equal periodic payments made
(at least annually) for the lifetime (or life expectancy) of the Annuitant or
for the joint lifetimes (or joint life expectancies) of the Annuitant and the
beneficiary (for Qualified Plans and TSAs, payments can only begin after the
employee separates from service); (4) payment for certain medical expenses (not
applicable to IRAs); (5) payment after age 55 and separation from service (not
applicable to IRAs); and (6) payments to an alternate payee pursuant to a
qualified domestic relations order under Code Section 414(p) (not applicable to
IRAs). Excess retirement accumulations may be subject to a 15% penalty tax.
Excess distributions may be subject to a 15% excise tax.
IRAs and contributions under Sections 401, 403(b) and 457 are subject to
limitations on the amount that may be contributed. The deductibility of
contributions by individuals or their spouses who are active participants in an
employer-maintained pension or profit-sharing plan may be reduced based on the
individual's adjusted gross income. In addition, certain distributions from
Qualified Plans and TSAs may be placed into an IRA on a tax-deferred basis.
In general, tax law requires that minimum distributions be made from
Qualified Plans, TSAs and IRAs beginning at age 70 1/2 or following the death
of the participant. To avoid penalty taxes of 50 percent or more, required
distributions, including distributions which should have been distributed in
prior years, should not be rolled over to IRAs.
Distributions from Qualified Plans and TSAs are subject to mandatory
federal income tax withholding. MML is required to withhold 20% when a payment
from a Qualified Plan or TSA is an "eligible rollover distribution" and such
payment is not directly rolled over to another Qualified Plan, TSA or IRA. In
general, an "eligible rollover distribution" is any taxable distribution other
than: (1) payments for the life (or life expectancy) of the Annuitant, or for
joint life (or joint life expectancies) of the Annuitant and the beneficiary;
(2) payments made over a period of ten years or more; and (3) required minimum
distributions (see above). Plan administrators should be able to tell
Annuitants what other payments are not "eligible rollover distributions".
Taxable distributions that are not "eligible rollover distributions" are
subject to the withholding rules for annuities (see "Tax Withholding").
TAXATION OF SECTION 457 PLANS
The amount deferred, including interest, under section 457 plans generally
will not be taxable until paid or otherwise made available to the employee, and
at that time will be taxable as ordinary income. Distributions from section 457
plans are not eligible for special income averaging treatment or for rollover
to IRAs.
25
<PAGE>
Section 457 plans are subject to restrictions on the amount that may be
deferred. All investments under the plan, including the Contract, are owned by
the employer and are subject to the claims of the employer's creditors. The
employee has no rights or vested interest in the Contract, and is only entitled
to payment from the employer in accordance with the Section 457 plan
provisions.
In general, tax law prohibits distributions from section 457 plans prior to
age 70 1/2 or separation from service with the employer, and requires that
minimum distributions commence at age 70 1/2 or following the death of the
participant.
ARE THERE ANY MATERIAL LEGAL PROCEEDINGS AFFECTING THE ACCOUNT?
No.
(SET OUT BELOW IS THE TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL
INFORMATION. THIS STATEMENT MAY BE OBTAINED BY CALLING THE NUMBER ON THE COVER
OF THIS PROSPECTUS AND ASKING FOR THE PANORAMA SEPARATE ACCOUNT STATEMENT OF
ADDITIONAL INFORMATION.)
26
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Purchase of Contracts................................................................................ B-3
Sales Charges........................................................................................ B-3
How the Charges Under These Contracts are Made....................................................... B-4
Redemptions.......................................................................................... B-4
Contracts That are Subject to Sales Charges.......................................................... B-4
Administrator........................................................................................ B-4
Underwriting Arrangements............................................................................ B-5
How Annuity Payments are Determined.................................................................. B-5
How the Value of the Deferred Contract is Determined................................................. B-6
How the Accumulation Unit Value is Determined........................................................ B-6
Distribution on Death of Contract Holder............................................................. B-6
Valuing the Underlying Funds Shares.................................................................. B-7
Independent Public Accountants....................................................................... B-7
Investment Performance Calculations.................................................................. B-7
Money Market Sub-Account Yield....................................................................... B-7
Sub-Account Total Return Calculations: Standardized.................................................. B-8
FINANCIAL STATEMENTS
Supplemental Financial Statements of MML
Report of Independent Public Accountants for MML................................................... F-1
The Separate Account............................................................................... F-20
Financial Statements of the Panorama Separate Account.............................................. F-22
Appendix -- General Formulae
</TABLE>
27
<PAGE>
APPENDIX A
IRA DISCLOSURE STATEMENT
FOR USE WITH THE MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
PROTOTYPE IRA
This statement is designed to assist you in understanding the requirements
of Federal tax law which apply to your Individual Retirement Annuity ("IRA"),
Spousal IRA or your Simplified Employee Pension IRA ("SEP-IRA") for employer
contributions. If you should desire further information regarding your IRA, it
may be obtained either from your registered representative or from any district
office of the Internal Revenue Service.
The growth in value of the annuity is neither guaranteed nor projected.
SEVEN-DAY REVIEW PERIOD
You have seven (7) days after you sign your application to review this
statement and the Prospectus without obligation. If you notify your
representative either orally or in writing within this seven-day period that
you do not wish to keep your contract, your entire Purchase Payment will be
refunded to you.
<TABLE>
<S> <C>
Registered
Representative: ------------------------------------
Address: 140 Garden Street
Hartford, Connecticut 06154
Telephone: (800) 234-5606
</TABLE>
ELIGIBILITY REQUIREMENTS
All persons with earned compensation are eligible for Individual Retirement
Annuities ("IRAs"). Additionally, if you have a spouse who has earned no
compensation (and you file a joint tax return), you may establish an IRA on
behalf of your spouse. Of course, if you have a working spouse who has earned
compensation, that spouse may establish his or her own IRA. Lastly, a divorced
or legally separated spouse may treat taxable alimony or separate maintenance
payments as compensation for purposes of establishing an IRA.
THE ANNUITY AS AN IRA
When this Annuity is issued as an IRA, the contract is amended to provide
that the contract is both non-transferable and non-forfeitable.
CONTRIBUTIONS AND DEDUCTIONS
As a result of significant changes made by the Tax Reform Act of 1986,
contributions to your IRA are limited at two levels. First, there are limits on
the amount of contributions which may be deducted for income tax purposes.
Second, there is a limit with respect to the amount of nondeductible
contributions which can be made.
If neither you nor your spouse (if you file a joint return) is an active
participant in an employer-maintained retirement plan, then you are eligible to
make deductible contributions to an IRA equal to the lesser of 100% of
compensation or $2,000 ($2,250 in the case of a Spousal IRA -- see below).
However, if you or your spouse (if you file a joint return) is an active
participant in an employer-maintained retirement plan, your deduction limit for
contributions to an IRA is reduced. Specifically, individuals with adjusted
gross income over $35,000, married taxpayers filing jointly with adjusted gross
income over $50,000, and a married taxpayer filing separately with adjusted
gross income over $10,000, are no longer allowed any IRA deductions if they
participate in an employer-maintained retirement plan. In the case of a married
couple filing jointly, the restrictions apply where either spouse so
participates. For single individuals with adjusted gross income between $25,000
and $35,000, married taxpayers filing jointly with adjusted gross income
between $40,000 and $50,000, and a married taxpayer filing separately with
adjusted gross income between $0 and $10,000, the IRA deduction will be phased
out ratably as income rises above the threshold limits.
A-1
<PAGE>
Nevertheless, you may still make designated nondeductible IRA contributions
to the extent of the excess of (1) the lesser of $2,000 ($2,250 in the case of
a Spousal IRA), or 100% of compensation annually, over (2) the applicable IRA
deduction limit. You may also choose to make a contribution nondeductible even
if you could have deducted part or all of the contribution. Interest or other
earnings on your IRA contribution, whether from deductible or nondeductible
contributions, will not be taxed until distributed to you.
For purposes of the above discussion, you are an "active participant" in an
employer-maintained retirement plan, if you are covered by such plan, even if
you are not yet vested in your retirement benefit. However, an individual who
is a participant in an eligible state deferred compensation plan, as defined in
Code section 457(b), is not considered to be an "active participant".
In order to qualify for a particular tax year, IRA contributions must be
made during such tax year or by the deadline for filing your income tax return
for that year (not including extensions). For calendar year taxpayers the
deadline is generally April 15.
If you make contributions in excess of the combined deductible and
nondeductible limits, you may be liable for a nondeductible excise tax of 6% of
the amount of the excess. You may withdraw an excess contribution together with
the net income attributable to the excess, on or before the due date (including
extensions of time) for filing your Federal income tax return and the excess
amount will be treated as if you never contributed it, regardless of the size
of the contribution. The accompanying distribution of the net income, however,
is includible in income for the year in which the excess contribution is made.
Excess amounts which are not withdrawn by this method are subject to the 6%
excise tax in the year of contribution and are carried over and taxed each year
until the year the excess is reduced.
No contribution may be made by you to your IRA during or after the tax year
in which you attain age 70 1/2.
SPOUSAL IRAS
If your spouse has no compensation for the year and you file a joint
return, you may set up and make contributions to an IRA for your spouse, as
well as for yourself. Subject to the active participant rules discussed
above, the maximum amount that you can deduct for contributions to both
IRAs is the lesser of $2,250, or 100% of compensation. You may not deduct,
however, more than $2,000 to either IRA for any year.
SEP-IRAS
Under a SEP-IRA agreement, your employer may contribute 15% of your
compensation, up to $30,000, to your IRA each year. The contribution and
interest earned is excludable from your income until such time as it is
distributed to you.
You must withdraw any excess contribution made to your SEP-IRA by your
employer before the date for filing your return. If you do not, you are liable
for the 6% excise tax discussed above. SEP-IRAs are also generally subject to
the other requirements applicable to IRAs.
ROLLOVER CONTRIBUTIONS AND TRANSFERS
You are permitted to withdraw any portion of the value of your IRA and
reinvest it in another individual retirement annuity or account, but not more
frequently than once in any one-year period. Such withdrawals may also be made
from other IRAs and contributed to this contract. Such a withdrawal of funds
from one IRA and subsequent reinvestment in another IRA is called a "rollover
contribution". In order to qualify as a tax-free rollover contribution, the
entire portion of the withdrawal must be reinvested in another IRA within 60
days after the date it is received. Of course, you will not be allowed a tax
deduction for the amount of any rollover contribution.
A similar type of rollover contribution can be made with the proceeds of an
eligible rollover distribution or a lump-sum distribution from a qualified
retirement plan. Such a distribution must also be invested in the IRA within 60
days of receipt. A lump sum distribution is one made from a
A-2
<PAGE>
Qualified Plan: (1) because of your death; (2) after you reached age 59 1/2;
(3) because you left your job (unless you are self-employed); or (4) after you
become permanently disabled (but only if you are self-employed). To be
considered a lump sum, the distribution must also be made entirely in a single
tax year and must represent the entire value of your account in the retirement
plan (and in all plans of a similar type sponsored by the same employer).
Properly made, such a distribution will not be taxable until you receive
payments from the IRA created with it. Unless you were a self-employed
participant in the distributing plan, you may later roll over such a
contribution to another qualified retirement plan as long as you have not mixed
it with any IRA contributions you have deducted from your income.
Eligible rollover distributions are generally all taxable distributions
from Qualified Plans and Section 403(b) annuities except for: (1) amounts
paid over your life or life expectancy; or (2) installments for periods of
years spanning ten (10) years or more; or (3) required minimum distributions.
Also, if you receive a distribution on account of a plan termination you
may make a rollover contribution to an IRA.
In addition to rollover contributions, you may also have the assets of one
IRA directly transferred (without any distribution to you) to another IRA.
Direct IRA to IRA transfers are not subject to the one-year waiting period
applicable to IRA rollover contributions.
WITHDRAWALS
If you withdraw an amount from an IRA during a tax year and you have made
both deductible and nondeductible IRA contributions, the part of the withdrawal
that is from nondeductible contributions (not including interest) is excludable
from income. The amount excludable from income for the tax year is the portion
of the amount withdrawn that has the same ratio to the amount withdrawn as your
total nondeductible IRA contributions (of all your IRAs) have to the total
balance of all your IRAs, including rollover IRAs. The remaining portion of the
amount withdrawn for the tax year is includable in income. For purposes of this
calculation, all your IRAs are treated as one contract and all withdrawals you
make during a tax year are treated as one distribution and the value of the
contract (after adding back distributions made during the year), income on the
contract and investment in the contract are computed at the end of the year.
PREMATURE DISTRIBUTIONS
Premature distributions are amounts you withdraw from your IRA before you
are age 59 1/2. Premature distributions which do not qualify for rollover
treatment are subject to a penalty tax equal to 10% of the amount of the
distribution includable in gross income in the tax year, unless you are totally
disabled or receive the distributions in substantially equal payments (at least
annually) for your life or life expectancy or the joint lives or life
expectancies of you and your beneficiary or unless the distributions are made
to your beneficiary on account of your death.
The penalty tax is also applicable to income taxable distributions deemed
to have been made upon disqualification of your IRA as a result of a prohibited
transaction (including, in general, the sale or assignment of your interest in
your IRA to anyone), or as a result of borrowing on your IRA, or using your IRA
as security for a loan.
INADEQUATE OR UNDER DISTRIBUTION -- 50% TAX
Your IRA is intended to provide retirement benefits over your lifetime.
Thus, Federal law requires that you either (1) receive a lump sum distribution
from your IRA not later than April 1st of the year after the year in which you
attain age 70 1/2 or (2) start to receive periodic payments by that date. If
you elect to receive periodic payments, those payments must be sufficient to
pay out the entire value of your IRA during your life or life expectancy (or
over the life or life expectancies of you and your beneficiary). If the
payments are not sufficient to meet these requirements, an excise tax of 50%
will be imposed on the amount of any underpayment.
A-3
<PAGE>
EXCESS DISTRIBUTIONS -- 15% TAX
Certain persons, particularly those who participate in more than one
tax-qualified retirement plan, may be subject to an excise tax of 15% on
certain excess aggregate distributions from those plans. In general,
excess distributions are taxable distributions from all tax-qualified plans in
excess of a specified annual limit for payments made in the form of an annuity
(generally, $150,000 for 1987, indexed for inflation), or five (5) times the
annual limit for lump sum distributions.
DEATH BENEFITS
If you should die before receiving any benefits from your IRA, your
beneficiary must either elect (1) to receive the balance of your account in a
lump sum within five (5) years of your death, or (2) have the balance applied
to purchase an immediate annuity payable over the life or life expectancy of
the beneficiary. Such annuity must commence within one year of your death. If
your spouse is your beneficiary, however, distributions are not required to be
distributed until the date you would have attained age 70 1/2, and if your
spouse dies before any distribution to him or her commences, your spouse is
treated as the owner of your IRA for purposes of any required distributions.
PROHIBITED TRANSACTIONS
If you engage in certain prohibited transactions with your IRA, the IRA
will lose its exemption from taxation. Depending on the type of prohibited
transaction, you must include in income all or a portion of the fair market
value of the IRA account. Examples of prohibited transactions are: (1) any
borrowing from the account; (2) use of the account as security for a loan; (3)
receipt by you or certain family members of unreasonable compensation for
managing the IRA.
If you should die after benefits have commenced to you, the remaining
portion of your account must be distributed to your beneficiary as rapidly as
under the method of distribution in effect on the date of your death.
PROTOTYPE STATUS
The Internal Revenue Service will be asked to review the format of your
Massachusetts Mutual Life Insurance Company Prototype IRA and to issue an
opinion letter to Massachusetts Mutual Life Insurance Company stating that it
qualifies as a prototype IRA. An opinion letter is a determination only as to
the form of the IRA, and does not represent a determination as to its merits.
REPORTING TO THE IRS
If you make a designated nondeductible contribution to an IRA for a taxable
year or receive a distribution from an IRA during a taxable year, you are
required to provide such information as the IRS may prescribe on your tax
return for the taxable year, and, to the extent required, for succeeding
taxable years. The information that may be required includes, but is not
limited to: (1) the amount of designated nondeductible contributions for the
taxable year; (2) the total amount of designated nondeductible contributions
for all preceding taxable years that have not previously been withdrawn;
(3) the total balance of all your IRAs as of the close of the calendar year
with or within which the taxable year ends; and (4) the amount of distributions
from your IRAs during the taxable year. If the required information is not
shown on your return, all IRA contributions are presumed to have been
deductible. Therefore, they will be taxable upon withdrawal from the IRA,
unless it can be shown, with satisfactory evidence, that the contributions
were nondeductible when they were made.
Whenever you are liable for one of the penalty taxes discussed above (6%
for excess contributions, 10% for premature distributions, 50% for
underpayments, or 15% for excess distributions), you must file Form 5329 with
the Internal Revenue Service. The form is to be attached to your income tax
return (Form 1040) for the tax year in which the penalty applies.
FINANCIAL DISCLOSURE
The charges which may be made against a contribution to your IRA include
the Custodian's fees (set forth in the Adoption Agreement), and the mortality
and expense risk fee, and other fees for the
A-4
<PAGE>
Account set forth on page 3 of the Account Prospectus. The charges which may be
made against a withdrawal are also described in the Prospectus, and you should
read the Panorama Account Prospectus carefully and retain it for your future
reference.
A-5
