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SUPPLEMENT TO PROSPECTUS
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
DATED MAY 1, 1998
EXCHANGE OFFER
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
VARIABLE ANNUITY CONTRACTS
EXCHANGE OFFER
In the states of Maryland and Oregon, the contracts described in Appendix C
to this Prospectus ("New Contracts") may be issued in exchange for contracts
previously issued by The Manufacturers Life Insurance Company of America
("ManAmerica"), an affiliate of the Company. The ManAmerica annuity contracts
were offered through the Lifestyle Multi-Account Flexible Payment Variable
Annuity ("Lifestyle Annuity") and through the Multi-Account Flexible Payment
Variable Annuity ("Manulife Annuity"). Lifestyle Annuity contracts and Manulife
Annuity contracts are collectively referred to as "Old Contracts."
The Company will permit an owner of an outstanding Old Contract to exchange
the Old Contract for a New Contract without the imposition of a withdrawal
charge at the time of exchange, except a possible market value adjustment as
described below. For purposes of computing the applicable withdrawal charge upon
any withdrawals made subsequent to the exchange, the New Contract will be deemed
to have been issued on the date the Old Contract was issued, and any purchase
payment credited to the Old Contract will be deemed to have been credited to the
New Contract on the date it was credited under the Old Contract. The death
benefit under the New Contract on the date of its issue will be the contract
value under the Old Contract on the date of exchange, and will "step up"
annually thereafter as described in paragraph "4." below.
Old Contract owners interested in a possible exchange should carefully
review both the Old Contract prospectus and the remainder of this Prospectus
before deciding to make an exchange.
AN EXCHANGE MAY NOT BE IN THE BEST INTERESTS OF AN OWNER OF AN OLD
CONTRACT. Further, under Lifestyle Annuity contracts, a market value adjustment
may apply to any amounts transferred from a fixed investment account in
connection with an exchange. (Reference should be made to the discussion of the
market value adjustment under "Market Value Adjustment" in the Lifestyle Annuity
prospectus.) The Company believes that an exchange as described above will not
be a taxable event for Federal tax purposes; however, any owner considering an
exchange should consult a tax adviser. The Company reserves the right to
terminate this exchange offer or to vary its terms at any time.
THE PRINCIPAL DIFFERENCES BETWEEN THE MANULIFE ANNUITY AND THE NEW CONTRACT
ARE AS FOLLOWS:
1. NUMBER OF VARIABLE INVESTMENT OPTIONS AND FIXED ACCOUNT INVESTMENT
OPTIONS
The Manulife Annuity has eight variable investment options whereas the New
Contract has thirty five variable investment options. The Manulife Annuity has a
Guaranteed Interest Account whereas the New Contract offers four fixed account
investment options: one, three and six year guaranteed investment accounts and a
dollar cost averaging fixed investment account.
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2. SURRENDER CHARGES
The surrender charges under the New Contract will be lower in certain
cases. The surrender charges under the Manulife Annuity and the New Contract are
as follows:
<TABLE>
<CAPTION>
New Contract Manulife Annuity
- ------------ ----------------
Number of Complete Years Withdrawal Charge Number of Complete Years Withdrawal Charge
Purchase Payments In Percentage Purchase Payments in Percentage
Contract Contract
<S> <C> <C> <C>
0 6% 0 8%
1 6% 1 7%
2 5% 2 6%
3 4% 3 5%
4 3% 4 4%
5 2% 5 3%
6+ 0% 6 2%
7 1%
Thereafter 0
</TABLE>
3. SEPARATE ACCOUNT ANNUAL EXPENSES; CONTRACT OWNER TRANSACTION EXPENSES
The New Contract and the Manulife Annuity have different separate account
and annual expenses as well as different contract owner transaction expenses as
noted in the chart below:
New Contract Separate Account Annual Expenses
- ---------------------------------------------
(as a percentage of average account value)
<TABLE>
<CAPTION>
Separate Account Annual Expenses
<S> <C>
Mortality and expense risk fees 1.25%
Administration fee - asset based 0.15%
----
Total Separate Account Annual Expenses 1.40%
New Contract Owner Transaction Expenses
- ---------------------------------------
Annual Administration Fee $30
Dollar Cost Averaging Charge none
Manulife Annuity Separate Account Annual Expenses
- -------------------------------------------------
(as a percentage of average account value)
Separate Account Annual Expenses
Mortality and expense risk fees 1.00%
Total Separate Account Annual Expenses 1.00%
</TABLE>
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<TABLE>
<CAPTION>
Manulife Annuity Contract Owner Transaction Expenses
- ----------------------------------------------------
<S> <C>
Annual Contract Fee $30*
Dollar Cost Averaging Charge
(if selected and applicable) $ 5**
</TABLE>
* An administration fee equal to 2% of the total policy value up to a maximum of
$30 is deducted during the accumulation period on the last day of a policy year
if the total policy value on that date is less than $25,000. The fee is also
deducted on a pro rata basis upon full surrender of a policy on a date other
than the last day of a policy year.
**Transfers pursuant to the optional Dollar Cost Averaging program are free if
policy value exceed $15,000 at the time of the transfer, but otherwise incur a
$5 charge.
4. MINIMUM DEATH BENEFIT
Differences Between Death Benefit of Manulife Annuity and New Contract are
as follows:
Minimum Death Benefit for Manulife Annuity
Manulife Annuity does not have a minimum death benefit. Until a lump-sum
distribution is made or an annuity option is elected, the variable policy value
will continue to reflect the investment performance of the selected variable
account unless a transfer or withdrawal is made by the beneficiary.
Minimum Death Benefit for New Contracts
The minimum death benefit during the first six contract years will be equal
to the greater of: (a) the contract value on the date due proof of death and all
required claim forms are received at the Company's Annuity Service Office, or
(b) the sum of all purchase payments made, less any amount deducted in
connection with partial withdrawals. During any subsequent contract year period,
the minimum death benefit will be the greater of: (a) the contract value on the
date due proof of death and all required claim forms are received at the
Company's Annuity Service Office, or (b) the minimum death benefit on the last
day of the previous contract year period plus any purchase payments made and
less any amount deducted in connection with partial withdrawals since then. If
the annuitant dies after the first of the month following his or her 85th
birthday, the minimum death benefit will be the greater of the contract value or
the excess of the sum of all purchase payments less the sum of any amounts
deducted in connection with partial withdrawals on the date due proof of death
and all required claim forms are received at the Company's Annuity Service
Office.
5. ANNUITY PURCHASE RATES
The annuity purchase rates guaranteed in the New Contract are based on the
1983 Table A projected at Scale G, assume births in year 1942 and reflect an
assumed interest rate of 4% per year. The annuity purchase rates guaranteed in
the Manulife Annuity are based on the 1983 Individual Annuity Mortality Tables
and an assumed interest rate of 4% per year.
6. ANNUITY PAYMENTS
Annuity payments under the Manulife Annuity will be made on a fixed basis
only whereas annuity payments under the New Contract may be made on a fixed or
variable basis or a combination of fixed and variable bases.
* * * *
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THE PRINCIPAL DIFFERENCES BETWEEN THE LIFESTYLE ANNUITY AND THE NEW
CONTRACTS ARE AS FOLLOWS:
1. NUMBER OF VARIABLE INVESTMENT OPTIONS
The Lifestyle Annuity has eight variable investment options whereas the New
Contract has thirty five variable investment options.
2. FIXED ACCOUNT INVESTMENT OPTIONS
The Lifestyle Annuity has a Guaranteed Interest Account as well as Fixed
Accounts with guarantee periods ranging from 1 to 10 years whereas the New
Contract offers four fixed account investment options: one, three and six year
guaranteed investment accounts and a dollar cost averaging fixed investment
account. The market value adjustment for the Lifestyle Annuity Fixed Accounts is
different from the market value charge for the New Contract fixed account
investment options. The Lifestyle Annuity adjustment and the New Contract charge
both reduce the withdrawal amount when current interest rates are higher than
the credited rate on the fixed investment although the magnitude of the
adjustments may differ due to differences in adjustment formulas. The Lifestyle
Annuity adjustment also provides upside potential, increasing the withdrawal
value when current interest rates are lower than the fixed account credited
rate. The New Contract charge does not provide this upside potential. See
"Market Value Adjustment" in the Lifestyle Annuity prospectus and "Fixed Account
Investment Options" in the New Contract prospectus.
3. SURRENDER CHARGES
The surrender charges under the New Contract is different from the
Lifestyle Annuity. The surrender charges under the Lifestyle Annuity and the New
Contract are as follows:
<TABLE>
<CAPTION>
Lifestyle Annuity New Contract
- ----------------- ------------
Number of Complete Years Withdrawal Charge Number of Complete Years Withdrawal Charge
Purchase Payments In Percentage Purchase Payments in Percentage
Contract Contract
<S> <C> <C> <C>
0 8% 0 6%
1 8% 1 6%
2 8% 2 5%
3 6% 3 4%
4 4% 4 3%
5 2% 5 2%
6+ 0% 6+ 0%
</TABLE>
4. SEPARATE ACCOUNT AND FIXED ACCOUNT EXPENSES; CONTRACT OWNER TRANSACTION
EXPENSES
The New Contract and the Lifestyle Annuity have different separate account
and fixed account annual expenses as well as different contract owner
transaction expenses as noted in the chart below:
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New Contract Separate Account Annual Expenses
- ---------------------------------------------
(as a percentage of average account value)
<TABLE>
<CAPTION>
Separate Account Annual Expenses
<S> <C>
Mortality and expense risk fees 1.25%
Administration fee - asset based 0.15%
----
Total Separate Account Annual Expenses 1.40%
New Contract Owner Transaction Expenses
- ---------------------------------------
Annual Administration Fee $30
Dollar Cost Averaging Charge none
</TABLE>
Lifestyle Annuity Separate Account Annual Expenses
- --------------------------------------------------
<TABLE>
<CAPTION>
Separate Account Annual Expenses
Mortality and Expense Risk Charge Annual Rate
-----------
<S> <C>
Charged daily as a percentage of average Variable Account Values* 0.80%
Charged monthly as a percentage of the policy month-start
Variable and Fixed Account Assets* 0.45%
----
1.25%
Other Separate Account Expenses
Charge for administration charged daily as a percentage of average
Variable Account Values 0.20%
----
Total Separate Account Annual Expenses 1.45%
</TABLE>
<TABLE>
<CAPTION>
Lifestyle Annuity Contract Owner Transaction Expenses
- -----------------------------------------------------
<S> <C>
Record Keeping Charge $30**
Dollar Cost Averaging Charge
(if selected and applicable) $ 5***
</TABLE>
*A mortality and expense risk charge of 0.80% per annum is deducted daily from
separate account assets, and a mortality and expense risk charge of 0.45% per
annum is deducted monthly from variable policy values and fixed account values.
**A record-keeping charge of 2% of the policy value up to a maximum of $30 is
deducted during the accumulation period on the last day of a policy year. The
charge is also deducted upon full surrender of a policy on a date other than the
last day of a policy year.
***Transfers pursuant to the optional Dollar Cost Averaging program are free if
policy value exceeds $15,000 at the time of the transfer, but otherwise incur a
$5 charge.
5. MINIMUM DEATH BENEFIT
Differences Between the Minimum Death Benefit of Lifestyle Annuity and the
New Contract are as follows:
Minimum Death Benefit for Lifestyle Annuity
Upon the occurrence of the death of the original policy owner, ManAmerica
will compare the policy value to the Survivor Benefit Amount (described below)
and, if the policy value is lower, ManAmerica will deposit sufficient funds into
the Money-Market Variable Account to make the policy value equal the Survivor
Benefit Amount. Any funds which ManAmerica deposits into the Money-Market
Variable Account will not be deemed a purchase payment for purposes of
calculating withdrawal charges.
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The Survivor Benefit Amount is calculated as follows: (1) when the policy
is issued, the Survivor Benefit Amount is set equal to the initial purchase
payment; (2) each time a purchase payment is made, the Survivor Benefit Amount
is increased by the amount of the purchase payment; (3) each time a withdrawal
is made, the Survivor Benefit Amount is reduced by the same percentage as the
Gross Withdrawal Amount (withdrawal amounts prior to deduction of charges and
any adjustment for applicable market value adjustments) bears to the policy
value; (4) in jurisdictions where it is allowed, on every sixth policy
anniversary ManAmerica will set the Survivor Benefit Amount to the greater of
its current value or the policy value on that policy anniversary, provided the
original contract owner is still alive and is not older than age 85.
Minimum Death Benefit for New Contracts
The death benefit for the New Contracts is described above under "4. DEATH
BENEFIT."
6. ANNUITY PAYMENTS
Annuity payments under the Lifestyle Annuity will be made on a fixed basis
only whereas annuity payments under the New Contract may be made on a fixed or
variable basis or a combination of fixed and variable bases.
7. ANNUITY VALUE GUARANTEE
The Lifestyle Annuity guarantees that, in those jurisdictions where
permitted, under certain conditions the policy value available at the annuity
commencement date will be the greater of the policy value or an amount
reflecting the purchase payment and withdrawals made by the contract owner (the
"Annuity Value Guarantee") The New Contract does not have an Annuity Value
Guarantee.
8. ANNUITY PURCHASE RATES
The annuity purchase rates guaranteed in the New Contract are based on the
1983 Table A projected at Scale G, assume births in year 1942 and reflect an
assumed interest rate of 4% per year. The annuity purchase rates guaranteed in
the Lifestyle Annuity are based on the 1983 Individual Annuity Mortality Tables
and an assumed interest rate of 3% per year.
* * * *
Contract owners who do not wish to exchange their Old Contracts for the New
Contracts may continue to make purchase payments to their Old Contracts. Or,
they can keep their Old Contracts and buy a New Contract to which to apply
additional purchase payments.
The above comparison does not take into account differences between the Old
Contracts, as amended by qualified plan endorsements, and the New Contracts, as
amended by similar qualified plan endorsements. Owners using their Old Contract
in connection with a qualified plan should consult a tax advisor. See also the
Federal Tax Matters section of this prospectus and the Old Contract
prospectuses.
THE DATE OF THIS SUPPLEMENT IS MAY 1, 1998.
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