<PAGE> 1
As filed with the Securities and Exchange Commission on February 28, 2000.
Registration No. 33-76684
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO.8
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
(formerly NASL Variable Account)
(Exact name of Registrant)
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
(formerly North American Security Life Insurance Company)
(Name of Depositor)
500 Boylston Street
Suite 400
Boston, Massachusetts 02116
(Address of Depositor's Principal Executive Offices)
(617) 663-3000
(Depositor's Telephone Number Including Area Code)
<TABLE>
<S> <C>
James D. Gallagher, Esq.
Vice President, Secretary Copy to:
and General Counsel J. Sumner Jones, Esq.
The Manufacturers Life Insurance Company Jones & Blouch, L.L.P.
of North America 1025 Thomas Jefferson Street, N.W.
73 Tremont Street Washington, DC 20007
Boston, Massachusetts 02108
(Name and Address of Agent for Service)
</TABLE>
-----------------------------
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
___ on (date) pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
_X_ on May 1, 2000 pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following box:
___ this post-effective amendment designated a new effective date for a
previously filed post-effective amendment.
*The Prospectus contained in this registration statement also relates to
variable annuity contracts no longer being sold but for which additional
purchase payments are accepted and which are covered by an earlier registration
statement under File No. 33-49604.
<PAGE> 2
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA SEPARATE ACCOUNT A
CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-4
<TABLE>
<CAPTION>
N-4 Item Caption in Prospectus
Part A ---------------------
- ------
<S> <C>
1................................. Cover Page
2................................. Special Terms
3................................. Summary
4................................. Values; Performance Data; Financial
Statements
5................................. General Information about Us, The Variable
Account and The Trust
6................................. Charges and Deductions; Withdrawal Charges;
Reduction or Elimination of Withdrawal
Charge; Administration Fees; Reduction or
Elimination of Annual Administration Fee;
Mortality and Expense Risk Charge; Taxes;
Appendix C - Example of Calculation of
Withdrawal Charge; Appendix D - State
Premium Taxes
7................................. Accumulation Period Provisions; Our
Approval; Purchase Payments; Accumulation
Units; Net Investment Factor; Transfers
Among Investment Options; Telephone
Transactions; Special Transfer Services -
Dollar Cost Averaging; Asset Rebalancing
Program; Withdrawals; Special Withdrawal
Services - the Income Plan; Contract Owner
Inquiries; Other Contract Provisions;
Ownership; Beneficiary; Modification
8................................. Pay-out Period Provisions; General; Annuity
Options; Determination of Amount of the
First Variable Annuity Payment; Annuity
Units and the Determination of Subsequent
Variable Annuity Payments; Transfers During
the Pay-out Period
9................................. Accumulation Period Provisions; Death
Benefit During Accumulation Period; Pay-out
Period Provisions; Death Benefit During
Pay-out Period
10................................ Accumulation Period Provisions; Purchase
Payments; Accumulation Units; Value of
Accumulation Units; Net Investment Factor;
Distribution of Contracts
11................................ Withdrawals; Restrictions under the Texas
Optional Retirement Program; Accumulation
Period Provisions; Purchase Payments; Other
Contract Provisions; Ten Day Right to Review
12................................ Federal Tax Matters; Introduction; Our Tax
Status; Taxation of Annuities in General;
Qualified Retirement Plans
13................................ Legal Proceedings
14................................ Statement of Additional Information - Table
of Contents
</TABLE>
<TABLE>
<CAPTION>
N-4 Item Caption in Statement of
Part B Additional Information
- ------ ----------------------
<S> <C>
15................................ Cover Page
16................................ Table of Contents
17................................ General History and Information.
18................................ Services-Accountants; Services-Servicing Agent
19................................ Not Applicable
20................................ Principal Underwriter
21................................ Performance Data
22................................ Not Applicable
23................................ Financial Statements
</TABLE>
<PAGE> 3
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE> 4
<TABLE>
<S> <C>
ANNUITY SERVICE OFFICE MAILING ADDRESS
500 Boylston Street, Suite 400 Post Office Box 9230
Boston, Massachusetts 02116-3739 Boston, Massachusetts 02205-9230
(617) 663-3000 or (800) 344-1029
</TABLE>
THE MANUFACTURERS LIFE INSURANCE COMPANY
OF NORTH AMERICA SEPARATE ACCOUNT A
OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
FLEXIBLE PURCHASE PAYMENT DEFERRED
COMBINATION FIXED AND VARIABLE ANNUITY CONTRACT
NON-PARTICIPATING
This Prospectus describes an annuity contract issued by The
Manufacturers Life Insurance Company of North America ("WE" or "US"). The
contract is a flexible purchase payment, deferred, combination fixed and
variable annuity contract, including both an individual contract and a
participating interest in a group contract. Participation in a group contract
will be separately accounted for by the issuance of a certificate evidencing
your interest under the contract. An individual contract will usually be issued
only where a group contract may not be used. The certificate and individual
annuity contract are hereafter referred to as the "CONTRACT." Contract values
and annuity benefit payments are based upon forty-six investment options.
Forty-one options are variable and five are fixed account options.
- Contract values (other than those allocated to one of the
fixed accounts) and variable annuity benefit payments will
vary according to the investment performance of the
sub-accounts of one of our separate accounts, The
Manufacturers Life Insurance Company of North America Separate
Account A (the "VARIABLE ACCOUNT"). Contract values may be
allocated to, and transferred among, one or more of those
sub-accounts.
- Each sub-account's assets are invested in a corresponding
portfolio of a mutual fund, Manufacturers Investment Trust
(the "TRUST") or Merrill Lynch Variable Series Funds, Inc.
("MERRILL VARIABLE FUNDS"). We will provide the contract owner
("YOU") with prospectuses for the Trust and Merrill Variable
Funds with this Prospectus.
- SHARES OF THE TRUST AND MERRILL VARIABLE FUNDS ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY
BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR
ANY OTHER AGENCY.
- Except as specifically noted here and under the caption "FIXED
ACCOUNT INVESTMENT OPTIONS" below, this Prospectus describes
only the variable portion of the contract.
- Special terms are defined in a glossary in Appendix A.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. IT
CONTAINS INFORMATION ABOUT THE VARIABLE ACCOUNT AND THE VARIABLE PORTION OF THE
CONTRACT THAT YOU SHOULD KNOW BEFORE INVESTING.
THE CONTRACTS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("SEC"). NEITHER THE SEC NOR ANY STATE HAS DETERMINED
WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 5
- - ADDITIONAL INFORMATION about the contract and the Variable Account is
contained in a Statement of Additional Information, dated the same
date as this Prospectus, which has been filed with the SEC and is
incorporated herein by reference. The Statement of Additional
Information is available without charge upon request by writing us at
the address on the front cover or by telephoning (800) 344-1029.
- - The SEC maintains a Web site (http://www.sec.gov) that contains the
Statement of Additional Information and other information about us,
the contracts and the Variable Account.
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
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<S> <C>
General Information and History..................... 3
Performance Data.................................... 3
Service
Independent Auditors............................ 21
Servicing Agent................................. 22
Principal Underwriter........................... 22
Financial Statements................................ 23
</TABLE>
The date of this Prospectus is May 1, 2000.
VENTURE.PROS/2000(MLAM)
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY ................................................................................ 4
GENERAL INFORMATION ABOUT US, THE VARIABLE ACCOUNT, THE TRUST AND MERRILL VARIABLE FUNDS 14
The Manufacturers Life Insurance Company of North America ......................... 14
The Variable Account .............................................................. 14
The Trust ......................................................................... 15
Merrill Variable Funds ............................................................ 19
DESCRIPTION OF THE CONTRACT ............................................................ 20
ELIGIBLE GROUPS ..................................................................... 20
ACCUMULATION PERIOD PROVISIONS ...................................................... 20
Purchase Payments ................................................................. 20
Accumulation Units ................................................................ 21
Value of Accumulation Units ....................................................... 21
Net Investment Factor ............................................................. 22
Transfers Among Investment Options ................................................ 22
Maximum Number of Investment Options .............................................. 22
Telephone Transactions ............................................................ 23
Special Transfer Services - Dollar Cost Averaging ................................. 23
Asset Rebalancing Program ......................................................... 23
Withdrawals ....................................................................... 24
Special Withdrawal Services - the Income Plan ..................................... 25
Death Benefit During Accumulation Period .......................................... 26
PAY-OUT PERIOD PROVISIONS ........................................................... 29
General ........................................................................... 29
Annuity Options ................................................................... 30
Determination of Amount of the First Variable
Annuity Payment ................................................................... 31
Annuity Units and the Determination of
Subsequent Variable Annuity Payments ............................................ 31
Transfers During Pay-out Period ................................................... 32
Death Benefit During Pay-out Period ............................................... 32
OTHER CONTRACT PROVISIONS ........................................................... 32
Ten Day Right to Review ........................................................... 32
Ownership ......................................................................... 32
Annuitant ......................................................................... 33
Beneficiary ....................................................................... 33
Modification ...................................................................... 33
Our Approval ...................................................................... 33
Discontinuance of New Owners ...................................................... 34
Misstatement and Proof of Age, Sex or Survival .................................... 34
FIXED ACCOUNT INVESTMENT OPTIONS .................................................... 34
GUARANTEED RETIREMENT INCOME PROGRAM ................................................ 37
CHARGES AND DEDUCTIONS ................................................................. 39
Withdrawal Charges ................................................................ 40
Reduction or Elimination of Withdrawal Charge ..................................... 41
Administration Fees ............................................................... 42
Reduction or Elimination of Annual Administration
Fee ............................................................................. 42
Mortality and Expense Risks Charge ................................................ 42
Taxes ............................................................................. 43
Expenses of Distributing Contracts ................................................ 43
FEDERAL TAX MATTERS .................................................................... 43
INTRODUCTION ........................................................................ 43
OUR TAX STATUS ...................................................................... 44
TAXATION OF ANNUITIES IN GENERAL .................................................... 44
Tax Deferral During Accumulation Period ........................................... 44
Taxation of Partial and Full Withdrawals .......................................... 46
Taxation of Annuity Benefit Payments .............................................. 46
Taxation of Death Benefit Proceeds ................................................ 47
Penalty Tax on Premature Distributions ............................................ 47
Aggregation of Contracts .......................................................... 47
QUALIFIED RETIREMENT PLANS .......................................................... 48
Direct Rollovers .................................................................. 49
Loans ............................................................................. 25
FEDERAL INCOME TAX WITHHOLDING ......................................................... 49
GENERAL MATTERS ........................................................................ 50
Performance Data .................................................................. 50
Asset Allocation and Timing Services .............................................. 50
Restrictions under the Texas Optional
Retirement Program .............................................................. 50
Distribution of Contracts ......................................................... 51
Contract Owner Inquiries .......................................................... 51
Confirmation Statements ........................................................... 51
Legal Proceedings ................................................................. 51
Year 2000 Issues .................................................................. 51
Cancellation of Contract .......................................................... 52
Voting Interest ................................................................... 53
APPENDIX A: SPECIAL TERMS .............................................................. A-1
APPENDIX B: TABLE OF ACCUMULATION UNIT VALUES
FOR CONTRACTS DESCRIBED IN THIS PROSPECTUS ........................................ B-1
APPENDIX C: EXAMPLES OF CALCULATION OF
WITHDRAWAL CHARGE ................................................................. C-1
APPENDIX D: STATE PREMIUM TAXES ........................................................ D-1
APPENDIX E: PENNSYLVANIA MAXIMUM MATURITY
AGE ............................................................................... E-1
APPENDIX F: PRIOR CONTRACTS - VEN 7 AND VEN 8
CONTRACTS ......................................................................... F-1
APPENDIX G: PRIOR CONTRACTS - VEN 1 AND VEN 3
CONTRACTS ......................................................................... G-1
APPENDIX H: EXCHANGE OFFER - VEN 7 AND VEN 8
CONTRACTS ......................................................................... H-1
APPENDIX I: EXCHANGE OFFER - VEN 1 AND VEN 3
CONTRACTS ......................................................................... I-1
APPENDIX J: EXCHANGE OFFER - MANAMERICA
LIFESTYLE ANNUITY CONTRACTS ....................................................... J-1
APPENDIX K: EXCHANGE OFFER - MANAMERICA MULTI-
ACCOUNT FLEXIBLE PAYMENT VARIABLE ANNUITY ......................................... K-1
APPENDIX L: QUALIFIED PLAN TYPES ....................................................... L-1
</TABLE>
<PAGE> 7
SUMMARY
OVERVIEW OF THE CONTRACT. The contract offered by this Prospectus is a flexible
purchase payment deferred combination fixed and variable annuity contract. The
contract provides for the accumulation of contract values and the payment of
annuity benefits on a variable and/or fixed basis. The Prospectus describes both
participating interests in group deferred annuity contracts and individual
deferred annuity contracts.
Under the contract, you make one or more payments to us for a period of time
(the "ACCUMULATION PERIOD") and then later, beginning on the "MATURITY DATE" we
make one or more annuity benefit payments to you (the "PAY-OUT PERIOD").
Contract values during the accumulation period and the amounts of annuity
benefit payments during the pay-out period may either be variable or fixed,
depending upon the investment option(s) you select. You may use the contract to
fund either a non-qualified or tax-qualified retirement plan.
When you purchase a variable annuity for any tax-qualified retirement plan, the
variable annuity does not provide any additional tax deferred treatment of
earnings beyond the treatment provided by the plan. Consequently, you should
purchase a variable annuity for a tax-qualified plan only on the basis of other
benefits offered by the variable annuity. These benefits may include lifetime
income payments, family protection through the death benefit, and guaranteed
fees.
OTHER CONTRACTS. Prior to 1995, we issued four classes of variable annuity
contracts which are no longer being issued but under which purchase payments may
continue to be made: "VEN 1" contracts, which were sold during the period from
June, 1985 until June, 1987; "VEN 3" contracts, which were sold during the
period from November, 1986 until October, 1993; "VEN 8" contracts which were
sold during the period from September, 1992 until February, 1995; and "VEN 7"
contracts which were sold during the period from August, 1989 until April, 1999.
This Prospectus principally describes the contract offered by this Prospectus
but also describes the Ven 8, Ven 7, Ven 3 and Ven 1 contracts (collectively,
"prior contracts"). The principal differences between the contract offered by
this Prospectus and the prior contracts relate to the investment options
available under the contracts, charges made by the Company, death benefit
provisions and in the case of Ven 7 and Ven 8 contracts, a minimum interest rate
to be credited for any guarantee period under the fixed portion of the contract
(see "Appendices F and G").
PURCHASE PAYMENT LIMITS. Except as noted below, the minimum initial purchase
payment is $5,000 for Non-Qualified Contracts and $2,000 for Qualified
Contracts. Purchase payments normally may be made at any time. If a purchase
payment would cause your contract value to exceed $1,000,000, or your contract
value already exceeds $1,000,000, however, you must obtain our approval in order
to make the payment. If permitted by state law, we may cancel your contract if
you have made no payments for two years, your contract value is less than $2,000
and your payments over the life of your contract, minus your withdrawals over
the life of the contract is less than $2,000.
INVESTMENT OPTIONS. During the accumulation period, contract values may be
allocated among up to seventeen of the available investment options. Currently,
forty-one Variable Account investment options and five fixed account investment
options are available under the contract. Each of the forty-one Variable Account
investment options is a sub-account of the Variable Account that invests in a
corresponding portfolio of the Trust or Merrill Variable Funds. A full
description of each portfolio of the Trust or Merrill Variable Funds is in the
accompanying Prospectus of the Trust or Merrill Variable Funds. Your contract
value during the accumulation period and the amounts of annuity benefit payments
will depend upon the investment performance of the portfolio underlying each
sub-account of the Variable Account you select and/or upon the interest we
credit on each fixed account option you select. Subject to certain regulatory
limitations, we may elect to add, subtract or substitute investment options.
Fixed accounts are not available in all states.
TRANSFERS. During the accumulation period, you may transfer your contract values
among the Variable Account investment options and from the Variable Account
investment options to the fixed account investment options without charge. In
addition, you may transfer contract values among the fixed account investment
options and from the fixed account investment options to the Variable Account
investment options, subject to a one year holding period requirement (with
certain exceptions) and a market value charge which may apply to such a
transfer. During the pay-out period, you may transfer your allocations among the
Variable Account investment options, but transfers from Variable Account
4
<PAGE> 8
options to fixed account options or from fixed account options to Variable
Account options are not permitted.
WITHDRAWALS. During the accumulation period, you may withdraw all or a portion
of your contract value. The amount you withdraw from any investment account must
be at least $300 or, if less, your entire balance in that investment account. If
a partial withdrawal plus any applicable withdrawal charge would reduce your
contract value to less than $300, we will treat your withdrawal request as a
request to withdraw all of your contract value. A withdrawal charge and an
administration fee may apply to your withdrawal. A withdrawal may be subject to
income tax and a 10% IRS penalty tax. A systematic withdrawal plan service is
available under the contract.
CONFIRMATION STATEMENTS. We will send you confirmation statements for certain
transactions in your account. You should carefully review these statements to
verify their accuracy. You should immediately report any mistakes to our Annuity
Service Office (at the address or phone number shown on the cover of this
Prospectus). If you fail to notify our Annuity Service Office of any mistake
within 60 days of the mailing of the confirmation statement, you will be deemed
to have ratified the transaction.
DEATH BENEFITS. We will pay the death benefit described below to your
BENEFICIARY if you die during the accumulation period. If a contract is owned by
more than one person, then the surviving contract owner will be deemed the
beneficiary of the deceased contract owner. No death benefit is payable on the
death of any ANNUITANT (a natural person or persons to whom ANNUITY BENEFIT
PAYMENTS are made and whose life is used to determine the duration of annuity
benefit payments involving life contingencies), except that if any contract
owner is not a natural person, the death of any annuitant will be treated as the
death of an owner. The amount of the death benefit will be calculated as of the
date on which our Annuity Service Office receives written notice and proof of
death and all required claim forms. The formula used to calculate the death
benefit may vary according to the age(s) of the contract owner(s) at the time
the contract is issued and the age of the contract owner who dies. If there are
any unpaid loans (including unpaid interest) under the contract, the death
benefit equals the death benefit calculated according to the applicable formula,
minus the amount of the unpaid loans. If the annuitant dies during the pay-out
period and annuity payment method selected called for payments for a guaranteed
period, we will make the remaining guaranteed payments to the beneficiary. See F
for information on death benefit provisions of Ven 7 and Ven 8 contracts and
Appendix G for information on death benefit provisions of Ven 1 and Ven 3
contracts.
ANNUITY BENEFIT PAYMENTS. We offer a variety of fixed and variable annuity
payment options. Periodic annuity benefit payments will begin on the "maturity
date" (the first day of the pay-out period). You select the maturity date, the
frequency of payment and the type of annuity benefit payment option. Annuity
benefit payments are made to the annuitant.
GUARANTEED RETIREMENT INCOME PROGRAM. The Guaranteed Retirement Income Program
("GRIP") guarantees a minimum lifetime fixed income benefit in the form of fixed
monthly annuity payments. GRIP is based on the aggregate net purchase payments
applied to the contract, accumulated at interest, minus an adjustment for any
partial withdrawals (the "INCOME BASE"). The amount of the monthly annuity
payment provided by GRIP is determined by applying the Income Base to the
monthly income factors set forth in the GRIP Rider. Because the fixed annuity
options provided for in the contract are based on the contract value at the time
of annuitization, the amount of the monthly payments under such options may
exceed the monthly payments provided by the GRIP Rider. If the GRIP is exercised
and the annuity payment available under the contract is greater than the monthly
payment provided by the GRIP Rider, we will pay the monthly annuity payment
available under the contract. GRIP is available for new contracts issued on or
after May 1, 1998. The GRIP is not available in all states and is not available
for Ven 7, Ven 8, Ven 3 or Ven 1.
REINSURANCE ARRANGEMENTS. We utilize reinsurance as part of our risk management
program. Under any reinsurance agreement, we remain liable for the contractual
obligations of the contracts' guaranteed benefits and the reinsurer(s) agree to
reimburse us for certain amounts and obligations in connection with the risks
covered in the reinsurance agreements. The reinsurer's contractual liability
runs solely to us, and no contract owner shall have any right of action against
any reinsurer. In evaluating reinsurers, we consider the financial and claims
paying ability ratings
5
<PAGE> 9
of the reinsurer. Our philosophy is to minimize incidental credit risk. We do so
by engaging in secure types of reinsurance transactions with high quality
reinsurers and diversifying reinsurance counterparties to limit concentrations.
Some of the benefits that are currently reinsured include guaranteed death
benefits, fixed account guarantees, and GRIP.
TEN DAY REVIEW. You may cancel your contract by returning it to us within 10
days of receiving it.
MODIFICATION. In the case of a group annuity contract, we may not modify the
contract or any certificate without the consent of the group holder or the
owner, as applicable, except to make it conform to any law or regulation or
ruling issued by a governmental agency. However, on 60 days' notice to the group
holder, we may change the withdrawal charges, administration fees, mortality and
expense risks charges, free withdrawal percentage, annuity purchase rates and
the market value charge as to any certificates issued after the effective date
of the modification.
DISCONTINUANCE OF NEW OWNERS. In the case of a group annuity contract, on thirty
days' notice to the group holder, we may limit or discontinue acceptance of new
applications and the issuance of new certificates.
TAXATION. Generally all earnings on the underlying investments are tax-deferred
until withdrawn or until annuity benefit payments begin. Normally, a portion of
each annuity benefit payment is taxable as ordinary income. Partial and total
withdrawals generally are taxable as ordinary income to the extent contract
value prior to the withdrawal exceeds the purchase payments you have made, minus
any prior withdrawals that were not taxable. A 10% penalty tax may apply to
withdrawals prior to age 59-1/2.
CHARGES AND DEDUCTIONS. The following table and Example are designed to assist
you in understanding the various costs and expenses related to the contract. The
table reflects expenses of the Variable Account and the underlying portfolios.
In addition to the items listed in the following table, premium taxes may be
applicable to certain contracts. The items listed under "Contract Owner
Transaction Expenses" and "Separate Account Annual Expenses" are more completely
described in this Prospectus beginning at page 38 under "Charges and
Deductions." The items listed under "Trust Annual Expenses" are described in
detail in the accompanying Prospectuses of the Trust and Merrill Variable Funds.
CONTRACT OWNER TRANSACTION EXPENSES
See Appendix F for additional information regarding contract owner transaction
expenses for Ven 7 and Ven 8 contracts. See Appendix G for information regarding
contract owner transaction expenses for Ven 3 and Ven 1 contracts.
Deferred sales load (as percentage of purchase payments)
<TABLE>
<CAPTION>
NUMBER OF COMPLETE YEARS WITHDRAWAL CHARGE
PURCHASE PAYMENT IN CONTRACT PERCENTAGE
<S> <C>
0 6%
1 6%
2 5%
3 5%
4 4%
5 3%
6 2%
7+ 0%
ANNUAL CONTRACT FEE .................................................. $30(1)
</TABLE>
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
<TABLE>
<S> <C>
Mortality and expense risks fee........................................ 1.25%
Administration fee - asset based....................................... 0.15%
Total Separate Account Annual Expenses................................. 1.40%
</TABLE>
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<TABLE>
<S> <C>
OPTIONAL GRIP RIDER FEE................................................ 0.25%(2)
(as a percentage of the Income Base)
</TABLE>
(1)The $30 annual administration fee will not be assessed prior to the maturity
date if at the time of its assessment the sum of all investment account values
is greater than or equal to $100,000. This provision does not apply to Ven 7 or
Ven 8 contracts. See Appendix F.
(2)If the Guaranteed Retirement Income Program is elected, this fee is deducted
on each contract anniversary. The Guaranteed Retirement Income Program is not
available for Ven 7, Ven 8, Ven 3 or Ven 1 contracts (see "GUARANTEED RETIREMENT
INCOME PROGRAM").
TRUST ANNUAL EXPENSES
(as a percentage of Trust average net assets for the fiscal year ended December
31 1999)
<TABLE>
<CAPTION>
TOTAL TRUST
OTHER EXPENSES ANNUAL EXPENSES
MANAGEMENT (AFTER EXPENSE (AFTER EXPENSE
TRUST PORTFOLIO FEES REIMBURSEMENT) REIMBURSEMENT)
- --------------- ---------- --------------- ---------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets........ 0.850% 0.260% 1.110%
Science & Technology................ 1.100% 0.060% 1.160%
International Small Cap............. 1.100% 0.270% 1.370%
Aggressive Growth................... 1.000%(F) 0.130% 1.130%
Emerging Small Company.............. 1.050% 0.070% 1.120%
Small Company Blend................. 1.050% 0.250%(A) 1.300%(E)
Mid Cap Growth...................... 0.950%(F) 0.070% 1.020%
Mid Cap Stock....................... 0.925% 0.100%(A) 1.025%(E)
Overseas............................ 0.950% 0.260% 1.210%
International Stock................. 1.050% 0.200% 1.250%
International Value................. 1.000% 0.230%(A) 1.230%(E)
Mid Cap Blend....................... 0.850%(F) 0.060% 0.910%
Small Company Value................. 1.050% 0.170% 1.220%
Global Equity....................... 0.900% 0.160% 1.060%
Growth.............................. 0.850% 0.050% 0.900%
Large Cap Growth.................... 0.875%(F) 0.100% 0.975%
Quantitative Equity................. 0.700% 0.060% 0.760%
Blue Chip Growth.................... 0.875%(F) 0.050% 0.925%
Real Estate Securities.............. 0.700% 0.070% 0.770%
Value............................... 0.800% 0.070% 0.870%
Growth & Income..................... 0.750% 0.050% 0.800%
U.S. Large Cap Value................ 0.875% 0.070%(A) 0.945%(E)
Equity-Income....................... 0.875%(F) 0.060% 0.935%
Income & Value...................... 0.800%(F) 0.080% 0.880%
Balanced............................ 0.800% 0.070% 0.870%
High Yield.......................... 0.775% 0.065% 0.840%
Strategic Bond...................... 0.775% 0.095% 0.870%
Global Bond......................... 0.800% 0.180% 0.980%
Total Return........................ 0.775% 0.060%(A) 0.835%(E)
Investment Quality Bond............. 0.650% 0.120% 0.770%
Diversified Bond.................... 0.750% 0.090% 0.840%
</TABLE>
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<TABLE>
<CAPTION>
TOTAL TRUST
OTHER EXPENSES ANNUAL EXPENSES
MANAGEMENT (AFTER EXPENSE (AFTER EXPENSE
TRUST PORTFOLIO FEES REIMBURSEMENT) REIMBURSEMENT)
- --------------- ---------- --------------- ---------------
<S> <C> <C> <C>
U.S. Government Securities.......... 0.650% 0.070% 0.720%
Money Market........................ 0.500% 0.050% 0.550%
Lifestyle Aggressive 1000D.......... 0.075% 1.060%(B) 1.135%(C)
Lifestyle Growth 820D............... 0.057% 0.990%(B) 1.047%(C)
Lifestyle Balanced 640D............. 0.057% 0.910%(B) 0.967%(C)
Lifestyle Moderate 460D............. 0.066% 0.860%(B) 0.926%(C)
Lifestyle Conservative 280D......... 0.075% 0.780%(B) 0.855%(C)
</TABLE>
(A)Based on estimates to be made during the current fiscal year.
(B)Reflects expenses of the Underlying Portfolios.
(C)The investment adviser to the Trust, Manufacturers Securities Services, LLC
("MSS" or the "Adviser") has voluntarily agreed to pay certain expenses of each
Lifestyle Trust (excluding the expenses of the Underlying Portfolios) as noted
below. This voluntary expense reimbursement may be terminated at any time. If
such expense reimbursement was not in effect, Total Trust Annual Expenses would
be 0.03% higher, except for the Lifestyle Growth 820 Trust and Lifestyle
Moderate 460 Trust, which would be 0.04% higher (based on current advisory fees
and the Other Expenses of the Lifestyle Trusts for the fiscal year ended
December 31, 1999) as noted in the chart below:
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL TRUST
TRUST PORTFOLIO FEES EXPENSES ANNUAL EXPENSES
- --------------- ---------- -------- ---------------
<S> <C> <C> <C>
Lifestyle Aggressive 1000........... 0.075% 1.090% 1.165%
Lifestyle Growth 820................ 0.057% 1.030% 1.087%
Lifestyle Balanced 640.............. 0.057% 0.940% 0.997%
Lifestyle Moderate 460.............. 0.066% 0.900% 0.966%
Lifestyle Conservative 280.......... 0.075% 0.810% 0.885%
</TABLE>
If total expenses of a Lifestyle Trust (absent reimbursement) exceed 0.075%, the
Adviser will reduce the advisory fee or reimburse expenses of that Lifestyle
Trust by an amount such that total expenses of the Lifestyle Trust including the
advisory fee but excluding: (a) the expenses of the underlying portfolios, (b)
taxes, (c) portfolio brokerage, (d) interest, (e) litigation and (f)
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Trust's business, equal 0.075%. If the total expenses of
a Lifestyle Trust (absent reimbursement) are equal to or less then 0.075%, then
no expenses will be reimbursed by the Adviser.
(D)Each Lifestyle Trust will invest in shares of the Underlying Portfolios.
Therefore, each Lifestyle Trust will bear its pro rata share of the fees and
expenses incurred by the Underlying Portfolios in which it invests, and the
investment return of each Lifestyle Trust will be net of the Underlying
Portfolio expenses. Each Lifestyle Portfolio must bear its own expenses.
However, the Adviser is currently paying certain of these expenses as described
in footnote (C) above.
(E) Annualized - For the period May 1, 1999 (commencement of operations) to
December 31, 1999.
(F) Management Fees changed effective May 1, 1999. Fees shown are the current
management fees.
8
<PAGE> 12
MERRILL VARIABLE FUNDS ANNUAL EXPENSES: CLASS B SHARES
(as a percentage of average net assets and after waivers and reimbursements)
<TABLE>
<CAPTION>
Management Total Annual Fund
Fee Other Expenses Operating Expenses
(After Expense (After Expense (After Expense
Reimbursement 12b-1 Reimbursement Reimbursement
Portfolio and Waiver) Fees and Waiver)(A) and Waiver)(B)
--------- -------------- ------ -------------- ------------------
<S> <C> <C> <C> <C>
Merrill Lynch Special Value Focus 0.75% 0.15% 0.06% 0.96%
Merrill Lynch Basic Value Focus 0.60% 0.15% 0.06% 0.81%
Merrill Lynch Developing Capital 0.53%(c) 0.15% 0.72% 1.40%(c)
Markets Focus
</TABLE>
(A)Note that these are the expenses for the fiscal year ended December 31, 1999.
(B)Merrill Lynch Asset Management, L.P. ("MLAM") and Merrill Lynch Life Agency,
Inc. have entered into a Reimbursement Agreement that limits the operating
expenses (excluding any distribution fees imposed on shares of Class B Common
Stock) paid by each portfolio in a given year to 1.25% of its average net
assets. This Reimbursement Agreement is expected to remain in effect for the
current year.
(c)During 1999, MLAM waived management fees for the Developing Capital Markets
Focus Fund in the amount totaling 0.47% of that Fund's average daily net assets
of Class B shares; absent this waiver, the management fee and the total expenses
for Class B shares of this Fund would have been 1.00% and 1.87%, respectively.
Example
The Example of Expenses below is shown with both the Optional GRIP
Rider Fee reflected and with it not reflected. The Optional GRIP Rider Fee is
assessed if the Guaranteed Retirement Income Program is elected. For more
information see "Guaranteed Retirement Income Program" below.
I. The Optional GRIP Rider Fee is NOT reflected in the following example.
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return on assets, if you surrendered the contract at the end of the applicable
time period:
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS(A) 5 YEARS 10 YEARS
YEARS
--------- ------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Pacific Rim Emerging Markets........ $81 $128 $166 $176 $290
Science & Technology................ 82 130 169 179 294
International Small Cap............. 84 136 179 189 315
Aggressive Growth................... 82 129 167 177 291
Emerging Small Company.............. 81 129 167 177 290
Small Company Blend................. 83 134 175 185 308
Mid Cap Growth...................... 81 126 162 172 281
Mid Cap Stock....................... 81 126 162 172 281
Overseas............................ 82 131 171 181 299
International Stock................. 83 132 173 183 303
International Value................. 83 132 172 182 301
Mid Cap Blend....................... 79 123 156 166 270
Small Company Value................. 82 132 171 181 300
Global Equity....................... 81 127 164 174 285
Growth.............................. 79 122 156 166 269
Large Cap Growth.................... 80 125 159 169 276
Quantitative Equity................. 78 118 148 158 254
Blue Chip Growth.................... 80 123 157 167 271
</TABLE>
9
<PAGE> 13
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS(A) 5 YEARS 10 YEARS
--------- ------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Real Estate Securities.............. 78 119 149 159 255
Value............................... 79 122 154 164 266
Growth & Income..................... 78 120 150 160 258
U.S. Large Cap Value................ 80 124 158 168 273
Equity-Income....................... 80 123 157 167 272
Income & Value...................... 79 122 155 165 267
Balanced............................ 79 122 154 164 266
High Yield.......................... 79 121 153 163 263
Strategic Bond...................... 79 122 154 164 266
Global Bond......................... 80 125 160 170 277
Total Return........................ 79 121 152 162 262
Investment Quality Bond............. 78 119 149 159 255
Diversified Bond.................... 79 121 153 163 263
U.S. Government Securities.......... 78 117 146 156 250
Money Market........................ 76 112 138 148 233
Lifestyle Aggressive 1000........... 82 129 167 177 292
Lifestyle Growth 820................ 81 127 163 173 283
Lifestyle Balanced 640.............. 80 124 159 169 275
Lifestyle Moderate 460.............. 80 123 157 167 271
Lifestyle Conservative 280.......... 79 121 153 163 264
Merrill Lynch Special Value Focus... 80 124 159 169 275
Merrill Lynch Basic Value Focus..... 79 120 151 161 260
Merrill Lynch Developing Capital
Markets Focus..................... 84 137 180 190 318
</TABLE>
(A) For Ven 7 and Ven 8 contracts only (as described in Appendix F). The
difference in amounts is attributable to the different withdrawal charges. See
Appendix F.
II. The Optional GRIP Rider Fee is NOT reflected in the following example.
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return on assets, if you annuitized as provided in the contract or did not
surrender the contract at the end of the applicable time period:
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
YEARS
--------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets.......... $26 $80 $136 $290
Science & Technology.................. 26 81 139 294
International Small Cap............... 29 87 149 315
Aggressive Growth..................... 26 80 137 291
Emerging Small Company................ 26 80 137 290
Small Company Blend................... 28 85 145 308
Mid Cap Growth........................ 25 77 132 281
Mid Cap Stock......................... 25 77 132 281
Overseas.............................. 27 83 141 299
International Stock................... 27 84 143 303
International Value................... 27 83 142 301
Mid Cap Blend......................... 24 74 126 270
Small Company Value................... 27 83 141 300
Global Equity......................... 25 78 134 285
Growth................................ 24 73 126 269
Large Cap Growth...................... 25 76 129 276
Quantitative Equity................... 22 69 118 254
Blue Chip Growth...................... 24 74 127 271
Real Estate Securities................ 23 69 119 255
Value................................. 24 72 124 266
Growth & Income....................... 23 70 120 258
</TABLE>
10
<PAGE> 14
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
U.S. Large Cap Value.................. 24 75 128 273
Equity-Income......................... 24 74 127 272
Income & Value........................ 24 73 125 267
Balanced.............................. 24 72 124 266
High Yield............................ 23 72 123 263
Strategic Bond........................ 24 72 124 266
Global Bond........................... 25 76 130 277
Total Return.......................... 23 71 122 262
Investment Quality Bond............... 23 69 119 255
Diversified Bond...................... 23 72 123 263
U.S. Government Securities............ 22 68 116 250
Money Market.......................... 20 63 108 233
Lifestyle Aggressive 1000............. 26 80 137 292
Lifestyle Growth 820.................. 25 78 133 283
Lifestyle Balanced 640................ 24 75 129 275
Lifestyle Moderate 460................ 24 74 267 271
Lifestyle Conservative 280............ 23 72 123 264
Merrill Lynch Special Value Focus..... 24 75 129 275
Merrill Lynch Basic Value Focus....... 23 71 121 260
Merrill Lynch Developing Capital
Markets Focus....................... 29 88 150 318
</TABLE>
III. The Optional GRIP Rider Fee is reflected in the following example. The
example assumes a growth factor of 6% and the Income Base is not
stepped-up.
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return on assets, if you surrendered the contract at the end of the applicable
time period:
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
YEARS
--------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets......... $84 $136 $190 $321
Science & Technology................. 84 138 193 326
International Small Cap.............. 86 144 203 346
Aggressive Growth.................... 84 137 191 323
Emerging Small Company.............. 84 137 191 322
Small Company Blend.................. 86 142 200 339
Mid Cap Growth....................... 83 134 186 312
Mid Cap Stock........................ 83 134 186 313
Overseas............................. 85 139 195 331
International Stock.................. 85 140 197 334
International Value.................. 85 140 196 333
Mid Cap Blend........................ 82 131 180 301
Small Company Value.................. 85 140 196 332
Global Equity........................ 84 135 188 316
Growth............................... 82 130 180 300
Large Cap Growth..................... 83 133 184 308
Quantitative Equity.................. 81 126 173 286
Blue Chip Growth..................... 82 131 181 303
Real Estate Securities............... 81 127 173 287
Value................................ 82 130 178 297
Growth & Income...................... 81 128 175 290
U.S. Large Cap Value................. 82 132 182 305
Equity-Income........................ 82 131 182 304
Income & Value....................... 82 130 179 298
Balanced............................. 82 130 178 297
High Yield........................... 81 129 177 294
</TABLE>
11
<PAGE> 15
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Strategic Bond.......................... 82 130 178 297
Global Bond............................. 83 133 184 308
Total Return............................ 81 129 177 294
Investment Quality Bond................. 81 127 173 287
Diversified Bond........................ 81 129 177 294
U.S. Government Securities.............. 80 125 171 282
Money Market............................ 79 120 162 265
Lifestyle Aggressive 1000............... 84 137 192 323
Lifestyle Growth 820.................... 83 135 187 315
Lifestyle Balanced 640.................. 83 132 183 307
Lifestyle Moderate 460.................. 82 131 181 303
Lifestyle Conservative 280.............. 82 129 178 296
Merrill Lynch Special Value Focus....... 81 128 175 291
Merrill Lynch Basic Value Focus......... 83 132 183 306
Merrill Lynch Developing Capital
Markets Focus......................... 87 145 205 349
</TABLE>
IV. The Optional GRIP Rider Fee is reflected in the following example. The
example assumes a growth factor of 6% and the Income Base is not
stepped-up.
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return on assets, if you annuitized as provided in the contract or did not
surrender the contract at the end of the applicable time period:
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
YEARS
- --------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets............ $29 $88 $150 $321
Science & Technology.................... 29 89 153 326
International Small Cap................. 31 96 163 346
Aggressive Growth....................... 29 89 151 323
Emerging Small Company................. 29 88 151 322
Small Company Blend..................... 30 94 160 339
Mid Cap Growth.......................... 28 85 146 312
Mid Cap Stock........................... 28 85 146 313
Overseas................................ 30 91 155 331
International Stock..................... 30 92 157 334
International Value..................... 30 92 156 333
Mid Cap Blend........................... 27 82 140 301
Small Company Value..................... 30 91 156 332
Global Equity........................... 28 86 148 316
Growth.................................. 26 82 140 300
Large Cap Growth........................ 27 84 144 308
Quantitative Equity..................... 25 77 133 286
Blue Chip Growth........................ 27 82 141 303
Real Estate Securities.................. 25 78 133 287
Value................................... 26 81 138 297
Growth & Income......................... 25 79 135 290
U.S. Large Cap Value.................... 27 83 142 305
Equity-Income........................... 27 83 142 304
Income & Value.......................... 26 81 139 298
Balanced................................ 26 81 138 297
High Yield.............................. 26 80 137 294
Strategic Bond.......................... 26 81 138 297
Global Bond............................. 27 84 144 308
Total Return............................ 26 80 137 294
Investment Quality Bond................. 25 78 133 287
</TABLE>
12
<PAGE> 16
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Diversified Bond........................ 26 80 137 294
U.S. Government Securities.............. 25 76 131 282
Money Market............................ 23 71 122 265
Lifestyle Aggressive 1000............... 29 89 152 323
Lifestyle Growth 820.................... 28 86 147 315
Lifestyle Balanced 640.................. 27 84 143 307
Lifestyle Moderate 460.................. 27 82 141 303
Lifestyle Conservative 280.............. 26 80 138 296
Merrill Lynch Special Value Focus....... 26 79 135 291
Merrill Lynch Basic Value Focus......... 27 83 143 306
Merrill Lynch Developing Capital
Markets Focus......................... 31 97 165 349
</TABLE>
For purposes of presenting the foregoing Example, we have made certain
assumptions mandated by the SEC. We have assumed that, where applicable, the
maximum sales load is deducted, that there are no transfers or other
transactions and that the "Other Expenses" line item under "Trust Annual
Expenses" and "Merrill Variable Funds Annual Expenses" will remain the same.
Those assumptions, (each of which is mandated by the SEC in an attempt to
provide prospective investors with standardized data with which to compare
various annuity contracts) do not take into account certain features of the
contract and prospective changes in the size of the portfolios which may operate
to change the expenses borne by contract owners. CONSEQUENTLY, THE AMOUNTS
LISTED IN THE EXAMPLES ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES AND ACTUAL EXPENSES BORNE BY CONTRACT OWNERS MAY BE GREATER
OR LESSER THAN THOSE SHOWN.
In addition, for purposes of calculating the values in the above
Example, the Company has translated the $30 annual administration charge listed
under "Annual Contract Fee" to a 0.050% annual asset charge based on the $60,000
approximate average size of contracts of this series. So translated, such charge
would be higher for smaller contracts and lower for larger contracts.
A TABLE OF ACCUMULATION UNIT VALUES RELATING TO THE CONTRACT IS INCLUDED IN
APPENDIX B TO THIS PROSPECTUS.
LOCATION OF FINANCIAL STATEMENTS OF REGISTRANT AND DEPOSITOR
Our financial statements and those of the Variable Account may be found
in the Statement of Additional Information.
GENERAL INFORMATION ABOUT US, THE VARIABLE ACCOUNT, THE TRUST AND MERRILL
VARIABLE FUNDS
We are an indirect subsidiary of MFC.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
We are a stock life insurance company organized under the laws of
Delaware in 1979. Our principal office is located at 500 Boylston Street, Suite
400, Boston, Massachusetts 02116-3739. Our ultimate parent is Manulife Financial
Corporation ("MFC") based in Toronto, Canada. MFC is the holding company of The
Manufacturers Life Insurance Company and its subsidiaries, collectively known as
MANULIFE FINANCIAL.
The Manufacturers Life Insurance Company of North America's financial
ratings are as follows:
A++ A.M. Best
Superior in financial strength; 1st category of 15
AAA Duff & Phelps
Highest in claims paying ability; 1st category of 18
AA+ Standard & Poor's
Very strong in financial strength; 2nd category of 21
13
<PAGE> 17
Aa2 Moody's
Excellent in financial strength; 3rd category of 21
These ratings, which are current as of the date of this prospectus and are
subject to change, are assigned as a measure of The Manufacturers Life Insurance
Company of North America's ability to honor the death benefit, fixed account
guarantees and life annuitization guarantees but not specifically to its
products, the performance (return) of these products, the value of any
investment in these products upon withdrawal or to individual securities held in
any portfolio.
The Variable Account is one of our separate accounts that invests the contract
values you allocate to it in the Trust or Merrill Variable Funds portfolio(s)
you select.
THE VARIABLE ACCOUNT
We established the Variable Account on August 24, 1984. The income,
gains and losses, whether or not realized, from assets of the Variable Account
are credited to or charged against the Variable Account without regard to our
other income, gains or losses. Nevertheless, all obligations arising under the
contracts are our general corporate obligations. Assets of the Variable Account
may not be charged with liabilities arising out of any of our other business.
The Variable Account is registered with the SEC under the Investment
Company Act of 1940, as amended (the "1940 Act") as a unit investment trust. A
unit investment trust is a type of investment company which invests its assets
in specified securities, such as the shares of one or more investment companies.
Registration under the 1940 Act does not involve supervision by the SEC of the
management or investment policies or practices of the Variable Account. If we
determine that it would be in the best interests of persons having voting rights
under the contracts, the Variable Account may be operated as a management
company under the 1940 Act or it may be deregistered if 1940 Act registration
were no longer required.
The Variable Account currently has forty-one sub-accounts. We reserve
the right, subject to compliance with applicable law, to add other sub-accounts,
eliminate existing sub-accounts, combine sub-accounts or transfer assets in one
sub-account to another sub-account that we, or an affiliated company, may
establish. We will not eliminate existing sub-accounts or combine sub-accounts
without the prior approval of the appropriate state or federal regulatory
authorities. See Appendix G for information on sub-accounts available to Ven 1
contracts.
The Trust and Merrill Variable Funds are mutual funds in which the Variable
Account invests.
THE TRUST
The assets of each sub-account of the Variable Account (other than the
three sub-accounts invested in the Merrill Variable Funds described below) are
invested in shares of a corresponding investment portfolio of the Trust. A
description of each Trust portfolio is set forth below. The Trust is registered
under the 1940 Act as an open-end management investment company. Each of the
portfolios is diversified for purposes of the 1940 Act, except for the Global
Bond Trust and the five Lifestyle Trusts which are non-diversified. The Trust
receives investment advisory services from Manufacturers Securities Services,
LLC("MSS"), the successor to NASL Financial Services, Inc.
The Trust currently has sixteen subadvisers who manage all of the
portfolios, one of which is Manufacturers Adviser Corporation. Both MSS and
Manufacturers Adviser Corporation are affiliates of ours.
<TABLE>
<CAPTION>
SUBADVISER TRUST PORTFOLIOS MANAGED
- ---------- ------------------------
<S> <C>
A I M Capital Management, Inc. Aggressive Growth Trust
Mid Cap Growth Trust
AXA Rosenberg Investment Management LLC Small Company Value Trust
Capital Guardian Trust Company Small Company Blend Trust
U.S. Large Cap Value Trust
Income & Value Trust
Diversified Bond Trust
</TABLE>
14
<PAGE> 18
<TABLE>
<CAPTION>
SUBADVISER TRUST PORTFOLIOS MANAGED
- ---------- ------------------------
<S> <C>
Fidelity Management Trust Company Overseas Trust
Mid Cap Blend Trust
Large Cap Growth Trust
Founders Asset Management LLC International Small Cap Trust
Balanced Trust
Franklin Advisers, Inc. Emerging Small Company Trust
Manufacturers Adviser Corporation Pacific Rim Emerging Markets Trust
Quantitative Equity Trust
Real Estate Securities Trust
Money Market Trust
Lifestyle Trusts*
Miller Anderson & Sherrerd, LLP Value Trust
High Yield Trust
Morgan Stanley Asset Management Inc. Global Equity Trust
Pacific Investment Management Company Global Bond Trust
Total Return Trust
Rowe Price-Fleming International, Inc. International Stock Trust
Salomon Brothers Asset Management Inc Strategic Bond Trust
U.S. Government Securities Trust
State Street Global Advisors Growth Trust
Lifestyle Trusts*
T. Rowe Price Associates, Inc. Science & Technology Trust
Blue Chip Growth Trust
Equity-Income Trust
Templeton Investment Counsel, Inc. International Value Trust
Wellington Management Company LLP Mid Cap Stock Trust
Growth & Income Trust
Investment Quality Bond Trust
</TABLE>
*State Street Global Advisors provides subadvisory consulting services to
Manufacturers Adviser Corporation regarding management of the Lifestyle Trusts.
The following is a brief description of each portfolio:
The PACIFIC RIM EMERGING MARKETS TRUST seeks long-term growth of
capital by investing in a diversified portfolio that is comprised primarily of
common stocks and equity-related securities of corporations domiciled in
countries in the Pacific Rim region.
The SCIENCE & TECHNOLOGY TRUST seeks long-term growth of capital.
Current income is incidental to the portfolio's objective.
The INTERNATIONAL SMALL CAP TRUST seeks long-term capital appreciation
by investing primarily in securities issued by foreign companies which have
total market capitalization or annual revenues of $1 billion or less. These
securities may represent companies in both established and emerging economies
throughout the world.
15
<PAGE> 19
The AGGRESSIVE GROWTH TRUST seeks long-term capital appreciation by
investing the portfolio's asset principally in common stocks, convertible bonds,
convertible preferred stocks and warrants of companies which in the opinion of
the subadviser are expected to achieve earnings growth over time at a rate in
excess of 15% per year. Many of these companies are in the small and
medium-sized category.
The EMERGING SMALL COMPANY TRUST seeks long-term growth of capital by
investing, under normal market conditions, at least 65% of the portfolio's total
assets in common stock equity securities of companies with market
capitalizations that approximately match the range of capitalization of the
Russell 2000 Index ("small cap stocks") at the time of purchase.
The SMALL COMPANY BLEND TRUST seeks long-term growth of capital and
income by investing the portfolio's assets, under normal market conditions,
primarily in equity and equity-related securities of companies with market
capitalizations that approximately match the range of capitalization of the
Russell 2000 Index ("small cap stocks") at the time of purchase.
The MID CAP GROWTH TRUST seeks long-term capital appreciation by
investing the portfolio's assets principally in common stocks, with emphasis on
medium-sized and smaller emerging growth companies.
The MID CAP STOCK TRUST seeks long-term growth of capital by investing
primarily in equity securities of companies with market capitalizations that
approximately match the range of capitalization of the Wilshire Mid Cap 750
Index.
The OVERSEAS TRUST seeks growth of capital by investing, under normal
market conditions, at least 65% of the portfolio's assets in foreign securities
(including American Depositary Receipts (ADRs) and European Depositary Receipts
(EDRs)). The portfolio expects to invest primarily in equity securities.
The INTERNATIONAL STOCK TRUST seeks long-term growth of capital by
investing primarily in common stocks of established, non-U.S. companies.
The INTERNATIONAL VALUE TRUST seeks long-term growth of capital by
investing, under normal market conditions, primarily in equity securities of
companies located outside the U.S., including in emerging markets.
The MID CAP BLEND TRUST seeks growth of capital by investing primarily
in common stocks of U.S. issuers and securities convertible into or carrying the
right to buy common stocks.
The SMALL COMPANY VALUE TRUST seeks long-term growth of capital by
investing in equity securities of smaller companies which are traded principally
in the markets of the U.S.
The GLOBAL EQUITY TRUST seeks long-term capital appreciation by
investing primarily in equity securities throughout the world, including U.S.
issuers and emerging markets.
The GROWTH TRUST seeks long-term growth of capital by investing
primarily in large capitalization growth securities (market capitalizations of
approximately $1 billion or greater).
The LARGE CAP GROWTH TRUST seeks long-term growth of capital by
investing, under normal market conditions, at least 65% of the portfolio's
assets in equity securities of companies with large market capitalizations.
The QUANTITATIVE EQUITY TRUST seeks to achieve intermediate and
long-term growth through capital appreciation and current income by investing in
common stocks and other equity securities of well established companies with
promising prospects for providing an above average rate of return.
The BLUE CHIP GROWTH TRUST seeks to achieve long-term growth of capital
(current income is a secondary objective) and many of the stocks in the
portfolio are expected to pay dividends.
16
<PAGE> 20
The REAL ESTATE SECURITIES TRUST seeks to achieve a combination of
long-term capital appreciation and satisfactory current income by investing in
real estate related equity and debt securities.
The VALUE TRUST seeks to realize an above-average total return over a
market cycle of three to five years, consistent with reasonable risk, by
investing primarily in common and preferred stocks, convertible securities,
rights and warrants to purchase common stocks, ADRs and other equity securities
of companies with equity capitalizations usually greater than $300 million.
The GROWTH & INCOME TRUST seeks long-term growth of capital and income,
consistent with prudent investment risk, by investing primarily in a diversified
portfolio of common stocks of United States issuers which the subadviser
believes are of high quality.
The U.S. LARGE CAP VALUE TRUST seeks long-term growth of capital and
income by investing the portfolio's assets, under normal market conditions,
primarily in equity and equity-related securities of companies with market
capitalization greater than $500 million.
The EQUITY-INCOME TRUST seeks to provide substantial dividend income
and also long-term capital appreciation by investing primarily in
dividend-paying common stocks, particularly of established companies with
favorable prospects for both increasing dividends and capital appreciation.
The INCOME & VALUE TRUST seeks the balanced accomplishment of (a)
conservation of principal and (b) long-term growth of capital and income by
investing the portfolio's assets in both equity and fixed income securities. The
subadviser has full discretion to determine the allocation between equity and
fixed income securities.
The BALANCED TRUST seeks current income and capital appreciation by
investing in a balanced portfolio of common stocks, U.S. and foreign government
obligations and a variety of corporate fixed income securities.
The HIGH YIELD TRUST seeks to realize an above-average total return
over a market cycle of three to five years, consistent with reasonable risk, by
investing primarily in high yield debt securities, including corporate bonds and
other fixed income securities.
The STRATEGIC BOND TRUST seeks a high level of total return consistent
with preservation of capital by giving its subadviser broad discretion to deploy
the portfolio's assets among certain segments of the fixed income market as the
subadviser believes will best contribute to achievement of the portfolio's
investment objective.
The GLOBAL BOND TRUST seeks to realize maximum total return, consistent
with preservation of capital and prudent investment management by investing the
portfolio's asset primarily in fixed income securities denominated in major
foreign currencies, baskets of foreign currencies (such as the ECU),and the U.S.
dollar.
The TOTAL RETURN TRUST seeks to realize maximum total return,
consistent with preservation of capital and prudent investment management by
investing, under normal market conditions, at least 65% of the portfolio's
assets in a diversified portfolio of fixed income securities of varying
maturities. The average portfolio duration will normally vary within a three- to
six-year time frame based on the subadviser's forecast for interest rates.
The INVESTMENT QUALITY BOND TRUST seeks a high level of current income
consistent with the maintenance of principal and liquidity, by investing
primarily in a diversified portfolio of investment grade corporate bonds and
U.S. Government bonds with intermediate to longer term maturities. The portfolio
may also invest up to 20% of its assets in non-investment grade fixed income
securities.
The DIVERSIFIED BOND TRUST seeks high total return as is consistent
with the conservation of capital by investing at least 75% of the portfolio's
assets in fixed income securities.
17
<PAGE> 21
The U.S. GOVERNMENT SECURITIES TRUST seeks a high level of current
income consistent with preservation of capital and maintenance of liquidity, by
investing in debt obligations and mortgage-backed securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
derivative securities such as collateralized mortgage obligations backed by such
securities.
The MONEY MARKET TRUST seeks maximum current income consistent with
preservation of principal and liquidity by investing in high quality money
market instruments with maturities of 397 days or less issued primarily by U.S.
entities.
The LIFESTYLE AGGRESSIVE 1000 TRUST seeks to provide long-term growth
of capital (current income is not a consideration) by investing 100% of the
Lifestyle Trust's assets in other portfolios of the Trust ("UNDERLYING
PORTFOLIOS") which invest primarily in equity securities.
The LIFESTYLE GROWTH 820 TRUST seeks to provide long-term growth of
capital with consideration also given to current income by investing
approximately 20% of the Lifestyle Trust's assets in Underlying Portfolios which
invest primarily in fixed income securities and approximately 80% of its assets
in Underlying Portfolios which invest primarily in equity securities.
The LIFESTYLE BALANCED 640 TRUST seeks to provide a balance between a
high level of current income and growth of capital with a greater emphasis given
to capital growth by investing approximately 40% of the Lifestyle Trust's assets
in Underlying Portfolios which invest primarily in fixed income securities and
approximately 60% of its assets in Underlying Portfolios which invest primarily
in equity securities.
The LIFESTYLE MODERATE 460 TRUST seeks to provide a balance between a
high level of current income and growth of capital with a greater emphasis given
to current income by investing approximately 60% of the Lifestyle Trust's assets
in Underlying Portfolios which invest primarily in fixed income securities and
approximately 40% of its assets in Underlying Portfolios which invest primarily
in equity securities.
The LIFESTYLE CONSERVATIVE 280 TRUST seeks to provide a high level of
current income with some consideration also given to growth of capital by
investing approximately 80% of the Lifestyle Trust's assets in Underlying
Portfolios which invest primarily in fixed income securities and approximately
20% of its assets in Underlying Portfolios which invest primarily in equity
securities.
A full description of the Trust, including the investment objectives,
policies and restrictions of, and the risks relating to investment in, each
portfolio is contained in the Trust's Prospectus which we provided you along
with this Prospectus. The Trust prospectus should be read carefully before
allocating purchase payments to a sub-account.
MERRILL VARIABLE FUNDS
The variable portion of your contract contains three additional
investment options. Each portfolio is a series of Merrill Lynch Variable Series
Funds, Inc. ("MERRILL VARIABLE FUNDS"). Merrill Variable Funds is registered
under the 1940 Act as an open-end management investment company. Each of the
portfolios is diversified for purposes of the 1940 Act, with the exception of
the Developing Capital Markets Focus Fund which is non-diversified. Merrill
Variable Funds receive investment advisory services from Merrill Lynch Asset
Management, L.P. The Merrill Variable Funds Class B shares are subject to a Rule
12b-1 fee of up to .15% of a portfolio's Class B net assets. The portfolios are
not available for investment for Ven 1, Ven 3 and Ven 8 contract owners. Set
forth below is a brief description of each portfolio's investment objectives and
certain policies relating to that objective.
The MERRILL LYNCH SPECIAL VALUE FOCUS FUND seeks long-term growth of
capital by investing in a diversified portfolio of securities, primarily common
stocks, of relatively small companies and emerging growth companies, regardless
of size, that management of Merrill Variable Funds believes have special
investment value.
The MERRILL LYNCH BASIC VALUE FOCUS FUND seeks capital appreciation
and, secondarily, income by investing in securities, primarily stocks, that
management of the portfolio believes
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<PAGE> 22
are undervalued (stock price is less than what management of the fund believes
it is worth) and therefore represent basic investment value.
The MERRILL LYNCH DEVELOPING CAPITAL MARKETS FOCUS FUND seeks long-term
capital appreciation by investing in securities, principally equities, of
issuers in countries having smaller capital markets. For purposes of its
objective, the portfolio considers countries having smaller capital markets to
be all countries other than the U.S., United Kingdom, Japan and Germany. The
fund may also invest in fixed income securities of companies and governments in
these countries. The fund's management anticipates that under most circumstances
the fund will have substantial investments in emerging markets.
A full description of Merrill Variable Funds, including the investment
objectives, policies and restrictions of each portfolio is contained in Merrill
Variable Funds' prospectus which accompanies this prospectus and should be read
by a prospective purchaser before investing.
PLEASE NOTE THE MERRILL VARIABLE FUNDS ARE NOT AVAILABLE FOR ERISA
GOVERNED PLANS.
If shares of a portfolio of the Trust or a Merrill Variable Fund are no
longer available for investment or in our judgment investment in a portfolio of
the Trust or a Merrill Variable Fund becomes inappropriate, we may eliminate the
shares of a portfolio and substitute shares of another portfolio of the Trust,
Merrill Variable Funds or another open-end registered investment company.
Substitution may be made with respect to both existing investments and the
investment of future purchase payments. However, we will make no such
substitution without first notifying you and obtaining approval of the SEC (to
the extent required by the 1940 Act).
You instruct us how to vote shares.
Shares of the Trust portfolios or the Merrill Variable Funds portfolios
held in the Variable Account will be voted at any shareholder meetings in
accordance with voting instructions received from the persons having the voting
interest in the contracts. We will determine the number of portfolio shares for
which voting instructions may be given not more than 90 days prior to the
meeting. Proxy materials will be distributed to each person having the voting
interest in the contract together with appropriate forms for giving voting
instructions. We will vote all portfolio shares that we hold (including our own
shares and those we hold in the Variable Account for contract owners) in
proportion to the instructions so received.
During the accumulation period, the contract owner has the voting
interest under a contract. During the pay-out period, the annuitant has the
voting interest under a contract. We reserve the right to make any changes in
the voting rights described above that may be permitted by the federal
securities laws, regulations or interpretations thereof. For further information
on voting interest under the contract, see "Voting Interest" in this prospectus.
DESCRIPTION OF THE CONTRACT
ELIGIBLE GROUPS
The contract may be issued to fund plans qualifying for special income
tax treatment under the Code, such as individual retirement accounts and
annuities, pension and profit-sharing plans for corporations and sole
proprietorships/partnerships ("H.R. 10"and "Keogh" plans), tax-sheltered
annuities, and state and local government deferred compensation plans (see
"QUALIFIED RETIREMENT PLANS"). The contract is also designed so that it may be
used with non-qualified retirement plans, such as payroll savings plans and such
other groups (with or without a trustee) as may be eligible under applicable
law. Contracts have been issued to Venture Trust, a trust established with
United Missouri Bank, N.A., Kansas City, Missouri, as group holder for groups
comprised of persons who have brokerage accounts with brokers having selling
agreements with MSS, the principal underwriter of the contracts.
An eligible member of a group to which a contract has been issued may
become an owner under the contract by submitting a completed application, if
required by us, and a minimum purchase payment. A certificate summarizing the
rights and benefits of the owner under the contract will be issued to an
applicant acceptable to us. We reserve the right to decline to issue a
certificate to any person in our sole discretion. All rights and privileges
under the contract may be exercised by each owner as to his or her
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<PAGE> 23
interest unless expressly reserved to the group holder. However, provisions of
any plan in connection with which the contract was issued may restrict an
owner's ability to exercise such rights and privileges.
ACCUMULATION PERIOD PROVISIONS
Initial purchase payments usually must be at least $5,000, subsequent ones at
least $30, and total payments no more than $1 million (without our approval).
PURCHASE PAYMENTS
Your purchase payments are made to us at our Annuity Service Office.
Except as noted below, the minimum initial purchase payment is $5,000 for
Non-Qualified Contracts and $2,000 for Qualified Contracts. Subsequent purchase
payments must be at least $30. Purchase payments may be made at any time. We may
provide for purchase payments to be automatically withdrawn from your bank
account on a periodic basis. If a purchase payment would cause your contract
value to exceed $1,000,000 or your contract value already exceeds $1,000,000,
you must obtain our approval in order to make the payment.
If permitted by state law, we may cancel a contract at the end of any
two consecutive contract years in which no purchase payments have been made, if
both:
- the total purchase payments made over the life of the
contract, less any withdrawals, are less than $2,000; and
- the contract value at the end of such two year period is less
than $2,000.
We may vary the cancellation of contract privileges in certain states in order
to comply with state insurance laws and regulations. If we cancel your contract,
we will pay you the contract value computed as of the valuation period during
which the cancellation occurs, minus the amount of any outstanding loan and
minus the annual $30 administration fee. The amount paid will be treated as a
withdrawal for federal tax purposes and thus may be subject to income tax and to
a 10% IRS penalty tax (see "FEDERAL TAX MATTERS").
You designate how your purchase payments are to be allocated among the
investment options. You may change the allocation of subsequent purchase
payments at any time by notifying us in writing (or by telephone if you comply
with our telephone transfer procedures described below).
In addition, you have the option to participate in our Guarantee Plus
Program. Under the Guarantee Plus Program the initial purchase payment is split
between the fixed and variable investment options. The percentage of the initial
purchase payment allocated to a fixed account will assure that the fixed account
allocation will have grown to an amount at least equal to the total initial
purchase payment at the end of the guaranteed period. The balance of the initial
purchase payment is allocated among the investment options as indicated on the
contract specifications page. You may elect to participate in the Guarantee Plus
Program and may obtain full information concerning the program and its
restrictions from your securities dealer or our Annuity Service Office.
See Appendix F for information on purchase payments applicable to Ven 7
and Ven 8 contracts. See Appendix G for information on purchase payments
applicable to Ven 3 and Ven 1 contracts.
The value of an investment account is measured in "accumulation units," which
vary in value with the performance of the underlying Trust or Merrill Variable
Funds portfolio.
ACCUMULATION UNITS
During the accumulation period, we will establish an "INVESTMENT
ACCOUNT" for you for each Variable Account investment option to which you
allocate a portion of your contract value. Amounts are credited to those
investment accounts in the form of "ACCUMULATION UNITS" (units of measure used
to calculate the value of the variable portion of your contract during the
accumulation period). The number of accumulation units to be credited to each
investment account is determined by dividing the amount allocated to that
investment account by the value of an accumulation unit for that investment
account next computed after the purchase payment is received at our Annuity
Service Office complete with all necessary information or, in the case of the
first purchase payment, pursuant to the procedures described below.
Initial purchase payments received by mail will usually be credited on
the business day (any date on which the New York Stock Exchange is open and the
net asset value of a Trust or Merrill Variable Funds portfolio is determined) on
which they are received at our Annuity Service Office, and in any event not
later than two business days after our receipt of all information necessary for
issuing the contract. You
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<PAGE> 24
will be informed of any deficiencies preventing processing if your contract
cannot be issued. If the deficiencies are not remedied within five business days
after receipt, your purchase payment will be returned promptly, unless you
specifically consent to our retaining your purchase payment until all necessary
information is received. Initial purchase payments received by wire transfer
from broker-dealers will be credited on the business day received by us if the
broker-dealers have made special arrangements with us.
VALUE OF ACCUMULATION UNITS
The value of your accumulation units will vary from one business day to
the next depending upon the investment results of the investment options you
select. The value of an accumulation unit for each sub-account was arbitrarily
set at $10 or $12.50 for the first business day under other contracts we have
issued. The value of an accumulation unit for any subsequent business day is
determined by multiplying the value of an accumulation unit for the immediately
preceding business day by the net investment factor for that sub-account
(described below) for the business day for which the value is being determined.
Accumulation units will be valued as of the end of each business day. A business
day is deemed to end at the time of the determination of the net asset value of
the Trust shares.
NET INVESTMENT FACTOR
The net investment factor is an index used to measure the investment
performance of a sub-account from one business day to the next (the "VALUATION
PERIOD"). The net investment factor may be greater or less than or equal to one;
therefore, the value of an accumulation unit may increase, decrease or remain
the same. The net investment factor for each sub-account for any valuation
period is determined by dividing (a) by (b) and subtracting (c) from the result:
- Where (a) is:
- the net asset value per share of a portfolio share
held in the sub-account determined at the end of the
current valuation period, plus
- the per share amount of any dividend or capital gain
distributions made by the portfolio on shares held in
the sub-account if the "ex-dividend" date occurs
during the current valuation period.
- Where (b) is the net asset value per share of a portfolio
share held in the sub-account determined as of the end of the
immediately preceding valuation period.
- Where (c) is a factor representing the charges deducted from
the sub-account on a daily basis for administrative expenses
and mortality and expense risks. That factor is equal on an
annual basis to 1.40% (0.15% for administrative expenses and
1.25% for mortality and expense risks). See Appendix G for the
mortality and expense risks fees for Ven 1 contracts.
Amounts invested may be transferred among investment options.
TRANSFERS AMONG INVESTMENT OPTIONS
During the accumulation period, you may transfer amounts among the
variable account investment options and from those investment options to the
fixed account investment options at any time upon written notice to us or by
telephone if you authorize us in writing to accept your telephone transfer
requests. Accumulation units will be canceled from the investment account from
which you transfer amounts transferred and credited to the investment account to
which you transfer amounts. Your contract value on the date of the transfer will
not be affected by a transfer. You must transfer at least $300 or, if less, the
entire value of the investment account. If after the transfer the amount
remaining in the investment account is less than $100, then we will transfer the
entire amount instead of the requested amount. We reserve the right to limit,
upon notice, the maximum number of transfers you may make to one per month or
six at any time within a contract year. In addition, we reserve the right to
defer a transfer at any time we are unable to purchase or redeem shares of the
Trust portfolios. We also reserve the right to modify or terminate the transfer
privilege at any time (to the extent permitted by applicable law).
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<PAGE> 25
Currently, we do not impose a charge for transfer requests. The first
twelve transfers in a contract year are free of any transfer charge. For each
additional transfer in a contract year, we do not currently assess a charge but
reserve the right (to the extent permitted by your contract) to assess a
reasonable charge to reimburse us for the expenses of processing transfers.
Where permitted by law, we may accept your authorization for a third
party to make transfers for you subject to our rules. However, the contract is
not designed for professional market timing organizations or other entities or
persons engaging in programmed, frequent or large exchanges (collectively,
"market timers") to speculate on short-term movements in the market since such
activity may be disruptive to the Trust or Merrill Variable Funds portfolios and
increase their transaction costs. Therefore, in order to prevent excessive use
of the exchange privilege, we reserve the right to (a) reject or restrict any
specific purchase and exchange requests and (b) impose specific limitations with
respect to market timers, including restricting exchanges by market timers to
certain variable investment options (transfers by market timers into or out of
fixed investment options is not permitted).
See Appendix G for information on Transfer Among Investment Options
applicable to Ven 1 and Ven 3 contracts.
MAXIMUM NUMBER OF INVESTMENT OPTIONS
You currently are limited to a maximum of seventeen investment options
(including all fixed account investment options) during the accumulation period.
In calculating this limit, investment options to which you have allocated
purchase payments at any time during the accumulation period will be counted
toward the seventeen maximum even if you no longer have contract value allocated
to these investment options.
Telephone transfers and withdrawals are permitted.
TELEPHONE TRANSACTIONS
You are permitted to request transfers and withdrawals by telephone. We
will not be liable for following instructions communicated by telephone that we
reasonably believe to be genuine. To be permitted to request a transfer or
withdrawal by telephone, you must elect the option on the Application. (If you
do not initially elect an option in the Application form, you may request
authorization by executing an appropriate authorization form that we will
provide you upon request.) We will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine and may only be liable for
any losses due to unauthorized or fraudulent instructions where we fail to
employ our procedures properly. Such procedures include the following. Upon
telephoning a request, you will be asked to provide information that verifies
that it is you calling. For both your and our protection, we will tape record
all conversations with you. All telephone transactions will be followed by a
confirmation statement of the transaction. We reserve the right to impose
maximum withdrawal amounts and other new procedural requirements regarding
transfer privileges.
Dollar Cost Averaging and Asset Rebalancing programs are available.
SPECIAL TRANSFER SERVICES - DOLLAR COST AVERAGING
We administer a Dollar Cost Averaging ("DCA") program. If you enter
into a DCA agreement, you may instruct us to transfer monthly a predetermined
dollar amount from any sub-account or the one year fixed account investment
option to other sub-accounts until the amount in the sub-account from which the
transfer is made or one year fixed account investment option is exhausted. In
states where approved by the state insurance department, a DCA fixed account
investment option may be established under the DCA program to make automatic
transfers. Only purchase payments (and not existing contract values) may be
allocated to the DCA fixed account investment option. The DCA program is
generally suitable if you are making a substantial deposit and desire to control
the risk of investing at the top of a market cycle. The DCA program allows
investments to be made in equal installments over time in an effort to reduce
that risk. If you are interested in the DCA program, you may elect to
participate in the program on the application or by separate application. You
may obtain a separate application and full information concerning the program
and its restrictions from your securities dealer or our Annuity Service Office.
There is no charge for participation in the DCA program. See Appendix G for
information on the DCA Program applicable to Ven 1 and Ven 3 contracts.
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<PAGE> 26
ASSET REBALANCING PROGRAM
We administer an Asset Rebalancing Program which enables you to specify
the percentage levels you would like to maintain in particular portfolios. Your
contract value will be automatically rebalanced pursuant to the schedule
described below to maintain the indicated percentages by transfers among the
portfolios. (The Fixed Account Investment Options are not eligible for
participation in the Asset Rebalancing Program.) The entire value of the
variable investment accounts must be included in the Asset Rebalancing Program.
Other investment programs, such as the DCA program, or other transfers or
withdrawals may not work in concert with the Asset Rebalancing Program.
Therefore, you should monitor your use of these other programs and any other
transfers or withdrawals while the Asset Rebalancing Program is being used. If
you are interested in the Asset Rebalancing Program, you may obtain a separate
application and full information concerning the program and its restrictions
from your securities dealer or our Annuity Service Office. There is no charge
for participation in the Asset Rebalancing Program.
For rebalancing programs begun on or after October 1, 1996, asset
rebalancing will only be permitted on the following time schedules:
- quarterly on the 25th day of the last month of the quarter (or
the next business day if the 25th is not a business day);
- semi-annually on June 25th or December 26th (or the next
business day if these dates are not business days); or
- annually on December 26th (or the next business day if
December 26th is not a business day).
Rebalancing will continue to take place on the last business day of every
calendar quarter for rebalancing programs begun prior to October 1, 1996.
WITHDRAWALS
You may withdraw all or a portion of your contract value, but may incur
withdrawal charges and tax liability as a result.
During the accumulation period, you may withdraw all or a portion of
your contract value upon written request (complete with all necessary
information) to our Annuity Service Office. You may make withdrawals by
telephone if you have authorized telephone withdrawals, as described above under
"Telephone Transactions." For certain qualified contracts, exercise of the
withdrawal right may require the consent of the qualified plan participant's
spouse under the Internal Revenue Code of 1986, as amended (the "CODE"). In the
case of a total withdrawal, we will pay the contract value as of the date of
receipt of the request at our Annuity Service Office, minus the annual $30
administration fee (if applicable), any unpaid loans and any applicable
withdrawal charge. The contract then will be canceled. In the case of a partial
withdrawal, we will pay the amount requested and cancel accumulation units
credited to each investment account equal in value to the amount withdrawn from
that investment account plus any applicable withdrawal charge deducted from that
investment account.
When making a partial withdrawal, you should specify the investment
options from which the withdrawal is to be made. The amount requested from an
investment option may not exceed the value of that investment option minus any
applicable withdrawal charge. If you do not specify the investment options from
which a partial withdrawal is to be taken, the withdrawal will be taken from the
variable account investment options until exhausted and then from the fixed
account investment options, beginning with the shortest guarantee period first
and ending with the longest guarantee period last. If the partial withdrawal is
less than the total value in the variable account investment options, the
withdrawal will be taken proportionately from all of your variable account
investment options. For rules governing the order and manner of withdrawals from
the fixed account investment options, see "FIXED ACCOUNT INVESTMENT OPTIONS".
There is no limit on the frequency of partial withdrawals; however, the
amount withdrawn must be at least $300 or, if less, the entire balance in the
investment option. If after the withdrawal (and deduction of any withdrawal
charge) the amount remaining in the investment option is less than $100, we will
treat the partial withdrawal as a withdrawal of the entire amount held in the
investment option. If a partial withdrawal plus any applicable withdrawal charge
would reduce the contract value to less than $300, we will treat the partial
withdrawal as a total withdrawal of the contract value.
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<PAGE> 27
The amount of any withdrawal from the variable account investment
options will be paid promptly, and in any event within seven days of receipt of
the request, complete with all necessary information at our Annuity Service
Office, except that we reserve the right to defer the right of withdrawal or
postpone payments for any period when:
- the New York Stock Exchange is closed (other than customary
weekend and holiday closings),
- trading on the New York Stock Exchange is restricted,
- an emergency exists as a result of which disposal of
securities held in the Variable Account is not reasonably
practicable or it is not reasonably practicable to determine
the value of the Variable Account's net assets, or
- the SEC, by order, so permits for the protection of security
holders; provided that applicable rules and regulations of the
SEC shall govern as to whether trading is restricted or an
emergency exists.
Withdrawals from the contract may be subject to income tax and a 10%
IRS penalty tax (see "FEDERAL TAX MATTERS"). Withdrawals are permitted from
contracts issued in connection with Section 403(b) qualified plans only under
limited circumstances (see "APPENDIX L - QUALIFIED PLAN TYPES").
Systematic "Income Plan" withdrawals are available.
SPECIAL WITHDRAWAL SERVICES - THE INCOME PLAN
We administer an Income Plan ("IP") which permits you to pre-authorize
a periodic exercise of the contractual withdrawal rights described above. After
entering into an IP agreement, you may instruct us to withdraw a level dollar
amount from specified investment options on a periodic basis. The total of IP
withdrawals in a contract year is limited to not more than 10% of the purchase
payments made (to ensure that no withdrawal or market value charge will ever
apply to an IP withdrawal). If an additional withdrawal is made from a contract
participating in an IP, the IP will terminate automatically and may be
reinstated only on or after the next contract anniversary pursuant to a new
application. The IP is not available to contracts participating in the dollar
cost averaging program or for which purchase payments are being automatically
deducted from a bank account on a periodic basis. IP withdrawals will be free of
withdrawal and market value charges. IP withdrawals, like other withdrawals, may
be subject to income tax and a 10% IRS penalty tax. If you are interested in an
IP, you may obtain a separate application and full information concerning the
program and its restrictions from your securities dealer or our Annuity Service
Office. The IP program is free.
DEATH BENEFIT DURING ACCUMULATION PERIOD
For information on the death benefit applicable to Ven 7 and Ven 8
contracts see Appendix F, and to Ven 1 and Ven 3 contracts see Appendix G.
If you die during the accumulation period, your beneficiary will receive a
death benefit that might exceed your contract value.
IN GENERAL. The following discussion applies principally to contracts
that are not issued in connection with qualified plans, i.e., "NON-QUALIFIED
CONTRACTS." Tax law requirements applicable to qualified plans, and the tax
treatment of amounts held and distributed under such plans, are quite complex.
Accordingly, if your contract is to be used in connection with a qualified plan,
you should seek competent legal and tax advice regarding the suitability of the
contract for the situation involved and the requirements governing the
distribution of benefits, including death benefits, from a contract used in the
plan. In particular, if you intend to use the contract in connection with a
qualified plan, you should consider that the contract provides a death benefit
(described below) that could be characterized as an "incidental death benefit."
There are limits on the amount of incidental benefits that may be provided under
certain qualified plans and the provision of such benefits may result in
currently taxable income to plan participants (see "FEDERAL TAX MATTERS").
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<PAGE> 28
AMOUNT OF DEATH BENEFIT.
The death benefit varies by state and date of issue as follows.
A. The following death benefit generally applies to contracts issued:
<TABLE>
<CAPTION>
ON OR AFTER: IN THE STATES OF:
<S> <C>
May 1, 1998 Alaska, Alabama, Arizona, Arkansas, California, Colorado, Delaware,
Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky,
Louisiana, Maine, Michigan, Mississippi, Missouri, Nebraska, Nevada,
New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma,
Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee,
Utah, Vermont, Virginia, West Virginia, Wisconsin, Wyoming
June 1, 1998 Connecticut
July 1, 1998 Minnesota, Montana, District of Columbia
October 1, 1998 Texas
February 1, 1999 Massachusetts
March 15, 1999 Florida, Maryland, Oregon
November 1, 1999 Washington
</TABLE>
If any owner dies and the oldest owner had an attained age of less than
81 years on the contract date, the death benefit will be determined as follows:
During the first contract year, the death benefit will be the greater
of:
- the contract value or
- the sum of all purchase payments made, less any
amounts deducted in connection with partial
withdrawals.
During any subsequent contract year, the death benefit will be the
greater of:
- the contract value or
- the death benefit on the last day of the previous
contract year, plus any purchase payments made and
less any amounts deducted in connection with partial
withdrawals since then.
If any owner dies on or after his or her 81st birthday, the death
benefit will be the greater of
- the contract value or
- the death benefit on the last day of the contract
year ending just prior to the owner's 81st birthday,
plus any payments made, less amounts deducted in
connection with partial withdrawals.
If any owner dies and the oldest owner had an attained age of 81 years
or greater on the contract date, the death benefit will be the greater of:
- the contract value or
- the sum of all purchase payments made, less any
amounts deducted in connection with partial
withdrawals.
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<PAGE> 29
B. The following death benefit generally applies to contracts issued in Puerto
Rico, and to contracts issued:
<TABLE>
<CAPTION>
PRIOR TO: IN THE STATES OF:
<S> <C>
May 1, 1998 Alaska, Alabama, Arizona, Arkansas, California, Colorado, Delaware,
Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky,
Louisiana, Maine, Michigan, Mississippi, Missouri, Nebraska, Nevada, New
Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma,
Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee,
Utah, Vermont, Virginia, West Virginia, Wisconsin, Wyoming
June 1, 1998 Connecticut
July 1, 1998 Minnesota, Montana, District of Columbia
October 1, 1998 Texas
February 1, 1999 Massachusetts
March 15, 1999 Florida, Maryland, Oregon
November 1, 1999 Washington
</TABLE>
If any owner dies on or prior to his or her 85th birthday and the
oldest owner had an attained age of less than 81 years on the contract date, the
death benefit will be determined as follows:
During the first contract year, the death benefit will be the greater
of:
- the contract value or
- the sum of all purchase payments made, less any amounts
deducted in connection with partial withdrawals.
During any subsequent contract year, the death benefit will be the
greater of:
- the contract value or
- the death benefit on the last day of the previous contract
year, plus any purchase payments made and less any amounts
deducted in connection with partial withdrawals since then.
If any owner dies after his or her 85th birthday and the oldest owner
had an attained age of less than 81 years on the contract date, the death
benefit will be the greater of:
- the contract value or
- the sum of all purchase payments made, less any amounts
deducted in connection with partial withdrawals.
If any owner dies and the oldest owner had an attained age greater than
80 on the contract date, the death benefit will be the contract value less any
applicable withdrawal charges at the time of payment of benefits. For contracts
issued on or after October 1, 1997, we will waive any withdrawal charges applied
against the death benefit.
The determination of the death benefit will be made on the date we
receive written notice and "proof of death" as well as all required claims
forms, at our Annuity Service Office. No one is entitled to the death benefit
until this time. Death benefits will be paid within 7 days of that
determination. Proof of death occurs when we receive one of the following at our
Annuity Service Office within one year of the date of death:
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<PAGE> 30
- a certified copy of a death certificate;
- a certified copy of a decree of a court of competent
jurisdiction as to the finding of death; or
- any other proof satisfactory to us.
If there are any unpaid loans, the death benefit equals the death benefit, as
described above, minus the amount of unpaid loans (including unpaid interest).
PAYMENT OF DEATH BENEFIT. We will pay the death benefit to the
beneficiary if any contract owner dies before the maturity date. If there is a
surviving owner, that contract owner will be deemed to be the beneficiary. No
death benefit is payable on the death of any annuitant, except that if any owner
is not a natural person, the death of any annuitant will be treated as the death
of an owner. On the death of the last surviving annuitant, the owner, if a
natural person, will become the annuitant unless the owner designates another
person as the annuitant.
The death benefit may be taken in the form of a lump sum immediately.
If not taken immediately, the contract will continue subject to the following:
- The beneficiary will become the owner.
- Any excess of the death benefit over the contract value will
be allocated to the owner's investment accounts in proportion
to their relative values on the date of receipt at our Annuity
Service Office of due proof of the owner's death.
- No additional purchase payments may be made.
- If the beneficiary is not the deceased owner's spouse,
distribution of the owner's entire interest in the contract
must be made within five years of the owner's death, or
alternatively, distribution may be made as an annuity, under
one of the annuity options described below, which begins
within one year of the owner's death and is payable over the
life of the beneficiary or over a period not extending beyond
the life expectancy of the beneficiary. If distribution is not
made as an annuity, upon the death of the beneficiary, the
death benefit will equal the contract value and must be
distributed immediately in a single sum.
- If the deceased owner's spouse is the beneficiary, the spouse
continues the contract as the new owner. In such a case, the
distribution rules applicable when a contract owner dies will
apply when the spouse, as the owner, dies. In addition, a
death benefit will be paid upon the death of the spouse. For
purposes of calculating the death benefit payable upon the
death of the spouse, the death benefit paid upon the first
owner's death will be treated as a purchase payment to the
contract. In addition, the death benefit on the last day of
the previous contract year (or the last day of the contract
year ending just prior to the owner's 81st birthday, if
applicable) shall be set to zero as of the date of the first
owner's death.
- If any contract owner dies and the oldest owner had an
attained age of less than 81 on the date as of which the
contract is issued, withdrawal charges are not applied on
payment of the death benefit (whether taken through a partial
or total withdrawal or applied under an annuity option). If
any contract owner dies and the oldest owner had an attained
age greater than 80 on the date as of which the contract was
issued, any applicable withdrawal charges will be assessed
only upon payment of the death benefit (so that if the death
benefit is paid in a subsequent year, a lower withdrawal
charge will be applicable).For contracts issued after October
1, 1997, any withdrawal charge applied against the death
benefit shall be waived.
If any annuitant is changed and any contract owner is not a natural
person, the entire interest in the contract must be distributed to the contract
owner within five years. The amount distributed will be reduced by charges which
would otherwise apply upon withdrawal.
A substitution or addition of any contract owner may result in
resetting the death benefit to an amount equal to the contract value as of the
date of the change. For purposes of subsequent calculations of the death benefit
prior to the maturity date, the contract value on the date of the change will be
treated as a
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payment made on that date. In addition, all payments made and all amounts
deducted in connection with partial withdrawals prior to the date of the change
will not be considered in the determination of the death benefit. No such change
in death benefit will be made if the person whose death will cause the death
benefit to be paid is the same after the change in ownership or if ownership is
transferred to the owner's spouse.
Death benefits will be paid within seven days of the date the amount of
the death benefit is determined, as described above, subject to postponement
under the same circumstances that payment of withdrawals may be postponed (see
"WITHDRAWALS").
PAY-OUT PERIOD PROVISIONS
GENERAL
Annuity benefit payments may be paid in several ways.
You or your beneficiary may elect to have any amounts that we are
obligated to pay on withdrawal or death, or as of the maturity date, paid by
means of periodic annuity benefit payments rather than in one lump sum (subject
to the distribution of death benefit provisions described below).
Generally, we will begin paying annuity benefits to the annuitant under
the contract on the contract's maturity date (the first day of the pay-out
period). The maturity date is the date specified on your contract's
specifications page, unless you change that date. If no date is specified, the
maturity date is the maximum maturity date described below. The maximum maturity
date is the first day of the month following the later of the 85th birthday of
the annuitant or the tenth contract anniversary. (See Appendix E for contracts
issued in Pennsylvania, Appendix F for Ven 7 and Ven 8 contracts, and Appendix G
for Ven 3 and Ven 1 contracts.) You may specify a different maturity date at any
time by written request at least one month before both the previously specified
and the new maturity date. The new maturity date may not be later than the
maximum maturity date unless we consent. Maturity dates which occur when the
annuitant is at an advanced age, e.g., past age 85, may in some circumstances
have adverse income tax consequences (see "FEDERAL TAX MATTERS"). Distributions
from qualified contracts may be required before the maturity date.
You may select the frequency of annuity payments. However, if the
contract value at the maturity date is such that a monthly payment would be less
than $20, we may pay the contract value, minus any unpaid loans, in one lump sum
to the annuitant on the maturity date.
ANNUITY OPTIONS
Annuity benefit payments are available under the contract on a fixed,
variable, or combination fixed and variable basis. Upon purchase of the
contract, and at any time during the accumulation period, you may select one or
more of the annuity options described below on a fixed and/or variable basis
(except Option 5 which is available on a fixed basis only) or choose an
alternate form of payment acceptable to us. If an annuity option is not
selected, we will provide as a default option a life annuity with payments
guaranteed for ten years as described below. Annuity payments will be determined
based on the Investment Account Value of each investment option at the maturity
date. Internal Revenue Service ("IRS") regulations may preclude the availability
of certain annuity options in connection with certain qualified contracts.
Please read the description of each annuity option carefully. In
general, a nonrefund life annuity provides the highest level of payments.
However, because there is no guarantee that any minimum number of payments will
be made, an annuitant may receive only one payment if the annuitant dies prior
to the date the second payment is due. Annuities with payments guaranteed for a
certain number of years may also be elected but the amount of each payment will
be lower than that available under the nonrefund life annuity option.
The following annuity options are guaranteed in the contract.
OPTION 1(a): NON-REFUND LIFE ANNUITY - An annuity with payments during
the lifetime of the annuitant. No payments are due after the death of
the annuitant. Because there is no guarantee that any minimum number of
payments will be made, an annuitant may receive only one payment if the
annuitant dies prior to the date the second payment is due.
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OPTION 1(b): LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 YEARS - An
annuity with payments guaranteed for 10 years and continuing thereafter
during the lifetime of the annuitant. Because payments are guaranteed
for 10 years, annuity payments will be made to the end of such period
if the annuitant dies prior to the end of the tenth year.
OPTION 2(a): JOINT & SURVIVOR NON-REFUND LIFE ANNUITY - An annuity with
payments during the lifetimes of the annuitant and a designated
co-annuitant. No payments are due after the death of the last survivor
of the annuitant and co-annuitant. Because there is no guarantee that
any minimum number of payments will be made, an annuitant or
co-annuitant may receive only one payment if the annuitant and
co-annuitant die prior to the date the second payment is due.
OPTION 2(b): JOINT & SURVIVOR LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR
10 YEARS - An annuity with payments guaranteed for 10 years and
continuing thereafter during the lifetimes of the annuitant and a
designated co-annuitant. Because payments are guaranteed for 10 years,
annuity payments will be made to the end of such period if both the
annuitant and the co-annuitant die prior to the end of the tenth year.
In addition to the foregoing annuity options which we are contractually
obligated to offer at all times, we currently offer the following annuity
options. We may cease offering the following annuity options at any time and may
offer other annuity options in the future.
OPTION 3: LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 5, 15 OR 20 YEARS -
An Annuity with payments guaranteed for 5, 15 or 20 years and
continuing thereafter during the lifetime of the annuitant. Because
payments are guaranteed for the specific number of years, annuity
payments will be made to the end of the last year of the 5, 15 or 20
year period.
OPTION 4: JOINT & TWO-THIRDS SURVIVOR NON-REFUND LIFE ANNUITY - An
annuity with full payments during the joint lifetime of the annuitant
and a designated co-annuitant and two-thirds payments during the
lifetime of the survivor. Because there is no guarantee that any
minimum number of payments will be made, an annuitant or co-annuitant
may receive only one payment if the annuitant and co-annuitant die
prior to the date the second payment is due.
OPTION 5: PERIOD CERTAIN ONLY ANNUITY FOR 5, 10, 15 OR 20 YEARS - An
annuity with payments for a 5, 10, 15 or 20 year period and no payments
thereafter.
DETERMINATION OF AMOUNT OF THE FIRST VARIABLE ANNUITY PAYMENT
The first variable annuity payment is determined by applying that
amount of the contract value used to purchase a variable annuity to the annuity
tables contained in the contract. The amount of the contract value will be
determined as of the date not more than ten business days prior to the maturity
date. The amount of the first and all subsequent fixed annuity payments is
determined on the same basis using the portion of the contract value used to
purchase a fixed annuity. Contract value used to determine annuity payments will
be reduced by any applicable premium taxes.
The rates contained in the annuity tables vary with the annuitant's sex
and age and the annuity option selected However, for contracts issued in
connection with certain employer-sponsored retirement plans sex-distinct tables
may not be used. Under such tables, the longer the life expectancy of the
annuitant under any life annuity option or the longer the period for which
payments are guaranteed under the option, the smaller the amount of the first
monthly variable annuity payment will be. For information on annuity rates for
Ven 1 and Ven 3 contracts see Appendix G. For information on assumed interest
rates applicable to Ven 7 and Ven 8 contracts see Appendix F and for Ven 1 and
Ven 3 contracts see Appendix G.
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ANNUITY UNITS AND THE DETERMINATION OF SUBSEQUENT VARIABLE ANNUITY PAYMENT
Variable annuity payments after the first one will be based on the
investment performance of the sub-accounts selected during the pay-out period.
The amount of a subsequent payment is determined by dividing the amount of the
first annuity payment from each sub-account by the annuity unit value of that
sub-account (as of the same date the contract value to effect the annuity was
determined) to establish the number of annuity units which will thereafter be
used to determine payments. This number of annuity units for each sub-account is
then multiplied by the appropriate annuity unit value as of a uniformly applied
date not more than ten business days before the annuity payment is due, and the
resulting amounts for each sub-account are then totaled to arrive at the amount
of the annuity benefit payment to be made. The number of annuity units generally
remains constant throughout the pay-out period (assuming no transfer is made). A
pro-rata portion of the administration fee will be deducted from each annuity
payment.
The value of an annuity unit for each sub-account for any business day
is determined by multiplying the annuity unit value for the immediately
preceding business day by the net investment factor for that sub-account (see
"NET INVESTMENT FACTOR") for the valuation period for which the annuity unit
value is being calculated and by a factor to neutralize the assumed interest
rate.
A 3% assumed interest rate is built into the annuity tables in the
contract used to determine the first variable annuity payment.
TRANSFERS DURING PAY-OUT PERIOD
Some transfers are permitted during the pay-out period, but subject to a few
more limitations than during the accumulation period.
Once variable annuity payments have begun, you may transfer all or part
of the investment upon which those payments are based from one sub-account to
another. You must submit your transfer request to our Annuity Service Office at
least 30 days before the due date of the first annuity payment to which your
transfer will apply. Transfers after the maturity date will be made by
converting the number of annuity units being transferred to the number of
annuity units of the sub-account to which the transfer is made, so that the next
annuity payment if it were made at that time would be the same amount that it
would have been without the transfer. Thereafter, annuity payments will reflect
changes in the value of the annuity units for the new sub-account selected. We
reserve the right to limit, upon notice, the maximum number of transfers a
contract owner may make per contract year to four. Once annuity payments have
commenced, no transfers may be made from a fixed annuity option to a variable
annuity option or from a variable annuity option to a fixed annuity option. In
addition, we reserve the right to defer the transfer privilege at any time that
we are unable to purchase or redeem shares of the Trust or Merrill Variable
Funds portfolios. We also reserve the right to modify or terminate the transfer
privilege at any time in accordance with applicable law.
DEATH BENEFIT DURING PAY-OUT PERIOD
If an annuity option providing for payments for a guaranteed period has
been selected, and the annuitant dies during the pay-out period, we will make
the remaining guaranteed payments to the beneficiary. Any remaining payments
will be made as rapidly as under the method of distribution being used as of the
date of the annuitant's death. If no beneficiary is living, we will commute any
unpaid guaranteed payments to a single sum (on the basis of the interest rate
used in determining the payments) and pay that single sum to the estate of the
last to die of the annuitant and the beneficiary.
OTHER CONTRACT PROVISIONS
You have a ten-day right to cancel your contract.
TEN DAY RIGHT TO REVIEW
You may cancel the contract by returning it to our Annuity Service
Office or agent at any time within 10 days after receiving it. Within 7 days of
receiving a returned contract, we will pay you the contract value (minus any
unpaid loans), computed at the end of the business day on which we receive your
returned contract.
No withdrawal charge is imposed upon return of a contract within the
ten day right to review period. The ten day right to review may vary in certain
states in order to comply with the requirements of state insurance laws and
regulations. When the contract is issued as an individual retirement annuity
under
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Sections 408 or 408A of the Code, during the first 7 days of the 10 day period,
we will return all purchase payments if this is greater than the amount
otherwise payable.
OWNERSHIP
You are entitled to exercise all rights under your contract.
See Appendix F for information on ownership applicable to certain
contracts which are no longer being issued (Ven 8 contracts).
The contract owner is the person entitled to exercise all rights under
the contract. Prior to the maturity date, the contract owner is the person
designated in the contract or certificate specifications page or as subsequently
named. On and after the maturity date, the annuitant is the contract owner. If
amounts become payable to any beneficiary under the contract, the beneficiary is
the contract owner.
In the case of non-qualified contracts, ownership of the contract may
be changed or the contract may be collaterally assigned at any time prior to the
maturity date, subject to the rights of any irrevocable beneficiary. Assigning a
contract, or changing the ownership of a contract, may be treated as a
(potentially taxable) distribution of the contract value for federal tax
purposes. A change of any contract owner may result in resetting the death
benefit to an amount equal to the contract value as of the date of the change
and treating that value as a purchase payment made on that date for purposes of
computing the amount of the death benefit.
Any change of ownership or assignment must be made in writing. We must
approve any change. Any assignment and any change, if approved, will be
effective as of the date we receive the request at our Annuity Service Office.
We assume no liability for any payments made or actions taken before a change is
approved or an assignment is accepted or responsibility for the validity or
sufficiency of any assignment. An absolute assignment will revoke the interest
of any revocable beneficiary.
In the case of qualified contracts, ownership of the contract generally
may not be transferred except by the trustee of an exempt employees' trust which
is part of a retirement plan qualified under Section 401 of the Code or as
otherwise permitted by applicable IRS regulations. Subject to the foregoing, a
qualified contract may not be sold, assigned, transferred, discounted or pledged
as collateral for a loan or as security for the performance of an obligation or
for any other purpose to any person other than us.
ANNUITANT
The "annuitant" is either you or someone you designate.
The annuitant is any natural person or persons whose life is used to
determine the duration of annuity payments involving life contingencies. The
annuitant is entitled to receive all annuity payments under the contract. If the
contract owner names more than one person as an "annuitant," the second person
named shall be referred to as "CO-ANNUITANT." The annuitant is as designated on
the contract specifications page or in the application, unless changed.
On the death of the annuitant prior to the maturity date, the
co-annuitant, if living, becomes the annuitant. If there is no living
co-annuitant, the owner becomes the annuitant. In the case of certain qualified
contracts, there are limitations on the ability to designate and change the
annuitant and the co-annuitant.
The "beneficiary" is the person you designate to receive the death benefit if
you die.
BENEFICIARY
The beneficiary is the person, persons or entity designated in the
contract specifications page (or as subsequently changed). However, if there is
a surviving contract owner, that person will be treated as the beneficiary. The
beneficiary may be changed subject to the rights of any irrevocable beneficiary.
Any change must be made in writing, approved by us, and (if approved) will be
effective as of the date on which written. We assume no liability for any
payments made or actions taken before the change is approved. If no beneficiary
is living, the contingent beneficiary will be the beneficiary. The interest of
any beneficiary is subject to that of any assignee. If no beneficiary or
contingent beneficiary is living, the beneficiary is the estate of the deceased
contract owner. In the case of certain qualified contracts, IRS regulations may
limit designations of beneficiaries. For information regarding the beneficiary
for Ven 7 and Ven 8 contracts see Appendix F and for Ven 1 and Ven 3 contracts
see Appendix G.
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MODIFICATION
We may not modify your contract or certificate without your consent,
except to the extent required to make it conform to any law or regulation or
ruling issued by a governmental agency. However, in the case of group contracts,
on 60 days' notice to the group holder, we may change the administration fees,
mortality and expense risks charges, annuity purchase rates and the market value
charge as to any certificates issued after the effective date of the
modification. The provisions of the contract shall be interpreted so as to
comply with the requirements of Section 72(s) of the Code.
OUR APPROVAL
We reserve the right to accept or reject any contract application at
our sole discretion.
DISCONTINUANCE OF NEW OWNERS
In the case of group contracts, on thirty days' notice to the group
holder, we may limit or discontinue acceptance of new applications and the
issuance of new certificates.
MISSTATEMENT AND PROOF OF AGE, SEX OR SURVIVAL
We may require proof of age, sex or survival of any person upon whose
age, sex or survival any payment depends. If the age or sex of the annuitant has
been misstated, the benefits will be those that would have been provided for the
annuitant's correct age and sex. If we have made incorrect annuity payments, the
amount of any underpayment will be paid immediately and the amount of any
overpayment will be deducted from future annuity payments.
FIXED ACCOUNT INVESTMENT OPTIONS
For information on Fixed Account Investment Options for Ven 7 and Ven 8
contracts see Appendix F and for Ven 1 and Ven 3 contracts see Appendix G.
The fixed account investment options are not securities.
SECURITIES REGISTRATION. Interests in the fixed account investment
options are not registered under the Securities Act of 1933, as amended, (the
"1933 Act") and our general account is not registered as an investment company
under the 1940 Act. Neither interests in the fixed account investment options
nor the general account are subject to the provisions or restrictions of the
1933 Act or the 1940 Act. Disclosures relating to interests in the fixed account
investment options and the general account nonetheless may be required by the
federal securities laws to be accurate.
GUARANTEE. Pursuant to a Guarantee Agreement dated March 31, 1996, The
Manufacturers Life Insurance Company ("Manulife") unconditionally guarantees to
us, on behalf of and for the benefit of us and owners of fixed annuity contracts
we issue, that it will, on demand, make funds available to us for the timely
payment of contractual claims under certain of our fixed annuity contracts. This
guarantee covers the fixed portion of the contracts described in this
Prospectus. The guarantee may be terminated by Manulife, on notice to us.
Termination will not affect Manulife's continuing liability with respect to all
fixed annuity contracts issued prior to the termination of the guarantee except
if:
- the liability to pay contractual claims under the contracts is
assumed by another insurer, or
- we are sold and the buyer's guarantee is substituted for the
Manulife guarantee.
REINSURANCE. Effective June 30, 1995, we entered into a Reinsurance
Agreement with Peoples Security Life Insurance Company ("PEOPLES") pursuant to
which Peoples reinsures certain amounts with respect to the fixed account
portion of the contract described in this prospectus which were issued prior to
January 1, 1999. Under this Reinsurance Agreement, we remain liable for the
contractual obligations of the contracts' fixed account and Peoples agrees to
reimburse us for certain amounts and obligations in connection with the fixed
account. Peoples contractual liability runs solely to us, and no contract owner
shall have any right of action against Peoples. The Manufacturers Life Insurance
Company (U.S.A.) reinsures certain amounts with respect to the fixed account
portion of the contract for contracts issued after
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January 1, 1999 under a reinsurance agreement with substantially similar terms
to the Peoples reinsurance agreement.
Fixed account investment options guarantee interest of at least 3% .
INVESTMENT OPTIONS. Currently, there are five fixed account
investment options available under the contract in states where approved by the
state insurance department: one, three, five and seven year investment accounts
and, a DCA fixed investment account which may be established under the DCA
program to make automatic transfers to one or more variable investment options.
In Florida, Maryland and Oregon only the one year fixed investment account and
the DCA fixed investment account are offered; the three, five and seven year
investment accounts are not available. If a contract is issued with GRIP in the
state of Washington, the five fixed accounts will not be offered as investment
options. However, if the contract is issued without GRIP, then the five fixed
accounts will be offered as investment options. We may offer additional fixed
account investment options for any yearly period from two to ten years. Fixed
investment accounts provide for the accumulation of interest on purchase
payments at guaranteed rates for the duration of the guarantee period. We
determine the guaranteed interest rates on new amounts allocated or transferred
to a fixed investment account from time-to-time, according to market conditions.
In no event will the guaranteed rate of interest be less than 3%. Once an
interest rate is guaranteed for a fixed investment account, it is guaranteed for
the duration of the guarantee period, and we may not change it.
Notwithstanding the foregoing, with respect to contracts issued in the
State of Oregon, no purchase payments may be invested, transferred or reinvested
into any fixed account investment option with a guarantee period of more than
one year within 15 years of the maturity date, and no purchase payments may be
invested in the one year fixed account investment option within six years of the
maturity date.
INVESTMENT ACCOUNTS. You may allocate purchase payments, or make
transfers from the variable investment options, to fixed account investment
options at any time prior to the maturity date. We establish a separate
investment account each time you allocate or transfer amounts to fixed account
investment options, except that, for amounts allocated or transferred to the
same fixed account investment option on the same day, we will establish a single
investment account. Amounts may not be allocated to a fixed account investment
option that would extend the guarantee period beyond the maturity date.
RENEWALS. At the end of a guarantee period, you may establish a new
investment account with the same guarantee period at the then current interest
rate, select a different fixed account investment option or transfer the amounts
to a variable account investment option, all without the imposition of any
charge. You may not select a guarantee period that would extend beyond the
maturity date. In the case of renewals within one year of the maturity date, the
only fixed account investment option available is to have interest accrued up to
the maturity date at the then current interest rate for one year guarantee
periods.
If you do not specify the renewal option desired, we will select the
same guarantee period as has just expired, so long as such period does not
extend beyond the maturity date. In the event a renewal would extend beyond the
maturity date, we will select the longest period that will not extend beyond
such date, except in the case of a renewal within one year of the maturity date
in which case we will credit interest up to the maturity date at the then
current interest rate for one year guarantee periods.
A market value charge may apply to certain transactions.
MARKET VALUE CHARGE. Any amount withdrawn, transferred or borrowed from
an investment account prior to the end of the guarantee period may be subject to
a market value charge. A market value charge is assessed only when current
interest rates are higher than the guaranteed interest rate on the account. The
purpose of the charge is to compensate us for our investment losses on amounts
withdrawn, transferred or borrowed prior to the maturity date. The formula for
calculating this charge is set forth below. A market value charge will be
calculated separately for each investment account affected by a transaction to
which a market value charge may apply. The market value charge for an investment
account will be calculated by multiplying the amount withdrawn or transferred
from the investment account by the adjustment factor described below. In the
case of group contracts, we reserve the right to modify the market value charge
as to any certificates issued after the effective date of a change specified in
written notice to the group holder.
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The adjustment factor is determined by the following formula:
0.75x(B-A)xC/12 where:
A - The guaranteed interest rate on the investment account.
B - The guaranteed interest rate available, on the date the
request is processed, for amounts allocated to a new
investment account with the same length of guarantee period as
the investment account from which the amounts are being
withdrawn.
C - The number of complete months remaining to the end of the
guarantee period.
For purposes of applying this calculation, the maximum difference between "B"
and "A" will be 3%. The adjustment factor may never be less than zero.
The total market value charge will be the sum of the market value
charges for each investment account being withdrawn. Where the guaranteed rate
available on the date of the request is less than the rate guaranteed on the
investment account from which the amounts are being withdrawn (B-A in the
adjustment factor is negative), there is no market value charge. There is only a
market value charge when interest rates have increased (B-A in the adjustment
factor is positive).
We make no market value charge on withdrawals from the fixed account
investment options in the following situations:
- death of the owner;
- amounts withdrawn to pay fees or charges;
- amounts applied at the maturity date to purchase an annuity at
the guaranteed rates provided in the contract;
- amounts withdrawn from investment accounts within one month
prior to the end of the guarantee period;
- amounts withdrawn from a one-year fixed investment account;
and
- amounts withdrawn in any contract year that do not exceed 10%
of (i) total purchase payments less (ii) any prior partial
withdrawals in that contract year.
Notwithstanding application of the foregoing formula, in no event will
the market value charge
- be greater than the amount by which the earnings attributable
to the amount withdrawn or transferred from an investment
account exceed an annual rate of 3%,
- together with any withdrawal charges for an investment account
be greater than 10% of the amount transferred or withdrawn, or
- reduce the amount payable on withdrawal or transfer below the
amount required under the non-forfeiture laws of the state
with jurisdiction over the contract.
The cumulative effect of the market value and withdrawal charges could result in
a contract owner receiving total withdrawal proceeds of less than the contract
owner's purchase payments. See Appendix F for information on the market value
charge applicable to Ven 7 and Ven 8 contracts.
Withdrawals and some transfers from fixed account investment options are
permitted during the accumulation period.
TRANSFERS. During the accumulation period, you may transfer amounts
among your fixed account investment options and from your fixed account
investment options to the variable account investment options; provided that no
transfer from a fixed account investment option may be made unless the amount to
be transferred has been held in such account for at least one year, except for
transfers made pursuant to the DCA program. Any transfer other than one made at
the end of a guarantee period may be subject to a market value charge. Where
there are multiple investment accounts within a fixed account investment option,
amounts must be transferred from the fixed account investment option on a
first-in-first-out basis.
WITHDRAWALS. You may make total and partial withdrawals of amounts held
in the fixed account investment options at any time during the accumulation
period. Withdrawals from the fixed account investment options will be made in
the same manner and be subject to the same limitations as set forth
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under "WITHDRAWALS" plus the following provisions also apply to withdrawals from
the fixed account investment options:
- We reserve the right to defer payment of amounts withdrawn
from the fixed account investment options for up to six months
from the date we receive the written withdrawal request. If a
withdrawal is deferred for more than 30 days pursuant to this
right, we will pay interest on the amount deferred at a rate
not less than 3% per year (or a higher rate if required by
applicable law). See Appendix F for information on the
interest rate applicable to Ven 7 and Ven 8 contracts.
- If there are multiple investment accounts under the fixed
account investment options, amounts must be withdrawn from
those accounts on a first-in-first-out basis.
- The market value charge described above may apply to
withdrawals from any investment option except for a one year
investment option. In the event a market value charge applies
to a withdrawal from a fixed investment account, it will be
calculated with respect to the full amount in the investment
account and deducted from the amount payable in the case of a
total withdrawal. In the case of a partial withdrawal, the
market value charge will be calculated on the amount requested
and deducted, if applicable, from the remaining investment
account value.
If you request a partial withdrawal in excess of your amount in the
variable account investment options and do not specify the fixed account
investment options from which the withdrawal is to be made, such withdrawal will
be made from your investment options beginning with the shortest guarantee
period. Within such sequence, where there are multiple investment accounts
within a fixed account investment option, withdrawals will be made on a
first-in-first-out basis.
Withdrawals from the contract may be subject to income tax and a 10%
IRS penalty tax (see "FEDERAL TAX MATTERS" below). Withdrawals are permitted
from contracts or certificates issued in connection with Section 403(b)
qualified plans only under limited circumstances (see "APPENDIX L - QUALIFIED
PLAN TYPES"
LOANS. We offer a loan privilege only to owners of contracts issued in
connection with Section 403(b) qualified plans that are not subject to Title I
of ERISA. If you own such a contract, you may borrow from us, using your
contract as the only security for the loan, in the same manner and subject to
the same limitations as described under "LOANS" below. The market value charge
described above may apply to amounts transferred from the fixed investment
accounts to the loan account in connection with such loans and, if applicable,
will be deducted from the amount so transferred.
FIXED ANNUITY OPTIONS. Subject to the distribution of death benefits
provisions (see "DEATH BENEFIT DURING ACCUMULATION PERIOD" above), on death,
withdrawal or the maturity date of the contract, the proceeds may be applied to
a fixed annuity option (see "ANNUITY OPTIONS" above). The amount of each fixed
annuity payment is determined by applying the portion of the proceeds (minus any
applicable premium taxes) applied to purchase the fixed annuity to the
appropriate table in the contract. If the table we are then using is more
favorable to you, we will substitute that table. We guarantee the dollar amount
of fixed annuity payments.
GUARANTEED RETIREMENT INCOME PROGRAM
The Guaranteed Retirement Income Program ("GRIP") guarantees a minimum
lifetime fixed income benefit in the form of fixed monthly annuity payments.
GRIP is based on the aggregate net purchase payments applied to the contract,
accumulated at interest, minus an adjustment for any partial withdrawals. The
amount of the monthly annuity payment provided by GRIP is determined by applying
the Income Base, described below, to the annuity purchase rates set forth in the
GRIP Rider. Because the fixed annuity options provided for in the contract are
based on the contract value at the time of annuitization, the amount of the
monthly payments under such options may exceed the monthly payments provided by
the GRIP Rider. If GRIP is exercised and the annuity payment available under the
contract is greater than the monthly payment provided by the GRIP Rider, we will
pay the monthly annuity payment available under the contract.
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GRIP is available for new contracts issued on or after May 1, 1998.
GRIP is not available in all states and is not available for Ven 7, Ven 8, Ven 3
or Ven 1 contracts. If a contract is issued with GRIP in the state of
Washington, the five fixed accounts will not be offered as investment options.
However, if the contract is issued without GRIP, then the five fixed accounts
will be offered as investment options.
Income Base. The Income Base is equal to (a) less (b), where
(a) is the sum of all payments made, accumulated at the growth factor indicated
below starting on the date each payment is allocated to the contract, and
(b) is the sum of Income Base reductions on a pro rata basis in connection with
partial withdrawals taken, accumulated at the growth factor indicated below
starting on the date each deduction occurs.
The growth factor is 6% per annum for annuitant issue ages up to age 75, and 4%
per annum for annuitant issue ages 76 or older. The growth factor is reduced to
0% once the annuitant has attained age 85. Income Base reduction on a pro rata
basis is equal to the Income Base immediately prior to a partial withdrawal
multiplied by the percentage reduction in contract value resulting from a
partial withdrawal.
GRIP can only be elected at issue and, once elected, is irrevocable.
The Income Base is also reduced for any withdrawal charge remaining on
the date GRIP is exercised. We reserve the right to reduce the Income Base by
any premium taxes that may apply.
The Income Base is used solely for purposes of calculating GRIP and
does not provide a contract value or guarantee performance of any investment
option.
Step-Up of Income Base. Within 30 days immediately following any
contract anniversary, you may elect to step-up the Income Base to the contract
value on that contract anniversary by sending us a written request. If you elect
to step-up the Income Base, the earliest date that you may exercise GRIP is
extended to the seventh contract anniversary following the most recent date the
Income Base was stepped-up to contract value (the "Step-Up Date").
Following a step-up of the Income Base, the Income Base as of the
Step-Up Date is equal to the contract value on the Step-Up Date. For purposes of
subsequent calculation of the Income Base, the contract value on the Step-Up
Date will be treated as a purchase payment made on that date. In addition, all
payments made and all amounts deducted in connection with partial withdrawals
prior to the Step-Up Date will not be considered in determining the Income Base.
Conditions of Exercise of GRIP. GRIP may be exercised subject to the
following conditions:
1. GRIP must be exercised within 30 days immediately following an
Election Date. An Election Date is the seventh or later contract anniversary
following the date GRIP is elected or, in the case of a step-up of the Income
Base, the seventh or later contract anniversary following the Step-Up Date.
2. GRIP must be exercised by the later of (i) the contract anniversary
immediately prior to the annuitant's 85th birthday or (ii) the tenth contract
anniversary.
Monthly Income Factors. GRIP may be used to purchase a guaranteed
lifetime income under the following annuity options: (1) Life Annuity with a
10-Year Period Certain or (2) Joint and Survivor Life Annuity with a 20-Year
Period Certain.
Option 1: Life Annuity with a 10-Year Period certain. An annuity with
payments guaranteed for 10 years and continuing thereafter during the
lifetime of the annuitant. Since payments are guaranteed for 10 years,
annuity payments will be made to the end of such period if the
annuitant dies prior to the end of the tenth year.
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Option 2: Joint and Survivor Life Annuity with a 20-Year Period
Certain. An annuity with payments guaranteed for 20 years and
continuing thereafter during the lifetime of the annuitant and a
designated co-annuitant. Since payments are guaranteed for 20 years,
annuity payments will be made to the end of such period if both the
annuitant and the co-annuitant die prior to the end of the twentieth
year.
The monthly income factors depend upon the annuitant's (and
co-annuitant's, if any) sex and age (nearest birthday) and the annuity option
selected. The factors are based on the 1983 Table A projected at Scale G, and
reflect an assumed interest rate of 3% per year. The annuitant may only be
changed to an individual that is the same age or younger than the current
annuitant. Unisex rates are used when determining the monthly income factor for
employer-sponsored qualified contracts.
In the case of Qualified Plans, if the annuitant is at an advanced age
upon exercise of GRIP, we will shorten the guarantee period as follows: The
guarantee period will be the life expectancy of the annuitant(s), as specified
by IRS Unisex tables (partial years are not counted). Life expectancy will be
based on single life or joint life IRS tables, depending on the annuity option
chosen. Once the guarantee period is shortened upon exercise of GRIP, it will
not be further reduced. The guarantee period will never be increased based on
the life expectancy of the annuitant or at any other time or due to any other
event.
Illustrated below are GRIP amounts per $100,000 of initial payments,
for a male annuitant and a female co-annuitant both age 60 (at issue), on
contract anniversaries as indicated below, assuming no subsequent payments or
withdrawals and assuming there was no step-up of the Income Base. We will, upon
request, provide illustrations of GRIP for an annuitant based on other
assumptions.
<TABLE>
<CAPTION>
GRIP-Annual Income Life Annuity GRIP-Annual Income Joint &
Contract Anniversary with 10 Year Period Certain Survivor Life Annuity with 20
at Election Year Period Certain
-------------------- ------------------------------- -----------------------------
<S> <C> <C>
7 $ 9,797 $ 7,830
10 $12,593 $ 9,842
15 $19,124 $14,293
</TABLE>
GRIP Rider Fee. The risk assumed by us associated with GRIP is that the
annuity benefits payable under GRIP are greater than the annuity benefits that
would have been payable had the owner selected another annuity benefit permitted
by the contract (see "ANNUITY PROVISIONS"). To compensate us for this risk, we
charge an annual GRIP Rider Fee (the "Rider Fee"). On or before the Maturity
Date, the Rider Fee is deducted on each contract anniversary. The amount of the
Rider Fee is equal to 0.25% multiplied by the Income Base in effect on that
contract anniversary. The fee is withdrawn from each investment option in the
same proportion that the value of the investment account of each investment
option bears to the contract value.
In the case of full withdrawal of contract value on any date other than
the contract anniversary, we will deduct the Rider Fee from the amount paid upon
withdrawal. In the case of a full withdrawal, the Rider Fee is equal to 0.25%
multiplied by the Income Base immediately prior to withdrawal. The Rider Fee
will not be deducted during the annuity period. For purposes of determining the
Rider Fee, annuity payment commencement shall be treated as a full withdrawal.
GRIP DOES NOT PROVIDE CONTRACT VALUE OR GUARANTEE PERFORMANCE OF ANY
INVESTMENT OPTION. BECAUSE THIS BENEFIT IS BASED ON CONSERVATIVE ACTUARIAL
FACTORS, THE LEVEL OF LIFETIME INCOME THAT IT GUARANTEES MAY OFTEN BE LESS THAN
THE LEVEL THAT WOULD BE PROVIDED BY APPLICATION OF CONTRACT VALUE AT CURRENT
ANNUITY FACTORS. THEREFORE, GRIP SHOULD BE REGARDED AS A SAFETY NET. AS
DESCRIBED ABOVE UNDER "GUARANTEED RETIREMENT INCOME PROGRAM," WITHDRAWALS WILL
REDUCE GRIP.
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CHARGES AND DEDUCTIONS
Charges and deductions under the contracts are assessed against
purchase payments, contract values or annuity payments. Currently, there are no
deductions made from purchase payments, except for premium taxes in certain
states. In addition, there are deductions from and expenses paid out of the
assets of the Trust and Merrill Variable Funds portfolios that are described in
the accompanying Prospectuses of the Trust and Merrill Variable Funds. For
information on the GRIP Rider Fee, see "Guaranteed Retirement Income Program"
above.
WITHDRAWAL CHARGES
For information on Withdrawal Charges for Ven 7 and Ven 8 contracts see
Appendix F and for Ven 3 and Ven 1 contracts see Appendix G.
If you make a withdrawal from your contract during the accumulation
period, a withdrawal charge (contingent deferred sales charge) may be assessed
against amounts withdrawn attributable to purchase payments that have been in
the contract less than seven complete contract years. There is never a
withdrawal charge with respect to earnings accumulated in the contract, certain
other free withdrawal amounts described below or purchase payments that have
been in the contract more than seven complete contract years. In no event may
the total withdrawal charges exceed 6% of the amount invested. The amount of the
withdrawal charge and when it is assessed is discussed below.
Each withdrawal from the contract is allocated first to the "FREE
WITHDRAWAL AMOUNT" and second to "UNLIQUIDATED PURCHASE PAYMENTS". In any
contract year, the free withdrawal amount for that year is the greater of
- 10% of total purchase payments (less all prior partial
withdrawals in that contract year), and
- the accumulated earnings of the contract (i.e., the excess of
the contract value on the date of withdrawal over the
unliquidated purchase payments).
Withdrawals allocated to the free withdrawal amount may be withdrawn
without the imposition of a withdrawal charge. The free withdrawal amount will
be applied to a requested withdrawal, first, to withdrawals from variable
account investment options and then to withdrawals from fixed account investment
options beginning with those with the shortest guarantee period first and the
longest guarantee period last.
If the amount of a withdrawal exceeds the free withdrawal amount, the
excess will be allocated to purchase payments which will be liquidated on a
first-in first-out basis. On any withdrawal request, we will liquidate purchase
payments equal to the amount of the withdrawal request which exceeds the free
withdrawal amount in the order such purchase payments were made: the oldest
unliquidated purchase payment first, the next purchase payment second, etc.
until all purchase payments have been liquidated.
Each purchase payment or portion thereof liquidated in connection with
a withdrawal request is subject to a withdrawal charge based on the length of
time the purchase payment has been in the contract. The amount of the withdrawal
charge is calculated by multiplying the amount of the purchase payment being
liquidated by the applicable withdrawal charge percentage obtained from the
table below.
<TABLE>
<CAPTION>
NUMBER OF COMPLETE YEARS WITHDRAWAL CHARGE
PURCHASE PAYMENT IN CONTRACT PERCENTAGE
---------------------------- -----------------
<S> <C>
0 6%
1 6%
2 5%
3 5%
4 4%
5 3%
6 2%
7+ 0%
</TABLE>
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The total withdrawal charge will be the sum of the withdrawal charges
for the purchase payments being liquidated.
The withdrawal charge is deducted from the contract value remaining
after the contract owner is paid the amount requested, except in the case of a
complete withdrawal when it is deducted from the amount otherwise payable. In
the case of a partial withdrawal, the amount requested from an investment
account may not exceed the value of that investment account less any applicable
withdrawal charge.
There is generally no withdrawal charge on distributions made as a
result of the death of the contract owner or, if applicable, the annuitant, and
no withdrawal charges are imposed on the maturity date if the contract owner
annuitizes as provided in the contract.
The amount collected from the withdrawal charge will be used to
reimburse us for the compensation paid to cover selling concessions to
broker-dealers, preparation of sales literature and other expenses related to
sales activity.
For examples of calculation of the withdrawal charge, see Appendix C.
Withdrawals from the fixed account investment options may be subject to a market
value charge in addition to the withdrawal charge described above. In the case
of group annuity contracts, we reserve the right to modify the withdrawal charge
as to certificates issued after the effective date of a change specified in
written notice to the group holder.
REDUCTION OR ELIMINATION OF WITHDRAWAL CHARGE
The amount of the withdrawal charge on a contract may be reduced or
eliminated when sales of the contracts are made to individuals or to a group of
individuals in such a manner that results in savings of sales expenses. We will
determine entitlement to such a reduction in the withdrawal charge in the
following manner:
- - The size and type of group to which sales are to be made will be
considered. Generally, sales expenses for a larger group are smaller
than for a smaller group because of the ability to implement large
numbers of contracts with fewer sales contacts.
- - The total amount of purchase payments to be received will be
considered. Per-dollar sales expenses are likely to be less on larger
purchase payments than on smaller ones.
- - Any prior or existing relationship with us will be considered.
Per-contract sales expenses are likely to be less when there is a prior
or existing relationship because of the likelihood of implementing the
contract with fewer sales contacts.
- - The level of commissions paid to selling broker-dealers will be
considered. Certain broker-dealers may offer the contract in connection
with financial planning programs offered on a fee-for-service basis. In
view of the financial planning fees, such broker-dealers may elect to
receive lower commissions for sales of the contracts, thereby reducing
our sales expenses.
- - There may be other circumstances of which we are not presently aware,
which could result in reduced sales expenses.
If, after consideration of the foregoing factors, we determine that
there will be a reduction in sales expenses, we will provide a reduction in the
withdrawal charge. The withdrawal charge will be eliminated when a contract is
issued to officers, directors or employees (or a relative thereof), of us or of
Manulife, the Trust or any of their affiliates. In no event will reduction or
elimination of the withdrawal charge be permitted where that reduction or
elimination will be unfairly discriminatory to any person. For further
information, contact your registered representative.
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ADMINISTRATION FEES
For information on the Administration Fee applicable to Ven 7 and Ven 8
contracts see Appendix F and to Ven 3 and Ven 1 contracts see Appendix G.
We deduct asset-based charges totaling 1.40% on an annual basis for
administration and mortality and expense risks.
Except as noted below, we will deduct each year an annual
administration fee of $30 as partial compensation for the cost of providing all
administrative services attributable to the contracts and the operations of the
Variable Account and us in connection with the contracts. However, if prior to
the maturity date the contract value is equal to or greater than $100,000 at the
time of the fee's assessment, the fee will be waived. During the accumulation
period, this administration fee is deducted on the last day of each contract
year. It is withdrawn from each investment option in the same proportion that
the value of such investment option bears to the contract value. If the entire
contract is withdrawn on other than the last day of any contract year, the $30
administration fee will be deducted from the amount paid. During the pay-out
period, the fee is deducted on a pro-rata basis from each annuity payment.
A daily charge in an amount equal to 0.15% of the value of each
variable investment account on an annual basis is also deducted from each
sub-account to reimburse us for administrative expenses. This asset based
administrative charge will not be deducted from the fixed account investment
options. The charge will be reflected in the contract value as a proportionate
reduction in the value of each variable investment account. Even though
administrative expenses may increase, we guarantee that it will not increase the
amount of the administration fees.
REDUCTION OR ELIMINATION OF ANNUAL ADMINISTRATION FEE
The amount of the annual administration fee on a contract may be
reduced or eliminated when sales of the contracts are made to individuals or to
a group of individuals in such a manner that results in savings of
administration expenses. The entitlement to such a reduction or elimination of
the administration charges will be determined by us in the following manner:
1. The size and type of group to which administrative services are to
be provided will be considered.
2. The total amount of purchase payments to be received will be
considered.
3. There may be other circumstances of which we are not presently
aware, which could result in reduced administrative expense.
If, after consideration of the foregoing factors, it is determined that
there will be a reduction or elimination of administration expenses, we will
provide a reduction in the annual administration fee. In no event will reduction
or elimination of the administration fees be permitted where such reduction or
elimination will be unfairly discriminatory to any person. We may waive all or a
portion of the administration fee when a contract is issued to an officer,
director or employee, or relative thereof, of us, Manulife, the Trust or any of
our or their affiliates.
MORTALITY AND EXPENSE RISKS CHARGE
For information on mortality and expense risks charges for Ven 1
contracts see Appendix G.
The mortality risk we assume is the risk that annuitants may live for a
longer period of time than we estimate. We assume this mortality risk by virtue
of annuity benefit payment rates incorporated into the contract which cannot be
changed. This assures each annuitant that his or her longevity will not have an
adverse effect on the amount of annuity benefit payments. We also assume
mortality risks in connection with our guarantee that, if the contract owner
dies during the accumulation period, we will pay a death benefit. (See "Death
Benefit During Accumulation Period") The expense risk we assume is the risk that
the administration charges, distribution charge, or withdrawal charge may be
insufficient to cover actual expenses.
To compensate us for assuming these risks, we deduct from each of the
sub-accounts a daily charge in an amount equal to 1.25% of the value of the
variable investment accounts on an annual basis. In
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<PAGE> 44
the case of individual contracts, the rate of the mortality and expense risks
charge cannot be increased. In the case of group contracts, the rate of the
mortality and expense risks charge can be increased, but only as to certificates
issued after the effective date of the increase and upon 60 days' prior written
notice to the group holder. In the case of group contracts, we may issue
contracts and certificates with a mortality or expense risks charge at rates
less than those set out above, if we conclude that the mortality or expense
risks of the groups involved are less than the risks it has determined for
persons for whom the contracts and certificates have been generally designed. If
the charge is insufficient to cover the actual cost of the mortality and expense
risks assumed, we will bear the loss. Conversely, if the charge proves more than
sufficient, the excess will be profit to us and will be available for any proper
corporate purpose including, among other things, payment of distribution
expenses. The mortality and expense risks charge is not assessed against the
fixed account investment options. We will charge you for state premium taxes to
the extent we incur them and reserve the right to charge you for new taxes we
may incur.
TAXES
We reserve the right to charge, or provide for, certain taxes against
purchase payments, contract values or annuity payments. Such taxes may include
premium taxes or other taxes levied by any government entity which we determine
to have resulted from our:
- establishment or maintenance of the Variable Account,
- receipt of purchase payments,
- issuance of the contacts, or
- commencement or continuance of annuity payments under the
contracts.
In addition, we will withhold taxes to the extent required by applicable law.
Except for residents of those states which apply premium taxes upon
receipt of purchase payments, premium taxes will be deducted from the contract
value used to provide for fixed or variable annuity payments. For residents of
those states which apply premium taxes upon receipt of purchase payments,
premium taxes will be deducted upon payment of any withdrawal benefits, upon any
annuitization, or payment of death benefits. The amount deducted will depend on
the premium tax assessed in the applicable state. State premium taxes currently
range from 0% to 3.5% depending on the jurisdiction and the tax status of the
contract and are subject to change by the legislature or other authority. See
Appendix D for a table of State Premium Taxes.
EXPENSES OF DISTRIBUTING CONTRACTS
MSS, the principal underwriter for the contracts, pays compensation to
selling brokers in varying amounts which under normal circumstances are not
expected to exceed 6.5% of purchase payments plus 0.75% of the contract value
per year commencing one year after each purchase payment. These expenses are not
assessed against the contracts but are instead paid by MSS. See "Distribution of
Contracts" for further information.
FEDERAL TAX MATTERS
INTRODUCTION
The following discussion of the Federal income tax treatment of the
contract is not exhaustive, does not purport to cover all situations, and is not
intended as tax advice. The Federal income tax treatment of an annuity contract
is unclear in certain circumstances, and you should consult a qualified tax
advisor with regard to the application of the law to your circumstances. This
discussion is based on the Code, IRS regulations, and interpretations existing
on the date of this Prospectus. These authorities, however, are subject to
change by Congress, the Treasury Department, and judicial decisions.
This discussion does not address state or local tax consequences
associated with the purchase of a contract. In addition, WE MAKE NO GUARANTEE
REGARDING ANY TAX TREATMENT -- FEDERAL, STATE, OR LOCAL -- OF ANY CONTRACT OR OF
ANY TRANSACTION INVOLVING A CONTRACT.
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<PAGE> 45
OUR TAX STATUS
We are taxed as a life insurance company. Because the operations of the
Variable Account are a part of, and are taxed with, our operations, the Variable
Account is not separately taxed as a "regulated investment company" under the
Code. Under existing Federal income tax laws, we are not taxed on the investment
income and capital gains of the Variable Account. We do not anticipate that we
will be taxed on the income and gains of the Variable Account, but if we are,
then we may impose a corresponding charge against the Variable Account.
TAXATION OF ANNUITIES IN GENERAL
Gains inside the contract are usually tax-deferred until you make a withdrawal,
the annuitant starts receiving annuity benefit payments, or the beneficiary
receives a death benefit payment.
TAX DEFERRAL DURING ACCUMULATION PERIOD
Under existing provisions of the Code, except as described below, any
increase in the contract value is generally not taxable to the contract owner or
annuitant until received, either in the form of annuity payments, or in some
other form of distribution. Certain requirements must be satisfied in order for
this general rule to apply, including:
- the contract must be owned by an individual (or treated as
owned by an individual),
- the investments of the Variable Account must be "adequately
diversified" in accordance with IRS regulations,
- we, rather than the contract owner, must be considered the
owner of the assets of the Variable Account for federal tax
purposes, and
- the contract must provide for appropriate amortization,
through annuity benefit payments, of the contract's purchase
payments and earnings, e.g., the pay-out period must not begin
near the end of the annuitant's life expectancy.
NON-NATURAL OWNERS. As a general rule, deferred annuity contracts held
by "non-natural persons" (such as a corporation, trust or other similar entity)
are not treated as annuity contracts for Federal income tax purposes. The
investment income on such contracts is taxed as ordinary income that is received
or accrued by the owner of the contract during the taxable year. There are
several exceptions to this general rule for non-natural contract owners. First,
contracts will generally be treated as held by a natural person if the nominal
owner is a trust or other entity which holds the contract as an agent for a
natural person. This special exception will not apply, however, in the case of
any employer who is the nominal owner of an annuity contract under a
non-qualified deferred compensation arrangement for its employees.
Exceptions to the general rule for non-natural contract owners will
also apply with respect to:
- contracts acquired by an estate of a decedent by reason of the
death of the decedent,
- certain qualified contracts,
- certain contracts purchased by employers upon the termination
of certain qualified plans,
- certain contracts used in connection with structured
settlement agreements, and
- contracts purchased with a single premium when the annuity
starting date (as defined in the tax law) is no later than a
year from purchase of the annuity and substantially equal
periodic payments are made, not less frequently than annually,
during the annuity period.
LOSS OF INTEREST DEDUCTION WHERE CONTRACTS ARE HELD BY OR FOR THE
BENEFIT OF CERTAIN NON-NATURAL PERSONS. In the case of contracts issued after
June 8, 1997 to a non-natural taxpayer (such as a corporation or a trust), or
held for the benefit of such an entity, a portion of otherwise deductible
interest may not be deductible by the entity, regardless of whether the interest
relates to debt used to purchase or carry the contract. However, this interest
deduction disallowance does not affect a contract if the income on the contract
is treated as ordinary income that is received or accrued by the owner during
the taxable year. Entities that are considering purchasing the contract, or
entities that will be beneficiaries under a contract, should consult a tax
advisor.
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DIVERSIFICATION REQUIREMENTS. For a contract to be treated as an
annuity for Federal income tax purposes, the investments of the Variable Account
must be "adequately diversified" in accordance with Treasury Department
Regulations. The Secretary of the Treasury has issued regulations which
prescribe standards for determining whether the investments of the Variable
Account are "adequately diversified." If the Variable Account failed to comply
with these diversification standards, a contract would not be treated as an
annuity contract for Federal income tax purposes and the contract owner would
generally be taxable currently on the excess of the contract value over the
premiums paid for the contract.
Although we do not control the investments of the Trust or the Merrill
Variable Funds, we expect that the Trust and the Merrill Variable Funds will
comply with such regulations so that the Variable Account will be considered
"adequately diversified."
OWNERSHIP TREATMENT. In certain circumstances, a variable annuity
contract owner may be considered the owner, for Federal income tax purposes, of
the assets of the insurance company separate account used to support his or her
contract. In those circumstances, income and gains from such separate account
assets would be includible in the contract owner's gross income. The IRS has
stated in published rulings that a variable contract owner will be considered
the owner of separate account assets if the owner possesses "incidents of
ownership" in those assets, such as the ability to exercise investment control
over the assets. In addition, the Treasury Department announced, in connection
with the issuance of regulations concerning investment diversification, that
those regulations "do not provide guidance concerning the circumstances in which
investor control of the investments of a segregated asset account may cause the
investor, rather than the insurance company, to be treated as the owner of the
assets in the account." This announcement also stated that guidance would be
issued in the form of regulations or rulings on the "extent to which
Policyholders may direct their investments to particular sub-accounts of a
separate account without being treated as owners of the underlying assets." As
of the date of this Prospectus, no such guidance has been issued.
The ownership rights under this contract are similar to, but different
in certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of separate account assets. For
example, the owner of this contract has the choice of many more investment
options to which to allocate premiums and contract values, and may be able to
transfer among investment options more frequently than in such rulings. THESE
DIFFERENCES COULD RESULT IN THE CONTRACT OWNER BEING TREATED AS THE OWNER OF THE
ASSETS OF THE VARIABLE ACCOUNT AND THUS SUBJECT TO CURRENT TAXATION ON THE
INCOME AND GAINS FROM THOSE ASSETS. In addition, we do not know what standards
will be set forth in the regulations or rulings which the Treasury Department
has stated it expects to issue. We therefore reserve the right to modify the
contract as necessary to attempt to prevent contract owners from being
considered the owners of the assets of the Variable Account.
DELAYED PAY-OUT PERIODS. If the contract's pay-out period commences (or
is scheduled to commence) at a time when the annuitant has reached an advanced
age, (e.g., past age 85), it is possible that the contract would not be treated
as an annuity for Federal income tax purposes. In that event, the income and
gains under the contract could be currently includible in the owner's income.
The remainder of this discussion assumes that the contract will be
treated as an annuity contract for Federal income tax purposes and that we will
be treated as the owner of the Variable Account assets.
TAXATION OF PARTIAL AND FULL WITHDRAWALS
In the case of a partial withdrawal, amounts received are includible in
income to the extent the contract value before the withdrawal exceeds the
"INVESTMENT IN THE CONTRACT." In the case of a full withdrawal, amounts received
are includible in income to the extent they exceed the investment in the
contract. For these purposes the investment in the contract at any time equals
the total of the purchase payments made under the contract to that time (to the
extent such payments were neither deductible when made nor excludible from
income as, for example, in the case of certain employer contributions to
qualified contracts) less any amounts previously received from the contract
which were not included in income.
Other than in the case of certain qualified contracts, any amount
received as a loan under a contract, and any assignment or pledge (or agreement
to assign or pledge) any portion of the contract value, is treated as a
withdrawal of such amount or portion. (Loans, assignments and pledges are
permitted only
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in limited circumstances under qualified contracts.) The investment in the
contract is increased by the amount includible in income with respect to such
assignment or pledge, though it is not affected by any other aspect of the
assignment or pledge (including its release). If an individual transfers his or
her interest in an annuity contract without adequate consideration to a person
other than the owner's spouse (or to a former spouse incident to divorce), the
owner will be taxed on the difference between the contract value and the
investment in the contract at the time of transfer. In such a case, the
transferee's investment in the contract will be increased to reflect the
increase in the transferor's income.
The contract provides a death benefit that in certain circumstances may
exceed the greater of the purchase payments and the contract value. As described
elsewhere in this Prospectus, we impose certain charges with respect to the
death benefit. It is possible that those charges (or some portion thereof) could
be treated for Federal income tax purposes as a partial withdrawal from the
contract.
There may be special income tax issues present in situations where the
owner and the annuitant are not the same person and are not married to one
another. A tax advisor should be consulted in those situations.
A portion of each annuity payment is usually taxable as ordinary income.
TAXATION OF ANNUITY BENEFIT PAYMENTS
Normally, a portion of each annuity benefit payment is taxable as
ordinary income. The taxable portion of an annuity benefit payment is equal to
the excess of the payment over the "EXCLUSION AMOUNT." In the case of variable
annuity payments, the exclusion amount is the investment in the contract
(defined above) allocated to the variable annuity option, adjusted for any
period certain or refund feature, when payments begin to be made divided by the
number of payments expected to be made (determined by IRS regulations which take
into account the annuitant's life expectancy and the form of annuity benefit
selected). In the case of fixed annuity payments, the exclusion amount is the
amount determined by multiplying the payment by the ratio of (a) to (b), where:
(a) is the investment in the contract allocated to the fixed annuity
option (adjusted for any period certain or refund feature) and
(b) is the total expected value of fixed annuity payments for the term
of the contract (determined under IRS regulations).
A simplified method of determining the taxable portion of annuity payments
applies to contracts issued in connection with certain qualified plans other
than IRAs.
Once the total amount of the investment in the contract is excluded
using these ratios, annuity payments will be fully taxable. If annuity payments
cease because of the death of the annuitant and before the total amount of the
investment in the contract is recovered, the unrecovered amount generally will
be allowed as a deduction to the annuitant in his or her last taxable year.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a contract because of the death of an
owner or the annuitant. During the accumulation period, death benefit proceeds
are includible in income as follows:
- if distributed in a lump sum, they are taxed in the same
manner as a full withdrawal, as described above, or
- if distributed under an annuity option, they are taxed in the
same manner as annuity payments, as described above.
During the pay-out period, where a guaranteed period exists under an annuity
option and the annuitant dies before the end of that period, payments made to
the beneficiary for the remainder of that period are includible in income as
follows:
- if received in a lump sum, they are includible in income to
the extent that they exceed the unrecovered investment in the
contract at that time, or
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- if distributed in accordance with the existing annuity option
selected, they are fully excludable from income until the
remaining investment in the contract is deemed to be
recovered, and all annuity payments thereafter are fully
includible in income.
Withdrawals prior to age 59-1/2 may incur a 10% IRS penalty tax.
PENALTY TAX ON PREMATURE DISTRIBUTIONS
There is a 10% IRS penalty tax on the taxable amount of any payment
from a non-qualified contract. Exceptions to this penalty tax include
distributions:
- received on or after the contract owner reaches age 59-1/2;
- attributable to the contract owner becoming disabled (as
defined in the tax law);
- made to a beneficiary on or after the death of the contract
owner or, if the contract owner is not an individual, on or
after the death of the primary annuitant (as defined in the
tax law);
- made as a series of substantially equal periodic payments (not
less frequently than annually) for the life (or life
expectancy) of the owner or for the joint lives (or joint life
expectancies) of the owner and designated beneficiary (as
defined in the tax law);
- made under an annuity contract purchased with a single premium
when the annuity starting date (as defined in the tax law) is
no later than a year from purchase of the annuity and
substantially equal periodic payments are made, not less
frequently than annually, during the annuity period; or
- made with respect to certain annuities issued in connection
with structured settlement agreements.
A similar penalty tax, applicable to distributions from certain qualified
contracts, is discussed below.
AGGREGATION OF CONTRACTS
In certain circumstances, the amount of an annuity payment or a
withdrawal from a contract that is includible in income may be determined by
combining some or all of the non-qualified contracts owned by an individual. For
example, if a person purchases a contract offered by this Prospectus and also
purchases at approximately the same time an immediate annuity, the IRS may treat
the two contracts as one contract. Similarly, if a person transfers part of his
interest in one annuity contract to purchase another annuity contract, the IRS
might treat the two contracts as one contract. In addition, if a person
purchases two or more deferred annuity contracts from the same insurance company
(or its affiliates) during any calendar year, all such contracts will be treated
as one contract. The effects of such aggregation are not clear; however, it
could affect the amount of a withdrawal or an annuity payment that is taxable
and the amount which might be subject to the penalty tax described above.
Special tax provisions apply to qualified plans. Consult your tax advisor prior
to using the contract with a qualified plan.
QUALIFIED RETIREMENT PLANS
The contracts are also designed for use in connection with certain
types of retirement plans which receive favorable treatment under the Code
("QUALIFIED PLANS"). Numerous special tax rules apply to the participants in
qualified plans and to the contracts used in connection with qualified plans.
Therefore, no attempt is made in this Prospectus to provide more than general
information about use of the contract with the various types of qualified plans.
Brief descriptions of various types of qualified plans in connection with which
we may issue a contract are contained in Appendix L to this Prospectus. Appendix
L also discusses certain potential tax consequences associated with the use of
the contract with certain qualified plans which should be considered by a
purchaser. Persons intending to use the contract in connection with a qualified
plan should consult a tax advisor.
The tax rules applicable to qualified plans vary according to the type
of plan and the terms and conditions of the plan itself. For example, for both
withdrawals and annuity payments under certain qualified contracts, there may be
no "investment in the contract" and the total amount received may be
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taxable. Also, loans from qualified contracts, where allowed, are subject to a
variety of limitations, including restrictions as to the amount that may be
borrowed, the duration of the loan, and the manner in which the loan must be
repaid. (You should always consult your tax advisor and retirement plan
fiduciary prior to exercising your loan privileges.) Both the amount of the
contribution that may bemade, and the tax deduction or exclusion that you may
claim for that contribution, are limited under qualified plans.
If the contract is used in connection with a qualified plan, the owner
and annuitant must be the same individual. If a co-annuitant is named, all
distributions made while the annuitant is alive must be made to the annuitant.
Also, if a co-annuitant is named who is not the annuitant's spouse, the annuity
options which are available may be limited, depending on the difference in ages
between the annuitant and co-annuitant. Furthermore, the length of any guarantee
period may be limited in some circumstances. Additionally, for contracts issued
in connection with qualified plans subject to the Employee Retirement Income
Security Act, the spouse or ex-spouse of the owner will have rights in the
contract. In such a case, the owner may need the consent of the spouse or
ex-spouse to change annuity options or make a withdrawal from the contract.
In addition, special rules apply to the time at which distributions
must commence and the form in which the distributions must be paid. For example,
failure to comply with minimum distribution requirements applicable to qualified
plans will result in the imposition of an excise tax. This excise tax generally
equals 50% of the amount by which a minimum required distribution exceeds the
actual distribution from the qualified plan. In the case of IRAs (other than
Roth IRAs), distributions of minimum amounts (as specified in the tax law) must
generally commence by April 1 of the calendar year following the calendar year
in which the owner attains age 70-1/2. In the case of certain other qualified
plans, distributions of such minimum amounts must generally commence by the
later of this date or April 1 of the calendar year following the calendar year
in which the employee retires.
There is also a 10% IRS penalty tax on the taxable amount of any
payment from certain qualified contracts (but not Section 457 plans). (The
amount of the penalty tax is 25% of the taxable amount of any payment received
from a "SIMPLE retirement account" during the 2-year period beginning on the
date the individual first participated in any qualified salary reduction
arrangement (as defined in the tax law) maintained by the individual's
employer.) There are exceptions to this penalty tax which vary depending on the
type of qualified plan. In the case of an "Individual Retirement Annuity" or an
"IRA," including a "SIMPLE IRA," exceptions provide that the penalty tax does
not apply to a payment:
- received on or after the contract owner reaches age 59-1/2,
- received on or after the owner's death or because of the
owner's disability (as defined in the tax law), or
- made as a series of substantially equal periodic payments (not
less frequently than annually) for the life (or life
expectancy) of the owner or for the joint lives (or joint life
expectancies) of the owner and designated beneficiary (as
defined in the tax law).
These exceptions, as well as certain others not described herein, generally
apply to taxable distributions from other qualified plans (although, in the case
of plans qualified under Sections 401 and 403, the exception for substantially
equal periodic payments applies only if the owner has separated from service).
In addition, the penalty tax does not apply to certain distributions from IRAs
taken after December 31, 1997 which are used for qualified first time home
purchases or for higher education expenses. Special conditions must be met to
qualify for these two exceptions to the penalty tax. If you wish to take a
distribution from an IRA for these purposes, you should consult your tax
advisor.
When issued in connection with a qualified plan, a contract will be
amended as generally necessary to conform to the requirements of the plan.
However, the rights of any person to any benefits under qualified plans may be
subject to the terms and conditions of the plans themselves, regardless of the
terms and conditions of the contract. In addition, we will not be bound by terms
and conditions of qualified plans to the extent those terms and conditions
contradict the contract, unless we consent.
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DIRECT ROLLOVERS
If the contract is used in connection with a retirement plan that is
qualified under Sections 401(a), 403(a), or 403(b) of the Code, any "ELIGIBLE
ROLLOVER DISTRIBUTION" from the contract will be subject to "direct rollover"
and mandatory withholding requirements. An eligible rollover distribution
generally is any taxable distribution from such qualified plans, excluding
certain amounts such as (i) minimum distributions required under Section
401(a)(9) of the Code, (ii) certain distributions for life, life expectancy, or
for 10 years or more which are part of a "series of substantially equal periodic
payments," and (iii) hardship distributions as defined in the tax law.
Under these requirements, Federal income tax equal to 20% of the
eligible rollover distribution will be withheld from the amount of the
distribution. Unlike withholding on certain other amounts distributed from the
contract, discussed below, the owner cannot elect out of withholding with
respect to an eligible rollover distribution. However, this 20% withholding will
not apply if, instead of receiving the eligible rollover distribution, the
person entitled to the distribution elects to have it directly transferred to
certain qualified plans. Prior to receiving an eligible rollover distribution, a
notice will be provided explaining generally the direct rollover and mandatory
withholding requirements and how to avoid the 20% withholding by electing a
direct rollover.
LOANS
We offer a loan privilege only to owners of contracts issued in
connection with Section 403(b) qualified plans that are not subject to Title I
of ERISA. If you are not an owner of such a contract, none of this discussion
about loans applies to your contract. If you are an owner of such a contract,
you may borrow from us, using your contract as the only security for the loan.
Loans are subject to certain tax law restrictions and to applicable retirement
program rules (collectively, "LOAN RULES"). You should consult your tax advisor
and retirement plan fiduciary prior to taking a loan under the contract.
The maximum loan value of a contract is normally 80% of the contract
value, although loan rules may serve to reduce that maximum in some cases. The
amount available for a loan at any given time is the loan value less any unpaid
prior loans. Unpaid prior loans equal the amount of any prior loans plus
interest accrued on those loans. Loans will be made only upon written request
from the owner. We will make loans within seven days of receiving a properly
completed loan application (applications are available from our Annuity Service
Office), subject to postponement under the same circumstances that payment of
withdrawals may be postponed (see "WITHDRAWALS").
When you request a loan, we will reduce your investment in the
investment accounts and transfer the amount of the loan to the "LOAN ACCOUNT," a
part of our general account. You may designate the investment accounts from
which the loan is to be withdrawn. Absent such a designation, the amount of the
loan will be withdrawn from the investment accounts in accordance with the rules
for making partial withdrawals (see "WITHDRAWALS"). The contract provides that
you may repay unpaid loans at any time. Under applicable loan rules, loans
generally must be repaid within five years, repayments must be made at least
quarterly and repayments must be made in substantially equal amounts. When a
loan is repaid, the amount of the repayment will be transferred from the loan
account to the investment accounts. You may designate the investment accounts to
which a repayment is to be allocated. Otherwise, the repayment will be allocated
in the same manner as your most recent purchase payment. On each anniversary of
the date your contract was issued, we will transfer from the investment accounts
to the loan account the excess of the balance of your loan over the balance in
your loan account.
We charge interest of 6% per year on contract loans. Loan interest is
payable in arrears and, unless paid in cash, the accrued loan interest is added
to the amount of the debt and bears interest at 6% as well. We credit interest
with respect to amounts held in the loan account at a rate of 4% per year.
Consequently, the net cost of loans under the contract is 2%. If on any date
unpaid loans under your contract exceed your contract value, your contract will
be in default. In such case you will receive a notice indicating the payment
needed to bring your contract out of default and will
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have a thirty-one day grace period within which to pay the default amount. If
the required payment is not made within the grace period, your contract may be
terminated without value.
The amount of any unpaid loans will be deducted from the death benefit
otherwise payable under the contract. In addition, loans, whether or not repaid,
will have a permanent effect on contract value because the investment results of
the investment accounts will apply only to the unborrowed portion of the
contract value. The longer a loan is unpaid, the greater the effect is likely to
be. The effect could be favorable or unfavorable. If the investment results are
greater than the rate being credited on amounts held in your loan account while
your loan is unpaid, your contract value will not increase as rapidly as it
would have if no loan were unpaid. If investment results are below that rate,
contract value will be greater than it would have been had no loan been
outstanding.
See Appendix G for information on Loans applicable to Ven 1 and Ven 3
contracts.
FEDERAL INCOME TAX WITHHOLDING
We may be required to withhold amounts from some payments for Federal income tax
payments.
We will withhold and remit to the U.S. Government a part of the taxable
portion of each distribution made under a contract unless the person receiving
the distribution notifies us at or before the time of the distribution that he
or she elects not to have any amounts withheld. In certain circumstances, we may
be required to withhold tax. The withholding rates applicable to the taxable
portion of periodic annuity payments are the same as the withholding rates
generally applicable to payments of wages. In addition, the withholding rate
applicable to the taxable portion of non-periodic payments (including
withdrawals prior to the maturity date and rollovers from non-Roth IRAs to Roth
IRAs) is 10%. As discussed above, the withholding rate applicable to eligible
rollover distributions is 20%.
GENERAL MATTERS
We may advertise our investment performance.
PERFORMANCE DATA
Each of the sub-accounts may quote total return figures in its
advertising and sales materials. PAST PERFORMANCE FIGURES ARE NOT INTENDED TO
INDICATE FUTURE PERFORMANCE OF ANY SUB-ACCOUNT. The sub-accounts may advertise
both "standardized" and "non-standardized" total return figures. Standardized
figures will include average annual total return figures for one, five and ten
years, or from the inception date of the relevant sub-account of the Variable
Account (if that period since inception is shorter than one of those periods).
Non-standardized total return figures also may be quoted, including figures that
do not assume redemption at the end of the time period. Non-standardized figures
may also include total return numbers from the inception date of the portfolio
or ten years, whichever period is shorter. Where the period since inception is
less than one year, the total return quoted will be the aggregate return for the
period.
Average annual total return is the average annual compounded rate of
return that equates a purchase payment to the market value of that purchase
payment on the last day of the period for which the return is calculated. The
aggregate total return is the percentage change (not annualized) that equates a
purchase payment to the market value of such purchase payment on the last day of
the period for which the return is calculated. For purposes of the calculations
it is assumed that an initial payment of $1,000 is made on the first day of the
period for which the return is calculated. For total return figures quoted for
periods prior to the commencement of the offering of the contract, standardized
performance data will be the historical performance of the Trust or Merrill
Variable Funds portfolio from the date the applicable sub-account of the
Variable Account first became available for investment under other contracts
that we offer, adjusted to reflect current contract charges. In the case of
non-standardized performance, performance figures will be the historical
performance of the Trust or Merrill Variable Funds portfolio from the inception
date of the portfolio (or in the case of the Trust portfolios created in
connection with the merger of Manulife Series Fund, Inc. into the Trust, the
inception date of the applicable predecessor Manulife Series Fund, Inc.
portfolio), adjusted to reflect current contract charges.
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ASSET ALLOCATION AND TIMING SERVICES
We are aware that certain third parties are offering asset allocation
and timing services in connection with the contracts. In certain cases we have
agreed to honor transfer instructions from such asset allocation and timing
services where we have received powers of attorney, in a form acceptable to us,
from the contract owners participating in the service. The contract is not
designed for professional market timing organizations or other entities or
persons engaging in programmed, frequent or large exchanges (collectively,
"market timers") to speculate on short-term movements in the market since such
activity may be disruptive to the Trust or Merrill Variable Funds portfolios and
increase their transaction costs. Therefore, in order to prevent excessive use
of the exchange privilege, we reserve the right to (a) reject or restrict any
specific purchase and exchange requests and (b) impose specific limitations with
respect to market timers, including restricting exchanges by market timers to
certain variable investment options (transfers by market timers into or out of
fixed investment options is not permitted). WE DO NOT ENDORSE, APPROVE OR
RECOMMEND SUCH SERVICES IN ANY WAY AND YOU SHOULD BE AWARE THAT FEES PAID FOR
SUCH SERVICES ARE SEPARATE AND IN ADDITION TO FEES PAID UNDER THE CONTRACTS.
RESTRICTIONS UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM
Section 830.105 of the Texas Government Code permits participants in
the Texas Optional Retirement Program ("ORP") to withdraw their interest in a
variable annuity contract issued under the ORP only upon:
- termination of employment in the Texas public institutions of
higher education,
- retirement,
- death, or
- the participant's attainment of age 70-1/2.
Accordingly, before any amounts may be distributed from the contract, proof must
be furnished to us that one of these four events has occurred. The foregoing
restrictions on withdrawal do not apply in the event a participant in the ORP
transfers the contract value to another contract or another qualified custodian
during the period of participation in the ORP. Loans are not available under
contracts subject to the ORP.
We pay broker-dealers to sell the contracts.
DISTRIBUTION OF CONTRACTS
Manufacturers Securities Services, LLC ('MSS"), a Delaware limited
liability company that we control, is the principal underwriter of the
contracts. MSS, located at 73 Tremont Street, Boston, Massachusetts 02108, also
is the investment adviser to the Trust. MSS is a broker-dealer registered under
the Securities Exchange Act of 1934 (the "1934 Act") and a member of the
National Association of Securities Dealers, Inc. (the "NASD"). MSS has entered
into a non-exclusive promotional agent agreement with Manulife Wood Logan, Inc.
("MANULIFE WOOD LOGAN"). Manulife Wood Logan is a broker-dealer registered under
the 1934 Act and a member of the NASD. Manulife Wood Logan is an indirect wholly
owned subsidiary of MFC. Sales of the contracts will be made by registered
representatives of broker-dealers authorized by MSS to sell the contracts. Those
registered representatives will also be our licensed insurance agents. Under the
promotional agent agreement, Manulife Wood Logan will recruit and provide sales
training and licensing assistance to those registered representatives. In
addition, Manulife Wood Logan will prepare sales and promotional materials for
our approval.
CONTRACT OWNER INQUIRIES
Your inquiries should be directed to our Annuity Service Office mailing
address at P.O. Box 9230, Boston, Massachusetts 02205-9230.
CONFIRMATION STATEMENTS
You will be sent confirmation statements for certain transactions in
your account. You should carefully review these statements to verify their
accuracy. Any mistakes should immediately be reported to
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our Annuity Service Office. If you fail to notify our Annuity Service Office of
any mistake within 60 days of the mailing of the confirmation statement, you
will be deemed to have ratified the transaction.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party
or to which the assets of the Variable Account are subject. Neither we nor MSS
are involved in any litigation that is of material importance to either, or that
relates to the Variable Account.
YEAR 2000 ISSUES
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when information
using year 2000 dates is processed. In addition, similar problems may arise in
some systems which use certain dates in 1999 to represent something other than a
date. Although the change in date has occurred, it is not possible to conclude
that all aspects of the Year 2000 Issue that may affect us, including those
related to customers, suppliers, or other third parties, have been fully
resolved.
CANCELLATION OF CONTRACT
We may, at our option, cancel a contract at the end of any two
consecutive contract years in which no purchase payments by or on behalf of you,
have been made, if both:
- the total purchase payments made for the contract, less any
withdrawals, are less than $2,000; and
- the contract value at the end of such two year period is less
than $2,000.
We, as a matter of administrative practice, will attempt to notify you
prior to such cancellation in order to allow you to make the necessary purchase
payment to keep the contract in force. The cancellation of contract provisions
may vary in certain states in order to comply with the requirements of insurance
laws and regulations in such states.
VOTING INTEREST
As stated above under "Merrill Variable Funds", we will vote shares of
the Trust portfolios and the Merrill Variable Funds held in the Variable Account
at shareholder meetings according to voting instructions received from the
persons having the voting interest under the contracts.
Accumulation Period. During the accumulation period, the contract owner
has the voting interest under a contract. The number of votes for each portfolio
for which voting instructions may be given is determined by dividing the value
of the investment account corresponding to the sub-account in which such
portfolio shares are held by the net asset value per share of that portfolio.
Pay-out Period. During the pay-out period, the annuitant has the voting
interest under a contract. The number of votes as to each portfolio for which
voting instructions may be given is determined by dividing the reserve for the
contract allocated to the sub-account in which such portfolio shares are held by
the net asset value per share of that portfolio.
Generally, the number of votes tends to decrease as annuity payments
progress since the amount of reserves attributable to a contract will usually
decrease after commencement of annuity payments. We will determine the number of
portfolio shares for which voting instructions may be given not more than 90
days prior to the meeting.
REINSURANCE ARRANGEMENTS
We utilize reinsurance as part of our risk management program. Under
any reinsurance agreement, we remain liable for the contractual obligations of
the contracts' guaranteed benefits and
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the reinsurer(s) agree to reimburse us for certain amounts and obligations in
connection with the risks covered in the reinsurance agreements. The reinsurer's
contractual liability runs solely to us, and no contract owner shall have any
right of action against any reinsurer. In evaluating reinsurers, we consider the
financial and claims paying ability ratings of the reinsurer. Our philosophy is
to minimize incidental credit risk. We do so by engaging in secure types of
reinsurance transactions with high quality reinsurers and diversifying
reinsurance counterparties to limit concentrations. Some of the benefits that
are currently reinsured include guaranteed death benefits, fixed account
guarantees, and GRIP.
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APPENDIX A
SPECIAL TERMS
The following terms as used in this Prospectus have the indicated
meanings:
Accumulation Period - The period between the issue date of the contract
and the maturity date of the contract. During this period, purchase payments are
typically made to the contract by the owner.
Accumulation Unit - A unit of measure that is used to calculate the
value of the variable portion of the contract before the maturity date.
Annuitant - Any natural person or persons to whom annuity payments are
made and whose life is used to determine the duration of annuity payments
involving life contingencies. If the contract owner names more than one person
as an "annuitant," the second person named shall be referred to as
"co-annuitant." The "annuitant" and "co-annuitant" will be referred to
collectively as "annuitant." The "annuitant" is as designated on the contract or
certificate specification page, unless changed.
Annuity Option - The method selected by the contract owner (or as
specified in the contract if no selection is made) for annuity payments made by
the Company.
Annuity Service Office - The mailing address of the service office is
P.O. Box 9230, Boston, Massachusetts 02205-9230.
Annuity Unit - A unit of measure that is used after the maturity date
to calculate variable annuity payments.
Beneficiary - The person, persons or entity entitled to the death
benefit under the contract upon the death of a contract owner or, in certain
circumstances, an annuitant. The beneficiary is as specified in the contract or
certificate specifications page, unless changed. If there is a surviving
contract owner, that person will be deemed the beneficiary.
Certificate - The document issued to each owner which summarizes the
rights and benefits of the owner under the contract.
Contingent Beneficiary - The person, persons or entity to become the
beneficiary if the beneficiary is not alive. The contingent beneficiary is as
specified in the application, unless changed.
Contract Anniversary - In the case of an individual annuity contract,
the anniversary of the contract date. For a group contract, the anniversary of
the date of issue of a certificate under the contract.
Contract Date - In the case of an individual annuity contract, the date
of issue of the contract. In the case of a group annuity contract, the effective
date of participation under the group annuity contract as designated in the
certificate specifications page.
Contract Value - The total of the investment account values and, if
applicable, any amount in the loan account attributable to the contract.
Contract Year - The period of twelve consecutive months beginning on
the contract date or any anniversary thereof.
Debt - Any amounts in the loan account attributable to the contract
plus any accrued loan interest. The loan provision is applicable to certain
qualified contracts only.
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Due Proof of Death - Due Proof of Death is required upon the death of
the contract owner or annuitant, as applicable. One of the following must be
received at the Annuity Service Office within one year of the date of death:
(a) A certified copy of a death certificate;
(b) A certified copy of a decree of a court of competent
jurisdiction as to the finding of death; or
(c) Any other proof satisfactory to us.
Death benefits will be paid within 7 days of receipt of due proof of death and
all required claim forms at the Company's Annuity Service Office.
Fixed Annuity - An annuity option with payments which are predetermined
and guaranteed as to dollar amount.
General Account - All the assets of the Company other than assets in
separate accounts.
Group Holder - In the case of a group annuity contract, the person,
persons or entity to whom the contract is issued.
Investment Account - An account established by the Company which
represents a contract owner's interest in an investment option prior to the
maturity date.
Investment Account Value - The value of a contract owner's investment
in an investment account.
Investment Options - The investment choices available to contract
owners. Currently, there are forty-one variable and five fixed investment
options under the contract.
Loan Account - The portion of the general account that is used for
collateral when a loan is taken.
Market Value Charge - A charge that may be assessed if amounts are
withdrawn or transferred from the three, five or seven year investment options
prior to the end of the interest rate guarantee period.
Maturity Date - The date on which annuity benefits commence. The
maturity date is the date specified on the contract or certificate
specifications page and is generally the first day of the month following the
later of the annuitant's 85th birthday or the tenth contract anniversary, unless
changed. See Appendix F for information on the Maturity Date for Ven 7 and Ven 8
contracts and Appendix G for information on the Maturity Date for Ven 3 and Ven
1 contracts.
Net Purchase Payment - The purchase payment less the amount of premium
tax.
Non-Qualified Certificates - Certificates issued under non-qualified
Contracts.
Non-Qualified Contracts - Contracts which are not issued under
qualified plans.
Owner or Contract Owner - In the case of an individual contract, the
person, persons (co-owner) or entity entitled to all of the ownership rights
under the contract. In the case of a group annuity contract, the person, persons
or entity named in a certificate and entitled to all of the ownership rights
under the contract not expressly reserved to the group holder. The owner has the
legal right to make all changes in contractual designations where specifically
permitted by the contract. The owner is as specified in the contract or
certificate specifications page, unless changed. The maximum issue age is 85.
Pay-out Period - The pay-out period is the period when we make annuity
benefit payments to you.
Portfolio - A separate investment portfolio of the Trust or the Merrill
Variable Funds, mutual funds in which the Variable Account invests, or of any
successor mutual funds.
Purchase Payment - An amount paid by a contract owner to the Company as
consideration for the benefits provided by the contract.
Qualified Certificates - Certificates issued under qualified contracts.
A-2
<PAGE> 57
Qualified Contracts - Contracts issued under qualified plans.
Qualified Plans - Retirement plans which receive favorable tax
treatment under Section 401, 403, 408, 408A or 457 of the Internal Revenue Code
of 1986, as amended.
Separate Account - A segregated account of the Company that is not
commingled with the Company's general assets and obligations.
Sub-Account(s) - One or more of the sub-accounts of the Variable
Account. Each sub-account is invested in shares of a different portfolio.
Valuation Date - Any date on which the New York Stock Exchange is open
for business and the net asset value of a portfolio is determined.
Valuation Period - Any period from one valuation date to the next,
measured from the time on each such date that the net asset value of each
portfolio is determined.
Variable Account - The Variable Account, which is a separate account of
the Company.
Variable Annuity - An annuity option with payments which: (1) are not
predetermined or guaranteed as to dollar amount, and (2) vary in relation to the
investment experience of one or more specified sub-accounts.
A-3
<PAGE> 58
APPENDIX B
TABLE OF ACCUMULATION UNIT VALUES FOR
CONTRACTS DESCRIBED IN THIS PROSPECTUS(1)
<TABLE>
<CAPTION>
INDIVIDUAL CONTRACT GROUP CONTRACT
UNIT VALUE UNIT VALUE NUMBER OF UNITS NUMBER OF UNITS
SUB-ACCOUNT AT START OF YEAR(2) AT END OF YEAR AT END OF YEAR AT END OF YEAR
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets
1997 $12.500000 $ 8.180904 461,452.138 74,344.781
1998 8.180904 7.695249 755,538.125 157,041.182
1999 7.695249 12.359297 2,290,228.806 516,973.155
Science & Technology
1997 $12.500000 $13.647195 1,643,020.899 385,384.991
1998 13.647195 14.381705 1,766,701.306 733,336.652
1999 14.381705 37.943261 9,827,872.523 2,787,082.717
International Small Cap
1996 $12.500000 $13.493094 2,508,877.311 265,493.981
1997 13.493094 13.410016 3,471,789.485 411,567.524
1998 13.410016 14.792077 3,364,323.347 445,595.774
1999 14.792077 26.974754 3,104,142.787 590,286.471
Aggressive Growth
1997 $12.500000 $12.327066 1,855,271.120 347,682.217
1998 12.327066 12.680777 2,204,988.070 413,146.923
1999 12.680777 16.628126 3,175,556.947 642,031.433
Emerging Small Company
1997 $12.500000 $14.574077 1,261,104.634 211,397.254
1998 14.574077 14.381705 1,766,701.306 346,289.470
1999 14.381705 24.610648 2,282,640.849 391,924.052
Small Company Blend
1999 $12.500000 $15.922213 1,081,325.431 236,863.814
Mid Cap Growth
1996 $12.500000 $13.215952 4,970,485.965 684,451.580
1997 13.215952 15.020670 7,199,403.308 1,150,785.107
1998 15.020670 19.002856 8,705,899.524 1,409,072.931
1999 19.002856 27.113084 9,777,264.740 1,841,074.862
Mid Cap Stock
1999 $12.500000 $12.483520 937,955.877 199,187.406
Overseas
1995 $10.000000 $10.554228 2,338,302.067 403,796.120
1996 10.554228 11.718276 6,224,551.234 783,705.750
1997 11.718276 11.545714 7,490,974.192 1,064,531.666
1998 11.545714 12.290162 7,846,958.079 1,111,741.652
1999 12.290162 17.044524 9,341,522.459 1,269,249.155
International Stock
1997 $12.500000 $12.652231 1,311,720.798 204,655.753
1998 12.652231 14.337171 1,682,421.588 309,081.617
1999 14.337171 18.338932 2,281,283.494 439,631.206
International Value
1999 $12.500000 $12.860110 962,070.937 179,717.654
</TABLE>
B-1
<PAGE> 59
<TABLE>
<CAPTION>
INDIVIDUAL CONTRACT GROUP CONTRACT
UNIT VALUE UNIT VALUE NUMBER OF UNITS NUMBER OF UNITS
SUB-ACCOUNT AT START OF YEAR(2) AT END OF YEAR AT END OF YEAR AT END OF YEAR
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mid Cap Blend
1994 $14.381312 $14.786831 891,587.416 156,302.930
1995 14.786831 20.821819 5,881,806.714 761,321.040
1996 20.821819 24.664354 12,141,813.159 1,637,731.552
1997 24.664354 29.002593 13,343,419.201 1,935,946.769
1998 29.002593 31.289551 13,823,427.732 2,089,408.090
1999 31.289551 39.416089 12,680,796.239 2,169,912.103
Small Company Value
1997 $12.500000 $11.898363 620,681.436 59,637.804
1998 11.898363 11.178700 2,716,433.485 363,594.336
1999 11.178700 11.904646 2,227,809.455 447,851.113
Global Equity
1994 $16.715126 $15.500933 951,915.210 171,668.821
1995 15.500933 16.459655 3,472,776.106 583,284.547
1996 16.459655 18.276450 6,625,243.867 923,612.249
1997 18.276450 21.770913 8,196,104.137 1,299,904.123
1998 21.770913 24.098970 9,225,007.542 1,410,900.881
1999 24.098970 24.633827 8,734,027.228 1,417,111.243
Growth
1996 $12.500000 $13.727312 1,629,270.725 252,538.943
1997 13.727312 16.968111 3,610,591.057 639,712.776
1998 16.968111 20.739989 4,904,765.089 1,046,714.538
1999 20.739989 28.060585 7,961,636.213 1,786,314.584
Large Cap Growth
1994 $12.538660 $12.381395 202,014.859 41,051.814
1995 12.381395 14.990551 963,754.656 102,929.895
1996 14.990551 16.701647 1,725,531.634 162,245.394
1997 16.701647 19.614359 1,842,826.443 188,134.226
1998 19.614359 23.040505 2,032,060.452 207,714.978
1999 23.040505 28.465074 3,457,002.544 540,918.056
Quantitative Equity
1997 $12.500000 $16.107191 634,340.601 215,077.482
1998 16.107191 20.068624 1,177,427.311 600,960.185
1999 20.068624 24.202942 2,895,069.542 1,393,991.081
Blue Chip Growth
1994 $ 8.699511 $ 8.837480 427,027.154 67,651.751
1995 8.837480 11.026969 3,534,123.332 532,417.987
1996 11.026969 13.688523 7,508,607.872 1,036,815.886
1997 13.688523 17.134232 11,974,571.122 2,075,335.712
1998 17.134232 21.710674 15,628,004.547 3,273,092.167
1999 21.710674 25.568866 21,222,107.562 5,266,110.754
Real Estate Securities
1997 $12.500000 $14.949140 961,596.983 145,941.281
1998 14.949140 12.317190 1,341,124.477 239,992.320
1999 12.317190 11.174188 1,134,441.161 266,405.169
Value
1997 $12.500000 $15.057118 2,974,221.078 477,917.950
1998 15.057118 14.591878 4,657,068.062 850,683.716
1999 14.591878 13.987433 4,097,746.800 820,885.210
</TABLE>
B-2
<PAGE> 60
<TABLE>
<CAPTION>
INDIVIDUAL CONTRACT GROUP CONTRACT
UNIT VALUE UNIT VALUE NUMBER OF UNITS NUMBER OF UNITS
SUB-ACCOUNT AT START OF YEAR(2) AT END OF YEAR AT END OF YEAR AT END OF YEAR
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth & Income
1994 $13.239339 $13.076664 675,761.489 147,028.139
1995 13.076664 16.660889 4,936,977.686 916,107.230
1996 16.660889 20.178770 11,948,147.164 2,035,385.742
1997 20.178770 26.431239 17,029,624.733 3,295,978.088
1998 26.431239 32.976967 21,547,089.791 4,330,884.038
1999 32.976967 38.655938 27,232,378.764 5,915,996.753
U.S. Large Cap Value
1999 $12.500000 $12.721279 3,353,379.148 1,016,576.242
Equity-Income
1994 $11.375744 $11.107620 747,374.695 147,434.130
1995 11.107620 13.548849 4,453,647.654 816,934.091
1996 13.548849 16.011513 12,141,813.159 1,486,734.204
1997 16.011513 20.479412 13,420,571.870 2,237,941.970
1998 20.479412 22.054902 15,001,075.906 2,680,312.794
1999 22.054902 22.487758 13,946,555.915 2,908,844.039
Income & Value
1994 $12.522239 $12.396295 462,460.272 98,925.767
1995 12.396295 14.752561 2,139,216.556 312,206.344
1996 14.752561 15.995076 3,599,312.544 518,913.471
1997 15.995076 18.276161 3,631,403.547 675,599.424
1998 18.276161 20.742457 3,813,045.822 696,068.359
1999 20.742457 22.230152 5,286,263.515 1,002,438.443
Balanced
1997 $12.500000 $14.609853 761,001.508 102,157.738
1998 14.609853 16.459454 2,088,848.755 363,163.201
1999 16.459454 15.962370 2,427,979.502 569,650.577
High Yield
1997 $12.500000 $13.890491 1,854,776.096 338,419.694
1998 13.890491 14.078376 3,005,790.085 1,031,379.259
1999 14.078376 14.993652 3,643,194.244 890,597.699
Strategic Bond
1994 $10.192707 $ 9.965972 191,924.981 17,448.655
1995 9.965972 11.716972 1,392,653.448 276,219.578
1996 11.716972 13.250563 4,418,383.860 696,578.665
1997 13.250563 14.500997 6,763,049.841 1,080,748.752
1998 14.500997 14.486687 7,710,787.567 1,416,430.202
1999 14.486687 14.602672 6,553,164.268 1,339,642.588
Global Bond
1994 $14.734788 $14.630721 194,131.021 46,005.023
1995 14.630721 17.772344 952,156.169 117,694.301
1996 17.772344 19.803954 1,613,888.548 194,577.024
1997 19.803954 20.104158 1,767,579.789 242,752.181
1998 20.104158 21.333144 1,753,775.159 224,934.824
1999 21.333144 19.632749 1,681,756.979 220,123.815
Total Return
1999 $12.500000 $12.255674 1,966,111.227 532,638.870
</TABLE>
B-3
<PAGE> 61
<TABLE>
<CAPTION>
INDIVIDUAL CONTRACT GROUP CONTRACT
UNIT VALUE UNIT VALUE NUMBER OF UNITS NUMBER OF UNITS
SUB-ACCOUNT AT START OF YEAR(2) AT END OF YEAR AT END OF YEAR AT END OF YEAR
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Quality Bond
1994 $14.307698 $14.216516 128,932.292 15,254.616
1995 14.216516 16.751499 889,906.187 118,436.044
1996 16.751499 16.943257 1,828,328.994 276,418.440
1997 16.943257 18.336912 2,353,565.854 407,957.213
1998 18.336912 19.660365 3,418,019.452 713,485.329
1999 19.660365 19.039807 4,121,780.333 945,643.907
Diversified Bond
1994 $12.478545 $12.298940 128,525.165 33,929.162
1995 12.298940 14.320582 716,489.411 127,957.567
1996 14.320582 15.113142 1,281,095.343 174,512.432
1997 15.113142 16.607511 1,606,748.573 214,321.762
1998 16.607511 18.125951 1,593,867.820 287,507.011
1999 18.125951 18.002047 1,672,203.394 337,466.500
U.S. Government Securities
1994 $14.188969 $14.111357 231,053.897 14,981.455
1995 14.111357 16.083213 1,744,509.872 136,450.591
1996 16.083213 16.393307 2,512,596.677 299,784.238
1997 16.393307 17.535478 2,636,669.504 377,170.452
1998 17.535478 18.587049 3,474,578.886 595,649.153
1999 18.587049 18.286918 3,976,168.438 778,189.875
Money Market
1994 $13.453100 $13.623292 870,982.381 57,620.649
1995 13.623292 14.190910 3,204,791.061 218,876.370
1996 14.190910 14.699636 5,629,209.351 436,831.126
1997 14.699636 15.241915 8,474,412.668 751,417.909
1998 15.241915 15.794513 10,765,582.009 1,464,550.126
1999 15.794513 16.291417 19,654,749.306 3,445,219.284
Lifestyle Aggressive 1000
1997 $12.500000 $13.669625 1,463,426.964 621,262.575
1998 13.669625 14.134419 2,230,662.753 506,567.762
1999 14.134419 15.974195 1,662,582.560 442,019.643
Lifestyle Growth 820
1997 $12.500000 $14.033299 6,430,704.073 1,246,305.915
1998 14.033299 14.696667 10,008,771.513 2,128,963.458
1999 14.696667 16.893101 8,132,071.983 1,819,617.211
Lifestyle Balanced 640
1997 $12.500000 $14.066417 5,943,640.615 964,581.576
1998 14.066417 14.664362 10,319,807.162 2,042,016.557
1999 14.664362 16.257312 7,959,999.081 1,803,079.849
Lifestyle Moderate 460
1997 $12.500000 $14.016704 1,534,133.462 245,410.54
1998 14.016704 15.171965 3,266,162.755 715,352.758
1999 15.171965 16.142259 3,282,727.901 785,340.030
Lifestyle Conservative 280
1997 $12.500000 $13.825120 600,120.072 129,160.895
1998 13.825120 15.025549 1,754,059.436 450,163.851
1999 15.025549 15.439823 2,079,082.620 508,054.883
</TABLE>
B-4
<PAGE> 62
<TABLE>
<CAPTION>
INDIVIDUAL CONTRACT GROUP CONTRACT
UNIT VALUE UNIT VALUE NUMBER OF UNITS NUMBER OF UNITS
SUB-ACCOUNT AT START OF YEAR(2) AT END OF YEAR AT END OF YEAR AT END OF YEAR
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Merrill Lynch Special Value Focus
1997 $12.500000 $27.655848 3,107.949 5,349.303
1998 27.655848 25.494200 23,981.023 14,178.088
1999 25.494200 33.685273 50,401.853 31,472.859
Merrill Lynch Basic Value Focus
1997 $12.500000 $15.792005 14,893.523 6,541.426
1998 15.792005 17.018200 92,740.889 74,371.966
1999 17.018200 20.300779 309,413.366 329,427.661
Merrill Lynch Developing Capital Markets Focus
1997 $12.500000 $ 9.191866 2,694.632 763.637
1998 9.191866 6.389100 29,568.171 4,390.133
1999 6.389100 10.419795 0.000 0.000
</TABLE>
(1)For the TABLE OF ACCUMULATION UNIT VALUES for Ven 7 and Ven 8 contracts see
Appendix F and for Ven 3 and Ven 1 contracts see Appendix G.
(2)Units under these series of contracts were first credited under the
sub-accounts on August 9, 1994, except in the case of:
- Overseas Trust where units were first credited on January 9, 1995,
- Mid Cap Growth and International Small Company Trusts where units were
first credited on March 4, 1996,
- Growth Trust where units were first credited on July 15, 1996,
- Pacific Rim Emerging Markets, Science & Technology, Emerging Small
Company, Aggressive Growth, International Stock, Quantitative Equity,
Real Estate Securities, Value, Balanced and High Yield Trusts where
units were first credited on January 1, 1997,
- Lifestyle Aggressive 1000, Lifestyle Growth 820, Lifestyle Balanced
640, Lifestyle Moderate 460 and Lifestyle Conservative 280 Trusts
where units were first credited on January 7, 1997,
- Small Company Value Trust where units were first credited on October
1, 1997;
- Merrill Lynch Special Value Focus Fund, Merrill Lynch Basic Value
Focus Fund and Merrill Lynch Developing Capital Markets Focus Fund
where units were first credited on October 13, 1997; and
- Small Company Blend, Mid Cap Stock, International Value, U.S. Large
Cap Value and Total Return Trusts where units were first credited on
May 1, 1999.
B-5
<PAGE> 63
APPENDIX C
EXAMPLES OF CALCULATION OF WITHDRAWAL CHARGE*
EXAMPLE 1 - Assume a single payment of $50,000 is made into the contract, no
transfers are made, no additional payments are made and there are no partial
withdrawals. The table below illustrates four examples of the withdrawal charges
that would be imposed if the contract is completely withdrawn, based on
hypothetical contract values.
<TABLE>
<CAPTION>
CONTRACT HYPOTHETICAL FREE WITHDRAWAL
YEAR CONTRACT WITHDRAWAL PAYMENTS CHARGE
VALUE AMOUNT LIQUIDATED
--------------------------
PERCENT AMOUNT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2 55,000 5,000(a) 50,000 6% 3,000
4 50,500 5,000(b) 45,500 5% 2,275
6 60,000 10,000(c) 50,000 3% 1,500
8 70,000 20,000(d) 50,000 0% 0
</TABLE>
- ----------
(a) During any contract year the free withdrawal amount is the greater of
accumulated earnings, or 10% of the total payments made under the
contract less any prior partial withdrawals in that contract year. In
the second contract year the earnings under the contract and 10% of
payments both equal $5,000. Consequently, on total withdrawal $5,000 is
withdrawn free of the withdrawal charge, the entire $50,000 payment is
liquidated and the withdrawal charge is assessed against such
liquidated payment (contract value less free withdrawal amount).
(b) In the example for the fourth contract year, the accumulated earnings
of $500 is less than 10% of payments, therefore the free withdrawal
amount is equal to 10% of payments ($50,000 X 10% = $5,000) and the
withdrawal charge is only applied to payments liquidated (contract
value less free withdrawal amount).
(c) In the example for the sixth contract year, the accumulated earnings of
$10,000 is greater than 10% of payments ($5,000), therefore the free
withdrawal amount is equal to the accumulated earnings of $10,000 and
the withdrawal charge is applied to the payments liquidated (contract
value less free withdrawal amount).
(d) There is no withdrawal charge on any payments liquidated that have been
in the contract for at least 7 years.
C-1
<PAGE> 64
EXAMPLE 2 - Assume a single payment of $50,000 is made into the contract, no
transfers are made, no additional payments are made and there are a series of
four partial withdrawals made during the third contract year of $2,000, $5,000,
$7,000, and $8,000.
<TABLE>
<CAPTION>
HYPOTHETICAL PARTIAL WITHDRAWAL FREE WITHDRAWAL
CONTRACT REQUESTED WITHDRAWAL PAYMENTS CHARGE
VALUE AMOUNT LIQUIDATED
----------------------------
PERCENT AMOUNT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
65,000 2,000 15,000(a) 0 5% 0
49,000 5,000 3,000(b) 2,000 5% 100
52,000 7,000 4,000(c) 3,000 5% 150
44,000 8,000 0(d) 8,000 5% 400
</TABLE>
- ----------
(a) The free withdrawal amount during any contract year is the greater of
the contract value less the unliquidated payments (accumulated
earnings), or 10% of payments less 100% of all prior withdrawals in
that contract year. For the first example, accumulated earnings of
$15,000 is the free withdrawal amount since it is greater than 10% of
payments less prior withdrawals ($5,000-0). The amount requested
($2,000) is less than the free withdrawal amount so no payments are
liquidated and no withdrawal charge applies.
(b) The contract has negative accumulated earnings ($49,000-$50,000), so
the free withdrawal amount is limited to 10% of payments less all prior
withdrawals. Since $2,000 has already been withdrawn in the current
contract year, the remaining free withdrawal amount during the third
contract year is $3,000. The $5,000 partial withdrawal will consist of
$3,000 free of withdrawal charge, and the remaining $2,000 will be
subject to a withdrawal charge and result in payments being liquidated.
The remaining unliquidated payments are $48,000.
(c) The contract has increased in value to $52,000. The unliquidated
payments are $48,000 so the accumulated earnings are $4,000, which is
greater than 10% of payments less prior withdrawals
($5,000-$2,000-$5,000<0). Hence the free withdrawal amount is $4,000.
Therefore, $3,000 of the $7,000 partial withdrawal will be subject to a
withdrawal charge and result in payments being liquidated. The
remaining unliquidated payments are $45,000.
(d) The free withdrawal amount is zero since the contract has negative
accumulated earnings ($44,000-$45,000) and the full 10% of payments
($5,000) has already been withdrawn. The full amount of $8,000 will
result in payments being liquidated subject to a withdrawal charge. At
the beginning of the next contract year the full 10% of payments would
be available again for withdrawal requests during that year.
*Examples do not illustrate withdrawal charges applicable to Ven 7, Ven 8, Ven 3
or Ven 1 contracts.
C-2
<PAGE> 65
APPENDIX D
STATE PREMIUM TAXES
Premium taxes vary according to the state and are subject to change. In
many jurisdictions there is no tax at all. For current information, a tax
advisor should be consulted.
<TABLE>
<CAPTION>
TAX RATE
QUALIFIED NON-QUALIFIED
STATE CONTRACTS CONTRACTS
<S> <C> <C>
CALIFORNIA........................................... 0.50% 2.35%
DISTRICT OF COLUMBIA................................. 2.25% 2.25%
MAINE................................................ 0.00% 2.00%
NEVADA............................................... 0.00% 3.50%
PUERTO RICO.......................................... 1.00% 1.00%
SOUTH DAKOTA*........................................ 0.00% 1.25%
WEST VIRGINIA........................................ 1.00% 1.00%
WYOMING.............................................. 0.00% 1.00%
</TABLE>
* Premium tax paid upon receipt of premium (no tax at annuitization if tax paid
on premium at issue).
D-1
<PAGE> 66
APPENDIX E
PENNSYLVANIA MAXIMUM MATURITY AGE
For all certificates issued in Pennsylvania on or after August 9, 1994 the
maximum maturity age based upon the issue age of the annuitant is as follows:
<TABLE>
<CAPTION>
ISSUE AGE MAXIMUM MATURITY AGE
<S> <C>
70 or less 85
71-75 86
76-80 88
81-85 90
86-90 93
91-93 96
94-95 98
96-97 99
98-99 101
100-101 102
102 103
103 104
104 105
105 106
</TABLE>
It is required that the annuitant exercise a settlement annuity option
no later than the maximum maturity age stated above. For example an annuitant
age 60 at issue must exercise a settlement option prior to the attainment of age
86. The Company will use the issue age of the youngest named annuitant in the
determination of the required settlement option date.
If certificates are issued with annuitants over age 84, a withdrawal
charge could be imposed if they terminate the certificate rather than elect a
settlement option upon attainment of the maximum maturity age. This is a result
of the restrictions by Pennsylvania in combination with the 7-year withdrawal
charge schedule of the certificate.
E-1
<PAGE> 67
APPENDIX F
PRIOR CONTRACTS-VEN 7 AND VEN 8 CONTRACTS
The Company has a class of variable annuity contract which is no longer
being issued but under which purchase payments may continue to be made ("VEN 7"
contracts), which were sold during the period from August, 1989 until April,
1999. The Company also has a class of variable annuity contract which is no
longer being issued but under which purchase payments may continue to be made
("VEN 8" contracts) which were sold during the period from September, 1992 until
February, 1995. Ven 7 contracts and Ven 8 contracts are collectively referred to
as "prior contracts."
The principal differences between the contract offered by this
Prospectus and the prior contracts relate to the investment options available
under the contracts, a minimum interest rate to be credited for any guarantee
period under the fixed portion of the contracts, the charges made by the Company
and the death benefit provisions.
INVESTMENT OPTIONS
The investment options under the prior contracts differ as follows from
the investment options described in this Prospectus. The prior contracts do not
allow for investments in the five and seven year fixed account investments
options. The prior contracts allow investments in a six year fixed account
investment option not available under the contract offered by this Prospectus.
The prior contracts do not provide the Company the authority to offer additional
fixed account investment options for any yearly period from two to ten years.
The portfolios of Merrill Variable Funds are not available for investment for
Ven 8 contract owners.
FIXED ACCOUNT MINIMUM INTEREST GUARANTEE
The minimum interest rate to be credited for any guarantee period under
the fixed portion of the prior contracts is 4%. If a withdrawal is deferred for
more than 30 days, we will pay interest on the amount deferred at a rate not
less than 4% per year (or a higher rate if required by applicable law).
MARKET VALUE CHARGE
For purposes of calculating the market value adjustment factor (see
"FIXED ACCOUNT INVESTMENT OPTIONS - Market Value Charge") the maximum difference
between "B" and "A" will be 3% under the prior contracts. The adjustment factor
will never be greater than 2x(A-4%) and never less than zero. ("A" is the
guaranteed interest rate on the investment account. "B" is the guaranteed
interest rate available, on the date the request is processed, for amounts
allocated to a new investment account with the same length of guarantee period
as the investment account from which the amounts are being withdrawn.)
There will be no market value charge on withdrawals from the fixed
account investment options in the following situations: (a) death of the
annuitant; (b) amounts withdrawn to pay fees or charges; (c) amounts applied at
the maturity date to purchase an annuity as provided in the contract; (d)
amounts withdrawn from three and six year investment accounts within one month
prior to the end of the guarantee period; and (e) amounts withdrawn in any year
that do not exceed 10% of total purchase payments less any prior partial
withdrawals in that contract year.
Notwithstanding application of the market value adjustment factor
formula, in no event will the market value charge (i) exceed the earnings
attributable to the amount withdrawn from an investment account, (ii) together
with any withdrawal charges for an investment account be greater than 10% of the
amount transferred or withdrawn, or (iii) reduce the amount payable on
withdrawal or transfer below the amount required under the nonforfeiture laws of
the state with jurisdiction over the contract. The cumulative effect of the
market value and withdrawal charges (or the effect of the withdrawal charge
itself) could, however, result in an owner receiving total withdrawal proceeds
of less than the owner's purchase payments.
F-1
<PAGE> 68
WITHDRAWAL CHARGES
The withdrawal charges under the prior contracts differ from the
withdrawal charges described in this Prospectus.
Prior Contracts Withdrawal Charge
The withdrawal charge assessed under the prior contracts is as follows:
If a withdrawal is made from the contract by an owner before the
maturity date, a withdrawal charge (contingent deferred sales charge) may be
assessed against amounts withdrawn attributable to purchase payments that have
been in the contract for the owner less than six complete contract years. There
is never a withdrawal charge with respect to earnings accumulated in the
contract, certain other free withdrawal amounts described below or purchase
payments that have been in the contract more than six complete contract years.
In no event may the total withdrawal charges exceed 6% of the total purchase
payments. The amount of the withdrawal charge and when it is assessed is
discussed below:
1. Each withdrawal is allocated first to the "free withdrawal amount"
and second to "unliquidated purchase payments." In any contract year, the free
withdrawal amount for that year is the greater of (1) the excess of the contract
value on the date of withdrawal over the unliquidated purchase payments (the
accumulated earnings on the contract) or (2) 10% of total purchase payments less
any prior partial withdrawals in that contract year. Withdrawals allocated to
the free withdrawal amount may be withdrawn without the imposition of a
withdrawal charge.
2. If an owner makes a withdrawal for an amount in excess of the free
withdrawal amount, the excess will be allocated to purchase payments which will
be liquidated on a first-in first-out basis. On any withdrawal request, the
Company will liquidate purchase payments equal to the amount of the withdrawal
request which exceeds the free withdrawal amount in the order such purchase
payments were made: the oldest unliquidated purchase payment first, the next
purchase payment second, etc. until all purchase payments have been liquidated.
3. Each purchase payment or portion thereof liquidated in connection
with a withdrawal request is subject to a withdrawal charge based on the length
of time the purchase payment has been in the contract. The amount of the
withdrawal charge is calculated by multiplying the amount of the purchase
payment being liquidated by the applicable withdrawal charge percentage obtained
from the table below.
<TABLE>
<CAPTION>
NUMBER OF COMPLETE YEARS WITHDRAWAL CHARGE
PURCHASE PAYMENT IN CONTRACT PERCENTAGE
<S> <C>
0 6%
1 6%
2 5%
3 4%
4 3%
5 2%
6+ 0%
</TABLE>
The total withdrawal charge will be the sum of the withdrawal charges
for the purchase payments being liquidated.
4. The withdrawal charge is deducted from the contract value remaining
after the owner is paid the amount requested, except in the case of a complete
withdrawal when it is deducted from the amount otherwise payable. In the case of
a partial withdrawal, the amount requested from an investment account may not
exceed the value of that investment account less any applicable withdrawal
charge and market value charge.
5. There is generally no withdrawal charge on distributions made as a
result of the death of the annuitant or owner and no withdrawal charges are
imposed on the maturity date if the owner annuitizes as provided in the
contract.
ADMINISTRATION FEES
The prior contracts make no provision for the waiver of the $30 annual
administration fee when prior to the maturity date the contract value equals or
exceeds $100,000 at the time of the fee's assessment.
F-2
<PAGE> 69
DEATH BENEFIT PROVISIONS
Prior Contracts Death Benefit Provisions
The provisions governing the death benefit prior to the maturity date
under the prior contracts are as follows:
Death of Annuitant who is not the Owner. The Company will pay the
minimum death benefit, less any debt, to the beneficiary if the owner is not the
annuitant and the annuitant dies before the owner and before the maturity date.
If there is more than one such annuitant, the minimum death benefit will be paid
on the death of the last surviving co-annuitant. The minimum death benefit will
be paid either as a lump sum or in accordance with any of the annuity options
available under the contract. An election to receive the death benefit under an
annuity option must be made within 60 days after the date on which the death
benefit first becomes payable. Rather than receiving the minimum death benefit,
the beneficiary may elect to continue the contract as the new owner. (In
general, a beneficiary who makes such an election will nonetheless be treated
for Federal income tax purposes as if he or she had received the minimum death
benefit.)
Death of Annuitant who is the Owner. The Company will pay the minimum
death benefit, less any debt, to the beneficiary if the owner is the annuitant,
dies before the maturity date and is not survived by a co-annuitant. If the
contract is a non-qualified contract, the owner is the annuitant and the owner
dies before the maturity date survived by a co-annuitant, the Company, instead
of paying the minimum death benefit to the beneficiary, will pay to the
successor owner (the person, persons or entity to become the owner if the owner
dies prior to the maturity date) an amount equal to the amount payable on total
withdrawal without reduction for any withdrawal charge. If the contract is a
non-qualified contract, distribution of the minimum death benefit to the
beneficiary (or of the amount payable to the successor owner) must be made
within five years after the owner's death. If the beneficiary or successor
owner, as appropriate, is an individual, in lieu of distribution within five
years of the owner's death, distribution may be made as an annuity which begins
within one year of the owner's death and is payable over the life of the
beneficiary (or the successor owner, as appropriate) or over a period not in
excess of the life expectancy of the beneficiary (or the successor owner, as
appropriate). If the owner's spouse is the beneficiary (or the successor owner,
as appropriate) that spouse may elect to continue the contract as the new owner
in lieu of receiving the distribution. In such a case, the distribution rules
applicable when an owner dies generally will apply when that spouse, as the
owner, dies.
Death of Owner who is not the Annuitant. If the owner is not the
annuitant and dies before the maturity date and before the annuitant, the
successor owner will become the owner of the contract. If the contract is a
non-qualified contract, an amount equal to the amount payable on total
withdrawal, without reduction for any withdrawal charge, will be paid to the
successor owner. Distribution of the amount to the successor owner must be made
within five years of the owner's death. If the successor owner is an individual,
in lieu of distribution within five years of the owner's death, distribution may
be made as an annuity which begins within one year of the owner's death and is
payable over the life of the successor owner (or over a period not greater than
the successor owner's life expectancy). If the owner's spouse is the successor
owner, that spouse may elect to continue the contract as the new owner in lieu
of receiving the distribution. In such a case, the distribution rules applicable
when an owner dies generally will apply when that spouse, as the owner, dies.
For purposes of these death benefit provisions applicable on an owner's
death (whether or not such owner is an annuitant), if a non-qualified contract
has more than one individual owner, death benefits must be paid as provided in
the prior contract upon the death of any such owner. If both owners are
individuals, the distributions will be made to the remaining owner rather than
to the successor owner.
Entity as Owner. In the case of a non-qualified contract where the
owner is not an individual (for example, the owner is a corporation or a trust),
the special rules stated in this paragraph apply. For purposes of distributions
of death benefits before the maturity date, any annuitant will be treated as the
owner, and a change in the annuitant or any co-annuitant shall be treated as the
death of the owner. In the case of distributions which result from a change in
an annuitant when the annuitant does not actually die, the amount distributed
will be reduced by charges which would otherwise apply upon withdrawal.
If a non-qualified contract has both an individual and a non-individual
owner, death benefits must be paid as provided in the prior contract upon the
death of any annuitant, a change in any annuitant, or the death of any
individual owner, whichever occurs earlier.
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
F-3
<PAGE> 70
sum of all purchase payments made, less any amount deducted in connection with
partial withdrawals. During any subsequent six 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 six 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 contract value on the date due proof of
death and all required claim forms are received at the Company's Annuity Service
Office.
An Enhanced Death Benefit became available in Florida, Maryland and
Washington to contracts issued August 15, 1994 or later, in Idaho, New Jersey
and Oregon to contracts issued October 3, 1994 or later and in California to
contracts issued January 3, 1995 or later.
This Enhanced Death Benefit provides for a minimum death benefit as
described above, except that the death benefit is "stepped up" each contract
year instead of the six contract year period. In addition, if the annuitant dies
after the first of the month following his or her 85th birthday, the minimum
death benefit is 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.
Contracts with a contract date prior to the date the Enhanced Death
Benefit first became available in that state may also be exchanged for a new
contract which provides for an alternative enhanced death benefit. See Appendix
H.
Death benefits will be paid within seven days of receipt of due proof
of death and all required claim forms at the Company's Annuity Service Office,
subject to postponement under the same circumstances that payment of withdrawals
may be postponed.
OTHER CONTRACT PROVISIONS
Contract Maturity Date
Under the prior contracts, the maturity date is the later of the first
day of the month following the 85th birthday of the annuitant or the sixth
contract anniversary. The prior contracts allow the owner to specify a different
maturity date at any time by written request at least one month before both the
previously specified and the new maturity date. The new maturity date must be
the first day of a month no later than the first day of the month following the
85th birthday of the annuitant.
Annuity Tables Assumed Interest Rate
A 4% assumed interest rate is built into the annuity tables in the
prior contracts used to determine the first variable annuity payment to be made
under that contract.
Beneficiary
Under the prior contracts certain provisions relating to beneficiary
are as follows:
The beneficiary is the person, persons or entity designated in the
application or as subsequently named. The beneficiary may be changed during the
lifetime of the annuitant subject to the rights of any irrevocable beneficiary.
Any change must be made in writing, approved by the Company and if approved,
will be effective as of the date on which written. The Company assumes no
liability for any payments made or actions taken before the change is approved.
Prior to the maturity date, if no beneficiary survives the annuitant, the
contract owner or the contract owner's estate will be the beneficiary. The
interest of any beneficiary is subject to that of any assignee. In the case of
certain qualified contracts, regulations promulgated by the Treasury Department
prescribe certain limitations on the designation of a beneficiary.
Ownership
Under the Ven 8 contracts, certain provisions relating to ownership are
as follows:
The contract is owned by the group holder. However, all contract rights
and privileges not expressly reserved to the group holder may be exercised by
each owner as to his or her interests as specified in his or her certificate.
Prior to the maturity date, an owner is the person designated in an application
or as subsequently named. On and after a certificate's maturity date, the
annuitant is the owner and after the death of the annuitant, the beneficiary is
the owner.
F-4
<PAGE> 71
In the case of non-qualified contracts, ownership of the contract may
be changed at any time. In the case of non-qualified certificates, an owner may
assign his or her interest in the contract during the lifetime of the annuitant
prior to the maturity date, subject to the rights of any irrevocable
beneficiary. Assigning a contract or interest therein, or changing the ownership
of a contract or certificate, may be treated as a distribution of all or a
portion of the contract value for Federal tax purposes. Any change of ownership
or assignment must be made in writing. Any change must be approved by the
Company. Any assignment and any change, if approved, will be effective as of the
date on which written. The Company assumes no liability for any payments made or
actions taken before a change is approved or assignment is accepted or
responsibility for the validity or sufficiency of any assignment.
Modification
The Ven 8 contract does not include "free withdrawal percentage" among
contract terms the Company is authorized to change on 60 days' notice to the
group holder.
GUARANTEED RETIREMENT INCOME PROGRAM
The Guaranteed Retirement Income Program is not available for Ven 7 and
Ven 8 contracts.
F-5
<PAGE> 72
TABLE OF ACCUMULATION UNIT VALUES
Ven 7 Contract and Ven 8 Contracts
<TABLE>
<CAPTION>
UNIT VALUE UNIT VALUE NUMBER OF UNITS AT END OF YEAR
SUB-ACCOUNT AT START OF YEAR* AT END OF YEAR VEN 7 VEN 8
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets
1997 $12.500000 $ 8.180904 202,690.129 18,049.496
1998 8.180904 7.695249 257,642.215 33,443.232
1999 7.695249 12.359297 793,161.545 43,912.790
Science & Technology
1997 $12.500000 $13.647195 1,305,934.962 68,696.549
1998 13.647195 19.287390 1,617,336.664 51,857.405
1999 19.287390 37.943261 3,979,041.339 221,600.907
International Small Cap
1996 $12.500000 $13.493094 3,114,351 265,493.981
1997 13.493094 13.410016 2,651,586.537 148,139.543
1998 13.410016 14.792077 2,163,174.786 129,455.789
1999 14.792077 26.974754 1,542,194.298 104,735.511
Aggressive Growth
1997 $12.500000 $12.327066 1,038,009.080 33,654.601
1998 12.327066 12.680777 1,062,500.981 26,911.837
1999 12.680777 16.628126 771,427.677 16,508.243
Emerging Small Company
1997 $12.500000 $14.574077 901,316.946 29,183.460
1998 14.574077 14.381705 790,646.519 37,409.681
1999 14.381705 24.610648 656,180.906 32,066.485
Small Company Blend
1999 $12.500000 $15.922213 188,821.129 9,393.635
Mid Cap Growth
1996 $12.500000 $13.215952 5,250,942 293,815.378
1997 13.215952 15.020670 5,346,448.712 362,356.638
1998 15.020670 19.002856 5,016,440.634 295,990.876
1999 19.002856 27.113084 4,463,362.220 300,812.535
Mid Cap Stock
1999 $12.500000 $12.483520 144,800.795 3,955.925
Overseas
1995 $10.000000 $10.554228 4,340,859 100,475.374
1996 10.554228 11.718276 6,310,744 223,718.019
1997 11.718276 11.545714 5,349,536.965 216,124.371
1998 11.545714 12.290162 4,432,702.921 171,735.816
1999 12.290162 17.044524 4,475,257.272 187,758.568
International Stock
1997 $12.500000 $12.652231 767,902.981 18,313.864
1998 12.652231 14.337171 872,309.188 32,399.767
1999 14.337171 18.338932 856,082.103 37,959.368
International Value
1999 $12.500000 12.860110 247,737.092 6,511.057
</TABLE>
F-6
<PAGE> 73
<TABLE>
<CAPTION>
UNIT VALUE UNIT VALUE NUMBER OF UNITS AT END OF YEAR
SUB-ACCOUNT AT START OF YEAR* AT END OF YEAR VEN 7 VEN 8
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mid Cap Blend
1989 $ 9.695125 $12.208846 1,443,222 N/A
1990 12.208846 10.618693 1,044,365 N/A
1991 10.618693 12.349952 3,238,479 N/A
1992 12.349952 13.143309 10,082,924 122,807.657
1993 13.143309 15.075040 18,691,511 1,315,253.114
1994 15.075040 14.786831 27,046,973 1,958,082.571
1995 14.786831 20.821819 31,264,936 2,278,573.962
1996 20.821819 24.664354 30,156,559 2,007,082.996
1997 24.664354 29.002593 25,510,715.815 1,794,644.944
1998 29.002593 31.289551 21,305,320.808 1,510,219.114
1999 31.289551 39.416089 15,439,016.167 1,082,398.774
Small Company Value
1997 $12.500000 $11.898363 476,303.358 21,030.641
1998 11.898363 11.178700 1,076,348.860 78,803.707
1999 11.178700 11.904646 628,841.839 32,204.568
Global Equity
1989 $10.038462 $12.259530 1,599,855 N/A
1990 12.259530 10.827724 3,216,667 N/A
1991 10.827724 12.044260 4,968,734 N/A
1992 12.044260 11.790318 7,560,807 N/A
1993 11.790318 15.450341 18,493,192 28,203.763
1994 15.450341 15.500933 28,273,754 985,277.929
1995 15.500933 16.459655 25,947,632 2,268,423.350
1996 16.459655 18.276450 23,363,742 2,132,127.330
1997 18.276450 21.770913 21,385,412.929 1,785,966.081
1998 21.770913 24.098970 18,732,868.459 1,662,176.913
1999 24.098970 24.633827 13,761,625.657 880,498.618
Growth
1996 $12.500000 $13.727312 1,704,337 98,424.809
1997 13.727312 16.968111 2,322,586.639 276,494.410
1998 16.968111 20.739989 2,680,920.564 312,422.972
1999 20.739989 28.060585 3,381,916.343 359,200.422
Large Cap Growth
1989 $10.000000 $ 9.824046 7,476,667 N/A
1990 9.824046 8.982210 3,434,253 N/A
1991 8.982210 10.891189 5,038,265 N/A
1992 10.891189 11.623893 6,990,120 21,660.089
1993 11.623893 12.642493 8,147,578 244,300.482
1994 12.642493 12.381395 9,915,078 395,864.362
1995 12.381395 14.990551 9,004,834 422,911.593
1996 14.990551 16.701647 7,824,895 365,478.331
1997 16.701647 19.614359 6,709,014.040 297,611.885
1998 19.614359 23.040505 5,731,041.572 263,252.867
1999 23.040505 28.465074 4,877,735.748 193,065.415
Quantitative Equity
1997 $12.500000 $16.107191 445,182.268 32,343.397
1998 16.107191 20.068624 665,281.935 118,250.658
1999 20.068624 24.202942 1,173,701.112 247,925.487
</TABLE>
F-7
<PAGE> 74
<TABLE>
<CAPTION>
UNIT VALUE UNIT VALUE NUMBER OF UNITS AT END OF YEAR
SUB-ACCOUNT AT START OF YEAR* AT END OF YEAR VEN 7 VEN 8
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Blue Chip Growth
1992 $10.000000 $ 9.923524 2,614,367 58,049.495
1993 9.923524 9.413546 8,733,734 707,931.534
1994 9.413546 8.837480 12,682,151 1,001,113.147
1995 8.837480 11.026969 16,013,892 1,257,014.677
1996 11.026969 13.688523 16,253,601 1,223,305.806
1997 13.688523 17.134232 17,295,177.170 1,282,330.299
1998 17.134232 21.710674 17,573,508.266 1,215,750.879
1999 21.710674 25.568866 14,769,723.596 1,009,027.626
Real Estate Securities
1997 $12.500000 $14.949140 686,708.699 46,874.008
1998 14.949140 12.317190 754,054.780 34,312.778
1999 12.317190 11.174188 478,025.852 21,897.237
Value
1997 $12.500000 $15.057118 1,318,055.200 41,009.600
1998 15.057118 14.591878 1,527,294.910 63,015.329
1999 14.591878 13.987433 1,016,190.620 33,131.860
Growth & Income
1991 $10.874875 $10.973500 3,689,377 N/A
1992 10.973500 11.927411 8,573,365 149,476.889
1993 11.927411 12.893007 16,816,664 1,610,454.400
1994 12.893007 13.076664 22,827,949 2,142,828.604
1995 13.076664 16.660889 25,312,482 2,230,320.953
1996 16.660889 20.178770 26,519,026 2,214,190.721
1997 20.178770 26.431239 26,673,244.207 2,165,598.782
1998 26.431239 32.976967 25,345,937.545 2,080,116.646
1999 32.976967 38.655938 21,724,906.926 1,658,402.984
U.S. Large Cap Value
1999 $12.500000 $12.721279 700,912.203 112,084.809
Equity-Income
1993 $10.000000 $11.175534 5,061,871 715,700.792
1994 11.175534 11.107620 13,006,071 1,432,473.155
1995 11.107620 13.548849 16,254,844 1,741,975.072
1996 13.548849 16.011513 17,199,292 1,661,006.752
1997 16.011513 20.479412 17,462,811.390 1,587,287.165
1998 20.479412 22.054902 15,497,119.733 1,285,717.071
1999 22.054902 22.487758 11,326,571.148 943,535.476
Income & Value
1989 $10.000000 $ 9.973206 2,137,590 N/A
1990 9.973206 9.221559 11,521,935 N/A
1991 9.221559 11.023964 15,739,307 N/A
1992 11.023964 11.772128 21,949,044 120,020.418
1993 11.772128 12.775798 30,338,231 1,245,900.794
1994 12.775798 12.396295 31,579,176 1,690,801.919
1995 12.396295 14.752561 28,508,685 1,435,414.191
1996 14.752561 15.995076 23,443,602 1,266,755.972
1997 15.995076 18.276161 19,090,743.242 1,089,331.565
1998 18.276161 20.742457 16,167,380.942 942,806.968
1999 20.742457 22.230152 13,121,257.531 700,774.704
</TABLE>
F-8
<PAGE> 75
<TABLE>
<CAPTION>
UNIT VALUE UNIT VALUE NUMBER OF UNITS AT END OF YEAR
SUB-ACCOUNT AT START OF YEAR* AT END OF YEAR VEN 7 VEN 8
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced
1997 $12.500000 $14.609853 277,653.746 3,333.690
1998 14.609853 16.459454 628,355.898 28,116.364
1999 16.459454 15.962370 619,318.604 28,876.823
High Yield
1997 $12.500000 $13.890491 948,500.843 59,072.119
1998 13.890491 14.078376 1,368,850.143 276,718.210
1999 14.078376 14.996652 1,225,725.480 170,914.927
Strategic Bond
1993 $10.000000 $10.750617 3,628,986 381,406.287
1994 10.750617 9.965972 6,059,065 564,406.390
1995 9.965972 11.716972 6,153,987 682,547.892
1996 11.716972 13.250563 7,575,451 797,845.050
1997 13.250563 14.500997 8,237,089.984 763,855.628
1998 14.500997 14.486687 7,209,536.107 636,763.947
1999 14.486687 14.602672 4,921,990.805 371,500.948
Global Bond
1989 $10.097842 $10.404562 300,163 N/A
1990 10.404562 11.642912 503,123 N/A
1991 11.642912 13.302966 1,406,253 N/A
1992 13.302966 13.415849 3,990,936 56,786.509
1993 13.415849 15.741586 9,235,552 745,370.831
1994 15.741586 14.630721 10,820,359 694,644.982
1995 14.630721 17.772344 9,377,776 586,608.921
1996 17.772344 19.803954 8,200,560 494,576.435
1997 19.803954 20.104158 6,513,293.863 436,440.899
1998 20.104158 21.333144 5,273,156.315 332,252.339
1999 21.333144 19.632749 3,733,654.686 197,083.582
Total Return
1999 $12.500000 $12.255674 954,263.320 11,408.603
Investment Quality Bond
1989 $10.937890 $12.008936 1,924,256 N/A
1990 12.008936 11.517610 226,591 N/A
1991 11.517610 13.183268 1,133,721 N/A
1992 13.183268 13.936240 2,633,165 59,746.432
1993 13.936240 15.118716 4,666,274 319,417.770
1994 15.118716 14.216516 5,662,391 384,804.353
1995 14.216516 16.751499 5,445,294 371,328.627
1996 16.751499 16.943257 4,762,551 361,839.590
1997 16.943257 18.336912 4,300,212.219 291,735.510
1998 18.336912 19.660365 4,399,381.497 275,771.075
1999 19.660365 19.039807 3,220,243.949 172,770.532
</TABLE>
F-9
<PAGE> 76
<TABLE>
<CAPTION>
UNIT VALUE UNIT VALUE NUMBER OF UNITS AT END OF YEAR
SUB-ACCOUNT AT START OF YEAR* AT END OF YEAR VEN 7 VEN 8
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Diversified Bond
1989 $10.000000 $10.052759 11,861,277 N/A
1990 10.052759 9.531831 5,005,473 N/A
1991 9.531831 11.166459 6,075,773 N/A
1992 11.166459 11.821212 9,218,954 415,991.541
1993 11.821212 12.705196 12,271,114 56,414.765
1994 12.705196 12.298940 11,519,563 330,900.271
1995 12.298940 14.320582 10,207,673 478,239.388
1996 14.320582 15.113142 8,273,488 325,608.369
1997 15.113142 16.607511 6,909,670.281 340,682.860
1998 16.607511 18.125951 5,645,171.500 328,807.796
1999 18.125951 18.002047 4,133,997.111 189,308.060
U.S. Government Securities
1990 $10.826483 $11.596537 515,572 N/A
1991 11.596537 13.037076 1,496,429 N/A
1992 13.037076 13.651495 7,034,773 212,815.440
1993 13.651495 14.490734 11,566,348 783,550.472
1994 14.490734 14.111357 9,903,906 585,709.535
1995 14.111357 16.083213 8,402,470 494,142.862
1996 16.083213 16.393307 6,673,517 390,696.559
1997 16.393307 17.535478 5,731,746.842 345,437.781
1998 17.535478 18.587049 6,037,662.192 511,322.750
1999 18.587049 18.286918 4,840,847.723 244,511.446
Money Market
1989 $10.865066 $11.634481 1,480,696 N/A
1990 11.634481 12.364687 2,465,280 N/A
1991 12.364687 12.890414 3,340,971 N/A
1992 12.890414 13.137257 4,636,753 28,928.622
1993 13.137257 13.303085 7,413,316 331,225.229
1994 13.303085 13.623292 12,741,277 1,079,557.666
1995 13.623292 14.190910 9,721,732 530,610.979
1996 14.190910 14.699636 10,149,260 846,105.590
1997 14.699636 15.241915 8,439,006.345 454,080.933
1998 15.241915 15.794513 10,066,886.519 620,206.714
1999 15.794513 16.291417 13,503,057.087 727,778.444
Lifestyle Aggressive 1000
1997 $12.500000 $13.669625 718,339.885 19,900.057
1998 13.669625 14.134419 735,429.380 530.690
1999 14.134419 15.974195 379,259.077 0.009
Lifestyle Growth 820
1997 $12.500000 $14.033299 2,724,148.772 60,974.946
1998 14.033299 14.696667 2,662,118.220 51,939.327
1999 14.696667 16.893101 1,512,075.657 46,181.518
Lifestyle Balanced 640
1997 $12.500000 $14.066417 1,897,381.650 59,780.667
1998 14.066417 14.664362 2,114,618.283 27,550.486
1999 14.664362 16.257312 1,238,095.287 21,405.783
Lifestyle Moderate 460
1997 $12.500000 $14.016704 679,087.722 0.000
1998 14.016704 15.171965 951,771.442 0.000
1999 15.171965 16.142259 783,511.305 0.000
</TABLE>
F-10
<PAGE> 77
<TABLE>
<CAPTION>
UNIT VALUE UNIT VALUE NUMBER OF UNITS AT END OF YEAR
SUB-ACCOUNT AT START OF YEAR* AT END OF YEAR VEN 7 VEN 8
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lifestyle Conservative 280
1997 $12.500000 $13.825120 162,279.781 88,291.620
1998 13.825120 15.025549 508,786.268 60,866.728
1999 15.025549 15.439823 438,604.104 57,572.279
Merrill Lynch Special Value Focus
1997 $12.500000 $27.655848 506.421 N/A
1998 27.655848 25.494200 111.241 N/A
1999 25.494200 33.685273 110.706 N/A
Merrill Lynch Basic Value Focus
1997 $12.500000 $15.792005 596.419 N/A
1998 15.792005 17.018200 10,623.274 N/A
1999 17.018200 20.300779 11,769.295 N/A
Merrill Lynch Developing Capital Markets Focus
1997 $12.500000 $ 9.191866 0.002 N/A
1998 9.191866 6.389118 0.000 N/A
1999 6.389118 10.419795 0.000 N/A
</TABLE>
* Units under this series of contracts were first credited under the
sub-accounts on August 7, 1989, except in the case of:
- Growth & Income Trust where units were first credited on April
23, 1991,
- Blue Chip Growth Trust where units were first credited on
December 11, 1992,
- Equity-Income and Strategic Bond Trusts where units were first
credited on February 19, 1993,
- Overseas Trust where units were first credited on January 9,
1995,
- Mid Cap Growth and International Small Cap Trusts where units
were first credited on March 4, 1996,
- Growth Trust where units were first credited on July 15, 1996,
- Pacific Rim Emerging Markets, Science & Technology, Emerging
Small Company, Aggressive Growth, International Stock,
Quantitative Equity, Real Estate Securities, Value, Balanced and
High Yield Trusts where units were first credited on January 1,
1997;
- Lifestyle Aggressive 1000, Lifestyle Growth 820, Lifestyle
Balanced 640, Lifestyle Moderate 460, Lifestyle Conservative 280
Trusts where units were first credited on January 7, 1997,
- Small Company Value Trust where units were first credited on
October 1, 1997;
- Merrill Lynch Special Value Focus Fund, Merrill Lynch Basic Value
Focus Fund and Merrill Lynch Developing Capital Markets Focus
Fund; and
- Small Company Blend, Mid Cap Stock, International Value, U.S.
Large Cap Value and Total Return Trusts where units were first
credited on May 1, 1999.
F-11
<PAGE> 78
APPENDIX G
PRIOR CONTRACTS-VEN 1 AND VEN 3 CONTRACTS
Prior to October, 1993, the Company issued two classes of variable
annuity contracts which are no longer being issued but under which purchase
payments may continue to be made: "VEN 3" contracts, which were sold during the
period from November, 1986 until October, 1993 and "VEN 1" contracts, which were
sold during the period from June, 1985 until June, 1987.
The principal differences between the contract offered by this
Prospectus and the Ven 1 and Ven 3 contracts relate to the investment options
available under the contracts, charges made by the Company and death benefit
provisions.
EXPENSE SUMMARY
The following table and Example are designed to assist contract owners
in understanding the various costs and expenses that contract owners bear
directly and indirectly. The table reflects expenses of the separate account and
the underlying portfolio company. In addition to the items listed in the
following table, premium taxes may be applicable to certain contracts. The items
listed under "Contract Owner Transaction Expenses" and "Separate Account Annual
Expenses" are more completely described in this Appendix (see "Other Contract
Charges") and in the Prospectus (see "CHARGES AND DEDUCTIONS"). The items listed
under "Trust Annual Expenses" are described in detail in the accompanying Trust
prospectus to which reference should be made.
CONTRACT OWNERS TRANSACTION EXPENSES
Ven 1 and Ven 3 Contracts
Deferred sales load (as percentage of purchase payments)
<TABLE>
<CAPTION>
NUMBER OF COMPLETE YEARS WITHDRAWAL CHARGE
PURCHASE PAYMENT IN PERCENTAGE
CONTRACT
<S> <C>
0 5%
1 5%
2 5%
3 5%
4 5%
5+ 0%
</TABLE>
Ven 1 and Ven 3 Contracts
<TABLE>
<S> <C>
ANNUAL CONTRACT FEE.................................................. $ 30
</TABLE>
Ven 1 Contracts
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
<TABLE>
<S> <C>
Mortality and expense risk fees...................................... 1.30%
Total Separate Account Annual Expenses............................... 1.30%
</TABLE>
G-1
<PAGE> 79
Ven 3 Contracts
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
<TABLE>
<S> <C>
Mortality and expense risk fees...................................... 1.25%
Administration fee - asset based..................................... 0.15%
Total Separate Account Annual Expenses............................... 1.40%
</TABLE>
Ven 1 and Ven 3 Contracts
TRUST ANNUAL EXPENSES
(as a percentage of Trust average net assets)
See "SUMMARY - TRUST ANNUAL EXPENSES" in the Prospectus.
Ven 1 Contracts
EXAMPLE
A contract owner would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets, if the contract owner
surrendered the contract at the end of the applicable time period
<TABLE>
<CAPTION>
TRUST PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mid Cap Blend....................... $70 $121 $173 $263
Investment Quality Bond............. 68 117 166 249
Money Market........................ 66 111 154 226
</TABLE>
A contract owner would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets, if the contract owner
annuitized as provided in the contract or did not surrender the contract at the
end of the applicable time period:
<TABLE>
<CAPTION>
TRUST PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mid Cap Blend ...................... $23 $72 $123 $263
Investment Quality Bond............. 22 67 116 249
Money Market........................ 20 61 104 226
</TABLE>
Ven 3 Contracts
EXAMPLE
A contract owner would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets, if the contract owner
surrendered the contract at the end of the applicable time period:
<TABLE>
<CAPTION>
TRUST PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets........ $72 $129 $188 $293
Science & Technology................ 73 131 190 298
International Small Cap............. 75 137 201 318
Aggressive Growth................... 73 130 189 295
Emerging Small Company.............. 73 130 188 294
Small Company Blend................. 74 135 197 311
Mid Cap Growth...................... 72 127 183 284
Mid Cap Stock....................... 72 127 184 285
Overseas............................ 73 132 193 303
International Stock................. 74 133 195 307
International Value................. 74 133 194 305
Mid Cap Blend....................... 71 124 178 273
</TABLE>
G-2
<PAGE> 80
<TABLE>
<CAPTION>
TRUST PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Small Company Value................. 74 133 193 304
Global Equity....................... 72 128 185 288
Growth.............................. 70 123 177 272
Large Cap Growth.................... 71 126 181 280
Quantitative Equity................. 69 119 170 258
Blue Chip Growth.................... 71 124 179 275
Real Estate Securities.............. 69 120 171 259
Value............................... 70 123 176 269
Growth & Income..................... 70 121 172 262
U.S. Large Cap Value................ 71 125 180 277
Equity-Income....................... 71 124 179 276
Income & Value...................... 70 123 176 270
Balanced............................ 70 123 176 269
High Yield.......................... 70 122 174 266
Strategic Bond...................... 70 123 176 269
Global Bond......................... 71 126 181 280
Total Return........................ 70 122 174 266
Investment Quality Bond............. 69 120 171 259
Diversified Bond.................... 70 122 174 266
U.S. Government Securities.......... 69 118 168 254
Money Market........................ 67 113 160 236
Lifestyle Aggressive 1000........... 73 130 189 295
Lifestyle Growth 820................ 72 128 185 287
Lifestyle Balanced 640.............. 71 125 181 279
Lifestyle Moderate 460.............. 71 124 179 275
Lifestyle Conservative 280.......... 70 122 175 268
</TABLE>
A contract owner would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets, if the contract owner
annuitized as provided in the contract or did not surrender the contract at the
end of the applicable time period:
<TABLE>
<CAPTION>
TRUST PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets........ $26 $81 $138 $293
Science & Technology................ 27 82 140 298
International Small Cap............. 29 88 151 318
Aggressive Growth................... 26 81 139 295
Emerging Small Company.............. 26 81 138 294
Small Company Blend................. 28 86 147 311
Mid Cap Growth...................... 25 78 133 284
Mid Cap Stock....................... 25 78 134 285
Overseas............................ 27 84 143 303
International Stock................. 28 85 145 307
International Value................. 27 84 144 305
Mid Cap Blend....................... 24 75 128 273
Small Company Value................. 27 84 143 304
Global Equity....................... 26 79 135 288
Growth.............................. 24 74 127 272
Large Cap Growth.................... 25 77 131 280
Quantitative Equity................. 23 70 120 258
Blue Chip Growth.................... 24 75 129 275
Real Estate Securities.............. 23 71 121 259
Value............................... 24 74 126 269
Growth & Income..................... 23 71 122 262
U.S. Large Cap Value................ 25 76 130 277
Equity-Income....................... 25 75 129 276
Income & Value...................... 24 74 126 270
Balanced............................ 24 74 126 269
High Yield.......................... 24 73 124 266
</TABLE>
G-3
<PAGE> 81
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Strategic Bond...................... 24 74 126 269
Global Bond......................... 25 77 131 280
Total Return........................ 24 72 124 266
Investment Quality Bond............. 23 71 121 259
Diversified Bond.................... 24 73 124 266
U.S. Government Securities.......... 22 69 118 254
Money Market........................ 21 64 110 236
Lifestyle Aggressive 100............ 27 81 139 295
Lifestyle Growth 820................ 26 79 135 287
Lifestyle Balanced 640.............. 25 76 131 279
Lifestyle Moderate 460.............. 24 75 129 275
Lifestyle Conservative 280.......... 24 73 125 268
</TABLE>
INVESTMENT OPTIONS
The Ven 3 and Ven 1 contracts do not provide for a fixed-dollar
accumulation prior to the maturity date. Thus the descriptions in this
Prospectus of the Fixed Account Investment Options, Loans and the transfer and
Dollar Cost Averaging provisions, to the extent that they relate to the fixed
account investment options, are not applicable to the Ven 1 and Ven 3 contracts.
Ven 1 differs further in that only three of the thirty-eight sub-accounts of the
Variable Account are available for the investment of contract values, namely,
the Mid Cap Blend Trust, the Investment Quality Bond Trust and the Money Market
Trust. The portfolios of Merrill Variable Funds are not available for investment
for Ven 1 and Ven 3 contract owners.
WITHDRAWAL CHARGES
The withdrawal charges under the Ven 1 and Ven 3 contracts differ from
the withdrawal charges described in this Prospectus.
Ven 3 Withdrawal Charge.
The withdrawal charge assessed under the Ven 3 contract is as follows:
If a withdrawal is made from the contract before the maturity date, a
5% withdrawal charge (contingent deferred sales charge) may be assessed. The
amount of the withdrawal charge and when it is assessed are discussed below:
1. Withdrawals are allocated to purchase payments on a
first-in-first-out basis. Each time a contract owner requests a withdrawal,
whether or not a withdrawal charge is assessed, the Company will liquidate
purchase payments equal to the amount requested in the order such purchase
payments were made: the oldest unliquidated purchase payment first, the next
purchase payment second, etc. until all purchase payments have been liquidated.
Once all purchase payments have been liquidated, additional withdrawals will be
allocated to the remaining contract value.
2. A withdrawal charge will be assessed against purchase payments
liquidated in excess of the free withdrawal amount. The free withdrawal amount
in any contract year is the greater of: (i) 10% of the contract value at the
beginning of the contract year, or (ii) 10% of the total purchase payments made
in the current contract year and the preceding 4 contract years plus the amount
of all unliquidated purchase payments made 5 or more contract years prior to the
current contract year. Therefore, no withdrawal charge will apply to any
purchase payment that has been in the contract for at least 5 years. After all
purchase payments have been liquidated, any remaining contract value
(accumulated earnings) may be withdrawn free of charge.
3. The withdrawal charge is deducted from the contract value remaining
after the contract owner is paid the amount requested, except in the case of a
complete withdrawal when it is deducted from the amount otherwise payable. The
withdrawal charge is deducted from the contract value by canceling accumulation
units of a value equal to the charge and is deducted from each investment
account ("subdivision") in proportion to the amount withdrawn from each
investment account. In the case of a partial withdrawal the amount requested
from an investment account may not exceed the value of that investment account
less any applicable withdrawal charge.
4. Under no circumstances will the total of all withdrawal charges
exceed 5% of total purchase payments.
There is no withdrawal charge on distributions made as a result of the
death of the annuitant or contract owner. There is also no withdrawal charge on
amounts applied to an annuity option at the maturity date, as provided in the
contract.
G-4
<PAGE> 82
Ven 1 Withdrawal Charge.
The withdrawal charge ("SURRENDER CHARGE") assessed under the Ven 1
contract is as follows:
If a contract is surrendered, in whole or in part, before the maturity
date, a withdrawal charge may be assessed. The amount of the withdrawal charge
and when it is assessed are discussed below:
The withdrawal charge is 5% of the lesser of (1) the amount surrendered
or (2) the total of all purchase payments made within the sixty months
immediately preceding the date of surrender. The charge is deducted from the
contract value remaining after the contract owner is paid the amount requested,
except in the case of a complete surrender when it is deducted from the amount
otherwise payable. After the first contract year, no withdrawal charge will be
made on that part of the first surrender in any contract year which does not
exceed 10% of the contract value computed as of the date of such surrender. The
right to surrender up to 10% of the contract value free of any withdrawal charge
does not apply to qualified contracts issued as tax-sheltered annuities under
Section 403(b) of the Internal Revenue Code. There is no withdrawal charge on
distributions made as a result of the death of the annuitant or contract owner.
Under no circumstances will the total of all withdrawal charges exceed 9% of
total purchase payments.
The withdrawal charge will be deducted from the contract value by
canceling accumulation units of a value equal to the charge. It will be made
from each investment account in proportion to the amount withdrawn from such
investment account.
OTHER CONTRACT CHARGES
The Ven 1 contract provides for the deduction from each sub-account
each valuation period of a charge at an effective annual rate of 1.30% of the
contract reserves allocated to such sub-account, consisting of 0.8% for the
mortality risk assumed by the Company and 0.5% for the expense risk assumed by
the Company. However, there is no administration charge under the Ven 1 contract
other than the $30 annual administration fee. The Ven 1 and Ven 3 contracts make
no provision for the waiver of the $30 annual administration fee when prior to
the maturity date the contract value equals or exceeds $100,000 at the time of
the fee's assessment.
DEATH BENEFIT PROVISIONS
Ven 3 Death Benefit Provisions
The provisions governing the death benefit prior to the maturity date
under the Ven 3 contract are as follows:
Death of Owner. The Company will pay a minimum death benefit to the
beneficiary if the contract owner is the annuitant and dies before the maturity
date. If the contract owner is not the annuitant and the contract owner dies
before the annuitant and before the maturity date (or the contract owner is the
annuitant and there is a surviving co-annuitant), instead of a minimum death
benefit, the Company will distribute the contract owner's entire interest in the
contract (the contract value determined on the date due proof of death and all
required claim forms are received at the Company's Annuity Service Office) to
the contract owner's estate or to a successor owner. Distributions to a
beneficiary, successor owner, or estate, as appropriate, will be made no later
than 5 years after the contract owner's death, unless (1) the contract owner's
spouse is the beneficiary or successor owner (in which case the spouse will be
treated as the owner and distribution will be made no later than the date on
which distribution would be required in accordance with this paragraph after the
death of the spouse), or (2) the distribution is made to the beneficiary or
successor owner who is an individual, begins not later than a year after the
contract owner's death, and is made over a period not greater than the life
expectancy of that beneficiary or successor owner.
Death of Annuitant. A minimum death benefit will be paid to the
beneficiary if the contract owner is not the annuitant and the annuitant dies
before the contract owner and before the maturity date. If there is a
co-annuitant, the minimum death benefit will be paid on the death of the last
surviving co-annuitant.
Entity as Owner. If the contract is not owned by an individual, for
example, if it is owned by a corporation or a trust, the special rules stated in
this paragraph apply. A change in the annuitant shall be treated as the death of
the owner for purposes of these special distribution rules and the Company will
distribute the contract owner's entire interest in the contract. Distributions
to the contract owner or to the beneficiary, as appropriate, will be made not
later than 5 years after the annuitant's death, unless (1) the annuitant's
spouse is the beneficiary (in which case the spouse will be treated as the
contract owner and distribution will be made no later than the date on which
distribution would be required in accordance with this paragraph after the death
of the spouse), or (2) the distribution is made to a beneficiary who is an
individual, begins not later than a year after the annuitant's death, and is
made over a period not greater than the life expectancy of that beneficiary.
G-5
<PAGE> 83
General Provisions. If there is more than one individual contract
owner, death benefits must be paid as provided in the contract upon the death of
any such contract owner.
If there is both an individual and a non-individual contract owner,
death benefits must be paid as provided in the contract upon the death of the
annuitant or any individual contract owner, whichever occurs earlier.
Due proof of death and all required claim forms are required upon the
death of the contract owner or annuitant.
During the first five contract years, the minimum death benefit payable
to a beneficiary upon death of the annuitant is 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 five 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 determined in accordance with these provisions as
of the last day of the previous five contract year period plus any purchase
payments made and less any amount deducted in connection with partial
withdrawals since then. The death benefit will be paid within seven days of
receipt of due proof of death and all required claim forms at the Company's
Annuity Service Office, subject to postponement under the same circumstances
that payment of withdrawals may be postponed.
Ven 1 Death Benefit Provisions
The death benefit provisions of the Ven 1 contract are as described
above for the Ven 3 contract except that (i) the Ven 1 contract does not provide
for the designation of successor owners or co-annuitants or changes of
annuitants and (ii) the Ven 1 contract does not make special adjustments to the
minimum death benefit for subsequent five contract year periods.
OTHER CONTRACT PROVISIONS
Transfers
Under Ven 3 and Ven 1 contracts, owners may transfer all or part of
their contract value to a fixed annuity contract issued by the Company at any
time. In such case, the Company will waive any withdrawal charge that would
otherwise be applicable under the terms of the contract. Similarly, the Company
will permit holders of such fixed contracts to transfer certain contract values
to the Variable Account. In such case, the contract values transferred will be
attributable to certain purchase payments made under the fixed contract. For
purposes of calculating the withdrawal charge under the contract, the contract
date will be deemed to be the date of the earliest purchase payment transferred
from the fixed contract and the date of other purchase payments transferred will
be deemed to be the dates actually made under the fixed contract. A transfer of
all or a part of the contract value from one contract to another may be treated
as a distribution of all or a part of the contract value for Federal tax
purposes.
Under the Ven 1 contract, a contract owner may transfer prior to the
maturity date amounts among investment accounts of the contract without charge,
but such transfers cannot be made on more than two occasions in any contract
year. After annuity payments have been made for at least 12 months under a Ven 1
contract, all or a portion of the assets held in a sub-account with respect to
the contract may be transferred by the annuitant to one or more other
sub-accounts. Such transfers can be made only once each 12 months upon notice to
the Company at least 30 days before the due date of the first annuity payment to
which the change will apply.
Annuity Option Provisions
Under Ven 3 and Ven 1 contracts, there is no prescribed maturity date
that will govern in the absence of contract owner selection. The owner must
select a maturity date in the application. If no annuity option is selected by
the owner of a Ven 3 or Ven 1 contract, the automatic option will be on a
variable, not fixed, basis.
Ven 3 and Ven 1 contracts require a minimum contract value in order to
effect an annuity -- $2,000 for a Ven 3 contract and $5,000 for a Ven 1
contract, except for certain qualified Ven 1 contracts where the minimum is
$3,500. Ven 3 and Ven 1 contracts prescribe no minimum amount for the first
annuity payment but reserve the right to change the frequency of annuity
payments if the first annuity payment would be less than $50.
Purchase Payments
The provisions governing purchase payments under Ven 1 contracts are as
follows: For qualified contracts, the minimum purchase payment is $25. For
non-qualified contracts, the minimum initial purchase payment is $5,000 and the
minimum subsequent purchase payment is $300. The Company may refuse to accept
any purchase payment in excess of $10,000 per contract year.
G-6
<PAGE> 84
Annuity Rates
The annuity rates guaranteed in the Ven 1 contract differ from those
guaranteed in the contract described in the Prospectus for annuitants of certain
ages.
Annuity Tables Assumed Interest Rate
A 4% assumed interest rate is built into the annuity tables in the Ven
1 and Ven 3 contracts used to determine the first variable annuity payment to be
made under those contracts.
Beneficiary
Under the Ven 3 and Ven 1 contracts certain provisions relating to
beneficiary are as follows:
The beneficiary is the person, persons, or entity designated in the
application or as subsequently named. The beneficiary may be changed during the
lifetime of the annuitant subject to the rights of any irrevocable beneficiary.
Any change must be made in writing, approved by the Company and if approved,
will be effective as of the date on which written. The Company assumes no
liability for any payments made or actions taken before the change is approved.
Prior to the maturity date, if no beneficiary survives the annuitant, the
contract owner or the contract owner's estate will be the beneficiary. The
interest of any beneficiary is subject to that of any assignee. In the case of
certain qualified contracts, regulations promulgated by the Treasury Department
prescribe certain limitations on the designation of a beneficiary.
GUARANTEED RETIREMENT INCOME PROGRAM
The Guaranteed Retirement Income Program is not available for Ven 3 or
Ven 1 contracts.
G-7
<PAGE> 85
TABLE OF ACCUMULATION UNIT VALUES
Ven 3 Contracts
<TABLE>
<CAPTION>
UNIT VALUE UNIT VALUE NUMBER OF UNITS
SUB-ACCOUNT AT START OF YEAR* AT END OF YEAR AT END OF YEAR
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets
1997 $12.500000 $ 8.180904 10,161.117
1998 8.180904 7.695249 9,792.536
1999 7.695249 12.359297 76,285.402
Science & Technology
1997 $12.500000 $13.647195 40,748.263
1998 13.647195 19.287390 62,323.985
1999 19.287390 37.943261 157,003.091
International Small Cap
1996 $12.500000 $13.493094 227,222.471
1997 13.493094 13.410016 169,875.665
1998 13.410016 14.792077 114,166.793
1999 14.792077 26.974754 111,479.478
Aggressive Growth
1997 $12.500000 $12.327066 49,468.887
1998 12.327066 12.680777 17,454.293
1999 12.680777 16.628126 27,500.926
Emerging Small Company
1997 $12.500000 $14.574077 16,351.863
1998 14.574077 14.381705 28,130.114
1999 14.381705 24.610648 25,011.368
Small Company Blend
1999 $12.500000 $15.922213 1,485.500
Mid Cap Growth
1996 $12.500000 $13.215952 293,765.467
1997 13.215952 15.020670 272,918.809
1998 15.020670 19.002856 239,011.757
1999 19.002856 27.113084 228,968.885
Mid Cap Stock
1999 $12.500000 $12.483520 3,150.853
Overseas
1995 $10.000000 $10.554228 227,050.855
1996 10.554228 11.718276 281,119.474
1997 11.718276 11.545714 269,571.860
1998 11.545714 12.290162 193,171.660
1999 12.290162 17.044524 160,535.612
International Stock
1997 $12.500000 $12.652231 69,740.167
1998 12.652231 14.337171 63,239.603
1999 14.337171 18.338932 47,273.999
International Value
1999 $12.500000 $12.860110 17,619.635
</TABLE>
G-8
<PAGE> 86
<TABLE>
<CAPTION>
UNIT VALUE UNIT VALUE NUMBER OF UNITS
SUB-ACCOUNT AT START OF YEAR* AT END OF YEAR AT END OF YEAR
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mid Cap Blend
1987 $10.000000 $ 8.144663 4,242,221.369
1988 8.144663 9.695125 13,563,655.062
1989 9.695125 12.208846 1,443,222.778
1990 12.208846 10.618693 2,192,929.561
1991 10.618693 12.349952 3,748,439.163
1992 12.349952 13.143309 4,354,245.114
1993 13.143309 15.075040 4,165,733.576
1994 15.075040 14.786831 2,684,785.345
1995 14.786831 20.821819 2,572,695.681
1996 20.821819 24.664354 2,196,812.816
1997 24.664354 29.002593 1,634,482.536
1998 29.002593 31.289551 1,382,873.088
1999 31.289551 39.416089 980,820.808
Small Company Value
1997 $12.500000 $11.898363 9,967.306
1998 11.898363 11.178700 33,137.664
1999 11.178700 11.904646 28,327.797
Global Equity
1988 $10.000000 $10.038462 187,978.790
1989 10.038462 12.259530 1,599,855.768
1990 12.259530 10.827724 2,578,853.673
1991 10.827724 12.044260 2,395,298.635
1992 12.044260 11.790318 2,262,222.969
1993 11.790318 15.450341 3,100,733.209
1994 15.450341 15.500933 3,543,341.154
1995 15.500933 16.459655 2,642,703.724
1996 16.459655 18.276450 2,070,671.367
1997 18.276450 21.770913 1,665,275.671
1998 21.770913 24.098970 1,219,961.932
1999 24.098970 24.633827 919,791.435
Growth
1996 $12.500000 $13.727312 79,415.926
1997 13.727312 16.968111 109,553.070
1998 16.968111 20.739989 157,427.422
1999 20.739989 28.060585 189,826.874
Large Cap Growth
1989 $10.000000 $ 9.824046 7,476,667.034
1990 9.824046 8.982210 6,387,718.448
1991 8.982210 10.891189 6,407,235.310
1992 10.891189 11.623893 6,026,587.849
1993 11.623893 12.642493 5,042,331.574
1994 12.642493 12.381395 3,562,197.567
1995 12.381395 14.990551 2,708,444.950
1996 14.990551 16.701647 2,195,447.490
1997 16.701647 19.614359 1,834,275.557
1998 19.614359 23.040505 1,547,923.928
1999 23.040505 28.465074 1,308,404.195
Quantitative Equity
1997 $12.500000 $16.107191 14,117.858
1998 16.107191 20.068624 31,764.609
1999 20.068624 24.202942 71,460.240
</TABLE>
G-9
<PAGE> 87
<TABLE>
<CAPTION>
UNIT VALUE UNIT VALUE NUMBER OF UNITS
SUB-ACCOUNT AT START OF YEAR* AT END OF YEAR AT END OF YEAR
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Blue Chip Growth
1992 $10.000000 $ 9.923524 356,487.848
1993 9.923524 9.413546 586,908.649
1994 9.413546 8.837480 576,875.573
1995 8.837480 11.026969 683,051.399
1996 11.026969 13.688523 731,368.138
1997 13.688523 17.134232 706,018.373
1998 17.134232 21.710674 635,916.186
1999 21.710674 25.568866 603,923.460
Real Estate Securities
1997 $12.500000 $14.949140 38,437.470
1998 14.949140 12.317190 21,303.966
1999 12.317190 11.174188 22,615.951
Value
1997 $12.500000 $15.057118 51,361.154
1998 15.057118 14.591878 76,685.743
1999 14.591878 13.987433 35,958.384
Growth & Income
1991 $10.000000 $10.973500 1,530,130.493
1992 10.973500 11.927411 2,211,083.415
1993 11.927411 12.893007 2,248,648.359
1994 12.893007 13.076664 2,043,186.985
1995 13.076664 16.660889 2,105,056.205
1996 16.660889 20.178770 1,828,514.772
1997 20.178770 26.431239 1,673,047.924
1998 26.431239 32.976967 1,444,081.319
1999 32.976967 38.655938 1,263,136.961
U.S. Large Cap Value
1999 $12.500000 12.721279 28,046.729
Equity-Income
1993 $10.000000 $11.175534 251,822.076
1994 11.175534 11.107620 562,603.632
1995 11.107620 13.548849 818,646.261
1996 13.548849 16.011513 751,884.340
1997 16.011513 20.479412 736,770.570
1998 20.479412 22.054902 583,452.241
1999 22.054902 22.487758 452,980.852
Income & Value
1989 $10.000000 $ 9.973206 2,137,590.858
1990 9.973206 9.221559 23,978,405.670
1991 9.221559 11.023964 22,330,124.078
1992 11.023964 11.772128 20,887,367.134
1993 11.772128 12.775798 17,512,695.707
1994 12.775798 12.396295 12,484,174.615
1995 12.396295 14.752561 9,042,096.910
1996 14.752561 15.995076 7,206,776.711
1997 15.995076 18.276161 5,667,799.061
1998 18.276161 20.742457 4,737,002.275
1999 20.742457 22.230152 3,981,000.961
Balanced
1997 $12.500000 $14.609853 6,353.152
1998 14.609853 16.459454 20,822.562
1999 16.459454 15.962370 24,969.449
</TABLE>
G-10
<PAGE> 88
<TABLE>
<CAPTION>
UNIT VALUE UNIT VALUE NUMBER OF UNITS
SUB-ACCOUNT AT START OF YEAR* AT END OF YEAR AT END OF YEAR
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
High Yield
1997 $12.500000 $13.890491 37,067.803
1998 13.890491 14.078376 114,881.361
1999 14.078376 14.993652 117,307.157
Strategic Bond
1993 $10.000000 $10.750617 163,195.638
1994 10.750617 9.965972 181,540.594
1995 9.965972 11.716972 211,267.468
1996 11.716972 13.250563 258,026.189
1997 13.250563 14.500997 306,407.827
1998 14.500997 14.486687 430,512.235
1999 14.486687 14.602672 258,604.179
Global Bond
1988 $10.000000 $10.097842 108,831.804
1989 10.097842 10.404562 300,163.262
1990 10.404562 11.642912 470,980.068
1991 11.642912 13.302966 692,920.988
1992 13.302966 13.415849 976,794.214
1993 13.415849 15.741586 1,551,958.318
1994 15.741586 14.630721 1,018,783.920
1995 14.630721 17.772344 793,225.829
1996 17.772344 19.803954 648,725.739
1997 19.803954 20.104158 460,365.576
1998 20.104158 21.333144 315,284.329
1999 21.333144 19.632749 243,349.089
Total Return
1999 $12.500000 12.255674 3,533.985
Investment Quality Bond
1987 $10.000000 $10.357400 2,234,030.945
1988 10.357400 10.937890 10,253,483.698
1989 10.937890 12.008936 1,924,256.679
1990 12.008936 11.517610 1,423,403.443
1991 11.517610 13.183268 1,720,219.933
1992 13.183268 13.936240 1,572,065.442
1993 13.936240 15.118716 1,119,425.316
1994 15.118716 14.216516 841,610.498
1995 14.216516 16.751499 734,994.414
1996 16.751499 16.943257 597,720.778
1997 16.943257 18.336912 514,787.776
1998 18.336912 19.660365 440,009.634
1999 19.660365 19.039807 345,875.870
Diversified Bond
1989 $10.000000 $10.052759 11,861,277.612
1990 10.052759 9.531831 10,705,080.076
1991 9.531831 11.166459 8,708,253.007
1992 11.166459 11.821212 7,777,630.143
1993 11.821212 12.705196 6,463,981.799
1994 12.705196 12.298940 4,556,265.387
1995 12.298940 14.320582 3,177,786.472
1996 14.320582 15.113142 2,507,618.496
1997 15.113142 16.607511 1,928,258.300
1998 16.607511 18.125951 1,548,492.876
1999 18.125951 18.002047 1,192,638.371
</TABLE>
G-11
<PAGE> 89
<TABLE>
<CAPTION>
UNIT VALUE UNIT VALUE NUMBER OF UNITS
SUB-ACCOUNT AT START OF YEAR* AT END OF YEAR AT END OF YEAR
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Government Securities
1988 $10.000000 $ 9.702201 10,203.403
1989 9.702201 10.826483 300,163.430
1990 10.826483 11.596537 366,010.353
1991 11.596537 13.037076 720,491.624
1992 13.037076 13.651495 1,938,232.553
1993 13.651495 14.490734 1,478,270.571
1994 14.490734 14.111357 909,659.824
1995 14.111357 16.083213 954,067.593
1996 16.083213 16.393307 710,502.942
1997 16.393307 17.535478 763,521.806
1998 17.535478 18.587049 428,699.306
1999 18.587049 18.286918 330,164.260
Money Market
1987 $10.000000 $10.317570 510,079.365
1988 10.317570 10.865066 983,327.102
1989 10.865066 11.634481 1,480,696.936
1990 11.634481 12.364687 4,430,249.555
1991 12.364687 12.890414 2,754,467.033
1992 12.890414 13.137257 2,138,783.498
1993 13.137257 13.303085 1,659,478.414
1994 13.303085 13.623292 3,357,660.681
1995 13.623292 14.190910 2,370,449.919
1996 14.190910 14.699636 1,577,496.585
1997 14.699636 15.241915 778,379.937
1998 15.241915 15.794513 878,869.580
1999 15.794513 16.291417 921,421.619
Lifestyle Aggressive 1000
1997 $12.500000 $13.669625 33,037.747
1998 13.669625 14.134419 52,760.075
1999 14.134419 15.974195 27,238.895
Lifestyle Growth 820
1997 $12.500000 $14.033299 110,354.900
1998 14.033299 14.696667 129,721.317
1999 14.696667 16.893101 54,202.101
Lifestyle Balanced 640
1997 $12.500000 $14.066417 11,640.415
1998 14.066417 14.664362 51,041.225
1999 14.664362 16.257312 37,839.778
Lifestyle Moderate 460
1997 $12.500000 $14.016704 9,407.923
1998 14.016704 15.171965 25,932.897
1999 15.171965 16.142259 27,359.355
</TABLE>
G-12
<PAGE> 90
<TABLE>
<CAPTION>
UNIT VALUE UNIT VALUE NUMBER OF UNITS
SUB-ACCOUNT AT START OF YEAR* AT END OF YEAR AT END OF YEAR
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lifestyle Conservative 280
1997 $12.500000 $13.825120 9,967.306
1998 13.825120 15.025549 10,098.134
1999 15.025549 15.439823 1,718.387
</TABLE>
* Units under this series of contracts were first credited under the
sub-accounts on November, 1986, except in the case of:
- Investment Quality Bond and Money Market Trusts where units were
first credited on May 4, 1987,
- Global Equity, Global Bond and U.S. Government Securities Trusts
where units were first credited on March 18, 1988,
- Large Cap Growth, Income & Value and Diversified Bond Trusts
where units were first credited on August 3, 1989,
- Growth & Income Trust where units were first credited on April
23, 1991,
- Blue Chip Growth Trust where units were first credited on
December 11, 1992,
- Equity-Income and Strategic Bond Trusts where units were first
credited on February 19, 1993,
- Overseas Trust where units were first credited on January 9,
1995,
- Mid Cap Growth and International Small Cap Trusts where units
were first credited on March 4, 1996,
- Growth Trust where units were first credited on July 15, 1996,
- Pacific Rim Emerging Markets, Science & Technology, Emerging
Small Company, Aggressive Growth, International Stock,
Quantitative Equity, Real Estate Securities, Value, Balanced and
High Yield Trusts where units were first credited on January 1,
1997,
- Lifestyle Aggressive 1000, Lifestyle Growth 820, Lifestyle
Balanced 640, Lifestyle Moderate 460, Lifestyle Conservative 280
Trusts where units were first credited on January 7, 1997, and
- Small Company Value Trust where units were first credited on
October 1, 1997.
G-13
<PAGE> 91
TABLE OF ACCUMULATION UNIT VALUES
Ven 1 Contracts
<TABLE>
<CAPTION>
UNIT VALUE UNIT VALUE NUMBER OF UNITS
SUB-ACCOUNT AT START OF YEAR AT END OF YEAR AT END OF YEAR
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mid Cap Blend(1)
1985 $10.000000 $10.734987 385.265
1986 10.734987 12.558028 4,651.489
1987 12.558028 13.248428 179,246.825
1988 13.248428 15.787546 146,228.732
1989 15.787546 19.902359 108,382.617
1990 19.902359 17.329021 93,278.975
1991 17.329021 20.176180 88,873.664
1992 20.176180 21.495619 39,451.366
1993 21.495619 24.681624 29,876.682
1994 24.681624 24.235928 24,893.636
1995 24.235928 34.164256 18,792.722
1996 34.164256 40.513296 18,983.608
1997 40.513296 47.690851 17,422.710
1998 47.690851 51.507214 14,154.988
1999 51.507214 64.954980 12,707.403
Investment Quality Bond(2)
1985 $10.000000 $10.455832 157.237
1986 10.455832 11.689643 2,426.738
1987 11.689643 11.841366 164,289.054
1988 11.841366 12.518584 157,248.809
1989 12.518585 13.759270 113,311.078
1990 13.759270 13.210721 100,560.220
1991 13.210721 15.137617 75,660.271
1992 15.137617 16.019604 38,307.149
1993 16.019604 17.397685 25,428.550
1994 17.397685 16.377174 17,796.020
1995 16.377174 19.318272 13,340.073
1996 19.318272 19.560775 11,512.775
1997 19.560775 21.192677 10,088.494
1998 21.192677 22.746879 7,009.225
1999 22.746879 22.052785 4,129.118
Money Market(3)
1985 $10.000000 $10.199136 108.287
1986 10.199136 10.647679 116.902
1987 10.647679 11.156548 69,537.264
1988 11.156548 11.761294 40,025.230
1989 11.761294 12.607783 43,520.107
1990 12.607783 13.413682 41,671.105
1991 13.413682 13.999175 35,261.861
1992 13.999175 14.282708 9,873.140
1993 14.282708 14.478685 5,683.780
1994 14.478685 14.843213 4,598.398
1995 14.843213 15.478376 7,968.626
1996 15.478376 16.050779 5,920.354
1997 16.050779 16.660935 5,228.240
1998 16.660935 17.283692 4,497.361
1999 17.283692 17.846774 4,227.991
</TABLE>
(1)Commencement of operations July 1, 1985
(2)Commencement of operations August 6, 1985
(3)Commencement of operations August 23, 1985
G-14
<PAGE> 92
APPENDIX H
EXCHANGE OFFER - VEN 7 AND VEN 8 CONTRACTS
The Contracts described in this Prospectus ("NEW CONTRACTS") may be
issued in exchange for certain annuity contracts previously issued by the
Company ("OLD CONTRACTS"), which are substantially similar to the New Contracts,
if the New Contract is available for sale in the state or jurisdiction of the
owner of the Old Contract.
For purposes of this exchange offer an "Old Contract" is defined as a
contract issued prior to August 15, 1994 in all states except California, Idaho,
Illinois, Montana, New Jersey, Oregon and South Carolina; prior to September 6,
1994 in Illinois and Montana; prior to October 3, 1994 in Idaho, New Jersey and
Oregon; prior to January 3, 1995 in California; and prior to September 24, 1996
in South Carolina. The Old Contracts are described in Appendix D to this
Prospectus and include both Ven 7 and Ven 8 contracts.
The Company will permit an owner of an outstanding Old Contract to
exchange his or her Contract for a New Contract without the imposition of a
withdrawal charge at the time of exchange, except a possible market value
charge, 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
greater of the minimum death benefit under the Old Contract or the contract
value on the date of exchange and will "step up" annually thereafter as
described in paragraph "6." below.
Old Contract owners interested in a possible exchange should carefully
review this Prospectus including Appendix D before deciding to make an exchange.
AN EXCHANGE MAY NOT BE IN THE BEST INTERESTS OF AN OWNER OF AN OLD
CONTRACT. Further, under Old Contracts with a fixed account investment option, a
market value charge may apply to any amounts transferred from a three or six
year investment account in connection with an exchange. (Reference should be
made to the discussion of the market value charge under the caption "Fixed
Account Investment Options" in the prospectus.) The Company believes that an
exchange of Contracts 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 Old and New Contracts are as
follows:
1. Annual Administration Fee.
The New Contract will waive the $30 annual administration fee prior to
the maturity date if the contract value is equal to or greater than $100,000 at
the time the fee is assessed.
2. Withdrawal Charges.
The withdrawal charges under the New Contract will be higher in certain
cases. The withdrawal charges are the same under both Old and New Contracts for
the first three years, but thereafter the charges under the New Contract are as
noted below.
<TABLE>
<CAPTION>
New Contract Old Contract
------------ ------------
Number of Complete Years Number of Complete
Purchase Payments In Withdrawal Charge Years Purchase Withdrawal Charge
Contract Percentage Payments in Contract Percentage
-------------------------- ----------------------- ------------------------ -----------------------
<S> <C> <C> <C>
0 6% 0 6%
1 6% 1 6%
2 5% 2 5%
3 5% 3 4%
4 4% 4 3%
5 3% 5 2%
6 2% 6+ 0%
7+ 0%
</TABLE>
H-1
<PAGE> 93
3. Minimum Interest Rate to be Credited for Any Guarantee Period.
The minimum interest rate to be credited for any guarantee period under
the fixed portion of the New Contract will be three percent as opposed to four
percent under the Old Contract. The market value charge under the New Contract
will be limited so as to only affect accumulated earnings in excess of three
percent, whereas under the Old Contract the market value charge is limited so as
to not invade principal.
4. Annuity Purchase Rates.
The annuity purchase rates guaranteed in the New Contract have been
determined using 3% as opposed to 4% under the Old Contract.
5. Group Deferred Annuity Contracts.
(New Jersey, South Carolina and Washington contract owners only) Old
Contracts are individual deferred annuity contracts whereas the New Contracts
are group deferred annuity contracts. Ownership of an individual contract is
evidenced by the issuance of an individual annuity contract whereas
participation in a group contract is separately accounted for by the issuance of
a certificate evidencing the owner's interest under the contract. Under the
group contract, contracts have been issued to the Venture Trust, a trust
established with United Missouri Bank, N.A., Kansas City, Missouri, as group
holder for groups comprised of persons who have brokerage accounts with brokers
having selling agreements with Manufacturers Securities Services, LLC.
6. Differences Relating to the Death Benefit
a. Differences Between Death Benefit of Old Contracts and New Contracts
Death Benefit for Old Contracts
The minimum death benefit during the first six contract years will be
equal to the greater of: (a) the owner's 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 by or on behalf of the
owner, less any amount deducted in connection with partial withdrawals made by
the owner. During any subsequent six contract year period, the minimum death
benefit will be the greater of (a) the owner's 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 six contract year period plus any purchase payments made by or on
behalf of the owner and less any amount deducted in connection with partial
withdrawals made by the owner 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 owner's contract value on the date due proof of death and all required
claim forms are received at the Company's Annuity Service Office.
Death Benefit for New Contracts
The death benefit varies by state and date of issue as follows.
A. The following death benefit generally applies to contracts issued:
ON OR AFTER: IN THE STATES OF:
May 1, 1998 Alaska, Alabama, Arizona, Arkansas, California,
Colorado, Delaware, Georgia, Hawaii, Idaho,
Illinois, Indiana, Iowa, Kansas, Kentucky,
Louisiana, Maine, Michigan, Mississippi,
Missouri, Nebraska, Nevada, New Jersey, New
Mexico, North Carolina, North Dakota, Ohio,
Oklahoma, Pennsylvania, Rhode Island, South
Carolina, South Dakota, Tennessee, Utah,
Vermont, Virginia, West Virginia, Wisconsin,
Wyoming
June 1, 1998 Connecticut
July 1, 1998 Minnesota, Montana, District of Columbia
October 1, 1998 Texas
H-2
<PAGE> 94
ON OR AFTER: IN THE STATES OF:
February 1, 1999 Massachusetts
March 15, 1999 Florida, Maryland, Oregon
November 1, 1999 Washington
If any owner dies and the oldest owner had an attained age of less than
81 years on the contract date, the death benefit will be determined as follows:
During the first contract year, the death benefit will be the greater
of:
- the contract value or
- the sum of all purchase payments made, less any amounts
deducted in connection with partial withdrawals.
During any subsequent contract year, the death benefit will be the
greater of:
- the contract value or
- the death benefit on the last day of the previous contract
year, plus any purchase payments made and less any amounts
deducted in connection with partial withdrawals since then.
If any owner dies on or after his or her 81st birthday, the death
benefit will be the greater of
- the contract value or
- the death benefit on the last day of the contract year ending
just prior to the owner's 81st birthday, plus any payments
made, less amounts deducted in connection with partial
withdrawals.
If any owner dies and the oldest owner had an attained age of 81 years
or greater on the contract date, the death benefit will be the greater of:
- the contract value or
- the sum of all purchase payments made, less any amounts
deducted in connection with partial withdrawals.
B. The following death benefit generally applies to contracts issued in Puerto
Rico, and to contracts issued:
PRIOR TO: IN THE STATES OF:
May 1, 1998 Alaska, Alabama, Arizona, Arkansas, California,
Colorado, Delaware, Georgia, Hawaii, Idaho,
Illinois, Indiana, Iowa, Kansas, Kentucky,
Louisiana, Maine, Michigan, Mississippi,
Missouri, Nebraska, Nevada, New Jersey, New
Mexico, North Carolina, North Dakota, Ohio,
Oklahoma, Pennsylvania, Rhode Island, South
Carolina, South Dakota, Tennessee, Utah,
Vermont, Virginia, West Virginia, Wisconsin,
Wyoming
June 1, 1998 Connecticut
July 1, 1998 Minnesota, Montana, District of Columbia
October 1, 1998 Texas
February 1, 1999 Massachusetts
March 15, 1999 Florida, Maryland, Oregon
November 1, 1999 Washington
H-3
<PAGE> 95
If any owner dies on or prior to his or her 85th birthday and the
oldest owner had an attained age of less than 81 years on the contract date, the
death benefit will be determined as follows:
During the first contract year, the death benefit will be the greater
of:
- the contract value or
- the sum of all purchase payments made, less any amounts
deducted in connection with partial withdrawals.
During any subsequent contract year, the death benefit will be the
greater of:
- the contract value or
- the death benefit on the last day of the previous contract
year, plus any purchase payments made and less any amounts
deducted in connection with partial withdrawals since then.
If any owner dies after his or her 85th birthday and the oldest owner
had an attained age of less than 81 years on the contract date, the death
benefit will be the greater of:
- the contract value or
- the sum of all purchase payments made, less any amounts
deducted in connection with partial withdrawals.
If any owner dies and the oldest owner had an attained age greater than
80 on the contract date, the death benefit will be the contract value less any
applicable withdrawal charges at the time of payment of benefits. For contracts
issued on or after October 1, 1997, we will waive any withdrawal charges applied
against the death benefit.
b. Differences Regarding When Death Benefit Will Be Paid
The death benefit of the New Contract will be payable upon the death of
the owner (or first owner to die if there is more than one owner). The death
benefit of the Old Contract is payable on the death of the annuitant (or last
annuitant to die if there is more than one annuitant); if the owner predeceases
the annuitant, the Old Contract contract value is paid, which may be a lesser
amount than the death benefit payable on the death of the annuitant.
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
Contracts in connection with a qualified plan should consult a tax advisor. See
also the Federal Tax Matters section of the prospectus.
7. Investment Options
The New Contract provides for five fixed investment options except,
Florida, Maryland and Oregon where two fixed investment options are available.
If a contract is issued with GRIP in the state of Washington, the five fixed
accounts will not be offered as investment options. However, if the contract is
issued without GRIP, then the five fixed accounts will be offered as investment
options. The Old Contract provides for three fixed investment options: one,
three and six year. The portfolios of Merrill Variable Funds are not available
for investment for Ven 8 contract owners.
H-4
<PAGE> 96
APPENDIX I
EXCHANGE OFFER - VEN 1 AND VEN 3 CONTRACTS
The Contracts described in this Prospectus ("NEW CONTRACTS") may be
issued in exchange for Ven 1 and Ven 3 annuity contracts previously issued by
the Company. Ven 1 and Ven 3 (collectively, "OLD CONTRACTS") contracts are
described in Appendix G.
The Company will permit an owner of an outstanding Ven 1 and Ven 3 to
exchange his or her Old Contract for a New Contract without the imposition of a
withdrawal charge at the time of exchange. 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 greater of the minimum death benefit under the Old
Contract or the contract value on the date of exchange and will "step up"
annually thereafter as described in paragraph "3." below.
Old Contract owners interested in a possible exchange should carefully
review this Prospectus including Appendix E before deciding to make an exchange.
AN EXCHANGE MAY NOT BE IN THE BEST INTERESTS OF AN OWNER OF AN OLD
CONTRACT. The Company believes that an exchange of Contracts 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 Old and New Contracts are as
follows:
1. Separate Account Annual Expenses; Contract Owner Transaction
Expenses
The New Contract and the Old Contracts have different separate account
and annual expenses as well as different contract owner transaction expenses as
noted in the chart below:
New Contract and Ven 3 Separate Account Annual Expenses
- -------------------------------------------------------
(as a percentage of average account value)
<TABLE>
<S> <C>
Separate Account Annual Expenses
Mortality and expense risk fees............. 1.25%
Administration fee - asset based............ 0.15%
-----
Total Separate Account Annual Expenses...... 1.40%
</TABLE>
New Contract and Ven 3 Transaction Expenses
- -------------------------------------------
<TABLE>
<S> <C>
Annual Administration Fee................... $30*
Dollar Cost Averaging Charge................ none
</TABLE>
Ven 1 Separate Account Annual Expenses
- --------------------------------------
(as a percentage of average account value)
<TABLE>
<S> <C>
Separate Account Annual Expenses
Mortality and expense risk fees.......... 1.30%
-----
Total Separate Account Annual Expenses... 1.30%
</TABLE>
Ven 1 Transaction Expenses
- --------------------------
<TABLE>
<S> <C>
Annual Administration Fee................ $30
Dollar Cost Averaging Charge............. none
</TABLE>
*For New Contracts, the $30 annual administration fee will not be assessed prior
to the maturity date if at the time of its assessment the sum of all investment
account values is greater than or equal to $100,000.
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<PAGE> 97
2. Withdrawal Charges.
The withdrawal charges under the New Contract will be higher in certain
cases as noted below.
<TABLE>
<CAPTION>
New Contract Ven 3 and Ven 1 Contracts
------------ -------------------------
Number of Complete Years Number of Complete
Purchase Payments In Withdrawal Charge Years Purchase Withdrawal Charge
Contract Percentage Payments in Contract Percentage
-------------------------- ----------------------- ------------------------ -----------------------
<S> <C> <C> <C>
0 6% 0 5%
1 6% 1 5%
2 5% 2 5%
3 5% 3 5%
4 4% 4 5%
5 3% 5 5%
6 2% 6+ 0%
7+ 0%
</TABLE>
3. Death Benefit
a. Differences Between Death Benefit of Old Contracts and New Contracts
Death Benefit for Ven 3 Contracts
The minimum death benefit during the first five 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 by or on behalf of the
owner, less any amount deducted in connection with partial
withdrawals made by the owner.
During any subsequent five 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 five
contract year period plus any purchase payments made by or on
behalf of the owner less any amount deducted in connection
with partial withdrawals made by the owner since then.
Death Benefit for Ven 1 Contracts
The minimum death benefit is the greater of:
(a) the contract value on the date due proof of death and all
required claim forms are received at our Annuity Service
Office, or
(b) the sum of all purchase payments made, less any amount
deducted in connection with partial withdrawals.
I-2
<PAGE> 98
Death Benefit for New Contracts
The death benefit varies by state and date of issue as follows.
A. The following death benefit generally applies to contracts issued:
ON OR AFTER: IN THE STATES OF:
May 1, 1998 Alaska, Alabama, Arizona, Arkansas, California,
Colorado, Delaware, Georgia, Hawaii, Idaho,
Illinois, Indiana, Iowa, Kansas, Kentucky,
Louisiana, Maine, Michigan, Mississippi,
Missouri, Nebraska, Nevada, New Jersey, New
Mexico, North Carolina, North Dakota, Ohio,
Oklahoma, Pennsylvania, Rhode Island, South
Carolina, South Dakota, Tennessee, Utah,
Vermont, Virginia, West Virginia, Wisconsin,
Wyoming
June 1, 1998 Connecticut
July 1, 1998 Minnesota, Montana, District of Columbia
October 1, 1998 Texas
February 1, 1999 Massachusetts
March 15, 1999 Florida, Maryland, Oregon
November 1, 1999 Washington
If any owner dies and the oldest owner had an attained age of less than
81 years on the contract date, the death benefit will be determined as follows:
During the first contract year, the death benefit will be the greater
of:
- the contract value or
- the sum of all purchase payments made, less any amounts
deducted in connection with partial withdrawals.
During any subsequent contract year, the death benefit will be the
greater of:
- the contract value or
- the death benefit on the last day of the previous contract
year, plus any purchase payments made and less any amounts
deducted in connection with partial withdrawals since then.
If any owner dies on or after his or her 81st birthday, the death
benefit will be the greater of
- the contract value or
- the death benefit on the last day of the contract year ending
just prior to the owner's 81st birthday, plus any payments
made, less amounts deducted in connection with partial
withdrawals.
If any owner dies and the oldest owner had an attained age of 81 years
or greater on the contract date, the death benefit will be the greater of:
- the contract value or
- the sum of all purchase payments made, less any amounts
deducted in connection with partial withdrawals.
I-3
<PAGE> 99
B. The following death benefit generally applies to contracts issued in Puerto
Rico, and to contracts issued:
PRIOR TO: IN THE STATES OF:
May 1, 1998 Alaska, Alabama, Arizona, Arkansas, California,
Colorado, Delaware, Georgia, Hawaii, Idaho,
Illinois, Indiana, Iowa, Kansas, Kentucky,
Louisiana, Maine, Michigan, Mississippi,
Missouri, Nebraska, Nevada, New Jersey, New
Mexico, North Carolina, North Dakota, Ohio,
Oklahoma, Pennsylvania, Rhode Island, South
Carolina, South Dakota, Tennessee, Utah,
Vermont, Virginia, West Virginia, Wisconsin,
Wyoming
June 1, 1998 Connecticut
July 1, 1998 Minnesota, Montana, District of Columbia
October 1, 1998 Texas
February 1, 1999 Massachusetts
March 15, 1999 Florida, Maryland, Oregon
November 1, 1999 Washington
If any owner dies on or prior to his or her 85th birthday and the
oldest owner had an attained age of less than 81 years on the contract date, the
death benefit will be determined as follows:
During the first contract year, the death benefit will be the greater
of:
- the contract value or
- the sum of all purchase payments made, less any amounts
deducted in connection with partial withdrawals.
During any subsequent contract year, the death benefit will be the
greater of:
- the contract value or
- the death benefit on the last day of the previous contract
year, plus any purchase payments made and less any amounts
deducted in connection with partial withdrawals since then.
If any owner dies after his or her 85th birthday and the oldest owner
had an attained age of less than 81 years on the contract date, the death
benefit will be the greater of:
- the contract value or
- the sum of all purchase payments made, less any amounts
deducted in connection with partial withdrawals.
If any owner dies and the oldest owner had an attained age greater than
80 on the contract date, the death benefit will be the contract value less any
applicable withdrawal charges at the time of payment of benefits. For contracts
issued on or after October 1, 1997, we will waive any withdrawal charges applied
against the death benefit.
b. Differences Regarding When Death Benefit Will Be Paid
In general, the death benefit of the New Contract will be payable on
the death of the owner (or first owner to die if there is more than one owner).
The death benefit of the Ven 3 and Ven 1 contracts is generally payable on the
death of the annuitant (or last annuitant to die if there is more than one
annuitant); if the owner predeceases the annuitant, the Ven 3 or Ven 1 contract
value (as applicable) is paid, which may be a lesser amount than the death
benefit payable on the death of the annuitant.
I-4
<PAGE> 100
4. Number of Investment Options.
The New Contract provides for forty-six investment options (forty-one
variable and five fixed), except in Florida, Maryland and Oregon where two fixed
investment options are available. If a contract is issued with GRIP in the state
of Washington, the five fixed accounts will not be offered as investment
options. However, if the contract is issued without GRIP, then the five fixed
accounts will be offered as investment options. Neither the Ven 3 contract nor
the Ven 1 contract provide for fixed investment options. In addition, the Ven 1
contract offers only three variable investment options. The portfolios of
Merrill Variable Funds are not available for investment for Ven 3 or Ven 1
contract owners.
5. Annuity Purchase Rates.
The annuity purchase rates guaranteed in the New Contract have been
determined using 3% as opposed to 4% under the Ven 1 and Ven 3 contracts.
6. Federal Tax Considerations.
Certain Ven 3 and Ven 1 contracts may not be subject to some changes in
the Federal tax law that have occurred since the contracts were issued, i.e.,
the contracts were "grandfathered." If such a grandfathered contract is
exchanged, the New Contract is likely to be subject to the changes in the law.
For example, annuity contracts issued on or prior to April 22, 1987 are
generally not subject to Federal tax rules treating transfers of annuity
contracts for inadequate consideration as taxable events. See "Taxation of
Partial and Full Withdrawals" in the Federal Tax Matters section of this
prospectus. A New Contract received in exchange for a Ven 3 or Ven 1 contract
would, however, typically be subject to these rules.
I-5
<PAGE> 101
APPENDIX J
EXCHANGE OFFER - MANAMERICA LIFESTYLE ANNUITY CONTRACTS
Exchange Offer in all States Except New Hampshire, New York and the Territory of
Guam
In all states except New Hampshire, New York and the territory of Guam,
the contracts described in 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 CONTRACT").
The Company will permit an owner of an outstanding Lifestyle Contract
to exchange the Lifestyle 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 Lifestyle Contract
was issued, and any purchase payment credited to the Lifestyle Contract will be
deemed to have been credited to the New Contract on the date it was credited
under the Lifestyle Contract. The death benefit under the New Contract on the
date of its issue will be the contract value under the Lifestyle Contract on the
date of exchange, and will "step up" annually thereafter as described in
paragraph "5." below.
Lifestyle Contract owners interested in a possible exchange should
carefully review both the Lifestyle 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 A LIFESTYLE
CONTRACT. Further, under Lifestyle 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 Contract
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 LIFESTYLE CONTRACTS AND THE NEW
CONTRACTS ARE AS FOLLOWS:
1. Separate Account and Fixed Account Expenses; Contract Owner
Transaction Expenses
The New Contract and the Lifestyle Contract have different separate
account and fixed account 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)
Separate Account Annual Expenses
<TABLE>
<S> <C>
Mortality and expense risks fees............ 1.25%
Administration fee - asset based............ 0.15%
----
Total Separate Account Annual Expenses...... 1.40%
</TABLE>
New Contract Owner Transaction Expenses
<TABLE>
<S> <C>
Annual Administration Fee................... $30*
Dollar Cost Averaging Charge................ none
</TABLE>
*The $30 annual administration fee will not be assessed prior to the maturity
date if at the time of its assessment the sum of all investment account values
is greater than or equal to $100,000.
J-1
<PAGE> 102
Lifestyle Contract Separate Account Annual Expenses
Separate Account Annual Expenses
<TABLE>
<CAPTION>
Mortality and Expense Risks 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%
Lifestyle Contract Owner Transaction Expenses
Record Keeping Charge $30**
Dollar Cost Averaging Charge
(if selected and applicable) $5***
</TABLE>
*A mortality and expense risks charge of 0.80% per annum is deducted daily from
separate account assets, and a mortality and expense risks 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.
2. Number of Variable Investment Options
The Lifestyle Contract has eight variable investment options whereas
the New Contract has thirty eight variable investment options.
3. Fixed Account Investment Options
The Lifestyle Contract offers a Guaranteed Interest Account and prior
to May 1, 2000 offered Fixed Accounts with guarantee periods ranging from 1 to
10 years whereas the New Contract offers five fixed account investment options:
one, three, five and seven year guaranteed investment accounts and a dollar cost
averaging fixed investment account, except in Florida, Maryland and Oregon where
two fixed account investment options are offered: one year guaranteed investment
account and a DCA fixed investment account. The Lifestyle Contract Guaranteed
Interest Account credits a rate of interest that is subject to change daily. The
New Contract does not offer a similar investment option. See "The Guaranteed
Interest Account" in the Lifestyle Contract prospectus. The market value
adjustment for the Lifestyle Contract Fixed Accounts is different from the
market value charge for the New Contract fixed account investment options. The
Lifestyle Contract 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 Contract 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 Contract prospectus and "Fixed Account Investment Options" in the New
Contract prospectus.
J-2
<PAGE> 103
4. Withdrawal Charges
The withdrawal charges under the New Contract are different from the
Lifestyle Contract. The withdrawal charges under the Lifestyle Contract and the
New Contract are as follows:
<TABLE>
<CAPTION>
Lifestyle Contract New Contract
------------------ ------------
Number of Complete Years Number of Complete
Purchase Payments In Withdrawal Charge Years Purchase Withdrawal Charge
Contract Percentage Payments in Contract Percentage
------------------------ ----------------- -------------------- -----------------
<S> <C> <C> <C>
0 8% 0 6%
1 8% 1 6%
2 8% 2 5%
3 6% 3 5%
4 4% 4 4%
5 2% 5 3%
6+ 0% 6 2%
7+ 0%
</TABLE>
5. Minimum Death Benefit
Differences Between the Minimum Death Benefit of the Lifestyle Contract
and the New Contract are as follows:
Minimum Death Benefit for Lifestyle Contract
Upon the occurrence of the death of the original policyowner,
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.
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 varies by state and date of issue as follows.
A. The following death benefit generally applies to contracts issued:
ON OR AFTER: IN THE STATES OF:
May 1, 1998 Alaska, Alabama, Arizona, Arkansas, California,
Colorado, Delaware, Georgia, Hawaii, Idaho, Illinois,
Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,
Michigan, Mississippi, Missouri, Nebraska, Nevada,
New Jersey, New Mexico, North Carolina, North Dakota,
Ohio, Oklahoma, Pennsylvania, Rhode Island, South
Carolina, South Dakota, Tennessee, Utah, Vermont,
Virginia, West Virginia, Wisconsin, Wyoming
J-3
<PAGE> 104
ON OR AFTER: IN THE STATES OF:
July 1, 1998 Minnesota, Montana, District of Columbia
October 1, 1998 Texas
February 1, 1999 Massachusetts
March 15, 1999 Florida, Maryland, Oregon
November 1, 1999 Washington
If any owner dies and the oldest owner had an attained age of less than
81 years on the contract date, the death benefit will be determined as follows:
During the first contract year, the death benefit will be the greater
of:
- - the contract value or
- - the sum of all purchase payments made, less any amounts deducted in
connection with partial withdrawals.
During any subsequent contract year, the death benefit will be the
greater of:
- - the contract value or
- - the death benefit on the last day of the previous contract year, plus
any purchase payments made and less any amounts deducted in connection
with partial withdrawals since then.
If any owner dies on or after his or her 81st birthday, the death
benefit will be the greater of
- - the contract value or
- - the death benefit on the last day of the contract year ending just
prior to the owner's 81st birthday, plus any payments made, less
amounts deducted in connection with partial withdrawals.
If any owner dies and the oldest owner had an attained age of 81 years
or greater on the contract date, the death benefit will be the greater of:
- - the contract value or
- - the sum of all purchase payments made, less any amounts deducted in
connection with partial withdrawals.
B. The following death benefit generally applies to contracts issued in Puerto
Rico, and to contracts issued:
PRIOR TO: IN THE STATES OF:
May 1, 1998 Alaska, Alabama, Arizona, Arkansas, California,
Colorado, Delaware, Georgia, Hawaii, Idaho, Illinois,
Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,
Michigan, Mississippi, Missouri, Nebraska, Nevada,
New Jersey, New Mexico, North Carolina, North Dakota,
Ohio, Oklahoma, Pennsylvania, Rhode Island, South
Carolina, South Dakota, Tennessee, Utah, Vermont,
Virginia, West Virginia, Wisconsin, Wyoming
June 1, 1998 Connecticut
July 1, 1998 Minnesota, Montana, District of Columbia
October 1, 1998 Texas
J-4
<PAGE> 105
PRIOR TO: IN THE STATES OF:
February 1, 1999 Massachusetts
March 15, 1999 Florida, Maryland, Oregon
November 1, 1999 Washington
If any owner dies on or prior to his or her 85th birthday and the
oldest owner had an attained age of less than 81 years on the contract date, the
death benefit will be determined as follows:
During the first contract year, the death benefit will be the greater
of:
- - the contract value or
- - the sum of all purchase payments made, less any amounts deducted in
connection with partial withdrawals.
During any subsequent contract year, the death benefit will be the
greater of:
- - the contract value or
- - the death benefit on the last day of the previous contract year, plus
any purchase payments made and less any amounts deducted in connection
with partial withdrawals since then.
If any owner dies after his or her 85th birthday and the oldest owner
had an attained age of less than 81 years on the contract date, the death
benefit will be the greater of:
- - the contract value or
- - the sum of all purchase payments made, less any amounts deducted in
connection with partial withdrawals.
If any owner dies and the oldest owner had an attained age greater than
80 on the contract date, the death benefit will be the contract value less any
applicable withdrawal charges at the time of payment of benefits. For contracts
issued on or after October 1, 1997, we will waive any withdrawal charges applied
against the death benefit.
6. Annuity Payments
Annuity payments under the Lifestyle Contract 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 Contract 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 3% per year. The annuity purchase rates guaranteed in
the Lifestyle Contract are based on the 1983 Individual Annuity Mortality Tables
and an assumed interest rate of 3% per year.
* * * *
J-5
<PAGE> 106
Contract owners who do not wish to exchange their Lifestyle Contracts
for the New Contracts may continue to make purchase payments to their Lifestyle
Contracts. Or, they can keep their Lifestyle Contracts and buy a New Contract to
which to apply additional purchase payments.
The above comparison does not take into account differences between the
Lifestyle Contracts, as amended by qualified plan endorsements, and the New
Contracts, as amended by similar qualified plan endorsements. Owners using their
Lifestyle Contract in connection with a qualified plan should consult a tax
advisor. See also the Federal Tax Matters section of this prospectus and the
Lifestyle Contract prospectuses.
J-6
<PAGE> 107
APPENDIX K
EXCHANGE OFFER - MANAMERICA MULTI-ACCOUNT FLEXIBLE PAYMENT VARIABLE ANNUITY
Exchange Offer in all States Except New Hampshire, New York and the Territory of
Guam
In all states except New Hampshire, New York and the territory of Guam,
the contracts described in 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 Multi-Account Flexible Payment
Variable Annuity ("MANULIFE ANNUITY CONTRACT").
The Company will permit an owner of an outstanding Manulife Annuity
Contract to exchange the Manulife Annuity Contract for a New Contract without
the imposition of a withdrawal charge at the time of exchange. 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 Manulife Annuity Contract was issued, and any purchase payment credited to
the Manulife Annuity Contract will be deemed to have been credited to the New
Contract on the date it was credited under the Manulife Annuity Contract. The
death benefit under the New Contract on the date of its issue will be the
contract value under the Manulife Annuity Contract on the date of exchange, and
will "step up" annually thereafter as described in paragraph "4." below.
Manulife Annuity Contract owners interested in a possible exchange
should carefully review both the Manulife Annuity 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 MANULIFE
ANNUITY CONTRACT. 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 CONTRACT AND THE
NEW CONTRACT ARE AS FOLLOWS:
1. Separate Account Annual Expenses; Contract Owner Transaction
Expenses
The New Contract and the Manulife Annuity Contract 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)
Separate Account Annual Expenses
<TABLE>
<S> <C>
Mortality and expense risks fees............ 1.25%
Administration fee - asset based............ 0.15%
----
Total Separate Account Annual Expenses...... 1.40%
</TABLE>
New Contract Owner Transaction Expenses
<TABLE>
<S> <C>
Annual Administration Fee................... $30*
Dollar Cost Averaging Charge................ none
</TABLE>
*The $30 annual administration fee will not be assessed prior to the maturity
date if at the time of its assessment the sum of all investment accounts is
greater than or equal to $100,000.
K-1
<PAGE> 108
Manulife Annuity Contract Separate Account Annual Expenses
(as a percentage of average account value)
Separate Account Annual Expenses
<TABLE>
<S> <C>
Mortality and expense risks fees............ 1.00%
Total Separate Account Annual Expenses...... 1.00%
</TABLE>
Manulife Annuity Contract Contract Owner Transaction Expenses
<TABLE>
<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.
2. Withdrawal Charges
The withdrawal charges under the New Contract will be lower in certain
cases. The withdrawal charges under the Manulife Annuity Contract and the New
Contract are as follows:
<TABLE>
<CAPTION>
New Contract Manulife Annuity Contract
------------ -------------------------
Number of Complete Years Number of Complete
Purchase Payments In Withdrawal Charge Years Purchase Withdrawal Charge
Contract Percentage Payments in Contract Percentage
------------------------ ----------------- -------------------- -----------------
<S> <C> <C> <C>
0 6% 0 8%
1 6% 1 7%
2 5% 2 6%
3 5% 3 5%
4 4% 4 4%
5 3% 5 3%
6 2% 6 2%
7+ 0% 7 1%
8+ 0
</TABLE>
3. Number of Variable Investment Options and Fixed Account Investment
Options
The Manulife Annuity Contract has eight variable investment options
whereas the New Contract has thirty eight variable investment options. The
Manulife Annuity Contract has a Guaranteed Interest Account whereas the New
Contract offers five fixed account investment options: one, three, five and
seven year guaranteed investment accounts and a dollar cost averaging fixed
investment account, except in Florida, Maryland and Oregon where two fixed
account investment options are offered: one year guaranteed investment account
and a dollar cost averaging fixed investment account. The Manulife Annuity
Contract Guaranteed Interest Account has a credited rate of interest that is
subject to change each contract anniversary. The New Contract fixed account
investment options have an interest rate guaranteed for the duration of the
guaranteed period. See Appendix A in the Manulife Annuity Contract prospectus
and "Fixed Account Investment Options" in the New Contract prospectus.
K-2
<PAGE> 109
4. Minimum Death Benefit
Differences Between Death Benefit of Manulife Annuity Contract and New
Contract are as follows:
Minimum Death Benefit for Manulife Annuity
Manulife Annuity Contract 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 death benefit varies by state and date of issue as follows.
A. The following death benefit generally applies to contracts issued:
ON OR AFTER: IN THE STATES OF:
May 1, 1998 Alaska, Alabama, Arizona, Arkansas,
California, Colorado, Delaware, Georgia,
Hawaii, Idaho, Illinois, Indiana, Iowa,
Kansas, Kentucky, Louisiana, Maine,
Michigan, Mississippi, Missouri, Nebraska,
Nevada, New Jersey, New Mexico, North
Carolina, North Dakota, Ohio, Oklahoma,
Pennsylvania, Rhode Island, South Carolina,
South Dakota, Tennessee, Utah, Vermont,
Virginia, West Virginia, Wisconsin, Wyoming
June 1, 1998 Connecticut
July 1, 1998 Minnesota, Montana, District of Columbia
October 1, 1998 Texas
February 1, 1999 Massachusetts
March 15, 1999 Florida, Maryland, Oregon
November 1, 1999 Washington
If any owner dies and the oldest owner had an attained age of less than
81 years on the contract date, the death benefit will be determined as follows:
During the first contract year, the death benefit will be the greater
of:
- - the contract value or
- - the sum of all purchase payments made, less any amounts deducted in
connection with partial withdrawals.
During any subsequent contract year, the death benefit will be the
greater of:
- - the contract value or
- - the death benefit on the last day of the previous contract year, plus
any purchase payments made and less any amounts deducted in connection
with partial withdrawals since then.
If any owner dies on or after his or her 81st birthday, the death
benefit will be the greater of
- - the contract value or
- - the death benefit on the last day of the contract year ending just
prior to the owner's 81st birthday, plus any payments made, less
amounts deducted in connection with partial withdrawals.
K-3
<PAGE> 110
If any owner dies and the oldest owner had an attained age of 81 years
or greater on the contract date, the death benefit will be the greater of:
- - the contract value or
- - the sum of all purchase payments made, less any amounts deducted in
connection with partial withdrawals.
B. The following death benefit generally applies to contracts issued in
Puerto Rico, and to contracts issued:
PRIOR TO: IN THE STATES OF:
May 1, 1998 Alaska, Alabama, Arizona, Arkansas,
California, Colorado, Delaware, Georgia,
Hawaii, Idaho, Illinois, Indiana, Iowa,
Kansas, Kentucky, Louisiana, Maine,
Michigan, Mississippi, Missouri, Nebraska,
Nevada, New Jersey, New Mexico, North
Carolina, North Dakota, Ohio, Oklahoma,
Pennsylvania, Rhode Island, South Carolina,
South Dakota, Tennessee, Utah, Vermont,
Virginia, West Virginia, Wisconsin, Wyoming
June 1, 1998 Connecticut
July 1, 1998 Minnesota, Montana, District of Columbia
October 1, 1998 Texas
February 1 1999 Massachusetts
March 15, 1999 Florida, Maryland, Oregon
November 1, 1999 Washington
If any owner dies on or prior to his or her 85th birthday and the
oldest owner had an attained age of less than 81 years on the contract date, the
death benefit will be determined as follows:
During the first contract year, the death benefit will be the greater
of:
- - the contract value or
- - the sum of all purchase payments made, less any amounts deducted in
connection with partial withdrawals.
During any subsequent contract year, the death benefit will be the
greater of:
- - the contract value or
- - the death benefit on the last day of the previous contract year, plus
any purchase payments made and less any amounts deducted in connection
with partial withdrawals since then.
If any owner dies after his or her 85th birthday and the oldest owner
had an attained age of less than 81 years on the contract date, the death
benefit will be the greater of:
- - the contract value or
- - the sum of all purchase payments made, less any amounts deducted in
connection with partial withdrawals.
If any owner dies and the oldest owner had an attained age greater than
80 on the contract date, the death benefit will be the contract value less any
applicable withdrawal charges at the time of payment of benefits. For contracts
issued on or after October 1, 1997, we will waive any withdrawal charges applied
against the death benefit.
K-4
<PAGE> 111
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 3% per year. The annuity purchase rates guaranteed in
the Manulife Annuity Contract 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 Contract 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. Minimum Guaranteed Interest Rate on Guaranteed Interest Account
The minimum guaranteed interest rate for the Manulife Annuity Contract
Guaranteed Interest Account is 4% whereas the minimum guaranteed interest rate
for the New Contract fixed account investment options is 3%.
* * * *
Contract owners who do not wish to exchange their Manulife Annuity
Contract Contracts for the New Contracts may continue to make purchase payments
to their Manulife Annuity Contracts. Or, they can keep their Manulife Annuity
Contracts and buy a New Contract to which to apply additional purchase payments.
The above comparison does not take into account differences between the
Manulife Annuity Contracts, as amended by qualified plan endorsements, and the
New Contracts, as amended by similar qualified plan endorsements. Owners using
their Manulife Annuity Contract in connection with a qualified plan should
consult a tax advisor. See also the Federal Tax Matters section of this
prospectus and the Manulife Annuity Contract prospectuses.
K-5
<PAGE> 112
APPENDIX L
QUALIFIED PLAN TYPES
Set forth below are brief descriptions of the types of qualified plans
in connection with which we will issue contracts. Certain potential tax
consequences associated with use of the contract in connection with qualified
plans are also described. Persons intending to use the contract in connection
with qualified plans should consult their tax advisor.
Individual Retirement Annuities. Section 408 of the Code permits
eligible individuals to contribute to an individual retirement program known as
an "Individual Retirement Annuity" or "IRA." IRAs are subject to limits on the
amounts that may be contributed and deducted, the persons who may be eligible
and on the time when distributions may commence. Also, distributions from
certain other types of qualified retirement plans may be "rolled over" on a
tax-deferred basis into an IRA. The contract may not, however be used in
connection with an "Education IRA" under Section 530 of the Code.
IRAs generally may not provide life insurance coverage, but they may
provide a death benefit that equals the greater of the premiums paid and the
contract value. The contract provides a death benefit that in certain
circumstances may exceed the greater of the purchase payments and the contract
value. It is possible that the contract's death benefit could be viewed as
providing life insurance coverage with the result that the contract would not be
viewed as satisfying the requirements of an IRA.
Simplified Employee Pensions (SEP-IRAs). Section 408(k) of the Code
allows employers to establish simplified employee pension plans for their
employees, using the employees' IRAs for such purposes, if certain criteria are
met. Under these plans the employer may, within specified limits, make
deductible contributions on behalf of the employees to IRAs. As discussed above
(see "Individual Retirement Annuities"), there is some uncertainty regarding the
treatment of the contract's death benefit for purposes of the tax rules
governing IRAs (which would include SEP-IRAs).
SIMPLE IRAs. Section 408(p) of the Code permits certain small employers
to establish "SIMPLE retirement accounts," including SIMPLE IRAs, for their
employees. Under SIMPLE IRAs, certain deductible contributions are made by both
employees and employers. SIMPLE IRAs are subject to various requirements,
including limits on the amounts that may be contributed, the persons who may be
eligible, and the time when distributions may commence. As discussed above (see
Individual Retirement Annuities), there is some uncertainty regarding the proper
characterization of the contract's death benefit for purposes of the tax rules
governing IRAs (which would include SIMPLE IRAs).
Roth IRAs. Section 408A of the Code permits eligible individuals to
contribute to a type of IRA known as a "Roth IRA." Roth IRAs are generally
subject to the same rules as non-Roth IRAs, but differ in certain respects.
Among the differences are that contributions to a Roth IRA are not
deductible and "qualified distributions" from a Roth IRA are excluded from
income. A qualified distribution is a distribution that satisfies two
requirements. First, the distribution must be made in a taxable year that is at
least five years after the first taxable year for which a contribution to any
Roth IRA established for the owner was made. Second, the distribution must be:
- - made after the owner attains age 59-1/2;
- - made after the owner's death;
- - attributable to the owner being disabled; or
- - a qualified first-time homebuyer distribution within the meaning of
Section 72(t)(2)(F) of the Code.
In addition, distributions from Roth IRAs need not commence when the
owner attains age 70-1/2 . A Roth IRA may accept a "qualified rollover
contribution" from a non-Roth IRA, but a Roth IRA may not accept rollover
contributions from other qualified plans.
As described above (see "Individual Retirement Annuities"), there is
some uncertainty regarding the proper characterization of the contract's death
benefit for purposes of the tax rules governing IRAs (which include Roth IRAs).
Also, the state tax treatment of a Roth IRA may differ from the Federal income
tax treatment of a Roth IRA.
L-1
<PAGE> 113
Corporate and Self-Employed ("H.R. 10" and "Keogh") Pension and
Profit-Sharing Plans. Sections 401(a) and 403(a) of the Code permit corporate
employers to establish various types of tax-favored retirement plans for
employees. The Self-Employed Individuals' Tax Retirement Act of 1962, as
amended, commonly referred to as "H.R. 10" or "Keogh," permits self-employed
individuals also to establish such tax-favored retirement plans for themselves
and their employees. Such retirement plans may permit the purchase of the
contracts in order to provide benefits under the plans. The contract provides a
death benefit that in certain circumstances may exceed the greater of the
purchase payments and the contract value. It is possible that the IRS could
characterize the death benefit as an "incidental death benefit." There are
limitations on the amount of incidental benefits that may be provided under
pension and profit sharing plans. In addition, the provision of such benefits
may result in current taxable income to participants.
Tax-Sheltered Annuities. Section 403(b) of the Code permits public
school employees and employees of certain types of charitable, educational and
scientific organizations specified in Section 501(c)(3) of the Code to have
their employers purchase annuity contracts for them and, subject to certain
limitations, to exclude the amount of purchase payments from gross income for
tax purposes. These annuity contracts are commonly referred to as "tax-sheltered
annuities." Purchasers of the contracts for such purposes should seek competent
advice as to eligibility, limitations on permissible amounts of purchase
payments and other tax consequences associated with the contracts. In
particular, purchasers should consider that the contract provides a death
benefit that in certain circumstances may exceed the greater of the purchase
payments and the contract value. It is possible that the IRS could characterize
the death benefit as an "incidental death benefit." If so, the contract owner
could be deemed to receive currently taxable income. In addition, there are
limitations on the amount of incidental benefits that may be provided under a
tax-sheltered annuity. Even if the IRS characterized the benefit under the
contract as an incidental death benefit, the death benefit is unlikely to
violate those limits unless the purchaser also purchases a life insurance
contract as part of his or her tax-sheltered annuity plan.
Tax-sheltered annuity contracts must contain restrictions on
withdrawals of:
- - contributions made pursuant to a salary reduction agreement in years
beginning after December 31, 1988,
- - earnings on those contributions, and
- - earnings after 1988 on amounts attributable to salary reduction
contributions (and earnings on those contributions) held as of the last
day of the year beginning before January 1, 1989.
These amounts can be paid only if the employee has reached age 59-1/2, separated
from service, died, or become disabled (within the meaning of the tax law), or
in the case of hardship (within the meaning of the tax law). Amounts permitted
to be distributed in the event of hardship are limited to actual contributions;
earnings thereon cannot be distributed on account of hardship. Amounts subject
to the withdrawal restrictions applicable to Section 403(b)(7) custodial
accounts may be subject to more stringent restrictions. (These limitations on
withdrawals do not apply to the extent we are directed to transfer some or all
of the contract value to the issuer of another tax-sheltered annuity or into a
Section 403(b)(7) custodial account.)
Deferred Compensation Plans of State and Local Governments and
Tax-Exempt Organizations. Section 457 of the Code permits employees of state and
local governments and tax-exempt organizations to defer a portion of their
compensation without paying current taxes. The employees must be participants in
an eligible deferred compensation plan. Generally, a contract purchased by a
state or local government or a tax-exempt organization will not be treated as an
annuity contract for Federal income tax purposes. The contract will be issued in
connection with a Section 457 deferred compensation plan sponsored by a state or
local government only if the plan has established a trust to hold plan assets,
including the contract.
L-2
<PAGE> 114
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 115
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
THE MANUFACTURERS LIFE INSURANCE COMPANY OF
NORTH AMERICA SEPARATE ACCOUNT A
- --------------------------------------------------------------------------------
OF
THE MANUFACTURERS LIFE INSURANCE COMPANY
OF NORTH AMERICA
FLEXIBLE PURCHASE PAYMENT DEFERRED
COMBINATION FIXED AND VARIABLE ANNUITY CONTRACT
NON-PARTICIPATING
This Statement of Additional Information is not a Prospectus. It
contains information in addition to that described in the Prospectus and should
be read in conjunction with the Prospectus dated the same date as this Statement
of Additional Information. The Prospectus may be obtained by writing The
Manufacturers Life Insurance Company of North America at the mailing address of
the Annuity Service Office, P.O. Box 9230, Boston, Massachusetts 02205-9230 or
telephoning (800) 344-1029.
The date of this Statement of Additional Information is May 1, 2000
The Manufacturers Life Insurance Company of North America
500 Boylston Street, Suite 400
Boston, Massachusetts 02116-3739
(617) 663-3000
(800) 344-1029
VENTURE.SAI5/2000(MLAM)
<PAGE> 116
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Information and History.......................................... 3
Performance Data......................................................... 3
Services
Independent Auditors.............................................. 21
Servicing Agent................................................... 22
Principal Underwriter............................................. 22
Financial Statements..................................................... 23
</TABLE>
<PAGE> 117
GENERAL INFORMATION AND HISTORY
The Manufacturers Life Insurance Company of North America Separate
Account A (the "VARIABLE ACCOUNT") is a separate investment account of The
Manufacturers Life Insurance Company of North America ("WE" or "US"). We are a
stock life insurance company organized under the laws of Delaware in 1979. Our
principal office is located at 500 Boylston Street, Suite 400, Boston,
Massachusetts 02116-3739. Prior to October 1, 1997, we were known as North
American Security Life Insurance Company. Our ultimate parent is Manulife
Financial Corporation ("MFC") based in Toronto, Canada. MFC is the holding
company of The Manufacturers Life Insurance Company and its subsidiaries,
collectively known as Manulife Financial.
PERFORMANCE DATA
Each of the sub-accounts may in its advertising and sales materials
quote total return figures. The sub-accounts may advertise both "standardized"
and "non-standardized" total return figures, although standardized figures will
always accompany non-standardized figures. Non-standardized total return figures
may be quoted assuming both:
- - redemption at the end of the time period, and
- - not assuming redemption at the end of the time period.
Standardized figures include total return figures from:
- - the inception date of the sub-account of the Variable Account which
invests in the portfolio, or
- - ten years, whichever period is shorter.
Non-standardized figures include total return numbers from:
- - inception date of the portfolio, or
- - ten years, whichever period is shorter.
Such figures will always include the average annual total return for
recent one year and, when applicable, five and ten year periods, and where less
than ten years, the inception date of the sub-account, in the case of
standardized returns, and the inception date of the portfolio, in the case of
non-standardized returns. Where the period since inception is less than one
year, the total return quoted will be the aggregate return for the period. The
average annual total return is the average annual compounded rate of return that
equates a purchase payment to the market value of such purchase payment on the
last day of the period for which such return is calculated. The aggregate total
return is the percentage change (not annualized) that equates a purchase payment
to the market value of such purchase payment on the last day of the period for
which such return is calculated. For purposes of the calculations it is assumed
that an initial payment of $1,000 is made on the first day of the period for
which the return is calculated.
In calculating standardized return figures, all recurring charges (all
asset charges - mortality and expense risk fees, administrative fees) are
reflected, and the asset charges are reflected in changes in unit values.
Standardized total return figures will be quoted assuming redemption at the end
of the period. Non-standardized total return figures reflecting redemption at
the end of the time period are calculated on the same basis as the standardized
returns. Non-standardized total return figures not reflecting redemption at the
end of the time period are calculated on the same basis as the standardized
returns except that the calculations assume no redemption at the end of the
period and do not reflect deduction of the annual contract fee. We believe such
non-standardized figures not reflecting redemptions at the end of the time
period are useful to contract owners who wish to assess the performance of an
ongoing contract of the size that is meaningful to the individual contract
owner.
For total return figures quoted for periods prior to the commencement
of the offering of the contract, standardized performance data will be the
historical performance of the Trust or Merrill Variable Funds portfolio from the
date the applicable sub-account of the Variable Account first became available
for investment under other contracts
3
<PAGE> 118
offered by us; adjusted to reflect current contract charges. In the case of
non-standardized performance, performance figures will be the historical
performance of the Trust or Merrill Variable Funds portfolio from the inception
date of the portfolio (or in the case of the Trust portfolios created in
connection with the merger of Manulife Series Fund, Inc. into the Trust, the
inception date of the applicable predecessor Manulife Series Fund, Inc.
portfolio), adjusted to reflect current contract charges.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES(A)
CALCULATED AS OF DECEMBER 31, 1999
(NOT REFLECTING THE OPTIONAL GRIP RIDER FEE)
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS,
WHICHEVER IS INCEPTION
PORTFOLIO 1 YEAR 5 YEAR SHORTER DATE(C)
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets 54.56% N/A -1.96 01/01/97
Science & Technology 90.68% N/A 43.99% 01/01/97
International Small Cap 76.31% N/A 21.46% 03/04/96
Aggressive Growth 25.08% N/A 8.54% 01/01/97
Emerging Small Company 65.07% N/A 24.24% 01/01/97
Small Company Blend N/A N/A 21.33% 05/01/99
Mid Cap Growth 36.63% N/A 21.63% 03/04/96
Mid Cap Stock N/A N/A -5.57% 05/01/99
Overseas 32.63% N/A 10.73% 01/09/95
International Stock 21.86% N/A 12.29% 01/01/97
International Value N/A N/A -2.74% 05/01/99
Mid Cap Blend 19.92% 21.26% 12.40%(B) 06/18/85
Small Company Value 0.66% N/A -4.19% 10/01/97
Global Equity -3.36% 9.11% 7.19%(B) 03/18/88
Growth 29.25% N/A 25.44% 07/15/96
Large Cap Growth 17.49% 17.66% 11.19%(B) 08/03/89
Quantitative Equity 14.55% N/A 23.54% 01/01/97
Blue Chip Growth 11.72% 23.30% 14.18% 12/11/92
Real Estate Securities -14.17% N/A -5.17% 01/01/97
Value -9.34% N/A 2.20% 01/01/97
Growth & Income 11.17% 23.83% 16.79% 04/23/91
U.S. Large Cap Value N/A N/A -3.78% 05/01/99
Equity-Income -3.60% 14.66% 12.35% 02/19/93
</TABLE>
4
<PAGE> 119
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS,
WHICHEVER IS INCEPTION
PORTFOLIO 1 YEAR 5 YEAR SHORTER DATE(C)
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Income & Value 1.29% 11.85% 8.31%(B) 08/03/89
Balanced -8.29% N/A 7.02% 01/01/97
High Yield 0.66% N/A 4.71% 01/01/97
Strategic Bond -4.69% 7.30% 5.41% 02/19/93
Global Bond -12.94% 5.38% 6.52%(B) 03/18/88
Total Return N/A N/A -7.28% 05/01/99
Investment Quality Bond -8.41% 5.33% 4.68%(B) 06/18/85
Diversified Bond -6.09% 7.28% 5.96%(B) 08/03/89
U.S. Government Securities -6.96% 4.62% 5.34%(B) 03/18/88
Money Market -2.49% 2.89% 3.38%(B) 06/18/85
Lifestyle Aggressive 1000 6.97% N/A 7.09% 01/07/97
Lifestyle Growth 820 8.90% N/A 9.20% 01/07/97
Lifestyle Balanced 640 4.81% N/A 7.75% 01/07/97
Lifestyle Moderate 460 0.56% N/A 7.48% 01/07/97
Lifestyle Conservative 280 -2.86% N/A 5.83% 01/07/97
Merrill Lynch Special Value Focus -
Class B 26.08% N/A 0.57% 10/13/97
Merrill Lynch Basic Value Focus -
Class B 13.24% N/A 6.10% 10/13/97
Merrill Lynch Developing Capital 57.04% N/A -5.12% 10/13/97
Markets Focus - Class B
</TABLE>
(A) See charts below for Ven 7 and Ven 8 contracts total return figures.
(B) 10 year average annual return.
(C) Inception date of the sub-account of the Variable Account which invests
in the portfolio.
5
<PAGE> 120
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES(a)
(ASSUMING REDEMPTION AT THE END OF THE TIME PERIOD)
CALCULATED AS OF DECEMBER 31, 1999
(NOT REFLECTING THE OPTIONAL INCOME RIDER FEE)
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS, INCEPTION
WHICHEVER IS DATE OF
PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets(B) 54.56% N/A 1.26% 10/04/94
Science & Technology 90.68% N/A 43.99% 01/01/97
International Small Cap 76.31% N/A 21.46% 03/04/96
Aggressive Growth 25.08% N/A 8.54% 01/01/97
Emerging Small Company 65.07% N/A 24.24% 01/01/97
Small Company Blend N/A N/A 21.33% 5//3/99
Mid Cap Growth 36.63% N/A 21.63% 03/04/96
Mid Cap Stock N/A N/A -5.57% 05/01/99
Overseas 32.63% N/A 10.73% 01/09/95
International Stock 21.86% N/A 12.29% 01/01/97
International Value N/A N/A -2.74% 05/01/99
Mid Cap Blend 19.92% 21.26% 12.40%(C) 06/18/85
Small Company Value 0.66% N/A -4.19% 10/01/97
Global Equity -3.36% 9.11% 7.19%(C) 03/18/88
Growth 29.25% N/A 25.44% 07/15/96
Large Cap Growth 17.49% 17.66% 11.19%(C) 08/03/89
Quantitative Equity(B) 14.55% 22.93% 14.32(C) 04/30/87
Blue Chip Growth 11.72% 23.30% 14.18% 12/11/92
Real Estate Securities(B) -14.17% 4.96% 9.07%(C) 04/30/87
Value -9.34% N/A 2.20% 01/01/97
Growth & Income 11.17% 23.83% 16.79% 04/23/91
U.S. Large Cap Value N/A N/A -3.78% 05/01/99
Equity-Income -3.60% 14.66% 12.35% 02/19/93
Income & Value 1.29% 11.85% 8.31%(C) 08/03/89
Balanced -8.29% N/A 7.02% 01/01/97
High Yield 0.66% N/A 4.71% 01/01/97
Strategic Bond -4.69% 7.30% 5.41% 02/19/93
</TABLE>
6
<PAGE> 121
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS, INCEPTION
WHICHEVER IS DATE OF
PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Global Bond -12.94% 5.38% 6.52%(C) 03/18/88
Total Return N/A N/A -7.28% 05/01/99
Investment Quality Bond -8.41% 5.33% 4.68%(C) 06/18/85
Diversified Bond -6.09% 7.28% 5.96%(C) 08/03/89
U.S. Government Securities -6.96% 4.62% 5.34%(C) 03/18/88
Money Market -2.49% 2.89% 3.38%(C) 06/18/85
Lifestyle Aggressive 1000 6.97% N/A 7.09% 01/07/97
Lifestyle Growth 820 8.90% N/A 9.20% 01/07/97
Lifestyle Balanced 640 4.81% N/A 7.75% 01/07/97
Lifestyle Moderate 460 0.56% N/A 7.48% 01/07/97
Lifestyle Conservative 280 -2.86% N/A 5.83% 01/07/97
Merrill Lynch Special Value Focus -
Class B 26.08% N/A 0.57% 10/13/97
Merrill Lynch Basic Value Focus -
Class B 13.24% N/A 6.10% 10/13/97
Merrill Lynch Developing Capital
Markets Focus - Class B 57.04% N/A -5.12% 10/13/97
</TABLE>
(A) See charts below for Ven 7 and Ven 8 contracts total return figures.
(B) Performance for each of these sub-accounts is based on the historical
performance of the portfolio, adjusted to reflect current contract
charges. On December 31, 1996, Manulife Series Fund, Inc. merged with
the Trust. Performance presented for these sub-accounts is based upon
the performance of the respective predecessor Manulife Series Fund,
Inc. portfolio for periods prior to December 31, 1996.
(C) 10 year average annual return.
7
<PAGE> 122
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES(A)
(ASSUMING NO REDEMPTION AT THE END OF THE TIME PERIOD)
CALCULATED AS OF DECEMBER 31, 1999
(NOT REFLECTING THE OPTIONAL GRIP RIDER FEE)
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS, INCEPTION
WHICHEVER IS DATE OF
PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets(B) 60.61% 16.66% 10.15% 10/04/94
Science & Technology 96.73% N/A 203.55% 01/01/97
International Small Cap 82.36% N/A 115.80% 03/04/96
Aggressive Growth 31.13% N/A 33.03% 01/01/97
Emerging Small Company 71.12% N/A 96.89% 01/01/97
Small Company Blend N/A N/A 27.38% 05/01/99
Mid Cap Growth 42.68% N/A 116.90% 03/04/96
Mid Cap Stock N/A N/A -0.13% 05/01/99
Overseas 36.68% N/A 70.45% 01/09/95
International Stock 27.91% N/A 46.71% 01/01/97
International Value N/A N/A 2.88% 05/01/99
Mid Cap Blend 25.97% 166.56% 222.85%(C) 06/18/85
Small Company Value 6.49% N/A -4.76% 01/01/97
Global Equity 2.22% 58.92% 100.94%(C) 03/18/88
Growth 35.30% N/A 124.48% 07/15/96
Large Cap Growth 23.54% 129.90% 189.75%(C) 08/03/89
Quantitative Equity(B) 20.60% 185.07% 282.46%(C) 04/30/87
Blue Chip Growth 17.77% 189.32% 155.69% 12/11/92
Real Estate Securities(B) -9.28% 31.61% 139.02%(C) 04/30/87
Value -4.14% N/A 11.90% 01/01/97
Growth & Income 17.22% 195.61% 286.56% 04/23/91
U.S. Large Cap Value N/A N/A 1.77% 05/01/99
Equity-Income 1.96% 102.45% 124.88% 02/19/93
Income & Value 7.17% 79.33% 122.90%(C) 08/03/89
Balanced -3.02% N/A 27.70% 01/01/97
High Yield 6.50% N/A 19.95% 01/01/97
Strategic Bond 0.80% 46.53% 46.03% 02/19/93
</TABLE>
8
<PAGE> 123
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS, INCEPTION
WHICHEVER IS DATE OF
PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Global Bond -7.97% 34.19% 88.69%(C) 03/18/88
Total Return N/A N/A -1.95% 05/01/99
Investment Quality Bond -3.16% 33.93% 58.55%(C) 06/18/85
Diversified Bond -0.68% 46.37% 79.08%(C) 08/03/89
U.S. Government Securities -1.61% 29.59% 68.91%(C) 03/18/88
Money Market 3.15% 19.59% 40.03%(C) 06/18/85
Lifestyle Aggressive 1000 13.02% N/A 27.82% 01/07/97
Lifestyle Growth 820 14.95% N/A 35.17% 01/07/97
Lifestyle Balanced 640 10.86% N/A 30.08% 01/07/97
Lifestyle Moderate 460 6.40% N/A 29.16% 01/07/97
Lifestyle Conservative 280 2.76% N/A 23.54% 01/07/97
Merrill Lynch Special Value Focus -
Class B 32.13% N/A 6.26% 10/13/97
Merrill Lynch Basic Value Focus -
Class B 19.29% N/A 19.21% 10/13/97
Merrill Lynch Developing Capital
Markets Focus - Class B 63.09% N/A -6.63% 10/13/97
</TABLE>
(A) See charts below for Ven 7 and Ven 8 contracts total return figures.
(B) Performance for each of these sub-accounts is based on the historical
performance of the portfolio, adjusted to reflect current contract
charges. On December 31, 1996, Manulife Series Fund, Inc. merged with
the Trust. Performance presented for these sub-accounts is based upon
the performance of the respective predecessor Manulife Series Fund,
Inc. portfolio for periods prior to December 31, 1996.
(C) 10 year average annual return.
9
<PAGE> 124
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
CALCULATED AS OF DECEMBER 31, 1999
(REFLECTING THE OPTIONAL GRIP RIDER FEE)
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS,
WHICHEVER IS INCEPTION
PORTFOLIO 1 YEAR 5 YEAR SHORTER DATE(A)
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets 54.29% N/A -2.34% 01/01/97
Science & Technology 90.41% N/A 43.74% 01/01/97
International Small Cap 76.04% N/A 21.17% 03/04/96
Aggressive Growth 24.81% N/A 8.25% 01/01/97
Emerging Small Company 64.81% N/A 23.98% 01/01/97
Small Company Blend N/A N/A 21.07% 05/01/99
Mid Cap Growth 36.36% N/A 21.37% 03/04/96
Mid Cap Stock N/A N/A -5.82% 05/01/99
Overseas 32.37% N/A 10.46% 01/09/95
International Stock 21.60% N/A 12.01% 01/01/97
International Value N/A N/A -2.98% 05/01/99
Mid Cap Blend 19.66% 21.07% 12.14%(B) 06/18/85
Small Company Value 0.41% N/A -4.60% 10/01/97
Global Equity -3.61% 8.86% 6.90%(B) 03/18/88
Growth 28.98% N/A 25.20% 07/15/96
Large Cap Growth 17.23% 17.44% 10.93%(B) 08/03/89
Quantitative Equity 14.29% N/A 23.31% 01/01/97
Blue Chip Growth 11.46% 23.10% 13.89% 12/11/92
Real Estate Securities -14.42% N/A -5.43% 01/01/97
Value -9.59% N/A 1.94% 01/01/97
Growth & Income 10.91% 23.64% 16.57% 04/23/91
U.S. Large Cap Value N/A N/A -4.03% 05/01/99
Equity-Income -3.85% 14.44% 12.12% 02/19/93
Income & Value 1.05% 11.61% 8.04%(B) 08/03/89
Balanced -8.53% N/A 6.77% 01/01/97
High Yield 0.42% N/A 4.44% 01/01/97
Strategic Bond -4.94% 7.06% 5.14% 02/19/93
Global Bond -13.19% 5.14% 6.28%(B) 03/18/88
</TABLE>
10
<PAGE> 125
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS,
WHICHEVER IS INCEPTION
PORTFOLIO 1 YEAR 5 YEAR SHORTER DATE(A)
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Total Return N/A N/A -7.53% 05/01/99
Investment Quality Bond -8.66% 5.08% 4.39%(B) 06/18/85
Diversified Bond -6.34% 7.03% 5.69%(B) 08/03/89
U.S. Government Securities -7.21% 4.35% 5.08%(B) 03/18/88
Money Market -2.74% 2.61% 3.08%(B) 06/18/85
Lifestyle Aggressive 1000 6.70% N/A 6.82% 01/07/97
Lifestyle Growth 820 8.63% N/A 8.94% 01/07/97
Lifestyle Balanced 640 4.55% N/A 7.49% 01/07/97
Lifestyle Moderate 460 0.32% N/A 7.22% 01/07/97
Lifestyle Conservative 280 -3.10% N/A 5.56% 01/07/97
Merrill Lynch Special Value Focus -
Class B 25.81% N/A 0.10% 10/13/97
Merrill Lynch Basic Value Focus -
Class B 12.97% N/A 5.71% 10/13/97
Merrill Lynch Developing Capital
Markets Focus - Class B 56.77% N/A -5.64% 10/13/97
</TABLE>
(A) Inception date of the sub-account of the Variable Account which invests
in the portfolio.
(B) 10 year average annual return.
11
<PAGE> 126
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
(ASSUMING REDEMPTION AT THE END OF THE TIME PERIOD)
CALCULATED AS OF DECEMBER 31, 1999
(REFLECTING THE OPTIONAL GRIP RIDER FEE)
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS, INCEPTION
WHICHEVER IS DATE OF
PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets(A) 54.29% 2.02% 0.85% 10/04/94
Science & Technology 90.41% N/A 43.74% 01/01/97
International Small Cap 76.04% N/A 21.17% 03/04/96
Aggressive Growth 24.81% N/A 8.25% 01/01/97
Emerging Small Company 64.81% N/A 23.98% 01/01/97
Small Company Blend N/A N/A 21.07% 05/01/99
Mid Cap Growth 36.36% N/A 21.37% 03/04/96
Mid Cap Stock N/A N/A -5.82% 05/01/99
Overseas 32.37% N/A 10.46% 01/09/95
International Stock 21.60% N/A 12.01% 01/01/97
International Value N/A N/A -2.98% 05/01/99
Mid Cap Blend 19.66% 21.07% 12.14%(B) 06/18/85
Small Company Value 0.41% N/A -4.60% 10/01/97
Global Equity -3.61% 8.86% 6.90%(B) 03/18/88
Growth 28.98% N/A 25.20% 07/15/96
Large Cap Growth 17.23% 17.44% 10.93%(B) 08/03/89
Quantitative Equity(A) 14.29% 22.72% 14.09%(B) 04/30/87
Blue Chip Growth 11.46% 23.10% 13.89% 12/11/92
Real Estate Securities(A) -14.42% 4.73% 8.87%(B) 04/30/87
Value -9.59% N/A 1.94% 01/01/97
Growth & Income 10.91% 23.64% 16.57% 04/23/91
U.S. Large Cap Value N/A N/A -4.03% 05/01/99
Equity-Income -3.85% 14.44% 12.12% 02/19/93
Income & Value 1.05% 11.61% 8.04%(B) 08/03/89
Balanced -8.53% N/A 6.77% 01/01/97
High Yield 0.42% N/A 4.44% 01/01/97
Strategic Bond -4.94% 7.06% 5.14% 02/19/93
</TABLE>
12
<PAGE> 127
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS, INCEPTION
WHICHEVER IS DATE OF
PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Global Bond -13.19% 5.14% 6.28%(B) 03/18/88
Total Return N/A N/A -7.53% 05/01/99
Investment Quality Bond -8.66% 5.08% 4.39%(B) 06/18/85
Diversified Bond -6.34% 7.03% 5.69%(B) 08/03/89
U.S. Government Securities -7.21% 4.35% 5.08%(B) 03/18/88
Money Market -2.74% 2.61% 3.08%(B) 06/18/85
Lifestyle Aggressive 1000 6.70% N/A 6.82% 01/07/97
Lifestyle Growth 820 8.63% N/A 8.94% 01/07/97
Lifestyle Balanced 640 4.55% N/A 7.49% 01/07/97
Lifestyle Moderate 460 0.32% N/A 7.22% 01/07/97
Lifestyle Conservative 280 -3.10% N/A 5.56% 01/07/97
Merrill Lynch Special Value Focus -
Class B 25.81% N/A 0.10% 10/13/97
Merrill Lynch Basic Value Focus -
Class B 12.97% N/A 5.71% 10/13/97
Merrill Lynch Developing Capital
Markets Focus - Class B 56.77% N/A -5.64% 10/13/97
</TABLE>
(A) Performance for each of these sub-accounts is based on the historical
performance of the portfolio, adjusted to reflect current contract
charges. On December 31, 1996, Manulife Series Fund, Inc. merged with
the Trust. Performance presented for these sub-accounts is based upon
the performance of the respective predecessor Manulife Series Fund,
Inc. portfolio for periods prior to December 31, 1996.
(B) 10 year average annual return.
13
<PAGE> 128
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
(ASSUMING NO REDEMPTION AT THE END OF THE TIME PERIOD)
CALCULATED AS OF DECEMBER 31, 1999
(REFLECTING THE OPTIONAL GRIP RIDER FEE)
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS, INCEPTION
WHICHEVER IS DATE OF
PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets(A) 60.34% 14.81% 8.19% 10/04/94
Science & Technology 96.46% N/A 202.26% 01/01/97
International Small Cap 82.09% N/A 114.20% 03/04/96
Aggressive Growth 30.86% N/A 32.30% 01/01/97
Emerging Small Company 70.86% N/A 95.96% 01/01/97
Small Company Blend N/A N/A 27.38% 05/01/99
Mid Cap Growth 42.41% N/A 115.45% 03/04/96
Mid Cap Stock N/A N/A -0.13% 05/01/99
Overseas 38.42% N/A 68.74% 01/09/95
International Stock 27.65% N/A 45.97% 01/01/97
International Value N/A N/A 2.88% 05/01/99
Mid Cap Blend 25.71% 164.47% 215.57%(B) 06/18/85
Small Company Value 6.23% N/A -5.40% 01/01/97
Global Equity 1.95% 57.15% 95.73%(B) 03/18/88
Growth 35.03% N/A 123.33% 07/15/96
Large Cap Growth 23.28% 127.76% 183.10%(B) 08/03/89
Quantitative Equity(A) 20.34% 182.78% 274.73%(B) 04/30/87
Blue Chip Growth 17.51% 187.03% 151.51% 12/11/92
Real Estate Securities(A) -9.54% 30.21% 134.67%(B) 04/30/87
Value -4.41% N/A 11.38% 01/01/97
Growth & Income 16.96% 193.32% 280.65% 04/23/91
U.S. Large Cap Value N/A N/A 1.77% 05/01/99
Equity-Income 1.70% 100.64% 122.19% 02/19/93
Income & Value 6.91% 77.50% 117.54%(B) 08/03/89
Balanced -3.29% N/A 27.14% 01/01/97
High Yield 6.24% N/A 19.36% 01/01/97
Strategic Bond 0.54% 44.93% 43.87% 02/19/93
</TABLE>
14
<PAGE> 129
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS, INCEPTION
WHICHEVER IS DATE OF
PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Global Bond -8.24% 32.70% 84.56%(B) 03/18/88
Total Return N/A N/A -1.95% 05/01/99
Investment Quality Bond -3.42% 32.36% 54.35%(B) 06/18/85
Diversified Bond -0.95% 44.73% 74.54%(B) 08/03/89
U.S. Government Securities -1.88% 28.02% 64.77%(B) 03/18/88
Money Market 2.88% 17.99% 36.03%(B) 06/18/85
Lifestyle Aggressive 1000 12.75% N/A 27.19% 01/07/97
Lifestyle Growth 820 14.68% N/A 34.53% 01/07/97
Lifestyle Balanced 640 10.60% N/A 29.47% 01/07/97
Lifestyle Moderate 460 6.13% N/A 28.56% 01/07/97
Lifestyle Conservative 280 2.49% N/A 22.96% 01/07/97
Merrill Lynch Special Value Focus -
Class B 31.86% N/A 5.46% 10/13/97
Merrill Lynch Basic Value Focus -
Class B 19.02% N/A 18.54% 10/13/97
Merrill Lynch Developing Capital
Markets Focus - Class B 62.82% N/A -7.48% 10/13/97
</TABLE>
(A) Performance for each of these sub-accounts is based on the historical
performance of the portfolio, adjusted to reflect current contract
charges. On December 31, 1996, Manulife Series Fund, Inc. merged with
the Trust. Performance presented for these sub-accounts is based upon
the performance of the respective predecessor Manulife Series Fund,
Inc. portfolio for periods prior to December 31, 1996.
(B) 10 year average annual return.
15
<PAGE> 130
VEN 7 AND VEN 8 CONTRACTS
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
CALCULATED AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS,
WHICHEVER IS INCEPTION
PORTFOLIO 1 YEAR 5 YEAR SHORTER DATE(A)
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets 54.56% N/A -1.96% 01/01/97
Science & Technology 90.68% N/A 43.99% 01/01/97
International Small Cap 76.31% N/A 21.61% 03/04/96
Aggressive Growth 25.08% N/A 8.54% 01/01/97
Emerging Small Company 65.07% N/A 24.24% 01/01/97
Small Company Blend N/A N/A 21.33% 05/01/99
Mid Cap Growth 36.63% N/A 21.78% 03/04/96
Mid Cap Stock N/A N/A -5.57% 05/01/99
Overseas 32.63% N/A 10.86% 01/09/95
International Stock 21.86% N/A 12.29% 01/01/97
International Value N/A N/A -2.74% 05/01/99
Mid Cap Blend 19.92% 21.63% 12.40%(B) 06/18/85
Small Company Value 0.66% N/A -4.19% 10/01/97
Global Equity -3.36% 9.67% 7.19%(B) 03/18/88
Growth 29.25% N/A 25.61% 07/15/96
Large Cap Growth 17.49% 18.08% 11.19%(B) 08/03/89
Quantitative Equity 14.55% N/A 23.54% 01/01/97
Blue Chip Growth 11.72% 23.64% 14.18% 12/11/92
Real Estate Securities -14.17% N/A -5.17% 01/01/97
Value -9.34% N/A 2.20% 01/01/97
Growth & Income 11.17% 24.17% 16.79% 04/23/91
U.S. Large Cap Value N/A N/A -3.78% 05/01/99
Equity-Income -3.60% 15.12% 12.49% 02/19/93
Income & Value 1.29% 12.35% 8.31%(B) 08/03/89
Balanced -8.29% N/A 7.02% 01/01/97
High Yield 0.66% N/A 4.71% 01/01/97
Strategic Bond -4.69% 7.90% 5.63% 02/19/93
Global Bond -12.94% 6.02% 6.52%(B) 03/18/88
</TABLE>
16
<PAGE> 131
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS,
WHICHEVER IS INCEPTION
PORTFOLIO 1 YEAR 5 YEAR SHORTER DATE(A)
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Total Return N/A N/A -7.28% 05/01/99
Investment Quality Bond -8.41% 5.97% 4.68%(B) 06/18/85
Diversified Bond -6.09% 7.88% 5.96%(B) 08/03/89
U.S. Government Securities -6.96% 5.28% 5.34%(B) 03/18/88
Money Market -2.49% 3.60% 3.38%(B) 06/18/85
Lifestyle Aggressive 1000 6.97% N/A 7.09% 01/07/97
Lifestyle Growth 820 8.90% N/A 9.20% 01/07/97
Lifestyle Balanced 640 4.81% N/A 7.75% 01/07/97
Lifestyle Moderate 460 0.56% N/A 7.48% 01/07/97
Lifestyle Conservative 280 -2.86% N/A 5.83% 01/07/97
Merrill Lynch Special Value Focus -
Class B 26.08% N/A 0.57% 10/13/97
Merrill Lynch Basic Value Focus -
Class B 13.24% N/A 6.10% 10/13/97
Merrill Lynch Developing Capital
Markets Focus - Class B 57.04% N/A -5.12% 10/13/97
</TABLE>
(A) Inception date of the sub-account of the Variable Account which invests
in the portfolio.
(B) 10 year average annual return.
17
<PAGE> 132
VEN 7 AND VEN 8 CONTRACTS
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
(ASSUMING REDEMPTION AT THE END OF THE TIME PERIOD)
CALCULATED AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS, INCEPTION
WHICHEVER IS DATE OF
PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets(A) 54.56% 2.54% 1.44% 10/04/94
Science & Technology 90.68% N/A 43.99% 01/01/97
International Small Cap 76.31% N/A 21.61% 03/04/96
Aggressive Growth 25.08% N/A 8.54% 01/01/97
Emerging Small Company 65.07% N/A 24.24% 01/01/97
Small Company Blend N/A N/A 21.33% 05/01/99
Mid Cap Growth 36.63% N/A 21.78% 03/04/96
Mid Cap Stock N/A N/A -5.57% 05/01/99
Overseas 32.63% N/A 10.86% 01/09/95
International Stock 21.86% N/A 12.29% 01/01/97
International Value N/A N/A -2.74% 05/01/99
Mid Cap Blend 19.92% 21.63% 12.40%(B) 06/18/85
Small Company Value 0.66% N/A -4.19% 10/01/97
Global Equity -3.36% 9.67% 7.19%(B) 03/18/88
Growth 29.25% N/A 25.61% 07/15/96
Large Cap Growth 17.49% 18.08% 11.19%(B) 08/03/89
Quantitative Equity(A) 14.55% 23.27% 14.32%(B) 04/30/87
Blue Chip Growth 11.72% 23.64% 14.18% 12/11/92
Real Estate Securities(A) -14.17% 5.61% 9.07%(B) 04/30/87
Value -9.34% N/A 2.20% 01/01/97
Growth & Income 11.17% 24.17% 16.79% 04/23/91
U.S. Large Cap Value N/A N/A -3.78% 05/01/99
Equity-Income -3.60% 15.12% 12.49% 02/19/93
Income & Value 1.29% 12.35% 8.31%(B) 08/03/89
Balanced -8.29% N/A 7.02% 01/01/97
High Yield 0.66% N/A 4.71% 01/01/97
Strategic Bond -4.69% 7.90% 5.63% 02/19/93
</TABLE>
18
<PAGE> 133
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS, INCEPTION
WHICHEVER IS DATE OF
PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Global Bond -12.94% 6.02% 6.52%(B) 03/18/88
Total Return N/A N/A -7.28% 05/01/99
Investment Quality Bond -8.41% 5.97% 4.68%(B) 06/18/85
Diversified Bond -6.09% 7.88% 5.96%(B) 08/03/89
U.S. Government Securities -6.96% 5.28% 5.34%(B) 03/18/88
Money Market -2.49% 3.60% 3.38%(B) 06/18/85
Lifestyle Aggressive 1000 6.97% N/A 7.09% 01/07/97
Lifestyle Growth 820 8.90% N/A 9.20% 01/07/97
Lifestyle Balanced 640 4.81% N/A 7.75% 01/07/97
Lifestyle Moderate 460 0.56% N/A 7.48% 01/07/97
Lifestyle Conservative 280 -2.86% N/A 5.83% 01/07/97
Merrill Lynch Special Value Focus -
Class B 26.08% N/A 0.57% 10/13/97
Merrill Lynch Basic Value Focus -
Class B 13.24% N/A 6.10% 10/13/97
Merrill Lynch Developing Capital
Markets Focus - Class B 57.04% N/A -5.12% 10/13/97
</TABLE>
(A) Performance for each of these sub-accounts is based on the historical
performance of the portfolio, adjusted to reflect current contract
charges. On December 31, 1996, Manulife Series Fund, Inc. merged with
the Trust. Performance presented for these sub-accounts is based upon
the performance of the respective predecessor Manulife Series Fund,
Inc. portfolio for periods prior to December 31, 1996.
(B) 10 year average annual return.
19
<PAGE> 134
VEN 7 AND VEN 8 CONTRACTS
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
(ASSUMING NO REDEMPTION AT THE END OF THE TIME PERIOD)
CALCULATED AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS, INCEPTION
WHICHEVER IS DATE OF
PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets(A) 60.61% 16.66% 10.15% 10/04/94
Science & Technology 96.73% N/A 203.55% 01/01/97
International Small Cap 82.36% N/A 115.80% 03/04/96
Aggressive Growth 31.13% N/A 33.03% 01/01/97
Emerging Small Company 71.12% N/A 96.89% 01/01/97
Small Company Blend N/A N/A 27.38% 05/01/99
Mid Cap Growth 42.68% N/A 116.90% 03/04/96
Mid Cap Stock N/A N/A -0.13% 05/01/99
Overseas 38.68% N/A 70.45% 01/09/95
International Stock 27.91% N/A 46.71% 01/01/97
International Value N/A N/A 2.88% 05/01/99
Mid Cap Blend 25.97% 166.56% 222.85%(B) 06/18/85
Small Company Value 6.49% N/A -4.76% 10/01/97
Global Equity 2.22% 58.92% 100.94%(B) 03/18/88
Growth 35.30% N/A 124.48% 07/15/96
Large Cap Growth 23.54% 129.90% 189.75%(B) 08/03/89
Quantitative Equity(A) 20.60% 185.07% 282.46%(B) 04/30/87
Blue Chip Growth 17.77% 189.32% 155.69% 12/11/92
Real Estate Securities(A) -9.28% 31.61% 139.02%(B) 04/30/87
Value -4.14% N/A 11.90% 01/01/97
Growth & Income 17.22% 195.61% 286.56% 04/23/91
U.S. Large Cap Value N/A N/A 1.77% 05/01/99
Equity-Income 1.96% 102.45% 124.88% 02/19/93
Income & Value 7.17% 79.33% 122.90%(B) 08/03/89
Balanced -3.02% N/A 27.70% 01/01/97
High Yield 6.50% N/A 19.95% 01/01/97
Strategic Bond 0.80% 46.53% 46.03% 02/19/93
Global Bond -7.97% 34.19% 88.69%(B) 03/18/88
</TABLE>
20
<PAGE> 135
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS, INCEPTION
WHICHEVER IS DATE OF
PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- --------- ------ ------ --------------- ---------
<S> <C> <C> <C> <C>
Total Return N/A N/A -1.95 5/01/99
Investment Quality Bond -3.16% 33.93% 58.55%(B) 06/18/85
Diversified Bond -0.68% 46.37% 79.08%(B) 08/03/89
U.S. Government Securities -1.61% 29.59% 68.91%(B) 03/18/88
Money Market 3.15% 19.59% 40.03%(B) 06/18/85
Lifestyle Aggressive 1000 13.02% N/A 27.82% 01/07/97
Lifestyle Growth 820 14.95% N/A 35.17% 01/07/97
Lifestyle Balanced 640 10.86% N/A 30.08% 01/07/97
Lifestyle Moderate 460 6.40% N/A 29.16% 01/07/97
Lifestyle Conservative 280 2.76% N/A 23.54% 01/07/97
Merrill Lynch Special Value Focus -
Class B 32.13% N/A 6.26% 10/13/97
Merrill Lynch Basic Value Focus -
Class B 19.29% N/A 19.21% 10/13/97
Merrill Lynch Developing Capital
Markets Focus - Class B 63.09% N/A -6.63% 10/13/97
</TABLE>
(A) Performance for each of these sub-accounts is based on the historical
performance of the portfolio, adjusted to reflect current contract
charges. On December 31, 1996, Manulife Series Fund, Inc. merged with
the Trust. Performance presented for these sub-accounts is based upon
the performance of the respective predecessor Manulife Series Fund,
Inc. portfolio for periods prior to December 31, 1996.
(B) 10 year average annual return.
* * * * *
In addition to the non-standardized returns quoted above, each of the
sub-accounts may from time to time quote aggregate non-standardized total
returns calculated in the same manner as set forth above for other time periods.
From time to time the Trust or the Merrill Variable Funds may include in their
advertising and sales literature general discussions of economic theories,
including but not limited to, discussions on how demographic and political
trends can affect the financial markets. Further, the Trust may also include in
its advertising and sales literature specific information on each of the Trust's
subadvisers, including but not limited to, research capabilities of a
subadviser, assets under management, information relating to other clients of a
subadviser, and other generalized information.
SERVICES
INDEPENDENT AUDITORS
The financial statements of the Company at December 31, 1999 and 1998
and for the three years in the period ended December 31, 1999 and of the
Variable Account at December 31, 1999 and for the two years in the period then
ended December 31, 1999 appearing in this Statement of Additional Information
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports thereon appearing elsewhere herein, and are included in reliance
upon such reports given upon the authority of such firm as experts in accounting
and auditing.
21
<PAGE> 136
Our financial statements which are included in the Statement of
Additional Information should be considered only as bearing on our ability to
meet our obligations under the contracts. They should not be considered as
bearing on the investment performance of the assets held in the Variable
Account.
SERVICING AGENT
Computer Sciences Corporation Financial Services Group ("CSC FSG")
provides to us a computerized data processing recordkeeping system for variable
annuity administration. CSC FSG provides various daily, semimonthly, monthly,
semiannual and annual reports including:
- daily updates on:
- accumulation unit values,
- variable annuity participants and transactions,
- agent production and commissions;
- semimonthly commission statements;
- monthly summaries of agent production and daily transaction
reports;
- semiannual statements for contract owners;
- and annual contract owner tax reports.
We pay CSC FSG approximately $7.80 per policy per year, plus certain other fees
for the services provided.
PRINCIPAL UNDERWRITER
Manufacturers Securities Services, LLC ("MSS"), the successor to NASL
Financial Services, Inc., is a Delaware limited liability company controlled by
us. It serves as principal underwriter of the contracts. Contracts are offered
on a continuous basis. The aggregate dollar amounts of underwriting commissions
paid to MSS in 1999, 1998 and 1997 were $183,494,116, $122,828,714 and
$29,615,342, respectively. MSS did not retain any of these amounts during such
periods.
22
<PAGE> 137
FINANCIAL STATEMENTS
23
<PAGE> 138
PART C
OTHER INFORMATION
<PAGE> 139
Guide to Name Changes and Successions:
The following name changes took place October 1, 1997:
<TABLE>
<CAPTION>
Old Name New Name
-------- --------
<S> <C>
NASL Variable Account The Manufacturers Life Insurance
Company of North America Separate
Account A
North American Security Life The Manufacturers Life Insurance
Insurance Company Company of North America
</TABLE>
The following name changes took place November 1, 1997:
<TABLE>
<CAPTION>
Old Name New Name
-------- --------
<S> <C>
NAWL Holding Co., Inc. Manulife-Wood Logan Holding Co., Inc.
</TABLE>
The following name changes took place September 24, 1999:
<TABLE>
<CAPTION>
Old Name New Name
-------- --------
<S> <C>
Wood Logan Associates, Inc. Manulife Wood Logan, Inc.
</TABLE>
On September 30, 1997, Manufacturers Securities Services, LLC succeeded to the
business of NASL Financial Services, Inc.
* * * * *
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(1) Financial Statements of the Registrant, The
Manufacturers Life Insurance Company of North America
Separate Account A, formerly NASL Variable Account
(Part B of the registration statement). - To be filed
by amendment.
(2) Financial Statements of the Depositor, The
Manufacturers Life Insurance Company of North
America, formerly North American Security Life
Insurance Company (Part B of the registration
statement). - To be filed by amendment.
(b) Exhibits
(1) (i) Resolution of the Board of Directors of
North American Security Life Insurance
Company establishing the NASL Variable
Account -- Incorporated by reference to
Exhibit (b)(1)(i) to Form N-4, file number
33-76162, filed February 25, 1998.
(ii) Resolution of the Board of Directors of
North American Security Life Insurance
Company redesignating existing sub-accounts
and dividing the NASL Variable Account to
create additional sub-accounts, dated May
30, 1995 -- Previously filed as Exhibit
(b)(1)(ii) to post-effective amendment no. 2
to Form N-4 filed March 1, 1996.
(iii) Resolution of the Board of Directors of
North American Security Life Insurance
Company redesignating existing sub-accounts
and dividing the NASL Variable Account to
create additional sub-accounts, dated
September 30, 1996 -- Previously filed as
Exhibit (b)(1)(iii) to post effective
amendment no. 3 to Form N-4 filed February
28, 1997.
- 1 -
<PAGE> 140
(iv) Resolution of the Board of Directors of
North American Security Life Insurance
Company redesignating existing sub-accounts
and dividing the NASL Variable Account to
create additional sub-accounts, dated
September 30, 1996 -- Previously filed as
Exhibit (b)(1)(iv) to post effective
amendment no. 3 to Form N-4 filed February
28, 1997.
(v) Resolution of the Board of Directors of
North American Security Life Insurance
Company redesignating existing sub-accounts
and dividing the NASL Variable Account to
create four additional sub-accounts dated
September 26, 1997 -- Incorporated by
reference to Exhibit (b)(1)(v) to Form N-4,
file number 33-76162 filed February 25,
1998.
(2) Agreements for custody of securities and similar
investments - Not Applicable.
(3) (i) Underwriting Agreement between North
American Security Life Insurance Company
(Depositor) and NASL Financial Services,
Inc. (Underwriter) -- Incorporated by
reference to Exhibit (b)(3)(i) to Form N-4,
file number 33-76162, filed March 1, 1999.
(ii) Promotional Agent Agreement between NASL
Financial Services, Inc. (Underwriter),
North American Security Life Insurance
Company (Depositor) and Wood Logan
Associates, Inc. (Promotional Agent) and
NAWL Holding Company, Inc. -- Previously
filed as Exhibit (b)(3)(iii) to post
effective amendment no. 3 to Form N-4 filed
February 28, 1997.
(iii) Amendment to Promotional Agent Agreement -
Incorporated by reference to Exhibit
(b)(3)(iii) to Form N-4, file number
33-76162, filed February 25, 1998
(iv) Form of Selling Agreement between The
Manufacturers Life Insurance Company of
North America, Manufacturers Securities
Services, LLC, Selling Broker-Dealer and
General Agent -- Incorporated by reference
to Exhibit (b)(3)(iv) to Form N-4, file
number 33-76162, filed February 25, 1998.
(4) (i) Specimen Flexible Payment Deferred
Combination Fixed and Variable Group Annuity
Contract, Non-Participating -- Previously
filed as Exhibit (b)(4)(i) to post effective
amendment no. 4 to Form N-4 filed February
26, 1998.
(ii) Specimen Certificate Under Flexible Payment
Deferred Combination Fixed and Variable
Group Annuity Contract, Non-Participating --
Previously filed as Exhibit (b)(4)(ii) to
post effective amendment no. 4 to Form N-4
filed February 26, 1998.
(iii) Specimen Endorsements to Contract: (i)
Individual Retirement Annuity Endorsement;
(ii) ERISA Tax-sheltered Annuity
Endorsement; (iii) Tax-sheltered Annuity
Endorsement; (iv) Section 401 Plans
Endorsement; (v) Texas Optional Retirement
Program Endorsement; (vi) Qualified Contract
Provisions; (vii) Fixed Account Endorsement;
(viii) Death Benefit Endorsement --
Previously filed as Exhibit (b)(4)(iii) to
post effective amendment no. 4 to Form N-4
filed February 26, 1998.
(iv) Specimen Death Benefit Endorsements to
Contract (apply to certain prior contracts
only) -- Previously filed as Exhibit
(b)(4)(iv) to post effective amendment no. 4
to Form N-4 filed February 26, 1998.
- 2 -
<PAGE> 141
(v) Change of Name Endorsement -- Incorporated
by reference to Exhibit (4)(v) to
post-effective amendment no. 1 to Form S-1,
file number 333-6011 filed October 9, 1997.
(vi) Fixed Account Endorsement - Previously filed
as Exhibit (b)(4)(vi) to post effective
amendment no. 6 to Form N-4 filed March 2,
1999.
(vii) Roth Individual Retirement Annuity
Endorsement - Incorporated by reference to
Exhibit (b)(4)(ii)(F) to Form N-4, file
number 33-76162, filed March 1, 1999.
(5) (i) Specimen Group Holder Application for
Flexible Payment Deferred Combination Fixed
and Variable Group Annuity Contract --
Previously filed as Exhibit (b)(5)(i) to
post effective amendment no. 4 to Form N-4
filed February 26, 1998.
(ii) Specimen Participant Application for the
Flexible Payment Deferred Combination Fixed
and Variable Group Annuity Application --
Previously filed as Exhibit (b)(5)(ii) to
post effective amendment no. 4 to Form N-4
filed February 26, 1998.
(iii) Specimen Application for the Flexible
Payment Deferred Combination Fixed and
Variable Annuity Application - Incorporated
by reference to Exhibit (5)(i)(B) to post
effective amendment no. 6 to Form N-4, file
number 33-76162, filed March 1, 1999.
(6) (i) Certificate of Incorporation of North
American Security Life Insurance Company --
Incorporated by reference to Exhibit (3)(i)
to Form 10Q of The Manufacturers Life
Insurance Company of North America filed
November 14, 1997.
(ii) Certificate of Amendment of Certificate of
Incorporation of the Company, Name Change
July 1984 -- Incorporated by reference to
Exhibit (3)(i)(a) to Form 10Q of The
Manufacturers Life Insurance Company of
North America, filed November 14, 1997.
(iii) Certificate of Amendment of Certificate of
Incorporation of the Company, Authorization
of Capital December 1994 -- Incorporated by
reference to Exhibit (3)(i)(b) to Form 10Q
of The Manufacturers Life Insurance Company
of North America, filed November 14, 1997.
(iv) Certificate of Amendment of Certificate of
Incorporation, Name change March 1997 --
Incorporated by reference to Exhibit
(3)(i)(a) to post effective amendment no. 1
to Form S-1 on behalf of The Manufacturers
Life Insurance Company of North America,
file number 333-6011, filed October 9, 1997.
- 3 -
<PAGE> 142
(v) Certificate of Amendment of Certificate of
Incorporation of the Company, Registered
Agent July 1997 -- Incorporated by reference
to Exhibit (3)(i)(c) to Form 10Q of The
Manufacturers Life Insurance Company of
North America filed November 14, 1997.
(vi) Amended and Restated By-laws of The
Manufacturers Life Insurance Company of
North America -- Incorporated by reference
to Exhibit (3)(ii) to Form 10Q of The
Manufacturers Life Insurance Company of
North America filed November 14, 1997.
(7) (i) Contract of reinsurance in connection with
the variable annuity contracts being offered
-- Form of Reinsurance and Accounts
Receivable Agreements between North American
Security Life Insurance Company and ITT
Lyndon Life, effective December 31, 1993,
and amendments -- Incorporated by reference
to Exhibit (b)(7)(i) to Form N-4, file
number 33-76162, filed February 25, 1998.
(ii) (A) Contract of reinsurance in
connection with the variable
annuity contracts being offered --
Variable Annuity Guaranteed Death
Benefit Reinsurance Contract
between North American Security
Life Insurance Company and
Connecticut General Life Insurance
Company, effective July 1, 1995 --
Previously filed as Exhibit
(b)(7)(ii) to post-effective
amendment no. 2 to Form N-4 filed
March 1, 1996.
(B) Contract of reinsurance in
connection with the variable annuity
contracts being offered - Variable
Annuity Guaranteed Death Benefit
Reinsurance Contract between North
American Security Life Insurance
Company and Connecticut General Life
Insurance Company, effective July 1,
1995 --Previously filed as Exhibit
(b)(7)(iii) to post-effective
amendment no. 2 to Form N-4 filed
March 1, 1996.
(C) Contract of reinsurance in
connection with variable annuity
contracts being offered -
Reinsurance and Guaranteed Death
Benefits Agreement between North
American Security Life Insurance
Company and Connecticut General Life
Insurance Company, effective July 1,
1998 (VEN 20 Series) - Incorporated
by reference to Exhibit
(b)(7)(A)(ii) to Form N-4, file
number 33-76162, filed March 1,
1999.
(iii) Contract of reinsurance in connection with
the variable annuity contracts being offered
-- Automatic Reinsurance Agreement between
North American Security Life Insurance
Company and Swiss Re America, effective
August 1, 1995 -- Previously filed as
Exhibit (b)(7)(iv) to post-effective
amendment no. 3 to Form N-4 filed February
28, 1997.
(iv) Contract of reinsurance in connection with
the variable annuity contracts being offered
-- Reinsurance Agreement between North
American Security Life Insurance Company and
PaineWebber Life Insurance Company,
effective December 31, 1994 -- Previously
filed as Exhibit (b)(7)(v) to post-effective
amendment no. 3 to Form N-4 filed February
28, 1997.
- 4 -
<PAGE> 143
(v) Coinsurance Agreement between North American
Security Life Insurance Company and Peoples
Security Life Insurance Company, effective
June 30, 1995 -- Incorporated by reference
to Exhibit (10)(iv) to Pre-effective
Amendment no. 1 to Form S-1, file number
333-6011, filed January 29, 1997.
(vi) Contract of reinsurance in connection with
the variable annuity contracts being offered
-- Form of Reinsurance Agreement between
North American Security Life Insurance
Company and Merrill Lynch Life Insurance
Company effective January 1, 1997 --
Incorporated by reference to Exhibit
(b)(7)(v) to Form N-4, file number 33-76162,
filed February 25, 1998.
(vii) Coinsurance Agreement between The
Manufacturers Life Insurance Company of
North America and The Manufacturers Life
Insurance Company (USA) -- Incorporated by
reference to Exhibit 10(ix) to Form 10K,
file number 333-6011, filed March 30, 1999
on behalf of The Manufacturers Life
Insurance Company of North America.
(8) Other material contracts not made in the ordinary
course of business which are to be performed in whole
or in part on or after the date the registration
statement is filed:
(i) Form of Remote Service Agreement dated
November 1, 1996 between North American
Security Life Insurance Company and CSC
Continuum, Inc. -- Previously filed as
Exhibit (b)(8)(i) to post-effective
amendment no. 3 to Form N-4 filed February
28, 1997.
(9) Opinion of Counsel and consent to its use as to the
legality of the securities being registered June 28,
1994 -- Previously filed as Exhibit (b)(9) to post
effective amendment no. 4 to Form N-4 filed February
26, 1998.
(10) Written consent of Ernst & Young LLP, independent
auditors -- To be filed by amendment.
(11) All financial statements omitted from Item 23,
Financial Statements -- Not Applicable.
(12) Agreements in consideration for providing initial
capital between or among Registrant, Depositor,
Underwriter or initial contract owners -- Not
Applicable.
(13) Schedules of computation -- Previously filed as
Exhibit (b)(13) to post-effective amendment no. 2 to
Form N-4 filed March 1, 1996.
(14) Financial Data Schedule -- Not Applicable.
(15) (i) Power of Attorney - John D. Richardson
(Chairman of the Board of Directors, North
American Security Life Insurance Company) --
Previously filed as Exhibit (b)(15)(iii) to
post-effective amendment no. 2 to Form N-4
filed April 29, 1997.
(ii) Power of Attorney - David W. Libbey,
Principal Financial Officer, North American
Security Life Insurance Company --
Incorporated by reference to Exhibit
(24)(ii) to Form 10Q of The Manufacturers
Life Insurance Company of North America
filed November 14, 1997.
- 5 -
<PAGE> 144
(iii) Power of Attorney - John D. DesPrez III
(Director, The Manufacturers Life Insurance
Company of North America) -- Incorporated by
reference to Exhibit (14)(iv) to Form N-4,
file number 333-38081 filed April 19, 1999.
Item 25. Directors and Officers of the Depositor.
OFFICERS AND DIRECTORS OF THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH
AMERICA
<TABLE>
<CAPTION>
Name and Principal Position with
Business Address Manulife North America
- ---------------- ----------------------
<S> <C>
John D. DesPrez III Director and Chairman of the Board
73 Tremont Street of Directors
Boston, MA 02108
James R. Boyle Director and President
500 Boylston Street
Boston, MA 02116
John D. Richardson Director
200 Bloor Street East
Toronto, Ontario
Canada M4W-1E5
Robert Boyda Vice President, Investment
73 Tremont Street Management Services
Boston, MA 02108
James D. Gallagher Vice President, Secretary and
73 Tremont Street General Counsel
Boston, MA 02108
Kevin Hill Vice President, Business
500 Boylston Street Implementation
Boston, MA 02116
Brian A. Kroll Vice President, Product Development
500 Boylston Street
Boston, MA 02116
David W. Libbey Vice President, Treasurer and
500 Boylston Street Chief Financial Officer
Boston, MA 02116
Jonnie Smith Vice president, Customer Service
500 Boylston Street and Administration
Boston, MA 02116
Janet Sweeney Vice President, Human Resources
73 Tremont Street
Boston, MA 02108
</TABLE>
- 6 -
<PAGE> 145
<TABLE>
<CAPTION>
Name and Principal Position with
Business Address Manulife North America
<S> <C>
John G. Vrysen Vice President and Chief Actuary
73 Tremont Street
Boston, MA 02108
</TABLE>
Item 26. Persons Controlled by or Under Common Control with Depositor or
Registrant.
MANULIFE FINANCIAL CORPORATION
Corporate Organization as at December 31, 1999
Manulife Financial Corporation (Canada)
The Manufacturers Life Insurance Company (Canada)
<TABLE>
<S> <C> <C> <C> <C>
1. Manulife Data Services Inc. - Barbados (100%)
2. MF Leasing (Canada) Inc. - Ontario (100%)
2.1 1332953 Ontario Inc. - Ontario (100%)
3. Enterprise Capital Management Inc. - Ontario (20%)
4. Cantay Holdings Inc. - Canada (100%)
5. 994744 Ontario Inc. - Ontario (100%)
6. 3426505 Canada Inc. - Canada (100%)
7. Family Realty First Corp. - Ontario (100%)
8. Manulife Bank of Canada - Canada (100%)
9. Manulife Securities International Ltd. - Canada (100%)
10. NAL Resources Limited - Alberta (100%)
11. Manulife International Capital Corporation Limited - Ontario (100%)
11.1. Golf Town Canada Inc. - Canada (100%)
11.2. Regional Power Inc. - Ontario (100%)
11.2.1. Addalam Power Corporation - Philippines
11.2.2. La Regionale Power Angliers Inc. - Canada (100%)
11.2.3. La Regionale Power Port-Cartier Inc. - Canada (100%)
11.3. VFC Inc. - Canada (100%)
11.4. 1198184 Ontario Limited - Ontario (100%)
12. 1293319 Ontario Inc. - Ontario (100%)
13. FNA Financial Inc. - Canada (100%)
13.1. Elliott & Page Limited - Ontario (100%)
13.2. Seamark Asset Management Ltd. - Canada (67.86%)
13.3. NAL Resources Management Limited - Canada (100%)
13.3.1. Caravan Oil & Gas Ltd. - Alberta (12.2%)
13.3.2. Carrack Energy Inc. - Alberta (16%)
13.4. First North American Insurance Company - Canada (100%)
14. MLI Resources Inc. - Alberta (100%)
15. Stylus Exploration Inc. - Alberta (100%)
16. Manucab Ltd. - Canada (100%)
16.1. Plazcab Service Limited - Newfoundland (100%)
17. The Manufacturers Investment Corporation - Michigan (100%)
17.1. Manulife Reinsurance Corporation (U.S.A.) - Michigan (100%)
17.1.1. Manulife Reinsurance Limited - Bermuda (100%)
17.1.1.1. MRL Holding, LLC - Delaware (99%)
17.1.2. MRL Holding, LLC - Delaware (1%)
17.1.2.1. Manulife-Wood Logan Holding Co. Inc. --
Delaware (22.4%)
17.1.3. The Manufacturers Life Insurance Company (U.S.A.) --
Michigan (100%)
17.1.3.1. Manulife-Wood Logan Holding Co. Inc. --
Delaware (77.6%)
17.1.3.1.1. Manulife Wood Logan, Inc. --
Connecticut (100%)
</TABLE>
- 7 -
<PAGE> 146
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
17.1.3.1.2. The Manufacturers Life
Insurance Company of North
America -- Delaware (100%)
17.1.3.1.2.1. Manufacturers
Securities
Services, LLC --
Delaware (90%)
17.1.3.1.2.2. The Manufacturers
Life Insurance
Company of New
York -- New York
(100%)
17.1.3.1.2.2.1 Manufacturers
Securities
Services, LLC --
Delaware (10%)
17.1.3.2. Flex Leasing 1, LLC -- Delaware (50%)
17.1.3.3. Ennal, Inc. -- Ohio (100%)
17.1.3.4. ESLS Investment Limited, LLC -- Ohio (100%)
17.1.3.5. Thornhill Leasing Investments, LLC -- Delaware (90%)
17.1.3.6. The Manufacturers Life Insurance Company of America --
Michigan (100%)
17.1.3.6.1. Manulife Holding Corporation -- Delaware (100%)
17.1.3.6.1.1. ManEquity, Inc. -- Colorado (100%)
17.1.3.6.1.2. Manufacturers Adviser Corporation --
Colorado (100%)
17.1.3.6.1.3. Manulife Capital Corporation --
Delaware (100%)
17.1.3.6.1.3.1. MF Private Capital, Inc. --
Delaware (80.4%)
17.1.3.6.1.3.1.1. MF Private Capital
Securities, Inc. --
Delaware (100%)
17.1.3.6.1.3.1.2. MFPC Ventures, Inc. --
Delaware (100%)
17.1.3.6.1.3.1.3. MFPC Insurance Advisors,
Inc. -- Delaware (100%)
17.1.3.6.1.4. Manulife Property Management of Washington, D.C. Inc. --
Washington, D.C. (100%)
17.1.3.4.1.5. ManuLife Service Corporation - Colorado (100%)
17.1.3.4.1.6. Manulife Leasing Co., LLC. - Delaware (80%)
18. Manulife International Investment Management Limited - U.K. (100%)
18.1. Manulife International Fund Management Limited - U.K. (100%)
19. WT(SW) Properties Ltd. - U.K. (100%)
20. Manulife Europe Ruckversicherungs-Aktiengesellschaft - Germany (100%)
21. Manulife International Holdings Limited - Bermuda (100%)
21.1. Manulife Provident Funds Trust Company Limited - Hongkong (100%)
21.2. Manulife (International) Limited - Bermuda (100%)
21.2.1. Zhong Hong Life Insurance Co. Ltd. - China (51%)
21.3. Manulife Funds Direct (Barbados) Limited - Barbados (100%)
21.3.1. Manulife Funds Direct (Hong Kong) Limited - Hongkong (100%)
21.3.2. Pt. Manulife Aset Manajemen Indonesia - Indonesia (55%)
22. ManuLife (International) Reinsurance Limited - Bermuda (100%)
22.1. Manufacturers Life Reinsurance Limited - Barbados (100%)
22.2. Manufacturers P&C Limited - Barbados (100%)
22.3. Manulife Management Services Ltd. - Barbados (100%)
23. Chinfon-Manulife Insurance Company Limited - Bermuda (60%)
24. Manulife Century Investments (Bermuda) Limited - Bermuda (13%)
25. Manulife Century Investments (Alberta) Inc. - Alberta (100%)
25.1 Manulife Century Investments (Bermuda) Limited - Bermuda (87%)
25.1.1 Daihyaku System Service Co. Ltd. - Japan (90%)
25.2 Manulife Century Investments (Luxembourg) S.A. - Luxembourg (100%)
25.2.1 Manulife Century Investments (Netherlands) B.V. - Netherlands (100%)
25.2.1.1 Daihyaku Manulife Holdings (Bermuda) Limited - Bermuda (100%)
25.2.1.1.1 Manulife Century Life Insurance Company - Japan (8.8%)
25.2.1.2 Manulife Century Life Insurance Company - Japan (74.6%)
25.2.1.2.1 Daihyaku System Service Co. Ltd. - Japan (10%)
25.2.1.2.2 Manulife Century Business Company - Japan (100%)
25.2.1.2.3 Kyoritsu Confirm Co., Ltd. - Japan (9.1%)
25.2.1.2.4 Daihyaku Premium Collection Co., Ltd. - Japan (10%)
25.2.1.3 Kyoritsu Confirm Co., Ltd. - Japan (90.9%)
25.2.1.4 Daihyaku Premium Collection Co., Ltd. - Japan (57%)
26. P.T. Asuransi Jiwa Dharmala ManuLife - Indonesia (51%)
26.1. P.T. Buanadays Sarana Informatika - Indonesia (100%)
</TABLE>
- 8 -
<PAGE> 147
<TABLE>
<S> <C>
26.2. P.T. Asuransi Jiwa Arta Mandiri Prime - Indonesia (100%)
27. OUB Manulife Pte. Ltd. - Singapore (50%)
28. The Manufacturers Life Insurance Company (Phils.) Inc. - Philippines (100%)
</TABLE>
Item 27. Number of Contract owners.
As of December 31, 1999, the following table lists the number of qualified and
non-qualified contracts of the series offered hereby outstanding.
<TABLE>
<CAPTION>
Contract Qualified Non-Qualified
-------- --------- -------------
<S> <C> <C>
Ven 8 1,493 1,942
Ven 22/23 6,985 8,546
</TABLE>
Item 28. Indemnification.
Article 9 of the Articles of Incorporation of the Company provides as follows:
NINTH: A director of this corporation shall not be liable to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as a director
except to the extent such exemption from liability or limitation thereof is not
permitted under the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended. Any repeal or modification of the foregoing
sentence shall not adversely affect any right or protection of a director of the
corporation existing hereunder with respect to any act or omission occurring
prior to such repeal or modification.
Article XIV of the By-laws of the Company provides as follows:
Each Director or officer, whether or not then in office, shall be indemnified by
the Company against all costs and expenses reasonably incurred by or imposed
upon him or her, including legal fees, in connection with or resulting from any
claim, action, suit or proceeding, whether civil, criminal or administrative, in
which he or she may become involved as a party or otherwise, by reason of his or
her being or having been a Director or officer of the Company.
(1) Indemnity will not be granted to any Director or officer with
respect to any claim, action, suit or proceeding which shall be brought against
such Director or officer by or in the right of the Company, and
(2) Indemnification for amounts paid and expenses incurred in settling
such action, claim, suit or proceeding, will not be granted, until it shall be
determined by a disinterested majority of the Board of Directors or by a
majority of any disinterested committee or group of persons to whom the question
may be referred by the Board, that said Director or officer did indeed act in
good faith and in a manner he or she reasonably believed to be in, or not
adverse, to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonably cause to believe that his or her
conduct was legal, and that the payment of such costs, expenses, penalties or
fines is in the interest of the Company, and not contrary to public policy or
other provisions of law.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendre or its equivalent, shall
not, of itself, create a presumption that the person did not act in good faith
and in a manner which he or she reasonably believed to be in, or not adverse, to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
Indemnification shall be made by the corporation upon determination by a
disinterested majority of the Board of Directors or of a majority of any
disinterested committee or group or persons to whom the question may be referred
to by said Board, that the person did indeed act in good faith and in a manner
he or she reasonably believed to be in, or not adverse, to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had
reasonably cause to believe that his or her conduct was legal.
- 9 -
<PAGE> 148
The foregoing right to indemnity shall not be exclusive of any other
rights to which such Director or officer may be entitled as a matter of law.
The foregoing right to indemnity shall also extend to the estate of any
deceased Director or officer with respect to any such claim, action, suit or
proceeding in which such Director or officer or his or her estate may become
involved by reason of his or her having been a Director or officer of the
Company, and subject to the same conditions outlined above.
Section IX, paragraph D of the Promotional Agent Agreement among the Company
(referred to therein as "Security Life"), NASL Financial and Wood/Logan
(referred to therein as "Promotional Agent") provides as follows:
a. NASL Financial and Security Life agree to indemnify and hold harmless
Promotional Agent, its officers, directors and employees against any
and all losses, claims, damages or liabilities to which they may become
subject under the Securities Act of 1933 ("1933 Act"), the 1934 Act or
other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact or any
omission or alleged omission to state a material fact required to be
stated or necessary to make the statements made not misleading in any
registration statement for the Contracts filed pursuant to the 1933 Act
or any prospectus included as a part thereof, as from time to time
amended and supplemented, or any advertisement or sales literature
approved in writing by NASL Financial or Security Life pursuant to
Section VI, paragraph B of this Agreement.
b. Promotional Agent agrees to indemnify and hold harmless NASL Financial
and Security Life, their officers, directors and employees against any
and all losses, claims, damages or liabilities to which they may become
subject under the 1933 Act, the 1934 Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon: (i) any oral or written
misrepresentation by Promotional Agent or its officers, directors,
employees or agents unless such misrepresentation is contained in any
registration statement for the Contracts or Fund shares, any prospectus
included as a part thereof, as from time to time amended and
supplemented, or any advertisement or sales literature approved in
writing by NASL Financial pursuant to Section VI, paragraph B of this
Agreement or, (ii) the failure of Promotional Agent or its officers,
directors, employees or agents to comply with any applicable provisions
of this Agreement.
Notwithstanding the foregoing, Registrant hereby makes the following undertaking
pursuant to Rule 484 under the Securities Act of 1933:
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
- 10 -
<PAGE> 149
Item 29. Principal Underwriters.
<TABLE>
<CAPTION>
a. Name of Investment Company Capacity in which acting
-------------------------- ------------------------
<S> <C> <C>
Manufacturers Investment Trust Investment Adviser
The Manufacturers Life Insurance Principal Underwriter
Company of North America Separate
Account A
The Manufacturers Life Insurance Principal Underwriter
Company of North America Separate
Account B
The Manufacturers Life Insurance Principal Underwriter
Company of New York Separate
Account A
The Manufacturers Life Insurance Principal Underwriter
Company of New York Separate
Account B
</TABLE>
b. The Manufacturers Life Insurance Company of North America is the
managing member of Manufacturers Securities Services, LLC and has sole power to
act on behalf of Manufacturers Securities Services, LLC. The officers and
directors of The Manufacturers Life Insurance Company of North America are set
forth under Item 25.
c. None.
Item 30. Location of Accounts and Records.
All books and records are maintained at 500 Boylston Street, Boston, MA 02116
and at 73 Tremont Street, Boston, MA 02108.
Item 31. Management Services.
None.
Item 32. Undertakings.
Representation of Insurer Pursuant to Section 26 of the Investment Company Act
of 1940
The Manufacturers Life Insurance Company of North America (the "Company") hereby
represents that the fees and charges deducted under the contracts issued
pursuant to this registration statement, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by the Company.
- 11 -
<PAGE> 150
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant, The Manufacturers Life Insurance Company of North
America Separate Account A, has caused this Amendment to the Registration
Statement to be signed on its behalf, in the City of Boston, and Commonwealth of
Massachusetts on this 28th day of February, 2000.
THE MANUFACTURERS LIFE INSURANCE COMPANY
OF NORTH AMERICA SEPARATE ACCOUNT A
----------------------------------------
(Registrant)
By: THE MANUFACTURERS LIFE INSURANCE COMPANY
OF NORTH AMERICA
----------------------------------------
(Depositor)
By: /s/ JAMES R. BOYLE
----------------------------------------
James R. Boyle, President
Attest:
/s/ JAMES D. GALLAGHER
- -----------------------------
James D. Gallagher, Secretary
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Depositor has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned on the
28th day of February, 2000 in the City of Boston, and Commonwealth of
Massachusetts.
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NORTH AMERICA
----------------------------------------
(Depositor)
By: /s/ JAMES R. BOYLE
----------------------------------------
James R. Boyle, President
Attest:
/s/ JAMES D. GALLAGHER
- -----------------------------
James D. Gallagher, Secretary
<PAGE> 151
As required by the Securities Act of 1933, this amended Registration
Statement has been signed by the following persons in the capacities with the
Depositor as indicated on this 28th day of February, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
* Director and Chairman of the Board
- -----------------------------------
John D. DesPrez III
/s/ JAMES R. BOYLE Director (Principal Executive Officer)
- -----------------------------------
James R. Boyle
* Director
- -----------------------------------
John D. Richardson
/s/ DAVID W. LIBBEY Vice President, Treasurer and Chief
- ----------------------------------- Financial Officer (Principal Financial
David W. Libbey Officer)
*By: /s/ JAMES D. GALLAGHER
-------------------------------
James D. Gallagher
Attorney-in-Fact
Pursuant to Powers
of Attorney
</TABLE>
