<PAGE>
Registration No.33-52310
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
POST-EFFECTIVE AMENDMENT NO. 5
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF l933
SEPARATE ACCOUNT THREE
OF
THE MANUFACTURERS LIFE
INSURANCE COMPANY OF AMERICA
(Exact name of trust)
THE MANUFACTURERS LIFE
INSURANCE COMPANY OF AMERICA
(Name of depositor)
500 N. Woodward Avenue
Bloomfield Hills, Michigan 48304
(Address of depositor's principal executive offices)
STEPHEN C. NESBITT
Secretary and General Counsel Notice to:
The Manufacturers Life Insurance J. Sumner Jones, Esq.
Company of America Jones & Blouch
500 N. Woodward Avenue 1025 Thomas Jefferson St., N.W.
Bloomfield Hills, Michigan 48304 Washington, D.C. 20007
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
--- immediately upon filing pursuant to paragraph (b) of Rule
485
--- on February 14, 1996 pursuant to paragraph (b) of Rule 485
--- 60 days after filing pursuant to paragraph (a)(1) of Rule
485
-X- on February 14, 1996 pursuant to paragraph (a)(1) of Rule
485
--- 75 days after filing pursuant to paragraph (a)(2) of Rule
485
Election Pursuant to Rule 24f-2
Registrant has registered, pursuant to Rule 24f-2 under the
Investment Company Act of 1940, an indefinite number of its
variable life contracts for sale under the Securities Act of
1933 and filed a Rule 24f-2 Notice on February 28, 1995 for
its fiscal year ended December 31, 1994.
<PAGE>
SEPARATE ACCOUNT THREE
OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
Registration Statement on Form S-6
Cross-Reference Sheet
Form
N-8B-2
Item No. Caption in Prospectus
1 ------ Cover Page; General Information About Manufacturers
Life of America, Separate Account Three, Manulife
Series Fund and NASL Series Trust (Manufacturers
Life of America's Separate Account Three)
2 ----- Cover Page; General Information About Manufacturers
Life of America, Separate Account Three Series Fund
(Manufacturers Life Of America And Manufacturers
Life)
3 ----- *
4 ----- Miscellaneous Matters (Distribution of the Policy)
5 ----- General Information About Manufacturers Life Of
America, Separate Account Three, Manulife Series
Fund and NASL Series Trust (Manufacturers Life of
America's Separate Account Three)
6 ----- General Information About Manufacturers Life of
America, Separate Account Three, Manulife Series
Fund and NASL Series Trust (Manufacturers Life of
America's Separate Account Three)
7 ----- *
8 ----- *
9 ----- Miscellaneous Matters (Pending Litigation)
10 ----- Detailed Information About The Policies
11 ----- General Information About Manufacturers Life Of
America, Separate Account Three, Manulife Series
Fund and NASL Series Trust (Manulife Series Fund and
NASL Series Trust)
12 ----- General Information About Manufacturers Life Of
America, Separate Account Three, Manulife Series
Fund and NASL Series Trust (Manulife Series Fund and
NASL Series Trust)
13 ----- Detailed Information About The Policies (Charges and
Deductions)
14 ----- Detailed Information About the Policies (Premium
Provisions -- Policy Issue and Initial Premium);
Miscellaneous Matters (Responsibilities Assumed By
Manufacturers Life)
15 ----- Detailed Information About The Policies (Premium
Provisions -- Policy Issue and Initial Premium)
16 ----- **
* Omitted since answer is negative or item is not applicable.
** Omitted.
<PAGE> - 3 -
<PAGE>
Form
N-8B-2
Item No. Caption in Prospectus
17 ----- Detailed Information About The Policies (Policy
Values -- Partial Withdrawals and Surrenders); Other
Provisions -- Payment of Proceeds)
18 ----- General Information About Manufacturers Life Of
America, Separate Account Three, Manulife Series
Fund and NASL Series Trust
19 ----- Detailed Information About The Policies (Other
Provisions -- Reports To Policyowners);
Miscellaneous Matters (Responsibilities Assumed By
Manufacturers Life)
20 ----- *
21 ----- Detailed Information About The Policies
22 ----- *
23 ----- **
24 ----- Detailed Information About the Policies (Other
General Policy Provisions)
25 ----- General Information About Manufacturers Life Of
America, Separate Account Three, Manulife Series
Fund and NASL Series Trust (Manufacturers Life Of
America And Manufacturers Life)
26 ----- *
27 ----- **
28 ----- Miscellaneous Matters (The Directors And Officers Of
Manufacturers Life Of America)
29 ----- General Information About Manufacturers Life Of
America, Separate Account Three, Manulife Series
Fund and NASL Series Trust (Manufacturers Life Of
America And Manufacturers Life)
30 ----- *
31 ----- *
32 ----- *
33 ----- *
34 ----- *
35 ----- **
36 ----- *
37 ----- *
38 ----- Miscellaneous Matters (Distribution of the Policy;
Responsibilities Assumed By Manufacturers Life)
39 ----- Miscellaneous Matters (Distribution of the Policy)
40 ----- *
41 ----- **
42 ----- *
43 ----- *
* Omitted since answer is negative or item is not applicable.
** Omitted.
<PAGE> - 4 -
<PAGE>
Form
N-8B-2
Item No. Caption in Prospectus
44 ----- Detailed Information About The Policies (Policy
Values -- Policy Value)
45 ----- *
46 ----- Detailed Information About The Policies (Policy
Values -- Partial Withdrawals and Surrenders; Other
Provisions -- Payment of Proceeds)
47 ----- General Information About Manufacturers Life Of
America, Separate Account Three, Manulife Series
Fund and NASL Series Trust (Manulife Series Fund and
NASL Series Trust)
48 ----- *
49 ----- *
50 ----- General Information About Manufacturers Life Of
America, Separate Account Three, Manulife Series
Fund and NASL Series Trust (Manufacturers Life Of
America's Separate Account Three)
51 ----- Detailed Information About The Policies
52 ----- Detailed Information About The Policies
(Miscellaneous Matters -- Fund Share Substitution)
53 ----- **
54 ----- *
55 ----- *
56 ----- *
57 ----- *
58 ----- *
59 ----- Financial Statements
* Omitted since answer is negative or item is not applicable.
** Omitted.
<PAGE> - 5 -
<PAGE>
PART I
PROSPECTUS
<PAGE> - 6 -
<PAGE>
Prospectus for
Horizon from
Manulife Financial
A Flexible Premium
Variable Life Insurance Policy
Issued by
The Manufacturers Life Insurance
Company of America
<PAGE> - 7 -
<PAGE>
Prospectus
The Manufacturers Life Insurance
Company of America
Separate Account Three
Horizon from Manulife Financial
Flexible Premium Variable Life Insurance Policy
This prospectus describes the flexible premium variable life
insurance policy (the "Policy") issued by The Manufacturers
Life Insurance Company of America ("Manufacturers Life of
America" or the "Company"), a stock life insurance company
that is an indirect wholly-owned subsidiary of The
Manufacturers Life Insurance Company ("Manufacturers Life").
The Policies are designed to provide lifetime insurance
protection together with flexibility as to the timing and
amount of premium payments, the investments underlying the
Policy Value and the amount of insurance coverage. This
flexibility allows the policyowner to pay premiums and adjust
insurance coverage in light of his or her current financial
circumstances and insurance needs. The Policies provide for:
(1) a Net Cash Surrender Value that can be obtained by partial
withdrawals or surrender of the Policy; (2) policy loans; and
(3) an insurance benefit payable at the life insured's death.
A Policy's Policy Value may be accumulated on a fixed basis or
vary with the investment performance of the sub-accounts of
Manufacturers Life of America's Separate Account Three (the
"Separate Account") to which the policyowner allocates net
premiums.
<REDLINE>
The assets of each sub-account will be used to purchase shares
of a particular investment portfolio ("Portfolio") of Manulife
Series Fund, Inc. ("Manulife Series Fund") or NASL Series
Trust. The accompanying prospectuses for Manulife Series Fund
and NASL Series Trust, and the corresponding statements of
additional information, describe the investment objectives of
the Portfolios in which net premiums may be invested. The
Portfolios available for allocation of net premiums are the
following Portfolios of Manulife Series Fund: the Emerging
Growth Equity Fund, the Balanced Assets Fund, the Capital
Growth Bond Fund, the Money-Market Fund, the Common Stock
Fund, the Real Estate Securities Fund, the International Fund,
the Pacific Rim Emerging Markets Fund, and, subject to
regulatory approval, the Equity Index Fund (collectively the
"Manulife Funds") and the following Portfolios of NASL Series
Trust: the Value Equity Trust, the U.S. Government Securities
Trust, the Growth and Income Trust, the Equity Trust, the
Conservative Asset Allocation Trust, the Moderate Asset
Allocation Trust and the Aggressive Asset Allocation Trust
<PAGE> - 8 -
<PAGE>
(collectively the "NASL Trusts"). Other sub-accounts and
Portfolios may be added in the future.</REDLINE>
Prospective purchasers should ask a Manulife Financial
representative if changing, or adding to, existing insurance
coverage would be advantageous. Prospective purchasers should
note that it may not be advisable to purchase a Policy as a
replacement for existing insurance.
Because of the substantial nature of the surrender charges,
the Policy is not suitable for short-term investment purposes.
A policyowner contemplating surrender of a Policy should pay
special attention to the sales charge limitation provisions
described in this prospectus, which apply only during the
first two years following issuance of the Policy or following
an increase in face amount.
<REDLINE>
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE
REFERENCE. IT IS VALID ONLY WHEN ACCOMPANIED BY A CURRENT
PROSPECTUS FOR MANULIFE SERIES FUND, INC. AND NASL SERIES
TRUST.
</REDLINE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Manufacturers Life Insurance
Company of America
500 N. Woodward Avenue
Bloomfield Hills, Michigan 48304
Service Office:
200 Bloor Street East
Toronto, Ontario, Canada M4W 1E5
TELEPHONE: 1-800-827-4546
(1-800-VARILIN[E])
<REDLINE>
The date of this Prospectus is February 14, 1996.</REDLINE>
<PAGE> - 9 -
<PAGE>
Prospectus Contents
Page
Introduction To Policies
<REDLINE>
General Information About Manufacturers Life of
America, Separate Account Three, Manulife
Series Fund, and NASL Series Trust
Manufacturers Life of America And
Manufacturers Life
Manufacturers Life of America's Separate
Account Three
Manulife Series Fund and NASL
Series Trust
Investment Objective Of The
Portfolios </REDLINE>
Detailed Information About The Policies
PPEMIUM PROVISIONS
Policy Issue And Initial Premium
Premium Allocation
Premium Limitations
Short-Term Cancellation Right And "Free
Look" Provisions
INSURANCE BENEFIT
The Insurance Benefit
No Lapse Guarantee
Death Benefit Guarantee
Death Benefit Options
Death Benefit Option Changes
Face Amount Changes
POLICY VALUES
Policy Value
Transfers Of Policy Value
Policy Loans
Partial Withdrawals And Surrenders
CHARGES AND DEDUCTIONS
Deductions From Premiums
Surrender Charges
Monthly Deductions
Administration Charge
Cost Of Insurance Charge
Mortality And Expense Risks Charge
Other Charges
Special Provisions For Group Or
Sponsored Arrangements
Special Provisions For Exchanges
THE GENERAL ACCOUNT
OTHER GENERAL POLICY PROVISIONS
Policy Default
Policy Reinstatement
Miscellaneous Policy Provisions
OTHER PROVISIONS
Supplementary Benefits
<PAGE> - 10 -
<PAGE>
Prospectus Contents
Page
OTHER PROVISIONS (continued)
Payment Of Proceeds
Reports To Policyowners
MISCELLANEOUS MATTERS
Fund Share Substitution
Federal Income Tax Considerations
Tax Status Of The Policy
Tax Treatment Of Policy Benefits
The Company's Taxes
Distribution Of The Policy
Responsibilities Assumed By
Manufacturers Life
Voting Rights
Directors And Officers Of Manufacturers
Life of America
State Regulations
Pending Litigation
Additional Information
Legal Matters
Experts
Financial Statements
Appendices
A. Sample Illustrations Of Policy Values, Cash
Surrender Values And Death Benefits
B. Definitions
C. Deferred Sales Charge Tables
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, THE PROSPECTUS OF MANULIFE SERIES FUND OR
NASL SERIES TRUST, OR THE STATEMENT OF ADDITIONAL INFORMATION
OF MANULIFE
SERIES FUND OR NASL SERIES TRUST.
You are urged to examine this prospectus carefully. The
INTRODUCTION TO POLICIES will briefly describe the Flexible
Premium Variable Life Insurance Policy. More detailed
information will be found within.
<PAGE> - 11 -
<PAGE>
Introduction To Policies
The following summary is intended to provide a general
description of the most important features of the Policy. It
is not comprehensive and is qualified in its entirety by the
more detailed information contained in this prospectus.
Unless otherwise indicated or required by the context, the
discussion throughout this prospectus assumes that the Policy
has not gone into default, there is no outstanding Policy
Debt, and the death benefit is not determined by the corridor
percentage test.
General.
The Policy provides a death benefit in the event of the death
of the life insured.
Premium payments may be made at any time and in any amount,
subject to certain limitations.
After certain deductions, premiums will be allocated,
according to the policyowner's instructions, to one or more of
the general account and the sub-accounts of Manufacturers Life
of America's Separate Account Three. Assets of the
sub-accounts of Separate Account Three are invested in shares
of a particular Portfolio of Manulife Series Fund or NASL
Series Trust. Allocation instructions may be changed at any
time and transfers among the accounts may be made subject to
certain restrictions.
<REDLINE>
The Manulife Funds currently offered are the: Emerging Growth
Equity Fund, Common Stock Fund, Real Estate Securities Fund,
Balanced Assets Fund, Capital Growth Bond Fund, Money-Market
Fund, International Fund and Pacific Rim Emerging Markets Fund
and, subject to regulatory approval, the Equity Index Fund.
The NASL Trusts currently offered are the: Value Equity Trust,
U.S. Government Securities Trust, Growth and Income Trust,
Equity Trust, Conservative Asset Allocation Trust, Moderate
Asset Allocation Trust and Aggressive Asset Allocation
Trust.</REDLINE>
The Policy has a Policy Value reflecting premiums paid, the
investment performance of the accounts to which the
policyowner has allocated premiums, and certain charges for
expenses and cost of insurance. The policyowner may obtain a
portion of the Policy Value by taking a policy loan or a
partial withdrawal, or by full surrender of the Policy.
Death Benefit.
Death Benefit Options. The policyowner elects to have the
Policy's death benefit determined under one of two options:
<PAGE> - 12 -
<PAGE>
. a death benefit equal to the face amount of the Policy, or
. a death benefit equal to the face amount of the Policy plus
the Policy Value.
Under either option, the death benefit may have to be
increased to a multiple of the Policy Value to satisfy the
corridor percentage test under the definition of
life insurance in the Internal Revenue Code. See Detailed
Information About The Policies: Insurance Benefit - "The
Insurance Benefit" and "Death Benefit Options."
The Policyowner May Change The Death Benefit Option. A change
in the death benefit option may be requested after the Policy
has been in force for two years. See Detailed Information
About The Policies; Insurance Benefit - "Death Benefit Option
Changes."
The Policyowner May Increase The Face Amount. After the
Policy has been in force for two years, an increase in the
face amount of the Policy may be requested once per policy
year. An increase in the face amount is subject to
satisfactory evidence of insurability and will usually result
in the Policy's being subject to new surrender charges. See
Detailed Information About The Policies; Insurance Benefit -
"Face Amount Changes."
The Policyowner May Decrease The Face Amount. A decrease in
the face amount may be requested once per policy year after
the Policy has been in force for two years, except during the
two-year period following any increase in face amount. In
addition, during the two-year period following an increase in
face amount, the policyowner may elect at any time to cancel
the increase. During the two-year period following an
increase, the deferred sales charge for the increase is
subject to the Policy's sales charge limitation provisions. A
decrease in face amount may result in certain surrender
charges being deducted from the Policy Value. See Detailed
Information About The Policies; Insurance Benefit - "Face
Amount Changes."
Premium Payments Are Flexible.
The policyowner may pay premiums at any time and in any
amount, subject to certain limitations. See Detailed
Information About The Policies; Premium Provisions - "Policy
Issue" and "Premium Limitations."
The policyowner must pay at least the Initial Premium to put
the Policy in force. See Detailed Information About The
Policies; Premium Provisions - "Policy Limitations" and "Death
Benefit Guarantee."
<PAGE> - 13 -
<PAGE>
After the Initial Premium is paid there is no minimum premium
required. However, by complying with the Cumulative Premium
Test the policyowner can ensure the Policy will not go into
default for the first three policy years. For Policies with a
face amount of at least $250,000, the policyowner can ensure
the Policy will not go into default (i) prior to the life
insured reaching age 100 if Death Benefit Option 1 is
maintained throughout the life of the Policy and (ii) prior to
the life insured reaching age 85 if Death Benefit Option 2 is
selected at any time, by satisfying the Cumulative Premium
Test or the Fund Value Test. See Detailed Information About
The Policies; Premium Provisions - Death Benefit Guarantee.
Certain maximum premium limitations apply to the Policy to
ensure the Policy qualifies as life insurance under rules
defined in the Internal Revenue Code. See Detailed
Information About The Policies; Premium Provisions - Premium
Limitations.
Summary Of Charges And Deductions.
Charges under the Policy are assessed as:
(1) deductions from premiums
. 2.35% state and local taxes
. 1.25% federal taxes
(2) surrender charges upon surrender, partial withdrawal
in excess of the Withdrawal Tier Amount, decrease in
face amount or lapse
. deferred underwriting charge of $6 for each $1,000
of face amount
. deferred sales charge of a maximum of 50% of
premiums paid up to a maximum of 3.031 Target
Premiums
(3) monthly deductions
. administration charge of $35 plus $.01 per $1,000
of face amount per month until the first policy
anniversary; thereafter, $10 plus $.01 per $1,000
of face amount per month
. cost of insurance charge
. mortality and expense risks charge of .90% per
annum through the later of the tenth policy
<PAGE> - 14 -
<PAGE>
anniversary and the policyowner's attained age 60
and, thereafter, .45% per annum
. supplementary benefit(s) charge(s)
(4) Other Charges
For the Manulife Funds:
. investment management fee of .50% per annum
assessed against the assets of the Emerging Growth
Equity Fund, Common Stock Fund, Real Estate
Securities Fund, Balanced Assets Fund, Capital
Growth Bond Fund and Money-Market Fund
. investment management fee of (i) .85% per annum
assessed against the first $100 million of assets
and (ii) .70% per annum assessed against the assets
over $100 million of each of the International Fund
and the Pacific Rim Emerging Markets Fund
<REDLINE>
. investment management fee of .25% per annum
assessed against the assets of the Equity Index
Fund
. expenses of up to .50% and .65% per annum assessed
against the assets of the International Fund and
the Pacific Rim Emerging Markets Fund, respectively
. expenses of up to .15% per annum assessed against
the assets of the Equity Index Fund
For the NASL Trusts:
. investment management fee of .800% and expenses of
up to .50% assessed against the assets of the Value
Equity Trust
. investment management fee of .650% and expenses of
up to .50% assessed against the assets of the U.S.
Government Securities Trust
. investment management fee of .750% and expenses of
up to .50% assessed against the assets of the
Growth and Income Trust
. investment management fee of .750% and expenses of
up to .50% assessed against the assets of the
Equity Trust
<PAGE> - 15 -
<PAGE>
. investment management fee of .750% and expenses of
up to .50% assessed against the assets of the
Conservative Asset Allocation Trust
. investment management fee of .750% and expenses of
up to .50% assessed against the assets of the
Moderate Asset Allocation Trust
. investment management fee of .750% and expenses of
up to .50% assessed against the assets of the
Conservative Asset Allocation Trust
For all Policies:
</REDLINE>
. transfer fee of $35 if policyowner elects to
exercise the option to make a second transfer in
any policy month
. transfer fee of $5 for each transfer under the
Dollar Cost Averaging program when Policy Value
does not exceed $15,000
. transfer fee of $15 for each transfer under the
Asset Allocation Balancer program
For a complete discussion of charges and deductions see the
heading Charges And Deductions in this Introduction and the
references therein, and see also the heading Transfers Are
Permitted in this Introduction and the references therein.
Investment Options.
After deductions for federal, state and local taxes totalling
3.60%, net premiums will be allocated, according to the
policyowner's instructions, to any combination of the general
account or one or more of the sub-accounts of Manufacturers
Life of America's Separate Account Three.
Each sub-account of Separate Account Three invests its assets
in the shares of one of the following portfolios:
<REDLINE>
Manulife Funds:
. Emerging Growth Equity Fund
. Common Stock Fund
. Real Estate Securities Fund
. Balanced Assets Fund
<PAGE> - 16 -
<PAGE>
. Capital Growth Bond Fund
. Money-Market Fund
. International Fund
. Pacific Rim Emerging Markets Fund
. Subject to regulatory approval, Equity Index Fund
NASL Trusts:
. Value Equity Trust
. U.S. Government Securities Trust
. Growth and Income Trust
. Equity Trust
. Conservative Asset Allocation Trust
. Moderate Asset Allocation Trust
. Aggressive Asset Allocation Trust </REDLINE>
The policyowner may change the allocation of net premiums
among the general account and the sub-accounts at any time.
See General Information About Manufacturers Life of America,
Separate Account Three, Manulife Series Fund and NASL Series
Trust and Detailed Information About the Policies; Premium
Provisions - "Premium Allocation" and Policy Values - "Policy
Value."
The Policy Value.
The Policy has a Policy Value which reflects the following:
premium payments made; investment performance of the
sub-accounts to which amounts have been allocated; interest
credited by the Company to amounts allocated to the general
account; partial withdrawals; and deduction of charges
described under "Charges And Deductions" below.
The Policy Value is the sum of the values in the Investment
Accounts, the Guaranteed Interest Account and the Loan
Account.
Investment Account. An Investment Account is established
under the Policy for each sub-account of the Separate Account
to which net premiums or transfer amounts have been allocated.
<PAGE> - 17 -
<PAGE>
An Investment Account measures the interest of the Policy in
the corresponding sub-account.
<REDLINE>
The value of each Investment Account under the Policy varies
each Business Day and reflects the investment performance of
the Portfolio shares held in the corresponding sub-account.
See Detailed Information About the Policies; Policy Values -
"Policy Value."</REDLINE>
Guaranteed Interest Account. The Guaranteed Interest Account
consists of that portion of the Policy Value based on net
premiums allocated to, and amounts transferred to, the general
account of the Company.
Manufacturers Life of America credits interest on amounts in
the Guaranteed Interest Account at an effective annual rate
guaranteed to be at least 4%. See Detailed Information About
the Policies and The General Account.
Loan Account. When a policy loan is made, Manufacturers Life
of America will establish a Loan Account under the Policy and
will transfer an amount from the Investment Accounts and the
Guaranteed Interest Account to the Loan Account.
The Company will credit interest to amounts in the Loan
Account at an effective annual rate of at least 4%. The
actual rate credited on loan amounts will be the rate charged
on loan amounts less an interest rate differential, currently
1.75%, except on Select Loan Amounts where the interest rate
differential, subject to change in certain circumstances, is
currently 0%. See Detailed Information About the Policies;
Policy Values - "Policy Loans."
Transfers Are Permitted. A policyowner may make transfers
among the sub-accounts of Separate Account Three and the
Company's general account, subject to certain restrictions.
One transfer per policy month may be made at no cost to the
policyowner; a second transfer in each policy month will be
permitted at a cost of $35 per transfer. All transfer
requests received at the same time are treated as a single
transfer request. The minimum amount that may be transferred
is the lesser of $500 or the entire account value.
Certain restrictions may apply to transfer requests. See
Detailed Information About the Policies; Policy Values -
"Policy Value."
Using The Policy Value.
<PAGE> - 18 -
<PAGE>
Borrowing Against The Policy Value. The policyowner may
borrow against the Policy Value. The minimum loan amount is
$500.
Loan interest will be charged on a fixed basis at an effective
annual rate of 5.75%. See Detailed Information About the
Policies; Policy Values - "Policy Loans."
A Policyowner May Make A Partial Withdrawal Of The Policy
Value. After a Policy has been in force for two years the
policyowner may make a partial withdrawal of the Policy Value.
The minimum withdrawal amount is $500. The policyowner may
specify that the withdrawal is to be made from a specific
Investment Account or the Guaranteed Interest Account.
A partial withdrawal may result in a reduction in the face
amount of the Policy and may also result in the assessment of
a portion of the surrender charges to which the Policy is
subject. See Detailed Information About the Policies; Policy
Values - "Partial Withdrawals and Surrenders" and Charges and
Deductions - "Surrender Charges."
The Policy May Be Surrendered For Its Net Cash Surrender
Value. The Net Cash Surrender Value is equal to the Policy
Value less surrender charges, outstanding monthly deductions
due and the value of the Loan Account. Surrender of a Policy
during the Surrender Charge Period will usually result in
assessment of surrender charges. See Detailed Information
About the Policies; Policy Values - "Partial Withdrawals and
Surrenders" and Charges and Deductions - "Surrender Charges."
Charges And Deductions.
1) Deductions From Premiums. Two deductions are made when
premiums are paid:
. a charge of 2.35% for state and local taxes, and
. a charge of 1.25% for federal taxes.
2) Surrender Charges. Manufacturers Life of America will
usually deduct a deferred underwriting charge and a
deferred sales charge if, during the Surrender Charge
Period:
. the Policy is surrendered for its Net Cash Surrender
Value,
. a partial withdrawal in excess of the Withdrawal Tier
Amount is made,
. a decrease in face amount is requested, or
<PAGE> - 19 -
<PAGE>
. the Policy lapses.
The deferred underwriting charge is $6 for each $1,000 of face
amount of life insurance coverage initially or added by
increase. In effect, the charge applies only to the first
$500,000 of face amount initially purchased or the first
$500,000 of each subsequent increase in face amount. Thus,
the charge made in connection with any one underwriting will
not exceed $3,000.
The full amount of the deferred underwriting charge will be in
effect for five years following Policy issue. Beginning in
the sixth year these charges grade downward over a maximum
ten-year period. See Detailed Information About the Policies;
Charges And Deductions - "Surrender Charges."
The maximum deferred sales charge is 50% of premiums paid up
to a maximum number of Target Premiums that varies (from -
0.180 to 3.031) according to the issue age of the life
insured, the face amount at issue and the amount of any
increase. Subject to compliance with the sales charge
limitation provisions described below, the maximum deferred
sales charge will be in effect for at least the first two
years of the Surrender Charge Period. After that, the portion
of the deferred sales charge that remains in effect will grade
down at a rate that also varies according to the issue age of
the life insured until, at the end of the Surrender Charge
Period there is no deferred sales charge. See Detailed
Information About the Policies - "Charges And Deductions" -
Surrender Charges. In the event of a face amount increase,
the surrender charges applicable to the increase will be those
rates that would apply if a Policy were issued to the life
insured at his or her then attained age and based on the
amount of the increase.
Limitation Of Sales Charges. If the Policy is surrendered at
any time during the first two years following issuance or
following an increase in face amount or if the increase is
cancelled during the two-year period following the increase,
then Manufacturers Life of America may forego deducting the
maximum deferred sales charge applicable to the Policy or the
increase. See Detailed Information About the Policies;
Charges And Deductions - "Surrender Charges." If the Policy is
surrendered after that two-year period, the full amount of the
applicable sales charge will apply.
3) Monthly Deductions. At the beginning of each policy month
Manufacturers Life of America deducts from the Policy
Value:
<PAGE> - 20 -
<PAGE>
. an administration charge of $35 plus $.01 per $1,000
of face amount until the first policy anniversary and,
thereafter, $10 plus $.01 per $1,000 of face amount,
. a charge for the cost of insurance,
. a charge for mortality and expense risks of .90% per
annum through the later of the tenth policy
anniversary and the policyowner's attained age 60 and,
thereafter, .45% per annum. This charge is assessed
against the value of the policyowner's investment
accounts, and
. charge(s) for any supplementary benefit(s) added to
the Policy.
The cost of insurance charge varies based on the net amount at
risk under the Policy and the applicable cost of insurance
rate. Cost of insurance rates vary according to issue age,
the duration of the coverage, sex (unless unisex rates are
required by law), any additional ratings indicated in the
policy, and risk class of the life insured. The maximum cost
of insurance rate that can be charged is guaranteed not to
exceed the 1980 Commissioners Standard Ordinary
Smoker/Nonsmoker Mortality Tables. However, any additional
ratings as indicated in the Policy will be added to the cost
of insurance rate. See Detailed Information About the
Policies; Charges And Deductions - "Monthly Deductions."
If the Policy is still in force when the life insured attains
age 100, no further monthly deductions will be taken from the
Policy Value.
4) Other Charges. Charges will be imposed on certain
transfers of Policy Values, including a $35 charge for a
second transfer in a policy month, a $15 charge for each
Asset Allocation Balancer transfer and a $5 charge for each
Dollar Cost Averaging transfer if Policy Value does not
exceed $15,000. See Policy Values - "Transfers Of Policy
Value."
Certain expenses are, or will be, assessed against the
assets of the Portfolios, as follows.
<REDLINE>
For Manulife Series Fund:
(1) an investment management fee of (a) .50% per annum
assessed against the assets of the Emerging Growth
Equity Fund, Common Stock Fund, Real Estate Securities
Fund, Balanced Assets Fund, Capital Growth Bond Fund
and Money-Market Fund; (b) .85% per annum assessed
<PAGE> - 21 -
<PAGE>
against the first $100 million of assets and .70% per
annum assessed against the assets over $100 million of
each of the International Fund and the Pacific Rim
Emerging Markets Fund; and (c) .25% per annum assessed
against the assets of the Equity Index Fund; and
(2) expenses of up to .50% and .65% per annum assessed
against the assets of the International Fund and the
Pacific Rim Emerging Markets Fund, respectively, and
expenses of up to .15% per annum assessed against the
assets of the Equity Index Fund.
For NASL Series Trust:
(1) investment management fee of .800% and expenses of up
to .50% assessed against the assets of the Value
Equity Trust
(2) investment management fee of .650% and expenses of up
to .50% assessed against the assets of the U.S.
Government Securities Trust
(3) investment management fee of .750% and expenses of up
to .50% assessed against the assets of the Growth and
Income Trust
(4) investment management fee of .750% and expenses of up
to .50% assessed against the assets of the Equity
Trust
(5) investment management fee of .750% and expenses of up
to .50% assessed against the assets of the
Conservative Asset Allocation Trust
(6) investment management fee of .750% and expenses of up
to .50% assessed against the assets of the Moderate
Asset Allocation Trust
(7) investment management fee of .750% and expenses of up
to .50% assessed against the assets of the
Conservative Asset Allocation Trust
</REDLINE>
See Detailed Information About the Policies; Charges And
Deductions - "Other Charges."
Manufacturers Life of America reserves the right to charge
or establish a provision for any federal, state or local
taxes that may be attributable to the Separate Account or
the operations of the Company with respect to the Policies
<PAGE> - 22 -
<PAGE>
in addition to the deductions for state, local and federal
taxes currently being made.
Supplementary Benefits.
A policyowner may choose to add certain supplementary benefits
to the Policy. These supplementary benefits include an
accidental death benefit, life insurance for additional
insured persons, acceleration of benefits in the event of
terminal illness, term insurance option, a disability benefit
to waive the cost of monthly deductions and an option to
ensure a guaranteed Policy Value.
The cost of any supplementary benefits will be deducted from
the Policy Value monthly. See Detailed Information About the
Policies; Other Provisions - "Supplementary Benefits."
Default.
Unless the Death Benefit Guarantee is in effect, the Policy
will go into default if the Net Cash Surrender Value at the
beginning of any policy month would go below zero after
deducting the monthly charges then due. The Policy will not
go into default if the policy qualifies for the Death Benefit
Guarantee. The Company will notify the policyowner in the
event the Policy goes into default, and will allow a grace
period in which the policyowner may make a premium payment
sufficient to bring the Policy out of default. If the
required premium is not paid during the grace period the
Policy will terminate. See Detailed Information About the
Policies; Premium Provisions - "Policy Default."
Death Benefit Guarantee.
Except in the state of New Jersey where the Death Benefit
Guarantee is not available, on Policies issued and maintained
with a minimum face amount of $250,000, as long as the
Cumulative Premium Test or, where applicable, the Fund Value
Test is satisfied, the Company guarantees that the Policy will
not go into default (i) prior to the life insured's attaining
age 100 if Death Benefit Option 1 is maintained throughout the
life of the Policy and (ii) prior to the life insured reaching
age 85 if Death Benefit Option 2 is selected at any time,
regardless of the investment performance of the Funds
underlying the Policy Value. On Policies with face amounts of
less than $250,000 there is no Death Benefit Guarantee after
the third policy anniversary. See Detailed Information About
the Policies; Premium Provisions - "Death Benefit Guarantee."
<PAGE> - 23 -
<PAGE>
Reinstatement.
A terminated policy may be reinstated by the policyowner
within either the 21-day or five-year period following the
date of termination, providing certain conditions are met.
See Detailed Information About the Policies; Premium
Provisions - "Policy Reinstatement."
Free Look.
A Policy may be returned for a refund of premium within the
later of:
. 10 days after it is received
. 45 days after the application for the Policy is signed
. 10 days after Manufacturers Life of America mails or
delivers a notice of this right of withdrawal.
If a policyowner requests an increase in face amount which
results in new surrender charges, the "free look" provision
will also apply to the increase. See Detailed Information
About the Policies; Premium Provisions - "Short-Term
Cancellation Right and "Free Look" Provisions."
Federal Tax Matters.
Manufacturers Life of America believes that a Policy issued on
a standard risk class basis should meet the definition of a
life insurance contract as set forth in Section 7702 of the
Internal Revenue Code of 1986. With respect to a Policy
issued on a substandard basis, there is less guidance
available to determine if such a Policy would satisfy the
Section 7702 definition of a life insurance contract,
particularly if the policyowner pays the full amount of
premiums permitted under such a Policy. Assuming that a
Policy qualifies as a life insurance contract for Federal
income tax payments, a policyowner should not be deemed to be
in constructive receipt of Policy Value under a Policy until
there is a distribution from the Policy. Moreover, death
benefits payable under a Policy should be completely
excludable from the gross income of the beneficiary. As a
result, the beneficiary generally should not be taxed on these
proceeds. See Miscellaneous Matters - Federal Income Tax
Considerations - (Tax Status Of The Policy).
Under certain circumstances, a Policy may be treated as a
"Modified Endowment Contract." If the Policy is a Modified
Endowment Contract, then all pre-death distributions,
including Policy loans, will be treated first as a
distribution of taxable income and then as a return of
<PAGE> - 24 -
<PAGE>
investment in the Policy. In addition, prior to age 59 1/2
any such distributions generally will be subject to a 10%
penalty tax. See Miscellaneous Matters - Federal Income Tax
Considerations - (Tax Treatment Of Policy Benefits).
If the Policy is not a Modified Endowment Contract,
distributions generally will be treated first as a return of
investment in the Policy and then a disbursement of taxable
income. Moreover, loans will not be treated as distributions.
Select Loans may, however, be treated as taxable
distributions. A policyowner considering the use of
systematic policy loans as one element of a comprehensive
retirement income plan should consult his or her personal tax
adviser regarding the potential tax consequences if such loans
were to so reduce Policy Value that the Policy would lapse,
absent additional payments. The premium payment necessary to
avert lapse would increase with the age of the insured.
Finally, neither distributions nor loans under a Policy that
is not a Modified Endowment Contract are subject to the 10%
penalty tax. See Miscellaneous Matters - Federal Income Tax
Considerations - (Distributions From Policies Not Classified
As Modified Endowment Contracts).
<REDLINE>
General Information About Manufacturers
Life of America, Separate Account Three,
Manulife Series Fund And NASL Series Trust </REDLINE>
Manufacturers Life of America And
Manufacturers Life
Manufacturers Life of America, a wholly-owned subsidiary of
The Manufacturers Life Insurance Company of Michigan, is a
stock life insurance company organized under the laws of
Pennsylvania on April 11, 1977 and redomesticated under the
laws of Michigan on December 9, 1992. It is a licensed life
insurance company in the District of Columbia and all states
of the United States except New York. The Manufacturers Life
Insurance Company of Michigan is a life insurance company
organized in 1983 under the laws of Michigan and is a
wholly-owned subsidiary of Manufacturers Life, a mutual life
insurance company based in Toronto, Canada. Manufacturers
Life and its subsidiaries, together, constitute one of the
largest life insurance companies in North America as measured
by assets.
Manufacturers Life of America's
Separate Account Three
Manufacturers Life of America established its Separate Account
Three on August 22, 1986 as a separate account under
Pennsylvania law. Since December 9, 1992 the Separate Account
<PAGE> - 25 -
<PAGE>
has been operated under Michigan law. The Separate Account
holds assets that are segregated from all of Manufacturers
Life of America's other assets. The Separate Account is
currently used only to support variable life insurance
policies.
Manufacturers Life of America is the legal owner of the assets
in the Separate Account. The income, gains and losses of the
Separate Account, whether or not realized, are, in accordance
with applicable contracts, credited to or charged against the
Account without regard to the other income, gains or losses of
Manufacturers Life of America. Manufacturers Life of America
will at all times maintain assets in the Separate Account with
a total market value at least equal to the reserves and other
liabilities relating to variable benefits under all policies
participating in the Separate Account. These assets may not
be charged with liabilities which arise from any other
business Manufacturers Life of America conducts. However, all
obligations under the variable life insurance policies are
general corporate obligations of Manufacturers Life of
America.
The Separate Account is registered with the Securities and
Exchange Commission ("S.E.C.") under the Investment Company
Act of 1940 ("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, rather than in a portfolio of
unspecified securities. Registration under the 1940 Act does
not involve any supervision by the S.E.C. of the management
or investment policies or practices of the Separate Account.
For state law purposes the Separate Account is treated as a
part or division of Manufacturers Life of America.
<REDLINE>
Manulife Series Fund And NASL Series Trust
Each sub-account of the Separate Account will purchase shares
only of a particular Manulife Fund or an NASL Trust. Manulife
Series Fund and NASL Series Trust are registered under the
1940 Act an open-end management investment companies. The
Separate Account will purchase and redeem shares of Manulife
Funds and NASL Trusts at net asset value. Shares will be
redeemed to the extent necessary for Manufacturers Life of
America to provide benefits under the Policies, to transfer
assets from one sub-account to another or to the general
account as requested by policyowners, and for other purposes
consistent with the Policies. Any dividend or capital gain
distribution received from a Portfolio will be reinvested
immediately at net asset value in shares of that Portfolio and
retained as assets of the corresponding sub-account.
<PAGE> - 26 -
<PAGE>
Manulife Series Fund and NASL Series Trust shares are issued
to fund benefits under both variable annuity contracts and
variable life insurance policies issued by the Company or life
insurance companies affiliated with the Company and, with
respect to Manufacturers Life of America only, shares of the
Manulife Series Fund are also issued to its general account
for certain limited purposes including initial portfolio seed
money. For a description of the procedures for handling
potential conflicts of interest arising from the funding of
such benefits see the accompanying Manulife Series Fund
prospectus and the accompanying NASL Series Trust prospectus.
Manulife Series Fund receives investment management services
from Manufacturers Adviser Corporation. Manufacturers Adviser
Corporation is a registered investment adviser under the
Investment Advisers Act of 1940. NASL Series Trust receives
investment advisory services from NASL Financial Services,
Inc. NASL Financial Services, Inc. is a registered investment
adviser under the Investment Advisers Act of 1940. NASL
Series Trust also employs subadvisers. Fidelity Management
Trust Company provides investment subadvisory services to the
Equity, Conservative Asset Allocation, Moderate Asset
Allocation and Aggressive Asset Allocation Trusts. Goldman
Sachs Asset Management provides investment subadvisory
services to the Value Equity Trust. Wellington Management
Company provides investment subadvisory services to the Growth
and Income Trust and Salomon Brothers Asset Management Inc
provides investment subadvisory services to the U.S.
Government Securities Trust.
Investment Objectives Of The Portfolios
The investment objectives of the Portfolios available to
policyowners through allocation of Policy Values to
corresponding sub-accounts are set forth below. There is, of
course, no assurance that these objectives will be met.
Manulife Funds
Emerging Growth Equity Fund. The investment objective of the
Emerging Growth Equity Fund is to achieve growth of capital by
investing primarily in equity securities of companies believed
to offer growth potential over both the intermediate and the
long term. Current income is not a significant consideration.
In selecting investments, emphasis will be placed on
securities of progressive companies with aggressive and
competent managements. A substantial portion of the Fund's
assets may be invested in emerging growth companies, which at
the time of the Fund's investment may be paying no dividends
to their shareholders.
<PAGE> - 27 -
<PAGE>
Common Stock Fund. The investment objective of the Common
Stock Fund is 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. In selecting investments,
emphasis will be placed on companies with good financial
resources, strong balance sheet, satisfactory rate of return
on capital, good industry position, superior management
skills, and earnings that tend to grow consistently.
The Fund's investments are not limited to any particular type
or size of company, but high-quality growth stocks are
emphasized.
Real Estate Securities Fund. The investment objective of the
Real Estate Securities Fund is to achieve a combination of
long-term capital appreciation and satisfactory current income
by investing in real estate related equity and debt
securities. In pursuit of its objective, the Real Estate
Securities Fund will invest principally in real estate
investment trust equity and debt securities and other
securities issued by companies which invest in real estate or
interests therein. The Fund may also purchase the common
stocks, preferred stocks, convertible securities and bonds of
companies operating in industry groups relating to the real
estate industry. This would include companies engaged in the
development of real estate, building and construction, and
other market segments related to real estate. The Fund will
not invest directly in real property, nor will it purchase
mortgage notes directly. Under normal circumstances, at least
65% of the value of the Fund's total assets will be invested
in real estate related equity and debt securities.
Balanced Assets Fund. The investment objective of the
Balanced Assets Fund is to achieve intermediate and long-term
growth through capital appreciation and income by investing in
both debt and equity securities. The Fund will maintain at
all times a balance between debt securities or preferred
stocks, on the one hand, and common stocks, on the other.
At least 25% of the Fund's assets will be invested in each of
the two basic categories.
Capital Growth Bond Fund. The investment objective of the
Capital Growth Bond Fund is to achieve growth of capital by
investing in medium-grade or better debt securities with
income as a secondary consideration. The Capital Growth Bond
Fund differs from most "bond" funds in that its primary
objective is capital appreciation, not income. The Fund will
be carefully positioned in relation to the term of debt
obligations and the anticipated movement of interest rates.
<PAGE> - 28 -
<PAGE>
Money-Market Fund. The investment objective of the
Money-Market Fund is to provide maximum current income
consistent with capital preservation and liquidity by
investing in a portfolio of high-quality money market
instruments.
International Fund. The investment objective of the
International Fund is to achieve long-term growth of capital
by investing in a diversified portfolio that is comprised
primarily of common stocks and equity-related securities of
companies domiciled in countries other than the United States
and Canada. It invests primarily in the securities markets of
Western European countries, Australia, the Far East, Mexico
and South America. The Fund will, under normal conditions,
invest at least 65% of its net assets in common stocks and
equity-related securities of established larger-capitalization
companies that have attractive long-term prospects for growth
of capital.
Pacific Rim Emerging Markets Fund. The investment objective
of the Pacific Rim Emerging Markets Fund is to achieve
long-term growth of capital by investing in a diversified
portfolio that is comprised primarily of common stocks and
equity-related securities of companies domiciled in the
countries of the Pacific Rim region. The Fund will, under
normal conditions, invest at least 65% of its net assets in
common stocks and equity-related securities of established
larger-capitalization companies that have attractive long-term
prospects for growth of capital.
Equity Index Fund. The investment objective of the Equity
Index Fund is to achieve investment results which approximate
the total return of publicly-traded common stocks in the
aggregate, as represented by the Standard & Poor's 500
Composite Stock Price Index.
A full description of the Manulife Series Fund, its investment
objectives, policies and restrictions, the risks associated
therewith, its expenses, and other aspects of its operation is
contained in the accompanying Manulife Series Fund prospectus,
which should be read together with this prospectus.
NASL Trusts
Equity Trust. The investment objective of the Equity Trust is
to seek growth of capital by investing primarily in common
stocks of United States issuers and securities convertible
into or carrying the right to buy common stocks.
Value Equity Trust. The investment objective of the Value
Equity Trust is to seek long-term growth of capital by
<PAGE> - 29 -
<PAGE>
investing primarily in common stocks and securities
convertible into or carrying the right to buy common stocks.
Growth and Income Trust. The investment objective of the
Growth and Income Trust is to seek long-term growth of capital
and income, consistent with prudent investment risk, by
investing primarily in a diversified portfolio of common
stocks of U.S. issuers which the subadviser believes are of
high quality.
U.S. Government Securities Trust. The investment objective of
the U.S. Government Securities Trust is to seek 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.
Automatic Asset Allocation Trusts. The investment objective
of the Automatic Asset Allocation Trusts is to seek the
highest potential return consistent with a specified level of
risk tolerance -- conservative, moderate or aggressive -- by
investing primarily in debt, equity, and money market
securities.
. The Aggressive Asset Allocation Trust seeks the highest
total return consistent with an aggressive level of risk
tolerance. The Trust attempts to limit the decline in
portfolio value in very adverse market conditions to 15%
over any twelve month period.
. The Moderate Asset Allocation Trust seeks the highest total
return consistent with a moderate level of risk tolerance.
The Trust attempts to limit the decline in portfolio value
in very adverse market conditions to 10% over any twelve
month period.
. The Conservative Asset Allocation Trust seeks the highest
total return consistent with a conservative level of risk
tolerance. The Trust attempts to limit the decline in
portfolio value in very adverse market conditions to 5%
over any twelve month period.
A full description of the NASL Series Trust, its investment
objectives, policies and restrictions, the risks associated
therewith, its expenses, and other aspects of its operation is
contained in the accompanying NASL Series Trust prospectus,
which should be read together with this prospectus.
</REDLINE>
<PAGE> - 30 -
<PAGE>
Detailed Information About The Policies
Premium Provisions
Policy Issue And Initial Premium
To purchase a Policy, an applicant must submit a completed
application. Manufacturers Life of America will issue a
Policy only if it has a face amount of at least $50,000
($100,000 for preferred risk policies). A Policy will
generally be issued to persons between ages 0 and 90. In
certain circumstances the Company may at its sole discretion
issue a Policy to persons above age 90. Before issuing a
Policy, Manufacturers Life of America will require evidence of
insurability satisfactory to it. A life insured will have a
risk class of preferred/non-smoker, preferred/smoker,
standard/non-smoker or standard/smoker as determined by
underwriting rules. Persons failing to meet standard
underwriting requirements nonetheless may be eligible to
purchase a Policy provided an additional rating is assigned.
Acceptance of an application is subject to the Company's
insurance underwriting rules. Each Policy is issued with a
policy date from which policy years, policy months and policy
anniversaries are all determined. Each Policy also has an
effective date which is the date the Company becomes obligated
under the Policy and when the first monthly deductions are
taken. If an application is accompanied by a check for at
least the Initial Premium and the application is accepted, the
policy date will be the date the application and check were
received at the Manufacturers Life of America Service Office
and the effective date will be the date Manufacturers Life of
America's underwriters approve issuance of the Policy. If an
application is accompanied by a check for at least the Initial
Premium, the life insured may be covered under the terms of a
conditional insurance agreement until the effective date. If
an application accepted by the Company is not accompanied by a
check for at least the Initial Premium, the Policy will be
issued with a policy date which is seven days after issuance
of the Policy (the "issue date") and with an effective date
which is the date the Service Office receives at least the
Initial Premium. In certain situations a different policy
date may be used. The Initial Premium must be received within
60 days after the policy date; however, the Initial Premium
may be required within 30 days on Policies issued with
Additional Ratings. If the Initial Premium is not paid or if
the application is rejected, the Policy will be cancelled and
any premiums paid will be returned to the applicant.
Under certain circumstances a Policy may be issued with a
backdated policy date. A Policy will not be backdated more
than six months (twelve months where required by state
regulation) before the date of the application for the Policy.
Monthly deductions will be made for the period the policy date
is backdated.
<PAGE> - 31 -
<PAGE>
All premiums received prior to the effective date of a Policy
will be credited with interest from the date of receipt at the
rate of return then being earned on amounts allocated to the
Money-Market Fund. On the effective date, the premiums paid
plus interest credited, net of deductions for federal, state
and local taxes, will be allocated among the Investment
Accounts or the Guaranteed Interest Account in accordance with
the policyowner's instructions.
All premiums received on or after the effective date of the
Policy will be allocated among the Investment Accounts or the
Guaranteed Interest Account as of the date the premiums were
received at the Manufacturers Life of America Service Office.
Monthly deductions are due on the policy date and at the
beginning of each policy month thereafter. However, if due
prior to the effective date, they will be taken on the
effective date instead of the dates they were due.
Premium Allocation
Net Premiums may be allocated to either the Guaranteed
Interest Account for accumulation at a rate of interest equal
to at least 4% or to one or more of the Investment Accounts
for investment in the Portfolio shares held by the
corresponding sub-account of the Separate Account.
Allocations among the Investment Accounts and the Guaranteed
Interest Account are made as a percentage of the Net Premium.
The percentage allocation to any account may be any whole
number between zero and 100, provided the total percentage
allocations equal 100. A policyowner may change the way in
which Net Premiums are allocated at any time without charge.
The change will take effect on the date a written or
telephonic request for change, in a format satisfactory to the
Company, is received at the Manufacturers Life of America
Service Office.
<PAGE> - 32 -
<PAGE>
Premium Limitations
After the payment of the Initial Premium, premiums may be paid
at any time and in any amount during the lifetime of the life
insured subject to certain limitations. After the Initial
Premium, all premiums must be paid to the Manufacturers Life
of America Service Office. Unlike traditional insurance,
premiums are not payable at specified intervals or in
specified amounts. A Policy will be issued with a Planned
Premium which is based on the amount of premium the
policyowner wishes to pay. It is recommended that the Planned
Premium be such that the Cumulative Premium Test (see
Insurance Benefits - "Death Benefit Guarantee") will be
satisfied.
Manufacturers Life of America will send notices to the
policyowner setting forth the Planned Premium at the payment
interval selected by the policyowner, unless payment is being
made pursuant to a pre-authorized payment plan. However, the
policyowner is under no obligation to make the indicated
payment.
Manufacturers Life of America will not accept any premium
payment which is less than $50, unless the premium is payable
pursuant to a pre-authorized payment plan. In that case the
Company will accept a payment of as little as $10.
Manufacturers Life of America may change these minimums on
90 days' written notice. The Policies also limit the sum of
the premiums that may be paid at any time in order to preserve
the qualification of the Policies as life insurance for
federal tax purposes. These limitations are set forth in each
Policy. Manufacturers Life of America reserves the right to
refuse or refund any premium payments that may cause the
Policy to fail to qualify as life insurance under applicable
tax law.
Short-Term Cancellation Right And
"Free Look" Provisions
A Policy may be returned for a refund of the premium within
10 days after it is received, within 45 days after the
application for the Policy is signed, or within 10 days after
Manufacturers Life of America mails or delivers a notice of
right of withdrawal, whichever is latest. The Policy can be
mailed or delivered to the Manufacturers Life of America agent
who sold it or to the Manufacturers Life of America Service
Office. Immediately on such delivery or mailing, the Policy
shall be deemed void from the beginning. Within seven days
after receipt of the returned Policy at its Service Office,
Manufacturers Life of America will refund any premium paid.
Manufacturers Life of America reserves the right to delay the
<PAGE> - 33 -
<PAGE>
refund of any premium paid by check until the check has
cleared.
If a policyowner requests an increase in face amount which
results in new surrender charges, he or she will have the same
rights as described above to cancel the increase. If
cancelled, the Policy Value and the surrender charges will be
recalculated to the amounts they would have been had the
increase not taken place. A policyowner may request a refund
of all or any portion of premiums paid during the free look
period, and the Policy Value and the surrender charges will be
recalculated to the amounts they would have been had the
premiums not been paid.
Insurance Benefit
The Insurance Benefit
If the Policy is in force at the time of the life insured's
death, Manufacturers Life of America will pay an insurance
benefit based on the death benefit option selected by the
policyowner upon receipt of due proof of death. The amount
payable will be the death benefit under the selected option,
plus any amounts payable under any supplementary benefits
added to the Policy, less the value of the Loan Account at the
date of death. The insurance benefit will be paid in one sum
unless another form of settlement option is agreed to by the
beneficiary and the Company. If the insurance benefit is paid
in one sum, Manufacturers Life of America will pay interest
from the date of death to the date of payment. If the life
insured should die after the Company's receipt of a request
for surrender, no insurance benefit will be payable, and
Manufacturers Life of America will pay only the Net Cash
Surrender Value.
<REDLINE>
No Lapse Guarantee
In those states where it is permitted, on Policies issued with
a face amount of at least $250,000 (calculated as described
below), the policyowner may elect the No Lapse Guarantee (in
Illinois this benefit is known as Minimum Premium Guarantee).
If elected, as long as the No Lapse Guarantee Cumulative
Premium Test (see below) is satisfied during the No Lapse
Guarantee Period, as described below, Manufacturers Life of
America will guarantee that the Policy will not go into
default (see OTHER GENERAL PROVISIONS - "Policy Default"),
even if a combination of Policy loans, adverse investment
experience and other factors should cause the Policy's Net
Cash Surrender Value to be insufficient to meet the monthly
deductions due at the beginning of a policy month. For
<PAGE> - 34 -
<PAGE>
purposes of determining the face amount at issue for the No
Lapse Guarantee, the face amount shall include any amounts
purchased under the supplementary insurance option.
The No Lapse Guarantee Period is the first 5 Policy Years for
life insureds with an issue age up to and including 85. It is
not offered to life insureds whose Issue Age exceeds 85.
While the No Lapse Guarantee is in effect, Manufacturers Life
of America will determine at the beginning of each policy
month whether the No Lapse Guarantee Cumulative Premium Test,
described below, has been satisfied. If it has not been
satisfied, the Company will notify the policyowner of that
fact and allow a 61-day grace period in which the policyowner
may make a premium payment sufficient to keep the No Lapse
Guarantee in effect. This required payment, as described in
the notification to the policyowner, will be equal to the
outstanding premium requirement as of the date the No Lapse
Guarantee was not satisfied plus the Monthly No Lapse
Guarantee Premium due for the next two policy months. If the
required payment is not received by the end of the grace
period, the No Lapse Guarantee will terminate, and the Policy
subsequently may go into default if the Policy's Net Cash
Surrender Value is insufficient to meet the monthly deductions
due at the beginning of a policy month. A death benefit
option change will also terminate the No Lapse Guarantee if it
is in effect at the time of the change as will a decrease in
face amount below $250,000. The No Lapse Guarantee cannot be
reinstated after it has been terminated. See OTHER GENERAL
POLICY PROVISIONS - "Policy Default," and INSURANCE BENEFIT -
"Death Benefit Option Changes."
No Lapse Guarantee Cumulative Premium Test
The No Lapse Guarantee Cumulative Premium Test is satisfied
if, as of the beginning of the policy month, the sum of all
premiums paid to date less any partial withdrawals and less
any Policy Debt is at least equal to the sum of the Monthly No
Lapse Guarantee Premiums due since the policy date, as
follows:
The Policy will satisfy the No Lapse Guarantee Cumulative
Premium Test if (a) is greater than or equal to (b), where:
(a) is the sum of all premiums paid, less any partial
withdrawals and less any Policy Debt;
and
(b) is the sum of the Monthly No Lapse Guarantee Premiums
due since the policy date.
<PAGE> - 35 -
<PAGE>
The Monthly No Lapse Guarantee Premium is one-twelfth of the
No Lapse Guarantee Premium. The No Lapse Guarantee Premium is
set forth in the Policy. It is subject to change if the face
amount of the Policy is changed (see INSURANCE BENEFIT - "Face
Amount Changes"), or if there is any change in the
supplementary benefits added to the Policy or in the risk
class of any life insured.
</REDLINE>
Death Benefit Guarantee
Policies With Face Amounts Of At Least $250,000. If permitted
by state law and elected by the policyowner, on policies
issued and maintained with a minimum face amount of $250,000,
if the Cumulative Premium Test (see below) is satisfied,
Manufacturers Life of America will guarantee that the Policy
will not go into default (See Other General Policy
Provisions - "Policy Default") even if a combination of policy
loans, adverse investment experience or other factors should
cause the Policy's Net Cash Surrender Value to be insufficient
to meet the monthly deductions due at the beginning of a
policy month.
If permitted by state law and elected by the policyowner, on
Policies issued and maintained with a minimum face amount of
$250,000, if after the tenth policy anniversary the Cumulative
Premium Test is not satisfied but the Fund Value Test (see
below) is satisfied, Manufacturers Life of America will keep
the Death Benefit Guarantee in effect.
This Death Benefit Guarantee, which is not available in the
state of New Jersey, will expire at the end of a policy year
specified in the Policy, currently (i) the year in which the
life insured reaches attained age 100 if Death Benefit Option
1 is maintained throughout the life of the Policy and (ii) the
year in which the life insured reaches attained age 85 if
Death Benefit Option 2 is selected at any time. While the
guarantee is in effect, Manufacturers Life of America will
determine at the beginning of each policy month whether the
Cumulative Premium Test or the Fund Value Test has been
satisfied. If neither has been satisfied, the Company will
notify the policyowner of that fact and allow a 61-day grace
period in which the policyowner may make a premium payment
sufficient to keep the Death Benefit Guarantee in effect. The
required payment will be equal to the outstanding premium
required to meet the Cumulative Premium Test at the date
neither test was satisfied, plus the Monthly Death Benefit
Guarantee Premium due for the next two policy months. If the
required payment is not received by the end of the grace
period, the Death Benefit Guarantee will terminate. Once the
<PAGE> - 36 -
<PAGE>
Death Benefit Guarantee is terminated, it cannot be
reinstated.
Policies With Face Amounts Under $250,000. On Policies with a
face amount less than $250,000 at issue or after face amount
decrease, if the Cumulative Premium Test is satisfied in the
first three years, Manufacturers Life of America will
guarantee that the Policy will not go into default even if a
combination of policy loans, adverse investment experience or
other factors should cause the Policy's Net Cash Surrender
Value to be insufficient to meet the monthly deductions due at
the beginning of a policy month. After the third policy
anniversary, there is no Death Benefit Guarantee on
(a) Policies issued with face amounts of less than $250,000 or
(b) Policies on which a face amount decrease has resulted in a
face amount of less than $250,000.
Cumulative Premium Test. The Policy provides for a Cumulative
Premium Test. The Cumulative Premium Test is satisfied if at
the beginning of each policy month the sum of all premiums
paid to date less any partial withdrawals and any Policy Debt
is at least equal to the sum of the Monthly Death Benefit
Guarantee Premiums due since the policy date. The Death
Benefit Guarantee Premium will increase when the insured
attains age 70. The Death Benefit Guarantee Premiums for ages
0-69 and age 70 and above are set forth in the Policy. It is
subject to change if the face amount of the Policy or the
death benefit option is changed (see - "Death Benefit Option
Changes" and "Face Amount Changes") or if there is any change
in the supplementary benefits added to the Policy or in the
risk class of the life insured.
Fund Value Test. The Policy provides for a Fund Value Test.
The Fund Value Test is applicable after the tenth anniversary
of the Policy. The Fund Value Test is satisfied if at the
beginning of each policy month the Net Policy Value is greater
than or equal to the Gross Single Premium.
Death Benefit Options
The Policy permits the policyowner to select one of two death
benefit options - Option 1 and Option 2. Under Option 1 the
death benefit is the face amount of the Policy at the date of
death or, if greater, the Policy Value at the date of death
multiplied by the applicable percentage in the table set forth
below. Under Option 2 the death benefit is the face amount of
the Policy plus the Policy Value at the date of death or, if
greater, the Policy Value at the date of death multiplied by
the applicable percentage in the following table:
<PAGE> - 37 -
<PAGE>
Attained Corridor
Age Percentage
40 & below 250%
41 243
42 236
43 229
44 222
45 215
46 209
47 203
48 197
49 191
50 185
51 178
52 171
53 164
54 157
55 150
56 146
57 142
58 138
59 134
60 130
61 128
62 126
63 124
64 122
65 120
66 119
67 118
68 117
69 116
70 115
71 113
72 111
73 109
74 107
75-90 105
91 104
92 103
93 102
94 101
95 & above 100
Regardless of which death benefit option is in effect, the
relationship of Policy Value to death benefit will change
whenever the "corridor percentages" are used to determine the
amount of the death benefit. This will occur whenever
multiplying the Policy Value by the applicable percentage set
forth in the above table results in a greater death benefit
than would otherwise apply under the selected option. For
<PAGE> - 38 -
<PAGE>
example, assume the life insured under a Policy with a face
amount of $100,000 has an attained age of 40. If Option 1 is
in effect, the corridor percentage will produce a greater
death benefit whenever the Policy Value exceeds $40,000
(250% X $40,000 = $100,000). If the Policy Value is less than
$40,000, an incremental change in Policy Value, up or down,
will have no effect on the death benefit. If the Policy Value
is greater than $40,000, an incremental change in Policy Value
will result in a change in the death benefit by a factor of
2.5. Thus, if the Policy Value were to increase to $40,010,
the death benefit would be increased to $100,025
(250% X $40,010 = $100,025).
If Option 2 were in effect in the above example, the corridor
percentage would produce a greater death benefit whenever the
Policy Value exceeded $66,667 (250% X 66,667 = 166,667). At
that point the death benefit produced by multiplying the
Policy Value by 250% would result in a greater amount than
adding the Policy Value to the face amount of the Policy. If
the Policy Value is less than $66,667, an incremental change
in Policy Value will have a dollar-for-dollar effect on the
death benefit. If the Policy Value is greater than $66,667,
an incremental change in Policy Value will result in a change
in the death benefit by a factor of 2.5 in the same manner as
would be the case under Option 1 when the corridor percentage
determined the death benefit.
Death Benefit Option Changes
The death benefit option is selected initially by the
policyowner in the application. After the Policy has been in
force for two years the death benefit option may be changed
effective as of the next policy anniversary following a
request. Written request for a
change must be received by Manufacturers Life of America at
least 30 days prior to a policy anniversary in order to become
effective on that date. The Company reserves the right to
limit a request for change if the change would cause the
Policy to fail to qualify as life insurance for tax purposes.
A change in death benefit option will result in a change in
the Policy's face amount in order to avoid any change in the
amount of the death benefit.
If the change in death benefit is from Option 1 to Option 2,
the new face amount will be equal to the face amount prior to
the change minus the Policy Value on the effective date of the
change. A change to Option 2 will not be allowed if it would
cause the face amount of the Policy to go below the minimum
face amount of $50,000 ($100,000 for preferred risk policies).
A change of death benefit option to Option 2 will shorten the
<PAGE> - 39 -
<PAGE>
death benefit guarantee period to the year in which the life
insured reaches attained age 85.
A change in death benefit from Option 2 to Option 1 will be
subject to satisfactory evidence of insurability. If
satisfactory evidence is provided, the new face amount will be
equal to the face amount prior to the change plus the Policy
Value on the effective date of the change. The increase in
face amount resulting from a change to Option 1 will not
affect the amount of surrender charges to which a Policy may
be subject.
If satisfactory evidence of insurability is not provided, the
policyowner may still switch from Option 2 to Option 1;
however, the face amount of the Policy will remain at its
previous level, thus reducing the death benefit. A
policyowner may elect at issue the ability to switch from
Option 2 to Option 1 within six months of a date certain. No
evidence of insurability will be required if the policyowner
exercises his or her ability to switch within six months of
the chosen date.
Policyowners who wish to have level insurance coverage should
generally select Option 1. Under Option 1, increases in
Policy Value usually will reduce the net amount of risk under
a Policy which will reduce cost of insurance charges.
This means that favorable investment performance should result
in a faster increase in Policy Value than would occur under an
identical Policy with Option 2 in effect. However, the larger
Policy Value which may result under Option 1 will not affect
the amount of the death benefit unless the corridor
percentages are used to determine the death benefit.
Policyowners who want to have the Policy Value reflected in
the death benefit so that any increases in Policy Value will
increase the death benefit should generally select Option 2.
Under Option 2, the net amount at risk will remain level
unless the corridor percentages are used to determine death
benefit, in which case increases in Policy Value will increase
the net amount at risk.
Face Amount Changes
Subject to certain limitations, a policyowner may, upon
written request, increase or decrease the face amount of the
Policy. A change in face amount may affect the
Death Benefit Guarantee Premium, the monthly deductions and
surrender charges (see "Charges And Deductions"). Currently,
each increase or decrease (other than a decrease resulting
from a partial withdrawal) in face amount must be at least
$50,000 ($100,000 for increases in preferred risk policies).
Manufacturers Life of America reserves the right to increase
<PAGE> - 40 -
<PAGE>
or decrease the minimum face amount change on 90 days' written
notice to the policyowner. The Company also reserves the
right to limit a change in face amount to the extent necessary
to prevent the Policy from failing to qualify as life
insurance for tax purposes.
Increases. Increases in face amount are subject to
satisfactory evidence of insurability. Increases may be made
only once per policy year and only after the second policy
anniversary. An increase will become effective at the
beginning of the next policy month following the date
Manufacturers Life of America approves the requested increase.
The Company reserves the right to refuse a requested increase
if the life insured's age at the effective date of the
increase would be greater than the maximum issue age for new
Policies at that time.
An increase in face amount will usually result in the Policy's
being subject to new surrender charges. The new surrender
charges will be computed as if a new Policy were being
purchased for the increase in face amount. For purposes of
determining the new deferred sales charge, a portion of the
Policy Value at the time of the increase, and a portion of the
premiums paid on or subsequent to the increase, will be deemed
to be premiums attributable to the increase. See Charges And
Deductions - "Surrender Charges." Any increase in face amount
to a level less than the highest face amount previously in
effect will have no effect on the surrender charges to which
the Policy is subject, since surrender charges, if applicable,
will have been assessed in connection with the prior decrease
in face amount. The insurance coverage eliminated by the
decrease of the oldest face amount will be deemed to be
restored first. As with the purchase of a Policy, a
policyowner will have free look and sales charge limitation
rights with respect to any increase resulting in new surrender
charges.
No additional premium is required for a face amount increase.
However, a premium payment may be necessary to prevent the
Policy from going into default, since new surrender charges
resulting from an increase would automatically reduce the Net
Cash Surrender Value of the Policy. Moreover, a new Death
Benefit Guarantee Premium will be determined.
Decreases. A decrease in the face amount may be requested
only once per policy year and only after the Policy has been
in force for two years, except during the two-year period
following any increase in face amount. In addition, during
the two-year period following an increase in face amount, the
policyowner may elect at any time to cancel the increase and
have the deferred sales charge for the increase reduced by
applicable limitations on sales charges attributable to the
<PAGE> - 41 -
<PAGE>
increase. A decrease in face amount will become effective at
the beginning of the next policy month following the receipt
of a properly executed request. A decrease will not be
allowed if it would cause the face amount to go below the
minimum face amount of $50,000 ($100,000 for preferred risk
policies).
A decrease in face amount during the Surrender Charge Period
will usually result in surrender charges being deducted from
the Policy Value. See Charges And Deductions - "Surrender
Charges." For purposes of determining surrender and cost of
insurance charges, a decrease will reduce face amount in the
following order: (a) the face amount provided by the most
recent increase, then (b) the face amounts provided by the
next most recent increases successively, and finally (c) the
initial face amount.
Policy Values
Policy Value
A Policy has a Policy Value, a portion of which is available
to the policyowner by making a policy loan or partial
withdrawal or upon surrender of the Policy. See "Policy
Loans" and "Partial Withdrawals And Surrenders" below. The
Policy Value may also affect the amount of the death benefit.
See Insurance Benefit - "Death Benefit Options." The Policy
Value at any time is equal to the sum of the Values in the
Investment Accounts, the Guaranteed Interest Account and the
Loan Account. The following discussion relates only to the
Investment Accounts. Policy loans are discussed under "Policy
Loans" and the Guaranteed Interest Account is discussed under
"The General Account." The portion of the Policy Value based
on the Investment Accounts is not guaranteed and will vary
each Business Day with the investment performance of the
underlying Portfolio.
An Investment Account is established under each Policy for
each sub-account of the Separate Account to which net premiums
or transfer amounts have been allocated. Each Investment
Account under a Policy measures the interest of the Policy in
the corresponding sub-account. The value of the Investment
Account established for a particular sub-account is equal to
the number of units of that sub-account credited to the
Policy times the value of such units.
Units of a particular sub-account are credited to a Policy
when net premiums are allocated to that sub-account or amounts
are transferred to that sub-account. Units of a sub-account
are cancelled whenever amounts are deducted, transferred or
withdrawn from the sub-account. The number of units credited
or cancelled for a specific transaction is based on the dollar
<PAGE> - 42 -
<PAGE>
amount of the transaction divided by the value of the unit at
the end of the Business Day on which the transaction occurs.
The number of units credited with respect to a premium payment
will be based on the applicable unit values at the end of the
Business Day on which the premium is received at the
Manufacturers Life of America Service Office.
Units are valued at 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 Fund shares. When an order involving
the crediting or cancelling of units is received at the
Manufacturers Life of America Service Office after the end of
a Business Day or on a day which is not a Business Day, the
order will be processed on the basis of unit values determined
at the end of the next Business Day. Similarly, any
determination of Policy Value, Investment Account value or
death benefit to be made on a day which is not a Business Day
will be made at the end of the next Business Day.
The value of a unit of each sub-account was initially fixed at
$10. For each subsequent Business Day the unit value is
determined by multiplying the unit value for the preceding
Business Day by the "net investment factor" for the particular
sub-account for such subsequent Business Day. The net
investment factor for a sub-account for any Business Day is
equal to (a) divided by (b), where:
(a) is the net asset value of the underlying Portfolio
shares held by that sub-account at the end of such
Business Day before any policy transactions are made on
that day;
(b) is the net asset value of the underlying Fund shares
held by that sub-account at the end of the immediately
preceding Business Day after all policy transactions
have been made for that day.
Manufacturers Life of America reserves the right to adjust the
above formula for any taxes determined by it to be
attributable to the operations of the sub-account.
Transfers Of Policy Value
A policyowner may change the extent to which his or her Policy
Value is based upon any specific sub-account of the Separate
Account or the Company's general account. Such changes are
made by transferring amounts from one or more Investment
Accounts or the Company's general account to other Investment
Accounts or the Company's general account. A policyowner is
permitted to make one transfer each policy month free of
charge. One additional transfer in each policy month may be
made at a cost of $35. This charge will be allocated among
<PAGE> - 43 -
<PAGE>
the Investment Accounts and the Guaranteed Interest Account in
the same proportion as the amount transferred from each bears
to the total amount transferred. For this purpose all
transfer requests received by Manufacturers Life of America on
the same Business Day are treated as a single transfer.
The minimum amount that may be transferred from an account,
except for Asset Allocation Balancer transfers, is the lesser
of $500 or the entire account value. The maximum amount that
may be transferred from the Guaranteed Interest Account in any
one policy year is the greater of $500 or 15% of the
Guaranteed Interest Account value at the previous policy
anniversary. Any transfer which involves a transfer out of
the Guaranteed Interest Account may not involve a transfer to
the Investment Account for the Money-Market Fund.
Transfer requests must be in a format satisfactory to
Manufacturers Life of America and in writing, or by telephone,
if a currently valid telephone transfer authorization form is
on file. Although failure to follow reasonable procedures may
result in Manufacturers Life of America's liability for any
losses resulting from unauthorized or fraudulent telephone
transfers, Manufacturers Life of America will not be liable
for following instructions communicated by telephone that it
reasonably believes to be genuine. Manufacturers Life of
America will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Such
procedures shall consist of confirming a valid telephone
authorization form is on file, tape recording all telephone
transactions and providing written confirmation thereof.
The policyowner may effectively convert his or her Policy to a
fixed benefit policy by transferring the Policy Value in all
of the Investment Accounts to the Guaranteed Interest Account
and by changing his or her allocation of net premiums entirely
to the Guaranteed Interest Account. As long as the entire
Policy Value is allocated to the Guaranteed Interest Account,
the Policy Value, other values based thereon and the death
benefit will be determinable and guaranteed. The Investment
Account values to be transferred to the Guaranteed Interest
Account will be determined as of the Business Day on which
Manufacturers Life of America receives the request for
conversion. There will be no change in the issue age, risk
class of the life insured or face amount as a result of the
conversion. A transfer of any or all of the Policy Value to
the Guaranteed Interest Account can be made at any time, even
if a prior transfer has been made during the policy month.
Limitations. To the extent that total surrenders, partial
withdrawals and transfers out of a sub-account exceed total
net premium allocations and transfers into that sub-account,
portfolio securities of the underlying Portfolio may have to
<PAGE> - 44 -
<PAGE>
be sold. Excessive sales of the investment portfolio
securities in such a situation could be detrimental to that
Portfolio and to policyowners with Policy Values allocated to
sub-accounts investing in that Portfolio. To protect the
interests of all policyowners, the Policy's transfer privilege
is limited as described below.
So long as effecting net transfers out of a sub-account in a
particular Business Day would not reduce the number of shares
of the underlying Portfolio outstanding at the close of the
prior Business Day by more than 5%, all such transfers will be
effected. However, net transfers out of a sub-account greater
than 5% would be permitted only if, and to the extent that, in
the judgment of Manufacturers Adviser Corporation, they would
not result in detriment to the underlying Portfolio or to the
interests of policyowners or others with assets allocated to
that Portfolio. If and when transfers must be limited to
avoid such detriment, some requests will not be effected. In
determining which requests will be effected, transfers
pursuant to the Dollar Cost Averaging program will be effected
first, followed by Asset Allocation Balancer transfers,
written requests next and telephone requests last. Within
each such group, requests will be processed in the order
received, to the extent possible. Policyowners whose transfer
requests are not effected will be so notified. Current S.E.C.
rules preclude the Company from processing at a later date
those requests that were not effected. Accordingly, a new
transfer request would have to be submitted in order to effect
a transfer that was not effected because of the limitations
described in this paragraph. Manufacturers Life of America
may be permitted to limit transfers in certain other
circumstances. See Other Provisions - "Payment Of Proceeds."
Dollar Cost Averaging. Manufacturers Life of America will
offer policyowners a Dollar Cost Averaging program. Under
this program amounts will be automatically transferred at
predetermined intervals from one Investment Account to any
other Investment Account(s) or the Guaranteed Interest
Account.
Under the Dollar Cost Averaging program the policyowner will
designate an amount to be transferred at predetermined
intervals from one Investment Account into any other
Investment Account(s) or the Guaranteed Interest Account.
Each transfer under the Dollar Cost Averaging program must be
of a minimum amount as set by Manufacturers Life of America.
Once set, this minimum may be changed at any time at the
discretion of Manufacturers Life of America. Currently, no
charge will be made for this program if the Policy Value
exceeds $15,000 on the date of transfer. Otherwise, there
will be a charge of $5 for each transfer under this program.
The charge will be deducted from the value of the Investment
<PAGE> - 45 -
<PAGE>
Account out of which the transfer occurs. If insufficient
funds exist to effect a Dollar Cost Averaging transfer,
including the charge, if applicable, the transfer will not be
effected and the policyowner will be so notified.
Manufacturers Life of America reserves the right to cease to
offer this program on 90 days' written notice to the
policyowner.
Asset Allocation Balancer Transfers. Manufacturers Life of
America will also offer policyowners the ability to have
amounts automatically transferred among stipulated Investment
Accounts to maintain an allocated percentage in each
stipulated Investment Account.
Under the Asset Allocation Balancer program the policyowner
will designate an allocation of Policy Value among Investment
Accounts. On the policy anniversary, and at six month
intervals thereafter, Manufacturers Life of America will move
amounts among the Investment Accounts as necessary to maintain
the policyowner's chosen allocation. Currently, the charge
for this program is $15 per transfer or series of transfers
occurring on the same transfer date. This charge will be
deducted from all accounts affected by the Asset Allocation
Balancer transfer in the same proportion as the value in each
account bears to the Policy Value immediately after the
transfer.
Manufacturers Life of America reserves the right to cease to
offer this program on 90 days' written notice to the
policyowner.
Policy Loans
While the Policy is in force, the policyowner may borrow
against the Policy Value of his or her Policy. The Policy
serves as the only security for the loan. The minimum amount
of any loan is $500. The maximum loan amount is the amount
which would cause the Modified Policy Debt to equal the loan
value of the Policy on the date of the loan. The loan value
is the Policy's Cash Surrender Value less the monthly
deductions due to the next policy anniversary. The Modified
Policy Debt as of any date is the Policy Debt (the aggregate
amount of policy loans, including borrowed interest, less any
loan repayments) plus the amount of interest to be charged to
the next policy anniversary, all discounted from the next
policy anniversary to such date at an annual rate of 4%. An
amount equal to the Modified Policy Debt is transferred to the
Loan Account to ensure that a sufficient amount will be
available to pay interest on the Policy Debt at the next
policy anniversary.
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<PAGE>
For example, assume a Policy with a loan value of $5,000, no
outstanding policy loans and a loan interest rate of 5.75%.
The maximum amount that can be borrowed is an amount that will
cause the Modified Policy Debt to equal $5,000. If the loan
is made on a policy anniversary, the maximum loan will be
$4,917. This amount at 5.75% interest will equal $5,200 one
year later; $5,200 discounted to the date of the loan at 4%
(the Modified Policy Debt) equals $5,000. Because the minimum
rate of interest credited to the Loan Account is 4%, $5,000
must be transferred to the Loan Account to ensure that $5,200
will be available at the next policy anniversary to cover the
interest accrued on the Policy Debt.
When a loan is made, Manufacturers Life of America will deduct
from the Investment Accounts or the Guaranteed Interest
Account, and transfer to the Loan Account, an amount which
will result in the Loan Account value being equal to the
Modified Policy Debt. The policyowner may designate how the
amount to be transferred to the Loan Account is allocated
among the accounts from which the transfer is to be made. In
the absence of instructions, the amount to be transferred will
be allocated to each account in the same proportion as the
value in each Investment Account and the Guaranteed Interest
Account bears to the Net Policy Value. A transfer from an
Investment Account will result in the cancellation of units of
the underlying sub-account equal in value to the amount
transferred from the Investment Account. However, since the
Loan Account is part of the Policy Value, transfers made in
connection with a loan will not change the Policy Value.
A policy loan may result in a Policy's failing to satisfy the
Cumulative Premium Test, since the Policy Debt is subtracted
from the sum of the premiums paid in determining whether the
Cumulative Premium Test is satisfied. As a result, the death
benefit guarantee may terminate. See Insurance Benefit -
"Death Benefit Guarantee" and Other General Policy
Provisions - "Policy Default." Moreover, if the death benefit
guarantee is not in force, a policy loan may cause a Policy to
be more susceptible to going into default, since a policy loan
will be reflected in the Net Cash Surrender Value. See Other
General Policy Provisions - "Policy Default." A policy loan
will also affect future Policy Values, since that portion of
the Policy Value in the Loan Account will increase in value at
the crediting interest rate rather than varying with the
performance of the underlying Funds selected by the
policyowner or increasing in value at the rate of interest
credited for amounts allocated to the Guaranteed Interest
Account. Policy loans may have tax consequences. A
policyowner considering the use of systematic policy loans as
one element of a comprehensive retirement income plan should
consult his or her personal tax adviser regarding the
potential tax consequences if such loans were to so reduce
<PAGE> - 47 -
<PAGE>
Policy Value that the Policy would lapse, absent additional
payments. The premium payment necessary to avert lapse would
increase with the age of the insured. See Miscellaneous
Matters - Federal Income Tax Considerations (Tax Treatment of
Policy Benefits). Finally, a policy loan will affect the
amount payable on the death of the life insured, since the
death benefit is reduced by the value of the Loan Account at
the date of death in arriving at the insurance benefit.
Interest Charged On Policy Loans. Interest on the Policy Debt
will accrue daily and be payable annually on the policy
anniversary. The rate of interest charged will be fixed at an
effective annual rate of 5.75%. If the interest due on a
policy anniversary is not paid by the policyowner, the
interest will be borrowed against the Policy.
Interest Credited To The Loan Account. Manufacturers Life of
America will credit interest to any amount in the Loan Account
at an effective annual rate of at least 4%. The actual rate
credited is:
- On amounts up to the Policy's Select Loan Amount, the
rate of interest charged on the policy loan less an
interest rate differential, currently 0%; provided,
however, if at some time in the future it is determined
that the current differential could cause the loan to be
treated as a taxable distribution under any applicable
ruling, regulation or court decision, Manufacturers Life
of America has the right to increase the differential on
all subsequent Select Loan Amounts either (i) to an
amount that may be prescribed in such ruling, regulation
or court decision that would result in the transaction
being treated as a loan under federal tax law or (ii) if
no amount is prescribed, to an amount that Manufacturers
Life of America considers to be more likely to result in
the transaction being treated as a loan under Federal
tax law.
- On amounts in excess of the Select Loan Amount as
described above, the rate of interest charged on the
policy loan less an interest rate differential,
currently 1.75%.
Prior to the later of the tenth policy anniversary and the
anniversary following attained age 55, the amount available as
a Select Loan is zero; after the later of the tenth policy
anniversary and the policy anniversary following attained
age 55, the amount available annually as a Select Loan is
equal to 12% of the Policy's Net Cash Surrender Value at the
previous policy anniversary. The amount available as a Select
Loan applies to existing and new loans. If, at the time a
<PAGE> - 48 -
<PAGE>
policyowner is considering a Select Loan, interest due
currently on his or her outstanding loans equals or exceeds
the Select Loan Amount, the Select Loan feature could not be
used to withdraw additional cash from Policy Value. The total
of all loans, including the Select Loan Amount, cannot exceed
the maximum loan amount as described above.
To illustrate the amount available as a Select Loan, assume
that a Policy has an issue age of 47 and a Net Cash Surrender
Value on the eleventh policy anniversary of $10,000. The
Select Loan Amount available during the twelfth policy year is
$1,200 (12% X $10,000). Assume that at the beginning of the
twelfth policy year, a loan of $1,500 is taken. $1,200 of
that amount is considered the Select Loan Amount, $300 an
ordinary policy loan.
At the end of the twelfth policy year, assume that the Net
Cash Surrender Value is $9,000. The Select Loan Amount
available during the thirteenth policy year is $1,080 (12% X
$9,000). If not already repaid, the $300 from the prior
year's loan that was not considered a Select Loan is
immediately converted to a Select Loan, leaving $780 of the
Select Loan Amount available for the thirteenth policy year
(provided that the sum of all outstanding loans does not
exceed the Policy's maximum loan amount). The amount of any
unpaid interest on the Select Loan and the ordinary policy
loan from the twelfth policy year also would be borrowed as a
Select Loan up to the maximum Select Loan Amount and thereby
reduce by that amount the $780 available for borrowing as a
Select Loan during the remainder of the thirteenth policy
year.
Loan Account Adjustments. When a loan is first taken out, and
at specified events thereafter, the value of the Loan Account
is adjusted. Whenever the Loan Account is adjusted, the
difference between (i) the Loan Account before any adjustment
and (ii) the Modified Policy Debt at the time of adjustment,
is transferred between the Loan Account and the Investment
Accounts or the Guaranteed Interest Account. The amount
transferred to or from the Loan Account will be such that the
value of the Loan Account is equal to the Modified Policy Debt
after the adjustment.
The specified events which cause an adjustment to the Loan
Account are (i) a policy anniversary, (ii) a partial or full
loan repayment, (iii) a new loan being taken out, or (iv) when
an amount is needed to meet a monthly deduction. A loan
repayment may be implicit in that policy debt is effectively
repaid upon termination (i.e., upon death of the life insured,
surrender or lapse of the policy). In each of these
instances, the Loan Account will be adjusted so that any
<PAGE> - 49 -
<PAGE>
excess of the Loan Account over the Modified Policy Debt after
the repayment will be included in the termination proceeds.
Except as noted below in the Loan Repayments section, amounts
transferred from the Loan Account will be allocated to the
Investment Accounts and the Guaranteed Interest Account in the
same proportion as the value in the corresponding "loan
sub-account" bears to the value of the Loan Account. A "loan
sub-account" exists for each Investment Account and for the
Guaranteed Interest Account. Amounts transferred to the Loan
Account are allocated to the appropriate loan sub-account to
reflect the account from which the transfer was made.
Loan Account Illustration. (Dollar amounts in this
illustration have been rounded to the nearest dollar.) The
operation of the Loan Account may be illustrated by
consideration of a Policy with a loan value of $5,000, a loan
interest rate of 5.75%, and a maximum loan amount on a policy
anniversary of $4,917. For purposes of the illustration,
assume that the Select Loan Amount is zero. If a loan in the
maximum amount of $4,917 is made, an amount equal to the
Modified Policy Debt, $5,000, is transferred to the Loan
Account. At the next policy anniversary the value of the Loan
Account will have increased to $5,200 ($5,000 X 1.04)
reflecting interest credited at an effective annual rate of
4.0%. At that time the loan will have accrued interest
charges of $283 ($4,917 X .0575), bringing the Policy Debt to
$5,200.
If the accrued interest charges are paid on the policy
anniversary, the Policy Debt will continue to be $4,917, and
the Modified Policy Debt, reflecting interest for the next
policy year and discounting the Policy Debt and such interest
at 4%, will be $5,000. An amount will be transferred from the
Loan Account to the Guaranteed Interest Account or the
Investment Accounts so that the Loan Account value will equal
the Modified Policy Debt. Since the Loan Account value was
$5,200, a transfer of $200 will be required ($5,200 - $5,000).
If, however, the accrued interest charges of $283 are
borrowed, an amount will be transferred from the Investment
Accounts and the Guaranteed Interest Account so that the Loan
Account value will equal the Modified Policy Debt recomputed
at the policy anniversary. The new Modified Policy Debt is
the Policy Debt, $5,200, plus loan interest to be charged to
the next policy anniversary, $299 ($5,200 X .0575), discounted
at 4%, which results in a figure of $5,288. Since the value
of the Loan Account was $5,200, a transfer of $88 will be
required. This amount is equivalent to the 1.75% interest
rate differential on the $5,000 transferred to the Loan
Account on the previous policy anniversary.
Loan Repayments. Policy Debt may be repaid in whole or in
part at any time prior to the death of the life insured
provided the Policy is in force. When a repayment is made,
<PAGE> - 50 -
<PAGE>
the amount is credited to the Loan Account and a transfer is
made to the Guaranteed Interest Account or the Investment
Accounts so that the Loan Account at that time equals the
Modified Policy Debt. Loan repayments will first be allocated
to the Guaranteed Interest Account until the associated loan
sub-account is reduced to zero. Loan repayments will then be
allocated to each Investment Account in the same proportion as
the value in the corresponding loan sub-account bears to the
value of the Loan Account. Amounts paid to the Company not
specifically designated in writing as loan repayments will be
treated as premiums.
Partial Withdrawals And Surrenders
After a Policy has been in force for two policy years, the
policyowner may make a partial withdrawal of the Net Cash
Surrender Value. The minimum amount that may be withdrawn is
$500. The policyowner should specify the portion of the
withdrawal to be taken from each Investment Account and the
Guaranteed Interest Account. In the absence of instructions
the withdrawal will be allocated among such accounts in the
same proportion as the Policy Value in each account bears to
the Net Policy Value. No more than one partial withdrawal may
be made in any one policy month.
A partial withdrawal made during the Surrender Charge Period
will usually result in the assessment of a portion of the
surrender charges to which the Policy is subject (see Charges
And Deductions - "Surrender Charges") if the withdrawal is in
excess of the Withdrawal Tier Amount. The Withdrawal Tier
Amount is equal to 10% of the Net Cash Surrender Value
determined as of the previous policy anniversary. The portion
of a partial withdrawal that is considered to be in excess of
the Withdrawal Tier Amount includes all previous partial
withdrawals that have occurred in the current policy year. If
the Option 1 death benefit is in effect under a Policy from
which a partial withdrawal is made, the face amount of the
Policy will be reduced. See Charges And Deductions -
Surrender Charges (Charges On Partial Withdrawals).
A Policy may be surrendered for its Net Cash Surrender Value
at any time while the life insured is living. The Net Cash
Surrender Value is equal to the Policy Value less any
surrender charges and outstanding monthly deductions due (the
"Cash Surrender Value") minus the value of the Loan Account.
The Net Cash Surrender Value will be determined at the end of
the Business Day on which Manufacturers Life of America
receives the Policy and a written request for surrender at its
Service Office. After a Policy is surrendered, the insurance
coverage and all other benefits under the Policy will
terminate. Surrender of a Policy during the Surrender Charge
Period will usually result in the assessment by Manufacturers
Life of America of surrender charges. See Charges And
Deductions - "Surrender Charges."
<PAGE> - 51 -
<PAGE>
Charges And Deductions
Charges under the Policy are assessed as (i) deductions from
premiums, (ii) surrender charges upon surrender, partial
withdrawals, decreases in face amount or lapse, (iii) monthly
deductions, and (iv) other charges. These charges are
described below.
Deductions From Premiums
Manufacturers Life of America deducts a charge of 2.35% of
each premium payment for state and local taxes. State and
local taxes differ from state to state. The 2.35% rate is
expected to be sufficient, on average, to pay state and local
taxes where required. Manufacturers Life of America also
deducts a charge of 1.25% of each premium payment for federal
taxes, an amount which is also expected to be sufficient to
pay federal taxes. However, if Manufacturers Life of America
incurs higher charges for state, local or federal taxes, or
any other taxes are incurred, it may make a charge for those
taxes in addition to the deductions for federal, state or
local taxes currently being made from premium payments.
Surrender Charges
Manufacturers Life of America will assess surrender charges
upon surrender, a partial withdrawal of Policy Value in excess
of the Withdrawal Tier Amount, a requested decrease in face
amount, or lapse. The charges will usually be assessed if any
of the above transactions occurs within the Surrender Charge
Period unless the charges have been previously deducted.
There are two surrender charges - a deferred underwriting
charge and a deferred sales charge.
Deferred Underwriting Charge. The deferred underwriting
charge is $6 for each $1,000 of face amount of life insurance
coverage initially purchased or added by increase. In effect,
the charge applies only to the first $500,000 of face amount
initially purchased or the first $500,000 of each subsequent
increase in face amount. Thus, the charge made in connection
with any one underwriting will not exceed $3,000. The amount
of the charge remains level for five years. Following the
fifth year after issuance of the Policy or a face amount
increase, the charge applicable to the initial face amount or
increase will decrease each month by varying rates depending
upon the life insured's issue age until the charge has
decreased to zero. The applicable percentage of the deferred
underwriting charges to which the Policy is subject is
illustrated by the following table:
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<PAGE>
Table 1: Deferred Underwriting Charges
<TABLE>
<CAPTION>
Transaction Occurs After
Monthly Deduction Taken Percent of Deferred Underwriting
for Last Month Preceding Charges by Issue Age*
End of Month* Age
<S> <C> <C> <C> <C> <C>
Month 0-50 51 52 53 54 55+
12 100% 100% 100% 100% 100% 100%
24 100% 100% 100% 100% 100% 100%
36 100% 100% 100% 100% 100% 100%
48 100% 100% 100% 100% 100% 100%
60 100% 100% 100% 100% 100% 100%
72 90% 88.89% 87.50% 85.71% 83.33% 80.00%
84 80% 77.78% 75.00% 71.43% 66.67% 60.00%
96 70% 66.67% 62.50% 57.14% 50.00% 40.00%
108 60% 55.56% 50.00% 42.86% 33.33% 20.00%
120 50% 44.44% 37.50% 28.57% 16.67% 0%
132 40% 33.33% 25.00% 14.28% 0%
144 30% 22.22% 12.50% 0%
156 20% 11.11% 0%
168 10% 0%
180 0%
</TABLE>
* Months not shown may be calculated by interpolation.
The deferred underwriting charge is designed to cover the
administrative expenses associated with underwriting and
policy issue, including the costs of processing applications,
conducting medical examinations, determining the life
insured's risk class and establishing policy records.
Manufacturers Life of America does not expect to recover from
the deferred underwriting charge any amount in excess of its
expenses associated with underwriting and policy issue.
Deferred Sales Charge. The maximum deferred sales charge is
50% of premiums paid up to a maximum number of Target Premiums
that varies (from -0.180 to 3.031) according to the issue age
of the life insured, the face amount at issue and the amount
of any increase. This charge compensates the Company for some
of the expenses of selling and distributing the Policies,
including agents' commissions, advertising, agent training and
the printing of prospectuses and sales literature.
The deferred sales charge deducted in any policy year is not
specifically related to sales expenses incurred in that year.
Instead, the Company expects that the major portion of the
sales expenses attributable to a Policy will be incurred
during the first policy year, although the deferred sales
charge might be deducted up to fifteen years later.
Manufacturers Life of America anticipates that the aggregate
amounts received under the Policies for sales charges will be
<PAGE> - 53 -
<PAGE>
insufficient to cover aggregate sales expenses. To the extent
that sales expenses exceed sales charges, Manufacturers Life
of America will pay the excess from its other assets or
surplus, including amounts derived from the mortality and
expense risks charge described below. Manufacturers Life of
America may forego deducting a portion of the deferred sales
charge if the Policy is surrendered for its Net Cash Surrender
Value at any time during the first two years following
issuance or following an increase in face amount or if the
increase is cancelled during the two-year period following the
increase. See Surrender Charges (Sales Charge Limitation)
below.
The Target Premium for the initial face amount is specified in
the Policy. A Target Premium will be computed for each
increase in face amount above the highest face amount of
coverage previously in effect, and the policyowner will be
advised of each new Target Premium. Target Premiums depend
upon the face amount of insurance provided at issue or by an
increase and the issue age and sex (unless unisex rates are
required by law) of the life insured. The maximum number of
Target Premiums subject to the deferred sales charge varies,
based on the issue age of the life insured, the face amount at
issue and the amount of any increase, according to the
following tables:
<PAGE> - 54 -
<PAGE>
Table 2: Number of Target Premiums Subject to Deferred Sales
Charge for Policies Issued prior to July 10, 1995
(Applicable to the Initial Face Amount and Increases)
<TABLE>
<CAPTION>
$250,000 Under $250,000 Under $250,000 Under
Age or More $250,000 Age or More $250,000 Age or More $250,000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
*0 -0.031 -0.039 30 1.319 1.648 60 2.356 2.945
*1 -0.144 -0.180 31 1.366 1.707 61 2.375 2.968
*2 -0.081 -0.102 32 1.415 1.768 62 2.399 2.998
*3 -0.020 -0.025 33 1.459 1.823 63 2.425 3.031
4 0.037 0.046 34 1.503 1.878 64 2.380 2.975
5 0.096 0.120 35 1.542 1.927 65 2.269 2.836
6 0.166 0.207 36 1.590 1.987 66 2.124 2.655
7 0.221 0.276 37 1.633 2.041 67 2.006 2.507
8 0.281 0.351 38 1.672 2.090 68 1.888 2.360
9 0.340 0.425 39 1.718 2.147 69 1.787 2.233
10 0.391 0.488 40 1.756 2.195 70 1.691 2.113
11 0.453 0.566 41 1.790 2.237 71 1.592 1.990
12 0.514 0.642 42 1.832 2.290 72 1.494 1.867
13 0.560 0.700 43 1.869 2.336 73 1.396 1.745
14 0.614 0.767 44 1.904 2.380 74 1.317 1.646
15 0.560 0.700 45 1.937 2.421 75 1.241 1.551
16 0.606 0.757 46 1.969 2.461 76 1.162 1.452
17 0.658 0.822 47 2.000 2.500 77 1.084 1.355
18 0.718 0.897 48 2.032 2.540 78 1.010 1.262
19 0.767 0.958 49 2.062 2.577 79 0.946 1.182
20 0.817 1.021 50 2.093 2.616 80 0.887 1.108
21 0.870 1.087 51 2.123 2.653 81 0.831 1.038
22 0.924 1.155 52 2.154 2.692 82 0.779 0.973
23 0.973 1.216 53 2.182 2.727 83 0.733 0.916
24 1.026 1.282 54 2.211 2.763 84 0.688 0.860
25 1.075 1.343 55 2.234 2.792 85 0.646 0.807
26 1.125 1.406 56 2.259 2.823 86 0.606 0.757
27 1.177 1.471 57 2.284 2.855 87 0.567 0.708
28 1.228 1.535 58 2.307 2.883 88 0.530 0.662
29 1.274 1.592 59 2.333 2.916 89 0.493 0.616
90 0.484 0.605
</TABLE>
*A negative number of Target Premiums produces a negative
deferred sales charge. When combined with the deferred
underwriting charge, a negative deferred sales charge reduces
the total surrender charge.
<PAGE> - 55 -
<PAGE>
Table 3: Number of Target Premiums Subject to Deferred Sales
Charge for Policies Issued on or after July 10, 1995
(Applicable to the Initial Face Amount and Increases)
<TABLE>
<CAPTION>
$250,000 Under $250,000 Under $250,000 Under
Age or More $250,000 Age or More $250,000 Age or More $250,000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
*0 -0.031 -0.039 30 1.319 1.648 60 2.356 2.945
*1 -0.144 -0.180 31 1.366 1.707 61 2.375 2.968
*2 -0.081 -0.102 32 1.415 1.768 62 2.399 2.998
*3 -0.020 -0.025 33 1.459 1.823 63 2.425 3.031
4 0.037 0.046 34 1.503 1.878 64 2.367 2.959
5 0.096 0.120 35 1.542 1.927 65 2.259 2.824
6 0.166 0.207 36 1.590 1.987 66 2.113 2.641
7 0.221 0.276 37 1.633 2.041 67 1.992 2.490
8 0.281 0.351 38 1.672 2.090 68 1.875 2.344
9 0.340 0.425 39 1.718 2.147 69 1.777 2.222
10 0.391 0.488 40 1.756 2.195 70 1.679 2.099
11 0.453 0.566 41 1.790 2.237 71 1.583 1.979
12 0.514 0.642 42 1.832 2.290 72 1.486 1.857
13 0.560 0.700 43 1.869 2.336 73 1.392 1.740
14 0.614 0.767 44 1.904 2.380 74 1.315 1.644
15 0.560 0.700 45 1.937 2.421 75 1.238 1.547
16 0.606 0.757 46 1.969 2.461 76 1.161 1.451
17 0.658 0.822 47 2.000 2.500 77 1.083 1.354
18 0.718 0.897 48 2.032 2.540 78 1.007 1.259
19 0.767 0.958 49 2.062 2.577 79 0.945 1.182
20 0.817 1.021 50 2.093 2.616 80 0.885 1.106
21 0.870 1.087 51 2.123 2.653 81 0.829 1.037
22 0.924 1.155 52 2.154 2.692 82 0.779 0.973
23 0.973 1.216 53 2.182 2.727 83 0.732 0.915
24 1.026 1.282 54 2.211 2.763 84 0.687 0.859
25 1.075 1.343 55 2.234 2.792 85 0.644 0.806
26 1.125 1.406 56 2.259 2.823 86 0.604 0.755
27 1.177 1.471 57 2.284 2.855 87 0.566 0.708
28 1.228 1.535 58 2.307 2.883 88 0.529 0.661
29 1.274 1.592 59 2.333 2.916 89 0.493 0.616
90 0.484 0.605
</TABLE>
*A negative number of Target Premiums produces a negative
deferred sales charge. When combined with the deferred
underwriting charge, a negative deferred sales charge reduces
the total surrender charge.
<PAGE> - 56 -
<PAGE>
Except for surrenders to which the sales charge limitation
provisions described below apply, the maximum deferred sales
charge will be in effect for at least the first two years of
the Surrender Charge Period. After that, the portion of the
deferred sales charge that remains in effect will grade down
at a rate that also varies according to the issue age of the
life insured until, at the end of the Surrender Charge Period,
there is no deferred sales charge. The tables to be used to
reduce the applicable deferred sales charge during the
Surrender Charge Period are set forth in Appendix C to this
Prospectus. The applicable table will be set forth in each
Policy and the policyowner will be informed of the table to be
used in connection with sales charges on increases in face
amount.
In order to determine the deferred sales charge applicable to
a face amount increase, Manufacturers Life of America will
treat a portion of the Policy Value on the date of increase as
a premium attributable to the increase. In addition, a
portion of each premium paid on or subsequent to the increase
will be attributed to the increase. In each case, the portion
attributable to the increase will be the ratio of the
"guideline annual premium" for the increase to the sum of the
guideline annual premiums for the initial face amount and all
increases including the requested increase.
A "guideline annual premium" is a hypothetical amount based on
S.E.C. rules that is used to measure the maximum amount of
the deferred sales charge that may be imposed upon surrender,
partial withdrawal, a decrease in face amount or lapse during
the first two years after issuance or after an increase in
face amount.
The following example illustrates how deferred underwriting
and deferred sales charges are calculated using data from
Tables 1, 2 and 3 above and from the tables in Appendix C.
Assume a 36-year-old male (standard risk) whose Policy was
issued prior to July 10, 1995, at age 30, and who has paid
$9,000 in premiums under a Policy with a Target Premium of
$1,500 and a face amount of $100,000 surrenders his Policy
during the last month of the sixth policy year.
A deferred underwriting charge of $540 would be assessed. The
maximum deferred underwriting charge of $600 ($6 per $1,000 of
face amount X 100) would be multiplied by the 90% listed in
Table 1 as applicable to surrenders during the last month of
the sixth policy year [90% X ($6 X 100) = $540].
A deferred sales charge of $1,192.74 would also be assessed.
According to Table 2, the maximum number of Target Premiums
subject to the deferred sales charge for a person who was
30 years old when his or her Policy with a face amount less
than $250,000 was issued would be 1.648. Thus $2,472 (1.648 X
$1,500) would be the maximum amount of premiums subject to the
<PAGE> - 57 -
<PAGE>
50% sales charge, producing a maximum sales charge of $1,236
(50% X $2,472 = $1,236). Because the surrender occurs during
the last month of the sixth policy year, only 96.50% (from the
table in Appendix C for issue age 30) of the maximum sales
charge remains applicable [96.50% X (.50 X 1.648 X $1,500) =
$1,192.74].
Sales Charge Limitation.If a Policy is surrendered or its face
amount decreased at any time during the first two years after
issuance or after an increase in face amount, Manufacturers
Life of America will forego taking that part of the deferred
sales charge with respect to "premiums" paid for the initial
face amount or such increase (including the portion of Policy
Value treated as premiums for the increase, as described
above), whichever is applicable, which exceeds the sum of
(i) 30% of the premiums paid up to the lesser of one guideline
annual premium or the maximum amount of premiums subject to
the deferred sales charge plus (ii) 10% of the premiums paid
in excess of one guideline annual premium, up to the lesser of
two guideline annual premiums or the maximum amount of
premiums subject to the deferred sales charge, plus (iii) 9%
of the premiums paid in excess of two guideline annual
premiums up to the maximum amount of premiums subject to the
deferred sales charge.
The operation of the sales charge limitation for Policies
issued prior to July 10, 1995 is illustrated by the following
example. A 67-year-old male non-smoker purchased a Policy
with a face amount in excess of $250,000 when he was age 65.
He has paid $30,000 in premiums under the Policy and it has a
guideline annual premium (GAP) of $15,997 and a Target Premium
(TP) of $11,835. He surrenders his policy during the second
policy year. In the absence of the sales charge limitation,
the maximum deferred sales charge would be 50% of the lesser
of premiums paid ($30,000) or the maximum amount of premiums
subject to the deferred sales charge (TP X Maximum Number of
TP's = $11,835 X 2.269 = $26,854), which results in 50% of
$26,854 (the "Maximum Chargeable Amount" or "MCA") or $13,427
as the maximum deferred sales charge. However, under the
formula described above, the maximum sales charge allowable
would be $5,885. This is calculated as the sum of:
(i) 30% of one GAP, or $4,799 [.30 X $15,997 = $4,799],
because one GAP ($15,997) is less than premiums paid
($30,000) and less than the MCA ($26,854);
plus
(ii) 10% of the MCA in excess of one GAP, or $1,086 (.10 X
$10,857 = $1,086) because the MCA in excess of one GAP
($26,854 - $15,997 = $10,857) is less than premiums
paid in excess of one GAP ($30,000 - $15,997 = $14,003)
and less than the amount of a second GAP ($15,997);
plus
<PAGE> - 58 -
<PAGE>
(iii) $0, because no premiums in excess of two GAPs were paid
and would not have been chargeable in any event, as the
MCA was less than two GAPs.
Thus, (i) $4,799 plus (ii) $1,086 plus (iii) $0 equals $5,885,
the maximum sales charge allowable.
If the Policy in the foregoing example were issued on or after
July 10, 1995, the maximum sales charge allowable would be
$5,873 because the maximum amount of Target Premiums subject
to the deferred sales charge would be 2.259 (from Table 3)
instead of 2.269 (from Table 2).
Since a deferred sales charge is deducted when a Policy
terminates for failure to make the required payment following
the Policy's going into default, the sales charge limitation
will apply if the termination occurs during the two-year
period following issuance or any increase in face amount. If
the Policy terminates during the two years after a face amount
increase, the sales charge limitation will relate only to the
sales charges applicable to the increase.
Charges On Partial Withdrawals. Whenever a portion of the
surrender charges is deducted as a result of a partial
withdrawal of Policy Value in excess of the Withdrawal Tier
Amount, the Policy's remaining surrender charges will be
reduced by the amount of the charges taken. The surrender
charges not assessed as a result of the 10% free withdrawal
provision remain in effect under the Policy and may be
assessed upon surrender or lapse, other partial withdrawals,
or a requested decrease in face amount. The portion of the
surrender charges assessed will be based on the ratio of the
amount of the withdrawal in excess of the Withdrawal Tier
Amount to the Net Cash Surrender Value of the Policy less the
Withdrawal Tier Amount immediately prior to the withdrawal.
The surrender charges will be deducted from each Investment
Account and the Guaranteed Interest Account in the same
proportion as the amount of the withdrawal taken from such
account bears to the total amount of the withdrawal. If the
amount in the account is insufficient to pay the portion of
the surrender charges allocated to that account, then the
portion of the withdrawal allocated to that account will be
reduced so that the withdrawal plus the portion of the
surrender charges allocated to that account equal the value of
that account. Units equal to the amount of the partial
withdrawal taken, and surrender charges deducted, from each
Investment Account will be cancelled based on the value of
such units determined at the end of the Business Day on which
Manufacturers Life of America receives a written request for
withdrawal at its Service Office.
If the Option 1 death benefit is in effect under a Policy from
which a partial withdrawal is made, the face amount of the
Policy will be reduced. If the death benefit is equal to the
face amount at the time of withdrawal, the face amount will be
<PAGE> - 59 -
<PAGE>
reduced by the amount of the withdrawal plus the portion of
the surrender charges assessed. If the death benefit is based
upon the Policy Value times the applicable percentage set
forth under Insurance Benefit - "Death Benefit Options" above,
the face amount will be reduced only to the extent that the
amount of the withdrawal plus the portion of the surrender
charges assessed exceeds the difference between the death
benefit and the face amount. Reductions in face amount
resulting from partial withdrawals will not incur any
surrender charges above the surrender charges applicable to
the withdrawal. When the face amount of a Policy is based on
one or more increases subsequent to issuance of the Policy, a
reduction resulting from a partial withdrawal will be applied
in the same manner as a requested decrease in face amount,
i.e., against the face amount provided by the most recent
increase, then against the next most recent increases
successively and finally against the initial face amount.
Charges On Decreases In Face Amount. As with partial
withdrawals, a portion of a Policy's surrender charges will be
deducted upon a decrease, or a cancellation of an increase, in
face amount requested by the policyowner. Since surrender
charges are determined separately for the initial face amount
and each face amount increase, and since a decrease in face
amount will have a different impact on each level of insurance
coverage, the portion of the surrender charges to be deducted
with respect to each level of insurance coverage will be
determined separately. Such portion will be the same as the
ratio of the amount of the reduction in such coverage to the
amount of such coverage prior to the reduction. As noted
under Insurance Benefit - "Face Amount Changes," decreases are
applied to the most recent increase first and thereafter to
the next most recent increases successively. The charges will
be deducted from the Policy Value, and the amount so deducted
will be allocated among the Investment Accounts and the
Guaranteed Interest Account in the same proportion as the
Policy Value in each bears to the Net Policy Value. Whenever
a portion of the surrender charges is deducted as a result of
a decrease in face amount, the Policy's remaining surrender
charges will be reduced by the amount of the charges taken.
Charges Remaining After Face Amount Decreases Or Partial
Withdrawals. Each time a pro-rata deferred underwriting
charge or a pro-rata deferred sales charge for a face amount
decrease or for a partial withdrawal is deducted, the
remaining deferred underwriting charge and deferred sales
charge will be reduced proportionately.
The remaining deferred underwriting charge will be calculated
using Table 1 above. The actual remaining charge will be the
result of (a) divided by (b), multiplied by (c), where:
(a) is the grading percentage applicable to the life
insured's issue age and Policy duration;
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(b) is the grading percentage applicable to the life
insured's issued age at the time of the last face
amount decrease or partial withdrawal; and
(c) is the remaining deferred sales charge prior to the
last face amount decrease or partial withdrawal less
the deferred underwriting charge deducted for that face
amount decrease or partial withdrawal.
The remaining deferred sales charge will be calculated using
Table 2 above and Appendix C. The actual remaining charge will
be the result of (a) divided by (b), multiplied by (c), where:
(a) is the grading percentage applicable to the Policy
duration;
(b) is the grading percentage at the time of the last face
amount decrease or partial withdrawal; and
(c) is the remaining deferred sales charge prior to the
last face amount decrease or partial withdrawal less
the deferred sales charge deducted for that face amount
decrease or partial withdrawal.
Until the sum of premiums paid equals or exceeds the number of
Target Premiums subject to deferred sales charge multiplied by
the Target Premium, subsequent premium payments will increase
the remaining deferred sales charge.
Monthly Deductions
Each month a deduction consisting of an administration charge,
a charge for the cost of insurance, a charge for mortality and
expense risks, and charge(s) for any supplementary benefit(s)
(see Other Provisions - "Supplementary Benefits") is deducted
from Policy Value. The monthly deduction will be allocated
among the Investment Accounts and (other than the mortality
and expense risks charge) the Guaranteed Interest Account in
the same proportion as the Policy Value in each bears to the
Net Policy Value. Monthly deductions due prior to the
effective date will be taken on the effective date instead of
the dates they were due. If the Policy is still in force when
the life insured attains age 100, no further monthly
deductions will be taken from the Policy Value.
Administration Charge
The monthly administration charge is $35 plus $.01 per $1,000
of face amount until the first anniversary and, thereafter,
$10 plus $.01 per $1,000 of face amount. The charge is
designed to cover certain administrative expenses associated
with the Policy, including maintaining policy records,
collecting premiums and processing death claims, surrender and
withdrawal requests and various changes permitted under a
Policy. Manufacturers Life of America does not expect to
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recover from the monthly administration charge any amount in
excess of its accumulated administrative expenses relating to
the Policies and the Separate Account.
Cost Of Insurance Charge
The monthly charge for the cost of insurance is determined by
multiplying the applicable cost of insurance rate times the
net amount at risk at the beginning of each policy month.
The cost of insurance rate is based on the life insured's
issue age, the duration of the coverage, sex (unless unisex
rates are required by law), risk class, and, in the case of
certain Policies issued in group or sponsored arrangements
providing for reduction in cost of insurance charges (see
"Special Provisions For Group Or Sponsored Arrangements"), the
face amount of the Policy. See Miscellaneous Matters - "Legal
Considerations." The rate is determined separately for the
initial face amount and for each increase in face amount.
Cost of insurance rates will generally increase with the life
insured's age. Any additional ratings as indicated in the
Policy will be added to the cost of insurance rate.
The cost of insurance rates used by Manufacturers Life of
America reflect its expectations as to future mortality
experience as based on current experience. The rates may be
changed from time to time on a basis which does not unfairly
discriminate within the class of life insureds. In no event
will the cost of insurance rate exceed the guaranteed rate set
forth in the Policy except to the extent that an extra rate is
imposed because of an additional rating applicable to the life
insured or if simplified underwriting is granted in a group or
sponsored arrangement (see "Special Provisions For Group Or
Sponsored Arrangements"). The guaranteed rates are based on
the 1980 Commissioners Standard Ordinary Smoker/Nonsmoker
Mortality Tables.
If requested by the applicant, Manufacturers Life of America
may offer the Policy with provisions based on actuarial tables
that do not differentiate on the basis of sex to such
prospective purchasers in states where the unisex version of
the Policy has been approved.
The State of Montana currently prohibits the issuance of
policies with assumptions that distinguish between men and
women in determining premiums and policy benefits for policies
issued on the life of any of its residents.
The net amount at risk to which the cost of insurance rate is
applied is the difference between the death benefit, divided
by 1.0032737 (a factor which reduces the net amount at risk
for cost of insurance charge purposes by taking into account
assumed monthly earnings at an annual rate of 4%), and the
Policy Value. Because different cost of insurance rates may
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apply to different levels of insurance coverage, the net
amount at risk will be calculated separately for each level of
insurance coverage. When the Option 1 death benefit is in
effect, for purposes of determining the net amount at risk
applicable to each level of insurance coverage, the Policy
Value is attributed first to the initial face amount and then,
if the Policy Value is greater than the initial face amount,
to each increase in face amount in the order made.
Because the calculation of the net amount at risk is different
under the death benefit options when more than one level of
insurance coverage is in effect, a change in the death benefit
option may result in a different net amount at risk for each
level of insurance coverage than would have occurred had the
death benefit option not been changed. Since the cost of
insurance is calculated separately for each level of insurance
coverage, any change in the net amount at risk for a level of
insurance coverage resulting from a change in the death
benefit option may affect the amount of the charge for the
cost of insurance. Partial withdrawals and decreases in face
amount will also affect the manner in which the net amount at
risk for each level of insurance coverage is calculated.
Mortality And Expense Risks Charge
Manufacturers Life of America deducts a monthly charge from
the Policy Value for the mortality and expense risks it
assumes under the Policies. This charge is made at the
beginning of each policy month at an annual rate of .90%
through the later of the tenth anniversary of the Policy and
the policyowner's attained age of 60 and, thereafter, .45%.
It is assessed against the value of the policyowner's
Investment Accounts by cancellation of units in the same
proportion as the value of each Investment Account bears to
the total value of the Investment Accounts. The mortality
risk assumed is that lives insured may live for a shorter
period of time than the Company estimated. The expense risk
assumed is that expenses incurred in issuing and administering
the Policies will be greater than the Company estimated.
Manufacturers Life of America will realize a gain from this
charge to the extent it is not needed to provide benefits and
pay expenses under the Policies.
Other Charges
Currently, Manufacturers Life of America makes no charge
against the Separate Account for federal, state or local taxes
that may be attributable to the Separate Account or to the
operations of the Company with respect to the Policies.
However, if Manufacturers Life of America incurs any such
taxes, it may make a charge therefor, in addition to the
deductions for federal, state or local taxes currently being
made from premium payments.
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Charges will be imposed on certain transfers of Policy Values,
including a $35 charge for a second transfer in a policy
month, a $15 charge for each Asset Allocation Balancer
transfer and a $5 charge for each Dollar Cost Averaging
transfer when Policy Value does not exceed $15,000. See
Policy Values - "Transfers Of Policy Value."
The Separate Account purchases shares of Portfolios at net
asset value. The net asset value of those shares reflects:
<REDLINE>
For the Manulife Funds:
(i) an investment management fee equivalent to an annual
rate of .50% of the value of the average daily net
assets of the Emerging Growth Equity Fund, Common Stock
Fund, Real Estate Securities Fund, Balanced Assets
Fund, Capital Growth Bond Fund and Money-Market Fund;
(ii) (a) an investment management fee equivalent to an
annual rate of .85% of the value of the first
$100 million of average daily net assets and (b) .70%
of the value of the average daily net assets over
$100 million of each of the International Fund and the
Pacific Rim Emerging Markets Fund;
(iii) an investment management fee of .25% per annum assessed
against the assets of the Equity Index Fund;
(iv) expenses of up to .50% and .65% per annum assessed
against the assets of the International Fund and the
Pacific Rim Emerging Markets Fund, respectively;
(v) Expenses of up to .15% per annum assessed against the
assets of the Equity Index Fund; and
(vi) other expenses already deducted from the assets of the
Manulife Funds.
For the NASL Portfolios:
(i) investment management fee equivalent to an annual rate
of .800% of the value of the average daily net assets
of the Value Equity Trust;
(ii) investment management fee equivalent to an annual rate
of .650% of the value of the average daily net assets
of the U.S. Government Securities Trust;
(iii) investment management fee equivalent to an annual rate
of .750% of the value of the average daily net assets
of the Growth and Income Trust;
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(iv) investment management fee equivalent to an annual rate
of .750% of the value of the average daily net assets
of the Equity Trust;
(v) investment management fee equivalent to an annual rate
of .750% of the average daily net assets of the
Conservative Asset Allocation Trust;
(vi) investment management fee equivalent to an annual rate
of .750% of the average daily net assets of the
Moderate Asset Allocation Trust;
(vii) investment management fee equivalent to an annual rate
of .750% of the average daily net assets of the
Conservative Asset Allocation Trust; and
(viii) expenses of up to .50% per annum assessed against the
assets of each of the NASL Trusts; and
(ix) other expenses already deducted from the assets of the
NASL Trusts.
Detailed information concerning such fees and expenses is set
forth under the caption "Management Of The Funds" in the
Prospectus for the Manulife Series Fund that accompanies this
Prospectus and under the caption "Management of The Trust" in
the Prospectus for the NASL Series Trust that accompanies this
Prospectus.
</REDLINE>
Special Provisions For Group Or Sponsored Arrangements
Where permitted by state insurance laws, Policies may be
purchased under group or sponsored arrangements, as well as on
an individual basis. A "group arrangement" includes a program
under which a trustee, employer or similar entity purchases
Policies covering a group of individuals on a group basis. In
California all participants of group arrangements will be
individually underwritten. A "sponsored arrangement" includes
a program under which an employer permits group solicitation
of its employees or an association permits group solicitation
of its members for the purchase of Policies on an individual
basis.
The charges and deductions described above may be reduced for
Policies issued in connection with group or sponsored
arrangements. Such arrangements may include sales without
withdrawal charges and deductions to employees, officers,
directors, agents, immediate family members of the foregoing,
and employees of agents of Manufacturers Life and its
subsidiaries. Manufacturers Life of America will reduce the
above charges and deductions in accordance with its rules in
effect as of the date an application for a Policy is approved.
To qualify for such a reduction, a group or sponsored
arrangement must satisfy certain criteria as to, for example,
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<PAGE>
size of the group, expected number of participants and
anticipated premium payments from the group. Generally, the
sales contacts and effort, administrative costs and mortality
cost per Policy vary based on such factors as the size of the
group or sponsored arrangements, the purposes for which
Policies are purchased and certain characteristics of its
members. The amount of reduction and the criteria for
qualification will reflect the reduced sales effort and
administrative costs resulting from, and the different
mortality experience expected as a result of, sales to
qualifying groups and sponsored arrangements.
Manufacturers Life of America may modify from time to time, on
a uniform basis, both the amounts of reductions and the
criteria for qualification. Reductions in these charges will
not be unfairly discriminatory against any person, including
the affected policyowners and all other policyowners funded by
the Separate Account.
In addition, groups and persons purchasing under a sponsored
arrangement may apply for simplified underwriting. If
simplified underwriting is granted, the cost of insurance
charge may increase as a result of higher anticipated
mortality experience. In addition, groups or persons
purchasing under a sponsored arrangement may request increases
or decreases in face amount at any time after issue and
decreases in face amount at any time after an increase in face
amount.
Special Provisions For Exchanges
Manufacturers Life of America will permit owners of certain
life insurance policies issued either by the Company or
Manufacturers Life to exchange their policies for the Policies
described in this prospectus. Charges under the policies
being exchanged or the Policies issued in exchange therefor
may be reduced or eliminated. Owners of certain policies may
be entitled to convert their policies to the Policies
described in this prospectus. If they elect to convert, they
may receive a credit upon conversion in an amount up to their
first-year premium. Policy loans made under policies being
exchanged may, in some circumstances, be carried over to the
new Policies without repayment at the time of exchange.
Policyowners considering an exchange should consult their tax
advisers as to the tax consequences of an exchange.
The General Account
By virtue of exclusionary provisions, interests in the general
account of Manufacturers Life of America have not been
registered under the Securities Act of 1933 and the general
account has not been registered as an investment company under
the Investment Company Act of 1940. Accordingly, neither the
general account nor any interests therein are subject to the
provisions of these acts, and as a result the staff of the
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Securities and Exchange Commission has not reviewed the
disclosures in this prospectus relating to the general
account. Disclosures regarding the general account may,
however, be subject to certain generally applicable provisions
of the federal securities laws relating to the accuracy and
completeness of statements made in a prospectus.
The general account of Manufacturers Life of America consists
of all assets owned by the Company other than those in its
separate accounts. Subject to applicable law, Manufacturers
Life of America has sole discretion over the investment of the
assets of the general account.
A policyowner may elect to allocate net premiums to the
Guaranteed Interest Account or to transfer all or a portion of
the Policy Value to the Guaranteed Interest Account from the
Investment Accounts. Transfers from the Guaranteed Interest
Account to the Investment Accounts are subject to
restrictions. See Policy Values - "Transfers Of Policy Value"
and "Policy Value." Manufacturers Life of America will hold
the reserves required for any portion of the Policy Value
allocated to the Guaranteed Interest Account in its general
account. However, an allocation of Policy Value to the
Guaranteed Interest Account does not entitle the policyowner
to share in the investment experience of the general account.
Instead, Manufacturers Life of America guarantees that the
Policy Value in the Guaranteed Interest Account will accrue
interest daily at an effective annual rate of at least 4%,
without regard to the actual investment experience of the
general account. The Company may, at its sole discretion,
credit a higher rate of interest, although it is not obligated
to do so. The policyowner assumes the risk that interest
credited may not exceed the guaranteed minimum rate of 4% per
year.
Other General Policy Provisions
Policy Default
Unless the Death Benefit Guarantee is in effect, a Policy will
go into default if the Policy's Net Cash Surrender Value at
the beginning of any policy month would go below zero after
deducting the monthly deductions then due. Manufacturers Life
of America will notify the policyowner of the default and will
allow a 61-day grace period in which the policyowner may make
a premium payment sufficient to bring the Policy out of
default. The required payment will be equal to the amount
necessary to bring the Net Cash Surrender Value to zero, if it
was less than zero at the date of default, plus the monthly
deductions due at the date of default and at the beginning of
each of the two policy months thereafter, based on the Policy
Value at the date of default. If the required payment is not
received by the end of the grace period, the Policy will
terminate and the Net Cash Surrender Value (subject to any
applicable limitation on surrender charges; see Charges And
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Deductions - "Surrender Charges") as of the date of default
less the monthly deductions then due will be paid to the
policyowner. If the life insured should die during the grace
period following a Policy's going into default, the Policy
Value used in the calculation of the death benefit will be the
Policy Value as of the date of default and the insurance
benefit payable will be reduced by any outstanding monthly
deductions due at the time of death.
Policy Reinstatement
A policyowner can reinstate a Policy which has terminated
after going into default at any time within 21 days following
the date of termination without furnishing evidence of
insurability, subject to the following conditions:
(a) The life insured's risk class is standard or preferred.
(b) The life insured's attained age is less than 46.
A policyowner can reinstate a Policy which has terminated
after going into default at any time within the five-year
period following the date of termination subject to the
following conditions:
(a) The Policy must not have been surrendered for its Net
Cash Surrender Value at the request of the policyowner;
(b) Evidence of the life insured's insurability
satisfactory to Manufacturers Life of America is
furnished to it;
(c) A premium equal to the payment required during the
61-day grace period following default to keep the
Policy in force is paid to Manufacturers Life of
America; and
(d) An amount equal to any amounts paid by Manufacturers
Life of America in connection with the termination of
the Policy is repaid to Manufacturers Life of America.
If the reinstatement is approved, the date of reinstatement
will be the later of the date of the policyowner's written
request or the date the required payment is received at the
Manufacturers Life of America Service Office.
Miscellaneous Policy Provisions
Beneficiary. One or more beneficiaries of the Policy may be
appointed by the policyowner by naming them in the
application. Beneficiaries may be appointed in three
classes - primary, secondary and final. Thereafter the
beneficiary may be changed by the policyowner during the life
insured's lifetime by giving written notice to Manufacturers
Life of America in a form satisfactory to it unless an
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irrevocable designation has been elected. If the life insured
dies and there is no surviving beneficiary, the policyowner,
or the policyowner's estate if the policyowner is the life
insured, will be the beneficiary. If a beneficiary dies
before the seventh day after the death of the life insured,
the Company will pay the insurance benefit as if the
beneficiary had died before the life insured.
Incontestability. Manufacturers Life of America will not
contest the validity of a Policy after it has been in force
during the life insured's lifetime for two years from the
issue date. It will not contest the validity of an increase
in face amount or the addition of a supplementary benefit
after such increase or addition has been in force during the
life insured's lifetime for two years. If a Policy has been
reinstated and been in force for less than two years from the
reinstatement date, the Company can contest any
misrepresentation of a fact material to the reinstatement.
Misstatement Of Age Or Sex. If the life insured's stated age
or sex or both in the Policy are incorrect, Manufacturers Life
of America will change the face amount of insurance so that
the death benefit will be that which the most recent monthly
charge for the cost of insurance would have bought for the
correct age and sex (unless unisex rates are required by law).
Suicide Exclusion. If the life insured, whether sane or
insane, dies by suicide within two years from the issue date,
Manufacturers Life of America will pay only the premiums paid
less any partial withdrawals of the Net Cash Surrender Value
and any amount in the Loan Account. If the life insured
should die by suicide within two years after a face amount
increase, the death benefit for the increase will be limited
to the monthly deduction for the increase.
Assignment. Manufacturers Life of America will not be bound
by an assignment until it receives a copy of it at its Service
Office. Manufacturers Life of America assumes no
responsibility for the validity or effects of any assignment.
Other Provisions
Supplementary Benefits
Subject to certain requirements, one or more supplementary
benefits may be added to a Policy, including those providing
term insurance for additional insureds, providing term
insurance options, providing accidental death coverage,
waiving monthly deductions upon disability, guaranteeing the
Policy Value, accelerating benefits in the event of terminal
illness, and, in the case of corporate-owned Policies,
permitting a change of the life insured. More detailed
information concerning supplementary benefits may be obtained
from an authorized agent of the Company. The cost of any
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supplementary benefits will be deducted as part of the monthly
deduction. See Charges And Deductions - "Monthly Deductions."
Payment Of Proceeds
As long as the Policy is in force, Manufacturers Life of
America will ordinarily pay any policy loans, partial
withdrawals, Net Cash Surrender Value or any insurance benefit
within seven days after receipt at the Manufacturers Life of
America Service Office of all the documents required for such
a payment.
The Company may delay the payment of any policy loans, partial
withdrawals, Net Cash Surrender Value or the portion of any
insurance benefit that depends on the Guaranteed Interest
Account value for up to six months; otherwise the Company may
delay payment for any period during which (i) the New York
Stock Exchange is closed for trading (except for normal
holiday closings) or trading on the Exchange is otherwise
restricted; or (ii) an emergency exists as defined by the
S.E.C. or the S.E.C. requires that trading be restricted; or
(iii) the S.E.C. permits a delay for the protection of
policyowners. Also, transfers may be denied under the
circumstances stated in clauses (i), (ii) and (iii) above and
under the circumstances previously set forth. See Policy
Values - "Transfers Of Policy Value."
Reports To Policyowners
Within 30 days after each policy anniversary, Manufacturers
Life of America will send the policyowner a statement showing,
among other things, the amount of the death benefit, the
Policy Value and its allocation among the Investment Accounts,
the Guaranteed Interest Account and the Loan Account, the
value of the units in each Investment Account to which the
Policy Value is allocated, any Loan Account balance and any
interest charged since the last statement, the premiums paid
and policy transactions made during the period since the last
statement and any other information required by law.
Within 10 days after any transaction involving purchase, sale,
or transfer of units of Investment Accounts, a confirmation
statement will be sent.
Each policyowner will also be sent an annual and a semi-annual
report for the Series Fund which will include a list of the
securities held in each Fund as required by the 1940 Act.
Miscellaneous Matters
Fund Share Substitution
Although Manufacturers Life of America believes it to be
highly unlikely, it is possible that in the judgment of its
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management, one or more of the Funds may become unsuitable for
investment by the Separate Account because of a change in
investment policy or a change in the applicable laws or
regulations, because the shares are no longer available for
investment, or for some other reason. In that event,
Manufacturers Life of America may seek to substitute the
shares of another Fund or of an entirely different mutual
fund. Before this can be done, the approval of the S.E.C.
and one or more state insurance departments may be required.
Manufacturers Life of America also reserves the right to
combine other separate accounts with the Separate Account, to
establish additional sub-accounts within the Separate Account,
to operate the Separate Account as a management investment
company or other form permitted by law, to transfer assets
from this Separate Account to another separate account and
from another separate account to this Separate Account, and to
de-register the Separate Account under the 1940 Act. Any such
change would be made only if permissible under applicable
federal and state law.
The investment objectives of the Separate Account will not be
changed materially without first filing the change with the
Insurance Commissioner of the State of Michigan. Policyowners
will be advised of any such change at the time it is made.
Federal Income Tax Considerations
The following summary provides a general description of the
federal income tax considerations associated with the Policy
and does not purport to be complete or to cover all
situations. This discussion is not intended as tax advice.
Counsel or other competent tax advisers should be consulted
for more complete information. This discussion is based upon
the Company's understanding of the present federal income tax
laws as they are currently interpreted by the Internal Revenue
Service (the "Service"). No representation is made as to the
likelihood of continuation of the present federal income tax
laws or of the current interpretations by the Service. WE DO
NOT MAKE ANY GUARANTEE REGARDING THE TAX STATUS OF ANY POLICY
OR ANY TRANSACTION REGARDING THE POLICIES.
Tax Status Of The Policy
Section 7702 of the Internal Revenue Code of 1986, as amended
(the "Code") sets forth a definition of a life insurance
contract for federal tax purposes. The Secretary of Treasury
(the "Treasury") is authorized to prescribe regulations
implementing Section 7702. However, while proposed
regulations and other interim guidance have been issued, final
regulations have not been adopted and guidance as to how
Section 7702 is to be applied is limited. If a Policy were
determined not to be a life insurance contract for purposes of
Section 7702, such Policy would not provide the tax advantages
normally provided by a life insurance policy.
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With respect to a Policy issued on the basis of a standard
rate class, the Company believes (largely in reliance on IRS
Notice 88-128 and the proposed mortality charge regulations
under Section 7702, issued on July 5, 1991) that such a Policy
should meet the Section 7702 definition of a life insurance
contract.
With respect to a Policy that is issued on a substandard basis
(i.e., a premium class involving higher-than-standard
mortality risk), there is less guidance, in particular as to
how mortality and other expense requirements of Section 7702
are to be applied in determining whether such a Policy meets
the Section 7702 definition of a life insurance contract.
Thus, it is not clear whether or not such a Policy would
satisfy Section 7702, particularly if the policyowner pays the
full amount of premiums permitted under the Policy.
If it is subsequently determined that a Policy does not
satisfy Section 7702, the Company may take whatever steps are
appropriate and reasonable to attempt to cause such a Policy
to comply with Section 7702. For these reasons, the Company
reserves the right to restrict Policy transactions as
necessary to attempt to qualify it as a life insurance
contract under Section 7702.
Section 817(h) of the Code requires that the investments of
the Separate Account be "adequately diversified" in accordance
with Treasury regulations in order for the Policy to qualify
as a life insurance contract under Section 7702 of the Code
(discussed above). The Separate Account, through the Series
Fund, intends to comply with the diversification requirements
prescribed in Treas. Reg. Sec. 1.817-5, which affect how
the Series Fund's assets are to be invested. The Company
believes that the Separate Account will thus meet the
diversification requirement, and the Company will monitor
continued compliance with the requirement.
In certain circumstances, owners of variable life insurance
Policies may be considered the owners, for federal income tax
purposes, of the assets of the separate account used to
support their Policies. In those circumstances, income and
gains from the separate account assets would be includible in
the variable policyowner's gross income. The IRS has stated
in published rulings that a variable policyowner will be
considered the owner of separate account assets if the
policyowner possesses incidents of ownership in those assets,
such as the ability to exercise investment control over the
assets. The Treasury Department has also announced, in
connection with the issuance of regulations concerning
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 (i.e., the policyowner), rather than the
insurance company, to be treated as the owner of the assets in
the account." This announcement also stated that guidance
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would be issued by way of regulations or rulings on the
"extent to which policyowners may direct their investments to
particular subaccounts 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 the Policy are similar to, but
different in certain respects from, those described by the IRS
in rulings in which it was determined that policyowners were
not owners of separate account assets. For example, the owner
has additional flexibility in allocating premium payments and
Policy Values. These differences could result in an owner
being treated as the owner of a pro rata portion of the assets
of the Separate Account. In addition, the Company does not
know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has
stated it expects to issue. The Company therefore reserves
the right to modify the Policy as necessary to attempt to
prevent an owner from being considered the owner of a pro rata
share of the assets of the Separate Account.
The following discussion assumes that the Policy will qualify
as a life insurance contract for Federal income tax purposes.
Tax Treatment Of Policy Benefits
In General. The Company believes that the proceeds and cash
value increases of a Policy should be treated in a manner
consistent with a fixed-benefit life insurance policy for
federal income tax purposes. Thus, the death benefit under
the Policy should be excludable from the gross income of the
beneficiary under Section 101(a)(1) of the Code.
Depending on the circumstances, the exchange of a Policy, a
change in the Policy's death benefit option, a Policy loan, a
partial withdrawal, a surrender, a change in ownership, a
change of insured, the addition of an accelerated death
benefit rider, or an assignment of the Policy may have federal
income tax consequences. In addition, federal, state and
local transfer, and other tax consequences of ownership or
receipt of Policy proceeds depend on the circumstances of each
policyowner or beneficiary.
Generally, the policyowner will not be deemed to be in
constructive receipt of the Policy Value, including increments
thereof, until there is a distribution. The tax consequences
of distributions from, and loans taken from or secured by, a
Policy depend on whether the Policy is classified as a
"Modified Endowment Contract." Upon a complete surrender or
lapse of a Policy or when benefits are paid at a Policy's
maturity date, if the amount received plus the amount of
indebtedness exceeds the total investment in the Policy, the
excess will generally be treated as ordinary income subject to
tax, regardless of whether the Policy is or is not a Modified
Endowment Contract.
<PAGE> - 73 -
<PAGE>
Modified Endowment Contracts. Section 7702A establishes a
class of life insurance contracts designated as "Modified
Endowment Contracts," which applies to Policies entered into
or materially changed after June 20, 1988.
Because of the Policy's flexibility, classification as a
Modified Endowment Contract will depend on the individual
circumstances of each Policy. In general, a Policy will be a
Modified Endowment Contract if the accumulated premiums paid
at any time during the first seven policy years exceed the sum
of the net level premiums which would have been paid on or
before such time if the Policy provided for paid-up future
benefits after the payment of seven level annual premiums.
The determination of whether a Policy will be a Modified
Endowment Contract after a material change generally depends
upon the relationship of the death benefit and Policy Value at
the time of such change and the additional premiums paid in
the seven years following the material change. If a premium
is credited or transaction conducted which would cause the
Policy to become a Modified Endowment Contract, the Company
will notify the policyowner that unless a refund of the excess
premium is requested by the policyowner within 45 days of the
policy anniversary next occurring thereafter, the Policy will
become a Modified Endowment Contract.
Further, if a transaction occurs which reduces the face amount
of the Policy during the first seven years, the Policy will be
retested retroactive to the date of purchase to determine
compliance with the seven pay test based on the lower face
amount. As well, if a reduction of the face amount occurs
within seven years of a material change, the Policy will be
retested for compliance retroactive to the date of the
material change. Failure to comply would result in
classification as a Modified Endowment Contract regardless of
any efforts by the Company to provide a payment schedule that
will not violate the seven pay test.
The rules relating to whether a Policy will be treated as a
Modified Endowment Contract are extremely complex and cannot
be adequately described in the limited confines of this
summary. Therefore, a current or prospective policyowner
should consult with a competent adviser to determine whether a
transaction will cause the Policy to be treated as a Modified
Endowment Contract.
Distributions From Policies Classified As Modified Endowment
Contracts. Policies classified as Modified Endowment
Contracts will be subject to the following tax rules: First,
all partial withdrawals from such a Policy are treated as
ordinary income subject to tax up to the amount equal to the
excess (if any) of the Policy Value immediately before the
distribution over the investment in the Policy (described
below) at such time. Second, loans taken from or secured by
such a Policy are treated as partial withdrawals from the
Policy and taxed accordingly. Past-due loan interest that is
<PAGE> - 74 -
<PAGE>
added to the loan amount is treated as a loan. Third, a 10%
additional income tax is imposed on the portion of any
distribution (including distributions upon surrender) from, or
loans taken from or secured by, such a Policy that is included
in income except where the distribution or loan is made on or
after the policyowner attains age 59 1/2, is attributable to
the policyowner's becoming disabled, or is part of a series of
substantially equal periodic payments for the life (or life
expectancy) of the policyowner or the joint lives (or joint
life expectancies) of the policyowner and the policyowner's
beneficiary.
Distributions From Policies Not Classified As Modified
Endowment Contracts. A distribution from a Policy that is not
a Modified Endowment Contract is generally treated as a
tax-free recovery by the policyowner of the investment in the
Policy (described below) to the extent of such investment in
the Policy, and as a distribution of taxable income only to
the extent the distribution exceeds the investment in the
Policy. An exception to this general rule occurs in the case
of a decrease in the Policy's death benefit or any other
change that reduces benefits under the Policy in the first 15
years after the Policy is issued and that results in a cash
distribution to the policyowner in order for the Policy to
continue complying with the Section 7702 definitional limits.
Such a cash distribution will be taxed in whole or in part as
ordinary income (to the extent of any gain in the Policy)
under rules prescribed in Section 7702.
Loans from, or secured by, a Policy that is not a Modified
Endowment Contract are not treated as distributions. Instead,
such loans are treated as indebtedness of the policyowner.
Select Loans may, however, be treated as a distribution.
Finally, neither distributions (including distributions upon
surrender) nor loans from, or secured by, a Policy that is not
a Modified Endowment Contract are subject to the 10%
additional tax.
Policy Loan Interest. Generally, personal interest paid on
any loan under a Policy which is owned by an individual is not
deductible. In addition, interest on any loan under a Policy
owned by a taxpayer and covering the life of any individual
who is an officer or employee of or is financially interested
in the business carried on by that taxpayer will not be tax
deductible to the extent the aggregate amount of such loans
with respect to contracts covering such individual exceeds
$50,000. The deduction of interest on Policy loans may also
be subject to other restrictions under Section 264 of the
Code.
Investment In The Policy. Investment in the Policy means
(i) the aggregate amount of any premiums or other
consideration paid for a Policy, minus (ii) the aggregate
amount received under the Policy which has been excluded from
<PAGE> - 75 -
<PAGE>
gross income of the policyowner (except that the amount of any
loan from, or secured by, a Policy that is a Modified
Endowment Contract, to the extent such amount has been
excluded from gross income, will be disregarded), plus
(iii) the amount of any loan from, or secured by, a Policy
that is a Modified Endowment Contract to the extent that such
amount has been included in the gross income of the
policyowner.
Multiple Policies. All Modified Endowment Contracts that are
issued by the Company (or its affiliates) to the same
policyowner during any calendar year are treated as one
Modified Endowment Contract for purposes of determining the
amount includible in the gross income under Section 72(e) of
the Code.
The Company's Taxes
As a result of the Omnibus Budget Reconciliation Act of 1990,
insurance companies are generally required to capitalize and
amortize certain policy acquisition expenses over a 10-year
period rather than currently deducting such expenses. This
treatment applies to the deferred acquisition expenses of a
Policy and results in a significantly higher corporate income
tax liability for the Company. The Company makes a charge to
premiums to compensate it for the anticipated higher corporate
income taxes.
At the present time, the Company makes no charge to the
Separate Account for any federal, state or local taxes that
the Company incurs that may be attributable to such Account or
to the Policies. The Company, however, reserves the right in
the future to make a charge for any such tax or other economic
burden resulting from the application of the tax laws that it
determines to be properly attributable to the Separate Account
or to the Policies.
Distribution Of The Policy
ManEquity, Inc., an indirect wholly-owned subsidiary of
Manufacturers Life, will act as the principal underwriter of,
and continuously offer, the Policies pursuant to a
Distribution Agreement with Manufacturers Life of America.
ManEquity, Inc. is registered as a broker-dealer under the
Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers. The Policies will
be sold by registered representatives of either ManEquity,
Inc. or other broker-dealers having distribution agreements
with ManEquity, Inc. who are also authorized by state
insurance departments to do so. A registered representative
will receive first-year commissions not to exceed 50% of
premiums paid up to the Target Premium, commissions of 2% of
premiums in excess thereof and, after the third anniversary,
0.15% of the Policy Value per annum. In addition
representatives will be eligible for bonuses of up to 90% of
<PAGE> - 76 -
<PAGE>
first-year commissions. Representatives who meet certain
standards with regard to the sale of the Policies and certain
other policies issued by Manufacturers Life of America or
Manufacturers Life will be eligible for additional
compensation.
Responsibilities Assumed By Manufacturers Life
Manufacturers Life has entered into an agreement with
ManEquity, Inc. pursuant to which Manufacturers Life, on
behalf of ManEquity, Inc., will pay the sales commissions in
respect of the Policies and certain other policies issued by
Manufacturers Life of America, prepare and maintain all books
and records required to be prepared and maintained by
ManEquity, Inc. with respect to the Policies and such other
policies, and send all confirmations required to be sent by
ManEquity, Inc. with respect to the Policies and such other
policies. ManEquity, Inc. will promptly reimburse
Manufacturers Life for all sales commissions paid by
Manufacturers Life and will pay Manufacturers Life for its
other services under the agreement in such amounts and at
such times as agreed to by the parties.
Manufacturers Life has also entered into a Service Agreement
with Manufacturers Life of America pursuant to which
Manufacturers Life will provide to Manufacturers Life of
America all issue, administrative, general services and
recordkeeping functions on behalf of Manufacturers Life of
America with respect to all of its insurance policies
including the Policies.
Finally, Manufacturers Life has entered into a Stoploss
Reinsurance Agreement with Manufacturers Life of America under
which Manufacturers Life reinsures all aggregate claims in
excess of 110% of the expected claims for all flexible premium
variable life insurance policies issued by Manufacturers Life
of America. Under the agreement Manufacturers Life of America
will automatically reinsure the risk for any one life up to a
maximum of $7,500,000, except in the case of aviation risks
where the maximum will be $5,000,000. However, Manufacturers
Life of America may also consider reinsuring any non-aviation
risks in excess of $7,500,000 and any aviation risk in excess
of $5,000,000.
Voting Rights
<REDLINE>
As stated above, all of the assets held in the sub-accounts of
the Separate Account will be invested in shares of a
particular Portfolio of Manulife Series Fund or NASL Series
Trust. Manufacturers Life of America is the legal owner of
those shares and as such has the right to vote upon matters
that are required by the 1940 Act to be approved or ratified
by the shareholders of a mutual fund and to vote upon any
other matters that may be voted upon at a shareholders'
meeting. However, Manufacturers Life of America will vote
<PAGE> - 77 -
<PAGE>
shares held in the sub-accounts in accordance with
instructions received from policyowners having an interest in
such sub-accounts.
Shares held in each sub-account for which no timely
instructions from policyowners are received, including shares
not attributable to Policies, will be voted by Manufacturers
Life of America in the same proportion as those shares in that
sub-account for which instructions are received. Should the
applicable federal securities laws or regulations change so as
to permit Manufacturers Life of America to vote shares held in
the Separate Account in its own right, it may elect to do so.
The number of shares in each sub-account for which
instructions may be given by a policyowner is determined by
dividing the portion of the Policy Value derived from
participation in that sub-account, if any, by the value of one
share of the corresponding Manulife Fund or NASL Trust. The
number will be determined as of a date chosen by Manufacturers
Life of America, but not more than 90 days before the
shareholders' meeting. Fractional votes are counted. Voting
instructions will be solicited in writing at least 14 days
prior to the shareholders' meeting.
Manufacturers Life of America may, if required by state
insurance officials, disregard voting instructions if such
instructions would require shares to be voted so as to cause a
change in the sub-classification or investment policies of one
or more of the Portfolios, or to approve or disapprove an
investment management contract for Manulife Series Fund. In
addition, Manufacturers Life of America itself may disregard
voting instructions that would require changes in the
investment policies or investment adviser, provided that
Manufacturers Life of America reasonably disapproves such
changes in accordance with applicable federal regulations. If
Manufacturers Life of America does disregard voting
instructions, it will advise policyowners of that action and
its reasons for such action in the next communication to
policyowners.
</REDLINE>
<PAGE> - 78 -
<PAGE>
Directors And Officers Of Manufacturers Life of America
The directors and executive officers of Manufacturers Life of
America, together with their principal occupations during the
past five years, are as follows:
<TABLE>
<CAPTION>
Position with
Manufacturers
Name Life of America Principal Occupation
<S> <C> <C>
Sandra M. Cotter Director Attorney - 1989-present, Dykema Gossett
Leonard V.
Day, Jr. Director General Manager, Philadelphia Branch -
1970-present, The Manufacturers Life
Insurance Company
Donald A. Guloien President and Senior Vice President, Business Director
Director Development-1994-present,
The Manufacturers Life Insurance
Company; Vice President, U.S. Individual
Business - 1990-1994, The Manufacturers
Life Insurance Company
Stephen C. Nesbitt Secretary, Legal Vice President - 1990-present, The
General Counsel Manufacturers Life Insurance Company
and Director
Joseph J.
Pietroski Director Senior Vice President, General Counsel
and Corporate Secretary - 1988-present,
The Manufacturers Life Insurance Company
John D. Richardson Chairman and Senior Vice President and General
Director Manager, U.S. Operations-
1995-present, The Manufacturers Life
Insurance Company; Senior Vice President
and General Manager, Canadian
Operations - 1992-1994, The
Manufacturers Life Insurance Company;
Senior Vice President, Financial
Services - 1992, The Manufacturers Life
Insurance Company; Executive Vice
Chairman and CFO - 1989-1991, Canada
Trust
Diane M. Schwartz Director Senior Vice President, International
Operations - 1992-present, The
Manufacturers Life Insurance Company;
Senior Vice President and General
Manager, U.S. Operations - 1988-1992,
The Manufacturers Life Insurance Company
</TABLE>
<PAGE> - 79 -
<PAGE>
<TABLE>
<CAPTION>
Position with
Manufacturers
Name Life of America Principal Occupation
<S> <C> <C>
John R. Ostler Vice President, Financial Vice President - 1992-present,
Chief Actuary and The Manufacturers Life Insurance
Treasurer Company; Vice President, Insurance
Products- 1990-1992, The Manufacturers
Life Insurance Company
Douglas H. Myers Vice President, Assistant Vice President and Controller,
Finance and U.S. Operations-1988-present, The
Compliance, Manufacturers Life Insurance Company
Controller
</TABLE>
<PAGE> - 80 -
<PAGE>
State Regulations
Manufacturers Life of America is subject to regulation and
supervision by the Michigan Department of Insurance, which
periodically examines its financial condition and operations.
It is also subject to the insurance laws and regulations of
all jurisdictions in which it is authorized to do business.
The Policies have been filed with insurance officials, and
meet all standards set by law, in each jurisdiction where they
are sold.
Manufacturers Life of America is required to submit annual
statements of its operations, including financial statements,
to the insurance departments of the various jurisdictions in
which it does business for the purposes of determining
solvency and compliance with local insurance laws and
regulations.
Pending Litigation
No litigation is pending that would have a material effect
upon the Separate Account or the Series Fund.
Additional Information
A registration statement under the Securities Act of 1933 has
been filed with the S.E.C. relating to the offering described
in this prospectus. This prospectus does not include all the
information set forth in the registration statement. The
omitted information may be obtained from the S.E.C.'s
principal office in Washington, D.C. upon payment of the
prescribed fee.
For further information you may also contact Manufacturers
Life of America's Service Office, the address and telephone
number of which are on the cover page of this prospectus.
Legal Matters
The legal validity of the policies has been passed on by
Stephen C. Nesbitt, Esq., Secretary and General Counsel of
Manufacturers Life of America. Jones & Blouch L.L.P.,
Washington, D.C., has passed on certain matters relating to
the federal securities laws.
Experts
The financial statements of the Manufacturers Life Insurance
Company of America and the Manufacturers Life Insurance
Company of America Separate Account Three appearing in this
prospectus for the period ended September 30, 1995 are
unaudited.
The financial statements of The Manufacturers Life Insurance
Company of America and of The Manufacturers Life Insurance
<PAGE> - 81 -
<PAGE>
Company of America Separate Account Three appearing in this
prospectus for the periods ending December 31 have been
audited by Ernst & Young, independent auditors to the extent
indicated in their reports thereon also appearing elsewhere
herein. Such financial statements have been included herein
in reliance upon such reports given upon the authority of such
firm as experts in auditing and accounting.
Actuarial matters included in this prospectus have been
examined by John R. Ostler, Vice President, Chief Actuary and
Treasurer of Manufacturers Life of America, whose opinion is
filed as an exhibit to the registration statement.
<PAGE> - 82 -
<PAGE>
The following financial statements of
Separate Account Three
for the period ended September 30, 1995 only
are unaudited.
<PAGE> - 83 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Emerging Growth Common Stock
Equity Sub-Acccount Sub-Account
<S> <C> <C>
Investment in Manulife Series Fund, Inc.
at market value
Emerging Growth Equity Fund, $29,470,698
1,288,471 shares (cost $25,184,536)
Common Stock Fund, $12,436,512
766,942 shares (cost $11,024,438)
Real Estate Securities Fund,
571,032 shares (cost $7,914,577)
Balanced Assets Fund,
1,194,329 shares (cost $17,852,643)
Capital Growth Bond Fund,
778,188 shares (cost $8,591,439)
Money Market Fund,
1,011,823 shares (cost $10,629,212)
International Fund,
168,795 shares (cost $1,695,316)
Pacific Rim Emerging Markets Fund,
114,380 shares (cost $1,091,600)
29,470,698 12,436,512
Receivable for Policy-related Transactions 25,635 5,537
NET ASSETS $29,496,333 $12,442,049
Units Outstanding 850,529 590,510
Net asset value per unit $34.68 $21.07
</TABLE>
See accompanying notes.
<PAGE> - 84 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Real Estate Securities Balanced Assets
Sub-Account Sub-Account
<S> <C> <C>
Investment in Manulife Series Fund, Inc.
at market value
Emerging Growth Equity Fund,
1,288,471 shares (cost $25,184,536)
Common Stock Fund,
766,942 shares (cost $11,024,438)
Real Estate Securities Fund, $8,377,241
571,032 shares (cost $7,914,577)
Balanced Assets Fund, $19,418,919
1,194,329 shares (cost $17,852,643)
Capital Growth Bond Fund,
778,188 shares (cost $8,591,439)
Money Market Fund,
1,011,823 shares (cost $10,629,212)
International Fund,
168,795 shares (cost $1,695,316)
Pacific Rim Emerging Markets Fund,
114,380 shares (cost $1,091,600)
8,377,241 19,418,919
Receivable for Policy-related Transactions (3,482) 29,666
NET ASSETS $8,373,759 $19,448,585
Units Outstanding 348,907 1,017,718
Net asset value per unit $24.00 $19.11
</TABLE>
See accompanying notes.
<PAGE> - 85 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Capital Growth Money-Market
Bond Sub-Account Sub-Account
<S> <C> <C>
Investment in Manulife Series Fund, Inc.
at market value
Emerging Growth Equity Fund,
1,288,471 shares (cost $25,184,536)
Common Stock Fund,
766,942 shares (cost $11,024,438)
Real Estate Securities Fund,
571,032 shares (cost $7,914,577)
Balanced Assets Fund,
1,194,329 shares (cost $17,852,643)
Capital Growth Bond Fund, $9,014,464
778,188 shares (cost $8,591,439)
Money Market Fund, $10,822,504
1,011,823 shares (cost $10,629,212)
International Fund,
168,795 shares (cost $1,695,316)
Pacific Rim Emerging Markets Fund,
114,380 shares (cost $1,091,600)
9,014,464 10,822,504
Receivable for Policy-related Transactions 35,533 232,515
NET ASSETS $9,049,997 $11,055,019
Units Outstanding 498,897 710,020
Net asset value per unit $18.14 $15.57
</TABLE>
See accompanying notes.
<PAGE> - 86 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Pacific Rim
International Emerging Markets
Sub-Account Sub-Account
<S> <C> <C>
Investment in Manulife Series Fund, Inc.
at market value
Emerging Growth Equity Fund,
1,288,471 shares (cost $25,184,536)
Common Stock Fund,
766,942 shares (cost $11,024,438)
Real Estate Securities Fund,
571,032 shares (cost $7,914,577)
Balanced Assets Fund,
1,194,329 shares (cost $17,852,643)
Capital Growth Bond Fund,
778,188 shares (cost $8,591,439)
Money Market Fund,
1,011,823 shares (cost $10,629,212)
International Fund, $1,772,130
168,795 shares (cost $1,695,316)
Pacific Rim Emerging Markets Fund, $1,147,188
114,380 shares (cost $1,091,600)
1,772,130 1,147,188
Receivable for Policy-related Transactions (2,302) 705
NET ASSETS $1,769,828 $1,147,893
Units Outstanding 169,686 113,653
Net asset value per unit $10.43 $10.10
</TABLE>
See accompanying notes.
<PAGE> - 87 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Total
<S> <C>
Investment in Manulife Series Fund, Inc.
at market value
Emerging Growth Equity Fund, $29,470,698
1,288,471 shares (cost $25,184,536)
Common Stock Fund, 12,436,512
766,942 shares (cost $11,024,438)
Real Estate Securities Fund, 8,377,241
571,032 shares (cost $7,914,577)
Balanced Assets Fund, 19,418,919
1,194,329 shares (cost $17,852,643)
Capital Growth Bond Fund, 9,014,464
778,188 shares (cost $8,591,439)
Money Market Fund, 10,822,504
1,011,823 shares (cost $10,629,212)
International Fund, 1,772,130
168,795 shares (cost $1,695,316)
Pacific Rim Emerging Markets Fund, 1,147,188
114,380 shares (cost $1,091,600)
92,459,656
Receivable for Policy-related Transactions 323,807
NET ASSETS $92,783,463
Units Outstanding
Net asset value per unit
</TABLE>
See accompanying notes.
<PAGE> - 88 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF OPERATIONS
PERIOD ENDED SEPTEMBER 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Emerging Growth Common Stock
Equity Sub-Account Sub-Account
<S> <C> <C>
Net Investment Income: Dividends $721,489 $0
Realized and unrealized gain (loss) from
security transactions:
Proceeds from sales 1,064,105 632,239
Cost of securities sold 877,815 651,870
Net realized gain (loss) 186,290 (19,631)
Unrealized appreciation (depreciation)
of Investments
Beginning of Year 78,088 (438,289)
End of Period 4,286,162 1,412,074
Net unrealized depreciation
during the period 4,208,074 1,850,363
Net realized and unrealized gain (loss)
on investments 4,394,364 1,830,732
Net increase (decrease) in net
assets derived from operations $5,115,853 $1,830,732
</TABLE>
See accompanying notes.
<PAGE> - 89 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF OPERATIONS
PERIOD ENDED SEPTEMBER 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Real Estate Securities Balanced Assets
Sub-Account Sub-Account
<S> <C> <C>
Net Investment Income: Dividends $142,066 $24,806
Realized and unrealized gain (loss) from
security transactions:
Proceeds from sales 716,496 568,059
Cost of securities sold 735,854 603,592
Net realized gain (loss) (19,358) (35,533)
Unrealized appreciation (depreciation)
of Investments
Beginning of Year (280,544) (1,064,130)
End of Period 462,664 1,566,276
Net unrealized depreciation
during the period 743,208 2,630,406
Net realized and unrealized gain (loss)
on investments 723,850 2,594,873
Net increase (decrease) in net
assets derived from operations $865,916 $2,619,679
</TABLE>
See accompanying notes.
<PAGE> - 90 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF OPERATIONS
PERIOD ENDED SEPTEMBER 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Capital Growth Money-Market
Bond Sub-Account Sub-Account
<S> <C> <C>
Net Investment Income: Dividends $1,275 $468
Realized and unrealized gain (loss) from
security transactions:
Proceeds from sales 519,634 5,899,591
Cost of securities sold 549,737 5,793,608
Net realized gain (loss) (30,103) 105,983
Unrealized appreciation (depreciation)
of Investments
Beginning of Year (542,982) (75,010)
End of Period 423,025 193,292
Net unrealized depreciation
during the period 966,007 268,302
Net realized and unrealized gain (loss)
on investments 935,904 374,285
Net increase (decrease) in net
assets derived from operations $937,179 $374,753
</TABLE>
See accompanying notes.
<PAGE> - 91 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF OPERATIONS
PERIOD ENDED SEPTEMBER 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Pacific Rim
International Emerging Markets
Sub-Account Sub-Account
<S> <C> <C>
Net Investment Income: Dividends $480 $1,453
Realized and unrealized gain (loss) from
security transactions:
Proceeds from sales 154,143 184,196
Cost of securities sold 156,097 192,863
Net realized gain (loss) (1,954) (8,667)
Unrealized appreciation (depreciation)
of Investments
Beginning of Year (3,406) (8,633)
End of Period 76,814 55,588
Net unrealized depreciation
during the period 80,220 64,221
Net realized and unrealized gain (loss)
on investments 78,266 55,554
Net increase (decrease) in net
assets derived from operations $78,746 $57,007
</TABLE>
See accompanying notes.
<PAGE> - 92 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF OPERATIONS
PERIOD ENDED SEPTEMBER 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Total
<S> <C>
Net Investment Income: Dividends $892,037
Realized and unrealized gain (loss) from
security transactions:
Proceeds from sales 9,738,463
Cost of securities sold 9,561,436
Net realized gain (loss) 177,027
Unrealized appreciation (depreciation)
of Investments
Beginning of Year (2,334,906)
End of Period 8,475,895
Net unrealized depreciation
during the period 10,810,801
Net realized and unrealized gain (loss)
on investments 10,987,828
Net increase (decrease) in net
assets derived from operations $11,879,865
</TABLE>
See accompanying notes.
<PAGE> - 93 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED SEPTEMBER 30, 1995 and DECEMBER 31, 1994 (Unaudited)
<TABLE>
<CAPTION>
Emerging Growth Equity Sub-Account
Period Ended Year Ended
Sept. 30/95 Dec. 31/94
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $721,489 $43,907
Net realized gain (loss) 186,290 211,186
Unrealized appreciation (depreciation)
of investments during the period
Increase (decrease) in net assets 4,208,074 (255,344)
derived from operations 5,115,853 (251)
FROM CAPTIAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 10,164,632 12,590,008
Transfer on death (202,957)
Transfer of terminations (2,101,827) (1,565,370)
Transfer of policy loans (358,332) (86,018)
Net interfund transfers 2,491,046 823,390
9,992,562 11,762,010
Net increase in net assets 15,108,415 11,761,759
NET ASSETS
Beginning of Year 14,387,918 2,626,159
End of Period $29,496,333 $14,387,918
* Reflects the period from commencement of operations October 4, 1994
through December 31, 1994.
</TABLE>
See accompanying notes.
<PAGE> - 94 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED SEPTEMBER 30, 1995 and DECEMBER 31, 1994 (Unaudited)
<TABLE>
<CAPTION>
Common Stock
Sub-Account
Period Ended Year Ended
Sept. 30/95 Dec. 31/94
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $0 $267,928
Net realized gain (loss) (19,631) (341)
Unrealized appreciation (depreciation)
of investments during the period
Increase (decrease) in net assets 1,850,363 (435,910)
derived from operations 1,830,732 (168,323)
FROM CAPTIAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 4,546,125 5,554,746
Transfer on death 0
Transfer of terminations (971,198) (649,516)
Transfer of policy loans (210,249) (36,417)
Net interfund transfers 1,300,789 421,280
4,665,467 5,290,093
Net increase in net assets 6,496,199 5,121,770
NET ASSETS
Beginning of Year 5,945,850 824,080
End of Period $12,442,049 $5,945,850
* Reflects the period from commencement of operations October 4, 1994
through December 31, 1994.
</TABLE>
See accompanying notes.
<PAGE> - 95 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED SEPTEMBER 30, 1995 and DECEMBER 31, 1994 (Unaudited)
<TABLE>
<CAPTION>
Real Estate Securities
Sub-Account
Period Ended Year Ended
Sept. 30/95 Dec. 31/94
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $142,066 $75,896
Net realized gain (loss) (19,358) 31,029
Unrealized appreciation (depreciation)
of investments during the period
Increase (decrease) in net assets 743,208 (305,376)
derived from operations 865,916 (198,451)
FROM CAPTIAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 3,143,823 4,874,992
Transfer on death 0
Transfer of terminations (795,632) (663,869)
Transfer of policy loans (90,052) (6,117)
Net interfund transfers 12,039 318,546
2,270,178 4,523,552
Net increase in net assets 3,136,094 4,325,101
NET ASSETS
Beginning of Year 5,237,665 912,564
End of Period $8,373,759 $5,237,665
* Reflects the period from commencement of operations October 4, 1994
through December 31, 1994.
</TABLE>
See accompanying notes.
<PAGE> - 96 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED SEPTEMBER 30, 1995 and DECEMBER 31, 1994 (Unaudited)
<TABLE>
<CAPTION>
Balanced Assets
Sub-Account
Period Ended Year Ended
Sept. 30/95 Dec. 31/94
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $24,806 $603,014
Net realized gain (loss) (35,533) (1,270)
Unrealized appreciation (depreciation)
of investments during the period
Increase (decrease) in net assets 2,630,406 (954,131)
derived from operations 2,619,679 (352,387)
FROM CAPTIAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 5,251,842 9,721,164
Transfer on death 0
Transfer of terminations (1,256,759) (1,044,780)
Transfer of policy loans (175,440) (153,402)
Net interfund transfers 957,764 150,911
4,777,407 8,673,893
Net increase in net assets 7,397,086 8,321,506
NET ASSETS
Beginning of Year 12,051,499 3,729,993
End of Period $19,448,585 $12,051,499
* Reflects the period from commencement of operations October 4, 1994
through December 31, 1994.
</TABLE>
See accompanying notes.
<PAGE> - 97 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED SEPTEMBER 30, 1995 and DECEMBER 31, 1994 (Unaudited)
<TABLE>
<CAPTION>
Capital Growth
Bond Sub-Account
Period Ended Year Ended
Sept. 30/95 Dec. 31/94
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $1,275 $311,297
Net realized gain (loss) (30,103) 8,755
Unrealized appreciation (depreciation)
of investments during the period
Increase (decrease) in net assets 966,007 (497,582)
derived from operations 937,179 (177,530)
FROM CAPTIAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 2,381,173 3,709,555
Transfer on death 0
Transfer of terminations (501,086) (306,914)
Transfer of policy loans (169,797) (57,452)
Net interfund transfers 1,341,353 (184,732)
3,051,643 3,160,457
Net increase in net assets 3,988,822 2,982,927
NET ASSETS
Beginning of Year 5,061,175 2,078,248
End of Period $9,049,997 $5,061,175
* Reflects the period from commencement of operations October 4, 1994
through December 31, 1994.
</TABLE>
See accompanying notes.
<PAGE> - 98 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED SEPTEMBER 30, 1995 and DECEMBER 31, 1994 (Unaudited)
<TABLE>
<CAPTION>
Money-Market
Sub-Account
Period Ended Year Ended
Sept. 30/95 Dec. 31/94
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $468 $186,610
Net realized gain (loss) 105,983 12,880
Unrealized appreciation (depreciation)
of investments during the period
Increase (decrease) in net assets 268,302 (50,726)
derived from operations 374,753 148,764
FROM CAPTIAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 11,964,737 9,185,855
Transfer on death 0
Transfer of terminations (1,196,819) (1,053,809)
Transfer of policy loans (36,615) (110)
Net interfund transfers (7,178,279) (1,923,048)
3,553,024 6,208,888
Net increase in net assets 3,927,777 6,357,652
NET ASSETS
Beginning of Year 7,127,242 769,590
End of Period $11,055,019 $7,127,242
* Reflects the period from commencement of operations October 4, 1994
through December 31, 1994.
</TABLE>
See accompanying notes.
<PAGE> - 99 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED SEPTEMBER 30, 1995 and DECEMBER 31, 1994 (Unaudited)
<TABLE>
<CAPTION>
*International
Sub-Account
Period Ended Period Ended
Sept. 30/95 Dec. 31/94
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $480 $851
Net realized gain (loss) (1,954) (2)
Unrealized appreciation (depreciation)
of investments during the period
Increase (decrease) in net assets 80,220 (3,406)
derived from operations 78,746 (2,557)
FROM CAPTIAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 796,603 73,368
Transfer on death 0
Transfer of terminations (119,411) (4,461)
Transfer of policy loans (1,531) (768)
Net interfund transfers 687,407 262,432
1,363,068 330,571
Net increase in net assets 1,441,814 328,014
NET ASSETS
Beginning of Year 328,014 0
End of Period $1,769,828 $328,014
* Reflects the period from commencement of operations October 4, 1994
through December 31, 1994.
</TABLE>
See accompanying notes.
<PAGE> - 100 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED SEPTEMBER 30, 1995 and DECEMBER 31, 1994 (Unaudited)
<TABLE>
<CAPTION>
*Pacific Rim
Emerging Markets
Sub-Account
Period Ended Period Ended
Sept. 30/95 Dec. 31/94
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $1,453 $871
Net realized gain (loss) (8,667) (57)
Unrealized appreciation (depreciation)
of investments during the period
Increase (decrease) in net assets 64,221 (8,633)
derived from operations 57,007 (7,819)
FROM CAPTIAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 530,444 41,337
Transfer on death 0
Transfer of terminations (89,957) (2,998)
Transfer of policy loans (1,563) (768)
Net interfund transfers 407,469 214,741
846,393 252,312
Net increase in net assets 903,400 244,493
NET ASSETS
Beginning of Year 244,493 0
End of Period $1,147,893 $244,493
* Reflects the period from commencement of operations October 4, 1994
through December 31, 1994.
</TABLE>
See accompanying notes.
<PAGE> - 101 -
<PAGE>
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED SEPTEMBER 30, 1995 and DECEMBER 31, 1994 (Unaudited)
<TABLE>
<CAPTION>
Total
Period Ended Year Ended
Sept. 30/95 Dec. 31/94
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $892,037 $1,490,374
Net realized gain (loss) 177,027 262,180
Unrealized appreciation (depreciation)
of investments during the period
Increase (decrease) in net assets 10,810,801 (2,511,108)
derived from operations 11,879,865 (758,554)
FROM CAPTIAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 38,779,379 45,751,025
Transfer on death (202,957) 0
Transfer of terminations (7,032,689) (5,291,717)
Transfer of policy loans (1,043,579) (341,052)
Net interfund transfers 19,588 83,520
30,519,742 40,201,776
Net increase in net assets 42,399,607 39,443,222
NET ASSETS
Beginning of Year 50,383,856 10,940,634
End of Period $92,783,463 $50,383,856
* Reflects the period from commencement of operations October 4, 1994
through December 31, 1994.
</TABLE>
See accompanying notes.
<PAGE> - 102 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements
September 30, 1995
1. Organization
Separate Account Three of The Manufacturers Life Insurance
Company of America (the "Separate Account") is a unit
investment trust registered under the Investment Company Act
of 1940, as amended. The Separate Account is currently
comprised of eight investment sub-accounts, one for each
series of shares of Manulife Series Fund, Inc., available for
allocation of net premiums under certain variable life
insurance policies issued by The Manufacturers Life Insurance
Company of America ("Manufacturers Life of America").
The Separate Account was established by Manufacturers Life of
America, a wholly-owned subsidiary of The Manufacturers Life
Insurance Company of Michigan ("MLIM"), as a separate
investment account on February 6, 1987. MLIM is a life
insurance holding company organized in 1983 under Michigan law
and a wholly-owned subsidiary of The Manufacturers Life
Insurance Company ("Manulife Financial"), a mutual life
insurance company based in Toronto, Canada.
The assets of the Separate Accounts are the property of
Manufacturers Life of America. The portion of the Separate
Account's assets applicable to the Policies will not be
chargeable with liabilities arising out of any other business
Manufacturers Life of America may conduct.
The net assets may not be less than the amount required under
state insurance law to provide for death (without regard to
the minimum death benefit guarantee) and other Policy
benefits.
Additional assets are held in Manufacturers Life of America's
general account to cover the contingency that the guaranteed
minimum death benefit might exceed the death benefit which
would have been payable in the absence of such guarantee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies
followed by the Separate Account in preparation of its
financial statements:
a. Valuation of Investments - Investments are made among the
eight Funds of Manulife Series Fund, Inc. and are valued
at the reported net asset values of these Funds.
Transactions are recorded on the trade date.
<PAGE> - 103 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
b. Realized gains and losses on the sale of investments are
computed on the first-in, first-out basis.
c. Dividend income is recorded on the ex-dividend date.
d. Federal Income Taxes - Manufacturers Life of America, the
Separate Account's sponsor, is taxed as a "life insurance
company" under the Internal Revenue Code. Under these
provisions of the Code, the operations of the Separate
Account form part of the sponsor's total operations and
are not taxed separately.
The current year's operations of the Separate Account are not
expected to affect the sponsor's tax liabilities and,
accordingly, no charges were made against the Separate Account
for federal, state and local taxes. However, in the future,
should the sponsor incur significant tax liabilities related
to Separate Account operations, it intends to make a charge or
establish a provision within the Separate Account for such
taxes.
3. Purchases and Sales of Manulife Series Fund, Inc. Shares
Purchases and sales of the shares of common stock of Manulife
Series Fund, Inc. for the period ended September 30, 1995 were
$40,924,599 and $9,738,463 respectively, and for the year
ended December 31, 1994 were $47,012,777 and $5,377,813.
4. Related Party Transactions
ManEquity, Inc., a registered broker-dealer and indirect
wholly-owned subsidiary of Manulife Financial, acts as the
principal underwriter of the Policies pursuant to a
Distribution Agreement with Manufacturers Life of America.
Registered representatives of either ManEquity, Inc. or other
broker-dealers having distribution agreements with ManEquity,
Inc. who are also authorized as variable life insurance agents
under applicable state insurance laws, sell the Policies.
Registered representatives are compensated on a commission
basis.
Manufacturers Life of America has a formal service agreement
with its affiliate, Manulife Financial, which can be
terminated by either party upon two months' notice. Under
this Agreement, Manufacturers Life of America pays for legal,
actuarial, investment and certain other administrative
services.
<PAGE> - 104 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statement of Assets and Liabilities
Year Ended December 31, 1994
<TABLE>
<CAPTION>
Emerging Growth Common Stock
Equity Sub-Account Sub-Account
<S> <C> <C>
Assets
Investment in Manulife Series Fund, Inc.-
at market value:
Emerging Growth Equity Fund, $14,348,825
773,490 shares (cost $14,270,737)
Common Stock Fund, $5,928,854
443,671 shares (cost $6,367,143)
Real Estate Securities Fund,
391,124 shares (cost $5,499,930)
Balanced Assets Fund,
873,324 shares (cost $13,093,969)
Capital Growth Bond Fund,
501,327 shares (cost $5,605,877)
Money Market Fund,
694,147 shares (cost $7,198,453)
International Fund,
33,406 shares (cost $331,394)
Pacific Rim Emerging Markets Fund,
25,987 shares (cost $253,094)
14,348,825 5,928,854
Receivable (payable) for
policy-related transactions 39,093 16,996
Net assets $14,387,918 $5,945,850
Units outstanding 524,532 342,306
Net asset value per unit $ 27.43 $ 17.37
</TABLE>
* Reflects the period from commencement of operations
October 4, 1994 through December 31, 1994.
See accompanying notes.
<PAGE> - 105 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statement of Assets and Liabilities
Year Ended December 31, 1994
<TABLE>
<CAPTION>
Real Estate Balanced Assets
Securities Sub-Account
Sub-Account
<S> <C> <C>
Assets
Investment in Manulife Series Fund, Inc.-
at market value:
Emerging Growth Equity Fund,
773,490 shares (cost $14,270,737)
Common Stock Fund,
443,671 shares (cost $6,367,143)
Real Estate Securities Fund, $5,219,386
391,124 shares (cost $5,499,930)
Balanced Assets Fund, $12,029,839
873,324 shares (cost $13,093,969)
Capital Growth Bond Fund,
501,327 shares (cost $5,605,877)
Money Market Fund,
694,147 shares (cost $7,198,453)
International Fund,
33,406 shares (cost $331,394)
Pacific Rim Emerging Markets Fund,
25,987 shares (cost $253,094)
5,219,386 12,029,839
Receivable (payable) for
policy-related transactions 18,279 21,660
Net assets $5,237,665 $12,051,499
Units outstanding 244,066 745,300
Net asset value per unit $ 21.46 $ 16.17
</TABLE>
* Reflects the period from commencement of operations
October 4, 1994 through December 31, 1994.
See accompanying notes.
<PAGE> - 106 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statement of Assets and Liabilities
Year Ended December 31, 1994
<TABLE>
<CAPTION>
Capital Growth Money Market
Bond Sub-Acct. Sub-Account
<S> <C> <C>
Assets
Investment in Manulife Series Fund, Inc.-
at market value:
Emerging Growth Equity Fund,
773,490 shares (cost $14,270,737)
Common Stock Fund,
443,671 shares (cost $6,367,143)
Real Estate Securities Fund,
391,124 shares (cost $5,499,930)
Balanced Assets Fund,
873,324 shares (cost $13,093,969)
Capital Growth Bond Fund, $5,062,895
501,327 shares (cost $5,605,877)
Money Market Fund, $7,123,443
694,147 shares (cost $7,198,453)
International Fund,
33,406 shares (cost $331,394)
Pacific Rim Emerging Markets Fund,
25,987 shares (cost $253,094)
5,062,895 7,123,443
Receivable (payable) for
policy-related transactions (1,720) 3,799
Net assets $5,061,175 $7,127,242
Units outstanding 320,125 477,058
Net asset value per unit $ 15.81 $ 14.94
</TABLE>
* Reflects the period from commencement of operations
October 4, 1994 through December 31, 1994.
See accompanying notes.
<PAGE> - 107 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statement of Assets and Liabilities
Year Ended December 31, 1994
<TABLE>
<CAPTION>
*International *Pacific Rim
Sub-Account Emerging Mkts
Sub-Account
<S> <C> <C>
Assets
Investment in Manulife Series Fund, Inc.-
at market value:
Emerging Growth Equity Fund,
773,490 shares (cost $14,270,737)
Common Stock Fund,
443,671 shares (cost $6,367,143)
Real Estate Securities Fund,
391,124 shares (cost $5,499,930)
Balanced Assets Fund,
873,324 shares (cost $13,093,969)
Capital Growth Bond Fund,
501,327 shares (cost $5,605,877)
Money Market Fund,
694,147 shares (cost $7,198,453)
International Fund, $327,988
33,406 shares (cost $331,394)
Pacific Rim Emerging Markets Fund, $244,461
25,987 shares (cost $253,094)
327,988 244,461
Receivable (payable) for
policy-related transactions 26 32
Net assets $328,014 $244,493
Units outstanding 33,642 25,818
Net asset value per unit $ 9.75 $ 9.47
</TABLE>
* Reflects the period from commencement of operations
October 4, 1994 through December 31, 1994.
See accompanying notes.
<PAGE> - 108 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statement of Assets and Liabilities
Year Ended December 31, 1994
<TABLE>
<CAPTION>
Total
<S> <C>
Assets
Investment in Manulife Series Fund, Inc.-
at market value:
Emerging Growth Equity Fund, $14,348,825
773,490 shares (cost $14,270,737)
Common Stock Fund, 5,928,854
443,671 shares (cost $6,367,143)
Real Estate Securities Fund, 5,219,386
391,124 shares (cost $5,499,930)
Balanced Assets Fund, 12,029,839
873,324 shares (cost $13,093,969)
Capital Growth Bond Fund, 5,062,895
501,327 shares (cost $5,605,877)
Money Market Fund, 7,123,443
694,147 shares (cost $7,198,453)
International Fund, 327,988
33,406 shares (cost $331,394)
Pacific Rim Emerging Markets Fund, 244,461
25,987 shares (cost $253,094)
50,285,691
Receivable (payable) for
policy-related transactions 98,165
Net assets $50,383,856
Units outstanding
Net asset value per unit
</TABLE>
* Reflects the period from commencement of operations
October 4, 1994 through December 31, 1994.
See accompanying notes.
<PAGE> - 109 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statement of Operations
Year Ended December 31, 1994
<TABLE>
<CAPTION>
Emerging Growth Common Stock
Equity Sub-Account Sub-Account
<S> <C> <C>
Investment income:
Dividend income $ 43,907 $ 267,928
Expenses:
Mortality and expense risks charge - -
Net investment income 43,907 267,928
Realized and unrealized gain (loss) on
investments:
Realized gain (loss) from security
transactions:
Proceeds from sales 491,049 461,407
Cost of securities sold 279,863 461,748
Net realized gain (loss) 211,186 (341)
Unrealized (appreciation) depreciation
of investments:
Beginning of year 333,432 (2,379)
End of year 78,088 (438,289)
Net unrealized depreciation
during the year (255,344) (435,910)
Net realized and unrealized
loss on investments (44,158) (436,251)
Net decrease in net assets derived from
operations $ (251) $(168,323)
</TABLE>
* Reflects the period from commencement of operations
October 4, 1994 through December 31, 1994.
See accompanying notes.
<PAGE> - 110 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statement of Operations
Year Ended December 31, 1994
<TABLE>
<CAPTION>
Real Estate Balanced
Securities Assets
Sub-Account Sub-Account
<S> <C> <C>
Investment income:
Dividend income $ 75,896 $603,014
Expenses:
Mortality and expense risks charge - -
Net investment income 75,896 603,014
Realized and unrealized gain (loss) on
investments:
Realized gain (loss) from security
transactions:
Proceeds from sales 428,802 627,251
Cost of securities sold 397,773 628,521
Net realized gain (loss) 31,029 (1,270)
Unrealized (appreciation) depreciation
of investments:
Beginning of year 24,832 (109,999)
End of year (280,544) (1,064,130)
Net unrealized depreciation during
the year (305,376) (954,131)
Net realized and unrealized loss
on investments (274,347) (955,401)
Net decrease in net assets derived from
operations $ (198,451) $ (352,387)
</TABLE>
* Reflects the period from commencement of operations
October 4, 1994 through December 31, 1994.
See accompanying notes.
<PAGE> - 111 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statement of Operations
Year Ended December 31, 1994
<TABLE>
<CAPTION>
Capital Growth Money Market
Bond Sub-Account Sub-Account
<S> <C> <C>
Investment income:
Dividend income $ 311,297 $ 186,610
Expenses:
Mortality and expense risks charge - -
Net investment income 311,297 186,610
Realized and unrealized gain (loss) on
investments:
Realized gain (loss) from security
transactions:
Proceeds from sales 375,016 2,993,307
Cost of securities sold 366,261 2,980,427
Net realized gain (loss) 8,755 12,880
Unrealized (appreciation) depreciation
of investments:
Beginning of year (45,400) (24,284)
End of year (542,982) (75,010)
Net unrealized depreciation during
the year (497,582) (50,726)
Net realized and unrealized loss
on investments (488,827) (37,846)
Net decrease in net assets derived from
operations $ (177,530)$ 148,764
</TABLE>
* Reflects the period from commencement of operations
October 4, 1994 through December 31, 1994.
See accompanying notes.
<PAGE> - 112 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statement of Operations
Year Ended December 31, 1994
<TABLE>
<CAPTION>
*Pacific Rim
*International Emerging Markets
Sub-Account Sub-Account
<S> <C> <C>
Investment income:
Dividend income $ 851 $ 871
Expenses:
Mortality and expense risks charge - -
Net investment income 851 871
Realized and unrealized gain (loss) on
investments:
Realized gain (loss) from security
transactions:
Proceeds from sales 82 899
Cost of securities sold 84 956
Net realized gain (loss) (2) (57)
Unrealized (appreciation) depreciation
of investments:
Beginning of year- -
End of year (3,406) (8,633)
Net unrealized depreciation during the year (3,406) (8,633)
Net realized and unrealized loss
on investments (3,408) (8,690)
Net decrease in net assets derived from
operations $ (2,557) $ (7,819)
</TABLE>
* Reflects the period from commencement of operations
October 4, 1994 through December 31, 1994.
See accompanying notes.
<PAGE> - 113 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statement of Operations
Year Ended December 31, 1994
<TABLE>
<CAPTION> Total
<S> <C>
Investment income:
Dividend income $ 1,490,374
Expenses:
Mortality and expense risks charge -
Net investment income 1,490,374
Realized and unrealized gain (loss) on
investments:
Realized gain (loss) from security
transactions:
Proceeds from sales 5,377,813
Cost of securities sold 5,115,633
Net realized gain (loss) 262,180
Unrealized (appreciation) depreciation
of investments:
Beginning of year 176,202
End of year (2,334,906)
Net unrealized depreciation during
the year (2,511,108)
Net realized and unrealized loss
on investments (2,248,928)
Net decrease in net assets derived from
operations $ (758,554)
</TABLE>
* Reflects the period from commencement of operations
October 4, 1994 through December 31, 1994.
See accompanying notes.
<PAGE> - 114 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statements of Changes in Net Assets
Years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
Emerging Growth
Equity Sub-Account
Year ended Year ended
Dec. 31/94 Dec. 31/93
<S> <C> <C>
From Operations
Net investment income $ 43,907 $ 251,345
Net realized gain (loss) 211,186 24,226
Unrealized (depreciation)
appreciation of investments
during the year (255,344) 28,423
Increase (decrease) in net
assets derived from
operations (251) 303,994
From capital transactions
Additions (deductions) from:
Transfer of net premiums 12,590,008 1,239,654
Transfer on death - -
Transfer of terminations (1,565,370) (58,498)
Transfer of policy loans (86,018) (26,763)
Net interfund transfers 823,390 172,225
11,762,010 1,326,618
Net increase in net assets 11,761,759 1,630,612
Net Assets
Beginning of year 2,626,159 995,547
End of year $ 14,387,918 $ 2,626,159
</TABLE>
See accompanying notes.
<PAGE> - 115 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statements of Changes in Net Assets
Years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
Common Stock
Sub-Account
Year ended Year ended
Dec. 31/94 Dec. 31/93
<S> <C> <C>
From Operations
Net investment income $ 267,928 $ 38,418
Net realized gain (loss) (341) 100,980
Unrealized (depreciation)
appreciation of investments
during the year (435,910) (88,251)
Increase (decrease) in net
assets derived from
operations (168,323) 51,147
From capital transactions
Additions (deductions) from:
Transfer of net premiums 5,554,746 581,711
Transfer on death - -
Transfer of terminations (649,516) (366,106)
Transfer of policy loans (36,417) (8,300)
Net interfund transfers 421,280 (89,887)
5,290,093 117,418
Net increase in net assets 5,121,770 168,565
Net Assets
Beginning of year 824,080 655,515
End of year $ 5,945,850 $ 824,080
</TABLE>
See accompanying notes.
<PAGE> - 116 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statements of Changes in Net Assets (continued)
Years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
Real Estate Securities
Sub-Account
Year ended Year ended
Dec. 31/94 Dec. 31/93
<S> <C> <C>
From Operations
Net investment income $ 75,896 $ 62,048
Net realized gain (loss) 31,029 7,545
Unrealized (depreciation)
appreciation of investments
during the year (305,376) (13,818)
Increase (decrease) in net
assets derived from
operations (198,451) 55,775
From capital transactions
Additions (deductions) from:
Transfer of net premiums 4,874,992 647,750
Transfer on death - -
Transfer of terminations (663,869) (18,153)
Transfer of policy loans (6,117) (23,327)
Net interfund transfers 318,546 70,007
4,523,552 676,277
Net increase in net assets 4,325,101 732,052
Net Assets
Beginning of year 912,564 180,512
End of year $5,237,665 $912,564
</TABLE>
See accompanying notes.
<PAGE> - 117 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statements of Changes in Net Assets (continued)
Years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
Balanced Assets
Sub-Account
Year ended Year ended
Dec. 31/94 Dec. 31/93
<S> <C> <C>
From Operations
Net investment income $ 603,014 $ 195,442
Net realized gain (loss) (1,270) 345,185
Unrealized (depreciation)
appreciation of investments
during the year (954,131) (361,715)
Increase (decrease) in net
assets derived from
operations (352,387) 178,912
From capital transactions
Additions (deductions) from:
Transfer of net premiums 9,721,164 2,223,408
Transfer on death - (42,338)
Transfer of terminations (1,044,780) (57,543)
Transfer of policy loans (153,402) (115,269)
Net interfund transfers 150,911 43,189
8,673,893 2,051,447
Net increase in net assets 8,321,506 2,230,359
Net Assets
Beginning of year 3,729,993 1,499,634
End of year $12,051,499 $3,729,993
</TABLE>
See accompanying notes.
<PAGE> - 118 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statements of Changes in Net Assets
Years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
Capital Growth
Bond Sub-Account
Year ended Year ended
Dec. 31/94 Dec. 31/93
<S> <C> <C>
From Operations
Net investment income $ 311,297 $103,057
Net realized gain (loss) 8,755 6,150
Unrealized (depreciation)
appreciation of investments
during the year (497,582) (63,182)
Increase (decrease) in net
assets derived from
operations (177,530) 46,025
From capital transactions
Additions (deductions) from:
Transfer of net premiums 3,709,555 1,542,401
Transfer on death - -
Transfer of terminations (306,914) (22,391)
Transfer of policy loans (57,452) (63,465)
Net interfund transfers (184,732) 35,235
3,160,457 1,491,780
Net increase in net assets 2,982,927 1,537,805
Net Assets
Beginning of year 2,078,248 540,443
End of year $ 5,061,175 $ 2,078,248
</TABLE>
See accompanying notes.
<PAGE> - 119 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statements of Changes in Net Assets
Years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
Money Market
Sub-Account
Year ended Year ended
Dec. 31/94 Dec. 31/93
<S> <C> <C>
From Operations
Net investment income $ 186,610 $ 12,521
Net realized gain (loss) 12,880 (998)
Unrealized (depreciation)
appreciation of investments
during the year (50,726) (621)
Increase (decrease) in net
assets derived from
operations 148,764 10,902
From capital transactions
Additions (deductions) from:
Transfer of net premiums 9,185,855 677,589
Transfer on death - -
Transfer of terminations (1,053,809) (125,188)
Transfer of policy loans (110) (101)
Net interfund transfers (1,923,048) (226,511)
6,208,888 325,789
Net increase in net assets 6,357,652 336,691
Net Assets
Beginning of year 769,590 432,899
End of year $ 7,127,242 $ 769,590
See accompanying notes.
</TABLE>
<PAGE> - 120 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statements of Changes in Net Assets
Years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
International
Sub-Account
*Period ended
Dec. 31/94
<S> <C>
From Operations
Net investment income $ 851
Net realized loss (gain) (2)
Unrealized (depreciation)
appreciation of investments
during the year (3,406)
Increase (decrease) in net
assets derived from
operations (2,557)
From capital transactions
Additions (deductions) from:
Transfer of net premiums 73,368
Transfer on death -
Transfer of terminations (4,461)
Transfer of policy loans (768)
Net interfund transfers 262,432
330,571
Net increase in net assets 328,014
Net Assets -
Beginning of year
End of year $ 328,014
</TABLE>
*Reflects the period from commencement of operations October 4, 1994 through
December 31, 1994.
See accompanying notes.
<PAGE> - 121 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statements of Changes in Net Assets
Years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
Pacific Rim Emerging
Markets Sub-Account
*Period ended
Dec. 31/94
<S> <C>
From Operations
Net investment income $ 871
Net realized loss (gain) (57)
Unrealized (depreciation)
appreciation of investments
during the year (8,633)
Increase (decrease) in net
assets derived from
operations (7,819)
From capital transactions
Additions (deductions) from:
Transfer of net premiums 41,337
Transfer on death -
Transfer of terminations (2,998)
Transfer of policy loans (768)
Net interfund transfers 214,741
252,312
Net increase in net assets 244,493
Net Assets
Beginning of year -
End of year $ 244,493
</TABLE>
*Reflects the period from commencement of operations October 4, 1994 through
December 31, 1994.
See accompanying notes.
<PAGE> - 122 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Statements of Changes in Net Assets (continued)
Years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
Total
Year ended Year Ended
Dec. 31/94 Dec. 31/93
<S> <C> <C>
From Operations
Net investment income $ 1,490,374 $ 662,831
Net realized loss (gain) 262,180 483,088
Unrealized (depreciation)
appreciation of investments
during the year (2,511,108) (499,164)
Increase (decrease) in net
assets derived from
operations (758,554) 646,755
From capital transactions
Additions (deductions) from:
Transfer of net premiums 45,751,025 6,912,513
Transfer on death - (42,338)
Transfer of terminations (5,291,717) (647,879)
Transfer of policy loans (341,052) (237,225)
Net interfund transfers 83,520 4,258
40,201,776 5,989,329
Net increase in net assets 39,443,222 6,636,084
Net Assets
Beginning of year 10,940,634 4,304,550
End of year $ 50,383,856 $10,940,634
</TABLE>
*Reflects the period from commencement of operations October
4, 1994 through December 31, 1994.
See accompanying notes.
<PAGE> - 123 -
<PAGE>
Report of Independent Auditors
To the Board of Directors
The Manufacturers Life Insurance
Company of America
We have audited the statement of assets and liabilities as of
December 31, 1994 and the statement of operations, and the
statements of changes in net assets for each of the periods
presented herein of Separate Account Three of The
Manufacturers Life Insurance Company of America (comprising,
respectively, the Emerging Growth Equity Sub-Account, Common
Stock Sub-Account, Real Estate Securities Sub-Account,
Balanced Assets Sub-Account, Capital Growth Bond Sub-Account,
Money Markets Sub-Account, International Sub-Account and
Pacific Rim Emerging Markets Sub-Account). These financial
statements are the responsibility of the management of The
Manufacturers Life Insurance Company of America. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of each of the respective sub-accounts constituting
Separate Account Three of The Manufacturers Life Insurance
Company of America at December 31, 1994, and the results of
their operations and changes in their net assets for each of
the periods presented herein, in conformity with generally
accepted accounting principles.
Ernst & Young LLP
February 6, 1995
<PAGE> - 124 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements
December 31, 1994
1. Organization
Separate Account Three of The Manufacturers Life Insurance
Company of America (the "Separate Account") is a unit
investment trust registered under the Investment Company Act
of 1940, as amended. The Separate Account is currently
comprised of eight investment sub-accounts, one for each
series of shares of Manulife Series Fund, Inc., available for
allocation of net premiums under single premium variable life
insurance policies (the "Policies") issued by The
Manufacturers Life Insurance Company of America
("Manufacturers Life of America").
The Separate Account was established by Manufacturers Life of
America, a wholly-owned subsidiary of The Manufacturers Life
Insurance Company of Michigan ("MLIM"), as a separate
investment account on February 6, 1987. MLIM is a life
insurance holding company organized in 1983 under Michigan law
and a wholly-owned subsidiary of The Manufacturers Life
Insurance Company ("Manulife Financial"), a mutual life
insurance company based in Toronto, Canada.
The assets of the Separate Accounts are the property of
Manufacturers Life of America. The portion of the Separate
Account's assets applicable to the Policies will not be
chargeable with liabilities arising out of any other business
Manufacturers Life of America may conduct.
The net assets may not be less than the amount required under
state insurance law to provide for death (without regard to
the minimum death benefit guarantee) and other Policy
benefits.
Additional assets are held in Manufacturers Life of America's
general account to cover the contingency that the guaranteed
minimum death benefit might exceed the death benefit which
would have been payable in the absence of such guarantee.
In September 1993, Manufacturers Life of America began to
market a new life insurance product, Horizon Variable
Universal Life, through Separate Account Three. In September
1994, Manufacturers Life of America added Generation, a
survivorship variable life product sold through Separate
Account Three.
<PAGE> - 125 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (cont'd)
2. Significant Accounting Policies
The following is a summary of significant accounting policies
followed by the Separate Account in preparation of its
financial statements.
a. Valuation of Investments - Investments are made among the
eight Funds of Manulife Series Fund, Inc. and are valued
at the reported net asset values of these Funds.
Transactions are recorded on the trade date.
b. Realized gains and losses on the sale of investments are
computed on the first-in, first-out basis.
c. Dividend income is recorded on the ex-dividend date.
d. Federal Income Taxes - Manufacturers Life of America, the
Separate Account's sponsor, is taxed as a "life insurance
company" under the Internal Revenue Code. Under these
provisions of the Code, the operations of the Separate
Account form part of the sponsor's total operations and
are not taxed separately.
The current year's operations of the Separate Account are not
expected to affect the sponsor's tax liabilities and,
accordingly, no charges were made against the Separate Account
for federal, state and local taxes. However, in the future,
should the sponsor incur significant tax liabilities related
to Separate Account operations, it intends to make a charge or
establish a provision within the Separate Account for such
taxes.
3. Mortality and Expense Risks Charge
Until March 1993, Manufacturers Life of America deducted from
the assets of the Separate Account a daily charge equivalent
to an annual rate of 0.50% of the average net value of the
Separate Account's assets for mortality and expense risks.
After March 1993, mortality expense charges are only applied
to Horizon Variable Universal Life and Generation Survivorship
Variable Universal Life policies and are deducted as a policy
charge rather than an expense of the Separate Account.
<PAGE> - 126 -
<PAGE>
Separate Account Three of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (cont'd)
4. Purchases and Sales of Manulife Series Fund, Inc. Shares
Purchases and sales of the shares of common stock of Manulife
Series Fund, Inc. for the year ended December 31, 1994 were
$47,012,777 and $5,377,813, respectively, and for the year
ended December 31, 1993 were $8,804,293 and $2,194,923,
respectively.
5. Related Party Transactions
ManEquity, Inc., a registered broker-dealer and indirect
wholly-owned subsidiary of Manulife Financial, acts as the
principal underwriter of the Policies pursuant to a
Distribution Agreement with Manufacturers Life of America.
Registered representatives of either ManEquity, Inc. or other
broker-dealers having distribution agreements with ManEquity,
Inc. who are also authorized as variable life insurance agents
under applicable state insurance laws, sell the Policies.
Registered representatives are compensated on a commission
basis.
Manufacturers Life of America has a formal service agreement
with its affiliate, Manulife Financial, which can be
terminated by either party upon two months' notice. Under
this Agreement, Manufacturers Life of America pays for legal,
actuarial, investment and certain other administrative
services.
<PAGE> - 127 -
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> - 128 -
<PAGE>
The following financial statements of
The Manufacturers Life Insurance Company of America
for the period ended September 30, 1995 only
are unaudited.
<PAGE> - 129 -
<PAGE>
The Manufacturers Life Insurance Company of America
Balance Sheets
<TABLE>
<CAPTION>
September 30 December 31
1995 1994
(Unaudited)
<S> <C> <C>
Assets
Bonds, at amortized cost
(market $60,296,680 -1995
and $51,080,395 - 1994) $57,902,241 $52,149,080
Stocks (Note 7) 24,052,190 25,629,580
Short-term investments 189,672 10,914,561
Policy loans 6,582,470 4,494,390
Total investments 88,726,573 93,187,611
Cash on hand and on deposit 3,584,824 5,069,197
Life insurance premiums deferred
and uncollected 247,393 13,646
Accrued investment income 1,047,513 796,333
Separate account assets 439,258,680 302,736,198
Funds receivable on reinsurance assumed 421,666 880,284
Receivable for undelivered securities 15,682 69,003
Other assets 156,570 333,651
Total assets $533,458,901 $403,085,923
Liabilities, capital and surplus
Aggregate policy reserves $33,749,082 $29,761,174
Contract deposit funds 2,750,817 3,938,425
Interest maintenance and asset
valuation reserves 4,209,156 111,566
Policy and contract claims 77,415 94,346
Provision for policyholder
dividends payable 2,379,081 1,385,409
Amounts due to affiliates 6,872,260 7,377,108
Accrued liabilities 3,803,608 4,773,565
Amounts payable for
undelivered securities 7,841 3,512,459
Separate account liablilities 439,258,680 302,736,198
Total liabilities 493,107,940 353,690,250
Capital and surplus:
Common shares, par value $ 1.00; authorized,
5,000,000 shares; issued and outstanding shares
(4,501,856- - 1995 and 4,501,855- -1994) 4,501,856 4,501,855
Preferred shared, par value $ 1.00; authorized,
5,000,000 shares; issued and outstanding shares
105,000- - 1995 and 1994) 10,500,000 10,500,000
Capital paid in excess of par value 54,999,997 49,849,998
Surplus (29,650,892) (15,456,180)
Total capital and surplus 40,350,961 49,395,673
Total liablilities, capital,
and surplus $533,458,901 $403,085,923
</TABLE>
See accompanying notes
<PAGE> - 130 -
<PAGE>
The Manufacturers Life Insurance Company of America
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Life premiums $26,544,818 $21,796,303 $87,786,742 $73,901,637
Annuity deposits 9,176,744 15,984,688 29,606,973 63,516,003
Investment income, net of
investment expenses 1,197,939 595,134 3,854,192 2,193,338
Amortization of interest
maintenance reserve 8,353 (11,691) 14,172 27,901
Foreign exchange gain (loss) (329,945) 492,338 (329,662) 128,130
Other revenue 37,106 12,096 92,821 29,638
Total revenues 36,635,015 38,868,868 121,025,238 139,796,647
Benefits paid or provided:
Increase (decrease) in
aggregate policy
reserves (2,172,807) (2,690,406) 3,987,908 (4,359,854)
Increase (decrease) in
liability for
deposit funds (701,354) (2,211,032) (1,187,608) 773,375
Transfers to separate
accounts, net 21,999,494 31,050,361 73,046,861 112,599,442
Death benefits 694,831 207,720 2,163,196 329,505
Annuity benefits (506,892) (21,953) 30,802 224,706
Surrender benefits 6,683,913 707,625 12,938,150 2,100,743
25,997,185 27,042,315 90,979,309 111,667,917
Insurance expenses:
Intercompany service fee 5,289,000 5,895,734 16,764,000 16,358,143
Commissions 4,471,643 5,562,635 13,449,277 17,953,310
General expenses 4,665,024 1,726,021 9,470,575 4,609,828
Commission and expense
allowances on reinsurance
assumed 13,329 53,332 942,979 583,192
14,438,996 13,237,722 40,626,831 39,504,473
Loss before policyholders'
dividends and federal income
tax benefit (3,801,166) (1,411,169) (10,580,902)(11,375,743)
Dividends to policyholders 263,345 (152,804) 2,172,621 593,435
Loss before federal income tax
benefit (4,064,511) (1,258,365) (12,753,523)(11,969,178)
Federal income tax benefit - 99,969 - 499,393
Net loss from operations after
policyholders' dividends and
federal income tax (4,064,511) (1,358,334) (12,753,523)(12,468,571)
Net realized capital gain (loss)
net of transfer to interest
maintenance reserve 38,348 (75) 630,788 (554,046)
($4,026,163)($1,358,409)($12,122,735)($13,022,617)
</TABLE>
See accompanying notes.
<PAGE> - 131 -
<PAGE>
The Manufacturers Life Insurance Company of America
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
1995 1994
<S> <C> <C>
Operating activities:
Premiums collected, net $ll7,l59,968 $137,421,718
Policy benefits paid, net (15,137,221) (2,797,112)
Commissions and other expenses paid (43,854,220) (35,341,889)
Net investment income 3,569,190 2,179,963
Dividends paid to policyholders (1,178,949) (724,935)
Other income and expenses (172,880) (786,657)
Transfers to separate accounts, net (72,596,690) (112,179,755)
Net cash used in operating activities (12,210,802) (12,228,667)
Investing activities
Sale, maturity, or repayment of investments 62,744,420 36,295,459
Purchase of investments (67,892,880) (27,311,651)
Net cash (used in) provided by
investing activities (5,148,460) 8,983,808
Financing Activities
Issuance of stock 5,150,000 -
Net increase in cash and short-term
investments (12,209,262) (3,244,859)
Cash and short-term investments
at beginning of year 15,983,758 9,058,136
Cash and short-term investments
at end of year $3,774,496 $5,813,277
</TABLE>
See accompanying notes.
<PAGE> - 132 -
<PAGE>
The Manufacturers Life Insurance Company of America
Statement of Changes in Capital and Surplus
(Unaudited)
<TABLE>
<CAPTION>
Capital
Paid in
Excess of
Capital Par Value Surplus Total
<S> <C> <C> <C>
Balance, December 31,
1994 $15,001,855 $49,849,998 ($15,456,180)$49,395,673
Net loss from operations (12,122,735)(12,122,735)
Issuance of common stock 1 5,149,999 5,150,000
Increase in asset valuation
reserve (2,869,008) (2,869,008)
Increase in nonadmitted assets (1,710,551) (1,710,551)
Change in liability for
reinsurance
in unauthorized companies (54,935) (54,935)
Change in net unrealized
capital gains 2,562,517 2,562,517
Balance, September 30, 1995 15,001,856 $54,999,997 ($29,650,892)$40,350,961
</TABLE>
See accompanying notes.
<PAGE> - 133 -
<PAGE>
The Manufacturers Life Insurance Company of America
Notes to Financial Statements
(Unaudited)
September 30, 1995
1. Organization
The Manufacturers Life Insurance Company of America
("Manufacturers Life of America" or the "Company") is a
wholly-owned subsidiary of The Manufacturers Life Insurance
Company of Michigan (the "Parent"), which is in turn a wholly-
owned subsidiary of The Manufacturers Life Insurance Company
("Manulife Financial"), a Canadian-based mutual life insurance
company (Notes 4 and 5).
During the nine months ended September 30, 1995, the Company
received a capital contribution of $5,150,000 from the Parent
in return for one share of common stock (par value $1).
Subsequent to the end of the period the Company received a
capital contribution of $7,420,000 from the Parent in return
for one share of common stock (par value $1).
2. Significant Accounting Policies
Basis of Presentation
The accompanying unaudited financial statements of The
Manufacturers Life Insurance Company of America have been
prepared in accordance with accounting practices prescribed or
permitted for interim financial information by the Insurance
Department of Michigan (statutory practices) and with the
instructions to Form 1O-Q and Article 10 Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements for mutual life insurance
companies and their wholly-owned and indirect subsidiaries.
Statutory practices differ in certain respects from generally
accepted accounting principles followed by stock life
insurance companies in determining financial position and
results of operations. In general, the differences are: (1)
commissions and other costs of acquiring and writing policies
are charged to expense in the year incurred rather than being
amortized over the related policy term; (2) certain non-
admitted assets are excluded from the balance sheet; (3)
deferred income taxes are not provided for timing differences
in recording certain items for financial statement and tax
purposes; (4) certain transactions are reflected directly to
surplus rather than reflected in net income from operations,
and (5) debt securities are carried at amortized cost.
Operating results for the nine month period ended September
30, 1995 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1995. For
further information, refer to the financial statements and
footnotes thereto included in the Company's annual report on
Form 10-K for the year ended December 31, 1994.
<PAGE> - 134 -
<PAGE>
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
(Unaudited)
2. Significant Accounting Policies (continued)
In April 1993, the Financial Accounting Standard Board issued
Interpretation 40, "Applicability of Generally Accepted
Accounting Principles to Mutual Life Insurance and Other
Enterprises." The interpretation, which has been amended to be
effective for 1996 annual financial statements and thereafter,
will no longer allow statutory financial statements to be
described as being prepared in conformity with generally
accepted accounting principles (GAAP). This will require life
insurance companies to adopt all applicable standards
promulgated by the FASB in any general purpose financial
statements such companies may issue. While GAAP standards
have recently been developed for mutual life insurance
companies, the Company has not yet quantified the effects of
the Interpretation on its general purpose financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary
for a fair presentation have been included.
All amounts presented are expressed in U.S. Dollars.
Certain amounts from prior years have been restated to conform
to the current year's presentation.
Stocks
Stocks are carried at market value.
Bonds
Bonds are carried at amortized cost. Discounts and premiums
on investments are amortized using the effective interest
method. Gains and losses on sales of bonds are calculated on
the specific identification method and recognized into income
based on NAIC prescribed formulas. Short-term investments
include investments with maturities of less than one year at
the date of acquisition. Market values disclosed are based on
NAIC quoted values.
Asset Valuation Reserve and Interest Maintenance Reserve
The Asset Valuation Reserve and Interest Maintenance Reserve
were determined by NAIC prescribed formulas and are reported
as liabilities rather than as valuation allowances or
appropriations of surplus.
Policy and Contract Claims
<PAGE> - 135 -
<PAGE>
Policy and contract claims are determined on an individual
case basis for reported losses. Estimates of incurred but not
reported losses are developed on the basis of past experience.
<PAGE> - 136 -
<PAGE>
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
(Unaudited)
2. Significant Accounting Policies (continued)
Separate Accounts
Separate account assets and liabilities reported in the
accompanying financial statements represent funds that are
separately administered, principally for variable annuity and
variable life contracts, and for which the contract holder,
rather than the Company, bears the investment risk. Separate
account assets are recorded at market value. Operations of
the separate accounts are not included in the accompanying
financial statements.
Revenue Recognition
Both premium and investment income are recorded when due.
Reinsurance
Reinsurance premiums and claims are accounted for on a basis
consistent with that used in accounting for the original
policies issued and the terms of the reinsurance contracts.
Premiums and claims are reported net of reinsured amounts.
Policy Reserves
Certain policy reserves are calculated based on statutorily
required interest and mortality assumptions.
3. Investments and Investment Income
The amortized cost and market value of investments in fixed
maturities (bonds) as of September 30, 1995 is summarized as
follows:
<TABLE>
<CAPTION>
Quoted or
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government Securities $21,034,081 $706,256 $(49,695) $21,690,642
Foreign Government Securities 7,116,744 299,468 (13,898) 7,402,314
Corporate Securities 29,751,416 1,530,866 (78,558) 31,203,724
$57,902,241 $2,536,590 (142,151) $60,296,680
</TABLE>
<PAGE> - 137 -
<PAGE>
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
(Unaudited)
3. Investments and Investment Income (continued)
Proceeds from sales of investments in debt securities during
the first nine months of 1995 were $58,728,738. Gross gains
of $2,416,264 and gross losses of $199,627 were realized on
those sales.
The amortized cost and market value of investments in fixed
maturities (bonds) as of December 31, 1994 is summarized as
follows:
<TABLE>
<CAPTION>
Quoted or
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government securities $34,265,152 $243,971 $(441,592) $34,067,531
Foreign Government securities 7,388,458 (294,385) 7,094,073
Corporate securities 10,495,470 2,457 (577,136) 9,920,791
$52,149,080 $246,428 $(1,313,113) $51,082,395
</TABLE>
The amortized cost and market value of fixed maturities at
September 30, 1995 by contractual maturities, are shown below.
Expected maturities may differ from contractual maturities
because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
<TABLE>
<CAPTION>
Years to Maturity Amortized Cost Market Value
<S> <C> <C>
One year or less $675,639 $679,474
Greater than 1; up to 5 years 5,706,420 5,786,646
Greater than 5; up to 1O years 17,870,070 19,000,568
Due after IO years 33,650,112 34,829,992
</TABLE> $57,902,241 60,296,680
At September 30, 1995, $5,696,857 of bonds at amortized costs
were on deposit with government insurance departments to
satisfy regulatory regulations.
<PAGE> - 138 -
<PAGE>
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
(Unaudited)
3. Investments and Investment Income (continued)
Major categories of net investment income for the nine months
ended September 30, 1995 were as follows:
<TABLE>
<CAPTION>
Net Investment Income
1995 1994
<S> <C> <C>
Gross investment income:
Bond Income $3,190,652 $1,311,007
Dividends: Manulife Series Fund, Inc.
(Note 7) 7,848 407,610
Policy Loans 296,205 192,491
Short-term investments 624,593 366,387
4,119,298 2,277,495
Investment Expenses (265,106) (84,157)
Net investment income $3,854,192 $2,193,338
</TABLE>
4. Related Party Transactions
Manufacturers Life of America has a formal service agreement
with Manulife Financial which can be terminated by either
party upon two months' notice. Under the Agreement,
Manufacturers Life of America will pay direct operating
expenses incurred each year by Manulife Financial on behalf of
Manufacturers Life of America. Services provided under the
Agreement include legal, actuarial, investment, data
processing and certain other administrative services. Costs
incurred under this Agreement, for the nine months ended
September 30, 1995 and 1994, were $17,029,106 and $16,442,300
respectively.
In addition, the Company has several reinsurance agreements
with Manulife Financial which may be terminated upon the
specified notice by either party. These agreements are
summarized as follows:
(a) The Company assumes two blocks of insurance from Manulife
Financial under coinsurance treaties. The Company's risk
is limited to $100,000 of initial face amount per claim
plus a prorata share of any increase in face amount.
(b) The Company cedes the risk in excess of $25,000 per life
to Manulife Financial under the terms of an automatic
reinsurance agreement.
<PAGE> - 139 -
<PAGE>
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
(Unaudited)
4. Related Party Transactions (continued)
(c) The Company cedes a substantial portion of its risk on its
Flexible Premium Variable Life policies to Manulife
Financial under the terms of a stop loss reinsurance
agreement.
(d) Under the terms of an automatic coinsurance agreement, the
Company cedes its risk on structured settlements to
Manulife Financial.
Selected amounts for the nine months ended September 30, 1995
and 1994 relating to the above treaties reflected in the
financial statements are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
Life and annuity premiums assumed $5,540,617 $2,577,230
Other life and annuity
consideration ceded (431,357) (544,056)
Commissions and expense allowances
on reinsurance assumed (942,979) (583,192)
Policy reserves assumed 50,651,383 25,896,167
Policy reserves ceded 3,862,617 3,763,793
</TABLE>
5. Federal Income Tax
The Company joins the Parent and another wholly-owned life
insurance subsidiary in filing a U.S. consolidated income tax
return as a life insurance group under provisions of the
Internal Revenue Code. In accordance with an income tax-
sharing agreement dated December 29, 1983, the Company's
income tax provision (or benefit) is computed as if the
Company filed a separate income tax return. The Company
receives no surtax exemption. Tax benefits from operating
losses are provided at the U.S. statutory rate plus any tax
credits attributable to the Company, provided the consolidated
group utilizes such benefits currently. The tax provision or
benefit is the estimated amount that the Company will receive
from the consolidated group under the tax sharing agreement.
<PAGE> - 140 -
<PAGE>
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
(Unaudited)
6. Statutory Restrictions on Dividends
The Company is subject to statutory limitations on the payment
of dividends to its Parent. The Company cannot pay dividends
during 1995 without the prior approval of insurance regulatory
authorities.
7. Investment in Manulife Series Fund, Inc.
The Company markets variable life insurance and variable
annuity products through Separate Accounts which use Manulife
Series Fund, Inc. as its investment vehicle.
Common stock represents the Company's seed money investment in
Manulife Series Fund, Inc.
<PAGE> - 141 -
<PAGE>
Report of Independent Auditors
The Board of Directors
The Manufacturers Life Insurance
Company of America
We have audited the accompanying balance sheets of The
Manufacturers Life Insurance Company of America as of December
31, 1994 and 1993, and the related statements of operations,
changes in capital and surplus, and cash flows for each of the
three years in the period ended December 31, 1994. Our audit
also included the financial statement schedules listed in the
index at item 14(a). These financial statements and schedules
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these fmancial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall fmancial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of The Manufacturers Life Insurance Company of
America at December 31, 1994 and 1993, and the results of its
operations and its cash flows for each of the three years in
the period ended December 31, 1994, in conformity with
generally accepted accounting principles and with reporting
practices prescribed or permitted by the Insurance Department
of the State of Michigan. Also, in our opinion, the related
financial statement schedules when considered in relation to
the basic fmancial statements taken as a whole present fairly
in all material respects the information set forth therein.
Philadelphia, Pennsylvania ERNST & YOUNG LLP
February 20, 1995
<PAGE> - 142 -
<PAGE>
The Manufacturers Life Insurance Company of America
Balance Sheets
<TABLE>
<CAPTION>
December 31
1994 1993
<S> <C> <C>
Assets
Bonds, at amortized cost (market
$51,082,395--1994 and
$24,120,198--1993) $52,149,080 $23,375,773
Stocks (note 9) 25,629,580 40,549,278
Short-term investments 10,914,561 797,875
Policy loans 4,494,390 3,023,275
Total investments 93,187,611 67,746,201
Cash 5,069,197 8,260,261
Life insurance premiums
deferred and uncollected 13,646 31,574
Accrued investment income 796,333 468,968
Separate account assets 302,736,198 174,182,746
Funds receivable on reinsurance assumed 880,284 2,240,200
Receivable for undelivered securities 69,003 353,576
Other assets 333,651 108,260
Total assets $403,085,923 $253,391,786
Liabilities, capital and surplus
Aggregate policy reserves $29,761,174 $13,019,605
Other contract deposits 3,938,425 3,284,211
Interest maintenance and asset
valuation reserves 111,566 431,400
Policy and contract claims 94,346 153,709
Provision for policyholder
dividends payable 1,385,409 1,016,502
Amounts due to affiliates 7,377,108 7,953,242
Payable for undelivered securities 3,512,459 -
Accrued liabilities 4,773,565 2,694,433
Separate account liabilities 302,736,198 174,182,746
Total liabilities 353,690,250 202,735,848
Capital and surplus:
Common shares, par value $1.00;
authorized, 5,000,000 shares; issued
and outstanding 4,501,855 shares
(1,501,854 shares in 1993) 4,501,855 1,501,854
Preferred shares, par value $100;
authorized 5,000,000 shares; issued
and outstanding 105,000 shares
(335,000 shares in 1993) 10,500,000 33,500,000
Capital paid in excess of par value 49,849,998 9,849,999
Surplus (deficit) (15,456,180) 5,804,085
Total capital and surplus 49,395,673 50,655,938
Total liabilities, capital and surplus $403,085,923 $253,391,786
</TABLE>
See accompanying notes.
<PAGE> - 143 -
<PAGE>
The Manufacturers Life Insurance Company of America
Statements of Operations
<TABLE>
<CAPTION>
Year ended December 31
Revenues: 1994 1993 1992
<S> <C> <C> <C>
Life and annuity premiums, principally
reinsurance assumed $ 25,385,628 $12,745,981 $6,579,233
Other life and annuity considerations 168,075,003 113,332,974 33,268,869
Investment income, net of investment
expenses ($106,908 in 1994,
$89,186 in 1993, $58,423 in 1992) 3,588,629 3,323,962 1,430,454
Amortization of interest maintenance
reserve 19,527 32,866 7,707
Commission and expense allowance
on reinsurance ceded 187,694 - -
Foreign exchange gain (loss) 114,728 (197,971) 24,657
Other revenue 54,763 33,935 4,903
Total revenues 197,425,972 129,271,747 41,315,823
Benefits paid or provided:
Increase in aggregate policy reserves 16,741,569 5,168,484 3,625,964
Increase in liability for deposit funds 654,214 2,820,520 422,369
Transfers to separate accounts, net 136,896,150 98,601,141 26,789,260
Death benefits 640,875 582,534 286,278
Maturity benefits 580,615 79,253 -
Surrender benefits 3,701,591 2,319,926 1,596,434
159,215,014 109,571,858 32,720,305
Insurance expenses:
Management fee 21,222,310 12,378,288 4,861,244
Commissions 23,416,110 14,742,130 5,192,462
General expenses 8,260,467 5,108,104 2,744,475
Commissions and expense allowances
on reinsurance assumed 810,252 329,634 269,141
53,709,139 32,558,156 13,067,322
Loss before policyholders' dividends
and federal income tax (15,498,181) (12,858,267)
(4,471,804)
Dividends to policyholders 1,149,719 837,454 634,652
Loss before federal income tax (16,647,900) (13,695,721)
(5,106,456)
Federal income tax provision (benefit) - (324,643) 339,539
Net loss from operations after
policyholders' dividends and
federal income tax (16,647,900) (13,371,078)
(5,445,995)
Net realized capital gains (excluding capital
gains tax of $0 in 1994, $236,415 in 1993,
and $0 in 1992 and $(554,000) in 1994,
$347,292 in 1993, and $68,401 in 1992
transferred to (from) the interest
maintenance reserve) (3,012,485) 93,618 139,261
Net loss from operations $(19,660,385) $(13,277,460)
$(5,306,734)
</TABLE>
<PAGE> - 144 -
<PAGE>
See accompanying notes.
<PAGE> - 145 -
<PAGE>
The Manufacturers Life Insurance Company of America
Statements of Changes in Capital and Surplus
<TABLE>
<CAPTION>
Capital
Paid in
Excess of Surplus
Capital Par Value (Deficit) Total
<S> <C> <C> <C> <C>
Balance, December 31, 1991 $29,001,853 $4,000,000 $19,650,265 $52,652,118
Net loss from operations (5,306,734)
(5,306,734)
Issuance of preferred shares 6,000,000 6,000,000
Increase in asset valuation
reserve (8,813)
(8,813)
Increase in nonadmitted assets (1,025,556)
(1,025,556)
Change in liability for
reinsurance in unauthorized
companies (7,166)
(7,166)
Company's share of increase
in separate account assets, net 3,240,199 3,240,199
Balance, December 31, 1992 35,001,853 4,000,000 16,542,195 55,544,048
Net loss from operations (13,277,460)
(13,277,460)
Issuance of common stocks 1 5,849,999 5,850,000
Increase in asset valuation
reserve (13,076)
(13,076)
Increase in nonadmitted assets (133,575)
(133,575)
Change in net unrealized capital
losses (1,592,242)
(1,592,242)
Change in liability for
reinsurance in unauthorized
companies (29,905)
(29,905)
Company's share of increase in
separate account assets, net 4,308,148 4,308,148
Balance, December 31, 1993 35,001,854 9,849,999 5,804,085 50,655,938
Net loss from operations (19,660,385)
(19,660,385)
Issuance of common shares 1 19,999,999 20,000,000
Capital restructuring of
preference shares (20,000,000) 20,000,000 -
Increase in asset valuation
reserve (55,286)
(55,286)
<PAGE> - 146 -
<PAGE>
Increase in nonadmitted assets (1,021,357)
(1,021,357)
Change in net unrealized capital
losses (425,082)
(425,082)
Change in liability for
reinsurance in unauthorized
companies (98,155)
(98,155)
Company's share of increase in
separate account assets, net -
-
Balance, December 31, 1994 $15,001,855 $49,849,998 $(15,456,180) $49,395,673
</TABLE>
See accompanying notes.
<PAGE> - 147 -
<PAGE>
The Manufacturers Life Insurance Company of America
Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31
1994 1993 1992
<S> <C> <C> <C>
Operating activities
Premiums collected, net $193,478,637 $126,075,035 $39,842,600
Policy benefits paid, net (4,982,444) (2,829,812) (1,932,712)
Commissions and other expenses paid (48,141,400) (35,203,997) (9,431,344)
Net investment income 3,343,515 3,197,892 1,356,553
Other income and expenses (1,946,063) (1,592,957) (1,849,180)
Transfers to separate accounts, net (136,950,482) (98,220,292) (26,266,436)
Net cash provided by (used in)
operating activities 4,801,763 (8,574,131) 1,719,481
Investing activities
Sale, maturity, or repayment
of investments 73,187,733 28,248,633 11,975,475
Purchase of investments (91,063,874) (73,688,735) (24,400,135)
Net cash used in investing activities (17,876,141) (45,440,102) (12,424,660)
Financing activities
Issuance of shares 20,000,000 5,850,000 6,000,000
Surplus withdrawn from
separate account - 48,701,076 6,000,000
Net cash provided by
financing activities 20,000,000 54,551,076 12,000,000
Net increase in cash and short-term
investments 6,925,622 536,843 1,294,821
Cash and short-term investments
at beginning of year 9,058,136 8,521,293 7,226,472
Cash and short-term investments
at end of year $15,983,758 $9,058,136 $8,521,293
</TABLE>
See accompanying notes.
<PAGE> - 148 -
<PAGE>
The Manufacturers Life Insurance Company of America
Notes to Financial Statements
December 31, 1994
1. Organization
The Manufacturers Life Insurance Company of America
(Manufacturers Life of America or the Company) is a
wholly-owned subsidiary of The Manufacturers Life Insurance
Company of Michigan (the Parent), which is in turn a
wholly-owned subsidiary of The Manufacturers Life Insurance
Company (Manulife Financial), a Canadian-based mutual life
insurance company (Notes 4 and 5).
During 1994, the Company's parent contributed $20,000,000
capital in return for 1 share of the Company's common stock
par value $1 with the remaining $19,999,999 being recorded as
contributed surplus. During 1994 the Company restructured its
capital by exchanging 230,000 shares of preferred stock with a
par value of $23,000,000 for 3,000,000 shares of common stock
par value $3,000,000 with the remaining $20,000,000 being
recorded as contributed surplus.
The Parent contributed $5,850,000 in capital in return for 1
share of common stock during 1993, $6,000,000 in capital in
return for 60,000 shares of preferred stock during 1992.
During 1991, the Company invested $1,800,000 to fund initial
branch operations in Taiwan. This investment in Taiwan was
increased by $6,000,000 in 1992 and a further investment of
$5,200,000 in 1993. There was no new funding in 1994 for the
Taiwan branch.
2. Significant Accounting Policies
Basis of Presentation
The accompanying financial statements of Manufacturers Life of
America have been prepared in accordance with accounting
practices prescribed or permitted by the Insurance Department
of Michigan, which are considered generally accepted
accounting principles for mutual life insurance companies and
their wholly-owned direct and indirect subsidiaries. Such
practices differ in certain respects from generally accepted
accounting principles followed by stock life insurance
companies in determining financial position and results of
operations. In general, the differences are: (1) commissions
and other costs of acquiring and writing policies are charged
to expense in the year incurred rather than being amortized
over the related policy term; (2) certain non-admitted assets
are excluded from the balance sheet; (3) deferred income taxes
are not provided for timing differences in recording certain
items for financial statement and tax purposes; (4) certain
transactions are reflected directly to surplus rather than
reflected in net income from operations (for example, certain
transactions related to the separate accounts); and (5) debt
securities are carried at amortized cost.
<PAGE> - 149 -
<PAGE>
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
Basis of Presentation (continued)
In April 1993, the Financial Accounting Standards Board issued
Interpretation 40, "Applicability of Generally Accepted
Accounting Principles to Mutual Life Insurance and Other
Enterprises". The interpretation, which has been amended to
be effective for 1996 annual financial statements and
thereafter, will no longer allow statutory financial
statements to be described as being prepared in conformity
with generally accepted accounting principles (GAAP). This
will require life insurance companies to adopt all applicable
standards promulgated by the FASB in any general purpose
financial statements such companies may issue. While GAAP
standards have recently been developed for mutual life
insurance companies, the Company has not yet completed the
complex and extensive historical calculations and thus is
unable to quantify the effects of the Interpretation on its
financial statements.
All amounts presented are expressed in U.S. Dollars. Certain
amounts from prior periods have been reclassified to conform
with current period presentation.
Stocks
Stocks are carried at market value.
Bonds
Bonds are carried at amortized cost. Discounts and premiums
on investments are amortized using the effective interest
method. Gains and losses on sales of bonds are calculated on
the specific identification method and recognized into income
based on NAIC prescribed formulas. Short-term investments
include investments with maturities of less than one year at
the date of acquisition. Market values disclosed are based on
NAIC quoted values.
Asset Valuation Reserve and Interest Maintenance Reserve
The Asset Valuation Reserve and Interest Maintenance Reserve
were determined by NAIC prescribed formulas and are reported
as liabilities rather than as valuation allowances or
appropriations of surplus.
Policy and Contract Claims
Policy and contract claims are determined on an individual
case basis for reported losses. Estimates of incurred but not
reported losses are developed on the basis of past experience.
<PAGE> - 150 -
<PAGE>
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
Separate Accounts
Separate account assets and liabilities reported in the
accompanying financial statements represent funds that are
separately administered, principally for variable annuity and
variable life contracts. For the majority of these contracts
the contractholder, rather than the Company, bears the
investment risk. Separate account assets are recorded at
market value. Operations of the separate accounts are not
included in the accompanying financial statements.
Revenue Recognition
Both premium and investment income are recorded when due.
Reinsurance
Reinsurance premiums and claims are accounted for on a basis
consistent with that used in accounting for the original
policies issued and the terms of the reinsurance contracts.
Premiums and claims are reported net of reinsured amounts.
Policy Reserves
Certain policy reserves are calculated based on statutorily
required interest and mortality assumptions.
3. Investments and Investment Income
The amortized cost and market value of investments in fixed
maturities (bonds) as of December 31, 1994 are summarized as
follows:
<TABLE>
<CAPTION>
Quoted or
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government
securities $34,265,152 $243,971 $(441,592) $34,067,531
Foreign government
securities 7,388,458 - (294,385) 7,094,073
Corporate securities 10,495,470 2,457 (577,136) 9,920,791
$52,149,080 $246,428 $(1,313,113) $51,082,395
</TABLE>
<PAGE> - 151 -
<PAGE>
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
3. Investments and Investment Income (continued)
Proceeds from sales of investments in debt securities during
1994 were $43,175,845. Gross gains of $167,738 and gross
losses of $1,006,702 were realized on those sales.
The amortized cost and market value of investments in fixed
maturities (bonds) as of December 31, 1993 are summarized as
follows:
<TABLE>
<CAPTION>
Quoted or
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government
securities $15,473,821 $725,851 $ (19,830) $16,179,842
Foreign government
securities 3,277,886 39,710 (5,316) 3,312,280
Corporate securities 4,624,066 47,402 (43,392) 4,628,076
$23,375,773 $812,963 $ (68,538) $24,120,198
</TABLE>
Proceeds from sales of investments in debt securities during
1993 were $28,248,633. Gross gains of $694,800 and gross
losses of $17,715 were realized on those sales.
The amortized cost and market value of fixed maturities at
December 31, 1994 by contractual maturities, are shown below.
Expected maturities may differ from contractual maturities
because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
<TABLE>
<CAPTION>
Years to Maturity Amortized Cost Market Value
<S> <C> <C>
One year or less $ 107,413 $ 108,160
Greater than 1; up to 5 years 5,213,296 5,217,002
Greater than 5; up to 10 years 24,217,449 23,599,525
Due after 10 years 22,610,922 22,157,708
$ 52,149,080 $ 51,082,395
</TABLE>
At December 31, 1994, $4,447,934 of bonds at amortized cost
were on deposit with government insurance departments to
satisfy regulatory regulations.
<PAGE> - 152 -
<PAGE>
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
3. Investments and Investment Income (continued)
Major categories of net investment income for each year were
as follows:
<TABLE>
<CAPTION>
Net Investment Income
1994 1993 1992
<S> <C> <C> <C>
Gross investment income:
Dividend; Manulife Series
Fund, Inc. $ 1,244,794 $ 1,440,392 $ -
Bond income 1,712,294 1,422,064 1,043,273
Policy loans 236,972 166,514 131,606
Short-term investments 501,477 384,178 313,998
3,695,537 3,413,148 1,488,877
Investment expenses (106,908) (89,186) (58,423)
Net investment income $ 3,588,629 $ 3,323,962 $ 1,430,454
</TABLE>
4. Related Party Transactions
The Company has a formal service agreement with Manulife
Financial which can be terminated by either party upon two
months' notice. Under the Agreement, the Company will pay
direct operating expenses incurred each year by Manulife
Financial on behalf of the Company. Services provided under
the Agreement include legal, actuarial, investment, data
processing and certain other administrative services. Costs
incurred under this Agreement were $21,326,446 in 1994,
$12,467,474 in 1993, and $4,919,667 in 1992. In addition,
there were $7,795,184 agents' bonuses in 1994, $5,363,558 in
1993, and $1,871,799 in 1992 which were allocated to the
Company and are included in commissions.
The Company has reinsurance agreements with Manulife Financial
which may be terminated upon the specified notice by either
party. These agreements are summarized as follows:
(a) The Company assumes two blocks of insurance from Manulife
Financial under coinsurance treaties. The Company's risk
is limited to $100,000 of initial face amount per claim
plus a pro-rata share of any increase in face amount.
(b) The Company cedes the risk in excess of $25,000 per life
to Manulife Financial under the terms of an automatic
reinsurance agreement.
(c) The Company cedes a substantial portion of its risk on
its Flexible Premium Variable Life policies to Manulife
<PAGE> - 153 -
<PAGE>
Financial under the terms of a stop loss reinsurance
agreement.
<PAGE> - 154 -
<PAGE>
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
4. Related Party Transactions (continued)
(d) Under the terms of an automatic coinsurance agreement,
the Company cedes its risk on structured settlements to
Manulife Financial.
Selected amounts relating to the above treaties reflected in
the financial statements are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Life and annuity premiums assumed $ 25,385,628 $ 12,745,981 $ 6,579,233
Other life and annuity
considerations ceded (437,650) (201,685) (114,505)
Commissions and expense allowances
on reinsurance assumed (810,252) (329,634) (269,141)
Policy reserves assumed 47,672,591 23,070,952 10,799,350
Policy reserves ceded 3,786,647 3,782,156 3,662,930
</TABLE>
During 1992 and 1993 the Company assumed the first $50,000 of
initial face amount on two blocks of business. This resulted
in transfers of $5,031,000 and $10,837,000, respectively, to
establish the initial reserves. In 1994 the treaties were
amended to assume the first $100,000 of initial face amount
for the same blocks of business. This resulted in a transfer
of $21,477,000 to establish the additional reserve.
Commissions equal to 17% are charged for all renewed premiums
related to these contracts.
During 1994, the Company terminated another treaty resulting
in a premium to Manulife Financial to transfer the reserve of
$799,874.
5. Federal Income Tax
The Company joins the Parent, The Manufacturers Life Insurance
Co. (U.S.A.) and Manufacturers Reinsurance Limited in filing a
U.S. consolidated income tax return as a life insurance group
under provisions of the Internal Revenue Code. In accordance
with an income tax-sharing agreement dated December 29, 1983,
the Company's income tax provision (or benefit) is computed as
if the Company filed a separate income tax return. The
Company receives no surtax exemption. Tax benefits from
operating losses are provided at the U.S. statutory rate plus
any tax credits attributable to the Company, provided the
consolidated group utilizes such benefits currently. In 1994,
1993, and 1992, the Company's provisions (benefit) based upon
the above agreement will be paid to one or more members of the
<PAGE> - 155 -
<PAGE>
consolidated group in accordance with the income tax-sharing
agreement.
<PAGE> - 156 -
<PAGE>
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
5. Federal Income Tax (continued)
The Company, Parent and The Manufacturers Life Insurance Co.
(U.S.A.) have available consolidated net operating losses of
approximately $92,600,000 which will expire in the years 2007
to 2009, and capital loss carryforwards of $129,600,000 which
will expire in 1999. The losses of the Company, Parent and
The Manufacturers Life Insurance Co. (U.S.A.) may be used to
offset the ordinary and capital gain income of Manufacturers
Reinsurance Limited. However, losses of Manufacturers
Reinsurance Limited may not be used to offset the income of
the other members of the consolidated group.
6. Statutory Restrictions on Dividends
The Company is subject to statutory limitations on the payment
of dividends to its Parent. The Company cannot pay dividends
during 1995 without the prior approval of insurance regulatory
authorities.
7. Reinsurance
The Company cedes reinsurance as a party to several
reinsurance treaties with major unrelated insurance companies.
Summary financial information related to these reinsurance
activities is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Life insurance premiums assumed $ - $ - $28,887,669
Life insurance premiums ceded (218,767) (130,913) (28,809,307)
</TABLE>
During 1992, the Company assumed and ceded a significant block
of business on a yearly renewable term basis. This contract
was not renewed in 1993.
<PAGE> - 157 -
<PAGE>
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
8. Aggregate Policy Reserves
Aggregate policy reserves for life policies including variable
life are based on statutory mortality tables and interest
assumptions using either the net level or commissioners'
reserve valuation method. The composition of the aggregate
policy reserves at December 31, 1994 and 1993 is as follows:
<TABLE>
<CAPTION>
Mortality Interest
Aggregate Reserves Table Rates
1994 1993
<S> <C> <C> <C>
$ - $ 758,158 1958 CSO 4%
28,553,885 11,792,874 1980 CSO 4%
(189,080) (62,228) Reinsurance ceded
1,396,369 530,801 Miscellaneous
$ 29,761,174 $ 13,019,605
</TABLE>
9. Investment in Separate Accounts
During 1984, the Company initiated plans to market variable
life insurance products through Separate Account One of The
Manufacturers Life Insurance Company of America ("Separate
Account One") using Manulife Series Fund, Inc. as its
investment vehicle. Initial capitalization was $15,000,000.
Through 1988, the Company provided an additional
capitalization of $6,000,000.
In December 1993, the Company transferred all of its shares,
related to seed money, in Manulife Series Fund, Inc. out of
Separate Account One to the General Account. At December 31,
1994, the $25,629,580 common stock represents the Company's
seed money investment in Manulife Series Fund, Inc.
During 1994, 1993, and 1992, the following dividends were
received from Manulife Series Fund, Inc.:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Separate Account One $ 38,732 $1,610,693 $3,166,712
Separate Account Two 4,574,620 7,377,861 1,706,218
Separate Account Three 1,490,374 666,141 277,830
Separate Account Four 3,072,376 4,966,559 1,578,932
General Account 1,244,794 1,440,392 -
</TABLE>
<PAGE> - 158 -
<PAGE>
Dividends have been reinvested by the Company in Manulife
Series Fund, Inc.
During 1993, the Company withdrew $8,000,000 of its seed money
and accumulated earnings from Separate Account One and the
Manulife Series Fund, Inc. and utilized these funds to pay
down its intercompany debt.
During 1994, the Company withdrew $13,011,137 of its seed
money and accumulated earnings from the Manulife Series Fund,
Inc. and utilized these funds to pay down its intercompany
debt.
<PAGE> - 159 -
<PAGE>
APPENDIX A
Sample Illustrations Of Policy Values, Cash Surrender Values
And Death Benefits
The following tables have been prepared to help show how
values under the Policy change with investment performance.
The tables include both Policy Values and Cash Surrender
Values as well as Death Benefits. The Policy Value is the sum
of the values in the Investment Accounts, as the tables assume
no values in the Guaranteed Interest Account or Loan Account.
The Cash Surrender Value is the Policy Value less any
applicable surrender charges. The tables illustrate how
Policy Values and Cash Surrender Values, which reflect all
applicable charges and deductions, and Death Benefits of the
Policy on an insured of a given age would vary over time if
the return on the assets of the Portfolio was a uniform,
gross, after-tax, annual rate of 0%, 6% or 12%. The Policy
Values, Death Benefits and Cash Surrender Values would be
different from those shown if the returns averaged 0%, 6% or
12%, but fluctuated over and under those averages throughout
the years. The charges reflected in the tables include those
for: deductions from premiums for state, local and federal
taxes, deferred underwriting and sales charges, and monthly
deductions for administration, cost of insurance and mortality
and expense risks.
<REDLINE>
The amounts shown for the Policy Value, Death Benefit and Cash
Surrender Value as of each policy year reflect the fact that
the net investment return on the assets held in the
sub-accounts is lower than the gross, after-tax return. This
is because the expenses and fees borne by the Portfolios are
deducted from the gross return. The illustrations reflect an
average of the Funds'and Trusts' expenses, which is
approximately 0.76% on an annual basis. The gross annual
rates of return of 0%, 6% and 12% correspond to approximate
net annual rates of return of -.75%, 5.2% and
11.16%.</REDLINE>
The tables assume that no premiums have been allocated to the
Guaranteed Interest Account, that planned premiums are paid on
the policy anniversary and that no transfers, partial
withdrawals, policy loans, changes in death benefit options or
changes in face amount have been made. The tables reflect the
fact that no charges for federal, state or local taxes are
currently made against the Separate Account. If such a charge
is made in the future, it would take a higher gross rate of
return to produce after-tax returns of 0%, 6% and 12% than it
does now.
There are two tables shown for each combination of age and
death benefit option for male non-smokers, one based on
current cost of insurance charges assessed by the Company and
the other based on the maximum cost of insurance charges based
<PAGE> - 160 -
<PAGE>
on the 1980 Commissioners Standard Ordinary Smoker/Nonsmoker
Mortality Tables. Current cost of insurance charges are not
guaranteed and may be changed. Upon request, Manufacturers
Life of America will furnish a comparable illustration based
on the proposed life insured's age, sex (unless unisex rates
are required by law) and risk class, any additional ratings
and the death benefit option, face amount and planned premium
requested. Illustrations for smokers would show less
favorable results than the illustrations shown below.
<REDLINE>
From time to time, in advertisements or sales literature for
the Policies that quote performance data of one or more of the
Portfolios, the Company may include cash surrender values and
death benefit figures computed using the same methodology as
that used in the following illustrations, but with the average
annual total return of the Portfolios for which performance
data is shown in the advertisement replacing the hypothetical
rates of return shown in the following tables. This
information may be shown in the form of graphs, charts, tables
and examples.
</REDLINE>
The Policies have been offered to the public only since
September 10, 1993. However, total return data may be
advertised for as long a period of time as the underlying
Portfolio has been in existence. The results for any period
prior to the Policies' being offered would be calculated as if
the Policies had been offered during that period of time, with
all charges assumed to be those applicable to the Policies.
<PAGE> - 161 -
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Issue Age 35 (Standard)
$500,000 Face Amount Death Benefit Option 1
$5,960 Annual Planned Premium
ASSUMING CURRENT CHARGES
<TABLE>
<REDLINE>
0% Hypothetical
Gross Investment Return
<CAPTION>
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
<S> <C> <C> <C> <C>
1 $6,258 $4,353 $0 $500,000
2 12,829 8,898 4,076 500,000
3 19,728 13,325 6,803 500,000
4 26,973 17,630 11,161 500,000
5 34,579 21,804 15,384 500,000
6 42,566 25,874 19,754 500,000
7 50,953 29,802 23,982 500,000
8 59,758 33,592 28,072 500,000
9 69,004 37,236 32,233 500,000
10 78,712 40,738 36,676 500,000
15 135,039 55,857 55,857 500,000
20 206,927 66,191 66,191 500,000
25 298,676 70,725 70,725 500,000
30 415,774 66,532 66,532 500,000
6% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
1 $6,258 $4,650 $0 $500,000
2 12,829 9,772 4,950 500,000
3 19,728 15,068 8,546 500,000
4 26,973 20,541 14,072 500,000
5 34,579 26,189 19,769 500,000
6 42,566 32,044 25,923 500,000
7 50,953 38,076 32,256 500,000
8 59,758 44,297 38,777 500,000
9 69,004 50,706 45,703 500,000
10 78,712 57,314 53,252 500,000
15 135,039 93,409 93,409 500,000
20 206,927 134,815 134,815 500,000
25 298,676 182,538 182,538 500,000
30 415,774 241,392 241,392 500,000
<PAGE> - 162 -
<PAGE>
12% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
1 $6,258 $4,949 $243 $500,000
2 12,829 10,683 5,860 500,000
3 19,728 16,956 10,434 500,000
4 26,973 23,819 17,350 500,000
5 34,579 31,323 24,902 500,000
6 42,566 39,560 33,440 500,000
7 50,953 48,568 42,748 500,000
8 59,758 58,432 52,911 500,000
9 69,004 69,232 64,229 500,000
10 78,712 81,072 77,010 500,000
15 135,039 159,986 159,986 500,000
20 206,927 287,146 287,146 500,000
25 298,676 494,778 494,778 663,003
30 415,774 845,071 845,071 1,030,987
</TABLE>
(1) All values shown are as of the end of the policy year
indicated, have been rounded to the nearest dollar, and
assume that (a) premiums paid after the initial premium
are received on the policy anniversary, (b) no policy
loan has been made, (c) no partial withdrawal of the Cash
Surrender Value has been made and (d) no premiums have
been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test
has been and continues to be met, the No Lapse Guarantee
will keep the Policy in force until the end of the first
5 Policy Years.
Provided the Cumulative Premium Test or the Fund Value
Test has been and continues to be met, the Death Benefit
Guarantee will keep the Policy in force on all policies
for the first three years and until age 100 on Policies
issued and maintained with a minimum face amount of
$250,000 and Death Benefit Option 1; to age 85 on
policies issued and maintained with a face amount of at
least $250,000 and if Death benefit Option 2 is selected
at any time.
(4) Cash Surrender Values for first two years reflect sales
charge limitations imposed by the S.E.C.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT
WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR
FREQUENCIES. IT IS EMPHASIZED THAT THE HYPOTHETICAL
INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN AND
<PAGE> - 163 -
<PAGE>
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES
TRUST. THE POLICY VALUE, CASH SURRENDER VALUE AND DEATH
BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY
PERIOD OF TIME.</REDLINE>
<PAGE> - 164 -
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Issue Age 35 (Standard)
$500,000 Face Amount Death Benefit Option 1
$5,960 Annual Planned Premium
ASSUMING GUARANTEED CHARGES
<TABLE>
<REDLINE>
0% Hypothetical
Gross Investment Return
<CAPTION>
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
<S> <C> <C> <C> <C>
1 $6,258 $4,353 $0 $500,000
2 12,829 8,895 4,073 500,000
3 19,728 13,319 6,797 500,000
4 26,973 17,620 11,151 500,000
5 34,579 21,793 15,373 500,000
6 42,566 25,836 19,716 500,000
7 50,953 29,738 23,918 500,000
8 59,758 33,502 27,982 500,000
9 69,004 37,119 32,115 500,000
10 78,712 40,590 36,528 500,000
15 135,039 55,450 55,450 500,000
20 206,927 65,123 65,123 500,000
25 298,676 66,668 66,668 500,000
30 415,774 56,679 56,679 500,000
6% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
1 $6,258 $4,650 $0 $500,000
2 12,829 9,769 4,947 500,000
3 19,728 15,062 8,539 500,000
4 26,973 20,531 14,062 500,000
5 34,579 26,176 19,756 500,000
6 42,566 32,003 25,883 500,000
7 50,953 38,007 32,186 500,000
8 59,758 44,197 38,677 500,000
9 69,004 50,573 45,569 500,000
10 78,712 57,143 53,080 500,000
15 135,039 93,904 92,904 500,000
20 206,927 133,515 133,515 500,000
25 298,676 178,109 178,109 500,000
30 415,774 231,060 231,060 500,000
<PAGE> - 165 -
<PAGE>
12% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
1 $6,258 $4,949 $243 $500,000
2 12,829 10,680 5,857 500,000
3 19,728 16,949 10,427 500,000
4 26,973 23,807 17,338 500,000
5 34,579 31,308 24,888 500,000
6 42,566 39,516 33,395 500,000
7 50,953 48,492 42,672 500,000
8 59,758 58,321 52,800 500,000
9 69,004 69,080 64,077 500,000
10 78,712 80,874 76,811 500,000
15 135,039 159,357 159,357 500,000
20 206,927 286,585 286,585 500,000
25 298,676 490,730 490,730 657,579
30 415,774 835,709 835,709 1,019,566
</TABLE>
(1) All values shown are as of the end of the policy year
indicated, have been rounded to the nearest dollar, and
assume that (a) premiums paid after the initial premium
are received on the policy anniversary, (b) no policy
loan has been made, (c) no partial withdrawal of the Cash
Surrender Value has been made and (d) no premiums have
been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test
has been and continues to be met, the No Lapse Guarantee
will keep the Policy in force until the end of the first
5 Policy Years.
Provided the Cumulative Premium Test or the Fund Value
Test has been and continues to be met, the Death Benefit
Guarantee will keep the Policy in force on all policies
for the first three years and until age 100 on Policies
issued and maintained with a minimum face amount of
$250,000 and Death Benefit Option 1; to age 85 on
policies issued and maintained with a face amount of at
least $250,000 and if Death benefit Option 2 is selected
at any time.
(4) Cash Surrender Values for first two years reflect sales
charge limitations imposed by the S.E.C.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT
WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR
FREQUENCIES. IT IS EMPHASIZED THAT THE HYPOTHETICAL
INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN AND
<PAGE> - 166 -
<PAGE>
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES
TRUST. THE POLICY VALUE, CASH SURRENDER VALUE AND DEATH
BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY
PERIOD OF TIME.</REDLINE>
<PAGE> - 167 -
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Issue Age 35 (Standard)
$500,000 Face Amount Death Benefit Option 2
$7,450 Annual Planned Premium
ASSUMING CURRENT CHARGES
<TABLE>
<REDLINE>
0% Hypothetical
Gross Investment Return
<CAPTION>
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
<S> <C> <C> <C> <C>
1 $7,823 $5,757 $620 $505,757
2 16,036 11,676 6,539 511,676
3 24,660 17,444 10,922 517,444
4 33,716 23,057 16,588 523,057
5 43,224 28,508 22,088 528,508
6 53,208 33,821 27,701 533,821
7 63,691 38,958 33,138 538,958
8 74,698 43,921 38,401 543,921
9 86,255 48,702 43,699 548,702
10 98,391 53,304 49,241 553,304
15 168,798 73,313 73,313 573,313
20 258,658 87,353 87,353 587,353
25 373,345 94,220 94,220 594,220
30 519,718 91,038 91,038 591,038
6% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
1 $7,823 $6,139 $1,002 $506,139
2 16,036 12,804 7,667 512,804
3 24,660 19,697 13,175 519,697
4 33,716 26,823 20,354 526,823
5 43,224 34,178 27,758 534,178
6 53,208 41,798 35,678 541,798
7 63,691 49,650 43,830 549,650
8 74,698 57,745 52,224 557,745
9 86,255 66,080 61,077 566,080
10 98,391 74,666 70,603 574,666
15 168,798 121,301 121,301 621,301
20 258,658 173,702 173,702 673,702
25 373,345 231,331 231,331 731,331
30 519,718 295,583 295,583 795,583
<PAGE> - 168 -
<PAGE>
12% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
1 $7,823 $6,522 $1,384 $506,522
2 16,036 13,978 8,841 513,978
3 24,660 22,135 15,613 522,135
4 33,716 31,058 24,589 531,058
5 43,224 40,812 34,391 540,812
6 53,208 51,506 45,385 551,506
7 63,691 63,191 57,371 563,191
8 74,698 75,969 70,449 575,969
9 86,255 89,938 84,935 589,938
10 98,391 105,219 101,157 605,219
15 168,798 205,982 205,982 705,982
20 258,658 363,633 363,633 863,633
25 373,345 611,474 611,474 1,111,474
30 519,718 1,020,894 1,020,894 1,520,894
</TABLE>
(1) All values shown are as of the end of the policy year
indicated, have been rounded to the nearest dollar, and
assume that (a) premiums paid after the initial premium
are received on the policy anniversary, (b) no policy
loan has been made, (c) no partial withdrawal of the Cash
Surrender Value has been made and (d) no premiums have
been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test
has been and continues to be met, the No Lapse Guarantee
will keep the Policy in force until the end of the first
5 Policy Years.
Provided the Cumulative Premium Test or the Fund Value
Test has been and continues to be met, the Death Benefit
Guarantee will keep the Policy in force on all policies
for the first three years and until age 100 on Policies
issued and maintained with a minimum face amount of
$250,000 and Death Benefit Option 1; to age 85 on
policies issued and maintained with a face amount of at
least $250,000 and if Death benefit Option 2 is selected
at any time.
(4) Cash Surrender Values for first two years reflect sales
charge limitations imposed by the S.E.C.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT
WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR
FREQUENCIES. IT IS EMPHASIZED THAT THE HYPOTHETICAL
INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
<PAGE> - 169 -
<PAGE>
ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES
TRUST. THE POLICY VALUE, CASH SURRENDER VALUE AND DEATH
BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY
PERIOD OF TIME.</REDLINE>
<PAGE> - 170 -
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Issue Age 35 (Standard)
$500,000 Face Amount Death Benefit Option 2
$7,450 Annual Planned Premium
ASSUMING GUARANTEED CHARGES
<TABLE>
<REDLINE>
0% Hypothetical
Gross Investment Return
<CAPTION>
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
<S> <C> <C> <C> <C>
1 $7,823 $5,757 $620 $505,757
2 16,036 11,673 6,536 511,673
3 24,660 17,437 10,915 517,437
4 33,716 23,048 16,579 523,048
5 43,224 28,496 22,076 528,496
6 53,208 33,781 27,661 533,781
7 63,691 38,890 33,070 538,890
8 74,698 43,826 38,306 543,826
9 86,255 48,578 43,574 548,578
10 98,391 53,147 49,084 553,147
15 168,798 72,872 72,872 572,872
20 258,658 86,169 86,169 586,169
25 373,345 89,679 89,679 589,679
30 519,718 80,315 80,315 580,315
6% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
1 $7,823 $6,139 $1,002 $506,139
2 16,036 12,801 7,664 512,801
3 24,660 19,690 13,168 519,690
4 33,716 26,812 20,343 526,812
5 43,224 34,165 27,745 534,165
6 53,208 41,755 35,635 541,755
7 63,691 49,576 43,756 549,576
8 74,698 57,638 52,118 557,638
9 86,255 65,936 60,933 565,936
10 98,391 74,481 70,418 574,481
15 168,798 120,733 120,733 620,733
20 258,658 172,140 172,140 672,140
25 373,345 225,441 225,441 725,441
30 519,718 280,847 280,847 780,847
<PAGE> - 171 -
<PAGE>
12% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
1 $7,823 $6,522 $1,384 $506,522
2 16,036 13,975 8,838 513,975
3 24,660 22,128 15,606 522,128
4 33,716 31,047 24,577 531,047
5 43,224 40,797 34,377 540,797
6 53,208 51,459 45,339 551,459
7 63,691 63,110 57,290 563,110
8 74,698 75,849 70,329 575,849
9 86,255 89,773 84,769 589,773
10 98,391 105,000 100,938 605,000
15 168,798 205,236 205,236 05,236
20 258,658 361,466 361,466 861,466
25 373,345 603,409 905,038 1,103,409
30 519,718 999,213 999,213 1,499,213
</TABLE>
(1) All values shown are as of the end of the policy year
indicated, have been rounded to the nearest dollar, and
assume that (a) premiums paid after the initial premium
are received on the policy anniversary, (b) no policy
loan has been made, (c) no partial withdrawal of the Cash
Surrender Value has been made and (d) no premiums have
been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test
has been and continues to be met, the No Lapse Guarantee
will keep the Policy in force until the end of the first
5 Policy Years.
Provided the Cumulative Premium Test or the Fund Value
Test has been and continues to be met, the Death Benefit
Guarantee will keep the Policy in force on all policies
for the first three years and until age 100 on Policies
issued and maintained with a minimum face amount of
$250,000 and Death Benefit Option 1; to age 85 on
policies issued and maintained with a face amount of at
least $250,000 and if Death benefit Option 2 is selected
at any time.
(4) Cash Surrender Values for first two years reflect sales
charge limitations imposed by the S.E.C.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT
WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR
FREQUENCIES. IT IS EMPHASIZED THAT THE HYPOTHETICAL
INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
<PAGE> - 172 -
<PAGE>
ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES
TRUST. THE POLICY VALUE, CASH SURRENDER VALUE AND DEATH
BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY
PERIOD OF TIME.</REDLINE>
<PAGE> - 173 -
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Issue Age 55 (Standard)
$500,000 Face Amount Death Benefit Option 1
$15,095 Annual Planned Premium*
ASSUMING CURRENT CHARGES
<TABLE>
<REDLINE>
0% Hypothetical
Gross Investment Return
<CAPTION>
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4)Benefit
<S> <C> <C> <C> <C>
1 $15,850 $10,144 $2,644 $500,000
2 32,492 20,201 11,564 500,000
3 49,966 29,835 13,921 500,000
4 68,314 39,326 23,741 500,000
5 87,580 48,693 33,454 500,000
6 107,809 57,913 44,173 500,000
7 129,049 66,827 56,521 500,000
8 151,351 75,366 68,495 500,000
9 174,768 83,579 80,144 500,000
10 199,356 91,466 91,466 500,000
15 342,015 130,413 130,413 500,000
20 530,730 155,156 155,156 500,000
25 771,584 117,078 117,078 500,000
30 1,078,982 0(5) 0(5)500,000(5)
6% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4)Benefit
1 $15,850 $10,872 $3,371 $500,000
2 32,492 22,298 13,661 500,000
3 49,966 33,961 18,046 500,000
4 68,314 46,158 30,573 500,000
5 87,580 58,937 43,699 500,000
6 107,809 72,306 58,566 500,000
7 129,049 86,137 75,831 500,000
8 151,351 100,393 93,522 500,000
9 174,768 115,151 111,716 500,000
10 199,356 130,446 130,446 500,000
15 342,015 222,979 222,979 500,000
20 530,730 341,369 341,369 500,000
25 771,584 492,749 492,749 517,386
30 1,078,982 693,653 693,653 738,335
<PAGE> - 174 -
<PAGE>
12% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4)Benefit
1 $15,850 $11,602 $4,102 $500,000
2 32,492 24,486 15,849 500,000
3 49,966 38,440 22,526 500,000
4 68,314 53,877 38,292 500,000
5 87,580 70,985 55,746 500,000
6 107,809 89,928 76,187 500,000
7 129,049 110,759 100,453 500,000
8 151,351 133,642 126,771 500,000
9 174,768 158,876 155,440 500,000
10 199,356 186,753 186,753 500,000
15 342,015 389,170 389,170 500,000
20 530,730 742,067 742,067 794,012
25 771,584 1,317,557 1,317,557 1,383,435
30 1,078,982 2,238,053 2,238,053 2,349,955
</TABLE>
*Note that the second tier Death Benefit Guarantee Premium
level of $16,240 is paid from age 70.
(1) All values shown are as of the end of the policy year
indicated, have been rounded to the nearest dollar, and
assume that (a) premiums paid after the initial premium
are received on the policy anniversary, (b) no policy
loan has been made, (c) no partial withdrawal of the Cash
Surrender Value has been made and (d) no premiums have
been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test
has been and continues to be met, the No Lapse Guarantee
will keep the Policy in force until the end of the first
5 Policy Years.
Provided the Cumulative Premium Test or the Fund Value
Test has been and continues to be met, the Death Benefit
Guarantee will keep the Policy in force on all policies
for the first three years and until age 100 on Policies
issued and maintained with a minimum face amount of
$250,000 and Death Benefit Option 1; to age 85 on
policies issued and maintained with a face amount of at
least $250,000 and if Death benefit Option 2 is selected
at any time.
(4) Cash Surrender Values for first two years reflect sales
charge limitations imposed by the S.E.C.
(5) In the absence of additional premium payments, the Policy
will lapse, unless the Death Benefit Guarantee is in
effect.
<PAGE> - 175 -
<PAGE>
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT
WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR
FREQUENCIES. IT IS EMPHASIZED THAT THE HYPOTHETICAL
INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES
TRUST. THE POLICY VALUE, CASH SURRENDER VALUE AND DEATH
BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY
PERIOD OF TIME.</REDLINE>
<PAGE> - 176 -
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Issue Age 55 (Standard)
$500,000 Face Amount Death Benefit Option 1
$15,095 Annual Planned Premium*
ASSUMING GUARANTEED CHARGES
<TABLE>
<REDLINE>
0% Hypothetical
Gross Investment Return
<CAPTION>
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
<S> <C> <C> <C> <C>
1 $15,850 $10,144 $2,644 $500,000
2 32,492 20,036 11,398 500,000
3 49,966 29,449 13,534 500,000
4 68,314 38,372 22,786 500,000
5 87,580 46,770 31,531 500,000
6 107,809 54,610 40,870 500,000
7 129,049 61,858 51,552 500,000
8 151,351 68,456 61,585 500,000
9 174,768 74,337 70,901 500,000
10 199,356 79,428 79,428 500,000
15 342,015 93,059 93,059 500,000
20 530,730 77,673 77,673 500,000
25 771,584 0(5) 0(5) 500,000
30 1,078,982 0(5) 0(5) 500,000
6% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
1 $15,850 $10,872 $3,371 $500,000
2 32,492 22,128 13,490 500,000
3 49,966 33,554 17,639 500,000
4 68,314 45,147 29,562 500,000
5 87,580 56,885 41,647 500,000
6 107,809 68,747 55,007 500,000
7 129,049 80,714 70,408 500,000
8 151,351 92,746 85,875 500,000
9 174,768 104,801 101,365 500,000
10 199,356 116,834 116,834 500,000
15 342,015 180,139 180,139 500,000
20 530,730 249,786 249,786 500,000
25 771,584 321,121 321,121 500,000
30 1,078,982 413,422 413,422 500,000
<PAGE> - 177 -
<PAGE>
12% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
1 $15,850 $11,602 $4,102 $500,000
2 32,492 24,311 15,674 500,000
3 49,966 38,012 22,098 500,000
4 68,314 52,810 37,224 500,000
5 87,580 68,801 53,562 500,000
6 107,809 86,105 72,365 500,000
7 129,049 104,863 94,557 500,000
8 151,351 125,223 118,352 500,000
9 174,768 147,360 143,925 500,000
10 199,356 171,490 171,490 500,000
15 342,015 342,255 342,255 500,000
20 530,730 654,692 654,692 700,521
25 771,584 1,171,537 1,171,537 1,230,114
30 1,078,982 1,993,189 1,993,189 2,092,848
</TABLE>
*Note that the second tier Death Benefit Guarantee Premium
level of $16,240 is paid from age 70.
(1) All values shown are as of the end of the policy year
indicated, have been rounded to the nearest dollar, and
assume that (a) premiums paid after the initial premium
are received on the policy anniversary, (b) no policy
loan has been made, (c) no partial withdrawal of the Cash
Surrender Value has been made and (d) no premiums have
been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test
has been and continues to be met, the No Lapse Guarantee
will keep the Policy in force until the end of the first
5 Policy Years.
Provided the Cumulative Premium Test or the Fund Value
Test has been and continues to be met, the Death Benefit
Guarantee will keep the Policy in force on all policies
for the first three years and until age 100 on Policies
issued and maintained with a minimum face amount of
$250,000 and Death Benefit Option 1; to age 85 on
policies issued and maintained with a face amount of at
least $250,000 and if Death benefit Option 2 is selected
at any time.
(4) Cash Surrender Values for first two years reflect sales
charge limitations imposed by the S.E.C.
(5) In the absence of additional premium payments, the Policy
will lapse, unless the Death Benefit Guarantee is in
effect.
<PAGE> - 178 -
<PAGE>
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT
WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR
FREQUENCIES. IT IS EMPHASIZED THAT THE HYPOTHETICAL
INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES
TRUST. THE POLICY VALUE, CASH SURRENDER VALUE AND DEATH
BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY
PERIOD OF TIME.</REDLINE>
<PAGE> - 179 -
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Issue Age 55 (Standard)
$500,000 Face Amount Death Benefit Option 2
$17,920 Annual Planned Premium
ASSUMING CURRENT CHARGES
<TABLE>
<REDLINE>
0% Hypothetical
Gross Investment Return
<CAPTION>
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
<S> <C> <C> <C> <C>
1 $18,816 $12,730 $4,354 $512,730
2 38,573 25,241 14,302 525,241
3 59,317 37,184 21,269 537,184
4 81,099 48,853 33,268 548,853
5 103,970 60,271 45,033 560,271
6 127,985 71,413 57,672 571,413
7 153,200 82,092 71,786 582,092
8 179,676 92,222 85,351 592,222
9 207,476 101,854 98,418 601,854
10 236,666 110,977 110,977 610,977
15 406,022 154,012 154,012 654,012
20 622,169 166,081 166,081 666,081
25 898,033 92,014 92,014 592,014
30 1,250,113 0(5) 0(5)500,000(5)
6% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4)Benefit
1 $18,816 $13,613 $5,237 $513,613
2 38,573 27,795 16,856 527,795
3 59,317 42,206 26,292 542,206
4 81,099 57,152 41,567 557,152
5 103,970 72,673 57,434 572,673
6 127,985 88,762 75,022 588,762
7 153,200 105,249 94,943 605,249
8 179,676 122,052 115,182 622,052
9 207,476 139,228 135,793 639,228
10 236,666 156,774 156,774 656,774
15 406,022 257,946 257,946 757,946
20 622,169 353,578 353,578 853,578
25 898,033 375,361 375,361 875,361
30 1,250,113 302,125 302,125 802,125
<PAGE> - 180 -
<PAGE>
12% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4)Benefit
1 $18,816 $14,498 $6,122 $514,498
2 38,573 30,457 19,519 530,457
3 59,317 47,653 31,738 547,653
4 81,099 66,514 50,928 566,514
5 103,970 87,227 71,988 587,227
6 127,985 109,950 96,210 609,950
7 153,200 134,685 124,379 634,685
8 179,676 161,535 154,664 661,535
9 207,476 190,759 187,324 690,759
10 236,666 222,580 222,580 722,580
15 406,022 442,575 442,575 942,575
20 622,169 771,962 771,962 1,271,962
25 898,033 1,204,632 1,204,632 1,704,632
30 1,250,113 1,806,626 1,806,626 2,306,626
</TABLE>
(1) All values shown are as of the end of the policy year
indicated, have been rounded to the nearest dollar, and
assume that (a) premiums paid after the initial premium
are received on the policy anniversary, (b) no policy
loan has been made, (c) no partial withdrawal of the Cash
Surrender Value has been made and (d) no premiums have
been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test
has been and continues to be met, the No Lapse Guarantee
will keep the Policy in force until the end of the first
5 Policy Years.
Provided the Cumulative Premium Test or the Fund Value
Test has been and continues to be met, the Death Benefit
Guarantee will keep the Policy in force on all policies
for the first three years and until age 100 on Policies
issued and maintained with a minimum face amount of
$250,000 and Death Benefit Option 1; to age 85 on
policies issued and maintained with a face amount of at
least $250,000 and if Death benefit Option 2 is selected
at any time.
(4) Cash Surrender Values for first two years reflect sales
charge limitations imposed by the S.E.C.
(5) Provided the Death Benefit Guarantee has been in effect,
the Policy will have been kept in force until the end of
the policy year in which the life insured reached
attained age 85, at which time the Death Benefit
Guarantee will expire and in the absence of additional
premium payments, the Policy will lapse.
<PAGE> - 181 -
<PAGE>
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT
WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR
FREQUENCIES. IT IS EMPHASIZED THAT THE HYPOTHETICAL
INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES
TRUST. THE POLICY VALUE, CASH SURRENDER VALUE AND DEATH
BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY
PERIOD OF TIME.</REDLINE>
<PAGE> - 182 -
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Male Non-Smoker Issue Age 55 (Standard)
$500,000 Face Amount Death Benefit Option 2
$17,920 Annual Planned Premium
ASSUMING GUARANTEED CHARGES
<TABLE>
<REDLINE>
0% Hypothetical
Gross Investment Return
<CAPTION>
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
<S> <C> <C> <C> <C>
1 $18,816 $12,730 $4,354 $512,730
2 38,573 25,068 14,130 525,068
3 59,317 36,778 20,863 536,778
4 81,099 47,835 32,250 547,835
5 103,970 58,192 43,953 558,192
6 127,985 67,800 54,059 567,800
7 153,200 76,607 66,301 576,607
8 179,676 84,538 77,667 584,538
9 207,476 91,503 88,068 591,503
10 236,666 97,410 97,410 597,410
15 406,022 111,000 111,000 611,000
20 622,169 82,289 82,289 582,289
25 898,033 0(5) 0(5) 500,000(5)
30 1,250,113 0(5) 0(5) 0(5)
6% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
1 $18,816 $13,613 $5,237 $513,613
2 38,573 27,616 16,678 527,616
3 59,317 41,777 25,862 541,777
4 81,099 56,066 40,480 556,066
5 103,970 70,427 55,188 570,427
6 127,985 84,803 71,063 584,803
7 153,200 99,128 88,822 599,128
8 179,676 113,308 106,437 613,308
9 207,476 127,229 123,793 627,229
10 236,666 140,768 140,768 640,768
15 406,022 203,216 203,216 703,216
20 622,169 234,316 234,316 734,316
25 898,033 193,237 193,237 693,237
30 1,250,113 25,095 25,095 525,095
<PAGE> - 183 -
<PAGE>
12% Hypothetical
Gross Investment Return
End of Cash
Policy Accumulated Policy Surrender Death
Year(1) Premiums(2) Value Value(3)(4) Benefit
1 $18,816 $14,498 $6,122 $514,498
2 38,573 30,274 19,335 530,274
3 59,317 47,200 31,285 547,200
4 81,099 65,356 49,771 565,356
5 103,970 84,805 69,566 584,805
6 127,985 105,614 91,874 605,614
7 153,200 127,854 117,548 627,854
8 179,676 151,575 144,704 651,575
9 207,476 176,817 173,382 676,817
10 236,666 203,619 203,619 703,619
15 406,022 371,653 371,653 871,653
20 622,169 595,964 595,964 1,095,964
25 898,033 875,793 875,793 1,375,793
30 1,250,113 1,206,421 1,206,421 1,706,421
</TABLE>
(1) All values shown are as of the end of the policy year
indicated, have been rounded to the nearest dollar, and
assume that (a) premiums paid after the initial premium
are received on the policy anniversary, (b) no policy
loan has been made, (c) no partial withdrawal of the Cash
Surrender Value has been made and (d) no premiums have
been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test
has been and continues to be met, the No Lapse Guarantee
will keep the Policy in force until the end of the first
5 Policy Years.
Provided the Cumulative Premium Test or the Fund Value
Test has been and continues to be met, the Death Benefit
Guarantee will keep the Policy in force on all policies
for the first three years and until age 100 on Policies
issued and maintained with a minimum face amount of
$250,000 and Death Benefit Option 1; to age 85 on
policies issued and maintained with a face amount of at
least $250,000 and if Death benefit Option 2 is selected
at any time.
(4) Cash Surrender Values for first two years reflect sales
charge limitations imposed by the S.E.C.
(5) Provided the Death Benefit Guarantee has been in effect,
the Policy will have been kept in force until the end of
the policy year in which the life insured reached
attained age 85, at which time the Death Benefit
Guarantee will expire and in the absence of additional
premium payments, the Policy will lapse.
<PAGE> - 184 -
<PAGE>
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT
WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR
FREQUENCIES. IT IS EMPHASIZED THAT THE HYPOTHETICAL
INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANULIFE SERIES FUND, INC. AND NASL SERIES
TRUST. THE POLICY VALUE, CASH SURRENDER VALUE AND DEATH
BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN
ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY
PERIOD OF TIME.</REDLINE>
<PAGE> - 185 -
<PAGE>
APPENDIX B
Definitions
The following terms have the following meanings when used in
this Prospectus:
Additional Rating - an addition to the cost of insurance rate
for insureds who do not meet at least the underwriting
requirements of the standard risk class.
Business Day - any day that the New York Stock Exchange is
open for trading and trading is not restricted. The net asset
value of the underlying shares of a sub-account of the
Separate Account will be determined at the end of each
Business Day.
Cash Surrender Value - the Policy Value less the deferred
sales charge, the deferred underwriting charge and any
outstanding monthly deductions due.
Cumulative Premium Test - a test that, if satisfied in the
first three policy years and, where applicable, if satisfied
in subsequent policy years, will maintain the Death Benefit
Guarantee. To satisfy the Cumulative Premium Test, the sum of
premiums paid, less withdrawals, and less policy loans, must
equal or exceed the sum of Death Benefit Guarantee Premiums
since issue as at the beginning of each policy month.
Death Benefit Guarantee - Manufacturers Life of America's
guarantee that the Policy will not go into default even if a
combination of policy loans, adverse investment experience or
other factors should cause the Policy's Net Cash Surrender
Value to be insufficient to meet the monthly deductions due at
the beginning of a policy month.
Death Benefit Guarantee Premium - a measure of premium used in
determining compliance with the Cumulative Premium Test. The
Death Benefit Guarantee Premium as an annual amount is
established by the Company based on issue age, sex (unless
unisex rates are required by law), risk class, death benefit
option, supplementary benefits and additional ratings. The
Death Benefit Guarantee Premium, which is set forth in the
Policy, will increase, when the policyowner reaches attained
age 70, to an amount as specified in the Policy.
Effective Date - the date that Manufacturers Life of America
becomes obligated under the Policy and when the first monthly
deductions are taken.
Fund Value Test - a test which, if satisfied in applicable
policy years will maintain the Death Benefit Guarantee
feature. To satisfy the Fund Value Test, the Gross Single
<PAGE> - 186 -
<PAGE>
Premium at the beginning of any applicable policy month must
not be greater than the Net Policy Value.
Gross Single Premium - the amount of premium needed to endow
the Policy to the expiration of the Death Benefit Guarantee
assuming 4% interest and current charges.
Guaranteed Interest Account - that part of the Policy Value
which reflects the value the policyowner has in the general
account of Manufacturers Life of America.
Guideline Annual Premium - an amount defined by S.E.C.
regulation. It is used to determine maximum sales charges
that may be deducted during the first two years following
issuance of a Policy.
Initial Premium - at least 1/12 of the Target Premium. The
Initial Premium must be received within 60 days after the
policy date.
Investment Account - that part of the Policy Value which
reflects the value the policyowner has in one of the
sub-accounts of the Separate Account.
<REDLINE>
Issue Age - the age on the nearest birthday, at policy date,
as shown in the Policy.
</REDLINE>
Loan Account - that part of the Policy Value which reflects
the value the policyowner has transferred from the Guaranteed
Interest Account or the Investment Accounts as collateral for
a policy loan.
Modified Policy Debt - as of any date, the Policy Debt plus
the amount of interest to be charged to the next policy
anniversary, all discounted from the next policy anniversary
to such date at an annual rate of 4%.
Monthly Death Benefit Guarantee Premium - 1/12 of the Death
Benefit Guarantee Premium.
<REDLINE>
Monthly No Lapse Guarantee Premium - 1/12 of the No Lapse
Guarantee Premium.
</REDLINE>
Net Cash Surrender Value - the Cash Surrender Value less
Policy Debt.
<PAGE> - 187 -
<PAGE>
Net Policy Value - the Policy Value less the value in the Loan
Account.
Net Premium - amount of premium allocated to the Investment
Accounts or Guaranteed Interest Account. It equals gross
premiums less the deduction for state, local and federal
taxes.
<REDLINE>
No Lapse Guarantee - Manufacturers Life of America guarantees
that the Policy will not go into default even if a combination
of Policy loans, adverse investment experience and other
factors should cause the Policy's Net Cash Surrender Value to
be insufficient to meet the monthly deductions due at the
beginning of a policy month. In Illinois this benefit is
known as the Minimum Premium Guarantee.
No Lapse Guarantee Cumulative Premium Test - a test that, if
satisfied in the No Lapse Guarantee Period, will maintain the
No Lapse Guarantee. To satisfy the No Lapse Guarantee
Cumulative Premium Test, the sum of premiums paid, less
withdrawals, and less Policy loans must equal or exceed the
sum of No Lapse Guarantee Premiums since issue as at the
beginning of each policy month.
No Lapse Guarantee Period - is the first 5 policy years for
life insureds with an issue age up to and including 85. It is
not offered to life insureds whose Issue Age exceeds 85.
No Lapse Guarantee Premium - is a measure of premium used in
determining compliance with the No Lapse Guarantee Cumulative
Premium Test. The No Lapse Guarantee premium for each
policyowner is set forth in the Policy.
</REDLINE>
Planned Premium - The premium the policyowner plans to pay
periodically. Subject to certain requirements of law, the
Planned Premium may be changed at any time.
Policy Date - The date from which policy years, policy months
and policy anniversaries are determined. Monthly deductions
are due on the policy date. If a check for at least the
Initial Premium accompanies the application, the policy date
is the date the application and check are received at the
Service office. If an application accepted by the Company is
not accompanied by a check for the Initial Premium, the policy
will be issued with a policy date which is 7 days after
issuance of the policy.
Policy Debt - as of any date, the aggregate amount of policy
loans, including borrowed interest, less any loan repayments.
<PAGE> - 188 -
<PAGE>
Policy Value - the sum of the values in the Loan Account, the
Guaranteed Interest Account and the Investment Accounts.
Select Loan - A loan on which the differential between the
interest credited and the interest charged is currently 0%;
provided, however, if at some time in the future it is
determined that the current differential could cause the loan
to be treated as a taxable distribution under any applicable
ruling, regulation or court decision, Manufacturers Life of
America has the right to increase the differential on all
subsequent Select Loans either (i) to an amount that may be
presented in such ruling, regulation or court decision that
would result in the transaction being treated as a loan under
federal tax law or (ii) if no amount is prescribed, to an
amount that Manufacturers Life of America feels would be more
likely to result in the transaction being treated as a loan
under Federal tax law.
Select Loan Amount - the amount of any Select Loan.
Service Office - the office designated to service the
Policies, which is shown on the cover page of this prospectus.
Surrender Charge Period - the period (usually 15 years)
following issuance of the Policy or any increase in face
amount during which surrender charges may be assessed if the
Policy is surrendered or lapsed, the face amount is decreased
or a partial withdrawal takes place.
Target Premium - a premium amount used to measure the maximum
deferred sales charge under a Policy. The Target Premium for
the initial face amount is set forth in the Policy. The
policyowner will be advised of the Target Premium for any
increase in face amount.
Withdrawal Tier Amount - as of any date, the net Cash
Surrender Value at the previous anniversary multiplied by 10%.
<PAGE> - 189 -
<PAGE>
APPENDIX C
The maximum deferred sales charge is 50% of premiums received
up to a specified number of Target Premiums that varies (from
-0.180 to 3.031) with the issue age of the life insured, the
face amount of the Policy and the amount of any increase.
Beginning after two policy years, that maximum deferred sales
charge decreases over time according to a pattern that varies
with the issue age of the life insured. In all cases, the
deferred sales charge is eliminated entirely by the last month
of the 15th policy year. The same pattern applies to sales
charges occasioned by face amount increases, with time periods
and issue age computed using the date of the increase in face
amount rather than the Policy Date.
The following tables show the percentage of the maximum sales
charge that would be applicable in the last month of the years
shown. The percentages for other months would be derived by
interpolation.
<PAGE> - 190 -
<PAGE>
APPENDIX C
<TABLE>
If the transaction occurs in the last month of
<CAPTION>
Policy Issue Age
Year* 0 1 2 3 4 5 6 7
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9666 0.9500 0.9642 0.9444 0.9555 0.9811 0.9843 0.9866
4 0.9666 0.9500 0.9285 0.9444 0.9555 0.9622 0.9687 0.9600
5 0.9333 0.9000 0.8928 0.9166 0.9111 0.9433 0.9531 0.9466
6 0.9333 0.9000 0.8928 0.9166 0.9111 0.9433 0.9531 0.9466
7 0.9333 0.9000 0.8928 0.9166 0.9111 0.9433 0.9531 0.9466
8 0.9333 0.9000 0.8928 0.9166 0.9111 0.9433 0.9531 0.9466
9 0.8503 0.8503 0.8503 0.8503 0.8503 0.8503 0.8503 0.8503
10 0.6803 0.6803 0.6803 0.6803 0.6803 0.6803 0.6803 0.6803
11 0.5442 0.5442 0.5442 0.5442 0.5442 0.5442 0.5442 0.5442
12 0.4082 0.4082 0.4082 0.4082 0.4082 0.4082 0.4082 0.4082
13 0.2721 0.2721 0.2721 0.2721 0.2721 0.2721 0.2721 0.2721
14 0.1361 0.1361 0.1361 0.1361 0.1361 0.1361 0.1361 0.1361
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Policy Issue Age
Year* 8 9 10 11 12 13 14 15
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9885 0.9861 0.9873 0.9885 0.9895 0.9875 0.9940 0.9898
4 0.9655 0.9696 0.9734 0.9765 0.9722 0.9751 0.9831 0.9796
5 0.9540 0.9595 0.9646 0.9609 0.9652 0.9689 0.9719 0.9695
6 0.9540 0.9595 0.9646 0.9609 0.9652 0.9689 0.9719 0.9695
7 0.9540 0.9595 0.9646 0.9609 0.9652 0.9689 0.9719 0.9695
8 0.9540 0.9595 0.9646 0.9609 0.9652 0.9689 0.9719 0.9695
9 0.8503 0.8503 0.8503 0.8503 0.8503 0.8503 0.8503 0.8503
10 0.6803 0.6803 0.6803 0.6803 0.6803 0.6803 0.6803 0.6803
11 0.5442 0.5442 0.5442 0.5442 0.5442 0.5442 0.5442 0.5442
12 0.4082 0.4082 0.4082 0.4082 0.4082 0.4082 0.4082 0.4082
13 0.2721 0.2721 0.2721 0.2721 0.2721 0.2721 0.2721 0.2721
14 0.1361 0.1361 0.1361 0.1361 0.1361 0.1361 0.1361 0.1361
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
</TABLE>
<PAGE> - 191 -
<PAGE>
<TABLE>
<CAPTION>
Policy Issue Age
Year* 16 17 18 19 20 21 22 23
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9912 0.9872 0.9884 0.9842 0.9903 0.9867 0.9878 0.9887
4 0.9788 0.9795 0.9768 0.9789 0.9806 0.9778 0.9796 0.9804
5 0.9718 0.9681 0.9653 0.9631 0.9661 0.9646 0.9674 0.9699
6 0.9667 0.9667 0.9653 0.9631 0.9661 0.9646 0.9674 0.9699
7 0.9333 0.9333 0.9333 0.9333 0.9333 0.9396 0.9396 0.9396
8 0.9000 0.9000 0.9000 0.9000 0.9000 0.9060 0.9060 0.9060
9 0.8333 0.8333 0.8333 0.8333 0.8333 0.8389 0.8389 0.8389
10 0.6667 0.6667 0.6667 0.6667 0.6667 0.6711 0.6711 0.6711
11 0.5333 0.5333 0.5333 0.5333 0.5333 0.5369 0.5369 0.5369
12 0.4000 0.4000 0.4000 0.4000 0.4000 0.4027 0.4027 0.4027
13 0.2667 0.2667 0.2667 0.2667 0.2667 0.2685 0.2685 0.2685
14 0.1330 0.1330 0.1330 0.1330 0.1330 0.1342 0.1342 0.1342
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
*Months not shown may be calculated by interpolation.
</TABLE>
<PAGE> - 192 -
<PAGE>
<TABLE>
If the transaction occurs in the last month of
<CAPTION>
Policy Issue Age
Year* 24 25 26 27 28 29 30 31
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9896 0.9901 0.9885 0.9889 0.9897 0.9887 0.9889 0.9885
4 0.9792 0.9803 0.9793 0.9779 0.9770 0.9757 0.9772 0.9771
5 0.9688 0.9679 0.9678 0.9678 0.9659 0.9644 0.9650 0.9624
6 0.9688 0.9679 0.9678 0.9678 0.9659 0.9644 0.9650 0.9624
7 0.9396 0.9396 0.9432 0.9469 0.9507 0.9545 0.9583 0.9622
8 0.9060 0.9060 0.9122 0.9184 0.9247 0.9310 0.9375 0.9441
9 0.8389 0.8389 0.8446 0.8503 0.8562 0.8621 0.8681 0.8741
10 0.6711 0.6711 0.6757 0.6803 0.6849 0.6897 0.6944 0.6993
11 0.5369 0.5369 0.5405 0.5442 0.5479 0.5517 0.5556 0.5594
12 0.4027 0.4027 0.4054 0.4082 0.4110 0.4138 0.4167 0.4196
13 0.2685 0.2685 0.2703 0.2721 0.2740 0.2759 0.2778 0.2797
14 0.1342 0.1342 0.1351 0.1361 0.1370 0.1379 0.1389 0.1399
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Policy Issue Age
Year* 32 33 34 35 36 37 38 39
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9878 0.9886 0.9883 0.9888 0.9860 0.9859 0.9868 0.9858
4 0.9741 0.9758 0.9751 0.9739 0.9733 0.9728 0.9725 0.9714
5 0.9634 0.9630 0.9614 0.9602 0.9593 0.9577 0.9573 0.9572
6 0.9634 0.9630 0.9614 0.9602 0.9593 0.9577 0.9573 0.9572
7 0.9634 0.9630 0.9614 0.9602 0.9593 0.9577 0.9573 0.9572
8 0.9507 0.9574 0.9614 0.9602 0.9593 0.9577 0.9573 0.9572
9 0.8803 0.8865 0.8929 0.8993 0.8999 0.9006 0.9012 0.9019
10 0.7042 0.7092 0.7143 0.7194 0.7199 0.7205 0.7210 0.7215
11 0.5634 0.5674 0.5714 0.5755 0.5760 0.5764 0.5768 0.5772
12 0.4225 0.4255 0.4286 0.4317 0.4320 0.4323 0.4326 0.4329
13 0.2817 0.2837 0.2857 0.2878 0.2880 0.2882 0.2884 0.2886
14 0.1408 0.1418 0.1429 0.1439 0.1440 0.1441 0.1442 0.1443
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
</TABLE>
<PAGE> - 193 -
<PAGE>
<TABLE>
<CAPTION>
Policy Issue Age
Year* 40 41 42 43 44 45 46 47
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9849 0.9850 0.9828 0.9839 0.9822 0.9833 0.9819 0.9808
4 0.9706 0.9692 0.9680 0.9664 0.9651 0.9659 0.9639 0.9627
5 0.9529 0.9526 0.9501 0.9496 0.9480 0.9473 0.9446 0.9425
6 0.9529 0.9526 0.9501 0.9496 0.9480 0.9473 0.9446 0.9425
7 0.9529 0.9526 0.9501 0.9496 0.9480 0.9473 0.9190 0.9176
8 0.9529 0.9526 0.9501 0.9496 0.9480 0.9473 0.9117 0.9104
9 0.9025 0.9032 0.9038 0.9045 0.9051 0.9058 0.9045 0.9032
10 0.7220 0.7225 0.7231 0.7236 0.7241 0.7246 0.7236 0.7225
11 0.5776 0.5780 0.5785 0.5789 0.5793 0.5797 0.5789 0.5780
12 0.4332 0.4335 0.4338 0.4342 0.4345 0.4348 0.4342 0.4335
13 0.2888 0.2890 0.2892 0.2894 0.2896 0.2899 0.2894 0.2890
14 0.1444 0.1445 0.1446 0.1447 0.1448 0.1449 0.1447 0.1445
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
*Months not shown may be calculated by interpolation.
</TABLE>
<PAGE> - 194 -
<PAGE>
<TABLE>
<CAPTION>
Policy Issue Age
Year* 48 49 50 52 52 53 54 55
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9809 0.9796 0.9786 0.9795 0.9779 0.9770 0.9763 0.9761
4 0.9619 0.9598 0.9577 0.9573 0.9563 0.9541 0.9523 0.9512
5 0.9418 0.9385 0.9354 0.9351 0.9330 0.9300 0.9268 0.9250
6 0.9365 0.9251 0.9137 0.9023 0.8910 0.8797 0.8684 0.8571
7 0.9163 0.9150 0.9101 0.8567 0.8032 0.7498 0.6963 0.6429
8 0.9091 0.9078 0.9029 0.8080 0.7132 0.6183 0.5235 0.4286
9 0.9019 0.9006 0.8993 0.7623 0.6253 0.4883 0.3513 0.2143
10 0.7215 0.7205 0.7194 0.5755 0.4316 0.2878 0.1439 0.0000
11 0.5772 0.5764 0.5755 0.4316 0.2876 0.1439 0.0000 0.0000
12 0.4329 0.4323 0.4317 0.2878 0.1439 0.0000 0.0000 0.0000
13 0.2886 0.2882 0.2878 0.1439 0.0000 0.0000 0.0000 0.0000
14 0.1443 0.1441 0.1439 0.0000 0.0000 0.0000 0.0000 0.0000
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Policy Issue Age
Year* 56 57 58 59 60 61 62 63
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9738 0.9731 0.9720 0.9707 0.9711 0.9700 0.9690 0.9678
4 0.9477 0.9460 0.9441 0.9417 0.9410 0.9389 0.9367 0.9341
5 0.9207 0.9192 0.9160 0.9128 0.9109 0.9078 0.9044 0.9006
6 0.8689 0.8811 0.8939 0.9071 0.9087 0.9039 0.8986 0.8937
7 0.6517 0.6608 0.6704 0.6803 0.6907 0.7015 0.7128 0.7247
8 0.4345 0.4406 0.4469 0.4536 0.4605 0.4677 0.4752 0.4831
9 0.2172 0.2203 0.2235 0.2268 0.2302 0.2338 0.2376 0.2416
10 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
11 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
12 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
13 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
14 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
</TABLE>
<PAGE> - 195 -
<PAGE>
<TABLE>
<CAPTION>
Policy Issue Age
Year* 64 65 66 67 68 69 70 71
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9650 0.9638 0.9637 0.9612 0.9597 0.9573 0.9572 0.9559
4 0.9315 0.9277 0.9261 0.9224 0.9196 0.9158 0.9144 0.9129
5 0.8966 0.8916 0.8874 0.8836 0.8796 0.8745 0.8727 0.8700
6 0.8872 0.8823 0.8769 0.8719 0.8665 0.8612 0.8582 0.8554
7 0.7370 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500
8 0.4914 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000
9 0.2457 0.2500 0.2500 0.2500 0.2500 0.2500 0.2500 0.2500
10 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
11 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
12 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
13 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
14 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
*Months not shown may be calculated by interpolation.
</TABLE>
<PAGE> - 196 -
<PAGE>
<TABLE>
If the transaction occurs in the last month of
<CAPTION>
Policy Issue Age
Year* 72 73 74 75 76 77 78 79
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9555 0.9532 0.9518 0.9504 0.9491 0.9464 0.9436 0.9422
4 0.9113 0.9078 0.9050 0.9021 0.8982 0.8939 0.8885 0.8856
5 0.8676 0.8623 0.8581 0.8526 0.8472 0.8404 0.8347 0.8301
6 0.8520 0.8441 0.8387 0.8317 0.8239 0.8170 0.8099 0.8054
7 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500
8 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000
9 0.2500 0.2500 0.2500 0.2500 0.2500 0.2500 0.2500 0.2500
10 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
11 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
12 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
13 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
14 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Policy Issue Age
Year* 80 81 82 83 84 85 86 87
1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
3 0.9405 0.9388 0.9375 0.9362 0.9360 0.9345 0.9320 0.9303
4 0.8824 0.8806 0.8777 0.8762 0.8747 0.8705 0.8663 0.8608
5 0.8267 0.8235 0.8204 0.8176 0.8145 0.8079 0.8009 0.7899
6 0.8016 0.7971 0.7940 0.7897 0.7842 0.7749 0.7627 0.7451
7 0.7500 0.7500 0.7500 0.7500 0.7500 0.7405 0.7232 0.6964
8 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000
9 0.2500 0.2500 0.2500 0.2500 0.2500 0.2500 0.2500 0.2500
10 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
11 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
12 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
13 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
14 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
</TABLE>
<PAGE> - 197 -
<PAGE>
<TABLE>
<CAPTION>
Policy Issue Age
Year* 88 89 90 91 92 93 94 95
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1.0000 1.0000 1.0000 0.0000 0.0000 0.0000 0.0000 0.0000
2 1.0000 1.0000 1.0000 0.0000 0.0000 0.0000 0.0000 0.0000
3 0.9261 0.9191 0.9115 0.0000 0.0000 0.0000 0.0000 0.0000
4 0.8510 0.8357 0.8165 0.0000 0.0000 0.0000 0.0000 0.0000
5 0.7732 0.7483 0.7136 0.0000 0.0000 0.0000 0.0000 0.0000
6 0.7192 0.6822 0.6308 0.0000 0.0000 0.0000 0.0000 0.0000
7 0.6597 0.6068 0.5399 0.0000 0.0000 0.0000 0.0000 0.0000
8 0.5000 0.5000 0.4439 0.0000 0.0000 0.0000 0.0000 0.0000
9 0.2500 0.2500 0.2500 0.0000 0.0000 0.0000 0.0000 0.0000
10 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
11 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
12 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
13 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
14 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
*Months not shown may be calculated by interpolation.
</TABLE>
<PAGE> - 198 -
<PAGE>
PART II
OTHER INFORMATION
<PAGE> - 199 -
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and
documents:
The facing sheet;
The Prospectus, consisting of _____ pages;
Undertaking required by Section 15(d) of the Securities
Exchange Act of 1934;
The Undertaking pursuant to Rule 484;
Representations pursuant to Rule 6e-3(T);
The signatures;
Written consents of the following persons:
Jones & Blouch L.L.P.
Ernst & Young LLP
Stephen C. Nesbitt (previously filed)
John R. Ostler
The following exhibits are filed as part of this Registration
Statement:
1. Copies of all exhibits required by paragraph A
of the instructions as to exhibits in Form N-
8B-2 are set forth below under designations
based on such instructions:
A(1) Resolutions of Board of Directors of The
Manufacturers Life Insurance Company of
America establishing Separate Account
Three. Previously filed as Exhibit A(1) to
the Registration Statement on Form S-6
filed by The Manufacturers Life Insurance
Company of America on September 23, 1992
(file No. 33-52310).
A(3)(a)(i) Distribution Agreement between The
Manufacturers Life Insurance Company of
America and ManEquity, Inc. Previously
filed as Exhibit A(3)(a)(i) to the
Registration Statement on Form S-6 filed by
The Manufacturers Life Insurance Company of
America on September 23, 1992 (file No. 33-
52310).
<PAGE> - 200 -
<PAGE>
A(3)(a)(ii) Amendment to Distribution Agreement.
Previously filed as Exhibit A(3)(a)(ii) to
the Registration Statement on Form S-6
filed by The Manufacturers Life Insurance
Company of America on September 23, 1992
(file No. 33-52310).
A(3)(b)(i) Specimen agreement between ManEquity, Inc.
and registered representatives. Previously
filed as Exhibit A(3)(b)(i) to the
Registration Statement on Form S-6 filed by
The Manufacturers Life Insurance Company of
America on September 23, 1992 (file No. 33-
52310).
A(3)(b)(ii) Specimen agreement between ManEquity, Inc.
and dealers. Previously filed as Exhibit
A(3)(b)(ii) to Pre-Effective Amendment No.
1 to the Registration Statement on Form S-6
filed by The Manufacturers Life Insurance
Company of America on June 21, 1993 (file
No. 33-52310).
A(3)(c) Schedule of Sales Commissions. Previously
filed as Exhibit A(3)(c) to Pre-Effective
Amendment No. 1 to the Registration
Statement on Form S-6 filed by The
Manufacturers Life Insurance Company of
America on June 21, 1993 (file No. 33-
52310).
A(5)(a) Form of Flexible Premium Variable Life
Insurance Policy. Previously filed as
Exhibit A(5)(a) to the Pre-Effective
Amendment No. 2 to the Registration
Statement on Form S-6 filed by The
Manufacturers Life Insurance Company of
America on September 10, 1993 (file No. 33-
52310).
A(6)(a) Articles of Incorporation of The
Manufacturers Life Insurance Company of
America. Previously filed as Exhibit
A(6)(a) to Pre-Effective Amendment No. 1 to
the Registration Statement on Form S-6
filed by The Manufacturers Life Insurance
Company of America on June 21, 1993 (file
No. 33-52310).
<PAGE> - 201 -
<PAGE>
A(6)(b) By-Laws of The Manufacturers Life Insurance
Company of America. Previously filed as
Exhibit A(6)(b) to Pre-Effective Amendment
No. 1 to the Registration Statement on Form
S-6 filed by The Manufacturers Life
Insurance Company of America on June 21,
1993 (file No. 33-52310).
A(8)(a) Service Agreement between The Manufacturers
Life Insurance Company of America and The
Manufacturers Life Insurance Company.
Previously filed as Exhibit A(8)(a) to the
Registration Statement on Form S-6 filed by
The Manufacturers Life Insurance Company of
America on September 23, 1992 (file No. 33-
52310).
A(8)(a)(i) Amendment to Service Agreement (re
redomestication). Previously filed as
Exhibit A(3)(a)(i) to Pre-Effective
Amendment No. 1 to the Registration
Statement on Form S-6 filed by The
Manufacturers Life Insurance Company of
America on June 21, 1993 (file No. 33-
52310).
A(8)(a)(ii) Amendment to Service Agreement (re
extension of term). Previously filed as
Exhibit A(8)(a)(ii) to Pre-Effective
Amendment No. 1 to the Registration
Statement on Form S-6 filed by The
Manufacturers Life Insurance Company of
America on June 21, 1993 (file No. 33-
52310).
A(8)(a)(iii) Amendment to Service Agreement (re
Miscellaneous). Previously filed as
Exhibit A(8)(a)(iii) to Pre-Effective
Amendment No. 2 to the Registration
Statement on Form S-6 filed by The
Manufacturers Life Insurance Company of
America on September 10, 1993 (file No. 33-
52310).
A(8)(b) Stoploss Reinsurance Agreement between The
Manufacturers Life Insurance Company of
America and The Manufacturers Life
Insurance Company. Previously filed as
Exhibit A(8)(b) to Pre-Effective Amendment
No. 1 to the Registration Statement on Form
S-6 filed by The Manufacturers Life
Insurance Company of America on June 21,
1993 (file No. 33-52310).
<PAGE> - 202 -
<PAGE>
A(8)(c) Service Agreement between The Manufacturers
Life Insurance Company and ManEquity, Inc.
dated January 2, 1991 as amended March 1,
1994. Previously filed as Exhibit A(8)(c)
to Post-Effective Amendment No. 2 to the
Registration Statement on Form S-6 filed by
The Manufacturers Life Insurance Company of
America on April 26, 1994 (file No. 33-
52310).
A(10) Form of Application for Flexible Premium
Variable Life Insurance Policy. Previously
filed as Exhibit A(10) to Pre-Effective
Amendment to the Registration Statement on
Form S-6 filed by The Manufacturers Life
Insurance Company of America on June 21,
1993 (file No. 33-52310).
2. See Exhibit A(5).
3. Opinion and consent of Stephen C. Nesbitt,
Esq., General Counsel of The Manufacturers Life
Insurance Company of America. Previously filed
as Exhibit 3 to the Registration Statement on
Form S-6 filed by The Manufacturers Life
Insurance Company of America on September 23,
1992 (file No. 33-52310).
4. No financial statements are omitted from the
prospectus pursuant to instruction 1(b) or (c)
of Part I.
5. Not applicable.
6. Opinion and consent of John R. Ostler, Vice-
President, Treasurer and Chief Actuary of The
Manufacturers Life Insurance Company of
America. Previously filed as Exhibit 6 to
Post-Effective Amendment No. 3 to the
Registration Statement on Form S-6 filed by The
Manufacturers Life Insurance Company of America
on February 28, 1995 (file No. 33-52310).
7. Form of notice of withdrawal right ("free look"
notice). Previously filed as Exhibit 7 to the
Registration Statement on Form S-6 filed by The
Manufacturers Life Insurance Company of America
on September 23, 1992 (file No. 33-52310).
<PAGE> - 203 -
<PAGE>
8(a). Form of notice of right of surrender while
sales charge limitation applies (initial
purchase). Previously filed as Exhibit 8(a) to
the Registration Statement on Form S-6 filed by
The Manufacturers Life Insurance Company of
America on September 23, 1992 (file No. 33-
52310).
8(b). Form of notice of cancellation right (face
amount increase). Previously filed as Exhibit
8(b) to the Registration Statement on Form S-6
filed by The Manufacturers Life Insurance
Company of America on September 23, 1992 (file
No. 33-52310).
8(c). Form of notice of right of surrender while
sales charge limitation applies (default).
Previously filed as Exhibit 8(c) to the
Registration Statement on Form S-6 filed by The
Manufacturers Life Insurance Company of America
on September 23, 1992 (file No. 33-52310).
9. Memorandum Regarding Issuance, Face Amount
Increase, Redemption and Transfer Procedures
for the Policies. Previously filed as Exhibit
9 to the Registration Statement on Form S-6
filed by The Manufacturers Life Insurance
Company of America on April 27, 1995 (file No.
33-52310).
10. Consent of Ernst & Young LLP.
11. Consent of Jones & Blouch L.L.P.
12. Financial Data Schedule.
<PAGE> - 204 -
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant, SEPARATE
ACCOUNT THREE OF THE MANUFACTURERS LIFE INSURANCE COMPANY OF
AMERICA, and its depositor, THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA, have caused this amended registration
statement to be signed on their behalf in the City of Toronto,
Province of Ontario, Canada, on the 13th day of December,
1995.
[SEAL] SEPARATE ACCOUNT THREE OF THE
MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
-------------------------------
(Registrant)
By: THE MANUFACTURERS LIFE
INSURANCE COMPANY OF AMERICA
-------------------------------
(Depositor)
Donald A. Guloien
By:---------------------------
DONALD A. GULOIEN
President
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
Donald A. Guloien
By:----------------------------
DONALD A. GULOIEN
President
Attest
Sheri L. Kocen
---------------------
(60)SA3-486(a)(HORIZON)
<PAGE> - 205 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
l933, this Registration Statement has been signed by the
following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/Donald A. Guloien President and December 13, 1995
Director
(Principal
Executive Officer)
Sandra M. Cotter Director
Leonard V. Day, Jr. Director
/s/Stephen C. Nesbitt Director December 13, 1995
/s/Joseph J. Pietroski Director December 13, 1995
/s/John D. Richardson Director and December 13, 1995
Chairman
/s/Diane M. Schwartz Director December 13, 1995
/s/Douglas H. Myers Vice President, December 13, 1995
Finance (Principal
Financial and
Accounting Officer)
</TABLE>
<PAGE> - 206 -
<PAGE>
EXHIBITS
<PAGE> - 207 -
<PAGE>
<TABLE>
<CAPTION>
Page in Sequential Numbering
System Where Exhibit
Exhibit No. Description Located
<S> <C> <C>
A(1) Resolutions of Board Previously filed as
of Directors of The Exhibit A(1) to the
Manufacturers Life Registration Statement
Insurance Company of on Form S-6 filed by
America establishing The Manufacturers Life
Separate Account Three Insurance Company of
America on September 23,
1992 (file No. 33-
52310).
A(3)(a)(i) Distribution Agreement Previously filed as
between The Manufacturers Exhibit A(3)(a)(i) to
Life Insurance Company of the Registration State-
America and ManEquity, Inc. ment on Form S-6 filed
by The Manufacturers
Life Insurance Company
of America on September
23, 1992 (file No.
33-52310).
A(3)(a)(ii) Amendment to Distribution Previously filed as
Agreement Exhibit A(3)(a)(ii) to
the Registration State-
ment on Form S-6 filed
by The Manufacturers
Life Insurance Company
of America on September
23, 1992 (file No.
33-52310).
A(3)(b)(i) Specimen agreement Previously filed as
between ManEquity, Inc. Exhibit A(3)(b)(i) to
and registered repre- the Registration
sentatives. Statement on Form S-6
filed by The Manufacturers Life
Insurance Company of America on
September 23, 1992
(file No. 33-52310).
A(3)(b)(ii) Specimen agreement Previously filed as
between ManEquity, Inc. Exhibit A(3)(b)(ii) to
and dealers. Pre-Effective Amendment
No. 1 to the Registra-tion
Statement on Form S-6 filed by The
Manu-facturers Life Insurance
Company of America on June 21,
1993 (file No. 33-52310).
</TABLE>
<PAGE> - 208 -
<PAGE>
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
<S> <C> <C>
A(3)(c) Schedule of Sales Previously filed as
Commissions. Exhibit A(3)(b)(ii) to
Pre-Effective Amendment
No. 1 to the Registra-
tion Statement on Form
S-6 filed by The Manu-
facturers Life Insurance
Company of America on
June 21, 1993 (file
No. 33-52310).
A(5)(a) Form of Flexible Premium Previously filed as
Variable Life Insurance Exhibit A(5)(a) to Pre-
Policy. Effective Amendment No.2
to the Registration
Statement on Form S-6 filed by The
Manufacturers Life Insurance
Company of America on
September 10, 1993
(file No. 33-52310).
A(6)(a) Articles of Incor- Previously filed as
poration of The Manu- Exhibit A(6)(a) to Pre-
facturers Life Insurance Effective Amendment No.1
Company of America. to the Registration
Statement on Form S-6
filed by The Manufacturers Life
Insurance
Company of America on
June 21, 1993 (file
No. 33-52310).
A(6)(b) By-Laws of The Manu- Previously filed as
facturers Life Insurance Exhibit A(6)(b) to
Company of America. Pre-Effective Amendment
No. 1 to the Registra-
tion Statement on Form
S-6 filed by The Manu-
facturers Life Insurance
Company of America on
June 21, 1993 (file
No. 33-52310).
</TABLE>
<PAGE> - 209 -
<PAGE>
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
<S> <C> <C>
A(8)(a) Service Agreement between Previously filed as
The Manufacturers Life Exhibit A(8)(a) to the
Insurance Company of Registration Statement
America and The Manu- on Form S-6 filed by The
facturers Life Insurance Manufacturers Life
Company. Insurance Company of
America on September 23,
1992 (file No.
33-52310).
A(8)(a)(i) Amendment to Service Previously filed as
Agreement (re Exhibit A(8)(a)(i) to
redomestication). Pre-Effective Amendment
No. 1 to the Registration
Statement on Form
S-6 filed by The Manu-
facturers Life Insurance
Company America on June
21, 1993 (file No.
33-52310).
A(8)(a)(ii) Amendment to Service Previously filed as
Agreement (re extension Exhibit A(8)(a)(ii) to
of term). Pre-Effective Amendment
No. 1 to the Registra-
tion Statement on Form
S-6 filed by The Manu-
facturers Life Insurance
Company America on June
21, 1993 (file No.
33-52310).
A(8)(a)(iii) Amendment to Service Previously filed as
Agreement (re miscellaneous).Exhibit A(8)(a)(iii) to
Pre-Effective Amendment
No. 2 to the Registra-
tion Statement on Form
S-6 filed by The Manu-
facturers Life Insurance
Company America on
September 21, 1993
(file No. 33-52310).
<PAGE> - 210 -
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
<S> <C> <C>
A(8)(c) Service Agreement Previously filed as
between The Manufacturers Exhibit A(8)(c) to Post-
Life Insurance Company Effective Amendment No.3
and ManEquity, Inc. dated to the Registration
January 2, 1991 as amended Statement on Form S-6
March 1, 1994. filed by The Manufac-
turers Life Insurance
Company of America on
April 26, 1994
(file No. 52310).
A(8)(b) Stoploss Reinsurance Previously filed as
Agreement between The Exhibit A(8)(b) to Pre-
Manufacturers Life Effective Amendment
Insurance Company of No. 1 to the Registra-
America and The Manu- tion Statement on Form
facturers Life Insurance S-6 filed by The Manu-
Company. facturers Life Insurance
Company of America on
June 21, 1993 (file No.
33-52310).
A(10) Form of Application for Previously filed as
Flexible Premium Variable Exhibit A(10) to Pre-
Life Insurance Policy. Effective Amendment No.1
to the Registration
Statement on Form S-6
filed by The Manu-
facturers Life Insurance
Company America on
June 21, 1993
(file No. 33-52310).
** Filed Electronically.
</TABLE>
<PAGE> - 211 -
<PAGE>
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
<S> <C> <C>
2. See Exhibit A(5).
3. Opinion and consent of Previously filed as
Stephen C. Nesbitt, Esq., Exhibit A(8)(a) to the
General Counsel of The Registration Statement
Manufacturers Life Insurance on Form S-6 filed by The
Company of America. Manufacturers Life
Insurance Company of
America on September 23,
1992 (file No.
33-52310).
4. No financial statements
are omitted from the
prospectus pursuant to
instruction 1(b) or (c)
of Part I.
5. Not applicable.
6. Opinion and consent of Previously filed as
John R. Ostler, Vice- Exhibit 9 to Post-
President, Treasurer and Effective Amendment No.3
Chief Actuary of The Manu- to the Registration
facturers Life Insurance Statement on Form S-6
Company of America. filed by The Manu-
facturers Life Insurance
Company of America on
February 28, 1995
(file No. 33-52310).
7. Form of notice of withdrawal Previously filed as
right ("free look" notice). Exhibit 7 to the
Registration Statement
on Form S-6 filed by The
Manufacturers Life
Insurance Company of
America on September 23,
1992 (file No.33-52310).
</TABLE>
<PAGE> - 212 -
<PAGE>
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
<S> <C> <C>
8(a). Form of notice of right of Previously filed as
surrender while sales charge Exhibit 8(a) to the
limitation applies (initial Registration Statement
purchase). on Form S-6 filed by The
Manufacturers Life
Insurance Company of
America on September 23,
1992 (file No.33-52310
8(b). Form of notice of Previously filed as
cancellation right Exhibit 8(b) to the
(face amount increase). Registration Statement
on Form S-6 filed by The
Manufacturers Life
Insurance Company of
America on September 23,
1992 (file No.33-52310
8(c). Form of notice of right Previously filed as
of surrender while sales Exhibit 8(c) to the
charge limitation applies Registration Statement
(default). on Form S-6 filed by The
Manufacturers Life
Insurance Company of
America on September 23,
1992 (file No.33-52310
9. Memorandum Regarding Previously filed as
Issuance, Face Amount Exhibit 9 to the Regis-
Increase, Redemption tration Statement on Form
and Transfer Procedures S-1 filed by The Manu-
for the Policies. facturers Life Insurance
Company of America on
April 27, 1995 (file
No. 33-52310).
10. Consent of Ernst &
Young LLP.
11. Consent of Jones &
Blouch L.L.P.
12. Financial Data Schedule.
</TABLE>
<PAGE> - 213 -
<PAGE>
EXHIBIT 99-6
December 13, 1995
The Manufacturers Life Insurance
Company of America
500 N. Woodward Avenue
Suite 250
Bloomfield Hills Michigan 48304
U.S.A.
Gentlemen:
This opinion is furnished in connection with the filing of
Post-Effective Amendment No. 5 to Registration Statement No.
33-52310 on Form S-6 ("Registration Statement") which covers
premiums expected to be received under Flexible Premium
Variable Life Insurance Policies ("Policies") to be offered by
The Manufacturers Life Insurance Company of America
("Company"). The prospectus included in the Registration
Statement describes Policies which will be offered by the
Company in each State where they have been approved by
appropriate State insurance authorities. The Policy form was
prepared under my direction, and I am familiar with the
amended Registration Statement and Exhibits thereto. In my
opinion:
(l) The table of corridor percentages shown under the
caption "What Death Benefit Options Are Available?"
is consistent with the Policy's provisions.
(2) The illustrations of death benefits based on Policy
Value multiplied by corridor percentage shown under
the caption "What Death Benefit Options Are
Available?", based on the assumptions stated in the
illustrations, are consistent with the provisions of
the Policy.
(3) The illustration of Modified Policy Debt shown in
the second paragraph under the caption "What Are The
Provisions Governing Policy Loans?", based on the
assumptions stated in the illustration, is
consistent with the Policy's provisions.
(4) The illustration of an application of the loan tier
amount shown under the sub-caption "Interest
Credited to the Loan Account" of the caption "What
Are The Provisions Governing Policy Loans?", based
<PAGE> 1
<PAGE>
on the assumptions stated in the illustration, is
consistent with the provisions of the Policy.
(5) The Loan Account illustration shown as a sub-caption
under the caption "What Are The Provisions Governing
Policy Loans", based on the assumption stated in the
illustration, is consistent with the Policy's
provisions.
(6) The schedule of deferred underwriting charges shown
under the sub-caption "Deferred Underwriting Charge"
of the caption "What Are The Surrender Charges?" is
consistent with the Policy's provisions.
(7) The table under the sub-caption "Deferred
Underwriting Charge" of the caption "What Are The
Surrender Charges?" showing, on an annual basis, the
surrender charge applied to the Policy five years or
more after issuance of the Policy or a face amount
increase, is consistent with the provisions of the
Policy.
(8) The table under sub-section "Deferred Sales Charge"
of the caption "What Are The Surrender Charges?"
showing for life insureds over age 69 at issue or
face amount increase the applicable percent of
premium reduction against which the deferred sales
charge is applied is consistent with the Policy's
sales charge structure.
(9) The illustration of the operation of the maximum
sales charge under the sub-caption "Refund of Excess
Sales Charge" of the caption "What Are The Surrender
Charges?", based on the assumptions stated in the
illustration, is consistent with the Policy's sales
charge structure.
(10) The illustrations of Accumulated Premiums, Policy
Values, Cash Surrender Values, and Death Benefits
for the Policy shown in the Appendix under the
caption "What Are Some Illustration Of Policy
Values, Cash Surrender Values and Death Benefits?",
based on the assumptions stated in the
illustrations, are consistent with the provisions of
the Policy. The rate structure of the Policy has
not been designed so as to make the relationship
between premiums and benefits, as shown in these
illustrations, appear to be correspondingly more
favorable to a prospective purchaser of the Policy
for male ages 25 and 35, than to prospective
<PAGE> 2
<PAGE>
purchasers of the Policy for females or males at
other ages.
I hereby consent to the use of this opinion as an exhibit to
the Registration Statement and to the reference to my name
under the heading "Experts" in the Prospectus.
Very truly yours,
John R. Ostler
Vice President, Treasurer and Chief Actuary
<PAGE> 3
<PAGE>
EXHIBIT 99-10
Consent of Independent Auditors
We consent to the reference to our firm under the caption
Experts and to the use of our report dated February 20, 1995
accompanying the financial statements of The Manufacturers
Life Insurance Company of America and to the use of our report
dated February 6, 1995 accompanying the financial statements
of Separate Account Four of The Manufacturers Life Insurance
Company of America, in the Registration Statement on Form S-6
and related prospectus of Separate Account Four of The
Manufacturers Life Insurance Company of America.
Ernst & Young LLP
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
December 13, 1995
<PAGE>
EXHIBIT 99-11
Jones & Blouch L.L.P.
1025 THOMAS JEFFERSON STREET, N.W.
WASHINGTON, D.C. 20007
(202) 965-8110
December 13, 1995
The Board of Directors
The Manufacturers Life Insurance
Company of America
500 N. Woodward Avenue
Bloomfield Hills, MI 48304
Dear Sirs:
We hereby consent to the reference to this firm under the
caption "Legal Matters" in the prospectus contained in post-
effective amendment No. 19 to the registration statement on
Form S-6 of Separate Account Four of The Manufacturers Life
Insurance company of America, File No. 33-13774, to be filed
with the Securities and Exchange Commission pursuant to the
Securities Act of 1933.
Very truly yours,
Jones & Blouch L.L.P.
Jones & Blouch L.L.P.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> SEPARATE ACCOUNT THREE OF THE MANUFACTURERS LIFE INSURANCE
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<NAME> EMERGING GROWTH EQUITY SUB-ACCOUNT
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
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<NAME> Separate Account Three of The
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<NAME> Common Stock
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<PAGE>
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000801019
<NAME> Separate Account Three of The
Manufacturers Life Insurance
Company of America
<SERIES>
<NUMBER> 03
<NAME> Real Estate Securites
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<PAGE>
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000801019
<NAME> Separate Account Three of The
Manufacturers Life Insurance
Company of America
<SERIES>
<NUMBER> 04
<NAME> Balanced Assets
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<PAGE>
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000801019
<NAME> Separate Account Three of The
Manufacturers Life Insurance
Company of America
<SERIES>
<NUMBER> 05
<NAME> Capital Growth Bond
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000801019
<NAME> Separate Account Three of The
Manufacturers Life Insurance
Company of America
<SERIES>
<NUMBER> 06
<NAME> Money Market
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000801019
<NAME> Separate Account Three of The
Manufacturers Life Insurance
Company of America
<SERIES>
<NUMBER> 07
<NAME> International Fund
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK>
<NAME> Separate Account Three of The
Manufacturers Life Insurance
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<NAME> Pacific Rim Emerging Markets Fund
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