<PAGE> 1
As filed with the Securities and Exchange Commission on September 15, 2000
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF UNIT
INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
(Exact name of Registrant)
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
(Name of Depositor)
38500 Woodward Avenue
Bloomfield Hills, Michigan 48304
(Address of Depositor's Principal Executive Offices)
James D. Gallagher
Secretary and General Counsel
The Manufacturers Life Insurance Company of America
73 Tremont Street
Boston, MA 02108
(Name and Address of Agent for Service)
Copy to:
J. Sumner Jones, Esq.
Jones & Blouch L.L.P.
1025 Thomas Jefferson Street, NW
Washington, DC 20007
Title of Securities Being Registered: Variable Life Insurance Contracts
Approximate date of commencement of proposed public offering: As soon after the
effective date of this Registration Statement as is practicable.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that the Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 2
Separate Account Three of
The Manufacturers Life Insurance Company of America
Registration Statement on Form S-6
Cross-Reference Sheet
FORM
N-8B-2
<TABLE>
<CAPTION>
ITEM NO. CAPTION IN PROSPECTUS
<S> <C>
1 Cover Page; General Information About Manufacturers (Separate
Account Three)
2 Cover Page; General Information About Manufacturers (Manufacturers
Life of America)
3 *
4 Other Information (Distribution of the Policy)
5 General Information About Manufacturers Life (Separate Account
Three)
6 General Information About Manufacturers (Separate Account Three)
7 *
8 *
9 Other Information (Litigation)
10 Death Benefits; Premium Payments; Charges and Deductions; Policy
Value; Policy Loans; Policy Surrender and Partial Withdrawals;
Lapse and Reinstatement; Other Provisions of the Policy; Other
Information
11 General Information About Manufacturers (Manufacturers Investment
Trust)
12 General Information About Manufacturers (Manufacturers Investment
Trust)
13 Charges and Deductions
14 Issuing A Policy; Other Information (Responsibilities Assumed By
Manufacturers Life)
15 Issuing A Policy
16 General Information About Manufacturers (Manufacturers Investment
Trust)
17 Policy Surrender and Partial Withdrawals
18 General Information About Manufacturers
19 Other Information (Reports to Policyholders; Responsibilities
Assumed By Manufacturers Life)
20 *
21 Policy Loans
22 *
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
23 **
24 Other Provisions of the Policy
25 General Information About Manufacturers (Manufacturers Life of
America)
26 *
27 General Information About Manufacturers (Manufacturers Life of
America); Other Information (Distribution of the Policy)
28 Other Information (Officers and Directors)
29 General Information About Manufacturers (Manufacturers Life of
America)
30 *
31 *
32 *
33 *
34 *
35 **
36 *
37 *
38 Other Information (Distribution of the Policies; Responsibilities
of Manufacturers Life)
39 Other Information (Distribution of the Policies)
40 *
41 Other Information (Distribution of the Policy)
42 Other Information (Distribution of the Policy)
43 *
44 Policy Values --Determination of Policy Value; Units and Unit
Values)
45 *
46 Policy Surrender and Partial Withdrawals; Other Information --
Payment of Proceeds)
47 General Information About Manufacturers (Manufacturers Investment
Trust)
48 *
49 *
50 General Information About Manufacturers
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
51 Issuing a Policy; Death Benefits; Premium Payments; Charges and
Deductions; Policy Value; Policy Loans; Policy Surrender and
Partial Withdrawals; Lapse and Reinstatement; Other Policy
Provisions
52 Other Information (Substitution of Portfolio Shares)
53 General Information About Manufacturers Life (Separate Account
Three); Tax Treatment of the Policy
54 *
55 *
56 *
57 *
58 *
59 Financial Statements
</TABLE>
* Omitted since answer is negative or item is not applicable.
<PAGE> 5
PART I
INFORMATION REQUIRED IN PROSPECTUS
<PAGE> 6
PROSPECTUS
SEPARATE ACCOUNT THREE OF THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
VENTURE VUL ACCUMULATOR
A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
This prospectus describes Venture VUL Accumulator, a flexible premium variable
universal life insurance policy (the "Policy") offered by The Manufacturers Life
Insurance Company of America (the "Company," "Manufacturers Life of America,"
"we" or "us").
The Policy is designed to provide lifetime insurance protection together with
flexibility as to:
o the timing and amount of premium payments,
o the investments underlying the Policy Value, and
o the amount of insurance coverage.
This flexibility allows you, the policyowner, to pay premiums and adjust
insurance coverage in light of your current financial circumstances and
insurance needs.
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"). The assets of each sub-account will be
used to purchase shares of a particular investment portfolio (a "Portfolio") of
Manufacturers Investment Trust (the "Trust"). The accompanying prospectus for
the Trust, and the corresponding statement of additional information, describe
the investment objectives of the Portfolios in which you may invest net
premiums. Other sub-accounts and Portfolios may be added in the future.
THE POLICY IS NOT SUITABLE FOR SHORT TERM INVESTMENT PURPOSES. ALSO PROSPECTIVE
PURCHASERS SHOULD NOTE THAT IT MAY NOT BE ADVISABLE TO PURCHASE A POLICY AS A
REPLACEMENT FOR EXISTING INSURANCE.
The Securities and Exchange Commission (the "SEC") maintains a web site
(http://www.sec.gov) that contains material incorporated by reference and other
information regarding registrants that file electronically with the Commission.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. IT IS
VALID ONLY WHEN ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE TRUST.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR 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
38500 Woodward Avenue
Bloomfield Hills, Michigan 48304
THE DATE OF THIS PROSPECTUS IS ________, 2000
<PAGE> 7
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
DEFINITIONS.......................................................................................
POLICY SUMMARY
General...........................................................................................
Death Benefits....................................................................................
Optional Term Rider...............................................................................
Cash Surrender Value Enhance Riders...............................................................
Premiums..........................................................................................
Policy Value......................................................................................
Policy Loans......................................................................................
Surrender and Partial Withdrawals.................................................................
Lapse and Reinstatement...........................................................................
Charges and Deductions............................................................................
Investment Options and Investment Advisers .......................................................
Investment Management Fees and Expenses...........................................................
Table of Charges and Deductions...................................................................
Table of Investment Management Fees and Expenses..................................................
Table of Investment Options and Investment Subadvisers............................................
GENERAL INFORMATION ABOUT MANUFACTURERS LIFE OF AMERICA, THE SEPARATE ACCOUNT AND THE TRUST
Manufacturers Life of America.....................................................................
The Separate Account..............................................................................
The Trust.........................................................................................
Investment Objectives of the Portfolios...........................................................
ISSUING A POLICY
Requirements......................................................................................
Temporary Insurance Agreement.....................................................................
Right to Examine the Policy.......................................................................
Life Insurance Qualification......................................................................
DEATH BENEFITS....................................................................................
Death Benefit Options.............................................................................
Changing the Death Benefit Option.................................................................
Changing the Face Amount..........................................................................
PREMIUM PAYMENTS
Initial Premiums..................................................................................
Subsequent Premiums...............................................................................
Maximum Premium Limitation........................................................................
Premium Allocation................................................................................
CHARGES AND DEDUCTIONS
Premium Charge....................................................................................
Surrender Charges.................................................................................
Mortality and Expense Risks Charge................................................................
Charges for Transfers.............................................................................
Reduction in Charges..............................................................................
SPECIAL PROVISIONS FOR EXCHANGES..................................................................
COMPANY TAX CONSIDERATIONS........................................................................
POLICY VALUE
Determination of the Policy Value.................................................................
Units and Unit Values.............................................................................
Transfers of Policy Value.........................................................................
POLICY LOANS......................................................................................
Effect of Policy Loan.............................................................................
</TABLE>
2
<PAGE> 8
<TABLE>
<S> <C>
Interest Charged on Policy Loans..................................................................
Loan Account......................................................................................
POLICY SURRENDER AND PARTIAL WITHDRAWALS
Policy Surrender..................................................................................
Partial Withdrawals...............................................................................
LAPSE AND REINSTATEMENT
Lapse.............................................................................................
No Lapse Guarantee................................................................................
No-Lapse Guarantee Cumulative Premium Test........................................................
Reinstatement.....................................................................................
THE GENERAL ACCOUNT...............................................................................
Fixed Account.....................................................................................
OTHER PROVISIONS OF THE POLICY
Liquidity Enhancement Riders......................................................................
Policyowner Rights................................................................................
Beneficiary.......................................................................................
Incontestability..................................................................................
Misstatement of Age or Sex........................................................................
Suicide Exclusion.................................................................................
Supplementary Benefits............................................................................
TAX TREATMENT OF THE POLICY.......................................................................
Life Insurance Qualification......................................................................
Tax Treatment of Policy Benefits..................................................................
Alternate Minimum Tax.............................................................................
Income Tax Reporting..............................................................................
OTHER INFORMATION
Payment of Proceeds...............................................................................
Reports to Policyowners...........................................................................
Distribution of the Policies......................................................................
Responsibilities of Manufacturers Life............................................................
Voting Rights.....................................................................................
Substitution of Portfolio Shares..................................................................
Records and Accounts..............................................................................
State Regulations.................................................................................
Litigation........................................................................................
Independent Auditors..............................................................................
Further Information...............................................................................
Officers and Directors............................................................................
Year 2000 Issues..................................................................................
Optional Term Rider...............................................................................
Cash Surrender Value Enhancer Rider
Illustrations.....................................................................................
APPENDIX A - SAMPLE ILLUSTRATIONS OF POLICY VALUES, CASH SURRENDER VALUES AND DEATH BENEFITS...... A-1
APPENDIX B - AUDITED FINANCIAL STATEMENTS......................................................... B-1
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION WHERE IT
WOULD NOT BE LAWFUL. YOU SHOULD RELY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS, THE PROSPECTUS OF MANUFACTURERS INVESTMENT TRUST, OR THE STATEMENT
OF ADDITIONAL INFORMATION OF MANUFACTURERS INVESTMENT TRUST. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. Examine
this prospectus carefully. The Policy Summary will briefly describe the Policy.
More detailed information will be found further in the prospectus.
VUL Accumulator
DEFINITIONS
3
<PAGE> 9
Additional Rating
is an increase to the Cost of Insurance Rate for insureds who do not meet, at a
minimum, the Company's underwriting requirements for the standard Risk
Classification.
Age
on any date is the life insured's age on his or her nearest birthday to the
Policy Date. If no specific age is mentioned, age means the life insured's age
on the Policy Anniversary nearest to the birthday.
Attained Age
is the age at issue plus the number of whole years that have elapsed since the
Policy Date.
Business Day
is any day that the New York Stock Exchange is open for business. A Business Day
ends at the close of regularly scheduled daytime trading of the New York Stock
Exchange on that day.
Cash Surrender Value
is the Policy Value less the Surrender Charge and any outstanding Monthly
Deductions due.
Effective Date
is the date the underwriters approve issuance of the Policy. If the Policy is
approved without the initial premium, the Effective Date will be the date the
Company receives at least the minimum initial premium at our Service Office. In
either case, the Company will take the first Monthly Deduction on the Effective
Date.
Gross Withdrawal
is the amount of partial Net Cash Surrender Value the policyowner requests plus
any Surrender Charge applicable to the withdrawal.
Fixed Account
is that part of the Policy Value which reflects the value the policyowner has in
the general account of the Company.
Investment Account
is that part of the Policy Value which reflects the value the policyowner has in
one of the sub-accounts of the Separate Account.
Issue Date
is the date the Company issued the Policy. The Issue Date is also the date from
which the Suicide and Incontestability provisions of the Policy are measured.
Life Insured
is the person whose life is insured under this Policy.
4
<PAGE> 10
Loan Account
is that part of the Policy Value which reflects the value transferred from the
Fixed Account or the Investment Accounts as collateral for a policy loan.
Loan Interest Credited Differential
is the difference between the rate of interest charged on a Policy Loan and the
rate of interest credited to amounts in the Loan Account.
Maximum Loanable Amount
is 100% of the Policy Net Cash Surrender Value less estimated future monthly
deductions due to the next Policy Anniversary.
Monthly No-Lapse Guarantee Premium
is one-twelfth of the No-Lapse Guarantee Premium.
Net Cash Surrender Value
is the Cash Surrender Value less the Policy Debt.
Net Policy Value
is the Policy Value less the value in the Loan Account.
Net Premium
is the gross premium paid less the Premium Charge. It is the amount of premium
allocated to the Fixed Account and/or Investment Accounts.
No-Lapse Guarantee
is a provision of the Policy which occurs when the Policy is in the No-Lapse
Guarantee Period, and meets the No-Lapse Guarantee Cumulative Premium Test. If
such a condition is met the Policy will not lapse, even when the Net Cash
Surrender Value falls to or below zero.
No-Lapse Guarantee Period
is the period, set at issue, during which the No-Lapse Guarantee is provided.
The No-Lapse Guarantee period is fixed at the lesser of (a) twenty years or (b)
the number of years remaining until the life insured's age is 95, depending upon
applicable state law requirements. Certain states may have a shorter guarantee
period. The No Lapse Guarantee Period for a particular Policy is stated in the
Policy.
No-Lapse Guarantee Premium
is the annual premium used to determine the Monthly No-Lapse Guarantee Premium.
It is set at issue and is recalculated, prospectively, whenever any of the
following changes occur under the Policy:
- the face amount of insurance changes.
- a Supplementary Benefit is added, changed or terminated.
- the risk classification of the life insured changes.
- a temporary Additional Rating is added (due to a face amount increase), or
terminated.
- the Death Benefit Option changes.
5
<PAGE> 11
No-Lapse Guarantee Cumulative Premium
is the minimum amount due to satisfy the No-Lapse Guarantee Cumulative Premium
Test. This amount equals the sum, from issue to the date of the test, of the
Monthly No-Lapse Guarantee Premiums.
No-Lapse Guarantee Cumulative Premium Test
is a test that, if satisfied, during the No Lapse Guarantee Period will keep the
policy in force when the Net Cash Surrender Value is less than zero. The test is
satisfied if the sum of all premiums paid, less any gross partial withdrawals
and less any Policy Debt, is greater than or equal to the sum of the monthly
No-Lapse Guarantee Premiums due since the Policy Date.
Policy Date
is the date coverage takes effect under the Policy, provided the Company
receives the minimum initial premium at its Service Office, and is the date from
which charges for the first monthly deduction are calculated, and the date from
which Policy Years, Policy Months, and Policy Anniversaries are determined.
Policy Debt
as of any date equals (a) plus (b) plus (c) minus (d), where:
(a) is the total amount of loans borrowed as of such date;
(b) is the total amount of any unpaid loan interest charges which have been
borrowed against the Policy on a Policy Anniversary;
(c) is any interest charges accrued from the last Policy Anniversary to the
current date; and
(d) is the total amount of loan repayments as of such date.
Policy Value
is the sum of the values in the Loan Account, the Fixed Account, and the
Investment Accounts.
Premium Death Benefit Account
is the sum of premiums paid to date less any gross withdrawals.
Service Office Address
is 200 Bloor Street East, Toronto, Ontario, Canada M4W 1E5.
Surrender Charge Period
is the period following the Policy Date or following any increase in Face Amount
during which the Company will assess surrender charges. Surrender charges will
apply during this period if the policy terminates due to default, if the
policyowner surrenders the policy or makes a partial withdrawal.
Written Request
is the policyowner's request to the Company which must be in a form satisfactory
to the Company, signed and dated by the policyowner, and received at the Service
Office.
6
<PAGE> 12
POLICY SUMMARY
GENERAL
We have prepared the following summary as a general description of the most
important features of the Policy. It is not comprehensive and you should refer
to 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 minimum death
benefit percentage. The Policy's provisions may vary in some states.
DEATH BENEFITS
There are three death benefit options. Under Option 1 the death benefit is the
FACE AMOUNT OF THE POLICY at the date of death. Under Option 2 the death benefit
is the FACE AMOUNT PLUS THE POLICY VALUE OF THE POLICY at the date of death.
Under Option 3 the death benefit is the Face Amount plus the Premium Death
Benefit Account. The actual death benefit is the amount shown above under the
applicable death benefit option or, if greater, the Minimum Death Benefit. You
may change the death benefit option and increase or decrease the Face Amount.
OPTIONAL TERM RIDER
The Policy may be issued with an optional term insurance rider (the "Term
Rider"). The benefit of the term rider is that the cost of insurance rates will
always be less than or equal to the cost of insurance rates on the Policy.
HOWEVER, UNLIKE THE DEATH BENEFIT UNDER THE POLICY, THE DEATH BENEFIT UNDER THE
TERM RIDER IS NOT PROTECTED BY THE NO-LAPSE GUARANTEE AFTER THE SECOND POLICY
YEAR AND TERMINATES AT AGE 100.
CASH SURRENDER VALUE ENHANCER RIDERS
The Policy may be issued with one of two Cash Surrender Value Enhancer Riders.
The decision to add one of these two riders must be made at issuance of the
Policy and once made is irrevocable.The benefit of either rider is that the Cash
Surrender Values under the Policy will be enhanced during the period for which
Surrender Charges are applicable. An additional charge is made for the cost for
the rider.
PREMIUMS
You may pay premiums at any time and in any amount, subject to certain
limitations as described under "Premium Payments - Subsequent Premiums." Net
Premiums will be allocated, according to your instructions and at the Company's
discretion, to one or more of our general account and the sub-accounts of the
Separate Account. You may change your allocation instructions at any time. You
may also transfer amounts among the accounts.
POLICY VALUE
The Policy has a Policy Value reflecting premiums paid, certain charges for
expenses and cost of insurance, and the investment performance of the accounts
to which you have allocated premiums.
POLICY LOANS
You may borrow an amount not to exceed your Maximum Loanable Amount. Loan
interest at a rate of 5.25% during the first ten Policy Years and 4% thereafter
is due on each Policy Anniversary. We will deduct all outstanding Policy Debt
from proceeds payable at the insured's death, or upon surrender.
7
<PAGE> 13
SURRENDER AND PARTIAL WITHDRAWALS
You may make a partial withdrawal of your Policy Value. A partial withdrawal may
result in a reduction in the Face Amount or Death Benefit of the Policy and an
assessment of a portion of the Surrender Charges to which the Policy is subject.
You may surrender your Policy 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 Charge and outstanding Monthly Deductions due minus the
Policy Debt.
LAPSE AND REINSTATEMENT
Unless the No-Lapse Guarantee Cumulative Premium Test has been met, a Policy
will lapse (and terminate without value) when its Net Cash Surrender Value is
insufficient to pay the next monthly deduction and a grace period of 61 days
expires without your having made an adequate payment.
The Policies, therefore, differ in two important respects from conventional life
insurance policies. First, the failure to make planned premium payments will not
itself cause a Policy to lapse. Second, a Policy can lapse even if planned
premiums have been paid.
A policyowner may reinstate a lapsed Policy at any time within the five year
period following lapse provided the Policy was not surrendered for its Net Cash
Surrender Value. We will require evidence of insurability along with a certain
amount of premium as described under "reinstatement."
CHARGES AND DEDUCTIONS
We assess certain charges and deductions in connection with the Policy. These
include:
- charges deducted from premiums paid,
- asset-based risk charges assessed monthly,
- charges assessed monthly for the cost of insurance and administrative
expenses, and
- charges assessed on surrender or lapse.
- if applicable, a charge for any supplementary benefits added to the
Policy.
The charges are summarized in the Table of Charges and Deductions. We may allow
you to request that the sum of the charges assessed monthly for the cost of
insurance and administrative expenses be deducted from the Fixed Account or one
or more of the sub-accounts of the Separate Account.
In addition, there are charges deducted from each Portfolio of the Trust. These
charges are summarized in the Table of Investment Management Fees and Expenses.
INVESTMENT OPTIONS AND INVESTMENT ADVISERS
8
<PAGE> 14
You may allocate Net Premiums to the Fixed Account or to one or more of the
sub-accounts of the Separate Account. Each of the sub-accounts invests in the
shares of one of the Portfolios of the Trust.
The Trust receives investment advisory services from Manufacturers Securities
Services, LLC ("MSS"). MSS is a registered investment adviser under the
Investment Advisers Act of 1940, as amended.
The Trust also employs subadvisers. The Table of Investment Options and
Investment Subadvisers shows the subadvisers that provide investment subadvisory
services to the indicated Portfolios.
INVESTMENT MANAGEMENT FEES AND EXPENSES
Each sub-account of the Separate Account purchases shares of the Portfolios at
net asset value. The net asset value of those shares reflects investment
management fees and certain expenses of the Portfolios. The fees and expenses
for each Portfolio for the Trust's last fiscal year are shown in the Table of
Investment Management Fees and Expenses below. These fees and expenses are
described in detail in the accompanying Trust prospectus to which reference
should be made.
Allocating net premiums only to one or a small number of the investment options
(other than the Lifestyle Trusts) should not be considered a balanced investment
strategy. In particular, allocating net premiums to a small number of investment
options that concentrate their investments in a particular business or market
sector will increase the risk that the value of your Policy will be more
volatile since these investment options may react similarly to business or
market specific events. Examples of business or market sectors where this risk
historically has been and may continue to be particularly high include: (a)
technology related businesses, including internet related businesses, (b) small
cap securities and (c) foreign securities. The Company does not provide advice
regarding appropriate investment allocations, please discuss this matter with
your financial adviser.
<TABLE>
<CAPTION>
TABLE OF CHARGES AND DEDUCTIONS
<S> <C>
Premium Charges: The Policy provides for a deduction of 6.6% of the premium
paid during the first 10 Policy Years and 3.6% of each
premium paid thereafter (on a non-guaranteed basis in the
state of New Jersey).
Surrender Charges: A Surrender Charge is applicable for 10 Policy Years from
the Policy Date or an increase in Face Amount. The Surrender
Charge is determined by the following formula:
</TABLE>
Surrender Charge = (Surrender Charge Rate) x (Face Amount Associated with the
Surrender Charge/1000) x (Grading Percentage)
The Grading Percentage, which is based on the Policy Year in which the
transaction causing the assessment of the charge occurs, is a percent which
starts at 100% and grades down by .833% each Policy Month reaching zero at the
end of 10 years.
The Surrender Charge Rate is calculated as follows:
Surrender Charge Rate = (Rate per $1000 of Face Amount) + (80%) x (Surrender
Charge Premium)
9
<PAGE> 15
The Rate per $1000 of Face Amount is based on the age at which the transaction
causing the assessment of the charge occurs and is set forth in a table under
"Surrender Charges."
The Surrender Charge Premium is the lesser of:
- the premiums paid during the first two Policy Years (or premiums
attributable to a Face Amount increase for the two years following the
increase) per $1000 of Face Amount, and
- the Surrender Charge Premium Limit specified in the Policy per $1000 of
Face Amount.
The premiums attributable to a Face Amount increase will equal a portion of each
payment made within two years of the increase.
A portion of the Surrender Charge will be assessed on a partial withdrawal.
Monthly Deductions: An administration charge of $30 plus a per $1000 of Face
Amount charge per Policy Month will be deducted in the first
Policy Year. In subsequent years, the administration charge
will be $15 plus a per $1000 of Face Amount charge per
Policy Month. The per $1000 charge varies by age.
A charge of $1 per $1000 of Face Amount administrative
charge.
The cost of insurance charge.
An Asset-Based Risk Charge. This charge varies by the sum of
the Investment Accounts as follows:
<TABLE>
<CAPTION>
Sum of Investment Guaranteed Monthly Guaranteed Annual Asset-Based
Accounts Asset-Based Risk Charge Risk Charge
-------- ----------------------- -----------
<S> <C> <C>
Up to $25,000 0.0500% 0.6000%
$25,000 to 0.0208% 0.2500%
$100,000
Above $100,000 0.0125% 0.1500%
</TABLE>
Once the sum of the Investment Accounts exceeds a specified amount, the
Asset-Based Risk Charge is reduced on funds in excess of that specified amount.
Loan Charges: A fixed loan interest rate of 5.25% during the first 10
Policy Years and 4% thereafter. Interest credited to amounts
in the Loan Account is guaranteed not to be less than 3.50%
at all times.
Transfer Charge: A charge of $25 per transfer for each transfer in excess of
12 in a Policy Year.
TABLE OF INVESTMENT MANAGEMENT FEES AND EXPENSES
TRUST ANNUAL EXPENSES
10
<PAGE> 16
(as a percentage of Trust average net assets for the fiscal year ended
December 31, 1999)
<TABLE>
<CAPTION>
OTHER EXPENSES
MANAGEMENT (AFTER EXPENSE TOTAL TRUST
TRUST PORTFOLIO FEES REIMBURSEMENT) ANNUAL EXPENSES
--------------- ---- -------------- ---------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets.. 0.850% 0.260% 1.110%
Internet Technologies......... 1.150% 0.136%(A) 1.286%
Science & Technology(J)....... 1.100% 0.060% 1.160%
International Small Cap....... 1.100% 0.270% 1.370%
Aggressive Growth............. 1.000%(F) 0.130% 1.130%
Emerging Small Company........ 1.050% 0.070% 1.120%
Dynamic Growth................ 1.000%(F) 0.132%(A) 1.132%
Mid Cap Stock................. 0.925% 0.100%(A) 1.025%(E)
All Cap Growth(H)............. 0.950%(F) 0.070% 1.020%
Overseas...................... 0.950% 0.260% 1.210%
International Stock(J)........ 1.050% 0.200% 1.250%
International Value........... 1.000% 0.230%(A) 1.230%(E)
Mid Cap Blend................. 0.850%(F) 0.060% 0.910%
Small Company Value........... 1.050% 0.170% 1.220%
Global Equity................. 0.900% 0.160% 1.060%
Growth........................ 0.850% 0.050% 0.900%
Large Cap Growth.............. 0.875%(F) 0.100% 0.975%
Quantitative Equity........... 0.700% 0.060% 0.760%
Blue Chip Growth(J)........... 0.875%(F) 0.050% 0.925%
Real Estate Securities........ 0.700% 0.070% 0.770%
Value......................... 0.800% 0.070% 0.870%
Tactical Allocation........... 0.900% 0.127%(A) 1.027%
Equity Index(I)............... 0.250% 0.150%(I) 0.400%(I)
Growth & Income............... 0.750% 0.050% 0.800%
U.S. Large Cap Value.......... 0.875% 0.070%(A) 0.945%(E)
Equity-Income(J).............. 0.875%(F) 0.060% 0.935%
Income & Value................ 0.800%(F) 0.080% 0.880%
Balanced...................... 0.800% 0.070% 0.870%
High Yield.................... 0.775% 0.065% 0.840%
Strategic Bond................ 0.775% 0.095% 0.870%
Global Bond................... 0.800% 0.180% 0.980%
Total Return.................. 0.775% 0.060%(A) 0.835%(E)
Investment Quality Bond....... 0.650% 0.120% 0.770%
Diversified Bond.............. 0.750% 0.090% 0.840%
U.S. Government Securities.... 0.650% 0.070% 0.720%
Money Market.................. 0.500% 0.050% 0.550%
Small Cap Index............... 0.525% 0.075%(A)(G) 0.600%
International Index........... 0.550% 0.050%(A)(G) 0.600%
Mid Cap Index................. 0.525% 0.075%(A)(G) 0.600%
Total Stock Market Index...... 0.525% 0.564%
Lifestyle Aggressive 1000(D).. 0.075% 1.060%(B) 1.065%(C)
</TABLE>
11
<PAGE> 17
<TABLE>
<S> <C> <C> <C>
Lifestyle Balanced 640(D) 0.057% 0.928%(B) 0.985%(C)
Lifestyle Moderate 460(D) 0.066% 0.869%(B) 0.935%(C)
Lifestyle Conservative 280(D) 0.075% 0.780%(B) 0.855%(C)
</TABLE>
-----------------
(A) Based on estimates to be made during the current fiscal year.
(B) Reflects expenses of the Underlying Portfolios.
(C) The investment adviser to the Trust, Manufacturers Securities Services, LLC
("MSS" or the "Adviser") has voluntarily agreed to pay certain expenses of
each Lifestyle Trust (excluding the expenses of the Underlying Portfolios)
as follows:
If total expenses of a Lifestyle Trust (absent reimbursement) exceed 0.075%,
the Adviser will reduce the advisory fee or reimburse expenses of that
Lifestyle Trust by an amount such that total expenses of the Lifestyle Trust
equal 0.075%. If the total expenses of the Lifestyle Trust (absent
reimbursement) are equal to or less than 0.075%, then no expenses will be
reimbursed by the Adviser. (For purposes of the expense reimbursement, total
expenses of a Lifestyle Trust includes the advisory fee but excludes (a) the
expenses of the Underlying Portfolios, (b) taxes, (c) portfolio brokerage,
(d) interest, (e) litigation and (f) indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Trust's
business.)
This voluntary expense reimbursement may be terminated at any time. If such
expense reimbursement was not in effect, Total Trust Annual Expenses would be
higher (based on current advisory fees and the Other Expenses of the Lifestyle
Trusts for the fiscal year ended December 31, 1999) as noted in the chart below:
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL TRUST
TRUST PORTFOLIO FEES EXPENSES ANNUAL EXPENSES
--------------- ---- -------- ---------------
<S> <C> <C> <C>
Lifestyle Aggressive 1000 0.075% 1.090% 1.165%
Lifestyle Growth 820 0.057% 1.030% 1.087%
Lifestyle Balanced 640 0.057% 0.940% 0.997%
Lifestyle Moderate 460 0.066% 0.900% 0.966%
Lifestyle Conservative 280 0.075% 0.810% 0.885%
</TABLE>
(D) Each Lifestyle Trust will invest in shares of the Underlying Portfolios.
Therefore, each Lifestyle Trust will bear its pro rata share of the fees and
expenses incurred by the Underlying Portfolios in which it invests, and the
investment return of each Lifestyle Trust will be net of the Underlying
Portfolio expenses. Each Lifestyle Portfolio must bear its own expenses.
However, the Adviser is currently paying certain of these expenses as
described in footnote (C) above.
(E) Annualized --- For the period May 1, 1999 (commencement of operations) to
December 31, 1999.
(F) Management Fees changed effective May 1, 1999. Fees shown are the current
management fees.
(G) MSS has voluntarily agreed to pay expenses of each Index Trust (excluding
the advisory fee) that exceed the following amounts: 0.050% in the case of
the International Index Trust and 500 Index Trust and 0.075% in the case of
the Small Cap Index Trust, the Mid Cap Index Trust and Total Stock Market
Index Trust. If such expense reimbursement were not in effect, it is
estimated that "Other Expenses" and "Total Trust Annual Expenses" would be
0.022% higher for the International Index Trust, 0.014% higher for the Small
Cap Index Trust, 0.060% higher for the Mid Cap Index Trust and 0.005% higher
for the Total Stock Market Index Trust. It is estimated that the expense
reimbursement will not be effective during the year end December 31, 2000
for the 500 Index Trust. The expense reimbursement may be terminated at any
time by MSS.
(H) Formerly, the Mid Cap Growth Trust.
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<PAGE> 18
(I) The Equity Index Trust is available only for Policies issued for
applications dated prior to May 1, 2000. Under the Advisory Agreement, MSS
has agreed to reduce its advisory fee or reimburse the Equity Index Trust if
the total of all expenses (excluding advisory fees, taxes, portfolio
brokerage commissions, interest, litigation and indemnification expenses and
other extraordinary expenses not incurred in the ordinary course of the
Trust's business) exceeds an annual rate of 0.15% of the average annual net
assets of the Equity Index Trust. The expense limitation may be terminated
at any time by MSS. If this expense reimbursement had not been in effect,
Total Trust Annual Expenses would have been 0.55%, and Other Expenses would
have been 0.30%, of the average annual net assets of the Equity Index Trust.
(J) The Adviser has voluntarily agreed to waive a portion of its advisory fee
for the Science & Technology Trust, the Blue Chip Growth Trust, the
Equity-Income Trust and the International Stock Trust. The fee reduction is
based on the combined asset level of all four portfolios. Once the combined
assets exceed specified amounts, the fee reduction is increased. The
percentage fee reduction for each asset level is as follows:
<TABLE>
<CAPTION>
COMBINED ASSET LEVELS FEE REDUCTION
(AS A PERCENTAGE OF THE ADVISORY FEE)
<S> <C>
First $750 million 0.0%
Between $750 million and $1.5 billion 2.5%
Between $1.5 billion and $3.0 billion 3.75%
Over $3.0 billion 5.0%
</TABLE>
The fee reductions are applied to the advisory fees of each of the four
portfolios. This voluntary fee waiver may be terminated at any time by the
adviser.
TABLE OF INVESTMENT OPTIONS AND INVESTMENT SUBADVISERS
The Trust currently has nineteen subadvisers who manage all of the portfolios,
one of which subadvisers is Manufacturers Adviser Corporation ("MAC"). Both MSS
and MAC are affiliates of Manufacturers Life of America.
<TABLE>
<CAPTION>
SUBADVISER PORTFOLIO
<S> <C>
AIM Capital Management, Inc. Aggressive Growth Trust
. All Cap Growth Trust (C)
AXA Rosenberg Investment Management LLC Small Company Value Trust
Capital Guardian Trust Company Small Company Blend Trust
U.S. Large Cap Value Trust
Income & Value Trust
Diversified Bond Trust
Fidelity Management Trust Company Mid Cap Blend Trust
Large Cap Growth Trust
Overseas Trust
Founders Asset Management LLC International Small Cap Trust
Balanced Trust
Franklin Advisers, Inc. Emerging Small Company Trust
</TABLE>
13
<PAGE> 19
<TABLE>
<S> <C>
Janus Capital Corporation Dynamic Growth Trust
Manufacturers Adviser Corporation Pacific Rim Emerging Markets Trust
Quantitative Equity Trust
Equity Index Trust (B)
Real Estate Securities Trust
Money Market Trust
Index Trusts
Lifestyle Trusts (A)
Miller Anderson & Sherrerd, LLP Value Trust
High Yield Trust
Mitchell Hutchins Asset Management Inc. Tactical Allocation Trust
Morgan Stanley Asset Management Inc. Global Equity Trust
Munder Capital Management Internet Technologies Trust
Pacific Investment Management Company Global Bond Trust
Total Return Trust
Rowe Price-Fleming International, Inc. International Stock Trust
Salomon Brothers Asset Management Inc. U.S. Government Securities Trust
Strategic Bond Trust
State Street Global Advisors Growth Trust
Lifestyle Trusts (A)
T. Rowe Price Associates, Inc. Science & Technology Trust
Blue Chip Growth Trust
Equity-Income Trust
Templeton Investment Counsel, Inc. International Value Trust
Wellington Management Company, LLP Growth & Income Trust
Investment Quality Bond Trust
Mid Cap Stock Trust
</TABLE>
(A) State Street Global Advisors provides subadvisory consulting services to
Manufacturers Adviser Corporation regarding management of the Lifestyle
Trusts.
(B) The Equity Index Trust is available only for policies issued for
applications dated prior to May 1, 2000.
(C) Formerly, the Mid Cap Growth Trust
14
<PAGE> 20
GENERAL INFORMATION ABOUT MANUFACTURERS LIFE OF AMERICA, THE SEPARATE ACCOUNT
AND THE TRUST
MANUFACTURERS LIFE OF AMERICA
We are 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. We are a licensed life insurance company in the District of Columbia and
all states of the United States except New York. Our ultimate parent is Manulife
Financial Corporation ("MFC"), a publicly traded company, based in Toronto,
Canada. MFC is the holding company of The Manufacturers Life Insurance Company
and its subsidiaries, collectively known as Manulife Financial. The
Manufacturers Life Insurance Company is one of the largest life insurance
companies in North America and ranks among the 60 largest life insurers in the
world as measured by assets. However, neither Manufacturers Life nor any of its
affiliated companies guarantees the investment performance of the Separate
Account.
RATINGS
Manufacturers Life of America has received the following ratings from
independent rating agencies:
<TABLE>
<S> <C>
Standard and Poor's Insurance Ratings Service: AA+ (for financial strength)
A.M. Best Company: A++ (for financial strength)
Fitch: AAA (for insurer financial strength)
Moody's Investors Service, Inc.: Aa2 (for financial strength)
</TABLE>
These ratings, which are current as of the date of this prospectus and are
subject to change, are assigned to Manufacturers Life of America as a measure of
the Company's ability to honor the death benefit and no lapse guarantees but not
specifically to its products, the performance (return) of these products, the
value of any investment in these products upon withdrawal or to individual
securities held in any portfolio.
THE SEPARATE ACCOUNT
Manufacturers Life of America established its Separate Account Three on August
22, 1986 as a separate account under Pennsylvania Law. Since December 9, 1992,
it 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.
ASSETS OF THE SEPARATE ACCOUNT
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.
15
<PAGE> 21
REGISTRATION
The Separate Account is registered with the Commission under the Investment
Company Act of 1940, as amended (the "1940 Act") as a unit investment trust. A
unit investment trust is a type of investment company which invests its assets
in specified securities, such as the shares of one or more investment companies,
rather than in a portfolio of unspecified securities. Registration under the
1940 Act does not involve any supervision by the Commission 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.
THE TRUST
Each sub-account of the Separate Account will purchase shares only of a
particular Portfolio. The Trust is registered under the 1940 Act as an open-end
management investment company. The Separate Account will purchase and redeem
shares of the Portfolios 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 not inconsistent
with the Policies. Any dividend or capital gain distribution received from a
Portfolio with respect to the Policies will be reinvested immediately at net
asset value in shares of that Portfolio and retained as assets of the
corresponding sub-account.
The 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. Manufacturers Life of America
may also purchase shares through 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 Trust prospectus.
INVESTMENT OBJECTIVES OF THE PORTFOLIOS
The investment objectives and certain policies of the Portfolios currently
available to policyowners through corresponding sub-accounts are set forth
below. There is, of course, no assurance that these objectives will be met. A
full description of the Trust, its investment objectives, policies and
restrictions, the risks associated therewith, its expenses, and other aspects of
its operation is contained in the accompanying Trust prospectus, which should be
read together with this prospectus.
ELIGIBLE PORTFOLIOS
The Portfolios of the Trust available under the Policies are as follows:
The PACIFIC RIM EMERGING MARKETS TRUST seeks long-term growth of capital by
investing in a diversified portfolio that is comprised primarily of common
stocks and equity-related securities of corporations domiciled in countries in
the Pacific Rim region.
The INTERNET TECHNOLOGIES TRUST seeks long-term capital appreciation by
investing the portfolio's assets primarily in companies engaged in
Internet-related business (such businesses also include Intranet-related
businesses).
The SCIENCE & TECHNOLOGY TRUST seeks long-term growth of capital. By investing
at least 65% of the portfolio's total assets in common stocks of companies
expected to benefit from the development, advancement, and use of science &
technology. Current income is incidental to the portfolio's objective.
16
<PAGE> 22
The INTERNATIONAL SMALL CAP TRUST seeks capital appreciation by investing
primarily in securities issued by foreign companies which have total market
capitalization or annual revenues of $1 billion or less. These securities may
represent companies in both established and emerging economies throughout the
world.
The AGGRESSIVE GROWTH TRUST seeks long-term capital appreciation by investing
the portfolio's asset principally in common stocks, convertible bonds,
convertible preferred stocks and warrants of companies which in the opinion of
the subadviser are expected to achieve earnings growth over time at a rate in
excess of 15% per year. Many of these companies are in the small and
medium-sized category.
The EMERGING SMALL COMPANY TRUST seeks long-term growth of capital by investing,
under normal market conditions, at least 65% of the portfolio's total assets in
common stock equity securities of companies with market capitalizations that
approximately match the range of capitalization of the Russell 2000 Index
("small cap stocks") at the time of purchase.
The SMALL COMPANY BLEND TRUST seeks long-term growth of capital and income by
investing the portfolio's assets, under normal market conditions, primarily in
equity and equity-related securities of companies with market capitalizations
that approximately match the range of capitalization of the Russell 2000 Index
at the time of purchase.
The DYNAMIC GROWTH TRUST seeks long-term growth of capital by investing the
portfolio's assets primarily in equity securities selected for their growth
potential. Normally at least 50% of its equity assets are invested in
medium-sized companies.
The MID CAP STOCK TRUST seeks long-term growth of capital by investing primarily
in equity securities with significant capital appreciation potential, with
emphasis on medium sized companies.
The ALL CAP GROWTH TRUST (formerly, Mid Cap Growth Trust) seeks long-term
capital appreciation by investing the portfolio's assets, under normal market
conditions, principally in common stocks of companies that are likely to benefit
from new or innovative products, services or processes, as well as those that
have experienced above-average, long-term growth in earnings and have excellent
prospects for future growth.
The OVERSEAS TRUST seeks growth of capital by investing, under normal market
conditions, at least 65% of the portfolio's assets in foreign securities
(including American Depositary Receipts (ADRs) and European Depositary Receipts
(EDRs)). The portfolio expects to invest primarily in equity securities.
The INTERNATIONAL STOCK TRUST seeks long-term growth of capital by investing
primarily in common stocks of established, non-U.S. companies.
The INTERNATIONAL VALUE TRUST seeks long-term growth of capital by investing,
under normal market conditions, primarily in equity securities of companies
located outside the U.S., including emerging markets.
The MID CAP BLEND TRUST seeks growth of capital by investing primarily in common
stocks of U.S. issuers and securities convertible into or carrying the right to
buy common stocks.
17
<PAGE> 23
The SMALL COMPANY VALUE TRUST seeks long-term growth of capital by investing,
under normal circumstances, at least 65% of the portfolio's assets in common
stocks of companies with total market capitalization that approximately match
the range of capitalization of the Russell 2000 Index and are traded principally
in the markets of the United States.
The GLOBAL EQUITY TRUST seeks long-term capital appreciation by investing
primarily in equity securities throughout the world, including U.S. issuers and
emerging markets.
The GROWTH TRUST seeks long-term growth of capital by investing primarily in
large capitalization growth securities (market capitalizations of approximately
$1 billion or greater).
The LARGE CAP GROWTH TRUST seeks long-term growth of capital by investing, under
normal market conditions, at least 65% of the portfolio's assets in equity
securities of companies with large market capitalizations.
The QUANTITATIVE EQUITY TRUST seeks to achieve intermediate and long-term growth
through capital appreciation and current income by investing in common stocks
and other equity securities of well established companies with promising
prospects for providing an above average rate of return.
The BLUE CHIP GROWTH TRUST seeks to achieve long-term growth of capital (current
income is a secondary objective) by investing at least 65% of the portfolio's
total assets in the common stocks of large and medium sized blue chip companies.
Many of the stocks in the portfolio are expected to pay dividends.
The REAL ESTATE SECURITIES TRUST seeks to achieve a combination of long-term
capital appreciation and satisfactory current income by investing in real estate
related equity and debt securities.
The VALUE TRUST seeks to realize an above-average total return over a market
cycle of three to five years, consistent with reasonable risk, by investing
primarily in common and preferred stocks, convertible securities, rights and
warrants to purchase common stocks, ADRs and other equity securities of
companies with equity capitalizations usually greater than $300 million.
The TACTICAL ALLOCATION TRUST seeks total return, consisting of long-term
capital appreciation and current income, by allocating the portfolio's assets
between (i) a stock portion that is designed to track the performance of the S&P
500 Composite Stock Price Index, and (ii) a fixed income portion that consists
of either five-year U.S. Treasury notes or U.S. Treasury bills with remaining
maturities of 30 days.
The EQUITY INDEX TRUST seeks to achieve investment results which approximate the
aggregate total return of publicly traded common stocks which are included in
the Standard & Poor's 500 Composite Stock Price Index. (The Equity Index Trust
is available only for policies issued for applications dated prior to May 1,
2000).
The GROWTH & INCOME TRUST seeks long-term growth of capital and income,
consistent with prudent investment risk, by investing primarily in a diversified
portfolio of common stocks of U.S. issuers which the subadviser believes are of
high quality.
The U.S. LARGE CAP VALUE TRUST seeks long-term growth of capital and income by
investing the portfolio's assets, under normal market conditions, primarily in
equity and equity-related securities of companies with market capitalization
greater than $500 million.
18
<PAGE> 24
The EQUITY-INCOME TRUST seeks to provide substantial dividend income and also
long-term capital appreciation by investing primarily in dividend-paying common
stocks, particularly of established companies with favorable prospects for both
increasing dividends and capital appreciation.
The INCOME & VALUE TRUST seeks the balanced accomplishment of (a) conservation
of principal and (b) long-term growth of capital and income by investing the
portfolio's assets in both equity and fixed-income securities. The subadviser
has full discretion to determine the allocation between equity and fixed income
securities.
The BALANCED TRUST seeks current income and capital appreciation by investing in
a balanced portfolio of common stocks, U.S. and foreign government obligations
and a variety of corporate fixed income securities.
The HIGH YIELD TRUST seeks to realize an above-average total return over a
market cycle of three to five years, consistent with reasonable risk, by
investing primarily in high yield debt securities, including corporate bonds and
other fixed-income securities.
The STRATEGIC BOND TRUST seeks a high level of total return consistent with
preservation of capital by giving its subadviser broad discretion to deploy the
portfolio's assets among certain segments of the fixed income market as the
subadviser believes will best contribute to achievement of the portfolio's
investment objective.
The GLOBAL BOND TRUST seeks to realize maximum total return, consistent with
preservation of capital and prudent investment management by investing the
portfolio's asset primarily in fixed income securities denominated in major
foreign currencies, baskets of foreign currencies (such as the ECU), and the
U.S. dollar.
The TOTAL RETURN TRUST seeks to realize maximum total return, consistent with
preservation of capital and prudent investment management by investing, under
normal market conditions, at least 65% of the portfolio's assets in a
diversified portfolio of fixed income securities of varying maturities. The
average portfolio duration will normally vary within a three- to six-year time
frame based on the subadviser's forecast for interest rates.
The INVESTMENT QUALITY BOND TRUST seeks a high level of current income
consistent with the maintenance of principal and liquidity, by investing
primarily in a diversified portfolio of investment grade corporate bonds and
U.S. Government bonds with intermediate to longer term maturities. The portfolio
may also invest up to 20% of its assets in non-investment grade fixed income
securities.
The DIVERSIFIED BOND TRUST seeks high total return consistent with the
conservation of capital by investing at least 75% of the portfolio's assets in
fixed income securities.
The U.S. GOVERNMENT SECURITIES TRUST seeks a high level of current income
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.
19
<PAGE> 25
The MONEY MARKET TRUST seeks maximum current income consistent with preservation
of principal and liquidity by investing in high quality money market instruments
with maturities of 397 days or less issued primarily by U. S. entities.
The SMALL CAP INDEX TRUST seeks to approximate the aggregate total return of a
small cap U.S. domestic equity market index by attempting to track the
performance of the Russell 2000 Index.*
The INTERNATIONAL INDEX TRUST seeks to approximate the aggregate total return of
a foreign equity market index by attempting to track the performance of the
Morgan Stanley European Australian Far East Free Index (the "MSCI EAFE Index").*
The MID CAP INDEX TRUST seeks to approximate the aggregate total return of a mid
cap U.S. domestic equity market index by attempting to track the performance of
the S&P Mid Cap 400 Index.*
The TOTAL STOCK MARKET INDEX seeks to approximate the aggregate total return of
a broad U.S. domestic equity market index by attempting to track the performance
of the Wilshire 5000 Equity Index.*
The 500 INDEX TRUST seeks to approximate the aggregate total return of a broad
U.S. domestic equity market index by attempting to track the performance of the
S&P 500 Composite Stock Price Index.*
The LIFESTYLE AGGRESSIVE 1000 TRUST seeks to provide long-term growth of capital
(current income is not a consideration) by investing 100% of the Lifestyle
Trust's assets in other portfolios of the Trust ("Underlying Portfolios") which
invest primarily in equity securities.
The LIFESTYLE GROWTH 820 TRUST seeks to provide long-term growth of capital with
consideration also given to current income by investing approximately 20% of the
Lifestyle Trust's assets in Underlying Portfolios which invest primarily in
fixed income securities and approximately 80% of its assets in Underlying
Portfolios which invest primarily in equity securities.
The LIFESTYLE BALANCED 640 TRUST seeks to provide a balance between a high level
of current income and growth of capital with a greater emphasis given to capital
growth by investing approximately 40% of the Lifestyle Trust's assets in
Underlying Portfolios which invest primarily in fixed income securities and
approximately 60% of its assets in Underlying Portfolios which invest primarily
in equity securities.
The LIFESTYLE MODERATE 460 TRUST seeks to provide a balance between a high level
of current income and growth of capital with a greater emphasis given to current
income by investing approximately 60% of the Lifestyle Trust's assets in
Underlying Portfolios which invest primarily in fixed income securities and
approximately 40% of its assets in Underlying Portfolios which invest primarily
in equity securities.
THE LIFESTYLE CONSERVATIVE 280 TRUST seeks to provide a high level of current
income with some consideration also given to growth of capital by investing
approximately 80% of the Lifestyle Trust's assets in Underlying Portfolios which
invest primarily in fixed income securities and approximately 20% of its assets
in Underlying Portfolios which invest primarily in equity securities.
*"Standard & Poor's(R)," AS&P 500(R)," Standard and Poor's 500(R)" and "Standard
and Poor's 400(R)" are trademarks of The McGraw-Hill Companies, Inc. "Russell
2000(R)" is a trademark of Frank Russell Company. "Wilshire 5000(R)" is a
trademark of Wilshire Associates. "Morgan Stanley
20
<PAGE> 26
European Australian Far East Free" and "EAFE(R)" are trademarks of Morgan
Stanley & Co. Incorporated. None of the Index Trusts are sponsored, endorsed,
managed, advised, sold or promoted by any of these companies, and none of these
companies make any representation regarding the advisability of investing in the
Trust.
ISSUING A POLICY
REQUIREMENTS
To purchase a Policy, an applicant must submit a completed application. A Policy
will not be issued until the underwriting process has been completed to the
Company's satisfaction.
Policies may be issued on a basis which does not distinguish between the
insured's sex, with prior approval from the Company. A Policy will generally be
issued only on the lives of insureds from ages 0 through 90.
Each Policy has a Policy Date, an Effective Date and an Issue Date (See
"Definitions" above).
The Policy Date is the date from which the first monthly deductions are
calculated and from which Policy Years, Policy Months and Policy Anniversaries
are determined. The Effective Date is the date the Company becomes obligated
under the Policy and when the first monthly deductions are deducted from the
Policy Value. The Issue Date is the date from which Suicide and Incontestability
are measured.
If an application accepted by the Company is not accompanied by a check for the
initial premium and no request to backdate the Policy has been made:
(i) the Policy Date and the Effective Date will be the date the Company
receives the check at it's service office, and
(ii) the Issue Date will be the date the Company issues the Policy.
The initial premium must be received within 60 days after the Issue Date, and
the policyowner must be in good health on the date the initial premium is
received. If the premium is not paid or if the application is rejected, the
Policy will be canceled and any partial premiums paid will be returned to the
applicant.
MINIMUM INITIAL FACE AMOUNT
Manufacturers Life of America will generally issue a Policy only if it has a
Face Amount of at least $100,000.
BACKDATING A POLICY
Under limited circumstances, the Company may backdate a Policy, upon request, by
assigning a Policy Date earlier than the date the application is signed.
However, in no event will a Policy be backdated earlier than the earliest date
allowed by state law, which is generally three months to one year prior to the
date of application for the Policy. Monthly deductions will be made for the
period the Policy Date is backdated. Regardless of whether or not a policy is
backdated, Net 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 portfolio.
As of the Effective Date, the premiums paid plus interest credited, net of the
premium charge, will be allocated among the Investment Accounts and/or Fixed
Account in accordance with the policy owner's
21
<PAGE> 27
instructions unless such amount is first allocated to the Money Market Trust for
the duration of the Right to Examine period.
TEMPORARY INSURANCE AGREEMENT
In accordance with the Company's underwriting practices, temporary insurance
coverage may be provided under the terms of a Temporary Insurance Agreement.
Generally, temporary life insurance may not exceed $1,000,000 and may not be in
effect for more than 90 days. This temporary insurance coverage will be issued
on a conditional receipt basis, which means that any benefits under such
temporary coverage will only be paid if the life insured meets the Company's
usual and customary underwriting standards for the coverage applied for.
The acceptance of an application is subject to the Company's underwriting rules,
and the Company reserves the right to request additional information or to
reject an application for any reason.
Persons failing to meet standard underwriting classification may be eligible for
a Policy with an additional risk rating assigned to it.
RIGHT TO EXAMINE THE POLICY
A Policy may be returned for a refund within 10 days after you received it. Some
states provide a longer period of time to exercise this right. The Policy will
indicate if a longer time period applies. The Policy can be mailed or delivered
to the Manufacturers Life of America agent who sold it or to the Service Office.
Immediately on such delivery or mailing, the Policy shall be deemed void from
the beginning. Within seven days after receipt of the returned Policy at its
Service Office, the Company will refund to the policyholder an amount equal to
either:
(1) the amount of all premiums paid or
(2)
(a) the difference between payments made and amounts allocated to the
Separate Account and the Fixed Account; plus
(b) the value of the amount allocated to the Separate Account and the
Fixed Account as of the date the returned Policy is received by the
Company; minus
(c) any partial withdrawals made and policy loans taken.
Whether the amount described in (1) or (2) is refunded depends on the
requirements of the applicable state.
If a policyowner requests an increase in face amount which results in new
surrender charges, he or she will have the same rights as described above to
cancel the increase. If canceled, the Policy Value and the surrender charges
will be recalculated to the amounts they would have been had the increase not
taken place. A policyowner may request a refund of all or any portion of
premiums paid during the right to examine period, and the Policy Value and the
surrender charges will be recalculated to the amounts they would have been had
the premiums not been paid.
The Company reserves the right to delay the refund of any premium paid by check
until the check has cleared.
22
<PAGE> 28
LIFE INSURANCE QUALIFICATION
A Policy must satisfy either one of two tests to qualify as a life insurance
contract for purposes of Section 7702 of the Internal Revenue Code of 1986, as
amended (the "Code"). At the time of application, the policyowner must choose
either the Cash Value Accumulation Test or the Guideline Premium Test. The test
cannot be changed once the Policy is issued.
CASH VALUE ACCUMULATION TEST
Under the Cash Value Accumulation Test ("CVAT"), the Policy Value must be less
than the Net Single Premium necessary to fund future Policy benefits, assuming
guaranteed charges and 4% net interest. To ensure that a Policy meets the CVAT,
the Company will generally increase the death benefit, temporarily, to the
required minimum amount. However, the Company reserves the right to require
evidence of insurability should a premium payment cause the death benefit to
increase by more than the premium payment amount. Any excess premiums will be
refunded.
GUIDELINE PREMIUM TEST
The Guideline Premium Test restricts the maximum premiums that may be paid into
a life insurance policy for a given death benefit. The policy's death benefit
must also be at least equal to the Minimum Death Benefit (described below).
Changes to the Policy may affect the maximum amount of premiums, such as:
o a change in the policy's Face Amount.
o a change in the death benefit option.
o partial withdrawals.
o addition or deletion of supplementary benefits.
Any of the above changes could cause the total premiums paid to exceed the new
maximum limit. In this situation, the Company may refund any excess premiums
paid. In addition, these changes could reduce the future premium limitations.
The Guideline Premium Test requires a life insurance policy to meet minimum
ratios of life insurance coverage to policy value. This is achieved by ensuring
that the death benefit is at all times at least equal to the Minimum Death
Benefit. The Minimum Death Benefit on any date is defined as the Policy Value on
that date times the applicable Minimum Death Benefit Percentage for the Attained
Age of the life insured. The Minimum Death Benefit Percentages for this test
appear in the Policy.
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<PAGE> 29
DEATH BENEFITS
If the Policy is in force at the time of the death of the life insured, the
Company will pay an insurance benefit. The amount payable will be the death
benefit under the selected death benefit option, plus any amounts payable under
any supplementary benefits added to the Policy, less the Policy Debt and less
any outstanding monthly deductions due. The insurance benefit will be paid in
one lump sum unless another form of settlement option is agreed to by the
beneficiary and the Company. If the insurance benefit is paid in one sum, the
Company 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 the Company will pay only the Net Cash
Surrender Value.
DEATH BENEFIT OPTIONS
There are three death benefit options, described below. The actual death benefit
is the amount shown below under the applicable death benefit option or, if
greater, the Minimum Death Benefit.
DEATH BENEFIT OPTION 1
Under Option 1 the death benefit is the Face Amount of the Policy at the date of
death.
DEATH BENEFIT OPTION 2
Under Option 2 the death benefit is the Face Amount plus the Policy Value of the
Policy at the date of death.
DEATH BENEFIT OPTION 3
Under Option 3 the death benefit is the Face Amount plus the Premium Death
Benefit Account.
CHANGING THE DEATH BENEFIT OPTION
The death benefit option may be changed once each Policy Year after the first
Policy Year. The change will occur on the first day of the next Policy Month
after a written request for a change is received at the Service Office. The
Company reserves the right to limit a request for a change if the change would
cause the Policy to fail to qualify as life insurance for tax purposes. The
Company will not allow a change in death benefit option if it would cause the
Face Amount to decrease below $100,000.
A change in the 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, as
follows:
CHANGE 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 as of the date of the change.
CHANGE FROM OPTION 1 TO OPTION 3
The new Face Amount will be equal to the Face Amount prior to the change minus
the Premium Death Benefit Account.
CHANGE FROM OPTION 2 TO OPTION 1
The new Face Amount will be equal to the Face Amount prior to the change plus
the Policy Value as of the date of the change.
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<PAGE> 30
CHANGE FROM OPTION 2 TO OPTION 3
The new Face Amount will be equal to the Face Amount prior to the change plus
the Policy Value minus the Premium Death Benefit Account.
CHANGE FROM OPTION 3 TO OPTION 1
The new Face Amount will be equal to the Face Amount prior to the change plus
the Premium Death Benefit Account.
CHANGE FROM OPTION 3 TO OPTION 2
The new Face Amount will be equal to the Face Amount prior to the change plus
the Premium Death Benefit Account minus the Policy Value.
No new Surrender Charges will apply to an increase in Face Amount solely due to
a change in the death benefit option.
CHANGING THE FACE AMOUNT
Subject to the limitations stated in this prospectus, a policyowner may, upon
written request, increase or decrease the Face Amount of the Policy. The Company
reserves the right to limit a change in Face Amount so as to prevent the Policy
from failing to qualify as life insurance for tax purposes.
INCREASE IN FACE AMOUNT
Increases in Face Amount may be made once each Policy Year after the first
Policy Year. Any increase in Face Amount must be at least $50,000. An increase
will become effective at the beginning of the policy month following the date
Manufacturers Life of America approves the requested increase. Increases in Face
Amount are subject to satisfactory evidence of insurability. The Company
reserves the right to refuse a requested increase if the life insured's Attained
Age at the effective date of the increase would be greater than the maximum
issue age for new Policies at that time.
NEW SURRENDER CHARGES FOR AN INCREASE
An increase in face amount will usually result in the Policy being subject to
new Surrender Charges. The new Surrender Charges will be computed as if a new
Policy were being purchased for the increase in Face Amount. The premiums
attributable to the new Face Amount will not exceed the Surrender Charge premium
limit associated with that increase. There will be no new Surrender Charges
associated with restoration of a prior decrease in Face Amount. As with the
purchase of a Policy, a policyowner will have a free look right with respect to
any increase resulting in new Surrender Charges.
An additional premium may be required for a face amount increase, and a new
No-Lapse Guarantee Premium will be determined, if the No-Lapse Guarantee is in
effect at the time of the face amount increase.
INCREASE WITH PRIOR DECREASES
If, at the time of the increase, there have been prior decreases in Face Amount,
these prior decreases will be restored first. The insurance coverage eliminated
by the decrease of the oldest Face Amount will be deemed to be restored first.
CHANGING BOTH THE FACE AMOUNT AND THE DEATH BENEFIT OPTION
If a policyowner requests to change both the Face Amount and the Death Benefit
Option in the same month, the Death Benefit Option change shall be deemed to
occur first.
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<PAGE> 31
DECREASE IN FACE AMOUNT
Decreases in Face Amount may be made once each Policy Year after the
first Policy Year. Any decrease in Face Amount must be at least
$50,000. A written request from a policyowner for a decrease in the
Face Amount will be effective at the beginning of the Policy Month
following the date Manufacturers Life of America approves the requested
decrease. If there have been previous increases in Face Amount, the
decrease will be applied to the most recent increase first and
thereafter to the next most recent increases successively. Under no
circumstances should the sum of all decreases cause the policy to fall
below the minimum Face Amount of $100,000.
PREMIUM PAYMENTS
INITIAL PREMIUMS
No premiums will be accepted prior to receipt of a completed
application by the Company. All premiums received prior to the
Effective Date of the Policy will be held in the general account and
credited with interest from the date of receipt at the rate of return
then being earned on amounts allocated to the Money Market Trust.
The minimum initial premium is one-twelfth of the No-Lapse Guarantee
Premium.
On the later of the Effective Date or the date a premium is received,
the Net Premiums paid plus interest credited will be allocated among
the Investment Accounts or the Fixed Account in accordance with the
policyowner's instructions.
SUBSEQUENT PREMIUMS
After the payment of the initial premium, premiums may be paid at any
time and in any amount until the life insured's Attained Age 100,
subject to the limitations on premium amount described below.
A Policy will be issued with a planned premium, which is based on the
amount of premium the policyowner wishes to pay. Manufacturers Life of
America will send notices to the policyowner setting forth the planned
premium at the payment interval selected by the policyowner. However,
the policyowner is under no obligation to make the indicated payment.
The Company may refuse any premium payment that would cause the Policy
to fail to qualify as life insurance under the Code. The Company also
reserves the right to request evidence of insurability if a premium
payment would result in an increase in the Death Benefit that is
greater than the increase in Policy Value.
Payment of premiums will not guarantee that the Policy will stay in
force. Conversely, failure to pay premiums will not necessarily cause
the Policy to lapse.
All Net Premiums received on or after the Effective Date will be
allocated among Investment Accounts or the Fixed Account as of the
Business Day the premiums were received at the Service Office. Monthly
deductions are due on the Policy Date and at the beginning of each
Policy Month thereafter. However, if due prior to the Effective Date,
they will be taken on the Effective Date instead of the dates they were
due.
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<PAGE> 32
MAXIMUM PREMIUM LIMITATION
If the Policy is issued under the Guideline Premium Test, in no event
may the total of all premiums paid exceed the then current maximum
premium limitations established by federal income tax law for a Policy
to qualify as life insurance.
If, at any time, a premium is paid which would result in total premiums
exceeding the above maximum premium limitation, the Company will only
accept that portion of the premium which will make the total premiums
equal to the maximum. Any part of the premium in excess of that amount
will be returned and no further premiums will be accepted until allowed
by the then current maximum premium limitation.
PREMIUM ALLOCATION
Premiums may be allocated to the Fixed Account for accumulation at a
rate of interest equal to at least 3% or to one or more of the
Investment Accounts for investment in the Portfolio shares held by the
corresponding sub-account of the Separate Account. Allocations among
the Investment Accounts and the Fixed Account are made as a percentage
of the premium. The percentage allocation to any account may be any
whole number between zero and 100, provided the total allocation equals
100. A policyowner may change the way in which premiums are allocated
at any time without charge. The change will take effect on the date a
written request for change satisfactory to the Company is received at
the Service Office.
CHARGES AND DEDUCTIONS
PREMIUM CHARGE
During the first 10 Policy Years, Manufacturers Life of America deducts
a premium charge from each premium payment, equal to 6.6% of the
premium. Thereafter, the premium charge is equal to 3.6% of the
premium. The premium charge is designed to cover a portion of the
Company's acquisition and sales expenses and premium taxes. Premium
taxes vary from state to state, ranging from 0% to 3.5%.
SURRENDER CHARGES
The Company will deduct a Surrender Charge if during the first 10 years
following the Policy Date, or the effective date of a Face Amount
increase:
- the Policy is surrendered for its Net Cash Surrender Value,
- a partial withdrawal is made, or
- the Policy lapses.
The Surrender Charge, together with a portion of the premium charge, is
designed to compensate the Company for some of the expenses it incurs
in selling and distributing the Policies, including agents'
commissions, advertising, agent training and the printing of
prospectuses and sales literature.
The amount of the Surrender Charge is determined by multiplying the
"Surrender Charge rate" by the "Face Amount associated with the
Surrender Charge" divided by 1000. The amount obtained is then
multiplied by the "grading percentage," a percent which starts at 100%
and grades down by .833% (100%/120 months) each Policy Month reaching
zero at the end of 10 years.
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<PAGE> 33
The "Face Amount associated with the Surrender Charge" is the Face
Amount for which the Surrender Charge is being applied. See "New
Surrender Charge for an Increase" above.
The "Surrender Charge rate" is 80% of the "Surrender Charge premium"
plus a rate per $1,000 of Face Amount as set forth in the table below.
The "Face Amount factor" is the rate per $1000 of face value set forth
in the table below, and the "Surrender Charge premium" is the lesser of
- the premiums paid during the first two Policy Years (or premiums
attributable to a Face Amount increase for the two years
following the increase) per $1000 of Face Amount, and
- The "Surrender Charge Premium Limit" specified in the Policy per
$1000 of Face Amount.
Table for Rate per $1000 of Face Value (Face Amount Factor)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Age at Issue Rate per $1,000 Age at Issue Rate per $1,000
Or Increase of Face Value($) or Increase of Face Value($)
-----------------------------------------------------------------------------
<S> <C> <C> <C>
0 2.00 18 4.25
1 2.13 19 4.38
2 2.25 20 4.50
3 2.38 21 5.00
4 2.50 22 5.50
5 2.63 23 6.00
6 2.75 24 6.50
7 2.88 25 7.00
8 3.00 26 7.20
9 3.13 27 7.40
10 3.25 28 7.60
11 3.38 29 7.80
12 3.50 30 8.00
13 3.63 31 8.04
14 3.75 32 8.08
15 3.88 33 8.12
16 4.00 34 8.16
17 4.13 35 and over 8.20
-----------------------------------------------------------------------------
</TABLE>
As noted, the calculation produced by the above formula is adjusted by
application of the "grading percentage." The "grading percentage,"
which applies to both the initial Face Amount and to any Face Amount
increase, is based on the Policy Year in which the surrender occurs.
The percent starts at 100% for the first Policy Month and grades down
.833% each Policy Month reaching zero at the end of ten years.
28
<PAGE> 34
Formulas Described in Words
Surrender Charge
The Surrender Charge is determined by multiplying the Surrender Charge
Rate by the Face Amount associated with the Surrender Charge divided by
1000. The amount obtained is then multiplied by the Grading Percentage,
a percent which starts at 100% and grades down each policy year to zero
over a period not to exceed 10 years.
Surrender Charge Rate
The Surrender Charge Rate is equal to the sum of (a) plus (b) where (a)
equals "X" (see Table above) and (b) equals 80% times the Surrender
Charge Premium.
Illustration of Maximum Surrender Charge Calculation
Assumptions
- 45 year old male (standard risks and nonsmoker status)
- Policy issued 7 years ago
- $7,785 in premiums has been paid on the Policy in the first two
Policy Years
- Surrender Charge Premium for the Policy is $15.26
- Face Amount of the Policy at issue is $500,000 and no increases
have occurred
- Policy is surrendered during the first month of the seventh policy
year.
Maximum Surrender Charge
The maximum Surrender Charge to be assessed would be $4,082 determined
as follows:
First, the Surrender Charge Rate is determined by applying the
Surrender Charge Rate formula as set forth below.
Surrender Charge Rate = (8.20) + (80%) x (Surrender Charge Premium)
$20.41 = (8.20) + (80%) x (15.26)
The Surrender Charge Rate is equal to $20.41
Second, the Surrender Charge Rate is entered into the Surrender Charge
formula and the Surrender Charge is determined as set forth below.
Surrender Charge = (Surrender Charge Rate) x (Face Amount of the Policy
associated with the Surrender Charge/1000) x (Grading Percentage)
$4,082 = (20.41) x ($500,000/1000) x (40%)
The maximum Surrender Charge is equal to $4,082.
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<PAGE> 35
Depending upon the Face Amount of the Policy, the age of the insured at
issue, premiums paid under the Policy and the performance of the
underlying investment options, the Policy may have no Cash Surrender
Value and therefore, the policyowner may receive no surrender proceeds
upon surrendering the Policy.
Surrender Charges on a Partial Withdrawal
A partial withdrawal will result in the assessment of a portion of the
Surrender Charges to which the Policy is subject. The portion of the
Surrender Charges assessed will be based on the ratio of the amount of
the withdrawal to the Net Cash Surrender Value of the Policy as at the
date of the withdrawal. The Surrender Charges will be deducted from the
Policy Value at the time of the partial withdrawal on a pro-rata basis
from each of the Investment Accounts and the Fixed Account unless you
direct that the partial withdrawal be deducted from one or more
Investment Accounts or the Fixed Account. If the amount in the accounts
is not sufficient to pay the Surrender Charges assessed, then the
amount of the withdrawal will be reduced.
Whenever a portion of the Surrender Charges is deducted as a result of
a partial withdrawal, the Policy's remaining Surrender Charges will be
reduced in the same proportion that the Surrender Charge deducted bears
to the total Surrender Charge immediately before the partial
withdrawal.
Monthly Charges
On the Policy Date and at the beginning of each Policy Month, a
deduction is due from the Net Policy Value to cover certain charges in
connection with the Policy until the Policy Anniversary when the life
insured reaches Attained Age 100, unless certain riders are in effect
in which case such charges may continue. If there is a Policy Debt
under the Policy, loan interest and principal will continue to be
payable at the beginning of each Policy Month. Monthly deductions due
prior to the Effective Date will be taken on the Effective Date instead
of the dates they were due. These charges consist of:
- an administration charge;
- a charge for the cost of insurance;
- an asset-based risk charge;
- if applicable, a charge for any supplementary benefits added to the
Policy.
All of the Monthly Charges, except for the asset-based risk charge, may
be allocated among the Investment Accounts and the Fixed Account as
specified by the policyowner. Absent such specification, the Monthly
Deductions, except the asset-based risk charge, will be allocated among
the Investment Accounts and the Fixed Account in the same proportion as
the Policy value in each bears to the Net Policy Value. The Asset-Based
Risk Charge will be allocated among the Investment Accounts in the same
proportion as the value in each Investment Account bears to the total
value of all Investment Accounts.
Administration Charge
This charge will be equal to $30 plus a per $1000 of Face
Amount charge per Policy Month in the first Policy Year. For all
subsequent Policy Years, the administration charge will be $15 plus a
per $1000 of Face Amount charge per Policy Month. The per $1000 charge
varies by age. The charge is designed to cover certain administrative
expenses associated with the Policy, including maintaining policy
records, collecting premiums and processing death claims, surrender and
withdrawal requests and various changes permitted under the Policy.
30
<PAGE> 36
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 and the net amount at risk are determined separately for the
initial Face Amount and for each increase in Face Amount. In
determining the net amount at risk, if there have been increases in the
Face Amount, the Policy Value shall first be considered a part of the
initial Face Amount. If the Policy Value exceeds the initial Face
Amount, it shall then be considered a part of the additional increases
in Face Amount resulting from the increases, in the order the increases
occurred.
For Death Benefit Options 1 and 3, the net amount at risk is equal to
the greater of zero, or the result of (a) minus (b) where:
(a) is the death benefit as of the first day of the Policy Month,
divided by 1.0032737; and
(b) is the Policy Value as of the first day of the Policy Month after
the deduction of monthly cost of insurance.
For Death Benefit Option 2, the net amount at risk is equal to the Face
Amount of insurance.
The rates for the cost of insurance are based upon the issue age,
duration of coverage, sex, Risk Classification of the life insured and
Net Amount at Risk and Death Benefit Option. Cost of insurance rates
will generally increase with the age of the life insured. The first
year cost of insurance rate is guaranteed.
The Company applies unisex rates where appropriate under the law. This
currently includes the state of Montana and policies purchased by
employers and employee organizations in connection with
employment-related insurance or benefit programs.
The cost of insurance rates reflect the Company's expectations as to
future mortality experience. The rates may be re-determined from time
to time on a basis which does not unfairly discriminate within the
class of life insured. In no event will the cost of insurance rates
exceed the guaranteed rates set forth in the Policy except to the
extent that an extra charge is imposed because of an additional rating
applicable to the Life Insured. After the first Policy Year, the cost
of insurance will generally increase on each Policy Anniversary. The
guaranteed rates are based on the 1980 Commissioners Smoker Distinct
Mortality tables. [?]
Asset-Based Risk Charge
A monthly charge is assessed against the Investment Accounts
equal to a percentage of each Investment Account. This charge is to
compensate the Company for the sales, administrative and other expenses
it may incur. The Company will realize a gain from this charge to the
extent it is not needed to provide benefits and pay expenses under the
Policy.
The asset-based risk charge varies by the sum of the Investment
Accounts as follows:
31
<PAGE> 37
<TABLE>
<CAPTION>
---------------------------------------------------------------------
Sum of Guaranteed Monthly Guaranteed Annual Asset-
Investment Asset-Based Risk Based Risk Charge
Accounts Charge
---------------------------------------------------------------------
<S> <C> <C>
Up to 0.0500% 0.6000%
$25,000
$25,000 to 0.0208% 0.2500%
$100,000
Above
$100,000 0.0125% 0.1500%
---------------------------------------------------------------------
</TABLE>
Charges for Supplementary Benefits
If the Policy includes Supplementary Benefits, a charge may
apply to such Supplementary Benefits.
CHARGES FOR TRANSFERS
A charge of $25 will be imposed on each transfer in excess of twelve in
a Policy Year. The charge will be deducted from the Investment Account
or the Fixed Account to which the transfer is being made. All transfer
requests received by the Company on the same Business Day are treated
as a single transfer request.
Transfers under the Dollar Cost Averaging and Asset Allocation Balancer
programs do not count against the number of free transfers permitted
per Policy Year.
REDUCTION IN CHARGES
The Policy is available for purchase by corporations and other groups
or sponsoring organizations. Group or sponsored arrangements may
include reduction or elimination of withdrawal charges and deductions
for employees, officers, directors, agents and immediate family members
of the foregoing. Manufacturers Life of America reserves the right to
reduce any of the Policy's charges on certain cases where it is
expected that the amount or nature of such cases will result in savings
of sales, underwriting, administrative, commissions or other costs.
Eligibility for these reductions and the amount of reductions will be
determined by a number of factors, including the number of lives to be
insured, the total premiums expected to be paid, total assets under
management for the policyowner, the nature of the relationship among
the insured individuals, the purpose for which the policies are being
purchased, expected persistency of the individual policies, and any
other circumstances which Manufacturers Life of America believes to be
relevant to the expected reduction of its expenses. Some of these
reductions may be guaranteed and others may be subject to withdrawal or
modification, on a uniform case basis. Reductions in charges will not
be unfairly discriminatory to any policyowners. Manufacturers Life of
America may modify from time to time, on a uniform basis, both the
amounts of reductions and the criteria for qualification.
SPECIAL PROVISIONS FOR EXCHANGES
The Company will permit owners of certain fixed life insurance policies
issued either by the Company or The Manufacturers Life Insurance
Company (U.S.A.) to exchange their policies for the Policies described
in this prospectus (and likewise, owners of policies described in this
Prospectus may also exchange their Policies for certain fixed policies
issued either by the Company or by The Manufacturers Life Insurance
Company (U.S.A)). Policyowners considering an exchange should consult
their tax advisors as to the tax
32
<PAGE> 38
consequences of an exchange.
COMPANY TAX CONSIDERATIONS
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 the Separate 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.
POLICY VALUE
DETERMINATION OF THE POLICY VALUE
A Policy has a Policy Value, a portion of which is available to the
policyowner by making a policy loan or partial withdrawal, or upon
surrender of the Policy. The Policy Value may also affect the amount of
the death benefit. The Policy Value at any time is equal to the sum of
the values in the Investment Accounts, the Fixed Account, and the Loan
Account.
INVESTMENT ACCOUNTS
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.
FIXED ACCOUNT
Amounts in the Fixed Account do not vary with the investment
performance of any sub-account. Instead, these amounts are credited
with interest at a rate determined by Manufacturers Life of America.
For a detailed description of the Fixed Account, see "The General
Account - Fixed Account."
LOAN ACCOUNT
Amounts borrowed from the Policy are transferred to the Loan Account.
Amounts in the Loan Account do not vary with the investment performance
of any sub-account. Instead, these amounts are credited with interest
at a rate which is equal to the amount charged on the outstanding
Policy Debt less the Loan Interest Credited Differential. For a
detailed description of the Loan Account, see "Policy Loans - Loan
Account".
UNITS AND UNIT VALUES
CREDITING AND CANCELING 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 canceled whenever
amounts are deducted, transferred or withdrawn from the sub-account.
The number of units credited or canceled for a specific transaction is
based on the dollar amount of the transaction divided by the value of
the unit on the Business Day on which the transaction occurs. The
number of units credited with respect to a premium payment will be
based on the applicable unit values for the Business Day on which the
premium is received at the Service Office, except for any premiums
received before the Effective Date.
33
<PAGE> 39
For premiums received before the Effective Date, the values will be
determined on the Effective Date.
A Business Day is any day that the New York Stock Exchange is open for
business. A Business Day ends at the close of regularly scheduled
day-time trading of the New York Stock Exchange (currently 4:00 p.m.
Eastern Time) on that day.
Units are valued at the end of each Business Day. When an order
involving the crediting or canceling of units is received after the end
of a Business Day, or on a day which is not a Business Day, the order
will be processed on the basis of unit values determined on the next
Business Day. Similarly, any determination of Policy Value, Investment
Account value or death benefit to be made on a day which is not a
Business Day will be made on the next Business Day.
UNIT VALUES
The value of a unit of each sub-account was initially fixed at $10.00.
For each subsequent Business Day the unit value for that sub-account is
determined by multiplying the unit value for the immediately preceding
Business Day by the net investment factor for the sub-account on such
subsequent Business Day.
The net investment factor for a sub-account on any Business Day is
equal to (a) divided by (b) where:
(a) is the net asset value of the underlying Portfolio shares held by
that sub-account as of the end of such Business Day before any policy
transactions are made on that day; and
(b) is the net asset value of the underlying Portfolio shares held by
that sub-account as of the end of the immediately preceding Business
Day after all policy transactions were made for that day.
The value of a unit may increase, decrease, or remain the same,
depending on the investment performance of a sub-account from one
Business Day to the next.
TRANSFERS OF POLICY VALUE
At any time, a policyowner may transfer Policy Value from one
sub-account to another or to the Fixed Account. Transfers involving the
Fixed Account are subject to certain limitations noted below under
"Transfers Involving Fixed Accounts." Transfer requests must be in
writing in a format satisfactory to the Company, or by telephone if a
currently valid telephone transfer authorization form is on file.
The Company reserves the right to impose limitations on transfers,
including the maximum amount that may be transferred. The Company also
reserves the right to modify or terminate the transfer privilege at any
time in accordance with applicable law. Transfers may also be delayed
when any of the events described under items (i) through (iii) in
"Payment of Proceeds" occur. Transfer privileges are also subject to
any restrictions that may be imposed by the Trust. In addition, we
reserve the right to defer the transfer privilege at any time when we
are unable to purchase or redeem shares of the Trust.
While the Policy is in force, the policyowner may transfer the Policy
Value from any of the Investment Accounts to the Fixed Account without
incurring transfer charges:
(a) within eighteen months after the Issue Date; or
34
<PAGE> 40
(b) within 60 days of the effective date of a material change in the
investment objectives of any of the sub-accounts or within 60 days of
the date of notification of such change, whichever is later.
Such transfers will not count against the twelve transfers that may be
made free of charge in any Policy Year.
TRANSFERS INVOLVING FIXED ACCOUNT
The maximum amount that may be transferred from the Fixed Account in
any one Policy Year is the greater of $500 or 15% of the Fixed Account
Value at the previous Policy Anniversary. Any transfer which involves a
transfer out of the Fixed Account may not involve a transfer to the
Investment Account for the Money Market Trust.
TELEPHONE TRANSFERS
Although failure to follow reasonable procedures may result in the
Company being liable 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 the
Company reasonably believes to be genuine. The Company will employ
reasonable procedures to confirm that instructions communicated by
telephone are genuine. Such procedures shall consist of confirming that
a valid telephone authorization form is on file, tape recording of all
telephone transactions and providing written confirmation thereof.
DOLLAR COST AVERAGING
The Company will offer policyowners a Dollar Cost Averaging ("DCA")
program. Under the DCA program, the policyowner will designate an
amount which will be transferred monthly from one Investment Account
into any other Investment Account(s) or the Fixed Account. Currently,
no charge will be made for this program, although the Company reserves
the right to institute a charge on 90 days' written notice to the
policyholder. If insufficient funds exist to effect a DCA transfer, the
transfer will not be effected and the policyowner will be so notified.
The Company reserves the right to cease to offer this program as of 90
days after written notice is sent to the policyowner.
ASSET ALLOCATION BALANCER TRANSFERS
Under the Asset Allocation Balancer program the policyowner will
designate an allocation of Policy Value among Investment Accounts. At
six-month intervals beginning six months after the Policy Date, the
Company will move amounts among the Investment Accounts as necessary to
maintain the policyowner's chosen allocation. A change to the
policyowner premium allocation instructions will automatically result
in a change in Asset Allocation Balancer instructions so that the two
are identical unless the policyowner either instructs Manufacturers of
America otherwise or has elected the Dollar Cost Averaging program.
Currently, there is no charge for this program; however, the Company
reserves the right to institute a charge on 90 days' written notice to
the policyowner.
The Company reserves the right to cease to offer this program as of 90
days after written notice is sent to the policyowner.
POLICY LOANS
While this Policy is in force and has an available loan value, a
policyowner may borrow against the Policy Value of the Policy. The
Policy serves as the only security for the loan. Policy loans may have
tax
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<PAGE> 41
consequences, see "Tax Treatment of Policy Benefits - Interest on
Policy Loans After Year 10" and "Tax Treatment of Policy Benefits -
Policy Loan Interest."
EFFECT OF POLICY LOAN
A policy loan will have an effect on future Policy Values, since that
portion of the Policy Value in the Loan Account will increase in value
at the crediting interest rate rather than varying with the performance
of the underlying Portfolios or increasing in value at the rate of
interest credited for amounts allocated to the Fixed Account. A policy
loan may cause a Policy to be more susceptible to going into default
since a policy loan will be reflected in the Net Cash Surrender Value.
See "Lapse and Reinstatement." In addition, a policy loan may result in
a Policy's failing to satisfy the No-Lapse Guarantee Cumulative Premium
Test since the Policy Debt is subtracted from the sum of the premiums
paid in determining whether this test is satisfied. Finally, a policy
loan will affect the amount payable on the death of the life insured,
since the death benefit is reduced by the Policy Debt at the date of
death in arriving at the insurance benefit.
INTEREST CHARGED ON POLICY LOANS
Interest on the Policy Debt will accrue daily and be payable annually
on the Policy Anniversary. During the first 10 Policy Years, the rate
of interest charged will be an effective annual rate of 5.25%.
Thereafter, the rate of interest charged will be an effective annual
rate of 4%. If the interest due on a Policy Anniversary is not paid by
the policyowner, the interest will be borrowed against the Policy.
Interest on the Policy Debt will continue to accrue daily if there is
an outstanding loan when monthly deductions and premium payments cease
when the life insured reaches age 100. The Policy will go into default
at any time the Policy Debt exceeds the Cash Surrender Value. At least
61 days prior to termination, the Company will send the policyowner a
notice of the pending termination. Payment of interest on the Policy
Debt during the 61 day grace period will bring the policy out of
default.
LOAN ACCOUNT
When a loan is made, an amount equal to the loan principal, plus
interest to the next Policy Anniversary, will be deducted from the
Investment Accounts or the Fixed Account and transferred to the Loan
Account. Amounts transferred into the Loan Account cover the loan
principal plus loan interest due to the next Policy Anniversary. The
policyowner may designate how the amount to be transferred to the Loan
Account is allocated among the accounts from which the transfer is to
be made. In the absence of instructions, the amount to be transferred
will be allocated to each account in the same proportion as the value
in each Investment Account and the Fixed Account bears to the Net
Policy Value. A transfer from an Investment Account will result in the
cancellation of units of the underlying sub-account equal in value to
the amount transferred from the Investment Account. However, since the
Loan Account is part of the Policy Value, transfers made in connection
with a loan will not change the Policy Value.
INTEREST CREDITED TO THE LOAN ACCOUNT
Interest will be credited to amounts in the Loan Account at an
effective annual rate of at least 3.50%. The actual rate credited is
equal to the rate of interest charged on the policy loan less the Loan
Interest Credited Differential, which is currently 1.25% during the
first ten policy years and 0% thereafter, and is guaranteed not to
exceed 1.25%. The Company may change the Loan Interest Credited
Differential as of 90 days after sending you written notice of such
change.
For a Policy that is not a Modified Endowment Contract ("MEC"), the tax
consequences associated with a
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<PAGE> 42
loan interest credited differential of 0% are unclear. A tax advisor
should be consulted before effecting a loan to evaluate the tax
consequences that may arise in such a situation. If we determine, in
our sole discretion, that there is a substantial risk that a loan will
be treated as a taxable distribution under federal tax law as a result
of the differential between the credited interest rate and the loan
interest rate, we retain the right to increase the loan interest rate
to an amount that would result in the transaction being treated as a
loan under federal tax law.
LOAN ACCOUNT ADJUSTMENTS
On the first day of each Policy Anniversary the difference between the
Loan Account and the Policy Debt is transferred to the Loan Account
from the Investment Accounts or the Fixed Account. Amounts transferred
to the Loan Account will be taken from the Investment Accounts and the
Fixed Account in the same proportion as the value in each Investment
Account and the Fixed Account bears to the Net Policy Value.
LOAN REPAYMENTS
Policy Debt may be repaid in whole or in part at any time prior to the
death of the life insured, provided that the Policy is in force. When a
repayment is made, the amount is credited to the Loan Account and
transferred to the Fixed Account or the Investment Accounts. Loan
repayments will be allocated first to the Fixed Account until the
associated Loan Sub-Account is reduced to zero and then to each
Investment Account in the same proportion as the value in the
corresponding Loan Sub-Account bears to the value of the Loan Account.
Amounts paid to the Company not specifically designated in writing as
loan repayments will be treated as premiums. Where permitted by
applicable state law, when a portion of the Loan Account amount is
allocated to the Fixed Account, the Company may require that any
amounts paid to it be applied to outstanding loan balances.
POLICY SURRENDER AND PARTIAL WITHDRAWALS
POLICY SURRENDER
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 Policy
Debt. If there have been any prior Face Amount increases, the Surrender
Charge will be the sum of the Surrender Charge for the Initial Face
Amount plus the Surrender Charge for each increase. The Net Cash
Surrender Value will be determined as of the end of the Business Day on
which 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.
PARTIAL WITHDRAWALS
A policyowner may make a partial withdrawal of the Net Cash Surrender
Value once each Policy Month after the first Policy Anniversary. The
policyowner may specify the portion of the withdrawal to be taken from
each Investment Account and the Fixed 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. For information on Surrender Charges on a Partial
Withdrawal see "Charges and Deductions - Surrender Charges."
Withdrawals will be limited if they would otherwise cause the Face
Amount to fall below $100,000.
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<PAGE> 43
REDUCTION IN FACE AMOUNT DUE TO A PARTIAL WITHDRAWAL
If Death Benefit Option 1 is in effect when a partial withdrawal is
made, the Face Amount of the Policy will be reduced by the amount of
the withdrawal plus any applicable Surrender Charges. If Death Benefit
Option 3 is in effect when a partial withdrawal is made the Face Amount
of the Policy will be reduced if the Premium Death Benefit Account
reaches zero.
If the death benefit is based upon the Policy Value times the minimum
death benefit percentage set forth under "Death Benefit - Minimum Death
Benefit," the Face Amount will be reduced only to the extent that the
amount of the withdrawal plus the portion of the Surrender Charge
assessed exceeds the difference between the death benefit and the Face
Amount. 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.
Partial withdrawals do not affect the Face Amount of a Policy if Death
Benefit Option 2 is in effect.
LAPSE AND REINSTATEMENT
LAPSE
Unless the No-Lapse Guarantee is in effect, a Policy will go into
default if at the beginning of any Policy Month the Policy's Net Cash
Surrender Value would be zero or below after deducting the monthly
deduction then due. Therefore, a Policy could lapse eventually if
increases in Policy Value (prior to deduction of Policy charges) are
not sufficient to cover Policy charges. A lapse could have adverse tax
consequences as described under "Tax Treatment of the Policy - Tax
Treatment of Policy Benefits Surrender or Lapse." The Company will
notify the policyowner of the default and will allow a 61 day grace
period in which the policyowner may make a premium payment sufficient
to bring the Policy out of default. The required payment will be equal
to the amount necessary to bring the Net Cash Surrender Value to zero,
if it was less than zero on the date of default, plus the monthly
deductions due at the date of default and payable at the beginning of
each of the two Policy Months thereafter, plus any applicable premium
charge. If the required payment is not received by the end of the grace
period, the Policy will terminate with no value.
NO-LAPSE GUARANTEE
In those states where it is permitted, as long as the No-Lapse
Guarantee Cumulative Premium Test is satisfied during the No-Lapse
Guarantee Period, as described below, the Company will guarantee that
the Policy will not go into default, even if adverse investment
experience or other factors should cause the Policy's Net Cash
Surrender Value to fall to zero or below during such period.
The Monthly No-Lapse Guarantee Premium is one-twelfth of the No-Lapse
Guarantee Premium.
The No-Lapse Guarantee Premium is set at issue and reflects any
Additional Rating and Supplementary Benefits, if applicable. It is
subject to change if (i) the face amount of the Policy is changed, (ii)
there is a Death Benefit Option change, (iii) there is a decrease in
the Face Amount of insurance due to a partial withdrawal, or (iv) there
is any change in the supplementary benefits added to the Policy or in
the risk classification of the life insured.
The No-Lapse Guarantee Period is described under "Definitions"
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<PAGE> 44
While the No-Lapse Guarantee is in effect, the Company will determine
at the beginning of the Policy Month that your policy would otherwise
be in default, whether the No-Lapse Guarantee Cumulative Premium Test,
described below, has been met. If the test has not been satisfied, the
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 policy from going into default. This required
payment, as described in the notification to the policyowner, will be
equal to the lesser of:
(a) the outstanding premium requirement to satisfy the
No-Lapse Guarantee Cumulative Premium Test at the date of
default, plus the Monthly No-Lapse Guarantee Premium due for
the next two Policy Months, or
(b) the amount necessary to bring the Net Cash Surrender Value
to zero plus the monthly deductions due, plus the next two
monthly deductions plus the applicable premium charge.
If the required payment is not received by the end of the grace period,
the No-Lapse Guarantee and the Policy will terminate.
NO-LAPSE GUARANTEE CUMULATIVE PREMIUM TEST
The No-Lapse Guarantee Cumulative Premium Test is satisfied if, as of
the beginning of the Policy Month that your policy would otherwise be
in default, the sum of all premiums paid to date less any gross
withdrawals taken on or before the date of the test and less any policy
debt is equal to or exceeds the sum of the Monthly No-Lapse Guarantee
Premiums due from the Policy Date to the date of the test.
DEATH DURING GRACE PERIOD
If the life insured should die during the grace period, 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 will be
reduced by any outstanding Monthly Deductions due at the time of death.
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 classification is standard or
preferred, and
(b) The life insured's Attained Age is less than 46.
A policyowner can, by making a written request, reinstate a Policy
which has terminated after going into default at any time within the
five-year period following the date of termination subject to the
following conditions:
(a) Evidence of the life insured's insurability, satisfactory
to the Company is provided to the Company;
(b) A premium equal to the amount that was required to bring
the Policy out of default immediately prior to termination,
plus the amount needed to keep the Policy in force to the next
scheduled date for payment of the Planned Premium must be paid
to the Company.
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<PAGE> 45
If the reinstatement is approved, the date of reinstatement will be the
later of the date the Company approves the policyowner's request or the
date the required payment is received at the Company's Service Office.
In addition, any surrender charges will be reinstated to the amount
they were at the date of default. The Policy Value on the date of
reinstatement, prior to the crediting of any Net Premium paid on the
reinstatement, will be equal to the Policy Value on the date the Policy
terminated.
THE GENERAL ACCOUNT
The general account of Manufacturers Life of America consists of all
assets owned by the Company other than those in the Separate Account
and other separate accounts of the Company. Subject to applicable law,
Manufacturers Life of America has sole discretion over the investment
of the assets of 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 S.E.C. 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.
FIXED ACCOUNT
A policyowner may elect to allocate net premiums to the Fixed Account
or to transfer all or a portion of the Policy Value to the Fixed
Account from the Investment Accounts. Manufacturers Life of America
will hold the reserves required for any portion of the Policy Value
allocated to the Fixed Account in its general account. Transfers from
the Fixed Account to the Investment Accounts are subject to
restrictions.
POLICY VALUE IN THE FIXED ACCOUNT
The Policy Value in the Fixed Account is equal to:
(a) the portion of the net premiums allocated to it; plus
(b) any amounts transferred to it; plus
(c) interest credited to it; less
(d) any charges deducted from it; less
(e) any partial withdrawals from it; less
(f) any amounts transferred from it.
INTEREST ON THE FIXED ACCOUNT
An allocation of Policy Value to the Fixed 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 Fixed Account will accrue interest daily at an
effective annual rate of at least 3%, without regard to the actual
investment experience of the general account. Consequently, if a
policyowner pays the planned premiums, allocates all net premiums only
to the general account and makes no transfers, partial withdrawals, or
policy loans, the minimum amount and duration of the death benefit of
the Policy will be determinable and guaranteed.
OTHER PROVISIONS OF THE POLICY
CASH SURRENDER VALUE ENHANCER RIDER
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<PAGE> 46
The Policy may be issued with one of two Cash Surrender Value Enhancer
Riders. The decision to add either one of these two riders to a Policy
must be made at issuance of the Policy and once made is irrevocable.
The benefit of these riders is that the Cash Surrender Value of a
Policy is enhanced during the period for which Surrender Charges are
applicable. Under the rider for Option A the enhancement is ___, and
under Option B the enhancement is___.
An additional charge is made for the cost of the riders. The charge is
deducted as follows: _______. The additional charge is __% in the case
of Option A and ___% in the case of Option B.
<TABLE>
<CAPTION>
Option A Option B
-----------------------------------------------------------
Charge Enhancement Charge Enhancement
-----------------------------------------------------------
<S> <C> <C> <C>
--- ----- --- ---
-----------------------------------------------------------
</TABLE>
The effect of the charge for either of the riders will be to: (a)
decrease the Policy Value of the Policy and (b) during the period of
time when the Surrender Charges are not otherwise applicable, decrease
the Cash Surrender Value of the Policy.
POLICYOWNER RIGHTS
Unless otherwise restricted by a separate agreement, the policyowner
may, until the life insured's death:
- Vary the premiums paid under the Policy.
- Change the death benefit option.
- Change the premium allocation for future premiums.
- Transfer amounts between sub-accounts.
- Take loans and/or partial withdrawals.
- Surrender the contract.
- Transfer ownership to a new owner.
- Name a contingent owner that will automatically become owner if the
policyowner dies before the insured.
- Change or revoke a contingent owner.
- Change or revoke a beneficiary.
ASSIGNMENT OF RIGHTS
Manufacturers Life of America will not be bound by an assignment until
it receives a copy of the assignment at its Service Office.
Manufacturers Life of America assumes no responsibility for the
validity or effects of any assignment.
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.
Beneficiaries may also be revocable or irrevocable. Unless an
irrevocable designation has been elected, the beneficiary may be
changed by the policyowner during the life insured's lifetime by giving
written notice to Manufacturers Life of America in a form satisfactory
to the Company. The change will take effect as of the date such notice
is signed. If the life insured dies and there is no surviving
beneficiary, the policyowner, or the policyowner's estate if the
policyowner is the life insured, will be the beneficiary. If a
beneficiary dies before the seventh day after the death of the life
insured, the Company will pay the insurance benefit as if the
beneficiary had died before the life insured.
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<PAGE> 47
INCONTESTABILITY
Manufacturers Life of America will not contest the validity of a Policy
after it has been in force during any life insured's lifetime for two
years from the Issue Date. It will not contest the validity of an
increase in Face Amount, after such increase or addition has been in
force during the lifetime of the life insured for two years. If a
Policy has been reinstated and been in force during the lifetime of the
life insured 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 stated age or sex, or both, of the life insured in the Policy
are incorrect, Manufacturers Life of America will change the Face
Amount so that the death benefit will be that which the most recent
monthly charge for the cost of insurance would have purchased for the
correct age and sex.
SUICIDE EXCLUSION
If the life insured dies by suicide within two years after the Issue
Date (or within the maximum period permitted by the state in which the
Policy was delivered, if less than two years), the Policy will
terminate and the Company will pay only the premiums paid less any
partial Net Cash Surrender Value withdrawal and less any Policy Debt.
If the life insured dies by suicide within two years after the
effective date of an increase in Face Amount, the Company will credit
the amount of any Monthly Deductions taken for the increase and reduce
the Face Amount to what it was prior to the increase. If the insured's
death is by suicide, the Death Benefit for that increase will be
limited to the Monthly Deductions taken for the increase.
The Company reserves the right to obtain evidence of the manner and
cause of death of the life insured.
SUPPLEMENTARY BENEFITS
Subject to certain requirements, one or more supplementary benefits may
be added to a Policy, including those providing a death benefit
guarantee, term insurance for an additional insured, providing
accidental death coverage, waiving monthly deductions upon disability,
accelerating benefits in the event of a terminal illness, and, in the
case of corporate-owned policies, permitting a change of the life
insured. More detailed information concerning these supplementary
benefits may be obtained from an authorized agent of the Company. The
cost, if any, for supplementary benefits will be deducted as part of
the monthly deduction.
TAX TREATMENT OF THE POLICY
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 advisors
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 nor of the
current interpretations by the Service. MANUFACTURERS LIFE OF AMERICA
DOES NOT MAKE ANY GUARANTEE REGARDING THE TAX STATUS OF ANY POLICY OR
ANY TRANSACTION REGARDING THE POLICY.
The Policies may be used in various arrangements, including
non-qualified deferred compensation or salary continuation plans, split
dollar insurance plans, executive bonus plans, retiree medical benefit
plans and others. The tax consequences of such plans may vary depending
on the particular facts and
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<PAGE> 48
circumstances of each individual arrangement. Therefore, if the use of
such Policies in any such arrangement, the value of which depends in
part on the tax consequences, is contemplated, a qualified tax advisor
should be consulted for advice on the tax attributes of the particular
arrangement.
LIFE INSURANCE QUALIFICATION
There are several requirements that must be met for a Policy to be
considered a Life Insurance Contract under the Code, and thereby to
enjoy the tax benefits of such a contract:
- The Policy must satisfy the definition of life insurance under
Section 7702 of the Code.
- The investments of the Separate Account must be "adequately
diversified" in accordance with Section 817(h) of the Code and
Treasury Regulations.
- The Policy must be a valid life insurance contract under applicable
state law.
- The Policyowner must not possess "incidents of ownership" in the
assets of the Separate Account.
These four items are discussed in detail below.
DEFINITION OF LIFE INSURANCE
Section 7702 of the Code sets forth a definition of a life insurance
contract for federal tax purposes. For a Policy to be a life insurance
contract, it must satisfy either the Cash Value Accumulation Test or
the Guideline Premium and the Cash Value Corridor Tests. The Cash Value
Accumulation Test requires a minimum death benefit for a given Policy
Value. The Guideline Premium Test also requires a minimum death
benefit, but in addition limits the total premiums that can be paid
into a Policy for a given amount of death benefit.
With respect to a Policy which is 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
rate 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.
The Secretary of the 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 a Policy
would not provide the tax advantages normally provided by a life
insurance 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.
DIVERSIFICATION
Section 817(h) of the Code requires that the investments of the
Separate Account be "adequately
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<PAGE> 49
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 Trust,
intends to comply with the diversification requirements prescribed in
Treas. Reg. Sec. 1.817-5, which affect how the Trust'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.
STATE LAW
A policy must qualify as a valid life insurance contract under
applicable state laws. State regulations require that the policyowner
have appropriate insurable interest in the life insured. Failure to
establish an insurable interest may result in the Policy not qualifying
as a life insurance contract for federal tax purposes.
INVESTOR CONTROL
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 would be issued by way of regulations or rulings on the
"extent to which policyowners may direct their investments to
particular sub-accounts 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 policy has many more portfolios to which
Policyowners may allocate premium payments and Policy Values than were
available in the policies described in the ruling. 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.
TAX TREATMENT OF POLICY BENEFITS
The following discussion assumes that the Policy will qualify as a life
insurance contract for federal income tax purposes.
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. Depending on the
circumstances, the exchange of a Policy, a change in the Policy's death
benefit option, a Policy loan, partial withdrawal, surrender, change in
ownership, 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.
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<PAGE> 50
DEATH BENEFIT
The death benefit under the Policy should be excludable from the gross
income of the beneficiary under Section 101(a)(1) of the Code.
CASH VALUES
Generally, the policyowner will not be deemed to be in constructive
receipt of the Policy Value, including increments thereof, until there
is a distribution. This includes additions attributable to interest,
dividends, appreciation or gains realized on transfers among
sub-accounts.
INVESTMENT IN THE POLICY Investment in the Policy means:
- the aggregate amount of any premiums or other consideration paid
for a Policy; minus
- the aggregate amount, other than loan amounts, received under the
Policy which has been excluded from the gross income of the
policyowner (except that the amount of any loan from, or secured
by, a Policy that is a MEC, to the extent such amount has been
excluded from gross income, will be disregarded); plus
- the amount of any loan from, or secured by a Policy that is a MEC
to the extent that such amount has been included in the gross
income of the policyowner.
The repayment of a policy loan, or the payment of interest on a loan,
does not affect the Investment in the Policy.
SURRENDER OR LAPSE
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 Policy Debt exceeds the total investment in the Policy, the
excess will generally be treated as ordinary income subject to tax.
If, at the time of lapse or surrender, a Policy has a loan, the loan is
extinguished and the amount of the loan is a deemed payment to the
policyholder. If the amount of this deemed payment exceeds the
investment in the contract, the excess is taxable income and is subject
to Internal Revenue Service reporting requirements.
DISTRIBUTIONS
The tax consequences of distributions from, and loans taken from or
secured by, a Policy depend on whether the Policy is classified as a
MEC.
DISTRIBUTIONS FROM NON-MEC'S
A distribution from a non-MEC is generally treated as a tax-free
recovery by the policyowner of the Investment in the Policy 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. In general, loans from, or secured by, a
non-MEC are not treated as distributions. Instead, such loans are
treated as indebtedness of the policyowner. (But see the discussion of
the tax treatment of loans made after year ten in the section "Interest
on Policy Loans After Year 10").
Force Outs
45
<PAGE> 51
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 to comply 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. Changes include partial withdrawals and death benefit
option changes.
DISTRIBUTIONS FROM MEC'S
Policies classified as MEC's 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 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 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 on surrender) from, or loan
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 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.
These exceptions are not likely to apply in situations where the Policy
is not owned by an individual.
Definition of Modified Endowment Contracts
Section 7702A establishes a class of life insurance contracts
designated as "Modified Endowment Contracts" or "MECs," which applies
to Policies entered into or materially changed after June 20, 1988.
In general, a Policy will be a MEC if the accumulated premiums paid at
any time during the first seven Policy Years exceed the "seven-pay
premium limit". The seven-pay premium limit on any date is equal to the
sum of the net level premiums that would have been paid on or before
such date if the policy provided for paid-up future benefits after the
payment of seven level annual premiums (the "seven-pay premium").
The rules relating to whether a Policy will be treated as a MEC 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 MEC.
Material Changes
A Policy that is not a MEC may become a MEC if it is "materially
changed." If there is a material change to the Policy, the seven year
testing period for MEC status is restarted. The material change rules
for determining whether a Policy is a MEC are complex. In general,
however, the determination of whether a Policy will be a MEC after a
material change generally depends upon the relationship among the death
benefit of the Policy at the time of such change, the Policy Value at
the time of the change, and the additional premiums paid into the
Policy during the seven years starting with the date on which the
46
<PAGE> 52
material change occurs.
Reductions in Face Amount
If there is a reduction in benefits during any Policy Year, the
seven-pay premium limit is recalculated as if the policy had been
originally issued at the reduced benefit level. Failure to comply would
result in classification as a MEC regardless of any efforts by the
Company to provide a payment schedule that will not violate the seven
pay test.
Exchanges
A life insurance contract received in exchange for a MEC will also be
treated as a MEC.
Processing of Premiums
If a premium is received which would cause the Policy to become a MEC
within 23 days of the next Policy Anniversary, the Company will not
apply the portion of the premium which would cause MEC status ("excess
premium") to the Policy when received. The excess premium will be
placed in a suspense account until the next anniversary date, at which
point the excess premium, along with interest, earned on the excess
premium at a rate of 3.5% from the date the premium was received, will
be applied to the Policy. The policyowner will be advised of this
action and will be offered the opportunity to have the premium credited
as of the original date received or to have the premium returned. If
the policyowner does not respond, the premium and interest will be
applied to the Policy as of the first day of the next anniversary. The
interest credited will be taxable to the owner in the year earned.
If a premium is received which would cause the Policy to become a MEC
more than 23 days prior to the next Policy Anniversary, the Company
will refund any excess premium to the policyowner. The portion of the
premium which is not excess will be applied as of the date received.
The policyowner will be advised of this action and will be offered the
opportunity to return the premium and have it credited to the account
as of the original date received.
If in connection with the application or issue of the Policy, the
policyowner acknowledges that the policy is or will become a MEC,
excess premiums that would cause MEC status, will be credited to the
account as of the original date received.
Multiple Policies
All MEC's that are issued by a Company (or its affiliates) to the same
policyowner during any calendar year are treated as one MEC for
purposes of determining the amount includible in gross income under
Section 72(e) of the Code.
POLICY LOAN INTEREST
Generally, personal interest paid on any loan under a Policy which is
owned by an individual is not deductible. For policies purchased on or
after January 1, 1996, 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
the taxpayer will not be tax deductible unless the employee is a key
person within the meaning of Section 264 of the Code. A deduction will
not be permitted for interest on a loan under a Policy held on the life
of a key person to the extent the aggregate of such loans with respect
to contracts covering the key person exceed $50,000. The number of
employees who can qualify as key persons depends in part on the size of
the employer but cannot exceed 20 individuals.
Furthermore, if a non-natural person owns a Policy, or is the direct or
indirect beneficiary under a Policy, section 264(f) of the Code
disallows a pro-rata portion of the taxpayer's interest expense
allocable to
47
<PAGE> 53
unborrowed Policy cash values attributable to insurance held on the
lives of individuals who are not 20% (or more) owners of the
taxpayer-entity, officers, employees, or former employees of the
taxpayer.
The portion of the interest expense that is allocable to unborrowed
Policy cash values is an amount that bears the same ratio to that
interest expense as the taxpayer's average unborrowed Policy cash
values under such life insurance policies bear to the average adjusted
bases for all assets of the taxpayer.
If the taxpayer is not the Policyowner, but is the direct or indirect
beneficiary under the Policy, then the amount of unborrowed cash value
of the Policy taken into account in computing the portion of the
taxpayer's interest expense allocable to unborrowed Policy cash values
cannot exceed the benefit to which the taxpayer is directly or
indirectly entitled under the Policy.
INTEREST ON POLICY LOANS AFTER YEAR 10
Interest is credited to amounts in the Loan Account at an effective
annual rate of at least 3.50%. The actual rate credited is equal to the
rate of interest charged on the policy loan, less the Loan Interest
Credited Differential, which is currently 1.25% during the first ten
policy years and 0 thereafter, and is guaranteed not to exceed 1.25%.
The tax consequences associated with a loan interest credited
differential of 0% are unclear. A tax adviser should be consulted
before effecting a loan to evaluate the tax consequences that may arise
in such a situation. If we determine, in our sole discretion, that
there is a substantial risk that a loan will be treated as a taxable
distribution under Federal tax law as a result of no differential
between the credited interest rate and the loan interest rate, the
Company retains the right to decrease the crediting rate under the loan
to an amount that would result in the transaction being treated as a
loan under Federal tax law. If this amount is not prescribed by any IRS
ruling or regulation or any court decision, the amount of increase will
be that which the Company considers to be most likely to result in the
transaction being treated as a loan under Federal tax law.
POLICY EXCHANGES
A policyowner generally will not recognize gain upon the exchange of a
Policy for another life insurance policy issued by the Company or
another insurance company, except to the extent that the policyowner
receives cash in the exchange or is relieved of Policy indebtedness as
a result of the exchange. The receipt of cash or forgiveness of
indebtedness is treated as "boot" which is taxable up to the amount of
the gain in the policy. In no event will the gain recognized exceed the
amount by which the Policy Value (including any unpaid loans) exceeds
the policyowner's Investment in the Policy.
OTHER TRANSACTIONS
A transfer of the Policy, a change in the owner, a change in the
beneficiary, and certain other changes to the Policy, as well as
particular uses of the Policy (including use in a so called
"split-dollar" arrangement) may have tax consequences depending upon
the particular circumstances and should not be undertaken prior to
consulting with a qualified tax advisor. For instance, if the owner
transfers the Policy or designates a new owner in return for valuable
consideration (or, in some cases, if the transferor is relieved of a
liability as a result of the transfer), then the Death Benefit payable
upon the death of the Life Insured may in certain circumstances be
includible in taxable income to the extent that the Death Benefit
exceeds the prior consideration paid for the transfer and any premiums
or other amounts subsequently paid by the transferee. Further, in such
a case, if the consideration received exceeds the transferor's
Investment in the Policy, the difference will be taxed to the
transferor as ordinary income.
Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the
individual circumstances of each policyowner and beneficiary.
48
<PAGE> 54
ALTERNATE MINIMUM TAX
Corporate owners may be subject to Alternate Minimum Tax on the annual
increases in Cash Surrender Values and on the Death Benefit proceeds.
INCOME TAX REPORTING
In certain employer-sponsored life insurance arrangements, including
equity split dollar arrangements, participants may be required to
report for income tax purposes, one or more of the following:
- the value each year of the life insurance protection provided;
- an amount equal to any employer-paid premiums; or
- some or all of the amount by which the current value exceeds the
employer's interest in the Policy.
Participants should consult with their tax advisor to determine the tax
consequences of these arrangements.
OTHER INFORMATION
PAYMENT OF PROCEEDS
As long as the Policy is in force, Manufacturers Life of America will
ordinarily pay any policy loans, surrenders, partial withdrawals or
insurance benefit within seven days after receipt at its Service Office
of all the documents required for such a payment. The Company may delay
for up to six months the payment from the Fixed Account of any policy
loans, surrenders, partial withdrawals, or insurance benefit. In the
case of any such payments from any Investment Account the Company may
delay payment during any period during which (i) the New York Stock
Exchange is closed for trading (except for normal weekend and holiday
closings), (ii) trading on the New York Stock Exchange is restricted,
and (iii) an emergency exists as a result of which disposal of
securities held in the Separate Account is not reasonably practicable
or it is not reasonably practicable to determine the value of the
Separate Account's net assets; provided that applicable rules and
regulations of the Commission shall govern as to whether the conditions
described in (ii) and (iii) exist.
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 death benefit;
- the Policy Value and its allocation among the Investment Accounts,
the Fixed Account and the Loan Account;
- the value of the units in each Investment Account to which the
Policy Value is allocated;
- the Policy Debt and any loan interest charged since the last
report;
- the premiums paid and other Policy transactions made during the
period since the last report; and
- any other information required by law.
Each policyowner will also be sent an annual and a semi-annual report
for the Trust which will include a list of the securities held in each
Portfolio as required by the 1940 Act.
DISTRIBUTION OF THE POLICIES
ManEquity, Inc., an indirect wholly-owned subsidiary of MFC, will act
as the principal underwriter of, and continuously offer, the Policies
pursuant to a Distribution Agreement with Manufacturers Life of
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<PAGE> 55
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. ManEquity, Inc. is located at 200
Bloor Street East, Toronto, Ontario, Canada, M4W 1E5 and was organized
under the laws of Colorado on May 4, 1970. The directors of ManEquity,
Inc. are: Joseph Scott, Robert Cook and Gary Buchanan. The officers of
ManEquity, Inc. are: (i) _______ - President, (ii) Gary Buchanan - Vice
President, Compliance, (iii) Thomas Reive - Treasurer, (iv) Brian
Buckley - Secretary and General Counsel. The Policies will be sold by
registered representatives of either ManEquity, Inc. or other
broker-dealers having distribution agreements with ManEquity who are
also authorized by state insurance departments to do so. The Policies
will be sold in all states of the United States except New York.
The commissions payable to a registered representative will be an
amount not to exceed 105% of premiums in the first year, 2% of all
premiums paid in the second year and after, and after the second
anniversary .15% of the Net Policy Value per year. Representatives who
meet certain productivity standards with regard to the sale of the
Policies and certain other policies issued by Manufacturers Life of
America or Manufacturers Life will be eligible for additional
compensation.
RESPONSIBILITIES OF MANUFACTURERS LIFE
The Manufacturers Life Insurance Company "Manufacturers Life" and The
Manufacturers Life Insurance Company (USA), ("Manufacturers USA"), have
entered into an agreement with ManEquity, Inc. pursuant to which
Manufacturers Life or Manufacturers USA, 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 or Manufacturers USA
for all sales commissions paid by Manufacturers Life or Manufacturers
USA and will pay Manufacturers Life or Manufacturers USA for its other
services under the agreement in such amounts and at such times as
agreed to by the parties.
Manufacturers Life and Manufacturers USA have also entered into a
Service Agreement with Manufacturers Life of America pursuant to which
Manufacturers Life and Manufacturers USA 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 of America may, from time to time in its
sole discretion, enter into one or more reinsurance agreements with
other life insurance companies under which policies issued by it may be
reinsured, such that its total amount at risk under a policy would be
limited for the life of the insured.
VOTING RIGHTS
As stated previously, all of the assets held in the sub-accounts of the
Separate Account will be invested in shares of a particular Portfolio
of the Trust. Manufacturers Life of America is the legal owner of those
shares and as such has the right to vote upon certain matters that are
required by the 1940 Act to be approved or ratified by the shareholders
of a mutual fund and to vote upon any other matters that may be voted
upon at a shareholders' meeting. However, Manufacturers Life of America
will vote shares held in the sub-accounts in accordance with
instructions received from policyowners having an interest in such
sub-accounts. Shares held in each sub-account for which no timely
instructions from policyowners are received, including shares not
attributable to the Policies, will be voted by 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
50
<PAGE> 56
vote shares held in the Separate Account in its own right, it may elect
to do so.
The number of shares in each sub-account for which instructions may be
given by a policyowner is determined by dividing the portion of the
Policy Value derived from participation in that sub-account, if any, by
the value of one share of the corresponding Portfolio. The number will
be determined as of a date chosen by 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 meeting.
Manufacturers Life of America may, if required by state officials,
disregard voting instructions if such instructions would require shares
to be voted so as to cause a change in the sub-classification or
investment policies of one or more of the Portfolios, or to approve or
disapprove an investment management contract. In addition, the Company
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.
SUBSTITUTION OF PORTFOLIO SHARES
Although we believe it to be unlikely, it is possible that in the
judgment of the management of Manufacturers Life of America, one or
more of the Portfolios may become unsuitable for investment by the
Separate Account because of a change in investment policy or a change
in the applicable laws or regulation, because the shares are no longer
available for investment, or for some other reason. In that event,
Manufacturers Life of America may seek to substitute the shares of
another Portfolio or of an entirely different mutual fund. Before this
can be done, the approval of the Commission. and one or more state
insurance departments may be required.
Manufacturers Life of America also reserves the right (i) to combine
other separate accounts with the Separate Account, (ii) to create new
separate accounts, (iii) to establish additional sub-accounts within
the Separate Account to invest in additional portfolios of the Trust or
another management investment company, (iv) to eliminate existing
sub-accounts and to stop accepting new allocations and transfers into
the corresponding portfolio, (v) to combine sub-accounts or to transfer
assets in one sub-account to another sub-account or (vi) to transfer
assets from the Separate Account to another separate account and from
another separate account to the Separate Account. The Company also
reserves the right to operate the Separate Account as a management
investment company or other form permitted by law, and to de-register
the Separate Account under the 1940 Act. Any such change would be made
only if permissible under applicable federal and state law.
RECORDS AND ACCOUNTS
The Service Office will perform administrative functions, such as
decreases, increases, surrenders and partial withdrawals, and fund
transfers on behalf of the Company.
All records and accounts relating to the Separate Account and the
Portfolios will be maintained by the Company. All financial
transactions will be handled by the Company. All reports required to be
made and information required to be given will be provided by the
Company.
STATE REGULATIONS
Manufacturers Life of America is subject to the regulation and
supervision by the Michigan Department of Insurance, which periodically
examines its financial condition and operations. It is also subject to
the
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<PAGE> 57
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.
LITIGATION
No litigation is pending that would have a material effect upon the
Separate Account or the Trust.
INDEPENDENT AUDITORS
The consolidated financial statements of The Manufacturers Life
Insurance Company of America and Separate Account Three of The
Manufacturers Life Insurance Company of America at December 31, 1999
and 1998, and for each of the two years in the period ended December
31, 1999, appearing in this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth
in their reports thereon appearing elsewhere herein, and are included
in reliance upon such reports given on the authority of such firm as
experts in accounting and auditing.
FURTHER INFORMATION
A registration statement under the Securities Act of 1933 has been
filed with the Commission. 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 Commission's principal office in Washington D.C. upon
payment of the prescribed fee. The Commission also maintains a Web site
that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the
Commission which is located at http://www.sec.gov.
For further information you may also contact Manufacturers Life of
America's Home Office, the address and telephone number of which are on
the first page of the prospectus.
OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
--------------------------------------------------------------- --------------------------------------------------------------
Position with
Manufacturers
Life
Name of America Principal Occupation
--------------------------------------------------------------- --------------------------------------------------------------
<S> <C> <C>
Sandra M. Cotter (37)* Director Attorney, Dykema Gossett, PLLC, 1989 to present.
(since December
1992)
James D. Gallagher (45)** Director (since May President, The Manufacturers Life Insurance Company
1996), Secretary and of New York, August 1999 to Present, Vice
and General Counsel President, Secretary and General Counsel, The
Manufacturers Life Insurance Company (USA), January
1997 to present; Secretary and General Counsel,
Manufacturers Adviser Corporation, January 1997 to
present; Vice President, Legal Services - U.S.
Operations, The Manufacturers Life Insurance
Company, January 1996 to present; Vice President,
Secretary and General Counsel, The
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE> 58
<TABLE>
<CAPTION>
--------------------------------------------------------------- --------------------------------------------------------------
Position with
Manufacturers
Life
Name of America Principal Occupation
--------------------------------------------------------------- --------------------------------------------------------------
<S> <C> <C>
Manufacturers Life Insurance Company of North
America, 1994 to present.
Donald A. Guloien (42)*** Director (since Executive Vice President, Business Development, The
August 1990) and Manufacturers Life Insurance Company, January 1999
President to present, Senior Vice President, Business
Development, The Manufacturers Life Insurance
Company, 1994 to December 1998.
James O'Malley (54)*** Director (since Senior Vice President, U.S. Pensions, The
November 1998) Manufacturers Life Insurance Company, January 1999
to present; Vice President, Systems New Business
Pensions, The Manufacturers Life Insurance
Company, 1984 to December 1998.
Joseph J. Pietroski Director (since Senior Vice President and Corporate Secretary, The
(61)*** July 1992) Manufacturers Life Insurance Company, 1999 to
present. Senior Vice President, General Counsel
and Corporate Secretary, The Manufacturers Life
Insurance Company, 1988 to 1999.
John D. Richardson Director (since Senior Executive Vice President, The Manufacturers
(62)*** January 1995) and Life Insurance Company; January 1999 to present;
Chairman Executive Vice President, U.S. Operations, The
Manufacturers Life Insurance Company, November 1997
to December 1998; Senior Vice President and General
Manager, U.S. Operations, The Manufacturers Life
Insurance Company, January 1995 to October 1997.
Victor Apps (52)*** Vice President, Asia Executive Vice President, Asia Operations, The
Manufacturers Life Insurance Company, November 1997
to present; Senior Vice President and General
Manager, Greater China Division, The Manufacturers
Life Insurance Company, 1995 to 1997; Vice
President and General Manager, Greater China
Division, The Manufacturers Life Insurance Company,
1993 to 1995
--------------------------------------------------------------- --------------------------------------------------------------
</TABLE>
53
<PAGE> 59
<TABLE>
<CAPTION>
--------------------------------------------------------------- --------------------------------------------------------------
Position with
Manufacturers
Life
Name of America Principal Occupation
--------------------------------------------------------------- --------------------------------------------------------------
<S> <C> <C>
Felix Chee (53)*** Vice President, Executive Vice President & Chief Investment
Investments Officer, The Manufacturers Life Insurance Company;
November 1997 to present; Chief Investment Officer,
The Manufacturers Life Insurance Company, June 1997
to present, Senior Vice President and Treasurer,
The Manufacturers Life Insurance Company, August
1994 to May 1997.
Robert A. Cook (45)** Vice President, Senior Vice President, U.S. Individual Insurance,
Marketing The Manufacturers Life Insurance Company, January
1999 to present; Vice President, Product Management,
The Manufacturers Life Insurance Company, January
1996 to December 1998; Sales and Marketing Director,
The Manufacturers Life Insurance Company, 1994 to
1995.
John G. Vrysen (44)** Vice President, Chief Financial Officer and Treasurer, Manulife-Wood
Appointed Actuary Logan Holding Co., Inc., January 1996 to present;
Vice President and Chief Financial Officer, U.S.
Operations, The Manufacturers Life Insurance
Company, January 1996 to present; Vice President and
Chief Actuary, The Manufacturers Life Insurance
Company of New York, March 1992 to present; Vice
President and Chief Actuary, The Manufacturers Life
Insurance Company of North America, January 1986
to present.
Denis Turner (44)*** Vice President and Vice President and Treasurer, The Manufacturers Life
Treasurer Insurance Company of America, May 1999 to present;
Vice President & Chief Accountant, U.S. Division,
The Manufacturers Life Insurance Company, May 1999
to present; Assistant Vice President, Financial
Operations, Reinsurance Division, The Manufacturers
Life Insurance Company, February 1998 to April 1999;
Assistant Vice President & Controller, Reinsurance
Division, The Manufacturers Life Insurance Company,
November 1995, to January 1998, Assistant Vice
President, Corporate Controllers, The Manufacturers
Life Insurance Company, January 1989 to October
1995.
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
54
<PAGE> 60
*Principal business address is Dykema Gossett, 800 Michigan National
Tower, Lansing, Michigan 48933.
**Principal business address is Manulife Financial, 73 Tremont Street,
Boston, MA 02108.
***Principal business address is Manulife Financial, 200 Bloor Street,
Toronto, Ontario Canada M4W 1E5.
YEAR 2000 ISSUES
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using year 2000 dates is processed. In addition,
similar problems may arise in some systems which use certain dates in
1999 to represent something other than a date. Although the change in
date has occurred, it is not possible to conclude that all aspects of
the Year 2000 Issue that may affect us, including those related to
customers, suppliers, or other third parties, have been fully resolved.
OPTIONAL TERM RIDER
The Policy may be issued with an optional term insurance rider (the
"Term Rider"). The benefit of the term rider is that the cost of
insurance rates will always be less than or equal to the cost of
insurance rates on the Policy. HOWEVER, UNLIKE THE DEATH BENEFIT UNDER
THE POLICY, THE DEATH BENEFIT UNDER THE TERM RIDER IS NOT PROTECTED BY
THE NO LAPSE GUARANTEE AFTER THE SECOND POLICY YEAR AND TERMINATES AT
AGE 100.
ILLUSTRATIONS
The tables set forth in Appendix A illustrate the way in which a
Policy's Death Benefit, Policy Value, and Cash Surrender Value could
vary over an extended period of time.
FINANCIAL STATEMENTS
[To be Provided by Amendment]
55
<PAGE> 61
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
Fixed 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 given age would vary over time if
the return on the assets of the Portfolios 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,
surrender charges, and monthly deductions.
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 Manufacturers Investment Trust are
deducted from the gross return. The illustrations reflect an average of those
Portfolios' current expenses (excluding those of the Equity Index Trust), which
is approximately 0.945% per annum. The gross annual rates of return of 0%, 6%
and 12% correspond to approximate net annual rates of return of -0.941%, 5.0003%
and 10.947%. The illustrations reflect the current expense reimbursements in
effect for the Lifestyle Trusts and the Index Trusts. In the absence of such
expense reimbursements, the average of the Portfolio's current expenses would
have been 0.950% per annum and the gross annual rates of return of 0%, 6% and
12% would have corresponded to approximate net annual rates of return of
-0.946%, 4.998% and 10.941%. The expense reimbursements for the Lifestyle Trusts
and the Index Trusts are expected to remain in effect during the fiscal year
ended December 31, 2000. Were the expense reimbursements to terminate, the
average of the Portfolios' current expenses would be higher and the approximate
net annual rates of return would be lower.
The tables assume that no premiums have been allocated to the Fixed 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 a Policy issued to a male non-smoker:
- one based on current cost of insurance charges assessed by the Company and
reflecting a 20 year no lapse guarantee
- one based on the maximum cost of insurance charges based on the 1980
Commissioners Smoker Distinct Mortality Tables and reflecting a 20 year no
lapse guarantee.
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 issue age, sex (unless unisex rates are
required by law, or are requested) and risk classes, 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.
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 Portfolio 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.
The Policies have been offered to the public only since approximately _____,
2000. 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.
[Illustrations to be Provided by Amendment]
A-2
<PAGE> 62
PART 2
OTHER INFORMATION
<PAGE> 63
PART II. OTHER INFORMATION
Representation of Insurer Pursuant to Section 26 of the Investment Company Act
of 1940
The Manufacturers Life Insurance Company of America hereby represents
that the fees and charges deducted under the policies issued pursuant to this
registration statement in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by the Company.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
Cross-Reference Sheet;
The Prospectus, consisting of __ pages;
Representation of Insurer Pursuant to Section 26 of the Investment Company Act
of 1940
The signatures;
Written consents of the following persons:
A. Ernst & Young LLP - TO BE FILED BY AMENDMENT
B. Opinion and Consent of Actuary - TO BE FILED BY AMENDMENT
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. Incorporated by reference to Exhibit A(1) to the
registration statement on Form S-6, file number 333-66303
filed October 29, 1998 (the "SVUL Registration Statement").
A(3)(a)(i) Distribution Agreement between The Manufacturers Life
Insurance Company of America and ManEquity, Inc. dated
December 23, 1986. Incorporated by reference to Exhibit
A(3)(a)(i) to the SVUL Registration Statement.
A(3)(a)(ii) Amendment to Distribution Agreement between The Manufacturers
Life Insurance Company of America and ManEquity, Inc. dated
May 30, 1992. Incorporated by reference to Exhibit A(3)(a)(ii)
to the SVUL Registration Statement.
A(3)(a)(iii) Amendment to Distribution Agreement between The Manufacturers
Life Insurance Company of America and ManEquity, Inc. dated
February 23, 1994. Incorporated by reference to Exhibit
A(3)(a)(iii) to the SVUL Registration Statement.
A(3)(b)(i) Specimen Agreement between ManEquity, Inc. and registered
representatives. Incorporated by reference to Exhibit
A(3)(b)(i) to pre-effective amendment no. 1 to the
registration statement on Form S-6, file number 333-51293
filed August 28, 1998.
A(3)(b)(ii) Specimen agreement between The Manufacturers Life Insurance
Company of America and registered representatives.
Incorporated by reference to Exhibit A(3)(b)(ii) to
pre-effective amendment no. 1 to the registration statement on
Form S-6, file number 333-51293 filed August 28, 1998.
A(3)(b)(iii) Specimen Agreement between ManEquity, Inc. and dealers.
Incorporated by reference to Exhibit A(3)(b)(iii) to
pre-effective amendment no. 1 to the registration statement on
Form S-6, file number 333-51293 filed August 28, 1998.
<PAGE> 64
A(3)(b)(iv) Specimen agreement between The Manufacturers Life Insurance
Company of America and dealers. Incorporated by reference to
Exhibit A(3)(b)(iv) to pre-effective amendment no. 1 to the
registration statement on Form S-6, file number 333-51293
filed August 28, 1998.
A(5)(a) Specimen Flexible Premium Variable Life Insurance Policy - TO
BE FILED BY AMENDMENT
A(6)(a) Restated Articles of Redomestication of The Manufacturers Life
Insurance Company of America. Incorporated by reference to
Exhibit A(6)(a) to post-effective amendment no. 20 to the
registration statement on Form S-6, file number 33-13774,
filed April 26, 1996.
A(6)(b) By-Laws of The Manufacturers Life Insurance Company of
America. Incorporated by reference to Exhibit A(6)(b) to
post-effective amendment no. 20 to the registration statement
on Form S-6, file number 33-13774, filed April 26, 1996.
A(8)(a)(i) Service Agreement between The Manufacturers Life Insurance
Company and The Manufacturers Life Insurance Company of
America dated June 1, 1988. Incorporated by reference to
Exhibit A(8)(a)(i) to pre-effective amendment no. 1 to the
registration statement on Form S-6, file number 333-51293
filed August 28, 1998.
A(8)(a)(ii) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
of America dated December 31, 1992. Incorporated by reference
to Exhibit A(8)(a)(ii) to pre-effective amendment no. 1 to the
registration statement on Form S-6, file number 333-51293
filed August 28, 1998.
A(8)(a)(iii) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
of America dated May 31, 1993. Incorporated by reference to
Exhibit A(8)(a)(iii) to pre-effective amendment no. 1 to the
registration statement on Form S-6, file number 333-51293
filed August 28, 1998.
A(8)(a)(iv) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
of America dated June 30, 1993. Incorporated by reference to
Exhibit A(8)(a)(iv) to pre-effective amendment no. 1 to the
registration statement on Form S-6, file number 333-51293
filed August 28, 1998.
A(8)(a)(v) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
of America dated December 31, 1996. Incorporated by reference
to Exhibit A(8)(a)(v) to pre-effective amendment no. 1 to the
registration statement on Form S-6, file number 333-51293
filed August 28, 1998.
A(8)(a)(vi) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
of America dated May 31, 1998. Incorporated by reference to
Exhibit A(8)(a)(vi) to pre-effective amendment no. 1 to the
registration statement on Form S-6, file number 333-51293
filed August 28, 1998.
A(8)(a)(vii) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
of America dated December 31, 1998. Incorporated by reference
to Exhibit A(8)(a)(vii) to post-effective amendment No. 11 to
the registration statement on Form N-4, file number 33-57018
filed March 1, 1999.
A(8)(b) Specimen Stoploss Reinsurance Agreement between The
Manufacturers Life Insurance Company of America and The
Manufacturers Life Insurance Company. Incorporated by
reference to Exhibit A(8)(b) to the SVUL Registration
Statement.
<PAGE> 65
A(8)(c)(i) Service Agreement between The Manufacturers Life Insurance
Company and ManEquity, Inc. dated January 2, 1991.
Incorporated by reference to Exhibit A(8)(c)(i) to
pre-effective amendment no. 1 to the registration statement on
Form S-6, file number 333-51293 filed August 28, 1998.
A(8)(c)(ii) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and ManEquity, Inc. dated March 1, 1994.
Incorporated by reference to Exhibit A(8)(c)(ii) to
pre-effective amendment no. 1 to the registration statement on
Form S-6, file number 333-51293 filed August 28, 1998.
A(10)(a)(i) Specimen Application for Flexible Premium Variable Life
Insurance Policy. Incorporated by reference to Exhibit A(10)
to post effective amendment no. 7 to the registration
statement on Form S-6, file number 33-52310, filed April 26,
1996.
A(10)(a)(ii) Specimen Rider for Flexible Premium Variable Life Insurance
Policy Incorporated by reference to Exhibit A(10)(a)(ii) to
post effective amendment no. 1 to the registration statement
on Form S-6, file number 333-69719, filed February 25, 2000.
A(10)(b) Specimen Application Supplement for Flexible Premium Variable
Life Insurance Policy. Incorporated by reference to Exhibit
A(10)(a) to post effective amendment no. 9 to the registration
statement on Form S-6, file number 33-52310, filed December
23, 1996.
2. Consents of the following:
A. Opinion and consent of James D. Gallagher, Esq., Secretary and
General Counsel of The Manufacturers Life Insurance Company of
America - TO BE FILED BY AMENDMENT
B. Opinion and consent of Brian Koop, Actuary, of The Manufacturers
Life Insurance Company of America TO BE FILED BY AMENDMENT
C. Consent of Ernst & Young LLP- TO BE FILED BY AMENDMENT
3. No financial statements are omitted from the prospectus pursuant to
instruction 1(b) or (c) of Part I.
4. Not applicable.
6. Memorandum Regarding Issuance, Face Amount Increase, Redemption and Transfer
Procedures for the Policies. TO BE FILED BY AMENDMENT
7. Powers of Attorney for all Directors of The Manufacturers Life Insurance
Company of America-Incorporated by reference to Exhibit 7 to post-effective
amendment no 1 to the registration statement S-6, file number 333-69719,
filed February 25, 2000.
8. Power of Attorney Denis Turner, Principal Financial and Accounting Officer -
FILED HEREWITH
<PAGE> 66
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant and the Depositor have duly caused this Registration Statement to be
signed on their behalf in the City of Toronto, Province of Ontario, Canada, on
this 15th day of September, 2000.
SEPARATE ACCOUNT THREE OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
(Registrant)
By: THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
(Depositor)
By: /s/ Donald A. Guloien
----------------------------
DONALD A. GULOIEN
President
THE MANUFACTURERS LIFE
INSURANCE COMPANY OF AMERICA
By: /s/ Donald A. Guloien
----------------------------
DONALD A. GULOIEN
President
<PAGE> 67
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on this 15th day of September, 2000.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
* Chairman and Director
--------------------
JOHN D. RICHARDSON
/s/ Donald A. Guloien President and Director
--------------------- (Principal Executive Officer)
DONALD A. GULOIEN
* Director
--------------------
SANDRA M. COTTER
/s/ James D. Gallagher Director
---------------------
JAMES D. GALLAGHER
* Director
--------------------
JAMES O'MALLEY
* Director
--------------------
JOSEPH J. PIETROSKI
* Vice President and Treasurer
-------------------- (Principal Financial and
Denis Turner Accounting Officer)
*/s/ James D. Gallagher
---------------------------
JAMES D. GALLAGHER
Pursuant to Power of Attorney
</TABLE>
<PAGE> 68
EXHIBIT INDEX
<TABLE>
<CAPTION>
Item No. Description
<S> <C>
8. Power of Attorney Denis Turner, Principal Financial and Accounting
Officer
</TABLE>
