<PAGE> 1
Registration Nos. 33-14499 and 811-5179
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM N-4
POST-EFFECTIVE AMENDMENT NO. 14
TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF l933
AND
AMENDMENT NO. 15
TO
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF l940
SEPARATE ACCOUNT TWO
OF
THE MANUFACTURERS LIFE
INSURANCE COMPANY OF AMERICA
(Exact name of trust)
THE MANUFACTURERS LIFE
INSURANCE COMPANY OF AMERICA
(Name of depositor)
500 N. Woodward Avenue
Bloomfield Hills, Michigan 48304
(Address of depositor's principal executive offices)
STEPHEN C. NESBITT
Secretary and General Counsel Notice to:
The Manufacturers Life Insurance W. Randolph Thompson, Esq., Of Counsel
Company of America Jones & Blouch L.L.P., Suite 405W
500 N. Woodward Avenue 1025 Thomas Jefferson Street, N.W.
Bloomfield Hills, Michigan 48304 Washington, D.C. 20007-0805
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
-----
X on May 1, 1996 pursuant to paragraph (b) of Rule 485
-----
60 days after filing pursuant to paragraph (a)(1) of Rule 485
-----
on May 1, 1996 pursuant to paragraph (a)(1) of Rule 485
-----
75 days after filing pursuant to paragraph (a)(2) of Rule 485
-----
Registrant has registered, pursuant to Rule 24f-2 under the Investment
Company Act of 1940, an indefinite number of individual variable annuity
contracts for sale under the Securities Act of 1933 and filed a Rule
24f-2 notice on February 26, 1996 for its fiscal year ended December 31,
1995.
<PAGE> 2
PART A
PROSPECTUS
<PAGE> 3
Prospectus for
Multi-Account Flexible
Payment Variable Annuity
Issued by
The Manufacturers Life Insurance
Company of America
<PAGE> 4
Prospectus
The Manufacturers Life Insurance
Company of America
Separate Account Two
Multi-Account Flexible Payment Variable Annuity Policies
This prospectus describes Multi-Account Flexible Payment Variable Annuity
Policies ("Policies" or "Policy") issued by The Manufacturers Life Insurance
Company of America ("Manufacturers Life of America"), a stock life insurance
company that is an indirect wholly-owned subsidiary of The Manufacturers Life
Insurance Company ("Manufacturers Life" or the "Company"). The Policies are
designed for use in connection with retirement plans that may or may not be
entitled to special income tax treatment. The Policies will be offered on both
an individual basis and in connection with group or sponsored arrangements.
The Policies provide for the accumulation of values on a fixed or variable
basis. Annuity payments are available on a fixed basis only. Values
accumulated on a variable basis will be held in one or more of the sub-accounts
of The Manufacturers Life of America's Separate Account Two ("Account"). The
assets of each sub-account will be used to purchase shares of a particular
investment portfolio ( a "Portfolio") of Manulife Series Fund, Inc. ("Manulife
Series Fund"). The accompanying prospectus for Manulife Series Fund and the
corresponding statement of additional information describes the investment
objectives of the Portfolios in which net premiums may be invested. The
Portfolios available for allocation of net premiums are: the Emerging Growth
Equity Fund, the Balanced Assets Fund, the Capital Growth Bond Fund, the
Money-Market Fund, the Common Stock Fund, the Real Estate Securities Fund, the
International Fund, and the Pacific Rim Emerging Markets Fund. Other
sub-accounts and Portfolios may be added in the future.
This prospectus sets forth concisely the information concerning Separate
Account Two that a prospective purchaser ought to know before making a
purchase. Please read this prospectus carefully and keep it for future
reference. It is valid only when accompanied by a current prospectus for
Manulife Series Fund, Inc. Additional information concerning Separate Account
Two has been filed with the Securities and Exchange Commission and is available
upon request and without charge by writing to the Service Office address or
calling the number listed below and requesting the "Statement of Additional
Information of Separate Account Two of The Manufacturers Life Insurance Company
of America." The table of contents of the Statement of Additional Information
is included in the prospectus following the listing of the prospectus contents.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
1
<PAGE> 5
The Manufacturers Life Insurance
Company of America
500 N. Woodward Ave.
Bloomfield Hills, Michigan 48304
Service Office:
200 Bloor Street East
Toronto, Ontario, Canada
M4W 1E5
Telephone: 1 (800) 827-4546
1 (800) VARILIN(E)
The date of this Prospectus and of the Statement of Additional Information is
May 1, 1996.
2
<PAGE> 6
PROSPECTUS CONTENTS
Page
Definitions......................................
Summary Of Policies..............................
Policyowner Inquiries............................
Expense Table....................................
Condensed Financial Information
General Information About Manufacturers
Life of America, Separate Account Two
and Manulife Series Fund.....................
Who Are Manufacturers Life of America And
Manufacturers Life?............................
What Is Manufacturers Life of America's
Separate Account Two?..........................
What Is Manulife Series Fund, Inc. ..............
What Are The Investment Objectives Of
The Portfolios?................................
Description Of The Policies......................
What Are The Policy Charges?.....................
How Is A Policy Purchased?.......................
What Restrictions Apply To Purchase
Payments?......................................
What Is The Variable Policy Value And
How Is It Determined?..........................
What Are The Provisions On Transfers?............
What Surrender Or Withdrawal Rights
Are Available?.................................
What Are The Death Benefit Provisions?...........
When Do Annuity Payments Commence?...............
Under What Circumstances May Fund
Shares Be Substituted?.........................
What Are The Other General
Policy Provisions?.............................
Federal Tax Matters..............................
How Is Manufacturers Life of
America Taxed?.................................
What Is The Tax Treatment Of The Policies?.......
What Qualified Plans May Utilize
The Policies?..................................
Other Matters....................................
What Voting Rights Do Policyowners Have?.........
Where Can Financial Information
Be Found?......................................
Performance And Other Comparative
Information....................................
Appendix A.......................................
What Is The Guaranteed Interest Account?.........
What Are The Annuity Options?....................
STATEMENT OF ADDITIONAL
INFORMATION CONTENTS
Who Sells The Policies?
What Responsibilities Has Manufacturers
Life Assumed?
Who Are The Directors And Officers
Of Manufacturers Life of America?
What State Regulations Apply?
Is There Any Litigation Pending?
Where Can Further Information Be Found?
Legal Matters
Experts
Financial Statements
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN
WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED
TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS.
3
<PAGE> 7
Definitions
"Accumulation Period" is the period from the date we receive the first purchase
payment to the Annuity Date.
"Annuity Date" means the date on which the first annuity payment is due.
"General Account" is all assets of Manufacturers Life of America except those
allocated to Separate Account Two or other separate accounts of Manufacturers
Life of America.
"Guaranteed Interest Account" is the account in which allocated purchase
payments earn interest at a guaranteed rate set each Policy Anniversary.
"Guaranteed Interest Rate" is the rate of interest accrued on a compounded
annual basis and credited monthly on amounts allocated to the Guaranteed
Interest Account and will be no less than 4% per year.
"Qualified Policy" means a Policy used in connection with a retirement plan
which receives favorable federal income tax treatment under sections 401, 408
or 457 of the Internal Revenue Code of 1986, as amended ("Code"). (See page 19
for a brief discussion of the qualified plans which may use the Policies.)
"Policy Years" and "Policy Anniversaries" are determined from the date the
application was signed. The first Policy Anniversary will be the first date of
the same month one year later.
"Purchase Payment" is an amount paid under the Policy.
"Service Office" is the office designated by Manufacturers Life of America to
service the Policy.
"Total Policy Value" means the value during the Accumulation Period of amounts
accumulated under the Policy. The Total Policy Value is the sum of the
Variable Policy Value and the Guaranteed Interest Account.
"Unit" is an index used to measure the value of a Policy's interest in a
Variable Account.
"Valuation Period" is the period between two successive valuation dates
measured from the times on such dates as of which the valuations are made. A
valuation date is each day that the net asset value of the underlying shares of
Manulife Series Fund, Inc. is determined.
"Variable Account" is a sub-account of Separate Account Two of Manufacturers
Life of America.
"Variable Policy Value" is the sum of the value of a Policy's interest in each
of the Variable Accounts.
4
<PAGE> 8
Summary Of Policies
Eligible Purchasers. The Multi-Account Flexible Payment Variable Annuity
Policies described in this prospectus are designed to provide a flexible
investment program for the accumulation of amounts for retirement purposes
under plans which receive favorable federal income tax treatment pursuant to
sections 401, 408 or 457 of the Internal Revenue Code of 1986, as amended
("Qualified Policies"), or under plans and trusts not entitled to any special
tax treatment ("Nonqualified Policies"). The Policies will be offered on both
an individual basis and in connection with group or sponsored arrangements.
(See "How Is A Policy Purchased?")
Funding Arrangements. The Policies are designed to provide flexibility as to
the timing and amount of purchase payments and the available funding media.
Purchase payments may be allocated among two types of accounts--Variable
Accounts and a Guaranteed Interest Account. The Variable Accounts are
sub-accounts of Separate Account Two, each sub-account investing in a
corresponding portfolio of the Series Fund. The Guaranteed Interest Account is
an account in which allocated purchase payments earn interest at a guaranteed
rate set each Policy Anniversary. The fixed portion of the Policies, including
provisions relating to the Guaranteed Interest Account and the annuity options,
is described only in Appendix A to this prospectus unless specific reference to
the fixed portion is otherwise made.
Purchase Payments. The minimum initial purchase payment is $1,000. This may
be allocated to any of the Variable Accounts or to the Guaranteed Interest
Account in increments of not less than $50. Subsequent purchase payments may
be as little as $50. The minimum amount that may be allocated to any one
Variable Account or to the Guaranteed Interest Account from purchase payments
is $50. A Policyowner should specify how each purchase payment is to be
allocated. If no allocation is specified, a purchase payment will be allocated
entirely to the Guaranteed Interest Account. (See "What Restrictions Apply To
Purchase Payments?")
Charges And Deductions. There is no deduction from purchase payments for sales
expenses. However, full surrender of a Policy or a cash withdrawal thereunder
may be subject to a withdrawal charge (contingent deferred sales charge), which
is a percentage of the amount of the requested withdrawal subject to the
withdrawal charge. The applicable percentage will depend upon when the
purchase payment to which such amount is deemed attributable was made. The
maximum withdrawal charge is 8% of the amount withdrawn, decreasing by 1% each
year after the first. However, in no event may the charge exceed 8% of the
total purchase payments made. In addition, an administration fee equal to 2%
of the Total Policy Value up to a maximum of $30 will be deducted annually if
the Total Policy Value on the last day of any Policy Year is less than $25,000.
This fee will also be deducted on a pro rata basis in the event the Policy is
surrendered on other than the last day of a Policy Year if the Total Policy
Value is less than $25,000. The administration fee will be taken before any
withdrawal charge is applied. A deduction for mortality and expense risks is
made from the Variable Policy Value at an annual rate of 1.00%. This charge is
deducted daily from amounts invested in the Variable Accounts. A deduction may
also be made for any applicable premium taxes
5
<PAGE> 9
attributable to the Policies (currently such taxes range from 0% to 3%). A $10
charge will be applied to any transfers between accounts in excess of the six
transfers allowed each Policy Year. In addition, those Policyowners who wish
to participate in the Dollar Cost Averaging program will be charged $5 per
transfer or series of transfers occurring on the same transfer date if Total
Policy Value is $15,000 or less and those who wish to participate in the Asset
Allocation Balancer program will be charged $15 per transfer or series of
transfers occurring on the same transfer date. (See "What Are The Policy
Charges?")
Annuity Payments. Annuity payments will begin on the Annuity Date and will be
on a fixed basis only. The Policyowner may change the Annuity Date to any date
so long as payments will commence by the end of the year in which the annuitant
reaches age 85. Under some Qualified Policies, annuity payments must commence
no later than April 1 following the year the annuitant attains the age of 70
1/2. If application of the Total Policy Value would result in annuity payments
of less than $20 monthly, $60 quarterly, $100 semi-annually or $200 annually,
the Total Policy Value will be paid to the Policyowner in a single sum. (See
"When Do Annuity Payments Commence?")
Surrenders And Withdrawals. At any time prior to the Annuity Date, a
Policyowner may fully surrender the Policy for, or make a cash withdrawal in an
amount not exceeding, its Total Policy Value, reduced by any applicable
withdrawal charge and administration fee. A full surrender or cash withdrawal
may be subject to a tax penalty. (See "What Is The Tax Treatment Of The
Policies?") The minimum cash withdrawal that may be requested at any one time
is $300. Some Qualified Policies must contain restrictions on withdrawal
rights. (See "What Surrender Or Withdrawal Rights Are Available?")
Transfers. Transfers may be made at any time among the Guaranteed Interest
Account and Variable Accounts. Transfers to any Variable Account must be at
least $500 or, if less, the balance of the account. Transfers to the
Guaranteed Interest Account may be made in any amount. (See "What Are The
Provisions On Transfers?")
Free Look Right. Within ten days after receiving a Policy, the Policyowner may
return it for cancellation by mailing it to the Service Office. Within seven
days after receipt, except where state insurance law requires return of the
Policy Value, Manufacturers Life of America will refund in full any purchase
payments made.
***
The above summary is qualified in its entirety by the detailed information
appearing elsewhere in this prospectus and the accompanying prospectus of the
Series Fund to which reference should be made.
Policyowner Inquiries
All communications or inquiries relating to a Policy should be addressed to the
Manufacturers Life of America Service Office at 200 Bloor Street East, Toronto,
Ontario, Canada, M4W 1E5. All notices and elections under a Policy must be
received at that Service Office to be effective.
6
<PAGE> 10
EXPENSE TABLE
<TABLE>
<CAPTION>
Number of
Complete Policy
Years Elapsed
Since Purchase
Charge Payment Made Withdrawal
- ------ -------------- ----------
<S> <C> <C>
POLICYOWNER TRANSACTION EXPENSES
Withdrawal Charge (contingent deferred sales
charge) (as a percentage of the lesser of
amount surrendered or purchase payments) 1: 0 8.00%
1 7.00%
2 6.00%
3 5.00%
4 4.00%
5 3.00%
6 2.00%
7 1.00%
Thereafter none
Transfer Charge $10 2
Dollar Cost Averaging Charge 3 $ 5
(if selected and applicable)
Asset Allocation Balancer Charge $15 4
(if selected)
ANNUAL CONTRACT FEE $30 5
</TABLE>
1 The withdrawal charge decreases 1% each Policy Year elapsed since the
purchase to which the withdrawal is deemed attributable was made. A
withdrawal other than one made pursuant to the free withdrawal provision
is deemed to be a liquidation of a purchase payment. The free withdrawal
provision allows the Policyowner to withdraw in any Policy Year after the
first up to 10% of the Total Policy Value as of the most recent Policy
Anniversary free of the withdrawal charge.
2 A $10 charge is deducted from the amount transferred on each transfer in
excess of the first six made in a Policy Year.
3 Transfers pursuant to the optional Dollar Cost Averaging program are free
if Policy Value exceeds $15,000 at the time of the transfer, but otherwise
incur a $5 charge.
4 The Asset Allocation Balancer program is optional. If elected, there is
currently a charge of $15 for transfers under the program.
5 An administration fee equal to 2% of the Total Policy Value up to a
maximum of $30 is deducted during the accumulation period on the last day
of a Policy Year if the Total Policy Value on that date is less than
$25,000. The fee is also deducted on a pro rata basis upon full surrender
of a Policy on a date other than the last day of a Policy Year.
7
<PAGE> 11
<TABLE>
<S> <C> <C>
SEPARATE ACCOUNT ANNUAL
EXPENSES
(as a percentage of average account value)
Mortality and Expense
Risks Charge 1.00%
-----
1.00%
MANULIFE SERIES FUND, INC.
International Fund
Management Fees .85% 6
Other Expenses .50%
Pacific Rim Emerging Markets Fund
Management Fees .85% 5
Other Expenses .65%
All Other Manulife Series Fund Portfolios
Management Fees .50%
TOTAL MANULIFE SERIES FUND ANNUAL EXPENSE
International Fund 1.35%
Pacific Rim Emerging Markets Fund 1.50%
All Other Manulife Series Fund Portfolios .50%
</TABLE>
6 The management fee will drop to .70% on assets over $100 million.
8
<PAGE> 12
<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE7
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
If you surrender your Policy at the end
of the applicable time period:
You would pay the following expenses on
a $1,000 investment, assuming a 5%
annual return on assets:
MANULIFE SERIES FUND
INTERNATIONAL FUND $94 $123 $158 $273
PACIFIC RIM EMERGING MARKETS FUND $96 $128 $165 $288
EMERGING GROWTH EQUITY FUND $86 $99 $114 $183
COMMON STOCK FUND $86 $99 $114 $183
REAL ESTATE SECURITIES FUND $86 $99 $114 $183
BALANCED ASSETS FUND $86 $99 $114 $183
CAPITAL GROWTH BOND FUND $86 $99 $114 $183
MONEY-MARKET FUND $86 $99 $114 $183
If you do not surrender your Policy or
if you annuitize at the end of the
applicable time period:
You would pay the following expenses
on a $1,000 investment, assuming a 5%
annual return on assets:
MANULIFE SERIES FUND
INTERNATIONAL FUND $24 $75 $128 $273
PACIFIC RIM EMERGING MARKETS FUND $26 $79 $135 $288
EMERGING GROWTH EQUITY FUND $16 $49 $84 $183
COMMON STOCK FUND $16 $49 $84 $183
REAL ESTATE SECURITIES FUND $16 $49 $84 $183
BALANCED ASSETS FUND $16 $49 $84 $183
CAPITAL GROWTH BOND FUND $16 $49 $84 $183
MONEY-MARKET FUND $16 $49 $84 $183
</TABLE>
7 In the example above, the $30 annual administration charge has been
reflected in the calculation of annual expenses by converting it to a
percentage charge, adding the percentage charge to the Total Separate
Account Annual Expenses (1.00%) and total Manulife Series Fund, Inc.
Annual Expenses shown above and multiplying the resulting percentage
figure by the average annual assets of the hypothetical account. The
charge has been converted to a percentage by dividing the total
administration charges collected during 1995 by the average total net
assets attributable to the Policies during 1995, which values include
amounts allocated to both Separate Account Two and the Guaranteed Interest
Account.
The purpose of the above table is to assist a Policyowner in understanding the
various costs and expenses that he or she will bear directly or indirectly,
irrespective of the Variable Account to which purchase payments have been
allocated. The table reflects expenses of Separate Account Two, Manulife
Series Fund, Inc. but it does not reflect any deduction made to cover any
premium taxes attributable to a Policy. Such taxes may be as much as 3%
depending on the law of the applicable state or local jurisdiction. The
example included in the above table should not be considered a representation
of past or future expenses, and actual expenses may be greater or less than
those shown.
Information concerning charges assessed under the Policies is set forth under
the caption "What Are The Policy Charges?" below. Information concerning the
management fees paid by Manulife Series Fund, Inc. is provided under the
caption "Investment Management Arrangements" in the Fund prospectus.
9
<PAGE> 13
CONDENSED FINANCIAL INFORMATION
SCHEDULE OF ACCUMULATION UNIT VALUES
AND ACCUMULATION UNITS OUTSTANDING
The accumulation unit values set forth in the following table are accounting
data that do not reflect the impact of the following charges (which are not
deducted as part of the calculation of accumulation unit values): withdrawal
charges, administration fees, premium tax deductions (if any), transfer charges
(if applicable) and Dollar Cost Averaging charges. Accordingly, the change in
accumulation unit values over time should not be viewed as an accurate measure
of the investment performance of Separate Account Two.
For the Period November 3, 1987 through December 31, 1995
SUB-ACCOUNTS
<TABLE>
<CAPTION>
MANULIFE SERIES FUND
EMERGING GROWTH EQUITY FUND
-------------------------------
1987 1988 1989 1990 1991 1992 1993 1994 1995
------ ------ ------ --------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
November 3 (commencement) $10.00
January 1 value $10.87 $12.58 $17.72 $14.93 $25.33 $30.55 $37.47 $35.58
December 31 value $10.87 $12.58 $17.72 $14.93 $25.33 $30.55 $37.47 $35.58 $45.01
December 31 units 329 11,285 22,539 41,687 76,705 288,277 874,970 1,454,901 1,670,956
</TABLE>
<TABLE>
<CAPTION>
MANULIFE SERIES FUND
BALANCED ASSETS FUND
-------------------------
1987 1988 1989 1990 1991 1992 1993 1994 1995
------ ------ ------ ------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
November 3 (commencement) $10.00
January 1 value $10.20 $10.87 $13.06 $13.13 $16.04 $16.87 $18.70 $17.75
December 31 value $10.20 $10.87 $13.06 $13.13 $16.04 $16.87 $18.70 $17.75 $21.91
December 31 units 1,645 21,509 47,074 118,664 201,901 515,812 1,293,920 2,001,928 2,189,632
</TABLE>
<TABLE>
<CAPTION>
MANULIFE SERIES FUND
CAPITAL GROWTH BOND FUND
----------------------------
1987 1988 1989 1990 1991 1992 1993 1994 1995
------ ------ ------ -------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
November 3 (commencement) $10.00
January 1 value $10.15 $10.77 $12.14 $12.81 $14.76 $15.47 $16.94 $16.02
December 31 value $10.15 $10.77 $12.14 $12.81 $14.76 $15.47 $16.94 $16.02 $19.07
December 31 units 1,039 17,737 36,191 51,268 69,024 168,747 499,877 672,365 789,655
</TABLE>
10
<PAGE> 14
<TABLE>
<CAPTION>
MANULIFE SERIES FUND
MONEY-MARKET FUND
-------------------------
1987 1988 1989 1990 1991 1992 1993 1994 1995
------ ------ ------ ------- ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
November 3 (commencement) $10.00
January 1 value $10.07 $10.68 $11.51 $12.28 $12.84 $13.15 $13.37 $13.75
December 31 value $10.07 $10.68 $11.51 $12.28 $12.84 $13.15 $13.37 $13.75 $14.38
December 31 units 7,161 23,091 32,907 160,484 122,681 176,160 328,922 918,869 1,290,129
</TABLE>
<TABLE>
<CAPTION>
MANULIFE SERIES FUND
COMMON STOCK FUND
-------------------------
1987 1988 1989 1990 1991 1992 1993 1994 1995
------ ------ ------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
November 3 (commencement) $10.00
January 1 value $10.43 $11.35 $14.68 $13.94 $17.97 $18.88 $21.19 $20.10
December 31 value $10.43 $11.35 $14.68 $13.94 $17.97 $18.88 $21.19 $20.10 $25.72
December 31 units 709 7,257 20,202 43,044 78,327 194,079 485,195 803,568 977,871
</TABLE>
<TABLE>
<CAPTION>
MANULIFE SERIES FUND
REAL ESTATE SECURITIES FUND
-------------------------------
1987 1988 1989 1990 1991 1992 1993 1994 1995
------ ------ ------ --------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
November 3 (commencement) $10.00
January 1 value $9.99 $11.05 $11.95 $11.30 $15.78 $18.96 $23.01 $22.16
December 31 value $9.99 $11.05 $11.95 $11.30 $15.78 $18.96 $23.01 $22.16 $25.26
December 31 units 1,642 12,733 17,676 17,834 24,956 134,707 711,630 1,205,880 1,149,409
</TABLE>
<TABLE>
<CAPTION>
MANULIFE SERIES FUND
INTERNATIONAL FUND
---------------------------------
1994 1995
------ -------
<S> <C> <C> <C>
October 4 (commencement) $10.00
January 1 value $9.72
December 31 value $9.72 $10.71
December 31 units 89,180 354,776
MANULIFE SERIES FUND
PACIFIC RIM EMERGING MARKETS FUND
--------------------------------- ------ -------
1994 1995
------ -------
October 4 (commencement) $10.00
January 1 value $9.41
December 31 value $9.41 $10.38
December 31 units 67,272 261,208
</TABLE>
11
<PAGE> 15
General Information About Manufacturers
Life of America, Separate Account Two and
Manulife Series Fund
Who Are Manufacturers Life of America And Manufacturers Life?
Manufacturers Life of America, a wholly-owned subsidiary of Manulife Reinsurance
Corporation (U.S.A.) (formerly The Manufacturers Life Insurance Company of
Michigan), is a stock life insurance company organized under the laws of
Pennsylvania on April 11, 1977 and redomesticated under the laws of Michigan on
December 9, 1992. It is authorized to do business in the District of Columbia
and all states of the United States except New York. Manulife Reinsurance
Corporation (U.S.A.) is a life insurance company organized in 1983 under the
laws of Michigan and is a wholly-owned subsidiary of Manufacturers Life, a
mutual life insurance company based in Toronto, Canada. Manufacturers Life of
America was acquired by Manufacturers Life in 1982. Manufacturers Life and its
subsidiaries, together, constitute one of the largest life insurance companies
in North America as measured by assets. Manufacturers Life and Manufacturers
Life of America have received the following ratings from independent rating
agencies: Standard and Poor's Insurance Rating Service - AA+, A.M. Best
Company - A++, Duff & Phelps Credit Rating Co. - AAA, and Moody's Investors
Service, Inc. - Aa3.
What Is Manufacturers Life of America's Separate Account Two?
Manufacturers Life of America established its Separate Account Two on May 25,
1983 as a separate account under Pennsylvania law. Since December 9, 1992 it
has been operated under Michigan law. The Account holds assets that are
segregated from all of Manufacturers Life of America's other assets. The
Account is currently used only to support variable annuity contracts.
Manufacturers Life of America is the legal owner of the assets in the Account.
The income, gains and losses of the 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 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 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 Policies are general corporate obligations
of Manufacturers Life of America.
The Account is registered with the Securities and Exchange Commission
("S.E.C.") under the Investment Company Act of 1940 ("1940 Act") as a unit
investment trust. A unit investment trust is a type of investment company
which invests its assets in specified securities, such as the shares of one or
more investment companies, rather than in a portfolio of unspecified
securities. Registration under the 1940 Act does not involve any supervision
by the S.E.C. of the management or investment policies or practices of the
Account. For state law purposes the Account is treated as a part or division
of Manufacturers Life of America.
12
<PAGE> 16
What Is Manulife Series Fund, Inc.?
Each sub-account of the Account will purchase shares only of a particular
Portfolio of Manulife Series Fund. Manulife Series Fund is registered under
the 1940 Act as an open-end management investment company. The Account will
purchase and redeem shares of Manulife Series Fund 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. Manulife Series Fund
shares are issued to fund benefits under both variable annuity contracts and
variable life insurance policies issued by Manufacturers Life of America and
shares of Manulife Series Fund are issued to its general account for certain
limited investment purposes including initial portfolio seed money. For a
description of the procedures for handling potential conflicts of interest
arising from the funding of such benefits, see the accompanying Manulife Series
Fund prospectus.
Manulife Series Fund receives investment management services from Manufacturers
Adviser Corporation. Manufacturers Adviser Corporation is a registered
investment adviser under the Investment Advisers Act of 1940. Certain expenses
are assessed against the assets of Manulife Series Fund. These are: (1) an
investment management fee of (a) .50% of the average daily value of the
aggregate net assets of the Emerging Growth Equity Fund, Common Stock Fund,
Real Estate Securities Fund, Balanced Assets Fund, Capital Growth Bond Fund and
Money-Market Fund, and (b) .85% of the average daily value of the first $100
million of net assets and .70% of the average daily value of the net assets
over $100 million of each of the International Fund and the Pacific Rim
Emerging Markets Fund and (2) expenses of up to .50% and .65% per annum
assessed against the assets of the International Fund and the Pacific Rim
Emerging Markets Fund, respectively.
What Are The Investment Objectives Of The Portfolios?
The investment objectives 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.
Emerging Growth Equity Fund. The investment objective of the Emerging Growth
Equity Fund is to achieve growth of capital by investing primarily in equity
securities of companies believed to offer growth potential over both the
intermediate and the long term. Current income is not a significant
consideration. In selecting investments, emphasis will be placed on securities
of progressive companies with aggressive and competent managements. A
substantial portion of the Fund's assets may be invested in emerging growth
companies, which at the time of the Fund's investment may be paying no
dividends to their shareholders.
Balanced Assets Fund. The investment objective of the Balanced Assets Fund is
to achieve intermediate and long-term growth through capital appreciation and
income by investing in both debt and equity securities. The Fund will maintain
at all times a balance between debt securities or preferred stocks, on the one
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hand, and common stocks, on the other. At least 25% of the Fund's assets will
be invested in each of the two basic categories.
Capital Growth Bond Fund. The investment objective of the Capital Growth Bond
Fund is to achieve growth of capital by investing in medium-grade or better
debt securities with income as a secondary consideration. The Capital Growth
Bond Fund differs from most "bond" funds in that its primary objective is
capital appreciation, not income. The Fund will be carefully positioned in
relation to the term of debt obligations and the anticipated movement of
interest rates.
Money-Market Fund. The investment objective of the Money-Market Fund is to
provide maximum current income consistent with capital preservation and
liquidity by investing in a portfolio of high-quality money market instruments.
Common Stock Fund. The investment objective of the Common Stock Fund is to
achieve intermediate and long-term growth through capital appreciation and
current income by investing in common stocks and other equity securities of
well established companies with promising prospects for providing an
above-average rate of return. In selecting investments, emphasis will be
placed on companies with good financial resources, strong balance sheet,
satisfactory rate of return on capital, good industry position, superior
management skills and earnings that tend to grow consistently. The Fund's
investments are not limited to any particular type or size of company, but
high-quality growth stocks are emphasized.
Real Estate Securities Fund. The investment objective of the Real Estate
Securities Fund is to achieve a combination of long-term capital appreciation
and satisfactory current income by investing in real estate related equity and
debt securities. In pursuit of its objective, the Real Estate Securities Fund
will invest principally in real estate investment trust equity and debt
securities and other securities issued by companies which invest in real estate
or interests therein. The Fund may also purchase the common stocks, preferred
stocks, convertible securities and bonds of companies operating in industry
groups relating to the real estate industry. This would include companies
engaged in the development of real estate, building and construction, and other
market segments related to real estate. The Fund will not invest directly in
real property nor will it purchase mortgage notes directly. Under normal
circumstances, at least 65% of the value of the Fund's total assets will be
invested in real estate related equity and debt securities.
International Fund. The investment objective of the International Fund is to
achieve long-term growth of capital by investing in a diversified portfolio
that is comprised primarily of common stocks and equity-related securities of
companies domiciled in countries other than the United States and Canada. It
invests primarily in the securities markets of Western European countries,
Australia, the Far East, Mexico and South America. The Fund will, under normal
conditions, invest at least 65% of its net assets in common stocks and
equity-related securities of established larger-capitalization companies that
have attractive long-term prospects for growth of capital.
Pacific Rim Emerging Markets Fund. The investment objective of the Pacific Rim
Emerging Markets Fund is to achieve long-term growth of capital by investing in
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a diversified portfolio that is comprised primarily of common stocks and
equity-related securities of companies domiciled in the countries of the
Pacific Rim region. The Fund will, under normal conditions, invest at least
65% of its net assets in common stocks and equity-related securities of
established larger-capitalization companies that have attractive long-term
prospects for growth of capital.
A full description of Manulife Series Fund, its investment objectives, policies
and restrictions, its expenses, the risks associated therewith, and other
aspects of its operation is contained in the accompanying Manulife Series Fund
prospectus, which should be read together with this prospectus.
Description Of The Policies
What Are The Policy Charges?
The following charges will apply to the Policies in the circumstances
indicated. The imposition of the charges depends on the average net value of
amounts invested in the Variable Accounts (mortality and expense risks charge),
how large the Total Policy Value is (administration fee), whether cash
withdrawals in excess of prescribed amounts are made or the Policy is fully
surrendered (withdrawal charge), where the Policyowner resides (premium tax
charge), and whether he or she makes transfers in excess of six per year
(transfer charge). No deduction is made from purchase payments, unless the
Policyowner lives in a jurisdiction that requires premium taxes to be so
deducted, and consequently, 100% of the Policyowner's payment is usually
credited in full to the Policy on the date made.
Administration Fee. An administration fee equal to 2% of the Total Policy
Value up to a maximum of $30 will be deducted during the accumulation period
from a Policy on the last day of a Policy Year if the Total Policy Value on
that date is less than $25,000. The Total Policy Value is the sum of the
Variable Policy Value and the Guaranteed Interest Account. The administration
fee will also be deducted on a pro rata basis upon full surrender of a Policy
on a date other than the last day of a Policy Year if on the date of full
surrender the Total Policy Value is less than $25,000. The fee will be taken
before any withdrawal charge is applied. The fee will be deducted from the
Guaranteed Interest Account and, if necessary, from the value of the Policy in
the Variable Accounts in the following order: the Variable Account invested in
shares of the Money-Market Fund, the Variable Account invested in shares of the
Capital Growth Bond Fund, the Variable Account invested in shares of the
Emerging Growth Equity Fund, the Variable Account invested in shares of the
Balanced Assets Fund, the Variable Account invested in shares of the Common
Stock Fund, the Variable Account invested in shares of the Real Estate
Securities Fund, the Variable Account invested in shares of the International
Fund, and the Variable Account invested in shares of the Pacific Rim Emerging
Markets Fund.
The administration fee is paid to Manufacturers Life of America to compensate
it for the administrative costs associated with the Policies and the operations
of Separate Account Two, including the establishment and maintenance of Policy
records, processing transactions and communicating with Policyowners. Although
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administrative expenses may rise in the future, Manufacturers Life of America
guarantees that it will not increase the amount of the administration fee under
outstanding Policies. Moreover, Manufacturers Life of America does not expect
to recover from the administration fee any amount in excess of its accumulated
administrative expenses.
Withdrawal Charge. A withdrawal charge (contingent deferred sales charge) may
be imposed on cash withdrawals from, and the full surrender of, a Policy. A
cash withdrawal will result in a reduction in the Total Policy Value by an
amount equal to the amount withdrawn. A full surrender will reduce the Total
Policy Value to zero, thus resulting in termination of the Policy.
The withdrawal charge is designed to partially compensate Manufacturers Life of
America for the cost of selling and distributing the Policies. The cost
includes agents' commissions, advertising, agent training and the printing of
prospectuses and sales literature. Agents' commissions will not exceed 5% of
purchase payments. Under certain circumstances agents may be eligible for a
bonus payment not exceeding 1% of purchase payments. In addition, agents who
meet certain productivity and persistency standards will be eligible for
additional compensation.
In any Policy Year after the first and before the Annuity Date, up to 10% of
the Total Policy Value as of the most recent Policy Anniversary may be
surrendered or withdrawn free of the withdrawal charge. Amounts surrendered or
withdrawn during a Policy Year which exceed 10% of the Total Policy Value as of
the most recent Policy Anniversary will be subject to a withdrawal charge. The
withdrawal charge is determined by applying a percentage to the amount of the
requested withdrawal subject to the withdrawal charge, which percentage is
based upon when the purchase payments to which such amount is deemed
attributable were made, as follows:
<TABLE>
<S> <C>
Number of complete Policy Years elapsed
since purchase payment was made: Withdrawal Charge
0 8%
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
8 0%
</TABLE>
Where the amount withdrawn is deemed attributable to purchase payments made in
different Policy Years, different percentages will be applied to the portions
of the amount withdrawn attributable to such payments.
For purposes of determining the withdrawal charge applicable to a full
surrender or cash withdrawal, any amount surrendered or withdrawn, other than
an amount not subject to a withdrawal charge by reason of the 10% withdrawal
provision described above, will be deemed to be a liquidation of a purchase
payment, and
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the oldest previously unliquidated purchase payment will be deemed to have been
liquidated first, then the next oldest and so forth. In addition, all purchase
payments made during a Policy Year will be deemed to have been made on the
first day of such year. Once all purchase payments have been liquidated,
additional amounts surrendered or withdrawn will not be subject to a withdrawal
charge. Thus, in no event may the withdrawal charge exceed 8% of the total
purchase payments made.
No withdrawal charge will be applied: (1) at the Annuity Date, (2) when the
Policyowner is an individual and a death benefit payment is being made or (3)
when the Policyowner is not an individual and a death benefit payment is being
made on account of the death of the annuitant. A withdrawal charge will apply
if the Policy is not owned by an individual and a death benefit payment is
being made solely because a new annuitant has been named. (See "What Are The
Death Benefit Provisions?") A death benefit not subject to the withdrawal
charge also includes any payment to the spouse of the individual Policyowner
after the Policyowner's death, except for a full surrender or cash withdrawal
attributable to purchase payments made after the death of the Policyowner.
Any withdrawal charge applicable to a full surrender or cash withdrawal and
any applicable administration fee will be deducted from the amount being
withdrawn. The minimum cash withdrawal that can be requested at any one time
is $300.
Manufacturers Life of America does not expect to recover its total sales
expenses through the withdrawal charge. To the extent that the withdrawal
charge is insufficient to recover sales expenses, Manufacturers Life of America
will pay sales expenses from its other assets or surplus. These assets may
include proceeds from the mortality and expense risks charge described below.
Mortality And Expense Risks Charge. A charge at an annual rate of 1.00% of the
Variable Policy Value is made for the mortality and expense risks that
Manufacturers Life of America assumes. This charge is deducted daily from
amounts invested in the Variable Accounts by assessing a charge against the
assets of Separate Account Two at an annual rate of 1.00%, consisting of .10%
for the mortality risk and .90% for the expense risk.
The mortality risk assumed is the risk that annuitants may live for longer
periods of time than the periods indicated in the mortality tables on which
Manufacturers Life of America calculated the annuity tables in the Policies and
the risk that mortality will cause a Policy to terminate prematurely before the
assumed annuitization date. The expense risk assumed is that expenses in
administering the Policies will be greater than Manufacturers Life of America
estimated. Manufacturers Life of America will realize a gain from this charge
to the extent it is not needed to provide benefits and pay expenses under the
Policies.
Premium Tax Charge. Manufacturers Life of America will deduct any premium or
similar state or local tax attributable to a Policy. Currently, such taxes
range up to 3% depending on applicable law. Although the deduction can be made
either from purchase payments or from the Total Policy Value, it is anticipated
that premium taxes will be deducted from the Total Policy Value at the time it
is applied to provide an annuity unless required otherwise by applicable law.
When
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taken from the Total Policy Value before annuitization, the premium tax
deduction will be made first from the Guaranteed Interest Account and, if
necessary, from the Variable Accounts in the manner described above for the
administration fee.
Transfer Charge. A Policyowner is allowed to direct six transfers free of
charge each Policy Year. Thereafter, each additional direction to transfer
will be subject to a $10 charge, which will be deducted from the first amount
being transferred. There is no minimum transfer amount required for transfers
to the Guaranteed Interest Account. A minimum of $500 or, if less, the entire
account balance, is required for a request to transfer to any Variable Account.
If a transfer would result in a Variable Account having a remaining balance
less than $300, Manufacturers Life of America will cancel those units and
transfer their value to the Guaranteed Interest Account.
Dollar Cost Averaging Charge. Currently, there is no charge for Dollar Cost
Averaging transfers if Policy Value exceeds $15,000; otherwise there is a
charge of $5.00 per transfer or series of transfers taking place on the same
transfer date. This charge will be deducted from the account from which funds
are transferred. If insufficient funds exist to effect a Dollar Cost Averaging
transfer, including the charge, if applicable, the transfer will not be
effected.
Asset Allocation Balancer Charge. The current charge for Asset Allocation
Balancer transfers is $15 for each transfer or series of transfers taking place
on the same transfer date. This charge will be deducted from all accounts
affected by the Asset Allocation Balancer transfer in the same proportion as
the value in each account bears to the Total Policy Value immediately after the
transfer.
How Is A Policy Purchased?
The Policies are designed for use in connection with retirement plans entitled
to special tax treatment under Sections 401, 408 or 457 of the Code and
retirement plans and trusts not entitled to any special tax treatment. The
Policies are appropriate for plans with individual accounts or for purchase
directly by individuals.
Persons seeking to purchase Policies must submit an application and a check for
the initial purchase payment. The application is subject to underwriting
standards adopted by Manufacturers Life of America, and Manufacturers Life of
America reserves the right to reject any application. A properly completed
application that is accompanied by the first purchase payment and all
information necessary for the processing of the application will normally be
accepted within two business days. An incomplete application which is
subsequently made complete will normally be accepted within two business days
of completion; however, if an application is not completed properly or
necessary information is not obtained within five business days, Manufacturers
Life of America will offer to return the purchase payment.
Free Look Right. Within ten days after receiving a Policy, the Policyowner may
return it for cancellation by mailing it to the Service Office. Immediately
upon its receipt, the Policy will be deemed void from the beginning. Within
seven
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days after receipt, except where state insurance law requires return of the
Policy Value, Manufacturers Life of America will refund in full any purchase
payment made.
What Restrictions Apply To Purchase Payments?
Purchase payments are made directly by the Policyowner. They may be made at
any time until the Annuity Date or until the Policy is fully surrendered. If
the Policyowner is an individual, purchase payments will not be permitted after
the Policyowner's death unless the beneficiary is the Policyowner's spouse. If
the Policyowner is not an individual, purchase payments will not be permitted
after the annuitant's death, unless the Policyowner is the trustee of a trust
which is part of a qualified retirement plan described in section 401(a) of the
Code. Purchase payments must be made to the Manufacturers Life of America
Service Office.
The minimum initial purchase payment is $1,000. This may be allocated to any
of the Variable Accounts or to the Guaranteed Interest Account in increments of
not less than $50. Subsequent purchase payments may be as little as $50,
although higher or lower increments may be invoked with respect to purchase
payments payable pursuant to a pre-authorized payment plan. The minimum amount
that may be allocated to any one Variable Account or to the Guaranteed Interest
Account from purchase payments is $50. If an additional purchase payment would
cause the Total Policy Value to exceed $1,000,000, or if the Total Policy Value
should already exceed $1,000,000, the prior approval of Manufacturers Life of
America will be required for an additional purchase payment. If the Total
Policy Value should fall to zero, the Policy will be terminated and no further
purchase payments may be made.
A Policyowner should specify how each purchase payment is to be allocated. If
no allocation is specified, a purchase payment will be allocated entirely to
the Guaranteed Interest Account. Allocations will be made at the end of the
valuation period in which the purchase payment is received at the Manufacturers
Life of America Service Office. Manufacturers Life of America will send a
confirmation of its receipt of each purchase payment mailed by the Policyowner.
If a purchase payment is allocated to the Guaranteed Interest Account because
no allocation was specified, a notice of that fact will accompany the
confirmation.
What Is The Variable Policy Value
And How Is It Determined?
The Variable Policy Value is the sum of a Policy's interest in each of the
Variable Accounts. It is determined by multiplying the number of units
credited to the policy for each Variable Account by the current unit value.
The Variable Policy Value on any date that is not a valuation date will be
determined as of the next valuation date.
Crediting Units. Upon receipt of a purchase payment at its Service Office, or
other office or entity so designated by Manufacturers Life of America,
Manufacturers Life of America credits the Policy with a number of units for
each Variable Account based upon the portion of the purchase payment allocated
to the
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Variable Account. The number of units to be credited for each Variable Account
is determined by dividing the portion of the purchase payment allocated to
that Variable Account by the unit value for the valuation period in which the
purchase payment and, with respect to the initial payment only, all required
documentation properly completed was received at the Service Office. Units for
a Variable Account are also credited in a similar manner to reflect any
transfers to a Variable Account.
The value of a unit varies from one valuation period to the next depending upon
the investment results of the applicable Variable Account. The value of a unit
for each Variable Account was arbitrarily set at $10 for the first valuation
period in which monies were first allocated to that Variable Account. The
value of a unit for any subsequent valuation period is determined by
multiplying the value for the immediately preceding valuation period by the net
investment factor for that Variable Account for the valuation period for which
the value is being determined.
Net Investment Factor. The net investment factor is an index applied to
measure the investment performance of a Variable Account from one valuation
period to the next. The net investment factor may be greater than, less than
or equal to one. Therefore, the value of a unit may increase, decrease or
remain the same. The net investment factor for any Variable Account for any
valuation period is determined by adding one to the fraction obtained by
dividing (a) by (b) and then subtracting (c) from the result, where:
(a) is the investment income plus realized and unrealized gains and losses of
the Variable Account during the valuation period;
(b) is the value of the net assets of the Variable Account as of the beginning
of the valuation period adjusted for allocations and transfers to and
withdrawals and transfers from the Variable Account; and
(c) is the risk charge factor determined by Manufacturers Life of America for
the valuation period to reflect its charge for assuming the mortality and
expense risks. This mortality and expense risks charge will be deducted at an
annual rate of 1%.
Manufacturers Life of America reserves the right to adjust the above formula to
provide for any taxes determined by it to be attributable to the operations of
the Variable Account.
Cancelling Units. Units will be cancelled to reflect the assessment of any
administration fee or premium tax deduction assessed against a Variable Account
and any transfers or withdrawals from a Variable Account. The number of units
cancelled will be based upon the applicable unit value for the valuation period
in which the assessment, transfer or withdrawal is made. Units will also be
cancelled on the Annuity Date or upon surrender of the Policy or payment of a
death benefit.
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What Are The Provisions On Transfers?
Subject to the minimums described below, transfers may be made among any of the
accounts at any time during the Policy Year. There is no minimum transfer
amount required for transfers to the Guaranteed Interest Account or for
transfers pursuant to the Asset Allocation Balancer program. Otherwise the
minimum dollar amount of all transfers pursuant to a single transfer request is
$500.
Manufacturers Life of America will allow a Policyowner to direct six transfers
free of charge during a Policy Year. Multiple transfers made at the same time
will be treated as one direction to transfer. Each additional direction to
transfer during the same Policy Year will be subject to a $10 charge, which
will be deducted from the first amount being transferred. Transfers made
pursuant to the Dollar Cost Averaging or Asset Allocation Balancer programs do
not reduce the six transfers that may be made without charge each year.
Transfer requests must be in a format satisfactory to Manufacturers Life of
America and in writing, or by telephone if a currently valid telephone transfer
authorization form is on file. Although failure to follow reasonable
procedures may result in Manufacturers Life of America's liability for any
losses resulting from unauthorized or fraudulent telephone transfers,
Manufacturers Life of America will not be liable for following instructions
communicated by telephone that it reasonably believes to be genuine.
Manufacturers Life of America will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Such procedures shall
consist of confirming a valid telephone authorization form is on file, tape
recording all telephone transactions and providing written confirmation
thereof.
Dollar Cost Averaging. Manufacturers Life of America will offer Policyowners a
Dollar Cost Averaging program. Under this program amounts will be
automatically transferred at predetermined intervals from one Variable Account
to any other Variable Account(s) or the Guaranteed Interest Account.
Under the Dollar Cost averaging program the Policyowner will designate a dollar
amount of available assets to be transferred each month from one Variable
Account into any other Variable Account(s) or the Guaranteed Interest Account.
Each transfer under the Dollar Cost Averaging program must be at least $500 and
Manufacturers Life of America reserves the right to change this minimum at any
time upon notice to the Policyowner. Currently, there is no charge for this
program if Total Policy Value exceeds $15,000; otherwise a charge of $5.00 per
transfer or series of transfers occuring on the same transfer date will apply.
If insufficient funds exist to effect a Dollar Cost Averaging transfer,
including the charge, if applicable, the transfer will not be effected and the
Policyowner will be so notified. Manufacturers Life of America reserves the
right to cease to offer the Dollar Cost Averaging program on 90 days' written
notice to the Policyowner.
Asset Allocation Balancer. Manufacturers Life of America will also offer
Policyowners the ability to have amounts automatically transferred among
stipulated accounts to maintain an allocated percentage in each stipulated
account.
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<PAGE> 25
Under the Asset Allocation Balancer program the Policyowner will designate an
allocation of Total Policy Value among the Variable Accounts. At six month
intervals beginning six months after the date the application was signed,
Manufacturers Life of America will move amounts out of Variable Accounts and
into other Variable Accounts as necessary to maintain the Policyowner's chosen
allocation. A change to the Policyowner's premium allocation instruction will
automatically result in a change in Asset Allocation Balancer instructions so
that the two are identical unless the Policyowner instructs Manufacturers Life
of America otherwise or a Dollar Cost Averaging request is in effect.
Currently, the charge for this program is $15 per transfer or series of
transfers occurring on the same transfer date. Manufacturers Life of America
reserves the right to cease to offer the Asset Allocation Balancer Program on
90 days' written notice to the Policyowner.
What Surrender Or Withdrawal Rights Are Available?
At any time prior to the Annuity Date, a Policyowner may fully surrender the
Policy for, or make a cash withdrawal in an amount not exceeding, its Total
Policy Value, reduced by any applicable withdrawal charge and administration
fee. For certain Qualified Policies, exercise of the right to surrender may
require the consent of the Policyowner's spouse under regulations promulgated
by the Treasury or Labor Department.
In the case of a full surrender of a Policy, Manufacturers Life of America will
pay the Total Policy Value less any applicable withdrawal charge and
administration fee as of the valuation period in which the request for
surrender is received at its Service Office, and the Policy will be cancelled.
In the case of a cash withdrawal from the Variable Account, Manufacturers Life
of America will pay the amount requested less any applicable withdrawal charge
and cancel that number of units credited to each Variable Account necessary to
equal the amount of the withdrawal.
For a cash withdrawal, the Policyowner should specify the account from which
the withdrawal should be made. If no specification is made, the withdrawal
will be made first from the Guaranteed Interest Account and, if necessary, from
the value of the Policy in the Variable Accounts in the following order: the
Variable Account invested in shares of the Money-Market Fund, the Variable
Account invested in shares of the Capital Growth Bond Fund, the Variable
Account invested in shares of the Emerging Growth Equity Fund, the Variable
Account invested in shares of the Balanced Assets Fund, the Variable Account
invested in shares of the Common Stock Fund, the Variable Account invested in
shares of the Real Estate Securities Fund, the Variable Account invested in
shares of the International Fund and the Variable Account invested in shares of
the Pacific Rim Emerging Markets Fund.
There is no limit on the frequency of cash withdrawals; however, the requested
withdrawal must be at least $300. Any request for a cash withdrawal or to
fully surrender a Policy must be in writing and delivered to the Manufacturers
Life of America Service Office. If the amount withdrawn exceeds $10,000,
Manufacturers Life of America reserves the right to require that the request be
accompanied by a guarantee of the Policyowner's signature by a commercial bank,
trust company,
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member of the National Association of Securities Dealers, Inc.,
a notary public,
or any other individual or association designated by Manufacturers Life of
America.
What Are The Death Benefit Provisions?
If the Policyowner dies before the Annuity Date and the beneficiary is not the
Policyowner's spouse, the entire value of the Policy must either be distributed
to the beneficiary in a lump sum within five years of the Policyowner's death
or applied to provide an annuity. If applied to provide an annuity, the
annuity must begin within one year of the Policyowner's death. Until a
lump-sum distribution is made or an annuity option is elected, the Variable
Policy Value will continue to reflect the investment performance of the
selected Variable Accounts unless a transfer or withdrawal is made by the
beneficiary. The Total Policy Value on the date the Service Office receives
notice of the beneficiary's election of an annuity will be used to purchase an
annuity. All of the annuity options available on the Annuity Date are
available to a beneficiary, except that the beneficiary may not select a joint
and survivor annuity or an annuity with a certain period that is longer than
the beneficiary's life expectancy. (See "What Are The Annuity Options?" in
Appendix A.)
If the Policyowner's spouse is the beneficiary, the Policy will continue with
the spouse as the Policyowner. If the Policyowner was also the annuitant, the
spouse must choose a new annuitant.
If the Policyowner is not an individual and either the annuitant dies before
the Annuity Date or the Policyowner changes the annuitant, the entire value of
the Policy must be paid to the Policyowner in a lump sum not later than five
years after the annuitant's death or the change in annuitant. The Policyowner
may select the date of payment. If a Qualified Policy is owned by the trustee
of a plan described in section 401 of the Code, the trustee may continue the
Policy after the death of the annuitant. If the trustee continues the Policy,
a new annuitant must be named.
When Do Annuity Payments Commence?
Annuity payments will begin on the Annuity Date. Such payments will be made by
application of the Total Policy Value to provide an annuity. Annuity payments
will be made on a fixed basis only. The annuity options available are
described in Appendix A under "What Are The Annuity Options?".
The Policyowner selects the Annuity Date in the application. The Policyowner
may change the Annuity Date to any date prior to the end of the Policy Year in
which the annuitant reaches age 85 except in the case of Qualified Policies.
Written request for such change must be received by the Manufacturers Life of
America Service Office at least thirty days prior to the new Annuity Date.
There are legal restrictions on the Annuity Date for Qualified Policies. In
general, annuity payments for Qualified Policies owned by an individual cannot
begin later than April 1 following the calendar year in which the Policyowner
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attains age 70. There are some exceptions to this requirement. If the Policy
is owned by the trustee of a trust established pursuant to an employer
retirement plan, the Annuity Date is determined by the terms of the trust and
plan.
Annuity payments may be made either monthly, quarterly, semi-annually or
annually. If application of the Total Policy Value would result in annuity
payments of less than $20 monthly, $60 quarterly, $100 semi-annually or $200
annually, Manufacturers Life of America will pay the Total Policy Value to the
Policyowner in a single sum in lieu of annuity payments.
If a Qualified Policy is held by a trustee under an employee benefit plan
described in section 401(a) of the Code, the trustee may, prior to the Annuity
Date, have part of the Total Policy Value applied to provide an annuity
(partial annuitization). The same rules that apply to annuity payments
commencing on the Annuity Date apply to partial annuitization. If the trustee
partially annuitizes, the Total Policy Value will be reduced by the amount
applied to provide an annuity. Any withdrawal or surrender made after partial
annuitization will continue to be subject to withdrawal charges. For purposes
of determining the amount of the withdrawal charge, the amounts applied to
provide an annuity will not be treated as a liquidation of a purchase payment.
(See "What Surrender Or Withdrawal Rights Are Available?")
Under What Circumstances May Fund Shares Be Substituted?
Although Manufacturers Life of America believes it to be highly unlikely, it is
possible that in the judgment of its management, one or more of the Funds may
become unsuitable for investment by the Account because of a change in
investment policy or a change in the tax laws, because the shares are no longer
available for investment, or for some other reason. In that event,
Manufacturers Life of America may seek to substitute the shares of another Fund
or of an entirely different mutual fund. Before this can be done, the approval
of the S.E.C. and one or more state insurance departments may be required.
Manufacturers Life of America also reserves the right to combine other separate
accounts with the Account, to establish additional sub-accounts within the
Account, to operate the Account as a management investment company or other
form permitted by law, and to deregister the Account under the 1940 Act. Any
such change would be made only if permissible under applicable federal and
state law.
What Are The Other General Policy Provisions?
Deferral Of Payments. Manufacturers Life of America reserves the right to
postpone the transfer or payment of any value or benefit available under a
Policy based upon the assets allocated to Separate Account Two for any period:
(1) when the New York Stock Exchange ("Exchange") is closed (other than
customary weekend and holiday closings); (2) when trading on the Exchange is
restricted; (3) when an emergency exists as a result of which disposal of
securities held in Separate Account Two is not reasonably practicable or it is
not reasonably practicable to determine the value of the Account's net assets;
or (4) during any other period when the S.E.C., by order, so permits for the
protection of security holders;
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<PAGE> 28
provided that applicable rules and regulations of the S.E.C. shall
govern as to whether the conditions described in (2) and (3) exist.
Manufacturers Life of America also reserves the right to delay transfer
or payment of assets from the Guaranteed Interest Account for up to six
months and will pay interest at a rate determined by it if there is a
delay in payment for more than 30 days.
Annual Statements. Within 30 days after each Policy Anniversary, Manufacturers
Life of America will send the Policyowner a statement showing:
(1) the summary of each active account up to the most recent Policy Anniversary
including the Total Policy Value up to the Policy Anniversary date; and
(2) a description of the transactions affecting each active account during the
Policy Year including total units cancelled, amounts deducted from each account
for fees, and total units and amounts credited to each account as allocations
or interest.
Ownership. The Policyowner is the person entitled to exercise all rights under
a Policy. As such, any Policy rights or privileges may be exercised without
the consent of the annuitant, beneficiary or any other individual, except as
provided by the Policyowner.
Except as discussed below, ownership of the Policy may be changed or the Policy
collaterally assigned at any time prior to the Annuity Date, subject to the
rights of any irrevocable beneficiary or other person. Any change of ownership
or assignment must be made in writing and will not take effect until received
at the Manufacturers Life of America Service Office. Manufacturers Life of
America assumes no responsibility for the validity of any assignment.
In the case of a Qualified Policy, there may be restrictions on the privileges
of ownership. Some plans do not permit the exercise of certain of the
Policyowner's rights without the written consent of the owner's spouse. Among
the rights limited are the right to choose an optional form of payment; to make
withdrawals; or to surrender the Policy. A Qualified Policy which is not owned
by a trustee of a trust which qualifies under section 401(a) of the Code, or by
an employer under a plan which satisfies section 457 of the Code, may not be
sold, assigned, transferred, discounted or pledged as collateral for a loan or
as security for the performance of an obligation or for any other purpose to
any person other than to Manufacturers Life of America except as may be
provided by applicable state or federal law.
Beneficiary. Ownership of the Policy will pass to the designated beneficiary
on the death of the Policyowner. The beneficiary is the person designated in
the application or as subsequently named. The beneficiary may be changed at
any time by written notice to Manufacturers Life of America. Any change will
be effective on the date written notice is received at the Manufacturers Life
of America Service Office. If no beneficiary survives the Policyowner,
ownership will pass to the Policyowner's estate. In the case of Qualified
Policies, regulations promulgated by the Departments of Labor and Treasury
prescribe certain limitations on the designation of a beneficiary.
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<PAGE> 29
Modification. A Policy may not be modified by Manufacturers Life of America
without the consent of the Policyowner, except where required to conform to any
applicable law or regulation or any ruling issued by a government agency.
Federal Tax Matters
How Is Manufacturers Life of America Taxed?
Manufacturers Life of America is taxed as a life insurance company under
Subchapter L of the Code. Since the operations of the Account are part of, and
are taxed with, the operations of Manufacturers Life of America, the Account is
not separately taxed as a "regulated investment company" under Subchapter
Manulife Financial of the Code. Under existing federal income tax laws,
investment income and capital gains of the Account are not taxed to the extent
they are applied to increase reserves under the Policies. Since, under the
Policies, investment income and realized capital gains are automatically
applied to increase reserves, Manufacturers Life of America does not anticipate
that it will incur any federal income tax liability attributable to the
Account, and therefore Manufacturers Life of America does not intend to make
provision for any such taxes. However, if changes in the federal tax laws or
interpretations thereof result in Manufacturers Life of America being taxed on
such income or gains, then Manufacturers Life of America may impose a charge
against the Account in order to make provision for such taxes.
What Is The Tax Treatment Of The Policies?
The Policies are designed for use in connection with retirement plans that may
or may not qualify for special income tax treatment under the provisions of the
Code. The following discussion of federal income tax aspects of amounts
received under a variable annuity contract is not exhaustive, does not purport
to cover all situations, and is not intended as tax advice. A qualified tax
adviser should always be consulted with regard to the application of law to
individual circumstances.
The United States Congress has, in the past, considered legislation that, if
enacted, would have taxed the inside build-up in certain annuities. While this
proposal was not enacted, Congress remains interested in the taxation of the
inside build-up of annuity contracts. Policyholders should consult their tax
advisor regarding the status of new, similar provisions before purchasing the
Policy.
Section 72 of the Code governs taxation of annuities in general. Under
existing provisions of the Code, except as described below, any increase in the
value of an annuity contract is not taxable to the contract owner or annuitant
until received, either in the form of annuity payments, as contemplated by the
26
<PAGE> 30
contract, or in some other form of distribution. However, as a general rule,
deferred annuity contracts held by a corporation, trust or other similar
entity, as opposed to a natural person, are not treated as annuity contracts
for federal tax purposes. The investment income on such contracts is taxed as
ordinary income that is received or accrued by the owner of the contract during
the taxable year.
In certain circumstances, contracts will be treated as held by a natural person
if the nominal owner is a non-natural person and the beneficial owner is a
natural person, but this special exception will not apply in the case of any
employer who is the nominal owner of an annuity contract providing
non-qualified deferred compensation for its employees. Exceptions to the
general rule (of immediate taxation) for contracts which are held by a
corporation, trust, or similar entity may apply with respect to (1) annuities
held by an estate of a decedent, (2) annuity contracts issued in connection
with qualified retirement plans, or IRAs, (3) certain annuities purchased by
employers upon the termination of a qualified retirement plan, (4) certain
annuities used in connection with structured settlement agreements, and (5)
annuities purchased with a single premium when the annuity starting date is no
later than a year from purchase of the annuity.
When annuity payments commence, each payment is taxable under Section 72 of the
Code as ordinary income in the year of receipt if the Policyowner has not
previously been taxed on any portion of the purchase payments. If any portion
of the purchase payments has been included in the taxable income of the
Policyowner, this aggregate amount will be considered the "investment in the
contract." For fixed annuity payments, there is no tax on the portion of each
payment which represents the same ratio that the "investment in the contract"
bears to the total expected value of the annuity payments for the term of the
contract; the remainder of each payment is taxable. However, once the total
amount of the taxpayer's investment in the contract is excluded using this
ratio, annuity payments will be fully taxable. If annuity payments cease
before the total amount of the taxpayer's investment in the contract is
recovered, the unrecovered amount will be allowed as a deduction to the
Policyowner in his or her last taxable year.
In the case of a withdrawal, amounts received are taxable as ordinary income to
the extent that the cash value of the contract (determined without regard to
any withdrawal charges) before the withdrawal exceeds the "investment in the
contract." Amounts loaned under an annuity contract or amounts received
pursuant to an assignment or pledge of an annuity contract are treated as
withdrawals. There are special rules for loans to participants from annuity
contracts held in connection with qualified retirement plans or IRAs. With
respect to contracts issued after April 22, 1987, if an individual transfers an
annuity contract without adequate consideration to a person other than his or
her spouse (or former spouse incident to divorce), he or she will be taxed on
the difference between the contract value minus any withdrawal charge and the
investment in the contract at the time of transfer. In such case, the
transferee's investment in the contract will be increased to reflect the
increase in the transferor's income.
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<PAGE> 31
In addition, there is a 10% penalty tax on the taxable amount of any payment
unless the payment is: (a) received on or after the contract owner reaches age
59 1/2; (b) attributable to the contract owner's becoming disabled; (c) made to
a beneficiary on the death of the contract owner; (d) made to a beneficiary on
the death of the primary annuitant if the contract owner is not a natural
person; (e) made as a series of substantially equal periodic payments for the
life of the annuitant (or the joint lives of the annuitant and beneficiary),
subject to certain recapture rules; (f) made under an annuity contract that is
purchased with a single premium whose annuity starting date is no later than a
year from purchase of the annuity; (g) attributable to investment in the
contract before August 14, 1982; and (h) made with respect to certain annuities
issued in connection with structured settlement agreements. Also, special
rules may apply to annuity contracts issued in connection with qualified
retirement plans.
For both withdrawals and annuity payments under some types of plans qualifying
for special federal income tax treatment ("qualified plans"), there may be no
"investment in the contract" and the total amount received may be taxable.
Where the Policy is owned by an individual, Manufacturers Life of America will
withhold and remit to the U.S. Government a part of the taxable portion of each
distribution made under a Policy unless the distributee notifies Manufacturers
Life of America at or before the time of the distribution that he or she elects
not to have any amounts withheld. The withholding rates applicable to the
taxable portion of periodic annuity payments are the same as the withholding
rates generally applicable to payments of wages. The withholding rate
applicable to the taxable portion of nonperiodic payments (including
withdrawals prior to the annuity commencement date) is 10%. Where the Policy
is not owned by an individual or it is owned in connection with a qualified
plan, or when the owner is a non-resident alien, special withholding rules may
apply.
In connection with the issuance of temporary regulations relating to
diversification requirements for separate accounts or funds underlying variable
life and annuity policies, the Treasury Department has announced that such
regulations do not provide guidance concerning the extent to which Policyowners
may direct their investments to particular sub-accounts of the Account.
Regulations in this regard are expected in the near future. It is not clear
what these regulations will provide or whether they will be prospective only.
It is possible that when regulations are issued, the Policy may need to be
modified to comply with such regulations.
For purposes of determining a Policyholder's gross income from distributions
which are not in the form of an annuity, the Code provides that all deferred
annuity contracts issued by the same company to the same Policyholder during
any calendar year shall be treated as one annuity contract. Additional rules
may be promulgated under this provision to prevent avoidance of its effect.
For further information on current aggregation rules under this and other Code
provisions, see your tax adviser.
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<PAGE> 32
What Qualified Plans May Utilize The Policies?
The contracts are available for use with several types of qualified plans. The
tax rules applicable to participants in such qualified plans vary according to
the type of plan and the terms and conditions of the plan itself. Therefore,
no attempt is made to provide more than general information about the use of
the Policies with the various types of qualified plans. Policyowners,
annuitants and beneficiaries are cautioned that the rights of any person to any
benefits under such qualified plans may be subject to the terms and conditions
of the Policy. Following are brief descriptions of the various types of
qualified plans in connection with which Manufacturers Life of America will
issue a Policy.
Individual Retirement Annuities. Section 408 of the Code permits eligible
individuals to contribute to an individual retirement program known as an
"Individual Retirement Annuity" or "IRA." These IRAs are subject to limits on
the amount that may be contributed, the persons who may be eligible and on the
time when distributions may commence. Also, distributions from certain other
types of qualified plans may be "rolled over" on a tax-deferred basis into an
IRA. Distributions from these qualified plans are subject to special
withholding rules. Consult your plan administrator before taking a
distribution which you wish to roll over. A direct rollover from a qualified
plan is permitted and is exempt from the special witholding rules. Sales of
the Policies for use with IRAs may be subject to special requirements of the
Internal Revenue Service. When issued in connection with an IRA, a Policy will
be amended as necessary to conform to the requirements of federal laws
governing such plans.
Corporate and Self-Employed (H.R. 10 and Keogh) Pension and Profit Sharing
Plans. Section 401(a) of the Code permits corporate employers to establish
various types of tax-favored retirement plans for employees. Self-employed
individuals may establish plans for themselves and their employees. Such
retirement plans may permit the purchase of the Policies in order to provide
benefits under the plans. Employers intending to use Policies in connection
with such plans should seek competent advice.
State And Local Government Deferred Compensation Plans. Section 457 of the
Code permits employees of state and local governments, rural electric
cooperatives and tax-exempt organizations to defer a portion of their
compensation without paying current taxes. The employees must be participants
in an eligible deferred compensation plan. To the extent Policies are used in
connection with an eligible plan, employees are considered general creditors of
the employer and the employer as owner of the Policy has the sole right to the
proceeds of the Policy. Those who intend to use Policies in connection with
such plans should seek qualified advice as to the tax and legal consequences of
such an investment.
Purchase of Policies by Charitable Remainder Trusts
The Policies may be purchased by Charitable Remainder Trusts. If a Charitable
Remainder Trust is the Policyowner, the character of amounts received by the
income beneficiary of the Charitable Remainder Trust depends on the character
of the income in the trust. To the extent the trust has any undistributed
ordinary income, amounts received by the income beneficiary from the trust are
taxed as
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<PAGE> 33
ordinary income. The Internal Revenue Service has held in at least one private
letter ruling that any increase in the value of a Policy will be treated as
income to the trust in the year it accrues regardless whether it is actually
received by the trust. However, a private letter ruling cannot be relied on as
precedent by anyone other than the taxpayer who requests it.
Other Matters
What Voting Rights Do Policyowners Have?
As stated above, all of the assets held in the Variable Accounts will be
invested in shares of a particular Portfolio of Manulife Series Fund.
Manufacturers Life of America is the legal owner of those shares and as such
has the right to vote upon matters that are required by the 1940 Act to be
approved or ratified by the shareholders of a mutual fund and to vote upon any
other matters that may be voted upon at a shareholders' meeting. However,
Manufacturers Life of America will vote shares held in the Variable Accounts in
accordance with instructions received from Policyowners having an interest in
such Accounts. Shares held in each Variable Account for which no timely
instructions from Policyowners are received, including shares not attributable
to Policies, will be voted by Manufacturers Life of America in the same
proportion as those shares in that Variable Account for which instructions are
received. Should the applicable federal securities laws or regulations change
so as to permit Manufacturers Life of America to vote shares held in the
Variable Accounts in its own right, it may elect to do so.
The number of shares in each Variable Account for which instructions may be
given by a Policyowner is determined by dividing the portion of that Policy's
Variable Policy Value derived from participation in that Variable 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 of the shareholders' of Manulife Series Fund.
Where Can Financial Information Be Found?
Financial statements of Manufacturers Life of America and of the Account are
included in the Statement of Additional Information.
Performance And Other Comparative Information
From time to time, in advertisements or in reports to Policyowners,
Manufacturers Life of America may quote various independent quotation services
for the purpose of comparing Manufacturers Life of America's Policies'
performance and other rankings with other companies' variable annuity policies
and for the purpose of comparing any of the Portfolios of Manulife Series Fund
with other mutual funds with similar investment objectives. Performance
rankings are not to be considered indicative of the future performance of the
Portfolios. The quotation services which are currently followed by the Company
include Lipper Analytical
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<PAGE> 34
Services, Inc.("Lipper"), Morningstar, Inc., Variable Annuity Research and Data
Service, and Money Magazine; however, other nationally recognized rating
services may be quoted in the future. The performance of certain indices may
also be quoted in advertisements or in reports to Policyowners. These indices
include Standard & Poor's 500 Index, National Association of Real Estate A11
REIT's Index, Salomon Brothers (broad corporate index), Dow Jones Industrial
Average, Donoghue Prime Money Fund Index, 3 month Treasury Bills, the National
Association of Securities Dealers Automated Quotation System, the Financial
Times Actuaries World Index and the following Lipper Indices: Money-Market
Funds, Corporate Bond Funds, Balanced Funds, Growth Funds, Small-Company Growth
Funds, Real Estate Funds, International Funds and Pacific Region Funds.
Advertising Performance Of Variable Accounts.
Manufacturers Life of America may publish advertisements or distribute sales
literature that contain performance data relating to the sub-accounts of
Separate Account Two. Performance data will include average annual return
quotations for one-year, five-year (when applicable) and ten-year (when
applicable) periods ending the last day of the month. Quotations for the
period since inception of the Portfolio underlying a sub-account will replace
such periods for a Portfolio that has not been in existence for a full
five-year or ten-year period. In the case of a new Portfolio that is less than
one year old, the one-year figure would be replaced by an aggregate for the
period since inception. Average annual total returns may also be advertised
for three-year periods and one-year periods as of the last day of any month.
Average annual total return is the average annual compounded rate of return
that equates a purchase payment to the market value of that purchase payment on
the last day of the period for which the return is calculated. Aggregate total
return, which will also be advertised from time to time, is the percentage
change that equates a purchase payment to the market value of that purchase
payment on the last day of the period. For the purpose of the calculations it
is assumed that an initial payment of $1,000 is made on the first day of the
period for which the total return is calculated. All recurring charges are
reflected in the calculations. Asset charges are reflected in changes in unit
values. For purposes of the calculations, the annual administration charge is
estimated by dividing the total administration charges collected during a given
year by the average total assets attributable to the policies during that year
(including amounts allocated to both Separate Account Two and the Guaranteed
Interest Account), multiplying that percentage by the average of the beginning
and ending values of the hypothetical investment and subtracting the result
from the year-end account value. The contingent deferred sales charge that
would be applicable to withdrawals at the end of periods for which the total
return is measured are assumed to be deducted at the end of the period.
The Policies were first offered to the public in 1987. However, total return
data may be advertised for as long a period of time as the underlying separate
account has been active. The results for any period prior to the Policies'
being offered would be calculated as if the Policies had been offered during
that period, with all Policy charges and the daily mortality and expense
charges deducted. Policy charges for periods prior to 1988 are based on the
average rate for the first six years in which the Policies were offered.
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<PAGE> 35
Total returns if surrendered for the period ending December 31, 1995 were as
follows:
<TABLE>
<CAPTION>
AVG. ANNUALAGGREGATE
AVG. ANNUAL AVG. ANNUAL AVG. ANNUAL AVG. ANNUAL TOTAL RETURNTOTAL RETURN
TOTAL RETURNTOTAL RETURN TOTAL RETURNTOTAL RETURN SINCE SINCE
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS** INCEPTION*INCEPTION*
------------ ------------ ------------ ------------ --------------------------
<S> <C> <C> <C> <C> <C> <C>
Emerging Growth Equity 19.43% 12.43% 24.37% 13.61% 14.13% 358.51%
Balanced Assets 16.40% 7.64% 10.32% 9.21% 11.31% 243.77%
Capital Growth Bond 11.99% 5.69% 7.79% 8.21% 10.34% 210.77%
Common Stock 20.89% 9.44% 12.59% N/A 8.75% 107.03%
Real Estate Securities 6.95% 8.59% 17.07% N/A 10.00% 128.66%
Money-Market (2.47%) 1.42% 2.62% 4.54% 4.83% 72.26%
International 3.13% N/A N/A N/A 0.94% 1.17%
Pacific Rim Emerging Markets 3.32% N/A N/A N/A (2.55%) (3.15)%
</TABLE>
* June 26, 1984 for the Emerging Growth Equity, Balanced Assets, Capital
Growth and Money-Market Funds; May 1, 1987 for the Common Stock and Real
Estate Securities Funds; October 4, 1994 for the International and Pacific
Rim Emerging Markets Fund.
** Policies have been offered only since November 3, 1987. Performance data
for earlier periods are hypothetical figures based on the performance of
the Fund in which policy assets may be invested.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Total returns if not surrendered are as follows:
AVG. ANNUAL AGGREGATE
AVG. ANNUAL AVG. ANNUAL AVG. ANNUAL AVG. ANNUAL TOTAL RETURNTOTAL RETURN
TOTAL RETURN TOTAL RETURN TOTAL RETURNTOTAL RETURN SINCE SINCE
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS** INCEPTION* INCEPTION*
- ---------------------------- ---------------- ---------------- ------------ ------------ ------------ ------------
Emerging Growth Equity 26.43% 13.73% 24.62% 13.61% 14.13% 358.51%
Balanced Assets 23.40% 9.06% 10.72% 9.21% 11.31% 243.77%
Capital Growth Bond 18.99% 7.16% 8.23% 8.21% 10.34% 210.77%
Common Stock 27.89% 10.81% 12.96% N/A 8.75% 107.03%
Real Estate Securities 13.95% 9.98% 17.39% N/A 10.00% 128.66%
Money-Market 4.53% 2.99% 3.15% 4.54% 4.83% 72.26%
International 10.13% N/A N/A N/A 6.53% 8.17%
Pacific Rim Emerging Markets 10.32% N/A N/A N/A 3.09% 3.85%
</TABLE>
* June 26, 1984 for the Emerging Growth Equity, Balanced Assets, Capital
Growth and Money-Market Funds; May 1, 1987 for the Common Stock and Real
Estate Securities Funds; October 4, 1994 for the International and
Pacific Rim Emerging Markets Fund.
** Policies have been offered only since November 3, 1987. Performance data
for earlier periods are hypothetical figures based on the performance of
the Fund in which policy assets may be invested.
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<PAGE> 36
Aggregate total returns if surrendered as of the end of each year since
inception are as follows:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990
------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Emerging Growth Equity 19.43% (11.74)% 14.60% 12.55% 61.53% (21.71)%
Balanced Assets 16.40% (11.79)% 2.83% (2.89)% 14.06% (7.48)%
Capital Growth Bond 11.99% (12.10)% 1.41% (3.21)% 7.15% (2.57)%
Common Stock 20.89% (11.82)% 4.21% (3.04)% 20.80% (11.74)%
Real Estate Securities 6.95% (10.51)% 13.34% 12.03% 31.60% (12.17)%
Money-Market (2.47%) (4.19)% (6.34)% (5.68)% (3.52)% (1.35)%
International 3.13% N/A N/A N/A N/A N/A
Pacific Rim Emerging Markets 3.32% N/A N/A N/A N/A N/A
1989 1988 1987 1986 1985 1984
- ---------------------------- ------- -------- -------- -------- ------- --------
Emerging Growth Equity 32.63% 7.74% (12.47)% (14.05)% 14.08% (3.17)%
Balanced Assets 11.99% (1.50)% (9.60)% 8.11% 17.95% 5.13%
Capital Growth Bond 4.62% (1.96)% (9.54)% 13.08% 16.79% 5.11%
Common Stock 21.22% 0.73% (21.50)% N/A N/A N/A
Real Estate Securities 0.03% 2.57% (15.44)% N/A N/A N/A
Money-Market (0.32)% (2.04)% (3.45)% (3.05)% (2.00)% (3.79)%
International N/A N/A N/A N/A N/A N/A
Pacific Rim Emerging Markets N/A N/A N/A N/A N/A N/A
</TABLE>
All of the above performance data are based on the actual historical
performance of the Funds for specified periods, and the figures are not
intended to indicate future performance.
33
<PAGE> 37
Aggregate total returns as of the end of each year since inception, if not
surrendered are as follows:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990
------ ------- -------- ------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Emerging Growth Equity 26.43% (5.09)% 22.60% 20.55% 69.53% (15.82)%
Balanced Assets 23.40% (5.15)% 10.83% 5.11% 22.06% 0.52%
Capital Growth Bond 18.99% (5.48)% 9.41% 4.79% 15.15% 5.43%
Common Stock 27.89% (5.19)% 12.21% 4.96% 28.80% (5.10)%
Real Estate Securities 13.95% (3.77)% 21.34% 20.03% 39.60% (5.56)%
Money-Market 4.53% 2.81% 1.66% 2.32% 4.48% 6.65%
Internationa 10.13% (1.79)% N/A N/A N/A N/A
Pacific Rim Emerging Markets 10.32% (5.86)% N/A N/A N/A N/A
1989 1988 1987 1986 1985 1984
- ---------------------------- ------ ------- -------- ------- ------ --------
Emerging Growth Equity 40.63% 15.74% (5.88)% (7.58)% 22.08% 4.83%
Balanced Assets 19.99% 6.50% (2.80)% 16.11% 25.95% 13.13%
Capital Growth Bond 12.62% 6.04% (2.73)% 21.08% 24.79% 13.11%
Common Stock 29.22% 8.73% (15.59)% N/A N/A N/A
Real Estate Securities 8.03% 10.57% (9.07)% N/A N/A N/A
Money-Market 7.68% 5.96% 4.55% 4.95% 6.00% 4.21%
International N/A N/A N/A N/A N/A N/A
Pacific Rim Emerging Markets N/A N/A N/A N/A N/A N/A
</TABLE>
All of the above performance data are based on the actual historical
performance of the Funds for specified periods, and the figures are not
intended to indicate future performance.
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<PAGE> 38
APPENDIX A
This Appendix describes the fixed portion of the Policies, which consists of
the provisions based on the general account of Manufacturers Life of America,
including those relating to the Guaranteed Interest Account and the annuity
options. The interests of Policyowners arising from the allocation of purchase
payments or the transfer of values to the Guaranteed Interest Account are not
registered under the Securities Act of 1933, and the general account of
Manufacturers Life of America is not registered as an investment company under
the Investment Company Act of 1940. Accordingly, the fixed portion of the
Policies is not subject to the provisions that would apply if registration
under such acts were required. Manufacturers Life of America has been advised
that the staff of the Securities and Exchange Commission has not reviewed the
disclosures in this prospectus that relate to the Guaranteed Interest Account.
Disclosures regarding the Guaranteed Interest Account and the general account,
however, may be subject to certain generally applicable provisions of the
federal securities laws relating to the accuracy and completeness of statements
made in the prospectus.
What Is The Guaranteed Interest Account?
As noted in the prospectus, Policyowners may accumulate funds on a variable
basis, by allocating purchase payments for investment in one or more of the
Funds of Manulife Series Fund, Inc., or on a fixed basis by allocating purchase
payments to the Guaranteed Interest Account. The Guaranteed Interest Account
provides for the credit of a guaranteed rate of interest of at least 4% per
year to amounts allocated to such account. Amounts in the Guaranteed Interest
Account will receive a Guaranteed Interest Rate set by Manufacturers Life of
America on each Policy Anniversary for the ensuing Policy Year.
The $30 annual administration fee, if any, and any premium tax to be deducted
against the Total Policy Value will be assessed against the Guaranteed Interest
Account first to the extent sufficient amounts are available.
What Are The Annuity Options?
The Policyowner may elect one of the following annuity options described below.
If no option is specified, annuity payments will be made as a life annuity
with a ten-year certain period. Treasury or Labor Department regulations may
require a different annuity option if no option is specified and may preclude
the availability of certain options in connection with Qualified Policies.
There may also be state insurance law requirements that limit the availability
of certain options. The amounts payable under each option will be no less than
amounts determined on the basis of tables contained in each Policy. Such
tables are based on the 1983 Individual Annuity Mortality Tables and an assumed
interest rate of 4% per year.
Option 1: Annuity Certain--payments in equal installments for a period of not
less than five years and not more than twenty years.
35
<PAGE> 39
Option 2(a): Life Annuity Without Refund--payments in equal installments during
the lifetime of an annuitant. Upon the death of the annuitant, payments will
cease. Since there is no guarantee that any minimum number of payments will be
made, the payee may receive only one payment if he or she dies before the date
the second payment is due.
Option 2(b): Life Annuity With Certain Period--payments in equal installments
during the lifetime of an annuitant and if the annuitant dies
before installments have been paid for a designated period,
either five, ten or twenty years, payments will continue for the
remainder of the period selected.
Option 2(c): Life Annuity With Installment Refund--payments in equal
installments during the lifetime of an annuitant and if the
annuitant dies before the total installments paid equal the Total
Policy Value applied to provide the annuity, payments will
continue until the Total Policy Value has been paid.
Option 3(a): Joint and Survivor Annuity Without Refund--payments in equal
installments during the lifetime of two annuitants with payments
continuing in full amount to the survivor upon death of either.
Since there is no guarantee that any minimum number of payments
will be made, the payees may receive only one payment if they
both die before the date the second payment is due.
Option 3(b): Joint and Survivor Annuity With Certain Period--payments in equal
installments during the lifetime of two annuitants and if both
die before installments have been paid for a ten-year period,
payments will continue for the remainder of the period.
Under Options 2(b), 2(c) and 3(b), upon the death of the
annuitant or second to die of joint annuitants, the
beneficiary may elect to receive the commuted value of any
remaining payments. Any such commutation will be at the
interest rate used to determine the amount of the annuity
payments plus 1/2%.
36
<PAGE> 40
Please tear off, complete and return the form below to order a Statement of
Additional Information for the Multi-Account Flexible Payment Variable Annuity
Policy offered by this prospectus. Address the form to the Service Office as
follows:
The Manufacturers Life Insurance
Company of America
Service Office
200 Bloor Street East
Toronto, Ontario, Canada
M4W 1E5
Multi-Account Flexible Payment
Variable Annuity Policy
Please send me a free copy of the Statement of Additional Information for the
Multi-Account Flexible Payment Variable Annuity Policy.
(Please Print or Type)
Name: Policy#:
Address:
T
E
A
R
O
U
T
37
<PAGE> 41
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 42
Statement of Additional Information
SEPARATE ACCOUNT TWO
of
The Manufacturers Life Insurance
Company of America
This Statement of Additional Information relates to certain Flexible Payment
Variable Annuity Policies issued by the Manufacturers Life Insurance Company of
America. The Statement of Additional Information is not a prospectus but should
be read in conjunction with the prospectus of Separate Account Two dated May 1,
1996 which may be obtained from the Manufacturers Life of America Service
Office, 200 Bloor Street East, Toronto, Ontario, Canada M4W 1E5.
The date of this Statement of Additional Information is May 1, 1996.
The Manufacturers
Life Insurance Company
of America
ManEquity, Inc.
<PAGE> 43
Table of Contents
Page
----
Who Sells The Policies? ....................................
What Responsibilities Has Manufacturers Life Assumed? ......
Who Are The Directors And Officers Of Manufacturers
Life of America? .......................................
What State Regulations Apply? ..............................
Is There Any Litigation Pending? ...........................
Where Can Further Information Be Found? ....................
Legal Matters ..............................................
Experts ....................................................
Financial Statements .......................................
<PAGE> 44
Who Sells The Policies?
ManEquity, Inc., an indirect wholly-owned subsidiary of Manufacturers Life, will
act as the principal underwriter of, and continuously offer, the Policies
pursuant to an Underwriting Agreement with Manufacturers Life of America.
ManEquity, Inc. is registered as a broker-dealer under the Securities Exchange
Act of 1934 and is a member of the National Association of Securities Dealers.
The Policies will be sold by registered representatives of either ManEquity,
Inc. or other broker-dealers having distribution agreements with ManEquity, Inc.
who are also authorized by state insurance departments to do so.
For the years ended December 31, 1993, December 31, 1994, and December 31,
1995, ManEquity, Inc. received $2,053,998, $2,389,494, and $3,355,185
respectively, as compensation for sales of the Policies by its registered
representatives. Of these amounts, $1,897,235, $2,283,353, and $3,262,711
respectively, were remitted to Manufacturers Life to reimburse it for
commissions paid to such registered representatives pursuant to the agreement
described below.
What Responsibilities Has Manufacturers Life Assumed?
Manufacturers Life has entered into an agreement with ManEquity, Inc. pursuant
to which Manufacturers Life, on behalf of ManEquity, Inc., will pay the sales
commissions in respect of the Policies and certain other policies issued by
Manufacturers Life of America, prepare and maintain all books and records
required to be prepared and maintained by ManEquity, Inc. with respect to the
Policies and such other policies, and send all confirmations required to be
sent by ManEquity, Inc. with respect to the Policies and such other policies.
ManEquity, Inc. will promptly reimburse Manufacturers Life for all sales
commissions paid by Manufacturers Life and will pay Manufacturers Life for its
other services under the agreement in such amounts and at such times as agreed
to by the parties.
Manufacturers Life has also entered into a Service Agreement with Manufacturers
Life of America pursuant to which Manufacturers Life will provide to
Manufacturers Life of America in Toronto, Ontario, Canada all issue,
administrative, general services and record keeping functions on behalf of
Manufacturers Life of America with respect to all of its insurance policies
including the Policies. Under this agreement Manufacturers Life of America is
obligated to reimburse operating expenses and costs incurred by Manufacturers
Life on behalf of Manufacturers Life of America. For 1993, 1994, and 1995,
Manufacturers Life of America paid $17,831,031, $21,326,446, and $23,211,484
respectively, to Manufacturers Life pursuant to the agreement.
Who Are The Directors And Officers Of Manufacturers Life of America?
The directors and executive officers of Manufacturers Life of America, together
with their principal occupations during the past five years, are as follows:
2
<PAGE> 45
<TABLE>
<CAPTION>
Positions With
Manufacturers Life
Name of America Principal Occupation
<S> <C> <C>
William Atherton Director Vice President U.S. Annuities
(57) -- 1996-present, The
Manufacturers Life Insurance
Company; President -- 1957-1996,
North American Life Assurance
Company
Sandra M. Cotter Director Attorney 1989-present, Dykema
(34) Gossett
James D. Gallagher Director, Secretary, Vice President, Legal Services
(42) and General Counsel --January 1996-present, The
Manufacturers Life Insurance
Company; Vice President,
Secretary and General Counsel--
1994-present, North American
Security Life; Vice President
and Associate General Counsel--
1991-1994, The Prudential
Insurance Company of America
Bruce Gordon Director Vice President, -U.S. Operations
(53) -Pensions -- 1990-present, The
Manufacturers Life Insurance
Company
Donald A. Guloien Director and President Senior Vice President, Business
(39) Development 1994-present, The
Manufacturers Life Insurance
Company; Vice President, U.S.
Individual Business -- 1990-1994,
The Manufacturers Life Insurance
Company
Theodore Kilkuskie, Jr. Director Vice President, U.S. Individual
(41) Insurance -- June 1995-present,
The Manufacturers Life Insurance
Company; Executive Vice President,
Mutual Funds -- January 1995-May 1995,
State Street Research; Vice President,
Mutual Funds -- 1987-1994, Metropolitan
Life Insurance Company
</TABLE>
3
<PAGE> 46
<TABLE>
<CAPTION>
Positions With
Manufacturers Life
Name of America Principal Occupation
<S> <C> <C>
Joseph J. Pietroski Director Senior Vice President, General
(58) Counsel and Corporate Secretary --
1988-present, The Manufacturers
Life Insurance Company
John D. Richardson Chairman and Director Senior Vice President and General
(58) Manager, U.S. Operations
1995-present, The Manufacturers
Life Insurance Company; Senior
Vice President and General
Manager, Canadian Operations
1992-1994, The Manufacturers Life
Insurance Company; Senior Vice
President, Financial Services
1992, The Manufacturers Life
Insurance Company; Executive Vice
Chairman and CFO -- 1989-1991,
Canada Trust
John R. Ostler Vice President, Chief Financial Vice President -- 1992-
(43) Actuary and Treasurer present, The Manufacturers Life
Insurance Company; Vice President
Insurance Products -- 1990-1992,
The Manufacturers Life Insurance
Company
Douglas H. Myers Vice President, Assistant Vice President and
(42) Finance and Compliance Controller, U.S. Operations --
Controller 1988-present; The Manufacturers
Life Insurance Company
Hugh McHaffie Vice President Vice President & Product Actuary --
(37) June 1990-present, North American
Security Life
</TABLE>
4
<PAGE> 47
What State Regulations Apply?
Manufacturers Life of America is subject to regulation and supervision by the
Michigan Department of Insurance, which periodically examines its financial
condition and operations. It is also subject to the insurance laws and
regulations of all jurisdictions in which it is authorized to do business. The
Policy has been filed with insurance officials and meets all standards set by
law in each jurisdiction where it is 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.
Is There Any Litigation Pending?
No litigation is pending that would have a material effect upon the Account or
the Series Fund.
Where Can Further Information Be Found?
A registration statement under the Securities Act of 1933 has been filed with
the S.E.C. relating to the offering described in the prospectus and the
Statement of Additional Information. The prospectus and the Statement of
Additional Information do not include all the information set forth in the
registration statement. The omitted information may be obtained from the
S.E.C.'s principal office in Washington, D.C. upon payment of the prescribed
fee.
For further information you may also contact Manufacturers Life of America's
Service Office, the address and telephone number of which are on the first page
of the prospectus.
Legal Matters
The legal validity of the Policies has been passed on by Stephen C. Nesbitt,
Esq., former Secretary and General Counsel of Manufacturers Life of America.
Jones & Blouch L.L.P., Washington, D.C. has passed on certain matters relating
to the federal securities law.
Experts
The financial statements of the Manufacturers Life Insurance Company of America
and of The Manufacturers Life Insurance Company of America Separate Account Two
appearing in this Statement of Additional Information have been audited by
Ernst & Young LLP, independent auditors, to the extent indicated in their
reports thereon also appearing elsewhere herein. Such financial statements have
been included herein in reliance upon such reports given upon the authority of
such firm as experts in auditing and accounting.
5
<PAGE> 48
FINANCIAL STATEMENTS
The financial statements of Manufacturers Life of America included herein
should be distinguished from the financial statements of the Account and should
be considered only as bearing upon the ability of Manufacturers Life of America
to meet its obligations under the Policies.
6
<PAGE> 49
Report of Independent Auditors
To the Board of Directors
The Manufacturers Life Insurance
Company of America
We have audited the accompanying statement of assets and liabilities of Separate
Account Two of The Manufacturers Life Insurance Company of America (comprising,
respectively, Emerging Growth Equity Sub-Account, Common Stock Sub-Account, Real
Estate Securities Sub-Account, Balanced Assets Sub-Account, Capital Growth Bond
Sub-Account, Money Market Sub-Account, International Sub-Account and Pacific Rim
Emerging Markets Sub-Account) as of December 31, 1995 and the related statement
of operations for the year then ended, and the statements of changes in net
assets for each of the periods presented herein. These financial statements are
the responsibility of The Manufacturers Life Insurance Company of America's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Separate Account Two of The
Manufacturers Life Insurance Company of America at December 31, 1995, and the
results of its operations for the year then ended and the changes in its net
assets for each of the periods presented herein, in conformity with generally
accepted accounting principles.
Philadelphia, Pennsylvania ERNST & YOUNG LLP
February 2, 1996
7
<PAGE> 50
Separate Account Two of
The Manufacturers Life Insurance Company of America
Statement of Assets and Liabilities
December 31, 1995
<TABLE>
<CAPTION>
EMERGING COMMON REAL ESTATE
GROWTH EQUITY STOCK SECURITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Investment in Manulife Series
Fund, Inc.--at market value:
Emerging Growth Equity Fund,
3,253,525 shares (cost $63,821,544) $ 75,184,182
Common Stock Fund,
1,455,513 shares (cost $21,291,543) $ 25,135,478
Real Estate Securities Fund,
1,920,277 shares (cost $27,596,075) $ 29,002,463
Balanced Assets Fund,
2,796,100 shares (cost $42,199,124)
Capital Growth Bond Fund,
1,330,622 shares (cost $14,917,846)
Money Market Fund,
1,703,408 shares (cost $18,029,071)
International Fund,
356,021 shares (cost $3,579,877)
Pacific Rim Emerging Markets Fund,
261,205 shares (cost $2,552,133)
------------ ------------ ------------
75,184,182 25,135,478 29,002,463
Receivable for policy-related transactions 25,534 15,359 31,606
------------ ------------ ------------
Net assets $ 75,209,716 $ 25,150,837 $ 29,034,069
============ ============ ============
Units outstanding 1,670,956 977,871 1,149,409
============ ============ ============
Net asset value per unit $45.01 $25.72 $25.26
============ ============ ============
</TABLE>
See accompanying notes.
2
<PAGE> 51
<TABLE>
<CAPTION>
PACIFIC RIM
BALANCED CAPITAL EMERGING
ASSETS GROWTH BOND MONEY MARKET INTERNATIONAL MARKETS
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT TOTAL
----------- ----------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in Manulife Series
Fund, Inc.--at market value:
Emerging Growth Equity Fund,
3,253,525 shares (cost $63,821,544) $75,184,182
Common Stock Fund,
1,455,513 shares (cost $21,291,543) 25,135,478
Real Estate Securities Fund,
1,920,277 shares (cost $27,596,075) 29,002,463
Balanced Assets Fund,
2,796,100 shares (cost $42,199,124) $47,961,811 47,961,811
Capital Growth Bond Fund,
1,330,622 shares (cost $14,917,846) $15,031,374 15,031,374
Money Market Fund,
1,703,408 shares (cost $18,029,071) $18,464,059 18,464,059
International Fund,
356,021 shares (cost $3,579,877) $3,798,197 3,798,197
Pacific Rim Emerging Markets Fund,
261,205 shares (cost $2,552,133) $2,704,903 2,704,903
----------- ----------- ----------- ---------- ---------- ------------
47,961,811 15,031,374 18,464,059 3,798,197 2,704,903 217,282,467
Receivable for policy-related transactions 13,017 27,345 88,003 1,450 6,438 208,752
----------- ----------- ----------- ---------- ---------- ------------
Net assets $47,974,828 $15,058,719 $18,552,062 $3,799,647 $2,711,341 $217,491,219
=========== =========== =========== ========== ========== ============
Units outstanding 2,189,632 789,655 1,290,129 354,776 261,208
=========== =========== =========== ========== ========== ============
Net asset value per unit $21.91 $19.07 $14.38 $10.71 $10.38
=========== =========== =========== ========== ========== ============
</TABLE>
3
<PAGE> 52
Separate Account Two of
The Manufacturers Life Insurance Company of America
Statement of Operations
Year ended December 31, 1995
<TABLE>
<CAPTION>
EMERGING COMMON REAL ESTATE
GROWTH EQUITY STOCK SECURITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- -----------
<S> <C> <C> <C>
Investment income:
Dividend income $1,809,461 $ - $483,929
Expenses:
Mortality and expense risks charge 630,475 199,735 270,300
------------ ---------- ---------
Net investment income (loss) 1,178,986 (199,735) 213,629
------------ ---------- ---------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) from security transactions:
Proceeds from sales 8,790,460 1,833,948 5,825,223
Cost of securities sold 7,106,591 1,582,299 5,602,096
------------ ---------- ---------
Net realized gain (loss) 1,683,869 251,649 223,127
------------ ---------- ---------
Unrealized (depreciation) appreciation
of investments:
Beginning of year (546,353) (1,126,818) (1,736,824)
End of year 11,362,638 3,843,935 1,406,388
------------ ---------- ---------
Net unrealized appreciation
during the year 11,908,991 4,970,753 3,143,212
------------ ---------- ---------
Net realized and unrealized gain on
investments 13,592,860 5,222,402 3,366,339
------------ ---------- ---------
Net increase in net assets derived
from operations $14,771,846 $5,022,667 $3,579,968
=========== ========== ==========
</TABLE>
See accompanying notes.
4
<PAGE> 53
<TABLE>
<CAPTION>
PACIFIC RIM
BALANCED CAPITAL EMERGING
ASSETS GROWTH BOND MONEY MARKET INTERNATIONAL MARKETS
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT TOTAL
----------- ----------- ------------ ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income $57,666 $1,046,495 $ 668 $89,871 $32,371 $3,520,461
Expenses:
Mortality and expense risks charge 411,536 127,065 155,913 25,067 16,867 1,836,958
---------- ---------- ---------- -------- -------- -----------
Net investment income (loss) (353,870) 919,430 (155,245) 64,804 15,504 1,683,503
---------- ---------- ---------- -------- -------- -----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) from security transactions:
Proceeds from sales 4,206,198 2,183,478 13,837,707 270,103 731,924 37,679,041
Cost of securities sold 3,972,255 2,260,461 13,514,965 264,304 708,114 35,011,085
---------- ---------- ---------- -------- -------- -----------
Net realized gain (loss) 233,943 (76,983) 322,742 5,799 23,810 2,667,956
---------- ---------- ---------- -------- -------- -----------
Unrealized (depreciation) appreciation
of investments:
Beginning of year (3,067,645) (1,230,071) (96,137) (5,646) (14,100) (7,823,594)
End of year 5,762,687 113,528 434,988 218,320 152,770 23,295,254
---------- ---------- ---------- -------- -------- -----------
Net unrealized appreciation
during the year 8,830,332 1,343,599 531,125 223,966 166,870 31,118,848
---------- ---------- ---------- -------- -------- -----------
Net realized and unrealized gain on
investments 9,064,275 1,266,616 853,867 229,765 190,680 33,786,804
---------- ---------- ---------- -------- -------- -----------
Net increase in net assets derived
from operations $8,710,405 $2,186,046 $698,622 $294,569 $206,184 $35,470,307
========== ========== ========== ======== ======== ===========
</TABLE>
5
<PAGE> 54
Separate Account Two of
The Manufacturers Life Insurance Company of America
Statements of Changes in Net Assets
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
EMERGING GROWTH COMMON STOCK REAL ESTATE SECURITIES
EQUITY SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------------- ------------------------- -------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 1,178,986 $ (235,238) $ (199,735) $ 661,874 $ 213,629 $ 383,354
Net realized gain (loss) 1,683,869 281,851 251,649 114,996 223,127 166,653
Unrealized appreciation
(depreciation) of
investments
during the year 11,908,991 (2,010,919) 4,970,753 (1,522,706) 3,143,212 (1,864,424)
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net
assets derived from operations 14,771,846 (1,964,306) 5,022,667 (745,836) 3,579,968 (1,314,417)
----------- ----------- ----------- ----------- ----------- -----------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 9,075,130 20,192,208 3,138,683 6,307,192 2,395,793 11,495,742
Transfer on death (40,037) (34,481) (7,409) (9,742) (17,513) (32,754)
Transfer on terminations (3,053,099) (1,175,021) (681,944) (211,937) (1,232,704) (365,263)
Transfer of maturity 83,583 (85,686) 67,266 (88,804) 4,515 (51,701)
Net interfund transfers 2,606,912 2,047,524 1,459,853 619,575 (2,418,292) 616,085
----------- ----------- ----------- ----------- ----------- -----------
8,672,489 20,944,544 3,976,449 6,616,284 (1,268,201) 11,662,109
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net
assets 23,444,335 18,980,238 8,999,116 5,870,448 2,311,767 10,347,692
NET ASSETS
Beginning of year 51,765,381 32,785,143 16,151,721 10,281,273 26,722,302 16,374,610
----------- ----------- ----------- ----------- ----------- -----------
End of year $75,209,716 $51,765,381 $25,150,837 $16,151,721 $29,034,069 $26,722,302
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes.
6
<PAGE> 55
<TABLE>
<CAPTION>
BALANCED ASSETS CAPITAL GROWTH MONEY MARKET
SUB-ACCOUNT BOND SUB-ACCOUNT SUB-ACCOUNT
------------------------ ------------------------- -------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (353,870) $ 1,558,050 $ 919,430 $ 610,867 $ (155,245) $ 290,192
Net realized gain (loss) 233,943 126,212 (76,983) (126,465) 322,742 33,679
Unrealized appreciation
(depreciation) of
investments
during the year 8,830,332 (3,343,719) 1,343,599 (1,003,242) 531,125 (76,402)
----------- ----------- ----------- ---------- ---------- -----------
Increase (decrease) in net
assets derived from
operations 8,710,405 (1,659,457) 2,186,046 (518,840) 698,622 247,469
----------- ----------- ----------- ---------- ---------- -----------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 5,071,298 14,684,868 2,368,800 4,091,955 10,039,733 9,297,572
Transfer on death (84,545) (51,630) (12,196) (2,484) (27,370) --
Transfer on terminations (1,647,362) (715,314) (719,239) (530,903) (2,420,434) (504,302)
Transfer of maturity 12,834 (59,741) 25,737 (49,450) (38,588) (2,334)
Net interfund transfers 377,983 (860,845) 438,281 (686,906) (2,334,352) (801,647)
----------- ----------- ----------- ---------- ----------- -----------
3,730,208 12,997,338 2,101,383 2,822,212 5,218,989 7,989,289
----------- ----------- ----------- ---------- ----------- -----------
Net increase in net
assets 12,440,613 11,337,881 4,287,429 2,303,372 5,917,611 8,236,758
NET ASSETS
Beginning of year 35,534,215 24,196,334 10,771,290 8,467,918 12,634,451 4,397,693
----------- ----------- ----------- ----------- ----------- -----------
End of year $47,974,828 $35,534,215 $15,058,719 $10,771,290 $18,552,062 $12,634,451
=========== =========== =========== =========== =========== ===========
</TABLE>
7
<PAGE> 56
Separate Account Two of
The Manufacturers Life Insurance Company of America
Statements of Changes in Net Assets (continued)
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
PACIFIC RIM
INTERNATIONAL EMERGING MARKETS
SUB-ACCOUNT SUB-ACCOUNT TOTAL
------------------------- -------------------------- ------------------------
YEAR ENDED *PERIOD ENDED YEAR ENDED *PERIOD ENDED YEAR ENDED YEAR ENDED
DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94 DEC. 31/95 DEC. 31/94
---------- ------------- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 64,804 $ 1,326 $ 15,504 $ 1,553 $ 1,683,503 $ 3,271,978
Net realized gain (loss) 5,799 (89) 23,810 (873) 2,667,956 595,964
Unrealized appreciation
(depreciation) of investments
during the year 223,966 (5,646) 166,870 (14,100) 31,118,848 (9,841,158)
---------- -------- ---------- -------- ------------ -----------
Increase (decrease) in net assets
derived from operations 294,569 (4,409) 206,184 (13,420) 35,470,307 (5,973,216)
---------- -------- ---------- -------- ------------ ------------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 1,231,995 266,607 988,086 162,380 34,309,518 66,498,524
Transfer on death -- -- -- -- (189,070) (131,091)
Transfer on terminations (61,097) (69) (45,863) (40) (9,861,742) (3,502,849)
Transfer of maturity -- -- -- -- 155,347 (337,716)
Net interfund transfers 1,467,355 604,696 929,903 484,111 2,527,643 2,022,593
---------- -------- ---------- -------- ------------ ------------
2,638,253 871,234 1,872,126 646,451 26,941,696 64,549,461
---------- -------- ---------- -------- ------------ ------------
Net increase in net
assets 2,932,822 866,825 2,078,310 633,031 62,412,003 58,576,245
NET ASSETS
Beginning of year 866,825 -- 633,031 -- 155,079,216 96,502,971
---------- -------- ---------- -------- ------------ ------------
End of year $3,799,647 $866,825 $2,711,341 $633,031 $217,491,219 $155,079,216
========== ======== ========== ======== ============ ============
</TABLE>
* Reflects the period from commencement of operations October 4, 1994 through
December 31, 1994.
8
<PAGE> 57
Separate Account Two of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements
December 31, 1995
1. ORGANIZATION
Separate Account Two of The Manufacturers Life Insurance Company of America (the
"Separate Account") is a unit investment trust registered under the Investment
Company Act of 1940, as amended. The Separate Account is currently comprised of
eight investment sub-accounts, one for each series of shares of Manulife Series
Fund, Inc., available for allocation of net premiums under variable annuity
policies (the "Policies") issued by The Manufacturers Life Insurance Company of
America ("Manufacturers Life of America").
The Separate Account was established by Manufacturers Life of America, a
wholly-owned subsidiary of Manulife Reinsurance Corporation (U.S.A.) ("MRC"), as
a separate investment account on November 3, 1987. MRC is a life insurance
holding company organized in 1983 under Michigan law and a wholly-owned
subsidiary of The Manufacturers Life Insurance Company ("Manulife Financial"), a
mutual life insurance company based in Toronto, Canada.
The assets of the Separate Account are the property of Manufacturers Life of
America. The portion of the Separate Account's assets applicable to the Policies
will not be charged with liabilities arising out of any other business
Manufacturers Life of America may conduct.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Separate Account in preparation of its financial statements:
a. Valuation of Investments - Investments are made among the eight Funds of
Manulife Series Fund, Inc. and are valued at the reported net asset values
of these Funds. Transactions are recorded on the trade date. Net investment
income and net realized and unrealized gain (loss) on investments in
Manulife Series Fund, Inc. are reinvested.
b. Realized gains and losses on the sale of investments are computed on the
first-in, first-out basis.
c. Dividend income is recorded on the ex-dividend date.
9
<PAGE> 58
Separate Account Two of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
d. Federal Income Taxes - Manufacturers Life of America, the Separate
Account's sponsor, is taxed as a "life insurance company" under the
Internal Revenue Code. Under these provisions of the Code, the operations
of the Separate Account form part of the sponsor's total operations and are
not taxed separately.
The current year's operations of the Separate Account are not expected to
affect the sponsor's tax liabilities and, accordingly, no charges were made
against the Separate Account for federal, state and local taxes. However,
in the future, should the sponsor incur significant tax liabilities related
to Separate Account operations, it intends to make a charge or establish a
provision within the Separate Account for such taxes.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. MORTALITY AND EXPENSE RISKS CHARGE
Manufacturers Life of America deducts from the assets of the Separate Account a
daily charge equivalent to an annual rate of 1.0% of the average net value of
the Separate Account's assets for mortality and expense risks.
4. PURCHASES AND SALES OF MANULIFE SERIES FUND, INC. SHARES
Purchases and sales of the shares of common stock of Manulife Series Fund, Inc.
for the year ended December 31, 1995 were $66,126,070 and $37,679,041,
respectively and for the year ended December 31, 1994 were $83,423,197 and
$15,243,525, respectively.
10
<PAGE> 59
Separate Account Two of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
5. RELATED PARTY TRANSACTIONS
ManEquity, Inc., a registered broker-dealer and indirect wholly-owned subsidiary
of Manulife Financial, acts as the principal underwriter of the Policies
pursuant to a Distribution Agreement with Manufacturers Life of America.
Registered representatives of either ManEquity, Inc. or other broker-dealers
having distribution agreements with ManEquity, Inc. who are also authorized as
variable life insurance agents under applicable state insurance laws, sell the
Policies. Registered representatives are compensated on a commission basis.
Manufacturers Life of America has a formal service agreement with its affiliate,
Manulife Financial, which can be terminated by either party upon two months'
notice. Under this Agreement, Manufacturers Life of America pays for legal,
actuarial, investment and certain other administrative services.
11
<PAGE> 60
Report of Independent Auditors
The Board of Directors
The Manufacturers Life Insurance
Company of America
We have audited the accompanying balance sheets of The Manufacturers Life
Insurance Company of America as of December 31, 1995 and 1994, and the related
statements of operations, changes in capital and surplus, and cash flows for
each of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Manufacturers Life
Insurance Company of America at December 31, 1995 and 1994, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles and with reporting practices prescribed or permitted by the Insurance
Department of the State of Michigan.
Philadelphia, Pennsylvania ERNST & YOUNG LLP
February 2, 1996
<PAGE> 61
The Manufacturers Life Insurance Company of America
Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31
1995 1994
-----------------------------
<S> <C> <C>
ASSETS
Bonds, at amortized cost (market $66,046,733--
1995 and $51,082,395--1994) $ 62,757,202 $ 52,149,080
Stocks 22,584,259 25,629,580
Short-term investments -- 10,914,561
Policy loans 6,955,292 4,494,390
------------ ------------
Total investments 92,296,753 93,187,611
Cash 9,674,362 5,069,197
Life insurance premiums deferred and uncollected 504,818 13,646
Accrued investment income 1,059,536 796,333
Separate account assets 480,404,450 302,736,198
Funds receivable on reinsurance assumed -- 880,284
Receivable for undelivered securities 146,328 69,003
Taxes recoverable 3,308,316 --
Investment in subsidiary 1,080,184 --
Other assets 267,015 333,651
------------ ------------
Total assets $588,741,762 $403,085,923
============ ============
LIABILITIES, CAPITAL AND SURPLUS
Aggregate policy reserves $26,683,090 $29,761,174
Other contract deposits 1,238,943 3,938,425
Interest maintenance and asset valuation reserves 4,742,400 111,566
Policy and contract claims 582,853 94,346
Provision for policyholder dividends payable 2,346,258 1,385,409
Amounts due to affiliates 9,049,217 7,377,108
Payable for undelivered securities 80,821 3,512,459
Accrued liabilities 7,315,315 4,773,565
Separate account liabilities 480,404,450 302,736,198
------------ ------------
Total liabilities 532,443,347 353,690,250
Capital and surplus:
Common shares, par value $1.00; authorized,
5,000,000 shares; issued and outstanding
4,501,857 shares (4,501,855 shares in 1994) 4,501,857 4,501,855
Preferred shares, par value $100; authorized
5,000,000 shares; issued and outstanding
105,000 shares 10,500,000 10,500,000
Surplus note 8,500,000 --
Capital paid in excess of par value 63,500,180 49,849,998
Deficit (30,703,622) (15,456,180)
------------ ------------
Total capital and surplus 56,298,415 49,395,673
------------ ------------
Total liabilities, capital and surplus $588,741,762 $403,085,923
============ ============
</TABLE>
See accompanying notes.
2
<PAGE> 62
The Manufacturers Life Insurance Company of America
Statements of Operations
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
-----------------------------------------------
<S> <C> <C> <C>
Revenues:
Life and annuity premiums, principally
reinsurance assumed $ 5,956,997 $ 25,385,628 $ 12,745,981
Other life and annuity considerations 153,859,957 168,075,003 113,332,974
Investment income, net of investment
expenses 5,840,560 3,588,629 3,323,962
Amortization of interest maintenance reserve 23,975 19,527 32,866
Commission and expense allowance
on reinsurance ceded 147,109 187,694 --
Foreign exchange (loss) gain (284,127) 114,728 (197,971)
Other revenue 211,191 54,763 33,935
------------ ------------ ------------
Total revenues 165,755,662 197,425,972 129,271,747
Benefits paid or provided:
(Decrease) increase in aggregate policy reserves (3,078,084) 16,741,569 5,168,484
(Decrease) increase in liability for deposit funds (2,699,482) 654,214 2,820,520
Transfers to separate accounts, net 99,807,392 136,896,150 98,601,141
Death benefits 3,981,377 640,875 582,534
Disability benefits 123,786 -- --
Maturity benefits 207,719 580,615 79,253
Surrender benefits 22,028,224 3,701,591 2,319,926
------------ ------------ ------------
120,370,932 159,215,014 109,571,858
Insurance expenses:
Management fee 22,864,000 21,222,310 12,378,288
Commissions 21,411,198 23,416,110 14,742,130
General expenses 15,475,621 8,260,467 5,108,104
Commissions and expense allowances
on reinsurance assumed 1,014,163 810,252 329,634
------------ ------------ ------------
60,764,982 53,709,139 32,558,156
------------ ------------ ------------
Loss before policyholders' dividends
and federal income tax (15,380,252) (15,498,181) (12,858,267)
Dividends to policyholders 2,367,002 1,149,719 837,454
------------ ------------ ------------
Loss before federal income tax (17,747,254) (16,647,900) (13,695,721)
Federal income tax benefit (4,115,770) -- (324,643)
------------ ------------ ------------
Net loss from operations after policyholders'
dividends and federal income tax (13,631,484) (16,647,900) (13,371,078)
Net realized capital gains (net of capital
gains tax of $807,453 in 1995; $0 in 1994,
and $236,415 in 1993, and $1,567,770 in
1995, $(554,000) in 1994, and $347,292 in
1993 transferred (from) to the interest
maintenance reserve) (73,343) (3,012,485) 93,618
------------ ------------ ------------
Net loss from operations $(13,704,827) $(19,660,385) $(13,277,460)
============ ============ ============
</TABLE>
See accompanying notes.
3
<PAGE> 63
The Manufacturers Life Insurance Company of America
Statements of Changes in Capital and Surplus
<TABLE>
<CAPTION>
CAPITAL
PAID IN
EXCESS OF SURPLUS
CAPITAL PAR VALUE (DEFICIT) TOTAL
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Balance, December 31, 1992 $35,001,853 $ 4,000,000 $ 16,542,195 $ 55,544,048
Net loss from operations (13,277,460) (13,277,460)
Issuance of preferred shares 1 5,849,999 5,850,000
Increase in asset valuation reserve (13,076) (13,076)
Increase in nonadmitted assets (133,575) (133,575)
Change in net unrealized capital
losses (1,592,242) (1,592,242)
Change in liability for reinsurance
in unauthorized companies (29,905) (29,905)
Company's share of increase in
separate account assets, net 4,308,148 4,308,148
----------- ----------- ------------ -----------
Balance, December 31, 1993 35,001,854 9,849,999 5,804,085 50,655,938
Net loss from operations (19,660,385) (19,660,385)
Issuance of common stocks 1 19,999,999 20,000,000
Capital restructuring of preference
shares (20,000,000) 20,000,000 --
Increase in asset valuation reserve (55,286) (55,286)
Increase in nonadmitted assets (1,021,357) (1,021,357)
Change in net unrealized capital
losses (425,082) (425,082)
Change in liability for reinsurance
in unauthorized companies (98,155) (98,155)
----------- ----------- ------------ -----------
Balance, December 31, 1994 15,001,855 49,849,998 (15,456,180) 49,395,673
Net loss from operations (13,704,827) (13,704,827)
Issuance of common shares 2 12,569,998 12,570,000
Issuance of surplus note 8,500,000 8,500,000
Contribution of Manufacturers
Adviser Corporation 1,080,184 1,080,184
Increase in asset valuation reserve (3,285,208) (3,285,208)
Increase in nonadmitted assets (1,053,124) (1,053,124)
Change in net unrealized capital
losses 2,921,742 2,921,742
Change in liability for reinsurance
in unauthorized companies (126,025) (126,025)
----------- ----------- ------------ ------------
Balance, December 31, 1995 $23,501,857 $63,500,180 $(30,703,622) $ 56,298,415
=========== =========== ============ ============
</TABLE>
See accompanying notes.
4
<PAGE> 64
The Manufacturers Life Insurance Company of America
Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
--------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Premiums collected, net $159,337,079 $ 193,478,637 $ 126,075,035
Policy benefits paid, net (25,827,767) (4,982,444) (2,829,812)
Commissions and other expenses paid (62,302,890) (48,141,400) (35,203,997)
Net investment income 5,570,951 3,343,515 3,197,892
Other income and expenses (3,607,415) (1,946,063) (1,592,957)
Transfers to separate accounts, net (98,031,353) (136,950,482) (98,220,292)
------------ ------------- -------------
Net cash (used in) provided by
operating activities (24,861,395) 4,801,763 (8,574,131)
INVESTING ACTIVITIES
Sale, maturity, or repayment of investments 74,009,501 73,187,733 28,248,633
Purchase of investments (77,607,686) (91,063,874) (73,688,735)
------------ ------------- -------------
Net cash used in investing activities (3,598,185) (17,876,141) (45,440,102)
FINANCING ACTIVITIES
Issuance of shares 12,570,000 20,000,000 5,850,000
Contribution of Manufacturers Adviser
Corporation 1,080,184 -- --
Issuance of surplus notes 8,500,000 -- --
Surplus withdrawn from separate account -- -- 48,701,076
------------ ------------- -------------
Net cash provided by financing activities 22,150,184 20,000,000 54,551,076
------------ ------------- -------------
Net (decrease) increase in cash and
short-term investments (6,309,396) 6,925,622 536,843
Cash and short-term investments
at beginning of year 15,983,758 9,058,136 8,521,293
------------ ------------- -------------
Cash and short-term investments
at end of year $ 9,674,362 $ 15,983,758 $ 9,058,136
============ ============= =============
</TABLE>
See accompanying notes.
5
<PAGE> 65
The Manufacturers Life Insurance Company of America
Notes to Financial Statements
December 31, 1995
1. ORGANIZATION
ORGANIZATION
The Manufacturers Life Insurance Company of America (Manufacturers Life of
America or the Company) is a wholly-owned subsidiary of Manulife Reinsurance
Corporation (U.S.A.) (the Parent), (formerly Manufacturers Life Insurance
Company of Michigan), which is in turn a wholly-owned subsidiary of The
Manufacturers Life Insurance Company (Manulife Financial), a Canadian-based
mutual life insurance company (Notes 4 and 5).
The Company issues and sells variable universal life and variable annuity
products in the United States. The Company also has a branch operation in Taiwan
to develop and market traditional insurance for the Taiwanese market. At
December 31, 1995 the Company had assets of $11,234,000 and liabilities of
$5,696,000 in the Taiwan branch.
During 1995, the Company's parent contributed $12,570,000 of capital in return
for 2 shares of the Company's common stock par value $1 with the remaining
$12,569,998 being recorded as contributed surplus. During 1995, the Company's
parent transferred 100% of the outstanding stock of Manufacturers Adviser
Corporation to the Company which was recorded at book values as contributed
surplus. During 1995, the Company's parent also contributed $8,500,000 in return
for a 10-year surplus note bearing interest at 6.625%.
Subsequent to the year end, the Parent contributed $15,000,000 capital in return
for 1 share of the Company's common stock par value $1 with the remaining
$14,999,999 being recorded as contributed surplus.
During 1994, the Company's parent contributed $20,000,000 of capital in return
for 1 share of the Company's common stock par value $1 with the remaining
$19,999,999 being recorded as contributed surplus. During 1994, the Company
restructured its capital by exchanging 230,000 shares of preferred stock with a
par value of $23,000,000 for 3,000,000 shares of common stock par value
$3,000,000 with the remaining $20,000,000 being recorded as contributed surplus.
The Parent contributed $5,850,000 in capital in return for 1 share of common
stock during 1993.
6
<PAGE> 66
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements of Manufacturers Life of America have been
prepared in accordance with accounting practices prescribed or permitted by the
Insurance Department of Michigan, which are considered generally accepted
accounting principles for mutual life insurance companies and their wholly-owned
direct and indirect subsidiaries. Such practices differ in certain respects from
generally accepted accounting principles followed by stock life insurance
companies in determining financial position and results of operations. In
general, the differences are: (1) commissions and other costs of acquiring and
writing policies are charged to expense in the year incurred rather than being
amortized over the related policy term; (2) certain non-admitted assets are
excluded from the balance sheet; (3) deferred income taxes are not provided for
timing differences in recording certain items for financial statement and tax
purposes; (4) certain transactions are reflected directly to surplus rather than
reflected in net income from operations (for example, certain transactions
related to the separate accounts); and (5) debt securities are carried at
amortized cost.
In April 1993, the Financial Accounting Standards Board issued Interpretation
No. 40, "Applicability of Generally Accepted Accounting Principles to Mutual
Life Insurance and Other Enterprises." The Interpretation as amended is
effective for 1996 annual financial statements and thereafter, and will no
longer allow statutory financial statements to be described as being prepared in
conformity with generally accepted accounting principles (GAAP). Upon the
effective date of the Interpretation, in order for financial statements to be
described as being prepared in accordance with GAAP, life insurance companies
will be required to adopt all applicable standards promulgated by the FASB in
any general purpose financial statements such companies may issue. While GAAP
standards have recently been developed for mutual life insurance companies, the
Company has not yet completed the complex and extensive historical calculations
and thus is unable to quantify the effects of the Interpretation on its
financial statements.
The preparation of financial statements of insurance companies requires
management to make estimates and assumptions that affect amounts reported in the
financial statements and accompanying notes. Such estimates and assumptions
could change in the future as more information becomes known, which could impact
the amounts reported and disclosed herein.
All amounts presented are expressed in U.S. Dollars. Certain amounts from prior
periods have been reclassified to conform with current-period presentation.
7
<PAGE> 67
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STOCKS
Stocks are carried at market value.
BONDS
Bonds not backed by other loans are carried at amortized cost as computed using
the interest method. Loan backed bonds and other structured securities are
valued at amortized cost using the interest method including anticipated
prepayments. Prepayment assumptions are updated periodically and are accounted
for using the prospective method. Gains and losses on sales of bonds are
calculated on the specific identification method and recognized into income
based on NAIC prescribed formulas. Short-term investments include investments
with maturities of less than one year at the date of acquisition. Market values
disclosed are based on NAIC quoted values.
POLICY LOANS
Policy loans are reported at unpaid principal balances which approximate fair
value.
ASSET VALUATION RESERVE AND INTEREST MAINTENANCE RESERVE
The Asset Valuation Reserve and Interest Maintenance Reserve were determined by
NAIC prescribed formulas and are reported as liabilities rather than as
valuation allowances or appropriations of surplus.
POLICY AND CONTRACT CLAIMS
Policy and contract claims are determined on an individual case basis for
reported losses. Estimates of incurred but not reported losses are developed on
the basis of past experience.
8
<PAGE> 68
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SEPARATE ACCOUNTS
Separate account assets and liabilities reported in the accompanying financial
statements represent funds that are separately administered, principally for
variable annuity and variable life contracts. For the majority of these
contracts the contractholder, rather than the Company, bears the investment
risk. Separate account assets are recorded at market value. Operations of the
separate accounts are not included in the accompanying financial statements.
REVENUE RECOGNITION
Both premium and investment income are recorded when due.
INVESTMENT IN SUBSIDIARIES
The investment in Manufacturers Adviser Corporation ("MAC") is carried at net
equity of MAC as computed under generally accepted accounting principles.
Undistributed income and loss is treated as a component of unrealized gains and
losses and applies directly to capital and surplus.
REINSURANCE
Reinsurance premiums and claims are accounted for on a basis consistent with
that used in accounting for the original policies issued and the terms of the
reinsurance contracts. Premiums and claims are reported net of reinsured
amounts.
POLICY RESERVES
Certain policy reserves are calculated based on statutorily required interest
and mortality assumptions.
9
<PAGE> 69
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
3. INVESTMENTS AND INVESTMENT INCOME
The amortized cost and market value of investments in fixed maturities (bonds)
as of December 31, 1995 is summarized as follows:
<TABLE>
<CAPTION>
QUOTED OR
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
NAME OF PERSON COST GAINS LOSSES VALUE
- -------------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
United States Government $15,145,033 $ 681,032 $ (57,916) $15,768,149
Foreign governments 6,071,376 157,635 -- 6,229,011
Corporate 31,046,219 2,508,780 -- 33,554,999
Mortgage-backed securities:
U.S. Government agencies 9,522,771 -- -- 9,522,771
Corporate 971,803 -- -- 971,803
----------- ---------- ---------- -----------
$62,757,202 $3,347,447 $ (57,916) $66,046,733
=========== ========== ========== ===========
</TABLE>
Proceeds from sales of investments in debt securities during 1995 were
$67,506,660. Gross gains of $2,630,790 and gross losses of $218,778 were
realized on those sales.
The amortized cost and market value of investments in fixed maturities (bonds)
as of December 31, 1994 is summarized as follows:
<TABLE>
<CAPTION>
QUOTED OR
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
United States Government $31,784,581 $ 243,971 $ (441,592) $31,586,960
Foreign governments 7,388,458 -- (294,385) 7,094,073
Corporate 9,986,244 2,457 (577,136) 9,411,565
Mortgage-backed securities:
U.S. Government agencies 2,480,571 -- -- 2,480,571
Corporate 509,226 -- -- 509,226
----------- --------- ----------- -----------
$52,149,080 $ 246,428 $(1,313,113) $51,082,395
=========== ========= =========== ===========
</TABLE>
Proceeds from sales of investments in debt securities during 1994 were
$43,175,845. Gross gains of $167,738 and gross losses of $1,006,702 were
realized on those sales.
10
<PAGE> 70
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
3. INVESTMENTS AND INVESTMENT INCOME (CONTINUED)
The amortized cost and market value of fixed maturities at December 31, 1995 by
contractual maturities, are shown below. Expected maturities may differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
<TABLE>
<CAPTION>
YEARS TO MATURITY AMORTIZED COST MARKET VALUE
- ------------------------------ -------------- ------------
<S> <C> <C>
One year or less $ 564,857 $ 564,857
Greater than 1; up to 5 years 4,079,679 4,181,361
Greater than 5; up to 10 years 14,786,283 15,858,075
Due after 10 years 32,831,809 34,947,866
Mortgage-backed securities 10,494,574 10,494,574
----------- -----------
$62,757,202 $66,046,733
=========== ===========
</TABLE>
At December 31, 1995, $6,617,749 of bonds at amortized cost were on deposit
with government insurance departments to satisfy regulatory regulations.
Major categories of net investment income for each year were as follows:
<TABLE>
<CAPTION>
NET INVESTMENT INCOME
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Gross investment income:
Dividends; Manulife Series Fund,
Inc. (Note 9) $ 645,908 $1,244,794 $1,440,392
Bond income 4,430,236 1,712,294 1,422,064
Policy loans 360,406 236,972 166,514
Short-term investments 754,346 501,477 384,178
---------- ---------- ----------
6,190,896 3,695,537 3,413,148
Investment expenses (350,336) (106,908) (89,186)
---------- ---------- ----------
Net investment income $5,840,560 $3,588,629 $3,323,962
========== ========== ==========
</TABLE>
11
<PAGE> 71
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
4. RELATED PARTY TRANSACTIONS
Manufacturers Life of America has a formal service agreement with Manulife
Financial which can be terminated by either party upon two months' notice. Under
the Agreement, Manufacturers Life of America will pay direct operating expenses
incurred each year by Manulife Financial on behalf of Manufacturers Life of
America. Services provided under the Agreement include legal, actuarial,
investment, data processing and certain other administrative services. Costs
incurred under this Agreement were $23,211,484 in 1995, $21,326,446 in 1994, and
$12,467,474 in 1993. In addition, there were $5,052,062 agents' bonuses in 1995,
$7,795,184 in 1994, and $5,363,558 in 1993 which were allocated to the Company
and are included in commissions.
In addition, the Company has several reinsurance agreements with Manulife
Financial which may be terminated upon the specified notice by either party.
These agreements are summarized as follows:
(a) The Company assumes two blocks of insurance from Manulife Financial under
coinsurance treaties. The Company's risk is limited to $100,000 of initial
face amount per claim plus a pro-rata share of any increase in face amount.
(b) The Company cedes the risk in excess of $25,000 per life to Manulife
Financial under the terms of an automatic reinsurance agreement.
(c) The Company cedes a substantial portion of its risk on its Flexible Premium
Variable Life policies to Manulife Financial under the terms of a stop loss
reinsurance agreement.
(d) Under the terms of an automatic coinsurance agreement, the Company cedes
its risk on structured settlements to Manulife Financial.
12
<PAGE> 72
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
4. RELATED PARTY TRANSACTIONS (CONTINUED)
Selected amounts relating to the above treaties reflected in the financial
statements are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ----------- -----------
<S> <C> <C> <C>
Life and annuity premiums
assumed $5,956,997 $25,385,628 $12,745,981
Other life and annuity
considerations ceded (598,330) (437,650) (201,685)
Commissions and expense
allowances on reinsurance
assumed (1,014,163) (810,252) (329,634)
Policy reserves assumed 48,714,791 47,672,591 23,070,952
Policy reserves ceded 3,833,247 3,786,647 3,782,156
</TABLE>
During 1993, the Company assumed the first $50,000 of initial face amount on
two blocks of business. This resulted in transfers of $10,837,000 to establish
the initial reserves. In 1994 the treaties were amended to assume the first
$100,000 of initial face amount for the same blocks of business. This resulted
in a transfer of $21,477,000 to establish the additional reserve. Commissions
equal to 17% are charged for all renewed premiums related to these contracts.
During 1994, the Company terminated another treaty resulting in a premium to
Manulife Financial to transfer the reserve of $799,874.
Manulife Financial provides a claims paying guarantee to all U.S. policyholders.
5. FEDERAL INCOME TAX
The Company joins the Parent, The Manufacturers Life Insurance Co. (U.S.A.) and
Manufacturers Reinsurance Limited in filing a U.S. consolidated income tax
return as a life insurance group under provisions of the Internal Revenue Code.
In accordance with an income tax-sharing agreement dated December 29, 1983, the
Company's income tax provision (or benefit) is computed as if the Company filed
a separate income tax return. The Company receives no surtax exemption. Tax
benefits from operating losses are provided at the U.S. statutory rate plus any
tax credits attributable to the Company, provided the consolidated group
utilizes such benefits currently. Taxes recoverable in the financial statements
represent tax-related amounts receivable from affiliates.
13
<PAGE> 73
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
5. FEDERAL INCOME TAX
The Company, Parent and The Manufacturers Life Insurance Co. (U.S.A.) have
available consolidated net operating losses of approximately $51,400,000 which
will expire in the year 2009 and capital loss carryforwards of approximately
$102,800,000 which will expire in 1999. The losses of the Company, Parent and
the Manufacturers Life Insurance Co. (U.S.A.) may be used to offset the
ordinary and capital gain income of Manufacturers Reinsurance Limited.
6. STATUTORY RESTRICTIONS ON DIVIDENDS
The Company is subject to statutory limitations on the payment of dividends to
its Parent. The Company cannot pay dividends during 1995 without the prior
approval of insurance regulatory authorities.
7. REINSURANCE
The Company cedes reinsurance as a party to several reinsurance treaties with
major unrelated insurance companies. The Company remains obligated for amounts
ceded in the event reinsurers do not meet their obligations.
Summary financial information related to these reinsurance activities is as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Life insurance premiums ceded $275,145 $218,767 $130,913
</TABLE>
14
<PAGE> 74
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
8. RESERVES
Aggregate policy reserves for life policies including variable life, are based
on statutory mortality tables and interest assumptions using either the net
level or commissioners' reserve valuation method. The composition of the
aggregate policy reserves at December 31, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
MORTALITY INTEREST
AGGREGATE RESERVES TABLE RATES
-------------------- --------- --------
1995 1994
---- ----
<S> <C> <C> <C>
$25,561,456 $28,553,885 1980 CSO 4%
(173,768) (189,080) Reinsurance ceded
1,295,402 1,396,369 Miscellaneous
- ----------- -----------
$26,683,090 $29,761,174
=========== ===========
</TABLE>
At December 31, 1995 the Company's annuity reserves and deposit fund liabilities
are comprised as follows:
<TABLE>
<CAPTION>
AMOUNT PERCENT
--------- -------
(in 000's)
<S> <C> <C>
Subject to discretionary withdrawal:
With market value adjustment $222,994 97.8%
At book value less current surrender charge 1,239 .5%
Not subject to discretionary withdrawal 3,863 1.7%
-------- -----
Total gross annuity actuarial reserves and
deposit fund liabilities $228,096 100%
======== =====
</TABLE>
9. INVESTMENT IN SEPARATE ACCOUNTS
During 1984, the Company initiated plans to market variable life insurance
products through Separate Account One of The Manufacturers Life Insurance
Company of America ("Separate Account One") using Manulife Series Fund, Inc. as
its investment vehicle. Initial capitalization was $15,000,000. Through 1988,
the Company provided an additional capitalization of $6,000,000.
15
<PAGE> 75
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
9. INVESTMENT IN SEPARATE ACCOUNTS (CONTINUED)
In December 1993, the Company transferred all of its shares, related to seed
money, in Manulife Series Fund, Inc. out of Separate Account One to the General
Account. At December 31, 1995, the $22,584,259 common stock represents the
Company's seed money investment in Manulife Series Fund, Inc.
During 1995, 1994, and 1993, the following dividends were received from Manulife
Series Fund, Inc.:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Separate Account One $ 24,041 $ 38,732 $1,610,693
Separate Account Two 3,520,461 4,574,620 7,377,861
Separate Account Three 1,693,796 1,490,374 666,141
Separate Account Four 2,445,127 3,072,376 4,966,559
General Account 645,908 1,244,794 1,440,392
</TABLE>
Dividends have been reinvested by the Company in Manulife Series Fund, Inc.
During 1993, the Company withdrew $8,000,000 of its seed money and accumulated
earnings from Separate Account One and the Manulife Series Fund, Inc. and
utilized these funds to pay down its intercompany debt.
During 1994, the Company withdrew $13,011,137 of its seed money and accumulated
earnings from the Manulife Series Fund, Inc. and utilized these funds to pay
down its intercompany debt.
During 1995, the Company withdrew $6,500,000 of its seed money and accumulated
earnings from the Manulife Series Fund, Inc. and utilized these funds to pay
down its intercompany debt.
16
<PAGE> 76
PART C
ADDITIONAL INFORMATION
<PAGE> 77
Item 24. Financial Statements and Exhibits
(a) Financial Statements.
Reports of Independent Auditors for Registrant and Depositor
Financial Statements of The Manufacturers Life Insurance Company of America
Separate Account Two for the year ended December 31, 1995 and financial
statements of The Manufacturers Life Insurance Company of America for the
year ended December 31, 1995.
(b) Exhibits, including those previously filed and incorporated herein by
reference.
(1) Copy of resolution establishing Separate Account Two, previously filed as
Exhibit A(1) to the registration statement on Form S-6 of Separate Account
One of The Manufacturers Life Insurance Company of America (File No.
2-88607), December 23, 1983.
(3)(a) Distribution Agreement between The Manufacturers Life Insurance Company
of America and ManEquity, Inc., previously filed as Exhibit (3)(a) to
Pre-Effective Amendment No. 1, September 4, 1987.
(3)(a)(i) Distribution Agreement between The Manufacturers Life Insurance
Company of America and Delta Financial Associates, Inc., previously filed
as Exhibit (3)(a)(i) to Post-Effective Amendment No. 14, February 28,
1995.
(3)(b)(i) Specimen Agreement between ManEquity, Inc. and registered
representatives, previously filed as Exhibit (3)(b)(i) to Post-Effective
Amendment No. 6, February 28, 1992.
(3)(b)(ii) Specimen Agreement between ManEquity, Inc. and dealers, previously
filed as Exhibit (3)(b)(ii) to Post-Effective Amendment No. 8, February
26, 1993.
(4)(a) Form of Multi-Account Flexible Variable Annuity Policy, previously filed
as Exhibit (4)(a) to Pre-Effective Amendment No. 1 September 4, 1987.
(4)(b)(i) Qualified Pension Plan Rider, previously filed as Exhibit (4)(b)(i)
to Registrant's registration statement on Form S-6, May 13, 1987.
(4)(b)(ii) Qualified Profit Sharing Plan Rider, previously filed as Exhibit
(4)(b)(ii) to Registrant's registration statement on From S-6, May 22,
1987.
<PAGE> 78
(ii)
(4)(b)(iii) Individual Retirement Annuity Rider, previously filed as Exhibit
(4)(b)(iii) to Registrant's registration statement on Form S-6, May 22,
1987.
(4)(b)(iv) Tax Sheltered Annuity Rider, Form No.419-24US, previously filed as
Exhibit (4)(b)(vi) to Registrant's registration statement on From S-6, May
22, 1987.
(4)(b)(v) Tax Sheltered Annuity Rider, Form No.419-25US, previously filed as
Exhibit (4)(b)(vii) to Registrant's registration statement on From S-6,
May 22, 1987.
(4)(b)(vi) Unisex Endorsement, previously filed as Exhibit (4)(b)(viii) to
Registrant's registration statement on From S-6, May 22, 1987.
(4)(b)(vii) Endorsement to Policy re Redomestication, previously filed as
Exhibit (4)(b)(vii) to Post-Effective Amendment No. 8, February 26, 1993.
(5) Form of Application for the Policy, previously filed as Exhibit (5) to
Post-Effective Amendment No. 4, May 1, 1990.
(6)(a) Restated Articles of Redomestication of The Manufacturers Life Insurance
Company of America.**
(6)(b) By-Laws of The Manufacturers Life Insurance Company of America.**
(7) Reinsurance Agreement between The Manufacturers Life Insurance Company
and The Manufacturers Life Insurance Company of America, previously filed
as Exhibit (7) to the Pre-Effective Amendment No. 1 September 4, 1987.
(8)(i) Service Agreement between The Manufacturers Life Insurance Company of
America and The Manufacturers Life Insurance Company, previously filed as
Exhibit 1.A(8)(a) to Post-Effective Amendment No. 7 of Separate Account
One of The Manufacturers Life Insurance Company of America (File No.
2-88607), March 2, 1989.
(8)(i)(a) Amendment to Service Agreement, previously filed as Exhibit 1.A(8)(a)
to Post-Effective Amendment No. 10, March 1, 1994.
(8)(i)(b) Amendments to Service Agreement: May 31, 1993 and June 30, 1993.
Previously filed as Exhibit 1.A(8)(b) to Post-Effective Amendment No. 8,
February 26, 1993.
** Filed electronically
<PAGE> 79
(iii)
(8)(ii) Service Agreement between The Manufacturers Life Insurance Company and
ManEquity, Inc. dated January 2, 1991 as amended March 1, 1994.
Previously filed as Exhibit 1.A(8)(ii) to Post Effective Amendment No. 12,
April 26, 1994.
(9)(a) Opinion and consent of Stephen C. Nesbitt, Esq., General Counsel of The
Manufacturers Life Insurance Company of America, previously filed as
Exhibit 9(a) to Post-Effective Amendment No. 6, February 28, 1992.
(9)(b) Consent of Ernst & Young LLP.
(9)(c) Consent of Jones & Blouch L.L.P.
(11) No Financial Statements omitted from Item 23.
(16) Performance Computation Schedule.
(17) Financial Data Schedules.
<PAGE> 80
Item 25. Directors and Officers of the Depositor.
The names and positions of each of the officers and directors of The
Manufacturers Life Insurance Company of America are set forth in Part B of this
registration statement under the caption "Who Are the Directors and Officers of
Manufacturers Life of America"?. The business address of Donald Guloien,
Joseph Pietroski, Bruce Gordon, John Ostler and Douglas Myers is 200 Bloor
Street, East, Toronto, Ontario, Canada M4W 1E5. The business address of
Sandra M. Cotter is 800 Michigan National Tower, Lansing, Michigan 48933. The
business address of William Atherton, James Gallagher, Theodore Kilkuskie, John
Richardson and Hugh McHaffie is 73 Tremont Street, Boston, MA 02108-3915.
Item 26. Persons Controlled by or Under Common Control with the Depositor
or Registrant.
THE MANUFACTURERS LIFE INSURANCE COMPANY
(Subsidiaries Organization Chart
- - including certain Significant Investments)
The Manufacturers Life Insurance Company (Canada)
1. ManuLife Holdings (Hong Kong) Limited - H.K. (100%)
2. ManuLife Financial Systems (Hong Kong) Limited - H.K. (100%)
3. P.T. Asuransi Jiwa Dharmala Manulife - Indonesia (51%)
4. ManuLife (International) Limited - Bermuda (100%)
5. OUB Manulife Pte. Ltd. - Singapore (50%)
6. Manulife (Malaysia) SDN. BHD. - Malaysia (100%)
7. Manulife (Thailand) Ltd. - Thailand (100%)
8. Young Poong Manulife Insurance Company - Korea (50%)
<PAGE> 81
9. Ennal, Inc. - Ohio (100%)
10. 495603 Ontario Limited - Ontario (100%)
11. 994744 Ontario Inc. - Ontario (100%)
12. 1056416 Ontario Limited - Ontario (100%)
13. 484551 Ontario Limited - Ontario (100%)
(a) 911164 Ontario Limited - Ontario (100%)
14. NAWL (North American Wood Logan Holding Company) - Delaware (85%)
(a) Wood Logan Associate Inc. - Connecticut (100%)
(i) Wood Logan Distributors - Connecticut (100%)
(b) North American Security Life Insurance Company - Delaware (100%)
(i) NASL Financial Services, Inc. - Massachusetts (100%)
(ii) First North American Life Assurance Company - New York (100%)
(iii) North American Funds - Massachusetts (100%)
(iv) NASL Series Trust - Massachusetts (100%)
15. Domlife Realty Limited - Canada (100%)
16. Balmoral Developments Inc. - Canada (100%)
17. Cantay Holdings Inc. - Ontario (100%)
18. 576986 Ontario Inc. - Ontario (100%)
19. KY Holding Corporation - Canada (100%)
20. 172846 Canada Limited - Canada (100%)
21. First North American Realty, Inc. - Minnesota (100%)
22. North American Capital Corporation - Ontario (100%)
23. Elliott & Page Mutual Fund Corporation - Ontario (100%)
24. TBD Life Insurance Company - Canada (100%)
25. The North American Group Inc. - Canada (100%)
26. Capitol Bankers Life Insurance Company - Minnesota (100%)
<PAGE> 82
27. Manulife Investment Management Corporation - Canada (100%)
(a) 159139 Canada Inc. - Canada (50%)
i. Altamira Management Ltd. - Canada (60.96%)
A. ACI2 Limited - Cayman (100%)
a/ Regent Pacific Group Limited-Cayman (63.8%)
a.1 Manulife Regent Investment Corporation -
Barbados (100%) [50% by Regent Pacific Group Limited
and 50% by Manulife Data Services Inc.]
b.1 Manulife Regent Investment Asia Limited -
Hong Kong (100%)
B. Altamira Financial Services Inc. - Ontario (100%)
a/ AIS Securities (Partnership) - Ontario (100%) [5% by
Altamira Financial Services, Inc. and 95% by
Altamira Investment Services Inc.]
b/ Altamira Investment Services Inc. - Ontario (100%)
(a) AIS Securities (Partnership) - Ontario (100%)[95% by
Altamira Investment Services Inc. and 5% by
Altamira Financial Services Inc.]
(b) Altamira (Alberta) Ltd. - Alberta (100%)
(c) Capital Growth Financial Services Inc. -
Ontario (100%)
28. Manulife International Investment Management Limited - U.K. (100%)
(a) Manulife International Fund Management Limited - U.K. (100%)
29. ManuCab Ltd. - Canada (100%)
(a) Plazcab Service Limited - Canada (100%)
30. Manulife Data Services Inc.- Barbados (100%)
(a) Manulife Regent Investment Corporation - Barbados - (100%)
[50% by Manulife Data Services Inc. and 50% by Regent
Pacific Group Limited]
(b) Manulife Regent Investment Asia Limited - Hong Kong (100%)
31. 16351 Canada Limited - Canada (100%)
32. Manufacturers Life Capital Corporation Inc. - Canada (100%)
33. Townvest Inc. - Ontario (100%)
34. Manulife Financial Holdings Limited - Ontario (100%)
(a) Family Financial Services Limited - Ontario (100%)
i. 742166 Ontario Inc. - Ontario (100%)
ii. Family Trust Corporation - Ontario (100%)
A. Family Financial Mortgage Corporation - Ontario) (100%)
B. Family Realty Firstcorp Limited - Ontario (100%)
C. Thos. N. Shea Investment Corporation Limited - Ontario (100%)
<PAGE> 83
(b) Manulife Bank of Canada - Canada (100%)
i. Manulife Securities International Ltd. - Canada (100%)
ii. Cabot Financial Services Corporation - Ontario (100%)
iii. Cabot Investments Limited - Ontario (100%)
35. NALACO Mortgage Corporation - Ontario (100%)
(a) Underwater Gas Developers Limited - Ontario (100%)
36. Manulife (International) Reinsurance Limited - Bermuda (100%)
(a) Manulife (International) P&C Limited - Bermuda (100%)
(b) Manufacturers P&C Limited - Bermuda (100%)
37. FNA Financial Inc. - Canada (100%)
(a) NAL Resources Management Limited - Canada (100%)
(b) First North America Insurance Company - Canada (100%)
(c) NAL Trustco Inc. - Ontario (100%)
(d) North American Life Financial Services Inc. - Ontario (100%)
(e) Nalafund Investors Limited - Canada - (100%)
(f) Seamark Asset Management Ltd. - Canada (69.175%)
(g) Elliott & Page Limited - Ontario (100%)
38. NAL Resources Limited - Alberta (100%)
39. Manulife Reinsurance Corporation (U.S.A.) - Michigan (100%)
(a) Manulife Reinsurance Limited - Bermuda (100%)
(b) Manulife Holding Corporation - Delaware (100%)
i. Manufacturers Life Mortgage Securities
Corporation - Delaware (100%)
ii. Underwriters International Inc. - Delaware (50%)
iii. Capital Design Corporation - California - (100%)
iv. ManEquity, Inc. - Colorado (100%)
v. Manulife Service Corporation - Colorado (100%)
(c) The Manufacturers Life Insurance Company (U.S.A.) - Michigan (100%)
(d) The Manufacturers Life Insurance Company of America - Michigan (100%)
i. Manulife Series Fund, Inc. - Maryland (100%)
ii. Manufacturers Adviser Corporation - Colorado (100%)
40. The Manufacturers Investment Corporation - Michigan (100%)
41. Manulife Property Management of Washington D.C., Inc. - Washington, D.C.
(100%)
Item 27. Number of Policyowners
There were 4,931 Policies participating in Separate
Account Two at March 1, 1996.
<PAGE> 84
Item 28. Indemnification of Directors and Officers
Article XV of the By-Laws of The Manufacturers Life Insurance Company of
America provides for indemnification of directors and officers as follows:
"Article XV."
1. The Company may indemnify any person who is a party or is threatened
to be made a party to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal or administrative (other than by
or in the right of the Company), by reason of the fact that he;
(a) is or was a director, officer or employee of the Company, or
(b) is or was serving at the request of the Company as a director, officer,
employee, or trustee of another corporation, partnership, joint venture,
trust or other enterprise, against all expenses (including solicitors' and
attorneys' fees), judgments, fines and amounts paid in settlement,
actually and reasonably incurred by him in connection with such action,
suit or proceeding, if he acted honestly and in good faith and with a view
to the best interests of the Company, and, in the case of any criminal or
administrative action or proceeding, he had reasonable grounds for
believing that his conduct was lawful. The termination of any action,
suit or proceeding by judgment, order, settlement or conviction shall not
of itself create a presumption that the person did not act honestly and in
good faith with a view to the best interest of the Company and, with
respect to any criminal action or proceeding, that he did not have
reasonable grounds for believing that his conduct was lawful.
2. The Company shall in any event indemnify a person referred to in
paragraph 1 hereof who has been substantially successful in the defence
of any such action, suit or proceeding against all expenses
(including solicitors' and
<PAGE> 85
attorneys' fees) reasonably incurred by him in
connection with the action, suit or proceeding.
3. The indemnification provided by this By-Law shall be continuing and
enure to the benefit of the heirs, executors, and administrators of any
person referred to in paragraph 1 hereof.
4. Expenses (including solicitors' and attorneys' fees) incurred in
defending a civil or criminal action, suit or proceeding may be paid by
the Company in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of any person
referred to in paragraph 1 hereof to repay the amount if it shall be
ultimately determined that he is not entitled to be indemnified by the
Company as authorized by this By-Law.
5. The indemnification provided by this By-Law shall not be deemed
exclusive of any other rights to which those entitled to be indemnified
hereunder may be entitled as a matter of law or under any by-law,
agreement, vote of members, or otherwise.
Administrative Resolution Number 600.01 of The Manufacturers Life
Insurance Company provides for indemnification of certain directors and
officers of subsidiary companies as follows:
"Resolution 600.01"
1.1 [The Manufacturers Life Insurance Company (the "Company")] shall
indemnify any person who is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal or administrative (other than by or in the right
of the Company except as provided in 1.2 of this Article) by reason of
the fact that the person
(a) is or was a Director, officer or employee of the Company, or
(b) is or was serving at the specific request of the Company, as a Director,
officer, employee or trustee of another corporation, partnership, joint
venture, trust or other enterprise, or
<PAGE> 86
(c) is or was engaged at the same time as an agent in the sale of the Company's
products while at the same time employed by the Company in the United States in
a branch management capacity, against all expenses (including but not limited
to solicitors' and attorneys' fees) judgments, fines and amounts in settlement,
actually and reasonably incurred by the person in connection with such action,
suit or proceeding, (other than those specifically excluded below) if the
person acted honestly, in good faith, with a view to the best interests of the
Company or the enterprise the person is serving at the request of the Company,
and within the scope of his or her authority and normal activities, and, in the
case of any criminal or administrative action or proceeding, the person had
reasonable grounds for believing that his or her conduct was lawful.
The termination of any action, suit or proceeding by judgment, order,
settlement or conviction shall not of itself create a presumption that
the person did not act honestly and in good faith with a view to the best
interests of the Company and, with respect to any criminal action or
proceeding, that the person did not have reasonable grounds for believing
that his or her conduct was lawful.
1.2 The Company shall also, with the approval of the Board, indemnify a
person referred to in Section 1.1 of this Article in respect of any
action by any person by or on behalf of the Company to procure a judgment
in its favour to which the person is made a party by reason of being or
having been a Director, officer or employee of the Company, against all
costs, charges and expenses reasonably incurred by him or her in
connection with such action if he or she fulfills the conditions set out
in Section 1.1 of this Article.
1.3 The Company shall have no obligation to indemnify any person for:
(a) any act, error, or omission committed with actual dishonest,
fraudulent, criminal or malicious purpose or intent, or
(b) any act of gross negligence or
willful neglect, or
<PAGE> 87
(c) any liability of others assumed by any person otherwise
entitled to indemnification hereunder, or
(d) any claims by or against any enterprise which is owned, operated,
managed, or controlled by any person otherwise entitled to indemnification
hereunder or any claims by such person against an enterprise, or
(e) any claim arising out of, or based on, any pension plan sponsored by any
person otherwise entitled to indemnification hereunder as employer, or
(f) bodily injury, sickness, disease or death of any person, or injury to or
destruction of any tangible property including loss of use thereof, or
(g) any amount covered by any other indemnification provision or by any valid
and collectible insurance which the person entitled to indemnity hereunder
may have, or
(h) any liability in respect of which the person would otherwise be entitled
to indemnification if in the course of that person's actions, he or she is
found by the Board of Directors to have been in breach of compliance with
the Company's Code of Business Conduct or Conflict of Interest guidelines,
or
(i) any liability incurred by that person for any sales activities unless the
person qualifies under Section 1.1(c) of this Article.
1.4 In the event of any indemnity payment by the Company and as a
condition of it, the Company shall be subrogated to all the rights of
recovery of the person indemnified, and such person shall execute and
deliver instruments and papers and do whatever else is necessary to
secure such rights.
1.5 As a condition of indemnification, the person to be indemnified shall
not demand or agree to arbitration of any claim, make any payment, admit
any liability, settle any claims, assume any obligation or incur any
expense without the written consent of the Company.
<PAGE> 88
1.6 Any claim to indemnification shall not be assignable. In the event
of death or incompetency, the legal representative of a person eligible
for indemnification shall be entitled to indemnification for those acts
and omissions of the indemnified person incurred prior to his death or
incompetency.
1.7 The Company shall have the right as a condition of pending
indemnification to appoint counsel satisfactory to the person to be
indemnified to defend the person for any claim against him or her which
may be covered by this indemnity.
1.8 The indemnification shall be continuing and enure to the benefit of
the heirs, executors and administrators of any person referred to in
Section 1.1. of this Article.
1.9 Expenses (including but not limited to solicitors' and attorneys'
fees), incurred in defending a civil, criminal, or administrative action,
suit or proceeding shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of any person referred to in Section 1.1 of
this Article to repay the amount if it shall be ultimately determined
that the person is not eligible to be indemnified by the Company.
1.10 The Indemnification provided hereunder shall not be deemed exclusive
of any other rights to which those eligible to be indemnified hereunder
may be entitled as a matter of law under any By-Law, Resolution,
agreement, vote of members or otherwise.
Liability Insurance
At a meeting of the Executive Committee of the Board of Directors
of The Manufacturers Life Insurance Company held October 21, 1993,
the purchase of Directors and Officers (D&O) liability insurance
was approved. It became effective December 1, 1993. It provides
global coverage for all Directors and Officers of The Manufacturers
Life Insurance Company and its subsidiaries.
<PAGE> 89
The coverage provided:
1. Insures Directors and Officers against loss arising from
claims against them for certain acts in cases where they are not
indemnified by The Manufacturers Life Insurance Company or a
subsidiary.
2. Insures The Manufacturers Life Insurance Company against loss
arising from claims against Directors and Officers for certain
wrongful acts, but only where the corporation indemnifies the
Directors or Officers as required or permitted under applicable
statutory or by-law provisions.
In general, the D&O coverage encompasses:
- past, present and future Directors and Officers of The
Manufacturers Life Insurance Company and subsidiaries
- defense costs and settlements (if legally obligated to be paid)
resulting from third party claims in connection with 'wrongful
acts' committed by a Director or Officer within the scope of
their duties
- claims made basis (i.e. policy responds to claims filed/reported
during the policy term, including claims arising from events
transpiring before the policy was in force as long as no
Director/Officer was aware of the events prior to coverage
placement).
Item 29. Principal Underwriters.
(a) In addition to the Policies, ManEquity, Inc. acts as principal
underwriter of policies participating in Separate Accounts One, Three
and Four of The Manufacturers Life Insurance Company of America.
<PAGE> 90
<TABLE>
<CAPTION>
(b) Name and Principal Positions and Offices
Business Address with Underwriter
------------------ ---------------------
<S> <C>
- Martin Block Director
200 Bloor Street East
Toronto, Ontario
- John MacGowan Director, Vice President
200 Bloor Street East
Toronto, Ontario
- George Cushnie Treasurer
200 Bloor Street East
Toronto, Ontario
- Gary Buchanan V.P., Compliance
200 Bloor Street East
Toronto, Ontario
- Brian Buckley Secretary and General
116 Huntington Avenue Counsel
Boston, Massachusetts 02116
- Douglas Myers Director, President
200 Bloor Street East
Toronto, Ontario
- Barbara Gardiner Director
7676 Hazard Center Drive
Suite 1450, San Diego CA 92108
- Bruce Gordon Director
200 Bloor Street East
Toronto, Ontario
- Imants Saksons Director
200 Bloor Street East
Toronto, Ontario
- Jack Wherry Director
6800 France Avenue South
Minneapolis, Minnesota 55435
</TABLE>
<PAGE> 91
(c) (1) (2) (3) (4) (5)
Name of Net Underwriting Other
Principal Discounts and Compensation Brokerage Compen-
Underwriter Commissions on Redemption Commissions sation
ManEquity, Inc. $3,355,815 - 0 - - 0 - - 0 -
Item 30. Location of Accounts and Records.
Pursuant to a Service Agreement, The Manufacturers Life Insurance Company
maintains physical possession of the books and records of Separate Account Two
required by Section 31(a) of the 1940 Act and the rules thereunder.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
Not Applicable.
<PAGE> 92
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the
registrant, SEPARATE ACCOUNT TWO OF THE MANUFACTURERS LIFE INSURANCE COMPANY
OF AMERICA, and the depositor, THE MANUFACTURERS LIFE INSURANCE COMPANY OF
AMERICA, certify that the registrant meets all of the requirements for
effectiveness of this amended registration statement pursuant to Rule 485(b)
under the Securities Act of 1933 and have duly caused this amendment to the
registration statement to be signed on their behalf by the undersigned
thereunto duly authorized, and the seal of the depositor to be hereunto
affixed and attested, all in the City of Toronto, Province of Ontario, Canada,
on the 19th day of April, 1996.
[SEAL] SEPARATE ACCOUNT TWO OF THE
MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
--------------------------------
(Registrant)
By: THE MANUFACTURERS LIFE
INSURANCE COMPANY OF AMERICA
--------------------------------
(Depositor)
By: Donald A. Guloien
--------------------------------
DONALD A. GULOIEN
President
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
By: Donald A. Guloien
--------------------------------
DONALD A. GULOIEN
President
Attest
Sheri L. Kocen
(O)SA2-485(b)
<PAGE> 93
SIGNATURES
Pursuant to the requirements of the Securities Act of l933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
Donald A. Guloien President and Director April 19, 1996
DONALD A. GULOIEN (Principal Executive Officer)
SANDRA M. COTTER Director
LEONARD V. DAY, Jr. Director
Stephen C. Nesbitt Director April 19, 1996
STEPHEN C. NESBITT
Joseph J. Pietroski Director April 19, 1996
JOSEPH J. PIETROSKI
John D. Richardson Director and Chairman April 19, 1996
JOHN D. RICHARDSON
Diane M. Schwartz Director April 19, 1996
DIANE M. SCHWARTZ
Douglas H. Myers Vice President, Finance April 19, 1996
DOUGLAS H. MYERS (Principal Financial and
Accounting Officer)
</TABLE>
<PAGE> 94
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
- ----------- ----------- -------------------------------
<S> <C> <C>
(1) Copy of resolution Previously filed as Exhibit A(1)
establishing Separate to the registration statement on
Account Two on Form S-6 of Separate Account
One of The Manufacturers Life
Insurance Company of America
(File No. 2-88607),
December 23, 1983.
(3)(a) Distribution Agreement Previously filed as
between The Manufacturers Exhibit (3)(a) to Pre-
Life Insurance Company Effective Amendment
of America and Man-Equity, No. 1, September 4, 1987.
Inc.
(3)(a)(i) Distribution Agreement Previously filed as
between The Manufacturers Exhibit (3)(a)(i) to Post-
Life Insurance Company Effective Amendment
of America and Delta No. 14, February 28, 1995.
Financial Associates, Inc.
(3)(b)(i) Specimen Agreement between Previously filed as
ManEquity, Inc. and Exhibit (3)(b)(i) to
registered representatives Post-Effective Amendment
No. 6, February 28, 1992.
(3)(b)(ii) Specimen Agreement between Previously filed as
ManEquity, Inc. and dealers. Exhibit (3)(b)(ii) to
Post-Effective Amendment
No. 8, February 26, 1993.
(4)(a) Form of Multi-Account Previously filed as
Flexible Variable Annuity Exhibit (4)(a)(i) to Pre-
Policy Effective Amendment No. 1
September 4, 1987.
(4)(b)(i) Qualified Pension Plan Previously filed as
Rider Exhibit (4)(b) to Registrant's
registration statement on
Form S-6, May 13, 1987.
(4)(b)(ii) Qualified Profit Sharing Previously filed as
Plan Rider Exhibit (4)(b)(ii) to Registrant's
registration statement on
From S-6, May 22, 1987.
</TABLE>
<PAGE> 95
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
- ----------- ----------- -------------------------------
<S> <C> <C>
(4)(b)(iii) Individual Retirement Previously filed as
Annuity Rider Exhibit
(4)(b)(iii) to Registrant's
registration statement on
Form S-6, May 22, 1987.
(4)(b)(iv) Tax Sheltered Annuity Previously filed as Rider,
Form No. 419-24US Exhibit
to Registrant's registration
statement on From S-6,
May 22, 1987.
(4)(b)(v) Tax Sheltered Annuity Previously filed as Rider,
Form No. 419-25US
Exhibit (4)(b)(vii) to
Registrant's registration
statement on From S-6,
May 22, 1987.
(4)(b)(vi) Unisex Endorsement Previously filed as
Exhibit (4)(b)(viii) to
Registrant's registration
statement on From S-6
May 22, 1987.
(4)(b)(vii) Endorsement to Policy Previously filed as Exhibit
re Redomestication (4)(b)(vii) to Post-Effective
Amendment No. 8, February 26,
1993.
(5) Form of Application Previously filed as Exhibit (5)
for the Policy to Post-Effective Amendment No. 4,
May 1, 1990.
(6)(a) Restated Articles of
Redomestication of The
Manufacturers Life
Insurance Company of
America**
</TABLE>
** Filed electronically
<PAGE> 96
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
- ----------- ----------- -------------------------------
<S> <C> <C>
(6)(b) By-Laws of The Manufacturers
Life Insurance Company of
America**
(7) Reinsurance Agreement Previously filed as
between The Manufacturers Exhibit (7) to the Pre-
Life Insurance Company and Effective Amendment No. 1
The Manufacturers Life September 4, 1987.
Insurance Company of America
(8)(i) Service Agreement between Previously filed as
The Manufacturers Life Exhibit 1.A(8)(a) to
Insurance Company of America Post-Effective Amendment
and The Manufacturers Life No. 7 of Separate Account
Insurance Company One of The Manufacturers Life
Insurance Company of America
(File No. 2-88607),
March 2, 1989.
(8)(i)(a) Amendment to Service Previously filed as
Agreement Exhibit 1.A(8)(a) to Post
Effective Amendment No.8,
February 26, 1993.
(8)(i)(b) Amendments to Service Previously filed as
Agreement: May 31, 1993 Exhibit 1.A(8)(b) to Post
and June 30, 1993 Effective Amendment No. 10,
March 1, 1994.
(8)(ii) Service Agreement between Previously filed as
The Manufacturers Life Exhibit 1.A(8)(ii) to
Insurance Company and Man- Post Effective Amendment
Equity, Inc. dated January 1, No. 12, April 26, 1994.
1991 as amended March 1, 1994
</TABLE>
** Filed electronically
<PAGE> 97
<TABLE>
<CAPTION>
Page in Sequential
Numbering System
Where Exhibit
Exhibit No. Description Located
- ----------- ----------- -------------------------------
<S> <C> <C>
(9)(a) Opinion and consent of Previously filed as
Stephen C. Nesbitt, Esq., Exhibit (9)(a) to Post-
General Counsel of The Effective Amendment
Manufacturers Life Insurance No. 6, February 28, 1992.
Company of America.
(9)(b) Consent of Ernst &
Young LLP.
(9)(c) Consent of Jones &
Blouch L.L.P.
(16) Performance Computation
Schedule.
(17) Financial Data Schedules.
</TABLE>
<PAGE> 1
EXHIBIT 99-(6)(a)
<PAGE> 2
MICHIGAN DEPARTMENT OF COMMERCE
INSURANCE BUREAU
RESTATED ARTICLES OF REDOMESTICATION
(Domestic)
The name of the corporation is THE MANUFACTURERS LIFE INSURANCE COMPANY
OF AMERICA.
The undersigned company and persons of full age, and pursuant to action
by the Company's Board of Directors and stockholders, as appropriate,
and subject to the approvals of the Commissioners of Insurance of the
Commonwealth of Pennsylvania and the State of Michigan, do make,
acknowledge, and verify these Restated Articles of Redomestication for
the purpose of redomesticating The Manufacturers Life Insurance Company
of America from the Commonwealth of Pennsylvania to the State of
Michigan, pursuant to Michigan Insurance Code Sections 500.412 through
500.415, and for the purpose of restating the Articles of Agreement of
The Manufacturers Life Insurance Company of America.
The following Restated Articles of Redomestication of The Manufacturers Life
Insurance Company of America was adopted by the stockholders of the company on
the Fifteenth day of September, 1992, in the manner prescribed by law to be
filed for approval with the above-identified Commissioners and to be effective
immediately upon filing:
Each article in the Articles of Agreement of The Manufacturers Life Insurance
Company of America, as amended, is deleted in its entirety and the following
is substituted in lieu thereof and supersedes the original Articles of
Agreement and all amendments thereto:
ARTICLE I
The name of the corporation and by which it is known in law is The
Manufacturers Life Insurance Company of America (the "Company") and its
principal office for the transaction of business shall be in the City of
Bloomfield Hills, State of Michigan.
ARTICLE II
The date of incorporation of the Company in the Commonwealth of Pennsylvania
was April 11, 1977 and the date of incorporation of the redomesticated Company
in the State of Michigan shall also be April 11, 1977.
ARTICLE III
The Company is organized for the following purposes, as authorized by Chapter
6, Act No. 218 of the Public Acts of 1956, as amended, namely:
1. To insure the lives of persons, and every insurance appertaining thereto;
to grant and dispose of annuities, including variable life insurance contracts
and variable annuity contracts and to insure against personal injury,
disablement, or death resulting from traveling or general accidents, and
against disablement resulting from sickness, and every insurance appertaining
thereto, when written as a part of a policy of life insurance.
<PAGE> 3
2. To insure against personal injury, disablement, or death resulting from
traveling or general accidents, and against disablement resulting from
sickness, and every insurance appertaining thereto.
3. To have the power to establish either or both general or separate accounts
in connection with the business authorized hereunder; to have the power to
establish or acquire any subsidiary authorized by law; and to have the power
to act in its own right in any similar capacity authorized by law.
4. To have the right to buy, hold, sell, and convey personal property and such
real estate or interest therein, as may be necessary or convenient for the
proper conduct of the affairs of the corporation, and as permitted by law.
5. To have all the powers conferred by law on a life insurance company
organized for the purpose above set forth; and in connection therewith to have
all powers conferred by law on all corporations organized and doing business
under and by authority of Chapter 52 of the Michigan Insurance Code.
ARTICLE IV
The term of existence of the Company shall be perpetual.
ARTICLE V
The annual meeting of the stockholders of the Company shall be held on the
First day of May of each year. If for any reason the annual meeting is not
held on that date, the Board of Directors shall properly call and notice a
special general meeting for the transaction of business of the annual meeting.
The annual meeting of the stockholders of the Company shall be held at a
place determined by the Company's Board of Directors unless otherwise required
by law.
ARTICLE VI
AUTHORIZED SHARES OF STOCK
The amount of capital stock of the Company is Five Hundred Five Million
Dollars ($505,000,000.00) divided into two classes: common stock and
preferred stock; Five Million (5,000,000) shares of the stock, of the par
value of One Dollar ($1.00) each, amounting in the aggregate at par to Five
Million Dollars ($5,000,000) to be common stock and Five Million (5,000,000)
shares of the stock, of the par value of One Hundred Dollars ($100.00) each,
amounting in the aggregate at par to Five Hundred Million Dollars
($500,000,000) to be preferred stock. The preferred stock shall be
<PAGE> 4
non-voting, except as required by law, and shall be redeemable by the Company
at any time determined by its Board of Directors. Preferred stock will take
preference over common stock upon liquidation of the company. The holders of
shares of common stock shall be entitled to one vote for each share of common
stock held in the stockholders name on the books of the company on each matter
submitted to a vote of the stockholders.
ARTICLE VII
DIVIDENDS
Dividends and distributions on shares of a particular stock may be declared
and paid with such frequency, in such form and in such amount as the Board of
Directors may from time to time determine, provided, however, that dividends
on the preferred stock will be noncumulative and will be at the rate of 10% on
all issued preferred stock.
Dividends and distributions may be paid in cash, property or shares, including
authorized but unissued shares, or treasury shares, or a combination of any of
the foregoing, as determined by the Board of Directors or pursuant to any
programs the Board of Directors may have in effect at the time.
ARTICLE VIII
BOARD OF DIRECTORS
The business of the Company shall be conducted by the Board of Directors. The
number of Directors shall be not less than five nor more than twenty. At
least one Director of the Company shall be a resident of the State of
Michigan.
Directors shall be elected annually at the annual meeting of stockholders,
except that, if the stockholders at a special meeting called for the purpose
or without a meeting by unanimous consent, shall increase the number of
directors, additional directors to fill the vacancies so created shall be
elected at such meeting or by such consent.
The majority of the members of the Board of Directors shall constitute a
quorum for the transaction of business at any meeting of the Board of
Directors. If a quorum shall not be in attendance, the meeting of the Board
of Directors shall be adjourned from time to time until a quorum shall be
present.
A member of the Board of Directors may be removed, for cause, at any time by
the affirmative vote of a majority of the Board of Directors.
If any vacancy on the Board of Directors shall occur by death, resignation,
removal, or otherwise, the remaining directors shall continue to act, and such
vacancy may be filled by a majority of the remaining directors, though less
than a quorum. The person elected to fill the
<PAGE> 5
vacancy shall hold office for the remainder of the unexpired term or
until a successor is duly elected and qualified.
At its annual meeting, the Board of Directors shall elect a President, a
Secretary, and a Treasurer; and may appoint one or more Vice-Presidents and
such other officers with authority to act for such Board of Directors as they
may see fit or as may be provided for by the Bylaws of the Company. Any
person may serve in two or more offices, but a single person may not hold the
positions of President and Vice-President or Secretary and Assistant Secretary
at one and the same time.
ARTICLE IX
No director of the Company shall be personally liable to the Company
stockholders or policyholders for monetary damages for breach of the
director's fiduciary duty, provided that the foregoing shall not eliminate or
limit the liability of a director for any of the following:
i. a breach of the director's duty of loyalty to the corporation or its
stockholders or policyholders;
ii. acts or omissions not in good faith or that involve intentional misconduct
or knowing violations of law;
iii. a violation of Section 5036, 5276 or 5280 of the Michigan Insurance Code,
being MCL 500.5036, 500.5276 and 500.5280;
iv. a transaction from which the director derived an improper personal
benefit; or
v. an act or omission occurring on or before the date of filing of these
Restated Articles of Redomestication.
If the Michigan Insurance Code is hereafter amended to authorize the
further elimination or limitation of the liability of directors, then
the liability of a director of the corporation, in addition to the
limitation and personal liability contained herein, shall be eliminated
or limited to the fullest extent permitted by the Michigan Insurance
Code as so amended. No amendment or appeal of this Article IX shall
apply to or have any effect on the liability or alleged liability of any
director of the corporation for or with respect to any acts or omissions
of such director occurring prior to the effective date of such amendment
or appeal.
IN WITNESS WHEREOF, , President, and ,
Secretary of The Manufacturers Life Insurance Company of America, by affixing
their signatures below on this day of , 1992 do hereby certify
that the Restated Articles of Redomestication herein were duly adopted by the
unanimous written consent of the stockholders.
<PAGE> 6
________________________ ________________________
, President , Secretary
Province of Ontario )
County of )
On this day of , 1992, before me a notary public in and for said
county, personally appeared and , known to me to
be the persons named in and who executed the foregoing instrument, and
severally acknowledged that they executed the same freely and for the
intents and purposes therein mentioned.
Notary Public, in and for the Province of Ontario, County of
My Commission does not expire.
<PAGE> 1
EXHIBIT 99-(6)(b)
<PAGE> 2
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
BY-LAWS
ARTICLE I - Name
This corporation shall be known as The Manufacturers Life Insurance Company of
America (formerly National Liberty Life Insurance Company of America).
ARTICLE II - Purposes
This Company shall, through its officers, Board of Directors and persons duly
authorized to act for and on behalf of the Company, cause to be issued
contracts or policies of insurance in the form and for the purposes as
provided for under the statutes of the State of Michigan relating thereto, and
the rules and regulations of the Michigan Insurance Bureau and as provided by
the laws, rules and regulations of any other states in which the Company may
qualify to do business.
ARTICLE III - Company Business and
Principal Office
The business of the Company may be conducted anywhere in the State of
Michigan, and in such other states of the United States or elsewhere wherein
the Company may qualify for the purpose of the conduct of the business, as
authorized by its Restated Articles of Redomestication and amendments thereto.
The home office of the Company shall be in Bloomfield Hills, Michigan. The
Company may establish branch or district offices, or agencies, elsewhere in
the State of Michigan, as well as in such other states in which it may qualify
to do the business of insurance.
ARTICLE IV - Seal
The Company has adopted a seal, a copy of which is impressed herewith, that
shall hereafter be used by the Company wherever a seal may be required.
ARTICLE V - Stockholders' Meetings
Section 1. Place of Meeting. All Annual and Special meetings of the
Stockholders shall be held in the city set forth in the Company's Restated
Articles of Redomestication as the location of its principal office or such
other place as determined by the Board of Directors unless otherwise required
by law.
Section 2. Annual Meeting. The annual meeting of the stockholders of the
Company shall be held on the First day of May of each year or at such other
time as may be ordered by the Board of Directors.
<PAGE> 3
Section 3. Special Meeting. Special meetings of the stockholders may be
convened at the request of the majority of the members of the Board of
Directors, by the President, or at the written request of stockholders
representing forty percent (40%) of the outstanding stock of this Company,
duly submitted to the Secretary at least forty-five days before the date of
such meeting. The call for a special meeting shall designate the time and
place of the said meeting, and as set forth in Section 5. The notice must
also set forth the particular purpose or purposes for which the said meeting
is being called.
Section 4. Quorum. A quorum for the purpose of transacting the business of
any meeting shall consist of a majority of the outstanding stock represented
either in person or by proxy. A proxy must be filed with the Secretary at
least five days prior to any meeting, as provided for in Section 7.
Section 5. Notice of Meeting. Except as may otherwise be provided by the
Michigan Insurance Code, notice of the annual or any special meetings of the
stockholders shall be given to the stockholders either by publication, when
required under the Code, or by personal notice mailed, postage prepaid, to the
last known address as it appears on the books and records of the Company, at
least twenty one days prior to the date of such meeting. Any meeting
occurring on a holiday, not attended by a quorum, or at the request of the
majority of those present at any meeting, may be continued or adjourned from
day to day or to any other day certain without the necessity of any further
notice being given to stockholders.
Section 6. Business of the Meeting. The annual meeting of the stockholders
of the Company shall be an open meeting for all business of any nature, kind
or character relating to the affairs of the Company. At this meeting,
elections shall be held for members of the Board of Directors whose term
expires at the annual meeting, or to fill any existing vacancy. Any business
of the meeting may be continued from day to day or to a day certain.
Section 7. Voting. Each stockholder shall be entitled to one vote for each
share of stock. Each stockholder may vote by proxy. The proxy shall be in
writing and must be filed with the Secretary of the Company at least five days
prior to the date of the meeting. In all elections for directors, each
stockholder having a right to vote may cast the whole number of his votes for
one candidate or distribute them among the candidates as he may prefer.
Section 8. Action Without a Meeting. Except as otherwise provided in the
Restated Articles of Redomestication, or by law, any action required or
permitted to be taken at any annual or special meeting of the stockholders may
be taken without a meeting, prior notice or a vote, if a consent in writing
setting forth the action so taken shall be signed by the holders of all the
outstanding shares entitled to vote thereon.
<PAGE> 4
ARTICLE VI - Directors
Section 1. Number and Term. There shall be not less than five nor more than
twenty members of the Board of Directors. The exact number of directors
within said limits shall be determined by the Board of Directors. Each
director shall be elected for a period of one year or until his successor has
been duly elected and qualified as required herein. A director need not be a
stockholder.
Section 2. Meetings. An annual meeting of the newly elected Board of
Directors shall be held as soon after the annual meeting of shareholders as
convenient, but in no event later than thirty days after the annual meeting of
the shareholders.
Special meetings of the Board of Directors may be called at any time by the
President or Chairman and shall be called by the President upon the written
request of one-third (1/3) of the directors. Notice of the time and place of
each special meeting shall be given to each director no later than the day
before the meeting.
Section 3. Quorums. A majority of the members of the Board of Directors
shall constitute a quorum for the transaction of business at any meeting. If
a quorum shall not be in attendance, a meeting may be adjourned from time to
time until a quorum shall be present.
Section 4. Action Without a Meeting. Except as otherwise provided in the
Restated Articles of Redomestication or by law, any action required or
permitted to be taken at any regular or special meeting of the Board of
Directors, or of any committee thereof, may be taken without a meeting, prior
notice or a vote, if a consent in writing setting forth the action so taken
shall be signed by all the members of the Board of Directors or the committee.
Section 5. Vacancies. Any vacancy in the Board of Directors which shall
occur by death, resignation, removal or for any other cause may be filled by a
vote of the majority of the remaining members of the Board at the next regular
or special meeting. The person elected shall hold office for the unexpired
term or until a successor is duly elected and qualified.
Section 6. Election of Officers. At its annual meeting, the Board of
Directors shall elect from among its members a Chairman. It shall also elect
a President, Secretary and Treasurer, and if the majority of the Board deems
it necessary, may elect Vice Presidents, Assistant Secretaries, Assistant
Treasurers, and such other officers as it may designate. Any person may be
elected to two or more offices, but may not hold the position of both
President and Vice President at one and the same time.
Section 7. Removal. The Board of Directors by a majority vote may, for
cause, at any time remove any officer or director of the Company from office
and upon such removal the rights of such persons to the emolument and
compensation for services in such office shall forthwith cease and terminate.
<PAGE> 5
Section 8. Security. The Board of Directors may from time to time designate
the nature, kind and amount, if any, of security that may be required of any
officer for the faithful performance of his duty.
Section 9. Powers of Board of Directors. The Board of Directors shall
generally be in charge of the business and affairs of the Company. The
business and affairs of the Company in its details shall be conducted and
managed by its elected officers. The Board of Directors may by resolution
duly adopted, designate or appoint any one to act for and on behalf of the
Company, and may delegate specific authority to any elected officer or to any
person to do or perform any act or deed for and on behalf of this Company.
The Board of Directors may enter into any contract or agreement on any matters
relating to the business and affairs of this Company, and it shall be binding
upon the Company though extending beyond the terms of office of any or all the
members of the Board of Directors. It shall receive reports from its officers
and employees, and shall be authorized to issue directives to them. It shall
set the policy and the manner of the conduct of the business of the Company.
It shall set the salary and compensation, if any, to be paid its elected
officers. Subject to the provisions of the Michigan Insurance Code, the
investment of the funds of this Company shall be in accordance with the
policies prescribed by the Board of Directors, and the elected officers shall
act only subject to and within the limits authorized by the Board of
Directors. The Board of Directors shall generally have all the duties,
powers, rights and privileges granted them by the laws of the State of
Michigan as they presently exist or are amended or changed from time to time.
ARTICLE VII - Committees
Section 1. Executive Committee. There shall be elected at each annual
meeting of the Board of Directors an Executive Committee. The Executive
Committee shall have all the powers of the Board of Directors in the interim
between Board Meetings.
The Executive Committee shall consist of three or more members, of which the
President shall be a member. Any vacancy shall be filled by the Board of
Directors.
Regular minutes of the proceedings of the Executive Committee shall be kept,
which shall be presented to the meeting of the Board next succeeding such
meeting.
Section 2. Other Committees. The Board of Directors may elect such other
committees as it deems appropriate and desirable at such times, for such
durations, for such purposes, under such conditions, and with such authority
of the Board as the Board of Directors shall designate.
ARTICLE VIII - Officers and Their Duties
Section 1. The general management of the business and affairs of this Company
shall be conducted and managed by its elected officers in accordance
<PAGE> 6
with the duties assigned to each of the said officers by these by-laws or by
directives from the Board of Directors, and they shall have the duty to
generally supervise the details and procedure or daily operation of the said
business and see to the proper performance of same by employees, agents or
persons hired or engaged by them on behalf of the Company.
Section 2. Chairman. The Chairman shall preside at all meetings of the Board
of Directors and stockholders. The Chairman shall not be an officer of the
Company. He shall have such other powers and perform such other duties as may
from time to time be assigned to him by the Board of Directors.
Vice Chairman. The Vice Chairman, if one is elected, shall preside at all
meetings of the Board of Directors and stockholders in the absence of the
Chairman. He shall not be an officer of the Company. He shall have such
other powers and perform such other duties as may from time to time be
assigned to him by the Board of Directors.
President. The President, unless otherwise provided by the Board, shall be
the chief executive officer of the Company, and shall have entire supervision
of the affairs of the Company subject to the regulations of the Board of
Directors. He shall preside at all meetings of the Board of Directors and
stockholders in the absence of the Chairman and Vice Chairman. He shall
perform all acts properly pertaining to the executive officer of the Company,
or that he may be directed to perform by the Board of Directors from time to
time. He shall from time to time bring before the Board of Directors such
information affecting the business and property of the Company as may be
required or advisable.
Vice President. Each Vice President shall have such powers and perform such
duties as may from time to time be assigned to him or them by the Board of
Directors. Unless otherwise ordered by the Board of Directors, the Vice
Presidents in the order of their seniority shall, in the absence or the
inability of the President, perform the duties of that office until the return
of the President or the disability shall have been removed or a new President
shall have been elected.
Secretary. The Secretary shall have such particular powers as pertains to his
office, and such authority as may be granted to him by the Board of Directors.
He shall have a custody of the corporate seal, attend all the regular and
special meetings of the stockholders, Board of Directors, and committees, keep
accurate minutes of the proceedings at each of such meetings and report the
same at a succeeding meeting of the committee, Board of Directors, or of the
stockholders. He shall attend to the giving of all notices required by law or
by these by-laws to be given to stockholders, directors or committees unless
and except as the President or the Board of Directors may from time to time
designate some other officer to perform such functions. The Secretary may
delegate any of his ministerial duties to any Assistant Secretary.
Assistant Secretaries. The Assistant Secretaries shall have such powers and
perform such duties as may be assigned to them by the Board of Directors or by
the Secretary of the Company.
<PAGE> 7
Treasurer. The Treasurer shall be the custodian of all the funds and
securities of the Company. He shall have such powers and authorities as may
be granted to him by the Board of Directors. He shall have the right to
delegate any of his ministerial duties to the Assistant Treasurer and shall
also have the right to enter into custodian agreements with banks or trust
companies or other corporations authorized by law to act as custodians.
Assistant Treasurer. Assistant Treasurers shall have such power and duties as
may be granted to him or them by the Board of Directors or as may be assigned
to him or them by the Treasurer.
The Treasurer and Assistant Treasurer may be required to file a bond in the
sum of at least Five Thousand Dollars ($5,000.00) with corporate surety. The
amount of the bond may from time to time be increased or decreased by the
Board of Directors.
Other Officers. The Board of Directors shall have the power from time to time
at any of its regular meetings or special meetings called for that purpose, to
create such additional officers, to elect persons to such offices and assign
their duties and powers.
Section 3. Delegation of Authority. In the event of death, resignation,
absence, disability or removal of any officer, the Board of Directors may
delegate the power and duties of such office to any other officer, or appoint
any other person to said position for the balance of the term.
Section 4. Bonds. Every officer and employee of the Company may be required
by the Board of Directors to furnish a bond for the faithful performance of
their duties and trust at the expense of the Company. Said bond shall be in
an amount prescribed by the Board of Directors and with such surety and in
such form and amount as required by the Board of Directors.
ARTICLE IX - Certificates of Stock
The certificates for shares of capital stock of the Company shall be in such
form, not inconsistent with the Restated Articles of Redomestication, as shall
be approved by the Board of Directors. Certificates of stock shall be issued
under the seal of the Company and shall be signed by the President or a Vice
President and the Secretary, and countersigned by the Treasurer. Shares of
stock of the Company shall be transferable only on the books of the Company by
the registered holder thereof in person or by attorney duly authorized, and
upon the surrender and cancellation of the certificate thereof duly endorsed.
The Board of Directors may direct the proper officers to issue new
certificates of stock in lieu of others which may have been lost or destroyed,
after the expiration of thirty days from receipt of request therefor, provided
the person requesting the new certificate shall make an affidavit of the facts
concerning loss or destruction and shall give the
<PAGE> 8
Company a bond of indemnity in such form, amount, and with such surety, as is
acceptable to the Board of Directors.
ARTICLE X - Fiscal Year
The fiscal year of the Company shall begin on the first day of January and
terminate on the thirty-first day of December in each year.
ARTICLE XI - Bank Accounts
The Board of Directors shall have the authority on behalf of the company and
in its name to open or close an account or accounts in any reputable banks or
trust companies wherein there shall be deposited the funds of the Company.
Withdrawals from the said bank deposit shall be made by cheque or draft signed
only by such person or persons as may be specifically authorized so to do by
the Board of Directors. The Board of Directors may authorize a facsimile
signature on all cheques or drafts drawn for any amount.
ARTICLE XIa
1. All deeds, powers of attorney, contracts, documents, and instruments in
writing requiring to be executed by the Company under Seal shall be signed on
behalf of the Company by such Officer or Officers, or person or persons as may
be designated from time to time by Resolution of the Board of Directors.
2. All instruments and documents necessary to sell, assign, transfer, purchase
or accept shares, stocks, bonds, debentures and other like securities out of
or into the name of the Company shall be signed on behalf of the Company by
such Officer or Officers, or person or persons as may be designated from time
to time by Resolution of the Board of Directors.
ARTICLE XII - Reinsurance
The Board of Directors shall have the right to reinsure all or any of the
Company's liabilities under all or any of its policy contracts, subject to the
laws of the State of Michigan.
ARTICLE XIII - Notices
Wherever any notice is required by these by-laws, such notice may be waived in
writing by all of the persons entitled to such notice, anything to the
contrary herein notwithstanding.
<PAGE> 9
ARTICLE XIV - Amendments
These by-laws may be altered, amended, or repealed, except as otherwise
provided by law, by the affirmative vote of a majority of the Board of
Directors, if notice of the proposed alteration, amendment or repeal be
contained in the notice of the meeting of the Board of Directors at which such
action is proposed.
The undersigned, the Secretary of the Company, states that these By-laws were
adopted as and for the by-laws of the Company on the day of ,
1992.
Dated: ___________________ ____________________________________
Secretary
<PAGE> 1
EXHIBIT 99-(9)(b)
<PAGE> 2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and
to the use of our report dated February 2, 1995 accompanying the
financial statements of The Manufacturers Life Insurance Company of
America and to the use of our report dated February 2, 1996 accompanying
the financial statements of Separate Account Two of The Manufacturers
Life Insurance Company of America, in Post-Effective Amendment No. 14 to
the Registration Statement No. 33-14499 on Form N-4 and related
prospectus of Separate Account Two of The Manufacturers Life Insurance
Company of America.
Ernst & Young LLP
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
April 22, 1996
<PAGE> 1
EXHIBIT 99-(9)(c)
<PAGE> 2
Jones & Blouch L.L.P.
Suite 405 West
1025 THOMAS JEFFERSON STREET, N.W.
WASHINGTON, D.C. 20007-0805
(202) 223-3500
April 22, 1996
The Board of Directors
The Manufacturers Life Insurance
Company of America
500 N. Woodward Avenue
Bloomfield Hills, MI 48304
Dear Sirs:
We hereby consent to the reference to this firm under the caption "Legal
Matters" in the Statement of Additional Information included in post-effective
amendment No. 14 to the registration statement on Form N-4, File No. 33-14499
(amendment No. 15 to the registration statement under the Investment Company
Act of 1940), to be filed with the Securities and Exchange Commission pursuant
to the Securities Act of 1933 by Separate Account Two of The Manufacturers
Life Insurance Company of America.
Very truly yours,
Jones & Blouch L.L.P.
Jones & Blouch L.L.P.
<PAGE> 1
EXHIBIT 99-(16)
<PAGE> 2
EMERGING GROWTH EQUITY FUND - OLD VA
TOTAL RETURN SINCE INCEPTION
<TABLE>
<CAPTION>
A B C D E H
Dividend Dividend Shares
Declaration/ Dividend Share Per Share Purchased Shares
Reporting Initial Per Share Value (Shares) Dividends Outstanding
Date (t) Investment $ (NAV) B/C D x H E+F+G+H(t-1)
- ------------ ---------- --------- ----- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
26-Jun-84 $1,000 -- 10.1195 -- -- 98.8191
31-Dec-84 -- 10.6669 -- -- 98.8191
15-Mar-85 0.4413 11.5057 0.0384 3.7947 102.6138
30-Apr-85 0.0261 10.8096 0.0024 0.2463 102.8601
30-Jul-85 0.0343 12.3338 0.0028 0.2880 103.1481
31-Oct-85 0.0285 11.3848 0.0025 0.2579 103.4060
31-Dec-85 -- 12.5774 -- -- 103.4060
14-Mar-86 1.5112 12.3582 0.1223 12.6466 116.0526
30-Apr-86 0.0264 11.9873 0.0022 0.2553 116.3079
31-Dec-86 -- 10.4451 -- -- 116.3079
30-Apr-87 0.0049 14.1421 0.0003 0.0349 116.3428
30-Jul-87 0.0140 13.8992 0.0010 0.1163 116.4591
31-Dec-87 2.3165 7.6065 0.3045 35.4618 151.9209
12-May-88 0.0072 8.6613 0.0008 0.1215 152.0424
02-Aug-88 0.0189 8.6793 0.0022 0.3345 152.3769
02-Nov-88 0.0421 8.5060 0.0049 0.7466 153.1235
30-Dec-88 0.0781 8.6917 0.0090 1.3781 154.5016
31-Dec-88 -- 8.7465 -- -- 154.5016
28-Mar-89 0.0015 9.3359 0.0002 0.0309 154.5325
03-May-89 0.0652 10.0765 0.0065 1.0045 155.5370
08-Aug-89 0.0587 11.1889 0.0052 0.8088 156.3458
07-Nov-89 0.0356 11.3370 0.0031 0.4847 156.8305
28-Dec-89 0.0528 12.0330 0.0044 0.6901 157.5206
31-Dec-89 -- 12.1989 -- -- 157.5206
29-Mar-90 0.0005 11.6844 0.0000 0.0000 157.5206
02-May-90 0.0585 11.1337 0.0053 0.8349 158.3555
30-Jul-90 0.0594 12.4561 0.0048 0.7601 159.1156
25-Oct-90 0.0244 9.8084 0.0025 0.3978 159.5134
28-Dec-90 0.2980 9.8260 0.0303 4.8333 164.3467
31-Dec-90 -- 9.9499 -- -- 164.3467
18-Mar-91 0.0005 12.5783 0.0000 0.0000 164.3467
25-Apr-91 0.0125 13.5385 0.0009 0.1479 164.4946
30-Dec-91 0.8440 15.9250 0.0530 8.7182 173.2128
31-Dec-91 -- 16.1758 -- -- 173.2128
10-Sep-92 0.0253 15.4630 0.0016 0.2771 173.4899
30-Dec-92 1.8862 17.4341 0.1082 18.7716 192.2615
31-Dec-92 -- 17.7525 -- -- 192.2615
09-Sep-93 0.9508 19.7694 0.0481 9.2478 201.5093
30-Dec-93 1.5439 19.2064 0.0804 16.2013 217.7106
31-Dec-93 -- 19.4219 -- -- 217.7106
27-Jul-94 0.0044 16.8576 0.0003 0.0653 217.7759
06-Sep-94 0.0705 18.5666 0.0038 0.8275 218.6034
31-Dec-94 -- 18.5500 -- -- 218.6034
13-Sep-95 0.5846 22.8916 0.0255 5.5744 224.1778
31-Dec-95 -- 23.1085 -- -- 224.1778
</TABLE>
Total value before charges C x H = 5,180.41 I
n
Daily M&E and Admin. Charge Factor (1-.01/365) = 0.8912 J
t
Yearly Record Keeping Charge (1-.000610) = 0.9932 L
Total Value at the End of Period I x J x L = 4,585.12 M
IF NOT SURRENDERED
<TABLE>
<S> <C>
M 4,585.12
Total Return T = --- - 1 x 100 = ------------ - 1 x 10 358.51% A = 1000.00
A 1,000.00
M = 4,585.12
n = 11.52 x 365 days
1/t .0868
M 4,585.12 m = 11.52 x 12 months
Average Annual Return T = --- - 1 x 100 = ------------ - 1 x 10 14.13%
A 1,000.00 t = 11.52 years
</TABLE>
IF SURRENDERED
No Surrender Charges Apply After Six Years
(*) To simplify this illustration, policy anniversary charges have been
implemented as of each December 31st above.
YEARLY RECORD KEEPING CHARGE
<TABLE>
<CAPTION>
Contract fees Average Average
Fund Value Rate
<S> <C> <C> <C>
Oct. 1984 - 1987
(average of
rates from
1988 to 1993) 0.000632
1988 198.43 591,073 0.000336
1989 1,887.81 1,699,249 0.001111
1990 3,171.47 3,988,387 0.000795
1991 4,991.71 7,622,016 0.000655
1992 8,717.17 19,385,077 0.000450
1993 28,919.46 64,610,163 0.000448
1994 56,165.55 127,153,046 0.000442
1995 68,792.16 171,473,665 0.000401
</TABLE>
Inception rate (1- 1984)x(1-1985)x(1-1986)x(1-1987)
x(1-1988)x(1-1989)x(1-1990)x(1-1991)x(1-1992)
x(1-1993)x(1-1994)x(1-1995) 0.9932
<PAGE> 3
EMERGING GROWTH EQUITY FUND - OLD VA
ONE YEAR RETURN
<TABLE>
<CAPTION>
A B C D E H
Dividend Dividend Shares
Declaration/ Dividend Share Per Share Purchased Shares
Reporting Initial Per Share Value (Shares) Dividends Outstanding
Date (t) Investment $ (NAV) B/C D x H E+F+G+H(t-1)
- ------------ ---------- --------- ----- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
31-Dec-94 $1,000 -- 18.5500 -- -- 53.9084
13-Sep-95 0.5846 22.8916 0.0255 1.3747 55.2831
31-Dec-95 -- 23.1085 -- -- 55.2831
</TABLE>
Total value before charges C x H = 1277.51 I
n
Daily M&E and Admin. Charge Factor (1-.01/365) = 0.990050 J
m
Yearly Record Keeping Charge (1-.000442) = 0.999599 L
Total Value at the End of Period I x J x L = 1,264.29 M
Surrender Charge (7% x Lesser of L or 1000) = 70.00 N
Total Surrender Value M - N = 1,194.29 P
IF NOT SURRENDERED
<TABLE>
<S> <C>
M 1,264.29
Total Return T = --- - 1 x 100 = ------------ - 1 x 100 26.43% A = 1000.00
A 1,000.00 M = 1.264.29
P = 1,194.29
</TABLE>
IF SURRENDERED
P 1,194.29
Total Return T = --- - 1 x 100 = ------------ - 1 x 100 19.43%
A 1,000.00
YEARLY RECORD KEEPING CHARGE
<TABLE>
<CAPTION>
Average Average
Contract fees Fund Value Rate
------------- ----------- --------
<S> <C> <C> <C>
1995 68,792.16 171,473,665 0.000401
One year rate (1-1995) 0.999599
</TABLE>
<PAGE> 4
EMERGING GROWTH EQUITY FUND - OLD VA
THREE YEAR RETURN
<TABLE>
<CAPTION>
A B C D E H
Dividend Dividend Shares
Declaration/ Dividend Share Per Share Purchased Shares
Reporting Initial Per Share Value (Shares) Dividends Outstanding
Date (t) Investment $ (NAV) B/C D x H E+F+G+H(t-1)
- ------------ ---------- --------- ----- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
31-Dec-92 $1,000 -- 17.7525 -- -- 56.3301
09-Sep-93 0.9508 19.7694 0.0481 2.7095 59.0396
30-Dec-93 1.5439 19.2064 0.0804 4.7468 63.7864
31-Dec-93 -- 19.4219 -- -- 63.7864
27-Jul-94 0.0044 16.8576 0.0003 0.0191 63.8055
06-Sep-94 0.0705 18.5666 0.0038 0.2425 64.0480
31-Dec-94 -- 18.5500 -- -- 64.0480
13-Sep-95 0.5846 22.8916 0.0255 1.6332 65.6812
31-Dec-95 -- 23.1085 -- -- 65.6812
</TABLE>
Total value before charges C x H = 1517.80 I
n
Daily M&E and Admin. Charge Factor (1-.01/365) = 0.9704 J
t
Yearly Record Keeping Charge (1-0.000446) = 0.9987 L
Total Value at the End of Period I x J x L = 1470.97 M
Surrender Charge = 50.00 N
Total Surrender Value M - N = 1420.97 P
IF NOT SURRENDERED
<TABLE>
<S> <C>
M 1,470.97
Total Return T = --- - 1 x 100 = ------------ - 1 x 100 47.10% A = 1000.00
A 1,000.00
M = 1,470.97
1/t .3333 P = 1,420.97
M 1,470.97
Average Annual Return T = --- - 1 x 100 = ------------ - 1 x 100 13.73% n = 3 x 365 days
A 1,000.00
m = 3 x 12 months
IF SURRENDERED
t = 3 years
P 1,420.97
Total Return T = --- - 1 x 100 = ------------ - 1 x 100 42.10%
A 1,000.00
1/t .3333
P 1,420.97
Average Annual Return T = --- - 1 x 100 = ------------ - 1 x 100 12.43%
A 1,000.00
</TABLE>
SURRENDER CHARGE
(i) 10% Free Withdrawal Amount: I' = 1238.85
Total Value as of Dec. 31, 1994 (Policy Anniversary)
I' x J' x K' 1,225.36 J' = 0.9900
10% x 1225.36 122.54
K' = 0.9991
(ii) Surrender Charge on Dec. 31 '95:
5% times the lesser of: M' = 1225.36
Total Value - 10% Free Withdrawal Amount 1,348.43
or $1000.00
= $50.00
YEARLY RECORD KEEPING CHARGE
<TABLE>
<CAPTION>
Average Average
Contract fees Fund Value Rate
------------- ---------- --------
<S> <C> <C> <C>
1993 28,919.46 64,610,163 0.000448
1994 56,165.55 127,153,046 0.000442
1995 68,792.16 171,473,665 0.000401
</TABLE>
Three year rate (1-1993) x(1- 1994) x(1 - 1995) 0.998710
<PAGE> 5
EMERGING GROWTH EQUITY FUND - OLD VA
FIVE YEAR RETURN
<TABLE>
<CAPTION>
A B C D E H
Dividend Dividend Shares
Declaration/ Dividend Share Per Share Purchased Shares
Reporting Initial Per Share Value (Shares) Dividends Outstanding
Date (t) Investment $ (NAV) B/C D x H E+F+G+H(t-1)
- ------------ ---------- --------- ----- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
31-Dec-90 $1,000 -- 9.9499 -- -- 100.5035
18-Mar-91 0.0005 12.5783 0.0000 0.0000 100.5035
25-Apr-91 0.0125 13.5385 0.0009 0.0905 100.5940
30-Dec-91 0.8440 15.9250 0.0530 5.3315 105.9255
31-Dec-91 -- 16.1758 -- -- 105.9255
10-Sep-92 0.0253 15.4630 0.0016 0.1695 106.0950
30-Dec-92 1.8862 17.4341 0.1082 11.4795 117.5745
31-Dec-92 -- 17.7525 -- -- 117.5745
09-Sep-93 0.9508 19.7694 0.0481 5.6553 123.2298
30-Dec-93 1.5439 19.2064 0.0804 9.9077 133.1375
31-Dec-93 -- 19.4219 -- -- 133.1375
27-Jul-94 0.0044 16.8576 0.0003 0.0399 133.1774
06-Sep-94 0.0705 18.5666 0.0038 0.5061 133.6835
31-Dec-94 -- 18.5500 -- -- 133.6835
13-Sep-95 0.5846 22.8916 0.0255 3.4089 137.0924
31-Dec-95 -- 23.1085 -- -- 137.0924
</TABLE>
Total value before charges C x H = 3,168.00 I
n
Daily M&E and Admin. Charge Factor (1-.01/365) = 0.9512
t
Yearly Record Keeping Charge (1-0.00075) = 0.9976 L
Total Value at the End of Period I x J x L = 3006.20 M
Surrender Charge = 30.00 N
Total Surrender Value M - N = 2976.20 P
IF NOT SURRENDERED
<TABLE>
<S> <C>
M 3,006.20
Total Return T = --- - 1 x 100 = ------------ - 1 x 100 200.62% A = 1000.00
A 1,000.00
M = 3,006.20
1/t .2000 P = 2,976.20
M 3,006.20
Average Annual Return T = --- - 1 x 100 = ------------ - 1 x 100 24.62% n = 5 x 365 days
A 1,000.00
M = 5 x 12 months
IF SURRENDERED
t = 5 years
P 2,976.20
Total Return T = --- - 1 x 100 = ------------ - 1 x 100 197.62%
A 1,000.00
1/t .2000
P 2,976.20
Average Annual Return T = --- - 1 x 100 = ------------ - 1 x 100 24.37%
A 1,000.00
</TABLE>
SURRENDER CHARGE
(i) 10% Free Withdrawal Amount: I' = 2,585.78
Total Value as of Dec. 31, 1994 (Policy Anniversary)
I' x J' x K' 2,503.47 J' = 0.9704
10% x 2,503.4 250.35
K' = 0.9977
(ii) Surrender Charge on Dec. 31 '95:
3% times the lesser of: M' = 2503.47
Total Value - 10% Free Withdrawal Amount 2,755.85
or $1000.00
= $30.00
YEARLY RECORD KEEPING CHARGE
<TABLE>
<CAPTION>
Average Average
Contract fees Fund Value Rate
------------- ----------- --------
<S> <C> <C> <C>
1991 4,991.71 7,622,016 0.000655
1992 8,717.17 19,385,077 0.000450
1993 28,919.46 64,610,163 0.000448
1994 56,165.55 127,153,046 0.000442
1995 68,792.16 171,473,665 0.000401
</TABLE>
Five year rate (1- 1991) x (1-1992)x(1-1993)
x(1- 1994) x (1-1995)= 0.997607
<PAGE> 6
EMERGING GROWTH EQUITY FUND - OLD VA
TEN YEAR RETURN
<TABLE>
<CAPTION>
A B C D E H
Dividend Dividend Shares
Declaration/ Dividend Share Per Share Purchased Shares
Reporting Initial Per Share Value (Shares) Dividends Outstanding
Date (t) Investment $ (NAV) B/C D x H E+F+G+H(t-1)
- ------------ ---------- --------- ----- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
31-Dec-85 $1,000 -- 12.5774 -- -- 79.5077
14-Mar-86 1.5112 12.3582 0.1223 9.7238 89.2315
30-Apr-86 0.0264 11.9873 0.0022 0.1963 89.4278
31-Dec-86 -- 10.4451 -- -- 89.4278
30-Apr-87 0.0049 14.1421 0.0003 0.0268 89.4546
30-Jul-87 0.0140 13.8992 0.0010 0.0895 89.5441
31-Dec-87 2.3165 7.6065 0.3045 27.2662 116.8103
12-May-88 0.0072 8.6613 0.0008 0.0934 116.9037
02-Aug-88 0.0189 8.6793 0.0022 0.2572 117.1609
02-Nov-88 0.0421 8.5060 0.0049 0.5741 117.7350
30-Dec-88 0.0781 8.6917 0.0090 1.0596 118.7946
31-Dec-88 -- 8.7465 -- -- 118.7946
28-Mar-89 0.0015 9.3359 0.0002 0.0238 118.8184
03-May-89 0.0652 10.0765 0.0065 0.7723 119.5907
08-Aug-89 0.0587 11.1889 0.0052 0.6219 120.2126
07-Nov-89 0.0356 11.3370 0.0031 0.3727 120.5853
28-Dec-89 0.0528 12.0330 0.0044 0.5306 121.1159
31-Dec-89 -- 12.1989 -- -- 121.1159
29-Mar-90 0.0005 11.6844 0.0000 0.0000 121.1159
02-May-90 0.0585 11.1337 0.0053 0.6419 121.7578
30-Jul-90 0.0594 12.4561 0.0048 0.5844 122.3422
25-Oct-90 0.0244 9.8084 0.0025 0.3059 122.6481
28-Dec-90 0.2980 9.8260 0.0303 3.7162 126.3643
31-Dec-90 -- 9.9499 -- -- 126.3643
18-Mar-91 0.0005 12.5783 0.0000 0.0000 126.3643
25-Apr-91 0.0125 13.5385 0.0009 0.1137 126.4780
30-Dec-91 0.8440 15.9250 0.0530 6.7033 133.1813
31-Dec-91 -- 16.1758 -- -- 133.1813
10-Sep-92 0.0253 15.4630 0.0016 0.2131 133.3944
30-Dec-92 1.8862 17.4341 0.1082 14.4333 147.8277
31-Dec-92 -- 17.7525 -- -- 147.8277
09-Sep-93 0.9508 19.7694 0.0481 7.1105 154.9382
30-Dec-93 1.5439 19.2064 0.0804 12.4570 167.3952
31-Dec-93 -- 19.4219 -- -- 167.3952
27-Jul-94 0.0044 16.8576 0.0003 0.0502 167.4454
06-Sep-94 0.0705 18.5666 0.0038 0.6363 168.0817
31-Dec-94 -- 18.5500 -- -- 168.0817
13-Sep-95 0.5846 22.8916 0.0255 4.2861 172.3678
31-Dec-95 -- 23.1085 -- -- 172.3678
</TABLE>
Total value before charges C x H = 3,983.16 I
n
Daily M&E and Admin. Charge Factor (1-.01/365) = 0.9048 J
t
Yearly Record Keeping Charge (1-0.000610) = 0.9941 L
Total Value at the End of Period I x J x L = 3,582.70 M
IF NOT SURRENDERED
<TABLE>
<S> <C>
M 3,582.70
Total Return T = --- - 1 x 100 = ------------ - 1 x 100 258.27% A = 1000.00
A 1,000.00
M = 3,582.70
1/t .1 n = 10 x 365 days
M 3,582.70
Average Annual Return T = --- - 1 x 100 = ------------ - 1 x 100 13.61% m = 10 x 12 months
A 1,000.00
t = 10 years
</TABLE>
IF SURRENDERED
No Surrender Charges Apply After Six Years
YEARLY RECORD KEEPING CHARGE
<TABLE>
<CAPTION>
Average Average
Contract fees Fund Value Rate
------------- ---------- -------
<S> <C> <C> <C>
1984 - 1987
(average of
rates from
1988 to 1993) 0.000632
1988 198.43 591,073 0.000336
1989 1,887.81 1,699,249 0.001111
1990 3,171.47 3,988,387 0.000795
1991 4,991.71 7,622,016 0.000655
1992 8,717.17 19,385,077 0.000450
1993 28,919.46 64,610,163 0.000448
1994 56,165.55 127,153,046 0.000442
1995 68,792.16 171,473,665 0.000401
</TABLE>
Ten year rate (1-1985)x(1-1986)x(1-1987)
x(1-1988)x(1-1989)x(1-1990)x(1-1991)
x(1-1992)x(1-1993)x(1-1994)x(1-1995) = 0.9941
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> EMERGING GROWTH EQUITY FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 63,821,544
<INVESTMENTS-AT-VALUE> 75,184,182
<RECEIVABLES> 25,534
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 75,209,716
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 56,289,782
<SHARES-COMMON-STOCK> 1,670,956
<SHARES-COMMON-PRIOR> 1,454,901
<ACCUMULATED-NII-CURRENT> 5,054,443
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,502,853
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,362,638
<NET-ASSETS> 75,209,716
<DIVIDEND-INCOME> 1,809,461
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (630,475)
<NET-INVESTMENT-INCOME> 1,178,986
<REALIZED-GAINS-CURRENT> 1,683,869
<APPREC-INCREASE-CURRENT> 11,908,991
<NET-CHANGE-FROM-OPS> 14,771,846
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 216,055
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 23,444,335
<ACCUMULATED-NII-PRIOR> 3,875,457
<ACCUMULATED-GAINS-PRIOR> 818,984
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> BALANCED ASSETS FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 42,199,811
<INVESTMENTS-AT-VALUE> 47,961,811
<RECEIVABLES> 13,017
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 47,974,828
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,497,448
<SHARES-COMMON-STOCK> 2,189,632
<SHARES-COMMON-PRIOR> 2,001,928
<ACCUMULATED-NII-CURRENT> 3,070,567
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 644,126
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,762,687
<NET-ASSETS> 47,974,828
<DIVIDEND-INCOME> 57,666
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (411,536)
<NET-INVESTMENT-INCOME> (353,870)
<REALIZED-GAINS-CURRENT> 233,943
<APPREC-INCREASE-CURRENT> 8,830,332
<NET-CHANGE-FROM-OPS> 8,710,405
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 187,704
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 12,440,613
<ACCUMULATED-NII-PRIOR> 3,424,437
<ACCUMULATED-GAINS-PRIOR> 410,183
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 003
<NAME> CAPITAL GROWTH BOND FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 14,917,846
<INVESTMENTS-AT-VALUE> 15,031,374
<RECEIVABLES> 27,345
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15,058,719
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,766,604
<SHARES-COMMON-STOCK> 789,655
<SHARES-COMMON-PRIOR> 672,365
<ACCUMULATED-NII-CURRENT> 2,328,266
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (149,679)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 113,528
<NET-ASSETS> 15,058,719
<DIVIDEND-INCOME> 1,046,495
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (127,065)
<NET-INVESTMENT-INCOME> 919,430
<REALIZED-GAINS-CURRENT> (76,983)
<APPREC-INCREASE-CURRENT> 1,343,599
<NET-CHANGE-FROM-OPS> 2,186,046
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 117,290
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,287,429
<ACCUMULATED-NII-PRIOR> 1,408,836
<ACCUMULATED-GAINS-PRIOR> (72,696)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 004
<NAME> MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 18,029,071
<INVESTMENTS-AT-VALUE> 18,464,059
<RECEIVABLES> 88,003
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18,552,062
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17,339,152
<SHARES-COMMON-STOCK> 1,209,129
<SHARES-COMMON-PRIOR> 918,869
<ACCUMULATED-NII-CURRENT> 424,936
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 352,986
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 434,988
<NET-ASSETS> 18,552,062
<DIVIDEND-INCOME> 668
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (155,913)
<NET-INVESTMENT-INCOME> (155,245)
<REALIZED-GAINS-CURRENT> 322,742
<APPREC-INCREASE-CURRENT> 531,125
<NET-CHANGE-FROM-OPS> 698,622
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 371,260
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,917,611
<ACCUMULATED-NII-PRIOR> 580,181
<ACCUMULATED-GAINS-PRIOR> 30,244
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 005
<NAME> COMMON STOCK FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 21,291,543
<INVESTMENTS-AT-VALUE> 25,135,478
<RECEIVABLES> 15,359
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 25,150,837
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19,744,651
<SHARES-COMMON-STOCK> 977,871
<SHARES-COMMON-PRIOR> 803,568
<ACCUMULATED-NII-CURRENT> 1,045,708
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 516,543
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,843,935
<NET-ASSETS> 25,150,837
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (199,735)
<NET-INVESTMENT-INCOME> (199,735)
<REALIZED-GAINS-CURRENT> 251,649
<APPREC-INCREASE-CURRENT> 4,970,753
<NET-CHANGE-FROM-OPS> 5,022,667
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 174,303
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 8,999,116
<ACCUMULATED-NII-PRIOR> 1,245,443
<ACCUMULATED-GAINS-PRIOR> 264,894
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 006
<NAME> REAL ESTATE SECURITIES FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 27,596,075
<INVESTMENTS-AT-VALUE> 29,002,463
<RECEIVABLES> 31,606
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 29,034,069
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,154,623
<SHARES-COMMON-STOCK> 1,149,409
<SHARES-COMMON-PRIOR> 1,205,880
<ACCUMULATED-NII-CURRENT> 1,989,840
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 483,218
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,406,388
<NET-ASSETS> 29,034,069
<DIVIDEND-INCOME> 483,929
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (270,306)
<NET-INVESTMENT-INCOME> 213,629
<REALIZED-GAINS-CURRENT> 223,127
<APPREC-INCREASE-CURRENT> 3,143,212
<NET-CHANGE-FROM-OPS> 3,579,968
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> (56,471)
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,311,767
<ACCUMULATED-NII-PRIOR> 1,776,211
<ACCUMULATED-GAINS-PRIOR> 260,091
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 007
<NAME> INTERNATIONAL FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 3,579,877
<INVESTMENTS-AT-VALUE> 3,796,197
<RECEIVABLES> 1,450
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,799,647
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,509,487
<SHARES-COMMON-STOCK> 354,776
<SHARES-COMMON-PRIOR> 89,180
<ACCUMULATED-NII-CURRENT> 66,130
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,710
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 218,320
<NET-ASSETS> 3,799,647
<DIVIDEND-INCOME> 89,871
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (25,067)
<NET-INVESTMENT-INCOME> 64,804
<REALIZED-GAINS-CURRENT> 5,799
<APPREC-INCREASE-CURRENT> 223,966
<NET-CHANGE-FROM-OPS> 294,569
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 265,596
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,932,822
<ACCUMULATED-NII-PRIOR> 1,326
<ACCUMULATED-GAINS-PRIOR> (89)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 008
<NAME> PACIFIC RIM EMERGING MARKETS FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 2,552,133
<INVESTMENTS-AT-VALUE> 2,704,903
<RECEIVABLES> 6,438
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,711,341
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,518,577
<SHARES-COMMON-STOCK> 261,208
<SHARES-COMMON-PRIOR> 67,272
<ACCUMULATED-NII-CURRENT> 17,057
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 22,937
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 152,770
<NET-ASSETS> 2,711,341
<DIVIDEND-INCOME> 32,371
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (16,887)
<NET-INVESTMENT-INCOME> 15,504
<REALIZED-GAINS-CURRENT> 23,810
<APPREC-INCREASE-CURRENT> 166,870
<NET-CHANGE-FROM-OPS> 206,184
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 193,936
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,078,310
<ACCUMULATED-NII-PRIOR> 1,553
<ACCUMULATED-GAINS-PRIOR> (873)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
