<PAGE>
As Filed with the Securities and Exchange Commission on February 28, 2000
REGISTRATION NO. 333-
811-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
AND
AMENDMENT NO. 23
TO
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 /X/
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
(Exact Name of Registrant)
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Name of Depositor)
ONE SUN LIFE EXECUTIVE PARK
WELLESLEY HILLS, MASSACHUSETTS 02481
(Address of Depositor's Principal Executive Offices)
DEPOSITOR'S TELEPHONE NUMBER: (781) 237-6030
EDWARD M. SHEA, ASSISTANT VICE PRESIDENT AND SENIOR COUNSEL
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
ONE COPLEY PLACE
BOSTON, MASSACHUSETTS 02116
(Name and Address of Agent for Service)
COPIES OF COMMUNICATIONS TO:
JOAN E. BOROS, ESQ.
JORDEN BURT BOROS CICCHETTI BERENSON & JOHNSON LLP
1025 THOMAS JEFFERSON STREET, N.W.
SUITE 400 EAST
WASHINGTON, D.C. 20007-0805
Approximate Date of Proposed Public Offering: Upon the date of effectiveness
or as soon thereafter as practicable.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration shall thereafter become effective in accordance with Section
8(a) of the Securities Act of 1933 or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said
Section 8(a) may determine.
- --------------------------------------------------------------------------------
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (check appropriate box)
/ / IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b) OF RULE 485
/ / ON (DATE) PURSUANT TO PARAGRAPH (b) OF RULE 485
/ / 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(1) OF RULE 485
/ / ON (DATE) PURSUANT TO PARAGRAPH (a)(1) OF RULE 485
IF APPROPRIATE CHECK THE FOLLOWING BOX:
/ / THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
Attached hereto and made a part hereof is the Profile and Prospectus dated
June __, 2000 for each of the following:
MFS Regatta Access Variable and Fixed Annuity
Futurity Focus II Variable and Fixed Annuity [to be filed by amendment]
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
JUNE __, 2000
PROFILE
MFS REGATTA ACCESS
VARIABLE AND FIXED
ANNUITY
THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT POINTS THAT YOU
SHOULD KNOW AND CONSIDER BEFORE PURCHASING THE CONTRACT. THE CONTRACT IS MORE
FULLY DESCRIBED IN THE FULL PROSPECTUS WHICH ACCOMPANIES THIS PROFILE. PLEASE
READ THE PROSPECTUS CAREFULLY.
1. THE MFS REGATTA ACCESS ANNUITY
The MFS Regatta Access Annuity is a flexible payment deferred annuity
contract ("Contract") designed for use in connection with retirement and
deferred compensation plans, some of which may qualify for favorable federal
income tax treatment. The Contract is intended to help you achieve your
retirement savings or other long-term investment goals.
The Contract has two phases: an Accumulation Phase and an Income Phase.
During the Accumulation Phase you make payments into the Contract; any
investment earnings under your Contract accumulate on a tax-deferred basis and
are taxed as income only when withdrawn. During the Income Phase, we make
annuity payments in amounts determined in part by the amount of money you have
accumulated under your Contract during the Accumulation Phase. You choose when
the Income Phase begins.
You may choose among 27 variable investment options and a range of fixed
interest options. For a variable investment return you choose one or more
Sub-Accounts in our Variable Account, each of which invests in shares of a
corresponding series of the MFS/Sun Life Series Trust (collectively, the
"Funds") listed in Section 4. The value of any portion of your Contract
allocated to the Sub-Accounts will fluctuate up or down depending on the
performance of the Funds you select, and you may experience losses. For a fixed
interest rate, you may choose one or more Guarantee Periods offered in our Fixed
Account, each of which earns its own Guaranteed Interest Rate if you keep your
money in that Guarantee Period for the specified length of time. In addition,
your Contract may be credited with extra interest at the time you purchase your
Contract.
The Contract is designed to meet your need for investment flexibility.
Over the life of your Contract, you may allocate amounts among as many as 18 of
the available variable and fixed options. Until we begin making annuity payments
under your Contract, you can, subject to certain limitations, transfer money
between options up to 12 times each year without a transfer charge or adverse
tax consequences.
2. ANNUITY PAYMENTS (THE INCOME PHASE)
Just as you can elect to have your Contract value accumulate on either a
variable or fixed basis, or a combination of both, you can elect to receive
annuity payments on either a variable or fixed basis or both. If you choose to
have any part of your annuity payments come from the Sub-Accounts, the dollar
amount of your annuity payments may fluctuate.
The Contract offers a variety of annuity options. You can select from
among the following methods of receiving either variable or fixed annuity
payments under your Contract: (1) monthly payments continuing for your lifetime
(assuming you are the annuitant); (2) monthly payments for your lifetime, but
with payments continuing to your chosen beneficiary for 10, 15 or 20 years after
your first payment if you die before the end of the period you have selected;
(3) monthly payments for your lifetime and the life of another person (usually
your spouse) you have chosen; and (4) monthly payments for a specified number of
years (from 5 to 30), with a cash-out option for variable payments. We may also
agree to other annuity options at our discretion.
Once the Income Phase begins, you cannot change your choice of annuity
payment method.
<PAGE>
3. PURCHASING A CONTRACT
You may purchase a Contract for $20,000 or more, under most circumstances.
You may increase the value of your investment by adding $1,000 or more at any
time during the Accumulation Phase. We may waive these limits. We will not
accept a purchase payment if your account value is over $2 million, or if the
purchase payment would cause your account value to exceed $2 million, unless we
have approved the payment in advance.
4. ALLOCATION OPTIONS
You can allocate your money among Sub-Accounts investing in the following
Funds of the MFS/ Sun Life Series Trust:
<TABLE>
<S> <C>
Bond Series International Growth and Income Series
Capital Appreciation Series Managed Sectors Series
Capital Opportunities Series Massachusetts Investors Growth Stock Series
Emerging Growth Series Massachusetts Investors Trust Series
Emerging Markets Equity Series Money Market Series
Equity Income Series New Discovery Series
Global Asset Allocation Series Research Series
Global Governments Series Research Growth and Income Series
Global Growth Series Research International Series
Global Total Return Series Science and Technology Series
Government Securities Series Strategic Growth Series
High Yield Series Strategic Income Series
International Growth Series Total Return Series
Utilities Series
</TABLE>
Market conditions will determine the value of an investment in any Fund.
Each Fund is described in the prospectus of the MFS/Sun Life Series Trust.
In addition to these variable options, you may also allocate your money to
one or more of the Guarantee Periods we make available. For each Guarantee
Period, we offer a Guaranteed Interest Rate for the specified length of time.
5. EXPENSES
The charges under the Contracts are as follows:
If your account value is less than $100,000, we impose an annual Account
Fee equal to $50. We will not assess an Account Fee if your Contract is fully
invested in the Fixed Account during the entire Account Year. In addition,
during both the Accumulation Phase and the Income Phase, we deduct insurance
charges equal to 1.40% per year of the average daily value of the Contract
allocated among the Sub-Accounts. If your initial purchase payment is greater
than $1,000,000, we will decrease the insurance charges to 1.15%.
If you elect one or more optional death benefit riders, we will deduct,
during the Accumulation Phase, an additional charge per year, depending upon the
number of riders you elect, as follows:
<TABLE>
<CAPTION>
NUMBER OF % OF AVERAGE
RIDERS YOU ELECT DAILY VALUE
- ---------------- ------------
<S> <C>
1 0.15%
2 0.25%
3 0.40%
</TABLE>
No optional death benefit is offered if you are 80 or older at issue. No
charges for optional death benefit riders are assessed during the Income Phase.
There are no sales charges when you purchase your Contract. If you
withdraw money from your Contract, we impose no withdrawal charge.
2
<PAGE>
If you withdraw, transfer, or annuitize money allocated to a Guarantee
Period more than 30 days before the expiration date of the Guarantee Period, the
amount will be subject to a Market Value Adjustment. This adjustment reflects
the relationship between our current Guaranteed Interest Rates and the
Guaranteed Interest Rate applicable to the amount being withdrawn. Generally, if
your Guaranteed Interest Rate is lower than the relevant current rate, then the
adjustment will decrease your Contract value. Conversely, if your Guaranteed
Interest Rate is higher than the relevant current rate, the adjustment will
increase your Contract value. The Market Value Adjustment will not apply to the
withdrawal of interest credited during the current Account Year, or to transfers
as part of our dollar-cost averaging program.
In addition to the charges we impose under the Contracts, there are
charges (which include management fees and operating expenses) imposed by each
Fund, which range from 0.56% to 1.55% of the average net assets of the Funds,
depending upon which Funds you have selected. The investment adviser has agreed
to waive or reimburse a portion of expenses for some of the Funds; without this
agreement, Fund expenses could be higher. Some of these agreements may be
terminated after one year, or earlier if the Board of Trustees of the MFS/Sun
Life Series Trust agrees.
The following chart is designed to help you understand the expenses you
will incur under your Contract, if you invest in one or more of the
Sub-Accounts. The column "Total Annual Expenses" shows the sum of the "Total
Annual Insurance Charges," as defined just above the chart, and the total
expenses (net of any applicable expense reimbursement and/or fee waiver) for
each Fund. The next two columns show two examples of the expenses, in dollars,
you would pay under a Contract. The examples assume that you invested $1,000 in
a Contract which earns 5% annually and that you withdraw your money (1) at the
end of one year or (2) at the end of 10 years. For the first year, the Total
Annual Expenses are deducted, as well as withdrawal charges. For year 10, the
example shows the aggregate of all of the annual expenses deducted for the 10
years, but there is no withdrawal charge.
During the Accumulation Phase, "Total Annual Insurance Charges" of 1.50%
as shown in the table below include insurance charges of 1.40% of your daily net
assets (1.25% for mortality and
3
<PAGE>
expense risks and 0.15% for administrative expenses) plus an additional 0.10%,
which is used to represent the $50 annual Account Fee based on an assumed
Contract value of $50,000. The actual impact of the Account Fee may be greater
or less than 0.10%, depending upon the value of your Contract.
<TABLE>
<CAPTION>
EXAMPLES:
TOTAL ANNUAL TOTAL ANNUAL TOTAL TOTAL EXPENSES
INSURANCE SERIES ANNUAL AT END
FUND CHARGES EXPENSES EXPENSES 1 YEAR 10 YEARS
- ---- ------------ ------------ ---------- -------- ---------
<S> <C> <C> <C> <C> <C>
Bond Series 1.50% 0.72% 2.22% $ $
Capital Appreciation Series 1.50% 0.76% 2.26% $ $
Capital Opportunities Series 1.50% 0.84% 2.34% $ $
Emerging Growth Series 1.50% 0.75% 2.25% $ $
Emerging Markets Equity Series 1.50% 1.60% 3.10% $ $
Equity Income Series 1.50% 1.01% 2.51% $ $
Global Asset Allocation Series 1.50% 0.89% 2.39% $ $
Global Governments Series 1.50% 0.90% 2.40% $ $
Global Growth Series 1.50% 1.01% 2.51% $ $
Global Total Return Series 1.50% 0.89% 2.39% $ $
Government Securities Series 1.50% 0.61% 2.11% $ $
High Yield Series 1.50% 0.83% 2.33% $ $
International Growth Series 1.50% 1.23% 2.73% $ $
International Growth and Income Series 1.50% 1.16% 2.66% $ $
Managed Sectors Series 1.50% 0.79% 2.29% $ $
Massachusetts Investors Growth Stock Series 1.50% 0.83% 2.33% $ $
Massachusetts Investors Trust Series 1.50% 0.59% 2.09% $ $
Money Market Series 1.50% 0.57% 2.07% $ $
New Discovery Series 1.50% 1.06% 2.56% $ $
Research Series 1.50% 0.75% 2.25% $ $
Research Growth and Income Series 1.50% 0.86% 2.36% $ $
Research International Series 1.50% 1.50% 3.00% $ $
Science and Technology Series 1.50% [ ]% [ ]% $ $
Strategic Growth Series 1.50% 1.00% 2.50% $ $
Strategic Income Series 1.50% 1.08% 2.58% $ $
Total Return Series 1.50% 0.69% 2.19% $ $
Utilities Series 1.50% 0.61% 2.31% $ $
</TABLE>
If your initial purchase payment is $1,000,000 or more, we will reduce
your insurance charges, during the Accumulation Phase, by 0.25%.
For more detailed information about Contract fees and expenses, please
refer to the fee table and discussion of Contract charges contained in the full
Prospectus which accompanies this Profile.
6. TAXES
Under current federal tax laws, your earnings are not taxed until you take
them out of your Contract. If you take money out, earnings come out first and
are taxed as income. If your Contract is funded with pre-tax or tax deductible
dollars (such as with a pension or IRA contribution) -- we call this a Qualified
Contract -- your entire withdrawal will be taxable. If you are younger than
59 1/2 when you take money out, you may be charged a 10% federal penalty tax on
the earnings. Annuity payments during the Income Phase are considered in part a
return of your original investment. That portion of each payment is not taxable,
except under a Qualified Contract, in which case the entire payment will be
taxable. In all cases, you should consult with your tax adviser for specific tax
information.
Different laws apply if your Contract is issued in Puerto Rico. Under the
tax laws of Puerto Rico, when an annuity payment is made under your Contract,
your annuitant or any other payee is required to include as gross income the
portion of each annuity payment equal to 3% of the aggregate purchase payments
you made under the Contract. The amount if any, in excess of the included amount
is excluded from gross income. After an amount equal to the aggregate amount
excluded from gross income has been received, all of the annuity payments are
considered to be taxable income.
You should consult with your tax adviser for specific tax information.
4
<PAGE>
7. ACCESS TO YOUR MONEY
You can withdraw or transfer money from your Contract at any time during
the Accumulation Phase without the imposition of the withdrawal charge.
Futhermore, no withdrawal charge is imposed upon annuitization. However, amounts
you withdraw, transfer or annuitize from the Fixed Account before your Guarantee
Period has ended may be subject to a Market Value Adjustment.
8. PERFORMANCE
If you invest in one or more Sub-Accounts, the value of your Contract will
increase or decrease depending upon the investment performance of the Funds you
choose. The Sub-Accounts have not been in operation for a full calendar year;
therefore no performance information is provided in this Profile.
9. DEATH BENEFIT
If you die before the Contract reaches the Income Phase, the beneficiary
will receive a death benefit. To calculate the death benefit, we use a "Death
Benefit Date," which is the earliest date we have both due proof of death and a
written request specifying the manner of payment.
BASIC DEATH BENEFIT
If you were 85 or younger when we issued your Contract, the death benefit
is the greatest of:
(1) the value of the Contract on the Death Benefit Date;
(2) the amount we would pay in the event of a full surrender of the
Contract on the Death Benefit Date; and
(3) your total purchase payments (adjusted for partial withdrawals)
calculated as of the Death Benefit Date.
If you were 86 or older when we issued your Contract, the death benefit is
equal to the amount set forth in (2) above. Because this amount will reflect any
applicable withdrawal charges and Market Value Adjustment, it may be less than
your Account value.
OPTIONAL DEATH BENEFIT RIDERS
Subject to availability in your state, if you are 79 or younger when we
issue your Contract, you may enhance this basic death benefit by electing one or
more of the following optional death benefit riders: the Maximum Anniversary
Account Value Rider, the 5% Premium Roll-Up Rider, andthe Earnings Enhancement
Rider.
MAXIMUM ANNIVERSARY ACCOUNT VALUE RIDER
If you elect the Maximum Anniversary Account Value Rider, the death benefit
is the greater of:
- any death benefit amounts payable under (1), (2) or (3) above, or
- your highest Contract value on any Account Anniversary before your 81st
birthday, adjusted for any subsequent purchase payments, partial
withdrawals, and charges made between that Account Anniversary and the
Death Benefit Date.
5% PREMIUM ROLL-UP RIDER
If you elect the 5% Premium Roll-Up Rider, the death benefit is
- the greatest of any death benefit amounts payable under (1), (2) or
(3) above or
- the sum of your total purchase payment plus interest accruals, adjusted
for partial withdrawals.
5
<PAGE>
Under this rider, interest accrues at 5% per year on purchase payments and
transfers to the Variable Account while they remain in the Variable Account. The
5% accruals will continue until the earlier of:
- first day of the month following your 80th birthday or
- the day the death benefit amount under this rider equals twice the total
of the purchase payments and transferred amounts adjusted for withdrawals.
EARNINGS ENHANCEMENT RIDER
If you elect the Earnings Enhancement Rider and you are 69 or younger when
we issue your Contract, the death benefit is:
- the greatest of any death benefit amounts payable under (1), (2) or (3)
above plus
- 40% of the lesser of your net purchase payments or your Account Value
minus net purchase payments, calculated as of the Death Benefit Date.
If you elect the Earnings Enhancement Rider, and you are between the ages
of 70 and 79 when we issue your Contract, the death benefit is:
- the greatest of any death benefit amounts payable under (1), (2) or
(3) above plus
- 25% of the lesser of your net purchase payment or your Account Value minus
net purchase payments, calculated as of the Death Benefit Date.
Net Purchase Payments under this rider will be adjusted for all partial
withdrawals as described in "Calculating the Death Benefit."
SELECTING MULTIPLE DEATH BENEFIT RIDERS
If you elect more than one death benefit rider, the death benefit will be
calculated as follows:
1) MAXIMUM ANNIVERSARY ACCOUNT VALUE RIDER COMBINED WITH 5% PREMIUM ROLL-UP
RIDER: The death benefit will equal the greater of the death benefit
under the Maximum Anniversary Account Value Rider or the death benefit
under the 5% Premium Roll-Up Rider.
2) MAXIMUM ANNIVERSARY ACCOUNT VALUE RIDER COMBINED WITH EARNINGS
ENHANCEMENT RIDER: The death benefit will equal the death benefit under
the Maximum Anniversary Account Value Rider, PLUS the amount calculated
under the Earnings Enhancement Rider. The death benefit under the
Earnings Enhancement Rider is calculated using the Account Value before
the application of the Maximum Anniversary Account Rider.
3) EARNINGS ENHANCEMENT RIDER COMBINED WITH 5% PREMIUM ROLL-UP RIDER: The
death benefit will equal the death benefit under the 5% Premium Roll-Up
Rider, PLUS the amount calculated under the Earnings Enhancement Rider.
The death benefit under the Earnings Enhancement Rider is calculated
using the Account Value before the application of the 5% Premium Roll-Up
Rider.
4) MAXIMUM ANNIVERSARY ACCOUNT VALUE RIDER COMBINED WITH BOTH THE 5%
PREMIUM ROLL-UP RIDER AND THE EARNINGS ENHANCEMENT RIDER: The death
benefit will equal the greater of the death benefit under the Maximum
Anniversary Account Value Rider or the death benefit under the 5% Premium
Roll-Up Rider, PLUS the amount calculated under the Earnings Enhancement
Rider. The death benefit under the Earnings Enhancement Rider is
calculated using the Account Value before the application of the 5%
Premium Roll-Up Rider or the Maximum Anniversary Account Value Rider.
If your spouse is the sole beneficiary, your spouse may elect to continue
the Contract. The death benefit amount described above will be your new account
value as of the Death Benefit Date. For purposes of calculating future death
benefits, your spouse's age and the original issue date will be used to
determine applicable expense and death benefit amounts.
6
<PAGE>
10. OTHER INFORMATION
FREE LOOK. Depending upon applicable state or federal law, if you cancel
your Contract within 10 days after receiving it we will send you the value of
your Contract as of the day we received your cancellation request (this may be
more or less than the original purchase payment) and we will not deduct a
withdrawal charge. However, based upon applicable state or federal law, we will
refund the full amount of any purchase payment(s) we receive and the "free look"
period may be greater than 10 days.
NO PROBATE. In most cases, when you die, the beneficiary will receive the
death benefit without going through probate. However, avoiding probate does not
mean that the beneficiary will not have a tax liability as a result of receiving
the death benefit.
WHO SHOULD PURCHASE A CONTRACT? The Contract is designed for those seeking
long-term tax deferred accumulation of assets and annuity features, generally
for retirement or other long-term investment purposes. The tax-deferred feature
is most attractive to purchasers in high federal and state income tax brackets.
You should note that qualified retirement investments automatically provide tax
deferral regardless of whether or not the underlying contract is an annuity. You
should not buy a Contract if you are looking for a short-term investment or if
you do not wish to risk a decrease in the value of your investment.
CONFIRMATIONS AND QUARTERLY STATEMENTS. You will receive a confirmation or
an acknowledgment of transactions within your Contract, except for those
transactions which are part of an automated program, such as Dollar-Cost
Averaging, Asset Allocation, Systematic Withdrawal and/or Portfolio Rebalancing.
On a quarterly basis, you will receive a complete statement of your transactions
over the past quarter and a summary of your Account values at the end of that
period.
ADDITIONAL FEATURES. The Contract offers the following additional
convenient features, which you may choose at no extra charge. These features may
be started or discontinued at any time by either you or the Company with at
least 30 days notice.
DOLLAR-COST AVERAGING -- This program lets you invest gradually in up to
12 Sub-Accounts.
ASSET ALLOCATION -- This program rebalances your Account balance based on
the terms of the program. Different asset allocation models may be available
over the lifetime of the Contract; however, only one program can be in effect at
any one time.
SYSTEMATIC WITHDRAWAL AND INTEREST OUT PROGRAMS -- These programs allow
you to receive monthly, quarterly, semi-annual or annual payments during the
Accumulation Phase.
PORTFOLIO REBALANCING PROGRAM -- Under this program, we automatically
reallocate your investments in the Sub-Accounts to maintain the proportions you
select. You can elect rebalancing on a quarterly, semi-annual or annual basis.
11. INQUIRIES
If you would like more information about buying a Contract, please contact
your broker or registered representative. If you have any other questions,
please contact us at:
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
C/O RETIREMENT PRODUCTS AND SERVICES
P.O. BOX 1024
BOSTON, MASSACHUSETTS 02103
TELEPHONE: TOLL FREE (800) 752-7215
7
<PAGE>
PROSPECTUS
JUNE __, 2000
MFS REGATTA ACCESS
Sun Life Assurance Company of Canada (U.S.) and Sun Life of Canada (U.S.)
Variable Account F offer the flexible payment deferred annuity contracts and
certificates described in this Prospectus to groups and individuals.
You may choose among 27 variable investment options and a range of fixed
options. The variable options are Sub-Accounts in the Variable Account. Each
Sub-Account invests in one of the following series of the MFS/Sun Life Series
Trust (the "Series Fund"), a mutual fund advised by our affiliate, Massachusetts
Financial Services Company:
<TABLE>
<S> <C>
Bond Series International Growth and Income Series
Capital Appreciation Series Managed Sectors Series
Capital Opportunities Series Massachusetts Investors Growth Stock Series
Emerging Growth Series Massachusetts Investors Trust Series
Emerging Markets Equity Series Money Market Series
Equity Income Series New Discovery Series
Global Asset Allocation Series Research Series
Global Governments Series Research Growth and Income Series
Global Growth Series Research International Series
Global Total Return Series Science and Technology Series
Government Securities Series Strategic Growth Series
High Yield Series Strategic Income Series
International Growth Series Total Return Series
Utilities Series
</TABLE>
The fixed account options are available for specified time periods, called
Guarantee Periods, and pay interest at a guaranteed rate for each period.
THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE SERIES
FUND. PLEASE READ THIS PROSPECTUS AND THE SERIES FUND PROSPECTUS CAREFULLY
BEFORE INVESTING AND KEEP THEM FOR FUTURE REFERENCE. THEY CONTAIN IMPORTANT
INFORMATION ABOUT THE CONTRACTS AND THE SERIES FUND.
We have filed a Statement of Additional Information dated June __, 2000
(the "SAI") with the Securities and Exchange Commission (the "SEC"), which is
incorporated by reference in this Prospectus. The table of contents for the SAI
is on page [ ] of this Prospectus. You may obtain a copy without charge by
writing to us at the address shown below (which we sometimes refer to as our
"Annuity Mailing Address") or by telephoning (800) 752-7215. In addition, the
SEC maintains a website (http://www.sec.gov) that contains the SAI, material
incorporated by reference, and other information regarding companies that file
with the SEC.
THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
ANY REFERENCE IN THIS PROSPECTUS TO RECEIPT BY US MEANS RECEIPT AT THE FOLLOWING
ADDRESS:
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
C/O RETIREMENT PRODUCTS AND SERVICES
P.O. BOX 1024
BOSTON, MASSACHUSETTS 02103
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Special Terms 4
Expense Summary 4
Summary of Contract Expenses 4
Underlying Fund Annual Expenses 5
Examples 6
The Annuity Contract 7
Communicating To Us About Your Contract 7
Sun Life Assurance Company of Canada (U.S.) 8
The Variable Account 8
Variable Account Options: The Funds 8
The Fixed Account 10
The Fixed Account Options: The Guarantee Periods 11
The Accumulation Phase 11
Issuing Your Contract 11
Amount and Frequency of Purchase Payments 12
Allocation of Net Purchase Payments 12
Your Account 12
Your Account Value 12
Variable Account Value 12
Fixed Account Value 13
Transfer Privilege 14
Waivers; Reduced Charges; Bonus Guaranteed Interest
Rates 15
Optional Programs 15
Withdrawals and Market Value Adjustment 17
Cash Withdrawals 17
Market Value Adjustment 18
Contract Charges 19
Account Fee 19
Administrative Expense Charge 19
Mortality and Expense Risk Charge 19
Charge for Optional Death Benefit Riders 20
Premium Taxes 20
Fund Expenses 20
Modification in the Case of Group Contracts 20
Death Benefit 20
Amount of Death Benefit 20
The Basic Death Benefit 21
Optional Death Benefit Riders 21
Spousal Continuance 22
Calculating the Death Benefit 23
Method of Paying Death Benefit 23
Non-Qualified Contracts 23
Selection and Change of Beneficiary 24
Payment of Death Benefit 24
Due Proof of Death 24
The Income Phase -- Annuity Provisions 24
Selection of the Annuitant or Co-Annuitant 24
Selection of the Annuity Commencement Date 25
Annuity Options 25
Selection of Annuity Option 26
Amount of Annuity Payments 26
Exchange of Variable Annuity Units 27
Account Fee 27
Annuity Payment Rates 27
Annuity Options as Method of Payment for Death Benefit 28
Other Contract Provisions 28
Exercise of Contract Rights 28
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Change of Ownership 28
Voting of Fund Shares 29
Periodic Reports 29
Substitution of Securities 30
Change in Operation of Variable Account 30
Splitting Units 30
Modification 30
Discontinuance of New Participants 31
Reservation of Rights 31
Right to Return 31
Tax Considerations 31
U.S. Federal Tax Considerations 31
DEDUCTIBILITY OF PURCHASE PAYMENTS 32
PRE-DISTRIBUTION TAXATION OF CONTRACTS 32
DISTRIBUTIONS AND WITHDRAWALS FROM NON-QUALIFIED
CONTRACTS 32
DISTRIBUTION AND WITHDRAWALS FROM QUALIFIED
CONTRACTS 32
WITHHOLDING 33
INVESTMENT DIVERSIFICATION AND CONTROL 33
TAX TREATMENT OF THE COMPANY AND THE VARIABLE
ACCOUNT 33
QUALIFIED RETIREMENT PLANS 33
PENSION AND PROFIT-SHARING PLANS 34
TAX-SHELTERED ANNUITIES 34
INDIVIDUAL RETIREMENT ACCOUNTS 34
ROTH IRAS 34
Puerto Rico Tax Considerations 35
Administration of the Contracts 35
Distribution of the Contracts 35
Performance Information 36
Available Information 37
Incorporation of Certain Documents by Reference 37
Additional Information About the Company 38
Business of the Company
Selected Financial Data
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Capital Resources
Demutualization
Year 2000 Compliance
Sale of Subsidiary
Quantitative and Qualitative Disclosures About Market
Risk
Reinsurance 38
Reserves 38
Investments 38
Competition 38
Employees 38
Properties 39
State Regulation 39
Legal Proceedings 39
Accountants 40
Financial Statements 40
Table of Contents of Statement of Additional Information 41
Appendix A -- Glossary 43
Appendix B -- Market Value Adjustment 46
Appendix C -- Calculation of Basic Death Benefit 48
Appendix D -- Calculation of Earnings Enhancement Optional
Death Benefit Rider 49
Appendix E -- Calculation of Death Benefit When All Three
Riders are Selected 50
</TABLE>
3
<PAGE>
SPECIAL TERMS
Your Contract is a legal document that uses a number of specially defined
terms. We explain most of the terms that we use in this Prospectus in the
context where they arise, and some are self-explanatory. In addition, for
convenient reference, we have compiled a list of these terms in the Glossary
included at the back of this Prospectus as Appendix A. If, while you are reading
this Prospectus, you come across a term that you do not understand, please refer
to the Glossary for an explanation.
EXPENSE SUMMARY
The purpose of the following table is to help you understand the costs and
expenses that you will bear directly and indirectly under a Contract WHEN YOU
ALLOCATE MONEY TO THE VARIABLE ACCOUNT. The table reflects expenses of the
Variable Account as well as of each Fund. The table should be considered
together with the narrative provided under the heading "Contract Charges" in
this Prospectus, and with the Funds' prospectus(es). In addition to the expenses
listed below, we may deduct premium taxes, where required by state law.
SUMMARY OF CONTRACT EXPENSES
<TABLE>
<S> <C>
TRANSACTION EXPENSES
Sales Load Imposed on Purchase Payments..................... $ 0
Transfer Fee (1)............................................ $ 0
ANNUAL ACCOUNT FEE per Contract or Certificate (2) $ 50
VARIABLE ACCOUNT ANNUAL EXPENSES (as a percentage of average
Variable Account assets)
</TABLE>
<TABLE>
<CAPTION>
FOR CONTRACTS WITH AN INITIAL FOR CONTRACTS WITH AN INITIAL
PURCHASE PAYMENT PURCHASE PAYMENT
LESS THAN $1,000,000 OF $1,000,000 OR MORE
<S> <C> <C> <C>
Mortality and Expense Risks Charge.... 1.25% Mortality and Expense Risks Charge.... 1.00%
Administrative Expenses Charge........ 0.15% Administrative Expenses Charge........ 0.15%
===== =====
Total Variable Annuity Annual Total Variable Annuity Annual
Expenses (3).......................... 1.40% Expenses (3).......................... 1.15%
</TABLE>
- ------------------------
(1) A Market Value Adjustment may be imposed on amounts transferred from or
within the Fixed Account. We reserve the right to impose up to $15 per
transfer.
(2) The Annual Account Fee will not exceed $50.
(3) An additional charge will apply during the Accumulation Phase if you elect
one or more of the optional death benefit riders. See "Charge for Optional
Death Benefit Riders."
4
<PAGE>
UNDERLYING FUND ANNUAL EXPENSES (1)
(AS A PERCENTAGE OF FUND NET ASSETS)
<TABLE>
<CAPTION>
OTHER TOTAL ANNUAL FUND
MANAGEMENT FUND EXPENSES(2) EXPENSES
FUND FEES (AFTER REIMBURSEMENT) (AFTER REIMBURSEMENT)
- ---- ----------- --------------------- ---------------------
<S> <C> <C> <C>
Bond Series............................... 0.60% 0.12% 0.72%
Capital Appreciation Series............... 0.71% 0.05% 0.76%
Capital Opportunities Series.............. 0.75% 0.09% 0.84%
Emerging Growth Series.................... 0.70% 0.05% 0.75%
Emerging Markets Equity Series............ 1.25% 0.35% 1.60%
Equity Income Series...................... 0.75% 0.26% 1.01%
Global Asset Allocation Series............ 0.75% 0.14% 0.89%
Global Governments Series................. 0.75% 0.15% 0.90%
Global Growth Series...................... 0.90% 0.11% 1.01%
Global Total Return Series................ 0.75% 0.14% 0.89%
Government Securities Series.............. 0.55% 0.06% 0.61%
High Yield Series......................... 0.75% 0.08% 0.83%
International Growth Series............... 0.98% 0.25% 1.23%
International Growth and Income Series.... 0.98% 0.18% 1.16%
Managed Sectors Series.................... 0.73% 0.06% 0.79%
Massachusetts Investors Growth Stock
Series................................... 0.75% 0.08% 0.83%
Massachusetts Investors Trust Series...... 0.55% 0.04% 0.59%
Money Market Series....................... 0.50% 0.07% 0.57%
New Discovery Series...................... 0.90% 0.16% 1.06%
Research Series........................... 0.70% 0.05% 0.75%
Research Growth and Income Series......... 0.75% 0.11% 0.86%
Research International Series............. 1.00% 0.50% 1.50%
Science and Technology Series............. [ ]% [ ]% [ ]%
Strategic Growth Series(3)................ 0.75% 0.25% 1.00%
Strategic Income Series................... 0.75% 0.33% 1.08%
Total Return Series....................... 0.65% 0.04% 0.69%
Utilities Series.......................... 0.75% 0.06% 0.81%
</TABLE>
- --------------------------
(1) The information relating to Fund expenses was provided by the Funds and we
have not independently verified it. You should consult the Fund
prospectus(es) for more information about Fund expenses.
(2) Each Fund has an expense offset arrangement which reduces the Fund's
custodian fee based upon the amount of cash maintained by the Fund with its
custodian and dividend disbursing agent, and may enter into such other
arrangements and directed brokerage arrangements (which would also have the
effect of reducing the Fund's expenses). Any such fee reductions are not
reflected in the table. Had these fees been taken into account, "Total Fund
Expenses" would be as follows:
<TABLE>
<S> <C>
Bonds Series................................................ 0.71%
Capital Appreciation Series................................. 0.75%
Capital Opportunities Series................................ 0.83%
Equity Income Series........................................ 1.00%
Global Asset Allocation Series.............................. 0.88%
Global Growth Series........................................ 1.00%
High Yield Series........................................... 0.82%
New Discovery Series........................................ 1.05%
Research Growth and Income Series........................... 0.85%
Strategic Income Series..................................... 1.03%
Utilities Series............................................ 0.80%
</TABLE>
(3) The investment adviser has agreed to bear the expenses of the Strategic
Growth Series such that "Other Expenses," after taking into account the
expense offset arrangement described in the previous paragraph, do not
exceed 0.25% annually. This arrangement will continue until at least May 1,
2001, unless changed with the consent of the Series Fund's Board of
Directors; provided, however, that this arrangement will terminate prior to
May 1, 2001 in the event that the Strategic Growth Series' "Other Expenses"
equal or fall below 0.25% annually.
Without taking into account the fee waiver and/or expense reimbursement, the
Strategic Growth Series' Other Expenses and Total Fund Expenses would be
estimated to be 2.90% and 3.65%, respectively.
5
<PAGE>
EXAMPLES
If you surrender your Contract at the end of the applicable time period,
you would pay the following expenses on a $1,000 investment, assuming a 5%
annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Bond Series.................................................
Capital Appreciation Series.................................
Capital Opportunities Series................................
Emerging Growth Series......................................
Emerging Markets Equity Series..............................
Equity Income Series........................................
Global Asset Allocation Series..............................
Global Governments Series...................................
Global Growth Series........................................
Global Total Return Series..................................
Government Securities Series................................
High Yield Series...........................................
International Growth Series.................................
International Growth and Income Series......................
Managed Sectors Series......................................
Massachusetts Investors Growth Stock Series.................
Massachusetts Investors Trust Series........................
Money Market Series.........................................
New Discovery Series........................................
Research Series.............................................
Research Growth and Income Series...........................
Research International Series...............................
Science and Technology Series...............................
Strategic Growth Series.....................................
Strategic Income Series.....................................
Total Return Series.........................................
Utilities Series............................................
</TABLE>
If you do NOT surrender your Contract, 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:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Bond Series.................................................
Capital Appreciation Series.................................
Capital Opportunities Series................................
Emerging Growth Series......................................
Emerging Markets Equity Series..............................
Equity Income Series........................................
Global Asset Allocation Series..............................
Global Governments Series...................................
Global Growth Series........................................
Global Total Return Series..................................
Government Securities Series................................
High Yield Series...........................................
International Growth Series.................................
International Growth and Income Series......................
Managed Sectors Series......................................
Massachusetts Investors Growth Stock Series.................
Massachusetts Investors Trust Series........................
Money Market Series.........................................
New Discovery Series........................................
Research Series.............................................
Research Growth and Income Series...........................
Research International Series...............................
Science and Technology Series...............................
Strategic Growth Income.....................................
Strategic Income Series.....................................
Total Return Series.........................................
Utilities Series............................................
</TABLE>
6
<PAGE>
THE EXAMPLES SHOULD NOT BE CONSIDERED TO BE REPRESENTATIONS OF PAST OR
FUTURE EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LOWER THAN THOSE SHOWN.
THE ANNUITY CONTRACT
Sun Life Assurance Company of Canada (U.S.) (the "Company", "we" or "us")
and Sun Life of Canada (U.S.) Variable Account F (the "Variable Account") offer
the Contracts to groups and individuals for use in connection with their
retirement plans. The Contracts are available on a group basis and, in certain
states, may be available on an individual basis. We issue an Individual Contract
directly to the individual owner of the Contract. We issue a Group Contract to
the Owner covering all individuals participating under the Group Contract; each
individual receives a Certificate that evidences his or her participation under
the Group Contract.
In this Prospectus, unless we state otherwise, we refer to both the owners
of Individual Contracts and participating individuals under Group Contracts as
"Participants" and we address all Participants as "you"; we use the term
"Contracts" to include Individual Contracts, Group Contracts, and Certificates
issued under Group Contracts. For the purpose of determining benefits under both
Individual Contracts and Group Contracts, we establish an Account for each
Participant, which we will refer to as "your" Account or a "Participant
Account."
Your Contract provides a number of important benefits for your retirement
planning. It has an Accumulation Phase, during which you make payments under the
Contract and allocate them to one or more Variable Account or Fixed Account
options, and an Income Phase, during which we make payments based on the amount
you have accumulated. Your Contract provides tax deferral, so that you do not
pay taxes on your earnings under your Contract until you withdraw them. It
provides a death benefit if you die during the Accumulation Phase. Finally, if
you so elect, during the Income Phase we will make annuity payments to you or
someone else for life or for another period that you choose.
You choose these benefits on a variable or fixed basis or a combination of
both. When you choose variable investment options or a Variable Annuity option,
your benefits will be responsive to changes in the economic environment,
including inflationary forces and changes in rates of return available from
different types of investments. With these options, you assume all investment
risk under the Contract. When you choose a Guarantee Period in our Fixed Account
or a Fixed Annuity option, we assume the investment risk, except in the case of
early withdrawals in the Accumulation Phase, where you bear the risk of
unfavorable interest rate changes. You also bear the risk that the interest
rates we will offer in the future and the rates we will use in determining your
Fixed Annuity might not exceed our minimum guaranteed rate, which is 3% per year
during the Accumulation Phase and 2.5% per year during the Income Phase,
compounded annually. For certain Contracts issued pursuant to an exchange
program approved by the SEC, the minimum guaranteed rate may be higher to
correspond to the guaranteed rate on the exchanged contract.
The Contracts are designed for use in connection with retirement and
deferred compensation plans, some of which qualify for favorable federal income
tax treatment under Sections 401, 403, 408 or 408A of the Internal Revenue Code.
The Contracts are also designed so that they may be used in connection with
certain non-tax-qualified retirement plans, such as payroll savings plans and
such other groups (trusteed or nontrusteed) as may be eligible under applicable
law. We refer to Contracts used with plans that receive favorable tax treatment
as "Qualified Contracts," and all others as "Non-Qualified Contracts."
COMMUNICATING TO US ABOUT YOUR CONTRACT
All materials sent to us, including Purchase Payments, must be sent to our
Annuity Mailing Address set forth on the first page of this Prospectus. For all
telephone communications, you must call (800) 752-7215.
Unless this Prospectus states differently, we will consider all materials
sent to us and all telephone communications to be received on the date we
actually receive them at our Annuity Mailing Address. However, we will consider
all financial transactions, including Purchase Payments, withdrawal
7
<PAGE>
requests, and transfer instructions to be received on the next Business Day if
we receive them (1) on a day that is not a Business Day or (2) after 4:00 p.m.,
Eastern Time.
When we specify that notice to us must be in writing, we reserve the
right, in our sole discretion, to accept notice in another form.
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
We are a stock life insurance company incorporated under the laws of
Delaware on January 12, 1970. We do business in 48 states, the District of
Columbia, and Puerto Rico, and we have an insurance company subsidiary that does
business in New York. Our Executive Office mailing address is One Sun Life
Executive Park, Wellesley Hills, Massachusetts 02481.
We are an indirect wholly-owned subsidiary of Sun Life Assurance Company
of Canada ("Sun Life (Canada)"). Sun Life (Canada) is a mutual life insurance
company incorporated pursuant to Act of Parliament of Canada in 1865 and
currently transacts business in all of the Canadian provinces and territories,
all U.S. states (except New York), the District of Columbia, Puerto Rico, the
Virgin Islands, Great Britain, Ireland, Hong Kong, Bermuda, the Philippines,
Indonesia, and the People's Republic of China.
THE VARIABLE ACCOUNT
We established the Variable Account as a separate account on July 13,
1989, pursuant to a resolution of our Board of Directors. Under Delaware
insurance law and the Contract, the income, gains or losses of the Variable
Account are credited to or charged against the assets of the Variable Account
without regard to the other income, gains, or losses of the Company. These
assets are held in relation to the Contracts described in this Prospectus and
other variable annuity contracts that provide benefits that vary in accordance
with the investment performance of the Variable Account. Although the assets
maintained in the Variable Account will not be charged with any liabilities
arising out of any other business we conduct, all obligations arising under the
Contracts, including the promise to make annuity payments, are general corporate
obligations of the Company.
The assets of the Variable Account are divided into Sub-Accounts. Each
Sub-Account invests exclusively in shares of a specific series of the MFS/Sun
Life Series Trust (the "Series Fund"). All amounts allocated to the Variable
Account will be used to purchase Series Fund shares as designated by you at
their net asset value. Any and all distributions made by the Funds with respect
to the shares held by the Variable Account will be reinvested to purchase
additional shares at their net asset value. Deductions will be made from the
Variable Account for cash withdrawals, annuity payments, death benefits, Account
Fees, Contract charges against the assets of the Variable Account for the
assumption of mortality and expense risks, administrative expenses and any
applicable taxes. The Variable Account will be fully invested in Fund shares at
all times.
VARIABLE ACCOUNT OPTIONS:
THE FUNDS
The MFS/Sun Life Series Trust (the "Series Fund") is an open-end
management investment company registered under the Investment Company Act of
1940. Our affiliate, Massachusetts Financial Services Company ("MFS"), serves as
the investment adviser to the Series Fund.
The Series Fund is composed of 28 independent portfolios of securities,
each of which has separate investment objectives and policies. Shares of the
Series Fund are issued in 28 series (which we sometimes refer to in this
Prospectus as the "Funds"), each corresponding to one of the portfolios. The
Contracts provide for investment by the Sub-Accounts in shares of the 27 Funds
described below. Additional portfolios may be added to the Series Fund which may
or may not be available for investment by the Variable Account.
BOND SERIES will primarily seek as high a level of current income as is
believed to be consistent with prudent investment risk; its secondary
objective is to seek to protect shareholders' capital.
8
<PAGE>
CAPITAL APPRECIATION SERIES will seek to maximize capital appreciation by
investing in securities of all types, with major emphasis on common stocks.
CAPITAL OPPORTUNITIES SERIES will seek capital appreciation.
EMERGING GROWTH SERIES will seek long-term growth of capital.
EMERGING MARKETS EQUITY SERIES will seek capital appreciation.
EQUITY INCOME SERIES will primarily seek reasonable income by investing
mainly in income producing securities; its secondary objective is to seek
capital appreciation.
GLOBAL ASSET ALLOCATION SERIES will seek total return over the long term
through investments in equity and fixed income securities and will also
seek to have low volatility of share price (i.e., net asset value per
share) and reduced risk (compared to an aggressive equity/fixed income
portfolio).
GLOBAL GOVERNMENTS SERIES will seek to provide moderate current income,
preservation of capital and growth of capital by investing in debt
obligations that are issued or guaranteed as to principal and interest by
either (i) the U.S. Government, its agencies, authorities, or
instrumentalities, or (ii) the governments of foreign countries (to the
extent that the Series' adviser believes that the higher yields available
from foreign government securities are sufficient to justify the risks of
investing in these securities).
GLOBAL GROWTH SERIES will seek capital appreciation by investing in
securities of companies worldwide growing at rates expected to be well
above the growth rate of the overall U.S. economy.
GLOBAL TOTAL RETURN SERIES will seek total return by investing in
securities which will provide above average current income (compared to a
portfolio invested entirely in equity securities) and opportunities for
long-term growth of capital and income.
GOVERNMENT SECURITIES SERIES will seek current income and preservation of
capital by investing in U.S. Government and U.S. Government-related
securities.
HIGH YIELD SERIES will seek high current income and capital appreciation by
investing primarily in certain lower rated or unrated securities (possibly
with equity features) of U.S. and foreign issuers (also known as "junk
bonds").
INTERNATIONAL GROWTH SERIES will seek capital appreciation.
INTERNATIONAL GROWTH AND INCOME SERIES will seek capital appreciation and
current income.
MANAGED SECTORS SERIES will seek capital appreciation by varying the
weighting of its portfolio among 13 industry sectors.
MASSACHUSETTS INVESTORS GROWTH STOCK SERIES will seek to provide long-term
growth of capital and future income rather than current income.
MASSACHUSETTS INVESTORS TRUST SERIES will seek long-term growth of capital
and future income while providing more current dividend income than is
normally obtainable from a portfolio of only growth stocks.
MONEY MARKET SERIES will seek maximum current income to the extent
consistent with stability of principal by investing exclusively in money
market instruments maturing in less than 13 months.
NEW DISCOVERY SERIES will seek capital appreciation.
RESEARCH SERIES will seek to provide long-term growth of capital and future
income.
9
<PAGE>
RESEARCH GROWTH AND INCOME SERIES will seek to provide long-term growth of
capital, current income and growth of income.
RESEARCH INTERNATIONAL SERIES will seek capital appreciation.
[SCIENCE AND TECHNOLOGY SERIES]
STRATEGIC GROWTH SERIES will seek capital appreciation.
STRATEGIC INCOME SERIES will seek to provide high current income by
investing in fixed income securities and will seek to take advantage of
opportunities to realize significant capital appreciation while maintaining
a high level of current income.
TOTAL RETURN SERIES will primarily seek to obtain above-average income
(compared to a portfolio entirely invested in equity securities) consistent
with prudent employment of capital; its secondary objective is to take
advantage of opportunities for growth of capital and income since many
securities offering a better than average yield may also possess growth
potential.
UTILITIES SERIES will seek capital growth and current income (income above
that available from a portfolio invested entirely in equity securities) by
investing, under normal market conditions, at least 65% of its assets in
equity and debt securities of both domestic and foreign companies in the
utilities industry.
The Funds pays fees to their investment adviser(s) for services rendered
pursuant to investment advisory agreements. MFS also serves as investment
adviser to each of the funds in the MFS Family of Funds, and to certain other
investment companies established by MFS and/or us. MFS Institutional
Advisers, Inc., a wholly-owned subsidiary of MFS, provides investment advice to
substantial private clients. MFS and its predecessor organizations have a
history of money management dating from 1924. MFS operates as an autonomous
organization and the obligation of performance with respect to the investment
advisory and underwriting agreements (including supervision of the sub-advisers
noted below) is solely that of MFS. We undertake no obligation in this regard.
MFS may serve as the investment adviser to other mutual funds which have
similar investment goals and principal investment policies and risks as the
Fund, and which may be managed by a Fund's portfolio manager(s). While a Fund
may have many similarities to these other funds, its investment performance will
differ from their investment performance. This is due to a number of differences
between the Fund and these similar products, including differences in sales
charges, expense ratios and cash flows.
The Series Fund also offers its shares to other separate accounts
established by the Company and our New York subsidiary in connection with
variable annuity and variable life insurance contracts. Although we do not
anticipate any disadvantages to this arrangement, there is a possibility that a
material conflict may arise between the interests of the Variable Account and
one or more of the other separate accounts investing in the Series Fund. A
conflict may occur due to differences in tax laws affecting the operations of
variable life and variable annuity separate accounts, or some other reason. We
and the Series Fund's Board of Trustees will monitor events for such conflicts,
and, in the event of a conflict, we will take steps necessary to remedy the
conflict, including withdrawal of the Variable Account from participation in the
Series which is involved in the conflict or substitution of shares of other
Series or other mutual funds.
MORE COMPREHENSIVE INFORMATION ABOUT THE FUNDS AND THE MANAGEMENT,
INVESTMENT OBJECTIVES, POLICIES, RESTRICTIONS, EXPENSES AND POTENTIAL RISKS OF
EACH FUND MAY BE FOUND IN THE ACCOMPANYING CURRENT FUND PROSPECTUS(ES). YOU
SHOULD READ THE FUND PROSPECTUS(ES) CAREFULLY BEFORE INVESTING. THE STATEMENT OF
ADDITIONAL INFORMATION OF THE FUNDS IS AVAILABLE BY CALLING 1-800-752-7215.
THE FIXED ACCOUNT
The Fixed Account is made up of all the general assets of the Company
other than those allocated to any separate account. Amounts you allocate to
Guarantee Periods become part of the
10
<PAGE>
Fixed Account, and are available to fund the claims of all classes of our
customers, including claims for benefits under the Contracts.
We will invest the assets of the Fixed Account in those assets we choose
that are allowed by applicable state insurance laws. In general, these laws
permit investments, within specified limits and subject to certain
qualifications, in federal, state and municipal obligations, corporate bonds,
preferred and common stocks, real estate mortgages, real estate and certain
other investments. We intend to invest primarily in investment-grade fixed
income securities (i.e., rated by a nationally recognized rating service within
the 4 highest grades) or instruments we believe are of comparable quality. We
are not obligated to invest amounts allocated to the Fixed Account according to
any particular strategy, except as may be required by applicable state insurance
laws. You will not have a direct or indirect interest in the Fixed Account
investments.
THE FIXED ACCOUNT OPTIONS:
THE GUARANTEE PERIODS
You may elect one or more Guarantee Period(s) from those we make available
from time to time. We publish Guaranteed Interest Rates for each Guarantee
Period offered. We may change the Guaranteed Interest Rates we offer from time
to time, but no Guaranteed Interest Rate will ever be less than 3% per year,
compounded annually. Also, once we have accepted your allocation to a particular
Guarantee Period, we promise that the Guaranteed Interest Rate applicable to
that allocation will not change for the duration of the Guarantee Period.
We determine Guaranteed Interest Rates in our discretion. We do not have a
specific formula for establishing the rates for different Guarantee Periods. Our
determination will be influenced by the interest rates on fixed income
investments in which we may invest amounts allocated to the Guarantee Periods.
We will also consider other factors in determining these rates, including
regulatory and tax requirements, sales commissions and administrative expenses
borne by us, general economic trends and competitive factors. We cannot predict
the level of future interest rates.
We may from time to time in our discretion offer interest rate specials
for new Purchase Payments that are higher than the rates we are then offering
for renewals or transfers.
Early withdrawals from your allocation to a Guarantee Period, including
cash withdrawals, transfers, and commencement of an annuity option, may be
subject to a Market Value Adjustment, which could decrease or increase the value
of your Account. See "Withdrawals and Market Value Adjustment."
THE ACCUMULATION PHASE
During the Accumulation Phase of your Contract, you make payments into
your Account, and your earnings accumulate on a tax-deferred basis. The
Accumulation Phase begins with our acceptance of your first Purchase Payment and
ends the Business Day before your Annuity Commencement Date. The Accumulation
Phase will end sooner if you surrender your Contract or die before the Annuity
Commencement Date.
ISSUING YOUR CONTRACT
When you purchase a Contract, a completed Application and the initial
Purchase Payment are sent to us for acceptance. When we accept an Individual
Contract, we issue the Contract to you. When we accept a Group Contract, we
issue the Contract to the Owner; we issue a Certificate to you as a Participant.
We will credit your initial Purchase Payment to your Account within 2
business days of receiving your completed Application. If your Application is
not complete, we will notify you. If we do not have the necessary information to
complete the Application within 5 business days, we will send your money back to
you or ask your permission to retain your Purchase Payment until the Application
is made
11
<PAGE>
complete. Then we will apply the Purchase Payment within 2 business days of when
the Application is complete.
AMOUNT AND FREQUENCY OF PURCHASE PAYMENTS
The amount of Purchase Payments may vary. In general; however, we will not
accept an initial Purchase Payment of less than $20,000, and each subsequent
Purchase Payment must be at least $1,000, unless we waive these limits. In
addition, we will not accept a Purchase Payment if your Account Value is over $2
million, or if the subsequent Purchase Payment would cause your Account Value to
exceed $2 million, unless we have approved the Payment in advance. Within these
limits, you may make Purchase Payments at any time during the Accumulation
Phase.
ALLOCATION OF NET PURCHASE PAYMENTS
You may allocate your Purchase Payments among the different Sub-Accounts
and Guarantee Periods we offer, but any allocation to a Guarantee Period must be
at least $1,000. Over the life of your Contract, you may allocate amounts among
as many as 18 of the available investment options.
In your Application, you may specify the percentage of each Purchase
Payment to be allocated to each Sub-Account or Guarantee Period. These
percentages are called your allocation factors. You may change the allocation
factors for future Payments by sending us written notice of the change, as
required. We will use your new allocation factors for the first Purchase Payment
we receive with or after we have received notice of the change, and for all
future Purchase Payments, until we receive another change notice.
Although it is currently not our practice, we may deduct applicable
premium taxes or similar taxes from your Purchase Payments. See "Contract
Charges -- Premium Taxes." In that case, we will credit your Net Purchase
Payment, which is the Purchase Payment minus the amount of those taxes.
YOUR ACCOUNT
When we accept your first Purchase Payment, we establish an Account for
you, which we maintain throughout the Accumulation Phase of your Contract.
YOUR ACCOUNT VALUE
Your Account Value is the sum of the value of the 2 components of your
Contract: the Variable Account portion of your Contract ("Variable Account
Value") and the Fixed Account portion of your Contract ("Fixed Account Value").
These 2 components are calculated separately, as described below under "Variable
Account Value" and "Fixed Account Value."
VARIABLE ACCOUNT VALUE
VARIABLE ACCUMULATION UNITS
In order to calculate your Variable Account Value, we use a measure called
a Variable Accumulation Unit for each Sub-Account. Your Variable Account Value
is the sum of your Account Value in each Sub-Account, which is the number of
your Variable Accumulation Units for that Sub-Account times the value of each
Unit.
VARIABLE ACCUMULATION UNIT VALUE
The value of each Variable Accumulation Unit in a Sub-Account reflects the
net investment performance of that Sub-Account. We determine that value once on
each day that the New York Stock Exchange is open for trading (a "Business
Day"), at the close of trading, which is currently 4:00 p.m., Eastern Time. (The
close of trading is determined by the New York Stock Exchange.) We also may
determine the value of Variable Accumulation Units of a Sub-Account on days the
Exchange is closed if there is enough trading in securities held by that
Sub-Account to materially affect the value of the Variable Accumulation Units.
Each day we make a valuation is called a "Business Day." The period that begins
at the time Variable Accumulation Units are valued on a Business Day and ends at
that
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time on the next Business Day is called a Valuation Period. On days other than
Business Days, the value of a Variable Accumulation Unit does not change.
To measure these values, we use a factor -- which we call the Net
Investment Factor -- which represents the net return on the Sub-Account's
assets. At the end of any Valuation Period, the value of a Variable Accumulation
Unit for a Sub-Account is equal to the value of that Sub-Account's Variable
Accumulation Units at the end of the previous Valuation Period, multiplied by
the Net Investment Factor. We calculate the Net Investment Factor by dividing
(1) the net asset value of a Fund share held in the Sub-Account at the end of
that Valuation Period, plus the per share amount of any dividend or capital
gains distribution made by that Fund during the Valuation Period, by (2) the net
asset value per share of the Fund share at the end of the previous Valuation
Period; we then deduct a factor representing the mortality and expense risk
charge and administrative expense charge for each day in the Valuation Period.
See "Contract Charges."
For a hypothetical example of how we calculate the value of a Variable
Accumulation Unit, see the Statement of Additional Information.
CREDITING AND CANCELING VARIABLE ACCUMULATION UNITS
When we receive an allocation to a Sub-Account either from a Net Purchase
Payment or a transfer of Account Value, we credit that amount to your Account in
Variable Accumulation Units. Similarly, we cancel Variable Accumulation Units
when you transfer or withdraw amounts from a Sub-Account, or when we deduct
certain charges under the Contract. We determine the number of Units credited or
canceled by dividing the dollar amount by the Variable Accumulation Unit value
for that Sub-Account at the end of the Valuation Period during which the
transaction or charge is effective.
FIXED ACCOUNT VALUE
Your Fixed Account value is the sum of all amounts allocated to Guarantee
Periods, either from Net Purchase Payments, transfers or renewals, plus interest
credited on those amounts, and minus withdrawals, transfers out of Guarantee
Periods, and any deductions for charges under the Contract taken from your Fixed
Account Value.
CREDITING INTEREST
We credit interest on amounts allocated to a Guarantee Period at the
applicable Guaranteed Interest Rate for the duration of the Guarantee Period.
The Guarantee Period begins the day we apply your allocation and ends when the
number of calendar years (or months if the Guarantee Period is less than one
year) in the Guarantee Period (measured from the end of the calendar month in
which the amount was allocated to the Guarantee Period) have elapsed. The last
day of the Guarantee Period is its Renewal Date. During the Guarantee Period, we
credit interest daily at a rate that yields the Guaranteed Interest Rate on an
annual effective basis.
GUARANTEE AMOUNTS
Each separate allocation you make to a Guarantee Period, together with
interest credited thereon, is called a Guarantee Amount. Each Guarantee Amount
is treated separately for purposes of determining the Market Value Adjustment. A
Guarantee Period that will extend beyond your maximum Annuity Commencement Date
will result in an application of a Market Value Adjustment upon annuitization or
withdrawals. Each new allocation to a Guarantee Period must be at least $1,000.
RENEWALS
We will notify you in writing between 45 and 75 days before the Renewal
Date for any Guarantee Amount. A new Guarantee Period of the same duration will
begin automatically for that Guarantee Amount on the first day following the
Renewal Date, unless before the Renewal Date we receive:
(1) written notice from you electing a different Guarantee Period from among
those we then offer, or
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<PAGE>
(2) instructions to transfer the Guarantee Amount to one or more
Sub-Accounts, in accordance with the transfer privilege provisions of the
Contract (see "Transfer Privilege" below).
A Guarantee Amount will not renew into a Guarantee Period that will extend
beyond your Maximum Annuity Commencement Date. We will automatically renew your
Guarantee Amount into the next available Guarantee Period.
EARLY WITHDRAWALS
If you withdraw, transfer, or annuitize an allocation to a Guarantee
Period 30 days prior to the Renewal Date, we will apply a Market Value
Adjustment to the transaction. This could result in an increase or decrease of
your Account Value, depending on interest rates at the time. You bear the risk
that you will receive less than your principal if the Market Value Adjustment
applies.
TRANSFER PRIVILEGE
PERMITTED TRANSFERS
During the Accumulation Phase, you may transfer all or part of your
Account Value to one or more Sub-Accounts or Guarantee Periods then available,
subject to the following restrictions:
- You may not make more than 12 transfers in any Account Year;
- The amount transferred from a Sub-Account must be at least $1,000,
unless you are transferring your entire balance in that Sub-Account;
- Your Account Value remaining in a Sub-Account must be at least $1,000;
- The amount transferred from a Guarantee Period must be the entire
Guarantee Amount, except for transfers of interest credited during the
current Account Year;
- At least 30 days must elapse between transfers to or from Guarantee
Periods;
- Transfers to or from Sub-Accounts are subject to terms and conditions
that may be imposed by the Funds; and
- We impose additional restrictions on market timers, which are further
described below.
These restrictions do not apply to transfers made under an approved
dollar-cost averaging program.
There is usually no charge imposed on transfers; however, we reserve the
right to impose a transfer charge of $15 for each transfer. Transfers out of a
Guarantee Period more than 30 days before the Renewal Date or any time after the
Renewal Date will be subject to the Market Value Adjustment described below.
Under current law, there is no tax liability for transfers.
REQUESTS FOR TRANSFERS
You may request transfers in writing or by telephone. The telephone
transfer privilege is available automatically, and does not require your written
election. We will require personal identifying information to process a request
for a transfer made by telephone. We will not be liable for following
instructions communicated by telephone that we reasonably believe are genuine.
If we receive your transfer request before 4:00 p.m. Eastern Time on a
Business Day or prior to the close of the New York Stock Exchange, it will be
effective that day. Otherwise, it will be effective the next Business Day.
MARKET TIMERS
The Contracts are not designed for professional market timing
organizations or other entities using programmed and frequent transfers. If you
wish to employ such strategies, you should not purchase a Contract. Accordingly,
transfers may be subject to restrictions if exercised by a market timing firm or
any other third party authorized to initiate transfer transactions on behalf of
multiple Participants. In imposing such restrictions, we may, among other
things, not accept (1) the transfer instructions of any agent acting under a
power of attorney on behalf of more than one Participant, or (2) the
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<PAGE>
transfer instructions of individual Participants who have executed preauthorized
transfer forms that are submitted at the same time by market timing firms or
other third parties on behalf of more than one Participant. We will not impose
these restrictions unless our actions are reasonably intended to prevent the use
of such transfers in a manner that will disadvantage or potentially impair the
Contract rights of other Participants.
In addition, the Series Fund has reserved the right to temporarily or
permanently refuse exchange requests from the Variable Account if, in MFS'
judgment, a Fund would be unable to invest effectively in accordance with its
investment objective and policies, or would otherwise potentially be adversely
affected. In particular, a pattern of exchanges that coincide with a market
timing strategy may be disruptive to a Fund and therefore may be refused.
Accordingly, the Variable Account may not be in a position to effectuate
transfers and may refuse transfer requests without prior notice. We also reserve
the right, for similar reasons, to refuse or delay exchange requests involving
transfers to or from the Fixed Account.
WAIVERS; REDUCED CHARGES; BONUS GUARANTEED INTEREST RATES
We may reduce or waive the annual Account Fee, credit additional amounts,
or grant bonus Guaranteed Interest Rates in certain situations. These situations
may include sales of Contracts (1) where selling and/or maintenance costs
associated with the Contracts are reduced, such as the sale of several Contracts
to the same Participant, sales of large Contracts, and certain group sales, and
(2) to officers, directors and employees of the Company or its affiliates,
registered representatives and employees of broker-dealers with a current
selling agreement with the Company and affiliates of such representatives and
broker-dealers, employees of affiliated asset management firms, and persons who
have retired from such positions ("Eligible Employees") and immediate family
members of Eligible Employees. Eligible Employees and their immediate family
members may also purchase a Contract without regard to minimum Purchase Payment
requirements.
OPTIONAL PROGRAMS
DOLLAR-COST AVERAGING
Dollar-cost averaging allows you to invest gradually, over time, in up to
12 Sub-Accounts. You may select a dollar-cost averaging program at no extra
charge by allocating a minimum of $1,000 to a designated Sub-Account or to a
Guarantee Period we make available in connection with the program. Amounts
allocated to the Fixed Account under the program will earn interest at a rate
declared by the Company for the Guarantee Period you select. Previously applied
amounts may not be transferred to a Guarantee Period made available in
connection with this program. Each month or quarter, as you select, we will
transfer the same amount automatically to one or more Sub-Accounts that you
choose, up to a maximum of 12 Sub-Accounts. The program continues until your
Account Value allocated to the program is depleted or you elect to stop the
program. The final amount transferred from the Fixed Account will include all
interest earned.
No Market Value Adjustment (either positive or negative) will apply to
amounts automatically transferred from the Fixed Account under the dollar-cost
averaging program. However, if you discontinue or alter the program prior to
completion, amounts remaining in the Fixed Account will be transferred to the
Money Market Fund investment option under the Contracts, unless you instruct us
otherwise, and the Market Value Adjustment will be applied. Any new allocation
of a Purchase Payment to the program will be treated as commencing a new
dollar-cost averaging program and is subject to the $1,000 minimum.
The main objective of a dollar-cost averaging program is to minimize the
impact of short-term price fluctuations on Account Value. In general, since you
transfer the same dollar amount to the variable investment options at set
intervals, dollar-cost averaging allows you to purchase more Variable
Accumulation Units (and, indirectly, more Fund shares) when prices are low and
fewer Variable Accumulation Units (and, indirectly, fewer Fund shares) when
prices are high. Therefore, you may
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<PAGE>
achieve a lower average cost per Variable Accumulation Unit over the long term.
A dollar-cost averaging program allows you to take advantage of market
fluctuations. However, it is important to understand that a dollar-cost
averaging program does not assure a profit or protect against loss in a
declining market. We do not allow transfers into any of the Guarantee Periods.
ASSET ALLOCATION
One or more asset allocation programs may be available in connection with
the Contracts, at no extra charge. Asset allocation is the process of investing
in different asset classes -- such as equity funds, fixed income funds, and
money market funds -- depending on your personal investment goals, tolerance for
risk, and investment time horizon. By spreading your money among a variety of
asset classes, you may be able to reduce the risk and volatility of investing,
although there are no guarantees, and asset allocation does not insure a profit
or protect against loss in a declining market.
Currently, you may select one of three asset allocation models, each of
which represents a combination of Sub-Accounts with a different level of risk.
The available models are: the conservative asset allocation model, the moderate
asset allocation model, and the aggressive asset allocation model. Each model
allocates a different percentage of Account Value to Sub-Accounts investing in
the various asset classes, with the conservative model allocating the lowest
percentage to Sub-Accounts investing in the equity asset class and the
aggressive model allocating the highest percentage to the equity asset class.
These models, as well as the terms and conditions of the asset allocation
program, are fully described in a separate brochure. Additional programs may be
available in the future.
If you elect an asset allocation program, we will automatically allocate
your Purchase Payments among the Sub-Accounts represented in the model you
choose. By your election of an asset allocation program, you thereby authorize
us to automatically reallocate your investment options that participate in the
asset allocation program on a quarterly basis, or as determined by the terms of
the Asset Allocation Program, to reflect the current composition of the model
you have selected, without further instruction, until we receive notification
that you wish to terminate the program, or choose a different model.
SYSTEMATIC WITHDRAWAL AND INTEREST OUT PROGRAMS
If you have an Account Value of $10,000 or more, you may select our
Systematic Withdrawal Program or our Interest Out Program.
Under the Systematic Withdrawal Program, you determine the amount and
frequency of regular withdrawals you would like to receive from your Fixed
Account Value and/or Variable Account Value and we will effect them
automatically; a Market Value Adjustment may be applicable upon withdrawal.
Under the Interest Out Program, we automatically pay you or reinvest interest
credited for all Guarantee Periods you have chosen. The withdrawals under these
programs are subject to surrender charges. They may also be included as income
and subject to a 10% federal tax penalty. You should consult your adviser before
choosing these options.
You may change or stop either program at any time, by written notice to
us.
PORTFOLIO REBALANCING PROGRAM
Under the Portfolio Rebalancing Program, we transfer funds among the
Sub-Accounts to maintain the percentage allocation you have selected among these
Sub-Accounts. At your election, we will make these transfers on a quarterly,
semi-annual or annual basis.
Portfolio Rebalancing does not permit transfers to or from any Guarantee
Period.
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WITHDRAWALS AND MARKET VALUE ADJUSTMENT
CASH WITHDRAWALS
REQUESTING A WITHDRAWAL
At any time during the Accumulation Phase, you may withdraw in cash all or
any portion of your Account Value. To make a withdrawal, you must send us a
written request at our Annuity Mailing Address. Your request must specify
whether you want to withdraw the entire amount of your Account or, if less, the
amount you wish to receive.
We do not deduct any sales charge from your Purchase Payments when they
are made, nor do we impose a withdrawal charge (known as a "contingent deferred
sales charge") on amounts you withdraw.
However, all withdrawals from your Fixed Account Value may be subject to a
Market Value Adjustment (see "Market Value Adjustment" below). Withdrawals also
may have adverse income tax consequences, including a 10% penalty tax. See "Tax
Considerations." You should carefully consider these tax consequences before
requesting a cash withdrawal.
FULL WITHDRAWALS
If you request a full withdrawal, we calculate the amount we will pay you
as follows: We start with the total value of your Account at the end of the
Valuation Period during which we receive your withdrawal request; we deduct the
Account Fee for the Account Year in which the withdrawal is made; and finally,
we add or subtract the amount of any Market Value Adjustment applicable to your
Fixed Account Value.
A full withdrawal results in the surrender of your Contract, and
cancellation of all rights and privileges under your Contract.
PARTIAL WITHDRAWALS
If you request a partial withdrawal, we will pay you the actual amount
specified in your request and then adjust the value of your Account by deducting
the amount paid, and adding or deducting any Market Value Adjustment applicable
to amounts withdrawn from the Fixed Account.
You may specify the amount you want withdrawn from each Sub-Account and/or
Guarantee Amount to which your Account is allocated. If you do not so specify,
we will deduct the total amount you request pro rata, based on your Account
Value at the end of the Valuation Period during which we receive your request.
If you request a partial withdrawal that would result in your Account
Value being reduced to an amount less than the Account Fee for the Account Year
in which you make the withdrawal, we will treat it as a request for a full
withdrawal.
TIME OF PAYMENT
We will pay you the applicable amount of any full or partial withdrawal
within 7 days after we receive your withdrawal request, except in cases where we
are permitted, and choose, to defer payment under the Investment Company Act of
1940 and applicable state insurance law. Currently, we may defer payment of
amounts you withdraw from the Variable Account only for the following periods:
- When the New York Stock Exchange is closed (except weekends and
holidays) or when trading on the New York Stock Exchange is restricted;
- When it is not reasonably practical to dispose of securities held by
the Series Fund or to determine the value of the net assets of the
Series Fund, because an emergency exists; or
- When an SEC order permits us to defer payment for the protection of
Participants.
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We also may defer payment of amounts you withdraw from the Fixed Account
for up to 6 months from the date we receive your withdrawal request. We do not
pay interest on the amount of any payments we defer.
WITHDRAWAL RESTRICTIONS FOR QUALIFIED PLANS
If your Contract is a Qualified Contract, you should carefully check the
terms of your retirement plan for limitations and restrictions on cash
withdrawals.
Special restrictions apply to withdrawals from Contracts used for
Section 403(b) annuities. See "Tax Considerations -- Tax-Sheltered Annuities."
When you make a withdrawal, we consider the oldest Purchase Payment that
you have not already withdrawn to be withdrawn first, then the second oldest
Purchase Payments, and so forth. Once all Purchase Payments are withdrawn, the
balance withdrawn is considered to be accumulated value.
MARKET VALUE ADJUSTMENT
We will apply a Market Value Adjustment if you withdraw or transfer
amounts from your Fixed Account Value more than 30 days before the end of the
applicable Guarantee Period. For this purpose, using Fixed Account Value to
provide an annuity is considered a withdrawal, and the Market Value Adjustment
will apply. However, we will not apply the Market Value Adjustment to automatic
transfers to a Sub-Account from a Guarantee Period as part of our dollar-cost
averaging program.
We apply the Market Value Adjustment separately to each Guarantee Amount
in the Fixed Account, that is to each separate allocation you have made to a
Guarantee Period together with interest credited on that allocation. However, we
do not apply the adjustment to the amount of interest credited during your
current Account Year. Any withdrawal from a Guarantee Amount is attributed first
to such interest.
A Market Value Adjustment may decrease, increase or have no effect on your
Account Value. This will depend on changes in interest rates since you made your
allocation to the Guarantee Period and the length of time remaining in the
Guarantee Period. In general, if the Guaranteed Interest Rate we currently
declare for Guarantee Periods equal to the balance of your Guarantee Period (or
your entire Guarantee Period for Guarantee Periods of less than one year) is
higher than your Guaranteed Interest Rate, the Market Value Adjustment is likely
to decrease your Account Value. If our current Guaranteed Interest Rate is
lower, the Market Value Adjustment is likely to increase your Account Value.
We determine the amount of the Market Value Adjustment by multiplying the
amount that is subject to the adjustment by the following formula:
<TABLE>
<C> <S> <C> <C> <C>
N/12
1 + I
( -------- ) -1
1 + J + b
</TABLE>
where:
I is the Guaranteed Interest Rate applicable to the Guarantee Amount from
which you withdraw, transfer or annuitize;
J is the Guaranteed Interest Rate we declare at the time of your
withdrawal, transfer or annuitization for Guarantee Periods equal to the length
of time remaining in the Guarantee Period applicable to your Guarantee Amount,
rounded to the next higher number of complete years, for Guarantee Periods of
one year or more. For any Guarantee Periods of less than one year, J is the
Guaranteed Interest Rate we declare at the time of your withdrawal, transfer or
annuitization for a Guarantee Period of the same length as your Guarantee
Period. If, at that time, we do not offer the applicable Guarantee Period we
will use an interest rate determined by straight-line interpolation of the
Guaranteed Interest Rates for the Guarantee Periods we do offer;
N is the number of complete months remaining in your Guarantee Period; and
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b is a factor that currently is 0%, but that in the future we may increase
to up to 0.25%. Any increase would be applicable only to Participants who
purchase their Contracts after the date of that increase.
We will apply the Market Value Adjustment to the amount being withdrawn
after deduction of any Account Fee, if applicable, but before we impose any
withdrawal charge on the amount withdrawn.
For examples of how we calculate the Market Value Adjustment, see
Appendix B.
No Market Value Adjustment will apply to Contracts issued in the states of
California, Maryland, Oregon, Texas and Washington.
CONTRACT CHARGES
ACCOUNT FEE
During the Accumulation Phase of your Contract, we will deduct from your
Account an annual Account Fee of $50 to help cover the administrative expenses
we incur related to the issuance of Contracts and the maintenance of Accounts.
We deduct the Account Fee on each Account Anniversary. The annual Account Fee
will never exceed $50. We deduct the Account Fee pro rata from each Sub-Account
and each Guarantee Period, based on the allocation of your Account Value on your
Account Anniversary.
We will not charge the Account Fee if:
(1) your Account has been allocated only to the Fixed Account during the
applicable Account Year; or
(2) your Account Value is $100,000 or more on your Account Anniversary.
If you make a full withdrawal of your Account, we will deduct the full
amount of the Account Fee at the time of the withdrawal. In addition, on the
Annuity Commencement Date we will deduct a pro rata portion of the Account Fee
to reflect the time elapsed between the last Account Anniversary and the day
before the Annuity Commencement Date.
After the Annuity Commencement Date, we will deduct an annual Account Fee
of $50 in the aggregate in equal amounts from each Variable Annuity payment we
make during the year. We do not deduct any fee from Fixed Annuity payments.
ADMINISTRATIVE EXPENSE CHARGE
We deduct an administrative expense charge from the assets of the Variable
Account at an annual effective rate equal to 0.15% during both the Accumulation
Phase and the Income Phase. This charge is designed to reimburse expenses we
incur in administering the Contracts, the Accounts and the Variable Account that
are not covered by the annual Account Fee.
MORTALITY AND EXPENSE RISK CHARGE
During both the Accumulation Phase and the Income Phase, we deduct a
mortality and expense risk charge from the assets of the Variable Account at an
effective annual rate equal to 1.25%, if your initial Purchase Payment was less
than $1,000,000, or 1.00% if your initial Purchase Payment was $1,000,000 or
more. The mortality risk we assume arises from our contractual obligation to
continue to make annuity payments to each Annuitant, regardless of how long the
Annuitant lives and regardless of how long all Annuitants as a group live. This
obligation assures each Annuitant that neither the longevity of fellow
Annuitants nor an improvement in life expectancy generally will have an adverse
effect on the amount of any annuity payment received under the Contract. The
mortality risk also arises from our contractual obligation to pay a death
benefit upon the death of the Participant prior to the Annuity Commencement
Date. The expense risk we assume is the risk that the Account Fee and
administrative expense charge we assess under the Contracts may be insufficient
to cover the actual total administrative expenses we incur. If the amount of the
charge is insufficient to cover the mortality and expense risks, we will bear
the loss. If the amount of the charge is more than sufficient to cover
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the risks, we will make a profit on the charge. We may use this profit for any
proper corporate purpose, including the payment of marketing and distribution
expenses for the Contracts.
CHARGES FOR OPTIONAL DEATH BENEFIT RIDERS
If you elect an optional death benefit rider during the Accumulation
Phase, we will deduct a charge from the assets of the Variable Account based
upon the number of optional death benefits riders you elect, as follows:
<TABLE>
<CAPTION>
NUMBER OF % OF
RIDERS YOU AVERAGE
ELECT DAILY VALUE
- ---------- -----------
<S> <C>
1 0.15%
2 0.25%
3 0.40%
</TABLE>
PREMIUM TAXES
Some states and local jurisdictions impose a premium tax on us that is
equal to a specified percentage of the Purchase Payments you make. In many
states there is no premium tax. We believe that the amounts of applicable
premium taxes currently range from 0% to 3.5%. You should consult a tax adviser
to find out if your state imposes a premium tax and the amount of any tax.
In order to reimburse us for the premium tax we may pay on Purchase
Payments, our policy is to deduct the amount of such taxes from the amount you
apply to provide an annuity at the time of annuitization. However, we reserve
the right to deduct the amount of any applicable tax from your Account at any
time, including at the time you make a Purchase Payment or make a full or
partial withdrawal. We do not make any profit on the deductions we make to
reimburse premium taxes.
FUND EXPENSES
There are fees and charges deducted from each Fund. These fees and
expenses are described in the Fund prospectus(es) and related Statement of
Additional Information.
MODIFICATION IN THE CASE OF GROUP CONTRACTS
For Group Contracts, we may modify the annual Account Fee, the
administrative expense charge and the mortality and expense risk charge upon
notice to Owners. However, such modification will apply only with respect to
Participant Accounts established after the effective date of the modification.
DEATH BENEFIT
If the Covered Person dies during the Accumulation Phase, we will pay a
death benefit to your Beneficiary, using the payment method elected (a single
cash payment or one of our Annuity Options). If the Beneficiary is not living on
the date of death of the Covered Person, we will pay the death benefit in one
sum to your estate. We do not pay a death benefit if the Covered Person dies
during the Income Phase. However, the Beneficiary will receive any annuity
payments provided under an Annuity Option that is in effect. If your Contract
names more than one Covered Person, we will pay the death benefit upon the first
death of such Covered Persons.
AMOUNT OF DEATH BENEFIT
To calculate the amount of the death benefit, we use a "Death Benefit
Date." The Death Benefit Date is the date we receive proof of the death of the
Covered Person in an acceptable form ("Due Proof of Death") if you have elected
a death benefit payment method before the death of the Covered Person and it
remains effective. Otherwise, the Death Benefit Date is the later of the date we
receive Due Proof of Death or the date we receive the Beneficiary's election of
either payment method or, if the Beneficiary is your spouse, Contract
continuation. If we do not receive the Beneficiary's
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election within 60 days after we receive Due Proof of Death, we reserve the
right to provide a lump sum to your Beneficiary.
The amount of the death benefit is determined as of the Death Benefit
Date.
THE BASIC DEATH BENEFIT
In general, if you were 85 or younger on your Contract Date (the date we
accepted your first Purchase Payment), the death benefit will be the greatest of
the following amounts:
1. Your Account Value for the Valuation Period during which the Death
Benefit Date occurs;
2. The amount we would pay if you had surrendered your entire Account on
the Death Benefit Date;
3. Your total Purchase Payments (adjusted for partial withdrawals as
described in "Calculating the Death Benefit") as of the Death Benefit
Date.
For examples of how to calculate this basic death benefit, see
Appendix C.
If you were 86 or older on your Contract Date, the death benefit is equal
to amount (2) above. Because this amount will reflect any applicable Withdrawal
Charges and Market Value Adjustment, it may be less than your Account Value.
OPTIONAL DEATH BENEFIT RIDERS
Subject to availability in your state, you may enhance the basic death
benefit by electing one or more of the following optional death benefit riders.
You must make your election before the date on which your Contract becomes
effective. You will pay a charge for each optional death benefit rider you
elect. (For a description of these charges, see "Charges for Optional Death
Benefit Riders.") The Maximum Anniversary Account Value Rider, the 5% Premium
Roll-Up Rider, and the Earnings Enhancement Riders are available only if you are
younger than 80 on the Contract Date. Any optional death benefit election may
not be changed after the Contract is issued. For a complete description of how
the death benefits under the optional death benefit riders are calculated, see
"Calculating the Death Benefit."
MAXIMUM ANNIVERSARY ACCOUNT VALUE RIDER
Under this rider, the death benefit will be the greater of:
- any of the death benefit amounts payable under options (1), (2) or
(3) under the basic death benefit, above; or
- your highest Account Value on any Account Anniversary before your 81st
birthday, adjusted for any subsequent Purchase Payments, partial
withdrawals and charges made between that Account Anniversary and the
Death Benefit Date.
5% PREMIUM ROLL-UP RIDER
Under this rider, the death benefit will be the greater of:
- any of the death benefit amounts payable under options (1), (2) or
(3) under the basic death benefit, above, or
- the sum of your total Purchase Payments plus interest accruals,
adjusted for partial withdrawals.
Under this rider, interest accrues at a rate of 5% per year on Purchase
Payments and transfers to the Variable Account while they remain in the Variable
Account. The 5% interest accruals will continue until the earlier of:
- the first day of the month following your 80th birthday, or
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- the day the death benefit amount under this rider equals twice the
total of the Purchase Payments and transferred amounts, adjusted for
withdrawals.
EARNINGS ENHANCEMENT RIDER
Under this rider, if you are 69 or younger on your Contract Date, the
death benefit will be:
- the greatest of any of the death benefit amounts payable under
options (1), (2) or (3) under the basic death benefit, above, plus
- 40% of the lesser of your net Purchase Payments or your Account Value
minus net Purchase Payments, calculated as of the Death Benefit Date.
If you are between the ages of 70 and 79 on your Contract Date, the death
benefit will be:
- the greatest of any of the death benefit amounts payable under
options (1), (2) or (3) under the basic death benefit, above, plus
- 25% of the lesser of your net Purchase Payments or your Account Value
minus net Purchase Payments, calculated as of the Death Benefit Date.
Net Purchase Payments under this rider will be adjusted for all partial
withdrawals, as described in "Calculating the Death Benefit." For examples of
how the death benefit is calculated under the Earnings Enhancement Rider, see
Appendix D.
SELECTING MULTIPLE DEATH BENEFIT RIDERS
If you elect more than one optional death benefit rider, the death benefit
will be calculated as follows:
1) MAXIMUM ANNIVERSARY ACCOUNT VALUE RIDER COMBINED WITH 5% PREMIUM ROLL-UP
RIDER: The death benefit will equal the greater of the death benefit
under the Maximum Anniversary Account Value Rider or the death benefit
under the 5% Premium Roll-Up Rider.
2) MAXIMUM ANNIVERSARY ACCOUNT VALUE RIDER COMBINED WITH EARNINGS
ENHANCEMENT RIDER: The death benefit will equal the death benefit under
the Maximum Anniversary Account Value Rider, PLUS the amount calculated
under the Earnings Enhancement Rider. The death benefit under the
Earnings Enhancement Rider is calculated using the Account Value before
the application of the Maximum Anniversary Account Rider.
3) EARNINGS ENHANCEMENT RIDER COMBINED WITH 5% PREMIUM ROLL-UP RIDER: The
death benefit will equal the death benefit under the 5% Premium Roll-Up
Rider, plus the amount calculated under the Earnings Enhancement Rider.
The death benefit under the Earnings Enhancement Rider is calculated
using the Account Value before the application of the 5% Premium Roll-Up
Rider.
4) MAXIMUM ANNIVERSARY ACCOUNT VALUE RIDER, THE 5% PREMIUM ROLL-UP RIDER
AND THE EARNINGS ENHANCEMENT RIDER: The death benefit will equal the
GREATER of the death benefit under the Maximum Anniversary Account Value
Rider or the death benefit under the 5% Premium Roll-Up Rider, PLUS the
amount calculated under the Earnings Enhancement Rider. The death benefit
under the Earnings Enhancement Rider is calculated using the Account
Value before the application of the 5% Premium Roll-Up Rider or the
Maximum Anniversary Account Value Rider.
SPOUSAL CONTINUANCE
If your spouse is your Beneficiary, upon your death your spouse may elect
to continue the Contract as the Participant, rather than receive the death
benefit amount. In that case, we will not pay a death benefit, but the
Contract's Account Value will be equal to your Contract's death benefit amount,
as defined under the basic death benefit or any optional death benefit rider you
have selected. All Contract provisions, including any optional death benefit
riders you have selected, will continue as
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if your spouse had purchased the Contract on the Death Benefit Date with a
deposit equal to the death benefit amount. For purposes of calculating death
benefits and expenses from that date forward, your spouse's age on the original
effective date of the Contract will be used.
CALCULATING THE DEATH BENEFIT
In calculating the death benefit amount payable under option (3) of the
basic death benefit or any of the optional death benefit riders, any partial
withdrawals will reduce the death benefit amount to an amount equal to the death
benefit amount immediately before the withdrawal multiplied by the ratio of the
Account Value immediately after the withdrawal to the Account Value immediately
before the withdrawal.
If the death benefit is the amount payable under options (2) or (3) of the
basic death benefit or under any of the optional death benefit riders, your
Account Value may be increased by the excess, if any, of that amount over option
(1) of the basic death benefit. Any such increase will be allocated to the
Sub-Accounts in proportion to your Account Value in those Sub-Accounts on the
Death Benefit Date. Such increase will be made only if the Beneficiary elects to
annuitize, elects to defer annuitization, or elects to continue the Contract.
Also, any portion of this new Account Value attributed to the Fixed Account will
be transferred to a Money Market Fund available as an investment option (without
the application of a Market Value Adjustment). If your spouse, as the named
Beneficiary, elects to continue the Contract after your death, your spouse may
transfer any such Fixed Account portion back to the Fixed Account and begin a
new Guarantee Period.
METHOD OF PAYING DEATH BENEFIT
The death benefit may be paid in a single cash payment or as an annuity
(either fixed, variable or a combination), under one or more of our Annuity
Options. We describe the Annuity Options in this Prospectus under "Income
Phase -- Annuity Provisions."
During the Accumulation Phase, you may elect the method of payment for the
death benefit. If no such election is in effect on the date of your death, the
Beneficiary may elect either a single cash payment or an annuity. If the
Beneficiary is the Owner's spouse, the Beneficiary may elect to continue the
Contract. These elections are made by sending us a completed election form,
which we will provide. If we do not receive the Beneficiary's election within 60
days after we receive Due Proof of Death, we will pay the death benefit in a
single cash payment.
If we pay the death benefit in the form of an Annuity Option, the
Beneficiary becomes the Annuitant/Payee under the terms of that Annuity Option.
NON-QUALIFIED CONTRACTS
If your Contract is a Non-Qualified Contract, special distribution rules
apply to the payment of the death benefit. The amount of the death benefit must
be distributed either (1) as a lump sum within 5 years after your death or
(2) if in the form of an annuity, over a period not greater than the life or
expected life of the "designated beneficiary" within the meaning of
Section 72(s) of the Internal Revenue Code, with payments beginning no later
than one year after your death.
The person you have named as Beneficiary under your Contract, if any, will
be the "designated beneficiary." If the named Beneficiary is not living and no
contingent beneficiary has been named, the Annuitant automatically becomes the
designated beneficiary.
If the designated beneficiary is your surviving spouse, your spouse may
continue the Contract in his or her own name as Participant. To make this
election, your spouse must give us written notification within 60 days after we
receive Due Proof of Death. The special distribution rules will then apply on
the death of your spouse. To understand what happens when your spouse continues
the Contract, see "Spousal Continuance," above.
During the Income Phase, if the Annuitant dies, the remaining value of the
Annuity Option in place must be distributed at least as rapidly as the method of
distribution under that option.
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If the Participant is not a natural person, these distribution rules apply
on a change in, or the death of, either the Annuitant or the Co-Annuitant.
Payments made in contravention of these special rules would adversely
affect the treatment of the Contracts as annuity contracts under the Internal
Revenue Code. Neither you nor the Beneficiary may exercise rights that would
have that effect.
SELECTION AND CHANGE OF BENEFICIARY
You select your Beneficiary in your Application. You may change your
Beneficiary at any time by sending us written notice on our required form,
unless you previously made an irrevocable Beneficiary designation. A new
Beneficiary designation is not effective until we record the change.
PAYMENT OF DEATH BENEFIT
Payment of the death benefit in cash will be made within 7 days of the
Death Benefit Date, except if we are permitted to defer payment in accordance
with the Investment Company Act of 1940. If an Annuity Option is elected, the
Annuity Commencement Date will be the first day of the second calendar month
following the Death Benefit Date, and your Account will remain in effect until
the Annuity Commencement Date.
DUE PROOF OF DEATH
We accept any of the following as proof of any person's death:
- An original certified copy of an official death certificate;
- An original certified copy of a decree of a court of competent
jurisdiction as to the finding of death; or
- Any other proof we find satisfactory.
THE INCOME PHASE -- ANNUITY PROVISIONS
During the Income Phase, we make regular monthly annuity payments to the
Annuitant.
The Income Phase of your Contract begins with the Annuity Commencement
Date. On that date, we apply your Account Value, adjusted as described below,
under the Annuity Option(s) you have selected, and we make the first payment.
Once the Income Phase begins, no lump sum settlement option or cash
withdrawals are permitted, except pursuant to Annuity Option D, Monthly Payments
for a Specified Period Certain, as described below under the heading "Annuity
Options," and you cannot change the Annuity Option selected. You may request a
full withdrawal before the Annuity Commencement Date, which will be subject to
all charges applicable on withdrawals. See "Withdrawals and Market Value
Adjustment."
SELECTION OF THE ANNUITANT OR CO-ANNUITANT
You select the Annuitant in your Application. The Annuitant is the person
who receives annuity payments during the Income Phase and on whose life these
payments are based. In your Contract, the Annuity Option(s) refer to the
Annuitant as the "Payee." If you name someone other than yourself as Annuitant
and the Annuitant dies before the Income Phase, you become the Annuitant.
In a Non-Qualified Contract, if you name someone other than yourself as
Annuitant, you may also select a Co-Annuitant, who will become the new Annuitant
if the original Annuitant dies before the Income Phase. If both the Annuitant
and Co-Annuitant die before the Income Phase, you become the Annuitant. If you
have named both an Annuitant and a Co-Annuitant, you may designate one of them
to become the sole Annuitant as of the Annuity Commencement Date, if both are
living at that time. If you have not made that designation on the 30th day
before the Annuity Commencement Date, and both the Annuitant and the
Co-Annuitant are still living, the Co-Annuitant will become the Annuitant.
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When an Annuity Option has been selected as the method of paying the death
benefit, the Beneficiary is the Payee of the annuity payment.
SELECTION OF THE ANNUITY COMMENCEMENT DATE
You select the Annuity Commencement Date in your Application. The
following restrictions apply to the date you may select:
- The earliest possible Annuity Commencement Date is the first day of the
first month following your first Account Anniversary.
- The latest possible Annuity Commencement Date is the first day of the
month following the Annuitant's 95th birthday or, if there is a
Co-Annuitant, the 95th birthday of the younger of the Annuitant and
Co-Annuitant.
- The Annuity Commencement Date must always be the first day of a month.
You may change the Annuity Commencement Date from time to time by sending
us written notice, with the following additional limitations:
- We must receive your notice at least 30 days before the current Annuity
Commencement Date.
- The new Annuity Commencement Date must be at least 30 days after we
receive the notice.
There may be other restrictions on your selection of the Annuity
Commencement Date imposed by your retirement plan or applicable law. In most
situations, current law requires that for a Qualified Contract, certain minimum
distributions must commence no later than April 1 following the year the
Annuitant reaches age 70 1/2 (or, for Qualified Contracts other than IRAs, no
later than April 1 following the year the Annuitant retires, if later than the
year the Annuitant reaches age 70 1/2).
ANNUITY OPTIONS
We offer the following Annuity Options for payments during the Income
Phase. Each Annuity Option may be selected for a Variable Annuity, a Fixed
Annuity, or a combination of both. We may also agree to other settlement
options, in our discretion.
ANNUITY OPTION A -- LIFE ANNUITY
We provide monthly payments during the lifetime of the Annuitant. Annuity
payments stop when the Annuitant dies. There is no provision for continuation of
any payments to a Beneficiary.
ANNUITY OPTION B -- LIFE ANNUITY WITH 60, 120, 180 OR 240 MONTHLY PAYMENTS
CERTAIN
We make monthly payments during the lifetime of the Annuitant. In
addition, we guarantee that the Beneficiary will receive monthly payments for
the remainder of the period certain, if the Annuitant dies during that period.
The election of a longer period results in smaller monthly payments. If no
Beneficiary is designated, we pay the discounted value of the remaining payments
in one sum to the Annuitant's estate. The Beneficiary may also elect to receive
the discounted value of the remaining payments in one sum. The discount rate for
a Variable Annuity will be the assumed interest rate in effect; the discount
rate for a Fixed Annuity will be based on the interest rate we used to determine
the amount of each payment.
ANNUITY OPTION C -- JOINT AND SURVIVOR ANNUITY
We make monthly payments during the lifetime of the Annuitant and another
person you designate and during the lifetime of the survivor of the two. We stop
making payments when the survivor dies. There is no provision for continuance of
any payments to a Beneficiary.
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ANNUITY OPTION D -- MONTHLY PAYMENTS FOR A SPECIFIED PERIOD CERTAIN
We make monthly payments for a specified period of time from 5 to 30
years, as you elect. If payments under this option are paid on a variable
annuity basis, the Annuitant may elect to receive in one sum the discounted
value of the remaining payments, less any applicable withdrawal charge; the
discount rate for this purpose will be the assumed interest rate in effect. If
the Annuitant dies during the period selected, the remaining income payments are
made as described under Annuity Option B. The election of this Annuity Option
may result in the imposition of a penalty tax. The 5 to 9 year period certain is
not available if your Account has been issued within the past 7 years.
SELECTION OF ANNUITY OPTION
You select one or more of the Annuity Options, which you may change from
time to time during the Accumulation Phase, as long as we receive your selection
or change in writing at least 30 days before the Annuity Commencement Date. If
we have not received your written selection on the 30th day before the Annuity
Commencement Date, you will receive Annuity Option B, for a life annuity with
120 monthly payments certain.
You may specify the proportion of your Adjusted Account Value you wish to
provide a Variable Annuity or a Fixed Annuity. Under a Variable Annuity, the
dollar amount of payments will vary, while under a Fixed Annuity, the dollar
amount of payments will remain the same. If you do not specify a Variable
Annuity or a Fixed Annuity, your Adjusted Account Value will be divided between
Variable Annuities and Fixed Annuities in the same proportions as your Account
Value was divided between the Variable and Fixed Accounts on the Annuity
Commencement Date. You may allocate your Adjusted Account Value applied to a
Variable Annuity among the Sub-Accounts, or we will use your existing
allocations.
There may be additional limitations on the options you may elect under
your particular retirement plan or applicable law.
REMEMBER THAT THE ANNUITY OPTIONS MAY NOT BE CHANGED ONCE ANNUITY PAYMENTS
BEGIN.
AMOUNT OF ANNUITY PAYMENTS
ADJUSTED ACCOUNT VALUE
The Adjusted Account Value is the amount we apply to provide a Variable
Annuity and/or a Fixed Annuity. We calculate Adjusted Account Value by taking
your Account Value on the Business Day just before the Annuity Commencement Date
and making the following adjustments:
- We deduct a proportional amount of the Account Fee, based on the
fraction of the current Account Year that has elapsed.
- If applicable, we apply the Market Value Adjustment to your Account
Value in the Fixed Account, which may result in a deduction, an
addition, or no change.
- We deduct any applicable premium tax or similar tax if not previously
deducted.
- Upon the Annuity Commencement Date, we will exchange your Variable
Annuity Units into Annuitization Units which have an annual mortality
and expense risk charge of 1.40% of your average daily net assets
(1.15% if your initial Purchase Payment was $1,000,000 or more).
VARIABLE ANNUITY PAYMENTS
Variable Annuity payments may vary each month. We determine the dollar
amount of the first payment using the portion of your Adjusted Account Value
applied to a Variable Annuity and the Annuity Payment Rates in your Contract,
which are based on an assumed interest rate of 3% per year, compounded annually.
See "Annuity Payment Rates."
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To calculate the remaining payments, we convert the amount of the first
payment into Annuity Units for each Sub-Account; we determine the number of
those Annuity Units by dividing the portion of the first payment attributable to
the Sub-Account by the Annuity Unit Value of that Sub-Account for the Valuation
Period ending just before the Annuity Commencement Date. This number of Annuity
Units for each Sub-Account will remain constant (unless the Annuitant requests
an exchange of Annuity Units). However, the dollar amount of the next Variable
Annuity payment -- which is the sum of the number of Annuity Units for each
Sub-Account times its Annuity Unit Value for the Valuation Period ending just
before the date of the payment -- will increase, decrease, or remain the same,
depending on the net investment return of the Sub-Accounts.
If the net investment return of the Sub-Accounts selected is the same as
the assumed interest rate of 3%, compounded annually, the payments will remain
level. If the net investment return exceeds the assumed interest rate, payments
will increase and, conversely, if it is less than the assumed interest rate,
payments will decrease.
Please refer to the Statement of Additional Information for more
information about calculating Variable Annuity Units and Variable Annuity
payments, including examples of these calculations.
FIXED ANNUITY PAYMENTS
Fixed Annuity payments are the same each month. We determine the dollar
amount of each Fixed Annuity payment using the fixed portion of your Adjusted
Account Value and the applicable Annuity Payment Rates. These will be either
(1) the rates in your Contract, which are based on a minimum guaranteed interest
rate of 2.5% per year, compounded annually, or (2) new rates we have published
and are using on the Annuity Commencement Date, if they are more favorable. See
"Annuity Payment Rates."
MINIMUM PAYMENTS
If your Adjusted Account Value is less than $2,000, or the first annuity
payment for any Annuity Option is less than $20, we will pay the Adjusted
Account Value to the Annuitant in one payment.
EXCHANGE OF VARIABLE ANNUITY UNITS
During the Income Phase, the Annuitant may exchange Annuity Units from one
Sub-Account to another, up to 12 times each Account Year. To make an exchange,
the Annuitant sends us, at our Annuity Mailing Address, a written request
stating the number of Annuity Units in the Sub-Account he or she wishes to
exchange and the new Sub-Account for which Annuity Units are requested. The
number of new Annuity Units will be calculated so the dollar amount of an
annuity payment on the date of the exchange would not be affected. To calculate
this number, we use Annuity Unit values for the Valuation Period during which we
receive the exchange request.
Before exchanging Annuity Units from one Sub-Account to another, the
Annuitant should carefully review the Fund prospectus(es) for the investment
objectives and risk disclosure of the Funds in which the Sub-Accounts invest.
During the Income Phase, we permit only exchanges among Sub-Accounts. No
exchanges to or from a Fixed Annuity are permitted.
ACCOUNT FEE
During the Income Phase, we deduct the annual Account Fee of $50 in equal
amounts from each Variable Annuity payment. We do not deduct the annual Account
Fee from Fixed Annuity payments.
ANNUITY PAYMENT RATES
The Contracts contain Annuity Payment Rates for each Annuity Option
described in this Prospectus. The rates show, for each $1,000 applied, the
dollar amount of: (a) the first monthly Variable
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Annuity payment based on the assumed interest rate specified in the applicable
Contract (3% per year, compounded annually); and (b) the monthly Fixed Annuity
payment, when this payment is based on the minimum guaranteed interest rate
specified in the Contract (at least 2.5% per year, compounded annually). We may
change these rates under Group Contracts for Accounts established after the
effective date of such change (See "Other Contract Provisions -- Modification").
The Annuity Payment Rates may vary according to the Annuity Option elected
and the adjusted age of the Annuitant. The Contracts also describe the method of
determining the adjusted age of the Annuitant. The mortality table used in
determining the Annuity Payment Rates for Annuity Options A, B and C is the
Annuity 2000 Table.
ANNUITY OPTIONS AS METHOD OF PAYMENT FOR DEATH BENEFIT
You or your Beneficiary may also select one or more Annuity Options to be
used in the event of the Annuitant's death before the Income Phase, as described
under the "Death Benefit" section of this Prospectus. In that case, your
Beneficiary will be the Annuitant. The Annuity Commencement Date will be the
first day of the second month beginning after the Death Benefit Date.
OTHER CONTRACT PROVISIONS
EXERCISE OF CONTRACT RIGHTS
An Individual Contract belongs to the individual to whom the Contract is
issued. A Group Contract belongs to the Owner. In the case of a Group Contract,
the Owner may expressly reserve all Contract rights and privileges; otherwise,
each Annuitant will be entitled to exercise such rights and privileges. In any
case, such rights and privileges can be exercised without the consent of the
Beneficiary (other than an irrevocably designated Beneficiary) or any other
person. Such rights and privileges may be exercised only during the lifetime of
the Annuitant before the Annuity Commencement Date, except as the Contract
otherwise provides.
The Annuitant becomes the Payee on and after the Annuity Commencement
Date. The Beneficiary becomes the Payee on the death of the Participant prior to
the Annuity Commencement Date, or on the death of the Annuitant after the
Annuity Commencement Date. Such Payee may thereafter exercise such rights and
privileges, if any, of ownership which continue.
CHANGE OF OWNERSHIP
Ownership of a Qualified Contract may not be transferred except to:
(1) the Annuitant; (2) a trustee or successor trustee of a pension or profit
sharing trust which is qualified under Section 401 of the Internal Revenue Code;
(3) the employer of the Annuitant, provided that the Qualified Contract after
transfer is maintained under the terms of a retirement plan qualified under
Section 403(a) of the Internal Revenue Code for the benefit of the Annuitant;
(4) the trustee or custodian of an individual retirement account plan qualified
under Section 408 of the Internal Revenue Code for the benefit of the
Participants under a Group Contract; or (5) as otherwise permitted from time to
time by laws and regulations governing the retirement or deferred compensation
plans for which a Qualified Contract may be issued. Subject to the foregoing, a
Qualified Contract may not be sold, assigned, transferred, discounted or pledged
as collateral for a loan or as security for the performance of an obligation or
for any other purpose to any person other than the Company.
The Owner of a Non-Qualified Contract may change the ownership of the
Contract prior to the Annuity Commencement Date; and each Participant, in like
manner, may change the ownership interest in a Contract. A change of ownership
will not be binding on us until we receive written notification. When we receive
such notification, the change will be effective as of the date on which the
request for change was signed by the Owner or Participant, as appropriate, but
the change will be without prejudice to us on account of any payment we make or
any action we take before receiving the change. If you change the Owner of a
Non-Qualified Contract, you will become immediately liable for the payment of
taxes on any gain realized under the Contract prior to the change of ownership,
including possible liability for a 10% federal excise tax.
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VOTING OF FUND SHARES
We will vote Fund shares held by the Sub-Accounts at meetings of
shareholders of the Funds or in connection with similar solicitations, but will
follow voting instructions received from persons having the right to give voting
instructions. During the Accumulation Phase, you will have the right to give
voting instructions, except in the case of a Group Contract where the Owner has
reserved this right. During the Income Phase, the Payee -- that is the Annuitant
or Beneficiary entitled to receive benefits -- is the person having such voting
rights. We will vote any shares attributable to us and Fund shares for which no
timely voting instructions are received in the same proportion as the shares for
which we receive instructions from Owners, Participants and Payees, as
applicable.
Owners of Qualified Contracts issued on a group basis may be subject to
other voting provisions of the particular plan and of the Investment Company Act
of 1940. Employees who contribute to plans that are funded by the Contracts may
be entitled to instruct the Owners as to how to instruct us to vote the Fund
shares attributable to their contributions. Such plans may also provide the
additional extent, if any, to which the Owners shall follow voting instructions
of persons with rights under the plans. If no voting instructions are received
from any such person with respect to a particular Participant Account, the Owner
may instruct the Company as to how to vote the number of Fund shares for which
instructions may be given.
Neither the Variable Account nor the Company is under any duty to provide
information concerning the voting instruction rights of persons who may have
such rights under plans, other than rights afforded by the Investment Company
Act of 1940, or any duty to inquire as to the instructions received or the
authority of Owners, Participants or others, as applicable, to instruct the
voting of Fund shares. Except as the Variable Account or the Company has actual
knowledge to the contrary, the instructions given by Owners under Group
Contracts and Payees will be valid as they affect the Variable Account, the
Company and any others having voting instruction rights with respect to the
Variable Account.
All Fund proxy material, together with an appropriate form to be used to
give voting instructions, will be provided to each person having the right to
give voting instructions at least 10 days prior to each meeting of the
shareholders of the Fund. We will determine the number of Fund shares as to
which each such person is entitled to give instructions as of the record date
set by the Fund for such meeting, which is expected to be not more than 90 days
prior to each such meeting. Prior to the Annuity Commencement Date, the number
of Fund shares as to which voting instructions may be given to the Company is
determined by dividing the value of all of the Variable Accumulation Units of
the particular Sub-Account credited to the Participant Account by the net asset
value of one Fund share as of the same date. On or after the Annuity
Commencement Date, the number of Fund shares as to which such instructions may
be given by a Payee is determined by dividing the reserve held by the Company in
the Sub-Account with respect to the particular Payee by the net asset value of a
Fund share as of the same date. After the Annuity Commencement Date, the number
of Fund shares as to which a Payee is entitled to give voting instructions will
generally decrease due to the decrease in the reserve.
PERIODIC REPORTS
During the Accumulation Period we will send you, or such other person
having voting rights, at least once during each Account Year, a statement
showing the number, type and value of Accumulation Units credited to your
Account and the Fixed Accumulation Value of your Account, which statement shall
be accurate as of a date not more than 2 months previous to the date of mailing.
These periodic statements contain important information concerning your
transactions with respect to a Contract. It is your obligation to review each
such statement carefully and to report to us, at the address or telephone number
provided on the statement, any errors or discrepancies in the information
presented therein within 60 days of the date of such statement. Unless we
receive notice of any such error or discrepancy from you within such period, we
may not be responsible for correcting the error or discrepancy.
In addition, every person having voting rights will receive such reports
or prospectuses concerning the Variable Account and the Funds as may be required
by the Investment Company Act of 1940
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and the Securities Act of 1933. We will also send such statements reflecting
transactions in your Account as may be required by applicable laws, rules and
regulations.
Upon request, we will provide you with information regarding fixed and
variable accumulation values.
SUBSTITUTION OF SECURITIES
Shares of any or all Funds may not always be available for investment
under the Contract. We may add or delete Funds or other investment companies as
variable investment options under the Contracts. We may also substitute for the
shares held in any Sub-Account shares of another Fund or shares of another
registered open-end investment company or unit investment trust, provided that
the substitution has been approved, if required, by the SEC. In the event of any
substitution pursuant to this provision, we may make appropriate endorsement to
the Contract to reflect the substitution.
CHANGE IN OPERATION OF VARIABLE ACCOUNT
At our election and subject to any necessary vote by persons having the
right to give instructions with respect to the voting of Fund shares held by the
Sub-Accounts, the Variable Account may be operated as a management company under
the Investment Company Act of 1940 or it may be deregistered under the
Investment Company Act of 1940 in the event registration is no longer required.
Deregistration of the Variable Account requires an order by the SEC. In the
event of any change in the operation of the Variable Account pursuant to this
provision, we may make appropriate endorsement to the Contract to reflect the
change and take such other action as may be necessary and appropriate to effect
the change.
SPLITTING UNITS
We reserve the right to split or combine the value of Variable
Accumulation Units, Annuity Units or any of them. In effecting any such change
of unit values, strict equity will be preserved and no change will have a
material effect on the benefits or other provisions of the Contract.
MODIFICATION
Upon notice to the Participant, in the case of an Individual Contract, and
the Owner and Participant(s), in the case of a Group Contract (or the Payee(s)
during the Income Phase), we may modify the Contract if such modification:
(i) is necessary to make the Contract or the Variable Account comply with any
law or regulation issued by a governmental agency to which the Company or the
Variable Account is subject; (ii) is necessary to assure continued qualification
of the Contract under the Internal Revenue Code or other federal or state laws
relating to retirement annuities or annuity contracts; (iii) is necessary to
reflect a change in the operation of the Variable Account or the Sub-Account(s)
(See "Change in Operation of Variable Account"); (iv) provides additional
Variable Account and/or fixed accumulation options; or (v) as may otherwise be
in the best interests of Owners, Participants, or Payees, as applicable. In the
event of any such modification, we may make appropriate endorsement in the
Contract to reflect such modification.
In addition, upon notice to the Owner, we may modify a Group Contract to
change the withdrawal charges, Account Fees, mortality and expense risk charges,
administrative expense charges, the tables used in determining the amount of the
first monthly variable annuity and fixed annuity payments and the formula used
to calculate the Market Value Adjustment, provided that such modification
applies only to Participant Accounts established after the effective date of
such modification. In order to exercise our modification rights in these
particular instances, we must notify the Owner of such modification in writing.
The notice shall specify the effective date of such modification which must be
at least 60 days following the date we mail notice of modification. All of the
charges and the annuity tables which are provided in the Group Contract prior to
any such modification will remain in effect permanently, unless improved by the
Company, with respect to Participant Accounts established prior to the effective
date of such modification.
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DISCONTINUANCE OF NEW PARTICIPANTS
We may limit or discontinue the acceptance of new Applications and the
issuance of new Certificates under a Group Contract by giving 30 days prior
written notice to the Owner. This will not affect rights or benefits with
respect to any Participant Accounts established under such Group Contract prior
to the effective date of such limitation or discontinuance.
RESERVATION OF RIGHTS
We reserve the right, to the extent permitted by law, to: (1) combine any
2 or more variable accounts; (2) add or delete Funds, sub-series thereof or
other investment companies and corresponding Sub-Accounts; (3) add or remove
Guarantee Periods available at any time for election by a Participant; and (4)
restrict or eliminate any of the voting rights of Participants (or Owners) or
other persons who have voting rights as to the Variable Account. Where required
by law, we will obtain approval of changes from Participants or any appropriate
regulatory authority. In the event of any change pursuant to this provision, we
may make appropriate endorsement to the Contract to reflect the change.
RIGHT TO RETURN
If you are not satisfied with your Contract, you may return it by mailing
or delivering it to us at our Annuity Mailing Address as shown on the cover of
this Prospectus within 10 days after it was delivered to you. When we receive
the returned Contract, it will be cancelled and we will refund to you your
Account Value. However, if applicable state law requires, we will return the
full amount of any Purchase Payment(s) we received. State law may also require
us to give you a longer "free look" period or allow you to return the Contract
to your sales representative.
If you are establishing an Individual Retirement Account ("IRA"), the
Internal Revenue Code requires that we give you a disclosure statement
containing certain information about the Contract and applicable legal
requirements. We must give you this statement on or before the date the IRA is
established. If we give you the disclosure statement before the seventh day
preceding the date the IRA is established, you will not have any right of
revocation under the Code. If we give you the disclosure statement at a later
date, then you may give us a notice of revocation at any time within 7 days
after your Contract Date. Upon such revocation, we will refund your Purchase
Payment(s). This right of revocation with respect to an IRA is in addition to
the return privilege set forth in the preceding paragraph. We allow a
Participant establishing an IRA a "ten day free-look," notwithstanding the
provisions of the Internal Revenue Code.
TAX CONSIDERATIONS
This section describes general federal income tax consequences based upon
our understanding of current federal tax laws. Actual federal tax consequences
may vary depending on, among other things, the type of retirement plan with
which you use and where the site where your Contract was issued. Also,
legislation affecting the current tax treatment of annuity contracts could be
enacted in the future and could apply retroactively to Contracts that you
purchased before the date of enactment. We do not make any guarantee regarding
the federal, state, or local tax status of any Contract or any transaction
involving any Contract. You should consult a qualified tax professional for
advice before purchasing a Contract or executing any other transaction (such as
a rollover, distribution, withdrawal or payment) involving a Contract.
U.S. FEDERAL TAX CONSIDERATIONS
The following discussion applies only to those Contracts issued in the
United States. For a discussion of tax considerations effecting Contracts issued
in Puerto Rico, see "Puerto Rico Tax Considerations," below.
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DEDUCTIBILITY OF PURCHASE PAYMENTS
For federal income tax purposes, Purchase Payments made under
Non-Qualified Contracts are not deductible.
PRE-DISTRIBUTION TAXATION OF CONTRACTS
Generally, an increase in the value of a Contract will not give rise to
tax, prior to distribution.
However, corporate (or other non-natural person) Owners of, and
Participants under, a Non-Qualified Contract incur current tax, regardless of
distribution, on Contract value increases. Such current taxation does not apply,
though, to (i) immediate annuities, which the Internal Revenue Code (the "Code")
defines as a single premium contract with an annuity commencement date within
one year of the date of purchase, or (ii) any Contract that the non-natural
person holds as agent for a natural person (such as where a bank or other entity
holds a Contract as trustee under a trust agreement).
You should note that qualified retirement investments generally provide
tax deferral regardless of whether the underlying contract is an annuity.
DISTRIBUTIONS AND WITHDRAWALS FROM NON-QUALIFIED CONTRACTS
The Account Value will include an amount attributable to Purchase
Payments, the return of which is not taxable, and an amount attributable to
investment earnings, the return of which is taxable at ordinary income rates.
The relative portions of a distribution that derive from nontaxable Purchase
Payments and taxable investment earnings depend upon the timing of the
distribution.
If you withdraw less than your entire Account Value under a Non-Qualified
Contract before the Annuity Commencement Date, you must treat the withdrawal
first as a return of investment earnings. You may treat only withdrawals in
excess of the amount of the Account Value attributable to investment earnings as
a return of Purchase Payments. Account Value amounts assigned or pledged as
collateral for a loan will be treated as if withdrawn from the Contract.
If a Payee receives annuity payments under a Non-Qualified Contract after
the Annuity Commencement Date, however, the Payee treats a portion of each
payment as a nontaxable return of Purchase Payments. In general, the nontaxable
portion of such a payment bears the same ratio to the total payment as the
Purchase Payments bear to the Payee's expected return under the Contract. The
remainder of the payment constitutes a taxable return of investment earnings.
Once the Payee has received nontaxable payments in an amount equal to total
Purchase Payments, all future distributions constitute fully taxable ordinary
income. If the Annuitant dies before the Payee recovers the full amount of
Purchase Payments, the Payee may deduct an amount equal to unrecovered Purchase
Payments.
Upon the transfer of a Non-Qualified Contract by gift (other than to the
Participant's spouse), the Participant must treat an amount equal to the Account
Value minus the total amount paid for the Contract as income.
A penalty tax of 10% may apply to taxable cash withdrawals and lump-sum
payments from Non-Qualified Contracts. This penalty will not apply in certain
circumstances, such as distributions pursuant to the death of the Participant or
distributions under an immediate annuity (as defined above), or after age
59 1/2.
DISTRIBUTIONS AND WITHDRAWALS FROM QUALIFIED CONTRACTS
Generally, distributions from a Qualified Contract will constitute fully
taxable ordinary income. Also, a 10% penalty tax will, except in certain
circumstances, apply to distributions prior to age 59 1/2.
Distributions from a Qualified Contract are not subject to current
taxation or a 10% penalty, however, if:
- the distribution is a hardship distribution or part of a series of
payments for life or for a specified period of 10 years or more (an
"eligible rollover distribution"), and
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- the Participant or Payee rolls over the distribution (with or without
actually receiving the distribution) into a qualified retirement plan
eligible to receive the rollover.
Only you or your spouse may elect to roll over a distribution to an
eligible retirement plan.
WITHHOLDING
In the case of an eligible rollover distribution (as defined above) from a
Qualified Contract (other than from a Contract issued for use with an individual
retirement account), we (or the plan administrator) must withhold and remit to
the U.S. Government 20% of the distribution, unless the Participant or Payee
elects to make a direct rollover of the distribution to another qualified
retirement plan that is eligible to receive the rollover; however, only you or
your spouse may elect a direct rollover. In the case of a distribution from
(i) a Non-Qualified Contract, (ii) a Qualified Contract issued for use with an
individual retirement account, or (iii) a Qualified Contract where the
distribution is not an eligible rollover distribution, we will withhold and
remit to the U.S. Government a part of the taxable portion of each distribution
unless, prior to the distribution, the Participant or Payee provides us his or
her taxpayer identification number and instructs us (in the manner prescribed)
not to withhold. The Participant or Payee may credit against his or her federal
income tax liability for the year of distribution any amounts that we (or the
plan administrator) withhold.
INVESTMENT DIVERSIFICATION AND CONTROL
The Treasury Department has issued regulations that prescribe investment
diversification requirements for mutual fund series underlying nonqualified
variable contracts. Contracts must comply with these regulations to qualify as
annuities for federal income tax purposes. Contracts that do not meet the
guidelines are subject to current taxation on annual increases in value. We
believe that each Fund available as an investment option under the Contract
complies with these regulations. The preamble to the regulations states that the
Internal Revenue Service may promulgate guidelines under which an owner's
excessive control over investments underlying the contract will preclude the
contract from qualifying as an annuity for federal tax purposes. We cannot
predict whether such guidelines, if in fact promulgated, will be retroactive. We
reserve the right to modify the Contract and/or the Variable Account to the
extent necessary to comply with any such guidelines, but cannot assure that such
modifications would satisfy any retroactive guidelines.
TAX TREATMENT OF THE COMPANY AND THE VARIABLE ACCOUNT
As a life insurance company under the Code, we will record and report
operations of the Variable Account separately from other operations. The
Variable Account will not, however, constitute a regulated investment company or
any other type of taxable entity distinct from our other operations. We will not
incur tax on the income of the Variable Account (consisting primarily of
interest, dividends, and net capital gains) if we use this income to increase
reserves under Contracts participating in the Variable Account.
QUALIFIED RETIREMENT PLANS
You may use Qualified Contracts with several types of qualified retirement
plans. Because tax consequences will vary with the type of qualified retirement
plan and the plan's specific terms and conditions, we provide below only brief,
general descriptions of the consequences that follow from using Qualified
Contracts in connection with various types of qualified retirement plans. We
stress that the rights of any person to any benefits under these plans may be
subject to the terms and conditions of the plans themselves, regardless of the
terms of the Qualified Contracts that you are using. These terms and conditions
may include restrictions on, among other things, ownership, transferability,
assignability, contributions and distributions.
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PENSION AND PROFIT-SHARING PLANS
Sections 401(a), 401(k) and 403(a) of the Code permit business employers
and certain associations to establish various types of retirement plans for
employees. The Tax Equity and Fiscal Responsibility Act of 1982 eliminated most
differences between qualified retirement plans of corporations and those of
self-employed individuals. Self-employed persons, as a general rule, may
therefore use Qualified Contracts as a funding vehicle for their retirement
plans.
TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits public school employees and employees
of certain types of charitable, educational and scientific organizations
specified in Section 501(c)(3) of the Code to purchase annuity contracts and,
subject to certain limitations, exclude the amount of purchase payments from
gross income for tax purposes. The Code imposes restrictions on cash withdrawals
from Section 403(b) annuities.
If the Contracts are to receive tax-deferred treatment, cash withdrawals
of amounts attributable to salary reduction contributions (other than
withdrawals of accumulation account value as of December 31, 1988) may be made
only when the Participant attains age 59 1/2, separates from service with the
employer, dies or becomes disabled (within the meaning of Section 72(m)(7) of
the Code). These restrictions apply to (i) any post-1988 salary reduction
contributions, (ii) any growth or interest on post-1988 salary reduction
contributions, and (iii) any growth or interest on pre-1989 salary reduction
contributions that occurs on or after January 1, 1989. It is permissible,
however, to withdraw post-1988 salary reduction contributions in cases of
financial hardship. While the Internal Revenue Service has not issued specific
rules defining financial hardship, we expect that to qualify for a hardship
distribution, the Participant must have an immediate and heavy bona fide
financial need and lack other resources reasonably available to satisfy the
need. Hardship withdrawals (as well as certain other premature withdrawals) will
be subject to a 10% tax penalty, in addition to any withdrawal charge applicable
under the Contracts. Under certain circumstances the 10% tax penalty will not
apply if the withdrawal is for medical expenses.
Under the terms of a particular Section 403(b) plan, the Participant may
be entitled to transfer all or a portion of the Account Value to one or more
alternative funding options. Participants should consult the documents governing
their plan and the person who administers the plan for information as to such
investment alternatives.
INDIVIDUAL RETIREMENT ACCOUNTS
Sections 219 and 408 of the Code permit eligible individuals to contribute
to an individual retirement program, including Simplified Employee Pension
Plans, Employer/Association of Employees Established Individual Retirement
Account Trusts, and Simple Retirement Accounts. Such IRAs are subject to
limitations on contribution levels, the persons who may be eligible, and on the
time when distributions may commence. In addition, certain distributions from
some other types of retirement plans may be placed in an IRA on a tax-deferred
basis. If we sell Contracts for use with IRAs, the Internal Revenue Service or
other agency may impose supplementary information requirements. We will provide
purchasers of the Contracts for such purposes with any necessary information.
You will have the right to revoke the Contract under certain circumstances, as
described in the section of this Prospectus entitled "Right to Return."
ROTH IRAS
Section 408A of the Code permits an individual to contribute to an
individual retirement program called a Roth IRA. Unlike contributions to a
traditional IRA under Section 408 of the Code, contributions to a Roth IRA are
not tax-deductible. Provided certain conditions are satisfied, distributions are
generally tax-free. Like traditional IRAs, Roth IRAs are subject to limitations
on contribution amounts and the timing of distributions. If an individual
converts a traditional IRA into a Roth IRA the full amount of the IRA is
included in taxable income. The Internal Revenue Service and other
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agencies may impose special information requirements with respect to Roth IRAs.
We will provide the necessary information for Contracts issued in connection
with Roth IRAs.
PUERTO RICO TAX CONSIDERATIONS
Puerto Rico tax laws with respect to qualified retirement plans described
in this Prospectus vary significantly from those discussed above under "U.S.
Federal Tax Considerations." Although we currently offer the Contract in Puerto
Rico in connection with qualified retirement plans, the text of this Prospectus
under the heading "U.S. Federal Tax Considerations" dealing with such qualified
retirement plans is inapplicable to Puerto Rico and should be disregarded.
The following discussion applies if your Contract is issued in Puerto
Rico:
Under Section 1022 of the Puerto Rico Internal Revenue Code of 1994, as
amended (the "1994 Code"), the Contract offered by this Prospectus is considered
an annuity contract. The 1994 Code provides that no income tax is payable on
increases in value of accumulation shares of annuity units credited to a
variable annuity contract until payments are made to the annuitant or other
payee under such contract.
If any annuity distributions are made under an annuity contract, the
annuitant or other payee will be required to include as gross income the portion
of each payment equal to 3% of the aggregate premiums or other consideration
paid for the annuity. The amount, if any, in excess of the included amount is
excluded from gross income. After an amount equal to the aggregate amount
excluded from gross income has been received, all of the annuity payments are
considered to be taxable income.
In the event payment under a Contract is made in a lump sum, the amount of
the payment would be included in the gross income of the Annuitant or other
Payee to the extent of the Annuitant's aggregate premiums or other consideration
paid.
For further information regarding the income tax consequences of owning a
Contract, you should consult a qualified tax adviser.
ADMINISTRATION OF THE CONTRACTS
We perform certain administrative functions relating to the Contracts,
Participant Accounts, and the Variable Account. These functions include, but are
not limited to, maintaining the books and records of the Variable Account and
the Sub-Accounts; maintaining records of the name, address, taxpayer
identification number, Contract number, Participant Account number and type, the
status of each Participant Account and other pertinent information necessary to
the administration and operation of the Contracts; processing Applications,
Purchase Payments, transfers and full and partial withdrawals; issuing Contracts
and Certificates; administering annuity payments; furnishing accounting and
valuation services; reconciling and depositing cash receipts; providing
confirmations; providing toll-free customer service lines; and furnishing
telephonic transfer services.
DISTRIBUTION OF THE CONTRACTS
We offer the Contracts on a continuous basis. The Contracts are sold by
licensed insurance agents in those states where the Contracts may be lawfully
sold. Such agents will be registered representatives of broker-dealers
registered under the Securities Exchange Act of 1934 who are members of the
National Association of Securities Dealers, Inc. and who have entered into
distribution agreements with the Company and the general distributor, Clarendon
Insurance Agency, Inc. ("Clarendon"), One Sun Life Executive Park, Wellesley
Hills, Massachusetts 02481. Clarendon, a wholly-owned subsidiary of the Company,
is registered with the SEC under the Securities Exchange Act of 1934 as a
broker-dealer and is a member of the National Association of Securities Dealers,
Inc.
Commissions and other distribution compensation will be paid by the
Company to the selling agents and will not be more than 2.50% of Purchase
Payments. In addition, after the first Account Year, broker-dealers who have
entered into distribution agreements with the Company may receive an annual
renewal commission of no more than 1.00% of the Participant's Account Value. In
addition to
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commissions, the Company may, from time to time, pay or allow additional
promotional incentives, in the form of cash or other compensation. We reserve
the right to offer these additional incentives only to certain broker-dealers
that sell or are expected to sell during specified time periods certain minimum
amounts of the Contracts or Certificates or other contracts offered by the
Company. Promotional incentives may change at any time. Commissions may be
waived or reduced in connection with certain transactions described in this
Prospectus under the heading "Waivers; Reduced Charges; Bonus Guaranteed
Interest Rates."
PERFORMANCE INFORMATION
From time to time the Variable Account may publish reports to
shareholders, sales literature and advertisements containing performance
information relating to the Sub-Accounts. This information may include
standardized and non-standardized "Average Annual Total Return," "Cumulative
Growth Rate" and "Compound Growth Rate." We may also advertise "yield" and
"effective yield" for some Sub-Accounts.
Average Annual Total Return measures the net income of the Sub-Account and
any realized or unrealized gains or losses of the Fund in which it invests, over
the period stated. Average Annual Total Return figures are annualized and
represent the average annual percentage change in the value of an investment in
a Sub-Account over that period. Standardized Average Annual Total Return
information covers the period after the Variable Account was established or, if
shorter, the life of the Fund. Non-standardized Average Annual Total Return
covers the life of each Fund, which may predate the Variable Account. Cumulative
Growth Rate represents the cumulative change in the value of an investment in
the Sub-Account for the period stated, and is arrived at by calculating the
change in the Accumulation Unit Value of a Sub-Account between the first and the
last day of the period being measured. The difference is expressed as a
percentage of the Accumulation Unit Value at the beginning of the base period.
"Compound Growth Rate" is an annualized measure, calculated by applying a
formula that determines the level of return which, if earned over the entire
period, would produce the cumulative return.
Average Annual Total Return figures assume an initial Purchase Payment of
$1,000 and reflect all applicable withdrawal and Contract charges. The
Cumulative Growth Rate and Compound Growth Rate figures that we advertise do not
reflect withdrawal charges, the annual Account Fee, or any Purchase Payment
Interest, althought such figures do reflect all recurring charges. If such
figures were calculated to reflect Purchase Payment Interest credited, the
calculation would also reflect any withdrawal charges made. Results calculated
without withdrawal and/or certain Contract charges will be higher. We may also
use other types of rates of return that do not reflect withdrawal and Contract
charges.
The performance figures used by the Variable Account are based on the
actual historical performance of the underlying Funds for the specified periods,
and the figures are not intended to indicate future performance. For periods
before the date the Contracts became available, we calculate the performance
information for the Sub-Accounts on a hypothetical basis. To do this, we reflect
deductions of the current Contract fees and charges from the historical
performance of the corresponding Funds.
Yield is a measure of the net dividend and interest income earned over a
specific one month or 30-day period (7-day period for the Money Market
Sub-Account available for investment under the Contract), expressed as a
percentage of the value of the Sub-Account's Accumulation Units. Yield is an
annualized figure, which means that we assume that the Sub-Account generates the
same level of net income over a one-year period and compound that income on a
semi-annual basis. We calculate the effective yield for the available Money
Market Sub-Account similarly, but include the increase due to assumed
compounding. The Money Market Sub-Account's effective yield will be slightly
higher than its yield as a result of its compounding effect.
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The Variable Account may also from time to time compare its investment
performance to various unmanaged indices or other variable annuities and may
refer to certain rating and other organizations in its marketing materials. More
information on performance and our computations is set forth in the Statement of
Additional Information.
The Company may also advertise the ratings and other information assigned
to it by independent industry ratings organizations. Some of these organizations
are A.M. Best, Moody's Investor's Service, Standard and Poor's Insurance Rating
Services, and Duff and Phelps. Each year A.M. Best reviews the financial status
of thousands of insurers, culminating in the assignment of Best's rating. These
ratings reflect A.M. Best's current opinion of the relevant financial strength
and operating performance of an insurance company in comparison to the norms of
the life/health industry. Best's ratings range from A++ to F. Standard and
Poor's and Duff and Phelps' ratings measure the ability of an insurance company
to meet its obligations under insurance policies it issues. These two ratings do
not measure the insurance company's ability to meet non-policy obligations.
Ratings in general do not relate to the performance of the Sub-Accounts.
We may also advertise endorsements from organizations, individuals or
other parties that recommend the Company or the Contracts. We may occasionally
include in advertisements (1) comparisons of currently taxable and tax deferred
investment programs, based on selected tax brackets; or (2) discussions of
alternative investment vehicles and general economic conditions.
AVAILABLE INFORMATION
The Company and the Variable Account have filed with the SEC registration
statements under the Securities Act of 1933 relating to the Contracts. This
Prospectus does not contain all of the information contained in the registration
statements and their exhibits. For further information regarding the Variable
Account, the Company and the Contracts, please refer to the registration
statements and their exhibits.
In addition, the Company is subject to the informational requirements of
the Securities Exchange Act of 1934. We file reports and other information with
the SEC to meet these requirements. You can inspect and copy this information
and our registration statements at the SEC's public reference facilities at the
following locations: WASHINGTON, D.C. -- 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549; CHICAGO, ILLINOIS -- 500 West Madison Street, Chicago,
IL 60661; NEW YORK, NEW YORK -- 7 World Trade Center, 13th Floor, New York, NY
10048. The Washington, D.C. office will also provide copies by mail for a fee.
You may also find these materials on the SEC's website (http:// www.sec.gov).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1999 filed with the SEC is incorporated by reference in this Prospectus. Any
statement contained in a document we incorporate by reference is deemed modified
or superceded to the extent that a later filed document, including this
Prospectus, shall modify or supercede that statement. Any statement so modified
or superceded shall not be deemed, except as so modified or superceded, to
constitute part of this Prospectus.
The Company will furnish, without charge, to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of the document referred to above which has been incorporated by reference
in this Prospectus, other than exhibits to such document (unless such exhibits
are specifically incorporated by reference in this Prospectus). Requests for
such document should be directed to the Secretary, Sun Life Assurance Company of
Canada (U.S.), One Sun Life Executive Park, Wellesley Hills, Massachusetts
02481, telephone (800) 225-3950.
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ADDITIONAL INFORMATION ABOUT THE COMPANY
[TO BE FILED BY AMENDMENT]
REINSURANCE
The Company has agreements with Sun Life (Canada) which provide that Sun
Life (Canada) will reinsure the mortality risks of the individual life insurance
contracts previously sold by the Company. Under these agreements, basic death
benefits and supplementary benefits are reinsured on a yearly renewable term
basis and coinsurance basis, respectively. Reinsurance transactions under these
agreements in 1999 had the effect of decreasing net income from operations by
$ .
Effective January 1, 1991 the Company entered into an agreement with Sun
Life (Canada) under which certain individual life insurance contracts issued by
Sun Life (Canada) were reinsured by the Company on a 90% coinsurance basis. Also
effective January 1, 1991, the Company entered into an agreement with Sun Life
(Canada) which provides that Sun Life (Canada) will reinsure the mortality risks
in excess of $500,000 per policy for the individual life insurance contracts
assumed by the Company in the reinsurance agreement described above. Death
benefits are reinsured on a yearly renewable term basis. The life reinsurance
assumed agreement requires the reinsurer to withhold funds in an amount equal to
the reserves assumed. These agreements had the effect of increasing income from
operations by approximately $24,579,000 for the year ended December 31, 1998.
The Company terminated these agreements, effective October 1, 1998, resulting in
an increase in income from operations of $65,679,000, which included a cash
settlement.
The Company has also executed reinsurance agreements with unaffiliated
companies. These agreements provide reinsurance of certain individual life
insurance contracts on a modified coinsurance basis under which all deficiency
reserves are ceded; as well as reinsurance for variable universal life on a
yearly renewable term basis for which the Company has a maximum retention of
$2,000,000.
RESERVES
In accordance with the life insurance laws and regulations under which the
Company operates, it is obligated to carry on its books, as liabilities,
actuarially determined reserves to meet its obligations on its outstanding
contracts. Reserves are based on mortality tables in general use in the United
States and are computed to equal amounts that, with additions from premiums to
be received, and with interest on such reserves compounded annually at certain
assumed rates, will be sufficient to meet the Company's policy obligations at
their maturities or in the event of an insured's death. In the accompanying
Financial Statements, these reserves are determined in accordance with statutory
regulations.
INVESTMENTS
Of the Company's total assets of $ billion at December 31, 1999, %
($ billion) consisted of unitized and non-unitized separate account assets,
% ($ billion) was invested in bonds and similar securities, %
($ million) was invested in mortgages, % ($ million) was invested in
subsidiaries, % ($ million) was invested in real estate, and the remaining
% ($ million) was invested in cash and other assets.
COMPETITION
The Company is engaged in a business that is highly competitive because of
the large number of stock and mutual life insurance companies and other entities
marketing insurance products. According to a 1999 statistical study, published
by A.M. Best, the Company ranked among North American life insurance
companies based upon total assets as of December 31, 1998. Its ultimate parent
company, Sun Life (Canada), ranked .
EMPLOYEES
The Company and Sun Life (Canada) have entered into a service agreement
which provides that the latter will furnish the Company, as required, with
personnel as well as certain services and facilities on a cost reimbursement
basis. Expenses under this agreement amounted to approximately $ in
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1999. As of February 28, 2000, the Company had direct employees employed at
its Principal Executive Office in Wellesley Hills, Massachusetts and at its
Retirement Products and Services Division in Boston, Massachusetts.
PROPERTIES
The Company occupies office space owned by it and leased to Sun Life
(Canada), and certain unrelated parties for lease terms not exceeding five
years. Rent received by the Company under the leases amounted to approximately
$6,856,000 in 1998. The Company also occupies office space which it leases from
unaffiliated parties for various lease terms.
STATE REGULATION
The Company is subject to the laws of the State of Delaware governing life
insurance companies and to regulation by the Commissioner of Insurance of
Delaware. An annual statement is filed with the Commissioner of Insurance on or
before March lst in each year relating to the operations of the Company for the
preceding year and its financial condition on December 31st of such year. Its
books and records are subject to review or examination by the Commissioner or
his agents at any time and a full examination of its operations is conducted at
periodic intervals.
The Company is also subject to the insurance laws and regulations of the
other states and jurisdictions in which it is licensed to operate. The laws of
the various jurisdictions establish supervisory agencies with broad
administrative powers with respect to licensing to transact business, overseeing
trade practices, licensing agents, approving policy forms, establishing reserve
requirements, fixing maximum interest rates on life insurance policy loans and
minimum rates for accumulation of surrender values, prescribing the form and
content of required financial statements and regulating the type and amounts of
investments permitted. Each insurance company is required to file detailed
annual reports with supervisory agencies in each of the jurisdictions in which
it does business and its operations and accounts are subject to examination by
such agencies at regular intervals.
In addition, many states regulate affiliated groups of insurers, such as
the Company, its parent and its affiliates, under insurance holding company
legislation. Under such laws, inter-company transfers of assets and dividend
payments from insurance subsidiaries may be subject to prior notice or approval,
depending on the size of such transfers and payments in relation to the
financial positions of the companies involved.
Under insurance guaranty fund laws in most states, insurers doing business
therein can be assessed (up to prescribed limits) for policyholder losses
incurred by insolvent companies. The amount of any future assessments of the
Company under these laws cannot be reasonably estimated. However, most of these
laws do provide that an assessment may be excused or deferred if it would
threaten an insurer's own financial strength and many permit the deduction of
all or a portion of any such assessment from any future premium or similar taxes
payable.
Although the federal government generally does not directly regulate the
business of insurance, federal initiatives often have an impact on the business
in a variety of ways. Current and proposed federal measures which may
significantly affect the insurance business include employee benefit regulation,
removal of barriers preventing banks from engaging in the insurance business,
tax law changes affecting the taxation of insurance companies, the tax treatment
of insurance products and its impact on the relative desirability of various
personal investment vehicles.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the Variable Account. We
and our subsidiaries are engaged in various kinds of routine litigation which,
in management's judgment, is not of material importance to our respective total
assets or material with respect to the Variable Account.
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ACCOUNTANTS
The financial statements of the Variable Account for the year ended
December 31, 1999 included in the Statement of Additional Information and the
statutory financial statements of the Company for the years ended December 31,
1999, 1998 and 1997 included in this Prospectus have been audited by
, independent auditors, as stated in their reports appearing
herein, and are included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
FINANCIAL STATEMENTS
The financial statements of the Company which are included in this
Prospectus should be considered only as bearing on the ability of the Company to
meet its obligations with respect to amounts allocated to the Fixed Account and
with respect to the death benefit and the Company's assumption of the mortality
and expense risks. They should not be considered as bearing on the investment
performance of the Series Fund shares held in the Sub-Accounts of the Variable
Account.
The financial statements of the Variable Account for the year ended
December 31, 1999 are included in the Statement of Additional Information.
40
<PAGE>
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<S> <C>
Calculation of Performance Data.............................
Advertising and Sales Literature............................
Calculations................................................
Example of Variable Accumulation Unit Value Calculation...
Example of Variable Annuity Unit Calculation..............
Example of Variable Annuity Payment Calculation...........
Distribution of the Contracts...............................
Designation and Change of Beneficiary.......................
Custodian...................................................
Financial Statements........................................
</TABLE>
41
<PAGE>
This Prospectus sets forth information about the Contracts and the
Variable Account that a prospective purchaser should know before investing.
Additional information about the Contracts and the Variable Account has been
filed with the Securities and Exchange Commission in a Statement of Additional
Information dated June __, 2000 which is incorporated herein by reference. The
Statement of Additional Information is available upon request and without charge
from Sun Life Assurance Company of Canada (U.S.). To receive a copy, return this
request form to the address shown below or telephone (800) 752-7215.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
To: Sun Life Assurance Company of Canada (U.S.)
c/o Retirement Products and Services
P.O. Box 1024
Boston, Massachusetts 02103
Please send me a Statement of Additional Information for
MFS Regatta Access Variable and Fixed Annuity
Sun Life of Canada (U.S.) Variable Account F.
</TABLE>
<TABLE>
<S> <C>
Name ------------------------------------------------------------
Address ------------------------------------------------------------
------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
City -------------------------------- State -------------- Zip -------
</TABLE>
<TABLE>
<S> <C>
Telephone ------------------------------------------------------------
</TABLE>
42
<PAGE>
APPENDIX A
GLOSSARY
The following terms as used in this Prospectus have the indicated
meanings:
ACCOUNT or PARTICIPANT ACCOUNT: An account established for each
Participant to which Net Purchase Payments are credited.
ACCOUNT VALUE: The Variable Accumulation Value, if any, plus the Fixed
Accumulation Value, if any, of your Account for any Valuation Period.
ACCOUNT YEAR and ACCOUNT ANNIVERSARY: Your first Account Year is the
period 365 days from the date on which we issued your Contract. Your Account
Anniversary is the last day of an Account Year. Each Account Year after the
first is the 365-day period that begins on your Account Anniversary. For
example, if the Contract Date is on March 12, the first Account Year is
determined from the Contract Date and ends on March 12 of the following year.
Your Account Anniversary is March 12 and all Account Years after the first are
measured from March 12. (If the Anniversary Date falls on a non-Business Day,
the previous Business Day will be used.)
ACCUMULATION PHASE: The period before the Annuity Commencement Date and
during the lifetime of the Annuitant during which you make Purchase Payments
under the Contract. This is called the "Accumulation Period" in the Contract.
*ANNUITANT: The person or persons to whom the first annuity payment is
made. If the Annuitant dies prior to the Annuity Commencement Date, the
Co-Annuitant will become the sole Annuitant. If the Co-Annuitant dies or if no
Co-Annuitant is named, the Participant becomes the Annuitant upon the
Annuitant's death prior to the Annuity Commencement Date. If you have not named
a sole Annuitant on the 30th day before the Annuity Commencement Date and both
the Annuitant and Co-Annuitant are living, the Co-Annuitant will be the sole
Annuitant/Payee during the Income Phase.
ANNUITY COMMENCEMENT DATE: The date on which the first annuity payment
under each Contract is to be made.
ANNUITY OPTION: The method you choose for receiving annuity payments.
ANNUITY UNIT: A unit of measure used in the calculation of the amount of
the second and each subsequent Variable Annuity payment from the Variable
Account.
APPLICATION: The document signed by you or other evidence acceptable to us
that serves as your application for participation under a Group Contract or
purchase of an Individual Contract.
*BENEFICIARY: Prior to the Annuity Commencement Date, the person or entity
having the right to receive the death benefit and, for Non-Qualified Contracts,
who, in the event of the Participant's death, is the "designated beneficiary"
for purposes of Section 72(s) of the Internal Revenue Code. After the Annuity
Commencement Date, the person or entity having the right to receive any payments
due under the Annuity Option elected, if applicable, upon the death of the
Payee.
BUSINESS DAY: Any day the New York Stock Exchange is open for trading.
CERTIFICATE: The document for each Participant which evidences the
coverage of the Participant under a Group Contract.
COMPANY: Sun Life Assurance Company of Canada (U.S.).
CONTRACT: Any Contract issued by the Company to groups or individuals in
connection with their retirement plans.
CONTRACT DATE: The date on which we issue your Contract. This is called
the "Date of Coverage" in the Contract.
COVERED PERSON: The person(s) identified as such in the Contract whose
death will trigger the death benefit provisions of the Contract and whose
medically necessary stay in a hospital or nursing
* You specify these items on the Application, and may change them, as we
describe in this Prospectus.
43
<PAGE>
facility may allow the Participant to be eligible for a waiver of the withdrawal
charge. Unless otherwise noted, the the Participant/Owner is the Covered Person.
DEATH BENEFIT DATE: If you have elected a death benefit payment option
before the Annuitant's death that remains in effect, the date on which we
receive Due Proof of Death. If your Beneficiary elects the death benefit payment
option, the later of (a) the date on which we receive the Beneficiary's election
and (b) the date on which we receive Due Proof of Death. If we do not receive
the Beneficiary's election within 60 days after we receive Due Proof of Death,
the Death Benefit Date will be the last day of the 60 day period and we will pay
the death benefit in one lump sum.
DUE PROOF OF DEATH: An original certified copy of an official death
certificate, an original certified copy of a decree of a court of competent
jurisdiction as to the finding of death, or any other proof satisfactory to the
Company.
FIXED ACCOUNT: The general account of the Company, consisting of all
assets of the Company other than those allocated to a separate account of the
Company.
FIXED ACCOUNT VALUE: The value of that portion of your Account allocated
to the Fixed Account.
FIXED ANNUITY: An annuity with payments which do not vary as to dollar
amount.
FUND: A registered management investment company, or series thereof, in
which assets of a Sub-Account may be invested.
GROUP CONTRACT: A Contract issued by the Company on a group basis.
GUARANTEE AMOUNT: Each separate allocation of Account Value to a
particular Guarantee Period (including interest earned thereon).
GUARANTEE PERIOD: The period for which a Guaranteed Interest Rate is
credited.
GUARANTEED INTEREST RATE: The rate of interest we credit on a compound
annual basis during any Guarantee Period.
INCOME PHASE: The period on and after the Annuity Commencement Date and
during the lifetime of the Annuitant during which we make annuity payments under
the Contract.
INDIVIDUAL CONTRACT: A Contract issued by the Company on an individual
basis.
NET INVESTMENT FACTOR: An index applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. The Net
Investment Factor may be greater or less than or equal to one.
NET PURCHASE PAYMENT (NET PAYMENTS): The portion of a Purchase Payment
which remains after the deduction of any applicable premium tax or similar tax.
This is also the term used to describe the total contribution made to the
Contract minus the total withdrawals.
NON-QUALIFIED CONTRACT: A Contract used in connection with a retirement
plan that does not receive favorable federal income tax treatment under
Sections 401, 403, 408, or 408A of the Internal Revenue Code. The Participant's
interest in the Contract must be owned by a natural person or agent for a
natural person for the Contract to receive income tax treatment as an annuity.
*OWNER: The person, persons or entity entitled to the ownership rights
stated in a Group Contract and in whose name or names the Group Contract is
issued. The Owner may designate a trustee or custodian of a retirement plan
which meets the requirements of Section 401, Section 408(c), Section 408(k),
Section 408(p) or Section 408A of the Internal Revenue Code to serve as legal
owner of assets of a retirement plan, but the term "Owner," as used herein,
shall refer to the organization entering into the Group Contract.
*PARTICIPANT: In the case of an Individual Contract, the owner of the
Contract. In the case of a Group Contract, the person named in the Contract who
is entitled to exercise all rights and privileges
* You specify these items on the Application, and may change them, as we
describe in this Prospectus.
44
<PAGE>
of ownership under the Contract, except as reserved by the Owner. If there are 2
Participants, the death benefit is paid upon the death of either Participant.
PAYEE: A recipient of payments under a Contract. The term includes an
Annuitant or a Beneficiary who becomes entitled to benefits upon the death of
the Participant, or on the Annuity Commencement Date.
PURCHASE PAYMENT (PAYMENT): An amount paid to the Company as consideration
for the benefits provided by a Contract.
QUALIFIED CONTRACT: A Contract used in connection with a retirement plan
which may receive favorable federal income tax treatment under Sections 401,
403, 408 or 408A of the Internal Revenue Code of 1986, as amended.
RENEWAL DATE: The last day of a Guarantee Period.
SERIES FUND: MFS/Sun Life Series Trust.
SUB-ACCOUNT: That portion of the Variable Account which invests in shares
of a specific Fund or series of a Fund.
VALUATION PERIOD: The period of time from one determination of Variable
Accumulation Unit or Annuity Unit values to the next subsequent determination of
these values. Value determinations are made as of the close of the New York
Stock Exchange on each day that the Exchange is open for trading.
VARIABLE ACCOUNT: Variable Account F of the Company, which is a separate
account of the Company consisting of assets set aside by the Company, the
investment performance of which is kept separate from that of the general assets
of the Company.
VARIABLE ACCUMULATION UNIT: A unit of measure used in the calculation of
Variable Account Value.
VARIABLE ACCOUNT VALUE: The value of that portion of your Account
allocated to the Variable Account.
VARIABLE ANNUITY: An annuity with payments which vary as to dollar amount
in relation to the investment performance of the Variable Account.
45
<PAGE>
APPENDIX B
MARKET VALUE ADJUSTMENT
FIXED ACCOUNT -- EXAMPLES OF THE MARKET VALUE ADJUSTMENT ("MVA")
The MVA Factor is:
<TABLE>
<C> <C> <S> <C> <C>
N/12
1 + I
( -------- ) -1
1 + J + b
</TABLE>
These examples assume the following:
(1) The Guarantee Amount was allocated to a 5-year Guarantee Period with
a Guaranteed Interest Rate of 6% or .06.
(2) The date of surrender is 2 years from the Expiration Date (N = 24).
(3) The value of the Guarantee Amount on the date of surrender is
$11,910.16.
(4) The interest earned in the current Account Year is $674.16.
(5) No transfers or partial withdrawals affecting this Guarantee Amount
have been made.
(6) Withdrawal charges, if any, are calculated in the same manner as
shown in the examples in Part 1.
EXAMPLE OF A NEGATIVE MVA:
Assume that on the date of surrender, the current rate (J) is 8% or .08
and the b factor is zero.
<TABLE>
<C> <C> <S> <C> <C> <C> <C>
N/12
1 + I
The MVA factor = ( -------- ) -1
1 + J + b
</TABLE>
<TABLE>
<C> <C> <S> <C> <C> <C> <C>
24/12
1 + .06
= ( ------ ) -1
1 + .08
= (.981)2 -1
= .963 -1
= - .037
</TABLE>
The value of the Guarantee Amount less interest credited to the Guarantee
Amount in the current Account Year is multiplied by the MVA factor to determine
the MVA:
($11,910.16 - $674.16) X (-.037) = -$415.73
-$415.73 represents the MVA that will be deducted from the value of the
Guarantee Amount before the deduction of any withdrawal charge.
For a partial withdrawal of $2,000 from this Guarantee Amount, the MVA
would be ($2,000.00 - $674.16) X (-.037) = -$49.06. -$49.06 represents the MVA
that will be deducted from the partial withdrawal amount before the deduction of
any withdrawal charge.
46
<PAGE>
EXAMPLE OF A POSITIVE MVA:
Assume that on the date of surrender, the current rate (J) is 5% or .05
and the b factor is zero.
<TABLE>
<C> <C> <S> <C> <C> <C> <C>
N/12
1 + I
The MVA factor = ( -------- ) -1
1 + J + b
</TABLE>
<TABLE>
<C> <C> <S> <C> <C> <C> <C>
24/12
1 + .06
= ( ------ ) -1
1 + .05
= (1.010)2 -1
= 1.019 -1
= - .019
</TABLE>
The value of the Guarantee Amount less interested credit to the Guarantee
Amount in the current Account Year is multiplied by the MVA factor to determine
the MVA:
($11,910.16 - $674.16) X .019 = $213.48
$213.48 represents the MVA that would be added to the value of the
Guarantee Amount before the deduction of any withdrawal charge.
For a partial withdrawal of $2,000 from this Guarantee Amount, the MVA
would be ($2,000.00 - $674.16) X .019 = $25.19.
$25.19 represents the MVA that would be added to the value of the partial
withdrawal amount before the deduction of any withdrawal charge.
47
<PAGE>
APPENDIX C
CALCULATION OF BASIC DEATH BENEFIT
EXAMPLE 1:
Assume a Purchase Payment of $60,000.00 is made on the Contract Date and
an additional Purchase Payment of $40,000.00 is made one year later. Assume that
all of the money is invested in the Sub-Accounts, that no Withdrawals are made
and that the Account Value on the Death Benefit Date is $80,000.00. The
calculation of the Death Benefit to be paid is as follows:
<TABLE>
<S> <C> <C> <C>
The Basic Death Benefit is the greatest of:
Account Value = $ 80,000.00
Cash Surrender Value = $ 74,400.00
Purchase Payments = $100,000.00
The Basic Death Benefit would therefore be: $100,000.00
</TABLE>
EXAMPLE 2:
Assume a Purchase Payment of $60,000.00 is made on the Contract Date and
an additional Purchase Payment of $40,000.00 is made one year later. Assume that
all of the money is invested in the Sub-Accounts and that the Account Value is
$80,000.00 just prior to a $20,000.00 withdrawal. The Account Value on the Death
Benefit Date is $60,000.00.
<TABLE>
<S> <C> <C> <C>
The Basic Death Benefit is the greatest of:
Account Value = $ 60,000.00
Cash Surrender Value = $ 55,200.00
Adjusted Purchase Payments* = $ 75,000.00
The Basic Death Benefit would therefore be: $ 75,000.00
*Adjusted Purchase Payments can be calculated as follows:
Payments X (Account Value after withdrawal DIVIDED BY Account Value before
withdrawal)
$100,000.00 X ($60,000.00 DIVIDED BY $80,000.00)
</TABLE>
48
<PAGE>
APPENDIX D
CALCULATION OF EARNINGS ENHANCEMENT OPTIONAL DEATH BENEFIT
EXAMPLE 1:
Assume a Purchase Payment of $60,000.00 is made on the Contract Date and
an additional Purchase Payment of $40,000.00 is made one year later. Assume that
all of the money is invested into the Sub-Accounts, no withdrawals are made and
the Account Value on the Death Benefit Date is $150,000.00. In addition, this
Contract was issued prior to the Participant's 70th birthday. The calculation of
the Basic Death Benefit to be paid is as follows:
<TABLE>
<S> <C> <C> <C>
The Basic Death Benefit is the greatest of:
Account Value = $150,000.00
Cash Surrender Value = $ 72,800.00
Adjusted Purchase Payments = $100,000.00
The Basic Death Benefit would therefore = $150,000.00
The benefit under the optional death benefit rider
can be calculated as follows:
The lesser of:
Adjusted Purchase Payments = $100,000.00
Account Value -- adjusted Purchase Payments = $ 50,000.00
Amount to use to determine rider benefit = $ 50,000.00
The amount to be paid on the rider benefit = $ 50,000.00 X 40% = $20,000.00
</TABLE>
The total Death Benefit would be the amount paid on the Basic Death
Benefit plus the amount paid on the Earnings Enhancement Optional Death Benefit
Rider: $150,000.00 + $20,000.00 = $170,000.00
EXAMPLE 2:
Assume a Purchase Payment of $60,000.00 is made on the Contract Date and
an additional Purchase Payment of $40,000.00 is made one year later. Assume that
all of the money is invested in the Sub-Accounts and that the Account Value is
$150,000.00 just prior to a $20,000.00 withdrawal. The Account Value on the
Death Benefit Date is $130,000.00.
<TABLE>
<S> <C> <C> <C>
The Basic Death Benefit is the greatest of:
Account Value = $130,000.00
Cash Surrender Value = $123,600.00
Adjusted Purchase Payments* = $ 86,666.67
The Basic Death Benefit would therefore = $130,000.00
*Adjusted Purchase Payments can be calculated as follows:
Payments X (Account Value after withdrawal DIVIDED BY Account Value before withdrawal)
$100,000.00 X ($130,000.00 DIVIDED BY $150,000.00)
The benefit under the optional death benefit rider
can be calculated as follows:
The lesser of:
Adjusted Purchase Payments = $ 86,666.67
Account Value -- adjusted Purchase Payments = $ 43,333.33
Amount to use to determine rider benefit: = $ 43,333.33
The amount to be paid on the rider benefit = $ 43,333.33 X 40% = $17,333.33
</TABLE>
The total Death Benefit would be the amount paid on the Basic Death
Benefit plus the amount paid on the Earnings Enhancement Optional Death Benefit
Rider: $130,000.00 + $17,333.33 = $147,333.33.
49
<PAGE>
APPENDIX E
CALCULATION OF DEATH BENEFIT WHEN ALL THREE DEATH BENEFITS RIDERS ARE SELECTED
Assume a Purchase Payment of $100,000.00 is made on the Contract Date, no
additional Purchase Payments or withdrawals are made and all of the money is
invested in the Sub-Accounts. In addition, on the Death Benefit Date the Account
Value is $150,000.00, the value of the Purchase Payment accumulated at 5% until
the Death Benefit Date is $160,000.00, and the Maximum Account Anniversary Value
is $170,000.00. The calculation of the death benefit to be paid is as follows:
<TABLE>
<S> <C> <C> <C>
The Death Benefit Amount will be the greatest
of:
Account Value = $150,000.00
Cash Surrender Value = $142,800.00
Total of adjusted Purchase Payments = $100,000.00
5% Premium Roll-Up Rider = $160,000.00
Maximum Account Anniversary Value Rider = $170,000.00
The Death Benefit Amount would therefore = $170,000.00
~ PLUS ~
The Earnings Enhancement Rider benefit is calculated as
follows:
The lesser of:
Adjusted Purchase Payments = $100,000.00
Account Value -- adjusted Purchase
Payments = $ 50,000.00
Amount to use to determine this rider
benefit: = $ 50,000.00
The amount to be paid on the rider benefit = $ 50,000.00 X 40% = $20,000.00
</TABLE>
The total Death Benefit would be the amount paid on the Maximum Account
Anniversary Rider plus the amount paid on the Earnings Enhancement Rider:
$170,000.00 + $20,000.00 = $190,000.00
50
<PAGE>
<TABLE>
<S> <C>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
ANNUITY MAILING ADDRESS:
C/O RETIREMENT PRODUCTS AND SERVICES
P.O. BOX 1024
BOSTON, MASSACHUSETTS 02103
TELEPHONE:
Toll Free (800) 752-7215
GENERAL DISTRIBUTOR
Clarendon Insurance Agency, Inc.
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
AUDITORS
200 Berkeley Street
Boston, Massachusetts 02116
ACCESS- 1 6/00
</TABLE>
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF
ADDITIONAL INFORMATION
Attached hereto and made a part hereof is the Statement of Additional
Information dated June __, 2000 for each of the following:
MFS Regatta Access Variable and Fixed Annuity
Futurity Focus II Variable and Fixed Annuity
<PAGE>
June __, 2000
MFS REGATTA ACCESS
VARIABLE AND FIXED ANNUITY
STATEMENT OF ADDITIONAL INFORMATION
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
TABLE OF CONTENTS
Calculation of Performance Data .............................................. 2
Advertising and Sales Literature ............................................. 5
Tax Deferred Accumulation..................................................... 8
Calculations ................................................................. 9
Example of Variable Accumulation Unit Value Calculation.................. 9
Example of Variable Annuity Unit Calculation ............................ 9
Example of Variable Annuity Payment Calculation ......................... 9
Distribution of the Contracts ................................................ 9
Designation and Change of Beneficiary ........................................10
Custodian ....................................................................10
Financial Statements .........................................................10
The Statement of Additional Information sets forth information
which may be of interest to prospective purchasers of MFS Regatta Access
Variable and Fixed Annuity Contracts (the "Contracts") issued by Sun Life
Assurance Company of Canada (U.S.) (the "Company") in connection with Sun
Life of Canada (U.S.) Variable Account F (the "Variable Account") which is
not included in the Prospectus dated June __, 2000. This Statement of
Additional Information should be read in conjunction with the Prospectus, a
copy of which may be obtained without charge from the Company by writing to Sun
Life Assurance Company of Canada (U.S.), c/o Retirement Products and Services,
P.O. Box 1024, Boston, Massachusetts 02103, or by telephoning (617) 348-9600 or
(800)-752-7215.
The terms used in this Statement of Additional Information have the
same meanings as in the Prospectus.
- --------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE PURCHASERS ONLY IF PRECEDED OR ACCOMPANIED BY A
CURRENT PROSPECTUS.
<PAGE>
-2-
CALCULATION OF PERFORMANCE DATA
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN:
The table below shows, for various Sub-Accounts of the Variable Account,
the Standardized Average Annual Total Return for the stated periods (or
shorter period indicated in the note below), based upon a hypothetical
initial Purchase Payment of $1,000, calculated in accordance with the formula
set out below. For purposes of determining these investment results, the
actual investment performance of each Fund of MFS/Sun Life Series Trust is
reflected from the date the Variable Account was established, or such later
date that the Fund commenced operations (the "Commencement Date"), although
the Contracts have been offered only since June __, 2000. No information is
shown for the Funds that have not commenced operations or that had been in
operation for less than one year as of December 31, 1999.
The Securities and Exchange Commission defines "standardized" total
return information to mean Average Annual Total Return, based on a
hypothetical initial purchase payment of $1,000 and calculated in accordance
with the formula set forth after the table, but presented only for periods
subsequent to the commencement of the offering of the Futurity annuities.
Since as of the date of the Prospectus the Company has been offering the
Futurity annuities for less than a year, no standardized total return
information is currently provided. Standardized total return information will
be provided after the Sub-Accounts have been in operation for one year.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
PERIOD ENDING DECEMBER 31, 1999
<TABLE>
<CAPTION>
1 YEAR 5 YEAR 10 YEAR COMMENCEMENT
PERIOD PERIOD PERIOD LIFE DATE
----------- ----------- ----------- ---------------- ----------------------
<S> <C> <C> <C> <C> <C>
FUNDS:
Bond Series.............................
Capital Appreciation Series............. July 13, 1989
Capital Opportunities Series............ June 3, 1996
Emerging Growth Series.................. May 1, 1995
Emerging Markets Equity Series(1)....... June 5, 1996
Equity Income Series....................
Global Asset Allocation Series.......... November 7, 1994
Global Governments Series............... July 13, 1989
Global Growth Series.................... November 16, 1993
Global Total Return Series.............. November 7, 1994
Government Securities Series............ July 13, 1989
High Yield Series....................... July 13, 1989
International Growth Series............. June 3, 1996
International Growth and Income
Series................................. October 2, 1995
Managed Sectors Series.................. July 13, 1989
Massachusetts Investors Growth Stock
Series.................................
Massachusetts Investors Trust Series.... July 13, 1989
Money Market Series..................... July 13, 1989
New Discovery Series....................
Research Series......................... November 7, 1994
Research Growth and Income Series....... May 12, 1997
Research International Series...........
Strategic Income Series.................
Total Return Series..................... July 13, 1989
Utilities Series........................ November 16, 1993
</TABLE>
The length of the period and the last day of each period used in
the above table are set out in the table heading and in the footnotes above.
The Average Annual Total Return for each period was determined by finding the
average annual compounded rate of return over each period that would equate
the initial amount invested to the ending redeemable value for that period,
in accordance with the following formula:
n
P(l + T) = ERV
Where: P = a hypothetical initial Purchase Payment of $1,000
T = average annual total return for the period
n = number of years
ERV = redeemable value (as of the end of the period) of a
hypothetical $1,000 Purchase Payment made at the beginning
of the 1-year, 5-year, or 10-year period (or fractional
portion thereof)
The formula assumes that: 1) all recurring fees have been deducted from the
Participant's Account; 2) all applicable non-recurring Contract charges are
deducted at the end of the period, and 3) there will be a full surrender at the
end of the period.
The $50 annual Account Fee will be allocated among the Sub-Accounts so
that each Sub-Account's allocated portion of the Account Fee is proportional to
the percentage of the number of Individual Contracts and Certificates that have
amounts allocated to that Sub-Account. Because the impact of Account Fees on a
particular Contract may differ from those assumed in the computation due to
differences between actual allocations and the assumed ones, the total return
that would have been experienced by an actual Contract over these same time
periods may have been different from that shown above.
<PAGE>
-3-
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN:
The table below shows, for various Sub-Accounts of the Variable Account,
the Non-Standardized Average Annual Total Return for the stated periods (or
shorter period indicated in the note below), based upon a hypothetical
initial Purchase Payment of $1,000, calculated in accordance with the formula
set out under "Standardized Average Annual Total Return." For purposes of
determining these investment results, the actual investment performance of
each Fund of the MFS/Sun Life Series Trust is reflected from the date such
Series commenced operations ("Inception"), although the Contracts have been
offered only since June __, 2000. No information is shown for the Funds that
have not commenced operations or that had been in operation less than one
year as of December 31, 1999.
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
PERIOD ENDING DECEMBER 31, 1999
<TABLE>
<CAPTION>
1 YEAR 5 YEAR 10 YEAR DATE OF
PERIOD PERIOD PERIOD LIFE* INCEPTION
----------- ----------- ----------- ----------- ----------------------
<S> <C> <C> <C> <C> <C>
FUND:
Bond Series.............................
Capital Appreciation Series............. August 13, 1985
Capital Opportunities Series............ June 3, 1996
Emerging Growth Series.................. May 1, 1995
Emerging Markets Equity Series.......... June 5, 1996
Equity Income Series....................
Global Asset Allocation Series.......... November 7, 1994
Global Governments Series............... May 16, 1988
Global Growth Series.................... November 16, 1993
Global Total Return Series.............. November 7, 1994
Government Securities Series............ August 12, 1985
High Yield Series....................... August 13, 1985
International Growth Series............. June 3, 1996
International Growth and Income Series.. October 2, 1995
Managed Sectors Series.................. May 27, 1988
Massachusetts Investors Growth Stock
Series.................................
Massachusetts Investors Trust Series.... December 5, 1986
Money Market Series..................... August 29, 1985
New Discovery Series....................
Strategic Income Series.................
Research Series......................... November 7, 1994
Research Growth and Income Series....... May 12, 1997
Research International Series...........
Strategic Income Series.................
Total Return Series..................... May 16, 1988
Utilities Series........................ November 16, 1993
</TABLE>
- ------------------------
*From commencement of investment operations
<PAGE>
-4-
NON-STANDARDIZED COMPOUND GROWTH RATE
The table below shows, for various Sub-Accounts of the Variable Account,
the Non-Standardized Compound Growth Rate for the stated periods (or shorter
period indicated in the note below), based upon a hypothetical investment,
calculated in accordance with the formula set out under "Standardized Average
Annual Return," except that no withdrawal charges or annual Account Fees have
been deducted. If withdrawal charges or Account Fees were reflected, returns
would be lower (see "Standardized Average Annual Total Return" and "Non-
Standardized Average Annual Return"). For purposes of determining these
investment results, the actual investment performance of each Fund of the
MFS/Sun Life Series Trust is reflected from the date such Series commenced
operations ("Inception"), although the Contracts have been offered only since
June __, 2000. No information is shown for the Funds that have not commenced
operations or that had been in operation for less than one year as of
December 31, 1999.
NON-STANDARDIZED COMPOUND GROWTH RATE
PERIOD ENDING DECEMBER 31, 1999
<TABLE>
<CAPTION>
1 YEAR 5 YEAR 10 YEAR DATE OF
PERIOD PERIOD PERIOD LIFE* INCEPTION
----------- ----------- ----------- ----------- ----------------------
<S> <C> <C> <C> <C> <C>
FUND:
Bond Series.............................
Capital Appreciation Series............. August 13, 1985
Capital Opportunities Series............ June 3, 1996
Emerging Growth Series.................. May 1, 1995
Emerging Markets Equity Series.......... June 5, 1996
Equity Income Series....................
Global Asset Allocation Series.......... November 7, 1994
Global Governments Series............... May 16, 1988
Global Growth Series.................... November 16, 1993
Global Total Return Series.............. November 7, 1994
Government Securities Series............ August 12, 1985
High Yield Series....................... August 13, 1985
International Growth Series............. June 3, 1996
International Growth and Income Series.. October 2, 1995
Managed Sectors Series.................. May 27, 1988
Massachusetts Investors Growth Stock
Series..................................
Massachusetts Investors Trust Series.... December 5, 1986
Money Market Series..................... August 29, 1985
New Discovery Series....................
Strategic Income Series.................
Research Series......................... November 7, 1994
Research Growth and Income Series....... May 12, 1997
Research International Series...........
Strategic Income Series.................
Total Return Series..................... May 16, 1988
Utilities Series........................ November 16, 1993
</TABLE>
- ------------------------
*From commencement of investment operations
ADDITIONAL NON-STANDARDIZED INVESTMENT PERFORMANCE:
The Variable Account may illustrate its results over various periods
and compare its results to indices and other variable annuities in sales
materials including advertisements, brochures and sports. Such results may be
computed on a "cumulative" and/or "annualized" basis.
"Cumulative" quotations are arrived at by calculating the change in
the Accumulation Unit value of a Sub-Account between the first and last day of
the base period being measured, and expressing the difference as a percentage of
the Accumulation Unit value at the beginning of the base period.
"Annualized" quotations are calculated by applying a formula which
determines the level rate of return which, if earned over the entire base
period, would produce the cumulative return.
<PAGE>
-5-
ADVERTISING AND SALES LITERATURE
As set forth in the Prospectus, the Company may refer to the following
organizations (and others) in its marketing materials:
A.M. BEST'S RATING SYSTEM is designed to evaluate the various factors
affecting the overall performance of an insurance company in order to provide an
opinion as to an insurance company's relative financial strength and ability to
meet its contractual obligations. The procedure includes both a quantitative and
qualitative review of each company.
DUFF & PHELPS CREDIT RATING Company's Insurance Company Claims Paying
Ability Rating is an independent evaluation by a nationally accredited rating
organization of an insurance company's ability to meet its future obligations
under the contracts and products it sells. The rating takes into account both
quantitative and qualitative factors.
LIPPER VARIABLE INSURANCE PRODUCTS PERFORMANCE ANALYSIS SERVICE is a
publisher of statistical data covering the investment company industry in the
United States and overseas. Lipper is recognized as the leading source of data
on open-end and closed-end funds. Lipper currently tracks the performance of
over 5,000 investment companies and publishes numerous specialized reports,
including reports on performance and portfolio analysis, fee and expense
analysis.
STANDARD & POOR's insurance claims-paying ability rating is an opinion
of an operating insurance company's financial capacity to meet obligations of
its insurance policies in accordance with their terms.
VARDS (Variable Annuity Research Data Service) provides a
comprehensive guide to variable annuity contract features and historical fund
performance. The service also provides a readily understandable analysis of the
comparative characteristics and market performance of funds inclusive in
variable contracts.
MOODY'S Investors Services, Inc.'s insurance claims-paying rating is a
system of rating an insurance company's financial strength, market leadership,
and ability to meet financial obligations. The purpose of Moody's ratings is to
provide investors with a simple system of gradation by which the relative
quality of insurance companies may be noted.
STANDARD & POOR'S INDEX - broad-based measurement of changes in
stock-market conditions based on the average performance of 500 widely held
common stocks; commonly known as the Standard & Poor's 500 (S&P 500). The
selection of stocks, their relative weightings to reflect differences in the
number of outstanding shares, and publication of the index itself are services
of Standard & Poor's Corporation, a financial advisory, securities rating, and
publishing firm. The index tracks 400 industrial company stocks, 20
transportation stocks, 40 financial company stocks, and 40 public utilities.
<PAGE>
-6-
NASDAQ-OTC Price Index - this index is based on the National
Association of Securities Dealers Automated Quotations (NASDAQ) and represents
all domestic over-the-counter stocks except those traded on exchanges and those
having only one market maker, a total of some 3,500 stocks. It is market
valueweighted and was introduced with a base of 100.00 on February 5, 1971.
DOW JONES INDUSTRIAL AVERAGE (DJIA) - price-weighted average of 30
actively traded blue chip stocks, primarily industrials, but including
American Express Company and American Telephone and Telegraph Company.
Prepared and Published by Dow Jones & Company, it is the oldest and most
widely quoted of all the market indicators. The average is quoted in points,
not dollars.
MORNINGSTAR, Inc. is an independent financial publisher offering
comprehensive statistical and analytical coverage of open-end and closed-end
funds and variable annuities. This coverage for mutual funds includes, among
other information, performance analysis rankings, risk rankings (e.g.
aggressive, moderate or conservative), and "style box" matrices. Style box
matrices display, for equity funds, the investment philosophy and size of the
companies in which the fund invests and, for fixed-income funds, interest rate
sensitivity and credit quality of the investment instruments.
IBBOTSON ASSOCIATES, Inc. is a consulting firm that provides a variety
of historical data, including total return, capital appreciation and income, on
the stock market as well as other investment asset classes, and inflation. This
information will be used primarily for comparative purposes and to illustrate
general financial planning principles.
In its advertisements and other sales literature for the Variable
Account and the Series Fund, the Company may illustrate the advantages of
the Contracts in a number of ways:
DOLLAR COST AVERAGING ILLUSTRATIONS. These illustrations will
generally discuss the price-leveling effect of making regular investments in the
same Sub-Accounts over a period of time, to take advantage of the trends in
market prices of the portfolio securities purchased by those Sub-Accounts.
SYSTEMATIC WITHDRAWAL PROGRAM. A service provided by the Company,
through which a Participant may take any distribution allowed by Internal
Revenue Code Section 401 (a) (9) in the case of Qualified Contracts, or
permitted under Internal Revenue Code Section 72 in the case of Non-Qualified
Contracts, by way of a series of partial withdrawals. Withdrawals under this
program may be fully or partially includible in income and may be subject to
a 10% penalty tax. Consult your tax advisor.
THE COMPANY'S OR MFS' CUSTOMERS. Sales literature for the Variable
Account and the Funds may refer to the number of clients which they serve.
THE COMPANY'S OR MFS' ASSETS, SIZE. The Company may discuss its
general financial condition (see, for example, the references to Standard &
Poor's, Duff & Phelps and A.M. Best Company above); it may refer to its assets;
it may also discuss its
<PAGE>
-7-
relative size and/or ranking among companies in the industry or among any
sub-classification of those companies, based upon recognized evaluation
criteria. For example, at December 31, 1998 the Company was the ___ largest
U.S. life insurance company based upon overall assets and its ultimate parent
company, Sun Life Assurance Company of Canada, was the ___ largest.
COMPOUND INTEREST ILLUSTRATIONS. These will emphasize several
advantages of the variable annuity contract. For example, but not by way of
limitation, the literature may emphasize the potential savings through tax
deferral; the potential advantage of the Variable Account over the Fixed
Account; and the compounding effect when a participant makes regular deposits to
his or her account.
The Company may use hypothetical illustrations of the benefits of tax
deferral, including but not limited to the following chart:
The chart below assumes an initial investment of $10,000 which remains
fully invested for the entire time period, an 8% annual return, and a 33%
combined federal and state income tax rate. It compares how three different
investments might fare over 10, 20, and 30 years. The first example illustrates
an investment in a non-tax-deferred account and assumes that taxes are paid
annually out of that account. The second example illustrates how the same
investment would grow in a tax-deferred investment, such as an annuity. And the
third example illustrates the net value of the tax-deferred investment after
paying taxes on the full account value.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
10 YEARS 20 YEARS 30 YEARS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Non-Tax-Deferred Account $16,856 $28,413 $ 47,893
- --------------------------------------------------------------------------------
Tax-Deferred Account $21,589 $46,610 $100,627
- --------------------------------------------------------------------------------
Tax-Deferred Account After $17,765 $34,528 $ 70,720
- --------------------------------------------------------------------------------
Paying Taxes
- --------------------------------------------------------------------------------
</TABLE>
THIS ILLUSTRATION IS HYPOTHETICAL AND DOES NOT REPRESENT THE PROJECTED
PERFORMANCE OF THE CONTRACTS OR ANY OF THE INVESTMENT OPTIONS THEREUNDER. THE
ILLUSTRATION DOES NOT REFLECT THE DEDUCTION OF ANY CHARGES OR FEES RELATED TO
PORTFOLIO MANAGEMENT, MORTALITY AND EXPENSE, OR ACCOUNT ADMINISTRATION. TAXES ON
EARNINGS WITHIN AN ANNUITY ARE DUE UPON WITHDRAWAL. WITHDRAWALS MAY ALSO BE
SUBJECT TO SURRENDER CHARGES AND, IF MADE PRIOR TO AGE 59 1/2, A 10% FEDERAL
PENALTY TAX.
<PAGE>
-8-
TAX DEFERRED ACCUMULATION
In general, individuals who own annuity contracts are not taxed on
increases in the value of their annuity contracts until some form of
distribution is made under the contract. As a result, the annuity contract
would benefit from tax deferral during the contract's accumulation phase;
this would have the effect of permitting an investment in an annuity contract
to grow more rapidly that a comparable investment under which increases in
value are taxed on a current basis.
In reports or other communications to you or in advertising or sales
materials, we may also describe the effects of tax deferred compounding on the
Variable Account's investment returns under the various Purchase Payment
Interest Options or upon returns in general. We may illustrate these effects in
charts or graphs and from time to time may include comparisons of returns under
the Contracts or in general on a tax deferred basis, with the returns on a
taxable basis. Different tax rates may be assumed. Any such illustrative chart
or graph would show accumulations on an initial investment or Purchase Payment,
assuming a given amount (including the applicable interest credit),
hypothetical gross annual returns compounded annually, and a stated rate of
return. The values shown for the taxable investment would not include any
deduction for management fees or other expenses, but would assume the annual
deduction of federal and state taxes from investment returns. The values shown
for the Contracts in a chart would reflect the deduction of Contract expenses,
such as the mortality and expense risk charge, the 0.15% administrative charge,
and the $50 annual Account Fee. In addition, the values shown would assume that
the Participant has not surrendered his or her Contract or made any partial
surrenders until the end of the period shown. The chart would assume a full
surrender at the end of the period shown and the payment of federal and state
taxes, at a rate of not more than 33%, on the amount in excess of the Purchase
Payments.
In developing illustrative tax deferral charts, we will observe these
general principles:
- The assumed rate of earnings will be realistic.
- The illustrative chart will accurately depict the effect of all
fees and charges or provide a narrative that prominently discloses
all fees and charges under the Contract.
- Charts comparing accumulation values for tax-deferred and non-tax-
deferred investments will depict the implications of any surrender.
- A narrative accompanying the chart will prominently disclose that
there may be a 10% tax penalty on a surrender by a Participant who
has not reached age 59 1/2 at the time of surrender.
The rates of return illustrated in any chart would be hypothetical and
are not an estimate or guaranty of performance. Actual tax returns may vary
for among Participants.
<PAGE>
-9-
CALCULATIONS [REVISE]
EXAMPLE OF VARIABLE ACCUMULATION UNIT VALUE CALCULATION
Suppose the net asset value of a Fund share at the end of the current
valuation period is $18.38; at the end of the immediately preceding valuation
period was $18.32; the Valuation Period is one day; and no dividends or
distributions caused Fund shares to go "ex-dividend" during the current
Valuation Period. $18.38 divided by $18.32 is 1.00327511. Subtracting the one
day risk factor for mortality and expense risks and the administrative
expense charge of .00004280 (the daily equivalent of the current maximum
charge of 1.55% on an annual basis) gives a net investment factor of
1.00323231. If the value of the variable accumulation unit for the
immediately preceding valuation period had been 14.5645672, the value for the
current valuation period would be 14.6116444 (14.5645672 X 1.00323231).
EXAMPLE OF VARIABLE ANNUITY UNIT CALCULATION
Suppose the circumstances of the first example exist, and the value of
an annuity unit for the immediately preceding valuation period had been
12.3456789. If the first variable annuity payment is determined by using an
annuity payment based on an assumed interest rate of 3% per year, the value
of the annuity unit for the current valuation period would be 12.3456789
(12.3456789 X 1.00323648 (the Net Investment Factor (based on the daily
equivalent of maximum annuity phase charge of 1.40% on an annual basis) X
0.99991902). 0.99991902 is the factor, for a one day Valuation Period, that
neutralizes the assumed interest rate of 3% per year used to establish the
Annuity Payment Rates found in certain Contracts.
EXAMPLE OF VARIABLE ANNUITY PAYMENT CALCULATION
Suppose that a Participant Account is credited with 8,765.4321 variable
accumulation units of a particular Sub-Account but is not credited with
any fixed accumulation units; that the variable accumulation unit value and
the annuity unit value for the particular Sub-Account for the valuation
period which ends immediately preceding the annuity commencement date are
14.5645672 and 12.3456789 respectively; that the annuity payment rate for the
age and option elected is $6.78 per $1,000; and that the annuity unit value
on the day prior to the second variable annuity payment date is 12.3846325.
The first variable annuity payment would be $865.57 (8,765.4321 X 14.5645672
X 6.78 divided by 1,000). The number of annuity units credited would be
70.1112 ($865.57 divided by 12.3456789) and the second variable annuity
payment would be $868.30 (70.1112 X 12.3846325).
DISTRIBUTION OF THE CONTRACTS
We offer the Contracts on a continuous basis. The Contracts are
sold by licensed insurance agents in those states where the Contracts may be
lawfully sold. Such agents will be registered representatives of
broker-dealers registered under the Securities Exchange Act of 1934 who are
members of the National Association of Securities Dealers, Inc. and who have
entered into distribution agreements with the Company and the general
distributor and principal underwriter of the Contracts, Clarendon Insurance
Agency, Inc. ("Clarendon"), One Sun Life Executive Park, Wellesley Hills,
Massachusetts 02481. Clarendon is a wholly-owned subsidiary of the Company.
Clarendon is registered with the SEC under the Securities Exchange Act of
1934 as broker-dealer and is a member of the National Association of
Securities Dealers, Inc. Clarendon also acts as the general distributor of
certain other annuity contracts issued by the Company and its wholly-owned
subsidiary, Sun Life Insurance and Annuity Company of New York, and variable
life insurance contracts issued by the Company.
Commissions and other distribution compensation will be paid by the
Company to the selling agents and will not be more than 2.50% of Purchase
Payments. In addition, after the first Account Year, broker-dealers who have
entered into distribution agreements with the Company may receive an annual
renewal commission of no more than 1.00% of the Participant's Account Value.
In addition to commissions, the Company may, from time to time, pay or allow
additional promotional incentives, in the form of cash or other compensation.
The Company reserves the right to offer these additional incentives only to
certain
<PAGE>
-10-
broker-dealers that sell or are expected to sell during specified time
periods certain minimum amounts of the Contracts or Certificates or other
contracts offered by the Company. Promotional incentives may change at any
time. Commissions will not be paid with respect to Participant Accounts
established for the personal account of employees of the Company or any of
its affiliates, or of persons engaged in the distribution of the Contracts,
or of immediate family members of such employees or persons. In addition,
commissions may be waived or reduced in connection with certain transactions
described in the Prospectus under the heading "Waivers; Reduced Charges;
Bonus Guaranteed Interest Rates."
DESIGNATION AND CHANGE OF BENEFICIARY
The Beneficiary designation in the Application will remain in effect
until changed.
Subject to the rights of an irrevocably designated Beneficiary, you
may change or revoke the designation of Beneficiary by filing the change or
revocation with us in the form we require. The change or revocation will not be
binding on us until we receive it. When we receive it, the change or revocation
will be effective as of the date on which it was signed, but the change or
revocation will be without prejudice to us on account of any payment we make or
any action we take before receiving the change or revocation.
Please refer to the terms of your particular retirement plan and any
applicable legislation for any restrictions on the beneficiary designation.
CUSTODIAN
We are the Custodian of the assets of the Variable Account. We
will purchase Fund shares at net asset value in connection with amounts
allocated to the Sub-Accounts in accordance with your instructions, and we
will redeem Fund shares at net asset value for the purpose of meeting the
contractual obligations of the Variable Account, paying charges relative to
the Variable Account or making adjustments for annuity reserves held in the
Variable Account.
FINANCIAL STATEMENTS
The Financial Statements of Sun Life of Canada (U.S.) Variable
Account F for the year ended December 31, 1999 included in this Statement of
Additional Information have been audited by __________________, independent
auditors, as stated in their report appearing herein, and are included in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
[To be Inserted by Amendment]
<PAGE>
-33-
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
C/O RETIREMENT PRODUCTS AND SERVICES
P.O. BOX 1024
BOSTON, MASSACHUSETTS 02103
TELEPHONE:
Toll Free (800) 752-7215
In Massachusetts (617) 348-9600
GENERAL DISTRIBUTOR
Clarendon Insurance Agency, Inc.
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
AUDITORS
200 Berkeley Street
Boston, Massachusetts 02116
<PAGE>
JUNE __, 2000
FUTURITY FOCUS II
VARIABLE AND FIXED ANNUITY
STATEMENT OF ADDITIONAL INFORMATION
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
TABLE OF CONTENTS
Calculation of Performance Data ............................................. 2
Advertising and Sales Literature ............................................ 9
Tax Deferred Accumulation....................................................12
Calculations ................................................................13
Example of Variable Accumulation Unit Value Calculation.................13
Example of Variable Annuity Unit Calculation ...........................13
Example of Variable Annuity Payment Calculation ........................13
Distribution of the Contracts ...............................................13
Designation and Change of Beneficiary .......................................14
Custodian ...................................................................14
Financial Statements ........................................................14
The Statement of Additional Information sets forth information which
may be of interest to prospective purchasers of Futurity Focus II Variable and
Fixed Annuity Contracts (the "Contracts") issued by Sun Life Assurance Company
of Canada (U.S.) (the "Company") in connection with Sun Life of Canada (U.S.)
Variable Account F (the "Variable Account") which is not included in the
Prospectus dated June __, 2000. This Statement of Additional Information
should be read in conjunction with the Prospectus, a copy of which may be
obtained without charge from the Company by writing to Sun Life Assurance
Company of Canada (U.S.), c/o Retirement Products and Services, P.O. Box 9133,
Boston, Massachusetts 02117, or by telephoning (617) 348-9600 or (888) 786-2435.
The terms used in this Statement of Additional Information have the
same meanings as in the Prospectus.
- --------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE PURCHASERS ONLY IF PRECEDED OR ACCOMPANIED BY A
CURRENT PROSPECTUS.
<PAGE>
-2-
CALCULATION OF PERFORMANCE DATA
AVERAGE ANNUAL TOTAL RETURN:
The table below shows, for various Sub-Accounts of the Variable
Account, the Average Annual Total Return for the stated periods (or shorter
period indicated in the note below), based upon a hypothetical initial
Purchase Payment of $1,000, calculated in accordance with the formula set out
after the table. For purposes of determining the investment results in this
table, the actual investment performance of each Fund is reflected from the
date the Fund commenced operations ("Inception"), although the Contracts have
been offered only since June __, 2000. No information is shown for the Funds
that have not commenced operations or that have been in operation for less than
one year.
The Securities and Exchange Commission defines "standardized" total
return information to mean Average Annual Total Return, based on a
hypothetical initial purchase payment of $1,000 and calculated in accordance
with the formula set forth after the table, but presented only for periods
subsequent to the commencement of the offering of the Futurity annuities.
Since as of the date of the Prospectus the Company has been offering the
Futurity annuities for less than a year, no standardized total return
information is currently provided. Standardized total return information will
be provided after the Sub-Accounts have been in operation for one year.
AVERAGE ANNUAL TOTAL RETURN
PERIOD ENDING DECEMBER 31, 1999
<TABLE>
<CAPTION> 10 YEAR FUND
1 YEAR 3 YEAR 5 YEAR OR INCEPTION
FUND PERIOD PERIOD PERIOD LIFE(1) DATE
- ---- ------ ------ ------ ------- -------------------
<S> <C> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund May 5, 1993
AIM V.I. Growth Fund May 5, 1993
AIM V.I. Growth and Income Fund May 2, 1994
AIM V.I. International Equity Fund May 5, 1993
Alger American Growth Portfolio January 1, 1989
Alger American Income and Growth Portfolio November 15, 1988
Alger American Small Capitalization Portfolio September 21, 1988
Goldman Sachs VIT CORE-SM- Large Cap Growth Fund February 13, 1998
Goldman Sachs VIT CORE-SM- Small Cap Equity Fund February 13, 1998
Goldman Sachs VIT CORE-SM- U.S. Equity Fund February 13, 1998
Goldman Sachs VIT Growth and Income Fund January 12, 1998
Goldman Sachs VIT International Equity Fund January 12, 1998
J.P. Morgan U.S. Disciplined Equity Portfolio (2) January 3, 1995
J.P. Morgan International Opportunities Portfolio (2) January 3, 1995
J.P. Morgan Small Company Portfolio (2) January 3, 1995
Lord Abbett Growth and Income Portfolio December 1, 1989
MFS/Sun Life Capital Appreciation Series June 12, 1985
MFS/Sun Life Emerging Growth Series May 1, 1995
MFS/Sun Life Government Securities Series June 12, 1985
MFS/Sun Life High Yield Series June 12, 1985
MFS/Sun Life Utilities Series November 16, 1993
MFS/Sun Life New Discovery Series May 5, 1998
MFS/Sun Life Massachusetts Investors Growth Series May 1, 1998
MFS/Sun Life Total Return Series May 16, 1988
MFS/Sun Life Massachusetts Investors Trust December 5, 1986
OCC Equity Portfolio (3) August 1, 1988
OCC Managed Portfolio (3) August 1, 1988
OCC Mid Cap Portfolio February 9, 1998
OCC Small Cap Portfolio (3) August 1, 1988
Sun Capital Blue Chip Mid Cap Fund
Sun Capital Investment Grade Bond Fund December 7, 1998
Sun Capital Investors Foundation Fund
Sun Capital Money Market Fund December 7, 1998
Sun Capital Real Estate Fund December 7, 1998
Sun Capital Select Equity Fund
</TABLE>
(1) From commencement of investment operations.
(2) From January 3, 1995 (commencement of operations) to December 31, 1996,
Chubb Investment Advisory Corporation ("Chubb Investment Advisory"), a
wholly owned subsidiary of Chubb Life Insurance Company of America,
served as each of these Fund's investment manager, and Morgan Guaranty
Trust Company of New York, an affiliate of J.P. Morgan Investment
Management Inc. ("J.P. Morgan") served as such Fund's sub-investment
adviser. Effective January 1, 1997, J.P. Morgan began serving as each
Fund's investment adviser.
(3) On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two
investment funds, the Old Trust and the OCC Accumulation Trust, at which
time the OCC Accumulation Trust commenced operations. The total net
assets for each of the Equity, Managed and Small Cap Portfolios
immediately after the transaction were $86,789,755, $682,601,380, and
$139,812,573, respectively, with respect to the Old Trust, and for each
of the Equity, Managed and Small Cap Portfolios, $3,764,598,
$51,345,102, and $8,129,274, respectively, with respect to the OCC
Accumulation Trust. The Equity, Managed and Small Cap Portfolios
commenced operations on August 1, 1998. For the period prior to September
16, 1994, the performance figures above for each of the Equity, Managed,
and Small Cap Portfolios reflect the performance of the corresponding
Portfolios of the Old Trust.
The length of the period and the last day of each period used in the
above table are set out in the table heading and in the footnotes above. The
Average Annual Total Return for each period was determined by finding the
average annual compounded rate of return over each period that would equate the
initial amount invested to the ending redeemable value for that period, in
accordance with the following formula:
<PAGE>
-3-
n
P(l + T) = ERV
Where: P = a hypothetical initial Purchase Payment of $1,000
T = average annual total return for the period
n = number of years
ERV = redeemable value (as of the end of the period) of a
hypothetical $1,000 Purchase Payment made at the beginning of
the 1-year, 5-year, or 10-year period (or fractional portion
thereof)
The formula assumes that: 1) all recurring fees have been deducted from the
Participant's Account; 2) all applicable non-recurring Contract charges are
deducted at the end of the period, and 3) there will be a full surrender at the
end of the period.
The $50 annual Account Fee will be allocated among the Sub-Accounts so
that each Sub-Account's allocated portion of the Account Fee is proportional to
the percentage of the number of Individual Contracts and Certificates that have
amounts allocated to that Sub-Account. Because the impact of Account Fees on a
particular Contract may differ from those assumed in the computation due to
differences between actual allocations and the assumed ones, the total return
that would have been experienced by an actual Contract over these same time
periods may have been different from that shown above.
ADDITIONAL NON-STANDARDIZED INVESTMENT PERFORMANCE:
The Variable Account may illustrate its results over various periods
and compare its results to indices and other variable annuities in sales
materials including advertisements, brochures and sports. Such results may be
computed on a "cumulative" and/or "annualized" basis.
"Cumulative" quotations are arrived at by calculating the change in
the Accumulation Unit value of a Sub-Account between the first and last day of
the base period being measured, and expressing the difference as a percentage of
the Accumulation Unit value at the beginning of the base period.
"Annualized" quotations (described in the following table as
"Compound Growth Rate") are calculated by applying a formula which determines
the level rate of return which, if earned over the entire base period, would
produce the cumulative return.
<PAGE>
-4-
<TABLE>
<CAPTION>
NON-STANDARDIZED INVESTMENT PERFORMANCE*
<S> <C>
$10,000 invested in this Fund under a ...would have grown to this amount
Futurity Focus II Contract, this many years ago... on December 31, 1999
</TABLE>
<TABLE>
<CAPTION>
AIM V.I. CAPITAL APPRECIATION FUND AIM V.I. GROWTH FUND
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate Years Periods Amount Rate Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/98-12/31/99 1 12/31/98-12/31/99
2 12/31/97-12/31/98 2 12/31/97-12/31/98
3 12/31/96-12/31/98 3 12/31/96-12/31/98
4 12/31/95-12/31/98 4 12/31/95-12/31/98
5 12/31/94-12/31/98 5 12/31/94-12/31/98
Life 05/05/93-12/31/99 Life 05/05/93-12/31/99
<CAPTION>
AIM V.I. GROWTH AND INCOME FUND AIM V.I. INTERNATIONAL EQUITY FUND
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate Years Periods Amount Rate Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/98-12/31/99 1 12/31/98-12/31/99
2 12/31/97-12/31/98 1 12/31/97-12/31/98
3 12/31/96-12/31/98 2 12/31/96-12/31/98
4 12/31/95-12/31/98 3 12/31/95-12/31/98
5 12/31/94-12/31/98 4 12/31/94-12/31/98
5 12/31/93-12/31/98
Life 05/02/94-12/31/99 Life 05/05/93-12/31/99
<CAPTION>
ALGER AMERICAN GROWTH PORTFOLIO ALGER AMERICAN INCOME AND GROWTH PORTFOLIO
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate Years Periods Amount Rate Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/98-12/31/99 1 12/31/98-12/31/99
2 12/31/97-12/31/98 2 12/31/97-12/31/98
3 12/31/96-12/31/98 3 12/31/96-12/31/98
4 12/31/95-12/31/98 4 12/31/95-12/31/98
5 12/31/94-12/31/98 5 12/31/94-12/31/98
10 12/31/89-12/31/99
Life 01/09/89-12/31/99 Life 11/15/88-12/31/99
</TABLE>
* For periods of less than one year, the growth rates listed are not annualized.
<PAGE>
-5-
<TABLE>
<CAPTION>
NON-STANDARDIZED INVESTMENT PERFORMANCE*
<S> <C>
$10,000 invested in this Fund under a ...would have grown to this amount
Futurity Focus II Contract, this many years ago... on December 31, 1999
</TABLE>
<TABLE>
<CAPTION>
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO GOLDMAN SACHS VIT CORE-SM- LARGE CAP GROWTH FUND
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate Years Periods Amount Rate Rate*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/98-12/31/99 1 12/31/98-12/31/99
2 12/31/97-12/31/98
3 12/31/96-12/31/98
4 12/31/95-12/31/98
5 12/31/94-12/31/98
10 12/31/88-12/31/99
Life 09/21/88-12/31/99 Life 02/13/98-12/31/99
<CAPTION>
GOLDMAN SACHS VIT CORE-SM- SMALL CAP EQUITY FUND GOLDMAN SACHS VIT CORE-SM- U.S. EQUITY FUND
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate* Years Periods Amount Rate Rate*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/98-12/31/99 1 12/31/98-12/31/99
Life 02/13/98-12/31/99 Life 02/13/98-12/31/99
<CAPTION>
GOLDMAN SACHS VIT CORE-SM- GROWTH AND INCOME FUND GOLDMAN SACHS VIT INTERNATIONAL EQUITY FUND
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate* Years Periods Amount Rate Rate*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/98-12/31/99 1 12/31/98-12/31/99
Life 01/12/98-12/31/99 Life 01/12/98-12/31/99
<CAPTION>
J.P. MORGAN U.S. DISCIPLINED EQUITY PORTFOLIO J.P. MORGAN INTERNATIONAL OPPORTUNITIES PORTFOLIO
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate Years Periods Amount Rate Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/98-12/31/99 1 12/31/98-12/31/99
2 12/31/97-12/31/98 $12,154 21.54% 21.54% 2 12/31/97-12/31/98
3 12/31/96-12/31/98 $16,647 66.47% 29.02% 3 12/31/96-12/31/98
4 12/31/95-12/31/98 $18,252 82.52% 22.21% 4 12/31/95-12/31/98
Life 01/03/95-12/31/99 $24,139 141.39% 24.68% Life 01/03/95-12/31/99
</TABLE>
* For periods of less than one year, the growth rates listed are not annualized.
<PAGE>
-6-
<TABLE>
<CAPTION>
NON-STANDARDIZED INVESTMENT PERFORMANCE*
<S> <C>
$10,000 invested in this Fund under a ...would have grown to this amount
Futurity Focus II Contract, this many years ago... on December 31, 1999
</TABLE>
<TABLE>
<CAPTION>
J.P. MORGAN SMALL COMPANY PORTFOLIO LORD ABBETT GROWTH AND INCOME PORTFOLIO
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate Years Periods Amount Rate Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/98-12/31/99 1 12/31/98-12/31/99
2 12/31/97-12/31/98 2 12/31/97-12/31/98
3 12/31/96-12/31/98 3 12/31/96-12/31/98
4 12/31/95-12/31/98 4 12/31/95-12/31/98
5 12/31/94-12/31/98
Life 01/03/95-12/31/99 Life 12/11/89-12/31/99
<CAPTION>
MFS/SUN LIFE CAPITAL APPRECIATION SERIES MFS/SUN LIFE EMERGING GROWTH SERIES
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate Years Periods Amount Rate Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/98-12/31/99 1 12/31/98-12/31/99
2 12/31/97-12/31/98 2 12/31/97-12/31/98
3 12/31/96-12/31/98 3 12/31/96-12/31/98
4 12/31/95-12/31/98 4 12/31/95-12/31/98
5 12/31/94-12/31/98
10 12/31/88-12/31/98
Life 06/12/85-12/31/99 Life 05/01/95-12/31/99
<CAPTION>
MFS/SUN LIFE GOVERNMENT SECURITIES SERIES MFS/SUN LIFE HIGH YIELD SERIES
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate Years Periods Amount Rate Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/98-12/31/99 1 12/31/98-12/31/99
2 12/31/97-12/31/98 $10,717 7.17% 7.17% 2 12/31/97-12/31/98
3 12/31/96-12/31/98 $11,485 14.85% 7.17% 3 12/31/96-12/31/98
4 12/31/95-12/31/98 $11,500 15.00% 4.77% 4 12/31/95-12/31/98
5 12/31/94-12/31/98 $13,333 33.33% 7.46% 5 12/31/94-12/31/98
10 12/31/88-12/31/99 $19,723 97.23% 7.03% 10 12/31/88-12/31/99
Life 06/12/85-12/31/99 $25,328 153.28% 7.09% Life 06/12/85-12/31/99
</TABLE>
* For periods of less than one year, the growth rates listed are not annualized.
<PAGE>
-7-
<TABLE>
<CAPTION>
NON-STANDARDIZED INVESTMENT PERFORMANCE*
<S> <C>
$10,000 invested in this Fund under a ...would have grown to this amount
Futurity Focus II Contract, this many years ago... on December 31, 1999
</TABLE>
<TABLE>
<CAPTION>
MFS/SUN LIFE NEW DISCOVERY SERIES MFS/SUN LIFE TOTAL RETURN SERIES
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate* Years Periods Amount Rate Rate*
<S> <C> <C> <C> <C> <S> <C> <C> <C> <C>
1 12/31/98-12/31/99 1 12/31/98-12/31/99
2 12/31/97-12/31/98
3 12/31/96-12/31/98
4 12/31/95-12/31/98
5 12/31/94-12/31/98
10 12/31/88-12/31/99
Life 05/05/98-12/31/99 Life 05/16/86-12/31/99
<CAPTION>
MFS/SUN LIFE MASSACHUSETTS INVESTORS GROWTH SERIES MFS/SUN LIFE MASSACHUSETTS INVESTORS TRUST SERIES
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate* Years Periods Amount Rate Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/98-12/31/99 1 12/31/98-12/31/99
2 12/31/97-12/31/98
3 12/31/96-12/31/98
4 12/31/95-12/31/98
5 12/31/94-12/31/98
10 12/31/88-12/31/99
Life 05/05/98-12/31/99 Life 12/05/86-12/31/99
</TABLE>
* For periods of less than one year, the growth rates listed are not annualized.
<PAGE>
-8-
<TABLE>
<CAPTION>
NON-STANDARDIZED INVESTMENT PERFORMANCE*
<S> <C>
$10,000 invested in this Fund under a ...would have grown to this amount
Futurity Focus II Contract, this many years ago... on December 31, 1999
</TABLE>
<TABLE>
<CAPTION>
MFS/SUN LIFE UTILITIES SERIES OCC EQUITY PORTFOLIO
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate Years Periods Amount Rate Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/98-12/31/99 1 12/31/98-12/31/99
2 12/31/97-12/31/98 2 12/31/97-12/31/98
3 12/31/96-12/31/98 3 12/31/96-12/31/98
4 12/31/95-12/31/98 4 12/31/95-12/31/98
5 12/31/94-12/31/98 5 12/31/94-12/31/98
10 12/31/88-12/31/98
Life 11/16/93-12/31/99 Life 08/01/88-12/31/99
<CAPTION>
OCC MANAGED PORTFOLIO OCC MID CAP PORTFOLIO
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate Years Periods Amount Rate Rate*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/98-12/31/99 1 12/31/98-12/31/99
2 12/31/97-12/31/98
3 12/31/96-12/31/98
4 12/31/95-12/31/98
5 12/31/94-12/31/98
10 12/31/88-12/31/98
Life 08/01/88-12/31/99 Life 02/09/98-12/31/99
<CAPTION>
OCC SMALL CAP PORTFOLIO SUN CAPITAL BLUE CHIP MID CAP FUND
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate Years Periods Amount Rate Rate*
<S> <C> <C> <C> <C> <S> <C> <C> <C> <C>
1 12/31/98-12/31/99
2 12/31/97-12/31/98
3 12/31/96-12/31/98
4 12/31/95-12/31/98
5 12/31/94-12/31/98
10 12/31/88-12/31/98
Life 08/01/88-12/31/99 Life -12/31/99
<CAPTION>
SUN CAPITAL INVESTMENT GRADE BOND FUND SUN CAPITAL INVESTORS FOUNDATION FUND
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate* Years Periods Amount Rate Rate*
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/98-12/31/99
Life 12/07/98-12/31/99 Life -12/31/99
<CAPTION>
SUN CAPITAL MONEY MARKET FUND SUN CAPITAL REAL ESTATE FUND
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate* Years Periods Amount Rate Rate*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/98-12/31/99 1 12/31/98-12/31/99
Life 12/07/98-12/31/99 Life 12/07/98-12/31/99
<CAPTION>
SUN CAPITAL SELECT EQUITY FUND
Number Cumulative Compound
of Growth Growth
Years Periods Amount Rate Rate
<S> <C> <C> <C> <C>
Life -12/31/99
</TABLE>
* For periods of less than one year, the growth rates listed are not annualized.
<PAGE>
-9-
ADVERTISING AND SALES LITERATURE
As set forth in the Prospectus, the Company may refer to the following
organizations (and others) in its marketing materials:
A.M. BEST'S RATING SYSTEM is designed to evaluate the various factors
affecting the overall performance of an insurance company in order to provide an
opinion as to an insurance company's relative financial strength and ability to
meet its contractual obligations. The procedure includes both a quantitative and
qualitative review of each company.
DUFF & PHELPS CREDIT RATING Company's Insurance Company Claims Paying
Ability Rating is an independent evaluation by a nationally accredited rating
organization of an insurance company's ability to meet its future obligations
under the contracts and products it sells. The rating takes into account both
quantitative and qualitative factors.
LIPPER VARIABLE INSURANCE PRODUCTS PERFORMANCE ANALYSIS SERVICE is a
publisher of statistical data covering the investment company industry in the
United States and overseas. Lipper is recognized as the leading source of data
on open-end and closed-end funds. Lipper currently tracks the performance of
over 5,000 investment companies and publishes numerous specialized reports,
including reports on performance and portfolio analysis, fee and expense
analysis.
STANDARD & POOR'S insurance claims-paying ability rating is an opinion
of an operating insurance company's financial capacity to meet obligations of
its insurance policies in accordance with their terms.
VARDS (Variable Annuity Research Data Service) provides a
comprehensive guide to variable annuity contract features and historical fund
performance. The service also provides a readily understandable analysis of the
comparative characteristics and market performance of funds inclusive in
variable contracts.
MOODY'S Investors Services, Inc.'s insurance claims-paying rating is a
system of rating an insurance company's financial strength, market leadership,
and ability to meet financial obligations. The purpose of Moody's ratings is to
provide investors with a simple system of gradation by which the relative
quality of insurance companies may be noted.
STANDARD & POOR'S INDEX - broad-based measurement of changes in
stock-market conditions based on the average performance of 500 widely held
common stocks; commonly known as the Standard & Poor's 500 (S&P 500). The
selection of stocks, their relative weightings to reflect differences in the
number of outstanding shares, and publication of the index itself are services
of Standard & Poor's Corporation, a financial advisory, securities rating, and
publishing firm. The index tracks 400 industrial company stocks, 20
transportation stocks, 40 financial company stocks, and 40 public utilities.
<PAGE>
-10-
NASDAQ-OTC Price Index - this index is based on the National
Association of Securities Dealers Automated Quotations (NASDAQ) and represents
all domestic over-the-counter stocks except those traded on exchanges and those
having only one market maker, a total of some 3,500 stocks. It is market
valueweighted and was introduced with a base of 100.00 on February 5, 1971.
DOW JONES INDUSTRIAL AVERAGE (DJIA) - price-weighted average of 30
actively traded blue chip stocks, primarily industrials, but including American
Express Company and American Telephone and Telegraph Company. Prepared and
Published by Dow Jones & Company, it is the oldest and most widely quoted of all
the market indicators. The average is quoted in points, not dollars.
MORNINGSTAR, Inc. is an independent financial publisher offering
comprehensive statistical and analytical coverage of open-end and closed-end
funds and variable annuities. This coverage for mutual funds includes, among
other information, performance analysis rankings, risk rankings (e.g.
aggressive, moderate or conservative), and "style box" matrices. Style box
matrices display, for equity funds, the investment philosophy and size of the
companies in which the fund invests and, for fixed-income funds, interest rate
sensitivity and credit quality of the investment instruments.
IBBOTSON ASSOCIATES, Inc. is a consulting firm that provides a variety
of historical data, including total return, capital appreciation and income, on
the stock market as well as other investment asset classes, and inflation. This
information will be used primarily for comparative purposes and to illustrate
general financial planning principles.
In its advertisements and other sales literature for the Variable
Account and the Series Fund, the Company intends to illustrate the advantages of
the Contracts in a number of ways:
DOLLAR COST AVERAGING ILLUSTRATIONS. These illustrations will
generally discuss the price-leveling effect of making regular investments in the
same Sub-Accounts over a period of time, to take advantage of the trends in
market prices of the portfolio securities purchased by those Sub-Accounts.
SYSTEMATIC WITHDRAWAL PROGRAM. A service provided by the Company,
through which a Participant may take any distribution allowed by Internal
Revenue Code Section 401 (a) (9) in the case of Qualified Contracts, or
permitted under Internal Revenue Code Section 72 in the case of Non-Qualified
Contracts, by way of a series of partial withdrawals. Withdrawals under this
program may be fully or partially includible in income and may be subject to
a 10% penalty tax. Consult your tax advisor.
THE COMPANY'S AND THE FUNDS' CUSTOMERS. Sales literature for the
Variable Account and the Funds may refer to the number of clients which they
serve.
THE COMPANY'S ASSETS, SIZE. The Company may discuss its
general financial condition (see, for example, the references to Standard &
Poor's, Duff & Phelps and A.M. Best Company above); it may refer to its assets;
it may also discuss its
<PAGE>
-11-
relative size and/or ranking among companies in the industry or among any
sub-classification of those companies, based upon recognized evaluation
criteria. For example, at December 31, 1998, the Company was the ___ largest
U.S. life insurance company based upon overall assets and its ultimate parent
company, Sun Life Assurance Company of Canada, was the ___ largest.
COMPOUND INTEREST ILLUSTRATIONS. These will emphasize several
advantages of the variable annuity contract. For example, but not by way of
limitation, the literature may emphasize the potential savings through tax
deferral; the potential advantage of the Variable Account over the Fixed
Account; and the compounding effect when a participant makes regular deposits to
his or her account.
The Company may use hypothetical illustrations of the benefits of tax
deferral, including but not limited to the following chart:
The chart below assumes an initial investment of $10,000 which remains
fully invested for the entire time period, an 8% annual return, and a 33%
combined federal and state income tax rate. It compares how three different
investments might fare over 10, 20, and 30 years. The first example illustrates
an investment in a non-tax-deferred account and assumes that taxes are paid
annually out of that account. The second example illustrates how the same
investment would grow in a tax-deferred investment, such as an annuity. And the
third example illustrates the net value of the tax-deferred investment after
paying taxes on the full account value.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
10 YEARS 20 YEARS 30 YEARS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Non-Tax-Deferred Account $16,856 $28,413 $ 47,893
- --------------------------------------------------------------------------------
Tax-Deferred Account $21,589 $46,610 $100,627
- --------------------------------------------------------------------------------
Tax-Deferred Account After $17,765 $34,528 $ 70,720
- --------------------------------------------------------------------------------
Paying Taxes
- --------------------------------------------------------------------------------
</TABLE>
THIS ILLUSTRATION IS HYPOTHETICAL AND DOES NOT REPRESENT THE PROJECTED
PERFORMANCE OF THE CONTRACTS OR ANY OF ITS INVESTMENT OPTIONS. THE ILLUSTRATION
DOES NOT REFLECT THE DEDUCTION OF ANY CHARGES OR FEES RELATED TO PORTFOLIO
MANAGEMENT, MORTALITY AND EXPENSE, OR ACCOUNT ADMINISTRATION. TAXES ON EARNINGS
WITHIN AN ANNUITY ARE DUE UPON WITHDRAWAL. WITHDRAWALS MAY ALSO BE SUBJECT TO
SURRENDER CHARGES AND, IF MADE PRIOR TO AGE 59 1/2, A 10% FEDERAL PENALTY TAX.
<PAGE>
-12-
TAX DEFERRED ACCUMULATION
In general, individuals who own annuity contracts are not taxed on
increases in the value of their annuity contracts until some form of
distribution is made under the contract. As a result, the annuity contract
would benefit from tax deferral during the contract's accumulation phase;
this would have the effect of permitting an investment in an annuity contract
to grow more rapidly that a comparable investment under which increases in
value are taxed on a current basis.
In reports or other communications to you or in advertising or sales
materials, we may also describe the effects of tax deferred compounding on the
Variable Account's investment returns under the various Purchase Payment
Interest Options or upon returns in general. We may illustrate these effects in
charts or graphs and from time to time may include comparisons of returns under
the Contracts or in general on a tax deferred basis, with the returns on a
taxable basis. Different tax rates may be assumed. Any such illustrative chart
or graph would show accumulations on an initial investment or Purchase Payment,
assuming a given amount (including the applicable interest credit),
hypothetical gross annual returns compounded annually, and a stated rate of
return. The values shown for the taxable investment would not include any
deduction for management fees or other expenses, but would assume the annual
deduction of federal and state taxes from investment returns. The values shown
for the Contracts in a chart would reflect the deduction of Contract expenses,
such as the mortality and expense risk charge, the 0.15% administrative charge,
and the $50 annual Account Fee. In addition, the values shown would assume that
the Participant has not surrendered his or her Contract or made any partial
surrenders until the end of the period shown. The chart would assume a full
surrender at the end of the period shown and the payment of federal and state
taxes, at a rate of not more than 33%, on the amount in excess of the Purchase
Payments.
In developing illustrative tax deferral charts, we will observe these
general principles:
- The assumed rate of earnings will be realistic.
- The illustrative chart will accurately depict the effect of all
fees and charges or provide a narrative that prominently discloses
all fees and charges under the Contract.
- Charts comparing accumulation values for tax-deferred and non-tax-
deferred investments will depict the implications of any surrender.
- A narrative accompanying the chart will prominently disclose that
there may be a 10% tax penalty on a surrender by a Participant who
has not reached age 59 1/2 at the time of surrender.
The rates of return illustrated in any chart would be hypothetical and
are not an estimate or guaranty of performance. Actual tax returns may vary
for among Participants.
<PAGE>
-13-
CALCULATIONS
EXAMPLE OF VARIABLE ACCUMULATION UNIT VALUE CALCULATION
Suppose the net asset value of a Fund share at the end of the current
valuation period is $18.38; at the end of the immediately preceding valuation
period was $18.32; the Valuation Period is one day; and no dividends or
distributions caused Fund shares to go "ex-dividend" during the current
Valuation Period. $18.38 divided by $18.32 is 1.00327511. Subtracting the one
day risk factor for mortality and expense risks and the administrative
expense charge of .00004280 (the daily equivalent of the current maximum
charge of 1.55% on an annual basis) gives a net investment factor of
1.00323231. If the value of the variable accumulation unit for the
immediately preceding valuation period had been 14.5645672, the value for the
current valuation period would be 14.6116444 (14.5645672 X 1.00323231).
EXAMPLE OF VARIABLE ANNUITY UNIT CALCULATION
Suppose the circumstances of the first example exist, and the value of
an annuity unit for the immediately preceding valuation period had been
12.3456789. If the first variable annuity payment is determined by using an
annuity payment based on an assumed interest rate of 3% per year, the value
of the annuity unit for the current valuation period would be 12.3456789
(12.3456789 X 1.00323648 (the Net Investment Factor) (based on the daily
equivalent of maximum annuity phase charge of 1.40% on an annual basis) X
0.99991902). 0.99991902 is the factor, for a one day Valuation Period, that
neutralizes the assumed interest rate of 3% per year used to establish the
Annuity Payment Rates found in certain Contracts.
EXAMPLE OF VARIABLE ANNUITY PAYMENT CALCULATION
Suppose that a Participant Account is credited with 8,765.4321 variable
accumulation units of a particular Sub-Account but is not credited with any
fixed accumulation units; that the variable accumulation unit value and the
annuity unit value for the particular Sub-Account for the valuation period
which ends immediately preceding the annuity commencement date are 14.5645672
and 12.3456789 respectively; that the annuity payment rate for the age and
option elected is $6.78 per $1,000; and that the annuity unit value on the
day prior to the second variable annuity payment date is 12.3846153. The
first variable annuity payment would be $865.57 (8,765.4321 X 14.5645672 X
6.78 divided by 1,000). The number of annuity units credited would be
70.1112 ($865.57 divided by 12.3456789) and the second variable annuity
payment would be $868.30 (70.1112 X 12.3846153).
DISTRIBUTION OF THE CONTRACTS
We offer the Contracts on a continuous basis. The Contracts are sold
by licensed insurance agents in those states where the Contracts may be lawfully
sold. Such agents will be registered representatives of broker-dealers
registered under the Securities Exchange Act of 1934 who are members of the
National Association of Securities Dealers, Inc. and who have entered into
distribution agreements with the Company and the general distributor and
principal underwriter of the Contracts, Clarendon Insurance Agency, Inc.
("Clarendon"), One Sun Life Executive Park, Wellesley Hills, Massachusetts
02481. Clarendon is a wholly-owned subsidiary of the Company. Clarendon is
registered with the SEC under the Securities Exchange Act of 1934 as
broker-dealer and is a member of the National Association of Securities Dealers,
Inc. Clarendon also acts as the general distributor of certain other annuity
contracts issued by the Company and its wholly-owned subsidiary, Sun Life
Insurance and Annuity Company of New York, and variable life insurance contracts
issued by the Company.
Commissions and other distribution compensation will be paid by the
Company to the selling agents and will not be more than 2.50% of Purchase
Payments. In addition, after the first Account Year, broker-dealers who have
entered into distribution agreements with the Company may receive an annual
renewal commission of no more than 0.50% of the Participant's Account Value. In
addition to commissions, the Company may, from time to time, pay or allow
additional promotional incentives, in the form of cash or other compensation.
The Company reserves the right to offer these additional incentives only to
certain
<PAGE>
-14-
broker-dealers that sell or are expected to sell during specified time
periods certain minimum amounts of the Contracts or Certificates or other
contracts offered by the Company. Promotional incentives may change at any
time. Commissions will not be paid with respect to Participant Accounts
established for the personal account of employees of the Company or any of
its affiliates, or of persons engaged in the distribution of the Contracts,
or of immediate family members of such employees or persons. In addition,
commissions may be waived or reduced in connection with certain transactions
described in the Prospectus under the heading "Waivers; Reduced Charges;
Credits; Bonus Guaranteed Interest Rates."
DESIGNATION AND CHANGE OF BENEFICIARY
The Beneficiary designation in the Application will remain in effect
until changed.
Subject to the rights of an irrevocably designated Beneficiary, you
may change or revoke the designation of Beneficiary by filing the change or
revocation with us in the form we require. The change or revocation will not be
binding on us until we receive it. When we receive it, the change or revocation
will be effective as of the date on which it was signed, but the change or
revocation will be without prejudice to us on account of any payment we make or
any action we take before receiving the change or revocation.
Please refer to the terms of your particular retirement plan and any
applicable legislation for any restrictions on the beneficiary designation.
CUSTODIAN
We are the Custodian of the assets of the Variable Account. We
will purchase Fund shares at net asset value in connection with amounts
allocated to the Sub-Accounts in accordance with your instructions, and we
will redeem Fund shares at net asset value for the purpose of meeting the
contractual obligations of the Variable Account, paying charges relative to
the Variable Account or making adjustments for annuity reserves held in the
Variable Account.
FINANCIAL STATEMENTS
The Financial Statements of Sun Life of Canada (U.S.) Variable
Account F for the year ended December 31, 1999 included in this Statement of
Additional Information have been audited by ____________________________,
independent auditors, as stated in their report appearing herein, and are
included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
[TO BE INSERTED BY AMENDMENT]
<PAGE>
-15-
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
C/O RETIREMENT PRODUCTS AND SERVICES
P.O. BOX 9133
BOSTON, MASSACHUSETTS 02117
TELEPHONE:
Toll Free (888) 786-2435
In Massachusetts (617) 348-9600
GENERAL DISTRIBUTOR
Clarendon Insurance Agency, Inc.
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
AUDITORS
___________________
200 Berkeley Street
Boston, Massachusetts 02116
<PAGE>
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) The following Financial Statements are included in the
Registration Statement:
Included in Part A:
A. Condensed Financial Information - Accumulation Unit Values
(to be filed by amendment).
B. Financial Statements of the Depositor (to be filed
by amendment):
1. Statutory Statements of Admitted Assets,
Liabilities and Capital Stock and Surplus,
December 31, 1999 and 1998;
2. Statutory Statements of Operations, Years Ended
December 31, 1999, 1998 and 1997;
3. Statutory Statements of Changes in Capital Stock
and Surplus, Years Ended December 31, 1999, 1998
and 1997;
4. Statutory Statements of Cash Flow, Years Ended
December 31, 1999, 1998 and 1997;
5. Notes to Statutory Financial Statements; and
6. Independent Auditors' Report.
Included in Part B
A. Financial Statements of the Registrant (to be filed
by amendment):
1. Statement of Condition, December 31, 1999;
2. Statement of Operations, Year Ended December 31,
1999;
3. Statements of Changes in Net Assets, Years Ended
December 31, 1999 and December 31, 1998;
4. Notes to Financial Statements; and
5. Independent Auditors' Report.
(b) The following Exhibits are incorporated in the Registration
Statement by reference unless otherwise indicated:
(1) Resolution of Board of Directors of the depositor
dated December 3, 1985 authorizing the
establishment of the Registrant (Incorporated
herein by reference to Exhibit 1 to the
Registration Statement of the Registrant on Form
N-4, File No. 333-37907, filed on October 14,
1997);
(2) Not Applicable;
(3)(a) Distribution Agreement between the Depositor,
Massachusetts Financial Services Company and
Clarendon Insurance Agency, Inc. (Incorporated
herein by reference to Exhibit 3(a) to
Pre-Effective Amendment No. 1 to the Registration
Statement of the Registrant on Form N-4, File No.
333-37907, filed on January 16, 1998);
(b)(i) Specimen Sales Operations and General Agent
Agreement (Incorporated herein by reference to
Exhibit 3(b)(i) to Pre-Effective Amendment No. 1
to the Registration Statement of the Registrant on
Form N-4, File No. 333-37907, filed on January 16,
1998);
<PAGE>
(b)(ii) Specimen Broker-Dealer Supervisory and Service
Agreement (Incorporated herein by reference to
Exhibit 3(b)(ii) to Pre-Effective Amendment No. 1
to the Registration Statement of the Registrant on
Form N-4, File No. 333-37907, filed on January 16,
1998); and
(b)(iii) Specimen Registered Representatives Agent
Agreement (Incorporated herein by reference to
Exhibit 3(b)(iii) to Pre-Effective Amendment No.
1 to the Registration Statement of the Registrant
on Form N-4, File No. 333-37907, filed on January
16, 1998);
(4)(a)(i) Form of Flexible Payment Combination
Fixed/Variable Group Annuity Contract (MFS Regatta
Choice) (To be filed by amendment);
(a)(ii) Form of Flexible Payment Combination Fixed/
Variable Group Annuity Contract (Futurity III)
(To be filed by amendment);
(b)(i) Form of Certificate to be
issued in connection with Contract filed as
Exhibit 4(a)(i) (MFS Regatta Choice) (To be
filed by amendment);
(b)(ii) Form of Certificate to be
issued in connection with Contract filed as
Exhibit 4(a)(ii) (Futurity III) (To be filed by
amendment);
(c)(i) Form of Flexible Payment Combination
Fixed/Variable Individual Annuity Contract (MFS
Regatta Choice) (To be filed by amendment);
(c)(ii) Form of Flexible Payment Combination
Fixed/Variable Individual Annuity Contract
(Futurity III) (To be filed by amendment);
(5)(a)(i) Form of Application to be used with
Contract filed as Exhibit 4(a)(i) (MFS Regatta
Choice) (To be filed by amendment);
(a)(ii) Form of Application to be used with
Contract filed as Exhibit 4(a)(ii) (Futurity III)
(To be filed by amendment);
(b)(i) Form of Application to be used with
Certificate filed as Exhibit 4(b)(i) and
Contract filed as Exhibit 4(c)(i) (MFS Regatta
Choice) (To be filed by amendment);
(b)(ii) Form of Application to be used with
Certificate filed as Exhibit 4(b)(ii) and
Contract filed as Exhibit 4(c)(ii) (Futurity III)
(To be filed by amendment);
(6) Certificate of Incorporation and By-laws of the
Depositor (Incorporated herein by reference to
Exhibits 3(a) and 3(b), respectively, to the
Registration Statement of the Depositor on Form
S-1, File No. 333-37907, filed on October 14,
1997);
(7) Not Applicable;
(8)(a) Form of Participation Agreement by and between
The Alger American Fund, the Depositor, and
Fred Alger and Company, Incorporated (Filed as
Exhibit 8(a) to Post-Effective Amendment No. 13
to the Registration Statement of the Registrant
on Form N-4, File No. 33-41628, filed April 26,
1999);
(b)(i) Form of Participation Agreement dated February 17,
1998 by and between Goldman Sachs Variable,
Insurance Trust, Goldman Sachs & Co. and the
Depositor (Filed as Exhibit 8(b)(i) to
Post-Effective Amendment No. 13 to Registrant's
Registration Statement on Form N-4, File No.
33-41628, filed April 26, 1999);
(ii) Form of Amendment No. 1 dated December 14, 1998 to
Participation Agreement filed as Exhibit 8(b)(i)
(Filed as Exhibit 8(b)(ii) to Post-Effective
Amendment No. 13 to Registrant's Registration
Statement on Form N-4, File No. 33-41628, filed
April 26, 1999);
(iii) Form of Amendment No. 2 dated as of March 15, 1999
to Participation Agreement filed as
Exhibit 8(b)(i) (Filed as Exhibit 8(b)(iii) to
Post-Effective Amendment No. 13 to Registrant's
Registration Statement on Form N-4, File No.
33-41628, filed April 26, 1999);
(c) Form of Fund Participation Agreement between
Depositor and J.P. Morgan Services Trust II
(Filed as Exhibit 8(c) to Post-Effective
Amendment No. 13 to Registrant's Registration
Statement on Form N-4, File No. 33-41628, filed
April 26, 1999);
(d) Form of Participation Agreement dated February 17,
1998 by and among MFS/Sun Life Services Trust, the
Depositor and Massachusetts Financial Services
Company (Filed as Exhibit 8(d) to Post-Effective
Amendment No. 13 to Registrant's Registration
Statement on Form N-4, File No. 33-41628, filed
April 26, 1999);
(e) Form of Participation Agreement dated February 17,
1998 by and among OCC Accumulation Trust, the
Depositor and OCC Distributors (Filed as Exhibit
8(e) to Post-Effective Amendment No. 13 to
Registrant's Registration Statement on Form N-4,
File No. 33-41628, filed April 26, 1999);
(f) Form of Participation Agreement dated February,
1998 by and among the Depositor, Warburg Pincus
Trust, Warburg Pincus Asset Management, Inc. and
Counsellors Securities, Inc. (Filed as Exhibit
8(f) to Post-Effective Amendment No. 13 to
Registrant's Registration Statement on Form N-4,
File No. 33-41628, filed April 26, 1999);
(g) Form of Participation Agreement dated February 17,
1998 by and among the Depositor, AIM Variable
Insurance Funds, Inc., AIM Distributors, Inc.,
and Clarendon Insurance Agency, Inc. (Filed as
Exhibit 8(g) to Post-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-4,
File No. 333-82957, filed on February 3, 2000);
(h) Form of Participation Agreement dated August 18,
1999 by and among the Depositor, Sun Capital
Advisers Trust and Sun Capital Advisers, Inc.
(Filed as Exhibit 8(h) to Post-Effective Amendment
No. 1 to Registrant's Registration Statement on
Form N-4, File No. 333-82957, filed on February 3,
2000);
(9) Opinion of Counsel as to the legality of the
securities being registered and Consent to its
use*;
(10) Consent of Independent Auditors
(To be filed by Amendment);
(11) Financial Statement Schedules I and VI
(Incorporated herein by reference to the
Depositor's Form 10-K Annual Report for the
fiscal year ended December 31, 1999, filed on
________, 2000) (To be filed by Amendment);
(12) Not Applicable;
(13) Schedule for Computation of Performance
Quotations (Incorporated by reference to
Exhibit 13 to Post-Effective Amendment No. 10
to the Registration Statement of the Registrant
on Form N-4, File No. 33-41628, filed on
April 29, 1998);
(14) Not Applicable;
(15)(a) Powers of Attorney (Filed as Exhibit 15 to the
Registration Statement on Form S-6,
File No. 333-94359, filed January 10, 2000)
(b) Power of Attorney of David D. Horn (Filed as
Exhibit 15(b) to Post-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-4,
File No. 333-82957, filed February 3, 2000); and
(16) Organizational Chart (Filed as Exhibit 16 to
Post-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-4, File
No. 333-82957, filed February 3, 2000)
* Filed herewith
<PAGE>
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Name and Principal Positions and Offices
Business Address with Depositor
---------------- --------------
Donald A. Stewart Chairman and Director
150 King Street West
Toronto, Ontario
Canada M5H 1J9
C. James Prieur Vice Chairman and Director
One Sun Life Executive Park
Wellesley Hills, MA 02481
James A. McNulty, III President and Director
One Sun Life Executive Park
Wellesley Hills, MA 02481
Richard B. Bailey Director
63 Atlantic Avenue
Boston, MA 02110
Gregory W. Gee Director
150 King Street West
Toronto, Ontario
Canada M5H 1J9
David D. Horn Director
Strong Road
New Vineyard, ME 04956
Angus A. MacNaughton Director
c/o Genstar Investment Corporation
555 California Street, Suite 4850
San Francisco, CA 94104
S. Caesar Raboy Director
220 Boylston Street
Boston, MA 02110
<PAGE>
Name and Principal Positions and Offices
Business Address with Depositor
---------------- --------------
Davey Scoon Vice President, Finance and
One Sun Life Executive Park Treasurer
Wellesley Hills, MA 02481
Robert P. Vrolyk Vice President and
One Sun Life Executive Park Actuary
Wellesley Hills, MA 02481
James M.A. Anderson Vice President, Investments
One Sun Life Executive Park
Wellesley Hills, MA 02481
Peter F. Demuth Vice President and Chief Counsel
One Sun Life Executive Park and Assistant Secretary
Wellesley Hills, MA 02481
Ronald J. Fernandes Vice President, Retirement
One Sun Life Executive Park Products and Services
Wellesley Hills, MA 02481
Robert K. Leach Vice President, Finance
One Copley Place and Product, RPS
Boston, MA 02116
Edward J. Ronan Vice President, Retirement
One Copley Place Products and Services
Boston, MA 02116
Ellen B. King Counsel and Secretary
One Sun Life Executive Park
Wellesley Hills, MA 02481
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
No person is directly or indirectly controlled by the Registrant. The
Registrant is a separate account of Sun Life Assurance Company of Canada
(U.S.), a wholly-owned subsidiary of Sun Life of Canada (U.S.) Holdings,
Inc., a wholly-owned subsidiary of Sun Life Assurance Company of Canada -
U.S. Operations Holdings, Inc., which is in turn a wholly-owned subsidiary of
Sun Life Assurance Company of Canada.
The organization chart of Sun Life Assurance Company of Canada is
incorporated herein by reference to Exhibit 16 to Post-Effective Amendment
No. 1 to Registrant's Registration Statement on Form N-4, File No. 333-82957,
filed February 3, 2000.
<PAGE>
None of the companies listed in such Exhibit 16 is a subsidiary of the
Registrant; therefore, the only financial statements being filed are those of
Sun Life Assurance Company of Canada (U.S.).
Item 27. NUMBER OF CONTRACT OWNERS
As of February __, 2000, no Contracts had been issued by the Depositor with
respect to the Securities registered pursuant to this Registration Statement.
Item 28. INDEMNIFICATION
Pursuant to Section 145 of the Delaware Corporation Law, Article 8 of
the By-laws of Sun Life Assurance Company of Canada (U.S.), a copy of which
was filed as Exhibit 3(b) to the Registration Statement of the Depositor on
Form S-1, File No. 33-29851, provides for the indemnification of directors,
officers and employees of Sun Life Assurance Company of Canada (U.S.).
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of Sun Life Assurance Company of Canada (U.S.) pursuant to the certificate of
incorporation, by-laws, or otherwise, Sun Life (U.S.) has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Sun Life (U.S.) of expenses incurred
or paid by a director, officer, controlling person of Sun Life (U.S.) in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, Sun Life (U.S.) will submit to a court of appropriate
jurisdiction the question whether such indemnification by them is against
public policy as expressed in the Act, unless in the opinion of their counsel
the matter has been settled by controlling precedent, and will be governed by
the final adjudication of such issue.
Item 29. PRINCIPAL UNDERWRITERS
(a) Clarendon Insurance Agency, Inc., a wholly-owned subsidiary of Sun
Life Assurance Company of Canada (U.S.), acts as general distributor for the
Registrant, Sun Life of Canada (U.S.) Variable Accounts C, D, E, G, H and I,
Sun Life (N.Y.) Variable Accounts A, B and C, and Money Market Variable
Account, High Yield Variable Account, Capital Appreciation Variable Account,
Government Securities Variable Account, World Governments Variable Account,
Total Return Variable Account, and Managed Sectors Variable Account.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address* with Underwriter
---------------- ----------------
<S> <C>
Anne M. Georges.................... President and Director
Davey Scoon........................ Treasurer and Director
James M.A. Anderson................ Director
Ronald J. Fernandes................ Director
James A. McNulty, III.............. Director
Maura A. Murphy.................... Secretary
Roy P. Creedon..................... Assistant Secretary
Donald E. Kaufman.................. Vice President
Brian Krivitsky.................... Vice President
Cynthia M. Orcutt.................. Vice President
Laurie Lennox...................... Vice President
</TABLE>
- -------------
* The principal business address of all directors and officers of the
principal underwriter except Ms. Georges, Ms. Lennox and Mr. Krivitsky is One
Sun Life Executive Park, Wellesley Hills, Massachusetts 02481. The principal
business address of Ms. Georges, Ms. Lennox and Mr. Krivitsky is One Copley
Place, Boston, Massachusetts 02116.
(a) Inapplicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder
are maintained, in whole or in part, by Sun Life Assurance Company of Canada
(U.S.) at its offices at One Sun Life Executive Park, Wellesley Hills,
Massachusetts 02481, and One Copley Place, Boston, Massachusetts 02116, or at
the offices of Clarendon Insurance Agency, Inc., at One Sun Life Executive Park,
Wellesley Hills, Massachusetts 02481.
Item 31. MANAGEMENT SERVICES
Not Applicable.
Item 32. UNDERTAKINGS
The Registrant hereby undertakes:
(a) To file a post-effective amendment to this Registration Statement as
frequently as is necessary to ensure that the audited financial statements in
the Registration Statement are never more than 16 months old for so long as
payments under the variable annuity Contracts may be accepted;
(b) To include either (1) as part of any application to purchase a Contract
offered by the prospectus, a space that an Applicant can check to request a
Statement of Additional Information, or (2) a post card or simiilar written
communication affixed to or included in the prospectus that the Applicant can
remove to send for a Statement of Additional Information;
(c) To deliver any Statement of Additional Information and any financial
statements required to be made available under SEC Form N-4 promptly upon
written or oral request.
(d) Representation with respect to Section 26(e)of the Investment Company
Act of 1940: Sun Life Assurance Company of Canada (U.S.) represents that the
fees and charges deducted under the Contracts, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by the insurance company.
The Registrant is relying on the no-action letter issued by the Division
of Investment Management of the Securities and Exchange Commission to
American Council of Life Insurance, Ref. No. IP-6-88, dated November 28,
1988, the requirements for which have been complied with by the Registrant.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant certifies that it meets all of the requirements
of Securities Act Rule 485 for effectiveness of this Registration Statement
and has caused this Registration Statement to be signed on its behalf, in the
Town of Wellesley Hills, and Commonwealth of Massachusetts on this 28th day of
February, 2000.
<TABLE>
<S> <C> <C>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
(Registrant)
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Depositor)
By: /s/ JAMES A. McNULTY, III
----------------------------
James A. McNulty, III
President
</TABLE>
Attest: /s/ EDWARD M. SHEA
- --------------------------
Edward M. Shea
Assistant Vice President and Senior Counsel
As required by the Securities Act of 1933, this Registration Statement
has been signed below by the following persons in the capacities with the
Depositor, Sun Life Assurance Company of Canada (U.S.), and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ------------------------------------ --------------
<S> <C> <C>
/s/ JAMES A. McNULTY, III President and Director February 28, 2000
- ------------------------------------- (Principal Executive Officer)
James A. McNulty, III
/s/ DAVEY SCOON Vice President, Finance February 28, 2000
- ------------------------------------- and Treasurer
Davey Scoon (Principal Financial and Accounting Officer)
* /s/ DONALD A. STEWART Chairman and Director February 28, 2000
- -------------------------------------
Donald A. Stewart
* /s/ C. JAMES PRIEUR Vice Chairman and Director February 28, 2000
- -------------------------------------
C. James Prieur
Director
- -------------------------------------
Richard B. Bailey
</TABLE>
* By Edward M. Shea pursuant to Power of Attorney filed as Exhibit 8 to the
Registration Statement on Form S-6 (File No. 333-94359), filed January 10,
2000.
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ------------------------------------ --------------
<S> <C> <C>
* /s/ GREGORY W. GEE Director February 28, 2000
- -------------------------------------
Gregory W. Gee
** /s/ DAVID D. HORN Director February 28, 2000
- -------------------------------------
David D. Horn
* /s/ ANGUS A. MACNAUGHTON Director February 28, 2000
- -------------------------------------
Angus A. MacNaughton
*/s/ S. CAESAR RABOY Director February 28, 2000
- -------------------------------------
S. Caesar Raboy
</TABLE>
* By Edward M. Shea pursuant to Power of Attorney filed as Exhibit 8 to
Registration Statement on Form S-6 (File No. 333-94359), filed January 10,
2000.
** By Edward M. Shea pursuant to Power of Attorney filed as Exhibit 15(b) to
Post-Effective Amendment No. 1 to Registrant's Registration Statement on
Form N-4 (File No. 333-82957), filed February 3, 2000.
<PAGE>
EXHIBIT INDEX
9 Opinion of Counsel as to the legality of the securities being
registered and Consent to use
<PAGE>
Sun Life Assurance Company of Canada (U.S.)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
Re: Registration Statement on Form N-4
Gentlemen and Ladies:
I have acted as counsel to Sun Life Assurance Company of Canada (U.S.)
(the "Company") in connection with the above-captioned registration
statement (the "Registration Statement") with respect to the registration of
certain annuity contracts (the "Contracts") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended. In giving this
opinion, I have examined the Registration Statement and have examined such
other documents and perceived such questions of Delaware law as I considered
necessary and appropriate. Based on such examination and review it is my
opinion that:
1. The Company is a corporation duly organized and validly existing
under the laws of the state of Delaware.
2. The Contracts when issued in the manner described in the
Registration Statement will be validly issued and will represent binding
obligations of the Company and the Account under Delaware law.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to reference this opinion under the caption "Legal
Matters" in the prospectuses constituting a part of the Registration Statement.
Very truly yours,
/s/ Edward M. Shea, Esq.
EDWARD M. SHEA
February 28, 2000
