<PAGE> 1
As filed with the Securities and Exchange
Commission on March 2, 1998.
Registration No. 33-79112
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 4
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE ACCOUNT A
(Exact name of Registrant)
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
(Formerly, First North American Life Assurance Company)
(Name of Depositor)
Corporate Center at Rye
555 Theodore Fremd Avenue, Suite C-209
Rye, New York 10580-9966
(Address of Depositor's Principal Executive Offices)
(914) 921-1020
(Depositor's Telephone Number Including Area Code)
A. Scott Logan
President
The Manufacturers Life Insurance
Company of New York Copy to:
Corporate Center at Rye J. Sumner Jones, Esq.
555 Theodore Fremd Avenue Jones & Blouch, L.L.P.
Suite C-209 1025 Thomas Jefferson St. N.W.
Rye, New York 10580 Suite 405 West
(Name and Address of Agent for Service) Washington, D.C. 20007-0805
-----------------------
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b)
___ on [date] pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)
___ 75 days after filing pursuant to paragraph (a)
X on May 1, 1998 pursuant to paragraph (a)(1) of Rule 485
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THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-4
N-4 Item Caption in Prospectus
Part A
<TABLE>
<CAPTION>
<S> <C>
1. Cover Page
2. Special Terms
3. Summary
4. Performance Data;
Financial Statements
5. General Information about
The Manufacturers Life Insurance Company of New York
The Manufacturers Life Insurance Company of
New York Separate Account A
Manufacturers Investment Trust
6. Charges and Deductions;
Withdrawal Charge;
Administration Fees;
Mortality and Expense Risk
Charge; Taxes; Appendix A; Appendix B
7. Accumulation Provisions;
Company Approval;
Purchase Payments;
Accumulation Units;
Net Investment Factor;
Transfers Among
Investment Options;
Special Transfer Services - Dollar Cost Averaging;
Asset Rebalancing Program;
Withdrawals;
Special Withdrawal Services - Income Plan;
Contract Owner Inquiries;
Other Contract Provisions;
Ownership; Beneficiary;
Modification;
8. Annuity Provisions; General;
Annuity Options; Determination of Amount of the First
Variable Annuity Payment;
Annuity Units and the Determination of Subsequent
Variable Annuity Payments;
Transfers After Maturity Date
</TABLE>
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<TABLE>
<S> <C>
9. Accumulation Provisions;
Death Benefit Before
Maturity Date; Annuity
Provisions; Death Benefit
After Maturity Date
10. Accumulation Provisions;
Purchase Payments; Accumulation Units;
Value of Accumulation Units; Net Investment Factor;
Distribution of Contracts
11. Withdrawals; Accumulation Provisions;
Purchase Payments; Other Contract
Provisions; Ten Day Right to Review
12. Federal Tax Matters; Introduction;
The Company's Tax Status;
Taxation of Annuities in General;
Diversification Requirements;
Qualified Retirement Plans
13. Legal Proceedings
14 Statement of Additional
Information - Table of Contents
Part B Caption in Statement of Additional Information
15. Cover Page
16. Table of Contents
17. General History and Information.
18. Services-Accountants;
Services-Servicing Agent
19. Not Applicable
20. Principal Underwriter
21. Performance Data
22. Not Applicable
23. Financial Statements
</TABLE>
<PAGE> 4
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE> 5
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
Annuity Service Office and Mailing Address:
Corporate Center at Rye
555 Theodore Fremd Avenue, Suite C-209
Rye, New York 10580-9966
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT A
OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
FLEXIBLE PURCHASE PAYMENT INDIVIDUAL DEFERRED
COMBINATION FIXED AND VARIABLE ANNUITY CONTRACT
NON-PARTICIPATING
This Prospectus describes a flexible purchase payment individual
deferred combination fixed and variable annuity contract (the "contract") issued
by The Manufacturers Life Insurance Company of New York, formerly First North
American Life Assurance Company (the "Company"), a stock life insurance company
organized under the laws of the state of New York. The contract is designed for
use in connection with retirement plans which may or may not qualify for special
Federal income tax treatment.
The contract provides for the accumulation of contract values and the
payment of annuity benefits on a variable and/or fixed basis. The contract
offers forty investment options: thirty-five variable and five fixed. The
variable portion of the contract value and annuity payments, if selected on a
variable basis, will vary according to the investment performance of the
sub-accounts of The Manufacturers Life Insurance Company of New York Separate
Account A, formerly NASL Variable Account (the "Variable Account"). The Variable
Account is a separate account established by the Company. Purchase payments and
earnings on those purchase payments may be allocated to and transferred among
one or more of thirty-five sub-accounts of the Variable Account. The assets of
each sub-account are invested in shares of Manufacturers Investment Trust,
formerly the NASL Series Trust (the "Trust"), a mutual fund having an investment
portfolio for each sub-account of the Variable Account (see the accompanying
Prospectus of the Trust). Fixed contract values may be accumulated under one,
three, five and seven year fixed account investment options and a one year
dollar cost averaging fixed account investment option. Except as specifically
noted herein and as set forth under the caption "FIXED ACCOUNT INVESTMENT
OPTIONS" below, this Prospectus describes only the variable portion of the
contract.
Additional information about the variable portion of the contract and
Variable Account is contained in a Statement of Additional Information, dated
the same date as this Prospectus, which has been filed with the Securities and
Exchange Commission (the "SEC") and is incorporated herein by reference. The
Statement of Additional Information is available without charge upon request by
writing the Company at the above address or telephoning (914) 921-1020. In
addition, the SEC maintains a Web site (http://www.sec.gov) that contains the
Statement of Additional Information, material incorporated by reference, and
other information regarding registrants that file electronically with the SEC.
The table of contents for the Statement of Additional Information is included on
page 40 of this Prospectus.
Shares of the Trust are not deposits or obligations of, or guaranteed
or endorsed by, any bank, and the shares are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. IT
CONTAINS INFORMATION ABOUT THE VARIABLE ACCOUNT AND THE VARIABLE PORTION OF THE
CONTRACT THAT A PROSPECTIVE PURCHASER SHOULD KNOW BEFORE INVESTING.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR HAS THE
SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is May 1, 1998.
V24.PRO598
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
SPECIAL TERMS ............................................................ 3
SUMMARY .................................................................. 5
GENERAL INFORMATION ABOUT THE MANUFACTURES LIFE INSURANCE COMPANY OF
NEW YORK, THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE
ACCOUNT A AND MANUFACTURERS INVESTMENT TRUST.............................. 11
The Manufacturers Life Insurance Company of New York .................. 11
The Manufacturers Life Insurance Company of New York
Separate Account A ................................................. 11
Manufacturers Investment Trust ........................................ 11
DESCRIPTION OF THE CONTRACT .............................................. 16
ACCUMULATION PROVISIONS ............................................... 16
Purchase Payments ................................................... 16
Accumulation Units .................................................. 17
Value of Accumulation Units ......................................... 17
Net Investment Factor ............................................... 17
Transfers Among Investment Options .................................. 18
Maximum Number of Investment Options ................................ 18
Special Transfer Services -
Dollar Cost Averaging ............................................ 18
Asset Rebalancing Program ........................................... 18
Withdrawals ......................................................... 19
Special Withdrawal Services -
the Income Plan .................................................. 20
Loans ............................................................... 20
Death Benefit Before Maturity Date .................................. 21
ANNUITY PROVISIONS .................................................... 22
General ............................................................. 22
Annuity Options ..................................................... 22
Determination of Amount of the First Variable
Annuity Payment ..................................................... 23
Annuity Units and the Determination of
Subsequent Variable Annuity Payments ................................ 23
Transfers After Maturity Date ....................................... 24
Death Benefit on or After Maturity Date ............................. 24
OTHER CONTRACT PROVISIONS ............................................. 24
Ten Day Right to Review ............................................. 24
Ownership ........................................................... 24
Beneficiary ......................................................... 25
Annuitant ........................................................... 25
Modification ........................................................ 25
Company Approval .................................................... 25
Misstatement and Proof of Age, Sex or Survival ...................... 25
FIXED ACCOUNT INVESTMENT OPTIONS ...................................... 26
CHARGES AND DEDUCTIONS ................................................... 28
Withdrawal Charges .................................................... 28
Administration Fees ................................................... 29
Mortality and Expense Risk Charge ..................................... 30
Taxes ................................................................. 30
FEDERAL TAX MATTERS ...................................................... 30
INTRODUCTION .......................................................... 30
THE COMPANY'S TAX STATUS .............................................. 31
TAXATION OF ANNUITIES IN GENERAL ...................................... 31
Tax Deferral During Accumulation Period ............................. 31
Taxation of Partial and Full Withdrawals ............................ 32
Taxation of Annuity Payments ........................................ 33
Taxation of Death Benefit Proceeds .................................. 33
Penalty Tax on Premature Distributions .............................. 34
Aggregation of Contracts ............................................ 34
QUALIFIED RETIREMENT PLANS ............................................... 34
Qualified Plan Types ................................................ 35
Direct Rollovers .................................................... 37
FEDERAL INCOME TAX WITHHOLDING ........................................... 37
GENERAL MATTERS .......................................................... 37
Tax Deferral .......................................................... 37
Performance Data ...................................................... 37
Financial Statements .................................................. 37
Asset Allocation and Timing Services .................................. 38
Distribution of Contracts ............................................. 38
Contract Owner Inquiries .............................................. 38
Confirmation Statements ............................................... 38
Legal Proceedings ..................................................... 39
Other Information ..................................................... 39
STATEMENT OF ADDITIONAL INFORMATION
Table of Contents ...................................................... 39
APPENDIX A
Examples of Calculation of Withdrawal Charge .......................... 40
</TABLE>
2
<PAGE> 7
SPECIAL TERMS
The following terms as used in this Prospectus have the indicated
meanings:
Accumulation Unit - A unit of measure that is used to calculate the
value of the variable portion of the contract before the maturity date.
Annuitant - Any natural person or persons whose life is used to
determine the duration of annuity payments involving life contingencies. If the
contract owner names more than one person as an "annuitant," the second person
named shall be referred to as "co-annuitant." The "annuitant" and "co-annuitant"
will be referred to collectively as "annuitant." The "annuitant" is as
designated on the contract specification page or in the application, unless
changed.
Annuity Option - The method selected by the contract owner (or as
specified in the contract if no selection is made) for annuity payments made by
the Company.
Annuity Service Office - The service office of the Company is Corporate
Center at Rye, 555 Theodore Fremd Avenue, Suite C-209, Rye, New York 10580-9966.
Annuity Unit - A unit of measure that is used after the maturity date
to calculate variable annuity payments.
Beneficiary - The person, persons or entity entitled to the death
benefit under the contract upon the death of a contract owner or, in certain
circumstances, an annuitant. The beneficiary is as specified in the application,
unless changed. If there is a surviving contract owner, that person will be
deemed the beneficiary (see also "Successor Owner").
Contingent Beneficiary - The person, persons or entity to become the
beneficiary if the beneficiary is not alive. The contingent beneficiary is as
specified in the application, unless changed.
Contract Anniversary - The anniversary of the contract date.
Contract Date - The date of issue of the contract.
Contract Value - The total of the investment account values and, if
applicable, any amount in the loan account attributable to the contract.
Contract Year - The period of twelve consecutive months beginning on
the contract date or any anniversary thereof.
Debt - Any amounts in the loan account attributable to the contract
plus any accrued loan interest. The loan provision is applicable to certain
qualified contracts only.
Due Proof of Death - Due Proof of Death is required upon the death of
the contract owner or annuitant, as applicable. One of the following must be
received at the Annuity Service Office:
(a) A certified copy of a death certificate;
(b) A certified copy of a decree of a court of competent jurisdiction
as to the finding of death; or
(c) Any other proof satisfactory to us.
Death benefits will be paid within 7 days of receipt of due proof of death and
all required claim forms by the Annuity Service Office.
Fixed Annuity - An annuity option with payments which are predetermined
and guaranteed as to dollar amount.
General Account - All the assets of the Company other than assets in
separate accounts.
Investment Account - An account established by the Company which
represents a contract owner's interest in
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<PAGE> 8
an investment option prior to the maturity date.
Investment Account Value - The value of a contract owner's investment
in an investment account.
Investment Options - The investment choices available to contract
owners. Currently, there are thirty-five variable and five fixed investment
options under the contract.
Loan Account - The portion of the general account that is used for
collateral when a loan is taken.
Market Value Charge - A charge that may be assessed if amounts are
withdrawn or transferred from the three, five or seven year investment options
prior to the end of the interest rate guarantee period.
Maturity Date - The date on which annuity benefits commence. The
maturity date is the date specified on the contract specifications page and is
generally the first day of the month following the later of the annuitant's 90th
birthday or the tenth contract anniversary, unless changed.
Net Purchase Payment - The purchase payment less the amount of premium
tax, if any.
Non-Qualified Contracts - Contracts which are not issued under
qualified plans.
Owner or Contract Owner - The person, persons (co-owner) or entity
entitled to all of the ownership rights under the contract. The owner has the
legal right to make all changes in contractual designations where specifically
permitted by the contract. The owner is as specified in the application, unless
changed.
Portfolio or Trust Portfolio - A separate investment portfolio of the
Trust, a mutual fund in which the Variable Account invests, or of any successor
mutual fund.
Purchase Payment - An amount paid by a contract owner to the Company as
consideration for the benefits provided by the contract.
Qualified Contracts - Contracts issued under qualified plans.
Qualified Plans - Retirement plans which receive favorable tax
treatment under Section 401, 403, 408 or 408A of the Internal Revenue Code of
1986, as amended (the "Code").
Separate Account - A segregated account of the Company that is not
commingled with the Company's general assets and obligations.
Sub-Account(s) - One or more of the sub-accounts of the Variable
Account. Each sub-account is invested in shares of a different Trust portfolio.
Successor Owner - The person, persons or entity to become the Owner if
the Owner dies prior to the Maturity Date. The Successor Owner is as specified
in the application, unless changed. If no Successor Owner is designated or the
Successor Owner dies before the Owner, the Owner's estate is the Successor Owner
(see also "Beneficiary").
Valuation Date - Any date on which the New York Stock Exchange is open
for business and the net asset value of a Trust portfolio is determined.
Valuation Period - Any period from one valuation date to the next,
measured from the time on each such date that the net asset value of each
portfolio is determined.
Variable Account - The Variable Account, which is a separate account of
the Company.
Variable Annuity - An annuity option with payments which: (1) are not
predetermined or guaranteed as to dollar amount, and (2) vary in relation to the
investment experience of one or more specified sub-accounts.
4
<PAGE> 9
SUMMARY
The Contract. The contract offered by this Prospectus is flexible
purchase payment individual deferred combination fixed and variable annuity
contract. The contract provides for the accumulation of contract values and the
payment of annuity benefits on a variable and/or fixed basis. Except as
specifically noted herein and as set forth under the caption "FIXED ACCOUNT
INVESTMENT OPTIONS" below, this Prospectus describes only the variable portion
of the contract.
Retirement Plans. The contract may be issued pursuant to either
non-qualified retirement plans or plans qualifying for special income tax
treatment under the Internal Revenue Code of 1986, as amended (the "Code"), such
as individual retirement accounts and annuities, including Roth IRAs, pension
and profit-sharing plans for corporations and sole proprietorships/ partnerships
("H.R. 10" and "Keogh" plans) and tax-sheltered annuities for public school
systems and tax-exempt organizations (see "QUALIFIED RETIREMENT PLANS").
Purchase Payments. A contract may be issued upon the making of an
initial purchase payment of as little as $30. A minimum of $300 must be paid
during the first contract year. Purchase payments may be made at any time,
except that if a purchase payment would cause the contract value to exceed
$1,000,000, or the contract value already exceeds $1,000,000, additional
purchase payments will be accepted only with the prior approval of the Company.
The Company may, at its option, cancel a contract at the end of any two
consecutive contract years in which no purchase payments have been made, if both
(i) the total purchase payments made over the life of the contract, less any
withdrawals, are less than $2,000; and (ii) the contract value at the end of
such two year period is less than $2,000. The cancellation of contract
privileges may vary in certain states in order to comply with the requirements
of insurance laws and regulations in such state (see "PURCHASE PAYMENTS").
Investment Options. Purchase payments may be allocated among the forty
investment options currently available under the contract: thirty-five variable
account investment options and five fixed account investment options. Due to
current administrative capabilities, a contract is limited to a maximum of 17
investment options (including all fixed account investment options) during the
period prior to the maturity date of the contract. The thirty-five variable
account investment options are the thirty-five sub-accounts of the Variable
Account, a separate account established by the Company. The sub-accounts invest
in corresponding portfolios of the Trust: Pacific Rim Emerging Markets Trust,
Science and Technology Trust, International Small Cap Trust, Emerging Growth
Trust, Pilgrim Baxter Growth Trust, Small/Mid Cap Trust, International Stock
Trust, Worldwide Growth Trust, Global Equity Trust, Small Company Value Trust,
Equity Trust, Growth Trust, Quantitative Equity Trust, Blue Chip Growth Trust,
Real Estate Securities Trust, Value Trust, International Growth and Income
Trust, Growth and Income Trust, Equity-Income Trust, Balanced Trust, Aggressive
Asset Allocation Trust, High Yield Trust, Moderate Asset Allocation Trust,
Conservative Asset Allocation Trust, Strategic Bond Trust, Global Government
Bond Trust, Capital Growth Bond Trust, Investment Quality Bond Trust, U.S.
Government Securities Trust, Money Market Trust, Lifestyle Aggressive 1000
Trust, Lifestyle Growth 820 Trust, Lifestyle Balanced 640 Trust, Lifestyle
Moderate 460 Trust and the Lifestyle Conservative 280 Trust (see the
accompanying Prospectus of the Trust). The portion of the contract value in the
Variable Account and monthly annuity payments, if selected on a variable basis,
will reflect the investment performance of the sub-accounts selected (see "THE
MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE ACCOUNT A"). Purchase
payments may also be allocated to the four fixed account investment options:
one, three, five and seven year guaranteed investment accounts and a one year
dollar cost averaging investment account. Under the fixed account investment
options, the Company guarantees the principal value of purchase payments and the
rate of interest credited to the investment account for the term of the
guarantee period. The portion of the contract value in the fixed account
investment options and monthly annuity payments, if selected on a fixed basis,
will reflect such interest and principal guarantees (see "FIXED ACCOUNT
INVESTMENT OPTIONS"). Subject to certain regulatory limitations, the Company may
elect to add, subtract or substitute investment options.
Transfers. Prior to the maturity date, amounts may be transferred among
the variable account investment options and from the variable account investment
options to the fixed account investment options without charge. In addition,
amounts may be transferred prior to the maturity date among the fixed account
investment options and from the fixed account investment options to the variable
account investment options, subject to a one year holding period requirement
(with certain exceptions) and a market value charge which may apply to such a
transfer (see "FIXED ACCOUNT INVESTMENT OPTIONS"). After the maturity date,
transfers are not permitted from variable annuity options to fixed annuity
options or from fixed annuity options to variable annuity options. Transfers
from any
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investment account must be at least $300 or, if less, the entire balance in the
investment account. If, after the transfer the amount remaining in the
investment account of the contract from which the transfer is made is less than
$100, then we will transfer the entire amount instead of the requested amount.
The Company may impose certain additional limitations on transfers (see
"TRANSFERS AMONG INVESTMENT OPTIONS" and "TRANSFERS AFTER MATURITY DATE").
Transfer privileges may also be used under a special service offered by the
Company to dollar cost average an investment in the contract (see "SPECIAL
TRANSFER SERVICES - DOLLAR COST AVERAGING").
Withdrawals. Prior to the earlier of the maturity date or the death of
the contract owner, the owner may withdraw all or a portion of the contract
value. The amount withdrawn from any investment account must be at least $300
or, if less, the entire balance of the investment account. If a partial
withdrawal plus any applicable withdrawal charge would reduce the contract value
to less than $300, the withdrawal request will be treated as a request to
withdraw the entire contract value. A withdrawal charge and an administration
fee may be imposed (see "WITHDRAWALS"). A withdrawal may be subject to income
tax and a 10% penalty tax (see "FEDERAL TAX MATTERS"). Withdrawal privileges may
also be exercised pursuant to the Company's systematic withdrawal plan service
(see "SPECIAL WITHDRAWAL SERVICES - THE INCOME PLAN").
Loans. The Company offers a loan privilege to owners of contracts
issued in connection with Section 403(b) qualified plans that are not subject to
Title I of ERISA. Owners of such contracts may obtain loans using the contract
as the only security for the loan. The effective cost of a contract loan is 2%
per year of the amount borrowed (see "LOANS").
Confirmation Statements. Owners will be sent confirmation statements
for certain transactions in their account. Owners should carefully review these
statements to verify their accuracy. Any mistakes should immediately be reported
to the Company's Annuity Service Office. If the owner fails to notify the
Company's Annuity Service Office of any mistake within 60 days of the mailing of
the confirmation statement, the owner will be deemed to have ratified the
transaction.
Death Benefits. The Company will pay the death benefit described below
(which, as defined, is net of any debt) to the beneficiary if any contract owner
dies before the maturity date. If there is a surviving contract owner, that
contract owner will be deemed to be the beneficiary. No death benefit is payable
on the death of any annuitant, except that if any contract owner is not a
natural person, the death of any annuitant will be treated as the death of an
owner. The death benefit will be determined as of the date on which written
notice and proof of death and all required claim forms are received at the
Company's Annuity Service Office.
If any contract owner dies on or prior to his or her 85th birthday and
the oldest owner had an attained age of less than 81 years on the contract date,
the death benefit will be determined as follows: During the first contract year,
the death benefit will be the greater of: (a) the contract value or (b) the sum
of all purchase payments made, less any amounts deducted in connection with
partial withdrawals. During any subsequent contract year, the death benefit will
be the greater of: (a) the contract value or (b) the death benefit on the last
day of the previous contract year, plus any purchase payments made and less any
amounts deducted in connection with partial withdrawals since then.
If any contract owner dies after his or her 85th birthday and the
oldest owner had an attained age of less than 81 years on the contract date, the
death benefit will be the greater of: (a) the contract value or (b) the excess
of (i) the sum of all purchase payments over (ii) the sum of any amounts
deducted in connection with partial withdrawals. If any contract owner dies and
the oldest owner had an attained age of 81 or greater on the contract date, the
death benefit will be the contract value less any applicable withdrawal charges
at the time of payment of benefits. If there is any debt under the contract, the
death benefit equals the death benefit, as described above, less such debt (see
"DEATH BENEFIT BEFORE MATURITY DATE"). If the annuitant dies after the maturity
date and annuity payments have been selected based on an annuity option
providing for payments for a guaranteed period, the Company will make the
remaining guaranteed payments to the beneficiary (see "DEATH BENEFIT ON OR AFTER
MATURITY DATE").
Annuity Payments. The Company offers a variety of fixed and variable
annuity options. Periodic annuity payments will begin on the maturity date. The
contract owner selects the maturity date, frequency of payment and annuity
option (see "ANNUITY PROVISIONS").
Ten Day Review. Within 10 days of receipt of a contract, the contract
owner may cancel the contract by
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<PAGE> 11
returning it to the Company (see "TEN DAY RIGHT TO REVIEW").
Charges and Deductions. The following table and Example are designed to
assist contract owners in understanding the various costs and expenses that
contract owners bear directly and indirectly. The table reflects expenses of the
separate account and the underlying portfolio company. The items listed under
"Contract Owner Transaction Expenses" and "Separate Account Annual Expenses" are
more completely described in this Prospectus (see "CHARGES AND DEDUCTIONS"). The
items listed under "Trust Annual Expenses" are described in detail in the
accompanying Trust Prospectus to which reference should be made.
CONTRACT OWNER TRANSACTION EXPENSES
Deferred sales load (as percentage of purchase payments)
<TABLE>
<CAPTION>
NUMBER OF COMPLETE YEARS WITHDRAWAL CHARGE
PURCHASE PAYMENT IN PERCENTAGE
CONTRACT
-----------------------------------------------
<S> <C>
0 6%
1 6%
2 5%
3 5%
4 4%
5 3%
6 2%
7+ 0%
</TABLE>
<TABLE>
<S> <C>
Annual Contract Fee ........................................... $ 30
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and expense risk fees ............................... 1.25%
Administration fee - asset based ............................. 0.15%
Total Separate Account Annual Expenses ........................ 1.40%
</TABLE>
TRUST ANNUAL EXPENSES
(as a percentage of Trust average net assets)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL TRUST
TRUST PORTFOLIO FEES EXPENSES ANNUAL EXPENSES
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets .......... 0.850% 0.570% 1.420%
Science and Technology ................ 1.100% 0.160% 1.260%
International Small Cap ............... 1.100% 0.210% 1.310%
Emerging Growth ....................... 1.050% 0.060% 1.110%
Pilgrim Baxter Growth ................. 1.050% 0.130% 1.180%
Small/Mid Cap ......................... 1.000% 0.050% 1.050%
International Stock ................... 1.050% 0.330% 1.380%
Worldwide Growth ...................... 1.000% 0.320% 1.320%
Global Equity ......................... 0.900% 0.110% 1.010%
Small Company Value ................... 1.050% 0.100%* 1.150%
Equity ................................ 0.750% 0.050% 0.800%
Growth ................................ 0.850% 0.100% 1.950%
Quantitative Equity ................... 0.700% 0.070% 0.770%
Blue Chip Growth ...................... 0.925% 0.050% 0.975%
Real Estate Securities ................ 0.700% 0.070% 0.770%
Value ................................. 0.800% 0.160% 0.960%
International Growth and Income ....... 0.950% 0.170% 1.120%
</TABLE>
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<TABLE>
<S> <C> <C> <C>
Growth and Income ..................... 0.750% 0.040% 0.790%
Equity Income ......................... 0.800% 0.050% 0.850%
Balanced .............................. 0.800% 0.080% 0.880%
Aggressive Asset Allocation ........... 0.750% 0.150% 0.900%
High Yield ............................ 0.775% 0.110% 0.885%
Moderate Asset Allocation ............. 0.750% 0.100% 0.850%
Conservative Asset Allocation ......... 0.750% 0.140% 0.890%
Strategic Bond ........................ 0.775% 0.100% 0.875%
Global Government Bond ................ 0.800% 0.130% 0.930%
Capital Growth Bond ................... 0.650% 0.080% 0.730%
Investment Quality Bond ............... 0.650% 0.090% 0.740%
U.S. Government Securities ............ 0.650% 0.070% 0.720%
Money Market .......................... 0.500% 0.040% 0.540%
Lifestyle Aggressive 1000# ............ 0% 1.116%** 1.116%
Lifestyle Growth 820# ................. 0% 1.048%** 1.048%
Lifestyle Balanced 640# .............. 0% 0.944%** 0.944%
Lifestyle Moderate 460# ............... 0% 0.850%** 0.850%
Lifestyle Conservative 260# ........... 0% 0.708%** 0.708%
</TABLE>
#Each Lifestyle Trust will invest in shares of the Underlying Portfolios.
Therefore, each Lifestyle Trust will, in addition to its own expenses, such as
certain Other Expenses, bear its pro rata share of the fees and expenses
incurred by the Underlying Portfolios and the investment return of each
Lifestyle Trust will be net of the Underlying Portfolio expenses.
*Based on estimates of payments to be made during the current fiscal year.
**Reflects expenses of the Underlying Portfolios. Manufacturers Securities
Services, LLC has voluntarily agreed to pay the expenses of each Lifestyle Trust
(excluding the expenses of the Underlying Portfolios). This voluntary expense
reimbursement may be terminated at any time. If such expense reimbursement was
not in effect, Total Trust Annual Expenses would be .04% higher (based on
expenses of the Lifestyle Trusts for the fiscal year ended December 31, 1997) as
noted in the chart below:.
<TABLE>
<CAPTION>
Management Other Total Trust Annual
Fees Expenses Expenses
<S> <C> <C> <C>
Lifestyle Aggressive 1000 Trust 0% 1.156% 1.156%
Lifestyle Growth 820 Trust 0% 1.088% 1.088%
Lifestyle Balanced 640 Trust 0% 0.984% 0.984%
Lifestyle Moderate 460 Trust 0% 0.890% 0.890%
Lifestyle Conservative 280 Trust 0% 0.748% 0.748%
</TABLE>
Example
A contract owner would pay the following expenses on a $1,000 investment,
assuming 5% annual return on assets, if the contract owner surrendered the
contract at the end of the applicable time period:
<TABLE>
<CAPTION>
TRUST PORTFOLIO 1 YEAR 3 YEARS 5 YEARS ** 10 YEARS**
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets ........... $ 84 $138 $192 $321
Science & Technology ................... 83 133 184 305
International Small Cap ................ 83 134 187 310
Emerging Growth ........................ 81 129 177 291
Pilgrim Baxter Growth .................. 82 131 180 298
Small/Mid Cap .......................... 81 127 174 285
International Stock .................... 84 136 190 317
Worldwide Growth ....................... 83 135 187 311
Global Equity .......................... 81 126 172 281
Small Company Value .................... 82 130
Equity ................................. 79 120 161 260
</TABLE>
8
<PAGE> 13
<TABLE>
<S> <C> <C> <C> <C>
Growth ................................. 80 124 169 275
Quantitative Equity .................... 78 119 160 257
Blue Chip Growth ....................... 80 125 170 277
Real Estate Securities ................. 78 119 160 257
Value .................................. 80 125 169 276
International Growth and Income ........ 82 129 177 292
Growth and Income ...................... 78 120 161 259
Equity-Income .......................... 79 121 164 265
Balanced ............................... 79 122 165 268
Aggressive Asset Allocation ............ 80 123 166 270
High Yield ............................. 79 122 165 268
Moderate Asset Allocation .............. 79 121 164 265
Conservative Asset Allocation .......... 79 123 166 269
Strategic Bond ......................... 79 122 165 267
Global Government Bond ................. 80 124 168 273
Capital Growth Bond .................... 78 118 158 253
Investment Quality Bond ................ 78 118 158 254
U.S. Government Securities ............. 78 118 157 252
Money Market ........................... 76 112 148 233
Lifestyle Aggressive 1000* ............. 82 129 177 291
Lifestyle Growth 820* .................. 81 127 174 285
Lifestyle Balanced 640* ............... 80 124 168 274
Lifestyle Moderate 460* ............... 79 121 164 265
Lifestyle Conservative 280* ............ 78 117 156 250
</TABLE>
*The Example of Expenses for the Lifestyle Trusts is calculated using the
midpoint of the minimum and maximum fees set forth under Annual Operating
Expenses.
** The Example of Expenses for the Small Company Value Trust contains figures
only for 1 and 3 years, since it is a newly formed Trust.
A contract owner would pay the following expenses on a $1,000 investment,
assuming 5% annual return on assets, if the contract owner annuitized as
provided in the contract or did not surrender the contract at the end of the
applicable time period:
<TABLE>
<CAPTION>
TRUST PORTFOLIO 1 YEAR 3 YEARS 5 YEARS* 10 YEARS*
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets ........... $ 29 $ 89 $152 $321
Science & Technology ................... 28 85 144 305
International Small Cap ................ 28 86 147 310
Emerging Growth ........................ 26 80 137 291
Pilgrim Baxter Growth .................. 27 82 140 298
Small/Mid Cap .......................... 25 78 134 285
International Stock .................... 29 88 150 317
Worldwide Growth ....................... 28 86 147 311
Global Equity .......................... 25 77 132 281
Small Company Value .................... 26 81
Equity ................................. 23 71 121 260
Growth ................................. 24 75 129 275
Quantitative Equity .................... 23 70 120 257
Blue Chip Growth ....................... 25 76 130 277
Real Estate Securities ................. 23 70 120 257
Value .................................. 25 76 129 276
International Growth and Income ........ 26 80 137 292
Growth and Income ...................... 23 70 121 259
Equity-Income .......................... 23 72 124 265
Balanced ............................... 24 73 125 268
Aggressive Asset Allocation ............ 24 74 126 270
</TABLE>
9
<PAGE> 14
<TABLE>
<S> <C> <C> <C> <C>
High Yield ............................. 24 73 125 268
Moderate Asset Allocation .............. 23 72 124 265
Conservative Asset Allocation .......... 24 73 126 269
Strategic Bond ......................... 24 73 125 267
Global Government Bond ................. 24 75 128 273
Capital Growth Bond .................... 22 69 118 253
Investment Quality Bond ................ 22 69 118 254
U.S. Government Securities ............. 22 68 117 252
Money Market ........................... 20 63 108 233
Lifestyle Aggressive 1000 .............. 26 80 137 291
Lifestyle Growth 820 ................... 25 78 134 285
Lifestyle Balanced 640 ................. 24 75 128 274
Lifestyle Moderate 460 ................. 23 72 124 265
Lifestyle Conservative 280 ............. 22 68 116 250
</TABLE>
* The Example of Expenses for the Small Company Value Trust contains figures for
only 1 and 3 years, since it is a newly formed Trust.
For purposes of presenting the foregoing Example, the Company has made
certain assumptions mandated by the SEC. The Company has assumed that, where
applicable, the maximum sales load is deducted, that there are no transfers or
other transactions and that the "Other Expenses" line item under "Trust Annual
Expenses" will remain the same. Such assumptions, which are mandated by the SEC
in an attempt to provide prospective investors with standardized data with which
to compare various annuity contracts, do not take into account certain features
of the contract and prospective changes in the size of the Trust which may
operate to change the expenses borne by contract owners. Consequently, the
amounts listed in the Example above should not be considered a representation of
past or future expenses and actual expenses borne by contract owners may be
greater or lesser than those shown.
In addition, for purposes of calculating the values in the above
Example, the Company has translated the $30 annual administration charge listed
under "Annual Contract Fee" to a 0.063% annual asset charge based on the $47,500
approximate average size. So translated, such charge would be higher for smaller
contracts and lower for larger contracts.
* * * * * * * *
The above summary is qualified in its entirety by the detailed
information appearing elsewhere in this Prospectus and Statement of Additional
Information and the Prospectus and Statement of Additional Information for the
Trust, to which reference should be made. This Prospectus generally describes
only the variable aspects of the contract, except where fixed aspects are
specifically mentioned.
10
<PAGE> 15
GENERAL INFORMATION ABOUT THE MANUFACTURERS LIFE INSURANCE COMPANY OF
NEW YORK, THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE
ACCOUNT A AND MANUFACTURERS INVESTMENT TRUST
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
The Manufacturers Life Insurance Company of New York (the "Company") is
a stock life insurance company organized in 1992 under the laws of the state of
New York. The Company's principal office is located at Corporate Center at Rye,
555 Theodore Fremd Avenue, Suite C-209, Rye, New York 10580-9966.
The Company is a wholly-owned subsidiary of The Manufacturers Life
Insurance Company of North America, formerly North American Security Life
Insurance Company, ("Manulife North America"). Manulife North America is a stock
life insurance company organized under the laws of Delaware in 1979 with its
principal office located at 116 Huntington Avenue, Boston, Massachusetts 02116.
Manulife North America's principal business is offering a variable annuity
contract, similar to that offered by the Company in New York, 49 other states,
the District of Columbia and Puerto Rico.
The ultimate parent of Manulife North America is The Manufacturers Life
Insurance Company ("Manulife"), a Canadian mutual life insurance company based
in Toronto, Canada. Prior to January 1, 1996, Manulife North America was a
wholly owned subsidiary of North American Life Assurance Company ("NAL"), a
Canadian mutual life insurance company. On January 1, 1996 NAL and Manulife
merged with the combined company retaining the name Manulife.
On January 19, 1998, the Board of Directors of Manulife asked the
management of Manulife to prepare a plan for conversion of Manulife from a
mutual life insurance company to an investor-owned, publicly-traded stock
company. Any demutualization plan for Manulife is subject to the approval of the
Manulife Board of Directors and policyholders as well as regulatory approval.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE ACCOUNT A
The Company established The Manufacturers Life Insurance Company of New
York Separate Account A (the " Variable Account") on March 4, 1992 as a separate
account under the laws of New York. The income, gains and losses, whether or not
realized, from assets of the Variable Account are, in accordance with the
contracts, credited to or charged against the Variable Account without regard to
other income, gains or losses of the Company. Nevertheless, all obligations
arising under the contracts are general corporate obligations of the Company.
Assets of the Variable Account may not be charged with liabilities arising out
of any other business of the Company.
The Variable Account is registered with the SEC under the Investment
Company Act of 1940, as amended (the "1940 Act") as a unit investment trust. A
unit investment trust is a type of investment company which invests its assets
in specified securities, such as the shares of one or more investment companies.
Registration under the 1940 Act does not involve supervision by the SEC of the
management or investment policies or practices of the Variable Account. If
deemed by the Company to be in the best interests of persons having voting
rights under the contracts, the Variable Account may be operated as a management
company under the 1940 Act or it may be deregistered under such Act in the event
such registration is no longer required.
There are currently thirty-five sub-accounts within the Variable
Account. The Company reserves the right, subject to prior approval of the New
York Superintendent of Insurance and compliance with applicable law, to add
other sub-accounts, eliminate existing sub-accounts, combine sub-accounts or
transfer assets in one sub-account to another sub-account established by the
Company or an affiliated company.
MANUFACTURERS INVESTMENT TRUST
The assets of each sub-account of the Variable Account are invested in
shares of a corresponding portfolio of the Manufacturers Investment Trust ( the
"Trust"). A description of each portfolio is set forth below. The Trust is
registered under the 1940 Act as an open-end management investment company. Each
of the portfolios is diversified for purposes of the 1940 Act, except for the
Global Government Bond Trust, the Emerging Growth Trust and the five Lifestyle
Trusts, which are non-diversified. The Trust receives investment advisory
services from Manufacturers Securities Services, LLC ("MSS"), successor to NASL
Financial Services, Inc. ("NASL
11
<PAGE> 16
Financial").
The Trust currently has fifteen Subadvisers who manage all of the portfolios:
<TABLE>
<CAPTION>
SUBADVISER SUBADVISER TO
---------- -------------
<S> <C>
Fidelity Management Trust Company Equity Trust
Conservative Asset Allocation Trust
Moderate Asset Allocation Trust
Aggressive Asset Allocation Trust
Founders Asset Management LLC Growth Trust
Worldwide Growth Trust
Balanced Trust
International Small Cap Trust
Fred Alger Management, Inc. Small/Mid Cap Trust
J.P. Morgan Investment Management Inc. International Growth and Income Trust
Manufacturers Adviser Corporation Pacific Rim Emerging Markets Trust
Quantitative Equity Trust
Real Estate Securities Trust
Capital Growth Bond Trust
Money Market Trust
Lifestyle Trusts
Miller Anderson & Sherrerd, LLP Value Trust
High Yield Trust
Morgan Stanley Asset Management Inc. Global Equity Trust
Oechsle International Advisors, L.P. Global Government Bond Trust
Pilgrim Baxter & Associates, Ltd. Pilgrim Baxter Growth Trust
Rosenberg Institutional Equity Management Small Company Value Trust
Rowe Price-Fleming International, Inc. International Stock Trust
Salomon Brothers Asset Management Inc U.S. Government Securities Trust
Strategic Bond Trust
T. Rowe Price Associates, Inc. Science & Technology Trust
Blue Chip Growth Trust
Equity-Income Trust
Warburg Pincus Asset Management, Inc. Emerging Growth Trust
Wellington Management Company, LLP Growth and Income Trust
Investment Quality Bond Trust
</TABLE>
12
<PAGE> 17
The following is a brief description of each portfolio:
The PACIFIC RIM EMERGING MARKETS TRUST seeks long-term growth of capital
by investing in a diversified portfolio that is comprised primarily of
common stocks and equity-related securities of corporations domiciled in
countries in the Pacific Rim region.
The SCIENCE & TECHNOLOGY TRUST seeks long-term growth of capital. Current
income is incidental to the portfolio's objective.
The INTERNATIONAL SMALL CAP TRUST seeks capital appreciation by investing
primarily in securities issued by foreign companies which have total
market capitalization or annual revenues of $1 billion or less. These
securities may represent companies in both established and emerging
economies throughout the world.
The EMERGING GROWTH TRUST seeks maximum capital appreciation by investing
primarily in a portfolio of equity securities of domestic companies. The
Emerging Growth Trust ordinarily will invest at least 65% of its total
assets in common stocks or warrants of emerging growth companies that
represent attractive opportunities for maximum capital appreciation.
The PILGRIM BAXTER GROWTH TRUST seeks capital appreciation by investing
in companies believed by the subadviser to have an outlook for strong
earnings growth and the potential for significant capital appreciation.
The SMALL/MID CAP TRUST seeks long term capital appreciation by investing
at least 65% of its total assets (except during temporary defensive
periods) in small/mid cap equity securities. As used herein small/mid cap
equity securities are equity securities of companies that, at the time of
purchase, have total market capitalization between $500 million and $5
billion.
The INTERNATIONAL STOCK TRUST seeks long-term growth of capital by
investing primarily in common stocks of established, non-U.S. companies.
The WORLDWIDE GROWTH TRUST seeks long-term growth of capital by normally
investing at least 65% of its total assets in equity securities of growth
companies in a variety of markets throughout the world.
The GLOBAL EQUITY TRUST seeks long-term capital appreciation by investing
primarily in equity securities throughout the world, including U.S.
issuers and emerging markets.
The SMALL COMPANY VALUE TRUST seeks long term growth of capital by
investing in equity securities of smaller companies which are traded
principally in the markets of the United States.
The EQUITY TRUST seeks growth of capital, by investing primarily in
common stocks of United States issuers and securities convertible into or
carrying the right to buy common stocks.
The GROWTH TRUST seeks long term growth of capital by investing at least
65% of the portfolio's total assets in common stocks of well-established,
high-quality growth companies that the subadviser believes have the
potential to increase earnings faster than the rest of the market.
The QUANTITATIVE EQUITY TRUST seeks to achieve intermediate and long-term
growth through capital appreciation and current income by investing in
common stocks and other equity securities of well established companies
with promising prospects for providing an above average rate of return.
The BLUE CHIP GROWTH TRUST seeks to achieve long-term growth of capital.
Current income is a secondary objective and many of the stocks in the
portfolio are expected to pay dividends.
The REAL ESTATE SECURITIES TRUST seeks to achieve a combination of
long-term capital appreciation and satisfactory current income by
investing in real estate related equity and debt securities.
The VALUE TRUST seeks to realize an above-average total return over a
market cycle of three to
13
<PAGE> 18
five years, consistent with reasonable risk by investing primarily in
common and preferred stocks, convertible securities, rights and warrants
to purchase common stocks, ADRs and other equity securities of companies
with equity capitalizations usually greater than $300 million.
The INTERNATIONAL GROWTH AND INCOME TRUST seeks long-term growth of
capital and income by investing, under normal circumstances, at least 65%
of its total assets in equity securities of foreign issuers. The
Portfolio may also invest in debt securities of corporate or sovereign
issuers rated A or higher by Moody's Investor Services, Inc. or Standard
and Poor's Corporation or, if unrated, of equivalent credit quality as
determined by the subadviser.
The GROWTH AND INCOME TRUST seeks long-term growth of capital and income,
consistent with prudent investment risk, by investing primarily in a
diversified portfolio of common stocks of United States issuers which the
subadviser believes are of high quality.
The EQUITY-INCOME TRUST seeks to provide substantial dividend income and
also long term capital appreciation by investing primarily in
dividend-paying common stocks, particularly of established companies with
favorable prospects for both increasing dividends and capital
appreciation.
The BALANCED TRUST seeks current income and capital appreciation by
investing in a balanced portfolio of common stocks, U.S. and foreign
government obligations and a variety of corporate fixed-income
securities.
The HIGH YIELD TRUST seeks to realize an above-average total return over
a market cycle of three to five years, consistent with reasonable risk by
investing primarily in high yield debt securities, including corporate
bonds and other fixed-income securities.
The AUTOMATIC ASSET ALLOCATION TRUSTS seek the highest potential total
return consistent with a specified level of risk tolerance --
conservative, moderate or aggressive -- by investing primarily in the
kinds of securities in which the Equity, Investment Quality Bond, U.S.
Government Securities and Money Market Trusts may invest.
- The AGGRESSIVE ASSET ALLOCATION TRUST seeks the highest total
return consistent with an aggressive level of risk tolerance. This
Trust attempts to limit the decline in portfolio value in very
adverse market conditions to 15% over any three year period.
- The MODERATE ASSET ALLOCATION TRUST seeks the highest total
return consistent with a moderate level of risk tolerance. This
Trust attempts to limit the decline in portfolio value in very
adverse market conditions to 10% over any three year period.
- The CONSERVATIVE ASSET ALLOCATION TRUST seeks the highest
total return consistent with a conservative level of risk tolerance.
This Trust attempts to limit the decline in portfolio value in very
adverse market conditions to 5% over any three year period.
The STRATEGIC BOND TRUST seeks a high level of total return consistent
with preservation of capital by giving its subadviser broad discretion to
deploy the portfolio's assets among certain segments of the fixed-income
market as the subadviser believes will best contribute to achievement of
the portfolio's investment objective.
The GLOBAL GOVERNMENT BOND TRUST seeks a high level of total return by
placing primary emphasis on high current income and the preservation of
capital, by investing primarily in a global portfolio of high-quality,
fixed-income securities of foreign and United States governmental
entities and supranational issuers.
The CAPITAL GROWTH BOND TRUST seeks to achieve growth of capital by
investing in medium-grade or better debt securities, with income as a
secondary consideration. The Capital Growth Bond Trust differs from most
"bond" funds in that its primary objective is capital appreciation, not
income.
14
<PAGE> 19
The INVESTMENT QUALITY BOND TRUST seeks a high level of current income
consistent with the maintenance of principal and liquidity, by investing
primarily in a diversified portfolio of investment grade corporate bonds
and U.S. Government bonds with intermediate to longer term maturities.
The portfolio may also invest up to 20% of its assets in non-investment
grade fixed income securities.
The U.S. GOVERNMENT SECURITIES TRUST seeks a high level of current income
consistent with preservation of capital and maintenance of liquidity, by
investing in debt obligations and mortgage-backed securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
derivative securities such as collateralized mortgage obligations backed
by such securities.
The MONEY MARKET TRUST seeks maximum current income consistent with
preservation of principal and liquidity, by investing in high quality
money market instruments with maturities of 397 days or less issued
primarily by United States entities.
The LIFESTYLE AGGRESSIVE 1000 TRUST seeks to provide long term growth of
capital (current income is not a consideration) by investing 100% of the
Lifestyle Trust's assets in other portfolios of the Trust ("Underlying
Portfolios") which invest primarily in equity securities.
The LIFESTYLE GROWTH 820 TRUST seeks to provide long term growth of
capital with consideration also given to current income by investing
approximately 20% of the Lifestyle Trust's assets in Underlying
Portfolios which invest primarily in fixed income securities and
approximately 80% of its assets in Underlying Portfolios which invest
primarily in equity securities.
The LIFESTYLE BALANCED 640 TRUST seeks to provide a balance between a
high level of current income and growth of capital with a greater
emphasis given to capital growth by investing approximately 40% of the
Lifestyle Trust's assets in Underlying Portfolios which invest primarily
in fixed income securities and approximately 60% of its assets in
Underlying Portfolios which invest primarily in equity securities.
The LIFESTYLE MODERATE 460 TRUST seeks to provide a balance between a
high level of current income and growth of capital with a greater
emphasis given to high income by investing approximately 60% of the
Lifestyle Trust's assets in Underlying Portfolios which invest primarily
in fixed income securities and approximately 40% of its assets in
Underlying Portfolios which invest primarily in equity securities.
The LIFESTYLE CONSERVATIVE 280 TRUST seeks to provide a high level of
current income with some consideration also given to growth of capital by
investing approximately 80% of the Lifestyle Trust's assets in Underlying
Portfolios which invest primarily in fixed income securities and
approximately 20% of its assets in Underlying Portfolios which invest
primarily in equity securities.
In pursuing the Strategic Bond, High Yield and Investment Quality Bond
Trusts' investment objective, each portfolio expects to invest a portion of its
assets in high yield securities, commonly known as "junk bonds" which also
present a high degree of risk. The risks of these securities include price
volatility and risk of default in the payment of interest and principal. See
"Risk Factors Relating to High Yield Securities" contained in the Trust
Prospectus before investing in any of these Trusts.
In pursuing the Pacific Rim Emerging Markets, International Stock,
Worldwide Growth, Global Equity, Strategic Bond, International Growth and
Income, International Small Cap, High Yield and Global Government Bond Trusts'
investment objective, each portfolio may invest up to 100% of its assets in
foreign securities, which may present additional risks. See "Foreign Securities"
contained in the Trust Prospectus before investing in any of these Trusts.
If the shares of a Trust portfolio are no longer available for investment
or in the Company's judgment investment in a Trust portfolio becomes
inappropriate in view of the purposes of the Variable Account, the Company may
eliminate the shares of a portfolio and substitute shares of another portfolio
of the Trust or another open-end registered investment company. Substitution may
be made with respect to both existing investments and the investment of future
purchase payments. However, no such substitution will be made without notice to
the contract owner and prior approval of the SEC to the extent required by the
1940 Act.
15
<PAGE> 20
The Company will vote shares of the Trust portfolios held in the Variable
Account at meetings of shareholders of the Trust in accordance with voting
instructions received from the persons having the voting interest under the
contracts. The number of portfolio shares for which voting instructions may be
given will be determined by the Company in the manner described below, not more
than 90 days prior to the meeting of the Trust. Trust proxy material will be
distributed to each person having the voting interest under the contract
together with appropriate forms for giving voting instructions. Portfolio shares
held in the Variable Account that are attributable to contract owners and as to
which no timely instructions are received, and portfolio shares held in the
Variable Account that are beneficially owned by the Company will be voted by the
Company in proportion to the instructions received.
Prior to the maturity date, the person having the voting interest under a
contract is the contract owner and the number of votes as to each portfolio for
which voting instructions may be given is determined by dividing the value of
the investment account corresponding to the sub-account in which such portfolio
shares are held by the net asset value per share of that portfolio. After the
maturity date, the person having the voting interest under a contract is the
annuitant and the number of votes as to each portfolio for which voting
instructions may be given is determined by dividing the reserve for the contract
allocated to the sub-account in which such portfolio shares are held by the net
asset value per share of that portfolio. Generally, the number of votes tends to
decrease as annuity payments progress since the amount of reserves attributable
to a contract will usually decrease after commencement of annuity payments. The
Company reserves the right to make any changes in the voting rights described
above that may be permitted by the Federal securities laws or regulations or
interpretations of these laws or regulations.
A full description of the Trust, including the investment objectives,
policies and restrictions of each of the portfolios is contained in the
Prospectus for the Trust which accompanies this Prospectus and should be read by
a prospective purchaser before investing.
DESCRIPTION OF THE CONTRACT
ACCUMULATION PROVISIONS
PURCHASE PAYMENTS
Purchase payments are paid to the Company at its Annuity Service Office.
The minimum purchase payment is $30, however, at least $300 must be paid during
the first contract year. Purchase payments may be made at any time. The Company
may provide for purchase payments to be automatically withdrawn from a contract
owner's bank account on a periodic basis. If a purchase payment would cause the
contract value to exceed $1,000,000 or the contract value already exceeds
$1,000,000, additional purchase payments will be accepted only with the prior
approval of the Company.
The Company may, at its option, cancel a contract at the end of any three
consecutive contract years in which no purchase payments have been made, if both
(i) the total purchase payments made over the life of the contract, less any
withdrawals, are less than $2,000; and (ii) the contract value at the end of
such three year period is less than $2,000. The cancellation of contract
privileges may vary in certain states in order to comply with the requirements
of insurance laws and regulations in such state. Upon cancellation the Company
will pay the contract owner the contract value computed as of the valuation
period during which the cancellation occurs less any debt and less the annual
$30 administration fee. The amount paid will be treated as a withdrawal for
Federal tax purposes and thus may be subject to income tax and to a 10% penalty
tax (see "FEDERAL TAX MATTERS").
Purchase payments are allocated among the investment options in
accordance with the percentages designated by the contract owner. In addition,
contract owners have the option to participate in the Guarantee Plus Program
administered by the Company. Under the Guarantee Plus Program the initial
purchase payment is split between the fixed and variable investment options. A
percentage of the initial purchase payment is allocated to the chosen fixed
account, such that, at the end of the guaranteed period the fixed account will
have grown to an amount at least equal to the total initial purchase payment.
The percentage depends upon the current interest rate of the fixed investment
option. The balance of the initial purchase payment is allocated among the
variable investment options as indicated on the contract specifications page.
Contract owners may elect to participate in the Guarantee Plus Program and may
obtain full information concerning the program and its restrictions from their
securities dealers or the Annuity Service Office. The contract owner may change
the allocation of subsequent purchase payments at any time upon written notice
to the Company.
16
<PAGE> 21
ACCUMULATION UNITS
The Company will establish an investment account for the contract owner
for each variable account investment option to which such contract owner
allocates purchase payments. Purchase payments are credited to such investment
accounts in the form of accumulation units. The following discussion of
accumulation units, the value of accumulation units and the net investment
factor formula pertains only to the accumulations in the variable account
investment options. The parallel discussion regarding accumulations in the fixed
account investment options appears elsewhere in this Prospectus (see "FIXED
ACCOUNT INVESTMENT OPTIONS").
The number of accumulation units to be credited to each investment
account is determined by dividing the net purchase payment allocated to that
investment account by the value of an accumulation unit for that investment
account for the valuation period during which the purchase payment is received
at the Company's Annuity Service Office complete with all necessary information
or, in the case of the first purchase payment, pursuant to the procedures
described below.
Initial purchase payments received by mail will usually be credited in
the valuation period during which received at the Annuity Service Office, and in
any event not later than two business days after receipt of all information
necessary for processing issuance of the contract. The applicant will be
informed of any deficiencies preventing processing if the contract cannot be
issued and the purchase payment credited within two business days after receipt.
If the deficiencies are not remedied within five business days after receipt,
the purchase payment will be returned promptly to the applicant, unless the
applicant specifically consents to the Company's retaining the purchase payment
until all necessary information is received. Initial purchase payments received
by wire transfer from broker-dealers will be credited in the valuation period
during which received where such broker-dealers have made special arrangements
with the Company.
VALUE OF ACCUMULATION UNITS
The value of accumulation units will vary from one valuation period to
the next depending upon the investment results of the particular sub-accounts to
which purchase payments are allocated. The value of an accumulation unit for
each sub-account was arbitrarily set at $10 or $12.50 for the first valuation
period under contracts issued by the Company or an affiliate of the Company. The
value of an accumulation unit for any subsequent valuation period is determined
by multiplying the value of an accumulation unit for the immediately preceding
valuation period by the net investment factor for such sub-account (described
below) for the valuation period for which the value is being determined.
NET INVESTMENT FACTOR
The net investment factor is an index used to measure the investment
performance of a sub-account from one valuation period to the next. The net
investment factor for each sub-account for any valuation period is determined by
dividing (a) by (b) and subtracting (c) from the result:
Where (a) is:
(1) the net asset value per share of a portfolio share held in the
sub-account determined at the end of the current valuation period,
plus
(2) the per share amount of any dividend or capital gain
distributions made by the portfolio on shares held in the
sub-account if the "ex-dividend" date occurs during the current
valuation period.
Where (b) is:
the net asset value per share of a portfolio share held in the
sub-account determined as of the end of the immediately preceding
valuation period.
Where (c) is:
a factor representing the charges deducted from the sub-account on
a daily basis for administrative expenses and mortality and
expense risks. Such factor is equal on an annual basis to 1.40%
(0.15%
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for administrative expenses and 1.25% for mortality and expense
risks). The charges deducted from the sub-account reduce the value
of the accumulation units for the sub-account.
The net investment factor may be greater or less than or equal to
one; therefore, the value of an accumulation unit may increase,
decrease or remain the same.
TRANSFERS AMONG INVESTMENT OPTIONS
Before the maturity date the contract owner may transfer amounts among
the variable account investment options and from such investment options to the
fixed account investment options at any time and without charge upon written
notice to the Company. Accumulation units will be canceled from the investment
account from which amounts are transferred and credited to the investment
account to which amounts are transferred. The Company will effect such transfers
so that the contract value on the date of the transfer will not be affected by
the transfer. The contract owner must transfer at least $300 or, if less, the
entire value of the investment account. If after the transfer the amount
remaining in the investment account is less than $100, then the Company will
transfer the entire amount instead of the requested amount. The Company reserves
the right to limit, upon notice, the maximum number of transfers a contract
owner may make to one per month or six at any time within a contract year. In
addition, the Company reserves the right to defer the transfer privilege at any
time that the Company is unable to purchase or redeem shares of the Trust
portfolios. The Company also reserves the right to modify or terminate the
transfer privilege at any time in accordance with applicable law.
MAXIMUM NUMBER OF INVESTMENT OPTIONS
Due to current administrative capabilities, a contract owner is limited
to a maximum of 17 investment options (including all fixed account investment
options) during the period prior to the maturity date of the contract (the
"Contract Period"). In calculating this limit for each contract owner,
investment options to which the contract owner has allocated purchase payments
at any time during the Contract Period will be counted toward the 17 maximum
even if the contract owner no longer has contract value allocated to these
investment options.
SPECIAL TRANSFER SERVICES - DOLLAR COST AVERAGING
The Company administers a Dollar Cost Averaging ("DCA") program which
enables a contract owner to pre-authorize a periodic exercise of the contractual
transfer rights described above. Contract owners entering into a DCA agreement
instruct the Company to transfer monthly a predetermined dollar amount from any
sub-account or the one year fixed account investment option to other
sub-accounts until the amount in the sub-account from which the transfer is made
or one year fixed account investment option is exhausted. A special one year
fixed account investment option (the "One Year DCA Account') may be established
under the DCA program to make automatic monthly transfers. In the first eleven
months the amount transferred is equal to one eleventh of the amount allocated
to the One Year DCA Account and in the twelfth month the remaining balance of
the One Year DCA Account is transferred. Only initial and subsequent net
payments may be allocated to the One Year DCA Account. The DCA program is
generally suitable for contract owners making a substantial deposit to the
contract and who desire to control the risk of investing at the top of a market
cycle. The DCA program allows such investments to be made in equal installments
over time in an effort to reduce such risk. Contract owners interested in the
DCA program may elect to participate in the program on the contract application
or by separate application. Contract owners may obtain a separate application
and full information concerning the program and its restrictions from their
securities dealer or the Annuity Service Office. There is no charge for
participation in the DCA program.
ASSET REBALANCING PROGRAM
The Company administers an Asset Rebalancing Program which enables a contract
owner to indicate to the Company the percentage levels he or she would like to
maintain in particular portfolios. The contract owner's contract value will be
automatically rebalanced, pursuant to the schedule described below, to maintain
the indicated percentages by transfers among the portfolios. (Fixed Account
Investment Options are not eligible for participation in the Asset Rebalancing
Program.) The entire value of the variable investment accounts must be included
in the Asset Rebalancing Program. Other investment programs, such as the DCA
program, or other transfers or withdrawals may not work in concert with the
Asset Rebalancing Program. Therefore, contract owners should monitor their use
of these other programs and any other transfers or withdrawals while the Asset
Rebalancing Program is being used. Contract owners
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<PAGE> 23
interested in the Asset Rebalancing Program may obtain a separate application
and full information concerning the program and its restrictions from their
securities dealer or the Annuity Service Office. There is no charge for
participation in the Asset Rebalancing Program.
For rebalancing programs begun on or after October 1, 1996 asset
rebalancing will only be permitted on the following time schedules:
(i) quarterly on the 25th day of the last month of the quarter (or the
next business day if the 25th is not a business day);
(ii) semi-annually on June 25th or December 26th (or the next business
day if these dates are not business days); or
(iii) annually on December 26th (or the next business day if December
26th is not a business day).
Rebalancing will continue to take place on the last business day of every
calendar quarter for rebalancing programs begun prior to October 1, 1996.
WITHDRAWALS
Prior to the earlier of the maturity date or the death of the contract
owner, the owner may withdraw all or a portion of the contract value upon
written request, complete with all necessary information to the Company's
Annuity Service Office. For certain qualified contracts, exercise of the
withdrawal right may require the consent of the qualified plan participant's
spouse under the Code and regulations promulgated by the Treasury Department. In
the case of a total withdrawal, the Company will pay the contract value as of
the date of receipt of the request at its Annuity Service Office, less the
annual $30 administration fee if applicable, any debt and any applicable
withdrawal charge, and the contract will be canceled. In the case of a partial
withdrawal, the Company will pay the amount requested and cancel that number of
accumulation units credited to each investment account necessary to equal the
amount withdrawn from each investment account plus any applicable withdrawal
charge deducted from such investment account (see "CHARGES AND DEDUCTIONS").
When making a partial withdrawal, the contract owner should specify the
investment options from which the withdrawal is to be made. The amount requested
from an investment option may not exceed the value of that investment option
less any applicable withdrawal charge. If the contract owner does not specify
the investment options from which a partial withdrawal is to be taken, a partial
withdrawal will be taken from the variable account investment options until
exhausted and then from the fixed account investment options, beginning with the
shortest guarantee period first and ending with the longest guarantee period
last. If the partial withdrawal is less than the total value in the variable
account investment options, the withdrawal will be taken pro rata from the
variable account investment options: taking from each such variable account
investment option an amount which bears the same relationship to the total
amount withdrawn as the value of such variable account investment option bears
to the total value of all the contract owner's investments in variable account
investment options.
For the rules governing the order and manner of withdrawals from the
fixed account investment options, see "FIXED ACCOUNT INVESTMENT OPTIONS".
There is no limit on the frequency of partial withdrawals; however, the
amount withdrawn must be at least $300 or, if less, the entire balance in the
investment option. If after the withdrawal (and deduction of any withdrawal
charge) the amount remaining in the investment option is less than $100, the
Company will treat the partial withdrawal as a withdrawal of the entire amount
held in the investment option. If a partial withdrawal plus any applicable
withdrawal charge would reduce the contract value to less than $300, the Company
will treat the partial withdrawal as a total withdrawal of the contract value.
The amount of any withdrawal from the variable account investment options
will be paid promptly, and in any event within seven days of receipt of the
request, complete with all necessary information at the Company's Annuity
Service Office, except that the Company reserves the right to defer the right of
withdrawal or postpone payments for any period when: (1) the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (2)
trading on the New York Stock Exchange is restricted, (3) an emergency exists as
a result of which disposal of securities held in the Variable Account is not
reasonably practicable or it is not reasonably practicable to determine the
value of the Variable Account's net assets, or (4) the SEC, by order, so permits
for the protection of security holders; provided that applicable rules and
regulations of the SEC shall govern as to whether the conditions
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<PAGE> 24
described in (2) and (3) exist.
Withdrawals from the contract may be subject to income tax and a 10%
penalty tax. Withdrawals are permitted from contracts issued in connection with
Section 403(b) qualified plans only under limited circumstances (see "FEDERAL
TAX MATTERS").
SPECIAL WITHDRAWAL SERVICES - THE INCOME PLAN
The Company administers an Income Plan ("IP") which enables a contract
owner to pre-authorize a periodic exercise of the contractual withdrawal rights
described above. Contract owners entering into an IP agreement instruct the
Company to withdraw a level dollar amount from specified investment options on a
periodic basis. The total of IP withdrawals in a contract year is limited to not
more than 10% of the purchase payments made to ensure that no withdrawal or
market value charge will ever apply to an IP withdrawal. If an additional
withdrawal is made from a contract participating in an IP, the IP will terminate
automatically and may be reinstated only on or after the next contract
anniversary pursuant to a new application. The IP is not available to contracts
participating in the dollar cost averaging program or for which purchase
payments are being automatically deducted from a bank account on a periodic
basis. IP withdrawals will be withdrawn without withdrawal and market value
charges. IP withdrawals may, however, be subject to income tax and a 10% penalty
tax (see "FEDERAL TAX MATTERS"). Contract owners interested in an IP may obtain
a separate application and full information concerning the program and its
restrictions from their securities dealer or the Annuity Service Office.
LOANS
The Company offers a loan privilege only to owners of contracts issued in
connection with Section 403(b) qualified plans that are not subject to Title I
of ERISA. Owners of such contracts may obtain loans using the contract as the
only security for the loan. Loans are subject to provisions of the Code and to
applicable retirement program rules (collectively, "loan rules"). Tax advisors
and retirement plan fiduciaries should be consulted prior to exercising loan
privileges.
Under the terms of the contract, the maximum loan value is equal to 80%
of the contract value, although loan rules may serve to reduce such maximum loan
value in some cases. The amount available for a loan at any given time is the
loan value less any outstanding debt. Debt equals the amount of any loans plus
accrued interest. Loans will be made only upon written request from the owner.
The Company will make loans within seven days of receiving a properly completed
loan application (applications are available from the Annuity Service Office),
subject to postponement under the same circumstances that payment of withdrawals
may be postponed (see "WITHDRAWALS").
When an owner requests a loan, the Company will reduce the owner's
investment in the investment accounts and transfer the amount of the loan to the
loan account, a part of the Company's general account. The owner may designate
the investment accounts from which the loan is to be withdrawn. Absent such a
designation, the amount of the loan will be withdrawn from the investment
accounts in accordance with the rules for making partial withdrawals (see
"WITHDRAWALS"). The contract provides that owners may repay contract debt at any
time. Under applicable loan rules, loans generally must be repaid within five
years, repayments must be made at least quarterly and repayments must be made in
substantially equal amounts. When a loan is repaid, the amount of the repayment
will be transferred from the loan account to the investment accounts. The owner
may designate the investment accounts to which a repayment is to be allocated.
Otherwise, the repayment will be allocated in the same manner as the owner's
most recent purchase payment. On each contract anniversary, the Company will
transfer from the investment accounts to the loan account the amount by which
the debt on the contract exceeds the balance in the loan account.
The Company charges interest of 6% per year on contract loans. Loan
interest is payable in arrears and, unless paid in cash, the accrued loan
interest is added to the amount of the debt and bears interest at 6% as well.
The Company credits interest with respect to amounts held in the loan account at
a rate of 4% per year. Consequently, the net cost of loans under the contract is
2%. If on any date debt under a contract exceeds the contract value, the
contract will be in default. In such case the owner will receive a notice
indicating the payment needed to bring the contract out of default and will have
a thirty-one day grace period within which to pay the default amount. If the
required payment is not made within the grace period, the contract may be
foreclosed (terminated without value).
The amount of any debt will be deducted from the death benefit (see
"DEATH BENEFIT BEFORE
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<PAGE> 25
MATURITY DATE"). In addition, debt, whether or not repaid, will have a permanent
effect on the contract value because the investment results of the investment
accounts will apply only to the unborrowed portion of the contract value. The
longer debt is outstanding, the greater the effect is likely to be. The effect
could be favorable or unfavorable. If the investment results are greater than
the rate being credited on amounts held in the loan account while the debt is
outstanding, the contract value will not increase as rapidly as it would have if
no debt were outstanding. If investment results are below that rate, the
contract value will be higher than it would have been had no debt been
outstanding.
DEATH BENEFIT BEFORE MATURITY DATE
In General. The following discussion applies principally to contracts
that are not issued in connection with qualified plans, i.e., a "non-qualified
contract." The requirements of the tax law applicable to qualified plans, and
the tax treatment of amounts held and distributed under such plans, are quite
complex. Accordingly, a prospective purchaser of the contract to be used in
connection with a qualified plan should seek competent legal and tax advice
regarding the suitability of the contract for the situation involved and the
requirements governing the distribution of benefits, including death benefits,
from a contract used in the plan. In particular, a prospective purchaser who
intends to use the contract in connection with a qualified plan should consider
that the contract provides a death benefit (described below) that could be
characterized as an incidental death benefit. There are limits on the amount of
incidental benefits that may be provided under certain qualified plans and the
provision of such benefits may result in currently taxable income to plan
participants (see "FEDERAL TAX MATTERS").
Amount of Death Benefit. If any contract owner dies and the oldest owner
had an attained age of less than 81 years on the contract date, the death
benefit will be determined as follows: During the first contract year, the death
benefit will be the greater of: (a) the contract value or (b) the sum of all
purchase payments made, less any amounts deducted in connection with partial
withdrawals. During any subsequent contract year, the death benefit will be the
greater of: (a) the contract value or (b) the death benefit on the last day of
the previous contract year, plus any purchase payments made and less any amounts
deducted in connection with partial withdrawals since then. If any contract
owner dies on or after his or her 81st birthday, the death benefit will be the
greater of (a) contract value or (b) the death benefit on the last day of the
contract year ending just prior to the owner's 81st birthday, plus any payments
made, less amounts deducted in connection with partial withdrawals.
If any contract owner dies and the oldest owner had an attained age of 81
years or greater on the contract date, the death benefit will be the greater of:
(a) the contract value or (b) the excess of (i) the sum of all purchase payments
over (ii) the sum of any amounts deducted in connection with partial
withdrawals.
Determination of Death Benefit. The determination of the death benefit
will be made on the date written notice and proof of death, as well as all
required claims forms, are received at the Company's Annuity Service Office. No
person is entitled to the death benefit until this time. In addition, partial
withdrawals include amounts applied under an annuity option under the contract.
Also, amounts deducted in connection with partial withdrawals include charges
imposed on a partial withdrawal, but not amounts charged to the contract in
payment of the annual administration fee. If there is any debt under the
contract, the death benefit equals the death benefit, as described above, less
such debt.
Payment of Death Benefit. The Company will pay the death benefit (which,
as defined above, is net of any debt) to the beneficiary if any contract owner
dies before the maturity date. If there is a surviving contract owner, that
contract owner will be deemed to be the beneficiary. No death benefit is payable
on the death of any annuitant (who is not an owner), except that if any contract
owner is not a natural person, the death of any annuitant will be treated as the
death of an owner. On the death of the last surviving annuitant, the contract
owner, if a natural person, will become the annuitant unless the contract owner
designates another person as the annuitant.
The death benefit may be taken in the form of a lump sum immediately. If
not taken immediately, the contract will continue subject to the following: (1)
The beneficiary will become the contract owner. (2) Any excess of the death
benefit over the contract value will be allocated to the owner's investment
accounts in proportion to their relative values on the date of the Company's
receipt at its Annuity Service Office of due proof of the owner's death. (3) No
additional purchase payments may be made. (4) If the beneficiary is not the
deceased's owner spouse, distribution of the contract owner's entire interest in
the contract must be made within five years of the owner's death, or
alternatively, distribution may be made as an annuity, under one of the annuity
options described below, which begins within one year of the
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owner's death and is payable over the life of the beneficiary or over a period
not extending beyond the life expectancy of the beneficiary. Upon the death of
the beneficiary, the death benefit will equal the contract value which must be
distributed immediately in a single sum. (5) If the owner's spouse is the
beneficiary, the spouse continues the contract as the new owner. In such a case,
the distribution rules described in "(4)" applicable when a contract owner dies
will apply when the spouse, as the owner, dies. (6) If any contract owner dies
and the oldest owner had an attained age of less than 81 on the contract date,
withdrawal charges are not applied on payment of the death benefit (whether
taken through a partial or total withdrawal or applied under an annuity option).
If any contract owner dies and the oldest owner had an attained age of 81 or
greater on the contract date, withdrawal charges will be assessed only upon
payment of the death benefit (if such charges are otherwise applicable), so that
if the death benefit is paid in a subsequent year, a lower withdrawal charge
will be applicable.
If any annuitant is changed and any contract owner is not a natural
person, the entire interest in the contract must be distributed to the contract
owner within five years.
A substitution or addition of any contract owner may result in resetting
the death benefit to an amount equal to the contract value as of the date of the
change and treating such value as a payment made on that date for purposes of
computing the amount of the death benefit. In addition, all payments made and
all amounts deducted in connection with partial withdrawals prior to the date of
change will not be considered in the determination of the death benefit.
Furthermore, the death benefit on the last day of the previous contract year
will be set to zero as of the date of the change. No such change in death
benefit will be made if the individual whose death will cause the death benefit
to be paid is the same after the change in ownership or if ownership is
transferred to the owner's spouse.
Death benefits will be paid within seven days of the date the amount of
the death benefit is determined, as described above, subject to postponement
under the same circumstances that payment of withdrawals may be postponed (see
"WITHDRAWALS").
ANNUITY PROVISIONS
GENERAL
The proceeds of the contract payable on death, withdrawal or the contract
maturity date may be applied to the annuity options described below, subject to
the distribution of death benefits provisions (see "DEATH BENEFIT BEFORE
MATURITY DATE").
Generally, annuity benefits under the contract will begin on the maturity
date. The maturity date is the date specified on the contract specifications
page, unless changed. If no date is specified, the maturity date is the maximum
maturity date described below. The maximum maturity date is the first day of the
month following the 90th birthday of the annuitant. The contract owner may
specify a different maturity date at any time by written request at least one
month before both the previously specified and the new maturity date. The new
maturity date may not be later than the first day of the month following the
90th birthday of the annuitant (see "FEDERAL TAX MATTERS -- Taxation of
Annuities in General - Delayed Maturity Dates"). Distributions from qualified
contracts may be required before the maturity date (see "FEDERAL TAX MATTERS
- -- Qualified Retirement Plans").
The contract owner may select the frequency of annuity payments. However,
if the contract value at the maturity date is such that a monthly payment would
be less than $20, the Company may pay the contract value, less any debt, in one
lump sum to the annuitant on the maturity date.
ANNUITY OPTIONS
Annuity benefits are available under the contract on a fixed or variable
basis, or any combination of fixed and variable bases. Upon purchase of the
contract, and on or before the maturity date, the contract owner may select one
or more of the annuity options described below on a fixed and/or variable basis
(except Option 5 which is available on a fixed basis only) or choose an
alternate form of settlement acceptable to the Company. If an annuity option is
not selected, the Company will provide as a default option annuity payments on a
fixed, variable or combined fixed and variable basis in proportion to the
Investment Account Value of each investment option at the maturity date, such
payments to be made for a period certain of 10 years and continuing thereafter
during the lifetime of the annuitant. Treasury Department regulations may
preclude the availability of certain annuity options in connection with certain
qualified contracts.
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The following annuity options are guaranteed in the contract.
Option 1(a): Non-Refund Life Annuity - An annuity with payments during
the lifetime of the annuitant. No payments are due after the death of the
annuitant. Since there is no guarantee that any minimum number of
payments will be made, an annuitant may receive only one payment if the
annuitant dies prior to the date the second payment is due.
Option 1(b): Life Annuity with Payments Guaranteed for 10 Years - An
annuity with payments guaranteed for 10 years and continuing thereafter
during the lifetime of the annuitant. Since payments are guaranteed for
10 years, annuity payments will be made to the end of such period if the
annuitant dies prior to the end of the tenth year.
Option 2(a): Joint & Survivor Non-Refund Life Annuity - An annuity with
payments during the lifetimes of the annuitant and a designated
co-annuitant. No payments are due after the death of the last survivor of
the annuitant and co-annuitant. Since there is no guarantee that any
minimum number of payments will be made, an annuitant or co-annuitant may
receive only one payment if the annuitant and co-annuitant die prior to
the date the second payment is due.
Option 2(b): Joint & Survivor Life Annuity with Payments Guaranteed for
10 Years An annuity with payments guaranteed for 10 years and continuing
thereafter during the lifetimes of the annuitant and a designated
co-annuitant. Since payments are guaranteed for 10 years, annuity
payments will be made to the end of such period if both the annuitant and
the co-annuitant die prior to the end of the tenth year.
In addition to the foregoing annuity options which the Company is
contractually obligated to offer at all times, the Company currently offers the
following annuity options. The Company may cease offering the following annuity
options at any time and may offer other annuity options in the future.
Option 3: Life annuity with Payments Guaranteed for 5, 15 or 20 Years -
An Annuity with payments guaranteed for 5, 15 or 20 years and continuing
thereafter during the lifetime of the annuitant. Since payments are
guaranteed for the specific number of years, annuity payments will be
made to the end of the last year of the 5, 15 or 20 year period.
Option 4: Joint & Two-Thirds Survivor Non-Refund Life Annuity - An
annuity with full payments during the joint lifetime of the annuitant and
a designated co-annuitant and two-thirds payments during the lifetime of
the survivor. Since there is no guarantee that any minimum number of
payments will be made, an annuitant or co-annuitant may receive only one
payment if the annuitant and co-annuitant die prior to the date the
second payment is due.
Option 5: Period Certain Only Annuity for 5, 10, 15 or 20 years - An
annuity with payments for a 5, 10, 15 or 20 year period and no payments
thereafter.
DETERMINATION OF AMOUNT OF THE FIRST VARIABLE ANNUITY PAYMENT
The first variable annuity payment is determined by applying that portion
of the contract value used to purchase a variable annuity, measured as of a date
not more than ten business days prior to the maturity date (minus any applicable
premium taxes), to the annuity tables contained in the contract. The rates
contained in such tables depend upon the annuitant's sex and age (as adjusted
depending on the annuitant's year of birth) and the annuity option selected.
Under such tables, the longer the life expectancy of the annuitant under any
life annuity option or the duration of any period for which payments are
guaranteed under the option, the smaller amount will be the amount of the first
monthly variable annuity payment. The rates are based on the 1983 Table A
projected at Scale G, assume births in year 1942 and reflect an assumed interest
rate of 3% per year.
ANNUITY UNITS AND THE DETERMINATION OF SUBSEQUENT VARIABLE ANNUITY PAYMENTS
Variable annuity payments subsequent to the first will be based on the
investment performance of the sub-
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accounts selected. The amount of such subsequent payments is determined by
dividing the amount of the first annuity payment from each sub-account by the
annuity unit value of such sub-account (as of the same date the contract value
to effect the annuity was determined) to establish the number of annuity units
which will thereafter be used to determine payments. This number of annuity
units for each sub-account is then multiplied by the appropriate annuity unit
value as of a uniformly applied date not more than ten business days before the
annuity payment is due, and the resulting amounts for each sub-account are then
totaled to arrive at the amount of the payment to be made. The number of annuity
units remains constant during the annuity payment period. A pro-rata portion of
the administration fee will be deducted from each annuity payment.
The value of an annuity unit for each sub-account for any valuation
period is determined by multiplying the annuity unit value for the immediately
preceding valuation period by the net investment factor for that sub-account
(see "NET INVESTMENT FACTOR") for the valuation period for which the annuity
unit value is being calculated and by a factor to neutralize the assumed
interest rate.
A 3% assumed interest rate is built into the annuity tables in the
contract used to determine the first variable annuity payment. A higher
assumption would mean a larger first annuity payment, but more slowly rising
subsequent payments when actual investment performance exceeds the assumed rate,
and more rapidly falling subsequent payments when actual investment performance
is less than the assumed rate. A lower assumption would have the opposite
effect. If the actual net investment performance is 3% annually, annuity
payments will be level.
TRANSFERS AFTER MATURITY DATE
Once variable annuity payments have begun, the contract owner may
transfer all or part of the investment upon which such payments are based from
one sub-account to another. Transfers will be made upon notice to the Company at
least 30 days before the due date of the first annuity payment to which the
change will apply. Transfers after the maturity date will be made by converting
the number of annuity units being transferred to the number of annuity units of
the sub-account to which the transfer is made, so that the next annuity payment
if it were made at that time would be the same amount that it would have been
without the transfer. Thereafter, annuity payments will reflect changes in the
value of the new annuity units. The Company reserves the right to limit, upon
notice, the maximum number of transfers a contract owner may make per contract
year to four. Once annuity payments have commenced, no transfers may be made
from a fixed annuity option to a variable annuity option or from a variable
annuity option to a fixed annuity option. In addition, the Company reserves the
right to defer the transfer privilege at any time that the Company is unable to
purchase or redeem shares of the Trust portfolios. The Company also reserves the
right to modify or terminate the transfer privilege at any time in accordance
with applicable law.
DEATH BENEFIT ON OR AFTER MATURITY DATE
If annuity payments have been selected based on an annuity option
providing for payments for a guaranteed period, and the annuitant dies on or
after the maturity date, the Company will make the remaining guaranteed payments
to the beneficiary. Any remaining payments will be made as rapidly as under the
method of distribution being used as of the date of the annuitant's death. If no
beneficiary is living, the Company will commute any unpaid guaranteed payments
to a single sum (on the basis of the interest rate used in determining the
payments) and pay that single sum to the estate of the last to die of the
annuitant and the beneficiary.
OTHER CONTRACT PROVISIONS
TEN DAY RIGHT TO REVIEW
The contract owner may cancel the contract by returning it to the
Company's Annuity Service Office or agent at any time within 10 days after
receipt of the contract. Within 7 days of receipt of the contract by the
Company, the Company will pay the contract value, less any debt, computed at the
end of the valuation period during which the contract is received by the
Company, to the contract owner. When the contract is issued as an individual
retirement annuity under Sections 408 or 408A of the Code, during the first 7
days of the 10 day period, the Company will return all purchase payments if this
is greater than the amount otherwise payable.
No withdrawal charge is imposed upon return of the contract within the
ten day right to review period.
OWNERSHIP
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The contract owner is the person entitled to exercise all rights under
the contract. Prior to the maturity date, the contract owner is the person
designated in the contract specifications page or as subsequently named. On and
after the maturity date, the annuitant is the contract owner. If amounts become
payable to any beneficiary under the contract, the beneficiary is the contract
owner.
In the case of non-qualified contracts, ownership of the contract may be
changed or the contract may be collaterally assigned at any time prior to the
maturity date, subject to the rights of any irrevocable beneficiary. Assigning a
contract, or changing the ownership of a contract, may be treated as a
distribution of the contract value for Federal tax purposes (see "FEDERAL TAX
MATTERS"). A change of any contract owner may result in resetting the death
benefit to an amount equal to the contract value as of the date of the change
and treating such value as a purchase payment made on that date for purposes of
computing the amount of the death benefit (see "DEATH BENEFIT BEFORE MATURITY
DATE").
Any change of ownership or assignment must be made in writing. Any change
must be approved by the Company. Any assignment and any change, if approved,
will be effective as of the date the Company receives the request at its Annuity
Service Office. The Company assumes no liability for any payments made or
actions taken before a change is approved or an assignment is accepted or
responsibility for the validity or sufficiency of any assignment. An absolute
assignment will revoke the interest of any revocable beneficiary.
In the case of qualified contracts, ownership of the contract generally
may not be transferred except by the trustee of an exempt employees' trust which
is part of a retirement plan qualified under Section 401 of the Code or as
otherwise permitted by applicable IRS regulations. Subject to the foregoing, a
qualified contract may not be sold, assigned, transferred, discounted or pledged
as collateral for a loan or as security for the performance of an obligation or
for any other purpose to any person other than the Company.
BENEFICIARY
The beneficiary is the person, persons or entity designated in the
contract specifications page or as subsequently named. However, if there is a
surviving contract owner, that person will be treated as the beneficiary. The
beneficiary may be changed subject to the rights of any irrevocable beneficiary.
Any change must be made in writing, approved by the Company and if approved,
will be effective as of the date on which written. The Company assumes no
liability for any payments made or actions taken before the change is approved.
If no beneficiary is living, the contingent beneficiary will be the beneficiary.
The interest of any beneficiary is subject to that of any assignee. If no
beneficiary or contingent beneficiary is living, the beneficiary is the estate
of the deceased contract owner. In the case of certain qualified contracts,
regulations promulgated by the Treasury Department prescribe certain limitations
on the designation of a beneficiary.
ANNUITANT
The annuitant is any natural person or persons whose life is used to
determine the duration of annuity payments involving life contingencies. If the
contract owner names more than one person as an "annuitant," the second person
named shall be referred to as "co-annuitant." The annuitant is as specified in
the application, unless changed.
On the death of the annuitant, the co-annuitant, if living, becomes the
annuitant. If there is no living co-annuitant, the owner becomes the annuitant.
In the case of certain qualified contracts, there are limitations on the ability
to designate and change the annuitant and the co-annuitant.
MODIFICATION
The contract may not be modified by the Company without the consent of
the contract owner, except as may be required to make it conform to any law or
regulation or ruling issued by a governmental agency. The provisions of the
contract shall be interpreted so as to comply with the requirements of Section
72(s) of the Code.
COMPANY APPROVAL
The Company reserves the right to accept or reject any contract
application at its sole discretion.
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MISSTATEMENT AND PROOF OF AGE, SEX OR SURVIVAL
The Company may require proof of age, sex or survival of any person upon
whose age, sex or survival any payment depends. If the age or sex of the
annuitant has been misstated, the benefits will be those that would have been
provided for the annuitant's correct age and sex. If the Company has made
incorrect annuity payments, the amount of any underpayment will be paid
immediately and the amount of any overpayment will be deducted from future
annuity payments.
FIXED ACCOUNT INVESTMENT OPTIONS
Due to certain exemptive and exclusionary provisions, interests in the
fixed account investment options are not registered under the Securities Act of
1933 (the "1933 Act") and the Company's general account is not registered as an
investment company under the 1940 Act. Accordingly, neither interests in the
fixed account investment options nor the general account are subject to the
provisions or restrictions of the 1933 Act or the 1940 Act and the staff of the
SEC has not reviewed the disclosures in this Prospectus relating thereto.
Disclosures relating to interests in the fixed account investment options and
the general account, however, may be subject to certain generally applicable
provisions of the Federal securities laws relating to the accuracy of statements
made in a registration statement.
Investment Options. Currently, there are five fixed account investment
options under the contract: one, three, five and seven year investment accounts
and a one year DCA fixed investment account which may be established under the
DCA program to make automatic monthly transfers from a one year DCA fixed
account to one or more variable investment options (see "SPECIAL TRANSFER
SERVICES - DOLLAR COST AVERAGING"). The Company may offer additional fixed
account investment options for any yearly period from two to ten years. Fixed
investment accounts provide for the accumulation of interest on purchase
payments at guaranteed rates for the duration of the guarantee period. The
guaranteed interest rates on new amounts allocated or transferred to a fixed
investment account are determined from time-to-time by the Company in accordance
with market conditions. In no event will the guaranteed rate of interest be less
than 3%. Once an interest rate is guaranteed for a fixed investment account, it
is guaranteed for the duration of the guarantee period and may not be changed by
the Company.
Investment Accounts. Contract owners may allocate purchase payments, or
make transfers from the variable investment options, to the fixed account
investment options at any time prior to the maturity date. The Company
establishes a separate investment account each time the contract owner allocates
or transfers amounts to a fixed account investment option, except that amounts
allocated or transferred to the same fixed account investment option on the same
day will establish a single investment account. Amounts may not be allocated to
a fixed account investment option that would extend the guarantee period beyond
the maturity date.
Renewals. At the end of a guarantee period, the contract owner may
establish a new investment account with the same guarantee period at the then
current interest rate, select a different fixed account investment option or
transfer the amounts to a variable account investment option, all without the
imposition of any charge. The contract owner may not select a guarantee period
that would extend beyond the maturity date. In the case of renewals within one
year of the maturity date, the only fixed account investment option available is
to have interest accrued up to the maturity date at the then current interest
rate for one year guarantee periods.
If the contract owner does not specify the renewal option desired, the
Company will select the same guarantee period as has just expired, so long as
such period does not extend beyond the maturity date. In the event a renewal
would extend beyond the maturity date, the Company will select the longest
period that will not extend beyond such date, except in the case of a renewal
within one year of the maturity date in which case the Company will credit
interest up to the maturity date at the then current interest rate for one year
guarantee periods.
Market Value Charge. Any amount withdrawn, transferred or borrowed from
an investment account prior to the end of the guarantee period may be subject to
a market value charge. A market value charge will be calculated separately for
each investment account affected by a transaction to which a market value charge
may apply. The market value charge for an investment account will be calculated
by multiplying the amount withdrawn or transferred from the investment account
by the adjustment factor described below.
The adjustment factor is determined by the following formula:
0.75x(B-A)xC/12 where:
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<PAGE> 31
A - The guaranteed interest rate on the investment account.
B - The guaranteed interest rate available, on the date the request is
processed, for amounts allocated to a new investment account with the
same length of guarantee period as the investment account from which the
amounts are being withdrawn.
C - The number of complete months remaining to the end of the guarantee
period.
For purposes of applying this calculation, the maximum difference between
"B" and "A" will be 3%. The adjustment factor may never be less than
zero.
The total market value charge will be the sum of the market value charges
for each investment account being withdrawn. Where the guaranteed rate available
on the date of the request is less than the rate guaranteed on the investment
account from which the amounts are being withdrawn (B-A in the adjustment factor
is negative), there is no market value charge. There is only a market value
charge when interest rates have increased (B-A in the adjustment factor is
positive).
There will be no market value charge on withdrawals from the fixed
account investment options in the following situations: (a) death of the
contract owner; (b) amounts withdrawn to pay fees or charges; (c) amounts
applied at the maturity date to purchase an annuity at the guaranteed rates
provided in the contract; (d) amounts withdrawn from investment accounts within
one month prior to the end of the guarantee period; (e) amounts withdrawn from a
one-year fixed investment account; and (f) amounts withdrawn in any contract
year that do not exceed 10% of (i) total purchase payments less (ii) any prior
partial withdrawals in that year.
Notwithstanding application of the foregoing formula, in no event will
the market value charge (i) be greater than the amount by which the earnings
attributable to the amount withdrawn or transferred from an investment account
exceed an annual rate of 3%, (ii) together with any withdrawal charges for an
investment account be greater than 10% of the amount transferred or withdrawn,
or (iii) reduce the amount payable on withdrawal or transfer below the amount
required under the non-forfeiture laws of the state with jurisdiction over the
contract. The cumulative effect of the market value and withdrawal charges
could, however, result in a contract owner receiving total withdrawal proceeds
of less than the contract owner's investment in the contract.
Transfers. Prior to the maturity date, the contract owner may transfer
amounts among the fixed account investment options and from the fixed account
investment options to the variable account investment options, subject to the
following conditions. An amount in a fixed investment account may not be
transferred until held in such account for at least one year, except transfers
may be made pursuant to the Dollar Cost Averaging program. Consequently, except
as noted above, amounts in one year investment accounts effectively may not be
transferred prior to the end of the guarantee period. Amounts in any other
investment accounts may be transferred, after the one year holding period has
been satisfied, but the market value charge described above may apply to such a
transfer. The market value charge, if applicable, will be deducted from the
amount transferred.
The contract owner must specify the fixed account investment option from
or to which a transfer is to be made. Where there are multiple investment
accounts within a fixed account investment option, amounts must be withdrawn
from the fixed account investment options on a first-in-first-out basis.
Withdrawals. The contract owner may make total and partial withdrawals of
amounts held in fixed account investment options at any time prior to his or her
death. Withdrawals from fixed account investment options will be made in the
same manner and be subject to the same limitations as set forth under
"WITHDRAWALS" plus the following provisions also apply to withdrawals from fixed
account investment options: (1) the Company reserves the right to defer payment
of amounts withdrawn from fixed account investment options for up to six months
from the date it receives the written withdrawal request (if a withdrawal is
deferred for more than 10 days pursuant to this right, the Company will pay
interest on the amount deferred at a rate not less than 3% per year); (2) if
there are multiple investment accounts under a fixed account investment option,
amounts must be withdrawn from such accounts on a first-in-first-out basis; and
(3) the market value charge described above may apply to withdrawals from any
investment option except for a one year investment option. In the event a market
value charge applies to a withdrawal from a fixed investment account, it will be
calculated with respect to the full amount in the investment account and
deducted from the amount payable in the case of a total withdrawal. In the case
of a partial withdrawal, the market value charge will
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<PAGE> 32
be calculated on the amount requested and deducted, if applicable, from the
remaining investment account value.
Where a contract owner requests a partial withdrawal from a contract in
excess of the amounts in the variable account investment options and does not
specify the fixed account investment options from which the withdrawal is to be
made, such withdrawal will be made from the investment options beginning with
the shortest guarantee period. Within such sequence, where there are multiple
investment accounts within a fixed account investment option, withdrawals will
be made on a first-in-first-out basis.
Withdrawals from the contract may be subject to income tax and a 10%
penalty tax. Withdrawals are permitted from contracts issued in connection with
Section 403(b) qualified plans only under limited circumstances (see "FEDERAL
TAX MATTERS").
Loans. The Company offers a loan privilege only to owners of contracts
issued in connection with Section 403(b) qualified plans that are not subject to
Title I of ERISA. Owners of such contracts may obtain loans using the contract
as the only security for the loan. Owners of such contracts may borrow amounts
allocated to fixed investment accounts in the same manner and subject to the
same limitations as set forth under "LOANS". The market value charge described
above may apply to amounts transferred from the fixed investment accounts to the
loan account in connection with such loans and, if applicable, will be deducted
from the amount so transferred.
Fixed Annuity Options. Subject to the distribution of death benefits
provisions (see "DEATH BENEFIT BEFORE MATURITY DATE"), on death, withdrawal or
the maturity date of the contract, the proceeds may be applied to a fixed
annuity option (see "ANNUITY OPTIONS"). The amount of each fixed annuity payment
is determined by applying the portion of the proceeds (less any applicable
premium taxes) applied to purchase the fixed annuity to the appropriate table in
the contract. If the table in use by the Company is more favorable to the
contract owner, the Company will substitute that table. In addition, at the time
of their commencement fixed annuity payments will not be less than those
provided by an amount applied to purchase a single consideration immediate
annuity to the same class of annuitants at that time. This amount will be the
greater of (a) the contract value less applicable withdrawal charges or (b) 95%
of the contract value. The Company guarantees the dollar amount of fixed annuity
payments.
CHARGES AND DEDUCTIONS
Charges and deductions under the contracts are assessed against contract
values or annuity payments. Currently, there are no deductions made from
purchase payments. In addition, there are deductions from and expenses paid out
of the assets of the Trust portfolios that are described in the accompanying
Prospectus of the Trust.
WITHDRAWAL CHARGES
If a withdrawal is made from the contract before the maturity date, a
withdrawal charge (contingent deferred sales charge) may be assessed against
amounts withdrawn attributable to purchase payments that have been in the
contract less than seven complete contract years. There is never a withdrawal
charge with respect to earnings accumulated in the contract, certain other
amounts available without withdrawal charges described below or purchase
payments that have been in the contract more than seven complete contract years.
In no event may the total withdrawal charges exceed 6% of the amount invested.
The amount of the withdrawal charge and when it is assessed is discussed below:
1. Each withdrawal from the contract is allocated first to the "amount
available without withdrawal charges" and second to "unliquidated purchase
payments". In any contract year, the amount available without withdrawal charges
for that year is the greater of (1) the excess of the contract value on the date
of withdrawal over the unliquidated purchase payments (the accumulated earnings
on the contract) or (2) the excess of (i) over (ii), where (i) is 10% of total
purchase payments and (ii) is all prior partial withdrawals in that year. The
amount withdrawn without withdrawal charges will be applied to a requested
withdrawal, first, to withdrawals from variable account investment options and
then to withdrawals from fixed account investment options beginning with those
with the shortest guarantee period first and the longest guarantee period last.
2. Withdrawals in excess of the amount available without withdrawal
charges may be subject to withdrawals charges. A withdrawal charge will be
assessed against purchase payments liquidated that have been in the contract for
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<PAGE> 33
less than seven years. Purchase payments will be liquidated on a first-in
first-out basis. On any withdrawal request, the Company will liquidate purchase
payments equal to the amount of the withdrawal request which exceeds the amount
available without withdrawal charges in the order such purchase payments were
made: the oldest unliquidated purchase payment first, the next purchase payment
second, etc. until all purchase payments have been liquidated.
3. Each purchase payment or portion thereof liquidated in connection with
a withdrawal request is subject to a withdrawal charge based on the length of
time the purchase payment has been in the contract. The amount of the withdrawal
charge is calculated by multiplying the amount of the purchase payment being
liquidated by the applicable withdrawal charge percentage obtained from the
table below.
<TABLE>
<CAPTION>
NUMBER OF COMPLETE YEARS WITHDRAWAL CHARGE
PURCHASE PAYMENT IN PERCENTAGE
CONTRACT
<S> <C>
0 6%
1 6%
2 5%
3 5%
4 4%
5 3%
6 2%
7+ 0%
</TABLE>
The total withdrawal charge will be the sum of the withdrawal charges for
the purchase payments being liquidated.
4. The withdrawal charge is deducted from the contract value remaining
after the contract owner is paid the amount requested, except in the case of a
complete withdrawal when it is deducted from the amount otherwise payable. In
the case of a partial withdrawal, the amount requested from an investment
account may not exceed the value of that investment account less any applicable
withdrawal charge.
5. There is generally no withdrawal charge on distributions made as a
result of the death of the contract owner or, if applicable, the annuitant (see
"DEATH BENEFIT BEFORE MATURITY DATE -- Amount of Death Benefit"), and no
withdrawal charges are imposed on the maturity date if the contract owner
annuitizes as provided in the contract.
The amount collected from the withdrawal charge will be used to reimburse
the Company for the compensation paid to cover selling concessions to
broker-dealers, preparation of sales literature and other expenses related to
sales activity.
For examples of calculation of the withdrawal charge, see Appendix A.
Withdrawals from the fixed account investment options may be subject to a market
value charge in addition to the withdrawal charge described above (see "FIXED
ACCOUNT INVESTMENT OPTIONS").
Withdrawal Charge Waiver in Connection with Clinton's Administration's
Fiscal Year 1999 Budget Proposal. The Clinton administration's Fiscal Year 1999
Budget proposal dated February 2, 1998 (the "1999 Budget Proposal") contains
proposals to change the taxation of non-qualified annuity contracts (see
"FEDERAL TAX MATTERS - Introduction"). While it is uncertain whether the 1999
Budget Proposal will become law, if the 1999 Budget Proposal is enacted
substantially as proposed, withdrawal charges will be waived on purchase
payments made on or after February 2, 1998, provided such amounts are withdrawn
within 60 days of the date that the 1999 Budget Proposal becomes law. The
Company reserves the right to terminate this withdrawal charge waiver at any
time. If the waiver is terminated, purchase payments made from February 2, 1998
to the termination date of the waiver will not be subject to withdrawal charge
as provided above. This waiver does not affect a contract owner's right to
cancel a contract within the ten day right to review period (see "OTHER CONTRACT
PROVISIONS - Ten Day Right to Review"). Withdrawals may be subject to income tax
to the extent of earnings under the contract and, if made prior to age 59-1/2,
generally will be subject to a 10% IRS penalty tax (see "FEDERAL TAX MATTERS -
Taxation of Partial and Full Withdrawals").
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<PAGE> 34
ADMINISTRATION FEES
Except as noted below, the Company will deduct each year an annual
administration fee of $30 as partial compensation for the cost of providing all
administrative services attributable to the contracts and the operations of the
Variable Account and the Company in connection with the contracts. However, if
prior to the maturity date the contract value is equal to or greater than
$100,000 at the time of the fee's assessment, the fee will be waived. Prior to
the maturity date, this administration fee is deducted on the last day of each
contract year. It is withdrawn from each investment option in the same
proportion that the value of such investment option bears to the contract value.
If the entire contract is withdrawn on other than the last day of any contract
year, the $30 administration fee will be deducted from the amount paid. During
the annuity period, the fee is deducted on a pro-rata basis from each annuity
payment.
A daily charge in an amount equal to 0.15% of the value of each variable
investment account on an annual basis is also deducted from each sub-account to
reimburse the Company for administrative expenses. This asset based
administrative charge will not be deducted from the fixed account investment
options. The charge will be reflected in the contract value as a proportionate
reduction in the value of each variable investment account. Because this portion
of the administrative fee is a percentage of assets rather than a flat amount,
larger contracts will in effect pay a higher proportion of this portion of the
administrative expense than smaller contracts.
The Company does not expect to recover from such fees any amount in
excess of its accumulated administrative expenses. Even though administrative
expenses may increase, the Company guarantees that it will not increase the
amount of the administration fees. There is no necessary relationship between
the amount of the administrative charge imposed on a given contract and the
amount of the expense that may be attributed to that contract.
MORTALITY AND EXPENSE RISK CHARGE
The mortality risk assumed by the Company is the risk that annuitants may
live for a longer period of time than estimated. The Company assumes this
mortality risk by virtue of annuity rates incorporated into the contract which
cannot be changed. This assures each annuitant that his longevity will not have
an adverse effect on the amount of annuity payments. Also, the Company
guarantees that if the contract owner dies before the maturity date, it will pay
a death benefit (see "DEATH BENEFIT BEFORE MATURITY DATE"). The expense risk
assumed by the Company is the risk that the administration charges or withdrawal
charge may be insufficient to cover actual expenses.
To compensate it for assuming these risks, the Company deducts from each
of the sub-accounts a daily charge in an amount equal to 1.25% of the value of
the variable investment accounts on an annual basis, consisting of .8% for the
mortality risk and .45% for the expense risk. The charge will be reflected in
the contract value as a proportionate reduction in the value of each variable
investment account. The rate of the mortality and expense risk charge cannot be
increased. If the charge is insufficient to cover the actual cost of the
mortality and expense risks undertaken, the Company will bear the loss.
Conversely, if the charge proves more than sufficient, the excess will be profit
to the Company and will be available for any proper corporate purpose including,
among other things, payment of distribution expenses. The mortality and expense
risk charge is not assessed against the fixed account investment options.
TAXES
The Company reserves the right to charge, or provide for, certain taxes
against purchase payments, contract values or annuity payments. Such taxes may
include premium taxes or other taxes levied by any government entity which the
Company determines to have resulted from the (i) establishment or maintenance of
the Variable Account, (ii) receipt by the Company of purchase payments, (iii)
issuance of the contracts, or (iv) commencement or continuance of annuity
payments under the contracts. The State of New York does not currently assess a
premium tax. In the event New York does impose a premium tax, the Company
reserves the right to pass-through such tax to contract owners. For a discussion
on premium taxes which may be applicable to non-New York residents, see "STATE
PREMIUM TAXES" in the Statement of Additional Information. The Company will
withhold taxes to the extent required by applicable law.
FEDERAL TAX MATTERS
INTRODUCTION
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The following discussion of the Federal income tax treatment of the
contract is not exhaustive, does not purport to cover all situations, and is not
intended as tax advice. A qualified tax advisor should always be consulted with
regard to the application of law to individual circumstances. This discussion is
based on the Code, Treasury Department regulations, and interpretations existing
on the date of this Prospectus. These authorities, however, are subject to
change by Congress, the Treasury Department, and judicial decisions.
The Clinton administration's Fiscal Year 1999 Budget proposal dated
February 2, 1998 (the "Budget Proposal") contains proposals to change the
taxation of non-qualified annuity contracts. See "FEDERAL TAX MATTERS -
Introduction." While it is uncertain whether the Budget Proposal will become
law, if the Budget Proposal is enacted substantially as proposed, withdrawal
charges will be waived on purchase payments made on or after February 2, 1998,
provided such amounts are withdrawn within 60 days of the date that the Budget
Proposal becomes law. The Company reserves the right to terminate this
withdrawal charge waiver at any time. If the waiver is terminated, purchase
payments made from February 2, 1998 to the termination date of the waiver will
not be subject to withdrawal charge as provided above. This waiver does not
affect a contract owner's right to cancel a contract within the ten day right to
review period. See "OTHER CONTRACT PROVISIONS -- Ten Day Right to Review."
Withdrawals may be subject to income tax to the extent of earnings under the
contract and, if made prior to age 59 1/2, generally will be subject to a 10%
IRS penalty tax. See "FEDERAL TAX MATTERS - Taxation of Partial and Full
Withdrawals."
This discussion does not address state or local tax consequences
associated with the purchase of a contract. In addition, THE COMPANY MAKES NO
GUARANTEE REGARDING ANY TAX TREATMENT -- FEDERAL, STATE, OR LOCAL -- OF ANY
CONTRACT OR OF ANY TRANSACTION INVOLVING A CONTRACT.
THE COMPANY'S TAX STATUS
The Company is taxed as a life insurance company under the Code. Since
the operations of the Variable Account are a part of, and are taxed with, the
operations of the Company, the Variable Account is not separately taxed as a
"regulated investment company" under the Code. Under existing Federal income tax
laws, investment income and capital gains of the Variable Account are not taxed
to the extent they are applied under a contract. The Company does not anticipate
that it will incur any Federal income tax liability attributable to such income
and gains of the Variable Account, and therefore the Company does not intend to
make provision for any such taxes. If the Company is taxed on investment income
or capital gains of the Variable Account, then the Company may impose a charge
against the Variable Account in order to make provision for such taxes.
TAXATION OF ANNUITIES IN GENERAL
TAX DEFERRAL DURING ACCUMULATION PERIOD
Under existing provisions of the Code, except as described below, any
increase in the contract value is generally not taxable to the contract owner or
annuitant until received, either in the form of annuity payments, as
contemplated by the contract, or in some other form of distribution. However,
certain requirements must be satisfied in order for this general rule to apply,
including: (1) the contract must be owned by an individual (or treated as owned
by an individual), (2) the investments of the Variable Account must be
"adequately diversified" in accordance with Treasury Department regulations, (3)
the Company, rather than the owner, must be considered the owner of the assets
of the Variable Account for Federal tax purposes, and (4) the contract must
provide for appropriate amortization, through annuity payments, of the
contract's purchase payments and earnings, e.g., the maturity date must not
occur at too advanced an age.
Non-Natural Owners. As a general rule, deferred annuity contracts held by
"non-natural persons" such as a corporation, trust or other similar entity, as
opposed to a natural person, are not treated as annuity contracts for Federal
income tax purposes. The investment income on such contracts is taxed as
ordinary income that is received or accrued by the owner of the contract during
the taxable year. There are several exceptions to this general rule for
non-natural contract owners. First, contracts will generally be treated as held
by a natural person if the nominal owner is a trust or other entity which holds
the contract as an agent for a natural person. However, this special exception
will not apply in the case of any employer who is the nominal owner of an
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<PAGE> 36
annuity contract under a non-qualified deferred compensation arrangement for its
employees.
In addition, exceptions to the general rule for non-natural contract
owners will apply with respect to (1) contracts acquired by an estate of a
decedent by reason of the death of the decedent, (2) certain qualified
contracts, (3) certain contracts purchased by employers upon the termination of
certain qualified plans, (4) certain contracts used in connection with
structured settlement agreements, and (5) contracts purchased with a single
premium when the annuity starting date (as defined in the tax law) is no later
than a year from purchase of the annuity and substantially equal periodic
payments are made, not less frequently than annually, during the annuity period.
Loss of Interest Deduction Where Contracts are Held by or for the Benefit
of Certain Non-Natural Person. In the case of contracts issued after June 8,
1997 to a non-natural taxpayer (such as a corporation or trust) or held for the
benefit of such an entity, recent changes in the tax law may result in otherwise
deductible interest no longer being deductible by the entity, regardless of
whether the interest relates to debt used to purchase or carry the contract.
However, this interest deduction disallowance does not affect contracts where
the income on such contracts is treated as ordinary income that is received or
accrued by the owner during the taxable year. Entities that are considering
purchasing the contract, or entities that will be beneficiaries under a
contract, should consult a tax advisor.
Diversification Requirements. For a contract to be treated as an annuity
for Federal income tax purposes, the investments of the Variable Account must be
"adequately diversified" in accordance with Treasury Department Regulations. The
Secretary of the Treasury has issued regulations which prescribe standards for
determining whether the investments of the Variable Account are "adequately
diversified." If the Variable Account failed to comply with these
diversification standards, a contract would not be treated as an annuity
contract for Federal income tax purposes and the contract owner would generally
be taxable currently on the excess of the contract value over the premiums paid
for the contract.
Although the Company does not control the investments of the Trust, it
expects that the Trust will comply with such regulations so that the Variable
Account will be considered "adequately diversified."
Ownership Treatment. In certain circumstances, a variable annuity
contract owner may be considered the owner, for Federal income tax purposes, of
the assets of the separate account used to support his or her contract. In those
circumstances, income and gains from such separate account assets would be
includible in the contract owner's gross income. The Internal Revenue Service
(the "IRS") has stated in published rulings that a variable contract owner will
be considered the owner of separate account assets if the owner possesses
incidents of ownership in those assets, such as the ability to exercise
investment control over the assets. In addition, the Treasury Department
announced, in connection with the issuance of regulations concerning investment
diversification, that those regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a segregated asset
account may cause the investor, rather than the insurance company, to be treated
as the owner of the assets in the account." This announcement also stated that
guidance would be issued by way of regulations or rulings on the "extent to
which policyholders may direct their investments to particular sub-accounts [of
a separate account] without being treated as owners of the underlying assets."
As of the date of this Prospectus, no such guidance has been issued.
The ownership rights under this contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of separate account assets. For
example, the owner of this contract has the choice of many more investment
options to which to allocate premiums and contract values, and may be able to
transfer among investment options more frequently than in such rulings. These
differences could result in the contract owner being treated as the owner of the
assets of the Variable Account and thus subject to current taxation on the
income and gains from those assets. In addition, the Company does not know what
standards will be set forth in the regulations or rulings which the Treasury
Department has stated it expects to issue. The Company therefore reserves the
right to modify the contract as necessary to attempt to prevent the contract
owner from being considered the owner of the assets of the Variable Account.
Delayed Maturity Dates. If the contract's maturity date occurs (or is
scheduled to occur) at a time when the annuitant has reached an advanced age,
e.g., past age 85, it is possible that the contract would not be treated as an
annuity for Federal income tax purposes. In that event, the income and gains
under the contract could be currently includible in the owner's income.
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<PAGE> 37
The remainder of this discussion assumes that the contract will be
treated as an annuity contract for Federal income tax purposes and that the
Company will be treated as the owner of the Variable Account assets.
TAXATION OF PARTIAL AND FULL WITHDRAWALS
In the case of a partial withdrawal, amounts received are includible in
income to the extent the contract value before the withdrawal exceeds the
"investment in the contract." In the case of a full withdrawal, amounts received
are includible in income to the extent they exceed the "investment in the
contract." For these purposes the investment in the contract at any time equals
the total of the purchase payments made under the contract to that time (to the
extent such payments were neither deductible when made nor excludable from
income as, for example, in the case of certain employer contributions to
qualified plans) less any amounts previously received from the contract which
were not included in income.
Other than in the case of certain qualified contracts, any amount
received as a loan under a contract, and any assignment or pledge (or agreement
to assign or pledge) any portion of the contract value, is treated as a
withdrawal of such amount or portion. (Loans, assignments and pledges are
permitted only in limited circumstances under qualified contracts.) The
investment in the contract is increased by the amount includible in income with
respect to such assignment or pledge, though it is not affected by any other
aspect of the assignment or pledge (including its release). If an individual
transfers his or her interest in an annuity contract without adequate
consideration to a person other than the owner's spouse (or to a former spouse
incident to divorce), the owner will be taxed on the difference between the
"contract value" and the "investment in the contract" at the time of transfer.
In such case, the transferee's investment in the contract will be increased to
reflect the increase in the transferor's income.
The contract provides a death benefit that in certain circumstances may
exceed the greater of the purchase payments and the contract value. As described
elsewhere in this Prospectus, the Company imposes certain charges with respect
to the death benefit. It is possible that those charges (or some portion
thereof) could be treated for Federal income tax purposes as a partial
withdrawal from the contract.
There may be special income tax issues present in situations where the
owner and the annuitant are not the same person and are not married to one
another. A tax advisor should be consulted in those situations.
TAXATION OF ANNUITY PAYMENTS
Normally, the portion of each annuity payment taxable as ordinary income
is equal to the excess of the payment over the exclusion amount. In the case of
variable annuity payments, the exclusion amount is the "investment in the
contract" (defined above) allocated to the variable annuity option, adjusted for
any period certain or refund feature, when payments begin to be made divided by
the number of payments expected to be made (determined by Treasury Department
regulations which take into account the annuitant's life expectancy and the form
of annuity benefit selected). In the case of fixed annuity payments, the
exclusion amount is the amount determined by multiplying (1) the payment by (2)
the ratio of the investment in the contract allocated to the fixed annuity
option, adjusted for any period certain or refund feature, to the total expected
value of annuity payments for the term of the contract (determined under
Treasury Department regulations). A simplified method of determining the taxable
portion of annuity payments applies to contracts issued in connection with
certain qualified plans other than IRAs.
Once the total amount of the investment in the contract is excluded using
these ratios, annuity payments will be fully taxable. If annuity payments cease
because of the death of the annuitant and before the total amount of the
investment in the contract is recovered, the unrecovered amount generally will
be allowed as a deduction to the annuitant in his or her last taxable year.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a contract because of the death of an
owner or the annuitant. Prior to the maturity date, such death benefit proceeds
are includible in income as follows: (1) if distributed in a lump sum, they are
taxed in the same manner as a full withdrawal, as described above, or (2) if
distributed under an annuity option, they are taxed in the same manner as
annuity payments, as described above. After the maturity date, where
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<PAGE> 38
a guaranteed period exists under an annuity option and the annuitant dies before
the end of that period, payments made to the beneficiary for the remainder of
that period are includible in income as follows: (1) if received in a lump sum,
they are includible in income to the extent that they exceed the unrecovered
investment in the contract at that time, or (2) if distributed in accordance
with the existing annuity option selected, they are fully excludable from income
until the remaining investment in the contract is deemed to be recovered, and
all annuity payments thereafter are fully includible in income.
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<PAGE> 39
PENALTY TAX ON PREMATURE DISTRIBUTIONS
There is a 10% penalty tax on the taxable amount of any payment from a
non-qualified contract unless the payment is: (a) received on or after the
contract owner reaches age 59 1/2; (b) attributable to the contract owner's
becoming disabled (as defined in the tax law); (c) made to a beneficiary on or
after the death of the contract owner or, if the contract owner is not an
individual, on or after the death of the primary annuitant (as defined in the
tax law); (d) made as a series of substantially equal periodic payments (not
less frequently than annually) for the life (or life expectancy) of the
annuitant or for the joint lives (or joint life expectancies) of the annuitant
and designated beneficiary (as defined in the tax law); (e) made under an
annuity contract purchased with a single premium when the annuity starting date
(as defined in the tax law) is no later than a year from purchase of the annuity
and substantially equal periodic payments are made, not less frequently than
annually, during the annuity period; or (f) made with respect to certain
annuities issued in connection with structured settlement agreements. (A similar
penalty tax, applicable to distributions from certain qualified contracts, is
discussed below.)
AGGREGATION OF CONTRACTS
In certain circumstances, the amount of an annuity payment or a
withdrawal from a contract that is includible in income may be determined by
combining some or all of the non-qualified contracts owned by an individual. For
example, if a person purchases a contract offered by this Prospectus and also
purchases at approximately the same time an immediate annuity, the IRS may treat
the two contracts as one contract. In addition, if a person purchases two or
more deferred annuity contracts from the same insurance company (or its
affiliates) during any calendar year, all such contracts will be treated as one
contract. The effects of such aggregation are not clear; however, it could
affect the amount of a withdrawal or an annuity payment that is taxable and the
amount which might be subject to the penalty tax described above.
QUALIFIED RETIREMENT PLANS
The contracts are also designed for use in connection with certain types
of retirement plans which receive favorable treatment under the Code. Numerous
special tax rules apply to the participants in such qualified plans and to the
contracts used in connection with such qualified plans. Therefore, no attempt is
made in this Prospectus to provide more than general information about use of
the contract with the various types of qualified plans.
The tax rules applicable to qualified plans vary according to the type of
plan and the terms and conditions of the plan itself. For example, for both
withdrawals and annuity payments under certain qualified contracts, there may be
no "investment in the contract" and the total amount received may be taxable.
Also, loans from qualified contracts, where allowed, are subject to a variety of
limitations, including restrictions as to the amount that may be borrowed, the
duration of the loan, and the manner in which the loan must be repaid. (Owners
should always consult their tax advisors and retirement plan fiduciaries prior
to exercising their loan privileges.) Both the amount of the contribution that
may be made, and the tax deduction or exclusion that the owner may claim for
such contribution, are limited under qualified plans. If this contract is used
in connection with a qualified plan, the owner and annuitant must be the same
individual. If a co-annuitant is named, all distributions made while the
annuitant is alive must be made to the annuitant. Also, if a co-annuitant is
named who is not the annuitant's spouse, the annuity options which are available
may be limited, depending on the difference in ages between the annuitant and
co-annuitant. Furthermore, the length of any guarantee period may be limited in
some circumstances to satisfy certain minimum distribution requirements under
the Code.
In addition, special rules apply to the time at which distributions must
commence and the form in which the distributions must be paid. For example,
failure to comply with minimum distribution requirements applicable to qualified
plans will result in the imposition of an excise tax. This excise tax generally
equals 50% of the amount by which a minimum required distribution exceeds the
actual distribution from the qualified plan. In the case of IRAs, distributions
of minimum amounts (as specified in the tax law) must generally commence by
April 1 of the calendar year following the calendar year in which the owner
attains age 70 1/2. In the case of certain other qualified plans, distributions
of such minimum amounts must generally commence by the later of this date or
April 1 of the calendar year following the calendar year in which the employee
retires.
There is also a 10% penalty tax on the taxable amount of any payment from
certain qualified contracts. (The amount of the penalty tax is 25% of the
taxable amount of any payment received from a "SIMPLE retirement account" during
the 2 year period beginning on the date the individual first participated in any
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<PAGE> 40
qualified salary reduction arrangement (as defined in the tax law) maintained by
the individual's employer.) There are exceptions to this penalty tax which vary
depending on the type of qualified plan. In the case of an "Individual
Retirement Annuity" or an "IRA", including a "SIMPLE IRA," exceptions provide
that the penalty tax does not apply to a payment (a) received on or after the
contract owner reaches age 59 1/2, (b) received on or after the owner's death or
because of the owner's disability (as defined in the tax law), or (c) made as a
series of substantially equal periodic payments (not less frequently than
annually) for the life (or life expectancy) of the owner or for the joint lives
(or joint life expectancies) of the owner and designated beneficiary (as defined
in the tax law). These exceptions, as well as certain others not described
herein, generally apply to taxable distributions from other qualified plans
(although, in the case of plans qualified under Sections 401 and 403, exception
"c" above for substantially equal periodic payments applies only if the owner
has separated from service). In addition, the penalty tax does not apply to
certain distributions from IRAs taken after December 31, 1997 which are used for
qualified first time home purchasers or for higher education expenses. Special
considerations must be met to qualify for these two exceptions to the penalty
tax. Owners wishing to take a distribution from an IRA for these purposes should
consult their tax advisor.
When issued in connection with a qualified plan, a contract will be
amended as generally necessary to conform to the requirements of the plan.
However, contract owners, annuitants, and beneficiaries are cautioned that the
rights of any person to any benefits under qualified plans may be subject to the
terms and conditions of the plans themselves, regardless of the terms and
conditions of the contract. In addition, the Company shall not be bound by terms
and conditions of qualified plans to the extent such terms and conditions
contradict the contract, unless the Company consents.
QUALIFIED PLAN TYPES
Following are brief descriptions of various types of qualified plans in
connection with which the Company may issue a contract.
Individual Retirement Annuities. Section 408 of the Code permits eligible
individuals to contribute to an individual retirement program known as an "IRA."
IRAs are subject to limits on the amounts that may be contributed, the persons
who may be eligible and on the time when distributions may commence. Also,
distributions from certain other types of qualified retirement plans may be
"rolled over" on a tax-deferred basis into an IRA. The contract may not,
however, be used in connection with an "Education IRA" under Section 530 of the
Code.
IRAs generally may not provide life insurance coverage, but they may
provide a death benefit that equals the greater of the premiums paid and the
contract value. The contract provides a death benefit that in certain
circumstances may exceed the greater of the purchase payments and the contract
value. It is possible that the contract's death benefit could be viewed as
providing life insurance coverage with the result that the contract would not be
viewed as satisfying the requirements of an IRA.
Simplified Employee Pensions (SEP-IRAs). Section 408(k) of the Code
allows employers to establish simplified employee pension plans for their
employees, using the employees' IRAs for such purposes, if certain criteria are
met. Under these plans the employer may, within specified limits, make
deductible contributions on behalf of the employees to IRAs. As discussed above
(see Individual Retirement Annuities), there is some uncertainty regarding the
treatment of the contract's death benefit for purposes of the tax rules
governing IRAs (which would include SEP-IRAs). Employers intending to use the
contract in connection with such plans should seek competent advice.
SIMPLE IRAs. Section 408(p) of the Code permits certain small employers
to establish "SIMPLE retirement accounts," including SIMPLE IRAs, for their
employees. Under SIMPLE IRAs, certain deductible contributions are made by both
employees and employers. SIMPLE IRAs are subject to various requirements,
including limits on the amounts that may be contributed, the persons who may be
eligible, and the time when distributions may commence. As discussed above (see
Individual Retirement Annuities), there is some uncertainty regarding the proper
characterization of the contract's death benefit for purposes of the tax rules
governing IRAs (which would include SIMPLE IRAs).
Corporate and Self-Employed ("H.R. 10" and "Keogh") Pension and
Profit-Sharing Plans. Sections 401(a) and 403(a) of the Code permit corporate
employers to establish various types of tax-favored
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<PAGE> 41
retirement plans for employees. The Self-Employed Individuals' Tax Retirement
Act of 1962, as amended, commonly referred to as "H.R. 10" or "Keogh," permits
self-employed individuals also to establish such tax-favored retirement plans
for themselves and their employees. Such retirement plans may permit the
purchase of the contracts in order to provide benefits under the plans. The
contract provides a death benefit that in certain circumstances may exceed the
greater of the purchase payments and the contract value. It is possible that
such death benefit could be characterized as an incidental death benefit. There
are limitations on the amount of incidental benefits that may be provided under
pension and profit sharing plans. In addition, the provision of such benefits
may result in current taxable income to participants. Employers intending to use
the contract in connection with such plans should seek competent advice.
Tax-Sheltered Annuities. Section 403(b) of the Code permits public school
employees and employees of certain types of charitable, educational and
scientific organizations specified in Section 501(c)(3) of the Code to have
their employers purchase annuity contracts for them and, subject to certain
limitations, to exclude the amount of purchase payments from gross income for
tax purposes. These annuity contracts are commonly referred to as "tax-sheltered
annuities." Purchasers of the contracts for such purposes should seek competent
advice as to eligibility, limitations on permissible amounts of purchase
payments and other tax consequences associated with the contracts. In
particular, purchasers should consider that the contract provides a death
benefit that in certain circumstances may exceed the greater of the purchase
payments and the contract value. It is possible that such death benefit could be
characterized as an incidental death benefit. If the death benefit were so
characterized, this could result in currently taxable income to purchasers. In
addition, there are limitations on the amount of incidental benefits that may be
provided under a tax-sheltered annuity. Even if the death benefit under the
contract were characterized as an incidental death benefit, it is unlikely to
violate those limits unless the purchaser also purchases a life insurance
contract as part of his or her tax-sheltered annuity plan.
Tax-sheltered annuity contracts must contain restrictions on withdrawals
of (i) contributions made pursuant to a salary reduction agreement in years
beginning after December 31, 1988, (ii) earnings on those contributions, and
(iii) earnings after 1988 on amounts attributable to salary reduction
contributions (and earnings on those contributions) held as of the last day of
the year beginning before January 1, 1989. These amounts can be paid only if the
employee has reached age 59 1/2, separated from service, died, or become
disabled (within the meaning of the tax law), or in the case of hardship (within
the meaning of the tax law). Amounts permitted to be distributed in the event of
hardship are limited to actual contributions; earnings thereon cannot be
distributed on account of hardship. Amounts subject to the withdrawal
restrictions applicable to Section 403(b)(7) custodial accounts may be subject
to more stringent restrictions. (These limitations on withdrawals do not apply
to the extent the Company is directed to transfer some or all of the contract
value to the issuer of another tax-sheltered annuity or into a Section 403(b)(7)
custodial account.)
Roth IRAs. Recently enacted Section 408A of the Code permits eligible
individuals to contribute to a type of IRA known as a "Roth IRA." Roth IRAs
differ from other IRAs in several respects. Among the differences is that,
although contributions to a Roth IRA are not deductible, "qualified
distributions" from a Roth IRA will be excludable from income. Additionally, the
eligibility and mandatory distribution requirements for Roth IRAs differ from
non-Roth IRAs. Furthermore, a rollover may be made to a Roth IRA only if it is a
"qualified rollover contribution." A "qualified rollover contribution" is a
rollover contribution to a Roth IRA from another Roth IRA or from a non-Roth
IRA, but only if such rollover contribution meets the rollover requirements for
IRAs under section 408(d)(3) of the Code. In the case of a qualified rollover
contribution or a transfer from a non-Roth IRA to a Roth IRA, any portion of the
amount rolled over which would be includible in gross income were it not part of
a qualified rollover contribution or a nontaxable transfer will be includible in
gross income. However, the 10 percent penalty tax on premature distributions
generally will not apply.
All or part of amounts in a non-Roth IRA may be converted into a Roth
IRA. Such a conversion can be made without taking an actual distribution from
the IRA. For example, an individual may make a conversion by notifying the IRA
issuer or trustee, whichever is applicable. The conversion of an IRA to a Roth
IRA is a special type of qualified rollover distribution. Hence, the IRA
participant must be eligible to make a qualified rollover distribution in order
to convert an IRA to a Roth IRA. A conversion typically will result in the
inclusion of some or all of the IRA value in gross income, as described above.
Persons with adjusted gross incomes in excess of $100,000 or who are married and
file a separate return are not eligible to make a qualified rollover
contribution or a transfer in a taxable year from a non-Roth IRA to a Roth IRA.
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Any "qualified distribution" from a Roth IRA is excludible from gross
income. A "qualified distribution" is a payment or distribution which satisfies
two requirements. First, the payment or distribution must be (a) made after the
Owner attains age 59-1/2, (b) made after the Owner's death, (c) attributable to
the Owner being disabled, or (d) a qualified first-time homebuyer distribution
within the meaning of section 72(t)(2)(F) of the Code. Second, the payment or
distribution must be made in a taxable year that is at least five years after
(a) the first taxable year for which a contribution was made to any Roth IRA
established for the Owner, or (b) in the case of a payment or distribution
properly allocable to a qualified rollover contribution from a non-Roth IRA (or
income allocable thereto), the taxable year in which the rollover contribution
was made. A distribution from a Roth IRA which is not a qualified distribution
is generally taxed in the same manner as a distribution from non-Roth IRAs.
Distributions from a Roth IRA need not commence at age 70-1/2.
As described above (see Individual Retirement Annuities), there is some
uncertainty regarding the proper characterization of the Contract's death
benefit for purposes of the tax rules governing IRAs (which include Roth IRAs).
Persons intending to use the Contract in connection with a Roth IRA should seek
competent advice.
DIRECT ROLLOVERS
If the contract is used in connection with a retirement plan that is
qualified under Sections 401(a), 403(a), or 403(b) of the Code, any "eligible
rollover distribution" from the contract will be subject to "direct rollover"
and mandatory withholding requirements. An eligible rollover distribution
generally is any taxable distribution from such qualified plans, excluding
certain amounts such as (i) minimum distributions required under Section
401(a)(9) of the Code, and (ii) certain distributions for life, life expectancy,
or for 10 years or more which are part of a "series of substantially equal
periodic payments."
Under these requirements, Federal income tax equal to 20% of the eligible
rollover distribution will be withheld from the amount of the distribution.
Unlike withholding on certain other amounts distributed from the contract,
discussed below, the owner cannot elect out of withholding with respect to an
eligible rollover distribution. However, this 20% withholding will not apply if,
instead of receiving the eligible rollover distribution, the distributee elects
to have it directly transferred to certain qualified plans. Prior to receiving
an eligible rollover distribution, a notice will be provided explaining
generally the direct rollover and mandatory withholding requirements and how to
avoid the 20% withholding by electing a direct rollover.
FEDERAL INCOME TAX WITHHOLDING
The Company will withhold and remit to the U.S. Government a part of the
taxable portion of each distribution made under a contract unless the
distributee notifies the Company at or before the time of the distribution that
he or she elects not to have any amounts withheld. In certain circumstances, the
Company may be required to withhold tax. The withholding rates applicable to the
taxable portion of periodic annuity payments are the same as the withholding
rates generally applicable to payments of wages. In addition, the withholding
rate applicable to the taxable portion of non-periodic payments (including
withdrawals prior to the maturity date and rollovers from non-Roth IRAs to Roth
IRAs) is 10%. As discussed above, the withholding rate applicable to eligible
rollover distributions is 20%.
GENERAL MATTERS
TAX DEFERRAL
The status of the contract as an annuity generally allows all earnings on
the underlying investments to be tax-deferred until withdrawn or until annuity
payments begin (see "FEDERAL TAX MATTERS"). This tax deferred treatment may be
beneficial to contract owners in building assets in a long-term investment
program.
PERFORMANCE DATA
Each of the sub-accounts may in its advertising and sales materials quote
total return figures. The sub-accounts may advertise both "standardized" and
"non-standardized" total return figures, although standardized figures will
always accompany non-standardized figures. Non-standardized total return figures
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may be quoted assuming both (i) redemption at the end of the time period and
(ii) not assuming redemption at the end of the time period. Standardized figures
include total return figures from: (i) the inception date of the sub-account of
the Variable Account which invests in the portfolio or (ii) ten years, whichever
period is shorter. Non-standardized figures include total return numbers from:
(i) inception date of the portfolio or (ii) ten year, whichever period is
shorter. Such figures will always include the average annual total return for
recent one year and, when applicable, five and ten year periods and, where less
than ten years, the inception date of the sub-account, in the case of
standardized returns, and the inception date of the portfolio, in the case of
non-standardized returns. Where the period since inception is less than one
year, the total return quoted will be the aggregate return for the period. The
average annual total return is the average annual compounded rate of return that
equates a purchase payment to the market value of such purchase payment on the
last day of the period for which such return is calculated. The aggregate total
return is the percentage change (not annualized) that equates a purchase payment
to the market value of such purchase payment on the last day of the period for
which such return is calculated. For purposes of the calculations it is assumed
that an initial payment of $1,000 is made on the first day of the period for
which the return is calculated. For total return figures quoted for periods
prior to the commencement of the offering of this contract, standardized
performance data will be the historical performance of the Trust portfolio from
the date the applicable sub-account of the Variable Account first became
available for investment under other contracts offered by the Company, adjusted
to reflect current contract charges. In the case of non-standardized
performance, performance figures will be the historical performance of the Trust
portfolio from the inception date of the portfolio (or in the case of the Trust
portfolios created in connection with the merger of Manulife Series Fund, Inc.
into the Trust, the inception date of the applicable predecessor Manulife Series
Fund portfolio), adjusted to reflect current contract charges. Past performance
figures quoted are not intended to indicate future performance of any
sub-account. More detailed information on the computations is set forth in the
Statement of Additional Information.
FINANCIAL STATEMENTS
Financial Statements for the Variable Account and the Company are
contained in the Statement of Additional Information.
ASSET ALLOCATION AND TIMING SERVICES
The Company is aware that certain third parties may offer asset
allocation and timing services in connection with the contracts. In certain
cases the Company may have agreed to honor transfer instructions from such asset
allocation and timing services where it has received powers of attorney, in a
form acceptable to it, from the contract owners participating in the service.
THE COMPANY DOES NOT ENDORSE, APPROVE OR RECOMMEND SUCH SERVICES IN ANY WAY AND
CONTRACT OWNERS SHOULD BE AWARE THAT FEES PAID FOR SUCH SERVICES ARE SEPARATE
AND IN ADDITION TO FEES PAID UNDER THE CONTRACTS.
DISTRIBUTION OF CONTRACTS
MSS, located at 73 Tremont Street, Boston, Massachusetts 02108, a
Delaware limited liability company controlled by the parent of the Company, is
the principal underwriter of the contracts in addition to providing advisory
services to the Trust. MSS is a broker-dealer registered under the Securities
Exchange Act of 1934 (the "1934 Act") and a member of the National Association
of Securities Dealers, Inc. (the "NASD").
Sales of the contracts will be made by registered representatives of
broker-dealers authorized by MSS and the company to sell the contracts. Such
registered representatives will also be licensed insurance agents of the
Company. MSS will pay distribution compensation to selling brokers in varying
amounts which under normal circumstances are not expected to exceed 6% of
purchase payments or 5% of purchase payments plus 0.75% of the contract value
per year commencing one year after each initial purchase payment. MSS may from
time to time pay additional compensation pursuant to promotional contests.
Additionally, in some circumstances, MSS will be compensated for providing
marketing support for the distribution of the contracts.
CONTRACT OWNER INQUIRIES
All contract owner inquiries should be directed to the Company's Annuity
Service Office at Corporate Center at Rye, 555 Theodore Fremd Avenue, Suite
C-209, Rye, New York 10580-9966.
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CONFIRMATION STATEMENTS
Owners will be sent confirmation statements for certain transactions in
their account. Owners should carefully review these statements to verify their
accuracy. Any mistakes should immediately be reported to the Company's Annuity
Service Office. If the owner fails to notify the Company's Annuity Service
Office of any mistake within 60 days of the mailing of the confirmation
statement, the owner will be deemed to have ratified the transaction.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party
or to which the assets of the Variable Account are subject. Neither the Company
nor MSS are involved in any litigation that is of material importance in
relation to their total assets or that relates to the Variable Account.
OTHER INFORMATION
A registration statement has been filed with the SEC under the 1933 Act
with respect to the variable portion of the contracts discussed in this
Prospectus. Not all the information set forth in the registration statement,
amendments and exhibits thereto has been included in this Prospectus. Statements
contained in this Prospectus or the Statement of Additional Information
concerning the content of the contracts and other legal instruments are only
summaries. For a complete statement of the terms of these documents, reference
should be made to the instruments filed with the SEC.
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
General Information and History .......................................... 3
Performance Data ......................................................... 3
State Premium Taxes ...................................................... 11
Services ................................................................. 11
Independent Auditors ............................................... 11
Servicing Agent .................................................... 11
Principal Underwriter .............................................. 11
Cancellation of Contract ........................................... 12
Appendix A - State Premium Taxes ......................................... 13
Financial Statements ..................................................... 14
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APPENDIX A
EXAMPLES OF CALCULATION OF WITHDRAWAL CHARGE
Example 1 - Assume a single payment of $50,000 is made into the contract, no
transfers are made, no additional payments are made and there are no partial
withdrawals. The table below illustrates four examples of the withdrawal charges
that would be imposed if the contract is completely withdrawn, based on
hypothetical contract values.
<TABLE>
<CAPTION>
HYPOTHETICAL
CONTRACT CONTRACT WITHDRAWAL AMOUNT PAYMENTS
YEAR VALUE WITHOUT CHARGES LIQUIDATED WITHDRAWAL CHARGE
- ---- ----- --------------- ---------- -----------------
PERCENT AMOUNT
<S> <C> <C> <C> <C> <C>
2 55,000 5,000(a) 50,000 6% 3,000
4 50,500 5,000(b) 45,500 5% 2,275
6 60,000 10,000(c) 50,000 3% 1,500
8 70,000 20,000(d) 50,000 0% 0
</TABLE>
(a) During any contract year the amount that may be withdrawn without
withdrawal charges is the greater of accumulated earnings, or 10% of the
total payments made under the contract less any prior partial withdrawals
in that contract year. In the second contract year the earnings under the
contract and 10% of payments both equal $5,000. Consequently, on total
withdrawal $5,000 is withdrawn without withdrawal charges, the entire
$50,000 payment is liquidated and the withdrawal charge is assessed
against such liquidated payment (contract value less withdrawal amount
without charges).
(b) In the example for the fourth contract year, the accumulated earnings of
$500 is less than 10% of payments, therefore the amount that may be
withdrawn without charges is equal to 10% of payments ($50,000 X 10% =
$5,000) and the withdrawal charge is only applied to payments liquidated
(contract value less withdrawal amount without charges).
(c) In the example for the sixth contract year, the accumulated earnings of
$10,000 is greater than 10% of payments ($5,000), therefore the amount
that may be withdrawn without charges is equal to the accumulated
earnings of $10,000 and the withdrawal charge is applied to the payments
liquidated (contract value less withdrawal amount without charges).
(d) There is no withdrawal charge on any payments liquidated that have been
in the contract for at least 7 years.
Example 2 - Assume a single payment of $50,000 is made into the contract, no
transfers are made, no additional payments are made and there are a series of
four partial withdrawals made during the third contract year of $2,000, $5,000,
$7,000, and $8,000.
<TABLE>
<CAPTION>
HYPOTHETICAL PARTIAL
CONTRACT WITHDRAWAL WITHDRAWAL AMOUNT PAYMENTS
VALUE REQUESTED WITHOUT CHARGES LIQUIDATED WITHDRAWAL CHARGE
- ----- --------- --------------- ---------- -----------------
PERCENT AMOUNT
<S> <C> <C> <C> <C> <C>
65,000 2,000 15,000(a) 0 5% 0
49,000 5,000 3,000(b) 2,000 5% 100
52,000 7,000 4,000(c) 3,000 5% 150
44,000 8,000 0(d) 8,000 5% 400
</TABLE>
(a) The amount that can be withdrawn without withdrawal charges during any
contract year is the greater of the contract value less the unliquidated
payments (accumulated earnings), or 10% of payments less 100% of all
prior withdrawals in that contract year. For the first example,
accumulated earnings of $15,000 is the amount that can be withdrawn
without withdrawal charges since it is greater than 10% of payments less
prior withdrawals ($5,000-0). The amount requested ($2,000) is less than
the amount that can be withdrawn without withdrawal charges so no
payments are liquidated and no withdrawal charge applies.
41
<PAGE> 46
(b) The contract has negative accumulated earnings ($49,000-$50,000), so the
amount that can be withdrawn without withdrawal charges is limited to 10%
of payments less all prior withdrawals. Since $2,000 has already been
withdrawn in the current contract year, the remaining amount that can be
withdrawn without withdrawal charges withdrawal during the third contract
year is $3,000. The $5,000 partial withdrawal will consist of $3,000 that
can be withdrawn without withdrawal charges, and the remaining $2,000
will be subject to a withdrawal charge and result in payments being
liquidated. The remaining unliquidated payments are $48,000.
(c) The contract has increased in value to $52,000. The unliquidated payments
are $48,000 so the accumulated earnings are $4,000, which is greater than
10% of payments less prior withdrawals ($5,000-$2,000-$5,000 less than 0).
Hence the amount that can be withdrawn without withdrawal charges is
$4,000. Therefore, $3,000 of the $7,000 partial withdrawal will be
subject to a withdrawal charge and result in payments being liquidated.
The remaining unliquidated payments are $45,000.
(d) The amount that can be withdrawn without withdrawal charges is zero since
the contract has negative accumulated earnings ($44,000-$45,000) and the
full 10% of payments ($5,000) has already been withdrawn. The full amount
of $8,000 will result in payments being liquidated subject to a
withdrawal charge. At the beginning of the next contract year the full
10% of payments would be available again for withdrawal requests during
that year.
42
<PAGE> 47
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 48
STATEMENT OF ADDITIONAL INFORMATION
THE MANUFACTURERS LIFE INSURANCE COMPANY OF
NEW YORK SEPARATE ACCOUNT A
of
THE MANUFACTURERS LIFE INSURANCE COMPANY
OF NEW YORK
FLEXIBLE PURCHASE PAYMENT INDIVIDUAL DEFERRED
COMBINATION FIXED AND VARIABLE ANNUITY CONTRACT
NON-PARTICIPATING
This Statement of Additional Information is not a Prospectus. It
contains information in addition to that described in the Prospectus and should
be read in conjunction with the Prospectus dated the same date as this Statement
of Additional Information. The Prospectus may be obtained by writing The
Manufacturers Life Insurance Company of New York at the Annuity Service Office,
Corporate Center at Rye, 555 Theodore Fremd Avenue, Suite C-209, Rye, New York
10580-9966 or by telephoning (914) 921-1020.
The date of this Statement of Additional Information is May 1, 1998
V24.SAI598
<PAGE> 49
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Information and History............................... 3
Performance Data.............................................. 3
State Premium Taxes........................................... 11
Services ..................................................... 11
Independent Auditors................................. 11
Servicing Agent...................................... 11
Principal Underwriter................................ 11
Cancellation of Contract............................. 12
Appendix A - State Premium Taxes.............................. 13
Financial Statements.......................................... 14
</TABLE>
2
<PAGE> 50
GENERAL INFORMATION AND HISTORY
The Manufacturers Life Insurance Company of New York Separate Account
A, formerly the FNAL Variable Account (the "Variable Account") is a separate
investment account of The Manufacturers Life Insurance Company of New York (the
"Company"), a stock life insurance company organized under the laws of New York
in 1992. The Company is a wholly-owned subsidiary of The Manufacturers Life
Insurance Company of North America, formerly, North American Security Life
Insurance Company ("Manulife North America"), a stock life insurance company
established in 1979 in Delaware. The ultimate parent of Manulife North America
is The Manufacturers Life Insurance Company ("Manulife"), a Canadian mutual life
insurance Company based in Toronto, Canada. Prior to January 1, 1996, Manulife
North America was a wholly owned subsidiary of North American Life Assurance
Company ("NAL"), a Canadian mutual life insurance company. On January 1, 1996
NAL and Manulife merged with the combined company retaining the name Manulife.
PERFORMANCE DATA
Each of the sub-accounts may in its advertising and sales materials
quote total return figures. The sub-accounts may advertise both "standardized"
and "non-standardized" total return figures, although standardized figures will
always accompany non-standardized figures. Non-standardized total return figures
may be quoted assuming both (i) redemption at the end of the time period and
(ii) not assuming redemption at the end of the time period. Standardized figures
include total return figures from: (i) the inception date of the sub-account of
the Variable Account which invests in the portfolio or (ii) inception date of
the portfolio or (ii) ten years, whichever period is shorter. Such figures will
always include the average annual total return for recent one year and, when
applicable, five and ten year periods and, where less than ten years, the
inception date of the sub-account, in the case of standardized returns, and the
inception date of the portfolio, in the case of non-standardized returns. Where
the period since inception is less than one year, the total return quoted will
be the aggregate return for the period. The average annual total return is the
average annual compounded rate of return that equates a purchase payment to the
market value of such purchase payment on the last day of the period for which
such return is calculated. The aggregate total return is the percentage change
(not annualized) that equates a purchase payment to the market value of such
purchase payment on the last day of the period for which such return is
calculated. For purposes of the calculations it is assumed that an initial
payment of $1,000 is made on the first day of the period for which the return is
calculated.
In calculating standardized return figures, all recurring charges (all
asset charges (mortality and expense risk fees and administrative fees)) are
reflected and the asset charges are reflected in changes in unit values.
Standardized total return figures will be quoted assuming redemption at the end
of the period. Non-standardized total return figures reflecting redemption at
the end of the time period are calculated on the same basis as the standardized
returns. Non-standardized total return figures not reflecting redemption at the
end of the time period are calculated on the same basis as the standardized
returns except that the calculations assume no redemption at the end of the
period and do not reflect deduction of the annual contract fee. The Company
believes such non-standardized figures not reflecting redemptions at the end of
the time period are useful to contract owners who wish to assess the performance
of an ongoing contract of the size that is meaningful to the individual contract
owner.
For total return figures quoted for periods prior to the commencement
of the offering of this contract _______, standardized performance data will be
the historical performance of the Trust portfolio from the date the applicable
sub-account of the Variable Account first became available for investment under
other contracts offered by the Company, adjusted to reflect current contract
charges. In the case of non-standardized performance, performance figures will
be the historical performance of the Trust portfolio from the inception date of
the portfolio (or in the case of the Trust portfolios created in connection with
the merger of Manulife Series Fund, Inc. into the Trust, the inception date of
the applicable predecessor, Manulife Series Fund portfolio), adjusted to reflect
current contract charges.
3
<PAGE> 51
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
CALCULATED AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
TRUST PORTFOLIO 1 YEAR 5 YEAR SINCE INCEPTION INCEPTION DATE*
OR 10 YEARS,
WHICHEVER SHORTER
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets N/A N/A -37.94% 1/1/97
Science & Technology N/A N/A 3.17% 1/4/97
International Small Cap -6.04% N/A 0.72% 3/4/96
Emerging Growth N/A N/A 10.53% 1/1/97
Pilgrim Baxter Growth N/A N/A -6.76% 1/1/97
Small/Mid Cap 7.59% N/A 7.45% 3/4/96
International Stock N/A N/A -4.31% 1/1/97
Worldwide Growth N/A N/A 5.66% 1/1/97
Global Equity 13.06% 12.51% 12.96% 10/31/92
Small Company Value N/A N/A -9.98% 10/1/97
Equity 11.53% 16.67% 18.08% 10/31/92
Growth 17.55% N/A 19.40% 7/15/96
Quantitative Equity N/A N/A 22.79% 1/1/97
Blue Chip Growth 19.11% 10.96% 10.78% 12/11/92
Real Estate Securities N/A N/A 13.53% 1/1/97
Value N/A N/A 14.39% 1/1/97
International Growth and Income -6.84% N/A 3.33% 1/9/95
Growth and Income 24.92% 16.77% 17.27% 10/31/92
Equity-Income 21.84% N/A 15.35% 2/19/93
Balanced N/A N/A 10.82% 1/1/97
Aggressive Asset Allocation 11.38% 10.44% 10.86% 10/31/92
High Yield N/A N/A 5.06% 1/1/97
Moderate Asset Allocation 8.20% 8.57% 8.90% 10/31/92
Conservative Asset Allocation 3.84% 6.36% 6.61% 10/31/92
</TABLE>
4
<PAGE> 52
<TABLE>
<S> <C> <C> <C> <C>
Strategic Bond 3.41% N/A 7.26% 2/19/93
Global Government Bond -4.03% 7.79% 7.48% 10/31/92
Capital Growth Bond N/A N/A 1.88 1/1/97
Investment Quality Bond 2.77% 4.93% 5.17% 10/31/92
U.S. Government Securities 1.09% 4.41% 4.51% 10/31/92
Money Market -1.99% 2.23% 2.37% 10/31/92
Lifestyle Aggressive 1000 N/A N/A 4.80% 1/1/97
Lifestyle Growth 820 N/A N/A 7.29% 1/1/97
Lifestyle Balanced 640 N/A N/A 7.38% 1/1/97
Lifestyle Moderate 460 N/A N/A 6.79% 1/197
Lifestyle Conservative 260 N/A N/A 5.07% 1/1/97
</TABLE>
* Inception date of the sub-account of the Variable Account which invests in the
portfolio.
5
<PAGE> 53
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
(ASSUMING REDEMPTION AT THE END OF THE TIME PERIOD)
CALCULATED AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
TRUST PORTFOLIO 1 YEAR 5 YEAR SINCE INCEPTION INCEPTION DATE
OR 10 YEARS, OF PORTFOLIO
WHICHEVER
SHORTER
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets* 38.40% N/A -10.58% 10/4/94
Science & Technology N/A N/A 3.17% 1/1/97
International Small Cap -6.04% N/A 0.72% 3/4/96
Emerging Growth N/A N/A 10.53% 1/1/97
Pilgrim Baxter Growth N/A N/A -6.76% 1/1/97
Small/Mid Cap 7.59% N/A 7.45% 3/4/96
International Stock N/A N/A -4.31% 1/1/97
Worldwide Growth N/A N/A 5.66% 1/1/97
Global Equity 13.06% 12.51% 8.18% 3/18/88
Small Company Value N/A N/A -9.98% 10/1/97
Equity 11.53% 16.67% 13.50%+ 6/18/85
Growth 17.55% N/A 19.40% 7/15/96
Quantitative Equity* 21.97% 14.40% 13.48%+ 4/30/87
Blue Chip Growth 19.11% 10.96% 10.78% 12/11/92
Real Estate Securities* 10.70% 14.83% 14.22%+ 4/30/87
Value N/A N/A 14.39% 1/1/97
International Growth and Income -6.84% N/A 3.33% 1/9/95
Growth and Income 24.92% 16.77% 15.44% 4/23/91
Equity-Income 21.84% N/A 15.35% 2/19/93
Balanced N/A N/A 10.82% 1/1/97
Aggressive Asset Allocation 11.38% 10.44% 8.51% 8/3/89
High Yield N/A N/A 5.06% 1/1/97
Moderate Asset Allocation 8.20% 8.57% 7.51% 8/3/89
Conservative Asset Allocation 3.84% 6.36% 6.21% 8/3/89
Strategic Bond 3.41% N/A 7.26% 2/19/93
Global Government Bond -4.03% 7.79% 7.31% 3/18/88
Capital Growth Bond* 1.31% 4.99% 6.97%+ 6/26/84
Investment Quality Bond 2.27% 4.93% 5.42%+ 6/18/85
U.S. Government Securities 1.09% 4.41% 5.82% 3/18/88
Money Market -1.99% 2.23% 3.93%+ 6/18/85
</TABLE>
6
<PAGE> 54
<TABLE>
<S> <C> <C> <C> <C>
Lifestyle Aggressive 1000 N/A N/A 4.80% 1/1/97
Lifestyle Growth 820 N/A N/A 7.29% 1/1/97
Lifestyle Balanced 640 N/A N/A 7.38% 1/1/97
Lifestyle Moderate 460 N/A N/A 6.79% 1/1/97
Lifestyle Conservative 260 N/A N/A 5.07% 1/1/97
</TABLE>
7
<PAGE> 55
+ Ten year average annual return.
* On December 31, 1996, Manulife Series Fund, Inc. merged with the Trust.
Performance presented for these sub-accounts is based upon the performance of
the respective predecessor Manulife Series Fund portfolio for periods prior to
December 31, 1996. Performance for each of these sub-accounts is based on the
historical performance of the predecessor Manulife Series Fund portfolio,
adjusted to reflect current contract charges, and therefore, does not reflect
for periods prior to December 31, 1996 the current Trust portfolio expenses that
an investor would incur as a holder of units of the sub-account.
8
<PAGE> 56
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
(ASSUMING NO REDEMPTION AT THE END OF THE TIME PERIOD)
CALCULATED AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
TRUST PORTFOLIO 1 YEAR 5 YEAR SINCE INCEPTION INCEPTION DATE
OR 10 YEARS, OF PORTFOLIO
WHICHEVER
SHORTER
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets* -35.04% N/A -9.28% 10/4/94
Science & Technology N/% N/A 9.18% 1/1/97
International Small Cap -0.62% N/A 3.92% 3/4/96
Emerging Growth N/A N/A 16.59% 1/1/97
Pilgrim Baxter Growth N/A N/A -1.38% 1/1/97
Small/Mid Cap 13.66% N/A 10.58% 3/4/96
International Stock N/A N/A 1.22% 1/1/97
Worldwide Growth N/A N/A 11.73% 1/1/97
Global Equity 19.12% 13.05% 8.23% 3/18/88
Small Company Value N/A N/A -4.81% 10/1/97
Equity 17.59% 17.15% 13.54+% 6/18/85
Growth 23.61% N/A 23.23% 7/15/96
Quantitative Equity* 28.03% 14.92% 13.52% 4/30/87
Blue Chip Growth 25.17% 11.54% 11.23% 12/11/92
Real Estate Securities* 16.76% 15.34% 14.27+% 4/30/87
Value N/A N/A 20.46% 1/1/97
International Growth and Income -1.47% N/A 4.94% 1/9/95
Growth and Income 30.99% 17.25% 15.62% 4/23/91
Equity-Income 27.90% N/A 15.87% 2/19/93
Balanced N/A N/A 16.88% 1/1/97
Aggressive Asset Allocation 17.44% 11.03% 8.57% 8/3/89
High Yield N/A N/A 11.12% 1/1/97
Moderate Asset Allocation 14.26% 9.02% 7.56% 8/3/89
Conservative Asset Allocation 9.89% 7.04% 6.26% 8/3/89
Strategic Bond 9.44% N/A 7.94% 2/19/93
Global Government Bond 1.52% 8.43% 7.36% 3/18/88
Capital Growth Bond* 7.20% 5.70% 7.02+% 6/26/84
Investment Quality Bond 8.23% 5.64% 5.47+% 6/18/85
U.S. Government Securities 6.97% 5.14% 5.87% 3/18/88
Money Market 3.69% 3.02% 3.98+% 6/18/85
</TABLE>
9
<PAGE> 57
<TABLE>
<S> <C> <C> <C> <C>
Lifestyle Aggressive 1000 N/A N/A 10.86% 1/1/97
Lifestyle Growth 820 N/A N/A 13.35% 1/1/97
Lifestyle Balanced 640 N/A N/A 13.44% 1/1/97
Lifestyle Moderate 460 N/A N/A 12.86% 1/1/97
Lifestyle Conservative 260 N/A N/A 11.13% 1/1/97
</TABLE>
10
<PAGE> 58
+ Ten year average annual return.
* On December 31, 1996, Manulife Series Fund, Inc. merged with the Trust.
Performance presented for these sub-accounts is based upon the performance of
the respective predecessor Manulife Series Fund portfolio for periods prior to
December 31, 1996. Performance for each of these sub-accounts is based on the
historical performance of the predecessor Manulife Series Fund portfolio,
adjusted to reflect current contract charges, and therefore, does not reflect
for periods prior to December 31, 1996 the current Trust portfolio expenses that
an investor would incur as a holder of units of the sub-account.
* * * * *
In addition to the non-standardized returns quoted above, each of the
sub-accounts may from time to time quote aggregate non-standardized total
returns calculated in the same manner as set forth above for other time periods.
From time to time the Trust may include in its advertising and sales literature
general discussions of economic theories, including but not limited to,
discussions on how demographic and political trends can affect the financial
markets. Further, the Trust may also include in its advertising and sales
literature specific information on each of the Trust's subadvisers, including
but not limited to, research capabilities of a subadviser, assets under
management, information relating to other clients of a subadviser, and other
generalized information.
STATE PREMIUM TAXES
New York does not currently assess a premium tax. In the event New York
does impose a premium tax, the Company reserves the right to pass-through such
tax to contract owners.
SERVICES
INDEPENDENT AUDITORS
The financial statements of the Company and the Variable Account at
December 31, 1997 and 1996 for the years then ended appearing in this Statement
of Additional Information have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein, and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
The consolidated balance sheet as of December 31, 1995 and the
consolidated statements of operations, capital surplus, and cash flows for each
of the two years in the period ended December 31, 1995, appearing in this
Statement of Additional Information have been included herein in reliance on the
report, which includes language explaining the basis of accounting used and
whose opinion is modified in consideration of the fact that such basis of
accounting after 1996 (upon issuance of 1996 financial statements) differs from
generally accepted accounting principles, of Coopers & Lybrand L.L.P.,
independent accountants given on the authority of said firm as experts in
accounting and auditing.
SERVICING AGENT
Computer Science Corporation Financial Services Group ("CSC FSG")
provides to the Company a computerized data processing recordkeeping system for
variable annuity administration. CSC FSG provides various daily, semimonthly,
monthly, semiannual and annual reports including: daily updates on accumulation
unit values, variable annuity participants and transactions, and agent
production and commissions; semimonthly commission statements; monthly summaries
of agent production and daily transaction reports; semiannual statements for
contract owners; and annual contract owner tax reports. CSC FSG receives
approximately $7.50 per policy per year, plus certain other fees paid by the
Company for the services provided.
PRINCIPAL UNDERWRITER
Manufacturers Securities Services, LLC ("MSS"), the successor to NASL
Financial Services, Inc., a wholly-owned subsidiary of Security Life, serves as
principal underwriter of the contracts. Contracts are offered on a continuous
basis. The aggregate dollar amount of underwriting commissions paid to MSS in
1997, 1996 and 1995 were ________, $7,049,687, $5,659,896 and $6,512,457,
respectively. MSS did not retain any of these amounts during such periods.
11
<PAGE> 59
CANCELLATION OF CONTRACT
The Company may, at its option, cancel a contract at the end of any
three consecutive contract years in which no purchase payments by or on behalf
of the contract owner have been made, if both (i) the total purchase payments
made for the contract, less any withdrawals, are less than $2,000; and (ii) the
contract value at the end of such three year period is less than $2,000. The
Company, as a matter of administrative practice, will attempt to notify a
contract owner prior to such cancellation in order to allow the contract owner
to make the necessary purchase payment to keep the contract in force.
12
<PAGE> 60
APPENDIX A
STATE PREMIUM TAXES
Premium taxes vary according to the state and are subject to change. In
many jurisdictions there is no tax at all. For current information, a tax
advisor should be consulted.
<TABLE>
<CAPTION>
TAX RATE
STATE QUALIFIED NON-QUALIFIED
CONTRACTS CONTRACTS
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CALIFORNIA .50% 2.35%
DISTRICT OF COLUMBIA 2.25% 2.25%
KENTUCKY 2.00% 2.00%
MAINE .00 2.00%
NEVADA .00 3.50%
PUERTO RICO 1.00% 1.00%
SOUTH DAKOTA* .00 1.25%
WEST VIRGINIA 1.00% 1.00%
WYOMING .00 1.00%
</TABLE>
* Premium tax paid upon receipt (no tax at annuitazation if tax paid on
premium at issue)
13
<PAGE> 61
FINANCIAL STATEMENTS
14
<PAGE> 62
PART C
OTHER INFORMATION
<PAGE> 63
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(1) Financial Statements of the Registrant, The
Manufacturers Life Insurance Company of New York
Separate Account A (Part B of the registration
statement) - to be filed by amendment.
(2) Financial Statements of the Depositor, The
Manufacturers Life Insurance Company of New York
(Part B of the registration statement) - to be filed
by amendment.
(b) Exhibits
(1) (a) Resolution of the Board of Directors of
First North American Life Assurance Company
establishing the FNAL Variable Account -
incorporated by reference to Exhibit
(b)(1)(a) to Form N-4, File No. 33-46217
filed February 25, 1997.
(b) Resolution of the Board of Directors of
First North American Life Assurance Company
establishing the Fixed Separate Account -
incorporated by reference to Exhibit
(b)(1)(b) to Form N-4, File No. 33-46217
filed February 25, 1997.
(c) Resolution of the Board of Directors of
First North American Life Assurance Company
establishing The Manufacturers Life
Insurance Company of New York Separate
Account D and The Manufacturers Life
Insurance Company of New York Separate
Account E - incorporated by reference to
Exhibit (b)(1)(c) to Form N-4, File No.
33-46217 filed February 25, 1997.
(2) Agreements for custody of securities and similar
investments - Not Applicable.
(3) (a) Underwriting and Distribution Agreement
between The Manufacturers Life Insurance
Company of New York (Depositor) and
Manufacturers Securities Services, LLC.
(Underwriter) - incorporated by reference to
Exhibit (b)(3)(a) to Form N-4, File No.
33-46217 filed February 25, 1997.
(b) Selling Agreement between The Manufacturers
Life Insurance Company of New York,
Manufacturers Securities Services, LLC
(Underwriter), and General Agents -
incorporated by reference to Exhibit
(b)(3)(c) to Form N-4, File No. 33-46217
filed February 25, 1997.
(4) (a) Form of Specimen Flexible Purchase Payment
Individual Deferred Combination Fixed and
Variable Annuity Contract, Non-Participating
is filed herewith.
(b) Specimen Endorsements to Contract -
previously filed as Exhibit (b)(4)(ii) to
FNAL Variable Account Registration Statement
on Form N-4 File No. 33-79112, dated May 18,
1994.
(c) Specimen Endorsement relating to Fixed
Accounts is filed herewith.
(d) Specimen Endorsement relating to Death
Benefits is filed herewith.
1
<PAGE> 64
(5) Specimen Application for Flexible Purchase Payment
Individual Deferred Combination Fixed and Variable
Annuity Contract, Non-Participating - previously
filed as Exhibit (b)(5) to FNAL Variable Account
Registration Statement on Form N-4 File No. 33-79112,
dated May 18, 1994.
(6) (a)(i) Declaration of Intention and Charter
of First North American Life Assurance
Company incorporated by reference to Exhibit
(b)(6)(a)(i) to Form N-4, File No. 33-46217
filed February 25, 1997.
(a)(ii) Certificate of Amendment of the Declaration
of Intention and Charter of First North
American Life Assurance Company -
incorporated by reference to Exhibit
(b)(6)(a)(ii) to Form N-4, File No. 33-46217
filed February 25, 1997.
(a)(iii) Certificate of Amendment of the Declaration
of Intention and Charter of The
Manufacturers Life Insurance Company of New
York - incorporated by reference to Exhibit
(b)(6)(a)(iii) to Form N-4, File No.
33-46217 filed February 25, 1997.
(b) By-laws of The Manufacturers Life Insurance
Company of New York - incorporated by
reference to Exhibit (b)(3)(c) to Form N-4,
File No. 33-46217 filed February 25, 1997.
(7) Contract of reinsurance in connection with
the variable annuity contracts being offered
- Not Applicable.
(8) Other material contracts not made in the ordinary
course of business which are to be performed in whole
or in part on or after the date the registration
statement is filed:
(a) Administrative Agreement between The
Manufacturers Life Insurance Company of New
York and The Manufacturers Life Insurance
Company - incorporated by reference to
Exhibit (b)(3)(c) to Form N-4, File No.
33-46217 filed February 25, 1997.
(b) Investment Services Agreement between First
North American Life Assurance Company and
Elliott and Page, Ltd - previously filed as
Exhibit (b)(8)(iv) to Form N-4 filed on
September 2, 1992.
(c) License and Service Agreement between North
American Security Life Insurance Company,
First North American Life Assurance Company,
and Mentap Systems, Inc. - previously filed
as Exhibit (b)(5)(v) to Form N-4 filed on
April 28, 1995.
(9) Opinion of Counsel and consent to its use as to the
legality of the securities being registered -
previously filed as Exhibit (b)(9) to Form N-4 filed
on June 29, 1994.
2
<PAGE> 65
(10) (a) Written consent of Ernst & Young LLP,
independent auditors will be filed by
amendment.
(b) Written consent of Coopers & Lybrand L.L.P,
independent will be filed by amendment.
(11) All financial statements omitted from Item 23,
Financial Statements - Not Applicable.
(12) Agreements in consideration for providing initial
capital between or among Registrant, Depositor,
Underwriter or initial contract owners - Not
Applicable.
(13) Schedule for computation of each performance
quotation provided in the Registration Statement in
response to Item 21 - previously filed as Exhibit
(b)(13) to FNAL Variable Account Registration
Statement on Form N-4 File No. 33-79112, dated May
18, 1994. An Additional schedule for computation was
previously filed as exhibit (13) to Form N-4 filed
April 30, 1996.
(14) (a) Power of Attorney - First North American Life
Insurance Company Directors was previously filed as
Exhibit (b)(3)(iii) to post effective amendment no. 6
to the registration statement on Form N-4 dated
February 28, 1997.
(27) Financial Data Schedule- Not Applicable
3
<PAGE> 66
Item 25. Directors and Officers of the Depositor.
OFFICERS AND DIRECTORS OF THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
<TABLE>
<CAPTION>
NAME AND PRINCIPAL BUSINESS POSITION WITH THE MANUFACTURERS
ADDRESS LIFE INSURANCE COMPANY OF
NEW YORK
<S> <C>
John Richardson Director and Chairman
Manulife Financial
200 Bloor Street East
North Tower 11
Ontario, Canada M4W-1E5
Bruce R. Gordon Director
200 Bloor Street East
North Tower 10
Toronto, Ontario
Canada M4W-1E5
Joseph Scott President & Director
73 Tremont Street
Boston, MA 02108-3915
David W. Libbey Treasurer
73 Tremont Street
Boston, MA 02108-3915
Theodore Kilkuskie Director
73 Tremont Street
Boston, MA 02108
John D. DesPrez III Director
73 Tremont Street
Boston, MA 02108
Robert C. Perez Director
715 North Avenue
New Rochelle, NY 01801
James K. Robinson Director
7 Summit Drive
Rochester, New York 14620-3127
</TABLE>
4
<PAGE> 67
<TABLE>
<S> <C>
Neil M. Merkl Esq. Director
35-35 161st Street
Flushing, New York 11358
Bruce Avedon Director
6601 Hitching Post Lane
Cincinnati, OH 45230
Ruth Ann Fleming Director
145 Western Drive
Short Hills, NJ 07078-1930
Tracy Anne Kane Secretary; Counsel
73 Tremont Street
Boston, MA 02108
Stephanie Elliman Vice President & Chief
International Corporate Center at Rye Administrative Officer
555 Theodore Fremd Avenue
Rye, New York 10580
</TABLE>
5
<PAGE> 68
Item 26. Persons Controlled by or Under Common Control with Depositor or
Registrant.
THE MANUFACTURERS LIFE INSURANCE COMPANY
Manulife Corporate Organization as at December 31, 1997
The Manufacturers Life Insurance Company (Canada)
1. Cantay Holdings Inc. - Ontario (100%)
2. 484551 Ontario Limited - Ontario (100%)
a. 911164 Ontario Inc. - Ontario (100%)
3. Churchill Lifestyles Corp. (100%)
4. 495603 Ontario Limited - Ontario (100%)
5. 1198183 Ontario Limited - Ontario (100%)
6. 1198184 Ontario Limited - Ontario (100%)
7. 1235434 Ontario Limited - Ontario (100%)
8. 576986 Ontario Inc. - Ontario (100%)
9. Balmoral Developments Inc. - Ontario (100%)
10. Manulife Bank of Canada - Canada (100%)
11. Manulife Securities International Ltd. - Canada (100%)
12. Family Realty First Corp. - Ontario (100%)
13. NAL Resources Limited - Alberta (100%)
14. Manulife International Capital Corporation Limited - Ontario (100%)
a. Regional Power Inc. - Ontario (100%)
i. La Regionale Power (Port Cartier) Inc. - Ontario (100%)
ii. La Regionale Power Angliers Inc. - Ontario (100%)
iii. Addalam Power Corporation - Philippines (100%)
15. Peel-de Maisonneuve Investments Ltd. - Canada (100%)
a. 2932121 Canada Inc. - Canada (100%)
16. FNA Financial Inc. - Canada (100%)
a. NAL Trustco Inc. - Ontario (100%)
b. First North American Insurance Company - Canada (100%)
c. Elliott & Page Limited - Ontario (100%)
d. Seamark Asset Management Ltd. - Canada (67.86%)
e. NAL Resources Management Limited - Canada (100%)
i. NAL Energy Inc. - Alberta (100%)
17. ManuCab Ltd. - Canada (100%)
a. Plazcab Service Limited - Newfoundland (100%)
18. Manufacturers Life Capital Corporation Inc. - Canada (100%)
19. The North American Group Inc. - Ontario (100%)
20. 994744 Ontario Inc. - Ontario (100%)
21. 1268337 Ontario Inc. - Ontario (100%)
22. 3426505 Canada Inc. - Canada (100%)
23. The Manufacturers Investment Corporation - Michigan (100%)
a. Manulife Reinsurance Corporation (U.S.A.) - Michigan (100%)
i. The Manufacturers Life Insurance Company (U.S.A.) - Michigan (100%)
(1) Dover Leasing Investments, LLC - Delaware (99%)
(2) The Manufacturers Life Insurance Company of America -
Michigan (100%)
6
<PAGE> 69
(a) Manulife Holding Corporation - Delaware (100%)
(i) Manufacturers Adviser Corporation -
Colorado (100%)
(ii) Succession Plainning International, Inc. -
Wisconsin (100%)
(iii)ManEquity, Inc. - Colorado (100%)
(iv) Manulife Property Management of Washington, D.C.
Inc. - Washington, D.C. (100%)
(v) ManuLife Service Corporation - Colorado (100%)
(vi) Manulife Leasing Company, LLC - Delaware (80%)
(3) Capitol Bankers Life Insurance Company - Michigan (100%)
(4) Ennal, Inc. - Ohio (100%)
(5) Manulife-Wood Logan Holding Co. Inc. - Delaware (62.5%)
(a) Wood Logan Associates, Inc. - Connecticut (100%)
(i)Wood Logan Distributors, Inc. - Connecticut (100%)
(b) The Manufacturers Life Insurance Company of
North America - Delaware (100%)
(i) Manufacturers Securities Services, LLC -
Massachusetts (100%)
(ii)The Manufacturers Life Insurance Company of
New York - New York (100%)
ii. Manulife Reinsurance Limited - Bermuda (100%)
(1) MRL Holding, LLC - Delaware (99%)
(a) Manulife-Wood Logan Holding Co. Inc. - Delaware
(22.5%)
iii. MRL Holding, LLC - Delaware (1%)
24. Manulife International Investment Management Limited - U.K. (100%)
a. Manulife International Fund Management Limited - U.K. (100%)
25. WT(SW) Properties Ltd. - U.K. (100%)
26. Manulife Europe Ruckversicherungs-Aktiengesellschaft - Germany (100%)
27. Manulife International Holdings Limited - Bermuda (100%)
a. Manulife (International) Limited - Bermuda (100%)
i. Zhong Hong Life Insurance Co., Ltd. - China (51%)
ii. The Manufacturers (Pacific Asia) Insurance Company Limited -
H.K. (100%)
iii. Newtime Consultants Limited - H.K. (100%)
28. Manulife (International) Reinsurance Limited - Bermuda (100%)
a. Manulife (International) P & C Limited - Bermuda (100%)
b. Manufacturers P & C Limited - Barbados (100%)
c. Manufacturers Life Reinsurance Limited - Barbados (100%)
29. Chinfon-Manulife Insurance Company Limited - Bermuda (100%)
30. Manulife (Malaysia) SDN. BHD. - Malaysia (100%)
31. Manulife (Thailand) Ltd. - Thailand (100%)
32. Young Poong Manulife Insurance Company - Korea (100%)
33. Manulife Data Services Inc. - Barbados (100%)
a. Manulife Funds Direct (Barbados) Limited - Barbados (100%)
i. Manulife Funds Direct (Hong Kong) Limited - H.K. (100%)
34. OUB Manulife Pte. Ltd. - Singapore (100%)
35. Manulife Holdings (Hong Kong) Limited - H.K. (100%)
36. ManuLife Financial Systems (Hong Kong) Limited - H.K. (100%)
7
<PAGE> 70
37. P.T. Asuransi Jiwa Dhamala ManuLife - Indonesia (51%)
a. P.T. AMP Panin Life - Indonesia (100%)
Item 27. Number of Contract Owners.
There are no contracts of the series offered hereby outstanding.
Item 28. Indemnification.
Article 10 of the Charter of the Company provides as follows:
TENTH: No director of the Corporation shall be personally liable to the
Corporation or any of its shareholders for damages for any breach of duty as a
director; provided, however, the foregoing provision shall not eliminate or
limit (i) the liability of a director if a judgment or other final adjudication
adverse to such director established his or her such acts or omissions were in
bad faith or involved intentional misconduct or were acts or omissions (a) which
he or she knew or reasonably should have known violated the New York Insurance
Law or (b) which violated a specific standard of care imposed on directors
directly, and not by reference, by a provision of the New York Insurance Law (or
any regulations promulgated thereunder) or (c) which constituted a knowing
violation of any other law, or establishes that the director personally gained
in fact a financial profit or other advantage to which the director was not
legally entitled or (ii) the liability of a director for any act or omission
prior to the adoption of this Article by the shareholders of the Corporation.
Any repeal or modification of this Article by the shareholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification.
Article VII of the By-laws of the Company provides as follows:
Section VII.1. Indemnification of Directors and Officers. The Corporation may
indemnify any person made, or threatened to be made, a party to an action by or
in the right of the corporation to procure a judgment in its favor by reason of
the fact that he or she, his or her testator, testatrix or intestate, is or was
a director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of any other corporation of any type or
kind, domestic or foreign, of any partnership, joint venture, trust, employee
benefit plan or other enterprise, against amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him or her in connection with the defense or settlement of such
action, or in connection with an appeal therein, if such director or officer
acted, in good faith, for a purpose which he or she reasonably believed to be
in, or, in the case of service for any other corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise, not opposed to,
the best interests of the Corporation, except that no indemnification under this
Section shall be made in respect of (1) a threatened action, or a pending action
which is settled or is otherwise disposed of, or (2) any claim, issue or matter
as to which such person shall have been adjudged to be liable to the
Corporation, unless and only to the extent that the court in which the action
was brought, or , if no action was brought, any court of competent jurisdiction,
determines upon application that, in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for such portion of
the settlement amount and expenses as the court deems proper.
8
<PAGE> 71
The Corporation may indemnify any person made, or threatened to be made, a party
to an action or proceeding (other than one by or in the right of the Corporation
to procure a judgment in its favor), whether civil or criminal, including an
action by or in the right of any other corporation of any type or kind, domestic
or foreign, or any partnership, joint venture, trust, employee benefit plan or
other enterprise, which any director or officer of the Corporation served in any
capacity at the request of the Corporation, by reason of the fact that he or
she, his or her testator, testatrix or intestate, was a director or officer of
the Corporation, or served such other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees actually and necessarily incurred as a result of such action or
proceeding, or any appeal therein, if such director or officer acted, in good
faith, for a purpose which he or she reasonably believed to be in, or, in the
case of service for any other corporation or any partnership, joint venture,
trust, employee benefit plan or other enterprise, not opposed to, the best
interests of the Corporation and, in criminal actions or proceedings, in
addition, had no reasonable cause to believe that his or her conduct was
unlawful.
The termination of any such civil or criminal action or proceeding by judgment,
settlement, conviction or upon a plea of nolo contendere, of its equivalent,
shall not in itself create a presumption that any such director or officer did
not act, in good faith, for a purpose which he or she reasonably believed to be
in, or, in the case of service for any other corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise, not opposed to,
the best interest of the Corporation or that he or she had reasonable cause to
believe that his or her conduct was unlawful.
Notwithstanding the foregoing, Registrant hereby makes the following undertaking
pursuant to Rule 484 under the Securities Act of 1933:
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
Notwithstanding the foregoing, Registrant hereby makes the following undertaking
pursuant to Rule 484 under the Securities Act of 1933:
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense
9
<PAGE> 72
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
Item 29. Principal Underwriters.
a. Name of Investment Company Capacity In which acting
Manufacturers Investment Trust Investment Adviser
The Manufacturers Life Insurance Principle Underwriter
Company of North America Separate
Account A
The Manufacturers Life Insurance Principle Underwriter
Company of North America Separate
Account B
The Manufacturers Life Insurance Principle Underwriter
Company of New York Separate
Account A
b. The Manufacturers Life Insurance Company of North America is the managing
member of Manufacturers Securities Services, LLC and has sole power to act on
behalf of Manufacturers Securities Services, LLC. The officers and directors of
The Manufacturers Life Insurance Company of North America are set forth under
Item 25.
<TABLE>
<CAPTION>
Name and Principal Position with The Manufacturers Life Insurance
Business Address Company of North America
<S> <C>
John D. Richardson Director and Chairman of the Board of
200 Bloor Street East Directors
North Tower, 11th Floor
Toronto, Ontario
Canada M4W-1E5
Peter S. Hutchison Director
200 Bloor Street East
North Tower, 7th Floor
Toronto, Ontario
Canada M4W-1E5
John D. DesPrez III President & Director
73 Tremont Street
</TABLE>
10
<PAGE> 73
<TABLE>
<S> <C>
Boston, MA 02108
James Boyle Vice President, Administration and Chief
116 Huntington Avenue Administrative Officer
Boston, MA 02116
John G. Vrysen Vice President & Chief Actuary
73 Tremont Street
Boston, MA 02108
Hugh McHaffie Vice President, U.S. Annuities and Product
73 Tremont Street Development
Boston, MA 02108
Richard C. Hirtle Vice President, Strategic Development and Accumulation s
116 Huntington Avenue Life Products
Boston, MA 02116
James D. Gallagher Vice President, Secretary and General Counsel
73 Tremont Street
Boston, MA 02108
Janet Sweeney Vice President, Corporate Services
73 Tremont Street
Boston, MA 02108
Robert Boyda Vice President, Investment Management Services
73 Tremont Street
Boston, MA 01208
David W. Libbey Vice President, Treasurer & Chief
73 Tremont Street Financial Officer
Boston, MA 02108
</TABLE>
c. None.
Item 30. Location of Accounts and Records.
All books and records are maintained at Corporate Center at Rye, 555 Theodore
Fremd Avenue, Rye, New York 10580.
Item 31. Management Services.
The Company has entered into an Administrative Services Agreement with The
Manufacturers Life Insurance Company ("Manulife"). This Agreement provides that
under the general supervision of
11
<PAGE> 74
the Board of Directors of the Company, and subject to initiation, preparation
and verification by the Chief Administrative Officer of the Company, Manulife
shall provide accounting services related to the provision of a payroll support
system, general ledger, accounts payable, tax and auditing services.
Item 32. Undertakings.
Representation of Insurer Pursuant to Section 26 of the Investment Company Act
of 1940
The Manufacturers Life Insurance Company of New York ("Company") hereby
represents that the fees and charges deducted under the contracts issued
pursuant to this registration statement, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by the Company
12
<PAGE> 75
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, The
Manufacturers Life Insurance Company of New York Separate Account A, has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Boston, and
Commonwealth of Massachusetts on the 27th day of February, 1998.
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NEW YORK SEPARATE ACCOUNT A
(Registrant)
By: THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NEW YORK
(Depositor)
By: /s/ Joseph Scott
----------------
Joseph Scott
President
Attest:
/s/ Tracy Anne Kane
---------------
Tracy Anne Kane
Secretary
<PAGE> 76
As required by the Securities Act of 1933, this amended Registration
Statement has been signed by the following persons in the capacities with the
Depositor and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
*_____________________ Director 2/27/98
John Richardson (Chairman)
/s/ Joseph Scott
Joseph Scott Director; President 2/27/98
(Chief Executive Officer)
/s/ John D. DesPrez III Director;
John D. DesPrez III 2/27/98
_____________________ Director
Theodore Kilkuski 2/27/98
*_____________________
Robert C. Perez Director 2/27/98
*_____________________
H. Bruce Gordon Director 2/27/98
*_____________________
James K. Robinson Director 2/27/98
*_____________________
Neil M. Merkl Director 2/27/98
*_____________________
Bruce Avedon Director 2/27/98
</TABLE>
<PAGE> 77
<TABLE>
<S> <C> <C>
*_____________________
Ruth Ann Fleming Director 2/27/98
</TABLE>
*By: /s/Tracy Anne Kane February 27, 1998
Tracy Anne Kane Date
Attorney-in-Fact
Pursuant to Powers
of Attorney
<PAGE> 78
EXHIBIT INDEX
Exhibit No. Description
(b)(4)(a) Form of Specimen Flexible Purchase Payment
Individual Deferred Combination Fixed and Variable Annuity
Contract
(b)(4)(c) Fixed Account Endorsement
(b)(4)(d) Death Benefit Endorsement
13
<PAGE> 1
[THE MANUFACTURERS LIFE INSURANCE LETTERHEAD]
HOME OFFICE:
International Corporate Center at Rye
555 Theodore Fremd Avenue
Rye, N.Y. 10580
THIS IS A LEGAL CONTRACT - READ IT
CAREFULLY.
WE AGREE to pay the benefits of this Contract in
accordance with its terms.
THIS CONTRACT is issued in consideration of the
Application and the Payments.
TEN DAY RIGHT TO REVIEW
THE CONTRACT OWNER MAY CANCEL THE CONTRACT BY RETURNING IT TO OUR ANNUITY
SERVICE OFFICE OR AGENT AT ANY TIME WITHIN 10 DAYS AFTER RECEIPT OF THE
CONTRACT. WITHIN 7 DAYS OF RECEIPT OF THE CONTRACT BY US, WE WILL PAY THE
CONTRACT VALUE, COMPUTED AT THE END OF THE VALUATION PERIOD, ON THE DATE OF
SURRENDER, TO THE CONTRACT OWNER.
SIGNED FOR THE COMPANY at its Executive
Office, Rye, New York, on the Contract Date.
DETAILS OF VARIABLE ACCOUNT PROVISIONS ON PAGE 8
DETAILS OF FIXED ACCOUNT PROVISIONS ON PAGE 9
DETAILS OF MARKET VALUE CHARGE PROVISIONS ON PAGES 9, 12, AND 14
s/Joseph Scott s/Tracy Kane
President Secretary
Flexible Payment Deferred Combination Fixed and Variable Annuity
Non-Participating
ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON
THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE AND
NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
<PAGE> 2
INTRODUCTION
This is a flexible payment deferred combination fixed and variable annuity. This
Contract provides that prior to the Maturity Date, the Contract Value will
accumulate on either a fixed or variable basis or a combination of both. After
the Maturity Date, annuity payments may be either fixed or variable, or a
combination of fixed and variable.
The variable portion of the Contract will vary with the investment performance
of the Variable Account. The fixed portion of the Contract will accumulate based
on interest rates guaranteed by the Company for the period selected.
If you select annuity payments on a variable basis, the payment amount will vary
with the investment performance of the Variable Account.
You must allocate Payments among one or more Investment Options. The Investment
Options are identified on the Contract Specifications Page.
TABLE OF CONTENTS
Contract Specifications Page Page
PART 1 - DEFINITIONS 1
--------------------------------------------------------
PART 2 - GENERAL PROVISIONS 2
-------------------------------------------------
PART 3 - OWNERSHIP 4
----------------------------------------------------------
PART 4 - BENEFITS 5
-----------------------------------------------------------
PART 5 - PAYMENTS 7
-----------------------------------------------------------
PART 6 - VARIABLE ACCOUNT PROVISIONS 8
----------------------------------------
PART 7 - FIXED ACCOUNT PROVISIONS 9
-------------------------------------------
PART 8 - ANNUITY PROVISIONS 10
------------------------------------------------
PART 9 - TRANSFERS 11
---------------------------------------------------------
PART 10 - WITHDRAWAL PROVISIONS 12
---------------------------------------------
PART 11 - FEES AND DEDUCTIONS 15
-----------------------------------------------
PART 12 - PAYMENT OF CONTRACT BENEFITS 15
--------------------------------------
<PAGE> 3
PART 1 DEFINITIONS
WE AND YOU "We", "us" and "our" means The
Manufacturers Life Insurance
Company of New York. "You" or "your"
means the Owner of this Contract.
ACCUMULATION UNIT A unit of measure that is used
to calculate the value of the
variable portion of the Contract
before the Maturity Date.
ANNUITANT Any individual person or persons
whose life is used to determine the
duration of annuity payments
involving life contingencies. The
Annuitant is as designated on the
Contract Specifications Page and
application, unless changed.
ANNUITY OPTION The method selected by you for
annuity payments made by us.
ANNUITY SERVICE OFFICE Any office designated by us for the
receipt of Payments and processing
of Contract Owner requests.
ANNUITY UNIT A unit of measure that is used after
the Maturity Date to calculate
Variable Annuity payments.
BENEFICIARY The person, persons or entity to whom
certain benefits are payable
following the death of an Owner, or
in certain circumstances, an
Annuitant.
CONTINGENT BENEFICIARY The person, persons, or entity who
becomes the Beneficiary if the
Beneficiary is not alive.
CONTRACT ANNIVERSARY The anniversary of the Contract Date.
CONTRACT DATE The date of issue of the Contract as
specified on the Contract
Specifications Page.
CONTRACT VALUE The total of the Investment Account
Values and, if applicable, any
amount in the Loan Account
attributable to the Contract.
CONTRACT YEAR The period of twelve consecutive
months beginning on the Contract Date
or any anniversary thereafter.
DEBT Any amounts in the Loan Account
attributable to the Contract plus any
accrued loan interest. The loan
provision is applicable to certain
Qualified Contracts only.
DESIGNATED BENEFICIARY For purposes of section 72(s) of the
Internal Revenue Code, the
"designated beneficiary" under
the contract shall be the individual
who is entitled to receive the
amounts payable on death of an Owner,
or if any Owner is not an individual,
on any change in, or death of, an
Annuitant.
FIXED ANNUITY An Annuity Option with payments
which are predetermined and
guaranteed as to dollar amount.
GENERAL ACCOUNT All the assets of The Manufacturers
Life Insurance Company of New York
other than assets in separate
accounts.
INTERNAL REVENUE CODE (IRC) The Internal Revenue Code of 1986,
as amended from time to time, and
any successor statute of similar
purposes.
INVESTMENT ACCOUNT An account established by us which
represents your interest in an
Investment Option prior to the
Maturity Date.
INVESTMENT ACCOUNT VALUE The value of your investment in an
Investment Account.
INVESTMENT OPTIONS The Investment Options can be either
fixed or variable. The Investment
Options available under this
Contract are shown on the Contract
Specifications Page and application.
1
<PAGE> 4
LOAN ACCOUNT The portion of the General Account
that is used for collateral when a
loan is taken.
MARKET VALUE CHARGE A charge that may be assessed if
amounts are withdrawn or transferred
from the fixed Investment Options
prior to the end of the interest
rate guarantee period.
MATURITY DATE The date on which annuity benefits
commence. It is the date specified
on the Contract Specifications Page,
unless changed.
NET PAYMENT The Payment less the amount of
premium tax, if any, deducted from
the Payment.
NON-QUALIFIED CONTRACTS Contracts which are not issued under
Qualified Plans.
OWNER OR CONTRACT OWNER The person, persons, or entity
entitled to the ownership rights
under this Contract. The Owner is as
designated on the Contract
Specifications Page and application,
unless changed.
PORTFOLIO OR TRUST A separate portfolio of
PORTFOLIO Manufacturers Investment Trust, a
mutual fund in which the Variable
Account invests, or any successor
mutual fund.
PAYMENT An amount paid to us by you as
consideration for the benefits
provided by the Contract.
QUALIFIED CONTRACTS Contracts issued under Qualified
Plans.
QUALIFIED PLANS Retirement plans which receive
favorable tax treatment under
section 401, 403, 408 or 457, of the
Internal Revenue Code of 1986, as
amended.
SEPARATE ACCOUNT A segregated account of The
Manufacturers Life Insurance Company
of New York that is not commingled
with our general assets and
obligations.
SUB-ACCOUNT(S) One or more of the Sub-Accounts of
the Variable Account. Each
Sub-Account is invested in shares of
a different Trust Portfolio.
VALUATION DATE Any date on which the New York Stock
Exchange is open for business and
the net asset value of a Trust
Portfolio is determined.
VALUATION PERIOD Any period from one Valuation Date
to the next, measured from the time
on each such date that the net asset
value of each Portfolio is
determined.
VARIABLE ACCOUNT The Manufacturers Life Insurance
Company of New York Separate Account
A, which is a separate account of
The Manufacturers Life Insurance
Company of New York.
VARIABLE ANNUITY An Annuity Option with payments
which: (1) are not predetermined or
guaranteed as to dollar amount, and
(2) vary in relation to the
investment experience of one or more
specified variable Sub-Accounts.
PART 2 GENERAL PROVISIONS
ENTIRE CONTRACT The entire contract consists of this
Contract, any Contract endorsements,
and a copy of the application. Only
our President, Vice-President or
Secretary may agree to change or
waive any provisions of this
Contract. The change or waiver must
be in writing.
We will not change or modify this
Contract without your consent except
as may be required to make it
conform to any applicable law or
regulation or any ruling issued by a
government agency.
The benefits and values available
under this Contract are not less
than the minimum required by the
State of New York. We have filed a
detailed statement of the method
used to calculate the benefits and
values with the Department of
Insurance in the
2
<PAGE> 5
state in which this Contract is
delivered, if required by law.
BENEFICIARY The Beneficiary is as designated in
the Contract Specifications Page and
application, unless changed.
However, if there is a surviving
Owner, that person will be treated
as the Beneficiary. If no such
Beneficiary is living, the
Beneficiary is the "Contingent
Beneficiary". If no Beneficiary or
Contingent Beneficiary is living,
the Beneficiary is the estate of the
deceased Owner.
CHANGE OF MATURITY DATE Prior to the Maturity Date, you may
request in writing a change of the
Maturity Date. Any extension of the
Maturity Date will be subject to our
prior approval.
ASSIGNMENT You may assign this Contract at any
time prior to the Maturity Date. No
assignment will be binding on us
unless it is written in a form
acceptable to us and received at our
Annuity Service Office. We will not
be liable for any payments made or
actions we take before the
assignment is accepted by us. An
absolute assignment will revoke the
interest of any revocable
Beneficiary. We will not be
responsible for the validity of any
assignment.
CLAIMS OF CREDITORS To the extent permitted by law, no
benefits payable under this Contract
will be subject to the claims of
your, the Beneficiary's or the
Annuitant's creditors.
MISSTATEMENT AND PROOF We may require proof of age, sex or
OF AGE, SEX OR SURVIVAL survival of any person upon whose
age, sex or survival any payments
depend. If the age or sex of the
Annuitant has been misstated, the
benefits will be those which the
Payments would have provided for the
correct age and sex. If we have made
incorrect annuity payments, the
amount of any underpayment, adjusted
with interest at 3% per annum, will
be paid immediately. The amount of
any overpayment will be deducted
from future annuity payments.
ADDITION, DELETION OR We reserve the right, subject to
SUBSTITUTION OF prior approval of the New York
INVESTMENT OPTIONS Superintendent of Insurance and
compliance with applicable law, to
make additions to, deletions from,
or substitutions for the Portfolio
shares that are held by the Variable
Account or that the Variable Account
may purchase. We reserve the right
to eliminate the shares of any of
the eligible Portfolios and to
substitute shares of another
Portfolio of the Trust, or of
another open-end registered
investment company, if the shares of
any eligible Portfolio are no longer
available for investment, or if in
our judgment further investment in
any eligible Portfolio should become
inappropriate in view of the
purposes of the Variable Account. We
will not substitute any shares
attributable to your interest in a
Sub-Account without notice to you
and prior approval of the Securities
and Exchange Commission to the
extent required by the Investment
Company Act of 1940. Nothing
contained herein shall prevent the
Variable Account from purchasing
other securities for other series or
classes of contracts, or from
effecting a conversion between
shares of another open-end
investment company.
We also reserve the right, subject
to prior approval of the New York
Superintendent of Insurance and
compliance with applicable law, to
establish additional Sub-Accounts
which would invest in shares of a
new Portfolio of the Trust or in
shares of another open-end
investment company. We also reserve
the right, subject to prior approval
of the New York Superintendent of
Insurance and compliance with
applicable law, to eliminate
existing Sub-Accounts, to combine
Sub-Accounts or to transfer assets
in a Sub-Account to another Separate
Account established by us or an
affiliated company. In the event of
any such substitutions or changes,
we may, by appropriate endorsement,
make such changes in this and other
Contracts as may be necessary or
appropriate to reflect such
substitutions or changes. If deemed
by us to be in the best interests of
persons having voting rights under
the Contracts, the Variable Account
may be operated as a management
company under the Investment Company
Act of 1940 or it may be
deregistered under such Act in the
event such registration is no longer
required.
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<PAGE> 6
NON-PARTICIPATING Your Contract is non-participating
and will not share in our profits or
surplus earnings. We will pay no
dividends on your Contract.
REPORTS At least once each year we will send
you a report containing information
required by the Investment Company
Act of 1940 and the laws of the
state of New York.
INSULATION The portion of the assets of the
Variable Account equal to the
reserves and other contract
liabilities with respect to such
account are not chargeable with
liabilities arising out of any other
business we may conduct. Moreover,
the income, gains and losses,
realized or unrealized, from assets
allocated to the Variable Account
shall be credited to or charged
against such account without regard
to our other income, gains or
losses.
CURRENCY AND PLACE All payments made to or by us shall
OF PAYMENTS be made in the lawful currency of
the United States of America at the
Annuity Service Office or elsewhere
if we consent.
NOTICES AND ELECTIONS To be effective, all notices and
elections you make under this
Contract must be in writing, signed
by you and received by us at our
Annuity Service Office. Unless
otherwise provided in this Contract,
all notices, requests and elections
will be effective when received by
us, complete with all necessary
information and your signature, at
our Annuity Service Office.
GOVERNING LAW This Contract will be governed by
the laws of the state of New York.
SECTION 72(s) The provisions of this Contract
shall be interpreted so as to comply
with the requirements of Section
72(s) of the Internal Revenue Code.
PART 3 OWNERSHIP
GENERAL Before the Maturity Date, the Owner
of this Contract shall be the
person, persons or entity so named
on the Contract Specifications Page
and application, or the latest
change filed with us. On the
Maturity Date, the Annuitant becomes
the Owner of the Contract. If
amounts become payable to the
Beneficiary under the Contract, the
Beneficiary becomes the Owner of the
Contract.
CHANGE OF OWNER, Subject to the rights of an
ANNUITANT, BENEFICIARY irrevocable Beneficiary, you may
change the Owner, Annuitant, or
Beneficiary by written request in a
form acceptable to us and which is
received at our Annuity Service
Office. The Annuitant may not be
changed after the Maturity Date. You
need not send us the Contract unless
we request it. Any change must be
approved by us. If approved, any
change in Beneficiary will take
effect on the date you signed the
request. If approved, any change of
Owner or Annuitant will take effect
on the date we received the request
at the Annuity Service Office. We
will not be liable for any payments
or actions we take before the change
is approved.
The substitution or addition of any
Owner may result in the resetting of
the Death Benefit to an amount equal
to the Contract Value as of the date
of such change. For purposes of
subsequent calculations of the Death
Benefit, described in Part 4,
Benefits, Death Benefit Before
Maturity Date, the Contract Value on
the date of the change will be
treated as a Payment made on that
date. In addition, all Payments made
and all amounts deducted in
connection with partial withdrawals
prior to the date of change of Owner
will not be considered in the
determination of the Death Benefit.
Furthermore, the Death Benefit on
the last day of the previous
Contract Year shall be set to zero
as of the date of the Owner change.
This paragraph will not apply if (a)
the individual whose death will
cause the Death Benefit to be paid
is the same after the change of
Owner, or (b) if Ownership is
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transferred to your spouse.
If any Annuitant is changed and any
Owner is not an individual, the
entire interest in the Contract must
be distributed to the Owner within
five years of the change.
PART 4 BENEFITS
ANNUITY BENEFITS We will pay a monthly income to the
Annuitant, if living, on the
Maturity Date. Payments can be fixed
or variable, or a combination of
fixed and variable. Annuity benefits
will commence on the Maturity Date
and continue for the period of time
provided for under the Annuity
Option selected.
We may pay the Contract Value, less
Debt, on the Maturity Date in one
lump sum if the monthly income is
less than $20.
On or before the Maturity Date you
must select how the Contract Value
will be used to provide the monthly
income. You may select a Fixed or
Variable Annuity. Unless you
indicate otherwise, we will provide
either variable or fixed, or a
combination variable and fixed
annuity payments in proportion to
the Investment Account Value of each
Investment Option at the Maturity
Date. Annuity payments will continue
for 10 years or the life of the
Annuitant, if longer.
If a Variable Annuity is used, the
amount of the first monthly annuity
payment will be obtained from the
appropriate option table under the
"Payment of Contract Benefits"
Section. Subsequent monthly annuity
payments will vary based on the
investment experience of the
Sub-Account(s) used to effect the
annuity. The method used to
calculate the amount of the initial
and subsequent payments is described
under the "Variable Annuity
Payments" Section of Part 8 of this
Contract.
If a Fixed Annuity is used, the
portion of the Contract Value used
to effect a Fixed Annuity will be
applied to the appropriate table
contained in this Contract. If the
table in use by us on the Maturity
date is more favorable to you, we
will use that table. We guarantee
the dollar amount of fixed
annuity payments.
DEATH BENEFIT BEFORE A Death Benefit will be determined
MATURITY DATE as of the date on which written
notice and proof of death, and all
required claim forms are received at
the Company's Annuity Service Office
as follows:
1. If any Owner dies on
or prior to their 85th birthday
and the oldest Owner had an
attained age of less than 81
years on the Contract Date, the
Death Benefit will be
determined as follows:
(a) During the first Contract
Year, the Death Benefit will
be the greater of:
(i) the Contract Value, or
(ii) the sum of all Payments
made, less any amount
deducted in connection
with partial
withdrawals.
(b) During any subsequent
Contract Year period, the
Death Benefit will be the
greater of:
(i) the Contract Value, or
(ii) the Death Benefit on
the last day of the
previous Contract Year
period plus any
Payments made and less
any amounts deducted in
connection with partial
withdrawals, since
then.
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<PAGE> 8
2. If any Owner dies after their
85th birthday and the oldest
Owner had an attained age of
less then 81 years on the
Contract Date, the Death Benefit
will be determined as the
greater of:
(a) the Contract Value, or
(b) the excess of (i) over (ii)
where:
(i) equals the sum of all
Payments,
(ii) equals the sum of any
amounts deducted in
connection with partial
withdrawals.
3. If any Owner dies and the oldest
Owner had an attained age of 81
or greater on the Contract
Date, the Death Benefit will be
the Contract Value less any
applicable Withdrawal Charges at
the time of payment of the
benefits.
If there is any Debt, the Death
Benefit equals the amount
described above less the Debt
under the Contract.
DEATH OF ANNUITANT: On the death of
the last surviving Annuitant, the
Owner becomes the new Annuitant,
if the Owner is an individual. If
any Owner is not an individual the
death of any Annuitant is treated
as the death of an Owner and the
Death Benefit will be determined by
substituting the Annuitant for the
Owner as described below.
DEATH OF OWNER: We will pay the
Death Benefit to the Beneficiary if
any Owner dies prior to the
Maturity Date. The Death Benefit
may be taken in one sum
immediately, in which case the
Contract will terminate. If the
Death Benefit is not taken in one
sum immediately, the Contract will
continue subject to the following
provisions:
(a) The Beneficiary becomes the
Contract Owner.
(b) The excess, if any, of the
Death Benefit over the
Contract Value will be
allocated to and among the
Investment Accounts in
proportion to their values as
of the date on which the Death
Benefit is determined.
(c) No additional Payments may be
applied to the Contract.
(d) If the Beneficiary is not the
deceased Owner's spouse, the
entire interest in the
Contract must be distributed
under one of the following
options:
(i) The entire interest in the
Contract must be
distributed over the life
of the Beneficiary, or
over a period not
extending beyond the
life expectancy of the
Beneficiary, with
distributions beginning
within one year of the
Owner's death; or
(ii) the entire interest in the
Contract must be
distributed within 5 years
of the Owner's Death.
If the Beneficiary dies
before the distributions
required by (i) or (ii)
are complete, the entire
remaining Contract Value
must be distributed in a
lump sum immediately.
(e) If the Beneficiary is the
deceased Owner's spouse, the
Contract will continue with
the surviving spouse as the
new Owner. The surviving
spouse may name a new
Beneficiary (and, if no
Beneficiary is so named, the
surviving spouse's estate will
be the Beneficiary). Upon the
death of the surviving spouse,
the Death Benefit will equal
the Contract Value at the time
of the surviving spouse's
death, and the entire interest
in the Contract must be
distributed to the new
Beneficiary in accordance with
the provisions of (d) (i) or
(d) (ii) above.
(f) Withdrawal Charges will be
waived on any withdrawals,
unless the Death Benefit
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<PAGE> 9
payable upon the Owner's death
was defined under provision
3., Death Benefit Before
Maturity Date above. If the
Death Benefit was so defined,
Withdrawal Charges will be
assessed at the time a
withdrawal occurs.
If there is more than one
Beneficiary, the foregoing
provisions will independently
apply to each Beneficiary.
DEATH BENEFIT ON OR If annuity payments have been
AFTER MATURITY DATE selected based on an Annuity
Option providing for payments
for a guaranteed period, and the
Annuitant dies on or after the
Maturity Date, we will make the
remaining guaranteed payments to
the Beneficiary. Any remaining
payments will be made as rapidly
as under the method of
distribution being used as of
the date of the Annuitant's
death. If no Beneficiary is
living, we will commute any
unpaid guaranteed payments to a
single sum (on the basis of the
interest rate used in
determining the payments) and
pay that single sum to the
estate of the last to die of the
Annuitant and the Beneficiary.
PROOF OF DEATH Proof of death is required upon
the death of the Annuitant or
the Owner. Proof of death is one
of the following received at the
Annuity Service Office:
(a) A certified copy of a death
certificate.
(b) A certified copy of a
decree of a court of
competent jurisdiction as
to the finding of death.
(c) Any other proof satisfactory to us.
PART 5 PAYMENTS
GENERAL All Payments under this Contract are payable
at our Annuity Service Office or such other
place as we may designate.
The minimum Payment will be $30. However at
least $300 must be paid during the first
Contract Year. Payments may be made at any
time. If a Payment would cause the Contract
Value to exceed $1,000,000, or the Contract
Value already exceeds $1,000,000, no
additional Payments will be accepted without
our prior approval.
NONPAYMENT OF PAYMENTS FOR If, prior to the Maturity Date, no Payments
THREE YEARS are made for three consecutive Contract
Years, and if both:
(a) the total Payments made, less any
partial withdrawals, are less than
$2,000; and
(b) the Contract Value at the end of such
three year period is less than $2,000;
We may cancel the Contract and pay you the
Contract Value (measured as of the Valuation
Period during which the cancellation
occurs), less any Debt and Annual
Administration Fee. We will provide you with
31 days prior written notice before
cancelling the contract.
ALLOCATION OF NET PAYMENTS When we receive Payments, the Net
Payments will be allocated among Investment
Options in accordance with the allocation
percentages shown on the Contract
Specifications Page. You may change the
allocation of subsequent Net Payments at any
time, without charge, by giving us written
notice.
PART 6 VARIABLE ACCOUNT PROVISIONS
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<PAGE> 10
INVESTMENT ACCOUNT We will establish a separate Investment
Account for you for each variable Investment
Option to which you allocate amounts. The
Investment Account represents the number of
your Accumulation Units in an Investment
Option.
INVESTMENT ACCOUNT VALUE The Investment Account Value of an
Investment Account is determined by
(a) times (b) where:
(a) equals the number of Accumulation
Units credited to the Investment
Account, and
(b) equals the value of the appropriate
Accumulation Unit.
ACCUMULATION UNITS We will credit Net Payments to your
Investment Accounts in the form of
Accumulation Units. The number of
Accumulation Units to be credited to each
Investment Account of the Contract will be
determined by dividing the Net Payment
allocated to that Investment Account by the
Accumulation Unit value for that Investment
Account.
Accumulation Units will be adjusted
for any transfers and will be canceled on
payment of a Death Benefit, withdrawal,
maturity or assessment of certain charges
based on their value for the Valuation
Period in which such transaction occurs.
VALUE OF ACCUMULATION UNIT The Accumulation Unit value for any
Valuation Period is determined by
multiplying the Accumulation Unit value for
the immediately preceding Valuation Period
by the "net investment factor" for the
Investment Account for the Valuation Period
for which the value is being determined. The
value of an Accumulation Unit may increase,
decrease or remain the same from one
Valuation Period to the next.
NET INVESTMENT FACTOR The net investment factor for a variable
Investment Account is an index that measures
the investment performance of a Sub-Account
from one Valuation Period to the next. The
net investment factor for any Valuation
Period is determined by dividing (a) by (b)
and subtracting (c) from the result where:
(a) is the net result of:
1) the net asset value per share of a
Portfolio share held in the Sub-Account
determined as of the end of the current
Valuation Period, plus
2) the per share amount of any dividend
or capital gain distributions made by
the Portfolio on shares held in the
Sub-Account if the "ex-dividend" date
occurs during the current Valuation
Period, and
(b) is the net asset value per share of a
Portfolio share held in the Sub-Account
determined as of the end of the
immediately preceding Valuation Period,
and
(c) is the Asset Fee as defined in Part
11, Fees and Deductions. The net
investment factor may be greater or
less than, or equal to, one.
PART 7 FIXED ACCOUNT PROVISIONS
INVESTMENT ACCOUNT We will establish a separate Investment
Account for you each time you allocate
amounts to a fixed Investment Option. Any
amounts you allocate to the same fixed
Investment Option on the same day will
establish a new Investment Account. Amounts
invested in these Investment Accounts will
earn interest at the guaranteed rate in
effect on the date the amounts are allocated
for the duration of the guarantee period.
We will determine the guaranteed rate from
time to time for new allocations, but in no
event will the minimum guaranteed rate under
a fixed Investment Account be less than 3%.
GUARANTEE PERIODS For any amounts allocated to the fixed
Investment Options, you have the choice of
the guarantee periods available. The amount
can be allocated into any combination
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<PAGE> 11
of the fixed Investment Options offered
under this Contract.
Separate Investment Accounts will be
established for each guarantee period. The
guarantee period will be the duration of the
fixed Investment Option selected, measured
from the date the amount is allocated to the
Investment Account. Amounts cannot be
allocated to a fixed Investment option that
would extend the guarantee period beyond the
Maturity Date.
RENEWALS The renewal amount is the Investment Account
Value at the end of the particular guarantee
period. The renewal amount will be
automatically renewed in the same Investment
Option at the end of the guarantee period,
unless you specify otherwise. If renewal in
a particular Investment Option would result
in the guarantee period for that Investment
Account extending beyond the Maturity Date,
the renewal amount may not be renewed in
that Investment Option. The renewal amount
will be applied to the longest guarantee
period of a fixed Investment Option such
that the guarantee period does not extend
beyond the Maturity Date.
INVESTMENT ACCOUNT VALUE The amount in the Investment Accounts will
accumulate at a rate of interest determined
by us and in effect on the date the amount
is allocated to the Investment Account. The
Investment Account Value is the accumulated
value of the amount invested in the
Investment Account reduced by any
withdrawals, loans, transfers or charges
taken from the Investment Account.
MARKET VALUE CHARGE Any amounts withdrawn from a fixed
Investment Account, prior to the end of the
guarantee period, may be subject to a Market
Value Charge. The Market Value Charge will
only apply to amounts withdrawn from a fixed
Investment Account pursuant to a partial
withdrawal, total withdrawal, transfer or a
loan. A Market Value Charge will not be
assessed on amounts withdrawn from the
1-year fixed Investment Account.
MARKET VALUE CHARGE A Market Value Charge will be calculated
FACTOR separately for each fixed Investment Account
affected. The Market Value Charge for a
particular Investment Account will be
calculated by multiplying the amount
withdrawn, loaned or transferred from the
Investment Account by the adjustment factor
described below.
The adjustment factor for a particular
Investment Account is determined by the
following formula: 0.75 x (B-A) x C/12
Where A, B and C are defined as follows:
A- The guaranteed interest rate on the
Investment Account.
B- The guaranteed interest rate available,
on the date the request is processed,
for amounts allocated to a new Investment
Account with the same length of
guarantee period as the Investment
Account from which amounts are being
withdrawn.
C- The number of complete months remaining
to the end of the guarantee period.
For purposes of this calculation, the
maximum difference between "B" and "A"
will be 3%. Furthermore, the adjustment
factor will never be less than zero. The
amount of Market Value Charge, if any,
upon transfer, or loan is specified in
Part 9, Transfer Provisions, and upon
withdrawal as specified in Part 10,
Withdrawal Provisions.
PART 8 ANNUITY PROVISIONS
VARIABLE ANNUITY PAYMENTS The amount of the first variable annuity
payment is determined by applying the
portion of the Contract Value used to effect
a Variable Annuity, measured as of a date
not more than 10 business days prior to the
Maturity Date (minus any applicable premium
taxes), to the appropriate tables(s)
contained in this Contract. If the table in
9
<PAGE> 12
use by us on the Maturity Date is
more favorable to you, we will use
that table. Subsequent payments will
be based on the investment
performance of one or more
Sub-Accounts as you select. The
amount of such payments is determined
by the number of Annuity Units
credited for each Sub-Account. Such
number is determined by dividing the
portion of the first payment
allocated to that Sub-Account by the
Annuity Unit value for that
Sub-Account determined as of the same
date that the Contract Value to
effect annuity payments was
determined. This number of Annuity
Units for each Sub-Account is then
multiplied by the appropriate Annuity
Unit value for each subsequent
determination date, which is a
uniformly applied date not more than
10 business days before the payment
is due.
MORTALITY AND EXPENSE We guarantee that the dollar amount
GUARANTEE of each variable annuity payment will
not be affected by changes
in mortality and expense experience.
ANNUITY UNIT VALUE The value of an Annuity Unit for each
Sub-Account for any Valuation Period
is determined as follows:
(a) The net investment factor for
the Sub-Account for the
Valuation Period for which
the Annuity Unit value is
being calculated is
multiplied by the value of
the Annuity Unit for the
preceding Valuation Period;
and
(b) The result is adjusted to
compensate for the interest
rate assumed in the tables
used to determine the first
variable annuity payment.
The dollar value of Annuity Units may
increase, decrease or remain the same
from one Valuation Period to the
next.
FIXED ANNUITY PAYMENTS The amount of each fixed annuity
payment is determined by applying the
portion of the Contract Value used to
effect a Fixed Annuity measured as of
a date not more than 10 business days
prior to the Maturity Date (minus any
applicable premium taxes) to the
appropriate table contained in this
Contract. If the table in use by us
on the Maturity Date is more
favorable to you, we will use that
table. In addition, at the time of
their commencement, fixed annuity
payments will not be less than those
provided by an amount applied to
purchase a single consideration
immediate annuity to the same class
of annuitants at that time. This
amount will be the greater of:
(a) the Contract Value less
applicable Withdrawal
Charges.
(b) 95% of the Contract Value.
We guarantee the dollar amount of
fixed annuity payments.
PART 9 TRANSFER PROVISIONS
TRANSFERS Before the Maturity Date you may
transfer amounts among Investment
Accounts of the Contract. There is no
transaction charge for transfers,
however, amounts transferred from a
fixed Investment Account prior to the
end of the guarantee period may be
subject to a Market Value Charge.
Amounts will be canceled from the
Investment Accounts from which
amounts are transferred and credited
to the Investment Account to which
amounts are transferred. We will
effect such transfers so that the
Contract Value on the date of
transfer will not be affected by the
transfer, except for the Market Value
Charge, if applicable. We reserve the
right to limit, upon notice, the
maximum number of transfers you may
make per Contract Year to one per
month or six at any time within a
Contract Year.
You must transfer at least $300 or,
if less, the entire amount in the
Investment Account each time you make
a transfer. If, after the transfer,
the amount remaining in the
Investment Account of the Contract
from which the transfer is made is
less than $100, then we will transfer
the entire amount instead of the
requested amount.
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We reserve the right to defer the
transfer privilege at any time that
we are unable to purchase or redeem
shares of the Trust Portfolios. In
addition, in accordance with
applicable law, the Company reserves
the right to modify or terminate the
transfer privilege at any time.
Amounts may not be transferred from a
fixed Investment Account unless those
amounts have been in the fixed
Investment Account for at least one
year. The Market Value Charge, if
applicable, will be deducted from the
amount transferred.
Once variable annuity payments have
begun, you may transfer all or part
of the investment upon which your
variable annuity payments are based
from one Sub-Account to another. To
do this, we will convert the number
of variable Annuity Units you hold in
the Sub-Account from which you are
transferring to a number of variable
Annuity Units of the Sub-Account to
which you are transferring so that
the amount of a variable annuity
payment, if it were made at that
time, would not be affected by the
transfer. After that, your variable
annuity payments will reflect changes
in the values of your new variable
Annuity Units. You must give us
notice at least 30 days before the
due date of the first variable
annuity payment to which the transfer
will apply. We reserve the right to
limit, upon notice, the maximum
number of transfers you may make per
Contract Year after variable annuity
payments have begun to four.
After the Maturity Date, transfers
will not be allowed from a fixed to a
variable Annuity Option, or from a
variable to a fixed Annuity Option.
TRANSFER MARKET VALUE Amounts transferred from a fixed
CHARGE Investment Account may be subject to
a Market Value Charge. For Transfers,
including transfers to the Loan
Account pursuant to a loan request,
the Market Value Charge, if
applicable, will be calculated by
multiplying the amount transferred
from each fixed Investment Account by
the Market Value Charge Factor and
deducted from the amount transferred.
If there are multiple Investment
Accounts under a fixed Investment
Option, the requested amount from
that Investment Option must be
transferred from those Investment
Accounts on a first-in-first-out
basis.
The Market Value Charge may not
exceed the earnings in excess of 3%
per annum attributable to the amount
transferred.
In no event will the Market Value
Charge be greater than 10% of the
amount transferred.
In no event will the Market Value
Charge reduce the amount transferred
below the amount required under the
non-forfeiture laws of the state that
has jurisdiction over this contract.
PART 10 WITHDRAWAL PROVISIONS
CONTRACT VALUE Your Contract Value is equal to
the total of the Investment Account
Values and, if applicable, any amount
in the Loan Account attributable to
the Contract.
PAYMENTS OF WITHDRAWALS You may withdraw part or all of the
Contract Value, less any Debt, at any
time before the earlier of your death
or the Maturity Date, by sending us a
written request. We will pay all
withdrawals within seven days of
receipt at the Annuity Service Office
subject to postponement in certain
circumstances, as specified below.
SUSPENSION OF PAYMENTS We may defer the right of withdrawal,
or postpone the date of payment, from
the variable Investment Accounts for
any period when: (1) the New York
Stock Exchange is closed (other than
customary weekend and holiday
closings); (2) trading on the
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New York Stock Exchange is
restricted; (3) an emergency exists
as a result of which disposal of
securities held in the Variable
Account is not reasonably practicable
or it is not reasonably practicable
to determine the value of the
Variable Account's net assets; or (4)
the Securities and Exchange
Commission, by order, so permits for
the protection of security holders;
provided that applicable rules and
regulations of the Securities and
Exchange Commission shall govern as
to whether the conditions described
in (2) and (3) exist.
We may defer the right of withdrawal
from the fixed Investment Accounts
for not more than six months from the
day we receive written request and
the Contract, if required. If such
payments are deferred 10 days or
more, the amount deferred will earn
interest at a rate not less than 3%
per year.
TOTAL WITHDRAWAL Upon receipt of your request to
withdraw all of your Contract Value,
we will terminate the Contract and
pay you the Contract Value, less any
applicable Debt, Withdrawal Charges,
Market Value Charges and the Annual
Administration Fee.
PARTIAL WITHDRAWAL If you are withdrawing part of the
Contract Value, you should specify
the amount that should be withdrawn
from each Investment Option of the
Contract. If there are multiple
Investment Accounts under a fixed
Investment Option, the requested
amount from that Investment Option
must be withdrawn from those
Investment Accounts on a
first-in-first-out basis. If you do
not specify, the requested amount
will be withdrawn in the following
order:
a) Variable Investment Accounts, on
a pro rata basis,
b) Fixed Investment Options
beginning with the shortest
guarantee period first and the
longest guarantee period last.
We will deduct the Withdrawal Charge
and the Market Value Charge, if
applicable, from the Contract Value
remaining after payment of the
requested amount.
WITHDRAWAL CHARGE If a withdrawal is made from the
Contract before the Maturity Date, a
Withdrawal Charge (contingent
deferred sales charge) may be
assessed against Payments that have
been in your Contract for less than 7
years. No Withdrawal Charge will
apply to Payments being withdrawn
that have been in the Contract for 7
or more years. The amount of the
Withdrawal Charge and when it is
assessed is discussed below:
1. An amount can be withdrawn
without Withdrawal Charges. This
amount is defined as the greater
of:
a) the excess of the Contract Value
on the date of withdrawal over
the unliquidated Payments, or
b) the excess of (i) over (ii): (i)
equals 10% of total Payments (ii)
equals 100% of all prior partial
withdrawals, in that Contract
Year. The amount withdrawn
without Withdrawal Charges will
be applied to your requested
withdrawal in the following
order:
a) withdrawals from the variable
Investment Accounts,
b) withdrawals from fixed Investment
Options beginning with the
shortest guarantee period first
and the longest guarantee period
last.
2. Withdrawals in excess of the
amount available without
Withdrawal Charges as defined in
(1) above, may be subject to
Withdrawal Charges. A Withdrawal
Charge will be assessed against
Payments liquidated that have
been in the Contract for less
than 7 years. Payments will be
liquidated on a
first-in-first-out basis. We will
liquidate Payments in the order
such Payments were made: the
oldest unliquidated Payment
first, the next Payment second,
etc...until all Payments have
been liquidated.
3. A Withdrawal Charge will be
assessed against Payments
liquidated that have been in the
Contract for less than 7 years.
4. Any Payments liquidated are
subject to a Withdrawal Charge
based on the length of time the
Payment has been in this
Contract. The Withdrawal Charge
is determined by multiplying the
amount of the Payment being
liquidated by the applicable
Withdrawal Charge Percentage
obtained from the table below.
Number of Complete Years Payment has Withdrawal Charge
4
<PAGE> 15
been in Contract Percentage
---------------- ----------
0 6%
1 6
2 5
3 5
4 4
5 3
6 2
7+ 0
The total Withdrawal Charge will
be the sum of the Withdrawal
Charges for the Payments being
liquidated.
5. The Withdrawal Charge is
deducted from the Contract
Value remaining after you are
paid the amount requested,
except in the case of a
complete withdrawal when it is
deducted from the amount
otherwise payable. In the case
of a partial withdrawal, the
amount requested from an
Investment Account may not
exceed the value of that
Investment Account less any
applicable Withdrawal Charge
and/or Market Value Charge, if
applicable.
6. In no event will the aggregate
Withdrawal Charge be greater
than 6% of the total Payments
made.
WITHDRAWAL MARKET VALUE
CHARGE Amounts withdrawn from a fixed
Investment Account may be subject
to a Market Value Charge. The
total Market Value Charge will be
the sum of the Market Value
Charges for each Investment
Account being withdrawn. For full
withdrawals, the Market Value
Charge will be calculated on the
total amount of each Investment
Account, and the total Market
Value Charge will be deducted from
the amount otherwise payable. For
partial withdrawals, the Market
Value Charge will be calculated
based on the withdrawal amount
requested from each Investment
Account and the Market Value
Charge, if applicable, will be
deducted from the remaining
Investment Account Value.
There will be no Market Value
Charge on withdrawals from the
fixed Investment Accounts in the
following situations: (a)
withdrawal from a 1-year fixed
Investment Account, (b) death of
the Owner, (c) amounts withdrawn
to pay any fees or charges, (d)
amounts applied at the Maturity
Date to purchase an annuity at the
guaranteed rates in the Annuity
Option tables, and (e) amounts
withdrawn from fixed Investment
Accounts within 30 days prior to
the end of the guarantee period. A
written notice of renewal will be
provided at least 15 days, but not
more than 45 days prior to the
beginning of the above 30 day
period.
An amount equal to 10% of total
Payments less all prior
withdrawals in that Contract Year
may be withdrawn without the
imposition of a Market Value
Charge.
The Market Value Charge may not
exceed the earnings in excess of
3% per annum attributable to the
amount withdrawn.
In no event will the Market Value
Charge plus any Withdrawal Charges
for an Investment Account be
greater than 10% of the amount
withdrawn.
In no event will the Market Value
Charge reduce the amount payable
on withdrawal below the amount
required under the non-forfeiture
laws of the state that has
jurisdiction over this Contract.
FREQUENCY AND AMOUNT OF
PARTIAL WITHDRAWLS You may make as many partial
withdrawals as you wish. Any
withdrawal from an Investment
Account of the Contract must be at
least $300 or the entire balance
of the Investment Account, if
less. If after the withdrawal, the
amount remaining in the Investment
Account is less than $100, then we
will consider the withdrawal
request to be a request for
withdrawal of the entire amount
held in the Investment Account. If
a partial withdrawal would reduce
the Contract Value to less than
$300, then we will treat the
partial withdrawal request as a
total withdrawal of the Contract
Value.
5
<PAGE> 16
PART 11 FEES AND DEDUCTIONS
- --------------------------------------------------------------------------------
ASSET FEE To compensate us for assuming
mortality and expense risks, and
certain administration expenses, we
deduct from each variable Investment
Option a fee each Valuation Period at
an annual rate of 1.40%. A portion of
this Asset Fee may also be used to
reimburse us for distribution
expenses. This fee is reflected in
the Net Investment Factor used to
determine the value of Accumulation
Units and Annuity Units of the
Contract.
ANNUAL ADMINISTRATION FEE To compensate us for assuming
certain administrative expenses,
we charge an Annual Administration
Fee equal to $30 per year. Prior
to the Maturity Date, the $30
Annual Administration Fee is
deducted on each Contract
Anniversary. It is withdrawn from
each Investment Option in the same
proportion that the value of the
Investment Accounts of each
Investment Option bears to the
Contract Value. If the Contract
Value is totally withdrawn on any
date other than the Contract
Anniversary, we will deduct the
total amount of the $30 Annual
Administration Fee from the amount
paid. During the annuity period,
the $30 Annual Administration Fee
is deducted on a pro rata basis
from each annuity payment.
Prior to the Maturity Date, when
the Annual Administration Fee is
to be assessed, if the sum of all
Investment Accounts exceeds
$100,000.00, the $30 Annual
Administration Fee will be waived.
TAXES We reserve the right to charge
certain taxes against your Payments
(either at the time of payment or
liquidation), Contract Value,
payment of Death Benefit or annuity
payments, as appropriate. Such taxes
may include any premium taxes or
other taxes levied by any government
entity which we, in our sole
discretion, determine have resulted
from the establishment or
maintenance of the Variable Account,
or from the receipt by us of
Payments, or from the issuance of
this Contract, or from the
commencement or continuance of
annuity payments under this
Contract.
PART 12 PAYMENT OF CONTRACT BENEFITS
- --------------------------------------------------------------------------------
GENERAL Benefits payable under this Contract
may be applied in accordance with one
or more of the Annuity Options
described below, subject to any
restrictions of Internal Revenue Code
section 72(s).
ALTERNATE ANNUITY OPTIONS Instead of settlement
in accordance with the Annuity
Options described below, you may
choose an alternate form of
settlement acceptable to us.
DESCRIPTION OF ANNUITY Option 1: Life Annuity
OPTIONS
(a) Life Non-Refund. We will make
payments during the lifetime of
the Annuitant. No payments are
due after the death of the
Annuitant.
(b) Life 10-Year Certain. We will
make payments for 10 years and
after that during the lifetime
of the Annuitant. No payments
are due after the death of the
Annuitant or, if later, the end
of the 10-year period certain.
Option 2: Joint and Survivor Life
Annuity
The second Annuitant named shall be
referred to as the Co-Annuitant.
(a)Joint and Survivor Non-Refund. We
will make payments during the
joint lifetime of the Annuitant
and Co-Annuitant.
6
<PAGE> 17
Payments will then continue
during the remaining lifetime of
the survivor. No payments are due
after the death of the last
survivor of the Annuitant and
Co-Annuitant. (b) Joint and
Survivor with 10-Year Certain. We
will make payments for 10 years
and after that during the joint
lifetime of the Annuitant and
Co-Annuitant. Payments will then
continue during the remaining
lifetime of the survivor. No
payments are due after the death
of the survivor of the Annuitant
and Co-Annuitant or, if later,
the end of the 10-year period
certain.
ANNUITY PAYMENT RATES The annuity payment rates on the
attached tables show, that for
each $1,000 applied, the dollar
amount of both (a) the first
monthly variable annuity payment
based on the assumed interest
rate of 3% and (b) the monthly
fixed annuity payment, when this
payment is based on the minimum
guaranteed interest rate of 3%
per year. The annuity payment
rates for payments made on a less
frequent basis (quarterly,
semiannual or annual) will be
quoted by us upon request.
The annuity payment rates are
based on the 1983 Table A
projected at Scale G with
interest at the rate of 3% per
annum and assume births in year
1942. The amount of each annuity
payment will depend upon the sex
and adjusted age of the
Annuitant, the Co-Annuitant, if
any, or other payee. The adjusted
age is determined from the actual
age nearest birthday at the time
the first monthly annuity payment
is due, as follows:
<TABLE>
<CAPTION>
Calendar Year of Birth Adjustment to Actual Age
---------------------- ------------------------
<S> <C> <C>
1899 - 1905 +6
1906 - 1911 +5
1912 - 1918 +4
1919 - 1925 +3
1926 - 1932 +2
1933 - 1938 +1
1939 - 1945 0
1946 - 1951 -1
1952 - 1958 -2
1959 - 1965 -3
1966 - 1972 -4
1973 - 1979 -5
1980 - 1986 -6
1987 + -7
</TABLE>
The dollar amount of annuity
payment for any age or
combination of ages not shown
following or for any other form
of Annuity Option agreed to by us
will be quoted on request.
<PAGE> 18
AMOUNT OF FIRST MONTHLY PAYMENT
PER $1000 OF CONTRACT VALUE
OPTION 1: LIFE ANNUITY
<TABLE>
<CAPTION>
Option 1(A): Non-Refund Option 1(B): 10-Year Certain
- -------------------------------------- -----------------------------------
Adjusted Age of Adjusted Age of
Annuitant Male Female Annuitant Male Female
- -------------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C>
55 4.23 3.83 55 4.19 3.82
60 4.64 4.15 60 4.57 4.12
65 5.20 4.57 65 5.05 4.51
70 5.94 5.13 70 5.65 5.02
75 6.91 5.91 75 6.35 5.67
80 8.21 6.98 80 7.13 6.45
85 9.94 8.47 85 7.90 7.29
</TABLE>
OPTION 2: JOINT AND SURVIVOR LIFE ANNUITY
Option 2(A): Non-Refund
<TABLE>
<CAPTION>
Age of Co-Annuitant
------------------------------------------------------------
Adjusted
Age of Male 10 Years 5 Years Same 5 Years 10 Years
Annuitant Younger Younger Age Older Older
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
55 3.24 3.38 3.53 3.69 3.83
60 3.40 3.58 3.78 3.98 4.16
65 3.61 3.85 4.10 4.36 4.61
70 3.88 4.19 4.53 4.88 5.20
75 4.23 4.64 5.10 5.57 6.00
80 4.70 5.26 5.88 6.51 7.06
85 5.34 6.09 6.94 7.76 8.43
</TABLE>
Option 2(B): 10 Year Certain
<TABLE>
<CAPTION>
Age of Co-Annuitant
------------------------------------------------------------
Adjusted
Age of Male 10 Years 5 Years Same 5 Years 10 Years
Annuitant Younger Younger Age Older Older
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
55 3.24 3.38 3.53 3.69 3.83
60 3.40 3.58 3.78 3.98 4.16
65 3.61 3.85 4.10 4.36 4.59
70 3.88 4.18 4.52 4.86 5.16
75 4.23 4.63 5.07 5.50 5.86
80 4.68 5.21 5.78 6.30 6.69
85 5.27 5.95 6.62 7.18 7.56
------------------------------------------------------------
</TABLE>
Monthly installments for ages not shown will be furnished on request.
8
<PAGE> 19
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<PAGE> 20
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<PAGE> 21
- --------------------------------------------------------------------------------
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NEW YORK
- --------------------------------------------------------------------------------
Manulife Financial and the block design are registered marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries.
11
<PAGE> 1
EXHIBIT (b)(4)(c)
FIXED ACCOUNT ENDORSEMENT
PART 7, FIXED ACCOUNT PROVISIONS, INVESTMENT ACCOUNT of all contracts to which
this Endorsement is attached is replaced as follows:
INVESTMENT ACCOUNT We will establish a separate Investment
Account for you each time you allocate
amounts to a fixed Investment Option.
Amounts invested in these Investment
Accounts will earn interest at the
guaranteed rate in effect on the date
the amounts are allocated for the
duration of the guarantee period.
We will determine the guaranteed rate
from time to time for Net Payments,
renewal amounts and amounts transferred
to a fixed Investment Option. In no
event will the minimum guaranteed rate
under a fixed Investment Account be
less than 3%.
PART 7, FIXED ACCOUNT PROVISIONS, 1-YEAR DOLLAR COST AVERAGING OPTION is added
to all contracts to which this Endorsement is attached as follows:
1-YEAR DOLLAR COST The 1-Year DCA Investment Option may be
AVERAGING (DCA) elected by the Owner to make automatic
INVESTMENT OPTION monthly transfers from a 1-Year fixed
Investment Account to one or more
variable Investment Options. Only
initial and subsequent Net Payments may
be allocated to the 1-Year DCA
Investment Option. Amounts may not be
transferred from other Investment
Options to the 1-Year DCA Investment
Option.
The automatic monthly transfer amount,
"DCA amount", is determined as follows:
(a) In the first 11 months, the DCA
amount will be equal to 1/11 of
the amount allocated to the
1-Year DCA Investment Option.
(b) At the end of the 12th month,
the DCA amount will be equal to
the remaining balance in the
Investment Account.
Endorsed on the Date of Issue of this Contract.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
Vice-President
END.007.98
<PAGE> 2
EXHIBIT (b)(4)(d)
DEATH BENEFIT ENDORSEMENT
PART 4, BENEFITS, DEATH BENEFIT BEFORE MATURITY DATE of all contracts to which
this Endorsement is attached is replaced as follows:
DEATH BENEFIT BEFORE A Death Benefit will be determined as of the date
MATURITY DATE on which written notice and proof of death and all
required claim forms are received at the Company's
Annuity Service Office as follows:
1. If any Owner dies and the oldest Owner had an
attained age of less than 81 years on the Contract
Date, the Death Benefit will be determined as
follows:
(a) During the first Contract Year, the Death
Benefit will be the greater of:
(i) the Contract Value, or
(ii) the sum of all Payments made,
less any amount deducted in connection with partial
withdrawals.
(b) During any subsequent Contract Year, the
Death Benefit will be the greater of:
(i) the Contract Value, or
(ii) the Death Benefit on the last day
of the previous Contract Year, plus any Payments
made and less any amounts deducted in connection
with partial withdrawals, since then.
If any Owner dies after their 81st birthday, (b)(ii)
is the Death Benefit on the last day of the Contract
Year just prior to the Owner's 81st birthday, plus
any Payments made and less any amounts deducted in
connection with partial withdrawals, since then.
2. If any Owner dies and the oldest Owner had an
attained age of 81 or greater on the Contract Date,
the Death Benefit will be determined as the greater
of:
(a) the Contract Value, or
(b) the excess of (i) over (ii) where:
(i) equals the sum of all Payments.
(ii) equals the sum of any amounts
deducted in connection with partial withdrawals.
If there is any Debt, the Death Benefit equals the
amount described above less the Debt under the
Contract.
DEATH OF ANNUITANT: On the death of the last
surviving Annuitant, the Owner becomes the new
Annuitant, if the Owner is an individual. If any
Owner is not an individual the death of any Annuitant
is treated as the death of an Owner and the Death
Benefit will be determined by substituting the
Annuitant for the Owner as described below.
DEATH OF OWNER: We will pay the Death Benefit to the
Beneficiary if any Owner dies prior to the Maturity
Date. The Death Benefit may be taken in one sum
immediately, in which case the Contract will
terminate. If the Death Benefit is not taken in one
sum immediately, the Contract will continue subject
to the following provisions:
(a) The Beneficiary becomes the Contract Owner.
(b) The excess, if any, of the Death Benefit over the
Contract Value will be allocated to and among the
Investment Accounts in proportion to their values as
of the date on which the Death Benefit is determined.
END.006.98
<PAGE> 3
(c) No additional Payments may be applied to the
Contract.
(d) If the Beneficiary is not the deceased Owner's
spouse, the entire interest in the Contract must be
distributed under one of the following options:
(i) The entire interest in the
Contract must be distributed over the life of the
Beneficiary, or over a period not extending beyond
the life expectancy of the Beneficiary, with
distributions beginning within one year of the
Owner's death; or
(ii) the entire interest in the
Contract must be distributed within 5 years of the
Owner's Death.
If the Beneficiary dies before the
distributions required by (i) or (ii) are complete,
the entire remaining Contract Value must be
distributed in a lump sum immediately.
(e) If the Beneficiary is the deceased Owner's
spouse, the Contract will continue with the surviving
spouse as the new Owner. The surviving spouse may
name a new Beneficiary (and, if no Beneficiary is so
named, the surviving spouse's estate will be the
Beneficiary). Upon the death of the surviving spouse,
a second Death Benefit will be paid and the entire
interest in the Contract must be distributed to the
new Beneficiary in accordance with the provisions of
(d) (i) or (d) (ii) above. For purposes of
calculating the Death Benefit payable upon the death
of the surviving spouse, the Death Benefit paid upon
the first Owner's death will be treated as a Payment
to the Contract. In addition, the Death Benefit on
the last day of the previous Contract Year (or the
last day of the Contract Year just prior to the
Owner's 81st birthday, if applicable) shall be set to
zero as of the date of the first Owner's death.
(f) Withdrawal Charges will be waived on any
withdrawals.
If there is more than one Beneficiary, the foregoing
provisions will independently apply to each
Beneficiary.
Endorsed on the Date of Issue of this Contract.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
Vice-President
<PAGE> 1
EXHIBIT (b)(4)(d)
DEATH BENEFIT ENDORSEMENT
PART 4, BENEFITS, DEATH BENEFIT BEFORE MATURITY DATE of all contracts to which
this Endorsement is attached is replaced as follows:
DEATH BENEFIT BEFORE A Death Benefit will be determined as of the date
MATURITY DATE on which written notice and proof of death and all
required claim forms are received at the Company's
Annuity Service Office as follows:
1. If any Owner dies and the oldest Owner had an
attained age of less than 81 years on the Contract
Date, the Death Benefit will be determined as
follows:
(a) During the first Contract Year, the Death
Benefit will be the greater of:
(i) the Contract Value, or
(ii) the sum of all Payments made,
less any amount deducted in connection with partial
withdrawals.
(b) During any subsequent Contract Year, the
Death Benefit will be the greater of:
(i) the Contract Value, or
(ii) the Death Benefit on the last day
of the previous Contract Year, plus any Payments
made and less any amounts deducted in connection
with partial withdrawals, since then.
If any Owner dies after their 81st birthday, (b)(ii)
is the Death Benefit on the last day of the Contract
Year just prior to the Owner's 81st birthday, plus
any Payments made and less any amounts deducted in
connection with partial withdrawals, since then.
2. If any Owner dies and the oldest Owner had an
attained age of 81 or greater on the Contract Date,
the Death Benefit will be determined as the greater
of:
(a) the Contract Value, or
(b) the excess of (i) over (ii) where:
(i) equals the sum of all Payments.
(ii) equals the sum of any amounts
deducted in connection with partial withdrawals.
If there is any Debt, the Death Benefit equals the
amount described above less the Debt under the
Contract.
DEATH OF ANNUITANT: On the death of the last
surviving Annuitant, the Owner becomes the new
Annuitant, if the Owner is an individual. If any
Owner is not an individual the death of any Annuitant
is treated as the death of an Owner and the Death
Benefit will be determined by substituting the
Annuitant for the Owner as described below.
DEATH OF OWNER: We will pay the Death Benefit to the
Beneficiary if any Owner dies prior to the Maturity
Date. The Death Benefit may be taken in one sum
immediately, in which case the Contract will
terminate. If the Death Benefit is not taken in one
sum immediately, the Contract will continue subject
to the following provisions:
(a) The Beneficiary becomes the Contract Owner.
(b) The excess, if any, of the Death Benefit over the
Contract Value will be allocated to and among the
Investment Accounts in proportion to their values as
of the date on which the Death Benefit is determined.
END.006.98
<PAGE> 2
(c) No additional Payments may be applied to the
Contract.
(d) If the Beneficiary is not the deceased Owner's
spouse, the entire interest in the Contract must be
distributed under one of the following options:
(i) The entire interest in the
Contract must be distributed over the life of the
Beneficiary, or over a period not extending beyond
the life expectancy of the Beneficiary, with
distributions beginning within one year of the
Owner's death; or
(ii) the entire interest in the
Contract must be distributed within 5 years of the
Owner's Death.
If the Beneficiary dies before the
distributions required by (i) or (ii) are complete,
the entire remaining Contract Value must be
distributed in a lump sum immediately.
(e) If the Beneficiary is the deceased Owner's
spouse, the Contract will continue with the surviving
spouse as the new Owner. The surviving spouse may
name a new Beneficiary (and, if no Beneficiary is so
named, the surviving spouse's estate will be the
Beneficiary). Upon the death of the surviving spouse,
a second Death Benefit will be paid and the entire
interest in the Contract must be distributed to the
new Beneficiary in accordance with the provisions of
(d) (i) or (d) (ii) above. For purposes of
calculating the Death Benefit payable upon the death
of the surviving spouse, the Death Benefit paid upon
the first Owner's death will be treated as a Payment
to the Contract. In addition, the Death Benefit on
the last day of the previous Contract Year (or the
last day of the Contract Year just prior to the
Owner's 81st birthday, if applicable) shall be set to
zero as of the date of the first Owner's death.
(f) Withdrawal Charges will be waived on any
withdrawals.
If there is more than one Beneficiary, the foregoing
provisions will independently apply to each
Beneficiary.
Endorsed on the Date of Issue of this Contract.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
Vice-President
