<PAGE> 1
As filed with the Securities and Exchange Commission on April 29, 1999
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. 7
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
POST-EFFECTIVE AMENDMENT NO. 11
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE ACCOUNT A
formerly, FNAL Variable Account
(Exact name of Registrant)
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
formerly, First North America 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 Copy to:
The Manufacturers Life Insurance J. Sumner Jones, Esq.
Company of New York Jones & Blouch, L.L.P.
Corporate Center at Rye 1025 Thomas Jefferson St. N.W.
555 Theodore Fremd Avenue Suite 405 West
Suite C-209 Washington, D.C. 20007-0805
Rye, New York 10580
(Name and Address of Agent for Service)
-----------------------
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
---
X on May 1, 1999 pursuant to paragraph (b) of Rule 485
---
60 days after filing pursuant to paragraph (a)(1) of Rule 485
---
on [date] pursuant to paragraph (a)(1) of Rule 485
---
If appropriate, check the following box:
___ this post-effective amendment designated a new effective date for a
previously filed post-effective amendment.
The Prospectus contained in this registration statement also relates to variable
annuity contracts covered by earlier registration statements under file no.
33-46217.
<PAGE> 2
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-4
<TABLE>
<CAPTION>
N-4 Item Caption in Prospectus
Part A
- ------
<S> <C>
1.-------------------------Cover Page
2.-------------------------Special Terms
3.-------------------------Summary
4.-------------------------Performance Data;
Financial Statements
5.-------------------------General Information about Us, The Variable Account and The Trust
6.-------------------------Charges and Deductions; Withdrawal Charges; Administration Fees; Mortality and Expense Risk Charge;
Taxes; Appendix C - Examples of Calculation of Withdrawal Charge
7.-------------------------Accumulation Period Provisions; Our 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.-------------------------Pay-out Period Provisions; General; Annuity Options; Determination of Amount of the First Variable
Annuity Payments; Annuity Units and the Determination of Subsequent Variable Annuity Payments; Transfers
During Pay-out Period
9.-------------------------Accumulation Provisions; Death Benefit Before Maturity Date; Annuity Provisions; Death Benefit After
Maturity Date
10.------------------------Accumulation Period Provisions; Purchase Payments; Accumulation Units; Value of Accumulation Units; Net
Investment Factor; Distribution of Contracts
11.------------------------Accumulation Period Provisions; Purchase Payments; Other Contract Provisions; Right to Review Contract
12.------------------------Federal Tax Matters; Introduction; Our Tax Status; Taxation of Annuities in General; 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-Independent Auditors; Services-Servicing Agent
19.------------------------Not Applicable
20.------------------------Services-Principal Underwriter
21.------------------------Performance Data
22.------------------------Not Applicable
23.------------------------Financial Statements
</TABLE>
<PAGE> 3
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE> 4
HOME OFFICE
Corporate Center at Rye
555 Theodore Fremd Avenue
Rye, New York 10580-9966
ANNUITY SERVICE OFFICE MAILING ADDRESS
P.O. Box 9013
Boston, Massachusetts 02205-9013
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 an annuity contract (the "CONTRACT") issued
by The Manufacturers Life Insurance Company of New York ("WE" or "US"). The
contract is a flexible purchase payment, individual, deferred,
non-participating, combination fixed and variable annuity contract.
- Contract values and annuity benefit payments are based upon forty-four
investment options. Thirty-eight options are variable and six are
fixed account options.
- The variable portion of contract values and variable annuity benefit
payments will vary according to the investment performance of the
sub-accounts of one of our separate accounts, The Manufacturers Life
Insurance Company of New York Separate Account A (the "VARIABLE
ACCOUNT"). Contract values may be allocated to, and transferred among,
one or more of those sub-accounts.
- Each sub-account's assets are invested in a corresponding portfolio of
a mutual fund, Manufacturers Investment Trust (the "TRUST"). We will
provide the contract owner ("YOU") a prospectus for the Trust with
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.
- Except as specifically noted here and under the caption "FIXED ACCOUNT
INVESTMENT OPTION" below, this Prospectus describes only the variable
portion of the contract.
- Special terms are defined in a glossary in Appendix A.
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 YOU SHOULD KNOW BEFORE INVESTING.
THE CONTRACTS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC. NEITHER THE SEC
NOR ANY STATE HAS DETERMINED WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is May 1, 1999
<PAGE> 5
- ADDITIONAL INFORMATION about the contract and the Variable Account is
contained in a Statement of Additional Information, dated the same
date as this Prospectus, which has been filed with the SEC and is
incorporated herein by reference. The Statement of Additional
Information is available without charge upon request by writing us at
the address on the front cover or by telephoning (800) 344-1029.
- The SEC maintains a Web site (http://www.sec.gov) that contains the
Statement of Additional Information and other information about us,
the contracts and the Variable Account.
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
General Information and History...............................
Performance Data..............................................
State Premium Taxes...........................................
Service
Independent Auditors......................................
Servicing Agent...........................................
Principal Underwriter.....................................
Appendix A - State Premium Taxes..............................
Financial Statements..........................................
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
SUMMARY ........................................................ 4
GENERAL INFORMATION ABOUT US, THE VARIABLE ACCOUNT AND
THE TRUST ................................................... 10
The Manufacturers Life Insurance Company
of New York ............................................... 10
The Variable Account ...................................... 11
The Trust ................................................. 11
DESCRIPTION OF THE CONTRACT .................................... 17
ACCUMULATION PERIOD PROVISIONS .............................. 17
Purchase Payments ......................................... 17
Accumulation Units ........................................ 17
Value of Accumulation Units ............................... 18
Net Investment Factor ..................................... 18
Transfers Among Investment Options ........................ 18
Maximum Number of Investment Options ...................... 19
Special Transfer Services - Dollar Cost Averaging ......... 19
Asset Rebalancing Program ................................. 19
Withdrawals ............................................... 20
Special Withdrawal Services - the Income Plan ............. 21
Loans ..................................................... 21
Death Benefit During Accumulation Period .................. 22
PAY-OUT PERIOD PROVISIONS ................................... 25
General ................................................... 25
Annuity Options ........................................... 25
Determination of Amount of the First Variable
Annuity Payment ......................................... 26
Annuity Units and the Determination of
Subsequent Variable Annuity Payments .................... 27
Transfers During Pay-out Period ........................... 27
Death Benefit During Pay-out Period ....................... 27
OTHER CONTRACT PROVISIONS ................................... 28
Right to Review Contract .................................. 28
Ownership ................................................. 28
Annuitant ................................................. 29
Change of Maturity Date ................................... 29
Beneficiary ............................................... 29
Modification .............................................. 29
Our Approval .............................................. 30
Misstatement and Proof of Age, Sex or Survival ............ 30
FIXED ACCOUNT INVESTMENT OPTIONS ............................ 30
CHARGES AND DEDUCTIONS ......................................... 33
Withdrawal Charges ........................................ 33
Administration Fees ....................................... 35
Mortality and Expense Risk Charge ......................... 35
Taxes ..................................................... 36
Expenses of Distributing Contracts ........................ 36
FEDERAL TAX MATTERS ............................................ 36
INTRODUCTION ................................................ 36
OUR TAX STATUS .............................................. 36
TAXATION OF ANNUITIES IN GENERAL ............................ 37
Tax Deferral During Accumulation Period ................... 37
Taxation of Partial and Full Withdrawals .................. 39
Taxation of Annuity Benefit Payments ...................... 39
Taxation of Death Benefit Proceeds ........................ 40
Penalty Tax on Premature Distributions .................... 40
Aggregation of Contracts .................................. 41
QUALIFIED RETIREMENT PLANS .................................. 41
Direct Rollovers .......................................... 42
FEDERAL INCOME TAX WITHHOLDING .............................. 43
GENERAL MATTERS ................................................ 43
Performance Data .......................................... 43
Asset Allocation and Timing Services ...................... 43
Distribution of Contracts ................................. 44
Contract Owner Inquiries .................................. 44
Confirmation Statements ................................... 44
Legal Proceedings ......................................... 44
Year 2000 Issues .......................................... 44
Cancellation of Contract .................................. 45
Voting Interest ........................................... 46
APPENDIX A: SPECIAL TERMS ...................................... A-1
APPENDIX B: EXAMPLES OF CALCULATION OF WITHDRAWAL CHARGE ....... B-1
APPENDIX C: PRIOR CONTRACTS .................................... C-1
APPENDIX D: QUALIFIED PLAN TYPES ............................... D-1
</TABLE>
<PAGE> 7
SUMMARY
OVERVIEW OF THE CONTRACT. Under the contract, you make one or more payments to
us for a period of time (the "ACCUMULATION PERIOD") and then later, beginning on
the "MATURITY DATE" we make one or more annuity benefit payments to you (the
"PAY-OUT PERIOD"). Contract values during the accumulation period and the
amounts of annuity benefit payments during the pay-out period may either be
variable or fixed, depending upon the investment option(s) you select. You may
use the contract to fund either a non-qualified or tax-qualified retirement
plan.
PRIOR CONTRACTS. We have a class of variable annuity contract which is no longer
being issued but under which purchase payments may continue to be made ("PRIOR
CONTRACT" or "VEN 9 CONTRACTS"), which were sold during the period from March,
1992 until May, 1999. This Prospectus principally describes the contract offered
by this Prospectus but also describes the Ven 9 contracts. The principal
differences between the contract offered by this Prospectus and the prior
contract relate to the fixed investment options available under the contracts, a
minimum interest rate to be credited for any guarantee period under the fixed
portion of the contracts, the charges made by us, and the death benefit
provisions. See Appendix C.
PURCHASE PAYMENT LIMITS. The minimum initial purchase payment is $5,000 for
Non-Qualified contracts and $2,000 for Qualified contracts. Purchase payments
normally may be made at any time. If a purchase payment would cause your
contract value to exceed $1,000,000, or your contract value already exceeds
$1,000,000, however, you must obtain our approval in order to make the payment.
If permitted by state law, we may cancel your contract if you have made no
payments for two years, your contract value is less than $2,000 and your
payments over the life of your contract, minus your withdrawals over the life of
the contract, are less than $2,000.
INVESTMENT OPTIONS. During the accumulation period, contract values may be
allocated among up to seventeen of the available investment options. Currently,
thirty-eight Variable Account investment options and six fixed account
investment options are available under the contract. Each of the thirty-eight
Variable Account investment options is a sub-account of the Variable Account
that invests in a corresponding portfolio of the Trust. A full description of
each Trust portfolio is in the accompanying Prospectus of the Trust. Your
contract value during the accumulation period and the amounts of annuity benefit
payments will depend upon the investment performance of the Trust portfolio
underlying each sub-account of the Variable Account you select and/or upon the
interest we credit on each fixed account option you select. Subject to certain
regulatory limitations, we may elect to add, subtract or substitute investment
options.
TRANSFERS. During the accumulation period, you may transfer your contract values
among any of the Variable Account investment options and from the Variable
Account investment options to the fixed account investment options without
charge. You may also transfer contract values 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 (with certain
exceptions) and a market value charge which may apply to such a transfer. During
the pay-out period, you may not transfer your allocations from Variable Account
options to fixed account options or from fixed account options to Variable
Account options.
WITHDRAWALS. During the accumulation period, you may withdraw all or a portion
of your contract value. The amount you withdraw from any investment account must
be at least $300 or, if less, your entire balance in that investment account. If
a partial withdrawal plus any applicable withdrawal charge would reduce your
contract value to less than $300, we will treat your withdrawal request as a
request to withdraw all of your contract value. A withdrawal charge and an
administration fee may apply to your
4
<PAGE> 8
withdrawal. A withdrawal may be subject to income tax and a 10% penalty tax. A
systematic withdrawal plan service is available under the contract.
LOANS. If your contract is issued in connection with a Section 403(b) qualified
plan that is not subject to Title I of ERISA, you may borrow money from us,
using your contract as the only security for the loan. The effective cost of a
contract loan is 2% per year of the amount borrowed.
CONFIRMATION STATEMENTS. We will send you confirmation statements for certain
transactions in your account. You should carefully review these statements to
verify their accuracy. You should immediately report any mistakes to our Annuity
Service Office (at the address shown on the cover of this Prospectus). If you
fail to notify our Annuity Service Office of any mistake within 60 days of the
mailing of the confirmation statement, you will be deemed to have ratified the
transaction.
DEATH BENEFITS. We will pay the death benefit described below to your
BENEFICIARY if you die during the accumulation period. If a contract is owned by
more than one person, then the surviving contract owner will be deemed the
beneficiary of the deceased contract owner. No death benefit is payable on the
death of any ANNUITANT (a natural person or persons to whom ANNUITY BENEFIT
PAYMENTS are made and whose life is used to determine the duration of annuity
benefit payments involving life contingencies), 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 amount of the death benefit will be calculated as of the
date on which our Annuity Service Office receives written notice and proof of
death and all required claim forms. The formula used to calculate the death
benefit may vary according to the age(s) of the contract owner(s) at the time
the contract is issued and the age of the contract owner who dies. If there are
any unpaid loans (including unpaid interest) under the contract, the death
benefit equals the death benefit calculated according to the applicable formula,
minus the amount of the unpaid loans. If the annuitant dies during the pay-out
period and annuity benefit payment method selected calls for payments for a
guaranteed period, we will make the remaining guaranteed payments to the
beneficiary.
ANNUITY BENEFIT PAYMENTS. We offer a variety of fixed and variable annuity
payment options. Periodic annuity benefit payments will begin on the "maturity
date" (the first day of the pay-out period). You select the maturity date, the
frequency of payment and the type of annuity benefit payment option. Annuity
benefit payments are made to the annuitant.
TEN DAY REVIEW. You may cancel your contract by returning it to us within 10
days of receiving it.
TAXATION. 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 benefit payments begin. Normally, a portion of each annuity benefit
payment is taxable as ordinary income. Partial and total withdrawals generally
are taxable as ordinary income to the extent contract value prior to the
withdrawal exceeds the purchase payments you have made, minus your prior
withdrawals. A 10% penalty tax may apply to withdrawals prior to age 59-1/2.
CHARGES AND DEDUCTIONS. The following Table and Example are designed to assist
you in understanding the various costs and expenses related to the contract. The
table reflects expenses of the Variable Account and the underlying portfolio of
the Trust. The items listed under "Contract Owner Transaction Expenses" and
"Separate Account Annual Expenses" are more completely described in this
Prospectus beginning at page 33. The items listed under "Trust Annual Expenses"
are described in detail in the accompanying Trust Prospectus.
5
<PAGE> 9
CONTRACT OWNER TRANSACTION EXPENSES
See Appendix C for a discussion of contract owner transaction expenses under Ven
9 contracts.
Deferred sales load (as percentage of purchase payments)
<TABLE>
<CAPTION>
NUMBER OF COMPLETE YEARS
PURCHASE PAYMENT IN CONTRACT WITHDRAWAL CHARGE PERCENTAGE
<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(1)
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>
TOTAL TRUST
OTHER EXPENSES ANNUAL EXPENSES
MANAGEMENT (AFTER EXPENSE (AFTER EXPENSE
TRUST PORTFOLIO FEES REIMBURSEMENT) REIMBURSEMENT)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets........ 0.850% 0.360% 1.210%
Science & Technology................ 1.100% 0.110% 1.210%
International Small Cap............. 1.100% 0.150% 1.250%
Aggressive Growth................... 1.000%* 0.090% 1.090%
Emerging Small Company.............. 1.050% 0.050% 1.100%
Small Company Blend................. 1.050% 0.150%** 1.200%
Mid Cap Growth...................... 0.950%* 0.040% 0.990%
Mid Cap Stock....................... 0.925% 0.000%** 0.925%
Overseas............................ 0.950% 0.210% 1.160%
</TABLE>
- --------
(1) The $30 annual administration fee will not be assessed prior to the maturity
date if at the time of its assessment the sum of all investment account values
is greater than or equal to $100,000. This provision does not apply to Ven 9
contracts. See Appendix C.
6
<PAGE> 10
<TABLE>
<CAPTION>
TOTAL TRUST
OTHER EXPENSES ANNUAL EXPENSES
MANAGEMENT (AFTER EXPENSE (AFTER EXPENSE
TRUST PORTFOLIO FEES REIMBURSEMENT) REIMBURSEMENT)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
International Stock................. 1.050% 0.200% 1.250%
International Value................. 1.000% 0.300%** 1.300%
Mid Cap Blend....................... 0.850%* 0.050% 0.900%
Small Company Value................. 1.050% 0.180% 1.230%
Global Equity....................... 0.900% 0.110% 1.010%
Growth.............................. 0.850% 0.050% 0.900%
Large Cap Growth.................... 0.875%* 0.130% 1.005%
Quantitative Equity................. 0.700% 0.060% 0.760%
Blue Chip Growth.................... 0.875%* 0.045% 0.920%
Real Estate Securities.............. 0.700% 0.060% 0.760%
Value............................... 0.800% 0.050% 0.850%
Growth & Income..................... 0.750% 0.040% 0.790%
U.S. Large Cap Value................ 0.875% 0.100%** 0.975%
Equity-Income....................... 0.875%* 0.050% 0.925%
Income & Value...................... 0.800%* 0.090% 0.890%
Balanced............................ 0.800% 0.070% 0.870%
High Yield.......................... 0.775% 0.065% 0.840%
Strategic Bond...................... 0.775% 0.075% 0.850%
Global Bond......................... 0.800% 0.110% 0.910%
Total Return........................ 0.775% 0.100%** 0.875%
Investment Quality Bond............. 0.650% 0.070% 0.720%
Diversified Bond.................... 0.750% 0.140% 0.890%
U.S. Government Securities.......... 0.650% 0.070% 0.720%
Money Market........................ 0.500% 0.120% 0.620%
Lifestyle Aggressive 1000#.......... 0% 1.110%*** 1.110%
Lifestyle Growth 820#............... 0% 1.000%*** 1.000%
Lifestyle Balanced 640#............. 0% 0.920%*** 0.920%
Lifestyle Moderate 460#............. 0% 0.830%*** 0.830%
Lifestyle Conservative 280#......... 0% 0.720%*** 0.720%
</TABLE>
*Management Fees for these portfolios changed effective May 1, 1999. Prior to
May 1, 1999, management fees were as follows:
<TABLE>
<S> <C> <C> <C>
Aggressive Growth.......... 1.050% Blue Chip Growth.......... 0.925%
Mid Cap Growth............. 1.000% Equity Income............. 0.800%
Mid Cap Blend.............. 0.750% Income & Value............ 0.750%
Large Cap Growth........... 0.750%
</TABLE>
**Based on estimates of payments to be made during the current fiscal year.
*** Reflects expenses of the Underlying Portfolios. Manufacturers Securities
Services, LLC ("MSS") 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 0.02%
higher, except for the Lifestyle Conservative 280 Trust, which would be 0.03%
higher (based on expenses of the Lifestyle Trusts for the fiscal year ended
December 31, 1998) as noted in the chart below:
7
<PAGE> 11
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL TRUST
TRUST PORTFOLIO FEES EXPENSES ANNUAL EXPENSES
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lifestyle Aggressive 1000........... 0% 1.130% 1.130%
Lifestyle Growth 820................ 0% 1.020% 1.020%
Lifestyle Balanced 640.............. 0% 0.940% 0.940%
Lifestyle Moderate 460.............. 0% 0.850% 0.850%
Lifestyle Conservative 280.......... 0% 0.750% 0.750%
</TABLE>
# Each Lifestyle Trust will bear its own pro rata share of the fees and expenses
incurred by the Underlying Portfolios in which it invests, and the investment
return of each Lifestyle Trust will be net of the Underlying Portfolio expenses.
Each Lifestyle Portfolio must also bear its own expenses. However, MSS is
currently paying those expenses as described in footnote (***) above.
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return on assets, if you surrendered your contract at the end of the applicable
time period:
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS+ 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Pacific Rim Emerging Markets............ $82 $132 $171 $181 $300
Science & Technology.................... 82 132 171 181 300
International Small Cap................. 83 133 173 183 304
Aggressive Growth...................... 81 128 166 176 289
Emerging Small Company................. 81 128 166 176 290
Small Company Blend*................... 82 131
Mid Cap Growth......................... 80 125 161 171 279
Mid Cap Stock*......................... 80 123
Overseas............................... 82 130 169 179 295
International Stock.................... 83 133 173 183 304
International Value*................... 83 134
Mid Cap Blend.......................... 79 123 156 166 270
Small Company Value.................... 83 132 172 182 302
Global Equity.......................... 81 126 162 172 281
Growth................................. 79 123 156 166 270
Large Cap Growth....................... 80 126 161 171 280
Quantitative Equity.................... 78 119 149 159 255
Blue Chip Growth....................... 80 123 157 167 272
Real Estate Securities................. 78 119 149 159 255
Value.................................. 79 121 154 164 265
Growth & Income......................... 78 120 150 160 258
U.S. Large Cap Value*................... 80 125
Equity-Income........................... 80 123 157 167 272
Income & Value.......................... 79 122 156 166 269
Balanced................................ 79 122 155 165 267
High Yield.............................. 79 121 153 163 264
Strategic Bond.......................... 79 121 154 164 265
Global Bond............................. 80 123 157 167 271
Total Return*........................... 79 122
Investment Quality Bond................. 78 118 147 157 251
Diversified Bond........................ 79 122 156 166 269
U.S. Government Securities.............. 78 118 147 157 251
</TABLE>
8
<PAGE> 12
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS+ 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Money Market............................ 77 115 142 152 241
Lifestyle Aggressive 1000............... 81 129 167 177 290
Lifestyle Growth 820.................... 80 126 161 171 280
Lifestyle Balanced 640.................. 80 123 157 167 272
Lifestyle Moderate 460.................. 79 121 153 163 263
Lifestyle Conservative 280.............. 78 118 147 157 251
</TABLE>
+For Ven 9 contracts only (as described in Appendix C). The difference in
amounts is attributable to the different withdrawal charges. See Appendix C.
*The example of expenses for these Trust portfolios contain figures for only one
and three years since they are newly created portfolios.
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return on assets, if you selected an annuity benefit payment option as provided
in the contract or did not surrender the contract at the end of the applicable
time period:
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets............ $27 $83 $141 $300
Science & Technology.................... 27 83 141 300
International Small Cap................. 27 84 143 304
Aggressive Growth....................... 26 79 136 289
Emerging Small Company.................. 26 80 136 290
Small Company Blend*.................... 27 83
Mid Cap Growth.......................... 25 76 131 279
Mid Cap Stock*.......................... 24 74
Overseas................................ 27 81 139 295
International Stock..................... 27 84 143 304
International Value*.................... 28 86
Mid Cap Blend........................... 24 74 126 270
Small Company Value..................... 27 84 142 302
Global Equity........................... 25 77 132 281
Growth.................................. 24 74 126 270
Large Cap Growth........................ 25 77 131 280
Quantitative Equity..................... 23 69 119 255
Blue Chip Growth........................ 24 74 127 272
Real Estate Securities.................. 23 69 119 255
Value................................... 23 72 124 265
Growth & Income......................... 23 70 120 258
U.S. Large Cap Value*................... 25 76
Equity-Income........................... 24 74 127 272
Income & Value.......................... 24 73 126 269
Balanced................................ 24 73 125 267
High Yield.............................. 23 72 123 264
Strategic Bond.......................... 23 72 124 265
Global Bond............................. 24 74 127 271
Total Return*........................... 24 73
Investment Quality Bond................. 22 68 117 251
Diversified Bond........................ 24 73 126 269
U.S. Government Securities.............. 22 68 117 251
</TABLE>
9
<PAGE> 13
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS+ 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C>
Money Market............................ 21 65 112 241
Lifestyle Aggressive 1000............... 26 80 137 290
Lifestyle Growth 820.................... 25 77 131 280
Lifestyle Balanced 640.................. 24 74 127 272
Lifestyle Moderate 460.................. 23 72 123 263
Lifestyle Conservative 280.............. 22 68 117 251
</TABLE>
*The example of expenses for these Trust portfolios contain figures for only one
and three years since they are newly created portfolios.
For purposes of presenting the foregoing Examples, we have made certain
assumptions. We have assumed, where applicable, that 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. Those
assumptions, (each of which is 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
EXAMPLES 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 0.060% annual asset charge based on the $50,000
approximate average size. So translated, such charge would be higher for smaller
contracts and lower for larger contracts.
A TABLE OF ACCUMULATION UNIT VALUES RELATING TO THE CONTRACT IS INCLUDED IN
APPENDIX B TO THIS PROSPECTUS.
LOCATION OF FINANCIAL STATEMENTS OF REGISTRANT AND DEPOSITOR
Our financial statements and those of the Variable Account may be found
in the Statement of Additional Information.
GENERAL INFORMATION ABOUT US, THE VARIABLE ACCOUNT AND THE TRUST
We are an indirect subsidiary of Manulife.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
We are a stock life insurance company organized under the laws of New
York in 1992. Our principal office is located at Corporate Center at Rye, 555
Theodore Fremd Avenue, Suite C-209, Rye, New York 10580-9966.
We are a wholly-owned subsidiary of The Manufacturers Life Insurance
Company of North America ("Manulife North America"), 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 us in New York, in 48 other states, the District of Columbia and
Puerto Rico.
Our ultimate parent 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
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<PAGE> 14
Canadian mutual life insurance company. On January 1, 1996 NAL and Manulife
merged with the combined company retaining the Manulife name.
On January 20, 1998, the Board of Directors of Manulife announced that
it had 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's financial
ratings are as follows:
A++ A.M. Best
Superior in financial strength; 1st category of 15
AAA Duff & Phelps
Highest in claims paying ability; 1st category of 18
AA+ Standard & Poor's
Very strong in financial strength; 2nd category of 21
These ratings, which are current as of the date of this prospectus and are
subject to change, are assigned as a measure of The Manufacturers Life Insurance
Company of New York's ability to honor the death benefit and life annuitization
guarantees but not specifically to its products, the performance (return) of
these products, the value of any investment in these products upon withdrawal or
to individual securities held in any portfolio.
THE VARIABLE ACCOUNT
The Variable Account is one of our separate accounts that invests the contract
values you allocate to it in the Trust portfolio(s) you select.
We established 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 credited to or charged against
the Variable Account without regard to our other income, gains or losses.
Nevertheless, all obligations arising under the contracts are our general
corporate obligations. Assets of the Variable Account may not be charged with
liabilities arising out of any of our other business.
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 we
determine that it would 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 if 1940 Act registration
were no longer required.
The Variable Account currently has thirty-eight sub-accounts. We
reserve 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 that we, or an affiliated company, may
establish.
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The Trust is a mutual fund in which the Variable Account invests that has 38
investment portfolios managed by 16 subadvisers.
THE TRUST
The assets of each sub-account of the Variable Account are invested in
shares of a corresponding investment portfolio of the Trust. A list of the Trust
portfolios 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 Small Company Trust and the five Lifestyle Trusts, which are
non-diversified. The Trust receives investment advisory services from
Manufacturers Securities Services, LLC ("MSS"), the successor to NASL Financial
Services, Inc.
The Trust currently has sixteen subadvisers who manage all of the
portfolios:
<TABLE>
<CAPTION>
SUBADVISER TRUST PORTFOLIOS MANAGED
- ---------- ------------------------
<S> <C>
A I M Capital Management, Inc. Aggressive Growth Trust
Mid Cap Growth Trust
AXA Rosenberg Investment Management LLC Small Company Value Trust
Capital Guardian Trust Company Small Company Blend Trust
U.S. Large Cap Value Trust
Income & Value Trust
Diversified Bond Trust
Fidelity Management Trust Company Overseas Trust
Mid Cap Blend Trust
Large Cap Growth Trust
Founders Asset Management, LLC International Small Cap Trust
Balanced Trust
Franklin Advisers, Inc. Emerging Small Company Trust
Manufacturers Adviser Corporation Pacific Rim Emerging Markets Trust
Quantitative Equity Trust
Real Estate Securities Trust
Money Market Trust
Lifestyle Trusts
Miller Anderson & Sherrerd, LLP Value Trust
High Yield Trust
Morgan Stanley Asset Management Inc. Global Equity Trust
Pacific Investment Management Company Global Bond Trust
Total Return Trust
Rowe Price-Fleming International, Inc. International Stock Trust
Salomon Brothers Asset Management Inc Strategic Bond Trust
U.S. Government Securities Trust
State Street Global Advisors Growth Trust
</TABLE>
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<PAGE> 16
<TABLE>
<CAPTION>
SUBADVISER TRUST PORTFOLIOS MANAGED
- --------------------------------------------------------------------------------------
<S> <C>
T. Rowe Price Associates, Inc. Science & Technology Trust
Blue Chip Growth Trust
Equity-Income Trust
Templeton Investment Counsel, Inc. International Value Trust
Wellington Management Company, LLP Mid Cap Stock Trust
Growth & Income Trust
Investment Quality Bond Trust
</TABLE>
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 AGGRESSIVE GROWTH TRUST (formerly, the Pilgrim Baxter Growth Trust)
seeks long-term capital appreciation by investing the portfolio's asset
principally in common stocks, convertible bonds, convertible preferred stocks
and warrants of companies which in the opinion of the subadviser are expected to
achieve earnings growth over time at a rate in excess of 15% per year. Many of
these companies are in the small and medium-sized category.
The EMERGING SMALL COMPANY TRUST (formerly, the Emerging Growth Trust)
seeks long-term growth of capital by investing, under normal market conditions,
at least 65% of the portfolio's total assets in common stock equity securities
of small capitalization ("small cap") growth companies. In general, companies in
which the portfolios invests will have market cap values of less than $1.5
billion at the time of purchase.
The SMALL COMPANY BLEND TRUST seeks long-term growth of capital and
income by investing the portfolio's assets, under normal market conditions,
primarily in equity and equity-related securities of companies with market
capitalization between $50 million and $1 billion.
The MID CAP GROWTH TRUST (formerly, the Small/Mid Cap Trust) seeks
long-term capital appreciation by investing the portfolio's assets principally
in common stocks, with emphasis on medium-sized and smaller emerging growth
companies.
The MID CAP STOCK TRUST seeks long-term growth of capital by investing
primarily in equity securities of companies with market capitalizations that
approximately match the range of capitalization of the Wilshire Mid Cap 750
Index.
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<PAGE> 17
The OVERSEAS TRUST (formerly, the International Growth & Income Trust)
seeks growth of capital by investing, under normal market conditions, at least
65% of the portfolios' assets in foreign securities (including American
Depositary Receipts (ADRs) and European Depositary Receipts (EDRs). The
portfolios expects to invest primarily in equity securities.
The INTERNATIONAL STOCK TRUST seeks long-term growth of capital by
investing primarily in common stocks of established, non-U.S. companies.
The INTERNATIONAL VALUE TRUST seeks long-term growth of capital by
investing, under normal market conditions, primarily in equity securities of
companies located outside the U.S., including in emerging markets.
The MID CAP BLEND TRUST (formerly, 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 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 GLOBAL EQUITY TRUST seeks long-term capital appreciation by
investing primarily in equity securities throughout the world, including U.S.
issuers and emerging markets.
The GROWTH TRUST seeks long-term growth of capital by investing
primarily in large capitalization growth securities (market capitalizations of
approximately $1 billion or greater).
The LARGE CAP GROWTH TRUST (formerly, the Aggressive Asset Allocation
Trust) seeks long-term growth of capital by investing, under normal market
conditions, at least 65% of the portfolio's assets in equity securities of
companies with large market capitalizations.
The QUANTITATIVE EQUITY TRUST seeks to achieve intermediate and
long-term growth through capital appreciation and current income by investing in
common stocks and other equity securities of well established companies with
promising prospects for providing an above average rate of return.
The BLUE CHIP GROWTH TRUST seeks to achieve long-term growth of capital
(current income is a secondary objective) 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 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 GROWTH & INCOME TRUST seeks long-term growth of capital and income,
consistent with prudent investment risk, by investing primarily in a diversified
portfolio of common stocks of United States issuers which the subadviser
believes are of high quality.
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<PAGE> 18
The U.S. LARGE CAP TRUST seeks long-term growth of capital and income
by investing the portfolio's assets, under normal market conditions, primarily
in equity and equity-related securities of companies with market capitalization
greater than $500 million.
The EQUITY-INCOME TRUST seeks to provide substantial dividend income
and also long-term capital appreciation by investing primarily in
dividend-paying common stocks, particularly of established companies with
favorable prospects for both increasing dividends and capital appreciation.
The INCOME & VALUE TRUST (formerly, the Moderate Asset Allocation
Trust) seeks the balanced accomplishment of (a) conservation of principal and
(b) long-term growth of capital and income by investing the portfolio's assets
in both equity and fixed-income securities. The subadviser has full discretion
to determine the allocation between equity and fixed-income securities.
The BALANCED TRUST seeks current income and capital appreciation by
investing in a balanced portfolio of common stocks, U.S. and foreign government
obligations and a variety of corporate fixed-income securities.
The HIGH YIELD TRUST seeks to realize an above-average total return
over a market cycle of three to five years, consistent with reasonable risk, by
investing primarily in high yield debt securities, including corporate bonds and
other fixed-income securities.
The STRATEGIC BOND TRUST seeks a high level of total return consistent
with preservation of capital by giving its subadviser broad discretion to deploy
the portfolio's assets among certain segments of the fixed-income market as the
subadviser believes will best contribute to achievement of the portfolio's
investment objective.
The GLOBAL BOND TRUST (formerly, the Global Government Bond Trust)
seeks to realize maximum total return, consistent with preservation of capital
and prudent investment management by investing the portfolio's asset primarily
in fixed income securities denominated in major foreign currencies, baskets of
foreign currencies (such as the ECU),and the U.S. dollar.
The TOTAL RETURN TRUST seeks to realize maximum total return,
consistent with preservation of capital and prudent investment management by
investing, under normal market conditions, at least 65% of the portfolio's
assets in a diversified portfolio of fixed income securities of varying
maturities. The average portfolio duration will normally vary within a three- to
six- year time frame based on Pacific Investment Management Company's forecast
for interest rates.
The INVESTMENT QUALITY BOND TRUST seeks a high level of current income
consistent with the maintenance of principal and liquidity, by investing
primarily in a diversified portfolio of investment grade corporate bonds and
U.S. Government bonds with intermediate to longer term maturities. The portfolio
may also invest up to 20% of its assets in non-investment grade fixed income
securities.
The DIVERSIFIED BOND TRUST (formerly, the Conservative Asset Allocation
Trust) seeks high total return as is consistent with the conservation of capital
by investing at least 75% of the portfolio's assets in fixed-income securities.
The U.S. GOVERNMENT SECURITIES TRUST seeks a high level of current
income consistent with preservation of capital and maintenance of liquidity, by
investing in debt obligations and mortgage-backed securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
derivative securities such as collateralized mortgage obligations backed by such
securities.
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<PAGE> 19
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.
A full description of the Trust, including the investment objectives,
policies and restrictions of, and the risks relating to investments in, each
portfolio is contained in the Trust's Prospectus which we provided you along
with this Prospectus. The Trust prospectus should be read carefully before
allocating purchase payments to a sub-account.
If the shares of a Trust portfolio are no longer available for
investment or in our judgment investment in a Trust portfolio becomes
inappropriate, we 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, we will make no such
substitution without first notifying you and obtaining approval of the SEC (to
the extent required by the 1940 Act).
You instruct us how to vote Trust shares.
We will vote shares of the Trust portfolios held in the Variable
Account at the Trust's shareholder meetings according to voting instructions
received from the persons having the voting interest under the contracts. We
will determine the number of portfolio shares for which voting instructions may
be given not more than 90 days prior to the meeting. Trust proxy material will
be distributed to each person having the voting interest under the contract
together with appropriate forms for giving voting instructions. We will vote all
portfolio shares that we hold (including our own shares and those we hold in the
Variable Account for contract owners in proportion to the instructions so
received.
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<PAGE> 20
During the accumulation period, the contract owner has the voting
interest under a contract. During the pay-out period, the annuitant has the
voting interest under a contract. We reserve the right to make any changes in
the voting rights described above that may be permitted by the federal
securities laws, regulations or interpretations thereof. For further information
on voting interest under the contract see "Voting Interest" in this prospectus.
DESCRIPTION OF THE CONTRACT
ACCUMULATION PERIOD PROVISIONS
Initial purchase payments must be at least $5,000 subsequent one's at least $30.
Total payments of more than $1 million require our approval.
PURCHASE PAYMENTS
Your purchase payments are made to us at our Annuity Service Office.
The minimum initial purchase payment is $5,000 for Non-Qualified contracts and
$2,000 for Qualified contracts. Purchase payments may be made at any time. We
may provide for purchase payments to be automatically withdrawn from your bank
account on a periodic basis. If a purchase payment would cause your contract
value to exceed $1,000,000 or your contract value already exceeds $1,000,000,
you must obtain our approval in order to make the payment.
If permitted by state law, we may cancel a contract at the end of any
three consecutive contract years in which no purchase payments have been made,
if both:
- the total purchase payments made over the life of the
contract, less any withdrawals, are less than $2,000; and
- the contract value at the end of such three-year period is
less than $2,000.
If we cancel your contract, we will pay you the contract value computed as of
the valuation period during which the cancellation occurs, minus the amount of
any outstanding loan and minus 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 you designate. You may change the allocation of
subsequent purchase payments at any time by notifying us in writing.
In addition, you have the option to participate in our Guarantee Plus
Program. Under the Guarantee Plus Program the initial purchase payment is split
between the fixed and variable investment options. The percentage of the initial
purchase payment allocated to a fixed account will assure that the fixed account
allocation will have grown to an amount at least equal to the total initial
purchase payment at the end of the guaranteed period. The percentage depends
upon the current investment rate of the fixed investment option. The balance of
the initial purchase payment is allocated among the variable investment options
as selected in the contract. You may obtain full information concerning the
Guarantee Plus Program and its restrictions from your securities dealer or our
Annuity Service Office. See Appendix C for information on purchase payments
applicable to Ven 9 contracts.
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<PAGE> 21
The value of an investment account is measured in "accumulation units," which
vary in value with the performance of the underlying Trust portfolio.
ACCUMULATION UNITS
During the accumulation period, we will establish an "INVESTMENT
ACCOUNT" for you for each Variable Account investment option to which you
allocate a portion of your contract value. Amounts are credited to those
investment accounts in the form of "ACCUMULATION UNITS" (units of measure used
to calculate the value of the variable portion of your contract during the
accumulation period). The number of accumulation units to be credited to each
investment account is determined by dividing the amount allocated to that
investment account by the value of an accumulation unit for that investment
account next computed after the purchase payment is received at our 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 on
the business day (any date on which the New York Stock Exchange is open and the
net asset value of a Trust portfolio is determined) on which they are received
at our Annuity Service Office, and in any event not later than two business days
after our receipt of all information necessary for issuing the contract. You
will be informed of any deficiencies preventing processing if your contract
cannot be issued. If the deficiencies are not remedied within five business days
after receipt, your purchase payment will be returned promptly, unless you
specifically consent to our retaining your purchase payment until all necessary
information is received. Initial purchase payments received by wire transfer
from broker-dealers will be credited on the business day received by us if the
broker-dealers have made special arrangements with us.
VALUE OF ACCUMULATION UNITS
The value of your accumulation units will vary from one business day to
the next depending upon the investment results of the investment options you
select. The value of an accumulation unit for each sub-account was arbitrarily
set at $10 or $12.50 for the first business day under other contracts which we
or an affiliate of ours have issued. The value of an accumulation unit for any
subsequent business day is determined by multiplying the value of an
accumulation unit for the immediately preceding business day by the net
investment factor for that sub-account (described below) for the business day
for which the value is being determined. Accumulation units will be valued at
the end of each Business Day. A Business Day is deemed to end at the time of the
determination of the net asset value of the Trust shares.
NET INVESTMENT FACTOR
The net investment factor is an index used to measure the investment
performance of a sub-account from one business day to the next (the "VALUATION
PERIOD"). The net investment factor may be greater than, less than or equal to
one; therefore, the value of an accumulation unit may increase, decrease or
remain the same. 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:
- 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
- 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.
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<PAGE> 22
- 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. That factor is equal on an
annual basis to 1.40% (0.15% for administrative expenses and
1.25% for mortality and expense risks).
Amounts invested may be transferred among investment options.
TRANSFERS AMONG INVESTMENT OPTIONS
During the accumulation period, you 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 us. Accumulation units will be canceled from the investment account
from which you transfer amounts transferred and credited to the investment
account to which you transfer amounts. Your contract value on the date of the
transfer will not be affected by a transfer. You 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 we will
transfer the entire amount instead of the requested amount. We reserve the right
to limit, upon notice, the maximum number of transfers you may make to one per
month or six at any time within a contract year. In addition, we reserve the
right to defer a transfer at any time we are unable to purchase or redeem shares
of the Trust portfolios. We also reserve the right to modify or terminate the
transfer privilege at any time (to the extent permitted by applicable law).
MAXIMUM NUMBER OF INVESTMENT OPTIONS
You currently are limited to a maximum of seventeen investment options
(including all fixed account investment options) during the accumulation period.
In calculating this limit, investment options to which you have allocated
purchase payments at any time during the accumulation period will be counted
toward the seventeen maximum even if you no longer have contract value allocated
to the investment option.
Dollar Cost Averaging and Asset Rebalancing programs are available.
SPECIAL TRANSFER SERVICES - DOLLAR COST AVERAGING
We administer a Dollar Cost Averaging ("DCA") program. If you enter
into a DCA agreement, you may instruct us 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 DCA
fixed account investment option may be established under the DCA program to make
automatic transfers. Only purchase payments (and not existing contract values)
may be allocated to the DCA fixed account investment option.
The DCA program is generally suitable if you are making a substantial
deposit and desire to control the risk of investing at the top of a market
cycle. The DCA program allows investments to be made in equal installments over
time in an effort to reduce that risk. If you are interested in the DCA program,
you may elect to participate in the program on the application or by separate
application. You may obtain a separate application and full information
concerning the program and its restrictions from your securities dealer or our
Annuity Service Office. There is no charge for participation in the DCA program.
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<PAGE> 23
ASSET REBALANCING PROGRAM
We administer an Asset Rebalancing Program which enables you to specify
the percentage levels you would like to maintain in particular portfolios. Your
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, you should
monitor your use of these other programs and any other transfers or withdrawals
while the Asset Rebalancing Program is being used. If you are interested in the
Asset Rebalancing Program, you may obtain a separate application and full
information concerning the program and its restrictions from your securities
dealer or our 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:
- 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);
- semi-annually on June 25th or December 26th (or the next
business day if these dates are not business days); or
- 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.
You may withdraw all or a portion of your contract value, but may incur
withdrawal charges and tax liability as a result.
WITHDRAWALS
During the accumulation period, you may withdraw all or a portion of
your contract value upon written request (complete with all necessary
information) to our 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 Internal Revenue Code of 1986, as amended (the
"CODE"). In the case of a total withdrawal, we will pay the contract value as of
the date of receipt of the request at our Annuity Service Office, minus the
annual $30 administration fee (if applicable), any unpaid loans (including
unpaid interest) and any applicable withdrawal charge. The contract then will be
canceled. In the case of a partial withdrawal, we will pay the amount requested
and cancel accumulation units credited to each investment account equal in value
to the amount withdrawn from that investment account plus any applicable
withdrawal charge deducted from that investment account.
When making a partial withdrawal, you 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 minus any
applicable withdrawal charge. If you do 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
and ending with the longest guarantee period. If the partial withdrawal is less
than the total value in the variable account investment options, the withdrawal
will be taken proportionately from all of your variable account investment
options. For rules governing the order
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<PAGE> 24
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, we 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, we 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 our Annuity Service
Office. However, we reserve the right to defer the right of withdrawal or
postpone payments for any period when:
- the New York Stock Exchange is closed (other than customary
weekend and holiday closings),
- trading on the New York Stock Exchange is restricted,
- 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
- 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 trading is restricted or an
emergency exists.
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.
Systematic "Income Plan" withdrawals are available.
SPECIAL WITHDRAWAL SERVICES - THE INCOME PLAN
We administer an Income Plan ("IP") which permits you to pre-authorize
a periodic exercise of the contractual withdrawal rights described above. After
entering into an IP agreement, you may instruct us 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, like
other withdrawals, may be subject to income tax and a 10% penalty tax. If you
are interested in an IP, you may obtain a separate application and full
information concerning the program and its restrictions from your securities
dealer or our Annuity Service Office. The IP program is offered without charge.
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Some qualified contracts have a loan feature.
LOANS
We offer 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. If you are not an owner of such a contract, none of this discussion
about loans applies to your contract. If you are an owner of such a contract,
you may borrow from us, using your contract as the only security for the loan.
Loans are subject to certain tax law restrictions and to applicable retirement
program rules (collectively, "LOAN RULES"). You should consult your tax advisor
and retirement plan fiduciary prior to taking a loan under the contract.
The maximum loan value of a contract is normally 80% of the contract
value, although loan rules may serve to reduce that maximum in some cases. The
amount available for a loan at any given time is the loan value less any unpaid
prior loans. Unpaid prior loans equal the amount of any prior loans plus
interest accrued on those loans. Loans will be made only upon written request
from the owner. We will make loans within seven days of receiving a properly
completed loan application (applications are available from our Annuity Service
Office), subject to postponement under the same circumstances that payment of
withdrawals may be postponed (see "WITHDRAWALS").
When you request a loan, we will reduce your investment in the
investment accounts and transfer the amount of the loan to the "LOAN ACCOUNT," a
part of our general account. You 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
you may repay unpaid loans at any time. Under applicable loan rules, loans
generally must be repaid within five years, and repayments must be made at least
quarterly and 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. You may designate the investment accounts to which a repayment is to
be allocated. Otherwise, the repayment will be allocated in the same manner as
your most recent purchase payment. On each anniversary of the date your contract
was issued, we will transfer from the investment accounts to the loan account
the excess of the balance of your loan over the balance in your loan account.
We charge 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. We credit 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
unpaid loans under your contract exceed your contract value, your contract will
be in default. In such case you will receive a notice indicating the payment
needed to bring your 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, your contract may be terminated without value.
The amount of any unpaid loans (including unpaid interest) will be
deducted from the death benefit otherwise payable under the contract. In
addition, loans, whether or not repaid, will have a permanent effect on contract
value because the investment results of the investment accounts will apply only
to the unborrowed portion of the contract value. The longer a loan is unpaid,
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 your loan account while your loan is unpaid, your contract
value will not increase as rapidly as it would have if no loan were unpaid. If
investment results are below that rate, contract value will be greater than it
would have been had no loan been outstanding.
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If you die during the accumulation period, your beneficiary will receive a death
benefit that might exceed your contract value.
DEATH BENEFIT DURING ACCUMULATION PERIOD
IN GENERAL. The following discussion applies principally to contracts
that are not issued in connection with qualified plans, i.e., "NON-QUALIFIED
CONTRACTS." Tax law requirements applicable to qualified plans, and the tax
treatment of amounts held and distributed under such plans, are quite complex.
Accordingly, if your contract is to be used in connection with a qualified plan,
you 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, if you intend to use the contract in connection with a
qualified plan, you 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").
See Appendix C for information on the death benefit provisions under Ven 9
contracts.
AMOUNT OF DEATH BENEFIT. If any contract owner dies and the oldest
owner had an attained age of less than 81 years on the date as of which the
contract was issued, the death benefit will be determined as follows.
During the first contract year, the death benefit will be the greater
of:
- the contract value or
- 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:
- the contract value or
- 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 attaining 81 years of age, the death
benefit will be the greater of:
- the contract value or
- the death benefit on the last day of the contract year ending
just prior to the contract owner's 81st birthday, plus any
purchase payments made, less amounts deducted in connection
with partial withdrawals since then.
If any contract owner dies and the oldest owner had an attained age of
81 years or greater on the date as of which the contract was issued, the death
benefit will be the greater of:
- the contract value or
- the sum of all purchase payments made, less any amounts
deducted in connection with partial withdrawals.
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The determination of the death benefit will be made on the date we
receive written notice and proof of death, as well as all required completed
claims forms, at our Annuity Service Office. No one is entitled to the death
benefit until this time.
PAYMENT OF DEATH BENEFIT. We will pay the death benefit to the
beneficiary if any contract owner dies during the accumulation period. 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:
- The beneficiary will become the contract owner.
- 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 receipt at our Annuity
Service Office of due proof of the owner's death.
- No additional purchase payments may be made.
- 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 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
and must be distributed immediately in a single sum.
- If the owner's spouse is the beneficiary, the spouse continues
the contract as the new owner. In such a case, the
distribution rules applicable when a contract owner dies will
apply when the spouse, as the owner, dies. In addition, we
will pay a death benefit upon the death of the spouse. For
purposes of calculating this death benefit, the death benefit
paid upon the first owner's death will be treated as a
purchase payment to the contract. In addition, the death
benefit on the last day of the previous year (or the last day
of the contract year ending just prior to the owner's 81st
birthday if applicable) will be set at zero as of the date of
the first owner's death.
- If any contract owner dies and the oldest owner had an
attained age of less than 81 on the date as of which the
contract was issued, 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 date as of which the contract was
issued, withdrawal charges will be assessed only upon payment
of the death benefit (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.
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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 the 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 at zero as of the date of the change. No such change in death
benefit will be made if the person 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").
PAY-OUT PERIOD PROVISIONS
You have a choice of several different ways of receiving annuity benefit
payments from us.
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
DURING ACCUMULATION PERIOD").
Generally, we will begin paying annuity benefits under the contract on
the contract's maturity date (the first day of the pay-out period). The maturity
date is the date specified on your contract's specifications page, unless you
change that date. 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. You 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
Pay-out Periods"). Distributions from qualified contracts may be required before
the maturity date (see "FEDERAL TAX MATTERS - Qualified Retirement Plans").
You 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, we may pay the contract value, minus any unpaid loans, in one lump sum
to the annuitant on the maturity date.
ANNUITY OPTIONS
Annuity benefit payments are available under the contract on a fixed,
variable, or combination fixed and variable basis. Upon purchase of the
contract, and at any time during the accumulation period, you 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 payment acceptable to us. If an annuity option is not
selected, we will provide as a default option a life annuity with payments
guaranteed for 10 years as described below. Annuity payments will be determined
based on the Investment Account Value of each investment option at the maturity
date. Internal Revenue Service ("IRS") regulations may preclude the availability
of certain annuity options in connection with certain qualified contracts.
Please read the description of each annuity option carefully. In
general, a non-refund life annuity provides the highest level of payments.
However, because there is no guarantee that any minimum number of payments will
be made, an annuitant may receive only one payment if the
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annuitant dies prior to the date the second payment is due. Annuities with
payments guaranteed for a certain number of years may also be elected but the
amount of each payment will be lower than that available under the non-refund
life annuity option.
The following annuity options are guaranteed to be offered 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. Because 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. Because 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. Because 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. Because 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 we are contractually
obligated to offer at all times, we currently offer the following annuity
options. We 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. Because
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. Because 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
amount of the contract value used to purchase a variable annuity to the annuity
tables contained in the contract. The
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amount of the contract value will be determined as of a date not more than ten
business days prior to the maturity date. The amount of the first and all
subsequent fixed annuity payments is determined on the same basis using the
portion of the contract value used to purchase a fixed annuity. Contract value
used to determine annuity payments will be reduced by any applicable premium
taxes.
The rates contained in the annuity tables vary with the annuitant's sex
and age and the annuity option selected. However, for contracts issued in
connection with certain employer-sponsored retirement plans sex-distinct tables
may not be used. Under such tables, the longer the life expectancy of the
annuitant under any life annuity option or the longer the period for which
payments are guaranteed under the option, the smaller the amount of the first
monthly variable annuity payment will be.
ANNUITY UNITS AND THE DETERMINATION OF SUBSEQUENT VARIABLE ANNUITY PAYMENTS
Variable annuity payments after the first one will be based on the
investment performance of the sub-accounts selected during the pay-out period.
The amount of a subsequent payment is determined by dividing the amount of the
first annuity payment from each sub-account by the annuity unit value of that
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 annuity benefit payment to be made. The number of annuity units remains
constant throughout the pay-out 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 business day
is determined by multiplying the annuity unit value for the immediately
preceding business day 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.
The smallest annual rate of investment return which is required to be
earned on the assets of the Separate Account so that the dollar amount of
variable annuity payments will not decrease is 4.46%.
See Appendix C for information on assumed interest rate for Ven 9 contracts.
Some transfers are permitted during the pay-out period, but subject to a few
more limitations than during the accumulation period.
TRANSFERS DURING PAY-OUT PERIOD
Once variable annuity payments have begun, you may transfer all or part
of the investment upon which those payments are based from one sub-account to
another. You must submit your transfer request to our Annuity Service Office at
least 30 days before the due date of the first annuity payment to which your
transfer will apply. Transfers 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 annuity
units for the new sub-account selected. We reserve 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
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annuity option to a fixed annuity option. In addition, 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. We also reserve the right to modify or
terminate the transfer privilege at any time in accordance with applicable law.
DEATH BENEFIT DURING PAY-OUT PERIOD
If an annuity option providing for payments for a guaranteed period has
been selected, and the annuitant dies during the pay-out period, 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.
OTHER CONTRACT PROVISIONS
You have a ten-day right to cancel your contract.
RIGHT TO REVIEW CONTRACT
You may cancel the contract by returning it to our Annuity Service
Office or to your registered representative at any time within 10 days after
receiving it. Within 7 days of receiving a returned contract, we will pay you
the contract value (minus any unpaid loans) computed at the end of the business
day on which we receive your returned contract. 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, we will return the purchase payments if
this is greater than the amount otherwise payable.
If the contract is purchased in connection with a replacement of an
existing annuity contract (as described below), you may also cancel the contract
by returning it to our Annuity Service Office or your registered representative
at any time within 60 days after receiving the contract. Within 10 days of
receiving a returned contract, we will pay you the contract value (minus any
unpaid loans) computed at the end of the business day on which we receive your
returned contract. In the case of a replacement of a contract issued by a New
York insurance company, you may have the right to reinstate the prior contract.
You should consult with your registered representative or attorney regarding
this matter prior to purchasing the new contract.
Replacement of an existing annuity contract generally is defined as the
purchase of a new annuity contract in connection with (a) the lapse, partial or
full surrender or change of, or borrowing from, an existing annuity or life
insurance contract or (b) the assignment to a new issuer of an existing annuity
contract. This description, however, does not necessarily cover all situations
which could be considered a replacement of an existing annuity contract.
Therefore, you should consult with your registered representative or attorney
regarding whether the purchase of a new annuity contract is a replacement of an
existing annuity or life insurance contract.
You are entitled to exercise all rights under your contract.
OWNERSHIP
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 contract owner is the annuitant. 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
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(potentially taxable) 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 that value as a purchase payment made on
that date for purposes of computing the amount of the death benefit.
Any change of ownership or assignment must be made in writing. We must
approve any change. Any assignment and any change, if approved, will be
effective as of the date we receive the request at our Annuity Service Office.
We assume 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 us.
The "annuitant" is either you or someone you designate.
ANNUITANT
The annuitant is any natural person or persons whose life is used to
determine the duration of annuity payments involving life contingencies. The
annuitant is entitled to receive all annuity payments under the contract. 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 prior to the maturity date, 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.
CHANGE OF MATURITY DATE
During the accumulation period, you may change the Maturity Date by
written request at least one month before both the previously specified Maturity
Date and the new Maturity Date. After the election, the new Maturity Date will
become the Maturity Date. The maximum Maturity Date will be age 90. Any
extension of the Maturity Date will be allowed only with our prior approval.
The "beneficiary" is the person you designate to receive the death benefit if
you die.
BENEFICIARY
The beneficiary is the person, persons or entity designated in the
contract specifications page (or as subsequently changed). 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 us, and (if approved) will be
effective as of the date on which written. We assume 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, IRS regulations may
limit designations of beneficiaries.
See Appendix C for information with respect to the beneficiary under Ven 9
contracts.
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MODIFICATION
We may not modify your contract without your consent, except to the
extent 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.
OUR APPROVAL
We reserve the right to accept or reject any contract application at
our sole discretion.
MISSTATEMENT AND PROOF OF AGE, SEX OR SURVIVAL
We 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 we have 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
The fixed account investment options are not securities.
Interests in the fixed account investment options are not registered
under the Securities Act of 1933 (the "1933 Act") and our general account is not
registered as an investment company under the 1940 Act. 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. Disclosures relating
to interests in the fixed account investment options and the general account
nonetheless may be required by the federal securities laws to be accurate.
Fixed account investment options guarantee interest of at least 3%.
INVESTMENT OPTIONS. Currently, there are six fixed account investment
options under the contract: one, three, five and seven year investment accounts
and a six month DCA fixed account investment and a twelve month DCA fixed
account investment which may be established under the DCA program to make
automatic transfers from the DCA fixed account to one or more variable
investment option (see "SPECIAL TRANSFER SERVICES - DOLLAR COST AVERAGING"). We
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. We determine the guaranteed interest rates on new amounts
allocated or transferred to a fixed investment account from time to time,
according to 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 we may
not change it.
See Appendix C for information on the fixed account investment options
and minimum interest rate under Ven 9 contracts.
INVESTMENT ACCOUNTS. You 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. We establish a distinct
investment account each time you allocate or transfer 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.
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RENEWALS. At the end of a guarantee period, you 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. You 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 you do not specify a renewal option, we will select the same
guarantee period as has just expired, so long as such period does not extend
beyond the maturity date. If a renewal would extend beyond the maturity date, we
will select the longest period that will not extend beyond such date, except in
the case of a renewal within one year of maturity date in which case we 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 is assessed only when current
interest rates are higher than the guaranteed interest rate on the account. The
purpose of the charge is to compensate us for our investment losses on amounts
withdrawn, transferred or borrowed prior to the maturity date. The formula for
calculating this charge is set forth below. 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:
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).
We make no market value charge on withdrawals from the fixed account
investment options in the following situations:
- death of the contract owner;
- amounts withdrawn to pay fees or charges;
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- amounts withdrawn from investment accounts within one month
prior to the end of the guarantee period;
- amounts withdrawn from a one-year fixed investment account;
and
- 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:
- 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%,
- together with any withdrawal charges for an investment account
be greater than 10% of the amount transferred or withdrawn, or
- 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.
See Appendix C for information on the market value charge provisions
under Ven 9 contracts.
Withdrawals and some transfers from fixed account investment options are
permitted during the accumulation period.
TRANSFERS. During the accumulation period, you may transfer amounts
among the fixed account investment options and from the fixed amount investment
options to the variable account investment options; provided that no transfer
from a fixed account option may be made unless the amount to be transferred has
been held in such account for at least one year, except for transfers made
pursuant to the DCA 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.
You must specify the fixed account investment option from or to which
you desire to make a transfer. Where there are multiple investment accounts
within the fixed account investment option, amounts must be withdrawn from the
fixed account investment options on a first-in-first-out basis.
WITHDRAWALS. You may make total and partial withdrawals of amounts held
in the fixed account investment options at any time prior to the death of the
contract owner. 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 the
fixed account investment options:
- We reserve the right to defer payment of amounts withdrawn
from fixed account investment options for up to six months
from the date we receive the written withdrawal request. If a
withdrawal is deferred for more than 10 days pursuant to this
right, we will pay interest on the amount deferred at a rate
not less than 3% per year.
- If there are multiple investment accounts under a fixed
account investment option, amounts must be withdrawn from
those accounts on a first-in-first-out basis.
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- The market value charge described above may apply to
withdrawals from any investment option except for a one year
investment option. If 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 be calculated on the amount requested
and deducted, if applicable, from the remaining investment
account value.
If you request a partial withdrawal from a contract in excess of the
amounts in the variable account investment options and do 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. We offer 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. If you own such a contract, you may borrow from us, using your
contract as the only security for the loan, in the same manner and subject to
the same limitations as described under "LOANS" above. 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 DURING ACCUMULATION PERIOD" above), 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 (minus any
applicable premium taxes) applied to purchase the fixed annuity to the
appropriate table in the contract. If the table we are then using is more
favorable to you, we will substitute that table. We guarantee 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 you make a withdrawal from your contract during the accumulation
period, 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 for withdrawal 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 are discussed below.
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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:
- 10% of total purchase payments (less all prior withdrawals in
that contract year), and
- the accumulated earnings on the contract (i.e., the excess of
the contract value on the date of withdrawal over the
unliquidated purchase payments).
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 fixed account investment options beginning with
those with the shortest guarantee period first and the longest guarantee period
last.
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
less than seven years. Purchase payments will be liquidated on a first-in
first-out basis. On any withdrawal request, we 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.
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>
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.
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 minus any applicable
withdrawal charge.
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 DURING ACCUMULATION
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PERIOD - 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 us for the compensation we pay to broker-dealers for selling the
contracts, preparation of sales literature and other expenses related to sales
activity.
For examples of calculation of the withdrawal charge, see Appendix B.
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").
See Appendix C for information on the withdrawal charge under Ven 9 contracts.
We deduct a $30 annual fee and asset-based charges totaling 1.40% on an annual
basis for administration expenses and mortality and expense risks.
ADMINISTRATION FEES
Except as noted below, we will deduct each year an administration fee
of $30 as partial compensation for the cost of providing all administrative
services attributable to the contracts and our operations and those of the
Variable Account in connection with the contracts. However, if during the
accumulation period the contract value is equal to or greater than $100,000 at
the time of the fee's assessment, we will waive the fee. (There is no provision
for waiver under Ven 9 contracts.) During the accumulation period, 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.
However, the $30 administration fee will not reduce the amount paid below the
amount that is guaranteed in the contract.
We also deduct a daily charge in an amount equal to 0.15% of the value
of each variable investment account on an annual basis from each sub-account as
an administrative fee. This asset based administrative fee 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.
We do not expect to recover from such fees any amount in excess of our
accumulated administrative expenses. Even though administrative expenses may
increase, we guarantee that we 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 we assume is the risk that annuitants may live for a
longer period of time than we estimate. We assume this mortality risk by virtue
of annuity benefit payment rates incorporated into the contract which cannot be
changed. This assures each annuitant that his or her longevity will not have an
adverse effect on the amount of annuity benefit payments. We also assume
mortality risks in connection with our guarantee that, if the contract owner
dies during the accumulation period, we will pay a death benefit (see "DEATH
BENEFIT DURING ACCUMULATION PERIOD"). The expense risk we assume is the risk
that the administration charges or withdrawal charge may be insufficient to
cover actual expenses.
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To compensate us for assuming these risks, we deduct 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. 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 assumed, we will bear the
loss. Conversely, if the charge proves more than sufficient, the excess will be
profit to us and will be available for any proper corporate purpose including,
among other things, payment of distribution expenses.
TAXES
We will charge you for state premium taxes to the extent we incur them and
reserve the right to charge you for new taxes we may incur.
We reserve 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 we determine
to have resulted from our:
- establishment or maintenance of the Variable Account,
- receipt of purchase payments,
- issuance of the contacts, or
- 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, we reserve 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. Premium taxes which may be applicable to non-New York residents
range between 0% to 3.50%. In addition, we will withhold taxes to the extent
required by applicable law.
EXPENSES OF DISTRIBUTING CONTRACTS
MSS, the principal underwriter for the contracts, pays compensation to
selling brokers in varying amounts which under normal circumstances are not
expected to exceed 7% of purchase payments or 6% of purchase payments plus 0.75%
of the contract value per year commencing one year after each purchase payment.
These expenses are not assessed against the contracts but are instead paid by
MSS. See "Distribution of Contracts" for further information.
FEDERAL TAX MATTERS
INTRODUCTION
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. You should consult a qualified tax advisor with regard
to the application of the law to your circumstances. This discussion is based on
the Code, IRS 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.
This discussion does not address state or local tax consequences
associated with the purchase of a contract. In addition, WE MAKE NO GUARANTEE
REGARDING ANY TAX TREATMENT -- FEDERAL, STATE, OR LOCAL -- OF ANY CONTRACT OR OF
ANY TRANSACTION INVOLVING A CONTRACT.
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OUR TAX STATUS
We are taxed as a life insurance company. Because the operations of the
Variable Account are a part of, and are taxed with, our operations, the Variable
Account is not separately taxed as a "regulated investment company" under the
Code. Under existing Federal income tax laws, we are not taxed on the investment
income and capital gains of the Variable Account. We do not anticipate that we
will be taxed on the income and gains of the Variable Account, but if we are,
then we may impose a corresponding charge against the Variable Account.
TAXATION OF ANNUITIES IN GENERAL
Gains inside the contract are usually tax-deferred until you make a withdrawal,
the annuitant starts receiving annuity benefit payments, or the beneficiary
receives a death benefit payment.
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, in the form of either annuity payments or some other
distribution. Certain requirements must be satisfied in order for this general
rule to apply, including:
- the contract must be owned by an individual (or treated as
owned by an individual),
- the investments of the Variable Account must be "adequately
diversified" in accordance with IRS regulations,
- we, rather than the contract owner, must be considered the
owner of the assets of the Variable Account for federal tax
purposes, and
- the contract must provide for appropriate amortization,
through annuity benefit payments, of the contract's purchase
payments and earnings, e.g., the pay-out period must not begin
near the end of the annuitant's life expectancy.
NON-NATURAL OWNERS. As a general rule, deferred annuity contracts held
by "non-natural persons" (such as a corporation, trust or other similar entity)
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. This special exception will not apply, however, in the case of
any employer who is the nominal owner of an annuity contract under a
non-qualified deferred compensation arrangement for its employees.
Exceptions to the general rule for non-natural contract owners will
also apply with respect to:
- contracts acquired by an estate of a decedent by reason of the
death of the decedent,
- qualified contracts,
- certain contracts purchased by employers upon the termination
of certain qualified plans,
- certain contracts used in connection with structured
settlement agreements, and
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- 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 PERSONS. In the case of contracts issued after
June 8, 1997 to a non-natural taxpayer (such as a corporation or a trust), or
held for the benefit of such an entity, recent changes in the tax law may result
in a portion of 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 a contract if the income on the contract 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 we do not control the investments of the Trust, we expect 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 insurance company 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 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 in the form 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, we do not know what standards
will be set forth in the regulations or rulings which the Treasury Department
has stated it expects to issue. We therefore reserve the right to modify the
contract as necessary to attempt to prevent contract owners from being
considered the owners of the assets of the Variable Account.
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DELAYED PAY-OUT PERIODS. If the contract's pay-out period commences (or
is scheduled to commence) 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.
The remainder of this discussion assumes that the contract will be
treated as an annuity contract for Federal income tax purposes and that we 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 contracts) 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 a case, the transferee's investment in the contract will be increased to
reflect the increase in the transferor's income.
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.
A portion of each annuity payment is usually taxable as ordinary income.
TAXATION OF ANNUITY BENEFIT PAYMENTS
Normally, a portion of each annuity benefit payment is taxable as
ordinary income. The taxable portion of an annuity benefit payment 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 IRS 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 the payment by the ratio of (a) to (b), where:
- (a) is the investment in the contract allocated to the fixed
annuity option (adjusted for any period certain or refund
feature); and
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- (b) is the total expected value of fixed annuity payments for
the term of the contract (determined under IRS 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. During the accumulation period, death benefit proceeds
are includible in income as follows:
- if distributed in a lump sum, they are taxed in the same
manner as a full withdrawal, as described above, or
- if distributed under an annuity option, they are taxed in the
same manner as annuity payments, as described above.
During the pay-out period, where 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:
- 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
- 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.
Withdrawals prior to age 59-1/2 may incur a 10% penalty tax.
PENALTY TAX ON PREMATURE DISTRIBUTIONS
There is a 10% penalty tax on the taxable amount of any payment from a
non-qualified contract. Exceptions to this penalty tax include distributions:
- received on or after the contract owner reaches age 59-1/2;
- attributable to the contract owner becoming disabled (as
defined in the tax law);
- 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);
- 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);
- 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
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substantially equal periodic payments are made, not less
frequently than annually, during the annuity period; or
- 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. Consult your
tax advisor for additional information.
Special tax provisions apply to qualified plans. Consult your tax advisor prior
to using the contract with a qualified plan.
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
("QUALIFIED PLANS"). Numerous special tax rules apply to the participants in
qualified plans and to the contracts used in connection with 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.
Brief descriptions of various types of qualified plans in connection with which
we may issue a contract are contained in Appendix D to this Prospectus. Appendix
D also discusses certain potential tax consequences associated with the use of
the contract with certain qualified plans which should be considered by a
purchaser. Persons intending to use the contract in connection with a qualified
plan should consult a tax advisor.
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. (You
should always consult your tax advisor and retirement plan fiduciary prior to
exercising your loan privileges.)
Both the amount of the contribution that may be made, and the tax
deduction or exclusion that you may claim for that 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.
Additionally, for contracts issued in connection with qualified plans subject to
the Employee Retirement Income Security Act, the spouse or ex-spouse of the
owner will have rights in the contract. In such a case, the owner may need the
consent of the spouse or ex-spouse to change annuity options or make a
withdrawal from the contract.
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<PAGE> 45
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 (other than
Roth 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. 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," exceptions provide that the penalty tax does
not apply to a payment:
- received on or after the contract owner reaches age 59-1/2,
- received on or after the owner's death or because of the
owner's disability (as defined in the tax law), or
- 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, the exception 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
which are used for qualified first time home purchases or for higher education
expenses. Special conditions must be met to quality for these two exceptions to
the penalty tax. If you wish to take a distribution from an IRA for these
purposes, you should consult your 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, 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, we will not be bound by terms
and conditions of qualified plans to the extent those terms and conditions
contradict the contract, unless we consent.
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, (ii) certain distributions for life, life expectancy, or
for 10 years or more which are part of a "series of substantially equal periodic
payments," and (iii) hardship distributions as defined in the tax law.
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
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<PAGE> 46
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 person entitled to the distribution 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.
We may be required to withhold amounts from some payments for Federal income tax
payments.
FEDERAL INCOME TAX WITHHOLDING
We will withhold and remit to the U.S. Government a part of the taxable
portion of each distribution made under a contract unless the person receiving
the distribution notifies us at or before the time of the distribution that he
or she elects not to have any amounts withheld. In certain circumstances, we 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
We may advertise our investment performance.
PERFORMANCE DATA
Each of the sub-accounts may quote total return figures in its
advertising and sales materials. PAST PERFORMANCE FIGURES ARE NOT INTENDED TO
INDICATE FUTURE PERFORMANCE OF ANY SUB-ACCOUNT. The sub-accounts may advertise
both "standardized" and "non-standardized" total return figures. Standardized
figures will include average annual total return figures for one, five and ten
years, or from the inception date of the relevant sub-account of the Variable
Account (if that period since inception is shorter than one of those periods).
Non-standardized total return figures also may be quoted, including figures that
do not assume redemption at the end of the time period. Non-standardized figures
may also include total return numbers from the inception date of the portfolio
or ten years, whichever period is shorter. Where the period since inception is
less than one year, the total return quoted will be the aggregate return for the
period.
Average annual total return is the average annual compounded rate of
return that equates a purchase payment to the market value of that purchase
payment on the last day of the period for which the return is calculated. 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 the 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 that we offer, 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,
Inc. portfolio), adjusted to reflect current contract charges.
ASSET ALLOCATION AND TIMING SERVICES
We are aware that certain third parties are offering asset allocation
and timing services in connection with the contracts. In certain cases we have
agreed to honor transfer instructions from such asset allocation and timing
services where we have received powers of attorney, in a form acceptable to us,
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<PAGE> 47
from the contract owners participating in the service. WE DO NOT ENDORSE,
APPROVE OR RECOMMEND SUCH SERVICES IN ANY WAY AND YOU SHOULD BE AWARE THAT FEES
PAID FOR SUCH SERVICES ARE SEPARATE FROM AND IN ADDITION TO FEES PAID UNDER THE
CONTRACTS.
We pay broker-dealers to sell the contracts.
DISTRIBUTION OF CONTRACTS
MSS is a Delaware limited liability company that is controlled by
Manulife North America. We have a 10% equity interest in MSS. MSS is the
principal underwriter and exclusive distributor of the contracts. MSS also is
the investment adviser to the Trust. MSS is a broker-dealer registered under
the Securities Exchange Act of 1934, is a member of the National Association of
Securities Dealers and is duly appointed and licensed as our insurance agent.
MSS is located at 73 Tremont Street, Boston, Massachusetts 02108.
We have entered into an Underwriting and Distribution Agreement with
MSS where we appointed MSS the principal underwriter and exclusive
representative for the distribution of all insurance products and authorized MSS
to enter into agreements with selling broker-dealers and general agents for the
distribution of the products. Sales of the contracts will be made by registered
representatives of broker-dealers authorized by us and MSS to sell the
contracts. Those registered representatives will also be our licensed insurance
agents. MSS will pay distribution compensation to selling broker-dealers in
varying amounts which under normal circumstances are not expected to exceed 7%
of purchase payments or 6% of purchase payments plus 0.75% of the contract value
per year commencing one year after each purchase payment.
CONTRACT OWNER INQUIRIES
Your inquiries should be directed to our Annuity Service Office mailing
address at Annuity Service Office, P.O. Box 9013, Boston, MA 02205-9013.
CONFIRMATION STATEMENTS
You will be sent confirmation statements for certain transactions in
your account. You should carefully review these statements to verify their
accuracy. Any mistakes should immediately be reported to our Annuity Service
Office. If you fail to notify our Annuity Service Office of any mistake within
60 days of the mailing of the confirmation statement, you 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 we nor MSS
are involved in any litigation that is of material importance to either, or that
relates to the Variable Account.
YEAR 2000 ISSUES
We make extensive use of information systems in the operations of our
various businesses, including for the exchange of financial data and other
information with customers, suppliers and other counterparties. We also use
software and information systems provided by third parties in our accounting,
business and investment systems.
The Year 2000 risk, as it is commonly known, is the result of computer
programs being written using two digits, rather than four, to define the
applicable year. Any of our computer
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programs that have date-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in systems failures
or miscalculations causing disruptions of operations, including among other
things, a temporary inability to process transactions, send premium billing
notices, make claims payments or engage in other normal business activities.
The systems used by us have been assessed as part of a comprehensive
written plan conducted by our ultimate parent company, The Manufacturers Life
Insurance Company (collectively with its subsidiaries "Manulife"), to ensure
that computer systems and processes of Manulife will continue to perform through
the end of this century and into the next.
In 1996, in order to make Manulife's systems Year 2000 compliant, a
program was instituted to modify or replace both Manulife's information
technology systems ("IT SYSTEMS") and embedded technology systems ("NON-IT
SYSTEMS"). The phases of this program include (i) an inventory and assessment of
all systems to determine which are critical, (ii) planning and designing the
required modifications and replacements, (iii) making these modifications and
replacements, (iv) testing modified or replaced systems, (v) redeploying
modified or replaced systems and (vi) final management review and certification.
For most IT and non-IT systems identified as critical, we have completed
certification. Of those systems classified as critical, management believes that
over 99% were Year 2000 compliant at the end of 1998. Management continues to
focus attention on the remaining 1% of critical systems. Those that affect us
are expected to be compliant by the end of the second quarter in 1999.
Management believes that our non-critical systems will be Year 2000 compliant by
the end of the second quarter 1999.
In addition to efforts directed at Manulife's own systems, Manulife is
presently consulting vendors, customers, and other third parties with which it
deals in an effort to ensure that no material aspect of Manulife's operations
will be hindered by Year 2000 problems of these third parties. This process
includes providing third parties with questionnaires regarding the state of
their Year 2000 readiness and, where possible or where appropriate, conducting
further due diligence activities.
Manulife recognizes the importance of preparing for the change to the
Year 2000 and, in January 1999, commenced preparation of contingency plans, in
the event that Manulife's Year 2000 program has not fully resolved its Year 2000
issues. The Year 2000 Project Management Office for Manulife's U.S. Division is
coordinating the preparation of the Year 2000 contingency plan on behalf of U.S.
Division affiliates and subsidiaries, including us. A contingency plan
concerning us is targeted for completion by the end of the first quarter of
1999.
Management currently believes that, with modifications to existing
software and conversions to new software, the Year 2000 risk will not pose
significant operational problems for Manulife's computer systems. As part of the
Year 2000 program, critical systems were "time-shift" tested in the Year 2000
and beyond to confirm that they will continue to function properly before,
during and after the change to the Year 2000. However, there can be no assurance
that Manulife's Year 2000 program, including consulting third parties and its
contingency planning, will avoid any material adverse effect on our operations,
customer relations or financial condition. Manulife estimates the total cost of
its Year 2000 program will be approximately $59 million, of which $49.5 million
has been incurred through December 31, 1998; however, there can be no assurance
that the actual cost incurred will not be materially higher than such estimate.
Most costs will be expensed as incurred; however, those costs attributed to the
purchase of new software and hardware will generally be capitalized. A
proportional amount of the total cost will be allocated to us and is not
expected to have a material effect on our net operating income.
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CANCELLATION OF CONTRACT
We may, at our option, cancel a contract at the end of any three
consecutive contract years in which no purchase payments by or on behalf of you
have been made, if both:
- the total purchase payments made for the contract, less any
withdrawals, are less than $2,000; and
- the contract value at the end of such three year period is
less than $2,000.
We, as a matter of administrative practice, will attempt to notify you prior to
such cancellation in order to allow you to make the necessary purchase payment
to keep the contract in force.
VOTING INTEREST
As stated above under "The Trust", we will vote shares of the Trust
portfolios held in the Variable Account at the Trust's shareholder meetings
according to voting instructions received from the persons having the voting
interest under the contracts.
Accumulation Period. During the accumulation period, the contract owner
has the voting interest under a contract. The number of votes for 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.
Pay-out Period. During the pay-out period, the annuitant has the voting
interest under a contract. 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. We will determine the number of
portfolio shares for which voting instructions may be given not more than 90
days prior to the meeting.
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APPENDIX A
SPECIAL TERMS
The following terms as used in this Prospectus have the indicated
meanings:
ACCUMULATION PERIOD - The period during which you make purchase
payments to us.
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 to whom annuity payments are
made and 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 is referred to as "co-annuitant." The
"annuitant" and "co-annuitant" are referred to collectively as "annuitant." The
"annuitant" is as designated on the contract specification page or in the
application, unless changed.
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 the
beneficiary.
BUSINESS DAY - Any day on which the New York Stock Exchange is open for
business and the net asset value of a Trust portfolio may be determined.
THE CODE - The Internal Revenue Code of 1986, as amended.
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 YEAR - The period of twelve consecutive months beginning on
the date as of which the contract is issued, or any anniversary of that date.
FIXED ANNUITY - An annuity option with payments the amount of which we
guarantee.
GENERAL ACCOUNT - All of our assets other than assets in separate
accounts such as the Variable Account.
INVESTMENT ACCOUNT - An account we establish for you which represents
your interest in an investment option during the accumulation period.
INVESTMENT OPTIONS - The investment choices available to contract
owners. Currently, there are thirty-eight variable and six fixed options under
the contract.
LOAN ACCOUNT - The portion of our general account that is used for
collateral for a loan.
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 the pay-out period commences and we
begin to make annuity benefit payments to the annuitant. The maturity date is
the date specified on the contract specifications page, unless changed.
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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. References in this
Prospectus to contract owners are typically by use of "you." 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.
PAY-OUT PERIOD - The period when we make annuity benefit payments to
you.
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.
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 Code.
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.
UNPAID LOANS - The unpaid amounts (including any accrued interest) of
loans some contract owners may have taken from us, using certain qualified
contracts as collateral.
VALUATION PERIOD - Any period from one business day to the next,
measured from the time on each business day that the net asset value of each
portfolio is determined.
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APPENDIX B
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 WITHDRAWAL AMOUNT PAYMENTS
CONTRACT YEAR CONTRACT 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.
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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 WITHDRAWAL WITHDRAWAL AMOUNT PAYMENTS
CONTRACT VALUE REQUESTED WITHOUT CHARGES LIQUIDATED WITHDRAWAL CHARGE
-------------- --------- --------------- ---------- -----------------
PERCENT AMOUNT
------- -----
<S> <C> <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.
(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<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.
B-2
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APPENDIX C
PRIOR CONTRACTS
The Company has a class of variable annuity contract which is no longer
being issued but under which purchase payments may continue to be made ("prior
contract" or "Ven 9 contracts"), which were sold during the period from March,
1992 until May, 1999.
The principal differences between the contract offered by this
Prospectus and the prior contract relate to:
- the fixed investment options available under the contracts,
- a minimum interest rate to be credited for any guarantee
period under the fixed portion of the contracts,
- the charges made by us, and
- the death benefit provisions.
FIXED INVESTMENT OPTIONS
The investment options under the prior contract differ as follows from
the investment options described in this Prospectus. The prior contract allows
for investments in one, three and six year fixed account investments options.
The contract described in this prospectus allows for investments in one, three,
five and seven year fixed account investment options and a six month DCA fixed
account investment option and a twelve month DCA fixed account investment
option.
FIXED ACCOUNT MINIMUM INTEREST GUARANTEE
The minimum interest rate to be credited for any guarantee period under
the fixed portion of the prior contract is 4%.
MARKET VALUE CHARGE
The market value charge under the prior contract differs in the
following respects from the market value charge under the contract described in
this Prospectus:
For purposes of calculating the market value adjustment factor the
maximum difference between "B" and "A" will be 3%. The adjustment factor will
never be greater than 2x(A-4%) and never less than zero. ("A" is the guaranteed
interest rate on the investment account. "B" is 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.)
There will be no market value charge on withdrawals from the fixed
account investment options in the following situations:
- death of the annuitant;
- amounts withdrawn to pay fees or charges;
- amounts withdrawn from three and six year investment accounts
within one month prior to the end of the guarantee period; and
- amounts withdrawn in any year that do not exceed 10% of total
purchase payments less any prior partial withdrawals in that
contract year.
Notwithstanding application of the foregoing formula, in no event will
the market value charge (i) exceed the earnings attributable to the amount
withdrawn from an investment account, (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 nonforfeiture laws of the state with jurisdiction
over the contract. The cumulative effect of the
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market value and withdrawal charges (or the effect of the withdrawal charge
itself) could, however, result in an owner receiving total withdrawal proceeds
of less than the owner's purchase payments.
WITHDRAWAL CHARGES
The withdrawal charges under the prior contract differ from
the withdrawal charges described in this Prospectus.
PRIOR CONTRACT 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 amounts withdrawn attributable to purchase payments that have been in
the contract less than six 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 six 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
"amounts available without withdrawal charges" and second to "unliquidated
purchase payments". In any contract year, the amounts 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) 10% of total purchase payments
less any prior partial withdrawals in that year. Withdrawals allocated to the
amounts available without withdrawal charges may be withdrawn without the
imposition of a withdrawal charge.
2. If a withdrawal is made for an amount in excess of the
amounts available without withdrawal charges, the excess will be allocated to
purchase payments which 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 amounts 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
PURCHASE PAYMENT IN WITHDRAWAL CHARGE
CONTRACT PERCENTAGE
-------- ----------
<S> <C>
0 6%
1 6%
2 5%
3 4%
4 3%
5 2%
6+ 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.
C-2
<PAGE> 56
5. There is no withdrawal charge on distributions made as a
result of the death of the annuitant or contract owner and no withdrawal charges
are imposed on the maturity date if the contract owner annuitizes as provided in
the contract.
ADMINISTRATION FEES
The prior contract makes no provision for the waiver of the
$30 annual administration fee when prior to the maturity date the contract value
equals or exceeds $100,000 at the time of the fee's assessment.
DEATH BENEFIT PROVISIONS
Prior Contract Death Benefit Provisions
The provisions governing the death benefit prior to the
maturity date under the prior contract are as follows:
Death of Annuitant who is not the Contract Owner. The Company
will pay the minimum death benefit, less any debt, to the beneficiary if the
contract owner is not the annuitant and the annuitant dies before the contract
owner and before the maturity date. If there is more than one such annuitant,
the minimum death benefit will be paid on the death of the last surviving
co-annuitant. The minimum death benefit will be paid either as a lump sum or in
accordance with any of the annuity options available under the contract. An
election to receive the death benefit under an annuity option must be made
within 60 days after the date on which the death benefit first becomes payable.
Rather than receiving the minimum death benefit, the beneficiary may elect to
continue the contract as the new contract owner. (In general, a beneficiary who
makes such an election will nonetheless be treated for Federal income tax
purposes as if he had received the minimum death benefit.)
Death of Annuitant who is the Contract Owner. The Company will
pay the minimum death benefit, less any debt, to the beneficiary if the contract
owner is the annuitant, dies before the maturity date and is not survived by a
co-annuitant. If the contract is a non-qualified contract, the contract owner is
the annuitant and the contract owner dies before the maturity date survived by a
co-annuitant, the Company, instead of paying the minimum death benefit to the
beneficiary, will pay to the successor owner an amount equal to the amount
payable on total withdrawal without reduction for any withdrawal charge. If the
contract is a non-qualified contract, distribution of the minimum death benefit
to the beneficiary (or of the amount payable to the successor owner) must be
made within five years after the owner's death. If the beneficiary or successor
owner, as appropriate, is an individual, in lieu of distribution within five
years of the owner's death, distribution may be made as an annuity which begins
within one year of the owner's death and is payable over the life of the
beneficiary (or the successor owner) or over a period not in excess of the life
expectancy of the beneficiary (or the successor owner). If the owner's spouse is
the beneficiary (or the successor owner, as appropriate) that spouse may elect
to continue the contract as the new owner in lieu of receiving the distribution.
In such a case, the distribution rules applicable when a contract owner dies
generally will apply when that spouse, as the owner, dies.
Death of Owner who is not the Annuitant. If the owner is not
the annuitant and dies before the maturity date and before the annuitant, the
successor owner (the person, persons or entity to become the owner if the owner
dies prior to the maturity date) will become the owner of the contract. If the
contract is a non-qualified contract, an amount equal to the amount payable on
total withdrawal, without reduction for any withdrawal charge, will be paid to
the successor owner. Distribution of that amount to the successor owner must be
made within five years of the owner's death. If the successor owner is an
individual, in lieu of distribution within five years of the owner's death,
distribution may be made as an annuity which begins within one year of the
owner's death and is payable over the life of the successor owner (or over a
period not greater than the successor owner's life expectancy). If the owner's
spouse is the successor owner, that spouse may elect to continue the contract as
the new contract owner in lieu of receiving the distribution. In such a case,
the distribution rules applicable when a contract owner dies generally will
apply when that spouse, as the owner, dies. If there is more than one owner,
distribution will occur upon the death of any owner. If both owners are
individuals, distribution will be made to the remaining owner rather than to the
successor owner.
Entity as Owner. In the case of a non-qualified contract which
is not owned by an individual (for example, a non-qualified contract owned by a
corporation or a trust), the special rules stated in this paragraph apply. For
purposes of distributions of death benefits before the maturity date, any
annuitant will be treated as the owner of the contract, and a change in the
annuitant
C-3
<PAGE> 57
or any co-annuitant shall be treated as the death of the owner. In the
case of distributions which result from a change in an annuitant when the
annuitant does not actually die, the amount distributed will be reduced by
charges which would otherwise apply upon withdrawal.
If the contract is a non-qualified contract and there is both an
individual and a non-individual contract owner, death benefits must be paid as
provided in the contract upon the death of any annuitant, a change in any
annuitant, or the death of any individual contract owner, whichever occurs
earlier.
If the annuitant dies on or prior to the first month following his or
her 85th birthday, the minimum death benefit is as follows: during the first
contract year, the minimum death benefit is the greater of: (a) the contract
value on the date due proof of death and all required claim forms are received
at the Company's Annuity Service Office, or (b) the sum of all purchase payments
made, less any amount deducted in connection with partial withdrawals. Except as
provided below, during any subsequent contract year, the minimum death benefit
will be the greater of: (a) the contract value on the date due proof of death
and all required claim forms are received at the Company's Annuity Service
Office, or (b) the minimum death benefit determined in accordance with these
provisions as of the last day of the previous contract year plus any purchase
payments made and less any amount deducted in connection with partial
withdrawals since then. If the annuitant dies after the first of the month
following his or her 85th birthday, the minimum death benefit is the greater of:
(a) the contract value on the date due proof of death and all required claim
forms are received at the Company's Annuity Service Office, or (b) the excess of
the sum of all purchase payments less the sum of any amounts deducted in
connection with partial withdrawals.
Death benefits will be paid within seven days of receipt of due proof
of death and all required claim forms at the Company's Annuity Service Office,
subject to postponement under the same circumstances that payment of withdrawals
may be postponed.
OTHER CONTRACT PROVISIONS
Annuity Tables Assumed Interest Rate
A 4% assumed interest rate is built into the annuity tables in the
prior contract used to determine the first variable annuity payment to be made
under that contract.
Beneficiary
Under the prior contract certain provisions relating to beneficiary are
as follows:
The beneficiary is the person, persons or entity designated in the
application or as subsequently named. The beneficiary may be changed during the
lifetime of the annuitant 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.
Prior to the maturity date, if no beneficiary survives the annuitant, the
contract owner or the contract owner's estate will be the beneficiary. The
interest of any beneficiary is subject to that of any assignee. In the case of
certain qualified contracts, regulations promulgated by the Treasury Department
prescribe certain limitations on the designation of a beneficiary.
C-4
<PAGE> 58
TABLE OF ACCUMULATION UNIT VALUES
Ven 9 Contracts
<TABLE>
<CAPTION>
UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
SUB-ACCOUNT START OF YEAR* END OF YEAR END OF YEAR
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets
1997 $12.500000 $8.180904 51,443.657
1998 8.180904 7.695249 137,388.667
- ----------------------------------------------------------------------------------------------
Science & Technology
1997 $12.500000 $13.647195 413,150.058
1998 13.647195 19.287390 932,323.295
- ----------------------------------------------------------------------------------------------
International Small Cap
1996 $12.500000 $13.493094 365,317.719
1997 13.493094 13.410016 510,488.164
1998 13.410016 14.792077 605,535.112
- ----------------------------------------------------------------------------------------------
Aggressive Growth
1997 $12.500000 $12.327066 188,114.289
1998 12.327066 12.680777 319,349.201
- ----------------------------------------------------------------------------------------------
Emerging Small Company
1997 $12.500000 $14.574077 207,223.803
1998 14.574077 14.381705 346.294.546
- ----------------------------------------------------------------------------------------------
Mid Cap Growth
1996 $12.500000 $13.215952 746,253.254
1997 13.215952 15.020670 1,211,554.866
1998 15.020670 19.002856 1,574,134.909
- ----------------------------------------------------------------------------------------------
Overseas
1995 $10.000000 $10.554228 419,354.257
1996 10.554228 11.718276 1,080,586.010
1997 11.718276 11.545714 1,405,066.785
1998 11.545714 12.290162 1,517,773.810
- ----------------------------------------------------------------------------------------------
International Stock
1997 $12.500000 $12.652231 131,727.457
1998 12.652231 14.337171 203,765.303
- ----------------------------------------------------------------------------------------------
Mid Cap Blend
1992 $12.386657 $13.143309 17,805.389
1993 13.143309 15.075040 532,797.733
1994 15.075040 14.786831 1,212,483.594
1995 14.786831 20.821819 1,680,197.930
1996 20.821819 24.664354 2,439,815.649
1997 24.664354 29.002593 2,655,387.874
1998 29.002593 31.289551 2,769,527.565
- ----------------------------------------------------------------------------------------------
Small Company Value
1998 $12.500000 $11.178700 257,438.611
- ----------------------------------------------------------------------------------------------
</TABLE>
C-5
<PAGE> 59
<TABLE>
<CAPTION>
UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
SUB-ACCOUNT START OF YEAR* END OF YEAR END OF YEAR
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Global Equity
1992 $12.003976 $11.790318 21,242.936
1993 11.790318 15.450341 701,425.817
1994 15.450341 15.500933 1,612,831.628
1995 15.500933 16.459655 1,679,042.917
1996 16.495655 18.276450 1,955,863.791
1997 18.276450 21.770913 2,090,810.929
1998 21.770913 24.098970 2,205,244.249
- ---------------------------------------------------------------------------------------------
Growth
1996 $12.500000 $13.727312 140,312.944
1997 13.727312 16.968111 426,278.047
1998 16.968111 20.739989 694,841.738
- ---------------------------------------------------------------------------------------------
Large Cap Growth
1992 $10.880194 $11.623893 6,314.930
1993 11.623893 12.642493 220,581.039
1994 12.642493 12.381395 395,570.370
1995 12.381395 14.990551 463,740.240
1996 14.990551 16.701647 600,271.664
1997 16.701647 19.614359 608,297.523
1998 19.614359 23.040505 594,195.179
- ---------------------------------------------------------------------------------------------
Quantitative Equity
1997 $12.500000 $16.107191 110,561.698
1998 16.107191 20.068624 242,026.359
- ---------------------------------------------------------------------------------------------
Blue Chip Growth
1992 $10.000000 $ 9.923524 105,743.980
1993 9.923524 9.413546 605,012.548
1994 9.413546 8.837480 1,049,124.977
1995 8.837480 11.026969 1,318,608.463
1996 11.026969 13.688523 1,623,697.582
1997 13.688523 17.134232 2,353,640.317
1998 17.134232 21.710674 3,184,929.266
- ---------------------------------------------------------------------------------------------
Real Estate Securities
1997 $12.500000 $14.949140 152,109.301
1998 14.949140 12.317190 251,203.724
- ---------------------------------------------------------------------------------------------
Value
1997 $12.500000 $15.057118 262,613.990
1998 15.057118 14.591878 557,129.589
- ---------------------------------------------------------------------------------------------
Growth & Income
1992 $10.942947 $11.927411 33,716.020
1993 11.927411 12.893007 753,734.211
1994 12.893007 13.076664 1,298,075.564
1995 13.076664 16.660889 1,702,726.488
1996 16.660889 20.178770 2,601,497.610
1997 20.178770 26.431239 3,402,510.675
1998 26.431239 32.976967 4,327,967.912
- ---------------------------------------------------------------------------------------------
</TABLE>
C-6
<PAGE> 60
<TABLE>
<CAPTION>
UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
SUB-ACCOUNT START OF YEAR* END OF YEAR END OF YEAR
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity-Income
1993 $10.000000 $11.175534 1,087,538.574
1994 11.175534 11.107620 2,147,059.046
1995 11.107620 13.548849 2,700,623.434
1996 13.548849 16.011513 3,362,755.333
1997 16.011513 20.479412 3,793,616.601
1998 20.479412 22.054902 4,109,128.664
- -----------------------------------------------------------------------------------------------
Income & Value
1992 $11.012835 $11.772128 31,652.055
1993 11.772128 12.775798 526,706.519
1994 12.775798 12.396295 994,126.229
1995 12.396295 14.752561 1,070,866.388
1996 14.752561 15.995076 1,346,688.023
1997 15.995076 18.276161 1,321,777.037
1998 18.276161 20.742457 1,300,435.286
- -----------------------------------------------------------------------------------------------
Balanced
1997 $12.500000 $14.609853 58,346.232
1998 14.609853 16.459454 267,044.520
- -----------------------------------------------------------------------------------------------
High Yield
1997 $12.500000 $13.890491 281,593.104
1998 13.890491 14.078376 531,010.395
- -----------------------------------------------------------------------------------------------
Strategic Bond
1993 $10.000000 $10.750617 414,573.339
1994 10.750617 9.965972 737,151.981
1995 9.965972 11.716972 878,455.666
1996 11.716972 13.250563 1,663,287.368
1997 13.250563 14.500997 2,261,586.076
1998 14.500997 14.486687 2,481,443.687
- -----------------------------------------------------------------------------------------------
Global Bond
1992 $13.322602 $13.415849 7,122.534
1993 13.415849 15.741586 299,274.049
1994 15.741586 14.630721 463,867.775
1995 14.630721 17.772344 417,838.308
1996 17.772344 19.803954 462,253.788
1997 19.803954 20.104158 430,961.451
1998 20.104158 21.333144 411,433.636
- -----------------------------------------------------------------------------------------------
Investment Quality Bond
1992 $13.147350 $13.936240 1,442.768
1993 13.936240 15.118716 209,360.256
1994 15.118716 14.216516 309,793.553
1995 14.216516 16.751499 305,028.908
1996 16.751499 16.943257 386,465.721
1997 16.943257 18.336912 440,005.300
1998 18.336912 19.660365 564,211.651
- -----------------------------------------------------------------------------------------------
</TABLE>
C-7
<PAGE> 61
<TABLE>
<CAPTION>
UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
SUB-ACCOUNT START OF YEAR* END OF YEAR END OF YEAR
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Diversified Bond
1992 $11.102574 $11.821212 3,884.882
1993 11.821212 12.705196 176,613.459
1994 12.705196 12.298940 267,695.021
1995 12.298940 14.320582 306,895.403
1996 14.320582 15.113142 424,786.597
1997 15.113142 16.607511 406,841.439
1998 16.607511 18.125951 439,784.815
- -----------------------------------------------------------------------------------------------
U.S. Government Securities
1992 $13.015785 $13.651495 13,906.158
1993 13.651495 14.490734 546,010.063
1994 14.490734 14.111357 652,508.827
1995 14.111357 16.083213 696,869.324
1996 16.083213 16.393307 807,763.458
1997 16.393307 17.535478 824,732.766
1998 17.535478 18.587049 990,184.348
- -----------------------------------------------------------------------------------------------
Money Market
1992 $12.892485 $13.137257 11.495
1993 13.137257 13.303085 141,771.056
1994 13.303085 13.623292 464,720.715
1995 13.623292 14.190910 639,836.317
1996 14.190910 14.699636 1,256,691.417
1997 14.699636 15.241915 1,750,416.963
1998 15.241915 15.794513 1,721,493.914
- -----------------------------------------------------------------------------------------------
Lifestyle Aggressive 1000
1997 $12.500000 $13.669625 358,660.180
1998 13.669625 14.134419 544,460.936
- -----------------------------------------------------------------------------------------------
Lifestyle Growth 820
1997 $12.500000 $14.033299 1,637,679.093
1998 14.033299 14.696667 2,556,433.101
- -----------------------------------------------------------------------------------------------
Lifestyle Balanced 640
1997 $12.500000 $14.066417 1,463,270.527
1998 14.066417 14.664362 2,366,219.819
- -----------------------------------------------------------------------------------------------
Lifestyle Moderate 460
1997 $12.500000 $14.016704 464,645.815
1998 14.016704 15.171965 863,517.086
- -----------------------------------------------------------------------------------------------
Lifestyle Conservative 260
1997 $12.500000 $13.825120 131,137.160
1998 13.825120 15.025549 364,590.805
- -----------------------------------------------------------------------------------------------
</TABLE>
*Units under this series of contracts were first credited under the sub-accounts
on March 4, 1992, except in the case of the:
- Blue Chip Growth Trust where units were first credited on
December 11, 1992;
- Strategic Bond and Equity-Income Trusts where units were first
credited on February 19, 1993;
- Overseas Trust where units were first credited on January 9,
1995;
- Mid Cap Growth and International Small Cap Trusts where units
were first credited on March 4, 1996;
C-8
<PAGE> 62
- Growth Trust where units were first credited on July 15, 1996;
- Pacific Rim Emerging Markets, Science & Technology, Emerging
Small Company, Aggressive Growth, International Stock,
Quantitative Equity, Real Estate Securities, Value, Balanced,
High Yield Trusts where units were first credited on January
1, 1997;
- Lifestyle Aggressive 1000, Lifestyle Growth 820, Lifestyle
Balanced 640, Lifestyle Moderate 460 and Lifestyle
Conservative Trusts where units were first credited on January
7, 1997; and
- Small Company Value Trust where units were first credited on
October 1, 1997.
C-9
<PAGE> 63
APPENDIX D
QUALIFIED PLAN TYPES
Set forth below are brief descriptions of the types of qualified plans
in connection with which we will issue contracts. Certain potential tax
consequences associated with use of the contract in connection with qualified
plans are also described. Persons intending to use the contract in connection
with qualified plans should consult their tax advisor.
Individual Retirement Annuities. Section 408 of the Code permits
eligible individuals to contribute to an IRA. IRAs are subject to limits on the
amounts that may be contributed and deducted, 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).
Roth IRAs. Section 408A of the Code permits eligible individuals to
contribute to a type of IRA known as a "Roth IRA." Roth IRAs are generally
subject to the same rules as non-Roth IRAs, but differ in certain respects.
Among the differences are that contributions to a Roth IRA are not
deductible and "qualified distributions" from a Roth IRA are excluded from
income. A qualified distribution is a distribution that satisfies two
requirements. First, the distribution must be made in a taxable year that is at
least five years after the first taxable year for which a contribution to any
Roth IRA established for the owner was made.
Second, the distribution must be:
- made after the owner attains age 59-1/2;
- made after the owner's death;
- attributable to the owner being disabled; or
- a qualified first-time homebuyer distribution within the meaning of
Section 72(t)(2)(F) of the Code.
In addition, distributions from Roth IRAs need not commence when the
owner attains age 70-1/2 . A Roth IRA may accept a "qualified rollover
contribution" from a non-Roth IRA, but a Roth IRA may not accept rollover
contributions from other qualified plans.
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).
Furthermore, the state tax treatment of a Roth IRA may differ from the Federal
income tax treatment of a Roth IRA.
D-1
<PAGE> 64
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 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 the IRS could
characterize the death benefit 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.
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 the IRS could characterize
the death benefit as an "incidental death benefit." If so, the contract owner
could be deemed to receive currently taxable income. In addition, there are
limitations on the amount of incidental benefits that may be provided under a
tax-sheltered annuity. Even if the IRS characterized the benefit under the
contract were as an incidental death benefit, the death benefit 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:
- contributions made pursuant to a salary reduction agreement in years
beginning after December 31, 1988,
- earnings on those contributions, and
- 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 we are 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.)
D-2
<PAGE> 65
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 66
- -------------------------------------------------------------------------------
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 mailing address of the
Annuity Service Office, P.O. Box 9013, Boston, MA 02205-9013 or by telephoning
(800) 551-2078.
The date of this Statement of Additional Information is May 1, 1999
The Manufacturers Life Insurance Company of New York
Corporate Center at Rye
555 Theodore Fremd Avenue
Rye, New York 10580
(800) 551-2078
NYVENTURE.SAI599
<PAGE> 67
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Information and History......................................... 3
Performance Data........................................................ 3
State Premium Taxes..................................................... 15
Services
Independent Auditors........................................... 15
Servicing Agent................................................ 15
Principal Underwriter.......................................... 16
Appendix A - State Premium Taxes........................................ 17
Financial Statements.................................................... 18
</TABLE>
2
<PAGE> 68
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 ("WE"
or "US"), a stock life insurance company organized under the laws of New York in
1992. We are 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.
On January 20, 1998, the Board of Directors of Manulife announced that
they 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.
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
- - redemption at the end of the time period, and
- - not assuming redemption at the end of the time period.
Standardized figures include total return figures from:
- - the inception date of the sub-account of the Variable Account which
invests in the portfolio, or
- - ten years, whichever period is shorter.
Non-standardized figures include total return figures from:
- - the inception date of the portfolio, or
- - 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. We believe 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.
3
<PAGE> 69
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 us, 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, Inc. portfolio), adjusted to
reflect current contract charges.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES#
CALCULATED AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
SINCE INCEPTION OR
10 YEARS, WHICHEVER
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER INCEPTION DATE*
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets -11.04% N/A -23.67% 01/01/97
- ------------------------------------------------------------------------------------------
Science & Technology 35.27% N/A 21.78% 01/04/97
- ------------------------------------------------------------------------------------------
International Small Cap 4.24% N/A 4.47% 03/04/96
- ------------------------------------------------------------------------------------------
Aggressive Growth -2.76% N/A -2.11% 01/01/97
- ------------------------------------------------------------------------------------------
Emerging Small Company -6.70% N/A 4.38% 01/01/97
- ------------------------------------------------------------------------------------------
Mid Cap Growth 20.45% N/A 14.57% 03/04/96
- ------------------------------------------------------------------------------------------
Overseas 0.60% N/A 4.17% 01/09/95
- ------------------------------------------------------------------------------------------
International Stock 7.25% N/A 4.20% 01/01/97
- ------------------------------------------------------------------------------------------
Mid Cap Blend 1.95% 15.23% 16.45% 10/31/92
- ------------------------------------------------------------------------------------------
Small Company Value -11.14% N/A -12.59% 10/01/97
- ------------------------------------------------------------------------------------------
Global Equity 4.63% 8.67% 12.70% 10/31/92
- ------------------------------------------------------------------------------------------
Growth 16.17% N/A 21.27% 07/15/96
- ------------------------------------------------------------------------------------------
Large Cap Growth 11.40% 12.20% 12.04% 10/31/92
- ------------------------------------------------------------------------------------------
Quantitative Equity 18.53% N/A 24.33% 01/01/97
- ------------------------------------------------------------------------------------------
Blue Chip Growth 20.65% 17.72% 13.42% 12/11/92
- ------------------------------------------------------------------------------------------
Real Estate Securities -22.01% N/A -3.51% 01/01/97
- ------------------------------------------------------------------------------------------
Value -8.36% N/A 5.19% 01/01/97
- ------------------------------------------------------------------------------------------
Growth & Income 18.70% 20.23% 18.56% 10/31/92
- ------------------------------------------------------------------------------------------
Equity-Income 1.77% 14.04% 14.12% 02/19/93
- ------------------------------------------------------------------------------------------
Income & Value 7.43% 9.57% 9.77% 10/31/92
- ------------------------------------------------------------------------------------------
Balanced 6.60% N/A 12.08% 01/01/97
- ------------------------------------------------------------------------------------------
High Yield -4.19% N/A 3.21% 01/01/97
- ------------------------------------------------------------------------------------------
Strategic Bond -5.55% 5.45% 6.09% 02/19/93
- ------------------------------------------------------------------------------------------
Global Bond 0.29% 5.57% 7.38% 10/31/92
- ------------------------------------------------------------------------------------------
Investment Quality Bond 1.33% 4.68% 5.64% 10/31/92
- ------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 70
<TABLE>
<CAPTION>
SINCE INCEPTION OR
10 YEARS, WHICHEVER
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER INCEPTION DATE*
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Diversified Bond 3.14% 7.15% 10/31/92
6.70%
- ---------------------------------------------------------------------------------------
U.S. Government Securities 0.18% 4.89% 10/31/92
4.38%
- ---------------------------------------------------------------------------------------
Money Market -2.05% 2.72% 10/31/92
2.73%
- ---------------------------------------------------------------------------------------
Lifestyle Aggressive 1000 -2.26% N/A 3.46% 01/07/97
- ---------------------------------------------------------------------------------------
Lifestyle Growth 820 -1.02% N/A 5.63% 01/07/97
- ---------------------------------------------------------------------------------------
Lifestyle Balanced 640 -1.46% N/A 5.51% 01/07/97
- ---------------------------------------------------------------------------------------
Lifestyle Moderate 460 2.29% N/A 7.44% 01/07/97
- ---------------------------------------------------------------------------------------
Lifestyle Conservative 260 2.70% N/A 6.88% 01/07/97
- ---------------------------------------------------------------------------------------
</TABLE>
# See charts below for Ven 9 contract total return figures.
* Inception date of the sub-account of the Variable Account which invests
in the portfolio.
5
<PAGE> 71
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES#
(ASSUMING REDEMPTION AT THE END OF THE TIME PERIOD)
CALCULATED AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
SINCE
INCEPTION OR 10 INCEPTION
YEARS, WHICHEVER DATE OF
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets* -11.04% N/A -9.34% 10/04/94
- -------------------------------------------------------------------------------------------
Science & Technology 35.27% N/A 21.78% 01/01/97
- -------------------------------------------------------------------------------------------
International Small Cap 4.24% N/A 4.47% 03/04/96
- -------------------------------------------------------------------------------------------
Aggressive Growth -2.76% N/A -2.11% 01/01/97
- -------------------------------------------------------------------------------------------
Emerging Small Company -6.70% N/A 4.38% 01/01/97
- -------------------------------------------------------------------------------------------
Mid Cap Growth 20.45% N/A 14.57% 03/04/96
- -------------------------------------------------------------------------------------------
Overseas 0.60% N/A 4.17% 01/09/95
- -------------------------------------------------------------------------------------------
International Stock 7.25% N/A 4.20% 01/01/97
- -------------------------------------------------------------------------------------------
Equity 1.95% 15.23% 12.39%## 06/18/85
- -------------------------------------------------------------------------------------------
Small Company Value -11.14% N/A -12.59% 10/01/97
- -------------------------------------------------------------------------------------------
Global Equity 4.63% 8.67% 9.11%## 03/18/88
- -------------------------------------------------------------------------------------------
Growth 16.17% N/A 21.27% 07/15/96
- -------------------------------------------------------------------------------------------
Large Cap Growth 11.40% 12.20% 9.43% 08/03/89
- -------------------------------------------------------------------------------------------
Quantitative Equity* 18.53% 16.95% 15.08%## 04/30/87
- -------------------------------------------------------------------------------------------
Blue Chip Growth 20.65% 17.72% 13.42% 12/11/92
- -------------------------------------------------------------------------------------------
Real Estate Securities* -22.01% 6.15% 10.96%## 04/30/87
- -------------------------------------------------------------------------------------------
Value -8.36% N/A 5.19% 01/01/97
- -------------------------------------------------------------------------------------------
Growth & Income 18.70% 20.23% 16.74% 04/23/91
- -------------------------------------------------------------------------------------------
Equity-Income 1.77% 14.04% 14.12% 02/19/93
- -------------------------------------------------------------------------------------------
Income & Value 7.43% 9.57% 8.13% 08/03/89
- -------------------------------------------------------------------------------------------
Balanced 6.60% N/A 12.08% 01/01/97
- -------------------------------------------------------------------------------------------
High Yield -4.19% N/A 3.21% 01/01/97
- -------------------------------------------------------------------------------------------
Strategic Bond -5.55% 5.45% 6.09% 02/19/93
- -------------------------------------------------------------------------------------------
Global Bond 0.29% 5.57% 7.72%## 03/18/88
- -------------------------------------------------------------------------------------------
Investment Quality Bond 1.33% 4.68% 5.58%## 06/18/85
- -------------------------------------------------------------------------------------------
Diversified Bond 3.14% 6.70% 6.51% 08/03/89
- -------------------------------------------------------------------------------------------
U.S. Government Securities 0.18% 4.38% 6.67%## 03/18/88
- -------------------------------------------------------------------------------------------
Money Market -2.05% 2.73% 3.76%## 06/18/85
- -------------------------------------------------------------------------------------------
Lifestyle Aggressive 1000 -2.26% N/A 3.46% 01/07/97
- -------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 72
<TABLE>
<CAPTION>
SINCE
INCEPTION OR 10 INCEPTION
YEARS, WHICHEVER DATE OF
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lifestyle Growth 820 -1.02% N/A 5.63% 01/07/97
- -----------------------------------------------------------------------------------------------
Lifestyle Balanced 640 -1.46% N/A 5.51% 01/07/97
- -----------------------------------------------------------------------------------------------
Lifestyle Moderate 460 2.29% N/A 7.44% 01/07/97
- -----------------------------------------------------------------------------------------------
Lifestyle Conservative 260 2.70% N/A 6.88% 01/07/97
- -----------------------------------------------------------------------------------------------
</TABLE>
# See charts below for Ven 9 total return figures.
* Performance for each of these sub-accounts is based upon the
performance of the portfolio, adjusted to reflect current contract
changes. On December 31, 1996, Manulife Series Fund, Inc. merged with
the Trust. Performance for each of these sub-accounts is based on the
historical performance of the respective predecessor Manulife Series
Fund, Inc. portfolio for periods prior to December 31, 1996.
## Ten year average annual return.
7
<PAGE> 73
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES#
(ASSUMING NO REDEMPTION AT THE END OF THE TIME PERIOD)
CALCULATED AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
SINCE
INCEPTION OR 10 INCEPTION
YEARS, WHICHEVER DATE OF
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets* -5.94% N/A -8.51% 10/04/94
- ---------------------------------------------------------------------------------------
Science & Technology 41.33% N/A 24.29% 01/01/97
- ---------------------------------------------------------------------------------------
International Small Cap 10.31% N/A 6.15% 03/04/96
- ---------------------------------------------------------------------------------------
Aggressive Growth 2.87% N/A 0.72% 01/01/97
- ---------------------------------------------------------------------------------------
Emerging Small Company -1.32% N/A 7.28% 01/01/97
- ---------------------------------------------------------------------------------------
Mid Cap Growth 26.51% N/A 16.00% 03/04/96
- ---------------------------------------------------------------------------------------
Overseas 6.45% N/A 5.32% 01/09/95
- ---------------------------------------------------------------------------------------
International Stock 13.32% N/A 7.12% 01/01/97
- ---------------------------------------------------------------------------------------
Mid Cap Blend 7.89% 15.73% 12.43%## 06/18/85
- ---------------------------------------------------------------------------------------
Small Company Value -6.05% N/A -8.57% 10/01/97
- ---------------------------------------------------------------------------------------
Global Equity 10.69% 9.30% 9.15%## 03/18/88
- ---------------------------------------------------------------------------------------
Growth 22.23% N/A 22.86% 07/15/96
- ---------------------------------------------------------------------------------------
Large Cap Growth 17.47% 12.75% 9.49% 08/03/89
- ---------------------------------------------------------------------------------------
Quantitative Equity* 24.59% 17.43% 15.11%## 04/30/87
- ---------------------------------------------------------------------------------------
Blue Chip Growth 26.71% 18.19% 13.66% 12/11/92
- ---------------------------------------------------------------------------------------
Real Estate Securities* -17.61% 6.82% 11.00%## 04/30/87
- ---------------------------------------------------------------------------------------
Value -3.09% N/A 8.07% 01/01/97
- ---------------------------------------------------------------------------------------
Growth & Income 24.77% 20.66% 16.79% 04/23/91
- ---------------------------------------------------------------------------------------
Equity-Income 7.69% 14.56% 14.44% 02/19/93
- ---------------------------------------------------------------------------------------
Income & Value 13.49% 10.18% 8.18% 08/03/89
- ---------------------------------------------------------------------------------------
Balanced 12.66% N/A 14.79% 01/01/97
- ---------------------------------------------------------------------------------------
High Yield 1.35% N/A 6.14% 01/01/97
- ---------------------------------------------------------------------------------------
Strategic Bond -0.10% 6.15% 6.52% 02/19/93
- ---------------------------------------------------------------------------------------
Global Bond 6.11% 6.27% 7.77%## 03/18/88
- ---------------------------------------------------------------------------------------
Investment Quality Bond 7.22% 5.39% 5.63%## 06/18/85
- ---------------------------------------------------------------------------------------
Diversified Bond 9.14% 7.37% 6.57% 08/03/89
- ---------------------------------------------------------------------------------------
U.S. Government Securities 6.00% 5.11% 6.72%## 03/18/88
- ---------------------------------------------------------------------------------------
Money Market 3.63% 3.49% 3.81%## 06/18/85
- ---------------------------------------------------------------------------------------
Lifestyle Aggressive 1000 3.40% N/A 6.41% 01/07/97
- ---------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 74
<TABLE>
<CAPTION>
SINCE
INCEPTION OR 10 INCEPTION
YEARS, WHICHEVER DATE OF
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lifestyle Growth 820 4.73% N/A 8.53% 01/07/97
- -----------------------------------------------------------------------------------
Lifestyle Balanced 640 4.25% N/A 8.40% 01/07/97
- -----------------------------------------------------------------------------------
Lifestyle Moderate 460 8.24% N/A 10.28% 01/07/97
- -----------------------------------------------------------------------------------
Lifestyle Conservative 260 8.68% N/A 9.74% 01/07/97
- -----------------------------------------------------------------------------------
</TABLE>
# See charts below for Ven 9 total return figures.
* Performance for each of these sub-accounts is based upon the
performance of the portfolio, adjusted to reflect current contract
changes. On December 31, 1996, Manulife Series Fund, Inc. merged with
the Trust. Performance for each of these sub-accounts is based on the
historical performance of the respective predecessor Manulife Series
Fund, Inc. portfolio for periods prior to December 31, 1996.
## Ten year average annual return.
9
<PAGE> 75
VEN 9 CONTRACTS
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
CALCULATED AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
SINCE
INCEPTION OR 10 INCEPTION
YEARS, WHICHEVER DATE OF
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets -11.04% N/A -23.67% 01/01/97
- -------------------------------------------------------------------------------------
Science & Technology 35.27% N/A 21.78% 01/01/97
- -------------------------------------------------------------------------------------
International Small Cap 4.24% N/A 4.47% 03/04/96
- -------------------------------------------------------------------------------------
Aggressive Growth -2.76% N/A -2.11% 01/01/97
- -------------------------------------------------------------------------------------
Emerging Small Company -6.70% N/A 4.38% 01/01/97
- -------------------------------------------------------------------------------------
Mid Cap Growth 20.45% N/A 14.57% 03/04/96
- -------------------------------------------------------------------------------------
Overseas 0.60% N/A 4.39% 01/09/95
- -------------------------------------------------------------------------------------
International Stock 7.25% N/A 4.20% 01/01/97
- -------------------------------------------------------------------------------------
Mid Cap Blend 1.95% 15.34% 16.60% 10/31/92
- -------------------------------------------------------------------------------------
Small Company Value -11.14% N/A -12.59% 10/01/97
- -------------------------------------------------------------------------------------
Global Equity 4.63% 8.82% 12.87% 10/31/92
- -------------------------------------------------------------------------------------
Growth 16.17% N/A 21.27% 07/15/96
- -------------------------------------------------------------------------------------
Large Cap Growth 11.40% 12.33% 12.22% 10/31/92
- -------------------------------------------------------------------------------------
Quantitative Equity 18.53% N/A 24.33% 01/01/97
- -------------------------------------------------------------------------------------
Blue Chip Growth 20.65% 17.83% 13.59% 12/11/92
- -------------------------------------------------------------------------------------
Real Estate Securities -22.01% N/A -3.51% 01/01/97
- -------------------------------------------------------------------------------------
Value -8.36% N/A 5.19% 01/01/97
- -------------------------------------------------------------------------------------
Growth & Income 18.70% 20.33% 18.69% 10/31/92
- -------------------------------------------------------------------------------------
Equity-Income 1.77% 14.16% 14.21% 02/19/93
- -------------------------------------------------------------------------------------
Income & Value 7.43% 9.71% 9.97% 10/31/92
- -------------------------------------------------------------------------------------
Balanced 6.60% N/A 12.08% 01/01/97
- -------------------------------------------------------------------------------------
High Yield -4.19% N/A 3.21% 01/01/97
- -------------------------------------------------------------------------------------
Strategic Bond -5.55% 5.61% 6.21% 02/19/93
- -------------------------------------------------------------------------------------
Global Bond 0.29% 5.73% 7.61% 10/31/92
- -------------------------------------------------------------------------------------
Investment Quality Bond 1.33% 4.84% 5.88% 10/31/92
- -------------------------------------------------------------------------------------
Diversified Bond 3.14% 6.85% 7.38% 10/31/92
- -------------------------------------------------------------------------------------
U.S. Government Securities 0.18% 4.55% 5.14% 10/31/92
- -------------------------------------------------------------------------------------
Money Market -2.05% 2.90% 3.00% 10/31/92
- -------------------------------------------------------------------------------------
Lifestyle Aggressive 1000 -2.26% N/A 3.46% 01/07/97
- -------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 76
<TABLE>
<CAPTION>
SINCE
INCEPTION OR 10
YEARS, WHICHEVER INCEPTION
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER DATE*
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lifestyle Growth 820 -1.02% N/A 5.63% 01/07/97
- -------------------------------------------------------------------------------------
Lifestyle Balanced 640 -1.46% N/A 5.51% 01/07/97
- -------------------------------------------------------------------------------------
Lifestyle Moderate 460 2.29% N/A 7.44% 01/07/97
- -------------------------------------------------------------------------------------
Lifestyle Conservative 280 2.70% N/A 6.88% 01/07/97
- -------------------------------------------------------------------------------------
</TABLE>
* Inception date of the sub-account of the Variable Account which invests
in the portfolio.
11
<PAGE> 77
VEN 9 CONTRACTS
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
(ASSUMING REDEMPTION AT THE END OF THE TIME PERIOD)
CALCULATED AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
SINCE
INCEPTION OR 10 INCEPTION
YEARS, WHICHEVER DATE OF
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets* -11.04% N/A -9.15% 10/04/94
- --------------------------------------------------------------------------------
Science & Technology 35.27% N/A 21.78% 01/01/97
- --------------------------------------------------------------------------------
International Small Cap 4.24% N/A 4.47% 03/04/96
- --------------------------------------------------------------------------------
Aggressive Growth -2.76% N/A -2.11% 01/01/97
- --------------------------------------------------------------------------------
Emerging Small Company -6.70% N/A 4.38% 01/01/97
- --------------------------------------------------------------------------------
Mid Cap Growth 20.45% N/A 14.57% 03/04/96
- --------------------------------------------------------------------------------
Overseas 0.60% N/A 4.39% 01/09/95
- --------------------------------------------------------------------------------
International Stock 7.25% N/A 4.20% 01/01/97
- --------------------------------------------------------------------------------
Mid Cap Blend 1.95% 15.34% 12.39%+ 06/18/85
- -------------------------------------------------------------------------------
Small Company Value -11.14% N/A -12.59% 10/01/97
- --------------------------------------------------------------------------------
Global Equity 4.63% 8.82% 9.11%+ 03/18/88
- --------------------------------------------------------------------------------
Growth 16.17% N/A 21.27% 07/15/96
- --------------------------------------------------------------------------------
Large Cap Growth 11.40% 12.33% 9.43% 08/03/89
- --------------------------------------------------------------------------------
Quantitative Equity* 18.53% 17.06% 15.08%+ 04/30/87
- --------------------------------------------------------------------------------
Blue Chip Growth 20.65% 17.83% 13.59% 12/11/92
- --------------------------------------------------------------------------------
Real Estate Securities* -22.01% 6.30% 10.96%+ 04/30/87
- --------------------------------------------------------------------------------
Value -8.36% N/A 5.19% 01/01/97
- --------------------------------------------------------------------------------
Growth & Income 18.70% 20.33% 16.74% 04/23/91
- --------------------------------------------------------------------------------
Equity-Income 1.77% 14.16% 14.21% 02/19/93
- --------------------------------------------------------------------------------
Income & Value 7.43% 9.71% 8.13% 08/03/89
- --------------------------------------------------------------------------------
Balanced 6.60% N/A 12.08% 01/01/97
- --------------------------------------------------------------------------------
High Yield -4.19% N/A 3.21% 01/01/97
- --------------------------------------------------------------------------------
Strategic Bond -5.55% 5.61% 6.21% 02/19/93
- --------------------------------------------------------------------------------
Global Bond 0.29% 5.73% 7.72%+ 03/18/88
- -------------------------------------------------------------------------------
Investment Quality Bond 1.33% 4.84% 5.58%+ 06/18/85
- -------------------------------------------------------------------------------
Diversified Bond 3.14% 6.85% 6.51% 08/03/89
-------------------------------------------------------------------------------
U.S. Government Securities 0.18% 4.55% 6.67%+ 03/18/88
- -------------------------------------------------------------------------------
Money Market -2.05% 2.90% 3.76%+ 06/18/85
- -------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 78
<TABLE>
<CAPTION>
SINCE
INCEPTION OR 10 INCEPTION
YEARS, WHICHEVER DATE OF
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lifestyle Growth 820 -1.02% N/A 5.63% 01/07/97
- ------------------------------------------------------------------------------
Lifestyle Balanced 640 -1.46% N/A 5.51% 01/07/97
- ------------------------------------------------------------------------------
Lifestyle Moderate 460 2.29% N/A 7.44% 01/07/97
- ------------------------------------------------------------------------------
Lifestyle Conservative 280 2.70% N/A 6.88% 01/07/97
- ------------------------------------------------------------------------------
</TABLE>
* Performance for each of these sub-accounts is based upon the historical
performance of the portfolio, adjusted to reflect current contract
charges. On December 31, 1996, Manulife Series Fund, Inc. merged with
the Trust. Performance for each of these sub-accounts is based on the
historical performance of the respective predecessor Manulife Series
Fund, Inc. portfolio for periods prior to December 31, 1996.
+ Ten year average annual return.
13
<PAGE> 79
VEN 9 CONTRACTS
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
(ASSUMING NO REDEMPTION AT THE END OF THE TIME PERIOD)
CALCULATED AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
SINCE
INCEPTION OR 10 INCEPTION
YEARS, WHICHEVER DATE OF
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets* -5.94% N/A -8.51% 10/04/94
- -------------------------------------------------------------------------------
Science & Technology 41.33% N/A 24.29% 01/01/97
- -------------------------------------------------------------------------------
International Small Cap 10.31% N/A 6.15% 03/04/96
- -------------------------------------------------------------------------------
Aggressive Growth 2.87% N/A 0.72% 01/01/97
- -------------------------------------------------------------------------------
Emerging Small Company -1.32% N/A 7.28% 01/01/97
- -------------------------------------------------------------------------------
Mid Cap Growth 26.51% N/A 16.00% 03/04/96
- -------------------------------------------------------------------------------
Overseas 6.45% N/A 5.32% 01/09/95
- -------------------------------------------------------------------------------
International Stock 13.32% N/A 7.12% 01/01/97
- -------------------------------------------------------------------------------
Mid Cap Blend 7.89% 15.73% 12.43%+ 06/18/85
- -------------------------------------------------------------------------------
Small Company Value -6.05% N/A -8.57% 10/01/97
- -------------------------------------------------------------------------------
Global Equity 10.69% 9.30% 9.15%+ 03/18/88
- -------------------------------------------------------------------------------
Growth 22.23% N/A 22.86% 07/15/96
- -------------------------------------------------------------------------------
Large Cap Growth 17.47% 12.75% 9.49% 08/03/89
- -------------------------------------------------------------------------------
Quantitative Equity* 24.59% 17.43% 15.11%+ 04/30/87
- -------------------------------------------------------------------------------
Blue Chip Growth 26.71% 18.19% 13.66% 12/11/92
- -------------------------------------------------------------------------------
Real Estate Securities* -17.61% 6.82% 11.00%+ 04/30/87
- -------------------------------------------------------------------------------
Value -3.09% N/A 8.07% 01/01/97
- -------------------------------------------------------------------------------
Growth & Income 24.77% 20.66% 16.79% 04/23/91
- -------------------------------------------------------------------------------
Equity-Income 7.69% 14.56% 14.44% 02/19/93
- -------------------------------------------------------------------------------
Income & Value 13.49% 10.18% 8.18% 08/03/89
- -------------------------------------------------------------------------------
Balanced 12.66% N/A 14.79% 01/01/97
- -------------------------------------------------------------------------------
High Yield 1.35% N/A 6.14% 01/01/97
- ------------------------------------------------ -----------------------------
Strategic Bond -0.10% 6.15% 6.52% 02/19/93
- -------------------------------------------------------------------------------
Global Bond 6.11% 6.27% 7.77%+ 03/18/88
- -------------------------------------------------------------------------------
Investment Quality Bond 7.22% 5.39% 5.63%+ 06/18/85
- ----------------------------------------- --------------------------------------
Diversified Bond 9.14% 7.37% 6.57% 08/03/89
- -------------------------------------------------------------------------------
U.S. Government Securities 6.00% 5.11% 6.72%+ 03/18/88
- -------------------------------------------------------------------------------
Money Market 3.63% 3.49% 3.81%+ 06/18/85
- -------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 80
<TABLE>
<CAPTION>
SINCE
INCEPTION OR 10 INCEPTION
YEARS, WHICHEVER DATE OF
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lifestyle Aggressive 1000 3.40% N/A 6.41% 01/07/97
- -------------------------------------------------------------------------------
Lifestyle Growth 820 4.73% N/A 8.53% 01/07/97
- -------------------------------------------------------------------------------
Lifestyle Balanced 640 4.25% N/A 8.40% 01/07/97
- -------------------------------------------------------------------------------
Lifestyle Moderate 460 8.24% N/A 10.28% 01/07/97
- -------------------------------------------------------------------------------
Lifestyle Conservative 280 8.68% N/A 9.74% 01/07/97
- -------------------------------------------------------------------------------
</TABLE>
* Performance for each of these sub-accounts is based upon the historical
performance of the portfolio, adjusted to reflect current contract
charges. On December 31, 1996, Manulife Series Fund, Inc. merged with
the Trust. Performance for each of these sub-accounts is based on the
historical performance of the respective predecessor Manulife Series
Fund, Inc. portfolio for periods prior to December 31, 1996.
+ Ten year average annual return.
* * * * *
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, we reserve the right to pass-through such tax
to you.
SERVICES
INDEPENDENT AUDITORS
The financial statements of the Company at December 31, 1998 and 1997 and
for the three years in the period ended December 31, 1998 and for the
Variable Account at December 31, 1998 and for the two years in the period
ended December 31, 1998 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 reports given upon the authority of such
firm as experts in accounting and auditing.
Our financial statements which are included in the Statement of Additional
Information should be considered only as bearing on our ability to meet our
obligations under the contracts. They should not be considered as bearing
on the investment performance of the assets held in the Variable Account.
15
<PAGE> 81
SERVICING AGENT
Computer Science Corporation Financial Services Group ("CSC FSG")
provides to us 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.
We pay CSC FSG approximately $7.80 per policy per year, plus certain other fees
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
1998 and 1997 was $12,640,836 and $3,222,530, respectively. The aggregate dollar
amount of underwriting commissions paid to NASL Financial Services Inc. in 1997
and 1996 was $8,439,218 and $7,049,687, respectively. Neither MSS nor NASL
Financial Services, Inc. retain any of these amounts during such periods.
16
<PAGE> 82
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 annuitization if tax paid on
premium at issue)
17
<PAGE> 83
FINANCIAL STATEMENTS
18
<PAGE> 84
AUDITED FINANCIAL STATEMENTS
THE MANUFACTURERS LIFE
INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT A
Years ended December 31, 1998 and 1997
<PAGE> 85
The Manufacturers Life Insurance Company of
New York Separate Account A
Audited Financial Statements
Years ended December 31, 1998 and 1997
CONTENTS
Report of Independent Auditors ............................................ 1
Audited Financial Statements
Statement of Assets and Contract Owners' Equity ........................... 2
Statements of Operations and Changes in Contract Owners' Equity ........... 3
Notes to Financial Statements ............................................. 15
<PAGE> 86
[Ernst & Young LLP Letterhead]
Report of Independent Auditors
To the Contract Owners of
The Manufacturers Life Insurance Company of
New York Separate Account A
We have audited the accompanying statement of assets and contract owners'
equity of The Manufacturers Life Insurance Company of New York Separate Account
A of The Manufacturers Life Insurance Company of New York as of December 31,
1998, and the related statements of operations and changes in contract owners'
equity for each of the two years in the period ended December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Manufacturers Life
Insurance Company of New York Separate Account A at December 31, 1998, and the
results of its operations and the changes in its contract owners' equity for
each of the two years in the period ended December 31, 1998 in conformity with
generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
February 15, 1999
1
<PAGE> 87
The Manufacturers Life Insurance Company of New York Separate Account A
Statement of Assets and Contract Owners' Equity
December 31, 1998
<TABLE>
<S> <C>
ASSETS
Investments at market value:
Sub-accounts:
Equity Portfolio - 4,449,054 shares (cost $86,262,063) $ 86,667,579
Investment Quality Bond Portfolio - 890,257 shares (cost $10,642,952) 11,092,607
Growth and Income Portfolio - 5,020,869 shares (cost $100,598,733) 142,743,309
Blue Chip Growth Portfolio - 3,655,240 shares (cost $51,171,383) 69,157,132
Money Market Portfolio - 2,719,016 shares (cost $27,190,158) 27,190,158
Global Equity Portfolio - 2,608,903 shares (cost $45,551,968) 53,169,435
Global Government Bond Portfolio - 639,270 shares (cost $8,709,225) 8,777,173
U.S. Government Securities Portfolio - 1,332,464 shares (cost $17,656,122) 18,414,647
Conservative Asset Allocation Portfolio - 673,839 shares (cost $7,603,401) 7,971,518
Moderate Asset Allocation Portfolio - 2,022,056 shares (cost $23,759,966) 26,974,223
Aggressive Asset Allocation Portfolio - 897,153 shares (cost $11,456,122) 13,690,557
Equity-Income Portfolio - 5,097,666 shares (cost $72,778,942) 90,636,502
Strategic Bond Portfolio - 3,069,792 shares (cost $36,043,652) 35,977,962
International Growth and Income Portfolio - 1,647,852 shares (cost $18,742,384) 18,653,686
Growth Portfolio - 702,976 shares (cost $12,022,732) 14,411,010
Small/Mid Cap Portfolio - 1,513,053 shares (cost $23,435,699) 29,913,059
International Small Cap Portfolio - 586,199 shares (cost $8,617,091) 8,957,122
Pacific Rim Emerging Markets Portfolio - 154,794 shares (cost $1,024,347) 1,057,240
Science & Technology Portfolio - 921,213 shares (cost $13,858,102) 17,982,083
Emerging Small Company Trust Portfolio - 209,081 shares (cost $4,860,283) 4,980,306
Pilgrim Baxter Growth Portfolio - 310,552 shares (cost $3,752,790) 4,049,596
International Stock Portfolio - 225,071 shares (cost $2,819,455) 2,921,418
Worldwide Growth Portfolio - 169,690 shares (cost $2,492,267) 2,570,809
Quantitative Equity Portfolio - 192,591 shares (cost $4,325,984) 4,857,136
Value Trust Portfolio - 578,205 shares (cost $8,689,149) 8,129,567
Real Estate Securities Portfolio - 209,487 shares (cost $3,685,448) 3,094,124
Balanced Portfolio - 226,567 shares (cost $4,327,203) 4,395,407
High Yield Portfolio - 579,780 shares (cost $7,931,009) 7,490,754
Capital Growth Bond Portfolio - 65,802 shares (cost $769,090) 795,551
Lifestyle Aggressive 1000 Portfolio - 574,730 shares (cost $7,557,476) 7,695,639
Lifestyle Growth 820 Portfolio - 2,726,491 shares (cost $37,144,870) 37,571,046
Lifestyle Balanced 640 Portfolio - 2,572,209 shares (cost $34,351,770) 34,699,104
Lifestyle Moderate 460 Portfolio - 941,858 shares (cost $12,507,036) 13,101,251
Lifestyle Conservative 280 Portfolio - 404,891 shares (cost $5,230,447) 5,478,177
Small Company Value Portfolio - 253,107 shares (cost $2,976,362) 2,877,829
--------------------
Total assets $828,144,716
====================
CONTRACT OWNERS' EQUITY
Variable annuity contracts $828,144,716
====================
</TABLE>
See accompanying notes.
2
<PAGE> 88
The Manufacturers Life Insurance Company of New York Separate Account A
Statements of Operations and Changes in Contract Owners' Equity
<TABLE>
<CAPTION>
SUB-ACCOUNT
------------------------------------------------------------------------------------------------
EQUITY INVESTMENT QUALITY BOND GROWTH AND INCOME
------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1998 1997 1998 1997
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $15,130,703 $12,486,387 $561,373 $466,752 $6,612,962 $4,210,169
Expenses:
Mortality & expense risk and
administrative charges 1,145,526 973,089 140,373 98,931 1,602,622 1,011,442
------------------------------------------------------------------------------------------------
Net investment income (loss) 13,985,177 11,513,298 421,000 367,821 5,010,340 3,198,727
Net realized gain (loss) 1,007,114 1,152,410 195,010 (39,663) 3,398,048 1,459,961
Unrealized appreciation
(depreciation) during the
period (9,138,827) (1,707,499) 47,652 243,636 17,104,121 13,568,863
------------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations 5,853,464 10,958,209 663,662 571,794 25,512,509 18,227,551
------------------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 9,156,693 9,500,943 2,092,516 1,310,962 23,975,140 17,401,810
Transfers between
sub-accounts and the
Company (1,769,886) (350,550) 895,525 28,925 8,666,092 4,249,654
Withdrawals (3,542,523) (3,231,007) (623,663) (387,897) (5,289,954) (2,405,054)
Annual contract fee (43,305) (40,938) (3,771) (3,433) (53,050) (36,410)
------------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions 3,800,979 5,878,448 2,360,607 948,557 27,298,228 19,210,000
------------------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 9,654,443 16,836,657 3,024,269 1,520,351 52,810,737 37,437,551
Contract owners' equity at
beginning of period 77,013,136 60,176,479 8,068,338 6,547,987 89,932,572 52,495,021
------------------------------------------------------------------------------------------------
Contract owners' equity at end
of period $86,667,579 $77,013,136 $11,092,607 $8,068,338 $142,743,309 $89,932,572
================================================================================================
</TABLE>
See accompanying notes.
3
<PAGE> 89
The Manufacturers Life Insurance Company of New York Separate Account A
Statements of Operations and Changes in Contract Owners' Equity
(continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
-----------------------------------------------------------------------------------------------
BLUE CHIP GROWTH MONEY MARKET GLOBAL EQUITY
-----------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1998 1997 1998 1997
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 925,258 $ 4,355,890 $ 1,217,864 $ 951,844 $ 3,435,281 $ 3,668,941
Expenses:
Mortality & expense risk and
administrative charges 734,935 432,353 345,389 264,763 701,828 576,664
-----------------------------------------------------------------------------------------------
Net investment income (loss) 190,323 3,923,537 872,475 687,081 2,733,453 3,092,277
Net realized gain (loss) 1,888,866 800,939 (4,278) (1,945) 976,295 838,480
Unrealized appreciation
(depreciation) during the
period 10,851,936 1,966,728 1,055,569 3,169,356
-----------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations 12,931,125 6,691,204 868,197 685,136 4,765,317 7,100,113
-----------------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 13,085,482 10,078,132 23,529,594 23,992,681 4,558,097 5,521,967
Transfers between
sub-accounts and the
Company 4,838,123 2,208,938 (21,232,778) (14,589,991) 311,099 (1,298,656)
Withdrawals (2,000,593) (861,115) (2,647,622) (1,875,345) (1,957,660) (1,526,906)
Annual contract fee (24,824) (15,363) (6,939) (5,681) (26,281) (23,902)
-----------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions 15,898,188 11,410,592 (357,745) 7,521,664 2,885,255 2,672,503
-----------------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 28,829,313 18,101,796 510,452 8,206,800 7,650,572 9,772,616
Contract owners' equity at
beginning of period 40,327,819 22,226,023 26,679,706 18,472,906 45,518,863 35,746,247
-----------------------------------------------------------------------------------------------
Contract owners' equity at end
of period $69,157,132 $40,327,819 $27,190,158 $26,679,706 $53,169,435 $45,518,863
===============================================================================================
</TABLE>
See accompanying notes.
4
<PAGE> 90
The Manufacturers Life Insurance Company of New York Separate Account A
Statements of Operations and Changes in Contract Owners' Equity
(continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
-----------------------------------------------------------------------------------------------
GLOBAL GOVERNMENT U.S. GOVERNMENT CONSERVATIVE ASSET
BOND SECURITIES ALLOCATION
-----------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1998 1997 1998 1997
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 828,155 $ 783,380 $ 767,695 $ 834,686 $ 683,398 $ 563,780
Expenses:
Mortality & expense risk and
administrative charges 121,247 125,157 232,775 187,607 102,810 91,137
-----------------------------------------------------------------------------------------------
Net investment income (loss) 706,908 658,223 534,920 647,079 580,588 472,643
Net realized gain (loss) 131,303 (18,110) 188,892 118,520 122,379 35,895
Unrealized appreciation
(depreciation) during the
period (331,938) (505,617) 236,061 135,070 (56,020) 100,855
-----------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations 506,273 134,496 959,873 900,669 646,947 609,393
-----------------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 419,396 1,025,262 3,629,590 2,213,798 582,731 540,228
Transfers between
sub-accounts and the
Company (301,107) (1,236,660) 372,771 (1,002,548) 599,459 (520,669)
Withdrawals (507,258) (408,918) (1,002,775) (884,908) (609,672) (287,581)
Annual contract fee (4,248) (4,515) (6,895) (6,841) (4,571) (4,606)
-----------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions (393,217) (624,831) 2,992,691 319,501 567,947 (272,628)
-----------------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 113,056 (490,335) 3,952,564 1,220,170 1,214,894 336,765
Contract owners' equity at
beginning of period 8,664,117 9,154,452 14,462,083 13,241,913 6,756,624 6,419,859
-----------------------------------------------------------------------------------------------
Contract owners' equity at end
of period $8,777,173 $ 8,664,117 $18,414,647 $14,462,083 $7,971,518 $6,756,624
===============================================================================================
</TABLE>
See accompanying notes.
5
<PAGE> 91
The Manufacturers Life Insurance Company of New York Separate Account A
Statements of Operations and Changes in Contract Owners' Equity
(continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
-----------------------------------------------------------------------------------------------
MODERATE ASSET AGGRESSIVE ASSET
ALLOCATION ALLOCATION EQUITY INCOME
-----------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1998 1997 1998 1997
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 2,721,906 $ 2,264,586 $ 1,432,979 $ 1,038,315 $ 4,886,452 $ 7,869,988
Expenses:
Mortality & expense risk and
administrative charges 354,371 321,851 177,019 155,411 1,183,871 920,557
-----------------------------------------------------------------------------------------------
Net investment income (loss) 2,367,535 1,942,735 1,255,960 882,904 3,702,581 6,949,431
Net realized gain (loss) 240,650 177,670 325,333 137,438 2,699,560 1,348,326
Unrealized appreciation
(depreciation) during the
period 610,351 932,989 406,423 738,123 (213,380) 7,719,775
-----------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations 3,218,536 3,053,394 1,987,716 1,758,465 6,188,761 16,017,532
-----------------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 1,976,675 1,602,078 1,088,836 869,661 10,272,190 9,213,615
Transfers between
sub-accounts and the
Company (493,969) (1,158,960) (682,669) (488,660) 340,674 1,275,136
Withdrawals (1,870,614) (866,466) (626,377) (225,655) (3,814,029) (2,621,838)
Annual contract fee (13,415) (13,414) (8,315) (7,970) (42,132) (36,208)
-----------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions (401,323) (436,762) (228,525) 147,376 6,756,703 7,830,705
-----------------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 2,817,213 2,616,632 1,759,191 1,905,841 12,945,464 23,848,237
Contract owners' equity at
beginning of period 24,157,010 21,540,378 11,931,366 10,025,525 77,691,038 53,842,801
-----------------------------------------------------------------------------------------------
Contract owners' equity at end
of period $26,974,223 $24,157,010 $13,690,557 $11,931,366 $90,636,502 $77,691,038
===============================================================================================
</TABLE>
See accompanying notes.
6
<PAGE> 92
The Manufacturers Life Insurance Company of New York Separate Account A
Statements of Operations and Changes in Contract Owners' Equity
(continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
-----------------------------------------------------------------------------------------------
INTERNATIONAL
STRATEGIC BOND GROWTH AND INCOME GROWTH
-----------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1998 1997 1998 1997
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 2,295,167 $ 1,679,486 $ 918,754 $ 885,754 $ 378,033 $ 87
Expenses:
Mortality & expense risk and
administrative charges 486,219 388,062 252,751 212,232 146,819 64,976
-----------------------------------------------------------------------------------------------
Net investment income (loss) 1,808,948 1,291,424 666,003 673,522 231,214 (64,889)
Net realized gain (loss) 859,950 390,907 268,040 253,795 239,398 147,916
Unrealized appreciation
(depreciation) during the
period (2,696,973) 810,491 (5,437) (1,196,179) 1,647,389 716,026
-----------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity
from operations (28,075) 2,492,822 928,606 (268,862) 2,118,001 799,053
-----------------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 7,609,581 10,705,119 2,337,324 4,149,234 3,141,393 2,997,064
Transfers between
sub-accounts and the
Company (2,900,935) (1,094,529) (19,511) 256,352 2,270,326 1,662,952
Withdrawals (1,483,625) (1,336,309) (804,738) (567,740) (347,582) (150,147)
Annual contract fee (14,237) (11,345) (10,494) (9,090) (4,261) (1,909)
-----------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions 3,210,784 8,262,936 1,502,581 3,828,756 5,059,876 4,507,960
-----------------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 3,182,709 10,755,758 2,431,187 3,559,894 7,177,877 5,307,013
Contract owners' equity at
beginning of period 32,795,253 22,039,495 16,222,499 12,662,605 7,233,133 1,926,120
-----------------------------------------------------------------------------------------------
Contract owners' equity at end
of period $35,977,962 $32,795,253 $18,653,686 $16,222,499 $14,411,010 $7,233,133
===============================================================================================
</TABLE>
See accompanying notes.
7
<PAGE> 93
The Manufacturers Life Insurance Company of New York Separate Account A
Statements of Operations and Changes in Contract Owners' Equity
(continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
-----------------------------------------------------------------------------------------------
INTERNATIONAL PACIFIC RIM
SMALL/MID CAP SMALL CAP EMERGING MARKETS
-----------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1998 1997 1998 1997
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 23,697 $ 3,321 $ 1,220
Expenses:
Mortality & expense risk and
administrative charges $ 306,388 $ 199,889 113,927 95,122 $ 9,975 4,946
-----------------------------------------------------------------------------------------------
Net investment income (loss) (306,388) (199,889) (90,230) (91,801) (9,975) (3,726)
Net realized gain (loss) 1,378,269 275,484 409,189 142,993 (154,105) (61,488)
Unrealized appreciation
(depreciation) during the
period 4,593,528 1,502,306 309,360 (156,452) 141,071 (108,178)
-----------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity
from operations 5,665,409 1,577,901 628,319 (105,260) (23,009) (173,392)
-----------------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 4,789,484 4,904,177 925,104 1,883,923 503,933 408,285
Transfers between
sub-accounts and the
Company 2,289,436 2,325,955 845,594 364,530 183,911 186,610
Withdrawals (1,018,210) (464,579) (283,422) (223,256) (28,153) (600)
Annual contract fee (11,426) (7,535) (4,127) (3,550) (298) (47)
-----------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions 6,049,284 6,758,018 1,483,149 2,021,647 659,393 594,248
-----------------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 11,714,693 8,335,919 2,111,468 1,916,387 636,384 420,856
Contract owners' equity at
beginning of period 18,198,366 9,862,447 6,845,654 4,929,267 420,856
-----------------------------------------------------------------------------------------------
Contract owners' equity at end
of period $29,913,059 $18,198,366 $8,957,122 $6,845,654 $1,057,240 $ 420,856
===============================================================================================
</TABLE>
See accompanying notes.
8
<PAGE> 94
The Manufacturers Life Insurance Company of New York Separate Account A
Statements of Operations and Changes in Contract Owners' Equity
(continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
-----------------------------------------------------------------------------------------------
SCIENCE & EMERGING SMALL COMPANY PILGRIM
TECHNOLOGY TRUST (1) BAXTER GROWTH
-----------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1998 1997 1998 1997
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 88,803 $ 50,122
Expenses:
Mortality & expense risk and
administrative charges $ 140,540 40,948 53,801 $ 21,107 $ 39,530 $ 16,862
-----------------------------------------------------------------------------------------------
Net investment income (loss) (140,540) 47,855 (3,679) (21,107) (39,530) (16,862)
Net realized gain (loss) 245,552 32,246 98,646 30,095 7,185 (4,782)
Unrealized appreciation
(depreciation) during the
period 4,315,307 (191,326) (127,344) 247,367 220,471 76,335
-----------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations 4,420,319 (111,225) (32,377) 256,355 188,126 54,691
-----------------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 5,039,793 4,250,885 1,628,997 2,039,572 800,978 1,608,478
Transfers between
sub-accounts and the 3,207,637 1,544,783 557,075 820,149 863,113 692,632
Company
Withdrawals (319,985) (45,757) (191,761) (95,697) (119,872) (36,691)
Annual contract fee (4,020) (347) (1,724) (283) (1,646) (213)
-----------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions 7,923,425 5,749,564 1,992,587 2,763,741 1,542,573 2,264,206
-----------------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 12,343,744 5,638,339 1,960,210 3,020,096 1,730,699 2,318,897
Contract owners' equity at
beginning of period 5,638,339 3,020,096 2,318,897
-----------------------------------------------------------------------------------------------
Contract owners' equity at end
of period $17,982,083 $5,638,339 $4,980,306 $3,020,096 $4,049,596 $2,318,897
===============================================================================================
</TABLE>
(1) Effective November 1, 1998, the Emerging Growth sub-account was renamed
Emerging Small Company Trust through a vote of the Board of Directors.
See accompanying notes.
9
<PAGE> 95
The Manufacturers Life Insurance Company of New York Separate Account A
Statements of Operations and Changes in Contract Owners' Equity
(continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
-----------------------------------------------------------------------------------------------
QUANTITATIVE
INTERNATIONAL STOCK WORLDWIDE GROWTH EQUITY
-----------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1998 1997 1998 1997
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 43,775 $ 22,697 $ 13,045 $ 13,596 $ 297,413
Expenses:
Mortality & expense risk and
administrative charges 31,689 11,181 29,659 11,839 43,301 $ 9,581
-----------------------------------------------------------------------------------------------
Net investment income (loss) 12,086 11,516 (16,614) 1,757 254,112 (9,581)
Net realized gain (loss) 27,952 15,045 36,499 37,872 25,491 24,157
Unrealized appreciation
(depreciation) during the
period 219,452 (117,489) 88,489 (9,947) 456,874 74,278
-----------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations 259,490 (90,928) 108,374 29,682 736,477 88,854
-----------------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 640,937 1,297,853 869,846 1,425,291 1,492,800 1,032,261
Transfers between
sub-accounts and
the Company 457,349 481,899 115,421 151,565 932,023 668,825
Withdrawals (102,003) (22,120) (110,403) (17,954) (83,791) (9,016)
Annual contract fee (1,001) (58) (914) (99) (1,211) (86)
-----------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions 995,282 1,757,574 873,950 1,558,803 2,339,821 1,691,984
-----------------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 1,254,772 1,666,646 982,324 1,588,485 3,076,298 1,780,838
Contract owners' equity at
beginning of period 1,666,646 1,588,485 1,780,838
-----------------------------------------------------------------------------------------------
Contract owners' equity at end
of period $2,921,418 $1,666,646 $2,570,809 $1,588,485 $4,857,136 $1,780,838
===============================================================================================
</TABLE>
See accompanying notes.
10
<PAGE> 96
The Manufacturers Life Insurance Company of New York Separate Account A
Statements of Operations and Changes in Contract Owners' Equity
(continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
-----------------------------------------------------------------------------------------------
REAL ESTATE
VALUE TRUST SECURITIES BALANCED
-----------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1998 1997 1998 1997
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 268,076 $ 121,213 $ 340,740 $ 274,564
Expenses:
Mortality & expense risk and
administrative charges 94,438 24,617 40,096 $ 14,364 36,138 $ 4,012
-----------------------------------------------------------------------------------------------
Net investment income (loss) 173,638 96,596 300,644 (14,364) 238,426 (4,012)
Net realized gain (loss) 81,939 54,041 (115,048) 75,356 9,117 3,982
Unrealized appreciation
(depreciation) during the
period (595,649) 36,067 (775,195) 183,871 35,848 32,356
-----------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations (340,072) 186,704 (589,599) 244,863 283,391 32,326
-----------------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 3,119,814 3,080,913 940,108 1,668,997 1,602,611 583,883
Transfers between
sub-accounts and the 1,619,109 711,554 636,804 369,754 1,705,099 237,500
Company
Withdrawals (220,984) (24,773) (166,110) (9,622) (47,399) (1,275)
Annual contract fee (2,510) (188) (982) (89) (725) (4)
-----------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions 4,515,429 3,767,506 1,409,820 2,029,040 3,259,586 820,104
-----------------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 4,175,357 3,954,210 820,221 2,273,903 3,542,977 852,430
Contract owners' equity at
beginning of period 3,954,210 2,273,903 852,430
-----------------------------------------------------------------------------------------------
Contract owners' equity at end
of period $8,129,567 $3,954,210 $3,094,124 $2,273,903 $4,395,407 $852,430
===============================================================================================
</TABLE>
See accompanying notes.
11
<PAGE> 97
The Manufacturers Life Insurance Company of New York Separate Account A
Statements of Operations and Changes in Contract Owners' Equity
(continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
-----------------------------------------------------------------------------------------------
CAPITAL LIFESTYLE
HIGH YIELD GROWTH BOND AGGRESSIVE 1000
-----------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1998 1997 1998 1997
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 543,274 $ 145,840 $ 28,804 $ 305,318 $ 25,615
Expenses:
Mortality & expense risk and
administrative charges 86,517 29,216 9,656 $ 2,231 83,756 31,492
--------------------------------------------------------------------------------------------
Net investment income (loss) 456,757 116,624 19,148 (2,231) 221,562 (5,877)
Net realized gain (loss) 115,549 49,427 7,917 5,380 73,870 16,091
Unrealized appreciation
(depreciation) during the
period (500,323) 60,068 16,427 10,034 (15,084) 153,247
--------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations 71,983 226,119 43,492 13,183 280,348 163,461
--------------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 3,600,414 3,947,397 598,774 308,180 3,077,092 3,805,176
Transfers between
sub-accounts and
the Company 256,649 (234,593) (198,882) 96,961 (268,897) 941,364
Withdrawals (348,311) (27,399) (62,706) (3,280) (290,307) (6,907)
Annual contract fee (1,447) (58) (166) (5) (5,347) (344)
--------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions 3,507,305 3,685,347 337,020 401,856 2,512,541 4,739,289
--------------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 3,579,288 3,911,466 380,512 415,039 2,792,889 4,902,750
Contract owners' equity at
beginning of period 3,911,466 415,039 4,902,750
--------------------------------------------------------------------------------------------
Contract owners' equity at end
of period $ 7,490,754 $ 3,911,466 $ 795,551 $ 415,039 $ 7,695,639 $ 4,902,750
============================================================================================
</TABLE>
See accompanying notes.
12
<PAGE> 98
The Manufacturers Life Insurance Company of New York Separate Account A
Statements of Operations and Changes in Contract Owners' Equity
(continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
-----------------------------------------------------------------------------------------------
LIFESTYLE LIFESTYLE LIFESTYLE
GROWTH 820 BALANCED 640 MODERATE 460
-----------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1998 1997 1998 1997
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 1,767,734 $ 233,491 $ 1,583,990 $ 295,156 $ 496,729 $ 136,780
Expenses:
Mortality & expense risk and
administrative charges 431,445 142,644 390,197 132,309 142,347 45,898
------------------------------------------------------------------------------------------------
Net investment income (loss) 1,336,289 90,847 1,193,793 162,847 354,382 90,882
Net realized gain (loss) 357,181 21,224 293,921 30,037 80,885 469
Unrealized appreciation
(depreciation) during the
period (312,708) 738,884 (390,020) 737,354 357,260 236,955
------------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations 1,380,762 850,955 1,097,694 930,238 792,527 328,306
------------------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 15,208,587 17,308,083 13,654,532 16,773,691 5,735,053 4,527,287
Transfers between
sub-accounts and
the Company (657,869) 5,044,274 561,143 3,245,867 414,134 1,713,547
Withdrawals (1,326,866) (220,725) (1,185,813) (366,383) (349,708) (56,284)
Annual contract fee (15,608) (547) (11,425) (440) (3,558) (53)
------------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions 13,208,244 22,131,085 13,018,437 19,652,735 5,795,921 6,184,497
------------------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 14,589,006 22,982,040 14,116,131 20,582,973 6,588,448 6,512,803
Contract owners' equity at
beginning of period 22,982,040 20,582,973 6,512,803
------------------------------------------------------------------------------------------------
Contract owners' equity at end
of period $ 37,571,046 $ 22,982,040 $ 34,699,104 $ 20,582,973 $ 13,101,251 $ 6,512,803
================================================================================================
</TABLE>
See accompanying notes.
13
<PAGE> 99
The Manufacturers Life Insurance Company of New York Separate Account A
Statements of Operations and Changes in Contract Owners' Equity
(continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
-------------------------------------------------------------------------------------
LIFESTYLE SMALL
CONSERVATIVE 280 COMPANY VALUE TOTAL
-------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1998 1997
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income:
Dividends $ 162,598 $ 42,545 $ 512 $ 48,996,371 $ 43,190,322
Expenses:
Mortality & expense risk and
administrative charges 51,871 12,554 22,160 9,885,986 6,675,044
-------------------------------------------------------------------------------------
Net investment income (loss) 110,727 29,991 (21,648) 39,110,385 36,515,278
Net realized gain (loss) 36,948 (8,788) (79,550) 15,473,967 7,541,380
Unrealized appreciation
(depreciation) during the period
179,655 68,075 (98,533) 27,635,813 30,266,422
-------------------------------------------------------------------------------------
Net increase (decrease) in contract
owners' equity from operations 327,330 89,278 (199,731) 82,220,165 74,323,080
-------------------------------------------------------------------------------------
Changes from principal transactions:
Purchase payments 3,398,468 1,530,748 2,148,651 177,231,214 173,507,634
Transfers between sub-accounts
and
the Company 82,618 205,923 991,569 5,486,250 7,509,833
Withdrawals (141,941) (12,896) (62,404) (33,588,834) (19,282,100)
Annual contract fee (1,284) (67) (256) (336,413) (235,638)
-------------------------------------------------------------------------------------
Net increase (decrease) in contract
owners' equity from principal
transactions 3,337,861 1,723,708 3,077,560 148,792,217 161,499,729
-------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 3,665,191 1,812,986 2,877,829 231,012,382 235,822,809
Contract owners' equity at
beginning of period 1,812,986 597,132,334 361,309,525
-------------------------------------------------------------------------------------
Contract owners' equity at end of
period $ 5,478,177 $ 1,812,986 $ 2,877,829 $ 828,144,716 $ 597,132,334
=====================================================================================
</TABLE>
See accompanying notes.
14
<PAGE> 100
The Manufacturers Life Insurance Company of
New York Separate Account A
Notes to Financial Statements
December 31, 1998
1. ORGANIZATION
The Manufacturers Life Insurance Company of New York Separate Account A (the
Account) is a separate account established by The Manufacturers Life Insurance
Company of New York (the Company). The Account operates as a Unit Investment
Trust under the Investment Company Act of 1940, as amended, and invests in
thirty-five sub-accounts of Manufacturers Investment Trust (the Trust). The
Account is a funding vehicle for variable annuity contracts (the Contracts)
issued by the Company. The account includes three contracts, distinguished
principally by the level of expenses and surrender charges. These three
contracts are Venture Variable Annuity 9 (VEN9), Venture Variable Annuity 10
(VEN10) and Vision Variable Annuity 24 (VIS24). The Company is a wholly-owned
subsidiary of The Manufacturers Life Insurance Company of North America (MNA).
MNA is a wholly-owned subsidiary of Manulife Wood Logan Holding Company, Inc.
(MWL). MWL holds all the outstanding shares of MNA and Wood Logan Associates,
Inc. (Wood Logan). The Manufacturers Life Insurance Company (MLI) owns all Class
A shares of MWL, representing 85% of the voting shares of MWL. Certain employees
of Wood Logan own all Class B shares, which represent the remaining 15% voting
interest in MWL.
On December 23, 1997, a new sub-account, Small Company Value, commenced
operations. Although the fund was available to contract owners in 1997, no
investments were made until 1998.
2. SIGNIFICANT ACCOUNTING POLICIES
Investments are made in the portfolios of the Trust and are valued at the
reported net asset value of such portfolios. Transactions are recorded on the
trade date. Income from dividends is recorded on the ex-dividend date. Realized
gains and losses on the sales of investments are computed on the basis of the
identified cost of the investment sold.
In addition to the Account, a contract holder may also allocate funds to the
Fixed Account, which is part of the Company's general account. Because of
exemptive and exclusionary provisions, interests in the Fixed Account have not
been registered under the Securities Act of 1933, and the Company's general
account has not been registered as an investment company under the Investment
Company Act of 1940.
15
<PAGE> 101
The Manufacturers Life Insurance Company of
New York Separate Account A
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The operations of the Account are included in the federal income tax return of
the Company, which is taxed as a life insurance company under the provisions of
the Internal Revenue Code (the Code). Under the current provisions of the Code,
the Company does not expect to incur federal income taxes on the earnings of the
Account to the extent the earnings are credited under the contracts. Based on
this, no charge is being made currently to the Account for federal income taxes.
The Company will review periodically the status of such decision based on
changes in the tax law. Such a charge may be made in future years for any
federal income taxes that would be attributable to the contract.
The preparation of financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Such estimates and assumptions could change in the future as more information
becomes known, which could impact the amounts reported and disclosed herein.
3. AFFILIATED COMPANY TRANSACTIONS
Administrative services necessary for the operation of the Account are performed
by the Company. The Company had an underwriting agreement with its affiliate,
NASL Financial Services, Inc. (NASL Financial). NASL Financial had an agreement
with Wood Logan to promote the sale of annuity contracts. On October 1, 1997,
NASL Financial ceased operations, and certain assets and liabilities of NASL
Financial were contributed to form a new company, Manufacturers Securities
Services LLC (MSS), for a 99.9% ownership interest by MNA. Effective October 1,
1998, MNA contributed 10% of MSS to MNY in accordance with the New York
Insurance Departments approval. MSS has an Administrative Services Agreement
with Wood Logan for marketing services for the sale of annuity contracts.
Certain officers of the Account are officers and directors of the Company or the
Trust.
4. CONTRACT CHARGES
There are no deductions made from purchase payments for sales charges at the
time of purchase. In the event of a surrender, a contingent deferred sales
charge may be made by the Company to cover sales expenses. An annual
administrative fee of $30 is generally deducted from each contract owners'
account on the contract anniversary date to cover contract administration costs.
This charge is waived on certain contracts.
Deductions from each sub-account for the VEN9 and VEN10 contracts are made daily
for administrative fees and for the assumption of mortality and expense risk
charges, equal to an effective annual rate of 0.15% and 1.25% of the contract
value, respectively.
16
<PAGE> 102
The Manufacturers Life Insurance Company of
New York Separate Account A
Notes to Financial Statements (continued)
4. CONTRACT CHARGES (CONTINUED)
Deductions from each sub-account for the VIS24 contracts are made daily for
distribution fees, administration and for the assumption of mortality and
expense risks equal to an effective annual rate of 0.15%, 0.25% and 1.25% of the
contract value, respectively.
5. PURCHASES AND SALES OF INVESTMENTS
The following table shows aggregate cost of shares purchased and proceeds from
sales of each sub-account for the year ended December 31, 1998.
<TABLE>
<CAPTION>
PURCHASES SALES
-------------- ------------
<S> <C> <C>
Equity Portfolio $ 23,819,779 $ 6,033,623
Investment Quality Bond Portfolio 5,800,711 3,019,104
Growth and Income Portfolio 39,366,248 7,057,680
Blue Chip Growth Portfolio 20,470,714 4,382,203
Money Market Portfolio 43,948,037 43,433,307
Global Equity Portfolio 11,983,061 6,364,353
Global Government Bond Portfolio 2,599,399 2,285,708
U.S. Government Securities Portfolio 9,896,611 6,369,000
Conservative Asset Allocation Portfolio 2,312,943 1,164,408
Moderate Asset Allocation Portfolio 4,975,316 3,009,104
Aggressive Asset Allocation Portfolio 2,657,095 1,629,660
Equity-Income Portfolio 18,293,488 7,834,204
Strategic Bond Portfolio 13,646,515 8,626,783
International Growth and Income Portfolio 5,757,906 3,589,322
Growth Portfolio 6,216,076 924,986
Small/Mid Cap Portfolio 11,066,758 5,323,862
International Small Cap Portfolio 4,826,543 3,433,624
Pacific Rim Emerging Markets Portfolio 1,072,136 422,718
Science & Technology Portfolio 9,337,732 1,554,847
Emerging Small Company Portfolio 2,932,042 943,134
Pilgrim Baxter Growth Portfolio 2,000,077 497,034
International Stock Portfolio 1,627,612 620,244
Worldwide Growth Portfolio 1,324,755 467,419
Quantitative Equity Portfolio 2,858,725 264,792
Value Trust Portfolio 5,639,217 950,150
Real Estate Securities Portfolio 2,638,677 928,213
Balanced Portfolio 3,887,472 389,460
High Yield Portfolio 6,019,474 2,055,412
Capital Growth Bond Portfolio 895,462 539,294
Lifestyle Aggressive 1000 Portfolio 3,775,713 1,042,052
Lifestyle Growth 820 Portfolio 19,028,183 4,507,852
Lifestyle Balanced 640 Portfolio 17,914,385 3,728,248
Lifestyle Moderate 460 Portfolio 7,450,467 1,308,674
Lifestyle Conservative 280 Portfolio 4,110,136 663,311
Small Company Value Portfolio 3,556,043 500,131
------------ ------------
Total $323,705,508 $135,863,916
============ ============
</TABLE>
17
<PAGE> 103
The Manufacturers Life Insurance Company of
New York Separate Account A
Notes to Financial Statements (continued)
6. UNIT VALUES
A summary of the accumulation unit values at December 31, 1998 and 1997 and the
accumulation units and dollar value outstanding at December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
1997 1998
---------------- -----------------------------------------------
UNIT UNIT
VALUE VALUE UNITS DOLLARS
---------------- -----------------------------------------------
<S> <C> <C> <C> <C>
Equity Sub-Account:
Ven 9 and Ven 10 Contracts $ 29.002593 $ 31.289551 2,769,528 $ 86,657,274
Vis 24 Contracts -- 22.973151 449 10,305
----------------------------
2,769,977 86,667,579
Investment Quality Bond Sub-Account:
Ven 9 and Ven 10 Contracts 18.336912 19.660365 564,212 11,092,607
Growth and Income Sub-Account:
Ven 9 and Ven 10 Contracts 26.431239 32.976967 4,327,968 142,723,255
Vis 24 Contracts -- 26.056725 770 20,054
----------------------------
4,328,738 142,743,309
Blue-Chip Growth Sub-Account:
Ven 9 and Ven 10 Contracts 17.134232 21.710674 3,184,929 69,146,961
Vis 24 Contracts -- 22.573222 451 10,171
----------------------------
3,185,380 69,157,132
Money Market Sub-Account:
Ven 9 and Ven 10 Contracts 15.241915 15.794513 1,721,494 27,190,158
Global Equity Sub-Account:
Ven 9 and Ven 10 Contracts 21.770913 24.098970 2,205,244 53,144,115
Vis 24 Contracts -- 18.706100 1,354 25,320
----------------------------
2,206,598 53,169,435
Global Government Bond Sub-Account:
Ven 9 and Ven 10 Contracts 20.104158 21.333144 411,434 8,777,173
U.S. Government Securities Sub-Account
Ven 9 and Ven 10 Contracts 17.535478 18.587049 990,184 18,404,605
Vis 24 Contracts -- 12.999698 773 10,042
----------------------------
990,957 18,414,647
</TABLE>
18
<PAGE> 104
The Manufacturers Life Insurance Company of
New York Separate Account A
Notes to Financial Statements (continued)
6. UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
1997 1998
-------------- -----------------------------------------------
UNIT UNIT
VALUE VALUE UNITS DOLLARS
-------------- -----------------------------------------------
<S> <C> <C> <C> <C>
Conservative Asset Allocation Sub-Account:
Ven 9 and Ven 10 Contracts $16.607511 $18.125951 439,785 $ 7,971,518
Moderate Asset Allocation Sub-Account:
Ven 9 and Ven 10 Contracts 18.276161 20.742457 1,300,435 26,974,223
Aggressive Asset Allocation Sub-Account:
Ven 9 and Ven 10 Contracts 19.614359 23.040505 594,195 13,690,557
Equity-Income Sub-Account:
Ven 9 and Ven 10 Contracts 20.479412 22.054902 4,109,129 90,626,430
Vis 24 Contracts - 20.794388 484 10,072
--------------------------
4,109,613 90,636,502
Strategic Bond Sub-Account:
Ven 9 and Ven 10 Contracts 14.500997 14.486687 2,481,444 35,947,898
Vis 24 Contracts - 14.243718 2,111 30,064
-------------------------
2,483,555 35,977,962
International Growth and Income Sub-Account:
Ven 9 and Ven 10 Contracts 11.545714 12.290162 1,517,774 18,653,686
Growth Sub-Account:
Ven 9 and Ven 10 Contracts 16.968111 20.739989 694,842 14,411,010
Small/Mid-Cap Sub-Account:
Ven 9 and Ven 10 Contracts 15.020670 19.002856 1,574,135 29,913,059
International Small-Cap Sub-Account:
Ven 9 and Ven 10 Contracts 13.410016 14.792077 605,535 8,957,122
Pacific Rim Emerging Markets Sub-Account:
Ven 9 and Ven 10 Contracts 8.180904 7.695249 137,389 1,057,240
</TABLE>
19
<PAGE> 105
The Manufacturers Life Insurance Company of
New York Separate Account A
Notes to Financial Statements (continued)
6. UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
1997 1998
-------------- -----------------------------------------------
UNIT UNIT
VALUE VALUE UNITS DOLLARS
-------------- -----------------------------------------------
<S> <C> <C> <C> <C>
Science & Technology Sub-Account:
Ven 9 and Ven 10 Contracts $13.647195 $19.287390 932,323 $17,982,083
Emerging Small Company Sub-Account:
Ven 9 and Ven 10 Contracts 14.574077 14.381705 346,295 4,980,306
Pilgrim Baxter Growth Sub-Account
Ven 9 and Ven 10 Contracts 12.327066 12.680777 319,349 4,049,596
International Stock Sub-Account:
Ven 9 and Ven 10 Contracts 12.652231 14.337171 203,765 2,921,418
Worldwide Growth Sub-Account:
Ven 9 and Ven 10 Contracts 13.965674 14.936768 172,113 $2,570,809
Quantitative Equity Sub-Account:
Ven 9 and Ven 10 Contracts 16.107191 20.068624 242,026 4,857,136
Value Trust Sub-Account:
Ven 9 and Ven 10 Contracts 15.057118 14.591878 557,130 8,129,567
Real Estate Securities Sub-Account:
Ven 9 and Ven 10 Contracts 14.949140 12.317190 251,204 3,094,124
Balanced Sub-Account:
Ven 9 and Ven 10 Contracts 14.609853 16.459454 267,045 4,395,407
High-Yield Sub-Account:
Ven 9 and Ven 10 Contracts 13.890491 14.078376 531,010 7,475,764
Vis 24 Contracts - 14.008370 1,070 14,990
------------------------
532,080 7,490,754
Capital Growth Bond Sub-Account:
Ven 9 and Ven 10 Contracts 13.475788 14.344530 55,460 795,551
Lifestyle Aggressive 1000 Sub-Account:
Ven 9 and Ven 10 Contracts 13.669625 14.134419 544,461 7,695,639
Lifestyle Growth 820 Sub-Account:
Ven 9 and Ven 10 Contracts 14.033299 14.696667 2,556,433 37,571,046
</TABLE>
20
<PAGE> 106
The Manufacturers Life Insurance Company of
New York Separate Account A
Notes to Financial Statements (continued)
6. UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
1997 1998
-------------- -------------------------------------------------
UNIT UNIT
VALUE VALUE UNITS DOLLARS
-------------- -------------------------------------------------
<S> <C> <C> <C> <C>
Lifestyle Balanced 640 Sub-Account:
Ven 9 and Ven 10 Contracts $14.066417 $14.664362 2,366,220 $ 34,699,104
Lifestyle Moderate 460 Sub-Account:
Ven 9 and Ven 10 Contracts 14.016704 15.171965 863,517 13,101,251
Lifestyle Conservative 280 Sub-Account:
Ven 9 and Ven 10 Contracts 13.825120 15.025549 364,591 5,478,177
Small Company Value Sub-Account:
Ven 9 and Ven 10 Contracts 11.178700 257,439 2,877,829
------------
Total Contract Owners' Equity $828,144,716
============
</TABLE>
7. DIVERSIFICATION REQUIREMENTS
Under the provisions of Section 817(h) of the Internal Revenue Code, a variable
annuity contract other than a contract issued in connection with certain types
of employee benefits plans, will not be treated as an annuity contract for
federal tax purposes for any period for which the investments of the segregated
asset account on which the contract is based are not adequately diversified. The
Code provides that the "adequately diversified" requirement may be met if the
underlying investments satisfy either a statutory safe harbor test or
diversification requirements set forth in regulations issued by the Secretary of
Treasury.
The Internal Revenue Service has issued regulations under Section 817(h) of the
Code. The Company believes that the Account satisfies the current requirements
of the regulations, and it intends that the Account will continue to meet such
requirements.
8. YEAR 2000 ISSUES (UNAUDITED)
The Year 2000 risk is the result of computer programs being written using two
digits, rather than four, to define the applicable year. Any of the Company's
Computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. The effects of the Year 2000
risk may be experienced before, on, or after January 1, 2000 and, if not
addressed, could result in systems failures or miscalculations causing
disruptions of normal business operations. It is not possible to be certain that
the Company's Year 2000 program will fully resolve all aspects of the Year 2000
risk, including those related to third parties.
21
<PAGE> 107
AUDITED FINANCIAL STATEMENTS
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
Years ended December 31, 1998, 1997 and 1996
<PAGE> 108
The Manufacturers Life Insurance Company of New York
Audited Financial Statements
Years ended December 31, 1998, 1997 and 1996
CONTENTS
Report of Independent Auditors................................................1
Audited Financial Statements
Balance Sheets................................................................2
Statements of Income..........................................................3
Statements of Changes in Shareholder's Equity.................................4
Statements of Cash Flows......................................................5
Notes to Financial Statements.................................................6
<PAGE> 109
Report of Independent Auditors
The Board of Directors and Shareholder
The Manufacturers Life Insurance Company of New York
We have audited the accompanying balance sheets of The Manufacturers Life
Insurance Company of New York (formerly First North American Life Assurance
Company and hereinafter referred to as the Company) as of December 31, 1998 and
1997, and the related statements of income, changes in shareholder's equity, and
cash flows for each of the three years in the period ended December 31, 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Manufacturers Life
Insurance Company of New York at December 31, 1998 and 1997, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
February 22, 1999
1
<PAGE> 110
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
BALANCE SHEETS
<TABLE>
<CAPTION>
As at December 31
ASSETS ($ thousands) 1998 1997
- --------------------------------------------------------------------------------------------------------------------
Investments
Fixed maturity securities available-for-sale, at fair value
<S> <C> <C>
(note 3) $ 125,088 $ 129,151
(amortized cost: 1998 $120,902; 1997 $126,714)
Investment in unconsolidated affiliate 175 -
Policy loans 552 398
Short-term investments 10,032 9,998
- --------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS $ 135,847 $ 139,547
- --------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents $ 5,946 $ 1,431
Accrued investment income 3,073 2,401
Deferred acquisition costs (note 4) 36,831 28,364
Other assets 1,834 231
Separate account assets 833,693 597,193
- --------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 1,017,224 $ 769,167
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDER'S EQUITY ($ thousands)
- --------------------------------------------------------------------------------------------------------------------
Liabilities:
Policyholder liabilities and accruals $ 94,492 $ 86,611
Payable to affiliates 4,114 4,345
Deferred income taxes (note 5) 3,615 2,269
Other liabilities 1,943 987
Separate account liabilities 833,693 597,193
- --------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 937,857 $ 691,405
- --------------------------------------------------------------------------------------------------------------------
Shareholder's equity:
Common stock (note 6) $ 2,000 $ 2,000
Additional paid-in capital 72,706 72,531
Retained earnings 3,209 2,136
Accumulated other comprehensive income 1,452 1,095
- --------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDER'S EQUITY $ 79,367 $ 77,762
- --------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 1,017,224 $ 769,167
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes
2
<PAGE> 111
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the years ended December 31
($ thousands) 1998 1997 1996
- --------------------------------------------------------------- ------------------- ---------------- ----------------
REVENUES:
<S> <C> <C> <C>
Fees from separate accounts and policyholder liabilities $ 10,961 $ 7,395 $ 4,762
Net investment income (note 3) 9,786 6,717 5,224
Net realized investment gains 713 769 89
- --------------------------------------------------------------- ------------------- ---------------- ----------------
TOTAL REVENUE $ 21,460 $ 14,881 $ 10,075
- --------------------------------------------------------------- ------------------- ---------------- ----------------
BENEFITS AND EXPENSES:
Policyholder benefits and claims $ 4,603 $ 4,747 $ 4,189
Amortization of deferred acquisition costs (note 4) 4,849 3,393 2,319
Other insurance expenses 10,359 5,845 1,192
- --------------------------------------------------------------- ------------------- ---------------- ----------------
TOTAL BENEFITS AND EXPENSES $ 19,811 $ 13,985 $ 7,700
- --------------------------------------------------------------- ------------------- ---------------- ----------------
INCOME BEFORE INCOME TAXES $ 1,649 $ 896 $ 2,375
- --------------------------------------------------------------- ------------------- ---------------- ----------------
INCOME TAXES (note 5) $ 576 $ 310 $ 833
- --------------------------------------------------------------- ------------------- ---------------- ----------------
NET INCOME $ 1,073 $ 586 $ 1,542
- --------------------------------------------------------------- ------------------- ---------------- ----------------
</TABLE>
See accompanying notes.
3
<PAGE> 112
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
Accumulated
Other Total
Common Additional Retained Comprehensive Shareholder's
($ thousands) Stock Paid-in Capital Earnings Income Equity
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1996 $2,000 $ 11,500 $ 8 $ 1,704 $ 15,212
Capital contribution 13,300 13,300
Comprehensive income (note 2) 1,542 (1,285) 257
-------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1996 $2,000 $ 24,800 $ 1,550 $ 419 $ 28,769
Capital contribution 47,731 47,731
Comprehensive income (note 2) 586 676 1,262
-------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997 $2,000 $ 72,531 $ 2,136 $ 1,095 $ 77,762
Capital contribution 175 175
Comprehensive income (note 2) 1,073 357 1,430
-------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 $2,000 $ 72,706 $ 3,209 $ 1,452 $ 79,367
-------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
4
<PAGE> 113
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the years ended December 31
($ thousands) 1998 1997 1996
- ---------------------------------------------------------------------------- --------------- ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,073 $ 586 $ 1,542
Adjustments to reconcile net income to net cash (used in) provided by
operating activities:
Amortization of bond discount and premium 434 333 141
Net realized investment gains (713) (769) (89)
Provision for deferred income tax 1,153 (29) 220
Amortization of deferred acquisition costs 4,849 3,393 2,319
Policy acquisition costs deferred (14,515) (11,684) (7,224)
Return credited to policyholders and other benefits 4,603 4,747 4,189
Changes in assets and liabilities:
Accrued investment income (672) (873) (7)
Other assets (1,603) (80) 196
Payable to affiliates (231) 2,328 865
Other liabilities 956 115 (153)
- ---------------------------------------------------------------------------- --------------- ------------ ------------
Net cash (used in) provided by operating activities $ (4,666) $ (1,933) $ 1,999
- ---------------------------------------------------------------------------- --------------- ------------ ------------
INVESTING ACTIVITIES:
Fixed maturity securities sold, matured or repaid $ 30,591 $ 59,307 $ 31,659
Fixed maturity securities purchased (24,500) (103,383) (41,409)
Net change in short-term investments (34) (6,011) (3,985)
Policy loans advanced, net (154) (215) (116)
- ---------------------------------------------------------------------------- --------------- ------------ ------------
Cash provided by (used in) investing activities $ 5,903 $ (50,302) $ (13,851)
- ---------------------------------------------------------------------------- --------------- ------------ ------------
FINANCING ACTIVITIES:
Deposits and interest credited to policyholder funds 14,212 17,212 18,408
Return of policyholder funds (10,934) (15,382) (24,676)
Change in notes payable - - (2,000)
Capital contribution by parent - 47,731 13,300
- ---------------------------------------------------------------------------- --------------- ------------ ------------
CASH PROVIDED BY FINANCING ACTIVITIES $ 3,278 $ 49,561 $ 5,032
- ---------------------------------------------------------------------------- --------------- ------------ ------------
Cash and cash equivalents:
Increase (decrease) during the year 4,515 (2,674) (6,820)
Balance, beginning of year 1,431 4,105 10,925
- ---------------------------------------------------------------------------- --------------- ------------ ------------
BALANCE, END OF YEAR $ 5,946 $ 1,431 $ 4,105
- ---------------------------------------------------------------------------- --------------- ------------ ------------
</TABLE>
See accompanying notes
5
<PAGE> 114
The Manufacturers Life Insurance Company of New York
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
(In Thousands of Dollars)
1. ORGANIZATION
The Manufacturers Life Insurance Company of New York (First North
American Life Assurance Company prior to October 1, 1997, and
hereinafter referred to as "the Company"), is a stock life insurance
company which was organized on February 10, 1992 under the laws of the
State of New York. The New York Insurance Department ("the Department")
granted the Company a license to operate on July 22, 1992. The Company
is a wholly-owned subsidiary of The Manufacturers Life Insurance
Company of North America (formerly North American Security Life
Insurance Company and hereinafter referred to as "MNA"), which is in
turn a wholly-owned subsidiary of Manulife-Wood Logan Holding Co., Inc.
("MWL"). MWL is 62.5% owned by The Manufacturers Life Insurance Company
(USA) (ManUSA), 22.5% by MRL Holding, LLC, ("MRL") and 15% by minority
interest shareholders. ManUSA and MRL are indirectly wholly-owned
subsidiaries of The Manufacturers Life Insurance Company ("Manulife
Financial"), a federally chartered Canadian mutual life insurance
company.
The Company issues individual and group annuity and individual life
insurance contracts (collectively, the contracts) in the State of New
York. Amounts invested in the fixed portion of the contracts are
allocated to the general account or a non-insulated separate account of
the Company. Amounts invested in the variable portion of the contracts
are allocated to the separate accounts of the Company. Each of these
separate accounts invests in shares of the various portfolios of the
Manufacturers Investment Trust (formerly NASL Series Trust and
hereinafter referred to as "MIT"), a no-load, open-end investment
management company organized as a Massachusetts business trust, or in
open-end investment management companies offered and managed by
unaffiliated third parties.
Prior to October 1, 1997, the Company sold and administered only
combination fixed and variable annuity products. On October 21, 1997,
the Company received approval from the Department for a revised plan of
operations which expanded its product offerings. MNA contributed
$47,731 to the Company in support of the revised plan of operations.
Prior to October 1, 1997, NASL Financial Services Inc. ("NASL
Financial"), an affiliate of the Company, acted as investment adviser
to MIT and as principal underwriter of the annuity contracts issued by
the Company. Effective October 1, 1997, Manufacturers Securities
Services, LLC ("MSS"), the successor to NASL Financial and an affiliate
of the Company, replaced NASL Financial as the investment advisor to
MIT and as the principal underwriter for the variable contracts and
exclusive distributor of all contracts issued by the Company.
6
<PAGE> 115
1. ORGANIZATION (CONTINUED)
Prior to October 1, 1997, Wood Logan Associates Inc. ("WLA"), a
subsidiary of MWL, acted as the promotional agent for the sale of the
Company's contracts. Since October 1, 1997, marketing services for the
sale of all contracts issued by the Company and other services are
provided by certain affiliates of the Company pursuant to an
Administrative Services Agreement and an Investment Services Agreement
between the Company and Manulife Financial. Currently, services are
provided by Manulife Financial, WLA, MNA, and ManUSA.
On October 31, 1998, the Company received a 10% interest in the
members' equity of MSS from MNA, the managing member of MSS. The
Company treated the receipt of its equity interest as a contribution to
paid-in capital of $175.
2. SIGNIFICANT ACCOUNTING POLICIES
a) BASIS OF PRESENTATION
The accompanying financial statements of the Company have been prepared
in conformity with generally accepted accounting principles ("GAAP").
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes.
Actual results could differ from reported results using those
estimates.
b) RECENT ACCOUNTING STANDARDS
i) During 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for reporting and
displaying comprehensive income and its components in a full set
of general-purpose annual financial statements. Comprehensive
income includes all changes in shareholder's equity during a
period except those resulting from investments by and
distributions to shareholders. The adoption of SFAS No. 130
resulted in revised and additional disclosures but had no effect
on the financial position, results of operations, or liquidity of
the Company.
7
<PAGE> 116
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Total comprehensive income was as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1998 1997 1996
---------------------------------------------------------------- -------------- ------------ -------------
<S> <C> <C> <C>
NET INCOME $ 1,073 $ 586 $ 1,542
---------------------------------------------------------------- -------------- ------------ -------------
Other comprehensive income, net of tax:
Unrealized holding gains (losses) arising during the year 820 1,176 (1,227)
Less:
Reclassification adjustment for realized gains included in
net Income 463 500 58
---------------------------------------------------------------- -------------- ------------ -------------
Other comprehensive income (loss) 357 676 (1,285)
---------------------------------------------------------------- -------------- ------------ -------------
COMPREHENSIVE INCOME $ 1,430 $ 1,262 $ 257
---------------------------------------------------------------- -------------- ------------ -------------
</TABLE>
Other comprehensive income (loss) is reported net of taxes of $192,
$364, and ($692) for 1998, 1997, and 1996, respectively.
ii) During 1998, the Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS No. 131
establishes standards for the disclosure of information about the
Company's operating segments, including disclosures about products
and services, geographic areas, and major customers. The adoption
of SFAS No. 131 did not affect results of operations or financial
position, nor did it affect the manner in which the Company defines
its operating segments. The Company reports three business segments:
Annuities, Savings and Retirement Services, and Life Insurance. The
Annuities segment consists of annuity contracts that provide the
customer with the opportunity to invest in mutual funds managed by
independent investment managers and the Company or in the general
account of the Company, with investment returns accumulating on a
tax-deferred basis. The Savings and Retirement Services segment
offers 401(k) products to customers in the State of New York. The
Individual Life Insurance segment offers traditional non-
participating life insurance to the New York market. The Savings
and Retirement Services segment was launched in mid - 1998 and
the Individual Life Insurance segment was launched in late 1997.
Both these segments are considered to be in the start-up phase.
No significant assets or revenues have been generated to date in
these two segments. Start-up costs, on a pre-tax basis, reported
for these two segments totaled approximately $534 and $2,399,
respectively in 1998 and $1,551 for the Individual Life Insurance
segment in 1997. The following is a summary of the contribution
to net income of the three business segments:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1998 1997 1996
-------------------------------------------------------- ----------------- --------------- ---------------
<S> <C> <C> <C>
Annuities $ 2,623 $ 1,594 $ 1,542
Savings and Retirement Services - -
(318)
Life Insurance (1,008) -
(1,232)
-------------------------------------------------------- ----------------- --------------- ---------------
NET INCOME (LOSS) $ 1,073 $ 586 $ 1,542
-------------------------------------------------------- ----------------- --------------- ---------------
</TABLE>
8
<PAGE> 117
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
c) INVESTMENTS
The Company classifies all of its fixed maturity securities as
available-for-sale and records these securities at fair value. Realized
gains and losses on sales of securities classified as
available-for-sale are recognized in net income using the specific
identification method. Changes in the fair value of securities
available-for-sale are reflected directly in accumulated other
comprehensive income after adjustments for deferred taxes and deferred
acquisition costs. Discounts and premiums on investments are amortized
using the effective interest method.
The cost of fixed maturity securities is adjusted for the amortization
of premiums and accretion of discounts using the interest method. This
amortization or accretion is included in net investment income.
For the mortgage-backed bond portion of the fixed maturity securities
portfolio, the Company recognizes amortization using a constant
effective yield based on anticipated prepayments and the estimated
economic life of the securities. When actual prepayments differ
significantly from anticipated prepayments, the effective yield is
recalculated to reflect actual payments to date and anticipated future
payments. The net investment in the security is adjusted to the amount
that would have existed had the new effective yield been applied since
the acquisition of the security. That adjustment is included in net
investment income.
Policy loans are reported at aggregate unpaid balances which
approximate fair value.
Short-term investments which include investments with maturities of
less than one year and greater than 90 days at the date of acquisition,
are reported at amortized cost which approximates fair value.
d) CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with
an original maturity date of three months or less to be cash
equivalents. Cash equivalents are stated at cost plus accrued interest,
which approximates fair value.
9
<PAGE> 118
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
e) DEFERRED ACQUISITION COSTS (DAC)
Commissions and other expenses which vary with and are primarily
related to the production of new business are deferred to the extent
recoverable and included as an asset. Acquisition costs associated with
annuity contracts and investment pension contracts are being amortized
generally in proportion to the present value of expected gross profits
from surrender charges and investment, mortality and expense margins.
The amortization is adjusted retrospectively when estimates of current
or future gross profits are revised. DAC associated with traditional
non-participating individual insurance policies is charged to expense
over the premium paying period of the related policies. DAC is adjusted
for the impact on estimated future gross profits assuming the
unrealized gains or losses on securities had been realized at year-end.
The impact of any such adjustments is included in net unrealized gains
(losses) in accumulated other comprehensive income. DAC is reviewed
annually to determine recoverability from future income and, if not
recoverable, it is immediately expensed.
f) POLICYHOLDER LIABILITIES AND ACCRUALS
Policyholder liabilities equal the policyholder account value for the
fixed portion of annuity contracts and for investment pension contracts
with no substantial mortality risk. Account values are increased for
deposits received and interest credited and are reduced by withdrawals.
For traditional non-participating life insurance policies, policyholder
liabilities are computed using the net level premium method and are
based upon estimates as to future mortality, persistency, maintenance
expenses and interest rate yields that are applicable in the year of
issue. The assumptions include a provision for the risk of adverse
deviation.
g) SEPARATE ACCOUNTS
Separate account assets and liabilities that are reported in the
accompanying balance sheets represent investments in MIT, which are
mutual funds that are separately administered for the exclusive benefit
of the policyholders of the Company and its affiliates, or open-end
investment management companies offered and managed by unaffiliated
third parties, which are mutual funds that are separately administered
for the benefit of the Company's policyholders and other shareholders.
These assets and liabilities are reported at fair value. The
policyholders, rather than the Company, bear the investment risk. The
operations of the separate accounts are not included in the
accompanying financial statements. Fees charged on separate account
policyholder funds are included in revenues.
10
<PAGE> 119
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
h) REVENUE RECOGNITION
Fee income from separate accounts, annuity contracts and investment
pension contracts consists of charges for mortality, expenses and
surrender and administration charges that have been assessed against
the policyholder account balances. Premiums on traditional
non-participating life insurance policies are recognized as revenue
when due and currently are included in Fees from Separate Accounts and
Policyholder Liabilities in the statements of income. Investment income
is recorded as revenue when due.
i) POLICYHOLDER BENEFITS AND CLAIMS
Benefits for annuity contracts and investment pension contracts include
interest credited to policyholder account balances and benefit claims
incurred during the period in excess of policyholder account balances.
j) INCOME TAXES
Income taxes have been provided using the liability method in
accordance with SFAS No. 109, "Accounting for Income Taxes." Under this
method, deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that
likely will be in effect when the differences are expected to reverse.
The measurement of deferred tax assets is reduced by a valuation
allowance if, based upon the available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized.
3. INVESTMENTS AND INVESTMENT INCOME
a) FIXED MATURITY SECURITIES
At December 31, 1998 and 1997, all fixed maturity securities have been
classified as available-for-sale and reported at fair value. The
amortized cost and fair value are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED COST UNREALIZED UNREALIZED FAIR VALUE
AS AT DECEMBER 31, GAINS LOSSES
($ thousands) 1998 1997 1998 1997 1998 1997 1998 1997
------------------------------- ----------- ---------- -------- ------- ------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. government $ 11,018 $ 7,422 $ 591 $ 284 ($15) $ $ 11,594 $ 7,706
-
Corporate securities 99,696 108,682 3,321 1,879 (35) (23) 102,982 110,538
Mortgage-backed securities 6,680 5,016 125 69 (21) - 6,784 5,085
Foreign governments 2,449 - 111 - - - 2,560 -
States/political subdivisions 1,059 5,594 109 228 - - 1,168 5,822
------------------------------- ----------- ---------- -------- ------- ------- ------- ---------- ---------
Total fixed maturity securities $ 120,902 $126,714 $ 4,257 $2,460 ($71) ($23) $ 125,088 $129,151
------------------------------- ----------- ---------- -------- ------- ------- ------- ---------- ---------
</TABLE>
11
<PAGE> 120
3. INVESTMENTS AND INVESTMENT INCOME (CONTINUED)
Proceeds from sales of fixed maturity securities during 1998 were
$17,985 (1997 $45,217; 1996 $6,559). Gross gains of $715 and gross
losses of $2 were realized on those sales (1997 $772 and $6; 1996 $91
and $2 respectively).
The contractual maturities of fixed maturity securities at December 31,
1998 are shown below. Expected maturities may differ from contractual
maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties. Corporate
requirements and investment strategies may result in the sale of
investments before maturity.
<TABLE>
<CAPTION>
($ thousands) AMORTIZED COST FAIR VALUE
-----------------------------------------------------------------------------------------------------------
FIXED MATURITY SECURITIES
<S> <C> <C>
One year or less $ 13,083 $13,117
Greater than 1; up to 5 years 61,861 63,525
Greater than 5; up to 10 years 21,812 22,807
Due after 10 years 17,466 18,855
Mortgage-backed securities 6,680 6,784
-----------------------------------------------------------------------------------------------------------
TOTAL FIXED MATURITY SECURITIES $120,902 $125,088
-----------------------------------------------------------------------------------------------------------
</TABLE>
Fixed maturity securities with a fair value of $410 and $414 at December
31, 1998 and 1997, respectively, were on deposit with, or in custody
accounts on behalf of, New York State Insurance Department to satisfy
regulatory requirements.
b) Investment Income
Income by type of investment was as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1998 1997 1996
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturity securities $8,338 $ 6,343 $4,476
Other invested assets 830
Short-term investments 762 477 873
-----------------------------------------------------------------------------------------------------------
Gross investment income 9,930 6,819 5,349
-----------------------------------------------------------------------------------------------------------
Investment expenses (144) (102) (125)
-----------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $9,786 $ 6,717 $5,224
-----------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 121
4. DEFERRED ACQUISITION COSTS
The components of the change in DAC were as follows:
FOR THE YEARS ENDED DECEMBER 31
<TABLE>
<CAPTION>
($ thousands) 1998 1997 1996
----------------------------------------------- -------------------- ------------------- ------------------
<S> <C> <C> <C>
Balance at January 1, $ 28,364 $ 20,208 $ 15,919
Capitalization 14,515 11,684 7,224
Amortization (4,849) (3,393) (2,319)
Effect of net unrealized gains
on securities available for sale (1,199) (135) (616)
----------------------------------------------- -------------------- ------------------- ------------------
BALANCE AT DECEMBER 31 $ 36,831 $ 28,364 $ 20,208
----------------------------------------------- -------------------- ------------------- ------------------
</TABLE>
To date, the DAC balance is primarily attributable to the Annuities
segment.
5. INCOME TAXES
The components of income tax expense were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1998 1997 1996
----------------------------------------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Current expense (benefit) $ (577) $339 $613
Deferred expense (benefit) 1,153 (29) 220
----------------------------------------------------- ----------------- ----------------- -----------------
TOTAL EXPENSE $ 576 $310 $833
----------------------------------------------------- ----------------- ----------------- -----------------
</TABLE>
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's net deferred tax
liability are as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
AS AT DECEMBER 31
($ thousands) 1998 1997
-----------------------------------------------------------------------------------------------------------
DEFERRED TAX ASSETS:
<S> <C> <C>
Asset reserves $ 389 $ 92
-----------------------------------------------------------------------------------------------------------
Total deferred tax assets 389 92
-----------------------------------------------------------------------------------------------------------
DEFERRED TAX LIABILITIES:
Deferred acquisition costs (2,203) (1,135)
Reserves (4)
Unrealized gains on securities available-for-sale (784) (589)
Other (1,017) (633)
-----------------------------------------------------------------------------------------------------------
Total deferred tax liabilities (4,004) (2,361)
-----------------------------------------------------------------------------------------------------------
NET DEFERRED TAX LIABILITY $ (3,615) $ (2,269)
-----------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 122
5. INCOME TAXES (CONTINUED)
The Company participates as a member of the MWL affiliated group,
filing a consolidated federal income tax return. The Company files a
separate New York State return.
The method of allocation between the companies is subject to a tax
sharing agreement under which the tax liability is allocated to each
member of the group on a pro-rata basis based on the relationship that
the member's tax liability (computed on a separate return basis) bears
to the tax liability of the consolidated group. The tax charge to the
Company will not be more than the Company would have paid on a separate
return basis. Settlement of taxes are made through an increase or
reduction to the payable to parent, subsidiaries and affiliates which
is settled periodically.
The Company made estimated tax payments of $1,121 in 1998 and $531 and
$0 in 1997 and 1996, respectively.
6. Shareholder's Equity
The Company has one class of common stock:
<TABLE>
<CAPTION>
AS AT DECEMBER 31:
($ thousands) 1998 1997
--------------------------------------------------------------------- ------------------- -----------------
Authorized, issued and outstanding:
<S> <C> <C> <C>
2,000,000 Common shares, Par value $1 $2,000 $2,000
--------------------------------------------------------------------- ------------------- -----------------
</TABLE>
The net assets of the Company available for the Parent as dividends are
generally limited to and cannot be made except from earned
statutory-basis profits. The maximum amount of dividends that may be
paid by life insurance companies without prior approval of the New York
Insurance Commissioner is subject to restrictions relating to statutory
surplus and net gain from operations on a statutory basis.
The aggregate statutory capital and surplus of the Company at December
31, 1998 was $62,881 (1997 $68,336). The aggregate statutory net income
(loss) of the Company for the year ended 1998 was ($5,678) (1997
($1,562); 1996 $231). State regulatory authorities prescribe statutory
accounting practices that differ in certain respects from generally
accepted accounting principles followed by stock life insurance
companies. The significant differences relate to investments, deferred
acquisition costs, deferred income taxes, non-admitted asset balances
and reserves.
14
<PAGE> 123
7. REINSURANCE
The Company has entered into reinsurance agreements with various
reinsurers to reinsure any face amounts in excess of $100 for its
traditional non-participating insurance products. The Company remains
liable for amounts ceded in the event that reinsurers do not meet their
obligations. To date, there have been no reinsurance recoveries under
these agreements.
8. RELATED-PARTY TRANSACTIONS
The Company utilizes various services administered by Manulife
Financial and affiliates such as legal, personnel, investment
accounting and other corporate services. Prior to October 1, 1997,
Manulife Financial and MNA charged the Company for those services. In
the first nine months of 1997 and for the full year 1996, Manulife
Financial and MNA charged the Company approximately $623 and $661,
respectively. Effective October 1, 1997, pursuant to a revised plan of
operations, all intercompany expenses were billed through Manulife
Financial. For the year ended December 31, 1998 and for the fourth
quarter of 1997, Manulife Financial billed the Company expenses of
$4,685 and $869, respectively. At December 31, 1998 and 1997, the
Company had a net liability to Manulife Financial of $2,372 and $2,977,
respectively, for those services.
For the nine months ended September 30, 1997 and for the full year
1996, the Company paid underwriting commissions to NASL Financial of
$8,421 and $7,050, respectively. NASL Financial then reimbursed WLA for
promotional agent services. Effective October 1, 1997, MSS replaced
NASL Financial as underwriter. Thereafter, all commissions were paid to
MSS by the Company, and WLA marketing services expenses were paid by
Manulife Financial who was then reimbursed by the Company. Underwriting
commissions and marketing services expense of $17,838 and $4,431,
respectively, were incurred during the year ended December 31, 1998 and
the fourth quarter of 1997. At December 31, 1998 and 1997, the Company
had a net liability of $799 and $1,368, respectively, for these
services.
The financial statements have been prepared from the records maintained
by the Company and may not necessarily be indicative of the financial
conditions or results of operations that would have occurred if the
Company had been operated as an unaffiliated corporation (see also
Notes 1, 5, 10 and 13 for additional related-party transactions).
9. BORROWED MONEY
The Company has an unsecured line of credit with State Street Bank and
Trust in the amount of $5,000, bearing interest at the bank's money
market rate plus 50 basis points. There were no outstanding
advancements under the line of credit at December 31, 1998 and 1997.
15
<PAGE> 124
10. EMPLOYEE BENEFITS
a) RETIREMENT PLAN
Prior to July 1, 1998, the Company and MNA participated in a
non-contributory defined benefit pension plan (the " Nalaco Plan")
sponsored by Manulife Financial, covering its employees. A similar plan
(the "Manulife Plan") also existed for ManUSA. Both plans provided
pension benefits based on length of service and final average earnings.
Vested benefits are fully funded; current pension costs are funded as
they accrue.
Effective July 1, 1998, the Nalaco Plan was merged into the Manulife
Plan as approved by the Board of Directors of Manulife Financial. The
merged plan was then restated as a cash balance pension plan entitled,
"The Manulife Financial U.S. Cash Balance Pension Plan" ("Cash Balance
Plan"). Participants in the two prior plans ceased accruing benefits
under the old plan effective June 30, 1998, and became participants in
the Cash Balance Plan on July 1, 1998. Also effective July 1, ManUSA
became the sponsor of the Cash Balance Plan. Each participant who was a
participant in one of the prior plans received an opening account
balance equal to the present value of their June 30, 1998 accrued
benefit under the prior plan, using Pension Benefit Guaranty
Corporation rates. Future contribution credits under the Cash Balance
Plan vary by service, and interest credits are a function of interest
rate levels. Pension benefits are provided to participants after three
years of vesting service, and the normal retirement benefit is
actuarially equivalent to the cash balance account at normal retirement
date. The normal form of payment under the Cash Balance Plan is a life
annuity with various optional forms available.
Actuarial valuation of accumulated plan benefits are based on projected
salaries and best estimates of investment yields on plan assets,
mortality of participants, employee termination and ages at retirement.
Pension costs relating to current service and amortization of
experience gains and losses are amortized to income over the estimated
average remaining service lives of the participants. No pension expense
was recognized by the sponsor in 1998, 1997, or 1996 because the plan
was subject to the full funding limitation under the Internal Revenue
Code.
At December 31, 1998, the projected benefit obligation based on an
assumed interest rate of 6.5% was $51,757. The fair value of plan
assets invested in ManUSA's general fund deposit administration
insurance contracts and in an investment portfolio of equities and
fixed income securities managed by an affiliate were $52,541 and
$32,145, respectively.
16
<PAGE> 125
10. EMPLOYEE BENEFITS (CONTINUED)
b) 401(k) PLAN
Prior to July 1, 1998, the Company also participated in a defined
contribution plan sponsored by MNA, the North American Security Life
401(k) Savings Plan, which was subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"). A similar
plan, the Manulife Financial 401k Savings Plan, also existed for
employees of ManUSA. These two plans were effectively merged on July 1,
1998 into one defined contribution plan sponsored by ManUSA, as
approved by the Board of Directors on March 26, 1998. The Company's
costs associated with the plan were charged to the Company and were not
material.
c) POSTRETIREMENT BENEFIT PLAN
In addition to the retirement plan, the Company participates in the
postretirement benefit plan of ManUSA which provides retiree medical
and life insurance benefits to those who have attained age 55 with 10
or more years of service. The plan provides the medical coverage for
retirees and spouses under age 65. When the retirees or the covered
dependents reach age 65, Medicare provides primary coverage and the
plan provides secondary coverage. There is no contribution for post-age
65 coverage, and no contributions are required for retirees for life
insurance coverage. The plan is unfunded.
The postretirement benefit cost to the Company, which includes the
expected cost of postretirement benefits for newly eligible employees
and for vested employees, interest cost, and gains and losses arising
from differences between actuarial assumptions and actual experience,
is accounted for by the plan sponsor, ManUSA.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values and estimated fair values of the Company's
financial instruments at December 31, 1998 were as follows:
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
-----------------------------------------------------------------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-----------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C>
Fixed maturity securities $125,088 $125,088 $129,151 $129,151
Short-term investments 10,032 10,032 9,998 9,998
Policy loans 552 552 398 398
Cash and cash equivalents 5,946 5,946 1,431 1,431
Liabilities:
Policyholder liabilities and
accruals 94,492 91,113 86,611 81,715
</TABLE>
17
<PAGE> 126
11. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The following methods and assumptions were used by the Company in
estimating the fair value disclosures for financial instruments:
Fixed Maturity Securities: Fair values for fixed maturity securities
are obtained from an independent pricing service.
Short-Term Investment and Cash and Cash Equivalents: Carrying values
approximate fair values.
Policy Loans: Carrying values approximate fair values.
Policyholder Liabilities and Accruals: Fair values of the Company's
liabilities under contracts not involving significant mortality risk
(deferred annuities) are estimated to be the cash surrender value, or
the cost the Company would incur to extinguish the liability.
12. LEASES
The Company leases office space under an operating lease agreement
which expires in 1999 and is subject to a renewal option at market
rates prevailing at the time of renewal. For the years ended December
31, 1998 and 1997, the Company incurred rent expense of $95 and $84,
respectively. The minimum lease payments associated with the office
space are $61 in 1999.
13. CAPITAL MAINTENANCE AGREEMENT
Pursuant to a capital maintenance agreement and subject to regulatory
approval, Manulife Financial has agreed to maintain the Company's
statutory capital and surplus at a specified level and to ensure that
sufficient funds are available for the timely payment of contractual
obligations.
14. CONTINGENCIES
The Company is subject to various lawsuits that have arisen in the
course of its business. Contingent liabilities arising from litigation,
income taxes and other matters are not considered material in relation
to the financial position of the Company.
18
<PAGE> 127
15. UNCERTAINTY DUE TO THE YEAR 2000 RISK (UNAUDITED)
The Year 2000 risk is the result of computer programs being written
using two digits, rather than four, to define the applicable year. Any
of the Company's computer programs that have date-sensitive software
may recognize a date using "00" as the year 1900 rather than the year
2000. The effects of the Year 2000 risk may be experienced before, on,
or after January 1, 2000 and, if not addressed, could result in systems
failures or miscalculations causing disruptions of normal business
operations. It is not possible to be certain that the Company's Year
2000 program will fully resolve all aspects of the Year 2000 risk,
including those related to third parties.
19
<PAGE> 128
PART C
OTHER INFORMATION
<PAGE> 129
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).
(2) Financial Statements of the Depositor, The
Manufacturers Life Insurance Company of New York
(Part B of the registration statement).
(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, 1998.
(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, 1998.
(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, 1998.
(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, 1998.
(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, 1998.
(4) (a)(i) Form of Specimen Flexible Purchase Payment
Individual Deferred Combination Fixed and
Variable Annuity Contract, Non-Participating
(v24) - previously filed as Exhibit
(b)(4)(a) to post-effective amendment no. 4
to Registrant's Registration Statement on
Form N-4, File No.33-79112, dated March 2,
1998.
(a)(ii) Form of Specimen Flexible Purchase Payment
Individual Deferred Combination Fixed and
Variable Annuity Contract, Non-Participating
(v9) - incorporated by reference to Exhibit
(b)(4) to post-effective amendment no. 7 to
Registrant's Registration Statement on Form
N-4, File No. 33-46217, dated February 25,
1998.
(b)(i) Specimen Endorsements to Contract (v24) -
(i) ERISA Tax-Sheltered Annuity, (ii)
Tax-Sheltered Annuity, (iii) Qualified Plan
Endorsement Section 401 Plans, (iv) Simple
Individual Retirement Annuity, (v) Unisex
Benefits and Payments, (vi) Individual
Retirement Annuity - previously filed as
Exhibit (b)(4)(b) to post-effective
amendment no. 5 to Registrant's Registration
Statement on Form N-4 File, No.33-79112,
filed April 29, 1998.
(b)(ii) Specimen Death Benefit Endorsement (v9) -
previously filed as Exhibit (b)(4)(i) to
post-effective amendment no. 5 to
Registrant's Registration Statement on Form
N-4 File, No.33-46217, filed April 30, 1996.
<PAGE> 130
(b)(iii) Specimen Death Benefit Endorsement (v9) -
previously filed as Exhibit (b)(3)(iii) to
post-effective amendment no. 6 to
Registrant's Registration Statement on Form
N-4 File, No.33-46217, filed February 28,
1997.
(b)(iv) Roth Individual Retirement Annuity
Endorsement - filed herein.
(5) Form of Specimen Application for Flexible Purchase
Payment Individual Deferred Combination Fixed and
Variable Annuity Contract, Non-Participating (v9) -
previously filed as Exhibit (b)(5) to post-effective
amendment no. 7 to Registrant's Registration
Statement on Form N-4 File, No.33-46217, filed
February 25, 1998.
(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 post-effective
amendment no. 7 to Registrant's Registration
Statement on Form N-4 File, No.33-46217,
filed February 25, 1998.
(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 post-effective amendment
no. 7 to Registrant's Registration Statement
on Form N-4 File, No.33-46217, filed
February 25, 1998.
(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 post-effective amendment
no. 7 to Registrant's Registration Statement
on Form N-4 File, No.33-46217, filed
February 25, 1998.
(b) By-laws of The Manufacturers Life Insurance
Company of New York - incorporated by
reference to Exhibit (b)(3)(c) to
post-effective amendment no. 7 to
Registrant's Registration Statement on Form
N-4 File, No.33-46217, filed February 25,
1998.
(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)(8)(a) to post-effective
amendment no. 7 to Registrant's Registration
Statement on Form N-4 File, No.33-46217,
filed February 25, 1998.
(b) Investment Services Agreement between The
Manufacturers Life Insurance Company and The
Manufacturers Life Insurance Company of New
York - incorporated by reference to Exhibit
1(A)(8)(c) to pre-effective amendment no. 1
to The Manufacturers Life Insurance Company
of New York Separate Account B Registration
Statement on Form S-6, filed March 16, 1998.
(9) Opinion of Counsel and consent to its use as to the
legality of the securities being registered (June 28,
1994 ) - previously filed as Exhibit (b)(9) to
post-effective amendment no. 6 to Registrant's
Registration Statement on Form N-4 File, No.
33-79112, filed March 2, 1999.
(10) Written consent of Ernst & Young LLP - Filed herein.
(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.
<PAGE> 131
(13) Schedules of computations - Incorporated by reference
to Exhibit (b)(13) to post effective amendment no. 2
to Form N-4, file number 33-76162 filed March 1,
1996.
(14) (a) Power of Attorney - The Manufacturers
Life Insurance Company of New York Directors
is incorporated by reference to exhibit 7 to
pre-effective amendment no. 1 to The
Manufacturers Life Insurance Company of New
York Separate Account B Registration
Statement on Form S-6, filed March 16, 1998.
(b) Power of Attorney, James O'Malley and Thomas
Borshoff - previously filed as Exhibit
(b)(14)(b) to post-effective amendment no. 6
to Registrant's Registration Statement on
Form N-4 File, No. 33-79112, filed March 2,
1999.
(27) Financial Data Schedule - Not Applicable
Item 25. Directors and Officers of the Depositor.
OFFICERS AND DIRECTORS OF THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
<TABLE>
<CAPTION>
NAME AND POSITION WITH THE MANUFACTURERS LIFE INSURANCE COMPANY
PRINCIPAL BUSINESS ADDRESS OF NEW YORK
<S> <C>
John Richardson Director and Chairman
200 Bloor Street East
Toronto, Ontario
Canada M4W-1E5
Bruce Avedon Director
6601 Hitching Post Lane
Cincinnati, OH 45230
John D. DesPrez III Director
73 Tremont Street
Boston, MA 02108
Thomas Borshoff Director
3 Robin Drive
Rochester, NY 14618
Ruth Ann Fleming Director
205 Highland Avenue
Short Hills, NJ 07078
Theodore Kilkuskie Director
73 Tremont Street
Boston, MA 02108
A. Scott Logan President & Director
1455 East Putnam Avenue
Old Greenwich, CT 06870
</TABLE>
<PAGE> 132
<TABLE>
<CAPTION>
NAME AND POSITION WITH THE MANUFACTURERS LIFE INSURANCE COMPANY
PRINCIPAL BUSINESS ADDRESS OF NEW YORK
<S> <C>
Neil M. Merkl Esq. Director
35-35 161st Street
Flushing, New York 11358
James O'Malley Director, VP-Pension Marketing
200 Bloor Street East
Toronto, Ontario
Canada M4W 1E5
James K. Robinson Director
7 Summit Drive
Rochester, New York 14620-3127
Tracy Anne Kane Secretary & Counsel
73 Tremont Street
Boston, MA 02108
David W. Libbey Treasurer
73 Tremont Street
Boston, MA 02108-3915
Paige Sabine Chief Administrative Officer
73 Tremont Street
Boston, MA 02108
</TABLE>
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, 1998
The Manufacturers Life Insurance Company (Canada)
1. Peel-de Maisonneuve Investments Ltd. - Canada (100%)
1.1. 2932121 Canada Inc. - Canada (100%)
2. 1293319 Ontario Inc. - Ontario (100%)
3. Enterprise Capital Management Inc. - Ontario (100%)
4. Cantay Holdings Inc. - Canada (100%)
5. 495603 Ontario Limited - Ontario (100%)
6. Manulife Securities International Ltd. - Canada (100%)
7. Manulife Bank of Canada - Canada (100%)
8. Balmoral Developments Inc. - Ontario (100%)
9. Family Realty First Corp. - Ontario (100%)
10. Manufacturers Life Capital Corporation Inc. - Canada (100%)
11. Manucab Ltd. - Canada (100%)
11.1. Plazcab Service Limited - Newfoundland (100%)
12. FNA Financial Inc. - Canada (100%)
12.1. First North American Insurance Company - Canada (100%)
<PAGE> 133
12.2.NAL Trustco Inc. - Ontario (100%)
12.3.NAL Resources Management Limited - Canada (100%)
12.3.1. NAL Energy Inc. - Alberta (100%)
12.4.Seamark Asset Management Ltd. - Canada (100%)
12.5.Elliott & Page Limited - Ontario (100%)
13. Manulife International Capital Corporation Limited - Ontario (100%)
13.1.VFC Inc. - Canada (100%)
13.2.Regional Power Inc. - Ontario (100%)
13.2.1. Addalam Power Corporation - Philippines
13.2.2. La Regionale Power Angliers Inc. - Canada (100%)
13.2.3. La Regionale Power Port-Cartier Inc. - Canada (100%)
13.3.Golf Town Canada Inc. - Canada (100%)
14. 3426505 Canada Inc. - Canada (100%)
15. 994744 Ontario Inc. - Ontario (100%)
16. The Manufacturers Investment Corporation - Michigan (100%)
16.1.Manulife Reinsurance Corporation (U.S.A.) - Michigan (100%)
16.1.1. Manulife Reinsurance Limited - Bermuda (100%)
16.1.1.1. MRL Holding, LLC - Delaware (99%)
16.1.2. MRL Holding, LLC - Delaware (1%)
16.1.3. The Manufacturers Life Insurance Company (U.S.A.) -
Michigan (100%)
16.1.3.1. Manulife-Wood Logan Holding Co. Inc. - Delaware
(62.5%)
16.1.3.1.1. Wood Logan Associates, Inc. - Connecticut
(100%)
16.1.3.1.2. The Manufacturers Life Insurance Company of
North America - Delaware (100%)
16.1.3.1.2.1. The Manufacturers Life Insurance Company
of New York - New York (100%)
16.1.3.1.2.2. Manufacturers Securities Services, LLC -
Delaware (90%)
16.1.3.2. Ennal, Inc. - Ohio (100%)
16.1.3.3. Dover Leasing Investments, LLC - Delaware (99%)
16.1.3.4. The Manufacturers Life Insurance Company of America -
Michigan (100%)
16.1.3.4.1. Manulife Holding Corporation - Delaware (100%)
16.1.3.4.1.1. ManEquity, Inc. - Colorado (100%)
16.1.3.4.1.2. Manulife Property Management of
Washington, D.C. Inc. - Washington, D.C.
(100%)
16.1.3.4.1.3. ManuLife Service Corporation - Colorado
(100%)
16.1.3.4.1.4. Manulife Leasing Co., LLC. - Delaware
(100%)
16.1.3.4.1.5. Manufacturers Adviser Corporation -
Colorado (100%)
16.1.3.4.1.6. Manulife Capital Corporation - Delaware
(100%)
16.1.3.4.1.6.1. MF Private Capital, Inc. -
Delaware (100%)
16.1.3.5. Thornhill Leasing Investments, LLC - Delaware (90%)
16.1.3.6. ESLS Investment Limited, LLC - Ohio (100%)
16.1.3.7. Flex Leasing 1, LLC - Delaware (50%)
17. Manulife International Investment Management Limited - U.K. (100%)
17.1.Manulife International Fund Management Limited - U.K. (100%)
18. WT(SW) Properties Ltd. - U.K. (100%)
19. Manulife Europe Ruckversicherungs-Aktiengesellschaft - Germany (100%)
20. Manulife International Holdings Limited - Bermuda (100%)
20.1.Manulife (International) Limited - Bermuda (100%)
<PAGE> 134
20.1.1. Newtime Consultants Limited - Hongkong (100%)
20.1.2. The Manufacturers (Pacific Asia) Insurance Company Limited
- Hongkong (100%)
20.1.3. Zhong Hong Life Insurance Co. Ltd. - China (51%)
20.2. Manulife Provident Funds Trust Company Limited - Hongkong (100%)
20.3. Manulife Funds Direct (Barbados) Limited - Barbados (100%)
20.3.1. Manulife Funds Direct (Hong Kong) Limited - Hongkong
(100%)
20.3.2. Pt. Manulife Aset Manajemen Indonesia - Indonesia (55%)
21. Manulife Data Services Inc. - Barbados (100%)
22. ManuLife (International) Reinsurance Limited - Bermuda (100%)
22.1.Manufacturers Life Reinsurance Limited - Barbados (100%)
22.2.Manufacturers P&C Limited - Barbados (100%)
22.3.Manulife (International) P&C Limited - Bermuda (100%)
23. Chinfon-Manulife Insurance Company Limited - Bermuda (100%)
24. Young Poong Manulife Insurance Company - Korea (50%)
25. Manulife (Thailand) Ltd. - Thailand (100%)
26. Manulife (Malaysia) SDN.BHD. - Malaysia (100%)
27. The Manufacturers Life Insurance Company (Philippines) Inc. - Philippines
(100%)
28. OUB Manulife Pte. Ltd. - Singapore (50%)
29. P.T. Asuransi Jiwa Dharmala ManuLife - Indonesia (51%)
29.1.P.T. AMP Panin Life - Indonesia (100%)
29.2.P.T. Buanadays Sarana Informatika - Indonesia (100%)
30. ManuLife Financial Systems (Hong Kong) Limited - Hongkong (100%)
31. Manulife Holdings (Hong Kong) Limited - Hongkong (100%)
Item 27. Number of Contract Owners.
As of February 26, 1999, there were 6,327 qualified and 9,666 non-qualified
contracts for Ven 9 and 0 qualified and 0 non-qualified contracts for Ven 24 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:
<PAGE> 135
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.
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 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.
<PAGE> 136
Item 29. Principal Underwriters.
<TABLE>
<CAPTION>
a. Name of Investment Company Capacity In Which Acting
-------------------------- ------------------------
<S> <C>
Manufacturers Investment Trust Investment Adviser
The Manufacturers Life Insurance Principal Underwriter
Company of North America Separate
Account A
The Manufacturers Life Insurance Principal Underwriter
Company of North America Separate
Account B
The Manufacturers Life Insurance Principal Underwriter
Company of New York Separate
Account A
The Manufacturers Life Insurance Principal Underwriter
Company of New York Separate
Account B
</TABLE>
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. DesPrez III Director and Chairman of the Board of
73 Tremont Street Directors
Boston, MA 02108
Theodore F. Kilkuskie, Jr. Director and President
73 Tremont Street
Boston, MA 02108
John D. Richardson Director
200 Bloor Street East
Toronto, Ontario
Canada M4W-1E5
John G. Vrysen Vice President & Chief Actuary
73 Tremont Street
Boston, MA 02108
Hugh McHaffie Vice President, U.S. Annuities
116 Huntington Avenue
Boston, MA 02116
James D. Gallagher Vice President, Secretary and General Counsel
73 Tremont Street
Boston, MA 02108
</TABLE>
<PAGE> 137
<TABLE>
<CAPTION>
Name and Principal Position with The Manufacturers Life Insurance
Business Address Company of North America
- ------------------ ----------------------------------------------
<S> <C>
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
Cindy Granata Vice President, Information Systems
116 Huntington Avenue
Boston, MA 02116
Bill Hayward Vice President, Operations
116 Huntington Avenue
Boston, MA 02116
</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 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.
<PAGE> 138
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, The
Manufacturers Life Insurance Company of New York Separate Account A, certifies
that it meets all of the requirements for effectiveness of this registration
statement pursuant to Rule 485(b) under the Securities Act of 1933 and 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 28th day of April, 1999.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF
NEW YORK SEPARATE ACCOUNT A
(Registrant)
By: THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NEW YORK
(Depositor)
By: /s/ A. SCOTT LOGAN
-------------------------------
A. Scott Logan
President
Attest:
/s/ TRACY ANNE KANE
- ---------------------------
Tracy Anne Kane
Secretary
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Depositor has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned on the
28th day of April, 1999 in the City of Boston, and Commonwealth of
Massachusetts.
THE MANUFACTURERS LIFE INSURANCE COMPANY
OF NEW YORK
(Depositor)
By: /s/ A. SCOTT LOGAN
--------------------------------
A. Scott Logan
President
Attest:
/s/ TRACY ANNE KANE
- ---------------------------
Tracy Anne Kane
Secretary
<PAGE> 139
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 as indicated on this 28th day of April, 1999.
SIGNATURE TITLE
*____________________ Director
John Richardson (Chairman)
/s/ A SCOTT LOGAN Director; President
_____________________ (Chief Executive Officer)
A. Scott Logan
* ___________________ Director
John D. DesPrez III
*____________________ Director
Theodore Kilkuskie
*_____________________ Director
James K. Robinson
*_____________________ Director
Neil M. Merkl
*_____________________ Director
Bruce Avedon
*_____________________ Director
Ruth Ann Fleming
*_____________________ Director
James O'Malley
*_____________________ Director
Thomas Borshoff
*By: /s/ TRACY ANNE KANE
-----------------------------
Tracy Anne Kane
Attorney-in-Fact
Pursuant to Powers
of Attorney
<PAGE> 140
EXHIBIT INDEX
Exhibit No. Description
(b)(4)(b)(iv) Roth Individual Retirement Annuity Endorsement
(b)(10) Written consent of Ernst & Young LLP
<PAGE> 1
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
Corporate Center at Rye
555 Theodore Fremd Avenue, Sutie C-209
Rye, NY 10580
ROTH INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT
- --------------------------------------------------------------------------------
Check if this endorsement supersedes a prior Roth
IRA endorsement .................................
Check if Roth Conversion IRA ....................
- --------------------------------------------------------------------------------
This endorsement is made a part of the annuity contract to which it is
attached, and the following provisions apply in lieu of any provisions in the
contract to the contrary.
The Annuitant is establishing a Roth individual retirement annuity
(Roth IRA) under section 408A to provide for his or her retirement and for the
support of his or her beneficiaries after death.
ARTICLE I
1. If this Roth IRA is not designated as a Roth Conversion IRA, then,
except in the case of a rollover contribution described in section 408A(e), the
issuer will except only cash contributions and only up to a maximum amount of
$2,000 for any tax year of the annuitant.
2. If this Roth IRA is designated as a Roth Conversion IRA, no
contributions other than IRA Conversion Contributions made during the same tax
year will be accepted.
ARTICLE II
The $2,000 limit described in Article I is gradually reduced to $0
between certain levels of adjusted gross income (AGI). For a single annuitant,
the $2,000 annual contribution is phased out between AGI of $95,000 and
$110,000; for a married annuitant who files jointly, between AGI of $150,000 and
$160,000; and for a married annuitant who files separately, between $0 and
$10,000. In the case of a conversion, the issuer will not accept IRA Conversion
Contributions in a tax year if the annuitant's AGI for that tax year exceeds
$100,000 or if the annuitant is married and files a separate return. Adjusted
gross income is defined in section 408A(c)(3) and does not include IRA
Conversion Contributions.
ARTICLE III
The annuitant's interest in the contract is nonforfeitable and
nontransferable.
ARTICLE IV
1. The contract does not require fixed contributions.
2. Any dividends (refund of contributions other than those attributable
to excess contributions) arising under the contract will be applied before the
close of the calendar year following the year of the dividend as contributions
toward the contract.
ARTICLE V
1. If the annuitant dies before his or her entire interest in the
contract is distributed to him or her and the annuitant's surviving spouse is
not the sole beneficiary, the entire remaining interest will, at the election of
the annuitant or, if the annuitant has not so elected, at the election of the
beneficiary, either:
(a) Be distributed by December 31 of the calendar year containing the
fifth anniversary of the annuitant's death, or
(b) Be distributed over the life, or a period not longer than the life
expectancy, of the designated beneficiary starting no later than December 31 of
the calendar year following the calendar year of the annuitant's death. Life
expectancy is computed using the expected return multiples in Table V of section
1.72-9 of the Income Tax Regulations.
<PAGE> 2
If distributions do not begin by the date described in (b) distribution method
(a) will apply.
2. If the annuitant's spouse is the sole beneficiary on the annuitant's
date of death, such spouse will then be treated as the annuitant.
ARTICLE VI
1. The annuitant agrees to provide the issuer with information
necessary for the issuer to prepare any reports required under sections 408(i)
and 408A(d)(3)(E), and Regulations section 1.408-5 and 1.408-6, and under
guidance published by the Internal Revenue Service.
2. The issuer agrees to submit reports to the Internal Revenue Service
and the annuitant as prescribed by the Internal Revenue Service.
ARTICLE VII
Notwithstanding any other articles which may be added or incorporated,
the provisions of Articles I through IV and this sentence will be controlling.
Any additional articles that are not consistent with section 408A, the related
regulations, and other published guidance will be invalid.
ARTICLE VIII
This endorsement will be amended from time to time to comply with the
provisions of the Code, related regulations, and other published guidance. Other
amendments may be made with the consent of the persons whose signatures appear
on the contract.
ARTICLE IX
1. The Annuitant must be an individual who is the sole Owner. A Joint
Owner cannot be named. Neither the Owner nor the Annuitant can be changed. The
Contract is established for the exclusive benefit of the Owner and his or her
beneficiaries.
2. All distributions made while the Owner is alive must be made to the
Owner. All payments made under a Joint and Survivor Annuity Income Option after
the Owner's death while the Joint Annuitant is alive must be made to the Joint
Annuitant.
3. No loan may be made under the Contract. The Owner's interest in the
Contract may not be sold, assigned, transferred, discounted or pledged as
collateral for a loan or as security for the performance of any obligation or
for any other purpose (other than a transfer incident to a divorce or separation
instrument in accordance with section 408(d)(6)) to any person.
4. All references in the Contract to IRC Section 72(s) are deleted.
Endorsed on the Date of Issue of this Contract.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
President
<PAGE> 3
<TABLE>
<S> <C> <C>
GENERAL INSTRUCTIONS This Roth IRA can be used by an SPECIFIC INSTRUCTIONS
(Section references are to the annuitant to hold: (1) IRA Conversion ARTICLE I. The annuitant may be
Internal Revenue Code unless Contributions, amounts rolled over or subject to a 6-percent tax on excess
otherwise noted.) transferred from another Roth IRA, contributions if (1) contributions to
and annual cash contributions of up other individual retirement
PURPOSE OF FORM to $2,000 from the annuitant; or (2) if arrangements of the annuitant have
A Roth individual retirement annuity designated as a Roth Conversion been made for the same tax year, (2)
(Roth IRA) is established after the IRA (by checking the box on page 1), the annuitant's adjusted gross
contract, which includes this only IRA Conversion Contributions income exceeds the applicable limits
endorsement, is fully executed by for the same tax year. in Article II for the tax year, or (3)
both the individual (annuitant) and the annuitant's and spouse's
the issuer. The contract must be for To simplify the identification of funds compensation does not exceed the
the exclusive benefit of the annuitant distributed from Roth IRAs, amount contributed for them for the
or his or her beneficiaries. annuitants are encouraged to tax year. The annuitant should see
maintain IRA Conversion the disclosure statement or Pub. 590
Unlike contributions to traditional Contributions for each tax year in a for more information
individual retirement arrangements, separate Roth IRA. ARTICLE IX. Article IX and any that
contributions to a Roth IRA are not follow it may incorporate additional
deductible from the annuitant's gross DEFINITIONS provisions that are agreed to by the
income; and distributions after 5 ROTH CONVERSION IRA. A Roth annuitant and issuer to complete the
years that are made when the Conversion IRA is a Roth IRA that contract. They may include, for
annuitant is 59 1/2 years of age or accepts only IRA Conversion example, definitions, investment
older or on account of death, Contributions made during the same powers, voting rights, exculpatory
disability, or the purchase of a home tax year. provisions, amendment and
by a first-time homebuyer (limited to IRA CONVERSION CONTRIBUTIONS. termination, removal of the issuer,
$10,000), are not includible in gross IRA Conversion Contributions are issuer's fees, state law requirements,
income. For more information on amounts rolled over, transferred, or beginning date of distributions,
Roth IRAs, including the required considered transferred from a accepting only cash, treatment of
disclosure the annuitant can get from nonRoth IRA to a Roth IRA. A excess contributions, prohibited
the issuer, get Pub. 590, Individual nonRoth IRA is an individual transactions with the annuitant, etc.
Retirement Arrangements (IRAs). retirement account or annuity
described in section 408(a) or
408(b), other than a Roth IRA.
ISSUER. The issuer is the insurance
company providing the annuity
contract.
ANNUITANT. The annuitant is the
person who establishes the annuity
contract.
</TABLE>
<PAGE> 1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent
Auditors" and to the use of our report dated February 22, 1999 with respect to
the financial statements of The Manufacturers Life Insurance Company of New
York and our report dated February 15, 1999 with respect to the financial
statements of The Manufacturers Life Insurance Company of New York Separate
Account A, both of which are contained in the Statement of Additional
Information, in Post Effective Amendment No. 7 to the Registration Statement
(Form N-4 File No. 33-79112).
ERNST & YOUNG LLP
Boston, Massachusetts
April 28, 1999
