<PAGE> 1
As filed with the Securities and Exchange Commission on March 2, 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. 6
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
POST-EFFECTIVE AMENDMENT NO. 10
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
The Manufacturers Life Insurance Copy to:
Company of New York J. Sumner Jones, Esq.
Corporate Center at Rye Jones & Blouch, L.L.P.
555 Theodore Fremd Avenue 1025 Thomas Jefferson St. N.W.
Suite C-209 Suite 405 West
Rye, New York 10580 Washington, D.C. 20007-0805
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
___ on [date] pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
_X_ on May 1, 1999 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
N-4 Item Caption in Prospectus
Part A
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-Accountants; Services-Servicing Agent
19. Not Applicable
20. Principal Underwriter
21. Performance Data
22. Not Applicable
23. Financial Statements
<PAGE> 3
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE> 4
ANNUITY SERVICE OFFICE
Corporate Center at Rye
555 Theodore Fremd Avenue, Suite C-209
Rye, New York 10580-9966
ANNUITY SERVICE OFFICE MAILING ADDRESS
P.O. Box 9013
Boston, MA 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-three
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"). Your 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 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 appear in bold and are explained when first used in this
Prospectus and also 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 , 1999
Ven 24/9
<PAGE> 5
(Back Cover Page)
- - 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. 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............................... 3
Performance Data.............................................. 3
State Premium Taxes........................................... 15
Service
Independent Auditors...................................... 15
Servicing Agent........................................... 15
Principal Underwriter..................................... 16
Voting Interest............................................... 16
Cancellation of Contract...................................... 16
Appendix A - State Premium Taxes.............................. 17
Financial Statements.......................................... 18
<PAGE> 6
TABLE OF CONTENTS
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 ............................. 24
General ............................................. 24
Annuity Options ..................................... 25
Determination of Amount of the First Variable
Annuity Payment...................................... 26
Annuity Units and the Determination of
Subsequent Variable Annuity Payments .............. 26
Transfers During Pay-out Period ..................... 27
Death Benefit During Pay-out Period.................. 27
OTHER CONTRACT PROVISIONS ............................. 27
Right to Review Contract............................. 27
Ownership ........................................... 28
Annuitant ........................................... 28
Change of Maturity Date.............................. 29
Beneficiary ......................................... 29
Modification ........................................ 29
Our Approval ........................................ 29
Misstatement and Proof of Age, Sex or Survival....... 29
FIXED ACCOUNT INVESTMENT OPTIONS....................... 29
CHARGES AND DEDUCTIONS ................................... 33
Withdrawal Charges .................................. 33
Administration Fees.................................. 34
Mortality and Expense Risk Charge ................... 35
Taxes ............................................... 35
FEDERAL TAX MATTERS ...................................... 35
INTRODUCTION .......................................... 35
OUR TAX STATUS ........................................ 36
TAXATION OF ANNUITIES IN GENERAL ...................... 36
Tax Deferral During Accumulation Period ............. 36
Taxation of Partial and Full Withdrawals ............ 38
Taxation of Annuity Benefit Payments ................ 38
Taxation of Death Benefit Proceeds .................. 39
Penalty Tax on Premature Distributions .............. 39
Aggregation of Contracts ............................ 40
QUALIFIED RETIREMENT PLANS ............................ 40
Direct Rollovers .................................... 41
FEDERAL INCOME TAX WITHHOLDING......................... 42
GENERAL MATTERS........................................... 42
Performance Data..................................... 42
Asset Allocation and Timing Services................. 43
Distribution of Contracts ........................... 43
Contract Owner Inquiries............................. 43
Confirmation Statements.............................. 43
Legal Proceedings ................................... 43
Year 2000 Issues..................................... 44
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
<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, 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 August,
1994 until May 1, 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 may be as little
as $30, but a minimum of $300 must be paid during the first contract year.
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 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 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.
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 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 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 . The items listed under "Trust Annual Expenses"
are described in detail in the accompanying Trust Prospectus.
5
<PAGE> 9
CONTRACT OWNER TRANSACTION EXPENSES
Deferred sales load (as percentage of purchase payments)
NUMBER OF COMPLETE YEARS
PURCHASE PAYMENT IN CONTRACT WITHDRAWAL CHARGE PERCENTAGE
0 6%
1 6%
2 5%
3 5%
4 4%
5 3%
6 2%
7 0%
See Appendix C for a discussion of the withdrawal charges under Ven 9 contracts.
<TABLE>
<S> <C>
ANNUAL CONTRACT FEE..................................................................... $30
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and expense risk fees......................................................... 1.25%
Administration fee - asset based........................................................ 0.15%
Total Separate Account Annual Expenses.................................................. 1.40%
</TABLE>
<TABLE>
<CAPTION>
TRUST ANNUAL EXPENSES
(as a percentage of Trust average net assets)
OTHER EXPENSES
MANAGEMENT (AFTER EXPENSE TOTAL TRUST
TRUST PORTFOLIO FEES REIMBURSEMENT)*** ANNUAL EXPENSES
- --------------------------------------------------------------------------------------------------------
<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%
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%
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
OTHER EXPENSES
MANAGEMENT (AFTER EXPENSE TOTAL TRUST
TRUST PORTFOLIO FEES REIMBURSEMENT)*** ANNUAL EXPENSES
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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 and 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:
Aggressive Growth Trust 1.050%
Mid Cap Growth Trust 1.000%
Mid Cap Blend Trust 0.750%
Large Cap Growth Trust 0.750%
Blue Chip Growth Trust 0.925%
Equity Income Trust 0.800%
Income & Value Trust 0.750%
*Based on estimates of payments to be made during the current fiscal year.
** Reflects expenses of the Underlying Portfolios. Manufacturers Securities
Services, LLC has voluntarily agreed to pay the expenses of each Lifestyle Trust
(excluding the expenses of the Underlying Portfolios). This voluntary expense
reimbursement may be terminated at any time. If such expense reimbursement was
not in effect, Total Trust Annual Expenses would be 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:
<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%
</TABLE>
7
<PAGE> 11
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL TRUST
TRUST PORTFOLIO FEES EXPENSES ANNUAL EXPENSES
<S> <C> <C> <C>
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 and 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
Money Market............................ 77 115 142 152 241
Lifestyle Aggressive 1000............... 81 129 167 177 290
</TABLE>
8
<PAGE> 12
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS+ 5 YEARS 10 YEARS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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 and 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
Money Market............................ 21 65 112 241
Lifestyle Aggressive 1000............... 26 80 137 290
</TABLE>
9
<PAGE> 13
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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.
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 49 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 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
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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
Excellent in claims paying ability; 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 is one of our separate accounts that invests the contract
values you allocate to it in the Trust portfolio(s) you select.
THE VARIABLE ACCOUNT
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.
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.
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The Trust currently has sixteen subadvisers who manage all of the
portfolios:
SUBADVISER TRUST PORTFOLIOS MANAGED
A I M Advisors, 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 Aggressive 1000 Trust*
Lifestyle Growth 820 Trust*
Lifestyle Balanced 640 Trust*
Lifestyle Moderate 460 Trust*
Lifestyle Conservative 280 Trust*
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
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 and Income Trust
Investment Quality Bond Trust
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*Each Lifestyle Trust invests in other Trusts. The Lifestyle Trusts
vary in the portion of their assets that are invested in Trusts that invest
primarily in fixed income securities and those that invest in equity securities.
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.
The OVERSEAS TRUST (formerly, the International Growth and 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.
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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 AND INCOME TRUST seeks long-term growth of capital and
income, consistent with prudent investment risk, by investing primarily in a
diversified portfolio of common stocks of United States issuers which the
subadviser believes are of high quality.
The 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.
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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 PIMCO'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.
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.
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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.
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.
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.
A full description of the Trust, including the investment objectives,
policies and restrictions of and the risks relating to investment in each
portfolio, is contained in the Trust's Prospectus which we provided you along
with this Prospectus.
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DESCRIPTION OF THE CONTRACT
ACCUMULATION PERIOD PROVISIONS
Initial purchase payments must be at least $30, $300 must be paid during the
first contract year, and 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 $30, however at least $300 must be paid
during the first contract year 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.
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.
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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.
- 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
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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).
No more than 17 investment options.
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.
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.
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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 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") and related Treasury Department regulations. 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 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 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:
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- 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 free.
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").
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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 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.
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:
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- 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.
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 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.
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- 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.
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 THE 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
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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 Maturity Dates"). 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 annuity payments on a fixed,
variable or combined fixed and variable basis in proportion to the Investment
Account Value of each investment option at the maturity date. Such payments will
be made for a period certain of 10 years and continuing thereafter during the
lifetime of the annuitant. Treasury Department regulations may preclude the
availability of certain annuity options in connection with certain qualified
contracts.
The following annuity options are guaranteed in the contract.
OPTION 1(a): NON-REFUND LIFE ANNUITY - An annuity with
payments during the lifetime of the annuitant. No payments are due
after the death of the annuitant. 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.
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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
portion of the contract value used to purchase a variable annuity, measured as
of a date not more than ten business days prior to the maturity date (minus any
applicable premium taxes), to the annuity tables contained in the contract. The
rates contained in such tables depend upon the annuitant's sex and age and the
annuity option selected. Under the annuity tables, the longer the life
expectancy of the annuitant under any life annuity option or the duration of any
period for which payments are guaranteed under the option, the smaller will be
the amount of the first monthly variable annuity payment. The rates are based on
the 1983 Table A projected at Scale G, assume births in year 1942 and reflect an
assumed interest rate of 3% per year.
ANNUITY UNITS AND THE DETERMINATION OF SUBSEQUENT VARIABLE ANNUITY PAYMENTS
Variable annuity payments 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. If the actual net
investment performance:
- is exactly 3% annually, annuity payments will be level;
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- exceeds 3% annually, annuity payments will increase; or
- is less than 3% annually, annuity payments will decrease.
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 THE 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
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.
Some annuity options have a death benefit feature.
DEATH BENEFIT DURING THE 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.
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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, the "contract owner," 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
(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 Internal Revenue Service ("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. If the
contract owner names more than one person as an "annuitant," the second person
named shall be referred to as "co-annuitant." The annuitant is as specified in
the application, unless changed.
On the death of the annuitant, the co-annuitant, if living, becomes the
annuitant. If there is no living co-annuitant, the owner becomes the annuitant.
In the case of certain qualified contracts, there are limitations on the ability
to designate and change the annuitant and the co-annuitant.
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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, Treasury Department
regulations may limit designations of beneficiaries.
See Appendix C for information with respect to the beneficiary under Ven 9
contracts.
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.
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Fixed account investment options guarantee interest of at least 3% .
INVESTMENT OPTIONS. Currently, there are five fixed account investment
options under the contract: one, three, five and seven year investment accounts
and a DCA fixed investment account which may be established under the DCA
program to make automatic transfers from a DCA fixed amount 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.
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 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.
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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;
- 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.
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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.
- 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 THE 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.
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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.
Some old contracts have withdrawal charges - new ones do not.
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.
1. Each withdrawal from the contract is allocated first to the amount
available without withdrawal charges and second to "unliquidated purchase
payments." In any contract year, the amount available without withdrawal charges
for that year is the greater of:
- the excess of the contract value on the date of withdrawal
over the unliquidated purchase payments (i.e., the accumulated
earnings on the contract), or
- the excess of (i) over (ii), where
- (i) is 10% of total purchase payments and
- (ii) is the sum of all prior partial withdrawals in
that year.
The amount withdrawn without withdrawal charges will be applied to a
requested withdrawal, first, to withdrawals from variable account investment
options and then to withdrawals fixed account investment options beginning with
those with the shortest guarantee period first and the longest guarantee period
last.
2. Withdrawals in excess of the amount available without withdrawal
charges may be subject to withdrawals charges. A withdrawal charge will be
assessed against purchase payments liquidated that have been in the contract for
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.
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.
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PURCHASE PAYMENT IN PERCENTAGE
CONTRACT
0 6%
1 6%
2 5%
3 5%
4 4%
5 3%
6 2%
7+ 0%
The total withdrawal charge will be the sum of the withdrawal
charges for the 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 minus any applicable
withdrawal charge.
5. There is generally no withdrawal charge on distributions made as a
result of the death of the contract owner or, if applicable, the annuitant (see
"DEATH BENEFIT DURING THE ACCUMULATION 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
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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 THE ACCUMULATION PERIOD"). The expense risk we assume is the risk
that the administration charges or withdrawal charge may be insufficient to
cover actual expenses.
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.
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.
TAXES
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. In addition, we will withhold taxes to the extent required by
applicable law.
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
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tax advisor with regard to the application of the law to your circumstances.
This discussion is based on the Code, Treasury Department regulations, and
interpretations existing on the date of this Prospectus. These authorities,
however, are subject to change by Congress, the Treasury Department, and
judicial decisions.
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.
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,
start receiving annuity benefit payments, or receive a death benefit payment.
TAX DEFERRAL DURING THE 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 Treasury Department
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 occur
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:
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- contracts acquired by an estate of a decedent by reason of the
death of the decedent,
- certain qualified contracts,
- certain contracts purchased by employers upon the termination
of certain qualified plans,
- certain contracts used in connection with structured
settlement agreements, and
- 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 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
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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.
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 plans) less any amounts previously received from the contract which
were not included in income.
Other than in the case of certain qualified contracts, any amount
received as a loan under a contract, and any assignment or pledge (or agreement
to assign or pledge) any portion of the contract value, is treated as a
withdrawal of such amount or portion. (Loans, assignments and pledges are
permitted only in limited circumstances under qualified contracts.) The
investment in the contract is increased by the amount includible in income with
respect to such assignment or pledge, though it is not affected by any other
aspect of the assignment or pledge (including its release). If an individual
transfers his or her interest in an annuity contract without adequate
consideration to a person other than the owner's spouse (or to a former spouse
incident to divorce), the owner will be taxed on the difference between the
"contract value" and the "investment in the contract" at the time of transfer.
In such 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 Treasury Department
regulations which take into account the annuitant's life expectancy and the form
of
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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
- (b) is the total expected value of fixed annuity payments for
the term of the contract (determined under Treasury Department
regulations).
A simplified method of determining the taxable portion of annuity payments
applies to contracts issued in connection with certain qualified plans other
than IRAs.
Once the total amount of the investment in the contract is excluded
using these ratios, annuity payments will be fully taxable. If annuity payments
cease because of the death of the annuitant and before the total amount of the
investment in the contract is recovered, the unrecovered amount generally will
be allowed as a deduction to the annuitant in his or her last taxable year.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a contract because of the death of an
owner or the annuitant. 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 unless the payment is:
- 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);
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- made as a series of substantially equal periodic payments (not
less frequently than annually) for the life (or life
expectancy) of the annuitant or for the joint lives (or joint
life expectancies) of the annuitant and designated beneficiary
(as defined in the tax law);
- made under an annuity contract purchased with a single premium
when the annuity starting date (as defined in the tax law) is
no later than a year from purchase of the annuity and
substantially equal periodic payments are made, not less
frequently than annually, during the annuity period; or
- 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.
Special tax provisions apply to qualified plans. Consult your tax advisor and
plan fiduciary prior to taking a loan.
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.
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
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<PAGE> 44
length of any guarantee period may be limited in some circumstances to satisfy
certain minimum distribution requirements under federal tax laws.
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 (but not Section 457 plans). 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
taken after December 31, 1997 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, and (ii) certain distributions for life, life expectancy,
or for 10 years or more which are part of a "series of substantially equal
periodic payments."
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Under these requirements, federal income tax equal to 20% of the
eligible rollover distribution will be withheld from the amount of the
distribution. Unlike withholding on certain other amounts distributed from the
contract, discussed below, the owner cannot elect out of withholding with
respect to an eligible rollover distribution. However, this 20% withholding will
not apply if, instead of receiving the eligible rollover distribution, the
person receiving 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.
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<PAGE> 46
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,
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 brokers to sell the contracts.
DISTRIBUTION OF CONTRACTS
Manufacturers Securities Services, LLC ("MSS"), a Delaware limited
liability company organized on October 1, 1997, acts as the principal
underwriter of, and continuously offers, the contracts pursuant to an
Underwriting and Distribution Agreement with us. MSS also provides advisory
services to the Trust. MSS, whose principal offices are located at 73 Tremont
Street, Boston, Massachusetts 02108, is a subsidiary of Manulife North America,
the ultimate parent of which is Manulife, a Canadian mutual life insurance
company. MSS is registered as a broker-dealer under the Securities Exchange Act
of 1934, is a member of the National Association of Securities Dealers and is
duly appointed and licensed as an insurance agent of the company.
Sales of the contracts will be made by registered representatives of
broker-dealers having distribution agreements with MSS and us, and who are also
licensed by the New York State Insurance Department and appointed with us. MSS
will pay distribution 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. MSS may from time to time pay additional
compensation pursuant to promotional contests. Additionally, in some
circumstances, MSS will be compensated for providing marketing support for the
distribution of the contracts.
CONTRACT OWNER INQUIRIES
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.
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<PAGE> 47
YEAR 2000 ISSUES
Like other business organizations and individuals, we would be
adversely affected if our computer systems and those of our service providers do
not properly process and calculate date-related information and data from and
after January 1, 2000. We are completing an assessment of the Year 2000 impact
on our systems and business processes. We believe that we will complete our Year
2000 project for all critical systems and processes by September 30, 1998, prior
to any anticipated impact on the critical systems and processes.
The date on which we believe we will complete our Year 2000 project is
based on our best estimates, based on numerous assumptions of future events.
However, there can be no guarantee that our estimates will be achieved and
actual results could differ materially from those anticipated. Specific factors
that might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer code, and other similar uncertainties.
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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 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 is 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> <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.
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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.
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 investment in the contract.
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.
NUMBER OF COMPLETE YEARS
PURCHASE PAYMENT IN WITHDRAWAL CHARGE
CONTRACT PERCENTAGE
-------------------------------------------------------------------
0 6%
1 6%
2 5%
3 4%
4 3%
5 2%
6+ 0%
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.
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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 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
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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> 56
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
------------- ------------- -------------
Pacific Rim Emerging Markets
<S> <C> <C> <C>
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> 57
<TABLE>
<CAPTION>
UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
SUB-ACCOUNT START OF YEAR* END OF YEAR END OF YEAR
------------- ------------- -------------
Global Equity
<S> <C> <C> <C>
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 and 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> 58
<TABLE>
<CAPTION>
UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
SUB-ACCOUNT START OF YEAR* END OF YEAR END OF YEAR
------------- ------------- -------------
Equity-Income
<S> <C> <C> <C>
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> 59
<TABLE>
<CAPTION>
UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
SUB-ACCOUNT START OF YEAR* END OF YEAR END OF YEAR
------------- ------------- -------------
Diversified Bond
<S> <C> <C> <C>
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
</TABLE>
C-8
<PAGE> 60
<TABLE>
<CAPTION>
UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
SUB-ACCOUNT START OF END OF YEAR END OF YEAR
YEAR*
------------- ------------- -------------
Lifestyle Conservative 260
<S> <C> <C> <C>
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;
- - International Growth and Trust where units were first credited on
January 9, 1995;
- - Small/Mid Cap and International Small Cap Trusts where units were first
credited on March 4, 1996;
- - Growth Trust where units were first credited on July 15, 1996;
- - Pacific Rim Emerging Markets, Science & Technology, Emerging Small
Company, Pilgrim Baxter Growth, International Stock, Worldwide Growth,
Quantitative Equity, Real Estate Securities, Value, Balanced, High
Yield and Capital Growth Bond 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;
- - Small Company Value Trust where units were first credited on October 1,
1997.
C-9
<PAGE> 61
APPENDIX D
QUALIFIED PLAN TYPES
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, the persons who may be eligible and on the time
when distributions may commence. Also, distributions from certain other types of
qualified retirement plans may be "rolled over" on a tax-deferred basis into an
IRA. The contract may not, however be used in connection with an "Education IRA"
under Section 530 of the Code.
IRAs generally may not provide life insurance coverage, but they may
provide a death benefit that equals the greater of the premiums paid and the
contract value. The contract provides a death benefit that in certain
circumstances may exceed the greater of the purchase payments and the contract
value. It is possible that the contract's death benefit could be viewed as
providing life insurance coverage with the result that the contract would not be
viewed as satisfying the requirements of an IRA.
Simplified Employee Pensions (SEP-IRAs). Section 408(k) of the Code
allows employers to establish simplified employee pension plans for their
employees, using the employees' IRAs for such purposes, if certain criteria are
met. Under these plans the employer may, within specified limits, make
deductible contributions on behalf of the employees to IRAs. As discussed above
(see Individual Retirement Annuities), there is some uncertainty regarding the
treatment of the contract's death benefit for purposes of the tax rules
governing IRAs (which would include SEP-IRAs). Employers intending to use the
contract in connection with such plans should seek competent advice.
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 is 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. If you intend to use the contract in
connection with a Roth IRA, you should seek competent tax advice.
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
D-1
<PAGE> 62
value. It is possible that such death benefit could be characterized as an
incidental death benefit. There are limitations on the amount of incidental
benefits that may be provided under pension and profit sharing plans. In
addition, the provision of such benefits may result in current taxable income to
participants. Employers intending to use the contract in connection with such
plans should seek competent advice.
Tax-Sheltered Annuities. Section 403(b) of the Code permits public
school employees and employees of certain types of charitable, educational and
scientific organizations specified in Section 501(c)(3) of the Code to have
their employers purchase annuity contracts for them and, subject to certain
limitations, to exclude the amount of purchase payments from gross income for
tax purposes. These annuity contracts are commonly referred to as "tax-sheltered
annuities". Purchasers of the contracts for such purposes should seek competent
advice as to eligibility, limitations on permissible amounts of purchase
payments and other tax consequences associated with the contracts. In
particular, purchasers should consider that the contract provides a death
benefit that in certain circumstances may exceed the greater of the purchase
payments and the contract value. It is possible that such a death benefit could
be characterized 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 death benefit under the contract were
characterized as an incidental death benefit, it is unlikely to violate those
limits unless the purchaser also purchases a life insurance contract as part of
his or her tax-sheltered annuity plan.
Tax-sheltered annuity contracts must contain restrictions on
withdrawals of:
- 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> 63
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 64
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
<PAGE> 65
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
General Information and History........................................ 3
Performance Data....................................................... 3
State Premium Taxes.................................................... 15
Services
Independent Auditors.......................................... 15
Servicing Agent............................................... 15
Principal Underwriter......................................... 16
Voting Interest........................................................ 16
Cancellation of Contract............................................... 16
Appendix A - State Premium Taxes....................................... 17
Financial Statements................................................... 18
<PAGE> 66
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. The Company is a wholly-owned subsidiary of The Manufacturers Life
Insurance Company of North America, formerly, North American Security Life
Insurance Company ("MANULIFE NORTH AMERICA"), a stock life insurance company
established in 1979 in Delaware. The ultimate parent of Manulife North America
is The Manufacturers Life Insurance Company ("MANULIFE"), a Canadian mutual life
insurance Company based in Toronto, Canada. Prior to January 1, 1996, Manulife
North America was a wholly owned subsidiary of North American Life Assurance
Company ("NAL"), a Canadian mutual life insurance company. On January 1, 1996
NAL and Manulife merged with the combined company retaining the name Manulife.
On January 20, 1998, the Board of Directors of Manulife asked the
management of Manulife to prepare a plan for conversion of Manulife from a
mutual life insurance company to an investor-owned, publicly-traded stock
company. Any demutualization plan for Manulife is subject to the approval of the
Manulife Board of Directors and Policyholders as well as regulatory approval.
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.
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
3
<PAGE> 67
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 and 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
Diversified Bond 3.14% 6.70% 7.15% 10/31/92
U.S. Government Securities 0.18% 4.38% 4.89% 10/31/92
</TABLE>
4
<PAGE> 68
<TABLE>
<CAPTION>
SINCE INCEPTION OR 10
YEARS, WHICHEVER
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER INCEPTION DATE*
- -------------------------------------------------- ------------- -------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Money Market -2.05% 2.73% 2.72% 10/31/92
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 total return figures.
* Inception date of the sub-account of the Variable Account which invests in the
portfolio.
5
<PAGE> 69
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
YEARS, WHICHEVER INCEPTION 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 and 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
Lifestyle Growth 820 -1.02% N/A 5.63% 01/07/97
</TABLE>
6
<PAGE> 70
<TABLE>
<CAPTION>
SINCE INCEPTION OR 10
YEARS, WHICHEVER INCEPTION DATE OF
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- -------------------------------------------------- ------------- -------------- ----------------------- ---------------------
<S> <C> <C> <C> <C>
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.
+Ten year average annual return.
*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.
7
<PAGE> 71
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
YEARS, WHICHEVER INCEPTION 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 and 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
Lifestyle Growth 820 4.73% N/A 8.53% 01/07/97
</TABLE>
8
<PAGE> 72
<TABLE>
<CAPTION>
SINCE INCEPTION OR 10
YEARS, WHICHEVER INCEPTION DATE OF
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
- -------------------------------------------------- ------------- -------------- ------------------------ --------------------
<S> <C> <C> <C> <C>
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.
+Ten year average annual return.
*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.
9
<PAGE> 73
VEN 9 STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
CALCULATED AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
SINCE INCEPTION OR
10 YEARS,
TRUST PORTFOLIO 1 YEAR 5 YEAR WHICHEVER 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% 01/01/97
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 and 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
Lifestyle Growth 820 -1.02% N/A 5.63% 01/07/97
</TABLE>
10
<PAGE> 74
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS,
WHICHEVER SHORTER INCEPTION
TRUST PORTFOLIO 1 YEAR 5 YEAR DATE*
<S> <C> <C> <C> <C>
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> 75
VEN 9 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 YEARS, INCEPTION DATE
TRUST PORTFOLIO 1 YEAR 5 YEAR WHICHEVER SHORTER OF 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 and 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
Lifestyle Aggressive 1000 -2.26% N/A 3.46% 01/07/97
</TABLE>
12
<PAGE> 76
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS, INCEPTION DATE
TRUST PORTFOLIO 1 YEAR 5 YEAR WHICHEVER SHORTER OF 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>
+Ten year average annual return.
**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.
13
<PAGE> 77
VEN 9 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 YEARS, INCEPTION DATE
TRUST PORTFOLIO 1 YEAR 5 YEAR WHICHEVER SHORTER OF 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 and 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>
14
<PAGE> 78
<TABLE>
<CAPTION>
SINCE INCEPTION
OR 10 YEARS, INCEPTION DATE
TRUST PORTFOLIO 1 YEAR 5 YEAR WHICHEVER SHORTER OF 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 280 8.68% N/A 9.74% 01/07/97
</TABLE>
+Ten year average annual return.
**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.
* * * * *
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 and the Variable Account at
December 31, 1998 and 1997 and for the years then ended appearing in this
Statement of Additional Information have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon appearing elsewhere
herein, and are included in reliance upon such 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.
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;
15
<PAGE> 79
- 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 $7.50 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 $____________ 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.
VOTING INTEREST
As stated in the prospectus, 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.
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.
16
<PAGE> 80
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> 81
FINANCIAL STATEMENTS
[to be provided by amendment]
18
<PAGE> 82
PART C
OTHER INFORMATION
<PAGE> 83
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(1) Financial Statements of the Registrant, The
Manufacturers Life Insurance Company of New York
Separate Account A (Part B of the registration
statement). TO BE FILED BY AMENDMENT
(2) Financial Statements of the Depositor, The
Manufacturers Life Insurance Company of New York
(Part B of the registration statement). TO BE FILED
BY AMENDMENT
(b) Exhibits
(1) (a) Resolution of the Board of Directors of
First North American Life Assurance Company
establishing the FNAL Variable Account -
incorporated by reference to Exhibit
(b)(1)(a) to Form N-4, File No. 33-46217
filed February 25, 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.
<PAGE> 84
(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.
(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.
(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.
<PAGE> 85
(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 ) - filed herein.
(10) Written consent of Ernst & Young LLP - TO BE FILED BY
AMENDMENT.
(11) All financial statements omitted from Item 23,
Financial Statements - Not Applicable.
(12) Agreements in consideration for providing initial
capital between or among Registrant, Depositor,
Underwriter or initial contract owners - Not
Applicable.
(13) 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 - filed herein.
(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
PRINCIPAL BUSINESS ADDRESS INSURANCE COMPANY 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
</TABLE>
<PAGE> 86
<TABLE>
<CAPTION>
NAME AND POSITION WITH THE MANUFACTURERS LIFE
PRINCIPAL BUSINESS ADDRESS INSURANCE COMPANY OF NEW YORK
<S> <C>
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
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>
<PAGE> 87
Item 26. Persons Controlled by or Under Common Control with Depositor or
Registrant.
THE MANUFACTURERS LIFE INSURANCE COMPANY
Manulife Corporate Organization as at December 31, 1997
The Manufacturers Life Insurance Company (Canada)
1. Cantay Holdings Inc. - Ontario (100%)
2. 484551 Ontario Limited - Ontario (100%)
a. 911164 Ontario Inc. - Ontario (100%)
3. Churchill Lifestyles Corp. (100%)
4. 495603 Ontario Limited - Ontario (100%)
5. 1198183 Ontario Limited - Ontario (100%)
6. 1198184 Ontario Limited - Ontario (100%)
7. 1235434 Ontario Limited - Ontario (100%)
8. 576986 Ontario Inc. - Ontario (100%)
9. Balmoral Developments Inc. - Ontario (100%)
10. Manulife Bank of Canada - Canada (100%)
11. Manulife Securities International Ltd. - Canada (100%)
12. Family Realty First Corp. - Ontario (100%)
13. NAL Resources Limited - Alberta (100%)
14. Manulife International Capital Corporation Limited - Ontario (100%)
a. Regional Power Inc. - Ontario (100%)
i. La Regionale Power (Port Cartier) Inc. - Ontario (100%)
ii. La Regionale Power Angliers Inc. - Ontario (100%)
iii. Addalam Power Corporation - Philippines (100%)
15. Peel-de Maisonneuve Investments Ltd. - Canada (100%)
a. 2932121 Canada Inc. - Canada (100%)
16. FNA Financial Inc. - Canada (100%)
a. NAL Trustco Inc. - Ontario (100%)
b. First North American Insurance Company - Canada (100%)
c. Elliott & Page Limited - Ontario (100%)
d. Seamark Asset Management Ltd. - Canada (67.86%)
e. NAL Resources Management Limited - Canada (100%)
i. NAL Energy Inc. - Alberta (100%)
17. ManuCab Ltd. - Canada (100%)
a. Plazcab Service Limited - Newfoundland (100%)
18. Manufacturers Life Capital Corporation Inc. - Canada (100%)
19. The North American Group Inc. - Ontario (100%)
20. 994744 Ontario Inc. - Ontario (100%)
21. 1268337 Ontario Inc. - Ontario (100%)
22. 3426505 Canada Inc. - Canada (100%)
23. The Manufacturers Investment Corporation - Michigan (100%)
a. Manulife Reinsurance Corporation (U.S.A.) - Michigan (100%)
i. The Manufacturers Life Insurance Company (U.S.A.) -
Michigan (100%)
(1) Dover Leasing Investments, LLC - Delaware
(99%)
(2) The Manufacturers Life Insurance Company of
America - Michigan (100%)
(a) Manulife Holding Corporation -
Delaware (100%)
(i) Manufacturers Adviser
Corporation - Colorado
(100%)
(ii) Succession Planning
International, Inc. -
Wisconsin (100%)
<PAGE> 88
(iii) ManEquity, Inc. - Colorado
(100%)
(iv) Manulife Property
Management of Washington,
D.C. Inc. - Washington,
D.C. (100%)
(v) ManuLife Service
Corporation - Colorado
(100%)
(vi) Manulife Leasing Company,
LLC - Delaware (80%)
(3) Capitol Bankers Life Insurance Company -
Michigan (100%)
(4) Ennal, Inc. - Ohio (100%)
(5) Manulife-Wood Logan Holding Co. Inc. -
Delaware (62.5%)
(a) Wood Logan Associates, Inc. -
Connecticut (100%)
(i) Wood Logan Distributors,
Inc. - Connecticut (100%)
(b) The Manufacturers Life Insurance
Company of North America - Delaware
(100%)
(i) Manufacturers Securities
Services, LLC -
Massachusetts (100%)
(ii) The Manufacturers Life
Insurance Company of New
York - New York (100%)
ii. Manulife Reinsurance Limited - Bermuda (100%)
(1) MRL Holding, LLC - Delaware (99%)
(a) Manulife-Wood Logan Holding Co. Inc.
- Delaware (22.5%)
iii. MRL Holding, LLC - Delaware (1%)
24. Manulife International Investment Management Limited - U.K. (100%)
a. Manulife International Fund Management Limited - U.K. (100%)
25. WT(SW) Properties Ltd. - U.K. (100%)
26. Manulife Europe Ruckversicherungs-Aktiengesellschaft - Germany (100%)
27. Manulife International Holdings Limited - Bermuda (100%)
a. Manulife (International) Limited - Bermuda (100%)
i. Zhong Hong Life Insurance Co., Ltd. - China (51%)
ii. The Manufacturers (Pacific Asia) Insurance Company
Limited - H.K. (100%)
iii. Newtime Consultants Limited - H.K. (100%)
28. Manulife (International) Reinsurance Limited - Bermuda (100%)
a. Manulife (International) P & C Limited - Bermuda (100%)
b. Manufacturers P & C Limited - Barbados (100%)
c. Manufacturers Life Reinsurance Limited - Barbados (100%)
29. Chinfon-Manulife Insurance Company Limited - Bermuda (100%)
30. Manulife (Malaysia) SDN. BHD. - Malaysia (100%)
31. Manulife (Thailand) Ltd. - Thailand (100%)
32. Young Poong Manulife Insurance Company - Korea (100%)
33. Manulife Data Services Inc. - Barbados (100%)
a. Manulife Funds Direct (Barbados) Limited - Barbados (100%)
i. Manulife Funds Direct (Hong Kong) Limited - H.K.
(100%)
34. OUB Manulife Pte. Ltd. - Singapore (100%)
35. Manulife Holdings (Hong Kong) Limited - H.K. (100%)
36. ManuLife Financial Systems (Hong Kong) Limited - H.K. (100%)
37. P.T. Asuransi Jiwa Dhamala ManuLife - Indonesia (51%)
a. P.T. AMP Panin Life - Indonesia (100%)
Item 27. Number of Contract Owners.
As of December 31, 1998, there were 6,217 qualified and 9,532 non-qualified
contracts for Ven 9 and 0 qualified and 0 non-qualified contracts for Ven 24 of
the series offered hereby outstanding.
<PAGE> 89
Item 28. Indemnification.
Article 10 of the Charter of the Company provides as follows:
TENTH: No director of the Corporation shall be personally liable to the
Corporation or any of its shareholders for damages for any breach of duty as a
director; provided, however, the foregoing provision shall not eliminate or
limit (i) the liability of a director if a judgment or other final adjudication
adverse to such director established his or her such acts or omissions were in
bad faith or involved intentional misconduct or were acts or omissions (a) which
he or she knew or reasonably should have known violated the New York Insurance
Law or (b) which violated a specific standard of care imposed on directors
directly, and not by reference, by a provision of the New York Insurance Law (or
any regulations promulgated thereunder) or (c) which constituted a knowing
violation of any other law, or establishes that the director personally gained
in fact a financial profit or other advantage to which the director was not
legally entitled or (ii) the liability of a director for any act or omission
prior to the adoption of this Article by the shareholders of the Corporation.
Any repeal or modification of this Article by the shareholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification.
Article VII of the By-laws of the Company provides as follows:
Section VII.1. Indemnification of Directors and Officers. The Corporation may
indemnify any person made, or threatened to be made, a party to an action by or
in the right of the corporation to procure a judgment in its favor by reason of
the fact that he or she, his or her testator, testatrix or intestate, is or was
a director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of any other corporation of any type or
kind, domestic or foreign, of any partnership, joint venture, trust, employee
benefit plan or other enterprise, against amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him or her in connection with the defense or settlement of such
action, or in connection with an appeal therein, if such director or officer
acted, in good faith, for a purpose which he or she reasonably believed to be
in, or, in the case of service for any other corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise, not opposed to,
the best interests of the Corporation, except that no indemnification under this
Section shall be made in respect of (1) a threatened action, or a pending action
which is settled or is otherwise disposed of, or (2) any claim, issue or matter
as to which such person shall have been adjudged to be liable to the
Corporation, unless and only to the extent that the court in which the action
was brought, or , if no action was brought, any court of competent jurisdiction,
determines upon application that, in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for such portion of
the settlement amount and expenses as the court deems proper.
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
<PAGE> 90
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.
Item 29. Principal Underwriters.
a. Name of Investment Company Capacity In Which Acting
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
<PAGE> 91
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
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
</TABLE>
<PAGE> 92
<TABLE>
<CAPTION>
Name and Principal Position with The Manufacturers Life Insurance
Business Address Company of North America
- ---------------- ------------------------
<S> <C>
Bill Hayward Vice President, Administration
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> 93
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, The
Manufacturers Life Insurance Company of New York Separate Account A, has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Boston, and
Commonwealth of Massachusetts on the 1st day of March, 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
1st day of March, 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> 94
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 1st day of March, 1999.
SIGNATURE TITLE
- --------- -----
*____________________ Director
John Richardson (Chairman)
/s/ A SCOTT LOGAN Director; President
____________________
A. Scott Logan (Chief Executive Officer)
/s/ JOHN D. DESPREZ III 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> 95
EXHIBIT INDEX
Exhibit No. Description
(b)(9) Opinion of Counsel and consent to its use as to the
legality of the securities being registered (June 28,
1994 )
(b)(14)(b) Power of Attorney, James O'Malley and Thomas Borshoff
<PAGE> 1
FIRST NORTH AMERICAN LIFE ASSURANCE COMPANY
International Corporate Center at Rye
555 Theodore Fremd Avenue, Suite C-209
Rye, NY 10580-9966
June 28, 1994
To whom it may concern,
This opinion is written in reference to the individual deferred variable annuity
contracts (the "Contracts") to be issued by First North American Life Assurance
Company, a New York corporation (the "Company"), with respect to which a
Registration Statement on Form N-4 (the "Registration Statement") is being filed
under the Securities Act of 1933, as amended (the"Act").
As counsel to the Company, I have examined such records and documents and
reviewed such question of law as I deemed necessary for purposes of this
opinion.
1. The Company has been duly incorporated under the laws of the state of New
York and is a validly existing corporation.
2. FNAL Variable Account (the "Variable Account") is a separate account of the
Company and is duly created and validly existing pursuant to Section 4240 of the
New York Insurance Laws, as amended, and to New York Regulation 47.
3. The portion of the assets to be held in the Variable Account equal to the
reserves and other liabilities under the Contracts is not chargeable with
liabilities arising out of any other business the Company may conduct.
4. The Contracts, when issued in accordance with the prospectus contained in the
effective Registration Statement and upon compliance with applicable local law,
will be legal and binding obligations of the Company.
I consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement.
Very truly yours,
/s/ TRACY ANNE KANE
Tracy A. Kane
Secretary and Counsel
<PAGE> 1
POWER OF ATTORNEY
I, James P. O'Malley, Director of The Manufacturers Life Insurance
Company of New York (the "Company"), do hereby constitute and appoint John D.
Richardson, A. Scott Logan, John G. Vrysen, David Libbey, Paige Sabine or Tracy
Anne Kane, or any of them, my true and lawful attorneys to sign or execute (i)
registration statements and reports and other filings to be filed with the
Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as
amended (the "1933 Act") and/or the Investment Company Act of 1940, as amended
(the "1940 Act") and (ii) reports and other filings to be filed with the SEC (or
any other regulatory entity) pursuant to the Securities Exchange Act of 1934
(the "1934 Act") and to do any and all acts and things and to sign or execute
any and all instruments for me, in my name, in the capacities indicated below,
which said attorney, may deem necessary or advisable to enable the Company to
comply with the 1933 Act, the 1940 Act and the 1934 Act, and any rules,
regulations and requirements of the SEC, in connection with such registration
statements, reports and filings made under the 1933 Act, the 1940 Act and the
1934 Act, including specifically, but without limitation, power and authority to
sign or execute for me, in my name, and in the capacities indicated below, (i)
any and all amendments (including post-effective amendments) to such
registration statements and (ii) Form 10-Ks and Form 10-Qs filed under the 1934
Act; and I do hereby ratify and confirm all that the said attorneys, or any of
them, shall do or cause to be done by virtue of this power of attorney. This
Power of Attorney is intended to supersede any and all prior Power of Attorneys
in connection with the above mentioned acts.
SIGNATURE TITLE DATE
/s/ JAMES P. O'MALLEY Director February 9, 1999
- --------------------------- ------------------
James P. O'Malley
<PAGE> 2
POWER OF ATTORNEY
I, Thomas Borshoff, Director of The Manufacturers Life Insurance
Company of New York (the "Company"), do hereby constitute and appoint John D.
Richardson, A. Scott Logan, John G. Vrysen, David Libbey, Paige Sabine or Tracy
Anne Kane, or any of them, my true and lawful attorneys to sign or execute (i)
registration statements and reports and other filings to be filed with the
Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as
amended (the "1933 Act") and/or the Investment Company Act of 1940, as amended
(the "1940 Act") and (ii) reports and other filings to be filed with the SEC (or
any other regulatory entity) pursuant to the Securities Exchange Act of 1934
(the "1934 Act") and to do any and all acts and things and to sign or execute
any and all instruments for me, in my name, in the capacities indicated below,
which said attorney, may deem necessary or advisable to enable the Company to
comply with the 1933 Act, the 1940 Act and the 1934 Act, and any rules,
regulations and requirements of the SEC, in connection with such registration
statements, reports and filings made under the 1933 Act, the 1940 Act and the
1934 Act, including specifically, but without limitation, power and authority to
sign or execute for me, in my name, and in the capacities indicated below, (i)
any and all amendments (including post-effective amendments) to such
registration statements and (ii) Form 10-Ks and Form 10-Qs filed under the 1934
Act; and I do hereby ratify and confirm all that the said attorneys, or any of
them, shall do or cause to be done by virtue of this power of attorney. This
Power of Attorney is intended to supersede any and all prior Power of Attorneys
in connection with the above mentioned acts.
SIGNATURE TITLE DATE
/s/ THOMAS BORSHOFF Director February 26, 1999
Thomas Borshoff
