<PAGE> 1
SUPPLEMENT TO PROSPECTUS
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT A
DATED MAY 1, 2000
Effective January 1, 2001, new contracts will be issued with an
Optional Payment Enhancement if the contract owner elects this optional feature.
The minimum initial purchase payment required to elect the Optional Payment
Enhancement is $10,000. An additional fee is imposed for the Optional Payment
Enhancement and contracts with this feature will be subject to a higher
withdrawal charge for a longer period of time.
OPTIONAL PAYMENT ENHANCEMENT
If you elect the Optional Payment Enhancement, we will add a payment
enhancement to your contract when you make a purchase payment. The payment
enhancement is equal to 4% of the purchase payment and is allocated among
investment options in the same proportion as your purchase payment. The payment
enhancement is funded from our general account.
Purchase Payments Which Are Not Eligible for a Payment Enhancement. If
the owner's spouse is the beneficiary, the spouse continues the contract as the
new owner and a death benefit is paid 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. Such purchase
payment will not be eligible for a payment enhancement.
Right to Review Contract. If you exercise your right to return your
contract during the "ten day right to review period," we will reduce the amount
returned to you by the amount of any payment enhancement applied to your initial
purchase payment. Therefore, you bear the risk that if the market value of the
payment enhancement has declined, we will still recover the full amount of the
payment enhancement. However, earnings attributable to the payment enhancement
will not be deducted from the amount paid to you.
Tax Considerations. Payment enhancements are not considered to be
"investment in the contract" for income tax purposes (see "FEDERAL TAX
MATTERS").
Matters to Consider Prior to Electing the Optional Payment Enhancement.
There may be circumstances where you may be worse off for having purchased a
contract with a payment enhancement as opposed to a contract without a payment
enhancement. For example, the higher charges assessed for a contract with a
payment enhancement may over time exceed the amount of the payment enhancement
and any earnings thereon. We issue a variety of variable annuities designed to
meet different retirement planning goals. Other variable annuities issued by us
have no payment enhancement. In addition, the contract describe in this
prospectus may be purchased without a payment enhancement. Contracts with no
payment enhancements have withdrawal charges and asset based charges that may
for certain contracts be lower than the charges for this contract. You and your
financial consultant should decide if you may be better off with one of our
other variable annuities. In making this determination, you and your financial
consultant should consider the following factors:
- The length of time that you plan to own your contract
- The frequency, amount and timing of any partial earnings
- The amount of your purchase payments
Choosing the Optional Payment Enhancement is generally advantageous except in
the following situation: if you intend to make a single payment to your contract
or a high initial payment relative to renewal payments and you intend to hold
your contract for more than 11 years.
<PAGE> 2
We expect to make a profit from the contracts. The charges used to
recoup the expense of paying the payment enhancement include the withdrawal
charge and the asset based charges.
If you are considering purchasing a contract in connection with certain
qualified plans, then special considerations regarding the payment enhancement
may apply. Corporate and self-employed pension and profit sharing plans, as well
as tax-sheltered annuity plans, are subject to nondiscrimination rules. The
nondiscrimination rules generally require that benefits, rights, or features of
the plan not discriminate in favor of highly compensated employees. In
evaluating whether the contract is suitable for purchase in connection with such
a qualified plan, you should consider the effect of the payment enhancement on
the plan's compliance with the applicable nondiscrimination requirements.
Violation of these nondiscrimination rules can cause loss of the plan's tax
favored status under the Code. Employers intending to use the contract in
connection with such plans should seek competent advice. (See Appendix E -
"QUALIFIED PLAN TYPES").
ADDITIONAL CHARGES FOR THE OPTIONAL PAYMENT ENHANCEMENT
If the Optional Payment Enhancement is elected, the separate account
annual expenses are increased by 0.35% to 1.75%. In addition, each purchase
payment will be subject to a higher withdrawal charge for a longer period of
time. These additional charges are described in the chart below:
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
portfolios of the Trust. The items listed under "Trust Annual Expenses" are
described in detail in the accompanying Trust Prospectus.
CONTRACT OWNER TRANSACTION EXPENSES
Deferred sales load (as percentage of purchase payments)
<TABLE>
<CAPTION>
NUMBER OF COMPLETE YEARS
PURCHASE PAYMENT IN CONTRACT WITHDRAWAL CHARGE PERCENTAGE
<S> <C>
0 8%
1 8%
2 7%
3 7%
4 5%
5 4%
6 3%
7 1%
8 0%
</TABLE>
ANNUAL CONTRACT FEE..................................................... $30(1)
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and expense risks fees........................................ 1.60%
Administration fee - asset based........................................ 0.15%
Total Separate Account Annual Expenses.................................. 1.75%
--------------------
(1) The $30 annual administration fee will not be assessed prior to the maturity
date if at the time of its assessment the sum of all investment account values
is greater than or equal to $100,000.
2
<PAGE> 3
TRUST ANNUAL EXPENSES
(as a percentage of Trust average net assets for the fiscal year ended December
31, 1999)
<TABLE>
<CAPTION>
OTHER EXPENSES
MANAGEMENT (AFTER EXPENSE TOTAL TRUST
TRUST PORTFOLIO FEES REIMBURSEMENT) ANNUAL EXPENSES
--------------- ---- -------------- ---------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets........ 0.850% 0.260% 1.110%
Internet Technologies............... 1.150% 0.136%(A) 1.286%
Science & Technology................ 1.100%(J) 0.060% 1.160%
International Small Cap............. 1.100% 0.270% 1.370%
Aggressive Growth................... 1.000%(F) 0.130% 1.130%
Emerging Small Company.............. 1.050% 0.070% 1.120%
Small Company Blend................. 1.050% 0.250%(A) 1.300%(E)
Dynamic Growth...................... 1.000%(F) 0.132%(A) 1.132%
Mid Cap Stock....................... 0.925% 0.100%(A) 1.025%(E)
All Cap Growth(H)................... 0.950%(F) 0.070% 1.020%
Overseas............................ 0.950% 0.260% 1.210%
International Stock................. 1.050%(J) 0.200% 1.250%
International Value................. 1.000% 0.230%(A) 1.230%(E)
Capital Appreciation................ 0.900% 0.100%(A)(I) 1.000%
Mid Cap Blend....................... 0.850%(F) 0.060% 0.910%
Small Company Value................. 1.050% 0.170% 1.220%
Global Equity....................... 0.900% 0.160% 1.060%
Growth.............................. 0.850% 0.050% 0.900%
Large Cap Growth.................... 0.875%(F) 0.100% 0.975%
Quantitative Equity................. 0.700% 0.060% 0.760%
Blue Chip Growth.................... 0.875%(F)(J) 0.050% 0.925%
Real Estate Securities.............. 0.700% 0.070% 0.770%
Value............................... 0.800% 0.070% 0.870%
Tactical Allocation................. 0.900% 0.127%(A) 1.027%
Growth & Income..................... 0.750% 0.050% 0.800%
U.S. Large Cap Value................ 0.875% 0.070%(A) 0.945%(E)
Equity-Income....................... 0.875%(F)(J) 0.060% 0.935%
Income & Value...................... 0.800%(F) 0.080% 0.880%
Balanced............................ 0.800% 0.070% 0.870%
High Yield.......................... 0.775% 0.065% 0.840%
Strategic Bond...................... 0.775% 0.095% 0.870%
Global Bond......................... 0.800% 0.180% 0.980%
Total Return........................ 0.775% 0.060%(A) 0.835%(E)
Investment Quality Bond............. 0.650% 0.120% 0.770%
Diversified Bond.................... 0.750% 0.090% 0.840%
U.S. Government Securities.......... 0.650% 0.070% 0.720%
Money Market........................ 0.500% 0.050% 0.550%
Small Cap Index..................... 0.525% 0.075%(A)(G) 0.600%(G)
International Index................. 0.550% 0.050%(A)(G) 0.600%(G)
Mid Cap Index....................... 0.525% 0.075%(A)(G) 0.600%(G)
Total Stock Market Index............ 0.525% 0.075%(A)(G) 0.600%(G)
500 Index........................... 0.525% 0.039%(A)(G) 0.564%(G)
Lifestyle Aggressive 1000(D)........ 0.075% 1.060%(B) 1.135%(C)
Lifestyle Growth 820(D)............. 0.057% 1.008%(B) 1.065%(C)
Lifestyle Balanced 640(D)........... 0.057% 0.928%(B) 0.985%(C)
Lifestyle Moderate 460(D)........... 0.066% 0.869%(B) 0.935%(C)
Lifestyle Conservative 280(D)....... 0.075% 0.780%(B) 0.855%(C)
</TABLE>
-----------------
(A) Based on estimates to be made during the current fiscal year.
(B) Reflects expenses of the Underlying Portfolios.
3
<PAGE> 4
(C) The investment adviser to the Trust, Manufacturers Securities Services,
LLC ("MSS" or the "Adviser") has voluntarily agreed to pay certain expenses
of each Lifestyle Trust as follows:
If total expenses of a Lifestyle Trust (absent reimbursement) exceed 0.075%,
the Adviser will reduce the advisory fee or reimburse expenses of that
Lifestyle Trust by an amount such that total expenses of the Lifestyle
Trust, equal 0.075%. If the total expenses of a Lifestyle Trust (absent
reimbursement) are equal to or less than 0.075%, then no expenses will be
reimbursed by the Adviser. (For purposes of the expense reimbursement, total
expenses of a Lifestyle Trust includes the advisory fee but excludes (a) the
expenses of the Underlying Portfolios, (b) taxes, (c) portfolio brokerage,
(d) interest, (e) litigation and (f) indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Trust's
business.)
This voluntary expense reimbursement may be terminated at any time. If such
expense reimbursement was not in effect, Total Trust Annual Expenses would
be higher (based on current advisory fees and the Other Expenses of the
Lifestyle Trusts for the fiscal year ended December 31, 1999) 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...... 0.075% 1.090% 1.165%
Lifestyle Growth 820........... 0.057% 1.030% 1.087%
Lifestyle Balanced 640......... 0.057% 0.940% 0.997%
Lifestyle Moderate 460......... 0.066% 0.900% 0.966%
Lifestyle Conservative 280..... 0.075% 0.810% 0.885%
</TABLE>
(D) Each Lifestyle Trust will invest in shares of the Underlying Portfolios.
Therefore, each Lifestyle Trust will bear its 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 bear its own expenses.
However, the Adviser is currently paying certain of these expenses as
described in footnote (C) above.
(E) Annualized - For the period May 1, 1999 (commencement of operations) to
December 31, 1999.
(F) Management Fees changed effective May 1, 1999. Fees shown are the current
management fees.
(G) MSS has voluntarily agreed to pay expenses of each Index Trust (excluding
the advisory fee) that exceed the following amounts: 0.050% in the case of
the International Index Trust and 500 Index Trust and 0.075% in the case of
the Small Cap Index Trust, the Mid Cap Index Trust and Total Stock Market
Index Trust. If such expense reimbursement were not in effect, it is
estimated that "Other Expenses" and "Total Trust Annual Expenses" would be
0.072% and 0.622%, respectively, for the International Index Trust, 0.089%
and 0.614%, respectively, for the Small Cap Index Trust, and 0.135% and
0.660%, respectively, for the Mid Cap Index Trust and 0.080% and 0.605%,
respectively, for the Total Stock Market Index Trust. It is estimated that
the expense reimbursement will not be effective during the year end December
31, 2000 for the 500 Index Trust. The expense reimbursement may be
terminated at any time by MSS.
(H) Formerly, the Mid Cap Growth Trust.
(I) 0.900% on the first $300 million of net assets, 0.850% on net assets over
$300 million.
(J) Effective June 1, 2000, the Adviser voluntarily agreed to waive a portion of
its advisory fee for the Science & Technology Trust, the Blue Chip Growth
Trust, the Equity-Income Trust and the International Stock Trust. The fee
reduction is based on the combined asset level of all four portfolios. Once
the combined assets exceed specified amounts, the fee reduction is
increased. The percentage fee reduction for each asset level is as follows:
<TABLE>
<CAPTION>
COMBINED ASSET LEVELS FEE REDUCTION
(AS A PERCENTAGE OF THE ADVISORY FEE)
<S> <C>
First $750 million 0.0%
Between $750 million and $1.5 billion 2.5%
Between $1.5 billion and $3.0 billion 3.75%
Over $3.0 billion 5.0%
</TABLE>
4
<PAGE> 5
The fee reductions are applied to the advisory fees of each of the four
portfolios. This voluntary fee waiver may be terminated at any time by the
adviser. As of December 4, 2000, the combined asset level for all four
portfolios was approximately $4.4 billion resulting in a fee reduction of
5.0%. There is no guarantee that the combined asset level will remain at this
amount. If the combined asset level were to decrease to a lower breakpoint,
the fee reduction would decrease as well. The fee reductions are not
reflected in the "Trust Annual Expense" table above since the table reflects
expenses for the year ended December 31, 1999 which is prior to the
commencement of the fee reduction.
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming no payment
enhancement but reflecting the 1.75% separate account annual expenses and a 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 10 YEARS
--------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets.......... $103 $158 $203 $323
Internet Technologies................. 105 162 212 340
Science & Technology.................. 104 159 206 328
International Small Cap............... 105 165 216 348
Aggressive Growth..................... 103 158 204 325
Emerging Small Company................ 103 158 204 324
Small Company Blend................... 105 163 212 341
Dynamic Growth........................ 103 158 204 325
Mid Cap Stock......................... 102 155 199 315
All Cap Growth(A)..................... 102 154 199 315
Overseas.............................. 104 160 208 333
International Stock................... 104 161 210 336
International Value................... 104 161 209 335
Capital Appreciation.................. 102 155 198 313
Mid Cap Blend......................... 101 152 193 304
Small Company Value................... 104 161 209 334
Global Equity......................... 103 156 201 319
Growth................................ 101 152 193 303
Large Cap Growth...................... 102 154 197 310
Quantitative Equity................... 100 148 186 290
Blue Chip Growth...................... 101 152 194 306
Real Estate Securities................ 100 148 187 290
Value................................. 101 151 191 300
Tactical Allocation................... 102 155 199 315
Growth & Income....................... 100 149 188 293
U.S. Large Cap Value.................. 102 153 195 308
Equity-Income......................... 101 153 195 307
Income & Value........................ 101 151 192 301
Balanced.............................. 101 151 191 300
High Yield............................ 101 150 190 297
Strategic Bond........................ 101 151 191 300
Global Bond........................... 102 154 197 311
Total Return.......................... 101 150 190 297
Investment Quality Bond............... 100 148 187 290
Diversified Bond...................... 101 150 190 297
U.S. Government Securities............ 99 147 184 286
Money Market.......................... 98 142 176 269
Small Cap Index....................... 98 143 178 274
International Index................... 98 143 178 274
</TABLE>
5
<PAGE> 6
<TABLE>
<S> <C> <C> <C> <C>
Mid Cap Index......................... 98 143 178 274
Total Stock Market Index.............. 98 143 178 274
500 Index............................. 98 142 176 270
Lifestyle Aggressive 1000............. 103 158 205 326
Lifestyle Growth 820.................. 103 156 201 319
Lifestyle Balanced 640................ 102 154 197 311
Lifestyle Moderate 460................ 101 153 195 307
Lifestyle Conservative 280............ 101 151 191 299
</TABLE>
--------------------------
(A) Formerly, the Mid Cap Growth Trust.
You would pay the following expenses on a $1,000 investment, assuming no payment
enhancement but reflecting the 1.75% separate account annual expenses and a 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............ $29 $90 $153 $323
Internet Technologies................... 31 95 162 340
Science & Technology.................... 30 92 156 328
International Small Cap................. 32 98 166 348
Aggressive Growth....................... 30 91 154 325
Emerging Small Company.................. 30 90 154 324
Small Company Blend..................... 31 96 163 341
Dynamic Growth.......................... 30 91 154 325
Mid Cap Stock........................... 29 88 149 315
All Cap Growth(A)....................... 29 87 149 315
Overseas................................ 30 93 158 333
International Stock..................... 31 94 160 336
International Value..................... 31 94 159 335
Capital Appreciation.................... 28 87 148 313
Mid Cap Blend........................... 27 84 143 304
Small Company Value..................... 30 93 159 334
Global Equity........................... 29 89 151 319
Growth.................................. 27 84 143 303
Large Cap Growth........................ 28 86 147 310
Quantitative Equity..................... 26 80 136 290
Blue Chip Growth........................ 28 85 144 306
Real Estate Securities.................. 26 80 137 290
Value................................... 27 83 141 300
Tactical Allocation..................... 29 88 149 315
Growth & Income......................... 26 81 138 293
U.S. Large Cap Value.................... 28 85 145 308
Equity-Income........................... 28 85 145 307
Income & Value.......................... 27 83 142 301
Balanced................................ 27 83 141 300
High Yield.............................. 27 82 140 297
Strategic Bond.......................... 27 83 141 300
Global Bond............................. 28 86 147 311
Total Return............................ 27 82 140 297
Investment Quality Bond................. 26 80 137 290
Diversified Bond........................ 27 82 140 297
U.S. Government Securities.............. 26 78 134 286
Money Market............................ 24 73 126 269
Small Cap Index......................... 24 75 128 274
</TABLE>
6
<PAGE> 7
<TABLE>
<S> <C> <C> <C> <C>
International Index..................... 24 75 128 274
Mid Cap Index........................... 24 75 128 274
Total Stock Market Index................ 24 75 128 274
500 Index............................... 24 74 126 270
Lifestyle Aggressive 1000............... 30 91 155 326
Lifestyle Growth 820.................... 29 89 151 319
Lifestyle Balanced 640.................. 28 86 147 311
Lifestyle Moderate 460.................. 28 85 145 307
Lifestyle Conservative 280.............. 27 82 141 299
</TABLE>
-----------------
(A) Formerly, the Mid Cap Growth Trust.
For purposes of presenting the foregoing Examples, we have made certain
assumptions. We have assumed that, where applicable, the maximum sales load is
deducted, that there are no transfers or other transactions and that the "Other
Expenses" line item under "Trust Annual Expenses" will remain the same
(including any voluntary expense reimbursement continuing in effect). Those
assumptions, (each of which is mandated by the SEC in an attempt to provide
prospective contract owners 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, we have translated the $30 annual administration charge listed under
"Annual Contract Fee" to a 0.050% annual asset charge based on the $60,000
approximate average size. So translated, such charge would be higher for smaller
contracts and lower for larger contracts.
THE DATE OF THIS SUPPLEMENT IS DECEMBER 29, 2000.
7
<PAGE> 8
SUPPLEMENT TO PROSPECTUS
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT A
DATED MAY 1, 2000
NEW INVESTMENT PORTFOLIO
Effective November 1, 2000, one new investment portfolio, the Capital
Appreciation Trust will be added to the variable portion of your contract. The
new portfolio is a series of Manufacturers Investment Trust (the "Trust"). Set
forth below is a brief description of the portfolio's investment objective and
certain policies relating to that objective and a schedule of fees applicable to
that portfolio.
INVESTMENT OBJECTIVE AND POLICIES
CAPITAL APPRECIATION TRUST. The investment objective of the Capital Appreciation
Trust is long-term capital growth. Jennison Associates, LLC ("Jennison") manages
the Capital Appreciation Trust and seeks to achieve this investment objective by
investing at least 65% of the portfolio's total assets in equity-related
securities of companies that exceed $1 billion in market capitalization and that
Jennison believes have above-average growth prospects. These companies are
generally medium-to large-capitalization companies.
For more information on the new portfolio and its investment adviser, see the
Trust's prospectus dated November 1, 2000.
FEE TABLE AND EXAMPLE
Contract Owner Transaction Expenses, Annual Contract Fee and Separate Account
Annual Expenses are as set forth in the current Fee Table with respect to
existing portfolios. Trust Annual Expenses and Example are amended to include
the following new portfolio:
ANNUAL EXPENSES
---------------
(as a percentage of average net assets)
Management Other Total Trust
Fees Expenses Annual Expenses
Capital Appreciation Trust 0.900%* 0.100%** 1.000%
* 0.900% on the first $300 million of net assets, 0.850% on net assets over
$300 million
** Based on estimates of payments to be made during the current fiscal year.
<PAGE> 9
EXAMPLE
A Contract Owner would pay the following expenses on a $1,000 investment,
assuming 5% annual return on assets, if the Contract Owner surrendered the
contract at the end of the applicable time period:
TRUST PORTFOLIO 1 YEAR 3 YEARS
--------------- ------ -------
Capital Appreciation Trust $80 $125
A Contract Owner would pay the following expenses on a $1,000 investment,
assuming 5% annual return on assets, if the Contract Owner annuitized as
provided in the contract or did not surrender the contract at the end of the
applicable time period:
TRUST PORTFOLIO 1 YEAR 3 YEARS
--------------- ------ -------
Capital Appreciation Trust $25 $76
RATINGS OF THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
Due to the merger of the rating firms Duff & Phelps Credit Rating Co.
and Fitch IBCA, the disclosure regarding the ratings of The Manufacturers Life
Insurance Company of New York are amended to delete the reference to the Duff &
Phelps rating and replace it with the following:
AAA Fitch
Highest in insurer financial strength; 1st category of 22
THE DATE OF THIS SUPPLEMENT IS NOVEMBER 1, 2000.
NYVENTURE. SUPP112000 (2)
<PAGE> 10
HOME OFFICE ANNUITY SERVICE OFFICE MAILING ADDRESS
100 Summit Lake Drive P.O. Box 9013
Second Floor Boston, Massachusetts 02205-9013
Valhalla, New York 10595
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
fifty-two investment options. Forty-six options are variable
and six are fixed account options.
- The variable portion of contract values and variable annuity
benefit payments will vary according to the investment
performance of the sub-accounts of one of our separate
accounts, The Manufacturers Life Insurance Company of New York
Separate Account A (the "VARIABLE ACCOUNT"). Contract values
may be allocated to, and transferred among, one or more of
those sub-accounts.
- Each sub-account's assets are invested in a corresponding
portfolio of a mutual fund, Manufacturers Investment Trust
(the "TRUST"). We will provide the contract owner ("YOU") a
prospectus for the Trust with this Prospectus.
- SHARES OF THE TRUST ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
- Except as specifically noted here and under the caption "FIXED
ACCOUNT INVESTMENT OPTION" below, this Prospectus describes
only the variable portion of the contract.
- Special terms are defined in a glossary in Appendix A.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. IT
CONTAINS INFORMATION ABOUT THE VARIABLE ACCOUNT AND THE VARIABLE PORTION OF THE
CONTRACT THAT YOU SHOULD KNOW BEFORE INVESTING.
THE CONTRACTS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("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.
<PAGE> 11
- ADDITIONAL INFORMATION about the contract and the Variable Account is
contained in a Statement of Additional Information, dated the same date
as this Prospectus, which has been filed with the SEC and is
incorporated herein by reference. The Statement of Additional
Information is available without charge upon request by writing us at
the address on the front cover or by telephoning (877) 391-3748.
- 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
<TABLE>
<S> <C>
General Information and History.................................... 3
Performance Data................................................... 3
State Premium Taxes................................................ 15
Services
Independent Auditors.......................................... 15
Servicing Agent............................................... 16
Principal Underwriter......................................... 16
Appendix A - State Premium Taxes................................... 17
Audited Financial Statements....................................... 18
</TABLE>
The date of this Prospectus is May 1, 2000
<PAGE> 12
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY ................................................................................ 4
GENERAL INFORMATION ABOUT US, THE VARIABLE ACCOUNT AND THE TRUST ....................... 10
The Manufacturers Life Insurance Company
of New York ....................................................................... 10
The Variable Account .............................................................. 11
The Trust ......................................................................... 11
DESCRIPTION OF THE CONTRACT ............................................................ 16
ACCUMULATION PERIOD PROVISIONS ...................................................... 16
Purchase Payments ................................................................. 16
Accumulation Units ................................................................ 17
Value of Accumulation Units ....................................................... 17
Net Investment Factor ............................................................. 17
Transfers Among Investment Options ................................................ 18
Maximum Number of Investment Options .............................................. 18
Telephone Transactions
Special Transfer Services - Dollar Cost Averaging ................................. 18
Asset Rebalancing Program ......................................................... 18
Withdrawals ....................................................................... 19
Special Withdrawal Services - the Income Plan ..................................... 20
Death Benefit During Accumulation Period .......................................... 21
PAY-OUT PERIOD PROVISIONS ........................................................... 23
General ........................................................................... 23
Annuity Options ................................................................... 24
Determination of Amount of the First Variable Annuity Payment ..................... 25
Annuity Units and the Determination of Subsequent Variable Annuity Payments ....... 25
Transfers During Pay-out Period ................................................... 26
Death Benefit During Pay-out Period ............................................... 26
OTHER CONTRACT PROVISIONS ........................................................... 26
Right to Review Contract .......................................................... 26
Ownership ......................................................................... 27
Annuitant ......................................................................... 27
Change of Maturity Date ........................................................... 27
Beneficiary ....................................................................... 28
Modification ...................................................................... 28
Our Approval ...................................................................... 28
Misstatement and Proof of Age, Sex or Survival .................................... 28
FIXED ACCOUNT INVESTMENT OPTIONS .................................................... 28
CHARGES AND DEDUCTIONS ................................................................. 31
Withdrawal Charges ................................................................ 31
Administration Fees ............................................................... 33
Mortality and Expense Risks Charge ................................................ 33
Taxes ............................................................................. 33
Expenses of Distributing Contracts ................................................ 34
FEDERAL TAX MATTERS .................................................................... 34
INTRODUCTION ........................................................................ 34
OUR TAX STATUS ...................................................................... 34
TAXATION OF ANNUITIES IN GENERAL .................................................... 34
Tax Deferral During Accumulation Period ........................................... 34
Taxation of Partial and Full Withdrawals .......................................... 36
Taxation of Annuity Benefit Payments .............................................. 37
Taxation of Death Benefit Proceeds ................................................ 37
Penalty Tax on Premature Distributions ............................................ 38
Aggregation of Contracts .......................................................... 38
QUALIFIED RETIREMENT PLANS .......................................................... 38
Direct Rollovers .................................................................. 40
Loans ............................................................................. 20
FEDERAL INCOME TAX WITHHOLDING ...................................................... 40
GENERAL MATTERS ........................................................................ 40
Performance Data .................................................................. 40
Asset Allocation and Timing Services .............................................. 41
Distribution of Contracts ......................................................... 41
Contract Owner Inquiries .......................................................... 41
Confirmation Statements ........................................................... 41
Legal Proceedings ................................................................. 41
Year 2000 Issues .................................................................. 41
Cancellation of Contract .......................................................... 43
Voting Interest ................................................................... 43
APPENDIX A: SPECIAL TERMS .............................................................. A-1
APPENDIX B: TABLE OF ACCUMULATION UNIT VALUES FOR CONTRACTS DESCRIBED IN THIS PROSPECTUS B-1
APPENDIX C: EXAMPLES OF CALCULATION OF WITHDRAWAL CHARGE ............................... C-1
APPENDIX D: PRIOR CONTRACTS ............................................................ D-1
APPENDIX E: QUALIFIED PLAN TYPES ....................................................... E-1
</TABLE>
<PAGE> 13
SUMMARY
OVERVIEW OF THE CONTRACT. Under the contract, you make one or more payments to
us for a period of time (the "ACCUMULATION PERIOD") and then later, beginning on
the "MATURITY DATE" we make one or more annuity benefit payments to you (the
"PAY-OUT PERIOD"). Contract values during the accumulation period and the
amounts of annuity benefit payments during the pay-out period may either be
variable or fixed, depending upon the investment option(s) you select. You may
use the contract to fund either a non-qualified or tax-qualified retirement
plan.
When you purchase a variable annuity for any tax-qualified retirement plan, the
variable annuity does not provide any additional tax deferred treatment of
earnings beyond the treatment provided by the plan. Consequently, you should
purchase a variable annuity for a tax-qualified plan only on the basis of other
benefits offered by the variable annuity. These benefits may include lifetime
income payments, family protection through the death benefit, and guaranteed
fees.
PRIOR CONTRACTS. We have a class of variable annuity contract which is no longer
being issued but under which purchase payments may continue to be made ("PRIOR
CONTRACT" or "VEN 9 CONTRACTS"), which were sold during the period from March,
1992 until May, 1999. This Prospectus principally describes the contract offered
by this Prospectus but also describes the Ven 9 contracts. The principal
differences between the contract offered by this Prospectus and the prior
contract relate to the fixed investment options available under the contracts, a
minimum interest rate to be credited for any guarantee period under the fixed
portion of the contracts, the charges made by us, and the death benefit
provisions. See Appendix D.
PURCHASE PAYMENT LIMITS. The minimum initial purchase payment is $5,000 for
Non-Qualified contracts and $2,000 for Qualified contracts. Purchase payments
normally may be made at any time. If a purchase payment would cause your
contract value to exceed $1,000,000, or your contract value already exceeds
$1,000,000, however, you must obtain our approval in order to make the payment.
If permitted by state law, we may cancel your contract if you have made no
payments for two years, your contract value is less than $2,000 and your
payments over the life of your contract, minus your withdrawals over the life of
the contract, are less than $2,000.
INVESTMENT OPTIONS. Upon issuance of the contract, purchase payments may be
allocated among up to seventeen of the available investment options (including
all fixed account investment options). After the contract is issued, there is no
limit on the number of investment options to which you may allocate purchase
payments. Currently, forty-six Variable Account investment options and six fixed
account investment options are available under the contract. Each of the
forty-six 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.
Allocating assets only to one or a small number of the investment options (other
than the Lifestyle Trusts) should not be considered a balanced investment
strategy. In particular, allocating assets to a small number of investment
options that concentrate their investments in a particular business or market
sector will increase the risk that the value of your contract will be more
volatile since these investment options may react similarly to business or
market specific events. Examples of business or market sectors where this risk
historically has been and may continue to be particularly high include: (a)
technology related businesses, including internet related businesses, (b) small
cap securities and (c) foreign securities. The Company does not provide advice
regarding appropriate investment allocations; please discuss this matter with
your financial adviser.
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
4
<PAGE> 14
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 withdrawal. A withdrawal may be subject to
income tax and a 10% penalty tax. A systematic withdrawal plan service is
available under the contract.
CONFIRMATION STATEMENTS. We will send you confirmation statements for certain
transactions in your account. You should carefully review these statements to
verify their accuracy. You should immediately report any mistakes to our Annuity
Service Office (at the address shown on the cover of this Prospectus). If you
fail to notify our Annuity Service Office of any mistake within 60 days of the
mailing of the confirmation statement, you will be deemed to have ratified the
transaction.
DEATH BENEFITS. We will pay the death benefit described below to your
BENEFICIARY if you die during the accumulation period. If a contract is owned by
more than one person, then the surviving contract owner will be deemed the
beneficiary of the deceased contract owner. No death benefit is payable on the
death of any ANNUITANT (a natural person or persons to whom ANNUITY BENEFIT
PAYMENTS are made and whose life is used to determine the duration of annuity
benefit payments involving life contingencies), except that if any contract
owner is not a natural person, the death of any annuitant will be treated as the
death of an owner. The amount of the death benefit will be calculated as of the
date on which our Annuity Service Office receives written notice and proof of
death and all required claim forms. The formula used to calculate the death
benefit may vary according to the age(s) of the contract owner(s) at the time
the contract is issued and the age of the contract owner who dies. If there are
any unpaid loans (including unpaid interest) under the contract, the death
benefit equals the death benefit calculated according to the applicable formula,
minus the amount of the unpaid loans. If the annuitant dies during the pay-out
period and annuity benefit payment method selected calls for payments for a
guaranteed period, we will make the remaining guaranteed payments to the
beneficiary.
ANNUITY BENEFIT PAYMENTS. We offer a variety of fixed and variable annuity
payment options. Periodic annuity benefit payments will begin on the "maturity
date" (the first day of the pay-out period). You select the maturity date, the
frequency of payment and the type of annuity benefit payment option. Annuity
benefit payments are made to the annuitant.
TEN-DAY REVIEW. You may cancel your contract by returning it to us within 10
days of receiving it.
TAXATION. Generally all earnings on the underlying investments are tax-deferred
until withdrawn or until annuity benefit payments begin. Normally, a portion of
each annuity benefit payment is taxable as ordinary income. Partial and total
withdrawals generally are taxable as ordinary income to the extent contract
value prior to the withdrawal exceeds the purchase payments you have made, minus
any prior withdrawals that were not taxable. A 10% penalty tax may apply to
withdrawals prior to age 59-1/2.
CHARGES AND DEDUCTIONS. The following Table and Example are designed to assist
you in understanding the various costs and expenses related to the contract. The
table reflects expenses of the Variable Account and the underlying portfolio of
the Trust. The items listed under "Contract Owner Transaction Expenses" and
"Separate Account Annual Expenses" are more completely described in this
Prospectus under "Charges and Deductions." The items listed under "Trust Annual
Expenses" are described in detail in the accompanying Trust Prospectus.
5
<PAGE> 15
CONTRACT OWNER TRANSACTION EXPENSES
See Appendix D for a discussion of contract owner transaction expenses under Ven
9 contracts.
Deferred sales load (as percentage of purchase payments)
<TABLE>
<CAPTION>
NUMBER OF COMPLETE YEARS
PURCHASE PAYMENT IN CONTRACT WITHDRAWAL CHARGE PERCENTAGE
<S> <C>
0 6%
1 6%
2 5%
3 5%
4 4%
5 3%
6 2%
7 0%
</TABLE>
ANNUAL CONTRACT FEE.............................................. $30(1)
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and expense risks fees................................. 1.25%
Administration fee - asset based................................. 0.15%
Total Separate Account Annual Expenses........................... 1.40%
TRUST ANNUAL EXPENSES
(as a percentage of Trust average net assets for the fiscal year ended December
31, 1999)
<TABLE>
<CAPTION>
OTHER EXPENSES
MANAGEMENT (AFTER EXPENSE TOTAL TRUST
TRUST PORTFOLIO FEES REIMBURSEMENT) ANNUAL EXPENSES
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets........ 0.850% 0.260% 1.110%
Internet Technologies............... 1.150% 0.136%(A) 1.286%
Science & Technology................ 1.100% 0.060% 1.160%
International Small Cap............. 1.100% 0.270% 1.370%
Aggressive Growth................... 1.000%(F) 0.130% 1.130%
Emerging Small Company.............. 1.050% 0.070% 1.120%
Small Company Blend................. 1.050% 0.250%(A) 1.300%(E)
Dynamic Growth...................... 1.000%(F) 0.132%(A) 1.132%
Mid Cap Stock....................... 0.925% 0.100%(A) 1.025%(E)
All Cap Growth(H)................... 0.950%(F) 0.070% 1.020%
Overseas............................ 0.950% 0.260% 1.210%
International Stock................. 1.050% 0.200% 1.250%
International Value................. 1.000% 0.230%(A) 1.230%(E)
Mid Cap Blend....................... 0.850%(F) 0.060% 0.910%
Small Company Value................. 1.050% 0.170% 1.220%
Global Equity....................... 0.900% 0.160% 1.060%
Growth.............................. 0.850% 0.050% 0.900%
Large Cap Growth.................... 0.875%(F) 0.100% 0.975%
Quantitative Equity................. 0.700% 0.060% 0.760%
Blue Chip Growth.................... 0.875%(F) 0.050% 0.925%
Real Estate Securities.............. 0.700% 0.070% 0.770%
</TABLE>
----------------
(1) The $30 annual administration fee will not be assessed prior to the maturity
date if at the time of its assessment the sum of all investment account values
is greater than or equal to $100,000. This provision does not apply to Ven 9
contracts. See Appendix D.
6
<PAGE> 16
<TABLE>
<CAPTION>
OTHER EXPENSES
MANAGEMENT (AFTER EXPENSE TOTAL TRUST
TRUST PORTFOLIO FEES REIMBURSEMENT) ANNUAL EXPENSES
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Value............................... 0.800% 0.070% 0.870%
Tactical Allocation................. 0.900% 0.127%(A) 1.027%
Growth & Income..................... 0.750% 0.050% 0.800%
U.S. Large Cap Value................ 0.875% 0.070%(A) 0.945%(E)
Equity-Income....................... 0.875%(F) 0.060% 0.935%
Income & Value...................... 0.800%(F) 0.080% 0.880%
Balanced............................ 0.800% 0.070% 0.870%
High Yield.......................... 0.775% 0.065% 0.840%
Strategic Bond...................... 0.775% 0.095% 0.870%
Global Bond......................... 0.800% 0.180% 0.980%
Total Return........................ 0.775% 0.060%(A) 0.835%(E)
Investment Quality Bond............. 0.650% 0.120% 0.770%
Diversified Bond.................... 0.750% 0.090% 0.840%
U.S. Government Securities.......... 0.650% 0.070% 0.720%
Money Market........................ 0.500% 0.050% 0.550%
International Index................. 0.550% 0.050%(A)(G) 0.600%
Small Cap Index..................... 0.525% 0.075%(A)(G) 0.600%
Mid Cap Index....................... 0.525% 0.075%(A)(G) 0.600%
Total Stock Market Index............ 0.525% 0.075%(A)(G) 0.600%
500 Index........................... 0.525% 0.039%(A)(G) 0.564%
Lifestyle Aggressive 1000(D)........ 0.075% 1.060%(B) 1.135%(C)
Lifestyle Growth 820(D)............. 0.057% 1.008%(B) 1.065%(C)
Lifestyle Balanced 640(D)........... 0.057% 0.928%(B) 0.985%(C)
Lifestyle Moderate 460(D)........... 0.066% 0.869%(B) 0.935%(C)
Lifestyle Conservative 280(D)....... 0.075% 0.780%(B) 0.855%(C)
</TABLE>
-----------------
(A) Based on estimates to be made during the current fiscal year.
(B) Reflects expenses of the Underlying Portfolios.
(C) The investment adviser to the Trust, Manufacturers Securities Services, LLC
("MSS" or the "Adviser") has voluntarily agreed to pay certain expenses of
each Lifestyle Trust as follows:
If total expenses of a Lifestyle Trust (absent reimbursement) exceed 0.075%, the
Adviser will reduce the advisory fee or reimburse expenses of that Lifestyle
Trust by an amount such that total expenses of the Lifestyle Trust, equal
0.075%. If the total expenses of a Lifestyle Trust (absent reimbursement) are
equal to or less than 0.075%, then no expenses will be reimbursed by the
Adviser. (For purposes of the expense reimbursement, total expenses of a
Lifestyle Trust includes the advisory fee but excludes (a) the expenses of the
Underlying Portfolios, (b) taxes, (c) portfolio brokerage, (d) interest, (e)
litigation and (f) indemnification expenses and other extraordinary expenses not
incurred in the ordinary course of the Trust's business.)
This voluntary expense reimbursement may be terminated at any time. If such
expense reimbursement was not in effect, Total Trust Annual Expenses would be
higher (based on current advisory fees and the Other Expenses of the Lifestyle
Trusts for the fiscal year ended December 31, 1999) 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........... 0.075% 1.090% 1.165%
Lifestyle Growth 820................ 0.057% 1.030% 1.087%
Lifestyle Balanced 640.............. 0.057% 0.940% 0.997%
Lifestyle Moderate 460.............. 0.066% 0.900% 0.966%
Lifestyle Conservative 280.......... 0.075% 0.810% 0.885%
</TABLE>
7
<PAGE> 17
(D) Each Lifestyle Trust will invest in shares of the Underlying Portfolios.
Therefore, each Lifestyle Trust will bear its 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 bear its own expenses.
However, the Adviser is currently paying certain of these expenses as
described in footnote (C) above.
(E) Annualized - For the period May 1, 1999 (commencement of operations) to
December 31, 1999.
(F) Management Fees changed effective May 1, 1999. Fees shown are the current
management fees.
(G) MSS has voluntarily agreed to pay expenses of each Index Trust (excluding
the advisory fee) that exceed the following amounts: 0.050% in the case of
the International Index Trust and 500 Index Trust and 0.075% in the case of
the Small Cap Index Trust, the Mid Cap Index Trust and Total Stock Market
Index Trust. If such expense reimbursement were not in effect, it is
estimated that "Other Expenses" and "Total Trust Annual Expenses" would be
0.022% higher for the International Index Trust, 0.014% higher for the
Small Cap Index Trust, 0.060% higher for the Mid Cap Index Trust and 0.005%
higher for the Total Stock Market Index Trust. It is estimated that the
expense reimbursement will not be effective during the year end December
31, 2000 for the 500 Index Trust. The expense reimbursement may be
terminated at any time by MSS.
(H) Formerly, the Mid Cap Growth Trust.
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(A) 5 YEARS 10 YEARS
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Pacific Rim Emerging Markets.......... $81 $128 $166 $176 $290
Internet Technologies................. 83 133 175 185 307
Science & Technology.................. 82 130 169 179 294
International Small Cap............... 84 136 179 189 315
Aggressive Growth..................... 82 129 167 177 291
Emerging Small Company................ 81 129 167 177 290
Small Company Blend................... 83 134 175 185 308
Dynamic Growth........................ 82 129 167 177 292
Mid Cap Stock......................... 81 126 162 172 281
All Cap Growth(B)..................... 81 126 162 172 281
Overseas.............................. 82 131 171 181 299
International Stock................... 83 132 173 183 303
International Value................... 83 132 172 182 301
Mid Cap Blend......................... 79 123 156 166 270
Small Company Value................... 82 132 171 181 300
Global Equity......................... 81 127 164 174 285
Growth.................................. 79 122 156 166 269
Large Cap Growth........................ 80 125 159 169 276
Quantitative Equity..................... 78 118 148 158 254
Blue Chip Growth........................ 80 123 157 167 271
Real Estate Securities.................. 78 119 149 159 255
Value................................... 79 122 154 164 266
Tactical Allocation..................... 81 126 162 172 281
Growth & Income......................... 78 120 150 160 258
U.S. Large Cap Value.................... 80 124 158 168 273
Equity-Income........................... 80 123 157 167 272
Income & Value.......................... 79 122 155 165 267
Balanced................................ 79 122 154 164 266
High Yield.............................. 79 121 153 163 263
Strategic Bond.......................... 79 122 154 164 266
Global Bond............................. 80 125 160 170 277
Total Return............................ 79 121 152 162 262
Investment Quality Bond................. 78 119 149 159 255
</TABLE>
8
<PAGE> 18
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS(A) 5 YEARS 10 YEARS
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Diversified Bond........................ 79 121 153 163 263
U.S. Government Securities.............. 78 117 146 156 250
Money Market............................ 76 112 138 148 233
Small Cap Index......................... 77 114 140 150 238
International Index..................... 77 114 140 150 238
Mid Cap Index........................... 77 114 140 150 238
Total Stock Market Index................ 77 114 140 150 238
500 Index............................... 76 113 138 148 234
Lifestyle Aggressive 1000............... 82 129 167 177 292
Lifestyle Growth 820.................... 81 127 164 174 285
Lifestyle Balanced 640.................. 80 125 160 170 277
Lifestyle Moderate 460.................. 80 123 157 167 272
Lifestyle Conservative 280.............. 79 121 153 163 264
</TABLE>
-----------------
(A) For Ven 9 contracts only (as described in Appendix D). The difference in
amounts is attributable to the different withdrawal charges. See Appendix
D.
(B) Formerly, the Mid Cap Growth Trust.
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............ $26 $80 $136 $290
Internet Technologies................... 28 85 145 307
Science & Technology.................... 26 81 139 294
International Small Cap................. 29 87 149 315
Aggressive Growth....................... 26 80 137 291
Emerging Small Company.................. 26 80 137 290
Small Company Blend..................... 28 85 145 308
Dynamic Growth.......................... 26 80 137 292
Mid Cap Stock........................... 25 77 132 281
All Cap Growth(A)....................... 25 77 132 281
Overseas................................ 27 83 141 299
International Stock..................... 27 84 143 303
International Value..................... 27 83 142 301
Mid Cap Blend........................... 24 74 126 270
Small Company Value..................... 27 83 141 300
Global Equity........................... 25 78 134 285
Growth.................................. 24 73 126 269
Large Cap Growth........................ 25 76 129 276
Quantitative Equity..................... 22 69 118 254
Blue Chip Growth........................ 24 74 127 271
Real Estate Securities.................. 23 69 119 255
Value................................... 24 72 124 266
Tactical Allocation..................... 25 77 132 281
Growth & Income......................... 23 70 120 258
U.S. Large Cap Value.................... 24 75 128 273
Equity-Income........................... 24 74 127 272
Income & Value.......................... 24 73 125 267
Balanced................................ 24 72 124 266
High Yield.............................. 23 72 123 263
Strategic Bond.......................... 24 72 124 266
Global Bond............................. 25 76 130 277
Total Return............................ 23 71 122 262
Investment Quality Bond................. 23 69 119 255
Diversified Bond........................ 23 72 123 263
</TABLE>
9
<PAGE> 19
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government Securities.............. 22 68 116 250
Money Market............................ 20 63 108 233
Small Cap Index......................... 21 64 110 238
International Index..................... 21 64 110 238
Mid Cap Index........................... 21 64 110 238
Total Stock Market Index................ 21 64 110 238
500 Index............................... 20 63 108 234
Lifestyle Aggressive 1000............... 26 80 137 292
Lifestyle Growth 820.................... 25 78 134 285
Lifestyle Balanced 640.................. 25 76 130 277
Lifestyle Moderate 460.................. 24 74 127 272
Lifestyle Conservative 280.............. 23 72 123 264
</TABLE>
-----------------
(A) Formerly, the Mid Cap Growth Trust.
For purposes of presenting the foregoing Examples, we have made certain
assumptions. We have assumed that, where applicable, the maximum sales load is
deducted, that there are no transfers or other transactions and that the "Other
Expenses" line item under "Trust Annual Expenses" will remain the same
(including any voluntary expense reimbursement continuing in effect). Those
assumptions, (each of which is mandated by the SEC in an attempt to provide
prospective contract owners 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, we have translated the $30 annual administration charge listed under
"Annual Contract Fee" to a 0.050% annual asset charge based on the $60,000
approximate average size. So translated, such charge would be higher for smaller
contracts and lower for larger contracts.
A TABLE OF ACCUMULATION UNIT VALUES RELATING TO THE CONTRACT IS INCLUDED IN
APPENDIX B TO THIS PROSPECTUS.
LOCATION OF FINANCIAL STATEMENTS OF REGISTRANT AND DEPOSITOR
Our financial statements and those of the Variable Account may be found
in the Statement of Additional Information.
GENERAL INFORMATION ABOUT US, THE VARIABLE ACCOUNT AND THE TRUST
We are an indirect subsidiary of MFC.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
We are a stock life insurance company organized under the laws of New
York on February 10, 1992. Our principal office is located at 100 Summit Lake
Drive, Valhalla New York 10595.
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 500 Boylston Street, Boston, Massachusetts 02116. Manulife North
America's principal business is offering a variable annuity contract, similar to
that offered by us in New York, in 48 other states, the District of Columbia.
Our ultimate parent is Manulife Financial Corporation ("MFC"), a
publicly traded company, based in Toronto, Canada. MFC is the holding company of
The Manufacturers Life Insurance Company and its subsidiaries, collectively
known as MANULIFE FINANCIAL.
10
<PAGE> 20
The Manufacturers Life Insurance Company of New York's financial
ratings are as follows:
A++ A.M. Best
Superior in financial strength; 1st category of 15
AAA Duff & Phelps
Highest in claims paying ability; 1st category of 18
AA+ Standard & Poor's
Very strong in financial strength; 2nd category of 21
These ratings, which are current as of the date of this prospectus and are
subject to change, are assigned as a measure of The Manufacturers Life Insurance
Company of New York's ability to honor the death benefit, fixed account
guarantees 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 forty-six 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.
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 and
the five Lifestyle Trusts, which are non-diversified. The Trust receives
investment advisory services from Manufacturers Securities Services, LLC
("MSS").
The Trust currently has nineteen subadvisers who manage all of the
portfolios, one of which is Manufacturers Adviser Corporation. Both MSS and
Manufacturers Adviser Corporation are affiliates of ours.
<TABLE>
<CAPTION>
SUBADVISER TRUST PORTFOLIOS MANAGED
---------- ------------------------
<S> <C>
A I M Capital Management, Inc. Aggressive Growth Trust
All Cap Growth Trust(A)
AXA Rosenberg Investment Management LLC Small Company Value Trust
</TABLE>
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<TABLE>
<CAPTION>
SUBADVISER TRUST PORTFOLIOS MANAGED
---------- ------------------------
<S> <C>
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
Janus Capital Corporation Dynamic Growth Trust
Manufacturers Adviser Corporation Pacific Rim Emerging Markets Trust
Quantitative Equity Trust
Real Estate Securities Trust
Money Market Trust
Index Trusts
Lifestyle Trusts (B)
Miller Anderson & Sherrerd, LLP Value Trust
High Yield Trust
Mitchell Hutchins Investment Management Inc. Tactical Allocation Trust
Morgan Stanley Asset Management Inc. Global Equity Trust
Munder Capital Management Internet Technologies 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
Lifestyle Trusts (B)
T. Rowe Price Associates, Inc. Science & Technology Trust
Blue Chip Growth Trust
Equity-Income Trust
Templeton Investment Counsel, Inc. International Value Trust
Wellington Management Company, LLP Mid Cap Stock Trust
Growth & Income Trust
Investment Quality Bond Trust
</TABLE>
(A) Formerly, the Mid Cap Growth Trust
(B) State Street Global Advisors provides subadvisory consulting services to
Manufacturers Adviser Corporation regarding management of the Lifestyle
Trusts.
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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 INTERNET TECHNOLOGIES TRUST seeks long-term capital appreciation by
investing the portfolio's assets primarily in companies engaged in
Internet-related business (such businesses also include Intranet-related
businesses).
The SCIENCE & TECHNOLOGY TRUST seeks long-term growth of capital by
investing at least 65% of the portfolio's total assets in common stocks of
companies expected to benefit from the development, advancement, and use of
science & technology. Current income is incidental to the portfolio's objective.
The INTERNATIONAL SMALL CAP TRUST seeks long-term 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 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 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 companies with market
capitalizations that approximately match the range of capitalization of the
Russell 2000 Index ("small cap stocks") 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
capitalizations that approximately match the range of capitalization of the
Russell 2000 Index ("small cap stocks") at the time of purchase.
The DYNAMIC GROWTH TRUST seeks long-term growth of capital by investing
the portfolio's assets primarily in equity securities selected for their growth
potential. Normally at least 50% of its equity assets are invested in
medium-sized companies.
The MID CAP STOCK TRUST seeks long-term growth of capital by investing
primarily in equity securities with significant capital appreciation potential,
with emphasis on medium-sized companies.
The ALL CAP GROWTH TRUST (formerly, the Mid Cap Growth Trust) seeks
long-term capital appreciation by investing the portfolio's assets, under normal
market conditions, principally in common stocks of companies that are likely to
benefit from new or innovative products, services or processes as well as those
that have experienced, above-average, long-term growth in earnings and have
excellent proposals for future growth.
The OVERSEAS TRUST seeks growth of capital by investing, under normal
market conditions, at least 65% of the portfolio's assets in foreign securities
(including American Depositary Receipts (ADRs) and European Depositary Receipts
(EDRs)). The portfolio 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 seeks growth of capital by investing primarily
in common stocks of U.S. 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, under normal circumstances, at least 65% of the portfolio's assets in
common stocks of companies with total market capitalization that approximately
match the range of capitalization of the Russell 2000 Index and] 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 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) by investing at least 65% of the
portfolio's total assets in the common stocks of large and medium-sized blue
chip companies. 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 TACTICAL ALLOCATION TRUST seeks total return, consisting of
long-term capital appreciation and current income by allocating the portfolio's
assets between (i) a stock portion that is designed to track the performance of
the S&P 500 Composite Stock Price Index, and (ii) a fixed income portion that
consists of either five-year U.S. Treasury notes or U.S. Treasury bills with
remaining maturities of 30 days.
The GROWTH & INCOME TRUST seeks long-term growth of capital and income,
consistent with prudent investment risk, by investing primarily in a diversified
portfolio of common stocks of U.S. issuers which the subadviser believes are of
high quality.
The U.S. LARGE CAP VALUE 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 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 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 the subadviser'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 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 U.S.
entities.
The SMALL CAP INDEX TRUST seeks to approximate the aggregate total
return of a small cap U.S. domestic equity market index by attempting to track
the performance of the Russell 2000 Index.*
The INTERNATIONAL INDEX TRUST seeks to approximate the aggregate total
return of a foreign equity market index by attempting to track the performance
of the Morgan Stanley European Australian Far East Free Index (the "MSCI EAFE
Index").*
The MID CAP INDEX TRUST seeks to approximate the aggregate total return
of a mid cap U.S. domestic equity market index by attempting to track the
performance of the S&P Mid Cap 400 Index.*
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The TOTAL STOCK MARKET INDEX seeks to approximate the aggregate total
return of a broad U.S. domestic equity market index by attempting to track the
performance of the Wilshire 5000 Equity Index.*
The 500 INDEX TRUST seeks to approximate the aggregate total return of
a broad U.S. domestic equity market index by attempting to track the performance
of the S&P 500 Composite Stock Price Index.*
The LIFESTYLE AGGRESSIVE 1000 TRUST seeks to provide long-term growth
of capital (current income is not a consideration) by investing 100% of the
Lifestyle Trust's assets in other portfolios of the Trust ("UNDERLYING
PORTFOLIOS") which invest primarily in equity securities.
The LIFESTYLE GROWTH 820 TRUST seeks to provide long-term growth of
capital with consideration also given to current income by investing
approximately 20% of the Lifestyle Trust's assets in Underlying Portfolios which
invest primarily in fixed income securities and approximately 80% of its assets
in Underlying Portfolios which invest primarily in equity securities.
The LIFESTYLE BALANCED 640 TRUST seeks to provide a balance between a
high level of current income and growth of capital with a greater emphasis given
to capital growth by investing approximately 40% of the Lifestyle Trust's assets
in Underlying Portfolios which invest primarily in fixed income securities and
approximately 60% of its assets in Underlying Portfolios which invest primarily
in equity securities.
The LIFESTYLE MODERATE 460 TRUST seeks to provide a balance between a
high level of current income and growth of capital with a greater emphasis given
to current 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.
*"Standard & Poor's(R)," "S&P 500(R)," "Standard & Poor's 500(R)," and
"Standard & Poor's 400(R)"are trademarks of The McGraw-Hill Companies, Inc.
"Russell 2000(R)" is a trademark of Frank Russell Company. "Wilshire 5000(R)" is
a trademark of Wilshire Associates. "Morgan Stanley European Australian Far East
Free" and "EAFE(R)" are trademarks of Morgan Stanley & Co. Incorporated. None of
the Index Trusts are sponsored, endorsed, managed, advised, sold or promoted by
any of these companies, and none of these companies make any representation
regarding the advisability of investing in the Trust.
A full description of the Trust, including the investment objectives,
policies and restrictions of, and the risks relating to investments in, each
portfolio is contained in the Trust's Prospectus which we provided you along
with this Prospectus. The Trust prospectus should be read carefully before
allocating purchase payments to a sub-account.
If the shares of a Trust portfolio are no longer available for
investment or in our judgment investment in a Trust portfolio becomes
inappropriate, we may eliminate the shares of a portfolio and substitute shares
of another portfolio of the Trust or another open-end registered investment
company. Substitution may be made with respect to both existing investments and
the investment of future purchase payments. However, we will make no such
substitution without first notifying you and obtaining approval of the New York
Superintendent of Insurance and 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
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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. For further information
on voting interest under the contract see "Voting Interest" in this prospectus.
DESCRIPTION OF THE CONTRACT
ACCUMULATION PERIOD PROVISIONS
Initial purchase payments usually must be at least $5,000, subsequent ones at
least $30. Total payments of more than $1 million require our approval.
PURCHASE PAYMENTS
Your purchase payments are made to us at our Annuity Service Office.
The minimum initial purchase payment is $5,000 for Non-Qualified contracts and
$2,000 for Qualified contracts. Subsequent purchase payments must be at least
$30. 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
two consecutive contract years in which no purchase payments have been made, if
both:
- the total purchase payments made over the life of the
contract, less any withdrawals, are less than $2,000; and
- the contract value at the end of such three-year period is
less than $2,000.
If we cancel your contract, we will pay you the contract value computed as of
the valuation period during which the cancellation occurs, minus the amount of
any outstanding loan and minus the annual $30 administration fee. The amount
paid will be treated as a withdrawal for federal tax purposes and thus may be
subject to income tax and to a 10% penalty tax (see "FEDERAL TAX MATTERS").
Purchase payments are allocated among the investment options in
accordance with the percentages you designate. You may change the allocation of
subsequent purchase payments at any time by notifying us in writing.
In addition, you have the option to participate in our Guarantee Plus
Program. Under the Guarantee Plus Program the initial purchase payment is split
between the fixed and variable investment options. The percentage of the initial
purchase payment allocated to a fixed account will assure that the fixed account
allocation will have grown to an amount at least equal to the total initial
purchase payment at the end of the guaranteed period. The percentage depends
upon the current investment rate of the fixed investment option. The balance of
the initial purchase payment is allocated among the variable investment options
as selected in the contract. You may obtain full information concerning the
Guarantee Plus Program and its restrictions from your securities dealer or our
Annuity Service Office. See Appendix D for information on purchase payments
applicable to Ven 9 contracts.
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
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computed after the purchase payment is received at our Annuity Service Office
complete with all necessary information or, in the case of the first purchase
payment, pursuant to the procedures described below.
Initial purchase payments received by mail will usually be credited on
the business day (any date on which the New York Stock Exchange is open and the
net asset value of a Trust portfolio is determined) on which they are received
at our Annuity Service Office, and in any event not later than two business days
after our receipt of all information necessary for issuing the contract. You
will be informed of any deficiencies preventing processing if your contract
cannot be issued. If the deficiencies are not remedied within five business days
after receipt, your purchase payment will be returned promptly, unless you
specifically consent to our retaining your purchase payment until all necessary
information is received. Initial purchase payments received by wire transfer
from broker-dealers will be credited on the business day received by us if the
broker-dealers have made special arrangements with us.
VALUE OF ACCUMULATION UNITS
The value of your accumulation units will vary from one business day to
the next depending upon the investment results of the investment options you
select. The value of an accumulation unit for each sub-account was arbitrarily
set at $10 or $12.50 for the first business day under other contracts which we
or an affiliate of ours have issued. The value of an accumulation unit for any
subsequent business day is determined by multiplying the value of an
accumulation unit for the immediately preceding business day by the net
investment factor for that sub-account (described below) for the business day
for which the value is being determined. Accumulation units will be valued at
the end of each business day. A business day is deemed to end at the time of the
determination of the net asset value of the Trust shares.
NET INVESTMENT FACTOR
The net investment factor is an index used to measure the investment
performance of a sub-account from one business day to the next (the "VALUATION
PERIOD"). The net investment factor may be greater than, less than or equal to
one; therefore, the value of an accumulation unit may increase, decrease or
remain the same. The net investment factor for each sub-account for any
valuation period is determined by dividing (a) by (b) and subtracting (c) from
the result:
- Where (a) is:
- the net asset value per share of a portfolio share
held in the sub-account determined at the end of the
current valuation period, plus
- the per share amount of any dividend or capital gain
distributions made by the portfolio on shares held in
the sub-account if the "ex-dividend" date occurs
during the current valuation period.
- 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 upon written notice to us.
Accumulation units will be canceled from the investment account from which you
transfer amounts transferred and credited to the investment account to which you
transfer amounts. Your contract value on the date of the transfer will not be
affected by a transfer. You must transfer at least $300 or, if less, the entire
value of the investment account. If after the transfer the amount remaining in
the investment account is less than $100, then we will transfer the entire
amount instead of the requested amount. We
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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).
Currently, we do not impose a charge for transfer requests. The first
twelve transfers in a contract year are without any transfer charge. For each
additional transfer in a contract year, we do not currently assess a charge but
reserve the right (to the extent permitted by your contract) to assess a
reasonable charge to reimburse us for the expenses of processing transfers.
Where permitted by law, we may accept your authorization for a third
party to make transfers for you, subject to our rules. However, the contract is
not designed for professional market timing organizations or other entities or
persons engaging in programmed, frequent or large exchanges (collectively,
"market timers") to speculate on short-term movements in the market since such
activity may be disruptive to the Trust portfolios and increase their
transaction costs. Therefore, in order to prevent excessive use of the exchange
privilege, we reserve the right to (a) reject or restrict any specific purchase
and exchange requests and (b) impose specific limitations with respect to market
timers, including restricting exchanges by market timers to certain variable
investment options (transfers by market timers into or out of fixed investment
options is not permitted).
MAXIMUM NUMBER OF INVESTMENT OPTIONS
Upon issuance of the contract, purchase payments may be allocated among
up to seventeen of the available investment options (including all fixed account
investment options). After the contract is issued, there is no limit on the
number of investment options to which you may allocate purchase payments.
TELEPHONE TRANSACTIONS
Any person who can furnish proper account identification is permitted
to request transfers by telephone. The telephone transaction privilege is made
available automatically without the contract owner's election. We will not be
liable for following instructions communicated by telephone that we reasonably
believe to be genuine. We will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine and may only be liable for
any losses due to unauthorized or fraudulent instructions where we fail to
employ our procedures properly. Such procedures include the following: upon
telephoning a request, you will be asked to provide information that verifies
that it is you calling. For both your and our protection, we will tape record
all conversations with you. All telephone transactions will be followed by a
confirmation statement of the transaction. We reserve the right to impose new
procedural requirements regarding transfer privileges.
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. If the DCA fixed
account investment option is elected, the amounts allocated to this account will
be credited with interest at the guaranteed interest rate in effect on the date
of such allocation.
From time to time, we may offer special DCA programs where the rate of
interest credited to a fixed account investment option exceeds our actual
earnings on the supporting assets, less appropriate risk and expense
adjustments. In such case, any amounts credited to your account in excess of
amounts earned will be recovered from the existing charges described in your
contract. Your contract charges will not increase as a result of electing to
participate in any special DCA program.
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
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in equal installments over time in an effort to reduce that risk. Therefore, a
lower purchase price may be achieved over the long-term by purchasing more
accumulation units of a particular sub-account when the unit value is low; less
when the unit value is high. However, the DCA program does not guarantee profits
or prevent losses in a declining market and requires regular investment
regardless of fluctuating price levels. Contract owners interested in the DCA
program should consider their financial ability to continue purchases through
periods of low price levels. 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.
For rebalancing programs begun on or after October 1, 1996, asset
rebalancing will only be permitted on the following time schedules:
- quarterly on the 25th day of the last month of the quarter (or
the next business day if the 25th is not a business day);
- semi-annually on June 25th or December 26th (or the next
business day if these dates are not business days); or
- annually on December 26th (or the next business day if
December 26th is not a business day).
Rebalancing will continue to take place on the last business day of every
calendar quarter for rebalancing programs begun prior to October 1, 1996.
You may withdraw all or a portion of your contract value, but may incur
withdrawal charges and tax liability as a result.
WITHDRAWALS
During the accumulation period, you may withdraw all or a portion of
your contract value upon written request (complete with all necessary
information) to our Annuity Service Office. For certain qualified contracts,
exercise of the withdrawal right may require the consent of the qualified plan
participant's spouse under the Internal Revenue Code of 1986, as amended (the
"CODE"). In the case of a total withdrawal, we will pay the contract value as of
the date of receipt of the request at our Annuity Service Office, minus the
annual $30 administration fee (if applicable), any unpaid loans (including
unpaid interest) and any applicable withdrawal charge. The contract then will be
canceled. In the case of a partial withdrawal, we will pay the amount requested
and cancel accumulation units credited to each investment account equal in value
to the amount withdrawn from that investment account plus any applicable
withdrawal charge deducted from that investment account.
When making a partial withdrawal, you should specify the investment
options from which the withdrawal is to be made. The amount requested from an
investment option may not exceed the value of that investment option minus any
applicable withdrawal charge. If you do not specify the investment options from
which a partial withdrawal is to be taken, a partial withdrawal will be taken
from the variable account investment options until exhausted and then from the
fixed account investment options, beginning with the shortest guarantee period
and ending with the longest guarantee period. If the partial withdrawal is less
than the total value in the variable account investment options, the withdrawal
will be taken
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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:
- 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 (see "FEDERAL TAX MATTERS"). Withdrawals are permitted from
contracts issued in connection with Section 403(b) qualified plans only under
limited circumstances (see "APPENDIX E - QUALIFIED PLAN TYPES").
Systematic "Income Plan" withdrawals are available.
SPECIAL WITHDRAWAL SERVICES - THE INCOME PLAN
We administer an Income Plan ("IP") which permits you to pre-authorize
a periodic exercise of the contractual withdrawal rights described above. After
entering into an IP agreement, you may instruct us to withdraw a level dollar
amount from specified investment options on a periodic basis. The total of IP
withdrawals in a contract year is limited to not more than 10% of the purchase
payments made (to ensure that no withdrawal or market value charge will ever
apply to an IP withdrawal). If an additional withdrawal is made from a contract
participating in an IP, the IP will terminate automatically and may be
reinstated only on or after the next contract anniversary pursuant to a new
application. The IP is not available to contracts participating in the dollar
cost averaging program or for which purchase payments are being automatically
deducted from a bank account on a periodic basis. IP withdrawals will be
withdrawn without withdrawal and market value charges. IP withdrawals, like
other withdrawals, may be subject to income tax and a 10% penalty tax. If you
are interested in an IP, you may obtain a separate application and full
information concerning the program and its restrictions from your securities
dealer or our Annuity Service Office. The IP program is offered without charge.
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
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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 D for information on the death benefit provisions under
Ven 9 contracts.
AMOUNT OF DEATH BENEFIT. If any contract owner dies and the oldest
owner had an attained age of less than 81 years on the date as of which the
contract was issued, the death benefit will be determined as follows.
During the first contract year, the death benefit will be the greater
of:
- the contract value or
- the sum of all purchase payments made, less any amounts
deducted in connection with partial withdrawals.
During any subsequent contract year, the death benefit will be the
greater of:
- the contract value or
- the death benefit on the last day of the previous contract
year, plus any purchase payments made and less any amounts
deducted in connection with partial withdrawals since then.
If any contract owner dies after attaining 81 years of age, the death
benefit will be the greater of:
- the contract value or
- the death benefit on the last day of the contract year ending
just prior to the contract owner's 81st birthday, plus any
purchase payments made, less amounts deducted in connection
with partial withdrawals since then.
If any contract owner dies and the oldest owner had an attained age of
81 years or greater on the date as of which the contract was issued, the death
benefit will be the greater of:
- the contract value or
- the sum of all purchase payments made, less any amounts
deducted in connection with partial withdrawals.
The determination of the death benefit will be made on the date we
receive written notice and proof of death, as well as all required completed
claims forms, at our Annuity Service Office. No one is entitled to the death
benefit until this time.
PAYMENT OF DEATH BENEFIT. We will pay the death benefit to the
beneficiary if any contract owner dies during the accumulation period. If there
is a surviving contract owner, that contract owner will be deemed to be the
beneficiary. No death benefit is payable on the death of any annuitant (who is
not an owner), except that if any contract owner is not a natural person, the
death of any annuitant will be treated as the death of an owner. On the death of
the last surviving annuitant, the contract owner, if a natural person, will
become the annuitant unless the contract owner designates another person as the
annuitant.
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The death benefit may be taken in the form of a lump sum immediately.
If not taken immediately, the contract will continue subject to the following:
- The beneficiary will become the contract owner.
- Any excess of the death benefit over the contract value will
be allocated to the owner's investment accounts in proportion
to their relative values on the date of receipt at our Annuity
Service Office of due proof of the owner's death.
- No additional purchase payments may be made.
- If the beneficiary is not the deceased's owner spouse,
distribution of the contract owner's entire interest in the
contract must be made within five years of the owner's death,
or alternatively, distribution may be made as an annuity,
under one of the annuity options described below, which begins
within one year of the owner's death and is payable over the
life of the beneficiary or over a period not extending beyond
the life expectancy of the beneficiary. Upon the death of the
beneficiary, the death benefit will equal the contract value
and must be distributed immediately in a single sum.
- If the owner's spouse is the beneficiary, the spouse continues
the contract as the new owner. In such a case, the
distribution rules applicable when a contract owner dies will
apply when the spouse, as the owner, dies. In addition, we
will pay a death benefit upon the death of the spouse. For
purposes of calculating this death benefit, the death benefit
paid upon the first owner's death will be treated as a
purchase payment to the contract. In addition, the death
benefit on the last day of the previous year (or the last day
of the contract year ending just prior to the owner's 81st
birthday if applicable) will be set at zero as of the date of
the first owner's death.
- If any contract owner dies and the oldest owner had an
attained age of less than 81 on the date as of which the
contract was issued, withdrawal charges are not applied on
payment of the death benefit (whether taken through a partial
or total withdrawal or applied under an annuity option). If
any contract owner dies and the oldest owner had an attained
age of 81 or greater on the date as of which the contract was
issued, withdrawal charges will be assessed only upon payment
of the death benefit (so that if the death benefit is paid in
a subsequent year, a lower withdrawal charge will be
applicable).
If any annuitant is changed and any contract owner is not a natural
person, the entire interest in the contract must be distributed to the contract
owner within five years.
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").
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PAY-OUT PERIOD PROVISIONS
You have a choice of several different ways of receiving annuity benefit
payments from us.
GENERAL
The proceeds of the contract payable on death, withdrawal or the
contract maturity date may be applied to the annuity options described below,
subject to the distribution of death benefits provisions (see "DEATH BENEFIT
DURING ACCUMULATION PERIOD").
Generally, we will begin paying annuity benefits under the contract on
the contract's maturity date (the first day of the pay-out period). The maturity
date is the date specified on your contract's specifications page, unless you
change that date. If no date is specified, the maturity date is the maximum
maturity date described below. The maximum maturity date is the first day of the
month following the 90th birthday of the annuitant. You may specify a different
maturity date at any time by written request at least one month before both the
previously specified and the new maturity date. The new maturity date may not be
later than the first day of the month following the 90th birthday of the
annuitant (see "FEDERAL TAX MATTERS - Taxation of Annuities in General - Delayed
Pay-out Periods"). Distributions from qualified contracts may be required before
the maturity date (see "FEDERAL TAX MATTERS - Qualified Retirement Plans").
You may select the frequency of annuity payments. However, if the
contract value at the maturity date is such that a monthly payment would be less
than $20, we may pay the contract value, minus any unpaid loans, in one lump sum
to the annuitant on the maturity date.
ANNUITY OPTIONS
Annuity benefit payments are available under the contract on a fixed,
variable, or combination fixed and variable basis. Upon purchase of the
contract, and at any time during the accumulation period, you may select one or
more of the annuity options described below on a fixed and/or variable basis
(except Option 5 which is available on a fixed basis only) or choose an
alternate form of payment acceptable to us. If an annuity option is not
selected, we will provide as a default option a life annuity with payments
guaranteed for 10 years as described below. Annuity payments will be determined
based on the Investment Account Value of each investment option at the maturity
date. Internal Revenue Service ("IRS") regulations may preclude the availability
of certain annuity options in connection with certain qualified contracts.
Please read the description of each annuity option carefully. In
general, a non-refund life annuity provides the highest level of payments.
However, because there is no guarantee that any minimum number of payments will
be made, an annuitant may receive only one payment if the annuitant dies prior
to the date the second payment is due. Annuities with payments guaranteed for a
certain number of years may also be elected but the amount of each payment will
be lower than that available under the non-refund life annuity option.
The following annuity options are guaranteed to be offered in the
contract.
OPTION 1(a): NON-REFUND LIFE ANNUITY - An annuity with payments during
the lifetime of the annuitant. No payments are due after the death of the
annuitant. Because there is no guarantee that any minimum number of payments
will be made, an annuitant may receive only one payment if the annuitant dies
prior to the date the second payment is due.
OPTION 1(b): LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 YEARS - An
annuity with payments guaranteed for 10 years and continuing thereafter during
the lifetime of the annuitant. Because payments are guaranteed for 10 years,
annuity payments will be made to the end of such period if the annuitant dies
prior to the end of the tenth year.
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OPTION 2(a): JOINT & SURVIVOR NON-REFUND LIFE ANNUITY - An annuity with
payments during the lifetimes of the annuitant and a designated co-annuitant. No
payments are due after the death of the last survivor of the annuitant and
co-annuitant. Because there is no guarantee that any minimum number of payments
will be made, an annuitant or co-annuitant may receive only one payment if the
annuitant and co-annuitant die prior to the date the second payment is due.
OPTION 2(b): JOINT & SURVIVOR LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR
10 YEARS - An annuity with payments guaranteed for 10 years and continuing
thereafter during the lifetimes of the annuitant and a designated co-annuitant.
Because payments are guaranteed for 10 years, annuity payments will be made to
the end of such period if both the annuitant and the co-annuitant die prior to
the end of the tenth year.
In addition to the foregoing annuity options which we are contractually
obligated to offer at all times, we currently offer the following annuity
options. We may cease offering the following annuity options at any time and may
offer other annuity options in the future.
OPTION 3: LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 5, 15 OR 20 YEARS -
An Annuity with payments guaranteed for 5, 15 or 20 years and continuing
thereafter during the lifetime of the annuitant. Because payments are guaranteed
for the specific number of years, annuity payments will be made to the end of
the last year of the 5, 15 or 20 year period.
OPTION 4: JOINT & TWO-THIRDS SURVIVOR NON-REFUND LIFE ANNUITY - An
annuity with full payments during the joint lifetime of the annuitant and a
designated co-annuitant and two-thirds payments during the lifetime of the
survivor. Because there is no guarantee that any minimum number of payments will
be made, an annuitant or co-annuitant may receive only one payment if the
annuitant and co-annuitant die prior to the date the second payment is due.
OPTION 5: PERIOD CERTAIN ONLY ANNUITY FOR 5, 10, 15 OR 20 YEARS - An
annuity with payments for a 5, 10, 15 or 20 year period and no payments
thereafter.
DETERMINATION OF AMOUNT OF THE FIRST VARIABLE ANNUITY PAYMENT
The first variable annuity payment is determined by applying that
amount of the contract value used to purchase a variable annuity to the annuity
tables contained in the contract. The amount of the contract value will be
determined as of a date not more than ten business days prior to the maturity
date. The amount of the first and all subsequent fixed annuity payments is
determined on the same basis using the portion of the contract value used to
purchase a fixed annuity. Contract value used to determine annuity payments will
be reduced by any applicable premium taxes.
The rates contained in the annuity tables vary with the annuitant's sex
and age and the annuity option selected. However, for contracts issued in
connection with certain employer-sponsored retirement plans sex-distinct tables
may not be used. Under such tables, the longer the life expectancy of the
annuitant under any life annuity option or the longer the period for which
payments are guaranteed under the option, the smaller the amount of the first
monthly variable annuity payment will be.
ANNUITY UNITS AND THE DETERMINATION OF SUBSEQUENT VARIABLE ANNUITY PAYMENTS
Variable annuity payments after the first one will be based on the
investment performance of the sub-accounts selected during the pay-out period.
The amount of a subsequent payment is determined by dividing the amount of the
first annuity payment from each sub-account by the annuity unit value of that
sub-account (as of the same date the contract value to effect the annuity was
determined) to establish the number of annuity units which will thereafter be
used to determine payments. This number of annuity units for each sub-account is
then multiplied by the appropriate annuity unit value as of a uniformly applied
date not more than ten business days before the annuity payment is due, and the
resulting amounts for each sub-account are then totaled to arrive at the amount
of the annuity benefit payment to be made. The number of annuity units generally
remains constant throughout the pay-out period. A pro-rata portion of the
administration fee will be deducted from each annuity payment.
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The value of an annuity unit for each sub-account for any business day
is determined by multiplying the annuity unit value for the immediately
preceding business day by the net investment factor for that sub-account (see
"NET INVESTMENT FACTOR") for the valuation period for which the annuity unit
value is being calculated and by a factor to neutralize the assumed interest
rate.
A 3% assumed interest rate is built into the annuity tables in the
contract used to determine the first variable annuity payment.
The smallest annual rate of investment return which is required to be
earned on the assets of the Separate Account so that the dollar amount of
variable annuity payments will not decrease is 4.46%.
See Appendix D for information on assumed interest rate for Ven 9
contracts.
Some transfers are permitted during the pay-out period, but subject to a few
more limitations than during the accumulation period.
TRANSFERS DURING PAY-OUT PERIOD
Once variable annuity payments have begun, you may transfer all or part
of the investment upon which those payments are based from one sub-account to
another. You must submit your transfer request to our Annuity Service Office at
least 30 days before the due date of the first annuity payment to which your
transfer will apply. Transfers will be made by converting the number of annuity
units being transferred to the number of annuity units of the sub-account to
which the transfer is made, so that the next annuity payment if it were made at
that time would be the same amount that it would have been without the transfer.
Thereafter, annuity payments will reflect changes in the value of the annuity
units for the new sub-account selected. We reserve the right to limit, upon
notice, the maximum number of transfers a contract owner may make per contract
year to four. Once annuity payments have commenced, no transfers may be made
from a fixed annuity option to a variable annuity option or from a variable
annuity option to a fixed annuity option. In addition, we reserve the right to
defer the transfer privilege at any time that we are unable to purchase or
redeem shares of the Trust portfolios. We also reserve the right to modify or
terminate the transfer privilege at any time in accordance with applicable law.
DEATH BENEFIT DURING PAY-OUT PERIOD
If an annuity option providing for payments for a guaranteed period has
been selected, and the annuitant dies during the pay-out period, we will make
the remaining guaranteed payments to the beneficiary. Any remaining payments
will be made as rapidly as under the method of distribution being used as of the
date of the annuitant's death. If no beneficiary is living, we will commute any
unpaid guaranteed payments to a single sum (on the basis of the interest rate
used in determining the payments) and pay that single sum to the estate of the
last to die of the annuitant and the beneficiary.
OTHER CONTRACT PROVISIONS
You have a ten-day right to cancel your contract.
RIGHT TO REVIEW CONTRACT
You may cancel the contract by returning it to our Annuity Service
Office or to your registered representative at any time within 10 days after
receiving it. Within 7 days of receiving a returned contract, we will pay you
the contract value (minus any unpaid loans) computed at the end of the business
day on which we receive your returned contract. When the contract is issued as
an individual retirement annuity under Sections 408 or 408A of the Code, during
the first 7 days of the 10 day period, we will return the purchase payments if
this is greater than the amount otherwise payable.
If the contract is purchased in connection with a replacement of an
existing annuity contract (as described below), you may also cancel the contract
by returning it to our Annuity Service Office or your registered representative
at any time within 60 days after receiving the contract. Within 10 days of
receiving a returned contract, we will pay you the contract value (minus any
unpaid loans) computed at the end of the business day on which we receive your
returned contract. In the case of a replacement of a contract issued by a New
York insurance company, you may have the right to reinstate the prior contract.
You should consult with your registered representative or attorney regarding
this matter prior to purchasing the new contract.
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Replacement of an existing annuity contract generally is defined as the
purchase of a new annuity contract in connection with (a) the lapse, partial or
full surrender or change of, or borrowing from, an existing annuity or life
insurance contract or (b) the assignment to a new issuer of an existing annuity
contract. This description, however, does not necessarily cover all situations
which could be considered a replacement of an existing annuity contract.
Therefore, you should consult with your registered representative or attorney
regarding whether the purchase of a new annuity contract is a replacement of an
existing annuity or life insurance contract.
You are entitled to exercise all rights under your contract.
OWNERSHIP
The contract owner is the person entitled to exercise all rights under
the contract. Prior to the maturity date, the contract owner is the person
designated in the contract specifications page or as subsequently named. On and
after the maturity date, the contract owner is the annuitant. If amounts become
payable to any beneficiary under the contract, the beneficiary is the contract
owner.
In the case of non-qualified contracts, ownership of the contract may
be changed or the contract may be collaterally assigned at any time prior to the
maturity date, subject to the rights of any irrevocable beneficiary. Assigning a
contract, or changing the ownership of a contract, may be treated as a
(potentially taxable) distribution of the contract value for federal tax
purposes (see "FEDERAL TAX MATTERS"). A change of any contract owner may result
in resetting the death benefit to an amount equal to the contract value as of
the date of the change and treating that value as a purchase payment made on
that date for purposes of computing the amount of the death benefit.
Any change of ownership or assignment must be made in writing. We must
approve any change. Any assignment and any change, if approved, will be
effective as of the date we receive the request at our Annuity Service Office.
We assume no liability for any payments made or actions taken before a change is
approved or an assignment is accepted or responsibility for the validity or
sufficiency of any assignment. An absolute assignment will revoke the interest
of any revocable beneficiary.
In the case of qualified contracts, ownership of the contract generally
may not be transferred except by the trustee of an exempt employees' trust which
is part of a retirement plan qualified under Section 401 of the Code or as
otherwise permitted by applicable IRS regulations. Subject to the foregoing, a
qualified contract may not be sold, assigned, transferred, discounted or pledged
as collateral for a loan or as security for the performance of an obligation or
for any other purpose to any person other than us.
The "annuitant" is either you or someone you designate.
ANNUITANT
The annuitant is any natural person or persons whose life is used to
determine the duration of annuity payments involving life contingencies. The
annuitant is entitled to receive all annuity payments under the contract. If the
contract owner names more than one person as an "annuitant," the second person
named shall be referred to as "CO-ANNUITANT." The annuitant is as specified in
the application, unless changed.
On the death of the annuitant prior to the maturity date, the
co-annuitant, if living, becomes the annuitant. If there is no living
co-annuitant, the owner becomes the annuitant. In the case of certain qualified
contracts, there are limitations on the ability to designate and change the
annuitant and the co-annuitant.
CHANGE OF MATURITY DATE
During the accumulation period, you may change the Maturity Date by
written request at least one month before both the previously specified Maturity
Date and the new Maturity Date. After the election, the new Maturity Date will
become the Maturity Date. The maximum Maturity Date will be age 90. Any
extension of the Maturity Date will be allowed only with our prior approval.
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The "beneficiary" is the person you designate to receive the death benefit if
you die.
BENEFICIARY
The beneficiary is the person, persons or entity designated in the
contract specifications page (or as subsequently changed). However, if there is
a surviving contract owner, that person will be treated as the beneficiary. The
beneficiary may be changed subject to the rights of any irrevocable beneficiary.
Any change must be made in writing, approved by us, and (if approved) will be
effective as of the date on which written. We assume no liability for any
payments made or actions taken before the change is approved. If no beneficiary
is living, the contingent beneficiary will be the beneficiary. The interest of
any beneficiary is subject to that of any assignee. If no beneficiary or
contingent beneficiary is living, the beneficiary is the estate of the deceased
contract owner. In the case of certain qualified contracts, IRS regulations may
limit designations of beneficiaries.
See Appendix D 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.
SECURITIES REGISTRATION. Interests in the fixed account investment
options are not registered under the Securities Act of 1933 (the "1933 Act") and
our general account is not registered as an investment company under the 1940
Act. Neither interests in the fixed account investment options nor the general
account are subject to the provisions or restrictions of the 1933 Act or the
1940 Act. Disclosures relating to interests in the fixed account investment
options and the general account nonetheless may be required by the federal
securities laws to be accurate.
Fixed account investment options guarantee interest of at least 3% .
INVESTMENT OPTIONS. Currently, there are six fixed account investment
options under the contract: one, three, five and seven year investment accounts
and a six month DCA fixed account investment and a twelve month DCA fixed
account investment which may be established under the DCA program to make
automatic transfers from the DCA fixed account to one or more variable
investment option (see "SPECIAL TRANSFER SERVICES - DOLLAR COST AVERAGING"). We
may offer additional fixed account investment options for any yearly period from
two to ten years. Fixed investment accounts provide for the accumulation of
interest on purchase payments at guaranteed rates for the duration of the
guarantee period. We determine the guaranteed interest rates on new amounts
allocated or transferred to a fixed investment account from time to time,
according to market conditions. In no event will the guaranteed rate of interest
be less than 3%. Once an interest rate is guaranteed for a fixed investment
account, it is guaranteed for the duration of the guarantee period and we may
not change it.
See Appendix D for information on the fixed account investment options
and minimum interest rate under Ven 9 contracts.
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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 is assessed only when current
interest rates are higher than the guaranteed interest rate on the account. The
purpose of the charge is to compensate us for our investment losses on amounts
withdrawn, transferred or borrowed prior to the maturity date. The formula for
calculating this charge is set forth below. A market value charge will be
calculated separately for each investment account affected by a transaction to
which a market value charge may apply. The market value charge for an investment
account will be calculated by multiplying the amount withdrawn or transferred
from the investment account by the adjustment factor described below.
The adjustment factor is determined by the following formula:
0.75x(B-A)xC/12 where:
A - The guaranteed interest rate on the investment account.
B - The guaranteed interest rate available, on the date the request is
processed, for amounts allocated to a new investment account with the
same length of guarantee period as the investment account from which
the amounts are being withdrawn.
C - The number of complete months remaining to the end of the guarantee
period.
For purposes of applying this calculation, the maximum difference
between "B" and "A" will be 3%. The adjustment factor may never be less
than zero.
The total market value charge will be the sum of the market value
charges for each investment account being withdrawn. Where the
guaranteed rate available on the date of the request is less than the
rate guaranteed on the investment account from which the amounts are
being withdrawn (B-A in the adjustment factor is negative), there is no
market value charge. There is only a market value charge when interest
rates have increased (B-A in the adjustment factor is positive).
We do not impose a 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;
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- 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 purchase payments.
See Appendix D 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 account investment
options to the variable account investment options; provided that no transfer
from a fixed account option may be made unless the amount to be transferred has
been held in such account for at least one year, except for transfers made
pursuant to the DCA program. Consequently, except as noted above, amounts in one
year investment accounts effectively may not be transferred prior to the end of
the guarantee period. Amounts in any other investment accounts may be
transferred, after the one year holding period has been satisfied, but the
market value charge described above may apply to such a transfer. The market
value charge, if applicable, will be deducted from the amount transferred.
You must specify the fixed account investment option from or to which
you desire to make a transfer. Where there are multiple investment accounts
within the fixed account investment option, amounts must be withdrawn from the
fixed account investment options on a first-in-first-out basis.
WITHDRAWALS. You may make total and partial withdrawals of amounts held
in the fixed account investment options at any time prior to the death of the
contract owner. Withdrawals from fixed account investment options will be made
in the same manner and be subject to the same limitations as set forth under
"WITHDRAWALS" plus the following provisions also apply to withdrawals from the
fixed account investment options:
- We reserve the right to defer payment of amounts withdrawn
from fixed account investment options for up to six months
from the date we receive the written withdrawal request. If a
withdrawal is deferred for more than 10 days pursuant to this
right, we will pay interest on the amount deferred at a rate
not less than 3% per year.
- If there are multiple investment accounts under a fixed
account investment option, amounts must be withdrawn from
those accounts on a first-in-first-out basis.
- 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.
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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 (see "FEDERAL TAX MATTERS"). Withdrawals are permitted from
contracts issued in connection with Section 403(b) qualified plans only under
limited circumstances (see "APPENDIX E - QUALIFIED PLAN TYPES").
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" below. The market value charge
described above may apply to amounts transferred from the fixed investment
accounts to the loan account in connection with such loans and, if applicable,
will be deducted from the amount so transferred.
FIXED ANNUITY OPTIONS. Subject to the distribution of death benefits
provisions (see "DEATH BENEFIT DURING ACCUMULATION PERIOD" above), on death,
withdrawal or the maturity date of the contract, the proceeds may be applied to
a fixed annuity option (see "ANNUITY OPTIONS" ). The amount of each fixed
annuity payment is determined by applying the portion of the proceeds (minus any
applicable premium taxes) applied to purchase the fixed annuity to the
appropriate table in the contract. If the table we are then using is more
favorable to you, we will substitute that table. We guarantee the dollar amount
of fixed annuity payments.
CHARGES AND DEDUCTIONS
Charges and deductions under the contracts are assessed against
contract values or annuity payments. Currently, there are no deductions made
from purchase payments. In addition, there are deductions from and expenses paid
out of the assets of the Trust portfolios that are described in the accompanying
Prospectus of the Trust.
WITHDRAWAL CHARGES
If you make a withdrawal from your contract during the accumulation
period, a withdrawal charge (contingent deferred sales charge) may be assessed
against amounts withdrawn attributable to purchase payments that have been in
the contract less than seven complete contract years. There is never a
withdrawal charge with respect to earnings accumulated in the contract, certain
other amounts available for withdrawal described below or purchase payments that
have been in the contract more than seven complete contract years. In no event
may the total withdrawal charges exceed 6% of the amount invested. The amount of
the withdrawal charge and when it is assessed are discussed below.
Each withdrawal from the contract is allocated first to the amount
available without withdrawal charges and second to "UNLIQUIDATED PURCHASE
PAYMENTS." In any contract year, the amount available without withdrawal charges
for that year is the greater of:
- 10% of total purchase payments (less all prior withdrawals in
that contract year), and
- the accumulated earnings on the contract (i.e., the excess of
the contract value on the date of withdrawal over the
unliquidated purchase payments).
The amount withdrawn without withdrawal charges will be applied to a
requested withdrawal, first, to withdrawals from variable account investment
options and then to withdrawals from fixed account investment options beginning
with those with the shortest guarantee period first and the longest guarantee
period last.
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Withdrawals in excess of the amount available without withdrawal
charges may be subject to withdrawal charges. A withdrawal charge will be
assessed against purchase payments liquidated that have been in the contract for
less than seven years. Purchase payments will be liquidated on a first-in
first-out basis. On any withdrawal request, we will liquidate purchase payments
equal to the amount of the withdrawal request which exceeds the amount available
without withdrawal charges in the order such purchase payments were made: the
oldest unliquidated purchase payment first, the next purchase payment second,
etc. until all purchase payments have been liquidated.
Each purchase payment or portion thereof liquidated in connection with
a withdrawal request is subject to a withdrawal charge based on the length of
time the purchase payment has been in the contract. The amount of the withdrawal
charge is calculated by multiplying the amount of the purchase payment being
liquidated by the applicable withdrawal charge percentage obtained from the
table below.
<TABLE>
<CAPTION>
PURCHASE PAYMENT IN
CONTRACT PERCENTAGE
--------------------------------------------------
<S> <C>
0 6%
1 6%
2 5%
3 5%
4 4%
5 3%
6 2%
7+ 0%
</TABLE>
The total withdrawal charge will be the sum of the withdrawal charges
for the purchase payments being liquidated.
The withdrawal charge is deducted from the contract value remaining
after the contract owner is paid the amount requested, except in the case of a
complete withdrawal when it is deducted from the amount otherwise payable. In
the case of a partial withdrawal, the amount requested from an investment
account may not exceed the value of that investment account minus any applicable
withdrawal charge.
There is generally no withdrawal charge on distributions made as a
result of the death of the contract owner or, if applicable, the annuitant (see
"DEATH BENEFIT DURING ACCUMULATION 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 C.
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 D 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
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year, the $30 administration fee will be deducted from the amount paid. During
the annuity period, the fee is deducted on a pro-rata basis from each annuity
payment. However, the $30 administration fee will not reduce the amount paid
below the amount that is guaranteed in the contract.
We also deduct a daily charge in an amount equal to 0.15% of the value
of each variable investment account on an annual basis from each sub-account as
an administrative fee. This asset based administrative fee will not be deducted
from the fixed account investment options. The charge will be reflected in the
contract value as a proportionate reduction in the value of each variable
investment account. Because this portion of the administrative fee is a
percentage of assets rather than a flat amount, larger contracts will in effect
pay a higher proportion of this portion of the administrative expense than
smaller contracts.
We do not expect to recover from such fees any amount in excess of our
accumulated administrative expenses. Even though administrative expenses may
increase, we guarantee that we will not increase the amount of the
administration fees. There is no necessary relationship between the amount of
the administrative charge imposed on a given contract and the amount of the
expense that may be attributed to that contract.
MORTALITY AND EXPENSE RISKS CHARGE
The mortality risk we assume is the risk that annuitants may live for a
longer period of time than we estimate. We assume this mortality risk by virtue
of annuity benefit payment rates incorporated into the contract which cannot be
changed. This assures each annuitant that his or her longevity will not have an
adverse effect on the amount of annuity benefit payments. We also assume
mortality risks in connection with our guarantee that, if the contract owner
dies during the accumulation period, we will pay a death benefit (see "DEATH
BENEFIT DURING ACCUMULATION PERIOD"). The expense risk we assume is the risk
that the administration charges or withdrawal charge may be insufficient to
cover actual expenses.
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 risks 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. On the Period Certain Only
Annuity Option, if you elect benefits payable on a variable basis, the mortality
and expense risks charge is assessed although we bear only the expense risk and
not any mortality risk. The mortality and expense risks charge is not assessed
against the fixed account investment options.
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 of premium taxes which may be applicable to
non-New York residents, see "STATE PREMIUM TAXES" in the Statement of Additional
Information. Premium taxes which may be applicable to non-New York residents
range between 0% to 3.50%. In addition, we will withhold taxes to the extent
required by applicable law.
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EXPENSES OF DISTRIBUTING CONTRACTS
MSS, the principal underwriter for the contracts, pays compensation to
selling brokers in varying amounts which under normal circumstances are not
expected to exceed 7% of purchase payments or 6% of purchase payments plus 0.75%
of the contract value per year commencing one year after each purchase payment.
These expenses are not assessed against the contracts but are instead paid by
MSS. See "Distribution of Contracts" for further information.
FEDERAL TAX MATTERS
INTRODUCTION
The following discussion of the Federal income tax treatment of the
contract is not exhaustive, does not purport to cover all situations, and is not
intended as tax advice. You should consult a qualified tax advisor with regard
to the application of the law to your circumstances. This discussion is based on
the Code, IRS regulations, and interpretations existing on the date of this
Prospectus. These authorities, however, are subject to change by Congress, the
Treasury Department, and judicial decisions.
This discussion does not address state or local tax consequences
associated with the purchase of a contract. IN ADDITION, WE MAKE NO GUARANTEE
REGARDING ANY TAX TREATMENT - FEDERAL, STATE, OR LOCAL - OF ANY CONTRACT OR OF
ANY TRANSACTION INVOLVING A CONTRACT.
OUR TAX STATUS
We are taxed as a life insurance company. Because the operations of the
Variable Account are a part of, and are taxed with, our operations, the Variable
Account is not separately taxed as a "regulated investment company" under the
Code. Under existing Federal income tax laws, we are not taxed on the investment
income and capital gains of the Variable Account. We do not anticipate that we
will be taxed on the income and gains of the Variable Account, but if we are,
then we may impose a corresponding charge against the Variable Account.
TAXATION OF ANNUITIES IN GENERAL
Gains inside the contract are usually tax-deferred until you make a withdrawal,
the annuitant starts receiving annuity benefit payments, or the beneficiary
receives a death benefit payment.
TAX DEFERRAL DURING ACCUMULATION PERIOD
Under existing provisions of the Code, except as described below, any
increase in the contract value is generally not taxable to the contract owner or
annuitant until received, in the form of either annuity payments or some other
distribution. Certain requirements must be satisfied in order for this general
rule to apply, including:
- the contract must be owned by an individual (or treated as
owned by an individual),
- the investments of the Variable Account must be "adequately
diversified" in accordance with IRS regulations,
- we, rather than the contract owner, must be considered the
owner of the assets of the Variable Account for federal tax
purposes, and
- the contract must provide for appropriate amortization,
through annuity benefit payments, of the contract's purchase
payments and earnings, e.g., the pay-out period must not begin
near the end of the annuitant's life expectancy.
NON-NATURAL OWNERS. As a general rule, deferred annuity contracts held
by "non-natural persons" (such as a corporation, trust or other similar entity)
are not treated as annuity contracts for Federal income tax purposes. The
investment income on such contracts is taxed as ordinary income that is received
or accrued by the owner of the contract during the taxable year. There are
several exceptions to this general rule for non-natural contract owners. First,
contracts will generally be treated as held by a natural person if the nominal
owner is a trust or other entity which holds the contract as an agent for a
natural person. This
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special exception will not apply, however, in the case of any employer who is
the nominal owner of an annuity contract under a non-qualified deferred
compensation arrangement for its employees.
Exceptions to the general rule for non-natural contract owners will
also apply with respect to:
- contracts acquired by an estate of a decedent by reason of the
death of the decedent,
- qualified contracts,
- certain contracts purchased by employers upon the termination
of certain qualified plans,
- certain contracts used in connection with structured
settlement agreements, and
- 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, a portion of otherwise deductible
interest may not be deductible by the entity, regardless of whether the interest
relates to debt used to purchase or carry the contract. However, this interest
deduction disallowance does not affect a contract if the income on the contract
is treated as ordinary income that is received or accrued by the owner during
the taxable year. Entities that are considering purchasing the contract, or
entities that will be beneficiaries under a contract, should consult a tax
advisor.
DIVERSIFICATION REQUIREMENTS. For a contract to be treated as an
annuity for Federal income tax purposes, the investments of the Variable Account
must be "adequately diversified" in accordance with Treasury Department
Regulations. The Secretary of the Treasury has issued regulations which
prescribe standards for determining whether the investments of the Variable
Account are "adequately diversified." If the Variable Account failed to comply
with these diversification standards, a contract would not be treated as an
annuity contract for Federal income tax purposes and the contract owner would
generally be taxable currently on the excess of the contract value over the
premiums paid for the contract.
Although we do not control the investments of the Trust, we expect that
the Trust will comply with such regulations so that the Variable Account will be
considered "adequately diversified."
OWNERSHIP TREATMENT. In certain circumstances, a variable annuity
contract owner may be considered the owner, for Federal income tax purposes, of
the assets of the insurance company separate account used to support his or her
contract. In those circumstances, income and gains from such separate account
assets would be includible in the contract owner's gross income. The IRS has
stated in published rulings that a variable contract owner will be considered
the owner of separate account assets if the owner possesses "incidents of
ownership" in those assets, such as the ability to exercise investment control
over the assets. In addition, the Treasury Department announced, in connection
with the issuance of regulations concerning investment diversification, that
those regulations "do not provide guidance concerning the circumstances in which
investor control of the investments of a segregated asset account may cause the
investor, rather than the insurance company, to be treated as the owner of the
assets in the account." This announcement also stated that guidance would be
issued in the form of regulations or rulings on the "extent to which
policyholders may direct their investments to particular sub-accounts of a
separate account without being treated as owners of the underlying assets." As
of the date of this Prospectus, no such guidance has been issued.
The ownership rights under this contract are similar to, but different
in certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of separate account assets. For
example, the owner of this contract has the choice of many more investment
options to which to allocate premiums and contract values, and may be able to
transfer among investment options more frequently than in such rulings. THESE
DIFFERENCES COULD RESULT IN THE CONTRACT OWNER BEING TREATED AS THE OWNER OF THE
ASSETS OF THE VARIABLE ACCOUNT AND THUS SUBJECT TO CURRENT TAXATION ON THE
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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 contracts) less any amounts previously received from the contract
which were not included in income.
Other than in the case of certain qualified contracts, any amount
received as a loan under a contract, and any assignment or pledge (or agreement
to assign or pledge) any portion of the contract value, is treated as a
withdrawal of such amount or portion. (Loans, assignments and pledges are
permitted only in limited circumstances under qualified contracts.) The
investment in the contract is increased by the amount includible in income with
respect to such assignment or pledge, though it is not affected by any other
aspect of the assignment or pledge (including its release). If an individual
transfers his or her interest in an annuity contract without adequate
consideration to a person other than the owner's spouse (or to a former spouse
incident to divorce), the owner will be taxed on the difference between the
contract value and the investment in the contract at the time of transfer. In
such a case, the transferee's investment in the contract will be increased to
reflect the increase in the transferor's income.
There may be special income tax issues present in situations where the
owner and the annuitant are not the same person and are not married to one
another. A tax advisor should be consulted in those situations.
A portion of each annuity payment is usually taxable as ordinary income.
TAXATION OF ANNUITY BENEFIT PAYMENTS
Normally, a portion of each annuity benefit payment is taxable as
ordinary income. The taxable portion of an annuity benefit payment is equal to
the excess of the payment over the "EXCLUSION AMOUNT." In the case of variable
annuity payments, the exclusion amount is the investment in the contract
(defined above) allocated to the variable annuity option, adjusted for any
period certain or refund feature, when payments begin to be made divided by the
number of payments expected to be made (determined by IRS regulations which take
into account the annuitant's life expectancy and the form of annuity benefit
selected). In the case of fixed annuity payments, the exclusion amount is the
amount determined by multiplying the payment by the ratio of (a) to (b), where:
(a) is the investment in the contract allocated to the fixed
annuity option (adjusted for any period certain or refund
feature); and
(b) is the total expected value of fixed annuity payments for the
term of the contract (determined under IRS regulations).
A simplified method of determining the taxable portion of annuity payments
applies to contracts issued in connection with certain qualified plans other
than IRAs.
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Once the total amount of the investment in the contract is excluded
using these ratios, annuity payments will be fully taxable. If annuity payments
cease because of the death of the annuitant and before the total amount of the
investment in the contract is recovered, the unrecovered amount generally will
be allowed as a deduction to the annuitant in his or her last taxable year.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a contract because of the death of an
owner or the annuitant. During the accumulation period, death benefit proceeds
are includible in income as follows:
- if distributed in a lump sum, they are taxed in the same
manner as a full withdrawal, as described above, or
- if distributed under an annuity option, they are taxed in the
same manner as annuity payments, as described above.
During the pay-out period, where a guaranteed period exists under an annuity
option and the annuitant dies before the end of that period, payments made to
the beneficiary for the remainder of that period are includible in income as
follows:
- if received in a lump sum, they are includible in income to
the extent that they exceed the unrecovered investment in the
contract at that time, or
- if distributed in accordance with the existing annuity option
selected, they are fully excludable from income until the
remaining investment in the contract is deemed to be
recovered, and all annuity payments thereafter are fully
includible in income.
Withdrawals prior to age 59-1/2 may incur a 10% penalty tax.
PENALTY TAX ON PREMATURE DISTRIBUTIONS
There is a 10% penalty tax on the taxable amount of any payment from a
non-qualified contract. Exceptions to this penalty tax include distributions:
- received on or after the contract owner reaches age 59-1/2;
- attributable to the contract owner becoming disabled (as
defined in the tax law);
- made to a beneficiary on or after the death of the contract
owner or, if the contract owner is not an individual, on or
after the death of the primary annuitant (as defined in the
tax law);
- made as a series of substantially equal periodic payments (not
less frequently than annually) for the life (or life
expectancy) of the owner or for the joint lives (or joint life
expectancies) of the owner and designated beneficiary (as
defined in the tax law);
- made under an annuity contract purchased with a single premium
when the annuity starting date (as defined in the tax law) is
no later than a year from purchase of the annuity and
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.
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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. Similarly, if a person transfers part of his
interest in one annuity contract to purchase another annuity contract, the IRS
might treat the two contracts as one contract. In addition, if a person
purchases two or more deferred annuity contracts from the same insurance company
(or its affiliates) during any calendar year, all such contracts will be treated
as one contract. The effects of such aggregation are not clear; however, it
could affect the amount of a withdrawal or an annuity payment that is taxable
and the amount which might be subject to the penalty tax described above.
Consult your tax advisor for additional information.
Special tax provisions apply to qualified plans. Consult your tax advisor prior
to using the contract with a qualified plan.
QUALIFIED RETIREMENT PLANS
The contracts are also designed for use in connection with certain
types of retirement plans which receive favorable treatment under the Code
("QUALIFIED PLANS"). Numerous special tax rules apply to the participants in
qualified plans and to the contracts used in connection with qualified plans.
Therefore, no attempt is made in this Prospectus to provide more than general
information about use of the contract with the various types of qualified plans.
Brief descriptions of various types of qualified plans in connection with which
we may issue a contract are contained in Appendix E to this Prospectus. Appendix
E also discusses certain potential tax consequences associated with the use of
the contract with certain qualified plans which should be considered by a
purchaser. Persons intending to use the contract in connection with a qualified
plan should consult a tax advisor.
The tax rules applicable to qualified plans vary according to the type
of plan and the terms and conditions of the plan itself. For example, for both
withdrawals and annuity payments under certain qualified contracts, there may be
no "investment in the contract" and the total amount received may be taxable.
Also, loans from qualified contracts, where allowed, are subject to a variety of
limitations, including restrictions as to the amount that may be borrowed, the
duration of the loan, and the manner in which the loan must be repaid. (You
should always consult your tax advisor and retirement plan fiduciary prior to
exercising your loan privileges.) Both the amount of the contribution that may
be made, and the tax deduction or exclusion that you may claim for that
contribution, are limited under qualified plans.
If the contract is used in connection with a qualified plan, the owner
and annuitant must be the same individual. If a co-annuitant is named, all
distributions made while the annuitant is alive must be made to the annuitant.
Also, if a co-annuitant is named who is not the annuitant's spouse, the annuity
options which are available may be limited, depending on the difference in ages
between the annuitant and co-annuitant. Furthermore, the length of any guarantee
period may be limited in some circumstances. Additionally, for contracts issued
in connection with qualified plans subject to the Employee Retirement Income
Security Act, the spouse or ex-spouse of the owner will have rights in the
contract. In such a case, the owner may need the consent of the spouse or
ex-spouse to change annuity options or make a withdrawal from the contract.
In addition, special rules apply to the time at which distributions
must commence and the form in which the distributions must be paid. For example,
failure to comply with minimum distribution requirements applicable to qualified
plans will result in the imposition of an excise tax. This excise tax generally
equals 50% of the amount by which a minimum required distribution exceeds the
actual distribution from the qualified plan. In the case of IRAs (other than
Roth IRAs), distributions of minimum amounts (as specified in the tax law) must
generally commence by April 1 of the calendar year following the calendar year
in which the owner attains age 70-1/2. In the case of certain other qualified
plans, distributions of such minimum amounts must generally commence by the
later of this date or April 1 of the calendar year following the calendar year
in which the employee retires.
There is also a 10% penalty tax on the taxable amount of any payment
from certain qualified contracts. There are exceptions to this penalty tax which
vary depending on the type of qualified plan. In the case of an "Individual
Retirement Annuity" or an "IRA," exceptions provide that the penalty tax does
not apply to a payment:
38
<PAGE> 48
- received on or after the contract owner reaches age 59-1/2,
- received on or after the owner's death or because of the
owner's disability (as defined in the tax law), or
- made as a series of substantially equal periodic payments (not
less frequently than annually) for the life (or life
expectancy) of the owner or for the joint lives (or joint life
expectancies) of the owner and designated beneficiary (as
defined in the tax law).
These exceptions, as well as certain others not described herein, generally
apply to taxable distributions from other qualified plans (although, in the case
of plans qualified under Sections 401 and 403, the exception for substantially
equal periodic payments applies only if the owner has separated from service).
In addition, the penalty tax does not apply to certain distributions from IRAs
which are used for qualified first time home purchases or for higher education
expenses. Special conditions must be met to qualify for these two exceptions to
the penalty tax. If you wish to take a distribution from an IRA for these
purposes, you should consult your tax advisor.
When issued in connection with a qualified plan, a contract will be
amended as generally necessary to conform to the requirements of the plan.
However, the rights of any person to any benefits under qualified plans may be
subject to the terms and conditions of the plans themselves, regardless of the
terms and conditions of the contract. In addition, we will not be bound by terms
and conditions of qualified plans to the extent those terms and conditions
contradict the contract, unless we consent.
DIRECT ROLLOVERS
If the contract is used in connection with a retirement plan that is
qualified under Sections 401(a), 403(a), or 403(b) of the Code, any "ELIGIBLE
ROLLOVER DISTRIBUTION" from the contract will be subject to "direct rollover"
and mandatory withholding requirements. An eligible rollover distribution
generally is any taxable distribution from such qualified plans, excluding
certain amounts such as (i) minimum distributions required under Section
401(a)(9) of the Code, (ii) certain distributions for life, life expectancy, or
for 10 years or more which are part of a "series of substantially equal periodic
payments," and (iii) hardship distributions as defined in the tax law.
Under these requirements, Federal income tax equal to 20% of the
eligible rollover distribution will be withheld from the amount of the
distribution. Unlike withholding on certain other amounts distributed from the
contract, discussed below, the owner cannot elect out of withholding with
respect to an eligible rollover distribution. However, this 20% withholding will
not apply if, instead of receiving the eligible rollover distribution, the
person entitled to the distribution elects to have it directly transferred to
certain qualified plans. Prior to receiving an eligible rollover distribution, a
notice will be provided explaining generally the direct rollover and mandatory
withholding requirements and how to avoid the 20% withholding by electing a
direct rollover.
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
39
<PAGE> 49
our Annuity Service Office), subject to postponement under the same
circumstances that payment of withdrawals may be postponed (see "WITHDRAWALS").
When you request a loan, we will reduce your investment in the
investment accounts and transfer the amount of the loan to the "LOAN ACCOUNT," a
part of our general account. You may designate the investment accounts from
which the loan is to be withdrawn. Absent such a designation, the amount of the
loan will be withdrawn from the investment accounts in accordance with the rules
for making partial withdrawals (see "WITHDRAWALS"). The contract provides that
you may repay unpaid loans at any time. Under applicable loan rules, loans
generally must be repaid within five years, and repayments must be made at least
quarterly and in substantially equal amounts. When a loan is repaid, the amount
of the repayment will be transferred from the loan account to the investment
accounts. You may designate the investment accounts to which a repayment is to
be allocated. Otherwise, the repayment will be allocated in the same manner as
your most recent purchase payment. On each anniversary of the date your contract
was issued, we will transfer from the investment accounts to the loan account
the excess of the balance of your loan over the balance in your loan account.
We charge interest of 6% per year on contract loans. Loan interest is
payable in arrears and, unless paid in cash, the accrued loan interest is added
to the amount of the debt and bears interest at 6% as well. We credit interest
with respect to amounts held in the loan account at a rate of 4% per year.
Consequently, the net cost of loans under the contract is 2%. If on any date
unpaid loans under your contract exceed your contract value, your contract will
be in default. In such case you will receive a notice indicating the payment
needed to bring your contract out of default and will have a thirty-one day
grace period within which to pay the default amount. If the required payment is
not made within the grace period, your contract may be terminated without value.
The amount of any unpaid loans (including unpaid interest) will be
deducted from the death benefit otherwise payable under the contract. In
addition, loans, whether or not repaid, will have a permanent effect on contract
value because the investment results of the investment accounts will apply only
to the unborrowed portion of the contract value. The longer a loan is unpaid,
the greater the effect is likely to be. The effect could be favorable or
unfavorable. If the investment results are greater than the rate being credited
on amounts held in your loan account while your loan is unpaid, your contract
value will not increase as rapidly as it would have if no loan were unpaid. If
investment results are below that rate, contract value will be greater than it
would have been had no loan been outstanding.
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.
40
<PAGE> 50
Average annual total return is the average annual compounded rate of
return that equates a purchase payment to the market value of that purchase
payment on the last day of the period for which the return is calculated. The
aggregate total return is the percentage change (not annualized) that equates a
purchase payment to the market value of such purchase payment on the last day of
the period for which the return is calculated. For purposes of the calculations
it is assumed that an initial payment of $1,000 is made on the first day of the
period for which the return is calculated. For total return figures quoted for
periods prior to the commencement of the offering of this contract, standardized
performance data will be the historical performance of the Trust portfolio from
the date the applicable sub-account of the Variable Account first became
available for investment under other contracts that we offer, adjusted to
reflect current contract charges. In the case of non-standardized performance,
performance figures will be the historical performance of the Trust portfolio
from the inception date of the portfolio (or in the case of the Trust portfolios
created in connection with the merger of Manulife Series Fund, Inc. into the
Trust, the inception date of the applicable predecessor Manulife Series Fund,
Inc. portfolio), adjusted to reflect current contract charges.
ASSET ALLOCATION AND TIMING SERVICES
We are aware that certain third parties are offering asset allocation
and timing services in connection with the contracts. In certain cases we have
agreed to honor transfer instructions from such asset allocation and timing
services where we have received powers of attorney, in a form acceptable to us,
from the contract owners participating in the service. However, the contract is
not designed for professional market timing organizations or other entities or
persons engaging in programmed, frequent or large exchanges (collectively,
"market timers") to speculate on short-term movements in the market since such
activity may be disruptive to the Trust portfolios and increase their
transaction costs. Therefore, in order to prevent excessive use of the exchange
privilege, we reserve the right to (a) reject or restrict any specific purchase
and exchange requests and (b) impose specific limitations with respect to market
timers, including restricting exchanges by market timers to certain variable
investment options (transfers by market timers into or out of fixed investment
options is not permitted). WE DO NOT ENDORSE, APPROVE OR RECOMMEND SUCH SERVICES
IN ANY WAY AND YOU SHOULD BE AWARE THAT FEES PAID FOR SUCH SERVICES ARE SEPARATE
FROM AND IN ADDITION TO FEES PAID UNDER THE CONTRACTS.
We pay broker-dealers to sell the contracts.
DISTRIBUTION OF CONTRACTS
Manufacturers Securities Services, LLC ("MSS") is a Delaware limited
liability company that is controlled by Manulife North America. We have a 10%
equity interest in MSS. MSS is the principal underwriter and exclusive
distributor of the contracts. MSS is also the investment adviser to the Trust.
MSS is a broker-dealer registered under the Securities Exchange Act of 1934, is
a member of the National Association of Securities Dealers and is duly appointed
and licensed as our insurance agent. MSS is located at 73 Tremont Street,
Boston, Massachusetts 02108.
We have entered into an Underwriting and Distribution Agreement with
MSS where we appointed MSS the principal underwriter and exclusive
representative for the distribution of all insurance products and authorized MSS
to enter into agreements with selling broker-dealers and general agents for the
distribution of the products. Sales of the contracts will be made by registered
representatives of broker-dealers authorized by us and MSS to sell the
contracts. Those registered representatives will also be our licensed insurance
agents.
CONTRACT OWNER INQUIRIES
Your inquiries should be directed to our Annuity Service Office mailing
address at The Manufacturers Life Insurance Company of New York, Annuity Service
Office, P.O. Box 9013, Boston, MA 02205-9013.
41
<PAGE> 51
CONFIRMATION STATEMENTS
You will be sent confirmation statements for certain transactions in
your account. You should carefully review these statements to verify their
accuracy. Any mistakes should immediately be reported to our Annuity Service
Office. If you fail to notify our Annuity Service Office of any mistake within
60 days of the mailing of the confirmation statement, you will be deemed to have
ratified the transaction.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party
or to which the assets of the Variable Account are subject. Neither we nor MSS
are involved in any litigation that is of material importance to either, or that
relates to the Variable Account.
YEAR 2000 ISSUES
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when information
using year 2000 dates is processed. In addition, similar problems may arise in
some systems which use certain dates in 1999 to represent something other than a
date. Although the change in date has occurred, it is not possible to conclude
that all aspects of the Year 2000 Issue that may affect us, including those
related to customers, suppliers, or other third parties, have been fully
resolved.
CANCELLATION OF CONTRACT
We may, at our option, cancel a contract at the end of any three
consecutive contract years in which no purchase payments by or on behalf of you
have been made, if both:
- the total purchase payments made for the contract, less any
withdrawals, are less than $2,000; and
- the contract value at the end of such three year period is
less than $2,000.
We, as a matter of administrative practice, will attempt to notify you prior to
such cancellation in order to allow you to make the necessary purchase payment
to keep the contract in force.
VOTING INTEREST
As stated above under "The Trust", we will vote shares of the Trust
portfolios held in the Variable Account at the Trust's shareholder meetings
according to voting instructions received from the persons having the voting
interest under the contracts.
Accumulation Period. During the accumulation period, the contract owner
has the voting interest under a contract. The number of votes for each portfolio
for which voting instructions may be given is determined by dividing the value
of the investment account corresponding to the sub-account in which such
portfolio shares are held by the net asset value per share of that portfolio.
Pay-out Period. During the pay-out period, the annuitant has the voting
interest under a contract. The number of votes as to each portfolio for which
voting instructions may be given is determined by dividing the reserve for the
contract allocated to the sub-account in which such portfolio shares are held by
the net asset value per share of that portfolio.
Generally, the number of votes tends to decrease as annuity payments
progress since the amount of reserves attributable to a contract will usually
decrease after commencement of annuity payments. We will determine the number of
portfolio shares for which voting instructions may be given not more than 90
days prior to the meeting.
42
<PAGE> 52
APPENDIX A
SPECIAL TERMS
The following terms as used in this Prospectus have the indicated
meanings:
Accumulation Period - The period between the issue date of the contract
and the maturity date of the contract. During this period, purchase payments are
typically made to the contract by the owner.
Accumulation Unit - A unit of measure that is used to calculate the
value of the variable portion of the contract before the maturity date.
Annuitant - Any natural person or persons to whom annuity payments are
made and whose life is used to determine the duration of annuity payments
involving life contingencies. If the contract owner names more than one person
as an "annuitant," the second person named is referred to as "co-annuitant." The
"annuitant" and "co-annuitant" are referred to collectively as "annuitant." The
"annuitant" is as designated on the contract specification page or in the
application, unless changed.
Annuity Unit - A unit of measure that is used after the maturity date
to calculate variable annuity payments.
Annuity Option - The method selected by the contract owner (or as
specified in the contract if no selection is made) for annuity payments made by
us.
Annuity Service Office - The mailing address of our service office is
P.O. Box 9013, Boston, Massachusetts 02205-9013
Annuity Unit - A unit of measure that is used after the maturity date
to calculate variable annuity payments.
Beneficiary - The person, persons or entity entitled to the death
benefit under the contract upon the death of a contract owner or, in certain
circumstances, an annuitant. The beneficiary is as specified in the application,
unless changed. If there is a surviving contract owner, that person will be the
beneficiary.
Business Day - Any day on which the New York Stock Exchange is open for
business and the net asset value of a Trust portfolio may be determined.
The Code - The Internal Revenue Code of 1986, as amended.
Contingent Beneficiary - The person, persons or entity to become the
beneficiary if the beneficiary is not alive. The contingent beneficiary is as
specified in the application, unless changed.
Contract Value - The total of the investment account values and, if
applicable, any amount in the loan account attributable to the contract.
Contract Year - The period of twelve consecutive months beginning on
the date as of which the contract is issued, or any anniversary of that date.
Debt - Any amounts in the loan account attributable to the contract
plus any accrued loan interest. The loan provision is applicable to certain
qualified contracts only.
Due Proof of Death - Due Proof of Death is required upon the death of
the contract owner or annuitant, as applicable. One of the following must be
received at the Annuity Service Office within one year of the date of death:
(a) A certified copy of a death certificate;
(b) A certified copy of a decree of a court of competent jurisdiction as to
the finding of death; or
(c) Any other proof satisfactory to us.
Death benefits will be paid within 7 days of receipt of due proof of death and
all required claim forms at our Annuity Service Office.
Fixed Annuity - An annuity option with payments the amount of which we
guarantee.
A-1
<PAGE> 53
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 Account Value - The value of a contract owner's investment
in an investment account.
Investment Options - The investment choices available to contract
owners. Currently, there are forty-six 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.
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.
Purchase Payment - An amount paid by a contract owner to us as
consideration for the benefits provided by the contract.
Qualified Contracts - Contracts issued under qualified plans.
Qualified Plans - Retirement plans which receive favorable tax
treatment under Section 401, 403, 408 or 408A of the Code.
Separate Account - A segregated account of ours that is not commingled
with our general assets and obligations.
Sub-Account(s) - One or more of the sub-accounts of the Variable
Account. Each sub-account is invested in shares of a different Trust portfolio.
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.
Variable Account - Is a separate account of ours.
Variable Annuity - An annuity option with payments which: (1) are not
predetermined or guaranteed as to dollar amount, and (2) vary in relation to the
investment experience of one or more specified sub-accounts.
A-2
<PAGE> 54
APPENDIX B
TABLE OF ACCUMULATION UNIT VALUES FOR
CONTRACTS DESCRIBED IN THIS PROSPECTUS(A)
<TABLE>
<CAPTION>
SUB-ACCOUNT UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
START OF YEAR(B) END OF YEAR END OF YEAR
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets
1999 $12.500000 $12.359297 49,612.472
Science & Technology
1999 $12.500000 $37.660683 0.000
International Small Cap
1999 $12.500000 $26.974754 32,991.316
Aggressive Growth
1999 $12.500000 $16.628126 88,069.743
Emerging Small Company
1999 $12.500000 $24.610648 28,217.505
Small Company Blend
1999 $12.500000 $15.922213 27,581.879
Mid Cap Stock
1999 $12.500000 $12.483520 60,538.438
All Cap Growth(C)
1999 $12.500000 $27.113084 107,417.572
Overseas
1999 $12.500000 $17.044524 50,910.958
International Stock
1999 $12.500000 $18.338932 21,852.045
International Value
1999 $12.500000 $12.860110 29,546.092
Mid Cap Blend
1999 $12.500000 $39.416089 84,730.840
Small Company Value
1999 $12.500000 $11.904646 37,963.395
Global Equity
1999 $12.500000 $24.633827 38,003.587
Growth
1999 $12.500000 $28.060585 59,898.278
Large Cap Growth
1999 $12.500000 $28.465074 87,649.390
Quantitative Equity
1999 $12.500000 $24.202942 22,972.748
Blue Chip Growth
1999 $12.500000 $25.568866 226,749.926
Real Estate Securities
1999 $12.500000 $11.174188 6,162.684
Value
1999 $12.500000 $13.987433 29,886.713
Growth & Income
1999 $12.500000 $38.655938 306,537.047
</TABLE>
B-1
<PAGE> 55
<TABLE>
<CAPTION>
SUB-ACCOUNT UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
START OF YEAR(B) END OF YEAR END OF YEAR
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Large Cap Value
1999 $12.500000 $12.721279 110,817.291
Equity-Income
1999 $12.500000 $22.487758 119,864.541
Income & Value
1999 $12.500000 $22.230152 34,370.923
Balanced
1999 $12.500000 $15.962370 36,237.361
High Yield
1999 $12.500000 $14.993652 26,298.259
Strategic Bond
1999 $12.500000 $14.602672 37,068.994
Global Bond
1999 $12.500000 $19.632749 6,544.205
Total Return
1999 $12.500000 $12.255674 78,135.381
Investment Quality Bond
1999 $12.500000 $19.039807 19,293.016
Diversified Bond
1999 $12.500000 $18.002047 17,159.783
U.S. Government Securities
1999 $12.500000 $18.286918 23,761.010
Money Market
1999 $12.500000 $16.291417 247,891.481
Lifestyle Aggressive 1000
1999 $12.500000 $15.974195 15,601.680
Lifestyle Growth 820
1999 $12.500000 $16.893101 105,797.527
Lifestyle Balanced 640
1999 $12.500000 $16.257312 94,609.451
Lifestyle Moderate 460
1999 $12.500000 $16.142259 23,104.290
Lifestyle Conservative 280
1999 $12.500000 $15.439823 22,992.739
</TABLE>
(A) For the TABLE OF ACCUMULATION UNIT VALUES for Ven 9 contracts see
Appendix D.
(B) Units under this series of contracts were first credited under the
sub-accounts on May 1, 1999.
(C) Formerly, the Mid Cap Growth Trust.
B-2
<PAGE> 56
APPENDIX C
EXAMPLES OF CALCULATION OF WITHDRAWAL CHARGE
Example 1 - Assume a single payment of $50,000 is made into the contract, no
transfers are made, no additional payments are made and there are no partial
withdrawals. The table below illustrates four examples of the withdrawal charges
that would be imposed if the contract is completely withdrawn, based on
hypothetical contract values.
<TABLE>
<CAPTION>
HYPOTHETICAL WITHDRAWAL AMOUNT PAYMENTS
CONTRACT YEAR CONTRACT VALUE WITHOUT CHARGES LIQUIDATED WITHDRAWAL CHARGE
------------- -------------- ----------------- ---------- -----------------
PERCENT AMOUNT
------- ------
<S> <C> <C> <C> <C> <C>
2 55,000 5,000(a) 50,000 6% 3,000
4 50,500 5,000(b) 45,500 5% 2,275
6 60,000 10,000(c) 50,000 3% 1,500
8 70,000 20,000(d) 50,000 0% 0
</TABLE>
(a) During any contract year the amount that may be withdrawn without
withdrawal charges is the greater of accumulated earnings, or 10% of
the total payments made under the contract less any prior partial
withdrawals in that contract year. In the second contract year the
earnings under the contract and 10% of payments both equal $5,000.
Consequently, on total withdrawal $5,000 is withdrawn without
withdrawal charges, the entire $50,000 payment is liquidated and the
withdrawal charge is assessed against such liquidated payment (contract
value less withdrawal amount without charges).
(b) In the example for the fourth contract year, the accumulated earnings
of $500 is less than 10% of payments, therefore the amount that may be
withdrawn without charges is equal to 10% of payments ($50,000 X 10% =
$5,000) and the withdrawal charge is only applied to payments
liquidated (contract value less withdrawal amount without charges).
(c) In the example for the sixth contract year, the accumulated earnings of
$10,000 is greater than 10% of payments ($5,000), therefore the amount
that may be withdrawn without charges is equal to the accumulated
earnings of $10,000 and the withdrawal charge is applied to the
payments liquidated (contract value less withdrawal amount without
charges).
(d) There is no withdrawal charge on any payments liquidated that have been
in the contract for at least 7 years.
C-1
<PAGE> 57
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>
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-Less than 0). Hence the amount that can be
withdrawn without withdrawal charges is $4,000. Therefore, $3,000 of
the $7,000 partial withdrawal will be subject to a withdrawal charge
and result in payments being liquidated. The remaining unliquidated
payments are $45,000.
(d) The amount that can be withdrawn without withdrawal charges is zero
since the contract has negative accumulated earnings ($44,000-$45,000)
and the full 10% of payments ($5,000) has already been withdrawn. The
full amount of $8,000 will result in payments being liquidated subject
to a withdrawal charge. At the beginning of the next contract year the
full 10% of payments would be available again for withdrawal requests
during that year.
C-2
<PAGE> 58
APPENDIX D
PRIOR CONTRACTS
The Company has a class of variable annuity contract which is no longer
being issued but under which purchase payments may continue to be made ("PRIOR
CONTRACT" or "VEN 9 CONTRACTS"), which were sold during the period from March,
1992 until May, 1999.
The principal differences between the contract offered by this
Prospectus and the prior contract relate to:
- the fixed investment options available under the contracts,
- a minimum interest rate to be credited for any guarantee period under
the fixed portion of the contracts,
- the charges made by us, and
- the death benefit provisions.
FIXED INVESTMENT OPTIONS
The investment options under the prior contract differ as follows from
the investment options described in this Prospectus. The prior contract allows
for investments in one, three and six year fixed account investments options.
The contract described in this prospectus allows for investments in one, three,
five and seven year fixed account investment options and a six month DCA fixed
account investment option and a twelve month DCA fixed account investment
option.
FIXED ACCOUNT MINIMUM INTEREST GUARANTEE
The minimum interest rate to be credited for any guarantee period under
the fixed portion of the prior contract is 4%.
MARKET VALUE CHARGE
The market value charge under the prior contract differs in the
following respects from the market value charge under the contract described in
this Prospectus:
For purposes of calculating the market value adjustment factor the
maximum difference between "B" and "A" will be 3%. The adjustment factor will
never be greater than 2x(A-4%) and never less than zero. ("A" is the guaranteed
interest rate on the investment account. "B" is the guaranteed interest rate
available, on the date the request is processed, for amounts allocated to a new
investment account with the same length of guarantee period as the investment
account from which the amounts are being withdrawn.)
There will be no market value charge on withdrawals from the fixed
account investment options in the following situations:
- death of the annuitant;
- amounts withdrawn to pay fees or charges;
- amounts withdrawn from three and six year investment accounts within
one month prior to the end of the guarantee period; and
- amounts withdrawn in any year that do not exceed 10% of total purchase
payments less any prior partial withdrawals in that contract year.
Notwithstanding application of the foregoing formula, in no event will
the market value charge (i) exceed the earnings attributable to the amount
withdrawn from an investment account, (ii) together with any withdrawal charges
for an investment account be greater than 10% of the amount transferred or
withdrawn, or (iii) reduce the amount payable on withdrawal or transfer below
the amount required under the nonforfeiture laws of the state with jurisdiction
over the contract. The cumulative effect of the market value and withdrawal
charges (or the effect of the withdrawal charge itself) could, however, result
in an owner receiving total withdrawal proceeds of less than the owner's
purchase payments.
WITHDRAWAL CHARGES
The withdrawal charges under the prior contract differ from the
withdrawal charges described in this Prospectus.
D-1
<PAGE> 59
PRIOR CONTRACT WITHDRAWAL CHARGE
If a withdrawal is made from the contract before the maturity date, a
withdrawal charge (contingent deferred sales charge) may be assessed against
amounts withdrawn attributable to purchase payments that have been in the
contract less than six complete contract years. There is never a withdrawal
charge with respect to earnings accumulated in the contract, certain other
amounts available without withdrawal charges described below or purchase
payments that have been in the contract more than six complete contract years.
In no event may the total withdrawal charges exceed 6% of the amount invested.
The amount of the withdrawal charge and when it is assessed is discussed below:
1. Each withdrawal from the contract is allocated first to the "amounts
available without withdrawal charges" and second to "unliquidated purchase
payments". In any contract year, the amounts available without withdrawal
charges for that year is the greater of (1) the excess of the contract value on
the date of withdrawal over the unliquidated purchase payments (the accumulated
earnings on the contract) or (2) 10% of total purchase payments less any prior
partial withdrawals in that year. Withdrawals allocated to the amounts available
without withdrawal charges may be withdrawn without the imposition of a
withdrawal charge.
2. If a withdrawal is made for an amount in excess of the amounts
available without withdrawal charges, the excess will be allocated to purchase
payments which will be liquidated on a first-in first-out basis. On any
withdrawal request, the Company will liquidate purchase payments equal to the
amount of the withdrawal request which exceeds the amounts available without
withdrawal charges in the order such purchase payments were made: the oldest
unliquidated purchase payment first, the next purchase payment second, etc.
until all purchase payments have been liquidated.
3. Each purchase payment or portion thereof liquidated in connection
with a withdrawal request is subject to a withdrawal charge based on the length
of time the purchase payment has been in the contract. The amount of the
withdrawal charge is calculated by multiplying the amount of the purchase
payment being liquidated by the applicable withdrawal charge percentage obtained
from the table below.
<TABLE>
<CAPTION>
NUMBER OF COMPLETE YEARS
PURCHASE PAYMENT IN WITHDRAWAL CHARGE
CONTRACT PERCENTAGE
-------------------------------------------------------
<S> <C>
0 6%
1 6%
2 5%
3 4%
4 3%
5 2%
6+ 0%
</TABLE>
The total withdrawal charge will be the sum of the withdrawal charges for the
purchase payments being liquidated.
4. The withdrawal charge is deducted from the contract value remaining
after the contract owner is paid the amount requested, except in the case of a
complete withdrawal when it is deducted from the amount otherwise payable. In
the case of a partial withdrawal, the amount requested from an investment
account may not exceed the value of that investment account less any applicable
withdrawal charge.
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.
D-2
<PAGE> 60
DEATH BENEFIT PROVISIONS
Prior Contract Death Benefit Provisions
The provisions governing the death benefit prior to the maturity date
under the prior contract are as follows:
Death of Annuitant who is not the Contract Owner. The Company will pay
the minimum death benefit, less any debt, to the beneficiary if the contract
owner is not the annuitant and the annuitant dies before the contract owner and
before the maturity date. If there is more than one such annuitant, the minimum
death benefit will be paid on the death of the last surviving co-annuitant. The
minimum death benefit will be paid either as a lump sum or in accordance with
any of the annuity options available under the contract. An election to receive
the death benefit under an annuity option must be made within 60 days after the
date on which the death benefit first becomes payable. Rather than receiving the
minimum death benefit, the beneficiary may elect to continue the contract as the
new contract owner. (In general, a beneficiary who makes such an election will
nonetheless be treated for Federal income tax purposes as if he had received the
minimum death benefit.)
Death of Annuitant who is the Contract Owner. The Company will pay the
minimum death benefit, less any debt, to the beneficiary if the contract owner
is the annuitant, dies before the maturity date and is not survived by a
co-annuitant. If the contract is a non-qualified contract, the contract owner is
the annuitant and the contract owner dies before the maturity date survived by a
co-annuitant, the Company, instead of paying the minimum death benefit to the
beneficiary, will pay to the successor owner an amount equal to the amount
payable on total withdrawal without reduction for any withdrawal charge. If the
contract is a non-qualified contract, distribution of the minimum death benefit
to the beneficiary (or of the amount payable to the successor owner) must be
made within five years after the owner's death. If the beneficiary or successor
owner, as appropriate, is an individual, in lieu of distribution within five
years of the owner's death, distribution may be made as an annuity which begins
within one year of the owner's death and is payable over the life of the
beneficiary (or the successor owner) or over a period not in excess of the life
expectancy of the beneficiary (or the successor owner). If the owner's spouse is
the beneficiary (or the successor owner, as appropriate) that spouse may elect
to continue the contract as the new owner in lieu of receiving the distribution.
In such a case, the distribution rules applicable when a contract owner dies
generally will apply when that spouse, as the owner, dies.
Death of Owner who is not the Annuitant. If the owner is not the
annuitant and dies before the maturity date and before the annuitant, the
successor owner (the person, persons or entity to become the owner if the owner
dies prior to the maturity date) will become the owner of the contract. If the
contract is a non-qualified contract, an amount equal to the amount payable on
total withdrawal, without reduction for any withdrawal charge, will be paid to
the successor owner. Distribution of that amount to the successor owner must be
made within five years of the owner's death. If the successor owner is an
individual, in lieu of distribution within five years of the owner's death,
distribution may be made as an annuity which begins within one year of the
owner's death and is payable over the life of the successor owner (or over a
period not greater than the successor owner's life expectancy). If the owner's
spouse is the successor owner, that spouse may elect to continue the contract as
the new contract owner in lieu of receiving the distribution. In such a case,
the distribution rules applicable when a contract owner dies generally will
apply when that spouse, as the owner, dies. If there is more than one owner,
distribution will occur upon the death of any owner. If both owners are
individuals, distribution will be made to the remaining owner rather than to the
successor owner.
Entity as Owner. In the case of a non-qualified contract which is not
owned by an individual (for example, a non-qualified contract owned by a
corporation or a trust), the special rules stated in this paragraph apply. For
purposes of distributions of death benefits before the maturity date, any
annuitant will be treated as the owner of the contract, and a change in the
annuitant 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
D-3
<PAGE> 61
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.
D-4
<PAGE> 62
TABLE OF ACCUMULATION UNIT VALUES
Ven 9 Contracts
<TABLE>
<CAPTION>
SUB-ACCOUNT UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
START OF YEAR(A) END OF YEAR END OF YEAR
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Rim Emerging Markets
1997 $12.500000 $ 8.180904 51,443.657
1998 8.180904 7.695249 137,388.667
1999 7.695249 12.359297 314,806.513
Science & Technology
1997 $12.500000 $13.647195 413,150.058
1998 13.647195 19.287390 932,323.295
1999 19.287390 37.943261 1,883,524.507
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
1999 14.792077 26.974754 665,832.925
Aggressive Growth
1997 $12.500000 $12.327066 188,114.289
1998 12.327066 12.680777 319,349.201
1999 12.680777 16.628126 302,621.031
Emerging Small Company
1997 $12.500000 $14.574077 207,223.803
1998 14.574077 14.381705 346.294.546
1999 14.381705 24.610648 391,437.694
Small Company Blend
1999 $12.500000 $15.922213 59,731.393
Mid Cap Stock
1999 $12.500000 $12.483520 38,226.383
All Cap Growth(B)
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
1999 19.002856 27.113084 1,684,077.273
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
1999 12.290162 17.044524 1,468,158.585
International Stock
1997 $12.500000 $12.652231 131,727.457
1998 12.652231 14.337171 203,765.303
1999 14.337171 18.338932 235,697.859
International Value
1999 $12.500000 $12.860110 17,703.921
</TABLE>
D-5
<PAGE> 63
<TABLE>
<CAPTION>
SUB-ACCOUNT UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
START OF YEAR(A) END OF YEAR END OF YEAR
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
1999 31.289551 39.416089 2,642,361.432
Small Company Value
1998 $12.500000 $11.178700 257,438.611
1999 11.178700 11.904646 234,536.726
Global Equity
1992 $12.003976 $11.790318 21,242.936
1993 11.790318 15.450341 701,425.817
1994 15.450341 15.500933 1,612,831.628
1995 15.500933 16.459655 1,679,042.917
1996 16.495655 18.276450 1,955,863.791
1997 18.276450 21.770913 2,090,810.929
1998 21.770913 24.098970 2,205,244.249
1999 24.098970 24.633827 2,118,412.809
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
1999 20.739989 28.060585 1,007,470.923
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
1999 23.040505 28.465074 671,016.958
Quantitative Equity
1997 $12.500000 $16.107191 110,561.698
1998 16.107191 20.068624 242,026.359
1999 20.068624 24.202942 454,400.238
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
1999 21.710674 25.568866 3,865,926.158
</TABLE>
D-6
<PAGE> 64
<TABLE>
<CAPTION>
SUB-ACCOUNT UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
START OF YEAR(A) END OF YEAR END OF YEAR
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Real Estate Securities
1997 $12.500000 $14.949140 152,109.301
1998 14.949140 12.317190 251,203.724
1999 12.317190 11.174188 222,156.017
Value
1997 $12.500000 $15.057118 262,613.990
1998 15.057118 14.591878 557,129.589
1999 14.591878 13.987433 483,257.114
Growth & Income
1992 $10.942947 $11.927411 33,716.020
1993 11.927411 12.893007 753,734.211
1994 12.893007 13.076664 1,298,075.564
1995 13.076664 16.660889 1,702,726.488
1996 16.660889 20.178770 2,601,497.610
1997 20.178770 26.431239 3,402,510.675
1998 26.431239 32.976967 4,327,967.912
1999 32.976967 38.655938 5,082,495.232
U.S. Large Cap Value
1999 $12.500000 $12.721279 288,136.975
Equity-Income
1993 $10.000000 $11.175534 1,087,538.574
1994 11.175534 11.107620 2,147,059.046
1995 11.107620 13.548849 2,700,623.434
1996 13.548849 16.011513 3,362,755.333
1997 16.011513 20.479412 3,793,616.601
1998 20.479412 22.054902 4,109,128.664
1999 22.054902 22.487758 3,820,578.295
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
1999 20.742457 22.230152 1,258,137.080
Balanced
1997 $12.500000 $14.609853 58,346.232
1998 14.609853 16.459454 267,044.520
1999 16.459454 15.962370 304,255.397
High Yield
1997 $12.500000 $13.890491 281,593.104
1998 13.890491 14.078376 531,010.395
1999 14.078376 14.993652 548,705.526
</TABLE>
D-7
<PAGE> 65
<TABLE>
<CAPTION>
SUB-ACCOUNT UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
START OF YEAR(A) END OF YEAR END OF YEAR
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
1999 14.486687 14.602672 1,888,603.162
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
1999 21.333144 19.632749 337,556.130
Total Return
1999 $12.500000 $12.255674 96,155.847
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
1999 19.660365 19.039807 617,872.030
Diversified Bond
1992 $11.102574 $11.821212 3,884.882
1993 11.821212 12.705196 176,613.459
1994 12.705196 12.298940 267,695.021
1995 12.298940 14.320582 306,895.403
1996 14.320582 15.113142 424,786.597
1997 15.113142 16.607511 406,841.439
1998 16.607511 18.125951 439,784.815
1999 18.125951 18.002047 398,119.028
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
1999 18.587049 18.286918 843,937.470
</TABLE>
D-8
<PAGE> 66
<TABLE>
<CAPTION>
SUB-ACCOUNT UNIT VALUE AT UNIT VALUE AT NUMBER OF UNITS
START OF YEAR(A) END OF YEAR END OF YEAR
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
1999 15.794513 16.291417 1,695,531.957
Lifestyle Aggressive 1000
1997 $12.500000 $13.669625 358,660.180
1998 13.669625 14.134419 544,460.936
1999 14.134419 15.974195 302,518.112
Lifestyle Growth 820
1997 $12.500000 $14.033299 1,637,679.093
1998 14.033299 14.696667 2,556,433.101
1999 14.696667 16.893101 1,484,982.525
Lifestyle Balanced 640
1997 $12.500000 $14.066417 1,463,270.527
1998 14.066417 14.664362 2,366,219.819
1999 14.664362 16.257312 1,702,526.278
Lifestyle Moderate 460
1997 $12.500000 $14.016704 464,645.815
1998 14.016704 15.171965 863,517.086
1999 15.171965 16.142259 740,965.001
Lifestyle Conservative 280
1997 $12.500000 $13.825120 131,137.160
1998 13.825120 15.025549 364,590.805
1999 15.025549 15.439823 375,762.981
</TABLE>
(A) 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; o Overseas Trust where units
were first credited on January 9, 1995;
- All Cap Growth 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, Aggressive Growth, International Stock,
Quantitative Equity, Real Estate Securities, Value, Balanced,
High Yield Trusts where units were first credited on January
1, 1997;
- Lifestyle Aggressive 1000, Lifestyle Growth 820, Lifestyle
Balanced 640, Lifestyle Moderate 460 and Lifestyle
Conservative 280 Trusts where units were first credited on
January 7, 1997;
- Small Company Value Trust where units were first credited on
October 1, 1997;
- Small Company Blend, Mid Cap Stock, International Value, U.S.
Large Cap Value and Total Return Trusts where units were first
credited on May 1, 1999.
(B) Formerly, the Mid Cap Growth Trust.
D-9
<PAGE> 67
APPENDIX E
QUALIFIED PLAN TYPES
Set forth below are brief descriptions of the types of qualified plans
in connection with which we will issue contracts. Certain potential tax
consequences associated with use of the contract in connection with qualified
plans are also described. Persons intending to use the contract in connection
with qualified plans should consult their tax advisor.
Individual Retirement Annuities. Section 408 of the Code permits
eligible individuals to contribute to an IRA. IRAs are subject to limits on the
amounts that may be contributed and deducted, the persons who may be eligible
and on the time when distributions may commence. Also, distributions from
certain other types of qualified retirement plans may be "rolled over" on a
tax-deferred basis into an IRA. The contract may not, however be used in
connection with an "Education IRA" under Section 530 of the Code.
IRAs generally may not provide life insurance coverage, but they may
provide a death benefit that equals the greater of the premiums paid and the
contract value. The contract provides a death benefit that in certain
circumstances may exceed the greater of the purchase payments and the contract
value. It is possible that the contract's death benefit could be viewed as
providing life insurance coverage with the result that the contract would not be
viewed as satisfying the requirements of an IRA.
Simplified Employee Pensions (SEP-IRAs). Section 408(k) of the Code
allows employers to establish simplified employee pension plans for their
employees, using the employees' IRAs for such purposes, if certain criteria are
met. Under these plans the employer may, within specified limits, make
deductible contributions on behalf of the employees to IRAs. As discussed above
(see "Individual Retirement Annuities"), there is some uncertainty regarding the
treatment of the contract's death benefit for purposes of the tax rules
governing IRAs (which would include SEP-IRAs).
Roth IRAs. Section 408A of the Code permits eligible individuals to
contribute to a type of IRA known as a "Roth IRA." Roth IRAs are generally
subject to the same rules as non-Roth IRAs, but differ in certain respects.
Among the differences are that contributions to a Roth IRA are not
deductible and "qualified distributions" from a Roth IRA are excluded from
income. A qualified distribution is a distribution that satisfies two
requirements. First, the distribution must be made in a taxable year that is at
least five years after the first taxable year for which a contribution to any
Roth IRA established for the owner was made.
Second, the distribution must be:
- made after the owner attains age 59-1/2;
- made after the owner's death;
- attributable to the owner being disabled; or
- a qualified first-time homebuyer distribution within the meaning of
Section 72(t)(2)(F) of the Code.
In addition, distributions from Roth IRAs need not commence when the
owner attains age 70-1/2 . A Roth IRA may accept a "qualified rollover
contribution" from a non-Roth IRA, but a Roth IRA may not accept rollover
contributions from other qualified plans.
As described above (see "Individual Retirement Annuities"), there is
some uncertainty regarding the proper characterization of the contract's death
benefit for purposes of the tax rules governing IRAs (which include Roth IRAs).
Also, the state tax treatment of a Roth IRA may differ from the Federal income
tax treatment of a Roth IRA.
Corporate and Self-Employed ("H.R. 10" and "Keogh") Pension and
Profit-Sharing Plans. Sections 401(a) and 403(a) of the Code permit corporate
employers to establish various types of tax-favored retirement plans for
employees. The Self-Employed Individuals' Tax Retirement Act of 1962, as
amended, commonly referred to as "H.R. 10" or "Keogh," permits self-employed
individuals also to establish such tax-favored retirement plans for themselves
and their employees. Such retirement plans may permit the purchase of the
contracts in order to provide benefits under the plans. The contract provides a
death benefit that in certain circumstances may exceed the greater of the
purchase payments and the contract value. It is possible that the IRS could
characterize the death benefit as an "incidental death benefit". There are
limitations on the amount of incidental benefits that may be provided under
pension and profit sharing plans. In addition, the provision of such benefits
may result in current taxable income to participants.
E-1
<PAGE> 68
Tax-Sheltered Annuities. Section 403(b) of the Code permits public
school employees and employees of certain types of charitable, educational and
scientific organizations specified in Section 501(c)(3) of the Code to have
their employers purchase annuity contracts for them and, subject to certain
limitations, to exclude the amount of purchase payments from gross income for
tax purposes. These annuity contracts are commonly referred to as "tax-sheltered
annuities". Purchasers of the contracts for such purposes should seek competent
advice as to eligibility, limitations on permissible amounts of purchase
payments and other tax consequences associated with the contracts. In
particular, purchasers should consider that the contract provides a death
benefit that in certain circumstances may exceed the greater of the purchase
payments and the contract value. It is possible that the IRS could characterize
the death benefit as an "incidental death benefit." If so, the contract owner
could be deemed to receive currently taxable income. In addition, there are
limitations on the amount of incidental benefits that may be provided under a
tax-sheltered annuity. Even if the IRS characterized the benefit under the
contract as an incidental death benefit, the death benefit is unlikely to
violate those limits unless the purchaser also purchases a life insurance
contract as part of his or her tax-sheltered annuity plan.
Tax-sheltered annuity contracts must contain restrictions on
withdrawals of:
- contributions made pursuant to a salary reduction agreement in years
beginning after December 31, 1988,
- earnings on those contributions, and
- earnings after 1988 on amounts attributable to salary reduction
contributions (and earnings on those contributions) held as of the last
day of the year beginning before January 1, 1989.
These amounts can be paid only if the employee has reached age 59-1/2, separated
from service, died, or become disabled (within the meaning of the tax law), or
in the case of hardship (within the meaning of the tax law). Amounts permitted
to be distributed in the event of hardship are limited to actual contributions;
earnings thereon cannot be distributed on account of hardship. Amounts subject
to the withdrawal restrictions applicable to Section 403(b)(7) custodial
accounts may be subject to more stringent restrictions. (These limitations on
withdrawals do not apply to the extent we are directed to transfer some or all
of the contract value to the issuer of another tax-sheltered annuity or into a
Section 403(b)(7) custodial account.)
E-2
<PAGE> 69
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 70
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
(877) 391-3748.
The date of this Statement of Additional Information is May 1, 2000
The Manufacturers Life Insurance Company of New York
100 Summit Lake Drive
Second Floor
Valhalla, New York 10595
(877) 391-3748
<PAGE> 71
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........................................... 16
Principal Underwriter..................................... 16
Appendix A - State Premium Taxes................................... 17
Audited Financial Statements....................................... 18
2
<PAGE> 72
GENERAL INFORMATION AND HISTORY
The Manufacturers Life Insurance Company of New York Separate Account A
(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. Prior to October 1, 1997,
we were known as First North American Life Assurance Company. We are a
wholly-owned subsidiary of The Manufacturers Life Insurance Company of North
America ("MANULIFE NORTH AMERICA"), a stock life insurance company established
in 1979 in Delaware. The ultimate parent of Manulife North America is Manulife
Financial Corporation ("MFC") a publicly traded company based in Toronto,
Canada. MFC is the holding company of The Manufacturers Life Insurance Company
and its subsidiaries, collectively known as Manulife Financial.
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.
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 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.
3
<PAGE> 73
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES(A)
CALCULATED AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
SINCE INCEPTION OR 10
YEARS, WHICHEVER
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER INCEPTION DATE(B)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets 54.56% N/A -1.96% 01/01/97
------------------------------------------------------------------------------------------------------------
Science & Technology 90.68% N/A 43.99% 01/01/97
------------------------------------------------------------------------------------------------------------
International Small Cap 76.31% N/A 21.46% 03/04/96
------------------------------------------------------------------------------------------------------------
Aggressive Growth 25.08% N/A 8.54% 01/01/97
------------------------------------------------------------------------------------------------------------
Emerging Small Company 65.07% N/A 24.24% 01/01/97
------------------------------------------------------------------------------------------------------------
Small Company Blend N/A N/A 21.33% 05/01/99
------------------------------------------------------------------------------------------------------------
Mid Cap Stock N/A N/A -5.57% 05/01/99
------------------------------------------------------------------------------------------------------------
All Cap Growth(C) 36.63% N/A 21.63% 03/04/96
------------------------------------------------------------------------------------------------------------
Overseas 32.63% N/A 10.73% 01/09/95
------------------------------------------------------------------------------------------------------------
International Stock 21.86% N/A 12.29% 01/01/97
------------------------------------------------------------------------------------------------------------
International Value N/A N/A -2.74% 05/01/99
------------------------------------------------------------------------------------------------------------
Mid Cap Blend 19.92% 21.26% 17.80% 10/31/92
------------------------------------------------------------------------------------------------------------
Small Company Value 0.66% N/A -4.19% 10/01/97
------------------------------------------------------------------------------------------------------------
Global Equity -3.36% 9.11% 11.34% 10/31/92
------------------------------------------------------------------------------------------------------------
Growth 29.25% N/A 25.44% 07/15/96
------------------------------------------------------------------------------------------------------------
Large Cap Growth 17.49% 17.66% 13.65% 10/31/92
------------------------------------------------------------------------------------------------------------
Quantitative Equity 14.55% N/A 23.54% 01/01/97
------------------------------------------------------------------------------------------------------------
Blue Chip Growth 11.72% 23.30% 14.18% 12/11/92
------------------------------------------------------------------------------------------------------------
Real Estate Securities -14.17% N/A -5.17% 01/01/97
------------------------------------------------------------------------------------------------------------
Value -9.34% N/A 2.20% 01/01/97
------------------------------------------------------------------------------------------------------------
Growth & Income 11.17% 23.83% 18.41% 10/31/92
------------------------------------------------------------------------------------------------------------
U.S. Large Cap Value N/A N/A -3.78% 05/01/99
------------------------------------------------------------------------------------------------------------
Equity-Income -3.60% 14.66% 12.35% 02/19/93
------------------------------------------------------------------------------------------------------------
Income & Value 1.29% 11.85% 9.53% 10/31/92
------------------------------------------------------------------------------------------------------------
Balanced -8.29% N/A 7.02% 01/01/97
------------------------------------------------------------------------------------------------------------
High Yield 0.66% N/A 4.71% 01/01/97
------------------------------------------------------------------------------------------------------------
Strategic Bond -4.69% 7.30% 5.41% 02/19/93
------------------------------------------------------------------------------------------------------------
Global Bond -12.94% 5.38% 5.45% 10/31/92
------------------------------------------------------------------------------------------------------------
Total Return N/A N/A -7.28% 05/01/99
------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 74
<TABLE>
<CAPTION>
SINCE INCEPTION OR 10
YEARS, WHICHEVER
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER INCEPTION DATE(B)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Quality Bond -8.41% 5.33% 4.64% 10/31/92
------------------------------------------------------------------------------------------------------------
Diversified Bond -6.09% 7.28% 6.23% 10/31/92
------------------------------------------------------------------------------------------------------------
U.S. Government Securities -6.96% 4.62% 4.23% 10/31/92
------------------------------------------------------------------------------------------------------------
Money Market -2.49% 2.89% 3.03% 10/31/92
------------------------------------------------------------------------------------------------------------
Lifestyle Aggressive 1000 6.97% N/A 7.09% 01/07/97
------------------------------------------------------------------------------------------------------------
Lifestyle Growth 820 8.90% N/A 9.20% 01/07/97
------------------------------------------------------------------------------------------------------------
Lifestyle Balanced 640 4.81% N/A 7.75% 01/07/97
------------------------------------------------------------------------------------------------------------
Lifestyle Moderate 460 0.56% N/A 7.48% 01/07/97
------------------------------------------------------------------------------------------------------------
Lifestyle Conservative 280 -2.86% N/A 5.83% 01/07/97
------------------------------------------------------------------------------------------------------------
</TABLE>
(A) See charts below for Ven 9 contract total return figures.
(B) Inception date of the sub-account of the Variable Account which invests
in the portfolio.
(C) Formerly, the Mid Cap Growth Trust.
5
<PAGE> 75
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES(A)
(ASSUMING REDEMPTION AT THE END OF THE TIME PERIOD)
CALCULATED AS OF DECEMBER 31, 1999
<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(B) 54.56% 2.36 1.26% 10/04/94
--------------------------------------------------------------------------------------------------------------------
Science & Technology 90.68% N/A 43.99% 01/01/97
--------------------------------------------------------------------------------------------------------------------
International Small Cap 76.31% N/A 21.46% 03/04/96
--------------------------------------------------------------------------------------------------------------------
Aggressive Growth 25.08% N/A 8.54% 01/01/97
--------------------------------------------------------------------------------------------------------------------
Emerging Small Company 65.07% N/A 24.24% 01/01/97
--------------------------------------------------------------------------------------------------------------------
Small Company Blend N/A N/A 21.33% 05/01/99
--------------------------------------------------------------------------------------------------------------------
Mid Cap Stock N/A N/A -5.57% 05/01/99
--------------------------------------------------------------------------------------------------------------------
All Cap Growth(D) 36.63% N/A 21.63% 03/04/96
--------------------------------------------------------------------------------------------------------------------
Overseas 32.63% N/A 10.73% 01/09/95
--------------------------------------------------------------------------------------------------------------------
International Stock 21.86% N/A 12.29% 01/01/97
--------------------------------------------------------------------------------------------------------------------
International Value N/A N/A -2.74% 05/01/99
--------------------------------------------------------------------------------------------------------------------
Mid Cap Blend 19.92% 21.26% 12.40%(C) 06/18/85
--------------------------------------------------------------------------------------------------------------------
Small Company Value 0.66% N/A -4.19% 10/01/97
--------------------------------------------------------------------------------------------------------------------
Global Equity -3.36% 9.11% 7.19%(C) 03/18/88
--------------------------------------------------------------------------------------------------------------------
Growth 29.25% N/A 25.44% 07/15/96
--------------------------------------------------------------------------------------------------------------------
Large Cap Growth 17.49% 17.66% 11.19%(C) 08/03/89
--------------------------------------------------------------------------------------------------------------------
Quantitative Equity(B) 14.55% 22.93% 14.32%(C) 04/30/87
--------------------------------------------------------------------------------------------------------------------
Blue Chip Growth 11.72% 23.30% 14.18% 12/11/92
--------------------------------------------------------------------------------------------------------------------
Real Estate Securities(B) -14.17% 4.96% 9.07%(C) 04/30/87
--------------------------------------------------------------------------------------------------------------------
Value -9.34% N/A 2.20% 01/01/97
--------------------------------------------------------------------------------------------------------------------
Growth & Income 11.17% 23.83% 16.79% 04/23/91
--------------------------------------------------------------------------------------------------------------------
U.S. Large Cap Value N/A N/A -3.78% 05/01/99
--------------------------------------------------------------------------------------------------------------------
Equity-Income -3.60% 14.66% 12.35% 02/19/93
--------------------------------------------------------------------------------------------------------------------
Income & Value 1.29% 11.85% 8.31%(C) 08/03/89
--------------------------------------------------------------------------------------------------------------------
Balanced -8.29% N/A 7.02% 01/01/97
--------------------------------------------------------------------------------------------------------------------
High Yield 0.66% N/A 4.71% 01/01/97
--------------------------------------------------------------------------------------------------------------------
Strategic Bond -4.69% 7.30% 5.41% 02/19/93
--------------------------------------------------------------------------------------------------------------------
Global Bond -12.94% 5.38% 6.52%(C) 03/18/88
--------------------------------------------------------------------------------------------------------------------
Total Return N/A N/A -7.28% 05/01/99
--------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 76
<TABLE>
<CAPTION>
SINCE INCEPTION OR 10
YEARS, WHICHEVER INCEPTION DATE OF
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Quality Bond -8.41% 5.33% 4.68%(C) 06/18/85
--------------------------------------------------------------------------------------------------------------------
Diversified Bond -6.09% 7.28% 5.96%(C) 08/03/89
--------------------------------------------------------------------------------------------------------------------
U.S. Government Securities -6.96% 4.62% 5.34%(C) 03/18/88
--------------------------------------------------------------------------------------------------------------------
Money Market -2.49% 2.89% 3.38%(C) 06/18/85
--------------------------------------------------------------------------------------------------------------------
Lifestyle Aggressive 1000 6.97% N/A 7.09% 01/07/97
--------------------------------------------------------------------------------------------------------------------
Lifestyle Growth 820 8.90% N/A 9.20% 01/07/97
--------------------------------------------------------------------------------------------------------------------
Lifestyle Balanced 640 4.81% N/A 7.75% 01/07/97
--------------------------------------------------------------------------------------------------------------------
Lifestyle Moderate 460 0.56% N/A 7.48% 01/07/97
--------------------------------------------------------------------------------------------------------------------
Lifestyle Conservative 280 -2.86% N/A 5.83% 01/07/97
--------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) See charts below for Ven 9 total return figures.
(B) 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.
(C) Ten year average annual return.
(D) Formerly, the Mid Cap Growth Trust.
7
<PAGE> 77
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES (A)
(ASSUMING NO REDEMPTION AT THE END OF THE TIME PERIOD)
CALCULATED AS OF DECEMBER 31, 1999
<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(B) 60.61% 3.13% 1.86% 10/04/94
-------------------------------------------------------------------------------------------------------------------------
Science & Technology 96.73% N/A 44.84% 01/01/97
-------------------------------------------------------------------------------------------------------------------------
International Small Cap 82.36% N/A 22.26% 03/04/96
-------------------------------------------------------------------------------------------------------------------------
Aggressive Growth 31.13% N/A 9.99% 01/01/97
-------------------------------------------------------------------------------------------------------------------------
Emerging Small Company 71.12% N/A 25.36% 01/01/97
-------------------------------------------------------------------------------------------------------------------------
Small Company Blend N/A N/A 27.38% 05/01/99
-------------------------------------------------------------------------------------------------------------------------
Mid Cap Stock N/A N/A -0.13% 05/01/99
-------------------------------------------------------------------------------------------------------------------------
All Cap Growth(D) 42.68% N/A 22.42% 03/04/96
-------------------------------------------------------------------------------------------------------------------------
Overseas 38.68% N/A 11.31% 01/09/95
-------------------------------------------------------------------------------------------------------------------------
International Stock 27.91% N/A 13.64% 01/01/97
-------------------------------------------------------------------------------------------------------------------------
International Value N/A N/A 2.88% 05/01/99
-------------------------------------------------------------------------------------------------------------------------
Mid Cap Blend 25.97% 21.66% 12.43%(C) 06/18/85
-------------------------------------------------------------------------------------------------------------------------
Small Company Value 6.49% N/A 2.15% 10/01/97
-------------------------------------------------------------------------------------------------------------------------
Global Equity 2.22% 9.71% 7.23%(C) 03/18/88
-------------------------------------------------------------------------------------------------------------------------
Growth 35.30% N/A 26.30% 07/15/96
-------------------------------------------------------------------------------------------------------------------------
Large Cap Growth 23.54% 18.12% 11.22%(C) 08/03/89
-------------------------------------------------------------------------------------------------------------------------
Quantitative Equity(B) 20.60% 23.31% 14.36%(C) 04/30/87
-------------------------------------------------------------------------------------------------------------------------
Blue Chip Growth 17.77% 23.67% 14.23% 12/11/92
-------------------------------------------------------------------------------------------------------------------------
Real Estate Securities(B) -9.28% 5.65% 9.10%(C) 04/30/87
-------------------------------------------------------------------------------------------------------------------------
Value -4.14% N/A 3.82% 01/01/97
-------------------------------------------------------------------------------------------------------------------------
Growth & Income 17.22% 24.21% 16.82% 04/23/91
-------------------------------------------------------------------------------------------------------------------------
U.S. Large Cap Value N/A N/A 1.77% 05/01/99
-------------------------------------------------------------------------------------------------------------------------
Equity-Income 1.96% 15.15% 12.53% 02/19/93
-------------------------------------------------------------------------------------------------------------------------
Income & Value 7.17% 12.39% 8.35%(C) 08/03/89
-------------------------------------------------------------------------------------------------------------------------
Balanced -3.02% N/A 8.50% 01/01/97
-------------------------------------------------------------------------------------------------------------------------
High Yield 6.50% N/A 6.26% 01/01/97
-------------------------------------------------------------------------------------------------------------------------
Strategic Bond 0.80% 7.94% 5.67% 02/19/93
-------------------------------------------------------------------------------------------------------------------------
Global Bond -7.97% 6.06% 6.56%(C) 03/18/88
-------------------------------------------------------------------------------------------------------------------------
Total Return N/A N/A -1.95% 05/01/99
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 78
<TABLE>
<CAPTION>
SINCE INCEPTION OR 10
YEARS, WHICHEVER INCEPTION DATE OF
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Quality Bond -3.16% 6.02% 4.72%(C) 06/18/85
-------------------------------------------------------------------------------------------------------------------------
Diversified Bond -0.68% 7.92% 6.00%(C) 08/03/89
-------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities -1.61% 5.32% 5.38%(C) 03/18/88
-------------------------------------------------------------------------------------------------------------------------
Money Market 3.15% 3.64% 3.42%(C) 06/18/85
-------------------------------------------------------------------------------------------------------------------------
Lifestyle Aggressive 1000 13.02% N/A 8.58% 01/07/97
-------------------------------------------------------------------------------------------------------------------------
Lifestyle Growth 820 14.95% N/A 10.64% 01/07/97
-------------------------------------------------------------------------------------------------------------------------
Lifestyle Balanced 640 10.86% N/A 9.22% 01/07/97
-------------------------------------------------------------------------------------------------------------------------
Lifestyle Moderate 460 6.40% N/A 8.96% 01/07/97
-------------------------------------------------------------------------------------------------------------------------
Lifestyle Conservative 280 2.76% N/A 7.35% 01/07/97
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) See charts below for Ven 9 total return figures.
(B) 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.
(C) Ten year average annual return.
(D) Formerly, the Mid Cap Growth Trust.
9
<PAGE> 79
VEN 9 CONTRACTS
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
CALCULATED AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
SINCE INCEPTION OR 10
YEARS, WHICHEVER
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER INCEPTION DATE(A)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets 54.56% N/A -1.96% 01/01/97
------------------------------------------------------------------------------------------------------------------------
Science & Technology 90.68% N/A 43.99% 01/01/97
------------------------------------------------------------------------------------------------------------------------
International Small Cap 76.31% N/A 21.61% 03/04/96
------------------------------------------------------------------------------------------------------------------------
Aggressive Growth 25.08% N/A 8.54% 01/01/97
------------------------------------------------------------------------------------------------------------------------
Emerging Small Company 65.07% N/A 24.24% 01/01/97
------------------------------------------------------------------------------------------------------------------------
Small Company Blend N/A N/A 21.33% 05/01/99
------------------------------------------------------------------------------------------------------------------------
Mid Cap Stock N/A N/A -5.57% 05/01/99
------------------------------------------------------------------------------------------------------------------------
All Cap Growth(B) 36.63% N/A 21.78% 03/04/96
------------------------------------------------------------------------------------------------------------------------
Overseas 32.63% N/A 10.86% 01/09/95
------------------------------------------------------------------------------------------------------------------------
International Stock 21.86% N/A 12.29% 01/01/97
------------------------------------------------------------------------------------------------------------------------
International Value N/A N/A -2.74% 05/01/99
------------------------------------------------------------------------------------------------------------------------
Mid Cap Blend 19.92% 21.63% 17.80% 10/31/92
------------------------------------------------------------------------------------------------------------------------
Small Company Value 0.66% N/A -4.19% 10/01/97
------------------------------------------------------------------------------------------------------------------------
Global Equity -3.36% 9.67% 11.34% 10/31/92
------------------------------------------------------------------------------------------------------------------------
Growth 29.25% N/A 25.61% 07/15/96
------------------------------------------------------------------------------------------------------------------------
Large Cap Growth 17.49% 18.08% 13.65% 10/31/92
------------------------------------------------------------------------------------------------------------------------
Quantitative Equity 14.55% N/A 23.54% 01/01/97
------------------------------------------------------------------------------------------------------------------------
Blue Chip Growth 11.72% 23.64% 14.18% 12/11/92
------------------------------------------------------------------------------------------------------------------------
Real Estate Securities -14.17% N/A -5.17% 01/01/97
------------------------------------------------------------------------------------------------------------------------
Value -9.34% N/A 2.20% 01/01/97
------------------------------------------------------------------------------------------------------------------------
Growth & Income 11.17% 24.17% 18.41% 10/31/92
------------------------------------------------------------------------------------------------------------------------
U.S. Large Cap Value N/A N/A -3.78% 05/01/99
------------------------------------------------------------------------------------------------------------------------
Equity-Income -3.60% 15.12% 12.49% 02/19/93
------------------------------------------------------------------------------------------------------------------------
Income & Value 1.29% 12.35% 9.53% 10/31/92
------------------------------------------------------------------------------------------------------------------------
Balanced -8.29% N/A 7.02% 01/01/97
------------------------------------------------------------------------------------------------------------------------
High Yield 0.66% N/A 4.71% 01/01/97
------------------------------------------------------------------------------------------------------------------------
Strategic Bond -4.69% 7.90% 5.63% 02/19/93
------------------------------------------------------------------------------------------------------------------------
Global Bond -12.94% 6.02% 5.45% 10/31/92
------------------------------------------------------------------------------------------------------------------------
Total Return N/A N/A -7.28% 05/01/99
------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 80
<TABLE>
<CAPTION>
SINCE INCEPTION OR 10
YEARS, WHICHEVER
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER INCEPTION DATE(A)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Quality Bond -8.41% 5.97% 4.64% 10/31/92
------------------------------------------------------------------------------------------------------------------------
Diversified Bond -6.09% 7.88% 6.23% 10/31/92
------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities -6.96% 5.28% 4.23% 10/31/92
------------------------------------------------------------------------------------------------------------------------
Money Market -2.49% 3.60% 3.03% 10/31/92
------------------------------------------------------------------------------------------------------------------------
Lifestyle Aggressive 1000 6.97% N/A 7.09% 01/07/97
------------------------------------------------------------------------------------------------------------------------
Lifestyle Growth 820 8.90% N/A 9.20% 01/07/97
------------------------------------------------------------------------------------------------------------------------
Lifestyle Balanced 640 4.81% N/A 7.75% 01/07/97
------------------------------------------------------------------------------------------------------------------------
Lifestyle Moderate 460 0.56% N/A 7.48% 01/07/97
------------------------------------------------------------------------------------------------------------------------
Lifestyle Conservative 280 -2.86% N/A 5.83% 01/07/97
------------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Inception date of the sub-account of the Variable Account which invests
in the portfolio.
(B) Formerly, the Mid Cap Growth Trust.
11
<PAGE> 81
VEN 9 CONTRACTS
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
(ASSUMING REDEMPTION AT THE END OF THE TIME PERIOD)
CALCULATED AS OF DECEMBER 31, 1999
<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(A) 54.56% 2.54% 1.44% 10/04/94
------------------------------------------------------------------------------------------------------------------------
Science & Technology 90.68% N/A 43.99% 01/01/97
------------------------------------------------------------------------------------------------------------------------
International Small Cap 76.31% N/A 21.61% 03/04/96
------------------------------------------------------------------------------------------------------------------------
Aggressive Growth 25.08% N/A 8.54% 01/01/97
------------------------------------------------------------------------------------------------------------------------
Emerging Small Company 65.07% N/A 24.24% 01/01/97
------------------------------------------------------------------------------------------------------------------------
Small Company Blend N/A N/A 21.33% 05/01/99
------------------------------------------------------------------------------------------------------------------------
Mid Cap Stock N/A N/A -5.57% 05/01/99
------------------------------------------------------------------------------------------------------------------------
All Cap Growth(C) 36.63% N/A 21.78% 03/04/96
------------------------------------------------------------------------------------------------------------------------
Overseas 32.63% N/A 10.86% 01/09/95
------------------------------------------------------------------------------------------------------------------------
International Stock 21.86% N/A 12.29% 01/01/97
------------------------------------------------------------------------------------------------------------------------
International Value N/A N/A -2.74% 05/01/99
------------------------------------------------------------------------------------------------------------------------
Mid Cap Blend 19.92% 21.63% 12.40%(B) 06/18/85
------------------------------------------------------------------------------------------------------------------------
Small Company Value 0.66% N/A -4.19% 10/01/97
------------------------------------------------------------------------------------------------------------------------
Global Equity -3.36% 9.67% 7.19%(B) 03/18/88
------------------------------------------------------------------------------------------------------------------------
Growth 29.25% N/A 25.61% 07/15/96
------------------------------------------------------------------------------------------------------------------------
Large Cap Growth 17.49% 18.08% 11.19%(B) 08/03/89
------------------------------------------------------------------------------------------------------------------------
Quantitative Equity(A) 14.55% 23.27% 14.32%(B) 04/30/87
------------------------------------------------------------------------------------------------------------------------
Blue Chip Growth 11.72% 23.64% 14.18% 12/11/92
------------------------------------------------------------------------------------------------------------------------
Real Estate Securities(A) -14.17% 5.61% 9.07%(B) 04/30/87
------------------------------------------------------------------------------------------------------------------------
Value -9.34% N/A 2.20% 01/01/97
------------------------------------------------------------------------------------------------------------------------
Growth & Income 11.17% 24.17% 16.79% 04/23/91
------------------------------------------------------------------------------------------------------------------------
U.S. Large Cap Value N/A N/A -3.78% 05/01/99
------------------------------------------------------------------------------------------------------------------------
Equity-Income -3.60% 15.12% 12.49% 02/19/93
------------------------------------------------------------------------------------------------------------------------
Income & Value 1.29% 12.35% 8.31%(B) 08/03/89
------------------------------------------------------------------------------------------------------------------------
Balanced -8.29% N/A 7.02% 01/01/97
------------------------------------------------------------------------------------------------------------------------
High Yield 0.66% N/A 4.71% 01/01/97
------------------------------------------------------------------------------------------------------------------------
Strategic Bond -4.69% 7.90% 5.63% 02/19/93
------------------------------------------------------------------------------------------------------------------------
Global Bond -12.94% 6.02% 6.52%(B) 03/18/88
------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 82
<TABLE>
<CAPTION>
SINCE INCEPTION OR 10
YEARS, WHICHEVER INCEPTION DATE OF
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Return N/A N/A -7.28% 05/01/99
------------------------------------------------------------------------------------------------------------------------
Investment Quality Bond -8.41% 5.97% 4.68%(B) 06/18/85
------------------------------------------------------------------------------------------------------------------------
Diversified Bond -6.09% 7.88% 5.96%(B) 08/03/89
------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities -6.96% 5.28% 5.34%(B) 03/18/88
------------------------------------------------------------------------------------------------------------------------
Money Market -2.49% 3.60% 3.38%(B) 06/18/85
------------------------------------------------------------------------------------------------------------------------
Lifestyle Aggressive 1000 6.97% N/A 7.09% 01/07/97
------------------------------------------------------------------------------------------------------------------------
Lifestyle Growth 820 8.90% N/A 9.20% 01/07/97
------------------------------------------------------------------------------------------------------------------------
Lifestyle Balanced 640 4.81% N/A 7.75% 01/07/97
------------------------------------------------------------------------------------------------------------------------
Lifestyle Moderate 460 0.56% N/A 7.48% 01/07/97
------------------------------------------------------------------------------------------------------------------------
Lifestyle Conservative 280 -2.86% N/A 5.83% 01/07/97
------------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) 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.
(B) Ten year average annual return.
(C) Formerly, the Mid Cap Growth Trust.
13
<PAGE> 83
VEN 9 CONTRACTS
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
(ASSUMING NO REDEMPTION AT THE END OF THE TIME PERIOD)
CALCULATED AS OF DECEMBER 31, 1999
<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(A) 60.61% 3.13% 1.86% 10/04/94
------------------------------------------------------------------------------------------------------------------------
Science & Technology 96.73% N/A 44.84% 01/01/97
------------------------------------------------------------------------------------------------------------------------
International Small Cap 82.36% N/A 22.26% 03/04/96
------------------------------------------------------------------------------------------------------------------------
Aggressive Growth 31.13% N/A 9.99% 01/01/97
------------------------------------------------------------------------------------------------------------------------
Emerging Small Company 71.12% N/A 25.36% 01/01/97
------------------------------------------------------------------------------------------------------------------------
Small Company Blend N/A N/A 27.38% 05/01/99
------------------------------------------------------------------------------------------------------------------------
Mid Cap Stock N/A N/A -0.13% 05/01/99
------------------------------------------------------------------------------------------------------------------------
All Cap Growth(C) 42.68% N/A 22.42% 03/04/96
------------------------------------------------------------------------------------------------------------------------
Overseas 38.68% N/A 11.31% 01/09/95
------------------------------------------------------------------------------------------------------------------------
International Stock 27.91% N/A 13.64% 01/01/97
------------------------------------------------------------------------------------------------------------------------
International Value N/A N/A 2.88% 05/01/99
------------------------------------------------------------------------------------------------------------------------
Mid Cap Blend 25.97% 21.66% 12.43%(B) 06/18/85
------------------------------------------------------------------------------------------------------------------------
Small Company Value 6.49% N/A -2.15% 10/01/97
------------------------------------------------------------------------------------------------------------------------
Global Equity 2.22% 9.71% 7.23%(B) 03/18/88
------------------------------------------------------------------------------------------------------------------------
Growth 35.30% N/A 26.30% 07/15/96
------------------------------------------------------------------------------------------------------------------------
Large Cap Growth 23.54% 18.12% 11.22%(B) 08/03/89
------------------------------------------------------------------------------------------------------------------------
Quantitative Equity(A) 20.60% 23.31% 14.36%(B) 04/30/87
------------------------------------------------------------------------------------------------------------------------
Blue Chip Growth 17.77% 23.67% 14.23% 12/11/92
------------------------------------------------------------------------------------------------------------------------
Real Estate Securities(A) -9.28% 5.65% 9.10%(B) 04/30/87
------------------------------------------------------------------------------------------------------------------------
Value -4.14% N/A 3.82% 01/01/97
------------------------------------------------------------------------------------------------------------------------
Growth & Income 17.22% 24.21% 16.82% 04/23/91
------------------------------------------------------------------------------------------------------------------------
U.S. Large Cap Value N/A N/A 1.77% 05/01/99
------------------------------------------------------------------------------------------------------------------------
Equity-Income 1.96% 15.15% 12.53% 02/19/93
------------------------------------------------------------------------------------------------------------------------
Income & Value 7.17% 12.39% 8.35%(B) 08/03/89
------------------------------------------------------------------------------------------------------------------------
Balanced -3.02% N/A 8.50% 01/01/97
------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 84
<TABLE>
<CAPTION>
SINCE INCEPTION OR 10
YEARS, WHICHEVER INCEPTION DATE OF
TRUST PORTFOLIO 1 YEAR 5 YEAR SHORTER PORTFOLIO
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------
High Yield 6.50% N/A 6.26% 01/01/97
------------------------------------------------------------------------------------------------------------------------
Strategic Bond 0.80% 7.94% 5.67% 02/19/93
------------------------------------------------------------------------------------------------------------------------
Global Bond -7.97% 6.06% 6.56%(B) 03/18/88
------------------------------------------------------------------------------------------------------------------------
Total Return N/A N/A -1.95% 05/01/99
------------------------------------------------------------------------------------------------------------------------
Investment Quality Bond -3.16% 6.02% 4.72%(B) 06/18/85
------------------------------------------------------------------------------------------------------------------------
Diversified Bond -0.68% 7.92% 6.00%(B) 08/03/89
------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities -1.61% 5.32% 5.38%(B) 03/18/88
------------------------------------------------------------------------------------------------------------------------
Money Market 3.15% 3.64% 3.42%(B) 06/18/85
------------------------------------------------------------------------------------------------------------------------
Lifestyle Aggressive 1000 13.02% N/A 8.58% 01/07/97
------------------------------------------------------------------------------------------------------------------------
Lifestyle Growth 820 14.95% N/A 10.64% 01/07/97
------------------------------------------------------------------------------------------------------------------------
Lifestyle Balanced 640 10.86% N/A 9.22% 01/07/97
------------------------------------------------------------------------------------------------------------------------
Lifestyle Moderate 460 6.40% N/A 8.96% 01/07/97
------------------------------------------------------------------------------------------------------------------------
Lifestyle Conservative 280 2.76% N/A 7.35% 01/07/97
------------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) 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.
(B) Ten year average annual return.
(C) Formerly, the Mid Cap Growth Trust.
* * * * *
In addition to the non-standardized returns quoted above, each of the
sub-accounts may from time to time quote aggregate non-standardized total
returns calculated in the same manner as set forth above for other time periods.
From time to time the Trust may include in its advertising and sales literature
general discussions of economic theories, including but not limited to,
discussions on how demographic and political trends can affect the financial
markets. Further, the Trust may also include in its advertising and sales
literature specific information on each of the Trust's subadvisers, including
but not limited to, research capabilities of a subadviser, assets under
management, information relating to other clients of a subadviser, and other
generalized information.
STATE PREMIUM TAXES
New York does not currently assess a premium tax. In the event New York
does impose a premium tax, we reserve the right to pass-through such tax to you.
SERVICES
INDEPENDENT AUDITORS
The financial statements of the Company at December 31, 1999 and 1998
and for each of the three years in the period ended December 31, 1999 and of the
Variable Account at December 31, 1999 and for each of the two years in the
period ended December 31, 1999 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 on the authority of such firm as experts in
accounting and auditing.
15
<PAGE> 85
SERVICING AGENT
Computer Science Corporation Financial Services Group ("CSC FSG")
provides to us a computerized data processing recordkeeping system for variable
annuity administration. CSC FSG provides various daily, semimonthly, monthly,
semiannual and annual reports including:
- daily updates on:
- accumulation unit values,
- variable annuity participants and transactions, and
- agent production and commissions;
- semimonthly commission statements;
- monthly summaries of agent production and daily transaction reports;
- semiannual statements for contract owners; and
- annual contract owner tax reports.
We pay CSC FSG approximately $7.80 per policy per year, plus certain other fees
for the services provided.
PRINCIPAL UNDERWRITER
Manufacturers Securities Services, LLC ("MSS"), the successor to NASL
Financial Services, Inc., is a Delaware limited liability company that is
controlled by Manulife North America. MSS serves as principal underwriter of the
contracts. Contracts are offered on a continuous basis. The aggregate dollar
amounts of underwriting commissions paid to MSS in 1999, 1998 and 1997 were
$15,407,826, $12,640,836 and $3,222,530, respectively. MSS did not retain any of
these amounts during such periods.
16
<PAGE> 86
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%
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> 87
FINANCIAL STATEMENTS
18
<PAGE> 88
AUDITED FINANCIAL STATEMENTS
THE MANUFACTURERS LIFE
INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT A
Years ended December 31, 1999 and 1998
<PAGE> 89
The Manufacturers Life Insurance Company of
New York Separate Account A
Audited Financial Statements
Years ended December 31, 1999 and 1998
CONTENTS
Report of Independent Auditors................................................1
Audited Financial Statements
Statement of Assets and Contract Owners' Equity...............................2
Statements of Operations and Changes in Contract Owners' Equity...............3
Notes to Financial Statements................................................17
<PAGE> 90
Report of Independent Auditors
To the Contract Owners of
The Manufacturers Life Insurance Company of
New York Separate Account A
We have audited the accompanying statement of assets, liabilities and contract
owners' equity of The Manufacturers Life Insurance Company of New York Separate
Account A of The Manufacturers Life Insurance Company of New York as of December
31, 1999, and the related statements of operations and changes in contract
owners' equity for each of the two years in the period then ended. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Manufacturers Life
Insurance Company of New York Separate Account A at December 31, 1999, and the
results of its operations and the changes in its contract owners' equity for
each of the two years in the period then ended in conformity with accounting
principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
February 15, 2000
1
<PAGE> 91
The Manufacturers Life Insurance Company of New York
Separate Account A
Statement of Assets and Contract Owners' Equity
December 31, 1999
<TABLE>
<S> <C>
ASSETS
Investments at market value:
Sub-Accounts:
Mid Cap Blend Portfolio--4,947,626 shares (cost $97,627,315) $ 108,353,013
Investment Quality Bond Portfolio--1,082,965 shares (cost $12,963,687) 12,562,390
Growth and Income Portfolio--6,521,022 shares (cost $153,035,246) 213,041,790
Blue Chip Growth Portfolio--5,002,782 shares (cost $80,896,155) 108,260,194
Money Market Portfolio--3,318,125 shares (cost $33,181,248) 33,181,248
Global Equity Portfolio--2,856,127 shares (cost $51,589,889) 53,666,635
Global Government Bond Portfolio--584,322 shares (cost $7,713,633) 6,778,137
U.S. Government Securities Portfolio--1,223,229 shares (cost $16,524,102) 16,195,546
Diversified Bond Portfolio--726,845 shares (cost $8,177,112) 7,864,460
Income & Value Portfolio--2,245,899 shares (cost $27,342,302) 28,994,557
Large Cap Growth Portfolio--1,338,293 shares (cost $18,657,579) 23,058,789
Equity-Income Portfolio--5,263,837 shares (cost $80,265,769) 89,748,425
Strategic Bond Portfolio--2,541,638 shares (cost $29,671,146) 28,313,850
Overseas Portfolio--1,654,149 shares (cost $19,942,627) 26,334,055
Growth Portfolio--1,150,435 shares (cost $22,976,998) 30,923,698
Mid Cap Growth Portfolio--1,995,341 shares (cost $35,796,490 ) 49,664,040
International Small Cap Portfolio--678,797 shares (cost $11,407,734 ) 19,114,921
Pacific Rim Emerging Markets Portfolio--426,752 shares (cost $4,080,338) 4,643,064
Science & Technology Portfolio--2,053,786 shares (cost $47,888,938) 74,285,457
Emerging Small Company Portfolio--260,978 shares (cost $6,770,971) 10,632,248
Aggressive Growth Portfolio--419,561 shares (cost $5,478,710) 7,275,183
International Stock Portfolio--324,604 shares (cost $4,385,519) 5,008,635
Quantitative Equity Portfolio--427,846 shares (cost $10,470,268) 12,048,153
Value Trust Portfolio--572,956 shares (cost $8,529,765) 7,580,205
Real Estate Securities Portfolio--201,187 shares (cost $3,152,467) 2,593,305
Balanced Portfolio--319,022 shares (cost $5,894,185) 5,684,978
High Yield Portfolio--704,067 shares (cost $9,490,655) 9,040,226
Lifestyle Aggressive 1000 Portfolio--361,868 shares (cost $4,692,198) 5,261,554
Lifestyle Growth 820 Portfolio--1,859,200 shares (cost $25,521,580) 28,222,650
Lifestyle Balanced 640 Portfolio--2,098,179 shares (cost $28,109,005) 29,878,071
Lifestyle Moderate 460 Portfolio--881,149 shares (cost $11,920,005) 12,450,642
Lifestyle Conservative 280 Portfolio--510,775 shares (cost $6,690,679) 6,716,694
Small Company Value Portfolio--276,888 shares (cost $3,020,209) 3,397,422
Total Return Portfolio--239,638 shares (cost $2,963,766) 2,964,326
US Large Cap Value Portfolio--437,166 shares (cost $5,387,947) 5,613,215
Mid Cap Stock Portfolio--122,010 shares (cost $1,488,694) 1,537,326
Small Company Blend Portfolio--95,514 shares (cost $1,274,641) 1,505,299
International Value Portfolio--59,753 shares (cost $724,310) 775,593
----------------
Total assets $ 1,093,169,994
================
CONTRACT OWNERS' EQUITY
Variable annuity contracts $ 1,093,144,215
Annuity reserve 25,779
----------------
Total contract owners' equity $ 1,093,169,994
================
</TABLE>
See accompanying notes.
2
<PAGE> 92
The Manufacturers Life Insurance Company of New York
Separate Account A
Statements of Operations and Changes in Contract Owners' Equity
<TABLE>
<CAPTION>
SUB-ACCOUNT
--------------------------------------------------------------------------------------------
MID CAP BLEND (1) INVESTMENT QUALITY BOND GROWTH AND INCOME
--------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1999 1998 1999 1998 1999 1998
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 10,389,331 $ 15,130,703 $ 620,390 $ 561,373 $ 5,766,968 $ 6,612,962
Expenses:
Mortality and expense risk
and administrative charges 1,295,413 1,145,526 171,871 140,373 2,508,334 1,602,622
--------------------------------------------------------------------------------------------
Net investment income (loss) 9,093,918 13,985,177 448,519 421,000 3,258,634 5,010,340
Net realized gain (loss) 2,664,968 1,007,114 (415) 195,010 7,079,116 3,398,048
Unrealized appreciation
(depreciation) during the
period 10,320,182 (9,138,827) (850,952) 47,652 17,861,968 17,104,121
--------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations 22,079,068 5,853,464 (402,848) 663,662 28,199,718 25,512,509
--------------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 7,513,089 9,156,693 2,158,703 2,092,516 31,201,877 23,975,140
Transfers between
sub-accounts and the
Company (1,497,184) (1,769,886) 426,766 895,525 21,481,374 8,666,092
Withdrawals (6,364,759) (3,542,523) (708,280) (623,663) (10,507,981) (5,289,954)
Annual contract fee (44,780) (43,305) (4,558) (3,771) (76,507) (53,050)
--------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions (393,634) 3,800,979 1,872,631 2,360,607 42,098,763 27,298,228
--------------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 21,685,434 9,654,443 1,469,783 3,024,269 70,298,481 52,810,737
Contract owners' equity at
beginning of period 86,667,579 77,013,136 11,092,607 8,068,338 142,743,309 89,932,572
--------------------------------------------------------------------------------------------
Contract owners' equity at end
of period $ 108,353,013 $ 86,667,579 $ 12,562,390 $ 11,092,607 $ 213,041,790 $ 142,743,309
============================================================================================
</TABLE>
(1) Effective May 3, 1999, the Equity Sub-Account was renamed Mid Cap Blend
through a vote of the Board of Directors.
See accompanying notes.
3
<PAGE> 93
The Manufacturers Life Insurance Company of New York
Separate Account A
Statements of Operations and Changes in Contract Owners' Equity (continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
------------------------------------------------------------------------------------------
BLUE CHIP GROWTH MONEY MARKET GLOBAL EQUITY
------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 3,547,690 $ 925,258 $ 1,437,718 $ 1,217,864 $ 5,535,859 $ 3,435,281
Expenses:
Mortality and expense risk
and administrative charges 1,230,470 734,935 447,148 345,389 747,136 701,828
------------------------------------------------------------------------------------------
Net investment income (loss) 2,317,220 190,323 990,570 872,475 4,788,723 2,733,453
Net realized gain (loss) 3,564,898 1,888,866 228,810 (4,278) 1,751,074 976,295
Unrealized appreciation
(depreciation) during the
period 9,378,290 10,851,936 0 0 (5,540,721) 1,055,569
------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations 15,260,408 12,931,125 1,219,380 868,197 999,076 4,765,317
------------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 16,560,189 13,085,482 17,450,076 23,529,594 3,521,176 4,558,097
Transfers between
sub-accounts and the
Company 13,287,349 4,838,123 (7,095,942) (21,232,778) (952,941) 311,099
Withdrawals (5,966,875) (2,000,593) (5,572,666) (2,647,622) (3,044,050) (1,957,660)
Annual contract fee (38,009) (24,824) (9,758) (6,939) (26,061) (26,281)
------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions 23,842,654 15,898,188 4,771,710 (357,745) (501,876) 2,885,255
------------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 39,103,062 28,829,313 5,991,090 510,452 497,200 7,650,572
Contract owners' equity at
beginning of period 69,157,132 40,327,819 27,190,158 26,679,706 53,169,435 45,518,863
------------------------------------------------------------------------------------------
Contract owners' equity at end
of period $ 108,260,194 $ 69,157,132 $ 33,181,248 $ 27,190,158 $ 53,666,635 $ 53,169,435
==========================================================================================
</TABLE>
See accompanying notes.
4
<PAGE> 94
The Manufacturers Life Insurance Company of New York
Separate Account A
Statements of Operations and Changes in Contract Owners' Equity (continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
-------------------------------------------------------------------------------------
U.S. GOVERNMENT
GLOBAL BOND (2) SECURITIES DIVERSIFIED BOND (3)
-------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1999 1998 1999 1998 1999 1998
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 745,529 $ 828,155 $ 713,252 $ 767,695 $ 748,053 $ 683,398
Expenses:
Mortality and expense risk
and administrative charges 104,884 121,247 244,931 232,775 109,861 102,810
-------------------------------------------------------------------------------------
Net investment income (loss) 640,645 706,908 468,321 534,920 638,192 580,588
Net realized gain (loss) (290,060) 131,303 314,867 188,892 (8,884) 122,379
Unrealized appreciation
(depreciation) during the
period (1,003,444) (331,938) (1,087,081) 236,061 (680,769) (56,020)
-------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations (652,859) 506,273 (303,893) 959,873 (51,461) 646,947
-------------------------------------------------------------------------------------
Changes from principal transactions:
Purchase payments 250,749 419,396 1,774,042 3,629,590 848,171 582,731
Transfers between
sub-accounts and the
Company (1,058,750) (301,107) (1,352,111) 372,771 (329,796) 599,459
Withdrawals (534,603) (507,258) (2,329,987) (1,002,775) (569,360) (609,672)
Annual contract fee (3,573) (4,248) (7,152) (6,895) (4,612) (4,571)
-------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions (1,346,177) (393,217) (1,915,208) 2,992,691 (55,597) 567,947
-------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity (1,999,036) 113,056 (2,219,101) 3,952,564 (107,058) 1,214,894
Contract owners' equity at
beginning of period 8,777,173 8,664,117 18,414,647 14,462,083 7,971,518 6,756,624
-------------------------------------------------------------------------------------
Contract owners' equity at end
of period $ 6,778,137 $ 8,777,173 $ 16,195,546 $ 18,414,647 $ 7,864,460 $ 7,971,518
=====================================================================================
</TABLE>
(2) Effective May 3, 1999, the Global Government Bond Sub-Account was renamed
Global Bond through a vote of the Board of Directors.
(3) Effective May 3, 1999, the Conservative Asset Allocation Sub-Account was
renamed Diversified Bond through a vote of the Board of Directors.
See accompanying notes.
5
<PAGE> 95
The Manufacturers Life Insurance Company of New York
Separate Account A
Statements of Operations and Changes in Contract Owners' Equity (continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
-----------------------------------------------------------------------------------------
INCOME & VALUE (4) LARGE CAP GROWTH (5) EQUITY INCOME
-----------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1999 1998 1999 1998 1999 1998
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 3,262,684 $ 2,721,906 $ 1,462,144 $ 1,432,979 $ 6,639,089 $ 4,886,452
Expenses:
Mortality and expense risk
and administrative charges 405,381 354,371 229,404 177,019 1,312,004 1,183,871
-----------------------------------------------------------------------------------------
Net investment income (loss) 2,857,303 2,367,535 1,232,740 1,255,960 5,327,085 3,702,581
Net realized gain (loss) 676,183 240,650 673,975 325,333 4,670,683 2,699,560
Unrealized appreciation
(depreciation) during the
period (1,562,002) 610,351 2,166,775 406,423 (8,374,904) (213,380)
-----------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations 1,971,484 3,218,536 4,073,490 1,987,716 1,622,864 6,188,761
-----------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 1,889,519 1,976,675 4,110,011 1,088,836 7,333,688 10,272,190
Transfers between
sub-accounts and the
Company 34,607 (493,969) 2,401,258 (682,669) (4,353,163) 340,674
Withdrawals (1,861,079) (1,870,614) (1,207,853) (626,377) (5,447,799) (3,814,029)
Annual contract fee (14,197) (13,415) (8,674) (8,315) (43,667) (42,132)
-----------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions 48,850 (401,323) 5,294,742 (228,525) (2,510,941) 6,756,703
-----------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 2,020,334 2,817,213 9,368,232 1,759,191 (888,077) 12,945,464
Contract owners' equity at
beginning of period 26,974,223 24,157,010 13,690,557 11,931,366 90,636,502 77,691,038
-----------------------------------------------------------------------------------------
Contract owners' equity at end
of period $ 28,994,557 $ 26,974,223 $ 23,058,789 $ 13,690,557 $ 89,748,425 $ 90,636,502
=========================================================================================
</TABLE>
(4) Effective May 3, 1999, the Moderate Asset Allocation Sub-Account was
renamed Income & Value through a vote of the Board of Directors.
(5) Effective May 3, 1999, the Aggressive Asset Allocation Sub-Account was
renamed Large Cap Growth through a vote by the Board of Directors.
See accompanying notes.
6
<PAGE> 96
The Manufacturers Life Insurance Company of New York
Separate Account A
Statements of Operations and Changes in Contract Owners' Equity (continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
------------------------------------------------------------------------------------------
STRATEGIC BOND OVERSEAS (6) GROWTH
------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 2,445,021 $ 2,295,167 $ 0 $ 918,754 $ 859,187 $ 378,033
Expenses:
Mortality and expense risk
and administrative charges 452,630 486,219 276,831 252,751 302,573 146,819
------------------------------------------------------------------------------------------
Net investment income (loss) 1,992,391 1,808,948 (276,831) 666,003 556,614 231,214
Net realized gain (loss) (499,170) 859,950 962,029 268,040 958,174 239,398
Unrealized appreciation
(depreciation) during the
period (1,291,606) (2,696,973) 6,480,126 (5,437) 5,558,422 1,647,389
------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity
from operations 201,615 (28,075) 7,165,324 928,606 7,073,210 2,118,001
------------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 2,144,510 7,609,581 1,651,406 2,337,324 4,273,287 3,141,393
Transfers between
sub-accounts and the
Company (7,528,077) (2,900,935) (150,069) (19,511) 6,007,737 2,270,326
Withdrawals (2,468,375) (1,483,625) (975,966) (804,738) (832,997) (347,582)
Annual contract fee (13,785) (14,237) (10,326) (10,494) (8,549) (4,261)
------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions (7,865,727) 3,210,784 515,045 1,502,581 9,439,478 5,059,876
------------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity (7,664,112) 3,182,709 7,680,369 2,431,187 16,512,688 7,177,877
Contract owners' equity at
beginning of period 35,977,962 32,795,253 18,653,686 16,222,499 14,411,010 7,233,133
------------------------------------------------------------------------------------------
Contract owners' equity at end
of period $ 28,313,850 $ 35,977,962 $ 26,334,055 $ 18,653,686 $ 30,923,698 $ 14,411,010
==========================================================================================
</TABLE>
(6) Effective May 3, 1999, the International Growth & Income Sub-Account was
renamed Overseas through a vote of the Board of Directors.
See accompanying notes.
7
<PAGE> 97
The Manufacturers Life Insurance Company of New York
Separate Account A
Statements of Operations and Changes in Contract Owners' Equity (continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
--------------------------------------------------------------------------------------------
INTERNATIONAL PACIFIC RIM
MID CAP GROWTH (7) SMALL CAP EMERGING MARKETS
--------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1999 1998 1999 1998 1999 1998
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dividends $ 4,187,706 $ 0 $ 32,036 $ 23,697 $ 74,711 $ 0
Expenses:
Mortality and expense risk
and administrative charges 480,620 306,388 149,181 113,927 31,884 9,975
--------------------------------------------------------------------------------------------
Net investment income (loss) 3,707,086 (306,388) (117,145) (90,230) 42,827 (9,975)
Net realized gain (loss) 2,717,113 1,378,269 1,061,007 409,189 662,173 (154,105)
Unrealized appreciation
(depreciation) during the
period 7,390,190 4,593,528 7,367,156 309,360 529,833 141,071
--------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity
from operations 13,814,389 5,665,409 8,311,018 628,319 1,234,833 (23,009)
--------------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 4,908,698 4,789,484 1,113,321 925,104 672,325 503,933
Transfers between
sub-accounts and the
Company 2,912,295 2,289,436 1,522,620 845,594 1,801,255 183,911
Withdrawals (1,868,445) (1,018,210) (784,705) (283,422) (121,725) (28,153)
Annual contract fee (15,956) (11,426) (4,455) (4,127) (864) (298)
--------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions 5,936,592 6,049,284 1,846,781 1,483,149 2,350,991 659,393
--------------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 19,750,981 11,714,693 10,157,799 2,111,468 3,585,824 636,384
Contract owners' equity at
beginning of period 29,913,059 18,198,366 8,957,122 6,845,654 1,057,240 420,856
--------------------------------------------------------------------------------------------
Contract owners' equity at end
of period $ 49,664,040 $ 29,913,059 $ 19,114,921 $ 8,957,122 $ 4,643,064 $ 1,057,240
============================================================================================
</TABLE>
(7) Effective May 3, 1999, the Small Mid Cap Sub-Account was renamed Mid Cap
Growth through a vote of the Board of Directors.
See accompanying notes.
8
<PAGE> 98
The Manufacturers Life Insurance Company of New York
Separate Account A
Statements of Operations and Changes in Contract Owners' Equity (continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
--------------------------------------------------------------------------------------------
SCIENCE & TECHNOLOGY EMERGING SMALL COMPANY AGGRESSIVE GROWTH (8)
--------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1999 1998 1999 1998 1999 1998
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 5,160,554 $ 0 $ 71,618 $ 50,122 $ 0 $ 0
Expenses:
Mortality and expense risk
and administrative charges 509,712 140,540 78,549 53,801 62,126 39,530
--------------------------------------------------------------------------------------------
Net investment income (loss) 4,650,842 (140,540) (6,931) (3,679) (62,126) (39,530)
Net realized gain (loss) 2,500,553 245,552 228,415 98,646 189,779 7,185
Unrealized appreciation
(depreciation) during the
period 22,272,538 4,315,307 3,741,254 (127,344) 1,499,667 220,471
--------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations 29,423,933 4,420,319 3,962,738 (32,377) 1,627,320 188,126
--------------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 11,642,300 5,039,793 1,003,045 1,628,997 2,029,654 800,978
Transfers between
sub-accounts and the 16,787,391 3,207,637 1,006,706 557,075 (169,156) 863,113
Company
Withdrawals (1,536,409) (319,985) (318,158) (191,761) (260,523) (119,872)
Annual contract fee (13,841) (4,020) (2,389) (1,724) (1,708) (1,646)
--------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions 26,879,441 7,923,425 1,689,204 1,992,587 1,598,267 1,542,573
--------------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 56,303,374 12,343,744 5,651,942 1,960,210 3,225,587 1,730,699
--------------------------------------------------------------------------------------------
Contract owners' equity at
beginning of period 17,982,083 5,638,339 4,980,306 3,020,096 4,049,596 2,318,897
--------------------------------------------------------------------------------------------
Contract owners' equity at end
of period $ 74,285,457 $ 17,982,083 $ 10,632,248 $ 4,980,306 $ 7,275,183 $ 4,049,596
============================================================================================
</TABLE>
(8) Effective May 3, 1999, the Pilgrim Baxter Growth Sub-Account was renamed
Aggressive Growth through a vote of the Board of Directors.
See accompanying notes.
9
<PAGE> 99
The Manufacturers Life Insurance Company of New York
Separate Account A
Statements of Operations and Changes in Contract Owners' Equity (continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
------------------------------------------------------------------------------------------
QUANTITATIVE
INTERNATIONAL STOCK WORLDWIDE GROWTH (9) EQUITY
------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 413,960 $ 43,775 $ 21,603 $ 13,045 $ 598,619 $ 297,413
Expenses:
Mortality and expense risk
and administrative charges 49,175 31,689 11,932 29,659 115,609 43,301
------------------------------------------------------------------------------------------
Net investment income (loss) 364,785 12,086 9,671 (16,614) 483,010 254,112
Net realized gain (loss) 150,393 27,952 200,267 36,499 148,201 25,491
Unrealized appreciation
(depreciation) during the
period 521,153 219,452 (78,542) 88,489 1,046,733 456,874
------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations 1,036,331 259,490 131,396 108,374 1,677,944 736,477
------------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 1,130,989 640,937 109,985 869,846 2,506,769 1,492,800
Transfers between
sub-accounts and
the Company 50,156 457,349 (2,744,881) 115,421 3,341,246 932,023
Withdrawals (128,809) (102,003) (66,997) (110,403) (331,637) (83,791)
Annual contract fee (1,450) (1,001) (312) (914) (3,305) (1,211)
------------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions 1,050,886 995,282 (2,702,205) 873,950 5,513,073 2,339,821
------------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 2,087,217 1,254,772 (2,570,809) 982,324 7,191,017 3,076,298
------------------------------------------------------------------------------------------
Contract owners' equity at
beginning of period 2,921,418 1,666,646 2,570,809 1,588,485 4,857,136 1,780,838
------------------------------------------------------------------------------------------
Contract owners' equity at end
of period $ 5,008,635 $ 2,921,418 $ 0 $ 2,570,809 $ 12,048,153 $ 4,857,136
==========================================================================================
</TABLE>
(9) Effective April 30, 1999, the Worldwide Growth Sub-Account was merged with
Global Equity through a vote of the Board of Directors.
See accompanying notes.
10
<PAGE> 100
The Manufacturers Life Insurance Company of New York
Separate Account A
Statements of Operations and Changes in Contract Owners' Equity (continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
----------------------------------------------------------------------------------------
REAL ESTATE
VALUE TRUST SECURITIES BALANCED
----------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1999 1998 1999 1998 1999 1998
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 240,043 $ 268,076 $ 138,667 $ 340,740 $ 358,736 $ 274,564
Expenses:
Mortality and expense risk
and administrative charges 120,281 94,438 38,771 40,096 77,257 36,138
----------------------------------------------------------------------------------------
Net investment income (loss) 119,762 173,638 99,896 300,644 281,479 238,426
Net realized gain (loss) (198,442) 81,939 (398,793) (115,048) (159,412) 9,117
Unrealized appreciation
(depreciation) during the
period (389,978) (595,649) 32,162 (775,195) (277,411) 35,848
----------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations (468,658) (340,072) (266,735) (589,599) (155,344) 283,391
----------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 1,739,644 3,119,814 206,235 940,108 1,900,015 1,602,611
Transfers between
sub-accounts and the Company (1,426,196) 1,619,109 (277,145) 636,804 (257,437) 1,705,099
----------------------------------------------------------------------------------------
Withdrawals (390,633) (220,984) (162,041) (166,110) (195,543) (47,399)
Annual contract fee (3,519) (2,510) (1,133) (982) (2,120) (725)
----------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions (80,704) 4,515,429 (234,084) 1,409,820 1,444,915 3,259,586
----------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity (549,362) 4,175,357 (500,819) 820,221 1,289,571 3,542,977
----------------------------------------------------------------------------------------
Contract owners' equity at
beginning of period 8,129,567 3,954,210 3,094,124 2,273,903 4,395,407 852,430
----------------------------------------------------------------------------------------
Contract owners' equity at end
of period $ 7,580,205 $ 8,129,567 $ 2,593,305 $ 3,094,124 $ 5,684,978 $ 4,395,407
========================================================================================
</TABLE>
See accompanying notes.
11
<PAGE> 101
The Manufacturers Life Insurance Company of New York
Separate Account A
Statements of Operations and Changes in Contract Owners' Equity (continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
----------------------------------------------------------------------------------------
CAPITAL LIFESTYLE
HIGH YIELD GROWTH BOND (10) AGGRESSIVE 1000
----------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1999 1998 1999 1998 1999 1998
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 719,247 $ 543,274 $ 61,318 $ 28,804 $ 333,300 $ 305,318
Expenses:
Mortality and expense risk
and administrative charges 125,457 86,517 3,982 9,656 81,854 83,756
----------------------------------------------------------------------------------------
Net investment income (loss) 593,790 456,757 57,336 19,148 251,446
221,562
Net realized gain (loss) (32,854) 115,549 (43,935) 7,917 (107,893) 73,870
Unrealized appreciation
(depreciation) during the
period (10,174) (500,323) (26,461) 16,427 431,193 (15,084)
----------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations 550,762 71,983 (13,060) 43,492 574,746 280,348
----------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 1,694,142 3,600,414 69,827 598,774 757,414 3,077,092
Transfers between
sub-accounts and
the Company (85,354) 256,649 (835,008) (198,882) (3,149,323) (268,897)
Withdrawals (606,766) (348,311) (17,220) (62,706) (611,389) (290,307)
Annual contract fee (3,312) (1,447) (90) (166) (5,533) (5,347)
----------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions 998,710 3,507,305 (782,491) 337,020 (3,008,831) 2,512,541
----------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 1,549,472 3,579,288 (795,551) 380,512 (2,434,085) 2,792,889
----------------------------------------------------------------------------------------
Contract owners' equity at
beginning of period 7,490,754 3,911,466 795,551 415,039 7,695,639 4,902,750
----------------------------------------------------------------------------------------
Contract owners' equity at end
of period $ 9,040,226 $ 7,490,754 $ 0 $ 795,551 $ 5,261,554 $ 7,695,639
========================================================================================
</TABLE>
(10) Effective April 30, 1999, the Capital Growth Bond Sub-Account was merged
with Investment Quality Bond through a vote of the Board of Directors.
See accompanying notes.
12
<PAGE> 102
The Manufacturers Life Insurance Company of New York
Separate Account A
Statements of Operations and Changes in Contract Owners' Equity (continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
-----------------------------------------------------------------------------------------
LIFESTYLE LIFESTYLE LIFESTYLE
GROWTH 820 BALANCED 640 MODERATE 460
-----------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1999 1998 1999 1998 1999 1998
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends $ 1,747,760 $ 1,767,734 $ 1,960,473 $ 1,583,990 $ 742,188 $ 496,729
Expenses:
Mortality and expense risk
and administrative charges 421,007 431,445 432,727 390,197 176,230 142,347
-----------------------------------------------------------------------------------------
Net investment income (loss) 1,326,753 1,336,289 1,527,746 1,193,793 565,958 354,382
Net realized gain (loss) 214,773 357,181 32,385 293,921 303,640 80,885
Unrealized appreciation
(depreciation) during the
period 2,274,894 (312,708) 1,421,732 (390,020) (63,578) 357,260
-----------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations 3,816,420 1,380,762 2,981,863 1,097,694 806,020 792,527
-----------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 5,160,258 15,208,587 4,809,735 13,654,532 1,635,149 5,735,053
Transfers between
sub-accounts and
the Company (16,542,580) (657,869) (11,079,098) 561,143 (2,362,700) 414,134
Withdrawals (1,764,649) (1,326,866) (1,518,789) (1,185,813) (723,129) (349,708)
Annual contract fee (17,845) (15,608) (14,744) (11,425) (5,949) (3,558)
-----------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions (13,164,816) 13,208,244 (7,802,896) 13,018,437 (1,456,629) 5,795,921
-----------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity (9,348,396) 14,589,006 (4,821,033) 14,116,131 (650,609) 6,588,448
-----------------------------------------------------------------------------------------
Contract owners' equity at
beginning
of period 37,571,046 22,982,040 34,699,104 20,582,973 13,101,251 6,512,803
-----------------------------------------------------------------------------------------
Contract owners' equity at end
of period $ 28,222,650 $ 37,571,046 $ 29,878,071 $ 34,699,104 $ 12,450,642 $ 13,101,251
=========================================================================================
</TABLE>
See accompanying notes.
13
<PAGE> 103
The Manufacturers Life Insurance Company of New York
Separate Account A
Statements of Operations and Changes in Contract Owners' Equity (continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
-------------------------------------------------------------------------------------
LIFESTYLE SMALL TOTAL RETURN
CONSERVATIVE 280 COMPANY VALUE (11)
-------------------------------------------------------------------------------------
YEAR ENDED
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998 1999
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income:
Dividends $ 439,339 $ 162,598 $ 2,112 $ 512 $ 0
Expenses:
Mortality and expense risk
and administrative charges 90,231 51,871 42,581 22,160 14,483
-------------------------------------------------------------------------------------
Net investment income (loss) 349,108 110,727 (40,469) (21,648) (14,483)
Net realized gain (loss) 41,012 36,948 (212,962) (79,550) (499)
Unrealized appreciation
(depreciation) during the
period (221,715) 179,655 475,746 (98,533) 560
-------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
operations 168,405 327,330 222,315 (199,731) (14,422)
-------------------------------------------------------------------------------------
Changes from principal
transactions:
Purchase payments 1,343,171 3,398,468 1,017,273 2,148,651 1,666,355
Transfers between
sub-accounts and
the Company 198,222 82,618 (575,184) 991,569 1,381,559
Withdrawals (468,557) (141,941) (143,639) (62,404) (69,003)
Annual contract fee (2,724) (1,284) (1,172) (256) (163)
-------------------------------------------------------------------------------------
Net increase (decrease) in
contract owners' equity from
principal transactions 1,070,112 3,337,861 297,278 3,077,560 2,978,748
-------------------------------------------------------------------------------------
Total increase (decrease) in
contract owners' equity 1,238,517 3,665,191 519,593 2,877,829 2,964,326
-------------------------------------------------------------------------------------
Contract owners' equity at
beginning of period 5,478,177 1,812,986 2,877,829 0 0
-------------------------------------------------------------------------------------
Contract owners' equity at end
of period $ 6,716,694 $ 5,478,177 $ 3,397,422 $ 2,877,829 $ 2,964,326
=====================================================================================
</TABLE>
(11) Commencement of Operations, May 3, 1999, through a vote of the Board of
Directors.
See accompanying notes.
14
<PAGE> 104
The Manufacturers Life Insurance Company of New York
Separate Account A
Statements of Operations and Changes in Contract Owners' Equity (continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
--------------------------------------------------------
SMALL
US LARGE CAP MID CAP STOCK COMPANY BLEND
VALUE (11) (11) (11)
--------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1999 1999
--------------------------------------------------------
<S> <C> <C> <C>
Income:
Dividends $ 0 $ 0 $ 28,511
Expenses:
Mortality and expense risk and administrative charges 35,870 6,892 6,891
--------------------------------------------------------
Net investment income (loss) (35,870) (6,892) 21,620
Net realized gain (loss) (10,636) (8,908) 4,928
Unrealized appreciation (depreciation) during the period 225,268 48,632 230,658
--------------------------------------------------------
Net increase (decrease) in contract owners' equity from
operations 178,762 32,832 257,206
--------------------------------------------------------
Changes from principal transactions:
Purchase payments 3,136,423 1,009,841 562,946
Transfers between sub-accounts and the Company 2,339,105 504,374 689,623
Withdrawals (40,659) (9,675) (4,390)
Annual contract fee (416) (46) (86)
--------------------------------------------------------
Net increase (decrease) in contract owners' equity from 5,434,453 1,504,494 1,248,093
principal transactions
--------------------------------------------------------
Total increase (decrease) in contract owners' equity 5,613,215 1,537,326 1,505,299
--------------------------------------------------------
Contract owners' equity at beginning
of period 0 0 0
--------------------------------------------------------
Contract owners' equity at end of period $ 5,613,215 $ 1,537,326 $ 1,505,299
========================================================
</TABLE>
See accompanying notes.
15
<PAGE> 105
The Manufacturers Life Insurance Company of New York
Separate Account A
Statements of Operations and Changes in Contract Owners' Equity (continued)
<TABLE>
<CAPTION>
SUB-ACCOUNT
-----------------------------------------------------------
INTERNATIONAL
VALUE (11) TOTAL
-----------------------------------------------------------
YEAR ENDED
DECEMBER 31, YEAR ENDED DECEMBER 31,
1999 1999 1998
-----------------------------------------------------------
<S> <C> <C> <C>
Income:
Dividends $ 0 $ 61,505,416 $ 48,996,371
Expenses:
Mortality and expense risk and administrative
charges 3,106 13,005,279 9,885,986
-----------------------------------------------------------
Net investment income (loss) (3,106) 48,500,137 39,110,385
Net realized gain (loss) (1,570) 30,024,983 15,473,967
Unrealized appreciation (depreciation) during the
period 51,283 79,867,077 27,635,813
-----------------------------------------------------------
Net increase (decrease) in contract owners' equity
from operations 46,607 158,392,197 82,220,165
-----------------------------------------------------------
Changes from principal transactions:
Purchase payments 542,253 155,048,260 177,231,214
Transfers between sub-accounts and
the Company 188,666 12,540,214 5,486,250
Withdrawals (1,909) (60,538,029) (33,588,834)
Annual contract fee (24) (417,364) (336,413)
-----------------------------------------------------------
Net increase (decrease) in contract owners'
equity from principal transactions 728,986 106,633,081 148,792,217
-----------------------------------------------------------
Total increase (decrease) in contract owners' equity 775,593 265,025,278 231,012,382
-----------------------------------------------------------
Contract owners' equity at beginning
of period 0 828,144,716 597,132,334
-----------------------------------------------------------
Contract owners' equity at end of period $ 775,593 $ 1,093,169,994 $ 828,144,716
===========================================================
</TABLE>
See accompanying notes.
16
<PAGE> 106
The Manufacturers Life Insurance Company of New York
Separate Account A
Notes to Financial Statements
December 31, 1999
1. ORGANIZATION
The Manufacturers Life Insurance Company of New York Separate Account A (the
Account) is a separate account established by The Manufacturers Life Insurance
Company of New York (the Company). The Company established the Account on July
22, 1992 as a separate account under New York law. The Account operates as a
Unit Investment Trust under the Investment Company Act of 1940, as amended, and
invests in thirty-eight sub-accounts of Manufacturers Investment Trust (the
Trust). The Account is a funding vehicle for variable annuity contracts (the
Contracts) issued by the Company. The account includes four contracts,
distinguished principally by the level of expenses and surrender charges. These
four contracts are Venture Variable Annuity 9 (VEN9), Venture Variable Annuity
10 (VEN10), Venture Variable Annuity (VEN24) and Vision Variable Annuity 24
(VIS24).
The Company is a wholly-owned subsidiary of the Manufacturers Life Insurance
Company of North America (MNA). MNA is a wholly-owned subsidiary of Manulife
Wood Logan Holding Company, Inc. (MWLH). MWLH is 78.4% owned by The
Manufacturers Life Insurance Company (USA), (ManUSA) and 21.6% by MRL Holding
LLC, (MRL). ManUSA and MRL are indirectly wholly-owned subsidiaries of the
Manufacturers Life Insurance Company (MLI), which in turn is a wholly-owned
subsidiary of Manulife Financial Corporation. Manulife Financial Corporation and
its subsidiaries are known collectively as Manulife Financial.
On May 3, 1999, 5 new sub-accounts, Small Company Blend, Total Return, US Large
Cap Value, International Value and Mid Cap Stock commenced operations.
On April 30, 1999, 2 sub-accounts, Capital Growth Bond and Worldwide Growth,
ceased operations and were merged with Investment Quality Bond and Global Equity
sub-accounts, respectively.
2. SIGNIFICANT ACCOUNTING POLICIES
Investments are made in the portfolios of the Trust and are valued at the
reported net asset value of such portfolios. Transactions are recorded on the
trade date. Income from dividends is recorded on the ex-dividend date. Realized
gains and losses on the sales of investments are computed on the basis of the
identified cost of the investment sold.
In addition to the Account, a contract holder may also allocate funds to the
Fixed Account, which is part of the Company's general account. Because of
exemptive and exclusionary provisions, interests in the Fixed Account have not
been registered under the Securities Act of 1933, and the Company's general
account has not been registered as an investment company under the Investment
Company Act of 1940.
17
<PAGE> 107
The Manufacturers Life Insurance Company of New York Separate
Account A
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The operations of the Account are included in the federal income tax return of
the Company, which is taxed as a life insurance company under the provisions of
the Internal Revenue Code (the Code). Under the current provisions of the Code,
the Company does not expect to incur federal income taxes on the earnings of the
Account to the extent the earnings are credited under the contracts. Based on
this, no charge is being made currently to the Account for federal income taxes.
The Company will review, periodically, the status of such decision based on
changes in the tax law. Such a charge may be made in future years for any
federal income taxes that would be attributable to the contract.
The preparation of financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from reported results using those estimates.
3. AFFILIATED COMPANY TRANSACTIONS
The Company has an Administrative Services Agreement with Manulife Financial,
whereby Manulife Financial or its designee, with the consent of the Company,
performs certain services on behalf of the Company necessary for the operation
of the separate account. The Company has an underwriting and distribution
agreements with its affiliate, Manufacturers Securities Services LLC (MSS). MSS
is owned 90% by MNA and 10% by the Company.
4. CONTRACT CHARGES
There are no deductions made from purchase payments for sales charges at the
time of purchase. In the event of a surrender, a contingent deferred sales
charge may be made by the Company to cover sales expenses. An annual
administrative fee of $30 is deducted from each contract owners' account on the
contract anniversary date to cover contract administration costs. This charge is
waived on certain contracts.
Deductions from each sub-account for the VEN9, VEN10 and VEN24 contracts are
made daily for administrative fees and for the assumption of mortality and
expense risk charges, equal to an effective annual rate of 0.15% and 1.25% of
the contract value, respectively.
Deductions from each sub-account for the VIS24 contracts are made daily for
distribution fees, administration and for the assumption of mortality and
expense risks equal to an effective annual rate of 0.15%, 0.25% and 1.25% of the
contract value, respectively.
18
<PAGE> 108
The Manufacturers Life Insurance Company of New York Separate
Account A
Notes to Financial Statements (continued)
5. PURCHASES AND SALES OF INVESTMENTS
The following table shows aggregate cost of shares purchased and proceeds from
sales of each sub-account for the year ended December 31, 1999:
<TABLE>
<CAPTION>
PURCHASES SALES
----------------------------------
<S> <C> <C>
Mid Cap Blend Portfolio $ 20,671,139 $ 11,970,855
Investment Quality Bond Portfolio 5,032,082 2,710,932
Growth and Income Portfolio 58,308,505 12,951,108
Blue Chip Growth Portfolio 33,548,196 7,388,322
Money Market Portfolio 60,191,756 54,429,476
Global Equity Portfolio 17,049,507 12,762,660
Global Bond Portfolio 2,517,398 3,222,930
U.S. Government Securities Portfolio 6,801,373 8,248,260
Diversified Bond Portfolio 2,172,891 1,590,296
Income & Value Portfolio 8,042,078 5,135,925
Large Cap Growth Portfolio 8,922,195 2,394,713
Equity-Income Portfolio 16,695,502 13,879,358
Strategic Bond Portfolio 8,544,941 14,418,277
Overseas Portfolio 7,982,013 7,743,799
Growth Portfolio 12,634,654 2,638,562
Mid Cap Growth Portfolio 19,338,519 9,694,841
International Small Cap Portfolio 6,859,071 5,129,435
Pacific Rim Emerging Markets Portfolio 6,307,682 3,913,864
Science & Technology Portfolio 37,489,234 5,958,951
Emerging Small Company Portfolio 4,595,667 2,913,394
Aggressive Growth Portfolio 3,573,165 2,037,024
International Stock Portfolio 2,986,991 1,571,320
Worldwide Growth Portfolio 346,731 3,039,265
Quantitative Equity Portfolio 7,140,781 1,144,698
Value Trust Portfolio 3,605,093 3,566,035
Real Estate Securities Portfolio 917,464 1,051,652
Balanced Portfolio 3,592,560 1,866,166
High Yield Portfolio 4,755,486 3,162,986
Capital Growth Bond Portfolio 461,347 1,186,502
Lifestyle Aggressive 1000 Portfolio 1,100,883 3,858,268
Lifestyle Growth 820 Portfolio 6,972,543 18,810,606
Lifestyle Balanced 640 Portfolio 7,319,732 13,594,882
Lifestyle Moderate 460 Portfolio 2,254,401 3,145,072
Lifestyle Conservative 280 Portfolio 2,683,999 1,264,779
Small Company Value Portfolio 1,874,955 1,618,146
International Value Portfolio 997,738 271,858
US Large Cap Value Portfolio 6,921,639 1,523,056
Small Company Blend Portfolio 1,443,493 173,780
Mid Cap Stock Portfolio 1,718,222 220,620
Total Return Portfolio 3,256,870 292,605
----------------------------------
Total $407,628,496 $252,495,278
==================================
</TABLE>
19
<PAGE> 109
The Manufacturers Life Insurance Company of New York Separate
Account A
Notes to Financial Statements (continued)
6. UNIT VALUES
A summary of the accumulation unit values at December 31, 1999 and 1998, and the
accumulation units and dollar values outstanding at December 31, 1999 are as
follows:
<TABLE>
<CAPTION>
1998 1999
---------------- --------------------------------------------------
UNIT UNIT
VALUE VALUE UNITS DOLLARS
---------------- --------------------------------------------------
<S> <C> <C> <C> <C>
Mid Cap Blend Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts $31.289551 $39.416089 2,727,092 $107,491,312
Vis 24 Contracts 22.973151 28.867552 29,850 861,701
-----------------------------------
2,756,942 108,353,013
Investment Quality Bond Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 19.660365 19.039807 637,165 12,131,499
Vis 24 Contracts 12.847911 33,538 430,891
-----------------------------------
670,703 12,562,390
Growth and Income Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 32.976967 38.655938 5,388,989 208,316,427
Vis 24 Contracts 26.056725 30.467742 155,039 4,723,695
-----------------------------------
5,544,028 213,040,122
Blue-Chip Growth Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 21.710674 25.568866 4,092,676 104,645,086
Vis 24 Contracts 22.573222 26.518360 136,325 3,615,108
-----------------------------------
4,229,001 108,260,194
Money Market Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 15.794513 16.291417 1,943,423 31,661,122
Vis 24 Contracts 12.153141 125,081 1,520,126
-----------------------------------
2,068,504 33,181,248
Global Equity Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 24.098970 24.633827 2,156,416 53,120,788
Vis 24 Contracts 18.706100 19.073534 28,618 545,847
-----------------------------------
2,185,034 53,666,635
Global Bond Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 21.333144 19.632749 344,100 6,755,636
Vis 24 Contracts 13.599529 1,655 22,501
-----------------------------------
345,755 6,778,137
</TABLE>
20
<PAGE> 110
The Manufacturers Life Insurance Company of New York Separate
Account A
Notes to Financial Statements (continued)
6. UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
1998 1999
-------------------------------------------------------------------
UNIT UNIT
VALUE VALUE UNITS DOLLARS
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government Securities Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts $17.535478 $18.286918 867,698 $15,867,531
Vis 24 Contracts 12.757839 25,711 328,015
-----------------------------------
893,409 16,195,546
Diversified Bond Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 18.125951 18.002047 415,279 7,475,869
Vis 24 Contracts 14.527388 26,749 388,591
-----------------------------------
442,028 7,864,460
Income & Value Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 20.742457 22.230152 1,292,508 28,732,650
Vis 24 Contracts 17.986686 14,561 261,907
-----------------------------------
1,307,069 28,994,557
Large Cap Growth Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 23.040505 28.465074 758,666 21,595,494
Vis 24 Contracts 23.393391 62,552 1,463,295
-----------------------------------
821,218 23,058,789
Equity-Income Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 22.054902 22.487758 3,940,443 88,611,725
Vis 24 Contracts 20.794388 21.149570 53,746 1,136,700
-----------------------------------
3,994,189 89,748,425
Strategic Bond Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 14.486687 14.602672 1,925,359 28,115,388
Vis 24 Contracts 14.243718 14.321908 13,538 193,891
-----------------------------------
1,938,897 28,309,279
Overseas Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 12.290162 17.044524 1,518,672 25,885,043
Vis 24 Contracts 16.833813 26,271 442,237
-----------------------------------
1,544,943 26,327,280
Growth Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 20.739989 28.060585 1,067,369 29,951,005
Vis 24 Contracts 27.818889 34,965 972,693
-----------------------------------
1,102,334 30,923,698
</TABLE>
21
<PAGE> 111
The Manufacturers Life Insurance Company of New York Separate
Account A
Notes to Financial Statements (continued)
6. UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
1998 1999
-------------------------------------------------------------------
UNIT UNIT
VALUE VALUE UNITS DOLLARS
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mid-Cap Growth Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts $19.002856 $27.113084 1,791,495 $48,572,951
Vis 24 Contracts 26.855000 40,629 1,091,089
-----------------------------------
1,832,124 49,664,040
International Small-Cap Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 14.792077 26.974754 698,741 18,848,373
Vis 24 Contracts 26.718058 9,893 264,310
-----------------------------------
708,634 19,112,683
Pacific Rim Emerging Markets Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 7.695249 12.359297 364,288 4,502,345
Vis 24 Contracts 12.267100 11,339 139,101
-----------------------------------
375,627 4,641,446
Science & Technology Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 19.287390 37.943261 1,883,525 71,467,062
Vis 24 Contracts 37.660683 74,837 2,818,395
-----------------------------------
1,958,362 74,285,457
Emerging Small Company Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 14.381705 24.610648 419,655 10,327,987
Vis 24 Contracts 24.427201 12,456 304,261
-----------------------------------
432,111 10,632,248
Aggressive Growth Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 12.680777 16.628126 390,691 6,496,455
Vis 24 Contracts 16.504105 47,184 778,728
-----------------------------------
437,875 7,275,183
International Stock Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 14.337171 18.338932 257,550 4,723,191
Vis 24 Contracts 18.202233 15,682 285,444
-----------------------------------
273,232 5,008,635
Quantitative Equity Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 20.068624 24.202942 477,373 11,553,831
Vis 24 Contracts 24.022598 20,577 494,322
-----------------------------------
497,950 12,048,153
</TABLE>
22
<PAGE> 112
The Manufacturers Life Insurance Company of New York Separate
Account A
Notes to Financial Statements (continued)
6. UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
1998 1999
---------------- --------------------------------------------------
UNIT UNIT
VALUE VALUE UNITS DOLLARS
---------------- --------------------------------------------------
<S> <C> <C> <C> <C>
Value Trust Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts $14.591878 $13.987433 512,842 $ 7,173,343
Vis 24 Contracts 13.883152 29,002 402,640
-----------------------------------
541,844 7,575,983
Real Estate Securities Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 12.317190 11.174188 228,009 2,547,821
Vis 24 Contracts 11.090818 3,790 42,029
-----------------------------------
231,799 2,589,850
Balanced Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 16.459454 15.962370 340,493 5,435,072
Vis 24 Contracts 15.843343 15,774 249,906
-----------------------------------
356,267 5,684,978
High-Yield Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 14.078376 14.993652 574,922 8,620,175
Vis 24 Contracts 14.008370 14.881850 28,143 418,819
-----------------------------------
603,065 9,038,994
Lifestyle Aggressive 1000 Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 14.134419 15.974195 318,120 5,081,707
Vis 24 Contracts 15.855076 11,343 179,847
-----------------------------------
329,463 5,261,554
Lifestyle Growth 820 Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 14.696667 16.893101 1,590,780 26,873,208
Vis 24 Contracts 16.767184 80,481 1,349,442
-----------------------------------
1,671,261 28,222,650
Lifestyle Balanced 640 Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 14.664362 16.257312 1,797,136 29,216,596
Vis 24 Contracts 16.136115 40,993 661,475
-----------------------------------
1,838,129 29,878,071
Lifestyle Moderate 460 Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 15.171965 16.142259 764,069 12,333,805
Vis 24 Contracts 16.021927 7,292 116,837
-----------------------------------
771,361 12,450,642
</TABLE>
23
<PAGE> 113
The Manufacturers Life Insurance Company of New York Separate
Account A
Notes to Financial Statements (continued)
6. UNIT VALUES (CONTINUED)
<TABLE>
<CAPTION>
1998 1999
---------------- ---------------------------------------------------
UNIT UNIT
VALUE VALUE UNITS DOLLARS
---------------- ---------------------------------------------------
<S> <C> <C> <C> <C>
Lifestyle Conservative 280 Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts $15.025549 15.439823 $398,756 $ 6,156,718
Vis 24 Contracts 15.324704 36,541 559,976
------------------------------------
435,297 6,716,694
Total Return Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 12.255674 174,291 2,136,056
Vis 24 Contracts 12.235367 67,695 828,270
------------------------------------
241,986 2,964,326
Small Company Value Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 11.178700 11.904646 272,500 3,244,018
Vis 24 Contracts 11.837890 12,959 153,404
------------------------------------
285,459 3,397,422
U.S. Large Cap Value Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 12.721279 398,954 5,075,209
Vis 24 Contracts 12.700198 42,362 538,006
------------------------------------
441,316 5,613,215
Mid Cap Stock Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 12.483520 98,765 1,232,934
Vis 24 Contracts 12.462837 24,424 304,392
------------------------------------
123,189 1,537,326
Small Company Blend Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 15.922213 87,313 1,390,220
Vis 24 Contracts 15.895877 7,240 115,079
------------------------------------
94,553 1,505,299
International Value Sub-Account:
Ven 9, Ven 10 and Ven 24 Contracts 12.860110 47,250 607,640
Vis 24 Contracts 12.838810 13,082 167,953
------------------------------------
60,332 775,593
TOTAL CONTRACT OWNERS' EQUITY $1,093,144,215
================
</TABLE>
24
<PAGE> 114
The Manufacturers Life Insurance Company of New York Separate
Account A
Notes to Financial Statements (continued)
7. DIVERSIFICATION REQUIREMENTS
Under the provisions of Section 817(h) of the Internal Revenue Code, a variable
annuity contract, other than a contract issued in connection with certain types
of employee benefits plans, will not be treated as an annuity contract for
federal tax purposes for any period for which the investments of the segregated
asset account on which the contract is based are not adequately diversified. The
Code provides that the "adequately diversified" requirement may be met if the
underlying investments satisfy either a statutory safe harbor test or
diversification requirements set forth in regulations issued by the Secretary of
Treasury.
The Internal Revenue Service has issued regulations under Section 817(h) of the
Code. The Company believes that the Account satisfies the current requirements
of the regulations, and it intends that the Account will continue to meet such
requirements.
25
<PAGE> 115
AUDITED FINANCIAL STATEMENTS
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NEW YORK
Years ended December 31, 1999, 1998 and 1997
<PAGE> 116
The Manufacturers Life Insurance Company of New York
Audited Financial Statements
Years ended December 31, 1999, 1998 and 1997
CONTENTS
Report of Independent Auditors......................................... 1
Audited Financial Statements
Balance Sheets......................................................... 2
Statements of Income................................................... 3
Statements of Changes in Shareholder's Equity.......................... 4
Statements of Cash Flows............................................... 5
Notes to Financial Statements.......................................... 6
<PAGE> 117
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholder
The Manufacturers Life Insurance Company of New York
We have audited the accompanying balance sheets of The Manufacturers Life
Insurance Company of New York (the Company) as of December 31, 1999 and 1998,
and the related statements of income, changes in shareholder's equity, and cash
flows for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Manufacturers Life
Insurance Company of New York at December 31, 1999 and 1998, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
February 21, 2000
1
<PAGE> 118
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
BALANCE SHEETS
<TABLE>
<CAPTION>
As at December 31
ASSETS ($ thousands) 1999 1998
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENTS:
Fixed maturity securities available-for-sale, at fair value
(note 3)
(amortized cost: 1999 $125,429; 1998 $120,902) $ 122,301 $ 125,088
Investment in unconsolidated affiliate 175 175
Policy loans 930 552
Short-term investments 41,311 10,032
--------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS $ 164,717 $ 135,847
--------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents 7,093 5,946
Accrued investment income 3,036 3,073
Deferred acquisition costs (note 5) 50,476 36,831
Other assets 456 1,834
Separate account assets 1,119,103 833,693
--------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $1,344,881 $1,017,224
====================================================================================================================
LIABILITIES AND SHAREHOLDER'S EQUITY ($ thousands)
--------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Policyholder liabilities and accruals $ 131,104 $ 94,492
Payable to affiliates 3,825 4,114
Deferred income taxes (note 6) 4,382 3,615
Other liabilities 5,258 1,943
Separate account liabilities 1,119,103 833,693
--------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $1,263,672 $ 937,857
--------------------------------------------------------------------------------------------------------------------
SHAREHOLDER'S EQUITY:
Common stock (note 7) $ 2,000 $ 2,000
Additional paid-in capital 72,706 72,706
Retained earnings 8,947 3,209
Accumulated other comprehensive income (loss) (2,444) 1,452
--------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDER'S EQUITY $ 81,209 $ 79,367
--------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $1,344,881 $1,017,224
====================================================================================================================
</TABLE>
See accompanying notes.
2
<PAGE> 119
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1999 1998 1997
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Fees from separate accounts and policyholder liabilities $14,670 $10,961 $ 7,395
Premiums 175 - -
Net investment income (note 3) 16,944 9,786 6,717
Net realized investment (losses) gains (222) 713 769
---------------------------------------------------------------------------------------------------------------------
TOTAL REVENUE $31,567 $21,460 $14,881
---------------------------------------------------------------------------------------------------------------------
BENEFITS AND EXPENSES:
Policyholder benefits and claims $ 6,613 $ 4,603 $ 4,747
Amortization of deferred acquisition costs (note 5) 4,287 4,849 3,393
Other insurance expenses 11,834 10,359 5,845
---------------------------------------------------------------------------------------------------------------------
TOTAL BENEFITS AND EXPENSES $22,734 $19,811 $13,985
---------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES $ 8,833 $ 1,649 $ 896
---------------------------------------------------------------------------------------------------------------------
INCOME TAXES (NOTE 6) $ 3,095 $ 576 $ 310
---------------------------------------------------------------------------------------------------------------------
NET INCOME $ 5,738 $ 1,073 $ 586
=====================================================================================================================
</TABLE>
See accompanying notes.
3
<PAGE> 120
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
ACCUMULATED
OTHER TOTAL
COMMON ADDITIONAL RETAINED COMPREHENSIVE SHAREHOLDER'S
($ thousands) STOCK PAID-IN CAPITAL EARNINGS INCOME (LOSS) EQUITY
(NOTE 7)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1997 $2,000 $24,800 $1,550 $ 419 $28,769
Capital contribution - 47,731 - - 47,731
Comprehensive income (note 4) - - 586 676 1,262
-------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997 $2,000 $72,531 $2,136 $ 1,095 $77,762
Capital contribution - 175 - - 175
Comprehensive income (note 4) - - 1,073 357 1,430
-------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 2,000 72,706 3,209 1,452 79,367
Comprehensive income (Loss) (note 4) - - 5,738 (3,896) 1,842
-------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999 $2,000 $72,706 $8,947 $ (2,444) $81,209
===================================================================================================================
</TABLE>
See accompanying notes.
4
<PAGE> 121
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1999 1998 1997
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 5,738 $ 1,073 $ 586
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Amortization of bond discount and premium 585 434 333
Net realized investment losses (gains) 222 (713) (769)
Provision for deferred income tax 1,857 1,153 (29)
Amortization of deferred acquisition costs 4,287 4,849 3,393
Policy acquisition costs deferred (15,604) $ (14,515) $ (11,684)
Return credited to policyholders and other benefits 6,613 4,603 4,747
Changes in assets and liabilities:
Accrued investment income 37 (672) (873)
Other assets 1,378 (1,603) (80)
Payable to affiliates (289) (231) 2,328
Other liabilities 3,315 956 115
------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities $ 8,139 $ (4,666) $ (1,933)
------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Fixed maturity securities sold, matured or repaid $ 73,626 $ 30,591 $ 59,307
Fixed maturity securities purchased (78,960) $ (24,500) (103,383)
Net change in short-term investments (31,279) (34) (6,011)
Policy loans advanced, net (378) (154) (215)
------------------------------------------------------------------------------------------------------------------------
Cash (used in) provided by investing activities $ (36,991) $ 5,903 $ (50,302)
------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Deposits to policyholder funds $ 50,351 $ 14,212 17,212
Return of policyholder funds (20,352) (10,934) (15,382)
Capital contribution by parent - - 47,731
------------------------------------------------------------------------------------------------------------------------
Cash provided by financing activities $ 29,999 $ 3,278 $ 49,561
------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS:
Increase (decrease) during the year 1,147 4,515 (2,674)
Balance, beginning of year 5,946 1,431 4,105
------------------------------------------------------------------------------------------------------------------------
BALANCE, END OF YEAR $ 7,093 $ 5,946 $ 1,431
========================================================================================================================
</TABLE>
See accompanying notes
5
<PAGE> 122
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(IN THOUSANDS OF DOLLARS)
1. ORGANIZATION
The Manufacturers Life Insurance Company of New York (First North
American Life Assurance Company prior to October 1, 1997, and
hereinafter referred to as "the Company") is a stock life insurance
company which was organized on February 10, 1992 under the laws of the
State of New York. The New York Insurance Department ("the Department")
granted the Company a license to operate on July 22, 1992. The Company
is a wholly-owned subsidiary of The Manufacturers Life Insurance
Company of North America (formerly North American Security Life
Insurance Company ("NASL") and hereinafter referred to as "MNA"), which
is, in turn, a wholly-owned subsidiary of Manulife-Wood Logan Holding
Co., Inc. (hereinafter referred to as "MWLH"). MWLH is an indirect
wholly-owned subsidiary of The Manufacturers Life Insurance Company
("MLI"); prior to June 1, 1999, MLI indirectly owned 85% of MWLH, and
minority shareholders associated with MWLH owned the remaining 15%. MLI
is a wholly-owned subsidiary of Manulife Financial Corporation, a
publicly traded company. Manulife Financial Corporation and its
subsidiaries are known collectively as "Manulife Financial."
The Company issues individual and group annuity and individual life
insurance contracts (collectively, the contracts) in the State of New
York. Amounts invested in the fixed portion of the contracts are
allocated to the general account or a noninsulated separate account of
the Company. Amounts invested in the variable portion of the contracts
are allocated to the separate accounts of the Company. Each of these
separate accounts invests in either the shares of various portfolios of
the Manufacturers Investment Trust (formerly NASL Series Trust and
hereinafter referred to as "MIT"), a no-load, open-end investment
management company organized as a Massachusetts business trust, or in
open-end investment management companies offered and managed by
unaffiliated third parties.
Prior to October 1, 1997, the Company sold and administered only
combination fixed and variable annuity products. On October 21, 1997,
the Company received approval from the Department for a revised plan of
operations which expanded its product offerings. MNA contributed
$47,731 to the Company in support of the revised plan of operations.
Prior to October 1, 1997, NASL Financial Services Inc. ("NASL
Financial"), an affiliate of the Company, acted as investment adviser
to MIT and as principal underwriter of the annuity contracts issued by
the Company. Effective October 1, 1997, Manufacturers Securities
Services, LLC ("MSS"), the successor to NASL Financial and an affiliate
of the Company, replaced NASL
6
<PAGE> 123
1. ORGANIZATION (CONTINUED)
Financial as the investment advisor to MIT and as the principal
underwriter for the variable contracts and exclusive distributor of all
contracts issued by the Company.
Prior to October 1, 1997, Manulife Wood Logan, Inc. (formerly Wood
Logan Associates and hereinafter referred to as "MWL"), a subsidiary of
MWLH, acted as the promotional agent for the sale of the Company's
contracts. Since October 1, 1997, marketing services for the sale of
all contracts issued by the Company and other services are provided by
certain affiliates of the Company pursuant to an Administrative
Services Agreement and an Investment Services Agreement between the
Company and MLI. Currently, services are provided by MLI, MWLH, MNA and
The Manufacturers Life Insurance Company (U.S.A.)
("ManUSA").
On October 31, 1998, the Company received a 10% interest in the
members' equity of MSS from MNA, the managing member of MSS. The
Company treated the receipt of its equity interest as a contribution to
paid-in capital of $175.
2. SIGNIFICANT ACCOUNTING POLICIES
a) BASIS OF PRESENTATION
The accompanying financial statements of the Company have been prepared
in conformity with generally accepted accounting principles ("GAAP") in
the United States.
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes.
Actual results could differ from reported results using those
estimates.
b) RECENT ACCOUNTING STANDARDS
i) In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS No. 133). SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and for hedging
activities. Contracts that contain embedded derivatives, such as
certain insurance contracts, are also addressed by the Statement. SFAS
No. 133 requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and
measure those instruments at fair value. In July 1999, the FASB issued
Statement 137, which delayed the effective date of SFAS No. 133 to
fiscal years beginning after June 15, 2000. The Company is evaluating
the accounting implications of SFAS No. 133 and has not determined its
impact on the Company's results of operations or its financial
condition.
7
<PAGE> 124
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
b) RECENT ACCOUNTING STANDARDS (CONTINUED)
ii) In December 1997, the American Institute of Certified Public
Accountant's Accounting Standards Executive Committee (AcSEC) issued
Statement of Position (SOP) 97-3, "Accounting by Insurance and Other
Enterprises for Insurance-Related Assessments." SOP 97-3 provides
guidance on the recognition and measurement of liabilities for various
assessments related to insurance activities, including those by state
guaranty funds. The Company adopted SOP 97-3 during 1999. Prior to the
adoption of SOP 97-3, the Company expensed and recognized liabilities
for such assessments on a "pay-as-you-go" basis. The effect of adopting
SOP 97-3 did not have a material impact on the results of operations
and financial condition of the Company for the year ended December 31,
1999.
iii) In March 1998, AcSEC issued SOP 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." SOP 98-1
requires the capitalization of certain costs incurred in connection
with developing or obtaining internal-use software. The Company adopted
SOP 98-1 during 1999. Prior to the adoption of SOP 98-1, the Company
expensed internal-use software-related costs as incurred. The effect of
adopting SOP 98-1 did not have a material impact on the results of
operations and financial condition of the Company for the year ended
December 31, 1999.
c) INVESTMENTS
The Company classifies all of its fixed-maturity securities as
available-for-sale and records these securities at fair value. Realized
gains and losses on sales of securities classified as
available-for-sale are recognized in net income using the
specific-identification method. Changes in the fair value of securities
available-for-sale are reflected directly in accumulated other
comprehensive income after adjustments for deferred taxes and deferred
acquisition costs. Discounts and premiums on investments are amortized
using the effective-interest method.
The cost of fixed-maturity securities is adjusted for the amortization
of premiums and accretion of discounts using the interest method. This
amortization or accretion is included in net investment income.
For the mortgage-backed bond portion of the fixed-maturity securities
portfolio, the Company recognizes amortization using a constant
effective yield based on anticipated prepayments and the estimated
economic life of the securities. When actual prepayments differ
significantly from anticipated prepayments, the effective yield is
recalculated to reflect actual payments to date and anticipated future
payments. The net investment in the security is adjusted to the amount
that would have existed had the new effective yield been applied since
the acquisition of the security. That adjustment is included in net
investment income.
Policy loans are reported at aggregate unpaid balances, which
approximate fair value.
8
<PAGE> 125
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
c) INVESTMENTS (CONTINUED)
Short-term investments, which include investments with maturities of
less than one year and greater than 90 days at the date of acquisition,
are reported at amortized cost, which approximates fair value.
d) CASH EQUIVALENTS
The Company considers all liquid debt instruments purchased with an
original maturity date of three months or less to be cash equivalents.
Cash equivalents are stated at cost plus accrued interest, which
approximates fair value.
e) DEFERRED ACQUISITION COSTS (DAC)
Commissions and other expenses which vary with, and are primarily
related to, the production of new business are deferred to the extent
recoverable and included as an asset. Acquisition costs associated with
annuity contracts and investment pension contracts are being amortized
generally in proportion to the present value of expected gross profits
from surrender charges and investment, mortality and expense margins.
The amortization is adjusted retrospectively when estimates of current
or future gross profits are revised. DAC associated with traditional
non-participating individual insurance policies is charged to expense
over the premium-paying period of the related policies. DAC is adjusted
for the impact on estimated future gross profits, assuming the
unrealized gains or losses on securities had been realized at year end.
The impact of any such adjustments is included in net unrealized gains
(losses) in accumulated other comprehensive income. DAC is reviewed
annually to determine recoverability from future income and, if not
recoverable, it is immediately expensed.
f) POLICYHOLDER LIABILITIES AND ACCRUALS
Policyholder liabilities equal the policyholder account value for the
fixed portion of annuity contracts and for investment pension contracts
with no substantial mortality risk. Account values are increased for
deposits received and interest credited, and are reduced by
withdrawals. For traditional nonparticipating life insurance policies,
policyholder liabilities are computed using the net level premium
method and are based upon estimates as to future mortality,
persistency, maintenance expenses and interest rate yields that are
applicable in the year of issue. The assumptions include a provision
for adverse deviation.
9
<PAGE> 126
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
g) SEPARATE ACCOUNTS
Separate account assets and liabilities that are reported in the
accompanying balance sheets represent investments in either MIT, which
are mutual funds that are separately administered for the exclusive
benefit of the policyholders of the Company and its affiliates, or
open-end investment management companies offered and managed by
unaffiliated third parties, which are mutual funds that are separately
administered for the benefit of the Company's policyholders and other
shareholders. These assets and liabilities are reported at fair value.
The policyholders, rather than the Company, bear the investment risk.
The operations of the separate accounts are not included in the
accompanying financial statements. Fees charged on separate account
policyholder funds are included in revenues.
h) REVENUE RECOGNITION
Fee income from separate accounts, annuity contracts and investment
pension contracts consists of charges for mortality, expenses, and
surrender and administration charges that have been assessed against
the policyholder account balances. Premiums on traditional
nonparticipating life insurance policies are recognized as revenue when
due. Investment income is recorded as revenue when due.
i) POLICYHOLDER BENEFITS AND CLAIMS
Benefits for annuity contracts and investment pension contracts include
interest credited to policyholder account balances and benefit claims
incurred during the period in excess of policyholder account balances.
j) INCOME TAXES
Income taxes have been provided using the liability method in
accordance with SFAS No. 109, "Accounting for Income Taxes." Under this
method, deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that
likely will be in effect when the differences are expected to reverse.
The measurement of deferred tax assets is reduced by a valuation
allowance if, based upon the available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized.
10
<PAGE> 127
3. INVESTMENTS AND INVESTMENT INCOME
a) FIXED-MATURITY SECURITIES
At December 31, 1999 and 1998, all fixed-maturity securities have been
classified as available-for-sale and reported at fair value. The
amortized cost and fair value are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED COST UNREALIZED UNREALIZED FAIR VALUE
AS AT DECEMBER 31, GAINS LOSSES
($ thousands) 1999 1998 1999 1998 1999 1998 1999 1998
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. government $ 21,147 $ 11,018 $ - $ 591 $ (536) $(15) $ 20,611 $ 11,594
Corporate securities 92,532 99,696 122 3,321 (2,486) (35) 90,168 102,982
Mortgage-backed securities 8,278 6,680 27 125 (184) (21) 8,121 6,784
Foreign governments 2,414 2,449 23 111 - - 2,437 2,560
States/political subdivisions 1,058 1,059 - 109 (94) - 964 1,168
-------------------------------------------------------------------------------------------------------------------
TOTAL FIXED-MATURITY SECURITIES $125,429 $120,902 $172 $4,257 $(3,300) $(71) $122,301 $125,088
-------------------------------------------------------------------------------------------------------------------
</TABLE>
Proceeds from sales of fixed-maturity securities during 1999 were
$60,595 (1998, $17,985; 1997, $45,217). Gross gains of $301 and gross
losses of $523 were realized on those sales (1998, $715 and $2; 1997,
$772 and $6, respectively).
The contractual maturities of fixed-maturity securities at December 31,
1999 are shown below. Expected maturities may differ from contractual
maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties. Corporate
requirements and investment strategies may result in the sale of
investments before maturity.
<TABLE>
<CAPTION>
($ thousands) AMORTIZED COST FAIR VALUE
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
FIXED-MATURITY SECURITIES
One year or less $ 38,416 $ 38,507
Greater than 1; up to 5 years 46,376 45,790
Greater than 5; up to 10 years 15,922 15,114
Due after 10 years 16,437 14,769
Mortgage-backed securities 8,278 8,121
-----------------------------------------------------------------------------------------------------------
TOTAL FIXED-MATURITY SECURITIES $125,429 $122,301
-----------------------------------------------------------------------------------------------------------
</TABLE>
Fixed-maturity securities with a fair value of $438 and $410 at December
31, 1999 and 1998, respectively, were on deposit with or in custody
accounts on behalf of New York State Insurance Department to satisfy
regulatory requirements.
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<PAGE> 128
3. INVESTMENTS AND INVESTMENT INCOME (CONTINUED)
b) INVESTMENT INCOME
Income by type of investment was as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1999 1998 1997
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed-maturity securities $ 8,147 $8,338 $6,342
Other invested assets 7,476 830 -
Short-term investments 1,443 762 477
-----------------------------------------------------------------------------------------------------------
Gross investment income 17,066 9,930 6,819
-----------------------------------------------------------------------------------------------------------
Investment expenses
(122) (144) (102)
-----------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $16,944 $9,786 $6,717
===========================================================================================================
</TABLE>
The Company includes income earned from its investment in MSS in the
other invested assets category. Income earned from the Company's
investment in MSS was $7,453 and $813 for the years ended December 31,
1999 and 1998, respectively.
4. COMPREHENSIVE INCOME
Total comprehensive income was as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1999 1998 1997
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET INCOME $ 5,738 $1,073 $ 586
-----------------------------------------------------------------------------------------------------------
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX (BENEFITS):
Unrealized holding (losses) gains arising
during the year (4,038) 820 1,176
Less:
Reclassification adjustment for realized
(losses) gains included in net income (142) 463 500
-----------------------------------------------------------------------------------------------------------
Other comprehensive (loss) income (3,896) 357 676
-----------------------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME $ 1,842 $1,430 $1,262
===========================================================================================================
</TABLE>
Other comprehensive (loss) income is reported net of income taxes
(benefit) of $(1,088), $192, and $364 for 1999, 1998 and 1997,
respectively.
12
<PAGE> 129
5. DEFERRED ACQUISITION COSTS
The components of the change in DAC were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1999 1998 1997
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1 $36,831 $28,364 $20,208
Capitalization 15,604 14,515 11,684
Amortization (4,287) (4,849) (3,393)
Effect of net unrealized losses (gains)
on securities available-for-sale 2,328 (1,199) (135)
----------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31 $50,476 $36,831 $28,364
==========================================================================================================
</TABLE>
6. INCOME TAXES
The components of income tax expense were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
($ thousands) 1999 1998 1997
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current expense (benefit) $1,238 $ (577) $339
Deferred expense (benefit) 1,857 1,153 (29)
----------------------------------------------------------------------------------------------------------
TOTAL EXPENSE $3,095 $ 576 $310
==========================================================================================================
</TABLE>
Components of the Company's net deferred tax liability are as follows:
<TABLE>
<CAPTION>
AS AT DECEMBER 31
($ thousands) 1999 1998
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
DEFERRED TAX ASSETS:
Reserves $ 708 $ 389
Unrealized losses on securities available-for-sale 963 --
-----------------------------------------------------------------------------------------------------------
Gross deferred tax assets 1,671 389
Valuation allowance (657) --
-----------------------------------------------------------------------------------------------------------
Net deferred tax assets 1,014 389
-----------------------------------------------------------------------------------------------------------
DEFERRED TAX LIABILITIES:
Deferred acquisition costs (5,147) (2,203)
Unrealized gains on securities available-for-sale - (784)
Other (249) (1,017)
-----------------------------------------------------------------------------------------------------------
Total deferred tax liabilities (5,396) (4,004)
-----------------------------------------------------------------------------------------------------------
NET DEFERRED TAX LIABILITY $(4,382) $(3,615)
===========================================================================================================
</TABLE>
As of December 31, 1999, the Company had $3,128 of unrealized capital
losses in its available for sale portfolio. Under federal tax law,
utilization of these capital losses, when realized, is limited to use
as an offset against capital gains. The Company believes that it is
more likely than not that it will be unable to realize the benefit of
the full deferred tax asset related to the net unrealized capital
losses. The Company has therefore established a valuation allowance for
13
<PAGE> 130
6. INCOME TAXES (CONTINUED)
the amount in excess of the available capital gains. The Company
believes that it will realize the full benefit of its remaining
deferred tax assets.
The Company participates as a member of the MWLH-affiliated group,
filing a consolidated federal income tax return. The Company files a
separate New York State return. The method of allocation between the
companies is subject to a tax-sharing agreement under which the tax
liability is allocated to each member of the group on a pro rata basis
based on the relationship that the member's tax liability (computed on
a separate-return basis) bears to the tax liability of the consolidated
group. The tax charge to the Company will not be more than the Company
would have paid on a separate-return basis. Settlement of taxes are
made through an increase or reduction to the payable to parent,
subsidiaries and affiliates, which is settled periodically.
The Company received a refund of $719 in 1999 and made tax payments of
$1,121 and $531 in 1998 and 1997, respectively.
7. SHAREHOLDER'S EQUITY
The Company has one class of common stock:
<TABLE>
<CAPTION>
AS AT DECEMBER 31:
($ thousands) 1999 1998
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
AUTHORIZED, ISSUED AND OUTSTANDING:
2,000,000 Common shares, par value $1 $2,000 $2,000
-----------------------------------------------------------------------------------------------------------
</TABLE>
The net assets of the Company available for the Parent as dividends are
generally limited to, and cannot be made except from, earned
statutory-basis profits. The maximum amount of dividends that may be
paid by life insurance companies without prior approval of the New York
Insurance Commissioner is subject to restrictions relating to statutory
surplus and net gain from operations on a statutory basis.
The aggregate statutory capital and surplus of the Company at December
31, 1999 was $63,470 (1998, $62,881). The aggregate statutory net
income (loss) of the Company for the year ended 1999 was $932; (1998,
($5,678); 1997, ($1,562)). State regulatory authorities prescribe
statutory accounting practices that differ in certain respects from
generally accepted accounting principles followed by stock life
insurance companies. The significant differences relate to investments,
deferred acquisition costs, deferred income taxes, nonadmitted asset
balances, and reserves.
8. REINSURANCE
The Company has entered into reinsurance agreements with various
reinsurers to reinsure any face amounts in excess of $100 for its
traditional nonparticipating insurance products. The Company remains
liable for amounts ceded in the event that reinsurers do not meet their
obligations. To date, there have been no reinsurance recoveries under
these agreements.
14
<PAGE> 131
9. RELATED-PARTY TRANSACTIONS
The Company utilized various services provided by MLI and affiliates,
such as legal, personnel, investment accounting and other corporate
services. Prior to October 1, 1997, MLI and MNA charged the Company for
those services. In the first nine months of 1997, MLI and MNA charged
the Company approximately $623. Effective October 1, 1997, pursuant to
a revised plan of operations, all intercompany expenses were billed
through MLI. For the years ended December 31, 1999 and 1998, and for
the fourth quarter of 1997, MLI billed the Company expenses of $6,391,
$4,685 and $869, respectively. At December 31, 1999 and 1998, the
Company had a net liability to MLI of $2,664 and $2,372, respectively,
for those services.
For the nine months ended September 30, 1997, the Company paid
underwriting commissions to NASL Financial of $8,421. NASL Financial
then reimbursed MWL for promotional agent services. Effective October
1, 1997, MSS replaced NASL Financial as underwriter. Thereafter, all
commissions were paid to MSS by the Company, and MWL marketing services
expenses were paid by MLI, who was then reimbursed by the Company.
Underwriting commissions and marketing services expense of $19,575 and
$17,838 was incurred during the years ended December 31, 1999 and 1998,
respectively, and $4,431 was incurred during the fourth quarter of
1997. At December 31, 1999 and 1998, the Company had a net liability of
$1,161 and $799, respectively, for these services.
The financial statements have been prepared from the records maintained
by the Company and may not necessarily be indicative of the financial
conditions or results of operations that would have occurred if the
Company had been operated as an unaffiliated corporation (see also
Notes 1, 6, 11 and 14 for additional related-party transactions).
10. BORROWED MONEY
The Company has an unsecured line of credit with State Street Bank and
Trust in the amount of $5,000, bearing interest at the bank's money
market rate plus 50 basis points. There were no outstanding advances
under the line of credit at December 31, 1999 and 1998.
11. EMPLOYEE BENEFITS
a) RETIREMENT PLAN
Prior to July 1, 1998, the Company and MNA participated in a
noncontributory defined benefit pension plan (the Nalaco Plan)
sponsored by MLI, covering its employees. A similar plan (the Manulife
Plan) also existed for ManUSA. Both plans provided pension benefits
based on length of service and final average earnings. Vested benefits
are fully funded; current pension costs are funded as they accrue.
15
<PAGE> 132
11. EMPLOYEE BENEFITS (CONTINUED)
a) RETIREMENT PLAN (CONTINUED)
Effective July 1, 1998, the Nalaco Plan was merged into the Manulife
Plan as approved by the Board of Directors of MLI. The merged plan was
then restated as a cash balance pension plan entitled "The Manulife
Financial U.S. Cash Balance Pension Plan" (Cash Balance Plan).
Participants in the two prior plans ceased accruing benefits under the
old plan effective June 30, 1998, and became participants in the Cash
Balance Plan on July 1, 1998. Also effective July 1, ManUSA became the
sponsor of the Cash Balance Plan. Each participant who was a
participant in one of the prior plans received an opening account
balance equal to the present value of their June 30, 1998 accrued
benefit under the prior plan, using Pension Benefit Guaranty
Corporation rates. Future contribution credits under the Cash Balance
Plan vary by service, and interest credits are a function of interest
rate levels. Pension benefits are provided to participants after three
years of vesting service, and the normal retirement benefit is
actuarially equivalent to the cash balance account at normal retirement
date. The normal form of payment under the Cash Balance Plan is a life
annuity, with various optional forms available.
Actuarial valuation of accumulated plan benefits are based on projected
salaries and best estimates of investment yields on plan assets,
mortality of participants, employee termination and ages at retirement.
Pension costs relating to current service and amortization of
experience gains and losses are amortized to income over the estimated
average remaining service lives of the participants. No pension expense
was recognized by the plan sponsor in 1999, 1998 or 1997 because the
plan was subject to the full funding limitation under the Internal
Revenue Code.
At December 31, 1999, the projected benefit obligation based on an
assumed interest rate of 7.5% was $47,124. The fair value of plan
assets invested in ManUSA's general fund deposit administration
insurance contracts was $86,777.
b) 401(k) PLAN
Prior to July 1, 1998, the Company also participated in a defined
contribution plan sponsored by MNA, the North American Security Life
401(k) Savings Plan (NASL 401k), which was subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA). A similar
plan, the Manulife Financial 401K Savings Plan, also existed for
employees of ManUSA. These two plans were effectively merged on July 1,
1998 into one defined contribution plan sponsored by ManUSA, as
approved by the Board of Directors on March 26, 1998. The costs
associated with the Plan were charged to the Company and were not
material.
c) OTHER POSTRETIREMENT BENEFIT PLAN
In addition to the retirement plan, the Company participates in the
other postretirement benefit plan of MNA which provides retiree medical
and life insurance benefits to those who have attained age 55 with ten
or more years of service. The plan provides the medical coverage for
retirees and spouses under age 65. When the retirees or the covered
dependents reach age 65, Medicare provides primary coverage and the
plan provides secondary coverage. There is no contribution for post-age
65 coverage, and no contributions are required for retirees for life
insurance coverage. The plan is unfunded.
16
<PAGE> 133
11. EMPLOYEE BENEFITS (CONTINUED)
c) OTHER POSTRETIREMENT BENEFIT PLAN (CONTINUED)
The other postretirement benefit cost of the Company, which includes
the expected cost of post-retirement benefits for newly eligible
employees and for vested employees, interest cost, and gains and losses
arising from differences between actuarial assumptions and actual
experience is accounted for by the plan sponsor, ManUSA.
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values and estimated fair values of the Company's
financial instruments at December 31 were as follows:
<TABLE>
<CAPTION>
1999 1998
-----------------------------------------------------------------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Fixed-maturity securities $122,301 $122,301 $125,088 $125,088
Policy loans 930 930 552 552
Short-term investments 41,311 41,311 10,032 10,032
Cash and cash equivalents 7,093 7,093 5,946 5,946
Liabilities:
Policyholder liabilities and
accruals 130,808 126,272 94,492 91,113
</TABLE>
The following methods and assumptions were used by the Company in
estimating the fair value disclosures for financial instruments:
Fixed-Maturity Securities: Fair values for fixed-maturity securities
are obtained from an independent pricing service.
Policy Loans: Carrying values approximate fair values.
Short-Term Investment and Cash and Cash Equivalents: Carrying values
approximate fair values.
Policyholder Liabilities and Accruals: Fair values of the Company's
liabilities under contracts not involving significant mortality risk
(deferred annuities) are estimated to be the cash surrender value or
the cost the Company would incur to extinguish the liability.
13. LEASES
The Company leases office space under various operating lease
agreements which will expire between 2000 and 2005. For the years ended
December 31, 1999, 1998 and 1997 the Company incurred rent expense of
$166, $95 and $84, respectively.
17
<PAGE> 134
13. LEASES (CONTINUED)
The minimum lease payments associated with the office space under the
operating lease agreements are as follows:
YEAR ENDED MINIMUM LEASE PAYMENTS
---------------------------------------------
2000 $ 247
2001 231
2002 235
2003 221
2004 and after 346
---------------------------------------------
Total $1,280
---------------------------------------------
14. CAPITAL MAINTENANCE AGREEMENT
Pursuant to a capital maintenance agreement and subject to regulatory
approval, MLI has agreed to maintain the Company's statutory capital
and surplus at a specified level and to ensure that sufficient funds
are available for the timely payment of contractual obligations.
15. CONTINGENCIES
The Company is subject to various lawsuits that have arisen in the
course of its business. Contingent liabilities arising from litigation,
income taxes and other matters are not considered material in relation
to the financial position of the Company.
18
