1
As filed with the Securities and Exchange Commission on OCTOBER 10, 2001
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
SEPARATE ACCOUNT N OF
THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
(Exact name of Registrant)
THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
(Name of Depositor)
38500 Woodward Avenue
Bloomfield Hills, Michigan 48304
(Address of DEPOSITOR'S Principal Executive Offices)
James D. Gallagher
Secretary and General Counsel
The Manufacturers Life Insurance Company (U.S.A.)
73 Tremont Street
Boston, MA 02108
(Name and Address of Agent for Service)
Copy to:
J. Sumner Jones, Esq.
Jones & Blouch L.L.P.
1025 Thomas Jefferson Street, NW
Washington, DC 20007
TITLE OF SECURITIES BEING REGISTERED: VARIABLE LIFE INSURANCE CONTRACTS
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED PUBLIC OFFERING: AS SOON AFTER THE
EFFECTIVE DATE OF THIS REGISTRATION STATEMENT AS IS PRACTICABLE.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
2
SEPARATE ACCOUNT N of
The Manufacturers Life Insurance Company (U.S.A.)
Registration Statement on Form S-6
Cross-Reference Sheet
FORM
N-8B-2
ITEM NO. CAPTION IN PROSPECTUS
1 Cover Page; General Information About Manufacturers (Separate Account
N)
2 Cover Page; General Information About Manufacturers (Manufacturers
(U.S.A.))
3 *
4 Other Information (Distribution of the Policy)
5 General Information About Manufacturers Life (Separate Account N)
6 General Information About Manufacturers (Separate Account N)
7 *
8 *
9 Other Information (Litigation)
10 Death Benefits; Premium Payments; Charges and Deductions; Policy Value;
Policy Loans; Policy Surrender and Partial Withdrawals; Lapse and
Reinstatement; Other Provisions of the Policy; Other Information
11 General Information About Manufacturers (Manufacturers Investment
Trust)
12 General Information About Manufacturers (Manufacturers Investment
Trust)
13 Charges and Deductions
14 Issuing A Policy; Other Information (Responsibilities Assumed By
Manufacturers Life)
15 Issuing A Policy
16 GENERAL INFORMATION ABOUT MANUFACTURERS (MANUFACTURERS INVESTMENT
TRUST)
17 Policy Surrender and Partial Withdrawals
18 General Information About Manufacturers
19 Other Information (Reports to Policyholders; Responsibilities Assumed
By Manufacturers Life)
20 *
21 Policy Loans
22 *
23 **
3
24 Other Provisions of the Policy
25 General Information About Manufacturers (Manufacturers U.S.A.)
26 *
27 GENERAL INFORMATION ABOUT MANUFACTURERS (MANUFACTURERS U.S.A.);
OTHER INFORMATION (DISTRIBUTION OF THE POLICY)
28 Other Information (Officers and Directors)
29 General Information About Manufacturers (Manufacturers U.S.A.)
30 *
31 *
32 *
33 *
34 *
35 **
36 *
37 *
38 Other Information (Distribution of the Policies; Responsibilities of
Manufacturers Life)
39 Other Information (Distribution of the Policies)
40 *
41 OTHER INFORMATION (DISTRIBUTION OF THE POLICY)
42 OTHER INFORMATION (DISTRIBUTION OF THE POLICY)
43 *
44 Policy Values --Determination of Policy Value; Units and Unit Values)
45 *
46 Policy Surrender and Partial Withdrawals; Other Information -- Payment
of Proceeds)
47 General Information About Manufacturers (Manufacturers Investment
Trust)
48 *
49 *
50 General Information About Manufacturers
51 Issuing a Policy; Death Benefits; Premium Payments; Charges and
Deductions; Policy Value; Policy Loans; Policy Surrender and Partial
Withdrawals; Lapse and Reinstatement; Other Policy Provisions
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52 Other Information (Substitution of Portfolio Shares)
53 GENERAL INFORMATION ABOUT MANUFACTURERS LIFE (SEPARATE ACCOUNT N); TAX
TREATMENT OF THE POLICY
54 *
55 *
56 *
57 *
58 *
59 Financial Statements
* Omitted since answer is negative or item is not applicable.
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PART I
INFORMATION [REQUIRED] IN PROSPECTUS
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PROSPECTUS
SEPARATE ACCOUNT N OF THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
CORPORATE VUL
A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
This prospectus describes Corporate VUL, a flexible premium variable universal
life insurance policy (the "Policy") offered by The Manufacturers Life Insurance
Company (U.S.A.) (the "Company," "Manufacturers U.S.A.," "we" or "us").
The Policy is designed for use by corporations and other employers to provide
life insurance and to fund other employee benefits.
The Policy is designed to provide lifetime insurance protection together with
flexibility as to the timing and amount of premium payments, the investments
underlying the Policy Value, and the amount of insurance coverage.
The Policy provides for:
(1) a Net Cash Surrender Value that can be obtained by surrendering the Policy;
(2) policy loans and partial withdrawals; and
(3) an insurance benefit payable at the life insured's death.
The Policy will remain in force so long as the Net Cash Surrender Value is
sufficient to cover charges assessed against the Policy.
Policy Value may be accumulated on a fixed basis or vary with the investment
performance of the sub-accounts of Manufacturers U.S.A.'s Separate Account N
(the "Separate Account") to which the policyholder allocates net premiums. The
assets of each sub-account will be used to purchase shares of a particular
investment portfolio (a "Portfolio") of Manufacturers Investment Trust (the
"Trust"). The accompanying prospectus for the Trust, and the corresponding
statement of additional information, describe the investment objectives of the
Portfolios. The Portfolios available for allocation of net premiums are shown in
the Policy Summary under "Investment Options and Fees". Other sub-accounts and
Portfolios may be added in the future.
BECAUSE OF THE SUBSTANTIAL NATURE OF THE SURRENDER CHARGES, THE POLICY IS NOT
SUITABLE FOR SHORT-TERM INVESTMENT PURPOSES. ALSO, PROSPECTIVE PURCHASERS SHOULD
NOTE THAT IT MAY NOT BE ADVISABLE TO PURCHASE A POLICY AS A REPLACEMENT FOR
EXISTING INSURANCE.
The Securities and Exchange Commission (the "SEC") maintains a web site
(http://www.sec.gov) that contains material incorporated by reference and other
information regarding registrants that file electronically with the SEC.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. IT IS
VALID ONLY WHEN ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE TRUST.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Manufacturers Life Insurance Company (U.S.A.)
38500 Woodward Avenue
Bloomfield Hills, Michigan 48304
THE DATE OF THIS PROSPECTUS IS JANUARY 1, 2002.
Coli 01/2002
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B-1
TABLE OF CONTENTS
COLI 01/2002.............................................................2
Definitions..............................................................5
Policy Summary...........................................................6
General...............................................................6
Death Benefits........................................................6
Premiums..............................................................6
Policy Value..........................................................6
Policy Loans......................................................... 7
Surrender and Partial Withdrawals.....................................7
Lapse and Reinstatement...............................................7
Charges and Deductions................................................7
Investment Options and Investment Advisers............................7
Table of Charges and Deductions.......................................8
Table of Investment Management Fees and Expenses......................9
MANAGEMENT OTHER TOTAL TRUST..........................................
Table of Investment Options and Investment Subadvisers...............11
General Information about Manufacturers.................................13
Manufacturers U.S.A.................................................13
The Separate Account.................................................13
The Trust............................................................13
Investment Objectives of the Portfolios..............................14
Issuing A Policy........................................................18
Use of the Policy....................................................18
Requirements.........................................................18
Temporary Insurance Agreement........................................19
Underwriting.........................................................19
Right to Examine the Policy..........................................19
Death Benefits..........................................................20
Life Insurance Qualification.........................................20
Death Benefit Options................................................21
Changing the Face Amount.............................................22
Premium Payments........................................................22
Initial Premiums.....................................................22
Subsequent Premiums..................................................23
Maximum Premium Limitation...........................................23
Premium Allocation...................................................23
Charges and Deductions..................................................23
Amount Deducted from Premiums........................................23
Surrender Charges....................................................23
Monthly Charges......................................................24
Charges Assessed Against Assets of the Investment Accounts...........25
Charges for Transfers................................................25
Reduction in Charges.................................................25
Company Tax Considerations...........................................26
Policy Value............................................................26
Determination of the Policy Value....................................26
Units and Unit Values................................................26
Transfers of Policy Value............................................27
Policy Loans............................................................27
Maximum Loan.........................................................28
Effect of Policy Loan................................................28
Interest Charged on Policy Loans.....................................28
Loan Account.........................................................28
Policy Surrender and Partial Withdrawals................................28
Policy Surrender.....................................................28
Partial Withdrawals..................................................29
Lapse and Reinstatement.................................................29
Lapse................................................................29
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Reinstatement........................................................29
The General Account.....................................................29
Guaranteed Interest Account..........................................30
Other Provisions of the Policy..........................................30
Policyholder Rights..................................................30
Beneficiary..........................................................30
Incontestability.................................................... 31
Misstatement of Age or Sex...........................................31
Suicide Exclusion....................................................31
Supplementary Benefits...............................................31
Tax Treatment of the Policy.............................................31
Life Insurance Qualification.........................................31
Tax Treatment of Policy Benefits.....................................32
Alternate Minimum Tax................................................35
Income Tax Reporting.................................................35
Other Information.......................................................35
Payment of Proceeds..................................................35
Reports to Policyholders.............................................36
Distribution of the Policies.........................................36
Responsibilities of Manufacturers Life...............................36
Voting Rights........................................................36
Substitution of Portfolio Shares.....................................37
Records and Accounts.................................................37
State Regulations....................................................37
Litigation...........................................................37
Independent Auditors.................................................37
Further Information..................................................37
Officers and Directors...............................................
Death Benefit Schedule with Flexible Term Insurance Option..............39
Appendix A..............................................................
Illustrations...........................................................
Assumptions..........................................................
Appendix B - Audited Financial Statements...........................
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, THE PROSPECTUS OF MANUFACTURERS INVESTMENT TRUST, OR THE
STATEMENT OF ADDITIONAL INFORMATION OF MANUFACTURERS INVESTMENT TRUST.
THE PURPOSE OF THIS VARIABLE LIFE INSURANCE POLICY IS TO PROVIDE INSURANCE
PROTECTION FOR THE BENEFICIARY NAMED THEREIN. NO CLAIM IS MADE THAT THIS
VARIABLE LIFE INSURANCE POLICY IS IN ANY WAY SIMILAR OR COMPARABLE TO A
SYSTEMATIC INVESTMENT PLAN OF A MUTUAL FUND.
Examine this prospectus carefully. The Policy Summary will briefly describe the
Policy. More detailed information will be found further in the prospectus.
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DEFINITIONS
Attained Age
is the Issue Age of the life insured plus the number of completed Policy Years.
Business Day
is any day that the New York Stock Exchange is open for business. A Business Day
ends at the close of regularly scheduled trading of the New York Stock Exchange
(currently 4:00 p.m. Eastern Time) on that day.
Case
is a group of Policies covering individuals with common employment or other
relationship, independent of the Policies.
Cash Surrender Value
is the Policy Value less the Surrender Charge and any outstanding monthly
deductions due.
Due Proof of Death
Due Proof of Death is required upon the death of the insured. One of the
following must be received at the Service Office:
(a) A certified copy of a death certificate;
(b) A certified copy of a decree of a court of competent jurisdiction as to
the finding of death; or
(c) Any other proof satisfactory to the Company.
Effective Date
is the date when the first monthly deductions are taken. The Effective Date is
the later of:
(a) the date the Company approves issuance of the Policy; and
(b) the date the Company receives at least the initial premium.
Guaranteed Interest Account
is that part of the Policy Value which reflects the value the policyholder has
in the general account of the Company.
Home Office
is the main office of the Company.
Investment Account
is that part of the Policy Value which reflects the value the policyholder has
in one of the sub-accounts of the Separate Account.
Issue Age
is the life insured's age on the birthday closer to the Policy Date.
Issue Date
is the date the Company issued the Policy. The Issue Date is also the date from
which the Suicide and Incontestability provisions of the Policy are measured.
Loan Account
is that part of the Policy Value which reflects policy loans and interest
credited to the Policy Value in connection with such loans.
Net Cash Surrender Value
is the Cash Surrender Value less the Policy Debt.
Net Policy Value
is the Policy Value less the value in the Loan Account.
Net Premium
5
10
is the premium paid less the Premium Load.
Policy Anniversary
is the same date each year as the Policy Date.
Policy Date
is the date coverage takes effect under the Policy, provided the Company
receives the minimum initial premium at its Service Office, and the date from
which charges for the first monthly deduction are calculated and from which
Policy Years, Policy Months, and Policy Anniversaries are determined.
Policy Debt
as of any date is the aggregate amount of policy loans, including borrowed and
accrued interest, less any loan repayments.
Policy Year
is a period beginning on a Policy Anniversary and ending on the day immediately
preceding the next Policy Anniversary
Policy Value
is the sum of the values in the Loan Account, the Guaranteed Interest Account,
and the Investment Accounts.
Service Office
is McCamish Systems, L.L.C., 6425 Powers Ferry Road, Atlanta, Georgia 30339, or
such other service center or address as the Company may hereafter specify to the
policyholder by written notice.
Target Premium
is an amount used to measure the Surrender Charge under a Policy. The Target
Premium is based on the Face Amount, as well as the insured's age at issue and
sex, and is set forth in the Policy.
POLICY SUMMARY
GENERAL
The Policy is a flexible premium variable universal life insurance policy. The
following summary is intended to provide a general description of the most
important features of the Policy. It is not comprehensive and is qualified in
its entirety by the more detailed information contained in this prospectus.
Unless otherwise indicated or required by the context, the discussion throughout
this prospectus assumes that the Policy has not gone into default, there is no
outstanding Policy Debt, and the death benefit is not determined by the minimum
death benefit percentage. The Policy's provisions may vary in some states and
the terms of your Policy and any endorsement or rider, supersede the disclosure
in this prospectus.
DEATH BENEFITS
The Policy provides a death benefit in the event of the death of the life
insured. There are two death benefit options. Under Option 1 the death benefit
is the Face Amount of the Policy at the date of death or, if greater, the
Minimum Death Benefit. Under Option 2 the death benefit is the Face Amount plus
the Policy Value of the Policy at the date of death or, if greater, the Minimum
Death Benefit. The policyholder may change the death benefit option and increase
or decrease the Face Amount.
PREMIUMS
Premium payments may be made at any time and in any amount, subject to certain
limitations as described under "Premium Payments - Subsequent Premiums." Net
Premiums will be allocated, according to the policyholder's instructions, to one
or more of the general account and the sub-accounts of Manufacturers U.S.A.'s
Separate Account N. Allocation instructions may be changed at any time and
transfers among the accounts may be made.
POLICY VALUE
The Policy has a Policy Value reflecting premiums paid, certain charges for
expenses and cost of insurance, and the investment performance of the accounts
to which the policyholder has allocated premiums. The policyholder may obtain a
portion of the Policy Value by taking a policy loan or a partial withdrawal, or
by full surrender of the Policy.
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POLICY LOANS
The policyholder may borrow against the Cash Surrender Value of the Policy. Loan
interest at a rate of 5.00% is due and payable in arrears on each Policy
Anniversary. All outstanding Policy Debt will be deducted from proceeds payable
at the insured's death, or upon surrender.
SURRENDER AND PARTIAL WITHDRAWALS
The policyholder may make a partial withdrawal of the Policy Value. A partial
withdrawal may result in a reduction in the Face Amount of the Policy and an
assessment of a portion of the surrender charges to which the Policy is subject.
A Policy may be surrendered for its Net Cash Surrender Value at any time while
the life insured is living. The Net Cash Surrender Value is equal to the Policy
Value less Surrender Charges and outstanding monthly deductions due minus the
Policy Debt.
LAPSE AND REINSTATEMENT
A Policy will lapse (and terminate without value) when the Net Cash Surrender
Value is insufficient to pay the next monthly deduction and a grace period of 61
days expires without an adequate payment being made by the policyholder.
The Policies, therefore, differ in two important respects from conventional life
insurance policies. First, the failure to make planned premium payments will not
itself cause a Policy to lapse. Second, a Policy can lapse even if planned
premiums have been paid.
A lapsed Policy may be reinstated by the policyholder at any time within the
five year period following lapse if the Policy was not surrendered for its Net
Cash Surrender Value. Evidence of insurability is required, along with a certain
amount of premium as described under "Reinstatement."
CHARGES AND DEDUCTIONS
The Company assesses certain charges and deductions in connection with the
Policy. These include charges assessed monthly for cost of insurance and
administration expenses, charges assessed daily against the assets invested in
the Investment Account, and loads deducted from premiums paid. These charges are
summarized in the Table of Charges and Deductions.
INVESTMENT OPTIONS AND INVESTMENT ADVISERS
Net Premiums may be allocated to the general account or to one or more of the
sub-accounts of Manufacturers U.S.A.'s Separate Account N. Each of the
sub-accounts invests in the shares of one of the Portfolios of the Trust. The
Trust receives investment advisory services from Manufacturers Securities
Services, LLC ("MSS"). MSS is a registered investment adviser under the
Investment Advisers Act of 1940. The Trust also employs subadvisers. The Table
of Investment Options and Investment Subadvisers shows the subadvisers that
provide investment subadvisory services to the indicated Portfolios.
Allocating net premiums 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 net premiums 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 the Policy 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. The policyowner should discuss
this matter with his or her financial adviser.
INVESTMENT MANAGEMENT FEES AND EXPENSES
The Separate Account purchases shares of the Portfolios at net asset value. The
net asset value of those shares reflects investment management fees and certain
expenses. The fees and expenses of each Portfolio for the Trust's last fiscal
year are shown in the Table of Investment Management Fees and Expenses. These
fees and expenses are described in detail in the accompanying Trust prospectus
to which reference should be made.
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TABLE OF CHARGES AND DEDUCTIONS
Amount Deducted from Premiums 2.00% of the premium paid.
Surrender Charges The Company will assess a Surrender Charge
if, during the first 10 years following the
Policy Date or the effective date of a Face
Amount increase, the Policy is surrendered
or lapses. The Surrender Charge is expressed
as a percentage of total premiums paid from
the Effective Date to the Policy Year shown.
However, premiums paid in any year in excess
of the Target Premium, and premiums paid
after the fifth Policy Year are not included
in the determination of total premiums paid.
Percentages are as follows:
Policy Year Percentage Policy Year Percentage
1 10.00% 6 5.00%
2 7.50% 7 4.00%
3 5.00% 8 3.00%
4 5.00% 9 2.00%
5 5.00% 10+ 0.00%
The Target Premium is based on the Face
Amount, as well as the insured's age at
issue and sex, and is set forth in the
Policy.
A portion of the Surrender Charge may be
assessed on a partial withdrawal or a
decrease in the Face Amount. See "Charges
and Deductions - Surrender Charges on a
Partial Withdrawal" and "Death Benefits -
Changing the Face Amount - Surrender Charges
Assessed on a Decrease."
Monthly Deductions The following charges will be deducted from
Net Policy Value:
An administration charge of $12.
The cost of insurance charge.
Any additional charges for supplementary
benefits.
Investment Account Charges A mortality and expense risk charge is
assessed daily against the value of the
Investment Account assets. This charge
varies by Policy Year as follows:
Annual Mortality and
Policy Years Expense Risk Charge
1-10 0.75%
11+ 0.40%
Loan Charges A fixed loan interest rate of 5.00%.
Interest credited to amounts in the Loan
Account will be equal to the 5.00% rate
charged to the loan less the following Loan
Spread:
Policy Years Loan Spread
1-10 1.00%
11-20 0.50%
21+ 0.25%
Transfer Charge A charge of $25 per transfer for each
transfer in excess of 12 in a Policy Year.
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TABLE OF INVESTMENT MANAGEMENT FEES AND EXPENSES
TRUST ANNUAL EXPENSES
(as a percentage of Trust average net assets for the fiscal year ended
December 31, 2000)*
TOTAL TRUST
OTHER EXPENSES ANNUAL EXPENSES
MANAGEMENT (AFTER EXPENSE (AFTER EXPENSE
TRUST PORTFOLIO FEES CLASS A RULE 12B-1FEE REIMBURSEMENT) REIMBURSEMENT)
Internet Technologies...... 1.000% 0.150% 0.130% 1.280%(E)
Pacific Rim Emerging Markets 0.700% 0.150% 0.180% 1.030%
Telecommunications......... 0.950% 0.150% 0.130% 1.230%(A)
Science & Technology....... 0.916%(F) 0.150% 0.040% 1.106%
International Small Cap.... 0.914% 0.150% 0.440% 1.504%
Health Sciences............ 0.950%(F) 0.150% 0.130% 1.230%(A)
Aggressive Growth.......... 0.850% 0.150% 0.070% 1.070%
Emerging Small Company..... 0.896% 0.150% 0.050% 1.096%
Small Company Blend........ 0.900% 0.150% 0.140% 1.190%
Dynamic Growth............. 0.850% 0.150% 0.070% 1.070%(E)
Mid Cap Growth............. 0.850% 0.150% 0.280% 1.280%(A)
Mid Cap Opportunities...... 0.850% 0.150% 0.230% 1.230%(A)
Mid Cap Stock.............. 0.775% 0.150% 0.075% 1.000%
All Cap Growth............. 0.778% 0.150% 0.050% 0.978%
Financial Services......... 0.800% 0.150% 0.090% 1.040%(A)
Overseas................... 0.800% 0.150% 0.200% 1.150%
International Stock........ 0.850%(F) 0.150% 0.180% 1.180%
International Value........ 0.850% 0.150% 0.180% 1.180%
Capital Appreciation....... 0.750% 0.150% 0.500%(H) 1.400%(H)
Strategic Opportunities ... 0.700% 0.150% 0.050% 0.900%
Quantitative Mid Cap....... 0.650% 0.150% 0.070% 0.870%(A)
Global Equity.............. 0.750% 0.150% 0.120% 1.020%
Strategic Growth........... 0.750% 0.150% 0.120% 1.020%(A)
Growth..................... 0.683% 0.150% 0.050% 0.883%
Large Cap Growth........... 0.750% 0.150% 0.065% 0.965%
All Cap Value.............. 0.800% 0.150% 0.140% 1.090%(A)
Capital Opportunities...... 0.750% 0.150% 0.160% 1.060%(A)
Quantitative Equity........ 0.596% 0.150% 0.050% 0.796%
Blue Chip Growth........... 0.713%(F) 0.150% 0.035% .898%
Utilities.................. 0.750% 0.150% 0.270% 1.170%(A)
Real Estate Securities..... 0.650%(A) 0.150% 0.060% 0.860%
Small Company Value........ 0.900%(F) 0.150% 0.190% 1.240%
Mid Cap Value.............. 0.800% 0.150% 0.160% 1.110%(A)
Value...................... 0.650% 0.150% 0.060% 0.860%
Tactical Allocation....... 0.750% 0.150% 0.430% 1.330%(E)
Equity Index (I)........... 0.250% 0.000% 0.150% 0.400%
Fundamental Value.......... 0.800% 0.150% 0.130% 1.080%(A)
Growth & Income............ 0.524% 0.150% 0.040% 0.714%
U.S. Large Cap Value....... 0.725% 0.150% 0.055% 0.930%
Equity-Income.............. 0.725%(F) 0.150% 0.035% 0.910%
Income & Value............. 0.650% 0.150% 0.060% 0.860%
Balanced................... 0.554%(A) 0.150% 0.060% 0.764%
High Yield................. 0.625% 0.150% 0.065% 0.840%
Strategic Bond............. 0.625% 0.150% 0.095% 0.870%
Global Bond................ 0.600% 0.150% 0.200% 0.950%
Total Return............... 0.600% 0.150% 0.065% 0.815%
Investment Quality Bond.... 0.500% 0.150% 0.080% 0.730%
Diversified Bond........... 0.600% 0.150% 0.060% 0.810%
U.S. Government Securities. 0.550% 0.150% 0.070% 0.770%
Money Market............... 0.350% 0.150% 0.040% 0.540%
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Small Cap Index............... 0.375% 0.150% 0.075%(G) 0.600%(E)
International Index.......... 0.400% 0.150% 0.050%(G) 0.600%(E)
Mid Cap Index................ 0.375% 0.150% 0.075%(G) 0.600%(E)
Total Stock Market Index..... 0.375% 0.150% 0.075%(G) 0.600%(E)
500 Index.................... 0.375% 0.150% 0.025%(G) 0.550%(E)
Lifestyle Aggressive 1000(D). 0.070% 0.000% 1.089%(B) 1.159%(C)
Lifestyle Growth 820(D)...... 0.055% 0.000% 0.971%(B) 1.026%(C)
Lifestyle Balanced 640(D).... 0.055% 0.000% 0.893%(B) 0.948%(C)
Lifestyle Moderate 460(D).... 0.064% 0.000% 0.821%(B) 0.885%(C)
Lifestyle Conservative 280(D) 0.075% 0.000% 0.790%(B) 0.865%(C)
*EFFECTIVE JANUARY 1, 2002, THE TRUST IMPLEMENTED A CLASS A RULE 12B-1
PLAN WHILE SIMULTANEOUSLY REDUCING ITS ADVISORY FEES AND IMPLEMENTING
ADVISORY FEE BREAKPOINTS. THE TRUST ANNUAL EXPENSE CHART REFLECTS THESE
CHANGES.
(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 noted below. (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.)
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 the Lifestyle
Trust (absent reimbursement) are equal to or less than 0.075%, then no
expenses will be reimbursed by the Adviser.
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, 2000) as noted in the chart below:
TRUST MANAGEMENT RULE 12B-1 OTHER TOTAL TRUST
TRUST PORTFOLIO FEES FEES EXPENSES ANNUAL EXPENSES
Lifestyle Aggressive 1000 0.070% 0.000% 1.114% 1.184%
Lifestyle Growth 820...... 0.055% 0.000% 0.981% 1.036%
Lifestyle Balanced 640.... 0.055% 0.000% 0.903% 0.958%
Lifestyle Moderate 460.... 0.064% 0.000% 0.846% 0.910%
Lifestyle Conservative 280 0.075% 0.000% 0.822% 0.897%
(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, 2000 (commencement of
operations) to December 31, 2000.
(F) Effective June 1, 2000, the Adviser voluntarily agreed to
waive a portion of its advisory fee for the Science &
Technology Trust, Health Sciences Trust, Small Company Value
Trust, the Blue Chip Growth Trust and the Equity-Income Trust.
The fee reduction is based on the combined asset level of all
five portfolios and the International Stock Trust. Once the
combined assets exceed specified amounts, the fee reduction is
increased. The percentage fee reduction for each asset level
is as follows:
FEE REDUCTION
(AS A PERCENTAGE OF
COMBINED ASSET LEVELS THE ADVISORY FEE)
First $750 million 0.00%
Between $750 million and $1.5 billion 2.50%
Between $1.5 billion and $3.0 billion 3.75%
The fee reductions are applied to the advisory fees of each of the
five portfolios. This voluntary fee waiver may be terminated at any
time by the adviser. As of February 28, 2001, the combined asset
level for all four portfolios was
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approximately $4.469 billion resulting in a fee reduction of 3.065%.
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.
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
0.097% and 0.650%, respectively, for the International Index
Trust, 0.125% and 0.650%, respectively, for the Small Cap Index
Trust, and 0.164% and 0.690%, respectively, for the Mid Cap Index
Trust and 0.090% and 0.620%, 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, 2001 for the 500 Index Trust. The expense reimbursement may
be terminated at any time by MSS.
H Annualized - For period November 1, 2000 (commencement of
operations) to December 31, 2000. For all portfolios except the
Lifestyle Trusts, the Adviser reduces its advisory fee or
reimburses the portfolio if the total of all expenses (excluding
advisory fees, taxes, portfolio brokerage commissions, interest,
litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of the portfolio's
business) exceed certain annual rates. In the case of the Capital
Appreciation Trust, the Adviser reimbursed the portfolio for
certain expenses for the year ended December 31, 2000. If such
expense reimbursement were not in effect, it is estimated that
"Other Expenses" and "Total Trust Annual Expenses" would be
0.700% and 1.600%, respectively. These voluntary expense
reimbursements may be terminated at any time.
I The Equity Index Trust is available only for Policies issued for
applications dated prior to May 1, 2000. Under the Advisory
Agreement, MSS has agreed to reduce its advisory fee or reimburse
the Equity Index Trust if the total of all expenses (excluding
advisory fees, taxes, portfolio brokerage commissions, interest,
litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of the Trust's
business) exceeds an annual rate of 0.15% of the average annual
net assets of the Equity Index Trust. The expense limitation may
be terminated at any time by MSS. If this expense reimbursement
had not been in effect, Total Trust Annual Expenses would have
been 0.55%, and Other Expenses would have been 0.30%, of the
average annual net assets of the Equity Index Trust.
J For any policyowner who has allocated premiums to the 500 Index
Trust, the Company will waive contract charges by an amount
sufficient so that the total trust annual expenses for the 500
Index Trust will not exceed 0.40% per annum on an annualized
basis. This waiver may be terminated at any time by the Company.
TABLE OF INVESTMENT OPTIONS AND INVESTMENT SUBADVISERS
The Trust currently has twenty-five subadvisers who manage all of the
portfolios, one of which subadvisers is Manufacturers Adviser Corporation
("MAC"). Both MSS and MAC are affiliates of ours.
SUBADVISER PORTFOLIO
A I M Capital Management, Inc. All Cap Growth Trust
Aggressive Growth Trust
Brinson Advisors, Inc. Tactical Allocation Trust
Capital Guardian Trust Company Small Company Blend Trust
U.S. Large Cap Value Trust
Income & Value Trust
Diversified Bond Trust
Cohen & Steers Capital Management, Inc. Real Estate Securities Trust
Davis Select Advisers, L.P. Financial Services Trust
Fundamental Value Trust
The Dreyfus Corporation All Cap Value Trust
Fidelity Management & Research Company Strategic Opportunities Trust (A)
Large Cap Growth Trust
Overseas Trust
Founders Asset Management LLC International Small Cap Trust
Franklin Advisers, Inc. Emerging Small Company Trust
INVESCO Funds Group, Inc. Telecommunications Trust
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Mid Cap Growth Trust
Janus Capital Corporation Dynamic Growth Trust
Jennison Associates LLC Capital Appreciation Trust
Lord, Abbett & Co. Mid Cap Value Trust
Manufacturers Adviser Corporation Pacific Rim Emerging Markets Trust
Quantitative Equity Trust
Quantitative Mid Cap Trust
Equity Index Trust(C)
Money Market Trust
Index Trusts
Lifestyle Trusts(B)
Balanced Trust
Massachusetts Financial Services Company Strategic Growth Trust
Capital Opportunities Trust
Utilities Trust
Miller Anderson & Sherrerd, LLP Value Trust
High Yield Trust
Munder Capital Management Internet Technologies Trust
Pacific Investment Management Company Global Bond Trust
Total Return Trust
Putnam Investment Management, L.L.C. Mid Cap Opportunities Trust
Global Equity Trust
Salomon Brothers Asset Management Inc U.S. Government Securities Trust
Strategic Bond Trust
SSgA Funds Management, Inc. Growth Trust
Lifestyle Trusts(B)
T. Rowe Price Associates, Inc. Science & Technology Trust
Small Company Value Trust
Health Sciences Trust
Blue Chip Growth Trust
Equity-Income Trust
T. Rowe Price International, Inc. International Stock Trust
Templeton Investment Counsel, Inc. International Value Trust
Wellington Management Company, LLP Growth & Income Trust
Investment Quality Bond Trust
Mid Cap Stock Trust
(A) Formerly, the Mid Cap Blend Trust.
(B) SSgA Funds Management, Inc. provides subadvisory consulting
services to Manufacturers Adviser Corporation regarding management of
the Lifestyle Trusts.
(C) The Equity Index Trust is available for policies issued to clients
(corporations and other entities) who as of May 1, 2000 have at least
one currently effective variable life insurance policy with the
Company.
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GENERAL INFORMATION ABOUT MANUFACTURERS
MANUFACTURERS U.S.A.
We are a stock life insurance company incorporated in Maine on August 20, 1955
by a special act of the Maine legislature and redomesticated under the laws of
Michigan. We are a licensed life insurance company in the District of Columbia
and all states of the United States except New York. 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. The
Manufacturers Life Insurance Company is one of the largest life insurance
companies in North America and ranks among the 60 largest life insurers in the
world as measured by assets. However, neither Manufacturers Life nor any of its
affiliated companies guarantees the investment performance of the Separate
Account.
RATINGS
Manufacturers Life and Manufacturers U.S.A. have received the following ratings
from independent rating agencies:
Standard and Poor's Insurance Ratings Service: AA+ (for financial strength)
A.M.Best Company: A++ (for financial strength)
Fitch: AAA (for financial strength)
Moody's Investors Service, Inc.: Aa2 (for financial strength)
These ratings, which are current as of the date of this prospectus and are
subject to change, are assigned to Manufacturers U.S.A. as a measure of the
Company's ability to honor the death benefit 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 SEPARATE ACCOUNT
The manufacturers life Insurance Company of America ("ManAmerica") established
its Separate Account Four (the "Separate Account") on March 17, 1987 as a
separate account under Pennsylvania law. Since December 9, 1992, it has been
operated under Michigan law. On January 1, 2002, ManAmerica transferred
substantially all of its assets and liabilities to Manufacturers U.S.A. As a
result of this transaction, Manufacturers U.S.A. became the owner of all of
ManAmerica's assets, including the assets of the separate account and assumed
all of ManAmerica's obligations including those under the Policies. The ultimate
parent of both ManAmerica and Manufacturers U.S.A. is Manulife Financial
Corporation ("MFC"). The Separate Account holds assets that are segregated from
all of Manufacturers U.S.A.'s other assets. The Separate Account is currently
used only to support variable life insurance policies.
ASSETS OF THE SEPARATE ACCOUNT
Manufacturers U.S.A. is the legal owner of the assets in the Separate Account.
The income, gains, and losses of the Separate Account, whether or not realized,
are, in accordance with applicable contracts, credited to or charged against the
Account without regard to the other income, gains, or losses of Manufacturers
U.S.A.. Manufacturers U.S.A. will at all times maintain assets in the Separate
Account with a total market value at least equal to the reserves and other
liabilities relating to variable benefits under all policies participating in
the Separate Account. These assets may not be charged with liabilities which
arise from any other business Manufacturers U.S.A. conducts. However, all
obligations under the variable life insurance policies are general corporate
obligations of Manufacturers U.S.A.
REGISTRATION
The Separate Account is registered with the SEC under the Investment Company Act
of 1940 ("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, rather than in a
portfolio of unspecified securities. Registration under the 1940 Act does not
involve any supervision by the SEC of the management or investment policies or
practices of the Separate Account. For state law purposes the Separate Account
is treated as a part or division of Manufacturers U.S.A.
THE TRUST
Each sub-account of the Separate Account will purchase shares only of a
particular Portfolio of the Trust. The Trust is registered under the 1940 Act as
an open-end management investment company. Each of the Trust portfolios, except
the Lifestyle Trusts and the Equity Index Trust, are subject to a Rule 12b-1 fee
of .15% of a portfolio's Class A net assets. The Separate Account
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will purchase and redeem shares of the Portfolios at net asset value. Shares
will be redeemed to the extent necessary for Manufacturers U.S.A. to provide
benefits under the Policies, to transfer assets from one sub-account to another
or to the general account as requested by policyholders, and for other purposes
not inconsistent with the Policies. Any dividend or capital gain distribution
received from a Portfolio with respect to the policies will be reinvested
immediately at net asset value in shares of that Portfolio and retained as
assets of the corresponding sub-account.
The Trust shares are issued to fund benefits under both variable annuity
contracts and variable life insurance policies issued by the Company or life
insurance companies affiliated with the Company. Manufacturers U.S.A. will also
purchase shares through its general account for certain limited purposes
including initial portfolio seed money. For a description of the procedures for
handling potential conflicts of interest arising from the funding of such
benefits see the accompanying Trust prospectus.
INVESTMENT OBJECTIVES OF THE PORTFOLIOS
The investment objectives and certain policies of the Portfolios currently
available to policyowners through corresponding sub-accounts are set forth
below. There is, of course, no assurance that these objectives will be met. A
full description of the Trust, its investment objectives, policies and
restrictions, the risks associated therewith, its expenses, and other aspects of
its operation is contained in the accompanying Trust prospectus, which should be
read together with this prospectus.
ELIGIBLE PORTFOLIOS
The Portfolios of the Trust available under the Policies are as follows:
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 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 TELECOMMUNICATIONS TRUST seeks capital appreciation (with earning income as
a secondary objective) by investing, under normal market conditions, primarily
in equity securities of companies engaged in the telecommunications sector, that
is, in the design, development, manufacture, distribution or sale of
communications services and equipment and companies that are involved in
supplying equipment or services to such companies.
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 and technology.
Current income is incidental to the portfolio's objective.
The INTERNATIONAL SMALL CAP TRUST seeks capital appreciation by investing
primarily in securities issued by foreign companies which have total market
capitalization or annual revenues of $1 billion or less. These securities may
represent companies in both established and emerging economies throughout the
world.
The HEALTH SCIENCES TRUST seeks long-term capital appreciation by investing,
under normal market conditions, at least 65% of the portfolio's total assets in
common stocks of companies engaged in the research, development, production, or
distribution of products or services related to health care, medicine, or the
life sciences (collectively termed "health sciences").
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
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.
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The MID CAP GROWTH TRUST seeks capital appreciation by investing primarily in
common stocks of mid-sized companies - those with market capitalizations between
$2 billion and $15 billion at the time of purchase.
The MID CAP OPPORTUNITIES TRUST seeks capital appreciation by investing, under
normal market conditions, primarily in common stocks and other equity securities
of U.S. companies, with a focus on growth stocks of mid size 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 seeks long-term capital appreciation by investing the
portfolio's asset,s 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 prospects for future growth.
The FINANCIAL SERVICES TRUST seeks growth of capital by investing primarily in
common stocks of financial companies. During normal market conditions, at least
65% of the portfolio's assets are invested in companies that are principally
engaged in financial services. A company is "principally engaged" in financial
services if it owns financial services-related assets constituting at least 50%
of the value of its total assets, or if at least 50% of its revenues are derived
from its provision of financial services.
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.
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 emerging markets.
The CAPITAL APPRECIATION TRUST seeks long-term capital growth by investing at
least 65% of its total assets in equity-related securities of companies that
exceed $1 billion in market capitalization and that the subadviser believes have
above-average growth prospectus. These companies are generally medium-to-large
capitalization companies.
The STRATEGIC OPPORTUNITIES TRUST (formerly, 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 QUANTITATIVE MID CAP TRUST seeks long-term growth of capital by investing,
under normal market conditions, at least 65% of the portfolio's total assets in
U.S. mid-cap stocks, convertible preferred stocks, convertible bonds and
warrants.
The GLOBAL EQUITY TRUST seeks long-term capital appreciation by investing, under
normal market conditions, at least 65% of the portfolio's total assets in equity
securities of companies in at least three different countries, including the
U.S. The portfolio may invest in companies of any size but emphasizes mid- and
large-capitalization companies that the subadviser believes are undervalued.
The STRATEGIC GROWTH TRUST seeks capital appreciation by investing, under normal
market conditions, at least 65% of the portfolio's total assets in common stocks
and related securities (such as preferred stocks, bonds, warrants or rights
convertible into stock and depositary receipts for these securities) of
companies which the subadviser believes offer superior prospects for growth.
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 ALL CAP VALUE TRUST seeks capital appreciation by investing, under normal
market conditions, at least 65% of the portfolio's total assets in the stocks of
value companies of any size.
The CAPITAL OPPORTUNITIES TRUST seeks capital appreciation by investing, under
normal market conditions, at least 65% of the portfolio's total assets in common
stocks and related securities, such as preferred stock, convertible securities
and depositary receipts. The portfolio focuses on companies which the subadviser
believes have favorable growth prospects and attractive valuations based on
current and expected earnings or cash flow.
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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 UTILITIES TRUST seeks capital growth and current income (income above that
available from a portfolio invested entirely in equity securities) by investing,
under normal market conditions, at least 65% of the portfolio's total assets in
equity and debt securities of domestic and foreign companies in the utilities
industry.
The REAL ESTATE SECURITIES TRUST seeks to achieve a combination of long-term
capital appreciation and current income by investing, under normal market
conditions, substantially (at least 65% of total assets) in equity securities of
real estate companies, such as real estate investment trusts ("REITs").
The SMALL COMPANY VALUE TRUST seeks long-term growth of capital by investing,
under normal market conditions, primarily in small companies whose common stocks
are believed to be undervalued. Normally, the portfolio will invest at least 65%
of its total assets in companies with a market capitalization that do not exceed
the maximum market capitalization of any security in the Russell 2000 Index at
the time of purchase.
The MID CAP VALUE TRUST seeks capital appreciation by investing, under normal
market conditions, at least 65% of the portfolios total assets in equity
securities which the subadviser believes to be undervalued in the marketplace.
Normally, at least 65% of the portfolio's total assets will consist of
investments in mid-sized companies, with market capitalizations of roughly $500
million to $10 billion.
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 EQUITY INDEX TRUST seeks to achieve investment results which approximate the
aggregate total return of publicly traded common stocks which are included in
the Standard & Poor's 500 Composite Stock Price Index. (The Equity Index Trust
is available only for policies issued for applications dated prior to May 1,
2000).
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 FUNDAMENTAL VALUE TRUST seeks growth of capital by investing, under normal
market conditions, primarily in common stocks of U.S. companies with market
capitalizations of at least $5 billion that the subadviser believes are
undervalued. The portfolio may also invest in U.S. companies with smaller
capitalizations.
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.
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
the portfolio's assets in a balanced portfolio of (i) equity securities and (ii)
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.
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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 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.*
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
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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 and Poor's 500(R)" and
"Standard and 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.
ISSUING A POLICY
USE OF THE POLICY
The Policy is designed to provide to corporations and other entities life
insurance coverage on their employees or other persons in whose lives they have
an insurable interest. The Policy may be owned individually or by a corporation,
trust, association, or similar entity. The Policy may be used for such purposes
as funding non-qualified executive deferred compensation or salary continuation
plans, as a means of funding death benefit liabilities incurred under executive
retirement plans, or as a source for funding cash flow obligations under such
plans.
REQUIREMENTS
To purchase a Policy, an applicant must submit a completed application. A Policy
will not be issued until the underwriting process has been completed to the
Company's satisfaction.
Policies may be issued on a basis which does not distinguish between the
insured's sex and/or smoking status, with prior approval from the Company. A
Policy will only be issued on the lives of insureds from ages 20 through 80.
Each Policy is issued with a Policy Date, an Effective Date and an Issue Date.
The Policy Date is the date coverage takes effect under the Policy and the date
from which the first monthly deductions are calculated and from which Policy
Years, Policy Months and Policy Anniversaries are determined. The Effective Date
is the date the Company approves issuance of the Policy and the date the Company
receives at least the minimum initial premium. The Issue Date is the date from
which the Suicide and Incontestability provisions of the Policy are measured.
If an application accepted by the Company is not accompanied by a check for the
initial premium and no request to backdate the Policy has been made:
(i) the Policy Date and the Effective Date will be the date the Company
receives the check at its service office, and
(ii) the Issue Date will be the date the Company issues the Policy.
The initial premium must be received within 60 days after the Issue Date, and
the life insured must be in good health on the date the initial premium is
received. If the premium is not paid or if the application is rejected, the
Policy will be canceled and any partial premiums paid will be returned to the
applicant.
Regardless of whether or not a policy is backdated, Net Premiums received prior
to the Effective Date of a Policy will be credited with interest from the date
of receipt at the rate of return then being earned on amounts allocated to the
Money Market Trust. As of the Effective Date, the premiums paid plus interest
credited, net of the premium load, will be allocated among the Investment
Accounts and/or Guaranteed Interest Account in accordance with the
policyholder's instructions unless such amount is first allocated to the Money
Market Trust for the duration of the Right to Examine period.
MINIMUM INITIAL FACE AMOUNT
Manufacturers U.S.A. will issue a Policy only if it has a Face Amount of at
least $50,000.
BACKDATING A POLICY
Under limited circumstances, the Company may backdate a Policy, upon request, by
assigning a Policy Date earlier than the date the application is signed.
However, in no event will a Policy be backdated earlier than the earliest date
allowed by state law, which is
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generally three months to one year prior to the date of application for the
Policy. Monthly deductions will be made for the period the Policy Date is
backdated.
TEMPORARY INSURANCE AGREEMENT
In accordance with the Company's underwriting practices, temporary insurance
coverage may be provided under the terms of a Temporary Insurance Agreement.
Generally, temporary life insurance may not exceed $1,000,000 and may not be in
effect for more than 90 days. This temporary insurance coverage will be issued
on a conditional receipt basis, which means that any benefits under such
temporary coverage will only be paid if the life insured meets the Company's
usual and customary underwriting standards for the coverage applied for.
UNDERWRITING
The policies are offered on three underwriting bases, which vary by the amount
of information required of the prospective insured. These bases are: short form
underwriting, simplified underwriting, and regular (medical) underwriting. These
are described in more detail below. Regardless of which underwriting procedure
is used, the acceptance of an application is subject to the Company's
underwriting rules, and the Company reserves the right to request additional
information or to reject an application for any reason.
SHORT FORM UNDERWRITING
Generally, the availability of short form underwriting depends on the
characteristics of the Case, such as the number of lives to be insured and the
amounts of insurance. Under Short Form underwriting, a proposed Insured is
required to answer qualifying questions in the application, but is not required
to submit to a medical or paramedical exam. Short form underwriting is generally
available only up to issue age 65.
SIMPLIFIED UNDERWRITING
Like short form underwriting the availability of simplified underwriting depends
on the characteristics of the Case. Under Simplified Underwriting, the proposed
insured is required to respond satisfactorily to certain health questions in the
application. Medical records, such as "Attending Physician's Statements" (APS's)
are generally required. In some instances, a blood test may also be required.
REGULAR UNDERWRITING
If the requirements for short form or simplified underwriting are not satisfied,
the Company will require satisfactory evidence of insurability. This may include
medical exams and other information. Persons failing to meet standard
underwriting classification may be eligible for a Policy with an additional
rating assigned to it.
RIGHT TO EXAMINE THE POLICY
A Policy may be returned for a refund within 10 days after it is received. Some
states provide a longer period of time to exercise this right. The Policy will
indicate if the policyholder has a longer time. The Policy can be mailed or
delivered to the Manufacturers U.S.A. agent who sold it or to the Service
Office. Immediately on such delivery or mailing, the Policy shall be deemed void
from the beginning. Within seven days after receipt of the returned Policy at
its Service Office, the Company will refund to the policyholder an amount equal
to:
(a) the difference between payments made and amounts allocated to the Separate
Account and the Guaranteed Interest Account; plus
(b) the value of the amount allocated to the Separate Account and the
Guaranteed Interest Account as of the date the returned Policy is received
by the Company; minus
(c) any partial withdrawals made and policy loans taken.
Some state laws require the refund of all premiums paid, without adjustment for
the investment gains and losses of the Separate Account. In these states, all
Net Premiums will be allocated to the Money Market Trust during the right to
examine period, and the policyholder will receive a refund of all payments made
less any partial withdrawals and policy loans taken.
If a policyholder requests an increase in face amount which results in new
surrender charges, he or she will have the same rights as described above to
cancel the increase. If cancelled, the Policy Value and the surrender charges
will be recalculated to the amounts they would have been had the increase not
taken place. A policyholder may request a refund of all or any portion of
premiums paid during the free look period, and the Policy Value and the
surrender charges will be recalculated to the amounts they would have been had
the premiums not been paid.
The Company reserves the right to delay the refund of any premium paid by check
until the check has cleared.
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DEATH BENEFITS
If the Policy is in force at the time of the life insured's death, the Company
will pay an insurance benefit upon receipt of Due Proof of Death. The amount
payable will be the death benefit under the selected death benefit option, plus
any amounts payable under any supplementary benefits added to the Policy, less
the Policy Debt and any outstanding monthly deductions due. The insurance
benefit will be paid in one lump sum unless another form of settlement option is
agreed to by the beneficiary and the Company. If the insurance benefit is paid
in one sum, the Company will pay interest from the date of death to the date of
payment. If the life insured should die after the Company's receipt of a request
for surrender, no insurance benefit will be payable, and the Company will pay
only the Net Cash Surrender Value.
LIFE INSURANCE QUALIFICATION
A Policy must satisfy either of two tests to qualify as a life insurance
contract for purposes of Section 7702 of the Internal Revenue Code of 1986, as
amended. At the time of application, the policyholder may choose a Policy which
uses either the Cash Value Accumulation Test or the Guideline Premium Test. The
test cannot be changed once the Policy is issued.
CASH VALUE ACCUMULATION TEST
Under the Cash Value Accumulation Test ("CVA Test"), the Policy's death benefit
must be at least equal to the Minimum Death Benefit. There is no restriction on
the amount of premiums that may be paid into a Policy. However, the Company
reserves the right to require satisfactory evidence of insurability before
accepting any premium that would increase the net amount at risk under the
Policy.
GUIDELINE PREMIUM TEST
The Guideline Premium Test ("GLP Test") restricts the maximum premiums that may
be paid into a life insurance policy for a given death benefit. The policy's
death benefit must also be at least equal to the Minimum Death Benefit
(described below). However, the Minimum Death Benefit Percentages are lower than
those required under the Cash Value Accumulation Test.
Changes to the Policy may affect the maximum amount of premiums, such as:
A change in the policy's Face Amount.
A change in the death benefit option.
Partial Withdrawals.
Any of the above changes could cause the total premiums paid to exceed the new
maximum limit. In this situation, the Company will require the policyholder to
take a partial withdrawal. In addition, these changes could reduce the future
premium limitations.
MINIMUM DEATH BENEFIT
Both the Cash Value Accumulation Test ("CVA Test") and the Guideline Premium
Test ("GLP Test") require a life insurance policy to meet minimum ratios of life
insurance coverage to policy value. This is achieved by ensuring that the death
benefit is at all times at least equal to the Minimum Death Benefit. The Minimum
Death Benefit on any date is defined as the Policy Value on that date times the
applicable Minimum Death Benefit Percentage for the Attained Age of the life
insured. The Minimum Death Benefit Percentages for each test are shown in the
Table of Minimum Death Benefit Percentages.
TABLE OF MINIMUM DEATH BENEFIT PERCENTAGES
GLP TEST CVA TEST GLP TEST CVA TEST
AGE PERCENT MALE FEMALE AGE PERCENT MALE FEMALE
20 250% 653% 779% 60 130% 192% 221%
21 250% 634% 754% 61 128% 187% 214%
22 250% 615% 730% 62 126% 182% 208%
23 250% 597% 706% 63 124% 178% 203%
24 250% 580% 684% 64 122% 174% 197%
25 250% 562% 662% 65 120% 170% 192%
26 250% 545% 640% 66 119% 166% 187%
27 250% 528% 619% 67 118% 162% 182%
28 250% 511% 599% 68 117% 159% 177%
29 250% 494% 580% 69 116% 155% 173%
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GLP TEST CVA TEST GLP TEST CVA TEST
AGE PERCENT MALE FEMALE AGE PERCENT MALE FEMALE
30 250% 479% 561% 70 115% 152% 169%
31 250% 463% 542% 71 113% 149% 164%
32 250% 448% 525% 72 111% 146% 160%
33 250% 433% 507% 73 109% 144% 156%
34 250% 419% 491% 74 107% 141% 153%
35 250% 406% 475% 75 105% 139% 149%
36 250% 392% 459% 76 105% 136% 146%
37 250% 380% 444% 77 105% 134% 143%
38 250% 367% 430% 78 105% 132% 140%
39 250% 356% 416% 79 105% 130% 138%
40 250% 344% 403% 80 105% 129% 135%
41 243% 333% 390% 81 105% 127% 133%
42 236% 323% 378% 82 105% 125% 130%
43 229% 313% 366% 83 105% 124% 128%
44 222% 303% 355% 84 105% 122% 126%
45 215% 294% 344% 85 105% 121% 124%
46 209% 285% 333% 86 105% 120% 123%
47 203% 277% 323% 87 105% 119% 121%
48 197% 268% 313% 88 105% 118% 119%
49 191% 260% 304% 89 105% 116% 118%
50 185% 253% 295% 90 105% 116% 117%
51 178% 245% 286% 91 104% 115% 115%
52 171% 238% 278% 92 103% 114% 114%
53 164% 232% 270% 93 102% 112% 113%
54 157% 225% 262% 94 101% 111% 112%
55 150% 219% 254% 95 100% 110% 110%
56 146% 213% 247% 96 100% 109% 109%
57 142% 207% 240% 97 100% 107% 107%
58 138% 202% 233% 98 100% 106% 106%
59 134% 197% 227% 99 100% 105% 105%
DEATH BENEFIT OPTIONS
There are two death benefit options, described below.
DEATH BENEFIT OPTION 1
Under Option 1 the death benefit is the Face Amount of the Policy at the date of
death or, if greater, the Minimum Death Benefit.
DEATH BENEFIT OPTION 2
Under Option 2 the death benefit is the Face Amount plus the Policy Value of the
Policy at the date of death or, if greater, the Minimum Death Benefit.
CHANGING THE DEATH BENEFIT OPTION
The death benefit option may be changed on the first day of any Policy month.
The change will occur on the first day of the next Policy month which is 30 days
after a written request for a change is received at the Service Office. The
Company reserves the right to limit a request for a change if the change would
cause the Policy to fail to qualify as life insurance for tax purposes.
A change in the death benefit option will result in a change in the Policy's
Face Amount, in order to avoid any change in the amount of the death benefit, as
follows:
CHANGE FROM OPTION 1 TO OPTION 2
The new Face Amount will be equal to the Face Amount prior to the change minus
the Policy Value on the date of the change. The Policy will not be assessed a
Surrender Charge for a reduction in Face Amount solely due to a change in the
death benefit option.
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CHANGE FROM OPTION 2 TO OPTION 1
The new Face Amount will be equal to the Face Amount prior to the change plus
the Policy Value on the date of the change. No new Surrender Charges will apply
to an increase in Face Amount solely due to a change in the death benefit
option.
CHANGING THE FACE AMOUNT
Subject to the limitations stated in this Prospectus, a policyholder may, upon
written request, increase or decrease the Face Amount of the Policy. The Company
reserves the right to limit a change in Face Amount so as to prevent the Policy
from failing to qualify as life insurance for tax purposes.
INCREASE IN FACE AMOUNT
Increases in Face Amount are subject to satisfactory evidence of insurability.
An increase will become effective at the beginning of the Policy month following
the date Manufacturers U.S.A. approves the requested increase. The Company
reserves the right to refuse a requested increase if the life insured's Attained
Age at the effective date of the increase would be greater than the maximum
Issue Age for new Policies at that time.
NEW SURRENDER CHARGES FOR AN INCREASE
An increase in Face Amount will result in the Policy's being subject to new
Surrender Charges. The new Surrender Charges will be computed as if a new Policy
were being purchased for the increase in Face Amount. For purposes of
determining the new Surrender Charges a portion of the premiums paid on or
subsequent to the increase will be deemed to be premiums attributable to the
increase. The portion attributable to the increase in any Policy Year will be
the amount of premiums in excess of the sum of the Target Premiums for the (i)
initial Face Amount during the first five Policy Years and (ii) all prior
increases that are in effect at the time of the increase in Face Amount and have
been in effect for less than five years.
INCREASE WITH PRIOR DECREASES
If, at the time of the increase, there have been prior decreases in Face Amount,
these prior decreases will be restored first. There will be no new Surrender
Charges associated with these increases, since Surrender Charges will have
already been assessed at the time of the prior decrease.
DECREASE IN FACE AMOUNT
A written request from a policyholder for a decrease in the Face Amount must be
received by Manufacturers U.S.A. at least 30 days prior to the first day of a
policy month for the change to take effect on the first day of that policy
month. If there have been previous increases in Face Amount, the decrease will
be applied to the most recent increase first and thereafter to the next most
recent increases successively.
SURRENDER CHARGES ASSESSED ON A DECREASE
A portion of a Policy's Surrender Charge will be deducted from the Policy Value
on a decrease in Face Amount. Since Surrender Charges are determined separately
for the initial Face Amount and each Face Amount Increase, the portion of the
Surrender Charges to be deducted with respect to each level of insurance
coverage will be determined separately. The portion of the Surrender Charge
deducted with respect to a level of coverage will be equal to:
(a) the amount of the decrease; divided by
(b) the amount of the coverage prior to the decrease; multiplied by
(c) the Surrender Charge for the coverage.
The charges will be allocated among the Investment Accounts and the Guaranteed
Interest Account in the same proportion as the Policy Value in each bears to the
Net Policy Value.
Whenever a portion of the surrender charges are deducted as a result of a
decrease in Face Amount, the Policy's remaining surrender charges will be
reduced in the same proportion that the surrender charge deducted bears to the
total surrender charge immediately prior to the decrease in Face Amount.
PREMIUM PAYMENTS
INITIAL PREMIUMS
No premiums will be accepted prior to receipt of a completed application by the
Company. All premiums received prior to the Effective Date of the Policy will be
held in the general account and credited with interest from the date of receipt
at the rate of return then being earned on amounts allocated to the Money Market
Trust.
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On the Effective Date, the Net Premiums paid plus interest credited will be
allocated among the Investment Accounts or the Guaranteed Interest Account in
accordance with the policyholder's instructions.
All Net Premiums received on or after the Effective Date will be allocated among
Investment Accounts or the Guaranteed Interest Account as of the date the
premiums were received at the Service Office. Monthly deductions are due on the
Policy Date and at the beginning of each policy month thereafter. However, if
due prior to the Effective Date, they will be taken on the Effective Date
instead of the dates they were due.
EXCEPTION FOR CERTAIN STATES
Some state laws require the refund of all premiums paid, without adjustment for
gains and losses of the Separate Account, if a Policy is returned during the
right to examine period. In these states, all Net Premiums will be allocated to
the Money Market Trust during the right to examine period. At the end of this
period, the Policy Value in the Money Market Trust will be allocated among the
Investment Accounts or the Guaranteed Interest Account. The Policy will state if
a return of premiums is required.
SUBSEQUENT PREMIUMS
After the payment of the initial premium, premiums may be paid at any time and
in any amount during the lifetime of the life insured, subject to the
limitations on premium amount described below.
A Policy will be issued with a planned premium, which is based on the amount of
premium the policyholder wishes to pay. Manufacturers U.S.A. will send notices
to the policyholder setting forth the planned premium at the payment interval
selected by the policyholder. However, the policyholder is under no obligation
to make the indicated payment.
Payment of premiums will not guarantee that the Policy will stay in force.
Conversely, failure to pay premiums will not necessarily cause the Policy to
lapse.
MAXIMUM PREMIUM LIMITATION
If the Policy is issued under the Guideline Premium Test, in no event may the
total of all premiums paid exceed the then-current maximum premium limitations
established by federal income tax law for a Policy to qualify as life insurance.
If, at any time, a premium is paid which would result in total premiums
exceeding the above maximum premium limitation, the Company will only accept
that portion of the premium which will make the total premiums equal to the
maximum. Any part of the premium in excess of that amount will be returned and
no further premiums will be accepted until allowed by the then-current maximum
premium limitation. The maximum premium limitations are set forth in the Policy.
PREMIUM ALLOCATION
Premiums may be allocated to either the Guaranteed Interest Account for
accumulation at a rate of interest equal to at least 4% or to one or more of the
Investment Accounts for investment in the Portfolio shares held by the
corresponding sub-account of the Separate Account. Allocations among the
Investment Accounts and the Guaranteed Interest Account are made as a percentage
of the premium. The percentage allocation to any account may be any number
between zero and 100, provided the total allocation equals 100. Alternatively, a
policyholder may specify the allocation of a specific premium payment in dollar
amounts, so long as the total allocation among the Investment Accounts equals
the Net Premium paid. A policyholder may change the way in which premiums are
allocated at any time without charge. The change will take effect on the date a
written request for change satisfactory to the Company is received at the
Service Office.
CHARGES AND DEDUCTIONS
AMOUNT DEDUCTED FROM PREMIUMS
Manufacturers U.S.A. deducts an amount from each premium payment equal to 2.00%
of the premium. Premium Loads are deducted in order to cover federal, state and
local taxes on premium payments.
SURRENDER CHARGES
The Company will deduct a Surrender Charge if during the first 10 years
following the Policy Date, or the effective date of a Face Amount increase:
the Policy is surrendered for its Net Cash Surrender Value,
a partial withdrawal is made in excess of the Free Partial Withdrawal
Amount,
the Face Amount is decreased, or
the Policy lapses.
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The Surrender Charge is expressed as a percentage of the total premiums paid
from the Effective Date. However, premiums paid in any Policy Year in excess of
the Target Premium, and premiums paid after the fifth Policy Year, are not
counted in the determination of total premiums paid. Therefore, the timing of
premium payments may affect the amount of the Surrender Charge. The percentages
vary by Policy Year as follows:
Policy Year Percentage
1 10.00%
2 7.50%
3 5.00%
4 5.00%
5 5.00%
6 5.00%
7 4.00%
8 3.00%
9 2.00%
10+ 0.00%
Although the percentages remain level or decrease as the Policy Year increases,
the total dollar amount of Surrender Charges may increase, as the total premium
paid increases.
The Target Premium is based on the Face Amount, as well as the insured's age at
issue and sex, and is set forth in the Policy.
Depending upon the circumstances, including the premiums paid under the Policy
and the performance of the underlying investment options, the Policy may have no
Cash Surrender Value and, therefore, the policyowner may receive no surrender
proceeds upon surrendering the Policy.
SURRENDER CHARGES ON A PARTIAL WITHDRAWAL
A partial withdrawal will result in the assessment of a portion of the Surrender
Charges to which the Policy is subject. The portion of the Surrender Charges
assessed will be based on the ratio of the amount of the withdrawal which
exceeds the Free Withdrawal Amount to the Net Cash Surrender Value of the Policy
immediately prior to the withdrawal. The Surrender Charges will be deducted on a
pro-rata basis from each of the Investment Accounts and the Guaranteed Interest
Account. If the amount in the accounts are not sufficient to pay the Surrender
Charges assessed, then the amount of the withdrawal will be reduced.
Whenever a portion of the surrender charges is deducted as a result of a partial
withdrawal, the Policy's remaining surrender charges will be reduced in the same
proportion that the surrender charge deducted bears to the total surrender
charge immediately before the partial withdrawal.
FREE WITHDRAWAL AMOUNT
The Free Withdrawal Amount is equal to 10% of the Net Cash Surrender Value at
the time of the withdrawal. In determining what, if any, portion of a partial
withdrawal is in excess of the Free Withdrawal Amount, all previous partial
withdrawals that have occurred in the current Policy Year are included.
MONTHLY CHARGES
On the Policy Date and at the beginning of each policy month, a deduction is due
from the Policy Value to cover certain charges in connection with the Policy
until the insured reaches age 100. Monthly deductions due prior to the Effective
Date will be taken on the Effective Date instead of the dates they were due. The
charges consist of:
(i) a monthly administration charge;
(ii) a monthly charge for the cost of insurance;
(iii) a monthly charge for any supplementary benefits added to the Policy.
Unless otherwise allowed by the Company and specified by the policyholder, the
monthly deduction will be allocated among the Investment Accounts and the
Guaranteed Interest Account in the same proportion as the Policy value in each
bears to the Net Policy Value.
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ADMINISTRATION CHARGE
This charge will be equal to $12 per policy month, which is guaranteed not to
increase. The charge is designed to cover certain administrative expenses
associated with the Policy, including maintaining policy records, collecting
premiums and processing death claims, surrender and withdrawal requests and
various changes permitted under a Policy.
COST OF INSURANCE CHARGE
The monthly charge for the cost of insurance is determined by multiplying the
applicable cost of insurance rate times the net amount at risk at the beginning
of each policy month. The cost of insurance rate and the net amount at risk are
determined separately for the initial Face Amount and for each increase in Face
Amount. In determining the net amount at risk, if there have been increases in
the Face Amount, the Policy Value shall first be considered a part of the
initial Face Amount. If the Policy Value exceeds the initial Face Amount, it
shall then be considered a part of the additional increases in Face Amount
resulting from the increases in the order of the increases.
The net amount at risk is equal to the greater of zero, or the result of
(a) minus (b) where:
(a) is the death benefit as of the first day of the month, divided by
1.0032737; and
(b) is the Policy Value as of the first day of the month.
The cost of insurance rate is based upon the following factors:
the issue age, sex (unless unisex rates are required by law) and smoking
status of the life insured;
the underwriting class of the Policy;
the number of years since issue or since an increase in Face Amount;
the amount of the Death Benefit in excess of the Face Amount; and
any extra charges for additional ratings indicated in the Policy.
Cost of insurance rates will generally increase with the life insured's age.
The cost of insurance rates reflect the Company's expectations as to future
mortality experience. The rates may be changed from time to time on a basis
which does not unfairly discriminate within the class of lives insured. In no
event will the cost of insurance rate exceed the guaranteed rates set forth in
the Policy except to the extent that an extra charge is imposed because of an
additional rating applicable to the life insured. The guaranteed rates are based
on the 1980 Commissioners Standard Ordinary Mortality Tables.
CHARGES FOR SUPPLEMENTARY BENEFITS
If the Policy includes Supplementary Benefits, a charge will be made applicable
to such Supplementary Benefit.
CHARGES ASSESSED AGAINST ASSETS OF THE INVESTMENT ACCOUNTS
A daily charge is assessed against amounts in the Investment Accounts equal to a
percentage of the value of the Investment Account. This charge is to compensate
the Company for the mortality and expense risks it assumes under the Policy. The
mortality risk assumed is that lives insured may live for a shorter period of
time than the Company estimated. The expense risk assumed is that expenses
incurred in issuing and administering the Policy will be greater than the
Company estimated. The Company will realize a gain from this charge to the
extent it is not needed to provide benefits and pay expenses under the Policy.
The charge varies by Policy Year as follows:
Equivalent Annual
Daily Mortality and Mortality and Expense
Policy Year Expense Risk Charge Risk Charge
1-10 0.000020625% 0.75%
11+ 0.000010981% 0.40%
CHARGES FOR TRANSFERS
A charge of $25 will be imposed on each transfer in excess of twelve in a policy
year.
REDUCTION IN CHARGES
The Policy is available for purchase by corporations and other groups or
sponsoring organizations for multiple life sales. Manufacturers U.S.A. reserves
the right to reduce any of the Policy's loads or charges on certain Cases where
it is expected that
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the amount or nature of such Cases will result in savings of sales,
underwriting, administrative or other costs. Eligibility for these reductions
and the amount of reductions will be determined by a number of factors,
including the number of lives to be insured, the total premiums expected to be
paid, total assets under management for the policyholder, the nature of the
relationship among the insured individuals, the purpose for which the policies
are being purchased, expected persistency of the individual policies, and any
other circumstances which Manufacturers U.S.A. believes to be relevant to the
expected reduction of its expenses. Some of these reductions may be guaranteed
and others may be subject to withdrawal or modification, on a uniform Case
basis. Reductions in charges will not be unfairly discriminatory to any
policyholders.
COMPANY TAX CONSIDERATIONS
At the present time, the Company makes no specific charge to the Separate
Account for any federal, state, or local taxes that the Company incurs that may
be attributable to such Account or to the Policies. The Company, however,
reserves the right in the future to make a charge for any such tax or other
economic burden resulting from the application of the tax laws that it
determines to be properly attributable to the Separate Account or to the
Policies.
POLICY VALUE
DETERMINATION OF THE POLICY VALUE
A Policy has a Policy Value, a portion of which is available to the policyholder
by making a policy loan or partial withdrawal, or upon surrender of the Policy.
The Policy Value may also affect the amount of the death benefit. The Policy
Value at any time is equal to the sum of the values in the Investment Accounts,
the Guaranteed Interest Account, and the Loan Account.
INVESTMENT ACCOUNTS
An Investment Account is established under each Policy for each sub-account of
the Separate Account to which net premiums or transfer amounts have been
allocated. Each Investment Account under a Policy measures the interest of the
Policy in the corresponding sub-account. The value of the Investment Account
established for a particular sub-account is equal to the number of units of that
sub-account credited to the Policy times the value of such units.
GUARANTEED INTEREST ACCOUNT
Amounts in the Guaranteed Interest Account do not vary with the investment
performance of any sub-account. Instead, these amounts are credited with
interest at a rate determined by Manufacturers U.S.A.. For a detailed
description of the Guaranteed Interest Account, see "The General Account -
Guaranteed Interest Account".
LOAN ACCOUNT
Amounts borrowed from the Policy are transferred to the Loan Account. Amounts in
the Loan Account do not vary with the investment performance of any sub-account.
Instead, these amounts are credited with interest at a rate which is equal to
the amount charged on the outstanding Policy Debt less the Loan Spread. For a
detailed description of the Loan Account, see "Policy Loans - Loan Account".
UNITS AND UNIT VALUES
CREDITING AND CANCELING UNITS
Units of a particular sub-account are credited to a Policy when net premiums are
allocated to that sub-account or amounts are transferred to that sub-account.
Units of a sub-account are cancelled whenever amounts are deducted, transferred
or withdrawn from the sub-account. The number of units credited or cancelled for
a specific transaction is based on the dollar amount of the transaction divided
by the value of the unit on the Business Day on which the transaction occurs.
The number of units credited with respect to a premium payment will be based on
the applicable unit values for the Business Day on which the premium is received
at the Service Office, except for any premiums received before the Effective
Date. For premiums received before the Effective Date, the values will be
determined on the Effective Date.
Units are valued at the end of each Business Day. When an order involving the
crediting or canceling of units is received after the end of a Business Day, or
on a day which is not a Business Day, the order will be processed on the basis
of unit values determined on the next Business Day. Similarly, any determination
of Policy Value, Investment Account value or death benefit to be made on a day
which is not a Business Day will be made on the next Business Day.
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UNIT VALUES
The value of a unit of each sub-account was initially fixed at $10.00. For each
subsequent Business Day the unit value for that sub-account is determined by
multiplying the unit value for the immediately preceding Business Day by the net
investment factor for the that sub-account on such subsequent Business Day.
The net investment factor for a sub-account on any Business Day is equal to (a)
divided by (b) minus (c), where:
(a) is the net asset value of the underlying Portfolio shares held by that
sub-account as of the end of such Business Day before any policy transaction are
made on that day;
(b) is the net asset value of the underlying Portfolio shares held by that
sub-account as of the end of the immediately preceding Business Day after all
policy transaction were made for that day; and
(c) is a charge not exceeding the daily mortality and expense risk charge shown
in the "Charges and Deductions - Charges Assessed Against Assets of the
Investment Accounts" section.
The value of a unit may increase, decrease, or remain the same, depending on the
investment performance of a sub-account from one Business Day to the next.
Due to the fact that the daily mortality and expense risk charge varies by
Policy Years, two unit values will be calculated for each sub-account commencing
10 years after the effective date of the first Policy.
TRANSFERS OF POLICY VALUE
At any time, a policyholder may transfer Policy Value from one sub-account to
another or to the Guaranteed Interest Account. Transfer requests must be in
writing in a format satisfactory to the Company, or by telephone if a currently
valid telephone transfer authorization form is on file.
These transfer privileges are subject to the Company's consent. The Company
reserves the right to impose limitations on transfers, including the maximum
amount that may be transferred. In addition, transfer privileges are subject to
any restrictions that may be imposed by the Trust.
TRANSFER CHARGES
A policyholder may make up to twelve transfers each policy year free of charge.
Additional transfers in each policy year may be made at a cost of $25 per
transfer. This charge will be allocated among the Investment Accounts and the
Guaranteed Interest Account in the same proportion as the amount transferred
from each bears to the total amount transferred. All transfer requests received
by the Company on the same Business Day are treated as a single transfer
request.
Transfers under the Dollar Cost Averaging and Asset Allocation Balancer
programs, discussed below, do not count against the number of free transfers
permitted per Policy Year.
TRANSFERS INVOLVING GUARANTEED INTEREST ACCOUNT
The maximum amount that may be transferred from the Guaranteed Interest Account
in any one policy year is the greater of $500 or 25% of the Guaranteed Interest
Account Value at the previous Policy Anniversary. Any transfer which involves a
transfer out of the Guaranteed Interest Account may not involve a transfer to
the Investment Account for the Money Market Trust.
TELEPHONE TRANSFERS
Although failure to follow reasonable procedures may result in the Company being
liable for any losses resulting from unauthorized or fraudulent telephone
transfers, Manufacturers U.S.A. will not be liable for following instructions
communicated by telephone that the Company reasonably believes to be genuine.
The Company will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Such procedures shall consist of
confirming that a valid telephone authorization form is on file, tape recording
of all telephone transactions and providing written confirmation thereof.
POLICY LOANS
At any time while this Policy is in force, a policyholder may borrow against the
Policy Value of the Policy. The Policy serves as the only security for the loan.
Policy loans may have tax consequences, see "Tax Treatment of Policy Benefits -
Policy Loan Interest."
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MAXIMUM LOAN
The amount of any loan cannot exceed the amount which would cause the Policy
Debt to equal the Loan Value of the Policy on the date of the loan.
LOAN VALUE
The Loan Value is equal to the Policy's Cash Surrender Value less the monthly
deductions due to the next Policy Anniversary.
EFFECT OF POLICY LOAN
A policy loan will have an effect on future Policy Values, since that portion of
the Policy Value in the Loan Account will increase in value at the crediting
interest rate rather than varying with the performance of the underlying
Portfolios or increasing in value at the rate of interest credited for amounts
allocated to the Guaranteed Interest Account. A policy loan may cause a Policy
to be more susceptible to going into default since a policy loan will be
reflected in the Net Cash Surrender Value. See "Lapse and Reinstatement."
Finally, a policy loan will affect the amount payable on the death of the life
insured, since the death benefit is reduced by the Policy Debt at the date of
death in arriving at the insurance benefit.
INTEREST CHARGED ON POLICY LOANS
Interest on the Policy Debt will accrue daily and be payable annually on the
Policy Anniversary. The rate of interest charged will be an effective annual
rate of 5.00%.
LOAN ACCOUNT
When a loan is made, an amount equal to the loan will be deducted from the
Investment Accounts or the Guaranteed Interest Account and transferred to the
Loan Account. The policyholder may designate how the amount to be transferred to
the Loan Account is allocated among the accounts from which the transfer is to
be made. In the absence of instructions, the amount to be transferred will be
allocated to each account in the same proportion as the value in each Investment
Account and the Guaranteed Interest Account bears to the Net Policy Value. A
transfer from an Investment Account will result in the cancellation of units of
the underlying sub-account equal in value to the amount transferred from the
Investment Account. However, since the Loan Account is part of the Policy Value,
transfers made in connection with a loan will not change the Policy Value.
INTEREST CREDITED TO THE LOAN ACCOUNT
Interest will be credited to amounts in the Loan Account at an effective annual
rate of at least 4.00%. The actual rate credited is equal to the rate of
interest charged on the policy loan less the Loan Spread. The Loan Spread varies
by policy year as follows:
Policy Year Loan Spread
1-10 1.00%
11-20 0.50%
21+ 0.25%
LOAN ACCOUNT ADJUSTMENTS
On the first day of each policy month the difference between the Loan Account
and the Policy Debt is transferred to the Loan Account from the Investment
Accounts or the Guaranteed Interest Account. Amounts transferred from the Loan
Account will be allocated to the Investment Accounts and the Guaranteed Interest
Account in the same proportion as the value in each Investment Account and the
Guaranteed Interest Account bears to the Net Policy Value.
LOAN REPAYMENTS
Policy Debt may be repaid in whole or in part at any time prior to the death of
the life insured, provided that the Policy is in force. When a repayment is
made, the amount is credited to the Loan Account and transferred to the
Guaranteed Interest Account or the Investment Accounts. Loan repayments will be
allocated to the Guaranteed Interest Account and each Investment Account in the
same proportion as the value in each Investment Account and the Guaranteed
Interest Account bears to the Net Policy Value.
Amounts paid to the Company not specifically designated in writing as loan
repayments will be treated as premiums.
POLICY SURRENDER AND PARTIAL WITHDRAWALS
POLICY SURRENDER
A Policy may be surrendered for its Net Cash Surrender Value at any time while
the life insured is living. The Net Cash Surrender Value is equal to the Policy
Value less any surrender charges and outstanding monthly deductions due (the
"Cash Surrender Value")
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minus the Policy Debt. The Net Cash Surrender Value will be determined at the
end of the Business Day on which Manufacturers U.S.A. receives the Policy and a
written request for surrender at its Service Office. After a Policy is
surrendered, the insurance coverage and all other benefits under the Policy will
terminate.
PARTIAL WITHDRAWALS
A policyholder may make a partial withdrawal of the Net Cash Surrender Value.
The policyholder may specify the portion of the withdrawal to be taken from each
Investment Account and the Guaranteed Interest Account. In the absence of
instructions, the withdrawal will be allocated among such accounts in the same
proportion as the Policy Value in each account bears to the Net Policy Value.
For information on Surrender Charges on a Partial Withdrawal see "Charges and
Deductions - Surrender Charges."
REDUCTION IN FACE AMOUNT DUE TO A PARTIAL WITHDRAWAL
If Death Benefit Option 1 is in effect when a partial withdrawal is made, the
Face Amount of the Policy will be reduced by the amount of the withdrawal plus
any applicable Surrender Charges. Reductions in Face Amount resulting from
partial withdrawals will not incur any Surrender Charges above the Surrender
Charges applicable to the withdrawal.
If the death benefit is based upon the Policy Value times the minimum death
benefit percentage set forth under "Death Benefit - Minimum Death Benefit," the
Face Amount will be reduced only to the extent that the amount of the withdrawal
plus the portion of the Surrender Charge assessed exceeds the difference between
the death benefit and the Face Amount. When the Face Amount of a Policy is based
on one or more increases subsequent to issuance of the Policy, a reduction
resulting from a partial withdrawal will be applied in the same manner as a
requested decrease in Face Amount, i.e., against the Face Amount provided by the
most recent increase, then against the next most recent increases successively
and finally against the initial Face Amount.
LAPSE AND REINSTATEMENT
LAPSE
A Policy will go into default if at the beginning of any policy month the
Policy's Net Cash Surrender Value would go below zero after deducting the
monthly deduction then due. Therefore, a Policy could lapse eventually if
increases in Policy Value (prior to deduction of Policy charges) are not
sufficient to cover Policy charges. A lapse could have adverse tax consequences
as described under "Tax Treatment of the Policy - Tax Treatment of Policy
Benefits - Surrender or Lapse." Manufacturers U.S.A. will notify the
policyholder of the default and will allow a 61 day grace period in which the
policyholder may make a premium payment sufficient to bring the Policy out of
default. The required payment will be equal to the amount necessary to bring the
Net Cash Surrender Value to zero, if it was less than zero on the date of
default, plus the monthly deductions due at the date of default and payable at
the beginning of each of the two policy months thereafter, plus any appliable
premium load. If the required payment is not received by the end of the grace
period, the Policy will terminate with no value.
DEATH DURING GRACE PERIOD
If the life insured should die during the grace period, the Policy Value used in
the calculation of the death benefit will be the Policy Value as of the date of
default and the insurance benefit will be reduced by any outstanding monthly
deductions due at the time of death.
REINSTATEMENT
A policyholder can reinstate a Policy which has terminated after going into
default at any time within the five year period following the date of
termination subject to the following conditions:
(a) The Policy must not have been surrendered for its Net Cash Surrender
Value;
(b) Evidence of the life insured's insurability satisfactory to
Manufacturers U.S.A. is furnished to the Company; and
(c) A premium equal to the payment required during the grace period
following default to keep the Policy in force is paid to the Company.
THE GENERAL ACCOUNT
The general account of Manufacturers U.S.A. consists of all assets owned by the
Company other than those in the Separate Account and other separate accounts of
the Company. Subject to applicable law, Manufacturers U.S.A. has sole
discretion over the investment of the assets of the general account.
By virtue of exclusionary provisions, interests in the general account of
Manufacturers U.S.A. have not been registered under the Securities Act of 1933
and the general account has not been registered as an investment company under
the Investment Company Act of 1940. Accordingly, neither the general account nor
any interests therein are subject to the provisions of these acts, and as a
result the staff of the SEC. has not reviewed the disclosures in this prospectus
relating to the general account. Disclosures regarding the
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general account may, however, be subject to certain generally applicable
provisions of the federal securities laws relating to the accuracy and
completeness of statements made in a prospectus.
GUARANTEED INTEREST ACCOUNT
A policyholder may elect to allocate net premiums to the Guaranteed Interest
Account or to transfer all or a portion of the Policy Value to the Guaranteed
Interest Account from the Investment Accounts. Manufacturers U.S.A. will hold
the reserves required for any portion of the Policy Value allocated to the
Guaranteed Interest Account in its general account. Transfers from the
Guaranteed Interest Account to the Investment Accounts are subject to
restrictions.
POLICY VALUE IN THE GUARANTEED INTEREST ACCOUNT The Policy Value in the
Guaranteed Interest Account is equal to:
(a) the portion of the net premiums allocated to it; plus
(b) any amounts transferred to it; plus
(c) interest credited to it; less
(d) any charges deducted from it; less
(e) any partial withdrawals from it; less
(f) any amounts transferred from it.
INTEREST ON THE GUARANTEED INTEREST ACCOUNT
An allocation of Policy Value to the Guaranteed Interest Account does not
entitle the policyholder to share in the investment experience of the general
account. Instead, Manufacturers U.S.A. guarantees that the Policy Value in the
Guaranteed Interest Account will accrue interest daily at an effective annual
rate of at least 4%, without regard to the actual investment experience of the
general account. Consequently, if a policyholder pays the planned premiums,
allocates all net premiums only to the general account and makes no transfers,
partial withdrawals, or policy loans, the minimum amount and duration of the
death benefit of the Policy will be determinable and guaranteed.
OTHER PROVISIONS OF THE POLICY
POLICYHOLDER RIGHTS
Unless otherwise restricted by a separate agreement, the policyholder may:
Vary the premiums paid under the Policy.
Change the death benefit option.
Change the premium allocation for future premiums.
Transfer amounts between sub-accounts.
Take loans and/or partial withdrawals.
Surrender the contract.
Transfer ownership to a new owner.
Name a contingent owner that will automatically become owner if the
policyholder dies before the insured.
Change or revoke a contingent owner.
Change or revoke a beneficiary.
ASSIGNMENT OF RIGHTS
Manufacturers U.S.A. will not be bound by an assignment until it receives a copy
of the assignment at its Service Office. Manufacturers U.S.A. assumes no
responsibility for the validity or effects of any assignment.
BENEFICIARY
One or more beneficiaries of the Policy may be appointed by the policyholder by
naming them in the application. Beneficiaries may be appointed in three classes
primary, secondary, and final. Beneficiaries may also be revocable or
irrevocable. Unless an irrevocable designation has been elected, the beneficiary
may be changed by the policyholder during the life insured's lifetime by giving
written notice to the Company in a form satisfactory to us. If the life insured
dies and there is no surviving beneficiary, the policyholder, or the
policyholder's estate if the policyholder is the life insured, will be the
beneficiary. If a beneficiary dies before the seventh day after the death of the
life insured, the Company will pay the insurance benefit as if the beneficiary
had died before the life insured.
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INCONTESTABILITY
Manufacturers U.S.A. will not contest the validity of a Policy after it has been
in force during the life insured's lifetime for two years from the Issue Date.
It will not contest the validity of an increase in Face Amount, after such
increase or addition has been in force during the life insured's lifetime for
two years. If a Policy has been reinstated and been in force for less than two
years from the reinstatement date, the Company can contest any misrepresentation
of a fact material to the reinstatement.
MISSTATEMENT OF AGE OR SEX
If the life insured's stated age or sex or both in the Policy are incorrect,
Manufacturers U.S.A. will change the Face Amount so that the death benefit
will be that which the most recent monthly charge for the cost of insurance
would have purchased for the correct age and sex.
SUICIDE EXCLUSION
If the life insured, whether sane or insane, dies by suicide within two years
from the Issue Date (or within the maximum period permitted by the state in
which the Policy was delivered, if less than two years), Manufacturers U.S.A.
will pay only the premiums paid less any partial withdrawals and any Policy
Debt. If the life insured should die by suicide within two years after a Face
Amount increase, the death benefit for the increase will be limited to the
monthly deductions for the increase. At the discretion of the Company, this
provision may be waived under some circumstances, such as policies purchased in
conjunction with certain existing benefit plans.
SUPPLEMENTARY BENEFITS
Subject to certain requirements, one or more supplementary benefits may be added
to a Policy, including, in the case of a Policy owned by a corporation or other
similar entity, a benefit permitting a change in the life insured (a taxable
event). More detailed information concerning these supplementary benefits may be
obtained from an authorized agent of the Company. The cost of any supplementary
benefits will be deducted as part of the monthly deduction.
TAX TREATMENT OF THE POLICY
The following summary provides a general description of the federal income tax
considerations associated with the Policy and does not purport to be complete or
to cover all situations. This discussion is not intended as tax advice. Counsel
or other competent tax advisers should be consulted for more complete
information. This discussion is based upon the Company's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service (the "Service"). No representation is made as to the
likelihood of continuation of the present federal income tax laws nor of the
current interpretations by the Service. MANUFACTURERS U.S.A. DOES NOT MAKE ANY
GUARANTEE REGARDING THE TAX STATUS OF ANY POLICY OR ANY TRANSACTION REGARDING
THE POLICIES.
The Policies may be used in various arrangements, including non-qualified
deferred compensation or salary continuation plans, split dollar insurance
plans, executive bonus plans, retiree medical benefit plans and others. The tax
consequences of such plans may vary depending on the particular facts and
circumstances of each individual arrangement. Therefore, if the use of such
Policies in any such arrangement, the value of which depends in part on the tax
consequences, is contemplated, a qualified tax adviser should be consulted for
advice on the tax attributes of the particular arrangement.
LIFE INSURANCE QUALIFICATION
There are several requirements that must be met for a Policy to be considered a
Life Insurance Contract under the Internal Revenue Code, and thereby to enjoy
the tax benefits of such a contract:
1. The Policy must satisfy the definition of life insurance under Section
7702 of the Internal Revenue Code of 1986 (the "Code").
2. The investments of the Separate Account must be "adequately
diversified" in accordance with Section 817(h) of the Code and Treasury
Regulations.
3. The Policy must be a valid life insurance contract under applicable
state law.
4. The Policyholder must not possess "incidents of ownership" in the
assets of the Separate Account.
These four items are discussed in detail below.
DEFINITION OF LIFE INSURANCE
Section 7702 of the Code sets forth a definition of a life insurance contract
for federal tax purposes. For a Policy to be a life insurance contract, it must
satisfy either the Cash Value Accumulation Test or the Guideline Premium Test.
By limiting cash value at any time to the net single premium that would be
required in order to fund future benefits under the contract, the Cash Value
Accumulation Test in effect requires a minimum death benefit for a given Policy
Value. The Guideline Premium Test also requires a minimum death benefit, but in
addition limits the total premiums that can be paid into a Policy for a given
amount of death benefit.
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With respect to a Policy which is issued on the basis of a standard rate class,
the Company believes (largely in reliance on IRS Notice 88-128 and the proposed
mortality charge regulations under Section 7702, issued on July 5, 1991) that
such a Policy should meet the Section 7702 definition of a life insurance
contract.
With respect to a Policy that is issued on a substandard basis (i.e., a rate
class involving higher-than-standard mortality risk), there is less guidance, in
particular as to how mortality and other expense requirements of Section 7702
are to be applied in determining whether such a Policy meets the Section 7702
definition of a life insurance contract. Thus it is not clear whether or not
such a Policy would satisfy Section 7702, particularly if the policyholder pays
the full amount of premiums permitted under the Policy.
The Secretary of the Treasury (the "Treasury") is authorized to prescribe
regulations implementing Section 7702. However, while proposed regulations and
other interim guidance have been issued, final regulations have not been adopted
and guidance as to how Section 7702 is to be applied is limited. If a Policy
were determined not to be a life insurance contract for purposes of Section
7702, such a Policy would not provide the tax advantages normally provided by a
life insurance policy.
If it is subsequently determined that a Policy does not satisfy Section 7702,
the Company may take whatever steps are appropriate and reasonable to attempt to
cause such a Policy to comply with Section 7702. For these reasons, the Company
reserves the right to restrict Policy transactions as necessary to attempt to
qualify it as a life insurance contract under Section 7702.
DIVERSIFICATION
Section 817(h) of the Code requires that the investments of the Separate Account
be "adequately diversified" in accordance with Treasury regulations in order for
the Policy to qualify as a life insurance contract under Section 7702 of the
Code (discussed above). The Separate Account, through the Trust, intends to
comply with the diversification requirements prescribed in Treas. Reg. Sec.
1.817-5, which affect how the Trust's assets are to be invested. The Company
believes that the Separate Account will thus meet the diversification
requirement, and the Company will monitor continued compliance with the
requirement.
STATE LAW
State regulations require that the policyholder have appropriate insurable
interest in the life insured. Failure to establish an insurable interest may
result in the Policy not qualifying as a life insurance contract for federal tax
purposes.
INVESTOR CONTROL
In certain circumstances, owners of variable life insurance Policies may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their policies. In those circumstances, income
and gains from the separate account assets would be includible in the variable
policyholder's gross income. The IRS has stated in published rulings that a
variable policyholder will be considered the owner of separate account assets if
the policyholder possesses incidents of ownership in those assets, such as the
ability to exercise investment control over the assets. The Treasury Department
has also announced, in connection with the issuance of regulations concerning
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 (i.e., the policyholder), rather than the
insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular sub-accounts 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 the Policy are similar to, but different in certain
respects from, those described by the IRS in rulings in which it was determined
that policyholders were not owners of separate account assets. For example, the
Policy has many more portfolios to which policyowners may allocate premium
payments and Policy Values than were available in the policies described in the
rulings. These differences could result in an owner being treated as the owner
of a pro-rata portion of the assets of the Separate Account. In addition, the
Company does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. The company therefore reserves the right to modify the Policy as
necessary to attempt to prevent an owner from being considered the owner of a
pro rata share of the assets of the Separate Account.
TAX TREATMENT OF POLICY BENEFITS
The following discussion assumes that the Policy will qualify as a life
insurance contract for federal income tax purposes. The Company believes that
the proceeds and cash value increases of a Policy should be treated in a manner
consistent with a fixed-benefit life insurance policy for federal income tax
purposes.
Depending on the circumstances, the exchange of a Policy, a change in the
Policy's death benefit option, a Policy loan, partial withdrawal, surrender,
change in ownership, the addition of an accelerated death benefit rider, or an
assignment of the Policy may have federal income tax consequences. In addition,
federal, state and local transfer, and other tax consequences of ownership or
receipt of Policy proceeds depend on the circumstances of each policyholder or
beneficiary.
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DEATH BENEFIT
The death benefit under the Policy should be excludible from the gross income of
the beneficiary under Section 101(a)(1) of the Code.
CASH VALUES
Generally, the policyholder will not be deemed to be in constructive receipt of
the Policy Value until there is a distribution. This includes additions
attributable to interest, dividends, appreciation or gains realized on transfers
among sub-accounts.
INVESTMENT IN THE POLICY
Investment in the Policy means:
(a) the aggregate amount of any premiums or other consideration paid for a
Policy; minus
(b) the aggregate amount, other than loan amounts, received under the
Policy which has been excluded from the gross income of the
policyholder (except that the amount of any loan from, or secured by, a
Policy that is a Modified Endowment Contract or "MEC," to the extent
such amount has been excluded from gross income, will be disregarded);
plus
(c) the amount of any loan from, or secured by a Policy that is a MEC to
the extent that such amount has been included in the gross income of
the policyholder.
The repayment of a policy loan, or the payment of interest on a loan, does not
affect the Investment in the Policy.
SURRENDER OR LAPSE
Upon a complete surrender or lapse of a Policy or when benefits are paid at a
Policy's maturity date, if the amount received plus the amount of Policy Debt
exceeds the total investment in the Policy, the excess will generally be treated
as ordinary income subject to tax.
If, at the time of lapse, a Policy has a loan, the loan is extinguished and the
amount of the loan is a deemed payment to the policyholder. If the amount of
this deemed payment exceeds the investment in the contract, the excess is
taxable income and is subject to Internal Revenue Service reporting
requirements.
DISTRIBUTIONS
The tax consequences of distributions from, and loans taken from or secured by,
a Policy depend on whether the Policy is classified as a MEC.
DISTRIBUTIONS FROM NON-MEC'S
A distribution from a non-MEC is generally treated as a tax-free recovery by the
policyholder of the Investment in the Policy to the extent of such Investment in
the Policy, and as a distribution of taxable income only to the extent the
distribution exceeds the Investment in the Policy. Loans from, or secured by, a
non-MEC are not treated as distributions. Instead, such loans are treated as
indebtedness of the policyholder.
Force Outs
An exception to this general rule occurs in the case of a decrease in the
Policy's death benefit or any other change that reduces benefits under the
Policy in the first 15 years after the Policy is issued and that results in a
cash distribution to the policyholder in order for the Policy to continue to
comply with the Section 7702 definitional limits. Such a cash distribution will
be taxed in whole or in part as ordinary income (to the extent of any gain in
the Policy) under rules prescribed in Section 7702. Changes include partial
withdrawals and death benefit option changes.
DISTRIBUTIONS FROM MEC'S
Policies classified as MEC's will be subject to the following tax rules:
(a) First, all partial withdrawals from such a Policy are treated as
ordinary income subject to tax up to the amount equal to the excess (if
any) of the Policy Value immediately before the distribution over the
Investment in the Policy at such time.
(b) Second, loans taken from or secured by such a Policy and assignments
and pledges of any part of its value are treated as partial withdrawals
from the Policy and taxed accordingly. Past-due loan interest that is
added to the loan amount is treated as a loan.
(c) Third, a 10% additional income tax is imposed on the portion of any
distribution (including distributions on surrender) from, or loan taken
from or secured by, such a policy that is included in income except
where the distribution or loan:
(i) is made on or after the policyholder attains age 59 1/2;
(ii) is attributable to the policyholder becoming disabled; or
(iii) is part of a series of substantially equal periodic payments
for the life (or life expectancy) of the policyholder or the
joint lives (or joint life expectancies) of the policyholder
and the policyholder's beneficiary.
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These exceptions are not likely to apply in situations where the Policy is not
owned by an individual.
Definition of Modified Endowment Contracts
Section 7702A establishes a class of life insurance contracts designated as
"Modified Endowment Contracts," which applies to Policies entered into or
materially changed after June 20, 1988.
In general, a Policy will be a Modified Endowment Contract if the accumulated
premiums paid at any time during the first seven policy years exceed the
"seven-pay premium limit". The seven-pay premium limit on any date is equal to
the sum of the net level premiums that would have been paid on or before such
date if the policy provided for paid-up future benefits after the payment of
seven level annual premiums (the "seven-pay premium").
The rules relating to whether a Policy will be treated as a MEC are extremely
complex and cannot be adequately described in the limited confines of this
summary. Therefore, a current or prospective policyholder should consult with a
competent adviser to determine whether a transaction will cause the Policy to be
treated as a MEC.
Material Changes
A policy that is not a MEC may become a MEC if it is "materially changed". If
there is a material change to the policy, the seven year testing period for MEC
status is restarted. The material change rules for determining whether a Policy
is a MEC are complex. In general, however, the determination of whether a Policy
will be a MEC after a material change generally depends upon the relationship
among the death benefit of the Policy at the time of such change, the Policy
Value at the time of the change, and the additional premiums paid into the
Policy during the seven years starting with the date on which the material
change occurs.
Reductions in Face Amount
If there is a reduction in benefits during the first seven policy years, the
seven-pay premium limit is recalculated as if the policy had been originally
issued at the reduced benefit level. Failure to comply would result in
classification as a MEC regardless of any efforts by the Company to provide a
payment schedule that will not violate the seven pay test.
Exchanges
A life insurance contract received in exchange for a MEC will also be treated as
a MEC.
Processing of Premiums
If a premium is received which would cause the Policy to become a MEC within 23
days of the next Policy Anniversary, the Company will not apply the portion of
the premium which would cause MEC status ("excess premium") to the Policy when
received. The excess premium will be placed in a suspense account until the next
anniversary date, at which point the excess premium, along with interest, earned
on the excess premium at a rate of 3.5% from the date the premium was received,
will be applied to the Policy. (Any amount that would still be excess premium on
the next anniversary will be refunded to the policyholder). The policyholder
will be advised of this action and will be offered the opportunity to have the
premium credited as of the original date received or to have the premium
returned. If the policyholder does not respond, the premium and interest will be
applied to the Policy as of the first day of the next anniversary.
If a premium is received which would cause the Policy to become a MEC more than
23 days prior to the next Policy Anniversary, the Company will refund any excess
premium to the policyholder. The portion of the premium which is not excess will
be applied as of the date received. The policyholder will be advised of this
action and will be offered the opportunity to return the premium and have it
credited to the account as of the original date received.
Multiple Policies
All MEC's that are issued by a Company (or its affiliates) to the same
policyholder during any calendar year are treated as one MEC for purposes of
determining the amount includible in gross income under Section 72(e) of the
Code.
POLICY LOAN INTEREST
Generally, personal interest paid on any loan under a Policy which is owned by
an individual is not deductible. For policies purchased on or after January 1,
1996, interest on any loan under a Policy owned by a taxpayer and covering the
life of any individual who is an officer or employee of or is financially
interested in the business carried on by the taxpayer will not be tax deductible
unless the employee is a key person within the meaning of Section 264 of the
Code. A deduction will not be permitted for interest on a loan under a Policy
held on the life of a key person to the extent the aggregate of such loans with
respect to contracts covering the key person exceed $50,000. The number of
employees who can qualify as key persons depends in part on the size of the
employer but cannot exceed 20 individuals.
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Furthermore, if a non-natural person owns a Policy, or is the direct or indirect
beneficiary under a Policy, section 264(f) of the Code disallows a pro-rata
portion of the taxpayer's interest expense allocable to unborrowed Policy cash
values attributable to insurance held on the lives of individuals who are not
20% (or more) owners of the taxpayer-entity, officers, employees, or former
employees of the taxpayer.
The portion of the interest expense that is allocable to unborrowed Policy cash
values is an amount that bears the same ratio to that interest expense as the
taxpayer's average unborrowed Policy cash values under such life insurance
policies bear to the average adjusted bases for all assets of the taxpayer.
If the Policyholder is an individual, and if the taxpayer is a business and is
not the Policyholder, but is the direct or indirect beneficiary under the
Policy, then the amount of unborrowed cash value of the Policy taken into
account in computing the portion of the taxpayer's interest expense allocable to
unborrowed Policy cash values cannot exceed the benefit to which the taxpayer is
directly or indirectly entitled under the Policy.
POLICY EXCHANGES
A policyholder generally will not recognize gain upon the exchange of a Policy
for another life insurance policy covering the same life insured and issued by
the Company or another insurance company, except to the extent that the
policyholder receives cash in the exchange or is relieved of Policy indebtedness
as a result of the exchange. In no event will the gain recognized exceed the
amount by which the Policy Value (including any unpaid loans) exceeds the
policyholder's Investment in the Policy.
OTHER TRANSACTIONS
A transfer of the Policy, a change in the owner, a change in the life insured, a
change in the beneficiary, and certain other changes to the Policy, as well as
particular uses of the Policy (including use in a so called "split-dollar"
arrangement) may have tax consequences depending upon the particular
circumstances and should not be undertaken prior to consulting with a qualified
tax adviser. For instance, if the owner transfers the Policy or designates a new
owner in return for valuable consideration (or, in some cases, if the transferor
is relieved of a liability as a result of the transfer), then the Death Benefit
payable upon the death of the Insured may in certain circumstances be includible
in taxable income to the extent that the Death Benefit exceeds the prior
consideration paid for the transfer and any premiums or other amounts
subsequently paid by the transferee. Further, in such a case, if the
consideration received exceeds the transferor's Investment in the Policy, the
difference will be taxed to the transferor as ordinary income.
Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the individual
circumstances of each policyholder and beneficiary.
ALTERNATE MINIMUM TAX
Corporate owners may be subject to Alternate Minimum Tax on the annual increases
in Cash Surrender Values and on the Death Benefit proceeds.
INCOME TAX REPORTING
In certain employer-sponsored life insurance arrangements, including
equity-split dollar arrangements, participants may be required to report for
income tax purposes, one or more of the following:
(a) the value each year of the life insurance protection provided;
(b) an amount equal to any employer-paid premiums; or
(c) some or all of the amount by which the current value exceeds the
employer's interest in the Policy.
Participants should consult with their tax adviser to determine the tax
consequences of these arrangements.
OTHER INFORMATION
PAYMENT OF PROCEEDS
As long as the Policy is in force, Manufacturers U.S.A. will ordinarily pay any
policy loans, surrenders, partial withdrawals or insurance benefit within seven
days after receipt at its Service Office of all the documents required for such
a payment. The Company may delay the payment of any policy loans, surrenders,
partial withdrawals, or insurance benefit that depends on Guaranteed Interest
Account values for up to six months or in the case of any Investment Account for
any period during which (i) the New York Stock Exchange is closed for trading
(except for normal weekend and holiday closings), (ii) trading on the New York
Stock Exchange is restricted (iii) an emergency exists as a result of which
disposal of securities held in the Separate Account is not reasonably
practicable or it is not reasonably practicable to determine the value of the
Separate Account's net assets or (iv) the SEC, by order, so permits for the
protection of security holders; provided that applicable rules and regulations
of the SEC shall govern as to whether the conditions described in (2) and (3)
exist.
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REPORTS TO POLICYHOLDERS
Within 30 days after each Policy Anniversary, Manufacturers U.S.A. will send the
policyholder a statement showing, among other things:
the amount of death benefit;
the Policy Value and its allocation among the Investment Accounts, the
Guaranteed Interest Account and the Loan Account;
the value of the units in each Investment Account to which the Policy
Value is allocated;
the Policy Debt and any loan interest charged since the last report;
the premiums paid and other Policy transactions made during the period
since the last report; and
any other information required by law.
Each policyholder will also be sent an annual and a semi-annual report for the
Trust which will include a list of the securities held in each Portfolio as
required by the 1940 Act.
DISTRIBUTION OF THE POLICIES
Manulife Financial Securities, LLC ("Manulife Services"), an indirect
wholly-owned subsidiary of MFC, will act as the principal underwriter of, and
continuously offer, the Policies pursuant to a Distribution Agreement with
Manufacturers U.S.A. Manulife Securities is registered as a broker-dealer under
the Securities Exchange Act of 1934 and is a member of the National Association
of Securities Dealers. Manulife Securities is located At 73 Tremont Street,
Boston, MA 02108 and is organized as a Delaware limited liability company. The
managing member of Manulife Services is Manufacturers U.S.A. The Policies Will
be sold by registered representatives of either Manulife Securities or other
broker-dealers having distribution agreements with Manulife Services who are
also authorized by state insurance departments to do so. The policies will be
sold in all states of the United States Except New York.
A registered representative will receive commissions not to exceed 15% of
premiums paid up to the Target Premium, and 2.5% of premiums paid in excess of
the Target Premium in Policy Years 1 through 5, commissions of 2.5% of premiums
paid in Policy Years 6 and later, and after the fifth anniversary 0.20% of the
Policy Value per year. Representatives who meet certain productivity standards
with regard to the sale of the Policies and certain other policies issued by
Manufacturers U.S.A. or Manufacturers Life will be eligible for additional
compensation.
RESPONSIBILITIES OF MANUFACTURERS LIFE
The Manufacturers Life Insurance Company "Manufacturers Life" and Manufacturers
U.S.A., have entered into an agreement with Manulife Securities pursuant to
which Manufacturers Life or Manufacturers U.S.A., on behalf of Manulife
Securities will pay the sales commissions in respect of the Policies and certain
other policies issued by Manufacturers U.S.A., prepare and maintain all books
and records required to be prepared and maintained by Manulife Securities with
respect to the Policies and Such other policies, and send all confirmations
required to be sent by Manulife Securities with respect to the Policies and such
other policies. Manulife Securities will promptly reimburse Manufacturers Life
or Manufacturers U.S.A. for all sales commissions paid by Manufacturers Life or
Manufacturers U.S.A and will pay Manufacturers Life or Manufacturers U.S.A. for
its other services under the agreement in such amounts and at such times as
agreed to by the parties.
MFC has also entered into a Service Agreement with Manufacturers U.S.A. pursuant
to which MFC will provide to Manufacturers U.S.A. with issue, administrative,
general services and recordkeeping functions on behalf of Manufacturers U.S.A.
with respect to all of its insurance policies including the Policies.
VOTING RIGHTS
As stated previously, all of the assets held in each sub-account of the Separate
Account will be invested in shares of a particular Portfolio of the Trust.
Manufacturers U.S.A. is the legal owner of those shares and as such has the
right to vote upon certain matters that are required by the 1940 Act to be
approved or ratified by the shareholders of a mutual fund and to vote upon any
other matters that may be voted upon at a shareholders' meeting. However,
Manufacturers U.S.A. will vote shares held in the sub-accounts in accordance
with instructions received from policyholders having an interest in such
sub-accounts. Shares held in each sub-account for which no timely instructions
from policyholders are received, including shares not attributable to the
Policies, will be voted by Manufacturers U.S.A. in the same proportion as those
shares in that sub-account for which instructions are received. Should the
applicable federal securities laws or regulations change so as to permit
Manufacturers U.S.A. to vote shares held in the Separate Account in its own
right, it may elect to do so.
The number of shares in each sub-account for which instructions may be given by
a policyholder is determined by dividing the portion of the Policy Value derived
from participation in that sub-account, if any, by the value of one share of the
corresponding Portfolio. The number will be determined as of a date chosen by
Manufacturers U.S.A., but not more than 90 days before the shareholders'
meeting. Fractional votes are counted. Voting instructions will be solicited in
writing at least 14 days prior to the meeting.
36
41
Manufacturers U.S.A. may, if required by state officials, disregard voting
instructions if such instructions would require shares to be voted so as to
cause a change in the sub-classification or investment policies of one or more
of the Portfolios, or to approve or disapprove an investment management
contract. In addition, the Company itself may disregard voting instructions that
would require changes in the investment policies or investment adviser, provided
that the Company reasonably disapproves such changes in accordance with
applicable federal regulations. If Manufacturers U.S.A. does disregard voting
instructions, it will advise policyholders of that action and its reasons for
such action in the next communication to policyholders.
SUBSTITUTION OF PORTFOLIO SHARES
It is possible that in the judgment of the management of Manufacturers U.S.A.,
one or more of the Portfolios may become unsuitable for investment by the
Separate Account because of a change in investment policy or a change in the
applicable laws or regulations, because the shares are no longer available for
investment, or for some other reason. In that event, Manufacturers U.S.A. may
seek to substitute the shares of another Portfolio or of an entirely different
mutual fund. Before this can be done, the approval of the SEC and one or more
state insurance departments may be required.
Manufacturers U.S.A. also reserves the right (i) to combine other separate
accounts with the Separate Account, (ii) to create new separate accounts, (iii)
to establish additional sub-accounts within the Separate Account to invest in
additional portfolios of the Trust or another management investment company,
(iv) to eliminate existing sub-accounts and to stop accepting new allocations
and transfers into the corresponding portfolio, (v) to combine sub-accounts or
to transfer assets in one sub-account to another sub-account or (vi) to transfer
assets from the Separate Account to another separate account and from another
separate account to the Separate Account. The Company also reserves the right to
operate the Separate Account as a management investment company or other form
permitted by law, and to de-register the Separate Account under the 1940 Act.
Any such change would be made only if permissible under applicable federal and
state law.
RECORDS AND ACCOUNTS
McCamish Systems, L.L.C., 6425 Powers Ferry Road, Atlanta, Georgia 30339, will
act as a Transfer Agent on behalf of Manufacturers U.S.A. as it relates to the
Policies described in this Prospectus. In the role of a Transfer Agent, McCamish
Systems will perform administrative functions, such as decreases, increases,
surrenders and partial withdrawals and fund transfers on behalf of the Company.
All records and accounts relating to the Separate Account and the Portfolios
will be maintained by the Company. All financial transactions will be handled by
the Company. All reports required to be made and information required to be
given will be provided by McCamish Systems on behalf of the Company.
STATE REGULATIONS
Manufacturers U.S.A. is subject to the regulation and supervision by the
Michigan Department of Insurance, which periodically examines its financial
condition and operations. It is also subject to the insurance laws and
regulations of all jurisdictions in which it is authorized to do business. The
Policies have been filed with insurance officials, and meet all standards set by
law, in each jurisdiction where they are sold.
Manufacturers U.S.A. is required to submit annual statements of its operations,
including financial statements, to the insurance departments of the various
jurisdictions in which it does business for the purposes of determining solvency
and compliance with local insurance laws and regulations.
LITIGATION
No litigation is pending that would have a material effect upon the Separate
Account or the Trust.
INDEPENDENT AUDITORS
The consolidated financial statements of The Manufacturers Life Insurance
Company (U.S.A.) at December 31, 2000 and 1999, and for each of the three years
ended December 31, 2000 and the financial statements of Separate Account N of
The Manufacturers Life Insurance Company of America at December 31, 2000 and
1999, and for each of the two years ended December 31, 2000, appearing in this
prospectus, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their reports thereon appearing elsewhere herein. Such financial
statements have been included herein in reliance upon such reports given upon
the authority of such firm as experts in auditing and accounting.
FURTHER INFORMATION
A registration statement under the Securities Act of 1933 has been filed with
the SEC relating to the offering described in this prospectus. This prospectus
does not include all the information set forth in the registration statement.
The omitted information may be obtained from the SEC's principal office in
Washington D.C. upon payment of the prescribed fee. The SEC also maintains a Web
37
42
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC which is
located at http://www.sec.gov.
For further information you may also contact Manufacturers U.S.A.'s Home Office,
the address and telephone number of which are on the first page of the
prospectus.
OFFICERS AND DIRECTORS
POSITION WITH
NAME MANUFACTURERS U.S.A. PRINCIPAL OCCUPATION
James Boyle Director President of U.S. Annuities, Manulife Financial, July 1999 to present; Vice
(42)** President, Institutional Markets, Manulife Financial, May 1998 to June 1999;
Vice President, Administration of U.S. Annuities, Manulife Financial, September
1996 to May 1998; Vice President, Treasurer and Chief Administrative Officer,
North American Funds, June 1994 to September 1996.
Robert A. Cook Senior Vice President, Senior Vice President, U.S. Individual Insurance, The Manufacturers Life
(45)** U.S. Insurance; Insurance Company, January 1999 to present; Vice President, Product Management,
Director The Manufacturers Life Insurance Company, January 1996 to December 1998; Sales
and Marketing Director, The Manufacturers Life Insurance Company, 1994 to 1995.
Peter Copestake Vice President, Finance Vice President & Treasurer, The Manufacturers Life Insurance Company, November
(45)*** 1999 to present; Vice President, Asset Liability Management, Canadian Imperial
Bank of Commerce (CIBC), 1991 to 1999; Director, Capital Management, Bank of
Montreal, 1986-1990; Inspector General of Banks, Department of Finance,
1980-1985.
John D. DesPrez Chairman and President Executive Vice President, U.S. Operation, The Manufacturers Life Insurance
III (43)** Company, January 1999 to date; Senior Vice President, U.S. Annuities, The
Manufacturers Life Insurance Company, September 1996 to December 1998;
President of the Manufacturers Life Insurance Company of North America,
September 1996 to December, 1998; Vice President, Mutual Funds, North American
Security Life Insurance Company, January 1995 to September 1996.
James D. Gallagher Vice President, Vice President, US Law and Government Relations, U.S. Operations, the
(45)** Secretary and General Manufacturers Life Insurance Company, January 1996 to present; President, the
Counsel Manufacturers Life Insurance Company of New York, August 1999 to present, Vice
President, Secretary and General Counsel, The Manufacturers Life Insurance
Company of America, January 1997 to present; Secretary and General Counsel,
Manufacturers Adviser Corporation, January 1997 to present; Vice President,
Secretary and General Counsel, The Manufacturers Life Insurance Company of
North America, 1994 to present.
Donald Guloien Executive Vice Executive Vice President & Chief Investment Officer, The Manufacturers Life
(44)*** President and Chief Insurance Company, March 2001 to present; Executive Vice President, Business
Investment Officer Development, The Manufacturers Life Insurance Company, January 1999 to March
2001; Senior Vice President, Business Development, The Manufacturers Life
Insurance Company, 1994 to December 1998.
Geoffrey Guy Director Executive Vice President and Chief Actuary, The Manufacturers Life Insurance
(53)*** Company, February 2000 to present; Senior Vice President and Chief Actuary, The
Manufacturers Life Insurance Company, 1996 to 2000; Vice President and Chief
Actuary, The Manufacturers Life Insurance Company, 1993 to 1996; Vice President
and Chief Financial Officer, U.S.
38
43
POSITION WITH
NAME MANUFACTURERS U.S.A. PRINCIPAL OCCUPATION
Operations, The Manufacturers Life Insurance Company, 1987 to 1993.
John Lyon Vice President and Vice President & Chief Financial Officer, Investments, The Manufacturers Life
(48) *** Chief Financial Insurance Company; April 2001 to present; Vice President, Business
Officer, Investments; Development, The Manufacturers Life Insurance Company, 1995-2001; Assistant
Director Vice President, Business Development, The Manufacturers Life Insurance Company,
1994-1995; Director/Manager, Corporate Finance, The Manufacturers Life
Insurance Company, 1992-1994.
James O'Malley Senior Vice President, Senior Vice President, U.S. Pensions, The Manufacturers Life Insurance Company,
(54)*** U.S. Group Pension; January 1999 to present; Vice President, Systems New Business Pensions, the
Director Manufacturers Life Insurance Company, 1984 to December 1998.
Rex Schaybaugh, Director Member, Dykema Gossett, PLLC, 1982 to present
Jr. (51)****
John Ostler (47)** Vice President And Vice President and Chief Financial Officer, U.S. Operations, The
Chief Financial Officer Manufacturers Life Insurance Company, October 1, 2000 to present; Vice
President and Corporate Actuary, The Manufacturers Life Insurance Company,
March 1998 to September 2000; Vice President & CFO U.S. Individual Insurance,
The Manufacturers Life Insurance Company, 1992 to March 1998; Vice President,
U.S. Insurance Products, The Manufacturers Life Insurance Company, 1990 - 1992;
Assistant Vice President & Pricing Actuary, US Insurance, The Manufacturers Life
Insurance Company, 1988-1990.
Warren Thomson Senior Vice President, Senior Vice President, Investments, The Manufacturers Life Insurance Company,
(46)*** Investments May 2001 to present; President, Norfolk Capital Partners Inc. 2000 - May 2001;
Managing Director, Public Sector Finance, New Capital Group Inc. 1995-2000;
Tax Partner, Coopers & Lybrand Chartered Accounts, 1994-1995; Taxation Vice
President, The Manufacturers Life Insurance Company, 1987-1994.
Denis Turner Vice President and Vice President and Chief Accountant, U.S. Division, The Manufacturers Life
(44)*** Treasurer Insurance Company, May 1999 to present; Vice President and Treasurer, The
Manufacturers Life Insurance Company of America, May 1999 to Present; Assistant
Vice President, Financial Operations, Reinsurance Division, The Manufacturers Life
Insurance Company, February 1998 to April 1999; Assistant Vice President &
Controller, Reinsurance Division, The Manufacturers Life Insurance Company, November
1995, to January 1998, Assistant Vice President, Corporate Controllers, The
Manufacturers Life Insurance Company, January 1989 to October 1995.
** Principal business address is Manulife Financial, 73 Tremont Street, Boston,
MA 02108.
*** Principal business address is Manulife Financial, 200 Bloor
Street, Toronto, Ontario Canada M4W 1E5.
**** Principal business address is Dykema Gossett, 800 Michigan National Tower,
Lansing, Michigan 48933.
DEATH BENEFIT SCHEDULE WITH FLEXIBLE TERM INSURANCE OPTION
A Policy can be issued with a schedule of death benefits which may vary by
Policy Year. The entire schedule is called the Death Benefit Schedule. The Death
Benefit Schedule will provide flexible term insurance to age 100. The amount of
death benefit shown in the Death Benefit Schedule for any Policy Year is called
the Scheduled Annual Death Benefit for that Policy Year. Any amount of Scheduled
Annual Death Benefit over and above the death benefit provided by the Policy
will be provided by Flexible Term Insurance (the "Rider"). The combined death
benefit of the Policy and Rider may be the Scheduled Annual Death Benefit alone
(similar to Death Benefit Option 1), or the Scheduled Annual Death Benefit plus
the Policy Value (similar to Death Benefit Option 2).
39
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APPENDIX A
ILLUSTRATIONS
The following tables illustrate the way in which a Policy's Death Benefit,
Policy Value, and Cash Surrender Value could vary over an extended period of
time.
ASSUMPTIONS
Hypothetical gross annual investment returns for the Portfolios (i.e.,
investment income and capital gains and losses, realized or unrealized)
equivalent to constant gross annual rates of 0%, 6%, and 12% over the
periods indicated.
An Insured who is a male, Issue Age 45, non-smoker.
A Face Amount of $365,000 in all Policy Years.
Payment of an annual premium of $20,000 each year for the first seven
Policy Years. Premiums are paid on the Policy Anniversary.
All Premiums are allocated to and remain in the Variable Account for
the entire period shown.
There are no transfers, partial withdrawals, or policy loans.
Tables 1, 2, and 3 assume regular underwriting. Tables 4, 5, and 6
assume short form underwriting.
The Cash Value Accumulation Test is used.
The illustrations assume all charges currently assessed against the
Policy, including monthly cost of insurance charges and administrative
charges and mortality and expense risk charges. The first set of
columns in each table, under the heading "Current Charges", assumes
cost of insurance rates currently expected to be charged. The second
set of columns, under the heading "Guaranteed Charges", assumes maximum
cost of insurance rates.
The amounts shown in the Tables also take into account the Portfolios'
advisory fees and operating expenses, which are assumed to be at an
annual rate of 0.969% of the average daily net assets of the portfolio.
The Death Benefits, Policy Values, and Cash Surrender Values would be different
from those shown if the returns averaged 0%, 6%, and 12%, but fluctuated over
and under those averages throughout the years. The values would also be
different depending on the allocation of a Policy's total Policy Value among the
sub-accounts, if the actual rates of return averaged 0%, 6%, or 12%, but the
rates of each Portfolio varied above and below such averages.
The gross annual rates of returns correspond to net annual rates of return
according to the table below:
Gross Rate of Return
Policy Year 0.00% 6.00% 12.00%
--------------------------------------------------------------------------------
Net Rate 1-10 -1.707% 4.191% 10.089%
of Return 11+ -1.360% 4.558% 10.477%
Current cost of insurance charges are not guaranteed and may be changed.
The illustrations reflect the expense reimbursement in effect for the Science &
Technology, International Stock, Blue Chip Growth, Equity Income and Lifestyle
Trusts and the expense limitations in effect for the Capital Appreciation and
Index Trusts. In the absence of such expense reimbursement and expense
limitation, the average of the Portfolios' current expenses would have been
0.981% per annum and the gross annual rates of return of 0%, 6% and 12% would
have corresponded to approximate net annual rates of return of -1.719%, 4.178%
and 10.075% for Policy Years 1-10 and -1.372%, 4.546% and 10.463% for Policy
Years 11 and after. The expense reimbursement for the Life-style Trusts and the
expense limitation for the Equity Index Trust remained in effect during the
fiscal year ended December 31, 2000 and are expected to remain in effect during
the fiscal year ending December 31, 2001. Were the expense reimbursement and
expense limitation to terminate, the average of the Portfolios' current expenses
would be higher and the approximate net annual rates of return would be lower.
A-1
45
Upon request, the Company will furnish a comparable illustration based on the
proposed life insured's Issue Age, sex and risk class, any additional ratings
and the death benefit option, Face Amount, Death Benefit Schedule (if
applicable), and planned premium requested. Illustrations for smokers would show
less favorable results than the illustration shown in this prospectus.
From time to time, in advertisements or sales literature for the Policies that
quote performance data of one or more of the Portfolios, the Company may include
cash surrender values and death benefit figures computed or using the same
methodology as that used in the following illustrations, but with the average
annual total return of the Portfolio for which performance data is shown in the
advertisement replacing the hypothetical rates of return shown in the following
tables.
The Policies were first sold to the public on September 11, 1998. However, total
return data may be advertised for as long a period of time as the underlying
Portfolio has been in existence. The results for any period prior to the
Policies being offered would be calculated as if the Policies had been offered
during that period of time, with all charges assumed to be the same as for the
first full year the Policies were offered.
A-2
46
Table 1 - Regular Underwriting
Hypothetical Gross Investment Return of 0.00%
Current Charges
-----------------------------------------------------------------------------------------------------------------------
Premium Policy plus less less plus Policy Net Cash Death
Pol Annual Accum Value Net Admin Cost Invest Value Surr Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees of Ins Earning End Yr Charge Value End Yr
1 20,000 21,000 0 19,600 144 732 -326 18,397 2,000 16,397 365,000
2 20,000 43,050 18,397 19,600 144 980 -638 36,235 3,000 33,235 365,000
3 20,000 66,203 36,235 19,600 144 1,198 -941 53,553 3,000 50,553 365,000
4 20,000 90,513 53,553 19,600 144 1,285 -1,236 70,487 4,000 66,487 365,000
5 20,000 116,038 70,487 19,600 144 1,321 -1,524 87,099 5,000 82,099 365,000
6 20,000 142,840 87,099 19,600 144 1,381 -1,807 103,366 5,000 98,366 365,000
7 20,000 170,982 103,366 19,600 144 1,432 -2,085 119,306 4,000 115,306 365,000
8 0 179,531 119,306 0 144 1,599 -2,021 115,542 3,000 112,542 365,000
9 0 188,508 115,542 0 144 1,794 -1,955 111,649 2,000 109,649 365,000
10 0 197,933 111,649 0 144 2,036 -1,886 107,583 0 107,583 365,000
11 0 207,830 107,583 0 144 2,083 -1,447 103,909 0 103,909 365,000
12 0 218,221 103,909 0 144 2,091 -1,397 100,277 0 100,277 365,000
13 0 229,132 100,277 0 144 2,043 -1,348 96,742 0 96,742 365,000
14 0 240,589 96,742 0 144 1,860 -1,301 93,437 0 93,437 365,000
15 0 252,619 93,437 0 144 1,519 -1,259 90,515 0 90,515 365,000
16 0 265,249 90,515 0 144 1,681 -1,218 87,471 0 87,471 365,000
17 0 278,512 87,471 0 144 1,857 -1,175 84,295 0 84,295 365,000
18 0 292,438 84,295 0 144 2,051 -1,131 80,970 0 80,970 365,000
19 0 307,059 80,970 0 144 2,249 -1,084 77,493 0 77,493 365,000
20 0 322,412 77,493 0 144 2,457 -1,035 73,856 0 73,856 365,000
25 0 411,489 56,721 0 144 4,375 -738 51,463 0 51,463 365,000
30 0 525,176 24,246 0 144 8,487 -266 15,349 0 15,349 365,000
</Table>
<Table>
<Caption>
Guaranteed Charges
-----------------------------------------------------------------------------------------------------------------------
Premium Policy plus less less plus Policy Net Cash Death
Pol Annual Accum Value Net Admin Cost Invest Value Surr Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees of Ins Earning End Yr Charge Value End Yr
1 20,000 21,000 0 19,600 144 1,570 -319 17,567 2,000 15,567 365,000
2 20,000 43,050 17,567 19,600 144 1,613 -618 34,792 3,000 31,792 365,000
3 20,000 66,203 34,792 19,600 144 1,653 -912 51,684 3,000 48,684 365,000
4 20,000 90,513 51,684 19,600 144 1,687 -1,200 68,253 4,000 64,253 365,000
5 20,000 116,038 68,253 19,600 144 1,723 -1,482 84,503 5,000 79,503 365,000
6 20,000 142,840 84,503 19,600 144 1,754 -1,760 100,446 5,000 95,446 365,000
7 20,000 170,982 100,446 19,600 144 1,793 -2,031 116,078 4,000 112,078 365,000
8 0 179,531 116,078 0 144 1,987 -1,962 111,985 3,000 108,985 365,000
9 0 188,508 111,985 0 144 2,210 -1,890 107,740 2,000 105,740 365,000
10 0 197,933 107,740 0 144 2,467 -1,815 103,314 0 103,314 365,000
11 0 207,830 103,314 0 144 2,748 -1,384 99,038 0 99,038 365,000
12 0 218,221 99,038 0 144 3,058 -1,324 94,512 0 94,512 365,000
13 0 229,132 94,512 0 144 3,391 -1,260 89,717 0 89,717 365,000
14 0 240,589 89,717 0 144 3,757 -1,192 84,624 0 84,624 365,000
15 0 252,619 84,624 0 144 4,160 -1,120 79,200 0 79,200 365,000
16 0 265,249 79,200 0 144 4,619 -1,042 73,395 0 73,395 365,000
17 0 278,512 73,395 0 144 5,144 -960 67,147 0 67,147 365,000
18 0 292,438 67,147 0 144 5,752 -870 60,381 0 60,381 365,000
19 0 307,059 60,381 0 144 6,461 -773 53,002 0 53,002 365,000
20 0 322,412 53,002 0 144 7,278 -666 44,914 0 44,914 365,000
25 0 411,489 3,327 0 144 13,234 -4 0 0 0 0
30 0 525,176 0 0 0 0 0 0 0 0 0
The policy value, cash surrender value, and the death benefit will
differ if premiums are paid in different amounts or frequencies.
It is emphasized that the hypothetical investment returns are
illustrative only, and should not be deemed a representation of past or
future results. Actual investment returns may be more or less than
those shown and will depend on a number of factors, including the
investment allocation made by the policyholder, and the investment
return for the portfolios of manufacturers investment trust.
The policy value, cash surrender value and death benefit for a policy
would be different from those shown if actual rates of investment
return averaged the rate shown above over a period of years, but also
fluctuated above or below that average for individual policy years.
No representations can be made that these hypothetical rates of return
can be achieved for any one year or sustained over any period of time.
A-3
47
Table 2 - Regular Underwriting
Hypothetical Gross Investment Return of 6.00%
Current Charges
-----------------------------------------------------------------------------------------------------------------------
Premium Policy plus less less plus Policy Net Cash Death
Pol Annual Accum Value Net Admin Cost Invest Value Surr Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees of Ins Earning End Yr Charge Value End Yr
1 20,000 21,000 0 19,600 144 731 802 19,526 2,000 17,526 365,000
2 20,000 43,050 19,526 19,600 144 973 1,614 39,624 3,000 36,624 365,000
3 20,000 66,203 39,624 19,600 144 1,179 2,452 60,353 3,000 57,353 365,000
4 20,000 90,513 60,353 19,600 144 1,246 3,319 81,882 4,000 77,882 365,000
5 20,000 116,038 81,882 19,600 144 1,253 4,221 104,306 5,000 99,306 365,000
6 20,000 142,840 104,306 19,600 144 1,272 5,161 127,651 5,000 122,651 365,000
7 20,000 170,982 127,651 19,600 144 1,273 6,139 151,973 4,000 147,973 365,000
8 0 179,531 151,973 0 144 1,370 6,335 156,793 3,000 153,793 365,000
9 0 188,508 156,793 0 144 1,486 6,534 161,697 2,000 159,697 365,000
10 0 197,933 161,697 0 144 1,620 6,737 166,670 0 166,670 365,000
11 0 207,830 166,670 0 144 1,597 7,554 172,483 0 172,483 365,000
12 0 218,221 172,483 0 144 1,546 7,821 178,613 0 178,613 365,000
13 0 229,132 178,613 0 144 1,456 8,102 185,115 0 185,115 365,000
14 0 240,589 185,115 0 144 1,288 8,403 192,086 0 192,086 365,000
15 0 252,619 192,086 0 144 1,029 8,727 199,639 0 199,639 365,000
16 0 265,249 199,639 0 144 1,109 9,069 207,455 0 207,455 365,000
17 0 278,512 207,455 0 144 1,193 9,423 215,541 0 215,541 365,000
18 0 292,438 215,541 0 144 1,282 9,790 223,905 0 223,905 365,000
19 0 307,059 223,905 0 144 1,386 10,169 232,544 0 232,544 365,000
20 0 322,412 232,544 0 144 1,495 10,560 241,465 0 241,465 365,000
25 0 411,489 279,862 0 144 2,299 12,697 290,116 0 290,116 365,000
30 0 525,176 333,322 0 144 3,664 15,100 344,615 0 344,615 365,000
</Table>
<Table>
<Caption>
Guaranteed Charges
-----------------------------------------------------------------------------------------------------------------------
Premium Policy plus less less plus Policy Net Cash Death
Pol Annual Accum Value Net Admin Cost Invest Value Surr Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees of Ins Earning End Yr Charge Value End Yr
1 20,000 21,000 0 19,600 144 1,568 783 18,671 2,000 16,671 365,000
2 20,000 43,050 18,671 19,600 144 1,602 1,564 38,089 3,000 35,089 365,000
3 20,000 66,203 38,089 19,600 144 1,627 2,378 58,296 3,000 55,296 365,000
4 20,000 90,513 58,296 19,600 144 1,637 3,224 79,339 4,000 75,339 365,000
5 20,000 116,038 79,339 19,600 144 1,638 4,106 101,262 5,000 96,262 365,000
6 20,000 142,840 101,262 19,600 144 1,620 5,025 124,123 5,000 119,123 365,000
7 20,000 170,982 124,123 19,600 144 1,593 5,984 147,971 4,000 143,971 365,000
8 0 179,531 147,971 0 144 1,702 6,159 152,284 3,000 149,284 365,000
9 0 188,508 152,284 0 144 1,825 6,337 156,652 2,000 154,652 365,000
10 0 197,933 156,652 0 144 1,961 6,517 161,064 0 161,064 365,000
11 0 207,830 161,064 0 144 2,099 7,286 166,107 0 166,107 365,000
12 0 218,221 166,107 0 144 2,239 7,513 171,237 0 171,237 365,000
13 0 229,132 171,237 0 144 2,376 7,743 176,460 0 176,460 365,272
14 0 240,589 176,460 0 144 2,515 7,978 181,779 0 181,779 367,193
15 0 252,619 181,779 0 144 2,660 8,217 187,192 0 187,192 368,767
16 0 265,249 187,192 0 144 2,815 8,460 192,692 0 192,692 369,969
17 0 278,512 192,692 0 144 2,980 8,707 198,275 0 198,275 370,774
18 0 292,438 198,275 0 144 3,157 8,957 203,930 0 203,930 371,153
19 0 307,059 203,930 0 144 3,373 9,209 209,623 0 209,623 373,128
20 0 322,412 209,623 0 144 3,606 9,463 215,335 0 215,335 374,683
25 0 411,489 238,384 0 144 13,234 10,746 244,235 0 244,235 378,564
30 0 525,176 0 0 0 0 12,022 272,750 0 0 384,577
The policy value, cash surrender value, and the death benefit will
differ if premiums are paid in different amounts or frequencies.
It is emphasized that the hypothetical investment returns are
illustrative only, and should not be deemed a representation of past or
future results. Actual investment returns may be more or less than
those shown and will depend on a number of factors, including the
investment allocation made by the policyholder, and the investment
return for the portfolios of manufacturers investment trust.
The policy value, cash surrender value and death benefit for a policy
would be different from those shown if actual rates of investment
return averaged the rate shown above over a period of years, but also
fluctuated above or below that average for individual policy years.
No representations can be made that these hypothetical rates of return
can be achieved for any one year or sustained over any period of time.
A-4
48
Table 3 - Regular Underwriting
Hypothetical Gross Investment Return of 12.00%
Current Charges
-----------------------------------------------------------------------------------------------------------------------
Premium Policy plus less less plus Policy Net Cash Death
Pol Annual Accum Value Net Admin Cost Invest Value Surr Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees of Ins Earning End Yr Charge Value End Yr
1 20,000 21,000 0 19,600 144 730 1,930 20,656 2,000 18,656 365,000
2 20,000 43,050 20,656 19,600 144 967 4,001 43,147 3,000 40,147 365,000
3 20,000 66,203 43,147 19,600 144 1,158 6,260 67,704 3,000 64,704 365,000
4 20,000 90,513 67,704 19,600 144 1,203 8,735 94,692 4,000 90,692 365,000
5 20,000 116,038 94,692 19,600 144 1,176 11,459 124,432 5,000 119,432 365,000
6 20,000 142,840 124,432 19,600 144 1,187 14,459 157,160 5,000 152,160 365,000
7 20,000 170,982 157,160 19,600 144 1,356 17,752 193,011 4,000 189,011 365,000
8 0 179,531 193,011 0 144 1,479 19,385 210,774 3,000 207,774 365,000
9 0 188,508 210,774 0 144 1,619 21,170 230,181 2,000 228,181 365,000
10 0 197,933 230,181 0 144 1,768 23,119 251,388 0 251,388 365,000
11 0 207,830 251,388 0 144 1,784 26,230 275,689 0 275,689 365,000
12 0 218,221 275,689 0 144 1,782 28,776 302,539 0 302,539 365,000
13 0 229,132 302,539 0 144 1,765 31,590 332,220 0 332,220 365,000
14 0 240,589 332,220 0 144 1,700 34,704 365,080 0 365,080 365,000
15 0 252,619 365,080 0 144 1,614 38,152 401,473 0 401,473 365,000
16 0 265,249 401,473 0 144 1,936 41,947 441,340 0 441,340 365,000
17 0 278,512 441,340 0 144 2,313 46,103 484,985 0 484,985 365,000
18 0 292,438 484,985 0 144 2,756 50,651 532,736 0 532,736 365,000
19 0 307,059 532,736 0 144 3,307 55,623 584,908 0 584,908 365,000
20 0 322,412 584,908 0 144 3,944 61,054 641,874 0 641,874 365,000
25 0 411,489 927,005 0 144 8,194 96,660 1,015,328 0 1,015,328 365,000
30 0 525,176 1,454,137 0 144 16,677 151,419 1,588,736 0 1,588,736 365,000
</Table>
<Table>
<Caption>
Guaranteed Charges
-----------------------------------------------------------------------------------------------------------------------
Premium Policy plus less less plus Policy Net Cash Death
Pol Annual Accum Value Net Admin Cost Invest Value Surr Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees of Ins Earning End Yr Charge Value End Yr
1 20,000 21,000 0 19,600 144 1,566 1,885 19,776 2,000 17,776 365,000
2 20,000 43,050 19,776 19,600 144 1,592 3,879 41,519 3,000 38,519 365,000
3 20,000 66,203 41,519 19,600 144 1,600 6,072 65,447 3,000 62,447 365,000
4 20,000 90,513 65,447 19,600 144 1,583 8,487 91,807 4,000 87,807 365,000
5 20,000 116,038 91,807 19,600 144 1,541 11,148 120,871 5,000 115,871 365,000
6 20,000 142,840 120,871 19,600 144 1,504 14,083 152,906 5,000 147,906 386,851
7 20,000 170,982 152,906 19,600 144 1,888 17,295 187,769 4,000 183,769 460,034
8 0 179,531 187,769 0 144 2,132 18,822 204,315 3,000 201,315 486,269
9 0 188,508 204,315 0 144 2,428 20,476 222,219 2,000 220,219 515,548
10 0 197,933 222,219 0 144 2,743 22,265 241,597 0 241,597 543,592
11 0 207,830 241,597 0 144 3,114 25,132 263,470 0 263,470 577,000
12 0 218,221 263,470 0 144 3,529 27,400 287,198 0 287,198 611,732
13 0 229,132 287,198 0 144 3,968 29,862 312,948 0 312,948 647,803
14 0 240,589 312,948 0 144 4,483 32,531 340,852 0 340,852 688,522
15 0 252,619 340,852 0 144 5,045 35,424 371,088 0 371,088 731,042
16 0 265,249 371,088 0 144 5,669 38,557 403,832 0 403,832 775,357
17 0 278,512 403,832 0 144 6,361 41,949 439,276 0 439,276 821,446
18 0 292,438 439,276 0 144 7,132 45,620 477,620 0 477,620 869,269
19 0 307,059 477,620 0 144 8,091 49,585 518,970 0 518,970 923,766
20 0 322,412 518,970 0 144 9,160 53,858 563,524 0 563,524 980,531
25 0 411,489 778,844 0 144 13,234 80,710 843,484 0 843,484 1,307,401
30 0 525,176 0 0 0 0 119,153 1,243,090 0 0 1,752,756
The policy value, cash surrender value, and the death benefit will
differ if premiums are paid in different amounts or frequencies.
It is emphasized that the hypothetical investment returns are
illustrative only, and should not be deemed a representation of past or
future results. Actual investment returns may be more or less than
those shown and will depend on a number of factors, including the
investment allocation made by the policyholder, and the investment
return for the portfolios of manufacturers investment trust.
The policy value, cash surrender value and death benefit for a policy
would be different from those shown if actual rates of investment
return averaged the rate shown above over a period of years, but also
fluctuated above or below that average for individual policy years.
No representations can be made that these hypothetical rates of return
can be achieved for any one year or sustained over any period of time.
A-5
49
Table 4 - Short Form Underwriting
Hypothetical Gross Investment Return of 0.00%
Current Charges
-----------------------------------------------------------------------------------------------------------------------
Premium Policy plus less less plus Policy Net Cash Death
Pol Annual Accum Value Net Admin Cost Invest Value Surr Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees of Ins Earning End Yr Charge Value End Yr
1 20,000 21,000 0 19,600 144 840 -325 18,291 2,000 16,291 365,000
2 20,000 43,050 18,291 19,600 144 1,023 -636 36,087 3,000 33,087 365,000
3 20,000 66,203 36,087 19,600 144 1,236 -938 53,370 3,000 50,370 365,000
4 20,000 90,513 53,370 19,600 144 1,455 -1,231 70,140 4,000 66,140 365,000
5 20,000 116,038 70,140 19,600 144 1,624 -1,516 86,457 5,000 81,457 365,000
6 20,000 142,840 86,457 19,600 144 1,678 -1,794 102,441 5,000 97,441 365,000
7 20,000 170,982 102,441 19,600 144 1,686 -2,066 118,144 4,000 114,144 365,000
8 0 179,531 118,144 0 144 1,841 -1,998 114,160 3,000 111,160 365,000
9 0 188,508 114,160 0 144 2,031 -1,929 110,056 2,000 108,056 365,000
10 0 197,933 110,056 0 144 2,249 -1,857 105,806 0 105,806 365,000
11 0 207,830 105,806 0 144 2,288 -1,422 101,952 0 101,952 365,000
12 0 218,221 101,952 0 144 2,278 -1,369 98,161 0 98,161 365,000
13 0 229,132 98,161 0 144 2,223 -1,318 94,476 0 94,476 365,000
14 0 240,589 94,476 0 144 2,045 -1,269 91,018 0 91,018 365,000
15 0 252,619 91,018 0 144 1,724 -1,225 87,925 0 87,925 365,000
16 0 265,249 87,925 0 144 1,874 -1,181 84,726 0 84,726 365,000
17 0 278,512 84,726 0 144 2,037 -1,137 81,408 0 81,408 365,000
18 0 292,438 81,408 0 144 2,208 -1,090 77,965 0 77,965 365,000
19 0 307,059 77,965 0 144 2,374 -1,042 74,406 0 74,406 365,000
20 0 322,412 74,406 0 144 2,543 -992 70,726 0 70,726 365,000
25 0 411,489 53,626 0 144 4,419 -696 48,367 0 48,367 365,000
30 0 525,176 21,086 0 144 8,565 -223 12,154 0 12,154 365,000
</Table>
<Table>
<Caption>
Guaranteed Charges
-----------------------------------------------------------------------------------------------------------------------
Premium Policy plus less less plus Policy Net Cash Death
Pol Annual Accum Value Net Admin Cost Invest Value Surr Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees of Ins Earning End Yr Charge Value End Yr
1 20,000 21,000 0 19,600 144 1,570 -319 17,567 2,000 15,567 365,000
2 20,000 43,050 17,567 19,600 144 1,613 -618 34,792 3,000 31,792 365,000
3 20,000 66,203 34,792 19,600 144 1,653 -912 51,684 3,000 48,684 365,000
4 20,000 90,513 51,684 19,600 144 1,687 -1,200 68,253 4,000 64,253 365,000
5 20,000 116,038 68,253 19,600 144 1,723 -1,482 84,503 5,000 79,503 365,000
6 20,000 142,840 84,503 19,600 144 1,754 -1,760 100,446 5,000 95,446 365,000
7 20,000 170,982 100,446 19,600 144 1,793 -2,031 116,078 4,000 112,078 365,000
8 0 179,531 116,078 0 144 1,987 -1,962 111,985 3,000 108,985 365,000
9 0 188,508 111,985 0 144 2,210 -1,890 107,740 2,000 105,740 365,000
10 0 197,933 107,740 0 144 2,467 -1,815 103,314 0 103,314 365,000
11 0 207,830 103,314 0 144 2,748 -1,384 99,038 0 99,038 365,000
12 0 218,221 99,038 0 144 3,058 -1,324 94,512 0 94,512 365,000
13 0 229,132 94,512 0 144 3,391 -1,260 89,717 0 89,717 365,000
14 0 240,589 89,717 0 144 3,757 -1,192 84,624 0 84,624 365,000
15 0 252,619 84,624 0 144 4,160 -1,120 79,200 0 79,200 365,000
16 0 265,249 79,200 0 144 4,619 -1,042 73,395 0 73,395 365,000
17 0 278,512 73,395 0 144 5,144 -960 67,147 0 67,147 365,000
18 0 292,438 67,147 0 144 5,752 -870 60,381 0 60,381 365,000
19 0 307,059 60,381 0 144 6,461 -773 53,002 0 53,002 365,000
20 0 322,412 53,002 0 144 7,278 -666 44,914 0 44,914 365,000
25 0 411,489 3,327 0 144 13,234 -4 0 0 0 0
30 0 525,176 0 0 0 0 0 0 0 0 0
The policy value, cash surrender value, and the death benefit will
differ if premiums are paid in different amounts or frequencies.
It is emphasized that the hypothetical investment returns are
illustrative only, and should not be deemed a representation of past or
future results. Actual investment returns may be more or less than
those shown and will depend on a number of factors, including the
investment allocation made by the policyholder, and the investment
return for the portfolios of manufacturers investment trust.
The policy value, cash surrender value and death benefit for a policy
would be different from those shown if actual rates of investment
return averaged the rate shown above over a period of years, but also
fluctuated above or below that average for individual policy years.
No representations can be made that these hypothetical rates of return
can be achieved for any one year or sustained over any period of time.
A-6
50
Table 5 - Short Form Underwriting
Hypothetical Gross Investment Return of 6.00%
Current Charges
-----------------------------------------------------------------------------------------------------------------------
Premium Policy plus less less plus Policy Net Cash Death
Pol Annual Accum Value Net Admin Cost Invest Value Surr Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees of Ins Earning End Yr Charge Value End Yr
1 20,000 21,000 0 19,600 144 839 799 19,416 2,000 17,416 365,000
2 20,000 43,050 19,416 19,600 144 1,017 1,609 39,465 3,000 36,465 365,000
3 20,000 66,203 39,465 19,600 144 1,216 2,445 60,149 3,000 57,149 365,000
4 20,000 90,513 60,149 19,600 144 1,411 3,307 81,502 4,000 77,502 365,000
5 20,000 116,038 81,502 19,600 144 1,541 4,199 103,615 5,000 98,615 365,000
6 20,000 142,840 103,615 19,600 144 1,546 5,125 126,651 5,000 121,651 365,000
7 20,000 170,982 126,651 19,600 144 1,495 6,092 150,703 4,000 146,703 365,000
8 0 179,531 150,703 0 144 1,574 6,277 155,263 3,000 152,263 365,000
9 0 188,508 155,263 0 144 1,674 6,466 159,910 2,000 157,910 365,000
10 0 197,933 159,910 0 144 1,781 6,658 164,644 0 164,644 365,000
11 0 207,830 164,644 0 144 1,743 7,458 170,214 0 170,214 365,000
12 0 218,221 170,214 0 144 1,669 7,714 176,115 0 176,115 365,000
13 0 229,132 176,115 0 144 1,567 7,986 182,390 0 182,390 365,000
14 0 240,589 182,390 0 144 1,397 8,276 189,124 0 189,124 365,000
15 0 252,619 189,124 0 144 1,147 8,589 196,422 0 196,422 365,000
16 0 265,249 196,422 0 144 1,212 8,920 203,986 0 203,986 365,000
17 0 278,512 203,986 0 144 1,280 9,263 211,826 0 211,826 365,000
18 0 292,438 211,826 0 144 1,347 9,619 219,954 0 219,954 365,000
19 0 307,059 219,954 0 144 1,422 9,988 228,375 0 228,375 365,000
20 0 322,412 228,375 0 144 1,501 10,369 237,100 0 237,100 365,000
25 0 411,489 274,822 0 144 2,248 12,468 284,898 0 284,898 365,000
30 0 525,176 327,368 0 144 3,582 14,831 338,473 0 338,473 365,000
Guaranteed Charges
-----------------------------------------------------------------------------------------------------------------------
Premium Policy plus less less plus Policy Net Cash Death
Pol Annual Accum Value Net Admin Cost Invest Value Surr Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees of Ins Earning End Yr Charge Value End Yr
1 20,000 21,000 0 19,600 144 1,568 783 18,671 2,000 16,671 365,000
2 20,000 43,050 18,671 19,600 144 1,602 1,564 38,089 3,000 35,089 365,000
3 20,000 66,203 38,089 19,600 144 1,627 2,378 58,296 3,000 55,296 365,000
4 20,000 90,513 58,296 19,600 144 1,637 3,224 79,339 4,000 75,339 365,000
5 20,000 116,038 79,339 19,600 144 1,638 4,106 101,262 5,000 96,262 365,000
6 20,000 142,840 101,262 19,600 144 1,620 5,025 124,123 5,000 119,123 365,000
7 20,000 170,982 124,123 19,600 144 1,593 5,984 147,971 4,000 143,971 365,000
8 0 179,531 147,971 0 144 1,702 6,159 152,284 3,000 149,284 365,000
9 0 188,508 152,284 0 144 1,825 6,337 156,652 2,000 154,652 365,000
10 0 197,933 156,652 0 144 1,961 6,517 161,064 0 161,064 365,000
11 0 207,830 161,064 0 144 2,099 7,286 166,107 0 166,107 365,000
12 0 218,221 166,107 0 144 2,239 7,513 171,237 0 171,237 365,000
13 0 229,132 171,237 0 144 2,376 7,743 176,460 0 176,460 365,272
14 0 240,589 176,460 0 144 2,515 7,978 181,779 0 181,779 367,193
15 0 252,619 181,779 0 144 2,660 8,217 187,192 0 187,192 368,767
16 0 265,249 187,192 0 144 2,815 8,460 192,692 0 192,692 369,969
17 0 278,512 192,692 0 144 2,980 8,707 198,275 0 198,275 370,774
18 0 292,438 198,275 0 144 3,157 8,957 203,930 0 203,930 371,153
19 0 307,059 203,930 0 144 3,373 9,209 209,623 0 209,623 373,128
20 0 322,412 209,623 0 144 3,606 9,463 215,335 0 215,335 374,683
25 0 411,489 238,384 0 144 13,234 10,746 244,235 0 244,235 378,564
30 0 525,176 0 0 0 0 12,022 272,750 0 0 384,577
The policy value, cash surrender value, and the death benefit will
differ if premiums are paid in different amounts or frequencies.
It is emphasized that the hypothetical investment returns are
illustrative only, and should not be deemed a representation of past or
future results. Actual investment returns may be more or less than
those shown and will depend on a number of factors, including the
investment allocation made by the policyholder, and the investment
return for the portfolios of manufacturers investment trust.
The policy value, cash surrender value and death benefit for a policy
would be different from those shown if actual rates of investment
return averaged the rate shown above over a period of years, but also
fluctuated above or below that average for individual policy years.
No representations can be made that these hypothetical rates of return
can be achieved for any one year or sustained over any period of time.
A-7
51
Table 6 - Short Form Underwriting
Hypothetical Gross Investment Return of 12.00%
Current Charges
-----------------------------------------------------------------------------------------------------------------------
Premium Policy plus less less plus Policy Net Cash Death
Pol Annual Accum Value Net Admin Cost Invest Value Surr Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees of Ins Earning End Yr Charge Value End Yr
1 20,000 21,000 0 19,600 144 837 1,925 20,543 2,000 18,543 365,000
2 20,000 43,050 20,543 19,600 144 1,010 3,988 42,977 3,000 39,977 365,000
3 20,000 66,203 42,977 19,600 144 1,195 6,241 67,479 3,000 64,479 365,000
4 20,000 90,513 67,479 19,600 144 1,362 8,704 94,276 4,000 90,276 365,000
5 20,000 116,038 94,276 19,600 144 1,447 11,402 123,688 5,000 118,688 365,000
6 20,000 142,840 123,688 19,600 144 1,440 14,371 156,076 5,000 151,076 365,000
7 20,000 170,982 156,076 19,600 144 1,612 17,629 191,549 4,000 187,549 365,000
8 0 179,531 191,549 0 144 1,726 19,224 208,903 3,000 205,903 365,000
9 0 188,508 208,903 0 144 1,866 20,968 227,860 2,000 225,860 365,000
10 0 197,933 227,860 0 144 2,001 22,873 248,588 0 248,588 365,000
11 0 207,830 248,588 0 144 2,015 25,924 272,353 0 272,353 365,000
12 0 218,221 272,353 0 144 2,001 28,414 298,622 0 298,622 365,000
13 0 229,132 298,622 0 144 1,975 31,168 327,671 0 327,671 365,000
14 0 240,589 327,671 0 144 1,899 34,216 359,844 0 359,844 365,000
15 0 252,619 359,844 0 144 1,791 37,593 395,501 0 395,501 365,000
16 0 265,249 395,501 0 144 2,106 41,312 434,563 0 434,563 365,000
17 0 278,512 434,563 0 144 2,470 45,384 477,333 0 477,333 365,000
18 0 292,438 477,333 0 144 2,892 49,842 524,138 0 524,138 365,000
19 0 307,059 524,138 0 144 3,391 54,718 575,321 0 575,321 365,000
20 0 322,412 575,321 0 144 3,974 60,048 631,251 0 631,251 365,000
25 0 411,489 911,651 0 144 8,058 95,059 998,509 0 998,509 365,000
30 0 525,176 1,430,038 0 144 16,400 148,909 1,562,403 0 1,562,403 365,000
</Table>
<Table>
Guaranteed Charges
-----------------------------------------------------------------------------------------------------------------------
Premium Policy plus less less plus Policy Net Cash Death
Pol Annual Accum Value Net Admin Cost Invest Value Surr Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees of Ins Earning End Yr Charge Value End Yr
1 20,000 21,000 0 19,600 144 1,566 1,885 19,776 2,000 17,776 365,000
2 20,000 43,050 19,776 19,600 144 1,592 3,879 41,519 3,000 38,519 365,000
3 20,000 66,203 41,519 19,600 144 1,600 6,072 65,447 3,000 62,447 365,000
4 20,000 90,513 65,447 19,600 144 1,583 8,487 91,807 4,000 87,807 365,000
5 20,000 116,038 91,807 19,600 144 1,541 11,148 120,871 5,000 115,871 365,000
6 20,000 142,840 120,871 19,600 144 1,504 14,083 152,906 5,000 147,906 386,851
7 20,000 170,982 152,906 19,600 144 1,888 17,295 187,769 4,000 183,769 460,034
8 0 179,531 187,769 0 144 2,132 18,822 204,315 3,000 201,315 486,269
9 0 188,508 204,315 0 144 2,428 20,476 222,219 2,000 220,219 515,548
10 0 197,933 222,219 0 144 2,743 22,265 241,597 0 241,597 543,592
11 0 207,830 241,597 0 144 3,114 25,132 263,470 0 263,470 577,000
12 0 218,221 263,470 0 144 3,529 27,400 287,198 0 287,198 611,732
13 0 229,132 287,198 0 144 3,968 29,862 312,948 0 312,948 647,803
14 0 240,589 312,948 0 144 4,483 32,531 340,852 0 340,852 688,522
15 0 252,619 340,852 0 144 5,045 35,424 371,088 0 371,088 731,042
16 0 265,249 371,088 0 144 5,669 38,557 403,832 0 403,832 775,357
17 0 278,512 403,832 0 144 6,361 41,949 439,276 0 439,276 821,446
18 0 292,438 439,276 0 144 7,132 45,620 477,620 0 477,620 869,269
19 0 307,059 477,620 0 144 8,091 49,585 518,970 0 518,970 923,766
20 0 322,412 518,970 0 144 9,160 53,858 563,524 0 563,524 980,531
25 0 411,489 778,844 0 144 13,234 80,710 843,484 0 843,484 1,307,401
30 0 525,176 0 0 0 0 119,153 1,243,090 0 0 1,752,756
The policy value, cash surrender value, and the death benefit will
differ if premiums are paid in different amounts or frequencies.
It is emphasized that the hypothetical investment returns are
illustrative only, and should not be deemed a representation of past or
future results. Actual investment returns may be more or less than
those shown and will depend on a number of factors, including the
investment allocation made by the policyholder, and the investment
return for the portfolios of manufacturers investment trust.
The policy value, cash surrender value and death benefit for a policy
would be different from those shown if actual rates of investment
return averaged the rate shown above over a period of years, but also
fluctuated above or below that average for individual policy years.
No representations can be made that these hypothetical rates of return
can be achieved for any one year or sustained over any period of time.
A-8
52
APPENDIX B - AUDITED FINANCIAL STATEMENTS
53
Part 2
Other Information
54
PART II. OTHER INFORMATION
Representation of Insurer Pursuant to Section 26 of the Investment Company Act
of 1940
The Manufacturers Life Insurance Company (U.S.A.) hereby represents
that the fees and charges deducted under the policies issued pursuant to this
registration statement in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by the Company.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
Cross-Reference Sheet;
The Prospectus, consisting of 48 pages;
Representation of Insurer Pursuant to Section 26 of the Investment Company Act
of 1940
The signatures;
Written consents of the following persons:
A. Ernst & Young LLP - TO BE FILED BY AMENDMENT
B. Opinion and Consent of Actuary - TO BE FILED BY AMENDMENT
C. Opinion and Consent of James D. Gallagher, Attorney - TO BE FILED BY
AMENDMENT
The following exhibits are filed as part of this Registration Statement:
1. Copies of all exhibits required by paragraph A of the instructions as to
exhibits in Form N-8B-2 are set forth below under designations based on such
instructions:
A(1) Resolutions of Board of Directors of The Manufacturers Life
Insurance Company (U.S.A.) establishing Separate Account N -
TO BE FILED BY AMENDMENT
A(3)(a)(i) Form of Distribution Agreement. Incorporated by reference to
Exhibit A(3)(a)(i) to the registration statement on Form S-6,
file number 333-66303 filed October 29, 1998 (the "SVUL
Registration Statement").
A(3)(a)(ii) Form of Amendment to Distribution Agreement. Incorporated by
reference to Exhibit A(3)(a)(ii) to the SVUL Registration
Statement.
A(3)(a)(iii) Form of Amendment to Distribution Agreement. Incorporated by
reference to Exhibit A(3)(a)(iii) to the SVUL Registration
Statement.
A(3)(b) Form of broker-dealer agreement. Incorporated by reference to
Exhibit A(3)(b) to the initial registration statement on Form
S-6, File Number 333-70950, filed October 4, 2001.
A(5)(a) Form of Flexible Premium Variable Life Insurance Policy -
Incorporated by reference to Exhibit A(5)(a) to the
registration statement on Form S-6, file number 333-51293
filed April 29, 1998.
A(6)(a) Restated Articles of Redomestication of The Manufacturers Life
Insurance Company (U.S.A.) - Incorporated by reference to
Exhibit A(6) to the registration statement filed July 20, 2000
(File No. 333-41814) (the "Initial Registration Statement")
A(6)(b) By-Laws of The Manufacturers Life Insurance Company (U.S.A.) -
Incorporated by reference to Exhibit A(6)(b) to the Initial
Registration Statement.
A(8)(a)(i) Form of Service Agreement between The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
of America dated June 1, 1988. Incorporated by reference to
Exhibit A(8)(a)(i) to pre-effective amendment no. 1 to
55
the registration statement on Form S-6, file number 333-51293
filed August 28, 1998.
A(8)(a) Form of Amendment to Service Agreement between The
Manufacturers Life Insurance Company and The Manufacturers
Life Insurance Company of America dated December 31, 1992.
Incorporated by reference to Exhibit A(8)(a)(ii) to
pre-effective amendment no. 1 to the registration statement on
Form S-6, file number 333-51293 filed August 28, 1998.
A(8)(a)(iii) Form of Amendment to Service Agreement between The
Manufacturers Life Insurance Company and The Manufacturers
Life Insurance Company of America dated May 31, 1993.
Incorporated by reference to Exhibit A(8)(a)(iii) to
pre-effective amendment no. 1 to the registration statement on
Form S-6, file number 333-51293 filed August 28, 1998.
A(8)(a)(iv) Form of Amendment to Service Agreement between The
Manufacturers Life Insurance Company and The Manufacturers
Life Insurance Company of America dated June 30, 1993.
Incorporated by reference to Exhibit A(8)(a)(iv) to
pre-effective amendment no. 1 to the registration statement on
Form S-6, file number 333-51293 filed August 28, 1998.
A(8)(a)(v) Form of Amendment to Service Agreement between The
Manufacturers Life Insurance Company and The Manufacturers
Life Insurance Company of America dated December 31, 1996.
Incorporated by reference to Exhibit A(8)(a)(v) to
pre-effective amendment no. 1 to the registration statement on
Form S-6, file number 333-51293 filed August 28, 1998.
A(8)(a)(vi) Form of Amendment to Service Agreement between The
Manufacturers Life Insurance Company and The Manufacturers
Life Insurance Company of America dated May 31, 1998.
Incorporated by reference to Exhibit A(8)(a)(vi) to
pre-effective amendment no. 1 to the registration statement on
Form S-6, file number 333-51293 filed August 28, 1998.
A(8)(a)(vii) Form of Amendment to Service Agreement between The
Manufacturers Life Insurance Company and The Manufacturers
Life Insurance Company of America dated December 31, 1998.
Incorporated by reference to Exhibit A(8)(a)(vii) to
post-effective amendment No. 11 to the registration statement
on Form N-4, file number 33-57018 filed March 1, 1999.
A(8)(b) Form of Stoploss Reinsurance Agreement. Incorporated by
reference to Exhibit A(8)(b) to the SVUL Registration
Statement.
A(8)(c)(i) Form of Service Agreement. Incorporated by reference to
Exhibit A(8)(c)(i) to pre-effective amendment no. 1 to the
registration statement on Form S-6, file number 333-51293
filed August 28, 1998.
A(8)(c)(ii) Form of Amendment to Service Agreement. Incorporated by
reference to Exhibit A(8)(c)(ii) to pre-effective amendment
no. 1 to the registration statement on Form S-6, file number
333-51293 filed August 28, 1998.
A(10)(a)(i) Form of Application for Flexible Premium Variable Life
Insurance Policy. Incorporated by reference to Exhibit A(10)
to pre- effective amendment no. 1 to the registration
statement on Form S-6, file number 33-51293 , filed August 28,
1998.
56
A(10)(b) Form of Assumption Reinsurance Agreement with The
Manufacturers Life Insurance Company (U.S.A.) and The
Manufacturers Life Insurance Company of America , incorporated
by reference to the initial registration statement on for S-6,
file number 333-70950, filed October 4, 2001
2. Consents of the following:
A. Opinion and consent of James D. Gallagher, Esq., Secretary and
General Counsel of The Manufacturers Life Insurance Company of
America - TO BE FILED BY AMENDMENT
B. Opinion and consent of Brian Koop, Actuary, of The Manufacturers
Life Insurance Company of America - TO BE FILED BY AMENDMENT
C. Consent of Ernst & Young LLP- TO BE FILED BY AMENDMENT
3. No financial statements are omitted from the prospectus pursuant to
instruction 1(b) or (c) of Part I.
4. Not applicable.
6. Memorandum Regarding Issuance, Face Amount Increase, Redemption and Transfer
Procedures for the Policies. Incorporated by reference to Exhibit A(6) to pre-
effective amendment no. 1 to the registration statement on Form S-6, file number
333-51293 filed August 28, 1998.
7. Powers of Attorney
(i) (Felix Chee, Robert A. Cook, John DesPrez III, Geoffrey
Guy, James O'Malley, Joseph J. Pietroski, Rex Schaybaugh)
incorporated by reference to exhibit 7 to initial
registration statement on Form S-6, file number 333-41814
filed July 20, 2000 on behalf of The Manufacturers Life
Insurance Company (U.S.A.)
(ii) Powers of Attorney (John Ostler) incorporated by reference
to exhibit 7(ii) of the initial registration statement on
Form S-6, file number 333-70950, filed October 4, 2001
(iii) Powers of Attorney (Jim Boyle, John Lyon incorporated by
reference to exhibit 7(iii) of the initial registration
statement on Form S-6, file number 333-70950, filed
October 4, 2001
8. Undertakings
As a condition to the grant of effectiveness of this Registration Statement
prior to the transfer of substantially all the assets and liabilities of The
Manufacturers Life Insurance Company of America to The Manufacturers Life
Insurance Company (U.S.A.), Registrant hereby undertakes not to offer or sell to
the public any securities of which Registrant is the issuer unless and until the
transfer of assets and liabilities is consummated and a registration statement
for Registrant is filed pursuant to Section 8 of the Investment Company Act of
1940 to reflect the change in depositor, which registration statement may take
the form of an amendment to the Form N-8B-2 of Separate Account 4 of The
Manufacturers Life Insurance of America (File no. 811-5130).
57
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant and the Depositor and have caused this Registration Statement to be
signed on their behalf in the City of Boston, Massachusetts, on this 10th day of
October, 2001.
SEPARATE ACCOUNT N OF
THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
(Registrant)
By: THE MANUFACTURERS LIFE INSURANCE
COMPANY (U.S.A.)
(Depositor)
By: /s/ John D. DesPrez III
------------------------------------------------
John D. DesPrez III
President
THE MANUFACTURERS LIFE
INSURANCE COMPANY (U.S.A.)
By: /s/ John D. DesPrez III
------------------------------------------------
John D. DesPrez III
President
58
Signatures
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on this 10th day of October, 2001.
Signature Title
/s/John D. DesPrez III Chairman and President
- ------------------------------------
John D. DesPrez III (Principal Executive Officer)
* Vice President and
- ------------------------------------
John Ostler Chief Financial Officer
* Director
- ------------------------------------
James Boyle
* Director
- ------------------------------------
Robert A. Cook
* Director
- ------------------------------------
Geoffrey Guy
* Director
- ------------------------------------
James O'Malley
* Director
- ------------------------------------
John Lyon
* Director
- ------------------------------------
Rex Schaybaugh, Jr.
*/s/James D. Gallagher
- ------------------------------------
JAMES D. GALLAGHER
Pursuant to Power of Attorney