Prospectus dated May 3, 2010
(JOHN HANCOCK(R) LOGO)
JOHN HANCOCK ANNUITIES
Declaration Variable Annuity
Patriot Variable Annuity
Revolution Access Variable Annuity
Revolution Extra Variable Annuity**
Revolution Value Variable Annuity
PREVIOUSLY ISSUED CONTRACTS
This Prospectus describes interests in the deferred Purchase Payment Variable
Annuity Contracts listed above that were previously issued by JOHN HANCOCK
VARIABLE LIFE INSURANCE COMPANY ("JHVLICO") and subsequently assumed by JOHN
HANCOCK LIFE INSURANCE COMPANY (U.S.A.) ("JOHN HANCOCK USA"). These Contracts
are no longer offered for sale, however, you may make Additional Purchase
Payments as permitted under your Contract. In this Prospectus, "we," "us,"
"our," or "the Company" refers to John Hancock USA. You, the Contract Owner,
should refer to the first page of your Contract, to determine which of the above
Contracts you purchased.
This Prospectus describes the variable portion of the Contracts to which you may
allocate Additional Purchase Payments, to the extent permitted by your Contract.
If you do, your Contract Value (other than value allocated to a Fixed Investment
Option) and Variable Annuity payments will vary according to the investment
performance of the applicable Sub-Accounts of the JOHN HANCOCK LIFE INSURANCE
COMPANY (U.S.A.) SEPARATE ACCOUNT T (the "Separate Account"). Each Sub-Account
invests in one of the following Portfolios of John Hancock Trust that
corresponds to a Variable Investment Option that we make available on the date
of this Prospectus. Certain Variable Investment Options may not be available
under a Contract.
JOHN HANCOCK TRUST
500 Index Trust B
Active Bond Trust
Blue Chip Growth Trust(1)
Capital Appreciation Trust(1)
Equity-Income Trust(1)
Financial Services Trust
Global Bond Trust(1)
Health Sciences Trust(2)
High Yield Trust(1)
International Equity Index Trust B(1)
International Value Trust(3)
Lifestyle Balanced Trust
Mid Cap Index Trust(2)
Mid Cap Stock Trust(2)
Mid Value Trust(1)
Money Market Trust B
Optimized All Cap Trust
Real Estate Securities Trust(1)
Short Term Government Income Trust(4)
Small Cap Growth Trust
Small Cap Index Trust(2)
Small Cap Value Trust(2)
Total Bond Market Trust B
Total Return Trust(2)
Total Stock Market Index Trust(2)
(1) Available on Revolution Access, Revolution Extra, Revolution Value Variable
Annuities and Patriot Variable Annuity Contracts only
(2) Available on Revolution Access, Revolution Extra, Revolution Value Variable
Annuity Contracts only
(3) Successor to "Overseas Equity Trust"
(4) Successor to "Short-Term Bond Trust"
CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED, GUARANTEED OR ENDORSED
BY ANY BANK, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY. PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT
FOR FUTURE REFERENCE. IT CONTAINS INFORMATION ABOUT THE SEPARATE ACCOUNT AND THE
VARIABLE PORTION OF THE CONTRACT THAT YOU SHOULD KNOW BEFORE INVESTING. THE
CONTRACTS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION ("SEC"). NEITHER THE SEC NOR ANY STATE HAS DETERMINED WHETHER THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
** If you purchased a Revolution Extra Contract, we will add an "Extra Credit"
of at least 3.5% of each Purchase Payment that you make under that
Contract. Because of this feature, the withdrawal charge applicable to
certain withdrawals of Contract Value may be higher than those imposed
under Contracts without an "Extra Credit" or "bonus" feature. The amount of
the Extra Credit may be more than offset by the withdrawal charge if you
prematurely "surrender" or otherwise withdraw money in excess of the free
withdrawal amounts while this charge is in effect.
JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)
JOHN HANCOCK ANNUITIES SERVICE CENTER MAILING ADDRESS
164 Corporate Drive Post Office Box 9505
Portsmouth, NH 03801-6815 Portsmouth, NH 03802-9505
(800) 824-0335 www.jhannuities.com
Table of Contents
I. GLOSSARY OF SPECIAL TERMS ............................................. 1
II. OVERVIEW ............................................................. 3
III. FEE TABLES .......................................................... 5
EXAMPLES .............................................................. 6
IV. BASIC INFORMATION .................................................... 10
WHAT IS THE CONTRACT? ................................................. 10
WHO OWNS THE CONTRACT? ................................................ 10
IS THE OWNER ALSO THE ANNUITANT? ...................................... 10
HOW CAN I INVEST MONEY IN A CONTRACT? ................................. 10
Purchase Payments .................................................. 10
Initial Purchase Payment ........................................... 10
Issue Date and Contract Year ....................................... 11
Limits on Purchase Payments ........................................ 11
Ways to Make Additional Purchase Payments .......................... 11
Additional Purchase Payments by Wire ............................... 11
HOW WILL THE VALUE OF MY INVESTMENT IN THE CONTRACT CHANGE OVER
TIME? .............................................................. 11
Variable Investment Options ........................................ 11
Fixed Investment Options ........................................... 12
Extra Credit Feature ............................................... 12
WHAT ANNUITY BENEFITS DOES THE CONTRACT PROVIDE? ...................... 12
TO WHAT EXTENT CAN JOHN HANCOCK USA VARY THE TERMS AND CONDITIONS OF
THE CONTRACTS? ..................................................... 12
State Law Insurance Requirements ................................... 12
Variations in Charges or Rates ..................................... 12
WHAT ARE THE TAX CONSEQUENCES OF OWNING A CONTRACT? ................... 13
HOW CAN I CHANGE MY CONTRACT'S INVESTMENT OPTIONS? .................... 13
Allocation of Purchase Payments .................................... 13
Transfers Among Investment Options ................................. 13
Procedure for Transferring Your Assets ............................. 15
Telephone and Electronic Transactions .............................. 15
Dollar Cost Averaging Programs ..................................... 15
Strategic Rebalancing Program ...................................... 16
WHAT FEES AND CHARGES WILL BE DEDUCTED FROM MY CONTRACT? .............. 16
Asset-Based Charges ................................................ 17
Annual Contract Fee ................................................ 17
Premium Taxes ...................................................... 17
Withdrawal Charge .................................................. 18
Other Charges ...................................................... 19
HOW CAN I WITHDRAW MONEY FROM MY CONTRACT? ............................ 19
Surrenders and Partial Withdrawals ................................. 19
Nursing Home Waiver of Withdrawal Charge ........................... 20
Waiver of Withdrawal Charge Rider .................................. 20
Systematic Withdrawal Plan ......................................... 21
Telephone Withdrawals .............................................. 21
WHAT HAPPENS IF THE OWNER OR ANNUITANT DIES BEFORE MY CONTRACT'S
MATURITY DATE? ..................................................... 21
Death Benefits - In General ........................................ 21
Distribution Requirements Following Death of Owner ................. 21
Death Benefits Following Death of Annuitant ........................ 22
Standard Death Benefit ............................................. 23
Enhanced Death Benefit Riders ...................................... 23
Calculation and Payment of Death Benefit Value ..................... 23
WHAT OTHER OPTIONAL BENEFITS MAY HAVE BEEN AVAILABLE TO ME UNDER A
CONTRACT? .......................................................... 23
Accumulated Value Enhancement Benefit .............................. 23
Guaranteed Retirement Income Benefit ............................... 24
CAN I RETURN MY CONTRACT? ............................................. 25
V. GENERAL INFORMATION ABOUT US, THE SEPARATE ACCOUNT AND THE
PORTFOLIOS ............................................................ 26
THE COMPANY ........................................................... 26
THE SEPARATE ACCOUNT .................................................. 26
THE PORTFOLIOS ........................................................ 27
VI. INFORMATION ABOUT FIXED INVESTMENT OPTIONS ........................... 34
IN GENERAL ............................................................ 34
HOW THE FIXED INVESTMENT OPTIONS WORK ................................. 34
GUARANTEED INTEREST RATES ............................................. 34
CALCULATION OF MARKET VALUE ADJUSTMENT ("MVA") ........................ 34
WHAT ADDITIONAL GUARANTEE APPLIES TO THE FIXED INVESTMENT OPTIONS UNDER
MY CONTRACT? ....................................................... 35
VII. THE ACCUMULATION PERIOD ............................................. 37
YOUR VALUE IN OUR VARIABLE INVESTMENT OPTIONS ......................... 37
VALUATION OF ACCUMULATION UNITS ....................................... 37
VARIABLE INVESTMENT OPTION VALUATION PROCEDURES ....................... 37
YOUR VALUE IN THE FIXED INVESTMENT OPTIONS ............................ 37
VIII. THE ANNUITY PERIOD ................................................. 38
DATE OF MATURITY ...................................................... 38
CHOOSING FIXED OR VARIABLE ANNUITY PAYMENTS ........................... 38
SELECTING AN ANNUITY OPTION ........................................... 38
VARIABLE MONTHLY ANNUITY PAYMENTS ..................................... 39
ASSUMED INVESTMENT RATE ............................................... 39
TRANSFERS DURING THE ANNUITY PERIOD ................................... 39
FIXED MONTHLY ANNUITY PAYMENTS ........................................ 39
ANNUITY OPTIONS ....................................................... 40
IX. FEDERAL TAX MATTERS .................................................. 41
INTRODUCTION .......................................................... 41
OUR TAX STATUS ........................................................ 41
SPECIAL CONSIDERATIONS FOR OPTIONAL BENEFITS .......................... 41
CHARITABLE REMAINDER TRUSTS ........................................... 41
NONQUALIFIED CONTRACTS ................................................ 42
QUALIFIED CONTRACTS ................................................... 45
SEE YOUR OWN TAX ADVISER .............................................. 49
X. OTHER INFORMATION ..................................................... 50
ASSIGNMENT; CHANGE OF OWNER OR BENEFICIARY ............................ 50
BENEFICIARY ........................................................... 50
SPOUSE ................................................................ 51
CODE SECTION 72-S ..................................................... 51
PERFORMANCE INFORMATION ............................................... 51
REPORTS ............................................................... 51
VOTING PRIVILEGES ..................................................... 51
CHANGES TO THE SEPARATE ACCOUNT ....................................... 52
VARIATIONS IN CHARGES OR RATES FOR ELIGIBLE CLASSES ................... 52
DISTRIBUTION OF CONTRACTS ............................................. 52
CONFIRMATION STATEMENTS ............................................... 53
STATEMENT OF ADDITIONAL INFORMATION ................................... 53
FINANCIAL STATEMENTS .................................................. 54
APPENDIX A: DETAILS ABOUT OUR FIXED INVESTMENT OPTIONS ................... A-1
APPENDIX B: EXAMPLES OF WITHDRAWAL CHARGE CALCULATIONS ................... B-1
APPENDIX C: OPTIONAL ENHANCED DEATH BENEFITS ............................. C-1
APPENDIX D: EXAMPLES OF EARNINGS ENHANCEMENT DEATH BENEFIT CALCULATION ... D-1
APPENDIX E: QUALIFIED PLAN TYPES ......................................... E-1
APPENDIX U: ACCUMULATION UNIT VALUE TABLES ............................... U-1
I. Glossary of Special Terms
The following terms as used in this Prospectus have the indicated meanings. We
also define other terms in specific sections of this Prospectus.
1940 ACT: The Investment Company Act of 1940, as amended.
ACCUMULATION PERIOD: The period between the issue date of the Contract and its
Maturity Date.
ADDITIONAL PURCHASE PAYMENT: Any Purchase Payment made after the initial
Purchase Payment.
ANNUITANT: Any natural person or persons to whom annuity payments are made and
whose life is used to determine the duration of annuity payments involving life
contingencies. If the Contract Owner names more than one person as an
"Annuitant," the second person named is referred to as "co-Annuitant." The
"Annuitant" and "co-Annuitant" are referred to collectively as "Annuitant." The
"Annuitant" is as designated on the Contract specification page or in the
application.
ANNUITIES SERVICE CENTER: The mailing address of our service office is listed on
the first page of this Prospectus. You can send overnight mail to us at 164
Corporate Drive, Portsmouth, New Hampshire 03801-6815.
ANNUITY OPTION: The method selected by the Contract Owner (or as specified in
the Contract if no selection is made) for annuity payments made by us.
ANNUITY PERIOD: The period when we make annuity payments to you following the
Maturity Date.
ANNUITY UNIT: A unit of measure that is used after the election of an Annuity
Option to calculate Variable Annuity payments.
BENEFICIARY: The person, persons or entity entitled to the death benefit under
the Contract. The Beneficiary is as specified in the application, unless
changed.
BUSINESS DAY: Any day on which the New York Stock Exchange is open for business.
The end of a Business Day is the close of daytime trading on the New York Stock
Exchange, which generally is 4:00 p.m. Eastern Time.
CODE: The Internal Revenue Code of 1986, as amended.
COMPANY: John Hancock Life Insurance Company (U.S.A.).
CONTRACT: The Variable Annuity Contracts described by this Prospectus.
CONTRACT ANNIVERSARY: The anniversary of the date the Contract was issued.
CONTRACT VALUE: The total of the Investment Account values attributable to the
Contract.
CONTRACT YEAR: The period of twelve consecutive months beginning on the date as
of which the Contract is issued, or any anniversary of that date.
FIXED ANNUITY: An Annuity Option with payments for a set dollar amount that we
guarantee.
FIXED INVESTMENT OPTION: An Investment Option in which a Company guarantees the
principal value and the rate of interest credited to the Investment Account for
the term of any guarantee period.
GENERAL ACCOUNT: All of the Company's assets other than assets in its Separate
Account or any other separate account that it may maintain.
INVESTMENT ACCOUNT: An account we establish for you which represents your
interests in an Investment Option during the Accumulation Period.
INVESTMENT OPTIONS: The investment choices available to Contract Owners. We
refer to the Variable Investment Options and the Fixed Investment Option
together as Investment Options.
JHVLICO: John Hancock Variable Life Insurance Company.
JOHN HANCOCK USA: John Hancock Life Insurance Company (U.S.A.).
1
MATURITY DATE: The date on which we begin to make annuity payments to the
Annuitant. The Maturity Date is the date specified on the Contract
specifications page, unless changed.
NONQUALIFIED CONTRACT: A Contract which is not issued under a Qualified Plan.
OWNER OR CONTRACT OWNER ("YOU"): The person, persons (co-Owner) or entity
entitled to all of the Ownership rights under the Contract. References in this
Prospectus to Contract Owners are typically by use of "you." The Owner has the
legal right to make all changes in contractual designations where specifically
permitted by the Contract. The Owner is as specified in the application, unless
changed.
PORTFOLIO: A series of a registered open-end management investment company which
corresponds to a Variable Investment Option.
PROSPECTUS: This Prospectus that describes interests in a Contract.
PURCHASE PAYMENT: An amount you pay to us for the benefits provided by the
Contract.
QUALIFIED CONTRACT: A Contract issued under a Qualified Plan.
QUALIFIED PLAN: A retirement plan that receives favorable tax treatment under
Section 401, 403, 408 (IRAs), 408A (Roth IRAs) or 457 of the Code.
RIDER: An optional benefit that you may have elected for an additional charge.
SEPARATE ACCOUNT: John Hancock Life Insurance Company (U.S.A.) Separate Account
T. A separate account is a segregated asset account of a company that is not
commingled with the general assets and obligations of the company.
SUB-ACCOUNT: A Sub-Account of the Separate Account. Each Sub-Account invests in
shares of a specific Portfolio.
SURRENDER VALUE: The total value of a Contract, after any market value
adjustment, minus the annual Contract fee, any applicable premium tax, and any
applicable Rider charges, and any withdrawal charges (if applicable). We will
determine the amount surrendered or withdrawn as of the date we receive your
request in proper form at the Annuities Service Center.
UNPAID LOAN: The unpaid amount (including any accrued interest) of loans a
Qualified Contract Owner may have taken from us, using certain Contract Value as
collateral.
VARIABLE ANNUITY: An Annuity Option with payments which: (1) are not
predetermined or guaranteed as to dollar amount, and (2) vary in relation to the
investment experience of one or more specified Sub-Accounts.
VARIABLE INVESTMENT OPTION: An Investment Option corresponding to a Sub-Account
of the Separate Account that invests in shares of a specific Portfolio.
WITHDRAWAL AMOUNT: The total amount taken from your Contract Value, including
any applicable withdrawal charge, tax, proportional share of administrative fee
and market value adjustment, to process a withdrawal.
2
II. Overview
This overview tells you some key points you should know about the Contract.
Because this is an overview, it does not contain all the information that may be
important to you. You should read carefully this entire Prospectus, including
its Appendices, your Contract and the Statement of Additional Information for
more detailed information.
We disclose all material features and benefits of the Contracts in this
Prospectus. Insurance laws and regulations apply to us in every state in which
our Contracts are sold. As a result, some terms and conditions of your Contract
may vary from the terms and conditions described in this Prospectus, depending
upon where you purchase a Contract. These variations will be reflected in your
Contract or in a Rider attached to your Contract. We disclose all material
variations in this Prospectus.
The Contracts described in this Prospectus are no longer offered for sale;
however, you may make Additional Purchase Payments as permitted under your
Contract. This Prospectus contains information that you should know before you
exercise any of your rights under the Contract.
Prospectuses for Contracts often undergo certain changes in their terms from
year to year to reflect changes in the Contracts. The changes include such
things as the liberalization of benefits, the exercise of rights reserved under
a Contract, the alteration of administrative procedures and changes in the
Investment Options available. Any such change may or may not apply to Contracts
issued prior to the effective date of the change. This Prospectus reflects the
status of the product as of the date of this Prospectus. This Prospectus
contains information about other products. Therefore, this Prospectus may
contain information that is inapplicable to your Contract. You should consult
your Contract to verify whether any particular provision applies to you and
whether you may elect any particular Investment Option.
The Variable Investment Options shown on the first page of this Prospectus are
those available under the Contracts described in this Prospectus as of the date
of this Prospectus. There may be Variable Investment Options that are not
available to you. We may add, modify or delete Variable Investment Options in
the future.
When you select one or more of these Variable Investment Options, we invest your
money in NAV shares of a corresponding Portfolio of the John Hancock Trust (the
"Trust"). The Trust is a so-called "series" type mutual fund registered with the
SEC. The investment results of each Variable Investment Option you select will
depend on those of the corresponding Portfolios of the Trust. Each of the
Portfolios is separately managed and has its own investment objective and
strategies. The Trust prospectus contains detailed information about each
available Portfolio. Be sure to read that prospectus before selecting any of the
Variable Investment Options.
For amounts you don't wish to invest in a Variable Investment Option, you may be
able to invest these amounts in a currently offered Fixed Investment Option if
permitted by your local jurisdiction. We invest the assets allocated to a Fixed
Investment Option in our General Account and they earn interest at a fixed rate,
declared by us, subject to a minimum rate stated in your Contract. If you remove
money from any Fixed Investment Option prior to its expiration, however, we may
increase or decrease your Contract's value to compensate for changes in interest
rates that may have occurred subsequent to the beginning of that Fixed
Investment Option. This is known as a "market value adjustment."
In addition to the transfer restrictions that we impose, the John Hancock Trust
also has adopted policies under Rule 22c-2 of the 1940 Act to detect and deter
abusive short term trading. Accordingly, a Portfolio may require us to impose
trading restrictions if it discovers violations of its frequent short-term
trading policy. We will provide tax identification numbers and other Contract
Owner transaction information to John Hancock Trust upon request, which it may
use to identify any pattern or frequency of activity that violates its
short-term trading policy.
We refer to the Variable Investment Options and any available Fixed Investment
Option together as Investment Options.
The annuity described in this Prospectus may be sold on a group basis. If you
purchase the annuity under a group contract, you will be issued a group
certificate. If that is the case, the word "Contract" as used in this Prospectus
should be interpreted as meaning the certificate issued to you under the group
contract.
SECTION 403(B) QUALIFIED PLANS. We currently are not offering this Contract for
use in a retirement plan intended to qualify as a Section 403(b) Qualified Plan
(a "Section 403(b) Qualified Plan" or the "Plan"). If you had purchased this
Contract for use in a Section 403(b) Qualified Plan, your employer, the Plan's
administrator, or the Plan's sponsor may request that we enter into an agreement
with your Section 403(b) Qualified Plan concerning the sharing of information
related to your Contract (an "Information Sharing Agreement"). Unless contained
in an Information Sharing Agreement, we may receive a written determination by
your employer, the Plan administrator or the Plan sponsor of your Section 403(b)
Qualified Plan that the plan qualifies under Section 403(b) of the Code and
complies with applicable Treasury regulations (a "Certificate of Compliance")
(Information Sharing Agreement and Certificate of Compliance, together the
"Required Documentation").
3
We may accept, reject or modify any of the terms of a proposed Information
Sharing Agreement presented to us, and make no representation that we will enter
into an Information Sharing Agreement with your Section 403(b) Qualified Plan.
For more information regarding Section 403(b) Qualified Plans, please see
Appendix E: "Qualified Plan Types," or you may request a copy of the Statement
of Additional Information from the Annuities Service Center.
The Contracts were not available in all states. Certain features of the
Contracts, including optional benefit Riders, may not have been available or may
have been modified for Contracts issued in various states. YOU SHOULD REVIEW
YOUR CONTRACT, OR CONTACT THE ANNUITIES SERVICE CENTER, FOR ADDITIONAL
INFORMATION. You should disregard all references in the Prospectus to benefits
that are NOT available in your state.
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, securities in any state to any person to whom it is unlawful to
make or solicit an offer in that state.
4
III. Fee Tables
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES APPLICABLE TO BUYING, OWNING
AND SURRENDERING A CONTRACT. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES
THAT YOU PAID AT THE TIME THAT YOU BOUGHT THE CONTRACT AS WELL AS THE FEES AND
EXPENSES YOU WILL PAY WHEN YOU MAKE ADDITIONAL PURCHASES UNDER THE CONTRACT,
SURRENDER THE CONTRACT, OR TRANSFER ACCOUNT VALUE BETWEEN INVESTMENT OPTIONS.
STATE PREMIUM TAXES MAY ALSO BE DEDUCTED.
CONTRACT OWNER TRANSACTION DECLARATION PATRIOT REVOLUTION ACCESS REVOLUTION EXTRA REVOLUTION VALUE
EXPENSES(1) VARIABLE ANNUITY VARIABLE ANNUITY VARIABLE ANNUITY VARIABLE ANNUITY VARIABLE ANNUITY
--------------------------- ------------------- ------------------- ----------------- ------------------- -------------------
Maximum Withdrawal Charge 6% for the 1st year 6% for the 1st year None 7% for the 1st year 7% for the 1st year
(as % of amount of the 6% for the 2nd year 6% for the 2nd year 7% for the 2nd year 6% for the 2nd year
Purchase Payment that we 5% for the 3rd year 5% for the 3rd year 7% for the 3rd year 5% for the 3rd year
consider to have been 5% for the 4th year 5% for the 4th year 7% for the 4th year 4% for the 4th year
withdrawn) (2) 4% for the 5th year 4% for the 5th year 6% for the 5th year 3% for the 5th year
3% for the 6th year 3% for the 6th year 5% for the 6th year 2% for the 6th year
2% for the 7th year 2% for the 7th year 4% for the 7th year 1% for the 7th year
0% thereafter 0% thereafter 0% thereafter 0% thereafter
Maximum transfer charge(3) $25 N/A $25 $25 $25
(1) State premium taxes may also apply to your Contract, which currently range
from 0.04% to 4.00% of each Purchase Payment.
(2) This charge is taken upon withdrawal or surrender within the specified
period of years measured from the date of Purchase Payment.
(3) This charge is not currently imposed, but we reserve the right to do so in
the Contract. If we do, it will be taken upon each transfer into or out of
any Investment Option beyond an annual limit of not less than 12.
THE NEXT TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY
DURING THE TIME YOU OWN THE CONTRACT. THIS TABLE DOES NOT INCLUDE FEES AND
EXPENSES PAID AT THE PORTFOLIO LEVEL.
DECLARATION PATRIOT REVOLUTION ACCESS REVOLUTION EXTRA REVOLUTION VALUE
VARIABLE ANNUITY VARIABLE ANNUITY VARIABLE ANNUITY VARIABLE ANNUITY VARIABLE ANNUITY
------------------- ------------------- ----------------- ------------------- -------------------
Maximum Annual
Contract Fee(4) $ 50 $ 50 $ 50 $ 50 $ 50
Current Annual Contract
Fee (5) $ 30 $ 30 $ 30 $ 30 $ 30
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE ACCOUNT VALUE) (6)
(Contracts with initial Purchase Payment less than $250,000)
Asset-Based Charge (7) 1.25% 1.25% 1.25% 1.25% 1.25%
(Contracts with initial Purchase Payment greater than $250,000)
Asset-Based Charge (7) 1.00% 1.00% 1.25% 1.25% 1.25%
OPTIONAL BENEFIT RIDER CHARGES(8) (AS A PERCENTAGE OF YOUR CONTRACT'S TOTAL VALUE UNLESS OTHERWISE STATED)
Accidental Death Benefit
Rider 0.10% 0.10% Not Offered Not Offered Not Offered
Accumulated Value Not Offered Not Offered Maximum: 1.00% Maximum: 1.00% Maximum: 1.00%
Enhance-ment Current: 0.40% Current: 0.35% Current: 0.35%
("CARESolutions Plus")
Rider(9) (as a percentage
of your initial Purchase
Payment)
Earnings Enhancement Not Offered Not Offered 0.25% 0.25% 0.25%
("Beneficiary Tax Relief")
Death Benefit Rider
Enhanced "Stepped Up" 0.15% 0.15% Not Offered Not Offered Not Offered
Death Benefit Rider
Enhanced Death Benefit Not Offered Not Offered 0.25% 0.25% 0.25%
Rider(10)
Guaranteed Retirement Income Not Offered Not Offered 0.30% 0.30% 0.30%
Benefit Rider (11)
Nursing Home Waiver (11) 0.05% 0.05% Not Offered Not Offered Not Offered
Waiver of Withdrawal Not Offered Not Offered Not Offered 0.10% 0.10%
Charge ("CARESolutions")
Rider(12)
(4) This charge is not currently imposed and would only apply to Declaration
and Patriot Contracts of less than $10,000; and Revolution Access,
Revolution Extra, and Revolution Value Contracts of less than $50,000.
(5) This charge applies only to Declaration and Patriot Contracts of less than
$10,000; and Revolution Access, Revolution Extra, and Revolution Value
Variable Annuities Contracts of less than $50,000. It is taken at the end
of each Contract Year but, if you surrender a Contract before then, it will
be taken at the time of surrender.
(6) This charge only applies to that portion of account value held in the
Variable Investment Options. The charge does not apply to amounts in the
Fixed Investment Options. For Revolution Access, Revolution Extra and
Revolution Value Variable Annuities Contracts, the charge does not apply to
the guarantee rate account under our dollar-cost averaging value program.
(7) This charge is assessed on all active Contracts, including Contracts
continued by a Beneficiary upon the death of the Contract Owner.
5
(8) Charges for optional benefit Riders are assessed monthly. The monthly
charge is 1/12 of the annual charge shown in this table.
(9) This Rider is available only if you purchased the Waiver of Withdrawal
Charge Rider as well. We do not currently impose the maximum charge shown,
but reserve the right to do so on a uniform basis for all Accumulated Value
Enhancement Riders issued in the same state.
(10) In certain states (and for Riders issued prior to May 1, 2002), the rate
for Enhanced Death Benefit Rider may be lower than the amount shown.
(11) This Rider is not available for Contracts issued after April 30, 2004.
(12) This charge is imposed as a percentage of that portion of your Contract's
total value attributable to Purchase Payments that are still subject to
withdrawal charges.
THE NEXT TABLE DESCRIBES THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES
CHARGED BY THE PORTFOLIOS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU
OWN THE CONTRACT. MORE DETAIL CONCERNING EACH PORTFOLIO'S FEES AND EXPENSES IS
CONTAINED IN THE PORTFOLIO'S PROSPECTUS.
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES MINIMUM MAXIMUM
----------------------------------------- ------- -------
Range of expenses that are deducted from
Portfolio assets, including management
fees, and other expenses 0.25% 1.14%
EXAMPLES
The following two examples are intended to help you compare the cost of
investing in Contracts with the cost of investing in other variable annuity
contracts. These costs include Contract Owner transaction expenses, Contract
fees, Separate Account annual expenses and Portfolio fees and expenses.
EXAMPLE 1
The first example assumes that you invest $10,000 in a Contract with all the
optional benefit Riders that may have been available. The first example also
assumes that your investment has a 5% return each year and assumes the maximum
annual Contract fee and the maximum fees and expenses of any of the Portfolios.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:
MAXIMUM PORTFOLIO LEVEL TOTAL OPERATING EXPENSES
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
DECLARATION VARIABLE ANNUITY WITH:
Enhanced "stepped-up" Death Benefit Rider;
Accidental Death Benefit Rider;
and Nursing Home Waiver Rider
If you surrender the Contract at the end of
the applicable time period: $817 $1,296 $1,803 $3,066
If you annuitize, or do not surrender the
Contract at the end of the applicable
time period: $277 $ 849 $1,447 $3,066
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
PATRIOT VARIABLE ANNUITY WITH:
Enhanced "stepped-up" Death Benefit Rider;
Accidental Death Benefit Rider;
and Nursing Home Waiver Rider
If you surrender the Contract at the end of
the applicable time period: $815 $1,292 $1,797 $3,053
If you annuitize, or do not surrender the
Contract at the end of the applicable
time period: $275 $ 845 $1,440 $3,053
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
REVOLUTION ACCESS VARIABLE ANNUITY WITH:
Enhanced Death Benefit Rider
Earnings Enhancement Death Benefit Rider
Accumulated Value Enhancement Rider; and
Guaranteed Retirement Income Benefit Rider
If you surrender the Contract at the end of
the applicable time period: $423 $1,278 $2,143 $4,354
If you annuitize, or do not surrender the
Contract at the end of the applicable
time period: $423 $1,278 $2,143 $4,354
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
REVOLUTION EXTRA VARIABLE ANNUITY WITH:
Waiver of Withdrawal Charge Rider;
Enhanced Death Benefit Rider;
Earnings Enhancement Death Benefit Rider;
Accumulated Value Enhancement Rider; and
Guaranteed Retirement Income Benefit Rider
If you surrender the Contract at the end of
the applicable time period: $1,064 $1,938 $2,732 $4,447
If you annuitize, or do not surrender the
Contract at the end of the applicable
time period: $ 434 $1,309 $2,193 $4,447
6
MAXIMUM PORTFOLIO LEVEL TOTAL OPERATING EXPENSES
REVOLUTION VALUE VARIABLE ANNUITY WITH:
Waiver of Withdrawal Charge Rider;
Enhanced Death Benefit Rider;
Earnings Enhancement Death Benefit Rider;
Accumulated Value Enhancement Rider; and
Guaranteed Retirement Income Benefit Rider
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
If you surrender the Contract at the end of
the applicable time period: $1,063 $1,755 $2,456 $4,436
If you annuitize, or do not surrender the
Contract at the end of the applicable time
period: $ 433 $1,305 $2,187 $4,436
EXAMPLE 2
The next example assumes that you invest $10,000 in a Contract with no optional
benefit riders for the time periods indicated. This example also assumes that
your investment has a 5% return each year and assumes the average annual
Contract fee we expect to receive for the Contracts and the minimum fees and
expenses of any of the Portfolios.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:
MINIMUM PORTFOLIO LEVEL TOTAL OPERATING EXPENSES
DECLARATION VARIABLE ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------- ------ ------- ------- --------
If you surrender the Contract at the end of the
applicable time period: $695 $ 929 $1,187 $1,820
If you annuitize, or do not surrender the Contract at
the end of the applicable time period: $155 $ 482 $ 833 $1,820
PATRIOT VARIABLE ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------ ------ ------- ------- --------
If you surrender the Contract at the end of the
applicable time period: $695 $ 926 $1,183 $1,811
If you annuitize, or do not surrender the Contract at
the end of the applicable time period: $155 $ 480 $ 828 $1,811
REVOLUTION ACCESS VARIABLE ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------- ------ ------- ------- --------
If you surrender the Contract at the end of the
applicable time period: $155 $ 480 $ 828 $1,811
If you annuitize, or do not surrender the Contract at
the end of the applicable time period: $155 $ 480 $ 828 $1,811
REVOLUTION EXTRA VARIABLE ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------- ------ ------- ------- --------
If you surrender the Contract at the end of the
applicable time period: $785 $1,107 $1,362 $1,817
If you annuitize, or do not surrender the Contract at
the end of the applicable time period: $155 $ 482 $ 831 $1,817
REVOLUTION VALUE VARIABLE ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------- ------ ------- ------- --------
If you surrender the Contract at the end of the
applicable time period: $784 $ 925 $1,092 $1,808
If you annuitize, or do not surrender the Contract at
the end of the applicable time period: $154 $ 479 $ 827 $1,808
The following table describes the operating expenses for each Portfolio, as a
percentage of the Portfolio's average net assets for the fiscal year ending
December 31, 2009. More detail concerning each Portfolio's fees and expenses is
contained in the Portfolio's prospectus and in the notes following the table.
AS NOTED IN THE FOOTNOTES TO THE TABLE, FOR CERTAIN PORTFOLIOS JOHN HANCOCK
INVESTMENT MANAGEMENT SERVICES, INC. (THE "ADVISER") HAS AGREED TO WAIVE A
PORTION OF ITS FEES OR REIMBURSE THE PORTFOLIO FOR EXPENSES WHEN, AND TO THE
EXTENT THAT, THE NET OPERATING EXPENSES EXCEED AN AGREED UPON EXPENSE
LIMITATION. THE ADVISOR MAY RECAPTURE OPERATING EXPENSES REIMBURSED OR FEES
WAIVED UNDER PREVIOUS EXPENSE LIMITATION OR WAIVER ARRANGEMENTS FOR A PERIOD OF
THREE YEARS FOLLOWING THE BEGINNING OF THE MONTH IN WHICH SUCH REIMBURSEMENT OR
WAIVER OCCURRED.
PORTFOLIO ANNUAL EXPENSES (as a percentage of Portfolio average net assets for
the fiscal year ended December 31, 2009, except as stated in the Notes that
follow this table, rounded to two decimal places).
All of the Portfolios shown in the table are NAV class shares that are not
subject to Rule 12b-1 fees. These NAV class shares commenced operations on April
29, 2005. These NAV class shares of a Portfolio are based upon the expense
ratios of the Portfolio's Series I shares for the year ended December 31, 2009
(adjusted to reflect the absence of any Rule 12b-1 fee applicable to the NAV
shares).
DISTRIBUTION ACQUIRED TOTAL ANNUAL CONTRACTUAL NET
MANAGEMENT AND SERVICE OTHER PORTFOLIO FEES OPERATING EXPENSE OPERATING
PORTFOLIO/SERIES FEE (12B-1) FEES EXPENSES AND EXPENSES EXPENSES (1) REIMBURSEMENT EXPENSES
---------------- ---------- ------------ -------- -------------- ------------ ------------- ---------
500 INDEX B(2)
Series NAV 0.47% 0.00% 0.02% 0.00% 0.49% -0.24% 0.25%
ACTIVE BOND
Series NAV 0.60% 0.00% 0.03% 0.00% 0.63% 0.00% 0.63%
BLUE CHIP GROWTH(3)
Series NAV 0.78% 0.00% 0.03% 0.00% 0.81% 0.00% 0.81%
CAPITAL APPRECIATION
Series NAV 0.72% 0.00% 0.03% 0.00% 0.75% 0.00% 0.75%
EQUITY-INCOME(3)
7
DISTRIBUTION ACQUIRED TOTAL ANNUAL CONTRACTUAL NET
MANAGEMENT AND SERVICE OTHER PORTFOLIO FEES OPERATING EXPENSE OPERATING
PORTFOLIO/SERIES FEE (12B-1) FEES EXPENSES AND EXPENSES EXPENSES (1) REIMBURSEMENT EXPENSES
---------------- ---------- ------------ -------- -------------- ------------ ------------- ---------
Series NAV 0.79% 0.00% 0.03% 0.00% 0.82% 0.00% 0.82%
FINANCIAL SERVICES
Series NAV 0.83% 0.00% 0.08% 0.00% 0.91% 0.00% 0.91%
GLOBAL BOND(4)
Series NAV 0.70% 0.00% 0.07% 0.00% 0.77% 0.00% 0.77%
HEALTH SCIENCES
Series NAV 1.05% 0.00% 0.09% 0.00% 1.14% 0.00% 1.14%
HIGH YIELD
Series NAV 0.66% 0.00% 0.04% 0.00% 0.70% 0.00% 0.70%
INTERNATIONAL EQUITY INDEX B(2)
Series NAV 0.54% 0.00% 0.04% 0.00% 0.58% -0.24% 0.34%
INTERNATIONAL VALUE(5, 6)
Series NAV 0.82% 0.00% 0.12% 0.00% 0.94% -0.01% 0.93%
LIFESTYLE BALANCED
Series NAV 0.04% 0.00% 0.02% 0.73% 0.79% 0.00% 0.79%
MID CAP INDEX
Series NAV 0.47% 0.00% 0.03% 0.00% 0.50% 0.00% 0.50%
MID CAP STOCK
Series NAV 0.84% 0.00% 0.05% 0.00% 0.89% 0.00% 0.89%
MID VALUE
Series NAV 0.96% 0.00% 0.05% 0.00% 1.01% 0.00% 1.01%
MONEY MARKET B(2, 7)
Series NAV 0.49% 0.00% 0.04% 0.00% 0.53% -0.25% 0.28%
OPTIMIZED ALL CAP
Series NAV 0.68% 0.00% 0.02% 0.00% 0.70% 0.00% 0.70%
REAL ESTATE SECURITIES
Series NAV 0.70% 0.00% 0.04% 0.00% 0.74% 0.00% 0.74%
SHORT TERM GOVERNMENT INCOME
Series NAV 0.57% 0.00% 0.19% 0.00% 0.76% 0.00% 0.76%
SMALL CAP GROWTH
Series NAV 1.06% 0.00% 0.04% 0.00% 1.10% 0.00% 1.10%
SMALL CAP INDEX
Series NAV 0.48% 0.00% 0.03% 0.00% 0.51% 0.00% 0.51%
SMALL CAP VALUE
Series NAV 1.06% 0.00% 0.05% 0.00% 1.11% 0.00% 1.11%
TOTAL BOND MARKET B(2)
Series NAV 0.47% 0.00% 0.05% 0.00% 0.52% -0.27% 0.25%
TOTAL RETURN
Series NAV 0.68% 0.00% 0.04% 0.00% 0.72% 0.00% 0.72%
TOTAL STOCK MARKET INDEX
Series NAV 0.49% 0.00% 0.03% 0.00% 0.52% 0.00% 0.52%
FOOTNOTES TO EXPENSE TABLE:
(1) The "Total Annual Operating Expenses" include fees and expenses incurred
indirectly by a Portfolio as a result of its investment in other investment
companies ("Acquired Portfolio Fees and Expenses"). The Total Annual
Operating Expenses shown may not correlate to the Portfolio's ratio of
expenses to average net assets shown in the "Financial Highlights" section
of the Portfolio prospectus, which does not include Acquired Portfolio Fees
and Expenses. Acquired Portfolio Fees and Expenses are based on the
estimated indirect net expenses associated with the Portfolio's investment
in the underlying Portfolios.
(2) John Hancock Trust ("JHT") sells shares of these Portfolios only to certain
variable life insurance and variable annuity separate accounts of John
Hancock Life Insurance Company (U.S.A.) and its affiliates. As reflected in
the table, each Portfolio is subject to an expense cap pursuant to an
agreement between JHT and John Hancock Investment Management Services, LLC
(the "Adviser") as follows: the Adviser has agreed to waive its advisory
fee (or, if necessary, reimburse expenses of the Portfolio) in an amount so
that the rate of the Portfolio's "Total Annual Operating Expenses" does not
exceed its "Net Operating Expenses" as listed in the table above. A
Portfolio's "Total Annual Operating Expenses" includes all of its operating
expenses including advisory and Rule 12b-1 fees, but excludes taxes,
brokerage commissions, interest, litigation and indemnification expenses
and extraordinary expenses of the Portfolio not incurred in the ordinary
course of the Portfolio's business. Under the agreement, the Adviser's
obligation to provide the expense cap will remain in effect until April 30,
2011 and will terminate after that date only if JHT, without the prior
written consent of the Adviser, sells shares of the Portfolio to (or has
shares of the Portfolio held by) any person other than the separate
accounts and other persons specified in the agreement.
(3) The advisory fees were restated to reflect the new advisory agreement
effective May 1, 2010.
(4) "Other Expenses" exclude Extraordinary Expenses incurred during the fiscal
year ended December 31, 2009. Had these fees been included, "Other
Expenses" would have been 0.08%.
(5) The Adviser has contractually agreed to waive its advisory fees so that the
amount retained by the Adviser after payment of the subadvisory fees for
the Portfolio does not exceed 0.45% of the Portfolio's average net assets.
This advisory fee waiver will remain in place until April 30, 2011.
(6) "Other Expenses" includes an estimated expense based on new contractual
custody agreement that became effective April 1, 2009.
8
(7) "Other Expenses" exclude Extraordinary Expenses incurred during the fiscal
year ended December 31, 2009. Had these fees been included, "Other
Expenses" would have been 0.05%.
9
IV. Basic Information
WHAT IS THE CONTRACT?
Each of the five (5) Contracts listed on the first page of this Prospectus are
deferred purchase payment variable annuity contracts. An "annuity contract"
provides a person (known as the "Annuitant" or "payee") with a series of
periodic payments. Because this Contract is also a "deferred payment" contract,
the annuity payments will begin on a future date, called the Contract's Maturity
Date. Under a "variable annuity" contract, the amount you have invested can
increase or decrease in value daily based upon the value of the Variable
Investment Options chosen. If your annuity is provided under a master group
contract, the term "Contract" as used in this Prospectus refers to the
certificate you will be issued and not to the master group contract.
WHO OWNS THE CONTRACT?
Unless the Contract provides otherwise, the Owner of the Contract is the person
who can exercise the rights under the Contract, such as the right to choose the
Investment Options or the right to surrender the Contract. In many cases, the
person who bought the Contract is the Owner. However, you are free to name
another person or entity (such as a trust) as Owner. In writing this Prospectus,
we've assumed that you, the reader, are the person or persons entitled to
exercise the rights and obligations under discussion. If a Contract has joint
Owners, both must join in any written notice or request.
IS THE OWNER ALSO THE ANNUITANT?
In many cases, the same person is both the Annuitant and the Owner of a
Contract. The Annuitant is the person whose lifetime is used to measure the
period of time when we make various forms of annuity payments. Also, the
Annuitant receives payments from us under any Annuity Option that commences
during the Annuitant's lifetime. We may permit you to name another person as
Annuitant or joint Annuitant if that person meets our underwriting standards. We
may also permit you to name as joint Annuitants two persons other than yourself
if those persons meet our underwriting standards.
HOW CAN I INVEST MONEY IN A CONTRACT?
Purchase Payments
We call the investments you make in your Contract Payments or Purchase Payments.
The Contracts described in this Prospectus are no longer available for sale;
however, the minimum initial Purchase Payment requirements for the Contracts are
outlined in the table below, along with the minimum Purchase Payment for each
Additional Purchase Payment into the Contracts. If you purchased your Contract
through the automatic investment plan, different minimums may apply. If your
Contract's total value ever falls to zero, we may terminate it. Therefore, you
may need to pay more Additional Purchase Payments to keep the Contract in force.
MINIMUM INITIAL MINIMUM MINIMUM DIRECT
PURCHASE ADDITIONAL DEPOSIT ADDITIONAL
CONTRACT PAYMENT PURCHASE PAYMENT PURCHASE PAYMENT
-------- --------------- ---------------- ------------------
Declaration $ 1,000 $500 $100
Patriot $ 1,000 $500 $100
Revolution Access $25,000 $200 $100
Revolution Extra $10,000 $200 $100
Revolution Value $ 5,000 $200 $100
Currently, we do not enforce these minimum Additional Purchase Payment amounts,
but may do so in the future.
Initial Purchase Payment
When we received your initial Purchase Payment and all necessary information, we
issued your Contract and invested your initial Purchase Payment. If the
information was not in good order, we contacted you to get the necessary
information. If for some reason, we were unable to complete this process within
5 Business Days, we either sent back your money or received your permission to
keep it until we received all of the necessary information.
In certain situations, we may have issued a Contract upon receiving the order of
your broker-dealer or financial institution but delayed the effectiveness of the
Contract until we received your signed application. In those situations, if we
did not receive your signed application within our required time period, we
deemed the Contract void from the beginning and returned your Purchase Payment.
We may not have issued a Contract if any proposed Owner or Annuitant was older
than age 84. We may also have limited your ability to purchase multiple
Contracts on the same Annuitants or Owners. We may, however, have waived either
of these underwriting limits.
10
Issue Date and Contract Year
We measure the years and anniversaries of your Contract from its date of issue.
We use the term Contract Year to refer to each period of time between
anniversaries of your Contract's date of issue. We did not issue a Contract if
the proposed Annuitant was older than age 84.
Limits on Purchase Payments
You can make Purchase Payments of up to $1,000,000 in any one Contract Year. The
total of all new Purchase Payments and transfers that you may allocate to any
one Variable Investment Option or Fixed Investment Option, in any one Contract
Year may not exceed $1,000,000. While the Annuitant is alive and the Contract is
in force, you can make Purchase Payments at any time before the Maturity Date
until the age limit shown below:
YOU MAY NOT MAKE ANY PURCHASE PAYMENTS
IF YOUR CONTRACT IS USED TO FUND AFTER THE ANNUITANT REACHES AGE
-------------------------------- --------------------------------------
A Qualified Plan 70 1/2 (1)
A Nonqualified plan 85 (2)
(1) except for a Roth IRA, which has an age limit of 85
(2) 84 1/2 for Declaration Variable Annuity
We may waive any of these limits on Purchase Payments.
Ways to Make Additional Purchase Payments
Additional Purchase Payments made by check or money order must be:
- drawn on a U.S. bank;
- drawn in U.S. dollars; and
- made payable to "John Hancock" and sent to the Annuities Service
Center.
We credit any Additional Purchase Payments to your Contract received by mail or
wire transfer at the close of the Business Day in which we receive them in good
order at the Annuities Service Center. Each Business Day ends at the close of
daytime trading for the day on the New York Stock Exchange (usually 4:00 p.m.
Eastern Time). If we receive an Additional Purchase Payment after the close of a
Business Day, we will credit it to your Contract on the next Business Day.
We will not accept credit card checks. Nor will we accept starter or third party
checks that fail to meet our administrative requirements. Additional Purchase
Payments should be sent to the Annuities Service Center at the address shown on
the first page of this Prospectus. You can find information about other methods
of making Purchase Payments by contacting us.
Additional Purchase Payments by Wire
You may transmit Additional Purchase Payments by wire through your bank to our
bank, as long as you provide appropriate instructions with the transmittal to
identify your Contract, and the selected Investment Options (unless you have
provided us with standing allocation instructions). Information about our bank,
our account number, and the ABA routing number may be obtained from the
Annuities Service Center. Banks may charge a fee for wire services.
If your wire order is complete, we will invest the Additional Purchase Payment
in your selected Investment Options as of the day we received the wire order. If
the wire order is incomplete for an identified Contract, we will immediately
return it.
HOW WILL THE VALUE OF MY INVESTMENT IN THE CONTRACT CHANGE OVER TIME?
Variable Investment Options
You may invest in any of the Variable Investment Options. Each Variable
Investment Option is a Sub-Account of a Separate Account that invests in a
corresponding Portfolio. The Portfolio prospectus contains a full description of
a Portfolio. The amount you've invested in any Variable Investment Option will
increase or decrease based upon the investment performance of the corresponding
Portfolio (reduced by certain charges we deduct - see "III. Fee Tables"). Your
Contract Value during the Accumulation Period and the amounts of annuity
payments will depend upon the investment performance of the underlying Portfolio
of the Variable Investment Option you select and/or upon the interest we credit
on each Fixed Investment Option you select.
You bear the investment risk that your Contract Value will increase or decrease
to reflect the investment results of the Contract's investment Portfolios.
Although a Portfolio may invest in other underlying portfolios, you will not
have the ability to make those investment decisions. You (and your financial
advisor) should carefully consider the features of other variable annuity
contracts offered by us or by other life insurance companies, before submitting
an Additional Purchase Payment if you would prefer a broader range of investment
options.
11
Fixed Investment Options
The amount you've invested in a Fixed Investment Option will earn interest at
the rate we have set for that Fixed Investment Option. The interest rate depends
upon the length of the guarantee period of the Fixed Investment Option you
select. In states where approved, we currently make available various Fixed
Investment Options with durations of up to five years, and we may make one or
more additional Fixed Investment Options available for Contracts issued before
September 30, 2002. As long as you keep your money in a Fixed Investment Option
until its expiration date, we bear all the investment risk on that money.
However, if you prematurely transfer, "surrender" or otherwise withdraw money
from a Fixed Investment Option we will increase or reduce the remaining value in
your Contract by an amount that approximates the impact that any changes in
interest rates would have had on the market value of a debt instrument with
terms comparable to that Fixed Investment Option. This "market value adjustment"
(or "MVA") imposes investment risks on you. We describe how the market value
adjustments work in "Calculation of Market Value Adjustment ("MVA")".
Extra Credit Feature
(Available only on the Revolution Extra Variable Annuity Contracts)
Each time you make a Purchase Payment, we will credit an extra amount to the
total value of your Contract in addition to the amount of the Purchase Payment.
If your Purchase Payment is greater than $10,000 and less than $2.5 million, the
extra amount will be equal to 3.5% of the Purchase Payment. If your Purchase
Payment is $2.5 million or more, the extra amount will be equal to 5.0% of the
Purchase Payment. These extra amounts are referred to as extra credits. Each
extra credit will be credited to your Contract at the same time the Purchase
Payment is credited and will be allocated among the Variable Investment Options
and the Fixed Investment Options in the same way that the Purchase Payment is
allocated (see "Allocation of Purchase Payments"). However, each extra credit
will be treated as "earnings" under your Contract, not as a Purchase Payment for
determining withdrawal charges. Amounts attributable to extra credits will be
considered "earnings" under a Contract for federal tax purposes and "earnings"
with respect to our determination of certain benefits under your Contract and
any optional benefit Riders that you may have purchased.
We expect to make a profit from the Contracts and anticipate that a portion of
the withdrawal charge, and any profits derived from other Contract fees and
charges will be used to help recover our cost of providing the Extra Credit
feature. (For a description of these fees and charges, see the response to the
question "What Fees and Charges will be Deducted from My Contract?") Under
certain circumstances (such as a withdrawal of money that is in excess of the
Free Withdrawal amounts, while a withdrawal charge is in effect) the cost
associated with the Extra Credit feature may exceed the Extra Credit amount and
any related earnings. You should consider this possibility before remitting any
Additional Purchase Payments for a Revolution Extra Contract.
WHAT ANNUITY BENEFITS DOES THE CONTRACT PROVIDE?
If your Contract is still in effect on its Maturity Date, it enters what is
called the Annuity Period. During the Annuity Period, we make a series of fixed
or variable payments to you as provided under one of our several Annuity
Options. The form in which we will make the annuity payments, and the proportion
of such payments that will be on a fixed basis and on a variable basis, depend
on the elections that you have in effect on the Maturity Date. Therefore, you
should exercise care in selecting your Maturity Date and your choices that are
in effect on that date.
You should carefully review the discussion under "VIII. The Annuity Period" for
information about all of these choices you can make.
TO WHAT EXTENT CAN JOHN HANCOCK USA VARY THE TERMS AND CONDITIONS OF THE
CONTRACTS?
State Law Insurance Requirements
Insurance laws and regulations apply to us in every state in which our Contracts
are sold. As a result, a Contract purchased in one state may have terms and
conditions that vary from the terms and conditions of a Contract purchased in a
different jurisdiction. We disclose all material features and benefits of the
Contracts in this Prospectus.
Variations in Charges or Rates
We may vary the charges, durations of Fixed Investment Options, rates and other
terms of our Contracts where special circumstances result in sales or
administrative expenses, mortality risks or other risks that are different from
those normally associated with the Contracts. These include the types of
variations discussed under the "Variations in Charges or Rates for Eligible
Classes" section of this Prospectus.
12
WHAT ARE THE TAX CONSEQUENCES OF OWNING A CONTRACT?
In most cases, no income tax will have to be paid on amounts you earn under a
Contract until these earnings are paid out. All or part of the following
distributions from a Contract may constitute a taxable payout of earnings:
- full or partial withdrawals (including surrenders and systematic
withdrawals);
- payment of any death benefit proceeds;
- periodic payments under one of our annuity payment options;
- certain ownership changes; and
- any loan, assignment or pledge of the Contract as collateral.
How much you will be taxed on a distribution is based upon complex tax rules and
depends on matters such as:
- the type of the distribution;
- when the distribution is made;
- the nature of any Qualified Plan for which the Contract is being used;
and
- the circumstances under which the payments are made.
If your Contract is issued in connection with a Qualified Plan, all or part of
your Purchase Payments may be tax-deductible or excludible from income.
A 10% tax penalty applies in many cases to the taxable portion of any
distributions taken from a Contract before you reach age 59 1/2. Also, most
Qualified Plans require that minimum distributions from a Contract commence
and/or be completed within a certain period of time. This effectively limits the
period of time during which you can continue to derive tax deferral benefits
from any tax-deductible or tax-deferred Purchase Payments you paid or on any
earnings under the Contract.
CONTRACTS PURCHASED AS AN INVESTMENT VEHICLE FOR A QUALIFIED PLAN, INCLUDING AN
IRA, DO NOT PROVIDE ANY ADDITIONAL TAX-DEFERRAL BENEFITS BEYOND THE TREATMENT
PROVIDED BY THE QUALIFIED PLAN ITSELF. THE FAVORABLE TAX-DEFERRAL BENEFITS
AVAILABLE FOR QUALIFIED PLANS THAT INVEST IN ANNUITY CONTRACTS ARE ALSO
GENERALLY AVAILABLE IF THE QUALIFIED PLANS PURCHASE OTHER TYPES OF INVESTMENTS,
SUCH AS MUTUAL FUNDS, EQUITIES AND DEBT INSTRUMENTS. HOWEVER, THE CONTRACT
OFFERS FEATURES AND BENEFITS THAT OTHER INVESTMENTS MAY NOT OFFER. YOU AND YOUR
FINANCIAL PROFESSIONAL SHOULD CAREFULLY CONSIDER WHETHER THE FEATURES AND
BENEFITS, INCLUDING THE INVESTMENT OPTIONS, ANNUITY LIFETIME INCOME OPTIONS,
DEATH BENEFITS AND OTHER BENEFITS PROVIDED UNDER AN ANNUITY CONTRACT ISSUED IN
CONNECTION WITH A QUALIFIED PLAN ARE SUITABLE FOR YOUR NEEDS AND OBJECTIVES AND
ARE APPROPRIATE IN LIGHT OF THE EXPENSE.
We provide additional information on taxes in the Federal Tax Matters section of
this Prospectus. We make no attempt to provide more than general information
about use of the Contract with the various types of retirement plans. Purchasers
of Contracts for use with any retirement plan should consult their legal counsel
and a qualified tax advisor regarding the suitability of the Contract.
HOW CAN I CHANGE MY CONTRACT'S INVESTMENT OPTIONS?
Allocation of Purchase Payments
When you applied for your Contract, you specified the Variable Investment
Options and Fixed Investment Options (together, your Investment Options) to
which your Purchase Payments will be allocated. You may change this investment
allocation for future Purchase Payments at any time. Any change in allocation
will be effective as of the receipt of your request at the Annuities Service
Center.
We do not impose a limit on the number of Investment Options to which you may
allocate Purchase Payments at any one time during the accumulation period. For
limits imposed during the annuity period, please see "Choosing Fixed or Variable
Annuity Payments" in "VIII. The Annuity Period."
Transfers among Investment Options
During the Accumulation Period, you may transfer amounts held in one Investment
Option to any other Investment Option. To make a transfer, you must tell us how
much to transfer, either as a whole number percentage or as a specific dollar
amount. A confirmation of each transfer will be sent to you.
You may make a transfer by providing written notice to us, by telephone or by
other electronic means that we may provide through the Internet (see "Telephone
and Electronic Transactions," above). We will cancel accumulation units from the
Investment Account from which you transfer amounts and we will credit to the
Investment Account to which you transfer amounts. Your Contract Value on the
date of the transfer will not be affected by a transfer. Although your Contract
may impose restrictions on the maximum dollar amount
13
that may be transferred among Variable Investment Options, we currently do not
enforce these restrictions.
Currently, we do not impose a charge for transfer requests. The first twelve
transfers in a Contract Year are free of any transfer charge. For each
additional transfer in a Contract Year, except for the Patriot variable annuity
which has no transfer charge, we do not currently assess a charge but reserve
the right (to the extent permitted by your Contract) to impose a charge of up to
$25 for any transfer beyond the annual limit (transfers out of a Fixed
Investment Option may, however, incur a market value adjustment - either
positive or negative).
We have adopted a policy and procedures to restrict frequent transfers of
Contract Value among Variable Investment Options.
Variable investment options in variable annuity and variable life insurance
products can be a prime target for abusive transfer activity because these
products value their variable investment options on a daily basis and allow
transfers among investment options without immediate tax consequences. As a
result, some investors may seek to frequently transfer into and out of variable
investment options in reaction to market news or to exploit some perceived
pricing inefficiency. Whatever the reason, frequent transfer activity can harm
long-term investors in a variable investment option since such activity may
expose the variable investment option's underlying Portfolio to increased
investment portfolio transaction costs (affecting the value of the shares)
and/or disrupt the Portfolio manager's ability to effectively manage a Portfolio
in accordance with its investment objective and policies, both of which may
result in dilution with respect to interests held for long-term investment.
To discourage disruptive frequent trading activity, we have adopted a policy for
the Separate Account to restrict transfers to two per calendar month per
Contract, with certain exceptions, and procedures to count the number of
transfers made under a Contract. Under the current procedures of the Separate
Accounts, we count all transfers made during each Business Day that the net
asset value of the shares of a Portfolio are determined ending at the close of
daytime trading on the New York Stock Exchange (usually 4 p.m. Eastern Time) as
a SINGLE transfer. We do NOT count: (a) scheduled transfers made pursuant to any
of our dollar cost averaging programs (ONLY THE REVOLUTION VALUE VARIABLE
ANNUITY HAS MORE THAN ONE DOLLAR COST AVERAGING PROGRAM; see below under "Dollar
Cost Averaging Programs") or our Strategic Rebalancing Program, (b) transfers
from a Fixed Investment Option at the end of its fixed investment period, (c)
transfers made within a prescribed period before and after a substitution of
Portfolios and (d) transfers made during the Annuity Period (these transfers are
subject to a 30 day notice requirement, however, as described in the "Transfers
during the Annuity Period" section of this Prospectus). Under the Separate
Account's policy and procedures, Contract Owners may transfer to a Money Market
Investment Option even if the two transfer per month limit has been reached if
100% of the Contract Value in all Variable Investment Options is transferred to
that Money Market Investment Option. If such a transfer to a Money Market
Investment Option is made, for a 30 calendar day period after such transfer, no
subsequent transfers from that Money Market Investment Option to another
Variable Investment Option may be made. We apply the Separate Account's policy
and procedures uniformly to all Contract Owners.
We reserve the right to take other actions at any time to restrict trading,
including, but not limited to:
- restricting the number of transfers made during a defined period,
- restricting the dollar amount of transfers,
- restricting the method used to submit transfers (e.g., changing
telephone and facsimile procedures to require that transfer requests
be submitted in writing via U.S. mail), and
- restricting transfers into and out of certain Sub-Accounts.
In addition, we reserve the right to defer a transfer at any time we are unable
to purchase or redeem shares of the Portfolios. We also reserve the right to
modify or terminate the transfer privilege at any time (to the extent permitted
by applicable law), and to prohibit a transfer less than 30 days prior to the
Contract's Maturity Date, and to reimpose the annual limit of 12 transfers as
stated in your Contract.
While we seek to identify and prevent disruptive frequent trading activity, it
may not always be possible to do so. Therefore, no assurance can be given that
the restrictions we impose will be successful in preventing disruptive frequent
trading activity and avoid harm to long-term investors. If we are unsuccessful
in restricting disruptive frequent trading activity, the Portfolios may incur
higher brokerage costs and may maintain higher cash levels, limiting their
ability to achieve their investment objective.
In addition to the transfer restrictions that we impose, the John Hancock Trust
also has adopted policies under Rule 22c-2 of the 1940 Act to detect and deter
abusive short term trading. Accordingly, a Portfolio may require us to impose
trading restrictions if it discovers violations of its frequent short-term
trading policy. We will provide tax identification numbers and other Contract
Owner transaction information to John Hancock Trust upon request, which it may
use to identify any pattern or frequency of activity that violates its
short-term trading policy.
DURING THE ANNUITY PERIOD, YOU MAY NOT MAKE ANY TRANSFER THAT WOULD RESULT IN
MORE THAN FOUR INVESTMENT OPTIONS BEING USED AT ONCE. You must submit your
transfer request to our Annuities Service Center at least 30 DAYS BEFORE the due
date of the first annuity payment to which your transfer will apply.
14
Procedure for Transferring Your Assets
You may request a transfer in writing or, if you have authorized telephone
transfers, by telephone or fax. All transfer requests should be directed to the
Annuities Service Center. Your request should include:
- your name;
- daytime telephone number;
- Contract number;
- the names of the Investment Options to and from which assets are being
transferred; and
- the amount of each transfer.
Your request becomes effective at the close of the Business Day in which we
receive it, in proper form at the Annuities Service Center. Each Business Day
ends at the close of daytime trading for the day on the New York Stock Exchange
(usually 4:00 p.m. Eastern Time). If we receive a transfer request, in proper
form, after the close of a Business Day, it will become effective at the end of
the next Business Day.
Telephone and Electronic Transactions
If you complete a special authorization form, we will permit you to request
transfers and withdrawals by telephone. We will also permit you to access
information about your Contract, request transfers and perform some transactions
(other than withdrawals) electronically through the Internet. You can contact us
at the applicable telephone number or Internet address shown on the first page
of this Prospectus.
To access information and perform electronic transactions through our website,
we require you to create an account with a username and password, and to
maintain a valid e-mail address. You may also authorize other people to make
certain transaction requests by telephone or electronically through the Internet
by sending us instructions in a form acceptable to us.
We will not be liable for following instructions communicated by telephone or
electronically that we reasonably believe to be genuine. We will employ
reasonable procedures to confirm that instructions we receive are genuine. Our
procedures require you to provide information to verify your identity when you
call us and we will record all conversations with you. When someone contacts us
by telephone and follows our procedures, we will assume that you are authorizing
us to act upon those instructions. For electronic transactions through the
Internet, you will need to provide your username and password. You are
responsible for keeping your password confidential and must notify us of:
- any loss or theft of your password; or
- any unauthorized use of your password.
We may be liable for any losses due to unauthorized or fraudulent instructions
only where we fail to employ our procedures properly.
All transaction instructions we receive by telephone or electronically will be
followed by either a hardcopy or e-delivery of a confirmation statement of the
transaction. Please contact the John Hancock Annuities Service Center at the
applicable telephone number or Internet address shown on the first page of this
Prospectus to find out whether e-delivery is available in your area and, if so,
how to register for it. Transaction instructions we receive by telephone or
electronically before the close of any Business Day will usually be effective at
the end of that day. Your ability to access or transact business electronically
may be limited due to circumstances beyond our control, such as system outages,
or during periods when our telephone lines or our website may be busy. We may,
for example, experience unusual volume during periods of substantial market
change.
We may suspend, modify or terminate our telephone or electronic transaction
procedures at any time. We may, for example, impose limits on the maximum
Withdrawal Amount available to you through a telephone transaction. Also, as
stated earlier in this Prospectus, we have imposed restrictions on transfers and
reserve the right to take other actions to restrict trading, including the right
to restrict the method used to submit transfers (e.g., by requiring transfer
requests to be submitted in writing via U.S. mail). We also reserve the right to
suspend or terminate the transfer privilege altogether with respect to anyone
who we feel is abusing the privilege to the detriment of others.
Dollar Cost Averaging Programs
Under our STANDARD DOLLAR-COST AVERAGING PROGRAM, you may elect, at no cost, to
automatically transfer assets from any Variable Investment Option to one or more
other Variable Investment Options on a monthly, quarterly, semiannual, or annual
basis. The following conditions apply to the standard dollar cost averaging
program:
- you may change your variable investment allocation instructions at any
time in writing or, if you have authorized telephone transfers, by
telephone;
- you may discontinue the program at any time;
- the program automatically terminates when the Variable Investment
Option from which we are taking the transfers has been exhausted;
- automatic transfers to or from Fixed Investment Options are not
permitted under this program.
15
We reserve the right to suspend or terminate the program at any time.
(Available only on the Revolution Value Variable Annuity.) Under our DOLLAR-COST
AVERAGING VALUE PROGRAM, you may elect to deposit any new Purchase Payment of
$5,000 or more in a guarantee rate account that we call the "DCA rate account."
For Contracts issued after April 30, 2004, your deposits under this program will
be depleted over a 6 month period. For Contracts issued prior to May 1, 2004,
the assets in this account attributable to a new Purchase Payment will be
transferred automatically to one or more Variable Investment Options over a
period that is equal in length (i.e., either 6 months or 12 months) to the
period you initially selected. A new period will begin on the date each new
Purchase Payment is deposited in the DCA rate account program with respect to
that Purchase Payment. At the time of each deposit into this program, you must
tell us in writing:
- that your deposit should be allocated to this program; and
- the Variable Investment Options to which assets will be transferred;
and
- the percentage amount to be transferred to each such Variable
Investment Option.
Transfers to Fixed Investment Options are not permitted under this program, and
transfers of your account value from a Variable Investment Option are not
currently permitted to initiate the program. (You may, however, change your
variable investment allocation instructions at any time in writing or, if you
have authorized telephone transfers, by telephone).
Your participation in the dollar-cost averaging value program will end if you
request a partial withdrawal from the DCA rate account, or if you request a
transfer from the DCA rate account that is in addition to the automatic
transfers.
You may not use the standard dollar-cost averaging program and the dollar-cost
averaging value program at the same time.
The dollar-cost averaging programs allow investments to be made in equal
installments over time in an effort to reduce the risk posed by market
fluctuations. Therefore, you may achieve a lower purchase price over the
long-term by purchasing more accumulation units of a particular Subaccount when
the unit value is low, and less when the unit value is high. However, the
dollar-cost averaging programs do not guarantee profits or prevent losses in a
declining market and require regular investment regardless of fluctuating price
levels. In addition, the dollar-cost averaging programs do not protect you from
market fluctuations in the Variable Investment Option from which we are taking
the transfers. If you are interested in either dollar-cost averaging program,
you may elect to participate in that program on the appropriate application or
you may obtain a separate authorization form and full information concerning the
program and its restrictions from your registered representative or our
Annuities Service Center. You may elect out of the dollar-cost averaging
programs at any time.
You should consult with your financial professional to assist you in determining
whether the dollar-cost averaging programs and the Variable Investment Option
from which we are taking the transfers are suited for your financial needs and
investment risk tolerance.
Strategic Rebalancing Program
This program automatically resets the percentage of your account value allocated
to the Variable Investment Options. Over time, the variations in the investment
results for each Variable Investment Option you've selected for this program
will shift the percentage allocations among them. The strategic rebalancing
program will periodically transfer your account value among these Variable
Investment Options to reestablish the preset percentages you have chosen. (You
may, however, change your variable investment allocation instructions at any
time in writing or, if you have authorized telephone transfers, by telephone).
Strategic rebalancing would usually result in transferring amounts from a
Variable Investment Option with relatively higher investment performance since
the last rebalancing to one with relatively lower investment performance.
However, rebalancing can also result in transferring amounts from a Variable
Investment Option with relatively lower current investment performance to one
with relatively higher current investment performance.
This program can be elected by sending the appropriate form to the Annuities
Service Center. You must specify the frequency for rebalancing (monthly,
quarterly, semi-annually or annually), the preset percentage for each Variable
Investment Option, and a future beginning date. Once elected, strategic
rebalancing will continue until we receive notice of cancellation of the option
or notice of the death of the insured person.
The Fixed Investment Options do not participate in and are not affected by
strategic rebalancing. There is no charge for the strategic rebalancing program.
Also, fund transfers under this program do not trigger transfer fees (where
applicable) nor do they count towards any applicable transfer limits. We reserve
the right to modify, terminate or suspend the strategic rebalancing program at
any time.
WHAT FEES AND CHARGES WILL BE DEDUCTED FROM MY CONTRACT?
We assess charges and deductions under the Contract against Purchase Payments,
Contract Values or withdrawals. Currently, there are no deductions made from
Purchase Payments. In addition, there are deductions from and expenses paid out
of the assets of the Portfolios that are described in the Portfolios'
prospectuses.
16
Asset-Based Charges
We deduct Separate Account expenses daily, as a percentage of average account
value, to compensate us primarily for our administrative expenses and for the
mortality and expense risks that we assume under the Contracts, as follows:
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE ACCOUNT VALUE)
DECLARATION PATRIOT REVOLUTION REVOLUTION EXTRA REVOLUTION VALUE
VARIABLE VARIABLE ACCESS VARIABLE VARIABLE VARIABLE
ANNUITY ANNUITY ANNUITY ANNUITY ANNUITY
----------- -------- --------------- ---------------- ----------------
(Contracts with initial
Purchase Payment less
than $250,000)
Asset-Based Charge 1.25% 1.25% 1.25% 1.25% 1.25%
(Contracts with initial
Purchase Payment
greater than $250,000)
Asset-Based Charge 1.00% 1.00% 1.25% 1.25% 1.25%
This charge does not apply to assets you have in our Fixed Investment Options.
We take the deduction proportionally from each Variable Investment Option you
are then using.
In return for the mortality risk charge, we assume the risk that Annuitants as a
class will live longer than expected, requiring us to pay a greater number of
annuity payments. In return for the expense risk charge, we assume the risk that
our expenses relating to the Contracts may be higher than we expected when we
set the level of the Contracts' other fees and charges, or that our revenues
from such other sources will be less than expected. The rate of the mortality
and expense risks charge cannot be increased. The charge is assessed on all
active Contracts, including Contracts continued by a Beneficiary upon the death
of the Contract Owner or continued under any annuity option payable on a
variable basis. If the charge is insufficient to cover the actual cost of the
mortality and expense risks assumed, we will bear the loss. Conversely, if the
charge proves more than sufficient, the excess will be profit to us and will be
available for any proper corporate purpose including, among other things,
payment of distribution expenses. In cases where no death proceeds are payable
(e.g., for Contracts continued by a Beneficiary upon the death of the Owner), or
under the Period Certain Only Annuity Option, if you elect benefits payable on a
variable basis, the mortality and expense risks charge is assessed although we
bear only the expense risk and not any mortality risk.
Annual Contract Fee
We currently deduct a $30 annual Contract fee at the end of each Contract Year
for a DECLARATION OR PATRIOT CONTRACT WITH A TOTAL VALUE OF LESS THAN $10,000
and also for a REVOLUTION ACCESS, REVOLUTION EXTRA OR REVOLUTION VALUE CONTRACT
WITH A TOTAL VALUE OF LESS THAN $50,000. We also deduct the annual fee before
then if you surrender your Contract, unless your Contract's total value, at the
time of surrender, is above either $10,000 FOR DECLARATION and PATRIOT
CONTRACTS, or $50,000 FOR REVOLUTION ACCESS, REVOLUTION EXTRA, AND REVOLUTION
VALUE CONTRACTS.
We take the deduction proportionally from each Variable Investment Option and
each Fixed Investment Option you are then using. We reserve the right to
increase the annual Contract fee up to $50.
Premium Taxes
We make deductions for any applicable premium or similar taxes based on the
amount of a Purchase Payment. Currently, certain local jurisdictions assess a
tax of up to 4% of each Purchase Payment.
In most cases, and subject to applicable state law, we deduct a charge in the
amount of the tax from the total value of the Contract only at the time of
annuitization, death, surrender, or withdrawal. We reserve the right, however,
to deduct the charge from each Purchase Payment at the time it is made. We
compute the amount of the charge by multiplying the applicable premium tax
percentage times the amount you are withdrawing, surrendering, annuitizing or
applying to a death benefit.
PREMIUM TAX RATE(1)
--------------------------------------------
STATE OR TERRITORY QUALIFIED CONTRACTS NONQUALIFIED CONTRACTS
------------------ ------------------- ----------------------
CA 0.50% 2.35%
GUAM 4.00% 4.00%
ME(2) 0.00% 2.00%
NV 0.00% 3.50%
PR 1.00% 1.00%
SD(2) 0.00% 1.25%(3)
TX(4) 0.04% 0.04%
WV 1.00% 1.00%
WY 0.00% 1.00%
17
(1) Based on the state of residence at the time the tax is assessed.
(2) We pay premium tax upon receipt of Purchase Payment.
(3) 0.80% on Purchase Payments in excess of $500,000.
(4) Referred to as a "maintenance fee."
Withdrawal Charge
(Not applicable to the Revolution Access Variable Annuity)
If you withdraw some of your Purchase Payments from your Contract prior to the
Maturity Date (a "partial withdrawal") or if you surrender (turn in) your
Contract, in its entirety, for cash prior to the Maturity Date (a "total
withdrawal" or "surrender"), we may assess a withdrawal charge. Some people
refer to this charge as a "contingent deferred withdrawal load." The amount of
this charge will depend on the type of Contract you purchased and the number of
years that have passed since we received your Purchase Payments, as shown below:
DECLARATION PATRIOT REVOLUTION ACCESS REVOLUTION EXTRA REVOLUTION VALUE
VARIABLE ANNUITY VARIABLE ANNUITY VARIABLE ANNUITY VARIABLE ANNUITY VARIABLE ANNUITY
------------------- ------------------- ----------------- ------------------- -------------------
Maximum Withdrawal Charge 6% for the 1st year 6% for the 1st year None 7% for the 1st year 7% for the 1st year
(as % of amount withdrawn 6% for the 2nd year 6% for the 2nd year 7% for the 2nd year 6% for the 2nd year
or surrendered) (1) 5% for the 3rd year 5% for the 3rd year 7% for the 3rd year 5% for the 3rd year
5% for the 4th year 5% for the 4th year 7% for the 4th year 4% for the 4th year
4% for the 5th year 4% for the 5th year 6% for the 5th year 3% for the 5th year
3% for the 6th year 3% for the 6th year 5% for the 6th year 2% for the 6th year
2% for the 7th year 2% for the 7th year 4% for the 7th year 1% for the 7th year
0% thereafter 0% thereafter 0% thereafter 0% thereafter
(1) This charge is taken upon withdrawal or surrender within the specified
period of years measured from the date of Purchase Payment.
Withdrawal charges help to compensate us for the cost of selling the Contracts,
including expenses relating to the Extra Credit feature under Revolution Extra
Variable Annuity Contracts. The amount of the charges in any Contract Year does
not specifically correspond to sales expenses for that year. We expect to
recover our total sales expenses over the life of the Contracts. To the extent
that the withdrawal charges do not cover total sales expenses, the sales
expenses may be recovered from other sources, including gains from the
asset-based risk charge and other gains with respect to the Contracts or from
our general assets. Similarly, administrative expenses not fully recovered by
the administration fee may also be recovered from such other sources.
FREE WITHDRAWAL AMOUNTS (APPLICABLE TO REVOLUTION EXTRA AND REVOLUTION VALUE
CONTRACTS). If you purchased a Revolution Extra or Revolution Value Contract and
have any profit in your Contract, you can always withdraw that profit without
any withdrawal charge. By "profit," we mean the amount by which your Contract's
total value exceeds the Purchase Payments you have paid and have not (as
discussed below) already withdrawn. For Revolution Extra Contracts, "profit"
also includes any amounts attributable to an Extra Credit. If your Contract
doesn't have any profit (or you have withdrawn it all) you can still make charge
free withdrawals, unless and until all of your withdrawals during the same
Contract Year exceed 10% of all of the Purchase Payments you have paid to date.
FREE WITHDRAWAL AMOUNTS (APPLICABLE TO PATRIOT AND DECLARATION CONTRACTS). If
you purchased a Patriot or Declaration Contract, you can make withdrawals
without any withdrawal charge, unless and until all of your withdrawals during
the same Contract Year exceed 10% of all of the Purchase Payments you have paid
to date.
HOW WE DETERMINE AND DEDUCT THE CHARGE: If the amount you withdraw or surrender
totals more than the free withdrawal amount during the Contract Year, we will
assess a withdrawal charge shown in the Fee Tables on any amount of the excess
that we attribute to Purchase Payments you made within a withdrawal charge
period. Solely for purposes of determining the amount of the withdrawal charge,
we assume that the amount of each withdrawal that exceeds the free withdrawal
amount (together with any associated withdrawal charge) is a withdrawal first
from the earliest Purchase Payment, and then from the next earliest Purchase
Payment, and so forth until all payments have been exhausted. Once a Purchase
Payment has been considered to have been "withdrawn" under these procedures,
that Purchase Payment will not enter into any future withdrawal charge
calculations.
We deduct the withdrawal charge proportionally from each Variable Investment
Option and each Fixed Investment Option being reduced by the surrender or
withdrawal. For example, if 60% of the withdrawal amount comes from Investment
Option "A" and 40% from Investment Option "B," then we will deduct 60% of the
withdrawal charge from Investment Option "A" and 40% from Investment Option "B."
If any such option has insufficient remaining value to cover the charge, we will
deduct any shortfall from all of your other Investment Options, pro-rata based
on the value in each. If your Contract as a whole has insufficient surrender
value to pay the entire charge, we will pay you no more than the surrender
value.
You will find examples of how we compute the withdrawal charge in Appendix B to
this Prospectus.
WHEN WITHDRAWAL CHARGES DON'T APPLY: We don't assess a withdrawal charge in the
following situations:
18
- on amounts applied to an Annuity Option at the Contract's Maturity
Date or to pay a death benefit;
- on certain withdrawals if you have elected the Rider that waives the
withdrawal charge (nursing home Rider for Declaration and Patriot
Variable Annuities); or
- on amounts withdrawn to satisfy the minimum distribution requirements
for tax qualified plans. (Amounts above the minimum distribution
requirements are subject to any applicable withdrawal charge,
however.)
HOW AN MVA AFFECTS THE WITHDRAWAL CHARGE. If you make a withdrawal from a Fixed
Investment Option at a time when the related MVA results in an upward adjustment
in your remaining value, we will calculate the withdrawal charge as if you had
withdrawn that much more. Similarly, if the MVA results in a downward
adjustment, we will compute any withdrawal charge as if you had withdrawn that
much less.
Other Charges
If you purchased an optional benefit Rider, we will deduct the applicable
charges for that benefit proportionally from each of your Investment Options,
including the Fixed Investment Options, based on your value in each. We list
these charges below:
OPTIONAL BENEFIT RIDER CHARGES(1) (AS A PERCENTAGE OF YOUR CONTRACT'S TOTAL
VALUE UNLESS OTHERWISE STATED)
DECLARATION PATRIOT REVOLUTION ACCESS REVOLUTION EXTRA REVOLUTION VALUE
VARIABLE ANNUITY VARIABLE ANNUITY VARIABLE ANNUITY VARIABLE ANNUITY VARIABLE ANNUITY
------------------- ------------------- ----------------- ------------------- -------------------
Accidental Death Benefit
Rider 0.10% 0.10% Not Offered Not Offered Not Offered
Accumulated Value
Enhancement ("CARESolutions
Plus") Rider(2) Not Offered Not Offered Maximum: 1.00% Maximum: 1.00% Maximum: 1.00%
(as a percentage of your Current: 0.40% Current: 0.35% Current: 0.35%
initial Purchase Payment)
Earnings Enhancement
("Beneficiary Tax
Relief") Not Offered Not Offered 0.25% 0.25% 0.25%
Death Benefit Rider
Enhanced "Stepped Up" 0.15% 0.15% Not Offered Not Offered Not Offered
Death Benefit Rider
Enhanced Death Benefit
Rider(3) Not Offered Not Offered 0.25% 0.25% 0.25%
Guaranteed Retirement Income
Benefit Rider (4) Not Offered Not Offered 0.30% 0.30% 0.30%
Nursing Home Waiver (4) 0.05% 0.05% Not Offered Not Offered Not Offered
Waiver of Withdrawal Charge
("CARESolutions") Rider(5) Not Offered Not Offered Not Offered 0.10% 0.10%
(1) Charges for optional benefit Riders are assessed monthly. The monthly
charge is 1/12 of the annual charge shown in this table.
(2) This Rider is available only if you purchased the Waiver of Withdrawal
Charge Rider as well. We do not currently impose the maximum charge shown,
but reserve the right to do so on a uniform basis for all Accumulated Value
Enhancement Riders issued in the same state.
(3) In certain states (and for Riders issued prior to May 1, 2002), the rate
for Enhanced Death Benefit Rider may be lower than the amount shown.
(4) This Rider was not available for Contracts issued after April 30, 2004.
(5) The charge shown is a percentage of that portion of your Contract's total
value attributable to Purchase Payments that are still subject to
withdrawal charges.
HOW CAN I WITHDRAW MONEY FROM MY CONTRACT?
Surrenders and Partial Withdrawals
Prior to your Contract's Maturity Date, if the Annuitant is living, you may:
- surrender your Contract for a cash payment of its Surrender Value; or
- make a partial withdrawal of the surrender value.
Certain surrenders and withdrawals may result in taxable income to you or other
tax consequences as described under "IX. Federal Tax Matters." Among other
things, if you make a full surrender or partial withdrawal from your Contract
before you reach age 59 1/2, an additional federal penalty of 10% generally
applies to any taxable portion of the withdrawal.
We will deduct any partial withdrawal proportionally from each of your
Investment Options based on the value in each, unless you direct otherwise. When
you take a partial withdrawal, we deduct any applicable withdrawal charge as a
percentage of the total amount withdrawn. We take any applicable withdrawal
charge from the amount remaining in a Contract after we process the amount you
request.
19
We reserve the right to terminate your Contract if the value of your Contract
becomes zero. You generally may not make any surrenders or partial withdrawals
once we begin making payments under an Annuity Option. FOR DECLARATION AND
PATRIOT VARIABLE ANNUITIES ONLY: if your "free withdrawal value" at any time is
less than $100, you must withdraw that amount in full, in a single sum, before
you make any other partial withdrawals.
Your request to surrender your Contract or to make a partial withdrawal becomes
effective at the close of the Business Day in which we receive it, in proper
form at the Annuities Service Center. Each Business Day ends at the close of
daytime trading for the day on the New York Stock Exchange (usually 4:00 p.m.
Eastern Time). If we receive a request, in proper form, after the close of a
Business Day, it will become effective at the end of the next Business Day.
We will pay the amount of any withdrawal from the Variable Investment Options
promptly, and in any event within seven days of receipt of the request, complete
with all necessary information, at our Annuities Service Center. We reserve the
right to defer the right of withdrawal or postpone payments for any period when:
- the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
- trading on the New York Stock Exchange is restricted;
- an emergency exists as determined by the SEC, 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
- the SEC, by order, so permits for the protection of security holders;
provided that applicable rules and regulations of the SEC shall govern
as to whether trading is restricted or an emergency exists.
IMPACT OF DIVORCE. In the event that you and your spouse become divorced after
you purchase a Contract, we will consider any request to reduce or divide
benefits under a Contract as a request for withdrawal of Contract Value. The
transaction may be subject to taxes and any applicable withdrawal charges. If
you determine to continue the remaining Contract, we will reduce the benefit
under any existing optional benefit Rider to the Contract in accordance with its
terms.
TAX CONSIDERATIONS. Withdrawals from the Contract may be subject to income tax
and a 10% IRS penalty tax (see "IX. Federal Tax Matters"). Withdrawals are
permitted from Contracts issued in connection with Section 403(b) Qualified
Plans only under limited circumstances (see "IX. Federal Tax Matters" and the
section titled "Qualified Plan Types" in the Statement of Additional Information
("SAI")).
Signature Guarantee Requirements for Surrenders and Partial Withdrawals
(Not applicable to Contracts issued in New Jersey)
We require that you obtain a signature guarantee on a surrender or partial
withdrawal in the following circumstances:
- you are requesting that we mail the amount withdrawn to an alternate
address; or
- you have changed your address within 30 days of the withdrawal
request; or
- you are requesting a withdrawal in the amount of $250,000 or greater.
We must receive the original signature guarantee on your withdrawal request. We
will not accept copies or faxes of a signature guarantee. You may obtain a
signature guarantee at most banks, financial institutions or credit unions. A
notarized signature is not the same as a signature guarantee and will not
satisfy this requirement. There may be circumstances, of which we are not
presently aware, in which we would not impose a signature guarantee on a
surrender or partial withdrawal as described above.
Nursing Home Waiver of Withdrawal Charge
(Applicable only to the Declaration and Patriot Variable Annuities)
If you own a Declaration or Patriot Contract, you have may purchased an optional
nursing home waiver of withdrawal charge Rider when you applied for your
Contract, as permitted by state law. If you purchased this Rider, we will waive
the withdrawal charges on any withdrawals, provided all the following conditions
apply:
- You become confined to a nursing home beginning at least 90 days after
we issue your Contract.
- You remain in the nursing home for at least 90 consecutive days and
receive skilled nursing care.
- We receive your request for a withdrawal and adequate proof of
confinement no later than 90 days after discharge from the facility.
- Your confinement is prescribed by a doctor and medically necessary.
At the time of application, you could not purchase this Rider if (1) you were
older than 75 years at application or (2) in most states, if you were confined
to a nursing home within the past two years at application.
Waiver of Withdrawal Charge Rider
(Applicable only to Revolution Extra and Revolution Value Variable Annuities)
If you own a Revolution Extra or Revolution Value Contract, you may have
purchased an optional waiver of withdrawal charge Rider when you applied for
your Contract, as permitted by state law. The "covered persons" under the Rider
are the Owner and the Owner's spouse, unless the Owner is a trust. If the Owner
is a trust, the "covered persons" are the Annuitant and the Annuitant's spouse.
20
Under this Rider, we will waive withdrawal charges on any withdrawals, if all
the following conditions apply to a "covered person":
- a covered person becomes confined to a nursing home beginning at least
30 days after we issue your Contract;
- such covered person remains in the nursing home for at least 90
consecutive days receiving nursing care; and
- the covered person's confinement is prescribed by a doctor and
medically necessary because of a covered physical or mental
impairment.
In addition, depending on your state, the Rider may also provide for a waiver of
withdrawal charges if a covered person has been diagnosed with a chronic,
critical or terminal illness to the extent so provided in the Rider.
At the time of application, you could not purchase this Rider: (1) if either of
the covered persons was older than 74 years at application or (2) in most
states, if either of the covered persons was confined to a nursing home within
the past two years at application.
There is a charge for this Rider, as set forth in the Fee Tables. This Rider
(and the related charges) will terminate on the Contract's Maturity Date, upon
your surrendering the Contract, or upon your written request that we terminate
it.
If you purchased this Rider:
- you and your immediate family will also have access to a national
program designed to help the elderly maintain their independent living
by providing advice about an array of eldercare services available to
seniors; and
- you will have access to a list of long-term care providers in your
area who provide special discounts to persons who belong to the
national program.
You should carefully review the tax considerations for optional benefit Riders
under "IX. Federal Tax Matters." For a more complete description of the terms
and conditions of this benefit, you should refer directly to the Rider. We will
provide you with a copy on request. In certain marketing materials, this Rider
may be referred to as "CARESolutions."
There are or may be situations other than those described above or elsewhere in
the Prospectus (e.g., "Variations in Charges or Rates"), that merit waiver of
withdrawal charges, which we may consider on a case-by-case basis.
Systematic Withdrawal Plan
Our optional systematic withdrawal plan enables you to preauthorize periodic
withdrawals. If you elect this plan, we will withdraw a percentage or dollar
amount from your Contract on a monthly, quarterly, semiannual, or annual basis,
based upon your instructions. Unless otherwise directed, we will deduct the
requested amount from each applicable Investment Option in the ratio that the
value of each bears to the Contract Value. Each systematic withdrawal is subject
to any market value adjustment or withdrawal charge (WITHDRAWAL CHARGE NOT
APPLICABLE TO REVOLUTION ACCESS VARIABLE ANNUITIES) that would apply to an
otherwise comparable non-systematic withdrawal. See "How Will the Value of My
Investment in the Contract Change Over Time?" and "What Fees and Charges Will be
Deducted from My Contract?" The same tax consequences also generally will apply.
You may cancel the systematic withdrawal plan at any time.
Telephone Withdrawals
If you complete a separate authorization form, you may make requests to withdraw
a portion of your Contract Value by telephone. We reserve the right to impose
maximum withdrawal amount and procedural requirements regarding this privilege.
For additional information regarding telephone procedures, see "Telephone and
Facsimile Transactions" in this Prospectus.
WHAT HAPPENS IF THE OWNER OR ANNUITANT DIES BEFORE MY CONTRACT'S MATURITY DATE?
Death Benefits - In General
The Contracts described in this Prospectus generally provide for distribution of
death benefits if you die before a Contract's Maturity Date. The minimum death
benefits provided under the Contracts differ, depending on when you purchased a
Contract, our maximum limits on death benefits at that time, the jurisdiction in
which we issued a Contract, and the age of the oldest Owner (or Annuitant) on
the date of issue. We may pay death benefits in some cases on the Annuitant's
death, instead of the Owner's death, if the Annuitant predeceases the Owner. In
addition, you may have purchased a Contract with an optional death benefit Rider
that will enhance the amount of death benefit. You should read your Contract
carefully to determine the minimum death benefit and any enhanced death benefit
payable during the Accumulation Period.
Distribution Requirements Following Death of Owner
If you did not purchase your Contract under a Qualified Plan (as that term is
used below), the Code requires that the following distribution provisions apply
if you die. We summarize these provisions (and the effect of spousal
continuation) below. If your Contract has joint Owners, these provisions apply
upon the death of the first to die.
If you die before annuity payments have begun:
- If the Contract's designated Beneficiary is your surviving spouse who
falls within the definition of "spouse" under the federal Defense of
Marriage Act, your spouse may continue the Contract as the new Owner
without triggering adverse
21
federal tax consequences. See "X. Other Information - Spouse." In that
case:
- under DECLARATION and PATRIOT Contracts, we will not pay a death
benefit but the total value of your Contract will equal the death
benefit that would have been payable, excluding amounts payable
under any optional benefit Riders; and
- under REVOLUTION ACCESS, REVOLUTION EXTRA and REVOLUTION VALUE
Contracts, we will not pay a death benefit but the total value of
your Contract will equal the death benefit that would have been
payable, including amounts payable under any optional benefit
Riders; and
- under PATRIOT, DECLARATION, REVOLUTION ACCESS, REVOLUTION EXTRA
and REVOLUTION VALUE Contracts, any additional amount that we may
credit to your Contract will be allocated to the Investment
Options in the same ratio as the investment allocations held at
the time of death and will not be subject to any future surrender
or withdrawal charges. If your spouse makes any Additional
Purchase Payments (and if there are any unliquidated Purchase
Payments at the time of your death), however, they will be
subject to future surrender or withdrawal charges as provided in
your Contract;
- if the Beneficiary is not your surviving spouse or if the Beneficiary
is your surviving spouse but chooses not to continue the Contract, the
"entire interest" (as discussed below) in a Contract on the date of
your death must be:
- paid out in full within five years of your death; or
- applied in full towards the purchase of a life annuity on the
Beneficiary, or for a similar benefit payable over a period not
extending beyond the life expectancy of the Beneficiary, with
payments commencing within one year of your death.
Your "entire interest" in a REVOLUTION ACCESS, REVOLUTION EXTRA and REVOLUTION
VALUE Contract, as issued in most states, equals the standard death benefit (or
any enhanced death benefit) for the Contract on the date of your death. If an
Earnings Enhancement benefit Rider is then in force, the "entire interest" in
most states will also include any Earnings Enhancement death benefit amount that
may then be payable. Your "entire interest" in a DECLARATION or PATRIOT Contract
on the date of your death, if you are the last surviving Annuitant as well as
the Owner, equals the death benefit that then becomes payable. If you are the
Owner of a DECLARATION or PATRIOT Contract (or an owner of a REVOLUTION ACCESS,
REVOLUTION EXTRA or REVOLUTION VALUE Contract in certain states such as IL or
MN) but not the last surviving Annuitant, the "entire interest" equals:
- the surrender value if paid out in full within five years of your
death; or
- the total value of your Contract applied in full towards the purchase
of a life annuity on the Beneficiary, or for a similar benefit payable
over a period not extending beyond the life expectancy of the
Beneficiary, with payments commencing within one year of your death.
YOU SHOULD REVIEW YOUR CONTRACT CAREFULLY TO DETERMINE THE "ENTIRE INTEREST"
THAT WILL BE DISTRIBUTED UPON AN OWNER'S DEATH.
IF YOU DIE ON OR AFTER ANNUITY PAYMENTS HAVE BEGUN, any remaining amount that we
owe must be paid out at least as rapidly as under the method of making annuity
payments that is then in use.
We continue to assess the asset-based charges during this period, even though we
bear only the expense risk and not any mortality risk (see "IV. Basic
Information - What Fees and Charges will be Deducted from My Account? -
Asset-Based Charges").
The Code imposes very similar distribution requirements on Contracts used to
fund tax qualified plans. We provide the required provisions for tax qualified
plans in separate disclosures and endorsements.
Death Benefits Following Death of Annuitant
Under DECLARATION and PATRIOT Contracts, if the Annuitant dies before your
Contract's date of maturity, we will pay a standard death benefit, unless you
have elected an enhanced death benefit Rider. Under REVOLUTION ACCESS,
REVOLUTION EXTRA and REVOLUTION VALUE Contracts, our payment of the "standard"
death benefit, and any enhanced death benefits, depends on the form of ownership
and whether there is one Annuitant or joint Annuitants:
- If your Contract is owned by a single natural person and has a single
Annuitant, the death benefit is payable on the earlier of the Owner's
death and the Annuitant's death.
- If your Contract is owned by a single natural person and has joint
Annuitants, the death benefit is payable on the earliest of the
Owner's death (whether or not the Owner is also an Annuitant) and the
last Annuitant's death.
- If your Contract is owned by joint Owners and has a single Annuitant,
the death benefit is payable on the earliest of the first Owner's
death (whether or not the Owner is also an Annuitant) and the
Annuitant's death.
- If your Contract is owned by joint Owners and has joint Annuitants,
the death benefit is payable on the earliest of the first Owner's
death (whether or not the Owner is also an Annuitant) and the last
Annuitant's death.
In certain states, such as IL and MN, the death benefit under REVOLUTION ACCESS,
REVOLUTION EXTRA and REVOLUTION VALUE Contracts is payable only upon an
Annuitant's death. YOU SHOULD REVIEW YOUR CONTRACT CAREFULLY TO DETERMINE WHEN A
"STANDARD" DEATH BENEFIT IS PAYABLE.
If your PATRIOT, DECLARATION, REVOLUTION ACCESS, REVOLUTION EXTRA or REVOLUTION
VALUE Contract has joint Owners, each Owner will automatically be deemed to be
the Beneficiary of the other. This means that any death benefit payable upon the
death of one
22
owner will be paid to the other owner. In that case, any other Beneficiary you
have named would receive the death benefit only if neither joint owner remains
alive at the time the death benefit becomes payable.
Standard Death Benefit
The standard death benefit under Declaration, Patriot, Revolution Access,
Revolution Extra and Revolution Value Contracts is the greater of:
- the total value of your Contract, adjusted by any then-applicable
market value adjustment; or
- the total amount of Purchase Payments made, minus any partial
withdrawals and related withdrawal charges.
Enhanced Death Benefit Riders
We offered several optional death benefit Riders under DECLARATION, PATRIOT,
REVOLUTION ACCESS, REVOLUTION EXTRA and REVOLUTION VALUE Contracts that,
depending on state availability and our underwriting rules, were available to
you at the time you purchased your Contract. For an extra fee, these optional
death benefit Riders may enhance the standard death benefit payable under your
Contract, subject to the terms and limitations contained in the Rider.
Under DECLARATION and PATRIOT Contracts, we offered a "Stepped-Up" death benefit
Rider and an "Accidental Death Benefit" Rider to applicants under age 80 at the
time of purchase. Under REVOLUTION ACCESS, REVOLUTION EXTRA and REVOLUTION VALUE
Contracts, we offered an "Enhanced" death benefit Rider if each owner and each
Annuitant was under age 80 at the time of purchase. We also offered an "Earnings
Enhancement" death benefit Rider to purchasers of REVOLUTION ACCESS, REVOLUTION
EXTRA and REVOLUTION VALUE Contracts if each Owner and each Annuitant was under
age 75 at the time of purchase. The "Earnings Enhancement" death benefit Rider
was not available, however, to Contracts issued in connection with tax-qualified
plans.
We provide a general description of each of these Riders in Appendix C to this
Prospectus.
Calculation and Payment of Death Benefit Value
We calculate the death benefit value as of the day we receive, in proper order
at the Annuities Service Center:
- proof of death before the Contract's date of maturity; and
- any required instructions as to method of settlement.
We will generally pay the death benefit in a "lump sum" under our current
administrative procedures to the Beneficiary you chose, unless:
- the death benefit is payable because of the Owner's death, the
designated Beneficiary is the Owner's spouse, and he or she elects to
continue the Contract in force; or
- an optional method of settlement is in effect. If you have not elected
an optional method of settlement, the Beneficiary may do so. However,
if the death benefit is less than the minimum stated in your Contract
(in most states, $5,000), we will pay it in a lump sum, regardless of
any election. You can find more information about optional methods of
settlement under "Annuity Options."
We will pay the death benefit within seven calendar days of the date that we
determine the amount of the death benefit, subject to postponement under the
same circumstances for which payment of withdrawals may be postponed (see "IV.
Basic Information - What Fees and Charges will be Deducted from My Contract? -
Withdrawal Charge"). Beneficiaries who opt for a lump sum payout of their
portion of the death benefit may choose to receive the funds either in a single
check or wire transfer or in a John Hancock Safe Access Account ("JHSAA").
Similar to a checking account, the JHSAA provides the Beneficiary access to the
payout funds via a checkbook, and account funds earn interest at a variable
interest rate. Any interest paid may be taxable. The Beneficiary can obtain the
remaining death benefit proceeds in a single sum at any time by cashing one
check for the entire amount. Note, however, that a JHSAA is not a true checking
account as the Beneficiary cannot make deposits. It is solely a means of
distributing the death benefit, so the Beneficiary can only make withdrawals.
The JHSAA is part of our general account; it is not a bank account and it is not
insured by the FDIC or any other government agency. As part of our general
account, it is subject to the claims of our creditors. We receive a benefit from
all amounts left in the JHSAA.
You can find more information about optional methods of settlement under
"Annuity Options."
WHAT OTHER OPTIONAL BENEFITS MAY HAVE BEEN AVAILABLE TO ME UNDER A CONTRACT?
(APPLICABLE ONLY TO REVOLUTION ACCESS, REVOLUTION EXTRA AND REVOLUTION VALUE
VARIABLE ANNUITIES)
Accumulated Value Enhancement Benefit
If you elected this benefit when you purchased a Contract, we will make a
contribution to the total value of the Contract on a monthly basis if the
covered person (who must be an Owner and the Annuitant):
- is unable to perform at least 2 activities of daily living without
human assistance or has a cognitive impairment; and
- is receiving certain qualified services described in the Rider.
The amount of the contribution (called the "Monthly Benefit") is shown in the
specifications page of the Contract. However, the benefit contains an inflation
protection feature that will increase the Monthly Benefit by 5% each year after
the 7th Contract Year. The
23
specifications page of the Contract also contains a limit on how much the total
value of the Contract can be increased by this benefit (the "benefit limit").
The Rider must be in effect for 7 years before any increase will occur.
You could only elect this benefit when you applied for the Contract, if it was
then available in your state. Under our current administrative rules, the
Monthly Benefit (without regard to the inflation protection feature) is
equivalent to 1% of your initial Purchase Payment, up to a maximum Purchase
Payment of $300,000. We may reduce this $300,000 limit further, however, if you
own additional annuity contracts issued by John Hancock USA and its affiliates
that provide a similar benefit. The $300,000 limit applies only to the
calculation of the Monthly Benefit under the accumulated value enhancement
Rider. (See "Limits on Purchase Payments" for a general description of other
Purchase Payment limits under the Contract).
You could not have elected this Rider unless you also elected the waiver of
withdrawal charge Rider. There is a monthly charge for this benefit as described
in the Fee Tables.
The Rider will terminate if the Contract terminates, if the covered person dies,
if the benefit limit is reached, if the Owner is the covered person and the
ownership of the Contract changes, or if, before annuity payments start, the
total value of the Contract falls below an amount equal to 25% of your initial
Purchase Payment. You may cancel the Rider by written notice at any time. The
Rider charge will terminate when the Rider terminates.
If you choose to continue the Rider after the Contract's Maturity Date, charges
for the Rider will be deducted from annuity payments and any Monthly Benefit for
which the covered person qualifies will be added to the next annuity payment.
In certain marketing materials, this Rider may have been referred to as
"CARESolutions Plus."
You should carefully review the tax considerations for optional benefit Riders
under "IX. Federal Tax Matters" in this Prospectus.
Guaranteed Retirement Income Benefit
CONTRACTS ISSUED BEFORE MAY 1, 2004 MAY HAVE BEEN ISSUED WITH GUARANTEED
RETIREMENT INCOME BENEFIT RIDER:
If you elected this benefit, we will guarantee the amount of annuity payments
you receive, if the following conditions are satisfied:
- The Maturity Date must be within the 30 day period following a
Contract Anniversary.
- If the Annuitant was age 45 or older on the date of issue, the
Contract must have been in effect for at least 10 Contract Years on
the Maturity Date and the Maturity Date must be on or after the
Annuitant's 60th birthday and on or before the Annuitant's 90th
birthday.
- If the Annuitant was less than age 45 on the date of issue, the
Contract must have been in effect for at least 15 Contract Years on
the Maturity Date and the Maturity Date must be on or before the
Annuitant's 90th birthday.
If your Contract was issued with this Rider, you need not choose to receive the
guaranteed income benefit that it provides. Rather, unless and until such time
as you exercise your option to receive a guaranteed income benefit under this
Rider, you will continue to have the option of exercising any other right or
option that you would have under the Contract (including withdrawal and annuity
payment options) if the Rider had not been added to it.
If you decided to add this Rider to your Contract, and if you ultimately decide
to take advantage of the guaranteed income it provides, we will automatically
provide that guaranteed income in the form of fixed payments under our "Option
A: Life Annuity with Payments for a Guaranteed Period" described below under
"Annuity Options." The guaranteed period will automatically be a number of years
that the Rider specifies, based on the Annuitant's age at the annuity date and
whether your Contract is purchased in connection with a tax-qualified plan.
(These specified periods range from 5 to 10 years.) You will have no discretion
to vary this form of payment, if you choose the guaranteed income benefit under
this Rider.
We guarantee that the amount you can apply to this annuity payment option will
be at least equal to the amount of each Purchase Payment you have paid,
accumulated at the rate(s) specified in the Contract, but adjusted for any
partial withdrawals you have taken. The accumulation rates differ between (a)
Contract Value allocated to a Fixed Investment Option or Money Market Investment
Option (currently 4%) and (b) Contract Value allocated to all other Variable
Investment Options (currently 5%). Withdrawals reduce the accumulated amount in
direct proportion to the percentage of Contract Value that was reduced by the
withdrawal (including any withdrawal charges). After a withdrawal, the
accumulation rate(s) will only be applied to the remaining accumulated amount.
If your total Contract Value is higher than the amount we guarantee, we will
apply the higher amount to the annuity payment option instead of the guaranteed
amount.
There is a monthly charge for this Rider as described in the Fee Tables. The
Rider (and the related charges) automatically terminate if your Contract is
surrendered or the Annuitant dies. After you've held your Contract for 10 years,
you can terminate the Rider by written request.
24
CAN I RETURN MY CONTRACT?
In most cases, you had the right to cancel your Contract within 10 days (or
longer in some states) after you received it. To have canceled your Contract,
you would have delivered or mailed it to us or to the JHVLICO representative who
delivered the Contract to you.
In most states, you would have received a refund equal to the total value of
your Contract on the date of cancellation, minus the extra credit deduction
(APPLICABLE ONLY TO REVOLUTION EXTRA VARIABLE ANNUITY CONTRACTS, as defined
below), adjusted by any then-applicable market value adjustments and increased
by any charges for premium taxes deducted by us to that date. In some states, or
if your Contract was issued as an IRA, you would have received a refund of any
Purchase Payments you would have paid, if that amount were higher. The date of
cancellation would have been the date we received the Contract.
The "extra credit deduction" is equal to the lesser of (1) the portion of the
total value of your Contract that is attributable to any extra credits and (2)
the amount of all extra credits. Thus, you would have received any gain and we
would have borne any loss on extra credits if you returned your Contract within
the time period specified above.
WILL I RECEIVE A CONFIRMATION STATEMENT?
We will send you a confirmation statement for certain transactions in your
Investment Accounts. You should carefully review these statements to verify
their accuracy. You should immediately report any mistakes to our Annuities
Service Center (at the address or phone number shown on the first page of this
Prospectus). If you fail to notify our Annuities Service Center of any mistake
within 60 days of the delivery of the confirmation statement, you will be deemed
to have ratified the transaction. Information regarding e-delivery of
confirmation statements appears under "IV. Basic Information - How Can I Change
My Contract's Investment Options? - Telephone and Electronic Transactions."
25
V. General Information about Us, the Separate Account and the Portfolios
THE COMPANY
Effective December 31, 2009, we entered into a merger agreement with John
Hancock Life Insurance Company ("JHLICO") and John Hancock Variable Life
Insurance Company ("JHVLICO") and assumed legal ownership of all of the assets
of JHLICO and JHVLICO, including those assets related to the John Hancock
Variable Annuity Account JF, now known as the John Hancock Life Insurance
Company (U.S.A.) Separate Account T). Effective at the time of the merger, we
became the depositor of John Hancock Life Insurance Company (U.S.A.) Separate
Account T (the "Separate Account").
Except for the succession of John Hancock USA as the depositor for the Separate
Account and to the liabilities and obligations arising under the Contracts, the
merger did not affect the Separate Account or any provisions of, any rights and
obligations under, or any of your allocations among investment options under,
the Contracts. We will continue to administer and service inforce contracts of
JHLICO and JHVLICO in all jurisdictions where issued and will assume the direct
responsibility for the payment of all claims and benefits and other obligations
under these contracts.
We are a stock life insurance company and are currently licensed in the District
of Columbia and all states of the United States except New York.
We were incorporated in Maine on August 20, 1955 by a special act of the Maine
legislature and redomesticated under the laws of Michigan on December 30, 1992.
Our ultimate parent is Manulife Financial Corporation ("MFC"), a publicly traded
company based in Toronto, Canada. MFC is the holding company of John Hancock USA
and its subsidiaries. However, neither John Hancock USA nor any of its
affiliated companies guarantees the investment performance of the Separate
Account.
The Company incurs obligations under the Contracts to guarantee amounts in
addition to your Contract Value, and to the extent the Company pays such
amounts, the payments will come from the Company's general account assets. You
should be aware that the Company's general account consists of securities and
other investments, the value of which may decline during periods of adverse
market conditions. The Company's financial statements contained in the Statement
of Additional Information include a further discussion of risks inherent within
the Company's general account investments.
THE SEPARATE ACCOUNT
We use our Separate Account to support the Variable Investment Options you
choose.
You do not invest directly in the Portfolios made available under the Contract.
When you direct or transfer money to a Variable Investment Option, we will
purchase shares of a corresponding Portfolio through the John Hancock Variable
Annuity Account JF, now known as the John Hancock Life Insurance Company
(U.S.A.) Separate Account T (the "Separate Account"). We hold the Portfolio's
shares in a "sub-account" (usually with a name similar to that of the
corresponding Portfolio).
The Company established John Hancock Life Insurance Company (U.S.A.) Separate
Account T under Massachusetts law. The Separate Account's assets, including the
Portfolios' shares, belong to John Hancock USA. Each Contract provides that
amounts we hold in the Separate Account pursuant to the Contracts cannot be
26
reached by any other persons who may have claims against us.
The income, gains and losses, whether or not realized, from assets of the
Separate Account are credited to or charged against the Separate Account without
regard to the Company's other income, gains, or losses. Nevertheless, all
obligations arising under the Company's Contracts are general corporate
obligations of the Company. Assets of our Separate Accounts may not be charged
with liabilities arising out of any of our other business.
We reserve the right, subject to compliance with applicable law, to add other
sub-accounts, eliminate existing sub-accounts, combine sub-accounts or transfer
assets in one sub-account to another sub-account that we, or an affiliated
company, may establish. We will not eliminate existing sub-accounts or combine
sub-accounts without the prior approval of the appropriate state or federal
regulatory authorities.
The Separate Account is registered as a unit investment trust under the 1940
Act. Registration under the 1940 Act does not involve supervision by the SEC of
the management or investment policies or practices of the Separate Account. If
we determine that it would be in the best interests of persons having voting
rights under the Contracts, the Separate Account may be operated as a management
investment company under the 1940 Act or it may be deregistered if 1940 Act
registration were no longer required.
THE PORTFOLIOS
When you select a Variable Investment Option, we invest your money in a
Sub-Account of our Separate Account and it invests in NAV shares of a
corresponding Portfolio of John Hancock Trust.
THE PORTFOLIOS IN THE SEPARATE ACCOUNT ARE NOT PUBLICLY TRADED MUTUAL FUNDS. The
Portfolios are only available to you as Investment Options in the Contracts or,
in some cases, through other variable annuity contracts or variable life
insurance policies issued by us or by other life insurance companies. In some
cases, the Portfolios also may be available through participation in certain
qualified pension, retirement or college savings plans.
Investment Management
The Portfolios' investment advisers and managers may manage publicly traded
mutual funds with similar names and investment objectives. However, the
Portfolios are NOT directly related to any publicly traded mutual fund. You
should not compare the performance of any Portfolio described in this Prospectus
with the performance of a publicly traded mutual fund. THE PERFORMANCE OF ANY
PUBLICLY TRADED MUTUAL FUND COULD DIFFER SUBSTANTIALLY FROM THAT OF ANY OF THE
PORTFOLIOS HELD IN OUR SEPARATE ACCOUNT.
In selecting the Portfolios that will be available as Investment Options under
the Contract or its optional benefit Riders, we may establish requirements that
are intended, among other things, to mitigate market price and interest rate
risk for compatibility with our obligations to pay guarantees and benefits under
the Contract and its optional benefit Riders. We seek to make available
Investment Options that use strategies that are intended to lower potential
volatility, including, but not limited to, strategies that: encourage
diversification in asset classes and style; combine equity exposure with
exposure to fixed income securities; and that allow us to effectively and
efficiently manage our exposure under the Contracts and optional benefit Riders.
The requirements we impose may affect both the performance and the availability
of Investment Options under the Contract and optional benefit Riders.
The John Hancock Trust is a so-called "series" type mutual fund and is
registered under the 1940 Act as an open-end management investment company. John
Hancock Investment Management Services, LLC ("JHIMS LLC") provides investment
advisory services to the John Hancock Trust and receives investment management
fees for doing so. JHIMS LLC pays a portion of its investment management fees to
other firms that manage the John Hancock Trust's Portfolios (i.e., subadvisers).
JHIMS LLC is our affiliate and we indirectly benefit from any investment
management fees JHIMS LLC retains.
The John Hancock Trust has obtained an order from the SEC permitting JHIMS LLC,
subject to approval by the Board of Trustees, to change a subadviser for a
Portfolio or the fees paid to subadvisers and to enter into new subadvisory
agreements from time to time without the expense and delay associated with
obtaining shareholder approval of the change. This order does not, however,
permit JHIMS LLC to appoint a subadviser that is an affiliate of JHIMS LLC or
the John Hancock Trust (other than by reason of serving as subadviser to a
portfolio) (an "Affiliated Subadviser") or to change a subadvisory fee of an
Affiliated Subadviser without the approval of shareholders.
If shares of a Portfolio are no longer available for investment or in our
judgment investment in a Portfolio becomes inappropriate, we may eliminate the
shares of a Portfolio and substitute shares of another Portfolio, or of another
open-end registered investment company. A substitution may be made with respect
to both existing investments and the investment of future Purchase Payments.
However, we will make no such substitution without first notifying you and
obtaining approval of the SEC (to the extent required by the 1940 Act).
27
Portfolio Expenses
The table in the Fee Tables section of the Prospectus shows the investment
management fees and other operating expenses for these Portfolio shares as a
percentage (rounded to two decimal places) of each Portfolio's average daily net
assets for 2009, except as indicated in the footnotes appearing at the end of
the table. Fees and expenses of the Portfolios are not fixed or specified under
the terms of the Contracts and may vary from year to year. These fees and
expenses differ for each Portfolio and reduce the investment return of each
Portfolio. Therefore, they also indirectly reduce the return you will earn on
any Variable Investment Options you select.
The Portfolios pay us or certain of our affiliates compensation for some of the
distribution, administrative, shareholder support, marketing and other services
we or our affiliates provide to the Portfolios. The amount of this compensation
is based on a percentage of the assets of the Portfolio attributable to the
variable insurance products that we and our affiliates issue. These percentages
may differ from Portfolio to Portfolio and among classes of shares within a
Portfolio. Compensation payments may be made by a Portfolio's investment adviser
or its affiliates. Any such payments do not, however, result in any charge to
you in addition to what is shown in the Total Annual Portfolio Operating
Expenses table.
Fund-of-Funds
The John Hancock Trust's Lifestyle Balanced Trust is a "fund-of-funds" that
invests in other underlying mutual funds. Expenses for a fund-of-funds may be
higher than that for other Portfolios because a fund-of-funds bears its own
expenses and indirectly bears its proportionate share of expenses of the
underlying Portfolios in which it invests. The prospectus for the John Hancock
Trust's Lifestyle Balanced Trust contains a description of the underlying
Portfolios for that Portfolio, including expenses of the Portfolio, associated
investment risks, and deductions from and expenses paid out of the assets of the
Portfolio. JHIMS LLC has retained Deutsche Investment Management Americas Inc.
("DIMA") to provide direct subadvisory consulting services in its management of
the Lifestyle Balanced Portfolio.
Portfolio Investment Objective and Strategies
You bear the investment risk of any Portfolio you choose as a Variable
Investment Option for your Contract. The following table contains a general
description of the Portfolios that we make available under the Contracts. You
can find a full description of each Portfolio, including the investment
objectives, policies and restrictions of, and the risks relating to, investment
in the Portfolio in the prospectus for that Portfolio. YOU CAN OBTAIN A COPY OF
A PORTFOLIO'S PROSPECTUS, WITHOUT CHARGE, BY CONTACTING US AT THE ANNUITIES
SERVICE CENTER SHOWN ON THE FIRST PAGE OF THIS PROSPECTUS. YOU SHOULD READ THE
PORTFOLIO'S PROSPECTUS CAREFULLY BEFORE INVESTING IN THE CORRESPONDING VARIABLE
INVESTMENT OPTION.
JOHN HANCOCK TRUST
We show the Portfolio's subadviser ("manager") in bold above the name of the Portfolio
and we list the Portfolios alphabetically by manager. AVAILABLE IN:
------------------------------------------------------------------------------------------------ -------------------
DAVIS SELECTED ADVISERS, L.P.
Financial Services Trust Seeks growth of capital. To do this, the Portfolio Revolution Access
invests at least 80% of its net assets in common Revolution Extra
stocks of companies that are principally engaged Revolution Value
in financial services. Patriot
Declaration
DECLARATION MANAGEMENT & RESEARCH LLC AND
MFC GLOBAL INVESTMENT MANAGEMENT (U.S.), LLC (1)
Active Bond Trust Seeks income and capital appreciation. To do this, Revolution Access
the Portfolio invests at least 80% of its net Revolution Extra
assets in a diversified mix of debt securities and Revolution Value
instruments with maturity durations of Patriot
approximately 4 to 6 years. Declaration
DECLARATION MANAGEMENTS & RESEARCH LLC
Total Bond Market Trust B Seeks to track the performance of the Barclays Revolution Access
Capital U.S. Aggregate Bond Index (which Revolution Extra
represents the U.S. investment grade bond market). Revolution Value
To do this, the Portfolio invests at least 80% of Patriot
its net assets in securities listed in the
Barclays Capital U.S. Aggregate Bond Index.
28
JOHN HANCOCK TRUST
We show the Portfolio's subadviser ("manager") in bold above the name of the Portfolio
and we list the Portfolios alphabetically by manager. AVAILABLE IN:
------------------------------------------------------------------------------------------------ -------------------
DEUTSCHE INVESTMENT MANAGEMENT
AMERICAS INC. ("DIMA")
Real Estate Securities Trust(2) Seeks to achieve a combination of long-term Revolution Access
capital appreciation and current income. To do Revolution Extra
this, the Portfolio invests at least 80% of its Revolution Value
net assets in equity securities of REITs and real Patriot
estate companies.
JENNISON ASSOCIATES LLC
Capital Appreciation Trust Seeks long-term growth of capital. To do this, the Revolution Access
Portfolio invests at least 65% of its total assets Revolution Extra
in equity and equity-related securities of Revolution Value
companies that exceed $1 billion in capitalization Patriot
and are attractively valued and have above-average
growth prospects.
MFC GLOBAL INVESTMENT MANAGEMENT
(U.S.A.) LIMITED
500 Index Trust B Seeks to approximate the aggregate total return of Revolution Access
a broad-based U.S. domestic equity market index. Revolution Extra
To do this, the Portfolio invests at least 80% of Revolution Value
its net assets in the common stocks in the S&P Patriot
500(R) Index and securities that as a group will Declaration
behave in a manner similar to the Index. (3)
Lifestyle Balanced Trust (4) Seeks a balance between a high level of current Revolution Access
income and growth of capital, with a greater Revolution Extra
emphasis on growth of capital. The Portfolio Revolution Value
operates as a fund-of-funds and normally invests Patriot
approximately 50% of its assets in Portfolios that
invest primarily in equity securities, and
approximately 50% in Portfolios which invest
primarily in fixed-income securities.
Mid Cap Index Trust Seeks to approximate the aggregate total return of Revolution Access
a mid cap U.S. domestic equity market index. To do Revolution Extra
this, the Portfolio invests at least 80% of its Revolution Value
net assets in the common stocks in the S&P MidCap
400(R) Index(3) and securities that as a group
behave in a manner similar to the Index.
Money Market Trust B Seeks to obtain maximum current income consistent Revolution Access
with preservation of principal and liquidity. To Revolution Extra
do this, the Portfolio invests in high quality, Revolution Value
U.S. dollar denominated money market instruments.
Note: The returns of the Money Market Subaccount Patriot
in your Contract may become extremely low or Declaration
possibly negative whenever the net income earned,
if any, by the underlying Money Market Portfolio
is not sufficient to offset the Contract's expense
deductions.
Optimized All Cap Trust Seeks long-term growth of capital. To do this, the Revolution Access
Portfolio invests at least 65% of its total assets Revolution Extra
in equity securities of large-, mid- and small-cap Revolution Value
U.S. companies with strong industry position, Patriot
leading market share, proven management or strong Declaration
financials.
Small Cap Index Trust Seeks to approximate the aggregate total return of Revolution Access
a small cap U.S. domestic equity market index. To Revolution Extra
do this, the Portfolio invests at least 80% of its Revolution Value
net assets in the common stocks in the Russell
2000(R) Index(5) and securities that will as a
group behave in a manner similar to the Index.
29
JOHN HANCOCK TRUST
We show the Portfolio's subadviser ("manager") in bold above the name of the Portfolio
and we list the Portfolios alphabetically by manager. AVAILABLE IN:
------------------------------------------------------------------------------------------------ -------------------
MFC GLOBAL INVESTMENT MANAGEMENT (U.S.A.)
LIMITED (CONTINUED)
Total Stock Market Index Trust Seeks to approximate the aggregate total return of Revolution Access
a broad-based U.S. domestic equity market index. Revolution Extra
To do this, the Portfolio invests at least 80% of Revolution Value
its net assets in the common stocks in the
Wilshire 5000(R) Total Market Index(6) and
securities that as a group will behave in a manner
similar to the Index.
MFC GLOBAL INVESTMENT MANAGEMENT (U.S.), LLC
Short Term Government Income Trust Seeks a high level of current income consistent Revolution Access
(successor to Short-Term Bond Trust) with preservation of capital. Maintaining a stable Revolution Extra
share price is a secondary goal. To do this, the Revolution Value
Portfolio invests at least 80% of its net assets Patriot
in obligations issued or guaranteed by the U.S.
government or its agencies, authorities, or
instrumentalities. Under normal circumstances, the
Portfolio's effective duration is no more than 3
years.
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC
Global Bond Trust Seeks maximum total return, consistent with Revolution Access
preservation of capital and prudent investment Revolution Extra
management. To do this, the Portfolio invests at Revolution Value
least 80% of its net assets in fixed-income Patriot
instruments that are economically tied to at least
three countries (one of which may be the U.S.),
which may be represented by futures contracts and
options on such securities.
Total Return Trust Seeks maximum total return, consistent with Revolution Access
preservation of capital and prudent investment Revolution Extra
management. To do this, the Portfolio invests at Revolution Value
least 65% of its total assets in a diversified
portfolio of fixed-income instruments of varying
maturities, which may be represented by forwards
or derivatives.
SSGA FUNDS MANAGEMENT, INC.
International Equity Index Trust B Seeks to track the performance of a broad-based Revolution Access
equity index of foreign companies primarily in Revolution Extra
developed countries and, to a lesser extent, in Revolution Value
emerging markets. To do this, the Portfolio Patriot
invests at least 80% of its assets in securities
listed in the Morgan Stanley Capital International
All Country World Excluding U.S. Index,(7) or
American Depository Receipts or Global Depository
Receipts representing such securities.
T. ROWE PRICE ASSOCIATES, INC.
Blue Chip Growth Trust Seeks to provide long-term growth of capital. Revolution Access
Current income is a secondary objective. To do Revolution Extra
this, the Portfolio invests at least 80% of its Revolution Value
net assets in the common stocks of large and Patriot
medium-sized blue chip growth companies that are
well established in their industries and have the
potential for above-average earnings growth.
30
JOHN HANCOCK TRUST
We show the Portfolio's subadviser ("manager") in bold above the name of the Portfolio
and we list the Portfolios alphabetically by manager. AVAILABLE IN:
------------------------------------------------------------------------------------------------ -------------------
T. ROWE PRICE ASSOCIATES, INC. (CONTINUED)
Equity-Income Trust Seeks to provide substantial dividend income and Revolution Access
also long-term growth of capital. To do this, the Revolution Extra
Portfolio invests at least 80% of its net assets Revolution Value
in equity securities, with at least 65% in common Patriot
stocks of well-established companies paying
above-average dividends.
Health Sciences Trust Seeks long-term capital appreciation. To do this, Revolution Access
the Portfolio invests at least 80% of its net Revolution Extra
assets in common stocks of companies engaged in Revolution Value
the research, development, production, or
distribution of products or services related to
health care, medicine, or the life sciences.
Mid Value Trust Seek long-term capital appreciation. To do this, Revolution Access
the Portfolio invests at least 80% of its net Revolution Extra
assets in a diversified mix of common stocks of Revolution Value
mid-size U.S. companies that are believed to be Patriot
undervalued by various measures and offer good
prospects for capital appreciation.
TEMPLETON INVESTMENT COUNSEL, LLC
International Value Trust
(successor to Overseas Equity Trust) Seeks long-term growth of capital. To do this, the Revolution Access
Portfolio invests at least 80% of its net assets Revolution Extra
in equity securities of companies located outside Revolution Value
the U.S., including in emerging markets. Patriot
Declaration
WELLINGTON MANAGEMENT COMPANY, LLP
Mid Cap Stock Trust Seeks long-term growth of capital. To do this, the Revolution Access
Portfolio invests at least 80% of its net assets Revolution Extra
in equity securities of medium-sized companies Revolution Value
with significant capital appreciation potential.
WELLINGTON MANAGEMENT COMPANY, LLP (CONTINUED)
Small Cap Growth Trust Seeks long-term capital appreciation. To do this, Revolution Access
the Portfolio invests at least 80% of its net Revolution Extra
assets in small-cap companies that are believed to Revolution Value
offer above-average potential for growth in Patriot
revenues and earnings. Declaration
Small Cap Value Trust Seeks long-term capital appreciation. To do this, Revolution Access
the Portfolio invests at least 80% of its net Revolution Extra
assets in small-cap companies that are believed to Revolution Value
be undervalued.
WESTERN ASSET MANAGEMENT COMPANY
31
JOHN HANCOCK TRUST
We show the Portfolio's subadviser ("manager") in bold above the name of the Portfolio
and we list the Portfolios alphabetically by manager. AVAILABLE IN:
------------------------------------------------------------------------------------------------ -------------------
High Yield Trust(8) Seeks to realize an above-average total return Revolution Access
over a market cycle of three to five years, Revolution Extra
consistent with reasonable risk. To do this, the Revolution Value
Portfolio invests at least 80% of its net assets Patriot
in high yield securities, including corporate
bonds, preferred stocks, U.S. government and
foreign securities, mortgage-backed securities,
loan assignments or participations, and
convertible securities.
(1) The Active Bond Trust is subadvised by Declaration Management & Research
LLC and MFC Global Investment Management (U.S.), LLC., with each subadviser
subadvising approximately one half of the assets of the Portfolio. Since
the Portfolio is only rebalanced periodically, the actual percentage of the
Portfolio managed by each subadviser will vary.
(2) RREEF America L.L.C. provides sub-subadvisory services to DIMA in its
management of the All Cap Core Trust and the Real Estate Securities Trust.
(3) "Standard & Poor's(R)," "S&P 500(R)," and "S&P MidCap 400(R)" are
trademarks of The McGraw-Hill Companies, Inc. 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. As of February 26, 2010, the
range for S&P 500(R) was from $1.4 billion to $307.3 billion, and as of
October 31, 2009, the mid cap range for the S&P MidCap 400(R), was from
$300 million to $6.6 billion.
(4) The Small Cap Index Trust is not available for Contracts issued after April
30, 2003.
(5) "Russell 2000(R)" and "Russell 1000(R) are trademarks of Frank Russell
Company. None of the Index Trusts are sponsored, endorsed, managed,
advised, sold or promoted by the Frank Russell Company, nor does Frank
Russell Company make any representation regarding the advisability of
investing in the Trust. As of October 31, 2009, the market capitalizations
of companies included in the Russell 2000(R) Index ranged was from $14
million to $3.62 billion, and as of February 26, 2010, the market
capitalization range of the Russell 1000(R)Value Index was from $239
million to $307.3 billion.
(6) "Wilshire 5000(R)" is a trademark of Wilshire Associates. None of the Index
Trusts are sponsored, endorsed, managed, advised, sold or promoted by
Wilshire Associates, nor does Wilshire Associates make any representation
regarding the advisability of investing in the Trust. As of October 31,
2009, the market capitalizations of companies included in the Wilshire
5000(R) Total Market Index ranged from less than $1 million to $344
billion.
32
(7) "MSCI All Country World ex-USA Index(SM)" is a service mark of Morgan
Stanley Capital International Inc. and its affiliates ("MSCI"). None of the
Index Trusts are sponsored, endorsed, managed, advised, sold or promoted by
MSCI, nor does MSCI make any representation regarding the advisability of
investing in the Trust. As of February 26, 2010, the market capitalization
range of the Index was from $544 million to $197.9 billion.
(8) International Value Trust is sub-subadvised by Templeton Global Advisors
Limited under an agreement with Templeton Investment Counsel, LLC.
(9) High Yield Trust is sub-subadvised by Western Asset Management Company
Limited.
33
VI. Information about Fixed Investment Options
IN GENERAL
All of John Hancock USA's general assets (discussed above) support its
obligations under the Fixed Investment Options (as well as all of its other
obligations and liabilities). To hold the assets that support primarily the
Fixed Investment Options, we have established a "non-unitized" separate account.
With a non-unitized separate account, you have no interest in or preferential
claim on any of the assets held in the account. The investments we purchase with
amounts you allocated to the Fixed Investment Options belong to us; any
favorable investment performance on the assets allocated to the Fixed Investment
Options belongs to us. Instead, you earn interest at the guaranteed interest
rate of the Fixed Investment Option you selected, provided that you don't
surrender, transfer, or withdraw your assets prior to the end of your selected
Fixed Investment Option.
HOW THE FIXED INVESTMENT OPTIONS WORK
Amounts you allocate to the Fixed Investment Options earn interest at a
guaranteed rate commencing with the date of allocation. At the expiration of the
Fixed Investment Option, we will automatically transfer its total value to a
Money Market Variable Investment Option under your Contract, unless you elect
to:
- withdraw all or a portion of any such amount from the Contract;
- allocate all or a portion of such amount to a new Fixed Investment
Option or periods of the same or different duration as the expiring
Fixed Investment Option; or
- allocate all or a portion of such amount to one or more of the
Variable Investment Options.
You must notify us of any such election, by mailing a request to us at the
Annuities Service Center at least 30 days prior to the end of the expiring Fixed
Investment Option. We will notify you of the end of the Fixed Investment Option
at least 30 days prior to its expiration. The first day of the new Fixed
Investment Option or other reallocation will begin the day after the end of the
expiring Fixed Investment Option.
We currently make available Fixed Investment Options with durations of five
years. For Contracts issued before September 30, 2002, however, we may permit
you to select different durations. If you select any Fixed Investment Option
with a duration that extends beyond your Contract's Maturity Date, your maturity
date will automatically be changed to the Annuitant's 95th birthday (or a later
date, if we approve). We reserve the right to add or delete Fixed Investment
Options for new allocations to or from those that are available at any time.
GUARANTEED INTEREST RATES
Each Fixed Investment Option has its own guaranteed interest rate. We may, at
our discretion, change the guaranteed rate for future Fixed Investment Options.
These changes will not affect the guaranteed rates being paid on Fixed
Investment Options that have already commenced. Each time you allocate or
transfer money to a Fixed Investment Option, a new Fixed Investment Option, with
a new interest rate, begins to run with respect to that amount. The amount
allocated or transferred earns a guaranteed rate that will continue unchanged
until the end of that period.
We make the final determination of guaranteed rates and Fixed Investment Options
to be declared. We cannot predict or assure the level of any future guaranteed
rates or the availability of any future Fixed Investment Options.
You may obtain information concerning the guaranteed rates applicable to the
various Fixed Investment Options, and the durations of the Fixed Investment
Options offered at any time by calling the Annuities Service Center.
CALCULATION OF MARKET VALUE ADJUSTMENT ("MVA")
If you withdraw, surrender, transfer, or otherwise remove money from a Fixed
Investment Option prior to its expiration date, we will apply a market value
adjustment.
A market value adjustment also generally applies to:
- death benefits pursuant to your Contract;
- amounts you apply to an Annuity Option; and
- amounts paid in a single sum in lieu of an annuity.
The market value adjustment increases or decreases your remaining value in the
Fixed Investment Option. If the value in that Fixed Investment Option is
insufficient to pay any negative MVA, we will deduct any excess from the value
in your other Investment Options pro-rata based on the value in each. If there
is insufficient value in your other Investment Options, we will in no event pay
out more than the surrender value of the Contract.
34
Here is how the MVA works:
We compare:
- the guaranteed rate of the Fixed Investment Option from which the
assets are being taken WITH;
- the guaranteed rate we are currently offering for Fixed Investment
Options of the same duration as remains on the Fixed Investment Option
from which the assets are being taken.
If the first rate exceeds the second by more than 1/2%, the market value
adjustment produces an increase in your Contract's value.
If the first rate does not exceed the second by at least 1/2%, the market value
adjustment produces a decrease in your Contract's value.
For this purpose, we consider that the amount withdrawn from the Fixed
Investment Option includes the amount of any negative MVA and is reduced by the
amount of any positive MVA.
The mathematical formula and sample calculations for the market value adjustment
appear in Appendix A.
WHAT ADDITIONAL GUARANTEE APPLIES TO THE FIXED INVESTMENT OPTIONS UNDER MY
CONTRACT?
John Hancock USA's ultimate corporate parent, Manulife Financial Corporation
("MFC"), has guaranteed John Hancock USA's obligations with respect to any Fixed
Investment Options you elect (the "MFC Subordinated Guarantee"). The MFC
Subordinated Guarantee will apply unless and until we notify you otherwise. (If
we give you such notice, however, the MFC Subordinated Guarantee would remain in
effect for all guarantee periods under the Fixed Investment Options that had
already started, and would be inapplicable only to guarantee periods starting
after the date of such notice.) The MFC Subordinated Guarantee does not relieve
John Hancock USA of any obligations under your Contract -- it is in addition to
all of the rights and benefits that the Contract provides. There is no charge or
cost to you for the MFC Subordinated Guarantee, and there are no disadvantages
to you of having this additional guarantee.
Under the rules of the United States Securities and Exchange Commission ("SEC"),
the MFC Subordinated Guarantee exempts us from the obligation to file with the
SEC annual, quarterly and current reports on Form 10-K, Form 10-Q and Form 8-K,
respectively, and thereby saves us the expense of being an SEC reporting
company. MFC is a company organized under the laws of Canada and its common
shares are listed principally on the Toronto Stock Exchange and the New York
Stock Exchange. MFC files with the SEC annual and current reports on Forms 40-F
and 6-K, respectively. MFC's consolidated financial statements include
information about us in a footnote containing condensed consolidating financial
information with separate columns for MFC, John Hancock USA and other
subsidiaries of MFC, together with consolidating adjustments.
WHAT ARE THE TERMS OF THE MFC SUBORDINATED GUARANTEE? MFC guarantees your full
interest in any Fixed Investment Option. This means that, if we fail to honor
any valid request to surrender, transfer, or withdraw any amount from a
guarantee period, or fail to allocate amounts from a Fixed Investment Option to
an Annuity Option when it is obligated to do so, MFC guarantees the full amount
that you would have received, or value that you would have been credited with,
had we fully met our obligations under your Contract with respect to such Fixed
Investment Option. If we fail to pay any amount that becomes payable under the
Contract upon the death of an owner or Annuitant, MFC guarantees the unpaid
amount, up to the Contract Value in any Fixed Investment Option on the date of
death, increased by any accrued but uncredited interest attributable thereto and
increased by any upward market value adjustment that would have been payable
upon any surrender of the Contract at that time (but not decreased by any
negative market value adjustment). If we fail to make payment when due of any
amount that is guaranteed by MFC, you could directly request MFC to satisfy our
obligation, and MFC must do so. You would not have to make any other demands on
us as a precondition to making a claim against MFC under the MFC Subordinated
Guarantee.
The MFC Subordinated Guarantee constitutes an unsecured obligation of MFC as
guarantor, and is subordinated in right of payment to the prior payment in full
of all other obligations of MFC, except for other guarantees or obligations of
MFC which by their terms are designated as ranking equally in right of payment
with or subordinated to the MFC Subordinated Guarantee, and effectively rank
senior to MFC's preferred and common shares.
HOW CAN I FIND ADDITIONAL INFORMATION ABOUT MFC? MFC is subject to the
information requirements of the U.S. Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance with the Exchange Act, files reports
and other information with the SEC. Under a multi-jurisdictional disclosure
system adopted by the United States and Canada, these reports and other
information (including financial information) may be prepared in accordance with
the disclosure requirements of Canada, which are different from those of the
United States.
You may read and copy any reports, statements or other information filed by MFC
at the SEC's Public Reference Room, Station Place, 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the Public Reference Room. You can also inspect
reports, proxy statements and other information about MFC at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005.
35
You may also obtain copies of this information by mail from the Public Reference
Section of the SEC, Station Place, 100 F Street, N.E., Washington, D.C. 20549,
at prescribed rates, or from commercial document retrieval services. The SEC
maintains a website that contains reports, proxy statements and other
information, including those filed by MFC, at http://www.sec.gov. You may also
access the SEC filings and obtain other information about MFC through the
website maintained by MFC, which is http://www.manulife.com. The information
contained in that website is not incorporated by reference into this Prospectus.
MFC and John Hancock USA filed a joint registration statement on Form F-3 with
the SEC in respect of the MFC guarantee described in this Prospectus. This
Prospectus is a part of that registration statement. As permitted by SEC rules,
this Prospectus does not contain all the information you can find in the
registration statement. The SEC allows MFC to "incorporate by reference"
information into this Prospectus, which means that we can disclose important
information to you by referring you to other documents filed separately with the
SEC.
The information incorporated by reference is deemed to be part of this
Prospectus, except for any information superseded by information in this
Prospectus. These documents contain important information about the companies
and their financial condition.
MFC incorporates by reference the documents listed below, which were filed with
the SEC.
(a) MFC's Report of Foreign Issuer on Form 6-K filed March 29, 2010; and
(b) MFC's Report of Foreign Issuer on Form 6-K filed March 26, 2010, other
than the sections of the Notice of Annual Meeting and Proxy Circular
entitled "Report of the Management Resources Committee and Compensation
Committee," "Performance Graph" and "Supplemental Shareholder Return" and
other than the 2009 Annual Financial Statements; and
(c) MFC's Annual Report on Form 40-F for the year ended December 31, 2009, as
filed on March 19, 2010 and as amended and filed on Form 40 F/A on March
29, 2010; and
(d) MFC's Annual Report on Form 40-F for the year ended December 31, 2008, as
filed on March 26, 2009 and as amended and filed on Form 40-F/A on May
8, 2009.
Copies of the documents incorporated in this Prospectus by reference may be
obtained on request without charge from:
Manulife Financial Corporation
ATTN: Corporate Secretary
200 Bloor Street East, NT-10
Toronto, Ontario Canada M4W 1E5
Telephone: (416) 926-3000
Any annual reports on Form 20-F, Form 40-F or Form 10-K, any reports on Form
10-Q or Form 8-K, other than current reports furnished to the SEC pursuant to
Item 2.02 or Item 7.01 of Form 8-K, and any Form 6-K specifying that it is being
incorporated by reference in this Prospectus, as well as all Prospectus
supplements disclosing additional or updated information, filed by MFC with the
SEC subsequent to the date of this Prospectus shall be deemed to be incorporated
by reference into this Prospectus.
ANY STATEMENT CONTAINED IN THIS PROSPECTUS OR IN A DOCUMENT INCORPORATED OR
DEEMED TO BE INCORPORATED BY REFERENCE IN THIS PROSPECTUS SHALL BE DEEMED TO BE
MODIFIED OR SUPERSEDED FOR PURPOSES OF THIS PROSPECTUS TO THE EXTENT THAT A
STATEMENT CONTAINED IN THIS PROSPECTUS OR IN ANY OTHER SUBSEQUENTLY FILED
DOCUMENT WHICH ALSO IS OR IS DEEMED TO BE INCORPORATED BY REFERENCE IN THIS
PROSPECTUS MODIFIES OR SUPERSEDES SUCH PRIOR STATEMENT. ANY STATEMENT OR
DOCUMENT SO MODIFIED OR SUPERSEDED SHALL NOT, EXCEPT TO THE EXTENT SO MODIFIED
OR SUPERSEDED, BE INCORPORATED BY REFERENCE AND CONSTITUTE A PART OF THIS
PROSPECTUS.
YOU SHOULD RELY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS OR ANY APPLICABLE PROSPECTUS SUPPLEMENT AND ON THE OTHER
INFORMATION INCLUDED IN THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS
FORMS A PART. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT OR
ADDITIONAL INFORMATION. WE ARE NOT MAKING AN OFFER OF THE MFC GUARANTEES COVERED
BY THIS PROSPECTUS IN ANY JURISDICTION WHERE THE OFFER IS NOT PERMITTED BY LAW.
YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY APPLICABLE PROSPECTUS SUPPLEMENT IS ACCURATE
AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS PROSPECTUS OR ANY
APPLICABLE PROSPECTUS SUPPLEMENT, AS THE CASE MAY BE.
36
VII. The Accumulation Period
YOUR VALUE IN OUR VARIABLE INVESTMENT OPTIONS
Each Purchase Payment or transfer that you allocate to a Variable Investment
Option purchases accumulation units of that Variable Investment Option.
Similarly, each withdrawal or transfer that you take from a Variable Investment
Option (as well as certain charges that may be allocated to that option) result
in a cancellation of such accumulation units.
VALUATION OF ACCUMULATION UNITS
To determine the number of accumulation units that a specific transaction will
purchase or cancel, we use the following formula:
dollar amount of transaction
DIVIDED BY
value of one accumulation unit for the applicable
Variable Investment Option at the time of such
transaction
The value of each accumulation unit will change daily depending upon the
investment performance of the Portfolio that corresponds to that Variable
Investment Option and certain charges we deduct from such Investment Option.
Therefore, at any time prior to the Maturity Date, the total value of your
Contract in a Variable Investment Option can be computed according to the
following formula:
number of accumulation units in the Variable
Investment Options
MULTIPLIED BY
value of one accumulation unit for the applicable
Variable Investment Option at that time
VARIABLE INVESTMENT OPTION VALUATION PROCEDURES
We compute the net investment return and accumulation unit values for each
Variable Investment Option as of the end of each Business Day. A Business Day is
any date on which the New York Stock Exchange is open for daytime trading. Each
Business Day ends at the close of regular trading for the day on that exchange
(usually 4:00 p.m. Eastern Time). On any date other than a Business Day, the
accumulation unit value will be the same as the value at the close of the next
following Business Day.
YOUR VALUE IN THE FIXED INVESTMENT OPTIONS
On any date, the total value of your Contract in a Fixed Investment Option
equals:
- the amount of Purchase Payments or transferred amounts allocated to
the Fixed Investment Option, MINUS
- the amount of any withdrawals or transfers paid out of the Fixed
Investment Option, MINUS
- the amount of any negative market value adjustments resulting from
such withdrawals or transfers, PLUS
- the amount of any positive market value adjustments resulting from
such withdrawals and transfers, MINUS
- the amount of any charges and fees deducted from that Fixed Investment
Option, PLUS
- interest compounded daily on any amounts in the Fixed Investment
Option from time to time at the effective annual rate of interest we
have declared for that Fixed Investment Option.
37
VIII. The Annuity Period
Annuity payments are made to the Annuitant, if still living. If more than one
Annuitant is living at the Maturity Date, the payments are made to the younger
of them.
DATE OF MATURITY
Your Contract specifies the Maturity Date, when payments from one of our Annuity
Options are scheduled to begin. You initially choose a Maturity Date when you
complete your application for a Contract. Unless we otherwise permit, the
Maturity Date must be:
- at least 6 months after the date the first Purchase Payment is applied
to your Contract; and
- no later than the maximum age specified in your Contract (normally age
95).
Subject always to these requirements, you may subsequently change the Maturity
Date. Maturity Dates which occur when the Annuitant is at an advanced age, e.g.,
past age 90, may have adverse income tax consequences. Also, if you are
selecting or changing your Maturity Date for a Contract issued under a Qualified
Plan, special limits apply (see "IX. Federal Tax Matters"). The Annuities
Service Center must receive your new selection at least 31 days prior to the new
Maturity Date.
NOTICE OF MATURITY DATE. Under our current administrative procedures, we will
send you one or more notices at least 30 days before your scheduled Maturity
Date and request that you verify information we currently have on file. We may
delay the start of annuity payments if you fail to verify this information.
CHOOSING FIXED OR VARIABLE ANNUITY PAYMENTS
During the Annuity Period, the total value of your Contract must be allocated to
no more than four Investment Options. During the Annuity Period, we do not offer
the Fixed Investment Options. Instead, we offer annuity payments on a fixed
basis as one Investment Option, and annuity payments on a variable basis for
EACH Variable Investment Option.
We will generally apply (1) amounts allocated to the Fixed Investment Options as
of the Maturity Date to provide annuity payments on a fixed basis and (2)
amounts allocated to Variable Investment Options to provide annuity payments on
a variable basis. If you are using more than four Investment Options on the
Maturity Date, we will divide your Contract's value pro-rata among the four
Investment Options with the largest values (considering all Fixed Investment
Options as a single option), based on the amount of the total value of your
Contract that you have in each.
We will make a market value adjustment to any remaining Fixed Investment Option
amounts on the Maturity Date, before we apply such amounts to an annuity payment
option. We will also deduct any premium tax charge.
Once annuity payments commence, you may not make transfers from fixed to
variable or from variable to fixed.
SELECTING AN ANNUITY OPTION
Each Contract provides, at the time of its issuance, for annuity payments to
commence on the Maturity Date pursuant to Option A: "Life Annuity with Payments
for a Guaranteed Period" for a 10 year period (discussed under "Annuity
Options").
Prior to the Maturity Date, you may select a different Annuity Option. However,
if the total value of your Contract on the Maturity Date is less than $5,000,
you may only select Option A: "Life Annuity with Payments for a Guaranteed
Period" for the 10 year period as an Annuity Option, regardless of any other
election that you have made. You may not change the form of Annuity Option once
payments commence.
If the initial monthly payment under an Annuity Option would be less than $50,
we may make a single sum payment equal to the total surrender value of your
Contract on the date the initial payment would be payable. Such single payment
would replace all other benefits.
Subject to that $50 minimum limitation, your Beneficiary may elect an Annuity
Option if:
- you have not made an election prior to the Annuitant's death;
- the Beneficiary is entitled to payment of a death benefit of at least
$5,000 in a single sum; and
- the Beneficiary notifies us of the election prior to the date the
proceeds become payable.
38
VARIABLE MONTHLY ANNUITY PAYMENTS
During the Annuity Period, the Contract Value must be allocated to no more than
four Investment Options. During the Annuity Period, we offer annuity payments on
a variable basis for each Variable Investment Option. If you are using more than
four Investment Options on the Maturity Date, under a deferred Contract, we will
divide your Contract's value (after deducting any premium tax charge that was
not deducted from Purchase Payments) among the four Investment Options with the
largest values, pro-rata based on the amount of the Contract Value that you have
in each.
We determine the amount of the first variable monthly payment under any Variable
Investment Option by using the applicable annuity purchase rate for the Annuity
Option under which the payment will be made. The Contract sets forth these
annuity purchase rates. In most cases they vary by the age and gender of the
Annuitant or other payee.
The amount of each subsequent variable annuity payment under that Variable
Investment Option depends upon the investment performance of that Variable
Investment Option.
Here's how it works:
- We calculate the actual net investment return of the Variable
Investment Option (after deducting all charges) during the period
between the dates for determining the current and immediately previous
monthly payments.
- If that actual net investment return exceeds the "assumed investment
rate" (explained below), the current monthly payment will be larger
than the previous one.
- If the actual net investment return is less than the assumed
investment rate, the current monthly payment will be smaller than the
previous one.
Variable Investment Option Valuation Procedures
We compute the net investment return and Annuity Unit values for each Variable
Investment Option as of the end of each Business Day. A Business Day is any date
on which the New York Stock Exchange is open for daytime trading. Each Business
Day ends at the close of daytime trading for the day on that exchange (usually
4:00 p.m. Eastern Time). On any date other than a Business Day, the Annuity Unit
value will be the same as the value at the close of the next following Business
Day.
ASSUMED INVESTMENT RATE
The assumed investment rate for any variable portion of your annuity payments
will be 3 1/2% per year, except as follows.
You may elect an assumed investment rate of 5% or 6%, provided such a rate is
available in your state. If you elect a higher assumed investment rate, your
initial variable annuity payment will also be higher. Eventually, however, the
monthly variable annuity payments may be smaller than if you had elected a lower
assumed investment rate.
TRANSFERS DURING THE ANNUITY PERIOD
Some transfers are permitted during the Annuity Period, but subject to different
limitations than during the Accumulation Period. Once annuity payments on a
variable basis have begun, you may transfer all or part of the investment upon
which those payments are based from one sub-account to another. You must submit
your transfer request to Annuities Service Center at least 30 DAYS BEFORE the
due date of the first annuity payment to which your transfer will apply.
Transfers after the maturity date will be made by converting the number of
ANNUITY UNITS being transferred to the number of Annuity Units of the
Sub-Account to which the transfer is made, so that the next annuity payment if
it were made at that time would be the same amount that it would have been
without the transfer. Thereafter, annuity payments will reflect changes in the
value of the Annuity Units for the new sub-account selected. Once annuity
payments begin, no transfers may be made from payments on a fixed basis to
payments on a variable basis or from payments on a variable basis to payments on
a fixed basis. In addition, we reserve the right to defer the transfer privilege
at any time that we are unable to purchase or redeem shares of a Portfolio. We
also reserve the right to modify or terminate the transfer privilege at any time
in accordance with applicable law.
FIXED MONTHLY ANNUITY PAYMENTS
The dollar amount of each fixed monthly annuity payment is specified during the
entire period of annuity payments, according to the provisions of the Annuity
Option selected. To determine such dollar amounts we first, in accordance with
the procedures described above, calculate the amount to be applied to the FIXED
ANNUITY OPTION as of the Maturity Date. We then subtract any applicable premium
tax charge, if applicable, and divide the difference by $1,000.
We then multiply the result by the greater of:
- the applicable Fixed Annuity purchase rate shown in the appropriate
table in the Contract; or
- the rate we currently offer at the time of annuitization. (This
current rate may be based on the sex of the Annuitant, unless
prohibited by law.)
39
ANNUITY OPTIONS
Here are some of the Annuity Options that are available, subject to the terms
and conditions described above. We reserve the right to make available optional
methods of payment in addition to those Annuity Options listed here and in your
Contract.
OPTION A - LIFE ANNUITY WITH PAYMENTS FOR A GUARANTEED PERIOD - We will make
monthly payments for a guaranteed period of 5, 10, or 20 years, as selected by
you or your Beneficiary, and after such period for as long as the payee lives.
If the payee dies prior to the end of such guaranteed period, we will continue
payments for the remainder of the guaranteed period to a contingent payee,
subject to the terms of any supplemental agreement issued.
Federal income tax requirements currently applicable to Contracts used with H.R.
10 plans and individual retirement annuities provide that the period of years
guaranteed under Option A cannot be any greater than the joint life expectancies
of the payee and his or her designated Beneficiary.
OPTION B - LIFE ANNUITY WITHOUT FURTHER PAYMENT ON DEATH OF PAYEE - We will make
monthly payments to the payee as long as he or she lives. We guarantee no
minimum number of payments.
OPTION C - JOINT AND LAST SURVIVOR - We will provide payments monthly,
quarterly, semiannually, or annually, for the payee's life and the life of the
payee's spouse/joint payee. Upon the death of one payee, we will continue
payments to the surviving payee. All payments stop at the death of the surviving
payee.
OPTION D - JOINT AND 1/2 SURVIVOR; OR JOINT AND 2/3 SURVIVOR - We will provide
payments monthly, quarterly, semiannually, and annually for the payee's life and
the life of the payee's spouse/joint payee. Upon the death of one payee, we will
continue payments (reduced to 1/2 or 2/3 the full payment amount) to the
surviving payee. All payments stop at the death of the surviving payee.
OPTION E - LIFE INCOME WITH CASH REFUND - We will provide payments monthly,
quarterly, semiannually, or annually for the payee's life. Upon the payee's
death, we will provide a contingent payee with a lump sum payment, if the total
payments to the payee were less than the accumulated value at the time of
annuitization. The lump sum payment, if any, will be for the balance.
OPTION F - INCOME FOR A FIXED PERIOD - We will provide payments monthly,
quarterly, semiannually, or annually for a pre-determined period of time to a
maximum of 30 years. If the payee dies before the end of the fixed period,
payments will continue to a contingent payee until the end of the period.
OPTION G - INCOME OF A SPECIFIC AMOUNT - We will provide payments for a specific
amount. Payments will stop only when the amount applied and earnings have been
completely paid out. If the payee dies before receiving all the payments, we
will continue payments to a contingent payee until the end of the Contract.
With Options A, B, C, and D, we offer both fixed and/or variable annuity
payments. With Options E, F, and G, we offer only Fixed Annuity payments.
Payments under Options F and G must continue for 10 years, unless your Contract
has been in force for 5 years or more.
If the payee is more than 85 years old on the Maturity Date, the following two
options are not available without our consent:
- Option A: "Life Annuity with Payments for a Guaranteed Period" for the
5 year period and
- Option B: "Life Annuity without Further Payment on Death of Payee."
40
IX. Federal Tax Matters
INTRODUCTION
The following discussion of the federal income tax treatment of the Contract is
not exhaustive, does not purport to cover all situations, and is not intended as
tax advice. The federal income tax treatment of an annuity contract is unclear
in certain circumstances, and you should consult a qualified tax advisor with
regard to the application of the law to your circumstances. This discussion is
based on the Code, Treasury Department regulations, and Internal Revenue Service
("IRS") rulings and interpretations existing on the date of this Prospectus.
These authorities, however, are subject to change by Congress, the Treasury
Department, and judicial decisions.
This discussion does not address state or local tax consequences associated with
the purchase of a Contract. IN ADDITION, WE MAKE NO GUARANTEE REGARDING ANY TAX
TREATMENT -- FEDERAL, STATE, OR LOCAL -- OF ANY CONTRACT OR OF ANY TRANSACTION
INVOLVING A CONTRACT.
OUR TAX STATUS
We are taxed as a life insurance company. Under current tax law rules, we
include the investment income (exclusive of capital gains) of a Separate Account
in our taxable income and take deductions for investment income credited to our
"policyholder reserves." We are also required to capitalize and amortize certain
costs instead of deducting those costs when they are incurred. We do not
currently charge a Separate Account for any resulting income tax costs. We also
claim certain tax credits or deductions relating to foreign taxes paid and
dividends received by the Portfolios. These benefits can be material. We do not
pass these benefits through to a Separate Account, principally because: (i) the
deductions and credits are allowed to the Company and not the Contract owners
under applicable tax law; and (ii) the deductions and credits do not represent
investment return on Separate Account assets that is passed through to Contract
owners.
The Contracts permit us to deduct a charge for any taxes we incur that are
attributable to the operation or existence of the Contracts or a Separate
Account. Currently, we do not anticipate making a charge for such taxes. If the
level of the current taxes increases, however, or is expected to increase in the
future, we reserve the right to make a charge in the future. (Please note that
this discussion applies to federal income tax but not to any state or local
taxes.)
SPECIAL CONSIDERATIONS FOR OPTIONAL BENEFITS
At present, the IRS has not provided guidance as to the tax treatment of charges
for optional benefits to an annuity contract. The IRS might take the position
that each charge associated with these optional benefits is deemed a withdrawal
from the contract subject to current income tax to the extent of any gains and,
if applicable, the 10% penalty tax for premature withdrawals. We do not
currently report charges for optional benefits as partial withdrawals, but we
may do so in the future if we believe that the IRS would require us to report
them as such.
When you take a withdrawal under a Nonqualified Contract, it ordinarily is
taxable only to the extent it does not exceed gain in the Contract, if any, at
the time of the withdrawal. Under current IRS guidance, we expect to determine
gain on a withdrawal, including withdrawals during the "Settlement Phase" of an
optional guaranteed minimum withdrawal benefit Rider, using the Contract Value.
See "VI. Optional Benefits" for a description of the guaranteed minimum
withdrawal benefit Riders available under the Contracts. It is possible,
however, that the IRS may take the position that the value of amounts guaranteed
to be available in the future should also be taken into account in computing the
taxable portion of a withdrawal. In that event, you may be subject to a higher
amount of tax on a withdrawal.
Please see "Qualified Contracts - Conversions and Rollovers to Roth IRAs" below
for additional information on the tax impact of optional benefit Riders on
withdrawals a conversion to a Roth IRA.
If you purchased a Qualified Contract with an optional death benefit or other
optional benefit Rider, the presence of these benefits may increase the amount
of any required minimum distributions under the requirements of your Qualified
Plan. See "Qualified Contracts (Contracts Purchased for a Qualified Plan)"
below.
Any annuity payments that you receive under an Annuity Option, including Annuity
Options that only are available when you elect a guaranteed minimum withdrawal
benefit Rider, will be taxed in the manner described in "Taxation of Annuity
Payments" below.
You should consult a qualified tax advisor for information on any optional
benefit Riders.
CHARITABLE REMAINDER TRUSTS
This federal tax discussion does not address tax consequences of a Contract used
in a charitable remainder trust. The tax consequences of charitable remainder
trusts may vary depending on the particular facts and circumstances of each
individual case. Additionally, the tax rules governing charitable remainder
trusts, or the taxation of a Contract used with a charitable remainder trust,
41
may be subject to change by legislation, regulatory changes, judicial decrees or
other means. You should consult qualified legal or tax counsel regarding the tax
treatment of a charitable remainder trust before purchasing a Contract for use
within it.
NONQUALIFIED CONTRACTS
(Contracts Not Purchased to Fund an Individual Retirement Account or Other
Qualified Plan)
Aggregation of Contracts
In certain circumstances, the IRS may determine the amount of an annuity payment
or a withdrawal from a contract that is includible in income by combining some
or all of the annuity contracts owned by an individual which are not issued in
connection with a Qualified Plan.
For example, if you purchase two or more deferred annuity contracts from the
same insurance company (or its affiliates) during any calendar year, all such
contracts will be treated as one contract for purposes of determining whether
any payment not received as an annuity (including withdrawals prior to the
Maturity Date) is includible in income. Thus, if during a calendar year you buy
two or more of the Contracts offered by this Prospectus (which might be done,
for example, in order to purchase different guarantees and/or benefits under
different contracts), all of such Contracts would be treated as one Contract in
determining whether withdrawals from any of such Contracts are includible in
income. The IRS may also require aggregation in other circumstances and you
should consult a qualified tax advisor if you own or intend to purchase more
than one annuity contract.
The effects of such aggregation are not always clear and depend on the
circumstances. However, aggregation could affect the amount of a withdrawal that
is taxable and the amount that might be subject to the 10% penalty tax described
above.
Exchanges of Annuity Contracts
We may issue the Contract in exchange for all or part of another annuity
contract that you own. Such an exchange will be tax free if certain requirements
are satisfied. If the exchange is tax free, your investment in the Contract
immediately after the exchange will generally be the same as that of the annuity
contract exchanged, increased by any Additional Purchase Payment made as part of
the exchange. Your Contract Value immediately after the exchange may or may not
exceed your investment in the Contract. Any excess may be includable in income
should amounts subsequently be withdrawn or distributed from the Contract (e.g.,
as a partial surrender, full surrender, annuity payment, or death benefit). If
you exchange part of an existing contract for the Contract, and within 12 months
of the exchange you receive a payment (e.g., you make a withdrawal) from either
contract, the exchange may not be treated as a tax free exchange. Rather, the
exchange may be treated as if you had made a partial surrender from the existing
contract and then purchased the Contract. In these circumstances, some or all of
the amount exchanged into the Contract could be includable in your income and
subject to a 10% penalty tax. There are various circumstances in which a partial
exchange followed by receipt of a payment within 12 months of the exchange is
unlikely to affect the tax free treatment of the exchange. You should consult
your own qualified tax advisor in connection with an exchange of all or part of
an annuity contract for the Contract, especially if you make a withdrawal from
either contract within 12 months after the exchange.
Loss of Interest Deduction Where Contracts are Held by or for the Benefit of
Certain Non-Natural Persons
In the case of Contracts issued after June 8, 1997 to a non-natural taxpayer
(such as a corporation or a trust), or held for the benefit of such an entity, a
portion of otherwise deductible interest may not be deductible by the entity,
regardless of whether the interest relates to debt used to purchase or carry the
Contract. However, this interest deduction disallowance does not affect
Contracts where the income on such Contracts is treated as ordinary income that
is received or accrued by the Owner during the taxable year. Entities that are
considering purchasing the Contract, or entities that will be beneficiaries
under the Contract, should consult a qualified tax advisor.
Undistributed Gains
Except where the Owner is not an individual, we expect our Contracts to be
considered annuity contracts under Section 72 of the Code. This means that,
ordinarily, you pay no federal income tax on any gains in your Contract until we
actually distribute assets to you.
However, a Contract held by an Owner other than a natural person (for example, a
corporation, partnership, limited liability company, trust, or other such
entity) does not generally qualify as an annuity contract for tax purposes. Any
increase in value therefore would constitute ordinary taxable income to such an
Owner in the year earned. Notwithstanding this general rule, a Contract will
ordinarily be treated as held by a natural person if the nominal Owner is a
trust or other entity which holds the Contract as an agent for a natural person.
Taxation of Annuity Payments
When we make payments under a Contract in the form of an annuity, normally a
portion of each annuity payment is taxable as ordinary income. The taxable
portion of an annuity payment is equal to the excess of the payment over the
exclusion amount.
In the case of variable annuity payments, the exclusion amount is the investment
in the Contract when payments begin to be made divided by the number of payments
expected to be made (taking into account the Annuitant's life expectancy and the
form of annuity benefit selected). In the case of Fixed Annuity payments, the
exclusion amount is based on the investment in the Contract and the total
expected value of Fixed Annuity payments for the term of the Contract
(determined under Treasury Department regulations).
42
In general, your investment in the Contract equals the aggregate amount of
premium payments you have made over the life of the Contract, reduced by any
amounts previously distributed from the Contract that were not subject to tax.
(A simplified method of determining the taxable portion of annuity payments
applies to Contracts issued in connection with certain Qualified Plans other
than IRAs.)
Once you have recovered your total investment in the Contract tax-free, further
annuity payments will be fully taxable. If annuity payments cease because the
Annuitant dies before all of the investment in the Contract is recovered, the
unrecovered amount generally will be allowed as a deduction on the Annuitant's
last tax return or, if there is a beneficiary entitled to receive further
payments, will be distributed to the beneficiary as described more fully below
under "Taxation of Death Benefit Proceeds."
Surrenders, Withdrawals and Death Benefits
When we make a single sum payment consisting of the entire value of your
Contract, you have ordinary taxable income to the extent the payment exceeds
your investment in the Contract (discussed above). Such a single sum payment can
occur, for example, if you surrender your Contract before the Maturity Date or
if no extended payment option is selected for a death benefit payment.
When you take a partial withdrawal from a Contract before the Maturity Date,
including a payment under a systematic withdrawal plan or guaranteed minimum
withdrawal benefit, all or part of the payment may constitute taxable ordinary
income to you. If, on the date of withdrawal, the total value of your Contract
exceeds the investment in the Contract, the excess will be considered gain and
the withdrawal will be taxable as ordinary income up to the amount of such gain.
Taxable withdrawals may also be subject to a penalty tax for premature
withdrawals as explained below. When there is no gain included in the Contract's
value and only the investment in the Contract remains, any subsequent withdrawal
made before the Maturity Date will be a tax-free return of investment until you
have recovered your entire investment in the Contract. If you assign or pledge
any part of your Contract's value, the value so pledged or assigned is taxed the
same way as if it were a partial withdrawal.
For purposes of determining the amount of taxable income resulting from a single
sum payment or a partial withdrawal, all Nonqualified annuity contracts issued
by us or our affiliates to the Owner within the same calendar year will be
treated as if they were a single contract.
As mentioned above, amounts received in either a partial withdrawal or full
surrender are taxable to the extent that the Contract Value exceeds the
investment in the Contract. There is some uncertainty regarding the effect a
Fixed Investment Option's market value adjustment might have on the amount
treated as "Contract Value" for this purpose. As a result, the taxable portion
of amounts received in either a partial withdrawal or full surrender could be
greater or less depending on how the market value adjustment is treated.
There may be special income tax issues present in situations where the Owner and
the Annuitant are not the same person and are not married to each other. A
qualified tax adviser should be consulted in those situations.
Taxation of Death Benefit Proceeds
All or part of any death benefit proceeds may constitute a taxable payout of
earnings. A death benefit payment generally results in taxable ordinary income
to the extent there is gain in the Contract.
Amounts may be distributed from a Contract because of the death of an Owner or
the Annuitant. During the Accumulation Period, death benefit proceeds are
includible in income as follows:
- if distributed in a single sum payment under our current
administrative procedures, they are taxed in the same manner as a full
withdrawal, as described above; or
- if distributed under an Annuity Option, they are taxed in the same
manner as annuity payments, as described above; or
- if distributed as a series of withdrawals over the Beneficiary's life
expectancy, they are taxable to the extent there is gain in the
Contract.
After a Contract matures and annuity payments begin, if the Contract guarantees
payments for a stated period and the Owner dies before the end of that period,
payments made to the Beneficiary for the remainder of that period are includible
in the Beneficiary's income as follows:
- if received in a single sum under our current administrative
procedures, they are includible in income to the extent that they
exceed the unrecovered investment in the Contract at that time; or
- if distributed in accordance with an existing period certain Annuity
Option, they are fully excludible from income until the remaining
investment in the Contract has been recovered, and all annuity
payments thereafter are fully includible in income.
Penalty Tax on Premature Distributions
There is a 10% IRS penalty tax on the taxable portion of any payment from a
Nonqualified Contract. Exceptions to this penalty tax include distributions:
- received on or after the date on which the Contract Owner reaches age
59 1/2;
- attributable to the Contract Owner becoming disabled (as defined in
the tax law);
- made to a Beneficiary on or after the death of the Contract Owner or,
if the Contract Owner is not an individual, on or
43
after the death of the primary Annuitant;
- made as a series of substantially equal periodic payments for the life
(or life expectancy) of the Owner or for the joint lives (or joint
life expectancies) of the Owner and designated individual Beneficiary;
- made under a single-premium immediate annuity contract; or
- made with respect to certain annuities issued in connection with
structured settlement agreements.
Note that when a series of substantially equal periodic payments (Life
Expectancy Distribution) is used to avoid the penalty, if the Contract Owner
then modifies the payment pattern (other than by reason of death or disability)
before the LATER of the Contract Owner's attaining age 59 1/2 and the passage of
five years after the date of the first payment, such modification will cause
retroactive imposition of the penalty plus interest on it.
Puerto Rico Nonqualified Contracts
IF YOU ARE A RESIDENT OF PUERTO RICO, YOU SHOULD CONSULT A TAX ADVISER.
Distributions from Puerto Rico annuity contracts issued by us are subject to
federal income taxation, withholding and reporting requirements as well as
Puerto Rico tax laws. Both jurisdictions impose a tax on distributions. Under
federal requirements, distributions are deemed to be income first. Under the
Puerto Rico tax laws, however, distributions from a Contract not purchased to
fund a Qualified Plan ("Nonqualified Contract") are generally treated as a
non-taxable return of principal until the principal is fully recovered.
Thereafter, all distributions under a Nonqualified Contact are fully taxable.
Puerto Rico does not currently impose an early withdrawal penalty tax. The
Internal Revenue Code, however, does impose such a penalty and bases it on the
amount that is taxable under federal rules.
Distributions under a Nonqualified Contract after annuitization are treated as
part taxable income and part non-taxable return of principal. The amount
excluded from gross income after annuitization under Puerto Rico tax law is
equal to the amount of the distribution in excess of 3% of the total Purchase
Payments paid, until an amount equal to the total Purchase Payments paid has
been excluded. Thereafter, the entire distribution from a Nonqualified Contract
is included in gross income. For federal income tax purposes, however, the
portion of each annuity payment that is subject to tax is computed on the basis
of investment in the Contract and the Annuitant's life expectancy. Generally
Puerto Rico does not require income tax to be withheld from distributions of
income. Although Puerto Rico allows a credit against its income tax for taxes
paid to the federal government, you may not be able to use the credit fully.
Diversification Requirements
Your Contract will not qualify for the tax benefits of an annuity contract
unless the Separate Account follows certain rules requiring diversification of
investments underlying the Contract. In addition, the rules require that the
Contract Owner not have "investment control" over the underlying assets.
In certain circumstances, the owner of a variable annuity contract may be
considered the owner, for federal income tax purposes, of the assets of the
separate account used to support the contract. In those circumstances, income
and gains from the separate account assets would be includible in the contract
owner's gross income. The IRS has stated in published rulings that a variable
contract owner will be considered the owner of separate account assets if the
contract owner possesses incidents of ownership in those assets, such as the
ability to exercise investment control over the assets. A Treasury Decision
issued in 1986 stated that guidance would be issued in the form of regulations
or rulings on the "extent to which Policyholders may direct their investments to
particular sub-accounts of a separate account without being treated as owners of
the underlying assets." As of the date of this Prospectus, no comprehensive
guidance on this point has been issued. In Rev. Rul. 2003-91, however, the IRS
ruled that a contract holder would not be treated as the owner of assets
underlying a variable annuity contract despite the owner's ability to allocate
funds among as many as twenty sub-accounts.
The ownership rights under your Contract are similar to, but different in
certain respects from, those described in IRS rulings in which it was determined
that contract owners were not owners of separate account assets. Since you have
greater flexibility in allocating
44
premiums and Contract Values than was the case in those rulings, it is possible
that you would be treated as the owner of your Contract's proportionate share of
the assets of the Separate Account.
We do not know what future Treasury Department regulations or other guidance may
require. We cannot guarantee that an underlying Portfolio will be able to
operate as currently described in its prospectus, or that a Portfolio will not
have to change any of its investment objectives or policies. We have reserved
the right to modify your Contract if we believe doing so will prevent you from
being considered the owner of your Contract's proportionate share of the assets
of the Separate Account, but we are under no obligation to do so.
Health Care and Education Reconciliation Act of 2010
On March 30, 2010, President Barack Obama signed the Health Care and Education
Reconciliation Act of 2010 (the "Act") into law. The Act contains provisions for
a new Medicare tax to be imposed at a maximum rate of 3.8% in taxable years
beginning in 2013. The tax will be imposed on an amount equal to the lesser of
(a) "net investment income" or (b) the excess of the taxpayer's modified
adjusted gross income over a specified income threshold ($250,000 for married
couples filing jointly, $125,000 for married couples filing separately, and
$200,000 for everyone else). "Net investment income," for these purposes,
includes the excess (if any) of gross income from annuities, interest,
dividends, royalties and rents, and certain net gain, over allowable deductions,
as such terms are defined in the Act or as may be defined in future Treasury
Regulations or IRS guidance. The term "net investment income" does not include
any distribution from a plan or arrangement described in Code sections 401(a),
403(a), 403(b), 408 (i.e., IRAs), 408A (i.e., Roth IRAs) or 457(b).
You should consult a qualified tax advisor for further information about the
impact of the Act on your individual circumstances.
Puerto Rico Nonqualified Contracts
IF YOU ARE A RESIDENT OF PUERTO RICO, YOU SHOULD CONSULT A QUALIFIED TAX
ADVISER. Distributions from Puerto Rico annuity contracts issued by us are
subject to federal income taxation, withholding and reporting requirements as
well as Puerto Rico tax laws. Both jurisdictions impose a tax on distributions.
Under federal requirements, distributions are deemed to be income first. Under
the Puerto Rico tax laws, however, distributions from a Contract not purchased
to fund a Qualified Plan ("Nonqualified Contract") are generally treated as a
non-taxable return of principal until the principal is fully recovered.
Thereafter, all distributions under a Nonqualified Contact are fully taxable.
Puerto Rico does not currently impose an early withdrawal penalty tax. The Code,
however, does impose such a penalty and bases it on the amount that is taxable
under federal rules.
Distributions under a Nonqualified Contract after annuitization are treated as
part taxable income and part non-taxable return of principal. The amount
excluded from gross income after annuitization under Puerto Rico tax law is
equal to the amount of the distribution in excess of 3% of the total Purchase
Payments paid, until an amount equal to the total Purchase Payments paid has
been excluded. Thereafter, the entire distribution from a Nonqualified Contract
is included in gross income. For federal income tax purposes, however, the
portion of each annuity payment that is subject to tax is computed on the basis
of investment in the Contract and the Annuitant's life expectancy. Generally
Puerto Rico does not require income tax to be withheld from distributions of
income from annuity contracts. Although Puerto Rico allows a credit against its
income tax for taxes paid to the federal government, you may not be able to use
the credit fully.
QUALIFIED CONTRACTS
(Contracts Purchased to Fund an Individual Retirement Account or Other Qualified
Plan, including IRAs)
The Contracts are also available for use in connection with certain types of
retirement plans which receive favorable treatment under the Code ("Qualified
Plans"). Numerous special tax rules apply to the participants in Qualified Plans
and to the Contracts used in connection with these plans. We provide a brief
description of types of Qualified Plans in Appendix E of this Prospectus and in
the SAI, but make no attempt to provide more than general information about use
of the Contracts with the various types of Qualified Plans in this Prospectus.
We may limit the availability of the Contracts to certain types of Qualified
Plans and may discontinue making Contracts available to any Qualified Plan in
the future. If you intend to use a Contract in connection with a Qualified Plan
you should consult a qualified tax adviser.
We have no responsibility for determining whether a particular retirement plan
or a particular contribution to the plan satisfies the applicable requirements
of the Code, or whether a particular employee is eligible for inclusion under a
plan. In general, the Code imposes limitations on the amount of annual
compensation that can be contributed into a Qualified Plan, and contains rules
to limit the amount you can contribute to all of your Qualified Plans. Trustees
and administrators of Qualified Plans may, however, generally invest and
reinvest existing plan assets without regard to such Code imposed limitations on
contributions. Certain distributions from Qualified Plans may be transferred
directly to another plan, unless funds are added from other sources, without
regard to such limitations.
The tax rules applicable to Qualified Plans vary according to the type of plan
and the terms and conditions of the plan itself. For example, for both
withdrawals and annuity payments under certain Qualified Contracts, there may be
no "investment in the Contract" and the total amount received may be taxable.
Also, loans from Qualified Contracts intended for use under retirement plans
qualified under section 403(b) of the Code, where allowed, are subject to a
variety of limitations, including restrictions as to the amount that
45
may be borrowed, the duration of the loan, and the manner in which the loan must
be repaid. (You should always consult your tax adviser and retirement plan
fiduciary prior to exercising your loan privileges.) Both the amount of the
contribution that may be made and the tax deduction or exclusion that you may
claim for that contribution are limited under Qualified Plans.
Under the tax rules, the Owner and the Annuitant may not be different
individuals if a Contract is used in connection with a Qualified Plan. If a
co-Annuitant is named, all distributions made while the Annuitant is alive must
be made to the Annuitant. Also, if a co-Annuitant is named who is not the
Annuitant's spouse, the Annuity Options which are available may be limited,
depending on the difference in ages between the Annuitant and co-Annuitant.
Additionally, for Contracts issued in connection with Qualified Plans subject to
the Employee Retirement Income Security Act, the spouse or ex-spouse of the
Owner will have rights in the Contract. In such a case, the Owner may need the
consent of the spouse or ex-spouse to change Annuity Options or make a
withdrawal from the Contract.
Required Minimum Distributions
Treasury Department regulations prescribe required minimum distribution ("RMD")
rules governing the time at which distributions to the Owner and beneficiaries
must commence and the form in which the distributions must be paid. These
special rules may also require the length of any guarantee period to be limited.
They also affect the restrictions that the Owner may impose on the timing and
manner of payment of death benefits to beneficiaries or the period of time over
which a Beneficiary may extend payment of the death benefits under the Contract.
In addition, the presence of the death benefit or a benefit provided under an
optional rider may affect the amount of the required minimum distributions that
must be made under the Contract. Failure to comply with minimum distribution
requirements will result in the imposition of an excise tax, generally 50% of
the amount by which the amount required to be distributed exceeds the actual
distribution. In the case of IRAs (other than Roth IRAs), distributions of
minimum amounts (as specified in the tax law) to the Owner must generally
commence by April 1 of the calendar year following the calendar year in which
the Owner attains age 70 1/2. In the case of certain other Qualified Plans, such
distributions of such minimum amounts must generally commence by the later of
this date or April 1 of the calendar year following the calendar year in which
the employee retires. Distributions made under certain Qualified Plans,
including IRAs and Roth IRAs, after the Owner's death must also comply with the
minimum distribution requirements, and different rules governing the timing and
the manner of payments apply, depending on whether the designated Beneficiary is
an individual, and, if so, the Owner's spouse, or an individual other than the
Owner's spouse. If you wish to impose restrictions on the timing and manner of
payment of death benefits to your designated beneficiaries or if your
Beneficiary wishes to extend over a period of time the payment of the death
benefits under your Contract, please consult your own qualified tax adviser.
46
Penalty Tax on Premature Distributions
There is also a 10% IRS penalty tax on the taxable amount of any payment from
certain Qualified Contracts (but not Section 457 plans). (The amount of the
penalty tax is 25% of the taxable amount of any payment received from a SIMPLE
retirement account during the 2-year period beginning on the date the individual
first participated in any qualified salary reduction arrangement maintained by
the individual's employer.) There are exceptions to this penalty tax which vary
depending on the type of Qualified Plan. In the case of an Individual Retirement
Annuity (or, an "IRA"), including a SIMPLE IRA, the penalty tax does not apply
to a payment:
- received on or after the date on which the Contract Owner reaches age
59 1/2;
- received on or after the Owner's death or because of the Owner's
disability (as defined in the tax law); or
- made as a series of substantially equal periodic payments (not less
frequently than annually) for the life (or life expectancy) of the
Owner or for the joint lives (or joint life expectancies) of the Owner
and "designated beneficiary" (as defined in the tax law).
Note that when a series of substantially equal periodic payments (Life
Expectancy Distribution) is used to avoid the penalty, if the Contract Owner
then modifies the payment pattern (other than by reason of death or disability)
before the LATER of the Contract Owner's attaining age 59 1/2 and the passage of
five years after the date of the first payment, such modification will cause
retroactive imposition of the penalty plus interest on it.
These exceptions generally apply to taxable distributions from other Qualified
Plans (although, in the case of plans qualified under Sections 401 and 403 of
the Code, the exception for substantially equal periodic payments applies only
if the Owner has had a severance from employment). In addition, the penalty tax
does not apply to certain distributions from IRAs which are used for first time
home purchases or for higher education expenses, or for distributions made to
certain eligible individuals called to active duty after September 11, 2001.
Special conditions must be met to qualify for these three exceptions to the
penalty tax. If you wish to take a distribution from an IRA for these purposes,
you should consult your own qualified tax adviser.
When we issue a Contract in connection with a Qualified Plan, we will amend the
Contract as necessary to conform to the requirements of the plan. However, your
rights to any benefits under the plan may be subject to the terms and conditions
of the plan itself, regardless of the terms and conditions of the Contracts. We
will not be bound by terms and conditions of Qualified Plans to the extent those
terms and conditions contradict a Contract, unless we consent.
Rollovers and Transfers
If permitted under your plan, you may make take a distribution:
- from a traditional IRA and make a "tax-free rollover" to another
traditional IRA;
- from a traditional IRA and make a "tax-free rollover" to a retirement
plan qualified under Section 401(a), 403(a), or 403(b) of the Code or
a governmental deferred compensation plan described in Section 457(b)
of the Code;
- from any Qualified Plan (other than a Section 457 deferred
compensation plan maintained by a tax-exempt organization) and make a
"tax-free rollover" to a traditional IRA;
- from a retirement plan qualified under Section 401(a), 403(a), or
403(b) of the Code or a governmental deferred compensation plan
described in Section 457(b) of the Code and make a "tax-free rollover"
to any such plans.
In addition, if your spouse survives you and falls within the definition of the
federal Defense of Marriage Act, he or she is permitted to take a distribution
from your tax-qualified retirement account and make a "tax-free rollover" to
another tax-qualified retirement account in which your surviving spouse
participates, to the extent permitted by your surviving spouse's plan. A
beneficiary who is not your surviving spouse may, if permitted by the plan,
transfer to a traditional IRA the amount distributable to him or her upon your
death under a Contract that is held as part of a retirement plan described in
Section 401(a), 403(a), or 403(b) of the Code or a governmental deferred
compensation plan described in Section 457(b) of the Code to a traditional IRA.
The IRA is treated as an inherited IRA of the non-spouse beneficiary.
You may also make a taxable rollover from a traditional IRA to a Roth IRA. In
addition, distributions that you receive from a retirement plan described in
Sections 401(a), 403(a), or 403(b) of the Code or a governmental deferred
compensation plan described in Section 457(b) of the Code may be rolled over
directly to a Roth IRA. This type of rollover is taxable. You may make a
"tax-free rollover" to a Roth IRA from a Roth IRA or from a Roth account in a
retirement plan described in Section 401(a) or Section 403(b) of the Code.
47
Although we allow a beneficiary of an IRA who is eligible to roll the IRA over
to a Contract as a traditional or Roth IRA to do so, we do not allow such an IRA
beneficiary to purchase any of our optional benefit Riders on that Contract.
In lieu of taking a distribution from your plan (including a Section 457
deferred compensation plan maintained by a tax-exempt organization), your plan
may permit you to make a direct trustee-to-trustee transfer of plan assets.
Withholding on Rollover Distributions
Eligible rollover distributions from a retirement plan that is qualified under
Section 401(a), 403(a), or 403(b) of the Code, or a governmental deferred
compensation plan described in Section 457(b) of the Code are subject to
mandatory withholding. An eligible rollover distribution generally is any
taxable distribution from such plans except (i) minimum distributions required
under Section 401(a)(9) of the Code, (ii) certain distributions for life, life
expectancy, or for 10 years or more which are part of a "series of substantially
equal periodic payments," and (iii) if applicable, certain hardship withdrawals.
Federal income tax of 20% will be withheld from an eligible rollover
distribution. The withholding is mandatory, and you cannot elect to have it not
apply. This 20% withholding will not apply, however, if instead of receiving the
eligible rollover distribution, you choose to have it directly transferred to an
applicable plan, a traditional IRA, or a Roth IRA.
If you take a distribution from a Qualified Contract, we may have to take a
withdrawal from your Contract Value, withhold it from you, and remit to the IRS.
The amount we may be required to withhold is up to 20% of the taxable gain in
the Contract. We treat any amount we withhold as a withdrawal from your
Contract, which could result in a reduction of the guarantees and benefits you
may have purchased under an optional benefits Rider to your Contract. Please
read "What Other Optional Benefits May Have Been Available to Me Under a
Contract?" in "IV. Basic Information" earlier in this Prospectus for information
about the impact of withdrawals on optional benefit Riders.
We do not need to withhold amounts if you provide us with information, on the
forms we require for this purpose, that you wish to assign a Qualified Contract
and/or transfer amounts from that Contract directly to another tax-qualified
retirement plan. Similarly, if you wish to purchase a Qualified Contract, you
may find it advantageous to instruct your existing retirement plan to transfer
amounts directly to us, in lieu of making a distribution to you. YOU SHOULD SEEK
INDEPENDENT TAX ADVICE IF YOU PURCHASED A CONTRACT FOR USE WITH A TAX-QUALIFIED
RETIREMENT PLAN.
Conversions and Rollovers to Roth IRAs
You can convert a traditional IRA to a Roth IRA or directly roll over
distributions that you receive from a retirement plan described in Sections
401(a), 403(a), or 403(b) of the Code or a governmental deferred compensation
plan described in Section 457(b) of the Code to a Roth IRA. The Roth IRA annual
contribution limit does not apply to converted or rollover amounts. The former
$100,000 adjusted gross income limit for converting traditional IRAs and other
qualified retirement accounts to a Roth IRA does not apply to years after 2009.
You must, however, pay tax on any portion of the converted or rollover amount
that would have been taxed if you had not converted or rolled over to a Roth
IRA. No similar limitations apply to rollovers to one Roth IRA from another Roth
IRA or from a Roth account in a retirement plan described in Section 401(a) or
Section 403(b) of the Code. Please note that the amount deemed to be the
"converted amount" for tax purposes may be higher than the Contract Value
because of the deemed value of guarantees.
If you convert a Contract issued as a traditional IRA (or other type of
Qualified Contract, if permitted under your plan) to a Roth IRA, or instruct us
to transfer a rollover amount from a Qualified Contract to a Roth IRA, you may
instruct us to not withhold any of the conversion for taxes and remittance to
the IRS. A direct rollover or conversion is not subject to mandatory tax
withholding, even if the distribution is includible in gross income. If you do
instruct us to withhold for taxes when converting an existing Contract to a Roth
IRA, we will treat any amount we withhold as a withdrawal from your Contract,
which could result in a reduction of the guarantees and benefits you may have
purchased under an optional benefits Rider to your Contract. Please read "What
Other Optional Benefits May Have Been Available to Me Under a Contract?" in "IV.
Basic Information" earlier in this Prospectus for information about the impact
of withdrawals on optional benefit Riders.
You may find it advantageous to pay the tax due from resources other than your
retirement plan assets if you wish to purchase a Contract for use as a Roth IRA
through a rollover from that retirement plan. YOU SHOULD SEEK INDEPENDENT TAX
ADVICE IF YOU INTEND TO USE THE CONTRACT IN CONNECTION WITH A ROTH IRA.
The adjusted gross income limit for converting traditional IRAs and other
qualified retirement accounts to a Roth IRA was repealed effective January 1,
2010. Accordingly, taxpayers with more than $100,000 of adjusted gross income
may now convert such assets without an early distribution penalty at the time of
the conversion. However, the early distribution penalty may still apply if
amounts converted to a Roth IRA are distributed within the 5-taxable year period
beginning in the year the conversion is made. Generally, the amount converted to
a Roth IRA is included in ordinary income for the year in which the account was
converted. However, for 2010 only, unless you elect to include the converted
amount in your 2010 income, half of it will be included in your income in 2011
and the other half in 2012. Given the potential for taxation of Roth IRA
conversions and early distribution penalties, you should consider the
48
resources that you have available, other than your retirement plan assets, for
paying any taxes that would become due the year of any such conversion or a
subsequent year. You should seek independent qualified tax advice if you intend
to use the Contract in connection with a Roth IRA.
Section 403(b) Qualified Plans
Section 403(b) of the Code permits public school employees and employees of
certain types of tax-exempt organizations to have their employers purchase
annuity contracts for them and, subject to certain limitations, to exclude the
Purchase Payments from gross income for tax purposes. We currently are not
offering this Contract for use in a retirement plan intended to qualify as a
Section 403(b) Qualified Plan (a "Section 403(b) Qualified Plan" or the "Plan")
unless (a) we (or an affiliate of ours) previously issued annuity contracts to
that retirement plan, (b) the initial purchase payment for the new Contract is
sent to us directly from the Section 403(b) Qualified Plan through your
employer, the Plan's administrator, the Plan's sponsor or in the form of a
transfer acceptable to us, (c) we have entered into an agreement with your
Section 403(b) Qualified Plan concerning the sharing of information related to
your Contract (an "Information Sharing Agreement"), and (d) unless contained in
the Information Sharing Agreement, we have received a written determination by
your employer, the Plan administrator or the Plan sponsor of your Section 403(b)
Qualified Plan that the plan qualifies under Section 403(b) of the Code and
complies with applicable Treasury Department regulations (a "Certificate of
Compliance") (Information Sharing Agreement and Certificate of Compliance,
together, the "Required Documentation").
We may accept, reject or modify any of the terms of a proposed Information
Sharing Agreement presented to us, and make no representation that we will enter
into an Information Sharing Agreement with your Section 403(b) Qualified Plan.
In the event that we do not receive the Required Documentation and you
nonetheless direct us to proceed with a rollover transfer of initial Purchase
Payment funds, the transfer may be treated as a taxable transaction.
Loans
A loan privilege is available only to Owners of Contracts issued in connection
with Section 403(b) retirement arrangements that are not subject to Title 1 of
the Employee Retirement Income Security Act of 1974 (ERISA). The rules governing
the availability of loans, including the maximum Loan Amount, are prescribed in
the Code, Treasury regulations, IRS rulings, and our procedures in effect at the
time a loan is made. Because the rules governing loans under section 403(b)
Contracts are complicated, you should consult your tax adviser before exercising
the loan privilege. Failure to meet the requirements for loans may result in
adverse income tax consequences to you. The loan agreement you sign will
describe the restrictions and limitations applicable to the loan at the time you
apply.
Federal tax law generally requires loans to be repaid within 5 years (except in
cases where the loan was used to acquire the principal residence of a plan
participant), with repayments made at least quarterly and in level payments over
the term of the loan. Interest will be charged on your Loan Amount. Failure to
make a loan repayment when due will result in adverse tax income tax
consequences to you.
The amount of any Unpaid Loans will be deducted from the death benefit otherwise
payable under the Contract. In addition, loans, whether or not repaid, will have
a permanent effect on the Contract Value because the investment results of the
Investment Accounts will apply only to the unborrowed portion of the Contract
Value. The longer a loan is unpaid, the greater the effect is likely to be. The
effect could be favorable or unfavorable.
If you are considering making a rollover transfer from a retirement plan
described in Section 403(b) of the Code to a traditional IRA or a Roth IRA, you
should consult with a qualified tax advisor regarding possible tax consequences.
If you have a loan outstanding under the section 403(b) plan, the transfer may
subject you to income taxation on the amount of the loan balance.
Please see Appendix E or request a copy of the SAI from the Annuities Service
Center for more detailed information regarding Section 403(b) Qualified Plans.
Puerto Rico Contracts Issued to Fund Retirement Plans
The tax laws of Puerto Rico vary significantly from the provisions of the
Internal Revenue Code of the United States that are applicable to various
Qualified Plans. Although we may offer variable annuity contracts in Puerto Rico
in connection with Puerto Rican "tax qualified" retirement plans, the text of
this Prospectus addresses federal tax law only and is inapplicable to the tax
laws of Puerto Rico.
SEE YOUR OWN TAX ADVISER
The foregoing description of federal income tax topics and issues is only a
brief summary and is not intended as tax advice. It does not include a
discussion of federal estate and gift tax or state tax consequences. The rules
under the Code governing Qualified Plans are extremely complex and often
difficult to understand. Changes to the tax laws may be enforced retroactively.
Anything less than full compliance with the applicable rules, all of which are
subject to change from time to time, can have adverse tax consequences. The
taxation of an Annuitant or other payee has become so complex and confusing that
great care must be taken to avoid pitfalls. For further information you should
always consult a qualified tax adviser.
49
X. Other Information
ASSIGNMENT; CHANGE OF OWNER OR BENEFICIARY
To qualify for favorable tax treatment, certain Contracts can't be sold,
assigned, discounted, or pledged as collateral for a loan, as security for the
performance of an obligation, or for any other purpose, unless the Owner is a
trustee under section 401(a) of the Code.
Subject to these limits, while the Annuitant is alive, you may designate someone
else as the Owner by written notice to the Annuities Service Center. You choose
the Beneficiary in the application for the Contract. You may change the
Beneficiary by written notice no later than receipt of due proof of the death of
the Annuitant. Changes of Owner or Beneficiary will take effect when we receive
them, whether or not you or the Annuitant is then alive. However, these changes
are subject to:
- the rights of any assignees of record; and
- certain other conditions referenced in the Contract.
An assignment, pledge, or other transfer may be a taxable event. See "IX.
Federal Tax Matters" above. Therefore, you should consult a competent tax
adviser before taking any such action.
BENEFICIARY
The Beneficiary is the person, persons or entity designated in the Contract
specifications page (or as subsequently changed). However, if there is a
surviving Contract Owner, we will treat that person as the Beneficiary. You may
change the Beneficiary subject to the rights of any irrevocable Beneficiary. You
must make any change in writing and the change must be received at our Annuities
Service Center. We must approve any change. If approved, we will effect such
change as of the date on which it was written. We assume no liability for any
payments made or actions taken before the change is approved. If no Beneficiary
is living, any designated Contingent Beneficiary will be the Beneficiary. The
interest of any Beneficiary is subject to that of any assignee. If no
Beneficiary or Contingent Beneficiary is living, the Beneficiary is the estate
of the deceased Contract Owner. In the case of certain Qualified Contracts,
Treasury Department regulations may limit designations of Beneficiaries.
50
SPOUSE
FEDERAL DEFINITION OF SPOUSE. Any federal tax provisions related to status as a
"spouse" are governed by the federal Defense of Marriage Act ("DOMA"), which
does not recognize civil unions or same-sex marriages that may be allowed under
state law. Please consult your own qualified tax advisor for information on how
federal tax rules may affect Contracts where civil union or same-sex marriage
partners, either singularly or jointly own the Contract, or are designated
Annuitant(s), Beneficiary(ies) and/or Covered Person(s).
STATE VARIATIONS. Some states require that civil union and same-sex marriage
partners receive the same contractual benefits as spouses who fall within the
DOMA definition. To see a table of states with such a requirement, you may
request a Statement of Additional Information from the Annuities Service Center.
You should consult with a qualified financial professional for additional
information on your state's regulations regarding civil unions and same-sex
marriages.
CODE SECTION 72(S)
In order for our Nonqualified Contracts (i.e., Contracts not purchased to fund
an Individual Retirement Account or other Qualified Plan) to be treated as
annuities under the Code, we will interpret the provisions of the Contract so as
to comply with the requirements of Section 72(s) of the Code, which prescribes
certain required provisions governing distributions after the death of the
Owner.
PERFORMANCE INFORMATION
We may advertise total return information about investments made in the Variable
Investment Options. We refer to this information as "Account level" performance.
In our Account level advertisements, we usually calculate total return for 1, 5,
and 10 year periods or since the beginning of the applicable Variable Investment
Option.
Total return at the Account level is the percentage change between:
- the value of a hypothetical investment in a Variable Investment Option
at the beginning of the relevant period, and
- the value at the end of such period.
At the Account level, total return reflects adjustments for any:
- mortality and expense risk charges,
- administrative charge,
- annual Contract fee, and
- withdrawal charge payable if the Owner surrenders his Contract at the
end of the relevant period.
Total return at the Account level does not, however, reflect any premium tax
charges or any charges for optional benefit Riders. Total return at the Account
level will be lower than that at the Trust level where comparable charges are
not deducted.
We may also advertise total return in a non-standard format in conjunction with
the standard format described above. The non-standard format is generally the
same as the standard format except that it will not reflect any Contract fee or
withdrawal charge and it may be for additional durations.
We may advertise "current yield" and "effective yield" for investments in the
Money Market Investment Option. Current yield refers to the income earned on
your investment in the Money Market Investment Option over a 7-day period and
then annualized. In other words, the income earned in the period is assumed to
be earned every 7 days over a 52-week period and stated as a percentage of the
investment.
Effective yield is calculated in a similar manner but, when annualized, the
income earned by your investment is assumed to be reinvested and thus compounded
over the 52-week period. Effective yield will be slightly higher than current
yield because of this compounding effect of reinvestment.
Current yield and effective yield reflect all the recurring charges at the
Account level, but will not reflect any premium tax, any withdrawal charge, if
applicable, or any charge for optional benefit Riders.
REPORTS
At least annually, we will send you (1) a report showing the number and value of
the accumulation units in your Contract and (2) the financial statements of the
Portfolios.
VOTING PRIVILEGES
At meetings of the Portfolios' shareholders, we will generally vote all the
shares of each Portfolio that we hold in the Account in accordance with timely
instructions we receive from the Owners of Contracts that participate in the
corresponding Variable Investment Option.
51
CHANGES TO THE SEPARATE ACCOUNT
We reserve the right, subject to applicable law, including any required
shareholder approval,
- to transfer assets that we determine to be your assets from the
Separate Account to another separate account or Investment Option by
withdrawing the same percentage of each investment in the Account with
proper adjustments to avoid odd lots and fractions;
- to add or delete Variable Investment Options;
- to change the underlying investment vehicles;
- to operate the Separate Account in any form permitted by law; and
- to terminate the Separate Account's registration under the 1940 Act,
if such registration should no longer be legally required.
Unless otherwise required under applicable laws and regulations, notice to or
approval of Owners will not be necessary for us to make such changes.
VARIATIONS IN CHARGES OR RATES FOR ELIGIBLE CLASSES
We may allow a reduction in or the elimination of any Contract charges, or an
increase in a credited interest rate for a Fixed Investment Option. The affected
Contracts would involve sales to groups or classes of individuals under special
circumstances that we expect to result in a reduction in our expenses associated
with the sale or maintenance of the Contracts, or that we expect to result in
mortality or other risks that are different from those normally associated with
the Contracts.
The entitlement to such variation in charges or rates will be determined by us
based upon such factors as the following:
- the size of the initial Purchase Payment;
- the size of the group or class,
- the total amount of Purchase Payments expected to be received from the
group or class and the manner in which the Purchase Payments are
remitted;
- the nature of the group or class for which the Contracts are being
purchased and the persistency expected from that group or class as
well as the mortality or morbidity risks associated with that group or
class;
- the purpose for which the Contracts are being purchased and whether
that purpose makes it likely that the costs and expenses will be
reduced; or
- the level of commissions paid to selling broker-dealers or certain
financial institutions with respect to Contracts within the same group
or class.
We will make any reduction in charges or increase in initial guarantee rates
according to our rules in effect at the time an application for a Contract is
approved. We reserve the right to change these rules from time to time. Any
variation in charges, rates, or fees will reflect differences in costs and
services, will apply uniformly to all prospective Contract purchasers in the
group or class, and will not be unfairly discriminatory to the interests of any
Owner.
DISTRIBUTION OF CONTRACTS
John Hancock Distributors, LLC ("JH Distributors"), a Delaware limited liability
company and an affiliate of ours, is the principal underwriter and distributor
of the Contract interests offered by this Prospectus and of other annuity and
life insurance products we and our affiliates offer. JH Distributors also acts
as the principal underwriter of John Hancock Trust, whose securities are used to
fund certain Variable Investment Options under the Contract and under other
annuity and life insurance products we offer.
JH Distributors' principal address is 200 Bloor Street East, Toronto, Canada M4W
1E5. It also maintains offices with us at 601 Congress Street, Boston,
Massachusetts 02210. JH Distributors is a broker-dealer registered under the
Securities Exchange Act of 1934, as amended (the "1934 Act") and is a member of
the Financial Industry Regulatory Authority ("FINRA").
We offered the Contract for sale through broker-dealers that entered into
selling agreements for the sale of the Contracts. Broker-dealers sold the
Contract through their registered representatives who have been appointed by us
to act as our insurance agents. Signator Investors, Inc. ("Signator"), a
subsidiary of ours, or any of its affiliates that is registered under the 1934
Act and a member of FINRA, may also have offered the Contract.
JH Distributors may pay on-going compensation to broker-dealers in connection
with the sale or servicing of a Contract. In turn, the broker-dealers pay a
portion of the compensation to their registered representatives, under their own
arrangements. We may also reimburse Signator for direct and indirect expenses
actually incurred in connection with the distribution of these Contracts.
Signator representatives may have received additional cash or non-cash
incentives (including expenses for conference or seminar trips and certain
gifts) in connection with the sale of Contracts issued by us. From time to time,
Signator, at its expense, may also have
52
provided significant additional amounts to broker dealers or other financial
services firms which sold or arranged for the sale of the Contracts. Such
compensation may have included, for example, financial assistance to financial
services firms in connection with their conferences or seminars, sales or
training programs for invited registered representatives and other employees,
payment for travel expenses, including lodging, incurred by registered
representatives and other employees for such seminars or training programs,
seminars for the public, advertising and sales campaigns regarding the
Contracts, and/or other events or activities sponsored by the financial services
firms. As a consequence of such additional compensation, representatives and
financial services firms, including but not limited to Signator and its
representatives, may have been motivated to sell our Contracts instead of
Contracts issued by other insurance companies.
We or our affiliates may provide compensation to broker-dealers for providing
on-going service in relation to Contracts that have already been purchased. The
amount and timing of compensation we or our affiliates may provide may vary, but
total compensation paid to broker-dealers with respect to the Contracts is not
expected to exceed the amount of compensation for distribution of the Contracts
as described in this Prospectus.
CONFIRMATION STATEMENTS
We will send you confirmation statements for certain transactions in your
Investment Accounts. You should carefully review these statements to verify
their accuracy. You should report any mistakes immediately to our Annuities
Service Center. If you fail to notify our Annuities Service Center of any
mistake within 60 days of the delivery of the confirmation statement, we will
deem you to have ratified the transaction. Information regarding e-delivery of
confirmation statements appears under "IV. Basic Information - How Can I Change
My Contract's Investment Options? - Telephone and Electronic Transactions."
STATEMENT OF ADDITIONAL INFORMATION
Our Statement of Additional Information provides additional information about
the Contract and the Separate Account, including information on our history,
services provided to the Separate Account and legal and regulatory matters. We
filed the Statement of Additional Information with the SEC on the same date as
this Prospectus and incorporate it herein by reference. You may obtain a copy of
the current Statement of Additional Information without charge by contacting us
at the Annuities Service Center shown on the first page of this Prospectus. The
SEC also maintains a Web site (http://www.sec.gov) that contains the Statement
of Additional Information and other information about us, the Contract and the
Separate Account. We list the Table of Contents of the Statement of Additional
Information below.
JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT T
(FORMERLY JOHN HANCOCK VARIABLE ANNUITY ACCOUNT JF)
Statement of Additional Information
Table of Contents
page of SAI
-----------
General Information and History .................................. 1
Accumulation Unit Values ......................................... 1
Services ......................................................... 2
Independent Registered Public Accounting Firm ................. 2
Principal Underwriter ......................................... 2
Compensation .................................................. 2
Calculation of Performance Data .................................. 3
Money Market Variable Investment Options ...................... 3
Other Variable Investment Options ............................. 3
Other Performance Information .................................... 4
Table of State Variations......................................... 5
Qualified Plan Types.............................................. 6
Traditional IRAs............................................... 6
Roth IRAs...................................................... 6
Simple IRA Plans............................................... 7
Simplified Employee Pensions (SEP-IRAs)........................ 7
Section 403(b) Qualified Plans or Tax-Sheltered Annuities...... 7
Restrictions Under the Texas Optional Retirement Program....... 9
Corporate and Self-Employed ("HR 10 and "Keogh") Pension
and Profit-Sharing Plans.................................... 9
Deferred Compensation Plans of State and Local Governments
53
page of SAI
-----------
and Tax-Exempt Organizations................................... 10
Calculation of Annuity Payments................................... 10
Calculation of Annuity Units................................... 10
Annuity Unit Values............................................ 11
Mortality Tables............................................... 11
Additional Information About Determining Unit Values ............. 12
Net Investment Rate ........................................... 12
Adjustment of Units and Values ................................ 12
Hypothetical Example Illustrating the Calculation of
Accumulation
Unit Values and Annuity Unit Values ........................... 12
Purchases and Redemptions of Portfolio Shares .................... 12
The Separate Account ............................................. 12
Liability for Telephone Transfers ................................ 13
Voting Privileges ................................................ 13
Legal and Regulatory Matters...................................... 14
Financial Statements ............................................. 15
FINANCIAL STATEMENTS
The Statements of Additional Information also contain the Company's financial
statements as of the years ended 2008 and 2009, and its Separate Account's
financial statements as of the year ended 2009 (the "Financial Statements"). Our
Financial Statements provide information on our financial strength as of the
year ended 2009, including information on our general account assets that were
available at that time to support our guarantees under the Contracts and any
optional benefit Riders. The Company's general account consists of securities
and other investments, the value of which may decline during periods of adverse
market conditions.
54
APPENDIX A: Details About Our Fixed Investment Options
INVESTMENTS THAT SUPPORT OUR FIXED INVESTMENT OPTIONS
We back our obligations under the Fixed Investment Options with John Hancock
USA's general assets. Subject to applicable law, we have sole discretion over
the investment of our general assets (including those held in our "non-unitized"
separate account that primarily supports the Fixed Investment Options). We
invest these amounts in compliance with applicable state insurance laws and
regulations concerning the nature and quality of our general investments.
We invest the non-unitized separate account assets, according to our detailed
investment policies and guidelines, in fixed income obligations, including:
- corporate bonds;
- mortgages;
- mortgage-backed and asset-backed securities; and
- government and agency issues.
We invest primarily in domestic investment-grade securities. In addition, we use
derivative Contracts only for hedging purposes, to reduce ordinary business
risks associated with changes in interest rates, and not for speculating on
future changes in the financial markets. Notwithstanding the foregoing, we are
not obligated to invest according to any particular strategy.
GUARANTEED INTEREST RATES
We declare the guaranteed rates from time to time as market conditions and other
factors dictate. We advise you of the guaranteed rate for a selected Fixed
Investment Option at the time we:
- receive your Purchase Payment;
- effectuate your transfer; or
- renew your Fixed Investment Option.
We have no specific formula for establishing the guaranteed rates for the Fixed
Investment Options. The rates may be influenced by interest rates generally
available on the types of investments acquired with amounts allocated to the
Fixed Investment Option. In determining guarantee rates, we may also consider,
among other factors, the duration of the Fixed Investment Option, regulatory and
tax requirements, sales and administrative expenses we bear, risks we assume,
our profitability objectives, and general economic trends.
COMPUTATION OF MARKET VALUE ADJUSTMENT
We determine the amount of the market value adjustment by multiplying the amount
being taken from the Fixed Investment Option (before any applicable withdrawal
charge, if any is applicable) by a factor expressed by the following formula:
(1 + g)/(1 + c + 0.005) x (n/12) - 1
where,
G is the guaranteed rate in effect for the current Fixed Investment Option.
C is the current guaranteed rate in effect for new Fixed Investment Options with
duration equal to the number of years remaining in the current Fixed Investment
Option (rounded to the nearest whole number of years). If we are not currently
offering such a Fixed Investment Option, we will declare a guarantee rate,
solely for this purpose, consistent with interest rates currently available.
N is the number of complete months from the date of withdrawal to the end of the
current Fixed Investment Option. (If less than one complete month remains, N
equals one unless the withdrawal is made on the last day of the Fixed Investment
Option, in which case no adjustment applies.)
A-1
SAMPLE CALCULATION 1: POSITIVE ADJUSTMENT
Amount withdrawn or transferred $10,000
Guarantee period 5 years
Time of withdrawal or transfer begining of 3rd year of guaranteed period
Guaranteed rate(g) 4%
Guaranteed rate for new 3 year guarantee(c) 3%
Remaining guarantee period(n) 36 months
Market Value Adjustment:
10,000 x [(1 + 0.04)/(1 + 0.03 + 0.005) x (36/12) - 1] = 145.63
Amount withdrawn or transferred (adjusted for market value adjustment): $10,000
+ $145.63 = $10,145.63
* All interest rates have been arbitrarily chosen for purposes of this
example. In most cases they will bear little or no relation to the rates we
are actually guaranteeing at any time.
SAMPLE CALCULATION 2: NEGATIVE ADJUSTMENT
Amount withdrawn or transferred $10,000
Guarantee period 5 years
Time of withdrawal or transfer begining of 3rd year of guaranteed period
Guaranteed rate(g) 4%
Guaranteed rate for new 3 year guarantee(c) 5%
Remaining guarantee period(n) 36 months
Market Value Adjustment:
10,000 x [(1 + 0.04)/(1 + 0.05 + 0.005) x (36/12) - 1] = -420.50
Amount withdrawn or transferred (adjusted for market value adjustment): $10,000
- $420.50 = $9,579.50
* All interest rates shown have been arbitrarily chosen for purposes of this
example. In most cases they will bear little or no relation to the rates we
are actually guaranteeing at any time.
A-2
APPENDIX B: Examples of Withdrawal Charge Calculations
DECLARATION AND PATRIOT VARIABLE ANNUITIES
Assume the Following Facts:
- On January 1, 1997, you make a $5000 initial Purchase Payment and we
issue you a Contract.
- On January 1, 1998, you make a $1000 Purchase Payment.
- On January 1, 1999, you make a $1000 Purchase Payment.
- On January 1, 2000, the total value of your Contract is $9000 because
of good investment earnings.
Now assume you make a partial withdrawal of $6000 (no tax withholding) on
January 2, 2000. In this case, assuming no prior withdrawals, we would deduct a
CDSL of $272.23. We withdraw a total of $6272.23 from your Contract.
$ 6,000.00 -- withdrawal request payable to you
+ 272.23 -- withdrawal charge payable to us
-----------
$ 6,272.23 -- total amount withdrawn from your Contract
Here Is How We Determine the Withdrawal Charge:
(1) We FIRST reduce your $5000 INITIAL PURCHASE PAYMENT by the three annual
$30 Contract fees we assessed on January 1, 1998, 1999, and 2000. We withdraw
the remaining $4910 from your Contract.
$ 5,000
- 30 -- 1998 Contract fee payable to us
- 30 -- 1999 Contract fee payable to us
- 30 -- 2000 Contract fee payable to us
-----------
$ 4,910 -- amount of your initial Purchase Payment we would consider
to be withdrawn
Under the free withdrawal provision, we deduct 10% of the total value of your
Contract at the beginning of the Contract Year, or $900 (.10 x $9000). We pay
the $900 to you as part of your withdrawal request, and we assess a withdrawal
charge on the remaining balance of $4010. Because you made the initial Purchase
Payment 3 years ago, the withdrawal charge percentage is 5%. We deduct the
resulting $200.50 from your Contract to cover the withdrawal charge on your
initial Purchase Payment. We pay the remainder of $3809.50 to you as a part of
your withdrawal request.
$ 4,910.00
- 900 -- free withdrawal amount (payable to you)
-----------
$ 4,010
x .05
-----------
$ 200.50 -- withdrawal charge on initial Purchase Payment
(payable to us)
$ 4,010.00
- 200.50
-----------
$ 3,809.50 -- part of withdrawal request payable to you
(2) We NEXT deem the entire amount of your 1998 PURCHASE PAYMENT to be
withdrawn and we assess a withdrawal charge on that $1000 amount. Because you
made this Purchase Payment 2 years ago, the withdrawal charge percentage is 5%.
We deduct the resulting $50 from your Contract to cover the withdrawal charge on
your 1998 Purchase Payment. We pay the remainder of $950 to you as a part of
your withdrawal request.
$ 1,000
x .05
-----------
$ 50 -- withdrawal charge on 1998 Purchase Payment (payable to us)
$ 1,000
- 50
-----------
$ 950 -- part of withdrawal request payable to you
B-1
DECLARATION AND PATRIOT VARIABLE ANNUITIES - CONTINUED
(3) We NEXT determine what additional amount we need to withdraw to provide
you with the total $6000 you requested, after the deduction of the withdrawal
charge on that additional amount. We have already allocated $900 from the free
withdrawal amount, $3809.50 from your initial Purchase Payment, and $950 from
your 1998 Purchase Payment. Therefore, $340.50 is needed to reach $6000.
$ 6,000.00 -- total withdrawal amount requested
- 900.00 -- free withdrawal amount
- 3,809.50 -- payment deemed from initial Purchase Payment
- 950.00 -- payment deemed from 1998 Purchase Payment
-----------
$ 340.50 -- additional payment to you needed to reach $6000
We know that the withdrawal charge percentage for this remaining amount is 6%,
because you are already deemed to have withdrawn all Purchase Payments you paid
prior to 1999. We use the following formula to determine how much more we need
to withdraw:
Remainder due to you = Withdrawal needed - [applicable withdrawal charge
percentage times withdrawal needed]
$ 340.50 = x - [.06x]
$ 340.50 = .94x
$340.50/0.94 = X
$ 362.23 = X
$ 362.23 -- deemed withdrawn from 1999 Purchase Payment
$- 340.50 -- part of withdrawal request payable to you
-----------
$ 21.73 -- withdrawal charge on 1999 Purchase Payment deemed withdrawn
(payable to us)
$ 200.50 -- withdrawal charge on the INITIAL PURCHASE PAYMENT
$+ 50.00 -- withdrawal charge on the 1998 PURCHASE PAYMENT
$+ 21.73 -- withdrawal charge on the 1999 PURCHASE PAYMENT
-----------
$ 272.23 -- Total withdrawal charge
EXAMPLES OF WITHDRAWAL CHARGE CALCULATIONS - CONTINUED
Revolution Extra Variable Annuities
Assume the Following Facts:
- On January 1, 2001, you make a $5,000 initial Purchase Payment and we
issue you a Contract.
- On January 1, 2002, you make a $1,000 Purchase Payment.
- On January 1, 2003, you make a $1,000 Purchase Payment.
- On January 1, 2004, the total value of your Contract is $7,500 because
of the extra credits and favorable investment earnings.
Now assume you make a partial withdrawal of $7,000 (no tax withholding) on
January 2, 2004. In this case, assuming no prior withdrawals, we would deduct a
CDSL of $474.19. We withdraw a total of $7,474.19 from your Contract.
$ 7,000.00 -- withdrawal request payable to you
+ 474.19 -- withdrawal charge payable to us
-----------
$ 7,474.19 -- total amount withdrawn from your Contract
Here Is How We Determine the Withdrawal Charge:
(1) We first distribute to you the $500 profit you have in your Contract
($7,500 total Contract Value less $7,000 of Purchase Payments you have
paid) under the free withdrawal provision.
(2) Next we repay to you the $5,000 Purchase Payments you paid in 2001 Under
the free withdrawal provision, $200 of that Purchase Payment is charge free
($7,000 total Purchase Payments paid x 10%; less the $500 free withdrawal
in the same Contract Year described in paragraph 1 above). We assess a
withdrawal charge on the remaining balance of $4,800 from your 2001
Purchase Payment. Because you made that Purchase Payment 3 years ago, the
withdrawal charge percentage is 7%. We deduct the resulting $336 from your
Contract to cover the withdrawal charge on your 2001 Purchase Payment. We
pay the remainder of $4,464 to you as a part of your withdrawal request.
B-2
Revolution Extra Variable Annuities - continued
$ 5,000
- 200 -- free withdrawal amount (payable to you)
-----------
$ 4,800
x .07
-----------
$ 336 -- withdrawal charge on 2001 Purchase Payment (payable to us)
$ 4,800
- 336
-----------
$ 4,464 -- part of withdrawal request payable to you
(1) We NEXT deem the entire amount of your 2002 PURCHASE PAYMENT to be
withdrawn and we assess a withdrawal charge on that $1,000 amount. Because
you made this Purchase Payment 2 years ago, the withdrawal charge
percentage is 7%. We deduct the resulting $70 from your Contract to cover
the withdrawal charge on your 2002 Purchase Payment. We pay the remainder
of $930 to you as a part of your withdrawal request.
$ 1,000
x .07
-----------
$ 70 -- withdrawal charge on 2002 Purchase Payment (payable to us)
$ 1,000
- 70
-----------
$ 930 -- part of withdrawal request payable to you
(2) We NEXT determine what additional amount we need to withdraw to provide you
with the total $7,000 you requested, after the deduction of the withdrawal
charge on that additional amount. We have already allocated $500 from
profits under paragraph 1 above, $200 of additional free withdrawal amount
under paragraph 2, $4,464 from your 2001 Purchase Payment under paragraph
2, and $930 from your 2003 Purchase Payment under paragraph 3. Therefore,
$906 is needed to reach $7,000.
$ 7,000 -- total withdrawal amount requested
- 500 -- profit
- 200 -- free withdrawal amount
- 4,464 -- payment deemed from initial Purchase Payment
- 930 -- payment deemed from initial Purchase Payment
-----------
$ 906 -- additional payment to you needed to reach $7,000
We know that the withdrawal charge percentage for this remaining amount is 7%,
because you are already deemed to have withdrawn all Purchase Payments you paid
prior to 2003. We use the following formula to determine how much more we need
to withdraw:
Remainder due to you = Withdrawal needed - [applicable withdrawal charge
percentage times withdrawal needed]
$ 906 = x - [.07x]
$ 906 = .93x
$ 906/.93 = X
$ 974.19 = X
$ 974.19 -- deemed withdrawn from 2003 Purchase Payment
$ 906.00 -- part of withdrawal request payable to you
-----------
$ 68.19 -- withdrawal charge on 2003 Purchase Payment deemed
withdrawn (payable to us)
Revolution Value Variable Annuities
Assume the Following Facts:
- On January 1, 2001, you make a $5,000 initial Purchase Payment and we
issue you a Contract.
- On January 1, 2002, you make a $1,000 Purchase Payment.
- On January 1, 2003, you make a $1,000 Purchase Payment.
- On January 1, 2004, the total value of your Contract is $7,500 because
of favorable investment earnings.
Now assume you make a partial withdrawal of $7,000 (no tax withholding) on
January 2, 2004. In this case, assuming no prior withdrawals, we would deduct a
withdrawal charge of $289.36. We withdraw a total of $7,289.36 from your
Contract.
B-3
EXAMPLES OF WITHDRAWAL CHARGE CALCULATIONS - CONTINUED
Revolution Value Variable Annuities - continued
$ 7,000.00 -- withdrawal request payable to you
+ 289.36 -- withdrawal charge payable to us
-----------
$ 7,289.36 -- total amount withdrawn from your Contract
Here Is How We Determine the Withdrawal Charge:
(1) We FIRST distribute to you the $500 profit you have in your Contract
($7,500 total Contract Value less $7,000 of Purchase Payments you have
paid) under the free withdrawal provision.
Next we repay to you the $5,000 Purchase Payments you paid in 2001. Under the
free withdrawal provision, $200 of that Purchase Payment is charge free ($7,000
total Purchase Payments paid x 10%; less the $500 free withdrawal in the same
Contract Year described in paragraph 1 above). We assess a withdrawal charge on
the remaining balance of $4,800 from your 2001 Purchase Payment. Because you
made that Purchase Payment 3 years ago, the withdrawal charge percentage is 4%.
We deduct the resulting $192 from your Contract to cover the withdrawal charge
on your 2001 Purchase Payment. We pay the remainder of $4,608 to you as a part
of your withdrawal request.
$ 5,000
- 200 -- free withdrawal amount (payable to you)
-----------
$ 4,800
x .04
-----------
$ 192 -- withdrawal charge on 2001 Purchase Payment (payable to us)
$ 4,800
- 192
-----------
$ 4,608 -- part of withdrawal request payable to you
(2) We NEXT deem the entire amount of your 2002 PURCHASE PAYMENT to be
withdrawn and we assess a withdrawal charge on that $1,000 amount. Because
you made this Purchase Payment 2 years ago, the withdrawal charge
percentage is 5%. We deduct the resulting $50 from your Contract to cover
the withdrawal charge on your 2002 Purchase Payment. We pay the remainder
of $950 to you as a part of your withdrawal request.
$ 1,000
x .05
-----------
$ 50 -- withdrawal charge on 2002 Purchase Payment (payable to us)
$ 1,000
- 50
-----------
$ 950 -- part of withdrawal request payable to you
(3) We NEXT determine what additional amount we need to withdraw to provide you
with the total $7,000 you requested, after the deduction of the withdrawal
charge -n that additional amount. We have already allocated $500 from
profits under paragraph 1 above, $200 of additional free withdrawal amount
under paragraph 2, $4,608 from your 2001 Purchase Payment under paragraph
2, and $950 from your 2003 Purchase Payment under paragraph 3. Therefore,
$742 is needed to reach $7,000.
$ 7,000 -- total withdrawal amount requested
- 500 -- Profit
- 200 -- free withdrawal amount
- 4,608 -- payment deemed from initial Purchase Payment
- 950 -- payment deemed from 2002 Purchase Payment
-----------
$ 742 -- additional payment to you needed to reach $7,000
(4) We know that the withdrawal charge percentage for this remaining amount is
6%, because you are already deemed to have withdrawn all Purchase Payments
you paid prior to 2003. We use the following formula to determine how much
more we need to withdraw:
B-4
EXAMPLES OF WITHDRAWAL CHARGE CALCULATIONS - CONTINUED
Revolution Value Variable Annuities - continued
Remainder due to you = Withdrawal needed - [applicable withdrawal charge
percentage times withdrawal needed]
$ 742.00 = x - [.06x]
$ 742.00 = .94x
$ 742.00/.94 = X
$ 789.36 = X
$ 789.36 -- Deemed withdrawn from 2003 Purchase Payment
$- 742.00 -- part of withdrawal request payable to you
-----------
$ 47.36 -- withdrawal charge on 2003 Purchase Payment deemed
withdrawn (payable to us)
B-5
APPENDIX C: Optional Enhanced Death Benefits
DECLARATION AND PATRIOT VARIABLE ANNUITIES
"Stepped-Up" Death Benefit Rider
If you were under age 80 when you applied for your Contract, you may have
elected to enhance the standard death benefit by purchasing a stepped-up death
benefit. Under this benefit, if the Annuitant dies before the Contract's
Maturity Date, we will pay the Beneficiary the greater of:
- the standard death benefit (described above); or
- the highest total value of your Contract (adjusted by any market value
adjustment) as of any anniversary of your Contract to date, PLUS any
Purchase Payments you have made since that anniversary, MINUS any
withdrawals you have taken (and any related withdrawal charges) since
that anniversary.
For these purposes, however, we count only those Contract Anniversaries that
occur (1) BEFORE we receive proof of death and any required settlement
instructions and (2) BEFORE the Annuitant attains age 81 (80 1/2 for PATRIOT
VARIABLE ANNUITIES).
You may have elected this benefit ONLY when you applied for the Contract and
ONLY if this benefit is available in your state. As long as the benefit is in
effect, you will pay a monthly charge for this benefit as shown in the Fee
Tables. For a description of this charge, refer to "What Fees and Charges will
be Deducted from My Contract?"
You should carefully review the tax considerations for optional benefit benefits
section before selecting this optional benefit. For a more complete description
of the terms and conditions of this benefit, you should refer directly to the
benefit. We will provide you with a copy on request.
Accidental Death Benefit Rider
If you are under age 80 when you apply for your Contract, you may elect to
purchase an accidental death benefit. In addition to any other death benefit,
this benefit provides a benefit upon the accidental death of the Annuitant prior
to the earlier of:
- the Contract's Maturity Date; and
- the Annuitant's 80th birthday.
Under this benefit, the Beneficiary will receive an amount equal to the total
value of the Contract as of the date of the accident, up to a maximum of
$200,000. We will pay the benefit after we receive, at the Annuities Service
Center:
- proof of the Annuitant's death; and
- any required instructions as to method of settlement.
You may elect this benefit ONLY when you apply for the Contract. As long as the
benefit is in effect, you will pay a monthly charge for this benefit as shown in
the Fee Tables.
YOU SHOULD CAREFULLY REVIEW THE TAX CONSIDERATIONS FOR OPTIONAL BENEFIT RIDERS
BEFORE SELECTING THIS OPTIONAL BENEFIT RIDER. FOR A COMPLETE DESCRIPTION OF THE
TERMS AND CONDITIONS OF THIS BENEFIT, YOU SHOULD REFER DIRECTLY TO THE RIDER. WE
WILL PROVIDE YOU WITH A COPY UPON REQUEST. NOT ALL STATES ALLOW THIS BENEFIT.
REVOLUTION ACCESS, REVOLUTION EXTRA, AND REVOLUTION VALUE VARIABLE ANNUITIES
You may have elected a death benefit that differs from the standard death
benefit by purchasing an optional death benefit Rider:
- only if the Rider was available in your state when you applied for the
Contract;
- if you elected the Enhanced Death Benefit Rider, only if each Owner
and each Annuitant was under age 80 at the time you applied for the
Contract; and
- if you elected the Earnings Enhancement Death Benefit Rider, only if
each Owner and each Annuitant was under age 75 at the time you applied
for the Contract.
We may have waived either or both of the last two restrictions for Contracts
purchased prior to the date a Rider was available in your state.
As long as an optional death benefit Rider is in effect, you will pay the
monthly charge shown in the Fee Tables for that benefit. The Rider and its
related charges terminate on:
- the Contract's Maturity Date; or
- upon your surrendering the Contract; or
- a change of ownership, except where a spousal Beneficiary continues
the Rider after an Owner's death (we explain Contract continuation by
a spouse in "Distributions Requirements Following Death of Owner").
C-1
In addition, you may terminate the Enhanced Death Benefit Rider at any time by
providing written notification to us at the Annuities Service Center shown on
the first page of this Prospectus. If you purchase an Earnings Enhancement Death
Benefit Rider, however, you CANNOT request us to terminate the Rider and its
charges.
Enhanced Death Benefit Rider Under this benefit, we will pay the greatest of:
- the standard death benefit;
- the amount of each Purchase Payment you have paid (but not including
any extra credits), accumulated at 5% effective annual interest during
the benefit's measuring period (less any partial withdrawals you have
taken and not including any interest on such amounts after they are
withdrawn); or
- the highest total value of your Contract (adjusted by any market value
adjustment) as of any anniversary of your Contract during the
benefit's measuring period, plus any Purchase Payments you have made
since that anniversary, minus any withdrawals you have taken since
that anniversary.
The benefit's "measuring period" includes only those Contract Anniversaries that
occur (1) before we receive proof of death and (2) before the measuring life
attains age 81. The benefit's "measuring life" is:
- the Owner, if there is only one Owner under your Contract and the
death benefit is payable because the Owner dies before the Maturity
Date;
- the oldest Owner, if there are joint Owners under your Contract and
the death benefit is payable because either Owner dies before the
Maturity Date;
- the Annuitant, if there is only one Annuitant under your Contract and
the death benefit is payable because the Annuitant dies before the
Maturity Date;
- the youngest Annuitant, if there are joint Annuitants under your
Contract and the death benefit is payable because the surviving
Annuitant dies during the Owner(s) lifetime(s) but before the Maturity
Date.
If an Owner is also an Annuitant, we will generally consider that person to be
an "Owner" instead of an "Annuitant" for purposes of determining the benefit's
measuring life.
For a more complete description of the terms and conditions of this benefit, you
should refer directly to the benefit. We will provide you with a copy on
request.
You should carefully review the tax considerations for optional benefits under
"IX. Federal Tax Matters" if you selected this optional benefit.
Earnings Enhancement Death Benefit Rider
(not available for Contracts issued to tax-qualified plans)
Under this benefit, the death benefit may be increased by an earnings
enhancement amount that will vary based on the age of the Owners and Annuitants
when you purchased the benefit. In certain marketing materials, this benefit may
have been referred to as the "Beneficiary Tax Relief" benefit because any
amounts paid under this benefit can be used to cover taxes that may be due on
death benefit proceeds under your Contract. Amounts paid under this benefit,
however, may also be subject to tax and may be greater than or less than the
amount of taxes due on the death benefits.
The Earnings Enhancement amount is determined as follows:
- if all of the Owners and the Annuitant are under age 70 on the date
your benefit is issued, the Earnings Enhancement amount will be 40% of
the difference between the Standard Death Benefit (or Enhanced Death
Benefit, if that benefit is in effect) and your "Net Purchase
Payments," up to a maximum benefit amount of 80% of your "Adjusted Net
Purchase Payments" prior to the date of the decedent's death;
- if any of the Owners or the Annuitant is age 70 or older on the date
your benefit is issued, the Earnings Enhancement amount will be 25% of
the difference between the Standard Death Benefit (or Enhanced Death
Benefit, if that benefit is in effect) and your "Net Purchase
Payments," up to a maximum benefit amount of 50% of your "Adjusted Net
Purchase Payments" prior to the date of the decedent's death; but
- if there are joint Annuitants under your Contract, we will not count
the age of the older Annuitant for either of these purposes unless the
older Annuitant is also an Owner.
C-2
"Net Purchase Payments," for purposes of this benefit, means Purchase Payments
you paid for the Contract, less any withdrawals in excess of earnings from your
Contract (including any surrender charges imposed on these withdrawals). For
this purpose, we consider withdrawals to be taken first from earnings on your
Contract before they are taken from your Purchase Payments. "Adjusted Net
Purchase Payments" means Net Purchase Payments minus any Purchase Payments you
paid in the 12 month period prior to the decedent's death (excluding the initial
Purchase Payments).
For a more complete description of the terms and conditions of this benefit, you
should refer directly to the Rider. We will provide you with a copy on request.
YOU SHOULD CAREFULLY REVIEW THE TAX CONSIDERATIONS FOR OPTIONAL BENEFIT RIDERS
UNDER "IX. FEDERAL TAX MATTERS" IF YOU SELECTED ANY OF THESE OPTIONAL DEATH
BENEFIT RIDERS. THE DEATH BENEFITS UNDER THESE RIDERS WILL DECREASE IF YOU MAKE
PARTIAL WITHDRAWALS UNDER YOUR CONTRACT. THE ENHANCED EARNINGS DEATH BENEFIT
RIDER MAY NOT BE APPROPRIATE FOR YOU IF YOU EXPECT TO WITHDRAW EARNINGS.
C-3
APPENDIX D: Examples of Earnings Enhancement Death Benefit Calculation
(Not applicable to the Declaration or Patriot Variable Annuities)
The following are examples of the optional Earnings Enhancement death benefit.
We have assumed that there are earnings under the Contracts in each case. Actual
investment performance may be greater or lower than the amounts shown.
EXAMPLE 1
Earnings Enhancement death benefit with standard death benefit, no adjustments
for withdrawals or Additional Purchase Payments Assume:
- You elect the Earnings Enhancement death benefit Rider (but not the
enhanced death benefit Rider) when you purchase your Contract,
- At the time of purchase, you and the Annuitant are each under age 70
and you pay an initial Purchase Payment of $100,000,
- You allocate the Purchase Payment to a Variable Investment Option, and
make no transfers of Contract Value to other Investment Options,
- We determine the death benefit before the Maturity Date, in the fourth
year of your Contract on a day when the total value of your Contract
is $180,000.
CALCULATION OF STANDARD DEATH BENEFIT. We compare the total value of your
Contract ($180,000, with no market value adjustment) to the total amount of
Purchase Payments you paid ($100,000, with no adjustment for withdrawals). The
standard death benefit is the higher of the two, or $180,000.
CALCULATION OF EARNINGS ENHANCEMENT AMOUNT. Because you and the Annuitant were
both under age 70 when the Rider was issued, the Earnings Enhancement amount is
40% of the difference between the standard death benefit and your "Net
Premiums," up to a maximum benefit amount equal to 80% of your "Adjusted Net
Premiums."
CALCULATION OF NET PURCHASE PAYMENTS AND ADJUSTED NET PURCHASE PAYMENTS. To
determine "Net Purchase Payments," we reduce the Purchase Payments you paid
($100,000) by the amount of any withdrawals in excess of earnings ($0, with no
adjustment for withdrawal charges). In this example, the Net Purchase Payments
is $100,000. To determine "Adjusted Net Purchase Payments," we reduce the Net
Purchase Payments ($100,000) by any Purchase Payments you made, other than the
initial Purchase Payment, during the 12 months before we calculated the death
benefit ($0). In this example, the "Adjusted Net Purchase Payments" is $100,000.
CALCULATION OF MAXIMUM BENEFIT AMOUNT. The maximum benefit amount under the
Earnings Enhancement death benefit Rider in this example is 80% of the Adjusted
Net Premiums ($100,000), or $80,000.
The Earnings Enhancement amount is 40% of the difference between the standard
death benefit ($180,000) and your Net Premiums ($100,000), up to the maximum
benefit amount. In this example, 40% of the difference is $32,000, which is less
than the maximum benefit amount ($80,000). The Earnings Enhancement amount is
therefore $32,000.
The total Death Benefit in this example is the standard death benefit ($180,000)
plus the Earnings Enhancement amount ($32,000), or $212,000.
D-1
EXAMPLE 2
Earnings Enhancement death benefit with enhanced death benefit, adjusted for
withdrawal and Additional Purchase Payments.
Assume:
- you elect the Earnings Enhancement death benefit Rider and the
enhanced death benefit Rider when you purchase your Contract;
- at the time of purchase, you are over age 70 and you pay an initial
Purchase Payment of $100,000;
- you allocate the Purchase Payments to a Variable Investment Option,
and make no transfers of Contract Value to other Investment Options;
- on the seventh anniversary of your Contract, your total value in the
Contract is $175,000, which is the highest value on any anniversary
date;
- on the day after the seventh anniversary of your Contract, you make a
withdrawal of $80,000;
- on the eighth anniversary of your Contract, the total value of your
Contract is $110,000, and you make an Additional Purchase Payment of
$10,000 at the end of the eighth year of your Contract;
- we determine the death benefit before the Maturity Date in the middle
of the ninth year of your Contract, on a day when the total value of
your Contract is $120,000.
CALCULATION OF ENHANCED DEATH BENEFIT. In this example, the enhanced death
benefit is the highest of an accumulated premium "roll-up" amount, a "highest
anniversary value" amount and the value of your Contract on the date the death
benefit is determined.
CALCULATION OF PREMIUM ROLL-UP. We calculate the amount of each Purchase Payment
you have paid, accumulated at a 5% effective annual rate, minus any withdrawals.
In this example, the accumulated value of your initial Purchase Payment, after
adjustment for the $80,000 withdrawal, is $65,319.75, and the accumulated value
of your second Purchase Payment is $10,246.95. The total amount of the premium
"roll-up" is $75,566.70.
CALCULATION OF HIGHEST ANNIVERSARY VALUE. We determine the highest anniversary
value of your Contract on any anniversary date during the Rider's measuring
period ($175,000), plus any Purchase Payments since that date ($10,000), minus
any withdrawals since that date ($80,000). In this example, the "highest
anniversary value" is $105,000.
The total value of your Contract on the date the death benefit is determined
($120,000, with no market value adjustment) is higher than the premium roll-up
amount ($75,566.70) and higher than the "highest anniversary value" amount
($105,000). The enhanced death benefit is therefore $120,000.
CALCULATION OF EARNINGS ENHANCEMENT AMOUNT. Because you were over age 70 when
the Rider was issued, the Earnings Enhancement amount is 25% of the difference
between the enhanced death benefit and your "Net Premiums," up to a maximum
benefit amount equal to 50% of your "Adjusted Net Premiums."
CALCULATION OF NET PREMIUMS AND ADJUSTED NET PREMIUMS. To determine "Net
Premiums," we reduce the Purchase Payments you paid by the amount of any
withdrawals in excess of earnings (including withdrawal charges). In this
example, you withdrew $80,000 at a time when your earnings were $75,000 and no
withdrawal charges were imposed. The amount withdrawn in excess of earnings is
therefore $5,000. Net Premiums is the amount of Purchase Payments paid
($110,000) less amounts withdrawn in excess of earnings ($5,000), or $105,000.
To determine "Adjusted Net Premiums," we reduce the Net Premiums ($105,000) by
any Purchase Payments you made during the 12 months before we calculated the
death benefit ($10,000). In this example, the "Adjusted Net Premiums" is
$95,000.
CALCULATION OF MAXIMUM BENEFIT AMOUNT. The maximum benefit amount under the
Earnings Enhancement death benefit Rider in this example is 50% of your Adjusted
Net Premiums ($95,000), or $47,500.
The Earnings Enhancement amount is 25% of the difference between the enhanced
death benefit ($120,000) and your Net Premiums ($105,000), up to the maximum
benefit amount. In this example, 25% of the difference is $3,750, which is less
than the maximum benefit amount ($47,500). The Earnings Enhancement amount is
therefore $3,750.
The total Death Benefit in this example is the enhanced death benefit ($120,000)
plus the Earnings Enhancement amount ($3,750), or $123,750.
D-2
APPENDIX E: Qualified Plan Types
For more detailed information about these plan types, you may request a
Statement of Additional Information.
PLAN TYPE
---------
TRADITIONAL IRAS Section 408 of the Code permits eligible individuals to contribute
to an individual retirement program known as an Individual
Retirement Annuity or IRA (sometimes referred to as a traditional
IRA to distinguish it from the Roth IRA discussed below). IRAs are
subject to limits on the amounts that may be contributed and
deducted, the persons who may be eligible and the time when
distributions may commence. Also, distributions from certain other
types of qualified retirement plans may be rolled over on a
tax-deferred basis into an IRA. The Contract may not, however, be
used in connection with an Education IRA under Section 530 of the
Code. In general, unless you have made non-deductible contributions
to your IRA, all amounts paid out from a traditional IRA contract
(in the form of an annuity, a single sum, death benefits or partial
withdrawal), are taxable to the payee as ordinary income.
ROTH IRAS Section 408A of the Code permits eligible individuals to contribute
to a type of IRA known as a Roth IRA. Roth IRAs are generally
subject to the same rules as non-Roth IRAs, but they differ in
certain significant respects. Among the differences are that
contributions to a Roth IRA are not deductible and qualified
distributions from a Roth IRA are excluded from income.
SIMPLE IRA PLANS In general, under Section 408(p) of the Code a small business
employer may establish a SIMPLE IRA retirement plan if the employer
employed no more than 100 employees earning at least $5,000 during
the preceding year. Under a SIMPLE IRA plan both employees and the
employer make deductible contributions. SIMPLE IRAs are subject to
various requirements, including limits on the amounts that may be
contributed, the persons who may be eligible, and the time when
distributions may commence. The requirements for minimum
distributions from a SIMPLE IRA retirement plan are generally the
same as those discussed above for distributions from a traditional
IRA. The rules on taxation of distributions are also similar to
those that apply to a traditional IRA with a few exceptions.
SIMPLIFIED EMPLOYEE Section 408(k) of the Code allows employers to establish simplified
PENSIONS (SEP - IRAS) employee pension plans for their employees, using the employees'
IRAs for such purposes, if certain criteria are met. Under these
plans the employer may, within specified limits, make deductible
contributions on behalf of the employees to IRAs. The requirements
for minimum distributions from a SEP - IRA, and rules on taxation of
distributions from a SEP - IRA, are generally the same as those
discussed above for distributions from a traditional IRA.
SECTION 403(B) QUALIFIED Section 403(b) of the Code permits public school employees and
PLANS OR employees of certain types of tax-exempt organizations to have their
TAX-SHELTERED ANNUITIES employers purchase annuity contracts for them and, subject to
certain limitations, to exclude the Purchase Payments from gross
income for tax purposes. There also are limits on the amount of
incidental benefits that may be provided under a tax-sheltered
annuity. These Contracts are commonly referred to as "tax-sheltered
annuities." We currently are not offering this Contract for use in a
Section 403(b) Qualified Plan except under limited circumstances.
CORPORATE AND SELF- Sections 401(a) and 403(a) of the code permit corporate employers to
EMPLOYED PENSION AND establish various types of tax-deferred retirement plans for
PROFIT-SHARING PLANS (H.R. 10 employees. The Self-Employed Individuals' Tax Retirement Act of
AND KEOGH) 1962, as amended, commonly referred to as "H.R. 10" or "Keogh,"
permits self-employed individuals to establish tax-favored
retirement plans for themselves and their employees. Such retirement
plans may permit the purchase of annuity contracts in order to
provide benefits under the plans, but there are limits on the amount
of incidental benefits that may be provided under pension and profit
sharing plans.
DEFERRED COMPENSATION Section 457 of the Code permits employees of state and local
PLANS OF STATE AND LOCAL governments and tax-exempt organizations to defer a portion of their
GOVERNMENTS AND TAX- compensation without paying current taxes. The employees must be
EXEMPT ORGANIZATIONS participants in an eligible deferred compensation plan. A Section
457 plan must satisfy several conditions, including the requirement
that it must not permit distributions prior to the participant's
severance from employment (except in the case of an unforeseen
emergency). When we make payments under a Section 457 Contract, the
payment is taxed as ordinary income.
E-1
APPENDIX U: Accumulation Unit Value Tables
The following table provides information about Variable Investment Options
available under the Contracts described in this Prospectus. We present this
information in columns that compare the value of various classes of Accumulation
Units for each Variable Investment Option during the periods shown. The table
reflects the current name of the Separate Account (John Hancock Life Insurance
Company (U.S.A.) Separate Account T), not its previous name (John Hancock
Variable Annuity Account JF).
We use Accumulation Units to measure the value of your investment in a
particular Variable Investment Option. Each Accumulation Unit reflects the value
of underlying shares of a particular Portfolio (including dividends and
distributions made by that Portfolio), as well as the charges we deduct on a
daily basis for Separate Account Annual Expenses. (See the Fee Tables section of
the Prospectus for additional information on these charges.)
The table contains information on different classes of Accumulation Units
because we deduct different levels of daily charges. In particular, the table
shows Accumulation Units reflecting the daily charges for:
- Patriot Contracts with Initial Purchase of less that $250,000;
- Patriot Contracts with Initial Purchase of $250,000, or more;
- Declaration Contracts with Initial Purchase of less that $250,000;
- Declaration Contracts with Initial Purchase of $250,000, or more;
- Revolution Access Contracts;
- Revolution Extra Contracts;
- Revolution Value Contracts.
The number of units listed in the Accumulation Unit Value Tables for Revolution
Contracts for the years 2000 and 2001 are listed for the entire Revolution
series (Revolution Access, Revolution Extra, and Revolution Value), rather than
the individual Contracts.
U-1
Revolution, Declaration
JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.) SEPARATE ACCOUNT T
ACCUMULATION UNIT VALUES
REVOLUTION VALUE VARIABLE ANNUITY, REVOLUTION ACCESS VARIABLE ANNUITY,
REVOLUTION EXTRA VARIABLE ANNUITY
AND
DECLARATION VARIABLE ANNUITY AND PATRIOT VARIABLE ANNUITY
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
500 INDEX TRUST B - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 7.37 22.93 22.06 19.32 18.70 -- -- -- -- --
Value at End of Year 7.37 7.37 22.93 22.06 19.32 -- -- -- -- --
Rev Value No. of Units 808,695 964,580 1,237,659 1,647,151 1,911,056 -- -- -- -- --
Rev. Access No. of Units 133,208 150,214 173,190 201,117 236,963 -- -- -- -- --
Rev. Extra No. of Units 239,593 286,531 384,693 524,530 609,115 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- 10.08 -- -- -- -- --
Value at End of Year -- -- -- -- 10.45 -- -- -- -- --
No. of Units -- -- -- -- 4,262 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 7.55 12.18 11.72 10.27 9.93 -- -- -- -- --
Value at End of Year 9.43 7.55 12.18 11.72 10.27 -- -- -- -- --
No. of Units 11,304 12,827 21,214 34,915 39,274 -- -- -- -- --
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year 11.99 19.28 18.50 16.17 15.61 -- -- -- -- --
Value at End of Year 15.00 11.99 19.28 18.50 16.17 -- -- -- -- --
No. of Units 397 400 655 25,069 75,382 -- -- -- -- --
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 14.22 22.93 22.06 19.32 18.70 -- -- -- -- --
Value at End of Year 17.75 14.22 22.93 22.06 19.32 -- -- -- -- --
No. of Units 74,590 80,207 102,600 140,106 197,318 -- -- -- -- --
ACTIVE BOND FUND (MERGED INTO ACTIVE BOND TRUST EFF 4-29-05) - NAV SHARES (units first credited 5-01-2001)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 11.57 11.00 10.39 10.00 --
Value at End of Year -- -- -- -- -- 11.97 11.57 11.00 10.39 --
Rev Value No. of Units -- -- -- -- -- 1,549,579 1,767,167 1,018,456 1,154,989 --
Rev. Access No. of Units -- -- -- -- -- 152,483 172,975 191,092 1,154,989 --
Rev. Extra No. of Units -- -- -- -- -- 508,142 561,305 391,520 1,154,989 --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 14.78 14.02 13.20 10.00 --
Value at End of Year -- -- -- -- -- 15.33 14.78 14.02 13.20 --
No. of Units -- -- -- -- -- 13,113 24,515 24,867 12,777 --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 11.57 11.00 10.39 10.00 --
Value at End of Year -- -- -- -- -- 11.97 11.57 11.00 10.39 --
No. of Units -- -- -- -- -- 55,188 65,067 22,897 22,387 --
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 14.78 14.02 13.20 10.00 --
Value at End of Year -- -- -- -- -- 15.33 14.78 14.02 13.20 --
No. of Units -- -- -- -- -- 31,793 36,530 8,785 9,232 --
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 11.57 11.00 10.39 10.00 --
Value at End of Year -- -- -- -- -- 11.97 11.57 11.00 10.39 --
No. of Units -- -- -- -- -- 534,099 670,444 400,122 341,607 --
U-2
Revolution, Declaration
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
ACTIVE BOND TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 11.37 12.86 12.52 12.13 11.97 -- -- -- -- --
Value at End of Year 14.02 11.37 12.86 12.52 12.13 -- -- -- -- --
Rev Value No. of Units 508,844 651,030 897,422 1,118,514 1,299,356 -- -- -- -- --
Rev. Access No. of Units 89,771 110,460 117,286 126,015 156,946 -- -- -- -- --
Rev. Extra No. of Units 161,489 228,290 265,929 354,955 433,037 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- 15.33 -- -- -- -- --
Value at End of Year -- -- -- -- 15.57 -- -- -- -- --
No. of Units -- -- -- -- 12,777 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 11.37 12.86 12.52 12.13 11.97 -- -- -- -- --
Value at End of Year 14.02 11.37 12.86 12.52 12.13 -- -- -- -- --
No. of Units 15,612 16,226 18,927 24,243 50,914 -- -- -- -- --
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year 14.71 16.60 16.12 15.57 15.33 -- -- -- -- --
Value at End of Year 18.19 14.71 16.60 16.12 15.57 -- -- -- -- --
No. of Units 15,896 7,210 20,258 24,714 35,544 -- -- -- -- --
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 11.37 12.86 12.52 12.13 11.97 -- -- -- -- --
Value at End of Year 14.02 11.37 12.86 12.52 12.13 -- -- -- -- --
No. of Units 152,723 172,100 243,065 282,341 375,146 -- -- -- -- --
AIM V.I. CAPITAL DEVELOPMENT FUND (MERGED INTO MID CAP INDEX TRUST EFF 4-29-05)SERIES II CLASS SHARES (units first credited
5-01-2002)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 9.93 7.45 10.00 -- --
Value at End of Year -- -- -- -- -- 11.31 9.93 7.45 -- --
Rev Value No. of Units -- -- -- -- -- 45,281 37,054 11,177 -- --
Rev. Access No. of Units -- -- -- -- -- 1,080 6,387 2,620 -- --
Rev. Extra No. of Units -- -- -- -- -- 4,632 4,066 -- -- --
AIM V. I. PREMIER EQUITY FUND (SHARES MERGED INTO 500 INDEX TRUST B EFF 4-29-05)SERIES I CLASS SHARES (units first credited
8-10-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 7.29 5.90 8.57 9.92 11.77
Value at End of Year -- -- -- -- -- 7.62 7.29 5.90 8.57 9.92
Rev Value No. of Units -- -- -- -- -- 1,894,411 2,169,567 1,779,003 3,090,645 2,548,369
Rev. Access No. of Units -- -- -- -- -- 227,332 268,348 230,661 3,090,645 2,548,369
Rev. Extra No. of Units -- -- -- -- -- 675,995 791,576 646,051 3,090,645 2,548,369
BLUE CHIP GROWTH TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 5.35 9.43 8.47 7.82 7.41 -- -- -- -- --
Value at End of Year 7.56 5.35 9.43 8.47 7.82 -- -- -- -- --
Rev Value No. of Units 719,504 849,908 1,132,219 1,200,356 1,324,980 -- -- -- -- --
Rev. Access No. of Units 77,527 84,973 103,249 106,105 121,357 -- -- -- -- --
Rev. Extra No. of Units 223,476 246,938 310,455 395,008 445,212 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- 7.52 -- -- -- -- --
Value at End of Year -- -- -- -- 35.40 -- -- -- -- --
No. of Units -- -- -- -- 3,877 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 5.35 9.43 8.47 7.82 7.41 -- -- -- -- --
Value at End of Year 7.56 5.35 9.43 8.47 7.82 -- -- -- -- --
No. of Units 26,574 26,771 38,624 63,374 53,262 -- -- -- -- --
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year 24.41 42.90 38.40 35.40 7.52 -- -- -- -- --
Value at End of Year 34.56 24.41 42.90 38.40 35.40 -- -- -- -- --
No. of Units 6,096 6,096 6,124 9,367 9,370 -- -- -- -- --
U-3
Revolution, Declaration
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 5.35 9.43 8.47 7.82 7.41 -- -- -- -- --
Value at End of Year 7.56 5.35 9.43 8.47 7.82 -- -- -- -- --
No. of Units 55,135 58,618 87,324 104,902 127,019 -- -- -- -- --
BOND INDEX FUND (REPLACED BY BOND INDEX TRUST B EFF 4-29-05) (NOW TOTAL BOND MARKET TRUST B) - NAV SHARES (units first credited
5-03-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 12.57 12.28 11.31 10.63 9.63
Value at End of Year -- -- -- -- -- 12.91 12.57 12.28 11.31 10.63
Rev Value No. of Units -- -- -- -- -- 731,490 911,341 737,019 833,929 327,502
Rev. Access No. of Units -- -- -- -- -- 78,974 105,438 145,149 833,929 327,502
Rev. Extra No. of Units -- -- -- -- -- 176,431 215,193 232,070 833,929 327,502
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 12.74 12.42 11.41 10.66 9.66
Value at End of Year -- -- -- -- -- 13.12 12.74 12.42 11.41 10.66
No. of Units -- -- -- -- -- 9,826 9,826 9,826 9,826 9,826
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 12.58 12.29 11.32 10.64 9.63
Value at End of Year -- -- -- -- -- 12.92 12.58 12.29 11.32 10.64
No. of Units -- -- -- -- -- 7,901 9,232 18,388 14,281 19,106
CAPITAL APPRECIATION TRUST - NAV SHARES (units first credited 4-28-2006)
Contracts with no Optional Benefits
Value at Start of Year 2.61 4.21 3.81 3.71 -- -- -- -- -- --
Value at End of Year 3.67 2.61 4.21 3.81 -- -- -- -- -- --
Rev Value No. of Units 592,281 678,778 883,258 924,111 -- -- -- -- -- --
Rev. Access No. of Units 77,863 87,290 90,304 97,812 -- -- -- -- -- --
Rev. Extra No. of Units 87,769 104,980 139,604 151,570 -- -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year 8.33 13.41 12.12 11.77 -- -- -- -- -- --
Value at End of Year 11.74 8.33 13.41 12.12 -- -- -- -- -- --
No. of Units 2,762 4,168 4,708 4,708 -- -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 2.61 4.21 3.81 3.71 -- -- -- -- -- --
Value at End of Year 3.67 2.61 4.21 3.81 -- -- -- -- -- --
No. of Units 36,270 43,157 50,245 86,214 -- -- -- -- -- --
EARNINGS GROWTH FUND (REPLACED BY LARGE CAP GROWTH TRUST EFF 4-29-05) - NAV SHARES (units first credited 5-03-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 3.65 2.96 4.43 7.11 10.00
Value at End of Year -- -- -- -- -- 3.70 3.65 2.96 4.43 7.11
Rev Value No. of Units -- -- -- -- -- 1,068,977 1,209,120 1,222,455 1,636,323 629,910
Rev. Access No. of Units -- -- -- -- -- 118,540 129,095 154,964 1,636,323 629,910
Rev. Extra No. of Units -- -- -- -- -- 174,391 227,056 239,167 1,636,323 629,910
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 7.19 5.82 8.69 13.92 21.92
Value at End of Year -- -- -- -- -- 7.31 7.19 5.82 8.69 13.92
No. of Units -- -- -- -- -- 7,532 20,004 20,872 14,866 20,511
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 7.10 5.76 8.63 13.85 21.87
Value at End of Year -- -- -- -- -- 7.20 7.10 5.76 8.63 13.85
No. of Units -- -- -- -- -- 78,767 90,017 98,370 112,159 154,934
EQUITY INDEX FUND (REPLACED BY 500 INDEX TRUST B EFF 4-29-05) - NAV SHARES (units first credited 5-03-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 17.10 13.49 17.58 20.22 22.54
Value at End of Year -- -- -- -- -- 18.70 17.10 13.49 17.58 20.22
Rev Value No. of Units -- -- -- -- -- 651,999 728,312 673,856 804,600 507,320
Rev. Access No. of Units -- -- -- -- -- 85,101 85,894 86,077 804,600 507,320
Rev. Extra No. of Units -- -- -- -- -- 171,065 164,996 154,223 804,600 507,320
U-4
Revolution, Declaration
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 9.20 7.23 9.41 10.79 12.00
Value at End of Year -- -- -- -- -- 10.08 9.20 7.23 9.41 10.79
No. of Units -- -- -- -- -- 4,262 75,959 75,959 79,909 79,917
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 9.08 7.16 9.33 10.74 11.97
Value at End of Year -- -- -- -- -- 9.93 9.08 7.16 9.33 10.74
No. of Units -- -- -- -- -- 47,638 51,022 60,758 84,207 115,506
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 14.24 11.20 14.56 10.00 --
Value at End of Year -- -- -- -- -- 15.61 14.24 11.20 14.56 --
No. of Units -- -- -- -- -- 78,336 52,830 59,634 75,420 --
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 17.10 13.49 17.58 10.00 --
Value at End of Year -- -- -- -- -- 18.70 17.10 13.49 17.58 --
No. of Units -- -- -- -- -- 279,282 352,181 366,608 447,352 --
EQUITY-INCOME TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 10.70 16.92 16.57 14.09 13.72 -- -- -- -- --
Value at End of Year 13.29 10.70 16.92 16.57 14.09 -- -- -- -- --
Rev Value No. of Units 740,319 946,430 1,201,392 1,446,739 1,650,936 -- -- -- -- --
Rev. Access No. of Units 119,371 139,325 153,610 164,653 186,140 -- -- -- -- --
Rev. Extra No. of Units 217,757 267,263 371,493 471,158 525,745 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year 17.10 26.96 26.36 22.34 13.93 -- -- -- -- --
Value at End of Year 21.29 17.10 26.96 26.36 22.34 -- -- -- -- --
No. of Units 944 945 947 -- 14,210 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 10.70 16.92 16.57 14.09 13.72 -- -- -- -- --
Value at End of Year 13.29 10.70 16.92 16.57 14.09 -- -- -- -- --
No. of Units 14,007 14,103 19,101 36,627 48,062 -- -- -- -- --
FIDELITY VIP CONTRAFUND (MERGED INTO TOTAL STOCK MARKET INDEX TRUST EFF 4-29-05) - SERVICE CLASS SHARES (units first credited
8-10-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 10.49 8.28 9.25 10.69 11.61
Value at End of Year -- -- -- -- -- 11.95 10.49 8.28 9.25 10.69
Rev Value No. of Units -- -- -- -- -- 1,199,675 1,230,521 1,168,106 1,645,859 1,447,471
Rev. Access No. of Units -- -- -- -- -- 157,444 179,239 202,789 1,645,859 1,447,471
Rev. Extra No. of Units -- -- -- -- -- 371,068 386,807 377,519 1,645,859 1,447,471
FIDELITY VIP GROWTH (MERGED INTO 500 INDEX TRUST B EFF 4-29-05) - SERVICE CLASS SHARES (units first credited 8-10-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 7.76 5.92 8.59 10.57 12.04
Value at End of Year -- -- -- -- -- 7.92 7.76 5.92 8.59 10.57
Rev Value No. of Units -- -- -- -- -- 1,424,488 1,601,890 133,140 2,501,361 1,875,307
Rev. Access No. of Units -- -- -- -- -- 157,843 203,487 198,959 2,501,361 1,875,307
Rev. Extra No. of Units -- -- -- -- -- 400,455 480,716 507,521 2,501,361 1,875,307
FIDELITY VIP OVERSEAS (MERGED INTO INTERNATIONAL EQUITY INDEX TRUST B EFF 4-29-05) - SERVICE CLASS SHARES (units first credited
8-10-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 8.62 6.10 7.73 9.97 12.48
Value at End of Year -- -- -- -- -- 9.66 8.62 6.10 7.73 9.97
Rev Value No. of Units -- -- -- -- -- 470,234 501,964 523,589 960,931 1,107,608
Rev. Access No. of Units -- -- -- -- -- 108,986 126,285 143,079 960,931 1,107,608
Rev. Extra No. of Units -- -- -- -- -- 165,213 170,854 193,599 960,931 1,107,608
FINANCIAL INDUSTRIES FUND (REPLACED BY FINANCIAL SERVICES TRUST EFF 4-29-05) - NAV SHARES (units first credited 4-30-1997)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 14.43 11.60 14.58 17.90 14.25
Value at End of Year -- -- -- -- -- 15.49 14.43 11.60 14.58 17.90
Rev Value No. of Units -- -- -- -- -- 418,976 488,871 542,851 855,100 642,376
Rev. Access No. of Units -- -- -- -- -- 18,431 21,825 49,964 855,100 642,376
Rev. Extra No. of Units -- -- -- -- -- 126,349 132,174 145,392 855,100 642,376
U-5
Revolution, Declaration
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 14.67 11.76 14.75 18.06 14.35
Value at End of Year -- -- -- -- -- 15.79 14.67 11.76 14.75 18.06
No. of Units -- -- -- -- -- 5,074 7,562 10,776 15,026 13,558
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 14.43 11.60 14.58 17.90 14.25
Value at End of Year -- -- -- -- -- 15.49 14.43 11.60 14.58 17.90
No. of Units -- -- -- -- -- 22,357 24,757 29,786 44,296 59,272
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 14.67 11.76 14.74 18.06 14.35
Value at End of Year -- -- -- -- -- 15.79 14.67 11.76 14.74 18.06
No. of Units -- -- -- -- -- 91,290 88,045 95,524 155,926 115,989
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 14.43 11.60 14.58 17.90 14.25
Value at End of Year -- -- -- -- -- 15.49 14.43 11.60 14.58 17.90
No. of Units -- -- -- -- -- 656,027 791,313 946,719 1,210,792 1,113,582
FINANCIAL SERVICES TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 10.07 18.42 20.00 16.44 15.49 -- -- -- -- --
Value at End of Year 14.08 10.07 18.42 20.00 16.44 -- -- -- -- --
Rev Value No. of Units 165,351 177,539 225,906 301,610 367,963 -- -- -- -- --
Rev. Access No. of Units 8,724 7,682 9,704 10,516 12,681 -- -- -- -- --
Rev. Extra No. of Units 29,745 40,298 63,214 86,689 102,683 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- 15.79 -- -- -- -- --
Value at End of Year -- -- -- -- 16.80 -- -- -- -- --
No. of Units -- -- -- -- 4,460 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 10.07 18.42 20.00 16.44 15.49 -- -- -- -- --
Value at End of Year 14.08 10.07 18.42 20.00 16.44 -- -- -- -- --
No. of Units 4,956 5,086 7,948 13,625 19,140 -- -- -- -- --
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- 16.80 15.79 -- -- -- -- --
Value at End of Year -- -- -- 20.49 16.80 -- -- -- -- --
No. of Units -- -- -- 22,512 59,620 -- -- -- -- --
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 10.07 18.42 20.00 16.44 15.49 -- -- -- -- --
Value at End of Year 14.08 10.07 18.42 20.00 16.44 -- -- -- -- --
No. of Units 173,183 236,100 308,095 377,881 502,999 -- -- -- -- --
FUNDAMENTAL GROWTH FUND (MERGED INTO LARGE CAP GROWTH FUND EFF 11-1-04) - NAV SHARES (units first credited 11-15-2001)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- -- 6.79 9.86 14.74 15.39
Value at End of Year -- -- -- -- -- -- 8.84 6.79 9.86 14.74
Rev Value No. of Units -- -- -- -- -- -- 328,022 337,037 589,572 525,081
Rev. Access No. of Units -- -- -- -- -- -- 49,535 66,283 589,572 525,081
Rev. Extra No. of Units -- -- -- -- -- -- 135,376 123,943 589,572 525,081
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- -- 7.20 10.43 10.00 --
Value at End of Year -- -- -- -- -- -- 9.39 7.20 10.43 --
No. of Units -- -- -- -- -- -- 5,248 5,264 8,119 --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- -- 6.79 9.86 10.00 --
Value at End of Year -- -- -- -- -- -- 8.84 6.79 9.86 --
No. of Units -- -- -- -- -- -- 11,404 10,008 24,747 --
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- -- 7.20 10.43 10.00 --
Value at End of Year -- -- -- -- -- -- 9.39 7.20 10.43 --
No. of Units -- -- -- -- -- -- 46,190 33,826 64,187 --
U-6
Revolution, Declaration
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- -- 6.79 9.86 10.00 --
Value at End of Year -- -- -- -- -- -- 8.84 6.79 9.86 --
No. of Units -- -- -- -- -- -- 117,743 114,921 167,698 --
FUNDAMENTAL VALUE FUND (REPLACED BY EQUITY-INCOME TRUST EFF 4-29-05) - NAV SHARES (units first credited 11-15-2001)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 11.12 8.75 10.73 11.68 10.43
Value at End of Year -- -- -- -- -- 12.70 11.12 8.75 10.73 11.68
Rev Value No. of Units -- -- -- -- -- 1,256,245 603,015 569,649 802,605 347,760
Rev. Access No. of Units -- -- -- -- -- 143,234 78,791 85,139 802,605 347,760
Rev. Extra No. of Units -- -- -- -- -- 371,180 210,263 177,846 802,605 347,760
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 9.76 7.66 9.37 10.00 --
Value at End of Year -- -- -- -- -- 11.17 9.76 7.66 9.37 --
No. of Units -- -- -- -- -- -- 50,632 50,632 50,632 --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 11.12 8.75 10.73 10.00 --
Value at End of Year -- -- -- -- -- 12.70 11.12 8.75 10.73 --
No. of Units -- -- -- -- -- 22,289 21,714 23,612 30,710 --
FUNDAMENTAL VALUE FUND B (FORMERLY LARGE CAP VALUE CORE SM) (MERGED INTO FUNDAMENTAL VALUE FUND EFF 11-1-04) - NAV SHARES (units
first credited 8-10-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- -- 8.13 10.07 10.71 10.31
Value at End of Year -- -- -- -- -- -- 10.35 8.13 10.07 10.71
Rev Value No. of Units -- -- -- -- -- -- 816,510 826,588 1,056,790 520,128
Rev. Access No. of Units -- -- -- -- -- -- 71,994 80,764 1,056,790 520,128
Rev. Extra No. of Units -- -- -- -- -- -- 204,107 195,857 1,056,790 520,128
GLOBAL BOND FUND (REPLACED BY GLOBAL BOND TRUST EFF 4-29-05) - NAV SHARES (units first credited 5-03-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 13.85 12.10 10.31 10.60 10.00
Value at End of Year -- -- -- -- -- 15.13 13.85 12.10 10.31 10.60
Rev Value No. of Units -- -- -- -- -- 150,408 180,511 141,303 71,857 --
Rev. Access No. of Units -- -- -- -- -- 31,596 32,488 28,155 71,857 --
Rev. Extra No. of Units -- -- -- -- -- 76,355 87,529 39,131 71,857 --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 13.96 12.20 10.39 10.68 9.65
Value at End of Year -- -- -- -- -- 15.26 13.96 12.20 10.39 10.68
No. of Units -- -- -- -- -- 9,431 9,647 11,396 5,140 8,203
GLOBAL BOND TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 14.73 15.60 14.41 13.86 15.13 -- -- -- -- --
Value at End of Year 16.78 14.73 15.60 14.41 13.86 -- -- -- -- --
Rev Value No. of Units 95,920 129,165 153,973 122,036 137,434 -- -- -- -- --
Rev. Access No. of Units 19,205 18,840 21,525 24,419 26,043 -- -- -- -- --
Rev. Extra No. of Units 35,818 40,352 51,292 54,079 67,446 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 14.73 15.60 14.41 13.86 15.26 -- -- -- -- --
Value at End of Year 16.78 14.73 15.60 14.41 13.86 -- -- -- -- --
No. of Units 517 517 3,653 3,657 5,725 -- -- -- -- --
GROWTH & INCOME FUND (MERGED INTO GROWTH & INCOME TRUST II EFF 4-29-05) (NOW GROWTH & INCOME TRUST) - NAV SHARES (units first
credited 11-15-2001)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 6.95 5.66 7.36 8.82 10.00
Value at End of Year -- -- -- -- -- 7.61 6.95 5.66 7.36 8.82
Rev Value No. of Units -- -- -- -- -- 2,011,770 2,127,364 1,293,111 1,817,947 12,749
Rev. Access No. of Units -- -- -- -- -- 149,584 160,565 126,954 1,817,947 12,749
Rev. Extra No. of Units -- -- -- -- -- 747,950 802,120 416,961 1,817,947 12,749
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 12.30 9.99 12.97 10.00 --
Value at End of Year -- -- -- -- -- 13.52 12.30 9.99 12.97 --
No. of Units -- -- -- -- -- 15,633 16,765 11,472 17,169 --
U-7
Revolution, Declaration
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 6.95 5.66 7.36 10.00 --
Value at End of Year -- -- -- -- -- 7.61 6.95 5.66 7.36 --
No. of Units -- -- -- -- -- 283,703 306,082 182,202 225,112 --
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 12.30 9.99 12.97 10.00 --
Value at End of Year -- -- -- -- -- 13.52 12.30 9.99 12.97 --
No. of Units -- -- -- -- -- 54,413 145,833 26,987 92,665 --
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 6.95 5.66 7.36 10.00 --
Value at End of Year -- -- -- -- -- 7.61 6.95 5.66 7.36 --
No. of Units -- -- -- -- -- 2,038,882 2,463,202 1,034,165 1,326,556 --
GROWTH & INCOME TRUST (MERGED INTO OPTIMIZED ALL CAP TRUST EFF 4-25-08) - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year -- -- 9.12 8.19 7.61 -- -- -- -- --
Value at End of Year -- -- 9.37 9.12 8.19 -- -- -- -- --
Rev Value No. of Units -- -- 1,233,324 1,509,917 1,762,597 -- -- -- -- --
Rev. Access No. of Units -- -- 120,175 132,498 142,242 -- -- -- -- --
Rev. Extra No. of Units -- -- 436,434 522,234 682,260 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- 13.52 -- -- -- -- --
Value at End of Year -- -- -- -- 14.58 -- -- -- -- --
No. of Units -- -- -- -- 14,829 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- 9.12 8.19 7.61 -- -- -- -- --
Value at End of Year -- -- 9.37 9.12 8.19 -- -- -- -- --
No. of Units -- -- 151,847 206,970 254,401 -- -- -- -- --
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- 16.28 14.58 13.52 -- -- -- -- --
Value at End of Year -- -- 16.77 16.28 14.58 -- -- -- -- --
No. of Units -- -- 6,823 36,469 54,549 -- -- -- -- --
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- 9.12 8.19 7.61 -- -- -- -- --
Value at End of Year -- -- 9.37 9.12 8.19 -- -- -- -- --
No. of Units -- -- 818,413 1,071,538 1,515,204 -- -- -- -- --
HEALTH SCIENCES FUND (REPLACED BY HEALTH SCIENCES TRUST EFF 4-29-05) - NAV SHARES (units first credited 5-01-2001)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 10.00 7.69 9.73 10.00 --
Value at End of Year -- -- -- -- -- 10.98 10.00 7.69 9.73 --
Rev Value No. of Units -- -- -- -- -- 127,989 138,303 129,645 100,786 --
Rev. Access No. of Units -- -- -- -- -- 13,508 15,522 15,340 100,786 --
Rev. Extra No. of Units -- -- -- -- -- 65,016 60,627 33,411 100,786 --
HEALTH SCIENCES TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 11.00 15.88 13.65 12.75 10.98 -- -- -- -- --
Value at End of Year 14.32 11.00 15.88 13.65 12.75 -- -- -- -- --
Rev Value No. of Units 59,435 80,893 102,996 123,120 130,066 -- -- -- -- --
Rev. Access No. of Units 1,255 1,468 1,523 1,574 4,983 -- -- -- -- --
Rev. Extra No. of Units 32,739 44,129 55,554 64,344 68,732 -- -- -- -- --
HIGH YIELD BOND FUND (REPLACED BY HIGH YIELD TRUST EFF 4-29-05) - NAV SHARES (units first credited 5-03-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 9.90 8.60 9.12 9.04 10.27
Value at End of Year -- -- -- -- -- 10.57 9.90 8.60 9.12 9.04
Rev Value No. of Units -- -- -- -- -- 551,124 626,689 477,166 644,021 333,028
Rev. Access No. of Units -- -- -- -- -- 89,295 97,589 77,833 644,021 333,028
Rev. Extra No. of Units -- -- -- -- -- 238,160 234,126 149,911 644,021 333,028
U-8
Revolution, Declaration
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 10.10 8.76 9.26 9.16 10.38
Value at End of Year -- -- -- -- -- 10.82 10.10 8.76 9.26 9.16
No. of Units -- -- -- -- -- -- 6,229 2,466 2,470 2,473
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 9.98 8.67 9.19 9.11 10.35
Value at End of Year -- -- -- -- -- 10.66 9.98 8.67 9.19 9.11
No. of Units -- -- -- -- -- 5,093 6,395 11,108 9,657 10,644
HIGH YIELD TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 8.26 11.87 11.82 10.84 10.57 -- -- -- -- --
Value at End of Year 12.61 8.26 11.87 11.82 10.84 -- -- -- -- --
Rev Value No. of Units 204,197 227,866 317,293 410,632 471,887 -- -- -- -- --
Rev. Access No. of Units 47,839 34,468 60,756 71,458 77,829 -- -- -- -- --
Rev. Extra No. of Units 72,858 85,158 116,666 150,806 212,388 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 8.26 11.87 11.82 10.84 10.66 -- -- -- -- --
Value at End of Year 12.61 8.26 11.87 11.82 10.84 -- -- -- -- --
No. of Units 2,285 1,517 3,542 3,881 4,281 -- -- -- -- --
INTERNATIONAL EQUITY INDEX FUND (REPLACED BY INTERNATIONAL EQUITY INDEX TRUST B EFF 4-29-05) - NAV SHARES (units first credited
5-03-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 9.49 6.77 10.00 -- --
Value at End of Year -- -- -- -- -- 11.27 9.49 6.77 -- --
Rev Value No. of Units -- -- -- -- -- 211,686 206,714 9,558 -- --
Rev. Access No. of Units -- -- -- -- -- 34,893 31,853 906 -- --
Rev. Extra No. of Units -- -- -- -- -- 100,560 101,328 4,383 -- --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 9.61 6.84 8.14 10.32 12.62
Value at End of Year -- -- -- -- -- 11.44 9.61 6.84 8.14 10.32
No. of Units -- -- -- -- -- 8,050 8,075 8,099 8,123 8,148
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 9.49 6.77 8.08 10.27 12.59
Value at End of Year -- -- -- -- -- 11.27 9.49 6.77 8.08 10.27
No. of Units -- -- -- -- -- 10,689 10,664 13,070 14,510 19,558
INTERNATIONAL EQUITY INDEX TRUST B - NAV SHARES (units first credited 4-29-2005) Contracts with no Optional Benefits
Value at Start of Year 10.26 18.67 16.33 13.01 11.29 -- -- -- -- --
Value at End of Year 14.06 10.26 18.67 16.33 13.01 -- -- -- -- --
Rev Value No. of Units 360,135 430,124 588,679 670,804 713,779 -- -- -- -- --
Rev. Access No. of Units 96,102 97,211 106,507 116,598 128,613 -- -- -- -- --
Rev. Extra No. of Units 115,464 133,152 194,823 246,859 257,900 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- 11.44 -- -- -- -- --
Value at End of Year -- 10.52 -- -- 13.24 -- -- -- -- --
No. of Units -- -- -- -- 8,026 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 10.26 18.67 16.33 13.01 9.49 -- -- -- -- --
Value at End of Year 14.06 10.26 18.67 16.33 13.01 -- -- -- -- --
No. of Units 7,681 7,712 8,833 9,829 9,943 -- -- -- -- --
JANUS ASPEN GLOBAL TECHNOLOGY (MERGED INTO TOTAL STOCK MARKET INDEX TRUST EFF 4-29-05) SERVICE CLASS SHARES (units first credited
5-01-2003)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 13.67 10.04 -- -- --
Value at End of Year -- -- -- -- -- 13.58 13.67 -- -- --
Rev Value No. of Units -- -- -- -- -- 10,639 18,973 -- -- --
Rev. Access No. of Units -- -- -- -- -- 1,095 1,101 -- -- --
Rev. Extra No. of Units -- -- -- -- -- 4,092 2,704 -- -- --
U-9
Revolution, Declaration
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
JANUS ASPEN WORLDWIDE GROWTH (MERGED INTO INTERNATIONAL EQUITY INDEX TRUST B EFF 4-29-05) SERVICE CLASS SHARES (units first credited
11-01-2000)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 6.19 5.07 6.90 9.04 10.00
Value at End of Year -- -- -- -- -- 6.39 6.19 5.07 6.90 9.04
Rev Value No. of Units -- -- -- -- -- 178,127 214,502 229,005 322,018 128,709
Rev. Access No. of Units -- -- -- -- -- 35,764 47,215 42,016 322,018 128,709
Rev. Extra No. of Units -- -- -- -- -- 52,533 53,367 51,239 322,018 128,709
LARGE CAP GROWTH FUND (REPLACED BY BLUE CHIP GROWTH TRUST EFF 4-29-05) - NAV SHARES (units first credited 3-03-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 7.19 5.79 8.13 10.00 --
Value at End of Year -- -- -- -- -- 7.41 7.19 5.79 8.13 --
Rev Value No. of Units -- -- -- -- -- 1,439,838 540,715 167,749 77,662 --
Rev. Access No. of Units -- -- -- -- -- 146,532 49,259 10,413 77,662 --
Rev. Extra No. of Units -- -- -- -- -- 489,849 128,549 20,683 77,662 --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 7.28 5.85 8.19 10.03 12.34
Value at End of Year -- -- -- -- -- 7.52 7.28 5.85 8.19 10.03
No. of Units -- -- -- -- -- 17,276 12,579 13,586 48,418 49,959
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 7.19 5.79 8.13 9.98 12.31
Value at End of Year -- -- -- -- -- 7.41 7.19 5.79 8.13 9.98
No. of Units -- -- -- -- -- 59,258 50,560 53,908 74,845 86,341
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 6.97 -- -- -- --
Value at End of Year -- -- -- -- -- 7.52 -- -- -- --
No. of Units -- -- -- -- -- 34,293 -- -- -- --
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 6.87 -- -- -- --
Value at End of Year -- -- -- -- -- 7.41 -- -- -- --
No. of Units -- -- -- -- -- 142,526 -- -- -- --
LARGE CAP GROWTH FUND B (FORMERLY LARGE CAP AGGRESSIVE GROWTH FUND) (MERGED INTO LARGE CAP GROWTH FUND EFF 11-1-04) - NAV SHARES
(units first credited 8-10-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- -- 5.48 8.09 9.60 11.97
Value at End of Year -- -- -- -- -- -- 7.13 5.48 8.09 9.60
Rev Value No. of Units -- -- -- -- -- -- 609,843 681,954 1,205,414 1,040,129
Rev. Access No. of Units -- -- -- -- -- -- 45,760 78,966 1,205,414 1,040,129
Rev. Extra No. of Units -- -- -- -- -- -- 294,010 322,673 1,205,414 1,040,129
LARGE CAP GROWTH TRUST (MERGED INTO CAPITAL APPRECIATION TRUST EFF 4-28-2006) - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- 3.70 -- -- -- -- --
Value at End of Year -- -- -- -- 3.71 -- -- -- -- --
Rev Value No. of Units -- -- -- -- 975,667 -- -- -- -- --
Rev. Access No. of Units -- -- -- -- 100,095 -- -- -- -- --
Rev. Extra No. of Units -- -- -- -- 159,332 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- 7.31 -- -- -- -- --
Value at End of Year -- -- -- -- 11.77 -- -- -- -- --
No. of Units -- -- -- -- 4,708 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- 3.70 -- -- -- -- --
Value at End of Year -- -- -- -- 3.71 -- -- -- -- --
No. of Units -- -- -- -- 118,078 -- -- -- -- --
U-10
Revolution, Declaration
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
LARGE CAP VALUE FUND (REPLACED BY EQUITY-INCOME TRUST EFF 4-29-05) - NAV SHARES (units first credited 5-03-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 12.08 9.75 11.38 10.00 --
Value at End of Year -- -- -- -- -- 13.72 12.08 9.75 11.38 --
Rev Value No. of Units -- -- -- -- -- 619,096 601,394 483,868 334,667 --
Rev. Access No. of Units -- -- -- -- -- 94,674 91,386 50,708 334,667 --
Rev. Extra No. of Units -- -- -- -- -- 209,987 155,358 97,450 334,667 --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 12.23 9.84 11.46 11.44 10.22
Value at End of Year -- -- -- -- -- 13.93 12.23 9.84 11.46 11.44
No. of Units -- -- -- -- -- 22,174 54,141 54,818 47,784 47,784
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 12.08 9.75 11.38 11.38 10.20
Value at End of Year -- -- -- -- -- 13.72 12.08 9.75 11.38 11.38
No. of Units -- -- -- -- -- 35,552 40,103 45,084 69,954 80,984
LIFESTYLE BALANCED TRUST - NAV SHARES (units first credited 11-07-2008)
Contracts with no Optional Benefits
Value at Start of Year 8.40 8.49 -- -- -- -- -- -- -- --
Value at End of Year 10.86 8.40 -- -- -- -- -- -- -- --
Rev Value No. of Units 466,251 579,379 -- -- -- -- -- -- -- --
Rev. Access No. of Units 25,481 21,983 -- -- -- -- -- -- -- --
Rev. Extra No. of Units 103,362 -- -- -- -- -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- 9.54 -- -- -- -- -- -- -- --
Value at End of Year -- -- -- -- -- -- -- -- -- --
No. of Units -- -- -- -- -- -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 9.21 9.31 -- -- -- -- -- -- -- --
Value at End of Year 11.91 9.21 -- -- -- -- -- -- -- --
No. of Units 2,888 4,005 -- -- -- -- -- -- -- --
MANAGED FUND (MERGED INTO MANAGED TRUST EFF 4-29-05) - NAV SHARES (units first credited 5-03-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 9.41 8.00 9.34 9.73 10.00
Value at End of Year -- -- -- -- -- 10.05 9.41 8.00 9.34 9.73
Rev Value No. of Units -- -- -- -- -- 1,168,263 1,277,365 1,159,355 868,814 89
Rev. Access No. of Units -- -- -- -- -- 65,821 73,227 80,473 868,814 89
Rev. Extra No. of Units -- -- -- -- -- 166,993 185,973 154,757 868,814 89
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 10.31 8.77 10.24 10.67 10.80
Value at End of Year -- -- -- -- -- 11.02 10.31 8.77 10.24 10.67
No. of Units -- -- -- -- -- 16,131 17,668 19,124 20,975 26,890
MANAGED TRUST (MERGED INTO LIFESTYLE BALANCED TRUST EFF 11-7-08) - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year -- -- 10.82 10.19 10.05 -- -- -- -- --
Value at End of Year -- -- 10.90 10.82 10.19 -- -- -- -- --
Rev Value No. of Units -- -- 735,180 837,115 1,037,978 -- -- -- -- --
Rev. Access No. of Units -- -- 27,832 31,340 61,630 -- -- -- -- --
Rev. Extra No. of Units -- -- 139,748 153,056 163,956 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- 11.86 11.17 11.02 -- -- -- -- --
Value at End of Year -- -- 11.94 11.86 11.17 -- -- -- -- --
No. of Units -- -- 6,463 10,572 14,098 -- -- -- -- --
MFS INVESTORS GROWTH STOCK (MERGED INTO 500 INDEX TRUST B EFF 4-29-05) - INITIAL CLASS SHARES (units first credited 8-10-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 7.46 6.14 8.58 11.45 12.36
Value at End of Year -- -- -- -- -- 8.05 7.46 6.14 8.58 11.45
Rev Value No. of Units -- -- -- -- -- 641,118 715,159 723,032 1,280,675 971,077
Rev. Access No. of Units -- -- -- -- -- 121,589 132,909 146,522 1,280,675 971,077
Rev. Extra No. of Units -- -- -- -- -- 253,985 281,892 331,636 1,280,675 971,077
U-11
Revolution, Declaration
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
MFS NEW DISCOVERY (MERGED INTO SMALL CAP INDEX TRUST EFF 4-29-05) - INITIAL CLASS SHARES (units first credited 5-01-2001)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 12.35 9.35 13.85 14.77 15.26
Value at End of Year -- -- -- -- -- 12.99 12.35 9.35 13.85 14.77
Rev Value No. of Units -- -- -- -- -- 225,250 256,805 277,963 533,377 431
Rev. Access No. of Units -- -- -- -- -- 57,556 76,297 83,268 533,377 431,090
Rev. Extra No. of Units -- -- -- -- -- 103,634 117,145 144,140 533,377 431,090
MFS RESEARCH FUND (MERGED INTO TOTAL STOCK MARKET INDEX TRUST EFF 4-29-05) - INITIAL CLASS SHARES (units first credited 8-10-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 7.95 6.46 8.67 11.14 11.86
Value at End of Year -- -- -- -- -- 9.10 7.95 6.46 8.67 11.14
Rev Value No. of Units -- -- -- -- -- 517,686 578,045 621,468 970,571 672,010
Rev. Access No. of Units -- -- -- -- -- 38,062 49,422 68,797 970,571 672,010
Rev. Extra No. of Units -- -- -- -- -- 160,507 183,241 177,806 970,571 672,010
MID CAP GROWTH FUND (REPLACED BY MID CAP STOCK TRUST EFF 4-29-05) - NAV SHARES (units first credited 8-10-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 23.49 16.19 20.79 20.47 18.98
Value at End of Year -- -- -- -- -- 25.90 23.49 16.19 20.79 20.47
Rev Value No. of Units -- -- -- -- -- 210,494 228,854 200,020 242,085 136,439
Rev. Access No. of Units -- -- -- -- -- 28,188 29,359 29,475 242,085 136,439
Rev. Extra No. of Units -- -- -- -- -- 65,986 67,961 57,788 242,085 136,439
MID CAP INDEX TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 8.79 13.99 13.17 12.15 11.31 -- -- -- -- --
Value at End of Year 11.87 8.79 13.99 13.17 12.15 -- -- -- -- --
Rev Value No. of Units 26,515 34,418 43,736 56,057 52,742 -- -- -- -- --
Rev. Access No. of Units 4,330 4,933 7,744 10,746 11,718 -- -- -- -- --
Rev. Extra No. of Units 9,480 9,935 10,108 6,412 6,834 -- -- -- -- --
MID CAP STOCK TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 22.94 41.30 33.84 30.14 25.90 -- -- -- -- --
Value at End of Year 23.89 22.94 41.30 33.84 30.14 -- -- -- -- --
Rev Value No. of Units 96,492 127,520 161,299 181,786 207,932 -- -- -- -- --
Rev. Access No. of Units 16,484 18,794 21,306 24,574 25,048 -- -- -- -- --
Rev. Extra No. of Units 23,543 29,692 46,933 60,077 63,351 -- -- -- -- --
MID CAP VALUE B FUND (FORMERLY SMALL MIDCAP CORE FUND) (MERGED INTO MID VALUE TRUST EFF 4-29-05) - NAV SHARES (units first credited
5-03-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 15.68 10.94 13.06 13.16 12.73
Value at End of Year -- -- -- -- -- 18.39 15.68 10.94 13.06 13.16
Rev Value No. of Units -- -- -- -- -- 293,358 231,918 215,620 220,092 114,891
Rev. Access No. of Units -- -- -- -- -- 54,371 39,919 41,956 220,092 114,891
Rev. Extra No. of Units -- -- -- -- -- 128,593 70,945 67,848 220,092 114,891
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 14.91 10.38 12.36 12.42 11.99
Value at End of Year -- -- -- -- -- 17.53 14.91 10.38 12.36 12.42
No. of Units -- -- -- -- -- 9,924 4,305 5,358 6,506 6,516
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 14.73 10.27 12.27 12.36 11.96
Value at End of Year -- -- -- -- -- 17.27 14.73 10.27 12.27 12.36
No. of Units -- -- -- -- -- 16,112 16,311 15,084 19,421 16,718
MID CAP VALUE FUND (MERGED INTO MID CAP VALUE B FUND EFF 11-1-04) - NAV SHARES (units first credited 5-01-2003)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- -- 10.00 -- -- --
Value at End of Year -- -- -- -- -- -- 13.56 -- -- --
Rev Value No. of Units -- -- -- -- -- -- 27,470 -- -- --
Rev. Access No. of Units -- -- -- -- -- -- 8,029 -- -- --
Rev. Extra No. of Units -- -- -- -- -- -- 32,051 -- -- --
U-12
Revolution, Declaration
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
MID VALUE TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 14.85 23.01 23.18 19.50 18.39 -- -- -- -- --
Value at End of Year 21.45 14.85 23.01 23.18 19.50 -- -- -- -- --
Rev Value No. of Units 106,217 142,852 198,422 253,569 300,424 -- -- -- -- --
Rev. Access No. of Units 32,840 33,304 35,077 37,722 39,761 -- -- -- -- --
Rev. Extra No. of Units 37,743 52,219 71,890 101,242 115,752 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- 17.53 -- -- -- -- --
Value at End of Year -- 14.30 -- -- 18.64 -- -- -- -- --
No. of Units -- -- -- -- 9,229 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 13.94 21.61 21.77 18.32 17.27 -- -- -- -- --
Value at End of Year 20.14 13.94 21.61 21.77 18.32 -- -- -- -- --
No. of Units 3,811 2,541 4,893 7,555 12,517 -- -- -- -- --
MONEY MARKET FUND (REPLACED BY MONEY MARKET TRUST B EFF 4-29-05) - NAV SHARES (units first credited 5-01-2001)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 10.12 10.15 10.12 10.00 --
Value at End of Year -- -- -- -- -- 10.10 10.12 10.15 10.12 --
Rev Value No. of Units -- -- -- -- -- 1,589,131 2,054,260 2,479,251 4,289,180 --
Rev. Access No. of Units -- -- -- -- -- 333,841 346,239 1,018,815 4,289,180 --
Rev. Extra No. of Units -- -- -- -- -- 549,370 837,553 1,371,649 4,289,180 --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 12.16 12.17 12.11 10.00 --
Value at End of Year -- -- -- -- -- 12.17 12.16 12.17 12.11 --
No. of Units -- -- -- -- -- 65,316 83,691 86,772 92,991 --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 10.12 10.15 10.12 10.00 --
Value at End of Year -- -- -- -- -- 10.10 10.12 10.15 10.12 --
No. of Units -- -- -- -- -- 63,446 62,638 67,782 53,661 --
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 12.16 12.17 12.11 10.00 --
Value at End of Year -- -- -- -- -- 12.17 12.16 12.17 12.11 --
No. of Units -- -- -- -- -- 17,913 23,367 28,641 20,225 --
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 10.12 10.15 10.12 10.00 --
Value at End of Year -- -- -- -- -- 10.10 10.12 10.15 10.12 --
No. of Units -- -- -- -- -- 288,851 412,229 552,435 457,386 --
MONEY MARKET TRUST B - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 11.09 11.00 10.62 10.27 10.10 -- -- -- -- --
Value at End of Year 11.01 11.09 11.00 10.62 10.27 -- -- -- -- --
Rev Value No. of Units 996,976 1,415,112 1,196,751 1,222,919 1,263,530 -- -- -- -- --
Rev. Access No. of Units 211,288 245,234 247,288 217,207 246,064 -- -- -- -- --
Rev. Extra No. of Units 430,550 523,249 584,561 545,460 469,050 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year 13.49 13.35 12.86 12.40 12.17 -- -- -- -- --
Value at End of Year 13.42 13.49 13.35 12.86 12.40 -- -- -- -- --
No. of Units 4,935 4,781 5,458 7,794 63,596 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 11.09 11.00 10.62 10.27 10.10 -- -- -- -- --
Value at End of Year 11.01 11.09 11.00 10.62 10.27 -- -- -- -- --
No. of Units 34,314 51,279 61,001 60,716 53,013 -- -- -- -- --
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year 13.49 13.35 12.86 12.40 12.17 -- -- -- -- --
Value at End of Year 13.42 13.49 13.35 12.86 12.40 -- -- -- -- --
No. of Units 189 29,089 32,708 10,752 13,773 -- -- -- -- --
U-13
Revolution, Declaration
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 11.09 11.00 10.62 10.27 10.10 -- -- -- -- --
Value at End of Year 11.01 11.09 11.00 10.62 10.27 -- -- -- -- --
No. of Units 71,235 113,177 122,938 189,082 213,156 -- -- -- -- --
OPTIMIZED ALL CAP TRUST - NAV SHARES (units first credited 4-25-2008)
Contracts with no Optional Benefits
Value at Start of Year 5.11 8.56 -- -- -- -- -- -- -- --
Value at End of Year 6.48 5.11 -- -- -- -- -- -- -- --
Rev Value No. of Units 737,377 914,124 -- -- -- -- -- -- -- --
Rev. Access No. of Units 78,073 107,884 -- -- -- -- -- -- -- --
Rev. Extra No. of Units 282,711 351,659 -- -- -- -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 5.11 8.56 -- -- -- -- -- -- -- --
Value at End of Year 6.48 5.11 -- -- -- -- -- -- -- --
No. of Units 82,225 100,794 -- -- -- -- -- -- -- --
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 5.11 8.56 -- -- -- -- -- -- -- --
Value at End of Year 6.48 5.11 -- -- -- -- -- -- -- --
No. of Units 504,020 567,826 -- -- -- -- -- -- -- --
OVERSEAS EQUITY B FUND (MERGED INTO OVERSEAS EQUITY TRUST EFF 4-29-05) - NAV SHARES (units first credited 11-15-2001)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 8.79 6.72 8.33 10.00 --
Value at End of Year -- -- -- -- -- 9.64 8.79 6.72 8.33 --
Rev Value No. of Units -- -- -- -- -- 694,057 301,848 190,914 20,457 --
Rev. Access No. of Units -- -- -- -- -- 102,357 16,942 18,535 20,457 --
Rev. Extra No. of Units -- -- -- -- -- 262,113 137,661 75,514 20,457 --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 8.90 6.79 8.39 10.72 12.94
Value at End of Year -- -- -- -- -- 9.78 8.90 6.79 8.39 10.72
No. of Units -- -- -- -- -- 5,820 4,791 6,084 7,494 7,506
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 8.79 6.72 8.33 10.66 12.91
Value at End of Year -- -- -- -- -- 9.64 8.79 6.72 8.33 10.66
No. of Units -- -- -- -- -- 43,870 38,739 42,177 48,242 50,459
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 8.90 6.79 10.00 -- --
Value at End of Year -- -- -- -- -- 9.78 8.90 6.79 -- --
No. of Units -- -- -- -- -- 9,076 7,752 7,963 -- --
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 8.79 6.72 10.00 -- --
Value at End of Year -- -- -- -- -- 9.64 8.79 6.72 -- --
No. of Units -- -- -- -- -- 95,289 102,807 103,370 -- --
OVERSEAS EQUITY C FUND (FORMERLY EMERGING MARKETS EQUITY FUND) (MERGED INTO OVERSEAS EQUITY B EFF 11-1-04) - NAV SHARES (units first
credited 5-03-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- -- 9.07 9.85 10.00 --
Value at End of Year -- -- -- -- -- -- 14.06 9.07 9.85 --
Rev Value No. of Units -- -- -- -- -- -- 33,986 17,395 7,941 --
Rev. Access No. of Units -- -- -- -- -- -- 4,792 2,150 7,941 --
Rev. Extra No. of Units -- -- -- -- -- -- 20,573 7,320 7,941 --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- -- 9.07 9.85 10.35 17.48
Value at End of Year -- -- -- -- -- -- 14.06 9.07 9.85 10.35
No. of Units -- -- -- -- -- -- 6,003 8,809 7,313 7,636
U-14
Revolution, Declaration
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
OVERSEAS EQUITY FUND (MERGED INTO OVERSEAS EQUITY B FUND EFF 11-01-2004) - NAV SHARES (units first credited 8-10-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- -- 9.96 10.76 11.65 12.98
Value at End of Year -- -- -- -- -- -- 13.75 9.96 10.76 11.65
Rev Value No. of Units -- -- -- -- -- -- 201,570 174,540 128,318 63,735
Rev. Access No. of Units -- -- -- -- -- -- 35,964 24,431 128,318 63,735
Rev. Extra No. of Units -- -- -- -- -- -- 41,367 28,672 128,318 63,735
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- -- 7.79 8.42 9.12 10.16
Value at End of Year -- -- -- -- -- -- 10.76 7.79 8.42 9.12
No. of Units -- -- -- -- -- -- 6,486 4,448 4,508 5,357
OVERSEAS EQUITY TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 8.48 14.81 13.33 11.27 9.64 -- -- -- -- --
Value at End of Year 10.95 8.48 14.81 13.33 11.27 -- -- -- -- --
Rev Value No. of Units 306,223 361,051 518,546 583,528 613,845 -- -- -- -- --
Rev. Access No. of Units 41,208 49,501 55,768 60,848 82,171 -- -- -- -- --
Rev. Extra No. of Units 122,581 145,618 196,646 215,947 217,607 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- 9.78 -- -- -- -- --
Value at End of Year -- 8.69 -- -- 11.47 -- -- -- -- --
No. of Units -- -- -- -- 4,986 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 8.48 14.81 13.33 11.27 9.64 -- -- -- -- --
Value at End of Year 10.95 8.48 14.81 13.33 11.27 -- -- -- -- --
No. of Units 9,970 10,062 15,425 25,085 36,329 -- -- -- -- --
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- 11.47 9.78 -- -- -- -- --
Value at End of Year -- 8.69 -- 13.60 11.47 -- -- -- -- --
No. of Units -- -- -- 2,952 12,021 -- -- -- -- --
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 8.48 14.81 13.33 11.27 9.64 -- -- -- -- --
Value at End of Year 10.95 8.48 14.81 13.33 11.27 -- -- -- -- --
No. of Units 43,619 49,398 58,092 73,639 80,279 -- -- -- -- --
REAL ESTATE EQUITY FUND (REPLACED BY REAL ESTATE SECURITIES TRUST EFF 4-29-05) - NAV SHARES (units first credited 5-03-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 15.47 11.44 11.43 10.95 10.00
Value at End of Year -- -- -- -- -- 20.85 15.47 11.44 11.43 10.95
Rev Value No. of Units -- -- -- -- -- 253,425 267,781 217,276 138,332 1,766
Rev. Access No. of Units -- -- -- -- -- 31,913 48,314 48,847 138,332 1,766
Rev. Extra No. of Units -- -- -- -- -- 88,926 86,358 68,106 138,332 1,766
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 17.95 13.24 13.20 12.61 9.63
Value at End of Year -- -- -- -- -- 24.26 17.95 13.24 13.20 12.61
No. of Units -- -- -- -- -- 10,542 11,719 11,722 11,726 11,730
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 17.72 13.11 13.10 12.54 9.60
Value at End of Year -- -- -- -- -- 23.89 17.72 13.11 13.10 12.54
No. of Units -- -- -- -- -- 6,087 6,937 3,182 2,869 2,599
REAL ESTATE SECURITIES TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 15.75 26.31 31.55 23.24 20.85 -- -- -- -- --
Value at End of Year 20.26 15.75 26.31 31.55 23.12 -- -- -- -- --
Rev Value No. of Units 62,684 109,404 147,035 210,402 235,518 -- -- -- -- --
Rev. Access No. of Units 14,809 20,191 19,335 22,181 25,551 -- -- -- -- --
Rev. Extra No. of Units 37,132 41,180 54,623 63,742 72,842 -- -- -- -- --
U-15
Revolution, Declaration
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year 39.23 65.38 78.20 57.17 24.26 -- -- -- -- --
Value at End of Year 50.59 39.23 65.38 78.20 57.17 -- -- -- -- --
No. of Units 59 59 59 -- 4,971 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 15.75 26.31 31.55 23.12 23.89 -- -- -- -- --
Value at End of Year 20.26 15.75 26.31 31.55 23.12 -- -- -- -- --
No. of Units 4,546 4,546 5,465 7,545 9,394 -- -- -- -- --
SHORT-TERM BOND FUND (MERGED INTO SHORT-TERM BOND TRUST EFF 4-29-05) - NAV SHARES (units first credited 5-03-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 15.04 14.82 14.20 13.30 12.48
Value at End of Year -- -- -- -- -- 15.07 15.04 14.82 14.20 13.30
Rev Value No. of Units -- -- -- -- -- 765,939 884,537 621,051 440,240 126,421
Rev. Access No. of Units -- -- -- -- -- 98,324 118,364 132,895 440,240 126,421
Rev. Extra No. of Units -- -- -- -- -- 162,310 185,025 158,441 440,240 126,421
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 12.41 12.20 11.66 10.89 10.19
Value at End of Year -- -- -- -- -- 12.46 12.41 12.20 11.66 10.89
No. of Units -- -- -- -- -- -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 12.26 12.08 11.57 10.84 10.17
Value at End of Year -- -- -- -- -- 12.28 12.26 12.08 11.57 10.84
No. of Units -- -- -- -- -- 7,734 7,829 5,826 6,019 6,207
SHORT-TERM BOND TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 12.82 16.01 15.70 15.20 15.07 -- -- -- -- --
Value at End of Year 15.10 12.82 16.01 15.70 15.20 -- -- -- -- --
Rev Value No. of Units 277,348 290,944 364,019 513,093 617,842 -- -- -- -- --
Rev. Access No. of Units 41,608 45,656 62,900 67,792 79,284 -- -- -- -- --
Rev. Extra No. of Units 82,765 94,448 127,046 140,163 141,094 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- -- -- -- -- --
Value at End of Year -- 10.71 -- -- -- -- -- -- -- --
No. of Units -- -- -- -- -- -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 10.45 13.05 12.79 12.39 12.28 -- -- -- -- --
Value at End of Year 12.30 10.45 13.05 12.79 12.39 -- -- -- -- --
No. of Units 829 1,048 11,142 5,002 7,197 -- -- -- -- --
SMALL CAP EMERGING GROWTH FUND (MERGED INTO SMALL CAP GROWTH TRUST EFF 4-29-05) - NAV SHARES (units first credited 11-15-2001)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 8.23 5.60 7.90 8.30 10.00
Value at End of Year -- -- -- -- -- 8.90 8.23 5.60 7.90 8.30
Rev Value No. of Units -- -- -- -- -- 692,587 116,428 110,281 79,406 535
Rev. Access No. of Units -- -- -- -- -- 66,206 12,351 8,332 79,406 535
Rev. Extra No. of Units -- -- -- -- -- 200,297 28,761 30,007 79,406 535
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 8.62 5.85 8.23 8.64 9.58
Value at End of Year -- -- -- -- -- 9.34 8.62 5.85 8.23 8.64
No. of Units -- -- -- -- -- 4,203 7,749 8,574 -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 8.52 5.79 8.17 8.60 9.56
Value at End of Year -- -- -- -- -- 9.21 8.52 5.79 8.17 8.60
No. of Units -- -- -- -- -- 48,346 12,101 14,125 12,245 16,236
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- 8.52 -- -- -- --
Value at End of Year -- -- -- -- -- 9.34 -- -- -- --
No. of Units -- -- -- -- -- 23,421 -- -- -- --
U-16
Revolution, Declaration
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- 8.40 -- -- -- --
Value at End of Year -- -- -- -- -- 9.21 -- -- -- --
No. of Units -- -- -- -- -- 316,019 -- -- -- --
SMALL CAP GROWTH FUND (MERGED INTO SMALL CAP EMERGING GROWTH FUND EFF 11-01-04) - NAV SHARES (units first credited 11-15-2001)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- -- 9.81 14.19 16.44 21.19
Value at End of Year -- -- -- -- -- -- 12.39 9.81 14.19 16.44
Rev Value No. of Units -- -- -- -- -- -- 428,036 448,285 715,728 608,753
Rev. Access No. of Units -- -- -- -- -- -- 41,073 45,628 715,728 608,753
Rev. Extra No. of Units -- -- -- -- -- -- 143,040 134,266 715,728 608,753
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- -- 11.49 16.57 10.00 --
Value at End of Year -- -- -- -- -- -- 14.55 11.49 16.57 --
No. of Units -- -- -- -- -- -- 2,478 2,478 2,702 --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- -- 9.81 14.19 10.00 --
Value at End of Year -- -- -- -- -- -- 12.39 9.81 14.19 --
No. of Units -- -- -- -- -- -- 29,375 31,651 35,009 --
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- -- -- 11.49 16.57 10.00 --
Value at End of Year -- -- -- -- -- -- 14.55 11.49 16.57 --
No. of Units -- -- -- -- -- -- 24,095 29,369 50,072 --
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year -- -- -- -- -- -- 9.81 14.19 10.00 --
Value at End of Year -- -- -- -- -- -- 12.39 9.81 14.19 --
No. of Units -- -- -- -- -- -- 250,519 270,532 334,521 --
SMALL CAP GROWTH TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 7.77 13.01 11.56 10.31 8.90 -- -- -- -- --
Value at End of Year 10.31 7.77 13.01 11.56 10.31 -- -- -- -- --
Rev Value No. of Units 311,915 347,109 452,303 561,876 650,669 -- -- -- -- --
Rev. Access No. of Units 36,629 38,785 42,586 51,201 51,319 -- -- -- -- --
Rev. Extra No. of Units 77,922 94,270 129,808 170,356 182,932 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year 8.24 13.76 12.19 10.85 9.34 -- -- -- -- --
Value at End of Year 10.96 8.24 13.76 12.19 10.85 -- -- -- -- --
No. of Units 2,465 3,721 4,203 4,203 4,203 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 8.03 13.46 11.95 10.67 9.21 -- -- -- -- --
Value at End of Year 10.67 8.03 13.46 11.95 10.67 -- -- -- -- --
No. of Units 12,153 12,349 16,165 18,525 42,275 -- -- -- -- --
Declaration Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- 13.76 12.19 10.85 9.34 -- -- -- -- --
Value at End of Year -- 8.24 13.76 12.19 10.85 -- -- -- -- --
No. of Units -- 2,052 2,052 10,518 25,657 -- -- -- -- --
Declaration Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 8.03 13.46 11.95 10.67 9.21 -- -- -- -- --
Value at End of Year 10.67 8.03 13.46 11.95 10.67 -- -- -- -- --
No. of Units 99,121 104,644 141,109 183,334 268,773 -- -- -- -- --
SMALL CAP INDEX TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 9.19 14.03 14.51 12.49 12.99 -- -- -- -- --
Value at End of Year 11.49 9.19 14.03 14.51 12.49 -- -- -- -- --
Rev Value No. of Units 97,141 130,164 152,792 193,514 214,291 -- -- -- -- --
Rev. Access No. of Units 35,350 42,141 45,838 52,121 53,815 -- -- -- -- --
Rev. Extra No. of Units 28,944 41,777 67,072 88,093 95,089 -- -- -- -- --
U-17
Revolution, Declaration
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
SMALL CAP VALUE FUND (MERGED INTO SMALL CAP VALUE TRUST EFF 4-29-05) - NAV SHARES (units first credited 8-10-1999)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 20.54 15.07 16.31 13.87 10.46
Value at End of Year -- -- -- -- -- 25.43 20.54 15.07 16.31 13.87
Rev Value No. of Units -- -- -- -- -- 444,257 467,842 467,201 546,648 241,338
Rev. Access No. of Units -- -- -- -- -- 63,114 79,351 81,318 546,648 241,338
Rev. Extra No. of Units -- -- -- -- -- 123,938 137,936 128,046 546,648 241,338
SMALL CAP VALUE TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 22.64 31.01 32.34 27.44 25.43 -- -- -- -- --
Value at End of Year 28.79 22.64 31.01 32.34 27.44 -- -- -- -- --
Rev Value No. of Units 142,150 179,170 248,004 333,449 377,974 -- -- -- -- --
Rev. Access No. of Units 33,253 38,734 43,470 48,214 60,124 -- -- -- -- --
Rev. Extra No. of Units 39,230 54,200 75,774 99,137 112,417 -- -- -- -- --
TOTAL BOND MARKET TRUST B (FORMERLY BOND INDEX TRUST B) - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 14.84 14.20 13.42 13.06 12.91 -- -- -- -- --
Value at End of Year 15.57 14.84 14.20 13.42 13.06 -- -- -- -- --
Rev Value No. of Units 231,983 286,085 392,704 519,385 618,333 -- -- -- -- --
Rev. Access No. of Units 34,899 38,594 38,237 43,712 59,493 -- -- -- -- --
Rev. Extra No. of Units 80,849 115,535 131,724 150,735 168,737 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments greater than $250,000
Value at Start of Year -- -- -- -- 13.12 -- -- -- -- --
Value at End of Year -- 15.22 -- -- 13.30 -- -- -- -- --
No. of Units -- -- -- -- 9,826 -- -- -- -- --
Patriot Contracts with no Optional Benefits with initial premium payments less than $250,000
Value at Start of Year 14.85 14.21 13.43 13.07 12.92 -- -- -- -- --
Value at End of Year 15.59 14.85 14.21 13.43 13.07 -- -- -- -- --
No. of Units 2,522 8,892 5,318 5,432 7,696 -- -- -- -- --
TOTAL RETURN BOND FUND (REPLACED BY TOTAL RETURN TRUST EFF 4-29-05) - NAV SHARES (units first credited 5-01-2003)
Contracts with no Optional Benefits
Value at Start of Year -- -- -- -- -- 10.11 10.00 -- -- --
Value at End of Year -- -- -- -- -- 10.46 10.11 -- -- --
Rev Value No. of Units -- -- -- -- -- 101,935 85,139 -- -- --
Rev. Access No. of Units -- -- -- -- -- 9,789 10,515 -- -- --
Rev. Extra No. of Units -- -- -- -- -- 44,923 61,613 -- -- --
TOTAL RETURN TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 11.84 11.67 10.88 10.63 10.46 -- -- -- -- --
Value at End of Year 13.30 11.84 11.67 10.88 10.63 -- -- -- -- --
Rev Value No. of Units 198,366 242,785 185,403 158,257 154,807 -- -- -- -- --
Rev. Access No. of Units 29,906 27,102 11,694 14,272 14,021 -- -- -- -- --
Rev. Extra No. of Units 52,493 58,155 90,593 87,943 74,581 -- -- -- -- --
TOTAL STOCK MARKET INDEX TRUST - NAV SHARES (units first credited 4-29-2005)
Contracts with no Optional Benefits
Value at Start of Year 9.35 15.07 14.51 12.74 12.50 -- -- -- -- --
Value at End of Year 11.91 9.35 15.07 14.51 12.74 -- -- -- -- --
Rev Value No. of Units 498,006 647,535 933,262 1,117,167 1,374,019 -- -- -- -- --
Rev. Access No. of Units 104,036 114,803 120,127 130,048 154,546 -- -- -- -- --
Rev. Extra No. of Units 167,529 209,661 275,782 405,193 444,705 -- -- -- -- --
U-18
PROSPECTUS
DATED JANUARY 4, 2010
AS SUPPLEMENTED MAY 3, 2010
JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)
MARKET VALUE ADJUSTMENT INTERESTS
OFFERED UNDER
REVOLUTION ACCESS VARIABLE ANNUITY
REVOLUTION VALUE VARIABLE ANNUITY
REVOLUTION EXTRA VARIABLE ANNUITY
PATRIOT VARIABLE ANNUITY
AND
DECLARATION VARIABLE ANNUITY
DEFERRED COMBINATION FIXED AND VARIABLE ANNUITY CONTRACTS
PREVIOUSLY ISSUED BY
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
GUARANTEED AS DESCRIBED HEREIN BY
MANULIFE FINANCIAL CORPORATION
This prospectus describes the market value adjustment interests offered under
REVOLUTION ACCESS VARIABLE ANNUITY, REVOLUTION VALUE VARIABLE ANNUITY,
REVOLUTION EXTRA VARIABLE ANNUITY, PATRIOT VARIABLE ANNUITY, AND DECLARATION
VARIABLE ANNUITY deferred combination fixed and variable annuity contracts
previously issued by John Hancock Variable Life Insurance Company and
subsequently assumed by John Hancock Life Insurance Company (U.S.A.) ("John
Hancock USA") Unless otherwise specified, "we," "us," "our," or "Company" refers
to John Hancock USA. The prospectus also describes the subordinated guarantee by
Manulife Financial Corporation ("MFC") of obligations of John Hancock USA under
a Contract (the "MFC Subordinated Guarantee"). MFC is our parent company.
The prospectus describes market value adjustment interests under both an
individual deferred annuity contract and certificates that were issued under a
group deferred annuity contract. We use the term "Contract" to describe both an
individual contract and a certificate under a group contract that evidences a
participating interest in the group contract. As used herein, "you" refers to
the Owner of a Contract.
Each Contract is called a "combination contract," because it provides you the
option of earning either a fixed or a variable investment return on the value
accumulating in the Contract. John Hancock USA offers the fixed return option
under the Contracts in the form of Fixed Interest Options which are described in
the Annex to this prospectus. The Fixed Investment Options may also be referred
to as "market value adjustment interests." The accompanying Annex to this
prospectus describes both the "fixed" and "variable" investment options for each
of the Revolution Access, Revolution Value, Revolution Extra, Patriot, and
Declaration annuity Contracts.
----------
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. IT
CONTAINS INFORMATION ABOUT THE CONTRACT AND THE MFC SUBORDINATED GUARANTEE THAT
YOU SHOULD KNOW BEFORE INVESTING IN A FIXED INVESTMENT OPTION.
BECAUSE OF THE MARKET VALUE ADJUSTMENT PROVISION OF THE CONTRACT, THE CONTRACT
OWNER BEARS THE INVESTMENT RISK THAT THE GUARANTEED INTEREST RATES OFFERED BY US
AT THE TIME OF WITHDRAWAL OR THE START OF ANNUITY PAYMENTS MAY BE HIGHER THAN
THE GUARANTEED INTEREST RATE APPLIED TO THE NEW FIXED INVESTMENT OPTION, WITH
THE RESULT THAT THE AMOUNT YOU RECEIVE UPON WITHDRAWAL OR ANNUITIZATION MAY BE
REDUCED BY THE MARKET VALUE ADJUSTMENT AND MAY BE LESS THAN YOUR ORIGINAL
INVESTMENT IN THE NEW FIXED INVESTMENT OPTION. SEE "RISK FACTORS" ON PAGE 2 OF
THIS PROSPECTUS; AND REFER TO "CALCULATION OF MARKET VALUE ADJUSTMENT" AND
"APPENDIX A: DETAILS ABOUT OUR FIXED INVESTMENT OPTIONS - COMPUTATION OF MARKET
VALUE ADJUSTMENT" IN THE ANNEX TO THIS PROSPECTUS.
----------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------
THESE SECURITIES ARE NOT DEPOSITS WITH, OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR ANY AFFILIATE THEREOF, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY.
THE MFC SUBORDINATED GUARANTEE DOES NOT RELIEVE THE COMPANY OF ANY OBLIGATIONS
UNDER THE CONTRACTS. THEREFORE, THE MFC SUBORDINATED GUARANTEE IS IN ADDITION TO
ALL OF THE RIGHTS AND BENEFITS THAT THE CONTRACTS OTHERWISE PROVIDE.
YOU SHOULD BE AWARE THAT OWNING THESE SECURITIES MAY HAVE TAX CONSEQUENCES BOTH
IN THE UNITED STATES AND CANADA. THIS PROSPECTUS AND ANY APPLICABLE PROSPECTUS
SUPPLEMENT MAY NOT DESCRIBE THESE TAX CONSEQUENCES FULLY. YOU SHOULD READ THE
TAX DISCUSSION CONTAINED IN THIS PROSPECTUS AND IN ANY APPLICABLE PROSPECTUS
SUPPLEMENT.
YOUR ABILITY TO ENFORCE CIVIL LIABILITIES UNDER U.S. FEDERAL SECURITIES LAWS MAY
BE AFFECTED ADVERSELY BY THE FACT THAT MANULIFE FINANCIAL CORPORATION IS
ORGANIZED UNDER THE LAWS OF CANADA, MOST OF ITS OFFICERS AND DIRECTORS AND SOME
OF THE EXPERTS NAMED IN THIS PROSPECTUS ARE RESIDENTS OF CANADA, AND A
SUBSTANTIAL PORTION OF ITS ASSETS ARE LOCATED OUTSIDE THE UNITED STATES.
YOU SHOULD RELY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS OR ANY APPLICABLE PROSPECTUS SUPPLEMENT AND ON THE OTHER
INFORMATION INCLUDED IN THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS
FORMS A PART. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT OR
ADDITIONAL INFORMATION. WE ARE NOT MAKING AN OFFER OF THE SECURITIES COVERED BY
THIS PROSPECTUS IN ANY JURISDICTION WHERE THE OFFER IS NOT PERMITTED BY LAW. YOU
SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS OR ANY APPLICABLE PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY
DATE OTHER THAN THE DATE ON THE FRONT OF THIS PROSPECTUS OR ANY APPLICABLE
PROSPECTUS SUPPLEMENT, AS THE CASE MAY BE.
THERE IS NO MARKET THROUGH WHICH THESE SECURITIES MAY BE SOLD AND PURCHASERS MAY
NOT BE ABLE TO RESELL SECURITIES PURCHASED UNDER THIS PROSPECTUS.
TABLE OF CONTENTS
About This Prospectus 2
Overview 2
Risk Factors 4
Where You Can Find More Information 5
Accounting Treatment 7
Description of John Hancock Life Insurance Company (U.S.A.) 7
Description of Manulife Financial Corporation 8
Description of the MFC Subordinated Guarantee 8
Legal Opinions 9
Experts 9
Enforcement of Judgments 9
Annex -- Prospectus dated May 3, 2010 A-1
ii
ABOUT THIS PROSPECTUS
In this prospectus, unless otherwise specified or the context otherwise
requires, references to "John Hancock USA," "we", "our," "ours" and "us" refer
to John Hancock Life Insurance Company (U.S.A.) and references to "MFC" refer to
Manulife Financial Corporation. Unless otherwise specified, all dollar amounts
contained in this prospectus are expressed in U.S. dollars, and references to
"dollars" or "$" are to U.S. dollars and all references to "Cdn$" are to
Canadian dollars. John Hancock USA financial information included and
incorporated by reference in this prospectus is prepared using generally
accepted accounting principles in the United States, which we refer to as "U.S.
GAAP." Unless otherwise specified, MFC financial information included and
incorporated by reference in this prospectus is prepared using generally
accepted accounting principles in Canada, which we refer to as "Canadian GAAP."
This prospectus, which includes the accompanying Annex, is part of a joint
registration statement on Form F-3 relating to the Contracts that MFC and John
Hancock USA filed with the U.S. Securities and Exchange Commission ("SEC"). This
prospectus describes information about a subordinated guarantee of the
Contracts. The accompanying Annex provides more general information about the
Contracts. The accompanying Annex is dated as of a specific date. To the extent
information in a later dated portion of this prospectus is inconsistent with an
earlier dated portion of this prospectus, you should rely on the information in
the later dated portion of this prospectus. Under the registration statement,
John Hancock USA may, from time to time, accept additional purchase payments for
the Contracts described in this prospectus.
This prospectus, together with the documents incorporated by reference herein,
provides you with a description of the Contracts. Before you invest, you should
read this prospectus together with the additional information described under
the heading "Where You Can Find More Information." This prospectus does not
contain all of the information contained in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
SEC. You should refer to the Registration Statement and the exhibits to the
Registration Statement for further information with respect to us and the
Contracts. See "Accounting Treatment."
OVERVIEW
This overview tells you some key points you should know about any new allocation
to a Fixed Investment Option under your Contract. Because this is an overview,
it does not contain all the information that may be important to you about new
Fixed Investment Options that we may make available from time to time. Insurance
laws and regulations apply to us in every state in which our Contracts are sold.
As a result, some terms and conditions of your Contract regarding the new Fixed
Investment Options may vary from the terms and conditions described in this
Prospectus, including the Annex, depending upon where you purchase a Contract.
We disclose all material features and benefits of the Fixed Investment Options
under your Contract in this Prospectus, including the Annex, that you should
read before you invest in a new Fixed Investment Option. You should be sure to
read your Contract as well.
The Contracts described in this Prospectus are no longer offered for sale;
however, you may be able to make investments for new guarantee periods under the
Fixed Investment Options we make available, as permitted under your Contract.
Under the Contract, you may allocate a Purchase Payment or transfer Contract
Value to a Fixed Investment Option, and we credit interest for a period of time
known as the "guarantee period."
We invest the Contract Value you allocate to a Fixed Investment Option in our
General Account and we will credit interest at a fixed rate, declared by us,
subject to a minimum rate stated in your Contract. If you remove money from any
Fixed Investment Option prior to its expiration, however, we may increase or
decrease your Contract's value to compensate for changes in interest rates that
may have occurred subsequent to the beginning of that Fixed Investment Option.
This is known as a "Market Value Adjustment."
At the end of each guarantee period, you can choose:
- to start a subsequent guarantee period (up to a maximum Maturity
Date),
- to transfer your Fixed Investment Option Contract Value to one or more
Variable Investment Options,
- to start annuity benefit payments, or
- to receive your Contract Value.
-2-
(We may assess a withdrawal charge and make a Market Value Adjustment to your
Contract Value if you make any of these elections outside of a 30-day period at
the end of a guarantee period.)
ADDITIONAL PURCHASE PAYMENTS AND TRANSFERS OF CONTRACT VALUE. The minimum
additional Purchase Payment, depending upon the Contract, ranges from $200 -
$500 ($100 minimum for an additional Purchase Payment paid by direct deposit).
Currently, we do not enforce these minimum additional Purchase Payment amount
requirements, but we may do so in the future.
You can make Purchase Payments of up to $1,000,000 in any one Contract Year. The
total of all additional Purchase Payments and transfers of Contract Value that
you may allocate to any one Variable Investment Option or Fixed Investment
Option, in any one Contract Year may not exceed $1,000,000.
GUARANTEE PERIODS. We may offer different guarantee periods under the Contract
for you to choose, but any specific guarantee period may not be available at all
times or through all authorized distributors of the Contracts. In states where
approved, we currently make available various Fixed Investment Options with
durations of up to five years, and we may make one or more additional Fixed
Investment Options available for Contracts issued before September 30, 2002. We
provide no assurance that we will continue to offer a guarantee period within
this range.
At the end of a guarantee period, you may choose a new guarantee period from any
of the then existing guarantee period options, at the then current interest
rates.
GUARANTEE RATES. We determine from time to time the interest rates that we will
guarantee for each guarantee period. The guaranteed interest rate will in no
event be less than the minimum rate required by applicable law. WE, IN OUR SOLE
DISCRETION, DETERMINE THE GUARANTEED INTEREST RATES. We guarantee the interest
rate for the duration of the guarantee period and may not change it for that
guarantee period.
WITHDRAWALS. Before the earlier of the Maturity Date or the death of a Contract
Owner, you may withdraw all or a portion of your Contract Value.
We will deduct any partial withdrawal proportionally from each of your
Investment Options based on the value in each, unless you direct otherwise. When
you take a partial withdrawal, we deduct any applicable withdrawal charge as a
percentage of the total amount withdrawn. We take any applicable withdrawal
charge from the amount remaining in a Contract after we process the amount you
request.
Market Value Adjustment. We will adjust any amount withdrawn or annuitized prior
to the end of either the Initial Guarantee Period or a Subsequent Guarantee
Period by the Market Value Adjustment factor described under "Calculation of
Market Value Adjustment" and Appendix A: "Details About Our Fixed Investment
Options - Computation of Market Value Adjustment" in the Annex to this
prospectus.
We reserve the right to terminate your Contract if the value of your Contract
becomes zero. You generally may not make any surrenders or partial withdrawals
once we begin making payments under an Annuity Option. FOR DECLARATION AND
PATRIOT VARIABLE ANNUITIES ONLY: if your "free withdrawal value" at any time is
less than $100, you must withdraw that amount in full, in a single sum, before
you make any other partial withdrawals.
Withdrawal Charges.
If you make a withdrawal from the Contract before the Maturity Date, we may
impose a withdrawal charge for Declaration, Patriot, Revolution Extra and
Revolution Value Contracts (which will never be more than 6% of the Purchase
Payment we deem withdrawn for Declaration and Patriot Contracts and 7% of the
Purchase Payment we deem withdrawn for Revolution Extra and Revolution Value
Contracts). The Revolution Access Contracts do not have a withdrawal charge.
There is never a withdrawal charge with respect to certain free withdrawal
amounts. The amount of the withdrawal charge and when it is assessed are
discussed under "III Fee Tables," "IV. Basic Information - What Fees and Charges
will be Deducted from My Contract? - Withdrawal Charge" and Appendix B "Examples
of Withdrawal Charge Calculations" in the Annex to this prospectus. A withdrawal
may be subject to income tax and a 10% penalty tax (see "IX. Federal Tax
Matters" in the Annex to this prospectus for possible qualifications and a more
detailed discussion).
See the Annex to this prospectus for a description of all other fees applicable
to your Contract.
-3-
CONFIRMATION STATEMENTS. We will send you confirmation statements for certain
transactions in your account. You should carefully review these statements to
verify their accuracy and report any mistake immediately to our Annuities
Service Center. If you fail to report any mistake to the Annuities Service
Center within 60 days of the mailing of the confirmation statement, you will be
deemed to have ratified the transaction.
TELEPHONE AND ELECTRONIC TRANSACTIONS. You may request withdrawals by telephone.
We may also permit you to access information and perform some electronic
transactions through our website (see "IV. Basic Information - How Can I Change
My Contract's Investment Options? - Telephone and Electronic Transactions" and
"IV. Basic Information - How Can I Withdraw Money from My Contract? - Telephone
Withdrawals" in the Annex to this prospectus).
DEATH BENEFITS. The Contracts described in this prospectus and the Annex to this
prospectus generally provide for distribution of death benefits if you die
before a Contract's Maturity Date. The minimum death benefits provided under the
Contracts differ, depending on when you purchased a Contract, our maximum limits
on death benefits at that time, the jurisdiction in which we issued a Contract,
and the age of the oldest Owner (or Annuitant) on the date of issue. We may pay
death benefits in some cases on the Annuitant's death, instead of the Owner's
death, if the Annuitant predeceases the Owner. In addition, you may have
purchased a Contract with an optional death benefit Rider that will enhance the
amount of death benefit. You should read your Contract carefully to determine
the minimum death benefit and any enhanced death benefit payable during the
Accumulation Period.
We will determine the death benefit as of the date we receive written notice and
proof of death (Due Proof of Death) and all required claim forms at our
Annuities Service Center.
TAX DEFERRAL. The status of the Contract as an annuity generally allows all
earnings under the Contract to be tax-deferred until withdrawn or until Annuity
Payments begin (see "IX. Federal Tax Matters" in the Annex to this prospectus
for possible qualifications and a more detailed discussion). In most cases, no
income tax will have to be paid on your earnings under the Contract until these
earnings are paid out. This tax-deferred treatment may be beneficial to you in
building assets in a long-term investment program.
YOU DO NOT RECEIVE ANY ADDITIONAL TAX DEFERRAL BENEFIT IF YOUR CONTRACT WAS
PURCHASED IN CONNECTION WITH A TAX-QUALIFIED RETIREMENT PLAN.
RISK FACTORS
There are various risks associated with an investment in the Contract that we
summarize below.
ISSUER/GUARANTOR RISK. Fixed Investment Options under your Contract are the
obligation of John Hancock USA and thus are backed by John Hancock USA's
financial strength. If John Hancock USA were to experience significant financial
adversity, it is possible that the company's ability to pay interest and
principal under the Contract could be impaired. The guarantee periods are
subject to a subordinated guarantee by MFC. If MFC were to experience
significant financial adversity, it is possible that MFC's ability to pay
amounts due under the guarantee could be impaired.
MARKET VALUE ADJUSTMENT RISK. If you choose to withdraw your money or annuitize
on any date other than the period 30 days after the expiration of a guarantee
period, and interest rates have risen above their level when you selected your
guarantee period, you will experience a negative Market Value Adjustment. You do
not participate directly in the investment experience of the assets that John
Hancock USA holds to support the Contract. Nonetheless, the Market Value
Adjustment formula (which is discussed in the Annex to this prospectus) reflects
the effect that prevailing interest rates have on those assets. If you need to
withdraw your money during a period in which prevailing interest rates have
risen above their level when a guarantee period began, you will experience a
"negative" Market Value Adjustment. When we impose this Market Value Adjustment,
it could result in the loss of both the interest you have earned and a portion
of the amount you allocated to the guarantee period. THE MARKET VALUE
ADJUSTMENT, ALONE OR IN COMBINATION WITH THE APPLICABLE WITHDRAWAL CHARGES,
COULD RESULT IN YOUR TOTAL WITHDRAWAL PROCEEDS BEING LESS THAN THE AMOUNT YOU
ALLOCATED TO THE GUARANTEE PERIOD. Thus, before you commit to a particular
guarantee period, you should consider carefully whether you have the ability to
remain invested throughout the guarantee period. In addition, we cannot, of
course, assure you that the Contract will perform better than another investment
that you might have made.
RISKS RELATED TO THE WITHDRAWAL CHARGE. We may impose a withdrawal charge for
Declaration, Patriot, Revolution Extra and Revolution Value Contracts (which
will never be more than 6% of the Purchase Payment we deem withdrawn for
Declaration and Patriot Contracts and 7% of the Purchase Payment we deem
withdrawn for Revolution Extra and Revolution Value Contracts). The
-4-
Revolution Access Contracts do not have a withdrawal charge. If you anticipate
needing to withdraw your money prior to the end of a guarantee period, you
should be prepared to pay the withdrawal charge that we will impose.
RISKS RELATING TO MFC AND ITS SUBORDINATED GUARANTEE
MFC MAY BE UNABLE TO MAKE TIMELY PAYMENTS IN ACCORDANCE WITH THE MFC
SUBORDINATED GUARANTEE
The financial capacity of MFC to make timely payments under its subordinated
guarantee of your interest in any fixed investment option may be adversely
affected by a number of factors. Investors in the fixed investment options
should review the factors discussed under the captions "Risk Factors" and
"Caution Regarding Forward-Looking Statements" in MFC's Annual Information Form,
dated March 26, 2009, under the captions "Risk Management" and "Critical
Accounting and Actuarial Policies" in MFC's Management's Discussion and Analysis
for the year ended December 31, 2008, and in note 8 to MFC's annual audited
consolidated financial statements as at and for the year ended December 31,
2008, each filed as an exhibit to MFC's annual report on Form 40-F, as amended,
for the fiscal year ended December 31, 2008 (incorporated by reference in this
prospectus), similar sections in MFC's subsequent filings that MFC incorporates
by reference in this prospectus, and other information about MFC included in
this prospectus. In addition, the subordinated guarantee will constitute an
unsecured obligation of MFC as guarantor, and will be subordinated in right of
payment to the prior payment in full of all other obligations of MFC, except for
other guarantees or obligations of MFC which by their terms are designated as
ranking equally in right of payment with or subordinate to MFC's guarantee of
the contract's fixed investment options. Consequently, in the event of MFC's
bankruptcy, liquidation, dissolution, winding-up or other similar event, or upon
acceleration of any series of debt securities or other financial obligations due
to an event of default thereunder also triggering payment obligations on other
debt, MFC's assets will be available to pay its obligations on the subordinated
guarantee only after all secured indebtedness and other indebtedness senior to
the subordinated guarantee has been paid in full.
MFC'S INCORPORATION IN CANADA MAY MAKE IT MORE DIFFICULT FOR YOU TO ENFORCE THE
MFC SUBORDINATED GUARANTEE
Holders of Contracts may have more difficulty enforcing their rights under the
subordinated guarantee than would holders of contracts guaranteed by a
corporation incorporated in a jurisdiction of the United States. Your ability to
enforce civil liabilities related to the MFC Subordinated Guarantee under U.S.
federal securities laws may be affected adversely by the fact that Manulife
Financial Corporation is organized under the laws of Canada, most of its
officers and directors and some of the experts named in this prospectus are
residents of Canada, and a substantial portion of its assets are located outside
the United States.
WHERE YOU CAN FIND MORE INFORMATION
MFC is subject to the information requirements of the U.S. Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance with the
Exchange Act, files reports and other information with the SEC. Under a
multijurisdictional disclosure system adopted by the United States and Canada,
these reports and other information (including financial information) may be
prepared in accordance with the disclosure requirements of Canada, which are
different from those of the United States. Summary financial information
regarding John Hancock USA is included in MFC's reports. John Hancock USA is not
subject to the information and filing requirements of the Exchange Act.
You may read and copy any reports, statements or other information filed by MFC
at the SEC's Public Reference Room, Station Place, 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the Public Reference Room. You can also inspect
reports, proxy statements and other information about MFC at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005.
You may also obtain copies of this information by mail from the Public Reference
Section of the SEC, Station Place, 100 F Street, N.E., Washington, D.C. 20549,
at prescribed rates, or from commercial document retrieval services.
The SEC maintains a website that contains reports, proxy statements and other
information, including those filed by MFC, at http://www.sec.gov. You may also
access the SEC filings and obtain other information about MFC through the
website maintained by MFC, which is http://www.manulife.com. The information
contained in that website is not incorporated by reference into this prospectus.
-5-
MFC and John Hancock USA filed a joint Registration Statement on Form F-3 with
the SEC in respect of the securities being offered by this prospectus. This
prospectus is a part of that Registration Statement. As permitted by SEC rules,
this prospectus does not contain all the information you can find in the
Registration Statement. The SEC allows MFC to "incorporate by reference"
information into this prospectus, which means that we can disclose important
information to you by referring you to other documents filed separately with the
SEC.
The information incorporated by reference is deemed to be part of this
prospectus, except for any information superseded by information in this
prospectus. These documents contain important information about the companies
and their financial condition.
MFC incorporates by reference the documents listed below, which were filed with
the SEC.
(a) MFC's Annual Report on Form 40-F for the year ended December 31, 2008,
as filed on March 26, 2009 and as amended and filed on Form 40-F/A on
May 8, 2009;
(b) MFC's Reports of Foreign Issuer on Form 6-K filed on March 26, 2009,
other than the sections of the Notice of Annual Meeting and Proxy
Circular entitled "Report of the Management Resources Committee and
Compensation Committee" and "Performance Graph" and other than the
2008 Annual Financial Statements;
(c) MFC's Annual Report on Form 40-F for the year ended December 31, 2007,
as filed on March 28, 2008 and as amended and filed on Form 40-F/A on
May 8, 2009; and
(d) MFC's Reports of Foreign Issuer on Form 6-K filed on May 15, 2009,
June 25, 2009, July 13, 2009, August 13, 2009, November 13, 2009,
November 30, 2009 and January 4, 2010.
Copies of the documents incorporated in this prospectus by reference may be
obtained on request without charge from:
Manulife Financial Corporation
ATTN: Corporate Secretary
200 Bloor Street East, NT-10
Toronto, Ontario Canada M4W 1E5
Telephone: (416) 926-3000
Any annual reports on Form 20-F, Form 40-F or Form 10-K, any reports on Form
10-Q or Form 8-K, other than current reports furnished to the SEC pursuant to
Item 2.02 or Item 7.01 of Form 8-K, and any Form 6-K specifying that it is being
incorporated by reference in this prospectus, as well as all prospectus
supplements disclosing additional or updated information, filed by MFC with the
SEC subsequent to the date of this prospectus shall be deemed to be incorporated
by reference into this prospectus.
ANY STATEMENT CONTAINED IN THIS PROSPECTUS OR IN A DOCUMENT INCORPORATED OR
DEEMED TO BE INCORPORATED BY REFERENCE IN THIS PROSPECTUS SHALL BE DEEMED TO BE
MODIFIED OR SUPERSEDED FOR PURPOSES OF THIS PROSPECTUS TO THE EXTENT THAT A
STATEMENT CONTAINED IN THIS PROSPECTUS OR IN ANY OTHER SUBSEQUENTLY FILED
DOCUMENT WHICH ALSO IS OR IS DEEMED TO BE INCORPORATED BY REFERENCE IN THIS
PROSPECTUS MODIFIES OR SUPERSEDES SUCH PRIOR STATEMENT. ANY STATEMENT OR
DOCUMENT SO MODIFIED OR SUPERSEDED SHALL NOT, EXCEPT TO THE EXTENT SO MODIFIED
OR SUPERSEDED, BE INCORPORATED BY REFERENCE AND CONSTITUTE A PART OF THIS
PROSPECTUS.
YOU SHOULD RELY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS OR ANY APPLICABLE PROSPECTUS SUPPLEMENT AND ON THE OTHER
INFORMATION INCLUDED IN THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS
FORMS A PART. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT OR
ADDITIONAL INFORMATION. WE ARE NOT MAKING AN OFFER OF THE SECURITIES COVERED BY
THIS PROSPECTUS IN ANY JURISDICTION WHERE THE OFFER IS NOT PERMITTED BY LAW. YOU
SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS OR ANY APPLICABLE PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY
DATE OTHER THAN THE DATE ON THE FRONT OF THIS PROSPECTUS OR ANY APPLICABLE
PROSPECTUS SUPPLEMENT, AS THE CASE MAY BE.
-6-
ACCOUNTING TREATMENT
John Hancock USA does not file annual, quarterly or current reports with the SEC
and there are no additional separate financial statements of John Hancock USA
included in, or incorporated by reference in, this prospectus. John Hancock USA
is a subsidiary of MFC for financial reporting purposes and, as a consequence,
John Hancock USA has been, and will continue to be, included in the consolidated
financial statements of MFC in reports filed by MFC. MFC's financial statements
include a footnote containing condensed consolidating financial information with
separate columns for MFC, John Hancock USA and other subsidiaries of MFC,
together with consolidating adjustments.
MFC prepares its consolidated financial statements in accordance with Canadian
GAAP, which differs from U.S. GAAP. While MFC reconciles its consolidated
financial statements to U.S. GAAP to the extent required by applicable SEC rules
and guidelines, MFC's consolidated financial statements incorporated by
reference in this prospectus and in the documents incorporated by reference in
this prospectus may not be comparable to financial statements prepared in
accordance with U.S. GAAP. You should refer to note 22 to MFC's amended annual
audited consolidated financial statements as at and for the year ended December
31, 2008 on Form 40-F/A filed on May 8, 2009, and to note 23 to MFC's amended
annual audited consolidated financial statements as at and for the year ended
December 31, 2007 on Form 40-F/A filed on May 8, 2009, for a discussion of the
principal differences between MFC's financial results calculated under Canadian
GAAP and under U.S. GAAP.
DESCRIPTION OF JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.)
We are John Hancock Life Insurance Company (U.S.A.), a stock life insurance
company that was incorporated in Maine on August 20, 1955 by a special act of
the Maine legislature and redomesticated under the laws of the State of Michigan
on December 29, 1992. We are a direct, wholly-owned subsidiary of The
Manufacturers Investment Corporation, which in turn is indirectly wholly-owned
by MFC. The "John Hancock" name is MFC's primary U.S. brand. We are a licensed
life insurance company in the District of Columbia and all states of the United
States except New York.
Our principal executive offices are located at 601 Congress Street, Boston,
Massachusetts 02210-2805 (Tel. No. 617-663-3000).
On December 31, 2009, JHVLICO merged into John Hancock USA (the "Merger"). As a
result of the Merger, John Hancock USA has assumed JHVLICO's obligations with
respect to the Contracts, which were previously issued by JHVLICO.
As a result of the Merger, John Hancock USA has assumed JHVLICO's obligations
with respect to existing guarantee periods, and offers of new guarantee periods
under the Contracts beginning on or after January 4, 2010. John Hancock USA's
obligations with respect to all guarantee periods offered hereby will continue
to be fully and unconditionally guaranteed by MFC pursuant to a subordinated
guarantee. MFC's subordinated guarantee applies to any guarantee periods offered
hereby, unless and until we notify you otherwise (the "MFC Subordinated
Guarantee"). See "Description of the MFC Subordinated Guarantee -- What Are the
Terms of the MFC Subordinated Guarantee?"
As a publicly-traded company whose common shares are listed for trading
principally on the Toronto Stock Exchange and the New York Stock Exchange, MFC
files annual and other reports with the United States Securities and Exchange
Commission ("SEC"). Under the SEC's rules, the MFC Subordinated Guarantee is
being implemented in order to save John Hancock USA the expense of being a
company required to periodically file annual and quarterly reports with the SEC.
See "Description of the MFC Subordinated Guarantee--What Are the Reasons for the
Additional MFC Subordinated Guarantee?"
The MFC Subordinated Guarantee does not relieve John Hancock USA of any
obligations under the Contracts. Therefore, the MFC Subordinated Guarantee is in
addition to all of the rights and benefits that the Contracts otherwise provide.
-7-
DESCRIPTION OF MANULIFE FINANCIAL CORPORATION
MFC was incorporated under the Insurance Companies Act (Canada) in 1999 for the
purpose of becoming the holding company of The Manufacturers Life Insurance
Company, which was founded in 1887. As a mutual life insurance company, The
Manufacturers Life Insurance Company had no common shareholders and its board of
directors was elected by its participating policyholders. In September 1999, The
Manufacturers Life Insurance Company implemented a plan of demutualization and
converted into a life insurance company with common shares and became a
wholly-owned subsidiary of MFC. MFC's head office and registered office is
located at 200 Bloor Street East, Toronto, Ontario, Canada M4W 1E5 (Tel. No.
416-926-3000).
MFC and its subsidiaries provide a wide range of financial products and
services, including individual life insurance, group life and health insurance,
pension products, annuities and mutual funds, to individual and group customers
in Canada, the United States, Asia and Japan. Funds under management by MFC were
Cdn $436.5 billion as at September 30, 2009. MFC and its subsidiaries also offer
reinsurance services, primarily life and accident and health reinsurance, and
provide investment management services with respect to MFC's general fund
assets, segregated funds assets and mutual funds and, in Canada and Asia,
provide institutional investment services.
DESCRIPTION OF THE MFC SUBORDINATED GUARANTEE
WHAT ARE THE TERMS OF THE MFC SUBORDINATED GUARANTEE?
MFC guarantees your full interest in any Fixed Investment Option. This means
that, if we fail to honor any valid request to surrender, transfer, or withdraw
any amount from a guarantee period, or fail to allocate amounts from a Fixed
Investment Option to an Annuity Option when we are obligated to do so, MFC
guarantees the full amount that you would have received, or value that you would
have been credited with, had we fully met our obligations under your Contract
with respect to such Fixed Investment Option. If we fail to pay any amount that
becomes payable under the Contract upon the death of an owner or Annuitant, MFC
guarantees the unpaid amount, up to the Contract Value in any Fixed Investment
Option on the date of death, increased by any accrued but uncredited interest
attributable thereto and increased by any upward market value adjustment that
would have been payable upon any surrender of the Contract at that time (but not
decreased by any negative market value adjustment). If we fail to make payment
when due of any amount that is guaranteed by MFC, you could directly request MFC
to satisfy our obligation, and MFC must do so. You would not have to make any
other demands on us as a precondition to making a claim against MFC under the
MFC Subordinated Guarantee.
Unless otherwise set forth herein, the MFC Subordinated Guarantee constitutes an
unsecured obligation of MFC as guarantor, and is subordinated in right of
payment to the prior payment in full of all other obligations of MFC, except for
other guarantees or obligations of MFC which by their terms are designated as
ranking equally in right of payment with or subordinated to the MFC Subordinated
Guarantee, and effectively ranks senior to MFC's preferred and common shares. As
a result, in the event of MFC's bankruptcy, liquidation, dissolution, winding-up
or reorganization or upon acceleration of any series of debt securities or other
financial obligations due to an event also triggering payment obligations on
other debt, MFC's assets will be available to pay its obligations on the MFC
Subordinated Guarantee only after all secured indebtedness and other
indebtedness senior to the MFC Subordinated Guarantee has been paid in full.
There may not be sufficient assets remaining to pay amounts due on all or any
portion of the MFC Subordinated Guarantee.
The MFC Subordinated Guarantee will be governed by the laws of the Commonwealth
of Massachusetts. The MFC Subordinated Guarantee will provide that any claim or
proceeding brought by a holder to enforce the obligations of MFC, as guarantor,
may be brought in a court of competent jurisdiction in the City of Boston,
Commonwealth of Massachusetts, and that MFC submits to the non-exclusive
jurisdiction of such courts in connection with such action or proceeding. MFC
has designated John Hancock USA as its authorized agent upon whom process may be
served in any legal action or proceeding against MFC arising out of or in
connection with the MFC Subordinated Guarantee. All payments on the Contracts by
MFC under the MFC Subordinated Guarantee will be made without withholding or
deduction for, or on account of, any present or future taxes, duties,
assessments or governmental charges of whatever nature imposed or levied by or
on behalf of the Government of Canada, or any province, territory or political
subdivision thereof, or any authority therein or thereof having power to tax,
unless the withholding or deduction of such taxes, duties, assessments or
governmental charges by MFC is required by law or by the administration or
interpretation of such law. In the event of any withholding or deduction, MFC
will pay such additional amounts as may be necessary in order that the net
amounts received by the holders of the Contracts after such withholding or
deduction shall equal the respective amounts under the Contracts which would
have been receivable in respect of the Contracts in the absence of such
withholding or deduction ("Guarantor Additional Amounts"), except
-8-
as described herein and except that no such Guarantor Additional Amounts shall
be payable with respect to any Contract presented for payment:
(a) by or on behalf of a holder who is liable for such taxes, duties,
assessments or governmental charges in respect of such Contract (i) by
reason of his being a person with whom John Hancock USA or the guarantor is
not dealing at arm's length for the purposes of the Income Tax Act
(Canada), or (ii) by reason of his having a connection with Canada or any
province or territory thereof other than the mere holding, use or ownership
or deemed holding, use or ownership of such Contract;
(b) by or on behalf of a holder who would not be liable for or subject to such
withholding or deduction by making a claim for exemption to the relevant
tax authority; or
(c) more than 10 days after the Relevant Date (as defined below) except to the
extent that the holder thereof would have been entitled to Guarantor
Additional Amounts on presenting the same for payment on the last day of
such period of 10 days.
As used herein "Relevant Date" shall mean the date on which such payment first
becomes due.
Additional information about the MFC Subordinated Guarantee can be found in the
prospectus contained in the accompanying Annex under the headings, "What
Additional Guarantee Applies to the Fixed Investment Options Under My Contract?"
and "How can I find additional information about MFC?".
LEGAL OPINIONS
The validity of the market value adjustment interests under deferred annuity
contracts and the MFC Subordinated Guarantee offered in this prospectus have
been passed upon for us by Arnold R. Bergman, Chief Counsel, Variable Annuities,
John Hancock USA, Boston, Massachusetts. Certain matters regarding Canadian law
with respect to the MFC Subordinated Guarantee have been passed upon for MFC by
Torys LLP, Toronto, Canada. As of December 18, 2009, the partners and
associates of Torys LLP own an aggregate of approximately 20,000 MFC common
shares, 1,500 class A shares, series 4 and 2,000 class 1 shares, series 1.
EXPERTS
The consolidated financial statements of MFC at December 31, 2008 and 2007, and
for each of the two years in the period ended December 31, 2008, and the
effectiveness of MFC's internal control over financial reporting as of December
31, 2008, included in MFC's Annual Report on Form 40-F, as filed on March 26,
2009 and as amended and filed on Form 40-F/A on May 8, 2009, for the year ended
December 31, 2008, filed with the SEC, and the consolidated financial statements
of MFC at December 31, 2007 and 2006, and for each of the two years in the
period ended December 31, 2007, and the effectiveness of MFC's internal control
over financial reporting as of December 31, 2007, included in MFC's Annual
Report on Form 40-F, as filed on March 28, 2008 and as amended and filed on Form
40-F/A on May 8, 2009, for the year ended December 31, 2007, filed with the SEC,
which are incorporated by reference in this prospectus and in the registration
statement of which this prospectus forms a part, have been audited by Ernst &
Young LLP, Toronto, Canada, an independent registered public accounting firm, as
set forth in their reports thereon, included therein by reference and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such reports given on the
authority of such firm as experts in accounting and auditing.
ENFORCEMENT OF JUDGMENTS
MFC is a corporation incorporated under the laws of Canada. Because a
substantial portion of MFC's assets are located outside the United States and
most of its directors and officers are not residents of the United States, any
judgment obtained in the United States against MFC or certain of its officers
and directors, including a judgment with respect to payments on the MFC
Subordinated Guarantee, may not be collectible within the United States.
Pursuant to the MFC Subordinated Guarantee, MFC agrees that any legal action or
proceeding against it arising out of or in connection with the MFC Subordinated
Guarantee may be brought in any United States federal or Massachusetts state
court located in the City of Boston, Commonwealth of Massachusetts (a
"Massachusetts Court") and irrevocably submits to the non-exclusive jurisdiction
of such courts in connection with such action or proceeding.
-9-
MFC has been informed by its Canadian counsel, Torys LLP, that the laws of the
Province of Ontario and the federal laws of Canada applicable therein permit an
action to be brought in a court of competent jurisdiction in that province on
any final judgment in personam of any Massachusetts Court against MFC, which
judgment is subsisting and unsatisfied for a fixed sum of money with respect to
the enforcement of the MFC Subordinated Guarantee and that is not impeachable as
void or voidable under the internal laws of the Commonwealth of Massachusetts
if:
(i) the court rendering such judgment had jurisdiction over the judgment
debtor, as recognized by the courts of Ontario (submission by MFC in the
MFC Subordinated Guarantee to the non-exclusive jurisdiction of a
Massachusetts Court will be sufficient for this purpose);
(ii) such judgment was not obtained by fraud or in a manner contrary to natural
justice or other rule of law, whether equitable, legal or statutory and the
enforcement thereof would not be inconsistent with public policy, as such
term is understood under the laws of Ontario and the federal laws of Canada
applicable therein or contrary to any order made by the Attorney General of
Canada under the Foreign Extraterritorial Measures Act (Canada) or by the
Competition Tribunal under the Competition Act (Canada);
(iii) the enforcement of such judgment does not constitute, directly or
indirectly, the enforcement of foreign revenue or penal laws in the
Province of Ontario; and
(iv) the action to enforce such judgment is commenced within the applicable
limitation period.
Enforcement of a judgment by a court in the Province of Ontario, as described
above, may only be given in Canadian dollars.
In the opinion of Torys LLP, there are currently no reasons under the present
laws of the Province of Ontario for avoiding recognition of said judgments of
Massachusetts Courts on the MFC Subordinated Guarantee based upon public policy.
However, it may be difficult for holders of Contracts to effect service within
the United States upon MFC's directors and officers and the experts named in
this prospectus who are not residents of the United States or to enforce against
them, both in and outside of the United States, judgments of courts of the
United States predicated upon civil liability under United States federal
securities laws. MFC has designated John Hancock USA as its authorized agent
upon whom process may be served in any legal action or proceeding against MFC
arising out of or in connection with the MFC Subordinated Guarantee. Based on
the opinion of Torys LLP, MFC believes that a monetary judgment of a United
States court predicated solely upon the civil liability provisions of United
States federal securities laws would likely be enforceable in Canada if the
United States court in which the judgment was obtained had a basis for
jurisdiction in the matter that was recognized by a Canadian court for such
purposes. We cannot assure you that this will be the case since the case law in
Canada in respect of this matter is not entirely clear. It is less certain that
an action could be brought in Canada in the first instance on the basis of
liability predicated solely upon such laws.
-10-
ANNEX
References to the "Annex" refer to the prospectus for the Declaration Variable
Annuity, Patriot Variable Annuity, Revolution Access Variable Annuity,
Revolution Extra Variable Annuity, and Revolution Value Variable Annuity located
in the front of this booklet.
A-1