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NYLIAC CORPORATE SPONSORED VARIABLE UNIVERSAL LIFE
SEPARATE ACCOUNT -- I
SUPPLEMENT DATED SEPTEMBER 28, 1999 TO PROSPECTUS DATED MAY 1, 1999
FOR NYLIAC CORPORATE SPONSORED VARIABLE UNIVERSAL LIFE POLICIES
This Supplement describes (1) the addition of four new Investment Divisions
as Allocation Alternatives under the policies, (2) a reduction in the loan
interest spread used to determine the crediting rate of interest on the value in
the Loan Account after Policy Year 10 and (3) a change in the commissions paid
on policies issued on or after September 28, 1999. It provides information that
a prospective investor should know before investing. Please read it carefully
and retain it for future reference. This Supplement is not valid unless
accompanied by the current prospectus for the policies ("Policy Prospectus").
Defined terms used but not defined in this Supplement have the same meaning as
in the Policy Prospectus.
The Policy Prospectus should be read in light of the following additions
and changes:
The terms "investment options", "Investment Divisions" and Allocation
Alternatives should be updated to include the four new Portfolios mentioned
below. The addition of these four Portfolios brings the number of
Investment Divisions available for investment in the Separate Account to
22. These new Investment Divisions may not be available in all states.
Although there are a total of 23 Allocation Alternatives including the
Fixed Account, policyowners may only invest in a total of 21 Allocation
Alternatives, including the Fixed Account.
Below is a list of the new Investment Divisions, each of which invests in a
corresponding Portfolio of a mutual fund:
<TABLE>
<CAPTION>
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INVESTMENT DIVISION MUTUAL FUND
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<S> <C>
American Century Income & Growth MainStay VP Series Fund, Inc.
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Dreyfus Large Company Value MainStay VP Series Fund, Inc.
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Eagle Asset Management Growth Equity MainStay VP Series Fund, Inc.
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T. Rowe Price Equity Income T. Rowe Price Equity Series, Inc.
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</TABLE>
INVESTMENT OBJECTIVES
A description of the investment objectives of the new Portfolios appears
below:
The MainStay VP American Century Income & Growth Portfolio -- The MainStay
VP American Century Income & Growth Portfolio seeks dividend growth, current
income and capital appreciation by primarily investing in equity securities of
the 1,500 largest companies traded in the United States (ranked by market
capitalization).
The MainStay VP Dreyfus Large Company Value Portfolio -- The MainStay VP
Dreyfus Large Company Value Portfolio seeks capital appreciation by investing
principally in a portfolio of publicly traded equity securities of domestic and
foreign issuers which are characterized as value companies.
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The MainStay VP Eagle Asset Management Growth Equity Portfolio -- The
MainStay VP Eagle Asset Management Growth Equity Portfolio seeks growth through
long-term capital appreciation by investing in common stocks that Eagle Asset
Management, Inc., the Portfolio's subadviser, believes have sufficient growth
potential to offer above average long-term capital appreciation.
The T. Rowe Price Equity Income Portfolio -- The T. Rowe Price Equity
Income Portfolio seeks to provide substantial dividend income and also long-term
capital appreciation by primarily investing in dividend-paying stocks,
particularly of established companies, with favorable prospects for both
increasing dividends and capital appreciation.
THE UNDERLYING MUTUAL FUNDS
Information relating to the MainStay VP Series Fund Inc. and the T. Rowe
Price Equity Series, Inc. appears below:
Mainstay VP Series Fund, Inc. -- The Separate Account currently invests in
fourteen Portfolios of the MainStay VP Series Fund, Inc. MacKay-Shields
Financial Corporation, Monitor Capital Advisors, Inc., Madison Square Advisors,
Inc. and New York Life Insurance Company provide investment advisory services to
these Portfolios in accordance with the policies, programs and guidelines
established by the Board of Directors of the MainStay VP Series Fund, Inc.
American Century Investment Management, Inc., The Dreyfus Corporation and Eagle
Asset Management, Inc. provide investment subadvisory services to certain
Portfolios. As compensation for providing investment advisory services, MainStay
VP Series Fund, Inc. pays each investment adviser a fee. See the supplement to
the MainStay VP Series Fund, Inc. prospectus which is attached to this
supplement.
The three new Portfolios of the MainStay VP Series Fund, Inc., their
investment advisers, subadvisers and fees are listed in the table below.
<TABLE>
<CAPTION>
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INVESTMENT ADVISERS PORTFOLIOS ADVISORY FEE
------------------- ---------- ------------
(AS A PERCENTAGE
OF THE AGGREGATE
DAILY NET ASSETS)
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<S> <C> <C>
Adviser: New York Life Insurance Company MainStay VP American 0.50%
Century Income & Growth
Subadviser: American Century
Investment Management Inc.
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Adviser: New York Life Insurance Company MainStay VP Dreyfus 0.60%
Large Company Value
Subadviser: The Dreyfus Corporation
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Adviser: New York Life Insurance Company MainStay VP Eagle Asset 0.50%
Management Growth Equity
Subadviser: Eagle Asset Management, Inc.
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</TABLE>
T. Rowe Price Equity Series, Inc. -- The Separate Account currently invests
in the T. Rowe Price Equity Income Portfolio of the T. Rowe Price Equity Series,
Inc. Currently,
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the T. Rowe Price Equity Income Portfolio is the only Eligible Portfolio
available through the T. Rowe Price Equity Series, Inc. for investment by the
Separate Account.
T. Rowe Price Associates, Inc. provides investment advisory services to the
T. Rowe Price Equity Income Portfolio in accordance with the policies, programs
and guidelines established by the Board of Trustees of the T. Rowe Price Equity
Series, Inc. As compensation for such services, the T. Rowe Price Associates,
Inc. pays a management fee in the form of a daily charge at an annual rate of
0.85% of the average daily net assets of the T. Rowe Price Equity Income
Portfolio. See the prospectus for the T. Rowe Price Equity Series, Inc. which is
attached to this supplement.
FUND CHARGES
The information below is added to the Fund charges table which appears on
page 11 of the Policy Prospectus:
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP MAINSTAY VP
AMERICAN DREYFUS EAGLE ASSET
CENTURY LARGE MANAGEMENT T. ROWE
INCOME & COMPANY GROWTH PRICE EQUITY
GROWTH VALUE EQUITY INCOME
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Fund Annual Expenses After
Reimbursement (as a % of average net
assets)
Management Fees....................... 0.50% 0.60% 0.50% 0.85%
Administration Fees................... 0.20% 0.20% 0.20% --
Other Expenses........................ 0.15%* 0.15%* 0.15%* --
Total Annual Expenses................. 0.85% 0.95% 0.85% 0.85%
</TABLE>
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* These numbers reflect an expense reimbursement agreement effective through
December 31, 1999 limiting "Other Expenses" to 0.15% annually. In the absence
of the expense reimbursement agreement, the "Total Annual Expenses" would have
been 1.30%, 1.39% and 1.28% for MainStay VP American Century Income & Growth
Portfolio, MainStay VP Dreyfus Large Company Value Portfolio and MainStay VP
Eagle Asset Management Growth Equity Portfolio, respectively.
LOANS
On page 25 of the Policy Prospectus, the last paragraph of the section
entitled "LOANS -- Loan Account" is deleted and is replaced by the following new
section:
INTEREST ON VALUE IN LOAN ACCOUNT
The amount held in the Loan Account earns interest at a
rate we determine. Such rate will never be less than 2% less
than the effective annual loan interest rate and in no event
less than 4%. Currently, the amount in the Loan Account is
credited with interest at a rate that is 2% less than the
effective annual loan interest rate during the first 10 Policy
Years, and we currently expect to credit 0.5% less than the
effective annual loan interest rate in subsequent Policy
Years. These rates are not guaranteed and can change at any
time.
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<PAGE> 4
SALES AND OTHER AGREEMENTS
On page 36 of the Policy Prospectus, the last paragraph of the section
entitled "SALES AND OTHER AGREEMENTS" is deleted and is replaced by the
following paragraphs:
For policies issued prior to September 28, 1999, the commissions paid
to registered representatives of broker-dealers who have entered into
dealer agreements with NYLIFE Distributors during a policy's first year
will not exceed 35% of the premiums paid up to a policy's surrender charge
premium (5% in Policy Years two through ten) plus 3% of premiums paid in
excess of such amount. Commissions paid in Policy Years eleven and beyond
are 2% of premiums paid.
For policies issued on or after September 28, 1999, the commissions
paid during a policy's first year will not exceed 35% of the premiums paid
up to a policy's surrender charge premium (2.5% in Policy Years two through
ten) plus 1.25% of premiums paid in excess of such amount. No commissions
are paid in Policy Years eleven and beyond. Apart from commissions,
registered representatives may receive compensation for policy
administration services which they provide pursuant to the terms of a
service agreement.
A table of surrender charge premium rates per thousand appears in
Appendix B to the Policy Prospectus.
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Appendix A is eliminated and replaced in its entirety by the following:
APPENDIX A
ILLUSTRATIONS
The following tables demonstrate the way in which your policy works. The
tables are based on the age, initial death benefit and premium as follows:
The tables are for a policy issued to a male, non-smoker, age 45, on a
medically underwritten basis, with a scheduled annual premium of $7,500 and an
initial death benefit of $350,000. It assumes that Life Insurance Benefit Option
1 and Internal Revenue Code Section 7702 Guideline Premium Corridor Table have
been selected. It also assumes that 100% of the Net Premium is allocated to
purchase Accumulation Units.
The tables show how the Cash Value, Cash Surrender Value and death benefit
would vary over an extended period of time assuming hypothetical gross rates of
return equivalent to a constant annual rate of 0%, 6% or 12%. The tables will
assist in the comparison of the benefit, of the policy with other corporate
sponsored variable life insurance plans.
The Cash Value, Cash Surrender Value and universal death benefit for a
policy would be different from the amounts shown if the actual gross rates of
return averaged 0%, 6% or 12%, but varied above and below those averages for the
period. They would also be different depending on the allocation of the Cash
Value among the Investment Divisions of the Separate Account, the Fixed Account,
and the Loan Account, if the actual gross rate of return for all Investment
Divisions averaged 0%, 6% or 12%, but varied above or below that average for
individual Investment Divisions. They would also differ if any policy loans or
partial withdrawals were made or if premium payments were not paid on the policy
anniversary during the period of time illustrated.
The first table reflects all charges under the policy. It assumes that the
cost of insurance charges are based on our current cost of insurance rates and
reflects the deduction of all charges from Planned Premiums and the Accumulation
Value at their current levels. It also reflects a daily mortality and expense
risk charge assessed against the Separate Account equal to an annual rate of
0.70% (for Policy Years one through ten) and a currently expected annual rate of
0.30% (for Policy Years eleven and later), which is deducted daily.
The second table reflects all charges under the policy. It assumes that the
cost of insurance charges are based on our guaranteed maximum cost of insurance
rates and reflects the deduction of all charges from planned premium and the
Accumulation Value at their guaranteed maximum levels. It also reflects a daily
mortality and expense risk charge assessed against the Separate Account equal to
an annual rate of 0.90% (for all Policy Years), which is deducted daily.
The tables also reflect total assumed investment advisory fees together
with the expenses incurred by the Funds of 0.77% of the average daily net assets
of the Funds. The total is based upon (a) 0.45% of average daily net assets,
which is an average of the management fees of each Portfolio; (b) 0.13% of
average daily net assets, which is an average of the administrative fees for
each Portfolio; and (c) 0.19% of average daily
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net assets, which is an average of the other expenses after expense
reimbursement for each Portfolio. Actual fees and expenses of the Funds may be
more or less than the amounts illustrated and will depend on the allocations
made by the policyowner.
"Other Expenses" and "Total Fund Annual Expenses" for the MainStay VP
Convertible and MainStay VP International Equity Portfolios reflect an expense
reimbursement agreement that ended December 31, 1998 limiting "Other Expenses"
to 0.17% annually. In the absence of the expense reimbursement arrangement, the
"Total Fund Annual Expenses" for the year ended December 31, 1998 would have
been 1.17% for the MainStay VP International Equity Portfolio.
"Other Expenses" and "Total Fund Annual Expenses" for the MainStay VP
American Century Income & Growth, MainStay VP Dreyfus Large Company Value and
MainStay VP Eagle Asset Management Growth Equity Portfolios reflect an expense
reimbursement agreement effective through December 31, 1999 limiting "Other
Expenses" to 0.15% annually. In the absence of the expense reimbursement
agreement, the "Total Fund Annual Expenses" would have been 1.30%, 1.39% and
1.28% for the MainStay VP American Century Income & Growth Portfolio, MainStay
VP Dreyfus Large Company Value Portfolio and MainStay VP Eagle Asset Management
Growth Equity Portfolio, respectively.
For the Calvert Social Balanced Portfolio, the fees are based on expenses
for the fiscal year 1998, and have been restated to reflect the complete
assessment of transfer agency expenses of 0.01% expected to be incurred in 1999.
"Other Expenses" reflect an indirect fee. "Total Fund Annual Expenses" after
reductions for fees paid indirectly, which are restated, would have been 0.86%.
A portion of the brokerage commissions that the Fidelity VIP II Contrafund
and Fidelity VIP Equity Income Portfolios pay was used to reduce the Portfolios'
expenses. In addition, these Portfolios have entered into arrangements with
their custodian whereby credits realized as a result of uninvested cash balances
were used to reduce custodian expenses. Including these reductions, the "Total
Fund Annual Expenses" would have been 0.66% for the Fidelity VIP II Contrafund
Portfolio and 0.57% for the Fidelity VIP Equity-Income Portfolio.
The "Total Fund Annual Expenses" for the Janus Aspen Series Worldwide
Growth Portfolio include a fee reduction to reduce the "Advisory Fees" to the
level of the corresponding Janus retail fund. Other waivers, if applicable, are
first applied against the "Advisory Fees" and then against "Other Expenses".
Janus Capital Corporation has agreed to continue the other waivers and fee
reductions until at least the next annual renewal of the advisory agreement.
Absent such waivers or reductions, the "Total Fund Annual Expenses" for the
fiscal year ended December 31, 1998 would have been 0.74% for the Portfolio.
Morgan Stanley Dean Witter Investment Management Inc. has voluntarily
waived receipt of its "Advisory Fees" and agreed to reimburse the Portfolio, if
necessary, to the extent that the "Total Fund Annual Expenses" of the Portfolio
exceed 1.75% of average daily net assets. However, Morgan Stanley Dean Witter
has reflected under "Other Expenses" the Portfolio's interest and foreign tax
expenses incurred in 1998 which were equal to 0.20% of the Portfolio's average
daily net assets. The fee waivers and reimbursements described above may be
terminated by Morgan Stanley Dean Witter at any time without notice. Absent such
reductions, it is estimated that "Advisory Fees",
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"Administration Fees" and "Total Fund Annual Expenses" would be 1.25%, 0.25% and
3.45%, respectively.
Taking into account the assumed charges for mortality and expense risks in
the Separate Account and the average fees and expenses of the Funds, the gross
rates of return of 0%, 6% and 12% would correspond to illustrated net investment
returns of -1.46%, 4.45% and 10.36%, respectively, based on the current charge
for mortality and expense risks, applicable to Policy Years one through ten;
- -1.07%, 4.87% and 10.80%, respectively, based on the current expected charge for
mortality and expense risks, applicable to Policy Years eleven and later, and
- -1.66%, 4.24% and 10.14%, respectively, based on the guaranteed maximum charge
for mortality and expense risks, applicable to all Policy Years.
The actual investment advisory fees and expenses may be more or less than
the amounts illustrated and will depend on the allocations made by the
policyowner.
The second column of each table shows the amount which would accumulate if
an amount equal to the scheduled annual premium was invested and earned
interest, after taxes, at 5% per year, compounded annually.
We will furnish upon request a comparable illustration using the age, sex
and underwriting classification of an Insured for any initial death benefit and
premium requested. In addition to an illustration assuming policy charges at
their maximum, we will furnish an illustration assuming current policy charges
and current cost of insurance rates.
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CORPORATE SPONSORED VARIABLE UNIVERSAL LIFE INSURANCE POLICY
MALE ISSUE AGE: 45, N0N-SMOKER MEDICALLY UNDERWRITTEN CLASS
SCHEDULED ANNUAL PREMIUM: $7,500
INITIAL FACE AMOUNT: $350,000
SECTION 7702 GUIDELINE PREMIUM CORRIDOR TEST
LIFE INSURANCE BENEFIT OPTION 1
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
END OF YEAR
END OF YEAR DEATH BENEFIT(2) END OF YEAR CASH VALUE(2) CASH SURRENDER VALUE
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
TOTAL PREMIUMS PAID ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
VALUE(2) PLUS INTEREST AT 5% ------------------------------ ----------------------------- -----------------------------
POLICY YEAR AS OF END OF YEAR(1) 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ----------- -------------------- -------- -------- -------- ------- -------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 7,875 350,000 350,000 350,000 5,148 5,504 5,861 4,122 4,478 4,835
2 16,144 350,000 350,000 350,000 10,113 11,143 12,217 9,087 10,117 11,191
3 24,826 350,000 350,000 350,000 14,900 16,928 19,127 13,875 15,902 18,102
4 33,942 350,000 350,000 350,000 19,477 22,829 26,614 18,452 21,804 25,589
5 43,514 350,000 350,000 350,000 23,849 28,860 34,749 22,824 27,834 33,723
6 53,565 350,000 350,000 350,000 28,023 35,031 43,609 27,204 34,212 42,790
7 64,118 350,000 350,000 350,000 31,968 41,318 53,245 31,352 40,702 52,629
8 75,199 350,000 350,000 350,000 35,653 47,697 63,717 35,243 47,287 63,307
9 86,834 350,000 350,000 350,000 39,085 54,183 75,133 38,878 53,976 74,927
10 99,051 350,000 350,000 350,000 42,235 60,755 87,583 42,235 60,755 87,583
15 169,931 350,000 350,000 350,000 53,216 94,744 170,201 53,216 94,744 170,201
20 260,394 350,000 350,000 375,073 53,915 130,060 307,437 53,915 130,060 307,437
30 523,206 * 350,000 944,654 * 196,673 882,854 * 196,673 882,854
</TABLE>
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(1) All premiums are illustrated as if made at the beginning of the Policy Year.
(2) Assumes no policy loan or partial withdrawal has been made.
* Without additional premiums above the annual scheduled premium, the policy
would terminate in this scenario.
THE ILLUSTRATION IS HYPOTHETICAL AND MAY NOT BE USED TO PROJECT OR PREDICT
INVESTMENT RESULTS. THE INVESTMENT RATES OF RETURN SHOWN ARE ILLUSTRATIVE ONLY
AND ARE BASED ON A HYPOTHETICAL LEVEL ANNUAL RATE OF RETURN. EVEN IF YOUR
AVERAGE RATE OF RETURN IS THE SAME AS THE HYPOTHETICAL RATE, YOUR ACTUAL RESULTS
WILL DIFFER DUE TO ANNUAL FLUCTUATIONS ABOVE OR BELOW THE HYPOTHETICAL AVERAGE
RATE OF RETURN.
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CORPORATE SPONSORED VARIABLE UNIVERSAL LIFE INSURANCE POLICY
MALE ISSUE AGE: 45, NON-SMOKER MEDICALLY UNDERWRITTEN CLASS
SCHEDULED ANNUAL PREMIUM: $7,500
INITIAL FACE AMOUNT: $350,000
SECTION 7702 GUIDELINE PREMIUM CORRIDOR TEST
LIFE INSURANCE BENEFIT OPTION 1
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
END OF YEAR
END OF YEAR DEATH BENEFIT(2) END OF YEAR CASH VALUE(2) CASH SURRENDER VALUE
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
TOTAL PREMIUMS PAID ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
VALUE(2) PLUS INTEREST AT 5% ----------------------------- ----------------------------- -----------------------------
POLICY YEAR AS OF END OF YEAR(1) 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ----------- --------------------- ------- ------- --------- ------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 7,875 350,000 350,000 350,000 6,333 6,731 7,130 5,307 5,705 6,104
2 16,144 350,000 350,000 350,000 12,487 13,674 14,909 11,462 12,649 13,884
3 24,826 350,000 350,000 350,000 18,501 20,876 23,445 17,475 19,850 22,420
4 33,942 350,000 350,000 350,000 24,362 28,335 32,805 23,337 27,310 31,780
5 43,514 350,000 350,000 350,000 30,076 36,068 43,082 29,050 35,043 42,056
6 53,565 350,000 350,000 350,000 35,635 44,080 54,366 34,816 43,261 53,547
7 64,118 350,000 350,000 350,000 41,027 52,370 66,754 40,411 51,754 66,138
8 75,199 350,000 350,000 350,000 46,134 60,837 80,255 45,724 60,427 79,846
9 86,834 350,000 350,000 350,000 51,175 69,705 95,205 50,969 69,498 94,999
10 99,051 350,000 350,000 350,000 56,150 78,992 111,758 56,150 78,992 111,758
15 169,931 350,000 350,000 350,000 79,534 133,183 228,339 79,534 133,183 228,339
20 260,394 350,000 350,000 517,539 97,624 199,988 424,212 97,624 199,988 424,212
30 523,206 350,000 427,106 1,372,869 114,549 399,165 1,283,055 114,549 399,165 1,283,055
</TABLE>
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(1) All premiums are illustrated as if made at the beginning of the Policy Year.
(2) Assumes no policy loan or partial withdrawal has been made.
THE ILLUSTRATION IS HYPOTHETICAL AND MAY NOT BE USED TO PROJECT OR PREDICT
INVESTMENT RESULTS. THE INVESTMENT RATES OF RETURN SHOWN ARE ILLUSTRATIVE ONLY
AND ARE BASED ON A HYPOTHETICAL LEVEL ANNUAL RATE OF RETURN. EVEN IF YOUR
AVERAGE RATE OF RETURN IS THE SAME AS THE HYPOTHETICAL RATE, YOUR ACTUAL RESULTS
WILL DIFFER DUE TO ANNUAL FLUCTUATIONS ABOVE OR BELOW THE HYPOTHETICAL AVERAGE
RATE OF RETURN.
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