PROSPECTUS FOR
TRANSAMERICA SERIES sm
TRANSAMERICA CLASSIC sm
VARIABLE ANNUITY
A Variable Annuity Issued by
Transamerica Life Insurance
and Annuity Company
Including Prospectuses for:
<TABLE>
<CAPTION>
<S> <C> <C>
Income and Growth Portfolio of The Alger American Fund
Growth and Income Portfolio and
Premier Growth Portfolio of Alliance Variable Products Series
Fund, Inc.
Capital Appreciation Portfolio and
Small Cap Portfolio of Dreyfus Variable Investment Fund
Balanced Portfolio and
Worldwide Growth Portfolio of Janus Aspen Series
Emerging Growth Series
Growth with Income Series and
Research Series of MFS Variable Insurance Trust
Fixed Income Portfolio
High Yield Portfolio and
International Magnum Portfolio of Morgan Stanley Universal Funds, Inc.
Managed Portfolio and
Small Cap Portfolio of OCC Accumulation Trust
Growth Portfolio and
Money Market Portfolio of Transamerica Variable Insurance
Fund, Inc.
</TABLE>
December 22, 1997
<PAGE>
TRANSAMERICA SERIES sm
TRANSAMERICA CLASSIC sm
VARIABLE ANNUITY
A Flexible Premium Deferred Variable Annuity
Issued by
TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY
401 North Tryon Street, Charlotte, North Carolina 28202
This prospectus describes the Transamerica Classic Variable Annuity, a
variable annuity contract ("contract") issued by Transamerica Life Insurance and
Annuity Company (referred to as "Transamerica"). The contract allows you, the
owner, to accumulate assets on a tax-deferred basis for retirement and other
long-term financial purposes.
You may direct your purchase payments, as well as any value accumulated
under the contract, to one or more variable sub-accounts of Separate Account
VA-6 or to the general account options, or to both. The money you place in each
variable sub-account will be invested solely in a corresponding mutual fund
investment portfolio ("portfolio"). The value of each variable sub-account will
vary in accordance with the investment performance of the portfolio in which
that variable sub-account invests. You bear the entire investment risk for all
assets you place in the variable sub-accounts. This means that, depending on
market conditions, the amount you invest in the variable sub-accounts may
increase or decline. Currently you may choose among the following 17 variable
sub-accounts:
<TABLE>
<CAPTION>
<S> <C>
Janus Aspen Worldwide Growth Alger American Income & Growth
Morgan Stanley UF International Magnum Alliance VPF Growth & Income
Dreyfus VIF Small Cap MFS VIT Growth with Income
OCC Accumulation Trust Small Cap Janus Aspen Balanced
MFS VIT Emerging Growth OCC Accumulation Trust Managed
Alliance VPF Premier Growth Morgan Stanley UF High Yield
Dreyfus VIF Capital Appreciation Morgan Stanley UF Fixed Income
MFS VIT Research Transamerica VIF Money Market
Transamerica VIF Growth
</TABLE>
You may also place your purchase payments or accumulated value in the
general account options. We are currently offering two general account options.
In one, the fixed account, Transamerica guarantees the return of the amount
invested at a specified rate of interest for at least 12 months. Transamerica
will periodically declare the rate of interest applicable to each amount
allocated to the fixed account. In the second option, the guarantee period
account, Transamerica guarantees the return of the amount invested at a declared
rate of interest for a specified guarantee period. Currently, the guarantee
periods available are three, five and seven years; there may be a reduction made
to the amount of interest credited on amounts withdrawn or transferred before
the end of these periods. For both general account options, 3% will be the
minimum rate of interest credited.
This prospectus contains vital information that you should know before
investing. You can obtain more information about the contract by requesting a
copy of the Statement of Additional Information ("SAI") dated December 22, 1997.
The SAI is available free by writing to Transamerica Life Insurance and Annuity
Company, Annuity Service Center, 401 North Tryon Street, Suite 700, Charlotte,
North Carolina, 28202 or by calling (800) 420-7749. The current SAI has been
filed with the Securities and Exchange Commission and is incorporated by
reference into this prospectus. The table of contents of the SAI is included at
the end of this prospectus.
These securities have not been approved or disapproved by the Securities and
Exchange Commission, nor has the Commission passed upon the accuracy or adequacy
of this prospectus. Any representation to the contrary is a criminal offense.
For your own benefit and protection, please
read this prospectus carefully before you
invest. Keep it on hand for future
reference.
The date of this prospectus is December 22 , 1997.
<PAGE>
Under the terms of the contract, we promise to pay you a series of
monthly settlement option payments. Payments may be for a fixed or a variable
amount or a combination of both, for the life of the annuitant or for some other
period as you select prior to the annuity date.
On or before the annuity date, you may transfer assets between and
among the variable sub-accounts and the general account options. The fixed
account has restrictions on certain transfers while transfers from a guarantee
period account may be subject to an interest adjustment. After the annuity date,
transfers are permitted among the variable sub-accounts only if you elect to
receive variable settlement option payments.
On or before the annuity date, you may elect to withdraw all or a
portion of your cash surrender value in exchange for a cash payment. Withdrawals
out of the guarantee period account may be subject to an interest adjustment.
Withdrawals may be subject to a contingent deferred sales load, certain
administrative fees, premium tax charges, federal, state or local income taxes,
and/or a tax penalty.
This prospectus must be accompanied by current prospectuses
for the portfolios.
THIS PROSPECTUS MAY NOT BE OFFERED IN ANY JURISDICTION WHERE SUCH OFFERING IS
UNLAWFUL. ANY INFORMATION THAT A DEALER, SALESPERSON, OR OTHER PERSON GIVES YOU
ABOUT THIS CONTRACT SHOULD BE CONTAINED IN THIS PROSPECTUS. IF YOU RECEIVE ANY
INFORMATION ABOUT THE CONTRACT THAT IS NOT CONTAINED IN THIS PROSPECTUS, YOU
SHOULD NOT RELY ON THAT INFORMATION.
Please note that your investment in the contract:
o is not a bank deposit
o is not federally insured
o is not endorsed by any bank or government agency.
Investing in the contract involves certain investment risks, including possible
loss of principal.
This prospectus generally describes only the
variable account portion of the contract,
except when the general account options are
specifically mentioned.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
DEFINITIONS.......................................................................................................6
SUMMARY...........................................................................................................8
CONDENSED FINANCIAL INFORMATION..................................................................................17
TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY AND THE VARIABLE ACCOUNT.........................................17
Transamerica Life Insurance and Annuity Company.........................................................17
Published Ratings.......................................................................................17
The Variable Account....................................................................................17
THE PORTFOLIOS...................................................................................................18
THE CONTRACT.....................................................................................................22
Ownership...............................................................................................23
PURCHASE PAYMENTS................................................................................................23
Purchase Payments.......................................................................................23
Allocation of Purchase Payments.........................................................................24
Investment Option Limits................................................................................24
ACCOUNT VALUE....................................................................................................24
TRANSFERS........................................................................................................25
Before the Annuity Date.................................................................................25
Other Restrictions......................................................................................25
Telephone Transfers.....................................................................................26
Dollar Cost Averaging...................................................................................26
Automatic Asset Rebalancing.............................................................................27
After the Annuity Date..................................................................................27
CASH WITHDRAWALS.................................................................................................27
Systematic Withdrawal Option............................................................................28
Automatic Payment Option (APO)..........................................................................28
DEATH BENEFIT....................................................................................................29
Payment of Death Benefit................................................................................29
Designation of Beneficiaries............................................................................30
Death of Owner Before Annuity Date......................................................................30
If Annuitant Dies Before Annuity Date...................................................................31
Death After Annuity Date................................................................................31
Survival Provision......................................................................................31
CHARGES, FEES AND DEDUCTIONS.....................................................................................31
Contingent Deferred Sales Load..........................................................................32
Free Withdrawals - Allowed Amount.......................................................................32
Free Withdrawals - Living Benefits Rider................................................................32
Other Free Withdrawals..................................................................................33
Administrative Charges..................................................................................33
Mortality and Expense Risk Charge.......................................................................34
Living Benefits Rider Fee...............................................................................34
Premium Tax Charges.....................................................................................34
Transfer Fee............................................................................................34
Option and Service Fees.................................................................................35
Taxes...................................................................................................35
Portfolio Expenses......................................................................................35
Interest Adjustment.....................................................................................35
SETTLEMENT OPTION PAYMENTS.......................................................................................35
Annuity Date............................................................................................35
Settlement Option Payments..............................................................................35
Election of Settlement Option Forms and Payment Options.................................................36
Payment Options.........................................................................................36
Fixed Payment Option....................................................................................36
Variable Payment Option.................................................................................36
Settlement Option Forms.................................................................................37
FEDERAL TAX MATTERS..............................................................................................38
Introduction............................................................................................38
Purchase Payments.......................................................................................38
Taxation of Annuities...................................................................................38
Qualified Contracts.....................................................................................40
Taxation of Transamerica ...............................................................................42
Tax Status of Contract..................................................................................42
Possible Changes in Taxation............................................................................43
Other Tax Consequences..................................................................................43
PERFORMANCE DATA ................................................................................................43
DISTRIBUTION OF THE CONTRACT.....................................................................................45
LEGAL PROCEEDINGS................................................................................................45
LEGAL MATTERS....................................................................................................45
ACCOUNTANTS......................................................................................................45
VOTING RIGHTS....................................................................................................45
AVAILABLE INFORMATION............................................................................................46
STATEMENT OF ADDITIONAL INFORMATION - TABLE OF CONTENTS..........................................................47
APPENDIX A - THE GENERAL ACCOUNT OPTIONS........................................................................A-1
Fixed Account .........................................................................................A-1
Guarantee Period Account ..............................................................................A-2
APPENDIX B......................................................................................................B-1
Example of Variable Accumulation Unit Value Calculations...............................................B-1
Example of Variable Annuity Unit Value Calculations....................................................B-1
Example of Variable Annuity Payment Calculations.......................................................B-1
APPENDIX C
Disclosure Statement for Individual Retirement
Annuities ........................................................................................C-1
</TABLE>
The contract is not available in all states.
<PAGE>
DEFINITIONS
Account Value: The sum of the variable accumulated value and the general
account options accumulated value.
Annuity Date: The date on which the annuitization phase of the contract begins.
Cash Surrender Value: The amount we will pay to the owner if the contract
is surrendered on or before the
annuity date. The cash surrender value is equal to: the account value;
less any account fee, interest
adjustment, contingent deferred sales load, and premium tax charges.
Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations issued under it.
Contract Anniversary: The anniversary of the contract effective date each year.
Contract Effective Date: The effective date of the contract as shown on the
contract.
Contract Year: A 12-month period starting on the contract effective date and
ending with the day before the contract anniversary, and each 12-month period
thereafter.
Fixed Account: An account which credits a rate of interest for a period
of at least twelve months for each
allocation or transfer.
General Account Options Accumulated Value: The total dollar value of all amounts
the owner allocates or transfers to any general account options; plus interest
credited; less any amounts withdrawn, applicable fees or premium tax charges, or
transfers out to the variable account prior to the annuity date.
General Account Options: The fixed account and the guarantee period
account offered by us to which the owner
may allocate purchase payments and transfers.
Guaranteed Interest Rate: The annual effective rate of interest after daily
compounding credited to a guarantee
period.
Guarantee Period: The number of years that a guaranteed rate of interest will
be credited to a guarantee period.
Guarantee Period Account: An account which credits a guaranteed rate of interest
for a specified guarantee period. There may be several guarantee periods, each
with a different guaranteed rate of interest, offered under the guarantee period
account.
Living Benefits Rider: Also called a "Waiver of CDSL" rider in some contracts,
it provides benefits described on
page 32.
Portfolio: The investment portfolio underlying each variable sub-account in
which we will invest any amounts the
owner allocates to that variable sub-account.
Service Center: Transamerica's Annuity Service Center, at P.O. Box 31848,
Charlotte, North Carolina 28231-1848,
telephone (800) 258-4260.
Status (Qualified and Non-Qualified): The contract has a qualified status if
it is issued in connection with a
tax-favored retirement plan or program. Otherwise, the status is non-qualified.
Valuation Day: Any day the New York Stock Exchange is open. To determine the
value of an asset on a day that is
not a valuation day, we will use the value of that asset as of the end of the
next valuation day.
Valuation Period: The time interval between the closing (generally 4:00 p.m
Eastern Time) of the New York Stock
Exchange on consecutive valuation days.
Variable Account: Separate Account VA-6, a separate account established and
maintained by Transamerica for the investment of a portion of its assets
pursuant to Section 58-7-95 of the North Carolina Insurance Code.
Variable Accumulation Unit: A unit of measure used to determine the variable
accumulated value before the annuity date. The value of a variable accumulation
unit varies with each variable sub-account.
Variable Accumulated Value: The total dollar value of all variable
accumulation units under this contract prior
to the annuity date.
Variable Sub-Account(s): One or more divisions of the variable account which
invests solely in shares of one of
the underlying portfolios.
We: The company, Transamerica.
You: The owner.
<PAGE>
SUMMARY
The Contract
The Transamerica Classic sm Variable Annuity is a flexible purchase
payment deferred annuity that is designed to aid your long-term financial
planning and retirement needs. The contract may be used in connection with a
retirement plan which qualifies as a retirement program under Sections 403(b),
408 or 408A of the Code, with various types of qualified pension and profit
sharing plans under Section 401 of the Code, or with non-qualified plans. Some
qualified contracts may not be available in all states or in all situations. The
contract is issued by Transamerica Life Insurance and Annuity Company
("Transamerica"), an indirect wholly-owned subsidiary of Transamerica
Corporation. Its principal office is at 401 North Tryon Street, Charlotte, North
Carolina 28202.
This contract will be issued as a certificate under a group annuity
contract in some states and as an individual annuity contract in other states.
The term "contract" as used in this prospectus refers to either the individual
annuity contract or to a certificate issued under a group annuity contract. The
term "owner" refers to the owner(s) of the individual contract or the owner(s)
of the certificate, as appropriate.
Transamerica will establish and maintain an account for each contract.
Each owner will receive either an individual annuity contract or a certificate
evidencing the owner's coverage under a group annuity contract. The contract
provides that the account value, after certain adjustments, will be applied to a
settlement option on a future date you select ("annuity date").
You may allocate all or portions of your purchase payments to one or
more variable sub-accounts or to the general account options.
The account value prior to the annuity date, except for amounts in the
general account options, will vary depending on the investment experience of
each of the variable sub-accounts selected by the owner. All benefits and values
provided under the contract, when based on the investment experience of the
variable account, are variable and are not guaranteed as to dollar amount.
Therefore, prior to the annuity date the owner bears the entire investment risk
under the contract for amounts allocated to the variable account.
There is no guaranteed or minimum cash surrender value on amounts
allocated to the variable account, so the proceeds of a surrender could be less
than the amount invested.
The initial purchase payment for each contract must be at least $5,000
($2,000 for contributory IRAs, SEP/IRAs and Roth IRAs). Generally each
additional purchase payment must be at least $1,000, unless an automatic
purchase payment plan is selected. See "Purchase Payments" page 23.
The Variable Account
The variable account is a separate account (designated Separate Account
VA-6) that is subdivided into variable sub-accounts. See "The Variable Account"
page 17. Assets of each variable sub-account are invested in a specified mutual
fund portfolio ("portfolio"). The variable sub-accounts currently available for
investment are:
Janus Aspen Worldwide Growth
Morgan Stanley UF International Magnum
Dreyfus VIF Small Cap
OCC Accumulation Trust Small Cap
MFS VIT Emerging Growth
Alliance VPF Premier Growth
Dreyfus VIF Capital Appreciation
MFS VIT Research
Transamerica VIF Growth
Alger American Income & Growth
Alliance VPF Growth & Income
MFS VIT Growth with Income
Janus Aspen Balanced
OCC Accumulation Trust Managed
Morgan Stanley UF High Yield
Morgan Stanley UF Fixed Income
Transamerica VIF Money Market
The portfolios pay their investment advisers and administrators certain
fees charged against the assets of each portfolio. The variable accumulated
value, if any, of a contract and the amount of any variable settlement option
payments will vary to reflect the investment performance of the variable
sub-accounts to which amounts have been allocated. Additionally, applicable
charges are deducted. See "Charges, Fees and Deductions" page 31. For more
information about the portfolios, see "The Portfolios" page 18 and the
accompanying portfolios' prospectuses.
General Account Options
There are two types of general account options - the fixed account and
the guarantee period account. See "The General Account Options" in Appendix A.
The amounts in the fixed account will be credited interest at a rate of
not less than 3% annually. Transamerica may credit interest at a rate in excess
of 3% at its discretion for any class. Each interest rate will be guaranteed to
be credited for at least 12 months.
The other general account option, the guarantee period account,
provides specified rates of interest for specified terms of, currently, three,
five and seven years, subject to interest adjustments on early withdrawals or
transfers which, if applicable, could reduce the interest credited to the 3%
minimum rate.
Investment Option Limits
Currently, the owner may not elect more than a total of eighteen
investment options over the life of the contract. Investment options include
variable sub-accounts and general account options. See "Investment Option
Limits" page 24 .
Transfers Before the Annuity Date
Prior to the annuity date, you may transfer values between the variable
sub-accounts and the general account options. For transfers after the annuity
date, see "After the Annuity Date" page 27.
Transfers out of the fixed account are restricted to four per contract
year and to a limited percentage of the fixed account value. More frequent
transfers may be allowed under certain services and options, for example, dollar
cost averaging. Transfers out of a guarantee period prior to the end of the term
may be subject to an interest adjustment which may reduce interest credited to
the 3% minimum rate. See "General Account Options" in Appendix A.
Transamerica currently imposes a transfer fee of $10 for each transfer
in excess of 12 made during the same contract year. See "Transfers" on page 25
for additional limitations and information regarding transfers.
Withdrawals
You may withdraw all or part of the cash surrender value on or before
the annuity date. The cash surrender value of your contract is the account value
less any account fee, interest adjustment, contingent deferred sales load and
premium tax charges. The account fee generally will be deducted on a full
surrender of a contract if the account value is then less than $50,000.
Transamerica may delay payment of any withdrawal from the general account
options for up to six months. See "Cash Withdrawals" page 27.
Withdrawals may be taxable, subject to withholding and subject to
a penalty tax. Withdrawals from
qualified contracts may be subject to severe restrictions and, in
certain circumstances, prohibited. See
"Federal Tax Matters" page 38.
Contingent Deferred Sales Load
Transamerica does not deduct a sales charge when purchase payments are
made (although premium tax charges may be deducted). However, if any part of the
account value is withdrawn, a contingent deferred sales load of up to 6% of
purchase payments may be deducted. After a purchase payment has been held by
Transamerica for seven years, it may be withdrawn without charge. In most
states, the owner may elect, for an extra charge, an optional Living Benefits
Rider that provides that the contingent deferred sales load will be waived in
certain circumstances. No contingent deferred sales load is assessed on payment
of the death benefit, on transfers within the contract, or on certain
annuitizations. See "Contingent Deferred Sales Load" page 32, "Withdrawals" page
32 and "Living Benefits Rider" page 32.
Also, beginning 30 days from the contract effective date (or the end of
the free look period if later), any portion of the "allowed amount" may be
withdrawn each contract year without imposition of any contingent deferred sales
load. The allowed amount for each contract year is equal to 15% of purchase
payments, that were received during the last seven years, as of the prior
contract anniversary, less any withdrawals already taken that contract year. All
purchase payments not previously withdrawn that have been held at least seven
years are not subject to a contingent deferred sales load. For purposes of
calculating the contingent deferred sales load, withdrawals will be considered
to be taken first from purchase payments, on a first in/first out basis, and
then from earnings.
Other Charges and Deductions
Transamerica deducts a mortality and expense risk charge of 1.20%
(annually) of the assets in the variable account and an administrative expense
charge of 0.15% (annually) of these assets. The administrative expense charge
may change, but it is guaranteed not to exceed a maximum effective annual rate
of 0.35%. See "Mortality and Expense Risk Charge" page 34 and "Administrative
Charges" page 33.
An account fee of currently $30 (or 2% of the account value, if less)
is deducted at the end of each contract year and upon surrender. This fee may
change but it is guaranteed not to exceed $60 (or 2% of the account value, if
less) per contract year. If the account value is more than $50,000 on the last
business day of a contract year (or as of the date the contract is surrendered),
the account fee will be waived for that year.
After the annuity date, the annual annuity fee of $30 will be deducted
in equal installments from each periodic payment under the variable payment
option.
For each transfer in excess of 12 during a contract year, a transfer
fee of $10 will be imposed. See
"Transfer Fee" page 34.
Charges for premium taxes (including retaliatory premium taxes) are not
currently deducted, except for annuitizations, but such charges could be imposed
in some jurisdictions. Depending on the applicability of such taxes, the charges
could be deducted from purchase payments, from amounts withdrawn, and/or upon
annuitization.
See "Premium Tax Charges" page 34.
In addition, amounts withdrawn or transferred out of a guarantee period
prior to the end of its term may be subject to an interest adjustment. See
"Guaranteed Period Account" in Appendix A.
If the owner elects the Living Benefits Rider a fee of 0.05%
(annually) of the account value will be
deducted at the end of each contract month at the rate of 1/12 times 0.05%
times the account value. The Living
Benefit Rider is not available in all states.
Currently, no fees are deducted for any other services or options under
the contract. However, Transamerica does reserve the right to impose fees to
cover processing for certain services and options in the future, including
dollar cost averaging, systematic withdrawals, automatic payouts, asset
allocation and asset rebalancing.
Variable Account Fee Table
The purpose of this table is to assist in understanding the various
costs and expenses that the owner will bear directly and indirectly. The table
reflects expenses of the variable account as well as of the mutual fund
portfolios. The table assumes that the entire account value is in the variable
account. The information below should be considered together with the narrative
provided under the heading "Charges, Fees and Deductions" on page 31 of this
prospectus, and with the prospectuses for the portfolios. In addition to the
expenses listed below, premium tax charges may be applicable.
Sales Load(1)
Sales Load Imposed on Purchase Payments 0
Maximum Contingent Deferred Sales Load(2) 6%
Range of Contingent Deferred Sales Load Over Time
Years Since Contingent Deferred Sales Load
Purchase Payment Receipt (as a percentage of purchase payment)
Less than 1 year 6%
1 year but less than 2 years 6%
2 years but less than 3 years 5%
3 years but less than 4 years 5%
4 years but less than 5 years 4%
5 years but less than 6 years 4%
6 years but less 7 years 2%
7 or more years 0%
Other Contract Expenses
Transfer Fee (first 12 per contract year)(3) 0
Fees For Other Services and Options(4) 0
Account Fee(5) $30
Living Benefits Rider Fee (if elected)(6) 0.05%
Variable Account Annual Expenses(7)
(as a percentage of the variable accumulated value)
Mortality and Expense Risk Charge 1.20%
Administrative Expense Charge(8) 0.15%
Total Variable Account Annual Expenses 1.35%
Portfolio Expenses
(as a percentage of assets after fee waiver and/or expense reimbursement)(9)
<TABLE>
<CAPTION>
Total
Portfolio
Management Other Annual
Portfolio Fees Expenses Expenses
<S> <C> <C> <C>
Janus Aspen Worldwide Growth 0.66 0.14 0.80
Morgan Stanley UF International 0.62 0.53 1.15
Magnum
Dreyfus VIF Small Cap 0.75 0.04 0.79
OCC Accumulation Trust Small Cap 0.80 0.22 1.02
MFS VIT Emerging Growth 0.75 0.25 1.00
Alliance VPF Premier Growth 0.72 0.23 0.95
Dreyfus VIF Capital Appreciation 0.75 0.09 0.84
MFS VIT Research 0.75 0.25 1.00
Transamerica VIF Growth 0.75 0.10 0.85
Alger American Income & Growth 0.63 0.19 0.82
Alliance VPF Growth & Income 0.63 0.19 0.82
MFS VIT Growth with Income 0.75 0.25 1.00
Janus Aspen Balanced 0.79 0.15 0.94
OCC Accumulation Trust Managed 0.80 0.10 0.90
Morgan Stanley UF High Yield 0.27 0.53 0.80
Morgan Stanley UF Fixed Income 0.24 0.46 0.70
Transamerica VIF Money Market 0.35 0.25 0.60
</TABLE>
Expense information regarding the portfolios has been provided by the
portfolios. Transamerica has no reason to doubt the accuracy of that
information, but Transamerica has not verified those figures. In preparing the
table above and the examples that follow, Transamerica has relied on the figures
provided by the portfolios. These figures are for the year ended December 31,
1996, except for Morgan Stanley UF International Magnum, High Yield and Fixed
Income Portfolios which are estimates which assume that each portfolio's average
daily net assets will be $50 million, and except for the Transamerica VIF Money
Market Portfolio which are estimates for the year 1998, its first year of
operation. Actual expenses in future years may be higher or lower than these
figures.
Notes to Fee Table:
(1) The contingent deferred sales load applies to each contract, regardless
of how the account value is allocated between the variable account and
the general account options.
(2) A portion of the purchase payments may be withdrawn each contract year
without imposition of any contingent deferred sales load, and after
seven years, a purchase payment may be withdrawn free of any contingent
deferred sales load. See "Charges, Fees and Deductions" page 31.
(3) A transfer fee of $10 will be imposed for each transfer in excess
of 12 in a contract year. See
"Charges, Fees and Deductions" page 31.
(4) Transamerica currently does not impose fees for any other services, or
options. However, Transamerica reserves the right to impose a fee for
various services and options including dollar cost averaging,
systematic withdrawals, automatic payouts, asset allocation and asset
rebalancing.
(5) The current account fee is $30 (or 2% of the account value, if less)
per contract year. This fee will
be waived for account values over $50,000. This limit may be
changed in the future. The fee may be
changed, but it may not exceed $60 (or 2% of the account value,
if less). See "Charges, Fees and
Deductions" page 31.
(6) If the owner elects the Living Benefits Rider, the rider fee will be
deducted at the rate of 1/12 of 0.05% at the end of each contract month
based on the account value at that time. See "Living Benefits Rider"
page 32 .
(7) The variable account annual expenses do not apply to the general account
options.
(8) The current annual administrative expense charge of 0.15% may be
increased to 0.35%. See "Charges, Fees
and Deductions" page 31.
(9) From time to time, the portfolios' investment advisers, each in its own
discretion, may voluntarily waive all or part of their fees and/or
voluntarily assume certain portfolio expenses. The expenses shown in
the Portfolio Expenses table are the expenses paid for 1996 (except for
the Morgan Stanley UF International Magnum, High Yield and Fixed Income
Portfolios and the Transamerica VIF Money Market Portfolio, which are
estimates). The expenses shown in the table reflect a portfolio's
adviser's waivers or fees or reimbursement of expenses if applicable.
It is anticipated that such waivers or reimbursements will continue for
calendar years 1997 and 1998. Without such waivers or reimbursements,
the annual expenses for 1996 for certain portfolios would have been, as
a percentage of assets, as follows:
<TABLE>
<CAPTION>
Total Portfolio
Management Fee Other Expenses Annual Expense
<S> <C> <C> <C>
Janus Aspen Worldwide Growth 0.77 0.14 0.91
Morgan Stanley UF International Magnum 0.80 0.53 1.33
OCC Accumulation Trust Small Cap 0.80 0.26 1.06
MFS VIT Emerging Growth 0.75 0.41 1.16
Alliance VPF Premier Growth 1.00 0.23 1.23
MFS VIT Research 0.75 0.73 1.48
Transamerica VIF Growth 0.75 0.59 1.34
Alliance VPF Growth & Income 0.63 0.32 0.95
MFS VIT Growth with Income 0.75 1.32 2.07
Janus Aspen Balanced 0.92 0.15 1.07
Morgan Stanley UF High Yield 0.50 0.53 1.03
Morgan Stanley UF Fixed Income 0.40 0.46 0.86
</TABLE>
The expenses of the Transamerica VIF Growth Portfolio reflect all 12 months of
1996, including the first 10 months of 1996 when the portfolio was organized as
a separate account of Transamerica Occidental Life Insurance Company; for those
10 months, the separate account was assessed mortality and expense risk charges
which will no longer be assessed at the portfolio level. Without expense
reimbursements, the other expenses for the first year of operation for the
Transamerica VIF Money Market Portfolio are expected to be 0.80% There were no
fee waivers or expense reimbursements for the Dreyfus VIF Small Cap Portfolio,
Dreyfus VIF Capital Appreciation Portfolio, Alger American Income and Growth
Portfolio or OCC Accumulation Trust Managed Portfolio.
<PAGE>
EXAMPLES
The following tables show the total expenses an owner would incur in
various situations assuming a $1,000 investment and a 5% annual return on
assets.
These examples assume an average account value of $40,000 and,
therefore, a deduction of 0.075% has been made to reflect the $30 account fee.
These examples also assume that all amounts were allocated to the variable
sub-account indicated. These examples also assume that no transfer fees or other
option or service fees or premium tax charges have been assessed. Premium tax
charges may be applicable. See "Premium Tax Charges" page 34.
Examples 1 through 3 show expenses for contracts without the optional
Living Benefits Rider based on fee waivers and reimbursements for the portfolios
for 1996. There is no guarantee that any fee waivers or expense reimbursements
will continue in the future. For annuitizations before the first contract
anniversary, and for annuitizations under a form that does not include life
contingencies, the contingent deferred sales load may apply (see expense
examples in column 1).
<TABLE>
<CAPTION>
3. If the owner elects
Examples 1-3 to annuitize at the end
An owner would pay the following 1. If the owner 2. If the owner does of the applicable
expenses on a $1,000 investment, surrenders the not surrender and does period under a
assuming a 5% annual return on assets: contract at the end of not annuitize the Settlement Option with
the applicable time contract: life contingencies:
period:
1 Year 3 Years 1 Year 3 Years 1 Year 3 Years
<S> <C> <C> <C> <C> <C> <C>
Janus Aspen Worldwide Growth $73.56 $112.07 $22.56 $69.57 $22.56 $69.57
Morgan Stanley UF International Magnum $89.28 $158.71 $38.28 $116.21 $38.28 $116.21
Dreyfus VIF Small Cap $73.46 $111.77 $22.46 $69.27 $22.46 $69.27
OCC Accumulation Trust Small Cap $75.60 $117.17 $24.60 $74.67 $24.60 $74.17
MFS VIT Emerging Growth $75.56 $118.10 $24.56 $75.60 $24.56 $75.60
Alliance VPF Premium Growth $75.06 $116.60 $24.06 $74.10 $24.06 $74.10
Dreyfus VIF Capital Appreciation $73.96 $113.28 $22.96 $70.78 $22.96 $70.78
MFS VIT Research $75.56 $118.10 $24.56 $75.60 $24.56 $75.60
Transamerica VIF Growth $74.06 $113.58 $23.06 $71.08 $23.06 $71.08
Alger American Income & Growth $73.66 $112.37 $22.66 $69.87 $22.66 $69.87
Alliance VPF Growth and Income $73.76 $112.68 $22.76 $70.18 $22.76 $70.18
MFS VIF Growth with Income $75.56 $118.10 $24.56 $75.60 $24.56 $75.60
Janus Aspen Balanced $74.96 $116.30 $23.96 $73.80 $23.96 $73.80
OCC Accumulation Trust Managed $74.39 $113.51 $23.39 $71.01 $23.39 $71.01
Morgan Stanley UF High Yield $78.56 $127.08 $27.56 $84.58 $27.56 $84.58
Morgan Stanley UF Fixed Income $81.45 $135.67 $30.45 $93.17 $30.45 $93.17
Transamerica VIF Money Market $71.55 $106.01 $20.55 $63.51 $20.55 $63.51
</TABLE>
Examples 4 through 6 show expenses for contracts with the optional
Living Benefits Rider, based on the
fee waivers and reimbursements for the portfolios for 1996. There is no
guarantee that fee waivers or expense reimbursements will continue in the
future. For annuitizations before the first contract anniversary and for
annuitizations under a form that does not include life contingencies, a
contingent deferred sales load may apply (see examples in column 4).
<TABLE>
<CAPTION>
6. If the owner
Examples 4-6 elects to annuitize at
An owner would pay the following 4. If the owner 5. If the owner does the end of the
expenses on a $1,000 investment, surrenders the not surrender and does applicable period
assuming a 5% annual return on assets: contract at the end not annuitize the under a Settlement
of the applicable contract: Option with life
time period: contingencies:
1 Year 3 Years 1 Year 3 Years 1 Year 3 Years
<S> <C> <C> <C> <C> <C> <C>
Janus Aspen Worldwide Growth $74.06 $113.58 $23.06 $71.08 $23.06 $71.08
Morgan Stanley UF International Magnum $89.77 $160.15 $38.77 $117.65 $38.77 $117.65
Dreyfus VIF Small Cap $73.96 $113.28 $22.96 $70.78 $22.96 $70.78
OCC Accumulation Trust Small Cap $76.09 $118.64 $25.09 $76.14 $25.09 $76.14
MFS VIT Emerging Growth $76.06 $119.60 $25.06 $77.10 $25.06 $77.10
Alliance VPF Premium Growth $75.56 $118.10 $24.56 $75.60 $24.56 $75.60
Dreyfus VIF Capital Appreciation $74.46 $114.79 $23.46 $72.29 $23.46 $72.29
MFS VIT Research $76.06 $119.60 $25.06 $77.10 $25.06 $77.10
Transamerica VIF Growth $74.56 $115.09 $23.56 $72.59 $23.56 $72.59
Alger American Income & Growth $74.16 $113.88 $23.16 $71.38 $23.16 $71.38
Alliance VPF Growth and Income $74.26 $114.19 $23.26 $71.69 $23.26 $71.69
MFS VIF Growth with Income $76.06 $119.60 $25.06 $77.10 $25.06 $77.10
Janus Aspen Balanced Portfolio $75.46 $117.80 $24.46 $75.30 $24.46 $75.30
OCC Accumulation Trust Managed $74.89 $114.98 $23.89 $72.48 $23.89 $72.48
Portfolio
Morgan Stanley UF High Yield $79.06 $128.56 $28.06 $86.06 $28.06 $86.06
Morgan Stanley UF Fixed Income $81.95 $137.15 $30.95 $94.65 $30.95 $94.65
Transamerica VIF Money Market $72.05 $107.53 $21.05 $65.03 $21.05 $65.03
</TABLE>
THESE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES PAID MAY BE GREATER OR LESS THAN THOSE SHOWN, SUBJECT
TO THE GUARANTEES IN THE CONTRACT. THE ASSUMED 5% ANNUAL RATE OF RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
ANNUAL RETURNS, WHICH MAY BE GREATER OR LESS THAN THIS ASSUMED RATE.
Settlement Option Payments
Settlement option payments will be made either on a fixed basis or a
variable basis or a combination of a fixed and variable basis, as you select.
You have flexibility in choosing the annuity date, but it may generally not be a
date later than the annuitant's 85th birthday or the tenth contract anniversary,
whichever occurs last, but never later than the annuitant's 97th birthday.
Certain qualified contracts may have restrictions as to the annuity date and the
types of settlement options available. See "Settlement Option Payments" page 35.
Four settlement options are available under the contract: (1) life
annuity; (2) life and contingent
annuity; (3) life annuity with period certain; and (4) joint and survivo
annuity. See "Settlement Option
Forms" page 37.
Death of Owner Before the Annuity Date
If an owner dies prior to the annuity date and before either the
owner's or any joint owner's 85th birthday, the death benefit for the contract
will be the greatest of (a) the account value or (b) the sum of all purchase
payments made to the contract, less withdrawals and applicable premium tax
charges, or (c) the highest account value on any contract anniversary prior to
the earlier of the owner's or joint owner's 85th birthday, plus purchase
payments made and less withdrawals and applicable premium tax charges since that
contract anniversary. If death occurs after the earlier of the owner's or joint
owner's 85th birthday, the death benefit will be the account value. If the owner
is not a natural person, the annuitant will be treated as the owner(s) for
purposes of the death benefit.
The death benefit will generally be paid within seven days of receipt
of the required proof of death of the owner and election of the method of
settlement or as soon thereafter as Transamerica has sufficient information to
make the payment. If no settlement method is elected the death benefit will be
distributed within five years after the owner's death. No contingent deferred
sales load is imposed. The death benefit may be paid as either a lump sum or as
a settlement option. See "Death Benefit" page 29. Amounts in the guarantee
period account will not be subject to interest adjustments in calculating the
death benefit.
Federal Income Tax Consequences
An owner who is a natural person generally should not be taxed on
increases in the account value until a distribution under the contract occurs
(e.g., a withdrawal or settlement option payment) or is deemed to occur (e.g., a
pledge, loan, or assignment of a contract). Generally, a portion (up to 100%) of
any distribution or deemed distribution is taxable as ordinary income. The
taxable portion of distributions is generally subject to income tax withholding
unless the recipient elects otherwise (although withholding is mandatory for
certain qualified contracts). In addition, a federal penalty tax may apply to
certain distributions. See "Federal Tax Matters" page 38.
Right to Cancel
The owner has the right to examine the contract for a limited period,
known as a "free look period." The owner can cancel the contract during this
period by delivering a written notice of cancellation and returning the contract
to the Service Center before midnight of the tenth day after receipt of the
contract (or longer if required by state law). Notice given by mail and the
return of the contract by mail will be effective on the date received by
Transamerica. Unless otherwise required by law, Transamerica will refund the
purchase payment(s) allocated to any general account option (less any
withdrawals) plus the variable accumulated value as of the date the written
notice and the contract are received by Transamerica. See "Purchase Payments"
page 23 and "Account Value" page 24.
Questions
Questions about procedures or the contract can be answered by the
Transamerica Annuity Service Center ("Service Center"), at P.O. Box 31848,
Charlotte, North Carolina 28231-1848, (800) 258-4260. All inquiries should
include the contract number and the owner's name.
NOTE: The foregoing summary is qualified in its entirety by the
detailed information in the remainder of this prospectus and in the prospectuses
for the portfolios which should be referred to for more detailed information.
With respect to qualified contracts, it should be noted that the requirements of
a particular retirement plan, an endorsement to the contract, or limitations or
penalties imposed by the Code or the Employee Retirement Income Security Act of
1974, as amended, may impose additional limits or restrictions on purchase
payments, withdrawals, distributions, or benefits, or on other provisions of the
contract. This prospectus does not describe such limitations or restrictions.
See "Federal Tax Matters" page 38.
CONDENSED FINANCIAL INFORMATION
Because the variable account has not yet commenced operations, there
are no financial statements available.
TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY AND THE VARIABLE ACCOUNT
Transamerica Life Insurance and Annuity Company
Transamerica Life Insurance and Annuity Company ("Transamerica") is a
stock life insurance company incorporated under the laws of the State of
California in 1966 and redomesticated to North Carolina in 1994. It is
principally engaged in the sale of life insurance and annuity policies.
Transamerica is a wholly-owned indirect subsidiary of Transamerica Corporation.
The address of Transamerica is 401 North Tryon Street, Charlotte, North Carolina
28202.
Published Ratings
Transamerica may from time to time publish in advertisements, sales
literature and reports to owners, the ratings and other information assigned to
it by one or more independent rating organizations such as A.M. Best Company,
Standard & Poor's, Moody's, and Duff & Phelps. The ratings reflect the financial
strength and/or claims-paying ability of Transamerica and should not be
considered as bearing on the investment performance of the variable account.
Each year the A.M. Best Company reviews the financial status of thousands of
insurers, culminating in the assignment of Best's Ratings. These ratings reflect
their current opinion of the relative financial strength and operating
performance of an insurance company in comparison to the norms of the
life/health insurance industry. In addition, the claims-paying ability of
Transamerica as measured by Standard & Poor's Insurance Ratings Services,
Moody's, or Duff & Phelps may be referred to in advertisements or sales
literature or in reports to owners. These ratings are opinions of an operating
insurance company's financial capacity to meet the obligations of its insurance
and annuity policies in accordance with their terms, including its obligations
under the general account options of this contract. Such ratings do not reflect
the investment performance of the variable account or the degree of risk
associated with an investment in the variable account.
The Variable Account
Separate Account VA-6 of Transamerica (the "variable account") was
established by Transamerica as a separate account under the laws of the State of
North Carolina pursuant to June 11, 1996, resolutions of Transamerica's Board of
Directors. The variable account is registered with the Securities and Exchange
Commission ("Commission") under the Investment Company Act of 1940 (the "1940
Act") as a unit investment trust. It meets the definition of a separate account
under the federal securities laws. However, the Commission does not supervise
the management or the investment practices or policies of the variable account.
The assets of the variable account are owned by Transamerica but they
are held separately from the other assets of Transamerica. Section 58-7-95 of
the North Carolina Insurance Law provides that the assets of a separate account
are not chargeable with liabilities incurred in any other business operation of
the insurance company (except to the extent that assets in the separate account
exceed the reserves and other liabilities of the separate account). Income,
gains and losses incurred on the assets in the variable account, whether or not
realized, are credited to or charged against the variable account without regard
to other income, gains or losses of Transamerica. Therefore, the investment
performance of the variable account is entirely independent of the investment
performance of Transamerica's general account assets or any other separate
account maintained by Transamerica.
The variable account currently has seventeen variable sub-accounts
available under the contract, each of which invests solely in a specific
corresponding portfolio. Changes to the variable sub-accounts may be made at the
discretion of Transamerica. See "Addition, Deletion, or Substitution" page 22.
THE PORTFOLIOS
Each of the variable sub-accounts offered under the contract invests
exclusively in one of the portfolios. Descriptions of each portfolio's
investment objectives follow. The management fees listed below are fees
specified in the applicable advisory contract (i.e., before any fee waivers).
The Worldwide Growth Portfolio of the Janus Aspen Series seeks long-term growth
of capital in a manner consistent with the preservation of capital. It is a
diversified portfolio that pursues its objective primarily through investments
in common stocks of foreign and domestic issuers. The portfolio has the
flexibility to invest on a worldwide basis in companies and other organizations
of any size, regardless of country of organization or place of principal
business activity. The portfolio normally invests in issuers from at least five
different countries, including the United States. The portfolio may at times
invest in fewer than five countries or even a single country.
Adviser: Janus Capital Corporation. Management Fee: 0.75% of the first $300
million plus 0.70% of the next $200
million plus 0.65% of the assets over $500 million.
The International Magnum Portfolio of the Morgan Stanley Universal Funds, Inc.,
seeks long-term capital appreciation by investing primarily in equity securities
of non-U.S. issuers domiciled in EAFE countries. The countries in which the
portfolio will invest are those comprising the Morgan Stanley Capital
International EAFE Index, which includes Australia, Japan, New Zealand, most
nations located in Western Europe and certain developed countries in Asia, such
as Hong Kong and Singapore (collectively the "EAFE countries"). The portfolio
may invest up to 5% of its total assets in securities of issuers domiciled in
non-EAFE countries. Under normal circumstances, at least 65% of the total assets
of the portfolio will be invested in equity securities of issuers in at least
three different EAFE countries.
Adviser: Morgan Stanley Asset Management Inc. Management Fee: 0.80% of the
first $500 million plus 0.75% of the
next $500 million plus 0.70% of the assets over $1 billion.
The Small Cap Portfolio of the Dreyfus Variable Investment Fund seeks to
maximize capital appreciation. It seeks to achieve its objective by investing
principally in common stocks. Under normal market conditions, the portfolio will
invest at least 65% of its total assets in companies with market capitalizations
of less than $1.5 billion at the time of purchase which The Dreyfus Corporation
believes to be characterized by new or innovative products, services or
processes which should enhance prospects for growth in future earnings.
Adviser: The Dreyfus Corporation. Management Fee: 0.75%.
The Small Cap Portfolio of the OCC Accumulation Trust seeks capital appreciation
through investments in a diversified portfolio consisting primarily of equity
securities of companies with market capitalizations of under $1 billion. Under
normal circumstances at least 65% of the portfolio's assets will be invested in
equity securities. The majority of securities purchased by the portfolio will be
traded on the New York Stock Exchange, the American Stock Exchange or in the
over-the-counter market, and will also include options, warrants, bonds, notes
and debentures which are convertible into or exchangeable for, or which grant a
right to purchase or sell, such securities. In addition, the portfolio may also
purchase foreign securities provided that they are listed on a domestic or
foreign securities exchange or are represented by American depository receipts
listed on a domestic securities exchange or traded in domestic or foreign
over-the-counter markets.
Adviser: OpCap Advisors. Management Fee: 0.80% of the first $400 million
plus 0.75% of the next $400 million
plus 0.70% of assets over $800 million.
The Emerging Growth Series of the MFS Variable Insurance Trust seeks to provide
long-term growth of capital. Dividend and interest income from portfolio
securities, if any, is incidental to the investment objective of long-term
growth of capital. The policy is to invest primarily (i.e., at least 80% of its
assets under normal circumstances) in common stocks of companies that the
Adviser believes are early in their life cycle but which have the potential to
become major enterprises (emerging growth companies). While the portfolio will
invest primarily in common stocks, the portfolio may, to a limited extent, seek
appreciation in other types of securities such as fixed income securities (which
may be unrated), convertible securities and warrants when relative values make
such purchases appear attractive either as individual issues or as types of
securities in certain economic environments. The portfolio may invest in
non-convertible fixed income securities rated lower than "investment grade"
(commonly known as "junk bonds") or in comparable unrated securities, when, in
the opinion of the Adviser, such an investment presents a greater opportunity
for appreciation with comparable risk to an investment in "investment grade"
securities. Under normal market conditions the portfolio will invest not more
than 5% of its nets assets in these securities. Consistent with its investment
objective and policies described above, the portfolio may also invest up to 25%
(and generally expects to invest not more than 15%) of its net assets in foreign
securities (including emerging market securities and Brady Bonds) which are not
traded on a U.S. exchange.
Adviser: Massachusetts Financial Services Company. Management Fee: 0.75%.
The Premier Growth Portfolio of Alliance Variable Products Series Fund, Inc.,
seeks growth of capital by pursuing aggressive investment policies. Since
investments will be made based upon their potential for capital appreciation,
current income will be incidental to the objective of capital growth. The
portfolio will invest predominantly in the equity securities (common stocks,
securities convertible into commons stocks and rights and warrants to subscribe
for or purchase common stocks) of a limited number of large, carefully selected,
high-quality U.S. companies that, in the judgment of the Adviser, are likely to
achieve superior earnings growth. The portfolio investments in the 25 such
companies most highly regarded at any point in time by the Adviser will usually
constitute approximately 70% of the portfolio's net assets. The portfolio thus
differs from more typical equity mutual funds by investing most of its assets in
a relatively small number of intensively researched companies. The portfolio
will, under normal circumstances, invest at least 85% of the value of its total
assets in the equity securities of U.S. companies.
Adviser: Alliance Capital Management L.P. Management Fee: 1%.
The Capital Appreciation Portfolio of the Dreyfus Variable Investment Fund is a
diversified portfolio, the primary investment objective of which is to provide
long-term capital growth consistent with the preservation of capital; current
income is a secondary investment objective. During periods which the Sub-Adviser
determines to be of market strength, the portfolio acts aggressively to increase
shareholders' capital by investing principally in common stocks of domestic and
foreign issuers, common stocks with warrants attached and debt securities of
foreign governments. The portfolio will seek investment opportunities generally
in large capitalization companies (those with market capitalizations exceeding
$500 million) which the Sub-Adviser believes have the potential to experience
above average and predictable earnings growth.
Adviser: The Dreyfus Corporation. Sub-Adviser: Fayez Sarofim & Co.
Management Fee: 0.75%.
The Research Series of the MFS Variable Insurance Trust seeks long-term growth
of capital and future income. The policy is to invest a substantial proportion
of its assets in equity securities of companies believed to possess better than
average prospects for long-term growth. Equity securities in which the portfolio
may invest include the following: common stocks, preferred stocks and preference
stocks, securities such as bonds, warrants or rights that are convertible into
stocks and depository receipts for those securities. These securities may be
listed on securities exchanges, traded in various over-the-counter markets or
have no organized markets. A smaller proportion of the assets may be invested in
bonds, short-term obligations, preferred stocks or common stocks whose principal
characteristic is income production rather than growth. Such securities may also
offer opportunities for growth of capital as well as income. In the case of both
growth stocks and income issues, emphasis is placed on the selection of
progressive, well-managed companies. The portfolio's non-convertible debt
investments, if any, may consist of "investment grade" securities, and, with
respect to no more than 10% of the portfolio's net assets, securities in the
lower rated categories or securities which the Adviser believes to be a similar
quality to these lower rated securities (commonly know as "junk bonds").
Consistent with its investment objective and policies described above, the
portfolio may also invest up to 20% of its net assets in foreign securities
(including emerging market securities) which are not traded on a U.S. exchange.
Adviser: Massachusetts Financial Services Company. Management Fee: 0.75%.
The Growth Portfolio of the Transamerica Variable Insurance Fund, Inc., seeks
long-term capital growth. Common stock (listed and unlisted) is the basic form
of investment. Although the portfolio invests the majority of its assets in
common stocks, the portfolio may also invest in debt securities and preferred
stocks (both having a call on common stocks by means of a conversion privilege
or attached warrants) and warrants or other rights to purchase common stocks.
Unless market conditions would indicate otherwise, the portfolio will be
invested primarily in such equity-type securities. When in the judgment of the
Sub-Adviser market conditions warrant, the portfolio may, for temporary
defensive purposes, hold part or all of its assets in cash, debt or money market
instruments. The portfolio may invest up to 10% of its assets in debt securities
having a call on common stocks that are rated below investment grade.
Adviser: Transamerica Occidental Life Insurance Company. Sub-Adviser:
Transamerica Investment Services, Inc.
Management Fee: 0.75%.
The Income and Growth Portfolio of The Alger American Fund seeks, primarily, a
high level of dividend income. Capital appreciation is a secondary objective of
the portfolio. Except during temporary defensive periods, the portfolio attempts
to invest 100%, and it is a fundamental policy of the portfolio to invest at
least 65%, of its total assets in dividend paying equity securities. Alger
Management will favor securities it believes also offer opportunities for
capital appreciation. The portfolio may invest up to 35% of its total assets in
money market instruments and repurchase agreements and in excess of that amount
(up to 100% of its assets) during temporary defensive periods.
Adviser: Fred Alger Management, Inc. Management Fee: 0.625%.
The Growth and Income Portfolio of the Alliance Variable Products Series Fund,
Inc., seeks reasonable current income and reasonable opportunity for
appreciation through investments primarily in dividend-paying common stocks of
good quality. Whenever the economic outlook is unfavorable for investment in
common stock, investments in other types of securities, such as bonds,
convertible bonds, preferred stock and convertible preferred stocks may be made
by the portfolio. Purchases and sales of portfolio securities are made at such
times and in such amounts as are deemed advisable in light of market, economic
and other conditions.
Adviser: Alliance Capital Management L.P. Management Fee: 0.625%.
The Growth with Income Series of the MFS Variable Insurance Trust seeks
reasonable current income and long-term growth of capital and income. Under
normal market conditions, the portfolio will invest at least 65% of its assets
in equity securities of companies that are believed to have long-term prospects
for growth and income. Equity securities in which the portfolio may invest
include the following: common stocks, preferred stocks and preference stock;
securities such as bonds, warrants or rights that are convertible into stocks;
and depository receipts for those securities. These securities may be listed on
securities exchanges, traded in various over-the-counter markets or have no
organized markets. Consistent with its investment objective and policies
described above, the portfolio may also invest up to 75% (and generally expects
to invest no more than 15%) of its net assets in foreign securities (including
emerging market securities and Brady Bonds) which are not traded on a U.S.
exchange.
Adviser: Massachusetts Financial Services Company. Management Fee: 0.75%.
The Balanced Portfolio of the Janus Aspen Series seeks long-term capital growth,
consistent with preservation of capital and balanced by current income. It is a
diversified portfolio that, under normal circumstances, pursues its objective by
investing 40-60% of its assets in securities selected primarily for their growth
potential and 40-60% of its assets in securities selected primarily for their
income potential. This portfolio normally invests at least 25% of its assets in
fixed-income senior securities, which include debt securities and preferred
stocks.
Adviser: Janus Capital Corporation. Management Fee: 0.75% of the first $300
million plus 0.70% of the next $200
million plus 0.65% of the assets over $500 million.
The Managed Portfolio of the OCC Accumulation Trust seeks growth of capital over
time through investment in a portfolio consisting of common stocks, bonds and
cash equivalents, the percentages of which will vary based on the Adviser's
assessments of the relative outlook for such investments. Debt securities are
expected to be predominantly investment grade intermediate to long term U.S.
Government and corporate debt, although the portfolio will also invest in high
quality short term money market and cash equivalent securities and may invest
almost all of its assets in such securities when the Adviser deems it advisable
in order to preserve capital. In addition, the portfolio may also purchase
foreign securities provided that they are listed on a domestic or foreign
securities exchange or are represented by American depository receipts listed on
a domestic securities exchange or traded in domestic or foreign over-the-counter
markets.
Adviser: OpCap Advisors. Management Fee: 0.80% of first $400 million
plus 0.75% of next $400 million plus
0.70% of the assets over $800 million.
The High Yield Portfolio of the Morgan Stanley Universal Funds, Inc., seeks
above-average total return over a market cycle of three to five years by
investing primarily in high yield securities of U. S. and foreign issuers,
including corporate bonds and other fixed income securities and derivatives.
High yield securities are rated below investment grade and are commonly referred
to as "junk bonds." The portfolio's average weighted maturity will ordinarily
exceed five years and will usually be between five and fifteen years.
Adviser: Miller Anderson & Sherrerd, LLP. Management Fee: 0.50% of first
$500 million plus 0.45% of next $500
million plus 0.40% of the assets over $1 billion.
The Fixed Income Portfolio of the Morgan Stanley Universal Funds, Inc., seeks
above-average total return over a market cycle of three to five years by
investing primarily in a diversified portfolio of U.S. government and agencies,
corporate bonds, mortgage backed securities, foreign bonds and other fixed
income securities and derivatives. The portfolio's average weighted maturity
will ordinarily exceed five years and will usually be between five and fifteen
years.
Adviser: Miller Anderson & Sherrerd, LLP. Management Fee: 0.40% of the first
$500 million plus 0.35% of the next
$500 million plus 0.30% of the assets over $1 billion.
The Money Market Portfolio of the Transamerica Variable Insurance Fund,
Inc., seeks to maximize current income
from money market securities consistent with liquidity and the preservation
of principal. The portfolio invests
primarily in high quality U. S. dollar-denominated money market instruments
with remaining maturities of 13
months or less, including: obligations issued or guaranteed by the U. S.
and foreign governments and their
agencies and instrumentalities; obligations of U. S. and foreign banks, or
their foreign branches, and U. S.
savings banks; short-term corporate obligations, including commercial
paper, notes and bonds; other short-term
debt obligations with remaining maturities of 397 days or less; and
repurchase agreements involving any of the
securities mentioned above. The portfolio may also purchase other
marketable, non-convertible corporate debt
securities of U. S. issuers. These investments include bonds, debentures,
floating rate obligations, and issues
with optional maturities.
Adviser: Transamerica Occidental Life Insurance Company. Sub-Adviser:
Transamerica Investment Services, Inc.
Management Fee: 0.35%.
Meeting investment objectives depends on various factors,
including, but not limited to, how well the
portfolio managers anticipate changing economic and market conditions.
THERE IS NO ASSURANCE THAT ANY OF THESE
PORTFOLIOS WILL ACHIEVE THEIR STATED OBJECTIVES.
An investment in the contract is not a deposit or obligation of, or
guaranteed or endorsed, by any bank, nor is the contract federally insured by
the Federal Deposit Insurance Corporation or any other government agency.
Investing in the contract involves certain investment risks, including possible
loss of principal.
Since all of the portfolios are available to registered separate
accounts offering variable annuity and variable life products of Transamerica as
well as other insurance companies, there is a possibility that a material
conflict may arise between the interests of the variable account and one or more
other separate accounts investing in the portfolios. In the event of a material
conflict, the affected insurance companies will take any necessary steps to
resolve the matter, including stopping their separate accounts from investing in
the portfolios. See the portfolios' prospectuses for greater details.
Additional information concerning the investment objectives and
policies of all of the portfolios, the investment advisory services and
administrative services and charges can be found in the current prospectuses for
the portfolios which accompany this prospectus. The portfolios' prospectuses
should be read carefully before any decision is made concerning the allocation
of purchase payments to, or transfers among, the variable sub-accounts.
Transamerica may receive payments from some or all of the portfolios or
their advisers, in varying amounts, that may be based on the amount of assets
allocated to the portfolios. The payments are for administrative or distribution
services.
Addition, Deletion, or Substitution
Transamerica does not control the portfolios and cannot guarantee that
any of the variable sub-accounts offered under this contract or any of the
portfolios will always be available for allocation of purchase payments or
transfers. Transamerica retains the right to make changes in the variable
account and in its investments.
Transamerica reserves the right to eliminate the shares of any
portfolio held by a variable sub-account and to substitute shares of another
portfolio or of another investment company for the shares of any portfolio, if
the shares of the portfolio are no longer available for investment or if, in
Transamerica's judgment, investment in any portfolio would be inappropriate in
view of the purposes of the variable account. To the extent required by the 1940
Act, a substitution of shares attributable to the owner's interest in a variable
sub-account will not be made without prior notice to the owner and the prior
approval of the Commission. Nothing contained herein shall prevent the variable
account from purchasing other securities for other series or classes of variable
annuity contracts, or from effecting an exchange between series or classes of
variable contracts on the basis of requests made by owners.
New variable sub-accounts for the contracts may be established when, in
the sole discretion of Transamerica, marketing, tax, investment or other
conditions so warrant. Any new variable sub-accounts will be made available to
existing owners on a basis to be determined by Transamerica. Each additional
variable sub-account will purchase shares in a mutual fund portfolio or other
investment vehicle. Transamerica may also eliminate one or more variable
sub-accounts if, in its sole discretion, marketing, tax, investment or other
conditions so warrant. In the event any variable sub-account is eliminated,
Transamerica will notify owners and request a re-allocation of the amounts
invested in the eliminated variable sub-account.
In the event of any substitution or change, Transamerica may make such
changes in the contract as may be necessary or appropriate to reflect such
substitution or change. Furthermore, if deemed to be in the best interests of
persons having voting rights under the contracts, the variable account may be
operated as a management company under the 1940 Act or any other form permitted
by law, may be de-registered under such Act in the event such registration is no
longer required, or may be combined with one or more other separate accounts.
THE CONTRACT
The contract is a flexible purchase payment deferred annuity contract.
The rights and benefits are described below and in the individual contract or in
the certificate and group contract; however, Transamerica reserves the right to
make any modification to conform the individual contract and the group contract
and certificates thereunder to, or give the owner the benefit of, any federal or
state statute or rule or regulation. The obligations under the contract are
obligations of Transamerica. The contracts are available on a non-qualified
basis and on a qualified basis. Contracts available on a qualified basis are as
follows: (1) rollover and contributory individual retirement annuities (IRAs)
under Code Sections 408(a) and 408(b); (2) conversion and contributory Roth IRAs
under Code Section 408A; (3) simplified employee pension plans (SEP/IRAs) that
qualify for special federal income tax treatment under Code Section 408(k); (4)
Code Section 403(b) annuities; and (5) qualified pension and profit sharing
plans intended to qualify under Code Section 401. Generally, qualified contracts
contain certain restrictive provisions limiting the timing and amount of
purchase payments to, and distributions from, the qualified contract. For
further discussion concerning qualified contracts, see "Federal Tax Matters"
page 38.
Ownership
The owner is entitled to the rights granted by the contract. If the
owner dies, the rights of the owner belong to the joint owner, if any, and then
to the owner's beneficiary. If there are joint owners, the one designated as the
primary owner will receive all mail and any tax reporting information.
For non-qualified contracts, the owner is entitled to designate the
annuitant(s) and, if the owner is an individual, the owner can change the
annuitant(s) at any time before the annuity date. Any such change will be
subject to our then current underwriting requirements. Transamerica reserves the
right to reject any change of annuitant(s) which has been made without our prior
written consent.
If the owner is not an individual, the annuitant(s) may not be changed
once the contract is issued. Different rules apply to qualified contracts. See
"Federal Tax Matters," page 38.
For each contract, a different account will be established and values,
benefits and charges will be calculated separately. The various administrative
rules described below will apply separately to each contract, unless otherwise
noted.
PURCHASE PAYMENTS
Purchase Payments
All purchase payments must be paid to the Service Center. A
confirmation will be issued to the owner upon the acceptance of each purchase
payment.
The initial purchase payment must be at least $5,000 ($2,000 for
contributory IRAs, SEP/IRAs and Roth
IRAs).
The contract will be issued and the initial purchase payment generally
will be credited within two business days after the receipt of both sufficient
information to issue a contract and the initial purchase payment at the Service
Center. Acceptance is subject to sufficient information being provided in a form
acceptable to Transamerica, and Transamerica reserves the right to reject any
request for issuance of a contract or purchase payment. Contracts normally will
not be issued with respect to owners, joint owners, or annuitants more than 90
years old, although Transamerica in its discretion may waive this restriction in
appropriate cases. Transamerica further reserves the right to not accept
purchase payments after the owners' (or annuitants' if non-individual owner)
91st birthday.
If the initial purchase payment allocated to the variable
sub-account(s) cannot be credited within two days of receipt of the purchase
payment and information requesting issuance of a contract because the
information is incomplete or for any other reason, then Transamerica will
contact the owner, explain the reason for the delay and will refund the initial
purchase payment within five business days, unless the owner consents to
Transamerica retaining the initial purchase payment and crediting it as soon as
the requirements are fulfilled.
Additional purchase payments may be made at any time prior to the
annuity date. Additional purchase payments must be at least $1,000 or at least
$100 if made pursuant to an automatic purchase payment plan under which the
additional purchase payments are automatically deducted from a bank account and
allocated to the contract. In addition, minimum allocation amounts apply (see
"Allocation of Purchase Payments" below). Additional purchase payments are
credited to the contract as of the date the payment is received.
Total purchase payments for any contract may not exceed $1,000,000
without prior approval of Transamerica.
In no event may the sum of all purchase payments for a contract during
any taxable year exceed the limits imposed by any applicable federal or state
law, rules, or regulations.
Allocation of Purchase Payments
You specify how purchase payments will be allocated under the contract.
You may allocate purchase payments between and among one or more of the variable
sub-accounts and the general account options as long as the portions are whole
number percentages and any allocation percentage for a variable sub-account is
at least 10%. In addition, there is a minimum allocation of $100 to any variable
sub-account and the fixed account, and $1,000 to each guarantee period.
Transamerica may waive this minimum allocation amount under certain options and
circumstances.
Each purchase payment will be subject to the allocation percentages in
effect at the time of receipt of such purchase payment. The allocation
percentages for additional purchase payments may be changed by the owner at any
time by submitting a request for such change, in a form and manner acceptable to
Transamerica, to the Service Center. Any changes to the allocation percentages
are subject to the limitation(s) above. Any change will take effect with the
first purchase payment received with or after receipt by the Service Center of
the request for such change and will continue in effect until subsequently
changed.
In certain jurisdictions and under certain conditions where by law
Transamerica is required to return upon the exercise of the free look option,
either (1) the purchase payment or (2) the greater of the purchase payment or
account value, any initial allocation to the variable account may be held in the
money market variable sub-account during the applicable free look period plus 5
days for delivery. Any such allocations to the money market variable sub-account
will automatically be transferred at the end of the free-look period plus 5 days
according to the owner's requested allocation. Such transfer will not count
against the 12 allowed transfers without charge during the first contract year.
Investment Option Limits
Currently, the owner may not allocate amounts to more than eighteen
investment options over the life of the contract. Investment options include
variable sub-accounts and general account options. Each variable sub-account,
each duration of guarantee period under the guarantee period account and the
fixed account that ever received a transfer or purchase payment allocation count
as one towards this total of eighteen limit.
Transamerica may waive this limit in the future.
For example, if the owner makes an allocation to the money market
variable sub-account and later transfers all amounts out of this money market
variable sub-account, it would still count as one for the purposes of the
limitation even if it held no value. If the owner transfers from a variable
sub-account to another variable sub-account and later back to the first, the
count towards the limitation would be two, not three. If the owner selects a
guarantee period and renews for the same term, the count will be one; but if the
owner renews to a guarantee period with a different term, the count will be two.
ACCOUNT VALUE
Before the annuity date, the account value is equal to: (a) the general
account options accumulated value plus (b) the variable accumulated value.
The variable accumulated value is determined at the end of each
valuation day. To determine the variable accumulated value on a day that is not
a valuation day, the value as of the end of the next valuation day will be used.
The variable accumulated value is expected to change from valuation period to
valuation period, reflecting the investment experience of the selected
portfolios as well as the deductions for charges and fees. A valuation period is
the period between successive valuation days. It begins at the close of the New
York Stock Exchange (generally 4:00 p.m. ET) on each valuation day and ends at
the close of the New York Stock Exchange on the next succeeding valuation day. A
valuation day is each day that the New York Stock Exchange is open for regular
business.
Purchase payments allocated to a variable sub-account are credited to
the variable accumulated value in the form of variable accumulation units. The
number of variable accumulation units credited for each variable sub-account is
determined by dividing the purchase payment allocated to the variable
sub-account by the variable accumulation unit value for that variable
sub-account. In the case of the initial purchase payment, variable accumulation
units for that payment will be credited to the variable accumulated value within
two valuation days of the later of: (a) the date sufficient information, in an
acceptable manner and form, is received at our Service Center; or (b) the date
our Service Center receives the initial purchase payment. In the case of any
additional purchase payment, variable accumulation units for that payment will
be credited at the end of the valuation period during which Transamerica
receives the payment. The value of a variable accumulation unit for each
variable sub-account is established at the end of each valuation period and is
calculated by multiplying the value of that unit at the end of the prior
valuation period by the variable sub-account's net investment factor for the
valuation period. The value of a variable accumulation unit may go up or down.
The net investment factor is used to determine the value of
accumulation and annuity unit values for the end of a valuation period. The
applicable formula can be found in the Statement of Additional Information.
Transfers involving variable sub-accounts will result in the crediting
and/or cancellation of variable accumulation units having a total value equal to
the dollar amount being transferred to or from a particular variable
sub-account. The crediting and cancellation of such units is made using the
variable accumulation unit value of the applicable variable sub-account as of
the end of the valuation day in which the transfer is effective.
TRANSFERS
Before the Annuity Date
Before the annuity date, you may transfer all or any portion of the
account value among the variable sub-accounts and the guarantee periods.
Transfers are restricted into or out of the fixed account. See "General Account
Options" in Appendix A.
Transfers among the variable sub-accounts and the general account
options may be made by submitting a request, in a form and manner acceptable to
Transamerica, to the Service Center. The transfer request must specify: (1) the
variable sub-account(s) and/or the general account option(s) from which the
transfer is to be made; (2) the amount of the transfer; and (3) the variable
sub-account(s) and/or general account option(s) to receive the transferred
amount. The minimum amount which may be transferred from the variable
sub-accounts and the general account options is $1,000. Transfers among the
variable sub-accounts are also subject to such terms and conditions as may be
imposed by the portfolios.
When a transfer is made from a guarantee period before the end of its
term, the amount transferred may be subject to an interest adjustment. See "The
General Account Options" in Appendix A. A transfer from a guarantee period made
within 30 days before the last day of its term will not be subject to any
interest adjustment.
Transamerica currently imposes a transfer fee of $10 for each transfer
in excess of 12 made during the same contract year. Transamerica reserves the
right to waive the transfer fee or vary the number of transfers without charge
or not count transfers under certain options or services for purposes of the
allowed number without charge. A transfer generally will be effective on the
date the request for transfer is received by the Service Center.
If a transfer reduces the value in a variable sub-account or guarantee
period or in the fixed account to less than $1,000, then Transamerica reserves
the right to transfer the remaining amount along with the amount requested to be
transferred in accordance with the transfer instructions provided by the owner.
Under current law, there will not be any tax liability for transfers within the
contract.
Other Restrictions
Transamerica reserves the right without prior notice to modify,
restrict, suspend or eliminate the
transfer
<PAGE>
privileges (including telephone transfers) at any time and for any reason. For
example, restrictions may be necessary to protect owners from adverse impacts on
portfolio management of large and/or numerous transfers by market timers or
others. Transamerica has determined that the movement of significant variable
sub-account values from one variable sub-account to another may prevent the
underlying portfolio from taking advantage of investment opportunities because
the portfolio must maintain a significant cash position in order to handle
redemptions. Such movement may also cause a substantial increase in portfolio
transaction costs which must be indirectly borne by owners. Therefore,
Transamerica reserves the right to require that all transfer requests be made by
the owner and not by a third party holding a power of attorney and to require
that each transfer request be made by a separate communication to Transamerica.
Transamerica also reserves the right to require that each transfer request be
submitted in writing and be manually signed by the owner(s); telephone or
facsimile transfer requests may not be allowed.
Telephone Transfers
Transamerica will allow telephone transfers if the owner has provided
proper authorization for such transfers in a form and manner acceptable to
Transamerica. Transamerica reserves the right to suspend telephone transfer
privileges at any time, for some or all contracts, for any reason. Withdrawals
are not permitted by telephone.
Transamerica will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine and if it follows such
procedures it will not be liable for any losses due to unauthorized or
fraudulent instructions. In the opinion of certain government regulators,
Transamerica may be liable for such losses if it does not follow those
procedures. The procedures Transamerica will follow for telephone transfers may
include requiring some form of personal identification prior to acting on
instructions received by telephone, providing written confirmation of the
transaction, and/or tape recording the instructions given by telephone.
Dollar Cost Averaging
Prior to the annuity date, the owner may request that amounts be
automatically transferred on a monthly basis from a "source account," which is
currently either the money market sub-account or the fixed account, to any of
the variable sub-accounts by submitting a request to the Service Center in a
form and manner acceptable to Transamerica. Other source accounts may be
available; call the Service Center for availability.
Only one source account can be elected at a time. The transfers will
begin when the owner requests, but no sooner than one week following, receipt of
such request, provided that dollar cost averaging transfers will not commence
until the later of (a) 30 days after the contract effective date, or (b) the
estimated end of the free look period (allowing 5 days for delivery). Transfers
will continue for the number of consecutive months selected by the owner unless
(1) terminated by the owner, (2) automatically terminated by Transamerica
because there are insufficient amounts in the source account, or (3) for other
reasons as described in the election form. The owner may request that monthly
transfers be continued for a term then available by giving notice to the Service
Center in a form and manner acceptable to Transamerica within 30 days prior to
the last monthly transfer. If no request to continue the monthly transfers is
made by the owner, this option will terminate automatically with the last
transfer at the end of the term.
In order to be eligible for dollar cost averaging, the following
conditions must be met: (1) the value of the source account must be at least
$5,000; (2) the minimum amount that can be transferred out of the source account
is $250 per month; and (3) the minimum amount transferred into any other
variable sub-account is the greater of $250 or 10% of the amount being
transferred. These limits may be changed for new elections of this service.
Dollar cost averaging transfers can not be made from a source account from which
systematic withdrawals or automatic payouts are also being made. Dollar cost
averaging may not be elected at the same time automatic asset rebalancing is in
effect.
There is currently no charge for the dollar cost averaging option and
transfers due to dollar cost averaging currently will not count toward the
number of transfers allowed without charge per contract year.
Transamerica may charge in the future for dollar cost averaging.
Dollar cost averaging transfers may not be made to or from the
guarantee period account or to the fixed
account.
Automatic Asset Rebalancing
After purchase payments have been allocated among the variable
sub-accounts, the performance of each variable sub-account may cause proportions
of the values in the variable sub-accounts to vary from the allocation
percentages. The owner may instruct Transamerica to automatically rebalance the
amounts in the variable account by reallocating amounts among the variable
sub-accounts, at the time, and in the percentages, specified in the owner
instructions to Transamerica and accepted by Transamerica. The owner may elect
to have the rebalancing done on an annual, semi-annual or quarterly basis. The
owner may elect to have amounts allocated among the variable sub-accounts using
whole percentages, with a minimum of 10% allocated to each variable sub-account.
The owner may elect to establish, change or terminate the automatic
asset rebalancing by submitting a request to the Service Center in a form and
manner acceptable to Transamerica. Automatic asset rebalancing currently will
not count towards the number of transfers without charge in a contract year.
Transamerica reserves the right to discontinue the automatic asset rebalancing
service at any time for any reason. There is currently no charge for the
automatic asset rebalancing service. Transamerica may in the future charge for
this service and may count the transfers toward those allowed without charge.
Automatic asset rebalancing may not be elected at the same time that
dollar cost averaging is in effect.
After the Annuity Date
If a variable payment option is elected, the owner may make transfers
among variable sub-accounts after the annuity date by giving a written request
to the Service Center, subject to the following provisions: (1) transfers after
the annuity date may be made no more than four times during any contract year;
and (2) the minimum amount transferred from one variable sub-account to another
is the amount supporting a current $75 monthly payment.
Transfers among variable sub-accounts after the annuity date will be
processed based on the formula outlined in the appendix in the Statement of
Additional Information.
CASH WITHDRAWALS
The owner of a non-qualified contract may withdraw all or part of the
cash surrender value at any time prior to the annuity date by giving a written
request to the Service Center. For qualified contracts, reference should be made
to the terms of the particular retirement plan or arrangement for any additional
limitations or restrictions, including prohibitions, on cash withdrawals. See
"Federal Tax Matters," page 38. The cash surrender value is equal to the account
value, less any account fee, interest adjustment, contingent deferred sales load
and premium tax charges. A full surrender will result in a cash withdrawal
payment equal to the cash surrender value at the end of the valuation period
during which the election is received along with all completed forms then
required by Transamerica. No surrenders or withdrawals may be made after the
annuity date. Partial withdrawals must be at least $1,000.
In the case of a partial withdrawal, you may direct the Service Center
to withdraw amounts from specific variable sub-account(s) and/or from the
general account options. If the owner does not specify, the withdrawal will be
taken pro rata from account value.
A partial withdrawal request cannot be made if it would reduce the
account value to less than $2,000. In that case, the owner will be notified.
Withdrawal (including surrender) requests generally will be processed
as of the end of the valuation period during which the request, including all
completed forms, is received. Payment of any cash withdrawal, settlement option
payment or lump sum death benefit due from the variable account and processing
of any transfers will occur within seven days from the date the election is
received, except that Transamerica may postpone such payment if: (1) the New
York Stock Exchange is closed for other than usual weekends or holidays, or
trading on the Exchange is otherwise restricted; or (2) an emergency exists as
defined by the Commission, or the Commission requires that trading be
restricted; or (3) the Commission permits a delay for the protection of owners.
The withdrawal request will be effective when all required withdrawal request
forms are received. Payments of any amounts derived from a purchase payment paid
by check may be delayed until the check has cleared the owner's bank.
When a withdrawal is made from a guarantee period before the end of its
term, the amount withdrawn may be subject to an interest adjustment. See "The
General Account Options" in Appendix A.
Transamerica may delay payment of any withdrawal from the general
account options for up to six months after Transamerica receives the request for
such withdrawal. If Transamerica delays payment for more than 30 days,
Transamerica will pay interest on the withdrawal amount up to the date of
payment.
SINCE THE OWNER ASSUMES THE INVESTMENT RISK FOR ALL AMOUNTS IN THE
VARIABLE ACCOUNT AND BECAUSE CERTAIN WITHDRAWALS ARE SUBJECT TO A CONTINGENT
DEFERRED SALES LOAD AND OTHER CHARGES, THE TOTAL AMOUNT PAID UPON SURRENDER OF
THE CONTRACT MAY BE MORE OR LESS THAN THE TOTAL PURCHASE PAYMENTS.
An owner may elect, under the systematic withdrawal option or automatic
payout option (but not both), to withdraw certain amounts on a periodic basis
from the variable sub-accounts prior to the annuity date.
The tax consequences of a withdrawal or surrender are discussed later
in this prospectus. See "Federal Tax Matters" page 38.
Systematic Withdrawal Option
Prior to the annuity date, you may elect to have withdrawals
automatically made from one or more variable sub-account(s) on a monthly basis.
Other distribution modes may be permitted. The withdrawals will not begin until
the later of (a) 30 days after the contract effective date or (b) the end of the
free look period. Withdrawals will be from the variable sub-account(s) and in
the percentage allocations that you specify. If no specifications are made,
withdrawals will be pro rata based on value from all variable sub-account(s) and
general account options with value and any applicable interest adjustment will
apply to withdrawals from the guarantee periods. Systematic withdrawals cannot
be made from a variable sub-account from which dollar cost averaging transfers
are being made and cannot be elected concurrently with the automatic payout
option. The systematic withdrawal option is currently not available with respect
to the general account options.
To be eligible for the systematic withdrawal option, the account value
must be at least $12,000 at the time of election. The minimum monthly amount
that can be withdrawn is $100. Currently, the owner can elect any amount over
$100 to be withdrawn systematically. The owner may also make partial withdrawals
while receiving systematic withdrawals. If the total withdrawals (systematic,
automatic, or partial) in a contract year exceed the allowed amount to be
withdrawn without charge for that year, any applicable contingent deferred sales
load will then apply.
The withdrawals will continue indefinitely unless terminated. If this
option is terminated it may not be elected again until the end of the next 12
full months.
Transamerica reserves the right to impose an annual fee of up to $25
for processing payments under this option. This fee, which is currently waived,
will be deducted in equal installments from each systematic withdrawal during a
contract year.
Systematic withdrawals may be taxable and, prior to age 59 1/2,
subject to a 10% federal tax penalty. See
"Federal Tax Matters," page 38.
Automatic Payout Option ("APO")
Prior to the annuity date, for qualified contracts, the owner may elect
the automatic payout option (APO) to satisfy minimum distribution requirements
under Sections 401(a)(9), 403(b), and 408(b)(3) of the Code. See "Federal Tax
Matters" page 38. For IRAs and SEP/IRAs this may be elected no earlier than six
months prior to the calendar year in which the owner attains age 701/2, but
payments may not begin earlier than January of such calendar year. For other
qualified contracts, APO can be elected no earlier than six months prior to the
later of when the owner (a) attains age 70 1/2; and (b) retires from employment.
Additionally, APO withdrawals may not begin before the later of (a) 30 days
after the contract effective date or (b) the end of the free look period. APO
may be elected in any calendar month, but no later than the month of the owner's
84th birthday.
Withdrawals will be from the variable sub-account(s) and in the
percentage allocations you specify. If no specifications are made, withdrawals
will be pro rata based on account value. Withdrawals can not be made from a
variable sub-account from which dollar cost averaging transfers are being made.
The APO is not currently available with respect to the general account options.
The calculation of the APO amount will reflect the total account value although
the withdrawals are only from the variable sub-accounts. This calculation and
APO are based solely on value in this contract.
To be eligible for this option, the following conditions must be met:
(1) the account value must be at least $12,000 at the time of election; (2) the
annual withdrawal amount is the larger of the required minimum distribution
under Code Sections 401(a)(9) or 408(b)(3) or $500. These conditions may change.
Currently, withdrawals under this option are only paid annually.
The withdrawals will continue indefinitely unless terminated. If there
are insufficient amounts in the variable account to make a withdrawal, this
option generally will terminate. Once terminated, APO may not be elected again.
DEATH BENEFIT
If an owner dies before the annuity date, a death benefit is payable.
If death occurs prior to any owner's or joint owner's 85th birthday, the death
benefit will be equal to the greatest of (a) the account value, or (b) the sum
of all purchase payments made to the contract less withdrawals and applicable
premium tax charges, or (c) the highest account value on any contract
anniversary prior to the earlier of the owner's or joint owner's 85th birthday,
plus purchase payments made less withdrawals and applicable premium tax charges
since that contract anniversary. If the owner or joint owner dies before the
annuity date and after either the deceased owner's or joint owner's 85th
birthday, the death benefit is equal to the account value. For purposes of
calculating such death benefit, the account value is determined as of the date
the benefit is paid. If the owner is not a natural person, the annuitant(s) will
be treated as the owner(s) for purposes of the death benefit. For example, if
the owner is a trust that allows a person(s) other than the trustee to exercise
the ownership rights under this certificate, such person(s) must be named
annuitant(s) and will be treated as the owner(s) so the death benefit will be
determined based on the age of the annuitant(s).
An ownership change will be subject to our then current underwriting
rules and may decrease the death benefit. However, such reduction will never
decrease the death benefit below the account value.
Payment of Death Benefit
The death benefit is generally payable upon receipt of proof of death
of the owner. Upon receipt of this proof and an election of a method of
settlement, the death benefit generally will be paid within seven days, or as
soon thereafter as Transamerica has sufficient information about the beneficiary
to make the payment.
The death benefit will be determined as of the end of the valuation
period during which our Service Center receives both proof of death of the owner
or joint owner and the written notice of the settlement option elected by the
person to whom the death benefit is payable. If no settlement method is elected,
the death benefit will be a lump sum distributed within five years after the
owner's death. No contingent deferred sales load nor interest adjustment will
apply.
Until the death benefit is paid, the account value allocated to the
variable account remains in the variable account, and fluctuates with investment
performance of the applicable portfolio(s). Accordingly, the amount of the death
benefit depends on the account value at the time the death benefit is paid, not
at the time of death.
Designation of Beneficiaries
The owner may select one or more beneficiaries by designating the
person(s) to receive the amounts payable under this contract if: the owner dies
before the annuity date and there is no joint owner, or the owner dies after the
annuity date and settlement option payments have begun under a selected
settlement option that guarantees payments for a certain period of time. The
interest of any beneficiary who dies before the owner will terminate at time of
death of such beneficiary.
A beneficiary may be named or changed at any time in a form and manner
acceptable to us. Any change made to an irrevocable beneficiary must also
include the written consent of the beneficiary, except as otherwise required by
law.
If more than one beneficiary is named, each named beneficiary will
share equally in any benefits or rights granted by this contract unless the
owner gives us other instructions at the time the beneficiaries are named.
Transamerica may rely on any affidavit by any responsible person
in determining the identity or
non-existence of any beneficiary not identified by name
Death of Owner or Joint Owner Before the Annuity Date
If the owner or joint owner dies before the annuity date, we will pay
the death benefit as specified in this section. The entire death benefit will be
distributed within five years after the owner's death. If the owner is not an
individual, an annuitant's death will be treated as the death of the owner as
provided in Code Section 72 (s)(6). For example, the contract will remain in
force with the annuitant's surviving spouse as the new annuitant if:
o This contract is owned by a trust; and
o The beneficiary is either the annuitant's surviving spouse or
a trust holding the contract solely for the benefit of such
spouse.
The manner in which we will pay the death benefit depends on the status
of the person(s) involved in the contract. The death benefit will be payable to
the first person from the applicable list below:
If the owner is the annuitant:
o The joint owner, if any,
o The beneficiary, if any.
If the owner is not the annuitant:
o The joint owner, if any,
o The beneficiary, if any,
o The annuitant,
o The joint annuitant; if any.
If the death benefit is payable to the owner's surviving spouse (or to a trust
for the sole benefit of such surviving spouse),
We will continue this contract with the owner's spouse as the new
annuitant (if the owner was the annuitant) and the new owner (if applicable),
unless such spouse selects another option as provided below.
If the death benefit is payable to someone other that the owner's surviving
spouse,
We will pay the death benefit in a lump sum payment to, or for the
benefit of, such person within five years after the owner's death, unless such
person(s) selects another option as provided below.
In lieu of the automatic form of death benefit specified above,
The person(s) to whom the death benefit is payable may elect to receive
it:
o In a lump sum; or
o As settlement option payments, provided the person making the
election is an individual. Such payments must begin within one
year after the owner's death and must be in equal amounts over
a period of time not extending beyond the individual's life or
life expectancy.
Election of either option must be made no later than 60 days prior to
the one-year anniversary of the owner's death. Otherwise, the death benefit will
be settled under the appropriate automatic form of benefit specified above.
If the person to whom the death benefit is payable dies before the entire death
benefit is paid,
We will pay the remaining death benefit in a lump sum to the payee
named by such person or, if no payee was named, to such person's estate.
If the death benefit is payable to a non-individual (subject to the special rule
for a trust for the sole benefit of a surviving spouse),
We will pay the death benefit in a lump sum within one year after the
owner's death.
If the Annuitant Dies Before the Annuity Date
If an owner and an annuitant are not the same individual and the
annuitant (or the last of joint annuitants) dies before the annuity date, the
owner will become the annuitant until a new annuitant is selected.
Death after the Annuity Date
If an owner or the annuitant dies after the annuity date, any amounts
payable will continue to be distributed at least as rapidly as under the
settlement and payment option then in effect on the date of death.
Upon the owner's death after the annuity date, any remaining ownership
rights granted under this contract will pass to the person to whom the death
benefit would have been paid if the owner had died before the annuity date, as
specified above.
Survival Provision
The interest of any person to whom the death benefit is payable who
dies at the time of, or within 30 days after, the death of the owner will also
terminate if no benefits have been paid to such beneficiary, unless the owner
had given us written notice of some other arrangement.
CHARGES, FEES AND DEDUCTIONS
No deductions are currently made from purchase payments (although we
reserve the right to charge for any applicable premium tax charges). Therefore,
the full amount of the purchase payments are invested in one or more of the
variable sub-accounts and/or the general account options.
Contingent Deferred Sales Load
No deduction for sales charges is made from purchase payments at the
time they are made. However, a contingent deferred sales load of up to 6% of
purchase payments may be imposed on certain withdrawals or surrenders to
partially cover certain expenses incurred by Transamerica relating to the sale
of the contract, including commissions paid to salespersons, the costs of
preparation of sales literature and other promotional costs and acquisition
expenses.
The contingent deferred sales load percentage varies according to the
number of years between when a purchase payment was credited to the contract and
when the withdrawal is made. The amount of the contingent deferred sales load is
determined by multiplying the amount withdrawn subject to the contingent
deferred sales load by the contingent deferred sales load percentage in
accordance with the following table. In no event shall the aggregate contingent
deferred sales load assessed against the contract exceed 6% of the aggregate
purchase payments.
<TABLE>
<CAPTION>
Number of Years Since Contingent Deferred Sales Load
contingent deferred sales load
Receipt of Purchase Payment As a Percentage of Purchase Payment
<S> <C>
Less than one year 6%
1 year but less than 2 years 6%
2 years but less than 3 years 5%
3 years but less than 4 years 5%
4 years but less than 5 years 4%
5 years but less than 6 years 4%
6 years but less than 7 years 2%
7 or more years 0%
</TABLE>
Free Withdrawals - Allowed Amount
Beginning 30 days after the contract effective date (or the end of the
free look period, if later), the owner may make a withdrawal up to the "allowed
amount" without incurring a contingent deferred sales load each contract year
before the annuity date.
The allowed amount each contract year is equal to 15% of the total
purchase payments received during the last seven years determined as of the last
contract anniversary less any withdrawals during the present contract year. In
the first contract year, the 15% will be applied to the total purchase payments
at the time of the first withdrawal.
Purchase payments held for seven full years may be withdrawn without
charge.
Withdrawals will be made first from purchase payments on a
first-in/first-out basis and then from earnings. The allowed amount may vary
depending on the state of issuance. If the allowed amount is not fully withdrawn
or paid out during a contract year, it does not carry over to the next contract
year.
Free Withdrawals - Living Benefits Rider
When the contract is purchased, the owner may also elect, in certain
states, a Living Benefits Rider for an additional fee, that provides that the
contingent deferred sales load will be waived in any of the three following
instances:
(1) if the owner receives extended medical care in a licensed hospital or
nursing care facility (as defined in the contract) for at least 60 consecutive
days, and the request for the withdrawal or surrender, together with proof of
such extended care, is received at the Service Center during the term of such
care or within 90 days after the last day upon which the owner received such
extended care; or
(2) if the owner receives medically required in-home care for at least 60 days
and such extended in-home medical care is certified by a qualified medical
professional and the owner may also be required to submit other evidence as
required by Transamerica such as evidence of medicare eligibility; or
(3) if the owner becomes terminally ill after the first contract year and the
terminal illness is diagnosed by a qualified medical professional and is
reasonably expected to result in death within 12 months.
Neither (1) nor (2) apply if the owner is receiving extended medical care in a
licensed hospital or nursing care facility or in-home medical care at the time
the contract is purchased.
Transamerica reserves the right to not accept purchase payments after
the owner has qualified for any of these waivers. Owner under this rider means
either the owner or the joint owner or annuitant(s) if the contract is not owned
by an individual. Any withdrawals under this rider on which the contingent
deferred sales load is waived will not reduce the allowed amount for the
contract year.
Other Free Withdrawals
In addition, no contingent deferred sales load is assessed: upon
annuitization after the first contract year to an option involving life
contingencies; upon payment of the death benefit; or upon transfers of account
value. Any applicable contingent deferred sales load will be deducted from the
amount requested for both partial withdrawals (including withdrawals under the
systematic withdrawal option or the APO) and full surrenders unless the owner
elects to "gross-up" the amount for a partial withdrawal to cover the applicable
contingent deferred sales load. The contingent deferred sales load and any
premium tax charge applicable to a withdrawal from the guarantee period account
will be deducted from the amount withdrawn after the interest adjustment, if
any, is applied and before payment is made.
Administrative Charges
Account Fee
At the end of each contract year before the annuity date, Transamerica
deducts an annual account fee as partial compensation for expenses relating to
the issue and maintenance of the contract and the variable account. The annual
account fee is equal to the lesser of $30 or 2% of the account value. The
account fee may be increased upon 30 days advance written notice, but in no
event may it exceed $60 (or 2% of the account value, if less) per contract year.
If the contract is surrendered, the account fee, unless waived, will be deducted
from a full surrender before the application of any continent deferred sales
load. The account fee will be deducted on a pro rata basis (based on values)
from the account value including both the variable sub-accounts and the general
account options. No interest adjustment will be assessed on any deduction for
the account fee taken from the guarantee period account. The account fee for a
contract year will be waived if the account value exceeds $50,000 on the last
business day of that contract year or as of the date the contract is
surrendered.
Annuity Fee
After the annuity date, an annual annuity fee of $30 to help cover
processing costs will be deducted in equal amounts from each variable payment
made during the year ($2.50 each month if monthly payments). This fee will not
be changed but may be waived. No annuity fee will be deducted from fixed
payments.
Administrative Expense Charge
Transamerica also makes a daily deduction (the administrative expense
charge) from the variable account (both before and after the contract date) at
an effective current annual rate of 0.15% of assets held in each variable
sub-account to reimburse Transamerica for administrative expenses. Transamerica
has the ability in most states to increase or decrease this charge, but the
charge is guaranteed not to exceed 0.35%. Transamerica will provide 30 days
written notice of any change in fees. The administrative charges do not bear any
relationship to the actual administrative costs of a particular contract. The
administrative expense charge is reflected in the variable accumulation or
variable annuity unit values for each variable sub-account.
Mortality and Expense Risk Charge
Transamerica deducts a charge for bearing certain mortality and expense
risks under the contracts. This is a daily charge at an effective annual rate of
1.20% of the assets in the variable account. Transamerica guarantees that this
charge of 1.20% will never increase. The mortality and expense risk charge is
reflected in the variable accumulation and variable annuity unit values for each
variable sub-account.
Variable accumulated values and variable settlement option payments are
not affected by changes in actual mortality experience incurred by Transamerica.
The mortality risks assumed by Transamerica arise from its contractual
obligations to make settlement option payments determined in accordance with the
settlement option tables and other provisions contained in the contract and to
pay death benefits prior to the annuity date.
The expense risk assumed by Transamerica is the risk that
Transamerica's actual expenses in administering the contracts and the variable
account will exceed the amount recovered through the administrative expense
charge, account fees, transfer fees and any fees imposed for certain options and
services.
If the mortality and expense risk charge is insufficient to cover
actual costs and risks assumed, the loss will fall on Transamerica. Conversely,
if this charge is more than sufficient, any excess will be profit to
Transamerica. Currently, Transamerica expects a profit from this charge.
Transamerica anticipates that the contingent deferred sales load will
not generate sufficient funds to pay the cost of distributing the contracts. To
the extent that the contingent deferred sales load is insufficient to cover the
actual cost of contract distribution, the deficiency will be met from
Transamerica's general corporate assets which may include amounts, if any,
derived from the mortality and expense risk charge.
Living Benefits Rider Fee
If the owner elected the Living Benefits Rider when the contract was
purchased, a fee will be deducted at the end of each contract month while the
rider continues in force. The fee each month will be 1/12 of 0.05% of the
account value at that time. The fee is deducted from each variable sub-account
pro rata based on the value in each variable sub-account through the
cancellation of variable accumulation units. If there is insufficient variable
accumulated value, the fee will be deducted pro rata from the values in the
general account options (any interest adjustment will apply.) Transamerica
reserves the right to waive the interest adjustment for deductions from the
guarantee period account for this rider fee.
Premium Tax Charges
Currently there is no charge for premium taxes except upon
annuitization. However, Transamerica may be required to pay premium or
retaliatory taxes currently ranging from 0% to 3.5%. Transamerica reserves the
right to deduct a charge for these premium taxes from premium payments, from
amounts withdrawn, or from amounts applied on the annuity date. In some states
and jurisdictions, charges for both direct premium taxes and retaliatory premium
taxes may be imposed at the same or different times with respect to the same
purchase payment, depending upon applicable law.
Transfer Fee
Transamerica currently imposes a fee for each transfer in excess of the
first 12 in a single contract year. Transamerica will deduct the charge from the
amount transferred. This fee is $10 and will be used to help cover
Transamerica's costs of processing transfers. Transamerica reserves the right to
waive this fee or to not count transfers under certain options and services as
part of the number of allowed annual transfers without charge.
Option and Service Fees
Transamerica reserves the right to impose reasonable fees for
administrative expenses associated with processing certain options and services.
These fees would be deducted from each use of the option or service during a
contract year.
Taxes
No charges are currently made for taxes. However, Transamerica reserves
the right to deduct charges in the future for federal, state, and local taxes or
the economic burden resulting from the application of any tax laws that
Transamerica determines to be attributable to the contracts.
Portfolio Expenses
The value of the assets in the variable account reflects the value of
portfolio shares and therefore the fees and expenses paid by each portfolio. A
complete description of the fees, expenses, and deductions from the portfolios
are found in the portfolios' prospectuses. See "The Portfolios" page 18.
Interest Adjustment
For a description of the interest adjustment applicable to early
withdrawals and transfers from the guaranteed period account, see "The General
Account Options -- the Guarantee Period Account" in Appendix A.
SETTLEMENT OPTION PAYMENTS
Annuity Date
The annuity date is the date that the annuitization phase of the
contract begins. On the annuity date, we will apply the annuity amount (defined
below) to provide payments under the settlement option selected by the owner.
The annuity date is selected by the owner and may be changed from time to time
by the owner by giving notice, in a form and manner acceptable to Transamerica,
to the Service Center, provided that notice of each change is received by the
Service Center at least thirty (30) days prior to the then-current annuity date.
The annuity date cannot be earlier than the first contract anniversary except
for certain qualified contracts. The latest annuity date which may be elected is
the later of (a) the first day of the calendar month immediately preceding the
month of the annuitant's or joint annuitants' 85th birthday, or (b) the first
day of the month coinciding with or next following the tenth contract
anniversary (but in no event later than the annuitants' or joint annuitants'
97th birthday). The latest allowed annuity date may vary in certain
jurisdictions.
The annuity date must be the first day of a calendar month. The first
settlement option payment will be on the first day of the month immediately
following the annuity date. Certain qualified contracts may have restrictions as
to the annuity date and the types of settlement options available. See "Federal
Tax Matters," page 38.
Settlement Option Payments
The annuity amount is the account value, less any interest adjustment,
less any applicable contingent deferred sales load, and less any applicable
premium tax charges. Any contingent deferred sales load will be waived if the
settlement option payments involve life contingencies and begin on or after the
first contract anniversary.
If the amount of the monthly payment from the settlement option
selected by the owner would result in a monthly settlement option payment of
less than $150, or if the annuity amount is less than $5,000, Transamerica
reserves the right to offer a less frequent mode of payment or pay the cash
surrender value in a cash payment. Monthly settlement option payments from the
variable payment option will further be subject to a minimum monthly payment of
$75 from each variable sub-account from which such payments are made.
The owner may choose from the settlement options below. Transamerica
may consent to other plans of payment before the annuity date. For settlement
options involving life contingencies, the actual age and/or sex of the
annuitant, or a joint annuitant will affect the amount of each payment.
Sex-distinct rates generally are not allowed under certain qualified contracts.
Transamerica reserves the right to ask for satisfactory proof of the annuitant's
(or joint annuitant's) age. Transamerica may delay settlement option payments
until satisfactory proof is received. Since payments to older annuitants are
expected to be fewer in number, the amount of each annuity payment shall be
greater for older annuitants than for younger annuitants.
The owner may choose from the two payment options described below. The
annuity date and settlement options available for qualified contracts may also
be controlled by endorsements, the plan or applicable law.
Election of Settlement Option Forms and Payment Options
Before the annuity date, and while the annuitant is living, the owner
may, by written request, change the settlement option or payment option. The
request for change must be received by the Service Center at least 30 days prior
to the annuity date.
In the event that a settlement option form and payment option is not
selected at least 30 days before the annuity date, Transamerica will make
settlement option payments in accordance with the 120 month period certain and
life settlement option and the applicable provisions of the contract.
Payment Options
Owners may elect a fixed or a variable payment option, or a
combination of both (in 25% increments of
the annuity amount).
Unless specified otherwise, the annuity amount in the variable account
will be used to provide a variable payment option and the amount in the general
account options will be used to provide a fixed payment option. In this event,
the initial allocation of variable annuity units for the variable sub-accounts
will be in proportion to the account value in the variable sub-accounts on the
annuity date.
Fixed Payment Option
A fixed payment option provides for payments which will remain constant
pursuant to the terms of the settlement option elected. If a fixed payment
option is selected, the portion of the annuity amount used to provide that
payment option will be transferred to the general account assets of
Transamerica, and the amount of payments will be established by the fixed
settlement option selected and the age and sex (if sex-distinct rates are
allowed by law) of the annuitant(s) and will not reflect investment experience
after the annuity date. The fixed payment amounts are determined by applying the
fixed settlement option purchase rate specified in the contract to the portion
of the annuity amount applied to the payment option. Payments may vary after the
death of an annuitant under some options; the amounts of variances are fixed on
the annuity date.
Variable Payment Option
A variable payment option provides for payments that vary in dollar
amount, based on the investment performance of the selected variable
sub-account(s). The variable settlement option purchase rate tables in the
contract reflect an assumed annual interest rate of 4%, so if the actual net
investment performance of the variable sub-account(s) is less than 4%, then the
dollar amount of the actual payments will decrease. If the actual net investment
performance of the variable sub-account(s) is higher than 4%, then the dollar
amount of the actual payments will increase. If the net investment performance
exactly equals the 4% rate, then the dollar amount of the actual payments will
remain constant. Transamerica may offer other assumed annual interest rates.
Variable payments will be based on the variable sub-accounts selected
by the owner, and on the allocations among the variable sub-accounts.
For further details as to the determination of variable payments, see
the Statement of Additional Information.
Settlement Option Forms
The owner may choose any of the settlement option forms described
below. Subject to approval by Transamerica, the owner may select any other
settlement option form then being offered by Transamerica.
(1) Life Annuity. Payments start on the first day of the month
immediately following the annuity date, if the annuitant is living. Payments end
with the payment due just before the annuitant's death. There is no death
benefit. It is possible that no payment will be made if the annuitant dies after
the annuity date but before the first payment is due; only one payment will be
made if the annuitant dies before the second payment is due, and so forth.
(2) Life and Contingent Annuity. Payments start on the first day of the
month immediately following the annuity date, if the annuitant is living.
Payments will continue for as long as the annuitant lives. After the annuitant
dies, payments will be made to the contingent annuitant, for as long as the
contingent annuitant lives. The continued payments can be in the same amount as
the original payments, or in an amount equal to one-half or two-thirds thereof.
Payments will end with the payment due just before the death of the contingent
annuitant. There is no death benefit after both die. If the contingent annuitant
does not survive the annuitant, payments will end with the payment due just
before the death of the annuitant. It is possible that no payments or very few
payments will be made, if the annuitant and contingent annuitant die shortly
after the annuity date.
The written request for this form must: (a) name the contingent
annuitant; and (b) state the percentage of payments to be made after the
annuitant dies. Once payments start under this settlement option form, the
person named as contingent annuitant for purposes of being the measuring life,
may not be changed. Transamerica will require proof of age for the annuitant and
for the contingent annuitant before payments start.
(3) Life Annuity With Period Certain. Payments start on the
first day of the month immediately
following the annuity date, if the annuitant is living. Payments will be
made for the longer of: (a) the
annuitant's life; or (b) the period certain. The period certain may be 120 or
180 or 240 months.
If the annuitant dies after all payments have been made for the period
certain, payments will cease with the payment due just before the annuitant's
death. No benefit will then be payable to the beneficiary.
If the annuitant dies during the period certain, the rest of the period
certain payments will be made to the beneficiary, unless the owner provides
otherwise.
The written request for this form must: (a) state the length of the
period certain; and (b) name the
beneficiary.
(4) Joint and Survivor Annuity. Payments will be made starting on the
first day of the month immediately following the annuity date, if and for as
long as the annuitant and joint annuitant are living. After the annuitant or
joint annuitant dies, payments will continue for so long as the survivor lives.
Payments end with the payment due just before the death of the survivor. The
continued payments can be in the same amount as the original payments, or in an
amount equal to one-half or two-thirds thereof. It is possible that no payments
or very few payments will be made under this form if the annuitant and joint
annuitant both die shortly after the annuity date.
The written request for this form must: (a) name the joint annuitant;
and (b) state the percentage of continued payments to be made after the first
death. Once payments start under this settlement option form, the person named
as joint annuitant, for the purpose of being the measuring life, may not be
changed. Transamerica will need proof of age for the annuitant and joint
annuitant before payments start.
(5) Other Forms of Payment. Benefits can be provided under other
settlement options not described in this section subject to Transamerica's
agreement and any applicable state or federal law or regulation. Requests for
any other settlement option must be made in writing to the Service Center at
least 30 days before the annuity date.
After the annuity date, (a) no changes can be made in the settlement
option and payment option; (b) no additional purchase payment will be accepted
under the contract; and (c) no further withdrawals will be allowed.
The owner of a non-qualified contract may, at any time after the
annuity date by written notice to us at the Service Center, change the payee of
benefits being provided under the contract. The effective date of change in
payee will be the latter of: (a) the date we receive the written request for
such change; or (b) the date specified by the owner. The owner of a qualified
contract may not change payees, except as permitted by the plan, arrangement or
federal law.
FEDERAL TAX MATTERS
Introduction
The following discussion is a general description of federal tax
considerations relating to the contract and is not intended as tax advice. This
discussion is not intended to address the tax consequences resulting from all of
the situations in which a person may be entitled to or may receive a
distribution under the contract. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction. This discussion is based upon Transamerica's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service ("IRS"). No representation is made as to the likelihood
of the continuation of the present federal income tax laws or of the current
interpretation by the IRS. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
The contract may be purchased on a non-tax qualified basis
("non-qualified contract") or purchased and used in connection with plans or
arrangements qualifying for special tax treatment ("qualified contract").
Qualified contracts are designed for use in connection with plans or
arrangements entitled to special income tax treatment under Sections 401,
403(b), 408 and 408A of the Code. The ultimate effect of federal income taxes on
the amounts held under a contract, on settlement option payments, and on the
economic benefit to the owner, the annuitant, or the beneficiary may depend on
the type of retirement plan or arrangement for which the contract is purchased,
on the tax and employment status of the individual concerned, and on
Transamerica's tax status. In addition, certain requirements must be satisfied
in purchasing a qualified contract with proceeds from a tax qualified retirement
plan or arrangement and receiving distributions from a qualified contract in
order to continue receiving favorable tax treatment. Therefore, purchasers of
qualified contracts should seek competent legal and tax advice regarding the
suitability of the contract for their situation, the applicable requirements,
and the tax treatment of the rights and benefits of the contract. The following
discussion is based on the assumption that the contract qualifies as an annuity
for federal income tax purposes and that all purchase payments made to qualified
contracts are in compliance with all requirements under the Code and the
specific retirement plan or arrangement.
Purchase Payments
At the time the initial purchase payment is paid, a prospective
purchaser must specify whether he or she is purchasing a non-qualified contract
or a qualified contract. If the initial purchase payment is derived from an
exchange, transfer, conversion or surrender of another annuity contract,
Transamerica may require that the prospective purchaser provide information with
regard to the federal income tax status of the previous annuity contract.
Transamerica will require that persons purchase separate contracts if they
desire to invest monies qualifying for different annuity tax treatment under the
Code. Each such separate contract would require the minimum initial purchase
payment previously described. Additional purchase payments under a contract must
qualify for the same federal income tax treatment as the initial purchase
payment under the contract Transamerica will not accept an additional purchase
payment under a contract if the federal income tax treatment of such purchase
payment would be different from that of the initial purchase payment.
Taxation of Annuities
In General
Section 72 of the Code governs taxation of annuities in general.
Transamerica believes that an owner who is a natural person generally is not
taxed on increases in the value of a contract until distribution occurs by
withdrawing all or part of the account value (e.g., withdrawals or settlement
option payments). For this purpose, the assignment, pledge, or agreement to
assign or pledge any portion of the account value (and in the case of a
qualified contract, any portion of an interest in the plan) generally will be
treated as a distribution. The taxable portion of a distribution is taxable as
ordinary income.
The owner of any contract who is not a natural person generally must
include in income any increase in the excess of the account value over the
"investment in the contract" (discussed below) during the taxable year. There
are some exceptions to this rule and a prospective owner that is not a natural
person should discuss these with a competent tax adviser.
The following discussion generally applies to a contract owned by a
natural person.
Withdrawals
With respect to non-qualified contracts, partial withdrawals (including
withdrawals under the systematic withdrawal option) are generally treated as
taxable income to the extent that the account value immediately before the
withdrawal exceeds the "investment in the contract" at that time. The
"investment in the contract" generally equals the amount of non-deductible
purchase payments made.
In the case of a withdrawal from qualified contracts (including
withdrawals under the systematic withdrawal option or the automatic payout
option), a ratable portion of the amount received is taxable, generally based on
the ratio of the "investment in the contract" to the individual's total accrued
benefit under the retirement plan or arrangement. The "investment in the
contract" generally equals the amount of non-deductible purchase payments made
by or on behalf of any individual. For certain qualified contracts, the
"investment in the contract" can be zero. Special tax rules applicable to
certain distributions from qualified contracts are discussed below, under
"Qualified Contracts."
If a partial withdrawal from the guarantee period account is subject to
an interest adjustment, the account value immediately before the withdrawal will
not be altered to take into account the interest adjustment. As a result, for
purposes of determining the taxable portion of a partial withdrawal, the account
value will be treated as including the amount deducted from the guarantee period
account due to the interest adjustment.
Full surrenders are treated as taxable income to the extent that the
amount received exceeds the "investment in the contract."
Settlement Option Payments
Although the tax consequences may vary depending on the settlement
option elected under the contract, in general a ratable portion of each payment
that represents the amount by which the account value exceeds the "investment in
the contract" will be taxed based on the ratio of the "investment in the
contract" to the total benefit payable; after the "investment in the contract"
is recovered, the full amount of any additional settlement option payments is
taxable.
For variable payments, the taxable portion is generally determined by
an equation that establishes a specific dollar amount of each payment that is
not taxed. The dollar amount is determined by dividing the "investment in the
contract" by the total number of expected periodic payments. However, the entire
distribution will be taxable once the recipient has recovered the dollar amount
of his or her "investment in the contract."
For fixed payments, in general there is no tax on the portion of each
payment which represents the same ratio that the "investment in the contract"
bears to the total expected value of the payments for the term selected;
however, the remainder of each settlement option payment is taxable. Once the
"investment in the contract" has been fully recovered, the full amount of any
additional settlement option payments is taxable. If settlement option payments
cease as a result of an annuitant's death before full recovery of the
"investment in the contract," consult a competent tax adviser regarding
deductibility of the unrecovered amount.
Withholding
The Code requires Transamerica to withhold federal income tax from
withdrawals. However, except for certain qualified contracts, an owner will be
entitled to elect, in writing, not to have tax withholding apply. Withholding
applies to the portion of the distribution which is includible in income and
subject to federal income tax. The federal income tax withholding rate is 10%,
or 20% in the case of certain qualified plans, of the taxable amount of the
distribution. Withholding applies only if the taxable amount of the distribution
is at least $200. Some states also require withholding for state income taxes.
Penalty Tax
There may be imposed a federal income tax penalty equal to 10% of the
amount treated as taxable income. In general, however, there is no penalty tax
on distributions: (1) made on or after the date on which the owner attains age
591/2; (2) made as a result of death or disability of the owner; or (3) received
in substantially equal periodic payments as a life annuity or a joint and
survivor annuity for the life(ves) or life expectancy(ies) of the owner and a
"designated beneficiary." Other exceptions to the tax penalty may apply to
certain distributions from a qualified contract.
Taxation of Death Benefit Proceeds
Amounts may be distributed from the contract because of the death of an
owner. Generally such amounts are includible in the income of the recipient as
follows: (1) if distributed in a lump sum, they are taxed in the same manner as
a full surrender as described above, or (2) if distributed under a settlement
option, they are taxed in the same manner as settlement option payments, as
described above. For these purposes, the investment in the contract is not
affected by the owner's death. That is, the investment in the contract remains
the amount of any purchase payments paid which are not excluded from gross
income.
Transfers, Assignments, or Exchanges of the Contract
For non-qualified contracts, a transfer of ownership of a contract, the
designation of an annuitant, payee, or other beneficiary who is not also the
owner, or the exchange of a contract may result in certain tax consequences to
the owner that are not discussed herein. An owner contemplating any such
designation, transfer, assignment, or exchange should contact a competent tax
adviser with respect to the potential tax effects of such a transaction.
Qualified contracts may not be assigned or transferred, except as permitted by
the Code or the Employee Retirement Income Security Act of 1974 (ERISA).
Multiple Contracts
All deferred non-qualified contracts that are issued by Transamerica
(or its affiliates) to the same owner during any calendar year are treated as
one contract for purposes of determining the amount includible in gross income
under Section 72(e) of the Code. In addition, the Treasury Department has
specific authority to issue regulations that prevent the avoidance of Section
72(e) through the serial purchase of contracts or otherwise. Congress has also
indicated that the Treasury Department may have authority to treat the
combination purchase of an immediate annuity contract and separate deferred
annuity contracts as a single annuity contract under its general authority to
prescribe rules as may be necessary to enforce the income tax laws.
Qualified Contracts
In General
The qualified contracts are designed for use with several types of
retirement plans and arrangements. The tax rules applicable to participants and
beneficiaries in retirement plans or arrangements vary according to the type of
plan and the terms and conditions of the plan. Special tax treatment may be
available for certain types of contributions and distributions. Adverse tax
consequences may result from contributions in excess of specified limits;
distributions prior to age 591/2 (subject to certain exceptions); distributions
that do not conform to specified commencement and minimum distribution rules;
aggregate distributions in excess of a specified annual amount; and in other
specified circumstances.
We make no attempt to provide more than general information about use
of the contracts with the various types of retirement plans. Owners and
participants under retirement plans, as well as annuitants and beneficiaries,
are cautioned that the rights of any person to any benefits under qualified
contracts may be subject to the terms and conditions of the plans themselves,
regardless of the terms and conditions of the contract (including any
endorsements) issued in connection with such a plan. Some retirement plans are
subject to distribution and other requirements that are not incorporated in the
administration of the contracts. Owners are responsible for determining that
contributions and other transactions with respect to the contracts satisfy
applicable law. Purchasers of contracts for use with any retirement plan should
consult their legal counsel and tax adviser regarding the suitability of the
contract.
Qualified Pension and Profit Sharing Plans
Section 401(a) of the Code permits employers to establish various types
of retirement plans for employees. Such retirement plans may permit the purchase
of the contract in order to provide retirement savings under the plans. Adverse
tax consequences to the plan, to the participant or to both may result if this
contract is assigned or transferred to any individual as a means to provide
benefits payments. Purchasers of a contract for use with such plans should seek
competent advice regarding the suitability of the proposed plan documents and
the contract to their specific needs.
Individual Retirement Annuities, Simplified Employee Plans and Roth IRAs
The contract is also designed for use with IRA rollovers and
contributory IRA's. A contributory IRA is a contract to which initial and
subsequent purchase payments are subject to limitations imposed by the Code.
Section 408 of the Code permits eligible individuals to contribute to an
individual retirement program known as an Individual Retirement Annuity or
Individual Retirement Account (each hereinafter referred to as an "IRA"). Also,
distributions from certain other types of qualified plans may be "rolled over"
on a tax-deferred basis into an IRA.
The sale of a contract for use with an IRA may be subject to special
disclosure requirements of the Internal Revenue Service. Purchasers of a
contract for use with IRAs will be provided with supplemental information
required by the Internal Revenue Service or other appropriate agency. Such
purchasers will have the right to revoke their purchase within 7 days of the
earlier of the establishment of the IRA or their purchase. Purchasers should
seek competent advice as to the suitability of the contract for use with IRAs.
Eligible employers that meet specified criteria under Code Section
408(k) could establish simplified employee pension plans (SEP/IRAs) for their
employees using IRAs. Employer contributions that may be made to such plans are
larger than the amounts that may be contributed to regular IRAs, and may be
deductible to the employer.
The contract may also be used for Roth IRA conversions and contributory
Roth IRAs. A contributory Roth IRA is a contract to which initial and subsequent
purchase payments are subject to limitations imposed by the Code. Section 408A
of the Code permits eligible individuals to contribute to an individual
retirement program known as a Roth IRA on a non-deductible basis. In addition,
distributions from a non-Roth IRA may be converted to a Roth IRA. A non-Roth IRA
is an individual retirement account or annuity described in section 408(a) or
408(b), other than a Roth IRA. Purchasers should seek competent advise as to the
suitability of the contract for use with Roth IRAs.
Tax Sheltered Annuities
Under Code Section 403(b), payments made by public school systems and
certain tax exempt organizations to purchase annuity contracts for their
employees are excludable from the gross income of the employee, subject to
certain limitations. However, these payments may be subject to Social Security
and Medicare (FICA) taxes.
Code Section 403(b)(11) restricts the distribution under Code Section
403(b) annuity contracts of: (1) elective contributions made in years beginning
after December 31, 1988; (2) earnings on those contributions; and (3) earnings
in such years on amounts held as of the last year beginning before January 1,
1989. Distribution of those amounts may only occur upon death of the employee,
attainment of age 59 1/2, separation from service, disability, or financial
hardship. In addition, income attributable to elective contributions may not be
distributed in the case of hardship.
Pre-1989 contributions and earnings through December 31, 1989 are not
subject to the restrictions described above. However, funds transferred to a
qualified contract from a Section 403(b)(7) custodial account will be subject to
the restrictions.
Restrictions under Qualified Contracts
Other restrictions with respect to the election, commencement, or
distribution of benefits may apply under qualified contracts or under the terms
of the plans in respect of which qualified contracts are issued.
Taxation of Transamerica
Transamerica is taxed as a life insurance company under Part I of
Subchapter L of the Code. Since the variable account is not an entity separate
from Transamerica, and its operations form a part of Transamerica, it will not
be taxed separately as a "regulated investment company" under Subchapter M of
the Code. Investment income and realized capital gains are automatically applied
to increase reserves under the contracts. Under existing federal income tax law,
Transamerica believes that the variable account investment income and realized
net capital gains will not be taxed to the extent that such income and gains are
applied to increase the reserves under the contracts.
Accordingly, Transamerica does not anticipate that it will incur any
federal income tax liability attributable to the variable account and,
therefore, Transamerica does not intend to make provisions for any such taxes.
However, if changes in the federal tax laws or interpretations thereof result in
Transamerica being taxed on income or gains attributable to the variable
account, then Transamerica may impose a charge against the variable account
(with respect to some or all contracts) in order to set aside provisions to pay
such taxes.
Tax Status of the Contract
Diversification Requirements
Section 817(h) of the Code requires that with respect to
non-qualified contracts, the investments of the portfolios be "adequately
diversified" in accordance with Treasury regulations in order for the contracts
to qualify as annuity contracts under federal tax law. The variable account,
through the portfolios, intends to comply with the diversification requirements
prescribed by the Treasury in Reg. Sec. 1.817-5, which affect how the
portfolios' assets may be invested.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their contracts. In those circumstances,
income and gains from the separate account assets would be includible in the
variable 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. The Treasury
Department has also announced, in connection with the issuance of regulations
concerning diversification, that those regulations "do not provide guidance
concerning the circumstances in which investor control for the investments of a
segregated asset account may cause the investor (i.e., the owner), rather than
the insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular Sub-Accounts without being treated as owners of the
underlying assets."
The ownership rights under the contract are similar to, but different
in certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of separate account assets. For
example, the owner has additional flexibility in allocating premium payments and
account values. These differences could result in an owner being treated as the
owner of a pro rata portion of the assets of the variable account. In addition,
Transamerica does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. Transamerica therefore reserves the right to modify the contract as
necessary to attempt to prevent an owner from being considered the owner of a
pro rata share of the assets of the variable account.
Required Distributions
In order to be treated as an annuity contract for federal income tax
purposes, section 72(s) of the Code requires any non-qualified contract to
provide that (a) if any owner dies on or after the annuity date but prior to the
time the entire interest in the contract has been distributed, the remaining
portion of such interest will be distributed at least as rapidly as under the
method of distribution being used as of the date of that owner's death; and (b)
if any owner dies prior to the annuity date, the entire interest in the contract
will be distributed within five years after the date of the owner's death. These
requirements will be considered satisfied as to any portion of the owner's
interest which is payable to or for the benefit of a "designated beneficiary"
and which is distributed over the life of such "designated beneficiary" or over
a period not extending beyond the life expectancy of that beneficiary, provided
that such distributions begin within one year of the owner's death. The owner's
"designated beneficiary" refers to a natural person designated by such owner as
a beneficiary and to whom ownership of the contract passes by reason of death.
However, if the owner's "designated beneficiary" is the surviving spouse of the
deceased owner, the contract may be continued with the surviving spouse as the
new owner.
The non-qualified contracts contain provisions which are intended to
comply with the requirements of Section 72(s) of the Code, although no
regulations interpreting these requirements have yet been issued. All provisions
in the contract will be interpreted to maintain such tax qualification. We may
make changes in order to maintain this qualification or to conform the contract
to any applicable changes in the tax qualification requirements. We will provide
you with a copy of any changes made to the contract.
Possible Changes in Taxation
In past years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of non-qualified annuities that
did not have "substantial life contingencies" by taxing income as it is credited
to the annuity. Although as of the date of this prospectus Congress is not
actively considering any legislation regarding the taxation of annuities, there
is always the possibility that the tax treatment of annuities could change by
legislation or other means (such as IRS regulations, revenue rulings, judicial
decisions, etc.). Moreover, it is also possible that any change could be
retroactive (that is, effective prior to the date of the change).
Other Tax Consequences
As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with respect to
other tax situations not discussed in this prospectus. Further, the federal
income tax consequences discussed herein reflect Transamerica's understanding of
current law and the law may change. Federal estate and gift tax consequences and
state and local estate, inheritance, and other tax consequences of ownership or
receipt of distributions under the contract depend on the individual
circumstances of each owner or recipient of the distribution. A competent tax
adviser should be consulted for further information.
PERFORMANCE DATA
From time to time, Transamerica may advertise yields and average annual
total returns for the variable sub-accounts. In addition, Transamerica may
advertise the effective yield of the money market variable sub-account. These
figures will be based on historical information and are not intended to indicate
future performance.
The yield of the money market variable sub-account refers to the
annualized income generated by an investment in that variable sub-account over a
specified seven-day period. The yield is calculated by assuming that the income
generated for that seven-day period is generated each seven-day period over a
52-week period and is shown as a percentage of the investment. The effective
yield is calculated similarly but, when annualized, the income earned by an
investment in that variable sub-account is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment.
The yield of a variable sub-account (other than the money market
variable sub-account) refers to the annualized income generated by an investment
in the variable sub-account over a specified thirty-day period. The yield is
calculated by assuming that the income generated by the investment during that
thirty-day period is generated each thirty-day period over a twelve-month period
and is shown as a percentage of the investment.
The yield calculations do not reflect the effect of any contingent
deferred sales load or premium taxes that may be applicable to a particular
contract. To the extent that the contingent deferred sales load or premium taxes
are applicable to a particular contract, the yield of that contract will be
reduced. For additional information regarding yields and total returns, please
refer to the Statement of Additional Information.
The average annual total return of a variable sub-account refers to
return quotations assuming an investment has been held in the variable
sub-account for various periods of time including, but not limited to, a period
measured from the date the variable sub-account commenced operations. When a
variable sub-account has been in operation for 1, 5, and 10 years, respectively,
the average annual total return for these periods will be provided. The average
annual total return quotations will represent the average annual compounded
rates of return that would equate an initial investment of $1,000 to the
redemption value of that investment (including the deduction of any applicable
contingent deferred sales load but excluding deduction of any premium taxes) as
of the last day of each of the periods for which total return quotations are
provided.
Performance information for any variable sub-account reflects only the
performance of a hypothetical contract under which account value is allocated to
a variable sub-account during a particular time period on which the calculations
are based. Performance information should be considered in light of the
investment objectives and policies and characteristics of the portfolios in
which the variable sub-account invests, and the market conditions during the
given time period, and should not be considered as a representation of what may
be achieved in the future. For a description of the methods used to determine
yield and total returns, see the Statement of Additional Information.
Reports and promotional literature may also contain other information
including (1) the ranking of any variable sub-account derived from rankings of
variable annuity separate accounts or their investment products tracked by
Lipper Analytical Services, Inc., VARDS, IBC/Donoghue's Money Fund Report,
Financial Planning Magazine, Money Magazine, Bank Rate Monitor, Standard and
Poor's Indices, Dow Jones Industrial Average, and other rating services,
companies, publications, or other persons who rank separate accounts or other
investment products on overall performance or other criteria, and (2) the effect
of tax deferred compounding on variable sub-account investment returns, or
returns in general, which may be illustrated by graphs, charts, or otherwise,
and which may include a comparison, at various points in time, of the return
from an investment in a contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a currently taxable basis.
Other ranking services and indices may be used.
In its advertisements and sales literature, Transamerica may discuss,
and may illustrate by graphs, charts, or otherwise, the implications of longer
life expectancy for retirement planning, the tax and other consequences of
long-term investment in the contract, the effects of the contract's lifetime
payout options, and the operation of certain special investment features of the
contract -- such as the dollar cost averaging option. Transamerica may explain
and depict in charts, or other graphics, the effects of certain investment
strategies, such as allocating purchase payments between the general account
options and a variable sub-account. Transamerica may also discuss the Social
Security system and its projected payout levels and retirement plans generally,
using graphs, charts and other illustrations.
Transamerica may from time to time also disclose average annual total
return in non-standard formats and cumulative (non-annualized) total return for
the variable sub-accounts. The non-standard average annual total return and
cumulative total return will assume that no contingent deferred sales load is
applicable. Transamerica may from time to time also disclose yield, standard
total returns, and non-standard total returns for any or all variable
sub-accounts.
All non-standard performance data will only be disclosed if the
standard performance data is also disclosed. For additional information
regarding the calculation of other performance data, please refer to the
Statement of Additional Information.
Transamerica may also advertise performance figures for the variable
sub-accounts based on the performance of a portfolio prior to the time the
variable account commenced operations.
DISTRIBUTION OF THE CONTRACT
Transamerica Securities Sales Corporation ("TSSC") is the principal
underwriter of the contracts under a Distribution Agreement with Transamerica.
TSSC may also serve as an underwriter and distributor of other contracts issued
through the variable account and certain other separate accounts of Transamerica
and affiliates of Transamerica. TSSC is an indirect wholly-owned subsidiary of
Transamerica Corporation. TSSC is registered with the Commission as a
broker/dealer and is a member of the National Association of Securities Dealers,
Inc. ("NASD"). Its principal offices are located at 1150 South Olive Street, Los
Angeles, California 90015. TSSC may enter into sales agreements with
broker/dealers to solicit applications for the contracts through registered
representatives who are licensed to sell securities and variable insurance
products.
Under the Sales Agreements, TSSC will pay broker-dealers compensation
based on a percentage of each purchase payment. The percentage may be up to
5.75% and in certain situations additional amounts for marketing allowances,
production bonuses, service fees, sales awards and meetings, and asset based
trailer commissions may be paid.
LEGAL PROCEEDINGS
There is no pending, material legal proceeding affecting the variable
account. Transamerica is involved in various kinds of routine litigation which,
in management's judgment, are not of material importance to Transamerica's
assets or to the variable account.
LEGAL MATTERS
Advice regarding certain legal matters concerning the federal
securities laws applicable to the issue and sale of the contract has been
provided by Sutherland, Asbill & Brennan LLP. The organization of Transamerica,
its authority to issue the contract and the validity of the form of the contract
have been passed upon by James W. Dederer, General Counsel and Secretary of
Transamerica.
ACCOUNTANTS
The consolidated financial statements of Transamerica for each of the
three years in the period ended December 31, 1996, have been audited by Ernst &
Young LLP, Independent Auditors, as set forth in their reports appearing in the
Statement of Additional Information, and are included in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing. There are no audited financial statements for the variable account
since it had not commenced operations as of the date of this prospectus.
VOTING RIGHTS
To the extent required by applicable law, all portfolio shares held in
the variable account will be voted by Transamerica at regular and special
shareholder meetings of the respective portfolio in accordance with instructions
received from persons having voting interests in the corresponding variable
sub-account. If, however, the 1940 Act or any regulation thereunder should be
amended, or if the present interpretation thereof should change, or if
Transamerica determines that it is allowed to vote all portfolio shares in its
own right, Transamerica may elect to do so.
The person with the voting interest is the owner. The number of votes
which are available to an owner will be calculated separately for each variable
sub-account. Before the annuity date, that number will be determined by applying
his or her percentage interest, if any, in a particular variable sub-account to
the total number of votes attributable to that variable sub-account. The owner
holds a voting interest in each variable sub-account to which the account value
is allocated. After the annuity date, the number of votes decreases as
settlement option payments are made and as the reserves for the contract
decrease.
The number of votes of a portfolio will be determined as of the date
coinciding with the date established by that portfolio for determining
shareholders eligible to vote at the meeting of the portfolios. Voting
instructions will be solicited by written communication prior to such meeting in
accordance with procedures established by the respective portfolios.
Shares as to which no timely instructions are received and shares held
by Transamerica as to which owners have no beneficial interest will be voted in
proportion to the voting instructions which are received with respect to all
contracts participating in the variable sub-account. Voting instructions to
abstain on any item to be voted upon will be applied on a pro rata basis.
Each person or entity having a voting interest in a variable
sub-account will receive proxy material, reports and other material relating to
the appropriate portfolio.
It should be noted that generally the portfolios are not required, and
do not intend, to hold annual or other regular meetings of shareholders.
AVAILABLE INFORMATION
Transamerica has filed a registration statement (the "Registration
Statement") with the Securities and Exchange Commission under the 1933 Act
relating to the contract offered by this prospectus. This prospectus has been
filed as a part of the Registration Statement and does not contain all of the
information set forth in the Registration Statement and exhibits thereto, and
reference is hereby made to such Registration Statement and exhibits for further
information relating to Transamerica and the contract. Statements contained in
this prospectus, as to the content of the contract and other legal instruments,
are summaries. For a complete statement of the terms thereof, reference is made
to the instruments filed as exhibits to the Registration Statement. The
Registration Statement and the exhibits thereto may be inspected and copied at
the office of the Commission, located at 450 Fifth Street, N.W., Washington,
D.C.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available which contains more
details concerning the subjects discussed in this prospectus. The following is
the Table of Contents for that Statement:
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C>
THE CONTRACT .....................................................................................................3
NET INVESTMENT FACTOR.............................................................................................3
SETTLEMENT OPTION PAYMENTS........................................................................................3
Variable Annuity Units and Payments......................................................................3
Variable Annuity Unit Value..............................................................................3
Transfers After the Annuity Date ........................................................................4
GENERAL PROVISIONS ...............................................................................................4
IRS Required Distributions...............................................................................4
Non-Participating........................................................................................4
Misstatement of Age or Sex ..............................................................................4
Proof of Existence and Age ..............................................................................4
Annuity Data.............................................................................................4
Assignment...............................................................................................5
Annual Report............................................................................................5
Incontestability.........................................................................................5
Entire Contract..........................................................................................5
Changes in the Contract..................................................................................5
Protection of Benefits...................................................................................5
Delay of Payments........................................................................................5
Notices and Directions...................................................................................6
CALCULATION OF YIELDS AND TOTAL RETURNS...........................................................................6
Money Market Sub-Account Yield Calculation...............................................................6
Other Sub-Account Yield Calculations.....................................................................6
Standard Total Return Calculations.......................................................................7
Adjusted Historical Portfolio Performance Data...........................................................7
Other Performance Data...................................................................................8
HISTORIC PERFORMANCE DATA.........................................................................................8
General Limitations......................................................................................8
Adjusted Historical Sub-Account Performance Data.........................................................8
DISTRIBUTION OF THE CONTRACT.....................................................................................18
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS...........................................................................18
STATE REGULATION.................................................................................................18
RECORDS AND REPORTS..............................................................................................18
FINANCIAL STATEMENTS.............................................................................................18
APPENDIX - Accumulation Transfer Formula.........................................................................19
</TABLE>
<PAGE>
Please forward (without charge) a copy of the Statement of Additional
Information concerning the Transamerica Seriessm - Transamerica Classicsm
Variable Annuity issued by Transamerica Life Insurance and Annuity Company to:
(Please print or type and fill in all information)
----------------------------------------------------
Name
----------------------------------------------------
Address
---------------------------------------------------
City/State/Zip
----------------------------------------------------
Date: ________________________ Signed: ___________________________
Return to Transamerica Life Insurance and Annuity Company, Annuity Service
Center, 401 North Tryon Street, Suite 700, Charlotte, North Carolina 28202.
<PAGE>
TRANSAMERICA SERIES sm
TRANSAMERICA CLASSIC sm VARIABLE ANNUITY
Contract Form 4-701 Certificate Form TCG-311
Issued by Transamerica Life Insurance and Annuity Company
401 North Tryon Street, Suite 700, Charlotte, North Carolina, 28202
<PAGE>
3
STATEMENT OF ADDITIONAL INFORMATION FOR
TRANSAMERICA SERIES sm -
TRANSAMERICA CLASSIC sm
VARIABLE ANNUITY
Issued By
Transamerica Life Insurance and Annuity Company
This statement of additional information expands upon subjects
discussed in the current prospectus for the Transamerica Classic sm Variable
Annuity ("contract") issued by Transamerica Life Insurance and Annuity Company
("Transamerica") through Separate Account VA-6. The owner may obtain a free copy
of the prospectus by writing to: Transamerica Life Insurance and Annuity
Company, Annuity Service Center, 401 North Tryon Street, Suite 700, Charlotte,
North Carolina 28202 or calling (8000 420-7749. Terms used in the current
prospectus for the contract are incorporated into this statement.
The contract will be issued as a certificate under a group annuity
contract in some states and as an individual annuity contract in other states.
The term "contract" as used herein refers to both the individual contract and
the certificates issued under the group contract.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A
PROSPECTUS AND SHOULD BE READ ONLY IN
CONJUNCTION WITH THE PROSPECTUS FOR THE
CONTRACT AND THE PORTFOLIOS.
December 22, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C>
THE CONTRACT .....................................................................................................3
NET INVESTMENT FACTOR.............................................................................................3
SETTLEMENT OPTION PAYMENTS........................................................................................3
Variable Annuity Units and Payments......................................................................3
Variable Annuity Unit Value..............................................................................3
Transfers After the Annuity Date ........................................................................4
GENERAL PROVISIONS ...............................................................................................4
IRS Required Distributions...............................................................................4
Non-Participating........................................................................................4
Misstatement of Age or Sex ..............................................................................4
Proof of Existence and Age ..............................................................................4
Annuity Data.............................................................................................4
Assignment...............................................................................................5
Annual Report............................................................................................5
Incontestability.........................................................................................5
Entire Contract..........................................................................................5
Changes in the Contract..................................................................................5
Protection of Benefits...................................................................................5
Delay of Payments........................................................................................5
Notices and Directions...................................................................................6
CALCULATION OF YIELDS AND TOTAL RETURNS...........................................................................6
Money Market Sub-Account Yield Calculation...............................................................6
Other Sub-Account Yield Calculations.....................................................................6
Standard Total Return Calculations.......................................................................7
Adjusted Historical Portfolio Performance Data...........................................................7
Other Performance Data...................................................................................8
HISTORIC PERFORMANCE DATA.........................................................................................8
General Limitations......................................................................................8
Adjusted Historical Sub-Account Performance Data.........................................................8
DISTRIBUTION OF THE CONTRACT.....................................................................................18
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS...........................................................................18
STATE REGULATION.................................................................................................18
RECORDS AND REPORTS..............................................................................................18
FINANCIAL STATEMENTS.............................................................................................18
APPENDIX - Accumulation Transfer Formula.........................................................................19
</TABLE>
<PAGE>
THE CONTRACT
......... The following pages provides additional information about the
contract which may be of interest to
some owners.
NET INVESTMENT FACTOR
For any sub-account of the variable account, the net investment factor
for a valuation period, before the annuity date, is (a) divided by (b), minus
(c) minus (d):
Where (a) is:
The net asset value per share held in the sub-account, as of the end of
the valuation period; plus the per-share amount of any dividend or
capital gain distributions if the "ex-dividend" date occurs in the
valuation period; plus or minus a per-share charge or credit as
Transamerica may determine, as of the end of the valuation period, for
taxes.
Where (b) is:
The net asset value per share held in the sub-account as of the end of
the last prior valuation period.
Where (c) is:
The daily charge of 0.00329% (1.20% annually) for the mortality and
expense risk charge times the number of calendar days in the current
valuation period.
Where (d) is:
The daily administrative expense charge, currently 0.000411% (0.15%
annually) times the number of calendar days in the current valuation
period. This charge may be increased, but will not exceed 0.00096%
(0.35% annually).
A valuation day is defined as any day that the New York Stock
Exchange is open.
SETTLEMENT OPTION PAYMENTS The variable settlement options provide for payments
that fluctuate in dollar amount, based on the investment performance of the
selected variable sub-account(s).
Variable Annuity Units and Payments
For the first monthly payment, the number of variable annuity units
credited in each variable sub-account will be determined by dividing: (a) the
product of the portion of the value to be applied to the variable sub-account
and the variable annuity purchase rate specified in the contract; by (b) the
value of one variable annuity unit in that sub-account on the annuity date.
The amount of each subsequent variable payment equals the product of
the number of variable annuity units in each variable sub-account and the
variable sub-account's variable annuity unit value as of the tenth day of the
month before the payment due date. The amount of each payment may vary.
Variable Annuity Unit Value
The value of a variable annuity unit in a variable sub-account on any
valuation day is determined as described below.
The net investment factor for the valuation period (for the appropriate
payment frequency) just ended is multiplied by the value of the variable annuity
unit for the sub-account on the preceding valuation day. The net investment
factor after the annuity date is calculated in the same manner as before the
annuity date and then multiplied by an interest factor. The interest factor
equals (.999893)n where n is the number of days since the preceding valuation
day. This compensates for the 4% interest assumption built into the variable
annuity purchase rates. Transamerica may offer other assumed interest rates than
4%. The appropriate interest factor will be applied to compensate for the
assumed interest rate.
Transfers After the Annuity Date
After the annuity date, the owner may transfer variable annuity units
from one sub-account to another, subject to certain limitations. See "Transfers"
page 25 of the prospectus. The dollar amount of each subsequent monthly annuity
payment after the transfer must be determined using the new number of variable
annuity units multiplied by the variable sub-account's variable annuity unit
value on the tenth day of the month preceding payment. Transamerica reserves the
right to change this day of the month.
The formula used to determine a transfer after the annuity date can be
found in the Appendix to this statement of additional information.
GENERAL PROVISIONS
IRS Required Distributions
If any owner under a non-qualified contract dies before the entire
interest in the contract is distributed, the value generally must be distributed
to the designated beneficiary so that the contract qualifieS as an annuity under
the Code. (See "Federal Tax Matters" page 38 of the prospectus.)
Non-Participating
The contract is non-participating. No dividends are payable and the
contract will not share in the profits or surplus earnings of Transamerica.
Misstatement of Age or Sex
If the age or sex of the annuitant or any other measuring life has been
misstated in the application, the settlement option payments under the contract
will be whatever the annuity amount applied on the annuity date would purchase
on the basis of the correct age or sex of the annuitant and/or other measuring
life. Any overpayments or underpayments by Transamerica as a result of any such
misstatement may be respectively charged against or credited to the settlement
option payment or payments to be made after the correction so as to adjust for
such overpayment or underpayment.
Proof of Existence and Age
Before making any payment under the contract, Transamerica may require
proof of the existence and/or proof of the age of the annuitant or any other
measuring life, or any other information deemed necessary in order to provide
benefits under the contract.
Annuity Data
Transamerica will not be liable for obligations which depend on
receiving information from a payee or measuring life until such information is
received in a satisfactory form.
<PAGE>
Assignment
No assignment of a contract will be binding on Transamerica unless made
in writing and given to Transamerica at the Service Center. Transamerica is not
responsible for the adequacy of any assignment. The owner's rights and the
interest of any annuitant or non-irrevocable beneficiary will be subject to the
rights of any assignee of record.
Annual Report
At least once each contract year prior to the annuity date, the owner
will be given a report of the current account value allocated to each
sub-account of the variable account and any general account option. This report
will also include any other information required by law or regulation. After the
annuity date, a confirmation will be provided with every variable annuity
payment.
Incontestability
Each contract is incontestable from the contract effective date except
in certain states where medical questions are required on the application for
the optional Living Benefits Rider.
Entire Contract
Transamerica has issued the contract in consideration and acceptance of
the payment of the initial purchase payment and certain required information in
an acceptable form and manner or, where state law requires, the application. In
those states that require a written application, a copy of the application is
attached to and is part of the contract and along with the contract constitutes
the entire contract.
The group annuity contract has been issued to a trust organized under
Missouri law. However, the sole purpose of the trust is to hold the group
annuity contract. The owner has all rights and benefits under the individual
certificate issued under the group contract.
Changes in the Contract
Only two authorized officers of Transamerica, acting together, have the
authority to bind Transamerica or to make any change in the individual contract
or the group contract or individual certificates thereunder and then only in
writing. Transamerica will not be bound by any promise or representation made by
any other persons.
Transamerica may change or amend the individual contract or the group
contract or individual certificates thereunder if such change or amendment is
necessary for the individual contract or the group contract or individual
certificates thereunder to comply with any state or federal law, rule or
regulation.
Protection of Benefits
To the extent permitted by law, no benefit (including death benefits)
under the contract will be subject to any claim or process of law by any
creditor.
Delay of Payments
Payment of any cash withdrawal, lump sum death benefit, or variable
payment or transfer due from the variable account will occur within seven days
from the date the election becomes effective, except that Transamerica may be
permitted to postpone such payment if: (1) the New York Stock Exchange is closed
for other than usual weekends or holidays, or trading on the Exchange is
otherwise restricted; or (2) an emergency exists as defined by the Securities
and Exchange Commission (Commission), or the Commission requires that trading be
restricted; or (3) the Commission permits a delay for the protection of owners.
In addition, while it is our intention to process all transfers from
the sub-accounts immediately upon receipt of a transfer request, we have the
right to delay effecting a transfer from a variable sub-account for up to seven
days. We may delay effecting such a transfer if there is a delay of payment from
an affected portfolio. If this happens, then we will calculate the dollar value
or number of units involved in the transfer from a variable sub-account on or as
of the date we receive a transfer request in a acceptable form and manner, but
will not process the transfer to the transferee sub-account until a later date
during the seven-day delay period when the portfolio underlying the transferring
sub-account obtains liquidity to fund the transfer request through sales of
portfolio securities, new purchase payments, transfers by investors or
otherwise. During this period, the amount transferred would not be invested in a
variable sub-account.
Transamerica may delay payment of any withdrawal from any general
account options for a period of not more than six months after Transamerica
receives the request for such withdrawal. If Transamerica delays payment for
more than 30 days, Transamerica will pay interest on the withdrawal amount up to
the date of payment. See "Cash Withdrawals" page 27 of the prospectus.
Notices and Directions
Transamerica will not be bound by any authorization, direction,
election or notice which is not, in a form and manner acceptable to
Transamerica, and received at the Service Center.
Any written notice requirement by Transamerica to the owner will be
satisfied by our mailing of any such required written notice, by first-class
mail, to the owner's last known address as shown on our records.
CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Sub-Account Yield Calculation
In accordance with regulations adopted by the Commission, Transamerica
is required to compute the money market sub-account's current annualized yield
for a seven-day period in a manner which does not take into consideration any
realized or unrealized gains or losses on shares of the money market series or
on its portfolio securities. This current annualized yield is computed by
determining the net change (exclusive of realized gains and losses on the sale
of securities and unrealized appreciation and depreciation) in the value of a
hypothetical account having a balance of one unit of the money market
sub-account at the beginning of such seven-day period, dividing such net change
in account value by the value of the account at the beginning of the period to
determine the base period return and annualizing this quotient on a 365-day
basis. The net change in account value reflects the deductions for the annual
account fee, the mortality and expense risk charge and administrative expense
charges and income and expenses accrued during the period. Because of these
deductions, the yield for the money market sub-account of the variable account
will be lower than the yield for the money market series or any comparable
substitute funding vehicle.
The Commission also permits Transamerica to disclose the effective
yield of the money market sub-account for the same seven-day period, determined
on a compounded basis. The effective yield is calculated by compounding the
unannualized base period return by adding one to the base period return, raising
the sum to a power equal to 365 divided by 7, and subtracting one from the
result.
The yield on amounts held in the money market sub-account normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The money market sub-account's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
money market series or substitute funding vehicle, the types and quality of
portfolio securities held by the money market series or substitute funding
vehicle, and operating expenses. In addition, the yield figures do not reflect
the effect of any contingent deferred sales load (of up to 6% of purchase
payments) that may be applicable to a contract.
Other Sub-Account Yield Calculations
Transamerica may from time to time disclose the current annualized
yield of one or more of the variable sub-accounts (except the money market
sub-account) for 30-day periods. The annualized yield of a sub-account refers to
the income generated by the sub-account over a specified 30-day period. Because
this yield is annualized, the yield generated by a sub-account during the 30-day
period is assumed to be generated each 30-day period. The yield is computed by
dividing the net investment income per variable accumulation unit earned during
the period by the price per unit on the last day of the period, according to the
following formula:
YIELD= 2[{a-b + 1}6 - 1]
cd
Where:
a = net investment income earned during the period by the
portfolio attributable to the shares owned by the sub-account.
b = expenses for the sub-account accrued for the period (net of
reimbursements). c = the average daily number of variable accumulation
units outstanding during the period. d = the maximum offering price per
variable accumulation unit on the last day of the period.
Net investment income will be determined in accordance with rules
established by the Commission. Accrued expenses will include all recurring fees
that are charged to all contracts. The yield calculations do not reflect the
effect of any contingent deferred sales load that may be applicable to a
particular contract. Contingent deferred sales load range from 6% to 0% of the
amount of account value withdrawn depending on the elapsed time since the
receipt of each purchase payment.
Because of the charges and deductions imposed by the variable account,
the yield for the sub-account will be lower than the yield for the corresponding
portfolio. The yield on amounts held in the variable sub-accounts normally will
fluctuate over time. Therefore, the disclosed yield for any given period is not
an indication or representation of future yields or rates of return. The
variable sub-account's actual yield will be affected by the types and quality of
portfolio securities held by the portfolio, and its operating expenses.
Standard Total Return Calculations
Transamerica may from time to time also disclose average annual total
returns for one or more of the sub-accounts for various periods of time. Average
annual total return quotations are computed by finding the average annual
compounded rates of return over one, five and ten year periods that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
P{1 + T}n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the one, five or
ten-year period at the end of the one, five, or
ten-year period (or fractional portion of such
period).
All recurring fees are recognized in the ending redeemable value. The
standard average annual total return calculations will reflect the effect of any
contingent deferred sales loads that may be applicable to a particular period.
Adjusted Historical Portfolio Performance Data
Transamerica may also disclose "historic" performance data for a
portfolio, for periods before the variable sub-account commenced operations.
Such performance information will be calculated based on the performance of the
portfolio and the assumption that the sub-account was in existence for the same
periods as those indicated for the portfolio, with a level of contract charges
currently in effect.
This type of adjusted historical performance data may be disclosed on
both an average annual total return and a cumulative total return basis.
Moreover, it may be disclosed assuming that the contract is not surrendered
(i.e., with no deduction for the contingent deferred sales load) and assuming
that the contract is surrendered at the end of the applicable period (i.e.,
reflecting a deduction for any applicable contingent deferred sales load).
Other Performance Data
Transamerica may from time to time also disclose average annual total
returns in a non-standard format in conjunction with the standard described
above. The non-standard format will be identical to the standard format except
that the contingent deferred sales load percentage will be assumed to be 0%.
Transamerica may from time to time also disclose cumulative total
returns in conjunction with the standard format described above. The cumulative
returns will be calculated using the following formula assuming that the
contingent deferred sales load percentage will be 0%.
CTR = {ERV/P} - 1
Where:
CTR = the cumulative total return net of sub-account
recurring charges for the period.
ERV = ending redeemable value of a hypothetical $1,000
payment at the beginning of the one,
five, or ten-year period at the end of the one, five,
or ten-year period (or fractional portion of the
period).
P = a hypothetical initial payment of $1,000.
All non-standard performance data will be advertised only if the
standard performance data is also disclosed.
HISTORIC PERFORMANCE DATA
General Limitations
The figures below represent past performance and are not indicative of
future performance. The figures may reflect the waiver of advisory fees and
reimbursement of other expenses which may not continue in the future.
Portfolio information, including historical daily net asset values and
capital gains and dividends distributions regarding each portfolio has been
provided by that portfolio. The adjusted historical sub-account performance data
is derived from the data provided by the portfolios. Transamerica has no reason
to doubt the accuracy of the figures provided by the portfolios. Transamerica
has not verified these figures.
Adjusted Historical Sub-Account Performance Data
The charts below show adjusted historical performance date for sixteen
sub-accounts for the periods, prior to the inception of the sub-accounts, based
on the performance of the corresponding portfolios since their inception date,
with a level of charges equal to those currently assessed under the contracts.
These figures are not an indication of the future performance of the
sub-accounts.
The dates next to each sub-account name indicates the date of
commencement of operation of the corresponding portfolio. The Transamerica VIF
Money Market portfolio has not yet commenced operations. The sub-accounts will
commence operations January 2, 1998. Hence, there is no actual performance data
for these sub-accounts.
Notes:
1. On September 16, 1994, an investment company which had commenced operations
on August 1, 1988, called Quest for Value Accumulation Trust (the "Old Trust")
at which time the Present Trust commenced operations. The total net assets of
the Small Cap Portfolio immediately after the transaction were $139,812,573 in
the Old Trust and $8,129,274 in the Present Trust. For the period prior to
September 16, 1994, the performance figures for the Small Cap Portfolio of the
Present Trust reflect the performance of the Small Cap Portfolio of the Old
Trust.
2. The Growth Portfolio of the Transamerica Variable Insurance Fund, Inc., is
the successor to Separate Account Fund C of Transamerica Occidental Life
Insurance Company, a management investment company funding variable annuities,
through a reorganization on November 1, 1996. Accordingly, the performance data
for the Transamerica VIF Growth Portfolio includes performance of its
predecessor.
3. On September 16, 1994, an investment company which had commenced operations
on August 1, 1988, called Quest for Value Accumulation Trust (the "Old Trust")
was effectively divided into two investment funds - The Old Trust and the
present OCC Accumulation Trust (the "Present Trust") at the time of the
transaction there was $682,601,380 in the Old Trust and $51,345,102 in the
Present Trust. For the period prior to September 16, 1994, the performance
figures for the Managed Portfolio of the Present Trust reflect the performance
of the Managed Portfolio of the Old Trust.
<PAGE>
Standard average annual total returns for periods since inception of
the portfolio, including adjusted historical performance for each sub-account
are as follows. These figures include mortality and expenses charges of 1.20%
per annum, administrative expenses charge of 0.15% per annum, an account fee of
$30 per annum adjusted for average account size and the applicable contingent
deferred sales load (maximum of 6% of purchase payments) and do not reflect any
fee deduction for the optional Living Benefits Rider.
<TABLE>
<CAPTION>
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
SUB-ACCOUNT For the period from
(date of commencement of For the For the 3-year For the For the 10-year commencement of
operation of 1-year period period ending 5-year period period ending portfolio
corresponding portfolio) ending 12/31/96 ending 12/31/96 operations to
12/31/96 12/31/96 12/31/96
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Aspen Worldwide 21.30% 15.77% N/A N/A 20.55%
Growth (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF N/A N/A N/A N/A N/A
International Magnum
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 10.01% 15.43% 34.32% N/A 46.65%
(8/30/90) (1)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 11.78% 8.24% 12.27% N/A 13.06%
Small Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 10.39% N/A N/A N/A 19.60%
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Premier 14.53% 17.60% N/A N/A 17.09%
Growth (6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Capital 17.65% 17.25% N/A N/A 15.64%
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Research (7/25/95) 15.40% N/A N/A N/A 18.39%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth 21.29% 26.46% 22.59% 20.69% 16.43%
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alger American Income & 13.30% 11.74% 10.16% N/A 9.73%
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Growth & 16.55% 16.40% 13.11% N/A 11.26%
Income (1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income 16.57% N/A N/A N/A 20.09%
(10/5/95)
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced 9.45% 10.73% N/A N/A 11.98%
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 15.35% 19.91% 17.20% N/A 18.40%
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF High N/A N/A N/A N/A N/A
Yield (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF Fixed N/A N/A N/A N/A N/A
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money N/A N/A N/A N/A N/A
Market (1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Standard average annual total returns for periods since inception of
the portfolio, including adjusted historical performance for each sub-account
are as follows. These figures include mortality and expenses charges of 1.20%
per annum, administrative expenses charge of 0.15% per annum, an account fee of
$30 per annum adjusted for average account size, the applicable contingent
deferred sales load (maximum 6% of purchase payments) and optional Living
Benefits Rider fee of 0.05% per annum.
<TABLE>
<CAPTION>
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
SUB-ACCOUNT For the period from
(date of commencement of For the For the 3-year For the For the 10-year commencement of
operation of 1-year period period ending 5-year period period ending portfolio
corresponding portfolio) ending 12/31/96 ending 12/31/96 operations to
12/31/96 12/31/96 12/31/96
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Aspen Worldwide 21.24% 15.71% N/A N/A 20.48%
Growth (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Morgan Stanley UF
International Magnum
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
9.95% 15.37% 34.25% N/A 46.58%
Dreyfus VIF Small Cap
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
11.72% 8.18% 12.21% N/A 13.00%
OCC Accumulation Trust
Small Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
10.33% N/A N/A N/A 19.53%
MFS VIT Emerging Growth
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
14.48% 17.54% N/A N/A 17.03%
Alliance VPF Premier
Growth (6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
17.59% 17.19% N/A N/A 15.58%
Dreyfus VIF Capital
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
15.34% N/A N/A N/A 18.33%
MFS VIT Research (7/25/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
21.23% 26.40% 22.53% 20.63% 16.37%
Transamerica VIF Growth
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
13.24% 11.68% 10.11% N/A 9.67%
Alger American Income &
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
16.49% 16.34% 13.05% N/A 11.21%
Alliance VPF Growth &
Income (1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
16.51% N/A N/A N/A 20.03%
MFS VIT Growth w/ Income
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
9.40% 10.67% N/A N/A 11.92%
Janus Aspen Balanced
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
15.29% 19.85% 17.14% N/A 18.34%
OCC Accumulation Trust
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Morgan Stanley UF High
Yield (1/1/97)
- -----------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Morgan Stanley UF Fixed
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Transamerica VIF Money
Market (1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Non-standard average annual total returns for periods since inception
of the portfolio, including adjusted historical performance for each sub-account
are as follows. These figures include mortality and expenses charges of 1.20%
per annum, administrative expenses charge of 0.15% per annum and an account fee
of $30 per annum adjusted for average account size, but do not reflect any
applicable contingent deferred sales load (maximum of 6% of purchase payments)
and do not reflect any fee deduction for the optional Living Benefits Rider.
<TABLE>
<CAPTION>
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
SUB-ACCOUNT For the period from
(date of commencement of For the For the 3-year For the For the 10-year commencement of
operation of 1-year period period ending 5-year period period ending portfolio
corresponding portfolio) ending 12/31/96 ending 12/31/96 operations to
12/31/96 12/31/96 12/31/96
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Aspen Worldwide 26.40% 16.82% N/A N/A 21.37%
Growth (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Morgan Stanley UF
International Magnum
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
15.11% 16.48% 34.53% N/A 46.69%
Dreyfus VIF Small Cap
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
16.88% 9.44% 12.69% N/A 13.06%
OCC Accumulation Trust
Small Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
15.49% N/A N/A N/A 22.84%
MFS VIT Emerging Growth
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
19.63% 18.61% N/A N/A 17.52%
Alliance VPF Premier
Growth (6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
22.75% 18.27% N/A N/A 16.41%
Dreyfus VIF Capital
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
20.50% N/A N/A N/A 21.66%
MFS VIT Research (7/25/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
26.39% 27.34% 22.89% 20.69% 16.43%
Transamerica VIF Growth
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
18.40% 12.86% 10.62% N/A 9.73%
Alger American Income &
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
21.65% 17.44% 13.52% N/A 11.60%
Alliance VPF Growth &
Income (1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
21.67% N/A N/A N/A 24.04%
MFS VIT Growth w/ Income
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
14.55% 11.87% N/A N/A 12.96%
Janus Aspen Balanced
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
20.45% 20.89% 17.56% N/A 18.40%
OCC Accumulation Trust
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Morgan Stanley UF High
Yield (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Morgan Stanley UF Fixed
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Transamerica VIF Money
Market (1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Non-standard average annual total returns for periods since inception of the portfolio, including
adjusted historical performance for each sub-account are as follows. These figures include mortality and expenses
charges of 1.20% per annum, administrative expenses charge of 0.15% per annum and, an account fee of $30 per
annum adjusted for average account size, but do not reflect any applicable contingent deferred sales load
(maximum 6% of purchase payments). They do reflect deduction of the fee for the
optional Living Benefits Rider Fee of 0.05% per annum.
- ------------------------------- --------------- --------------- --------------- ---------------- --------------------
For the period
SUB-ACCOUNT For the For the For the For the from commencement
(date of commencement of 1-year period 3-year period 5-year period 10-year period of portfolio
operation of ending ending ending ending 12/31/96 operations to
corresponding portfolio) 12/31/96 12/31/96 12/31/96 12/31/96
- ------------------------------- --------------- --------------- --------------- ---------------- --------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Aspen Worldwide Growth 26.34% 16.76% N/A N/A 21.31%
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Morgan Stanley UF
International Magnum (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
15.05% 16.42% 34.46% N/A 46.61%
Dreyfus VIF Small Cap
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
16.82% 9.38% 12.63% N/A 13.00%
OCC Accumulation Trust Small
Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
15.43% N/A N/A N/A 22.78%
MFS VIT Emerging Growth
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
19.58% 18.55% N/A N/A 17.46%
Alliance VPF Premier Growth
(6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
22.69% 18.21% N/A N/A 16.36%
Dreyfus VIF Capital
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
20.44% N/A N/A N/A 21.60%
MFS VIT Research (7/25/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
26.33% 27.28% 22.83% 20.63% 16.37%
Transamerica VIF Growth
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
18.34% 12.81% 10.57% N/A 9.67%
Alger American Income &
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
21.59% 17.38% 13.46% N/A 11.54%
Alliance VPF Growth & Income
(1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
21.61% N/A N/A N/A 23.98%
MFS VIT Growth w/ Income
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
14.50% 11.81% N/A N/A 12.90%
Janus Aspen Balanced (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
20.39% 20.83% 17.50% N/A 18.34%
OCC Accumulation Trust
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Morgan Stanley UF High Yield
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Morgan Stanley UF Fixed
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Transamerica VIF Money Market
(1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Adjusted historical standard cumulative total returns for periods since
inception of the portfolio for each sub-account are as follows. These figures
include mortality and expenses charges of 1.20% per annum, administrative
expenses charge of 0.15% per annum, an account fee of $30 per annum adjusted for
average account size and the applicable contingent deferred sales load (maximum
of 6% of purchase payments) and do not reflect any fee deduction for the
optional Living Benefits Rider.
<TABLE>
<CAPTION>
- --------------------------- ---------------- ---------------- --------------- ----------------- ---------------------
SUB-ACCOUNT For the period from
(date of commencement of For the 1-year For the 3-year For the For the 10-year commencement of
operation of period ending period ending 5-year period period ending portfolio
corresponding portfolio) 12/31/96 12/31/96 ending 12/31/96 operations to
12/31/96 12/31/96
- --------------------------- ---------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Aspen Worldwide 21.30% 55.15% N/A N/A 85.41%
Growth (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Morgan Stanley UF
International Magnum
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
10.01% 53.78% 337.20% N/A 1034.15%
Dreyfus VIF Small Cap
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
11.78% 26.81% 78.33% N/A 181.28%
OCC Accumulation Trust
Small Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
10.39% N/A N/A N/A 29.48%
MFS VIT Emerging Growth
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
14.53% 62.62% N/A N/A 103.96%
Alliance VPF Premier
Growth (6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
17.65% 61.19% N/A N/A 70.76%
Dreyfus VIF Capital
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
15.40% N/A N/A N/A 27.48%
MFS VIT Research (7/25/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
21.29% 102.24% 176.88% 555.69% 1057.12%
Transamerica VIF Growth
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
13.30% 39.52% 62.25% N/A 112.80%
Alger American Income &
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
16.55% 57.70% 85.12% N/A 89.07%
Alliance VPF Growth &
Income (1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
16.57% N/A N/A N/A 25.32%
MFS VIT Growth w/ Income
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
9.45% 35.75% N/A N/A 45.32%
Janus Aspen Balanced
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
15.35% 72.41% 121.10% N/A 314.94%
OCC Accumulation Trust
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Morgan Stanley UF High
Yield (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Morgan Stanley UF Fixed
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Transamerica VIF Money
Market (1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Adjusted historical standard cumulative total returns for periods since
inception of the portfolio for each sub-account are as follows. These figures
include mortality and expenses charges of 1.20% per annum, administrative
expenses charge of 0.15% per annum, an account fee of $30 per annum adjusted for
average account size, the applicable contingent deferred sales load (maximum 6%
of purchase payments) and the optional Living Benefits Rider Fee of 0.05% per
annum.
<TABLE>
<CAPTION>
- --------------------------- ----------------- --------------- ---------------- ---------------- ---------------------
SUB-ACCOUNT For the period from
(date of commencement of For the 1-year For the For the 5-year For the commencement of
operation of period ending 3-year period period ending 10-year period portfolio
corresponding portfolio) 12/31/96 ending 12/31/96 ending 12/31/96 operations to
12/31/96 12/31/96
- --------------------------- ----------------- --------------- ---------------- ---------------- ---------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Aspen Worldwide 21.24% 54.92% N/A N/A 85.10%
Growth (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF N/A N/A N/A N/A N/A
International Magnum
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 9.95% 53.55% 336.10% N/A 1030.55%
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 11.72% 26.61% 77.88% N/A 180.10%
Small Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 10.33% N/A N/A N/A 29.39%
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Premier 14.48% 62.37% N/A N/A 103.50%
Growth (6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Capital 17.59% 60.94% N/A N/A 70.43%
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Research (7/25/95) 15.34% N/A N/A N/A 27.39%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth 21.23% 101.93% 176.18% 552.43% 1047.85%
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alger American Income & 13.24% 39.30% 61.83% N/A 111.94%
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Growth & 16.49% 57.46% 84.66% N/A 88.49%
Income (1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income 16.51% N/A N/A N/A 25.24%
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced 9.40% 35.54% N/A N/A 45.07%
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 15.29% 72.15% 120.54% N/A 313.20%
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF High N/A N/A N/A N/A N/A
Yield (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF Fixed N/A N/A N/A N/A N/A
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money N/A N/A N/A N/A N/A
Market (1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Adjusted historical non-standard cumulative total returns for periods
since inception of the portfolio for each sub-account are as follow. These
figures include mortality and expenses charges of 1.20% per annum,
administrative expenses charge of 0.15% per annum and an account fee of $30 per
annum adjusted for average account size but do not reflect any applicable
contingent deferred sales load (maximum of 6% of purchase payments) and do not
reflect any fee deduction for the optional Living Benefits Rider.
<TABLE>
<CAPTION>
- --------------------------- ----------------- --------------- ---------------- ---------------- ---------------------
SUB-ACCOUNT For the period from
(date of commencement of For the 1-year For the For the 5-year For the commencement of
operation of period ending 3-year period period ending 10-year period portfolio
corresponding portfolio) 12/31/96 ending 12/31/96 ending 12/31/96 operations to
12/31/96 12/31/96
- --------------------------- ----------------- --------------- ---------------- ---------------- ---------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Aspen Worldwide 26.40% 59.40% N/A N/A 89.66%
Growth (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF N/A N/A N/A N/A N/A
International Magnum
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 15.11% 58.03% 340.60% N/A 1035.85%
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 16.88% 31.06% 81.73% N/A 181.28%
Small Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 15.49% N/A N/A N/A 34.58%
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Premier 19.63% 66.87% N/A N/A 107.36%
Growth (6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Capital 22.75% 65.44% N/A N/A 75.01%
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Research (7/25/95) 20.50% N/A N/A N/A 32.58%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth 26.39% 106.49% 180.28% 555.69% 1057.12%
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alger American Income & 18.40% 43.77% 65.65% N/A 112.80%
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Growth & 21.65% 61.95% 88.52% N/A 92.47%
Income (1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income 21.67% N/A N/A N/A 30.42%
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced 14.55% 40.00% N/A N/A 49.57%
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 20.45% 76.66% 124.50% N/A 314.94%
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF High N/A N/A N/A N/A N/A
Yield (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF Fixed N/A N/A N/A N/A N/A
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money N/A N/A N/A N/A N/A
Market (1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Adjusted historical non-standard cumulative total returns for periods
since inception of the portfolio for each sub-account are as follow. These
figures include mortality and expenses charges of 1.20% per annum,
administrative expenses charge of 0.15% per annum and an account fee of $30 per
annum adjusted for average account size, but do not reflect any applicable
contingent deferred sales load (maximum 6% of purchase payments). They do
reflect deductions of the fee for the optional Living Benefits Rider Fee of
0.05% per annum.
<TABLE>
<CAPTION>
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
For the period from
SUB-ACCOUNT For the For the 3-year For the For the 10-year commencement of
(date of commencement of 1-year period period ending 5-year period period ending portfolio
operation of ending 12/31/96 ending 12/31/96 operations to
corresponding portfolio) 12/31/96 12/31/96 12/31/96
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Aspen Worldwide 26.34% 59.17% N/A N/A 89.35%
Growth (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Morgan Stanley UF
International Magnum
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
15.05% 57.80% 339.50% N/A 1032.25%
Dreyfus VIF Small Cap
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
16.82% 30.86% 81.28% N/A 180.10%
OCC Accumulation Trust
Small Cap (7/31/88)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
15.43% N/A N/A N/A 34.49%
MFS VIT Emerging Growth
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
19.58% 66.62% N/A N/A 106.90%
Alliance VPF Premier
Growth (6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
22.69% 65.19% N/A N/A 74.68%
Dreyfus VIF Capital
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
20.44% N/A N/A N/A 32.49%
MFS VIT Research (7/25/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
26.33% 106.18% 179.58% 552.43% 1047.85%
Transamerica VIF Growth
(12/1/80)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
18.34% 43.55% 65.23% N/A 111.94%
Alger American Income &
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
21.59% 61.71% 88.06% N/A 91.89%
Alliance VPF Growth &
Income (1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
21.61% N/A N/A N/A 30.34%
MFS VIT Growth w/ Income
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
14.50% 39.79% N/A N/A 49.32%
Janus Aspen Balanced
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
20.39% 76.40% 123.94% N/A 313.20%
OCC Accumulation Trust
Managed (7/31/88)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Morgan Stanley UF High
Yield (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Morgan Stanley UF Fixed
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
N/A N/A N/A N/A N/A
Transamerica VIF Money
Market (1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION OF THE CONTRACT
Transamerica Securities Sales Corporation ("TSSC") is principal
underwriter of the contracts. TSSC may also serve as principal underwriter and
distributor of other contracts issued through the variable account and certain
other separate accounts of Transamerica and any affiliated of Transamerica. TSSC
is a wholly owned subsidiary of Transamerica Insurance Corporation of
California, which is a subsidiary of Transamerica Corporation. TSSC is
registered with the Commission as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc. ("NASD"). Transamerica pays
TSSC for acting as the principal underwriter under a distribution agreement.
TSSC has entered into sales agreements with other broker-dealers to
solicit applications for the contracts through registered representatives who
are licensed to sell securities and variable insurance products. These
agreements provide that applications for the contracts may be solicited by
registered representatives of the broker-dealers appointed by Transamerica to
sell its variable life insurance and variable annuities. These broker-dealers
are registered with the Commission and are members of the NASD. The registered
representatives are authorized under applicable state regulations to sell
variable life insurance and variable annuities.
Under the agreements, applications for contracts will be sold by
broker-dealers which will receive compensation as described in the Prospectus.
The offering of the contracts is expected to be continuous and TSSC
does not anticipate discontinuing the offering of the contracts. However, TSSC
reserves the right to discontinue the offering of the contracts.
During fiscal year 1996, no commissions were paid to TSSC as
underwriter of the contracts; no amounts were retained by TSSC. Under the Sales
Agreement, TSSC will pay broker-dealers compensation based on a percentage of
each purchase payment. The percentage may be up to 5.75% and in certain
situations additional amounts for marketing allowances, production bonuses,
service fees, sales awards and meetings, and asset based trailer commission may
be paid.
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS
Title to assets of the variable account is held by Transamerica. The
assets of the variable account are kept separate and apart from Transamerica
general account assets. Records are maintained of all purchases and redemptions
of portfolio shares held by each of the sub-accounts.
STATE REGULATION
Transamerica is subject to the insurance laws and regulations of all
the states where it is licensed to operate. The availability of certain contract
rights and provisions depends on state approval and/or filing and review
processes. Where required by state law or regulation, the contract will be
modified accordingly.
RECORDS AND REPORTS
All records and accounts relating to the variable account will be
maintained by Transamerica or by the Service Center. As presently required by
the provisions of the 1940 Act and regulations promulgated thereunder which
pertain to the variable account, reports containing such information as may be
required under the 1940 Act or by other applicable law or regulation will be
sent to owners semi-annually at their last known address of record.
FINANCIAL STATEMENTS
Because the variable account has not yet commenced operations, there is
no financial statement for the variable account.
The financial statements for Transamerica included in this statement of
additional information should be considered only as bearing on the ability of
Transamerica to meet its obligations under the contracts. They should not be
considered as bearing on the investment performance of the assets in the
variable account.
<PAGE>
APPENDIX
Accumulation Transfer Formula
Transfers after the annuity date are implemented according to the
following formulas:
(1) Determine the number of units to be transferred from the variable
sub-account as follows:
= AT/AUV1
(2) Determine the number of variable accumulation units remaining in
such variable sub-account (after the transfer):
= UNIT1 AT/AUV1
(3) Determine the number of variable accumulation units in the
transferee variable sub-account (after the transfer):
= UNIT2 + AT/AUV2
(4) Subsequent variable accumulation payments will reflect the changes
in variable accumulation units in each variable sub-account as of the
next Variable Accumulation Payment's due date.
Where:
(AUV1) is the variable accumulation Unit value of the Variable
sub-account that the transfer is being made from as of the end of the
valuation Period in which the transfer request was received.
(AUV2) is the variable accumulation unit value of the variable
sub-account that the transfer is being made to as of the end of the
valuation period in which the transfer request was received.
(UNIT1) is the number of variable accumulation units in the Variable
sub-account that the transfer is being made from, before the transfer.
(UNIT2) is the number of variable accumulation units in the variable
sub-account that the transfer is being made to, before the transfer.
(AT) is the dollar amount being transferred from the variable
sub-account.
