<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON February 17, 2000
Registration No. 333-10805
Registration No. 811-07785
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM N-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
(GROUP VARIABLE ANNUITY I,II, & III)
Pre-Effective Amendment No.
Post-Effective Amendment No. 6 [X]
AND/OR
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 16 [X]
___________
LINCOLN LIFE & ANNUITY
VARIABLE ANNUITY ACCOUNT L
(Exact Name of Registrant)
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
(Name of Depositor)
120 Madison Street, Suite 1700
Syracuse, New York 13202
(Address of Depositor's Principal Executive Offices)
DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-800-893-7168
Robert O. Sheppard, Esquire
Lincoln Life & Annuity Company of New York
120 Madison Street, Suite 1700
Syracuse, New York 13202
(Name and Complete Address of Agent for Service)
Copy to:
Kimberly J. Smith, Esquire
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
It is proposed that this filing will become effective (check appropriate box)
[_] immediately upon filing pursuant to paragraph (b) of Rule 485
[_] on May 1, 2000, pursuant to paragraph (b) of Rule 485
[X] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[_] on pursuant to paragraph (a)(1) of Rule 485
----------
If appropriate, check the following box:
[_] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of securities being registered:
Interests in a separate account under group variable annuity contracts.
<PAGE>
Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
prospectus and statement of additional information included herein also relate
to the registrant's registration statements on Form N-4 (File No. 333-10863 and
File No. 333-10861).
<PAGE>
Lincoln Life & Annuity Variable Annuity Account L
Group Variable Annuity Contracts I, II, & III
Home Office and Servicing Office:
Lincoln Life & Annuity Company of New York
120 Madison Street, Suite 1700
Syracuse, NY 13202
(800) 893-7168
This Prospectus describes group annuity contracts and
individual certificates issued by Lincoln Life & Annuity Company of New York
(LNY), a subsidiary of The Lincoln National Life Insurance Company (Lincoln
Life). They are for use with qualified and non-qualified retirement plans. Gen-
erally, neither the contractowner nor the individual participant pays federal
income tax on the contract's growth until it is paid out. The contract is de-
signed to accumulate account value and, as permitted by the plan for which the
contractowner purchases the contract, to provide retirement income that a par-
ticipant cannot outlive or for an agreed upon time. These benefits may be a
variable or fixed amount or a combination of both. If a participant dies before
the annuity commencement date, we pay the beneficiary or the plan a death bene-
fit.
If the contractowner gives certain rights to plan participants, we issue active
life certificates to them. Participants choose whether account value accumu-
lates on a variable or a fixed (guaranteed) basis or both. If a participant al-
locates contributions to the fixed account, we guarantee principal and a mini-
mum interest rate.
All contributions for benefits on a variable basis will be placed in Lincoln
Life & Annuity Variable Annuity Account L (variable annuity account [VAA]). The
VAA is a segregated investment account of LNY. If a participant puts all or
some contributions into one or more of the contract's subaccounts, the partici-
pant takes all the investment risk on the account value and the retirement in-
come. If the selected subaccounts make money, account value goes up; if they
lose money, it goes down. How much it goes up or down depends on the perfor-
mance of the selected subaccounts. We do not guarantee how any of the
subaccounts or their funds will perform. Also, neither the U.S. Government nor
any federal agency insures or guarantees investment in the contract.
The available subaccounts, and the funds in which they invest, are listed be-
low. The contractowner decides which of these subaccounts are available under
the contract for participant allocations. For more information about the in-
vestment objectives, policies and risks of the funds please refer to the Pro-
spectuses for the funds.
Balanced Account -- American Century Variable
Portfolios, Inc.: VP Balanced
Small Cap Growth Account -- Baron Capital
Funds Trust: Baron Capital Asset Fund Insurance Shares
Index Account -- Dreyfus Stock Index Fund
Small Cap Account -- Dreyfus Variable Investment Fund: Small Cap Portfolio
Growth I Account -- Fidelity Variable Insurance
Products Fund: Growth Portfolio Initial Class
Equity-Income Account -- Fidelity Variable Insurance Products Fund: Equity-In-
come Portfolio Initial Class
Asset Manager Account -- Fidelity Variable
Insurance Products Fund II: Asset Manager Portfolio Initial Class
Global Growth Account -- Janus Aspen Series:
Worldwide Growth Portfolio
Mid Cap Growth I Account -- Lincoln National Aggressive Growth Fund, Inc.
Social Awareness Account -- Lincoln National Social Awareness Fund, Inc.
Mid Cap Value Account -- Neuberger Berman Advisers Management Trust: Partners
Portfolio
International Stock Account -- T. Rowe Price International Series, Inc.
This Prospectus gives you information about the contracts and certificates that
contractowners and participants should know before investing. Please review the
Prospectuses for the funds, and keep them for reference.
Neither the SEC nor any state securities commission has approved the contracts
or determined that this Prospectus is accurate and complete. Any representation
to the contrary is a criminal offense.
A Statement of Additional Information (SAI) has more information about the con-
tracts and certificates. Its terms are made part of this Prospectus. For a free
copy, write: Lincoln Life & Annuity Company of New York, TDA Client Services,
P.O. Box 1337, Syracuse, NY 13201-1337, or call 1-800-893-7168, or e-mail
[email protected]. The SAI and other information about LNY and Account L
are also available on the SEC's web site (http://www.sec.gov). There is a table
of contents for the SAI on the last page of this Prospectus.
May 1, 2000
1
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
- ---------------------------------------
<S> <C>
Special Terms 2
- ---------------------------------------
Expense Tables 3
- ---------------------------------------
Summary 5
- ---------------------------------------
Condensed Financial Information 7
- ---------------------------------------
Investment Results 7
- ---------------------------------------
Financial Statements 7
- ---------------------------------------
Lincoln Life & Annuity Company of
New York 7
- ---------------------------------------
Fixed Side of the Contract 7
- ---------------------------------------
Variable Annuity Account (VAA) 8
- ---------------------------------------
Investments of the VAA 8
- ---------------------------------------
Description of the Funds 9
- ---------------------------------------
Charges and Other Deductions 10
- ---------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Page
- -------------------------------------------------
<S> <C>
The Contracts 12
- -------------------------------------------------
Annuity Payouts 16
- -------------------------------------------------
Federal Tax Matters 17
- -------------------------------------------------
Voting Rights 21
- -------------------------------------------------
Distribution of the Contracts 21
- -------------------------------------------------
Return Privilege 21
- -------------------------------------------------
State Regulation 21
- -------------------------------------------------
Records and Reports 21
- -------------------------------------------------
Other Information 21
- -------------------------------------------------
Group Variable Annuity Contracts I, II, III
Statement of Additional Information
Table of Contents 22
- -------------------------------------------------
</TABLE>
Special Terms
Account or variable annuity account (VAA) -- The segregated investment ac-
count, Account L, into which LNY sets aside and invests the assets for the
variable side of the contracts offered in this Prospectus.
Account value -- At a given time before the annuity commencement date, account
value in the VAA is the value of all accumulation units for a contract and ac-
count value in the fixed account is the value of the fixed side of the con-
tract.
Accumulation unit -- A measure used to calculate account value for the vari-
able side of the contract.
Annuitant -- The person on whose life the annuity benefit payments made after
an annuity commencement date are based.
Annuity commencement date -- The date on which Lincoln Life makes the first
annuity payout to the annuitant.
Annuity payout -- An amount paid at regular intervals after the annuity com-
mencement date under one of several options available to the annuitant and/or
any other payee. This amount may be paid on a variable or fixed basis, or a
combination of both.
Annuity unit -- A measure used to calculate the amount of each annuity payout
for the variable side of the contract after an annuity commencement date.
Beneficiary -- The person the participant chooses to receive any death benefit
paid if the participant dies before the annuity commencement date.
Contractowner -- The party named on the group annuity contract (for example,
an employer, a retirement plan trust, an association, or other entity allowed
by law).
contributions -- Amounts paid into the contract.
Death benefit -- An amount payable to a designated beneficiary if a partici-
pant dies before his or her annuity commencement date.
LNY (we, us, our) -- Lincoln Life & Annuity Company of New York.
Participant -- An employee or other person affiliated with the contractowner
on whose behalf we maintain an account under the contract.
Participation year -- A period beginning with one participation anniversary
and ending the day before the next participation anniversary, except for the
first participation year which begins with the participation date.
Plan -- The retirement program that an employer offers to its employees for
which a contract is used to accumulate funds.
Subaccount -- The portion of the VAA that reflects investments in accumulation
and annuity units of a class of a particular fund available under the con-
tracts. There is a separate subaccount which corresponds to each fund.
Valuation date -- Each day the New York Stock Exchange (NYSE) is open for
trading.
Valuation period -- The period starting at the close of trading (currently
4:00 p.m. New York time) on each day that the NYSE is open for trading (valua-
tion date) and ending at the close of such trading on the next valuation date.
2
<PAGE>
Expense Tables
Contractowner transaction expenses for GVA I, II, & III
The maximum surrender charge (contingent deferred sales charge) as a per-
centage of the gross withdrawal amount:
<TABLE>
<CAPTION>
GVA I GVA II GVA III
----- ------ -------
<S> <C> <C>
5% 6% None
</TABLE>
For all GVA I Contracts, and GVA II Contracts that are subject to ERISA,
the surrender charge percentage is reduced over time. The later the redemp-
tion occurs, the lower the surrender charge with respect to that surrender
or withdrawal.
Contract fees for GVA I, II, & III
Annual administration charge (per participant for GVA I, II, & III): $25
Systematic withdrawal option fee: $30
The annual administration charge may be paid by an employer on behalf of par-
ticipants. It is not charged during the annuity period.
We may reduce or waive these charges in certain situations. See Charges and
Other Deductions and systematic withdrawal options.
- --------------------------------------------------------------------------------
Account L annual expenses for GVA I, II, & III subaccounts:
(as a percentage of average account value):
<TABLE>
<S> <C>
Mortality and expense risk charge 1.00%
</TABLE>
Annual expenses of the funds for the year ended December 31, 1999:
(as a percentage of each fund's average net assets):
<TABLE>
<CAPTION>
Management 12b-1 Other Total
fee + fees + expenses = expenses
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1. American Century--VP Balanced
- ----------------------------------------------------------------------------------------
2. Baron Capital Funds Trust:
Baron Capital Asset Fund Insurance
Shares
- ----------------------------------------------------------------------------------------
3. Dreyfus Stock Index Fund
- ----------------------------------------------------------------------------------------
4. Dreyfus VIF: Small Cap Portfolio
- ----------------------------------------------------------------------------------------
5. Fidelity VIP--Growth Portfolio
Initial Class
- ----------------------------------------------------------------------------------------
6. Fidelity VIP--
Equity-Income Portfolio Initial Class
- ----------------------------------------------------------------------------------------
7. Fidelity VIP II--
Asset Manager Initial Class
- ----------------------------------------------------------------------------------------
8. Janus Aspen Series: Worldwide
Growth Portfolio
- ----------------------------------------------------------------------------------------
9. Lincoln Nat'l Aggressive Growth
Fund
- ----------------------------------------------------------------------------------------
10. Lincoln Nat'l Social Awareness Fund
- ----------------------------------------------------------------------------------------
11. Neuberger & Berman AMT: Partners
Portfolio
- ----------------------------------------------------------------------------------------
12. T. Rowe Price International Series
- ----------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
*Examples shown may be less for GVA
II Contracts subject to ERISA.
EXAMPLES
(expenses of the subaccounts and the funds):
If you surrender your contract at the end of the time period shown, you would
pay the following expenses on a $1,000 investment, assuming a 5% annual return:
<TABLE>
<CAPTION>
GVA I GVA II GVA III
------------------------------- ----------------------------------- -----------------------------------
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
------ ------- ------- -------- ------- -------- -------- --------- ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. American
Century--VP
Balanced
- -------------------------------------------------------------------------------------------------------------------------
2. Baron
Capital Funds
Trust: Baron
Capital Asset
Fund Insurance
Shares
- -------------------------------------------------------------------------------------------------------------------------
3. Dreyfus
Stock Index
Fund
- -------------------------------------------------------------------------------------------------------------------------
4. Dreyfus VIF:
Small Cap
Portfolio
- -------------------------------------------------------------------------------------------------------------------------
5. Fidelity
VIP--Growth
Portfolio
Initial Class
- -------------------------------------------------------------------------------------------------------------------------
6. Fidelity
VIP--Equity
Income
Portfolio
Initial Class
- -------------------------------------------------------------------------------------------------------------------------
7. Fidelity VIP
II--Asset
Manager
Initial Class
- -------------------------------------------------------------------------------------------------------------------------
8. Janus Aspen
Series:
Worldwide
Growth
Portfolio
- -------------------------------------------------------------------------------------------------------------------------
9. Lincoln
National
Aggressive
Growth Fund
- -------------------------------------------------------------------------------------------------------------------------
10. Lincoln
National
Social
Awareness Fund
- -------------------------------------------------------------------------------------------------------------------------
11. Neuberger
Berman AMT:
Partners
Portfolio
- -------------------------------------------------------------------------------------------------------------------------
12. T. Rowe
Price
International
Series
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
If you do not surrender your contract, you would pay the following expenses on
a $1,000 investment, assuming a 5% annual return:
<TABLE>
<CAPTION>
GVA I GVA II GVA III
------------------------------- ----------------------------------- -----------------------------------
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
------ ------- ------- -------- ------- -------- -------- --------- ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. American
Century--VP
Balanced
- --------------------------------------------------------------------------------------------------------------------------------
2. Baron Capital Funds
Trust: Baron
Capital Asset
Fund Insurance
Shares
- --------------------------------------------------------------------------------------------------------------------------------
3. Dreyfus
Stock Index
Fund
- --------------------------------------------------------------------------------------------------------------------------------
4. Dreyfus VIF:
Small Cap
Portfolio
- --------------------------------------------------------------------------------------------------------------------------------
5. Fidelity
VIP--Growth
Portfolio
Initial Class
- --------------------------------------------------------------------------------------------------------------------------------
6. Fidelity
VIP--Equity
Income
Portfolio
Initial Class
- --------------------------------------------------------------------------------------------------------------------------------
7. Fidelity VIP
II--Asset
Manager
Initial Class
- --------------------------------------------------------------------------------------------------------------------------------
8. Janus Aspen
Series:
Worldwide
Growth
Portfolio
- --------------------------------------------------------------------------------------------------------------------------------
9. Lincoln
National
Aggressive
Growth Fund
- --------------------------------------------------------------------------------------------------------------------------------
10. Lincoln
National
Social
Awareness Fund
- --------------------------------------------------------------------------------------------------------------------------------
11. Neuberger
Berman AMT:
Partners
Portfolio
- --------------------------------------------------------------------------------------------------------------------------------
12. T. Rowe
Price
International
Series
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
We provide these examples, which are unaudited, to show the direct and indirect
costs and expenses of the contract.
For more information, see Charges and Other Deductions in this Prospectus, and
in the Prospectuses for the funds. Premium taxes may also apply, although they
do not appear in the examples. These examples should not be considered a repre-
sentation of past or future expenses. Actual expenses may be more or less than
those shown.
4
<PAGE>
Summary
What kind of contracts are these? They are group variable annuity contracts be-
tween the contractowner and LNY. They may provide for a fixed annuity and/or a
variable annuity. This Prospectus describes the variable side of the contract.
See The Contracts.
What is the variable annuity account (VAA)? It is a separate account we estab-
lished under New York insurance law, and registered with the SEC as a unit in-
vestment trust. VAA assets are allocated to one or more subaccounts, according
to your investment choices. VAA assets are not chargeable with liabilities
arising out of any other business which LNY may conduct. See The Variable Annu-
ity Account.
What are the contract's investment choices? Based on instructions, the VAA ap-
plies contributions to buy fund shares in one or more of the investment funds
of the subaccounts: American Century Variable Portfolios, Inc.: VP Balanced;
Baron Capital Funds Trust: Baron Capital Asset Fund; Dreyfus Stock Index Fund;
Dreyfus Variable Investment Fund: Small Cap Portfolio; Fidelity Variable Insur-
ance Products Fund: Growth Portfolio; Fidelity Variable Insurance Products
Fund: Equity-Income Portfolio; Fidelity Variable Insurance Products Fund II:
Asset Manager Portfolio; Janus Aspen Series: Worldwide Growth Portfolio; Lin-
coln National Aggressive Growth Fund, Inc.; Lincoln National Social Awareness
Fund, Inc.; Neuberger Berman Advisers Management Trust: Partners Portfolio; and
T. Rowe Price International Series, Inc. In turn, each fund holds a portfolio
of securities consistent with its investment policy. See The Variable Annuity
Account and The funds for a description of the subaccounts.
Who advises the funds? American Century Investment Management, Inc. is the in-
vestment advisor of American Century VP Balanced. BAMCO, Inc. is advisor to the
Baron fund. The investment advisor of the Dreyfus funds is The Dreyfus Corpora-
tion, New York, N.Y. The investment advisor of the Dreyfus funds is The Dreyfus
Corporation, New York, NY. The investment advisor of the Fidelity funds is Fi-
delity Management & Research Company, Boston, MA. Janus Capital Corporation is
the advisor to the Janus fund. Lincoln Investments, Inc. is the investment ad-
visor of the Lincoln funds; Neuberger Berman Management Incorporated is the in-
vestment advisor to the Neuberger Berman Fund. Putnam Investments is sub-advi-
sor to the Lincoln National Aggressive Growth Fund and Vantage Investment Ad-
visers is sub-advisor to the Lincoln Social Awareness Fund. Rowe Price-Fleming
International, Inc. is investment advisor of the T. Rowe Price International
Series. See Description of the Funds.
How do the contracts work? If we approve the application, we will send the
contractowner a contract. When participants make contributions, they buy accu-
mulation units. If the participant decides to purchase retirement income pay-
ments, we convert accumulation units to annuity units. Retirement income pay-
ments will be based on the number of annuity units received and the value of
each annuity unit on payout days. See The Contracts.
What charges do I pay under the contract? If participants in GVA I or GVA II
withdraw account value, a surrender charge applies of 0-5% for all GVA I con-
tracts and for GVA II contracts not subject to ERISA, depending on how many
participation years the participant has been in the contract. For GVA II con-
tracts issued to Plans that are not subject to ERISA, a surrender charge of 6%
applies regardless of the number of participation years. We may reduce or waive
surrender charges in certain situations. See Surrender Charges for GVA I and
GVA II.
There is no surrender charge for GVA III.
We charge an annual administration charge of $25 per participant account.
We will deduct any applicable premium tax from contributions or account value
at the time the tax is incurred or at another time we choose.
We apply an annual charge totaling 1.00% to the daily net asset value of the
VAA. See Charges and Other Deductions.
We may charge $50 to establish a systematic withdrawal option. We may waive
these charges in certain situations.
The funds' investment management fees, 12b-1 fees, expenses and expense limita-
tions, if applicable, are more fully described in the Prospectuses for the
funds.
What contributions are necessary, and how often? Contributions made on behalf
of participants may be in any amount unless the contractowner or the plan has a
minimum amount. See The Contracts--contributions.
How will annuity payouts be calculated? If a participant decides to annuitize,
they select an annuity option and start receiving retirement income payments
from the contract as a fixed option or variable option or a combination of
both. See Annuity payout options. Remember that participants in the VAA benefit
from any gain, and take a risk of any loss, in the value of the securities in
the funds' portfolios.
What happens if a participant dies before he or she annuitizes? The beneficiary
has options as to how any death benefit is paid. See Death benefits and annuity
period.
May participants transfer account value between subaccounts, and between the
VAA and the fixed account? Before the annuity commencement date, yes, subject
to the terms of the plan. See The fixed account and The contracts--Transfers
between subaccounts on or before the annuity commencement date.
5
<PAGE>
May a participant withdraw account value? Yes, during the accumulation period,
subject to contract requirements, to the restrictions of any plan, and to cer-
tain restrictions under GVA III. See Surrenders and withdrawals. Under Group
Variable Annuity III, a participant may not transfer more than 20% of his or
her fixed account holdings to the VAA per year, unless the participant intends
to liquidate their fixed account value. This liquidation under GVA III must be
over 5 annual installments. See fixed account withdrawal/transfer limits for
GVA III. The contractowner must also approve participant withdrawals under
Section 401(a) plans, plans subject to Title I of ERISA. Certain charges may
apply. See Charges and Other Deductions. A portion of withdrawal proceeds may
be taxable. In addition, a 10% Internal Revenue Service (IRS) tax penalty may
apply to distributions before age 59 1/2. A withdrawal also may be subject to
20% withholding. See Federal Tax Matters.
Do participants get a free look at their certificates? A participant under a
Section 403(b) or 408 plan and certain non-qualified plans can cancel the ac-
tive life certificate within ten days (in some states longer) of the date the
participant receives the certificate. The participant needs to give notice to
our home and servicing office. We will refund the participant's contributions
less withdrawals, or for the variable side of the contract if greater, the
participant's account balance on the day we receive the written notice. See
Return Privilege.
6
<PAGE>
Condensed Financial Information
The financial data included below should be read along with the financial
statements of the VAA and the related data included in the SAI.
Accumulation unit values
(For an accumulation unit outstanding throughout the period)
<TABLE>
<CAPTION>
1997 1998 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Asset Manager Account*
. Beginning of period unit value........................... 17.769 20.583
. End of period unit value................................. 20.583 23.445
. End of period number of units (000's omitted)............ 1,420 1,535
- --------------------------------------------------------------------------------
Balanced Account*
. Beginning of period unit value........................... 16.989 18.551
. End of period unit value................................. 18.551 21.263
. End of period number of units (000's omitted)............ 439 510
- --------------------------------------------------------------------------------
Equity-Income Account*
. Beginning of period unit value........................... 16.389 19.985
. End of period unit value................................. 19.985 22.087
. End of period number of units (000's omitted)............ 889 1,176
- --------------------------------------------------------------------------------
Global Growth Account**
. Beginning of period unit value........................... 10.000
. End of period unit value................................. 12.520
. End of period number of units (000's omitted)............ 25
- --------------------------------------------------------------------------------
Growth I Account*
. Beginning of period unit value........................... 24.529 28.328
. End of period unit value................................. 28.328 39.122
. End of period number of units (000's omitted)............ 1,819 2,095
- --------------------------------------------------------------------------------
Index Account*
. Beginning of period unit value........................... 24.091 29.827
. End of period unit value................................. 29.827 37.861
. End of period number of units (000's omitted)............ 814 1,129
- --------------------------------------------------------------------------------
International Stock Account*
. Beginning of period unit value .......................... 12.108 12.504
. End of period unit value................................. 12.504 14.342
. End of period number of units (000's omitted)............ 475 546
- --------------------------------------------------------------------------------
Mid Cap Growth I Account**
. Beginning of period unit value........................... 10.000
. End of period unit value................................. 12.455
. End of period number of units (000's omitted)............ 6
- --------------------------------------------------------------------------------
Mid Cap Value Account**
. Beginning of period unit value........................... 10.000
. End of period unit value................................. 11.861
. End of period number of units (000's omitted)............ 10
- --------------------------------------------------------------------------------
Small Cap Account*
. Beginning of period unit value........................... 15.523 17.632
. End of period unit value ................................ 17.632 16.856
. End of period number of units (000's omitted)............ 966 1,187
- --------------------------------------------------------------------------------
Small Cap Growth Account**
. Beginning of period unit value........................... 10.000
. End of period unit value ................................ 13.217
. End of period number of units (000's omitted)............ 25
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1997 1998 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Social Awareness Account**
. Beginning of period unit value........................... 10.000
. End of period unit value ................................ 12.791
. End of period number of units (000's omitted)............ 14
- --------------------------------------------------------------------------------
Pending Allocation Account*
. Beginning of period unit value........................... 11.328 11.894
. End of period unit value................................. 11.894 12.545
. End of period number of units (000's omitted)............ 2 3
- --------------------------------------------------------------------------------
</TABLE>
*The Sub-Account indicated commenced operations on January 31, 1997.
**The Sub-Account indicated commenced operations on October 1, 1998.
Investment Results
At times, the VAA may compare its investment results to various unmanaged indi-
ces or other variable annuities in reports to shareholders, sales literature
and advertisements. The results will be calculated on a total return basis for
various periods, with or without surrender charges. Results calculated without
surrender charges will be higher. Total returns include the reinvestment of all
distributions, which are reflected in changes in unit value. See the SAI for
further information.
Financial Statements
The financial statements for the VAA and the statutory-basis financial state-
ments of LNY are located in the SAI. For a free copy of the SAI, complete and
mail the enclosed form, or call 1-800-893-7168, or e-mail at
[email protected].
Lincoln Life & Annuity Company of New York
LNY is a life insurance company founded in New York on June 6, 1996. LNY is a
subsidiary of Lincoln Life. Lincoln Life is one of the largest stock life in-
surance companies in the United States. Lincoln Life is owned by Lincoln Na-
tional Corp. (LNC) which is also organized under Indiana law. LNC's primary
businesses are insurance and financial services.
Fixed Side of the Contract
Contributions allocated to the fixed account become part of LNY's general ac-
count, and do not participate in the investment experience of the VAA. The gen-
eral account is subject to regulation and supervision by the New York Insurance
Department as well as the insurance laws and regulations of the jurisdictions
in which the contracts are distributed.
7
<PAGE>
In reliance on certain exemptions, exclusions and rules, LNY has not regis-
tered interests in the general account as a security under the Securities Act
of 1933 (1933 Act) and has not registered the general account as an investment
company under the Investment Company Act of 1940 (1940 Act). Accordingly, nei-
ther the general account nor any interests in it are subject to regulation un-
der the 1933 Act or the 1940 Act. LNY has been advised that the staff of the
SEC has not made a review of the disclosures which are included in this Pro-
spectus which relate to our general account and to the fixed side of the con-
tract. These disclosures, however, may be subject to certain provisions of the
federal securities laws relating to the accuracy and completeness of state-
ments made in the Prospectus. This Prospectus is generally intended to serve
as a disclosure document only for aspects of the contract involving the VAA,
and therefore contains only selected information regarding the fixed side of
the contract. Complete details regarding the fixed side of the contract can be
found in the contract.
Contributions allocated to the fixed account are guaranteed to be credited
with a minimum interest rate, specified in the contract, of at least 3.0%. A
contribution allocated to the fixed side of the contract is credited with in-
terest beginning on the next calendar day following the date of receipt if all
participant data is complete. LNY may vary the way in which it credits inter-
est to the fixed side of the contract from time to time.
ANY INTEREST IN EXCESS OF 3.0% WILL BE DECLARED IN ADVANCE IN "LNY'S" SOLE
DISCRETION. PARTICIPANTS BEAR THE RISK THAT NO INTEREST IN EXCESS OF 3.0% WILL
BE DECLARED.
Under GVA III, special limits apply to transfers and withdrawals from the
fixed account. See fixed account withdrawal/transfer limits for GVA III.
If the Plan permits loans, then during the participant's accumulation period,
the participant may apply for a loan by completing a loan application that we
provide. The participant's account balance in the fixed account secures the
loan. Loans are subject to restrictions imposed by the IRC, Title I of the Em-
ployee Retirement Income Security Act of 1974 (ERISA), and the participant's
plan. For plans subject to Title I of ERISA, the initial amount of a partici-
pant loan cannot exceed the lesser of 50% of the participant's vested account
balance in the fixed account or $50,000 and must be at least $1,000. For plans
not subject to Title I of ERISA, a participant may borrow up to $10,000 of his
or her vested account balance. A participant may have only one loan outstand-
ing at a time and may not take more than one loan in any six-month period.
Amounts serving as collateral for the loan are not subject to the minimum in-
terest rate under the contract and will accrue interest at a rate below the
loan interest rate provided in the contract. More information about loans and
loan interest rates is in the contract, the active life certificates, the an-
nuity loan agreement and is available from us.
Variable Annuity Account (VAA)
On July 24, 1996, the VAA was established as an insurance company separate ac-
count under New York law. It is registered with the SEC as a unit investment
trust under the provisions of the 1940 Act. The SEC does not supervise the VAA
or LNY. The VAA is a segregated investment account, meaning that its assets
may not be charged with liabilities resulting from any other business that we
may conduct. Income, gains and losses, whether realized or not, from assets
allocated to the VAA are, in accordance with the applicable annuity contracts,
credited to or charged against the VAA. They are credited or charged without
regard to any other income, gains or losses of LNY. The VAA satisfies the def-
inition of separate account under the federal securities laws. We do not guar-
antee the investment performance of the VAA. Any investment gain or loss de-
pends on the investment performance of the funds. You assume the full invest-
ment risk for all amounts placed in the VAA.
Investments of the VAA
The contractowner decides which of the subaccounts available under the con-
tract will be available for participant allocations. There is a separate
subaccount which corresponds to each fund. Participant allocations may be
changed without penalty or charges. Shares of the funds will be sold at net
asset value with no initial sales charge to the VAA in order to fund the con-
tracts. The funds are required to redeem fund shares at net asset value on our
request. We reserve the right to add, delete, or substitute funds.
Each fund, described below, is an investment vehicle for insurance company
separate accounts. Certain funds offered as part of this contract have similar
investment objectives and policies to other portfolios managed by the fund's
advisor. The investment results of the funds, however, may be higher or lower
than the results of other portfolios that are managed by the adviser. There
can be no assurance, and no representation is made, that the investment re-
sults of any of the funds will be comparable to the investment results of any
other portfolio managed by the adviser.
8
<PAGE>
Description of the Funds
Following are brief summaries of the investment objectives and policies of the
funds, and a description of their managers. Each fund is subject to certain
investment policies and restrictions which may not be changed without a major-
ity vote of shareholders of that fund. More detailed information can be ob-
tained from the current Prospectus for the fund, which is included in this
booklet. There is not assurance that any of the funds will achieve its stated
objective.
1. American Century Variable Portfolios, Inc.--American Century VP Balanced
seeks capital growth and current income. Its investment team intends to
maintain approximately 60% of the portfolio's assets in common stocks that
are considered by its manager to have better than average prospects for ap-
preciation and the balance in bonds and other fixed income securities.
American Century Investment Management, Inc. is the investment manager of
this portfolio.
2. Baron Capital Funds Trust--Baron Capital Asset Fund seeks capital apprecia-
tion through investments in securities of small sized companies with market
capitalizations of $100 million to $1.5 billion, with undervalued assets or
favorable growth prospects. BAMCO, Inc. serves as the Fund's investment ad-
visor.
3. Dreyfus Stock Index Fund is a non-diversified index fund that seeks to pro-
vide investment results that correspond to the price and yield performance
of publicly traded common stocks in the aggregate, as represented by the
Standard & Poor's 500 Composite Stock Price Index. The Fund is neither
sponsored by nor affiliated with Standard & Poor's Corporation. The Dreyfus
Corporation acts as the Fund manager and Mellon Equity Associates, an af-
filiate of Dreyfus located at 500 Grant Street, Pittsburgh, Pennsylvania
15258, is the Fund index manager.
4. Dreyfus Variable Investment Fund--Small Cap Portfolio seeks to maximize
capital appreciation investing primarily in common stocks of domestic and
foreign issuers. The Small Cap Portfolio seeks out companies that have the
potential for significant growth. Under normal market conditions, the Port-
folio will invest at least 65% of its total assets in companies with market
capitalization of less than $1.5 billion, at the time of purchase. The
portfolio manager seeks companies believed to be characterized by new or
innovative products or services which should enhance prospects for growth
in future earnings. The Portfolio may also invest in special situations
such as corporate restructurings, mergers or acquisitions. The Dreyfus Cor-
poration serves as the Portfolio's investment adviser.
5. Fidelity Variable Insurance Products Fund (VIP)--Growth Portfolio seeks
long-term capital appreciation. The Portfolio normally purchases common
stocks. Fidelity Management & Research Company ("FMR") is the manager this
portfolio.
6. Fidelity Variable Insurance Products Fund (VIP)--Equity-Income Portfolio
seeks reasonable income by investing primarily in income-producing Equity,
securities, with some potential for capital appreciation, seeking a yield
that exceeds the composite yield on the securities comprising the Standard
and Poor's 500 Index (S&P 500). FMR is the investment manager of this port-
folio.
7. Fidelity Variable Insurance Products Fund II (VIP II)--Asset Manager Port-
folio seeks high total return with reduced risk over the long term by allo-
cating its assets among domestic and foreign stocks, bonds and short-term
money market instruments. FMR is the investment manager of this portfolio.
8. Janus Aspen Series--Worldwide Growth Portfolio seeks long-term growth of
capital in a manner consistent with the preservation of capital by invest-
ing primarily in common stocks of foreign and domestic issuers. The Portfo-
lio has 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, but
may at times invest in fewer than five countries or even a single country.
Janus Capital Corporation serves as the Portfolio's investment advisor.
9. Lincoln National Aggressive Growth Fund, Inc. seeks to maximize capital ap-
preciation by investing in a diversified portfolio of equity securities of
small and medium-sized companies which have a dominant position within
their respective industries, are undervalued or have a potential for growth
in earnings. The fund invests in companies with market capitalizations of
between $250 million and $5 billion at the time of purchase. Lincoln In-
vestment is the fund's investment advisor, and Putnam Investments is the
fund's investment sub-advisor.
10. Lincoln National Social Awareness Fund, Inc. seeks long-term capital ap-
preciation by investing primarily in a portfolio of common stock and secu-
rities convertible into common stock, which adhere to certain specific so-
cial criteria. Lincoln Investment Management, Inc. (Lincoln Investment) is
the fund's investment advisor and Vantage Investment Advisors is the
fund's investment sub-advisor.
11. Neuberger Berman Advisers Management Trust--Partners Portfolio seeks capi-
tal growth by investing mainly in common stocks of mid- to large-capital-
ization established companies. Neuberger Berman Management Incorporated
serves as the Portfolio's investment adviser. Neuberger Berman, LLC serves
as the Fund's investment sub-advisor.
9
<PAGE>
12. T. Rowe Price International Series, Inc.--T. Rowe Price International
Stock Portfolio seeks long-term growth of capital through investments pri-
marily in common stocks of established, non-U.S. companies. Rowe Price-
Fleming International, Inc. is the investment manager of this portfolio.
Fidelity VIP--Money Market Portfolio seeks to obtain as high a level of cur-
rent income as is consistent with preserving capital and providing liquidity.
For more information about the Portfolio, into which initial contributions are
invested pending LNY's receipt of a complete order, see The Contracts.
Some advisors (or their affiliate) may pay compensation to LNY (or an affili-
ate) for administration, distribution, or other expenses. Currently these ad-
visors include American Century, BAMCO, FRM, Janus and Neuberger Berman. The
amount of compensation is usually based on assets of the Portfolio from con-
tracts that we issue or administer, and some advisors may pay us more than
others.
Sale of shares by the funds
We will purchase shares of the funds at net asset value and direct them to the
appropriate subaccounts of the VAA. We will redeem shares of the appropriate
funds to pay annuity payouts, death benefits, surrender/ withdrawal proceeds
or for other purposes described in the contract. If a participant wants to
transfer all or part of his or her account balance from one subaccount to an-
other, we redeem shares held in the first and purchase shares of the other.
The shares are retired, but they may be reissued later.
Shares of the funds are not sold directly to the general public. They are sold
to LNY and may be sold to other insurance companies for investment of assets
of the subaccounts established by those insurance companies to fund variable
annuity and variable life insurance contracts.
When a fund sells shares both to variable annuity and to variable life insur-
ance separate accounts, it is engaging in mixed funding. When a fund sells
shares to separate accounts of unaffiliated life insurance companies, it is
engaging in shared funding.
The funds may engage in mixed and shared funding. Due to differences in re-
demption rates or tax treatment, or other considerations, the interests of
various contract owners participating in a fund could conflict. The funds' Di-
rectors or Trustees will monitor for the existence of any material conflicts,
and determine what action, if any, should be taken. See the Prospectuses for
the funds.
Reinvestment of dividends and capital gain distributions
All dividend and capital gain distributions of the funds are automatically re-
invested in shares of the distributing funds at their net asset value on the
date of distribution. Dividends are not paid out to contractowners as addi-
tional units, but are reflected as changes in unit values.
Addition, deletion or substitution of investments
We reserve the right, within the law, to make additions, deletions and substi-
tutions for the funds in which the VAA participates. (We may substitute shares
of other funds for shares already purchased, or to be purchased in the future,
under the contract. This substitution might occur if shares of a fund should
no longer be available, or if investment in any fund's shares should become
inappropriate, in the judgment of our management, for the purposes of the con-
tract.) We cannot substitute shares without approval by the SEC. We will also
notify contractowners and participants.
Charges and Other Deductions
We will deduct the charges described below to cover our costs and expenses,
services provided, and risks assumed under the contracts. We will incur cer-
tain costs and expenses for distribution and administration of the contracts
and for providing the benefits payable thereunder. More particularly, our ad-
ministrative services include: processing applications and enrollment forms
and issuing the contracts and active life certificates, processing purchases
and redemptions of fund shares as required, maintaining records, administering
annuity payout options, furnishing accounting and valuation services (includ-
ing the calculation and monitoring of daily subaccount values), reconciling
and depositing cash receipts, providing contract confirmations, providing
toll-free inquiry services and furnishing telephone fund transfer services.
The risks we assume include: the risk that annuitants receiving annuity
payouts under the contract will live longer than we assumed when we calculated
our guaranteed rates (these rates cannot be changed); the risk that death ben-
efits paid will exceed actual participant account balances (less outstanding
loans); the risk that more participants than expected will qualify for waiver
of the surrender charge under GVA I or GVA II and the risk that our costs in
providing the services will exceed our revenues from contract charges which we
cannot change. The amount of a charge may not necessarily correspond to the
costs associated with providing the services or benefits indicated by the de-
scription of the charge. For example, the surrender charge collected under GVA
I or GVA II may not fully cover all of the sales and distribution expenses ac-
tually incurred by us.
10
<PAGE>
Deductions from the VAA for GVA I, II, & III
We deduct from the VAA an amount, computed daily, which is equal to an annual
rate of 1.00% of the daily net asset value. The charge is a mortality and ex-
pense risk charge. It is assessed during the accumulation period and during
the annuity period, even though during the annuity period, we bear no mortal-
ity risk on annuity options that do not have life contingencies.
Annual administration charge
During the accumulation period, we currently deduct $25 (or the balance of the
participant's account, if less) per year from each participant's account bal-
ance on the last business day of the month in which a participant anniversary
occurs. We also deduct the charge from a participant's account balance if the
participant's account is totally withdrawn. The charge may be increased or de-
creased.
Surrender charge for GVA I and GVA II*
Under GVA I and GVA II, a surrender charge applies (except as described below)
to total or partial withdrawals of a participant's account balance during the
accumulation period as follows:
<TABLE>
<CAPTION>
GVA II
GVA II NON-
During Participation Year GVA I ERISA ERISA
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1-6...................................................... 5% 5% 6%
7........................................................ 4% 4% 6%
8........................................................ 3% 3% 6%
9........................................................ 2% 2% 6%
10....................................................... 1% 1% 6%
11 and later............................................. 0% 0% 6%
</TABLE>
*There is no surrender charge taken on withdrawals from GVA III.
The surrender charge is imposed on the gross withdrawal amount, and is de-
ducted from the subaccounts and the fixed account in proportion to the amount
withdrawn from each. We do not impose a surrender charge on death benefits, or
on account balances converted to an annuity payout option. For any partici-
pant, the surrender charge will never exceed 8.5% of the cumulative contribu-
tions to the participant's account.
We impose the surrender charge on GVA I and GVA II to compensate us for the
loss we experience on our distribution costs when a participant withdraws ac-
count value before distribution costs have been recovered. We may also recover
distribution costs from other contract charges, including the mortality and
expense risk charge.
Fixed account withdrawal/transfer limits for GVA III
GVA III has no surrender charges, but under GVA III special limits apply to
transfers and withdrawals from the fixed account. During any one calendar year
a participant may make one withdrawal from the fixed account, OR one transfer
to the VAA from the fixed account, of up to 20% of their fixed account bal-
ance.
Participants who want to liquidate their entire fixed account balance, or
transfer it to the VAA, however, may make one withdrawal or transfer request
from their fixed account in each of five consecutive calendar years according
to the following percentages:
<TABLE>
<CAPTION>
Year Request Received Percentage of Fixed Account
By Lincoln Life Available Under GVA III
- --------------------------------------------------------------------------------
<S> <C>
1................................................ 20%
2................................................ 25%
3................................................ 33.33%
4................................................ 50%
5................................................ 100%
</TABLE>
Each consecutive withdrawal or transfer may not be made more frequently than
twelve months apart. This liquidation schedule is also subject to the same
conditions as other withdrawals and transfers. We reserve the right to pro-
hibit any additional contributions by a participant that notifies us their in-
tention to liquidate their fixed account balance and stop contributions to the
contract.
Fixed account waiver of surrender charges and withdrawal/transfer limits
Under certain conditions, a participant may withdraw part or all of his or her
fixed account balance without incurring a surrender charge under GVA I or GVA
II, or without being subject to the fixed account withdrawal/transfer limits
under GVA III. We must receive reasonable proof of the condition with the
withdrawal request. The chart below shows the standard conditions provided by
GVA I, GVA II, and GVA III, as well as optional conditions the contractowner
may or may not make available under the contracts:
Standard con- Optional con-
ditions ditions [/R]
- -------------------------------------------------------------------------------
. the partici- . the partici-
pant has at- pant has
tained age separated
59 1/2 from service
with their
GVA I employer and
is at least
55 years of
age
. the partici-
pant has
died [/R]
. the partici-
pant has in-
curred a . the partici-
disability pant is ex-
(as defined periencing
under the financial
contract) hardship
. the partici-
pant has
separated
from service
with their
employer
[/R]
. the partici- . the partici-
pant has at- pant has
tained age separated
59 1/2 from service
with their
GVA II employer
[/R]
. the partici-
pant has
died
. the partici- . the partici-
pant has in- pant is ex-
curred a periencing
disability financial
(as defined hardship
under the
contract)
[/R]
. the partici-
pant has
separated
from service
with their
employer and
is at least
55 years of
age
11
<PAGE>
. the partici- . the partici-
pant has at- pant has
tained age separated
59 1/2 from service
with their
GVA III employer and
is at least
55 years of
age
. the partici-
pant has
died [/R]
. the partici-
pant has in-
curred a
disability
(as defined
under the
contract)
. the partici-
pant has
separated
from service
with their
employer
. the partici-
pant is ex-
periencing
financial
hardship*
* A contractowner has the option to waive financial hardship.
Under GVA I and GVA II, a contractowner may also elect an optional contract
provision that permits participants to make a withdrawal once each contract
year of up to 20% of the participant's account balance without a surrender
charge.
A contractowner choosing one or more of the optional provisions may receive a
different declared interest rate on the fixed account than will holders of
contracts without these provisions.
Deductions for premium taxes
Any premium tax or other tax levied by any governmental entity as a result of
the existence of the contracts or the VAA will be deducted from account value
when incurred, or at another time of our choosing.
The applicable premium tax rates that states and other governmental entities
impose on the purchase of an annuity are subject to change by legislation, by
administrative interpretation or by judicial action. The tax ranges from 0.5%
to 4.0%.
Other charges and deductions
There are deductions from and expenses paid out of the assets of the under-
lying funds that are more fully described in the Prospectuses for the funds.
Loans are subject to loan interest charges. In addition, we may impose a $30
fee to set up a systematic withdrawal option for a participant.
Additional information
The annual administration charge and surrender charge described previously may
be reduced or eliminated under a particular contract. However, these charges
will be reduced only to the extent that we anticipate lower distribution
and/or administrative expenses, or that we perform fewer sales or administra-
tive services than those originally contemplated in establishing the levels of
those charges. Lower distribution and/or administrative expenses may be the
result of economies associated with (i) the size of a particular group; (ii)
an existing relationship with the contractowner or employer; (iii) the use of
mass enrollment procedures; (iv) the performance of administrative or sales
functions by the employer; or (v) the use by an employer of automated tech-
niques in submitting contributions or information relating to contributions on
behalf of its employees. In addition, an employer may pay the annual adminis-
tration charge on behalf of participants under a contract, or by election im-
pose this charge only on participants with account balances in the VAA.
The Contracts
Purchase of the Contracts
We designed the Contracts for employers and other entities to enable partici-
pants and employers to accumulate funds for retirement programs meeting the
requirements of the following Sections of the Internal Revenue Code of 1986,
as amended (tax code): 401(a), 403(b), 408 and other related sections, as well
as for programs offering non-qualified annuities. An employer, association or
trustee in some circumstances may apply for a contract by completing an appli-
cation and returning it to us. If we accept the application, the contractowner
or an affiliated employer can forward contributions on behalf of employees who
then become participants under the contracts. For plans that have allocated
rights to the participant, we will issue to each participant a separate active
life certificate that describes the basic provisions of the contract to each
participant.
Contributions
Contractowners generally forward contributions to us for investment. Depending
on the plan, the contributions may consist of salary reduction contributions,
employer contributions or post-tax contributions.
Contributions may accumulate on either a guaranteed or variable basis as se-
lected from those subaccounts made available by the contractowner.
Contributions made on behalf of participants may be in any amount unless there
is a minimum amount set by the contractowner or plan. A contract may require
the contractowner to contribute a minimum annual amount on behalf of all par-
ticipants. Annual contributions under qualified plans may be subject to maxi-
mum limits imposed by the tax code. Annual contributions under non-qualified
plans may be limited by the terms of the contract. In the SAI see Tax Law Con-
siderations for a discussion of these limits. Subject to any restrictions im-
posed by the plan or the tax code, we will accept transfers from other con-
tracts and qualified rollover contributions.
Contributions must be in U.S. funds, and all withdrawals and distributions un-
der the contract will be in U.S. funds. If a bank or other financial institu-
tion does not honor the check or other payment method used for a contribution,
we will treat the contribution as invalid. All allocation and subsequent
transfers resulting from the invalid contributions will be reversed and the
party responsible for the invalid contribution must reimburse us for any
losses or expenses resulting from the invalid contribution.
12
<PAGE>
Initial contributions
If we have received a completed enrollment form and all other information nec-
essary for processing a contribution, we will price the initial contribution
for a participant to his or her account no later than two business days after
we receive the contribution.
If we receive contributions without a properly completed enrollment form, we
will notify the contractowner and deposit the contributions to the pending al-
location account. Within two business days of receipt of a properly completed
enrollment form, we will transfer the participant's account balance in the
pending allocation account in accordance with the allocation percentages
elected on the enrollment form. We will allocate all future contributions in
accordance with these percentages until the participant notifies us of a
change. If we do not receive a properly completed enrollment form after we
send three monthly notices, then we will refund the participant's account bal-
ance in the pending allocation account within 105 days of the date of the ini-
tial contribution. The pending allocation account invests in Fidelity VIP--
Money Market Portfolio, which is not available as an investment option under
the contract. We do not impose the mortality and expense risk charges or the
annual administration charge on the pending allocation account. We begin im-
posing these charges when we receive a properly completed enrollment form. The
participant's participation date will be the date we deposited the partici-
pant's contribution into the pending allocation account.
Valuation date
Accumulation units and annuity units will be valued once daily at the close of
trading (currently 4:00 p.m., New York time) on each day the New York Stock
Exchange is open (valuation date). On any date other than a valuation date,
the accumulation unit value and the annuity unit value will not change.
Allocation of contributions
The contractowner forwards contributions to us, specifying the amount being
contributed on behalf of each participant and allocation information in accor-
dance with our procedures. Contributions are placed into the VAA's
subaccounts, each of which invests in shares of a fund, and/or the fixed ac-
count, according to written participant instructions and subject to the plan.
The contribution allocation percentage to the subaccounts or the fixed account
can be in any whole percent. A participant may allocate contributions to a
maximum of ten subaccounts, or to a maximum of nine subaccounts and the fixed
account.
Upon allocation to the appropriate subaccount, contributions are converted to
accumulation units. The number of accumulation units credited is determined by
dividing the amount allocated to each subaccount by the value of an accumula-
tion unit for that subaccount on the valuation date on which the contribution
is received by us if received before 4:00 p.m., New York time. If the contri-
bution is received at or after 4:00 p.m., New York time, we will use the accu-
mulation unit value computed on the next valuation date. The number of accumu-
lation units determined in this way is not changed by any subsequent change in
the value of an accumulation unit. However, the dollar value of an accumula-
tion unit will vary depending not only upon how well the underlying fund's in-
vestments perform, but also upon the expenses of the VAA and the underlying
funds.
Subject to the terms of the plan, a participant may change the allocation of
contributions by notifying us in writing or by telephone in accordance with
our published procedures. The change is effective for all contributions re-
ceived concurrently with the allocation change form and for all future contri-
butions, unless the participant specifies a later date. Changes in the alloca-
tion of future contributions have no effect on amounts a participant may have
already contributed. Such amounts, however, may be transferred between
subaccounts and the fixed account pursuant to the requirements described in
Transfers on or before the annuity commencement date. Allocations of employer
contri -
butions may be restricted by the applicable plan.
Valuation of accumulation units
Contributions allocated to the VAA are converted into accumulation units. This
is done by dividing each contribution by the value of an accumulation unit for
the valuation period during which the contribution is allocated to the VAA.
The accumulation unit value for each subaccount was or will be established at
the inception of the subaccount. It may increase or decrease from valuation
period to valuation period. The accumulation unit value for a subaccount for a
later valuation period is determined as follows:
(1) The total value of the fund shares held in the subaccount is calculated by
multiplying the number of fund shares owned by the subaccount at the be-
ginning of the valuation period by the net asset value per share of the
fund at end of the valuation period, and adding any dividend or other dis-
tribution of the fund if an ex-dividend date occurs during the valuation
period; minus
(2) The liabilities of the subaccount at the end of the valuation period;
these liabilities include daily charges imposed on the subaccount, and may
include a charge or credit with respect to any taxes paid or reserved for
by us that we determine result from the operations of the VAA; and
(3) The result of (2) is divided by the number of subaccount units outstanding
at the beginning of the valuation period.
The daily charges imposed on a subaccount for any valuation period are equal
to the mortality and expense risk charge multiplied by the number of calendar
days in the valuation period.
13
<PAGE>
Transfers on or before the annuity commencement date
Subject to the terms of a plan, a participant may transfer all or a portion of
the participant's account balance from one subaccount to another, and between
the VAA and the fixed account.
Under GVA III transfers from the fixed account are subject to special limits.
See fixed account withdrawals/ transfer limits for GVA III.
A transfer from a subaccount involves the surrender of accumulation units in
that subaccount, and a transfer to a subaccount involves the purchase of accu-
mulation units in the that subaccount. Subaccount transfers will be done using
accumulation unit values determined at the end of the valuation date on which
we receive the transfer request. There is no charge for a transfer. We do not
require any minimum transfer amount, and do not limit the number of transfers
other than for transfers from the fixed account for GVA III.
A transfer may be made by writing to us or, if a Telephone Exchange Authoriza-
tion form (available from us) is on file with us, by a toll-free telephone
call. In order to prevent unauthorized or fraudulent telephone transfers, we
may require the caller to provide certain identifying information before we
will act upon their instructions. We may also assign the participant a Personal
Identification Number (PIN) to serve as identification. We will not be liable
for following telephone instructions we reasonably believe are genuine. Tele-
phone requests may be recorded and written confirmation of all transfer re-
quests will be mailed to the participant on the next valuation date. If the
participant or contractowner determines that a transfer was made in error, the
contractowner or participant must notify us within 30 days of the confirmation
date. Telephone transfers will be processed on the valuation date that they are
received when they are received by us before 4:00 p.m. New York time.
When thinking about a transfer of account value, the participant should con-
sider the inherent risk involved. Frequent transfers based on short-term expec-
tations may increase the risk that a transfer will be made at an inopportune
time.
Transfers after the annuity commencement date
We do not permit transfers of a participant's account balance after the annuity
commencement date.
Death benefit before the annuity commencement date
The payment of death benefits is governed by the applicable plan and the tax
code. The participant may designate a beneficiary during the participant's
lifetime and change the beneficiary by filing a written request with us. Each
change of beneficiary revokes any previous designation.
If the participant dies before the annuity commencement date, the death benefit
paid to the participant's designated beneficiary will be the greater of: (1)
the net contributions; or (2) the participant's account balance less any out-
standing loan (including principal and due and accrued interest), provided
that, if we are not notified of the participant's death within six months of
such death, we pay the beneficiary the amount in (2).
We determine the value of the death benefit as of the date on which the death
claim is approved for payment. This payment will occur when we receive (1)
proof, satisfactory to us, of the death of the participant; (2) written autho-
rization for payment; and (3) all required claim forms, fully completed.
If a death benefit is payable, the beneficiary may elect to receive payment of
the death benefit in either the form of a lump sum settlement or an annuity
payout, or as a combination of these two. If a lump sum settlement is request-
ed, the proceeds will be mailed within seven days of receipt of satisfactory
claim documentation as discussed previously, subject to the laws and regula-
tions governing payment of death benefits. If no election is made within 60
days after we receive satisfactory notice of the participant's death, we will
pay a lump sum settlement to the beneficiary at that time. This payment may be
postponed as permitted by the 1940 Act.
Payment will be made in accordance with applicable laws and regulations gov-
erning payment of death benefits.
Under qualified contracts, if the beneficiary is someone other than the spouse
of the deceased participant, the tax code provides that the beneficiary may not
elect an annuity which would commence later than December 31st of the calendar
year following the calendar year of the participant's death. If a non-spousal
beneficiary elects to receive payment in a single lump sum, the tax code pro-
vides that such payment must be received no later than December 31st of the
fourth calendar year following the calendar year of the participant's death.
If the beneficiary is the surviving spouse of the deceased participant, distri-
butions generally are not required under the tax code to begin earlier than De-
cember 31st of the calendar year in which the participant would have attained
age 70 1/2. If the surviving spouse dies before the date distributions com-
mence, then, for purposes of determining the date distributions to the benefi-
ciary must commence, the date of death of the surviving spouse is substituted
for the date of death of the participant.
Other rules apply to non-qualified annuities. See Federal tax matters.
If there is no living named beneficiary on file with us at the time of a par-
ticipant's death and unless the plan directs otherwise, we will pay the death
benefit to the participant's estate in the form of a lump sum payment, upon re-
ceipt of satisfactory proof of the participant's
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death, but only if we receive proof of death no later than the end of the
fourth calendar year following the year of the participant's death. In such
case, the value of the death benefit will be determined as of the end of the
valuation period during which we receive due proof of death, and the lump sum
death benefit generally will be paid within seven days of that date.
Withdrawals
Before the annuity commencement date and subject to the terms of the plan,
withdrawals may be made from the subaccounts or the fixed account of all or
part of the participant's account balance remaining after deductions for any
applicable (1) surrender charge; (2) annual administration charge (imposed on
total withdrawals), (3) premium taxes, and (4) outstanding loan. Annuity con-
version amounts are not considered withdrawals.
Converting all or part of the account balance or death benefit to an annuity
payout is not considered a withdrawal.
Under Group Variable Annuity III, special limits apply to withdrawals from the
fixed account. See fixed account withdrawal/transfer limits for Group Variable
Annuity III.
The account balance available for withdrawal is determined at the end of the
valuation period during which we receive the written withdrawal request. Un-
less a request for withdrawal specifies otherwise, withdrawals will be made
from all subaccounts within the VAA and from the fixed account in the same
proportion that the amount of withdrawal bears to the total participant ac-
count balance. Unless prohibited, withdrawal payments will be mailed within
seven days after we receive a valid written request. The payment may be post-
poned as permitted by the 1940 Act.
There are charges associated with withdrawals of account value. See Charges
and Other Deductions.
The tax consequences of a withdrawal are discussed later in this booklet. See
Federal Tax Matters.
Total withdrawals. Only participants with no outstanding loans can make a to-
tal withdrawal. A total withdrawal of a participant's account will occur when
(a) the participant or contractowner requests the liquidation of the partici-
pant's entire account balance, or (b) the amount requested plus any surrender
charge results in a remaining participant account balance of an amount less
than or equal to the annual administration charge, in which case we treat the
request as a request for liquidation of the participant's entire account
balance.
Any active life certificate must be surrendered to us when a total withdrawal
occurs. If the contractowner resumes contributions on behalf of a participant
after a total withdrawal, the participant will receive a new participation
date and active life certificate.
Partial withdrawals. A partial withdrawal of a participant's account balance
will occur when less than a total withdrawal is made from a participant's ac-
count.
Systematic withdrawal option. Participants who are at least age 59 1/2, are
separated from service from their employer, or are disabled, and certain
spousal beneficiaries and alternate payees who are former spouses, may be eli-
gible for a Systematic Withdrawal Option ("SWO") under the contract. Payments
are made only from the fixed account. Under the SWO a participant may elect to
withdraw either a monthly amount which is an approximation of the interest
earned between each payment period based upon the interest rate in effect at
the beginning of each respective payment period, or a flat dollar amount with-
drawn on a periodic basis. A participant must have a vested pre-tax account
balance of at least $10,000 in the fixed account in order to select the SWO. A
participant may transfer amounts from the VAA to the fixed account in order to
support SWO payments. These transfers, however, are subject to the transfer
restrictions imposed by any applicable plan. A one-time fee of up to $30 may
be charged to set up the SWO. This charge is waived for total vested pre-tax
account balances of $25,000 or more. More information about SWO, including ap-
plicable fees and charges, is available in the contracts and active life cer-
tificates and from us.
Maximum conservation option. Under certain contracts participants who are at
least age 70 1/2 may ask us to calculate and pay to them the minimum annual
distribution required by Sections 401(a)(9), 403(b)(10), or 408 of the tax
code. The participant must complete the forms we require to elect this option.
We will base our calculation solely on the participant's account value with
us. Participants who select this option are responsible for determining the
minimum distributions amount applicable to their non-LNY contracts.
Withdrawal restrictions. Withdrawals under Section 403(b) contracts are sub-
ject to the limitations under Section 403(b)(11) of the tax code and regula-
tions thereof and in any applicable plan document. That section provides that
withdrawals of salary reduction contributions deposited and earnings credited
on any salary reduction contributions after December 31, 1988 can only be made
if the participant has (1) died; (2) become disabled; (3) attained age 59 1/2;
(4) separated from service; or (5) incurred a hardship. If amounts accumulated
in a Section 403(b)(7) custodial account are deposited in a contract, these
amounts will be subject to the same withdrawal restrictions as are applicable
to post-1988 salary reduction contributions under the contracts. For more in-
formation on these provisions see Federal tax matters.
Withdrawal requests for a participant under Section 401(a) plans, plans and
plans subject to Title I of ERISA must be authorized by the contractowner on
behalf of a participant. All withdrawal requests will require the
contractowner's written authorization and written documentation specifying the
portion of the participant's account balance which is available for distribu-
tion to the participant.
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For withdrawal requests (other than transfers to other investment vehicles) by
participants under plans not subject to Title I of ERISA and non-401(a) Plans,
the participant must certify to us that one of the permitted distribution
events listed in the tax code has occurred (and provide supporting informa-
tion, if requested) and that we may rely on this representation in granting
the withdrawal request. See Federal tax matters. A participant should consult
his or her tax adviser as well as review the provisions of their plan before
requesting a withdrawal.
A plan and applicable law may contain additional withdrawal or transfer re-
strictions.
Withdrawals may have Federal tax consequences. In addition, early withdrawals,
as defined under Section 72(q) and 72(t) of the tax code, may be subject to a
ten percent excise tax.
Amendment of the contract
We reserve the right to amend the contract to meet the requirements of the
1940 Act or other applicable federal or state laws or regulations. The
contractowner will be notified in writing of any changes, modifications or
waivers.
Commissions
We pay commissions of up to 3.5% of contributions to dealers. In some instanc-
es, we may lower commissions on contributions by as much as 3.5% and include a
commission of up to .50% of annual contract values (or an equivalent sched-
ule). These commissions are not deducted from contributions or account value;
they are paid by us.
Ownership
Contractowners have all rights under the contract except those allocated to
participants. According to New York law, the assets of the VAA are held for
the exclusive benefit of all contractowners, participants, and their desig-
nated beneficiaries; and the assets of the VAA are not chargeable with liabil-
ities arising from any other business that we may conduct. Qualified contracts
and active life certificates may not be assigned or transferred except as per-
mitted by ERISA and on written notification to us. In addition, a participant,
beneficiary, or annuitant may not, unless permitted by law, assign or encumber
any payment due under the contract.
Contractowner questions
The obligations to purchasers under the contracts are those of LNY. Questions
about the contract should be directed to us at 1-800-893-7168.
Annuity payouts
As permitted by the plan, the participant, or the beneficiary of a deceased
participant, may elect to convert all or part of the participant's account
balance or the death benefit to an annuity payout. The contract provides op-
tional forms of payouts of annuities (annuity payout options), each of which
is payable on a variable basis, a fixed basis or a combination of both as
specified. If the contractowner does not give us instructions, we will apply
the participant's account balance in the fixed account to a fixed annuity, and
account balance in the VAA to a variable annuity.
If the participant's account balance or the beneficiary's death benefit is
less than $2,000 or if the amount of the first payout is less than $20, we
have the right to cancel the annuity and pay the participant or beneficiary
the entire amount in a lump sum.
We may maintain variable annuity payouts in the VAA, or in another separate
account of LNY (variable payout division). We do not impose a charge when the
annuity conversion amount is applied to a variable payout division to provide
an annuity payout option. The contract benefits and charges for an annuity
payout option, whether maintained in the VAA or in a variable payout division,
are as described in this Prospectus. The selection of funds available through
a variable payout division may be different from the funds available through
the VAA. If we will maintain a participant's variable annuity payout in a
variable payout division, we will provide a Prospectus for the variable payout
division before the annuity commencement date.
Under qualified plans, any annuity selected must be payable over a period that
does not extend beyond the life expectancy of the participant and the benefi-
ciary. If the beneficiary is not the participant's spouse, the present value
of payouts to be made to the participant must be more than 50% of the present
value of the total payouts to be made to the participant and the beneficiary.
If an annuitant dies before the end of a guaranteed annuity period, the bene-
ficiary, if any, or the annuitant's estate will receive any remaining payouts
due under the annuity option in effect.
Annuity payout options
Note Carefully: Under the Single Life Annuity and Joint Life Annuity options
it would be possible for only one annuity payout to be made if the
annuitant(s) were to die before the due date of the second annuity payout;
only two annuity payouts if the annuitant(s) were to die before the due date
of the third annuity payout; and so forth.
Single Life Annuity. Payouts are made monthly during the lifetime of the annu-
itant, and the annuity terminates with the last payout preceding death.
Life Annuity With Guaranteed Period of 10, 15 or 20 Years. Payouts are made
monthly during the lifetime of the annuitant with a monthly payout guaranteed
to the beneficiary for the remainder of the selected number of years, if the
annuitant dies before the end of the period selected. Payouts under this annu-
ity option are smaller than a single life annuity without a guaranteed payout
period.
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Joint Life Annuity. Payouts are made monthly during the joint lifetime of the
annuitant and a designated second person.
Non-Life Annuities. Annuity payouts are guaranteed monthly for the selected
number of years. While there is no right to make any total or partial with-
drawals during the annuity period, an annuitant or beneficiary who has se-
lected this annuity option as a variable annuity may request at any time dur-
ing the payout period that the present value of any remaining installments be
paid in one lump sum. This lump sum payout will be treated as a total with-
drawal during the accumulation period and may be subject to a surrender
charge. See Charges and deductions and Federal tax matters.
Additional information
Annuity payout options are only available if consistent with the contract, the
plan, the tax code, and ERISA.
The annuity commencement date is the date on which we make the first payout
annuity payment to an annuitant. For plans subject to Section 401(a)(9)(B) of
the tax code, a beneficiary must select an annuity commencement date that is
not later than one year after the date of the participant's death. A partici-
pant or contractowner may select an annuity commencement date for the annui-
tant, which is shown in the retired life certificate. Selection of an annuity
commencement date may be affected by the distribution restrictions under the
tax code and the minimum distribution requirements under Section 401(a)(9) of
the tax code. See Federal tax matters.
You must send us written notice of the selected annuity commencement date, the
annuity payout option (including whether fixed or variable), and the annuity
conversion amount to be converted on behalf of a participant or beneficiary,
at least 30 days before the selected annuity commencement date. If proceeds
become available to a beneficiary in a lump sum, the beneficiary may choose
any annuity payout option.
The annuity conversion amount is either the participant's account balance or a
portion thereof, or the death benefit plus interest, as of the annuity payout
calculation date. For a fixed annuity, the annuity commencement date is usu-
ally one month after the annuity payout calculation date; subsequent annuity
payouts are at one-month intervals from the annuity commencement date. For a
variable annuity, the annuity commencement date is ten business days after the
initial annuity payout calculation date; subsequent monthly payouts have annu-
ity payout calculation dates which are ten business days prior.
Annuity payout calculation
Fixed annuity payouts are determined by dividing the participant's annuity
conversion amount in the fixed account as of the initial annuity payout calcu-
lation date by the applicable annuity conversion factor (in the contract) for
the annuity payout option selected.
Variable annuity payouts will be determined using:
1. The participant's annuity conversion amount in the VAA as of the initial
annuity payout calculation date;
2. The annuity conversion factor in the contract;
3. The annuity payout option selected; and
4. The investment performance of the funds selected.
To determine the amount of annuity payouts, we make this calculation:
1. Determine the dollar amount of the first payout; then
2. Credit the retired life certificate with a specific number of annuity units
equal to the first payout divided by the annuity unit value; and
3. Calculate the value of the annuity units each period thereafter.
We assume an investment return of a specified percentage per year, as applied
to the applicable mortality table. The amount of each annuity payout after the
initial payout will depend upon how the underlying fund(s) perform, relative
to the assumed rate. If the actual net investment rate (annualized) exceeds
the assumed rate, the payment will increase at a rate proportional to the
amount of such excess. Conversely, if the actual rate is less than the assumed
rate, annuity payouts will decrease. There is a more complete explanation of
this calculation in the SAI.
Federal tax matters
Introduction
The Federal income tax treatment of the contract is complex and sometimes un-
certain. The Federal income tax rules may vary with your particular circum-
stances. This discussion does not include all the Federal income tax rules
that may affect the contractowner, participant and contract. This discussion
also does not address other Federal tax consequences or state or local tax
consequences, associated with the contract. As a result, contractowner and
participant should always consult a tax adviser about the application of tax
rules to their individual situation.
Taxation of nonqualified annuities
This part of the discussion describes some of the Federal income tax rules ap-
plicable to nonqualified annuities. A nonqualified annuity is a contract not
issued in connection with a qualified retirement plan receiving special tax
treatment under the tax code, such as an IRA or a section 403(b) plan.
Tax deferral on earnings
The Federal income tax law generally does not tax any increase in the contract
value the contractowner or partic-
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ipant receives a contract distribution. However, for this general rule to ap-
ply, certain requirement must be satisfied:
. An individual must own the contract (or the tax law must treat the contract
as owned by an individual).
. The investments of the VAA must be "adequately diversified" in accordance
with IRS regulations.
. The right to choose particular investments for a contract must be limited.
. The annuity commencement date must not occur near the end of the annuitant's
life expectancy.
Contracts not owned by the individual
If a contract is owned by an entity (rather than an individual), the tax code
generally does not treat it as an annuity contract for Federal income tax pur-
poses. This means that the entity owning the contract pays tax currently on
the excess of the contract value over the purchase payments for the contract.
Examples of contracts where the owner pays current tax on the contract's earn-
ings are contracts issued to a corporation or a trust. Exceptions to this rule
exist. For example, the tax code treats a contract as owned by an individual
if the named owner is a trust or other entity that holds the contract as an
agent for an individual. However, this exception does not apply in the case of
any employer that owns a contract to provide deferred compensation for its em-
ployees.
Investments in the VAA must be diversified
For a contract to be treated as an annuity for Federal Income tax purposes,
the investments of the VAA must be "adequately diversified." IRS regulations
define standards for determining whether the investments of the VAA are ade-
quately diversified. If the VAA fails to comply with these diversification
standards, participant could be required to pay tax currently on the excess of
the contract value over the contract contributions. Although we do not control
the investments of the underlying investment options, we expect that the un-
derlying investment options will comply with the IRS regulations so that the
VAA will be considered "adequately diversified."
Restrictions
Federal income tax law limits contractowner's and participant's right to
choose particular investments for the contract. Because the IRS has not issued
guidance specifying those limits, the limits are uncertain and your right to
allocate contract values among the subaccounts may exceed those limits. If so,
contractowner and/or participant would be treated as the owner of the assets
of the VAA and thus subject to current taxation on the income and gains from
those assets. We do not know what limits may be set by the IRS in any guidance
that it may issue and whether any such limits will apply to existing con-
tracts. We reserve the right to modify the contract without your consent to
try to prevent the tax law from considering you as the owner of the assets of
the VAA.
Age at which annuity payouts begin
Federal income tax rules do not expressly identify a particular age by which
annuity payouts must begin. However, those rules do require that annuity con-
tract provide for amortization, through annuity payouts, of the contract's
contributions and earnings. If annuity payouts under the contract begin or are
scheduled to begin on a date past the annuitant's 85th birthday, it is possi-
ble that the tax law will not treat the contract as an annuity for Federal in-
come tax purposes. In that event, contractowner and/or participant would be
currently taxable on the excess of the contract value over the contributions
of the contract.
Tax treatment of payments
We make no guarantees regarding the tax treatment of any contract or of any
transaction involving a contract. However, the rest of this discussion assumes
your contract will be treated as an annuity for Federal income tax purposes
and that the tax law will not tax any increase in the contract value until
there is a distribution from your contract.
Taxation of withdrawals and surrenders
Contractowner and/or participant will pay tax on withdrawals to the extent
your contract value exceeds your contributions in the contract. This income
(and all other income from your contract) is considered ordinary income. A
higher rate of tax is paid on ordinary income than on capital gains.
Contractowner and/or participant will pay tax on a surrender to the extent the
amount you receive exceeds contributions. In certain circumstances, contribu-
tions are reduced by amounts received from the contract that were not included
in income.
Taxation of annuity payouts
The tax code imposes tax on a portion of each annuity payout (at ordinary in-
come tax rates) and treats a portion as a nontaxable return of contributions
in the contract. We will notify you annually of the taxable amount of your an-
nuity payout. Once you have recovered the total amount of the contribution in
the contract, contractowner and/or participant will pay tax on the full amount
of your annuity payouts. If annuity payouts end because of the annuitant's
death and before the total amount of the contributions in the contract has
been received, the amount not received generally will be deductible.
Taxation of death benefits
We may distribute amounts from the contract because of the death of a partici-
pant. The tax treatment of these amounts depends on whether participant or the
annuitant dies before or after the annuity commencement date.
. Death prior to the annuity commencement date
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. If the beneficiary receives death benefits under an annuity payout option,
they are taxed in the same manner as annuity payouts.
. If the beneficiary does not receive death benefits under an annuity payout
option, they are taxed in the same manner as a withdrawal.
. Death after the annuity commencement date
. If death benefits are received in accordance with the existing annuity
payout option, they are excludible from income if they do not exceed the
contributions not yet distributed from the contract. All annuity payouts
in excess of the contributions not previously received are includible in
income.
. If death benefits are received in a lump sum, the tax law imposes tax on
the amount of death benefits which exceeds the amount of purchase not pre-
viously received.
Penalty taxes payable on withdrawals, surrenders or annuity payouts
The tax code may impose a 10% penalty tax on any distribution from the contract
which contractowner and/or participant must include in your gross income. The
10% penalty tax does not apply if one of several exceptions exists. These ex-
ceptions include withdrawals, surrenders or annuity payouts that:
. participant receives on or after they reach age 59 1/2,
. participant receives because they became disabled (as defined in the tax
law),
. A beneficiary receives on or after participant's death, or
. participant receives as a series of substantially equal periodic payments for
their life (or life expectancy).
Special rules if you own more than one annuity contract
In certain circumstances, we must combine some or all of the nonqualified annu-
ity contracts participant owns in order to determine the amount of an annuity
payout, a surrender or a withdrawal that participant must include in income.
For example, if you purchase two or more deferred annuity contracts from the
same life insurance company (or its affiliates) during any calendar year, the
tax code treats all such contracts as one contract. Treating two or more con-
tracts as one contract could affect the amount of a surrender, a withdrawal or
an annuity payout that participant must include in income and the amount that
might be subject to the penalty tax described above.
Loans and assignments
Except for certain qualified contracts, the tax code treats any amount received
as a loan under a contract, and any assignment or pledge (or agreement to as-
sign or pledge) any portion of your contract value, as a withdrawal of such
amount or portion.
Gifting a contract
If contractowner and/or participant transfer ownership of the contract to a
person other than participant's spouse (or to participant's former spouse inci-
dent to divorce), and receive a payment less than the contract's value, partic-
ipant will pay tax on their contract value to the extent that it exceeds
contractowner's and/or participant's contributions not previously received. The
new owner's contributions in the contract would then be increased to reflect
the amount included in the contractowner's and/or participant's income.
Loss of interest deduction
After June 8, 1997, if a contract is issued to a taxpayer that is not an indi-
vidual, or if a contract is held for the benefit of an entity, the entity will
lose a portion of its deduction for otherwise deductible interest expenses.
This disallowance does not apply if contractowner and/or participant pay tax on
the annual increase in the contract value. Entities that are considering pur-
chasing a contract, or entities that will benefit from someone else's ownership
of a contract, should consult a tax advisor.
Qualified retirement plans
We also designed the contracts for use in connection with certain types of re-
tirement plans that receive favorable treatment under the tax code. Contracts
issued to or in connection with a qualified retirement plan are called "quali-
fied contracts". We issue contracts for use with different types of qualified
plans. The Federal income tax rules applicable to those plans are complex and
varied. As a result, this Prospectus does not attempt to provide more than gen-
eral information about use of the contract with the various types of qualified
plans. Persons planning to use the contract in connection with a qualified plan
should obtain advice from a competent tax advisor.
Types of qualified contracts and terms of contracts
Currently, we issue contracts in connection with the following types of quali-
fied plans:
. Individual Retirement Accounts and Annuities ("Traditional IRAs")
. Public school system and tax-exempt organization annuity plans ("403(b)
plans")
. Qualified employee pension and profit sharing plans ("401(a)") and qualified
annuity plans ("403(a) plans")
We may issue a contract for use with other types of qualified plans in the fu-
ture.
We will amend contracts to be used with a qualified plan as generally necessary
to conform to tax law requirements for the type of plan. However, the rights of
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a person to any qualified plan benefits may be subject to the plan's terms and
conditions, regardless of the contract's terms and conditions. In addition, we
are not bound by the terms and conditions of qualified plans to the extent
such terms and conditions contradict the contract, unless we consent.
Tax treatment of qualified contracts
The Federal income tax rules applicable to qualified plans and qualified con-
tracts vary with the type of plan and contract. For example,
. Federal tax rules limit the amount of contributions that can be made and the
tax deduction or exclusion that may be allowed for the contributions. These
limits vary depending on the type of qualified plan and the plan partici-
pant's specific circumstances, e.g., the participant's compensation.
. Under most qualified plans, e.g., 403(b) plans and Traditional IRAs, the
participant must begin receiving payments from the contract in certain mini-
mum amounts by a certain age, typically age 70 1/2. However, these "minimum
distribution rules" do not apply to a Roth IRA.
. Loans are allowed under certain types of qualified plans, but Federal income
tax rules permit loans under some section 403(b) plans, but prohibit loans
under Traditional and Roth IRAs. If allowed, loans are subject to a variety
of limitations, including restrictions as to the loan amount, the loan dura-
tion, and the manner of repayment. Your contract or plan may not permit
loans.
Tax treatment of payments
Federal income tax rules generally include distributions from a qualified con-
tract in the recipient's income as ordinary income. These taxable distribu-
tions will include contributions that were deductible or excludible from in-
come. Thus, under many qualified contracts the total amount received is in-
cluded in income since a deduction or exclusion from income was taken for con-
tributions. There are exceptions. For example, participant does not include
amounts received from a Roth IRA in income if certain conditions are satis-
fied.
Failure to comply with the minimum distribution rules applicable to certain
qualified plans, such as Traditional IRAs, will result in the imposition of an
excise tax. This excise tax generally equals 50% of the amount by which a min-
imum required distribution exceeds the actual distribution from the qualified
plan.
Federal penalty taxes payable on distributions
The tax code may impose a 10% penalty tax on the amount received from the
qualified contract that must be included in income. The tax code does not im-
pose the penalty tax if one of several exceptions applies. The exceptions vary
depending on the type of qualified contract you purchase. For example, in the
case of an IRA, exceptions provide that the penalty tax does not apply to a
withdrawal, surrender or annuity payout:
. received on or after the participant reaches age 59 1/2,
. received on or after the participant's death or because of the participant's
disability (as defined in the tax law),
. received as a series of substantially equal periodic payments for the par-
ticipant's life or (life expectancy), or
. received as reimbursement for certain amounts paid for medical care.
These exceptions, as well as certain others not described here, generally ap-
ply to taxable distributions from other qualified plans. However, the specific
requirements of the exception may vary.
Transfers and direct rollovers
In many circumstances, money may be moved between qualified contracts and
qualified plans by means of a rollover or a transfer. Special rules apply to
such rollovers and transfers. If the applicable rules are not followed, par-
ticipant may suffer adverse Federal income tax consequences, including paying
taxes which might not otherwise have had to be paid. A qualified advisor
should always be consulted before you move or attempt to move funds between
any qualified plan or contract and another qualified plan or contract.
The direct rollover rules apply to certain payments (called "eligible rollover
distributions") from section 401(a) plans, section 403(a) or (b) plans, H.R.
10 plans, and contracts used in connection with these types of plans. (The di-
rect rollover rules do not apply to distributions from IRAs). The direct
rollover rules require that we withhold Federal income tax equal to 20% of the
eligible rollover distribution from the distribution amount unless participant
elects to have the amount directly transferred to certain qualified plans or
contracts. Before we send a rollover distribution, we will provide the partic-
ipant with a notice explaining these requirements and how the 20% withholding
can be avoided by electing a direct rollover.
Federal income tax withholding
We will withhold and remit to the IRS a part of the taxable portion of each
distribution made under a contract unless the participant notifies us at or
before the time of distribution that tax is not to be withheld. In certain
circumstances, Federal income tax rules may require us to withhold tax. At the
time a withdrawal, surrender or annuity payout is requested, we will give the
participant an explanation of the withholding requirements.
Tax status of LNY
Under existing Federal income tax laws, LNY does not pay tax on investment in-
come and realized gains of the VAA. LNY does not expect that it will incur any
Federal income tax liability on the income and gains earned by the VAA. We,
therefore, do not impose a charge for Federal income taxes. If Federal income
tax law changes
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and we must pay tax on some or all of the income and gains earned by the VAA,
we may impose a charge against the VAA to pay the taxes.
Changes in the law
The above discussion is based on the tax code, IRS regulations, and interpre-
tations existing on the date of this Prospectus. However, Congress, the IRS
and the courts may modify these authorities, sometimes retroactively.
Voting rights
As required by law, we will vote the fund shares held in the VAA at meetings
of shareholders of the funds. The voting will done according to the instruc-
tions of participants that have interests in any subaccounts which invest in
the funds. If the 1940 Act or any regulation under it should be amended or if
present interpretations should change, and if as a result we determine that we
are permitted to vote the fund shares in our own right, we may elect to do so.
The number of votes which the participant has the right to cast will be deter-
mined by applying the participant's percentage interest in a subaccount to the
total number of votes attributable to the subaccount. In determining the num-
ber of votes, fractional shares will be recognized.
Shares held in a subaccount for which no timely instructions are received will
be voted by us in proportion to the voting instructions which are received for
all contracts participating in that subaccount. Voting instructions to abstain
on any item to be voted on will be applied on a pro-rata basis to reduce the
number of votes eligible to be cast.
Whenever a shareholders meeting is called, we will furnish participants with a
voting interest in a subaccount with proxy voting materials, reports, and vot-
ing instruction forms for all participants who have voting rights under the
contract. Since the funds engage in shared funding, other persons or entities
besides LNY may vote fund shares. See Sale of fund shares.
Distribution of the contracts
Lincoln Financial Advisors Corporation (LFA), 1300 South Clinton Street, Fort
Wayne, Indiana 46802, is the distributor and principal underwriter of the con-
tracts. The contracts will be sold by properly licensed registered representa-
tives of independent broker-dealers which in turn have selling agreements with
LFA and have been licensed by state insurance departments to represent us. LFA
is registered with the SEC under the Securities Exchange Act of 1934 as a bro-
ker-dealer and is a member of the National Association of Securities Dealers
(NASD). LNY will offer contracts in New York.
Return privilege
Participants under Sections 403(b), 408 and certain non-qualified plans will
receive an active life certificate. Within the free-look period (ten days) af-
ter the participant receives the active life certificate, the participant may
cancel it for any reason by giving us written notice. The postmark date of the
notice is the date of notice for these purposes. An active life certificate
canceled under this provision will be void. With respect to the fixed side of
the contract, we will return the participant's contributions less withdrawals
made on behalf of the participant. With respect to the VAA, we will return the
greater of the participant's contributions less withdrawals made on behalf of
the participant, or the participant's account balance in the VAA on the date
we receive the written notice. No surrender charge applies.
State regulation
As a life insurance company organized and operated under New York law, we are
subject to provisions governing life insurers and to regulation by the New
York Commissioner of Insurance.
Our books and accounts are subject to review and examination by the New York
Insurance Department at all times. A full examination of our operations is
conducted by that department at least every five years.
Records and reports
As presently required by the 1940 Act and applicable regulations, we are re-
sponsible for maintaining all records and accounts relating to the VAA. We
have entered into an agreement with Lincoln Life, 1300 South Clinton Street,
Fort Wayne, IN 46802, to provide accounting services to the VAA. The account-
ing services for Lincoln Life are in turn provided by Delaware Management Com-
pany, 2005 Market Street, Philadelphia, PA 19203, through Lincoln Life's serv-
ice agreement with Delaware. We will mail to the contractowner, at its last
known address of record at our offices, at least semiannually after the first
contract year, reports containing information required by that Act or any
other applicable law or regulation.
Other information
Contract deactivation. Under certain contracts, we may deactivate a contract
by prohibiting new contributions and/or new participants after the date of de-
activation. We will give the contractowner and participants at least ninety
days notice of the deactivation date.
Delay in payments. We may delay payments from the fixed account for up to six
months. During this period, we will continue to credit the current declared in-
21
<PAGE>
terest rate to a participant's account in the fixed account. Contract proceeds
from the VAA will be paid within seven days, except (i) when the NYSE is closed
(except weekends and holidays); (ii) times when market trading is restricted or
the SEC declares an emergency, and we cannot value units or the funds cannot
redeem shares; or (iii) when the SEC so orders to protect contractowners.
IMSA. We are a member of the Insurance Marketplace Standards Association
("IMSA") and may include the IMSA logo and information about IMSA membership in
our advertisements. Companies that belong to IMSA subscribe to a set of ethical
standards covering the various aspects of sales and services for individually
sold life insurance and annuities.
Legal proceedings. LNY may be involved in various pending or threatened legal
proceedings arising from the conduct of its business. Most of these proceedings
are routine and in the ordinary course of business.
Group Variable Annuity Contracts I, II, III
Statement of Additional Information
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
DEFINITIONS 2
DETERMINATION OF VARIABLE ANNUITY PAYMENTS 2
PERFORMANCE CALCULATIONS 3
TAX LAW CONSIDERATIONS 8
DISTRIBUTION OF CONTRACTS 10
INDEPENDENT AUDITORS 10
ADVERTISING AND SALES LITERATURE 10
FINANCIAL STATEMENTS 13
</TABLE>
22
<PAGE>
................................................................................
Please send me a free copy of the current Statement of Additional Information
for Lincoln Life & Annuity Co. of New York Variable Annuity Account L:
(Please Print)
Name: ________________________________ Social Security No.: ___________________
Address: _______________________________________________________________________
City _________________________________ State ____________
Zip ________________
Mail to Lincoln Life & Annuity Co. of New York, P.O. Box 1337, Syracuse NY
13201-1337
23
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
May 1, 2000
GROUP VARIABLE ANNUITY CONTRACTS I, II & III
FUNDED THROUGH THE SUB-ACCOUNTS OF
LINCOLN LIFE & ANNUITY
VARIABLE ANNUITY ACCOUNT L
OF
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Definitions................................................................ 2
Determination of Variable Annuity Payments................................. 2
Performance Calculations................................................... 3
Tax Law Considerations..................................................... 8
Distribution of Contracts.................................................. 10
Independent Auditors....................................................... 10
Advertising and Sales Literature........................................... 10
Financial Statements....................................................... 13
</TABLE>
This Statement of Additional Information (SAI) is not a prospectus. It should
be read in conjunction with the prospectus for the Group Variable Annuity Con-
tracts (the "Contracts"), dated May 1, 2000.
A copy of the prospectus to which this SAI relates is available at no charge by
writing to Lincoln Life & Annuity Company of New York, TDA Client Services,
P.O. Box 1337, Syracuse, New York 13201-1337, calling LNY at 1-800-893-7168, or
e-mailing [email protected].
NY90022
<PAGE>
DEFINITIONS
ANNUITY CONVERSION FACTOR: The factor applied to the Annuity Conversion Amount
in determining the dollar amount of an annuitant's annuity payments for Guar-
anteed Annuities or the initial payment for Variable Annuities.
ANNUITY PAYMENT CALCULATION DATE: For Guaranteed Annuities, this is the first
day of a calendar month. For Variable Annuities, this is the Valuation Date
ten (10) Business Days prior to the first day of a calendar month.
ANNUITY UNIT: An accounting unit of measure that is used in calculating the
amounts of annuity payments to be made from a Sub-Account during the Annuity
Period.
ANNUITY UNIT VALUE: The dollar value of an Annuity Unit in a Sub-Account on
any Valuation Date.
CODE: The Internal Revenue Code of 1986, as amended.
DETERMINATION OF VARIABLE ANNUITY PAYMENTS
As stated in the prospectus, the amount of each Variable Annuity payment will
vary depending on investment experience. The initial payment amount of the
Annuitant's Variable Annuity for each Sub-Account is determined by dividing
his Annuity Conversion Amount in each Sub-Account as of the initial Annuity
Payment Calculation Date ("APCD") by the Applicable Annuity Conversion Factor
as defined as follows:
The Annuity Conversion Factors which are used to determine the initial pay-
ments are based on the 1983 Individual Annuity Mortality Table, and an inter-
est rate in an integral percentage ranging from zero to six percent (0 to
6.00%) as selected by the Annuitant.
The amount of the Annuitant's subsequent Variable Annuity payment for each
Sub-Account is determined by:
(a) Dividing the Annuitant's initial Variable Annuity payment amount by the
Annuity Unit Value for that Sub-Account selected for his interest rate
option as described above as of his initial APCD; and
(b) Multiplying the resultant number of annuity units by the Annuity Unit
Values for the Sub-Account selected for his interest rate option for his
respective subsequent APCDs.
Each subsequent Annuity Unit Value for a Sub-Account for an interest rate op-
tion is determined by:
Dividing the Accumulation Unit Value for the Sub-Account as of
subsequent APCD by the Accumulation Unit Value for the Sub-Account as of
the immediately preceding APCD;
Dividing the resultant factor by one (1.00) plus the interest rate
option to the n/365 power where n is the number of days from the
immediately preceding APCD to the subsequent APCD; and
Multiplying this factor times the Annuity Unit Value as of the
immediately preceding APCD.
Illustration of Calculation of Annuity Unit Value
<TABLE>
<S> <C>
1.Annuity Unit Value as of immediately preceding Annuity Payment
Calculation Date.................................................. $11.0000
2.Accumulation Unit Value as of Annuity Payment Calculation Date...... $20.0000
3.Accumulation Unit Value as of immediately preceding Annuity Payment
Calculation Date.................................................. $19.0000
4.Interest Rate.......................................................... 6.00%
5.Interest Rate Factor (30 days)........................................ 1.0048
6.Annuity Unit Value as of Annuity Payment Calculation Date =
1 times 2 divided by 3 divided by 5............................... $11.5236
</TABLE>
2
<PAGE>
Illustration of Annuity Payments
1.Annuity Conversion Amount as of Participant's initial Annuity Payment
Calculation
Date............................................................... $100,000.00
2.Assumed Annuity Conversion Factor per $1 of Monthly Income for an individual
age 65
selecting a Single Life Annuity with Assumed Interest Rate of 6%... $138.63
3.Participant's initial Annuity Payment = 1 divided by 2............... $721.34
4.Assumed Annuity Unit Value as of Participant's initial Annuity Payment
Calculation Date.................................................. $11.5236
5.Number of Annuity Units = 3 divided by 4............................. 62.5968
6.Assumed Annuity Unit Value as of Participant's second Annuity Payment
Calculation Date.................................................. $11.9000
7.Participant's second Annuity Payment = 5 times 6..................... $744.90
PERFORMANCE CALCULATIONS
Standard Total Return Calculation
The Variable Annuity Account may advertise average annual total return infor-
mation calculated according to a formula prescribed by the Securities and Ex-
change Commission ("SEC"). Average annual total return shows the average an-
nual percentage increase, or decrease, in the value of a hypothetical Contri-
bution allocated to a Sub-Account from the beginning to the end of each speci-
fied period of time. The SEC standardized version of this performance informa-
tion is based on an assumed Contribution of $1,000 allocated to a Sub-Account
at the beginning of each period and surrender or withdrawal of the value of
that amount at the end of each specified period, giving effect to any CDSC and
all other charges and fees applicable under the Contract. The effect of the
Annual Administration Charge for a period is determined by dividing the total
amount of such charges collected in the previous year by the total average net
assets of the accounts for the previous year, as of the previous month ended;
accounts include accounts available under Group Variable Annuity I, II & III
of LNY and under corresponding accounts of First UNUM Life Insurance Company,
pending assumption reinsurance by LNY of Group Variable Annuity I, II & III
contracts issued through such corresponding accounts. This method of calculat-
ing performance further assumes that (i) a $1,000 Contribution was allocated
to a Sub-Account and (ii) no transfers or additional payments were made. Pre-
mium taxes are not included in the term "charges" for purposes of this calcu-
lation. Average annual total return is calculated by finding the average an-
nual compounded rates of return of a hypothetical Contribution that would com-
pare the Accumulation Unit value on the first day of the specified period to
the ending redeemable value at the end of the period according to the follow-
ing formula:
T = (ERV/C) 1/n--1
Where T equals average annual total return, where ERV (the ending redeemable
value) is the value at the end of the applicable period of a hypothetical Con-
tribution of $1,000 made at the beginning of the applicable period, where C
equals a hypothetical Contribution of $1,000, and where n equals the number of
years.
For Sub-Account average annual total return information calculated according
to the formula prescribed by the SEC, see "Sub-Account Performance."
Non-Standardized Calculation of Total Return Performance
In addition to the standardized average annual total return information de-
scribed above, we may present total return information computed on bases dif-
ferent from that standardized method. Such non-standard performance informa-
tion may be based on the historical performance of a Fund and adjusted to re-
flect some or all of the fees and charges imposed under a Contract.
3
<PAGE>
The Variable Annuity Account may also present total return information com-
puted on the same basis as the standardized method except that charges de-
ducted from the hypothetical Contribution will not include any CDSC. Consis-
tent with the long-term investment and retirement objectives of the Contract,
this total return presentation assumes either (i) investment in the Contract
continues beyond the Accumulation Period and/or (ii) one or more of the condi-
tions for Total or Partial Withdrawal without incurring a CDSC are met. The
Variable Annuity Account may also present total return information computed on
the same basis as the standardized method except that charges deducted from
the hypothetical Contribution will not include either the CDSC or the Annual
Administration Charge. The total return percentage under both of these non-
standardized methods will be higher than that resulting from the standardized
method.
The Sub-Accounts also may present total return information calculated by sub-
tracting a Sub-Account's Accumulation Unit Value at the beginning of a period
from the Accumulation Unit Value of that Sub-Account at the end of the period
and dividing that difference (in that Sub-Account's Accumulation Unit Value)
by the Accumulation Unit Value of that Sub-Account at the beginning of the pe-
riod. This computation results in a total growth rate for the specified period
which we annualize in order to obtain the average annual percentage change in
the Accumulation Unit Value for the period used. This method of calculating
performance does not take into account CDSC, the Annual Administration Charge
or premium taxes, and assumes no transfers. Such percentages would be lower if
these charges were included in the calculation.
In addition, the Variable Annuity Account may present actual aggregate total
return figures for various periods, reflecting the cumulative change in value
of an investment in the Variable Annuity Account for the specified period.
For information regarding the historical performance of the Funds adjusted for
the fees and charges imposed under a Contract, see "Historical Fund Perfor-
mance Adjusted for Variable Annuity Account and Contract Fees and Charges."
Performance Information
The tables below provide performance information for GVA II for each Sub-Ac-
count for specified periods ending December 31, 1999. This information does
not indicate or represent future performance.
Performance information for GVA I and GVA III is not shown.
Total Return
Total returns quoted in sales literature or advertisements reflect all aspects
of a Sub-Account's return. Average annual returns are calculated by determin-
ing the growth or decline in value of a hypothetical historical investment in
the Sub-Account over a stated period of time, and then calculating the annu-
ally compounded percentage rate that would have produced the same result if
the rate of growth or decline had been constant over the period.
Contractholders and Participants should recognize that average annual returns
represent averaged returns rather than actual year-to-year performance.
Sub-Account Performance
Table A below assumes a hypothetical investment of $1,000 at the beginning of
the period in the Sub-Account investing in the applicable Fund and withdrawal
of the investment on 12/31/99. The rates thus reflect the mortality and ex-
pense risk charge, the withdrawal charge and a pro rata portion of the Annual
Administration Charge. Table A shows Sub-Account average annual total return
information calculated according to the formula prescribed by the SEC. This
information does not indicate or represent future performance.
4
<PAGE>
SUB-ACCOUNT STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
LIFE OF
SUB- SUB-
ACCOUNT 1 YEAR ACCOUNT
INCEPTION ENDING ENDING
DATE 12/31/99 12/31/99
--------- -------- --------
<S> <C> <C> <C>
Balanced Account
(American Century VP Balanced) 01/31/97
Small Cap Growth Account
(Baron Capital Asset Fund) 10/01/98
Index Account
(Dreyfus Stock Index Fund) 01/31/97
Small Cap Account
(Dreyfus VIF Small Cap Portfolio) 01/31/97
Growth I Account
(Fidelity VIP Growth Portfolio) 01/31/97
Equity-Income Account
(Fidelity VIP Equity-Income Portfolio) 01/31/97
Asset Manager Account
(Fidelity VIP II-Asset Manager) 01/31/97
Global Growth Account
(Janus Aspen Series: Worldwide Growth Portfolio) 10/01/98
Mid Cap Growth Account
(Lincoln National Aggressive Growth Fund) 10/01/98
Social Awareness Account
(Lincoln National Social Awareness Fund) 10/01/98
Mid Cap Value Account
(Neuberger Berman AMT: Partners Portfolio) 10/01/98
International Stock Account
(T. Rowe Price International Series) 01/31/97
</TABLE>
Historical Fund Performance Adjusted for Variable Annuity Account and Contract
Fees and Charges
Performance information for the periods prior to the date the Sub-Accounts com-
menced operations will be calculated based on the performance of the Funds and
the assumption that the Sub-Accounts were in existence for the same periods as
those indicated for the Funds, with the Contract charges that were in effect
during the time periods shown. This performance information is referred to as
"adjusted" performance information. This information does not indicate or rep-
resent future performance.
Table B below assumes a hypothetical investment of $1,000 at the beginning of
the period in the Sub-Account investing in the applicable fund and withdrawal
of the investment on 12/31/99. The rates reflect the mortality and expense risk
charge but do not reflect withdrawal charge or deductions of the pro rata por-
tion of the annual administration charge because certain contracts and partici-
pants are not assessed such a charge.
5
<PAGE>
TABLE B -- SUB-ACCOUNT ADJUSTED AVERAGE ANNUAL TOTAL RETURN ASSUMING NO
WITHDRAWAL AND NO ANNUAL ADMINISTRATION CHARGE
<TABLE>
<CAPTION>
LIFE
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS OF FUND
INCEPTION ENDING ENDING ENDING ENDING ENDING
DATE 12/31/99 12/31/99 12/31/99 12/31/99 12/31/99
--------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balanced Account 05/01/91
(American Century VP
Balanced)
Small Cap Growth Account 10/01/98
(Baron Capital Asset
Fund)
Index Account 09/29/89
(Dreyfus Stock Index
Fund)
Small Cap Account 08/31/90
(Dreyfus VIF Small Cap
Portfolio)
Growth I Account 10/09/86
(Fidelity VIP Growth
Portfolio)
Equity-Income Account 10/09/86
(Fidelity VIP
Equity-Income
Portfolio)
Asset Manager Account 09/06/89
Fidelity VIP II--Asset
Manager
Global Growth Account 09/13/93
Janus Aspen Series:
Worldwide Growth
Portfolio
Mid Cap Growth Account 02/03/94
Lincoln National
Aggressive Growth Fund
Social Awareness Account 05/02/88
Lincoln National Social
Awareness Fund
Mid Cap Value Account 03/22/94
Neuberger Berman AMT:
Partners Portfolio
International Stock 03/31/94
Account
T. Rowe Price
International Series
</TABLE>
6
<PAGE>
Table C below shows total return information on a calendar year basis. The
rates of return shown reflect the mortality and expense risk charge but do not
reflect a withdrawal charge or deduction of the pro rata portion of the Annual
Administration Charge because certain Contracts and Participants are not as-
sessed such a charge.
TABLE C -- SUB-ACCOUNT ADJUSTED CALENDAR YEAR ANNUAL RETURN ASSUMING NO ANNUAL
ADMINISTRATION CHARGE*
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balanced Account
Growth II Account
Small Cap Growth Account
Socially Responsible
Account
Index Account
Small Cap Account
Growth I Account
Equity-Income Account
Asset Manager Account
Global Growth Account
Mid Cap Growth Account
Social Awareness Account
Mid Cap Value Account
International Stock
Account
</TABLE>
*The above calendar-year returns assume a hypothetical investment of $1,000 on
January 1 of the first full calendar year that the underlying fund was in ex-
istence. The returns assume that the money will be left on account until re-
tirement and thus no CDSC will be deducted. Returns are provided for years be-
fore the fund was an available investment option under the Contract. Returns
for those periods reflect a hypothetical return as if those funds were avail-
able under the Contract, and reflect the deduction of the mortality and expense
risk charge. The returns do not reflect deductions for the pro rata portion of
the Annual Administration Charge or the CDSC.
SEC regulations require that any product performance data be accompanied by
standardized performance data.
7
<PAGE>
TAX LAW CONSIDERATIONS
Retirement Programs:
Participants are urged to discuss the income tax considerations of their re-
tirement plan with their tax advisors. In many situations special rules may
apply to the plans and/or to the Participants. See the Prospectus for a more
complete discussion of tax considerations and for limitations on the following
discussion.
Contributions to retirement programs subject to Sections 401(a), 403(b), and
408 may be excludable from a Participant's reportable gross income if the Con-
tributions do not exceed the limitations imposed under the Code. Certain plans
allow employees to make Elective Salary Deferral Contributions. Certain Plans
allow Employers to make Contributions. The information below is a brief sum-
mary of some the important federal tax considerations that apply to retirement
plans. When there is a written Plan, often the Contribution limits, withdrawal
rights and other provisions of the Plan may be more restrictive than those al-
lowed by the Code.
Elective Salary Deferral Contributions:
For calendar years 1998 and 1999, the maximum elective salary deferral contri-
butions to a 401(k) Plan which is a type of 401(a) Plan is limited to $10,000;
for a 403(b) plan the limit is $10,000 unless the employee is a qualified em-
ployee; for an Eligible 457 Plan the limit is $8,000.
Total Salary Deferral & Employer Contributions:
QUALIFIED RETIREMENT PLAN -- 401(a) PLAN
The Code limits the Contributions to a defined contribution 401(a) plan to the
lesser of $30,000 or 25% of compensation.
TAX QUALIFIED ANNUITY PLAN -- 403(b) PLAN
Total contributions which include both salary deferral contributions and em-
ployer contributions are also limited.
The combined limit is:
(a) the amount determined by multiplying 20 percent of the employee's
includable compensation by the number of years of service, over
(b) the aggregate of the amount contributed by the employer for annuity
contracts and excludable from the gross income of the employee for the
prior taxable year.
Therefore, if the maximum exclusion allowance is less than $10,000 a year, the
employee's elective deferrals plus any other employer Contributions cannot ex-
ceed this lesser amount.
Section 415 of the Code imposes limitations with respect to annual contribu-
tions to all Section 403(b) programs, qualified plans and simplified employee
pensions maintained by the Employer. A Participant's annual contributions to
these programs and defined contribution plans generally cannot exceed the
lesser of $30,000 or 25 percent of the employee's compensation. This amount is
subject to the maximum exclusion allowance and the salary deferral amount lim-
itations.
INDIVIDUAL RETIREMENT ACCOUNT -- IRA OR 408 PLAN
For IRA's the maximum deductible contribution is the lesser of $2,000 or 100%
of taxable income. The $2,000 is increased to $4,000 when the IRA covers the
taxpayer and a non-working spouse.
Transfers and Rollovers:
Participants who receive distributions from their 401(a) or 403(b) contract
may transfer the amount not representing employee contributions to an Individ-
ual Retirement Account or Annuity (IRA) or an-
8
<PAGE>
other Section 401(a) or 403(b) program without including that amount in gross
income for the taxable year in which paid. Note 401(a) distributions may not be
transferred to a 403(b) plan or vice versa. If the amount is paid directly to
an acceptable rollover account, LNY is not required to withhold any amount. In
order for the distribution to qualify for rollover, the distribution must be
made on account of the employee's death, after the employee attains age 59 1/2,
on account of the employee's separation from service, or after the employee has
become disabled. The distribution cannot be part of a series of substantially
equal payments made over the life expectancy of the employee or the joint life
expectancies of the employee and his or her spouse or made for a specified pe-
riod of 10 years or more. The rollover must be made within sixty days of the
distribution to avoid taxation.
Pursuant to Revenue Ruling 90-24, a Participant, to the extent permitted by any
applicable Contract or Plan, may transfer funds between Section 403(b) invest-
ment vehicles, including both Section 403(b)(1) annuity contracts and Section
403(b)(7) custodial accounts. Any amount transferred must continue to be sub-
ject to withdrawal restrictions at least as restrictive as that of the trans-
ferring investment vehicle. LNY considers any total or partial transfer from a
LNY investment vehicle to a non-LNY investment vehicle to be a withdrawal.
Once every twelve months a Participant in an IRA may roll the money from one
IRA to another IRA.
If the rollover amount is paid directly to the Participant, the amount distrib-
uted may be subject to a 20% federal tax withholding.
Excise Tax on Early Distributions:
Section 72(t) of the Code provides that any distribution made to a Participant
in a 401(a), 403(b) or 408 plan other than on account of the following events
will be subject to a 10 percent excise tax on the taxable amount distributed:
a) the employee has attained age 59 1/2;
b) the employee has died;
c) the employee is disabled;
d) the employee is 55 and has separated from service (Does not apply to IRA's).
Distributions which are received as a life annuity where payment is made at
least annually will not be subject to an excise tax. Certain amounts paid for
medical care may also not be subject to an excise tax. Distributions from 408
Plans may qualify for additional exceptions.
Minimum Distribution Rules:
The value in a contract under Sections 401(a), 403(b), and 408 are subject to
the distribution rules provided in Section 401(a)(9) of the Code. Generally,
that section requires that an employee must begin receiving distributions of
his post-1986 balance by April 1 of the calendar year following the calendar
year in which the employee attains age 70 1/2. Such distributions must not ex-
ceed the life expectancy of the employee or the life expectancy of such em-
ployee and the designated beneficiary (as defined under the plan). For 403(b)
and 401(a) plans, an employee must begin receiving distributions by April 1 of
the calendar year following the later of (a) the calendar year in which the em-
ployee attains age 70 1/2 or (b) the calendar year in which the employee re-
tires (other than a more than 5% owner).
Additionally, distribution of an employee's entire account balance (including
pre-1987 funds) must satisfy the minimum distribution incidental benefit re-
quirement. In general, this requires that death and other non-retirement bene-
fits payable under the above plans be incidental to the primary purpose of the
program which is to provide deferred compensation to the employee. A payee is
subject to a penalty for failing to receive the required minimum annual distri-
bution. Section 4974(a) of the Code provides that a payee will be subject to a
penalty equal to 50 percent of the amount by which the required minimum distri-
bution exceeds the actual amount distributed during the taxable year.
Additional information on federal income taxation is included in the prospec-
tus.
9
<PAGE>
DISTRIBUTION OF CONTRACTS
Lincoln Financial Advisors Corporation ("LFA"), an indirect subsidiary of Lin-
coln National Corporation, is registered with the Securities and Exchange Com-
mission as a broker-dealer under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc. LFA is the Vari-
able Investment Division's principal underwriter and also enters into selling
agreements with other unaffiliated broker-dealers authorizing them to offer the
Contracts.
INDEPENDENT AUDITORS
The financial statements of the Variable Annuity Account and the statutory-ba-
sis financial statements of LNY appearing in this SAI and Registration State-
ment have been audited by Ernst & Young LLP, independent auditors, as set forth
in their reports also appearing elsewhere in this document and in the Registra-
tion Statement. The financial statements audited by Ernst & Young LLP have been
included in this document in reliance on their reports given on their authority
as experts in accounting and auditing.
ADVERTISING AND SALES LITERATURE
As set forth in the Prospectus, LNY may refer to the following organizations
(and others) in its marketing materials:
A.M. BEST'S RATING SYSTEM evaluates the various factors affecting the overall
performance of an insurance company in order to provide an opinion as to an in-
surance company's relative financial strength and ability to meet its contrac-
tual obligations. The procedure includes both a quantitative and qualitative
review of each company.
DUFF & PHELPS insurance company claims paying ability (CPA) service provides
purchasers of insurance company policies and contracts with analytical and sta-
tistical information on the solvency and liquidity of major U.S. licensed in-
surance companies, both mutual and stock.
EAFE Index is prepared by Morgan Stanley Capital International (MSCI). It mea-
sures performance of securities in Europe, Australia and the Far East. The in-
dex reflects the movements of world stock markets by representing the evolution
of an unmanaged portfolio. The EAFE Index offers international diversification
with over 1,000 companies across 20 different countries.
LIPPER VARIABLE INSURANCE PRODUCTS PERFORMANCE ANALYSIS SERVICE is a publisher
of statistical data covering the investment company industry in the United
States and overseas. Lipper is recognized as the leading source of data on
open-end and closed-end funds. Lipper currently tracks the performance of over
5,000 investment companies and publishes numerous specialized reports, includ-
ing reports on performance and portfolio analysis, fee and expense analysis.
MOODY'S insurance claims-paying rating is a system of rating insurance
company's financial strength, market leadership and ability to meet financial
obligations. The purpose of Moody's ratings is to provide investors with a sim-
ple system of gradation by which the relative quality of insurance companies
may be noted.
MORNINGSTAR is an independent financial publisher offering comprehensive sta-
tistical and analytical coverage of open-end and closed-end funds and variable
annuity contracts.
STANDARD & POOR'S CORP. insurance claims-paying ability rating is an assessment
of an operating insurance company's financial capacity to meet obligations un-
der an insurance policy in accordance with the terms. The likelihood of a
timely flow of funds from the insurer to the trustee for the bondholders is a
key element in the rating determination for such debt issues.
10
<PAGE>
VARDS (Variable Annuity Research Data Service) provides a comprehensive guide
to variable annuity contract features and historical fund performance. The
service also provides a readily understandable analysis of the comparative
characteristics and market performance of funds inclusive in variable con-
tracts.
STANDARD & POOR'S 500 INDEX (S&P 500)--broad-based measurement of changes in
stock-market conditions based on the average performance of 500 widely held
common stocks; commonly known as the S&P 500. The selection of stocks, their
relative weightings to reflect differences in the number of outstanding shares
and publication of the index itself are services of Standard & Poor's Corp., a
financial advisory, securities rating and publishing firm.
NASDAQ-OTC Price Index--This index is based on the National Association of Se-
curities Dealers Automated Quotations (NASDAQ) and represents all domestic
over-the-counter stocks except those traded on exchanges and those having only
one market maker, a total of some 3,500 stocks. It is market value-weighted
and was introduced with a base of 100.00 on February 5, 1971.
DOW JONES INDUSTRIAL AVERAGE (DJIA)--Price-weighted average of 30 actively
traded blue chip stocks, primarily industrials but including American Express
Co. and American Telephone and Telegraph Co. Prepared and published by Dow
Jones & Co., it is the oldest and most widely quoted of all the market indica-
tors. The average is quoted in points, not dollars.
RUSSELL 1000 INDEX--Measures the performance of the 1,000 largest companies in
the Russell 3000 Index, which represents approximately 90% of the total market
capitalization of the Russell 3000 that measures 3,000 of the largest US com-
panies.
RUSSELL 2000 INDEX--Measures the performance of the 2,000 smallest companies
in the Russell 3000 Index, which represents approximately 10% of the total
market capitalization of the Russell 3000 that measures 3,000 of the largest
US companies.
LEHMAN BROTHERS AGGREGATE BOND INDEX--Composed of securities from Lehman
Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index,
and the Asset-Backed Securities Index. Indexes are rebalanced monthly by mar-
ket capitalization.
LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX--Composed of all bonds that
are investment grade (rated Baa or higher by Moody's or BBB or higher by S&P,
if unrated by Moody's). Issues must have at least one year to maturity.
LEHMAN BROTHERS GOVERNMENT INTERMEDIATE BOND INDEX--Composed of all bonds cov-
ered by the Lehman Brothers Government Bond Index (all publicly issued, non-
convertible, domestic debt of the US government or any agency thereof, quasi-
federal corporations, or corporate debt guaranteed by the US government) with
maturities between one and 9.99 years.
MERRILL LYNCH HIGH YIELD MASTER INDEX--This is an index of high yield debt se-
curities. High yield securities are those below the top four quality rating
categories and are considered more risky than investment grade. Issues must be
rated by Standard & Poor's or by Moody's Investors Service as less than in-
vestment grade (i.e., BBB or Baa) but not in default (i.e. DDD1 or less). Is-
sues must be in the form of publicly placed nonconvertible, coupon-bearing US
domestic debt and must carry a term to maturity of at least one year.
MORGAN STANLEY EMERGING MARKETS FREE INDEX--A market capitalization weighted
index composed of companies representative of the market structure of 22
Emerging Market countries in Europe, Latin America, and the Pacific Basin.
This index excludes closed markets and those shares in otherwise free markets,
which are not purchasable by foreigners.
MORGAN STANLEY WORLD CAPITAL INTERNATIONAL WORLD INDEX--A market capitaliza-
tion weighted index composed of companies representative of the market struc-
ture of 22 Developed Market countries in North America, Europe and the
Asia/Pacific Region.
11
<PAGE>
MORGAN STANLEY PACIFIC BASIN (EX-JAPAN) INDEX--An arithmetic, market value-
weighted average of the performance of securities listed on the stock ex-
changes of the following Pacific Basin Countries: Australia, Hong Kong, Malay-
sia, New Zealand and Singapore.
NAREIT EQUITY REIT INDEX--All of the data is based on the last closing price
of the month for all tax-qualified REITs listed on the New York Stock Ex-
change, American Stock Exchange, and the NASDAQ National Market System. The
data is market weighted.
SALOMON BROTHERS WORLD GOVERNMENT BOND (NON US) INDEX--A market capitalization
weighted index consisting of government bond markets of the following 13 coun-
tries: Australia, Austria, Belgium, Canada, Denmark, France, Germany, Italy,
Japan, The Netherlands, Spain, Sweden, and The United Kingdom.
SALOMON BROTHERS 90 DAY TREASURY-BILL INDEX--Equal dollar amounts of three-
month Treasury bills are purchased at the beginning of each of three consecu-
tive months. As each bill matures, all proceeds are rolled over or reinvested
in a new three-month bill.
STANDARD AND POOR'S INDEX (S&P 400)--Consists of 400 domestic stocks chosen
for market size, liquidity, and industry group representations.
STANDARD AND POOR'S UTILITIES INDEX--The utility index is one of several in-
dustry groups within the broader S&P 500. Utility stocks include electric,
natural gas, and telephone companies included in the S&P 500.
Internet--As an electronic communications network Internet may be used to pro-
vide information regarding "LNY" performance of the subaccounts and advertise-
ment literature.
In its advertisements and other sales literature for the VAA and the eligible
funds, LNY intends to illustrate the advantages of the contracts in a number
of ways:
Compound interest illustrations. These will emphasize several advantages of
the variable annuity contract. For example, but not by way of limitation, the
literature may emphasize the potential savings through tax deferral; the po-
tential advantage of the variable account over the fixed side; and the com-
pounding effect when a client makes regular contributions to his or her ac-
count.
Dollar-cost averaging illustrations. These illustrations will generally dis-
cuss the price-leveling effect of making regular purchases in the same
subaccounts over a period of time, to take advantage of the trends in market
prices of the portfolio securities purchased for those subaccounts.
LNY's customers. Sales literature for the VAA, the funds and series may refer
to the number of employers and the number of individual annuity clients which
LNY serves. As of the date of this prospectus LNY was serving over 400 employ-
ers and had more than 145,000 individuals.
LNY's assets, size. LNY may discuss its general financial condition (see, for
example, the reference to A.M. Best Co., above), it may refer to its assets;
it may also discuss its relative size and/or ranking among companies in the
industry or among any subclassification of those companies, based upon recog-
nized evaluation criteria. (See Reference to A.M. Best Company above.) For ex-
ample, at year-end 1998, LNY had statutory admitted assets of over $2 billion.
Sales literature may reference the Group Variable Annuity newsletter which is
a newsletter distributed quarterly to clients of the VAA. The contents of the
newsletter will be a commentary on general economic conditions and, on some
occasions, referencing matters in connection with the Group Variable Annuity.
Sales literature and advertisements may reference these and other similar re-
ports from Best's or other similar publications which report on the insurance
and financial services industries.
12
<PAGE>
FINANCIAL STATEMENTS
Financial statements of the VAA and the statutory-basis financial statements of
LNY appear on the following pages.
13
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) List of Financial Statements
1. Part A. The Table of Condensed Financial Information is
included in Part A (to be filed by Amendment).
2. Part B. The Financial Statements of Account L are
included in Part B (to be filed by Amendment).
3. The Statutory -- Basis Financial Statements of the
Lincoln National Life Insurance Company are included in the
SAI (to be filed by Amendment).
(b) Exhibits
1. Resolution adopted by the Board of Directors of Lincoln Life &
Annuity Company of New York on July 24, 1996 establishing the
Lincoln Life & Annuity Variable Annuity Account L of Lincoln
Life & Annuity Company of New York. /1/
2. Not applicable.
3(a). Principal Underwriting Contract. /2/
3(b). Broker-dealer sales agreement. /2/
4(a). Forms of Group Annuity Contracts for Lincoln Life & Annuity
Company of New York./2/
4(b). Form of 401(a) Group Annuity Contract for Lincoln Life &
Annuity Company of New York./3/ /6/ /7/
4(c). Form of endorsement to Group Annuity Contract and Certificate.
/4/
4(d). Form of Group Annuity Endorsement to the Contract. /8/
5(a). Form of application for Group Annuity Contract. /1/ /9/ /10/
5(b). Form of Participant enrollment form (including acknowledgement
of restrictions on redemption imposed by I.R.C. Section
403(b))./2/
6. Copy of certificate of incorporation and by-laws of Lincoln
Life & Annuity Company of New York. /1/
7. Not applicable.
8(a). Participation Agreement between Lincoln Life & Annuity Company
of New York and Dreyfus Life & Annuity Index Fund, Inc. and
Dreyfus Variable Investment Fund. /2/
8(b). Participation Agreement between Lincoln Life & Annuity Company
of New York and Variable Insurance Products Fund and Fidelity
Distributors Corporation. /2/
8(c). Participation Agreement between Lincoln Life & Annuity Company
of New York and Variable Insurance Products Fund II and
Fidelity Distributors Corporation. /2/
8(d). Participation Agreement between Lincoln Life & Annuity Company
of New York and Twentieth Century Securities, Inc. /2/
C-1
<PAGE>
8(e). Participation Agreement between Lincoln Life & Annuity Company
of New York and T. Rowe Price International Series, Inc. and T.
Rowe Price Investment Services, Inc. /2/
8(f). Participation Agreement between Lincoln Life & Annuity Company
of New York and The Lincoln National Social Awareness Fund,
Inc. /5/
8(g). Participation Agreement between Lincoln Life & Annuity Company
of New York and Janus Aspen Series. /5/
8(h). Participation Agreement between Lincoln Life & Annuity Company
of New York and The Lincoln National Aggressive Growth Fund,
Inc. /5/
8(i). Participation Agreement between Lincoln Life & Annuity Company
of New York and Baron Capital Funds Trust. /5/
8(j). Participation Agreement between Lincoln Life & Annuity Company
of New York and Neuberger & Berman Advisers Management Trust.
/5/
9. Consent and opinion of Counsel as to the legality of the
securities being registered. /2/
10(a). Consent of Ernst & Young LLP, Independent Auditors (to be filed
by Amendment).
11. Not applicable.
12. Not applicable.
13(a). Schedule for Computation of Performance Quotations./3/
13(b). Supplement to Schedule for Computation of Performance
Quotations. /4/
14. Not applicable.
15(a). Organizational Chart of Lincoln National Life Insurance Holding
Company System (to be filed by Amendment).
15(b). Memorandum Concerning Books and Records (to be filed by
Amendment).
__________________
/1/ Incorporated herein by reference to the registrant's initial
registration statement filed with the Securities and Exchange Commission on
August 27, 1996 (File No. 333-10805).
/2/ Incorporated herein by reference to Pre-effective Amendment No. 1
on Form N-4 filed by the Lincoln Life & Annuity Variable Account L of Lincoln
Life & Annuity Company of New York with the Securities and Exchange Commission
on September 30, 1996.
/3/ Incorporated herein by reference to Post-effective Amendment No. 1 on
Form N-4 filed by Lincoln Life & Annuity Variable Annuity Account L of Lincoln
Life & Annuity Company of New York on April 30, 1997 (File No. 333-10805).
/4/ Incorporated herein by reference to Post-effective Amendment No. 2 on
Form N-4 filed by Lincoln Life & Annuity Variable Annuity Account L of Lincoln
Life & Annuity Company of New York on May 1, 1998 (File No. 333-10863).
/5/ Incorporated herein by reference to Post-Effective Amendment No. 3 on
Form N-4 filed by Lincoln Life & Annuity Variable Annuity Account L of Lincoln
Life & Annuity Company of New York on September 30, 1998 (File No. 333-10805).
/6/ Incorporated herein by reference to Post-effective Amendment No. 1 on
Form N-4 filed by Lincoln Life & Annuity Variable Annuity Account L of Lincoln
Life & Annuity Company of New York on April 30, 1997 (File No. 333-10863).
/7/ Incorporated herein by reference to Post-effective Amendment No. 1
on Form N-4 filed by Lincoln Life & Annuity Variable Account L of Lincoln Life
& Annuity Company of New York on April 30, 1997 (File No. 333-10861).
/8/ Incorporated herein by reference to Post-effective Amendment No. 5 on
Form N-4 filed by Lincoln Life & Annuity Variable Annuity Account L of Lincoln
Life & Annuity Company of New York on April 29, 1999 (File No. 333-10805).
/9/ Incorporated herein by reference to the registrant's initial
registration statement filed with the Securities and Exchange Commission on
August 27, 1996 (File No. 333-10863).
/10/ Incorporated herein by reference to the registrant's initial
registration statement filed with the Securities and Exchange Commission on
August 27, 1996 (File No. 333-10861).
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The following list contains the officers and directors of Lincoln Life & Annuity
Company of New York who are engaged directly or indirectly in activities
relating to the Lincoln Life & Annuity Variable Annuity Account L as well as the
Contracts. The list also shows Lincoln Life & Annuity Company of New York's
executive officers.
<TABLE>
<CAPTION>
Name Positions and Offices with Lincoln Life & Annuity Company of New York
- ---- ---------------------------------------------------------------------
<S> <C>
Philip L. Holstein* President, Treasurer and Director
Troy D. Panning* Second Vice President and Chief Financial Officer
Roland C. Baker Director
1801 S. Meyers Road
Oakbrook Terrace, IL 60181
J. Patrick Barrett Director
Chairman & CEO
Carpat Investments
4605 Watergap
Manlius, NY 13104
Thomas D. Bell, Jr. Director
President & CEO
Burson-Marstellar Worldwide
230 Park Avenue South
New York, NY 10003
</TABLE>
C-2
<PAGE>
<TABLE>
<S> <C>
Jon A. Boscia** Director
Kathleen R. Gorman* Assistant Vice President and Assistant Secretary
Harry L. Kavetas Director
Executive Vice President & CFO
Eastman Kodak Company
343 State Street
Rochester, NY 14650-0235
Barbara S. Kowalczyk*** Director
M. Leanne Lachman Director
Managing Director
Schroder Real Estate Associates
437 Madison Avenue - 18th Floor
New York, NY 10022
Louis G. Marcoccia Director
Senior Vice President
Syracuse University
Skytop Office Building
Skytop Road
Syracuse, NY 13244-5300
John M. Pietruski Director
27 Paddock Lane
Colts Neck, NJ 07722
Lawrence T. Rowland**** Director
Gabriel L. Shaheen** Director
Robert O. Sheppard* Assistant Vice President and Associate Counsel
Richard C. Vaughan*** Director
</TABLE>
* Principal business address of each person is 120 Madison Street, Suite
1700, Syracuse, New York 13202.
** Principal business address of each person is 1300 S. Clinton Street, Fort
Wayne, Indiana 46802-2706.
*** Principal business address of each person is 200 E. Berry Street, Fort
Wayne, Indiana 46802-2706.
**** Principal business address of each person is 1700 Magnovox Way, One
Reinsurance Place, Fort Wayne, Indiana 46804-1538.
Item 26. Persons Controlled by or Under Common Control with Lincoln Life &
Annuity Company of New York ("LLANY") or the Lincoln Life & Annuity Variable
Annuity Account L.
Lincoln Life & Annuity Variable Annuity Account L is a separate account of LLANY
and may be deemed to be controlled by LLANY although LLANY will follow voting
instructions of Contractholders with respect to voting on certain important
matters requiring a vote of Contractholders.
See Exhibit 15(a): The Organizational Chart of Lincoln National Life Insurance
Holding Company System is hereby incorporated herein by this reference.
C-3
<PAGE>
Item 27. Number of Contractholders
As of January 31, 2000, Registrant had 44 Contractholders.
Item 28. Indemnification
Under the Participation Agreements entered into between LLANY and the
Dreyfus Life & Annuity Index Fund, Inc., Dreyfus Variable Investment Fund and
Dreyfus Corporation, Variable Insurance Products Funds I and II and Fidelity
Distributors Corporation, Twentieth Century Management Company, and T. Rowe
Price (the "Funds"), LLANY and its directors, officers, employees, agents and
control persons have been indemnified by the Funds against any losses, claims or
liabilities that arise out of any untrue statement or alleged untrue statement
or omission of a material fact in the Funds' registration statements,
prospectuses or sales literature. In addition, the Funds will indemnify LLANY
against any liability, loss, damages, costs or expenses which LLANY may incur as
a result of the Funds' incorrect calculations, incorrect reporting and/or
untimely reporting of the Funds' net asset values, dividend rates or capital
gain distribution rates.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
Item 29. Principal Underwriter
(a) Lincoln Financial Advisors Corporation also acts as the principal
underwriter for Lincoln National Variable Annuity Account L, the VA
Separate Account of UNUM Life Insurance Company of America, and the VA-I
Separate Account OF First UNUM Life Insurance Company.
(b)(1) The following table sets forth certain information regarding the officers
and directors of Lincoln Financial Advisors Corporation:
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
NAME AND ADDRESS WITH LINCOLN FINANCIAL ADVISORS CORPORATION
- ---------------- -------------------------------------------
<S> <C>
J. Michael Hemp***** President and Director
Priscilla S. Brown* Vice President
John M. Behrendt* Vice President and Director
Richard C. Boyles*** Chief Financial Officer and Administrative
Officer
Carolyn P. Brody* Vice President and Director
Gary D. Giller**** Director
Janet C. Chrzan** Vice President and Treasurer
Cynthia A. Rose** Secretary
Todd R. Stephenson*** Senior Vice President
Michael McMath***** Senior Vice President
</TABLE>
C-4
<PAGE>
* Principal business address of each person is 1300 S. Clinton Street, Fort
Wayne, Indiana 46802-2706.
** Principal business address of each person is 200 East Berry Street, Fort
Wayne, Indiana 46802-2706.
*** Principal business address of each person is 3811 Illinois Road, Suite
205, Fort Wayne, Indiana 46804-1202.
**** Principal business address is 7650 Rivers Edge Dr., Suite 250, Columbus,
Ohio 43235.
***** Principal business address of each person is 350 Church Street, Hartford,
CT 06103
(c)
<TABLE>
<CAPTION>
Name of Net Underwriting
Principal Discounts and Compensation Brokerage
Underwriter Commissions on Redemption Commissions Compensation
- ----------- ---------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Lincoln Financial Advisors Corporation
</TABLE>
Item 30. Location of Accounts and Records
Exhibit 15(b) is hereby expressly incorporated herein by this reference.
Item 31. Management Services
None
Item 32. Undertakings and Representations
The Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial statements
in this registration statement are never more than 16 months old for so
long as payments under the variable annuity contracts may be accepted,
unless otherwise permitted.
(b) to include either (1) as part of any application to purchase a contract
offered by the prospectus, a space that an applicant can check to request a
Statement of Additional Information, or (2) a post card or similar written
communication affixed to or included in the prospectus that the applicant
can remove to send for a Statement of Additional Information.
(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form promptly upon
written or oral request.
(d) The Registrant intends to rely on the no-action response dated November 28,
1988, from Ms. Angela C. Goelzer of the Commission staff to the American
Council of Life Insurance concerning the redeemability of Section 403(b)
annuity contracts and the Registrant has complied with the provisions of
paragraphs (1)-(4) thereof.
(e) Lincoln Life & Annuity Company of New York hereby represents that the fees
and charges deducted under the Contract, in the aggregate, are reasonable
in relation to the services rendered, the expenses expected to be incurred,
and the risks assumed by Lincoln Life & Annuity Company of New York.
C-5
<PAGE>
SIGNATURES
(a) As required by the Securities Act of 1933 and the Investment Company
Act of 1940, this Amendment to the Registration has duly caused the Registration
Statement to be signed on its behalf, by the undersigned, thereunto duly
authorized in the City of Syracuse, and State of New York on this 17th day of
February, 2000.
Lincoln Life & Annuity Variable Annuity Account L
(Registrant)
By: Lincoln Life & Annuity Company of New York
By: /s/ Joanne B. Collins
--------------------------------------------
Joanne B. Collins, President
Lincoln Life & Annuity Company of New York
(Depositor)
By: /s/ Joanne B. Collins
--------------------------------------------
Joanne B. Collins, President
(b) As required by the Securities Act of 1933, this Amendment to the
Registration Statement has been signed for the Depositor by the following
persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Joanne B. Collins President, Treasurer February 17, 2000
- ------------------------------ and Director (Principal
Joanne B. Collins Executive Officer)
/s/ Troy D. Panning Second Vice President February 17, 2000
- ------------------------------ and Chief Financial
Troy D. Panning Officer (Principal
Financial Officer and
Principal Accounting
Officer)
/s/ Director February , 2000
- ------------------------------
Roland C. Baker
/s/ J. Patrick Barrett Director February 17, 2000
- ------------------------------
J. Patrick Barrett
/s/ Thomas D. Bell, Jr. Director February 17, 2000
- ------------------------------
Thomas D. Bell, Jr.
/s/ Jon A. Boscia Director February 17, 2000
- ------------------------------
Jon A. Boscia
/s/ John H. Gotta Director February 17, 2000
- ------------------------------
John H. Gotta
/s/ Barbara S. Kowalczyk Director February 17, 2000
- ------------------------------
Barbara S. Kowalczyk
Director February , 2000
- ------------------------------
M. Lachman
/s/ Louis G. Marcoccia Director February 17, 2000
- ------------------------------
Louis G. Marcoccia
Director February , 2000
- ------------------------------
John M. Pietroski
/s/ Lawrence T. Rowland Director February 15, 2000
- ------------------------------
Lawrence T. Rowland
/s/ Richard C. Vaughan Director February 17, 2000
- ------------------------------
Richard C. Vaughan
