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FILE NO. 333-61879
FILE NO. 811-08965
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. 1 [X]
POST-EFFECTIVE AMENDMENT NO. [ ]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 1 [X]
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE ANNUITY SEPARATE ACCOUNT II
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(NAME OF DEPOSITOR)
20 WASHINGTON AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55401
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE: (612) 342-7346
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STEWART D. GREGG
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
20 WASHINGTON AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55401
(NAME AND ADDRESS OF AGENT OF SERVICE)
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APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the Registration Statement becomes effective.
It is proposed that this filing will become effective (check appropriate space)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on (date) pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] on (date) pursuant to paragraph (a) 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.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
TITLE OF SECURITIES BEING REGISTERED: VARIABLE ANNUITY CONTRACTS
ISSUED BY A REGISTERED SEPARATE ACCOUNT.
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RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE ANNUITY SEPARATE ACCOUNT II
CROSS REFERENCE SHEET PURSUANT TO RULE 495(A)
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FORM N-4
ITEM NUMBER PART A INFORMATION REQUIRED IN PROSPECTUS
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1. Cover Page
2. Definitions
3. Summary of Contract Expenses
4. Performance Information and Condensed Financial Information
5. ReliaStar Life Insurance Company of New York; The Variable Account;
Investments of the Variable Account
6. Charges Made by ReliaStar Life Insurance Company of New York
7. The Contracts
8. Annuity Provisions
9. The Contracts
10. The Contracts
11. The Contracts
12. Federal Tax Status
13. Legal Proceedings
14. Statement of Additional Information Table of Contents
PART B INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
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15. Cover Page
16. Table of Contents
17. Introduction
18. Administration of the Contracts
19. Distribution of the Contracts
20. Distribution of the Contracts
21. Calculation of Yield and Return
22. Annuity Provisions (In Prospectus)
23. Financial Statements
PART C OTHER INFORMATION
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24. Financial Statements and Exhibits
25. Directors and Officers of the Depositor
26. Persons Controlled by or Under Common Control with the Depositor or Registrant
27. Number of Contract Owners
28. Indemnification
29. Principal Underwriters
30. Location of Accounts and Records
31. Not Applicable
32. Undertakings
</TABLE>
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FEBRUARY 22, 1999
(RELIASTAR Logo appears here)
INDIVIDUAL DEFERRED VARIABLE/FIXED ANNUITY CONTRACTS
Issued By
ReliaStar Life Insurance Company of New York
Variable Annuity Separate Account II
of ReliaStar Life Insurance Company of New York
PROFILE OF OUR INDIVIDUAL FIXED AND VARIABLE ANNUITY CONTRACT
THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT FEATURES OF THE
CONTRACT THAT YOU SHOULD KNOW AND CONSIDER BEFORE PURCHASING IT. THE CONTRACT
IS MORE FULLY DESCRIBED IN THE PROSPECTUS WHICH ACCOMPANIES THIS PROFILE.
PLEASE READ THE PROSPECTUS CAREFULLY.
1. THE ANNUITY CONTRACT: The fixed and variable annuity contract we are
offering is a contract between you, the owner, and us, ReliaStar Life Insurance
Company of New York ("ReliaStar New York"). It provides a means for selecting
one or more investment funds ("Investment Options" or "Funds") on a
tax-deferred basis. The Contract is intended for retirement savings or other
long-term investment purposes and provides for a death benefit and guaranteed
income options.
Through the Variable Account, the Contract offers up to 29 investment
options from which you can choose up to 17 over the lifetime of the Contract.
Currently there is no charge for transfers. The returns on these investment
options are not guaranteed and you can possibly lose money.
The Contract also offers a Fixed Account. This Fixed Account has an
interest rate that is set periodically by ReliaStar New York. While your money
is in the fixed account, the interest you earn and your principal is guaranteed
by ReliaStar New York.
The Contract has two phases: the accumulation phase and the income or
payout phase. During the accumulation phase, earnings accumulate on a
tax-deferred basis and are not taxed as income until you make a withdrawal. The
amounts accumulated during the accumulation phase will determine the amount of
annuity payments. The income phase occurs when you begin receiving regular
annuity payments from your contract on the annuity commencement date.
2. ANNUITY PAYMENTS (THE INCOME PHASE): If you want to receive regular income
from your annuity, you can choose one of three options: (1) monthly payments
for your life (assuming you are the annuitant); (2) monthly payments for your
life, but with payments continuing to the beneficiary for 10 or 20 years (as
you select) if you die before the end of the selected period; and (3) monthly
payments for your life and for the life of another person (usually your spouse)
selected by you. Once you begin receiving regular annuity payments, you cannot
change your payment plan.
During the income phase, you have the same investment options you had
during the accumulation phase. You can choose to have annuity payments come
from the Fixed Account, the Variable Account or both. If you choose to have any
part of your payments come from the Variable Account, the dollar amount of your
annuity payments may go up or down.
3. PURCHASE: The minimum amount ReliaStar New York will accept as an initial
purchase payment is $5,000 for Non-Qualified Contracts and $2,000 for Qualified
Contracts. ReliaStar New York may choose not to accept any subsequent purchase
payment for a Non-Qualified Contract if it is less than $500 and for a
Qualified Contract if it is less than $200. ReliaStar New York may choose not
to accept any subsequent purchase payments if the additional payments, when
added to the Contract Value at the next Valuation Date, would exceed
$1,000,000. Large contracts with initial premium paid of $1 million or more
contain certain specialized contract provisions that may be more or less
advantageous than the terms of contracts with less than $1 million of initial
premium.
4. INVESTMENT OPTIONS: You can put your money in up to 17 of these 29
investment options which are described in the prospectuses for the Funds. You
do not have to choose your investment options in advance, but upon
participation in the seventeenth Fund you would only be able to transfer within
the seventeen already utilized and which are still available.
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<TABLE>
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FIDELITY VARIABLE INSURANCE NEUBERGER BERMAN ADVISERS
THE ALGER AMERICAN FUND: PRODUCTS FUND II: MANAGEMENT TRUST: OCC ACCUMULATION TRUST:
<S> <C> <C> <C>
GROWTH PORTFOLIO VIP II CONTRAFUND PORTFOLIO LIMITED MATURITY BOND PORTFOLIO EQUITY PORTFOLIO
MIDCAP GROWTH PORTFOLIO VIP II INDEX 500 PORTFOLIO PARTNERS PORTFOLIO GLOBAL EQUITY PORTFOLIO
SMALL CAPITALIZATION PORTFOLIO VIP II INVESTMENT GRADE BOND SOCIALLY RESPONSIVE PORTFOLIO MANAGED PORTFOLIO
PORTFOLIO SMALL CAP PORTFOLIO
FIDELITY VARIABLE INSURANCE
PRODUCTS FUND: JANUS ASPEN SERIES: NORTHSTAR GALAXY TRUST: PUTNAM VARIABLE TRUST:
VIP EQUITY-INCOME PORTFOLIO AGGRESSIVE GROWTH PORTFOLIO EMERGING GROWTH PORTFOLIO PUTNAM VT GROWTH AND
VIP GROWTH PORTFOLIO GROWTH PORTFOLIO GROWTH + VALUE PORTFOLIO INCOME FUND
VIP HIGH INCOME PORTFOLIO INTERNATIONAL GROWTH PORTFOLIO HIGH YIELD BOND PORTFOLIO PUTNAM VT NEW OPPORTUNITIES
VIP MONEY MARKET PORTFOLIO WORLDWIDE GROWTH PORTFOLIO INTERNATIONAL VALUE PORTFOLIO FUND
MULTI-SECTOR BOND PORTFOLIO PUTNAM VT VOYAGER FUND
</TABLE>
Depending upon market conditions, you can make or lose money in any of these
Funds.
5. EXPENSES: The Contract has insurance features and investment features, and
there are costs related to each.
Each year ReliaStar New York deducts a $30 contract maintenance charge
from your Contract. Reliastar New York reserves the right to waive this Annual
Contract Charge where the cumulative purchase payments, less any cumulative
partial surrenders, exceed $50,000. In addition, this charge will be waived for
all Contracts with $1 million or more of initial premium. We also deduct for
insurance and administrative charges which annually total 1.40% of the average
daily value of your Contract allocated to the investment portfolios. (Of this
amount, .05% is waived and re-credited for Contracts with initial premium of $1
million or more, prior to the Annuity Commencement Date).
There are also investment fund annual expenses which range from 0.28% to
1.19% of the average daily value of the investment fund depending upon the
investment option which you select.
If you take your money out, we may assess a withdrawal charge. This charge
is equal to a maximum of 6.00% in years 1 and 2 and reduces to 0 after year 6.
We may also assess a state premium tax charge which ranges from 0.00% to 3.50%
depending upon the state.
The following chart is designed to help you understand the expenses in the
Contract. The column "Total Annual Expenses" shows the total of the $30
contract maintenance charge (which is represented as 0.08% below), the 1.40%
insurance charges assessed on most Contracts, and the investment expenses for
each investment portfolio. The next two columns show you two examples of the
expenses, in dollars, you would pay under a Contract. The examples assume that
you invested $1,000 in a Contract which earns 5.00% annually and that you
withdraw your money: (1) at the end of year 1, and (2) at the end of year 10.
For year 1, the Total Annual Expenses are assessed as well as the withdrawal
charges. For year 10, the example shows the aggregate of all the annual
expenses assessed for the 10 years, but there is no withdrawal charge. The
premium tax is assumed to be 0.00% in both examples.
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<TABLE>
<CAPTION>
TOTAL ANNUAL
EXPENSES AT END OF:
TOTAL ANNUAL TOTAL ANNUAL TOTAL ANNUAL (1) (2)
INVESTMENT FUNDS INSURANCE CHARGES PORTFOLIO EXPENSES EXPENSES 1 YEAR 10 YEARS
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THE ALGER AMERICAN FUND:
Growth Portfolio .......................... 1.48% 0.79% 2.27% $77 $260
MidCap Growth Portfolio ................... 1.48% 0.84% 2.32% $77 $265
Small Capitalization Portfolio ............ 1.48% 0.89% 2.37% $78 $270
FIDELITY VARIABLE INSURANCE
PRODUCTS FUND:
VIP Equity-Income Portfolio ............... 1.48% 0.58% 2.06% $75 $239
VIP Growth Portfolio ...................... 1.48% 0.69% 2.17% $76 $250
VIP High Income Portfolio ................. 1.48% 0.71% 2.19% $76 $252
VIP Money Market Portfolio ................ 1.48% 0.31% 1.79% $72 $210
FIDELITY VARIABLE INSURANCE
PRODUCTS FUND II:
VIP II Contrafund Portfolio ............... 1.48% 0.71% 2.19% $76 $252
VIP II Index 500 Portfolio ................ 1.48% 0.28% 1.76% $72 $207
VIP II Investment Grade Bond Portfolio..... 1.48% 0.58% 2.06% $75 $239
JANUS ASPEN SERIES:
Aggressive Growth Portfolio ............... 1.48% 0.76% 2.24% $77 $257
Growth Portfolio .......................... 1.48% 0.70% 2.18% $76 $251
International Growth Portfolio ............ 1.48% 0.96% 2.44% $79 $277
Worldwide Growth Portfolio ................ 1.48% 0.74% 2.22% $76 $255
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST:
Limited Maturity Bond Portfolio ........... 1.48% 0.77% 2.25% $78 $267
Partners Portfolio ........................ 1.48% 0.86% 2.34% $77 $258
Socially Responsive Portfolio ............. 1.48% 1.50% 2.98% $84 $330
NORTHSTAR GALAXY TRUST:
Emerging Growth Portfolio ................. 1.48% 0.90% 2.38% $83 $315
Growth + Value Portfolio .................. 1.48% 0.80% 2.28% $77 $261
High Yield Bond Portfolio ................. 1.48% 0.80% 2.28% $77 $261
International Value Portfolio ............. 1.48% 1.00% 2.48% $79 $281
Multi-Sector Bond Portfolio ............... 1.48% 0.80% 2.28% $77 $261
OCC ACCUMULATION TRUST:
Equity Portfolio .......................... 1.48% 0.99% 2.47% $79 $280
Global Equity Portfolio ................... 1.48% 1.19% 2.67% $81 $300
Managed Portfolio ......................... 1.48% 0.87% 2.35% $78 $268
Small Cap Portfolio ....................... 1.48% 0.97% 2.45% $79 $278
PUTNAM VARIABLE TRUST:
Putnam VT Growth and Income Fund .......... 1.48% 0.51% 1.99% $74 $231
Putnam VT New Opportunities Fund .......... 1.48% 0.63% 2.11% $75 $244
Putnam VT Voyager Fund .................... 1.48% 0.59% 2.07% $75 $240
</TABLE>
Certain of the portfolios are subject to fee reimbursement or waiver
arrangements. The charges above reflect any expense reimbursement or fee
waiver. For more detailed information, see Summary of Contract Expenses in the
Prospectus for the Contract. The Total Annual Insurance charges listed above
represent the maximum insurance charges that currently may be assessed for
Contract expenses. Of these charges, prior to the Annuity Commencement Date
.05% is waived and re-credited for Contracts with initial premium received of
$1 million or more.
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6. TAXES: Your earnings are not taxed until you take them out. If you withdraw
money, earnings may come out first and will be taxed as income. If you are
younger than 59 1/2 when you take money out, you may be charged a 10% federal
tax penalty on the amount treated as taxable income. Annuity payments during
the income phase may be considered partly a return of your original investment,
in which case that part of each payment is not taxable as income.
7. ACCESS TO YOUR MONEY: You can take money out at any time during the
accumulation phase. After the first year, you can take up to 10.00% of your
total purchase payments each year without charge from us. Withdrawals in excess
of that will be charged a maximum of 6.00% in years 1 and 2 which reduces to 0
after year 6. After we have a payment for 6 years, there is no charge for
withdrawals for those payments. You may also have to pay income tax and a tax
penalty on any money you take out. Each purchase payment you add to your
Contract has its own 6 year withdrawal charge period.
8. PERFORMANCE: The value of the Contract will vary up or down depending upon
the investment performance of the investment fund you choose. Performance will
be affected by the insurance charges, the contract maintenance charge, the
investment expenses and other expenses of the investment fund, and any
applicable withdrawal charges. Past performance is not a guarantee of future
results.
9. DEATH BENEFIT: If you die prior to the income phase, the person you have
chosen as your beneficiary will receive a death benefit. For Contracts with
initial premium of less than $1 million, this death benefit will be the greater
of three amounts: 1) the money you've put in less any money you've taken out,
or 2) the current value of your Contract, or 3) the value of your Contract at
the most recent specified contract anniversary plus any money you've added
since that anniversary reduced for any money you've taken out since that
anniversary. If you die after age 85, your beneficiary would receive the
Contract Value. For Contracts with initial premium of $1 million or more, the
death benefit is the Contract Value minus any applicable surrender charge.
10. OTHER INFORMATION
FREE LOOK. If you cancel the Contract within 10 days after receiving it (or
whatever period is required in your state), we will return the Contract Value
without assessing a withdrawal charge. You will receive whatever your Contract
is worth on the day we receive your request. This may be more or less than your
original payment.
NO PROBATE. In most cases, when you die, the person you choose as your
beneficiary will receive the death benefit without going through probate.
WHO SHOULD PURCHASE THE CONTRACT? This Contract is designed for people seeking
long-term tax-deferred accumulation of assets, generally for retirement or
other long-term purposes. The tax-deferred feature is most attractive to people
in high federal and state tax brackets. You should not buy this Contract if you
are looking for a short-term investment or if you cannot take the risk of
getting back less money than you put in.
ADDITIONAL FEATURES. This Contract has additional Features you might be
interested in. These include:
o You can arrange to have money automatically sent to you each month
while your Contract is still in the accumulation phase. Of course,
you'll have to pay taxes on money you receive. ReliaStar New York
calls this feature the Systematic Withdrawal Program.
o You can arrange to have a regular amount of money automatically
transferred to investment portfolios each month to provide for
regular level investments over time. ReliaStar New York calls this
feature Dollar Cost Averaging.
o ReliaStar New York will automatically readjust the money in your
Contract between investment portfolios periodically to keep the blend
you select. ReliaStar New York calls this feature Portfolio
Rebalancing.
These features may not be suitable for your particular situation.
11. INQUIRIES If you need more information, please contact us at:
ReliaStar Life Insurance Company of New York
1000 Woodbury Road, Suite 102
Woodbury, New York 11797
1-800-621-3750
or the distributor of the Contracts, our affiliated Company,
Washington Square Securities, Inc.
20 Washington Avenue South
Minneapolis, Minnesota 55401
1-800-621-3750
or your registered representative
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(RELIASTAR logo appears here)
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
1000 WOODBURY ROAD, SUITE 102
WOODBURY, NEW YORK 11797
1-800-621-3750
INDIVIDUAL DEFERRED VARIABLE/FIXED ANNUITY CONTRACTS
Issued by
The ReliaStar Life Insurance Company of New York
Variable Annuity Separate Account II
of ReliaStar Life Insurance Company of New York
This Prospectus offers flexible purchase payment Individual Deferred
Variable/Fixed Annuity Contracts. The Contracts are sold both as non-qualified
contracts and in connection with retirement plans which may qualify for special
federal tax treatment under the Internal Revenue Code. (See "Federal Tax
Status.") Annuity payouts from the Contracts are deferred until a selected
later date. The Contracts are issued by ReliaStar Life Insurance Company of New
York Variable Annuity Separate Account II (the "Variable Account"), a separate
account of ReliaStar Life Insurance Company of New York ("ReliaStar New York").
Subject to certain restrictions, you can allocate premiums to:
o the Fixed Account, an account that provides a minimum specified rate of
interest; and
o Sub-Accounts of the Variable Account, which allow you to invest in
certain portfolios of the following Funds (the "Investment Funds"):
<TABLE>
<S> <C>
The Alger American Fund Neuberger Berman Advisers Management Trust
Fidelity Variable Insurance Products Fund Northstar Galaxy Trust
Fidelity Variable Insurance Products Fund II OCC Accumulation Trust
Janus Aspen Series Putnam Variable Trust
</TABLE>
The Variable Account, your account value and the amount of any variable
annuity payments that you receive will vary, primarily based on the investment
performance of the Investment Funds you select. (For more information about
investing in the Investment Funds, see "Investments of the Variable Account".)
The Fixed Account is the general account of ReliaStar New York.
Additional information about the Contracts, ReliaStar New York and the
Variable Account, contained in a Statement of Additional Information dated
December 31, 1998, has been filed with the Securities and Exchange Commission.
The Statement of Additional Information is available by accessing the SEC's
internet web site (http: // www.sec.gov) or upon request without charge by
writing to Washington Square Securities, Inc., 20 Washington Avenue South,
Minneapolis, Minnesota 55401 or by calling 1-800-621-3750. The Statement of
Additional Information is incorporated by reference in this Prospectus, and its
Table of Contents can be found on page 34 of this Prospectus.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE CONTRACT
THAT A PROSPECTIVE INVESTOR OUGHT TO KNOW BEFORE INVESTING AND SHOULD BE
RETAINED FOR FUTURE REFERENCE.
THESE INVESTMENTS:
o ARE NOT BANK DEPOSITS OR GUARANTEED BY A BANK
o ARE NOT INSURED OR GUARANTEED BY THE FDIC, THE FEDERAL RESERVE BOARD OR
ANY OTHER GOVERNMENT AGENCY
o ARE AFFECTED BY MARKET FLUCTUATIONS AND SO INVOLVE INVESTMENT RISK,
INCLUDING POSSIBLE LOSS OF PRINCIPAL
o HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE
INVESTMENT FUNDS OFFERED BY THE ALGER AMERICAN FUND, FIDELITY VARIABLE
INSURANCE PRODUCTS FUND, FIDELITY VARIABLE INSURANCE PRODUCTS FUND II, JANUS
ASPEN SERIES, NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST, THE NORTHSTAR GALAXY
TRUST, THE OCC ACCUMULATION TRUST AND PUTNAM VARIABLE TRUST, AND IS VALID ONLY
WHEN ACCOMPANIED BY THESE PROSPECTUSES.
THE DATE OF THIS PROSPECTUS IS FEBRUARY 22, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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DEFINITIONS ......................................... 3
SUMMARY OF CONTRACT EXPENSES ........................ 5
RELIASTAR LIFE INSURANCE COMPANY OF
NEW YORK .......................................... 12
THE VARIABLE ACCOUNT ................................ 12
INVESTMENTS OF THE VARIABLE
ACCOUNT ........................................... 13
CHARGES MADE BY RELIASTAR NEW
YORK .............................................. 16
Surrender Charge (Contingent Deferred Sales
Charge) ........................................ 16
Annual Contract Charge ............................ 17
Waiver of Charges ................................. 17
Mortality Risk Premium ............................ 18
Expense Risk Premium .............................. 18
Administration Charge ............................. 18
Premium and Other Taxes ........................... 18
General: Reduction or Waiver of Charges or
Minimum Purchase Payments ...................... 18
Expenses of the Investment Funds .................. 19
ADMINISTRATION OF THE CONTRACTS ..................... 20
THE CONTRACTS ....................................... 20
Allocation of Purchase Payments ................... 20
Sub-Account Accumulation Unit Value ............... 20
Net Investment Factor ............................. 21
Death Benefit Before the Annuity
Commencement Date .............................. 21
Death Benefit After the Annuity
Commencement Date .............................. 22
Surrender (Redemption) ............................ 22
Systematic Withdrawals ............................ 22
Transfers ......................................... 23
Written Transfers ................................. 23
Telephone/Fax Instructions ........................ 23
Dollar Cost Averaging Transfers ................... 24
Portfolio Rebalancing Service ..................... 24
Assignments ....................................... 24
Contract Owner and Beneficiaries .................. 24
Contract Inquiries ................................ 25
</TABLE>
<TABLE>
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ANNUITY PROVISIONS .................................. 25
Annuity Commencement Date ......................... 25
Annuity Form Selection ............................ 25
Annuity Forms ..................................... 25
Frequency and Amount of Annuity Payments .......... 26
Annuity Payments .................................. 26
Sub-Account Annuity Unit Value .................... 27
Assumed Investment Rate ........................... 27
FEDERAL TAX STATUS .................................. 27
Introduction ...................................... 27
Tax Status of the Contract ........................ 27
Taxation of Annuities ............................. 28
Taxation of Death Benefit Proceeds ................ 29
Penalty Tax on Certain Distributions .............. 29
Possible Changes in Taxation ...................... 30
Transfers, Assignments or Exchanges of a
Contract ....................................... 30
Withholding ....................................... 30
Multiple Contracts ................................ 30
Taxation of Qualified Plans ....................... 30
Possible Charge for ReliaStar
New York's Taxes ............................... 31
Other Tax Consequences ............................ 31
VOTING OF FUND SHARES ............................... 31
DISTRIBUTION OF THE CONTRACTS ....................... 32
REVOCATION .......................................... 32
REPORTS TO OWNERS ................................... 32
PREPARING FOR YEAR 2000 ............................. 32
LEGAL PROCEEDINGS ................................... 33
FINANCIAL STATEMENTS AND EXPERTS .................... 33
FURTHER INFORMATION ................................. 33
STATEMENT OF ADDITIONAL
INFORMATION TABLE OF CONTENTS ..................... 34
APPENDIX A: THE FIXED ACCOUNT ....................... A-1
APPENDIX B: PERFORMANCE
INFORMATION AND CONDENSED
FINANCIAL INFORMATION ............................. B-1
</TABLE>
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DEFINITIONS
ANNUITANT -- The person who is named by the Owner whose life determines
the annuity benefits payable.
ANNUITY COMMENCEMENT DATE (COMMENCEMENT DATE) -- The date on which the
annuity payments begin, which must be the first day of a month. The date will
be the first day of the month following the Annuitant's 75th birthday unless an
earlier or later date has been selected by the Owner and, if the date is later,
it has been agreed to by ReliaStar New York.
BENEFICIARY -- The person who is named to receive the Contract Value upon
the death of the Owner before the Annuity Commencement Date or to receive the
balance of the annuity payments, if any, under the Annuity Form in effect at
the Annuitant's death.
CODE -- The Internal Revenue Code of 1986, as amended.
CONTRACT ANNIVERSARY -- Occurs yearly on the same day and month the
Contract was issued.
CONTRACT OWNER (OWNER) -- The person who controls all the rights and
privileges under the Contract. The Annuitant owns the Contract unless another
Owner is named as provided for in the Contract. The Contract may be owned by
one, but no more than two, natural persons only, except when it is held under a
retirement plan or program described in Section 401(a), 403(a), 403(b), 408 or
408A or similar provisions of the Code.
CONTRACT VALUE -- The sum of (a) the Variable Account Contract Value,
which is the value of the Sub-Account Accumulation Units under the Contract
plus (b) the Fixed Account Contract Value, which is the sum of purchase
payments allocated to the Fixed Account under the Contract, plus credited
interest, minus surrenders, surrender charges previously applied, and any
annual administrative charges applicable to the Fixed Account, and minus any
transfers to the Variable Account.
CONTRACT YEAR -- Each twelve-month period starting with the date the
Contract was issued and each Contract Anniversary after that.
DEATH BENEFIT -- The amount payable upon the death of a Contract Owner
before the Annuity Commencement Date. (See "Death Benefit Before the Annuity
Commencement Date.")
DEATH BENEFIT VALUATION DATE -- The Death Benefit Valuation Date is the
Valuation Date next following the date ReliaStar Life receives proof of death
and a written request from the Beneficiary for a single sum payment or an
Annuity Form permitted by Section 72(s) of the Code.
FIXED ACCOUNT -- The Fixed Account is the general account of ReliaStar New
York, which consists of all assets of ReliaStar New York other than those
allocated to separate accounts of ReliaStar New York.
FIXED ANNUITY -- An annuity with payments which do not vary as to dollar
amount.
INVESTMENT FUNDS -- Any open-end management investment company (or
portfolio thereof) or unit investment trust (or series thereof) in which a
Sub-Account invests.
QUALIFIED PLAN -- A retirement plan under Sections 401, 403, 408 or 408A
or similar provisions of the Code.
SPECIFIED CONTRACT ANNIVERSARY -- Each consecutive six year anniversary
date measured from the date the Contract was issued. The Specified Contract
Anniversary is used to determine the Death Benefit payable if the Contract
Owner dies before the Annuity Commencement Date. (See "Death Benefit Before the
Annuity Commencement Date.")
SUB-ACCOUNT -- That portion of the Variable Account which invests in
shares of a specific Investment Fund.
SUB-ACCOUNT ACCUMULATION UNIT -- A unit of measure used to determine the
Variable Account Contract Value before annuity payments start.
SUCCESSOR BENEFICIARY -- The person named to become the Beneficiary if the
Beneficiary is not alive.
VALUATION DATE -- Each day on which the New York Stock Exchange is open
for business except for a day that a Sub-Account's corresponding Fund does not
value its shares. The New York Stock Exchange is currently closed on weekends
and on the following holidays: New Year's Day; Martin Luther King Day;
President's Day; Good Friday; Fourth of July; Labor Day; Thanksgiving Day; and
Christmas Day.
VALUATION PERIOD -- The time interval between a Valuation Date and the
next Valuation Date.
VARIABLE ACCOUNT -- A separate account of ReliaStar New York consisting of
assets set aside by ReliaStar New York, the investment performance of which is
kept separate from that of the general assets of ReliaStar New York.
3
<PAGE>
VARIABLE ANNUITY -- A series of periodic payments to the Contract Payee
which will vary in amount, primarily based on the investment results of the
Sub-Accounts under the Contract.
VARIABLE ANNUITY UNIT -- A unit of measure used in the calculation of the
second and each subsequent variable annuity payment from the Variable Account.
4
<PAGE>
SUMMARY OF CONTRACT EXPENSES
<TABLE>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES
Sales Charge Imposed on Purchases ........................................................ None
Surrender Charge (as a percentage of amounts surrendered attributable to purchase
payments made in the last six Contract Years) (a)
</TABLE>
<TABLE>
<CAPTION>
CONTRACT YEAR OF SURRENDER MINUS CONTRACT SURRENDER CHARGE AS A PERCENTAGE OF
YEAR OF PURCHASE PAYMENT EACH PURCHASE PAYMENT
- ------------------------------------------- ------------------------------------
<S> <C>
0-1 6%
2-3 5
4-5 4
6 and later 0
</TABLE>
<TABLE>
<S> <C>
Transfer Charge(b) ............................................................ None
ANNUAL CONTRACT CHARGE ........................................................ $ 30
VARIABLE ACCOUNT ANNUAL EXPENSES (as a percentage of average account value)
Mortality and Expense Risk Premiums (c) ....................................... 1.25%
Other Account Fees and Expenses (See "Administration Charge") ................. 0.15%
Total Variable Account Annual Expenses ........................................ 1.40%
</TABLE>
In addition to the costs and expenses shown in this table, state premium
taxes may also be applicable. For more information on state premium taxes, see
"Premium and Other Taxes."
5
<PAGE>
ANNUAL INVESTMENT FUND EXPENSES AFTER REIMBURSEMENTS(e)(f)(g)(i)(j)(l)(m):
(AS A PERCENTAGE OF INVESTMENT FUND AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
TOTAL INVESTMENT
MANAGEMENT OTHER FUND ANNUAL
FEES EXPENSES EXPENSES
------------ ---------- -----------------
<S> <C> <C> <C>
THE ALGER AMERICAN FUND:
Growth Portfolio(d) ..................................... 0.75% 0.04% 0.79%
MidCap Growth Portfolio(d) .............................. 0.80% 0.04% 0.84%
Small Capitalization Portfolio(d) ....................... 0.85% 0.04% 0.89%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND (VIP):
VIP Equity-Income Portfolio(d)(e) ....................... 0.50% 0.08% 0.58%
VIP Growth Portfolio(d)(e) .............................. 0.60% 0.09% 0.69%
VIP High Income Portfolio(d) ............................ 0.59% 0.12% 0.71%
VIP Money Market Portfolio .............................. 0.21% 0.10% 0.31%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II (VIP II):
VIP II Contrafund Portfolio(d)(e) ....................... 0.60% 0.11% 0.71%
VIP II Index 500 Portfolio(d)(f) ........................ 0.24% 0.04% 0.28%
VIP II Investment Grade Bond Portfolio(d) ............... 0.44% 0.14% 0.58%
JANUS ASPEN SERIES:
Aggressive Growth Portfolio(d)(g) ....................... 0.73% 0.03% 0.76%
Growth Portfolio(d)(g) .................................. 0.65% 0.05% 0.70%
International Growth Portfolio(d)(g) .................... 0.67% 0.29% 0.96%
Worldwide Growth Portfolio(d)(g) ........................ 0.66% 0.08% 0.74%
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio(d)(h) ................... 0.65% 0.12% 0.77%
Partners Portfolio(d)(h) ................................ 0.80% 0.06% 0.86%
Socially Responsive Portfolio(d)(h)(i) .................. 0.85% 0.65% 1.50%
NORTHSTAR GALAXY TRUST:
Emerging Growth Portfolio(j)(k) ......................... 0.85% 0.05% 0.90%
Growth + Value Portfolio(j) ............................. 0.75% 0.05% 0.80%
High Yield Bond Portfolio(j) ............................ 0.75% 0.05% 0.80%
International Value Portfolio(j) ........................ 0.95% 0.05% 1.00%
Multi-Sector Bond Portfolio(j) .......................... 0.75% 0.05% 0.80%
OCC ACCUMULATION TRUST:
Equity Portfolio(d)(l) .................................. 0.80% 0.19% 0.99%
Global Equity Portfolio(d)(l) ........................... 0.79% 0.40% 1.19%
Managed Portfolio(d)(l) ................................. 0.80% 0.07% 0.87%
Small Cap Portfolio(d)(l) ............................... 0.80% 0.17% 0.97%
PUTNAM VARIABLE TRUST:
Putnam VT Growth and Income Fund(m) ..................... 0.47% 0.04% 0.51%
Putnam VT New Opportunities Fund(m) ..................... 0.58% 0.05% 0.63%
Putnam VT Voyager Fund(m) ............................... 0.54% 0.05% 0.59%
</TABLE>
The fee and expense information regarding the Investment Funds was
provided by the Funds. This information is for the 1997 calendar year.
Except for the Northstar Galaxy Trust, neither the Investment Funds nor
their Advisers are affiliated with ReliaStar New York.
6
<PAGE>
EXAMPLES
If you surrender your contract at the end of the applicable time period,
you would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
THE ALGER AMERICAN FUND:
Growth Portfolio .................................... $77 $116 $157 $260
MidCap Growth Portfolio ............................. 77 117 160 265
Small Capitalization Portfolio ...................... 78 119 162 270
FIDELITY VARIABLE INSURANCE PRODUCTS FUND (VIP):
VIP Equity-Income Portfolio ......................... 75 110 147 239
VIP Growth Portfolio ................................ 76 113 152 250
VIP High Income Portfolio ........................... 76 113 153 252
VIP Money Market Portfolio .......................... 72 101 133 210
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II (VIP II):
VIP II Contrafund Portfolio ......................... 76 113 153 252
VIP II Index 500 Portfolio .......................... 72 100 131 207
VIP II Investment Grade Bond Portfolio .............. 75 110 147 239
JANUS ASPEN SERIES:
Aggressive Growth Portfolio ......................... 77 115 156 257
Growth Portfolio .................................... 76 113 153 251
International Growth Portfolio ...................... 79 121 166 277
Worldwide Growth Portfolio .......................... 76 114 155 255
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio ..................... 78 118 161 267
Partners Portfolio .................................. 77 115 156 258
Socially Responsive Portfolio ....................... 84 137 193 330
NORTHSTAR GALAXY TRUST:
Emerging Growth Portfolio ........................... 83 133 185 315
Growth + Value Portfolio ............................ 77 116 158 261
High Yield Bond Portfolio ........................... 77 116 158 261
International Value Portfolio ....................... 79 122 168 281
Multi-Sector Bond Portfolio ......................... 77 116 158 261
OCC ACCUMULATION TRUST:
Equity Portfolio .................................... 79 122 167 280
Global Equity Portfolio ............................. 81 128 177 300
Managed Portfolio ................................... 78 118 161 268
Small Cap Portfolio ................................. 79 121 166 278
PUTNAM VARIABLE TRUST:
Putnam VT Growth and Income Fund .................... 74 107 143 231
Putnam VT New Opportunities Fund .................... 75 111 149 244
Putnam VT Voyager Fund .............................. 75 110 147 240
</TABLE>
7
<PAGE>
If you annuitize your contract at the end of the applicable time period,
you would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets.*
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
THE ALGER AMERICAN FUND:
Growth Portfolio ..................................... $77 $71 $121 $260
MidCap Growth Portfolio .............................. 77 72 124 265
Small Capitalization Portfolio ....................... 78 74 126 270
FIDELITY VARIABLE INSURANCE PRODUCTS FUND (VIP):
VIP Equity-Income Portfolio .......................... 75 65 111 239
VIP Growth Portfolio ................................. 76 68 116 250
VIP High Income Portfolio ............................ 76 68 117 252
VIP Money Market Portfolio ........................... 72 56 97 210
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II (VIP II):
VIP II Contrafund Portfolio .......................... 76 68 117 252
VIP II Index 500 Portfolio ........................... 72 55 95 207
VIP II Investment Grade Bond Portfolio ............... 75 65 111 239
JANUS ASPEN SERIES:
Aggressive Growth Portfolio .......................... 77 70 120 257
Growth Portfolio ..................................... 76 68 117 251
International Growth Portfolio ....................... 79 76 130 277
Worldwide Growth Portfolio ........................... 76 69 119 255
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio ...................... 78 73 125 267
Partners Portfolio ................................... 77 70 120 258
Socially Responsive Portfolio ........................ 84 92 157 330
NORTHSTAR GALAXY TRUST:
Emerging Growth Portfolio ............................ 83 88 149 315
Growth + Value Portfolio ............................. 77 71 122 261
High Yield Bond Portfolio ............................ 77 71 122 261
International Value Portfolio ........................ 79 77 132 281
Multi-Sector Bond Portfolio .......................... 77 71 122 261
OCC ACCUMULATION TRUST:
Equity Portfolio ..................................... 79 77 131 280
Global Equity Portfolio .............................. 81 83 141 300
Managed Portfolio .................................... 78 73 125 268
Small Cap Portfolio .................................. 79 76 130 278
PUTNAM VARIABLE TRUST:
Putnam VT Growth and Income Fund ..................... 74 62 107 231
Putnam VT New Opportunities Fund ..................... 75 66 113 244
Putnam VT Voyager Fund ............................... 75 65 111 240
</TABLE>
- ---------
* If the Contract's Annuity Commencement Date occurs during the first two
Contract Years following the date the Contract was issued a Surrender Charge
is deducted and the expenses shown in year 1 reflect this deduction.
8
<PAGE>
If you do not surrender or annuitize your contract at the end of the
applicable time period, you would pay the following expenses on a $1,000
investment, assuming a 5.00% annual return on assets.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
THE ALGER AMERICAN FUND:
Growth Portfolio ..................................... $23 $71 $121 $260
MidCap Growth Portfolio .............................. 23 72 124 265
Small Capitalization Portfolio ....................... 24 74 126 270
FIDELITY VARIABLE INSURANCE PRODUCTS FUND (VIP):
VIP Equity-Income Portfolio .......................... 21 65 111 239
VIP Growth Portfolio ................................. 22 68 116 250
VIP High Income Portfolio ............................ 22 68 117 252
VIP Money Market Portfolio ........................... 18 56 97 210
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II (VIP II):
VIP II Contrafund Portfolio .......................... 22 68 117 252
VIP II Index 500 Portfolio ........................... 18 55 95 207
VIP II Investment Grade Bond Portfolio ............... 21 65 111 239
JANUS ASPEN SERIES:
Aggressive Growth Portfolio .......................... 23 70 120 257
Growth Portfolio ..................................... 22 68 117 251
International Growth Portfolio ....................... 25 76 130 277
Worldwide Growth Portfolio ........................... 22 69 119 255
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio ...................... 24 73 125 267
Partners Portfolio ................................... 23 70 120 258
Socially Responsive Portfolio ........................ 30 92 157 330
NORTHSTAR GALAXY TRUST:
Emerging Growth Portfolio ............................ 29 88 149 315
Growth + Value Portfolio ............................. 23 71 122 261
High Yield Bond Portfolio ............................ 23 71 122 261
International Value Portfolio ........................ 25 77 132 281
Multi-Sector Bond Portfolio .......................... 23 71 122 261
OCC ACCUMULATION TRUST:
Equity Portfolio ..................................... 25 77 131 280
Global Equity Portfolio .............................. 27 83 141 300
Managed Portfolio .................................... 24 73 125 268
Small Cap Portfolio .................................. 25 76 130 278
PUTNAM VARIABLE TRUST:
Putnam VT Growth and Income Fund ..................... 20 62 107 231
Putnam VT New Opportunities Fund ..................... 21 66 113 244
Putnam VT Voyager Fund ............................... 21 65 111 240
</TABLE>
- ---------
(a) In certain situations amounts can be surrendered without any surrender
charge. For more information on the Surrender Charge, see, "Surrender
Charge (Contingent Deferred Sales Charge)." ReliaStar New York reserves
the right to charge a partial surrender processing fee not to exceed the
lesser of 2.00% of the partial surrender amount or $25. For more
information on the processing fee, see "Surrender (Redemption)."
(b) ReliaStar New York currently does not impose a charge on transfers between
the Sub-Accounts or to the Fixed Account, although it reserves the right
to impose a charge not to exceed $25 per transfer.
(c) For Contracts with initial premium of $1 million or more, prior to the
Annuity Commencement Date a portion of the Mortality Risk Premium in an
amount equal to 0.05% of the Contract Value on the Contract Anniversary is
waived and re-credited to the contract on the next succeeding day.
(d) ReliaStar New York or its affiliates may receive compensation from an
affiliate or affiliates of certain of the Funds based upon an annual
percentage of the average net assets held in that Fund by ReliaStar New
York and certain of its insurance company affiliates. The percentage paid
may vary from one Fund company to another. These amounts are
9
<PAGE>
intended to compensate ReliaStar New York or its affiliates for
administrative, record keeping, distribution in some cases, and other
services provided by such parties to the Funds and/or the Funds'
affiliates. Currently, ReliaStar New York has service arrangements with
Fred Alger Management, Inc., Fidelity Management & Research Company, Janus
Capital, Neuberger&Berman Management, and OpCap Advisors. Payments of such
amounts by an affiliate or affiliates of the Funds do not increase the fees
paid by the Funds or their shareholders.
(e) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, certain funds have entered into
arrangements with their custodian whereby credits realized as a result of
uninvested cash balances were used to reduce custodian expenses. Including
these reductions, the total operating expenses presented in the table
would have been: 0.57% for VIP Equity-Income Portfolio, 0.67% for VIP
Growth Portfolio, and 0.68% for VIP II Contrafund Portfolio.
(f) FMR agreed to reimburse a portion of VIP II Index 500 Portfolio's expenses
during the period. Without this reimbursement, the funds' management fee,
other expenses and total expenses would have been 0.27%, 0.13, and 0.40%,
respectively. Expense reimbursements are voluntary. There is no assurance
of ongoing reimbursement.
(g) Management fees for Growth, Aggressive Growth, International Growth and
Worldwide Growth Portfolios reflect a reduced fee schedule effective July
1, 1997. The management fee for each of these Portfolios reflects the new
rate applied to net assets as of December 31, 1997. Other expenses are
based on gross expenses of the Shares before expense offset arrangements
for the fiscal year ended December 31, 1997. The information for each
Portfolio is net of fee waivers or reductions from Janus Capital. Fee
reductions for the Growth, Aggressive Growth, International Growth and
Worldwide Growth Portfolios reduce the management fee to the level of the
corresponding Janus retail fund. Other waivers, if applicable, are first
applied against the management fee and then against other expenses.
Without such waivers or reductions, the Management Fee, Other Expenses and
Total Operating Expenses for the Shares would have been 0.74%, 0.04%, and
0.78% for Growth Portfolio; 0.74%, 0.04%, and 0.78% for Aggressive Growth
Portfolio; 0.79%, 0.29% and 1.08% for International Growth Portfolio; and
0.72%, 0.09% and 0.81% for Worldwide Growth Portfolio, respectively. Janus
Capital may modify or terminate the waivers or reductions at any time upon
at least 90 days' notice to the Trustees.
(h) Neuberger Berman Advisers Management Trust is comprised of separate
Portfolios, the following of which are available as funding options under
the contract: Limited Maturity Bond Portfolio, Partners Portfolio and
Socially Responsive Portfolio ("Portfolio series"). Unlike the other
funding options available under the contract, each of the Portfolio series
invests all of its net investable assets in AMT Limited Maturity Bond
Investments, AMT Partners Investments and AMT Socially Responsive
Investments, respectively, of Advisers Managers Trust ("Investment
series"). The Investment series in turn, invest directly in securities.
For a more complete discussion of this structure, please see the
prospectus for Neuberger Berman Advisers Management Trust Limited Maturity
Bond Portfolio, Partners Portfolio and Socially Responsive Portfolio.
Please note that the figures reported under "Management Fees" and "Other
Expenses" include the aggregate of (i) the management fees paid by the
Investment series, (ii) the administration fees paid by the Portfolio
series, and (iii) all other expenses in the aggregate for the Investment
series and Portfolio series, respectively.
(i) Neuberger Berman Management Inc. ("NBMI") has undertaken to reimburse the
Socially Responsive Portfolio for certain operating expenses, including
the compensation of NBMI and excluding taxes, interest, extraordinary
expenses, brokerage commissions and transaction costs, that exceed in the
aggregate, 1.50% of the average daily net asset value of the Socially
Responsive Portfolio. The Socially Responsive Portfolio has not commenced
operations as of November 30, 1998, and therefore these expense figures
are estimated. Estimated expenses are expected to be 2.50% for the fiscal
period ending December 31, 1998, prior to the reimbursement. The expense
reimbursement policy is subject to termination upon 60 days' written
notice. There can be no assurance that this policy will be continued. See
"Expense Limitation" in the Socially Responsive Portfolio prospectus for
further information.
(j) The investment adviser to the Northstar Galaxy Trust has agreed to
reimburse the Northstar Growth + Value Portfolio, High Yield Bond
Portfolio, and Multi-Sector Bond Portfolio for any expenses in excess of
0.80% of each Portfolio's average daily net assets. It has also agreed to
reimburse the Emerging Growth and International Value Portfolios for
amounts in excess of 0.90% and 1.00%, respectively. In the absence of the
investment adviser's expense reimbursements, the Total Investment Fund
Annual Expenses that would have been paid by each Portfolio during its
fiscal year ended December 31, 1997 would have been: Northstar Galaxy
Trust Emerging Growth Portfolio: 1.11%; Northstar Galaxy Trust Growth +
Value Portfolio: 1.09%; Northstar Galaxy Trust High Yield Bond Portfolio:
1.35%; Northstar Galaxy Trust Multi-Sector Bond Portfolio: 1.36%. For the
Northstar Galaxy Trust International Value Portfolio, on an annualized
basis, absent expense reimbursement, the actual expenses for this
Portfolio are estimated to be 2.61%. Expense reimbursements are voluntary.
There is no assurance of ongoing reimbursement.
10
<PAGE>
(k) The Northstar Galaxy Trust Emerging Growth Portfolio (formerly the
Northstar Galaxy Trust Income and Growth Portfolio) operated under an
investment objective of seeking income balanced with capital appreciation
from inception through November 8, 1998, when the investment objective was
modified to seeking long-term capital appreciation.
(l) The annual Other Expenses of OCC Accumulation Trust Portfolios are shown
gross of certain expense offsets afforded the Portfolios which effectively
lowered overall custody expenses. Total Portfolio Expenses for the Equity,
Small Cap and Managed Portfolios are limited by OpCap Advisors so that
their respective annualized operating expenses (net of any expense
offsets) do not exceed 1.00% of average daily net assets. Total Portfolio
Expenses for the Global Equity Portfolio (net of any expense offsets) are
limited to 1.25% of average daily net assets. Without such limitation and
without giving effect to any expense offsets, the Management Fees, Other
Expenses and Total Portfolio Expenses incurred for the fiscal year ended
December 31, 1997 would have been: 0.80%, 0.19% and 0.99%, respectively,
for the Equity Portfolio, 0.80%, 0.17% and 0.97%, respectively, for the
Small Cap Portfolio, 0.80%, 0.07% and 0.87%, respectively, for the Managed
Portfolio and 0.80%, 0.40% and 1.20%, respectively, for the Global Equity
Portfolio.
(m) The expenses shown in the table do not reflect the application of credits
related to brokerage service and expense offset arrangements that reduce
certain fund expenses.
THE EXAMPLES SHOWN IN THE TABLE ABOVE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN. THE 5% ANNUAL RETURN ASSUMED IS HYPOTHETICAL AND SHOULD NOT
BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE
GREATER OR LESS THAN THE ASSUMED RATE.
The purpose of this table is to assist you in understanding the various
costs and expenses that you will bear either directly or indirectly. The table
reflects the expenses of the Variable Account as well as those of the
Investment Funds. The $30 Annual Contract Charge is reflected as an annual
percentage charge in this table based on the anticipated average net assets in
the Variable Account and Fixed Account, which translates to a charge equal to
an annual rate of 0.078% of the Variable Account and Fixed Account values.
There is an accumulation unit value history contained in Appendix B --
Performance Information and Condensed Financial Information.
11
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
We are a stock life insurance company incorporated under the laws of the
State of New York in 1917 under the name The Morris Plan Insurance Society. In
1946 we adopted the name Bankers Security Life Insurance Society, in 1996 we
adopted the name ReliaStar Bankers Security Life Insurance Company, and in 1998
we adopted our present name. We are authorized to transact business in all
states, the District of Columbia, and the Dominican Republic. We are a
wholly-owned subsidiary of ReliaStar Financial Corp., a holding company whose
subsidiaries specialize in life insurance and related financial services
businesses.
Our principal office is located at 1000 Woodbury Road, Suite 102, P.O. Box
9004, Woodbury, New York 11797.
We may from time to time publish in advertisements, sales literature, and
reports, the ratings and other information assined to us by one or more
independent rating organizations such as A.M. Best Company, Standard & Poor's,
Moody's, and Duff & Phelps. The purpose of the ratings is to reflect our
financial strength and/or claims-paying ability and should not be considered as
bearing on the investments held in the Variable Account. Each year the A.M.
Best Company reviews the financial status of many insurers, culminating in the
assignment of Best's Ratings. These ratings reflect their current opinion of
the relative financial strength and operating performance of an insurance
company in comparison to the norms of the life/health insurance industry. We
have been assigned a rating of A+ by A.M. Best, which is a rating assigned to
companies demostrating superior overall performance and a very strong ability
to meet obligations to Policy holders over a long period.
The Company is a charter member of the Insurance Marketplace Standard
Association ("IMSA"). Companies that belong to IMSA subscribe to a rigorous set
of standards that cover the various aspects of sales and service for
individually sold life insurance and annuities. IMSA members have adopted
policies and procedures that demonstrate a commitment to honesty, fairness and
integrity in all customer contacts involving sales and service of individual
life insurance and annuity products.
THE VARIABLE ACCOUNT
The Variable Account is a separate account of ReliaStar New York
established by the Board of Directors of ReliaStar New York on June 15, 1998,
pursuant to the laws of the State of New York. The Variable Account is
registered with the Securities and Exchange Commission as a unit investment
trust under the Investment Company Act of 1940, as amended ("1940 Act"). Such
registration does not involve supervision by the Commission of the management
or investment policies or practices of the Variable Account, ReliaStar New York
or the Portfolios. ReliaStar New York has complete ownership and control of the
assets in the Variable Account, but these assets are held separately from
ReliaStar New York's other assets and are not part of ReliaStar New York's
General Account.
The portion of the assets of the Variable Account equal to the reserves
and other contract liabilities of the Variable Account will not be charged with
liabilities incurred in any other business that ReliaStar New York may conduct.
ReliaStar New York has the right to transfer to its General Account any assets
of the Variable Account which are in excess of such reserves and other
liabilities. The income, if any, and gains, and losses, realized or unrealized,
of the Variable Account will be credited to or charged against the Variable
Account in accordance with the contracts supported by the Variable Account,
without regard to the other income, gains or losses of ReliaStar New York.
Purchase payments allocated to the Variable Account under a Contract are
invested in one or more Sub-Accounts of the Variable Account, as selected by
you, the Owner. The future Variable Account Contract Value depends primarily on
the investment performance of the Investment Funds whose shares are held in the
Sub-Accounts selected.
12
<PAGE>
INVESTMENTS OF THE VARIABLE ACCOUNT
When you apply for a Contract, you can allocate purchase payments to one
or more of the Sub-Accounts. There are currently 29 Sub-Accounts. Each
Sub-Account invests in shares of one of the Investment Funds at its net asset
value. As Owner, you can change a purchase payment allocation for future
purchase payments and can transfer all or part of the values in a Sub-Account
to another Sub-Account. However, you are only permitted to participate in a
maximum of 17 Sub-Accounts over the lifetime of your Contract. Upon
participation in the seventeenth Sub-Account since the issue of the Contract
you would only be able to transfer within the 17 Sub-Accounts already utilized
and which are still available. For example, assume that you select seven
investment options. Later you transfer out of all of your seven initial
selections and choose 10 different options, none of which are the same as your
original seven selections. You have now used your maximum selection of 17
Sub-Accounts. You can still allocate purchase payments or transfers among any
of the 17 Sub-Accounts you have previously selected. However, you cannot
allocate funds to the remaining Sub-Accounts. An Owner may make partial or
complete transfers to the Fixed Account from the Variable Account at any time.
The Investment Funds currently offered, and the investment adviser,
sub-adviser, and investment objective of each, are named below. More detailed
information about the Investment Funds can be found in the current prospectus
and Statement of Additional Information for each Investment Fund. These
prospectuses accompany this Prospectus in a book entitled "Select*Product
Investment Options." The Investment Fund prospectuses should be read carefully
before any allocation to, or transfers among, the Sub-Accounts.
13
<PAGE>
INVESTMENT FUNDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Group Fund Adviser/ MONEY FIXED GROWTH & INTER- BAL- GROWTH AGGRES- Objec- Primary
Subadviser MARKET INCOME INCOME NATIONAL ANCED SIVE tives Investments
GROWTH
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Alger Alger American Fred Alger X Long-term Equity secur-
American Fund Growth Management, Inc. capital ap- ities of com-
Portfolio preciation panies with a
New York, N.Y. capitalization
of $1 billion
or more
--------------------------------------------------------------------------------------------------------------------
Alger American Fred Alger X Long-term Equity secur-
MidCap Management, Inc. capital ap- ities within
Growth preciation the range of
Portfolio S&P MidCap 400
Index
--------------------------------------------------------------------------------------------------------------------
Alger American Fred Alger X Long-term Equity secur-
Small Management, Inc. capital ap- ities within
Capitalization preciation the range of
Portfolio Russell 2000
Growth or S&P
SmallCap 600
Indexes
====================================================================================================================================
Fidelity VIP Fidelity Management X Reasonable Income-producing
Investments(R) Equity-Income & Research Company income: also equity secur-
Portfolio considers po- ities and debt
Boston, Mass. tential for obligations
capital ap-
preciation
--------------------------------------------------------------------------------------------------------------------
VIP Growth Fidelity Management X Capital ap- Common stocks
Portfolio & Research Company preciation
--------------------------------------------------------------------------------------------------------------------
VIP Fidelity Management X High current Lower-quality
High Income & Research Company income debt securities
Portfolio
--------------------------------------------------------------------------------------------------------------------
VIP Fidelity Management X Income while High-quality
Money Market & Research Company maintaining a short-term
Portfolio stable $1.00 securities
share price
--------------------------------------------------------------------------------------------------------------------
VIP II Fidelity Management X Capital ap- Equity secur-
Contrafund & Research Company preciation ities of com-
Portfolio panies whose
value the fund's
owner believes
is not fully
recognized by
the public
--------------------------------------------------------------------------------------------------------------------
VIP II Fidelity Management X Total return Common stocks
Index 500 & Research Company that corresponds of S&P 500
Portfolio to that of S&P
500 Index
--------------------------------------------------------------------------------------------------------------------
VIP II Fidelity Management X High current Investment-
Investment & Research Company income grade inter-
Grade Bond mediate fixed
Portfolio income secur-
ities
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
Janus Aspen Series Janus X Long-term Nondiversified
Aggressive Capital growth of portfolio of
Denver, Colo. Growth Corporation capital common stocks
Portfolio
--------------------------------------------------------------------------------------------------------------------
Aspen Series Janus X Long-term Diversified
Growth Capital capital growth common stocks
Portfolio Corporation
--------------------------------------------------------------------------------------------------------------------
Aspen Series Janus X Long-term Foreign issuers
International Capital capital growth of common
Growth Corporation stocks
Portfolio
--------------------------------------------------------------------------------------------------------------------
Aspen Series Janus X Long-term Foreign and
Worldwide Capital capital growth domestic common
Growth Corporation stocks
Portfolio
====================================================================================================================================
</TABLE>
14
<PAGE>
INVESTMENT FUNDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Group Fund Adviser/ MONEY FIXED GROWTH & INTER- BAL- GROWTH AGGRES- Objec- Primary
Subadviser MARKET INCOME INCOME NATIONAL ANCED SIVE tives Investments
GROWTH
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Neuberger Advisers Manage- Neuberger Berman X High current Short to inter-
Berman ment Trust Limited Management/ income consis- mediate-term
Maturity Bond Neuberger Berman, tent with low Investment-grade
New York, N.Y. Portfolio LLC risk to prin- debt securities
cipal and
liquidity and,
secondarily,
total return
--------------------------------------------------------------------------------------------------------------------
Advisers Manage- Neuberger Berman X Capital growth Common stocks
ment Trust Management/ of medium- and
Partners Neuberger Berman, large-capitali-
Portfolio LLC zation companies
--------------------------------------------------------------------------------------------------------------------
Advisers Manage- Neuberger Berman X Long-term Common stocks
ment Socially Management/ capital of companies
Responsive Neuberger Berman, growth that meet both
Portfolio LLC financial and
social criteria
====================================================================================================================================
Northstar Emerging Northstar Invest- X Long-term Small & MidCap
Growth ment Management capital equity secur-
Stamford, Conn. Portfolio Corporation appreciation ities
--------------------------------------------------------------------------------------------------------------------
Growth + Value Northstar Invest- X Long-term Common stocks
Portfolio ment Management capital growth
Corporation/
Navellier Fund
Management, Inc.
--------------------------------------------------------------------------------------------------------------------
High Yield Northstar Invest- X High current High-yield
Bond Portfolio ment Management yield and bonds
Corporation capital ap-
preciation
--------------------------------------------------------------------------------------------------------------------
International Northstar Invest- X Long-term International
Value Portfolio ment Management capital ap- equities
Corporation/ preciation
Brandes Invest-
ment Partners, L.P.
--------------------------------------------------------------------------------------------------------------------
Multi-Sector Northstar Invest- X Current income Fixed income
Bond Portfolio ment Management while preserv- securities:
Corporation ing capital U.S. government;
international
investment
grade; high-
yield bonds
====================================================================================================================================
OCC OCC Accumu- OpCap X Long-term Securities of
lation Trust Advisors capital ap- undervalued
New York, N.Y. Equity preciation companies
Portfolio
--------------------------------------------------------------------------------------------------------------------
OCC Accumu- OpCap X Long-term Global invest-
lation Trust Advisors capital ap- ments in equity
Global Equity preciation securities
Portfolio
--------------------------------------------------------------------------------------------------------------------
OCC Accumu- OpCap X Growth of Common stocks,
lation Trust Advisors capital bonds and cash
Managed equivalents
Portfolio
--------------------------------------------------------------------------------------------------------------------
OCC Accumu- OpCap X Capital ap- Equity securi-
lation Trust Advisors preciation ties of com-
SmallCap panies under
Portfolio $1 billion
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
Putnam Putnam VT Putnam Invest- X Capital growth Common stocks
Investments Growth and ment Management, & current
Income Fund Inc. income
Boston, Mass. --------------------------------------------------------------------------------------------------------------------
Putnam VT Putnam Invest- X Long-term Common stocks
New Opportun- ment Management, capital ap-
ities Fund Inc. preciation
--------------------------------------------------------------------------------------------------------------------
Putnam VT Putnam Invest- X Capital ap- Common stocks
Voyager Fund ment Management, preciation
Inc.
====================================================================================================================================
</TABLE>
THERE IS NO ASSURANCE THAT THE STATED OBJECTIVES AND POLICIES OF ANY OF THE
INVESTMENT FUNDS WILL BE ACHIEVED.
ReliaStar New York reserves the right, subject to compliance with the law,
to offer additional Investment Funds.
The Investment Funds are available to registered separate accounts of
ReliaStar New York and to insurance companies other than ReliaStar New York,
offering variable annuity contracts and variable life insurance policies.
ReliaStar New York currently does not foresee any disadvantages to Owners
resulting from the Investment Funds selling shares to fund products other than
the Contracts. However, there is a possibility that a material conflict may
arise between Owners whose Contract Values are allocated to the Variable
Account and the owners of variable life insurance policies and variable annuity
contracts
15
<PAGE>
issued by ReliaStar New York or by such other companies whose assets are
allocated to one or more other separate accounts investing in any one of the
Investment Funds. In the event of a material conflict, ReliaStar New York will
take any necessary steps, including removing the Variable Account from that
Investment Fund, to resolve the matter. The Board of Directors or Trustees of
each Investment Fund will monitor events in order to identify any material
conflicts that possibly may arise and determine what action, if any, should be
taken in response to those events or conflicts. See each individual Investment
Fund prospectus for more information.
REINVESTMENT
The Investment Funds described above have as a policy the distribution of
income, dividends and capital gains. However, under the Contracts there is an
automatic reinvestment of such distributions.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENT FUND SHARES
ReliaStar New York reserves the right, subject to compliance with
applicable law and, if required, approval by the New York Insurance Department,
to make additions to, deletions from, or substitutions for the shares that are
held in the Variable Account or that the Variable Account may purchase:
o ReliaStar New York reserves the right to establish additional
Sub-Accounts of the Variable Account, each of which would invest in shares
corresponding to a new or another investment company portfolio or delete
Sub-Accounts pursuant to the process described in this section. Any new
Sub-Accounts may be made available to existing Contract Owners on a basis
to be determined by ReliaStar New York.
o ReliaStar New York may, in its sole discretion, eliminate one or more
Sub-Accounts, or close such Sub-Accounts to new premium or transfers, if
marketing needs, tax or regulatory considerations or investment conditions
warrant.
o If the shares of a portfolio of an Investment Fund are no longer
available for investment or if in ReliaStar New York's judgment further
investment in any portfolio of an Investment Fund should become
inappropriate in view of the purposes of the Variable Account, or because,
in our sole discretion, of marketing, tax, regulatory requirements or
investment conditions, ReliaStar New York may redeem the shares of that
portfolio and substitute shares of another registered open-end investment
company.
In the event of any such substitution, deletion or change, ReliaStar New
York may make such changes in this and other contracts as may be necessary or
appropriate to reflect such substitution, deletion or change. If all or a
portion of your investments are allocated to any of the current funds that are
being substituted for or deleted on the date such action is announced, you may
transfer the portion of the Accumulation Value affected without payment of a
transfer charge to available Sub-Accounts.
If deemed by us to be in the best interests of persons having voting
rights under the Contracts, the Variable Account may be operated as a
management company under the Investment Company Act of 1940, it may be
deregistered under that Act in the event such registration is no longer
required, or it may be combined with other separate accounts of ReliaStar New
York.
CHARGES MADE BY RELIASTAR NEW YORK
SURRENDER CHARGE (CONTINGENT DEFERRED SALES CHARGE)
No deduction for a sales charge is made from purchase payments. However, a
surrender charge (which may be deemed a contingent deferred sales charge) may
be assessed. This charge, is intended to reimburse ReliaStar New York for
expenses relating to the sale of the Contracts, including commissions to sales
personnel, costs of sales material and other promotional activities and sales
administration costs.
If part or all of a Contract's value is surrendered, or, if the Contract's
Annuity Commencement Date occurs within the first two years after the Contract
is issued, surrender charges may be made by ReliaStar New York.
Computation of Surrender Charges -- For purposes of determining surrender
charges, surrenders shall first be taken from Old Purchase Payments until they
are exhausted, then from New Purchase Payments until they are exhausted, and
thereafter from Contract Earnings.
o "New Purchase Payments" are those Contract purchase payments received by
ReliaStar New York during the Contract Year in which the surrender occurs
or in the five immediately preceding Contract Years;
16
<PAGE>
o "Old Purchase Payments" are those Contract purchase payments not defined
as New Purchase Payments; and
o "Contract Earnings" at any Valuation Date is the Contract Value less the
sum of New Purchase Payments and Old Purchase Payments.
TOTAL SURRENDERS; AMOUNT OF SURRENDER CHARGE -- The surrender charge for
a total surrender is determined by multiplying the amount of each New
Purchase Payment surrendered, that is not eligible for a free surrender,
by the applicable surrender charge percentage as set forth in the
following table:
<TABLE>
<CAPTION>
SURRENDER CHARGE PERCENTAGE TABLE
- -----------------------------------------------------
CONTRACT YEAR OF SURRENDER SURRENDER CHARGE AS A
MINUS CONTRACT YEAR OF PERCENTAGE OF EACH
PURCHASE PAYMENT PURCHASE PAYMENT
- ------------------------------ ----------------------
<S> <C>
0-1 ........................ 6%
2-3 ........................ 5
4-5 ........................ 4
6 and later ................ 0
</TABLE>
FREE SURRENDERS -- Surrenders taken from the following amounts ("Free
Surrenders") are not subject to a surrender charge during any Contract Year:
(a) any Old Purchase Payments not already surrendered; (b) 10% of all New
Purchase Payments that have been received by ReliaStar New York (with the
exception of Systematic Withdrawals, this does not apply to surrenders made
during the first Contract Year nor to any surrenders after the first surrender
made in each Contract Year thereafter); and (c) any Contract Earnings being
surrendered.
PARTIAL SURRENDERS -- The amount of the partial surrender subject to a
surrender charge is determined by dividing (a) the portion of each New Purchase
Payment to be surrendered which is not eligible for a Free Surrender by (b) one
minus the applicable surrender charge percentage from the Surrender Charge
Percentage Table set forth above. The resulting amount for each New Purchase
Payment to be surrendered is then multiplied by the applicable surrender charge
percentage from the Surrender Charge Percentage Table shown above to arrive at
the amount of surrender charge to be assessed. The total of the amount
surrendered will be subject to the surrender charge.
If the surrender charge is less than the Contract Value that remains
immediately after surrender, it will be deducted proportionately from the
Sub-Accounts that make up such Contract Value. If the surrender charge is more
than such remaining Contract Value, the portion of the surrender charge that
can be deducted from such remaining Contract Value will be so deducted and the
balance will be deducted from the surrender payment. In computing surrenders,
any portion of a surrender charge that is deducted from the remaining Contract
Value will be deemed a part of the surrender.
ANNUAL CONTRACT CHARGE
Each year on the Contract Anniversary, ReliaStar New York deducts an
Annual Contract Charge of $30 from the Contract Value. ReliaStar New York will
not increase the Annual Contract Charge. In any Contract Year when a Contract
is surrendered for its full value on other than the Contract Anniversary, the
Annual Contract Charge will be deducted at the time of such surrender. If a
fixed annuity payment or a variable annuity payment is selected, then the
Annual Contract Charge will be assessed and deducted in equal installments from
each annuity payment. When more than one annuity is selected, then a separate
Annual Contract Charge will be assessed against each annuity.
WAIVER OF CHARGES
WAIVER OF ANNUAL CONTRACT CHARGE -- ReliaStar New York reserves the right
to waive the Annual Contract Charge where the cumulative purchase payments,
less any cumulative partial surrenders, exceed $50,000. ReliaStar New York
reserves the right to reinstate the Annual Contract Charge on Contracts
previously qualifying for the waiver, if the cumulative purchase payments, less
any cumulative partial surrenders, equals or falls below $50,000 or if
ReliaStar New York withdraws the waiver of the Charge. ReliaStar New York also
reserves the right to waive the Annual Contract Charge for Contracts with
initial premium of $1 million or more.
ReliaStar New York will not waive the Annual Contract Charges assessed and
deducted from annuity payments.
WAIVER OF SURRENDER CHARGE -- Under certain circumstances as defined in
the Contract and the Rider related to the provisions below, beginning one year
after the effectiveness of the Rider ReliaStar New York will permit the
Contract Owner to access his or her money in the Contract. ReliaStar New York
will permit a full or partial surrender without a surrender charge if and so
long as the Contract Owner is disabled.
17
<PAGE>
These waivers are subject to the specific provisions of the Riders and may
not be available in all states.
MORTALITY RISK PREMIUM
The variable annuity payments made to Annuitants will vary in accordance
with the investment performance of the Sub-Accounts selected by the Owner.
However, they will not be affected by the mortality experience (death rate) of
persons receiving annuity payments from the Variable Account. ReliaStar New
York assumes this "mortality risk" and has guaranteed the annuity rates
incorporated in the Contract, which cannot be changed.
To compensate ReliaStar New York for assuming this mortality risk and the
mortality risk that Beneficiaries of Annuitants dying before the Annuity
Commencement Date may receive amounts in excess of the then current Contract
Value (see "Death Benefit Before the Annuity Commencement Date"), ReliaStar New
York deducts a Mortality Risk Premium from the Variable Account Contract Value.
The deduction is made daily in an amount that is equal to an annual rate of
0.85% of the daily Contract Values under the Variable Account.
For Contracts with initial premium of $1 million or more, prior to the
Annuity Commencement Date an amount equal to 0.05% of the Contract Value on the
Contract Anniversary is waived and re-credited to the Contract on the next
succeeding day. Re-credited amounts are applied to purchase of additional
Sub-Account Accumulation Units.
ReliaStar New York may not change the rate charged for the Mortality Risk
Premium under any Contract.
EXPENSE RISK PREMIUM
ReliaStar New York will not increase charges for administrative expenses
regardless of its actual expenses. To compensate ReliaStar New York for
assuming this expense risk, ReliaStar New York deducts an Expense Risk Premium
from the Variable Account Contract Value. The deduction is made daily in an
amount that is equal to an annual rate of 0.40% of the daily Variable Account
Contract Values.
ReliaStar New York may not change the rate of the Expense Risk Premium
under any Contract.
ADMINISTRATION CHARGE
ReliaStar New York deducts a daily Administration Charge from the Variable
Account Contract Value in an amount equal to an annual rate of 0.15% of the
daily Contract Values under the Variable Account. This charge is deducted to
reimburse ReliaStar New York for the cost of providing administrative services
under the Contracts and the Variable Account. ReliaStar New York may not change
the rate of the Administration Charge under any Contract.
PREMIUM AND OTHER TAXES
Various states and other governmental entities levy a premium tax,
currently ranging up to 3.50%, on annuity contracts issued by insurance
companies. If the Owner of the Contract lives in a governmental jurisdiction
that levies such a tax, ReliaStar New York will pay the taxes when due and
reserves the right to deduct the amount of the tax either from purchase
payments as they are received or from the Contract Value at the Annuity
Commencement Date (immediately before the Contract Value is applied to an
Annuity Form) as permitted or required by applicable law.
Premium tax rates are subject to change from time to time by legislative
and other governmental action. The timing of tax levies also varies from one
taxing authority to another. Consequently, in many cases the purchaser of a
Contract will not be able to accurately determine the premium tax applicable to
the Contract. ReliaStar New York reserves the right to deduct charges for any
other tax or economic burden resulting from the application of the tax laws
that it determines to be applicable to the Contract.
GENERAL: REDUCTION OR WAIVER OF CHARGES OR MIMIMUM PURCHASE PAYMENTS
Any of the charges under the Contract, as well as the minimum purchase
payment requirements set forth in this Prospectus, may be reduced due to
special circumstances that result in lower sales, administrative or mortality
expenses. For example, special circumstances may exist in connection with group
or sponsored arrangements, sales to ReliaStar New York's policy and Contract
Owners or those of affiliated insurance companies, or sales to employees or
clients of ReliaStar New York or its affiliates. The amount of any reductions
will reflect the reduced sales effort and administrative costs resulting from,
or the different mortality experience expected as a result of, the special
circumstances. Reductions will not be unfairly discriminatory against any
person, including the affected policy or Contract owners and owners of all
other contracts funded by the Variable Account.
EXPENSES OF THE INVESTMENT FUNDS
There are fees deducted from and expenses paid out of the assets of the
Investment Funds that are described in the accompanying prospectuses for the
Funds.
18
<PAGE>
ADMINISTRATION OF THE CONTRACTS
ReliaStar New York assumes the responsibilities of performing certain
administrative functions relating to the Contracts and the Variable Account.
These functions include, among other things, maintaining the books and records
of the Variable Account and the Sub-Accounts, and maintaining records of the
name, address, taxpayer identification number, Contract number, type of
Contract issued to each Owner, Contract Value and other pertinent information
necessary to the administration and operation of the Contracts.
THE CONTRACTS
The Contracts are designed for sale as non-qualified contracts and also
for retirement plans which may be Qualified Plans. A single purchase payment
can be made for a deferred annuity, or subsequent purchase payments can be made
up to the maximum level of funding set forth below. The minimum amount
ReliaStar New York will accept as an initial purchase payment is $5,000 for
Non-Qualified Contracts and $2,000 for Qualified Contracts. ReliaStar New York
may choose not to accept any subsequent purchase payment for a Non-Qualified
Contract if it is less than $500 and for a Qualified Contract if it is less
than $200. ReliaStar New York may also choose not to accept any subsequent
purchase payment if the purchase payment together with the Contract Value at
the next Valuation Date exceeds $1,000,000. Any purchase payment not accepted
by ReliaStar New York will be refunded. Contracts with an initial premium of $1
million or more contain a number of specialized provisions, as outlined in this
Prospectus. These provisions may be more or less advantageous than provisions
applicable to Contracts with less than $1 million of initial premium. ReliaStar
New York reserves the right to accept smaller or larger initial and subsequent
purchase payments in connection with special circumstances, such as sales
through group or sponsored arrangements.
ALLOCATION OF PURCHASE PAYMENTS
Purchase payments can be allocated by the Owner in up to 17 of the
available Sub-Accounts of the Variable Account selected and/or to the Fixed
Account. (See Appendix A). Any purchase payment or portion thereof for which no
allocation election is made will be returned to the Owner.
The initial purchase payment will be allocated not later than two business
days after receipt, if the application and all information necessary for
processing the Contract are complete. ReliaStar New York may retain purchase
payments for up to five business days while attempting to complete an
incomplete application. If the application cannot be made complete within this
period, the applicant will be informed of the reasons for the delay and the
purchase payment will be returned immediately. Once the completed application
is received, the payment must be allocated within two business days. ReliaStar
New York will make inquiry to discover any missing information related to
subsequent payments. For any subsequent purchase payments, the payments will be
credited at the Sub-Account Accumulation Unit Value next determined after
receipt of the purchase payment.
Upon allocation to Sub-Accounts of the Variable Account, a purchase
payment is converted into Accumulation Units of the Sub-Account. The amount of
the purchase payment allocated to a particular Sub-Account is divided by the
value of an Accumulation Unit for the Sub-Account to determine the number of
Accumulation Units of the Sub-Account to be held in the Variable Account with
respect to the Contract. The net investment results of each Sub-Account vary
primarily with the investment performance of the Investment Fund whose shares
are held in the Sub-Account.
An Investment Fund may impose a minimum purchase requirement. If that
minimum purchase requirement exceeds the aggregate of all purchase payments
received by ReliaStar New York, less any redemption of Investment Fund shares
resulting from transfers or surrenders, on any given day that are to be applied
to a Sub-Account for the purchase of shares of such Investment Fund, such
purchase payments will be refunded.
SUB-ACCOUNT ACCUMULATION UNIT VALUE
The Unit Value for a Sub-Account on any Valuation Date is equal to the
previous Unit Value multiplied by the Net Investment Factor for that
Sub-Account for the Valuation Period ending on that Valuation Date. The value
of each Sub-Account Accumulation Unit will vary up or down according to a Net
Investment Factor, which is primarily based on the investment performance of
the applicable Investment Fund. Investment Fund shares in the Sub-Accounts will
be valued at their net asset value.
19
<PAGE>
Dividend and capital gain distributions from an Investment Fund will be
automatically reinvested in additional shares of such Investment Fund and
allocated to the appropriate Sub-Account. The number of Sub-Account
Accumulation Units does not increase because of the additional shares, but the
Accumulation Unit value may increase.
NET INVESTMENT FACTOR
The Net Investment Factor is an index number which reflects charges under
the Contract and the investment performance during a Valuation Period of the
Investment Fund whose shares are held in the particular Sub-Account. If the Net
Investment Factor is greater than one, the value of a Sub-Account Accumulation
Unit has increased. If the Net Investment Factor is less than one, the value of
a Sub-Account Accumulation Unit has decreased. The Net Investment Factor is
determined by dividing (1) by (2) then subtracting (3) from the result, where:
(1) is the net result of:
(a) the net asset value per share of the Investment Fund shares held in
the Sub-Account, determined at the end of the current Valuation
Period, plus
(b) the per share amount of any dividend or capital gain distributions
made on the Investment Fund shares held in the Sub-Account during the
current Valuation Period, plus or minus
(c) a per share charge or credit for any taxes reserved for which
ReliaStar New York determines to have resulted from the investment
operations of the Sub-Account and to be applicable to the Contract;
(2) is the net result of:
(a) the net asset value per share of the Investment Fund shares held in
the Sub-Account, determined at the end of the last prior Valuation
Period, plus or minus
(b) a per share charge or credit for any taxes reserved for during the
last prior Valuation Period which ReliaStar New York determines to
have resulted from the investment operations of the Sub-Account and
to be applicable to the Contract; and
(3) is a factor representing the Mortality Risk Premium, the Expense Risk
Premium and the Administration Charge deducted from the Sub-Account which
factor is equal, on an annual basis, to 1.40% of the daily net asset
value of the Sub-Account.
DEATH BENEFIT BEFORE THE ANNUITY COMMENCEMENT DATE
If the Owner, including any joint Owner, dies before the Annuity
Commencement Date, the Beneficiary will be entitled to receive the Death
Benefit. For this purpose the Death Benefit for Contracts with less than $1
million of initial premium will be:
(1) if any Owner (including the Annuitant) dies on or before the first day
of the month following the Owner's 85th birthday, the greater of (i) the
Contract Value on the Death Benefit Valuation Date, or (ii) the sum of
the purchase payments received by ReliaStar Life under the Contract to
the Death Benefit Valuation Date, less any surrender payments previously
made by ReliaStar Life; or (iii) the Contract Value on the Specified
Contract Anniversary (immediately preceding the Owner's death), plus any
Purchase Payments and reduced by any surrender payments since that
anniversary;
(2) if any Owner (including the Annuitant) dies after the first day of the
month following the Owner's 85th birthday, the Contract Value on the
Death Benefit Valuation Date.
The Death Benefit for Contracts with $1 million of initial premium or more
will be the Contract Value minus surrender charges.
If a single sum is requested, it will be paid within seven days after the
Death Benefit Valuation Date. If an Annuity Form is requested, it may be any
Annuity Form permitted by Section 72(s) of the Code and which ReliaStar New
York is willing to issue. An Annuity Form selection must be in writing and must
be received by ReliaStar New York within 60 days after the date of the Owner's
death, otherwise the Death Benefit as of the Death Benefit Valuation Date will
be paid in a single sum to the Beneficiary and the Contract will be canceled.
If the only Beneficiary is the Owner's surviving spouse, such spouse may
continue the Contract as the Owner, and then (1) select a single sum payment,
or (2) select any Annuity Form which does not exceed such spouse's life
expectancy.
20
<PAGE>
If the Beneficiary elects to receive annuity payments under an Annuity
Form, the amount and duration of payments may vary depending on the Annuity
Form selected and whether fixed and/or variable annuity payments are requested.
(See "Annuity Provisions.")
DEATH BENEFIT AFTER THE ANNUITY COMMENCEMENT DATE
If the Annuitant dies after the Annuity Commencement Date, the Death
Benefit, if any, shall be as stated in the Annuity Form in effect.
SURRENDER (REDEMPTION)
If a written request is received by ReliaStar New York from the Owner
before the Annuity Commencement Date, all or part of the Contract Value will be
paid to the Owner after deducting any applicable surrender charge and taxes.
(See "Surrender Charge (Contingent Deferred Sales Charge).") Partial surrenders
must be at least $500. No partial surrender can cause the Contract Value to
fall below $1,000. ReliaStar New York reserves the right to limit the number of
partial surrenders you can make to 12 per Contract Year. This limitation does
not apply to Systematic Withdrawals. If a total surrender occurs other than on
a Contract Anniversary the Annual Contract Charge will be deducted from the
Contract Value before the surrender payment is made.
Surrenders must be consented to by each collateral assignee. ReliaStar New
York reserves the right to require that surrenders in excess of $50,000 be
signature guaranteed by a member firm of the New York, American, Boston,
Midwest, Philadelphia, or Pacific Stock Exchange, or by a commercial bank (not
a savings bank) which is a member of the Federal Deposit Insurance Corporation,
or, in certain cases, by a member firm of the National Association of
Securities Dealers, Inc. that has entered into an appropriate agreement with
ReliaStar New York.
ReliaStar New York may require that the Contract be returned before a
surrender takes place. A surrender will take place on the next Valuation Date
after the requirements for surrender are completed and payment will be made
within seven days after such Valuation Date. Unless the Owner requests a
partial surrender to be made from the Fixed Account or particular Sub-Accounts,
a partial surrender will be taken proportionately from the Fixed Account and
all Sub-Accounts on a basis that reflects their proportionate percentage of the
Contract Value.
ReliaStar New York reserves the right to limit the number of partial
surrenders, and to assess a processing fee not to exceed the lesser of 2.00% of
the partial surrender amount or $25. No processing fee will be charged in
connection with total surrenders.
If the Contract Value after all charges is less than $1,000, ReliaStar New
York can cancel the Contract on any Contract Anniversary, or if such Contract
Anniversary is not a Valuation Date, on the next Valuation Date thereafter, by
paying to the Owner the Contract Value as of such Valuation Date.
If the Contract is purchased as a "tax-sheltered annuity" under Section
403(b) of the Internal Revenue Code (the "Code"), it is subject to certain
restrictions on redemption imposed by Section 403(b)(11) of the Code. (See
"Tax-Sheltered Annuities.")
Surrender payments may be taxable and in addition may be subject to a 10%
tax penalty if before age 59 1/2. Consideration should be given to the tax
implications of a surrender before making a surrender request, including a
surrender in connection with a Qualified Plan.
SYSTEMATIC WITHDRAWALS
Systematic Withdrawals, which are a specialized form of Partial Surrenders
(See "Surrender (Redemption)."), are offered for both Qualified Plan Contracts
and for Non-Qualified Contracts. The Owner may elect to take Systematic
Withdrawals from Sub-Accounts by surrendering a specified dollar amount or
percentage of cumulative purchase payments on a monthly, quarterly, semi-annual
or annual basis. Systematic Withdrawals can be taken from Variable Account
Contract Value and/or Fixed Account Contract Value, but are limited annually to
10.00% of total cumulative purchase payments made under the Contract. A
Surrender Charge will be imposed on the amount of any Systematic Withdrawal,
which is not a Free Surrender. (See "Surrender Charge (Contingent Deferred
Sales Charge).") Systematic Withdrawals can be discontinued by the Owner at any
time by notifying ReliaStar New York in writing.
ReliaStar New York reserves the right to modify or discontinue offering
Systematic Withdrawals, however, any such modification or discontinuation will
not affect any Systematic Withdrawal programs already commenced. While
ReliaStar New York does not currently charge a processing fee for Partial
Surrenders under this program, it reserves the right to charge a processing fee
not to exceed the lesser of 2.00% of the Systematic Withdrawal payment or $25.
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Systematic Withdrawals may be subject to tax, including a penalty tax, and
you should consult with your tax advisor before requesting any Systematic
Withdrawal. (See "Taxation of Annuities.")
Contract Owners interested in participating in the Systematic Withdrawal
program can obtain a separate application form and full information about the
program and its restrictions from their registered representative.
TRANSFERS
Before the Annuity Commencement Date, the Owner can transfer amounts
between Sub-Accounts or from the Sub-Accounts to the Fixed Account. Subject to
certain restrictions, amounts can also be transferred from the Fixed Account to
the Sub-Accounts. Currently, there are four methods by which transfers may be
made: in writing, by telephone or fax, by Dollar Cost Averaging and by
Portfolio Rebalancing.
WRITTEN TRANSFERS
Before the Annuity Commencement Date -- Before the Annuity Commencement
Date the Owner may request a transfer in writing, subject to any conditions or
charges the Investment Funds whose shares are involved may impose, of all or
part of a Sub-Account's value to other Sub-Accounts or to the Fixed Account.
The transfer will be made on the first Valuation Date after the request for
such a transfer is received by ReliaStar New York. Before the Annuity
Commencement Date, transfers may also be made from the Fixed Account to the
Variable Account, provided, that
o transfers may only be made during the period starting 30 days before and
ending 30 days after the Contract Anniversary, and only one transfer may
be made during each such period,
o no more than 50.00% of the Fixed Account Contract Value may be the
subject of any such transfer (unless the balance, after such transfer,
would be less than $1,000, in which case the full Fixed Account Contract
Value may be transferred), and
o such transfer must involve at least $500 (or the total Fixed Account
Contract Value, if less).
Currently, there is no charge for such a transfer, other than those that
may be made by the Funds. ReliaStar New York reserves the right, however,
to charge a transfer fee not to exceed $25 per transfer and to limit the
number of transfers made by the Owner.
After the Annuity Commencement Date -- After the Annuity Commencement
Date, an Annuitant who has selected Variable Annuity Payments can request
transfer of Annuity Unit values in the same manner and subject to the same
requirements as for an Owner-transfer of Sub-Account Accumulation Unit values.
However, no transfers can be made to the Fixed Account after the Annuity
Commencement Date.
No transfers may be made from the Fixed Account after the Annuity
Commencement Date.
The conditions applicable to Written Transfers also apply to Telephone/Fax
Transfers, Dollar Cost Averaging Transfers, and Portfolio Rebalancing.
TELEPHONE/FAX INSTRUCTIONS -- An Owner is allowed to enter the following
types of instructions either by telephone or by fax if a telephone/fax
instruction authorization form is completed:
o transfers between funds,
o surrenders,
o changes of allocations among fund options,
o change of source funds for systematic withdrawals, and
o change of source funds for variable annuitization payouts.
If you complete the telephone/fax form, you agree that ReliaStar New York
will not be liable for any loss, liability, cost or expense when it acts in
accordance with the telephone/fax instructions received. If a telephone/fax
transaction, is later determined not to have been made by you or was made
without your authorization, and a loss results, you bear the risk of this loss.
Any fax requests are considered telephone requests and are bound by the
conditions in the telephone/fax authorization form. Any fax request should
include your name, daytime telephone number, Contract number and the names of
the Sub-Accounts from which and to which money will be transferred or withdrawn
and the allocation percentage. ReliaStar New York will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine.
In the event ReliaStar
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New York does not employ such procedures, it may be liable for any losses due
to unauthorized or fraudulent instructions. Such procedures may include, among
others, requiring forms of personal identification prior to acting upon
telephone instructions, providing written confirmation of such instructions
and/or tape recording telephone instructions.
DOLLAR COST AVERAGING TRANSFERS -- You can direct ReliaStar New York to
automatically transfer a fixed dollar amount or a specified percentage of
Sub-Account Value to any one or more other Sub-Accounts or to the Fixed
Account. The minimum transfer amount is $100. No transfers from the Fixed
Account are permitted under this service. Transfers may be made on a monthly,
quarterly, semi-annual or annual basis. This service is intended to allow you
to utilize "Dollar Cost Averaging," a long-term investment method which
provides for regular, level investments over time. ReliaStar New York makes no
guarantees that Dollar Cost Averaging will result in a profit or protect
against loss.
If you are using the Dollar Cost Averaging Services, it will be
discontinued immediately if: (1) you make a written request to discontinue this
service; (2) we receive a request to begin a Portfolio Rebalancing service; (3)
the specified transfer amount from any Sub-Account is more than the
Accumulation Value in that Sub-Account; or (4) it is 36 months after the Dollar
Cost Averaging start date.
Contract Owners interested in Dollar Cost Averaging can obtain an
application form and full information concerning this service and its
restrictions from their registered representatives.
ReliaStar New York reserves the right to discontinue, modify, or suspend
this service. Any such modification or discontinuation would not affect Dollar
Cost Averaging transfer programs already commenced. Although ReliaStar Life
currently charges no fees for transfers made under the Dollar Cost Averaging
program, it reserves the right to charge a processing fee for Dollar Cost
Averaging transfers not to exceed $25 per transfer.
PORTFOLIO REBALANCING SERVICE -- You may request this service if your
Contract Value, is at least $25,000. If you request this service, you direct us
to automatically make periodic transfers to maintain your specified percentage
allocation among Sub-Accounts of the Variable Account. You may also have your
allocation of future premium payments changed to be equal to this specified
percentage allocation. Transfers made under this service may be made on a
quarterly, semi-annual, or annual basis. This service is intended to maintain
the allocation you have selected consistent with your personal objectives.
The Portfolio Rebalancing service will be discontinued at the earliest of
one of the following events: (1) at the termination date selected by you; (2)
you make a written request to discontinue this service; (3) we receive a
request to begin a Dollar Cost Averaging service; (4) we receive a request to
transfer all of the Accumulation Value from the participating rebalancing
Sub-Accounts; (5) we receive a request to change the allocation of future net
premiums; or (6) the Contract Value falls below $10,000.
Contract Owners interested in Portfolio Rebalancing can obtain an
application form and full information concerning this service and its
restrictions from their registered representatives. ReliaStar New York reserves
the right to discontinue, modify, or suspend this service. Although ReliaStar
New York currently charges no fees for transfers made under the Portfolio
Rebalancing program, it reserves the right to charge a processing fee for
Portfolio Rebalancing transfers not to exceed $25 per transfer.
ASSIGNMENTS
If the Contract is issued pursuant to or in connection with a Qualified
Plan, it cannot be sold, transferred, pledged or assigned to any person or
entity other than ReliaStar New York. In other circumstances, an assignment of
the Contract is permitted, but only before the Annuity Commencement Date, by
giving ReliaStar New York the original or a certified copy of the assignment.
ReliaStar New York shall not be bound by any assignment until it is actually
received by ReliaStar New York and shall not be responsible for the validity of
any assignment. Any payments made or actions taken by ReliaStar New York before
ReliaStar New York actually receives any assignment shall not be affected by
the assignment.
CONTRACT OWNER AND BENEFICIARIES
Unless someone else is named as the Owner in the application for the
Contract, the applicant is the Owner of the Contract and before the Annuity
Commencement Date may exercise all of the Owner's rights under the Contract. No
more than two (2) natural persons may be named as Owner.
The Owner may name a Beneficiary and a Successor Beneficiary. In the event
an Owner dies before the Annuity Commencement Date, the Beneficiary shall
receive a Death Benefit as provided in the Contract. In the event an Owner dies
on or after the
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Annuity Commencement Date, the Beneficiary, if the Annuity Form in effect at
the Owner's death so provides, may continue receiving payments, be paid a lump
sum, or be paid nothing. If the Beneficiary or Successor Beneficiary is not
living on the date payment is due or if no Beneficiary or Successor Beneficiary
has been named, the Owner's estate will receive the applicable proceeds.
A person named as an Annuitant, a Beneficiary or a Successor Beneficiary
shall not be entitled to exercise any rights relating to the Contract or to
receive any payments or settlements under the Contract or any Annuity Form,
unless such person is living on the earlier of (a) the day due proof of death
of the Owner, the Annuitant or the Beneficiary, whichever is applicable, is
received by ReliaStar New York or (b) the tenth day after the death of the
Owner, the Annuitant or the Beneficiary, whichever is applicable.
Unless different arrangements have been made with ReliaStar New York by
the Owner, if more than one Beneficiary is entitled to payments from ReliaStar
New York the payments shall be in equal shares.
Before the Annuity Commencement Date, the Owner may change the Annuitant,
the Beneficiary or the Successor Beneficiary by giving ReliaStar New York
written notice of the change, but the change shall not be effective until
actually received by ReliaStar New York. Upon receipt by ReliaStar New York of
a notice of change, it will be effective as of the date it was signed but shall
not affect any payments made or actions taken by ReliaStar New York before
ReliaStar New York received the notice, and ReliaStar New York shall not be
responsible for the validity of any change.
CONTRACT INQUIRIES
Inquiries regarding a Contract may be made by writing to ReliaStar Life
Insurance Company of New York, 1000 Woodbury Road, Suite 102, P.O Box 9004,
Woodbury, New York 11797, or by calling 1-800-621-3750.
ANNUITY PROVISIONS
ANNUITY COMMENCEMENT DATE
The Owner selects the Annuity Commencement Date, which must be the first
day of a month, when making application for the Contract. The date will be the
first day of the month following the Annuitant's 75th birthday unless an
earlier or later date has been selected by the Owner. The latest Annuity
Commencement Date is the later of the Annuitant's age 85 or 10 years after the
Contract issue date. The Owner may change an Annuity Commencement Date
selection by written notice received by ReliaStar New York at least 30 days
before both the Annuity Commencement Date currently in effect and the New
Annuity Commencement Date. The new date selected must satisfy the requirements
for an Annuity Commencement Date. If the Annuity Commencement Date selected by
the Owner does not occur on a Valuation Date at least two years after the date
on which the Contract was issued, ReliaStar New York reserves the right to
adjust the Annuity Commencement Date to the first Valuation Date after the
Annuity Commencement Date selected by the Owner which is at least two years
after the Contract issue date. If the Annuity Commencement Date occurs before
the second Contract Anniversary, ReliaStar New York may deduct Surrender
Charges. (See "Surrender Charge (Contingent Deferred Sales Charge).")
ANNUITY FORM SELECTION
The Owner may select a Variable Annuity Form, a Fixed Annuity Form, or
both, with payments starting at the Annuity Commencement Date when making
application for the Contract. Thereafter, the Owner may change the Annuity
Form(s) by written notice received by ReliaStar New York before the Annuity
Commencement Date. If no election has been made before the Annuity Commencement
Date, ReliaStar New York will apply the Fixed Account Contract Value to provide
a Fixed Annuity and the Variable Account Contract Value to provide a Variable
Annuity, both in the form of a Life Annuity with Payments Guaranteed for 10
years (120 months), which shall be automatically effective.
ANNUITY FORMS
Variable Annuity Payments and Fixed Annuity Payments are available in any
of the following Annuity Forms:
LIFE ANNUITY -- An annuity payable on the first day of each month during
the Annuitant's life, starting with the first payment due according to the
Contract. Payments cease with the payment made on the first day of the month in
which the Annuitant's death occurs. IT WOULD BE POSSIBLE UNDER THIS ANNUITY
FORM FOR THE ANNUITANT TO RECEIVE ONLY ONE PAYMENT IF HE OR SHE DIED BEFORE THE
SECOND ANNUITY PAYMENT, ONLY TWO PAYMENTS IF HE OR SHE DIED BEFORE THE THIRD
ANNUITY PAYMENT, ETC.
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LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 YEARS (120 MONTHS) OR 20
YEARS (240 MONTHS) -- An annuity payable on the first day of each month during
the Annuitant's life, starting with the first payment due according to the
Contract. If the Annuitant receives all of the guaranteed payments, payments
will continue thereafter but cease with the payment made on the first day of
the month in which the Annuitant's death occurs. If all of the guaranteed
payments have not been made before the Annuitant's death, the unpaid
installments of the guaranteed payments will be continued to the Beneficiary.
JOINT AND FULL SURVIVOR ANNUITY -- An annuity payable on the first day of
each month during the Annuitant's life and the life of a named person (the
"Joint Annuitant"), starting with the first payment due according to the
Contract. Payments will continue while either the Annuitant or the Joint
Annuitant is living and cease with the payment made on the first day of the
month in which the death of the Annuitant or the Joint Annuitant, whichever
lives longer, occurs. THERE IS NO MIMIMUM NUMBER OF PAYMENTS GUARANTEED UNDER
THIS ANNUITY FORM. PAYMENTS CEASE UPON THE DEATH OF THE LAST SURVIVOR OF THE
ANNUITANT AND THE JOINT ANNUITANT REGARDLESS OF THE NUMBER OF PAYMENTS
RECEIVED.
ReliaStar New York also has other annuity forms available and information
about them can be obtained by writing to ReliaStar New York.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Annuity payments will be paid as monthly installments, unless the
Annuitant and ReliaStar New York agree to a different payment schedule.
However, if the Contract Value at the Annuity Commencement Date is less than
$2,000, ReliaStar New York may pay the Contract Value in a single sum and the
Contract will be canceled. Also if a monthly payment would be or become less
than $50, ReliaStar New York may change the frequency of payments to intervals
that will result in payments of at least $50 each.
ANNUITY PAYMENTS
The amount of the first fixed annuity payment is determined by applying
the Contract Value to be used for a fixed annuity at the Annuity Commencement
Date to the annuity table in the Contract for the fixed Annuity Form selected.
The table shows the amount of the initial annuity payment for each $1,000
applied and all subsequent payments shall be equal to this amount. The amount
of the first variable annuity payment is determined by applying the Contract
Value to be used for a variable annuity at the Annuity Commencement Date to the
annuity table in the Contract for the Annuity Form selected.
ReliaStar New York may, as of the Annuity Commencement Date, offer for
sale a single premium immediate annuity contract. If so, the amount of the
Fixed Annuity Payments will not be less than that which would be provided if a
single premium immediate annuity contract then offered by us to Annuitants in
the same class were to be purchased with the greater of:
o the surrender value of Contract; or
o 95% of the Contract Value of the Contract.
Subsequent variable annuity payments vary in amount in accordance with the
investment performance of the applicable Sub-Account. Assuming annuity payments
are based on the unit values of a single Sub-Account, the dollar amount of the
first annuity payment, determined as set forth above, is divided by the
Sub-Account Annuity Unit Value as of the Annuity Commencement Date to establish
the number of Variable Annuity Units representing each annuity payment. This
number of Variable Annuity Units remains fixed during the annuity payment
period. The dollar amount of the second and subsequent payments is not
predetermined and may change from month to month. The dollar amount of the
second and each subsequent payment is determined by multiplying the fixed
number of Variable Annuity Units by the Sub-Account Annuity Unit Value for the
Valuation Period with respect to which the payment is due. If the monthly
payment is based upon the Annuity Unit Values of more than one Sub-Account, the
foregoing procedure is repeated for each applicable Sub-Account and the sum of
the payments based on each Sub-Account is the amount of the monthly annuity
payment.
The Annual Contract Charge is deducted in equal installments from each
annuity payment. When a fixed annuity payment is made in conjunction with a
variable annuity payment, an Annual Contract Charge is assessed against each
type of payment and is deducted in equal installments from each annuity
payment. Premium taxes payable to any governmental entity will be charged
against the Contracts. (See "Premium and Other Taxes.")
The annuity tables in the Contracts are based on the annuity mortality
table as defined in the Contract.
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ReliaStar New York guarantees that the dollar amount of each variable
annuity payment after the first payment will not be affected by variations in
expenses (including those related to the Variable Account) or in mortality
experience from the mortality assumptions used to determine the first payment.
SUB-ACCOUNT ANNUITY UNIT VALUE
The Sub-Account Annuity Unit Value for any Valuation Period is determined
by multiplying the Sub-Account Annuity Unit Value for the immediately preceding
Valuation Period by the Net Investment Factor for the Sub-Account for the
Valuation Period for which the Sub-Account Annuity Unit Value is being
calculated, and multiplying the result by an interest factor to neutralize the
assumed investment rate of 4.00% per annum built into the annuity tables
contained in the Contracts. (See "Net Investment Factor.")
ASSUMED INVESTMENT RATE
An assumed investment rate is built into the annuity tables contained in
the Contracts. If the actual net investment rate on the assets of the Variable
Account is the same as the assumed investment rate, variable annuity payments
will remain level. If the actual net investment rate exceeds the assumed
investment rate, variable annuity payments will increase and conversely, if it
is less than the assumed investment rate the payments will decrease.
FEDERAL TAX STATUS
INTRODUCTION
THIS DISCUSSION IS GENERAL AND NOT INTENDED AS TAX ADVICE. The discussion
is not intended to address the tax consequences resulting from all of the
situations in which a person may be entitled to or may receive a distribution
under the Contract.
The Contract may be purchased on a non-qualified basis ("Non-Qualified
Contract") or purchased and used in connection with plans qualifying for
favorable tax treatment ("Qualified Contract"). The Qualified Contract is
designed for use by individuals whose premium payments are comprised solely of
proceeds from and/or contributions under retirement plans which are intended to
qualify as plans entitled to special income tax treatment under Sections
401(a), 403(b), 408, or 408A of the Internal Revenue Code (the "Code").
The ultimate effect of Federal income taxes on the amounts held under a
Contract, or annuity payments, and on the economic benefit to the Owner, the
Annuitant, or the Beneficiary depends on the age and tax and employment status
of the individual concerned, on the type of retirement plan and on ReliaStar
Life's tax status. In addition, certain requirements must be satisfied in
purchasing a Qualified Contract with proceeds from a tax-qualified plan and
receiving distributions from a Qualified Contract in order to continue
receiving favorable tax treatment.
The following discussion assumes that Qualified Contracts are purchased
with proceeds from and/or contributions under retirement plans that qualify for
the intended special Federal income tax treatment.
Purchasers of Qualified Contracts should seek competent legal and tax
advice regarding the suitability of a Contract for their situation, the
applicable requirements, and the tax treatment of the rights and benefits of a
Contract.
The discussion is based on ReliaStar New York's understanding of Federal
Income Tax Laws as currently interpreted. No representation is made regarding
the likelihood of the continuation of the present Federal Income Tax Laws or
the current interpretation by the Internal Revenue Service ("IRS").
No attempt is made to consider any applicable state or other tax laws.
TAX STATUS OF THE CONTRACT
DIVERSIFICATION REQUIREMENTS
Section 817(h) of the Code provides that separate account investments
underlying a contract must be "adequately diversified" in accordance with
Treasury regulations in order for the contract to qualify as an annuity
contract under Section 72 of the Code. The Variable Account, through each of
the Investment Funds, intends to comply with the diversification requirements
prescribed in regulations under Section 817(h) of the Code, which affect how
the assets in the various Sub-Accounts may be invested. Although ReliaStar New
York does not have control over the Investment Funds in which the Variable
Account invests, ReliaStar New York expects that each Investment Fund in which
the Variable Account owns shares will meet the diversification requirements and
that the Contract will be treated as an annuity contract under the Code.
The Treasury has also announced that the diversification regulations do
not provide guidance concerning the extent to which Owners may direct their
investments to particular Sub-Accounts of a variable account or how
concentrated the investments
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of the Investment Funds underlying a variable account may be. The number of
underlying investment options available under a variable product may also be
relevant in determining whether the product qualifies for the desired tax
treatment. It is possible that if additional rules, regulations or guidance in
this regard are issued, the Contract may need to be modified to comply with
such additional rules or guidance. For these reasons, ReliaStar New York
reserves the right to modify the Contract as necessary to attempt to prevent
the Owner from being considered the owner of the assets of the Investment Funds
or otherwise to qualify the Contract for favorable tax treatment.
REQUIRED DISTRIBUTIONS
NON-QUALIFIED CONTRACTS -- In order to be treated as an annuity contract
for Federal income tax purposes, Section 72(s) of the Code requires any
Non-Qualified Contract to provide that: (a) if any Owner dies on or after the
Annuity Commencement Date but prior to the time the entire interest in the
Contract has been distributed, the remaining portion of such interest will be
distributed at least as rapidly as under the method of distribution being used
as of the date of that Owner's death; and (b) if any Owner dies prior to the
Annuity Commencement Date, the entire interest in the Contract will be
distributed within five years after the date of the Owner's death. These
requirements will be considered satisfied as to any portion of the Owner's
interest which is payable to or for the benefit of a "designated Beneficiary"
and which is distributed over the life of such Beneficiary or over a period not
extending beyond the life expectancy of that Beneficiary, provided that such
distributions begin within one year of that Owner's death. The Owner's
"designated Beneficiary" is the person designated by such Owner as a
Beneficiary and to whom ownership of the Contract passes by reason of death and
must be a natural person. However, if the Owner's "designated Beneficiary" is
the surviving spouse of the Owner, the Contract may be continued with the
surviving spouse as the new Owner. If the Owner is not an individual, any
change in the primary Annuitant is treated as a change of Owner for tax
purposes.
The Non-Qualified Contracts contain provisions which are intended to
comply with the requirements of Section 72(s) of the Code, although no
regulations interpreting these requirements have yet been issued. ReliaStar New
York intends to review such provisions and modify them if necessary to assure
that they comply with the requirements of Code Section 72(s) when clarified by
regulation or otherwise. Other rules may apply to Qualified Contracts.
TAXATION OF ANNUITIES
IN GENERAL
Section 72 of the Code governs taxation of annuities in general. ReliaStar
New York believes that an Owner who is a natural person generally is not taxed
on increases in the value of a Contract until distribution occurs by
withdrawing all or part of the Contract Value (e.g., partial surrenders and
complete surrenders) or as annuity payments under the Annuity Form selected.
For this purpose, the assignment, pledge, or agreement to assign or pledge any
portion of the Contract Value (and in the case of a Qualified Contract, any
portion of an interest in the qualified plan) generally will be treated as a
distribution. The taxable portion of a distribution (in the form of a single
sum payment or annuity) is taxable as ordinary income.
The Owner of any annuity contract who is not a natural person generally
must include in income any increase in the excess of the net surrender value
over the "investment in the contract" during the taxable year. ReliaStar New
York restricts ownership of Non-Qualified Contracts to no more than two natural
persons.
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The following discussion generally applies to Contracts owned by natural
persons.
SURRENDERS
QUALIFIED CONTRACTS -- In the case of a full surrender under a Qualified
or Non-Qualified Contract, the amount received generally will be taxable only
to the extent it exceeds the "investment in the contract."
NON-QUALIFIED CONTRACTS -- In the case of a surrender from a Non-Qualified
Contract before the Annuity Commencement Date, under Code Section 72(e) amounts
received are generally first treated as taxable income to the extent that the
Contract Value exceeds the "investment in the contract" at that time. Any
additional amount surrendered is not taxable.
In the case of a surrender from a Qualified Contract, under Section 72(e)
of the Code a ratable portion of the amount received is taxable, generally
based on the ratio of the "investment in the contract" to the participant's
total accrued benefit or balance under the retirement plan. The "investment in
the contract" generally equals the portion, if any, of any premium payments
paid by or on behalf of any individual under a Contract which was not excluded
from the individual's gross income. For Contracts issued in connection with
qualified plans, the "investment in the contract" can be zero. Special tax
rules may be available for certain distributions from Qualified Contracts.
A Federal penalty tax may apply to certain surrenders. (See "Penalty Tax
on Certain Distributions.")
ANNUITY PAYMENTS
Although tax consequences may vary depending on the Annuity Form selected
under the Contract, in general, only the portion of the Annuity Payment that
represents the amount by which the Contract Value exceeds the investment in the
Contract will be taxed. For variable annuity payments, the taxable portion is
generally determined by an equation that establishes a specific dollar amount
of each payment that is not taxed. The dollar amount is determined by dividing
the investment in the contract by the total number of expected periodic
payments. However, the entire distribution will be taxable once the recipient
has recovered the amount of his or her investment in the contract. For fixed
annuity payments, in general, there is no tax on the portion of each payment
which represents the same ratio that the investment in the contract bears to
the total expected value of the annuity payments for the term of the payments;
however, the remainder of each annuity payment is taxable until the recovery of
the investment in the Contract, and thereafter the full amount or each annuity
payment is taxable.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a Contract because of the death of an
Owner or an Annuitant. Generally, such amounts are includible in the income of
the recipient as follows: (i) if distributed in a lump sum, they are taxed in
the same manner as a full surrender of the contract; or (ii) if distributed
under a payment option, they are taxed in the same way as annuity payments.
PENALTY TAX ON CERTAIN DISTRIBUTIONS
In the case of a distribution pursuant to a Non-Qualified Contract, a
Federal penalty equal to 10.00% of the amount treated as taxable income may be
imposed. In general, however, there is no penalty on distributions:
o made on or after the taxpayer reaches age 59 1/2;
o made on or after the death of the holder (a holder is considered an
Owner) (or if the holder is not an individual, the death of the primary
annuitant);
o attributable to the taxpayer's becoming disabled;
o a part of a series of substantially equal periodic payments (not less
frequently than annually) for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the taxpayer
and his or her designated beneficiary;
o made under an annuity contract that is purchased with a single premium
when the annuity starting date is no later than a year from purchase of
the annuity and substantially equal periodic payments are made, not less
frequently than annually, during the annuity period; and
o made under certain annuities issued in connection with structured
settlement agreements.
Other tax penalties may apply to certain distributions under a Qualified
Contract, as well as to certain contributions to, loans from, and other
circumstances, applicable to the Qualified Plan of which the Qualified Contract
is part.
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POSSIBLE CHANGES IN TAXATION
Although the likelihood of legislative changes is uncertain, there is
always the possibility that the tax treatment of the Policy could change by
legislation or other means (such as IRS regulations, revenue rulings, judicial
decisions, etc.). Moreover, it is also possible that any change could be
retroactive (that is, effective prior to the date of the change). You should
consult a tax adviser with respect to legislative developments and their effect
on the Policy.
TRANSFERS, ASSIGNMENTS OR EXCHANGES OF A CONTRACT
A transfer of ownership or assignment of a Contract, the designation of an
Annuitant, Payee or other Beneficiary who is not also the Owner, or the
exchange of a Contract may result in certain tax consequences to the Owner that
are not discussed herein. An Owner contemplating any such transfer, assignment,
or exchange of a Contract should contact a competent tax adviser with respect
to the potential tax effects of such a transaction.
WITHHOLDING
Pension and annuity distributions generally are subject to withholding for
the recipient's Federal income tax liability at rates that vary according to
the type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions. Effective January 1, 1993, distributions from certain qualified
plans are generally subject to mandatory withholding. Withholding for Contracts
issued to retirement plans established under Section 401 of the Code is the
responsibility of the plan trustee.
MULTIPLE CONTRACTS
Section 72(e)(11) of the Code treats non-qualified deferred annuity
contracts issued by ReliaStar New York (or its affiliates) to the same Owner
during any calendar year as one annuity contract for purposes of determining
the amount includible in gross income under Code Section 72(e). The effects of
this rule are not yet clear; however, it could affect the time when income is
taxable and the amount that might be subject to the 10.00% penalty tax
described above. In addition, the Treasury Department has specific authority to
issue regulations that prevent the avoidance of Section 72(e) through the
serial purchase of annuity contracts or otherwise. There may also be other
situations in which the Treasury may conclude that it would be appropriate to
aggregate two or more annuity contracts purchased by the same Owner.
Accordingly, an Owner should consult a competent tax adviser before purchasing
more than one annuity contract.
TAXATION OF QUALIFIED PLANS
The Contracts are designed for use with several types of Qualified Plans.
The tax rules applicable to participants in these Qualified Plans vary
according to the type of plan and the terms of the plan itself. Favorable tax
treatment may be available for certain types of contributions and
distributions. Adverse tax consequences can result from contributions in excess
of specified limits; distributions prior to age 59 1/2 (subject to certain
exceptions); distributions that do not conform to specified commencement and
minimum distribution rules; aggregate distributions in excess of a specified
annual amount; and in other specified circumstances. Therefore, no attempt is
made to provide more than general information about the use of the Contracts
with the various types of Qualified Plans. Contract Owners, the Annuitants, and
Beneficiaries are cautioned that the rights of any person to any benefits under
these Qualified Plans will be subject to the terms and conditions of the plans
themselves, regardless of the terms and conditions of the Contracts issued in
connection with the plans. ReliaStar New York is not bound by the terms and
conditions of such plans to the extent such terms contradict the Contract,
unless ReliaStar New York consents. Brief descriptions follow of the various
types of Qualified Plans in connection with a Contract.
PENSION AND PROFIT SHARING PLANS
Section 401(a) of the Code permits employers and self-employed persons to
establish various types of retirement plans for employees. Such retirement
plans may permit the purchaser of the Contract to provide benefits under the
plans. Persons intending to use the Contract with such plans should seek
competent advice.
INDIVIDUAL RETIREMENT ANNUITIES
Section 408 and 408A of the Code permits eligible individuals to
contribute to an individual retirement program known as an "Individual
Retirement Annuity" or "IRA." All IRAs are subject to limits on the amount that
may be contributed, the persons who are eligible, and on the time when
distributions may commence.
TRADITIONAL IRAs -- Section 408 governs "traditional" IRAs. Subject to
certain income limits, contributions to a traditional IRA may be tax
deductible. Distributions from a traditional IRA, if attributable to deductible
contributions, are
29
<PAGE>
generally subject to income tax. Distributions must begin in the year the
Contract owner reaches age 70 1/2 for the traditional IRA, but not for the Roth
IRA (see below). Distributions from certain other types of qualified retirement
plans may be "rolled over" on a tax-deferred basis into a traditional IRA.
ROTH IRAs -- Section 408A of the Code permits individuals to contribute to
a special type of IRA called a Roth IRA. The IRA must be designated as a "Roth
IRA" at the time it is established, in accordance with IRS rules. Contributions
to a Roth IRA are not deductible. If certain conditions are met, qualified
distributions from a Roth IRA are tax free. Subject to special limitations, a
distribution from a traditional IRA or another Roth IRA may be rolled over to a
Roth IRA.
Sales of a Contract for use with traditional or Roth IRAs may be subject
to special requirements of the IRS. The IRS has not reviewed the contract for
qualification as an IRA, and has not addressed in a ruling of general
applicability whether a death benefit provision such as the provision in the
Contract comports with IRS qualification requirements.
TAX SHELTERED ANNUITIES
Section 403(b) of the Code allows employees of certain Section 501(c)(3)
organizations and public schools to exclude from their gross income the
premiums paid, within certain limits, on a Contract that will provide an
annuity for the employee's retirement. Code section 403(b)(11) restricts the
distribution under Code section 403(b) annuity contracts of elective
contributions and earnings on those contributions; and Distribution may only
occur upon death of the employee, attainment of age 59 1/2, separation from
service, disability, or financial hardship. In addition, income attributable to
elective contributions may not be distributed in the case of hardship.
POSSIBLE CHARGE FOR RELIASTAR NEW YORK'S TAXES
At the present time, ReliaStar New York makes no charge to the
Sub-Accounts for any Federal, state, or local taxes that ReliaStar New York
incurs which may be attributable to such Sub-Accounts or to the Contracts.
ReliaStar New York, however, reserves the right in the future to make a charge
for any such tax laws that it determines to be properly attributable to the
Sub-Accounts or the Contracts.
OTHER TAX CONSEQUENCES
As noted above, the foregoing comments about the Federal tax consequences
under these Contracts are not exhaustive, and special rules are provided with
respect to other tax situations not discussed in this Prospectus. Further, the
Federal income tax consequences discussed herein reflect ReliaStar New York's
understanding of current law and the law may change. Federal estate and state
and local estate, inheritance, and other tax consequences of ownership or
receipt of distributions under a Contract depend on the individual
circumstances of each Owner or recipient of the distribution. A competent tax
adviser should be consulted for further information.
VOTING OF FUND SHARES
As long as the Variable Account is registered as a unit investment trust
under the Investment Company Act of 1940 and the assets of the Variable Account
are allocated to Sub-Accounts that are invested in Investment Fund shares, the
Investment Fund shares held in the Sub-Accounts will be voted by ReliaStar New
York in accordance with instructions received from the person having voting
interests under the Contracts as described below. If ReliaStar New York
determines pursuant to applicable law or regulation that Investment Fund shares
held in the Sub-Accounts and attributable to the Contracts need not be voted
pursuant to instructions received from persons otherwise having the voting
interests, then ReliaStar New York may vote such Investment Fund shares held in
the Sub-Accounts in its own right.
Before the Annuity Commencement Date, the Owner shall have the voting
interest with respect to the Investment Fund shares attributable to the
Contract. On and after the Annuity Commencement Date, the person then entitled
to receive annuity payments shall have the voting interest with respect to the
Investment Fund shares. Such voting interest will generally decrease during the
annuity payout period.
Any Investment Fund shares held in the Variable Account for which we do
not receive timely voting instructions, or which are not attributable to
Contract Owners, will be voted by us in proportion to the instructions received
from all Contract Owners having a voting interest in the Investment Fund. Any
Investment Fund shares held by us or any of our affiliates in general accounts
will, for voting purposes, be allocated to all separate accounts having voting
interests in the Investment Fund in proportion to each account's voting
interest in the respective Investment Fund and will be voted in the same manner
as are the respective account's vote.
30
<PAGE>
All Investment Fund proxy material will be sent to persons having voting
interests together with appropriate forms which may be used to give voting
instructions. Persons entitled to voting interests and the number of votes
which they may cast shall be determined as of a record date, to be selected by
ReliaStar New York, not more than 90 days before the meeting of the applicable
Fund.
Persons having voting interests under the Contracts as described above
will not, as a result thereof, have voting interests with respect to meetings
of the stockholders of ReliaStar New York.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be sold by licensed insurance agents in those states
where the Contracts can be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
The Contracts will be distributed by the General Distributor, Washington Square
Securities, Inc., 20 Washington Avenue South, Minneapolis, Minnesota 55401,
which is an affiliate of ReliaStar New York. Commissions and other distribution
compensation will be paid by ReliaStar New York. Generally such payments will
not exceed 7.50% of the purchase payments. In some cases a trail commission
based on the Contract Value may also be paid.
REVOCATION
The Contract Owner may revoke the contract at any time between the date of
Application and the date 10 days after receipt of the Contract and receive a
refund of the Contract Value unless otherwise required by state and/or federal
law. All Individual Retirement Annuity refunds will be for a return of purchase
payments. In order to revoke the Contract, it must be mailed or delivered to
the mailing address shown below or the agent through whom it was purchased.
Mailing or delivery must occur on or before 10 days after receipt of the
Contract for revocation to be effective. In order to revoke the Contract
written notice must be mailed or delivered to:
ReliaStar Life Insurance Company of New York
1000 Woodbury Road
Suite 102
P.O. Box 9004
Woodbury, New York 11797
The liability of the Variable Account under this provision is limited to
the Contract Value in each Sub-Account on the date of revocation. Any
additional amounts refunded to the Contract Owner will be paid by ReliaStar New
York.
REPORTS TO OWNERS
ReliaStar New York will mail to the Contract Owner, at the last known
address of record at the home office of ReliaStar New York, at least annually
after the first Contract Year, a report containing such information as may be
required by any applicable law or regulation and a statement showing the
Contract Value.
PREPARING FOR YEAR 2000
Like all financial services providers, ReliaStar New York utilizes systems
that may be affected by Year 2000 transition issues and it relies on service
providers, including the Funds, that also may be affected. ReliaStar New York
has developed, and is in the process of implementing, a Year 2000 transition
plan, and is confirming that its service providers are also so engaged. The
resources that are being devoted to this effort are substantial. It is
difficult to predict with precision whether the amount of resources ultimately
devoted, or the outcome of these efforts, will have any negative impact on
ReliaStar New York. However, as of the date of this prospectus, it is not
anticipated that Contract owners will experience negative effects on their
investment, or on the services provided in connection therewith, as a result of
Year 2000 transition implementation. ReliaStar New York currently anticipates
that its systems will be Year 2000 compliant by the end of the second quarter
of 1999 but there can be no assurance that it will be successful, or that
interaction with other service providers will not impair ReliaStar New York's
services at that time.
31
<PAGE>
LEGAL PROCEEDINGS
ReliaStar New York and its affiliates, like other life insurance
companies, are involved in lawsuits, which may include class action lawsuits.
In some class action and other lawsuits involving insurers, substantial damages
have been sought and/or material settlement payments have been made. Although
the outcome of any litigation cannot be predicted with certainty, ReliaStar New
York believes that at the present time there are no pending or threatened
lawsuits that are reasonably likely to have a material adverse impact on the
Variable Account or upon ReliaStar New York.
FINANCIAL STATEMENTS AND EXPERTS
The annual financial statements of ReliaStar Life Insurance Company of New
York, which are incorporated by reference in the Statement of Additional
Information, have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their reports which are incorporated by reference and have been so
incorporated by reference in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.
No financial statements are available for the Variable Account because it
did not commence operations until after December 31, 1998.
FURTHER INFORMATION
A Registration Statement under the Securities Act of 1933 has been filed
with the Securities and Exchange Commission with respect to the contracts
described herein. The Prospectus does not contain all of the information set
forth in the Registration Statement and exhibits thereto, to which reference is
hereby made for further information concerning the Variable Account, ReliaStar
New York and the Contracts. The information so omitted may be obtained from the
Commission's principal office in Washington, D.C., upon payment of the fee
prescribed by the Commission, or examined there without charge. Statements
contained in this Prospectus as to the provisions of the Contracts and other
legal documents are summaries, and reference is made to the documents as filed
with the Commission for a complete statement of the provisions thereof.
INFORMATION ABOUT THE FIXED ACCOUNT CAN BE FOUND IN APPENDIX A, ON PAGE
A-1, AND CONDENSED FINANCIAL INFORMATION CAN BE FOUND IN APPENDIX B, ON PAGE
B-1.
32
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Introduction ............................. SAI-2
Administration of the Contracts .......... SAI-2
Custody of Assets ........................ SAI-2
Independent Auditors ..................... SAI-2
Distribution of the Contracts ............ SAI-2
Calculation of Yield and Return .......... SAI-2
Financial Statements ..................... SAI-9
</TABLE>
-------------------------------------------------------------------------------
If you would like to receive a copy of the ReliaStar Life Insurance Company of
New York Variable Annuity Separate Account II Statement of Additional
Information, please call 1-800-621-3750 or return this request to:
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
1000 WOODBURY ROAD
SUITE 102
P.O. BOX 9004
WOODBURY, NEW YORK 11797
- --------------------------------------------------------------------------------
Your name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip
- --------------------------------------------------------------------------------
Please send me a copy of the ReliaStar Life Insurance Company of New York
Variable Annuity Separate Account II Statement of Additional Information.
- -------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR ACCOMPANYING
INVESTMENT FUND PROSPECTUSES AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
33
<PAGE>
APPENDIX A
THE FIXED ACCOUNT
CONTRIBUTIONS UNDER THE FIXED PORTION OF THE CONTRACT AND TRANSFERS TO THE
FIXED PORTION BECOME PART OF THE GENERAL ACCOUNT OF RELIASTAR NEW YORK (THE
"FIXED ACCOUNT"), WHICH SUPPORTS INSURANCE AND ANNUITY OBLIGATIONS. INTERESTS
IN THE FIXED ACCOUNT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
("1933 ACT") NOR IS THE FIXED ACCOUNT REGISTERED AS AN INVESTMENT COMPANY UNDER
THE INVESTMENT COMPANY ACT OF 1940 ("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED
ACCOUNT NOR ANY INTEREST THEREIN ARE GENERALLY SUBJECT TO THE PROVISIONS OF THE
1933 OR 1940 ACT AND RELIASTAR NEW YORK HAS BEEN ADVISED THAT THE STAFF OF THE
SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED THE DISCLOSURES IN THIS
PROSPECTUS WHICH RELATE TO THE FIXED PORTION OF THE CONTRACT. DISCLOSURES
REGARDING THE FIXED PORTION OF THE ANNUITY CONTRACT AND THE FIXED ACCOUNT,
HOWEVER, MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE
FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY AND COMPLETENESS OF STATEMENTS
MADE IN PROSPECTUSES.
The Fixed Account is made up of all of the general assets of ReliaStar New
York other than those allocated to any separate account. Purchase payments will
be allocated to the Fixed Account as elected by the Owner at the time of
purchase or as subsequently changed. ReliaStar New York will invest the assets
of the Fixed Account in those assets chosen by ReliaStar New York and allowed
by applicable law.
ReliaStar New York guarantees that it will credit interest at a rate of
not less than 3.00% per year, compounded annually, to amounts allocated to the
Fixed Account under the Contract. ReliaStar New York may credit interest at a
rate in excess of 3.00% per year; however, ReliaStar New York is not obligated
to do so. ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN
EXCESS OF 3.00% PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF RELIASTAR
NEW YORK. THE OWNER ASSUMES THE RISK THAT INTEREST CREDITED TO FIXED ACCOUNT
ALLOCATIONS MAY NOT EXCEED THE MINIMUM GUARANTEE OF 3.00% FOR ANY GIVEN YEAR.
A-1
<PAGE>
APPENDIX B
PERFORMANCE INFORMATION AND CONDENSED FINANCIAL INFORMATION
PERFORMANCE INFORMATION
From time to time, ReliaStar New York may advertise or include in sales
literature yields, effective yields, and total returns for the available
Sub-Accounts. THESE FIGURES ARE BASED ON HISTORICAL EARNINGS AND DO NOT
INDICATE OR PROJECT FUTURE PERFORMANCE. RELIASTAR NEW YORK MAY, FROM TIME TO
TIME, ALSO DISCLOSE YIELD AND TOTAL RETURNS FOR THE PORTFOLIOS OF THE
INVESTMENT FUNDS, INCLUDING SUCH DISCLOSURE FOR PERIODS PRIOR TO THE DATES THE
SUB-ACCOUNTS COMMENCED OPERATIONS. EACH SUB-ACCOUNT MAY, FROM TIME TO TIME,
ADVERTISE OR INCLUDE IN SALES LITERATURE PERFORMANCE RELATIVE TO CERTAIN
PERFORMANCE RANKINGS AND INDICES COMPILED BY INDEPENDENT ORGANIZATIONS. MORE
DETAILED INFORMATION AS TO THE CALCULATION OF PERFORMANCE INFORMATION, AS WELL
AS COMPARISONS WITH UNMANAGED MARKET INDICES, APPEARS IN THE STATEMENT OF
ADDITIONAL INFORMATION.
Yields, effective yields and total returns for the Sub-Accounts are based
on the investment performance of the corresponding portfolios of the Investment
Funds. The performance in part reflects the Investment Funds' expenses. See the
prospectuses for the Investment Funds.
The yield of the Sub-Account investing in Fidelity's VIP Money Market
Portfolio refers to the annualized income generated by an investment in the
Sub-Account over a specified seven-day period. The yield is calculated by
assuming that the income generated for that seven-day period is generated each
seven-day period over a 52-week period and is shown as a percentage of the
investment. The effective yield is calculated similarly but, when annualized,
the income earned by an investment in the Sub-Account is assumed to be
reinvested. The effective yield will be slightly higher than the yield because
of the compounding effect of this assumed reinvestment.
The yield of a Sub-Account (except the Money Market Sub-Account investing
in Fidelity's VIP Money Market Portfolio) refers to the annualized income
generated by an investment in the Sub-Account over a specified 30-day or
one-month period. The yield is calculated by assuming that the income generated
by the investment during that 30-day or one-month period is generated each
period over a 12-month period and is shown as a percentage of the investment.
When a Sub-Account has been in operation for one, five, and ten years,
respectively, the total return for these periods will be provided. For periods
prior to the date the Sub-Account commenced operations, performance information
for Contracts funded by the Sub-Accounts will be calculated based on the
performance of the Investment Funds' portfolios and the assumption that the
Sub-Accounts were in existence for the same periods as those indicated for the
Investment Funds' portfolios, with the level of Contract charges that were in
effect at the inception of the Sub-Accounts for the Contracts. Advertising and
sales literature may also compare the performance of each Sub-Account to the
Standard & Poor's Composite Index of 500 Stocks, a widely used measure of stock
performance. This unmanaged index assumes the reinvestment of dividends but
does not reflect any "deduction" for the expense of operating or managing an
investment portfolio. Other independent ranking services and indices may also
be used as a source of performance comparison.
Yields, effective yields and total returns for the Sub-Accounts are based
on the investment performance of the corresponding portfolios of the Investment
Funds. The performance in part reflects the Investment Funds' expenses. See the
prospectuses for the Investment Funds.
ReliaStar New York may also report other information including the effect
of tax-deferred compounding on a Sub-Account's investment returns, or returns
in general, which may be illustrated by tables, graphs or charts.
SUB-ACCOUNT ACCUMULATION UNIT VALUES
The value of Sub-Account Accumulation Units will vary up or down depending
upon performance of the applicable Fund and will be computed based upon an
initial unit value established as of the date of this Prospectus.
B-1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
---------------
INDIVIDUAL DEFERRED VARIABLE/FIXED ANNUITY CONTRACTS
ISSUED BY
RELIASTAR LIFE INSURANCE COMPANY OF
NEW YORK VARIABLE ANNUITY SEPARATE ACCOUNT II
AND
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
This Statement of Additional Information is not a Prospectus, but should
be read in conjunction with the Prospectus, dated February 22, 1999 (the
"Prospectus") relating to the Individual Deferred Variable/Fixed Annuity
Contracts issued by ReliaStar Life Insurance Company of New York Variable
Annuity Separate Account II (the "Variable Account") and ReliaStar Life
Insurance Company of New York ("ReliaStar New York") (formerly known as
ReliaStar Bankers Security Life Insurance Company). Much of the information
contained in this Statement of Additional Information expands upon subjects
discussed in the Prospectus. A copy of the Prospectus may be obtained from
Washington Square Securities, Inc., 20 Washington Avenue South, Minneapolis,
Minnesota 55401.
Capitalized terms used in this Statement of Additional Information that
are not otherwise defined herein shall have the meanings given to them in the
Prospectus.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Introduction ............................. SAI-2
Administration of the Contracts .......... SAI-2
Custody of Assets ........................ SAI-2
Independent Auditors ..................... SAI-2
Distribution of the Contracts ............ SAI-2
Calculation of Yield and Return .......... SAI-2
Financial Statements ..................... SAI-9
</TABLE>
---------------
The date of this Statement of Additional Information is February 22, 1999.
SAI-1
<PAGE>
INTRODUCTION
The Individual Deferred Variable/Fixed Annuity Contracts described in the
Prospectus are flexible purchase payment contracts. The Contracts are sold both
as Non-Qualified contracts and/or in connection with retirement plans which may
qualify for special Federal tax treatment under the Internal Revenue Code. (See
"Federal Tax Status" on page 27 of the Prospectus.) Annuity payouts under the
Contracts are deferred until a selected later date.
Purchase payments may be allocated to one or more of the available
Sub-Accounts of the Variable Account, a separate account of ReliaStar New York,
and/or to the Fixed Account (which is the general account of ReliaStar New
York). Purchase payments allocated to one or more of the available Sub-Accounts
of the Variable Account, as selected by the Contract Owner, will be invested in
shares at net asset value of one or more of a group of investment funds (the
"Investment Funds").
ADMINISTRATION OF THE CONTRACTS
ReliaStar New York performs certain administrative functions
("Administrative Functions") relating to the Contracts and the Variable Account
in Minneapolis, Minnesota. These functions include, among other things,
maintaining the books and records of the Variable Account and the Sub-Accounts,
and maintaining records of the name, address, taxpayer identification number,
Contract number, type of Contract issued to each Owner, Contract Value and
other pertinent information necessary to the administration and operation of
the Contracts. ReliaStar New York receives no payment for performing any of the
Administrative Functions.
CUSTODY OF ASSETS
ReliaStar New York maintains custody of the assets of the Variable Account.
INDEPENDENT AUDITORS
The annual financial statements of ReliaStar Life Insurance Company of New
York, which are incorporated by reference in this Statement of Additional
Information, have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their reports which are incorporated by reference herein, and have
been so incorporated by reference in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
The Variable Account had no assets as of December 31, 1998, and therefore,
no financial statements are included.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be distributed by the General Distributor, Washington
Square Securities, Inc. ("WSSI"), which is a direct wholly-owned subsidiary of
ReliaStar Financial Corp. and is an affiliate of ReliaStar New York. The
Contracts will be sold by licensed insurance agents in those states where the
Contracts can be lawfully sold. Such agents will be registered representatives
of broker-dealers registered under the Securities Exchange Act of 1934 who are
members of the National Association of Securities Dealers, Inc.
As of December 31, 1998, WSSI was not paid any fees by the Company in
connection with distribution of the Contracts.
No deduction for a sales charge is made from the purchase payments for the
Contracts. However, if part or all of a Contract's value is surrendered,
surrender charges (which may be deemed to be contingent deferred sales charges)
may be made by ReliaStar New York. The method used to determine the amount of
such charge is described in the Prospectus under the heading "Charges Made By
ReliaStar New York -- Surrender Charge (Contingent Deferred Sales Charge)."
CALCULATION OF YIELD AND RETURN
CURRENT YIELD AND EFFECTIVE YIELD. Current yield and effective yield will
be calculated only for the VIP Money Market Portfolio Sub-Account.
The current yield is based on a seven-day period (the "base period") and
is calculated by determining the "net change in value" on a hypothetical
account having a balance of one Accumulation Unit at the beginning of the
period, dividing the net change in account value by the value of the account at
the beginning of the base period to obtain the base period return, and
multiplying the base period return by 365/7 with the resulting yield figure
carried to the nearest hundredth of one percent. The effective yield is
computed in a similar manner, except that the base period return is compounded
by adding 1, raising the sum to a power equal to 365 divided by 7, and
subtracting 1 from the result, according to the following formula:
365/7
------------------------------
EFFECTIVE YIELD = [(Base Period Return + 1)] - 1
SAI-2
<PAGE>
Net changes in value of a hypothetical account will include net investment
income of the account (accrued daily dividends as declared by the VIP Money
Market Portfolio, less daily expense and contract charges to the account) for
the period, but will not include realized or unrealized gains or losses on its
underlying fund shares.
The VIP Money Market Portfolio Sub-Account's yield and effective yield
will vary in response to any fluctuations in interest rates and expenses of the
Sub-Account.
Assuming that the Sub-Account investing in the VIP Money Market Portfolio
was then in existence, the yield and effective yield of the Sub-Account for the
seven-day period ending December 31, 1997 would have been as follows:
<TABLE>
<S> <C>
YIELD: 4.09%
EFFECTIVE YIELD: 4.17%
</TABLE>
STANDARDIZED YIELD. A standardized yield computation may be used for bond
Sub-Accounts. The yield quotation will be based on a recent 30 day (or one
month) period, and is computed by dividing the net investment income per
Accumulation Unit earned during the period by the maximum offering price on the
last day of the period according to the following formula:
STANDARDIZED YIELD. A standardized yield computation may be used for bond
Sub-Accounts. The yield quotation will be based on a recent 30 day (or one
month) period, and is computed by dividing the net investment income per
Accumulation Unit earned during the period by the maximum offering price on the
last day of the period according to the following formula:
YIELD = 2 [( a - b +1)6 - 1]
--------------------
cd
Where:
a = net investment earned during the period by the Fund or
Portfolio attributable
to shares owned by the Sub-Account.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of Accumulation Units outstanding
during the period.
d = the maximum offering price per Accumulation Unit on the last
day of the period.
Yield on each Sub-Account is earned from dividends declared and paid by
the underlying Fund or Portfolio, which are automatically reinvested in Fund or
Portfolio shares.
AVERAGE ANNUAL TOTAL RETURNS. From time to time, sales literature or
advertisements may also quote average annual total returns for one or more of
the Sub-Accounts for various periods of time.
Average annual total returns represent the average annual compounded rates
of return that would equate an initial investment of $1,000 under a Contract to
the redemption value of that investment as of the last day of each of the
periods. The ending date for each period for which total return quotations are
provided will be for the most recent month-end practicable, considering the
type and media of the communication and will be stated in the communication.
Average annual total returns will be calculated using Sub-Account unit
values which ReliaStar New York calculates on each Valuation Date based on the
performance of the Sub-Account's underlying Portfolio, the deductions for the
Mortality and Expense Risk Premiums, the Administration Charge, and the Annual
Contract Charge. The calculation assumes that the Annual Contract Charge is $30
per year per Contract deducted at the end of each Contract Year. For purposes
of calculating average annual total return, an average per dollar Annual
Contract Charge attributable to the hypothetical account for the period is
used. The calculation also assumes surrender of the Contract at the end of the
period for the return quotation. Total returns will therefore reflect a
deduction of the Surrender Charge for any period less than six years. The total
return will then be calculated according to the following formula:
TR = ((ERV/P) 1/N) - 1
Where:
TR = The average annual total return net of Sub-Account
recurring charges.
ERV = the ending redeemable value (net of any applicable
surrender charge) of the hypothetical account at the
end of the period.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
SAI-3
<PAGE>
Such average annual total return information for the Sub-Accounts is as
follows:
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR
PERIOD ENDED PERIOD ENDED
SUB-ACCOUNT 12/31/97 12/31/97
- ------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Alger American Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Alger American MidCap Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Alger American Small Capitalization Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP Equity-Income Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP High Income Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP II Contrafund Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP II Index 500 Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP II Investment Grade Bond Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Janus Aggressive Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Janus Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Janus International Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Janus Worldwide Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Neuberger Berman Advisers Management Trust Limited Maturity
Bond Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Neuberger Berman Advisers Management Trust Partners Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Neuberger Berman Advisers Management Trust Socially
Responsive Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust Emerging Growth Portfolio*
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust Growth + Value Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust High Yield Bond Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust International Value Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust Multi-Sector Bond Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
OCC Equity Portfolio**
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
OCC Global Equity Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
OCC Managed Portfolio**
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
OCC Small Cap Portfolio**
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Putnam VT Growth and Income Fund
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Putnam VT New Opportunities Fund
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Putnam VT Voyager Fund
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
<CAPTION>
FOR THE 10-YEAR FOR THE PERIOD FROM
PERIOD ENDED DATE OF INCEPTION OF
SUB-ACCOUNT 12/31/97 SUB-ACCOUNT TO 12/31/97
- ------------------------------------------------------------- ----------------- ------------------------
<S> <C> <C>
Alger American Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Alger American MidCap Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Alger American Small Capitalization Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP Equity-Income Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP High Income Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP II Contrafund Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP II Index 500 Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP II Investment Grade Bond Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Janus Aggressive Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Janus Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Janus International Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Janus Worldwide Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Neuberger Berman Advisers Management Trust Limited Maturity
Bond Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Neuberger Berman Advisers Management Trust Partners Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Neuberger Berman Advisers Management Trust Socially
Responsive Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust Emerging Growth Portfolio*
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust Growth + Value Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust High Yield Bond Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust International Value Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust Multi-Sector Bond Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
OCC Equity Portfolio**
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
OCC Global Equity Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
OCC Managed Portfolio**
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
OCC Small Cap Portfolio**
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Putnam VT Growth and Income Fund
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Putnam VT New Opportunities Fund
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Putnam VT Voyager Fund
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
</TABLE>
From time to time, sales literature or advertisements may quote average
annual total returns for periods prior to the date the Sub-Accounts commenced
operations. Such performance information for the Sub-Accounts will be
calculated based on the performance of the Portfolios and the assumption that
the Sub-Accounts were in existence for the same periods as those indicated for
the Portfolios, with the level of Contract charges currently in effect.
SAI-4
<PAGE>
Such average annual total return information for the Sub-Accounts is as
follows:
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR
PERIOD ENDED PERIOD ENDED
SUB-ACCOUNT 12/31/97 12/31/97
- ------------------------------------------------------------- ------------------ ------------------
<S> <C> <C>
Alger American Growth Portfolio
(Portfolio Inception: 1/9/89) .............................. 18.53% 17.20%
Alger American MidCap Growth Portfolio
(Portfolio Inception: 5/3/93) .............................. 7.94% N/A
Alger American Small Capitalization Portfolio
(Portfolio Inception: 9/21/88) ............................. 4.38% 10.55%
Fidelity VIP Equity-Income Portfolio
(Portfolio Inception: 10/9/86) ............................. 20.86% 18.05%
Fidelity VIP Growth Portfolio
(Portfolio Inception: 10/9/86) ............................. 16.30% 15.92%
Fidelity VIP High Income Portfolio
(Portfolio Inception: 9/19/85) ............................. 10.56% 11.84%
Fidelity VIP II Contrafund Portfolio
(Portfolio Inception: 1/3/95) .............................. 16.95% N/A
Fidelity VIP II Index 500 Portfolio
(Portfolio Inception: 8/27/92) ............................. 25.39% 17.82%
Fidelity VIP II Investment Grade Bond Portfolio
(Portfolio Inception: 12/5/88) ............................. 2.08% 4.98%
Janus Aggressive Growth Portfolio
(Portfolio Inception: 9/13/93) ............................. 5.63% N/A
Janus Growth Portfolio
(Portfolio Inception: 9/13/93) ............................. 15.57% N/A
Janus International Growth Portfolio
(Portfolio Inception: 5/2/94) .............................. 11.39% N/A
Janus Worldwide Growth Portfolio
(Portfolio Inception: 9/13/93) ............................. 14.99% N/A
Neuberger Berman Advisers Management Trust Limited Maturity
Bond Portfolio
(Portfolio Inception: 9/10/84) ............................. -0.21% 3.48%
Neuberger Berman Advisers Management Trust Partners Portfolio
(Portfolio Inception: 3/22/94) ............................. 23.96% N/A
Neuberger Berman Advisers Management Trust Socially
Responsive Portfolio
(Portfolio Inception: 8/19/98) ............................. N/A N/A
Northstar Galaxy Trust Emerging Growth Portfolio*
(Portfolio Inception: 5/6/94) .............................. 8.54% N/A
Northstar Galaxy Trust Growth + Value Portfolio
(Portfolio Inception: 5/6/94) .............................. 7.59% N/A
Northstar Galaxy Trust High Yield Bond Portfolio
(Portfolio Inception: 5/6/94) .............................. 3.19% N/A
Northstar Galaxy Trust International Value Portfolio
(Portfolio Inception: 8/8/97) .............................. N/A N/A
Northstar Galaxy Trust Multi-Sector Bond Portfolio (Portfolio
Inception: 5/6/94) ......................................... 0.06% N/A
OCC Equity Portfolio**
(Portfolio Inception: 8/1/88) .............................. 19.40% 17.33%
OCC Global Equity Portfolio
(Portfolio Inception: 3/1/95) .............................. 6.97% N/A
OCC Managed Portfolio**
(Portfolio Inception: 8/1/88) .............................. 15.13% 17.79%
OCC Small Cap Portfolio**
(Portfolio Inception: 8/1/88) .............................. 15.08% 12.53%
Putnam VT Growth and Income Fund
(Portfolio Inception: 2/1/88) .............................. 16.96% 16.77%
Putnam VT New Opportunities Fund
(Portfolio Inception: 5/2/94) .............................. 16.11% N/A
Putnam VT Voyager Fund
(Portfolio Inception: 2/1/88) .............................. 19.29% 17.16%
<CAPTION>
FOR THE 10-YEAR FOR THE PERIOD FROM DATE
PERIOD ENDED OF INCEPTION OF FUND
SUB-ACCOUNT 12/31/97 PORTFOLIO TO 12/31/97
- ------------------------------------------------------------- ------------------- ---------------------------
<S> <C> <C>
Alger American Growth Portfolio
(Portfolio Inception: 1/9/89) .............................. N/A 17.73%
Alger American MidCap Growth Portfolio
(Portfolio Inception: 5/3/93) .............................. N/A 19.96%
Alger American Small Capitalization Portfolio
(Portfolio Inception: 9/21/88) ............................. N/A 17.54%
Fidelity VIP Equity-Income Portfolio
(Portfolio Inception: 10/9/86) ............................. 15.09% 13.02%
Fidelity VIP Growth Portfolio
(Portfolio Inception: 10/9/86) ............................. 15.53% 13.92%
Fidelity VIP High Income Portfolio
(Portfolio Inception: 9/19/85) ............................. 11.20% 10.85%
Fidelity VIP II Contrafund Portfolio
(Portfolio Inception: 1/3/95) .............................. N/A 25.39%
Fidelity VIP II Index 500 Portfolio
(Portfolio Inception: 8/27/92) ............................. N/A 17.82%
Fidelity VIP II Investment Grade Bond Portfolio
(Portfolio Inception: 12/5/88) ............................. N/A 6.73%
Janus Aggressive Growth Portfolio
(Portfolio Inception: 9/13/93) ............................. N/A 17.01%
Janus Growth Portfolio
(Portfolio Inception: 9/13/93) ............................. N/A 15.46%
Janus International Growth Portfolio
(Portfolio Inception: 5/2/94) .............................. N/A 16.79%
Janus Worldwide Growth Portfolio
(Portfolio Inception: 9/13/93) ............................. N/A 20.70%
Neuberger Berman Advisers Management Trust Limited Maturity
Bond Portfolio
(Portfolio Inception: 9/10/84) ............................. 5.53% 6.62%
Neuberger Berman Advisers Management Trust Partners Portfolio
(Portfolio Inception: 3/22/94) ............................. N/A 21.71%
Neuberger Berman Advisers Management Trust Socially
Responsive Portfolio
(Portfolio Inception: 8/19/98) ............................. N/A N/A
Northstar Galaxy Trust Emerging Growth Portfolio*
(Portfolio Inception: 5/6/94) .............................. N/A 11.70%
Northstar Galaxy Trust Growth + Value Portfolio
(Portfolio Inception: 5/6/94) .............................. N/A 15.27%
Northstar Galaxy Trust High Yield Bond Portfolio
(Portfolio Inception: 5/6/94) .............................. N/A 9.52%
Northstar Galaxy Trust International Value Portfolio
(Portfolio Inception: 8/8/97) .............................. N/A -4.74%
Northstar Galaxy Trust Multi-Sector Bond Portfolio (Portfolio
Inception: 5/6/94) ......................................... N/A 7.48%
OCC Equity Portfolio**
(Portfolio Inception: 8/1/88) .............................. N/A 15.89%
OCC Global Equity Portfolio
(Portfolio Inception: 3/1/95) .............................. N/A 14.01%
OCC Managed Portfolio**
(Portfolio Inception: 8/1/88) .............................. N/A 18.63%
OCC Small Cap Portfolio**
(Portfolio Inception: 8/1/88) .............................. N/A 13.82%
Putnam VT Growth and Income Fund
(Portfolio Inception: 2/1/88) .............................. N/A 14.98%
Putnam VT New Opportunities Fund
(Portfolio Inception: 5/2/94) .............................. N/A 20.28%
Putnam VT Voyager Fund
(Portfolio Inception: 2/1/88) .............................. N/A 16.40%
</TABLE>
ReliaStar New York may also disclose average annual total returns for the
Investment Fund's Portfolios since their inception, including such disclosure
for periods prior to the date the Variable Account commenced operations.
SAI-5
<PAGE>
Such average annual total return information for the Portfolios of the
Investment Funds is as follows:
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR
PERIOD ENDED PERIOD ENDED
SUB-ACCOUNT 12/31/97 12/31/97
- ---------------------------------------------------- ------------------ ------------------
<S> <C> <C>
Alger American Growth Portfolio
(Portfolio Inception: 1/9/89) ..................... 25.75% 19.28%
Alger American MidCap Growth Portfolio
(Portfolio Inception: 5/3/93) ..................... 15.01% N/A
Alger American Small Capitalization Portfolio
(Portfolio Inception: 9/21/88) .................... 11.39% 12.65%
Fidelity VIP Equity-Income Portfolio
(Portfolio Inception: 10/9/86) .................... 28.11% 20.14%
Fidelity VIP Growth Portfolio
(Portfolio Inception: 10/9/86) .................... 23.48% 18.00%
Fidelity VIP High Income Portfolio
(Portfolio Inception: 9/19/85) .................... 17.67% 13.94%
Fidelity VIP II Contrafund Portfolio
(Portfolio Inception: 1/3/95) ..................... 24.14% N/A
Fidelity VIP II Index 500 Portfolio
(Portfolio Inception: 8/27/92) .................... 32.70% 19.91%
Fidelity VIP II Investment Grade Bond Portfolio
(Portfolio Inception: 12/5/88) .................... 9.06% 7.11%
Janus Aggressive Growth Portfolio
(Portfolio Inception: 9/13/93) .................... 12.66% N/A
Janus Growth Portfolio
(Portfolio Inception: 9/13/93) .................... 22.75% N/A
Janus International Growth Portfolio
(Portfolio Inception: 5/2/94) ..................... 18.51% N/A
Janus Worldwide Growth Portfolio
(Portfolio Inception: 9/13/93) .................... 22.15% N/A
Neuberger Berman Advisers Management Trust Limited
Maturity Bond Portfolio
(Portfolio Inception:9/10/84) ..................... 6.74% 5.63%
Neuberger Berman Advisers Management Trust Partners
Portfolio
(Portfolio Inception: 3/22/94) .................... 31.25% N/A
Neuberger Berman Advisers Management Trust Socially
Responsive Portfolio
(Portfolio Inception: 8/19/98) .................... N/A N/A
Northstar Galaxy Trust Emerging Growth Portfolio*
(Portfolio Inception: 5/6/94) ..................... 15.62% N/A
Northstar Galaxy Trust Growth + Value Portfolio
(Portfolio Inception: 5/6/94) ..................... 14.65% N/A
Northstar Galaxy Trust High Yield Bond Portfolio
(Portfolio Inception: 5/6/94) ..................... 12.06% N/A
Northstar Galaxy Trust International Value Portfolio
(Portfolio Inception: 8/8/97) ..................... N/A N/A
Northstar Galaxy Trust Multi-Sector Bond Portfolio
(Portfolio Inception: 5/6/94) ..................... 9.07% N/A
OCC Equity Portfolio**
(Portfolio Inception: 8/1/88) ..................... 27.26% 19.54%
OCC Global Equity Portfolio
(Portfolio Inception: 3/1/95) ..................... 14.10% N/A
OCC Managed Portfolio**
(Portfolio Inception: 8/1/88) ..................... 22.77% 19.97%
OCC Small Cap Portfolio**
(Portfolio Inception: 8/1/88) ..................... 22.24% 14.62%
Putnam VT Growth and Income Fund
(Portfolio Inception: 2/1/88) ..................... 24.15% 18.86%
Putnam VT New Opportunities Fund
(Portfolio Inception: 5/2/94) ..................... 23.29% N/A
Putnam VT Voyager Fund
(Portfolio Inception: 2/1/88) ..................... 26.52% 19.25%
<CAPTION>
FOR THE 10-YEAR FOR THE PERIOD FROM DATE
PERIOD ENDED OF INCEPTION OF FUND
SUB-ACCOUNT 12/31/97 PORTFOLIO TO 12/31/97
- ---------------------------------------------------- ------------------- ---------------------------
<S> <C> <C>
Alger American Growth Portfolio
(Portfolio Inception: 1/9/89) ..................... N/A 19.43%
Alger American MidCap Growth Portfolio
(Portfolio Inception: 5/3/93) ..................... N/A 22.09%
Alger American Small Capitalization Portfolio
(Portfolio Inception: 9/21/88) .................... N/A 19.23%
Fidelity VIP Equity-Income Portfolio
(Portfolio Inception: 10/9/86) .................... 16.75% 14.66%
Fidelity VIP Growth Portfolio
(Portfolio Inception: 10/9/86) .................... 17.20% 15.56%
Fidelity VIP High Income Portfolio
(Portfolio Inception: 9/19/85) .................... 12.81% 12.45%
Fidelity VIP II Contrafund Portfolio
(Portfolio Inception: 1/3/95) ..................... N/A 28.17%
Fidelity VIP II Index 500 Portfolio
(Portfolio Inception: 8/27/92) .................... N/A 19.87%
Fidelity VIP II Investment Grade Bond Portfolio
(Portfolio Inception: 12/5/88) .................... N/A 8.29%
Janus Aggressive Growth Portfolio
(Portfolio Inception: 9/13/93) .................... N/A 19.21%
Janus Growth Portfolio
(Portfolio Inception: 9/13/93) .................... N/A 17.66%
Janus International Growth Portfolio
(Portfolio Inception: 5/2/94) ..................... N/A 19.31%
Janus Worldwide Growth Portfolio
(Portfolio Inception: 9/13/93) .................... N/A 22.90%
Neuberger Berman Advisers Management Trust Limited
Maturity Bond Portfolio
(Portfolio Inception:9/10/84) ..................... 7.07% 8.17%
Neuberger Berman Advisers Management Trust Partners
Portfolio
(Portfolio Inception: 3/22/94) .................... N/A 24.18%
Neuberger Berman Advisers Management Trust Socially
Responsive Portfolio
(Portfolio Inception: 8/19/98) .................... N/A N/A
Northstar Galaxy Trust Emerging Growth Portfolio*
(Portfolio Inception: 5/6/94) ..................... N/A 14.25%
Northstar Galaxy Trust Growth + Value Portfolio
(Portfolio Inception: 5/6/94) ..................... N/A 17.80%
Northstar Galaxy Trust High Yield Bond Portfolio
(Portfolio Inception: 5/6/94) ..................... N/A 12.61%
Northstar Galaxy Trust International Value Portfolio
(Portfolio Inception: 8/8/97) ..................... N/A 1.30%
Northstar Galaxy Trust Multi-Sector Bond Portfolio
(Portfolio Inception: 5/6/94) ..................... N/A 10.65%
OCC Equity Portfolio**
(Portfolio Inception: 8/1/88) ..................... N/A 17.62%
OCC Global Equity Portfolio
(Portfolio Inception: 3/1/95) ..................... N/A 17.08%
OCC Managed Portfolio**
(Portfolio Inception: 8/1/88) ..................... N/A 20.38%
OCC Small Cap Portfolio**
(Portfolio Inception: 8/1/88) ..................... N/A 15.46%
Putnam VT Growth and Income Fund
(Portfolio Inception: 2/1/88) ..................... N/A 16.64%
Putnam VT New Opportunities Fund
(Portfolio Inception: 5/2/94) ..................... N/A 22.78%
Putnam VT Voyager Fund
(Portfolio Inception: 2/1/88) ..................... N/A 18.08%
</TABLE>
SAI-6
<PAGE>
OTHER TOTAL RETURNS. From time to time, sales literature or advertisements
may quote average annual total returns for the Sub-Accounts that do not reflect
the Surrender Charge. Such performance information may quote average annual
total returns for periods during which the Sub-Accounts were operating and for
periods prior to the date the Sub-Accounts commenced operations. These returns
are calculated in exactly the same way as average annual total returns
described above, except that the ending redeemable value of the hypothetical
account for the period is replaced with an ending value for the period that
does not take into account any charges on amounts surrendered or withdrawn.
Such information is as follows:
RETURNS SINCE DATE SUB-ACCOUNTS COMMENCED OPERATIONS
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR
PERIOD ENDED PERIOD ENDED
SUB-ACCOUNT 12/31/97 12/31/97
- ------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Alger American Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Alger American MidCap Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Alger American Small Capitalization Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP Equity-Income Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP High Income Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP II Contrafund Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP II Index 500 Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP II Investment Grade Bond Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Janus Aggressive Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Janus Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Janus International Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Janus Worldwide Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Neuberger Berman Advisers Management Trust Limited Maturity
Bond Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Neuberger Berman Advisers Management Trust Partners Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Neuberger Berman Advisers Management Trust Socially
Responsive Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust Emerging Growth Portfolio*
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust Growth + Value Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust High Yield Bond Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust International Value Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust Multi-Sector Bond Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
OCC Equity Portfolio**
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
OCC Global Equity Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
OCC Managed Portfolio**
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
OCC Small Cap Portfolio**
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Putnam VT Growth and Income Fund
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Putnam VT New Opportunities Fund
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Putnam VT Voyager Fund
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
<CAPTION>
FOR THE 10-YEAR FOR THE PERIOD FROM
PERIOD ENDED DATE OF INCEPTION OF
SUB-ACCOUNT 12/31/97 SUB-ACCOUNT TO 12/31/97
- ------------------------------------------------------------- ----------------- ------------------------
<S> <C> <C>
Alger American Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Alger American MidCap Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Alger American Small Capitalization Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP Equity-Income Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP High Income Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP II Contrafund Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP II Index 500 Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Fidelity VIP II Investment Grade Bond Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Janus Aggressive Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Janus Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Janus International Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Janus Worldwide Growth Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Neuberger Berman Advisers Management Trust Limited Maturity
Bond Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Neuberger Berman Advisers Management Trust Partners Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Neuberger Berman Advisers Management Trust Socially
Responsive Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust Emerging Growth Portfolio*
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust Growth + Value Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust High Yield Bond Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust International Value Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Northstar Galaxy Trust Multi-Sector Bond Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
OCC Equity Portfolio**
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
OCC Global Equity Portfolio
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
OCC Managed Portfolio**
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
OCC Small Cap Portfolio**
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Putnam VT Growth and Income Fund
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Putnam VT New Opportunities Fund
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
Putnam VT Voyager Fund
(Sub-Account Inception: 12/31/98) .......................... N/A N/A
</TABLE>
SAI-7
<PAGE>
RETURNS INCLUDING PERIOD PRIOR TO DATE SUB-ACCOUNTS COMMENCED OPERATIONS
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR
PERIOD ENDED PERIOD ENDED
SUB-ACCOUNT 12/31/97 12/31/97
- ---------------------------------------------------- ------------------ ------------------
<S> <C> <C>
Alger American Growth Portfolio
(Portfolio Inception: 1/9/89) ..................... 23.93% 17.57%
Alger American MidCap Growth Portfolio
(Portfolio Inception: 5/3/93) ..................... 13.34% N/A
Alger American Small Capitalization Portfolio
(Portfolio Inception: 9/21/88) .................... 9.78% 11.03%
Fidelity VIP Equity-Income Portfolio
(Portfolio Inception: 10/9/86) .................... 26.26% 18.42%
Fidelity VIP Growth Portfolio
(Portfolio Inception: 10/9/86) .................... 21.70% 16.31%
Fidelity VIP High Income Portfolio
(Portfolio Inception: 9/19/85) .................... 15.96% 12.30%
Fidelity VIP II Contrafund Portfolio
(Portfolio Inception: 1/3/95) ..................... 22.35% N/A
Fidelity VIP II Index 500 Portfolio
(Portfolio Inception: 8/27/92) .................... 30.79% 18.19%
Fidelity VIP II Investment Grade Bond Portfolio
(Portfolio Inception: 12/5/88) .................... 7.48% 5.56%
Janus Aggressive Growth Portfolio
(Portfolio Inception: 9/13/93) .................... 11.03% N/A
Janus Growth Portfolio
(Portfolio Inception: 9/13/93) .................... 20.97% N/A
Janus International Growth Portfolio
(Portfolio Inception: 5/2/94) ..................... 16.79% N/A
Janus Worldwide Growth Portfolio
(Portfolio Inception: 9/13/93) .................... 20.39% N/A
Neuberger Berman Advisers Management Trust Limited
Maturity Bond Portfolio
(Portfolio Inception: 9/10/84) .................... 5.19% 4.10%
Neuberger Berman Advisers Management Trust Partners
Portfolio
(Portfolio Inception: 3/22/94) .................... 29.36% N/A
Neuberger Berman Advisers Management Trust Socially
Responsive Portfolio
(Portfolio Inception: 8/19/98) .................... N/A N/A
Northstar Galaxy Trust Emerging Growth Portfolio*
(Portfolio Inception: 5/6/94) ..................... 13.94% N/A
Northstar Galaxy Trust Growth + Value Portfolio
(Portfolio Inception: 5/6/94) ..................... 12.99% N/A
Northstar Galaxy Trust High Yield Bond Portfolio
(Portfolio Inception: 5/6/94) ..................... 8.59% N/A
Northstar Galaxy Trust International Value Portfolio
(Portfolio Inception: 8/8/97) ..................... N/A N/A
Northstar Galaxy Trust Multi-Sector Bond Portfolio
(Portfolio Inception: 5/6/94) ..................... 5.46% N/A
OCC Equity Portfolio**
(Portfolio Inception: 8/1/88) ..................... 24.80% 17.70%
OCC Global Equity Portfolio
(Portfolio Inception: 3/1/95) ..................... 12.37% N/A
OCC Managed Portfolio**
(Portfolio Inception: 8/1/88) ..................... 20.53% 18.16%
OCC Small Cap Portfolio**
(Portfolio Inception: 8/1/88) ..................... 20.48% 12.97%
Putnam VT Growth and Income Fund
(Portfolio Inception: 2/1/88) ..................... 22.36% 17.16%
Putnam VT New Opportunities Fund
(Portfolio Inception: 5/2/94) ..................... 21.51% N/A
Putnam VT Voyager Fund
(Portfolio Inception: 2/1/88) ..................... 24.69% 17.54%
<CAPTION>
FOR THE 10-YEAR FOR THE PERIOD FROM DATE
PERIOD ENDED OF INCEPTION OF FUND
SUB-ACCOUNT 12/31/97 PORTFOLIO TO 12/31/97
- ---------------------------------------------------- ------------------- ---------------------------
<S> <C> <C>
Alger American Growth Portfolio
(Portfolio Inception: 1/9/89) ..................... N/A 17.73%
Alger American MidCap Growth Portfolio
(Portfolio Inception: 5/3/93) ..................... N/A 20.35%
Alger American Small Capitalization Portfolio
(Portfolio Inception: 9/21/88) .................... N/A 17.54%
Fidelity VIP Equity-Income Portfolio
(Portfolio Inception: 10/9/86) .................... 15.09% 13.02%
Fidelity VIP Growth Portfolio
(Portfolio Inception: 10/9/86) .................... 15.53% 13.92%
Fidelity VIP High Income Portfolio
(Portfolio Inception: 9/19/85) .................... 11.20% 10.85%
Fidelity VIP II Contrafund Portfolio
(Portfolio Inception: 1/3/95) ..................... N/A 26.34%
Fidelity VIP II Index 500 Portfolio
(Portfolio Inception: 8/27/92) .................... N/A 18.15%
Fidelity VIP II Investment Grade Bond Portfolio
(Portfolio Inception: 12/5/88) .................... N/A 6.73%
Janus Aggressive Growth Portfolio
(Portfolio Inception: 9/13/93) .................... N/A 17.50%
Janus Growth Portfolio
(Portfolio Inception: 9/13/93) .................... N/A 15.97%
Janus International Growth Portfolio
(Portfolio Inception: 5/2/94) ..................... N/A 17.59%
Janus Worldwide Growth Portfolio
(Portfolio Inception: 9/13/93) .................... N/A 21.15%
Neuberger Berman Advisers Management Trust Limited
Maturity Bond Portfolio
(Portfolio Inception: 9/10/84) .................... 5.53% 6.62%
Neuberger Berman Advisers Management Trust Partners
Portfolio
(Portfolio Inception: 3/22/94) .................... N/A 22.39%
Neuberger Berman Advisers Management Trust Socially
Responsive Portfolio
(Portfolio Inception: 8/19/98) .................... N/A N/A
Northstar Galaxy Trust Emerging Growth Portfolio*
(Portfolio Inception: 5/6/94) ..................... N/A 12.60%
Northstar Galaxy Trust Growth + Value Portfolio
(Portfolio Inception: 5/6/94) ..................... N/A 16.11%
Northstar Galaxy Trust High Yield Bond Portfolio
(Portfolio Inception: 5/6/94) ..................... N/A 10.48%
Northstar Galaxy Trust International Value Portfolio
(Portfolio Inception: 8/8/97) ..................... N/A 0.66%
Northstar Galaxy Trust Multi-Sector Bond Portfolio
(Portfolio Inception: 5/6/94) ..................... N/A 8.49%
OCC Equity Portfolio**
(Portfolio Inception: 8/1/88) ..................... N/A 15.89%
OCC Global Equity Portfolio
(Portfolio Inception: 3/1/95) ..................... N/A 15.25%
OCC Managed Portfolio**
(Portfolio Inception: 8/1/88) ..................... N/A 18.63%
OCC Small Cap Portfolio**
(Portfolio Inception: 8/1/88) ..................... N/A 13.82%
Putnam VT Growth and Income Fund
(Portfolio Inception: 2/1/88) ..................... N/A 14.98%
Putnam VT New Opportunities Fund
(Portfolio Inception: 5/2/94) ..................... N/A 21.02%
Putnam VT Voyager Fund
(Portfolio Inception: 2/1/88) ..................... N/A 16.40%
</TABLE>
- ---------
SAI-8
<PAGE>
* The Northstar Galaxy Trust Emerging Growth Portfolio (formerly the Northstar
Galaxy Trust Income and Growth Portfolio) opearated under an investment
objective of seeking income balanced with capital appreciation from
inception through November 8, 1998, when the investment objective was
modified to seeking long-term capital appreciation.
** On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two
investment funds, the Old Trust and the present OCC Accumulation Trust (the
"Trust") at which time the Trust commenced operations. The total net assets
for the Equity, Managed, and Small Cap Portfolios immediately after the
transaction were $86,789,755, $682,601,380, and $139,812,573, respectively,
with respect to the Old Trust and for the Equity, Managed, and Small Cap
Portfolios, $3,764,598, $51,345,102, and $8,129,274, respectively with
respect to the Trust. For the period prior to September 14, 1994, the
performance figures for each of the Equity, Managed, and Small Cap
Portfolios reflect the performance of the corresponding Portfolios of the
Old Trust.
The Investment Funds have provided the total return information for the
Portfolios, including the Portfolio total return information used to calculate
the total returns of the Sub-Accounts for periods prior to the inception of the
Sub-Accounts. The Alger American Fund, Fidelity's Variable Insurance Products
Fund, Fidelity's Variable Insurance Products Fund II, Janus Aspen Series,
Neuberger&Berman Advisers Management Trust, OCC Accumulation Trust, and Putnam
Variable Trust are not affiliated with ReliaStar New York.
ReliaStar New York may disclose Cumulative Total Returns in conjunction
with the standard formats described above. The Cumulative Total Returns will be
calculated using the following formula:
CTR = ERV/P - 1
Where:
CTR = the Cumulative Total Return net of Sub-Account
recurring
charges for the period.
ERV = the ending redeemable value of the hypothetical
investment
at the end of the period.
P = a hypothetical single payment of $1,000.
EFFECT OF THE ANNUAL CONTRACT CHARGE ON PERFORMANCE DATA. The Contract
provides for a $30 Annual Contract Charge to be deducted annually at the end of
each Contract Year, from the Sub-Accounts and the Fixed Account based on the
proportion that the value of each such account bears to the total Contract
Value. For purposes of reflecting the Annual Contract Charge in yield and total
return quotations, the annual charge is converted into an annual charge per
$1,000 invested based on the Annual Contract Charges collected from the average
total assets of the Variable Account and Fixed Account during the calendar year
ending December 31, 1997.
COMPARATIVE ADVERTISING. In advertising and sales literature, the
performance of each Sub-Account may be compared to the performance of other
variable annuity issuers in general or to the performance of particular types
of variable annuities investing in mutual funds, or investment series of mutual
funds with investment objectives similar to each of the Sub-Accounts. Lipper
Analytical Services, Inc. ("Lipper") and the Variable Annuity Research Data
Service ("VARDS") are independent services which monitor and rank the
performance of variable annuity issuers in each of the major categories of
investment objectives on an industry-wide basis.
Lipper's rankings include variable life insurance issuers as well as
variable annuity issuers. VARDS rankings compare only variable annuity issuers.
The performance analyses prepared by Lipper and VARDS each rank such issuers on
the basis of total return, assuming reinvestment of distributions, but do not
take sales charges, redemption fees or certain expense deductions at the
separate account level into consideration. In addition, VARDS prepares risk
adjusted rankings, which consider the effects of market risk on total return
performance. This type of ranking provides data as to which funds provide the
highest total return within various categories of funds defined by the degree
of risk inherent in their investment objectives.
FINANCIAL STATEMENTS
The Variable Account had no assets as of December 31, 1998, and therefore
no financial statements are included.
ReliaStar New York's statements of financial condition as of December 31,
1997 and 1996, and the related statements of operations, shareholder's equity
and cash flows for the years ended December 31, 1997 and 1996 which are
incorporated by reference in this Statement of Additional Information, should
be considered only as bearing on ReliaStar New York's ability to meet its
obligations under the Contracts. They should not be considered as bearing on
the investment performance of the assets held in the Variable Account.
SAI-9
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF RELIASTAR FINANCIAL CORP.)
INDEPENDENT AUDITORS' REPORT*
BALANCE SHEETS*
STATEMENTS OF INCOME*
STATEMENTS OF SHAREHOLDER'S EQUITY*
STATEMENTS OF CASH FLOWS*
NOTES TO FINANCIAL STATEMENTS*
DECEMBER 31, 1997
- ---------
* Incorporated by reference to Depositor's Form S-6 Registration Statement of
ReliaStar Life Insurance Company of New York Variable Life Separate Account
I, File No. 333-19123, filed April 27, 1998.
SAI-10
