As filed with the Securities and Exchange Commission on September 1, 2000
File No. 333-
File No. 811-10061
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.__ [_]
Post-Effective Amendment No. ___ [_]
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 1 [X]
THE SAGE VARIABLE ANNUITY ACCOUNT A-NY
(Exact Name of Registrant)
SAGE LIFE ASSURANCE COMPANY OF NEW YORK
(Name of Depositor)
70 West Red Oak Lane
White Plains, NY 10604
(Address of Depositor's Principal Executive Offices)
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Depositor's Telephone Number: (203) 602-6500
James F. Bronsdon
Sage Life Assurance Company of New York
70 West Red Oak Lane
White Plains, NY 10604
(Name and Address of Agent for Service of Process)
Copy to:
Lynn K. Stone
Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this filing.
Title of Securities: Interests in a separate account under flexible payment
deferred variable annuity contracts.
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.
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CROSS REFERENCE SHEET
(required by Rule 495)
Item No. Location
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PART A
Item 1. Cover Page . . . . . . . . . . . . . . Cover Page
Item 2. Definitions . . . . . . . . . . . . . Index of Terms
Item 3. Synopsis . . . . . . . . . . . . . . . Profile
Item 4. Condensed Financial Information . . . Not Applicable
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Item 5. General Description of Registrant,
Depositor, and Portfolio Companies . . What Are My Investment Options?
What Other Information Should I Know?
Additional Information About Sage Life
Assurance Company of New York
Item 6. Deductions and Expenses. . . . . . . . What Are The Expenses Under a Contract?
Item 7. General Description of Variable
Annuity Contracts. . . . . . . . . . . What Are The Contracts?
Item 8. Annuity Period . . . . . . . . . . . . What Are My Income Payment Options?
Item 9. Death Benefit. . . . . . . . . . . . . Does The Contract Have A Death Benefit?
Item 10. Purchases and Contract Value . . . . . How Do I Purchase a Contract?; What Are
My Investment Options? - Values under
Your Contract
Item 11. Redemptions. . . . . . . . . . . . . . How Do I Access My Money?
Item 12. Taxes. . . . . . . . . . . . . . . . . How Will My Contract Be Taxed?
Item 13. Legal Proceedings. . . . . . . . . . . What Other Information Should I Know? -
Legal Proceedings
Item 14. Table of Contents of the Statement of
Additional Information . . . . . . . . Table Of Contents Of The Statement of
Additional Information
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CROSS REFERENCE SHEET
(required by Rule 495)
Item No. Location
-------- -----------------------
PART B
Item 15. Cover Page . . . . . . . . . . . . . . Cover Page
Item 16. Table of Contents. . . . . . . . . . . Table of Contents
Item 17. General Information and History. . . . General Information and History
Item 18. Services . . . . . . . . . . . . . . . Not Applicable
Item 19. Purchase of Securities Being Offered . Not Applicable
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Item 20. Underwriters . . . . . . . . . . . . . Underwriter
Item 21. Calculation of Performance Data. . . . Calculation of Historical Performance Data
Item 22. Annuity Payments . . . . . . . . . . . Income Payment Provisions
Item 23. Financial Statements . . . . . . . . . Financial Statements
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PART A
PROFILE DATED __________, 2000
FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED AND
VARIABLE ANNUITY CONTRACTS
Issued By
THE SAGE VARIABLE ANNUITY ACCOUNT A-NY AND
SAGE LIFE ASSURANCE COMPANY OF NEW YORK
This Profile is a summary of some important points that you
should know and consider before purchasing a Contract. The
Contract is more fully described in the full Prospectus that
accompanies this Profile. Please read that Prospectus carefully.
"We," "us," "our," "Sage Life-NY" or the "Company" refer to Sage Life
Assurance Company of New York. "You" and "your" refer to the Owner of a
Contract.
1. What Are The Contracts?
The Contracts are flexible payment fixed and variable annuity contracts
offered by Sage Life Assurance Company of New York. Your Contract is a contract
between you, the Owner, and us, Sage Life-NY.
We designed the Contract for use in your long-term financial and retirement
planning. It provides a means for allocating amounts on a tax-deferred basis to
our Variable Account and our Fixed Account.
Investment Flexibility. You can invest among over 30 subdivisions of our
Variable Account, known as "Variable Sub-Accounts," each corresponding to a
different Fund. These Funds, listed in Section 4, are professionally managed and
use a broad range of investment strategies (growth and income, aggressive
growth, etc.), styles (growth, value, etc.) and asset classes (stocks, bonds,
international, etc.). You can select a mix of Funds to meet your financial and
retirement needs and objectives, tolerance for risk, and view of the market.
Amounts you invest in these Funds will fluctuate daily based on underlying
investment performance. So, the value of your investment may increase or
decrease.
Through our Fixed Account, you can invest to receive guaranteed rates of
interest for periods we offer up to 10 years ("Guarantee Periods"). We also
guarantee your principal while it remains in our Fixed Account. However, if
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you decide to surrender your Contract, or transfer or access amounts in the
Fixed Account before the end of a Guarantee Period you have chosen, we
ordinarily will apply a Market Value Adjustment. This adjustment reflects
changes in prevailing interest rates since your allocation to the Fixed Account.
The Market Value Adjustment may result in an increase or decrease in the amounts
surrendered, transferred, or accessed.
As your needs or financial or retirement goals change, your investment mix can
change with them. You may transfer amounts among any of the investment choices
in our Fixed or Variable Accounts while continuing to defer current income
taxes.
Safety of Separate Accounts. Significantly, both our Fixed and Variable
Accounts are separate investment accounts of Sage Life-NY. This provides you
with an important safety feature: we cannot charge the assets supporting your
allocations to these Accounts with liabilities arising out of any other business
we may conduct.
The Contract also provides you with other important features, including a
death benefit, access to your money, and income plan options.
Access to Amounts Invested. The Contract provides access to your investment
should you need it. During the savings, or Accumulation Phase, your investment
grows tax-free until withdrawn. You decide how much to take and when to take it
(certain restrictions apply after the Accumulation Phase).
Ordinarily, once you access earnings, they are taxed as income. If you access
earnings before you are 59 1/2 years old, you may have to pay an additional 10%
federal tax penalty. Amounts you surrender or withdraw may be subject to a
Market Value Adjustment (positive or negative) if you take the amount from the
Fixed Account before the end of the applicable Guarantee Period.
Protection for Your Beneficiaries. The Contract also provides a death benefit
feature to protect your family should you die during the Accumulation Phase. In
the event of your untimely death, the Beneficiary of your choice will never
receive less than you have invested in the Contract, and may even receive more.
Your Beneficiary decides, within certain federal tax required limitations, how
to receive the death benefit. Or, if your Beneficiary is your spouse, he or she
may take over the Contract and continue deferring taxes on any gain. Your
spouse's starting Account Value would equal any death benefits payable.
Income Payments. The payout, or Income Phase, of your Contract begins when you
inform us you want to start receiving regular income payments under one of the
various income plans we offer. The amount you accumulated during the
Accumulation Phase determines the amount of income payments you receive during
the Income Phase. You can use your Account Value to provide income payments that
are guaranteed, or income payments that vary with underlying investment
performance, or a combination of both. The income payments can be for life,
which means you can't outlive them!
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A portion of each income payment is ordinarily considered a return of your
investment in the Contract. So, until you recover all of your investment in the
Contract, only the portion in excess of this amount is taxed as income. Other
tax consequences may apply to Qualified Contracts.
Optional Riders. Subject to state availability and for an additional charge,
you may elect either or both optional riders offering a guaranteed minimum
income benefit and an enhanced death benefit. These riders can provide
additional benefits that we discuss under "What Are My Income Payment Options"
and "Does the Contract Have A Death Benefit."
2. What Are My Income Payment Options?
Once the Income Phase of your Contract begins, we apply your Account Value
(adjusted for any market value adjustment) to provide you with regular income
payments.
You can tailor your income to meet your needs by choosing from five different
income plans described below. In explaining the income plans, we are assuming
that you designate yourself as the Annuitant. Of course, you always can
designate someone other than yourself as Annuitant.
Income Plan 1--Life Annuity: You will receive payments for your life.
Income Plan 2--Life Annuity with 10 or 20 Years Certain: You will receive
payments for your life. However, if you die before the end of the guaranteed
certain period you select (10 or 20 years), your Beneficiary will receive the
payments for the remainder of that period.
Income Plan 3--Joint and Last Survivor Annuity: We will make payments
as long as either you or a second person you select (such as your spouse) is
alive.
Income Plan 4--Payments for a Specified Period Certain: You will receive
payments for the number of years you select. However, if you die before the
end of that period, your Beneficiary will receive the payments for the
remainder of the guaranteed certain period.
Income Plan 5--Annuity Plan: You can use your Account Value to purchase any
other income plan we offer at the time you want to begin receiving regular
income payments for which you and the Annuitant are eligible.
You tell us how much of your Account Value to apply to fixed income payments
and to variable income payments. During the Income Phase, you still have all of
the investment choices you had during the Accumulation Phase. However, we
currently limit transfers among your investment choices.
We will allocate the amount of Account Value you apply to provide fixed income
payments to the Fixed Account and invest it in the Guarantee Periods you select.
We guarantee the amount of each income payment, and the amount of each payment
will remain level throughout the period you select.
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We will allocate the amount of Account Value you apply to provide variable
income payments to the Variable Account and invest it in the Funds you select.
The amount of each income payment will vary according to the investment
performance of those Funds.
Optional Guaranteed Minimum Income Benefit. Subject to availability in your
state, at issue, if you are 80 or younger, you may ensure that guaranteed
minimum lifetime income payments are available on your Income Date by electing
the Guaranteed Minimum Income Benefit. You must satisfy the conditions set forth
in the rider to receive the benefit, and there are charges associated with the
benefit. Once you elect the Guaranteed Minimum Income Benefit, you cannot cancel
it.
3. How Do I Purchase A Contract?
In most cases, you may purchase a Contract with $25,000 or more through an
authorized registered representative.
In addition, subject to special rules for Contracts used in connection with
tax-qualified retirement plans, you can make additional purchase payments of
$1,000 or more to your Contract at any time during the Accumulation Phase.
4. What Are My Investment Options?
There are over 40 investment options under the Contracts available through our
Variable and Fixed Accounts. These choices are professionally managed and allow
for a broad range of investment strategies, styles and asset classes. Additional
investment options may be available in the future.
Through our Variable Account you can choose to invest your money in one or
more of the Variable Sub-Accounts investing in the following Funds:
AIM Variable Insurance Funds
. AIM V.I. Government Securities Fund
. AIM V.I. Growth and Income Fund
. AIM V.I. International Equity Fund
. AIM V.I. Value Fund
The Alger American Fund
. Alger American MidCap Growth Portfolio
. Alger American Income and Growth Portfolio
. Alger American Small Capitalization Portfolio
Liberty Variable Investment Trust
<PAGE>
. Colonial High Yield Securities Fund, Variable Series
. Colonial Small Cap Value Fund, Variable Series
. Colonial Strategic Income Fund, Variable Series
. Colonial U.S. Growth and Income Fund, Variable Series
. Liberty All-Star Equity Fund, Variable Series
. Newport Tiger Fund, Variable Series
. Stein Roe Global Utilities Fund, Variable Series
SteinRoe Variable Investment Trust
. Stein Roe Growth Stock Fund, Variable Series
. Stein Roe Balanced Fund, Variable Series
MFS(R) Variable Insurance Trust SM
. MFS Growth With Income Series
. MFS High Income Series
. MFS Research Series
. MFS Total Return Series
. MFS Capital Opportunities Series
The Universal Institutional Funds, Inc.
. The Global Equity Portfolio
. The Mid Cap Value Portfolio
. The Value Portfolio
Oppenheimer Variable Account Funds
. Oppenheimer Bond Fund/VA
. Oppenheimer Capital Appreciation Fund/VA
. Oppenheimer Small Cap Growth Fund/VA
Sage Life Investment Trust
. EAFE(R) Equity Index Fund
. S&P 500 Equity Index Fund
. Money Market Fund
. Nasdaq - 100 Index(R) Fund
. All-Cap Growth Fund
T. Rowe Price Equity Series, Inc.
. T. Rowe Price Equity Income Portfolio
. T. Rowe Price Mid-Cap Growth Portfolio
. T. Rowe Price Personal Strategy Balanced Portfolio
The prospectuses for the Trusts describe the Funds in detail. These Funds do
not provide any performance guarantees, and their values will increase or
decrease depending upon investment performance.
Through our Fixed Account you can choose to invest your money in one or more
of the different Guarantee Periods we offer. We guarantee your principal and
interest rate when your investment is left in the Guarantee Period until it
ends. You currently can choose periods of 1, 2, 3, 4, 5, 7, and 10 years. We may
offer different guarantee periods for our Dollar Cost Averaging ("DCA") Fixed
Sub-Accounts. However, if you decide to surrender your Contract, or transfer or
access amounts before the end of a period you have chosen, we ordinarily will
apply a Market Value Adjustment. This Adjustment may be positive or negative
depending upon current interest rates.
5. What Are The Expenses Under A Contract?
The Contract has insurance and investment features. Each has related costs.
Below is a brief summary of the Contract's charges:
Annual Administration Charge--During the first seven Contract Years only, we
will deduct an annual $30 administration charge. However, there is no charge if,
at the time of deduction, your Account Value is at least $50,000.
Asset-Based Charges--Each month, we deduct Asset-Based Charges for mortality
and expense risks and for certain administrative costs from the amounts you
allocate to the Variable Account. The maximum charges equal, on an annual basis,
1.40% of your Variable Account Value.
Surrender Charge None. There are no surrender charges under the Contract.
Purchase Payment Tax Charge--We will deduct any state premium or local tax
that we incur from your Account Value. We reserve the right to defer collection
of this charge and deduct it against your Account Value when you surrender your
Contract, make an Excess Withdrawal, or begin receiving regular income payments.
This tax charge currently ranges from 0% to 3.5% depending upon the state or
locality. We currently do not intend to deduct this charge on or after the
eighth Contract Year.
Optional Rider Charges--If you choose one or both of the optional benefit
riders we offer, we will deduct a separate charge on the Contract Date and
monthly thereafter. We deduct the rider charges proportionately from the
Variable and Fixed Sub-Accounts in which you are invested. On an annual basis,
the charge for the Guaranteed Minimum Income Benefit is 0.20% of Account Value.
On an annual basis, the charge for the Enhanced Death Benefit is 0.20% of
Account Value.
Fund Fees and Expenses--There are also Fund fees and expenses that are based
on the average daily value of the Funds. Currently, these Fund fees and expenses
range on an annual basis from .55% to 1.34%, depending upon the Fund.
Sage Life-NY's business philosophy rewards our long-term customers. So, after
the seventh Contract Year we
. eliminate the Annual Administration Charge, and
. eliminate the Purchase Payment Tax Charge, if any.
This means more of your investment is working for you over the long term!
The following chart is designed to help you understand expenses under the
Contract.
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Total Total Examples of Examples of
Annual Annual Total Total Expenses Total Expenses
Insurance Fund Annual Paid at the Paid at the End
Fund Charges Charges Charges End of 1 Year of 10 Years
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AIM Variable Insurance
Funds:
AIM V.I. Government
Securities Fund...... 1.40% 0.90% 2.30%
AIM V.I. Growth and
Income Fund.......... 1.40 0.77 2.17
AIM V.I. International
Equity Fund.......... 1.40 0.97 2.37
AIM V.I. Value Fund... 1.40 0.76 2.16
The Alger American Fund:
Alger American MidCap
Growth Portfolio..... 1.40 0.85 2.25
Alger American Income
and Growth
Portfolio............ 1.40 0.70 2.10
Alger American Small
Capitalization
Portfolio............ 1.40 0.90 2.30
Liberty Variable
Investment Trust:
Colonial High Yield
Securities Fund,
Variable Series...... 1.40 0.80 2.20
Colonial Small Cap
Value Fund, Variable
Series............... 1.40 1.00 2.40
Colonial Strategic
Income Fund, Variable
Series............... 1.40 0.75 2.15
Colonial U.S. Growth
and Income Fund,
Variable Series...... 1.40 0.88 2.28
Liberty All-Star
Equity Fund, Variable
Series............... 1.40 0.95 2.35
Newport Tiger Fund,
Variable Series...... 1.40 1.21 2.61
Stein Roe Global
Utilities Fund,
Variable Series...... 1.40 0.77 2.17
SteinRoe Variable
Investment Trust:
Stein Roe Growth Stock
Fund, Variable
Series............... 1.40 0.67 2.07
Stein Roe Balanced
Fund, Variable
Series............... 1.40 0.62 2.02
MFS(R) Variable
Insurance Trust SM:
MFS Growth With Income
Series............... 1.40 0.88 2.28
MFS High Income
Series............... 1.40 0.91 2.31
MFS Research Series... 1.40 0.86 2.26
MFS Total Return
Series............... 1.40 0.90 2.30
MFS Capital
Opportunities
Series............... 1.40 0.91 2.31
The Universal
Institutional Funds,
Inc.:
The Global Equity
Portfolio............ 1.40 1.15 2.55
The Mid Cap Value
Portfolio............ 1.40 1.05 2.45
The Value Portfolio... 1.40 0.85 2.25
Oppenheimer Variable
Account Funds:
Oppenheimer Bond
Fund/VA.............. 1.40 0.73 2.13
Oppenheimer Capital
Appreciation
Fund/VA.............. 1.40 0.70 2.10
Oppenheimer Small Cap
Growth Fund/VA....... 1.40 1.34 2.74
Sage Life Investment
Trust:
EAFE(R) Equity Index
Fund................. 1.40 0.90 2.30
S&P 500 Equity Index
Fund................. 1.40 0.55 1.95
Money Market Fund..... 1.40 0.65 2.15
Nasdaq - 100 Index (R)
Fund 1.40 0.85 2.25
All-Cap Growth Fund 1.40 1.10 2.50
T. Rowe Price Equity
Series, Inc.:
T. Rowe Price Equity
Income Portfolio..... 1.40 0.85 2.25
T. Rowe Price Mid-Cap
Growth Portfolio..... 1.40 0.85 2.25
T. Rowe Price Personal
Strategy Balanced
Portfolio............ 1.40 0.90 2.30
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The above chart does not reflect expenses under the Contract if you elected the
Guaranteed Minimum Income Benefit and the Enhanced Death Benefit. If you choose
one or both benefits, your expenses will be higher.
Below is an explanation of what we included in each column of the chart:
The column "Total Annual Insurance Charges" shows the sum of the Asset-
Based Charges and the Annual Administration Charge (for purposes of the chart,
we assume the average Account Value is $50,000 and the Annual Administration
Charge is therefore not applicable).
The column "Total Annual Fund Charges" shows the fees and expenses for each
Fund.
The charges shown for the following funds reflect any expense reimbursement
or waiver:
. Liberty Variable Investment Trust:
Colonial High Yield Securities Fund, Variable Series and Colonial Small Cap
Value Fund, Variable Series.
. MFS(R) Variable Insurance Trust:SM
MFS Capital Opportunity Series and MFS High Income Series.
. The Universal Institutional Funds, Inc.:
The Global Equity Portfolio; The Mid Cap Value Portfolio; and The Value
Portfolio.
. Sage Life Investment Trust:
EAFE(R) Equity Index Fund; S&P 500 Equity Index Fund; Money Market Fund;
Nasdaq - 100 Index (R) Fund; and All-Cap Growth Fund.
The charges for Sage Life Trust's NASDAQ - 100 INDEX Fund and All-Cap Growth
Fund are based on the estimated expenses that those Funds expect to incur in
their initial fiscal year.
The column "Total Annual Charges" shows the sum of "Total Annual Insurance
Charges" and "Total Annual Fund Charges."
The last two columns show you examples of the charges, in dollars, you could
pay under a Contract for each $1,000 you invested in that Fund. The example
assumes that your Contract earns 5% annually before charges.
For more information about expenses under a Contract, please refer to the "Fee
Table" in the full Prospectus that accompanies this Profile.
6. How Will My Contract Be Taxed?
During the Accumulation Phase, your earnings are not taxed unless you take
them out. If you take money out, earnings come out first and are taxed as
income. If you are younger than 59 1/2 when you take money out, you also may be
charged a 10% federal tax penalty on the withdrawn earnings.
Income payments during the Income Phase are considered partly a return of your
original investment. That part of each payment is not taxable as income.
However, once you have recovered all of your original investment, income
payments then will be fully taxable.
Special tax rules apply to withdrawals from Qualified Contracts, including the
Roth IRA.
7. How Do I Access My Money?
There are a number of ways to withdraw money from your Contract. You can
tailor your income to meet your near-term or lifelong liquidity needs.
During the Accumulation Phase, if you want to take money out of your Contract,
you can choose among several different options.
. You can withdraw some of your money.
. You can surrender your Contract and take all of your money.
. You can withdraw money using our systematic partial withdrawal program.
. You can apply your Account Value to an income plan.
If you take the amounts from the Fixed Account before the end of a Guarantee
Period, we ordinarily will apply a Market Value Adjustment. If you are younger
than 59 1/2 when you take money out, you may owe a 10% federal tax penalty in
addition to the income tax that will apply to any gain in your Contract. Please
remember that withdrawals will reduce your death benefit by the proportion that
the withdrawal reduces your Account Value.
Once you start receiving regular income payments and if you selected the
"payments for a specified period certain" income plan, you may request a full or
partial withdrawal.
8. How Is Contract Performance Presented?
As of the date of this Profile, the Variable Account had not commenced
operations. However, certain of the Funds had commenced operations before the
date of this Profile. For those Funds, non-standard performance is shown.
Non-standard performance data is data that reflects past performance of the
Funds as adjusted for the Contract expenses and deductions discussed above,
except for the purchase payment tax charge. If applied, this charge would reduce
the performance figures shown.
Please remember that the performance data represents past performance. Amounts
you invest in the Variable Account will fluctuate daily based on underlying Fund
investment performance, so the value of your investment may increase or
decrease.
[Chart to be filed by Amendment.]
9. Does The Contract Have A Death Benefit?
Your Contract provides a death benefit for your Beneficiary.
We will pay the death benefit to the Beneficiary of your choice in the event
of your untimely death prior to the Income Phase. This provides comfort knowing
your Beneficiary will receive the greatest of the following:
. the current Account Value on the date we receive proof of death;
. the sum of all purchase payments you have invested in your Contract, reduced
proportionately by the amount that any withdrawals you have made (including
any associated Market Value Adjustment incurred) reduced Account Value;
. the highest anniversary value on or before you reach age 80; or
. the surrender value.
We determine the highest anniversary value in the following manner. When we
receive proof of death, we will calculate an anniversary value for each Contract
Anniversary before the date of the Owner's death, but not beyond the Owner's
attained age 80. An anniversary value for a Contract Anniversary equals (1) the
Account Value on that Contract Anniversary, (2) increased by the dollar amount
of any purchase payments made since the Contract Anniversary, and (3) reduced
proportionately by any withdrawals (including any associated Market Value
Adjustment incurred) taken since that Contract Anniversary. (By proportionately,
we take the percentage by which the withdrawal decreases the Account Value and
we reduce the sum of (1) and (2) by that percentage.) The greatest of these
anniversary values is your highest anniversary value.
Optional Enhanced Death Benefit. Subject to availability in your state, at
issue, if you are 79 or younger, you may supplement the basic death benefit by
electing the Enhanced Death Benefit. You must satisfy the conditions set forth
in the rider to receive the benefit, and there are charges associated with the
benefit. Once you elect the Enhanced Death Benefit, you may not cancel it.
10. What Other Information Should I Know?
The Contract has several additional features available to you at no additional
charge:
Free Look Right: You have the right to return your Contract to us at our
Customer Service Center or to the registered representative who sold it to you,
and have us cancel the Contract. You must return the Contract within a certain
number of days specified by your state (usually 10) from the date you received
the Contract.
If you exercise this right, we will cancel your Contract as of the Business
Day we receive it. We will send you a refund equal to your Account Value plus
any Asset-Based Charges and Purchase Payment Tax Charges we have deducted in
arriving at the Account Value on or before the date we received the returned
Contract. If you have purchased the Contract as an IRA, we are required to
refund your purchase payment if you decide to cancel your Contract within
10 days after receiving it (or whatever period is required).
Dollar-Cost Averaging Program: Under our optional Dollar-Cost Averaging
Program, you may transfer a set dollar amount systematically from the Money
Market Sub-Account and/or from specially designated Fixed Sub-Accounts (the "DCA
Fixed Sub-Accounts") to any other Variable Sub-Account, subject to certain
limitations. By investing the same amount on a regular basis, you don't have to
worry about timing the market. Since you invest the same amount each period, you
automatically acquire more units when market values fall and fewer units when
they rise. The potential benefit is to lower your average cost per unit. This
strategy does not guarantee that any Fund will gain in value. It also will not
protect against a decline in value if market prices fall. However, if you
can continue to invest regularly throughout changing market conditions,
this program can be an effective way to help meet your long-term or
retirement goals. Due to the effect of interest that continues to be paid on
the amount remaining in the Money Market Sub-Account or the DCA Fixed Sub-
Account, the amounts that we transfer will vary slightly from month to month.
Asset Allocation Program: An optional Asset Allocation Program is available if
you do not wish to make your own investment decisions. This investment planning
tool is designed to find an asset mix that attempts to achieve the highest
expected return based upon your tolerance for risk, and consistent with your
needs and objectives. Bear in mind that the use of an asset allocation model
does not guarantee investment results.
Automatic Portfolio Rebalancing Program: Our optional Automatic Portfolio
Rebalancing Program can help prevent a well-conceived investment strategy from
becoming diluted over time. Investment performance will likely cause the
allocation percentages you originally selected to shift. With this program, you
can instruct us to automatically rebalance your Variable Sub-Account allocations
to your original percentages on a quarterly, semi-annual, or annual basis. Money
invested in the Fixed Account is not part of this program.
11. How Can I Make Inquiries?
If you need further information about the Contracts, please contact an
authorized registered representative or write or call us at our Customer Service
Center. The address and telephone number of our Customer Service Center office
is P.O. Box 290680, Wethersfield, CT 06129-0680 and (877) 835- 7243 (Toll Free).
PROSPECTUS DATED ________, 2000
FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED
AND VARIABLE ANNUITY CONTRACTS
ISSUED BY
THE SAGE VARIABLE ANNUITY ACCOUNT A-NY AND
SAGE LIFE ASSURANCE COMPANY OF NEW YORK
Executive Office: Customer Service Center:
70 West Red Oak Lane P.O. Box 290680
White Plains, NY 10604 Wethersfield, CT 06129-
0680
Telephone: (877) 835-7243
<PAGE>
(Toll Free)
This Prospectus describes flexible payment deferred combination fixed and
variable annuity contracts for individuals and groups offered by Sage Life
Assurance Company of New York. We designed the Contracts for use in your long-
term financial and retirement planning. The Contracts provide a means for
investing on a tax-deferred basis in our Variable Account and our Fixed Account.
You can purchase a Contract by making a minimum initial purchase payment. After
purchase, you determine the amount and timing of any additional purchase
payments.
You may allocate purchase payments and transfer Account Value to our Variable
Account and/or our Fixed Account within certain limits. The Variable Account has
over 30 Sub-Accounts. Through our Fixed Account, you can choose to invest your
money in one or more of 7 different Guarantee Periods.
Each Variable Sub-Account invests in a corresponding Fund of the following
Trusts (collectively, the "Trusts"):
. AIM Variable Insurance Funds
. The Alger American Fund
. Liberty Variable Investment Trust
. SteinRoe Variable Investment Trust
. MFS(R) Variable Insurance Trust SM
. The Universal Institutional Funds, Inc.
. Oppenheimer Variable Account Funds
. Sage Life Investment Trust
. T. Rowe Price Equity Series, Inc.
Your Account Value will vary daily with the investment performance of the
Variable Sub-Accounts and any interest we credit under our Fixed Account. We do
not guarantee any minimum Account Value for amounts you allocate to the Variable
Account. We do guarantee principal and a minimum fixed rate of interest for
specified periods of time on amounts you allocate to the Fixed Account. However,
amounts you withdraw, surrender, transfer, or apply to an income plan from the
Fixed Account before the end of an applicable Guarantee Period ordinarily will
be subject to a Market Value Adjustment, which may increase or decrease these
amounts.
The Statement of Additional Information contains more information about the
Contracts and the Variable Account, is dated the same as this Prospectus, and is
incorporated herein by reference. The Table of Contents for the Statement of
Additional Information is found on page __ of this Prospectus. We filed it with
the Securities and Exchange Commission. You may obtain a copy of the Statement
of Additional Information free of charge by contacting our Customer Service
Center, or by accessing the Securities and Exchange Commission's website at
http://www.sec.gov.
This Prospectus includes basic information about the Contracts that you should
know before investing. Please read this Prospectus carefully and keep it for
future reference. The Trust prospectuses contain important information about the
Funds. Your registered representative can provide these prospectuses to
<PAGE>
you before you invest.
The Securities and Exchange Commission has not approved these Contracts or
determined if this Prospectus is accurate or complete. Any representation to the
contrary is a criminal offense.
Variable annuity contracts are not deposits or obligations of, or endorsed or
guaranteed by, any bank, nor are they federally insured or otherwise protected
by the FDIC, the Federal Reserve Board, or any other agency; they are subject to
investment risks, including possible loss of principal.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Index of Terms.............................................................
Fee Table..................................................................
1.What Are The Contracts?..................................................
Your Options...........................................................
Transfers..............................................................
2.What Are My Income Payment Options?......................................
Your Choices...........................................................
Income Payment Amounts.................................................
Optional Guaranteed Minimum Income Benefit Rider.......................
3.How Do I Purchase A Contract?............................................
Initial Purchase Payment...............................................
Issuance of a Contract.................................................
Free Look Right to Cancel Your Contract................................
Making Additional Purchase Payments....................................
When We May Cancel Your Contract.......................................
4.What Are My Investment Options?..........................................
Purchase Payment Allocations...........................................
Variable Sub-Account Investment Options................................
Fixed Account Investment Options.......................................
Transfers..............................................................
Transfer Programs......................................................
Values Under Your Contract.............................................
5.What Are The Expenses Under A Contract?..................................
Annual Administration Charge...........................................
Transfer Charge........................................................
Asset-Based Charges....................................................
Purchase Payment Tax Charge............................................
Fund Annual Expenses...................................................
Additional Information.................................................
6.How Will My Contract Be Taxed?...........................................
Introduction...........................................................
Taxation of Non-Qualified Contracts....................................
Taxation of a Qualified Contract.......................................
<PAGE>
Transfers, Assignments, or Exchanges of a Contract.....................
Possible Tax Law Changes...............................................
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.How Do I Access My Money?................................................
Withdrawals............................................................
Requesting Payments....................................................
8.How Is Contract Performance Presented?...................................
Yield..................................................................
Total Return...........................................................
Performance/Comparisons................................................
9.Does The Contract Have A Death Benefit?..................................
Owner's Death Before the Income Date...................................
Owner's or Annuitant's Death After the Income Date.....................
Optional Enhanced Death Benefit Rider..................................
Proof of Death.........................................................
10.What Other Information Should I Know?...................................
Separate Accounts......................................................
Modification...........................................................
Distribution of the Contracts..........................................
Experts................................................................
Legal Proceedings......................................................
Reports to Contract Owners.............................................
Authority to Make Agreements...........................................
Financial Statements...................................................
11.How Can I Make Inquiries?...............................................
12.Additional Information About Sage Life Assurance Company of New York....
History and Business...................................................
Management's Discussion and Analysis of Financial Condition............
Table Of Contents Of The Statement Of Additional Information...............
Appendix A - Market Value Adjustment.......................................
Appendix B - Dollar Cost Averaging Program.................................
Appendix C - Guaranteed Minimum Income Benefit.............................
Appendix D - Enhanced Death Benefit........................................
</TABLE>
This Prospectus does not constitute an offering in any jurisdiction in which
such offering may not lawfully be made.
<PAGE>
INDEX OF TERMS
We tried to make this Prospectus as readable and understandable as possible.
<PAGE>
To help you to understand how the Contract works, we have used certain terms
with special meanings. We define these terms below.
Account Value--The Account Value is the entire amount we hold under your
Contract during the Accumulation Phase. It equals the sum of your Variable
Account Value and Fixed Account Value.
Accumulation Phase--The Accumulation Phase is the period during which you
accumulate savings under your Contract.
Accumulation Unit--An Accumulation Unit is the unit of measure we use before
the Income Date to keep track of the value of each Variable Sub-Account.
Annuitant--The Annuitant is the natural person whose age determines the
maximum Income Date and the amount and duration of income payments involving
life contingencies. The Annuitant may also be the person to whom we will make
any payment starting on the Income Date.
Asset-Based Charges--The Asset-Based Charges are charges for mortality and
expense risks and for administrative costs assessed monthly against the assets
of the Variable Account. After the Income Date, we call these charges Variable
Sub-Account Charges and deduct them daily from the assets of the Variable
Account.
Beneficiary--The Beneficiary is the person or persons to whom we pay a death
benefit if any Owner dies before the Income Date.
Business Day--A Business Day is any day the New York Stock Exchange ("NYSE")
is open for regular trading exclusive of (i) Federal holidays, (ii) any day on
which an emergency exists making the disposal or fair valuation of assets in the
Variable Account not reasonably practicable, and (iii) any day on which the
Securities and Exchange Commission ("SEC") permits a delay in the disposal or
valuation of assets in the Variable Account.
Contracts--The Contracts are flexible payment deferred combination fixed and
variable annuity contracts. In some jurisdictions, we may issue the Contracts
directly to individuals. In New York, however, the Contracts are only available
as a group contract. We issue a group Contract to or on behalf of a group.
Individuals who are part of a group to which we issue a Contract receive a
certificate that recites substantially all of the provisions of the group
Contract. Throughout this Prospectus and unless otherwise stated, the term
"Contract" refers to individual Contracts, group Contracts, and certificates for
group Contracts.
Contract Anniversary--A Contract Anniversary is each anniversary of the
Contract Date.
Contract Date--The Contract Date is the date an individual Contract or a
certificate for a group Contract is issued at our Customer Service Center.
Contract Year--Contract Year is each consecutive twelve-month period beginning
on the Contract Date and the anniversaries thereof.
<PAGE>
Excess Withdrawal--An Excess Withdrawal is a withdrawal of Account Value that
exceeds the Free Withdrawal Amount.
Expiration Date--The Expiration Date is the last day in a Guarantee Period.
Fixed Account--The Fixed Account is The Sage Fixed Interest Account A-NY. It
is a separate investment account of ours into which you may invest purchase
payments or transfer Account Value. In certain states we refer to the Fixed
Account as the Interest Account or Interest Separate Account.
Free Withdrawal Amount--A Free Withdrawal Amount is the maximum amount that
you can withdraw within a Contract Year during the Accumulation Phase without
being subject to a surrender charge.
Fund--A Fund is an investment portfolio in which a Variable Sub-Account
invests.
General Account--An account that consists of all our assets other than those
held in any separate investment accounts.
Income Date--The Income Date is the date you select for your regular income
payments to begin.
Income Phase--The Income Phase starts on the Income Date and is the period
during which you receive regular income payments.
Income Unit--An Income Unit is the unit of measure we use to calculate the
amount of income payments under a variable income plan option.
Market Value Adjustment--A Market Value Adjustment is a positive or negative
adjustment that ordinarily applies to a surrender, withdrawal, or transfer, and
to amounts applied to an income plan from a Fixed Sub-Account before the end of
its Guarantee Period.
Net Asset Value--Net Asset Value is the price of one share of a Fund.
Owner--The Owner is the person or persons who owns (or own) a Contract.
Provisions relating to action by the Owner mean, in the case of joint Owners,
both Owners acting jointly. In the context of a Contract issued on a group
basis, Owners refer to holders of certificates under the group Contract.
Satisfactory Notice--Satisfactory Notice is a notice or request you make or
authorize, in a form satisfactory to us, received at our Customer Service
Center.
Surrender Value--The Surrender Value is the amount we pay you upon surrender
of your Contract before the Income Date. It reflects the calculation of any
applicable charge, including the Market Value Adjustment.
Valuation Period--The Valuation Period is the period between one calculation
of an Accumulation Unit value and the next calculation.
Variable Account--The Variable Account is The Sage Variable Annuity Account
A-NY. It is a separate investment account of ours into which you may invest
purchase payments or transfer Account Value.
"We", "us", "our", "Sage Life-NY" or the "Company" is Sage Life Assurance
Company of New York.
"You" or "your" is the Owner of a Contract.
FEE TABLE
The purpose of this Fee Table is to assist you in understanding the expenses
that you will pay directly or indirectly when you invest in the Contract.
Transaction Expenses
<TABLE>
<S> <C> Sales Load Imposed on Purchases (as a percentage of purchase payments)
.. None
Surrender Charge: None
Maximum Transfer Charge(/1/) 0
First 12 transfers in a Contract Year..................... $ 0
After 12th transfer in a Contract Year.................... $25
Administration Charge(/2/)
Contract Years 1-7 ....................................... $30
After Contract Year 7..................................... $ 0
</TABLE>
In addition, we may deduct the amount of any state and local taxes on purchase
payments from your Account Value when we incur such taxes. We reserve the right
to defer collection of this charge and deduct it against your Account Value when
you surrender your Contract, make an Excess Withdrawal, or apply your Account
Value to provide income payments. We refer to this as the Purchase Payment Tax
Charge.
Asset Based Annual Charges (/3/) (deducted monthly as a percentage
of the Variable Account Value)
<TABLE>
<CAPTION>
<S> <C>
Mortality and
Expense Risk
Charge........ 1.25%
Asset-Based
Administrative
Charge........ 0.15%
Total
Asset-Based
Charges....... 1.40%
</TABLE>
Optional Rider Annual Expenses
(deducted monthly as a percentage of Account Value)
Guaranteed Minimum Income Benefit Charge..................... 0.20%
Enhanced Death Benefit Charge................................ 0.20%
Fund Charges. The fees and expenses for each of the Funds (as a percentage of
net assets) for the year ended December 31, 1999 are shown in the following
table. For more information on these fees and expenses, see the prospectuses for
the Trusts. Certain figures shown are net of fee waivers or expense
reimbursements. We cannot guarantee that these fee waivers or reimbursements
will continue.
Fund Annual Expenses (as a percentage of average daily net assets of a Fund)
<TABLE>
<CAPTION>
Total Expenses Total Expenses
(after fee (before fee
Management Fees Other Expenses waivers and waivers and
(after fee waiver, (after reimbursement, reimbursements reimbursements
Fund as applicable) as applicable) as applicable) as applicable)
---- ------------------ --------------------- -------------- --------------
<S> <C> <C> <C> <C>
AIM VARIABLE INSURANCE
FUNDS:
AIM V.I. Government Se-
curities Fund......... 0.50% 0.40% 0.90% N/A
AIM V.I. Growth and In-
come Fund............. 0.61 0.16 0.77 N/A
AIM V.I. International
Equity Fund........... 0.75 0.22 0.97 N/A
AIM V.I. Value Fund.... 0.61 0.15 0.76 N/A
THE ALGER AMERICAN FUND:
Alger American MidCap
Growth Portfolio...... 0.80 0.05 0.85 N/A
Alger American Income
and Growth Portfolio.. 0.625 0.075 0.70 N/A
Alger American Small
Capitalization
Portfolio............. 0.80 0.05 0.90 N/A
LIBERTY VARIABLE INVEST-
MENT TRUST:
Colonial High Yield
Securities Fund,
Variable Series....... 0.65(/4/) 0.20(/4/) 0.80(/4/) 1.88%
Colonial Small Cap
Value Fund, Variable
Series................ 0.80(/4/) 0.20(/4/) 1.00(/4/) 4.46
Colonial Strategic
Income Fund, Variable
Series................ 0.65 0.10 0.75 N/A
Colonial U.S. Growth
and Income Fund,
Variable Series....... 0.80 0.08 0.88 N/A
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Total Expenses Total Expenses
(after fee (before fee
Management Fees Other Expenses waivers and waivers and
(after fee waiver, (after reimbursement, reimbursements reimbursements
Fund as applicable) as applicable) as applicable) as applicable)
---- ------------------ --------------------- -------------- --------------
<S> <C> <C> <C> <C>
Liberty All-Star Equity
Fund, Variable
Series................ 0.80% 0.15% 0.95% N/A
Newport Tiger Fund,
Variable Series....... 0.90 0.31 1.21 N/A
Stein Roe Global
Utilities Fund,
Variable Series....... 0.65 0.12 0.77 N/A
STEINROE VARIABLE IN-
VESTMENT TRUST:
Stein Roe Growth Stock
Fund, Variable
Series................ 0.50 0.17 0.67 N/A
<PAGE>
Stein Roe Balanced
Fund, Variable
Series................ 0.45 0.17 0.62 N/A
MFS(R) VARIABLE INSUR-
ANCE TRUST SM:
MFS Growth with Income
Series................ 0.75 0.13(/5/) 0.88(/5/) N/A
MFS High Income Se-
ries.................. 0.75(/5/) 0.16(/5/) 0.91(/5/) 0.97%
MFS Research Series.... 0.75 0.11(/5/) 0.86(/5/) N/A
MFS Total Return Se-
ries.................. 0.75 0.15(/5/) 0.90(/5/) N/A
MFS Capital Opportuni-
ties Series........... 0.75(/5/) 0.16(/5/) 0.91(/5/) 1.02
THE UNIVERSAL INSTITU-
TIONAL FUNDS, INC.:
The Global Equity Port-
folio................. 0.47(/6/) 0.68(/6/) 1.15(/6/) 1.48
The Mid Cap Value Port-
folio................. 0.43(/6/) 0.62(/6/) 1.05(/6/) 1.37
The Value Portfolio.... 0.18(/6/) 0.67(/6/) 0.85(/6/) 1.22
OPPENHEIMER VARIABLE AC-
COUNT FUNDS:
Oppenheimer Bond
Fund/VA............... 0.72 0.01 0.73 N/A
Oppenheimer Capital Ap-
preciation Fund/VA.... 0.68 0.02 0.70 N/A
Oppenheimer Small Cap
Growth Fund/VA........ 0.75 0.59 1.34 N/A
SAGE LIFE INVESTMENT
TRUST:
EAFE(R) Equity Index
Fund*................. 0.73(/7/) 0.17(/7/) 0.90(/7/) 1.07
S&P 500 Equity Index
Fund**................ 0.38(/7/) 0.17(/7/) 0.55(/7/) 0.72
Money Market Fund...... 0.48(/7/) 0.17(/7/) 0.65(/7/) 0.82
NASDAQ -100 Index
Fund***............... 0.80(/8/) 0.05(/8/) 0.85(/8/) 0.90
All-Cap Growth Fund.... 0.99(/8/) 0.11(/8/) 1.10(/8/) 1.21
T. ROWE PRICE EQUITY SE-
RIES, INC.:
T. Rowe Price Equity
Income Portfolio...... 0.85(/9/) 0.00 0.85(/9/) N/A
T. Rowe Price Mid-Cap
Growth Portfolio...... 0.85(/9/) 0.00 0.85(/9/) N/A
T. Rowe Price Personal
Strategy Balanced
Portfolio............. 0.90(/9/) 0.00 0.90(/9/) N/A
</TABLE>
- --------
(1) Currently, we do not assess a transfer charge.
(2) We waive the annual Administration Charge if the Account Value is at least
$50,000 on the date of deduction.
(3) On and after the Income Date, we call the Asset Based Charges Variable
Sub-Account Charges and deduct them on a daily basis. See "What Are The
Expenses Under A Contract?"
(4) Without fee waivers and expense reimbursements, the management fees, the
other expenses, and total expenses for each of the following Liberty
Variable Investment Trust Funds during 1999 would have been: Colonial High
Yield Securities Fund, Variable Series 0.60%, 1.28%, 1.88%; and Colonial
Small Cap Value Fund, Variable Series 0.80%, 3.66% and 4.46%.
(5) Without fee waivers and expense reimbursements, the management fees, the
other expenses, and total expenses for each of the following MFS Variable
Insurance Trust Funds during 1999 would have been: MFS Capital Opportunity
Series 0.75%, 0.27% and 1.02%; and MFS High Income Series 0.75%, 0.22%, and
0.97%. In addition, each Fund has an expense offset arrangement which
reduces the Fund's custodian fee based upon the amount of cash maintained by
the Fund with its custodian and dividend disbursing agent. Each fund may
enter into such arrangement and directed brokerage arrangements, which would
also have the effect of reducing Fund expenses. "Other Expenses" do not take
into account these expense reductions, and are therefore higher than the
actual expenses of the Fund. Had these fee reductions been taken into
account, "Total Expenses (after fee waivers and reimbursements, as
applicable)" would be lower and would equal: MFS Growth with Income
Series--0.87%; MFS High Income Series--0.90%; MFS Research Series--0.85%;
MFS Total Return Series--0.89%; and MFS Capital Opportunities Series--
0.90%.
(6) Without fee waivers and expense reimbursements, the management fees, the
other expenses, and total expenses for each of the following The Universal
Institutional Funds, Inc. Funds during 1999 would have been: Global Equity
Portfolio 0.80%, 0.68%, and 1.48%; Mid Cap Value Portfolio 0.75%, 0.62%, and
1.37%; and Value Portfolio 0.55%, 0.67%, and 1.22%.
(7) Without fee waivers and expense reimbursements, total expenses for each of
the Sage Life Investment Trust Funds during 1999 would have been: EAFE(R)
Equity Index Fund 1.07%; S&P 500 Equity Index Fund 0.72%; and Money Market
Fund 0.82%. In addition, a Rule 12b-1 Plan (the "Plan") has been adopted by
each Fund, pursuant to which up to 0.25% may be deducted from Fund assets.
No Plan payments were made during 1999, and no payments will be made under
the plan prior to May 1, 2001.
(8) The expenses of Sage Life Investment Trust's Nasdaq-100 Index Fund and All-
Cap Growth Fund are based on the estimated expenses that those Funds expect
to incur in their initial fiscal year. Without fee waivers and expense
reimbursements, total expenses for the Nasdaq-100 Index Fund during 2000
would be estimated to be 0.90% and total expenses for the All-Cap Growth
Fund during 2000 would be estimated to be 1.21%. In addition, a Rule 12b-1
Plan has been adopted by each Fund, pursuant to which up to 0.25% may be
deducted from Fund assets. No payments will be made under the Plan prior to
May 1, 2001.
(9) For each of the portfolios in the T. Rowe Price Equity Series, management
fees include operating expenses.
* The EAFE(R) Index is the exclusive property of Morgan Stanley Capital
International ("MSCI"). This Fund is not sponsored, endorsed, sold or
promoted by MSCI or any affiliate of MSCI.
** S&P 500(R) is a trademark of the McGraw-Hill Companies, Inc. and has been
licensed for use by Sage Advisors, Inc. The S&P 500 Equity Index Fund is not
sponsored, endorsed, sold or promoted by Standard & Poor's, and Standard &
Poor's makes no representation regarding the advisability of investing in
the Fund.
*** The Nasdaq-100 , Nasdaq-100 Index , and Nasdaq are trade or service marks of
The Nasdaq Stock Market, Inc. (which with its affiliates are the
Corporations), and are licensed for use by Sage Advisors, Inc. The product
has not been passed on by the Corporations as to its legality or
suitability. The product is not issued, endorsed, sold, or promoted by the
Corporations. The corporations make no warranties and bear no liabilities
with respect to the product.
Examples
<PAGE>
The purpose of the following examples is to demonstrate the expenses that you
would pay on a $1,000 investment in the Variable Account. We calculate the
examples based on the fees and charges shown in the tables above, and we assume
that the fee waivers and reimbursements shown above will continue. For a more
complete description of these expenses, see "What Are The Expenses Under A
Contract?" and see the prospectuses for the Trusts. The examples assume that the
initial purchase payment is $50,000, and that you have invested all your money
in the Variable Account. (At this level of Account Value the annual
administration charge is not assessed, and it is therefore not included in these
examples.) The examples assume you do not select either the optional
Guaranteed Minimum Income Benefit or the optional Enhanced Death Benefit.
If you select one or both of these benefits, your expenses would be higher.
You should not consider the examples a representation of past or future
expenses. Actual expenses may be greater or less than those shown. In addition,
we do not reflect Purchase Payment Tax Charges. These charges may apply
depending on the state where the Contract is sold. You might also incur transfer
fees if you make more than twelve transfers in a Contract Year, however, we
currently do not assess the Transfer Charge. See "Transfer Charge."
The assumed 5% annual rate of return is hypothetical. You should not consider
it to be a representation of past or future annual returns; both may be greater
or less than this assumed rate.
You would pay the following expenses on a $1,000 initial purchase payment,
assuming a 5% annual return on assets and the charges listed in the Fee Table
above if you remain in your contract or you annuitize at the end of each time
period.
<TABLE>
<CAPTION>
1 3
Fund Year Years
---- ---- -----
<S> <C> <C>
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Government Securities
Fund.......................... $__ $___
AIM V.I. Growth and Income
Fund.......................... __ ___
AIM V.I. International Equity
Fund.......................... __ ___
AIM V.I. Value Fund............ __ ___
THE ALGER AMERICAN FUND:
Alger American MidCap Growth
Portfolio..................... __ ___
Alger American Income and
Growth Portfolio.............. __ ___
Alger American Small
Capitalization Portfolio...... __ ___
LIBERTY VARIABLE INVESTMENT
TRUST:
Colonial High Yield Securities
Fund, Variable Series......... __ ___
Colonial Small Cap Value Fund,
Variable Series............... __ ___
Colonial Strategic Income Fund,
Variable Series............... __ ___
Colonial U.S. Growth and Income
Fund, Variable Series......... __ ___
Liberty All-Star Equity Fund,
Variable Series............... __ ___
Newport Tiger Fund, Variable
Series........................ __ ___
Stein Roe Global Utilities
Fund, Variable Series......... __ ___
STEINROE VARIABLE INVESTMENT
TRUST:
Stein Roe Growth Stock Fund,
Variable Series............... __ ___
Stein Roe Balanced Fund,
Variable Series............... __ ___
MFS(R) VARIABLE INSURANCE
TRUSTSM:
MFS Growth With Income Series.. __ ___
MFS High Income Series......... __ ___
MFS Research Series............ __ ___
MFS Total Return Series........ __ ___
MFS Capital Opportunities
Series........................ __ ___
THE UNIVERSAL INSTITUTIONAL
FUNDS, INC.:
The Global Equity Portfolio.... __ ___
The Mid Cap Value Portfolio.... __ ___
The Value Portfolio............ __ ___
OPPENHEIMER VARIABLE ACCOUNT
FUNDS:
Oppenheimer Bond Fund/VA....... __ ___
Oppenheimer Capital
Appreciation Fund/VA.......... __ ___
Oppenheimer Small Cap Growth
Fund/VA....................... __ ___
SAGE LIFE INVESTMENT TRUST:
EAFE(R) Equity Index Fund...... __ ___
S&P 500 Equity Index Fund...... __ ___
Money Market Fund.............. __ ___
Nasdaq-100 Index(R) Fund....... __ ___
All-Cap Growth Fund............ __ ___
T. ROWE PRICE EQUITY SERIES,
INC.:
T. Rowe Price Equity Income
Portfolio..................... __ ___
T. Rowe Price Mid-Cap Growth
Portfolio..................... __ ___
T. Rowe Price Personal Strategy
Balanced Portfolio............ __ ___
</TABLE>
1. What Are The Contracts?
The Contracts are flexible payment deferred combination fixed and variable
annuity Contracts. They are designed for use in your long-term financial and
retirement planning and provide a means for investing amounts on a tax-deferred
basis in our Variable Account and our Fixed Account.
Under the terms of the Contract, we promise to pay you (or the Annuitant, if
the Owner is other than an individual) regular income payments after the Income
Date. Until the Income Date, you may make additional purchase payments under the
Contract, and will ordinarily not be taxed on increases in the value of your
Contract as long as you do not take distributions. When you use the Contract in
connection with tax-qualified retirement plans, federal income taxes may be
deferred on your purchase payments, as well as on increases in the value of your
Contract. However, if you would like to purchase a Contract in connection with a
tax-qualified retirement plan, please carefully consider the costs and benefits
of the Contract (including income payments) before your purchase since the
tax-qualified retirement plan itself provides for tax- sheltered growth. See
"How Will My Contract Be Taxed?"
Your Options
When you make purchase payments, you can allocate those purchase payments to
one or more of the subdivisions of the Variable Account, known as "Variable
Sub-Accounts." We will invest purchase payments you allocate to a Variable
Sub-Account solely in its corresponding Fund. Your Account Value in a Variable
Sub-Account will vary according to the investment performance of that Fund.
Depending on market conditions, your value in each Variable Sub-Account could
increase or decrease. We do not guarantee a minimum value. You bear the risk of
investing in the Variable Account. We call the total of the values in the
Variable Sub-Accounts the "Variable Account Value."
You can also allocate purchase payments to our Fixed Account. See "Fixed
Account Investment Option." The Fixed Account includes "Fixed Sub-Accounts" to
which we credit fixed rates of interest for the Guarantee Periods you select. We
call the total of the values in the Fixed Sub-Accounts, the "Fixed Account
Value." We currently offer Guarantee Periods with durations of 1, 2, 3, 4, 5, 7,
and 10 years. If any amount allocated or transferred remains in a Guarantee
Period until the Expiration Date, its value will equal the amount originally
allocated or transferred, multiplied, on an annually compounded basis, by its
guaranteed interest rate. We will ordinarily apply a Market Value Adjustment to
any surrender, withdrawal, transfer, or amount applied to an income plan from a
Fixed Sub-Account before its Expiration Date. The Market Value Adjustment may
increase or decrease the value of the Fixed Sub-Account (or portion thereof)
being surrendered, withdrawn, transferred, or applied to an income plan. See
"Market Value Adjustment."
We also offer you two optional benefits for an additional charge - the GMIB
and EDB. These riders can provide additional benefits that we discuss in "What
Are My Income Payment Options" and "Does The Contract Have A Death Benefit."
Transfers
Subject to certain conditions, you can transfer Account Value three ways:
. From one Variable Sub-Account to another;
. From a Fixed Sub-Account to a Variable Sub-Account; or
. From a Variable Sub-Account to a Fixed Sub-Account.
We may offer other variable annuity contracts that also invest in the same
Funds offered under the Contracts. These contracts may have different charges
and they may offer different benefits.
2. What Are My Income Payment Options?
Your Choices
You have several choices to make concerning your Income Payments. First, you
choose the Income Date when you want regular income payments to begin. The
Income Date you choose must be on or before the first calendar month following
the Annuitant's 90th birthday. We reserve the right to require that your Income
Date be at least 13 months after the Contract Date. Then, you select an income
plan from the list below, and indicate whether you want your income payments to
be fixed or variable or a combination of fixed and variable. You must give
Satisfactory Notice of your choices at least 30 days before the Income Date, and
you must have at least $2,000 of Account Value to apply to a variable or fixed
income plan.
On the Income Date, we will use the Account Value under the Contract (which
includes adjustment for any Market Value Adjustment, if applicable) to provide
income payments. Unless you request otherwise, we will use any Variable Account
Value to provide variable income payments, and we will use any Fixed Account
Value to provide fixed income payments. If you have not chosen an income plan
by the Income Date, a "life annuity with 10 years certain" (described
below) will be used.
The available income plans are:
. Income Plan 1--Life Annuity--You will receive payments for your life.
. Income Plan 2--Life Annuity with 10 or 20 Years Certain--You will receive
payments for your life. However, if you die before the end of the guaranteed
certain period you select (10 or 20 years), your Beneficiary will receive
the payments for the remainder of that period.
. Income Plan 3--Joint and Last Survivor Life Annuity--We will make payments
as long as either you or a second person you select (such as your spouse) is
alive.
. Income Plan 4--Payments for a Specified Period Certain--You will receive
payments for the number of years you select. However, if you die before the
end of that period, your Beneficiary will receive the payments for the
remainder of the guaranteed certain period.
. Income Plan 5--Annuity Plan--You can use your Account Value to purchase any
other income plan we offer at the time you want to begin receiving regular
income payments for which you and the Annuitant are eligible.
Income Payment Amounts
We will base your first income payment, whether fixed or variable, on the
amount of proceeds applied under the income plan you have selected and on the
monthly income rate per $1,000. These rates vary based on the Annuitant's age
and sex, and if applicable upon the age and sex of a second person you
designate. The monthly income rate per $1,000 we apply will never be lower than
the rate shown in your Contract.
If you told us you want fixed income payments, we guarantee the amount of each
income payment, and it remains level throughout the period you selected.
If you told us you want variable income payments, the amount of each payment
will vary according to the investment performance of the Funds you selected.
Variable Income Payments. To calculate your initial and future variable income
payments, we need to make an assumption regarding the investment performance of
the Funds you select. We call this your assumed investment rate. This rate is
simply the total return, after expenses, you need to earn to keep your variable
income payments level. Rather than building in our own estimate, we will allow
you to tailor your variable income payments to meet your needs by giving you a
choice of rates. Currently, you may select either 2.5% or 5.0%; if you do not
select a rate, we will apply the 2.5% rate. (We may offer other rates in the
future). The lower the rate, the lower your initial variable income payment, but
the better your payments will keep pace with inflation (assuming positive
investment performance). Conversely, the higher the rate, the higher your
initial variable income payment, but the less likely your payments will keep
pace with inflation (assuming positive investment performance).
For example, if you select 5.0%, this means that if the investment
performance, after expenses, of your Funds is less than 5.0%, then the dollar
amount of your variable income payment will decrease. Conversely, if the
investment performance, after expenses, of your Funds is greater than 5.0%, then
the dollar amount of your income payments will increase.
If you told us that you want a life annuity, it is possible that you could
only receive one payment.
Your income payments will be made monthly, unless you choose quarterly,
semi-annual or annual payments by giving us Satisfactory Notice at least 30 days
before the Income Date. Payments start on the Income Date. Each payment must be
at least $20.00. If any payment would be less than $20.00, we may change the
payment frequency to the next longer interval, but in no event less frequent
than annual. Also, if on the Income Date, the Account Value is less than $2,000,
we may pay the Surrender Value on that date in one sum.
Optional Guaranteed Minimum Income Benefit Rider - The GMIB is an optional
rider that ensures, if you satisfy the rider's conditions, the availability of
guaranteed minimum lifetime income payments on the Income Date. Regardless of
investment experience, this rider guarantees that you will never receive income
payments that are less than the GMIB. For a particular Income Plan and frequency
of payment, we determine the GMIB by multiplying (a) by (b) where:
a) is the Highest Anniversary Value determined on the Income Date;
and
b) is the applicable annuity purchase rate per $1,000 shown in the
Income Tables in your Contract Schedule.
We then compare the GMIB to what we would pay you if you had not elected the
GMIB rider. We determine this amount by applying your current Surrender Value to
our then current monthly income rate per $1,000 (the current monthly income
rates may be more favorable than the guaranteed rates shown in the Contract to
calculate the GMIB). We will pay you the amount that results in higher income
payments.
The Highest Anniversary Value is the greatest anniversary value attained in
the following manner. We will calculate an anniversary value for each Contract
Anniversary before your Income Date, excluding, however, Contract Anniversaries
that come after you attain age 80 or before the effective date of the GMIB
rider. An anniversary value for a Contract Anniversary equals:
. the Account Value on that Contract Anniversary;
. increased by the dollar amount of any purchase payments made since
that Contract Anniversary; and
. reduced for any withdrawals taken since that anniversary. This
reduction will be made in proportion to the reduction of Account
Value that results from the withdrawal.
We show an example of how the GMIB works in Appendix C.
Contract Continuation Option. An Owner's surviving spouse who is eligible to
continue the Contract under the Contract Continuation Option, may also be
eligible to continue this rider. To do so, the surviving spouse must give our
Customer Service Center notice within 30 days of the Business Day we receive
proof of the Owner's death. If the spouse is eligible under our then existing
rules, we will continue the rider and assess charges based on the spouse's
attained age and our then current charges. The rider's effective date for
purposes of reviewing Contract Anniversaries to determine the Highest
Anniversary Value will be the Business Day the new Owner elects to continue the
rider. All of the other terms and conditions of the rider will continue as
before.
When may you elect the GMIB? You may take income payments using the GMIB on
any Contract Anniversary, or the thirty-day period that follows, after (a) the
Contract has been in effect for seven years, and (b) the Annuitant has attained
age 60.
Income Plans Available with the GMIB. You may elect to use the GMIB with the
following Income Plans in your Contract:
. Income Plan 1. Fixed Life Annuity;
. Income Plan 2. Fixed Life Annuity with 10 or 20 Years Certain; and
. Income Plan 3. Fixed Joint and Last Survivor Annuity.
You may also elect any other Income Plan we offer on the Income Date for which
you and the Annuitant are then eligible and we then make available for use with
the GMIB.
Other GMIB Terms and Conditions.
. The GMIB must be elected at time of application; . The Annuitant must
be age 80 or younger at the time your Contract
is issued;
. Election of the GMIB as an optional benefit is irrevocable and
charges for the GMIB will remain in force for as long as your
Contract remains in force, or until your Income Date if sooner.
Important Considerations Regarding the GMIB. While a GMIB does provide a
guaranteed income, a GMIB may not be appropriate for all investors. You should
understand the GMIB completely and analyze it thoroughly before you elect the
GMIB.
. A GMIB does not in any way guarantee the performance of any Fund, or
any other investment option under your Contract.
. Once elected, the GMIB is irrevocable. This means that before the
Income Date if current monthly income payment rates per $1,000 and
the investment performance of the Funds are such as would result in
higher income payments than would be the case under the GMIB using
guaranteed monthly income payment rates, the GMIB charges will still
be assessed.
. The GMIB in no way restricts or limits your rights to take income
payments at other times permitted under your Contract --- therefore,
you should consider the GMIB as an income payment "floor."
. Please take advantage of the guidance of a qualified financial
adviser in evaluating the GMIB options, as well as all other aspects
of your Contract.
. The GMIB may not be approved in all states.
3. How Do I Purchase A Contract?
Initial Purchase Payment. You may purchase a Contract for use in connection
with tax-qualified retirement plans ("Qualified Contracts") or on a non-tax
qualified basis ("Non-Qualified Contracts"). To purchase a Contract, you and the
Annuitant you select may not be more than 85 years old on the Contract Date. We
require a different minimum initial purchase payment of $25,000.
Issuance of a Contract. Once we receive your initial purchase payment and your
application at our Customer Service Center, we will usually issue your Contract
within two Business Days. However, if you did not give us all the information we
need, we will try to contact you to get the needed information. If we cannot
complete the application within five Business Days, we will either send your
money back or obtain your permission to keep your money until we receive the
necessary information. Your Contract Date will be the date we issue your
Contract at our Customer Service Center.
Free Look Right to Cancel Your Contract. During your "Free Look" Period, you
may cancel your Contract. The Free Look Period usually ends 10 days after you
receive your Contract. Some states may require a longer period. If you decide to
cancel your Contract, you must return it to our Customer Service Center or to
one of our authorized registered New York. If you bought the Contract by mail,
you have 30 days to return it to us or the agent who sold it to you. We will
send you a refund equal to your Account Value plus any Asset-Based Charges and
Purchase Payment Tax Charges we have deducted in arriving at the Account Value
on or before the date we receive your returned Contract at our Customer Service
Center. If you have purchased the Contract as an IRA, we are required to refund
your purchase payment if you decide to cancel your Contract within 10 days
after receiving it (or whatever period is required).
Making Additional Purchase Payments . You may make additional purchase
payments of $1,000 or more (a lesser minimum amount may apply to Qualified
Contracts; contact our Customer Service Center) at any time before the Income
Date, subject to the following conditions. We will accept additional purchase
payments as shown in the chart below:
<TABLE>
<CAPTION>
Restrictions on Acceptance of Additional Purchase
Contract Type Payments
------------- -----------------------------------------------------
<C> <S>
Non-Qualified Contract.. Accepted until the earlier of the year in
which you attain age 85 or the year in which the
Annuitant attains age 85.
Qualified Contract...... Accepted until the year in which you
attain 70 1/2, except contributions to a Roth IRA or
rollover contributions may be made until the year in
which you attain age 85.
</TABLE>
You must obtain our prior approval before you make a purchase payment that
causes the Account Value of all annuities that you maintain with us and
affiliated companies to exceed $1,000,000.
We will credit any purchase payment received after the Contract Date to your
Contract as of the Business Day on which we receive it at our Customer Service
Center. We will deem purchase payments received on other than a Business Day as
received on the next following Business Day.
When We May Cancel Your Contract
If you have not made a purchase payment for more than three years and your
Account Value is less than $2,000 on a Contract Anniversary, we may cancel your
Contract and pay you the Surrender Value as though you had surrendered. We will
give you written notice at your address of record. However, we will allow you 61
days from the date of that notice to submit an additional purchase payment in an
amount not less than the difference between $2,000 and the Account Value on the
last Contract Anniversary. If we have not received the required additional
purchase payment by the end of this period, we may cancel your Contract.
4. What Are My Investment Options?
<PAGE>
Purchase Payment Allocations. When you apply for a Contract, you specify the
percentage of your initial and additional purchase payments to be allocated to
each Variable Sub-Account and/or to each Fixed Sub-Account. Subject to our
rules, you may tell us how to allocate any additional purchase payments. If you
do not tell us, they will be allocated in the same manner as your most recent
purchase payment. You can change the allocation percentages at any time by
sending Satisfactory Notice to our Customer Service Center. The change will
apply to all purchase payments we receive on or after the date we receive your
request. Purchase payment allocations must be in percentages totaling 100%, and
each allocation percentage must be a whole number.
Variable Sub-Account Investment Options. The Variable Account has over 30
Sub-Accounts, each investing in a specific Fund. Each of the Funds is either an
open-end diversified management investment company or a separate investment
portfolio of such a company, and is managed by a registered investment adviser.
The Funds, as well as brief descriptions of their investment objectives, are
provided below. There is no assurance that these objectives will be met. Not
every Fund may be available in every state or in every market.
AIM VARIABLE INSURANCE FUNDS
AIM V.I. Government Securities Fund. This Fund seeks to achieve a high level
of current income consistent with reasonable concern for safety of principal
by investing in debt securities issued, guaranteed or otherwise backed by the
United States Government.
AIM V.I. Growth and Income Fund. This Fund's primary objective is growth of
capital with a secondary objective of current income.
AIM V.I. International Equity Fund. This Fund seeks to provide long-term
growth of capital by investing in a diversified portfolio of international
equity securities whose issuers are considered to have strong earnings
momentum.
AIM V.I. Value Fund. This Fund seeks to achieve long-term growth of capital by
investing primarily in equity securities judged by the Fund's investment advisor
to be undervalued relative to the investment adviser's appraisal of the current
or projected earnings of the companies issuing the securities, or relative to
current market values of assets owned by the companies issuing the securities or
relative to the equity market generally. Income is a secondary objective.
A I M Advisers, Inc. advises the AIM Variable Insurance Funds.
THE ALGER AMERICAN FUND
Alger American MidCap Growth Portfolio. This Fund seeks long-term capital
appreciation. It focuses on midsize companies with promising growth potential.
Under normal circumstances, the portfolio invests primarily in the equity
securities of companies having a market capitalization within the range of
companies in the S&P MidCap 400 Index.
Alger American Income and Growth Portfolio. This Fund primarily seeks to
provide a high level of dividend income; its secondary goal is to provide
capital appreciation. The Portfolio invests in dividend paying equity
securities, such as common or preferred stocks, preferably those which the
Manager believes also offer opportunities for capital appreciation.
Alger American Small Capitalization Portfolio. This Fund seeks long-term
appreciation. It focuses on small, fast-growing companies that offer innovative
products, services or technologies to a rapidly expanding marketplace. Under
normal circumstances, the portfolio invests primarily in the equity securities
of small capitalization companies. A small capitalization company is one that
has a market capitalization within the range of the Russell 2000 Growth Index or
the S&P SmallCap 600 Index.
Fred Alger Management, Inc. advises The Alger American Fund.
LIBERTY VARIABLE INVESTMENT TRUST
Colonial High Yield Securities Fund, Variable Series. This Fund seeks current
income and total return by investing primarily in lower rated corporate debt
securities (commonly referred to as "junk bonds").
Colonial Small Cap Value Fund, Variable Series. This Fund seeks long-term
growth by investing primarily in smaller capitalization equity securities.
Colonial Strategic Income Fund, Variable Series. This Fund seeks a high level
of current income, as is consistent with prudent risk and maximizing total
return, by diversifying investments primarily in U.S. and foreign government and
lower rated corporate debt securities.
Colonial U.S. Growth and Income Fund, Variable Series. This Fund seeks long-
term growth and income by investing primarily in large capitalization equity
securities. Up to 10% of its assets may be invested in debt securities.
Liberty All-Star Equity Fund, Variable Series. This Fund seeks total
investment return, comprised of long-term capital appreciation and current
income, through investment primarily in a diversified portfolio of equity
securities.
Newport Tiger Fund, Variable Series. This Fund seeks long-term capital growth
by investing primarily in equity securities of companies located in the nine
Tigers of Asia (Hong Kong, Singapore, South Korea, Taiwan, Malaysia, Thailand,
Indonesia, The People's Republic of China and the Philippines).
Stein Roe Global Utilities Fund, Variable Series. This Fund seeks current
income and long-term growth of capital by investing primarily in U.S. and
foreign securities of utility companies.
Liberty Advisory Services Corp. provides investment management and advisory
services to the Liberty Variable Investment Trust. Colonial Management
Associates, Inc. sub-advises the High Yield Securities Fund, the U.S. Growth
and Income Fund, the Small Cap Value Fund, and the Strategic Income Fund.
Stein Roe & Farnham Incorporated sub-advises the Global Utility Fund. Newport
Fund Management, Inc. sub-advises the Tiger Fund. Liberty Asset Management
Company sub-advises the All-Star Fund.
STEINROE VARIABLE INVESTMENT TRUST
Stein Roe Growth Stock Fund. This Fund seeks long-term growth of capital
through investment primarily in common stocks.
Stein Roe Balanced Fund. This Fund seeks high total investment return
through a changing mix of equities, debt securities, and cash.
Stein Roe & Farnham Incorporated advises the SteinRoe Variable Investment
Trust.
MFS(R) VARIABLE INSURANCE TRUST SM
MFS Growth with Income Series. This Fund seeks long-term growth of capital and
income. The Fund invests, under normal market conditions, at least 65% of its
total assets in common stock and related securities, such as preferred stocks,
convertible securities and depositary receipts for those securities. These
securities may be listed on a securities exchange or traded in the over-
the-counter markets. While the Fund may invest in companies of any size, the
Fund generally focuses on companies with larger market capitalizations that the
Fund's adviser believes have sustainable growth prospects and attractive
valuations based on current and expected earnings or cash flow.
MFS High Income Series. This Fund seeks high current income by investing
primarily in a professionally managed diversified portfolio of fixed income
securities, some of which may involve equity features. The Fund invests, under
normal market conditions, at least 80% of its total assets in high yield fixed
income securities. Fixed income securities offering the high current income
sought by the series generally are lower rated bonds (junk bonds).
MFS Research Series. This Fund seeks to provide long-term growth of capital
and future income. The Fund invests, under normal market conditions, at least
80% of its total assets in common stocks and related securities, such as
preferred stocks, convertible securities and depositary receipts. The Fund
focuses on companies that the Fund's adviser believes have favorable prospects
for long-term growth, attractive valuations based on current and expected
earnings or cash flow, dominant or growing market share and superior management.
MFS Total Return Series. This Fund primarily seeks to obtain above-average
income (compared to a portfolio entirely invested in equity securities)
consistent with prudent employment of capital; its secondary objective is to
take advantage of opportunities for growth of capital and income since many
securities offering a better than average yield may also possess growth
potential. The Fund is a "balanced fund," and invests in a combination of equity
and fixed income securities. Under normal market conditions, the Fund invests
(i) at least 40%, but not more than 75%, of its net assets in common stocks and
related securities (referred to as equity securities), such as preferred stocks,
bonds, warrants or rights convertible into stock, and depositary receipts for
those securities; and (ii) at least 25% of its net assets in non-convertible
fixed income securities.
MFS Capital Opportunities Series. This Fund seeks capital appreciation. The
Fund invests, under normal market conditions, at least 65% of its total assets
in common stocks and related securities, such as preferred stocks, convertible
securities and depositary receipts for those securities. The Fund focuses on
companies which the Fund's adviser believes have favorable growth prospects and
attractive valuations based on current and expected earnings or cash flow.
MFS Investment Management(R) advises the MFS(R) Variable Insurance Trust.
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
The Global Equity Portfolio. This Fund seeks long-term capital appreciation by
investing primarily in equity securities of issuers throughout the world,
including U.S. issuers, using an approach that is oriented to the selection of
individual stocks that the Fund's investment adviser believes are undervalued.
The Mid Cap Value Portfolio. This Fund seeks above-average total return over a
market cycle of three to five years by investing primarily in common stocks of
companies with equity capitalizations in the range of companies included in the
S&P MidCap 400 Index (currently $500 million to $6 billion).
The Value Portfolio. This Fund seeks above-average return over a market cycle
of three to five years by investing primarily in a portfolio of common stocks
and other equity securities of companies with equity capitalization greater than
$2.5 billion that are deemed by the Fund's investment adviser to be relatively
undervalued based on the market as a whole, as measured by the S&P 500 Index.
Morgan Stanley Dean Witter Investment Management, Inc. advises The Global
Equity Portfolio. Miller Anderson & Sherrerd, LLP advises The Value Portfolio
and The Mid Cap Value Portfolio.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Oppenheimer Bond Fund/VA. This Fund seeks a high level of current income.
Secondarily, this Fund seeks capital growth when consistent with its primary
objective. The Fund will, under normal market conditions, invest at least 65% of
its total assets in investment grade debt securities.
Oppenheimer Capital Appreciation Fund/VA. This Fund seeks to achieve capital
appreciation by investing in securities of well-known, established companies.
Oppenheimer Small Cap Growth Fund/VA. This Fund seeks capital appreciation.
Current income is not an objective. In seeking its investment objective, the
Fund invests mainly in securities of "growth type" companies with market
capitalizations of less than $1 billion.
Oppenheimer Funds, Inc. manages Oppenheimer Variable Account Funds.
SAGE LIFE INVESTMENT TRUST
EAFE(R) Equity Index Fund. This Fund seeks to replicate as closely as possible
the performance of the Morgan Stanley Capital International Europe, Australasia,
Far East Index before the deduction of Fund expenses.
S&P 500 Equity Index Fund. This Fund seeks to replicate as closely as possible
the performance of the S&P 500 Composite Stock Price Index before the deduction
of Fund expenses.
Money Market Fund. This Fund seeks to provide high current income consistent
with the preservation of capital and liquidity. Although the Fund seeks to
maintain a constant net asset value of $1.00 per share, there can be no
assurance that the Fund can do so on a continuous basis. An investment in the
Money Market Fund is not guaranteed.
Nasdaq-100 Index(R) Fund. This Fund seeks to provide investment returns that
correspond to the performance of the Nasdaq-100 Index(R) before the deduction of
Fund expenses. The Nasdaq-100 Index(R) is a modified capitalization-weighted
index composed of 100 of the largest non-financial domestic and international
companies listed on the National Market tier of the Nasdaq Stock Market.
All-Cap Growth Fund. This Fund seeks long-term capital appreciation by
investing primarily in a diversified portfolio of common stocks.
Sage Advisors, Inc. is the investment manager to the Sage Life Investment
Trust. State Street Global Advisors subadvises the EAFE(R) Equity Index Fund,
S&P 500 Equity Index Fund and Nasdaq-100 Index(R) Fund. Conning Asset Management
Company subadvises the Money Market Fund. Eagle Asset Management, Inc.
subadvises the All-Cap Growth Fund.
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price Equity Income Portfolio. This Fund seeks to provide substantial
dividend income as well as long-term growth of capital through investments in
the common stocks of established companies.
T. Rowe Price Mid-Cap Growth Portfolio. This Fund seeks to provide long-term
capital appreciation by investing in mid-cap stocks with potential for above-
average earnings.
T. Rowe Price Personal Strategy Balanced Portfolio. The Fund seeks to provide
the highest total return over time, with an emphasis on both capital growth and
income. The Personal Strategy Balanced Portfolio invests in a diversified
portfolio of stocks, bonds, and money market securities.
T. Rowe Price Associates, Inc. provides investment management to the T. Rowe
Price Equity Series, Inc.
The names, investment objectives, and policies of certain Funds may be similar
to those of other retail mutual funds which can be purchased outside of a
variable insurance product, and that are managed by the same investment adviser
or manager. The investment results of the Funds, however, may be higher or lower
than the results of such other retail mutual funds. There can be no assurance,
and no representation is made, that the investment results of any of the Funds
will be comparable to the investment results of any other retail mutual fund,
even if the other retail mutual fund has the same investment adviser or manager.
Shares of the Funds may be sold to separate accounts of insurance companies
that are not affiliated with us or each other, a practice known as "shared
funding." They also may be sold to separate accounts to serve as the underlying
investment for both variable annuity contracts and variable life insurance
contracts, a practice known as "mixed funding." As a result, there is a
possibility that a material conflict may arise between the interests of
Owners who allocate Account Values to the Variable Account, and owners of other
contracts who allocate contract values to one or more other separate accounts
investing in any of the Funds. Shares of some of the Funds may also be sold
directly to certain qualified pension and retirement plans qualifying under
Section 401 of the Internal Revenue Code of 1986, as amended (the "Code"). As a
result, there is a possibility that a material conflict may arise between the
interest of Owners or owners of other contracts (including contracts issued by
other companies), and such retirement plans or participants in such retirement
plans. In the event of any material conflicts, we will consider what action may
be appropriate, including removing a Fund from the Variable Account or replacing
the Fund with another Fund. There are certain risks associated with mixed and
shared funding and with the sale of shares to qualified pension and retirement
plans, as disclosed in each Trust's prospectus.
We have entered into agreements with either the investment adviser or
distributor for each of the Funds in which the adviser or distributor pays us a
fee for administrative services we provide. The fee is ordinarily based upon an
annual percentage of up to .25% of the average aggregate net amount we have
invested on behalf of the Variable Account and other separate accounts. These
percentages differ; some investment advisers or distributors pay us a greater
percentage than other advisers or distributors.
More detailed information concerning the investment objectives, policies, and
restrictions of the Funds, the expenses of the Funds, the risks attendant to
investing in the Funds and other aspects of their operations is found in the
current prospectus for each Trust. You should read the Trusts' prospectuses
carefully. The Trusts' prospectuses will be delivered to you with your Contract.
Fixed Account Investment Options
Each time you allocate purchase payments or transfer funds to the Fixed
Account, we establish a Fixed Sub-Account. We guarantee an interest rate (the
"Guaranteed Interest Rate") for each Fixed Sub-Account for a period of time (a
"Guarantee Period"). When you make an allocation to the Fixed Sub-Account, we
apply the Guaranteed Interest Rate then in effect. We may establish DCA Fixed
Sub-Accounts for our Dollar-Cost Averaging Program.
How we determine the Guaranteed Interest Rate. We have no specific formula for
establishing the Guaranteed Interest Rates for the different Guarantee Periods.
Our determination will be influenced by, but not necessarily correspond to,
interest rates available on fixed income investments that we may acquire with
the amounts we receive as purchase payments or transfers of Account Value under
the Contracts. We will invest these amounts primarily in investment-grade fixed
income securities including: securities issued by the U.S. Government or its
agencies or instrumentalities, which issues may or may not be guaranteed by the
U.S. Government; debt securities that have an investment grade, at the time of
purchase, within the four highest grades assigned by Moody's Investor Services,
Inc., Standard & Poor's Corporation, or any other nationally recognized rating
service; mortgage-backed securities collateralized by real estate mortgage
loans, or securities collateralized by other assets, that are insured or
guaranteed by the Federal Home Loan Mortgage Association, the Federal National
Mortgage Association, or the Government National Mortgage Association, or
that have an investment grade at the time of purchase within the four highest
grades described above; other debt instruments; commercial paper; cash or cash
equivalents. You will have no direct or indirect interest in these investments,
and you do not share in the investment performance of the assets of the
Fixed Account. We will also consider other factors in determining the
Guaranteed Interest Rates, including regulatory and tax requirements, sales
commissions, administrative expenses borne by us, general economic trends,
and competitive factors. The Company's management will make the final
determination of the Guaranteed Interest Rates it declares. We cannot predict
or guarantee the level of future interest rates. However, our Guaranteed
Interest Rates will be at least 3% per year. Guaranteed Interest Rates do
not depend upon and do not reflect the performance of the Fixed Account.
Guarantee Periods. We measure the length of a Guarantee Period from the end of
the calendar month in which you allocated or transferred the amount to the Fixed
Sub-Account. This means that the Expiration Date of any Guarantee Period will
always be the last day of a calendar month. The currently available Guarantee
Periods are 1, 2, 3, 4, 5, 7, and 10 years. We may offer different Guarantee
Periods in the future. Not all Guarantee Periods may be available in all states.
Any Guarantee Period you select cannot be longer than the number of full years
remaining until your Income Date.
We may offer different Guarantee Periods with special Guaranteed Interest
Rates for the DCA Fixed Sub-Accounts. In addition, we may offer special
Guaranteed Interest Rates for new purchase payments allocated to the Fixed
Sub-Accounts and DCA Fixed Sub-Accounts.
We will notify you of your renewal options at least fifteen days but not more
than forty-five days before each Expiration Date of your Fixed Sub-Accounts.
Currently, your options are:
. Take no action and we will transfer the value of the expiring Fixed Sub-
Account to the Fixed Sub-Account with the same Guarantee Period, but not
longer than five years or extending beyond the Income Date, as of the day
the previous Fixed Sub-Account expires. If such Guarantee Period is not
currently available, we will transfer your value to the next shortest
Guarantee Period. If there is no shorter Guarantee Period, we will transfer
your value to the Money Market Sub-Account.
. Elect a new Guarantee Period(s) from among those we offer (excluding any
that extend beyond your Income Date) as of the day the previous Fixed Sub-
Account expires.
. Elect to transfer the value of the Fixed Sub-Account to one or more Variable
Sub-Accounts.
Any amounts surrendered, withdrawn, transferred or applied to an income plan
other than during the thirty days before the Expiration Date of the Guarantee
Period are subject to a Market Value Adjustment with the exception of the
following transactions:
. Transfers from DCA Fixed Sub-Accounts made automatically under our Dollar
Cost Averaging Program, and
. Withdrawals of earned interest made automatically under our Systematic
Partial Withdrawal Program.
We currently waive any Market Value Adjustment on withdrawals you take to
satisfy IRS minimum distribution requirements.
Market Value Adjustment. A Market Value Adjustment reflects the change in
interest rates since we established a Fixed Sub-Account. It compares: (1) the
current Index Rate for a period equal to the time remaining in the Guarantee
Period, and (2) the Index Rate at the time we established the Fixed Sub- Account
for a period equal to the Guarantee Period.
Ordinarily:
. If the current Index Rate for a period equal to the time remaining in the
Guarantee Period is higher than the applicable Index Rate at the time we
established the Fixed Sub-Account, the Market Value Adjustment will be
negative.
. If the current Index Rate for a period equal to the time remaining in the
Guarantee Period is lower than the applicable Index Rate at the time we
established the Fixed Sub-Account, the Market Value Adjustment will be
positive.
We will apply a Market Value Adjustment as follows:
. For a surrender, withdrawal, transfer, or amount applied to an income plan,
we will calculate the Market Value Adjustment on the total amount that must
be surrendered, withdrawn, transferred or applied to an income plan to
provide the amount requested.
. If the Market Value Adjustment is negative, it reduces any remaining value
in the Fixed Sub-Account, or amount of Surrender Value. Any remaining Market
Value Adjustment then reduces the amount withdrawn, transferred, or applied
to an income plan.
. If the Market Value Adjustment is positive, it increases any remaining value
in the Fixed Sub-Account or amount surrendered. In the case of surrender, or
if you withdraw, transfer or apply to an income plan, the full amount of the
Fixed Sub-Account, the Market Value Adjustment increases the amount
surrendered, withdrawn, transferred, or applied to an income plan.
A Market Value Adjustment will not be applied to any amounts payable upon
death or cancellation during the Free Look Period.
We will compute the Market Value Adjustment by multiplying the factor below by
the total amount that must be surrendered, withdrawn, transferred, or applied to
an income plan from the Fixed Sub-Account to provide the amount you requested.
N/365
[(1+I)/(1+J+.0025)] -1
Where
I is the Index Rate for a maturity equal to the Fixed Sub-Account's
Guarantee Period at the time we established the Sub-Account;
J is the Index Rate for a maturity equal to the time remaining (rounded up
to the next full year) in the Fixed Sub-Account's Guarantee Period at the time
of calculation; and
N is the remaining number of days in the Guarantee Period at the time of
calculation.
We currently base the Index Rate for a calendar week on the reported rate for
the preceding calendar week. We reserve the right to set it less frequently than
weekly but in no event less often than monthly. If there is no Index Rate for
the maturity needed to calculate I or J, we will use straight- line
interpolation between the Index Rate for the next highest and next lowest
maturities to determine that Index Rate. If the maturity is one year or less, we
will use the Index Rate for a one-year maturity.
Examples of how the Market Value Adjustment works are shown in Appendix A. A
detailed description of the Market Value Adjustment formula has been filed with
the New York Superintendent of Insurance.
Transfers
Before the Income Date and while the Annuitant is living, you may transfer
Account Value from and among the Variable and Fixed Sub-Accounts at any time,
subject to certain conditions. However, in certain states, your right to
transfer Account Value is restricted until the Free Look Period ends. See "What
Are My Investment Options?" The minimum amount of Account Value that you may
transfer from a Sub-Account is $100, or, if less, the entire remaining Account
Value held in that Sub-Account. If a transfer would reduce the Account Value
remaining in a Sub-Account below $100, we will treat your transfer request as a
request to transfer the entire amount.
You must give us Satisfactory Notice of the Sub-Accounts from which and to
which we are to make the transfers. Otherwise, we will not transfer your Account
Value. A transfer from a Fixed Sub-Account other than in the 30-day period
before its Expiration Date ordinarily will be subject to a Market Value
Adjustment. There is currently no limit on the number of transfers from and
among the Sub-Accounts.
A transfer ordinarily takes effect on the Business Day we receive Satisfactory
Notice at our Customer Service Center. We will deem requests received on other
than a Business Day as received on the next following
<PAGE>
Business Day. We may, however, defer transfers to, from, and among the Variable
Sub- Accounts under the same conditions that we may delay paying proceeds.
In addition, we reserve the right to restrict transfers:
. if any of the Variable Sub-Accounts that would be affected by the transfer
is unable to purchase or redeem shares of the Fund in which the Sub-Account
invests; or
. if the transfer results in more than one trade involving the same Sub-
Account with a 30-day period; or
. if the transfer would adversely affect Accumulation Unit Values (which may
occur if the transfer would affect one percent or more of the relevant
Fund's total assets).
We reserve the right to impose a transfer charge of up to $25 on each transfer
in a Contract Year in excess of twelve, and to limit, upon notice, the maximum
number of transfers you may make per calendar month or per Contract Year. For
purposes of assessing any transfer charge, we will consider each transfer
request to be one transfer, regardless of the number of Sub- Accounts affected
by the transfer.
After the Income Date, you must have our prior consent to transfer value from
the Fixed Account to the Variable Account or from the Variable Account to the
Fixed Account. A Market Value Adjustment ordinarily will apply to transfers from
the Fixed Account. We reserve the right to limit the number of transfers among
the Variable Sub-Accounts to one transfer per Contract Year after the Income
Date.
Telephone Transactions. You may request transfers or withdrawals by telephone.
(We reserve the right to discontinue permitting withdrawals by telephone.) We
will not be liable for following instructions communicated by telephone that we
reasonably believe to be genuine. To request transfers or withdrawals by
telephone, you must elect the option on our authorization form. We will use
reasonable procedures to confirm that instructions communicated by telephone are
genuine. We may only be liable for any losses due to unauthorized or fraudulent
instructions where we fail to follow our procedures properly. These procedures
include: (a) asking you or your authorized representative to provide certain
identifying information; (b) tape recording all such conversations; and (c)
sending you a confirmation statement after all such telephone transactions.
We also have a form to allow you to create a power of attorney by authorizing
another person to give telephone instructions. Unless prohibited by state law,
we will treat such power as a durable power of attorney. The Owner's subsequent
incapacity, disability, or incompetency will not affect the power of attorney.
We may cease to honor the power by sending written notice to you at your last
known address. Neither we nor any person acting on our behalf shall be subject
to liability for any act done in good faith reliance upon your power of
attorney.
<PAGE>
Internet Transactions. In addition to telephone transactions, we permit
transfers via the Internet. We will send Owners information about our website
and transactions that may be made through it.
Third Party Transfers. As a general rule and as a convenience to you, we allow
a third party the right to make transfers on your behalf. However, when the same
third party possesses the right to make transfers on behalf of many Owners, the
result can be simultaneous transfers involving large amounts of Account Value.
Such transfers can disrupt the orderly management of the Funds, can result in
higher costs to Owners, and are ordinarily not compatible with the long-range
goals of purchasers of the Contracts. We believe that such simultaneous
transfers made by third parties are not in the best interest of all shareholders
of the Funds. The managements of the Funds share this position.
Therefore, to the extent necessary to reduce the adverse effects of
simultaneous transfers made by Owners or third parties holding the right to make
transfers on behalf of multiple parties, we may refuse to honor third party
transfers and have instituted or will institute procedures to ensure that the
transfer requests that we receive have, in fact, been made by the Owners in
whose names they are submitted. However, our procedures will not prevent you
from making your own transfer requests.
Transfer Programs
Dollar-Cost Averaging Program. Our optional dollar-cost averaging program
permits you to systematically transfer (monthly, or as frequently as we allow),
a set dollar amount from the Money Market Sub-Account to any combination of
Variable Sub-Accounts. We also allow dollar-cost averaging from DCA Fixed
Sub-Accounts.
The dollar-cost averaging method of investment is designed to reduce the risk
of making purchases only when the price of Accumulation Units is high. However,
you should carefully consider your financial ability to continue the program
over a long enough period of time to purchase units when their value is low as
well as when high. Dollar-cost averaging does not assure a profit or protect
against a loss. Because interest continues to be earned on the balance in the
Money Market Sub-Account or a DCA Fixed Sub-Account, the amounts we transfer
will vary slightly from month to month. An example of how our dollar- cost
averaging program works is shown in Appendix B.
You may elect to participate in the dollar-cost averaging program at any time
before the Income Date by sending us Satisfactory Notice. The minimum transfer
amount is $100 from the Money Market Sub-Account or from a DCA Fixed
Sub-Account. We will make all dollar-cost averaging transfers on the day of each
month that corresponds to your Contract Date. If that date is not one on which
we are open for business, we will make the transfer on the next following
Business Day. If you want to dollar-cost average from more than one DCA Fixed
Sub-Account at the same time, restrictions may apply.
Once elected, dollar-cost averaging remains in effect until:
. the Income Date;
. you surrender the Contract;
. the value of the Sub-Account from which transfers are being made is
depleted; or
. you cancel the program by written request.
If you cancel dollar-cost averaging from a DCA Fixed Sub-Account before the
end of the selected Guarantee Period, we reserve the right to treat this request
as a transfer request, and we ordinarily will assess a Market Value Adjustment
on the amount canceled. You can request changes by writing us at our Customer
Service Center. There is no additional charge for dollar-cost averaging. A
transfer under this program is not a transfer for purposes of assessing a
transfer charge. We also reserve the right, at any time and for any reason, (a)
to discontinue offering this program, or (b) to amend this program in any
fashion including but not limited to restricting the Variable Sub-Accounts to
which transfers can be made. Dollar-cost averaging is not available while you
are participating in the systematic partial withdrawal program.
We may also permit you to periodically transfer earnings (sweep) from the
Fixed Sub-Accounts to the Variable Sub-Accounts.
Asset Allocation Program. An optional Asset Allocation Program is available
during the Income Phase if you do not wish to make your own investment
decisions. This investment planning tool is designed to find an asset mix that
attempts to achieve the highest expected return based upon your tolerance for
risk, and consistent with your needs and objectives.
If you participate in the asset allocation program, we will automatically
allocate all initial and additional purchase payments among the Variable Sub-
Accounts indicated by the model you select. The models do not include
allocations to the Fixed Account. Although you may only use one model at a time,
you may change your selection as your tolerance for risk, and/or your needs and
objectives change. Bear in mind, the use of an asset allocation model does not
guarantee investment results. You may use a questionnaire that is offered to
determine the model that best meets your risk tolerance and time horizons.
Because each Variable Sub-Account performs differently over time, your
portfolio mix may vary from its initial allocations. We will automatically
rebalance your Fund mix quarterly to bring your portfolio back to its original
allocation percentages.
From time to time the models are reviewed. It may be found that allocation
percentages within a particular model need to be changed. You will be sent a
notice at least 30 days before any such change is made, and you will be given an
opportunity not to make the change.
If you participate in the asset allocation program, the transfers made under
the program are not taken into account in determining any transfer charge. There
is no additional charge for this program, and you may discontinue your
<PAGE>
participation in this program by contacting our Customer Service Center. We
reserve the right to cancel the asset allocation program at any time and for any
reason.
Automatic Portfolio Rebalancing Program. Once you allocate your money among
the Variable Sub-Accounts, the investment performance of each Variable Sub-
Account may cause your allocation to shift. Before the Income Date, you may
instruct us to automatically rebalance (on a calendar quarter, semi-annual or
annual basis) Variable Account Value to return to your original allocation
percentages. Your request will be effective on the Business Day on which we
receive your request at our Customer Service Center. We will deem requests
received on other than a Business Day as received on the next following Business
Day. Your allocation percentages must be in whole percentages. You may start and
stop automatic portfolio rebalancing at any time and make changes to your
allocation percentages by written request. There is no additional charge for
using this program. A transfer under this program is not a transfer for purposes
of assessing any transfer charge. We reserve the right to discontinue offering
this program at any time and for any reason. We do not include any money
allocated to the Fixed Account in the rebalancing.
Values Under Your Contract
Account Value. The Account Value is the entire amount we hold under your
Contract for you. The Account Value serves as a starting point for calculating
certain values under your Contract. It equals the sum of your Variable Account
Value and your Fixed Account Value. We first determine your Account Value on the
Contract Date, and after that, on each Business Day. The Account Value will vary
to reflect:
. the performance of the Variable Sub-Accounts you have selected;
. interest credited on amounts you allocated to the Fixed Account;
. any additional purchase payments; and
. charges, transfers, withdrawals, and surrenders.
Your Account Value may be more or less than purchase payments you made.
Surrender Value. The Surrender Value on a Business Day before the Income Date
is the Account Value, plus or minus any applicable Market Value Adjustment,
less any applicable annual administration charge and any applicable Purchase
Payment Tax Charge.
Variable Account Value. On any Business Day, the Variable Account Value equals
the sum of the values in each Variable Sub-Account. The value in each Variable
Sub-Account equals the number of Accumulation Units attributable to that
Variable Sub-Account multiplied by the Accumulation Unit value for that Variable
Sub-Account on that Business Day. When you allocate a purchase payment or
transfer Account Value to a Variable Sub-Account, we credit your Contract with
Accumulation Units in that Variable Sub-Account. We determine the number of
Accumulation Units by dividing the dollar amount allocated or transferred to
the Variable Sub-Account by the Sub-Account's Accumulation Unit value for that
Business Day. Similarly, when you transfer, withdraw, or surrender an
amount from a Variable Sub-Account, we cancel Accumulation Units in that
Variable Sub-Account. We determine the number of Accumulation Units
canceled by dividing the dollar amount you transferred, withdrew, or surrendered
by the Variable Sub-Account's Accumulation Unit value for that Business Day.
Accumulation Unit Value. Accumulation Unit Value varies to reflect the
investment experience of the underlying Fund, and may increase or decrease from
one Business Day to the next. We arbitrarily set the Accumulation Unit value for
each Variable Sub-Account at $10 when we established the Sub- Account. For each
Valuation Period after the date of establishment, we determine the Accumulation
Unit value by multiplying the Accumulation Unit value for a Sub-Account for the
prior Valuation Period by the net investment factor for the Variable Sub-Account
for the Valuation Period.
Net Investment Factor. The net investment factor is an index we use to measure
the investment performance of a Variable Sub-Account from one Valuation Period
to the next during the Accumulation Phase. We determine the net investment
factor for any Valuation Period by dividing (a) by (b) where:
(a) is the net result of:
(1) the Net Asset Value of the Fund in which the Variable Sub-Account
invests determined at the end of the current Valuation Period; plus
(2) the per share amount of any dividend or capital gain distributions
made by the Fund on shares held in the Variable Sub- Account if the
"ex-dividend" date occurs during the current Valuation Period; plus or minus
(3) a per share charge or credit for any taxes reserved for, which we
determine to have resulted from the operations of the Variable Sub- Account;
and
(b) is the Net Asset Value of the Fund in which the Variable Sub-Account
invests determined at the end of the immediately preceding Valuation Period.
The net investment factor may be more or less than, or equal to, one.
Fixed Account Value. The Fixed Account Value is the sum of the Fixed Account
Value in each Fixed Sub-Account (including a DCA Fixed Sub-Account) on any
particular day. The value in each Fixed Sub-Account equals:
. the portion of the purchase payment(s) allocated or amount transferred to
the Sub-Account; plus
. interest at the Guaranteed Interest Rate; minus
. any transfers from the Sub-Account; minus
. any withdrawals from the Sub-Account; and minus
. any charges allocated to the Sub-Account.
We also adjust the Fixed Sub-Account Value for any Market Value Adjustment,
the value of which could be positive or negative.
5. What Are The Expenses Under A Contract?
We deduct the charges described below. The charges are for the services and
benefits we provide, costs and expenses we incur, and risks we assume under the
Contracts.
. Services and benefits we provide include:
. the ability of Owners to make withdrawals and surrenders under the
Contracts;
. the death benefit paid on the death of the Owner;
. the available investment options, including dollar-cost averaging, asset
allocation, automatic portfolio rebalancing, IRA partial withdrawal program
and systematic partial withdrawal programs;
. administration of the income plans available under the Contracts; and
. the distribution of various reports to Owners.
Costs and expenses we incur include:
. those related to various overhead and other expenses associated with
providing the services and benefits guaranteed by the Contracts;
. sales and marketing expenses; and
. other costs of doing business.
Risks we assume include:
. the risks that Annuitants may live longer than we estimated when we
established the monthly income payment rates per $1,000 under the Contracts;
. that the amount of the death benefit will be greater than Account Value;
and
. that the costs of providing the services and benefits under the Contracts
will exceed the charges deducted.
We may also deduct a charge for taxes. See "Fee Table."
We may realize a profit or loss on one or more of the charges. We may use any
such profits for any corporate purpose, including, among other things, the
payment of sales expenses.
Unless we otherwise specify, we will deduct charges proportionately from all
Variable Sub-Accounts and Fixed Sub-Accounts in which you are invested.
We may reduce or eliminate charges under the Contracts when sales result in
savings, reduction of expenses and/or risks to the Company. Generally, we will
make such reductions or eliminations based on the following factors:
. the size of the group;
. the total amount of purchase payments to be received from the group;
. the purposes for which the Contracts are purchased;
. the nature of the group for which the Contracts are purchased; and
. any other circumstances that could reduce Contract costs and expenses.
We may also sell the Contracts with lower or no charges to a person who is an
officer, director or employee of Sage Life-NY or of certain affiliates,
distributors, or service providers of ours. Reductions or eliminations in
Contract charges will not be unfairly discriminatory against any person. Please
contact our Customer Service Center for more information about these cost
reductions and eliminations.
Annual Administration Charge
We will deduct an annual administration charge of $30 for the first seven
Contract Years (i) on each Contract Anniversary, and (ii) on the day of any
surrender if the surrender is not on the Contract Anniversary. We will waive
this charge on and after the eighth Contract Anniversary, or if the Account
Value is at least $50,000 when we would have otherwise deducted the annual
administration charge. We may, from time to time, eliminate this charge for the
first Contract Year. We reserve the right to increase this charge to $40.00.
However, we will not increase this charge without obtaining any necessary state
approvals prior to the increase.
Transfer Charge
We currently do not deduct this charge. However, we reserve the right to
deduct a transfer charge of up to $25 for the 13th and each subsequent transfer
during a Contract Year. The charge is at cost with no profit to us. For the
purpose of assessing the transfer charge, we consider each written or telephone
request to be one transfer, regardless of the number of Sub- Accounts affected
by the transfer. In the event that the transfer charge becomes applicable, we
will deduct it proportionately from the Sub-Accounts from which you made the
transfer. Transfers made in connection with the dollar-cost averaging, asset
allocation, and automatic portfolio rebalancing programs will not count as
transfers for purposes of assessing this charge.
Asset-Based Charges
We assess Asset-Based Charges against your Contract for assuming mortality
and expense risks and administrative costs we assume. Before the Income Date,
we deduct Asset-Based Charges monthly and calculate the charges as a percentage
of the Variable Account Value on the date of deduction. On the Contract Date and
monthly thereafter, we deduct the Asset-Based Charges proportionately from the
Variable Sub-Accounts in which you are invested. On and after the Income Date,
however, these charges are called Variable Sub- Account Charges and we deduct
them daily from the assets in each Variable Sub- Account supporting variable
income payments. The maximum charges are:
<TABLE>
<CAPTION>
Combined
Asset-Based Charges
------------------------
Annual Monthly Daily
Charge Charge Charge
------ ------- --------
<S> <C> <C> <C>
1.40% .116667% .0038626%
</TABLE>
We reserve the right to deduct Asset-Based Charges on the effective date of
any transfer from the Fixed Account, or allocation of purchase payment to the
Variable Account, based on the amount transferred or allocated and based on the
number of days remaining until the next date of deduction. These charges do not
apply to any Fixed Account Value.
Purchase Payment Tax Charge
We will deduct any state or local premium tax that we incur from your Account
Value. We reserve the right to defer the collection of this charge and deduct it
against your Account Value when you surrender your Contract or begin receiving
regular income payments. This charge currently ranges from 0% to 3.5% depending
upon the state or locality.
Optional Benefits Charges
Guaranteed Minimum Income Benefit. If you choose the optional Guaranteed
Minimum Income Benefit, we will deduct an additional charge equal on an annual
basis to 0.20% of your Account Value on the date of deduction during the
Accumulation Phase. We calculate this charge as a percentage of your Account
Value on the date of deduction, and deduct it proportionately from the Fixed and
Variable Sub-Accounts in which you are invested. Charges are deducted on your
Contract Date and monthly thereafter. These charges will continue while your
Contract is in force unless (a) you apply all of your Account Value to an Income
Plan or income payments cease for any reason, (b) the death benefit is paid or
has begun to be paid, or (c) the Covered Person dies and an eligible surviving
spouse chooses not to continue this rider even though he or she continues the
Contract.
Enhanced Death Benefit. If you choose the optional Enhanced Death Benefit, we
will deduct an additional charge equal on an annual basis to 0.20% of your
Account Value on the date of deduction during the Accumulation Phase. We
calculate this charge as a percentage of your Account Value on the date of
deduction, and deduct it proportionately from the Fixed and Variable
Sub-Accounts in which you are invested. Charges are deducted on your Contract
Date and monthly thereafter. These charges will continue while your Contract is
in force unless (a) you apply the Account Value to an Income Plan, (b) the death
benefit is paid or has begun to be paid, or (c) the Covered Person dies and an
eligible surviving spouse chooses not to continue this rider even though he or
she continues the Contract.
Fund Annual Expenses
Because the Variable Account purchases shares of the various Funds you choose,
the net assets of the Variable Account will reflect the investment management
fees and other operating expenses incurred by those Funds. A table of each
Fund's management fees and other expenses can be found in the front of this
Prospectus in the Fee Table. For a description of each Fund's expenses,
management fees, and other expenses, see the Trusts' prospectuses.
Additional Information
The Contracts are sold by broker-dealers through registered representatives of
such broker-dealers who are also appointed and licensed as insurance agents of
Sage Life-NY. See "Distribution of the Contracts." These broker-dealers receive
commissions for selling Contracts calculated as a percentage of purchase
payments (up to a maximum of 6.25%). You do not pay these commissions. We do.
Broker-dealers who meet certain productivity and profitability standards may be
eligible for additional compensation.
6. How Will My Contract Be Taxed?
This discussion is not intended as tax advice. Please consult counsel or other
competent tax advisers for more complete information.
Introduction
The following discussion is general in nature and is not intended as tax
advice. Each person concerned should consult a competent tax adviser. No attempt
is made to consider any applicable state tax or other tax laws, or to address
any federal estate, or state and local estate, inheritance, and other tax
consequences of ownership or receipt of distributions under a Contract.
When you invest in an annuity contract, you usually do not pay taxes on your
investment gains until you withdraw the money--generally for retirement
purposes. If you invest in a variable annuity as part of a pension plan or
employer-sponsored retirement program, your contract is called a Qualified
Contract. If your annuity is independent of any formal retirement or pension
plan, it is termed a Non-Qualified Contract.
Taxation of Non-Qualified Contracts
Non-Natural Person. A Non-Qualified Contract that is owned by a non-natural
person (such as a corporation or a trust) is generally not treated as an annuity
contract for tax purposes. There are some exceptions to this rule and a
prospective owner that is not a natural person should discuss these with a tax
adviser. The discussion in this section assumes that the Contract is owned by a
natural person.
Withdrawals and Surrenders. When a withdrawal from a Non-Qualified Contract
occurs, the amount received will be treated as ordinary income subject to tax up
to an amount equal to the excess (if any) of the Account Value immediately
before the distribution over the Owner's investment in the Contract (generally,
the premiums or other consideration paid for the Contract, reduced by any amount
previously distributed from the Contract that was not subject to tax) at that
time. In the case of a surrender under a Non-Qualified Contract, the amount
received generally will be taxable as ordinary income only to the extent it
exceeds the Owner's investment in the Contract.
Special Note on Withdrawals. Please read the following carefully and consult
with your tax adviser on these and other possible tax consequences before making
a withdrawal.
. It is possible that a positive Market Value Adjustment at the time of a
withdrawal may be treated as part of the Account Value immediately before
the distribution.
. We understand that it is the position of the Internal Revenue Service that
when withdrawals (other than income payments) are taken from the cash value
of an income payout option, such as that offered by this Prospectus under
the term certain option (Income Plan 4. See "What Are My Income Payment
Options?"), then all amounts received by the taxpayer are taxable at
ordinary income rates as amounts "not received as an annuity." In addition,
such amounts are taxable to the recipient without regard to the owner's
investment in the contract or any investment gain which might be present in
the current annuity value. For example, under this view, an Owner with a
cash value of $100,000 seeking to obtain $20,000 of the cash value
immediately after annuitization under a term certain payout, would pay
income taxes on the entire $20,000 amount in that tax year. For some
taxpayers, such as those under age 59 1/2, additional tax penalties may also
apply. This adverse tax result means that Owners of Non-Qualified Contracts
should consider carefully the tax implications of any withdrawal requests
and their need for Contract funds prior to the exercise of this right.
Penalty Tax on Certain Withdrawals. If you make a withdrawal from or surrender
a Non-Qualified Contract, you may be subject to a federal tax penalty equal to
ten percent of the amount treated as income. However, there usually is no
penalty on distributions that are:
. made on or after the taxpayer reaches age 59 1/2;
. made on or after the death of an Owner;
. attributable to the taxpayer's becoming disabled; or
. made as part of a series of substantially equal periodic payments for the
life (or life expectancy) of the taxpayer.
Other exceptions may be applicable under certain circumstances and special
rules may be applicable in connection with the exceptions listed above. You
should consult a tax adviser with regard to exceptions from the penalty tax.
Income Payments. Although tax consequences may vary depending on the payout
option elected under an annuity contract, a portion of each income payment is
generally not taxed and the remainder is taxed as ordinary income. The non-
taxable portion of an income payment is generally determined in a manner that is
designed to allow you to recover your investment in the contract ratably on a
tax-free basis over the expected stream of income payments, as determined when
income payments start. Once your investment in the contract has been fully
recovered, however, the full amount of each income payment is subject to tax as
ordinary income.
Taxation of Death Benefit Proceeds. Amounts may be distributed from a Contract
because of your death or the death of the 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 surrender of the Contract, or
(ii) if distributed under a payout option, they are taxed in the same way as
annuity payments.
Withholding. Annuity distributions are generally subject to withholding for
the recipient's federal income tax liability. Recipients can generally elect,
however, not to have tax withheld from distributions.
Multiple Contracts. All non-qualified deferred annuity contracts that are
issued by us (or our affiliates) to the same Owner during any calendar year are
treated as one annuity contract for purposes of determining the amount
includible in such Owner's income when a taxable distribution occurs.
Further Information. We believe that the Contracts will qualify as annuity
contracts for federal income tax purposes and the above discussion is based on
that assumption. Further details can be found in the Statement of Additional
Information under the heading "Tax Status of the Contracts."
Taxation of a Qualified Contract
Qualified Contracts are subject to some of the same tax rules as Non-
Qualified Contracts, but there are a number of significant differences. Some of
these differences and other important rules are highlighted here and in the
Statement of Additional Information, but please keep in mind that this
discussion provides only general information about the tax consequences of
Qualified Contracts, and Owners, Annuitants, and Beneficiaries should consult
their tax advisors for more specific information.
Types of Qualified Contracts. A Qualified Contract can be used in connection
with the following types of retirement plans:
. Individual Retirement Annuity (IRA)--permits eligible individuals to make
non-deductible or deductible annual contributions of up to $2,000.
. SIMPLE IRA--permits certain small employers to establish a plan allowing
employees to make annual pre-tax contributions of up to $6,000, with an
employer contribution or match.
. Roth IRA--allows eligible individuals to make after-tax contributions of up
to $2,000, with no tax on qualifying distributions.
The form of the Qualified Contract and its IRA rider have been approved by the
IRS for use as an IRA. IRS approval does not relate to the merits of the IRA as
an investment.
Contributions and Distributions. Annual contributions to Qualified Contracts
are limited by tax rules and the terms of the retirement plans. For IRAs and
SIMPLE IRAs, minimum distributions generally must begin no later than April 1 of
the calendar year following the calendar year in which the Owner reaches age 70
1/2. Roth IRAs do not require distributions while the Owner is alive. Upon the
Owner's death, minimum distributions are required from IRAs, SIMPLE IRAs, and
Roth IRAs. Penalty taxes may apply to distributions made before age 59 1/2 and
to certain early distributions from Roth IRAs. See "Qualified Contracts" in the
Statement of Additional Information for more information on contributions and
distributions.
Distributions from Qualified Contracts generally are subject to withholding
for the Owner's federal income tax liability. The Owner will be provided the
opportunity to elect not to have tax withheld from distributions.
Terms of the Plan. Your rights under a Qualified Contract are also subject to
the terms of the retirement plan itself, although we will not be bound by the
terms of the plan if they contradict the Qualified Contract.
Transfers, Assignments, or Exchanges of a Contract
A transfer or assignment of ownership of a Contract, the designation of an
Annuitant, the selection of certain maturity dates, or the exchange of a
Contract may result in certain tax consequences to you that are not discussed in
this prospectus. An Owner contemplating any such transfer, assignment or
exchange, should consult a tax adviser as to the tax consequences.
Possible Tax Law Changes
Although the likelihood of legislative changes is uncertain, there is always
the possibility that the tax treatment of the Contract could change by
legislation or otherwise. Consult a tax adviser with respect to such
developments and their effect on the Contract. We have the right to modify the
Contract in response to changes that could otherwise diminish the favorable
tax treatment that Owners currently receive.
7. How Do I Access My Money?
You can partially withdraw from or surrender your Contract. When you surrender
your Contract, you can take the proceeds in a single sum, or you can request
that we pay the proceeds over a period of time under one of our income plans.
See "What Are My Income Payment Options?"
Withdrawals
You may withdraw all or part of your Surrender Value at any time before the
Income Date while the Annuitant is still living. (If you have elected the
"payments for a specified period certain" income plan option, you may request a
full or partial withdrawal after the Income Date; otherwise, no withdrawals are
permitted after the Income Date.) There may be adverse tax consequences if you
make a withdrawal from or surrender your Contract. Also, there may be adverse
tax consequences if you make a partial withdrawal during the Income Phase. See
"How Will My Contract Be Taxed?" You may make your withdrawal request in writing
or by telephone. See "Requesting Payments." Any withdrawal must be at least
$250. If a withdrawal request would reduce your Account Value remaining in a
Sub-Account below $250, we will treat the withdrawal request as a request to
withdraw the entire amount. We will pay you the withdrawal amount in one sum.
Under certain circumstances, we may delay this payment. See "Requesting
Payments."
When you request a withdrawal, you can direct how we deduct the withdrawal
from your Account Value. If you provide no directions, we will deduct the
withdrawal from your Account Value in the Sub-Accounts on a pro-rata basis.
A partial withdrawal will reduce your death benefit proportionately by the
amount your withdrawal(including any applicable Market Value Adjustment) reduces
Account Value and may be subject to federal income tax. See "What Are The
Expenses Under A Contract?" "How Will My Contract Be Taxed?" and "Does The
Contract Have A Death Benefit?"
Please note that if your requested withdrawal would reduce your Account Value
below $2,000, we reserve the right to treat the request as a withdrawal of only
the excess over $2,000.
Systematic Partial Withdrawal Program. The systematic partial withdrawal
program provides automatic monthly, quarterly, semi-annual, or annual payments
to you from the amounts you have accumulated in the Sub-Accounts. You select the
day we take withdrawals, but this day can be no later than the 28th day of the
month. If you do not select a day, we will use the day of each month that
corresponds to your Contract Date. If that date is not a Business Day, we will
use the next following Business Day. The minimum payment is $100. You can elect
to withdraw either earnings in a prior period (for example, prior month for
monthly withdrawals or prior quarter for quarterly withdrawals) or a specified
dollar amount.
. If you elect earnings, we will deduct the withdrawals from the Sub- Accounts
in which you are invested on a pro-rata basis.
. If you elect a specified dollar amount, we will deduct the withdrawals from
the Sub-Accounts in which you are invested on a pro-rata basis unless you
tell us otherwise. Also, any amount in excess of interest earned on a Fixed
Sub-Account in the prior period ordinarily will be subject to a Market Value
Adjustment. See "Market Value Adjustment."
You may participate in the systematic partial withdrawal program at any time
before the Income Date by providing Satisfactory Notice. Once we receive your
request, the program will begin and will remain in effect until your Account
Value drops to zero. You may cancel or make changes in the program at any time
by providing us with Satisfactory Notice. We do not deduct any other charges for
this program. We reserve the right to discontinue the systematic partial
withdrawal program at any time and for any reason. Systematic partial
withdrawals are not available while you are participating in the dollar-cost
averaging program.
IRA Partial Withdrawal Program. If your Contract is an IRA Contract (other
than a Roth IRA Contract) and you will attain age 70 1/2 in the current calendar
year, distributions may be made to satisfy requirements imposed by federal tax
law. An IRA partial withdrawal provides payout of amounts required to be
distributed by the IRS rules governing mandatory distributions under qualified
plans. We will send a notice before distributions must commence, and you may
elect this program at that time, or at a later date. You are, however,
ultimately responsible for determining that IRA distributions comply with
applicable tax code rules.
You may not elect the IRA Partial Withdrawal program while you are
participating in the systematic partial withdrawal program. You may take IRA
partial withdrawals on a monthly, quarterly, semi-annual, or annual basis. We
require a minimum withdrawal of $100. You select the day we make the
withdrawals, but this day can be no later than the 28th day of the month. If you
do not elect a day, we will use the day of each month that corresponds to your
Contract Date.
Requesting Payments
You must provide us with Satisfactory Notice of your request for payment. We
will ordinarily pay any death benefit, withdrawal, or surrender proceeds within
seven days after receipt at our Customer Service Center of all the requirements
for payment. We will determine the amount as of the date our Customer Service
Center receives all requirements.
We may delay making a payment, applying Account Value to an income plan, or
processing a transfer request if:
. the disposal or valuation of the Variable Account's assets is not reasonably
practicable because the New York Stock Exchange is closed for other than a
regular holiday or weekend, trading is restricted by the SEC, or the SEC
declares that an emergency exists; or
. the SEC, by order, permits postponement of payment to protect our Owners.
We also may defer making payments attributable to a check that has not cleared
(which may take up to 15 days), and we may defer payment of proceeds from the
Fixed Account for a withdrawal, surrender, or transfer request for up to six
months from the date we receive the request.
If we defer payment 10 Business Days or more, the amount deferred will earn
interest at a rate not less than the minimum required in the jurisdiction in
which we delivered the Contract.
8. How Is Contract Performance Presented?
We may advertise or include in sales literature yields, effective yields, and
total returns for the Variable Sub-Accounts. Effective yields and total returns
for the Variable Sub-Accounts are based on the investment performance of the
corresponding Funds. We base these figures on historical performance, and they
do not indicate or project future results. We may also advertise or include in
sales literature a Variable Sub-Account's performance compared to certain
performance rankings and indexes compiled by independent organizations, and we
may present performance rankings and indexes without such a comparison.
Yield
The yield of the Money Market Sub-Account refers to the annualized income
generated by an investment in the Sub-Account over a specified seven-day period.
We calculate the yield by assuming that the income generated for that seven-day
period is generated each seven-day period over a 52-week period. We calculate
the effective yield similarly but, when annualized, the income earned by an
investment in the Money Market Sub-Account is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment.
The yield of a Variable Sub-Account (except the Money Market Sub-Account)
refers to the annualized income generated by an investment in the Variable
Sub-Account over a specified 30-day or one-month period. We calculate the yield
by assuming that the income generated by the investment during that 30- day or
one-month period is generated over a 12-month period.
Total Return
The total return of a Variable Sub-Account refers to return quotations
assuming an investment under a Contract has been held in the Variable Sub-
Account for the stated times. Average annual total return of a Variable Sub-
Account tells you the return you would have experienced if you allocated a
$1,000 purchase payment to a Variable Sub-Account for the specified period.
Standard average annual total return reflects all historical investment results
for the Variable Sub-Account, and less all charges and deductions applied
against the Variable Sub-Account, but excluding any deductions for purchase
payment tax charges. Standard total return may be quoted for various periods
including 1 year, 5 years, and 10 years, or from inception of the Variable
Sub-Account if any of those periods are not available. We show standard
performance that reflects no charges for the optional benefits and that
reflects the charges for the optional benefits. "Non-Standard" average
annual total return information may be presented, computed on the same
basis as described above, except that there will be no Contract charges
deducted. In addition, we may from time to time disclose average annual
total return for non-standard periods and cumulative total return for a Variable
Sub-Account.
For periods starting prior to the date the Contracts were first offered, the
performance will be based on the historical performance of the corresponding
Fund. The performance will reflect the expenses of the Fund but will not reflect
any Contract charges.
Performance/Comparisons
We may, from time to time, also disclose yield, standard total returns, and
non-standard total returns for the Funds. We may also disclose yield, standard
total returns, and non-standard total returns of funds or other accounts managed
by the Adviser or Subadviser with investment objectives similar to those of the
Funds, and Variable Sub-Account performance based on that performance data. We
will accompany non-standard performance by standard performance.
In advertising and sales literature, we may compare the performance of each
Variable Sub-Account 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 Variable Sub-Accounts. Advertising and sales
literature may also compare the performance of a Variable Sub-Account to the S&P
500 Composite Stock Price Index, 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 indexes may also be used as a source of
performance comparison. We may also report other information, including the
effect of tax-deferred compounding on a Variable Sub-Account's investment
returns, or returns in general, which may be illustrated by tables, graphs, or
charts.
9. Does The Contract Have A Death Benefit?
Your Contract provides a death benefit for your Beneficiary if you die before
the Income Date.
If any Owner dies before the Income Date, we will pay the Beneficiary the
greatest of:
a. the Account Value determined as of the Business Day we receive proof of
death (if proof of death is received on other than a Business Day, we
will deem the proof as received on the next following Business Day);
b. 100% of the sum of all purchase payments made under the Contract, reduced
proportionately by the amount that any prior withdrawal (including any
associated Market Value Adjustment incurred) reduced Account Value;
c. the highest anniversary value (the "Highest Anniversary Value"); or
d. the surrender value.
The Highest Anniversary Value is the greatest anniversary value attained in
the following manner. When we receive proof of death, we will calculate an
anniversary value for each Contract Anniversary prior to the date of the Owner's
death, but not beyond the Owner's attained age 80. An anniversary value for a
Contract Anniversary equals:
(1) the Account Value on that Contract Anniversary;
(2) increased by the dollar amount of any purchase payments made since
the Contract Anniversary; and
(3) reduced proportionately by any withdrawals (including any applicable
Market Value Adjustment incurred) taken since that Contract Anniversary.
(By proportionately, we take the percentage by which the withdrawal decreases
the Account Value and we reduce the sum of (1) and (2) by that percentage.)
Example of effect of prior withdrawal on death benefit:
In (b) above, prior withdrawals will proportionately reduce the death benefit.
We provide the following example:
Death benefit before partial withdrawal: $100
Account Value before partial withdrawal: $50
Partial withdrawal: $48 (96% of Account Value)
Account Value after partial withdrawal $2
Death benefit after partial withdrawal $4 (death benefit reduced by 96%)
If there are multiple Owners, we will use the age of the oldest Owner to
determine the applicable death benefit. If there is an Owner who is a
non-natural person (that is, a non-individual), we will treat the Annuitant as
an Owner for the purpose of determining when an Owner dies and the Annuitant's
age will determine the death benefit payable to the Beneficiary in the event of
such Annuitant's death. We will consider any rider benefits payable upon death
of the Owner (or Annuitant, if a non-natural Owner) part of the death benefit.
Owner's Death Before the Income Date
If an Owner dies before the Income Date, the death benefit must be paid to the
Beneficiary (or joint Owner, if applicable) within 5 years of the date of death.
If the Beneficiary elects the lump sum and we pay it, the Contract will
terminate, and we will have no further obligations under the Contract.
Alternatively, the Beneficiary may provide us with Satisfactory Notice and
request that the Contract continue, in which case we will continue the Contract
subject to the following conditions:
(1) The Beneficiary becomes the new Owner. If there are joint Owners, the
surviving Owner is treated as the primary beneficiary and any other named
beneficiary is treated as the contingent beneficiary.
(2) Unless the new Owner otherwise tells us, we will allocate any excess of
the Death Benefit over the Account Value to and among the Variable and Fixed
Accounts in proportion to their values as of the date on which we determine
the death benefit. We will establish a new Fixed Sub-Account for any
allocation to the Fixed Account based on the Guarantee Period the new Owner
then elects.
However, certain distribution rules will apply to the continued Contract. If
the sole new Owner is not the deceased Owner's spouse, we must distribute the
entire interest in the Contract either: (i) over the life of the new Owner, but
not extending beyond the life expectancy of the new Owner, with distributions
beginning within one year of the prior Owner's death; or (ii) within five years
of the deceased Owner's death. These distributions, if from the Fixed Account,
are subject to our Market Value Adjustment rules. In addition, no additional
purchase payments may be applied to the Contract.
Alternatively, if the sole new Owner is the deceased Owner's spouse, the
Contract will continue with the surviving spouse as the new Owner. The Account
Value will be the Death Benefit that otherwise would be paid in a lump sum as of
the Business Day we receive proof of death, and the surviving spouse may make
additional purchase payments under the Contract. The surviving spouse may name a
new Beneficiary. If no Beneficiary is named, the surviving spouse's estate will
be the Beneficiary. Upon the death of the surviving spouse, the death benefit
will equal the Account Value as of the Business Day we receive proof of the
spouse's death. We will distribute the entire interest in the Contract to the
new Beneficiary in accordance with the provisions that apply in the case when
the new Owner is not the surviving spouse.
If there is more than one Beneficiary, the distribution provisions will apply
independently to each Beneficiary.
If the Owner of the Contract is a non-natural person, we will treat the death
of any Annuitant under the Contract as the death of an Owner. The Annuitant may
not be changed in a Contract owned by a non-natural person.
In all events, for Non-Qualified Contracts we will make death benefit
distributions in accordance with section 72(s) of the Code, or any applicable
successor provision. Other rules may apply to a Qualified Contract.
Owner's or Annuitant's Death After the Income Date
If any Owner dies on or after the Income Date, but before the time we have
distributed the entire interest in the Contract, we will distribute the
remaining portion at least as rapidly as under the method of distribution being
used as of the date of the Owner's death.
If income payments have been selected based on an income plan providing for
payments for a guaranteed period and the Annuitant dies on or after the Income
Date, we will make the remaining guaranteed payments to the Beneficiary. We will
make any remaining payments as rapidly as under the method of distribution being
used as of the date of the Annuitant's death. If no Beneficiary is living, we
will commute any unpaid guaranteed payments to a single sum (on the basis of the
interest rate used in determining the payments) and pay that single sum to the
estate of the last to die of the Annuitant or the Beneficiary.
Optional Enhanced Death Benefit Rider
You may enhance the Contract's basic death benefit by electing the optional
Enhanced Death Benefit rider if available in your state (check with your
registered representative regarding availability). The Enhanced Death Benefit
rider may provide an additional death benefit if the Owner dies before the
Income Date (or the Annuitant, if the Owner is not a natural person). We
determine the Enhanced Death Benefit on the Business Day we receive proof of
death by subtracting (b) from (a), and then multiplying by (c), where:
a) is your Account Value on the date of calculation;
b) is the Net Purchase Amount; and
c) is the Benefit Rate.
The Enhanced Death Benefit will not exceed the Maximum Benefit Amount as shown
in your Contract Schedule. The Maximum Benefit Amount is guaranteed not to be
less than 100% of your Net Purchase Amount times the Benefit Rate.
On the Contract Date, the Net Purchase Amount is equal to your Initial
Purchase Payment. Thereafter, the Net Purchase Amount is increased by any
additional purchase payments you make; and is reduced in proportion to the
reduction in Account Value that results from withdrawals you make.
The Benefit Rate is 40.0% for issue ages 69 and under, and 25.0% for issue
ages 70 through 79.
We will pay the Enhanced Death Benefit to your Beneficiary or surviving joint
Owner upon receipt of written proof of death. Please note that if your Account
Value has declined such that it is less than the Net Purchase Amount, no
Enhanced Death Benefit will be payable.
We show examples of the Enhanced Death Benefit in Appendix D.
Contract Continuation Option. An Owner's surviving spouse who is eligible to
continue the Contract under the Contract Continuation Option, may also be
eligible to continue this rider. To do so, the surviving spouse must give our
Customer Service Center notice within 30 days of the Business Day we receive
proof of the Owner's death. If the spouse is eligible under our then existing
rules, we will continue the rider based on our then current charges for the new
Owner's attained age. The rider's effective date for purposes of calculating
the Net Purchase Amount will be the Business Day the new Owner elects to
continue the rider. On this date the Net Purchase Amount will be equal to the
Account Value. After that, the Net Purchase Amount will be increased by any
additional purchase payments the new Owner makes, and will be reduced in
proportion to the reduction in Account Value that results from withdrawals
the new Owner makes. All of the other terms and conditions of the rider will
continue as before.
Other Enhanced Death Benefit Terms and Conditions.
. You can only elect the Enhanced Death Benefit at time of
application;
. You must be age 79 or younger at the time the Contract is issued;
. If you elect the Enhanced Death Benefit as an optional benefit it
is irrevocable and charges for it will remain in force during the
Accumulation Phase (unless not renewed by a surviving spouse who
continues the Contract under the Contract Continuation Option).
Important Considerations Regarding the Enhanced Death Benefit Option.
. The Enhanced Death Benefit rider does not guarantee that any amounts
under the rider will become payable upon death. Market declines
resulting in your Account Value at death being less than the Net
Purchase Amount will result in no Enhanced Death Benefit being
payable.
. Once elected, the Enhanced Death Benefit is irrevocable. This means
that even if the investment performance of the Funds are such as
would result in a basic death benefit that is sufficient for your
needs, the Enhanced Death Benefit charges will still be assessed.
. Please take advantage of the guidance of a qualified financial
adviser in evaluating the Enhanced Death Benefit option, as well as
all other aspects of the Contract.
. The Enhanced Death Benefit may not be available in all states.
Proof of Death
We must receive satisfactory proof of death at our Customer Service Center
before we will pay any death benefit. We will accept one of the following items:
1. An original certified copy of an official death certificate; or
2. An original certified copy of a decree of a court of competent
jurisdiction as to the finding of death; or
3. Any other proof satisfactory to us.
10. What Other Information Should I Know?
Separate Accounts
The Sage Variable Annuity Account A-NY. We established the Variable Account as
a separate investment account under New York law on April 10, 2000. The Variable
Account may invest in mutual funds, unit investment trusts, and other investment
portfolios. We own the assets in the Variable Account and are obligated to pay
all benefits under the Contracts. We use the Variable Account to support the
Contracts as well as for other purposes permitted by law. We registered the
Variable Account with the SEC as a unit investment trust under the 1940 Act and
it qualifies as a "separate account" within the meaning of the federal
securities laws. Such registration does not involve any supervision by the SEC
of the management of the Variable Account or Sage Life.
We divided the Variable Account into Variable Sub-Accounts, each of which
currently invests in shares of a specific Fund of AIM Variable Insurance Funds,
The Alger American Fund, Liberty Variable Investment Trust, SteinRoe Variable
Investment Trust, MFS(R) Variable Investment Trust SM, The Universal
Institutional Funds, Inc., Oppenheimer Variable Account Funds, Sage Life
Investment Trust, and T. Rowe Price Equity Series, Inc. Variable Sub-Accounts
buy and redeem Fund shares at net asset value without any sales charge. We
reinvest any dividends from net investment income and distributions from
realized gains from security transactions of a Fund at net asset value in shares
of the same Fund. Income, gains and losses, realized or unrealized, of the
Variable Account are credited to or charged against the Variable Account without
regard to any other income, gains or losses of Sage Life-NY.
Assets equal to the reserves and other Contract liabilities with respect to
the Variable Account are not chargeable with liabilities arising out of any
other business or account of Sage Life-NY. If the assets exceed the required
reserves and other liabilities, we may transfer the excess to our General
Account.
Voting of Fund Shares. We are the legal owner of shares held by the Variable
Sub-Accounts and as such, have the right to vote on all matters submitted to
shareholders of the Funds. However, as required by law, we will vote shares held
in the Variable Sub-Accounts at regular and special meetings of shareholders of
the Funds according to instructions received from Owners with Account Value in
the Variable Sub-Accounts. To obtain your voting instructions before a Fund
shareholder meeting, we will send you voting instruction materials, a voting
instruction form, and any other related material. We will vote shares held by a
Variable Sub-Account for which we received no timely instructions in the same
proportion as those shares for which we received voting instructions. Should the
applicable federal securities laws, regulations, or interpretations thereof
change so as to permit us to vote shares of the Funds in our own right, we may
elect to do so.
The Sage Fixed Interest Account A-NY. The Fixed Account is a separate
investment account under state insurance law. We maintain it separate from our
General Account and separate from any other separate account that we may have.
We own the assets in the Fixed Account, and may offer the Fixed Account in our
variable life insurance products. Assets equal to the reserves and other
liabilities of the Fixed Account will not be charged with liabilities that
<PAGE>
arise from any other business that we conduct. Thus, the Fixed Account
represents pools of assets that provide an additional measure of assurance that
Owners will receive full payment of benefits under the Contracts. We may
transfer to our General Account assets that exceed the reserves and other
liabilities of the Fixed Account. However, our obligations under (and values and
benefits under) the Fixed Account do not vary as a function of the investment
performance of the Fixed Account. Owners and Beneficiaries with rights under the
Contracts do not participate in the investment gains or losses of the assets of
the Fixed Account. These gains or losses accrue solely to us. We retain the risk
that the value of the assets in the Fixed Account may fall below the reserves
and other liabilities that we must maintain in connection with our obligations
under the Fixed Account. In such an event, we will transfer assets from our
General Account to the Fixed Account to make up the difference. We are not
required to register the Fixed Account as an investment company under the 1940
Act.
Modification
When permitted by applicable law, we may modify the Contracts as follows:
. deregister the Variable Account under the 1940 Act;
. operate the Variable Account as a management company under the 1940 Act
if it is operating as a unit investment trust;
. operate the Variable Account as a unit investment trust under the 1940 Act
if it is operating as a managed separate account;
. restrict or eliminate any voting rights of Owners, or other persons who
have voting rights as to the Variable Account;
. combine the Variable Account with other separate accounts; and
. combine a Variable Sub-Account with another Variable Sub-Account.
We also reserve the right, subject to applicable law, to make additions to,
deletions from, or substitutions of shares of a Fund that are held by the
Variable Account (the shares of the new Fund may have higher fees and charges
than the Fund it replaced, and not all Funds may be available to all classes of
Contracts); and to establish additional Variable Sub-Accounts or eliminate
Variable Sub-Accounts, if marketing, tax, or investment conditions so warrant.
Subject to any required regulatory approvals, we reserve the right to transfer
assets of a Variable Sub-Account that we determine to be associated with the
class of Contracts to which the Contract belongs, to another separate account or
to another separate account sub-account.
If the actions we take result in a material change in the underlying
investments of a Variable Sub-Account in which you are invested, we will notify
you of the change. You may then make a new choice of Variable Sub- Accounts.
Distribution of the Contracts
<PAGE>
Sage Distributors, Inc. ("Sage Distributors") acts as the distributor
(principal underwriter) of the Contracts. Sage Distributors is a corporation
organized under Delaware law in 1997, is registered as a broker-dealer under the
Securities Exchange Act of 1934, and is a member of the National Association of
Securities Dealers, Inc. (the "NASD"). Sage Distributors is a wholly owned
subsidiary of Sage Insurance Group Inc. We compensate Sage Distributors for
acting as principal underwriter under a distribution agreement. We offer the
Contracts on a continuous basis, and do not anticipate discontinuing their sale.
The Contracts may not be available in all states.
Experts
[To be filed by Amendment.]
Legal Proceedings
Sage Life-NY and its subsidiaries, as of the date of this Prospectus, are not
involved in any lawsuits. However, Sage Life-NY's direct and indirect parent
companies, like other companies, are involved in lawsuits. In some 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, Sage Life-NY 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, the Fixed Account, the
General Account, or Sage Life-NY.
Reports to Contract Owners
We maintain records and accounts of all transactions involving the Contracts,
the Variable Account, and the Fixed Account at our Customer Service Center. Each
year, or more often if required by law, we will send you a report showing
information about your Contract for the period covered by the report. We will
also send you an annual and a semi-annual report for each Fund underlying a
Variable Sub-Account in which you are invested as required by the 1940 Act. In
addition, when you make purchase payments, or if you make transfers or
withdrawals, we will send you a confirmation of these transactions.
Authority to Make Agreements
One of our officers must sign all agreements we make. No other person,
including an insurance agent or registered representative, can change the terms
of your Contract or make changes to it without our consent.
Financial Statements
[Financial Statements of Sage Life-NY will be filed by Amendment.]
11. How Can I Make Inquiries?
You may make inquiries about your Contract by contacting one of our authorized
registered representatives or by writing or calling us at our
<PAGE>
Customer Service Center.
12. Additional Information About Sage Life Assurance Company of New York.
History and Business
[To be filed by Amendment.]
Management's Discussion and Analysis of Financial Condition and Results of
Operations
[To be filed by Amendment.]
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Position held
with the
Company/Year Other Principal Positions
Name (Age) Commenced During Past Five Years
- ---------- ------------- -------------------------
<S> <C> <C>
Ronald S. Director, 5/98 Chairman, President and Chief Executive
Scowby(/1/)......... to present Officer, Sheldon Scowby Associates, Inc.,
Age 61 1/2000- present; Chairman and Trustee, Sage Life
Investment Trust, 7/98 to present; Deputy
Chairman 2/98 to present, President, 1/97
to 2/98, Director, 1/97 to present, Sage
Insurance Group Inc.; Director, Sage Advisors,
Inc., 1/98 to 12/99; President and Chief Executive
Officer, 1/97-2/98, Director 1/97 - present,
Chairman 2/98-present, Sage Life Assurance of
America, Inc.; Director, Sage Distributors, Inc.,
1/98 to 12/99; Director, President, Chief
Executive Officer, Sage Management Services
(USA), Inc., 6/96 to 12/99; Owner, Sheldon
Scowby Resources 7/95-6/96.
Robin I. Mars- Director, 5/98 Director, 1/97-present, President and Chief Executive
den (/2/)........... to present; Officer 2/98-present - Sage Life Assurance of America,
Age 34 President and Inc.; Director and President, Sage Life (Bermuda) Ltd.,
Chief Executive 1/2000 to present; President and Trustee, Sage Life
-/00 to present Investment Trust, 7/98 to present; Director, President,
Sage Advisors, Inc., 1/98 to present; Director, Sage
Distributors, Inc., 1/98 to present; Director, 1/97 to
present, President and Chief Executive Officer, 2/98
to present, Sage Insurance Group, Inc.; Chief Investment
Officer, Sage Life Holdings, Ltd., 11/94 to 1/98; and
Executive-Strategic Developments, Sage Group Ltd.,
11/94 to 1/98.
H. Louis Shill(/3/).. Director, 5/98 Director, 1/97-present, Chairman, 1/97-
Age 69 to present 2/98 -Sage Life Assurance of America, Inc.;
Chairman, Sage Insurance Group, Inc., 1/97 to
present; Founder, Chairman, Sage Group Limited,
1965 to present.
Paul C. Meyer(/4/)... Director, 5/98 Director, Sage Life Assurance of America, Inc.
Age 47 to present 1/97 to present; Partner, Clifford Chance Rogers &
Wells, 1986 to present.
Richard D. Director, 5/98 Director, Sage Life Assurance of America, Inc.
Starr(/5/).......... to present 1/97 to present; President, First Interstate
Age 56 Securities, 1/95 to 12/95; Chairman & Chief
Executive Officer, Financial Institutions
Group, Inc., 10/78 to present; Director and
Chairman, ABN Amro Financial Services, Inc.
7/00 to present.
Mitchell R. Director, 5/98 Director, 12/97 to present, Senior Executive
Katcher (/2/)....... to present; Vice President, Chief Financial Officer, and
Age 47 Senior Executive Chief Actuary 5/97 to present - Sage Life
Vice President, Assurance of America, Inc.; Director, Chief
Chief Financial Financial Officer and Chief Actuary, Sage Life
Officer, Chief (Bermuda), Ltd., 1/2000 to present; Vice
Actuary -/00 to President, Sage Life Investment Trust, 7/98 to
present present; Director, Treasurer, Sage Advisors, Inc.,
1/98 to present; Director, Sage Distributors,
Inc., 1/98 to present; Treasurer, 7/97 to present,
Senior Executive Vice President, 12/97 to present,
Sage Insurance Group, Inc.; Executive Vice
President, Golden American Life Insurance Company,
7/93-2/97.
Meyer Feldberg(/6/).. Chairman and Dean/Professor, Columbia University Graduate
Age 58 Director, 1/2000 School of Business, 7/89 to present; Director,
to present 1/2000 to present, Sage Life Assurance of America, Inc.
and Sage Insurance Group, Inc.
John A. Benning
(/7/).............. Director, 4/2000 Treasurer and General Counsel, Liberty Hospitality
Age 66 to present Company, 1/2000 to present; Director, Sage Life
Assurance of America, Inc., 4/2000 to present;
Senior Vice President and General Counsel, Liberty
Financial Companies, 1986 to 1999; Senior Vice
President, Torchmark Financial Services, 1980 to 1986.
Robert J.
Kiggins (/8/)...... Director, 5/98 ___/___ to present, Of Counsel, McCarthy, Fingar,
Age __ to present Donovan, Drazen & Smith; 1/97 to present,
Secretary, Sage Life Assurance of America, Inc.;
1/97 to present, Secretary, Sage Insurance
Group, Inc.
<PAGE>
</TABLE>
- --------
(1) Mr. Scowby's principal business address is 200 Broad St., Suite 2337,
Stamford, CT 06901.
(2) The principal business address of these persons is 300 Atlantic Street,
Stamford, CT 06901.
(3) Mr. Shill's principal business address is Sage Centre, 10 Fraser Street,
Johannesburg, South Africa 2000.
(4) Mr. Meyer's principal business address is 200 Park Avenue, New York, N.Y.
10166.
(5) Mr. Starr's principal business address is 22507 SE 47th Place, Issaquah,
WA 98029.
(6) Dr. Feldberg's principal business address is Columbia University Graduate
School of Business, Uris Hall, Room 101, 3022 Broadway, New York, NY 10027.
(7) Mr. Benning's principal business address is 23rd Floor, 600 Atlantic Avenue,
Boston, MA 02210.
(8) Mr. Kiggins' principal business address is 11 Martine Avenue, 12th Floor,
White Plains, NY 10606.
Compensation
We do not compensate any employee, officer or director of ours.
[Financial Statements of Sage Life Assurance Company of New York will be filed
by Amendment.]
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION
Additional information about the Contracts and The Sage Variable Annuity
Account A-NY is contained in the Statement of Additional Information. You can
obtain a free copy of the Statement of Additional Information by writing to us
at the address shown on the front cover or by calling (877) 835-7243 (Toll
Free). The following is the Table of Contents for the Statement of Additional
Information.
Statement of Additional Information
Table of Contents
<TABLE>
<S> <C>
General Information and History.............................................
Underwriter.................................................................
Assignment..................................................................
<PAGE>
Change of Owner, Beneficiary or Annuitant...................................
Misstatement and Proof of Age, Sex or Survival..............................
Incontestability............................................................
Participation...............................................................
Beneficiary Designation.....................................................
Tax Status of the Contracts.................................................
Diversification Requirements..............................................
Owner Control.............................................................
Required Distribution from Non-Qualified Contracts........................
Partial 1035 Exchanges....................................................
Qualified Contracts.........................................................
Taxation of Withdrawals...................................................
Individual Retirement Accounts (IRAs).....................................
SIMPLE IRAs...............................................................
Roth IRAs.................................................................
Pension and Profit-Sharing Plans..........................................
Tax Treatment of Withdrawals-Qualified Contracts..........................
Calculation of Historical Performance Data..................................
Money Market Sub-Account Yields...........................................
Other Variable Sub-Account Yields.........................................
Average Annual Total Returns..............................................
Other Total Returns.......................................................
Effect of the Annual Administration Charge on Performance Data............
Use of Indexes............................................................
Other Information.........................................................
Income Payment Provisions...................................................
Amount of Fixed Income Payments...........................................
Amount of Variable Income Payments........................................
Income Units..............................................................
Income Unit Value.........................................................
Exchange of Income Units..................................................
Safekeeping of Account Assets...............................................
Legal Matters...............................................................
Other Information...........................................................
Financial Statements........................................................
</TABLE>
APPENDIX A
<PAGE>
MARKET VALUE ADJUSTMENT
We will apply a Market Value Adjustment to amounts surrendered, withdrawn,
transferred or applied to an income plan when taken from a Fixed Sub-Account
more than 30 days before its Expiration Date. We apply a Market Value Adjustment
separately to each Fixed Sub-Account.
For a surrender, withdrawal, transfer or amount applied to an income plan, we
will calculate the Market Value Adjustment by applying the factor below to the
total amount that must be surrendered, withdrawn, transferred or applied
to an income plan in order to provide the amount requested.
N/365
[(1+I)/(1+J+.0025)] - 1
Where
. I is the Index Rate for a maturity equal to the Fixed Sub-Account's
Guarantee Period at the time that we established the Sub-Account;
. J is the Index Rate for a maturity equal to the time remaining (rounded up
to the next full year) in the Fixed Sub-Account's Guarantee Period, at the
time of surrender, withdrawal, transfer, or application to an income plan;
and
. N is the remaining number of days in the Guarantee Period at the time of
calculation.
We will apply Market Value Adjustments as follows:
If the Market Value Adjustment is negative, we first deduct it from any
remaining value in the Fixed Sub-Account. We then deduct any remaining
negative Market Value Adjustment from the amount you surrender, withdraw,
transfer, or apply to an income plan.
If the Market Value Adjustment is positive, we add it to any remaining value
in the Fixed Sub-Account or the amount you surrender. If you withdraw,
transfer or apply to an income plan the full amount of the Fixed Sub-Account,
we add the Market Value Adjustment to the amount you withdraw, transfer, or
apply to an income plan.
MVA EXAMPLES
Example #1: Surrender--Example of a Negative Market Value Adjustment
Assume you invest $100,000 in a Fixed Sub-Account with a Guarantee Period of
ten years, with a Guaranteed Interest Rate of 7.5% and an Index Rate ("I") of
7.0% based on the U.S. Treasury Constant Maturity Series at the time we
established the Sub-Account. You request a surrender three years into the
Guarantee Period, the Index Rate based on the U.S. Treasury Constant Maturity
Series for a seven-year Guarantee Period ("J") is 8.0% at the time of the
surrender, and no prior transfers or withdrawals affecting this Fixed Sub-
Account have been made.
Calculate the Market Value Adjustment
1. The Account Value of the Fixed Sub-Account on the date of surrender is
$124,230 ($100,000 x 1.075 to the power 3)
2. N = 2,555 (365 x 7)
3. Market Value Adjustment = $124,230 x {[(1.07)/(1.0825)] to the power of
2555 divided by the 365th power - 1) = - $9,700
Therefore, the amount paid on full surrender is $114,530 ($124,230 - $9,700).
Example #2: Surrender--Example of a Positive Market Value Adjustment
Assume you invest $100,000 in a Fixed Sub-Account with a Guarantee Period of
ten years, with a Guaranteed Interest Rate of 7.5% and an Index Rate ("I") of
7.0% based on the U.S. Treasury Constant Maturity Series at the time we
established the Sub-Account. You request a surrender three years into the
Guarantee Period, the Index Rate based on the U.S. Treasury Constant Maturity
Series for a seven-year Guarantee Period ("J") is 6.0% at the time of the
surrender, and no prior transfers or withdrawals affecting this Fixed Sub-
Account have been made.
Calculate the Market Value Adjustment
1. The Account Value of the Fixed Sub-Account on the date of surrender is
$124,230 ($100,000 x 1.075 to the power of 3)
2. N = 2,555 (365 x 7)
3. Market Value Adjustment = $124,230 x {[(1.07)/(1.0625)] to the power of
2555 divided by 365th power -1) = + $6,270
Therefore, the amount paid on full surrender is $130,500 ($124,230 + $6,270).
Example #3: Withdrawal--Example of a Negative Market Value Adjustment
Assume you invest $200,000 in a Fixed Sub-Account with a Guarantee Period of
ten years, with a Guaranteed Interest Rate of 7.5% and an Index Rate ("I") of
7.0% based on the U.S. Treasury Constant Maturity Series at the time we
established the Sub-Account. You request a withdrawal of $100,000 three years
into the Guarantee Period, the Index Rate based on the U.S. Treasury Constant
Maturity Series for a seven-year Guarantee Period ("J") is 8.0% at the time of
withdrawal, and no prior transfers or withdrawals affecting this Fixed Sub-
Account have been made.
Calculate the Market Value Adjustment
<PAGE>
1. The Account Value of the Fixed Sub-Account on the date of withdrawal is
$248,459 ($200,000 x 1.075 to the power of 3).
2. N = 2,555 (365 x 7)
3. Market Value Adjustment = $100,000 x {[(1.07)/(1.0825)] to the power of
2555 divided by 365th power -1) = - $7,808
Therefore, the amount of the withdrawal paid is $100,000, as requested. The
Fixed Sub-Account will be reduced by the amount of the withdrawal paid
($100,000) and by the Market Value Adjustment ($7,808), for a total reduction in
the Fixed Sub-Account of $107,808.
Example #4: Withdrawal--Example of a Positive Market Value Adjustment
Assume you invest $200,000 in a Fixed Sub-Account with a Guarantee Period of
ten years, with a Guaranteed Interest Rate of 7.5% and an initial Index Rate
("I") of 7.0% based on the U.S. Treasury Constant Maturity Series at the time we
established the Sub-Account. You request a withdrawal of $100,000 three years
into the Guarantee Period, the Index Rate based on the U.S. Treasury Constant
Maturity Series for a seven-year Guarantee Period ("J") is 6.0% at the time of
the withdrawal, and no prior transfers or withdrawals affecting this Fixed
Sub-Account have been made.
Calculate the Market Value Adjustment
1. The Account Value of the Fixed Sub-Account on the date of withdrawal is
$248,459 ($200,000 x 1.075 to the power 3)
2. N = 2,555 (365 x 7)
3. Market Value Adjustment = $100,000 x {[(1.07)/(1.0625)] to the power of
2555 divided by 365th power -1) = + $5,047
Therefore, the amount of the withdrawal paid is $100,000, as requested. The
Fixed Sub-Account will be reduced by the amount of the withdrawal paid
($100,000) and increased by the amount of the Market Value Adjustment ($5,047),
for a total reduction of $94,953.
APPENDIX B
DOLLAR-COST AVERAGING PROGRAM
Below is an example of how the Dollar-Cost Averaging Program works.
Assume that the Dollar-Cost Averaging Program has been elected and that
$24,000 is invested in a DCA Fixed Sub-Account with a Guarantee Period of two
years and an annual Guaranteed Interest Rate of 6.0%.
<TABLE>
<CAPTION>
<PAGE>
(1) (2) (4)
Beginning of Dollar Cost (3) Interest (5)
Beginning Month Averaging Amount Dollar Credited End of Month
of Month Account Value Monthly Factor Cost Averaged For Month Account Value
- --------- ------------- -------------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C>
1 24,000 -- -- 117 24,117
2 24,117 1/24 1,005 112 23,224
3 23,224 1/23 1,010 108 22,323
4 22,323 1/22 1,015 104 21,412
5 21,412 1/21 1,020 99 20,492
6 20,492 1/20 1,025 95 19,562
7 19,562 1/19 1,030 90 18,622
8 18,622 1/18 1,035 86 17,673
9 17,673 1/17 1,040 81 16,715
10 16,715 1/16 1,045 76 15,746
11 15,746 1/15 1,050 72 14,768
12 14,768 1/14 1,055 67 13,780
13 13,780 1/13 1,060 62 12,782
14 12,782 1/12 1,065 57 11,774
15 11,774 1/11 1,070 52 10,756
16 10,756 1/10 1,076 47 9,727
17 9,727 1/9 1,081 42 8,688
18 8,688 1/8 1,086 37 7,639
19 7,639 1/7 1,091 32 6,580
20 6,580 1/6 1,097 27 5,510
21 5,510 1/5 1,102 21 4,429
22 4,429 1/4 1,107 16 3,338
23 3,338 1/3 1,113 11 2,236
24 2,236 1/2 1,118 5 1,124
25 1,124 1/1 1,124 -- --
</TABLE>
Note:
Column (3) = Column (1) x Column (2) Column (5) = Column (1) - Column (3) +
Column (4)
APPENDIX C
GUARANTEED MINIMUM INCOME BENEFIT
Below is an example of how the GMIB will work. The example assumes the
following:
. you are a male whose age last birthday is 55;
. you purchase a Contract with the GMIB rider;
. you do not make any additional purchase payments nor any withdrawals;
. you elect to receive income from the Contract 10 years later, at
<PAGE>
attained age 65; and
. you elect a Life Annuity with 10 Year Certain, which is an eligible
Income Plan under the GMIB rider.
Assume your Account Value is $200,000 and that your Highest Anniversary
Value ("HAV") is $250,000.
Calculate the GMIB:
1. Your guaranteed Monthly Income Payment rate per $1,000 (as shown in
your Contract Schedule) is $5.42.
2. Your HAV is $250,000.
3. The GMIB = $1,355 [$5.42 x $250,000 / $1,000].
Therefore, under this Income Plan, we guarantee that your monthly income
payment will not be less than $1,355.00.
Different guaranteed minimum Monthly Income Payment rates per $1,000 will
apply for females, for males who begin income payments at ages other than the
age shown above, or for income payments under different Income Plans. In these
cases, the GMIB will be different.
APPENDIX D
ENHANCED DEATH BENEFIT
Below are examples of how the Enhanced Death Benefit will work. All
examples assume the following:
. The Owner is a male whose age last birthday is 55;
. The Owner purchases a Contract with the Enhanced Death Benefit rider;
. The Owner makes an initial purchase payment of $150,000;
. The Owner does not make any additional purchase payments nor any
withdrawals;
Example 1.
Assume the Account Value is $200,000, the Highest Anniversary Value ("HAV")
is $175,000 and the Owner dies of natural causes.
Calculate the basic Death Benefit:
1. The Account Value determined as of the Business Day we receive proof of
the Owner's death is $200,000.
2. The sum of all purchase payments made is $150,000.
3. The HAV is $175,000.
4. The basic Death Benefit is $200,000 [the greatest of (1), (2) and (3)].
Calculate the Enhanced Death Benefit:
5. The Benefit Rate for an issue age of 55 is 40.0%.
6. The Net Purchase Amount is $150,000.
7. The Maximum Benefit Amount is $60,000 ($150,000 x .40).
8. The Enhanced Death Benefit is $20,000 ([.40 x [$200,000 - $150,000] =
$20,000, but not in excess of $60,000).
We will pay the Owner's Beneficiary the basic Death Benefit of $200,000 and
the Enhanced Death Benefit of $20,000, for a total payment of $220,000.
Example 2.
Assume the Account Value is $500,000, the HAV is $300,000 and the Owner
dies of natural causes.
Calculate the basic Death Benefit:
1. The Account Value determined as of the Business Day we receive proof of
the Owner's death is $500,000.
2. The sum of all purchase payments made is $150,000.
3. The HAV is $300,000.
4. The basic Death Benefit is $500,000 [the greatest of (1), (2) and (3)].
Calculate the Enhanced Death Benefit:
5. The Benefit Rate for an issue age of 55 is 40.0%.
6. The Net Purchase Amount is $150,000.
7. The Maximum Benefit Amount is $60,000 ($150,000 x .40).
8. The Enhanced Death Benefit is $60,000 ([.40 x [$500,000 - $150,000] =
$140,000, but not in excess of $60,000).
We will pay the Owner's Beneficiary the basic Death Benefit of $500,000 and
the Enhanced Death Benefit of $60,000, for a total payment of $560,000.
Example 3.
Assume the Account Value is $100,000, the HAV is $175,000 and the Owner
dies of natural causes.
Calculate the basic Death Benefit:
1. The Account Value determined as of the Business Day we receive proof of
the Owner's death is $100,000.
2. The sum of all purchase payments made is $150,000.
3. The HAV is $175,000.
4. The basic Death Benefit is $175,000 [the greatest of (1), (2) and (3)].
Calculate the Enhanced Death Benefit:
5. The Benefit Rate for an issue age of 55 is 40.0%.
6. The Net Purchase Amount is $150,000.
7. The Maximum Benefit Amount is $60,000 ($150,000 x .40).
8. The Enhanced Death Benefit is $0 ([.40 x [$100,000 - $150,000] = $0,
but not in excess of $60,000).
We will pay the Owner's Beneficiary the basic Death Benefit of $175,000 and
the Enhanced Death Benefit of $0, for a total payment of $175,000.
To obtain a Statement of Additional Information for this Prospectus, please
complete the form below and mail to:
Sage Life Assurance Company of New York
Customer Service Center
P.O. Box 290680
Wethersfield, CT 06129-0680
Please send a Statement of Additional Information to me at the following
address:
Name ________________________________
Address _____________________________
-------------------------------------
City/State Zip Code
PART B
Statement of Additional Information
Dated ____________, 2000
Flexible Payment Deferred Combination Fixed and Variable Annuity
<PAGE>
Contracts
issued by:
The Sage Variable Annuity Account A-NY and Sage Life Assurance
Company of New York
Customer Service Center:
P.O. Box 290680
Wethersfield, CT 06129-0680
Telephone: (877) 835-7243
(Toll Free)
This Statement of Additional Information expands upon subjects we discussed in
the current Prospectus for the Flexible Payment Deferred Combination Fixed and
Variable Annuity Contracts (the "Contracts" offered by Sage Life Assurance
Company of New York ("we," "us," "our," "Sage Life-NY," or the "Company"). You
may obtain a copy of the Prospectus dated ____________, 2000 by calling 1-877-
835-7243 (Toll Free) or by writing to our Customer Service Center at the above
address. You may also obtain a copy of the Prospectus by accessing the
Securities and Exchange Commission's website at http://www.sec.gov. The terms we
used in the current Prospectus for the Contracts are incorporated into and made
a part of this Statement of Additional Information.
This Statement of Additional Information is not a prospectus and
should be read only in conjunction with the Prospectus for
the Contracts and the prospectuses for the Trusts.
Statement of Additional Information
Table of Contents
Page
----
General Information and History...........................................
Underwriter...............................................................
Assignment................................................................
Change of Owner, Beneficiary, or Annuitant................................
Misstatement and Proof of Age, Sex or Survival............................
Incontestability..........................................................
Participation.............................................................
<PAGE>
Beneficiary Designation...................................................
Tax Status of the Contracts...............................................
Diversification Requirements.........................................
Owner Control........................................................
Required Distribution from Non-Qualified Contracts...................
Partial 1035 Exchanges...............................................
Qualified Contracts.......................................................
Taxation of Withdrawals..............................................
Individual Retirement Accounts (IRAs)................................
SIMPLE IRAs..........................................................
Roth IRAs............................................................
Pension and Profit-Sharing Plans.....................................
Tax Treatment of Withdrawals - Qualified Contracts...................
Calculation of Historical Performance Data................................
Money Market Sub-Account Yields......................................
Other Variable Sub-Account Yields....................................
Average Annual Total Returns.........................................
Other Total Returns..................................................
Effect of the Annual Administration Charge on Performance Data.......
Use of Indexes.......................................................
Other Information....................................................
Income Payment Provisions.................................................
Amount of Fixed Income Payments......................................
Amount of Variable Income Payments...................................
Income Units.........................................................
Income Unit Value....................................................
Exchange of Income Units............................................
Safekeeping of Account Assets............................................
Legal Matters............................................................
Other Information........................................................
Financial Statements.....................................................
General Information and History
General Information pertaining to Sage Life Assurance Company of New York is
contained in the prospectus.
Underwriter
Sage Distributors, Inc. is the principal underwriter of the Contracts. The
offering is on a continuous basis.
Assignment
You may assign your Contract at any time before the Income Date. No
assignment will be binding on us unless we receive Satisfactory Notice. We will
not be liable for any payments made or actions we take before we receive the
assignment. An absolute assignment will revoke the interest of any revocable
Beneficiary. We are not responsible for the validity of any assignment. An
assignment may be a taxable event.
Change of Owner, Beneficiary, or Annuitant
During your lifetime and while your Contract is in force, you can transfer
ownership of your Contract, change the Beneficiary, or change the Annuitant.
However, you cannot change the Annuitant after the Income Date or if the Owner
is a non-natural person. To make any of these changes, you must send us
Satisfactory Notice. If accepted, any change in Owner, Beneficiary, or Annuitant
will take effect on the date you signed the notice. Any of these changes will
not affect any payment made or action we took before our acceptance. A change in
Owner may be a taxable event and may also affect the amount of death benefit
payable under your Contract.
Claims of Creditors
To the extent permitted by law, no benefits payable under your Contract
will be subject to the claim of the Owners, the Beneficiary's or the Annuitant's
creditors.
Misstatement and Proof of Age, Sex or Survival
We may require proof of age, sex, or survival of any person upon whose age,
sex, or survival any payments depend. If the age or sex of the Annuitant has
been misstated, or if the age of the Owner has been misstated, the benefits will
be those that would have been provided for the correct age and sex. If we have
made incorrect income payments, we will pay the amount of any underpayments. We
will deduct the amount of any overpayment from future income payments.
Incontestability
Your Contract is incontestable from its Contract Date.
Participation
The Contracts do not participate in our surplus or profits, and we do not
pay dividends on the Contracts.
Beneficiary Designation
This is as shown in the application. It includes the name of the
Beneficiary and the order and method of payment. If you name "estate" as a
Beneficiary, it means the executors or administrators of your estate. If you
name "children" of a person as a Beneficiary, only children born to or legally
adopted by that person as of an Owner's date of death will be included.
We may rely on an affidavit as to the ages, names, and other facts about
all Beneficiaries. We will incur no liability if we act on such affidavit.
Tax Status of the Contracts
Tax law imposes several requirements that variable annuities must satisfy
in order to receive the tax treatment normally accorded to annuity contracts.
Diversification Requirements. The Internal Revenue Code (Code) requires
that the investments of each investment division of the separate account
underlying the Contracts be "adequately diversified" in order for the Contracts
to be treated as annuity contracts for federal income tax purposes. It is
intended that each investment division, through the fund in which it invests,
will satisfy these diversification requirements.
Owner Control. In certain circumstances, owners of variable annuity
contracts have been considered for Federal income tax purposes to be the owners
of the assets of the separate account supporting their contracts due to their
ability to exercise investment control over those assets. When this is the case,
the contract owners have been currently taxed on income and gains attributable
to the variable account assets. There is little guidance in this area, and some
features of our Contracts, such as the flexibility of an owner to allocate
premium payments and transfer amounts among the investment divisions of the
separate account, have not been explicitly addressed in published rulings. While
we believe that the Contracts do not give Owners investment control over
separate account assets, we reserve the right to modify the Contracts as
necessary to prevent an Owner from being treated as the Owner of the separate
account assets supporting the Contract.
Required Distributions from 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 contain certain provisions
specifying how your interest in the Contract will be distributed in the event of
the death of an owner of the Contract. Specifically, section 72(s) requires that
(a) if any owner dies on or after the annuity starting date, but prior to the
time the entire interest in the contract has been distributed, the entire
interest in the contract will be distributed at least as rapidly as under the
method of distribution being used as of the date of such owner's death; and (b)
if any owner dies prior to the annuity starting date, the entire interest in the
contract will be distributed within five years after the date of such owner's
death. These requirements will be considered satisfied as to any portion of an
owner's interest which is payable to or for the benefit of a designated
beneficiary and which is distributed over the life of such designated
beneficiary or over a period not extending beyond the life expectancy of that
beneficiary, provided that such distributions begin within one year of the
owner's death. The designated beneficiary refers to a natural person designated
by the owner as a beneficiary and to whom ownership of the contract passes by
reason of death. However, if the designated beneficiary is the surviving spouse
of the deceased owner, the contract may be continued with the surviving spouse
as the new owner. If the Contract is owned by a non-natural person, the death of
the Annuitant will be treated as death of the Owner.
The Non-Qualified Contracts contain provisions that are intended to comply
with these Code requirements, although no regulations interpreting these
requirements have yet been issued. We intend to review such provisions and
modify them if necessary to assure that they comply with the applicable
requirements when such requirements are clarified by regulation or otherwise.
Partial 1035 Exchanges
Section 1035 of the Code provides that an annuity contract may be exchanged in a
tax-free transaction for another annuity contract. Historically, it was presumed
that only the exchange of an entire contract, as opposed to a partial exchange,
would be accorded tax-free status. In 1998 in CONWAY VS. COMMISSIONER, the Tax
Court held that the direct transfer of a portion of an annuity contract into
another annuity contract qualified as a non-taxable exchange. On November 22,
1999, the Internal Revenue Service filed an Action on Decision which indicated
that it acquiesced in the Tax Court decision in CONWAY. However, in its
acquiescence with the decision of the Tax Court, the Internal Revenue Service
stated that it will challenge transactions where taxpayers enter into a series
of partial exchanges and annuitizations as part of a design to avoid application
of the 10% premature distribution penalty or other limitations imposed on
annuity contracts under the Code. In the absence of further guidance from the
Internal Revenue Service it is unclear what specific types of partial exchange
designs and transactions will be challenged by the Internal Revenue Service. Due
to the uncertainty in this area, you should consult your own tax adviser prior
to entering into a partial exchange of an annuity contract.
Qualified Contracts
Qualified Plans
The Contracts offered herein are designed to be suitable for use under various
types of Qualified Plans. Taxation of participants in each Qualified Plan varies
with the type of plan and terms and conditions of each specific plan. Owners,
Annuitants and Beneficiaries are cautioned that benefits under a Qualified Plan
may be subject to the terms and conditions of the plan regardless of the terms
and conditions of the Contracts issued pursuant to the plan. Some retirement
plans are subject to distribution and other requirements that are not
incorporated into the Company's administrative procedures. The Company is not
bound by the terms and conditions of such plans to the extent such terms
conflict with the terms of a Contract, unless the Company specifically consents
to be bound. Owners, participants and Beneficiaries are responsible for
determining that contributions, distributions and other transactions with
respect to the Contracts comply with applicable law. A qualified contract will
not provide any necessary or additional tax deferral if it is used to fund a
qualified plan that is tax deferred. However, the contract has features and
benefits other than tax deferral that may make it an appropriate investment for
a qualified plan. Following are general descriptions of the types of Qualified
Plans with which the Contracts may be used. Such descriptions are not exhaustive
and are for general informational purposes only. The tax rules regarding
Qualified Plans are very complex and will have differing applications depending
on individual facts and circumstances. Each purchaser should obtain competent
tax advice prior to purchasing a Contract issued under a Qualified Plan.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available as described
herein. Generally, Contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals - Qualified Contracts" below.)
On July 6, 1983, the Supreme Court decided in ARIZONA GOVERNING COMMITTEE V.
NORRIS that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Company in connection with
Qualified Plans will utilize annuity tables which do not differentiate on the
basis of sex. Such annuity tables will also be available for use in connection
with certain non-qualified deferred compensation plans.
Taxation of Withdrawals. When you take a withdrawal from a Qualified
Contract, a pro-rata portion of the amount you receive is taxable. This portion
is based on the ratio of your investment in the contract (such as non-deductible
purchase payments or other consideration paid for the Contract) to your total
accrued benefit balance under the retirement plan. As a result, the investment
in the contract for a Qualified Contract can be zero. Special tax rules apply to
distributions from a Roth IRA.
Individual Retirement Annuities (IRAs). IRAs are defined in Section 408 of
the Code and permit individuals to make annual contributions of up to the lesser
of $2,000 or the amount of compensation includible in the individual's gross
income for the year. The contributions may be deductible in whole or in part,
depending on the individual's income. Distributions from certain pension plans
may be "rolled over" into an IRA on a tax-deferred basis without regard to these
limits. Amounts in the IRA (other than nondeductible contributions) are taxed
when distributed from the IRA. A 10% penalty tax generally applies to
distributions made before age 59 1/2, unless certain exceptions apply.
SIMPLE IRAs. SIMPLE IRAs permit certain small employers to establish SIMPLE
plans as provided by Section 408(p) of the Code, under which employees may elect
to defer to a SIMPLE IRA a percentage of compensation up to $6,000 (as increased
for cost of living adjustments). The sponsoring employer is required to make
matching or non-elective contributions on behalf of employees. Distributions
from SIMPLE IRAs are subject to the same restrictions that apply to IRA
distributions and are taxed as ordinary income. Subject to certain exceptions,
premature distributions prior to age 59 1/2 are subject to a 10 percent penalty
tax, which is increased to 25 percent if the distribution occurs within the
first two years after the commencement of the employee's participation in the
plan.
Roth IRAs. Roth IRAs are described in Code section 408A. They permit
certain eligible individuals to contribute to make non-deductible contributions
to a Roth IRA in cash or as a rollover or transfer from another Roth IRA or
other IRA. A rollover from or conversion of an IRA to a Roth IRA is generally
subject to tax and other special rules apply. The Owner may wish to consult a
tax adviser before combining any converted amounts with any other Roth IRA
contributions, including any other conversion amounts from other tax years.
Distributions from a Roth IRA generally are not taxed, except that, once
aggregate distributions exceed contributions to the Roth IRA, income tax and a
10% penalty tax may apply to distributions made (1) before age 59 1/2 (subject
to certain exceptions) or (2) during the five taxable years starting with the
year in which the first contribution is made to any Roth IRA. A 10% penalty tax
may apply to amounts attributable to a conversion from an IRA if they are
distributed during the five taxable years beginning with the year in which the
conversion was made.
Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit employers, including self-employed
individuals, to establish various types of retirement plans for employees. These
retirement plans may permit the purchase of the Contracts to provide benefits
under the Plan. Contributions to the Plan for the benefit of employees will not
be includible in the gross income of the employees until distributed from the
Plan. The tax consequences to participants may vary depending upon the
particular plan design. However, the Code places limitations and restrictions on
all Plans including on such items as: amount of allowable contributions; form,
manner and timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. Purchasers of Contracts for use with Pension or Profit Sharing Plans
should obtain competent tax advice as to the tax treatment and suitability of
such an investment.
Tax Treatment of Withdrawals - Qualified Contracts
In the case of a withdrawal under a Qualified Contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a Qualified
Contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including Contracts
issued and qualified under Code Sections 401 (Pension and Profit-Sharing Plans),
and 408 and 408A (Individual Retirement Annuities, including SIMPLE IRAs and
Roth IRAs). To the extent amounts are not includible in gross income because
they have been rolled over to an IRA or to another eligible Qualified Plan, no
tax penalty will be imposed. The tax penalty will not apply to the following
distributions: (a) if distribution is made on or after the date on which the
Owner or Annuitant (as applicable) reaches age 59 1/2; (b) distributions
following the death or disability of the Owner or Annuitant (as applicable) (for
this purpose disability is as defined in Section 72(m) (7) of the Code); (c)
after separation from service, distributions that are part of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the Owner or Annuitant (as applicable) or the joint lives
(or joint life expectancies) of such Owner or Annuitant (as applicable) and his
or her designated Beneficiary; (d) distributions to an Owner or Annuitant (as
applicable) who has separated from service after he has attained age 55; (e)
distributions made to the Owner or Annuitant (as applicable) to the extent such
distributions do not exceed the amount allowable as a deduction under Code
Section 213 to the Owner or Annuitant (as applicable) for amounts paid during
the taxable year for medical care; (f) distributions made to an alternate payee
pursuant to a qualified domestic relations order; (g) distributions made on
account of an IRS levy upon the Qualified Contract; (h) distributions from an
Individual Retirement Annuity for the purchase of medical insurance (as
described in Section 213(d)(1)(D) of the Code) for the Owner or Annuitant (as
applicable) and his or her spouse and dependents if the Owner or Annuitant (as
applicable) has received unemployment compensation for at least 12 weeks (this
exception will no longer apply after the Owner or Annuitant (as applicable) has
been re-employed for at least 60 days); (i) distributions from an Individual
Retirement Annuity made to the Owner or Annuitant (as applicable) to the extent
such distributions do not exceed the qualified higher education expenses (as
defined in Section 72(t)(7) of the Code) of the Owner or Annuitant (as
applicable) for the taxable year; and (j) distributions from an Individual
Retirement Annuity made to the Owner or Annuitant (as applicable) which are
qualified first-time home buyer distributions (as defined in Section 72(t)(8)of
the Code.) The exceptions stated in (d) and (f) above do not apply in the case
of an Individual Retirement Annuity. The exception stated in (c) above applies
to an Individual Retirement Annuity without the requirement that there be a
separation from service.
With respect to (c) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
Calculation of Historical Performance Data
From time to time, we may disclose yields, total returns, and other
performance data of the Variable Sub-Accounts and the Funds. Such performance
data will be computed, or accompanied by performance data computed, in
accordance with the standards defined by the SEC.
Money Market Sub-Account Yields
From time to time, advertisements and sales literature may quote the
current annualized yield of the Variable Sub-Account investing in the Money
Market Fund (the "Money Market Sub-Account") of the Sage Life Investment Trust
for a seven-day period in a manner that does not take into consideration any
realized or unrealized gains or losses on shares of the Money Market Fund.
We compute the current annualized yield by determining the net change
(exclusive of realized gains and losses on the sale of securities and unrealized
appreciation and depreciation) at the end of the seven-day period in the value
of a hypothetical account under a Contract having a balance of one Accumulation
Unit of the Money Market Sub-Account at the beginning of the period, dividing
such net change in Account Value by the value of the hypothetical account at the
beginning of the period to determine the base period return, and annualizing
this quotient on a 365-day basis. The net change in Account Value reflects (1)
net income from the Money Market Fund attributable to the hypothetical account;
and (2) charges and deductions imposed under a Contract which are attributable
to the hypothetical account. The charges and deductions include the per unit
charges for the hypothetical account for the annual administration charge and
the Asset-Based Charges. For purposes of calculating current yields for a
Contract, an average per unit annual administration charge is used based on the
$30 Annual Administration Charge. We calculate current yield according to the
following formula:
Current Yield = ((NCS - ES)/UV)(365/7)
Where:
NCS = the net change in the value of the
Money Market Fund (exclusive of realized
gains or losses on the sale of
securities, unrealized appreciation and
depreciation, and income other than
investment income) for the seven-day
period attributable to a hypothetical
account having a balance of one
Accumulation Unit.
ES = per unit expenses attributable to the hypothetical
account for the seven-day period.
UV = the unit value for the first day of the seven-day
period.
Effective Yield = (1+((NCS - ES)/UV))/(365/7)/-1
Where:
NCS = the net change in the value of the Money Market
Fund (exclusive of realized gains or losses on the
sale of securities, unrealized appreciation and
depreciation and income other than
investment income) for the seven-day period
attributable to a hypothetical account having a
balance of one Accumulation Unit.
ES = per unit expenses attributable to the hypothetical
account for the seven-day period.
UV = the unit value for the first day of the seven-day
period.
Because of the charges and deductions imposed under the Contracts, the
yield for the Money Market Sub-Account is lower than the yield for the Money
Market Fund.
The current and effective yields on amounts held in the Money Market
Sub-Account normally fluctuate on a daily basis. Therefore, the disclosed yield
for any given past period is not an indication or representation of future
yields or rates of return. The Money Market Sub-Account's actual yield is
affected by changes in interest rates on money market securities, average
portfolio maturity of the Money Market Fund, the types and quality of portfolio
securities held by the Money Market Fund and the Money Market Fund's operating
expenses. Yields on amounts held in the Money Market Sub-Account may also be
presented for periods other than a seven-day period.
As of __________, 2000 the current yield for the Money Market Sub-Account
was ____________, and the effective yield for the Money Market Sub-Account was
------------.
Other Variable Sub-Account Yields
We compute the yield by: 1) dividing the net investment income of the Fund
attributable to the Variable Sub-Account units less expenses allocated to a
Variable Sub-Account for the period; by 2) the maximum offering price per unit
on the last day of the period times the daily average number of Accumulation
Units outstanding for the period; and then 3) compounding that yield for a
six-month period; and then 4) multiplying that result by two (2). Expenses
allocated to a Variable Sub-Account include the Annual Administration Charge and
the Asset-Based Charges. The yield calculation assumes an annual administration
charge of $30 per Contract deducted at the end of each Contract Year on the
Contract Anniversary. For purposes of calculating the 30-day or one-month yield,
we use an average administration cost charge based on the average Account Value
in the Variable Sub-Account to determine the amount of the charge attributable
to the Variable Sub-Account for the 30-day or one-month period. We calculate the
30-day or one-month yield according to the following formula:
Yield = 2 x ((((NI - ES)/(U x UV)) + 1)/6/-1)
Where:
NI = net income of the portfolio for the 30-day
or one-month period attributable to the Variable
Sub-Account's units.
ES = expenses of the Variable Sub-Account for the
30-day or one-month period.
U = the average number of units outstanding.
UV = the unit value at the close (highest) of the last
day in the 30-day or one-month period.
Because of the charges and deductions imposed under the Contracts, the
yield for the Variable Sub-Account is lower than the yield for the corresponding
Fund.
The yield on amounts invested in the Variable Sub-Accounts normally
fluctuates over time. Therefore, the disclosed yield for any given past period
is not an indication or representation of future yields or rates of return. A
Variable Sub-Account's actual yield is affected by the types and quality of
securities held by the corresponding Fund and that Fund's operating expenses.
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 Variable Sub-Accounts for
various periods of time.
When a Variable Sub-Account or Fund has been in operation for 1, 5, and 10
years, respectively, the average annual total return for these periods will be
provided. Otherwise, average annual total return will be shown from inception of
the Variable Sub-Account. Average annual total returns for other periods of time
may, from time to time, also be disclosed.
Standard 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 Surrender 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 calendar quarter-end
practicable, considering the type of the communication and the media through
which it is communicated.
We calculate standard average annual total returns using Variable Sub-
Account unit values which we calculate on each Business Day based on the
performance of the Variable Sub-Account's underlying Fund. The calculation
assumes that annual Asset-Based Charges of 1.40% during the first seven Contract
Years are deducted monthly beginning on the Contract Date. The calculation
also assumes that the Annual Administration Charge is $30 per year per Contract
deducted at the end of each Contract Year during the first seven Contract
Years and that the maximum optional benefit changes are deducted. For purposes
of calculating average annual total return, we use an average per-dollar per-day
annual administration charge attributable to the hypothetical account for the
period. The calculation also assumes surrender of Account Value at the end of
the period for the return quotation. We may also include standard average
annual total return without the optional benefit charges when we show standard
average annual total return with the optional benefit charges. We calculate
the total return according to the following formula:
TR = (ESV/P)1/N-1
Where:
TR = the average annual total return for the period.
ESV = the Surrender Value 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.
We may also show non-standard average annual total returns, calculated
the same way as standard average annual total returns, except that no Contract
charges will be deducted. For periods starting prior to the date the Contracts
were first offered, the performance will be based on the historical performance
of the corresponding Fund. The following chart shows the non-standard average
annual total returns for the periods indicated.
[Chart to be filed by Amendment.]
Other Total Returns
We may disclose cumulative total returns in conjunction with the standard
formats described above. We will calculate the cumulative total returns using
the following formula:
CTR = (ESV/P) - 1
Where:
CTR = The cumulative total return for the period.
ESV = The ending Surrender Value of the hypothetical
investment at the end of the period net of recurring
charges.
P = A hypothetical single payment of $1,000.
Effect of the Annual Administration Charge on Performance Data
The Contracts provide for a $30 Annual Administration Charge (waived for
Contracts with Account Value of at least $50,000, or beginning on and after the
eighth Contract Year) that is deducted from the Sub-Accounts proportionately.
For purposes of reflecting the Annual Administration Charge in yield and total
return quotations, the average Account Value is assumed to be $30,000, so that
the annual administration charge is .10%.
Use of Indexes
From time to time, we may present the performance of certain historical
indexes in advertisements or sales literature. We may compare the performance of
these indexes to the performance of certain Variable Sub-Accounts or Funds, or
we may present without such a comparison.
Other Information
The following is a partial list of those publications which we may note in the
Funds' sales literature and/or shareholder materials which contain articles
describing investment results or other data relative to one or more of the
Variable Sub-Accounts. We also may cite other publications.
Across the Board Advertising Age
American Banker Barron's
Best's Review Business Insurance
Broker World Financial World
Business Month Business Week
Changing Times Consumer Reports
The Economist Financial Planning
Forbes Fortune
Inc. Institutional Investor
Insurance Forum Insurance Sales
Insurance Week Journal of Accountancy
Journal of Financial Service Professionals Journal of Commerce
Life Insurance Selling Life Association News
MarketFacts Manager's Magazine
National Underwriter Money
Morningstar, Inc. Nation's Business
New Choices (formerly 50 Plus) The New York Times
Pension World Pensions & Investments
Rough Notes Round the Table
U.S. Banker VARDs
The Wall Street Journal Working Woman
Income Payment Provisions
Amount of Fixed Income Payments. On the Income Date, the amount you have
chosen to apply to provide fixed income payments will be applied under the
income plan you have chosen. The monthly income payment factor in effect on the
Income Date times that amount and then divided by $1,000 will be the dollar
amount of each monthly payment. Each of these payments are guaranteed and remain
level throughout the period you selected.
The monthly income payment factor used to determine the amount of the fixed
income payments will not be less than the guaranteed minimum monthly income
payment factor shown in your Contract.
Amount of Variable Income Payments. These payments will vary in amount. The
dollar amount of each payment attributable to each Variable Sub-Account is the
number of Income Units for each Variable Sub-Account times the Income Unit value
of that Sub-Account. The sum of the dollar amounts for each Variable Sub-Account
is the amount of the total variable income payment. We will determine the Income
Unit values for each payment no earlier than five Business Days preceding the
due date of the variable income payment (except for Income Payment Option 4,
which we determine on the due date). We guarantee the payment will not vary due
to changes in mortality or expenses.
Income Units. On the Income Date, the number of Income Units for an
applicable Variable Sub-Account is determined by multiplying (1) by (2),
dividing the result by (3), and then dividing that result by (4) where:
(1) is the amount you have chosen to allocate to that Variable Sub-Account;
(2) is the monthly income payment factor for the income plan chosen;
(3) is $1,000; and
(4) is the Income Unit value for the Variable Sub-Account for the Valuation
Period ending on that date.
Income Unit Value. We calculate the value of an Income Unit at the same
time that the value of an Accumulation Unit is calculated and is based on the
same values for Fund shares and other assets and liabilities. The Income Unit
value for a Variable Sub-Account's first Business Day was set at $10. After
that, we determine the Income Unit value for every Business Day by multiplying
(a) by (b), and then dividing by (c) where:
(a) is the Income Unit value for the immediately preceding Valuation
Period;
(b) is the "net investment factor" for the Variable Sub-Account for the
Valuation Period for which the value is being determined; and
(c) is the daily equivalent of the assumed investment rate that you have
selected and that is shown in your Contract for the number of days in
the Valuation Period.
After the Income Date, we calculate the net investment factor slightly
differently than before the Income Date. Before the Income Date, we calculate
Asset-Based Charges as a percentage of the Variable Account Value on the date of
deduction. These charges are equal on an annual basis to 1.40%. However, on
and after the Income Date, we call these charges Variable Sub-Account Charges
and deduct them from the assets in each Variable Sub-Account on a daily basis.
Therefore, the "net investment factor" in (b), above, is determined by
dividing (i) by (ii), and then subtracting (iii) where:
(i) is the Accumulation Unit value for the current Valuation Period;
(ii) is the Accumulation Unit value for the immediately preceding
Valuation Period; and
(iii) is the daily Variable Sub-Account Charges (adjusted for the number of
days in the Valuation Period).
Illustration of Calculation of Income Unit Value
<TABLE>
<S> <C>
1. Accumulation Unit value for current Valuation Period.....................................10.0026116
2. Accumulation Unit value for immediately preceding Valuation
Period...................................................................................10.0000000
3. Net Investment Factor prior to the Income date (1)/(2)...................................1.00026116
4. Adjustment for Variable Sub-Account Charges.............................................0.000038626
5. Net Investment Factor on and after the Income Date (3)-(4)...............................1.00022253
6. Income Unit value for the immediately preceding Valuation
Period.................................................................................10.00000000
7. Daily equivalent of the assumed investment rate for the
number of days in the Valuation Period (assuming you
select 3%)=(1.031/365)...................................................................1.00008099
8. Income Unit value for current Valuation Period
[(5) x (6)]/(7).........................................................................10.00141533
</TABLE>
Illustration of Variable Income Payments
<TABLE>
<S> <C>
1. Number of Accumulation Units....................................................................1,000
2. Accumulation Unit value....................................................................10.0026116
3. Account Value (1) x (2).....................................................................10,002.61
4. Minimum monthly income payment factor per $1,000 applied........................................10.50
<PAGE>
5. First monthly variable income payment [(3) x (4)]/$1,000.......................................105.03
6. Income Unit value.........................................................................10.00141533
7. Number of Income Units (5)/(6)...............................................................10.50151
8. Assume Income Unit value at the end of the second month is......................................10.05
9. Second monthly variable income payment (7) x (8)...............................................105.54
10. Assume Income Unit value at the end of the third month is......................................10.10
11. Third monthly variable income payment (7) x (10)..............................................106.07
</TABLE>
Exchange of Income Units. After the Income Date, if there is an exchange of
value of a designated number of Income Units of particular Variable Sub-Accounts
into other Income Units, the value will be such that the dollar amount of the
income payment made on the date of exchange will be unaffected by the exchange.
Safekeeping of Account Assets
We hold the title to the assets of the Variable Account. The assets are
kept physically segregated and held separate and apart from our General Account
assets and from the assets in any other separate account.
We maintain records of all purchases and redemptions of Fund shares held by
each of the Variable Sub-Accounts.
A fidelity bond in the amount of approximately $10 million per occurrence
covering the Company's directors, officers, and employees has been issued by
Lloyd's of London.
Legal Matters
All matters relating to New York law pertaining to the Contracts, including
the validity of the Contracts and the Company's authority to issue the
Contracts, have been passed upon by James F. Bronsdon, the Company's Vice
President, Legal and Compliance. Blazzard, Grodd & Hasenauer, P.C., Westport,
Connecticut has provided advice on certain matters relating to the federal
securities laws.
Other Information
A registration statement has been filed with the SEC under the Securities
Act of 1933, as amended, with respect to the Contracts discussed in this
Statement of Additional Information. Not all the information set forth in the
registration statement, amendments and exhibits thereto has been included in
this Statement of Additional Information. Statements contained in this Statement
of Additional Information concerning the content of the Contracts and other
legal instruments are intended to be summaries. For a complete statement of the
terms of these documents, reference should be made to the instruments filed with
<PAGE>
the SEC.
Financial Statements
The Statement of Additional Information contains no financial statements
for the Variable Account because the Variable Account began operations as of the
date of the Prospectus. Financial statements of the Company are presented in the
Prospectus.
Part C
Other Information
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in Part A.
(b) Exhibits
(1)(a) Resolutions of the Board of Directors of Sage Life Assurance
Company of New York establishing The Sage Variable Annuity
Account A-NY.*
(2) Not Applicable.
(3) Form of Distribution Agreement with Sage Distributors, Inc.
and Form of Selling Agreement.**
(4)(a) Form of Individual Contract.**
(b) Form of Group Contract.**
(c) Form of Group Certificate.**
(d) Form of Individual IRA Rider.**
(e) Form of Group IRA Rider.**
(f) Form of Individual SIMPLE IRA Rider.**
(g) Form of Group SIMPLE IRA Rider.**
(h) Form of Individual Roth IRA Rider.**
(i) Form of Group Roth IRA Rider.**
(j) Form of Individual Enhanced Death Benefit Rider.**
(k) Form of Group Enhanced Death Benefit Rider.**
(l) Form of Individual Guaranteed Minimum Income Benefit Rider.**
(m) Form of Group Guaranteed Minimum Income Benefit Rider**
(5) (i) Form of Individual Contract Application.**
(ii) Form of Group Certificate Application.**
(6)(a) Declaration of Intention and Charter of the Company.*
(b) By-Laws of the Company.*
(7) Not Applicable.
(8)(a)(i) Form of Participation Agreement with AIM Variable Insurance
Funds.**
(ii) Form of Participation Agreement with The Alger American
Fund.**
(iii) Form of Participation Agreement with Liberty Variable
Investment Trust.**
(iv) Form of Participation Agreement with MFS(R) Variable
Insurance Trust(SM).**
(v) Form of Participation Agreement with The Universal
Institutional Funds, Inc.**
(vi) Form of Participation Agreement with Oppenheimer Variable
Account Funds.**
(vii) Form of Participation Agreement with Sage Life Investment
Trust.**
(viii) Form of Participation Agreement with SteinRoe Variable
Investment Trust.**
(ix) Form of Participation Agreement with T. Rowe Price Equity
Series, Inc.**
(b) Form of Services Agreement with Financial Administration
Services, Inc.**
(9) (i) Opinion and Consent of James F. Bronsdon.**
(ii) Consent of Blazzard, Grodd & Hasenauer, P.C.**
<PAGE>
(10) Consent of Ernst & Young LLP.**
(11) Not Applicable.
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
* Filed herewith.
**To be filed.
-----------------------
Item 25. Directors and Officers of the Depositor
Incorporated herein by reference to the section titled "Directors and
Executive Officers" of the Prospectus filed as Part A of this Registration
Statement.
Item 26. Persons Controlled by or under Common Control with the Depositor or
Registrant
The registrant is a segregated asset account of the Company and therefore
is owned and controlled by the Company. The Company is a stock life insurance
company of which all the voting securities are owned by Sage Life Assurance of
America, Inc., a Delaware corporation, ("Sage Life Assurance"), all of the
voting securities of which are owned by Sage Life Holdings of America, Inc., a
Delaware corporation ("Sage Life Holdings"), all of the voting securities of
which are owned by Sage Insurance Group, Inc. ("Sage Insurance Group"). In
addition to Sage Life Holdings, Sage Insurance Group also owns all of the
voting securities of Sage Distributors, Inc. (a broker-dealer), Sage Advisors,
Inc. (a registered investment adviser), and Finplan Holdings, Inc. (a financing
company), all of which are Delaware corporations, and Sage Re (Bermuda) Ltd.
(an insurer), a Bermudian corporation. All the voting securities of Sage
Insurance Group Inc. are owned by Sage Insurance Holdings, Inc, a Delaware
corporation. Sage Insurance Holdings, Inc. is a wholly owned subsidiary of Sage
Holdings (USA), Inc., a Delaware corporation. (Sage Holdings (USA), Inc. also
owns all of the voting securities of Sage Properties (USA), Inc., a Virginia
corporation whose principal assets are real estate.) Sage Holdings (USA), Inc.
is a wholly owned subsidiary of Sage Life Holdings Limited, a South African
corporation. The nature of the business of the companies listed above is
insurance and financial services. Sage Life Holdings Limited is 100% owned by
Sage Group Limited, a South African corporation that is the ultimate holding
company. Sage Group Limited is a controlling company operating in life
insurance, mutual funds and investment management. Various companies and other
entities controlled by Sage Group Limited may be considered to be under common
control with the registrant or the Company. Such other companies and entities
and the nature of their businesses are set forth below. These companies are
incorporated in South Africa and are wholly owned subsidiaries unless
otherwise noted.
Sage Life Holdings was formed pursuant to a letter of intent between Sage
Group Limited and Swiss Re Life and Health America, Inc. ("Swiss Re"). Swiss
Re's ultimate parent company is Swiss Reinsurance Company, Switzerland, one of
the world's largest life and health reinsurance groups. Under the letter of
intent, Swiss Re made an equity investment into Sage Life Holdings. The
arrangements contemplated by the letter of intent may be subject to regulatory
approval.
<TABLE>
<CAPTION>
Direct and Indirect Subsidiaries of Sage Group Limited
-----------------------------------------------------
<S> <C>
COMPANY NAME PRINCIPAL BUSINESS
Bentley Office Park (Pty) Ltd Property development & investment
Blackreef Properties (Pty) Ltd Property holding
Sage Strategic Services (Pty) Ltd Consulting, financial, administrative
and management services
Edenston Properties (Pty) Ltd Property development
Educational Information Services (Pty) Ltd Publishing
Ensiklopedie Afrikana (Edms) Beperk Publishing
Estromin Properties & Investments (Pty) Ltd Property investment
Everest Construction (Pty) Ltd Construction
FPS (South Vaal) Investments (Pty) Ltd Property investment
FPS (Vaal) Investments (Pty) Ltd Investment holding
FPS Investment Holdings Ltd Investment holding
FPS Investments (Pty) Ltd Investment holding
FPS Ltd Investment consultants
Fraser Street Registrars (Pty) Ltd Transfer secretaries
Hatfield Primary Square (Pty) Ltd. Property investment
Hatfield Properties (Block A) (Pty) Ltd Property investment
Hatfield Properties (Block C) (Pty) Ltd Property investment
Hatfield Properties (Block D) (Pty) Ltd Property investment
Highrise Home Investments (Pty) Ltd Property investment
Home Mortgage Investments (Pty) Ltd (50% owner) Financing
J van Streepen (Kempton Park) (Pty) Ltd (51% owner) Property development
Kemparkto (Pty) Ltd Property investment & development
Lakeview Management Properties (Pty) Ltd (75% owner) Property management
Marlands Flats (Pty) Ltd Property holding
Meumann & Heyneke (Pty) Ltd Retail merchants
Nedrep Investments Ltd Investment holding
</TABLE>
<TABLE>
<S> <C>
New Smal Construction Co. (Pty) Ltd Construction
Palmiet Townships (Pty) Ltd Property development
R/E 105 Rosebank (Pty) Ltd Investment holding
Residential Mortgage Investments (Pty) Ltd Financing
S A Cultural Holdings (Pty) Ltd Investment
S A Kultuur Beleggings (Edms) Beperk Investment
<PAGE>
S.B. Plant Hire (Pty) Ltd Plant hire
SACI Finance (Pty) Ltd Finance company
Sage Structured Options (Eight) (Pty) Ltd Investment holding
Sage Structured Options (Five) (Pty) Ltd Investment holding
Sage Structured Options (Four) (Pty) Ltd Investment holding
Sage Structured Options (Nine) (Pty) Ltd Investment holding
Sage Structured Options (One) (Pty) Ltd Investment holding
Sage Structured Options (Seven) (Pty) Ltd Investment holding
Sage Structured Options (Six) (Pty) Ltd Investment holding
Sage Structured Options (Three) (Pty) Ltd Investment holding
Sage Structured Options (Two) (Pty) Ltd Investment holding
Sage Centre (Pty) Ltd Investment holding
Sage Corporate Services (Pty) Ltd Investment holding
Sage Family Benefits (Pty) Ltd Insurance consultants
Sage Holdings Ltd Financial, investment & management
Sage Investment Trust Ltd Insurance & investment
Sage Land Finance (Pty) Ltd Financiers
Sage Land Holdings (Pty) Ltd Investment holding
Sage Library Gardens Ltd Investment holding
Sage Life Holdings Ltd Investment holding
Sage Life Ltd Life insurance
Sage Management Services (Pty) Ltd Management
Sage Parking (Pty) Ltd Own & operate parking garages
Sage Personal Investment Marketing (Pty) Ltd Investment consultants
Sage Properties (549 Sandown) (Pty) Ltd Property holding
Sage Properties (Menlyn) (Pty) Ltd Property investment
Sage Properties (Rivonia Four) (Pty) Ltd Property holding
Sage Properties (Sunnyside) (Pty) Ltd Property holding
Sage Properties Ltd Investment holding
Sage Property Holdings Ltd Property holding
Sage Property Management Services (Pty) Ltd Property management
Sage Property Trust Managers, Ltd. (77.2% owner) Management of unit trusts
Sage Schachat Developments (Pty) Ltd Builders
Sage Schachat Ltd Investment holding
Sage Selections (Pty) Ltd Investment
Sage Specialized Insurances Ltd Short term insurance
Sage Strategic Investments (Pty) Ltd Investment holding
Sage Trustees (Pty) Ltd Trustees
Sage Unit Trusts Ltd Management of unit trusts
Sagemed (Pty) Ltd Health & medical insurance
SAK Holdings (Pty) Ltd Investment holding
Sandhurst Properties (Block A) (Pty) Ltd Property investment & management
Sandhurst Properties (Block C) (Pty) Ltd Property investment & management
</TABLE>
<TABLE>
<S> <C>
Sandhurst Properties (Block D) (Pty) Ltd Property investment & management
Sandhurst Properties (Block E) (Pty) Ltd Property investment & management
Sandhurst Properties (Block F) (Pty) Ltd Property investment & management
Sandhurst Properties (Block G) (Pty) Ltd Property investment & management
<PAGE>
Sandown Development Holdings (Pty) Ltd Property holding
Sandown Developments (Pty) Ltd Property development
Schachat Ciskei (Pty) Ltd Property development
Schachat Construction (Pty) Ltd Construction
Schachat Cullum (Pty) Ltd Property development & management
Schachat Finance Company (Pty) Ltd Financiers
Schachat Land Resources (Pty) Ltd Investment holding
Schachat Natal (Pty) Ltd Farming & other
Schalab Townships (Pty) Ltd (51% owner) Property development
Sectional Title (Pty) Ltd Property development
SLR Land Development (Pty) Ltd Building contractors
SMH Land Development (Pty) Ltd Property investment
SPTM Holdings (Pty) Ltd Investment holding
SSI Securities (Pty) Ltd Financiers
Stonehouse Investments (Pty) Ltd Property investment
Sunnyside Erf 26 (Block D) (Pty) Ltd Property investment & management
Table Classics (Pty) Ltd Deal in tableware products
The Gold Jewellery Corporation (Pty) Ltd Manufacture & sale of coins & jewelry
Townhomes (Pty) Ltd Building contractors
Von Brandis Square Development Co. (Pty) Ltd Property development
Sage Consulting Services (Pty) Ltd Consulting, financial, administrative
and management services
Witch Construction Company (Pty) Ltd Property investment & development Witch
Construction Company (Transvaal) (Pty) Ltd Property investment & development
Sage International B.V. (Netherlands corporation) Holding Sage International
Assets Ltd (BVI corporation) Holding Sage Management Services (USA), Inc.
(New York corporation) Management services
</TABLE>
Item 27. Number of Contract Owners
As of July 28, 2000, the Registrant has no Contract Owners.
Item 28. Indemnification
Sage Life-NY's By-Laws provide that a director of the Company shall not be
personally liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director, except that (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which would involve intentional misconduct or a
knowing violation of law, (iii) under Section 721 to Section 729 of the New York
Business Corporation Law, or (iv) for any transaction from which the director
derived any personal benefit. Notwithstanding the foregoing, the Articles
provide that if the New York Business Corporation Law is amended to authorize
further limitations of the liability of a director or a corporation, then a
director of the Company, in addition to circumstances in which a director is not
personally liable as set forth in the preceding sentence, shall be held free
from liability to the fullest extent permitted by the New York Business
Corporation Law as amended.
Further, Sections 721 to 729 of the New York Business Corporation Law
<PAGE>
provides that a corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had a reasonable cause to believe that his conduct was not unlawful.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 29. Principal Underwriter
(a) Sage Distributors, Inc. ("Sage Distributors") is the registrant's
principal underwriter.
(b) Officers and Directors of Sage Distributors
The principal business address of all of the persons listed below is 300
Atlantic Street, Stamford, CT 06901.
<TABLE>
<CAPTION>
Name and Principal Business Address Positions and Offices With Sage Distributors
- ----------------------------------- --------------------------------------------
<S> <C>
<PAGE>
Robin I. Marsden Director
Mitchell R. Katcher Director
</TABLE>
<TABLE>
<S> <C>
Christopher J. O'Gorman President, Chief Executive Officer
James F. Bronsdon Chief Legal Officer, Chief Compliance Officer
James F. Renz Chief Financial Officer, Treasurer, Assistant Secretary
Lincoln B. Yersin Senior Vice-President, National Sales Manager
</TABLE>
Item 30. Location of Books and Records
All of the accounts, books, records or other documents required to be kept
by Section 31(a) of the Investment Company Act of 1940 and rules thereunder, are
maintained at our Customer Service Center.
Item 31. Management Services
All management contracts are discussed in Part A or Part B of this
registration statement.
Item 32. Undertakings and Representations
(a) The registrant undertakes that it will file a post-effective
amendment to this registration statement as frequently as is
necessary to ensure that the audited financial statements in the
statement are never more than 16 months old for as long as
purchase payments under the Contracts offered herein are being
accepted.
(b) The registrant undertakes that it will include either (1) as part
of any application to purchase a Contract offered by the
prospectus, a space that an applicant can check to request a
Statement of Additional Information, or (2) a post card or
similar written communication affixed to or included in the
prospectus that the applicant can remove and send to the Company
for a Statement of Additional Information.
Additional Information.
(c) The registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made
available under this Form N-4 promptly upon written or oral
request to the Company at the address or phone number listed in
the prospectus.
(d) The Company represents that the fees and charges under the
Contracts, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the
risks assumed by the Company.
Signatures
As required by the Securities Act of 1933, and the Investment Company Act
of 1940, the registrant has caused this Registration Statement to be signed on
its behalf, in the City of Stamford, in the State of Connecticut, on this 7th
day of August, 2000.
The Sage Variable Annuity Account A-NY
(Registrant)
By: Sage Life Assurance Company of New York
By: /s/ ROBIN I. MARSDEN*
--------------------------------------
Robin I. Marsden
Director, President,
Chief Executive Officer
By: Sage Life Assurance Company of New York
(Depositor)
By: /S/ ROBIN I. MARSDEN*
---------------------------------------
Robin I. Marsden
Director, President,
Chief Executive Officer
*By: /S/ MITCHELL R. KATCHER
------------------------
Mitchell R. Katcher
As Attorney-In-Fact pursuant to a Power of Attorney dated August 7, 2000.
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
--------- ---------------- ----
/S/ RONALD S. SCOWBY Director 8/9/2000
----------------------
Ronald S. Scowby
/S/ H. LOUIS SHILL Director 8/11/2000
-----------------------
H. Louis Shill
Director
----------------------
Paul C. Meyer
/S/ RICHARD D. STARR Director 8/7/2000
-----------------------
Richard D. Starr
/S/ MITCHELL R. KATCHER Director, 8/4/2000
------------------------ Senior Executive Vice
Mitchell R. Katcher President, Chief Financial
Officer, Chief Actuary
/S/ MEYER FELDBERG Director 8/16/2000
-------------------
Meyer Feldberg
/S/ JOHN A. BENNING Director 8/7/2000
-------------------
John A. Benning
/S/ ROBIN I. MARSDEN* Director, President, 8/7/2000
--------------------- Chief Executive Officer
Robin I. Marsden
ROBERT J. KIGGINS Director 8/7/2000
----------------------
Robert J. Kiggins
*By: /S/ MITCHELL R. KATCHER
------------------------
Mitchell R. Katcher
As Attorney-In-Fact pursuant to a Power of Attorney dated August 7, 2000.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that ROBIN I. MARSDEN, whose signature appears
below, hereby constitutes and appoints MITCHELL R. KATCHER as his
attorney-in-fact, with full power of substitution and resubstitution, for him
and in his name, place, and stead, in any and all capacities, to sign any
registration statement and amendments including post-effective amendments
thereto, under the Securities Act of 1933 and the Investment Company Act of
1940, where applicable, executed on behalf of Sage Life Assurance Company of New
York (the "Company") in connection with (a) combination fixed and variable
annuity contracts issued by the Company through The Sage Variable Annuity
Account A-NY, (b) variable annuity contracts issued by the Company through The
Sage Variable Annuity Account A-NY, (c) combination fixed and variable life
insurance contracts issued by the Company through The Sage Variable Life Account
A-NY, and (d) variable life contracts issued by the Company through The Sage
Variable Life Account A-NY, and to file the same, with exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission. ROBIN I. MARSDEN hereby ratifies and confirms all that said
attorney-in-fact, or his substitutes, may do or cause to be done by virtue
thereof.
/s/ROBIN I. MARSDEN
-------------------
Robin I. Marsden
Director
Sage Life Assurance Company of
New York
August 7, 2000
State of Connecticut )
County of Fairfield )
On this 7th day of August, 2000, before me came ROBIN I. MARSDEN, Director
of Sage Life Assurance Company of New York, to me known, and signed the above
Power of Attorney on behalf of Sage Life Assurance Company of New York.
/s/ROSEMARY LOMBARDI [SEAL]
---------------------
Rosemary Lombardi
Notary Public, State of Connecticut
Term Expires February 28, 2003
EXHIBIT INDEX
EX-99.B1.(a) Resolutions of the Board of Directors of the Company
establishing the Variable Account.
EX-99.B6.(a) Declaration of Intention and Charter of the Company
EX-99.B6.(b) Bylaws of the Company
