Registration No. 333-51916
No. 811-10219
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM N-8B-2
REGISTRATION STATEMENT OF UNIT INVESTMENT TRUST
WHICH IS CURRENTLY ISSUING SECURITIES
PURSUANT TO SECTION 8(B) OF THE INVESTMENT COMPANY ACT OF 1940
TRANSAMERICA OCCIDENTAL LIFE SEPARATE ACCOUNT VUL-5
(Name of Unit Investment Trust)
1150 South Olive Street, Los Angeles, CA 90015
(Address of Principal Office of Registrant)
Issuer of periodic payment plan certificates only for purposes of
information provided herein.
Dated January 11, 2001
<PAGE>
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Furnish name of the trust and the Internal Revenue Service Employer
Identification Number.
The trust is the Transamerica Occidental Life Separate Account VUL-5 (the
"Separate Account"). The Separate Account is a separate investment account of
Transamerica Occidental Life Insurance Company (the "Company") and has no
employer identification number.
(b) Furnish title of each class or series of securities issued by the trust.
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The securities are flexible premium variable life insurance policies (the
"Policy(ies)").
2. Furnish name and principal business address and zip code and the Internal
Revenue Service Employer Identification Number of each depositor of the
trust.
Transamerica Occidental Life Insurance Company, 1150 South Olive Street, Los
Angeles, California 90015 FEIN: 95-1060502
3. Furnish name and principal business address and zip code and the Internal
Revenue Service Employer Identification Number of each custodian or trustee of
the trust indicating for which class or series of securities each custodian or
trustee is acting.
The Company will hold, in its own custody, all of the securities.
4. Furnish name and principal business address and zip code and the Internal
Revenue Service Employer Identification Number of each principal underwriter
currently distributing securities of the trust.
Distribution of the Policies has not yet commenced. When
distribution commences, the principal underwriter will be:
Transamerica Securities Sales Corporation, 1150 South Olive Street, Los Angeles,
California 90015 FEIN: 95-4044525
5. Furnish name of state or other sovereign power, the laws of which govern
with respect to the organization of the trust.
Iowa.
6. (a) Furnish the dates of execution and termination of agreement currently
in effect under the terms of which the trust was organized and issued or
proposes to issue securities.
The Separate Account was established under California law pursuant to a
resolution of the Board of Directors of the Company on June 11, 1996. As the
company's domicile was moved to Iowa, effective December 31, 2000, the Separate
Account will be maintained pursuant to Iowa law.
(b) Furnish the dates of execution and termination of any indenture or
agreement currently in effect pursuant to which the proceeds of payments on
securities issued or to be issued by the trust are held by the custodian or
trustee.
None.
7. Furnish in chronological order the following information with respect to
each change of name of the trust since January 1, 1930. If the name has
never been changed, so state.
The name of the Separate Account has never been changed.
8. State the date on which the fiscal year of the trust ends.
December 31.
Material Litigation
9. Furnish a description of any pending legal proceedings, material with
respect to the security holders of the trust by reason of the nature of the
claim or the amount thereof, to which the trust, the depositor, or the
principal underwriter is a party or of which the assets of the trust are
the subject, including the substance of the claims involved in such
proceeding and the title of the proceeding. Furnish a similar statement
with respect to any pending administrative proceeding commenced by a
governmental authority or any such proceeding or legal proceeding known to
be contemplated by a governmental authority. Include any proceedings which,
although immaterial itself, is representative of, or one of, a group which
in the aggregate is material.
There are no current or pending legal or administrative
proceedings to which Separate Account, the Company, or
principal underwriter, Transamerica Securities Sales
Corporation, is a party, which are material with respect to
the security holders of the Separate Account.
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
------------------------------------------------------------
Except for terms defined in this Form N-8B-2, terms used in this Form
N-8B-2 have the same meaning as such terms are defined in the
prospectus (the "Prospectus") filed with the Securities and Exchange
Commission ("SEC") on December 15, 2000 by Transamerica Occidental Life
Separate Account as part of a Registration Statement, as amended from
time to time, on Form S-6 under the Securities Act of 1933 (the
"Registration Statement"), describing the Policies.
General Information Concerning the Securities of the Trust and the Rights of
Holders.
10. Furnish a brief statement with respect to the following matters for each
class or series of securities issued by the trust.
(a) Whether the securities are of the registered or bearer type.
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The Policies are flexible premium variable life
insurance policies and, as such, are "registered" in
the name of the owners of a Policy (the "Owner") and
the records concerning the Owner are maintained by or
on behalf of the Company.
(b) Whether the securities are of the cumulative or distributive type.
------------------------------------------------------------ ----
The Policies are of the cumulative type, providing
for no distribution of income, dividends or capital
gains except in connection with a voluntary surrender
or partial surrender or withdrawal of Accumulation
Value by an Owner, or in connection with the payment
of death benefits.
(c) The rights of security holders with respect to partial withdrawal or
redemption.
A Policy may be surrendered at any time, subject to
the possible imposition of a surrender charge after
the free look period. See Item 13(a) "Surrender
Charge" and Item 17(a) "Surrender."
(d) The rights of security holders with respect to conversion, transfer,
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partial-redemption, and similar matters.
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TRANSFER - The Policies permit payments to be
allocated either to the Fixed Account, which is part
of the Company's General Account, or to the
sub-accounts of the Separate Account. Each
sub-account invests exclusively in a corresponding
mutual fund investment portfolio ("portfolio").
Subject to the consent of the Company, the Owner may
transfer amounts among all of the sub-accounts and
between the sub-accounts and the Fixed Account,
subject to certain restrictions.
CONVERSION PRIVILEGE - During the 20 Policy years but
before the policy anniversary nearest age 95, subject
to certain restrictions, the Owner may convert the
Policy to a fixed Policy by transferring all
Accumulation Value in the sub-accounts to the Fixed
Account and by simultaneously changing the allocation
of future payments to the Fixed Account.
FREE LOOK PRIVILEGE -
-------------------
The Policy provides for a free look period under the
Right to Cancel provision. The Owner has the right to
examine and cancel the Policy by returning it to us
or to one of our representatives on or before the
tenth day (or such later date as required in by state
law) after receiving the Policy.
If the Policy provides for a full refund under its
"Right to Cancel" provision as required by state law,
the refund will be the entire payment. If the Policy
does not provide for a full refund, the refund amount
will be (1) amounts allocated to the Fixed Account;
PLUS, (2) the Accumulation Value in the sub-accounts;
PLUS, (3) all fees, charges and taxes which have been
imposed.
We may delay a refund of any payment made by check
until the check has cleared the Owner's bank. The
refund will be determined as of the Valuation Date
that the Policy is received by us.
The Owner may make surrenders and partial withdrawals
as described in Items 10(c), 13(a) and 17(a).
(e) If the trust is the issuer of periodic payment plan
certificates, the substance of the provisions of any
indenture or agreements with respect to lapses or
defaults by security holders in making principal
payments, and with respect to reinstatement.
POLICY LAPSE AND REINSTATEMENT -The Policy will lapse
if, on a monthly processing date, the surrender value
is less than the monthly deductions due. If the
Policy lapses, you will have a 61-day grace period in
which to pay required premium. If sufficient premium
is not paid by the end of the grace period, the
Policy will terminate without value.
If the outstanding loan at any time exceeds the
Accumulation Value minus the surrender charges, the
outstanding loan will be in default. If the
outstanding loan goes into default, you will have a
61-day grace period in which to pay back the excess
outstanding loan. If you do not pay back the excess
outstanding loan by the end of the grace period, the
loan will be foreclosed and the Policy will terminate
without value.
Within limits and provided it was not surrendered,
the Policy may be reinstated within three years from
the date of default if it lapses or the outstanding
loan is foreclosed.
An endorsement to modify grace period may be added at
policy issue if death benefit option 1 is selected.
While there is no additional charge for this
endorsement, Select Monthly Premiums must be paid to
maintain benefits of endorsement. These benefits are
that the grace period will be modified so that the
vase policy and endorsement will remain in effect.
The endorsement will not prevent policy from entering
grace period during first five years due to failure
to meet required premium payments.
(f) The substance of the provisions of any indenture or
agreements with respect to voting rights, together
with the names of any persons other than security
holders given the right to exercise voting rights
pertaining to the trust's securities or the
underlying securities and the relationship of such
persons to the trust.
We are the legal owner of all portfolio shares held
in the Separate Account and each sub-account. As the
owner, we have the right to vote at a portfolio's
shareholder meetings. However, to the extent required
by federal securities laws and regulations, we will
vote portfolio shares that each sub-account holds
according to instructions received from Owners with
Accumulation Value in the sub-account. If any federal
securities laws or regulations or their
interpretation change to permit us to vote shares in
our own right, we reserve the right to do so, whether
or not the shares relate to the Policies.
We will provide each person having a voting interest
in a portfolio with proxy materials and voting
instructions. We will vote shares held in each
sub-account for which no timely instructions are
received in proportion to all instructions received
for the sub-account. We will also vote in the same
proportion our shares held in the Separate Account
that do not relate to the Policies.
We will compute the number of votes that a Owner has
the right to instruct on the record date established
for the portfolio. This number is the quotient of (1)
each Owner's Accumulation Value in the sub-account;
divided by (2) the net asset value of one share in
the portfolio in which the assets of the sub-account
are invested.
We may disregard voting instructions Owners initiate
in favor of any change in the investment policies or
in any investment adviser or principal underwriter.
Our disapproval of any change must be reasonable. A
change in investment policies or investment adviser
must be based on a good faith determination that the
change would be contrary to state law or otherwise is
improper under the objectives and purposes of the
portfolios. If we do disregard voting instructions,
we will include a summary of and reasons for that
action in the next report to Owners.
(g) Whether security holders must be given notice of any changes in:
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(1) the composition of the assets of the trust.
------------------------------------------
We reserve the right, subject to law, to
make additions to, deletions from, or
substitutions for the shares that are held
in the sub-accounts. We may redeem the
shares of a portfolio and substitute shares
of another registered open-end management
company, if (1) the shares of the portfolio
are no longer available for investment; or
(2) in our judgment further investment in
the portfolio would be improper based on the
purposes of the Separate Account or the
affected sub-account.
Where the 1940 Act or other law requires, we
will not substitute any shares respecting a
Policy interest in a sub-account without
notice to Owners and prior approval of the
SEC and state insurance authorities. The
Separate Account may, as the law allows,
purchase other securities for other policies
or allow a conversion between policies on a
Owner's request.
We reserve the right to establish additional
sub-accounts funded by a new portfolio or by
another investment company. Subject to law,
we may, in our sole discretion, establish
new sub-accounts or eliminate one or more
sub-accounts.
Shares of the portfolios are issued to other
separate accounts of Transamerica and its
affiliates that fund variable annuity
policies and that fund other variable life
policies ("mixed funding"). It is
conceivable that in the future such mixed
funding or may be disadvantageous for
variable life contract and policy owners or
variable annuity policy owners. Transamerica
does not believe that mixed funding is
currently disadvantageous to either variable
life insurance contract and policy owners or
variable annuity policy owners. Transamerica
will monitor events to identify any material
conflicts among Policy and Owners because of
mixed funding. If Transamerica concludes
that separate portfolios should be
established for variable life and variable
annuity separate accounts, or for separate
variable life separate accounts, we will
bear the expenses.
We may change the Policy to reflect a
substitution or other change and will notify
Owners of the change. Subject to any
approvals the law may require, the Separate
Account or any sub-accounts may be (1)
operated as a management company under the
1940 Act; (2) deregistered under the 1940
Act if registration is no longer required;
or (3) combined with other sub-accounts or
our other separate accounts.
(2) the terms and conditions of the securities issued by the trust.
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No change in the terms and conditions of the
Policies that affect the Owner's rights will
be made without notice to Owners to the
extent required by law.
(3) the provisions of any indenture or agreement of the trust.
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No notice to or consent from Owners is
required for any change in the Company's
resolution establishing the Separate
Account.
(4) the identity of the depositor, trustee or custodian.
---------------------------------------------------
The depositor of the Separate Account cannot be changed.
The Separate Account has no Trustees.
Notice to Owners need not be given for the custodian to be changed.
(h) Whether the consent of security holders is required in order for action to
be taken concerning any change in:
(1) the composition of the assets of the trust.
------------------------------------------
The Policies do not require consent of the
Owners when changing the underlying
securities of the Separate Account, except
as may be required by currently applicable
law or regulation.
(2) the terms and conditions of the securities issued by the trust.
Except as appropriate to comply with federal
or state law or regulation the terms and
conditions of a Policy cannot be changed
without the consent of the Owner.
(3) the provisions of any indenture or agreement of the trust.
---------------------------------------------------------
No consent is required.
(4) the identity of the depositor, trustee or custodian.
---------------------------------------------------
The depositor of the Separate Account cannot be changed.
The Separate Account has no Trustees and no custodian.
(i) Any other principal feature of the securities issued
by the trust or any other principal right, privilege
or obligation not covered by subdivisions (a) to (g)
or by any other item in this form.
(1) Payments - See Items 14 and 15.
(2) DEATH BENEFIT - If the Policy is in force on the
Insured's death, we will, with due proof of death of
the Insured, pay the net death benefit to the named
beneficiary. We will normally pay the net death
benefit within seven days of receiving due proof of
the Insured's death, but we may delay payment of net
death benefits. The beneficiary may receive the net
death benefit in a lump sum or under a payment
option, unless the payment option has been restricted
by the Owner.
DEATH BENEFIT OPTIONS
There are three death benefit options available under
the policy before the policy anniversary nearest
exact age 100. You choose the desired option in the
application. By company practice, you may change the
option once per policy year after the first policy
year by written request. Changes in the death benefit
option:
o will be effective on the policy anniversary following the date we approve
the change;
o may not increase the net amount at risk, unless we approve the increase
based on evidence of insurability of the joint insureds provided to us;
o will incur applicable surrender penalties if the change in option results
in a decrease in the face amount; and
o may result in changes in the monthly deductions, including the monthly
deduction rates.
Before the policy anniversary nearest exact age 100, the death benefit will be
as follows:
For Option 1 (level option), the death benefit is the GREATEST of:
a) the total face amount of the base policy on the date of the insured's
death;
b) the death benefit factor multiplied by the accumulation value of the base
policy on the date of the insured's death; or
c) the amount required for the policy to qualify as a life insurance contract
under Code Section 7702.
For Option 2 (plus option), the death benefit is the
GREATEST of:
a) the total face amount of the base policy on the date of the insured's
death, plus the accumulation value of the base policy on the date of the
insured's death;
b) the death benefit factor multiplied by the accumulation value of the base
policy on the date of the insured's death; or
c) the amount required for the policy to qualify as a life insurance contract
under Code Section 7702.
For Option 3 (plus premium option), the death benefit is the GREATEST of:
a) the total face amount of the base policy on the
date of the insured's death, plus the excess, if
any, of all gross premiums paid for the base
policy as of the date of the insured's death,
minus any partial surrenders, proportionate
surrender penalties, surrender penalty free
withdrawals and premium refunds;
b) the death benefit factor multiplied by the accumulation value of the base
policy on the date of the insured's death; or
c) the amount required for the policy to qualify as a life insurance contract
under Code Section 7702.
Beginning with the policy anniversary nearest exact
age 100, the death benefit will be the greater of:
a) the death benefit factor multiplied by the accumulation value of the base
policy as of the date of the insured's death; or
b) the amount required for the policy to qualify as a life insurance contract
under Code Section 7702.
If the Full Death Benefit Rider is in force on the
policy anniversary nearest exact age 100, however,
the death benefit beginning on that date will be the
benefit as provided under the rider.
We will determine the accumulation value for the
death benefit calculation using the prices calculated
at the end of the valuation date on which the insured
died. If that date is not a valuation date, we use
the prices calculated at the end of the next
valuation date.
Information Concerning the Securities Underlying the Trust's Securities
11. Describe briefly the kind or type of securities comprising the unit of
specified securities in which security holders have an interest.
The Policies permit payments to be allocated either to the
Fixed Account, which is part of the Company's General Account,
or to the Separate Account. Nineteen investment divisions
("sub-accounts") are currently offered under the Policies.
Each sub-account invests exclusively in a corresponding
portfolio. The portfolios are open-end management investment
companies or portfolios of series, open-end management
companies. Each of the portfolios operates pursuant to
different investment objectives, which are summarized below:
THE INCOME & GROWTH PORTFOLIO OF THE ALGER AMERICAN FUND seeks
current income with long-term capital appreciation by
investing in dividend-paying equity securities that also offer
opportunities for capital appreciation.
THE GROWTH AND INCOME PORTFOLIO - CLASS B OF THE ALLIANCE
VARIABLE PRODUCTS SERIES FUND, INC. seeks capital growth with
current income by investing in dividend-paying common stocks
of good quality.
THE PREMIER GROWTH PORTFOLIO - CLASS B OF THE ALLIANCE
VARIABLE PRODUCTS SERIES FUND, INC. seeks capital growth
through active portfolio investment in equity securities of
carefully selected U.S. companies that are likely to achieve
superior earnings growth.
THE APPRECIATION PORTFOLIO OF THE DREYFUS VARIABLE INVESTMENT
FUND seeks current income and long-term capital growth
consistent with preservation of capital by investing in common
stocks focusing on "blue chip" companies with total market
values of more than $5 billion at the time of purchase.
THE SMALL CAP PORTFOLIO OF THE DREYFUS VARIABLE INVESTMENT
FUND seeks to maximize capital appreciation by investing in
common stocks of U.S. and foreign companies characterized by
new or innovative products or services which should enhance
prospects for growth of future earnings.
THE BALANCED PORTFOLIO - SERVICE SHARES OF THE JANUS ASPEN
SERIES seeks long-term growth consistent with preservation of
capital and balanced by current income by investing in equity
and fixed-income securities selected primarily for their
income potential.
THE WORLDWIDE GROWTH PORTFOLIO - SERVICE SHARES OF THE JANUS
ASPEN SERIES seeks long-term growth of capital by investing in
common stocks of foreign and domestic companies. The portfolio
has the flexibility to invest on a world-wide basis in
companies and other organizations of any size, regardless of
the country of organization or place of principal business
activity.
THE EMERGING GROWTH SERIES OF THE MFS VARIABLE INSURANCE TRUST
seeks long-term growth of capital by investing in common
stocks of companies that are early in their life cycles that
MFS believes have the potential to become major enterprises.
THE GROWTH WITH INCOME SERIES OF THE MFS VARIABLE INSURANCE
TRUST seeks current income with long-term capital growth by
investing in equity securities of companies that are believed
to have long-term potential for growth and income.
THE RESEARCH SERIES OF THE MFS VARIABLE INSURANCE TRUST seeks
long-term growth of capital and future income by investing in
equity securities of companies believed to possess
better-than-average prospects for long-term growth.
THE EMERGING MARKETS EQUITY PORTFOLIO OF THE MORGAN STANLEY
UNIVERSAL INSTITUTIONAL FUNDS, INC. seeks long-term capital
appreciation by investing primarily in emerging market
countries. The Adviser seeks to maximize returns by investing
in markets with improving fundamentals, attractive valuations,
and low investor recognition, and by selecting securities that
demonstrate attractive growth, reasonable valuations, and
attractive fundamentals.
THE FIXED INCOME PORTFOLIO OF THE MORGAN STANLEY UNIVERSAL
INSTITUTIONAL FUNDS, INC. seeks above-average income and
total return by investing in obligations of the U.S.
government and its agencies, corporate bonds,
mortgage-backed securities, foreign bonds, and other fixed
income securities and derivatives.
THE HIGH YIELD PORTFOLIO OF THE MORGAN STANLEY UNIVERSAL
INSTITUTIONAL FUNDS, INC. seeks above-average income and total
return by investing in high yield securities, including
corporate bonds and other fixed income securities and
derivatives.
THE INTERNATIONAL MAGNUM PORTFOLIO OF THE MORGAN STANLEY
UNIVERSAL INSTITUTIONAL FUNDS, INC. seeks long-term capital
appreciation by investing in developed market stocks,
including equity securities of non-U.S. issuers comprising the
Morgan Stanley Capital International EAFE Index (which
includes Australia, Japan, New Zealand, most Western European
nations, and certain developed Asian countries, such as Hong
Kong and Singapore).
THE MANAGED PORTFOLIO OF THE OCC ACCUMULATION TRUST seeks
growth of capital over time by investing primarily in common
stocks, bonds and cash equivalents.
THE SMALL CAP PORTFOLIO OF THE OCC ACCUMULATION TRUST seeks
capital appreciation by investing primarily in equity
securities of companies with a market capitalization under $1
billion.
THE STOCKSPLUS GROWTH AND INCOME PORTFOLIO OF THE PIMCO
VARIABLE INSURANCE TRUST seeks to outperform the stock market
as measured by the S&P 500 Index by investing in S&P 500
derivatives in addition to or in place of S&P 500 stocks in an
attempt to equal or exceed the performance of the S&P 500.
THE GROWTH PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE
FUND, INC. seeks long-term capital growth by investing in
listed and unlisted common stocks of companies with superior
growth potential.
THE MONEY MARKET PORTFOLIO OF THE TRANSAMERICA VARIABLE
INSURANCE FUND, INC. seeks to maximize current income,
liquidity and preservation of capital by investing in
short-term money market instruments.
12. If the trust is the issuer of periodic payment plan
certificates and if any underlying securities were issued by
another investment company, furnish information for each such
company:
(a) Name of Company.
---------------
<TABLE>
<CAPTION>
The sub-accounts of the Separate Account invest in a number of corresponding
portfolios managed by a number of investment advisers.
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
(A) (B) (C) (D) (E)
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
<S> <C> <C> <C> <C>
NAME OF COMPANY DEPOSITOR CUSTODIAN UNDERWRITER PERIOD DURING WHICH
SECURITIES OF SUCH
COMPANIES HAVE BEEN
THE UNDERLYING
SECURITIES
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
Emerging Growth Series of MFS None Investors Bank and Trust MFS Fund None
Variable Insurance Trust Company, 89 South Street, Distributors, Inc.
Boston, MA 02111 500 Boylston Street
Boston, MA 02116
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
Research Series of MFS Variable None Investors Bank and Trust MFS Fund None
Insurance Trust Company, 89 South Street, Distributors, Inc.
Boston, MA 02111 500 Boylston Street
Boston, MA 02116
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
Growth with Income Series of MFS None Investors Bank and Trust MFS Fund None
Variable Insurance Trust Company, 89 South Street, Distributors, Inc.
Boston, MA 02111 500 Boylston Street
Boston, MA 02116
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
None Morgan Stanley & Co., None
Fixed Income Portfolio of Morgan Chase Global Funds Inc. 1221 Avenue of
Stanley Universal Funds, Inc. Services Company, 73 the Americas, New
Tremont Street, Boston, York, NY 10020
MA 02108
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
High Yield Portfolio of Morgan None Chase Global Funds Morgan Stanley & Co., None
Stanley Universal Funds, Inc. Services Company, 73 Inc. 1221 Avenue of
Tremont Street, Boston, the Americas, New
MA 02108 York, NY 10020
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
International Magnum Portfolio of None Chase Global Funds Morgan Stanley & Co., None
Morgan Stanley Universal Funds, Inc. Services Company, 73 Inc. 1221 Avenue of
Tremont Street, Boston, the Americas, New
MA 02108 York, NY 10020
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
Emerging Markets Equity Portfolio None Chase Global Funds Morgan Stanley & Co., None
of Morgan Stanley Universal Funds, Services Company, 73 Inc. 1221 Avenue of
Inc. Tremont Street, Boston, the Americas, New
MA 02108 York, NY 10020
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
Premier Growth Portfolio of None State Street Bank and Alliance Fund None
Alliance Variable Products Series Trust Co. Distributors, Inc.
Fund, Inc. 225 Franklin Street 1345 Avenue of the
Boston, MA 02110 Americas, New York,
NY 10105
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
Growth and Income Portfolio of None State Street Bank and Alliance Fund None
Alliance Variable Products Series Trust Co. Distributors, Inc.
Fund, Inc. 225 Franklin Street 1345 Avenue of the
Boston, MA 02110 Americas, New York,
NY 10105
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
Income and Growth Portfolio of The None Custodial Trust Co. Fred Alger & Co., Inc. None
Alger American Fund 245 Park Avenue 30 Montgomery Street
New York, NY 10167 Jersey City, NJ 07302
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
Worldwide Growth Portfolio of Janus None State Street Bank and None None
Aspen Series Trust
P. O. Box 0351
Boston, MA 02117
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
Balanced Portfolio of Janus Aspen None State Street Bank and None None
Series Trust
P. O. Box 0351
Boston, MA 02117
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
Small Cap Portfolio of OCC None State Street Bank and OCC Distributors None
Accumulation Trust Trust 2 World Financial
P.O. Box 8505 Center
Boston, MA 02266 New York, NY 10080
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
Managed Portfolio of OCC None State Street Bank and OCC Distributors None
Accumulation Trust Trust 2 World Financial
P.O. Box 8505 Center
Boston, MA 02266 New York, NY 10080
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
Small Cap Portfolio of Dreyfus None Mellon Bank, N.A. Premier Mutual Fund None
Variable Investment Fund One Mellon Bank Center Services, Inc.
Pittsburgh, PA 15258 60 State Street
Boston, MA 02109
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
Capital Appreciation Portfolio of None Mellon Bank, N.A. Premier Mutual Fund None
Dreyfus Variable Investment Fund One Mellon Bank Center Services, Inc.
Pittsburgh, PA 15258 60 State Street
Boston, MA 02109
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
StocksPlus Growth and Income None PIMCO Funds Distributor State Street Bank and None
Portfolio of PIMCO Variable LLC Trust Company
Insurance Trust 2187 Atlantic Street 801 Pennsylvania,
Stamford, CT 06902 Kansas City, Missouri
64105
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
Growth Portfolio of Transamerica None State Street Bank and None None
Variable Insurance Fund, Inc. Trust Company
225 Franklin Street
Boston, MA 02110
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
Money Market Portfolio of None State Street Bank and None None
Transamerica Variable Insurance Trust Company
Fund, Inc. 225 Franklin Street
Boston, MA 02110
------------------------------------- ------------ --------------------------- ----------------------- ------------------------
</TABLE>
Information Concerning Loads, Fees, Charges and Expenses
13. (a) Furnish the following information with respect to
each load, fee, expense or charge to which (1)
principal payments; (2) underlying securities; (3)
distributions; (4) cumulated or reinvested
distributions or income; and (5) redeemed or
liquidated assets of the trust's securities are
subject:
(A) the nature of such load, fee, expense or charge;
(B) the amount thereof:
(C) the name of the person to whom such amounts
are paid and his relationship to the trust:
(D) the nature of the services performed by such
person in consideration for such load, fee,
expense or charge.
(1) Under the Policies
CHARGES AND DEDUCTIONS
The following charges will apply to your
policy under the circumstances described.
Some of these charges apply throughout the
policy's duration. Other charges apply only
if you choose certain options under the
policy. The charges are for the services and
benefits provided, costs and expenses
incurred and risks assumed by us under or in
connection with the policies. Services and
benefits provided by us include:
o the death benefits, cash and loan benefits provided by the policy;
o investment options, including net premium allocations;
o administration of various elective options under the policy; and
o the distribution of various reports to policy owners.
Costs and expenses incurred by us include:
o those associated with underwriting applications and riders;
o various overhead and other expenses associated with providing the services
and benefits related to the policy;
o sales and marketing expenses; and
o other costs of doing business, such as federal, state and local premium and
other taxes and fees.
Risks assumed by us include the risks that
the insured may live for a shorter period of
time than estimated resulting in the payment
of greater death benefits than expected, and
that the costs of providing the services and
benefits under the policies will exceed the
charges deducted.
ADMINISTRATIVE CHARGE
Each time you make a premium payment to us,
we impose a charge equal to 7% of the
premium payment for policies with a face
amount under $5,000,000, 6.5% for face
amounts between $5,000,000 and $9,999,999,
and 6.25% for face amounts of $10,000,000
and over. The administrative charge is
designed to help offset our state and local
premium taxes, federal income tax treatment
of deferred acquisition costs, as well as a
portion of the distribution costs associated
with the policies.
SURRENDER PENALTY
During the first 10 policy years, and the
first 10 layer years for each layer, or
until the policy anniversary nearest age
100, whichever is earlier, we will assess a
surrender penalty on any surrender amount
that exceeds the amount eligible for a
surrender penalty free withdrawal and/or a
decrease in face amount. Separate surrender
penalty factors and surrender penalty
periods apply to the base policy and to each
layer. The minimum surrender penalty is $25.
A layer year is a twelve month period
beginning on the effective date of a layer,
and each twelve month period thereafter.
After the 10th policy year or, as applicable, layer
year, we assess a $25 charge for partial surrenders
in excess of the amount that would be eligible for
surrender penalty free withdrawal during the
surrender penalty period.
We deduct the surrender penalty from the base policy
or layer accumulation value.
The surrender penalty is a factor times each $1,000
of the face amount of the base policy or layer. The
surrender penalty factor for a policy depends on:
o the face amount of the base policy;
o the face amount of each layer, if any;
o the insured's age at issue, sex, smoker or non-smoker
status, and underwriting risk classification as
determined separately for the base policy and each
layer, respectively; and
o how many years the policy and each layer, if any, have been in force.
The surrender penalty factors are shown in the policy
data pages for the policy.
The surrender penalty is intended to help us recover
a portion of our first year acquisition expenses and
sales expenses, including commissions.
ALLOCATION CHANGE CHARGE
We reserve the right to impose a charge of up to $25
for each change you make in premium allocations for
new net premiums. We will deduct such charge from the
accumulation value of the base policy on a pro rata
basis. Currently, we do not currently impose this
charge.
The charge is designed to recover the administrative
expenses associated with processing changes in
allocation elections.
TRANSFER FEE
We will not charge you for the first 18 transfers you
make during a policy year. If you make more than 18
transfers during a policy year, we will charge you up
to $25 for each additional transfer.
This fee is designed to cover our administrative
expenses associated with processing more transfers
than our other fees and charges for administrative
expenses are designed to offset.
ADDITIONAL ILLUSTRATIONS
Upon written request at any time, we will send you an
illustration of your policy's benefits and values.
There is no charge for the first illustration in each
policy year. We reserve the right to charge up to $25
for each additional illustration you request in a
policy year. We will deduct any such fee from the
accumulation value of the base policy on a pro-rata
basis.
This charge is designed to recover the administrative
expenses associated with providing such additional
illustrations.
ACCELERATED DEATH BENEFIT RIDER
If the Accelerated Death Benefit Rider is in effect
on your policy and you receive an Accelerated Death
Benefit payment, we will deduct an administrative fee
of $250 from each payment you receive.
The administrative fee is designed to help us recover
the expenses associated with gathering, reviewing,
and evaluating the information necessary to approve
your request, as well as the expenses associated with
processing the payment.
MORTALITY AND EXPENSE RISK CHARGE
We impose a daily charge at an effective annual rate
of 0.25% of the average daily net asset value of each
sub-account. The charge is reflected in the
calculation of the daily unit value. This charge
compensates us for assuming mortality and expense
risks. We may realize a profit from this charge.
The mortality risk we assume is that insureds may
live for a shorter time than anticipated. If this
happens, we will pay more net death benefits than
anticipated. The expense risk we assume is that the
expenses incurred in issuing and administering the
policies will exceed those compensated by the
administration charges in the policies.
MONTHLY DEDUCTIONS
Beginning on the policy date and on each subsequent
monthly policy date, we will determine the monthly
deduction for that policy month. The monthly
deduction is the sum of the monthly deduction for the
base policy and the monthly deduction for each layer.
The monthly deduction will continue to the policy
anniversary nearest the insured's 100th birthday.
The monthly deduction for the base policy is equal to
the sum of four charges:
o the monthly deduction rate for the base
policy, times .001, times the difference
between the death benefit and the
accumulation value of the base policy on the
applicable monthly policy date; PLUS
o the monthly deduction for any riders; PLUS
o the policy fee; PLUS
o the monthly expense charge per thousand for
the base policy, times .001, times the face
amount of the base policy.
The monthly deduction for each layer is equal to:
o the monthly deduction rate for the layer,
times .001, times the difference between the
death benefit and the accumulation value of
the layer on the monthly layer date; PLUS
o the monthly expense charge per thousand for the layer, times .001, times
the face amount of the layer.
On each monthly policy date, we will take the monthly
deduction for that policy month. If the monthly
policy date is not a valuation date, we will take the
monthly deduction on the next valuation date. The
monthly deduction for the base policy and for each
layer is taken from the applicable accumulation
value. If the monthly deduction amount for a layer
exceeds the layer's accumulation value minus any
outstanding loan, the excess portion of the monthly
deduction for the layer will be taken first from the
next most recently added layers, in order, and, then
from the base policy. The amount of the monthly
deduction taken from the accumulation value of the
base policy and then from any layers will be deducted
from your investment options within the base policy
or layer on a pro-rata basis.
This deduction is a charge we assess for various
expenses related to the issuance of a policy, the
cost of life insurance, the cost of any optional
benefits and administrative expenses. We may realize
a profit from the monthly deductions.
MONTHLY DEDUCTION RATES. This is the rate used to calculate
a portion of the monthly deduction on the base policy and on
each layer, respectively.
The monthly deduction rates may differ for the base
policy and for each layer. The monthly deduction
rates will depend on:
o the total of the face amount of the base policy and of all layers;
o the insured's sex;
o the insured's smoker or nonsmoker status as determined by us for the base
policy and, separately, for each layer, respectively;
o the insured's class of risk, including any extra ratings as determined by
us for the base policy and, separately, for each layer, respectively;
o the number of years that the policy and each layer, respectively, have been
in force; and
o the insured's age at issue or on each layer date, respectively.
The maximum monthly deduction rates are based on the
1980 Commissioners Standard Ordinary table for sex
distinct, smoker distinct, age nearest birthday
rates, adjusted for extra ratings.
A table of guaranteed maximum monthly deduction rates
for the policy is shown in the policy data pages. We
may use rates lower than these guaranteed maximum
monthly deduction rates. We will never use higher
rates.
Any change in the monthly deduction rates will be
prospective and will be subject to our expectations
as to future cost factors. Such cost factors may
include, but are not limited to, mortality, expenses,
interest, persistency, and any applicable federal,
state and local taxes.
The monthly deduction rates in effect for the base
policy and for each layer, respectively, at the time
they are issued, are guaranteed not to be increased
during the applicable required premium period.
MONTHLY DEDUCTION FOR RIDERS. Additional benefits are
available by riders to your policy. The fees for
these optional riders pay for the cost of these
additional benefits. The monthly deduction for riders
is deducted from the accumulation value as part of
the monthly deduction for the base policy.
o Accident Indemnity Rider - The charge for
this rider is part of the monthly deduction
during the policy years during which the
rider is in effect. The rider terminates on
the policy anniversary nearest the insured's
70th birthday, if not terminated sooner. The
monthly deduction rate for the rider varies
by issue age (age on the layer date for each
layer, respectively). The charge is equal to
the monthly rate for the rider times the
number of thousands of coverage amount under
the rider.
o Full Death Benefit Rider - The fee for this
rider is part of the monthly deduction
during the policy years when the insured is
between the attained ages of 90 and 99. The
monthly rate for the rider is equal to $0.10
per $1,000 of net amount at risk on the base
policy and on each layer, respectively.
o Guaranteed Insurability Rider - The charge
for this rider is part of the monthly
deduction during the policy years during
which the rider is in effect. The rider will
terminate on the policy anniversary nearest
the insured's 40th birthday, if it has not
been terminated sooner. The monthly
deduction rate varies based on the issue age
and, in California, by the sex of the
insured. The monthly rate is applied to the
number of thousands of insurance which may
be elected under the rider.
o Insurance on Children Rider -The charge for
this rider is part of the monthly deduction
during the policy years during which the
rider is in effect. The rider will terminate
on the policy anniversary nearest the
insured's 65th birthday, if not terminated
sooner. The monthly deduction rate for the
rider is equal to $0.45 for each unit of
coverage (one unit is $1,000) elected.
o Waiver Provision Rider - The charge for this
rider is part of the monthly deduction
during the policy years during which the
rider is in effect. The rider will terminate
on the policy anniversary nearest the
insured's 60th birthday, if not terminated
sooner. The charge is equal to the monthly
deduction rate times the number of thousands
of net amount at risk on the base policy and
on each layer, respectively. The rate varies
by the insured's attained age, sex, and
smoker or nonsmoker classification on the
base policy.
POLICY FEE - On each monthly policy date, we deduct a
policy fee as a part of the monthly deduction for the
base policy. Currently, this monthly fee is $6. We
reserve the right to change this fee, but we
guarantee it will never be more than $6 during the
required premium period of the base policy or $10
thereafter. There are no policy fees for layers.
MONTHLY EXPENSE CHARGE PER THOUSAND. The monthly expense
charge per thousand varies by policy. The charge for a
policy is based on:
o the face amount of the base policy;
o the face amount of each layer, respectively, if any;
o the age of the policy or layer, if any;
o the insured's sex;
o the insured's smoker or nonsmoker status as determined by us for the base
policy and, separately, for each layer, respectively;
o the insured's class of risk as determined by us for the base policy and,
separately, for each layer, respectively; and
o the insured's age at issue (or age on layer date, for each layer,
respectively).
The monthly expense charge per thousand may differ
for the base policy and for each layer.
REINSTATEMENT INTEREST CHARGES
If your policy lapses and you subsequently reinstate
it, you will incur interest charges if:
o you had an outstanding loan when the policy lapsed;
o you must pay us an amount necessary as a required premium per year; and/or o
you must pay us the net cash value we paid to you at the time the policy lapsed.
The interest rate for an outstanding loan is at an
effective annual rate of 6.25% (5.88% in advance) for
the period from the date the policy lapsed to the
date the loan is repaid or reinstated under the
REINSTATEMENT provisions. The interest rate for the
required premium per year and for the net cash value
paid back to us is at an effective annual rate of 6%.
These interest charges are designed to help us
recover the expenses we incur to underwrite and
process the reinstatement request, as well as to help
offset the reduction in surrender penalty factors
from the date the policy lapsed to the date of
reinstatement.
PORTFOLIO EXPENSES
The value of the units of the sub-accounts will
reflect the management fee and other expenses of the
portfolios in which the sub-accounts invest. The
management fees and other expenses of the portfolios
are listed above under the Table of Portfolio
Expenses. The prospectuses and statements of
additional Information of the portfolios contain more
information concerning the fees and expenses.
POSSIBLE TAX CHARGE
No charges are currently made against the
sub-accounts for federal or state income taxes.
Should income taxes be imposed, we reserve the right
to deduct a charge for such taxes from your policy.
We may reflect the amount of such taxes in the
calculation of the unit values.
(2) Underlying Securities
In addition to the charges described above,
certain management fees and other expenses
are deducted from the assets of the
underlying portfolios. The level of fees and
expenses vary among the portfolios. The
following table shows the management fees
and other expenses of the portfolios for
1999. For more information concerning these
fees and expenses, see the prospectuses of
the portfolios.
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO EXPENSES
(as a percentage of assets after fee waiver and/or expense reimbursement)(1)
TOTAL
PORTFOLIO
MANAGEMENT OTHER RULE ANNUAL
PORTFOLIO FEES EXPENSES 12B-1 FEES EXPENSES
--------- ---- -------- ---------- --------
<S> <C> <C> <C> <C>
Alger American Income & Growth 0.625% 0.075% - 0.70%
Alliance VP Growth & Income - Class B 0.63% 0.09% 0.25% 0.97%
Alliance VP Premier Growth - Class B 1.00% 0.04% 0.25% 1.29%
Dreyfus VIF Appreciation 0.75% 0.03% - 0.78%
Dreyfus VIF Small Cap 0.75% 0.03% - 0.78%
Janus Aspen Series Balanced - Service Shares(2) 0.65% 0.02% 0.25% 0.92%
Janus Aspen Series Worldwide Growth - Service Shares(2) 0.65% 0.05% 0.25% 0.95%
MFS VIT Emerging Growth 0.75% 0.09% - 0.84%
MFS VIT Growth with Income 0.75% 0.13% - 0.88%
MFS VIT Research 0.75% 0.11% - 0.86%
MS UIF Emerging Markets Equity(3) 0.42% 1.37% - 1.79%
MS UIF Fixed Income(3) 0.14% 0.56% - 0.70%
MS UIF High Yield(3) 0.19% 0.61% - 0.80%
MS UIF International Magnum(3) 0.29% 0.87% - 1.16%
OCC Accumulation Trust Managed(3)(4) 0.77% 0.06% - 0.83%
OCC Accumulation Trust Small Cap(4) 0.80% 0.09% - 0.89%
PIMCO VIT StocksPLUS Growth & Income(5) 0.40% 0.25% - 0.65%
Transamerica VIF Growth 0.70% 0.15% - 0.85%
Transamerica VIF Money Market 0.00% 0.60% - 0.60%
</TABLE>
We may receive payment from some or all of the portfolios or their advisers in
varying amounts that may be based on the amount of assets allocated to the
portfolios. The payments are for administrative or distribution services.
The fee table information relating to the underlying portfolios was provided to
us by the portfolios or their investment advisers, as we have not and cannot
independently verify either the accuracy or completeness of such information.
Therefore, we disclaim any and all liability for such information. Actual future
expenses of the portfolios may be greater or less than those shown in the Table.
These expenses are for the year ended December 31, 1999.
Notes to Fee Table:
(1) From time to time, the portfolio's investment advisers, each in its own
discretion, may voluntarily waive all or part of their fees and/or
voluntarily assume certain portfolio expenses. The expenses shown in
the Portfolio Expenses table are the expenses paid for 1999. The
expenses shown in the table reflect a portfolio's adviser's waivers of
fees or reimbursement of expenses, if applicable. It is anticipated
that such waivers or reimbursements will continue for calendar year
1999. Without such waivers or reimbursements, the annual expenses for
1999 for certain portfolios would have been, as a percentage of assets,
as follows:
<TABLE>
<CAPTION>
TOTAL PORTFOLIO
MANAGEMENT FEES OTHER ANNUAL
PORTFOLIO EXPENSES EXPENSES
--------- -------- --------
<S> <C> <C> <C>
MS UIF Emerging Markets Equity 1.25% 1.37% 2.62%
MS UIF Fixed Income 0.40% 0.56% 0.96%
MS UIF High Yield 0.50% 0.61% 1.11%
MS UIF International Magnum 0.80% 0.87% 1.67%
Transamerica VIF Growth 0.75% 0.15% 0.90%
Transamerica VIF Money Market 0.35% 1.04% 1.39%
</TABLE>
(2) Expenses are based on estimated expenses the service shares expect to incur
in the initial fiscal year.
(3) The management fee of certain of the portfolios includes breakpoints at
designated asset levels. Further information on these breakpoints is
provided in the prospectuses for the portfolios.
(4) The Adviser is contractually obligated to waive that portion of the
advisory fee and to assume any necessary expense to limit total
operating expenses of the portfolio to 1.00% of average net assets (net
of expenses offset) on an annual basis.
(5) PIMCO has contractually agreed to reduce total annual portfolio
operating expenses to the extent these expenses would exceed 0.65% of
average daily assets due to the payment of organizational expenses and
Trustees' fees. Without such reductions, total operating expenses for
the fiscal year ended December 31, 1999 were 0.65%. Under the Expense
Limitation Agreement, PIMCO may recoup these waivers and reimbursements
in future periods, not exceeding three years, provided total expenses,
including such recoupment, do not exceed the annual expense limit. Fees
expressed are restated as of April 1, 2000.
(3) Distributions
No distributions are made to Owners except
voluntary surrenders or partial withdrawals,
or to beneficiaries except upon payment of
death proceeds. Surrenders and partial
withdrawals may be subject to the surrender
charges and withdrawal transaction fees
described in 13(a)(1), above. Also see Item
21.
(4) Cumulated or Reinvested Distributions or Income
Distributions from the portfolios are
reinvested by sub-accounts of the Separate
Account in additional shares of the
respective portfolios, without charge, at
net asset value.
(5) Redeemed or Liquidated Assets of the Trust's Securities
See "Surrender Penalty" under Item 13(a)(1) above.
(b) For each installment payment type of periodic payment
plan certificate of the trust, furnish information
with respect to sales load and other deductions from
principal payments.
Each time you make a premium payment to us, we impose a
charge equal to 7% of the premium payment for policies with
a face amount under $5,000,000, 6.5% for face amounts
between $5,000,000 and $9,999,999, and 6.25% for face
amounts of $10,000,000 and over. The administrative charge
is designed to help offset our state and local premium
taxes, federal income tax treatment of deferred acquisition
costs, as well as a portion of the distribution costs
associated with the policies.
(c) State (1) the amount of sales load as a percentage of
the net amount invested, and (2) the amount of total
deductions as a percentage of the net amount invested
for each type of security issued by the trust.
See item 13(b) above.
(d) Explain fully the reasons for any difference in the
price at which securities are offered for any class
of transactions to any class or group of officers,
including officers, directors or employees of the
deposition trustee, custodian or principal
underwriter.
Not Applicable.
(e) Furnish a brief description of any loads, fees,
expenses or charges not covered in Item 13(a) which
may be paid by security holders in connection with
the trust or its securities.
None.
(f) State whether the depositor, principal underwriter,
custodian or trustee, or any affiliated person of the
foregoing, may receive profits or other benefits not
included in answer to Item 13(a) or 13(d) through the
sale or purchase of the trust's securities or
interests in such securities, or underlying
securities or interests in underlying securities, and
describe fully the nature and extent of such profits
or benefits.
Neither the Company, Transamerica Securities Sales
Corporation nor any affiliated person of the
foregoing may receive any profit or any other benefit
from payments under the Contract or the investments
held in the Separate Account not included in the
answer to Item 13(a) or (d) through the sale or
purchase of the Contract or shares of the portfolios,
except that (1) the Company may receive a profit to
the extent that the cost of insurance built into the
Contract exceeds the actual cost of insurance needed
to pay benefits; (2) favorable mortality or expense
experience may cause the insurance provided to be
profitable to the Company; (3) the Company will
compensate certain others, including the company's
agents, for services rendered in connection with the
distribution of the Contract, as described in Item
38, but such payments will be made from the Fixed
Account; and (4) the investment advisers of the
respective portfolios will receive an advisory fee,
as described in Item 13(a)(2).
(g) State the percentage that the aggregate annual
charges and deductions for maintenance and other
expenses of the trust bear to the dividend and
interest income from the trust property during the
period covered by the financial statements filed
herewith.
Not Applicable. The Separate Account has no assets
as of the date of this filing.
Information Concerning the Operations of the Trust
14. Describe the procedure with respect to the applications (if
any) and the issuance and authentication of the trust's
securities, and state the substance of the provisions of any
indenture or agreement pertaining thereto.
APPLICATION FOR A POLICY
We offer policies to proposed insureds who are between ages 16
and 89. After receiving a completed application, we will begin
underwriting to decide the insurability of the proposed
insured. We may require medical examinations and other
information before deciding insurability. We issue a policy
only after underwriting has been completed. We may reject an
application that does not meet our underwriting standards.
If we approve the application, we will place each insured into
one of six underwriting classes:
o Preferred nonsmoker
o Preferred smoker
o Standard nonsmoker
o Standard smoker
o Uninsurable nonsmoker
o Uninsurable smoker
Additional adjustments for extra ratings due to increased
mortality risk may apply to persons classified into the
preferred or the standard underwriting classes.
The underwriting class assigned to each insured affects the
monthly deductions for the policy. The monthly deductions and
surrender charges for a policy are based on the insured's
underwriting class, among other factors. Generally, our rates
are lowest for preferred nonsmokers.
We also charge lower rates for policies with higher face
amounts of base policy coverage. We offer the following bands
for face amounts of base policy coverage:
o $100,000 - $249,999
o $250,000 - $999,999
o $1,000,000 - $2,999,999
o $3,000,000 - $4,999,999
o $5,000,000 - $9,999,999
o $10,000,000 and above
You may make a payment at the time of application, under
certain circumstances, subject to our rules. Under our
underwriting rules, you may make a payment at the time of
application if you are requesting a face amount of base policy
coverage which is no more than $1,000,000. We may also refuse
to accept initial payments with the application for other
situations.
If you make an initial payment in the amount of at least one
monthly premium, (or 10% of an annual premium), we will issue
a conditional receipt which may provide fixed conditional
insurance, but not until after all its conditions are met.
Included in these conditions are:
o the completion of both parts of the application;
o completion of all underwriting requirements; and
o the proposed joint insureds must both be insurable
under our rules for insurance under the policy, in
the amount, and in the underwriting class applied for
in the application.
After all conditions are met, the amount of fixed conditional
insurance provided by the conditional receipt will be the
amount applied for, up to a maximum of $250,000 for persons
age 16 to 65 and insurable in a standard underwriting class,
and up to $100,000 for all other ages and underwriting
classes.
You do not need to pay an initial payment at the time of
application. If we approve the application, you will need to
pay us the minimum initial premium for the policy before any
coverage under the policy will be in effect.
MINIMUM INITIAL FACE AMOUNT
We will generally issue a policy only if it has a face amount
of at least$25,000.
EFFECTIVE DATE OF COVERAGE
Except as otherwise provided under the terms of the
conditional receipt, no insurance coverage is provided under
the policy until after we approved the application and:
o the minimum initial premium is paid to us; and
o the policy is delivered to you while:
a) the insured is alive and in good health, and
b) the statements and answers in the application continue to be true and
complete.
POLICY DATE
The policy date is the date from which insurance coverage is
provided under the policy, subject to the conditions noted
above. We take monthly deductions from the policy for the
period starting with the policy date.
Generally, except when you request and we approve backdating a
policy, the policy date will be:
o two calendar days after we approve the application if you submitted the
initial premium with the application and the policy is issued without
delivery requirements; or
o the date you accept the policy and pay us the initial
premium, if you did not submit the initial premium with
the application and/or we issued the policy subject to
satisfactory completion of delivery requirements.
In the latter situation, when we receive the initial premium
and any delivery requirements, we will amend the policy date
as originally issued. The amended policy date will be the date
on which the policy was delivered to you and you had completed
any delivery requirements and/or paid over to our agent the
required initial premiums. We will not amend the date forward
beyond that date which would cause either or both joint
insureds to be a year older for purposes of determining
monthly deductions.
BACKDATING A POLICY
If you request, we may backdate a policy by assigning a policy
date earlier than the date the application is signed. However,
in no event will a policy be backdated earlier than the
earliest date allowed by state law or by our underwriting
rules. Your request must be in writing and, if we approve the
request, will amend your application.
Monthly deductions are based in part on the age of each joint
insured at issue. Generally, monthly deductions are less at a
younger age. We will deduct monthly deductions for the period
that the policy is backdated. This means that, while the
monthly deduction may be lower than what would have applied
had we not backdated the policy, you will be paying for
insurance during a period when it was not in force.
REALLOCATION DATE
When we approve and issue a policy, we establish a
reallocation date for that policy. Currently, the reallocation
date is 25 calendar days from the date we approve the policy
for issue.
Any net premiums credited to your policy before the
reallocation date will be allocated initially to the money
market sub-account for any portion of net premiums you wish to
allocate to the sub-account. Any portion of the net premiums
you elected to allocate to the fixed account will be allocated
directly to the fixed account. On the reallocation date, the
value of those net premiums initially allocated to the money
market sub-account will be reallocated to the sub-account
options you elected on your application or subsequent premium
allocation election.
Net premiums credited to your policy on or after the
reallocation date will be allocated to the fixed account and
to your elected sub-account options directly, based on your
most recent premium allocation election.
FREE LOOK PERIOD
The policy provides for a free look period. You have the right
to examine and cancel your policy by returning it to us or to
one of our representatives within 10 days after you receive
the policy, or a longer period as required by state law for
replacement policies or for other reasons.
If you exercise the free look option, we will void the policy
and refund:
o the difference between any premiums paid, including fees or other charges,
and the amounts allocated to the separate account; PLUS
o the value of the amounts in the separate account on the date we receive the
returned policy at our administrative office; PLUS
o any fees or other charges imposed on amounts in the separate account.
If your policy provides for a full refund as required by state
law, your refund will be the total premiums paid to the
policy. We may delay a refund of any payment made by check
until the check has cleared your bank.
15. Describe the procedure with respect to the receipt of payments
from purchasers of the trust's securities and the handling of
the proceeds thereof, and state the substance of the
provisions of any indenture or agreement pertaining thereto.
<PAGE>
PREMIUMS
Premiums are payable to Transamerica Occidental Life Insurance
Company. Premium payments may be made by mail to our
Administrative Office or through our authorized
representative.
When you apply for a policy, you must elect a required premium
per year amount. Your agent will tell you the minimum and
maximum amounts that you may elect based on your proposed
policy. The cumulative required premium must be paid during
the applicable required premium period or the policy will
enter the grace period and may lapse.
PAYING THE REQUIRED PREMIUMS DURING THE REQUIRED PREMIUM
PERIOD DOES NOT GUARANTEE THE POLICY WILL NOT LAPSE. EVEN IF
YOU PAY THE REQUIRED PREMIUMS, THE POLICY CAN STILL LAPSE IF
THE ACCUMULATION VALUE, LESS ANY OUTSTANDING LOAN, IS NOT
ENOUGH TO PAY THE MONTHLY DEDUCTIONS DUE. If the Endorsement
to Modify Grace Period is in effect on your policy, however,
the policy will not enter the grace period due to monthly
deduction exceeding the available accumulation value, subject
to the provisions of that endorsement.
We will accept any premium amount you send us while the policy
is in force, subject to the Premium Limitation provision and
certain conditions.
PREMIUM QUALIFICATION CREDIT
At the end of each year during the required premium period of
the base policy, if you have paid the cumulative required
premiums for the base policy as described in the Required
Premiums provision, we will add a premium qualification credit
to the accumulation value of the base policy. For the base
policy, the amount of the credit will be a specific percentage
of the required premium per year for the base policy during
the required premium period. The premium qualification credit
is equal to 2% of the required premium. After the required
premium period for the base policy, no additional premium
qualification credits will be added to your accumulation
value.
At the end of each layer year during the required premium
period of each layer, if you have paid the cumulative required
premiums for the layer as described in the Required Premiums
provision, we will add a premium qualification credit to the
accumulation value of that layer. For a layer, the amount of
the credit will be 2% of the required premium for the layer.
After the required premium period for each layer, no
additional premium qualification credits will be added to your
accumulation value.
We will not credit the premium qualification credit if the
amount of premium required is not received by the end of the
applicable policy or layer year.
The premium qualification credit will be allocated among your
investment options according to the most recent premium
allocation election we have received from you. We will
allocate the premium qualification credit on the policy or
layer anniversary if that day is a valuation date. If the
policy or layer anniversary is not a valuation date, we will
allocate the premium qualification credit on the next
valuation date.
PREMIUM LIMITATION
We reserve the right to refund any unscheduled premium during
any policy year if the total premium paid:
o increases the difference between the death benefit and the accumulation
value; and
o is more than 1% of the policy's face amount and more than
three times the total of the monthly deductions for the
previous policy year.
We also reserve the right to refund any unscheduled premiums
that exceed $25,000 in any 12-month period. We will not refund
any amount if doing so would cause the policy to enter the
grace period before the next policy anniversary. The amount
refundable will not exceed the net cash value of the policy.
If we believe any portion of a premium payment will cause a
policy to become a Modified Endowment Contract, or MEC, under
the tax laws, we will not accept that portion of the premium
payment and will immediately notify you. We will refund the
excess portion when the premium payment check has had time to
clear the banking system (but in no case more than two weeks
after receipt), except in the following circumstances:
o The premium payment would no longer cause the policy to become a MEC as of
the date the refund is to be made; or
o We receive a signed acknowledgment from you before
the refund date instructing us to process the premium
notwithstanding the tax issues involved.
In the above cases, we will treat the excess premium as having
been received on the date the excess premium would no longer
create a MEC or the date we receive the signed acknowledgment.
We will then process it accordingly. You may submit a written
authorization to us with the premium instructing us to apply
the premium to the policy even though applying that premium
would cause the policy to become a MEC. In that event, we will
treat such authorization as the signed acknowledgement noted
above and will credit the net premium to the policy according
to our regular premium allocation rules.
CONTINUATION OF INSURANCE
If you stop paying premiums, we will continue your policy at
the face amount then in effect and with any additional
benefits provided by rider, subject to the grace period and
any premium requirements that may be in effect.
ALLOCATION OF NET PREMIUMS
In the application for your policy, you elect the initial
allocation of the net premiums among the investment options.
You may allocate net premiums to one or more investment
options. Allocation percentages must be in whole numbers (for
example, 33 1/3% may not be chosen) and the combined
percentages must total 100%. In the future, we may limit the
number of sub-accounts you may invest in. Currently, you may
allocate your net premiums among any or all the sub-accounts
and the fixed account. The allocation percentages you elect
will apply to all premiums we receive unless you change your
premium allocation instructions to us.
You may change your premium allocation instructions at any
time by sending us a written request or by exercising your
telephone access privilege. Any premium allocation change will
apply to all premiums we receive on or after the effective
date of change. We reserve the right to charge a fee up to $25
for each premium allocation change, but we do not currently
charge for allocation change requests. We will deduct any such
fee from the accumulation value of the base policy on a
pro-rata basis.
Your premium allocation election applies to all net premiums
credited to your policy. Separate elections for each layer and
the base policy are not permitted.
The accumulation value in each sub-account will vary with the
investment experience of the portfolio in which the
sub-account invests. You bear this investment risk. Investment
performance may also affect the death benefit. You should
review your allocations of premiums and accumulation value as
market conditions and your financial planning needs change.
INITIAL PREMIUM
The initial net premium will be credited to your policy no
later than the second valuation date following the latest of:
o the date we approve the issuance of the policy;
o the policy date;
o the date we receive the minimum initial premium; or
o the date we approve the final delivery requirement returned to us, if the
policy was issued with delivery requirements.
Delivery requirements are any requirement that must be
completed before the policy can become effective and before
the policy may be delivered to you. Examples include any
application amendment or additional evidence of insurability
that we require. Except as otherwise provided in the
conditional receipt, the policy will not become effective
until after all delivery requirements are satisfied.
SUBSEQUENT PREMIUMS
After the reallocation date, we will allocate net premiums on
the day we receive them. If the date we receive a premium is
not a valuation date, we will allocate the net premium on the
next valuation date.
16. Describe the procedure with respect to the acquisition of
underlying securities and the disposition thereof, and state
the substance of the provisions of any indenture or agreement
pertaining thereto.
Each sub-account of the Separate Account invests its assets in
shares of a corresponding portfolio. Purchases and redemptions
of such shares are made at net asset value, with no deduction
for sales load.
Amounts of payments allocated to a sub-account, transfers to
that sub-account, and reserve adjustment transfers, if any,
will be netted as of each valuation date against amounts
withdrawn from the sub-account in connection with Contract
surrenders, partial withdrawals, transfers (including
transfers of amounts to secure any outstanding loan), and
death benefits, as well as the asset charge and amounts paid
to the Company in lieu of taxes, if any. A net purchase or
sale of portfolio shares will be made for a sub-account at net
asset value. All income, dividends and realized gain
distributions of a portfolio will be reinvested in shares of
the respective portfolio at net asset value. Valuation dates
currently occur on each day on which the New York Stock
Exchange is open for trading, and on such other day where
there is a sufficient degree of trading in a portfolio's
securities such that the current net asset value of the
sub-accounts may be materially affected.
17. (a) Describe the procedure with respect to partial withdrawal or redemption
by security holders.
PARTIAL SURRENDERS
At any time after the end of the free-look period,
you may surrender a portion of the policy's value by
sending us a written request. We will deduct the
surrender amount and any surrender penalty from your
investment options on the day we receive your
surrender request in good order. If that day is not a
valuation date, we will deduct the surrender amount
and any surrender penalty from your investment
options on the next valuation date.
In any policy year, the maximum amount that you may
receive by partial surrender is:
o the accumulation value of the policy; MINUS
o any existing policy loans; MINUS
o the sum of three monthly deductions; and MINUS
o the greater of $25 or the surrender penalty that would apply for a full
surrender of the policy.
We will calculate the maximum partial surrender
amount for the base policy and each layer in a
similar manner.
If you request an amount larger than the maximum
described above, we will treat it as a request for a
full surrender.
We will allocate the partial surrender among the base
policy and any layers based on the proportion that
the maximum partial surrender amount for each bears
to the total maximum of the partial surrender amounts
available for the base policy and all layers. The
amounts so allocated will be deducted from the
accumulation value of the base policy or layer.
During the first 10 policy or layer years, or until
the policy anniversary nearest age 100, whichever is
earlier, we will assess a surrender penalty on any
partial surrender amount that exceeds the amount
eligible for the surrender penalty free withdrawal
described below. This excess will be attributed first
to the most recent layer, if any. To the extent the
excess is greater than the face amount of the most
recent layer, the remainder will be attributed to the
next most recent layers in order, and then to the
base policy.
For each layer where the amount attributed equals the
face amount, the surrender penalty will be equal to A
times B divided by C, below. For the base policy or
layer to which any lesser amount is attributed, the
surrender penalty will be equal to A times B divided
by D below, but not more than A times B divided by C.
For purposes of these calculations:
A is the amount of the excess attributed to the base policy or layer;
B is the surrender penalty factor for the current policy or layer year, as
applicable;
C is 1000; and
D is 1000 minus the surrender penalty factor for the
current policy or layer year, as applicable.
The surrender penalty factors vary by policy year and
layer year and are shown in the policy data pages.
However, if the sum of the surrender penalties for
the base policy and any layers is less than $25, the
surrender penalty will be $25.
After all surrender penalty periods have expired, we
will assess a $25 transaction fee on any surrender
amount that exceeds the amount eligible for a
surrender penalty free withdrawal.
The surrender penalty will be deducted from the
accumulation value of the newest layer. If the
accumulation value of that layer is insufficient, the
remainder will be deducted successively from the next
most recent layer(s), and then from the base policy.
After we have allocated the surrender amount and
surrender penalty among the base policy and any
layers, we will deduct the allocated amounts from
your investment options on a pro-rata basis. We may
permit you to specify the investment options from
which the partial surrender and surrender penalties,
if any, are to be deducted. Such specifications must
be in a form and manner acceptable to us. IF YOUR
POLICY HAS ONE OR MORE LAYERS ON IT, YOU WILL NOT BE
PERMITTED TO SPECIFY THE INVESTMENT OPTIONS FROM
WHICH THE PARTIAL SURRENDER AND PENALTIES, IF ANY,
ARE TO BE DEDUCTED.
If you choose Death Benefit Option 1, we will also
reduce the policy's face amount by:
o the surrender amount that exceeds the surrender penalty free withdrawal
amount; PLUS
o any applicable surrender penalty.
If you choose Death Benefit Option 3, we will also
reduce from the policy's face amount by:
o the surrender amount that exceeds the greater of:
a) the amount eligible for a surrender penalty free withdrawal; or
b) the cumulative gross premiums paid minus the sum of all previous surrenders
and premium refunds; PLUS
o any applicable surrender penalty on the
amount that exceeds the amount eligible for
a surrender penalty free withdrawal.
If the amount of the reduction exceeds the face
amount of the most recent layer, the excess amount
will reduce the face amount of the next most recently
added layers, in order, and then the face amount of
the base policy.
If the new face amount would be less than our minimum
allowed, then we will not allow the partial
surrender.
SURRENDER PENALTY FREE WITHDRAWALS
After the first policy year, a portion of any partial
surrender amount you request over $100 is available
without surrender charges and without reductions in
face amount. The amount available is:
o 10% of the accumulation value, MINUS
o 100% of the sum of all surrender penalty free withdrawals since the last
policy anniversary.
This amount may not exceed the maximum amount
available as a partial surrender.
There may be important tax consequences of making a
partial surrender of the policy. Consult with a tax
adviser regarding these tax consequences.
NONFORFEITURE OPTION - FULL SURRENDER
You may surrender the policy at any time after free
look period for its net cash value. The surrender
penalty for a full surrender of the policy is equal
to the surrender penalty, if any, for the base
policy, plus the surrender penalty, if any, for each
layer.
We will process the surrender on the day we receive
your written request in good order. If that date is
not a valuation date, then the request will be
effective on the next following valuation date.
There may be important tax consequences of taking a
full surrender of the policy. Consult with a tax
adviser regarding these tax consequences.
REINSTATEMENT
If the policy lapses, it may be reinstated provided
it was not surrendered. To reinstate the policy, you
must meet the following conditions:
o You must request reinstatement in writing
within three years after the date of lapse
and before the policy anniversary nearest
age 100.
o The insured must submit evidence of insurability satisfactory to us.
o If any loans existed when the policy lapsed,
you must repay or reinstate such loans, with
interest. Interest will be compounded
annually from the date of lapse. Interest
will be at the loan reinstatement interest
rate of 6.25% (5.88% in advance). Any loan
interest due after the effective date of
reinstatement will be at the effective
annual rate for the policy year during which
the interest is due.
o The reinstated policy will be subject to the
minimum premium requirement during the
required premium period. Any increase in the
face amount of the base policy will also be
subject to the minimum premium requirement
during the layer's required premium period.
The required premium period will be
calculated from the original policy date or
the original layer date. It does not start
over.
If the policy lapsed during any required premium
period, you must pay a premium large enough to meet
the minimum premium requirement at the time of
reinstatement, with interest. Interest will be
compounded annually at the reinstatement interest
rate of 6%. If the policy lapsed after any required
premium period, you must pay a premium large enough
to cover two monthly deductions due when the policy
lapsed and three monthly deductions due when the
policy is reinstated. The amount equivalent to two
monthly deductions due when the policy lapsed will be
used to reimburse us for the insurance provided
during the grace period.
o You must repay any net cash value given to
you at the time of lapse, with interest.
Interest will be compounded annually at the
reinstatement interest rate of 6.25% (5.88%
in advance).
o Any applicable surrender penalties in effect
for the reinstated policy or layer will be
calculated from the original policy date and
layer dates, as applicable.
The effective date of a reinstatement will be the
date we approve your request. We will resume taking
monthly deductions for the policy as of the nearest
monthly policy date. If a person other than the
insured is covered by any attached rider, that
person's coverage will be reinstated under the
reinstatement terms of such rider.
The accumulation value of the reinstated policy will
be:
o any surrender penalty assessed at the time of lapse; PLUS
o any net cash value we paid to you at the time of lapse; PLUS
o any loan repaid or reinstated; PLUS
o any net premium you pay at reinstatement; MINUS
o any monthly deductions due at the time of lapse.
We will allocate any loan repaid and any net premium
you pay at reinstatement according to the most recent
premium allocation election we have received from
you. We will restore any surrender penalty assessed
at the time of lapse. We will allocate any restored
surrender penalty and any net cash value you repay at
reinstatement between the base policy and any layers
in the same proportion as these amounts were deducted
at the time of lapse. We will then allocate the base
and layer amounts among your investment options in
the same proportion as these amounts were deducted at
the time of lapse.
We will allocate the amount you pay within one
valuation date after the later of:
o the valuation date that we approve the reinstatement; or
o the valuation date that we receive the required premium and other payments.
18. (a) Describe the procedure with respect to the receipt, custody and
disposition of the income and other distributable funds of the trust and
state the substance of the provisions of any indenture or agreement
pertaining thereto.
Distributions with respect to the shares of a
portfolio held by a sub-account are reinvested in
shares of that portfolio at net asset value. Such
shares are added to the assets of the respective
sub-account.
(b) Describe the procedure, if any, with respect to the
reinvestment of distributions to security holders and
state the substance of the provisions of any
indenture or agreement pertaining thereto.
No distributions are made to Owners (or
beneficiaries) other than in connection with a death
benefit or with a Owner-initiated loan, partial
withdrawal or surrender of the Contract. See Items
13(a) and 21.
(c) If any reserves or special funds are created out of
income or principal, state with respect to each such
reserve or fund the purpose and ultimate disposition
thereof, and describe the manner of handling same.
Payments placed in the Separate Account constitute
certain reserves for benefits under the Contract.
(d) Submit a schedule showing the periodic and special
distributions which have been made to security holders
during the three years covered by the financial statements
filed herewith. State for each such distribution the
aggregate amount and amount per share. If distributions from
sources other than current income have been made, identify
each such other source and indicate whether such
distribution represents the return of principal payments to
security holders. If payments other than cash were made,
describe the nature thereof, the account charged and the
basis of determining the amount of such charge.
Not Applicable. The Separate Account has not begun
business operations.
19. Describe the procedure with respect to the keeping of records
and accounts of the Trust, the making of reports and the
furnishing of information to security holders, and the
substance of the provisions of any indenture or agreement
pertaining thereto.
The Company will maintain the records and books of the
Separate Account. The Company will also maintain records for
each Contract, including the number and value of units of each
sub-account credited to each Contract and the value of
accumulations in the Fixed Account.
Issuance and transfer of portfolio shares will be by book
entry only. Stock certificates of the portfolios will not be
issued to the Company or Separate Account. Shares ordered from
the portfolios will be recorded in an appropriate title for
the Separate Account or appropriate sub-account.
Owners will be sent promptly statements of significant
transactions such as payments, transfers among sub-accounts
and the Fixed Account, partial withdrawals, increases in loan
amount by the Owner, loan repayments, lapse, termination for
any reason, and reinstatement. An annual statement will also
be sent to the Owner. The annual statement will summarize all
of the above transactions and deductions of charges during the
Contract year. It will also set forth the status of the death
benefit, Accumulation Value, surrender value, amounts in the
sub-accounts and Fixed Account, and any Contract loan(s).
In addition, the Owners will be sent semi-annual reports of
the underlying portfolios and other information for the
Separate Account as required by the 1940 Act.
20. State the substance of the provisions of any indenture or agreement
concerning the trust with respect to the following:
(a) Amendments to such indenture or agreement.
-----------------------------------------
Not Applicable.
(b) The extension or termination of such indenture or agreement.
-----------------------------------------------------------
Not Applicable.
(c) The removal or resignation of the trustee or custodian, or the failure
of the trustee or custodian to perform its duties, obligations and
functions.
The Company will act as custodian of assets of the
Separate Account. The Company may appoint another
custodian. In such event, the custodial agreement
will provide that the assets owned by the Separate
Account shall be delivered directly by the Company to
a successor custodian.
(d) The appointment of a successor trustee and the procedure if a successor
trustee is not appointed.
Not Applicable.
(e) The removal or resignation of the depositor, or the failure of the
depositor to perform its duties, obligations and functions.
There is no such provision in an indenture or
agreement. Under California and Iowa law, the Company
may not abrogate its obligation under the Policies.
(f) The appointment of a successor depositor and the procedure if a successor
depositor is not appointed.
There is no such provision in any indenture or agreement.
21. (a) State the substance of the provisions of any indenture or agreement
with respect to loans to security holders.
POLICY LOANS
You may borrow any portion of the net cash value of
the policy. We will process a loan on the day we
receive your loan request in good order. If that day
is not a valuation date, we will process the loan on
the next valuation date.
We will require the written consent of any
irrevocable beneficiaries.
The following terms and conditions apply to policy
loans:
o The maximum loan amount for the policy is equal to the policy's accumulation
value MINUS the total of:
a) any outstanding loan(s) on the policy; PLUS
b) interest on the amount of the loan to the end of the policy year; PLUS
c) the surrender charges that would be assessed on a
full surrender of the policy or, if greater, the
amount of two monthly deductions for the base policy
and for all layers.
We will calculate the maximum loan amount for the
base policy and each layer in a similar manner.
o Interest on loans is due in advance each year on the policy anniversary.
The annual effective loan interest rate is 6.25% (5.88% in advance) during
the first ten policy years and 4.25% (4.07% in advance) thereafter. We may
charge lower rates than these rates. We will never charge higher interest
rates. Currently, we charge 6.00% (5.66% in advance) during the first ten
policy years and 4.00% (3.84% in advance) thereafter. If you do not pay
interest when it is due, we will add the amount of the interest to the
loan.
We will allocate the net loan amount to the base
policy and any layers in the same proportion the
maximum loan amount for each bears to the total of
the maximum loan amounts for the base policy and all
layers. We will then deduct the allocated amount from
the base policy's or layer's investment options on a
pro-rata basis, unless you specify, in a form and
manner acceptable to us, the investment options to
which you want to allocate the net loan amount. We
will transfer the net loan amount to the loan
account.
If there are no layers on your policy, we will allow
you to specify the investment options from which the
loan should be deducted. Loan interest is always
deducted pro-rata. If there are any layers on your
policy, all loans will be allocated pro-rata, as
described above.
If the insured dies, we will deduct the outstanding
loan from the death benefit before we pay the death
benefit to the beneficiary.
We will credit interest to the loan account at a rate
equal to 4%.
LOAN REPAYMENT
You may repay any part of an outstanding loan at any
time while the insured is living. We will allocate
the loan repayment on the day we receive it. If that
day is not a valuation date, we will allocate it on
the next valuation date.
If you want to make a loan repayment, you must tell
us that the payment you send us is for that purpose.
Unless your payment is clearly marked as a loan
repayment, we will assume it is a premium payment if
it is received before the policy anniversary nearest
age 100. When we receive a loan repayment, we will
apply it to the outstanding loan. The loan repayment
will be allocated first to the most recent portion of
the outstanding loan, and then to the next most
recent portions in order. For each such portion of
the loan being repaid, the loan repayment is first
allocated to the portion of that loan amount in the
base policy, and then successively to any layers in
the order of their layer dates. After we have
allocated the loan repayment among the base policy
and any layers, we will allocate those amounts to
your investment options according to the allocation
percentages provided in the most recent premium
allocation election we have received from you.
Your policy will not automatically lapse if you do
not repay a loan. However, it will enter the grace
period if the accumulation value less any outstanding
loans is not large enough to cover the monthly
deduction due and any loan interest due that is not
paid in cash.
You may pay loan interest due in cash. We will treat
the payment as a loan repayment if you clearly
identify the payment as a loan repayment or a payment
of loan interest due. Loan interest for each year is
added to your loan. We will deduct the loan interest
from your investment options on a pro-rata basis, and
then transfer the loan interest to the loan account.
The loan interest deduction and transfer will be
effective on the policy anniversary. If the policy
anniversary is not a valuation date, the loan
interest deduction and transfer will be effective on
the next valuation date. Any loan interest paid in
cash will be applied to the loans in the order in
which they were made.
EFFECT OF POLICY LOANS
Policy loans will affect the accumulation value and
net cash value, and may permanently affect the death
benefit. The effect could be favorable or
unfavorable, depending on whether the investment
performance of the underlying portfolios in which the
sub-accounts are invested is less than or greater
than the interest credited to the portion of the
policy in the fixed account that secures the loan.
We will deduct any outstanding policy loan from the
proceeds payable when the insured dies or from a full
surrender.
The policy will enter the grace period and may lapse
at the end of that period if the monthly deductions
due on any monthly policy date exceed the
accumulation value of the policy minus any
outstanding loan. As a result, increases in the
outstanding loan and/or decreases in the accumulation
value may make it more likely that your policy will
lapse. Assuming you do not make loan repayments, the
outstanding loan will increase if you receive
additional loan amounts from your policy. The
outstanding loan amount will also increase if you do
not pay loan interest due in cash. Your accumulation
value, net of outstanding loans, will decrease if you
take additional loans from your policy or you take
partial surrenders from your policy or, in certain
situations, you decrease the face amount of your
policy. The accumulation value in a sub-account on
the policy may decline based on the investment
performance of the underlying portfolio.
In the event the policy lapses or is otherwise
terminated while a policy loan is outstanding, the
policy loan will be treated as cash received from the
policy for income tax purposes. Any cash received,
that is, the outstanding policy loan plus any other
accumulation value less surrender penalties in excess
of the policy's tax basis, should be taxable as
ordinary income.
For a discussion of the federal tax considerations of
policy loans, see FEDERAL TAX CONSIDERATIONS - Policy
Loans.
(b) Furnish a brief description of any procedure or
arrangement by which loans are made available to
security holders by the depositor, principal
underwriter, trustee or custodian, or any affiliated
person of the foregoing.
See Item 21(a), above. No other loans are made,
except under the terms of life insurance policies
which may be issued by the depositor or affiliated
insurance companies.
(c) If such loans are made, furnish the aggregate amount
of loans outstanding at the end of the last fiscal
year, the amount of interest collected during the
last fiscal year allocated to the depositor,
principal underwriter, trustee or custodian or
affiliated person of the foregoing, aggregate amount
of loans in default at the end of the last fiscal
year covered by financial statements filed herewith.
Not Applicable.
22. State the substance of the provisions of any indenture or
agreement with respect to limitations on the liabilities of
the depositor, trustee or custodian, or any other party to
such indenture or agreement.
You may assign a policy as collateral or make an absolute
assignment. All policy rights will be transferred as to the
assignee's interest. The consent of the assignee may be
required to make changes in premium allocations, make
transfers or to exercise other rights under the policy. We are
not bound by an assignment or release thereof, unless it is in
writing and recorded at our Administrative Office. When
recorded, the assignment will take effect as of the date the
written request was signed. Any rights the assignment creates
will be subject to any payments we made or actions we took
before the assignment was recorded. We are not responsible for
determining the validity of any assignment or release.
23. Describe any bonding arrangement for officers, directors,
partners or employees of the depositor or principal
underwriter of the trust, including the amount of coverage and
the type of bond.
The depositor is insured under a broad manuscript fidelity
bond program with coverage limits of $80,000,000. The lead
underwriter is Capital CNA.
24. State the substance of any other material provisions of any
indenture or agreement concerning the trust or its securities
and a description of any other material functions or duties of
the depositor, trustee or custodian not stated in Item 10 or
Items 14 to 23 inclusive.
PARTICIPATION AGREEMENTS. The Company and the portfolios have
entered into Participation Agreements which define the terms
under which the sub-accounts of Separate Account invest in the
portfolios.
OWNER
The insured is the owner unless another owner has been named
in the application or in a supplemental agreement filed with
us in accordance with the policy. As owner, you are entitled
to exercise all rights granted under the policy while the
insured is alive. If the owner is an individual other than the
insured, and dies before the insured, the rights of the owner
belong to the executor or administrator of the owner's estate,
unless the policy provides otherwise. If the owner is a
partnership, the rights belong to the partnership as it exists
when a right is exercised.
If ownership of the policy is shared by more than one person,
all such persons must sign each written request to exercise
any right under the policy. The telephone access privilege may
be exercised by any one person who shares ownership, or by
your registered representative.
You may change the owner while the insured is alive by
notifying us in a form and manner acceptable to us. The change
will not be effective until we record it at our Administrative
Office. The written consent of any irrevocable beneficiary
will be required.
You may assign a policy as collateral or make an absolute
assignment. All policy rights will be transferred as to the
assignee's interest. The consent of the assignee may be
required to make changes in premium allocations, make
transfers or to exercise other rights under the policy. We are
not bound by an assignment or release thereof, unless it is in
writing and recorded at our Administrative Office. When
recorded, the assignment will take effect as of the date the
written request was signed. Any rights the assignment creates
will be subject to any payments we made or actions we took
before the assignment was recorded. We are not responsible for
the adequacy of any assignment. However, if you file an
assignment with us and we record it at our administrative
office, your rights and those of any revocable beneficiary
will be subject to it. The written consent of any irrevocable
beneficiaries will be required.
BENEFICIARY
If the insured dies while the policy is in force, we will pay
the death benefit to the beneficiary. You select the
beneficiary on the application and may change the beneficiary
at a later date. If the beneficiary is a partnership, we will
pay the death benefit to the partnership as it exists on the
date the insured dies.
To the extent allowed by law, no death benefit will be subject
to the claims of the beneficiary's creditors or to any legal
process against the beneficiary.
If any beneficiary dies before the insured, that beneficiary's
interest in the death benefit will end. If any beneficiary
dies at the same time as the insured, or within 30 days after
the insured, that beneficiary's interest in the death benefit
will end if no benefits have been paid to that beneficiary. If
the interests of all designated beneficiaries have ended when
the insured dies, we will pay the death benefit to you, as
owner. If you are not living at that time, we will pay the
death benefit to your estate.
You may change the beneficiary while the insured is alive by
sending us written notice. The change will not be effective
until we record it at our Administrative Office. Even if the
insured is not living when we record the change, the change
will take effect as of the date it was signed. However, any
benefits we pay before we record the change will not be
subject to the change. An irrevocable beneficiary may not be
changed without the written consent of that beneficiary.
OTHER POLICY PROVISIONS
THE FOLLOWING POLICY PROVISIONS MAY VARY BY STATE.
INCONTESTABILITY OF THE POLICY
Except for fraud or nonpayment of premiums, the policy will be
incontestable as to the base policy after it has been in force
during the insured's lifetime for two years from the date of
issue. This provision does not apply to any rider or
endorsement providing benefits specifically for disability or
death by accident.
When a layer is added to the policy, this incontestability
provision will start anew with respect to that layer,
beginning on the layer date.
If the base policy is rescinded for any contestable reason
(e.g. material misrepresentation), we will be liable only for
the amount of premiums, less any partial surrenders, surrender
penalty free withdrawals, loans and loan interest due,
allocated to the base policy. The base policy will be
rescinded as of the policy date. If a layer is rescinded for
any contestable reason, we will be liable only for the amount
of premiums, less any partial surrenders, surrender penalty
free withdrawals, loans and loan interest due, allocated to
the layer. The layer will be rescinded as of the layer date.
SUICIDE
If the insured dies by suicide, while sane or insane, within
two years from the date of issue, we will be liable only for
the amount of premiums paid, less any partial surrenders,
surrender penalty free withdrawals, loans and loan interest
due. The policy will be rescinded as of the policy date.
When a layer is added to the policy, this suicide provision
will start anew with respect to that layer, beginning on the
layer date.
DELAY OF PAYMENTS
We may postpone any transaction involving the separate account
during any period when:
o trading on the New York Stock Exchange is restricted
as determined by the Securities and Exchange
Commission, or the New York Stock Exchange is closed
for days other than weekends or holidays;
o the Securities and Exchange Commission has allowed or ordered the
suspension described above; or
o the Securities and Exchange Commission has determined
that an emergency exists such that disposal of mutual
fund securities or valuation of assets is not
reasonably practical.
Transactions involving the separate account include the
following, to the extent the amounts of the transactions come
from the portion of the accumulation value in the separate
account:
o transfers between or among sub-accounts;
o transfers to or from the separate account;
o policy loans;
o exchange of the policy under the Guaranteed Exchange Option;
o partial or full surrenders; and
o death benefits payments.
We may delay paying you any portion of a partial or full
surrender that comes from the accumulation value in the fixed
account for up to six months after we receive your written
request for the surrender.
We may delay making a loan to you to the extent that the loan
is deducted from the portion of the accumulation value in the
fixed account for up to six months after we receive your
written request for the loan. We will not delay any loan made
to pay premiums due on the policy.
WE MAY DELAY ANY PAYMENT UNTIL ALL PREMIUM CHECKS HAVE
CLEARED.
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
-----------------------------------------------------------
Organization and Operations of Depositor
25. State the form of organization of the depositor of the trust,
the name of the state or other sovereign power under the laws
of which the depositor was organized and the date of
organization.
The Company is a stock life insurance company incorporated
under the laws of the state of California in 1906. It moved
its state of domicile to Iowa effective December 31, 2000.
26. (a) Furnish the following information with respect to all fees received by
the depositor of the trust in connection with the exercise of any functions
or duties concerning securities of the trust during the period covered by
the financial statements filed herewith:
Not Applicable.
(b) Furnish the following information with respect to any
fee or any participation in fees received by the
depositor from any underlying investment company or
any affiliated person or investment adviser of such
company:
See item 13(a)(2) regarding payments received from
portfolios or their advisers.
(1) The nature of such fee or participation.
---------------------------------------
See item 13(a)(2) regarding payments
received from portfolios or their advisers.
(2) The name of the person making payments.
--------------------------------------
See item 13(a)(2) regarding payments
received from portfolios or their advisers.
(3) The nature of the services rendered in consideration
for such fee or participation.
See item 13(a)(2) regarding payments
received from portfolios or their advisers.
(4) The aggregate amount received during the
last fiscal year covered by the financial
statements filed herewith.
None.
27. Describe the general character of the business engaged in by
the depositor including a statement as to any business other
than that of depositor of the trust. If the depositor acts or
has acted in any capacity with respect to any investment
company or companies other than the trust, state the name or
names of such company or companies, their relationship, if
any, to the trust, and the nature of the depositor's
activities therewith. If the depositor has ceased to act in
such named capacity, state the date of and circumstances
surrounding such cessation.
The Company is a California life insurance company licensed to
sell life insurance in the District of Columbia, Puerto Rico,
Virgin Islands and Guam and all states except New York.
The Company offers registered variable life and annuity
policies through other separate accounts registered as unit
investment trusts and one, Separate Account Fund B, as a
management investment company.
Officials and Affiliated Persons of Depositor
28. (a) Furnish as at latest practicable date the
following information with respect to the depositor
of the trust, with respect to each officer, director,
or partner of the depositor, and with respect to each
natural person directly or indirectly owning or
holding with power to vote 5% or more of the
outstanding voting securities of the depositor.
(i) name and principal business address;
------------------------------------
(ii) nature of relationship or affiliation with depositor of the trust;
------------------------------------------------------------------
(iii) ownership of all securities of the depositor;
---------------------------------------------
(iv) ownership of all securities of the trust;
-----------------------------------------
(v) other companies of which each person named above is presently
officer, director or partner.
See 28(b) and 29, below.
(b) Furnish a brief statement of the business
experience during the last five years of
each officer, director or partner of the
depositor.
The principal occupations and business
experience for the last five years of
Directors and Executive Officers of the
Company are as follows:
<TABLE>
<CAPTION>
DIRECTORS AND PRINCIPAL OFFICERS OF
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
<S> <C>
Patrick S. Baird***** Director of TOLIC since
1999. Director, Senior Vice President and
Chief Operating Officer of PFL Life
Insurance Company since 1996. Executive
Vice President and Chief Operating Officer
of AEGON USA since 1995. Chief Financial
Officer of AEGON USA from 1992 to 1995.
President and Chief Tax Officer of AEGON
USA from 1984 to 1995.
Brenda K. Clancy***** Director of TOLIC since 1999. Senior Vice President, Corporate, of
PFL Life Insurance Company since 1991. Treasurer and Chief Financial
Officer of PFL Life Insurance Company since 1996.
James W. Dederer, CLU* Director, Executive Vice President, General Counsel and Corporate
Secretary of TOLIC since 1988.
George A. Foegele**** Director and Senior Vice President; President and Chief Executive
Officer of Transamerica Life Insurance Company of Canada.
Douglas C. Kolsrud***** Director of TOLIC since 1999. Director, Senior Vice President, Chief
Investment Officer and Corporate Actuary, Investment Division, of
PFL Life Insurance Company.
Richard N. Latzer*** Director, Senior Vice President and Chief Investment Officer of
Transamerica Corporation since 1989. Director, President and Chief
Executive Officer of Transamerica Investment Services, Inc. since
1988.
Karen O. MacDonald* Director, Executive Vice President and Chief Operating Officer since
1999. Senior Vice President and Corporate Actuary from 1992 to 1995.
Gary U. Rolle* Director, Executive Vice President and Chief Investment Officer of
Transamerica Investment Services, Inc. since 1981.
Paul E. Rutledge III** Director and President, Reinsurance Division since 1998. President,
Life Insurance Company of Virginia, 1991-1997.
Craig D. Vermie***** Director of TOLIC since 1999. Director, Vice President and General
Counsel, Corporate, of PFL Life Insurance Company since 1990.
Ron F. Wagley, CLU* President and Director
since 1999. Chief Agency Officer of TOLIC
since 1993. Vice President of TOLIC from
1989 to 1993.
</TABLE>
*The business address is 1150 South Olive Street, Los Angeles, California 90015.
**The business address is 401 North Tryon Street, Charlotte, North Carolina
28202.
***The business address is 600 Montgomery Street, San Francisco, California
94111.
****The business address is 300 Consilium Place, Scarborough, Ontario, Canada
M1H3G2.
*****The business address is 4333 Edgewood Road, N.W., Cedar Rapids, Iowa 52449.
Companies Owning Securities of Depositor
29. Furnish as at latest practicable date the following
information with respect to each company which directly or
indirectly owns, controls or holds with power to vote 5% or
more of the outstanding voting securities of depositor.
The Company is a wholly-owned subsidiary of Transamerica
Insurance Corporation of California, 1150 South Olive Street,
Los Angeles, which in turn is a wholly-owned subsidiary of
Transamerica Corporation, 600 Montgomery Street, San
Francisco, California. Transamerica Corporation is organized
under the laws of the state of Delaware and is owned by AEGON
N.V., a Dutch holding company.
Controlling Persons
30. Furnish as at latest practicable date the following
information with respect to any person other than those
covered by Items 28, 29, and 42 who directly or indirectly
controls the depositor.
None.
Compensation of Officers of Depositor
31. Furnish the following information with respect to the
remuneration for services paid by the depositor during the
last fiscal year covered by financial statements filed
herewith:
(a) directly to each of the officers or partners or the
depositor directly receiving the three highest amounts
of remuneration;
None. No person received compensation for services rendered
to the trust (separate account).
(b) directly to all officers or partners of the depositor
as a group exclusive of persons whose remuneration is
included under Item 31(a), stating separately the
aggregate amount paid by the depositor itself and the
aggregate amount paid by all the subsidiaries;
None. No person received compensation for services rendered
to the trust (separate account).
(c) indirectly or through subsidiaries to each of the
officers or partners of the depositor:
None. No person received compensation for services rendered
to the trust (separate account).
Compensation of Directors
32. Furnish the following information with respect to the
remuneration for services, exclusive of remuneration reported
under Item 31, paid by the depositor during the last fiscal
year covered by financial statements filed herewith:
(a) the aggregate direct remuneration to directors;
----------------------------------------------
None.
(b) indirectly or through subsidiaries to directors.
-----------------------------------------------
Not Applicable.
Compensation to Employees
33. (a) Furnish the following information with respect to
the aggregate amount of remuneration for services of
all employees of the depositor (exclusive of persons
whose remuneration is reported in Items 31 and 32) who
received remuneration in excess of $10,000 during the
last fiscal year covered by financial statements filed
herewith from the depositor and any of its
subsidiaries.
Not applicable.
(b) Furnish the following information with respect to the
renumeration for services paid directly during the last
fiscal year covered by financial statements filed
herewith to the following classes of persons (exclusive
of those persons covered by Item 33(a)): (1) Sales
managers, branch managers, district managers and other
persons supervising the sale of registrant's
securities; (2) Salesmen, sales agents, canvassers and
other persons making solicitations but not in
supervisory capacity; (3) Administrative and clerical
employees; and (4) others (specify). If a person is
employed in more than one capacity, classify according
to predominant type of work.
Not Applicable.
Compensation to Other Persons
34. Furnish the following information with respect to the aggregate
amount of compensation for services paid any person (exclusive
of persons whose remuneration is reported in Items 31, 32 and
33), whose aggregate compensation in connection with services
rendered with respect to the trust in all capacities exceeded
$10,000 during the last fiscal year covered by financial
statements filed herewith from the depositor and any of its
subsidiaries.
Not Applicable.
IV. DISTRIBUTION AND REDEMPTION OF SECURITIES
-----------------------------------------
Distribution of Securities
35. Furnish the names of the states in which sales of the trust's
securities (a) are currently being made, (b) are presently
proposed to be made, and (c) have been discontinued, indicating
by appropriate letter the status with respect to each state.
(a) Sale of the Policies has not commenced in any state.
(b) Following the effectiveness of the Separate Account's
registration statement under the Securities Act of
1933, and obtaining required approvals under state law,
the Company proposes issuing the Policies in the
District of Columbia, Guam, Virgin Islands, and Puerto
Rico and in all states except New York.
(c) Not Applicable.
36. If sales of the trust's securities have at any time since
January 1, 1936 been suspended for more than a month, describe
briefly the reasons for such suspension.
Not Applicable.
37. (a) Furnish the following information with respect to
each instance where subsequent to January 1, 1937, any
federal or state governmental officer, agency, or
regulatory body denied authority to distribute
securities of the trust, excluding a denial which was
merely a procedural step prior to any determination by
such officer, etc., and which denial was subsequently
rescinded.
(1) Name of officer, agency or body
None.
(2) Date of denial
Not Applicable.
(3) Brief statement of reasons given for denial
-------------------------------------------
Not Applicable.
(b) Furnish the following information with regard to each
instance where, subsequent to January 1, 1937, the
authority to distribute securities of the trust has
been revoked by any federal or state governmental
officer, agency or regulatory body.
(1) Name of officer, agency or body
None.
(2) Date of revocation
Not Applicable.
(3) Brief statement of reasons given for revocation
-----------------------------------------------
Not Applicable.
38. (a) Furnish a general description of the method of
distribution of securities of the trust.
Transamerica Securities Sales Corporation, an affiliate
of the Company, will act as principal underwriter of
the Policies pursuant to a Distribution Agreement with
the Company and the Separate Account. Transamerica
Securities Sales Corporation is a broker-dealer and a
member of the National Association of Securities
Dealers, Inc. The Policies will be sold by agents of
the Company who are registered representatives of
affiliated and independent broker-dealers.
(b) State the substance of any current selling agreement
between each principal underwriter and the trust or the
depositor, including a statement as to the inception
and termination dates of the agreement, any renewal and
termination provisions, and any assignment provisions.
The Company and Separate Account has executed a
Distribution Services Agreement ("Agreement") with
Transamerica Securities Sales Corporation ("TSSC"), its
principal underwriter. Unless otherwise terminated, the
Agreement shall continue in effect from year to year.
The Agreement may be terminated by any party at any
time upon giving 60 days' written notice to the other
parties, and terminates automatically in the event of
its assignment.
(c) State the substance of any current agreements or
arrangements of each principal underwriter with
dealers, agents, salesmen, etc., with respect to
commissions and overriding commissions, territories,
franchises, qualifications, and revocations. If the
trust is the issuer of periodic payment plan
certificates, furnish schedules of commissions and the
bases thereof. In lieu of a statement concerning
schedules of commissions, such schedules of commissions
may be filed as Exhibit A(3)(c).
DISTRIBUTION
Transamerica Securities Sales Corporation, or TSSC,
acts as the principal underwriter and general
distributor of the policy. TSSC is registered with the
SEC as a broker-dealer and is a member of the National
Association of Securities Dealers, or NASD. TSSC was
organized on February 26, 1986, under the laws of the
state of Maryland. Broker-dealers sell the policies
through their registered representatives who are
appointed by us.
We pay to broker-dealers who sell the policy
commissions based on a commission schedule which
provides for commissions of up to 90% of premium
payments made up to a level we set; 4.5% of the excess
over that for premiums paid in the first year; and 4.5%
of premiums paid after the first policy year. We may
also provide additional compensation through bonuses.
To the extent permitted by NASD rules, promotional
incentives or payments may also be provided to
broker-dealers based on sales volumes, the assumption
of wholesaling functions or other sales-related
criteria. Other payments may be made for other services
that do not directly involve the sale of the policies.
These services may include the recruitment and training
of personnel, production of promotional literature, and
similar services.
We intend to recoup commissions and other sales
expenses primarily, but not exclusively, through:
o the administrative charge;
o the surrender penalty; and
o investment earnings on amounts allocated under policies to the fixed
account.
Commissions paid on the policy, including other
incentives or payments, are not charged to the policy
owners or the separate account.
Information Concerning Principal Underwriter
39. (a) State the form of organization of each principal
underwriter of securities of the trust, the name of the
state or other sovereign power under the laws of which
each underwriter was organized and the date of
organization.
The principal underwriter of the Policies, Transamerica
Securities Sales Corporation, was incorporated under
the laws of Maryland, February 26, 1986.
(b) State whether any principal underwriter currently
distributing securities of the trust is a member of the
National Association of Securities Dealers, Inc.
(NASD).
The Policies will be distributed only by broker-dealers
which are members of the NASD.
40. (a) Furnish the following information with respect to
all fees received by each principal underwriter of the
trust from the sale of securities of the trust and any
other functions in connection therewith exercised by
such underwriter in such capacity or otherwise during
the period covered by the financial statement filed
herewith.
None.
(b) Furnish the following information with respect to any
fee or any participation in fees received by each
principal underwriter from any underlying investment
company or any affiliated person or investment adviser
of such company:
See item 13(a)(2) regarding payments received from
portfolios or their advisers.
(1) The nature of such fee or participation.
---------------------------------------
See item 13(a)(2) regarding payments received
from portfolios or their advisers.
(2) The name of the person making payment.
-------------------------------------
See item 13(a)(2) regarding payments received
from portfolios or their advisers.
(3) The nature of the services rendered in consideration
for such fee or participation.
See item 13(a)(2) regarding payments received
from portfolios or their advisers.
(4) The aggregate amount received during the last
fiscal year covered by the financial statements
filed herewith.
None.
41. (a) Describe the general character of the business
engaged in by each principal underwriter, including a
statement as to any business other than the
distribution of securities of the trust. If a principal
underwriter acts or has acted in any capacity with
respect to any investment company or companies other
than the trust, state the name or names of such company
or companies, their relationship, if any, to the trust
and the nature of such activities. If a principal
underwriter has ceased to act in such named capacity,
state the date of and circumstances surrounding such
cessation.
Transamerica Securities Sales Corporation is a
registered broker-dealer and a member of the NASD.
Transamerica Securities Sales Corporation acts as
principal underwriter of variable annuity and variable
life policies issued by separate accounts of the
Company and affiliates Transamerica Life Insurance and
Annuity Company and Transamerica Life Insurance Company
of New York and also acts as distributor for
Transamerica Investors, Inc. The variable policies
issued by the Company are sold through registered
representatives of affiliated and independent
broker-dealers who are also appointed as insurance
agents of the Company.
(b) Furnish as at latest practicable date the address of
each branch office of each principal underwriter
currently selling securities of the trust and furnish
the name and residence address of the person in charge
of such office.
Not Applicable. The Separate Account is not yet issuing
securities.
(c) Furnish the number of individual salesmen of each
principal underwriter through whom any of the
securities of the trust were distributed for the last
fiscal year of the trust covered by the financial
statements filed herewith and furnish the aggregate
amount of compensation received by such salesmen in
such year.
Not Applicable. The Policies have not yet been issued.
42. Furnish as at latest practicable date the following information
with respect to each principal underwriter currently
distributing securities of the trust and with respect to each of
the officers, directors or partners of such underwriter
(ownership of securities of the Trust).
Not Applicable. The Policies have not yet been issued.
43. Furnish, for the last fiscal year covered by the financial
statements filed herewith, the amount of brokerage commissions
received by any principal underwriter who is a member of a
national securities exchange and who is currently distributing
the securities of the trust or effecting transactions for the
trust in the portfolio securities of the trust.
Not Applicable.
Offering Price or Acquisition Valuation of Securities of the Trust
------------------------------------------------------------------
44. (a) Furnish the following information with respect to
the method of valuation used by the trust for the
purposes of determining the offering price to the
public of securities issued the trust or the valuation
of shares or interests in the underlying securities
acquired by the holder of a periodic payment plan
certificate.
UNITS AND UNIT VALUES
VALUATION OF UNITS
We will allocate net premiums, transfers and any
applicable premium qualification credits to the
sub-accounts you have elected. All net premiums will be
allocated according to the ALLOCATION OF NET PREMIUMS
section.
Your policy will be credited with a number of units in
a sub-account is equal to the amounts allocated to that
sub-account divided by the value of the applicable
unit. The value of the applicable unit will be
determined on the day the amount is allocated. If day
we allocate the amount is not a valuation date, the
value of the applicable unit will be determined on the
next valuation date.
The number of units in a sub-account will remain fixed,
unless:
a) increased by a net premium, premium qualification credit
or a transfer allocated to the sub-account;
b) reduced because of a partial surrender, surrender
penalty free withdrawal, surrender penalty, monthly
deduction, policy loan, or other charges or fees
allocated to the sub-account, or because of a transfer
from the sub-account; or
c) changed by a subsequent split of a unit value.
Any transaction described in b) above will result in
the cancellation of a number of units that are equal in
value to the amount of the transaction.
On each valuation date, we will value the assets of
each sub-account and determine the value of each unit.
UNIT VALUES
The unit values for all sub-accounts except the money
market sub-account were initially set at $10.00. The
unit value for the money market sub-account was
initially set at $1.00. The unit value for a
sub-account on any subsequent valuation date is equal
to:
{(A x B) minus C}
-----------------
D
where
A is the number of shares of the underlying portfolio
held by the sub-account at the end of the valuation
date.
B is the net asset value (NAV) per share of the
underlying portfolio as of the end of the valuation
date, plus the per share amount of any capital gains or
dividends declared on that valuation date.
C is a charge for each day in the valuation period equal
to the net assets of the sub-account multiplied by the
daily mortality and expense risk factor.
D is the number of units outstanding as of the end of the
prior valuation date.
The unit value may increase or decrease from one
valuation date to the next. You bear this investment
risk. We reserve the right to change the method we use
to determine the unit value, subject to any required
regulatory approvals.
If we are required to pay federal taxes on the separate
account, we reserve the right to deduct a charge for
such taxes. We may reflect the amounts of such charges
in calculation of the unit values.
(b) Furnish a specimen schedule showing the components of
the offering price of the trust's securities as of the
latest practicable date.
No Policies have been issued or offered for sale to the
public.
(c) If there is any variation in offering price of the
trust's securities to any person or classes of persons
other than underwriters, state the nature and amount of
such variation and indicate the person or classes of
persons to whom such offering is made.
At any time, the "price" of a unit of a sub-account
will be the same for all Owners. However, the charges
under the Policies will not be the same for all Owners.
The insurance principles of pooling and distribution of
mortality risks is based upon the assumption that each
Owner pays a cost of insurance charge commensurate with
the Insured's mortality risk, which is actuarially
determined based upon factors such as age, sex, health
and occupation. In the context of life insurance, a
uniform mortality charge (the "cost of insurance
charge") for all Insureds would discriminate unfairly
in favor of those Insureds representing greater
mortality risks to the disadvantage of those
representing lesser risks. Accordingly, there will be a
different "price" for each actuarial category of
Insureds because different cost of insurance rates will
apply. The "price" will also vary depending upon
whether the Contract is issued based on simplified
underwriting criteria or, instead, is issued based on
full underwriting. The "price" may also vary based on
net amount at risk. The Policies will be offered and
sold pursuant to this cost of insurance schedule, the
Company's underwriting standards, and in accordance
with state insurance laws. Such laws prohibit unfair
discrimination among Insureds, but recognize that
premiums must be based upon factors such as age, health
and occupation. Tables showing the maximum cost of
insurance charges will be delivered as part of the
Contract.
45. Furnish the following information with respect to any suspension
of the redemption rights of the securities issued by the trust
during the three fiscal years covered by the financial
statements filed herewith:
(a) by whose action redemption rights were suspended;
------------------------------------------------
Not Applicable.
(b) the number of days' written notice given to security
holders prior to suspension of redemption rights;
Not Applicable.
(c) reason for suspension;
---------------------
Not Applicable.
(d) period during which suspension was in effect.
--------------------------------------------
Not Applicable.
46. (a) Furnish the following information with respect to
the method of determining the redemption or partial
withdrawal valuation of securities issued by the trust:
(1) The source of quotations used to determine the value of
portfolio securities.
The sub-accounts invest only in shares of the
portfolios. Shares of each are sold and redeemed
at their net asset value as next computed after
the Company's receipt of the purchase or
redemption order. Each purchase or redemption is
confirmed in a written statement of the number
of shares purchased or redeemed and the
aggregate number of shares currently held by the
respective-sub-accounts. See Item 44(a).
(2) Whether opening, closing, bid, asked or any other price
is used.
See 44(a) and 46(a)(1), above.
(3) Whether price is as of the day of sale or as of any
other time.
See 44(a) and 46(a)(1), above.
(4) A brief description of the methods used by
registrant for determining other assets and
liabilities including accrual for expenses and
taxes (including taxes on unrealized
appreciation).
ACCUMULATION VALUE is the policy's total value on
a specified date. The accumulation value at any
time is equal to the sum of:
o the value of the units of the sub-accounts credited to your policy; plus
o the value in the fixed account credited to your policy.
CASH VALUE is the accumulation value, MINUS any
surrender penalty.
NET CASH VALUE is the cash value, MINUS any
outstanding loans.
(5) Other items which registrant deducts from the
net asset value in computing redemption value of
its securities.
Units of the sub-accounts will be redeemed at
net asset value. However, under the Policies, a
surrender or partial redemption may be subject
to surrender charges. See 13(a).
(6) Whether adjustments are made for fractions.
------------------------------------------
No adjustments are made for fractions.
(b) Furnish a specimen schedule showing the components of
the redemption price to the holders of the trust's
securities as of the latest practicable date.
No Policies have been issued or offered for sale to the
public.
Purchase and sale of interests in underlying securities from
and to Security Holders
47. Furnish a statement as to the procedure with respect to
the maintenance of a position in the underlying
securities or interests in the underlying securities,
the extent and nature thereof and the person who
maintains such a position. Include a description of the
procedure with respect to the purchase of underlying
securities or interests in the underlying securities
from security holders who exercise redemption or
withdrawal rights and the sale of such underlying
securities and interests in the underlying securities
to other security holders. State whether the method of
valuation of such underlying securities or interests in
underlying securities differs from that set forth in
Items 44 and 46. If any item of expenditure included in
the determination of the valuation is not or may not
actually be incurred or expended, explain the nature of
such item and who may benefit from the transaction.
All purchases and redemptions of shares of the portfolios are at
net asset value. The Company will redeem sufficient shares of
the portfolios to pay certain life insurance proceeds, benefits
at maturity, or surrender proceeds, or for other purposes
contemplated by the Contract.
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Furnish the following information as to each trustee or
custodian of the trust.
The Company maintains custody of all securities of the
Separate Account. The Separate Account has no trustees. See
Item 3.
(a) Name and principal address:
--------------------------
Transamerica Occidental Life Insurance Company
1150 South Olive Street
Los Angeles, CA 90015
(b) Form of organization:
--------------------
Stock life insurance company.
(c) State or other sovereign power under the laws of which
the trustee or custodian was organized.
Incorporated under the laws of California. State of
domicile is Iowa, effective December 31, 2000.
(d) Name of governmental supervising or examining authority.
-------------------------------------------------------
California Department of Insurance.. The Company is also
subject to examination by the insurance departments of each
state in which it does business.
49. State the basis for payment of fees or expenses of the trustee
or custodian for services rendered with respect to the trust and
its securities, and the amount thereof for the last fiscal year.
Indicate the person paying such fees or expenses. If any fees or
expenses are prepaid, state the unearned amounts.
The Company is not paid a separate fee for expenses or services
rendered as custodian of the Separate Account.
See item 13(a) regarding discussion of fees.
As the Separate Account has not begun business operations, no
fees have been paid.
50. State whether the trustee or custodian or any other person has
or may create a lien on the assets of the trust, and, if so,
give full particulars, outlining the substance of the provisions
of any indenture or agreement with respect thereto.
None. Under California and Iowa law, the assets supporting
Contract reserves in the Separate Account may not be charged
with any liabilities arising out of any other business of the
Company.
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
51. Furnish the following information with respect to
insurance of holders of securities:
Interests in the Separate Account are sold only to fund the
Policies. Other than the Policies themselves, no insurance is
sold to Owners with interests in the sub-accounts, in connection
with such interests.
(a) The name and address of the insurance company.
---------------------------------------------
Transamerica Occidental Life Insurance Company
1150 South Olive Street
Los Angeles, CA 90015
(b) The types of policies and whether individual or group
policies.
The Policies are flexible premium variable life
insurance Policies. Policies are usually individual
policies but in certain states, however, we may instead
issue certificates under a group contract.
(c) The types of risks insured and excluded.
---------------------------------------
The Policies are offered to insureds between ages 16 to
89 and under, subject to our underwriting standards. We
assume the risk that the deduction made for mortality
and expense risks will prove inadequate to cover actual
insurance costs and expenses.
(d) The coverage of the policies.
----------------------------
The Policies provide insurance coverage on the life of
the Insured. The minimum death benefit is stated in
each Contract. Death benefits will be reduced by any
outstanding loans, any due and unpaid monthly
deductions, as well as any unpaid withdrawal
transaction fees, partial withdrawals, and applicable
surrender charges.
(e) The beneficiaries of such policies and the uses to
which the proceeds of policies must be put.
The beneficiary is named by the Owner(s) to receive the
net death benefits. The interest of any beneficiary
will be subject to any assignment made by the Owner.
The Owner may declare a beneficiary to be revocable
(changed at any time by written request) or irrevocable
(may be changed only with the written consent of the
irrevocable beneficiary). The interest of a beneficiary
who dies before the Insured will pass to surviving
beneficiaries. If all beneficiaries die before the
Insured, the death benefits will pass to the Owner or
to the Owner's estate.
(f) The terms and manner of cancellation and of
reinstatement.
See Item 17(c) for the manner of cancellation and
reinstatement.
(g) The method of determining the amount of premiums to be
paid by holders of securities.
See answers to Item 13(a) for amount of charges imposed
and 44(a) and 44(c) for the manner in which the
payments are determined.
(h) The amount of aggregate premiums paid to the insurance
company during the last fiscal year.
We have not yet begun issuing the Policies.
(i) Whether any person other than the insurance company
receives any part of such premiums, the name of each
such person and the amounts involved, and the nature of
the services rendered therefor.
No person other than the Company receives any part of
the amounts deducted for assumption of mortality and
expense risks. However, the Company may from time to
time enter into reinsurance agreements with other
insurance companies under which certain insurance
risks, premium income and related expenses are assumed
by such other insurance companies.
(j) The substance of any other material provisions of any
indenture or agreement of the trust relating to
insurance.
None.
VII. CONTRACT OF REGISTRANT
----------------------
52. (a) Furnish the substance of the provisions of any
indenture or agreement with respect to the conditions
upon which and the method of selection by which
particular portfolio securities must or may be
eliminated from the assets of the trust or must or may
be replaced by other portfolio securities. If an
investment adviser or other person is to be employed in
connection with such selection, elimination or
substitution, state the name of such person, the nature
of any affiliation to the depositor, trustee or
custodian, and any principal underwriter, and the
amount of remuneration to be received for such
services. If any particular person is not designated in
the indenture or agreement, describe briefly the method
of selection of such person.
The investment policy of each sub-account of the
Separate Account is to invest in a particular
portfolio.
We reserve the right, subject to law, to make additions
to, deletions from, or substitutions for the shares
that are held in the sub-accounts. We may redeem the
shares of a portfolio and substitute shares of another
registered open-end management company, if: (1) the
shares of the portfolio are no longer available for
investment; or (2) in our judgment further investment
in the portfolio would be improper based on the
purposes of the Separate Account or the affected
sub-account.
Where the 1940 Act or other law requires, we will not
substitute any shares respecting a Contract interest in
a sub-account without notice to Owners and prior
approval of the SEC and state insurance authorities.
The Separate Account may, as the law allows, purchase
other securities for other policies or allow a
conversion between policies on a Owner's request.
We reserve the right to establish additional
sub-accounts funded by a new portfolio or by another
investment company. Subject to law, we may, in our sole
discretion, establish new sub-accounts or eliminate one
or more sub-accounts.
Shares of the portfolios are issued to other separate
accounts of Transamerica and its affiliates that fund
variable annuity policies and that fund other variable
life policies ("mixed funding"). It is conceivable that
in the future such mixed funding may be disadvantageous
for variable life contract and policy owners or
variable annuity policy owners. Transamerica does not
believe that mixed funding is currently disadvantageous
to either variable life insurance contract and policy
owners or variable annuity policy owners. Transamerica
will monitor events to identify any material conflicts
among contract and policy owners because of mixed
funding. If Transamerica concludes that separate
portfolios should be established for variable life and
variable annuity separate accounts, or for separate
variable life separate accounts, we will bear the
expenses.
We may change the Contract to reflect a substitution or
other change and will notify Owners of the change.
Subject to any approvals the law may require, the
Separate Account or any sub-accounts may be: (1)
operated as a management company under the 1940 Act;
(2) deregistered under the 1940 Act if registration is
no longer required; or (3) combined with other
sub-accounts or our other separate accounts.
(b) Furnish the following information with respect to each
transaction involving the elimination of any underlying
security during the period covered by the financial
statements filed herewith.
Not Applicable.
(c) Describe the contract of the trust with respect to the
substitution and elimination of the underlying
securities of the trust with respect to:
(1) the grounds for elimination and substitution;
--------------------------------------------
See 52(a), above.
(2) the type of securities which may be substituted for any
underlying security;
See 52(a), above.
(3) whether the acquisition of such substituted
security or securities would constitute the
concentration of investment in a particular
industry or group of industries or would conform
to a contract of concentration of investment in
a particular industry or group of industries;
Not Applicable.
(4) whether such substituted securities may be the
securities of any other investment company; and
See 52(a), above.
(5) the substance of the provisions of any indenture
or agreement which authorize or restrict the
contract of the registrant in this regard.
See 52(a) above.
(d) Furnish a description of any contract (exclusive of
policies covered by paragraph (a) and (b) herein) of
the trust which is deemed a matter of fundamental
contract and which is elected to be treated as such.
None.
Regulated Investment Company
53. (a) State the taxable status of the trust.
-------------------------------------
Because of its current tax status, the Company does not
expect to incur any federal income tax liabilities that
would be charged to the Separate Account, and the
Company does not intend to make a charge for federal
income taxes. The Company may, however, incur state and
local taxes (in addition to premium taxes) in several
states. At present, these taxes are not significant. If
there is a material change in state or local tax laws,
charges for such taxes, if any, attributable to the
Separate Account may be made.
See also 46(a), above.
(b) State whether the trust qualified for the last taxable
year as a regulated investment company as defined in
Section 851 of the Internal Revenue Code of 1954, and
state its present intention with respect to such
qualification during the current taxable year.
Not Applicable.
VIII. FINANCIAL AND STATISTICAL INFORMATION
-------------------------------------
54. If the trust is not the issuer of periodic payment plan
certificates, furnish the following information with respect to
each class or series of its securities.
Not Applicable.
55. If the trust is the issuer of periodic payment plan
certificates, a transcript of a hypothetical account shall be
filed in approximately the following form on the basis of the
certificate calling for the smallest amount of payments. The
schedule shall cover a certificate of the type currently being
sold assuming that such certificate had been sold at a date
approximately ten years prior to the date of registration or to
the approximate date of organization of the trust.
Not Applicable.
56. If the trust is the issuer of periodic payment plan
certificates, furnish by years for the period covered by the
financial statements filed herewith in respect of certificates
sold during such period, the following information for each
fully paid type and each installment payment type of periodic
payment plan certificate currently being issued by the trust.
Not Applicable.
57. If the trust is the issuer of periodic payment plan
certificates, furnish by years for the period covered by
financial statements filed herewith the following information
for each installment payment type of periodic payment plan
certificate currently being issued by the trust.
Not Applicable.
58. If the trust is the issuer of periodic plan certificates furnish
the following information for each installment periodic payment
plan certificate outstanding as of the latest practicable date.
Not Applicable.
59. Financial Statements:
--------------------
Financial Statements of the Separate Account
Financial statements, if any, will be contained in a
pre-effective amendment to the registration statement for the
Contract on Form S-6 filed under the Securities Act of 1933.
They are incorporated herein by reference.
Financial Statements of the Depositor
The Financial Statements of the Company will be contained in a
pre-effective amendment to the registration statement on Form
S-6 filed by the Registrant pursuant the Securities Act of 1933.
They are incorporated herein by reference.
IX. EXHIBITS
1. Exhibit 1
(1) Certified copy of Resolutions of the Board of Directors of the Company of
December 6, 1996 establishing the Transamerica Occidental Life Separate
Account VUL-5. 1/
(2) Not Applicable.
(3) (a) Form of Distribution Agreement between Transamerica Securities Sales
Corporation and Transamerica Occidental Life Insurance Company. 1/
(b) Form of Sales Agreement between Transamerica Life Companies, Transamerica
Securities Sales Corporation and Broker-Dealers 1/
(4) Not Applicable.
(5) Forms of Policy and Policy riders. 1/
(6) Organizational documents of the Company, as amended. 1/
(7) Not Applicable.
(8) Form of Participation Agreement between: Transamerica Occidental Life
Insurance Company and:
(a) re The Alger American Fund 1/
(b) re Alliance Variable Products Series Fund, Inc. 1/
(c) re Dreyfus Variable Investment Fund 1/
(d) re Janus Aspen Series 1/
(e) re MFS Variable Insurance Trust 1/
(f) re Morgan Stanley Universal Funds, Inc. 1/
(g) re OCC Accumulation Trust 1/
(h) re Transamerica Variable Insurance Fund, Inc. 1/
(i) re PIMCO Variable Insurance Trust 1/
(9) Administrative Agreements.
(10) Form of Application. 1/
1. Incorporated by reference to the like-numbered exhibit of the Initial
Filing to the Form S-6 Registration Statement, File No. 333-51916 (December
15, 2000).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940 the
Depositor of the registrant has caused this registration statement to be duly
signed on behalf of the registrant in the City of Los Angeles, and State of
California, on the 11th day of January, 2001.
(SEAL) Transamerica Occidental Life Separate Account VUL-5
(Registrant)
By: Transamerica Occidental Life Insurance Company
(Depositor)
By: /s/ David M. Goldstein
(Name) David M. Goldstein
(Title) Vice President
Attest /s/ Gina Grusman
Gina Grusman, SEC Filing Coordinator
<TABLE>
<CAPTION>
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities
indicated on the date(s) set forth below.
Signatures Titles Date
<S> <C> <C>
Ron F. Wagley* ___________________________ January 11, 2001
President and Director
Patrick S. Baird* ___________________________ January 11, 2001
Director
Brenda K. Clancy* ___________________________ January 11, 2001
Director and Senior Vice President
James W. Dederer* ___________________________ January 11, 2001
Director, General Counsel and Secretary
George A. Foegele* __________________________ January 11, 2001
Director
Douglas C. Kolsrud* __________________________ January 11, 2001
Director and Senior Vice President
Richard N. Latzer* __________________________ January 11, 2001
Director and Investment Officer
Karen O. MacDonald* _________________________ January 11, 2001
Director and Acting Chief Financial Officer
Gary U. Rolle'* _________________________ January 11, 2001
Director and Investment Officer
Paul E. Rutledge III* _________________________ January 11, 2001
Director and President - Reinsurance Division
Craig D. Vermie* _________________________ January 11, 2001
Director, Vice President and Counsel
</TABLE>
/s/ David M. Goldstein On January 11, 2001 as Attorney-in-Fact pursuant
*By: David M. Goldstein to powers of attorney filed herewith.
