Registration No. 33-11489
811-3098
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As filed with the Securities and Exchange Commission
April 27, 1998
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. __________________ [ ]
Post-Effective Amendment No. 13 [ X ]
--
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 17 [ X ]
--
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RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE ANNUITY FUNDS M, P AND Q
(Exact Name of Registrant)
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(Name of Depositor)
1000 Woodbury Lane, Suite 102
Woodbury, New York 11797
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (516) 682-8700
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Stewart D. Gregg, Esq.
Counsel
ReliaStar Life Insurance Company of New York
1000 Woodbury Lane, Suite 102
Woodbury, New York 11797
Copy to:
Jeffrey A. Proulx, Esq.
ReliaStar Life Insurance Company of New York
1000 Woodbury Lane, Suite 102
Woodbury, New York 11797
(Name and Address of Agent of Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
Registration Statement becomes effective.
It is proposed that this filing will become effective (check appropriate space):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 1998 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] on (date) pursuant to paragraph (a) of Rule 485.
If appropriate, check the following box:
[ ] this Post-effective amendment designates a new effective date for a
previously-filed post-effective amendment.
Title of securities being registered: Variable annuity contracts issued by a
registered separate account.
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE ANNUITY FUNDS M, P AND Q
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
FORM N-4
ITEM NUMBER PART A HEADING IN PROSPECTUS
- ----------- ----------------------------
1. Cover Page
2. Definitions
3. Summary
4. Condensed Financial Information
5. The Company; The Separate Accounts; The Funds
6. Summary of Contract Expenses; Charges and Other Deductions
7. Summary; Accumulation Period - Deferred Variable Annuities;
Miscellaneous Contract Provisions
8. Annuity Period
9. Death Benefit During the Accumulation Period
10. Purchase of Contracts; Accumulation Period - Deferred Variable
Annuities
11. Surrenders Without Charge; Surrender and Termination; Right to
Examine Contract
12. Federal Income Tax Status
13. Litigation
14. Statement of Additional Information
PART B HEADING IN STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------------------------
15. Cover Page
16. Table of Contents
17. General Information about the Company
18. Custodian and Accountants
19. Underwriter
20. Underwriter
21. Calculation of Performance Data
22. Annuity Period (in Prospectus)
23. Financial Statements
PART C HEADINGS
---------------
24. Financial Statements and Exhibits
25. Directors and Officers of the Depositor
26. Persons Controlled by or Under Common Control with the Depositor
or Registrant
27. Number of Contract Owners
28. Indemnification
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE ANNUITY FUNDS P AND Q
INDIVIDUAL FLEXIBLE PAYMENT VARIABLE ANNUITY CONTRACTS
OFFERED BY
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
1000 WOODBURY ROAD, SUITE 102, WOODBURY, NEW YORK 11797
This Prospectus describes individual flexible payment variable annuity contracts
(the "Contracts") issued by ReliaStar Life Insurance Company of New York
("ReliaStar" or the "Company"). The Contracts provide Deferred Variable
Annuities with an Accumulation Period on a variable or fixed basis and for
payment of annuity benefits on a fixed basis, a variable basis, or a combination
thereof. The Contracts may be purchased for individual plans which qualify for
certain Federal tax benefits available under the Internal Revenue Code
("Qualified Plans") or may be issued for deferred compensation and other plans
which do not qualify under such Code sections ("Non-Qualified Plans"). Purchase
payments, after deductions for any applicable premium taxes, are allocated to
ReliaStar Life Insurance Company of New York Variable Annuity Fund P ("Separate
Account P") for Non-Qualified Plans and to ReliaStar Life Insurance Company of
New York Variable Annuity Fund Q ("Separate Account Q") for Qualified Plans. The
Owner of the Contract directs the Company to allocate such net purchase payments
to a Fixed Account or up to seventeen of twenty variable sub-accounts
("Sub-Accounts") that are established within each Separate Account. Each
Sub-Account invests exclusively in shares of one of the following portfolios of
mutual funds (collectively, the "Funds"):
<TABLE>
<CAPTION>
<S> <C>
Alliance Variable Products Series Fund Northstar Variable Trust
-Growth and Income Portfolio -Growth Portfolio
-Short-Term Multi-Market Portfolio -High Yield Bond Portfolio
-Income and Growth Portfolio
-International Value Portfolio
Fidelity Variable Insurance Products Fund Oppenheimer Variable Account Funds
and Variable Insurance Products Fund II -Aggressive Growth Fund
-VIP Equity-Income Portfolio -Bond Fund
-VIP Growth Portfolio -Global Securities Fund
-VIP II Asset Manager Portfolio -Growth Fund
-VIP II Contrafund Portfolio -High Income Fund
-VIP II Index 500 Portfolio -Money Fund
-VIP II Investment Grade Bond Portfolio -Multiple Strategies Fund
-Strategic Bond Fund
</TABLE>
Additional information about the Contracts has been filed with the Securities
and Exchange Commission ("SEC") in a Statement of Additional Information, dated
May 1, 1998, which is incorporated herein by reference. The Statement of
Additional Information, the table of contents of which is set forth on page 36
of this Prospectus, is available without charge upon request by writing to
ReliaStar at the above address or by calling 1-800-621-3750, and may also be
obtained by accessing the SEC's internet web site (http://www.sec.gov).
(Continued on Next Page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUNDS AND INTERESTS IN THE CONTRACTS ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY A BANK, AND THE SHARES AND
INTERESTS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, OR ANY OTHER AGENCY. ANY INVESTMENT IN THE CONTRACT INVOLVES
CERTAIN RISKS WHICH MAY INCLUDE THE POSSIBLE LOSS OF PRINCIPAL.
The date of this Prospectus is May 1, 1998
<PAGE>
The minimum initial purchase payment for Separate Account P is $1,000 ($100 for
automatic payment plans) with subsequent minimum payments of at least $100
unless waived by ReliaStar. The minimum initial payment for Separate Account Q
is $250 ($50 for automatic payment plans) with subsequent payments of at least
$50 unless waived by ReliaStar. No Contract payments will be accepted with
respect to an Annuitant or Contract Owner who is older than eighty years of age.
This Prospectus provides information a prospective investor should know before
investing and should be kept for future reference. A current Prospectus for each
of the Funds must accompany this Prospectus and should be read in conjunction
with this Prospectus.
Information about the Fixed Account may be found on page 36 of this Prospectus.
2
<PAGE>
TABLE OF CONTENTS
Heading Page
- ------- ----
DEFINITIONS..................................................4
SUMMARY......................................................5
SUMMARY OF CONTRACT EXPENSES.................................6
CONDENSED FINANCIAL INFORMATION..............................9
THE COMPANY.................................................15
THE SEPARATE ACCOUNTS.......................................15
THE FUNDS...................................................15
PURCHASE OF CONTRACTS.......................................17
CHARGES AND OTHER DEDUCTIONS................................18
A. Contingent Deferred Sales Charge.........................18
B. Surrenders Without Charge................................19
C. Mortality and Expense Risk Charges.......................20
D. Contract Maintenance Charge..............................20
E. Premium Taxes............................................20
F. Other Charges............................................20
G. Reduction or Elimination of Charges......................20
ACCUMULATION PERIOD - DEFERRED
VARIABLE ANNUITIES........................................21
A. Crediting Accumulation Units.............................21
B. Value of an Accumulation Unit............................21
C. Death Benefit During the Accumulation
Period...............................................22
D. Transfers Between Sub-Accounts...........................22
E. Telephone/Fax Instructions...............................22
F. Dollar Cost Averaging....................................23
G. Systematic Withdrawal Program............................23
H. Surrender and Termination................................24
ANNUITY PERIOD..............................................24
A. Annuity Commencement Date................................24
B. Annuity Options..........................................24
C. Allocation of Annuity....................................25
D. Value of an Annuity Unit.................................26
E. Frequency and Amount of Annuity Payments.................26
F. Assumed Investment Rate..................................26
MISCELLANEOUS CONTRACT PROVISIONS...........................27
A. Time of Payments.........................................27
B. Right to Examine Contract................................27
Heading Page
- ------- ----
C. Amendment of Contract....................................27
D. Reports to Contract Owners...............................27
E. Assignment...............................................27
F. Substitution of Fund Shares..............................27
G. Ownership of the Contract................................28
FEDERAL INCOME TAX STATUS...................................28
A. Introduction.............................................28
B. Tax Status...............................................28
C. Taxation of Annuities in General - Non-Qualified
Plans................................................28
D. Additional Considerations................................29
E. Qualified Plans..........................................31
F. Withholding Requirements Where Rollovers are
Distributed Directly to the Participant..............33
G. Seek Tax Advice..........................................33
PREPARING FOR YEAR 2000.....................................33
REGULATION..................................................34
A. State....................................................34
B. Proposed Unisex Legislation..............................34
VOTING RIGHTS...............................................34
TEXAS OPTIONAL RETIREMENT PROGRAM...........................34
LITIGATION..................................................35
REGISTRATION STATEMENT......................................35
LEGAL OPINIONS..............................................35
PERFORMANCE DATA............................................35
FINANCIAL STATEMENTS........................................36
STATEMENT OF ADDITIONAL INFORMATION.........................36
THE FIXED ACCOUNT...........................................36
APPENDIX I..................................................38
APPENDIX II.................................................40
APPENDIX III................................................41
INVESTMENT FUND PROSPECTUSES:
A. Alliance Variable Products Series Fund
B. Fidelity Variable Insurance Products Fund (VIP)
C. Fidelity Variable Insurance Products Fund II (VIP II)
D. Northstar Variable Trust
E. Oppenheimer Variable Account Funds
3
<PAGE>
DEFINITIONS
Accumulation Period - The period between the date the Contract is issued and the
Annuity Commencement Date.
Accumulation Unit - An accounting unit used to value a Contract Owner's interest
prior to the Annuity Commencement Date.
Annuitant - The person designated to receive or who is receiving annuity
payments.
Annuity Commencement Date - The date on which annuity payments are to commence.
Annuity Option - The provisions under which a series of annuity payments is made
to the Annuitant.
Annuity Unit - An accounting unit of measure used to calculate the value of
second and subsequent variable annuity payments.
Beneficiary - The person to receive benefits under a Contract upon the
Annuitant's death.
Contract Anniversary - The same day and month that the Contract is issued in
each subsequent year.
Contract Owner - The person or entity with legal rights of ownership of the
Contract.
Contract Owner's Individual Account - The sum of all values in the Sub-Accounts
of the Separate Accounts and the Fixed Account credited to a Contract Owner
during the Accumulation Period.
Contract Value - The value of the Contract Owner's Individual Account.
Fixed Account - Assets of ReliaStar other than those allocated to any separate
account of ReliaStar.
Fixed Account Value - The Contract Value allocated to the Fixed Account, which
accumulates in ReliaStar's general account.
Fixed Annuity - An annuity with payments which remain fixed throughout the
annuity period and do not vary with investment experience.
Joint Annuitant - The designated second person under a joint and survivor life
annuity.
Purchase Payment - An initial or subsequent Purchase Payment to purchase an
annuity.
Separate Accounts P and Q - Segregated investment accounts established by
ReliaStar pursuant to applicable law and registered as a unit investment trust
under the Investment Company Act of 1940, as amended.
Sub-Account - A division of the Separate Accounts whose assets are invested in
shares of corresponding underlying portfolios.
Valuation Date - Each day on which the New York Stock Exchange is open for
business, except for a day that a Sub-Account's corresponding Fund does not
value its shares. The New York Stock Exchange is currently closed on weekends
and on the following holidays: New Year's Day; Martin Luther King, Jr. Day,
Presidents' Day; Good Friday; Memorial Day; July Fourth; Labor Day; Thanksgiving
Day; and Christmas Day.
4
<PAGE>
Valuation Period - The interval of time between two consecutive Valuation Dates
measured from the daily closing of the New York Stock Exchange.
Variable Annuity - An annuity with payments varying as to dollar amount in
relation to the investment experience of the Sub-Account.
SUMMARY
The Contracts are flexible premium individual deferred variable/fixed
annuity contracts issued by the Separate Accounts and the Company (see "The
Company" and "The Separate Accounts"). They are sold to or in connection with
retirement plans which may or may not qualify for special federal tax treatment
under the Internal Revenue Code (see "Federal Income Tax Status"). Annuity
payments under the Contracts are deferred until a later date.
Purchase payments may be allocated to up to seventeen of the twenty
available Sub-Accounts of each Separate Account and/or to the Fixed Account (see
"The Funds"). Purchase payments allocated to the Sub-Accounts of the Separate
Accounts will be invested in shares at net asset value of one or more of the
Funds. The Contract Value and the amount of variable annuity payments will vary,
primarily based on the investment performance of the Funds whose shares are held
in the Sub-Accounts selected.
No deduction for a sales charge is made from the purchase payments for the
Contracts. However, a Surrender Charge (Contingent Deferred Sales Charge) may,
with certain exceptions, apply to whole or partial surrenders of purchase
payments that have been credited under the Contract for less than eight Contract
years, on a pro-rata basis, unless ReliaStar is otherwise instructed by the
Contract Owner. The Surrender Charge will also apply at the time the annuity
payments begin, with certain exceptions (see "Contingent Deferred Sales
Charge").
In addition, on each Contract Anniversary (and on the surrender of the
Contract for its full value if it is not surrendered on a Contract Anniversary)
the Company will deduct from the Contract Value a Contract Maintenance Charge of
$30. The Contract Maintenance Charge is to reimburse the Company for
administrative expenses relating to the issue and maintenance of the Contracts
(see "Contract Maintenance Charge").
The Company also deducts mortality and expense risk charges equal to an
annual rate of 1.25% of the daily asset value of the Sub-Accounts of each
Separate Account (see "Mortality Expense Risk Charges").
The minimum initial purchase payment must be at least $1,000 ($100 for
automatic payment plans) for a Non-Qualified Plan, and no subsequent individual
payment may be less than $100 unless waived by ReliaStar. If the Contract is
being purchased by or in connection with a Qualified Plan, the minimum initial
purchase payment is $250 ($50 for automatic payment plans), and no subsequent
individual payment may be less than $50 unless waived by ReliaStar. The Company
may choose not to accept any subsequent purchase payment if the additional
purchase payment, when added to the Contract Value at the next Valuation Date,
would exceed $250,000. No purchase payments will be accepted with respect to an
Annuitant or Contract Owner who is older than 80 years of age. The Company
reserves the right to accept smaller initial and subsequent purchase payments in
connection with special circumstances, including sales through group or
sponsored arrangements.
If the Contract Value at the Annuity Commencement Date is less than $2,000,
the Contract Value may be distributed in a single sum payment in lieu of annuity
payments. If the net Contract Value is not less than $2,000 but any annuity
payment would be less than $20, the Company has the right to change the
frequency of payments to such intervals as will result in payments of at least
$20 (see "Frequency and Amount of Annuity Payments"). The minimum frequency and
amount of annuity payments or the minimum Contract Value required for annuity
payments may vary by state.
Premium taxes payable to any governmental entity will be charged against
the Contracts (see "Premium Taxes").
5
<PAGE>
The Contract Owner may request early withdrawal or surrender of all or part
of the Contract Value before the Annuity Commencement Date (see "Systematic
Withdrawal Program" and "Surrender and Termination"). Under the Internal Revenue
Code, penalty taxes may apply to the early withdrawal of amounts accumulated
under a Contract whether or not such Contract is part of a Qualified Plan (see
"Federal Income Tax Status").
The Contract Owner may return the Contract within twenty days after it was
delivered to the Contract Owner, and receive a refund of the Contract Value
unless otherwise required by law (see "Right to Examine Contract").
SUMMARY OF CONTRACT EXPENSES
Contract Owner Transaction Expenses
Sales load imposed on purchases (as a percentage of purchase payments)........0%
Contingent Deferred Sales Charge (Surrender Charge) as a percentage of purchase
payments:
Years from Receipt of Contingent Deferred Sales
Purchase Payment(a) Charge Deduction
0-1 7%
1-2 7%
2-3 6%
3-4 5%
4-5 4%
5-6 3%
6-7 2%
7-8 1%
8+ 0%
(a) The eight year Surrender Charge period is measured from the date of each
purchase payment. There is no Surrender Charge for purchase payments more
than eight years old. Under certain circumstances, partial Contract Values
may be surrendered without charge. However, such surrenders may be subject
to Federal tax penalties (see "Surrenders Without Charge").
Charge for transfers among sub-accounts.......................................0%
Annual Contract Maintenance Charge..........................................$30
Separate Account Annual Expenses
Mortality and Expense Risk Charge (as percentage of the average
Sub-Account value)...............................................1.25%
Account Fees and Expenses................................................0%
Total Separate Account Annual Expenses................................1.25%
Annual Fund Expenses After Reimbursement(1) (as percentage of each Fund's
average net assets) paid by each Fund in its fiscal year ended December 31,
1997. Total expenses for the Funds are restated to reflect current management
charges.
<TABLE>
<CAPTION>
Management Other Total Fund
Fees Expenses Annual Expenses
---- -------- ---------------
<S> <C> <C> <C>
Alliance Growth and Income Portfolio .63% .09% .72%
Alliance Short-Term Multi-Market Portfolio .07% .87% .94%
Northstar Variable Trust Growth Portfolio .75% .05% .80%(2)
Northstar Variable Trust High Yield
Bond Portfolio .75% .05% .80%(2)
Northstar Variable Trust Income and
Growth Portfolio .75% .05% .80%(2)
6
<PAGE>
Northstar Variable Trust International
Value Portfolio .75% .05% .80%(2)
Oppenheimer Aggressive Growth Fund .71% .02% .73%
Oppenheimer Bond Fund .73% .05% .78%
Oppenheimer Global Securities Fund .70% .06% .76%
Oppenheimer Growth Fund .73% .02% .75%
Oppenheimer High Income Fund .75% .07% .82%
Oppenheimer Money Fund .45% .03% .48%
Oppenheimer Multiple Strategies Fund .72% .03% .75%
Oppenheimer Strategic Bond Fund .75% .08% .83%
VIP Equity-Income Portfolio .50% .08% .58%(3)
VIP Growth Portfolio .60% .09% .69%(3)
VIP II Asset Manager Portfolio .55% .10% .65%(3)
VIP II Contrafund Portfolio .60% .11% .71%(3)
VIP II Index 500 Portfolio .24% .04% .28%(2)
VIP II Investment Grade Bond Portfolio .44% .14% .58%
</TABLE>
EXAMPLES
If you surrender your contract at the end of the applicable time period, you
would pay the following cumulative expenses on an initial $1,000 investment,
assuming 5% annual return on assets:
<TABLE>
<CAPTION>
Sub-Account 1 Year 3 Years 5 Years 10 Years
-----------
<S> <C> <C> <C> <C>
Alliance Growth and Income Portfolio $84 $105 $136 $241
Alliance Short-Term Multi-Market 86 112 147 264
Northstar Variable Trust Growth Portfolio 85 108 140 250
Northstar Variable Trust High Yield
Bond Portfolio 85 108 140 250
Northstar Variable Trust Income and
Growth Portfolio 85 108 140 250
Northstar Variable Trust International
Value Portfolio 85 108 140 250
Oppenheimer Aggressive Growth Fund 84 106 137 242
Oppenheimer Bond Fund 85 107 139 248
Oppenheimer Global Securities Fund 85 106 138 245
Oppenheimer Growth Fund 84 106 138 244
Oppenheimer High Income Fund 85 108 141 252
Oppenheimer Money Fund 82 98 124 216
Oppenheimer Multiple Strategies Fund 84 106 138 244
Oppenheimer Strategic Bond Fund 85 109 142 253
VIP Equity-Income Portfolio 83 101 129 227
VIP Growth Portfolio 84 104 134 238
VIP II Asset Manager Portfolio 83 103 132 234
VIP II Contrafund Portfolio 84 105 136 240
VIP II Index 500 Portfolio 80 92 113 195
VIP II Investment Grade Bond Portfolio 83 101 129 227
</TABLE>
If you annuitize at the end of the applicable time period, you would pay the
following cumulative expenses on an initial $1,000 investment, assuming 5%
annual return on assets:
<TABLE>
<CAPTION>
Sub-Account 1 Year 3 Years 5 Years 10 Years
-----------
<S> <C> <C> <C> <C>
Alliance Growth and Income Portfolio $84 $105 $112 $241
Alliance Short-Term Multi-Market 86 112 123 264
Northstar Variable Trust Growth Portfolio 85 108 116 250
7
<PAGE>
Northstar Variable Trust High Yield
Bond Portfolio 85 108 116 250
Northstar Variable Trust Income and
Growth Portfolio 85 108 116 250
Northstar Variable Trust International
Value Portfolio 85 108 116 250
Oppenheimer Aggressive Growth Fund 84 106 113 242
Oppenheimer Bond Fund 85 107 115 248
Oppenheimer Global Securities Fund 85 106 114 245
Oppenheimer Growth Fund 84 106 114 244
Oppenheimer High Income Fund 85 108 117 252
Oppenheimer Money Fund 82 98 100 216
Oppenheimer Multiple Strategies Fund 84 106 114 244
Oppenheimer Strategic Bond Fund 85 109 118 253
VIP Equity-Income Portfolio 83 101 105 227
VIP Growth Portfolio 84 104 110 238
VIP II Asset Manager Portfolio 83 103 108 234
VIP II Contrafund Portfolio 84 105 112 240
VIP II Index 500 Portfolio 80 92 89 195
VIP II Investment Grade Bond Portfolio 83 101 105 227
</TABLE>
If you do not surrender your contract, you would pay the following cumulative
expenses on an initial $1,000 investment, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
Sub-Account 1 Year 3 Years 5 Years 10 Years
-----------
<S> <C> <C> <C> <C>
Alliance Growth and Income Portfolio $21 $65 $112 $241
Alliance Short-Term Multi-Market 23 72 123 264
Northstar Variable Trust Growth Portfolio 22 68 116 250
Northstar Variable Trust High Yield
Bond Portfolio 22 68 116 250
Northstar Variable Trust Income and
Growth Portfolio 22 68 116 250
Northstar Variable Trust International
Value Portfolio 22 68 116 250
Oppenheimer Aggressive Growth Fund 21 66 113 242
Oppenheimer Bond Fund 22 67 115 248
Oppenheimer Global Securities Fund 22 66 114 245
Oppenheimer Growth Fund 21 66 114 244
Oppenheimer High Income Fund 22 68 117 252
Oppenheimer Money Fund 19 58 100 216
Oppenheimer Multiple Strategies Fund 21 66 114 244
Oppenheimer Strategic Bond Fund 22 69 118 253
VIP Equity-Income Portfolio 20 61 105 227
VIP Growth Portfolio 21 64 110 238
VIP II Asset Manager Portfolio 20 63 108 234
VIP II Contrafund Portfolio 21 65 112 240
VIP II Index 500 Portfolio 17 52 89 195
VIP II Investment Grade Bond Portfolio 20 61 105 227
</TABLE>
The purpose of the above table is to assist the Contract Owner in understanding
the various costs and expenses that a Contract Owner will bear directly or
indirectly. The fee table does not reflect any fees which may be waived by
ReliaStar. In calculating the expenses in the above examples, the $30 annual
Contract Maintenance Charge has been converted to a .113% annual asset charge by
dividing the $30 annual Contract charge by the average contract size per
thousand in the last two years. The actual amount of the annual Contract fee
attributable to a $1,000 investment depends on the value of the
8
<PAGE>
Contract. The table reflects expenses of each Separate Account as well as the
Fund (see "Charges and Other Deductions" of this Prospectus and "Management of
the Fund" in each Fund's Prospectus).
Any premium taxes or other taxes levied by any governmental entity with respect
to the Contract will be charged against the Contract Values based on a
percentage of premiums paid. Premium taxes currently imposed by certain states
on the Contracts range from 0% to 3.5% of premiums paid (see "Premium Taxes").
"Other Expenses" are based upon the expenses outlined under the section
describing the management of the Fund in each Fund's Prospectus. Total Fund
expenses are assessed at the underlying mutual fund level.
After a Purchase Payment has been in the Contract for 12 months, a Contract
Owner may surrender up to 10% of that Purchase Payment per year without a
Surrender Charge (see "Surrenders Without Charge").
(1) The Company or its affiliates may receive compensation from an
affiliate or affiliates of certain of the Funds based upon an annual
percentage of the average net assets held in that Fund by the Company
and certain of the Company's insurance company affiliates. These
amounts are intended to compensate the Company or the Company's
affiliates for administrative, record keeping, distribution, and other
services provided by such parties to the Funds and/or the Funds'
affiliates. Payments of such amounts by an affiliate or affiliates of
the Funds do not increase the fees paid by the Funds or their
shareholders. The percentage paid may vary from one fund company to
another.
(2) The expenses listed in the table for the Fidelity VIP II Index 500
Portfolio, the Northstar Variable Trust Growth Portfolio, the
Northstar Variable Trust High Yield Bond Portfolio, the Northstar
Variable Trust Income and Growth Portfolio, and the Northstar Variable
Trust International Value Portfolio are net of expense reimbursements.
Expense reimbursements are voluntary. There is no assurance of ongoing
reimbursement. The total annual expenses of these Funds, before
expense reimbursements, would be: Fidelity VIP II Index 500 Portfolio
- .40%; Northstar Variable Trust Growth Portfolio - 1.09%; Northstar
Variable Trust High Yield Bond Portfolio - 1.35%; and Northstar
Variable Trust Income and Growth Portfolio - 1.11%. Estimated Total
Fund Annual Expenses for 1998 for the Northstar Variable Trust
International Value Portfolio, which became available to Contract
owners on May 1, 1998, are 2.61%.
(3) A portion of the brokerage commissions that certain Funds pay was used
to reduce these Funds expenses. In addition, certain Funds have
entered into arrangements with their custodian whereby credits
realized, as a part of uninvested cash balances, were used to reduce
custodian expenses. Including these reductions, the total operating
expenses presented in the table would have been .64% for VIP II Asset
Manager Portfolio, .68% for VIP II Contrafund Portfolio, .57% for VIP
Equity Income Portfolio and .67% for VIP Growth Portfolio.
The examples shown in the table above should not be considered a representation
of past or future expenses. Actual expenses may be more or less than those
shown. The 5% annual return assumed is hypothetical and should not be considered
a representation of past or future annual returns, which may be greater or less
than the assumed rates.
<TABLE>
<CAPTION>
CONDENSED FINANCIAL INFORMATION
(Unaudited)
Total No. of
Accumulation Accumulation Accumulation
NON-QUALIFIED CONTRACTS Unit Value Unit Value Units Outstanding
Account* Fund Beginning of Year End of Year at End of Year
----------------- ------------ -----------------
<S> <C> <C> <C> <C>
143 Alliance Growth and Income Portfolio
1991.................................... $1.000 $1.017 491,096
1992.................................... $1.017 $1.080 1,127,369
9
<PAGE>
1993.................................... $1.080 $1.190 1,397,688
1994.................................... $1.190 $1.170 1,613,227
1995.................................... $1.170 $1.569 1,716,168
1996.................................... $1.569 $1.922 1,790,697
1997.................................... $1.922 $2.432 1,964,939
149 Alliance Short-Term Multi-Market Portfolio
1990.................................... $1.000 $1.002 62,463
1991.................................... $1.002 $1.060 2,860,674
1992.................................... $1.060 $1.057 2,130,062
1993.................................... $1.057 $1.113 1,651,993
1994.................................... $1.113 $1.028 1,302,876
1995.................................... $1.028 $1.084 610,597
1996.................................... $1.084 $1.173 554,457
1997.................................... $1.173 $1.212 442,808
179 Northstar Variable Trust Growth Portfolio
1996.................................... $1.000 $1.022 114,625
1997.................................... $1.022 $1.152 1,409,062
127 Northstar Variable Trust High Yield
Bond Portfolio
1995.................................... $1.000 $1.043 24,738
1996.................................... $1.043 $1.199 957,784
1997.................................... $1.199 $1.324 2,765,961
120 Northstar Variable Trust Income and
Growth Portfolio
1995.................................... $1.000 $1.101 8,476
1996.................................... $1.101 $1.238 232,833
1997.................................... $1.238 $1.415 941,578
180 Northstar Variable Trust International
Value Portfolio
1997.................................... N/A N/A N/A
145 Oppenheimer Aggressive Growth Fund
1987.................................... $1.000 $0.887 153,418
1988.................................... $0.887 $0.971 1,264,130
1989.................................... $0.971 $1.224 2,899,407
1990.................................... $1.224 $1.014 5,576,327
1991.................................... $1.014 $1.534 7,348,757
1992.................................... $1.534 $1.731 9,997,201
1993.................................... $1.731 $2.172 9,363,538
1994.................................... $2.172 $1.982 9,302,670
1995.................................... $1.982 $2.594 8,372,729
1996.................................... $2.594 $3.080 7,619,988
1997.................................... $3.080 $3.398 6,413,231
151 Oppenheimer Bond Fund
1995.................................... $1.000 $1.046 62,264
1996.................................... $1.046 $1.082 138,625
1997.................................... $1.082 $1.170 103,512
148 Oppenheimer Global Securities Fund
1990.................................... $1.000 $1.002 481,915
1991.................................... $1.002 $1.027 2,717,933
1992.................................... $1.027 $0.943 4,148,982
1993.................................... $0.943 $1.579 7,844,806
1994.................................... $1.579 $1.471 9,907,933
10
<PAGE>
1995.................................... $1.471 $1.485 7,628,233
1996.................................... $1.485 $1.728 8,962,885
1997.................................... $1.728 $2.078 7,954,143
152 Oppenheimer Growth Fund
1995.................................... $1.000 $1.247 1,176,022
1996.................................... $1.247 $1.542 1,618,311
1997.................................... $1.542 $1.925 2,051,861
146 Oppenheimer High Income Fund
1987.................................... $1.000 $0.984 24,586
1988.................................... $0.984 $1.115 2,063,277
1989.................................... $1.115 $1.155 3,053,727
1990.................................... $1.155 $1.194 3,507,426
1991.................................... $1.194 $1.577 5,011,404
1992.................................... $1.577 $1.835 6,112,912
1993.................................... $1.835 $2.287 6,654,354
1994.................................... $2.287 $2.186 7,029,356
1995.................................... $2.186 $2.599 5,723,847
1996.................................... $2.599 $2.958 4,479,354
1997.................................... $2.958 $3.270 4,024,075
144 Oppenheimer Money Fund
1987.................................... $1.000 $1.034 93,218
1988.................................... $1.034 $1.095 1,795,770
1989.................................... $1.095 $1.180 3,264,826
1990.................................... $1.180 $1.261 4,137,387
1991.................................... $1.261 $1.324 3,530,844
1992.................................... $1.324 $1.359 2,492,443
1993.................................... $1.359 $1.385 3,998,003
1994.................................... $1.385 $1.425 5,478,469
1995.................................... $1.425 $1.487 2,852,045
1996.................................... $1.487 $1.544 2,588,520
1997.................................... $1.544 $1.606 2,705,988
147 Oppenheimer Multiple Strategies Fund
1987.................................... $1.000 $0.987 153,630
1988.................................... $0.987 $1.174 7,038,185
1989.................................... $1.174 $1.338 14,688,009
1990.................................... $1.338 $1.296 14,398,614
1991.................................... $1.296 $1.504 11,822,309
1992.................................... $1.504 $1.619 11,763,608
1993.................................... $1.619 $1.854 11,614,088
1994.................................... $1.854 $1.795 11,651,992
1995.................................... $1.795 $2.152 9,941,909
1996.................................... $2.152 $2.455 8,986,735
1997.................................... $2.455 $2.839 7,808,462
150 Oppenheimer Strategic Bond Fund
1995.................................... $1.000 $1.121 2,896,090
1996.................................... $1.121 $1.240 412,169
1997.................................... $1.240 $1.332 538,658
172 VIP Equity-Income Portfolio
1995.................................... $1.000 $1.166 1,330,026
1996.................................... $1.166 $1.316 2,203,171
1997.................................... $1.316 $1.661 2,931,167
11
<PAGE>
171 VIP Growth Portfolio
1995.................................... $1.000 $1.155 1,600,070
1996.................................... $1.155 $1.308 1,793,710
1997.................................... $1.308 $1.587 2,137,234
175 VIP II Asset Manager Portfolio
1995.................................... $1.000 $1.104 167,816
1996.................................... $1.104 $1.250 535,521
1997.................................... $1.250 $1.484 654,021
178 VIP II Contrafund Portfolio
1996.................................... $1.000 $1.057 4,993
1997.................................... $1.057 $1.292 897,536
176 VIP II Index 500 Portfolio
1995.................................... $1.000 $1.171 400,667
1996.................................... $1.171 $1.421 1,428,619
1997.................................... $1.421 $1.852 2,420,096
174 VIP II Investment Grade Bond Portfolio
1995.................................... $1.000 $1.056 57,961
1996.................................... $1.056 $1.076 155,516
1997.................................... $1.076 $1.161 481,776
</TABLE>
<TABLE>
<CAPTION>
Accumulation Accumulation Accumulation
QUALIFIED CONTRACTS Unit Value Unit Value Units Outstanding
Account* Fund Beginning of Year End of Year at End of Year
----------------- -------------- -----------------
<S> <C> <C> <C> <C>
043 Alliance Growth and Income Portfolio
1990.................................... $1.000 $1.000 11,759
1991.................................... $1.000 $1.022 928,702
1992.................................... $1.022 $1.090 1,246,481
1993.................................... $1.090 $1.203 1,376,518
1994.................................... $1.203 $1.185 1,613,227
1995.................................... $1.185 $1.588 1,778,121
1996.................................... $1.588 $1.947 1,753,403
1997.................................... $1.947 $2.463 1,961,816
049 Alliance Short-Term Multi-Market Portfolio
1990.................................... $1.000 $1.002 240,022
1991.................................... $1.002 $1.057 2,013,739
1992.................................... $1.057 $1.053 2,217,277
1993.................................... $1.053 $1.110 902,191
1994.................................... $1.110 $1.025 524,724
1995.................................... $1.025 $1.081 221,712
1996.................................... $1.081 $1.170 198,444
1997.................................... $1.170 $1.209 190,880
079 Northstar Variable Trust Growth Portfolio
1996.................................... $1.000 $1.013 125
1997.................................... $1.013 $1.142 367,794
027 Northstar Variable Trust High Yield
Bond Portfolio
1995.................................... $1.000 $1.046 35,156
1996.................................... $1.046 $1.202 247,943
1997.................................... $1.202 $1.328 1,405,786
12
<PAGE>
020 Northstar Variable Trust Income and
Growth Portfolio
1995.................................... $1.000 $1.046 43,086
1996.................................... $1.046 $1.175 141,640
1997.................................... $1.175 $1.344 744,494
080 Northstar Variable Trust International
Value Portfolio
1997.................................... N/A N/A N/A
045 Oppenheimer Aggressive Growth Fund
1987.................................... $1.000 $0.934 213,796
1988.................................... $0.934 $1.041 1,106,060
1989.................................... $1.041 $1.308 2,700,696
1990.................................... $1.308 $1.079 4,309,195
1991.................................... $1.079 $1.637 5,852,713
1992.................................... $1.637 $1.861 7,560,094
1993.................................... $1.861 $2.341 8,411,689
1994.................................... $2.341 $2.137 10,183,605
1995.................................... $2.137 $2.797 8,254,376
1996.................................... $2.797 $3.321 7,879,088
1997.................................... $3.321 $3.663 7,177,053
051 Oppenheimer Bond Fund
1995.................................... $1.000 $1.110 67,637
1996.................................... $1.110 $1.149 115,398
1997.................................... $1.149 $1.242 272,804
048 Oppenheimer Global Securities Fund
1990.................................... $1.000 $1.003 195,425
1991.................................... $1.003 $1.028 2,387,359
1992.................................... $1.028 $0.944 3,490,049
1993.................................... $0.944 $1.585 6,051,326
1994.................................... $1.585 $1.473 8,959,731
1995.................................... $1.473 $1.487 6,517,492
1996.................................... $1.487 $1.730 6,251,704
1997.................................... $1.730 $2.081 6,246,802
052 Oppenheimer Growth Fund
1995.................................... $1.000 $1.267 382,509
1996.................................... $1.267 $1.567 703,092
1997.................................... $1.567 $1.956 1,312,664
046 Oppenheimer High Income Fund
1987.................................... $1.000 $1.003 55,650
1988.................................... $1.003 $1.137 1,301,095
1989.................................... $1.137 $1.175 2,275,672
1990.................................... $1.175 $1.216 2,217,520
1991.................................... $1.216 $1.607 2,779,650
1992.................................... $1.607 $1.871 3,479,721
1993.................................... $1.871 $2.331 4,822,116
1994.................................... $2.331 $2.227 5,483,048
1995.................................... $2.227 $2.648 4,795,757
1996.................................... $2.648 $3.014 3,921,301
1997.................................... $3.014 $3.332 3,179,499
044 Oppenheimer Money Fund
1987.................................... $1.000 $1.029 123,844
1988.................................... $1.029 $1.089 1,145,741
13
<PAGE>
1989.................................... $1.089 $1.173 2,501,593
1990.................................... $1.173 $1.250 4,718,105
1991.................................... $1.250 $1.313 2,539,827
1992.................................... $1.313 $1.348 2,258,558
1993.................................... $1.348 $1.373 2,679,574
1994.................................... $1.373 $1.413 2,717,190
1995.................................... $1.413 $1.475 1,475,816
1996.................................... $1.475 $1.532 1,520,253
1997.................................... $1.532 $1.593 1,684,646
047 Oppenheimer Multiple Strategies Fund
1987.................................... $1.000 $0.951 416,460
1988.................................... $0.951 $1.147 4,438,167
1989.................................... $1.147 $1.305 15,240,153
1990.................................... $1.305 $1.264 16,667,402
1991.................................... $1.264 $1.467 14,730,777
1992.................................... $1.467 $1.579 14,941,044
1993.................................... $1.579 $1.808 15,125,832
1994.................................... $1.808 $1.751 14,855,639
1995.................................... $1.751 $2.099 14,609,651
1996.................................... $2.099 $2.394 12,763,831
1997.................................... $2.394 $2.768 10,695,235
050 Oppenheimer Strategic Bond Fund
1995.................................... $1.000 $1.130 1,201,509
1996.................................... $1.130 $1.251 288,665
1997.................................... $1.251 $1.343 479,631
072 VIP Equity-Income Portfolio
1995.................................... $1.000 $1.159 635,475
1996.................................... $1.159 $1.309 1,512,879
1997.................................... $1.309 $1.651 2,219,801
071 VIP Growth Portfolio
1995.................................... $1.000 $1.182 906,399
1996.................................... $1.182 $1.339 1,617,163
1997.................................... $1.339 $1.624 2,030,716
075 VIP II Asset Manager Portfolio
1995.................................... $1.000 $1.099 166,628
1996.................................... $1.099 $1.244 314,032
1997.................................... $1.244 $1.477 558,423
078 VIP II Contrafund Portfolio
1996.................................... $1.000 $1.024 196,230
1997.................................... $1.024 $1.252 753,435
076 VIP II Index 500 Portfolio
1995.................................... $1.000 $1.173 301,011
1996.................................... $1.173 $1.423 823,891
1997.................................... $1.423 $1.854 2,086,353
074 VIP II Investment Grade Bond Portfolio
1995.................................... $1.000 $1.043 5,779
1996.................................... $1.043 $1.063 61,107
1997.................................... $1.063 $1.147 131,202
</TABLE>
* The inception date for each of the Funds' inclusion as investment options in
the Contracts is as follows: 120: May 31, 1995; 127: September 8, 1995; 143:
January 31, 1991; 144: June 2, 1987; 145: July 30, 1987; 146: August 28, 1987;
147: June 2, 1987; 148: November 9, 1990; 149: November 23, 1990; 150: April 3,
1995; 151: June 22, 1995; 152:
14
<PAGE>
March 24, 1995; 171: May 25, 1995; 172: May 25, 1995; 174: June 19, 1995; 175:
June 8, 1995; 176: May 23, 1995; 178: November 1, 1996; 179: November 1, 1996;
180: May 1, 1998; 020: July 17, 1995; 027: August 14, 1995; 043: December 27,
1990; 044: June 2, 1987; 045: June 16, 1987; 046: June 16, 1987; 047: May 27,
1987; 048: November 12, 1990; 049: November 26, 1990; 050: March 20, 1995; 051:
March 15, 1995; 052: March 15, 1995; 071: May 31, 1995; 072: May 16, 1995; 074:
September 6, 1995; 075: June 1, 1995; 076: May 16, 1995; 078: November 12, 1996;
079: December 10, 1996; 80: May 1, 1998.
THE COMPANY
ReliaStar Life Insurance Company of New York ("ReliaStar" or the "Company")
is a stock life insurance company incorporated under the laws of the State of
New York in 1917 under the name The Morris Plan Insurance Society. It adopted
the name Bankers Security Life Insurance Society in 1946, ReliaStar Bankers
Security Life Insurance Company in 1996, and ReliaStar Life Insurance Company of
New York in 1998. It is authorized to transact business in all states, the
District of Columbia and the Dominican Republic. The Company is a wholly-owned
subsidiary of ReliaStar Financial Corp., a holding company whose subsidiaries
specialize in life insurance and related financial services businesses.
ReliaStar's principal office is located at 1000 Woodbury Road, Suite 102,
P.O. Box 9004, Woodbury, New York 11797. ReliaStar writes all forms of life
insurance.
THE SEPARATE ACCOUNTS
Separate Accounts P and Q were established in December, 1981 and September,
1982, respectively, under the provisions of the New York Insurance Law. The
Separate Accounts, along with Separate Account M, are registered collectively as
a unit investment trust under the Investment Company Act of 1940 (the "1940
Act"), but such registration does not involve any supervision of the management
or investment practices or policies of the Separate Accounts.
The assets of Separate Accounts P and Q are held separately from the assets
of ReliaStar. Under New York Insurance Law, all income, gains or losses of the
Sub-Accounts of the Separate Accounts, whether realized or not, must be credited
to or charged against the amounts placed in those Sub-Accounts without regard to
the other income, gains and losses of ReliaStar. The assets of the Separate
Accounts attributable to the Contracts may not be charged with liabilities
arising out of other business that ReliaStar conducts. They may, however, be
subject to liabilities arising from Sub-Accounts whose assets are attributable
to other variable annuity contracts offered by the Separate Accounts. All
obligations under the Contracts are general corporate obligations of ReliaStar.
Purchase payments allocated to the Separate Accounts under a Contract are
invested in up to seventeen of the twenty available Sub-Accounts of the Separate
Accounts as selected by the Contract Owner. The future Separate Account Contract
Value depends primarily on the investment performance of the Funds whose shares
are held in the Sub-Accounts selected.
Shares of the Funds are also available to other variable contracts funded
by the Separate Accounts and to separate accounts for other types of variable
contracts. Any and all distributions received from the chosen Fund(s) will be
reinvested to purchase additional Fund shares at net asset value for the
Sub-Account.
THE FUNDS
There are currently twenty Sub-Accounts whose Funds are available for
investment under the Separate Accounts. We reserve the right to establish
additional Sub-Accounts of the Separate Accounts, each of which could invest in
a new Fund with a specified investment objective. You are only permitted,
however, to participate in a total of seventeen investment options over the
lifetime of your Contract. You would not have to choose your investment options
in advance, but upon participation in the seventeenth Fund since the issue of
the Contract, you would only be able to transfer within the seventeen Funds
already utilized and which are still available. This limitation includes
transfers.
15
<PAGE>
For example, assume that you select seven investment options. Later, you
transfer out of all your seven initial selections and choose ten different
Sub-Accounts, none of which are the same as your original seven selections. You
have now used your maximum selection of seventeen Sub-Accounts. You may still
allocate purchase payments or transfer Contract Values among any of the
seventeen Sub-Accounts you have previously selected. However, you may not
allocate funds to the remaining three Sub-Accounts at any time. An Owner may
transfer partial or complete Contract Values to the Fixed Account from the
Variable Account at any time.
The Northstar Variable Trust Growth Portfolio is sub-advised by Navellier
Fund Management, Inc., and the Northstar Variable Trust International Value
Portfolio is sub-advised by Brandes Investment Partners, L.P.
The Company currently plans to discontinue offering certain of the Funds as
investment options. It is anticipated that this will occur in the first half of
1999, subject to and contingent upon receipt of various approvals. It is
expected that any policyholder monies that are invested in Sub-Accounts
investing in the discontinued Funds will be transferred to alternate Funds with
similar investment objectives. Policyholders who have investments in any of
discontinued Funds will be permitted for a period of 30 days to transfer their
investment into a non-discontinued Fund without payment of any transfer charge.
Each of the Funds has separate assets and liabilities and a separate net
asset value per share, and the value of an Accumulation Unit for a Sub-Account
depends upon the value of the shares of the Fund in which the Sub-Account's
assets are invested. Since market risks are inherent in all securities to
varying degrees, assurance cannot be given that the investment objective of any
of the Funds will be met. The board of directors (trustees) for certain of the
Funds monitors events for any irreconcilable conflicts because both variable
life and variable annuity contracts invest in certain of the Funds.
No offer will be made of a Contract funded by any of the Funds unless a
current prospectus for each of the Funds has been delivered. An investor's order
to purchase a Contract under a Separate Account will be accepted only if the
investor has received the current prospectuses.
For more complete information about each Fund, including management fees,
other expenses, and risks associated with mixed and/or shared funding, consult
the prospectus for each Fund. Additional copies of these prospectuses may be
obtained by writing to ReliaStar at 4601 Fairfax Drive, Arlington, Virginia
22203.
<TABLE>
<CAPTION>
Fund Descriptions
INVESTMENT FUNDS INVESTMENT OBJECTIVE
---------------- --------------------
<S> <C>
Alliance Variable Products Series Fund:
Growth and Income Portfolio Current income and capital appreciation
Short-Term Multi-Market Portfolio High current income consistent with prudent
investment risk
Fidelity Variable Insurance Products Fund and
Variable Insurance Fund II:
VIP Equity-Income Portfolio Reasonable income; capital appreciation
VIP Growth Portfolio Capital appreciation
VIP II Asset Manager Portfolio High total return with reduced risk over the
long-term
VIP II Contrafund Portfolio Capital Appreciation
VIP II Index 500 Portfolio Total return that corresponds to that of the Standard
& Poor's 500 Index
VIP II Investment Grade Bond Portfolio High current income
16
<PAGE>
Northstar Variable Trust:
Growth Portfolio Long-term capital growth
High Yield Bond Portfolio High current yield and capital appreciation
Income and Growth Portfolio Consistent level of income; capital appreciation
International Value Portfolio Long-term capital appreciation
Oppenheimer Variable Account Funds:
Aggressive Growth Fund Capital appreciation
Bond Fund High current income
Global Securities Fund Long-term capital appreciation
Growth Fund Capital appreciation
High Income Fund High current income
Money Fund Maximum current income with low capital risk
and maintenance of liquidity
Multiple Strategies Fund Total return, including current income and capital
appreciation
Strategic Bond Fund High level of current income
</TABLE>
PURCHASE OF CONTRACTS
Purchase Payments
This Prospectus offers individual flexible purchase payment Contracts which
provide for an initial purchase payment and for subsequent purchase payments, if
desired. However, the Contract Owner assumes no obligation to make additional
payments.
Investors in each Separate Account purchase Accumulation Units only of the
Sub-Account which they have chosen and not shares of the Fund in which that
Sub-Account invests.
ReliaStar uses a "two day/five day" procedure for the pricing of the
initial purchase payments. The purchase payment, less any deduction for premium
taxes if applicable, is applied to purchase Accumulation Units not later than
two business days after receipt of the purchase order by ReliaStar if the
application and all information necessary for processing the purchase order is
complete. The purchase payment may be retained for the benefit of ReliaStar up
to five business days to complete an incomplete application. If the information
necessary to process an application within the five business days cannot be
obtained, ReliaStar will inform the applicant of the reason for the delay and
immediately return the payment unless the applicant requests that ReliaStar
retain the money and application until it is made complete. When it is complete,
applicant's funds will be invested within two business days.
The minimum initial purchase payment must accompany the application. The
initial minimum required for Separate Accounts P (Non-Qualified Plans) and Q
(Qualified Plans) is $1,000 and $250, respectively (except $100 initially will
be accepted for Separate Account P and $50 for Separate Account Q for all
automatic payment plans, such as payroll deduction and automatic bank check
plans). Subsequent purchase payments for Separate Accounts P and Q must be at
least $100 and $50, respectively, but this requirement may be waived by
ReliaStar. The purchaser is cautioned that investment return on smaller purchase
payments may be less because of certain charges assessed by ReliaStar (see
"Charges and Other Deductions"). A payment may not exceed $250,000 without the
Company's consent.
Allocation of Net Purchase Payments
Purchase payments, after deductions for any applicable premium taxes, will
be allocated among the Sub-Accounts for the designated Separate Account, in
accordance with the allocation percentage specified by the Contract Owner. The
percentage allocation of future purchase payments may be changed by the Owner at
any time prior to the Annuity Commencement Date by providing written notice to
ReliaStar at its principal office or other designated office. (For a discussion
of transfer rights between Funds, see "Transfers Between Sub-Accounts") Purchase
payments, after any applicable premium tax deductions, may also be allocated to
the Fixed Account (see "Fixed Account").
17
<PAGE>
Immediate Variable Annuities
Initial payments allocated to the Separate Accounts for immediate variable
annuities will be credited, after deductions for any applicable premium taxes
(see "Charges and Other Deductions"), to the Contract Owner's Individual Account
and will be converted to Annuity Units (see "Annuity Period").
CHARGES AND OTHER DEDUCTIONS
A. Contingent Deferred Sales Charge (Surrender Charge)
No deduction for a sales charge is made from the purchase payments for
these Contracts. However, a Contingent Deferred Sales Charge (Surrender Charge),
when applicable, will be used to help defray expenses relating to the sale of
the Contracts, which include commissions paid to sales personnel, the cost of
preparation of sales literature and other promotional activity. Commissions paid
on the sale of these Contracts do not exceed 6% of the purchase payments. This
does not include any payments the Company may make to wholesalers.
During the Accumulation Period, prior to receiving an annuity, a Contract
Owner may make as many purchase payments as desired. For purposes of determining
if a Surrender Charge is due upon a partial or complete withdrawal, each
purchase payment is treated separately and is measured from the date the
purchase payment is received by the Company. Any Surrender Charge imposed upon a
withdrawal of purchase payments is on a "first in - first out" basis. In other
words, for the purposes of determining the Surrender Charge, surrenders shall
first be taken from purchase payments received earliest by the Company until the
amount of such payments is exhausted, and thereafter from purchase payments next
earliest received. The charge, if applicable, is as follows:
1. Any purchase payment left in this Contract for 96 months or longer is
not subject to a Surrender Charge.
2. During the first 96 months after a purchase payment is made under the
Contract, a partial or complete surrender of that Payment will be charged a
Surrender Charge, the amount depending upon the length of time the purchase
payment was in the Contract. The Surrender Charge imposed in connection with
partial surrenders will be deducted from the Separate Accounts on a pro-rata
basis unless ReliaStar is instructed otherwise by the Contract Owner.
Percentage of Purchase Payments
Year from Receipt of Withdrawn in Excess of the
Purchase Payment "No Charge Amount"
---------------- ------------------
0-1 7%
1-2 7
2-3 6
3-4 5
4-5 4
5-6 3
6-7 2
7-8 1
8+ 0
3. If a "first-in" purchase payment is fully withdrawn, these rules apply
to the "next-in" purchase payment made under the Contract and continue
thereafter in this manner. The Surrender Charge only applies to purchase
payments made under the Contracts. If the total of the Contract Owner's purchase
payments have been withdrawn, which may or may not have been subject to
Surrender Charges, the Contract may have value from accumulated earnings. There
is no Surrender Charge on these earnings.
4. The Surrender Charge at the percentage listed above also applies at the
time annuity payments begin unless (a) the first annuity payment begins after
the fourth Contract year; (b) the first annuity payment begins after the second
Contract year and the Annuitant has attained age 59 1/2 at such time; (c)
annuity payments are being made as part of the death
18
<PAGE>
proceeds during the Accumulation Period or as part of a distribution upon death
of the Annuitant or the Contract Owner during the Accumulation Period; or (d)
this Contract is an immediate annuity, i.e., annuity payments are starting at a
date no more than approximately 31 days after the Contract is issued.
The Internal Revenue Code places (with certain exceptions) an additional
IRS tax penalty on withdrawals prior to age 59 1/2 (see "Federal Income Tax
Status - Penalty Tax on Surrenders or Withdrawals"). That amount, if applicable,
is separate and distinct from the Contingent Deferred Sales Charge. The
Contracts may be sold without a Contingent Deferred Sales Charge to directors,
officers, and bona fide full-time employees of ReliaStar and its affiliated
insurance companies, and to Oppenheimer Fund Management, Inc., OppenheimerFunds,
Inc., Alliance Capital Management Corporation, Alliance Capital Management L.P.,
Fidelity Management & Research Company, and Northstar Investment Management
Corporation, who qualify under rules adopted by the Securities and Exchange
Commission. If applicable, such sales will be made only upon the written
assurance of the purchaser that the purchase is made for investment purposes and
that the Contract will not be sold or assigned except through surrender to
ReliaStar.
B. Surrenders Without Charge
1. After each purchase payment has been in the Contract for 12 months, a
Contract Owner may surrender, during each Contract Year, up to 10% of that
purchase payment without a Surrender Charge (the "No Charge Amount"). The "No
Charge Amount" is also applicable to all subsequent payments which are in the
Contract for more than twelve months. However, such "no fee" withdrawals may be
subject to a penalty tax under the Internal Revenue Code. "No Charge Amounts"
are fixed at 10% of the purchase payment and are cumulative up to 20%. For
example, if in a particular year, the withdrawal option is not exercised, the
"free" withdrawal for the next year is up to 20%. Withdrawals of more than 10%
(except where the 20% cumulative withdrawal right applies) are subject to a
Surrender Charge, if applicable (see chart below).
2. A Contract Owner may be eligible for a waiver of the Surrender Charge
during any period the Contract Owner is admitted to and confined in an
accredited hospital or long-term care facility, after the Contract Owner has
been confined to such an accredited hospital or long-term care facility for more
than 30 days. Contract Owners interested in exercising this right should contact
the Company for details.
ILLUSTRATION OF WITHDRAWAL RIGHTS FOR EACH PURCHASE PAYMENT
(Assumes $10,000 Purchase Payment and Withdrawals of $1,000 (10%) every 12
months)
<TABLE>
<CAPTION>
Percentage and Amount
of Purchase Payment
Length of Time That May Be Withdrawn
Each Purchase Payment Each 12 Months Without Amount and Rate Subject
Left in Contract a Surrender Charge to a Surrender Charge
---------------- ------------------ ---------------------
Years % Amount Amount Rate
<S> <C> <C> <C> <C>
0-1 0% $ 0 $10,000 7%
1-2 10 1,000 9,000 7
2-3 10 1,000 8,000 6
3-4 10 1,000 7,000 5
4-5 10 1,000 6,000 4
5-6 10 1,000 5,000 3
6-7 10 1,000 4,000 2
7-8 10 1,000 3,000 1
8 and thereafter 100 Total -- 0
Contract
Value
</TABLE>
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<PAGE>
C. Mortality and Expense Risk Charges
ReliaStar deducts an amount equal on an annual basis to 1.25% of the daily
asset value of the Sub-Accounts of each Separate Account for assuming mortality
and expense risks under the Contracts (approximately 1.00% for mortality and
.25% for expenses). The mortality risk assumed by ReliaStar arises from its
obligation to continue to make annuity payments, determined in accordance with
the annuity tables and other provisions of the Contracts, to each Annuitant
regardless of how long he lives and regardless of how long all payees as a group
live. In addition, ReliaStar assumes the risk that the charges for
administrative expenses may not be adequate to cover such expenses and assures
that it will not increase the amount charged for administrative expenses.
D. Contract Maintenance Charge
Each year on the Contract Anniversary, ReliaStar will deduct an annual
Contract Maintenance Charge of $30 from the Contract Value to reimburse its
expenses relating to maintenance of the Contract. In this respect ReliaStar,
among other things, establishes and maintains records, and provides reports to
Contract Owners. In any Contract year when the Contract is surrendered for its
full value on a date other than the Contract Anniversary, the Contract
Maintenance Charge will be deducted at the time of such surrender. The amount of
the maintenance charge under the Contract is contractual and may not be
increased by ReliaStar. If an individual has more than one Contract in The USA
Plan, the $30 charge will be charged on only one Contract. Each participant in a
Qualified Plan is charged the Contract Maintenance Charge.
E. Premium Taxes
Any applicable premium tax will be deducted when incurred. Premium taxes
imposed by some states or municipalities presently range from 0% to 3.5% and may
be imposed at the time a payment is made or at the Annuity Commencement Date.
When permitted by state law, it is ReliaStar's policy to postpone the
computation and deduction of premium taxes until the Annuity Commencement Date.
The amount of any applicable premium taxes will then be deducted from the
Contract Value; otherwise, such taxes will be deducted from purchase payments
when received. If any premium taxes are deducted, but are subsequently
determined not due, ReliaStar will apply the amount previously deducted to
increase the number of Accumulation Units or Annuity Units under the Contract at
the time the determination is made. If premium taxes are deducted but the amount
deducted is subsequently determined to be insufficient, or if no premium tax was
deducted but is subsequently determined due, ReliaStar reserves the right to
reduce the Accumulation Units or Annuity Units under the Contract by the amount
of the tax due.
F. Other Charges
Charges for investment management are paid out of the assets of the Funds
(see each of the Fund's prospectuses).
G. Reduction or Elimination of Charges
The Company reserves the right to waive certain contract charges, as
described below, in accordance with Company policies in the following
circumstances:
(1) Where a variable annuity contract issued by the Company, or any
affiliated life insurance company, has no applicable surrender charge, the owner
may transfer values in his contract to purchase a variable annuity Contract
offered by this Prospectus and the Surrender Charge will not apply to the newly
issued Contract; or
(2) Where a life insurance or annuity contract issued by the Company, or
any affiliated life insurance company, has matured, been surrendered, or where a
death benefit has been paid on the contract, the recipient of the proceeds may
use the proceeds to purchase a variable annuity Contract offered by this
Prospectus. A Surrender Charge will not apply to the newly-issued contract if
the purchase is made within two years from the date the proceeds have been paid
out.
These waivers of charges may not be available in all states.
Additionally, any of the charges under the Contract, as well as the minimum
purchase payment requirements set forth herein, may be reduced due to special
circumstances that result in lower sales, administrative or mortality expenses.
For example, special circumstances may exist in connection with group or
sponsored arrangements, sales to the Company's policy and Contract Owners or
those of affiliated insurance companies, or sales to employees or clients of the
Company's
20
<PAGE>
affiliates. The amount of any reductions will reflect the reduced sales effort
and administrative costs resulting from, or the different mortality experience
expected as a result of, the special circumstances.
Reductions will not be unfairly discriminatory against any person,
including the affected policy or Contract Owners and owners of all other
contracts funded by the Variable Account.
ACCUMULATION PERIOD-DEFERRED VARIABLE ANNUITIES
A. Crediting Accumulation Units
During the Accumulation Period, purchase payments on deferred Variable
Annuity Contracts, after deductions for any premium taxes, where applicable (see
"Charges and Other Deductions"), are credited to the Contract Owner's account in
the form of Accumulation Units. The number of Accumulation Units credited to a
Contract Owner for the Sub-Account is determined by dividing the net purchase
payment allocated to the Sub-Account by the value of an Accumulation Unit for
the Sub-Account for the Valuation Period during which the purchase payment is
received by ReliaStar at its principal office.
The value of the Contract Owner's Individual Account varies with the value
of the assets of the Sub-Account and the performance of the chosen Fund. There
is no assurance that the value of a Contract Owner's Individual Account will
equal or exceed purchase payments. The value of a Contract Owner's Individual
Account for a Valuation Period can be determined by multiplying the total number
of Accumulation Units credited to his account for the Sub-Account by the value
of an Accumulation Unit for the Sub-Account for that Valuation Period and adding
the value of the Sub-Accounts.
B. Value of an Accumulation Unit
The value of an Accumulation Unit of the Sub-Accounts was arbitrarily set
initially at $1.00. The value of an Accumulation Unit for any subsequent
Valuation Period is determined by multiplying the value of an Accumulation Unit
for the immediately preceding Valuation Period by the net investment factor, as
described below, for the Valuation Period for which the Accumulation Unit Value
is being calculated (see Appendix 1, Example B). The value of an Accumulation
Unit for the Sub-Account may increase or decrease from Valuation Period to
Valuation Period and will be affected by, among other things, the investment
performance of the Funds and their expenses.
Net Investment Factor
The net investment factor for the Sub-Account for any Valuation Period is
determined by dividing (a) by (b) and subtracting (c) from the result, where (a)
is the result of:
(1) the net asset value per share of the Fund invested in by the
Sub-Account determined at the end of the current Valuation Period, plus
(2) the per share amount of any dividend or capital gains distributions
made by the corresponding Fund if the "ex-dividend" date occurs during the
current Valuation Period, minus or plus
(3) a per share charge or credit for any taxes reserved for, which is
determined by ReliaStar to have resulted from the maintenance of the Sub-Account
(see "Federal Income Tax Status");
(b) is the net result of:
(1) the net asset value per share of the corresponding Fund determined as
of the end of the immediately preceding Valuation Period, minus or plus
(2) the per share charge or credit for any taxes reserved for the
immediately preceding Valuation Period (see "Federal Income Tax Status"); and
21
<PAGE>
(c) is a factor representing the charges deducted for mortality and expense
risks (see "Mortality and Expense Risk Charges"). The net investment factor may
be greater or less than one; and, therefore, the value of an Accumulation Unit
for the Sub-Account may increase or decrease. (For an illustration of this
calculation, see Appendix 1, Example A.)
C. Death Benefit During the Accumulation Period
If the Annuitant or Contract Owner dies prior to the Annuity Commencement
Date, the Contract generally ends. A payment will be made by ReliaStar under the
terms of the Contract upon receipt of due proof of the death of the Annuitant or
Contract Owner. The amount of the payment will be determined as of the Valuation
Date on or next following the date on which due proof of death is received by
ReliaStar at its Executive Office or other designated office.
During the first eight years of the Contract, the death benefit will be the
greater of (1) the sum of all purchase payments (gross, prior to any deductions
or charges) made under an individual Contract less any amounts surrendered, or
(2) the Contract Value. After an Owner has been in the Contract for more than
eight years, ReliaStar will determine the contract value on the eighth
anniversary of the Contract, and on each eighth anniversary thereafter, until
the Annuitant or Owner reaches 75 years of age. If an Owner's Contract is in
force for eight years or longer, and if permitted by state and/or federal law,
the amount of the death benefit will be the greater of (1) the sum of all
purchase payments (gross, prior to any deductions or charges) made under an
individual Contract less any amounts surrendered, or (2) the Contract Value, or
(3) the Contract Value as of the last eighth year Contract Anniversary Date
occurring prior to the Annuitant's or Owner's 75th birthday, less any amounts
surrendered after that last eighth year Contract Anniversary date.
If the Contract Owner did not elect payment of the death benefit under one
of the Annuity Options prior to the Annuitant's death, the Beneficiary may elect
to have the death benefit paid in a single sum or applied to provide an annuity
under one of the Annuity Options or as otherwise permitted by ReliaStar. If a
single sum settlement is requested, the proceeds will be paid within seven days
of receipt of such election and due proof of death. If an Annuity Option is
desired, election may be made by the Beneficiary during a ninety day period
commencing with the date of receipt of notification of death. If such an
election is not made, a single sum settlement will be made to the Beneficiary at
the end of such ninety day period. If an Annuity Option is elected, the Annuity
Commencement Date shall be the date specified in the election but no later than
ninety days after receipt by ReliaStar of notification of death. No deduction is
made for sales or other expenses upon the election of an Annuity Option.
D. Transfers Between Sub-Accounts
During the Accumulation Period an Owner may transfer a portion or all of a
Sub-Account's Contract Value between Sub-Accounts within that Separate Account
or to the Fixed Account without payment of any fee or charge, subject to the
following conditions: (a) the dollar amount of a transfer from any one
Sub-Account may not be less than $250 except that an entire Sub-Account Contract
value may be transferred if less than $250; (b) once a Contract Owner has
allocated any Contract Value to any seventeen of the Sub-Accounts over the life
of the Contract, transfers may only be made among these seventeen Sub-Accounts
(see "The Funds"); and (c) no transfer may be made after the Annuity
Commencement Date or the date of receipt by ReliaStar of notification of death
of the Annuitant prior to the Annuity Commencement Date. Normally, such
transfers shall be made as of the end of the Valuation Period during which the
request for transfer is received by ReliaStar at its principal office or other
designated office, or a later Valuation Period if requested. ReliaStar in its
discretion reserves the right to refuse or reduce any transfer request that will
disadvantage a Sub-Account. A transfer may be made by either: (1) submitting a
written request to ReliaStar at its principal office or other designated office,
or (2) by telephone or facsimile exchange instructions to ReliaStar by the
Contract Owner for an account, if ReliaStar has received an application or
Telephone/Fax Exchange Form authorizing telephone or fax exchanges for the
account (see "Telephone/Fax Instructions").
E. Telephone/Fax Instructions
An Owner is allowed to enter certain types of instructions either by
telephone or by fax if the Owner completes a telephone/fax instruction
authorization form. If the Owner completes the form, the Owner can enter the
following types of instructions by telephone or fax: transfers between funds,
withdrawals, changes of allocations among fund options, change of source funds
for systematic withdrawals, and change of source fund for variable annuitization
payouts. If the Owner completes the telephone/fax form, the Owner thereby agrees
that the Company will not be liable for any loss, liability, cost
22
<PAGE>
or expense when the Company acts in accordance with the telephone/fax
instructions which are received and, if received by telephone, are recorded on
voice recording equipment. If a telephone/fax transaction, processed after the
Owner has completed the telephone/fax form, is later determined not to have been
made by the Owner or was made without the Owner's authorization, and a loss
results, the Owner bears the risk of this loss. Any requests via fax are
considered telephone requests and are bound by the conditions in the
telephone/fax authorization form you sign. Any fax request should include your
name, daytime telephone number, Contract number and the names of the
Sub-Accounts from which and to which money will be transferred or withdrawn and
the allocation percentage. The Company will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. In the event
the Company does not employ such procedures, the Company may be liable for any
losses due to unauthorized or fraudulent instructions. Such procedures may
include, among others, requiring forms of personal identification prior to
acting upon telephone instructions, providing written confirmation of such
instructions and/or tape recording telephone instructions.
F. Dollar Cost Averaging
A Dollar Cost Averaging program is available to Contract Owners who want to
automatically transfer, at regular intervals, specified dollar amounts from any
one Sub-Account or the Fixed Account to any other investment options available
under the Contract.
This feature is available at the time of initial purchase of the Contract
or thereafter during the Accumulation Period. The Contract Owner specifies a
dollar amount of Contract Value in the Account to be automatically transferred
on a monthly basis to the other available Variable Account or Fixed Account
investment options. The minimum transfer amount is $100, but this may be divided
and allocated into two or more accounts. Transfers are not available if the
Sub-Account or Fixed Account has less than $100 of value.
Dollar Cost Averaging may also be selected for 12, 24 or 36 month periods.
The total Contract Value at the time this method is selected must be at least
$5,000 for the 12 month period and at least $10,000 for the 24 or 36 month
period. Transfers will be made on a monthly basis into available investment
options offered by the Contract, as selected by the Owner, and in the amount(s)
designated by the Owner. A minimum transfer of $100 is required, and this amount
may also be allocated among the Variable Account or Fixed Account
Transfers under the Dollar Cost Averaging program will be made on the first
business day of each month based on a valuation of the Accumulation Unit Values
of the accounts involved as of that day, provided the New York Stock Exchange is
open on that valuation date. If the Exchange is closed, valuation will be
determined in the same manner described above as of the next day the Exchange is
open.
The Dollar Cost Averaging program is elected by the Owner completing an
Automated Dollar Cost Averaging Form and returning it to the Company. We require
20 days after receipt to begin the program for the Contract Owner.
Dollar Cost Averaging will terminate upon any of the following events: (1)
the designated number of transfers are completed; (2) the Contract Value in the
designated Sub-Account or Fixed Account falls below $100 or is insufficient to
complete the next transfer for the amount designated by the Owner; (3) the Owner
requests termination in writing; in this event termination of the Dollar Cost
Averaging program will occur 20 days after the Company receives the termination
notice; or (4) surrender of the Contract.
Dollar Cost Averaging may be reinstated or changed, subject to the above
terms, 20 days after the Company receives a new election form.
G. Systematic Withdrawal Program
During the Accumulation Period a Contract Owner may elect, in writing, to
take systematic withdrawals from one or more of the Sub-Accounts. The
withdrawals may occur monthly, quarterly, semi-annually or annually, but the
amount to be systematically withdrawn must be at least $100. Withdrawals up to
the "No Charge Amount" are not subject to any contractual Surrender Charges.
Additional withdrawals are subject to such charges. The Owner may choose to
withdraw a
23
<PAGE>
specified dollar amount or a percentage of the Contract Value. No interest will
accrue on amounts represented by uncashed distribution or redemption checks.
Systematic payments will be made within the first ten business days of the
month. To begin the program, ReliaStar must receive a written request by the
first day of the month. The program may be canceled by the Owner at any time by
written notice to the Company. After a five (5) day notice to you the program
will automatically be canceled by the Company should the Contract Value fall
below $250 (see "Federal Income Tax Status").
H. Surrender and Termination
A Contract Owner, during the Accumulation Period under a deferred annuity
Contract, may elect, at any time before the earlier of the Annuity Commencement
Date or the death of the Annuitant, to surrender the Contract for all or any
part of his Individual Account. Participants in Tax-Sheltered Annuities (IRC
Section 403(b) Plans) and in the Texas Optional Retirement Program are subject
to the restrictions thereunder concerning the payment of amounts surrendered
(see "Tax-Sheltered Annuities" and "Texas Optional Retirement Program"). The
Company will, upon receipt of a request for a partial surrender, redeem a number
of Accumulation Units necessary to equal the dollar amount requested, plus any
applicable Contingent Deferred Sales Charge, Contract Maintenance Charge and
premium taxes. For complete surrenders, the entire Contract Value will be
surrendered, the said applicable charges deducted, and the balance sent to the
Contract Owner (see "Charges and Other Deductions"). The value of the
Accumulation Units under a partial surrender and of the Contract Value under a
complete surrender will be determined as of the end of the Valuation Period
during which the written request is received by ReliaStar at its principal
office. Payment of proceeds in connection with a partial or complete surrender
will generally be made within seven days after receipt of request for a
surrender. Postponement of payments may occur in certain circumstances (see
"Time of Payments"). (For information as to Federal tax consequences resulting
from surrenders, see "Federal Income Tax Status"; for information about state
premium tax consequences, see "Premium Taxes" and Appendix A of the Statement of
Additional Information.)
ANNUITY PERIOD
A. Annuity Commencement Date
Annuity payments will begin on the maturity date of the Contract which is
the first day of the calendar month following the Annuitant's 90th birthday, or
on an earlier Annuity Commencement Date as selected by the Contract Owner. Not
later than 30 days prior to the Annuity Commencement Date, the Contract Owner
may elect in writing to advance or defer the Annuity Commencement Date.
B. Annuity Options
The Contract Owner may, at any time at least 30 days prior to the Annuity
Commencement Date upon written notice to ReliaStar at its Principal Office,
elect to have payments made under any one of the Annuity Options provided in the
Contract. If one of the Annuity Options is not selected by the Contract Owner at
least 30 days prior to the Annuity Commencement Date, the amounts held under the
Contract on the date of maturity will automatically be applied to provide a
variable joint and one-half to survivor life annuity under Option 2c described
below.
On the Annuity Commencement Date, ReliaStar will apply the Contract value,
reduced by any applicable premium taxes not previously deducted, to provide a
Variable Annuity, a Fixed Annuity, or any combination thereof, as elected by the
Contract Owner.
The Contracts provide for the Annuity Options described below. The payments
under the Annuity Options may be fixed, variable, or any combination thereof, as
determined by the Contract Owner, except for Option 4 under which the payments
must be variable.
Option 1 - Life Annuity - An annuity payable during the lifetime of the
Annuitant, ceasing with the last payment due prior to the death of the
Annuitant. If this Option is elected, annuity payments terminate automatically
and immediately upon the death of the Annuitant without regard to the number or
total amount of payments received. (For example, if the Annuitant dies before
the due date of the second payment, no further payments will be made.)
Generally, however, the
24
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monthly payment amount during the Annuitant's lifetime is greater under Option 1
than the monthly payment amount where payments for a guaranteed number of months
(Option 3) has been selected.
Option 2a - Joint and 100% Survivor Life Annuity - An annuity payable
monthly during the joint lifetime of the Annuitant and the Joint Annuitant and
continuing thereafter at the same amount during the lifetime of the survivor,
ceasing with the last payment due prior to the death of the survivor.
Option 2b - Joint and Two-Thirds to Survivor Life Annuity - An annuity
payable monthly during the lifetime of the Annuitant and the Joint Annuitant and
continuing thereafter during the lifetime of the survivor at an amount equal to
two-thirds of the joint annuity payment, ceasing with the last payment due prior
to the death of the survivor.
Option 2c - Joint and One-Half to Survivor Life Annuity - An annuity
payable monthly during the joint lifetime of the Annuitant and the Joint
Annuitant and continuing thereafter during the lifetime of the survivor at an
amount equal to one-half of the joint annuity payment, ceasing with the last
payment due prior to the death of the survivor.
Under Options 2a, 2b, 2c, annuity payments terminate automatically and
immediately on the deaths of both the Annuitant and the Joint Annuitant without
regard to the number or total amount of payments received, even if only one
payment has been received.
Option 3 - Life Annuity with 60, 120 or 240 Monthly Payments Guaranteed -
An annuity payable monthly during the life of the Annuitant with the guarantee
that if, upon the death of the Annuitant, annuity payments have been made for
less than 60, 120 or 240 monthly periods, as elected, payments will be made as
follows:
1. Any guaranteed annuity payments will be continued during the remainder
of the selected period to the Beneficiary. The Beneficiary may, at any time,
elect to have the present value of the unpaid guaranteed number of annuity
payments commuted in the manner specified in 2 below, paid in a lump sum.
2. If a Beneficiary receiving annuity payments under this Option dies after
the death of the Annuitant, the present value, computed as of the Valuation
Period in which notice of death of the Beneficiary is received by ReliaStar at
its principal office, of the guaranteed number of annuity payments remaining
after the receipt of such notice and to which such deceased Beneficiary would
have been entitled had he not died, computed at the effective annual interest
rate assumed in determining the Annuity Tables contained in the Contract, shall
be paid in a lump sum in accordance with the Contract.
Option 4 - Unit Refund Life Annuity - An annuity payable monthly during the
lifetime of the Annuitant, terminating with the last payment due prior to the
death of the Annuitant. An additional annuity payment will be made to the
Beneficiary equal to the value of an Annuity Unit Value of the Separate Account
as of the date that notice of death in writing is received by ReliaStar at its
principal office, multiplied by the excess if any, of (a) over (b) where: (a) is
the net Contract value allocated to Sub-Accounts and applied under the Option at
the Annuity Commencement Date, divided by the corresponding Annuity Unit Value
as of the Annuity Commencement Date, and (b) is the product of the number of
Annuity Units applicable under the Sub-Account represented by each annuity
payment and the number of annuity payments made. The additional payment will be
equal to the combined results, if any, for the Separate Account. (For an
illustration of this Option see Appendix II.)
C. Allocation of Annuity
The Contract Owner may elect to have the net Contract Value, as determined
below in Paragraph E, applied at the Annuity Commencement Date to provide a
Fixed Annuity, a Variable Annuity, or any combination thereof. Such elections
must be made, or modified if previously made, in writing to ReliaStar at its
principal office or other designated office, at least 30 days prior to the
Annuity Commencement Date. After the Annuity Commencement Date, redemptions are
not allowed.
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<PAGE>
D. Value of an Annuity Unit
For each of the Sub-Accounts of the Separate Accounts, the value of an
Annuity Unit was arbitrarily set initially at $1.00. The value of an Annuity
Unit for any subsequent Valuation Period is determined by multiplying the value
of the Annuity Unit for the immediately preceding Valuation Period by the net
investment factor (see "Accumulation Period - Deferred Variable Annuities: Net
Investment Factor") for the Valuation Period for which the value of the Annuity
Unit is being calculated, and multiplying the result by an interest factor to
offset the effect of an investment earnings rate of 3.5% per annum, which is
assumed in the Annuity Tables contained in the Contract. (For an illustration of
this calculation see Appendix III, Example A.)
E. Frequency and Amount of Annuity Payments
When annuity payments are to commence, the Contract Value to be applied to
a Variable Annuity Option will be determined by multiplying the value of an
Accumulation Unit for the Valuation Date on or immediately preceding the seventh
day before the Annuity Commencement Date by the number of Accumulation Units
owned. This seven day period is used to permit calculation of amounts of annuity
payments and mailing of checks in advance of the due date. At that time any
applicable premium taxes not previously deducted will be deducted from the
Contract Value to determine the net Contract value. The resultant value is then
applied to the Annuity Tables set forth in the Contract to determine the amount
of the monthly installment for each $1,000 of contract value applied. These
Annuity Tables vary according to the Annuity Option selected by the Contract
Owner and according to the sex and adjusted age of the Annuitant and any joint
Annuitant at the Annuity Commencement Date. The Contract contains a formula for
determining the adjusted age, and the Annuity Tables are determined from the
Progressive Annuity Table assuming births in the year 1900 and a net investment
rate of 3.5% per annum.
Because statistically women as a class live longer than men, the annuity
payout rates for women under Annuity Tables which differentiate between men and
women are less, at the same age, than they are for men. On July 6, 1983, the
United States Supreme Court ruled that employer-based retirement benefits
derived from contributions made after August 1, 1983 may not differentiate
between men and women. In calculating benefits derived from contributions made
after August 1, 1983 for employer-based retirement plans funded by Contracts
offered by this prospectus, we will not use values which differentiate between
men and women. We will increase the guaranteed annuity payment rates in the
Annuity Tables for women so that they will equal the guaranteed annuity rates
for men. However, we will continue to use Annuity Tables which differentiate
between men and women for Contracts which are not associated with employer-based
retirement plans.
The dollar amount of the first monthly payment of a Variable Annuity,
determined as above, is divided by the value of an Annuity Unit for the
Sub-Account for the Valuation Date on or immediately preceding the seventh day
before the Annuity Commencement Date to establish the number of Annuity Units
representing each monthly payment under the Sub-Account. This seven day period
is used to permit calculation of amounts of annuity payments and mailing of
checks in advance of the due date. This number of Annuity Units remains fixed
for all variable annuity payments. The dollar amount of the second and
subsequent variable annuity payments is determined by multiplying the fixed
number of Annuity Units for the Sub-Account by the applicable value of an
annuity unit for the Valuation Date on or immediately preceding the seventh day
before the due date of the payment. The value of an Annuity Unit is determined
on each Valuation Date and will vary with the investment performance of the
Fund, and, therefore, the dollar amount of the second and subsequent variable
annuity payments may change from month to month. (For an illustration of the
calculation of the first and subsequent Variable Payments, see Appendix III,
Examples B, C, and D.)
If the net Contract Value on the Annuity Commencement Date is less than
$2,000, ReliaStar may pay such Value in one sum in lieu of annuity payments. If
the net Contract Value is not less than $2,000 but the annuity payments provided
for would be or become less than $20, ReliaStar may change the frequency of
annuity payments to such intervals as will result in payments of at least $20.
F. Assumed Investment Rate
A 3.5% assumed investment rate is built into the annuity tables in the
Contract. A higher assumption would mean a higher initial payment but more
slowly rising and more rapidly falling subsequent variable annuity payments. A
lower
26
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assumption would have the opposite effect. If the actual net investment rate of
the Sub-Account is at the annual rate of 3.5%, the variable annuity payments
will be level.
MISCELLANEOUS CONTRACT PROVISIONS
A. Time of Payments
All payments due under the Contracts will ordinarily be made within seven
days of the payment due date or within seven days after the date of receipt of a
request for a withdrawal or termination. However, ReliaStar reserves the right
to postpone payment of any amounts derived from purchase payments paid by check
or bank draft until ReliaStar is reasonably assured that the check or draft has
cleared, normally thirty days from the date of receipt of the check or draft.
ReliaStar further reserves the right to suspend or postpone the date of any
payment due under the Contracts (1) for any period during which the New York
Stock Exchange is closed (other than customary weekend and holiday closings) or
during which trading on the Exchange, as determined by the SEC, is restricted;
(2) for any period during which an emergency, as determined by the SEC, exists
as a result of which disposal of securities held in the Separate Account is not
reasonably practical or it is not reasonably practical to determine the value of
the Separate Account's net assets; or (3) for such other periods as the SEC may
by order permit for the protection of security holders or as may be permitted
under the 1940 Act.
B. Right to Examine Contract
Any Contract Owner may revoke the Contract at any time between the date of
application and the date 20 days after receipt of the Contract. In order to
revoke the Contract, it must be mailed or delivered (if it has already been
received), to the agent through whom the Contract was purchased, or to the
Company at 4601 Fairfax Drive, Arlington, Virginia 22203. Mailing or delivery
must occur on or before 20 days after receipt of the Contract for revocation to
be effective.
Upon revocation, ReliaStar will pay, unless otherwise required by state
and/or federal law, the Contract Value for the Contract based on the
Accumulation Unit Value as of the close of the business day when the Contract is
received at ReliaStar's principal office. The liability of the Separate Account
under this provision is limited to the Contract Owner's Contract Value in the
Separate Account on the date of receipt.
C. Amendment of Contract
Contracts may be amended to conform to changes in applicable law or
interpretations of applicable law, or to accommodate design changes. Changes in
the Contract may need to be approved by Contract Owners and state insurance
departments.
D. Reports to Contract Owners
ReliaStar will mail to each Contract Owner, at the last known address of
record, at least annually, a statement of the Accumulation Units credited to the
Contract for the Sub-Accounts and the values of the Accumulation Units. In
addition, the latest available reports of the Funds invested in by the
Sub-Accounts will be mailed to each Contract Owner.
E. Assignment
Any amounts payable under the Contracts may not be commuted, alienated,
assigned or otherwise encumbered before they are due. To the extent permitted by
law, no such payments shall be subject in any way to any legal process to be
used for payment of any claims against any Annuitant, joint annuitant or
Beneficiary. Separate Account P Contracts may be assigned. Separate Account Q
Contracts may not be assigned.
F. Substitution of Fund Shares
If in ReliaStar's judgment one or more of the Funds becomes unsuitable for
investment by Contract Owners because of a change in the investment policy, or a
change in the tax laws, or because the shares are no longer available for
investment, ReliaStar may seek to substitute the shares of another Fund or the
shares of an entirely different mutual fund. Before this can be done, the
approval of the SEC, and possibly one or more state insurance departments, will
be required.
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G. Ownership of the Contract
Ordinarily, the purchaser of a Contract is both the Owner and the Annuitant
and is entitled to exercise all the rights under the Contract. However, the
Owner may be a person other than the Annuitant. This is frequently the case with
respect to Contracts issued in connection with corporate retirement plans and
Keogh Plans. Transfer of the ownership of a Contract may involve Federal income
tax consequences, and a qualified advisor should be consulted before any such
transfer is attempted.
FEDERAL INCOME TAX STATUS
A. Introduction
The Contracts may be purchased for use by individuals in retirement plans
which qualify for Federal tax benefits available under Sections 401, 403(a),
403(b), 408 or 457 plans ("Qualified Plans") under the provisions of the
Internal Revenue Code of 1986 (the "Code"). They may also be issued for deferred
compensation and other individual retirement plans which do not qualify under
such provisions of the Code ("Non-Qualified Plans"). The ultimate effect of
Federal income taxes on the amounts held under a Contract, on annuity payments,
and on the economic benefits of the Contract Owner, Annuitant or Beneficiary
depends on ReliaStar's tax status, on the type of retirement plan for which the
Contract is purchased, and upon the tax and employment status of the individual
concerned.
The following discussion is general in nature and is not intended as tax
advice. Each person concerned should consult a competent tax advisor. No attempt
is made to consider any applicable state or other tax laws. Moreover, the
discussion is based upon ReliaStar's understanding of the Federal income tax
laws as they are currently interpreted. No representation is made regarding the
likelihood of continuation of the Federal income tax laws or the current
interpretations by the Internal Revenue Service (the "IRS"). For a discussion of
Federal income taxes as they relate to the mutual funds, please see the
accompanying Prospectuses of the Funds. References are made in this discussion
to the tax acts of the last several years that have significantly affected
taxation of these products: the Deficit Reduction Act of 1984 (the "DRA"), the
Tax Reform Act of 1986 (the "TRA"); and the Technical and Miscellaneous Revenue
Act of 1988 (the "TAMRA"). The TRA and the TAMRA tax acts also include technical
corrections to the DRA, some of which are discussed in the material below.
B. Tax Status
ReliaStar is taxed as a life insurance company under Subchapter L of the
Code. Since Separate Accounts P and Q are not separate entities from ReliaStar
and their operations form a part of ReliaStar, they will not be taxed separately
as a "regulated investment company" under Subchapter M of the Code. Investment
income and realized capital gains on the assets of the Separate Account are
reinvested and taken into account in determining the value of an Accumulation
Unit held under the Contracts. As a result, such investment income and realized
capital gains are automatically applied to increase reserves under the Contract.
Under existing Federal income tax law, the Separate Accounts' investment income,
including realized net capital gains, is not taxed to ReliaStar to the extent it
is applied to increase reserves under a Contract. ReliaStar's basis in the
assets underlying the Contracts will be adjusted for appreciation or
depreciation, to the extent the reserves are so adjusted.
C. Taxation of Annuities in General - Non-Qualified Plans
Section 72 of the Code governs taxation of annuities. In general, a
Contract Owner is not taxed on increases in value of the Accumulation Units held
under a Contract until some form of distribution is made under the Contract.
However, in some cases, the increase in value may be subject to tax currently.
In the case of Contracts not owned by natural persons, see page 30. In the case
of Contracts not meeting the diversification requirements, see page 30.
1. Surrenders or Withdrawals
Section 72 of the Code provides that a complete surrender or a withdrawal
from a Contract prior to the date of maturity of the Contract will, as a general
rule, be treated as taxable income to the extent the amounts held under the
Contract exceed the "investment in the Contract." The remainder will be treated
as a return of capital. For these purposes, loans against the Contract or the
pledging of the Contract are treated as withdrawals. The "investment in the
Contract" is the aggregate amount of purchase payments by or on behalf of an
individual under a Contract minus the amounts received under the
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Contract that have been excludable from the individual's gross income. The
taxable portion is taxed at ordinary income tax rates. For Contracts issued in
connection with Qualified Plans, the "investment in the contract" can be zero.
2. Annuity Payments
For fixed annuity payments, the taxable portion of each payment is
determined by a formula known as the "exclusion ratio," which establishes the
ratio that the investment in the Contract bears to the total expected amount of
annuity payments for the term of the Contract. That ratio is then applied to
each payment to determine the non-taxable portion of the payment. The remaining
portion of each payment is taxed at ordinary income rates. For variable annuity
payments, the taxable portion is determined by a formula which establishes a
specific dollar amount of each payment that is not taxed. The dollar amount is
determined by dividing the investment in the Contract by the total number of
expected periodic payments. The remaining portion of each payment is taxed at
ordinary income rates. Withholding of Federal income taxes on all distributions
may be required unless the recipient elects not to have any amounts withheld and
properly notifies ReliaStar of that election. Once the excludable portion of
annuity payments to date equals the investment in the Contract, the balance of
the annuity payments will be fully taxable.
3. Taxation of Death Benefit Proceeds
Amounts may be distributed from a Contract because of the death of an Owner
or Annuitant. Generally, such amounts are includible in the income of the
recipient as follows: (i) if distributed in a lump sum, they are taxed in the
same manner as a full surrender of the contract; or (ii) if distributed under an
Annuity Option, they are taxed in the same way as annuity payments. For these
purposes, the investment in the contract is not affected by the owner's or
annuitant's death. That is, the investment in the contract remains the amount of
any purchase payments paid which were not excluded from gross income.
4. Penalty Tax on Surrenders or Withdrawals
Generally, a 10 percent (10%) penalty tax is imposed on premature taxable
distributions (surrenders or withdrawals). The penalty is 10 percent (10%) of
the amount received that is includible in income by the Contract Owner. The
penalty tax is not imposed on amounts received (i) after the Contract Owner
attains age 59 1/2, (ii) after the death of the Contract Owner (or, if the
Contract Owner is not an individual, on or after the death of the primary
annuitant), (iii) that are attributable to the Contract Owner becoming totally
disabled, (iv) in a series of substantially equal periodic payments made for the
life (or life expectancy) of the taxpayer or the joint lives (or joint life
expectancies) of such taxpayer and his Beneficiary, and (v) under an immediate
annuity contract (an annuity which is purchased with a single premium, the
annuity starting date of which commences no later than one year from the date of
the purchase of the annuity and which provides for a series of substantially
equal periodic payments to be made not less frequently than annually). Other tax
penalties may apply to certain distributions under a Qualified Plan Contract
(see "Qualified Plans").
5. Possible Tax Changes.
The President's 1999 Budget Proposal has recommended legislation in 1998
that, if enacted, would adversely modify the federal taxation of certain
insurance and annuity contracts. For example, one proposal would tax transfers
among investment options and tax exchanges involving variable contracts. A
second proposal would reduce the "investment in the contract" under cash value
life insurance and certain annuity contracts, thereby increasing the amount of
income for purposes of computing gain. Although the likelihood of legislative
changes in uncertain, there is always the possibility that the tax treatment of
the Contract could change by legislation or other means (such as IRS
regulations, revenue rulings, judicial decisions, etc.). Moreover, it is also
possible that any change could be retroactive (that is, effective prior to the
date of the change). You should consult a tax adviser with respect to
legislative developments and their effect on the Contract.
D. Additional Considerations
1. Distribution-at-Death Rules.
In order to be treated as an annuity contract, a Contract issued on or
after January 19, 1985 must provide that if any Contract Owner dies on or after
the Contract Annuity Commencement Date, and before the entire interest in the
Contract has been distributed, the remainder of his interest will be distributed
at least as quickly as the method in effect on the Owner's death. If a Contract
Owner dies before the Annuity Commencement Date, his entire interest must
generally be distributed within five (5) years after the date of death, or must
be annuitized for some period (not extending beyond the life or life expectancy
of the designated Beneficiary) within one (1) year after the date of death. If
the designated Beneficiary is the
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spouse of the deceased Contract Owner, the Contract (together with the deferral
of tax on the accrued and future income thereunder) may be continued in the name
of the spouse as the sole Contract Owner.
For Contracts issued on or after April 23, 1987, the following changes
apply. Where a Contract Owner is not an individual, the primary Annuitant is
considered a Contract Owner. The primary Annuitant is defined as the individual,
the events in whose life which are of primary importance in affecting the timing
and amount of the payout under the Contract. In addition, when a Contract Owner
is not an individual, a change in the primary Annuitant is treated as the death
of the Contract Owner. Finally, in the case of joint Contract Owners, the
distribution will be required at the death of the first of the Contract Owners.
Other rules relating to distributions at death apply to Qualified Plans. You
should consult your legal counsel and tax adviser regarding these rules and
their impact on the Contracts (see "Qualified Plans").
2. Gift of annuity contracts.
With respect to Contracts issued on or after April 23, 1987, gifts of
non-qualified annuity contracts prior to the Annuity Commencement Date will
trigger tax on the gain in the Contract, with the donor getting a step-up in
basis for the amount included in the donor's income. This provision does not
apply to transfers between spouses or incident to a divorce.
3. Contracts Owned by Non-Natural Persons.
In the case of contributions after February 28, 1986, where the Contract is
held by a non-natural person (for example, a corporation) the income on that
Contract (generally the increase in the net surrender value less the premium
paid) is includible in income each year. The rule does not apply where the
non-natural person is the nominal Owner of a Contract and the beneficial Owner
is a natural person. The rule also does not apply where the annuity Contract is
acquired by the estate of a decedent, where the Contract is held under a
Qualified Plan, a TSA program, or an IRA, where the Contract is a qualified
funding asset for structured settlements, where the Contract is purchased on
behalf of an employee upon termination of a Qualified Plan, and in the case of
an immediate annuity.
4. Section 1035 Exchanges.
Section 1035 of the Code provides that no gain or loss shall be recognized
on the exchange of one annuity contract for another. A replacement contract
obtained in a tax-free exchange of contracts succeeds to the status of the
surrendered contract. If the surrendered contract was issued prior to August 14,
1982, the tax rules which formerly provided that the surrender was taxable only
to the extent the amount received exceeds the Contract Owner's investment in the
Contract, will continue to apply. In contrast, Contracts issued on or after
January 19, 1985, in a Code Section 1035 exchange, are treated after exchange as
new Contracts for purposes of the penalty and distribution-at-death rules.
Special rules and procedures apply to Code 1035 transactions. Purchasers wishing
to take advantage of Code 1035 should consult their tax advisors.
5. Anti-Abuse Rules.
To discourage abusive situations, TAMRA provides that all deferred annuity
contracts issued after October 21, 1988 by the same insurer (or its affiliates)
to the same contract owner during any 12-month period will be aggregated in
figuring how much of any distribution is includible in gross income. TAMRA also
gives the Treasury Department regulatory authority to prevent avoidance of
TAMRA's rules concerning how much of any distribution is includible in gross
income.
6. Diversification Requirements.
Section 817(h) of the Code provides that separate account investments
underlying a contract must be "adequately diversified" in accordance with
Treasury regulations in order for the contract to qualify as an annuity contract
under Section 72 of the Code. The Separate Accounts, through each of the Funds,
intends to comply with the diversification requirements prescribed in
regulations under Section 817(h) of the Code, which affect how the assets in the
various Sub-Accounts may be invested. Although the Company does not have control
over the Funds in which the Separate Accounts invest, the Company expects that
each Fund in which the Separate Accounts own shares will meet the
diversification requirements and that the Contract will be treated as an annuity
contract under the Code.
The Treasury has also announced that the diversification regulations do not
provide guidance concerning the extent to which Owners may direct their
investments to particular Sub-Accounts of a variable account or how concentrated
the investments of the Funds underlying a separate account may be. The number of
underlying investment options available
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under a variable product may also be relevant in determining whether the product
qualifies for the desired tax treatment. It is possible that if additional
rules, regulations or guidance in this regard are issued, the Contract may need
to be modified to comply with such additional rules or guidance. For these
reasons, the Company reserves the right to modify the Contract as necessary to
attempt to prevent the Owner from being considered the owner of the assets of
the Funds or otherwise to qualify the Contract for favorable tax treatment.
7. Ownership Treatment.
In certain circumstances, Owners of variable annuity contracts may be
considered the owners, for Federal income tax purposes, of the assets of the
separate account used to support their contracts. In those circumstances, income
and gains from the separate account assets would be includible in the variable
annuity contract owner's gross income. Several years ago, the IRS stated in
published rulings that a variable contract Owner will be considered the owner of
separate account assets if the contract Owner possesses incidents of ownership
in those assets, such as the ability to exercise investment control over the
assets. More recently, the Treasury Department announced, in connection with the
issuance of regulations concerning investment diversification, that those
regulations "do not provide guidance concerning the circumstances in which
investor control of the investments of a segregated asset account may cause the
investor, rather than the insurance company, to be treated as the owner of the
assets in the account." This announcement also stated that guidance would be
issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular sub-accounts without being treated as
owners of the underlying assets."
The ownership rights under the contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of separate account assets. For
example, the Owner of the Contracts has the choice of one or more Sub-Accounts
in which to allocate premiums and Contract Values, and may be able to transfer
among Sub-Accounts more frequently than in such rulings. These differences could
result in the Contract Owner being treated as the Owner of the assets of the
Separate Accounts. In addition, ReliaStar does not know what standards will be
set forth, if any, in the regulations or rulings which the Treasury Department
has stated it expects to issue. ReliaStar therefore reserves the right to modify
the Contracts as necessary to attempt to prevent the contract owners from being
considered the owners of the assets of the Separate Accounts.
8. Transfers, Assignments or Exchanges of a Contract.
A transfer of ownership of a Contract, the designation of an Annuitant,
payee or other Beneficiary who is not also the Owner, the selection of certain
Annuity Commencement Dates or the exchange of a Contract may result in certain
tax consequences to the Owner that are not discussed herein. An Owner
contemplating any such transfer, assignment, selection or exchanges should
contact a competent tax advisor with respect to the potential effects of such a
transaction.
9. Withholding.
Pension and annuity distributions generally are subject to withholding for
the recipient's Federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions. Effective January 1, 1993, distribution from certain Qualified
Plans are generally subject to mandatory withholding.
10. Multiple Contracts.
All Non-Qualified deferred annuity contracts entered into after October 21,
1988 that are issued by ReliaStar (or its affiliates) to the same Owner during
any calendar year are treated as one annuity Contract for purposes of
determining the amount includible in gross income under Code Section 72(e). The
effects of this rule are not yet clear; however, it could affect the time when
income is taxable and the amount that might be subject to the 10% penalty tax
described above. In addition, the Treasury Department has specific authority to
issue regulations that prevent the avoidance of Section 72(e) through the serial
purchase of annuity contracts or otherwise. There may also be other situations
in which the Treasury may conclude that it would be appropriate to aggregate two
or more annuity contracts purchased by the same Owner. Accordingly, a Contract
Owner should consult a competent tax advisor before purchasing more than one
annuity contract.
E. Qualified Plans
The Contracts may be used with several types of Qualified Plans. TSAs,
Keoghs, Individual Retirement Arrangements ("IRAs"), Corporate Pension and
Profit-Sharing Plans and Section 457 Deferred Compensation Plans will be
treated, for
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purposes of this discussion, as Qualified Plans. The tax rules applicable to
participants in such Qualified Plans vary according to the type of plan and the
terms and conditions of the plan itself. No attempt is made herein to provide
more than general information about the use of the Contracts with the various
types of Qualified Plans. Participants under such Qualified Plans as well as
Contract Owners, Annuitants, and beneficiaries, are cautioned that the rights of
any person to any benefits under such Qualified Plans may be subject to the
terms and conditions of the plans themselves, regardless of the terms and
conditions of the Contract issued in connection therewith. Owners are
responsible for determining that contributions, distributions and other
transactions with respect to the Contracts satisfy applicable law. Purchasers of
Contracts for use with any Qualified Plan should consult their legal counsel and
tax adviser regarding the suitability of the Contract.
The TRA has made numerous changes in the tax rules governing Qualified
Plans including rules with respect to: maximum contributions, minimum, maximum
and timing of distributions, anti-discrimination, coverage and vesting. The TRA
also generally increased the penalty tax on premature distributions,
substantially revised the general rules for the taxation of distributions, and
added a new penalty tax on large distributions. The following are brief
descriptions of the various types of Qualified Plans and of the use of the
Contracts in connection therewith:
1. Tax-Sheltered Annuities.
Section 403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations, specified
in Code 501(c)(3) to purchase annuity contracts and, subject to certain
limitations, exclude the amount of purchase payments from gross income for
Federal income tax purposes. However, these payments may be subject to FICA
(Social Security) taxes. These annuity contracts are commonly referred to as
"TSAs." In accordance with the requirements of Section 403(b), any Contract used
for a 403(b) plan will restrict distributions of (i) elective contributions made
in years beginning after December 31, 1988, and (ii) earnings on those
contributions, and (iii) earnings on amounts attributable to elective
contributions held as of the end of the last year beginning before January 1,
1989. However, distributions of such amounts will be allowed upon death of the
employee, attainment of age 59 1/2, separation from service, disability, or
financial hardship, except that income attributable to elective contributions
may not be distributed in the case of hardship. Purchasers of the Contracts for
these purposes should seek competent advice as to eligibility, applicable
non-discrimination rules, limitations on permissible amounts of purchase
payments, required distributions and tax consequences upon distribution.
2. Keogh Plans.
The Self-Employed Individual Tax Retirement Act of 1962, as amended,
permits self-employed individuals to establish "Keoghs," or Qualified Plans for
themselves and their employees. The tax consequences to participants under such
a plan depend upon the terms of the plan. In addition, special rules apply to
such plans with respect to maximum permissible contributions, required
distributions, nonforfeitability of interests, nondiscrimination, and the
taxation of distributions. Restrictions on the availability of the amounts may
be applicable. In order to establish such a plan, a plan document must be
adopted and implemented by the employer, and advance approval by the IRS is
often requested. Purchasers of the Contracts for use with Keogh plans should
seek competent advice as to the suitability of the proposed plan document and of
the Contracts to those specific needs.
3. Individual Retirement Arrangements.
Section 408 and 408A of the Code permit eligible individuals to contribute
to an individual retirement program known as an "Individual Retirement Annuity"
or "IRA." All IRAs are subject to limits on the amount that may be contributed,
the persons who are eligible, and on the time when distributions must commence.
Section 408 governs "traditional" IRAs. Subject to certain income limits,
contributions to a traditional IRA may be tax deductible. Distributions from a
traditional IRA, if attributable to deductible contributions, are generally
subject to income tax. Distributions must begin in the year the Contract owner
reach age 70 1/2. Distributions from certain other types of qualified retirement
plans may be "rolled over" on a tax-deferred basis into a traditional IRA.
Section 408A of the Code permits individuals to contribute to a special
type of IRA called a Roth IRA. The IRA must be designated as "Roth IRA" at the
time it is established, in accordance with IRS rules. Contributions to a Roth
IRA are not deductible. If certain conditions are met, qualified distributions
from a Roth IRA are tax free. Subject to special limitations,
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a distribution from a traditional IRA or another Roth IRA may be rolled over to
a Roth IRA. On or after July 1, 1998, the Contract may be purchased for use with
a Roth IRA.
Sales of a Contract for use with traditional or Roth IRAs may be subject to
special requirements of the IRS. The IRS has not reviewed the contract for
qualification as an IRA, and has not addressed in a ruling of general
applicability whether a death benefit provision such as the provision in the
Contract comports with IRS qualification requirements.
4. Corporate Pension and Profit Sharing Plans.
Sections 401(a) and 403(a) of the Code permit corporate employers to
establish various types of retirement plans for employees. The rules applicable
to such plans of corporate employers are similar to the rules applicable to
Keogh plans. Such retirement plans may permit the purchase of Contracts to
provide benefits thereunder. Corporate employers, intending to use the Contracts
in connection with such plans, should seek competent advice in connection
therewith.
5. Section 457 Deferred Compensation Plans With Respect to Service for
State and Local Governments and Tax-Exempt Entities. Section 457 of the Code
provides for certain deferred compensation plans with respect to service for
state and local governments and tax-exempt entities. The Contracts may be used
in connection with these plans; however, under these plans, the Contract Owner
is the plan sponsor, and the individual participants in the plans are the
annuitants. Under such Contracts, the rights of individual plan participants are
governed solely by their agreements with the plan sponsor and not by the terms
of the Contracts. A number of special rules apply to deferred compensation plans
described in Code Section 457, relating to items such as ownership of plan
assets, persons allowed to participate, maximum contributions, permitted
distributions, required distributions, and taxation of distributions.
Accordingly, state and local governments and tax-exempt entities intending to
use the Contracts in connection with such plans should seek competent advice in
connection therewith.
F. Withholding Requirements Where Rollovers are Distributed Directly to
the Participant
A qualified retirement or annuity plan must permit participants to elect to
have any distribution that is eligible for rollover treatment ("Eligible
Rollover Distributions") transferred directly to another qualified plan, IRA or
individual retirement annuity specified by the participant. Direct transfers are
sometimes referred to as Trustee-to-Trustee transfer.
Beginning January 1, 1993, when Eligible Rollover Distributions are made
directly to the participants, rather than Trustees-to-Trustee, 20% of the
distribution will be withheld and paid to the IRS.
G. Seek Tax Advice
The above description of Federal income tax consequences of the different
types of Qualified Plans which may be funded by the Contracts offered by this
Prospectus is only a brief summary and is not intended as tax advice. The rules
relating to Qualified Plans are extremely complex and often difficult to
comprehend. Many of these rules were changed by the TRA. Anything less than full
compliance with the applicable rules, all of which are subject to change, may
trigger severe adverse tax consequences. A prospective purchaser considering
adoption of a Qualified Plan should first consult a qualified and competent tax
advisor.
PREPARING FOR YEAR 2000
Like all financial services providers, ReliaStar utilizes systems that may
be affected by Year 2000 transition issues and it relies on service providers,
including the Funds, that also may be affected. ReliaStar has developed, and is
in the process of implementing, a Year 2000 transition plan, and is confirming
that its service providers are also so engaged. The resources that are being
devoted to this effort are substantial. It is difficult to predict with
precision whether the amount of resources ultimately devoted, or the outcome of
these efforts, will have any negative impact on ReliaStar. However, as of the
date of this prospectus, it is not anticipated that Contract owners will
experience negative effects on their investment, or on the services provided in
connection therewith, as a result of Year 2000 transition implementation.
ReliaStar currently anticipates that its systems will be Year 2000 compliant on
or about January 1, 1999, but there can be no assurance that it will be
successful, or that interaction with other service providers will not impair
ReliaStar's services at that time.
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REGULATION
A. State
ReliaStar is subject to the laws of the State of New York governing
insurance companies and to regulation by the New York Department of Insurance.
An annual statement in a prescribed form is filed with the Department of
Insurance each year covering the operations of ReliaStar for the preceding year
and its financial condition as of the end of such year.
ReliaStar's books and accounts are subject to review by the Department of
Insurance at any time and a full examination of its operations is conducted
periodically. Such regulation does not, however, involve any supervision of
management or investment practices or policies except to determine compliance
with the requirements of New York Insurance Law. In addition, ReliaStar is
subject to regulation under the insurance laws of other jurisdictions in which
it may operate.
B. Proposed Unisex Legislation
From time to time, legislation in several forms is considered to prohibit
insurers from using rates or factors which distinguish on the basis of sex in
determining premium rates and benefit payments under insurance policies and
annuity contracts (see "Annuity Period"). If "unisex" insurance requirements are
enacted, ReliaStar may be required to utilize contract annuity rate tables which
do not differentiate in the amount of annuity benefits on the basis of sex. If
enacted, one aspect of such legislation might result in a Contract change which
provides for either an increase in the initial rate amounts of monthly benefits
to be applied for females or a decrease in such rate amounts for males or a
combination of both. ReliaStar may be required to amend existing policies to
reflect such changes.
VOTING RIGHTS
As stated above, all of the assets held in the Sub-Accounts of the Separate
Accounts will be invested in shares of the corresponding Fund (the "Fund
Shares"). In accordance with its view of present applicable law, ReliaStar will
vote the Fund Shares held in the Separate Account at meetings of shareholders of
the Fund in accordance with instructions received from the Contract Owner. Fund
Shares as to which no timely instructions are received and Fund shares that are
not otherwise attributable to Contract Owners will be voted by ReliaStar in
proportion to the instructions received from all persons furnishing timely
instructions. However, if the 1940 Act or any regulation thereunder should be
amended or if the present interpretation thereof should change, and as a result
ReliaStar determines that it is permitted to vote the Fund Shares in its own
right, it may elect to do so.
Prior to the Annuity Commencement Date, the number of Fund Shares held in
the Sub-Accounts of the Separate Accounts which is attributable to each Contract
Owner is determined by dividing the Sub-Account Contract value by the net asset
value of one Fund Share. After the Annuity Commencement Date, the number of Fund
Shares held in the Sub-Account of the Separate Account which is attributable to
each Contract is determined by dividing the reserve held in the Sub-Account for
the variable annuity payment under such Contract by the net asset value of one
Fund Share. As this reserve fluctuates, the number of votes fluctuates, although
generally they will decrease, causing the votes attributable to a Contract to
decrease.
The number of votes which a person has the right to cast will be determined
as of the record date established by each Fund. Voting instructions will be
solicited by written communication prior to the date of the meeting at which
votes are to be cast. Each person having a voting interest in the Separate
Account will receive reports and other materials relating to the Funds.
TEXAS OPTIONAL RETIREMENT PROGRAM
Participants in the Texas Optional Retirement Program may not receive the
proceeds of a withdrawal from, or complete surrender of, a Contract, or apply
them to provide annuity options prior to retirement except in the case of
termination of employment in the Texas public institutions of higher education,
death or total disability. Such proceeds may, however, be used to fund another
eligible retirement vehicle.
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LITIGATION
ReliaStar and its affiliates, like other life insurance companies, are
involved in lawsuits, which may include class action lawsuits. In some class
action and other lawsuits involving insurers, substantial damages have been
sought and/or material settlement payments have been made. Although the outcome
of any litigation cannot be predicted with certainty, ReliaStar believes that at
the present time there are no pending or threatened lawsuits that are reasonably
likely to have a material adverse impact on the Variable Account or upon
ReliaStar.
REGISTRATION STATEMENT
A registration statement has been filed with the SEC under the Securities
Act of 1933, as amended, with respect to the Contracts. This Prospectus does not
contain all the information set forth in the registration statement and
amendments thereto and the exhibits filed as a part thereof, to all of which
reference is hereby made for further information concerning the Separate
Accounts, ReliaStar, and the Contracts. Statements contained in this Prospectus
as to the content of the Contract and other legal instruments are summaries. For
a complete statement of the terms thereof, reference is made to such instruments
as filed.
LEGAL OPINIONS
Legal matters in connection with the Contracts described in this Prospectus
have been passed upon by Jeffrey A. Proulx, Associate Counsel for ReliaStar.
PERFORMANCE DATA
From time to time, the ReliaStar Life Insurance Company of New York
Variable Annuity Accounts ("The USA Plan") may advertise several types of
performance measures relating both to the Funds and to the Sub-Accounts
themselves for specified periods, assuming current Contract charges and actual
Fund performance. Methods of quoting performance will include standardized
calculations of average annual total return for one, five and ten years, ending
on a recent calendar quarter, or if such periods have not yet elapsed, at the
end of a shorter period corresponding to the life of the Sub-Account. The USA
Plan may also use nonstandardized performance measures, comparisons of
investment results to various indices including the Dow Jones Average of 30
Industrial Stocks, the Standard and Poor's 500 Stock Index, the Consumer Price
Index, the Salomon Brothers High Grade Bond Index, the Lehman Brothers
Government/Corporate Bond Index and the Merrill Lynch Government/Corporate
Master Index, all of which are widely recognized indices of stock market
performance but which do not include the reinvestment of income dividends and do
not consider tax consequences. In addition, The USA Plan may be compared to the
performance of other fixed income or government bond mutual funds or mutual fund
indices such as reported by Lipper Analytical Services, Inc. ("Lipper") or CDA
Investment Technologies, Inc. ("CDA"). Lipper and CDA are widely recognized
independent mutual fund reporting services. Their performance calculations are
based upon changes in net asset value with all dividends reinvested, but do not
include the effect of any sales charges. Comparisons may also be made with
results of other mutual funds or groups of mutual funds in advertisements or in
reports furnished to present or prospective shareholders. Standardized measures
of performance are based on several assumptions which may or may not apply to an
individual investor's account. Because the average annual total return figures
are annualized, they represent an average percentage change over an annual
period which may be based on less than 12 months of actual data, whereas
previously reported total return figures may not have been annualized and
represented in those cases the aggregate percentage or dollar-value change over
the period in question.
The USA Plan's method for computing average annual total return is to
compute the average annual compounded rate of return that equates a purchase
payment to the market value of such purchase payment on the last day of the
period for which such return is calculated. For purposes of the calculation, it
is assumed that an initial payment of $1,000 is made on the first day of the
period for which the return is calculated. All recurring charges are reflected
in the calculations. The asset charges are reflected in the changes in unit
values. The $30 Contract Maintenance Charge is deducted by dividing the total
amount of contract fees collected in the prior year by the total average net
assets.
35
<PAGE>
Certain Sub-Accounts may quote current yield and effective yield. The
current yield refers to the income generated by an investment over a 7-day
period (which period will be stated in the advertisement). This income is then
assumed to be earned each week over a 52-week period. The effective yield is
calculated similarly, but the income earned by the sub-account investments are
assumed to be reinvested.
Each of the other Sub-Accounts may also quote yield. The yield of these
Sub-Accounts refers to the net income earned by the underlying mutual fund over
a 30-day period (which period will be stated in the advertisement). This income
is then assumed to be earned for a full year and to be reinvested each month or
six months. The resulting semi-annual yield is doubled.
Other reportable performance measures may include income production rates,
percentage changes in Accumulation Unit Values, and distribution rates. A
distribution rate is simply a measure of the level of income and short-term
capital gain dividends distributed for a specified period. It is, therefore, not
intended to be a complete measure of performance. The distribution rate may
sometimes be greater than yield since, for instance, it may include short-term
gains (which may be nonrecurring) and may not include the effect of amortization
of bond premiums. A distribution rate will be accompanied by a disclosure
explaining (i) the components of the distribution rate that differ from yield,
(ii) where components consist of capital gains, they are nonrecurring, and (iii)
where a component consists of option premiums, what potential effect on overall
performance option writing might have.
Any of the indicators mentioned in the section entitled "Performance Data"
may be included in sales literature and shareholder reports when accompanied by
required standardized calculations. More detailed information on performance
data is set forth in the Statement of Additional Information.
FINANCIAL STATEMENTS
The financial statements of ReliaStar set forth in the Statement of
Additional Information are separate and apart from the financial statements of
Separate Accounts P and Q and should be considered only as bearing upon the
ability of ReliaStar to meet its obligations under the Contracts.
STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more specific information
and financial statements relating to the Separate Accounts and ReliaStar. The
Table of Contents of the Statement of Additional Information is set forth below:
<TABLE>
<CAPTION>
<S> <C>
General Information About the Company..................................................................... S-2
Custodian and Accountants................................................................................. S-2
Underwriter............................................................................................... S-2
Calculation of Performance Data........................................................................... S-2
Financial Statements...................................................................................... S-10
</TABLE>
Contract Owner inquiries and requests for a Statement of Additional
Information should be directed to ReliaStar in writing at ReliaStar Life
Insurance Company of New York Variable Annuity Administration Center, Route
4300, P.O. Box 59218, Minneapolis, MN 55429-0218, or by telephoning ReliaStar at
(800) 621-3750.
THE FIXED ACCOUNT
During the accumulation period, the Owner may elect to have Contract Values
accumulate on a fixed basis in the Fixed Account within the Company's General
Account, which consists of all assets of ReliaStar other than allocated to any
separate account of ReliaStar. Because of exemptive and exclusionary provisions,
interests in the Fixed Account have not been registered under the Securities Act
of 1933 and the Fixed Account has not been registered as an investment company
under the 1940 Act. Accordingly, neither the Fixed Account nor any interest
therein are subject to the provisions of these acts and, as a result, the staff
of the SEC has not reviewed the disclosures in this Prospectus relating to the
Fixed Account.
36
<PAGE>
Disclosures regarding the Fixed Account may, however, be subject to certain
generally applicable provisions of the Federal securities laws relating to the
accuracy and completeness of statements made in prospectuses. This Prospectus is
generally intended to serve as a disclosure document only for the aspects of the
Contract involving Separate Accounts P and Q and their Sub-Accounts and contains
only selected information regarding the Fixed Account. More information
regarding the Fixed Account may be obtained from ReliaStar's principal office or
from your registered representative.
General Description
ReliaStar's obligations with respect to the Fixed Account are supported by
its General Account. Subject to applicable law, ReliaStar has sole discretion
over the investment of the assets in its General Account.
ReliaStar guarantees that Contract Values in the Fixed Account will accrue
interest at an effective rate of at least 4%, independent of the actual
investment experience of the General Account. ReliaStar may, at its sole
discretion, credit a higher rate of interest, although it is not obligated to
credit interest in excess of 4% per year. Any interest rate in excess of 4% per
year with respect to any amount in the Fixed Account pursuant to a Contract will
be declared by ReliaStar for a specific period of time as follows. On the issue
date and on any Contract Anniversary, the excess interest, if any, will be set
on the Fixed Account Value and guaranteed until the next Contract Anniversary.
Net purchase payments and transfers into the Fixed Account during the contract
year will be credited with an excess interest rate as then declared and such
excess interest rate will be guaranteed until the next Contract Anniversary.
Once credited, such interest will be guaranteed and become part of the
Contract Value in the Fixed Account from which deductions for fees and charges
may be made.
Charges under the Contract are the same as when a Separate Account is being
used, except that the 1.25% per annum charged for mortality and expense risk is
not imposed on amounts of Contract Value in the Fixed Account.
Fixed Account Value
The Contract's Fixed Account Value on any Valuation Date is the sum of the
net purchase payments allocated to the Fixed Account, plus any transfers from
the Separate Accounts, plus interest credited to the Fixed Account, less any
surrenders, any applicable Contingent Deferred Sales Charges, any applicable
premium taxes, annual Contract Maintenance Charges allocated to the Fixed
Account, and/or transfers to the Separate Accounts.
Transfers, Total and Partial Surrenders
Amounts in Fixed Account are generally subject to the same rights and
limitations and will be subject to the same charges as are amounts allocated to
the Sub-Accounts of the Separate Accounts with respect to total and partial
surrenders (see "Charges and Other Deductions").
Transfers out of the Fixed Account have special limitations. The owner may
make partial or total transfers of Contract Values from the Fixed Account to one
or more variable Sub-Accounts available in the Contract, as long as the amounts
to be transferred have been in the Fixed Account for at least six months, unless
transfers are being made as a part of an automatic dollar cost averaging
program. The following conditions are also applicable: (a) all transfers within
the Contract are without payment of any fee or charge; (b) the dollar amount of
a transfer may not be less than $250 except that the entire Fixed Account Value
may be transferred if less than $250; and (c) no transfer may be made after the
Annuity Commencement Date or the date of receipt by ReliaStar of notification of
death of the Annuitant. All transfers shall be made as of the end of the
Valuation Period during which the request for transfer is received by ReliaStar
at its principal office, or later Valuation Period if requested.
37
<PAGE>
APPENDIX I
EXAMPLE A
FORMULA AND ILLUSTRATION FOR DETERMINING
THE NET INVESTMENT FACTOR OF A
SUB-ACCOUNT FOR ALL CONTRACTS
A + B - C
Net Investment Factor = --------- - F
D - E
<TABLE>
<CAPTION>
Where:
<S> <C>
A = The Net Asset Value of the Fund as of the end of the current
Valuation Period.
Assume....................................................................= $11.570000
B = The per share amount of any dividend or capital gains
distribution since the end of the immediately preceding Valuation
Period.
Assume....................................................................= 0
C = The per share charge or credit for any taxes reserved for at the
end of the current Valuation Period.
Assume....................................................................= 0
D = The Net Asset Value of a Fund share at the end of the immediately
preceding Valuation Period.
Assume....................................................................= 11.400000
E = The per share amount of any taxes reserved for at the end of the
immediately preceding Valuation Period.
Assume....................................................................= 0
F = The daily deduction for mortality and expense risks, which totals
1.25% on an annual basis
On a Daily Basis..........................................................= 0.000034
Then, the Net Investment Factor = 11.570000 - 0.000034
---------
11.400000
</TABLE>
38
<PAGE>
EXAMPLE B
FORMULA AND ILLUSTRATION FOR DETERMINING
ACCUMULATION UNIT VALUE OF A
SUB-ACCOUNT
Accumulation Unit Value = A x B
<TABLE>
<CAPTION>
Where:
<S> <C>
A = The Accumulation Unit Value for the immediately preceding
Valuation Period.
Assume....................................................................= $1.347125
B = The Net Investment Factor for the current Valuation Period.
Assume....................................................................= 1.014878
Then, the Accumulation Unit Value
= $1.347125 x 1.014878
= $1.367167
</TABLE>
39
<PAGE>
APPENDIX II
EXAMPLE A
FORMULA AND ILLUSTRATION FOR DETERMINING
DEATH BENEFIT PAYABLE UNDER
SETTLEMENT OPTION 4 - UNIT REFUND LIFE ANNUITY
Upon the death of the Annuitant the designated Beneficiary under this option
will receive under each applicable Separate Account a lump sum death benefit of
the then dollar value of a number of Annuity Units computed using the following
format:
Annuity Units Payable = A - (C x D), if A is greater then C x D
---------------------------------------
- -
B B
<TABLE>
<CAPTION>
Where:
<S> <C>
A = The net benefit applied on the Annuity Commencement Date to
purchase the Variable Annuity.
Assume....................................................................= $15,000
B = The Annuity Unit Value at the Annuity Commencement Date.
Assume....................................................................= 1.103300
C = The number of Annuity Units represented by each payment made.
Assume....................................................................= 82.933019
D = The total number of monthly Variable Annuity Payments made prior
to the Annuitant's death.
Assume....................................................................= 24
</TABLE>
Then the number of Annuity Units Payable
$15,00000 - (82.933019 x 24)
--------- - ----------------
$1.103300
= 13,595.576905 - 1990.392456
= 11,605.184449 Annuity Unit
If the value of an Annuity Unit on the date of receipt of notification of death
was $1.130529 then the amount of the benefit under each applicable Separate Unit
would be:
11,605.18449 x $1.130529 = $13,120.00
This calculation will be made for each Separate Account upon which Variable
Annuity Payments were based.
40
<PAGE>
APPENDIX III
EXAMPLE A
FORMULA AND ILLUSTRATION FOR DETERMINING
ANNUITY VALUE OF A
SEPARATE ACCOUNT
Annuity Unit Value = A x B x C
<TABLE>
<CAPTION>
Where:
<S> <C>
A = Annuity Unit Value for the immediately preceding Valuation
Period.
Assume....................................................................= $1.097696
B = Net Investment Factor for the Valuation Period for which the
Annuity Unit is being calculated.
Assume....................................................................= 1.005200
C = A factor to neutralize the assumed interest of 3 1/2% built into
the Annuity tables used.
Daily factor equals.......................................................= 0.999906
</TABLE>
Then, the Annuity Value is:
$1.097696 x 1.005200 x 0.999906 = $1.103300
41
<PAGE>
EXAMPLE B
FORMULA AND ILLUSTRATION FOR DETERMINING
AMOUNT OF FIRST MONTHLY VARIABLE ANNUITY PAYMENT FROM
ONE SEPARATE ACCOUNT
First Monthly Variable Annuity Payment = A x B
----------
$1,000
<TABLE>
<CAPTION>
Where:
<S> <C>
A = The Contract value allocated to a Separate Account for the
Valuation Date or immediately preceding the seventh day before the
Annuity Commencement Date.
Assume....................................................................= $15,000.00
B = The Annuity purchase rate per $1,000 based upon the option
selected, the sex and adjusted age of the Annuitant according to
the tables contained in the Contract.
Assume....................................................................= 6.100000
</TABLE>
Then, the first Monthly Variable Payment
= $15,000 x $6.10 = $91.50
-------------------
$1,000
42
<PAGE>
EXAMPLE C
FORMULA AND ILLUSTRATION FOR DETERMINING
THE NUMBER OF ANNUITY UNITS FOR ONE SEPARATE ACCOUNT
REPRESENTED BY EACH MONTHLY VARIABLE ANNUITY PAYMENT
Number of Annuity Units = A
-
B
<TABLE>
<CAPTION>
Where:
<S> <C>
A = The dollar amount of the first monthly Variable Annuity Payment.
Assume....................................................................= $91.50
B = The Annuity Unit Value for the Valuation Date on or immediately
preceding the seventh day before the Annuity Commencement Date.
Assume....................................................................= $1.103300
</TABLE>
Then, the number of Annuity Units
= $91.50 = 82.933019
------
$1.103300
43
<PAGE>
EXAMPLE D
FORMULA AND ILLUSTRATION FOR DETERMINING
THE AMOUNT OF SECOND AND SUBSEQUENT MONTHLY VARIABLE
ANNUITY PAYMENTS FROM ONE SEPARATE ACCOUNT
Second Monthly Variable Annuity Payment = A x B
<TABLE>
<CAPTION>
Where:
<S> <C>
A = The number of Annuity Units represented by each monthly Variable
Annuity Payment.
Assume....................................................................= $82.933019
B = The Annuity Unit Value for the Valuation Date on or immediately
preceding the seventh day before the date on which the second (or
subsequent) Variable Annuity Payment is due.
Assume....................................................................= $1.128621
</TABLE>
Then, the second monthly Variable Annuity Payment
= $82.933019 x $1.128621 = $93.60
The above example was based upon the assumption of an increase in the Annuity
Unit Value since the initial Variable Annuity Payment due to favorable
investment results of the Separate Account and the Fund. If the investment
results were less favorable, a decrease in the Annuity Unit Value and in the
second monthly Variable Annuity Payment could result. Assume B above was
$1.074360.
Then, the second monthly Variable Annuity Payment
= $82.933019 x $1.074360 = $89.10
44
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE ANNUITY FUNDS M, P AND Q
INDIVIDUAL FLEXIBLE PAYMENT VARIABLE ANNUITY CONTRACTS
OFFERED BY
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
1000 Woodbury Lane, Suite 102
Woodbury, NY 11797
Telephone: (516) 682-8700
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1998
This Statement of Additional Information is not a Prospectus and should
be read in conjunction with the Contract's Prospectus, dated May 1, 1998, which
is available without charge by contacting ReliaStar Life Insurance Company of
New York at (800) 621-3750 or by writing to the following address:
ReliaStar Life Insurance Company of New York
Variable Annuity Administration Center
Route 4300
P.O. Box 59218
Minneapolis, MN 55429-0218
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Heading Page
- ------- ----
<S> <C>
GENERAL INFORMATION ABOUT THE COMPANY...........................................................................................S-2
CUSTODIAN AND ACCOUNTANTS.......................................................................................................S-2
UNDERWRITER.....................................................................................................................S-2
CALCULATION OF PERFORMANCE DATA.................................................................................................S-2
FINANCIAL STATEMENTS...........................................................................................................S-10
</TABLE>
<PAGE>
GENERAL INFORMATION ABOUT THE COMPANY
ReliaStar Life Insurance Company of New York ("ReliaStar" or the
"Company") is a stock life insurance company incorporated under the laws of the
State of New York in 1917 under the name The Morris Plan Insurance Society. It
adopted the name Bankers Security Life Insurance Society in 1946, ReliaStar
Bankers Security Life Insurance Company in 1996, and ReliaStar Life Insurance
Company of New York in 1998. ReliaStar is a wholly-owned subsidiary of
Security-Connecticut Life Insurance Company, which is in turn a wholly-owned
subsidiary of ReliaStar United Services Life Insurance Company ("ReliaStar
United Services") which in turn is wholly-owned by ReliaStar Life Insurance
Company, which is a subsidiary of ReliaStar Financial Corp. ReliaStar Financial
Corp. is a holding company incorporated under the laws of the State of Delaware
whose subsidiaries are engaged in life and health insurance and financial
services.
CUSTODIAN AND ACCOUNTANTS
A. Custodian
ReliaStar, whose address appears on the cover of the prospectus, is the
custodian of the assets of the Separate Accounts.
B. Accountants
The annual financial statements of ReliaStar Life Insurance Company of
New York Variable Annuity Funds P and Q as of December 31, 1997, which are
included in the Statement of Additional Information, and the annual financial
statements of ReliaStar, which are incorporated by reference in the Statement of
Additional Information, have been audited by Deloitte & Touche, LLP, independent
auditors, as stated in their reports, which are incorporated by reference and
included herein, and have been so incorporated and included in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.
UNDERWRITER
The Contracts are distributed in continuous offering by the principal
underwriter, Washington Square Securities, Inc. ("WSSI"), an affiliate of
ReliaStar and a subsidiary of ReliaStar Financial Corp. WSSI is a registered
broker/dealer under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc. The principal business address
of WSSI is 100 Washington Avenue South, Minneapolis, MN 55401. Prior to February
1, 1997, the principal underwriter for the Contracts was ReliaStar Financial
Marketing Corporation ("RFMC"), also an affiliate of ReliaStar. The Contracts
are sold by state-licensed insurance agents of ReliaStar who are also registered
representatives of broker/dealers who have sales agreements with WSSI. There are
no special purchase plans or exchange privileges not described in the Prospectus
(see "Charges and Other Deductions," on page 18 of the Prospectus). Commissions
paid to these and other broker/dealers obtaining applications for Contracts
accepted by ReliaStar will not exceed 6% of the Purchase Payments. The Contracts
are sold in those states where their sale is lawful. Under certain
circumstances, dealers may, in the calendar year in which they qualify, receive
their commissions in advance of Contract Owner purchase payments. During 1995,
1996 and 1997, RFMC received approximately $383,919.00, $0, and $0,
respectively, of commission income for the sale of variable annuity contracts
issued by ReliaStar. During 1996 and 1997, WSSI received $658,877 and $840,154,
respectively, of commission income for the sale of variable annuity contracts
issued by ReliaStar.
CALCULATION OF PERFORMANCE DATA
Current Yield and Effective Yield:
Current yield and effective yield will be calculated only for the
Oppenheimer Money Fund.
S-2
<PAGE>
The current yield is based on a seven-day period (the "base period")
and is calculated by determining the "net change in value" on a hypothetical
account having a balance of one Accumulation Unit at the beginning of the
period, dividing the net change in account value by the value of the account at
the beginning of the base period to obtain the base period return, and
multiplying the base period return by 365/7 with the resulting yield figure
carried to the nearest hundredth of one percent. The effective yield is computed
in a similar manner, except that the base period return is compounded by adding
1, raising the sum to a power equal to 365 divided by 7, and subtracting 1 from
the result, according to the following formula:
EFFECTIVE YIELD = [(Base Period Return + 1)(365/7)] - 1
Net changes in value of a hypothetical account will include net
investment income of the account (accrued daily dividends as declared by the
Oppenheimer Money Fund, less daily expense and contract charges to the account)
for the period, but will not include realized or unrealized gains or losses on
its underlying fund shares.
The Oppenheimer Money Fund's yield and effective yield will vary in
response to any fluctuations in interest rates and expenses of the Sub-Account.
The yield and effective yield of the Sub-Account for the seven-day
period ending December 31, 1997 were as follows:
Non-Qualified Contracts Qualified Contracts
Yield: 3.14% Yield: 3.13%
Effective Yield: 3.18% Effective Yield: 3.18%
Standardized Yield:
A standardized yield computation may be used for the Northstar Variable
Trust High Yield Bond Portfolio, the Oppenheimer Strategic Bond Fund, the
Oppenheimer Bond Fund and the VIP II Investment Grade Bond Portfolio
Sub-Accounts. The yield quotation will be based on a recent 30 day (or one
month) period, and is computed by dividing the net investment income per
Accumulation Unit earned during the period by the maximum offering price on the
last day of the period according to the following formula:
YIELD = 2[(a - b + 1)(6) - 1]
-----
cd
Where:
a = net investment earned during the period by the Fund or
Portfolio attributable to shares owned by the Sub-Account.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of Accumulation Units outstanding
during the period.
d = the maximum offering price per Accumulation Unit on the
last day of the period.
Yield on each Sub-Account is earned from dividends declared and paid by
the underlying Fund or Portfolio, which are automatically reinvested in Fund or
Portfolio shares.
S-3
<PAGE>
Average Annual Total Returns. From time to time, sales literature or
advertisements may also quote average annual total returns for one or more of
the Sub-Accounts for various periods of time.
Average annual total returns represent the average annual compounded
rates of return that would equate an initial investment of $1,000 under a
Contract to the redemption value of that investment as of the last day of each
of the periods. The ending date for each period for which total return
quotations are provided will be for the most recent month-end practicable,
considering the type and media of the communication and will be stated in the
communication.
Average annual total returns will be calculated using Sub-Account unit
values which the Company calculates on each Valuation Date based on the
performance of the Sub-Account's underlying portfolio, the deductions for the
Mortality and Expense Risk Charges, and the Contract Maintenance Charge. The
calculation assumes that the Contract Maintenance Charge is $30 per year per
Contract deducted at the end of each Contract year. For purposes of calculating
average annual total return, an average per dollar Contract Maintenance Charge
attributable to the hypothetical account for the period is used. The calculation
also assumes surrender of the Contract at the end of the period for the return
quotation. Total returns will therefore reflect a deduction of the surrender
charge for any period less than eight years. The total return will then be
calculated according to the following formula:
TR = ((ERV/P)(1/N)) - 1
Where:
TR = The average annual total return net of Sub-Account
recurring charges.
ERV = the ending redeemable value (net of any applicable
surrender charge) of the hypothetical account at
the end of the period.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
S-4
<PAGE>
Such average annual total return information for the
Sub-Accounts is as follows:
<TABLE>
<CAPTION>
QUALIFIED PLANS For the 1-year For the 5-year For the 10-year For the period from date
period ended period ended period ended of inception of
Sub-Account 12/31/97 12/31/97 12/31/97 Sub-Account to 12/31/97
- ----------- -------- -------- -------- -----------------------
<S> <C> <C> <C> <C>
Alliance Growth and Income Portfolio 20.12% 17.29% N/A 13.55%
(Inception: 12/27/90)
Alliance Short-Term Multi-Market Portfolio -3.10% 2.10% N/A 2.49%
(Inception: 11/26/90)
Northstar Variable Trust Growth Portfolio 6.37% N/A N/A 7.27%
(Inception: 12/10/96)
Northstar Variable Trust High Yield Bond 4.00% N/A N/A 10.76%
Portfolio
(Inception: 8/14/95)
Northstar Variable Trust Income and 7.88% N/A N/A 10.97%
Growth Portfolio
(Inception: 7/17/95)
Northstar Variable Trust International N/A N/A N/A N/A
Value Portfolio
(Inception: 5/1/98)
Oppenheimer Aggressive Growth Fund 3.89% 14.04% 14.57% 13.02%
(Inception: 6/16/87)
Oppenheimer Bond Fund 1.69% N/A N/A 6.42%
(Inception: 3/14/95)
Oppenheimer Global Securities Fund 13.84% 16.72% N/A 10.65%
(Inception: 11/12/90)
Oppenheimer Growth Fund 18.42% N/A N/A 25.85%
(Inception: 3/14/95)
Oppenheimer High Income Fund 4.14% 11.74% 12.69% 12.01%
(Inception: 6/16/87)
Oppenheimer Money Fund -2.41% 2.73% 4.38% 4.40%
(Inception: 5/27/87)
Oppenheimer Multiple Strategies Fund 9.23% 11.37% 11.20% 10.00%
(Inception: 5/27/87)
Oppenheimer Strategic Bond Fund 0.96% N/A N/A 9.61%
(Inception: 3/20/95)
VIP Equity-Income Portfolio 19.78% N/A N/A 19.54%
(Inception: 5/16/95)
S-5
<PAGE>
VIP Growth Portfolio 14.90% N/A N/A 19.10%
(Inception: 5/31/95)
VIP II Asset Manager Portfolio 12.33% N/A N/A 14.69%
(Inception: 6/1/95)
VIP II Contrafund Portfolio 15.86% N/A N/A 16.26%
(Inception: 11/12/96)
VIP II Index 500 Portfolio 23.94% N/A N/A 25.10%
(Inception: 5/16/95)
VIP II Investment Grade Bond Portfolio 1.50% N/A N/A 4.00%
(Inception: 9/16/95)
NON-QUALIFIED PLANS For the 1-year For the 5-year For the 10-year For the period from date
period ended period ended period ended of inception of
Sub-Account 12/31/97 12/31/97 12/31/97 Sub-Account to 12/31/97
- ----------- -------- -------- -------- -----------------------
Alliance Growth and Income Portfolio 20.12% 17.19% N/A 13.50%
(Inception: 1/31/91)
Alliance Short-Term Multi-Market Portfolio -3.10% 2.08% N/A 2.53%
(Inception: 11/23/90)
Northstar Variable Trust Growth Portfolio 6.38% N/A N/A 7.44%
(Inception: 11/1/96)
Northstar Variable Trust High Yield Bond 4.00% N/A N/A 10.96%
Portfolio
(Inception: 9/8/95)
Northstar Variable Trust Income and 7.88% N/A N/A 12.71%
Growth Portfolio
(Inception: 5/31/95)
Northstar Variable Trust International N/A N/A N/A N/A
Value Portfolio
(Inception: 5/1/98)
Oppenheimer Aggressive Growth Fund 3.89% 13.98% 14.30% 12.36%
(Inception: 7/30/87)
Oppenheimer Bond Fund 1.69% N/A N/A 4.52%
(Inception: 6/22/95)
Oppenheimer Global Securities Fund 13.84% 16.70% N/A 10.61%
(Inception: 11/9/90)
Oppenheimer Growth Fund 18.42% N/A N/A 25.38%
(Inception: 3/24/95)
Oppenheimer High Income Fund 4.14% 11.76% 12.69% 12.05%
(Inception: 8/28/87)
S-6
<PAGE>
Oppenheimer Money Fund -2.41% 2.72% 4.41% 4.49%
(Inception: 6/2/87)
Oppenheimer Multiple Strategies Fund 9.23% 11.38% 11.06% 10.28%
(Inception: 6/2/87)
Oppenheimer Strategic Bond Fund 0.96% N/A N/A 9.40%
(Inception: 4/3/95)
VIP Equity-Income Portfolio 19.77% N/A N/A 20.02%
(Inception: 5/25/95)
VIP Growth Portfolio 14.90% N/A N/A 17.88%
(Inception: 5/25/95)
VIP II Asset Manager Portfolio 12.33% N/A N/A 15.02%
(Inception: 6/8/95)
VIP II Contrafund Portfolio 15.86% N/A N/A 19.19%
(Inception: 11/1/96)
VIP II Index 500 Portfolio 23.94% N/A N/A 25.25%
(Inception: 5/23/95)
VIP II Investment Grade Bond Portfolio 1.50% N/A N/A 4.04%
(Inception: 6/19/95)
</TABLE>
Other Total Returns. From time to time, sales literature or
advertisements may quote average annual total returns for the Sub-Accounts that
do not reflect the surrender charge. These returns are calculated in exactly the
same way as average annual total returns described above, except that the ending
redeemable value of the hypothetical account for the period is replaced with an
ending value for the period that does not take into account any charges on
amounts surrendered or withdrawn. Such information is as follows:
<TABLE>
<CAPTION>
Returns Since Sub-Accounts Commenced Operations
-----------------------------------------------
QUALIFIED PLANS For the 1-year For the 5-year For the 10-year For the period from date
period ended period ended period ended of inception of
Sub-Account 12/31/97 12/31/97 12/31/97 Sub-Account to 12/31/97
- ----------- -------- -------- -------- -----------------------
<S> <C> <C> <C>
Alliance Growth and Income Portfolio 26.42% 17.63% N/A 13.61%
(Inception: 12/27/90)
Alliance Short-Term Multi-Market Portfolio 3.20% 2.68% N/A 2.59%
(Inception: 11/26/90)
Northstar Variable Trust Growth Portfolio 12.67% N/A N/A 13.20%
(Inception: 12/10/96)
Northstar Variable Trust High Yield Bond 10.30% N/A N/A 12.49%
Portfolio
(Inception: 8/14/95)
Northstar Variable Trust Income and 14.18% N/A N/A 12.62%
Growth Portfolio
(Inception: 7/17/95)
S-7
<PAGE>
Northstar Variable Trust International N/A N/A N/A N/A
Value Portfolio
(Inception 5/1/98)
Oppenheimer Aggressive Growth Fund 10.19% 14.41% 14.57% 13.02%
(Inception: 6/16/87)
Oppenheimer Bond Fund 7.99% N/A N/A 7.93%
(Inception: 3/14/95)
Oppenheimer Global Securities Fund 20.14% 17.06% N/A 10.71%
(Inception: 11/12/90)
Oppenheimer Growth Fund 24.72% N/A N/A 26.98%
(Inception: 3/14/95)
Oppenheimer High Income Fund 10.44% 12.15% 12.69% 12.01%
(Inception: 6/16/87
Oppenheimer Money Fund 3.89% 3.30% 4.38% 4.40%
(Inception: 5/27/87
Oppenheimer Multiple Strategies Fund 15.53% 11.79% 11.20% 10.00%
(Inception: 5/27/87)
Oppenheimer Strategic Bond Fund 7.26% N/A N/A 11.05%
(Inception: 3/20/95)
VIP Equity-Income Portfolio 26.08% N/A N/A 20.90%
(Inception: 5/16/95)
VIP Growth Portfolio 21.20% N/A N/A 20.49%
(Inception: 5/31/95)
VIP II Asset Manager Portfolio 18.63% N/A N/A 16.17%
(Inception: 6/1/95)
VIP II Contrafund Portfolio 22.16% N/A N/A 21.69%
(Inception: 11/1/96)
VIP II Index 500 Portfolio 30.24% N/A N/A 26.36%
(Inception: 5/16/95)
VIP II Investment Grade Bond Portfolio 7.80% N/A N/A 5.94%
(Inception: 9/16/95)
</TABLE>
<TABLE>
<CAPTION>
NON-QUALIFIED PLANS For the 1-year For the 5-year For the 10-year For the period from date
period ended period ended period ended of inception of
Sub-Account 12/31/97 12/31/97 12/31/97 Sub-Account to 12/31/97
- ----------- -------- -------- -------- -----------------------
<S> <C> <C> <C>
Alliance Growth and Income Portfolio 26.42% 17.53% N/A 13.61%
(Inception: 1/31/91)
Alliance Short-Term Multi-Market Portfolio 3.20% 2.67% N/A 2.62%
(Inception: 11/23/90)
S-8
<PAGE>
Northstar Variable Trust Growth Portfolio 12.68% N/A N/A 12.77%
(Inception: 11/1/96)
Northstar Variable Trust High Yield Bond 10.30% N/A N/A 12.75%
Portfolio
(Inception: 9/8/95)
Northstar Variable Trust Income and 14.18% N/A N/A 14.22%
Growth Portfolio
(Inception: 5/31/95)
Northstar Variable Trust International N/A N/A N/A N/A
Value Portfolio
(Inception: 5/1/98)
Oppenheimer Aggressive Growth Fund 10.19% 14.36% 14.30% 12.36%
(Inception: 7/30/87)
Oppenheimer Bond Fund 7.99% N/A N/A 6.27%
(Inception: 6/22/95)
Oppenheimer Global Securities Fund 20.14% 17.05% N/A 10.67%
(Inception: 11/9/90)
Oppenheimer Growth Fund 24.72% N/A N/A 26.53%
(Inception: 3/24/95)
Oppenheimer High Income Fund 10.44% 12.17% 12.69% 12.05%
(Inception: 8/28/87)
Oppenheimer Money Fund 3.89% 3.29% 4.41% 4.49%
(Inception: 6/2/87)
Oppenheimer Multiple Strategies Fund 15.53% 11.79% 11.06% 10.28%
(Inception: 6/2/87)
Oppenheimer Strategic Bond Fund 7.26% N/A N/A 10.88%
(Inception: 4/3/95)
VIP Equity-Income Portfolio 26.07% N/A N/A 21.38%
(Inception: 5/25/95)
VIP Growth Portfolio 21.20% N/A N/A 19.28%
(Inception: 5/25/95)
VIP II Asset Manager Portfolio 18.63% N/A N/A 16.51%
(Inception: 6/8/95)
VIP II Contrafund Portfolio 22.16% N/A N/A 24.42%
(Inception: 11/1/96)
VIP II Index 500 Portfolio 30.24% N/A N/A 26.52%
(Inception: 5/23/95)
VIP II Investment Grade Bond Portfolio 7.80% N/A N/A 5.80%
(Inception: 6/19/95)
</TABLE>
S-9
<PAGE>
The Company may disclose Cumulative Total Returns in conjunction with
the standard formats described above. The Cumulative Total Returns will be
calculated using the following formula.
CTR = ERV/P - 1
Where:
CTR = The Cumulative Total Return net of Sub-Account recurring charges
for the period.
ERV = the ending redeemable value of the hypothetical investment at the
end of the period.
P = a hypothetical single payment of $1,000.
Effect of the Annual Administrative Charge on Performance Data. The
Contract provides for a $30 Contract Maintenance Charge to be deducted annually
at the end of each Contract year, from the Sub-Accounts and the Fixed Account
based on the proportion that the value of each such account bears to the total
Contract Value. For purposes of reflecting the Contract Maintenance Charge in
yield and total return quotations, the annual charge is converted into an annual
charge per $1,000 invested based on the Annual Contract Charges collected from
the average total assets of the Variable Account and Fixed Account during the
calendar year ending December 31, 1997.
FINANCIAL STATEMENTS
The Statement of Additional Information includes Financial Statements
of the ReliaStar Life Insurance Company of New York Variable Annuity Funds P and
Q for The USA Plan as of December 31, 1997 and for each of the two years in the
period then ended. Deloitte & Touche, LLP served as independent auditors for the
years ended December 31, 1997 and 1996.
The Company's statement of financial condition as of December 31, 1997
and 1996, and the related statements of operations, changes of capital and
surplus and cash flows for the years ended December 31, 1997 and 1996 which are
incorporated by reference in this Statement of Additional Information, should be
considered only as bearing on the Company's ability to meet its obligations
under the Contracts. They should not be considered as bearing on the investment
performance of the assets held in the Variable Account.
S-10
<PAGE>
Independent Auditors' Report
Board of Directors
ReliaStar Life Insurance Company of New York
and ReliaStar Life Insurance Company of New York
Variable Annuity Funds P and Q for the USA Plan Contract Owners:
We have audited the accompanying combined statement of assets and liabilities of
ReliaStar Life Insurance Company of New York Variable Annuity Funds P and Q for
the USA Plan as of December 31, 1997 and the related combined statement of
operations and changes in contract owners' equity for the years ended December
31, 1997 and 1996. These financial statements are the responsibility of the
management of ReliaStar Life Insurance Company of New York. Our responsibility
is to express an opinion on these financial statements based on our audits.
We have conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures include
confirmation of the securities owned as of December 31, 1997, by correspondence
with the account custodians. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ReliaStar Life Insurance
Company of New York Variable Annuity Funds P and Q for the USA Plan as of
December 31, 1997 and the results of its combined operations and changes in
contract owners' equity for the years ended December 31, 1997 and 1996, in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Minneapolis, Minnesota
February 20, 1998
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE FUNDS P AND Q FOR THE USA PLAN
COMBINED STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31,1997
ASSETS:
Investments in mutual funds at market value:
<TABLE>
<CAPTION>
Shares Cost Market Value
-------- ----------- ------------
<S> <C> <C> <C>
Alliance Variable Products Series Fund:
Growth and Income Portfolio.......................... 482,566 $6,386,937 $9,617,533
Short-Term Multi-Market Portfolio.................... 72,676 744,478 768,184
Fidelity's Variable Insurance Products Fund (VIP)
and Variable Insurance Products Fund II (VIP II):
Asset Manager Portfolio ............................. 99,917 1,574,483 1,799,507
Contrafund Portfolio ................................ 105,565 1,865,181 2,104,967
Equity-Income Portfolio ............................. 352,173 6,991,034 8,550,766
Growth Portfolio .................................... 180,489 5,517,490 6,696,148
Index 500 Portfolio ................................. 56,591 688,564 710,788
Investment Grade Bond Portfolio ..................... 73,069 7,292,199 8,358,378
Northstar Variable Trust:
Growth Portfolio .................................... 129,094 1,914,492 2,046,136
High-Yield Bond Portfolio ........................... 1,056,685 5,616,373 5,600,428
Income & Growth Portfolio ........................... 179,606 2,249,231 2,334,877
Oppenheimer Variable Account Funds:
Bond Fund............................................ 38,657 450,386 460,404
Capital Appreciation Fund............................ 1,175,322 26,612,023 48,141,174
Global Securites Fund................................ 20,115 5,392,361 6,525,131
Growth Fund.......................................... 1,383,062 20,840,525 29,556,037
High Income Fund..................................... 2,064,311 21,398,135 23,780,867
Money Fund........................................... 7,121,867 7,121,866 7,121,866
Multiple Strategies Fund............................. 3,052,608 36,789,149 51,924,870
Strategic Bond Fund.................................. 266,204 1,335,061 1,362,963
============== =============
Total Investments .............................................. $160,779,968
Total Assets ................................................................ $217,461,024
=============
LIABILITIES AND CONTRACT OWNERS' EQUITY:
Due to ReliaStar Life Insurance Company of New York
for contract charges and reserve transfers .......... $315,271
Contract Owners' Equity .................................. 217,145,753
-------------
Total Liabilities and Contract Owners' Equity ... $217,461,024
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE ANNUITY FUNDS P AND Q FOR THE USA PLAN
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY
For the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
Total All Funds Alliance
Combined Growth and Income
------------------------------- -------------------------------
1997 1996 1997 1996
----------- ----------- ---------- -----------
<S> <C>
Net investment income:
Reinvested dividend income................................ $10,926,407 $11,389,208 $459,951 $1,000,205
Reinvested capital gains.................................. 73,934 - - -
Administrative expenses................................... (2,678,134) (2,304,654) (105,001) (78,165)
----------- ---------- --------- ---------
Net investment income (loss)
and capital gains................................... 8,322,207 9,084,554 354,950 922,040
----------- ---------- --------- ---------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares............................. 20,199,268 1,879,223 391,608 10,402
Increase (decrease) in unrealized
appreciation of investments............................ 349,817 15,329,276 1,188,137 343,053
----------- ---------- --------- ---------
Net realized and unrealized
gains (losses)........................................ 20,549,085 17,208,499 1,579,745 353,455
----------- ---------- --------- ---------
Additions from operations .............................. 28,871,292 26,293,053 1,934,695 1,275,495
----------- ---------- --------- ---------
Contract Owners' transactions:
Net premium payments .................................... 23,921,527 15,291,786 954,159 424,920
Transfers between sub-accounts .......................... 2,276,787 3,780,759 633,296 252,161
Surrenders and other benefits ........................... (25,073,461) (27,284,431) (747,470) (666,602)
Death benefits .......................................... (1,176,334) - (47,320) -
Transfers to (from) required reserves .................... - (1,113,785) - 50,930
Annuity payments ........................................ (700,489) - (2,177) -
----------- ---------- --------- ---------
(Reductions) additions for contract
owners' transactions.............................. (751,970) (9,325,671) 790,488 61,409
----------- ---------- --------- ---------
Net additions (reductions) for the year............... 28,119,322 16,967,382 2,725,183 1,336,904
Contract Owners' Equity, beginning of the year................. 189,026,431 172,059,049 6,880,041 5,543,137
----------- ---------- --------- ---------
Contract Owners' Equity, end of the year....................... $217,145,753 $189,026,431 $9,605,224 $6,880,041
============ =========== ========= =========
Units Outstanding, beginning of the year....................... 84,888,702 85,967,772 3,544,100.000 3,494,289.000
Units Outstanding, end of the year............................. 92,145,143 84,888,702 3,926,754.519 3,544,100.000
Net Asset Value per Unit:
Tax-Qualified........................................... $2.463076 $1.947000
Non Tax-Qualified....................................... $2.432149 $1.922000
</TABLE>
<TABLE>
<CAPTION>
Alliance
Short-Term Multi-Market
--------------------------
1997 1996
--------- ----------
<S> <C>
Net investment income:
Reinvested dividend income................................ $52,652 $62,769
Reinvested capital gains.................................. - -
Administrative expenses................................... (11,180) (11,694)
------- -------
Net investment income (loss)
and capital gains................................... 41,472 51,075
------- -------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares............................. (98,935) 8,990
Increase (decrease) in unrealized
appreciation of investments............................ 84,384 7,029
------- -------
Net realized and unrealized
gains (losses)........................................ (14,551) 16,019
------- -------
Additions from operations .............................. 26,921 67,094
------- -------
Contract Owners' transactions:
Net premium payments .................................... 242,523 20,318
Transfers between sub-accounts .......................... (181,323) (131,832)
Surrenders and other benefits ........................... (203,418) (43,398)
Death benefits .......................................... - -
Transfers to (from) required reserves .................... - 71,549
Annuity payments ........................................ - -
------- -------
(Reductions) additions for contract
owners' transactions.............................. (142,218) (83,363)
------- -------
Net additions (reductions) for the year............... (115,297) (16,269)
Contract Owners' Equity, beginning of the year................. 882,625 898,894
------- -------
Contract Owners' Equity, end of the year....................... $767,328 $882,625
======= =======
Units Outstanding, beginning of the year....................... 752,901.000 832,309.000
Units Outstanding, end of the year............................. 633,688.103 752,901.000
Net Asset Value per Unit:
Tax-Qualified........................................... $1.208833 $1.170000
Non Tax-Qualified....................................... $1.211796 $1.173000
</TABLE>
<TABLE>
<CAPTION>
Fidelity's VIP II Fidelity's VIP II
Asset Manager Portfolio Contrafund Portflio
----------------------------- --------------------------
1997 1996 1997 1996
----------- ---------- ---------- ---------
<S> <C>
Net investment income:
Reinvested dividend income............................... $135,703 $32,151 $6,790 $ -
Reinvested capital gains................................. - - - -
Administrative expenses.................................. (18,425) (10,650) (14,796) (300)
------- ------- ------ ----
Net investment income (loss)
and capital gains.................................. 117,278 21,501 (8,006) (300)
------- ------- ------ ----
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares............................ 10,269 (5,231) 10,255 -
Increase (decrease) in unrealized
appreciation of investments........................... 118,761 86,934 238,800 986
------- ------- ------ ----
Net realized and unrealized
gains (losses)....................................... 129,030 81,703 249,055 986
------- ------- ------ ----
Additions from operations ............................. 246,308 103,204 241,049 686
------- ------- ------ ----
Contract Owners' transactions:
Net premium payments ................................... 342,856 377,780 509,140 -
Transfers between sub-accounts ......................... 221,150 283,666 1,182,684 205,461
Surrenders and other benefits .......................... (60,692) (58,693) (36,330) -
Death benefits ......................................... (27,399) - - -
Transfers to (from) required reserves ................... - 266 - 6
Annuity payments ....................................... (1,601) - - -
------- ------- ------ ----
(Reductions) additions for contract
owners' transactions............................. 474,314 603,019 1,655,494 205,467
------- ------- ------ ----
Net additions (reductions) for the year.............. 720,622 706,223 1,896,543 206,153
Contract Owners' Equity, beginning of the year................ 1,077,456 371,233 206,153 -
------- ------- ------ ----
Contract Owners' Equity, end of the year...................... $1,798,078 $1,077,456 $2,102,696 $206,153
========= ========= ========== =======
Units Outstanding, beginning of the year...................... 849,553.000 334,444.000 201,223.000 -
Units Outstanding, end of the year............................1,212,443.806 849,553.000 1,650,970.899 201,223.000
Net Asset Value per Unit:
Tax-Qualified.......................................... $1.477435 $1.244000 $1.251682 $1.024000
Non Tax-Qualified...................................... $1.484035 $1.250000 $1.292027 $1.057000
</TABLE>
<TABLE>
<CAPTION>
Fidelity's VIP
Equity-Income Portfolio
-----------------------------
1997 1996
---------- ---------
<S> <C>
Net investment income:
Reinvested dividend income............................... $516,789 $115,792
Reinvested capital gains................................. - -
Administrative expenses.................................. (86,079) (48,603)
-------- --------
Net investment income (loss)
and capital gains.................................. 430,710 67,189
-------- --------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares............................ 186,880 (10,636)
Increase (decrease) in unrealized
appreciation of investments........................... 975,944 427,623
-------- --------
Net realized and unrealized
gains (losses)....................................... 1,162,824 416,987
-------- --------
Additions from operations ............................. 1,593,534 484,176
-------- --------
Contract Owners' transactions:
Net premium payments ................................... 1,292,516 958,112
Transfers between sub-accounts ......................... 1,198,468 1,478,431
Surrenders and other benefits .......................... (352,551) (333,217)
Death benefits ......................................... (89,764) -
Transfers to (from) required reserves ................... - 15,552
Annuity payments ....................................... (1,686) -
-------- --------
(Reductions) additions for contract
owners' transactions............................. 2,046,983 2,118,878
-------- --------
Net additions (reductions) for the year.............. 3,640,517 2,603,054
Contract Owners' Equity, beginning of the year................ 4,896,335 2,293,281
-------- --------
Contract Owners' Equity, end of the year...................... $8,536,852 $4,896,335
========= ==========
Units Outstanding, beginning of the year...................... 3,716,050.000 1,965,501.000
Units Outstanding, end of the year............................ 5,150,968.435 3,716,050.000
Net Asset Value per Unit:
Tax-Qualified.......................................... $1.651183 $1.309000
Non Tax-Qualified...................................... $1.660592 $1.316000
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE ANNUITY FUNDS P AND Q FOR THE USA PLAN
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, Continued
For the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
Fidelity's VIP
Growth Portfolio
---------------------------------------------
1997 1996
------ ------
<S> <C>
Net investment income:
Reinvested dividend income..................... $174,719 $217,126
Reinvested capital gains....................... - -
Administrative expenses........................ (76,558) (49,094)
---------------- ----------------
Net investment income (loss)
and capital gains........................ 98,161 168,032
---------------- ----------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares 154,660 (72,245)
Increase (decrease) in unrealized
appreciation of investments 872,572 342,596
---------------- ----------------
Net realized and unrealized
gains (losses)............................. 1,027,232 270,351
---------------- ----------------
Additions from operations ................... 1,125,393 438,383
---------------- ----------------
Contract Owners' transactions:
Net premium payments .......................... 1,057,986 1,385,667
Transfers between sub-accounts ................ 237,002 312,321
Surrenders and other benefits ................. (223,928) (548,078)
Death benefits ................................ (18,264) -
Transfers to (from) required reserves ......... - 13,500
Annuity payments .............................. - -
---------------- ----------------
Additions (reductions) for Contract
owners' transactions................... 1,052,796 1,163,410
---------------- ----------------
Net additions (reductions) for the year.... 2,178,189 1,601,793
Contract Owners' Equity, beginning of the year...... 4,511,425 2,909,632
---------------- ----------------
Contract Owners' Equity, end of the year............ $6,689,614 $4,511,425
================ ================
Units Outstanding, beginning of the year 3,410,873.000 2,506,469.000
Units Outstanding, end of the year 4,167,949.732 3,410,873.000
Net Asset Value per Unit:
Tax-Qualified $1.624095 $1.339000
Non Tax-Qualified $1.586882 $1.308000
</TABLE>
<TABLE>
<CAPTION>
Fidelity's VIP II
Investment Grade
Bond Portfolio
----------------------------------------------------
1997 1996
------------------- ----------------------
<S> <C>
Net investment income:
Reinvested dividend income..................... $15,789 $5,092
Reinvested capital gains....................... - -
Administrative expenses........................ (4,119) (2,609)
---------------- ----------------
Net investment income (loss)
and capital gains........................ 11,670 2,483
---------------- ----------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares (480) (2,614)
Increase (decrease) in unrealized
appreciation of investments 14,642 5,159
---------------- ----------------
Net realized and unrealized
gains (losses)............................. 14,162 2,545
---------------- ----------------
Additions from operations ................... 25,832 5,028
---------------- ----------------
Contract Owners' transactions:
Net premium payments .......................... 36,527 83,686
Transfers between sub-accounts ................ 409,625 196,457
Surrenders and other benefits ................. (1,753) (112,220)
Death benefits ................................ - -
Transfers to (from) required reserves ......... - 174
Annuity payments .............................. (653) -
---------------- ----------------
Additions (reductions) for Contract
owners' transactions................... 443,746 168,097
---------------- ----------------
Net additions (reductions) for the year.... 469,578 173,125
Contract Owners' Equity, beginning of the year...... 240,574 67,449
---------------- ----------------
Contract Owners' Equity, end of the year............ $710,152 $240,574
================ ================
Units Outstanding, beginning of the year 216,623.000 63,740.000
Units Outstanding, end of the year 612,978.577 216,623.000
Net Asset Value per Unit:
Tax-Qualified $1.146863 $1.063000
Non Tax-Qualified $1.611880 $1.076000
</TABLE>
<TABLE>
<CAPTION>
Fidelity's VIP II
Index 500 Portfolio
-------------------------------------
1997 1996
--------------- --------------
<S> <C>
Net investment income:
Reinvested dividend income..................... $128,703 $61,371
Reinvested capital gains....................... - -
Administrative expenses........................ (76,743) (28,781)
---------------- ----------------
Net investment income (loss)
and capital gains........................ 51,960 32,590
---------------- ----------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares 796,830 1,882
Increase (decrease) in unrealized
appreciation of investments 572,472 427,064
---------------- ----------------
Net realized and unrealized
gains (losses)............................. 1,369,302 428,946
---------------- ----------------
Additions from operations ................... 1,421,262 461,536
---------------- ----------------
Contract Owners' transactions:
Net premium payments .......................... 1,872,920 1,053,924
Transfers between sub-accounts ................ 2,299,262 1,077,726
Surrenders and other benefits ................. (331,299) (215,342)
Death benefits ................................ (113,027) -
Transfers to (from) required reserves ......... - 3,077
Annuity payments .............................. - -
---------------- ----------------
Additions (reductions) for Contract
owners' transactions................... 3,727,856 1,919,385
---------------- ----------------
Net additions (reductions) for the year.... 5,149,118 2,380,921
Contract Owners' Equity, beginning of the year...... 3,201,884 820,963
---------------- ----------------
Contract Owners' Equity, end of the year............ $8,351,002 $3,201,884
================ ================
Units Outstanding, beginning of the year 2,252,510.000 701,678.000
Units Outstanding, end of the year 4,506,448.253 2,252,510.000
Net Asset Value per Unit:
Tax-Qualified $1.854287 $1.423000
Non Tax-Qualified $1.852119 $1.421000
</TABLE>
<TABLE>
<CAPTION>
Northstar Variable Trust
Growth Portfolio
---------------------------------------------
1997 1996
--------------- ------------------
<S> <C>
Net investment income:
Reinvested dividend income........................ $10,145 $496
Reinvested capital gains.......................... 21,554 -
Administrative expenses........................... (14,845) (96)
---------------- ----------------
Net investment income (loss)
and capital gains........................... 16,854 400
---------------- ----------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares 15,294 -
Increase (decrease) in unrealized
appreciation of investments 130,841 803
---------------- ----------------
Net realized and unrealized
gains (losses)............................... 146,135 803
---------------- ----------------
Additions from operations ..................... 162,989 1,203
---------------- ----------------
Contract Owners' transactions:
Net premium payments ............................ 1,372,624 -
Transfers between sub-accounts .................. 413,719 116,228
Surrenders and other benefits ................... (22,624) -
Death benefits .................................. - -
Transfers to (from) required reserves ........... - (187)
Annuity payments ................................ - -
---------------- ----------------
Additions (reductions) for Contract
owners' transactions..................... 1,763,719 116,041
---------------- ----------------
Net additions (reductions) for the year...... 1,926,708 117,244
Contract Owners' Equity, beginning of the year........ 117,244 -
---------------- ----------------
Contract Owners' Equity, end of the year................ $2,043,952 $117,244
================ ================
Units Outstanding, beginning of the year 114,750.000 -
Units Outstanding, end of the year 1,776,856.244 114,750.000
Net Asset Value per Unit:
Tax-Qualified $1.142348 $1.013000
Non Tax-Qualified $1.152406 $1.022000
</TABLE>
<TABLE>
<CAPTION>
Northstar Variable Trust
High Yield Bond Portfolio
---------------------------------------------
1997 1996
---------------- ------------------
<S> <C>
Net investment income:
Reinvested dividend income..................... $305,627 $48,669
Reinvested capital gains....................... 37,740 -
Administrative expenses........................ (46,360) (4,265)
---------------- ----------------
Net investment income (loss)
and capital gains....................... 297,007 44,404
---------------- ----------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares 24,731 (231)
Increase (decrease) in unrealized
appreciation of investments (16,934) 410
---------------- ----------------
Net realized and unrealized
gains (losses)............................. 7,797 179
---------------- ----------------
Additions from operations ................... 304,804 44,583
---------------- ----------------
Contract Owners' transactions:
Net premium payments .......................... 2,414,521 1,419,568
Transfers between sub-accounts ................ 1,387,781 (91,186)
Surrenders and other benefits ................. (25,779) (84)
Death benefits ................................ - -
Transfers to (from) required reserves ......... - 13,471
Annuity payments .............................. - -
---------------- ----------------
Additions (reductions) for Contract
owners' transactions................... 3,776,523 1,341,769
---------------- ----------------
Net additions (reductions) for the year..... 4,081,327 1,386,352
Contract Owners' Equity, beginning of the year...... 1,446,494 60,142
---------------- ----------------
Contract Owners' Equity, end of the year............ $5,527,821 $1,446,494
================ ================
Units Outstanding, beginning of the year 1,205,727.000 59,894.000
Units Outstanding, end of the year 4,171,746.896 1,205,727.000
Net Asset Value per Unit:
Tax-Qualified $1.327522 $1.202000
Non Tax-Qualified $1.323811 $1.199000
</TABLE>
The accompanying notes are integral part of the financial statements.
3
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE ANNUITY FUNDS P AND Q FOR THE USA PLAN
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, Continued
For the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
Northstar Variable Trust Oppenheimer Variable Account
Income & Growth Fund Bond Fund
-------------------------- ------------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C>
Net investment income:
Reinvested dividend income .......................... $ 63,290 $ 42,327 $ 22,363 $ 14,799
Reinvested capital gains ............................ 14,640 -- -- --
Administrative expenses ............................. (19,973) (3,448) (4,232) (2,993)
------------ ------------ ------------ ------------
Net investment income (loss)
and capital gains ............................. 57,957 38,879 18,131 11,806
------------ ------------ ------------ ------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares ....................... 47,441 16,131 1,175 (1,066)
Increase (decrease) in unrealized
appreciation of investments ...................... 85,775 (942) 7,221 612
------------ ------------ ------------ ------------
Net realized and unrealized
gains (losses) .................................. 133,216 15,189 8,396 (454)
------------ ------------ ------------ ------------
Additions from operations ......................... 191,173 54,068 26,527 11,352
------------ ------------ ------------ ------------
Contract Owners' transactions:
Net premium payments ................................ 1,549,456 315,570 140,636 86,973
Transfers between sub-accounts ...................... 205,395 32,962 35,173 46,740
Surrenders and other benefits ....................... (68,355) (1,918) (25,026) (2,891)
Death benefits ...................................... -- -- -- --
Transfers to (from) required reserves ............... -- 56 -- (28)
Annuity payments .................................... -- -- -- --
------------ ------------ ------------ ------------
Additions (reductions) for Contract
owners' transactions ........................ 1,686,496 346,670 150,783 130,794
------------ ------------ ------------ ------------
Net additions (reductions) for the year ......... 1,877,669 400,738 177,310 142,146
Contract Owners' Equity, beginning of the year ........... 454,703 53,965 282,601 140,455
------------ ------------ ------------ ------------
Contract Owners' Equity, end of the year ................. $ 2,332,372 $ 454,703 $ 459,911 $ 282,601
============ ============ ============ ============
Units Outstanding, beginning of the year ................. 374,473.000 51,562.000 254,023.000 129,901.000
Units Outstanding, end of the year ....................... 1,686,071.506 374,473.000 376,316.601 254,023.000
Net Asset Value per Unit:
Tax-Qualified .................................... $ 1.343508 $ 1.175000 $ 1.241947 $ 1.149000
Non Tax-Qualified ................................. $ 1.414794 $ 1.238000 $ 1.169920 $ 1.082000
</TABLE>
<TABLE>
<CAPTION>
Oppenheimer Variable Account Oppenheimer Variable Account
Capital Appreciation Fund Global Securities Fund
------------------------------ ------------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C>
Net investment income:
Reinvested dividend income .......................... $ 2,281,753 $ 2,914,408 $ 338,554 $ --
Reinvested capital gains ............................ -- -- -- --
Administrative expenses ............................. (641,717) (610,215) (380,407) (326,866)
------------ ------------ ------------ ------------
Net investment income (loss)
and capital gains ............................. 1,640,036 2,304,193 (41,853) (326,866)
------------ ------------ ------------ ------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares ....................... 6,729,226 376,499 5,863,548 264,885
Increase (decrease) in unrealized
appreciation of investments ...................... (3,954,989) 5,704,387 (221,938) 3,699,632
------------ ------------ ------------ ------------
Net realized and unrealized
gains (losses) .................................. 2,774,237 6,080,886 5,641,610 3,964,517
------------ ------------ ------------ ------------
Additions from operations ......................... 4,414,273 8,385,079 5,599,757 3,637,651
------------ ------------ ------------ ------------
Contract Owners' transactions:
Net premium payments ................................ 3,098,829 3,254,062 2,150,487 1,197,260
Transfers between sub-accounts ...................... (2,702,824) 1,165,258 (1,364,976) 3,955,958
Surrenders and other benefits ....................... (6,052,831) (7,156,859) (2,605,695) (3,050,134)
Death benefits ...................................... (379,972) -- (128,418) --
Transfers to (from) required reserves ............... -- (852,858) -- (407,490)
Annuity payments .................................... (7,721) -- (401,811) --
------------ ------------ ------------ ------------
Additions (reductions) for Contract
owners' transactions ........................ (6,044,519) (3,590,397) (2,350,413) 1,695,594
------------ ------------ ------------ ------------
Net additions (reductions) for the year ......... (1,630,246) 4,794,682 3,249,344 5,333,245
Contract Owners' Equity, beginning of the year ........... 49,714,113 44,919,431 26,274,793 20,941,548
------------ ------------ ------------ ------------
Contract Owners' Equity, end of the year ................. $ 48,083,867 $ 49,714,113 $ 29,524,137 $ 26,274,793
============ ============ ============ ============
Units Outstanding, beginning of the year .................15,499,076.000 16,627,105.000 15,214,589.000 14,145,725.000
Units Outstanding, end of the year .......................13,590,284.826 15,499,076.000 14,200,945.115 15,214,589.000
Net Asset Value per Unit:
Tax-Qualified .................................... $ 3.662870 $ 3.321000 $ 2.080589 $ 1.726000
Non Tax-Qualified ................................. $ 3.397915 $ 3.080000 $ 2.077764 $ 1.724000
</TABLE>
<TABLE>
<CAPTION>
Oppenheimer Variable Account
Growth Fund
-----------------------------
1997 1996
---- ----
<S> <C>
Net investment income:
Reinvested dividend income .......................... $ 191,901 $ 169,241
Reinvested capital gains ............................ -- --
Administrative expenses ............................. (64,732) (33,764)
------------ ------------
Net investment income (loss)
and capital gains ............................. 127,169 135,477
------------ ------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares ....................... 418,538 33,941
Increase (decrease) in unrealized
appreciation of investments ...................... 517,360 400,627
------------ ------------
Net realized and unrealized
gains (losses) .................................. 935,898 434,568
------------ ------------
Additions from operations ......................... 1,063,067 570,045
------------ ------------
Contract Owners' transactions:
Net premium payments ................................ 1,209,108 478,907
Transfers between sub-accounts ...................... 1,033,131 739,243
Surrenders and other benefits ....................... (348,808) (146,335)
Death benefits ...................................... (36,640) --
Transfers to (from) required reserves ............... -- 556
Annuity payments .................................... -- --
------------ ------------
Additions (reductions) for Contract
owners' transactions ........................ 1,856,791 1,072,371
------------ ------------
Net additions (reductions) for the year ......... 2,919,858 1,642,416
Contract Owners' Equity, beginning of the year ........... 3,598,229 1,955,813
------------ ------------
Contract Owners' Equity, end of the year ................. $ 6,518,087 $ 3,598,229
============ ============
Units Outstanding, beginning of the year ................. 2,321,403.000 1,558,531.000
Units Outstanding, end of the year ....................... 3,364,525.454 2,321,403.000
Net Asset Value per Unit:
Tax-Qualified .................................... $ 1.955851 $ 1.567000
Non Tax-Qualified ................................. $ 1.925429 $ 1.542000
</TABLE>
The accompanying notes are integral part of the financial statements
4
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE ANNUITY FUNDS P AND Q FOR THE USA PLAN
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, Continued
For the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
Oppenheimer Variable Account Oppenheimer Variable Account
High Income Fund Money Fund
------------------------------ -----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C>
Net investment income:
Reinvested dividend income .............. $ 1,835,183 $ 2,443,607 $ 463,280 $ 388,890
Reinvested capital gains ................ -- -- -- --
Administrative expenses ................. (295,103) (313,575) (115,529) (100,134)
------------ ------------ ------------ ------------
Net investment income (loss)
and capital gains .......................... 1,540,080 2,130,032 347,751 288,756
------------ ------------ ------------ ------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares ........... 2,372,889 490,453 -- --
Increase (decrease) in unrealized
appreciation of investments .......... (1,555,933) 722,763 -- --
------------ ------------ ------------ ------------
Net realized and unrealized
gains (losses) ............................. 816,956 1,213,216 -- --
------------ ------------ ------------ ------------
Additions from operations .................... 2,357,036 3,343,248 347,751 288,756
------------ ------------ ------------ ------------
Contract Owners' transactions:
Net premium payments .................... 1,138,423 1,363,311 2,813,165 1,232,316
Transfers between sub-accounts .......... (1,219,536) (1,702,853) (88,855) 667,676
Surrenders and other benefits ........... (3,350,181) (5,079,513) (2,329,951) (2,714,206)
Death benefits .......................... (115,174) -- (719) --
Transfers to (from) required reserves ... -- (435,806) -- 359,341
Annuity payments ........................ (135,400) -- (83,716) --
------------ ------------ ------------ ------------
Additions (reductions) for Contract
owners' transactions .................. (3,681,868) (5,854,861) 309,924 (454,873)
------------ ------------ ------------ ------------
Net additions (reductions) for the year ...... (1,324,832) (2,511,613) 657,675 (166,117)
Contract Owners' Equity, beginning of the year 25,079,145 27,590,758 6,459,277 6,625,394
------------ ------------ ------------ ------------
Contract Owners' Equity, end of the year ..... $ 23,754,313 $ 25,079,145 $ 7,116,952 $ 6,459,277
============ ============ ============ ============
Units Outstanding, beginning of the year ..... 8,400,655.000 10,519,604.000 4,108,773.000 4,327,861.000
Units Outstanding, end of the year ........... 7,203,574.105 8,400,655.000 4,390,633.829 4,108,773.000
Net Asset Value per Unit:
Tax-Qualified ........................... $ 3.332104 $ 3.014000 $ 1.593086 $ 1.532000
Non Tax-Qualified ........................ $ 3.270137 $ 2.958000 $ 1.606311 $ 1.544000
</TABLE>
<TABLE>
<CAPTION>
Oppenheimer Variable Account Oppenheimer Variable Account
Multiple Strategies Fund Strategic Bond Fund
----------------------------- -----------------------------
1997 1996 1997 1996
----------- ------------ ------------ ------------
<S> <C>
Net investment income:
Reinvested dividend income .............. $ 3,832,881 $ 3,816,752 $ 90,334 $ 55,513
Reinvested capital gains ................ -- -- -- --
Administrative expenses ................. (687,993) (669,679) (14,342) (9,723)
------------ ------------ ------------ ------------
Net investment income (loss)
and capital gains .......................... 3,144,888 3,147,073 75,992 45,790
------------ ------------ ------------ ------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares ........... 3,250,673 627,156 24,666 140,907
Increase (decrease) in unrealized
appreciation of investments .......... 1,311,835 3,262,100 (19,133) (101,560)
------------ ------------ ------------ ------------
Net realized and unrealized
gains (losses) ............................. 4,562,508 3,889,256 5,533 39,347
------------ ------------ ------------ ------------
Additions from operations .................... 7,707,396 7,036,329 81,525 85,137
------------ ------------ ------------ ------------
Contract Owners' transactions:
Net premium payments .................... 1,332,725 1,405,596 392,926 233,816
Transfers between sub-accounts .......... (1,510,719) (767,534) 88,334 (4,056,124)
Surrenders and other benefits ........... (8,213,228) (7,152,902) (73,542) (2,039)
Death benefits .......................... (219,637) -- -- --
Transfers to (from) required reserves ... -- 43,994 -- 10,112
Annuity payments ........................ (65,724) -- -- --
------------ ------------ ------------ ------------
Additions (reductions) for Contract
owners' transactions .................. (8,676,583) (6,470,846) 407,718 (3,814,235)
------------ ------------ ------------ ------------
Net additions (reductions) for the year ...... (969,187) 565,483 489,243 (3,729,098)
Contract Owners' Equity, beginning of the year 52,831,111 52,265,628 872,228 4,601,326
------------ ------------ ------------ ------------
Contract Owners' Equity, end of the year ..... $ 51,861,924 $ 52,831,111 $ 1,361,471 $ 872,228
============ ============ ============ ============
Units Outstanding, beginning of the year ..... 21,750,566.000 24,551,560.000 700,834.000 4,097,599.000
Units Outstanding, end of the year ........... 18,503,696.785 21,750,566.000 1,018,289.097 700,834.000
Net Asset Value per Unit:
Tax-Qualified ........................... $ 2.768113 $ 2.394000 $ 1.342862 $ 1.251000
Non Tax-Qualified ........................ $ 2.838684 $ 2.455000 $ 1.331815 $ 1.240000
</TABLE>
The accompanying notes are integral part of the financial statements.
5
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE ANNUITY FUNDS P AND Q FOR THE USA PLAN
NOTES TO FINANCIAL STATEMENTS
1. Organization
ReliaStar Life Insurance Company of New York Variable Annuity Funds P and Q
for The USA Plan (the "Separate Accounts") were established under the
provisions of New York insurance laws by ReliaStar Life Insurance Company of
New York ("ReliaStar Life of New York"), previously ReliaStar Bankers
Security Life Insurance Society (see Note 6), in April 1987 (Funds 144, 145,
146, 147, 044, 045, 046 and 047), in November 1990 (Funds 148, 149, 048 and
049), in December 1990 (Fund 043), in January 1991 (Fund 143), in April 1995
(Funds 150, 151, 152, 050, 051 and 052), in May 1995 (Funds 174, 175, 172,
176, 171, 120, 127, 074, 075, 072, 076, 071, 020 and 027) and in November
1996 (Funds 178, 179, 078 and 079). The Separate Accounts are registered
with the Securities and Exchange Commission as a unit investment trust under
the Investment Company Act of 1940, as amended (the "Act"), and are used to
fund certain benefits for variable annuity policies issued by ReliaStar Life
of New York. The assets of the Separate Accounts are invested in open-end
diversified management investment companies registered under the Act.
2. Taxes
ReliaStar Life of New York is taxed as a life insurance company under the
Internal Revenue Code of 1986, as amended (the "Code"). Since the Separate
Accounts are not separate entities from ReliaStar Life of New York, and
their operations form a part of ReliaStar Life of New York, they will not be
taxed separately as a "regulated investment company" under Sub-chapter M of
the Code. Under existing Federal income tax law, investment income of the
Separate Accounts, to the extent that it is applied to increase reserves
under a contract, is not taxed and may be compounded through reinvestment
without additional tax to ReliaStar Life of New York.
3. Charges and Transfers
ReliaStar Life of New York does not deduct a sales charge from purchase
payments made for these contracts. All or a portion of the accumulated value
may be withdrawn during the accumulation year. However, purchase payments
that are partially or totally withdrawn from the contract prior to eight
years from their date of payment will be charged (with certain exceptions) a
contingent deferred sales charge of a percentage of the amount of the
purchase payment withdrawn. No such charge will be imposed against
withdrawals of purchase payments held for at least eight years. The
withdrawn amounts shall be considered withdrawals of purchase payments until
the total of all purchase payments in the accumulated value have been
withdrawn. A contingent deferred sales charge will not be made against that
portion of withdrawals which are in excess of the total of all purchase
payments. Within the year applicable to the contingent deferred sales charge
for purchase payments, the contract owner may surrender up to 10% of such
purchase payments held for at least one year, within stated guidelines,
without paying a contingent deferred sales charge. This "free withdrawal"
amount is cumulative to 20% of such purchase payments if no withdrawals are
taken for a two-year period. ReliaStar Life of New York deducts a daily
charge equal to an annual rate of 1.25% of the daily asset value of the
Separate Accounts for mortality and expense risks assumed. In addition, on
each contract anniversary, ReliaStar Life of New York deducts an annual
maintenance charge of $30 from the accumulated value of the contract. Where
applicable, premium taxes are charged.
The amount of reserves for contracts in the year of distribution is
determined by actuarial assumptions which meet statutory requirements. Gains
and losses resulting from actual mortality experience, the full
responsibility for which is assumed by ReliaStar Life of New York, are
offset by transfers to, or from, ReliaStar Life of New York. Included in Due
to ReliaStar Life Insurance Company of New York are policy transactions
which are unsettled as of the reporting date.
4. Transfers Among Funds
ReliaStar Life of New York established a fixed fund in 1989 to which
contract owners in the Separate Accounts could transfer all or part of their
contract equity. This fund is reported in the General Account of ReliaStar
Life of New York. Transfer activity to/from the fixed annuity fund is
included in Transfers between Sub-Accounts in the Statements of Operations
and Changes in Contract Owners' Equity. Net transfers from the fixed fund
were $2.3 million and $3.8 million for the years ended December 31, 1997 and
1996, respectively.
5. Related Parties
On January 17, 1995, ReliaStar Life of New York became an indirect wholly
owned subsidiary of ReliaStar Financial Corp. ("ReliaStar"), an insurance
holding company based in Minneapolis, Minnesota. In conjunction with this
merger, in May 1995, the Northstar Income and Growth and High Yield Bond
Funds were added as investment options. Subsequently, in November 1996, the
Northstar Growth Fund was added as an investment option. These Funds are
affiliates of ReliaStar Life of New York.
6
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE ANNUITY FUNDS P AND Q FOR THE USA PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
6 Investments:
Security transactions are recorded on the trade date at the purchase cost
or sales proceeds, as applicable. Investments owned are valued at closing
market quotations. The difference between beginning of year value and
current market value of investments owned is recorded as unrealized gain
(loss) on investments. Dividends received are generally recorded as income
on the ex-dividend date and are reinvested to purchase additional mutual
fund shares. The aggregate cost of shares acquired and the aggregate
proceeds from shares sold for the year ended December 31, 1997, were:
<TABLE>
<CAPTION>
Cost of Proceeds
Purchases From Sales
--------- ----------
<S><C>
Investing Fund
--------------
Alliance Variable Products Series Fund:
Growth and Income Portfolio................................... $2,396,077 $1,184,936
Short-Term Multi-Market Portfolio............................. 379,094 489,503
Fidelity's VIP and VIP II:
Asset Manager Portfolio ...................................... 723,898 130,694
Contrafund Portfolio ......................................... 1,754,516 102,822
Equity-Income Portfolio ...................................... 3,225,534 718,402
Growth Portfolio ............................................. 2,071,616 901,216
Index 500 Portfolio .......................................... 6,530,144 2,741,726
Investment Grade Bond Portfolio .............................. 492,587 36,073
Northstar Variable Trust:
Growth Portfolio ............................................. 3,177,179 1,395,732
High-Yield Bond Portfolio .................................... 5,170,030 1,009,996
Income & Growth Portfolio .................................... 2,364,189 617,276
Oppenheimer Variable Account Funds:
Bond Fund..................................................... 253,173 83,448
Capital Appreciation Fund..................................... 9,329,178 16,014,800
Global Securites Fund......................................... 10,257,118 13,237,626
Growth Fund................................................... 3,345,441 1,354,421
High Income Fund.............................................. 13,950,623 17,211,853
Money Fund.................................................... 28,242,481 27,181,645
Multiple Strategies Fund...................................... 5,416,779 11,121,644
Strategic Bond Fund........................................... 860,282 365,627
---------------- -------------
$99,939,939 $95,899,440
================= =============
</TABLE>
7
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
Independent Auditors' Report*
Consolidated Balance Sheets, December 31, 1997 and 1996*
Consolidated Statements of Shareholders' Equity, Years Ended
December 31, 1997 and 1996*
Consolidated Statements of Cash Flows, Years Ended December 31, 1997 and 1996*
Notes to Consolidated Financial Statements*
* Incorporated by reference to Post-Effective Amendment No. 3 to Form S-6
Registration Statement for ReliaStar Life Insurance Company of New York
Variable Life Separate Account I, File No. 333-19123, filed on April 27, 1998.
S-11
<PAGE>
PART C
OTHER INFORMATION
ITEM 24 Financial Statements and Exhibits
<TABLE>
<CAPTION>
<S> <C>
(a) Financial Statements
(1) Condensed Financial Information is included in Part A.
(2) ReliaStar Life Insurance Company of New York
Variable Annuity Funds P and Q
Independent Auditors' Report
Statements of Assets and Liabilities,
December 31, 1997
Statements of Operations and Changes in Net
Assets for Years Ended December 31,
1997 and 1996
Notes to Financial Statements
ReliaStar Life Insurance Company of New York(1)
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1997 and 1996
Consolidated Statements of Income, Years Ended
December 31, 1997 and 1996
Consolidated Statements of Shareholders' Equity, Years Ended
December 31, 1997 and 1996
Consolidated Statements of Cash Flows, Years Ended
December 31, 1997 and 1996
Notes to Consolidated Financial Statements
</TABLE>
(b) Exhibits
(1a) Resolution of the Board of Directors of
ReliaStar Life Insurance Company of New York
("RLICNY") authorizing the establishment of
the Separate Accounts.
(1b) Resolution of Board of Directors of RLICNY
changing the name of the Separate Accounts.
(2) Not applicable
(3a) Form of Underwriting Agreement for Variable
Annuity Funds P and Q.(2)
(3b) Form of Dealer Agreements for Variable
Annuity Funds P and Q.(2)
(3c) Underwriting and Dealer Agreements for
Variable Annuity Fund M.
(3d) Participation Agreement with Oppenheimer
Management Corporation.
(3e) Participation Agreement with Alliance
Capital Management Corp.
(3f) Participation Agreement with Variable
Insurance Products Fund and Fidelity
Distributors Corporation.(3)
(3g) Participation Agreement with Variable
Insurance Products Fund II and Fidelity
Distributors Corporation.(3)
C-1
<PAGE>
(3h) Form of Service Agreement and Service
Contract with Fidelity Investments
Institutional Operations Company, Inc.,
dated January 1, 1997.(2)
(3i) Form of Agreements between RLICNY,
Broker-Dealer, and Distributor with respect
to the sale of the contracts.
(4) Form of Contract.
(5) Contract Application Form.(2)
(6a) Certificate of Incorporation.
(6b) Amended Bylaws
(7) Not Applicable.
(8) Not Applicable.
(9) Opinion and Consent of Jeffrey A. Proulx as
to legality of securities being registered.
(10a) Written consent of Deloitte & Touche, LLP
Independent Auditors.
(11) Not applicable.
(12) Not applicable.
(13) Schedule for Computation of Performance
Data.
(15a) Powers of Attorney for Stephen A. Carb,
Richard R. Crowl, John H. Flittie, James T.
Hale, Wayne R. Huneke, Kenneth U. Kuk,
Richard E. Nolan, Fioravante G. Perrotta,
Robert C. Salipante, John G. Turner, Charles
B. Updike, and Ross M. Weale.(3)
(15b) Power of Attorney for R. Michael Conley.(2)
(1) Incorporated by reference to Post-Effective Amendment No. 3 to Form S-6
Registration Statement for ReliaStar Life Insurance Company of New York
Variable Life Separate Account I, File No. 333-19123, filed on April 27,
1998.
(2) Incorporated by reference to Post-Effective Amendment No. 12 to
Registrant's Form N-4 Registration Statement, File No. 33-11489, filed on
April 29, 1997.
(3) Incorporated by reference to the initial registration statement on Form
S-6EL24, for ReliaStar Life Insurance Company of New York Variable Life
Separate Account I, File No. 333-19123, filed on December 31, 1996.
C-2
<PAGE>
ITEM 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
Name Principal Business Address Positions with Depositor
- ---- -------------------------- ------------------------
<S> <C> <C>
Susan M. Bergen 20 Washington Avenue South Secretary
Minneapolis, MN 55401
Stephen A. Carb 529 Fifth Avenue - 7th Floor Director
New York, NY 10017
James G. Cochran 1000 Woodbury Road, Suite 102 Woodbury, Executive Vice President
NY 11797
R. Michael Conley 20 Washington Avenue South Executive Vice President and Director
Minneapolis, MN 55401
Richard R. Crowl 20 Washington Avenue South Senior Vice President, General Counsel and
Minneapolis, MN 55401 Director
John H. Flittie 20 Washington Avenue South Vice Chairman
Minneapolis, MN 55401
James T. Hale 777 Nicollet Mall Director
Minneapolis, MN 55402
Wayne R. Huneke 20 Washington Avenue South Vice President and Director
Minneapolis, MN 55401
Ronald D. Jarvis 20 Security Drive Director
Avon, CT 06001
Kenneth U. Kuk 20 Washington Avenue South Vice President and Director
Minneapolis, MN 55401
Richard E. Nolan One Chase Manhattan Plaza Director
New York, NY 10005
Fioravante G. Perrotta 200 Park Avenue Director
New York, NY 10166
Roger D. Roenfeldt 1000 Woodbury Road, Suite 102 Executive Vice President and Chief
Woodbury, NY 11797 Operating Officer
Robert C. Salipante 20 Washington Avenue South Chief Executive Officer, President
Minneapolis, MN 55401 and Director
John G. Turner 20 Washington Avenue South Chairman of the Board and Director
Minneapolis, MN 55401
Charles B. Updike 60 East 42nd Street Director
New York, NY 10165
Ross M. Weale 102 Brewster Avenue, Rt. 6 Director
Carmel, NY 10512
</TABLE>
C-3
<PAGE>
ITEM 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
ReliaStar Financial Corp., the Parent Company ("RLR"), owns directly or
indirectly, capital stock of subsidiary companies as follows as of March 3, 1998
(second and third tier subsidiaries are listed, indented, directly below their
parent company):
<TABLE>
<CAPTION>
Owner and
Company Percentage
------- ----------
<S> <C>
ReliaStar Life Insurance Company ("RLIC") RLR-100%
Northern Life Insurance Company ("NLIC") RLIC-100%
Norlic, Inc. NLIC-100%
Nova, Inc. NLIC-100%
ReliaStar United Services Life Insurance Company ("RUSL") RLIC-100%
Security-Connecticut Life Insurance Company ("SCL") RUSL-100%
ReliaStar Life Insurance Company of New York("RLNY") SCL-100%
North Atlantic Life Agency, Inc. RLNY-100%
Delaware Administrators, Inc. RUSL-100%
USL Services, Inc. RUSL-100%
NWNL Benefits Corporation ("NBC") RLIC-100%
NWNL Health Management Corp. NBC-100%
Select Care Health Network, Inc. NBC-50%
ReliaStar Mortgage Corporation ("RMC") RLIC-100%
James Mortgage Company RMC-100%
ReliaStar Reinsurance Group (UK), Ltd. RLIC-100%
Washington Square Advisers, Inc. RLR-100%
ReliaStar Investment Research, Inc. RLR-100%
Washington Square Securities, Inc. RLR-100%
Northstar Holding, Inc. ("NI") RLR-100%
Northstar Investment Management Corp. NI-100%
Northstar Distributors, Inc. ("NDI") NI-100%
Northstar Funding, Inc. NDI-100%
Northstar Administrators Corporation NI-100%
Bankers Centennial Management Corp. RLR-100%
IB Holdings, Inc. ("IB") RLR-100%
International Risks, Inc. IB-100%
Northeastern Corporation IB-100%
The New Providence Insurance Company, Limited IB-100%
IB Resolution, Inc. IB-100%
Successful Money Management Seminars, Inc. ("SMMS") RLR-100%
Successful Money Management Software, Inc. SMMS-100%
PrimeVest Financial Services, Inc.("PVF") RLR-100%
PrimeVest Mortgage, Inc. PVF-100%
PrimeVest Insurance Agency of Alabama, Inc. PVF-100%
PrimeVest Insurance Agency of New Mexico, Inc. PVF-100%
PrimeVest Insurance Agency of Ohio, Inc. Class A Robert Chapman-100%
Class B PVF-100%
Branson Insurance Agency, Inc. PVF-100%
Granite Investment Services, Inc. PVF-100%
Arrowhead, Ltd. RLR-100%
ReliaStar Payroll Agent, Inc. RLR-100%
RelaStar Bancshares, Inc. ("RBS") RLR-100%
ReliaStar Bank ("RB") RBS-100%
ReliaStar Investment Services, Inc. RB-100%
LaMar & Phillips, Inc. RLR-100%
</TABLE>
C-4
<PAGE>
ITEM 27. Number of Contract Owners
As of February 28, 1998 there were approximately 4,764 Owners of
qualified Contracts and approximately 3,608 Owners of non-qualified Contracts
offered by Registrants.
ITEM 28. Indemnification
Item 24, Exhibits 6(a) and 6(b) of Registrant's Registration Statement
are hereby incorporated by reference.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrants pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer of controlling person of the Registrants
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of its counsel the
matter has been settled be controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 29. Principal Underwriter
(a) Prior to February 1, 1997, ReliaStar Financial Marketing
Corporation was the principal underwriter of the Contracts. Effective February
1, 1997, Washington Square Securities, Inc. ("WSSI") became the principal
underwriter of the Contracts. WSSI also acts as distributor of (i) USLICO Series
Fund, which funds variable life insurance policies of related companies; (ii)
Select*Life II, Select*Life III, Select*Annuity III, and SVUL I which are
variable life insurance policies and variable annuity contracts, issued by the
Company's affiliate, ReliaStar Life Insurance Company; (iii) Northern Life
Advantage Variable Annuity, a variable annuity issued by the Company's
affiliate, Northern Life Insurance Company; and (iv) Select*Life NY, a variable
life policy issued by ReliaStar Life Insurance Company of New York.
(b) The directors and officers of WSSI are as follows:
<TABLE>
<CAPTION>
Name Positions and Offices with WSSI
---- -------------------------------
<S> <C>
John H. Flittie Director and Chairman
Anne W. Dowdle Director
Michael J. Dubes Director
James R. Gelder Director
Wayne R. Huneke Director
Robert C. Salipante Director
Jeffrey A. Montgomery President and Chief Operating Officer
Margaret B. Wall Treasurer and Chief Financial Officer
Susan M. Bergen Secretary
Timothy J. Lyle Assistant Vice President and Chief Compliance Officer
David Braun Assistant Vice President
Karin Callanan Assistant Vice President
Allen L. Kidd Assistant Secretary
Loralee A. Renelt Assistant Secretary
</TABLE>
The principal business address of each of the foregoing executive
officers is 20 Washington Avenue South, Minneapolis, Minnesota 55401, except for
the following individuals, whose principal business addresses are listed after
their respective names: James R. Gelder: 20 Security Drive, Avon, Connecticut
06001; Michael J. Dubes: 1110 3rd Avenue, Seattle, Washington 98101; Allen L.
Kidd: 222 North Arch Road, Richmond, Virginia 23236.
(c) Not applicable.
C-5
<PAGE>
ITEM 30. Location of Accounts and Records
All accounts, books or other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules promulgated thereunder are
maintained by the Registrant through ReliaStar Life Insurance Company of New
York, 1000 Woodbury Lane, Suite 102, Woodbury, New York 11797.
ITEM 31. Management Services
Not applicable.
ITEM 32. Undertakings
(a) The Depositor, ReliaStar Life Insurance Company of
New York, represents that the fees and charges
deducted under the flexible premium variable annuity
contract, in the aggregate, are reasonable in
relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by
ReliaStar Life Insurance Company of New York.
(b) Registrant undertakes to file a post-effective
amendment to this registration statement as
frequently as is necessary to ensure that the audited
financial statements in the registration statement
are never more than 16 months old for so long as
payments under the variable annuity contracts may be
accepted.
(c) Registrant undertakes to include either (1) as part
of any application to purchase a contract offered by
the Prospectus, a space that an applicant can check
to request a Statement of Additional Information, or
(2) a postcard or similar written communication
affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of
Additional Information.
(d) Registrant undertakes to deliver any Statement of
Additional Information and any financial statements
required to be made available under this form
promptly upon written or oral request.
(e) With regard to restricted distributions to plan
participants in accordance with the requirements of
IRC Section 403(b)(11), the Registrant, in respect to
a no-action letter issued by the Division of
Investment Management (No. IP-6-88, November 28,
1988), undertakes to:
(1) Include appropriate disclosure regarding the
redemption restrictions imposed by Section
403(b)(11) in each registration statement,
including the prospectus, used in connection
with the offer of the contract;
(2) Include appropriate disclosure regarding the
redemption restrictions imposed by Section
403(b)(11) in any sales literature used in
connection with the offer of the contract;
(3) Instruct sales representatives who solicit
participants to purchase the contract
specifically to bring the redemption
restrictions imposed by Section 403(b)(11) to
the attention of the potential participants;
(4) Obtain from each plan participant who purchases
a Section 403(b) annuity contract, prior to or
at the time of such purchase, a signed
statement acknowledging the participant's
understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and
(2) the investment alternatives available under
the employer's Section 403(b) arrangement, to
which the participant may elect to transfer his
contract value;
(5) The Registrant represents that this said
no-action letter is being relied upon and that
the provisions of paragraphs (1) - (4) above
have been complied with.
C-6
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Registrant certifies that it meets all of the requirements of
effectiveness of this Amendment to the Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has caused this Amendment to the
Registration Statement to be signed on its behalf, in the City of Minneapolis
and State of Minnesota, on this 16th day of April, 1998.
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
VARIABLE ANNUITY FUNDS M, P AND Q
(Registrant)
By RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(Depositor)
By /s/ Robert C. Salipante
-----------------------------------------
Robert C. Salipante
Chief Executive Officer and President
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Depositor has caused this Amendment to the Registration Statement to be
signed on its behalf, in the City of Minneapolis and State of Minnesota, on this
16th day of April, 1998.
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(Depositor)
By /s/ Robert C. Salipante
------------------------------------------
Robert C. Salipante
Chief Executive Officer and President
As required by the Securities Act of 1933, this Amendment to the Registration
Statement has been signed on this 16th day of April, 1998 by the following
directors and officers of Depositor in the capacities indicated:
/s/ Robert C. Salipante Chief Executive Officer and President
-----------------------
Robert C. Salipante
/s/ James R. Miller Vice President (Chief Financial Officer)
-----------------------
James R. Miller
Stephen A. Carb* Wayne R. Huneke* Robert C. Salipante*
R. Michael Conley* Ronald D. Jarvis John G. Turner*
Richard R. Crowl* Kenneth U. Kuk* Charles B. Updike*
John H. Flittie* Richard E. Nolan* Ross M. Weale*
James T. Hale* Fioravante G. Perrotta*
*A majority of the Board of Directors
Jeffrey A. Proulx, by signing his name hereto, does hereby sign this document on
behalf of each of the above-named directors of ReliaStar Life Insurance Company
of New York pursuant to powers of attorney duly executed by such persons.
/s/ Jeffrey A. Proulx
-----------------------------------
Jeffrey A. Proulx, Attorney-In-Fact
<PAGE>
EXHIBIT INDEX
(b) Exhibits:
(1a) Resolution of the Board of Directors of ReliaStar Life
Insurance Company of New York ("RLICNY") authorizing the
establishment of the Separate Accounts.
(1b) Resolution of Board of Directors of RLICNY changing the name
of the Separate Accounts.
(3c) Underwriting and Dealer Agreements for Variable Annuity Fund
M.
(3d) Form of Participation Agreement with Oppenheimer Management
Corporation.
(3e) Form of Participation Agreement with Alliance Capital
Management Corp.
(3i) Form of Agreements between RLICNY, Broker-Dealer, and
Distributor with respect to the sale of the contracts.
(4) Form of Contract.
(6a) Certificate of Incorporation.
(6b) Amended Bylaws.
(9) Opinion and Consent of Jeffrey A. Proulx as to legality of
securities being registered.
(10a) Written Consent of Deloitte & Touche, LLP Independent
Auditors.
(13) Schedule for Computation of Performance Data.
<PAGE>
BANKERS SECURITY LIFE INSURANCE SOCIETY
RESOLUTION
RESOLVED, that this Company be, and hereby is authorized to establish
and to designate one or more separate accounts of this Company and to issue
no-load Variable Annuity Contracts in accordance with the provisions of State
and Federal Law. The purpose of any such separate account shall be to provide an
investment medium for such Variable Annuity Contracts of Variable Policies
issued by this Company as may be designated as participating therein. Any such
separate account shall receive, hold, invest and reinvest only the monies
arising from (i) premiums, contributions or payments made pursuant to the
Variable Annuity Contracts of Variable Policies participating therein; (ii) such
assets of the Company as are appropriate to be transferred to such separate
accounts and to be invested in the same manner as the assets applicable to the
Company's reserve liability under the Variable Annuity Contracts of Variable
Policies participating in such separate accounts; and (iii) the dividends,
interest and gains produced by the foregoing:
FURTHER RESOLVED, That this Company be, and is hereby authorized:
a. To register any such separate account with the Securities and
Exchange Commission under such provisions of the Securities
Act of 1933 and the Investment Company Act of 1940 as
appropriate.
b. To register the Variable Annuity Contracts of Variable
Policies participating in any such separate account under the
provisions of the Securities Act of 1933 and the Investment
Company Act of 1940, to the extent such registration is
necessary.
c. To register this Company as an Investment Adviser under the
provisions of the Investment Adviser's Act of 1940 to the
extent such registration is necessary.
d. To apply for authority to issue such Variable Annuity
Contracts of Variable Policies in the State of New York and
all other states to the extent necessary.
e. To apply for appropriate exemptions from those provisions of
Federal or State Laws as necessary and to take any and all
other actions which shall be necessary, desirable or
appropriate in connection with Federal or State Laws and
Regulations.
-2-
FURTHER RESOLVED, That this Company undertakes to assume the insurance,
mortality or expense risks which may be appropriate to the Variable Annuity
Contracts of Variable Policies issued pursuant to this resolution.
Board of Directors Meeting
July 24, 1980
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
1000 WOODBURY ROAD ROAD, WOODBURY, NEW YORK 11797
RESOLVED, That effective January 1, 1998, the names of the
Corporation's separate accounts are changed as follows:
FORMER NAME NEW NAME
----------- --------
ReliaStar Bankers Security Variable ReliaStar Life Insurance Company of
Annuity Funds A, B, C New York Variable Annuity Funds
A, B, C
ReliaStar Bankers Security Variable ReliaStar Life Insurance Company of
Annuity Funds D, E, F, G, H, I New York Variable Annuity Funds
D, E, F, G, H, I
ReliaStar Bankers Security Variable ReliaStar Life Insurance Company of
Annuity Funds M, P, Q New York Variable Annuity Funds
M, P, Q
ReliaStar Bankers Security Variable ReliaStar Life Insurance Company of
Life Separate Account I New York Variable Life Separate
Account I
RESOLVED, That the officers of the Corporation are hereby authorized to
take any and all actions necessary to effectuate this resolution.
<PAGE>
PRINCIPAL UNDERWRITING AGREEMENT
This agreement made this 6th day of March, 1981, by and between BANKERS SECURITY
LIFE INSURANCE SOCIETY (hereinafter referred to as the "Society"); BANKERS
SECURITY VARIABLE ANNUITY FUND M (hereinafter referred to as "Separate Account
M") which is a registered unit investment trust under the Investment Company Act
of 1940, as amended and OPPENHEIMER INVESTOR SERVICES, INC. (hereinafter
referred to as the "Principal Underwriter").
Witnesseth:
The Society and Separate Account M invite the Principal Underwriter to form a
selling group of broker/dealers to distribute all of the Variable Annuity
Contracts issued by the Society through Separate Account M (hereinafter referred
to as the "Variable Annuity Contracts"), which group shall herein be referred
to, as the "selling group" and each broker/dealer joining such selling group
(hereinafter referred to as a "member") shall do so pursuant to an effective
dealer agreement with the Principal Underwriter current copies of which will be
supplied to the Society.
Now, therefore, in consideration of the mutual undertakings set forth herein and
intending to be legally bound hereby, the Society and Separate Account M, and
the Principal Underwriter agree as follows:
1. All applications for Variable Annuity Contracts shall be
made on application forms supplied by the Society and all
initial payments collected shall be remitted in full
together with such application forms, signed by the
Applicants, through the Principal Underwriter, to the
executive office of the Society at 1701 Pennsylvania
Avenue, N.W., Washington, D.C. 20006. Checks or money
orders in payment thereof shall be drawn to the order of
"Bankers Security Life Insurance Society". Payments shall
not be considered as received until the application has
been accepted by the Society, except at the direction and
risk of the Applicant. After the initial payment has been
made and the Variable Annuity Contract has been issued, the
Contract Owner or Participant shall make all future
payments, if any, and if accepted by the Society, directly
to Bankers Security Life Insurance Society at such address
as it may from time to time designate.
2. Applications shall be processed by the Society at the public
offering price then in effect as described in the current
Variable Annuity Contract prospectus. All Applications are
subject to acceptance or rejection by the Society at its sole
discretion.
3. When and as long as requested by the Principal
Underwriter, subject to the limitation that total
commissions and concessions and Principal Underwriter's
percentage shall not exceed the percentages expressed in
Table A attached, the Society will: (a) make payment of
concessions directly to entitled members with respect to the
sale of Variable Annuity Contracts as directed by the
Principal Underwriter from time to time, and (b) make
payment of commissions to the Principal Underwriter as
directed by the Principal Underwriter from time to
time, as consideration for the Principal Underwriter's
undertaking to provide at its own expense, among other
things: all costs associated with the distribution of the
Variable Annuity Contracts including sales literature and
mutual fund prospectuses, but not including the Variable
Annuity Contract prospectuses, registration statements or
registration fees nor the Separate Account registration
statements, reports and fees; nor any costs directly
incurred by the Society or employees in aiding the Principal
Underwriter in such distribution efforts.
As required by Federal Securities laws and regulations, all
sales literature must be first submitted by the Principal
Underwriter for clearance with the appropriate regulatory
authorities. Further, as required by State Insurance laws and
regulations, all sales literature must be first submitted by
the Society for prior clearance with the appropriate
regulatory authorities. The Society and the Principal
Underwriter will cooperate in the development of such
literature, as requested. No sales literature will be used
unless both the Society and the Principal Underwriter have
given it prior approval.
4. (a) The Principal Underwriter will direct members to transmit
initial applications and/or payments for Variable Annuity
Contracts promptly through the Principal Underwriter to the
Society at the appropriate address and to transmit subsequent
payments to the Society.
(b) The Principal Underwriter will direct members to
distribute the Variable Annuity Contracts only in those
jurisdictions in which such respective Variable Annuity
Contracts are registered or qualified for sale and only
through Registered Representatives of the members who are
fully licensed with the Society to sell Variable Annuity
Contracts in the jurisdictions involved.
5. The Principal Underwriter will be the exclusive underwriter
for a period of not less than three years, (commencing on the
date of this agreement). During this time, the Principal
Underwriter will not contract to sell Variable Annuity
Contracts of any other insurance company. The signing of
this agreement does not make it incumbent upon the Society
to license any particular member's Registered Representative
as a salesman of Variable Annuity Contracts. All matters
dealing with the licensing of one of a member's Registered
Representatives under any applicable state insurance law
shall be a matter handled directly by the member and the
Registered Representative involved; but the Society must be
furnished proof of licensing before commission payments may be
made.
6. The Principal Underwriter will not make any representations
concerning the Variable Annuity Contracts except those
contained in the prospectus for the Variable Annuity Contracts
and any such information as may be released or approved by the
Society as information supplemental to such prospectus.
Additional copies of any prospectus and any printed
information issued as supplemental to such prospectus shall be
supplied by the Society to the Principal Underwriter for
members of the selling group in reasonable quantities upon
request, or where appropriate, directly to the member's
Registered Representative.
7. Any notice shall be deemed to have been given if mailed to the
Principal Underwriter's executive office address. Notice is
deemed given to the Society if mailed to its executive office
address.
8. The Society and the Principal Underwriter shall each comply
with all applicable Federal and State laws, rules and
regulations. Further, the Principal Underwriter will by
agreement arrange for each member of the selling group to do
the same.
9. The Society agrees to indemnify and hold harmless the
Principal Underwriter and any member and each person, if
any, who controls the Principal Underwriter or any member,
their agents and employees, against any and all loss,
liability, claims, damage, and expenses whatsoever
(including but not limited to any and all expenses
whatsoever reasonably incurred in investigating or
defending against any litigation commenced or threatened
or any claim whatsoever) arising out of any untrue or
alleged untrue statement of a material fact contained in the
prospectus, registration statement, in any sales material
prepared by the Society or supplied to any member through the
Principal Underwriter by the Society or in any application
filed in any state in order to qualify the same for sale or
the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
10. The Principal Underwriter agrees to indemnify and hold
harmless the Society and each person, if any, who controls
the Society, its agents, subsidiaries and employees,
against any and all loss, liability, claims, damage, and
expense whatsoever (including but not limited to any and all
expenses whatsoever reasonably incurred in
investigating or defending against any litigation
commenced or threatened or any claim whatsoever) arising
out of any untrue or alleged untrue statement or
representation made (except as such statements may be made
in reliance on the prospectus, registration statement and
sales material supplied by the Society), the failure to
deliver a currently effective prospectus, or the use of any
unauthorized sales literature by the Principal Underwriter,
and its employees, in connection with the sale of the subject
Variable Annuity Contracts.
11. Nothing herein contained shall require the Society, or the
Principal Underwriter or any member to take any action
contrary to any provision of their charters or to any
applicable statute or regulation.
12. This Agreement shall become effective as of the date hereof
and shall continue in force and effect from year to year
thereafter; provided, however, this Agreement shall terminate
in the event of its "assignment" as such term is defined in
the Investment Company Act of 1940, as amended.
13. After three years, this Agreement may be terminated by either
party on 90 days notice.
14. This Agreement shall be construed in accordance with the laws
of the state of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate on the day and year first above written.
OPPENHEIMER INVESTOR BANKERS SECURITY LIFE
SERVICES, INC. INSURANCE SOCIETY
illegible) (illegible)
BY------------------------------ BY----------------------------------
BANKERS SECURITY VARIABLE
ANNUITY FUND M
BY BANKERS SECURITY LIFE
INSURANCE SOCIETY, DEPOSITOR
(illegible)
BY---------------------------------
<PAGE>
TABLE A
SEPARATE ACCOUNT M
COMMISSIONS
KIND OF POLICY TOTAL COMMISSION
Individual Single Payments 4%
Additional Purchase Payments 4%
Any Commissions paid on a Contract that is cancelled under the provisions of the
Contract's "10 days free look" clause will be repaid to the Society or charged
against the agent's account.
<PAGE>
OPPENHEIMER INVESTOR SERVICES, INC.
VARIABLE ANNUITY DEALER AGREEMENT
Oppenheimer Investor Services, Inc. (the "Principal Underwriter") and (the
"Dealer") enter this agreement this day of , 19____, for the purpose of
authorizing the Dealer to offer and sell variable annuity contracts (the
"Contracts") issued by Bankers Security Life Insurance Society and its Separate
Account M (which Separate Account and Bankers are hereinafter referred to as the
"Issuer") through the Principal Underwriter, subject to the following
provisions:
1. The Issuer is engaged in the issuance of the Contracts
pursuant to Federal securities laws and the insurance laws
of those states in which the Contracts have been qualified
for sale. The Contracts are considered securities under the
Securities Act of 1933, therefore, distribution of the
Contracts is made through the Principal Underwriter, a
registered broker-dealer under the Securities Exchange Act
of 1934 and a member of the National Association of
Securities Dealers, Inc. ("NASD"). The authorization for
the offer and sale of the Contracts provided by this
agreement is subject to all provisions of the Principal
Underwriting Agreement between the Principal Underwriter and
the Issuer.
2. The Dealer certifies that it is a registered broker-dealer
under the Securities Exchange Act of 1934 and a member of the
NASD. The Dealer agrees to abide by all rules and regulations
of the NASD, including its Rules of Fair Practice, and to
comply with all applicable state and Federal laws and the
rules and regulations of authorized regulatory agencies
affecting the sale of the Contracts.
3. The Dealer will select persons associated with it who are to
be trained and qualified as agents to solicit applications
for the Contracts in conformance with applicable state
and Federal Laws. Agents so trained and qualified will be
registered representatives of the Dealer in accordance with
the rules of the NASD and agents of the Issuer in accordance
with the rules of the insurance laws of such jurisdictions
as the Issuer may designate. The Dealer will notify the
Issuer when one of his agents and registered
representatives is fully licensed to sell Contracts. Such
agents and registered representatives are to distribute the
Contracts only in those jurisdictions in which the Contracts
are qualified for sale.
4. The Dealer and the agent shall enter into an agreement before
Contract sales are made in which the agent shall represent
that he is or will become a registered representative of the
Dealer in connection with the sale of the Contract, that such
activities will be under the supervision and control of the
Dealer and that the agent's right to sell the Contracts is
subject to his continued compliance with such agreement and
the rules and procedures which may be established by the
Dealer, the Principal Underwriter or the Issuer.
5. All applications for Contracts shall be made on application
forms supplied by the Issuer and all initial payments
collected shall be remitted in full together with such
application forms, signed by the applicants, directly to
the executive office of the Issuer at 1701 Pennsylvania
Ave., N.W., Washington, D.C. 20006. Checks or money
orders in payment thereof shall be drawn to the order of
"Bankers Security Life Insurance Society." Payments shall
not be considered as received until the application has
been accepted by the Issuer, except at the direction and
risk of the applicant. After the initial single purchase
payment has been made and the Contract has been issued,
the contract owner or participant shall make all future
payments, if any, directly to Bankers Security Life Insurance
Society, __________________________________________ or at
such other address as it may from time to time designate.
6. The Dealer will offer and sell the Contracts only in
accordance with the terms and conditions of the then current
prospectus applicable to the Contracts and will make no
representations not included in the prospectus or in any
authorized supplemental material supplied by the Principal
Underwriter and the Issuer. The Dealer shall not use or
permit the agents to use advertising media with regard to
the Contracts and shall not use printed materials other
than those supplied or approved by the Principal
Underwriter and the Issuer. Additional copies of any
prospectus and any printed information issued as
supplemental to such prospectus shall be supplied to the
Dealer in reasonable quantities upon request.
7. All applications are subject to acceptance or rejection by the
Issuer at its sole discretion. The Issuer will make payment of
concessions directly to the Dealer with respect to the sale of
Contracts as set forth in Table A attached.
8. As required by Federal Securities laws and regulations, all
sales literature must be first submitted by the Principal
Underwriter for prior clearance with the appropriate
regulatory authorities. Further, as required by State
insurance laws and regulations, all sales literature must be
first submitted by the Issuer, for prior clearance with the
appropriate regulatory authorities. No sales literature will
be used unless both the Issuer and the Principal Underwriter
have given it prior approval.
9. The Dealer's registered representatives will be made to
understand that all applications and/or considerations for
Contracts are to be transmitted promptly to the Issuer at the
appropriate address.
10. The signing of this agreement does not make it incumbent upon
the Issuer to license any particular Dealer's registered
representative as a salesman of Contracts. All matters dealing
with the licensing of one of the Dealer's registered
representatives under any applicable state insurance law shall
be a matter handled directly by the Dealer and the registered
representative involved; but the Issuer must be furnished
proof of licensing before commission payments may be made.
11. Any notice shall be deemed to have been given if mailed to the
Principal Underwriter's address or the Dealer's address as
registered from time to time with the National Association of
Securities Dealers, Inc. Notice is deemed given to the Issuer
if mailed to its executive office address at 1701 Pennsylvania
Ave., N.W., Washington, D.C. 20006.
12. The Dealer understands and agrees that in performing the
services covered by this agreement, it is acting in the
capacity of an independent contractor and not as agent or
employee of either the Principal Underwriter or Issuer and
that no party to this agreement shall be liable for any
obligation, act or omission of the other.
13. The Issuer has agreed with the Principal Underwriter to
indemnify and hold harmless the Principal Underwriter and
the Dealer and each person, if any, who controls the
Principal Underwriter or the Dealer, their agents and
employees, against any and all loss, liability, claims,
damage, and expenses whatsoever (including but not
limited to any and all expenses whatsoever reasonably
incurred in investigating or defending against any litigation
commenced or threatened or any claim whatsoever) arising out
of any untrue or alleged untrue statement of a material fact
contained in the prospectus, registration statement, in
any sales material prepared by the Issuer or supplied to
the Dealer through the Principal Underwriter by the
Issuer or in any application filed in any state in order to
qualify the same for sale or the omission or alleged
omission therefrom of a material fact necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading.
14. The Dealer will indemnify and hold harmless the Issuer or
the Principal Underwriter and each person, if any, who
controls the Issuer or the Principal Underwriter,
their agents, subsidiaries and employees, against any and
all loss, liability, claims, damage, and expense
whatsoever (including but not limited to any and all expenses
whatsoever reasonably incurred in investigating or defending
against any litigation commenced or threatened or any
claim whatsoever) arising out of any untrue or alleged
untrue statement or representation made (except as such
statements may be made in reliance on the prospectus,
registration statement and sales material supplied by the
Issuer or the Principal Underwriter), the failure to deliver
a currently effective prospectus, or the use of any
unauthorized sales literature by the Dealer, and its
employees, in connection with the sale of the Contracts.
15. This agreement may not be assigned except by mutual consent
and shall continue for a period of one year and from year to
year thereafter, subject to termination by any party upon 60
days prior written notice to the other parties, except that in
the event the Dealer shall cease to be a registered
broker-dealer or a member of NASD, this agreement shall
immediately terminate.
16. Failure of any party to terminate this agreement for any of
the causes set forth in this agreement shall not constitute a
waiver of the right to terminate this agreement at a later
time for any of such causes.
17. Within a reasonable time after execution of this agreement,
the Distributor reserves the right to draw a report concerning
the Dealer from a qualified agency, which report must be to
the satisfaction of the Distributor. In the event that the
report proves unsatisfactory, this agreement shall be
cancelled effective upon receipt by the Dealer of notification
to this effect.
18. This agreement shall be construed in accordance with the laws
of the State of New York.
OPPENHEIMER INVESTOR SERVICES, INC.
By---------------------------------
-----------------------------------
Dealer
-----------------------------------
<PAGE>
TABLE A
DEALER'S CONCESSIONS
KIND OF POLICY TOTAL CONCESSION
Individual Single Payments 4%
Additional Purchase Payments 4%
Any Commissions paid on a Contract that is cancelled under the provisions of the
Contract's "10 day free look" clause will be repaid to the Society or charged
against the dealer's account.
<PAGE>
TABLE A
SEPARATE ACCOUNT M
COMMISSIONS
KIND OF POLICY TOTAL COMMISSION
Individual Single Payments 4%
Additional Purchase Payments 4%
Any Commissions paid on a Contract that is cancelled under the provisions of the
Contract's "10 days free look" clause will be repaid to the Society or charged
against the agent's account.
<PAGE>
AGREEMENT
AGREEMENT effective August 15, 1986, between Bankers Security Life
Insurance Society ("Bankers"), having its principal place of business at 1701
Pennsylvania Avenue, NW, Washington, DC 20006, and Oppenheimer Management
Corporation, having its principal place of business at Two Broadway, New York,
New York 10004 ("OMC").
WHEREAS, Bankers intends to utilize Oppenheimer Variable Account Funds
(the "Fund") as the underlying investment vehicle for premiums and additional
payments allocated to any separate account Bankers has or may create to utilize
the Fund, and
WHEREAS, OMC is the Investment Adviser to the Fund;
WHEREAS, OMC makes shares of the Fund available for sale only to
variable life insurance separate accounts and variable annuity separate
accounts, and that such variable annuity separate accounts may be of insurance
companies not affiliated with Bankers or any of Bankers' affiliated companies
(hereinafter referred to as "shared funding") while such variable life separate
accounts are of insurance companies not affiliated with Bankers or any of
Bankers' affiliated companies (hereinafter referred to as "mixed funding");
WHEREAS, a majority of the Board of Trustees of the Fund shall consist
of persons who are not "interested persons" of the Fund as defined by Section
2(a)(19) of the Investment Company Act of 1940 ("Independent Trustees"), except
that if this condition is not met by reason of the death, disqualification, or
bona fide resignation of any trustee(s), then the operation of this condition
shall be suspended (a) for a period of 45 days if the vacancy or vacancies may
be filled by the Board of Trustees; (b) for a period of 60 days if a vote of
shareholders is required to fill the vacancy or vacancies; or (c) for such
longer period as the Securities and Exchange Commission (the "Commission") may
prescribe by order upon application;
WHEREAS, the Board of Trustees of the Fund will monitor the Fund of the
existence of any material irreconcilable conflict between the interests of the
policyowners of all separate accounts investing in the Fund, which conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any portfolio are being managed; (e) a difference in voting instructions given
by participating insurance companies or owners of variable annuity contracts and
owners of variable life contracts; or (f) a decision by an insurer to disregard
the voting instructions of policyowners.
WHEREAS, the Fund and/or Bankers shall comply with Rules 6e-2, 6e-3(T)
and, if adopted, 6e-3, promulgated pursuant to the Investment Company Act of
1940, if and to the extent they are amended to provide exemptive relief with
respect to mixed or shared funding; and
WHEREAS, the Board of Trustees' determination of the existence of a
material irreconcilable conflict and its implications shall be made known
promptly in writing to Bankers and any other participating insurance companies,
and all reports received by the Board of Trustees of the Fund and all action
with regard to a conflict will be properly recorded in the minutes of the Board
of Trustees or other appropriate records, which will be made available to the
Securities and Exchange Commission upon request;
WHEREAS, no penalty will be imposed by the Fund on Bankers for
withdrawing assets from the Fund (or any portfolio of the Fund) in the event of
a material irreconcilable conflict should this said withdrawal be determined as
necessary to remedy or eliminate such conflict.
NOW THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree, as follows:
1. Bankers and OMC, as a matter of ongoing responsibility, will
undertake and shall promptly report to the Fund's Board of Trustees any
potential or existing material irreconcilable conflict between the policyowners.
Bankers and OMC will be responsible for assisting the Board in carrying out its
responsibilities in monitoring such conflicts, by providing the Board in a
timely manner with all information reasonably necessary for the Board to
consider any issues raised, INCLUDING INFORMATION AS TO A DECISION BY BANKERS TO
DISREGARD VOTING INSTRUCTIONS OF POLICYOWNERS.
2. If it is determined by either a majority of the Board of Trustees of
the Fund or a majority of its Independent Trustees that a material
irreconcilable conflict exists, Bankers, at its own expense and to the extent
reasonably practicable (as determined by a majority of the Fund's Independent
Trustees) will take whatever steps are necessary to remedy or eliminate the
material irreconcilable conflict, up to and including: (a) withdrawing the
assets allocable to some or all of its separate account from the Fund (or any
portfolio of the Fund) and reinvesting such assets in a different investment
medium, including another portfolio of the Fund, or submitting the question of
whether such segregation should be implemented to a vote of all affected
policyowners and, as appropriate, segregating the assets of any group voting in
favor of segregation, or offering to the affected policyowners the option of
making such a change; and (b) establishing a new registered management
investment company or managed separate account.
For purposes of this paragraph 2, a majority of the Independent
Trustees shall determine whether any proposed action adequately remedies any
material irreconcilable conflict, but in no event will the Fund or OMC be
required to establish a new funding medium for any variable contract. Bankers
shall not be required by this paragraph 2 to establish a new funding medium for
any variable annuity contract if an offer to do so has been declined by vote of
a majority of the policyowners adversely affected by the material irreconcilable
conflict. Bankers will recommend to its policyowners that they decline an offer
to establish a new funding medium only if it believes it is in the best
interests of the policyowners to do so.
3. Bankers will provide pass-through voting privileges to all variable
policyowners so long as the Commission continues to interpret the Act to require
pass-through voting privileges for variable policyowners. Bankers shall be
responsible for assuring that each of its separate accounts investing in the
Fund calculates voting privileges in a manners consistent with other
participating companies, and will vote shares of the Fund held in its separate
account for which no timely voting instructions are received from policyowners,
as well as shares it owns, in the same proportion for which voting instructions
are received.
4. OMC and Bankers shall at least annually submit to the Fund's Board
of Trustees such reports, materials or data as the Trustees may reasonably
request so that the Trustees may fully carry out the obligations imposed upon
them herein, and said reports, materials and data shall be submitted more
frequently if deemed appropriate by the Trustee.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
BANKERS SECURITY LIFE INSURANCE SOCIETY
/s/ Frances A. Podlesney
By:------------------------------------
Vice President
Attest:
/s/ Robert B. Saginaw
- ------------------------------------
OPPENHEIMER MANAGEMENT CORPORATION
(illegible)
By:------------------------------------
Executive Vice President
Attest:
(illegible)
- ------------------------------------
Secretary
<PAGE>
AGREEMENT
AGREEMENT effective September 4, 1990, between Bankers Security Life
Insurance Society ("Bankers"), having its principal place of business at 4601 N.
Fairfax Drive, Arlington, Virginia 22203, and Alliance Capital Management L.P.,
having its principal place of business at 1345 Avenue of the Americas, New York,
New York 10105 ("Alliance").
WHEREAS, Bankers intends to utilize Alliance Variable Products Series
Fund, Inc., (the "Fund") as an underlying investment vehicle for premiums and
additional payments allocated to separate accounts Bankers has or may create to
issue Variable Contracts,
WHEREAS, Alliance is the Investment Advisor to the Fund;
WHEREAS, Alliance makes shares of the Fund available for sale only to
variable life insurance separate accounts and variable annuity insurance
separate accounts, and that such variable products separate accounts may be of
insurance companies not affiliated with Bankers or any of Bankers' affiliated
companies (hereinafter referred to as "shared funding") and the Fund may be the
investment vehicle for both variable life and variable annuity contracts
(hereinafter referred to as "mixed funding");
WHEREAS, a majority of the Board of Directors of the Fund shall consist
of persons who are not "interested persons" of the Fund as defined by Section
2(a)(19) of the Investment Act of 1940 ("Independent Directors");
WHEREAS, the Board of Directors of the Fund will monitor the Fund for
the existence of any material irreconcilable conflict between the interests of
the policyowners of all separate accounts investing in the Fund, which conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or public ruling, private
letter ruling, no-action or interpretive letter, or any similar action by
insurance, tax or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any portfolio are being managed; (e) a difference in voting
instructions given participating insurance companies or owners of variable
annuity contracts and owners of variable life contracts; or (f) a decision by an
insurer to disregard the voting instructions of policyowners.
WHEREAS, the Fund and/or Bankers shall comply with Rules 6e-2, 6e-3(T)
and, if adopted, 6e-3, promulgated pursuant to the Investment Company Act of
1940 (the "Act"), if and to the extent they are amended to provide exemptive
relief with respect to mixed or shared funding; and
WHEREAS, the Board of Directors' determination of the existence of a
material irreconcilable conflict and its implications shall be made known
promptly in writing to Bankers and any other participating insurance companies,
and all reports received by the Board of Directors of the Fund and all action
with regard to a conflict will be properly recorded in the minutes of the Board
of Directors or other appropriate records, which will be made available to the
Securities and Exchange Commission upon request;
WHEREAS, no penalty will be imposed by the Fund or Bankers for
withdrawing assets from the Fund (or any portfolio of the Fund) in the event of
a material irreconcilable conflict should this said withdrawal be determined as
necessary to remedy or eliminate such conflict.
NOW THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agrees, as follows:
1. Bankers and Alliance, as a matter of ongoing responsibility, will
undertake and shall report to the Fund's Board of Directors any potential or
existing material conflicts between the policyowners. Bankers and Alliance will
be responsible for assisting the Board in carrying out its responsibilities in
monitoring such conflicts, by providing the Board in a timely manner with all
information reasonably necessary for the Board to consider any issues raised,
including information as to a decision by Bankers to disregard voting
instructions of policyowners. The responsibility to report such information and
conflicts and to assist the Board will be carried out with a view only to the
interests of the policyowners.
2. If it is determined by either a majority of the Board of Directors
of the Fund or a majority of its Independent Directors that a material
irreconcilable conflict exists, Bankers, at their own expense and to the extent
reasonably practicable as determined by a majority of the disinterested
Directors) will take whatever steps are necessary to remedy or eliminate the
material irreconcilable conflict, up to and including: (a) withdrawing the
assets allocable to some or all of its separate accounts from the Fund (or any
portfolio of the Fund) and reinvesting such assets in a different investment
medium, including another portfolio of the Fund, or submitting the question of
whether such segregation should be implemented to a vote of all affected
policyowners and, as appropriate, segregating the assets of any group voting in
favor of segregation, or offering to the affected policyowners the option of
making such a change; and (b) establishing a new registered management
investment company or managed separate account.
For purposes of this paragraph 2, a majority of the Independent
Directors shall determine whether any proposed action adequately remedies any
material irreconcilable conflict, but in no event will the Fund or Alliance be
required to establish a new funding medium for any variable contract. Bankers
shall not be required by this paragraph 2 to establish a new funding medium for
any variable annuity contract if an offer to do so has been declined by vote of
a majority of the policyowners adversely affected by the material irreconcilable
conflict. Bankers will recommend to its policyowners that they decline an offer
to establish a new funding medium or take other remedial action only if it
believes it is in the best interests of the policyowners to do so.
3. Bankers will provide pass-through voting privileges to all variable
policyowners so long as the Commission continues to interpret the Act to require
pass-through voting privileges for variable policyowners. Bankers shall be
responsible for assuring that each of its separate accounts investing in the
Fund calculates voting privileges in a manner consistent with the Act, and will
vote shares of the Fund held in its separate account for which no timely voting
instructions are received from policyowners, as well as shares its own, in the
same proportion for which voting instructions are received.
4. Alliance and Bankers shall at least annually submit to the Fund's
Board of Directors such reports, materials or data as the Directors may
reasonably request so that the Directors may fully carry out the obligations
imposed upon them herein, and said reports, materials and data shall be
submitted more frequently if deemed appropriate by the Directors.
5. The Fund will comply with the provision of Section 4240(a) of the
New York Insurance Law.
6. Each portfolio of the Fund will comply with the provisions of
Section 817(h) of the Internal Revenue Code of 1986, as amended (the ("Code"),
relating to diversification requirements for variable annuity, endowment and
life insurance contracts. Specifically, each portfolio will comply with either
(i) the requirement of Section 817(h)(1) of the Code that its assets are
adequately diversified, or (ii) the "Safe Harbor for Diversification" specified
in Section 817(h)(2) of the Code, or (iii) the diversification requirement of
Section 817(h)(1) of the Code by having all or part of its assets invested in
U.S. Treasury securities which qualify for the "Special Rule for Investments in
United States Obligations" specified in Section 817(h)(3) of the Code.
7. The provisions of Paragraphs 2 and 3 of this Agreement shall be
interpreted in a manner consistent with any applicable order of the Securities
and Exchange Commission ("SEC") issued in a proceeding under the Act, initiated
by certain applicants, including the Fund (File No. 812-7585). In the event that
SEC Rules under the Act relating to variable contracts and insurance company
separate accounts are amended or adopted, containing provisions which are
applicable to the parties hereto and which conflict with the conditions of such
order, the parties hereto will conform to the conditions of such Rule or Rules
as adopted or amended.
8. No shares of any portfolio of the Fund may be sold to the general
public.
9. Any notice shall be sufficiently given when sent by prepaid first
class mail to the other party at the address of such party set forth below or at
such other address as such party may from time to time specify in writing to the
other party.
If to the Adviser:
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
Attn: Edmund P. Bergan, Jr.
If to Bankers:
Bankers Security Life Insurance Society
4601 N. Fairfax Drive
Arlington, Virginia 22203
Attn: Francis A. Podlesney
10. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The State of New York.
11. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12. This Agreement incorporates the entire understanding and agreement
among the parties hereto, and supersedes any and all prior understandings and
agreements between the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be
executed as of the date and year above written.
BANKERS SECURITY LIFE INSURANCE SOCIETY
By:------------------------------------
Vice President
Attest:
ALLIANCE CAPITAL MANAGEMENT L.P.
By:------------------------------------
By:------------------------------------
------------------------------------
Attest:
- --------------------------------
<PAGE>
BROKER-DEALER AGENCY SELLING AGREEMENT
FOR VARIABLE CONTRACTS
This Agreement is made among the following three parties:
1. RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
1000 Woodbury Road, Suite 102
Woodbury, New York 11797
a New York domiciled stock life insurance company
(hereinafter "INSURER"); and,
2. WASHINGTON SQUARE SECURITIES, INC.
20 Washington Avenue South
Minneapolis, Minnesota 55401-1900
an affiliate of Insurer, registered as a broker-dealer with
the Securities and Exchange Commission ("SEC") and a member
of the National Association of Securities Dealers, Inc. ("NASD")
(hereinafter "GENERAL DISTRIBUTOR"); and,
3. __________________________________
Company's Full Name
__________________________________
Street
__________________________________
City State Zip
registered as a broker-dealer with the SEC and a member of the
NASD and licensed as an insurance agency (hereinafter
"BROKER-DEALER").
RECITALS:
WHEREAS, Broker-Dealer is licensed as an insurance agency in order to
satisfy state insurance law requirements with respect to the sale of variable
insurance products which are registered securities with the SEC.
WHEREAS, the parties wish to enter into an agreement for the distribution
of Variable Contracts by Broker-Dealer; and
WHEREAS, Insurer has appointed General Distributor as principal
underwriter and distributor (as those terms are defined by the Investment
Company Act of 1940) of the Variable Contracts and has authorized General
Distributor to enter into selling agreements with registered broker-dealers
for the solicitation and sale of Variable Contracts; and,
1
<PAGE>
WHEREAS, Insurer and General Distributor propose to have Broker-Dealer's
registered representatives who are licensed as life insurance/
variable contract agents in appropriate jurisdictions ("Representatives")
solicit and sell Variable Contracts and,
WHEREAS, Insurer and General Distributor propose to have Broker-Dealer
provide certain supervisory and administrative services as hereinafter
described with respect to the solicitation and sales of Variable Contracts.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties now agree as follows:
1. VARIABLE CONTRACTS
In this Agreement, the words "Variable Contract" shall mean those variable
life insurance policies and variable annuity contracts identified in Section
1 of the Compensation Schedule attached hereto, and as may hereafter be
amended.
Insurer may in its sole discretion and without notice to Broker-Dealer, suspend
sales of any Variable Contracts or amend any policies or contracts evidencing
such Variable Contracts if, in Insurer's opinion, such suspension or amendment
is: (1) necessary for compliance with federal, state, or local laws,
regulations, or administrative order(s); or, (2) necessary to prevent
administrative or financial hardship to Insurer. In all other situations,
Insurer shall provide 30 days notice to Broker-Dealer prior to suspending sales
of any Variable Contracts or amending any policies or contracts evidencing
such Variable Contracts.
Insurer may issue and propose additional or successor products, in which event
Broker-Dealer will be informed of the product and its related Commission
Schedule. If Broker-Dealer does not agree to distribute such product(s), it
must notify Insurer in writing within 30 days of receipt of the Commission
Schedule for such product(s). If Broker-Dealer does not indicate disapproval
of the new product(s) or the terms contained in the related Commission Schedule,
Broker-Dealer will be deemed to have thereby agreed to distribute such
product(s) and agreed to the related Commission Schedule which shall be attached
to and made a part of this Agreement.
2. AGENCY APPOINTMENT
On the effective date, Insurer and General Distributor appoint Broker-
Dealer and Broker-Dealer accepts the appointment to solicit sales of and to
sell Variable Contracts, pursuant to the terms of this Agreement.
2
<PAGE>
3. DUTIES OF BROKER-DEALER
(a) SUPERVISION OF REPRESENTATIVES. Broker-Dealer shall have full
responsibility for the training and supervision of all
Representatives who are engaged directly or indirectly in the offer
or sale of the Variable Contracts, and all such persons shall be
subject to the control of Broker-Dealer with respect to such persons'
securities regulated activities in connection with the Variable
Contracts. Broker-Dealer will cause the Representatives to be
trained in the sale of the Variable Contracts, will cause such
Representatives to qualify under applicable federal and state laws to
engage in the sale of the Variable Contracts; will cause such
Representatives to be registered representatives of Broker-Dealer
before such Representatives engage in the solicitation of
applications for the Variable Contracts; and will cause such
Representatives to limit solicitation of applications for the
Variable Contracts to jurisdictions where Insurer has authorized
such solicitation. Broker-Dealer shall cause such Representatives'
qualifications to be certified to the satisfaction of General
Distributor and shall notify General Distributor if any Representative
ceases to be a registered representative of Broker-Dealer or ceases to
maintain the proper licensing required for the sale of the Variable
Contracts. All parties shall be liable for their own negligence and
misconduct under this paragraph.
(b) REPRESENTATIVES INSURANCE COMPLIANCE. Broker-Dealer, prior to allowing
its Representatives to solicit for sales or sell the Variable
Contracts, shall require such representatives to be validly insurance
licensed, registered and appointed by Insurer as a variable
contract/life insurance agent in accordance with the jurisdictional
requirements of the place where the solicitations and sales take place
as well as the solicited person's or entity's place of residence.
Broker-Dealer shall assist Insurer in the appointment of
Representatives under the applicable insurance laws to sell Variable
Contracts. Broker-Dealer shall fulfill all Insurer requirements
in conjunction with the submission of licensing/appointment papers for
all applicants as insurance agents of Insurer. All such licensing/
appointment papers shall be submitted to Insurer or its designee by
Broker-Dealer. Notwithstanding such submission, Insurer shall have
sole discretion to appoint, refuse to appoint, discontinue, or
terminate the appointment of any Representative as an insurance agent
of Insurer.
3
<PAGE>
(c) COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITIES LAWS. Broker-Dealer shall fully comply with the requirements of
the National Association of Securities Dealers, Inc., the Securities
Exchange Act of 1934 and all other applicable federal and state laws. In
addition, Broker-Dealer will establish and maintain such rules and
procedures as may be necessary to cause diligent supervision of the
securities activities of the Representatives as required by applicable law
or regulation. Upon request by General Distributor, Broker-Dealer shall
furnish such records as may be necessary to establish such diligent
supervision.
(d) NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE. In the event a Representative
fails or refuses to submit to supervision of Broker-Dealer or otherwise
fails to meet the rules and standards imposed by Broker-Dealer on its
Representatives, Broker-Dealer shall advise General Distributor of this
fact and shall immediately notify such Representative that he or she is no
longer authorized to sell the Variable Contracts and Broker-Dealer shall
take whatever additional action may be necessary to terminate the sales
activities of such Representative relating to such contracts and policies.
(e) PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING. Broker-Dealer shall
be provided, without any expense to Broker-Dealer, with prospectuses
relating to the Variable Contracts and such other supplementary sales
material as General Distributor determines is necessary or desirable for
use in connection with sales of the Variable Contracts.
NO SALES PROMOTION MATERIALS OR ANY ADVERTISING RELATING TO THE VARIABLE
CONTRACTS, INCLUDING WITHOUT LIMITATION GENERIC ADVERTISING MATERIAL WHICH
DOES NOT REFER TO INSURER BY NAME, SHALL BE USED BY BROKER-DEALER UNLESS
THE SPECIFIC ITEM HAS BEEN APPROVED IN WRITING BY GENERAL DISTRIBUTOR PRIOR
TO SUCH USE.
In addition, Broker-Dealer shall not print, publish or distribute any
advertisement, circular or any document relating to Insurer unless such
advertisement, circular or document shall have been approved in writing by
Insurer prior to such use. Upon termination of this Agreement, all
prospectuses, sales promotion material, advertising, circulars, documents
and software relating to the sales of Insurer's contracts shall be promptly
turned over to Insurer free from any claim or retention of rights by the
Broker-Dealer.
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Insurer represents that the prospectus and registration statement relating
to the Variable Contracts contain no untrue statements of material fact or
omission to state material fact, the omission of which makes any statement
contained in the prospectus and registration statement misleading. Insurer
agrees to indemnify Broker-Dealer from and against any claims, liabilities
and expenses which may be incurred under the Securities Act of 1933, the
Investment Company Act of 1940, common law or otherwise arising out of a
breach of the agreement in this paragraph.
Broker-Dealer agrees to hold harmless and indemnify Insurer and General
Distributor against any and all claims, liabilities and expenses which
Insurer or General Distributor may incur from liabilities arising out of or
based upon any alleged or untrue statement other than statements contained
in the registration statement, prospectus or approved sales material of any
Variable Contract.
In accordance with the requirements of the laws of the several states,
Broker-Dealer shall maintain complete records indicating the manner and
extent of distribution of any such solicitation material, shall make such
records and files available to staff of Insurer or its designated agent in
field inspections and shall make such material available to personnel of
state insurance departments, the NASD or other regulatory agencies,
including the SEC, which have regulatory authority over Insurer or General
Distributor. Broker-Dealer holds Insurer, General Distributor and their
affiliates harmless from any liability arising from the use of any material
which either (a) has not been specifically approved by Insurer in writing,
or (b) although previously approved, has been disapproved, in writing, for
further use.
(f) SECURING APPLICATIONS. All applications for Variable Contracts shall be
made on application forms supplied by Insurer and all payments collected by
Broker-Dealer or any Representative thereof shall be remitted promptly in
full, together with such application forms and any other required
documentation, directly to Insurer at the address indicated on such
application or to such other address as Insurer may, from time-to-time,
designate in writing. Broker-Dealer shall review all such applications for
accuracy and completeness. Checks or money orders in payment on any such
Variable Contract shall be drawn to the order of "ReliaStar Bankers
Security Life Insurance Company." All applications are subject to
acceptance or rejection by Insurer at its sole discretion. All records or
information obtained hereunder by Broker-Dealer shall not be disclosed or
used except as expressly authorized herein, and Broker-Dealer will keep
such records and information confidential, to be disclosed only as
5
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authorized or if expressly required by federal or state regulatory
authorities.
(g) COLLECTION OF PURCHASE PAYMENTS. Broker-Dealer agrees that all money or
other consideration tendered with or in respect of any application for a
Variable Contract and the Variable Contract when issued is the property of
Insurer and shall be promptly remitted in full to Insurer without deduction
or offset for any reason, including by way of example but not limitation,
any deduction or offset for compensation claimed by Broker-Dealer.
(h) POLICY DELIVERY. Insurer will transmit Variable Contracts to Broker-Dealer
for delivery to Policyowners. Broker-Dealer hereby agrees to deliver all
such Variable Contracts to Policyowners within ten (10) days of their
receipt by Broker-Dealer from Insurer. Broker-Dealer agrees to indemnify
and hold harmless Insurer for any and all losses caused by Broker-Dealer's
failure to perform the undertakings described in this paragraph.
Broker-Dealer hereby authorizes Insurer to set off any amount it owes
Insurer under this paragraph against any and all amounts otherwise payable
to Broker-Dealer by Insurer.
(i) FIDELITY BOND. Broker-Dealer represents that all directors, officers,
employees and Representatives of Broker-Dealer who are licensed pursuant to
this Agreement as Insurer's agents for state insurance law purposes or who
have acccess to funds of Insurer, including but not limited to funds
submitted with applications for the Variable Contracts, or funds being
returned to owners, are and shall be covered by a blanket fidelity bond,
including coverage for larceny and embezzlement, issued by a reputable
bonding company. This bond shall be maintained by Broker-Dealer at
Broker-Dealer's expense. Such bond shall be, at least, of the form, type
and amount required under the NASD Rules of Fair Practice. Insurer may
require evidence, satisfactory to it, that such coverage is in force and
Broker-Dealer shall give prompt written notice to Insurer of any notice of
cancellation or change of coverage.
Broker-Dealer assigns any proceeds received from the fidelity bonding
company to Insurer to the extent of Insurer's loss due to activities
covered by the bond. If there is any deficiency amount, whether due to a
deductible or otherwise, Broker-Dealer shall promptly pay Insurer such
amount on demand and Broker-Dealer hereby indemnifies and holds harmless
Insurer from any such deficiency and from the costs of collection thereof
(including reasonable attorneys' fees).
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(j) Broker Dealer will be governed strictly by all rules, regulations,
and instructions contained in the RBSL administrative handbook, together with
all other regulations instituted from time to time, and observe and comply with
the insurance laws and regulations of all states in which the Broker Dealer
operates.
4. COMPENSATION
(a) VARIABLE CONTRACTS. Insurer, on behalf of General Distributor,
shall pay a dealer concession to Broker-Dealer on all sales of Variable
Contracts through its Representatives, in accordance with the form of the
Compensation Schedule attached hereto, which is in effect when purchase payment
on such Variable Contracts are received by Insurer. Dealer concessions will be
paid as a percentage of premiums received in cash or other legal tender and
accepted by Insurer on applications obtained by Broker-Dealer's Representatives
unless otherwise indicated in Compensation Schedule A. Upon termination of this
Agreement, all compensation payable hereunder shall cease; however,
Broker-Dealer shall continue to be liable for any chargebacks or for any other
amounts advanced by or otherwise due Insurer hereunder.
Insurer will pay all such Compensation to the Broker-Dealer.
Broker-Dealer agrees to hold Insurer and General Distributor harmless from all
claims of its Representatives for compensation in respect of Representative's
sales of Variable Contracts.
(b) COMMISSION STATEMENTS. Broker-Dealer will be provided with copies of
its Representatives' commission statements together with Broker-Dealer's own
commission statement for each commission payment period in which commissions are
payable. Broker-Dealer agrees that, except as to clerical errors and material
undisclosed facts, if any, such statements constitutes a complete and accurate
statement of the commission account unless written notice is provided to Insurer
within 120 days after the date of the statement, which notice specifically sets
forth the objections or exceptions thereto.
(c) COMPENSATION SCHEDULES. The initial Compensation Schedule is
attached (see Table A). Insurer and General Distributor reserve the right to
change, amend, or cancel any Compensation Schedule as to business produced after
such change by mailing notice of such change in the form of a new Compensation
Schedule to Broker-Dealer. Such change shall be effective, unless otherwise
specified, ten (10) days after the notice is mailed.
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(d) RIGHTS OF REJECTION AND SETTLEMENT. Insurer reserves the right to
reject any and all applications and collections submitted, to discontinue
writing any form of policy, to take possession of and cancel any policy and
return the premium or any part of it, and to make any compromise settlement in
respect of a policy. Broker-Dealer will not be entitled to receive or retain any
compensation on premiums or parts of premiums Insurer does not receive and
retain because of such rejection, discontinuance, cancellation, or compromise
settlement. If compensation has been paid to which Broker-Dealer is not
entitled, any amount credited will be charged back, and if the account balance
is insufficient to cover the credited amount, Broker-Dealer as applicable agrees
to promptly repay the credited amount.
5. TERMINATION
This Agreement may be terminated, without cause, by any party upon
thirty (30) days prior written notice; and may be terminated, for failure to
perform satisfactorily or other cause, by any party immediately; and shall be
terminated if Broker-Dealer ceases to be registered as a Broker-Dealer under the
Securities Exchange Act of 1934 and a member of the NASD or, if Broker-Dealer
ceases to maintain its insurance agent license(s) in good standing in the
jurisdictions in which it conducts business.
6. ARBITRATION
Any dispute, claim or controversy arising out of or in connection
with this Agreement shall be submitted to arbitration pursuant to the NASD's
arbitration facilities. If the subject matter of the dispute, claim or
controversy is not within the scope of matters which may arbitrated through
the NASD arbitration facilities, then such dispute, claim or controversy shall,
upon the written request of any party, be submitted to three arbitrators, one to
be chosen by each party, and the third by the two so chosen. If either party
refuses or neglects to appoint an arbitrator within thirty (30) days after the
receipt of the written notice from the other party requesting it to do so, the
requesting party may appoint two arbitrators. If the two arbitrators fail to
agree in the selection of a third arbitrator within thirty (30) days of their
appointment, each of them shall name two, of whom the other shall decline one
and the decision shall be made by drawing lots. All arbitrators shall be active
or retired executive officers of insurance companies not under the control of
any party to this Agreement. Each party shall submit its case to the arbitrators
within thirty (30) days of the appointment of the third arbitrator. The
arbitration shall be held in Minneapolis, Minnesota at the times agreed upon by
the arbitrators. The decision in writing of any two arbitrators, when filed with
the parties hereto shall be final and binding on both parties. Judgment may be
entered upon the final decision of the arbitrators in
8
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any court having jurisdiction. Each party shall bear the expense of its own
arbitrator and shall jointly and equally bear with the other party the expense
of the third arbitrator and of the arbitration.
7. GENERAL PROVISIONS
(a) ADDITIONS, AMENDMENTS, MODIFICATIONS & WAIVERS. This Agreement shall
not be effective until approved by Insurer and General Distributor. Insurer and
General Distributor reserve the right to amend this Agreement at any time, and
the submission of an application for the purchase of a Variable Contract by
Broker-Dealer after notice of any such amendment has been sent shall constitute
Broker-Dealer's agreement to any such amendment. No additions, amendments or
modifications of this Agreement or any waiver of any provision will be valid
unless approved, in writing, by one of Insurer's duly authorized officers. In
addition, no approved waiver of any default, or failure of performance by
Broker-Dealer will affect Insurer's or General Distributor's rights with respect
to any later default or failure of performance.
(b) INDEPENDENT CONTRACTOR RELATIONSHIP. This Agreement does not create
the relationship of employer and employee between the parties to this Agreement.
Insurer and General Distributor are independent contractors with respect to
Broker-Dealer and its Representatives.
(c) ASSIGNMENTS. Broker-Dealer will not assign or transfer, either
wholly or partially, this Agreement or any of the benefits accrued or to accrue
under it, without the written prior consent of a duly authorized officer of the
Insurer and General Distributor.
(d) SERVICE OF PROCESS. If Broker-Dealer receives or is served with
any notice or other paper concerning any legal action against Insurer or General
Distributor, Broker-Dealer agrees to notify Insurer immediately (in any event
not later than the first business day after receipt) by telephone and further
agrees to transmit any papers that are served or received by facsimile to (612)
342-7531 and by overnight mail to Insurer's Office of General Counsel.
(e) SEVERABILITY. It is understood and agreed by the parties to this
Agreement that if any part, term or provision of this Agreement is held to be
invalid or in conflict with any law or regulation, the validity of the remaining
portions or provisions will not be affected, and the parties' rights and
obligations will be construed and enforced as if this
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Agreement did not contain the particular part, term or provision held to be
invalid.
(f) GOVERNING LAW. It is agreed by the parties to this Agreement that
the Agreement and all of its provisions will be governed by the laws of the
State of Minnesota.
(g) LIMITATIONS. No party other than Insurer shall have the authority on
behalf of the insurer to make, alter, discharge any policy, contract or
certificate issued by the Insurer, to waive any forfeiture or to grant, permit,
nor extend the time for making any payments nor to guarantee earnings or rates,
nor to alter the forms which Insurer may prescribe or substitute other forms in
place of those prescribed by Insurer, nor to enter into any proceeding in a
court of law or before a regulatory agency in the name of or on behalf of
Insurer, nor to open any bank account in the full legal name of Insurer, any
derivation thereof or any tradename thereof.
8. TERRITORY
Broker-Dealer's territory is limited geographically to those
jurisdictions in which the Variable Contracts may lawfully be offered, provided
that Broker-Dealer's right to solicit sales of and to sell the Variable
Contracts in such jurisdictions is not exclusive.
9. EFFECTIVE DATE:
IN WITNESS WHEREOF, we set our hands this _____ day of _____________,
199__.
BROKER-DEALER:
____________________________________________________________
By: ________________________________________________________
Title: _____________________________________________________
INSURER:
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This Agreement shall be effective ___________________________, 199__.
RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY
By: _________________________________________________________
Title: ______________________________________________________
GENERAL DISTRIBUTOR:
WASHINGTON SQUARE SECURITIES, INC.
By: __________________________________________________________
Title: _______________________________________________________
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TABLE A
- ----------------------------------------------------------------------------
DEALER'S CONCESSION
____________________________________________________________________________
Kind of Policy Total Concessions
____________________________________________________________________________
Individual Single Payment Deferred Annuity 6%
Contracts
Additional Purchase Payment Deferred Annuity 6%
Contract
Immediate Annuity Contract 2.5%
_____________________________________________________________________________
The Dealer hereby agrees that any commissions paid on a Variable Annuity
Contract that is canceled under the provisions of the Contract's right to
examine clause, a/k/a the "20-day free look" clause, will be repaid to ReliaStar
Bankers Security. ReliaStar Bankers Security may also charge such amounts
against the Dealer's account.
No commissions will be paid on purchases on Contracts resulting from
exchanges or transfers from Separate Accounts A through I or M sponsored by
ReliaStar Bankers Security or between Separate Accounts Q through NQ sponsored
by ReliaStar Bankers Security, or for transfers among investment media within
each such Separate Account Q or NQ.
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ReliaStar Bankers Security
Life Insurance Company
Home Office: 1000 Woodbury Road, Suite 102, Box 9004, Woodbury, NY 11797
Executive Office: 4601 Fairfax Drive, Arlington, VA 22203
(Hereinafter the "Company")
CONTRACT NUMBER: XXXXXXXXXXXXXXX DATE OF ISSUE: XXXXXXXXXXXXXXX
ANNUITANT: XXXXXXXXXXXXXXX
CONTRACT OWNER: XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX
The Company agrees to pay to the Annuitant an Annuity, as selected by the
Contract Owner, beginning on the Annuity Commencement Date.
The Contract provides for Accumulated Values on a variable basis. Annuity
payments may be made on a variable basis, a fixed basis or a combination of
variable and fixed basis, as selected by the Contract Owner. The dollar amount
of the Variable Annuity payments and the Accumulated Value can increase or
decrease with the investment results of the chosen sub-account of the Separate
Account. The investment results are not guaranteed. However, the Company
guarantees that the dollar amount of variable annuity payments will not be
affected by variations in the actual mortality experience of annuitants from the
mortality assumptions used in determining the first annuity payment, and further
guarantees that the charges for expenses will not exceed the charges provided
for in this Contract. The dollar amount of Fixed Annuity payments, described on
page 9, is guaranteed by the Company as provided herein.
This Contract is issued in consideration of the Application, a copy of which is
attached to and made a part hereof, and the purchase payments made in accordance
with the terms and conditions of the Contract.
Twenty Day Free Look: To be sure that the Owner is satisfied with this Contract,
the Owner has a twenty day right to examine this Contract. Within 20 days after
the Contract is first received, the owner may cancel it for any reason by
delivering or mailing it to the agent through whom it was purchased or the
Executive Office of the Company. Upon cancellation, the Company will pay the sum
of (1) the difference, if any, between the gross premium paid and the amount
allocated to the separate account(s), and (2) the contract value for the
Contract as of the date of surrender.
THE ANNUAL INVESTMENT RETURN REQUIRED TO MAINTAIN LEVEL VARIABLE ANNUITY PAYMENT
IS 4.75% (AFTER ANY APPLICABLE TAXES, BUT BEFORE ASSET CHARGES TOTALING 1.25%
FOR MORTALITY AND EXPENSE RISKS). MANAGEMENT FEES WILL NOT EXCEED THREE QUARTERS
OF 1% OF NET ASSETS OF THE MUTUAL FUND IN WHICH SEPARATE ACCOUNT ASSETS ARE
INVESTED. ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CONTRACT, WHEN
BASED ON THE INVESTMENT EXPERIENCE OF A SUB-ACCOUNT OF A SEPARATE ACCOUNT, ARE
VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
Signed for the Company on the Date of Issue.
/s/ Susan M. Bergen /s/ John H. Flittie
Susan M. Bergen John H. Flittie
Secretary President
Countersigned by:
Individual Flexible Purchase Payment Fixed and Variable Annuity
Non-Participating
Separate Accounts P and Q
LOGO
ReliaStar Bankers Security Life
<PAGE>
TABLE OF CONTENTS
SUBJECT PAGE
Adjustments on Account of Misstatements ......................................5
Amendment of Contract ........................................................6
Annuitant ....................................................................3
Annuity Commencement Date .................................................3, 9
Annuity Provisions ...........................................................9
Annuity Options .............................................................10
Annuity Tables ..............................................................11
Assignment ...................................................................5
Beneficiary ..................................................................5
Charges Against the Separate Accounts ........................................7
Contingent Deferred Sales Charge .............................................8
Contract .....................................................................4
Contract Charges .............................................................6
Contract Data Page ...........................................................3
Contract Owner ...............................................................3
Contract Value ...............................................................6
Date of Issue ................................................................3
Definitions ..................................................................4
General Provisions ...........................................................4
Incontestability .............................................................5
Investments of the Separate Accounts .........................................7
Modification of Contract .....................................................5
Purchase Provisions ..........................................................6
Refund Upon Death ...........................................................13
Reports ......................................................................6
Separate Accounts ............................................................7
Surrender Provisions .........................................................8
Transfer Provisions ..........................................................8
Valuation of Assets ..........................................................7
Voting Rights ................................................................6
<PAGE>
CONTRACT DATA
CONTRACT NUMBER: XXXXXXXXXXXXX DATE OF ISSUE: XXXXXXXXXXXXX
ANNUITANT: XXXXXXXXXXXXX
CONTRACT OWNER: XXXXXXXXXXXXX
ANNUITY COMMENCEMENT DATE * INITIAL PAYMENT
First Day of:
Month Year $10,000
XXXXXXXX XXXX
Initial Allocation of
Purchase Payment
50.00% Northstar Growth Fund (179/079)
25.00% Fidelity Index 500 Portfolio (176/076)
25.00% Oppenheimer Global Strategies Fund (148/048)
* Represents the first payment received.
PAGE 3
<PAGE>
SECTION I
DEFINITIONS
ACCUMULATION UNIT- An accounting unit, of measure used to calculate the value of
a Contract Owners interest in the Contract prior to the Annuity Commencement
Date.
ANNUITANT- The person named prior to the Annuity Commencement Date to receive
the annuity payments. The Annuitant is named on the Contract Data Page, unless
changed.
ANNUITY COMMENCEMENT DATE- The date on which annuity payments are to commence.
ANNUITY UNIT- An accounting unit of measure used to calculate the value of
second and subsequent variable annuity payments.
BENEFICIARY- The person designated to receive any benefits under this Contract
upon the death of the annuitant in accordance with the terms of this Contract.
CONTRACT ANNIVERSARY- An anniversary of the Date of Issue of this Contract.
CONTRACT OWNER-During the lifetime of the Annuitant and prior to the Annuity
Commencement Date, the Contract Owner shall be the person designated as the
Contract Owner in the Application, or a successor Contract Owner as provided in
Section II-B hereof. After the death of the Annuitant prior to the Annuity
Commencement Date, the Beneficiary shall become the Contract Owner. On and after
the Annuity Commencement Date, the Annuitant shall become the owner. Upon the
death of the Annuitant after the Annuity Commencement Date the successor
Contract Owner shall be the Joint Annuitant, if any, surviving the Annuitant,
otherwise, the Beneficiary.
CONTRACT VALUE- The value of all amounts accumulated under this contract.
CONTRACT YEAR- Any period of twelve months commencing with the Date of Issue or
with any Contract Anniversary.
FIXED ANNUITY- An annuity with payments which remain fixed as to dollar amount
throughout the annuity period and which does not vary with investment
experience.
JOINT ANNUITANT- The designated second person under a joint and survivor life
annuity.
SEPARATE ACCOUNT P- A segregated investment account established by the Company
pursuant to applicable law and registered under the Investment Company Act of
1940, as amended. It is used for non-tax qualified retirement programs for
individuals. It has Sub-Accounts which invest in different funds.
SEPARATE ACCOUNT Q - A segregated investment account established by the Company
pursuant to applicable law and registered under the Investment Company Act of
1940, as amended. It is used if this Contract is issued pursuant to a retirement
plan which receives favorable tax treatment under the provisions of the Internal
Revenue Code. It has Sub-Accounts which invest in different funds.
SUB-ACCOUNTS OF SEPARATE ACCOUNT P-Each Sub-Account invests in a different
Series of the Oppenheimer Variable Account Funds. The Contract Owner allocates
the next purchase payment to one or more of these Sub-Accounts. The initial
allocation to one or more of these Sub-Accounts is shown on the Contract Data
Page.
SUB-ACCOUNTS OF SEPARATE ACCOUNT Q-Each Sub-Account invests in a different
Series of the Oppenheimer Variable Accounts Funds. The Contract Owner allocates
the next purchase payment to one or more of these Sub-Accounts. The initial
allocation to one or more of these Sub-Accounts is shown on the Contract Data
Page.
VALUATION DATE- Each day that the New York Stock Exchange is open for trading.
VALUATION PERIOD- The interval of time between two consecutive Valuation Dates
measured from the closing of the New York Stock Exchange.
VARIABLE ANNUITY- An annuity with payments varying as to dollar amount in
relation to the investment experience of a segregated investment account or
accounts.
SECTION II
GENERAL PROVISIONS
A. THE CONTRACT
This Contract and the Application for it, a copy of which is attached hereto,
constitute the entire Contract. The application is part of the contract only if
it is attached. All statements made in the application shall be deemed
representations and not warranties. No statements shall be used to invalidate
the Contract nor to defend against claim under it unless contained in the
Application and unless contained in the Application is attached to the Contract
when issued.
B. CONTROL
In the absence of a special endorsement providing otherwise, the contract owner
shall have the sole and absolute right and power, without the consent of the
beneficiary or any other person, to exercise all rights and privileges under
this Contract.
C. ASSIGNMENT
Unless otherwise provided, the Owner may assign all rights under this Contract
during the lifetime of the Annuitant prior to the Annuity Commencement Date, but
no assignment shall be binding on the Company unless it is in writing and until
it is received by the Company at its Executive Office. The Company will not
assume responsibility for the validity or sufficiency of any assignment. The
rights of the Contract Owner or of any Beneficiary shall be subject to the
rights of any assignee of record at the Executive Office of the Company.
If this Contract is funded by Separate Account Q then it may not be assigned,
pledged or otherwise transferred except under such conditions as may be allowed
under applicable law.
D. MODIFICATION OF CONTRACT
Only the President and Secretary of the Company have the power on behalf of the
Company to change, modify or waive the provisions of this Contract, and then
only in writing properly countersigned. The Company shall not be bound by
promise or representation made by or to any agent or person other than as
specified above.
E. INCONTESTABILITY
This Contract shall be incontestable.
F. ADJUSTMENTS ON ACCOUNT OF MISSTATEMENTS
If the age or sex of the Annuitant or Joint Annuitant has been misstated, the
annuity benefit payable by the Company shall be on the basis of the correct age
or sex. The dollar amount of any overpayment made by the Company shall be paid
in full with the next payment, plus interest at the rate of six percent per
year, after receipt of proof of misstatement. The dollar amount of any
overpayment made by the Company, due to any misstatement shall be deducted from
payments falling due thereafter. The age of the Annuitant or Joint Annuitant may
be established at any time by the submission of proof satisfactory to the
Company.
G. PROTECTION OF PROCEEDS
No beneficiary, Annuitant or Joint Annuitant or other payee may commute,
encumber, alienate or assign any payments under this Contract before the same
are due; and, to the extent permitted by law, no payments shall be subject to
the debts, contracts or engagements of any Beneficiary, Annuitant or Joint
Annuitant, or other payee nor to any judicial process to levy upon or attach the
same for payment thereof.
H. FACILITY OF PAYMENT
If any payee under this Contract is, in the opinion of the Company, physically
or mentally incapable of giving valid receipt and discharge for any Payment due
under this Contract, the Company may then, at its option, make payment thereof
in installments of not more than $50 per month to the person or persons who, in
its opinion, are caring for and supporting such payee. The Company will continue
to make such installments until claim is made by a duly appointed guardian or
other legal representative of such payee. Payments under this section will
constitute a complete discharge of the liability of the Company to the extent of
such payments and the Company will assume no responsibility for the proper
application of the money paid.
I. BENEFICIARY
The Beneficiary designation contained in the application will remain in effect
until changed. Subject to the rights of any irrevocable beneficiary or the terms
of any existing assignment, the Contract Owner may change the Beneficiary from
time to time during the lifetime of the Annuitant by written notice to the
Company. The change will, upon receipt at the Executive Office of the Company,
take effect as of the date of the written receipt, but without further liability
as to any payment or other settlement made by the Company before receipt of the
change.
Unless otherwise specified in the Beneficiary designation, if two or more
persons are designated as Beneficiary, the Beneficiary will be the designated
person or persons who survive the Annuitant, and if more than one survive, they
will share equally. The Contract Owner may designate one or more primary
Beneficiaries to receive any refund upon death payable thereunder and one or
more successor Beneficiaries to receive any remaining benefits upon the deaths
of the primary Beneficiaries.
All primary Beneficiaries who survive the Annuitant will share equally in the
proceeds from any refund upon death. If all primary Beneficiaries predecease the
Annuitant, all surviving successor Beneficiaries will share equally in the
proceeds. If no primary or successor Beneficiary survives the Annuitant, any
death benefits shall vest in his estate.
J. EVIDENCE OF SURVIVAL
Where any payment under this Contract is contingent upon the payee being alive
on a given date, the Company shall have the right to require evidence
satisfactory to it that such Payee was alive on such date. No such payment will
be made until such evidence shall have been received, and if such evidence is
not furnished within five years from that date, the liability of the Company and
the rights of all parties shall be the same as if such payee had died on the day
before such date.
K. PAYMENT OF BENEFITS AND SUBMISSION OF CONTRACT
Payments mailed to the Company will be deemed made when received at its
Executive Office. Payments made by the Company will be deemed made when mailed
by the Company to the last known address of the payee. 'The Company may require
submission of this Contract as a condition to the surrender of any values
thereunder, the approval of an change except as to Beneficiary, or the payment
of any benefits except the Basic Annuity under Section VII-A.
L. NON PARTICIPATING
This Contract does not share in the surplus earnings of the Company.
M. REPORTS
The Company will mail to the Contract Owner at the Contract Owner's last known
address as it appears in the records of the Company, at least annually, a
statement reporting the investments held in the chosen Sub-Accounts of the
Separate Account, and any other information as may be required by any applicable
law or regulation and, prior to the Annuity Commencement Date, a statement of
the Accumulation Units credited to this Contract for the Separate Account and
the Accumulation Unit Values.
N. VOTING RIGHTS
In accordance with its view of present applicable law, the Company will vote the
Fund Shares in the Sub-Account of the Separate Account in accordance with
instructions received from persons having the voting interest in the Separate
Account. However, if the Investment Company Act of 1940 or any Regulation
thereunder should be amended or if the present interpretation thereof should
change, and as a result the Company determines that it is permitted to vote the
Fund Shares in its own right, it may elect to do so. The person having the
voting interest shall be the Contract Owner.
Prior to the Annuity Commencement Date, the number of Fund Shares held in a
Sub-Account of a Separate Account which is attributable to each Contract Owner
is determined by dividing the Sub-Account Accumulated Value by the net asset
value of one Fund Share. After the Annuity Commencement Date, the number of Fund
Shares held in the Sub-Account which is attributable to the Contract is
determined by dividing the reserve held in the Sub-Account for the Variable
Annuity Payments under such Contract by the net asset value of one Fund Share.
The number of votes which a person has the right to cast will be determined as
of the record date established by the Fund. Voting instructions will be
solicited by written communication prior to the date of the meeting at which
votes are to be cast.
Fund shares held in the Sub-Account as to which no timely instructions are
received will be voted by the Company in proportion to the voting instructions
which are received with respect to all Contracts participating in the
Sub-Account.
Each person having the voting interest in the Sub-Account will receive reports
and other materials relating to the applicable Fund.
O. AMENDMENT OF CONTRACT
The Company reserves the right to amend this Contract to meet the requirements
of the Investment Company Act of 1940 or other applicable federal or state laws
or regulations.
P. HOME OFFICE
The Home Office of the company is in Woodbury, New York.
Q. EXECUTIVE OFFICE
The Executive Office of the Company is in Woodbury, New York. Although this
Contract provides that certain transactions are to be performed at the Company's
Home Office, such transactions may be performed at the Company's Executive
Office or at any Regional Offices.
SECTION III
PURCHASE PROVISIONS AND CONTRACT CHARGES
A. PURCHASE PAYMENTS
The Purchase Payment is payable to the Company at its Executive Office and is
due on the Date of Issue. The amount of the Initial Payment, shown on the
Contract Data Page, may not be less than $2,500. A subsequent purchase payment
may not be less than $100. However, if this Contract is Funded by Separate
Account Q, then the initial payment may not be less than $250 and a subsequent
purchase payment may not be less than $50. The Company reserves the right to
reject any payment or application not in compliance with its underwriting rules.
B. DEDUCTION FOR PREMIUM TAXES
Any premium taxes levied by a state or other government entity will be paid when
due and charged either against the Purchase Payment or the Contract Value.
C. NET PURCHASE PAYMENTS
A net purchase payment is equal to the purchasepayment less any applicable
premium taxes. All of the Net Purchase Payments will be allocated to the
Sub-Account(s) specified by the Owner.
D. CONTRACT MAINTENANCE CHARGE
This charge is a deduction of $30.00 made on each Contract Anniversary. It is
also made on the date the full Contract Value is Surrendered, if the Surrender
occurs on a date other than the Contract Anniversary.
E. CONTRACT VALUE
The Contract Value is the value of the Accumulation Units under this Contract.
If; (1) part or all of the Contract Value is surrendered; or (2) charges or
deductions are made against the Contract Value; then an appropriate number of
Accumulation Units will be surrendered or canceled to equal such amount.
SECTION IV
THE SEPARATE ACCOUNTS
A. GENERAL
Separate Account P and Separate Account Q are segregated investment accounts
maintained by the Company to which a portion of its assets has been allocated
for this and certain other Contracts. The Company reserves the right to transfer
assets of either Separate Account, in excess of the reserves and other contract
liabilities with respect to such Separate Account, to another separate account
or to the Company's General Account. Although the assets of the Separate
Accounts are the property of the Company, that portion of such assets which
represents such reserves and other contract liabilities is not chargeable with
liabilities arising out of any other business conducted by the Company or any
other separate account of the Company.
B. INVESTMENTS OF THE SEPARATE ACCOUNTS
Separate Account P includes Sub-Accounts. Separate Account Q includes
Sub-Accounts. The assets of these Sub-Accounts will be invested at net asset
value in shares of Oppenheimer Variable Account Funds. This is a mutual fund
which offers a series of different investment objectives. You choose your
investment objective or objectives and allocate your money to the series which
invests for that objective. The mutual Fund is a no-load open-end diversified
investment company registered under the Investment Company Act of 1940, as
amended (the "Act").
The Company may, at its discretion, invest the assets of these Separate Accounts
in the shares of another investment company or any other investment permitted by
law. Such substitution would be made in accordance with the provisions of the
Act. If deemed by the Company to be in the best interest of Contract Owners, the
Separate Accounts may be operated as a unit investment trust or as management
companies under the Act or they may be deregistered under the Act in the event
such registration is no longer required.
Any and all distributions received from the Funds will be reinvested and
retained as assets of the Separate Accounts. Deductions and redemptions from a
Separate Account may be effected by redeeming the number of applicable Fund
shares, at net asset value, necessary to satisfy the amount to be deducted or
redeemed.
In the event of any substitution of Fund shares or change in operation of the
Separate Account, the Company may issue an endorsement for the Contract and take
such other actions as may be necessary and appropriate to effect the
substitution or change.
C. SEPARATE ACCOUNT ACCUMULATION UNITS
This Contract will be credited with Sub-Account Accumulation Units representing
the amount of the Net Purchase Payments allocated to the chosen Sub-Account. The
number of Sub-Account Accumulation Units credited for the Sub-Account shall be
determined by dividing the net amount allocated to the Sub-Account by the
Sub-Account Accumulation Unit value for the Sub-Account for the Valuation Period
during which the Purchase Payment is received at the Executive Office of the
Company.
D. CHARGES AGAINST THE SEPARATE ACCOUNT
The Company deducts a daily charge equal to an annual rate of 1.25% of the daily
asset value of the Sub-Account of the Separate Accounts to compensate it for
assuming mortality and expense risks. This percentage represents approximately a
1.0% charge for the mortality risk assumed and a 0.25% charge for the expense
risk assumed.
E. NET INVESTMENT FACTOR
The net investment factor for the Sub-Account for any Valuation Period is
determined by dividing (a) by (b) and subtracting (c) from the result, where:
(a) is the net result of:
(1) the net asset value per share of the Sub-Account Fund determined at
the end of the current Valuation Period, plus
(2) the per share amount of any dividend or gains distributions made by
the Fund if the "ex-dividend" date occurs during the current Valuation
Period, plus or minus
(3) a per share charge or credit for any taxes reserved for, which is
determined by the Company to have resulted from the maintenance of the
Sub-Account.
(b) is the net result of:
(1) the net asset value per share of the Sub-Account Fund determined
as of the end of the immediately preceding Valuation Period, plus or
minus
(2) the per share charge or credit for any taxes reserved for the
immediately preceding Valuation Period.
(c) is a factor representing the charges deducted for mortality and expense
risk. Such factor is a daily charge equal to an annual rate of 1.25% of
the daily asset value of the Sub-Account. This percentage represents
approximately a 1.0% charge for the mortality risk assumed and a 0.25%
charge for expense risk assumed.
F. VALUATION OF ASSETS
1. GENERAL
Fund shares in the Separate Account will be valued at their net asset value.
Other assets in the Separate Account will be valued at fair market value or,
where there is no readily available market, the fair market value as determined
by the Company in accordance with applicable laws and regulations.
2. ACCUMULATION UNIT VALUE
The value of a Sub-Account Accumulation Unit was arbitrarily set initially at
$1.00. The value for any subsequent Valuation Period is determined by
multiplying the Accumulation Unit Value for the immediately preceding Valuation
Period by the Net Investment Factor for the Valuation Period for which the
Accumulation Unit Value is being calculated.
The value of an Accumulation Unit for the Sub-Account may increase or decrease
from Valuation Period to Valuation Period depending on the investment experience
of the Sub-Account.
3. ANNUITY UNIT VALUE
The value of a Sub-Account Annuity Unit was arbitrarily set initially at $1.00.
The value for any subsequent Valuation Period is determined by multiplying the
Annuity Unit Value for the immediately preceding Valuation Period by the Net
Investment Factor for the Valuation Period for which the Annuity Unit Value is
being calculated, and multiplying the result by an interest factor to neutralize
the effect of an investment earning rate of 3.5% per annum, which is assumed in
the Annuity Tables contained in this Contract. The value of an Annuity Unit for
the Sub-Account may increase or decrease from Valuation Period to Valuation
Period depending on the investment experience of the Sub-Account.
SECTION V
SURRENDER AND TRANSFER PROVISIONS
A. PARTIAL AND COMPLETE SURRENDERS
While this contract is in force and before the earlier of the Annuity
Commencement Date or the death of the Annuitant, the Company will, upon written
request of the Company at its Executive Office, allow the Contract Owner to
surrender a part or all of the Accumulated Value of the Contract. The Company
will pay the funds applied for within seven days of receipt of such request
except as provided in Section VIII-B below.
All Accumulated Values described in this section will be determined as of the
end of the Valuation Period during which the written request is received by the
Company at its Executive Office, and at the end of such Valuation Period, the
number of Sub-Account Accumulation Units equal in value to the dollar amount
requested will be deducted from the number of Sub-Account Accumulation Units
credited to this Contract under the Sub-Account. Any Contingent Deferred Sales
Charge which applies and any other applicable charge will also be deducted.
B. CONTINGENT DEFERRED SALES CHARGE -- SURRENDER CHARGES AND AMOUNTS WHICH
MAY BE WITHDRAWN WITHOUT A SURRENDER CHARGE
This is a flexible premium deferred annuity. During the accumulation period,
prior to your receiving an annuity, you may make as many purchase payments as
you wish. We treat each purchase payment separately to figure out if a surrender
charge is due upon a partial or complete withdrawal. We assume withdrawals of
purchase payments on a "first in first out" basis. The charge, if it applies, is
as follows:
1. Any purchase payment left in this Contract 96 months or longer is not
subject to a surrender charge.
2. Partial or complete surrender of a purchase payment prior to 96 months will
be charged a surrender charge, the amount depending upon the length of time the
purchase payment was in the Contract:
Left in Contract % of Purchase Payment withdrawn
for in excess of our "no charge amount"
Years
0-1 7%
1-2 7
2-3 6
3-4 5
4-5 4
5-6 3
6-7 2
7-8 1
8 and thereafter 0
3. Our "no charge amount": After a purchase payment has been in the Contract for
24 months, you may surrender up to 10% of that purchase payment without a
surrender charge. Similar withdrawals of up to 10% of the purchase payment
without a surrender charge are permitted if more than 12 months have elapsed
since your last "no charge" withdrawal.
4. If you fully withdraw your "first-in" purchase payment, these rules apply to
your next-in payment, and so on. Our surrender charge only applies to your
purchase payments. If you have withdrawn the total of your purchase payments,
which may or may not have been subject to surrender charges, your Contract may
have value from accumulated earnings. There is no surrender charge on these
earnings.
5. The surrender charge at the percentages listed in this sub-section B also
applies at the time your annuity payments begin unless (a) after the fourth
Contract year; (b) the first annuity payment begins after the second Contract
year and the annuitant has attained age 59 1/2 at such time; or (c) Annuity
payments are being made as part of the death proceeds during the accumulation
period or as part of a distribution upon death of the Owner during the
accumulation period.
C. SURRENDER VALUE
The surrender Value is the amount that will be paid if the full Contract Value
is surrendered. The Surrender Value at any time will be the Contract Value less
any charges which apply.
D. TRANSFERS BETWEEN SUB-ACCOUNTS
Partial or total transfers of a Sub-Account Accumulated Value may be made among
the then offered Sub-Accounts of Separate Account P. Partial or total transfer
of a Sub-Accounts Accumulated Value may be made among the then offered
Sub-Accounts of Separate Account Q. All transfers are without payment of any fee
or charge and are subject to the following conditions: (a) no transfer may be
made within 7 days from the date of a previous transfer except that an
additional transfer will be allowed at the Annuity Commencement Date; (b) the
dollar amount of a transfer from any Sub-Account may not be less than $250
except that an entire Sub-Account Accumulated Value maybe transferred if less
than $250; and (c) no transfer may be made after the Annuity Commencement Date
or the date of receipt by the Company of notification of death of the Annuitant
prior to the Annuity Commencement Date. Such transfers shall be made as of the
end of the Valuation Period during which request for transfer is received by the
Company at its Home or Executive Office, or a later Valuation Period if
requested. Transfers may be made by written request to the company at its Home
or Executive Office.
SECTION VI
ANNUITY PROVISIONS
A. ANNUITY COMMENCEMENT DATE
The Annuity Commencement Date is the date chosen by the Owner at the time of
application. Such date must always be the first day of the Calendar month, and
may not be later than the first day of the month following the Designated
Annuitant's 80th birthday.
B. CHANGES IN ANNUITY COMMENCEMENT DATE
The Contract owner may at any time prior to the Annuity Commencement Date and
upon at least 30 days written notice to the Company at its Executive Office,
elect to advance or defer the Annuity Commencement Date in accordance with the
terms above.
C. ANNUITY SELECTION
The Contract Owner selects the form of Annuity beginning on the Annuity
Commencement Date. Section VII explains annuity options which may be selected.
D. DETERMINATION OF FIRST ANNUITY PAYMENT
At the Valuation Date on or immediately preceding the seventh day before the
Annuity Commencement Date any applicable premium taxes and surrender charges
will be deducted from the Accumulated Value to determine the Net Accumulated
Value. The Net Accumulated Value is then applied, in accordance with the Tables
in Section VII, to determine the first monthly annuity payment provided with
each $1,000 of Net Accumulated Value. The amount of each payment, under options
1 through 4, depends upon the sex and adjusted age of the Annuitant and Joint
Annuitant at Annuity Commencement Date. The adjusted age is determined from the
actual age nearest birthday at the time first payment is due in the following
manner:
CALENDAR YEAR OF BIRTH
Before 1990 ................................Actual Age, Plus 1
1900-1919 ..........................................Actual Age
1920-1939 .................................Actual Age, minus 1
1940-1959 .................................Actual Age, minus 2
1960-1979 .................................Actual Age, minus 3
1980-1985 .................................Actual Age, minus 4
1986 and thereafter ..............as determined by the Company
E. ALLOCATION OF ANNUITY
The Contract Owner may elect to have the Net Accumulated Value of the Contract
applied at the Annuity Commencement Date to provide a Fixed Annuity, a Variable
Annuity, or any combination thereof. Such elections must be made in writing to
the Company at its Executive Office at least 30 days prior to the Annuity
Commencement Date. Any allocations under this provision are subject to the
requirements of Section VI-G, Adjustment of Monthly Payment.
F. VARIABLE AND FIXED ANNUITIES
1. Variable Annuity
The Variable Annuity is an annuity with payments varying in amount and in
accordance with the net investment performance of the Sub-Account. At the
Valuation Date on or immediately preceding the seventh day before the Annuity
Commencement Date, the amount allocated to provide a Variable Annuity Payment is
applied in accordance with Section VI-D to determine the amount of the first
Variable Annuity Payment. The dollar amount of the first Variable Annuity
Payment based on the Sub-Account determined as above, is divided by the value of
an Annuity Unit for the Sub-Account as of the Valuation Date on or immediately
preceding the seventh day before the Annuity Commencement Date to establish the
number of Annuity Units representing each monthly Annuity Payment under the
Sub-Account. This number of Annuity Units remains fixed for all subsequent
Variable Annuity Payments. The dollar amount of the second and subsequent
Variable Annuity Payments is not predetermined and may change from month to
month. The dollar amount of each such subsequent payment is determined by
multiplying the fixed number of Sub-Account Annuity Units for the Sub-Account by
the Sub-Account Annuity Unit Value for the Valuation Date on or immediately
preceding the seventh day before the due date of the payment. The Company
guarantees that the dollar amount of each payment will not be affected by
variations in mortality and expense experience and from the mortality and
expense assumptions used to determine the first payment.
2. Fixed Annuity
A Fixed Annuity is an annuity with payments which remain fixed as to dollar
amount during the annuity period. At the Valuation Date on or immediately
preceding the seventh day before the Annuity Commencement Date the amount
allocated to provide a Fixed Annuity is applied in accordance with Section VI-D
to determine the amount of the Fixed Annuity Payment; however, the amount of the
payment may be increased by any interest that may be credited by the Company in
excess of the interest rate guaranteed by this Contract.
G. ADJUSTMENTS OF MONTHLY PAYMENT
If the Net Accumulated Value on the Annuity Commencement Date is less than
$2,000, the company shall have the right to pay such value in the sum in lieu of
the payments otherwise provided for. If the Net Accumulated Value is not less
than $2,000 but either the Variable Annuity or the Fixed Annuity payments
provided for would be or become less than $20, the Company shall have the right
to change the frequency of payments to such intervals as will result in payments
of at least $20.
SECTION VII
ANNUITY OPTIONS
A. ELECTION OF OPTIONS
The Contract Owner may elect to have annuity payments made under any one of the
Annuity Options described below, or receive payments in any other manner
agreeable to the Company. Any such election must be made in writing to the
Company at its Executive Office at least 30 days before the Annuity Commencement
Date. The election may be changed in the same manner at any time prior to the
surrender of this Contract.
OPTION 1-LIFE ANNUITY-An annuity payable monthly during the lifetime of the
Annuitant, ceasing with the last payment due prior to the death of the
Annuitant.
OPTION 2A-JOINT AND EQUAL TO SURVIVOR LIFE ANNUITY-An annuity payable monthly
during the joint lifetime of the Annuitant and the Joint Annuitant and
continuing thereafter at the same amount during the lifetime of the survivor,
ceasing with the last payment due prior to the death of the survivor.
OPTION 2B-JOINT AND TWO-THIRDS TO SURVIVOR LIFE ANNUITY-An annuity payable
monthly during the joint lifetime of the Annuitant and the Joint Annuitant and
continuing thereafter during the lifetime of the survivor at an amount equal to
two-thirds of the joint annuity payment, ceasing with the last payment due prior
to the death of the survivor.
OPTION 2C- JOINT AND ONE-HALF TO SURVIVOR LIFE ANNUITY- An annuity payable
monthly during the joint lifetime of the Annuitant and the Joint Annuitant and
continuing thereafter during the lifetime of the survivor at an amount equal to
one-half of the joint annuity payment, ceasing with the last payment due prior
to the death of the survivor.
OPTION 3- LIFE ANNUITY WITH 60, 120 OR 240 MONTHLY PAYMENTS GUARANTEED- An
annuity payable monthly during the lifetime of the Annuitant, with the guarantee
that if, at the death of the Annuitant, payments have been made for less than
60, 120 or 240 monthly periods as elected, payments will be made as follows:
a. Any guaranteed annuity payments will be continued during the remainder
of the selected period to the Beneficiary. The Beneficiary may, at any
time, elect to have the present value of the guaranteed number of
annuity payments, commuted in the manner specified in (b) below, paid
in a lump sum.
b. If a Beneficiary receiving annuity payments under this option dies
after the death of the Annuitant, the present value, computed as of the
Valuation Period in which notice of death of the Beneficiary is
received by the Company at its Executive Office, of the guaranteed
number of annuity payments remaining after receipt of such notice and
to which the deceased Beneficiary would have been entitled had he not
died, commuted at the effective annual interest rate assumed in
determining the values shown in the Annuity Tables, shall be paid in a
lump sum to the estate of such Beneficiary.
OPTION 4- UNIT REFUND LIFE ANNUITY- An annuity payable monthly during the
lifetime of the Annuitant, terminating with the last payment due prior to the
death of the Annuitant. An additional annuity payment will be made to the
Beneficiary if the result of multiplying (c) by the excess, if any, of (a) minus
(b) is greater than zero, where
(a) is that portion of the Net Accumulated Value which is allocated to the
Separate Account and applied at the Annuity Commencement Date under
this option, divided by the corresponding Annuity Unit value of the
Separate Account as of the Annuity Commencement Date,
(b) is the product of the number of Annuity Units represented by each
Variable Annuity Payment from the Separate Account paid to the
Annuitant and the number of Variable Annuity Payments made, and
(c) is the Annuity Unit value of the Separate Account as of the end of the
Valuation Period during which notice of death in writing is received by
the Company at its Executive Office.
The amount of the additional payment, if any, under the Separate Account will be
equal to the result obtained above.
When this option is applied as a fixed Annuity (a) shall be the General Account
Accumulated Value applied at the Annuity Commencement Date to the Fixed Annuity,
(b) shall be the sum of all Fixed Annuity Payments made, and (c) shall be $
1.00.
B. SUPPLEMENTARY AGREEMENTS
When payments under an Annuity Option commence, a supplementary Agreement to
this Contract will be issued setting forth the terms of the Option elected.
C. DETERMINATION OF FIRST AND SUBSEQUENT PAYMENTS
The amount of the first payment under any one of the Annuity Options shall be
determined as provided in Section VI-D using the Tables set out below applicable
to the Option elected, and subsequent payments shall be determined in accordance
with Section VI-F. The sex and adjusted age of the Annuitant and any Joint
Annuitant will be used to determine such payment. Amounts shown in the Table for
Single Life Annuities, and Joint and Survivor Life Annuities, are based on the
Progressive Annuity Table with interest at the rate of 3.5% per annum and assume
births in the year 1900. The adjusted age will be determined in accordance with
Section VI-D.
<PAGE>
ANNUITY TABLES
DOLLAR AMOUNT OF THE MONTHLY PAYMENT WHICH IS PROVIDED
WITH EACH $1,000 OF THE PROCEEDS APPLIED
OPTIONS 1, 3 AND 4 -- SINGLE LIFE ANNUITIES
MONTHLY PAYMENTS GUARANTEED
<TABLE>
<CAPTION>
Adjusted Age None 60 120 240 Unit Refund
Male Female Option 1 Option 3 Option 3 Option 3 Option 4
<S> <C>
50 54 4.74 4.73 4.69 4.52 4.53
51 55 4.84 4.82 4.78 4.58 4.60
52 56 4.94 4.92 4.87 4.65 4.68
53 57 5.04 5.03 4.97 4.71 4.75
54 58 5.16 5.14 5.07 4.78 4.84
55 59 5.28 5.25 5.18 4.85 4.93
56 60 5.40 5.38 5.29 4.91 5.02
57 61 5.54 5.51 5.41 4.98 5.12
58 62 5.69 5.65 5.53 5.05 5.22
59 63 5.84 5.80 5.66 5.11 5.33
60 64 6.01 5.95 5.79 5.18 5.44
61 65 6.18 6.12 5.94 5.24 5.56
62 66 6.37 6.30 6.08 5.30 5.69
63 67 6.57 6.49 6.24 5.36 5.82
64 68 6.79 6.69 6.40 5.41 5.96
65 69 7.02 6.91 6.57 5.46 6.11
66 70 7.27 7.14 6.74 5.51 6.26
67 71 7.54 7.38 6.91 5.55 6.44
68 72 7.83 7.64 7.10 5.59 6.61
69 73 8.14 7.91 7.28 5.62 6.79
70 74 8.48 8.20 7.47 5.65 6.99
71 75 8.84 8.51 7.66 5.68 7.20
72 76 9.23 8.84 7.85 5.70 7.41
73 77 9.95 9.18 8.04 5.71 7.66
74 78 10.11 9.55 8.23 5.72 7.90
75 79 10.61 9.93 8.41 5.73 8.16
76 80 11.15 10.33 8.58 5.74 8.47
77 81 11.73 10.75 8.75 5.75 8.76
78 82 12.36 11.19 8.91 5.75 9.07
79 83 13.05 11.64 9.06 5.75 9.45
80 84 13.80 12.10 9.19 5.75 9.79
</TABLE>
<PAGE>
OPTION 2a-JOINT AND EQUAL TO SURVIVOR LIFE ANNUITY
<TABLE>
<CAPTION>
Adjusted Age
of Joint
Annuitant Adjusted Age of Annuitant
Male Female Male 51 Male 56 Male 58 Male 61
Female 55 Female 60 Female 62 Female 65
<S> <C>
50 54 4.21 4.35 4.40 4.47
55 59 4.37 4.58 4.66 4.78
57 61 4.43 4.67 4.76 4.90
60 64 4.51 4.80 4.92 5.09
62 66 4.55 4.88 5.01 5.22
65 69 4.62 4.99 5.15 5.39
70 74 4.70 5.14 5.34 5.65
75 79 4.76 5.25 5.47 5.86
<CAPTION>
Adjusted Age
of Joint
Annuitant Adjusted Age of Annuitant
Male Female Male 63 Male 66 Male 71 Male 76
Female 67 Female 70 Female 75 Female 80
<S> <C>
50 54 4.51 4.57 4.64 4.68
55 59 4.85 4.94 5.07 5.15
57 61 4.99 5.10 5.26 5.38
60 64 5.20 5.36 5.59 5.75
62 66 5.35 5.54 5.82 6.03
65 69 5.56 5.81 6.19 6.50
70 74 5.88 6.23 6.83 7.37
75 79 6.14 6.60 7.45 8.33
<CAPTION>
OPTION 2b-JOINT AND TWO-THIRDS TO SURVIVOR LIFE ANNUITY
Adjusted Age
of Joint
Annuitant Adjusted Age of Annuitant
Male Female Male 51 Male 56 Male 58 Male 61
Female 55 Female 60 Female 62 Female 65
<S> <C>
50 54 4.58 4.79 4.89 5.03
55 59 4.80 5.06 5.17 5.35
57 61 4.89 5.18 5.30 5.49
60 64 5.04 5.36 5.50 5.72
62 66 5.14 5.48 5.64 5.88
65 69 5.30 5.68 5.85 6.13
70 74 5.58 6.03 6.23 6.57
75 79 5.87 6.38 6.63 7.03
<CAPTION>
Adjusted Age
of Joint
Annuitant Adjusted Age of Annuitant
Male Female Male 63 Male 66 Male 71 Male 76
Female 67 Female 70 Female 75 Female 80
<S> <C>
50 54 5.13 5.29 5.56 5.83
55 59 5.47 5.67 6.00 6.34
57 61 5.63 5.84 6.20 6.58
60 64 5.87 6.12 6.54 6.98
62 66 6.05 6.32 6.79 7.27
65 69 6.32 6.64 7.19 7.77
70 74 6.82 7.21 7.95 8.74
75 79 7.33 7.83 8.78 9.87
<CAPTION>
OPTION 2c-JOINT AND ONE-HALF TO SURVIVOR LIFE ANNUITY
Adjusted Age
of Joint
Annuitant Adjusted Age of Annuitant
Male Female Male 51 Male 56 Male 58 Male 61
Female 55 Female 60 Female 62 Female 65
<S> <C>
50 54 4.79 5.05 5.17 5.37
55 59 5.05 5.34 5.47 5.69
57 61 5.17 5.47 5.61 5.84
60 64 5.36 5.69 5.84 6.09
62 66 5.50 5.85 6.01 6.28
65 69 5.73 6.11 6.28 6.58
70 74 6.16 6.60 6.81 7.15
75 79 6.64 7.16 7.40 7.81
<CAPTION>
Adjusted Age
of Joint
Annuitant Adjusted Age of Annuitant
Male Female Male 63 Male 66 Male 71 Male 76
Female 67 Female 70 Female 75 Female 80
<S> <C>
50 54 5.51 5.74 6.17 6.65
55 59 5.85 6.12 6.61 7.16
57 61 6.01 6.29 6.81 7.40
60 64 6.28 6.58 7.15 7.81
62 66 6.47 6.79 7.41 8.11
65 69 6.79 7.15 7.83 8.62
70 74 7.41 7.83 8.66 9.63
75 79 8.12 8.63 9.64 10.87
</TABLE>
Values not shown in the above tables will be furnished upon
request.
SECTION VIII
REFUND UPON DEATH
A. REFUND UPON DEATH
If the Annuitant dies prior to the Annuity Commencement Date, the Company will
pay a Refund Upon Death to the Beneficiary designated by the Contract Owner upon
receipt of due proof of death of the Annuitant. The value of the Refund Upon
Death will be determined as of the Valuation Date on or next following the date
on which written notice of death is received by the Company at its Executive
Office. The Company will accept as due proof of death the following: (a) a copy
of a certified death certificate; (b) a copy of a certified decree of a court of
competent jurisdiction as to the finding of death; (c) a written statement by a
medical doctor who attended the deceased; or (d) any other proof satisfactory to
the Company.
If payment of the Refund Upon Death under one of the Annuity Options was not
elected by the Contract Owner prior to the Annuitant's death, the Beneficiary
may elect to have the Refund Upon Death paid in a single sum or applied to
provide an annuity under one of the Annuity Options described in Section VII or
as otherwise permitted by the Company. If a single sum settlement is requested,
the proceeds will be paid within seven days of receipt of such election and due
proof of death. If an Annuity Option is desired, election may be made by the
Beneficiary during a ninety day period commencing with the date of receipt of
notification of death. If such an election is not made, a single sum settlement
will be made to the Beneficiary at the end of such ninety day period. If an
Annuity Option is elected, the Annuity Commencement Date shall be the date
specified in the election but no later than ninety days after receipt by the
Company of notification of death.
The amount of the Refund Upon Death will be the greater of (1) All Purchase
Payments made under this Contract less any amounts surrendered, or (2) the
Accumulated Value of this Contract.
B. SUSPENSION OF PAYMENT OF DEATH REFUNDS PARTIAL SURRENDER
OR TERMINATION BENEFITS
The Company reserves the right to suspend or postpone the date of any payment of
death refunds or any benefit or values resulting from partial surrender or
termination (1) for any period during which the New York Stock Exchange is
closed (other than customary weekend and holiday closings) or during which
trading on the Exchange, as determined by the Securities and Exchange
Commission, is restricted; (2) for any period during which an emergency, as
determined by the Commission, exists as a result of which disposal of securities
held in the Separate Account is not reasonably practical or it is not reasonably
practical to determine the value of the Separate Account's net assets; or (3)
for such other periods as the Commission may by order permit for the protection
of securityholders or as may be permitted under the Investment Company Act of
1940.
ReliaStar Bankers Security Life Insurance Company
RIDER
This rider has three purposes: (1) To conform to the Internal Revenue Code
Section 72(s) by setting forth the required distributions upon an Owner's death;
(2) To allow the addition of investment options; (3) To reduce initial purchase
payments for Separate Account P from $2,500 to $1,000; to reduce the waiting
time from 24 months to 12 months when an Owner is eligible to surrender 10% of a
purchase payment without a contractual surrender charge and to allow
annuitization, based on the annuitant's age, up to age 85 years old or 10 years
after the Contract Issue Date, if later.
A. Required Distributions Upon Owner's Death
In order to conform to the Internal Revenue Code Section 72(s), the Contract is
amended, as follows:
1. "Section I Definitions - Contract Owner" is deleted and in its place is the
following:
CONTRACT OWNER - During the lifetime of the Annuitant and prior to the
Annuity Commencement Date, the Contract Owner shall be the person designated
as the Contract Owner in the Application, or a successor Contract Owner as
provided in Section II-B hereof. If an Owner other than the Annuitant dies
prior to the Annuity Commencement Date and while the Annuitant is living,
all rights of the Owner pass to the successor Owner; if there is no
successor Owner, all rights pass to the Owner's estate unless otherwise
provided.
2. Under "Section II - General Provisions," a new subparagraph "R" is added as
follows:
R. Distribution at Death Rules.
If the Contract Owner dies on or after the Contract Annuity
Commencement Date, and before the entire interest in the Contract has been
distributed, the remainder of the interest will be distributed at least as
quickly as the method in effect on the Owner's death. If a Contract Owner
dies before the Annuity Commencement Date the entire interest must be
distributed within five (5) years after the date of death, or must be
annuitized for some period (not extending beyond the life of a designated
beneficiary) within one (1) year after the date of death. If the beneficiary
is the spouse of the Contract Owner, the Contract may be continued in the
name of the spouse as Contract Owner. In the case of joint Contract Owners,
the distribution will be required at the death of the first of the Contract
Owners.
Where the Contract Owner is not a natural person (i.e. corporation or
trust), the primary annuitant is considered the Contract Owner. In addition,
when an individual is not the Contract Owner, a change in the primary
annuitant is treated as the death of the Contract Owner.
3. Subsection "A Refund upon Death" under Section VIII is deleted in its
entirety (all three paragraphs) and in its place is the following:
A DEATH BENEFIT BEFORE ANNUITY DATE
The Company will pay a benefit upon receipt of due proof of the death of
either the annuitant or the owner, if death of either occurs prior to the
Annuity Commencement Date. The value of benefit will be determined as of the
Valuation Date on or next following the date on which written notice of
death is received by the Company at its Executive Office.
(i) If an Owner other than the Annuitant dies prior to the Annuity
Commencement Date, and while the Annuitant is alive, the death benefit is the
Accumulated Value of the Contract.
(ii) If the Annuitant dies prior to the Annuity Commencement Date, the
amount of the proceeds is determined as follows:
During the first eight years of the Contract, the death benefit will be
the greater of (1) the sum of all Purchase Payments (gross, prior to
any deductions or charges) made under an individual Contract less any
amounts surrendered, or (2) the Accumulated Value. For purposes of this
death benefit, we will determine the accumulated value on the eighth
anniversary of the Contract, and on each eighth anniversary thereafter,
until the Annuitant reaches 65 years of age. If the contract is in
force for eight years or longer, the amount of the death benefit will
be the greater of (1) the sum of all Purchase Payments (gross, prior to
any deductions or charges) made under an individual Contract less any
amounts surrendered, or (2) the Accumulated Value, or (3) The
Accumulated Value as of the last eighth year Contract anniversary date
occurring prior to the Annuitant's 65th birthday, less any amounts
surrendered after the last eighth year Contract anniversary date.
(iii) If the designated beneficiary is the surviving spouse of the Owner of
the Contract, the Contract maybe continued in the name of the spouse as
Contract Owner. If the spouse so elects, a death benefit will not be paid,
but the Contract will be continued with the Spouse as the Contract Owner."
B. Adding Investment Options
In order to add investment options, the Contract is amended, as follows:
1. "Section I Definitions - Sub-Accounts of Separate Account P" and "Definitions
- - Sub-Accounts of Separate Account Q" are deleted, and in their places are the
following:
SUB-ACCOUNTS OF SEPARATE ACCOUNT P - Each Sub-Account invests in a different
fund. The Contract Owner allocates the net purchase payment to one or more
of these Sub-Accounts. The initial allocation to one or more of these
Sub-Accounts is shown on the Contract Data Page.
SUB-ACCOUNTS OF SEPARATE ACCOUNT Q - Each Sub-Account invests in a different
fund. The Contract Owner allocates the net purchase payment to one or more
of these Sub-Accounts. The initial allocation to one or more of these
Sub-Accounts is shown on the Contract Data Page.
2. "Section IV the Separate Accounts - B. Investments of the Separate Accounts":
the first paragraph is deleted and in its place is the following (the other
paragraphs under that heading remain the same):
Separate Account P includes Sub-Accounts. Separate Account Q includes
Sub-Accounts. The assets of each Sub-Account are invested at net asset value
in shares of a Fund, within a mutual fund which offers a series of different
investment objective. The mutual fund is an no-load open-end diversified
investment company registered under the Investment Company Act of 1940, as
amended (the "Act").
C. Miscellaneous: Initial Purchase Payments; Surrenders; Annuitization
1. The minimum initial purchase payment for Contracts funded by Sub-Accounts in
Separate Account P is reduced from $2,500 to $1,000 by amending "Section III
Purchase Provisions and Contract Charges - A. Purchase Payments" to read as
follows:
A. PURCHASE PAYMENTS
The Purchase Payment is payable to the Company at its Executive Office and
is due on the Date of Issue. The amount of the Initial Payment, shown on the
Contract Data Page, may not be less than $1,000. A subsequent purchase
payment may not be less than $100. However, if this Contract is funded by
Separate Account Q, then the initial payment may not be less than $250 and a
subsequent purchase payment may not be less than $50. The Company reserves
the right to accept smaller amounts and reject any payment or application
not in compliance with its underwriting rules.
2. The length of time a purchase payment must be in the Contract to be eligible
for a 10% withdrawal without a contractual surrender charge is reduced from 24
months to 12 months. Paragraph 3 of "Section V Surrender and Transfer
Provisions-B, Contingent Deferred Sales Charge - Surrender Charges and Amounts
Which May Be Withdrawn Without a Surrender Charge" is amended to read as
follows:
3. Our "no charge amount": After a purchase payment has been in the Contract
for 12 months, you may surrender, during each succeeding 12 month period, up
to 10% of that purchase payment without a surrender charge. (Similar
withdrawals of up to 10% of the purchase payment without a surrender charge
are permitted if more than 12 months have elapsed since your last "no
charge" withdrawal.)
3. The Annuity Commencement Date may not be later than the designated
annuitant's 85th birthday, or 10 years after the Contract Issue Date if later,
(previously it was the 80th birthday). "Section VI Annuity Provisions - A
Annuity Commencement Date" is amended to read as follows:
A. ANNUITY COMMENCEMENT DATE
The Annuity Commencement Date is the date chosen by the Owner at the time of
application. Such date must always be the first day of a calendar month, and
may not be later than the first day of the calendar month following the
Designated Annuitant's 85th birthday, or 10 years after the Contract Issue
Date if later.
GENERAL PROVISIONS
1. This Rider is made a part of the Contract to which it is attached and is
subject to all contract provisions which are not inconsistent with it.
2. The Rider does not otherwise alter or extend any of its terms of the policy.
3. ReliaStar Bankers Security Life Insurance
Company has made this Rider effective as of the Issue Date shown on the
Contract Data page, or the Date of the Amendment to such Page which first
shows this rider to be included.
ReliaStar Bankers Security Life Insurance Company
/s/ Susan M. Bergen
Secretary
<PAGE>
ReliaStar Bankers Security Life Insurance Company
FIXED ACCOUNT RIDER
This Rider adds a Fixed Account to the Contract during the accumulation period.
During this period, which occurs prior to the Contract's Annuity Commencement
Date, the Owner may elect to have Contract values accumulate, on a fixed basis
in the Fixed Account or on a variable basis in one or more of the variable
Sub-Accounts available in the Contract, or divided among the Fixed Account and
such variable Sub-Accounts. As indicated in the Contract, annuity payments may
be made on a variable basis, a fixed basis, or a combination of variable and
fixed basis, as selected by the Contract Owner.
FIXED ACCOUNT
The Fixed Account consists of all assets of the Company other than those
allocated to any separate Account of the Company.
ALLOCATION OF NET PURCHASE PAYMENTS
All of the Net Purchase Payments will be allocated either to the Fixed Account
or to one or more of the variable Sub-Accounts, as specified by the Owner in the
Application or as subsequently changed.
TRANSFERS OF CONTRACT VALUES
From the Fixed Account to a Variable Sub-Account. The owner may make partial or
total transfers of Contract Values from the Fixed Account to one or more
variable Sub-Accounts available in the Contract, as long as six months have
elapsed since the last partial or total transfer from the Fixed Account to any
variable Sub Account, except that an additional transfer will be allowed at the
Annuity Commencement Date.
From a Variable Sub-Account to the Fixed Account. The owner may make partial or
total transfers of Contract Values from one or more variable Sub-Accounts
available in the Contract to the Fixed Account, as long as Contract values have
remained in the Sub-Account for seven (7) days. Conditions Applicable to all
Transfers. (a) all transfers within the Contract are without payment of any fee
or charge: this refers to transfers of values from the variable Sub-Accounts to
the Fixed Account, from the Fixed Account to any variable Sub-Account, and among
the variable Sub-Accounts; (b) partial and complete surrenders out of the
Contract, either from the Fixed Account or from any of the variable
Sub-Accounts, are subject to the withdrawal surrender charges as specified in
the Contract, (c) the dollar amount of a transfer may not be less than $250
except that the entire Account Value may be transferred if less than $250; and
(d) no transfer may be made after the Annuity Commencement Date or the date of
receipt by the Company of notification of death of the Annuitant. All transfers
shall be made as of the end of the Valuation Period during which the request for
transfer is received by the Company at its Executive Office, or a later
Valuation Period if requested. Transfers may be made by written request to the
Company at its Executive Office or such other forms of communication is allowed
by the Company.
CONTRACT VALUE
The Contract value for any valuation period is the sum of the Contract Values in
the variable Sub-Accounts and in the Fixed Account.
FIXED ACCOUNT VALUE
The initial Value of the Fixed Account is equal to the amount of the first
allocation to the Fixed Account from a Net Purchase Payment, or the amount of
the first allocation by transfer from a variable Sub-Account to the Fixed
Account, or their total if both should occur on the same day. Thereafter, the
Fixed Account Value accumulates daily as follows:
(a) the Fixed Account at the end of the preceding day;
(b) plus any additional net Purchase Payments allocated to the Fixed
Account, or transfers from a variable Sub-Account to the Fixed Account
during the day;
(c) less any amounts withdrawn from the Fixed Account during the day;
(d) plus daily interest credited.
Interest is credited and compounded daily. The Interest Rate is the sum of:
(a) the daily equivalent of the Guaranteed Interest Rate of 4% per annum,
and
(b) the daily equivalent Excess Interest, if any, in excess of the
Guaranteed Interest Rate declared by the Company for a specific period
of time. On the issue date and on any contract anniversary, the excess
interest rate will be set on the Fixed Account Value and guaranteed
until the next contract anniversary. Net purchase payments and
transfers into the Fixed Account during the contract year will be
credited with an excess interest rate as then declared and such excess
interest rate will be guaranteed until the next Contract Anniversary.
GENERAL PROVISIONS
1. Any values that are available under the Fixed Account are not less than the
minimum benefits required by the state in which the Contract is delivered;
2. The Company reserves the right to defer the payment of a cash surrender
benefit from the Fixed Account for a period of six months after demand
therefor with surrender of the Contract;
3. Any annuity benefits derived from assets in the Policyowner's Fixed Account
at the time of their commencement will not be less than those that would be
provided by the application of an amount to purchase any single
consideration immediate annuity contract offered by the Company.
4. This Rider is made a part of the Contract to which it is attached and is
subject to all contract provisions which are not inconsistent with it.
5. This rider does not otherwise alter or extend any of the terms of the
Policy.
6. ReliaStar Bankers Security Life Insurance Company has made this rider
effective as of the Issue Date shown on the Contract Data page, or the Date
of the Amendment to such Page which first shows this rider to be included.
ReliaStar Bankers Security Life Insurance Company
/s/ Susan M. Bergen
Secretary
<PAGE>
ReliaStar Bankers Security
LIFE INSURANCE COMPANY
Executive Office: 1000 Woodbury Road, Suite 102, Box 9004, Woodbury, NY 11797
Home Office: 1000 Woodbury Road, Suite 102, Box 9004, Woodbury, NY 11797
Individual Retirement Annuity Endorsement to Contract No. XXXXXXXXXXXXX
Covering the life of XXXXXXXXXXXXX
This endorsement shall be in full force and effect in accordance with Section
408 of the Internal Revenue Code of 1954, as amended, or as subsequently
amended, as long as the provisions of this endorsement are required by such Law,
and the provisions hereof shall take precedence and supersede the provisions of
the Contract as follows:
1. The Contract may not be sold, transferred, assigned, discounted or pledged as
collateral for a loan or as security for the performance of an obligation of for
any other purpose to any person other than the Insurance Company, except in
accordance with "Rollover Contributions" described in paragraph 3 below.
2. Any provision of the Contract to the contrary notwithstanding, the entire
interest of the Annuitant shall be distributed to the Annuitant not later than
the first day of April following the year in which the Annuitant attains age
70-1/2, or shall be distributed beginning no later than such first day of April
to the Annuitant over:
a. the Annuitant's life or the lives of the Annuitant and spouse; or
b.a period certain not extending beyond the life expectancy of the
Annuitant or the joint and survivor life expectancy of such Annuitant and
spouse, calculated as of the date retirement benefits commence commence.
The Interest Income Settlement Option of the Contract is not available. If an
Annuitant's entire interest is to be distributed in other than a lump-sum, then
the amount to be distributed each year must be at least an amount equal to the
quotient obtained by dividing the participant's entire interest by the life
expectancy of the Annuitant or joint and last survivor expectancy of the
Annuitant and spouse. Life expectancy and joint and last survivor expectancy are
computed by the use of the return multiples contained in Section 1.72-9 of the
Income tax Regulations. For purposes of this computation, an Annuitant's life
expectancy may be recalculated not more frequently than annually.
3. Except for "Rollover Contributions" as defined in Sections 402(a)(5),
403(d)(3) and 409(b)(3) of the Internal Revenue Code of 1954, as amended, paid
into an Individual Retirement Annuity, the annual premium under the Contract
shall be paid in cash and shall not exceed the lesser of $2,000.00 or 100% of
compensation (the $30,000.00 for the Simplified Employee Pension Plan, or such
greater amount as may be prescribed in regulations).
Any refund of premiums, except refunds of premiums attributable to excess
contributions, shall be applied before the close of the calendar year following
the year of the refund toward the payment of future premiums or the purchase of
additional benefits. In the case of a spousal IRA, the maximum contribution
shall not exceed the lesser of $2,250 or 100% of compensation, but no more than
$2,000 can be contributed to either spouse's IRA for 1985 and later years, the
annual premium must be paid within the time prescribed by law for filing the
Annuitant's Federal income tax return for that taxable year (not including
extensions). "Compensation" means wages, salaries, professional fees, or other
amounts derived from or received for personal service actually rendered
(including, but not limited to commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips, and bonuses) and includes earned income, as defined in Section
401 (c) (2) (reduced by the deduction the self-employed individual takes for
contributions made to a pension plan). Compensation does not include amounts
derived from or received as earnings or profits from property (including, but
not limited to, interest and dividends) or amounts not includible in gross
income. Compensation also does not include any amount received as a pension or
annuity or as deferred compensation. For 1985, and later years, compensation
includes amounts received as alimony or separate maintenance payments.
The Annuitant agrees to notify ReliaStar Bankers Security if any contribution
for this contract is allocable to a taxable year other than the taxable year in
which such contribution is received by ReliaStar Bankers Security. The Annuitant
also agrees to notify ReliaStar Bankers Security if aggregate contributions for
this Contract and any other individual retirement accounts or annuities
established by and/or for the Annuitant exceed the lesser of $2,000 ($2,250 for
a spousal IRA) or 100% of earned income as defined, in any taxable year.
4. If the Annuitant dies before distribution of his or her interest
commences, the Annuitant's entire interest will be distributed in
accordance with one of the following four provisions:
a. The Annuitant's entire interest will be paid within five (5)
years after the date of the Annuitant's death.
b. If the Annuitant's interest is payable to a beneficiary
designated by the Annuitant and the Annuitant has not elected
(a) above, then the entire interest will be distributed in
substantially equal installments over the life or life
expectancy of the designated beneficiary commencing no later
than one (1) year after the date of the Annuitant's death.
c. If the designated beneficiary of the Annuitant is the
Annuitant's surviving spouse, the spouse may elect within the
five year period commencing with the Annuitant's; date of
death to receive equal or substantially equal payments over
the life or life expectancy of the surviving spouse commencing
at any date prior to the date on which the deceased Annuitant
would have attained age 70-1/2.
d. If the designated beneficiary is the Annuitant's surviving
spouse, the spouse may treat the Contract as his or her own
individual retirement arrangement (IRA). This election will be
deemed to have been made if such surviving spouse makes a
regular IRA contribution to the Contract, makes a rollover to
or from such Contract, or fails to elect any of the above
three provisions.
For purposes of the above, payments will be calculated by use
of the return of multiples specified in Section 1.72-9 of the
regulations. Life expectancy of a surviving spouse may be
recalculated annually. In the case of any other designated
beneficiary, life expectancy will be calculated at the time
payment first commences and payments for any 12-consecutive
month period will be based on such life expectancy minus the
number of whole years passed since distribution first
commenced.
5. Upon the death of the Annuitant following commencement of the
retirement benefits but before all of the installment payments
guaranteed, if any, have been made, the death benefit will be a
continuation of such guaranteed installment payments for the remainder
of the guaranteed period.
6. This Contract may be amended from time to time, in order to comply with
the provisions of the Internal Revenue Code and regulations thereunder.
7. The sole owner of this Contract shall be the Annuitant.
8. The entire interest of the Annuitant is nonforfeitable.
9. The Annuitant shall notify the Company of any intended disposition of
the distribution prior to age 59-1/2, other than for disability or
death.
10. The contract is established for the exclusive benefit of the individual
or his or her beneficiary.
11. a. If the premium payments are interrupted, the contract will be
reinstated at any date prior to maturity upon payment of a
premium to the Company, and the minimum premium amount for
reinstatement shall be the minimum required by the Contract.
b. The Company may at its option either accept additional future
payments or terminate the Contract by payment in cash of the
then present value of the paid-up benefit if no premiums have
been received for two full consecutive policy years and the
paid-up annuity benefit at maturity would be less than $20.00
per month.
12. ReliaStar Bankers Security shall furnish annual calendar year reports
concerning the status of the Annuity.
/s/ Susan M. Bergen
Secretary
<PAGE>
IRA DISCLOSURE STATEMENT
Internal Revenue Service regulations require that you be given this Disclosure
Statement so that you fully understand your rights and obligations under an
Individual Retirement Arrangement ("IRA").
(1) You will be permitted to revoke your IRA within seven (7) days after the
date on which your IRA is established by giving written notice to the Company.
This 7 day revocation period runs concurrently with your annuity cancellation
provisions stated on the cover page of your annuity. You may mail your
revocation notice to the Company as stated on the cover page of your annuity.
Upon such revocation, you will be entitled to a return of the entire amount of
the consideration paid to the IRA, without adjustment for commissions or
penalties for early surrender.
(2) An IRA annuity must be issued in your name as the owner, and either you or
your beneficiaries who survive you can be the only ones to receive the benefits
or payments. If you set up an IRA using an annuity contract, it must meet the
following requirements, (a) the amount in your account must be fully vested at
all times; (b) the contract must provide that you cannot transfer it to someone
else (except in the event of divorce), (c) the contract must provide that you
cannot contribute more than $2,000 in any year. You must use any refunded
premiums to pay for future premiums or to buy more benefits. You must do this
before the end of the calendar year after the year you receive the refund; (d)
you must start receiving distributions from your IRA annuity by April 1 of the
year following the year in which you reach age 70-1/2; and (e) your contract
must have flexible premiums so that if your compensation changes, your payment
may also change, which must apply to all contracts issued after 6 November 1978.
The Internal Revenue Code permits you, if you qualify, to establish an IRA to
which you may make contributions each year in an amount up to the lesser of
$2,000 or 100% of your gross annual compensation. Wages, salaries, tips,
profession fees, bonuses, commissions and other amounts including net earnings
from self-employment received for work you do are compensation. In addition,
alimony qualifies as compensation to the spouse receiving it. If you have more
than one IRA, the limit applies to the total contributions made to your IRAs for
the year. Contributions to your IRA may or may not be deductible from your gross
income on your federal tax return. Generally, you can take a tax deduction for
the contributions that you are allowed to make to your IRA. However, if you or
your spouse is covered by an employer retirement plan at any time during the
year, your IRA deduction may be reduced or eliminated, depending on the amount
of your income and your filing status. To qualify as a deductible contribution,
a contribution to an individual or spousal IRA for any year must be made no
later than the due date for filing an individual income tax return for that
year, not including extensions. The deadline is April 15th of the following year
for most taxpayers. No part of your IRA contributions or the earnings thereon is
subject to any forfeiture provisions. Further, your IRA is tax-deferred, which
means that you are not taxed on the earnings from your IRA contributions until
distribution. However, no deduction for IRA contributions will be allowed for
the year in which you reach the age of 70-1/2 the latest age at which
distributions must begin or any year thereafter.
(3) You are eligible to establish an IRA during a taxable year even if you are
an active participant (after 1981) in a tax-qualified retirement plan or
government retirement plan. A tax-qualified retirement plan would include a
pension, profit sharing or savings plan, a Keogh plan, an annuity plan or a bond
purchase plan. If you are covered by an employer's retirement plan, or if you
file a joint return with your spouse who is covered by such a plan, you may be
entitled to only a partial deduction or no deduction at all, depending on your
income.
(4) Contributions to your IRA must be in cash, and in no case will the Company
accept contributions on your behalf in excess of $2,000 for any taxable year
except in the case of a rollover contribution. See (10) below.
(5) An individual with a nonworking spouse may establish a separate IRA for the
spouse and contribute up to $2,000 to such IRA making a total possible
contribution of $4,000 for the year.
(6) Any contributions to your IRA over and above the permissible limits set
forth above are considered excess contributions subject under the Internal
Revenue Code to an annual excise tax of 6% of the amount of the excess
contributions for each year in which such excess contributions are not corrected
either by withdrawal of the excess contributions from the IRA or, in years
subsequent to the year in which the initial excise tax is imposed, by foregoing
IRA contributions up to the permissible limits.
The 6% penalty tax is imposed on the difference between the actual total
contribution made during the tax year and the maximum contribution permitted
($2,000 or 100% compensation for single taxpayers; $4,000 or 100% compensation
for a married taxpayer with a spousal IRA). If a single taxpayer, with a
compensation of $31,000, contributed $2,500 to his IRA, the excess contribution
would be $500 (assuming he does not withdraw that amount by the due date of his
return, including extensions). The tax of $30 ($500 multiplied by .06) must be
shown on both Form 5329 and Form 1040 filed jointly with the IRS.
(7) An IRA is intended to provide income for you when you retire. For this
reason, the law imposes certain restrictions on your right to withdraw this
money.
You may withdraw funds in your IRA without penalty on and after the date you
attain age 59-1/2 or become permanently disabled. You also may avoid the penalty
for distributions prior to age 59-1/2 if you receive at least annual or more
frequent payments that are part of a series of substantially equal payments over
your life (or your life expectancy) or over the lives of you and your
beneficiary (or your life expectancies). To avoid the penalty for distributions
prior to age 59-1/2, these substantially equal payments must continue to age
59-1/2 or for 5 years, if longer. The law requires that you must begin to
receive distributions no later than by April 1 of the year following the year in
which you attain age 70-1/2. The distribution of funds in your account at that
time can be in a single lump sum payment, or may be made in the form of periodic
payments for a period certain extending up to your life expectancy or the joint
life expectancy of you and your spouse. If you die before all funds in your IRA
have been distributed, or if your surviving spouse is receiving payments and
dies before all funds in your IRA have been distributed, the remaining funds in
your IRA must be distributed to your beneficiary or beneficiaries (or those of
your surviving spouse) within five (5) years after you (or your surviving
spouse) die. However, the preceding distribution is not required if
distributions over a period certain commenced before your death and the term is
for a period not longer than your life expectancy or the joint life expectancy
of you and your spouse. If, after you attain age 70-1/2 the amount distributed
to you in any year is less than the minimum amount required by law to be
distributed, an excise tax of 50% is levied on the "excess accumulation". This
accumulation is the difference between the amount that was distributed before
the end of the taxable year of the individual in which age 70-1/2 was attained
and the minimum amount that should have been distributed. This 50% tax is levied
in addition to any income tax that may be levied on the excess accumulation.
(8) In general, distributions from an IRA are taxed as ordinary income to the
individual receiving such distributions and are not eligible for capital gains
treatment. The special ten-year and five-year forward income averaging treatment
accorded lump sum distributions from tax-qualified pension and profit sharing
plans does not apply to lump sum distributions from an IRA. Your IRA assets may
not be excluded from your gross estate for federal estate tax purposes. However,
the designation of a beneficiary of an IRA is not considered a transfer of
property for federal gift tax purposes, and an exemption from estate tax is
available for proceeds payable on death providing the death benefit is payable
as an annuity to a beneficiary other than the estate. In addition, any payments
from your IRA to your beneficiary are generally not taxable under the gift tax
rules.
You are required under the Internal Revenue Code to make a choice concerning
withholding of federal income taxes on distributions you receive from your
IRA. Unless you tell us that you do not want any taxes withheld, the law
requires that taxes be withheld from all of your taxable distributions. Taxes
will be withheld at a flat rate of 10 percent of each distribution if you choose
to have taxes withheld. The amount withheld will be turned over the government
as a prepayment of your federal income tax liability for that year.
(9) In general, a distribution from an IRA before the individual attains age
59-1/2 is considered a premature distribution subject to both ordinary income
tax and an additional tax equal to 10% of such distribution. This additional 10%
tax on a premature distribution, however, does not apply if you are permanently
disabled at the time of the distribution before age 59-1/2. An investment in a
so-called "collectible" will be treated as a distribution includable in your
gross income, and subject to the 10% penalty tax if it is a premature
distribution. "Collectible" means art works, antiques, metals, gems, stamps,
certain coins, and certain other types of tangible personal property.
(10) Most amounts distributed from other qualified plans or IRAs may be
transferred or "rolled over" tax-free to an IRA. A lump sum distribution from a
qualified retirement plan may generally be "rolled over" in full, tax-free. In
general, the following types of distributions may not be "rolled over":
1. Substantially equal payments paid over the life or life expectancy of the
Annuitant or the Annuitant and the beneficiary.
2. A distribution made for a specified period of 10 years or more.
3. Any distribution excludable from income.
4. Required minimum distributions at or after age 70-1/2.
Generally, such "rollover" amounts are not tax deductible by the individual and
are not subject to the excise tax on excess contributions described in (6) above
or the additional tax on premature distributions explained in (9) above.
However, to postpone paying income taxes, you must place the assets into your
IRA within 60 days of receiving them. In addition, you can "roll over" assets
received from another IRA only once within any 12-month period. Similarly, the
amount distributed from your IRA may be "rolled over" tax-free into another IRA
or an individual retirement annuity in accordance with federal tax law. The
special tax treatment available for a lump-sum distribution from a qualified
plan is not available for an IRA annuity. In addition, your surviving spouse may
"roll over" a total payout from your IRA received due to your death.
(11) An IRA is subject to certain restrictions on the type of investments that
can be made with IRA funds; for example, no part of the IRA funds may be
invested in life insurance contracts.
(12) If you or your beneficiary engage in a so-called "prohibited transaction"
with respect to your IRA, the account will be disqualified and lose its
exemption from federal income tax. In this event, the fair market value of the
assets in your IRA will be included in your gross income for the taxable year in
which disqualification occurs. In addition, if your IRA is disqualified in a
year before or during which you attain age 59-1/2, you are subject to an
additional tax equal to 10% of the amount included in your gross income by
reason of such disqualification unless the disqualification is attributable to
your becoming permanently disabled. In general, a "prohibited transaction" means
any direct or indirect (a) sale or exchange, or leasing of any property; (b)
lending of money or other extension of credit; or (c) furnishing of goods,
services or facilities between the individual or his beneficiary or other
disqualified person and the IRA; (d) transfer to, or use by or for the benefit
of, the individual or his beneficiary or other disqualified person, or the
income or assets of the IRA; (e) dealing by the individual or his beneficiary or
other disqualified person with the assets of the IRA in his own interest or for
his own account; or (f) receipt of any consideration for his own personal
account by a disqualified person who is a fiduciary from any part dealing with
the IRA in connection with a transaction involving the income or assets of the
IRA.
(13) If you pledge amounts in your IRA as security for a loan, then the amounts
pledged are considered to be distributed to you and this amount must be included
in your gross income. Further, you may be subject to an additional tax equal to
10% of the amount pledged if you pledge your IRA in a year before or during
which you attain age 59-1/2.
(14) There are no expense charges made against the gross annual contribution to
your IRA annuity. Expense charges include such items as the cost of issuing and
maintaining the IRA annuity, commissions paid to a sales representative, or
other taxes and fees incurred by the Company, and are not charged against the
fund. If state premium taxes are assessed in your domiciliary state, the fund
will be reduced by a like amount. If you are purchasing a variable annuity, you
should refer to your prospectus for annual maintenance fees and charges.
At least once each year, the Company will send you a written report specifying
the current value of your IRA annuity (IRS Form 5498).
(15) As a beneficiary of an IRA, you are responsible for filing Form 5329
(Return for Individual Retirement Savings Arrangement) with the Internal Revenue
Service with your federal tax return for each taxable year during which you are
subject to a 6% penalty for excess contributions (see (6) above), a 50% excise
tax for failure to distribute at age 70-1/2 (see (7) above), or a 10% excise tax
for premature distributions (see (9) above), or where your beneficiary(ies) is
subject to a 50% excise tax for failure to take a distribution from your IRA
within five (5) years of your death (see (7) above). You are also responsible
for filing Form 990-T (Exempt Organization Business Income Tax Return) and
certain other related tax forms for any taxable year in which your IRA has
unrelated business income (see Section 511 of the Internal Revenue Code).
(16) Your IRA annuity has not been submitted to Internal Revenue Service. The
contract will be amended as and when necessary in order to comply with the
provisions of the Internal Revenue Code and regulations.
(17) Further information concerning IRAs may be obtained from any district
office of the Internal Revenue Service. To order publications and forms, call
the IRS toll-free telephone number, 1-800-424-FORM (3676), or write the IRS
Forms Distribution Center for your area. The Internal Revenue Service
Publication 590 (-Individual Retirement Arrangements-) provides additional
information about IRAs.
(18) A financial disclosure must be included with this Disclosure Statement and
your annuity contract.
(19) Wherever any words are used herein in the masculine gender, they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply, and wherever any words are used here in the singular
form, they shall be construed as though they were also used in the plural form
in all cases where they would so apply.
<PAGE>
POLICY NO. XXXXXXXXXXXXX ANNUITANT XXXXXXXXXXXXX
THIS RIDER IS ATTACHED TO AND FORMS PART OF THE ABOVE NUMBERED
POLICY EFFECTIVE FROM XXXXXXXXXXXXX
This is a Non-Transferable Policy. Provisions relating to transfer of
ownership and assignment of this policy are inapplicable hereafter. The
ownership o this Policy may not be transferred nor may this Policy be
assigned.
ReliaStar Bankers Security Life Insurance Company
/s/ Susan M. Bergen
Secretary
ORD 67-506
<PAGE>
(THIS PAGE LEFT INTENTIONALLY BLANK)
<PAGE>
LOGO
ReliaStar Bankers Security Life
HOME OFFICE - WOODBURY, NY
Individual Flexible Purchase Payment Fixed and Variable Annuity
Non-Participating
Separate Accounts P and Q
<PAGE>
RESTATED CHARTER
OF
RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
UNDER SECTION 807 OF THE NEW YORK BUSINESS
CORPORATION LAW
AND SECTION 1206 OF THE NEW YORK INSURANCE LAW
1. The name of the corporation is ReliaStar Bankers Security Life
Insurance Company. The name under which the corporation was originally
incorporated was the Morris Plan Insurance Society. The name was changed to
ReliaStar Bankers Security Life Insurance Company by Charter Amendment of August
19, 1996.
2. The Charter was filed in the office of the Superintendent of
Insurance of the State of New York on June 11, 1917.
3. The Charter is amended at Article I by changing the name of the
corporation to "ReliaStar Life Insurance Company of New York." The text of the
Charter is hereby restated as amended to read as set forth below in full, and
such Restated Charter shall be effective January 1, 1998:
ARTICLE I
The name of the Corporation shall be "ReliaStar Life Insurance
Company of New York".
ARTICLE II
The principal office of the Corporation shall be located in
the County of Nassau, State of New York. The Corporation may establish
and maintain other offices, agencies or branches within or without the
State of New York and in any part of the world.
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ARTICLE III
The Corporation is formed for the following purposes:
To transact the following kinds of insurance business as
defined in Section 1113(a)(1), (2) and (3) of the New York Insurance
Law:
"1. `Life insurance,' means every insurance upon the lives of
human beings, and every insurance appertaining thereto, including the
granting of endowment benefits, additional benefits in the event of
death by accident, additional benefits to safeguard the contract from
lapse, accelerated payments of part or all of the death benefit or a
special surrender value upon diagnosis (A) of terminal illness defined
as a life expectancy of twelve months or less, or (B) of a medical
condition requiring extraordinary medical care or treatment regardless
of life expectancy, or provide a special surrender value, upon total
and permanent disability of the insured, and optional modes of
settlement of proceeds. "Life insurance" also includes additional
benefits to safeguard the contract against lapse in the event of
unemployment of the insured. Amounts paid the insurer for life
insurance and proceeds applied under optional modes of settlement or
under dividend options may be allocated by the insurer to one or more
separate accounts pursuant to section four thousand two hundred forty
of this chapter.
2. `Annuities,' means all agreements to make periodical
payments for a period certain or where the making or continuance of all
or
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some of a series of such payments, or the amount of any such payment,
depends upon the continuance of human life, except payments made under
the authority of paragraph one hereof. Amounts paid the insurer to
provide annuities and proceeds applied under optional modes of
settlement or under dividend options may be allocated by the insurer to
one or more separate accounts pursuant to section four thousand two
hundred forty of this chapter.
3. `Accident and health insurance,' means (i) insurance
against death or personal injury by accident or by any specified kind
or kinds of accident and insurance against sickness, ailment or bodily
injury, including insurance providing disability benefits pursuant to
article nine of the workers' compensation law, except as specified in
item (ii) hereof; and (ii) non-cancelable disability insurance, meaning
insurance against disability resulting from sickness, ailment or bodily
injury (but excluding insurance solely against accidental injury) under
any contract which does not give the insurer the option to cancel or
otherwise terminate the contract at or after one year from its
effective date or renewal date."
To do such other business as a stock life insurance company
now is or hereafter may be permitted to do under the Insurance Law of
the State of New York and for which the Corporation shall have the
required capital and surplus.
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ARTICLE IV
The amount of the capital of the Corporation shall be Two
Million Seven Hundred Fifty Five Thousand Seven Hundred Twenty Six
Dollars ($2,755,726) to consist of One Million Three Hundred Seventy
Seven Thousand Eight Hundred Sixty Three (1,377,863) shares of Capital
Stock of the par value of Two Dollars ($2.00) each.
No holder of stock of the Corporation shall be entitled, as
such, to any pre-emptive rights to subscribe for the purchase of or to
receive any part of any issue of shares, or of bonds, notes,
debentures, preferred stock, or other securities convertible into
shares, of the Corporation whether now or hereafter authorized or
issued; and the Corporation shall have the right from time to time,
without offering the same to the holders of shares of any class then
outstanding, to issue and sell shares of its stock of any class, or any
such bonds, notes, debentures, or other securities convertible into
stock, to such person or persons as the Board of Directors from time to
time shall determine. As used in this paragraph the expression
"securities convertible into stock" shall be deemed to include
securities to which are attached or with which are issued warrants or
other instruments evidencing the right to purchase or otherwise acquire
shares to any class of stock of the Corporation.
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ARTICLE V
Section 1. The corporate powers shall be exercised by a Board
of Directors and by a president and by one or more vice presidents, a
secretary and a treasurer and by such other officers and such
committees as the Board of Directors may elect or appoint and empower.
The number of Directors shall be not less than thirteen nor more than
twenty-two. The actual number of Directors of the Corporation shall be
such as from time to time shall be fixed by or in the manner provided
in the By-laws.
Section 2. The Board of Directors or the Stockholder(s) shall
have the powers to make, prescribe amend or repeal the By-Laws. The
Board of Directors shall also have the powers to make and prescribe
rules and regulations for the transaction of business of the
Corporation and the conduct of its affairs, not inconsistent with this
Charter or the laws of the State, and to amend or repeal the same.
ARTICLE VI
Section 1. The directors shall be elected by the stockholders,
as prescribed by the laws of the State of New York or by By-laws not
inconsistent with this charter or the laws of the State of New York. An
election of directors shall be held each year on the second Thursday of
April, if not a legal holiday, and if a legal holiday, then on the next
succeeding business day not a legal holiday at such time and place as
specified by the Board of Directors, or, in the event the Board of
Directors
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shall fail to specify such a time and place, at the Corporation's
Executive Office at 9:00 a.m. The stockholders by a majority vote at a
meeting may remove any directors with or without cause. Any director
may be removed by the Board of Directors for cause, at any time, or
whenever such action is requested by the Superintendent of Insurance of
the State of New York.
Section 2. The president, one or more vice presidents, a
secretary and a treasurer shall be elected annually by the Directors at
the first meeting of the Board of Directors held after the election of
the Directors as provided in Section 1 of this Article; and each of
them shall hold office until the election of his successor. All other
officers shall be elected or appointed by the Board of Directors, or in
such manner as the By-laws may prescribe. Any officers may be removed
at any time by the Board of Directors.
Section 3. Whenever any vacancy or vacancies shall occur in
the Board of Directors by death, resignation, removal or otherwise, a
majority of the remaining members of the Board, at a meeting called for
that purpose, or at any regular meeting, shall elect a Director or
Directors to fill the vacancy or vacancies thus occasioned and each
Director so elected shall serve until his successor is elected and is
qualified. If, because of any vacancy or vacancies in the Board of
Directors, the number of Directors shall be less than thirteen, the
Corporation shall not for that reason be
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dissolved, but every Director shall continue to hold office and
discharge his duties until his successor shall have been elected and
qualified.
Section 4. Vacancies in any office may be filled for the
remainder of the term of the term in which the same shall occur by a
majority vote of the Board of Directors.
Section 5. At all times, not less than three directors shall
be residents of New York, at least a majority shall be citizens and
residents of the United States, and no director shall be less than
eighteen years of age. Not less than one-third of the Board of
Directors shall be persons who are not officers or employees of the
Corporation or any entity controlling, controlled by, or under common
control with the Corporation and who are not beneficial owners of a
controlling interest in the voting stock of the Corporation or any such
entity. Directors need not be stockholders.
ARTICLE VII
The names and post office residence addresses of the Directors
who shall serve until the next annual meeting of stockholders and until
their successors are duly elected are:
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<PAGE>
Name Residence
--------------- --------------------
Stephen A. Carb 254 East 68th Street
New York, NY 10021
R. Michael Conley 2910 Holly Lane
Plymouth, MN 55447
Richard R. Crowl 1439 Tyrol Trail
Golden Valley, MN 55416
John H. Flittie 13970 Oakland Place
Minnetonka, MN 55343
James T. Hale 6420 Pioneer Trail
Corcoran, MN 55357
Wayne R. Huneke 6100 Sherman Circle
Edina, MN 55436
Kenneth U. Kuk 6306 Maple Ridge
Excelisor, MN 55331
Richard E. Nolan 271 Central Park West
New York, NY 10024
Fioravante G. Perrotta 13 Clark Lane
Essex, CT 06426
Robert C. Salipante 14555 Durham Road
Minnetonka, MN 55345
John G. Turner 3424 West Calhoun Parkway
St. Louis Park, MN 55416
Charles B. Updike P.O. Box 263, S. Main Street
Westport, NY 12993
Ross M. Weale 56 Cove Road
S. Salem, NY 10590
Steven W. Wishart 1957 Sheridan South
Minneapolis, MN 55405
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ARTICLE VIII
Any person made a party to any action, suit or proceeding,
civil or criminal, by reason of the fact that he or she is or was an
officer or employee of the Corporation, or of any corporation which he
or she served as such at the request of the Corporation, shall be
indemnified by the Corporation against the reasonable expenses,
including attorney's fees, actually and necessarily incurred by him or
her in connection with the defense of such action, suit or proceeding,
civil or criminal, or in connection with any appeal therein, except in
relation to matters as to which it shall be adjudged in such action,
suit or proceeding that he or she is liable for negligence or
misconduct in the performance of his or her duties. No director shall
be personally liable to the Corporation or any of its stockholders for
damages for any breach of duty as a director; provided, however, that
the foregoing provision shall not eliminate or limit (i) the liability
of a director if a judgment or other final adjudication adverse to him
or her establishes that his or her acts or omissions were in bad faith
or involved intentional misconduct or any violation of the Insurance
Law or a knowing violation of any other law or that he or she
personally gained in fact a financial profit or other advantage to
which he or she was not legally entitled; or (ii) the liability of a
director for any act or omission prior to the adoption of this
amendment by the stockholders of the Corporation. Any amount payable by
way of indemnity shall be determined and paid in such manner as the
Board of Directors may determine or the stockholders by
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appropriate resolution may specify: provided, however, that if such
amount is paid otherwise than pursuant to a court order or by
resolution of the stockholders, the Corporation shall, not later than
the next annual meeting of stockholders unless such meeting is held
within three months of the date of payment and, in any event, within
fifteen months of the date of such payment, mail to its stockholders of
record at the time entitled to vote for the election of directors a
statement specifying the persons paid, the amounts paid and the nature
and status at the time of such payment of the litigation or threatened
litigation.
ARTICLE IX
The duration of the corporate existence of the Corporation
shall be perpetual.
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4. The said amendment to the charter was authorized by the Board of
Directors at a meeting held on July 23, 1997 and this Restated Charter was
authorized by the sole shareholder of the corporation at a meeting held on
October 28, 1997.
IN WITNESS WHEREOF This Restated Charter has been signed this 11th day
of December, 1997.
RELIASTAR BANKERS SECURITY
LIFE INSURANCE COMPANY
By /s/ RICHARD R. CROWL
Richard R. Crowl, Senior Vice
President and General Counsel
STATE OF MINNESOTA)
) ss:
COUNTY OF HENNEPIN)
On December 11, 1997, before me personally came Richard R. Crowl, to me
personally known and known to me to be the person who executed the foregoing
instrument, and he duly acknowledged before me that he executed the same.
____________________________________
|NOTARY SEAL |
|Patricia A. Thompson |
|NOTARY PUBLIC MINNESOTA | /s/ PATRICIA A. THOMPSON
|My Commission Expires Jan. 31, 2000| Notary Public
____________________________________|
By /s/ SUSAN M. BERGEN
Susan M. Bergen, Secretary
STATE OF MINNESOTA)
) ss:
COUNTY OF HENNEPIN)
On December 11, 1997, before me personally came Susan M. Bergen, to me
personally known and known to me to be the person who executed the foregoing
instrument, and she duly acknowledged before me that she executed the same.
____________________________________
|NOTARY SEAL |
|Patricia A. Thompson |
|NOTARY PUBLIC MINNESOTA | /s/ PATRICIA A. THOMPSON
|My Commission Expires Jan. 31, 2000| Notary Public
____________________________________|
11
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY
OF NEW YORK
Bylaws
as amended and restated
Effective January 1, 1998
Home Office: 1000 Woodbury Road, Suite 102, P.O. Box 9004, Woodbury, NY 11797
Incorporated Under the Laws of the State of New York
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
BYLAWS
Article I
1. The annual meeting of the stockholders of the Company for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held each year on the second Thursday
of April, if not a legal holiday, and if a legal holiday, then on the next
succeeding business day not a legal holiday, at such time and place as specified
by the Board of Directors.
2. Special meetings of the stockholders may be called at any time by a
majority of the Board of Directors or by the President, and shall be called upon
the written request of stockholders of record owning at least one-fourth of the
capital stock. Such meetings shall be held at such time and in such place as
shall be designated in the notice thereof.
3. Notice of each meeting of stockholders shall be in writing, signed
by the President, a Vice President, the Secretary or an Assistant Secretary. It
shall state the purpose of the meeting and shall be served, either personally or
by mail, upon each stockholder of record entitled to vote at such meeting, not
less than then ten nor more than fifty days before the meeting. If mailed, said
notice shall be directed to a stockholder at his last know post office address
appearing on the records of the Company.
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Article II
1. No election of directors shall be valid unless a copy of the Notice
of Election shall have been filed in the office of the Superintendent of
Insurance at least ten days before the day of such election. Whenever any of the
directors of the Company shall have resigned and successors shall have been
chosen pursuant to the provisions of these Bylaws, such successors shall not
take office nor exercise the duties thereof until ten days after written notice
of their election shall have been filed in the office of the Superintendent of
Insurance.
2. In case it shall happen at any time that an election of directors
shall not be had on the date hereinbefore designated, the Company shall not for
that reason be dissolved; but every director shall continue to hold his or her
office and discharge his or her duties until a successor has been elected.
3. Each share of voting stock shall entitle the holder thereof to one
vote, either in person or by proxy, in the election of directors or on any other
matter that may properly come before any meeting of the stockholders of the
Company.
4. A majority in interest of the outstanding voting stock of the
Company represented either in person or by proxy shall constitute a quorum for
the transaction of business at any annual or special meeting of the
stockholders. A majority of such quorum shall decide any question that may come
before the meeting, except as otherwise required by statute or as otherwise
provided in the Certificate of Incorporation or Bylaws of the Company.
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Article III
1. Certificates of stock shall be issued in numerical order and each
stockholder shall be entitled to a certificate signed by the President or a Vice
President, and the Secretary or an Assistant Secretary, or the Treasurer or an
Assistant Treasurer, and sealed with the seal of the Company (which may be a
facsimile, engraved or printed), certifying to the number of shares owned by the
stockholder; provided, however, that where any such certificate is signed by a
transfer agent or a transfer clerk and by a registrar acting on behalf of the
Company, the signature of any such officials of the Company may be facsimiles,
engraved or printed thereon.
2. All transfers of stock shall be made upon the transfer books of the
Company, which books shall be kept in the State of New York. Before any new
certificate is issued, the old certificate or all rights therein shall be
surrendered.
3. A person in whose name shares of capital stock stand on the books of
the Company shall be deemed the owner thereof for all purposes.
4. The transfer books of the Company may be closed by order of the
Board of Directors or the Executive Committee for the period not exceeding forty
days next preceding the day fixed for any annual or special meeting of the
stockholders and may likewise be closed for the payment of any dividend for a
similar period next preceding the day fixed for such payment.
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Article IV
1. The management of all the affairs, property and interests of the
Company shall be vested in a Board of Directors consisting of not less than
thirteen (13) nor more than twenty-two (22) Directors as fixed by the Resolution
of the Board of Directors who shall be annually elected. In addition to the
powers and authorities expressly conferred upon them by these Bylaws and the
Certificate of Incorporation, the Board of Directors may exercise all such
powers of the Company and do all such lawful acts and things as are not, by
statute or by the Certificate of Incorporation or by these Bylaws, directed or
required to be exercised or done by the stockholders.
2. A regular meeting of the Board of Directors shall be held once each
year and at any other time at dates to be fixed by resolution of said Board.
3. Special meetings of the Board of Directors may be held at any time
upon call of the Chairman of the Board, the Executive Committee, or the
President, or of a majority of the members of the said Board.
4. Meetings of the Board of Directors may be held at the Home Office of
the Company or at such other place or places as the Board of Directors or the
Executive Committee may from time to time designate. Directors may participate
in a meeting of the Board by means of conference telephone or similar
communications equipment allowing all persons participating in such meeting to
hear each other at the same time. Participation by such means shall constitute
presence in person at the meeting.
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5. At least three days written notice of any regular or special meeting
of the Board of Directors shall be given to each director.
6. A quorum of the Board of Directors shall be a majority of the
members thereof; provided that at least one member of the Board of Directors who
is not an officer or employee of the Company or any entity controlling,
controlled by, or under common control with the Company and who is not a
beneficial owner of a controlling interest in the voting stock of the Company or
any such entity must be included in any quorum for the transaction of business
of any meeting of the Board of Directors or any committee thereof.
7. The Board of Directors may appoint from its own membership an
Executive Committee of not less than five members which shall act for the Board
of Directors between the meetings of said Board, during which time the Executive
Committee shall exercise all of the powers and duties of the Board of Directors
except that it shall not have the power or authority to alter or amend the
Bylaws or to remove or change the compensation of any senior officer or
director. Not less than one-third of the members of the Executive Committee
shall be persons who are not officers or employees of the Company or any entity
controlling, controlled by, or under common control with the Company and who are
not beneficial owners of a controlling interest in the voting stock of the
Company or any such entity. At least one of such persons must be included in any
quorum. The Executive Committee shall meet at stated times or on notice to all
by any of its own members. A majority of the members of the Executive Committee
should constitute a quorum. The Executive Committee shall keep regular minutes
of its proceedings and report the same to the Board of Directors at its next
regular meeting.
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8. In the event a vacancy occurs on the Executive Committee in the
interim between meetings of the Board of Directors, the Chairman of the Board is
authorized and empowered to appoint a member of the Board of Directors as a
successor who shall serve until the next regular meeting of the Board of
Directors at which time the Board of Directors shall fill the vacancy.
9. A Compliance Committee of not less than five members of the Board of
Directors shall be appointed by the Board of Directors. Such members shall not
be persons who are officers or employees of the Company or any entity
controlling, controlled by, or under common control with the Company and who are
not beneficial owners of a controlling interest in the voting stock of the
Company or any such entity. The Compliance Committee shall have responsibility
for recommending the selection of independent certified public accountants,
reviewing the Company's financial condition, the scope and results of the
independent audit and any internal audit, nominating candidates for director for
election by stockholders, and evaluating the performance of officers deemed by
such committee to be principal officers of the Company and recommending to the
Board of Directors the selection and compensation of such principal officers.
Standing or temporary committees of not less than five members of the
Board of Directors may also be appointed by the Board of Directors from time to
time and the Board of Directors may from time to time to invest such committee
with such powers as it may see fit. Not less than one-third of the members of
any such committee shall be persons who are not officers or employees of the
Company or any entity, controlling, controlled by or under common control with
the Company and who are not beneficial
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owners of a controlling interest in the voting stock of the Company or any such
entity. At least one such person must be included in any quorum of any such
committee.
A majority of the members of each committee so appointed shall
constitute a quorum.
10. Each committee so appointed shall keep minutes of the transactions
of its meetings and shall cause them to be recorded in the books kept for that
purpose in the office of the Company and shall report the same to the Board of
Directors at its next regular meeting.
11. No stated salary shall be paid directors for their services as
such, but in accordance with a plan recommended by the Compliance Committee and
by resolution of the Board of Directors, expenses of attendance, if any, or a
fixed sum, or both, may be allowed for attendance at any meeting of the Board of
Directors, provided that nothing herein contained shall be construed to preclude
any director from serving the Company in any other capacity and receiving
compensation therefore.
12. Whenever a vacancy shall occur in the Board of Directors, whether
caused by resignation, death or otherwise, it may be filled by a majority vote
of the remaining directors present at a regular meeting, or at a special meeting
called for that purpose, although less than a quorum. A director thus elected to
fill any vacancy shall hold office for the unexpired term of his or her
predecessor and until his or her successor is elected and qualified. Whenever
the number of directors shall be increased, additional directors may be elected
by a majority of the directors in office at the time of such increase.
8
<PAGE>
Article V
1. The senior officers of the Company shall be a Chairman of the Board,
a Vice Chairman of the Board, and a President, one of whom shall be designated
as Chief Executive Officer. In addition, the senior officers of the Company
shall include one or more Vice Presidents, a Secretary and a Treasurer. Each
senior officer shall be elected annually by the Board of Directors at its first
regular meeting following the annual meeting of stockholders and shall hold
office for a period of one year or until his successor shall be elected and
qualified. The Chief Executive Officer may appoint such additional officers as
he deems necessary for the proper conduct of the business of the Company, and
such officers shall serve at his pleasure.
2. In the event a vacancy occurs in the office of Chairman of the
Board, the Vice Chairman of the Board, the President, or Secretary, or
Treasurer, the Board of Directors shall, at the earliest practicable date, elect
a successor who shall hold office for the unexpired term of his or her
predecessor. Any vacancy in any office of Vice President may be filled for the
unexpired portion of the term by the Board of Directors at any regular or
special meeting.
3. Any senior officer may be removed at any time by the affirmative
vote of not less than a majority of the entire Board of Directors.
4. More than one office may be held by the same person with the
exception that the same person may not hold the offices of President and
Secretary.
9
<PAGE>
5. The duties of the officers shall be those customarily pertaining to
their respective offices or positions, elective or appointive, together with
such other duties as may be prescribed by law or assigned by the Board of
Directors.
Article VI
1. The funds of the Company shall be deposited, in the name of the
Company, only in banks or trust companies approved by the Board of Directors.
The officers of the Company are authorized to establish and maintain such bank
accounts as are deemed necessary for the normal conduct of business, subject to
the requirements that such accounts must be reported to and approved by the
Executive Committee. The Board of Directors shall authorize and direct such
depositories to honor checks, drafts, bills of exchange, acceptances,
undertakings, or other orders for the payment of money, or receipts evidencing
the withdrawal of funds of the Company from such depositories, only when signed
on behalf of the Company by such persons as may be designated by the Board of
Directors.
2. Any one of the following officers: The Chairman of the Board, the
Vice Chairman of the Board, the Chairman of the Executive Committee, the
President, a Vice President, the Treasurer or the Secretary shall have the power
and be authorized to execute transfers of stock, powers of attorney, deeds,
leases, releases of mortgages, satisfaction pieces, contracts and instruments in
writing necessary to the Company in the management of its affairs and to attest
the Company's seal thereon when necessary. Upon contracts for insurance and
instruments relating thereto, facsimile signatures shall be sufficient.
10
<PAGE>
3. Any officer with the designation of Vice President, such as an
Executive Vice President, Senior Vice President, Second Vice President or an
Assistant Vice President, shall have all the rights and powers of a Vice
President as provided in these Bylaws.
4. No stockholder, policyowner or creditor of the Company, or his
personal representative, shall have the right to inspect any account or book or
document of the Company, except as conferred by law or by resolution of the
stockholders or Board of Directors.
Article VII
1. Whenever the provisions of the applicable statute of the State of
New York or these Bylaws require notice to be given to any director, officer or
stockholder, such notice shall be given in writing to his or her address as the
same appears in the books of the Company, and the time when the same shall be
mailed shall be deemed to be the time of the giving of such notice.
2. A waiver of any notice in writing, signed by a stockholder,
director, or officer before or after the time stated in said waiver for holding
a meeting, shall be deemed equivalent to a notice required to be given to any
director, officer or stockholders.
Article VIII
The seal of Company shall be circular in form and shall contain the
words: "ReliaStar of New York Life Insurance Company, New York, Corporate Seal,
1917," which seal shall be kept in the custody of the Secretary of this Company
and affixed to all instruments requiring such corporate seal.
11
<PAGE>
Article IX
Alterations, amendment or repeal of these Bylaws may be made by the
Stockholders or at any meeting of the Board of Directors at which a quorum is
present by a majority of the Directors attending such meeting.
Article X
Unless otherwise provided in the Articles of Incorporation, any action
required or permitted to be taken at any meeting of the shareholders, Board of
Directors, or of any committee thereof may be taken without a meeting if, a
written consent to such action is signed by all shareholders, all members of the
Board or of any Board committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the shareholders, the Board or the
committee.
<PAGE>
April 17, 1998
ReliaStar Life Insurance Company of New York
1000 Woodbury Lane, Suite 102
Woodbury, NY 11797
Sir/Madam:
In connection with the proposed registration under the Securities Act of 1933,
as amended, of individual variable annuity contracts (the "Contracts") and
interests in ReliaStar Life Insurance Company of New York Variable Annuity Funds
P and Q (the "Separate Account"), I have examined documents relating to the
establishment of the Separate Account by the Board of Directors of ReliaStar
Life Insurance Company of New York (the "Company") as a separate account for
assets applicable to variable annuity contracts, pursuant to New York Insurance
Code Section 4240, as amended, and the Registration Statement, on Form N-4, as
amended by Post-Effective Amendment No. 13 thereto, File No. 33-11489 (the
"Registration Statement"), and I have examined such other documents and have
reviewed such matters of law as I deemed necessary for this opinion, and I
advise you that in my opinion:
1. The Separate Account is a separate account of the Company duly
created and validly existing pursuant to the laws of the State
of New York.
2. The contracts, when issued in accordance with the Prospectus
constituting a part of the Registration Statement and upon
compliance with applicable local law, will be legal and
binding obligations of the Company in accordance with their
respective terms.
3. The portion of the assets held in the Separate Account equal
to reserves and other contract liabilities with respect to the
Separate Account are not chargeable with liabilities arising
out of any other business the Company may conduct.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of my name under the heading "Legal Opinions" in the
Prospectus constituting a part of the Registration Statement and to the
reference to me wherever appearing therein.
Sincerely yours,
/s/ Jeffrey A. Proulx
Jeffrey A. Proulx
Associate Counsel
<PAGE>
INDEPENDENT AUDITORS' CONSENT
Board of Directors and Contract Holders
ReliaStar Life Insurance Company of New York
Variable Annuity Funds P and Q for the USA Plan
We consent to the incorporation by reference in this Post-effective Amendment
No. 13 to Registration Statement on Form N-4 (File No. 33-11489) of ReliaStar
Life Insurance Company of New York Variable Annuity Funds P and Q for the USA
Plan filed under the Securities Act of 1933 and Amendment No. 17 to the
Registration Statement filed under the Investment Company Act of 1940,
respectively, of our report dated February 20, 1998 on the audit of the
financial statements of ReliaStar Life Insurance Company of New York Variable
Annuity Funds P and Q as of December 31, 1997 and for the two years then ended,
and the use of our report dated March 26, 1998, on the audit of the financial
statements of ReliaStar Life Insurance Company of New York, formerly known as
ReliaStar Bankers Security Life Insurance Company, as of December 31, 1997 and
for the two years then ended, appearing in the Statement of Additional
Information of such Registration Statement.
We also consent to the references to us under the headings "Custodian and
Accountants" and "Financial Statements" appearing in the Statement of Additional
Information which is part of such Registration Statement.
/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
April 21, 1998
<PAGE>
USA PLAN
Exhibit 13
Description of returns based on underlying fund performance
The company may at times quote average annual returns for periods prior to the
Sub-Accounts commenced operations. Such performance information for the
Sub-Accounts will be calculated based on the performance of the Portfolios and
the assumption that the Sub-Accounts were in existence for the same periods as
those indicated for the portfolios, with the level of Contract charges currently
in effect. The following provides the details in providing such returns.
Average annual total returns
The company may at times quote average annual returns that reflect net recurring
charges and any applicable surrender charges. The following is the formula used
to provide such returns.
TR = ((1 + TRsa - SC) ^ (1/N)) - 1
Where:
TR = The average annual total return of the Sub-Account net of recurring
charges and any applicable surrender charge for the period.
TRf = Total return of the fund for the period, provided by the investment
company.
TRsa = Total return of the fund for the period, provided by the investment
company, adjusted for the annual contract charge (AP) and separate
account annual expenses (AE) or the following formula:
((1 + TRf) * (((1 - AE) * (1 - AP)) ^ N)) - 1.
SC = Applicable surrender charge at the end of period.
AP = Annual Contract Charge as an equivalent annual percent charge (AP)
based on the average net assets in the Variable Account and Fixed
Account during the preceding year. (ie USA Plan Annuity would be .113%)
AE = Total Separate Account Annual Expenses consisting of the mortality
and expense risk premium and the administration charge. (ie USA Plan
Annuity would be 1.25%)
N = The number of years (N) in the period.
Other average annual returns
In addition, the company may at times quote average annual returns that do not
reflect the Surrender Charge. These are calculated in exactly the same way as
the average annual total returns described above, except that the surrender
charge is ignored as the following formula demonstrates.
TR = ((1 + TRsa) ^ (1/N)) - 1
Where:
TR = The average annual total return of the Sub-Account net of recurring
charges for the period.
<PAGE>
Fund: 120 NORTHSTAR INCOME AND GROWTH FUND
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
05/31/95 $1,000.00 $1.000000 1000.000
05/31/96 $1.133700 1000.000 $1,133.70 $1,132.57 999.003
05/31/97 $1.308052 999.003 $1,306.75 $1,305.62 998.139
12/31/97 $1.414794 998.139 $1,412.16 $1,411.03 997.341
Contract Value Surrender Value
Ending Value $1,411.03 $1,363.03
Total Return Incep to Date 41.10% 36.30%
Average Annual Return 14.22% 12.71%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.237839 807.860
12/31/97 $1.414794 807.860 $1,142.95 $1,141.82 807.061
Contract Value Surrender Value
Ending Value $1,141.82 $1,078.82
Total Return One Year 14.18% 7.88%
Average Annual Return 14.18% 7.88%
</TABLE>
<PAGE>
Fund: 127 NORTHSTAR HIGH YIELD BOND FUND
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
09/08/95 $1,000.00 $1.000000 1000.000
09/08/96 $1.130688 1000.000 $1,130.69 $1,129.56 999.001
09/08/97 $1.281366 999.001 $1,280.09 $1,278.96 998.119
12/31/97 $1.323811 998.119 $1,321.32 $1,320.19 997.265
Contract Value Surrender Value
Ending Value $1,320.19 $1,272.19
Total Return Incep to Date 32.02% 27.22%
Average Annual Return 12.75% 10.96%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.198990 834.035
12/31/97 $1.323811 834.035 $1,104.11 $1,102.98 833.182
Contract Value Surrender Value
Ending Value $1,102.98 $1,039.98
Total Return One Year 10.30% 4.00%
Average Annual Return 10.30% 4.00%
</TABLE>
<PAGE>
Fund: 143 ALLIANCE GROWTH AND INCOME PORTFOLIO
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
01/31/91 $1,000.00 $0.999963 1000.037
01/31/92 $1.017956 1000.037 $1,017.99 $1,016.86 998.927
01/31/93 $1.092024 998.927 $1,090.85 $1,089.72 997.892
01/31/94 $1.226587 997.892 $1,224.00 $1,222.87 996.971
01/31/95 $1.176385 996.971 $1,172.82 $1,171.69 996.010
01/31/96 $1.604474 996.010 $1,598.07 $1,596.94 995.306
01/31/97 $2.027881 995.306 $2,018.36 $2,017.23 994.749
12/31/97 $2.432149 994.749 $2,419.38 $2,418.25 994.284
Contract Value Surrender Value
Ending Value $2,418.25 $2,402.25
Total Return Incep to Date 141.82% 140.22%
Average Annual Return 13.61% 13.50%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/92 $1,000.00 $1.080242 925.718
12/31/93 $1.189736 925.718 $1,101.36 $1,100.23 924.769
12/31/94 $1.169778 924.769 $1,081.77 $1,080.64 923.803
12/31/95 $1.568523 923.803 $1,449.01 $1,447.88 923.082
12/31/96 $1.922186 923.082 $1,774.34 $1,773.21 922.494
12/31/97 $2.432149 922.494 $2,243.64 $2,242.51 922.030
Contract Value Surrender Value
Ending Value $2,242.51 $2,210.51
Total Return Incep to Date 124.25% 121.05%
Average Annual Return 17.53% 17.19%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.922186 520.241
12/31/97 $2.432149 520.241 $1,265.30 $1,264.17 519.776
Contract Value Surrender Value
Ending Value $1,264.17 $1,201.17
Total Return One Year 26.42% 20.12%
Average Annual Return 26.42% 20.12%
</TABLE>
<PAGE>
Fund: 144 OCC MONEY FUND
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
06/02/87 $1,000.00 $1.000000 1000.000
06/02/88 $1.056258 1000.000 $1,056.26 $1,055.13 998.930
06/02/89 $1.132504 998.930 $1,131.29 $1,130.16 997.932
06/02/90 $1.214077 997.932 $1,211.57 $1,210.44 997.002
06/02/91 $1.289171 997.002 $1,285.31 $1,284.18 996.125
06/02/92 $1.340751 996.125 $1,335.56 $1,334.43 995.282
06/02/93 $1.370263 995.282 $1,363.80 $1,362.67 994.458
06/02/94 $1.397368 994.458 $1,389.62 $1,388.49 993.649
06/02/95 $1.451764 993.649 $1,442.54 $1,441.41 992.871
06/02/96 $1.511189 992.871 $1,500.42 $1,499.29 992.123
06/02/97 $1.569264 992.123 $1,556.90 $1,555.77 991.403
12/31/97 $1.606311 991.403 $1,592.50 $1,591.37 990.699
Contract Value
Ending Value $1,591.37
Total Return Incep to Date 59.14%
Average Annual Return 4.49%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/87 $1,000.00 $1.034143 966.984
12/31/88 $1.095129 966.984 $1,058.97 $1,057.84 965.952
12/31/89 $1.180076 965.952 $1,139.90 $1,138.77 964.995
12/31/90 $1.260797 964.995 $1,216.66 $1,215.53 964.099
12/31/91 $1.323591 964.099 $1,276.07 $1,274.94 963.245
12/31/92 $1.359418 963.245 $1,309.45 $1,308.32 962.414
12/31/93 $1.384638 962.414 $1,332.59 $1,331.46 961.598
12/31/94 $1.425014 961.598 $1,370.29 $1,369.16 960.805
12/31/95 $1.487366 960.805 $1,429.07 $1,427.94 960.045
12/31/96 $1.544415 960.045 $1,482.71 $1,481.58 959.313
12/31/97 $1.606311 959.313 $1,540.96 $1,539.83 958.610
Contract Value
Ending Value $1,539.83
Total Return Incep to Date 53.98%
Average Annual Return 4.41%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/92 $1,000.00 $1.359418 735.609
12/31/93 $1.384638 735.609 $1,018.55 $1,017.42 734.793
12/31/94 $1.425014 734.793 $1,047.09 $1,045.96 734.000
12/31/95 $1.487366 734.000 $1,091.73 $1,090.60 733.240
12/31/96 $1.544415 733.240 $1,132.43 $1,131.30 732.508
12/31/97 $1.606311 732.508 $1,176.64 $1,175.51 731.805
Contract Value Surrender Value
Ending Value $1,175.51 $1,143.51
Total Return Incep to Date 17.55% 14.35%
Average Annual Return 3.29% 2.72%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.544415 647.494
12/31/97 $1.606311 647.494 $1,040.08 $1,038.95 646.791
Contract Value Surrender Value
Ending Value $1,038.95 $975.95
Total Return One Year 3.89% -2.41%
Average Annual Return 3.89% -2.41%
</TABLE>
<PAGE>
Fund: 145 OCC AGGRESSIVE GROWTH
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
07/30/87 $1,000.00 $1.000000 1000.000
07/30/88 $0.956662 1000.000 $956.66 $955.53 998.819
07/30/89 $1.224844 998.819 $1,223.40 $1,222.27 997.896
07/30/90 $1.164560 997.896 $1,162.11 $1,160.98 996.926
07/30/91 $1.286292 996.926 $1,282.34 $1,281.21 996.047
07/30/92 $1.418917 996.047 $1,413.31 $1,412.18 995.251
07/30/93 $2.171995 995.251 $2,161.68 $2,160.55 994.731
07/30/94 $1.855088 994.731 $1,845.31 $1,844.18 994.122
07/30/95 $2.378625 994.122 $2,364.64 $2,363.51 993.647
07/30/96 $2.723006 993.647 $2,705.71 $2,704.58 993.232
07/30/97 $3.436595 993.232 $3,413.33 $3,412.20 992.903
12/31/97 $3.397915 992.903 $3,373.80 $3,372.67 992.570
Contract Value
Ending Value $3,372.67
Total Return Incep to Date 237.27%
Average Annual Return 12.36%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/87 $1,000.00 $0.887296 1127.020
12/31/88 $0.971304 1127.020 $1,094.68 $1,093.55 1,125.856
12/31/89 $1.224049 1125.856 $1,378.10 $1,376.97 1,124.933
12/31/90 $1.013857 1124.933 $1,140.52 $1,139.39 1,123.819
12/31/91 $1.534073 1123.819 $1,724.02 $1,722.89 1,123.082
12/31/92 $1.730513 1123.082 $1,943.51 $1,942.38 1,122.429
12/31/93 $2.171995 1122.429 $2,437.91 $2,436.78 1,121.909
12/31/94 $1.982133 1121.909 $2,223.77 $2,222.64 1,121.339
12/31/95 $2.594485 1121.339 $2,909.30 $2,908.17 1,120.903
12/31/96 $3.080421 1120.903 $3,452.85 $3,451.72 1,120.536
12/31/97 $3.397915 1120.536 $3,807.49 $3,806.36 1,120.204
Contract Value
Ending Value $3,806.36
Total Return Incep to Date 280.64%
Average Annual Return 14.30%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/92 $1,000.00 $1.730513 577.863
12/31/93 $2.171995 577.863 $1,255.12 $1,253.99 577.343
12/31/94 $1.982133 577.343 $1,144.37 $1,143.24 576.773
12/31/95 $2.594485 576.773 $1,496.43 $1,495.30 576.337
12/31/96 $3.080421 576.337 $1,775.36 $1,774.23 575.971
12/31/97 $3.397915 575.971 $1,957.10 $1,955.97 575.638
Contract Value Surrender Value
Ending Value $1,955.97 $1,923.97
Total Return Incep to Date 95.60% 92.40%
Average Annual Return 14.36% 13.98%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $3.080421 324.631
12/31/97 $3.397915 324.631 $1,103.07 $1,101.94 324.298
Contract Value Surrender Value
Ending Value $1,101.94 $1,038.94
Total Return One Year 10.19% 3.89%
Average Annual Return 10.19% 3.89%
</TABLE>
<PAGE>
Fund: 146 OCC HIGH INCOME
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
08/28/87 $1,000.00 $1.000000 1000.000
08/28/88 $1.064176 1000.000 $1,064.18 $1,063.05 998.938
08/28/89 $1.182005 998.938 $1,180.75 $1,179.62 997.982
08/28/90 $1.044200 997.982 $1,042.09 $1,040.96 996.900
08/28/91 $1.485517 996.900 $1,480.91 $1,479.78 996.139
08/28/92 $1.803611 996.139 $1,796.65 $1,795.52 995.513
08/28/93 $2.160051 995.513 $2,150.36 $2,149.23 994.990
08/28/94 $2.241741 994.990 $2,230.51 $2,229.38 994.486
08/28/95 $2.459803 994.486 $2,446.24 $2,445.11 994.026
08/28/96 $2.783204 994.026 $2,766.58 $2,765.45 993.620
08/28/97 $3.150233 993.620 $3,130.14 $3,129.01 993.261
12/31/97 $3.270137 993.261 $3,248.10 $3,246.97 992.916
Contract Value
Ending Value $3,246.97
Total Return Incep to Date 224.70%
Average Annual Return 12.05%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/87 $1,000.00 $0.984083 1016.174
12/31/88 $1.114986 1016.174 $1,133.02 $1,131.89 1,015.161
12/31/89 $1.154900 1015.161 $1,172.41 $1,171.28 1,014.183
12/31/90 $1.194017 1014.183 $1,210.95 $1,209.82 1,013.236
12/31/91 $1.534073 1013.236 $1,554.38 $1,553.25 1,012.500
12/31/92 $1.834506 1012.500 $1,857.44 $1,856.31 1,011.884
12/31/93 $2.287035 1011.884 $2,314.21 $2,313.08 1,011.389
12/31/94 $2.185972 1011.389 $2,210.87 $2,209.74 1,010.873
12/31/95 $2.598860 1010.873 $2,627.12 $2,625.99 1,010.438
12/31/96 $2.958100 1010.438 $2,988.98 $2,987.85 1,010.056
12/31/97 $3.270137 1010.056 $3,303.02 $3,301.89 1,009.710
Contract Value
Ending Value $3,301.89
Total Return Incep to Date 230.19%
Average Annual Return 12.69%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/92 $1,000.00 $1.834506 545.106
12/31/93 $2.287035 545.106 $1,246.68 $1,245.55 544.612
12/31/94 $2.185972 544.612 $1,190.51 $1,189.38 544.095
12/31/95 $2.598860 544.095 $1,414.03 $1,412.90 543.660
12/31/96 $2.958100 543.660 $1,608.20 $1,607.07 543.278
12/31/97 $3.270137 543.278 $1,776.59 $1,775.46 542.932
Contract Value Surrender Value
Ending Value $1,775.46 $1,743.46
Total Return Incep to Date 77.55% 74.35%
Average Annual Return 12.17% 11.76%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $2.958100 338.055
12/31/97 $3.270137 338.055 $1,105.49 $1,104.36 337.709
Contract Value Surrender Value
Ending Value $1,104.36 $1,041.36
Total Return One Year 10.44% 4.14%
Average Annual Return 10.44% 4.14%
</TABLE>
<PAGE>
Fund: 147 OCC MULTIPLE STRATEGIES
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
06/02/87 $1,000.00 $1.000000 1000.000
06/02/88 $1.085053 1000.000 $1,085.05 $1,083.92 998.959
06/02/89 $1.314614 998.959 $1,313.24 $1,312.11 998.099
06/02/90 $1.319783 998.099 $1,317.27 $1,316.14 997.243
06/02/91 $1.395102 997.243 $1,391.26 $1,390.13 996.433
06/02/92 $1.551877 996.433 $1,546.34 $1,545.21 995.705
06/02/93 $1.726996 995.705 $1,719.58 $1,718.45 995.050
06/02/94 $1.817223 995.050 $1,808.23 $1,807.10 994.429
06/02/95 $1.999596 994.429 $1,988.46 $1,987.33 993.863
06/02/96 $2.281931 993.863 $2,267.93 $2,266.80 993.368
06/02/97 $2.618051 993.368 $2,600.69 $2,599.56 992.937
12/31/97 $2.838684 992.937 $2,818.63 $2,817.50 992.539
Contract Value
Ending Value $2,817.50
Total Return Incep to Date 181.75%
Average Annual Return 10.28%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/87 $1,000.00 $0.987384 1012.777
12/31/88 $1.173959 1012.777 $1,188.96 $1,187.83 1,011.815
12/31/89 $1.337878 1011.815 $1,353.68 $1,352.55 1,010.970
12/31/90 $1.296082 1010.970 $1,310.30 $1,309.17 1,010.098
12/31/91 $1.504125 1010.098 $1,519.31 $1,518.18 1,009.347
12/31/92 $1.618786 1009.347 $1,633.92 $1,632.79 1,008.649
12/31/93 $1.854495 1008.649 $1,870.53 $1,869.40 1,008.040
12/31/94 $1.795384 1008.040 $1,809.82 $1,808.69 1,007.410
12/31/95 $2.152069 1007.410 $2,168.02 $2,166.89 1,006.885
12/31/96 $2.454658 1006.885 $2,471.56 $2,470.43 1,006.425
12/31/97 $2.838684 1006.425 $2,856.92 $2,855.79 1,006.027
Contract Value
Ending Value $2,855.79
Total Return Incep to Date 185.58%
Average Annual Return 11.06%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/92 $1,000.00 $1.618786 617.747
12/31/93 $1.854495 617.747 $1,145.61 $1,144.48 617.138
12/31/94 $1.795384 617.138 $1,108.00 $1,106.87 616.508
12/31/95 $2.152069 616.508 $1,326.77 $1,325.64 615.983
12/31/96 $2.454658 615.983 $1,512.03 $1,510.90 615.523
12/31/97 $2.838684 615.523 $1,747.27 $1,746.14 615.125
Contract Value Surrender Value
Ending Value $1,746.14 $1,714.14
Total Return Incep to Date 74.61% 71.41%
Average Annual Return 11.79% 11.38%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $2.454658 407.389
12/31/97 $2.838684 407.389 $1,156.45 $1,155.32 406.991
Contract Value Surrender Value
Ending Value $1,155.32 $1,092.32
Total Return One Year 15.53% 9.23%
Average Annual Return 15.53% 9.23%
</TABLE>
<PAGE>
Fund: 148 OCC GLOBAL SECURITIES
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
11/09/90 $1,000.00 $0.999966 1000.034
11/09/91 $1.042187 1000.034 $1,042.22 $1,041.09 998.950
11/09/92 $0.934563 998.950 $933.58 $932.45 997.741
11/09/93 $1.391577 997.741 $1,388.43 $1,387.30 996.929
11/09/94 $1.580667 996.929 $1,575.81 $1,574.68 996.214
11/09/95 $1.474795 996.214 $1,469.21 $1,468.08 995.447
11/09/96 $1.678967 995.447 $1,671.32 $1,670.19 994.774
11/09/97 $2.050404 994.774 $2,039.69 $2,038.56 994.223
12/31/97 $2.077764 994.223 $2,065.76 $2,064.63 993.679
Contract Value Surrender Value
Ending Value $2,064.63 $2,056.63
Total Return Incep to Date 106.46% 105.66%
Average Annual Return 10.67% 10.61%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/92 $1,000.00 $0.942711 1060.770
12/31/93 $1.578783 1060.770 $1,674.73 $1,673.60 1,060.055
12/31/94 $1.470716 1060.055 $1,559.04 $1,557.91 1,059.286
12/31/95 $1.485161 1059.286 $1,573.21 $1,572.08 1,058.526
12/31/96 $1.727772 1058.526 $1,828.89 $1,827.76 1,057.872
12/31/97 $2.077764 1057.872 $2,198.01 $2,196.88 1,057.328
Contract Value Surrender Value
Ending Value $2,196.88 $2,164.88
Total Return Incep to Date 119.69% 116.49%
Average Annual Return 17.05% 16.70%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.727772 578.780
12/31/97 $2.077764 578.780 $1,202.57 $1,201.44 578.236
Contract Value Surrender Value
Ending Value $1,201.44 $1,138.44
Total Return One Year 20.14% 13.84%
Average Annual Return 20.14% 13.84%
</TABLE>
<PAGE>
Fund: 149 ALLIANCE SHORT TERM MULTI-MARKET
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
11/23/90 $1,000.00 $0.999933 1000.067
11/23/91 $1.057010 1000.067 $1,057.08 $1,055.95 998.998
11/23/92 $1.050328 998.998 $1,049.28 $1,048.15 997.922
11/23/93 $1.106464 997.922 $1,104.16 $1,103.03 996.901
11/23/94 $1.118505 996.901 $1,115.04 $1,113.91 995.891
11/23/95 $1.069867 995.891 $1,065.47 $1,064.34 994.834
11/23/96 $1.167892 994.834 $1,161.86 $1,160.73 993.867
11/23/97 $1.208851 993.867 $1,201.44 $1,200.31 992.932
12/31/97 $1.211796 992.932 $1,203.23 $1,202.10 992.000
Contract Value Surrender Value
Ending Value $1,202.10 $1,194.10
Total Return Incep to Date 20.21% 19.41%
Average Annual Return 2.62% 2.53%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/92 $1,000.00 $1.056696 946.346
12/31/93 $1.113236 946.346 $1,053.51 $1,052.38 945.331
12/31/94 $1.027888 945.331 $971.69 $970.56 944.232
12/31/95 $1.083889 944.232 $1,023.44 $1,022.31 943.189
12/31/96 $1.172902 943.189 $1,106.27 $1,105.14 942.226
12/31/97 $1.211796 942.226 $1,141.79 $1,140.66 941.293
Contract Value Surrender Value
Ending Value $1,140.66 $1,108.66
Total Return Incep to Date 14.07% 10.87%
Average Annual Return 2.67% 2.08%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.172902 852.586
12/31/97 $1.211796 852.586 $1,033.16 $1,032.03 851.654
Contract Value Surrender Value
Ending Value $1,032.03 $969.03
Total Return One Year 3.20% -3.10%
Average Annual Return 3.20% -3.10%
</TABLE>
<PAGE>
Fund: 150 OCC STRATEGIC BOND FUND
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
04/03/95 $1,000.00 $1.000000 1000.000
04/03/96 $1.139877 1000.000 $1,139.88 $1,138.75 999.009
04/03/97 $1.233347 999.009 $1,232.12 $1,230.99 998.092
12/31/97 $1.331815 998.092 $1,329.27 $1,328.14 997.244
Contract Value Surrender Value
Ending Value $1,328.14 $1,280.14
Total Return Incep to Date 32.81% 28.01%
Average Annual Return 10.88% 9.40%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.240333 806.235
12/31/97 $1.331815 806.235 $1,073.76 $1,072.63 805.387
Contract Value Surrender Value
Ending Value $1,072.63 $1,009.63
Total Return One Year 7.26% 0.96%
Average Annual Return 7.26% 0.96%
</TABLE>
<PAGE>
Fund: 151 OCC BOND FUND
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
06/22/95 $1,000.00 $1.000000 1000.000
06/22/96 $1.024275 1000.000 $1,024.28 $1,023.15 998.897
06/22/97 $1.114787 998.897 $1,113.56 $1,112.43 997.883
12/31/97 $1.169920 997.883 $1,167.44 $1,166.31 996.917
Contract Value Surrender Value
Ending Value $1,166.31 $1,118.31
Total Return Incep to Date 16.63% 11.83%
Average Annual Return 6.27% 4.52%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.082224 924.023
12/31/97 $1.169920 924.023 $1,081.03 $1,079.90 923.057
Contract Value Surrender Value
Ending Value $1,079.90 $1,016.90
Total Return One Year 7.99% 1.69%
Average Annual Return 7.99% 1.69%
</TABLE>
<PAGE>
Fund: 152 OCC GROWTH FUND
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
03/24/95 $1,000.00 $1.000000 1000.000
03/24/96 $1.330988 1000.000 $1,330.99 $1,329.86 999.151
03/24/97 $1.571898 999.151 $1,570.56 $1,569.43 998.432
12/31/97 $1.925429 998.432 $1,922.41 $1,921.28 997.845
Contract Value Surrender Value
Ending Value $1,921.28 $1,873.28
Total Return Incep to Date 92.13% 87.33%
Average Annual Return 26.53% 25.38%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.542441 648.323
12/31/97 $1.925429 648.323 $1,248.30 $1,247.17 647.736
Contract Value Surrender Value
Ending Value $1,247.17 $1,184.17
Total Return One Year 24.72% 18.42%
Average Annual Return 24.72% 18.42%
</TABLE>
<PAGE>
Fund: 171 FIDELITY GROWTH PORTOFLIO
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
05/25/95 $1,000.00 $1.000000 1000.000
05/25/96 $1.307814 1000.000 $1,307.81 $1,306.68 999.136
05/25/97 $1.415917 999.136 $1,414.69 $1,413.56 998.338
12/31/97 $1.586882 998.338 $1,584.24 $1,583.11 997.626
Contract Value Surrender Value
Ending Value $1,583.11 $1,535.11
Total Return Incep to Date 58.31% 53.51%
Average Annual Return 19.28% 17.88%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.308100 764.468
12/31/97 $1.586882 764.468 $1,213.12 $1,211.99 763.755
Contract Value Surrender Value
Ending Value $1,211.99 $1,148.99
Total Return One Year 21.20% 14.90%
Average Annual Return 21.20% 14.90%
</TABLE>
<PAGE>
Fund: 172 FIDELITY EQUITY INCOME
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
05/25/95 $1,000.00 $1.000000 1000.000
05/25/96 $1.255279 1000.000 $1,255.28 $1,254.15 999.100
05/25/97 $1.451731 999.100 $1,450.42 $1,449.29 998.321
12/31/97 $1.660592 998.321 $1,657.80 $1,656.67 997.641
Contract Value Surrender Value
Ending Value $1,656.67 $1,608.67
Total Return Incep to Date 65.67% 60.87%
Average Annual Return 21.38% 20.02%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.315967 759.897
12/31/97 $1.660592 759.897 $1,261.88 $1,260.75 759.217
Contract Value Surrender Value
Ending Value $1,260.75 $1,197.75
Total Return One Year 26.07% 19.77%
Average Annual Return 26.07% 19.77%
</TABLE>
<PAGE>
Fund: 174 FIDELITY INVESTMENT GRADE BOND PORTFOLIO
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
06/19/95 $1,000.00 $1.003305 996.706
06/19/96 $1.020397 996.706 $1,017.04 $1,015.91 995.598
06/19/97 $1.105627 995.598 $1,100.76 $1,099.63 994.576
12/31/97 $1.161188 994.576 $1,154.89 $1,153.76 993.603
Contract Value Surrender Value
Ending Value $1,153.76 $1,105.76
Total Return Incep to Date 15.38% 10.58%
Average Annual Return 5.80% 4.04%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.076070 929.308
12/31/97 $1.161188 929.308 $1,079.10 $1,077.97 928.334
Contract Value Surrender Value
Ending Value $1,077.97 $1,014.97
Total Return One Year 7.80% 1.50%
Average Annual Return 7.80% 1.50%
</TABLE>
<PAGE>
Fund: 175 FIDELITY ASSET MANAGER
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
06/08/95 $1,000.00 $1.000000 1000.000
06/08/96 $1.148629 1000.000 $1,148.63 $1,147.50 999.016
06/08/97 $1.357495 999.016 $1,356.16 $1,355.03 998.184
12/31/97 $1.484035 998.184 $1,481.34 $1,480.21 997.422
Contract Value Surrender Value
Ending Value $1,480.21 $1,432.21
Total Return Incep to Date 48.02% 43.22%
Average Annual Return 16.51% 15.02%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.249835 800.106
12/31/97 $1.484035 800.106 $1,187.38 $1,186.25 799.344
Contract Value Surrender Value
Ending Value $1,186.25 $1,123.25
Total Return One Year 18.63% 12.33%
Average Annual Return 18.63% 12.33%
</TABLE>
<PAGE>
Fund: 176 FIDELITY INDEX 500
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
05/23/95 $1,000.00 $1.000000 1000.000
05/23/96 $1.291423 1000.000 $1,291.42 $1,290.29 999.125
05/23/97 $1.625053 999.125 $1,623.63 $1,622.50 998.430
12/31/97 $1.852119 998.430 $1,849.21 $1,848.08 997.820
Contract Value Surrender Value
Ending Value $1,848.08 $1,800.08
Total Return Incep to Date 84.81% 80.01%
Average Annual Return 26.52% 25.25%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.420887 703.786
12/31/97 $1.852119 703.786 $1,303.49 $1,302.36 703.176
Contract Value Surrender Value
Ending Value 1,302.36 $1,239.36
Total Return One Year 30.24% 23.94%
Average Annual Return 30.24% 23.94%
</TABLE>
<PAGE>
Fund: 178 FIDELITY CONTRAFUND
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
11/01/96 $1,000.00 $1.000000 1000.000
11/01/97 $1.271980 1000.000 $1,271.98 $1,270.85 999.112
12/31/97 $1.292027 999.112 $1,290.88 $1,289.75 998.237
Contract Value Surrender Value
Ending Value $1,289.75 $1,226.75
Total Return Incep to Date 28.97% 22.67%
Average Annual Return 24.42% 19.19%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.056670 946.369
12/31/97 $1.292027 946.369 $1,222.73 $1,221.60 945.495
Contract Value Surrender Value
Ending Value $1,221.60 $1,158.60
Total Return One Year 22.16% 15.86%
Average Annual Return 22.16% 15.86%
</TABLE>
<PAGE>
Fund: 179 NORTHSTAR GROWTH
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
11/01/96 $1,000.00 $1.000000 1000.000
11/01/97 $1.153898 1000.000 $1,153.90 $1,152.77 999.021
12/31/97 $1.152406 999.021 $1,151.28 $1,150.15 998.040
Contract Value Surrender Value
Ending Value $1,150.15 $1,087.15
Total Return Incep to Date 15.01% 8.71%
Average Annual Return 12.77% 7.44%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.021743 978.720
12/31/97 $1.152406 978.720 $1,127.88 $1,126.75 977.739
Contract Value Surrender Value
Ending Value $1,126.75 $1,063.75
Total Return One Year 12.68% 6.38%
Average Annual Return 12.68% 6.38%
</TABLE>
<PAGE>
Fund: 020 NORTHSTAR INCOME AND GROWTH FUND
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
07/17/95 $1,000.00 $1.000000 1000.000
07/17/96 $1.043336 1000.000 $1,043.34 $1,042.21 998.917
07/17/97 $1.301124 998.917 $1,299.71 $1,298.58 998.048
12/31/97 $1.343508 998.048 $1,340.89 $1,339.76 997.207
Contract Value Surrender Value
Ending Value $1,339.76 $1,291.76
Total Return Incep to Date 33.98% 29.18%
Average Annual Return 12.62% 10.97%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.175464 850.728
12/31/97 $1.343508 850.728 $1,142.96 $1,141.83 849.887
Contract Value Surrender Value
Ending Value $1,141.83 $1,078.83
Total Return One Year 14.18% 7.88%
Average Annual Return 14.18% 7.88%
</TABLE>
<PAGE>
Fund: 027 NORTHSTAR HIGH YIELD BOND FUND
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
08/14/95 $1,000.00 $1.000000 1000.000
08/14/96 $1.128410 1000.000 $1,128.41 $1,127.28 998.999
08/14/97 $1.278863 998.999 $1,277.58 $1,276.45 998.115
12/31/97 $1.327522 998.115 $1,325.02 $1,323.89 997.264
Contract Value Surrender Value
Ending Value $1,323.89 $1,275.89
Total Return Incep to Date 32.39% 27.59%
Average Annual Return 12.49% 10.76%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.202364 831.695
12/31/97 $1.327522 831.695 $1,104.09 $1,102.96 830.844
Contract Value Surrender Value
Ending Value $1,102.96 $1,039.96
Total Return One Year 10.30% 4.00%
Average Annual Return 10.30% 4.00%
</TABLE>
<PAGE>
Fund: 043 ALLIANCE GROWTH AND INCOME PORTFOLIO
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
12/27/90 $1,000.00 $0.999966 1000.034
12/27/91 $1.021747 1000.034 $1,021.78 $1,020.65 998.928
12/27/92 $1.087802 998.928 $1,086.64 $1,085.51 997.889
12/27/93 $1.196279 997.889 $1,193.75 $1,192.62 996.945
12/27/94 $1.181780 996.945 $1,178.17 $1,177.04 995.988
12/27/95 $1.585557 995.988 $1,579.20 $1,578.07 995.276
12/27/96 $1.968258 995.276 $1,958.96 $1,957.83 994.702
12/27/97 $2.368311 994.702 $2,355.76 $2,354.63 994.225
12/31/97 $2.463076 994.225 $2,448.85 $2,447.72 993.766
Contract Value Surrender Value
Ending Value $2,447.72 $2,439.72
Total Return Incep to Date 144.77% 143.97%
Average Annual Return 13.61% 13.55%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/92 $1,000.00 $1.089542 917.817
12/31/93 $1.203015 917.817 $1,104.15 $1,103.02 916.878
12/31/94 $1.184656 916.878 $1,086.18 $1,085.05 915.924
12/31/95 $1.588467 915.924 $1,454.91 $1,453.78 915.212
12/31/96 $1.946624 915.212 $1,781.57 $1,780.44 914.632
12/31/97 $2.463076 914.632 $2,252.81 $2,251.68 914.173
Contract Value Surrender Value
Ending Value $2,251.68 $2,219.68
Total Return Incep to Date 125.17% 121.97%
Average Annual Return 17.63% 17.29%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.946624 513.710
12/31/97 $2.463076 513.710 $1,265.31 $1,264.18 513.251
Contract Value Surrender Value
Ending Value $1,264.18 $1,201.18
Total Return One Year 26.42% 20.12%
Average Annual Return 26.42% 20.12%
</TABLE>
<PAGE>
Fund: 044 OCC MONEY FUND
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
06/02/87 $1,000.00 $1.000703 999.297
06/02/88 $1.050091 999.297 $1,049.35 $1,048.22 998.221
06/02/89 $1.125651 998.221 $1,123.65 $1,122.52 997.218
06/02/90 $1.205317 997.218 $1,201.96 $1,200.83 996.280
06/02/91 $1.277779 996.280 $1,273.03 $1,271.90 995.396
06/02/92 $1.329061 995.396 $1,322.94 $1,321.81 994.545
06/02/93 $1.358447 994.545 $1,351.04 $1,349.91 993.714
06/02/94 $1.385885 993.714 $1,377.17 $1,376.04 992.898
06/02/95 $1.439826 992.898 $1,429.60 $1,428.47 992.113
06/02/96 $1.498763 992.113 $1,486.94 $1,485.81 991.359
06/02/97 $1.556350 991.359 $1,542.90 $1,541.77 990.633
12/31/97 $1.593086 990.633 $1,578.16 $1,577.03 989.924
Contract Value
Ending Value $1,577.03
Total Return Incep to Date 57.70%
Average Annual Return 4.40%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/87 $1,000.00 $1.029073 971.748
12/31/88 $1.088671 971.748 $1,057.91 $1,056.78 970.710
12/31/89 $1.172642 970.710 $1,138.30 $1,137.17 969.747
12/31/90 $1.250454 969.747 $1,212.62 $1,211.49 968.843
12/31/91 $1.312606 968.843 $1,271.71 $1,270.58 967.982
12/31/92 $1.347554 967.982 $1,304.41 $1,303.28 967.144
12/31/93 $1.372949 967.144 $1,327.84 $1,326.71 966.321
12/31/94 $1.413297 966.321 $1,365.70 $1,364.57 965.521
12/31/95 $1.475133 965.521 $1,424.27 $1,423.14 964.755
12/31/96 $1.531711 964.755 $1,477.73 $1,476.60 964.017
12/31/97 $1.593086 964.017 $1,535.76 $1,534.63 963.308
Contract Value
Ending Value $1,534.63
Total Return Incep to Date 53.46%
Average Annual Return 4.38%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/92 $1,000.00 $1.347554 742.085
12/31/93 $1.372949 742.085 $1,018.85 $1,017.72 741.262
12/31/94 $1.413297 741.262 $1,047.62 $1,046.49 740.463
12/31/95 $1.475133 740.463 $1,092.28 $1,091.15 739.697
12/31/96 $1.531711 739.697 $1,133.00 $1,131.87 738.959
12/31/97 $1.593086 738.959 $1,177.23 $1,176.10 738.250
Contract Value Surrender Value
Ending Value $1,176.10 $1,144.10
Total Return Incep to Date 17.61% 14.41%
Average Annual Return 3.30% 2.73%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.531711 652.865
12/31/97 $1.593086 652.865 $1,040.07 $1,038.94 652.155
Contract Value Surrender Value
Ending Value $1,038.94 $975.94
Total Return One Year 3.89% -2.41%
Average Annual Return 3.89% -2.41%
</TABLE>
<PAGE>
Fund: 045 OCC AGGRESSIVE GROWTH
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
06/16/87 $1,000.00 $1.000000 1000.000
06/16/88 $1.026003 1000.000 $1,026.00 $1,024.87 998.899
06/16/89 $1.277654 998.899 $1,276.25 $1,275.12 998.014
06/16/90 $1.269961 998.014 $1,267.44 $1,266.31 997.124
06/16/91 $1.325506 997.124 $1,321.69 $1,320.56 996.272
06/16/92 $1.465382 996.272 $1,459.92 $1,458.79 995.501
06/16/93 $1.889019 995.501 $1,880.52 $1,879.39 994.903
06/16/94 $2.063187 994.903 $2,052.67 $2,051.54 994.355
06/16/95 $2.347194 994.355 $2,333.94 $2,332.81 993.873
06/16/96 $3.383041 993.873 $3,362.31 $3,361.18 993.539
06/16/97 $3.436424 993.539 $3,414.22 $3,413.09 993.211
12/31/97 $3.662870 993.211 $3,638.00 $3,636.87 992.902
Contract Value
Ending Value $3,636.87
Total Return Incep to Date 263.69%
Average Annual Return 13.02%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/87 $1,000.00 $0.934230 1070.400
12/31/88 $1.041070 1070.400 $1,114.36 $1,113.23 1,069.315
12/31/89 $1.308025 1069.315 $1,398.69 $1,397.56 1,068.451
12/31/90 $1.079225 1068.451 $1,153.10 $1,151.97 1,067.404
12/31/91 $1.636956 1067.404 $1,747.29 $1,746.16 1,066.714
12/31/92 $1.861079 1066.714 $1,985.24 $1,984.11 1,066.106
12/31/93 $2.340500 1066.106 $2,495.22 $2,494.09 1,065.624
12/31/94 $2.136698 1065.624 $2,276.92 $2,275.79 1,065.095
12/31/95 $2.796796 1065.095 $2,978.85 $2,977.72 1,064.691
12/31/96 $3.320628 1064.691 $3,535.44 $3,534.31 1,064.350
12/31/97 $3.662870 1064.350 $3,898.58 $3,897.45 1,064.042
Contract Value
Ending Value $3,897.45
Total Return Incep to Date 289.74%
Average Annual Return 14.57%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/92 $1,000.00 $1.861079 537.323
12/31/93 $2.340500 537.323 $1,257.60 $1,256.47 536.840
12/31/94 $2.136698 536.840 $1,147.06 $1,145.93 536.311
12/31/95 $2.796796 536.311 $1,499.95 $1,498.82 535.907
12/31/96 $3.320628 535.907 $1,779.55 $1,778.42 535.567
12/31/97 $3.662870 535.567 $1,961.71 $1,960.58 535.258
Contract Value Surrender Value
Ending Value $1,960.58 $1,928.58
Total Return Incep to Date 96.06% 92.86%
Average Annual Return 14.41% 14.04%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $3.320628 301.148
12/31/97 $3.662870 301.148 $1,103.07 $1,101.94 300.839
Contract Value Surrender Value
Ending Value $1,101.94 $1,038.94
Total Return One Year 10.19% 3.89%
Average Annual Return 10.19% 3.89%
</TABLE>
<PAGE>
Fund: 046 OCC HIGH INCOME
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
06/16/87 $1,000.00 $1.000000 1000.000
06/16/88 $1.078223 1000.000 $1,078.22 $1,077.09 998.952
06/16/89 $1.173671 998.952 $1,172.44 $1,171.31 997.989
06/16/90 $1.223488 997.989 $1,221.03 $1,219.90 997.066
06/16/91 $1.431330 997.066 $1,427.13 $1,426.00 996.276
06/16/92 $1.778659 996.276 $1,772.04 $1,770.91 995.641
06/16/93 $2.134781 995.641 $2,125.48 $2,124.35 995.111
06/16/94 $2.298351 995.111 $2,287.12 $2,285.99 994.620
06/16/95 $2.453592 994.620 $2,440.39 $2,439.26 994.159
06/16/96 $2.778210 994.159 $2,761.98 $2,760.85 993.753
06/16/97 $3.128028 993.753 $3,108.49 $3,107.36 993.391
12/31/97 $3.332104 993.391 $3,310.08 $3,308.95 993.052
Contract Value
Ending Value $3,308.95
Total Return Incep to Date 230.90%
Average Annual Return 12.01%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/87 $1,000.00 $1.002813 997.195
12/31/88 $1.136779 997.195 $1,133.59 $1,132.46 996.201
12/31/89 $1.175259 996.201 $1,170.79 $1,169.66 995.239
12/31/90 $1.215625 995.239 $1,209.84 $1,208.71 994.310
12/31/91 $1.607244 994.310 $1,598.10 $1,596.97 993.607
12/31/92 $1.870898 993.607 $1,858.94 $1,857.81 993.003
12/31/93 $2.330994 993.003 $2,314.68 $2,313.55 992.518
12/31/94 $2.227388 992.518 $2,210.72 $2,209.59 992.011
12/31/95 $2.648098 992.011 $2,626.94 $2,625.81 991.584
12/31/96 $3.014153 991.584 $2,988.79 $2,987.66 991.209
12/31/97 $3.332104 991.209 $3,302.81 $3,301.68 990.870
Contract Value
Ending Value $3,301.68
Total Return Incep to Date 230.17%
Average Annual Return 12.69%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/92 $1,000.00 $1.870898 534.503
12/31/93 $2.330994 534.503 $1,245.92 $1,244.79 534.018
12/31/94 $2.227388 534.018 $1,189.47 $1,188.34 533.511
12/31/95 $2.648098 533.511 $1,412.79 $1,411.66 533.084
12/31/96 $3.014153 533.084 $1,606.80 $1,605.67 532.709
12/31/97 $3.332104 532.709 $1,775.04 $1,773.91 532.370
Contract Value Surrender Value
Ending Value $1,773.91 $1,741.91
Total Return Incep to Date 77.39% 74.19%
Average Annual Return 12.15% 11.74%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $3.014153 331.768
12/31/97 $3.332104 331.768 $1,105.49 $1,104.36 331.429
Contract Value Surrender Value
Ending Value $1,104.36 $1,041.36
Total Return One Year 10.44% 4.14%
Average Annual Return 10.44% 4.14%
</TABLE>
<PAGE>
Fund: 047 OCC MULTIPLE STRATEGIES
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
05/27/87 $1,000.00 $1.000000 1000.000
05/27/88 $1.037953 1000.000 $1,037.95 $1,036.82 998.911
05/27/89 $1.270242 998.911 $1,268.86 $1,267.73 998.022
05/27/90 $1.278731 998.022 $1,276.20 $1,275.07 997.138
05/27/91 $1.341480 997.138 $1,337.64 $1,336.51 996.296
05/27/92 $1.503874 996.296 $1,498.30 $1,497.17 995.544
05/27/93 $1.679441 995.544 $1,671.96 $1,670.83 994.871
05/27/94 $1.773709 994.871 $1,764.61 $1,763.48 994.234
05/27/95 $1.941913 994.234 $1,930.72 $1,929.59 993.652
05/27/96 $2.234639 993.652 $2,220.45 $2,219.32 993.147
05/27/97 $2.545498 993.147 $2,528.05 $2,526.92 992.703
12/31/97 $2.768113 992.703 $2,747.91 $2,746.78 992.295
Contract Value
Ending Value $2,746.78
Total Return Incep to Date 174.68%
Average Annual Return 10.00%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/87 $1,000.00 $0.951001 1051.524
12/31/88 $1.147018 1051.524 $1,206.12 $1,204.99 1,050.538
12/31/89 $1.304538 1050.538 $1,370.47 $1,369.34 1,049.672
12/31/90 $1.264111 1049.672 $1,326.90 $1,325.77 1,048.778
12/31/91 $1.466843 1048.778 $1,538.39 $1,537.26 1,048.008
12/31/92 $1.579038 1048.008 $1,654.84 $1,653.71 1,047.292
12/31/93 $1.807794 1047.292 $1,893.29 $1,892.16 1,046.667
12/31/94 $1.750748 1046.667 $1,832.45 $1,831.32 1,046.022
12/31/95 $2.098572 1046.022 $2,195.15 $2,194.02 1,045.483
12/31/96 $2.393640 1045.483 $2,502.51 $2,501.38 1,045.011
12/31/97 $2.768113 1045.011 $2,892.71 $2,891.58 1,044.603
Contract Value
Ending Value $2,891.58
Total Return Incep to Date 189.16%
Average Annual Return 11.20%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/92 $1,000.00 $1.579038 633.297
12/31/93 $1.807794 633.297 $1,144.87 $1,143.74 632.672
12/31/94 $1.750748 632.672 $1,107.65 $1,106.52 632.026
12/31/95 $2.098572 632.026 $1,326.35 $1,325.22 631.488
12/31/96 $2.393640 631.488 $1,511.55 $1,510.42 631.016
12/31/97 $2.768113 631.016 $1,746.72 $1,745.59 630.608
Contract Value Surrender Value
Ending Value $1,745.59 $1,713.59
Total Return Incep to Date 74.56% 71.36%
Average Annual Return 11.79% 11.37%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $2.393640 417.774
12/31/97 $2.768113 417.774 $1,156.44 $1,155.31 417.366
Contract Value Surrender Value
Ending Value $1,155.31 $1,092.31
Total Return One Year 15.53% 9.23%
Average Annual Return 15.53% 9.23%
</TABLE>
<PAGE>
Fund: 048 OCC GLOBAL SECURITIES
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
11/12/90 $1,000.00 $0.999897 1000.103
11/12/91 $1.052702 1000.103 $1,052.81 $1,051.68 999.030
11/12/92 $0.942124 999.030 $941.21 $940.08 997.830
11/12/93 $1.410618 997.830 $1,407.56 $1,406.43 997.029
11/12/94 $1.570004 997.029 $1,565.34 $1,564.21 996.309
11/12/95 $1.469799 996.309 $1,464.37 $1,463.24 995.541
11/12/96 $1.682984 995.541 $1,675.48 $1,674.35 994.869
11/12/97 $2.014809 994.869 $2,004.47 $2,003.34 994.308
12/31/97 $2.080589 994.308 $2,068.75 $2,067.62 993.765
Contract Value Surrender Value
Ending Value $2,067.62 $2,059.62
Total Return Incep to Date 106.76% 105.96%
Average Annual Return 10.71% 10.65%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/92 $1,000.00 $0.943537 1059.842
12/31/93 $1.584691 1059.842 $1,679.52 $1,678.39 1,059.129
12/31/94 $1.472721 1059.129 $1,559.80 $1,558.67 1,058.361
12/31/95 $1.487182 1058.361 $1,573.98 $1,572.85 1,057.602
12/31/96 $1.730119 1057.602 $1,829.78 $1,828.65 1,056.949
12/31/97 $2.080589 1056.949 $2,199.08 $2,197.95 1,056.405
Contract Value Surrender Value
Ending Value $2,197.95 $2,165.95
Total Return Incep to Date 119.79% 116.59%
Average Annual Return 17.06% 16.72%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.730119 577.995
12/31/97 $2.080589 577.995 $1,202.57 $1,201.44 577.452
Contract Value Surrender Value
Ending Value $1,201.44 $1,138.44
Total Return One Year 20.14% 13.84%
Average Annual Return 20.14% 13.84%
</TABLE>
<PAGE>
Fund: 049 ALLIANCE SHORT TERM MULTI-MARKET
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
11/26/90 $1,000.00 $0.999897 1000.103
11/26/91 $1.054491 1000.103 $1,054.60 $1,053.47 999.031
11/26/92 $1.049921 999.031 $1,048.90 $1,047.77 997.955
11/26/93 $1.105307 997.955 $1,103.05 $1,101.92 996.933
11/26/94 $1.115709 996.933 $1,112.29 $1,111.16 995.920
11/26/95 $1.070265 995.920 $1,065.90 $1,064.77 994.864
11/26/96 $1.165986 994.864 $1,160.00 $1,158.87 993.895
11/26/97 $1.205692 993.895 $1,198.33 $1,197.20 992.958
12/31/97 $1.208833 992.958 $1,200.32 $1,199.19 992.023
Contract Value Surrender Value
Ending Value $1,199.19 $1,191.19
Total Return Incep to Date 19.92% 19.12%
Average Annual Return 2.59% 2.49%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/92 $1,000.00 $1.053483 949.232
12/31/93 $1.110459 949.232 $1,054.08 $1,052.95 948.215
12/31/94 $1.025389 948.215 $972.29 $971.16 947.113
12/31/95 $1.081253 947.113 $1,024.07 $1,022.94 946.068
12/31/96 $1.170048 946.068 $1,106.94 $1,105.81 945.102
12/31/97 $1.208833 945.102 $1,142.47 $1,141.34 944.167
Contract Value Surrender Value
Ending Value $1,141.34 $1,109.34
Total Return Incep to Date 14.13% 10.93%
Average Annual Return 2.68% 2.10%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.170048 854.666
12/31/97 $1.208833 854.666 $1,033.15 $1,032.02 853.731
Contract Value Surrender Value
Ending Value $1,032.02 $969.02
Total Return One Year 3.20% -3.10%
Average Annual Return 3.20% -3.10%
</TABLE>
<PAGE>
Fund: 050 OCC STRATEGIC BOND FUND
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
03/20/95 $1,000.00 $1.000000 1000.000
03/20/96 $1.142842 1000.000 $1,142.84 $1,141.71 999.011
03/20/97 $1.249700 999.011 $1,248.46 $1,247.33 998.107
12/31/97 $1.342862 998.107 $1,340.32 $1,339.19 997.266
Contract Value Surrender Value
Ending Value $1,339.19 $1,291.19
Total Return Incep to Date 33.92% 29.12%
Average Annual Return 11.05% 9.61%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.250607 799.612
12/31/97 $1.342862 799.612 $1,073.77 $1,072.64 798.770
Contract Value Surrender Value
Ending Value $1,072.64 $1,009.64
Total Return One Year 7.26% 0.96%
Average Annual Return 7.26% 0.96%
</TABLE>
<PAGE>
Fund: 051 OCC BOND FUND
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
03/15/95 $1,000.00 $0.999966 1000.034
03/15/96 $1.085670 1000.034 $1,085.71 $1,084.58 998.993
03/15/97 $1.146996 998.993 $1,145.84 $1,144.71 998.008
12/31/97 $1.241947 998.008 $1,239.47 $1,238.34 997.098
Contract Value Surrender Value
Ending Value $1,238.34 $1,190.34
Total Return Incep to Date 23.83% 19.03%
Average Annual Return 7.93% 6.42%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.148860 870.428
12/31/97 $1.241947 870.428 $1,081.03 $1,079.90 869.518
Contract Value Surrender Value
Ending Value $1,079.90 $1,016.90
Total Return One Year 7.99% 1.69%
Average Annual Return 7.99% 1.69%
</TABLE>
<PAGE>
Fund: 052 OCC GROWTH FUND
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
03/15/95 $1,000.00 $0.999966 1000.034
03/15/96 $1.346490 1000.034 $1,346.54 $1,345.41 999.195
03/15/97 $1.623171 999.195 $1,621.86 $1,620.73 998.499
12/31/97 $1.955851 998.499 $1,952.91 $1,951.78 997.921
Contract Value Surrender Value
Ending Value $1,951.78 $1,903.78
Total Return Incep to Date 95.18% 90.38%
Average Annual Return 26.98% 25.85%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.566806 638.241
12/31/97 $1.955851 638.241 $1,248.30 $1,247.17 637.663
Contract Value Surrender Value
Ending Value $1,247.17 $1,184.17
Total Return One Year 24.72% 18.42%
Average Annual Return 24.72% 18.42%
</TABLE>
<PAGE>
Fund: 071 FIDELITY GROWTH PORTOFLIO
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
05/31/95 $1,000.00 $1.000000 1000.000
05/31/96 $1.327770 1000.000 $1,327.77 $1,326.64 999.149
05/31/97 $1.456314 999.149 $1,455.07 $1,453.94 998.373
12/31/97 $1.624095 998.373 $1,621.45 $1,620.32 997.677
Contract Value Surrender Value
Ending Value $1,620.32 $1,572.32
Total Return Incep to Date 62.03% 57.23%
Average Annual Return 20.49% 19.10%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.338781 746.948
12/31/97 $1.624095 746.948 $1,213.11 $1,211.98 746.252
Contract Value Surrender Value
Ending Value $1,211.98 $1,148.98
Total Return One Year 21.20% 14.90%
Average Annual Return 21.20% 14.90%
</TABLE>
<PAGE>
Fund: 072 FIDELITY EQUITY INCOME
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
05/16/95 $1,000.00 $1.000000 1000.000
05/16/96 $1.227803 1000.00 $1,227.80 $1,226.67 999.080
05/16/97 $1.422537 999.080 $1,421.23 $1,420.10 998.285
12/31/97 $1.651183 998.285 $1,648.35 $1,647.22 997.601
Contract Value Surrender Value
Ending Value $1,647.22 $1,599.22
Total Return Incep to Date 64.72% 59.92%
Average Annual Return 20.90% 19.54%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.308500 764.234
12/31/97 $1.651183 764.234 $1,261.89 $1,260.76 763.549
Contract Value Surrender Value
Ending Value $1,260.76 $1,197.76
Total Return One Year 26.08% 19.78%
Average Annual Return 26.08% 19.78%
</TABLE>
<PAGE>
Fund: 074 FIDELITY INVESTMENT GRADE BOND PORTFOLIO
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
09/06/95 $1,000.00 $1.000000 1000.000
09/06/96 $1.020789 1000.000 $1,020.79 $1,019.66 998.893
09/06/97 $1.104683 998.893 $1,103.46 $1,102.33 997.870
12/31/97 $1.146863 997.870 $1,144.42 $1,143.29 996.885
Contract Value Surrender Value
Ending Value $1,143.29 $1,095.29
Total Return Incep to Date 14.33% 9.53%
Average Annual Return 5.94% 4.00%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.062797 940.913
12/31/97 $1.146863 940.913 $1,079.10 $1,077.97 939.928
Contract Value Surrender Value
Ending Value $1,077.97 $1,014.97
Total Return One Year 7.80% 1.50%
Average Annual Return 7.80% 1.50%
</TABLE>
<PAGE>
Fund: 075 FIDELITY ASSET MANAGER
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
06/01/95 $1,000.00 $1.000000 1000.000
06/01/96 $1.146756 1000.000 $1,146.76 $1,145.63 999.015
06/01/97 $1.340997 999.015 $1,339.68 $1,338.55 998.172
12/31/97 $1.477435 998.172 $1,474.73 $1,473.60 997.407
Contract Value Surrender Value
Ending Value $1,473.60 $1,425.60
Total Return Incep to Date 47.36% 42.56%
Average Annual Return 16.17% 14.69%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.244271 803.683
12/31/97 $1.477435 803.683 $1,187.39 $1,186.26 802.919
Contract Value Surrender Value
Ending Value $1,186.26 $1,123.26
Total Return One Year 18.63% 12.33%
Average Annual Return 18.63% 12.33%
</TABLE>
<PAGE>
Fund: 076 FIDELITY INDEX 500
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
05/16/95 $1,000.00 $1.000000 1000.000
05/16/96 $1.271044 1000.000 $1,271.04 $1,269.91 999.111
05/16/97 $1.594159 999.111 $1,592.74 $1,591.61 998.402
12/31/97 $1.854287 998.402 $1,851.32 $1,850.19 997.793
Contract Value Surrender Value
Ending Value $1,850.19 $1,802.19
Total Return Incep to Date 85.02% 80.22%
Average Annual Return 26.36% 25.10%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.422553 702.962
12/31/97 $1.854287 702.962 $1,303.49 $1,302.36 702.352
Contract Value Surrender Value
Ending Value $1,302.36 $1,239.36
Total Return One Year 30.24% 23.94%
Average Annual Return 30.24% 23.94%
</TABLE>
<PAGE>
Fund: 078 FIDELITY CONTRAFUND
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
11/12/96 $1,000.00 $1.000000 1000.000
11/12/97 $1.210383 1000.000 $1,210.38 $1,209.25 999.066
12/31/97 $1.251682 999.066 $1,250.51 $1,249.38 998.164
Contract Value Surrender Value
Ending Value $1,249.38 $1,186.38
Total Return Incep to Date 24.94% 18.64%
Average Annual Return 21.69% 16.26%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.023682 976.866
12/31/97 $1.251682 976.866 $1,222.73 $1,221.60 975.963
Contract Value Surrender Value
Ending Value $1,221.60 $1,158.60
Total Return One Year 22.16% 15.86%
Average Annual Return 22.16% 15.86%
</TABLE>
<PAGE>
Fund: 079 NORTHSTAR GROWTH
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C> <C>
12/10/96 $1,000.00 $1.000000 1000.000
12/10/97 $1.130887 1000.000 $1,130.89 $1,129.76 999.001
12/31/97 $1.142348 999.001 $1,141.21 $1,140.08 998.012
Contract Value Surrender Value
Ending Value $1,140.08 $1,077.08
Total Return Incep to Date 14.01% 7.71%
Average Annual Return 13.20% 7.27%
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/96 $1,000.00 $1.012828 987.334
12/31/97 $1.142348 987.334 $1,127.88 $1,126.75 986.345
Contract Value Surrender Value
Ending Value $,126.75 $1,063.75
Total Return One Year 12.67% 6.37%
Average Annual Return 12.67% 6.37%
</TABLE>
