FILE NO. 33-69892
FILE NO. 811-3341
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. 10 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 11 [X]
RELIASTAR SELECT VARIABLE ACCOUNT
(Exact Name of Registrant as Specified in its Charter)
RELIASTAR LIFE INSURANCE COMPANY
(Name of Depositor)
20 Washington Avenue South, Minneapolis, Minnesota 55401
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (612) 342-7346
Stewart D. Gregg
ReliaStar Life Insurance Company
20 Washington Avenue South
Minneapolis, Minnesota 55401
(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 April 30, 1999 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:
[X] 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 SELECT VARIABLE ACCOUNT
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 of Contract Expenses
4 Performance Information and Condensed Financial
Information
5 ReliaStar Life; The Variable Account; Investments of
the Variable Account
6 Charges Made by ReliaStar Life
7 The Contracts
8 Annuity Provisions
9 The Contracts
10 The Contracts
11 The Contracts
12 Federal Tax Status
13 Legal Proceedings
14 Statement of Additional Information Table of Contents
PART B HEADING IN STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------------------------
15 Cover Page
16 Table of Contents
17 Introduction
18 Administration of the Contracts
19 Distribution of the Contracts
20 Distribution of the Contracts
21 Calculation of Yield and Return
22 Annuity Provisions (In Prospectus)
23 Financial Statements
PART C 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 Not Applicable
32 Undertakings
<PAGE>
APRIL 30, 1999
[LOGO] RELIASTAR
SELECT*ANNUITY III
INDIVIDUAL DEFERRED VARIABLE/FIXED ANNUITY CONTRACTS
ISSUED BY
THE RELIASTAR SELECT VARIABLE ACCOUNT OF
RELIASTAR LIFE INSURANCE COMPANY
PROFILE OF OUR INDIVIDUAL FIXED AND VARIABLE ANNUITY CONTRACT
THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT FEATURES OF THE CONTRACT
THAT YOU SHOULD KNOW AND CONSIDER BEFORE PURCHASING IT. THE CONTRACT IS MORE
FULLY DESCRIBED IN THE PROSPECTUS WHICH ACCOMPANIES THIS PROFILE.
PLEASE READ THE PROSPECTUS CAREFULLY.
1. THE ANNUITY CONTRACT: The fixed and variable annuity contract we are offering
is a contract between you, the owner, and us, ReliaStar Life Insurance Company
("ReliaStar Life"). It provides a means for selecting one or more investment
funds ("Investment Option" or "Funds") on a tax-deferred basis. The Contract is
intended for retirement savings or other long-term investment purposes and
provides for a death benefit and guaranteed income options.
Through the Variable Account, the Contract offers up to 29 investment
options from which you can choose up to 17 over the lifetime of the Contract.
The returns on these investment options are not guaranteed and possibly you can
lose money. Currently, there is no charge for transfers.
The Contract also offers a Fixed Account. This Fixed Account has an
interest rate that is set periodically by ReliaStar Life. While your money is in
the fixed account, the interest you earn and your principal is guaranteed by
ReliaStar Life.
The Contract has two phases: the accumulation phase and the income or
payout phase. During the accumulation phase, earnings accumulate on a
tax-deferred basis and are not taxed as income until you make a withdrawal. The
amounts accumulated during the accumulation phase will determine the amount of
annuity payments. The income phase occurs when you begin receiving regular
annuity payments from your contract on the annuity commencement date.
2. ANNUITY PAYMENTS (THE INCOME PHASE): If you want to receive regular income
from your annuity, you can choose one of three options: (1) monthly payments for
your life (assuming you are the annuitant); (2) monthly payments for your life,
but with payments continuing to the beneficiary for 10 or 20 years (as you
select) if you die before the end of the selected period; and (3) monthly
payments for your life and for the life of another person (usually your spouse)
selected by you. Once you begin receiving regular annuity payments, you cannot
change your payment plan.
During the income phase, you have the same investment options you had
during the accumulation phase. You can choose to have annuity payments come from
the Fixed Account, the Variable Account or both. If you choose to have any part
of your annuity payments come from the Variable Account, the dollar amount of
your annuity payments may go up or down.
3. PURCHASE: The minimum amount ReliaStar Life will accept as an initial
purchase payment is $5,000 for Non-Qualified Contracts and $2,000 for Qualified
Contracts. ReliaStar Life may choose not to accept any subsequent purchase
payment for a Non-Qualified Contract if it is less than $500 and for a Qualified
Contract if it is less than $200. ReliaStar Life may choose not to accept any
subsequent purchase payments if the additional payments, when added to the
Contract Value at the next Valuation Date, would exceed $1 million. Large
Contracts with initial premium paid of $1 million or more contain certain
specialized contract provisions that are in some respects more advantageous and
in some respects less advantageous than the terms of contracts with less than $1
million of initial premium.
4. INVESTMENT OPTIONS: You can put your money in up to seventeen (17) of these
twenty-nine (29) investment options which are described in the prospectuses for
the Funds. You do not have to choose your investment options in advance, but
upon participation in the seventeenth Fund you would only be able to transfer
within the 17 already utilized and which are still available.
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<TABLE>
<CAPTION>
FIDELITY VARIABLE INSURANCE NEUBERGER BERMAN ADVISERS
THE ALGER AMERICAN FUND PRODUCTS FUND II MANAGEMENT TRUST OCC ACCUMULATION TRUST
- ----------------------- --------------------------- ------------------------- -----------------------
<S> <C> <C> <C>
Alger American VIP II Contrafund Limited Maturity Bond Equity Portfolio
Growth Portfolio Portfolio Portfolio Global Equity Portfolio
Alger American VIP II Index 500 Partners Portfolio Managed Portfolio
MidCap Growth Portfolio Socially Responsive Small Cap Portfolio
Portfolio VIP II Investment Grade Portfolio
Alger American Bond Portfolio
Small Capitalization
Portfolio
</TABLE>
<TABLE>
<CAPTION>
FIDELITY VARIABLE INSURANCE
PRODUCTS FUND JANUS ASPEN SERIES NORTHSTAR GALAXY TRUST PUTNAM VARIABLE TRUST
- --------------------------- -------------------- ----------------------- ----------------------
<S> <C> <C> <C>
VIP Equity-Income Aggressive Growth Emerging Growth Putnam VT Growth and
Portfolio Portfolio Portfolio Income Fund -
VIP Growth Portfolio Growth Portfolio Growth + Value Class IA Shares
VIP High Income International Growth Portfolio Putnam VT New
Portfolio Portfolio High Yield Bond Opportunities Fund -
VIP Money Market Worldwide Growth Portfolio Class IA Shares
Portfolio Portfolio International Value Putnam VT Voyager Fund
Portfolio - Class IA Shares
Research Enhanced Index
Portfolio
</TABLE>
Depending upon market conditions, you can make or lose money in any of these
Funds.
5. EXPENSES: The Contract has insurance features and investment features, and
there are costs related to each.
Each year ReliaStar Life deducts a $30 contract maintenance charge from
your Contract. ReliaStar Life reserves the right to waive this Annual Contract
Charge for business applied for on or after May 30, 1998 where the cumulative
purchase payments, less any cumulative partial surrenders, exceed $50,000. We
also deduct for insurance and administrative charges which annually total 1.40%
of the average daily value of your Contract allocated to the investment
portfolios. (Of this amount, prior to the Annuity Commencement Date .05% is
waived and re-credited for Contracts with initial premium of $1 million or more
that are sold under the provisions of a special rider.)
There are also investment fund annual expenses which range from 0.28% to
1.50% of the average daily value of the investment fund depending upon the
investment option which you select.
If you take your money out, we may assess a withdrawal charge. This charge
is equal to a maximum of 6% in years 1 and 2 and reduces to 0 after year 6. We
may also assess a state premium tax charge which ranges from 0% to 3.5%
depending upon the state.
The following chart is designed to help you understand the expenses in the
Contract. The column "Total Annual Expenses" shows the total of the $30 contract
maintenance charge (which is represented as .07% below), the 1.40% insurance
charges assessed on most Contracts, and the investment expenses for each
investment portfolio. The next two columns show you two examples of the
expenses, in dollars, you would pay under a Contract. The examples assume that
you invested $1,000 in a Contract which earns 5% annually and that you withdraw
your money: (1) at the end of year 1, and (2) at the end of year 10. For year 1,
the Total Annual Expenses are assessed as well as the withdrawal charges. For
year 10, the example shows the aggregate of all the annual expenses assessed for
the 10 years, but there is no withdrawal charge. The premium tax is assumed to
be 0% in both examples.
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<TABLE>
<CAPTION>
EXAMPLES:
TOTAL ANNUAL
EXPENSES AT END OF:
-------------------
TOTAL ANNUAL TOTAL ANNUAL TOTAL ANNUAL (1) (2)
INVESTMENT FUNDS INSURANCE CHARGES PORTFOLIO EXPENSES EXPENSES 1 YEAR 10 YEARS
- ---------------- ----------------- ------------------ ------------ -------- ---------
<S> <C> <C> <C> <C> <C>
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio ....................... 1.47% 0.79% 2.26% $77 $259
Alger American MidCap Growth Portfolio ................ 1.47% 0.84% 2.31% $77 $264
Alger American Small Capitalization Portfolio ......... 1.47% 0.89% 2.36% $78 $269
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:
VIP Equity-Income Portfolio ........................... 1.47% 0.57% 2.04% $75 $238
VIP Growth Portfolio .................................. 1.47% 0.66% 2.13% $76 $248
VIP High Income Portfolio ............................. 1.47% 0.70% 2.17% $76 $250
VIP Money Market Portfolio ............................ 1.47% 0.30% 1.77% $72 $208
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II:
VIP II Contrafund Portfolio ........................... 1.47% 0.66% 2.13% $76 $250
VIP II Index 500 Portfolio ............................ 1.47% 0.28% 1.75% $72 $213
VIP II Investment Grade Bond Portfolio ................ 1.47% 0.57% 2.04% $75 $237
JANUS ASPEN SERIES:
Aggressive Growth Portfolio ........................... 1.47% 0.75% 2.22% $76 $255
Growth Portfolio ...................................... 1.47% 0.68% 2.15% $76 $248
International Growth Portfolio ........................ 1.47% 0.86% 2.33% $78 $266
Worldwide Growth Portfolio ............................ 1.47% 0.72% 2.19% $76 $252
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST:
Limited Maturity Bond Portfolio ....................... 1.47% 0.76% 2.23% $77 $256
Partners Portfolio .................................... 1.47% 0.84% 2.31% $77 $264
Socially Responsive Portfolio ......................... 1.47% 1.50% 2.97% $84 $329
NORTHSTAR GALAXY TRUST:
Emerging Growth Portfolio ............................. 1.47% 0.90% 2.37% $78 $270
Growth + Value Portfolio .............................. 1.47% 0.80% 2.27% $77 $260
High Yield Bond Portfolio ............................. 1.47% 0.80% 2.27% $77 $260
International Value Portfolio ......................... 1.47% 1.00% 2.47% $79 $280
Research Enhanced Index Portfolio ..................... 1.47% 0.90% 2.37% $78 $270
OCC ACCUMULATION TRUST:
Equity Portfolio ...................................... 1.47% 0.94% 2.41% $78 $274
Global Equity Portfolio ............................... 1.47% 1.13% 2.60% $80 $293
Managed Portfolio ..................................... 1.47% 0.82% 2.29% $77 $262
Small Cap Portfolio ................................... 1.47% 0.88% 2.35% $78 $268
PUTNAM VARIABLE TRUST:
Putnam VT Growth and Income Fund -
Class IA Shares ...................................... 1.47% 0.50% 1.97% $74 $229
Putnam VT New Opportunities Fund -
Class IA Shares ...................................... 1.47% 0.61% 2.08% $75 $241
Putnam VT Voyager Fund - Class IA Shares .............. 1.47% 0.58% 2.05% $75 $238
</TABLE>
Certain of the portfolios are subject to fee waiver or reimbursement
arrangements. The charges listed above reflect any expense reimbursement or fee
waiver. For more detailed information, see Summary of Contract Expenses in the
Prospectus for the Contract. The Total Annual Insurance charges listed above
represent the maximum insurance charges that may be assessed for Contract
expenses. Of these charges, prior to the Annuity Commencement Date .05% is
waived and re-credited for contracts with initial premium received of $1 million
or more that are sold under the provisions of a special rider.
iii
<PAGE>
6. TAXES: Your earnings are not taxed until you take them out. If you withdraw
money, earnings may come out first and will be taxed as income. If you are
younger than 59 1/2 when you take money out, you may be charged a 10% federal
tax penalty on the amount treated as taxable income. Annuity payments during the
income phase may be considered partly a return of your original investment, in
which case that part of each payment is not taxable as income.
7. ACCESS TO YOUR MONEY: You can take money out at any time during the
accumulation phase. After the first year, you can take up to 10% of your total
purchase payments each year without charge from us. Withdrawals in excess of
that will be charged a maximum of 6% in years 1 and 2 which reduces to 0 after
year 6. After we have a payment for 6 years, there is no charge for withdrawals
for those payments. You may also have to pay income tax and a tax penalty on any
money you take out. Each purchase payment you add to your Contract has its own 6
year withdrawal charge period.
8. PERFORMANCE: The value of the Contract will vary up or down depending upon
the investment performance of the investment fund you choose. The following
chart shows total returns through December 31, 1998, for each investment fund
for the time periods shown. This chart reports performance returns only for
periods where our Contracts offered the investment fund for a complete year.
These numbers reflect the insurance charges, the contract maintenance charge,
the investment expenses and all other expenses of the investment fund. These
numbers do not reflect any withdrawal charges and if applied these charges would
reduce such performance. Past performance is not a guarantee of future results.
Investment in the money market fund option is neither insured nor guaranteed by
the U.S. government and there can be no assurance that it will be able to
maintain a stable net asset value of $1 per share.
iv
<PAGE>
Performances of certain of the portfolios reflect a voluntary expense
limitation, as described in the prospectus. In the absence of this voluntary
limitation the total return would have been lower.
<TABLE>
<CAPTION>
CALENDAR YEAR
1998 1997 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
THE ALGER AMERICAN FUND
Alger American Growth Portfolio .......................... 45.96% n/a n/a n/a
Alger American MidCap Growth Portfolio ................... 28.43% n/a n/a n/a
Alger American Small Capitalization Portfolio ............ 13.87% n/a n/a n/a
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
VIP Equity-Income Portfolio .............................. 10.02% 26.26% 12.60% 33.12%
VIP Growth Portfolio ..................................... 37.50% 21.70% 13.02% 33.39%
VIP High Income Portfolio ................................ (5.72)% 15.96% 12.36% 18.83%
VIP Money Market Portfolio ............................... 3.93% 3.96% 3.86% 4.31%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
VIP II Contrafund Portfolio .............................. 28.12% 22.35% 19.53% n/a
VIP II Index 500 Portfolio ............................... 26.49% 30.79% 21.02% 35.19%
VIP II Investment Grade Bond Portfolio ................... 7.28% 7.48% 1.66% 15.60%
JANUS ASPEN SERIES
Aggressive Growth Portfolio .............................. 32.34% n/a n/a n/a
Growth Portfolio ......................................... 33.72% n/a n/a n/a
International Growth Portfolio ........................... 15.55% n/a n/a n/a
Worldwide Growth Portfolio ............................... 27.08% n/a n/a n/a
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Limited Maturity Bond Portfolio .......................... 2.88% n/a n/a n/a
Partners Portfolio ....................................... 2.70% n/a n/a n/a
Socially Responsive Portfolio ............................ n/a n/a n/a n/a
NORTHSTAR GALAXY TRUST
Emerging Growth Portfolio ................................ 15.61% 13.94% 12.13% n/a
Growth + Value Portfolio ................................. 17.61% 12.99% 21.30% n/a
High Yield Bond Portfolio ................................ (0.87)% n/a n/a n/a
International Value Portfolio ............................ 15.25% n/a n/a n/a
Research Enhanced Index Portfolio ........................ (0.11)% 5.46% 11.61% n/a
OCC ACCUMULATION TRUST
Equity Portfolio ......................................... 10.25% n/a n/a n/a
Global Equity Portfolio .................................. 11.66% n/a n/a n/a
Managed Portfolio ........................................ 5.58% n/a n/a n/a
Small Cap Portfolio ...................................... (10.35)% n/a n/a n/a
PUTNAM VARIABLE TRUST
Putnam VT Growth and Income Fund - Class IA Shares ....... 13.76% 22.36% 20.13% 34.72%
Putnam VT New Opportunities Fund - Class IA Shares ....... 22.60% 21.51% 8.55% n/a
Putnam VT Voyager Fund - Class IA Shares ................. 22.58% 24.69% 11.31% 38.62%
</TABLE>
9. DEATH BENEFIT: If you die prior to the income phase, the person you have
chosen as your beneficiary will receive a death benefit. For Contracts with
initial premium of less than $1 million, this death benefit will be the greater
of three amounts: 1) the money you've put in reduced for any money you've taken
out, or 2) the current value of your Contract, or 3) the value of your Contract
at the most recent Specified Contract Anniversary (as defined in the Prospectus
for the Contract) plus any money you've added since that anniversary reduced for
any money you've taken out since that anniversary. If you die after age 85, your
beneficiary will receive the Contract Value. For Contracts with initial premium
of $1 million or more that are sold under the provisions of a special rider, the
Death Benefit is the Contract Value minus any surrender charges.
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<PAGE>
10. OTHER INFORMATION
FREE LOOK. If you cancel the Contract within 10 days after receiving it (or
whatever period is required in your state), we will return the Contract Value
without assessing a withdrawal charge. You will receive whatever your Contract
is worth on the day we receive your request. This may be more or less than your
original payment.
NO PROBATE. In most cases, when you die, the person you choose as your
beneficiary will receive the death benefit without going through probate.
WHO SHOULD PURCHASE THE CONTRACT? This Contract is designed for people seeking
long-term tax-deferred accumulation of assets, generally for retirement or other
long-term purposes. The tax-deferred feature is most attractive to people in
high federal and state tax brackets. You should not buy this Contract if you are
looking for a short-term investment or if you cannot take the risk of getting
back less money than you put in.
ADDITIONAL FEATURES. This Contract has additional Features you might be
interested in. These include:
o You can arrange to have money automatically sent to you each month
while your Contract is still in the accumulation phase. Of course,
you'll have to pay taxes on money you receive. We call this feature
the Systematic Withdrawal Program.
o You can arrange to have a regular amount of money automatically
transferred to investment portfolios each month to provide for regular
level investments over time. We call this feature Dollar Cost
Averaging.
o ReliaStar Life will automatically readjust the money in your Contract
between investment portfolios periodically to keep the blend you
select. We call this feature Portfolio Rebalancing.
These features are not available in all states and may not be suitable for your
particular situation.
11. INQUIRIES If you need more information, please contact us at:
ReliaStar Life Insurance Company
20 Washington Avenue South
Minneapolis, Minnesota 54401
1-800-621-3750
or the distributor of the Contracts, our affiliated Company,
Washington Square Securities, Inc.
20 Washington Avenue South
Minneapolis, Minnesota 55401
1-800-621-3750
or your registered representative.
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<PAGE>
[LOGO] RELIASTAR
20 Washington Avenue South
Minneapolis, Minnesota 55401
1-800-621-3750
------------------------
SELECT*ANNUITY III
INDIVIDUAL DEFERRED VARIABLE/FIXED ANNUITY CONTRACTS
ISSUED BY
THE RELIASTAR SELECT VARIABLE ACCOUNT OF
RELIASTAR LIFE INSURANCE COMPANY
This Prospectus offers flexible purchase payment Individual Deferred
Variable/Fixed Annuity Contracts. The Contracts are sold both as non-qualified
contracts and in connection with retirement plans which may qualify for special
federal tax treatment under the Internal Revenue Code. (See "Federal Tax
Status.") Annuity payouts from the Contracts are deferred until a selected later
date.
Subject to certain restrictions, you can allocate premiums to:
o the Fixed Account, an account that provides a minimum specified rate
of interest; and
o Sub-Accounts of Select Variable Account (the "Variable Account"), a
variable account allowing you to invest in certain portfolios of the
following Funds (the "Investment Funds"):
<TABLE>
<S> <C>
The Alger American Fund Neuberger Berman Advisers Management Trust
Fidelity Variable Insurance Products Fund Northstar Galaxy Trust
Fidelity Variable Insurance Products Fund II OCC Accumulation Trust
Janus Aspen Series Putnam Variable Trust
</TABLE>
The Variable Account, your account value and the amount of any variable
annuity payments that you receive will vary, primarily based on the investment
performance of the Investment Funds you select. (For more information about
investing in the Investment Funds, see "Investments of the Variable Account.")
The Fixed Account is the general account of ReliaStar Life Insurance Company
("ReliaStar Life"). The Fixed Account is not available to Contract Owners in the
States of Maryland, Oregon, South Carolina and Washington.
Additional information about the Contracts, ReliaStar Life and the Variable
Account, contained in a Statement of Additional Information dated April 30,
1999, has been filed with the Securities and Exchange Commission. The Statement
of Additional Information is available by accessing the SEC's internet web site
(http: // www.sec.gov) or upon request without charge by writing to Washington
Square Securities, Inc., 20 Washington Avenue South, Minneapolis, Minnesota
55401 or by calling 1-800-621-3750. The Statement of Additional Information is
incorporated by reference in this Prospectus and its Table of Contents can be
found on page 33 of this Prospectus.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE CONTRACTS THAT A
PROSPECTIVE INVESTOR OUGHT TO KNOW BEFORE INVESTING AND SHOULD BE RETAINED FOR
FUTURE REFERENCE.
These insurance and investment products:
o ARE NOT BANK DEPOSITS OR GUARANTEED BY A BANK
o ARE NOT INSURED OR GUARANTEED BY THE FDIC, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY
o ARE AFFECTED BY MARKET FLUCTUATIONS AND SO INVOLVE INVESTMENT RISK,
INCLUDING POSSIBLE LOSS OF PRINCIPAL
o HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE INVESTMENT
FUNDS OFFERED BY THE ALGER AMERICAN FUND, FIDELITY VARIABLE INSURANCE PRODUCTS
FUND, FIDELITY VARIABLE INSURANCE PRODUCTS FUND II, JANUS ASPEN SERIES,
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST, NORTHSTAR GALAXY TRUST, OCC
ACCUMULATION TRUST AND PUTNAM VARIABLE TRUST, AND IS VALID ONLY WHEN ACCOMPANIED
BY THESE PROSPECTUSES.
THE DATE OF THIS PROSPECTUS IS APRIL 30, 1999.
<PAGE>
TABLE OF CONTENTS
Definitions ............................................................ 4
Summary of Contract Expenses ........................................... 6
ReliaStar Life ......................................................... 12
The Variable Account ................................................... 12
Investments of the Variable Account .................................... 13
Charges Made by ReliaStar Life ......................................... 16
Surrender Charge (Contingent Deferred Sales Charge) ................... 16
Annual Contract Charge ................................................ 17
Waiver of Charges ..................................................... 17
Mortality Risk Premium ................................................ 18
Expense Risk Premium .................................................. 18
Administration Charge ................................................. 18
Premium and Other Taxes ............................................... 18
General: Reduction or Waiver of Charges or Minimum Purchase Payments .. 19
Expenses of the Investment Funds ...................................... 19
Administration of the Contracts ........................................ 19
The Contracts .......................................................... 19
Allocation of Purchase Payments ....................................... 19
Sub-Account Accumulation Unit Value ................................... 20
Net Investment Factor ................................................. 20
Death Benefit Before the Annuity Commencement Date .................... 20
Death Benefit After the Annuity Commencement Date ..................... 21
Surrender (Redemption) ................................................ 21
Systematic Withdrawals ................................................ 22
Transfers ............................................................. 22
Written Transfers ..................................................... 22
Assignments ........................................................... 23
Contract Owner and Beneficiaries ...................................... 24
Contract Inquiries .................................................... 24
Annuity Provisions ..................................................... 24
Annuity Commencement Date ............................................. 24
Annuity Form Selection ................................................ 24
Annuity Forms ......................................................... 25
Frequency and Amount of Annuity Payments .............................. 25
Annuity Payments ...................................................... 25
Sub-Account Annuity Unit Value ........................................ 26
Assumed Investment Rate ............................................... 26
Federal Tax Status ..................................................... 26
Introduction .......................................................... 26
Tax Status of the Contract ............................................ 26
Taxation of Annuities ................................................. 27
Taxation of Death Benefit Proceeds .................................... 28
Penalty Tax on Certain Distributions .................................. 28
Possible Changes in Taxation .......................................... 28
Transfers, Assignments or Exchanges of a Contract ..................... 28
Withholding ........................................................... 28
Multiple Contracts .................................................... 29
Taxation of Qualified Plans ........................................... 29
Possible Charge for ReliaStar's Taxes ................................. 30
Other Tax Consequences ................................................ 30
Voting of Fund Shares .................................................. 30
Distribution of the Contracts .......................................... 30
Revocation ............................................................. 31
2
<PAGE>
Reports to Owners ...................................................... 31
Preparing for Year 2000 ................................................ 31
Legal Proceedings ...................................................... 31
Financial Statements and Experts ....................................... 32
Further Information .................................................... 32
Statement of Additional Information Table of Contents .................. 33
Appendix A: The Fixed Account .......................................... A-1
Appendix B: Performance Information and Condensed Financial Information B-1
3
<PAGE>
DEFINITIONS
ANNUITANT. The person who is named by the Owner whose life determines the
annuity benefits payable.
ANNUITY COMMENCEMENT DATE (COMMENCEMENT DATE). The date on which the annuity
payments begin, which must be the first day of a month. The date will be the
first day of the month following the Annuitant's 75th birthday unless an earlier
or later date has been selected by the Owner and, if the date is later, it has
been agreed to by ReliaStar Life.
BENEFICIARY. The person who is named to receive the Contract Value upon the
death of the Owner before the Annuity Commencement Date or to receive the
balance of the annuity payments, if any, under the Annuity Form in effect at the
Annuitant's death.
CODE. The Internal Revenue Code of 1986, as amended.
CONTRACT ANNIVERSARY. Occurs yearly on the same day and month the Contract was
issued.
CONTRACT OWNER (OWNER). The person who controls all the rights and privileges
under the Contract. The Annuitant owns the Contract unless another Owner is
named as provided for in the Contract. The Contract may be owned by one, but no
more than two, natural persons only, except when it is held under a retirement
plan or program described in Section 401(a), 403(a), 403(b), 408 or 408A or
similar provisions of the Code.
CONTRACT VALUE. The sum of (a) the Variable Account Contract Value, which is the
value of the Sub-Account Accumulation Units under the Contract plus (b) the
Fixed Account Contract Value, which is the sum of purchase payments allocated to
the Fixed Account under the Contract, plus credited interest, minus surrenders,
surrender charges previously applied, and any annual administrative charges
applicable to the Fixed Account, and minus any transfers to the Variable
Account.
CONTRACT YEAR. Each twelve-month period starting with the date the Contract was
issued and each Contract Anniversary after that.
DEATH BENEFIT. The amount payable upon the death of a Contract Owner before the
Annuity Commencement Date. (See "Death Benefit Before the Annuity Commencement
Date.")
DEATH BENEFIT VALUATION DATE. The Death Benefit Valuation Date is the Valuation
Date next following the date ReliaStar Life receives proof of death and a
written request from the Beneficiary for a single sum payment or an Annuity Form
permitted by Section 72(s) of the Code.
FIXED ACCOUNT. The Fixed Account is the general account of ReliaStar Life, which
consists of all assets of ReliaStar Life other than those allocated to separate
accounts of ReliaStar Life.
FIXED ANNUITY. An annuity with payments which do not vary as to dollar amount.
INVESTMENT FUNDS. Any open-end management investment company (or portfolio
thereof) or unit investment trust (or series thereof) in which a Sub-Account
invests.
QUALIFIED PLAN. A retirement plan under Sections 401, 403, 408 or 408A or
similar provisions of the Code.
SPECIFIED CONTRACT ANNIVERSARY. Each consecutive six year anniversary date
measured from the date the Contract was issued. The Specified Contract
Anniversary is used to determine the Death Benefit payable if the Contract
Owner dies before the Annuity Commencement Date. (See "Death Benefit Before the
Annuity Commencement Date.")
SUB-ACCOUNT. That portion of the Variable Account which invests in shares of a
specific Investment Fund.
SUB-ACCOUNT ACCUMULATION UNIT. A unit of measure used to determine the Variable
Account Contract Value before annuity payments start.
SUCCESSOR BENEFICIARY. The person named to become the Beneficiary if the
Beneficiary is not alive.
VALUATION DATE. Each day on which the New York Stock Exchange is open for
business except for a day that a Sub-Account's corresponding Fund does not
value its shares. The New York Stock Exchange is currently closed on weekends
and on the following holidays: New Year's Day; Martin Luther King, Jr. Day;
President's Day; Good Friday; Fourth of July; Labor Day; Thanksgiving Day; and
Christmas Day.
VALUATION PERIOD. The time interval between a Valuation Date and the next
Valuation Date.
4
<PAGE>
VARIABLE ACCOUNT. A separate account of ReliaStar Life consisting of assets set
aside by ReliaStar Life, the investment performance of which is kept separate
from that of the general assets of ReliaStar Life.
VARIABLE ANNUITY. A series of periodic payments to the Contract Payee which will
vary in amount, primarily based on the investment results of the Sub-Accounts
under the Contract.
VARIABLE ANNUITY UNIT. A unit of measure used in the calculation of the second
and each subsequent variable annuity payment from the Variable Account.
5
<PAGE>
SUMMARY OF CONTRACT EXPENSES
CONTRACT OWNER TRANSACTION EXPENSES
Sales Charge Imposed on Purchases ......................................... None
Surrender Charge (as a percentage of amounts surrendered attributable to
purchase payments made in the last six Contract Years) (a)
CONTRACT YEAR OF SURRENDER MINUS SURRENDER CHARGE AS A PERCENTAGE
CONTRACT YEAR OF PURCHASE PAYMENT OF EACH PURCHASE PAYMENT
--------------------------------- --------------------------------
0-1 6%
2-3 5
4-5 4
6 and later 0
Transfer Charge(b) ...................................................... None
ANNUAL CONTRACT CHARGE .................................................. $ 30
VARIABLE ACCOUNT ANNUAL EXPENSES (as a percentage of average account
value)
Mortality and Expense Risk Premiums(c) ................................ 1.25%
Other Account Fees and Expenses (See "Administration Charge") ......... .15%
Total Variable Account Annual Expenses ................................ 1.40%
In addition to the costs and expenses shown in this table, state premium
taxes may also be applicable. For more information on state premium taxes, see
"Premium and Other Taxes."
6
<PAGE>
ANNUAL INVESTMENT FUND EXPENSES AFTER REIMBURSEMENTS(e)(f)(g)(i)(j)(k)(l):
(as a percentage of Investment Fund average net assets)
<TABLE>
<CAPTION>
TOTAL INVESTMENT
MANAGEMENT OTHER FUND ANNUAL
FEES EXPENSES EXPENSES
---------- -------- ----------------
<S> <C> <C> <C>
THE ALGER AMERICAN FUND
Alger American Growth Portfolio(d) ......................... 0.75% 0.04% 0.79%
Alger American MidCap Growth Portfolio(d) .................. 0.80% 0.04% 0.84%
Alger American Small Capitalization Portfolio(d) ........... 0.85% 0.04% 0.89%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND (VIP):
VIP Equity-Income Portfolio(d)(e) .......................... 0.49% 0.09% 0.58%
VIP Growth Portfolio(d)(e) ................................. 0.59% 0.09% 0.68%
VIP High Income Portfolio(d) ............................... 0.58% 0.12% 0.70%
VIP Money Market Portfolio ................................. 0.20% 0.10% 0.30%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II (VIP II):
VIP II Contrafund Portfolio(d)(e) .......................... 0.59% 0.11% 0.70%
VIP II Index 500 Portfolio(d)(e) ........................... 0.24% 0.11% 0.35%
VIP II Investment Grade Bond Portfolio(d) .................. 0.43% 0.14% 0.57%
JANUS ASPEN SERIES:
Aggressive Growth Portfolio(d)(f) .......................... 0.72% 0.03% 0.75%
Growth Portfolio(d)(f) ..................................... 0.65% 0.03% 0.68%
International Growth Portfolio(d)(f) ....................... 0.66% 0.20% 0.86%
Worldwide Growth Portfolio(d)(f) ........................... 0.65% 0.07% 0.72%
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio(d)(g) ...................... 0.65% 0.11% 0.76%
Partners Portfolio(d)(g) ................................... 0.78% 0.06% 0.84%
Socially Responsive Portfolio(d)(g)(h) ..................... 0.85% 0.65% 1.50%
NORTHSTAR GALAXY TRUST:
Emerging Growth Portfolio(i) ............................... 0.75% 0.15% 0.90%
Growth + Value Portfolio(i) ................................ 0.75% 0.05% 0.80%
High Yield Bond Portfolio(i) ............................... 0.75% 0.05% 0.80%
International Value Portfolio(i) ........................... 1.00% 0.00% 1.00%
Research Enhanced Index Portfolio(i) ....................... 0.75% 0.15% 0.90%
OCC ACCUMULATION TRUST:
Equity Portfolio(d)(j) ..................................... 0.80% 0.14% 0.94%
Global Equity Portfolio(d)(j) .............................. 0.80% 0.33% 1.13%
Managed Portfolio(d)(j) .................................... 0.78% 0.04% 0.82%
Small Cap Portfolio(d)(j) .................................. 0.80% 0.08% 0.88%
PUTNAM VARIABLE TRUST:
Putnam VT Growth and Income Fund - Class IA Shares ......... 0.46% 0.04% 0.50%
Putnam VT New Opportunities Fund - Class IA Shares ......... 0.56% 0.05% 0.61%
Putnam VT Voyager Fund - Class IA Shares ................... 0.54% 0.04% 0.58%
</TABLE>
The fee and expense information regarding the Investment Funds was provided
by the Funds.
Except for the Northstar Galaxy Trust, neither the Investment Funds nor
their Advisers are affiliated with ReliaStar Life.
7
<PAGE>
EXAMPLES
If you surrender your contract at the end of the applicable time period,
you would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio ........................ $77 $116 $157 $259
Alger American MidCap Growth Portfolio ................. 77 117 159 264
Alger American Small Capitalization Portfolio .......... 78 119 162 269
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:
VIP Equity-Income Portfolio ............................ 75 109 146 238
VIP Growth Portfolio ................................... 76 112 151 248
VIP High Income Portfolio .............................. 76 113 152 250
VIP Money Market Portfolio ............................. 72 101 132 208
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II:
VIP II Contrafund Portfolio ............................ 76 113 152 250
VIP II Index 500 Portfolio ............................. 72 102 134 213
VIP II Investment Grade Bond Portfolio ................. 75 109 146 237
JANUS ASPEN SERIES:
Aggressive Growth Portfolio ............................ 76 114 155 255
Growth Portfolio ....................................... 76 112 151 248
International Growth Portfolio ......................... 78 118 160 266
Worldwide Growth Portfolio ............................. 76 113 153 252
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio ........................ 77 115 155 256
Partners Portfolio ..................................... 77 117 159 264
Socially Responsive Portfolio .......................... 84 137 192 329
NORTHSTAR GALAXY TRUST:
Emerging Growth Portfolio .............................. 78 119 162 270
Growth + Value Portfolio ............................... 77 116 157 260
High Yield Bond Portfolio .............................. 77 116 157 260
International Value Portfolio .......................... 79 122 167 280
Research Enhanced Index Portfolio ...................... 78 119 162 270
OCC ACCUMULATION TRUST:
Equity Portfolio ....................................... 78 120 164 274
Global Equity Portfolio ................................ 80 126 174 293
Managed Portfolio ...................................... 77 116 158 262
Small Cap Portfolio .................................... 78 118 161 268
PUTNAM VARIABLE TRUST:
Putnam VT Growth and Income Fund - Class IA Shares ..... 74 107 142 229
Putnam VT New Opportunities Fund - Class IA Shares ..... 75 110 148 241
Putnam VT Voyager Fund - Class IA Shares ............... 75 109 146 238
</TABLE>
8
<PAGE>
If you annuitize your contract at the end of the applicable time period,
you would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets.*
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio ........................ $77 $71 $121 $259
Alger American MidCap Growth Portfolio ................. 77 72 123 264
Alger American Small Capitalization Portfolio .......... 78 74 126 269
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:
VIP Equity-Income Portfolio ............................ 75 64 110 238
VIP Growth Portfolio ................................... 76 67 115 248
VIP High Income Portfolio .............................. 76 68 116 250
VIP Money Market Portfolio ............................. 72 56 96 208
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II:
VIP II Contrafund Portfolio ............................ 76 68 116 250
VIP II Index 500 Portfolio ............................. 72 57 98 213
VIP II Investment Grade Bond Portfolio ................. 75 64 110 237
JANUS ASPEN SERIES:
Aggressive Growth Portfolio ............................ 76 69 119 255
Growth Portfolio ....................................... 76 67 115 248
International Growth Portfolio ......................... 78 73 124 266
Worldwide Growth Portfolio ............................. 76 68 117 252
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio ........................ 77 70 119 256
Partners Portfolio ..................................... 77 72 123 264
Socially Responsive Portfolio .......................... 84 92 156 329
NORTHSTAR GALAXY TRUST:
Emerging Growth Portfolio .............................. 78 74 126 270
Growth + Value Portfolio ............................... 77 71 121 260
High Yield Bond Portfolio .............................. 77 71 121 260
International Value Portfolio .......................... 79 77 131 280
Research Enhanced Index Portfolio ...................... 78 74 126 270
OCC ACCUMULATION TRUST:
Equity Portfolio ....................................... 78 75 128 274
Global Equity Portfolio ................................ 80 81 138 293
Managed Portfolio ...................................... 77 71 122 262
Small Cap Portfolio .................................... 78 73 125 268
PUTNAM VARIABLE TRUST:
Putnam VT Growth and Income Fund - Class IA Shares ..... 74 62 106 229
Putnam VT New Opportunities Fund - Class IA Shares ..... 75 65 112 241
Putnam VT Voyager Fund - Class IA Shares ............... 75 64 110 238
</TABLE>
- ------------
* If the Contract's Annuity Commencement Date occurs during the first two
Contract Years following the date the Contract was issued a Surrender Charge
is deducted and the expenses shown in year 1 reflect this deduction.
9
<PAGE>
If you do not surrender your contract at the end of the applicable time
period, you would pay the following expenses on a $ 1,000 investment, assuming a
5% annual return on assets.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio ........................ $23 $71 $121 $259
Alger American MidCap Growth Portfolio ................. 23 72 123 264
Alger American Small Capitalization Portfolio .......... 24 74 126 269
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:
VIP Equity-Income Portfolio ............................ 21 64 110 238
VIP Growth Portfolio ................................... 22 67 115 248
VIP High Income Portfolio .............................. 22 68 116 250
VIP Money Market Portfolio ............................. 18 56 96 208
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II:
VIP II Contrafund Portfolio ............................ 22 68 116 250
VIP II Index 500 Portfolio ............................. 18 57 98 213
VIP II Investment Grade Bond Portfolio ................. 21 64 110 237
JANUS ASPEN SERIES:
Aggressive Growth Portfolio ............................ 22 69 119 255
Growth Portfolio ....................................... 22 67 115 248
International Growth Portfolio ......................... 24 73 124 266
Worldwide Growth Portfolio ............................. 22 68 117 252
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio ........................ 23 70 119 256
Partners Portfolio ..................................... 23 72 123 264
Socially Responsive Portfolio .......................... 30 92 156 329
NORTHSTAR GALAXY TRUST:
Emerging Growth Portfolio .............................. 24 74 126 270
Growth + Value Portfolio ............................... 23 71 121 260
High Yield Bond Portfolio .............................. 23 71 121 260
International Value Portfolio .......................... 25 77 131 280
Research Enhanced Index Portfolio ...................... 24 74 126 270
OCC ACCUMULATION TRUST:
Equity Portfolio ....................................... 24 75 128 274
Global Equity Portfolio ................................ 26 81 138 293
Managed Portfolio ...................................... 23 71 122 262
Small Cap Portfolio .................................... 24 73 125 268
PUTNAM VARIABLE TRUST:
Putnam VT Growth and Income Fund - Class IA Shares ..... 20 62 106 229
Putnam VT New Opportunities Fund - Class IA Shares ..... 21 65 112 241
Putnam VT Voyager Fund - Class IA Shares ............... 21 64 110 238
</TABLE>
- -----------
(a) In certain situations amounts can be surrendered without any surrender
charge. For more information on the Surrender Charge, see "Surrender Charge
(Contingent Deferred Sales Charge)." ReliaStar Life reserves the right to
charge a partial surrender processing fee not to exceed the lesser of 2% of
the partial surrender amount or $25. For more information on the processing
fee, see "Surrender (Redemption)."
(b) ReliaStar Life currently does not impose a charge on transfers between the
Sub-Accounts or to the Fixed Account although it reserves the right to
impose a fee not to exceed $25 per transfer.
(c) For Contracts with initial premium of $1 million or more that are issued
under the provisions of a special rider, prior to the Annuity Commencement
Date a portion of the Mortality Risk Premium in an amount equal to 0.05% of
the Contract Value on the Contract Anniversary is waived and re-credited to
the contract on the next succeeding day.
(d) ReliaStar Life or its affiliates may receive compensation from an affiliate
or affiliates of certain of the Funds based upon an annual percentage of
the average net assets held in that Fund by ReliaStar Life and certain of
ReliaStar Life's insurance company affiliates. The percentage paid may vary
from one Fund company to another. These amounts are intended to compensate
ReliaStar Life or ReliaStar Life's affiliates for administrative, record
keeping, distribution in
10
<PAGE>
some cases, and other services provided by such parties to the Funds and/or
the Funds' affiliates. Currently, ReliaStar Life has service arrangements
with Fred Alger Management, Inc., Fidelity Management & Research Company,
Janus Capital, Neuberger Berman Management Inc., and OpCap Advisors.
Payments of such amounts by an affiliate or affiliates of the Funds do not
increase the fees paid by the Funds or their shareholders.
(e) A portion of the brokerage commissions that certain Portfolios pay was used
to reduce Portfolio expenses. In addition, certain Portfolios have entered
into arrangements with their custodian whereby credits realized as a result
of uninvested cash balances were used to reduce custodian expenses.
Including these reductions, the total operating expenses presented in the
table would have been: 0.57% for VIP Equity-Income Portfolio, 0.66% for VIP
Growth Portfolio, 0.66% for VIP II Contrafund Portfolio, and 0.28% for VIP
II Index 500 Portfolio.
(f) The fees and expenses in the table above are based on net expenses after
expense offset arrangements for the fiscal year ended December 31, 1998.
The information is net of fee reductions from Janus Capital. Fee reductions
for the Aggressive Growth, Growth, International Growth and Worldwide
Growth Portfolios reduce the management fee to the level of the
corresponding Janus retail fund. Other waivers, if applicable, are first
applied against the management fee and then against other expenses. Without
such waivers or reductions, the Management Fee, Other Expenses and Total
Investment Fund Annual Expenses for the Shares would have been 0.72%,
0.03%, and 0.75% for Aggressive Growth Portfolio; 0.72%, 0.03%, and 0.75%
for Growth Portfolio; 0.75%, 0.20% and 0.95% for International Growth
Portfolio; and 0.67%, 0.07% and 0.74% for Worldwide Growth Portfolio. Janus
Capital has agreed to continue these fee reductions until at least the next
annual renewal of the advisory agreement of Janus Aspen Series.
(g) Neuberger Berman Advisers Management Trust is comprised of separate
Portfolios, the following of which are available as funding options under
the contract: Limited Maturity Bond Portfolio, Partners Portfolio and
Socially Responsive Portfolio ("Portfolio series"). Unlike the other
funding options available under the contract, each of the Portfolio series
invests all of its net investable assets in AMT Limited Maturity Bond
Investments, AMT Partners Investments and AMT Socially Responsive
Investments, respectively, of Advisers Managers Trust ("Investment
series"). The Investment series in turn, invest directly in securities. For
a more complete discussion of this structure, please see the prospectus for
Neuberger Berman Advisers Management Trust Limited Maturity Bond Portfolio,
Partners Portfolio and Socially Responsive Portfolio. Please note that the
figures reported under "Management Fees" and "Other Expenses" include the
aggregate of (i) the management fees paid by the Investment series, (ii)
the administration fees paid by the Portfolio series, and (iii) all other
expenses in the aggregate for the Investment series and Portfolio series,
respectively.
(h) Neuberger Berman Management Inc. ("NBMI") has undertaken to reimburse the
Socially Responsive Portfolio for certain operating expenses, including the
compensation of Neuberger Berman Advisers Management Trust and excluding
taxes, interest, extraordinary expenses, brokerage commissions and
transactions costs, that exceed in the aggregate, 1.50% of the average
daily net asset value of the Socially Responsive Portfolio. The Socially
Responsive Portfolio had not commenced operations as of December 31, 1998,
and therefore these expense figures are estimated. Estimated expenses are
expected to be 2.50% for the fiscal period ending December 31, 1999, prior
to the reimbursement. The expense reimbursement policy is subject to
termination upon 60 days' written notice after April 30, 2000. There can be
no assurance that this policy will be continued. See "Expense Limitation"
in the Socially Responsive Portfolio prospectus for further information.
(i) The fee and expense information for the Northstar Galaxy Trust Emerging
Growth Portfolio and International Value Portfolio has been restated to
reflect current fees and expenses effective November 9, 1998. The fee and
expense information for the Northstar Galaxy Trust Research Enhanced Index
Portfolio has been restated to reflect current fees and expenses effective
April 30, 1999.
The investment adviser to the Northstar Galaxy Trust has agreed to
reimburse the Growth + Value Portfolio and High Yield Bond Portfolio for
any expenses in excess of 0.80% of each Portfolio's average daily net
assets. It also has agreed to reimburse the Emerging Growth Portfolio,
Research Enhanced Index Portfolio, and International Value Portfolio for
expenses in excess of .90%, .90%, and 1.00%, respectively. In the absence
of these expense reimbursements, the Total Investment Fund Annual Expenses
that would have been paid by each Portfolio during its fiscal year ended
December 31, 1998 would have been: Emerging Growth Portfolio: 1.14%; Growth
+ Value Portfolio: 1.02%; High Yield Bond Portfolio: 1.23%; International
Value Portfolio: 1.68%; Research Enhanced Index Portfolio: 1.29%. Expense
reimbursements are voluntary. There is no assurance of ongoing
reimbursement.
The Northstar Galaxy Trust Emerging Growth Portfolio (formerly the
Northstar Galaxy Trust Income and Growth Portfolio) operated under an
investment objective of seeking income balanced with capital appreciation
from inception through November 8, 1998, when the investment objective was
modified to seeking long-term capital appreciation. The Northstar Galaxy
Trust Research Enhanced Index Portfolio (formerly the Northstar Galaxy
Trust Multi-Sector Bond
11
<PAGE>
Portfolio) operated under an investment objective of seeking current income
while preserving capital through April 29, 1999, when the investment
objective was modified to seeking long-term capital appreciation.
(j) The Management Fees reflect effective management fees after taking into
effect any waiver. Other Expenses are shown net of certain expense offsets
afforded the Portfolios. Total Investment Fund Annual Expenses for the
Equity, Small Cap and Managed Portfolios are limited by OpCap Advisors so
that their respective annualized operating expenses (net of any expense
offsets) do not exceed 1.00% of average daily net assets. Total Investment
Fund Annual Expenses for the Global Equity Portfolio are limited to 1.25%
of average daily net assets (net of any expense offsets).
The expenses shown in the examples above reflect the costs and expenses
applicable to Contracts with initial premium of less than $1 million.
THE EXAMPLES SHOWN IN THE TABLE ABOVE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN. THE 5% ANNUAL RETURN ASSUMED IS HYPOTHETICAL AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE
GREATER OR LESS THAN THE ASSUMED RATE.
The purpose of this table is to assist you in understanding the various
costs and expenses that you will bear either directly or indirectly. The table
reflects the expenses of the Variable Account as well as those of the Investment
Funds. The $30 Annual Contract Charge is reflected as an annual percentage
charge in this table based on the anticipated average net assets in the Variable
Account and Fixed Account, which translates to a charge equal to an annual rate
of 0.067% of the Variable Account and Fixed Account values. There is an
accumulation unit value history contained in Appendix B -- Performance
Information and Condensed Financial Information.
For Performance Information and Condensed Financial Information, see
Appendix B.
RELIASTAR LIFE
ReliaStar Life, organized in 1885, is a Minnesota stock life insurance
company. ReliaStar Life is a direct, wholly-owned subsidiary of ReliaStar
Financial Corp., a publicly traded Delaware holding company, whose shares are
listed on the New York Stock Exchange. ReliaStar Life offers individual life
insurance and annuities, employee benefits, and retirement contracts. ReliaStar
Life is admitted to do business in the District of Columbia and all states
except New York. Its home office is at 20 Washington Avenue South, Minneapolis,
Minnesota 55401 (telephone 1-800-621-3750).
The Contracts described in this Prospectus are nonparticipating. The
capital and surplus of ReliaStar Life should be considered as bearing only upon
the ability of ReliaStar Life to meet its obligations under the Contracts.
ReliaStar is a charter member of the Insurance Marketplace Standard
Association ("IMSA"). Companies that belong to IMSA subscribe to a rigorous set
of standards that cover the various aspects of sales and service for
individually sold life insurance and annuities. IMSA members have adopted
policies and procedures that demonstrate a commitment to honesty, fairness and
integrity in all customer contacts involving sales and service of individual
life insurance and annuity products.
THE VARIABLE ACCOUNT
The Variable Account is a separate account of ReliaStar Life established by
the Board of Directors of ReliaStar Life on November 12, 1981, pursuant to the
laws of the State of Minnesota. The Variable Account is registered with the
Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940, as amended ("1940 Act"). Such registration does
not involve supervision by the Commission of the management or investment
policies or practices of the Variable Account, ReliaStar Life or the Portfolios.
ReliaStar Life has complete ownership and control of the assets in the Variable
Account, but these assets are held separately from ReliaStar Life's other assets
and are not part of ReliaStar Life's General Account.
The portion of the assets of the Variable Account equal to the reserves and
other contract liabilities of the Variable Account will not be charged with
liabilities incurred in any other business that ReliaStar Life may conduct.
ReliaStar Life has the right to transfer to its General Account any assets of
the Variable Account which are in excess of such reserves and other liabilities.
The income, if any, and gains, and losses, realized or unrealized, of the
Variable Account will be credited to or charged against the Variable Account in
accordance with the contracts supported by the Variable Account, without regard
to the other income, gains or losses of ReliaStar Life.
Purchase payments allocated to the Variable Account under a Contract are
invested in one or more Sub-Accounts of the Variable Account, as selected by
you, the Owner. The future Variable Account Contract Value depends primarily on
the investment performance of the Investment Funds whose shares are held in the
Sub-Accounts selected.
12
<PAGE>
INVESTMENTS OF THE VARIABLE ACCOUNT
When you apply for a Contract, you can allocate purchase payments to one or
more of the Sub-Accounts. There are currently 29 Sub-Accounts. Each Sub-Account
invests in shares of one of the Investment Funds at its net asset value. As
Owner, you can change a purchase payment allocation for future purchase payments
and can transfer all or part of the values in a Sub-Account to another
Sub-Account. However, you are only permitted to participate in a maximum of 17
Sub-Accounts over the lifetime of your Contract. Upon participation in the
seventeenth Sub-Account since the issue of the Contract you would only be able
to transfer within the 17 Sub-Accounts already utilized and which are still
available. For example, assume that you select seven investment options. Later
you transfer out of all of your seven initial selections and choose 10 different
options, none of which are the same as your original seven selections. You have
now used your maximum selection of 17 Sub-Accounts. You can still allocate
purchase payments or transfers among any of the 17 Sub-Accounts you have
previously selected. However, you cannot allocate funds to the remaining
Sub-Accounts. An Owner may make partial or complete transfers to the Fixed
Account from the Variable Account at any time.
The following chart lists the Investment Funds and the investment advisers
and sub-advisers to the Funds, and provides summary information regarding the
investment objective and characteristic portfolio investments of each Fund.
INVESTMENT FUNDS
<TABLE>
<CAPTION>
ADVISER/
FUND GROUP FUND SUBADVISER MONEY MARKET FIXED INCOME GROWTH & INCOME
=================== ================ ===================== ============== ============== =================
<S> <C> <C> <C> <C> <C>
Alger Alger American Fred Alger
American Growth Management, Inc.
New York, N.Y. Portfolio
--------------------------------------------------------------------------------------
Alger American Fred Alger
MidCap Management, Inc.
Growth
Portfolio
--------------------------------------------------------------------------------------
Alger American Fred Alger
Small Management, Inc.
Capitalization
Portfolio
==========================================================================================================
Fidelity VIP Fidelity Management X
Investments(R) Equity-Income & Research Company
Boston, Mass. Portfolio
--------------------------------------------------------------------------------------
VIP Growth Fidelity Management
Portfolio & Research Company
--------------------------------------------------------------------------------------
VIP Fidelity Management X
High Income & Research Company
Portfolio
--------------------------------------------------------------------------------------
VIP Fidelity Management X
Money Market & Research Company
Portfolio
--------------------------------------------------------------------------------------
VIP II Fidelity Management
Contrafund & Research Company
Portfolio
--------------------------------------------------------------------------------------
VIP II Fidelity Management X
Index 500 & Research Company
Portfolio
--------------------------------------------------------------------------------------
Fidelity VIP II Fidelity Management X
Investments(R) Investment & Research Company
is a registered Grade Bond
trademark of FMR Portfolio
Corp.
==========================================================================================================
[WIDE TABLE CONTINUED FROM ABOVE]
<CAPTION>
PRIMARY
FUND GROUP INTERNATIONAL BALANCED GROWTH AGGRESSIVE GROWTH OBJECTIVE(S) INVESTMENTS
=================== =============== ========== ======== ================== =========================== =======================
<S> <C> <C> <C> <C> <C> <C>
Alger X Long-term capital Equity securities of
American appreciation large companies
New York, N.Y.
----------------------------------------------------------------------------------------------------------
X Long-term capital Equity securities
appreciation within the range of
S&P MidCap 400
Index
----------------------------------------------------------------------------------------------------------
Long-term capital Equity securities
X appreciation within the range of
Russell 2000 Growth
or S&P SmallCap 600
Indexes
==============================================================================================================================
Fidelity Reasonable income; Income-producing
Investments(R) also considers potential equity securities and
Boston, Mass. for capital appreciation debt obligations
----------------------------------------------------------------------------------------------------------
X Capital appreciation Common stocks
----------------------------------------------------------------------------------------------------------
High current income Income-producing
debt securities,
preferred stocks and
convertible securities,
with an emphasis
on lower-quality
debt securities
----------------------------------------------------------------------------------------------------------
High level of U.S. dollar-
current income consistent denominated money
with preservation of market securities
capital and liquidity
----------------------------------------------------------------------------------------------------------
X Capital appreciation Securities of
companies whose
value the adviser
believes is not
fully recognized
by the public
----------------------------------------------------------------------------------------------------------
Total return that Common stocks of
corresponds to that of S&P 500
S&P 500 Index
----------------------------------------------------------------------------------------------------------
Fidelity High current income Investment-grade
Investments(R) consistent with intermediate fixed
is a registered preservation of capital income securities
trademark of FMR
Corp.
==============================================================================================================================
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
ADVISER/
FUND GROUP FUND SUBADVISER MONEY MARKET FIXED INCOME GROWTH & INCOME
================== ================= ====================== ============== ============== =================
<S> <C> <C> <C> <C> <C>
Janus Aspen Series Janus
Aggressive Capital
Denver, Co. Growth Corporation
Portfolio
---------------------------------------------------------------------------------------
Aspen Series Janus
Growth Capital
Portfolio Corporation
---------------------------------------------------------------------------------------
Aspen Series Janus
International Capital
Growth Corporation
Portfolio
---------------------------------------------------------------------------------------
Aspen Series Janus
Worldwide Capital
Growth Corporation
Portfolio
===========================================================================================================
Neuberger Advisers Neuberger Berman X
Berman Management Management Inc./
Trust Limited Neuberger Berman,
Maturity Bond LLC
Portfolio
---------------------------------------------------------------------------------------
New York, N.Y. Advisers Neuberger Berman
Management Management Inc./
Trust Partners Neuberger Berman,
Portfolio LLC
---------------------------------------------------------------------------------------
Advisers Neuberger Berman
Management Management Inc./
Trust Socially Neuberger Berman,
Responsive LLC
Portfolio
===========================================================================================================
Northstar Emerging Northstar Investment
Growth Management
Stamford, Conn. Portfolio Corporation
---------------------------------------------------------------------------------------
Growth + Value Northstar Investment
Portfolio Management
Corporation/
Navellier Fund
Management, Inc.
---------------------------------------------------------------------------------------
High Yield Northstar Investment X
Portfolio Management
Corporation
---------------------------------------------------------------------------------------
International Northstar Investment
Value Portfolio Management
Corporation/Brandes
Investment Partners,
L.P.
---------------------------------------------------------------------------------------
Research Northstar Investment
Enhanced Management
Index Portfolio Corporation/
J.P. Morgan
Investment
Management Inc.
===========================================================================================================
[WIDE TABLE CONTINUED FROM ABOVE]
<CAPTION>
PRIMARY
FUND GROUP INTERNATIONAL BALANCED GROWTH AGGRESSIVE GROWTH OBJECTIVE(S) INVESTMENTS
================== =============== ========== ======== ================== ======================== ======================
<S> <C> <C> <C> <C> <C> <C>
Janus X Long-term growth of Nondiversified
capital portfolio
Denver, Co. of common stocks
-----------------------------------------------------------------------------------------------------
Long-term capital Diversified common
X growth stocks
-----------------------------------------------------------------------------------------------------
X Long-term capital Foreign issuers of
growth common stocks
-----------------------------------------------------------------------------------------------------
X Long-term capital Foreign and domestic
growth common stocks
=========================================================================================================================
Neuberger Highest available Short to
Berman current income intermediate term
consistent with investment-grade debt
liquidity and low securities
risk to principal;
total return is
a secondary goal
-----------------------------------------------------------------------------------------------------
New York, N.Y. X Growth of capital Common stocks of
medium- to large-
capitalization
companies
-----------------------------------------------------------------------------------------------------
X Long-term Common stocks of
growth of capital medium- to large-
by investing primarily capitalization
in companies that companies
meet financial and
social criteria
=========================================================================================================================
Northstar X Long-term capital Common stocks
appreciation
Stamford, Conn.
-----------------------------------------------------------------------------------------------------
X Capital appreciation Equity securities
from investing in a
diversified portfolio
of equity securities
-----------------------------------------------------------------------------------------------------
High current yield and High-yield bonds
capital appreciation
-----------------------------------------------------------------------------------------------------
X Long-term capital International equities
appreciation
-----------------------------------------------------------------------------------------------------
X Long-term capital Common stocks
appreciation
=========================================================================================================================
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
ADVISER/
FUND GROUP FUND SUBADVISER MONEY MARKET FIXED INCOME GROWTH & INCOME
==================== =================== =================== ============== ============== =================
<S> <C> <C> <C> <C> <C>
OCC OCC Accumulation OpCap
Trust Equity Advisors
New York, N.Y. Portfolio
----------------------------------------------------------------------------------------
OCC Accumulation OpCap
Trust Global Advisors
Equity Portfolio
----------------------------------------------------------------------------------------
OCC Accumulation OpCap
Trust Managed Advisors
Portfolio
----------------------------------------------------------------------------------------
OCC Accumulation OpCap
Trust Small Advisors
Cap Portfolio
============================================================================================================
Putnam Putnam Putnam Investment X
Investments, Inc. VT Growth and Management, Inc.
Income Fund -
Class IA Shares
----------------------------------------------------------------------------------------
Boston, Mass. Putnam Putnam Investment
VT New Management, Inc.
Opportunities
Fund -
Class IA Shares
----------------------------------------------------------------------------------------
Putnam Putnam Investment
VT Voyager Fund Management, Inc.
- Class IA Shares
============================================================================================================
[WIDE TABLE CONTINUED FROM ABOVE]
<CAPTION>
PRIMARY
FUND GROUP INTERNATIONAL BALANCED GROWTH AGGRESSIVE GROWTH OBJECTIVE(S) INVESTMENTS
==================== =============== ========== ======== ================== ====================== =====================
<S> <C> <C> <C> <C> <C> <C>
OCC X Long-term capital Securities of
appreciation undervalued
New York, N.Y. companies
----------------------------------------------------------------------------------------------------
X Long-term capital Global investments in
appreciation equity securities
----------------------------------------------------------------------------------------------------
X Growth of capital Common stocks,
bonds and cash
equivalents
----------------------------------------------------------------------------------------------------
X Capital appreciation Equity securities of
companies under
$1 billion
========================================================================================================================
Putnam Capital growth & Common stocks
Investments, Inc. current income
----------------------------------------------------------------------------------------------------
Boston, Mass. X Long-term capital Common stocks
appreciation
----------------------------------------------------------------------------------------------------
X Capital appreciation Common stocks
========================================================================================================================
</TABLE>
15
<PAGE>
More detailed information about the Investment Funds can be found in the
current prospectus and Statement of Additional Information for each Fund. These
prospectuses accompany this Prospectus in a book entitled "Variable Product
Investment Options." The Investment Fund prospectuses should be read carefully
before any allocation to, or transfers among, the Sub-Accounts.
THERE IS NO ASSURANCE THAT THE STATED OBJECTIVES AND POLICIES OF ANY OF THE
INVESTMENT FUNDS WILL BE ACHIEVED.
ReliaStar Life reserves the right, subject to compliance with the law, to
offer additional Investment Funds.
The Investment Funds are available to registered separate accounts of
ReliaStar Life and to insurance companies other than ReliaStar Life, offering
variable annuity contracts and variable life insurance policies. ReliaStar Life
currently does not foresee any disadvantages to Owners resulting from the
Investment Funds selling shares to fund products other than the Contracts.
However, there is a possibility that a material conflict may arise between
Owners whose Contract Values are allocated to the Variable Account and the
owners of variable life insurance policies and variable annuity contracts issued
by ReliaStar Life or by such other companies whose assets are allocated to one
or more other separate accounts investing in any one of the Investment Funds. In
the event of a material conflict, ReliaStar Life will take any necessary steps,
including removing the Variable Account from that Investment Fund, to resolve
the matter. The Board of Directors or Trustees of each Investment Fund will
monitor events in order to identify any material conflicts that possibly may
arise and determine what action, if any, should be taken in response to those
events or conflicts. See each individual Investment Fund prospectus for more
information.
REINVESTMENT
The Investment Funds have as a policy the distribution of income, dividends
and capital gains. However, under the Contracts there is an automatic
reinvestment of such distributions.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENT FUND SHARES
ReliaStar Life reserves the right, subject to applicable law and any
required regulatory approvals, to make additions to, deletions from, or
substitutions for the shares that are held in the Variable Account or that the
Variable Account may purchase:
o ReliaStar Life reserves the right to establish additional Sub-Accounts
of the Variable Account, each of which would invest in shares
corresponding to a new or another investment company portfolio or
delete Sub-Accounts. Any new Sub-Accounts may be made available to
existing Contract Owners on a basis to be determined by ReliaStar
Life.
o ReliaStar Life may, in its sole discretion, eliminate one or more
Sub-Accounts, or close such Sub-Accounts to new premium or transfers,
if marketing needs, tax or regulatory considerations or investment
conditions warrant.
o If the shares of a portfolio of an Investment Fund are no longer
available for investment or if in ReliaStar Life's judgment further
investment in any portfolio of an Investment Fund should become
inappropriate in view of the purposes of the Variable Account, or
because, in our sole discretion, for marketing, tax, regulatory
requirements or investment conditions, ReliaStar Life may redeem the
shares of that portfolio and substitute shares of another registered
open-end investment company.
In the event of any such substitution, deletion or change, we may make such
changes as may be necessary or appropriate to reflect such substitution,
deletion or change. If all or a portion of your investments are allocated to any
of the current funds that are being substituted for or deleted on the date such
action is announced, you may transfer the portion of the Accumulation Value
affected without payment of a transfer charge to available Sub-Accounts.
If deemed by us to be in the best interests of persons having voting rights
under the Policies, the Variable Account may be operated as a management company
under the Investment Company Act of 1940, it may be deregistered under that Act
in the event such registration is no longer required, or it may be combined with
our other separate accounts.
CHARGES MADE BY RELIASTAR LIFE
SURRENDER CHARGE (CONTINGENT DEFERRED SALES CHARGE)
No deduction for a sales charge is made from purchase payments. However, a
surrender charge (which may be deemed a contingent deferred sales charge) may be
assessed. This charge is intended to reimburse ReliaStar Life for expenses
relating to the sale of the Contracts, including commissions to sales personnel,
costs of sales material and other promotional activities and sales
administration costs.
16
<PAGE>
If part or all of a Contract's value is surrendered, or, except for
contracts issued in the State of Washington, if the Contract's Annuity
Commencement Date occurs within the first two years after the Contract is
issued, surrender charges may be assessed by ReliaStar Life.
COMPUTATION OF SURRENDER CHARGES -- For purposes of determining surrender
charges, surrenders shall first be taken from Old Purchase Payments until they
are exhausted, then from New Purchase Payments until they are exhausted, and
thereafter from Contract Earnings.
o "New Purchase Payments" are those Contract purchase payments received
by ReliaStar Life during the Contract Year in which the surrender
occurs or in the five immediately preceding Contract Years;
o "Old Purchase Payments" are those Contract purchase payments not
defined as New Purchase Payments; and
o "Contract Earnings" at any Valuation Date is the Contract Value less
the sum of New Purchase Payments and Old Purchase Payments.
TOTAL SURRENDERS; AMOUNT OF SURRENDER CHARGE -- The surrender charge for a
total surrender is determined by multiplying the amount of each New Purchase
Payment surrendered, that is not eligible for a free surrender, by the
applicable surrender charge percentage as set forth in the following table:
SURRENDER CHARGE PERCENTAGE TABLE
----------------------------------------------------
CONTRACT YEAR OF SURRENDER SURRENDER CHARGE AS A
MINUS CONTRACT YEAR OF PERCENTAGE OF EACH
PURCHASE PAYMENT PURCHASE PAYMENT
-------------------------- ---------------------
0-1 6%
2-3 5
4-5 4
6 and later 0
FREE SURRENDERS -- Surrenders taken from the following amounts ("Free
Surrenders") are not subject to a surrender charge during any Contract Year: (a)
any Old Purchase Payments not already surrendered; (b) 10% of all New Purchase
Payments that have been received by ReliaStar Life (with the exception of
Systematic Withdrawals, this does not apply to surrenders made during the first
Contract Year nor to any surrenders after the first surrender made in each
Contract Year thereafter); and (c) any Contract Earnings being surrendered.
PARTIAL SURRENDERS -- The amount of the partial surrender subject to a
surrender charge is determined by dividing (a) the portion of each New Purchase
Payment to be surrendered which is not eligible for a Free Surrender by (b) one
minus the applicable surrender charge percentage from the Surrender Charge
Percentage Table set forth above. The resulting amount for each New Purchase
Payment to be surrendered is then multiplied by the applicable surrender charge
percentage from the Surrender Charge Percentage Table shown above to arrive at
the amount of surrender charge to be assessed. The total of the amount
surrendered will be subject to the surrender charge.
If the surrender charge is less than the Contract Value that remains
immediately after surrender, it will be deducted proportionately from the
Sub-Accounts that make up such Contract Value. If the surrender charge is more
than such remaining Contract Value, the portion of the surrender charge that can
be deducted from such remaining Contract Value will be so deducted and the
balance will be deducted from the surrender payment. In computing surrenders,
any portion of a surrender charge that is deducted from the remaining Contract
Value will be deemed a part of the surrender.
ANNUAL CONTRACT CHARGE
Each year on the Contract Anniversary, ReliaStar Life deducts an Annual
Contract Charge of $30 from the Contract Value. ReliaStar Life will not increase
the Annual Contract Charge. In any Contract Year when a Contract is surrendered
for its full value on other than the Contract Anniversary, the Annual Contract
Charge will be deducted at the time of such surrender. If a fixed annuity
payment or a variable annuity payment is selected, then the Annual Contract
Charge will be assessed and deducted in equal installments from each annuity
payment. When more than one annuity is selected, then a separate Annual Contract
Charge will be assessed against each annuity.
WAIVER OF CHARGES
WAIVER OF ANNUAL CONTRACT CHARGE -- ReliaStar Life reserves the right to
waive the Annual Contract Charge for contracts applied for on or after May 30,
1998 where the cumulative purchase payments, less any cumulative partial
surrenders,
17
<PAGE>
exceed $50,000. ReliaStar Life reserves the right to reinstate the Annual
Contract Charge on Contracts previously qualifying for the waiver, if the
cumulative purchase payments, less any cumulative partial surrenders, equals or
falls below $50,000 or if ReliaStar Life withdraws the waiver of the Charge.
ReliaStar Life will not waive the Annual Contract Charges assessed and
deducted from annuity payments.
WAIVER OF SURRENDER CHARGE -- Under certain circumstances as defined in the
Contract and the Rider(s) related to the provisions below, beginning one year
after the effectiveness of the Rider(s) ReliaStar Life will permit the Contract
Owner to access his or her money in the Contract. ReliaStar Life will permit a
full or partial surrender without a surrender charge (1) if the Contract Owner
becomes terminally ill; (2) if the Contract Owner becomes confined to a skilled
nursing facility or hospital; and (3) if and so long as the Contract Owner is
disabled. If the Contract Owner is unemployed for at least 90 consecutive days
the Owner can take, on a one time basis, up to 50% of the Contract Value of the
Contract without incurring a surrender charge.
These waivers are subject to the specific provisions of the Rider(s) and
may not be available in all states.
MORTALITY RISK PREMIUM
The variable annuity payments made to Annuitants will vary in accordance
with the investment performance of the Sub-Accounts selected by the Owner.
However, they will not be affected by the mortality experience (death rate) of
persons receiving annuity payments from the Variable Account. ReliaStar Life
assumes this "mortality risk" and has guaranteed the annuity rates incorporated
in the Contract, which cannot be changed.
To compensate ReliaStar Life for assuming this mortality risk and the
mortality risk that Beneficiaries of Annuitants dying before the Annuity
Commencement Date may receive amounts in excess of the then current Contract
Value (see "Death Benefit Before the Annuity Commencement Date"), ReliaStar Life
deducts a Mortality Risk Premium from the Variable Account Contract Value. The
deduction is made daily in an amount that is equal to an annual rate of 0.85% of
the daily Contract Values under the Variable Account.
For Contracts with initial premium of $1 million or more that are sold
under the provisions of a special rider, prior to the Annuity Commencement Date
an amount equal to 0.05% of the Contract Value on the Contract Anniversary is
waived and re-credited to the Contract on the next succeeding day. Re-credited
amounts are applied to the purchase of additional Sub-Account Accumulation
Units.
ReliaStar Life may not change the rate charged for the Mortality Risk
Premium under any Contract.
EXPENSE RISK PREMIUM
ReliaStar Life will not increase charges for administrative expenses
regardless of its actual expenses. To compensate ReliaStar Life for assuming
this expense risk, ReliaStar Life deducts an Expense Risk Premium from the
Variable Account Contract Value. The deduction is made daily in an amount that
is equal to an annual rate of 0.40% of the daily Variable Account Contract
Values.
ReliaStar Life may not change the rate of the Expense Risk Premium under
any Contract.
ADMINISTRATION CHARGE
ReliaStar Life deducts a daily Administration Charge from the Variable
Account Contract Value in an amount equal to an annual rate of 0.15% of the
daily Contract Values under the Variable Account. This charge is deducted to
reimburse ReliaStar Life for the cost of providing administrative services under
the Contracts and the Variable Account. ReliaStar Life may not change the rate
of the Administration Charge under any Contract.
PREMIUM AND OTHER TAXES
Various states and other governmental entities levy a premium tax,
currently ranging up to 3.5%, on annuity contracts issued by insurance
companies. If the Owner of the Contract lives in a governmental jurisdiction
that levies such a tax, ReliaStar Life will pay the taxes when due and reserves
the right to deduct the amount of the tax either from purchase payments as they
are received or from the Contract Value at the Annuity Commencement Date
(immediately before the Contract Value is applied to an Annuity Form) as
permitted or required by applicable law.
Premium tax rates are subject to change from time to time by legislative
and other governmental action. The timing of tax levies also varies from one
taxing authority to another. Consequently, in many cases the purchaser of a
Contract will not
18
<PAGE>
be able to accurately determine the premium tax applicable to the Contract.
ReliaStar Life reserves the right to deduct charges for any other tax or
economic burden resulting from the application of the tax laws that it
determines to be applicable to the Contract.
GENERAL: REDUCTION OR WAIVER OF CHARGES OR MINIMUM PURCHASE PAYMENTS
Any of the charges under the Contract, as well as the minimum purchase
payment requirements set forth in this Prospectus, may be reduced due to special
circumstances that result in lower sales, administrative or mortality expenses.
For example, special circumstances may exist in connection with group or
sponsored arrangements, sales to ReliaStar Life's policy and Contract Owners or
those of affiliated insurance companies, or sales to employees or clients of
ReliaStar Life or ReliaStar Life's affiliates. The amount of any reductions will
reflect the reduced sales effort and administrative costs resulting from, or the
different mortality experience expected as a result of, the special
circumstances. Reductions will not be unfairly discriminatory against any
person, including the affected policy or Contract owners and owners of all other
contracts funded by the Variable Account.
EXPENSES OF THE INVESTMENT FUNDS
There are fees deducted from and expenses paid out of the assets of the
Investment Funds that are described in the accompanying prospectuses for the
Funds.
ADMINISTRATION OF THE CONTRACTS
ReliaStar Life assumes the responsibilities of performing certain
administrative functions relating to the Contracts and the Variable Account.
These functions include, among other things, maintaining the books and records
of the Variable Account and the Sub-Accounts, and maintaining records of the
name, address, taxpayer identification number, Contract number, type of Contract
issued to each Owner, Contract Value and other pertinent information necessary
to the administration and operation of the Contracts. These administrative
functions are located at: the Variable Annuity Administration Center, P.O. Box
59218, Minneapolis, Minnesota 55459-0218; Telephone 1-800-621-3750.
THE CONTRACTS
The Contracts are designed for sale as non-qualified contracts and also for
retirement plans which may be Qualified Plans. A single purchase payment can be
made for a deferred annuity, or subsequent purchase payments can be made up to
the maximum level of funding set forth below. The minimum amount ReliaStar Life
will accept as an initial purchase payment is $5,000 for Non-Qualified Contracts
and $2,000 for Qualified Contracts. ReliaStar Life may choose not to accept any
subsequent purchase payment for a Non-Qualified Contract if it is less than $500
and for a Qualified Contract if it is less than $200. ReliaStar Life may also
choose not to accept any subsequent purchase payment if the purchase payment
together with the Contract Value at the next Valuation Date exceeds $1,000,000.
Any purchase payment not accepted by ReliaStar Life will be refunded. Contracts
with an initial purchase payment of $1 million or more that are sold under the
provisions of a special rider contain a number of specialized provisions, as
outlined in this Prospectus. These provisions may be more or less advantageous
than provisions applicable to contracts with less than $1 million of initial
premium. ReliaStar Life reserves the right to accept smaller or larger initial
and subsequent purchase payments in connection with special circumstances, such
as sales through group or sponsored arrangements.
ALLOCATION OF PURCHASE PAYMENTS
Purchase payments can be allocated by the Owner to up to 17 of the
available Sub-Accounts of the Variable Account selected and/or to the Fixed
Account. (See Appendix A.) The Fixed Account is not available to Contract
Owners in the States of Maryland, Oregon, South Carolina and Washington. Any
purchase payment or portion thereof for which no allocation election is made
will be returned to the Owner.
The initial purchase payment will be allocated not later than two business
days after receipt, if the application and all information necessary for
processing the Contract are complete. ReliaStar Life may retain purchase
payments for up to five business days while attempting to complete an incomplete
application. If the application cannot be made complete within this period, the
applicant will be informed of the reasons for the delay and the purchase payment
will be returned immediately. Once the completed application is received, the
payment must be allocated within two business days. ReliaStar Life will
19
<PAGE>
make inquiry to discover any missing information related to subsequent payments.
For any subsequent purchase payments, the payments will be credited at the
Sub-Account Accumulation Unit Value next determined after receipt of the
purchase payment.
Upon allocation to Sub-Accounts of the Variable Account, a purchase payment
is converted into Accumulation Units of the Sub-Account. The amount of the
purchase payment allocated to a particular Sub-Account is divided by the value
of an Accumulation Unit for the Sub-Account to determine the number of
Accumulation Units of the Sub-Account to be held in the Variable Account with
respect to the Contract. The net investment results of each Sub-Account vary
primarily with the investment performance of the Investment Fund whose shares
are held in the Sub-Account.
An Investment Fund may impose a minimum purchase requirement. If that
minimum purchase requirement exceeds the aggregate of all purchase payments
received by ReliaStar Life, less any redemption of Investment Fund shares
resulting from transfers or surrenders, on any given day that are to be applied
to a Sub-Account for the purchase of shares of such Investment Fund, such
purchase payments will be refunded.
SUB-ACCOUNT ACCUMULATION UNIT VALUE
Each Sub-Account Accumulation Unit was initially valued at $10 when the
first Investment Fund shares were purchased. Thereafter the value of each
Sub-Account Accumulation Unit will vary up or down according to a Net Investment
Factor, which is primarily based on the investment performance of the applicable
Investment Fund. Investment Fund shares in the Sub-Accounts will be valued at
their net asset value.
Dividend and capital gain distributions from an Investment Fund will be
automatically reinvested in additional shares of such Investment Fund and
allocated to the appropriate Sub-Account. The number of Sub-Account Accumulation
Units does not increase because of the additional shares, but the Accumulation
Unit value may increase.
NET INVESTMENT FACTOR
The Net Investment Factor is an index number which reflects charges under
the Contract and the investment performance during a Valuation Period of the
Investment Fund whose shares are held in the particular Sub-Account. If the Net
Investment Factor is greater than one, the value of a Sub-Account Accumulation
Unit has increased. If the Net Investment Factor is less than one, the value of
a Sub-Account Accumulation Unit has decreased. The Net Investment Factor is
determined by dividing (1) by (2) then subtracting (3) from the result, where:
(1) is the net result of:
(a) the net asset value per share of the Investment Fund shares held in
the Sub-Account, determined at the end of the current Valuation
Period, plus
(b) the per share amount of any dividend or capital gain distributions
made on the Investment Fund shares held in the Sub-Account during the
current Valuation Period, plus or minus
(c) a per share charge or credit for any taxes reserved for which
ReliaStar Life determines to have resulted from the investment
operations of the Sub-Account and to be applicable to the Contract;
(2) is the net result of:
(a) the net asset value per share of the Investment Fund shares held in
the Sub-Account, determined at the end of the last prior Valuation
Period, plus or minus
(b) a per share charge or credit for any taxes reserved for during the
last prior Valuation Period which ReliaStar Life determines to have
resulted from the investment operations of the Sub-Account and to be
applicable to the Contract; and
(3) is a factor representing the Mortality Risk Premium, the Expense Risk
Premium and the Administration Charge deducted from the Sub-Account which
factor is equal, on an annual basis, to 1.40% of the daily net asset value
of the Sub-Account.
DEATH BENEFIT BEFORE THE ANNUITY COMMENCEMENT DATE
If the Owner, including any joint Owner, dies before the Annuity
Commencement Date, the Beneficiary will be entitled to receive the Death
Benefit. For this purpose the Death Benefit for Contracts with less than $1
million of initial premium will be:
(1) if any Owner (including the Annuitant) dies on or before the first day of
the month following the Owner's 85th birthday, the greater of (i) the
Contract Value on the Death Benefit Valuation Date, or (ii) the sum of the
purchase
20
<PAGE>
payments received by ReliaStar Life under the Contract to the Death Benefit
Valuation Date, less any surrender payments previously made by ReliaStar
Life; or (iii) the Contract Value on the Specified Contract Anniversary
(immediately preceding the Owner's death), plus any Purchase Payments and
reduced by any surrender payments since that anniversary;
(2) if any Owner (including the Annuitant) dies after the first day of the
month following the Owner's 85th birthday, the Contract Value on the Death
Benefit Valuation Date.
The Death Benefit for Contracts with $1 million of initial premium or more
will be the Contract Value minus surrender charges.
If a single sum is requested, it will be paid within seven days after the
Death Benefit Valuation Date. If an Annuity Form is requested, it may be any
Annuity Form permitted by Section 72(s) of the Code and which ReliaStar Life is
willing to issue. An Annuity Form selection must be in writing and must be
received by ReliaStar Life within 60 days after the date of the Owner's death,
otherwise the Death Benefit as of the Death Benefit Valuation Date will be paid
in a single sum to the Beneficiary and the Contract will be canceled.
If the only Beneficiary is the Owner's surviving spouse, such spouse may
continue the Contract as the Owner, and then (1) select a single sum payment, or
(2) select any Annuity Form which does not exceed such spouse's life expectancy.
If the Beneficiary elects to receive annuity payments under an Annuity
Form, the amount and duration of payments may vary depending on the Annuity Form
selected and whether fixed and/or variable annuity payments are requested.
(See "Annuity Provisions.")
DEATH BENEFIT AFTER THE ANNUITY COMMENCEMENT DATE
If the Annuitant dies after the Annuity Commencement Date, the Death
Benefit, if any, shall be as stated in the Annuity Form in effect.
SURRENDER (REDEMPTION)
If a written request is received by ReliaStar Life from the Owner before
the Annuity Commencement Date, all or part of the Contract Value will be paid
to the Owner after deducting any applicable surrender charge and taxes. (See
"Surrender Charge (Contingent Deferred Sales Charge).")
Partial surrenders must be at least $500. No partial surrender can cause
the Contract Value to fall below $1,000. If a total surrender occurs other than
on a Contract Anniversary the Annual Contract Charge will be deducted from the
Contract Value before the surrender payment is made. ReliaStar Life reserves the
right to limit the number of partial surrenders, and to assess a processing fee
not to exceed the lesser of 2% of the partial surrender amount or $25. No
processing fee will be charged in connection with total surrenders.
Surrenders must be consented to by each collateral assignee. ReliaStar Life
reserves the right to require that surrenders in excess of $50,000 be signature
guaranteed by a member firm of the New York, American, Boston, Midwest,
Philadelphia, or Pacific Stock Exchange, or by a commercial bank (not a savings
bank) which is a member of the Federal Deposit Insurance Corporation, or, in
certain cases, by a member firm of the National Association of Securities
Dealers, Inc. that has entered into an appropriate agreement with ReliaStar
Life.
ReliaStar Life may require that the Contract be returned before a surrender
takes place. A surrender will take place on the next Valuation Date after the
requirements for surrender are completed and payment will be made within seven
days after such Valuation Date. Unless the Owner requests a partial surrender to
be made from the Fixed Account or particular Sub-Accounts, a partial surrender
will be taken proportionately from the Fixed Account and all Sub-Accounts on a
basis that reflects their proportionate percentage of the Contract Value.
If the Contract Value after all charges is less than $1,000, ReliaStar Life
can cancel the Contract on any Contract Anniversary, or if such Contract
Anniversary is not a Valuation Date, on the next Valuation Date thereafter, by
paying to the Owner the Contract Value as of such Valuation Date.
If the Contract is purchased as a "tax-sheltered annuity" under Section
403(b) of the Internal Revenue Code (the "Code"), it is subject to certain
restrictions on redemption imposed by Section 403(b)(11) of the Code. (See
"Tax-Sheltered Annuities.")
Surrender payments may be taxable and in addition may be subject to a 10%
tax penalty if before age 59 1/2. Consideration should be given to the tax
implications of a surrender before making a surrender request, including a
surrender in connection with a Qualified Plan.
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SYSTEMATIC WITHDRAWALS
Systematic Withdrawals, which are a specialized form of Partial Surrenders
(see "Surrender (Redemption)"), are offered for both Qualified Plan Contracts
and for Non-Qualified Contracts. The Owner may elect to take Systematic
Withdrawals from Sub-Accounts by surrendering a specified dollar amount or
percentage of cumulative purchase payments on a monthly, quarterly, semi-annual
or annual basis. Systematic Withdrawals can be taken from Variable Account
Contract Value and/or Fixed Account Contract Value, but are limited annually to
10% of total cumulative purchase payments made under the Contract. A Surrender
Charge will be imposed on the amount of any Systematic Withdrawal, which is not
a Free Surrender. (See "Surrender Charge (Contingent Deferred Sales Charge).")
Systematic Withdrawals can be discontinued by the Owner at any time by notifying
ReliaStar Life in writing.
ReliaStar Life reserves the right to modify or discontinue offering
Systematic Withdrawals; however, any such modification or discontinuation will
not affect any Systematic Withdrawal programs already commenced. While ReliaStar
Life does not currently charge a processing fee for Partial Surrenders under
this program, it reserves the right to charge a processing fee not to exceed the
lesser of 2% of the Systematic Withdrawal payment or $25.
Systematic Withdrawals may be subject to tax, including a penalty tax, and
you should consult with your tax advisor before requesting any Systematic
Withdrawal. (See "Taxation of Annuities.")
Contract Owners interested in participating in the Systematic Withdrawal
program can obtain a separate application form and full information about the
program and its restrictions from their registered representative.
TRANSFERS
Before the Annuity Commencement Date, the Owner can transfer amounts
between Sub-Accounts or from the Sub-Accounts to the Fixed Account. Subject to
certain restrictions, amounts can also be transferred from the Fixed Account to
the Sub-Accounts. Currently, these are our methods by which transfers may be
made: in writing, by telephone or fax, by Dollar Cost Averaging and by Portfolio
Rebalancing.
WRITTEN TRANSFERS
BEFORE THE ANNUITY COMMENCEMENT DATE -- Before the Annuity Commencement
Date the Owner may request a transfer in writing, subject to any conditions or
charges the Investment Funds whose shares are involved may impose, of all or
part of a Sub-Account's value to other Sub-Accounts or to the Fixed Account. The
transfer will be made on the first Valuation Date after the request for such a
transfer is received by ReliaStar Life. Before the Annuity Commencement Date,
transfers may also be made from the Fixed Account to the Variable Account,
provided, that
o transfers may only be made during the period starting 30 days before
and ending 30 days after the Contract Anniversary, and only one
transfer may be made during each such period,
o no more than 50% of the Fixed Account Contract Value may be the
subject of any such transfer (unless the balance, after such transfer,
would be less than $1,000, in which case the full Fixed Account
Contract Value may be transferred), and
o such transfer must involve at least $500 (or the total Fixed Account
Contract Value, if less).
Currently, there is no charge for a transfer other than any charge that may
be made by the Funds. The Company reserves the right, however, to charge a
transfer fee not to exceed $25 per transfer and to limit the number of
transfers. For contracts with $1 million of initial premium or more that are
sold under the provisions of a special rider, there is no limit on the number of
transfers allowed in each Contract Year, and the Company will not charge a
transfer fee.
AFTER THE ANNUITY COMMENCEMENT DATE -- After the Annuity Commencement Date,
an Annuitant who has selected Variable Annuity Payments can request transfer of
Annuity Unit values in the same manner and subject to the same requirements as
for an Owner-transfer of Sub-Account Accumulation Unit values.
No transfers may be made to or from the Fixed Account after the Annuity
Commencement Date.
The conditions applicable to Written Transfers also apply to Telephone/Fax
Transfers, Dollar Cost Averaging Transfers, and Portfolio Rebalancing.
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TELEPHONE/FAX INSTRUCTIONS -- An Owner is allowed to enter the following
types of instructions either by telephone or by fax if he or she completes a
telephone/fax instruction authorization form:
o transfers between funds,
o surrenders,
o changes of allocations among fund options,
o change of source funds for systematic withdrawals, and
o change of source funds for variable annuitization payouts.
If you complete the telephone/fax form, you thereby agree that ReliaStar
Life will not be liable for any loss, liability, cost or expense when it acts in
accordance with the telephone/fax instructions received. If a telephone/fax
transaction, is later determined not to have been made by you or was made
without your authorization, and a loss results, you bear the risk of this loss.
Any fax requests are considered telephone requests and are bound by the
conditions in the telephone/fax authorization form. Any fax request should
include your name, daytime telephone number, Contract number and the names of
the Sub-Accounts from which and to which money will be transferred or withdrawn
and the allocation percentage. ReliaStar Life will employ reasonable procedures
to confirm that instructions communicated by telephone are genuine. In the event
ReliaStar Life does not employ such procedures, it may be liable for any losses
due to unauthorized or fraudulent instructions. Such procedures may include,
among others, requiring forms of personal identification prior to acting upon
telephone instructions, providing written confirmation of such instructions
and/or tape recording telephone instructions.
DOLLAR COST AVERAGING TRANSFERS -- You can direct ReliaStar Life to
automatically transfer a fixed dollar amount or a specified percentage of
Sub-Account Value to any one or more other Sub-Accounts or to the Fixed Account.
No transfers from the Fixed Account are permitted under this service. Transfers
may be made on a monthly, quarterly, semi-annual or annual basis. This service
is intended to allow you to utilize "Dollar Cost Averaging," a long-term
investment method which provides for regular, level investments over time.
ReliaStar Life makes no guarantees that Dollar Cost Averaging will result in a
profit or protect against loss. You can discontinue Dollar Cost Averaging at any
time by notifying ReliaStar Life in writing. Contract Owners interested in
Dollar Cost Averaging can obtain an application form and full information
concerning this service and its restrictions from their registered
representatives.
ReliaStar Life reserves the right to modify or discontinue offering Dollar
Cost Averaging. Any such modification or discontinuation would not affect Dollar
Cost Averaging transfer programs already commenced. Although ReliaStar Life
currently charges no fees for transfers made under the Dollar Cost Averaging
program, it reserves the right to charge a processing fee for Dollar Cost
Averaging transfers not to exceed $25 per transfer.
PORTFOLIO REBALANCING SERVICE -- You may request this service if your
Contract Value is at least $25,000. If you request this service, you direct us
to automatically make periodic transfers to maintain your specified percentage
allocation among Sub-Accounts of the Variable Account. You may also have your
allocation of future premium payments changed to be equal to this specified
percentage allocation. Transfers made under this service may be made on a
quarterly, semi-annual, or annual basis. This service is intended to maintain
the allocation you have selected consistent with your personal objectives. This
service can be discontinued if your Contract falls below $10,000.
You can discontinue Portfolio Rebalancing at any time by notifying
ReliaStar Life in writing. Contract Owners interested in Portfolio Rebalancing
can obtain an application form and full information concerning this service and
its restrictions from their registered representatives. ReliaStar Life reserves
the right to modify or discontinue offering Portfolio Rebalancing. Although
ReliaStar Life currently charges no fees for transfers made under the Portfolio
Rebalancing program, it reserves the right to charge a processing fee for
Portfolio Rebalancing transfers not to exceed $25 per transfer.
ASSIGNMENTS
If the Contract is issued pursuant to or in connection with a Qualified
Plan, it cannot be sold, transferred, pledged or assigned to any person or
entity other than ReliaStar Life. In other circumstances, an assignment of the
Contract is permitted, but only before the Annuity Commencement Date, by giving
ReliaStar Life the original or a certified copy of the assignment. ReliaStar
Life shall not be bound by any assignment until it is actually received by
ReliaStar Life and shall not be responsible for the validity of any assignment.
Any payments made or actions taken by ReliaStar Life before ReliaStar Life
actually receives any assignment shall not be affected by the assignment.
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CONTRACT OWNER AND BENEFICIARIES
Unless someone else is named as the Owner in the application for the
Contract, the applicant is the Owner of the Contract and before the Annuity
Commencement Date may exercise all of the Owner's rights under the Contract. No
more than two (2) natural persons may be named as Owner.
The Owner may name a Beneficiary and a Successor Beneficiary. In the event
an Owner dies before the Annuity Commencement Date, the Beneficiary shall
receive a Death Benefit as provided in the Contract. In the event an Owner dies
on or after the Annuity Commencement Date, the Beneficiary, if the Annuity Form
in effect at the Owner's death so provides, may continue receiving payments, be
paid a lump sum, or be paid nothing. If the Beneficiary or Successor Beneficiary
is not living on the date payment is due or if no Beneficiary or Successor
Beneficiary has been named, the Owner's estate will receive the applicable
proceeds.
A person named as an Annuitant, a Beneficiary or a Successor Beneficiary
shall not be entitled to exercise any rights relating to the Contract or to
receive any payments or settlements under the Contract or any Annuity Form,
unless such person is living on the earlier of (a) the day due proof of death of
the Owner, the Annuitant or the Beneficiary, whichever is applicable, is
received by ReliaStar Life or (b) the tenth day after the death of the Owner,
the Annuitant or the Beneficiary, whichever is applicable.
Unless different arrangements have been made with ReliaStar Life by the
Owner, if more than one Beneficiary is entitled to payments from ReliaStar Life
the payments shall be in equal shares.
Before the Annuity Commencement Date, the Owner may change the Annuitant,
the Beneficiary or the Successor Beneficiary by giving ReliaStar Life written
notice of the change, but the change shall not be effective until actually
received by ReliaStar Life. Upon receipt by ReliaStar Life of a notice of
change, the change will be effective as of the date it was signed but shall not
affect any payments made or actions taken by ReliaStar Life before ReliaStar
Life received the notice, and ReliaStar Life shall not be responsible for the
validity of any change.
CONTRACT INQUIRIES
Inquiries regarding a Contract may be made by writing to the ReliaStar Life
Insurance Company, Variable Annuity Administration Center, Route 4300, P.O. Box
59218, Minneapolis, Minnesota 55459-0218, or by calling 1-800-621-3750.
ANNUITY PROVISIONS
ANNUITY COMMENCEMENT DATE
The Owner selects the Annuity Commencement Date, which must be the first
day of a month, when making application for the Contract. The date will be the
first day of the month following the Annuitant's 75th birthday unless an earlier
or later date has been selected by the Owner and, if the date is later, it has
been agreed to by ReliaStar Life. The earliest Annuity Commencement Date is the
issue date. However, if the Annuity Commencement Date selected by the Owner does
not occur on a Valuation Date at least 60 days after the date on which the
Contract was issued, ReliaStar Life reserves the right to adjust the Annuity
Commencement Date to the first Valuation Date after the Annuity Commencement
Date selected by the Owner which is at least 60 days after the Contract issue
date. If the Annuity Commencement Date occurs before the second Contract
Anniversary, ReliaStar Life will deduct Surrender Charges. (See "Surrender
Charge (Contingent Deferred Sales Charge).") The latest Annuity Commencement
Date is the later of the Annuitant's age 85 or 10 years after the Contract
isssue date.
The Owner may change an Annuity Commencement Date selection by written
notice received by ReliaStar Life at least 30 days before both the Annuity
Commencement Date currently in effect and the New Annuity Commencement Date. The
new date selected must satisfy the requirements for an Annuity Commencement
Date.
ANNUITY FORM SELECTION
The Owner may select a Variable Annuity Form, a Fixed Annuity Form, or
both, with payments starting at the Annuity Commencement Date when making
application for the Contract. Thereafter, the Owner may change the Annuity
Form(s) by written notice received by ReliaStar Life before the Annuity
Commencement Date. If no election has been made before the Annuity Commencement
Date, ReliaStar Life will apply the Fixed Account Contract Value to provide a
Fixed Annuity and the Variable Account Contract Value to provide a Variable
Annuity, both in the form of a Life Annuity with Payments Guaranteed for 10
years (120 months), which shall be automatically effective.
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ANNUITY FORMS
Variable Annuity Payments and Fixed Annuity Payments are available in any
of the following Annuity Forms:
LIFE ANNUITY -- An annuity payable on the first day of each month during
the Annuitant's life, starting with the first payment due according to the
Contract. Payments cease with the payment made on the first day of the month in
which the Annuitant's death occurs. IT WOULD BE POSSIBLE UNDER THIS ANNUITY FORM
FOR THE ANNUITANT TO RECEIVE ONLY ONE PAYMENT IF HE OR SHE DIED BEFORE THE
SECOND ANNUITY PAYMENT, ONLY TWO PAYMENTS IF HE OR SHE DIED BEFORE THE THIRD
ANNUITY PAYMENT, ETC.
LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 YEARS (120 MONTHS) OR 20 YEARS
(240 MONTHS) -- An annuity payable on the first day of each month during the
Annuitant's life, starting with the first payment due according to the Contract.
If the Annuitant receives all of the guaranteed payments, payments will continue
thereafter but cease with the payment made on the first day of the month in
which the Annuitant's death occurs. If all of the guaranteed payments have not
been made before the Annuitant's death, the unpaid installments of the
guaranteed payments will be continued to the Beneficiary.
JOINT AND FULL SURVIVOR ANNUITY -- An annuity payable on the first day of
each month during the Annuitant's life and the life of a named person (the
"Joint Annuitant"), starting with the first payment due according to the
Contract. Payments will continue while either the Annuitant or the Joint
Annuitant is living and cease with the payment made on the first day of the
month in which the death of the Annuitant or the Joint Annuitant, whichever
lives longer, occurs. THERE IS NO MINIMUM NUMBER OF PAYMENTS GUARANTEED UNDER
THIS ANNUITY FORM. PAYMENTS CEASE UPON THE DEATH OF THE LAST SURVIVOR OF THE
ANNUITANT AND THE JOINT ANNUITANT REGARDLESS OF THE NUMBER OF PAYMENTS RECEIVED.
ReliaStar Life also has other annuity forms available and information about
them can be obtained by writing to ReliaStar Life.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Annuity payments will be paid as monthly installments, unless the Annuitant
and ReliaStar Life agree to a different payment schedule. However, if the
Contract Value at the Annuity Commencement Date is less than $5,000, ReliaStar
Life may pay the Contract Value in a single sum and the Contract will be
canceled. Also if a monthly payment would be or become less than $50, ReliaStar
Life may change the frequency of payments to intervals that will result in
payments of at least $50 each. The minimum frequency and amount of annuity
payments or the minimum Contract Value required for annuity payments may vary by
state.
ANNUITY PAYMENTS
The amount of the first fixed annuity payment is determined by applying the
Contract Value to be used for a fixed annuity at the Annuity Commencement Date
to the annuity table in the Contract for the fixed Annuity Form selected. The
table shows the amount of the initial annuity payment for each $1,000 applied
and all subsequent payments shall be equal to this amount. The amount of the
first variable annuity payment is determined by applying the Contract Value to
be used for a variable annuity at the Annuity Commencement Date to the annuity
table in the Contract for the Annuity Form selected.
Subsequent variable annuity payments vary in amount in accordance with the
investment performance of the applicable Sub-Account. Assuming annuity payments
are based on the unit values of a single Sub-Account, the dollar amount of the
first annuity payment, determined as set forth above, is divided by the
Sub-Account Annuity Unit Value as of the Annuity Commencement Date to establish
the number of Variable Annuity Units representing each annuity payment. This
number of Variable Annuity Units remains fixed during the annuity payment
period. The dollar amount of the second and subsequent payments is not
predetermined and may change from month to month. The dollar amount of the
second and each subsequent payment is determined by multiplying the fixed number
of Variable Annuity Units by the Sub-Account Annuity Unit Value for the
Valuation Period with respect to which the payment is due. If the monthly
payment is based upon the Annuity Unit Values of more than one Sub-Account, the
foregoing procedure is repeated for each applicable Sub-Account and the sum of
the payments based on each Sub-Account is the amount of the monthly annuity
payment.
The Annual Contract Charge is deducted in equal installments from each
annuity payment. When a fixed annuity payment is made in conjunction with a
variable annuity payment, an Annual Contract Charge is assessed against each
type of payment and is deducted in equal installments from each annuity payment.
Premium taxes payable to any governmental entity will be charged against the
Contracts. (See "Premium and Other Taxes.")
The annuity tables in the Contracts are based on the annuity mortality
table as defined in the Contract.
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ReliaStar Life guarantees that the dollar amount of each variable annuity
payment after the first payment will not be affected by variations in expenses
(including those related to the Variable Account) or in mortality experience
from the mortality assumptions used to determine the first payment.
SUB-ACCOUNT ANNUITY UNIT VALUE
A Sub-Account's Variable Annuity Units will initially be valued at $10 each
at the time Accumulation Units with respect to the Sub-Account are first
converted into Variable Annuity Units. The Sub-Account Annuity Unit Value for
any subsequent Valuation Period is determined by multiplying the Sub-Account
Annuity Unit Value for the immediately preceding Valuation Period by the Net
Investment Factor for the Sub-Account for the Valuation Period for which the
Sub-Account Annuity Unit Value is being calculated, and multiplying the result
by an interest factor to neutralize the assumed investment rate of 4% per annum
built into the annuity tables contained in the Contracts. (See "Net Investment
Factor.")
ASSUMED INVESTMENT RATE
An assumed investment rate is built into the annuity tables contained in
the Contracts. If the actual net investment rate on the assets of the Variable
Account is the same as the assumed investment rate, variable annuity payments
will remain level. If the actual net investment rate exceeds the assumed
investment rate, variable annuity payments will increase and conversely, if it
is less than the assumed investment rate the payments will decrease.
FEDERAL TAX STATUS
INTRODUCTION
THIS DISCUSSION IS GENERAL AND NOT INTENDED AS TAX ADVICE. The discussion
is not intended to address the tax consequences resulting from all of the
situations in which a person may be entitled to or may receive a distribution
under the Contract.
The Contract may be purchased on a non-qualified basis ("Non-Qualified
Contract") or purchased and used in connection with plans qualifying for
favorable tax treatment ("Qualified Contract"). The Qualified Contract is
designed for use by individuals whose premium payments are comprised solely of
proceeds from and/or contributions under retirement plans which are intended to
qualify as plans entitled to special income tax treatment under Sections 401(a),
403(b), 408, or 408A of the Internal Revenue Code (the "Code").
The ultimate effect of Federal income taxes on the amounts held under a
Contract, or annuity payments, and on the economic benefit to the Owner, the
Annuitant, or the Beneficiary depends on the age and the tax and employment
status of the individual concerned, the type of retirement plan, and on
ReliaStar Life's tax status. In addition, certain requirements must be satisfied
in purchasing a Qualified Contract with proceeds from a tax-qualified plan and
receiving distributions from a Qualified Contract in order to continue receiving
favorable tax treatment. Therefore, purchasers of Contracts should seek
competent legal and tax advice regarding the suitability of a Contract for their
situation, the applicable requirements, and the tax treatment of the rights and
benefits of a Contract.
This discussion is based on ReliaStar Life's understanding of Federal
Income Tax Laws as currently interpreted. No representation is made regarding
the likelihood of the continuation of the present Federal Income Tax Laws or the
current interpretations by the Internal Revenue Service ("IRS"). No attempt is
made to consider any applicable state or other tax laws.
The following discussion assumes that Qualified Contracts are purchased
with proceeds from and/or contributions under retirement plans that qualify for
the intended special Federal income tax treatment.
TAX STATUS OF THE CONTRACT
DIVERSIFICATION REQUIREMENTS
Section 817(h) of the Code provides that separate account investments
underlying a contract must be "adequately diversified" in accordance with
Treasury regulations in order for the contract to qualify as an annuity contract
under Section 72 of the Code. The Variable Account, through each of the
Investment Funds, intends to comply with the diversification requirements
prescribed in regulations under Section 817(h) of the Code, which affect how the
assets in the various Sub-Accounts may be invested. Although ReliaStar Life does
not have control over the Investment Funds in which the Variable Account
invests, ReliaStar Life expects that each Investment Fund in which the Variable
Account owns shares will meet the diversification requirements and that the
Contract will be treated as an annuity contract under the Code.
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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 Investment Funds underlying a variable account may be.
The number of underlying investment options available under a variable product
may also be relevant in determining whether the product qualifies for the
desired tax treatment. It is possible that if additional rules, regulations or
guidance in this regard are issued, the Contract may need to be modified to
comply with such additional rules or guidance. For these reasons, ReliaStar Life
reserves the right to modify the Contract as necessary to attempt to prevent the
Owner from being considered the owner of the assets of the Investment Funds or
otherwise to qualify the Contract for favorable tax treatment.
REQUIRED DISTRIBUTIONS
NON-QUALIFIED CONTRACTS -- In order to be treated as an annuity contract
for Federal income tax purposes, Section 72(s) of the Code requires any
Non-Qualified Contract to provide that: (a) if any Owner dies on or after the
Annuity Commencement Date but prior to the time the entire interest in the
Contract has been distributed, the remaining portion of such interest will be
distributed at least as rapidly as under the method of distribution being used
as of the date of that Owner's death; and (b) if any Owner dies prior to the
Annuity Commencement Date, the entire interest in the Contract will be
distributed within five years after the date of the Owner's death. These
requirements will be considered satisfied as to any portion of the Owner's
interest which is payable to or for the benefit of a "designated Beneficiary"
and which is distributed over the life of such Beneficiary or over a period not
extending beyond the life expectancy of that Beneficiary, provided that such
distributions begin within one year of that Owner's death. The Owner's
"designated Beneficiary" is the person designated by such owner as a Beneficiary
and to whom ownership of the Contract passes by reason of death and must be a
natural person. However, if the Owner's "designated Beneficiary" is the
surviving spouse of the Owner, the Contract may be continued with the surviving
spouse as the new Owner. If the Owner is not an individual, any change in the
primary Annuitant is treated as a change of Owner for tax purposes.
The Non-Qualified Contracts contain provisions which are intended to comply
with the requirements of Section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. ReliaStar Life intends to
review such provisions and modify them if necessary to assure that they comply
with the requirements of Code Section 72(s) when clarified by regulation or
otherwise. Other rules may apply to Qualified Contracts.
TAXATION OF ANNUITIES
IN GENERAL
Section 72 of the Code governs taxation of annuities in general. ReliaStar
Life believes that an Owner who is a natural person generally is not taxed on
increases in the value of a Contract until distribution occurs by withdrawing
all or part of the Contract Value (e.g., partial surrenders and complete
surrenders) or as annuity payments under the Annuity Form selected. For this
purpose, the assignment, pledge, or agreement to assign or pledge any portion of
the Contract Value (and in the case of a Qualified Contract, any portion of an
interest in the qualified plan) generally will be treated as a distribution. The
taxable portion of a distribution (in the form of a single sum payment or
annuity) is taxable as ordinary income.
The Owner of any annuity contract who is not a natural person generally
must include in income any increase in the excess of the net surrender value
over the "investment in the contract" during the taxable year. ReliaStar Life
restricts ownership of Non-Qualified Contracts to no more than two natural
persons.
The following discussion generally applies to Contracts owned by natural
persons.
SURRENDERS
In the case of a full surrender under a Qualified or Non-Qualified
Contract, the amount received generally will be taxable only to the extent it
exceeds the "investment in the contract." The "investment in the contract"
generally equals the portion, if any, of any premium payments paid by or on
behalf of any individual under a Contract which was not excluded from the
individual's gross income.
NON-QUALIFIED CONTRACTS -- In the case of a surrender from a Non-Qualified
Contract before the Annuity Commencement Date, under Code Section 72(e) amounts
received are generally first treated as taxable income to the extent that the
Contract Value exceeds the "investment in the contract" at that time. Any
additional amount surrendered is not taxable.
QUALIFIED CONTRACTS -- In the case of a surrender from a Qualified
Contract, under Section 72(e) of the Code a ratable portion of the amount
received is taxable, generally based on the ratio of the "investment in the
contract" to the participant's total accrued benefit or balance under the
retirement plan. For Qualified Contracts the "investment in the contract" can be
zero. Special tax rules may be available for certain distributions from
Qualified Contracts.
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A Federal penalty tax may apply to certain surrenders. (See "Penalty Tax on
Certain Distributions".)
ANNUITY PAYMENTS
Although tax consequences may vary depending on the Annuity Form selected
under the Contract, in general, only the portion of the Annuity Payment that
represents the amount by which the Contract Value exceeds the investment in the
Contract will be taxed. For variable annuity payments, the taxable portion is
generally determined by an equation that establishes a specific dollar amount of
each payment that is not taxed. The dollar amount is determined by dividing the
investment in the contract by the total number of expected periodic payments.
However, the entire distribution will be taxable once the recipient has
recovered the amount of his or her investment in the contract. For fixed annuity
payments, in general, there is no tax on the portion of each payment which
represents the same ratio that the investment in the contract bears to the total
expected value of the annuity payments for the term of the payments; however,
the remainder of each annuity payment is taxable until the recovery of the
investment in the Contract, and thereafter the full amount or each annuity
payment is taxable.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a Contract because of the death of an Owner
or an Annuitant. Generally, such amounts are includible in the income of the
recipient as follows: (i) if distributed in a lump sum, they are taxed in the
same manner as a full surrender of the contract; or (ii) if distributed under a
payment option, they are taxed in the same way as annuity payments.
PENALTY TAX ON CERTAIN DISTRIBUTIONS
In the case of a distribution pursuant to a Non-Qualified Contract, a
Federal penalty equal to 10% of the amount treated as taxable income may be
imposed. In general, however, there is no penalty on distributions:
o made on or after the taxpayer reaches age 59 1/2;
o made on or after the death of the holder (a holder is considered an
Owner) (or if the holder is not an individual, the death of the
primary annuitant);
o attributable to the taxpayer's becoming disabled;
o a part of a series of substantially equal periodic payments (not less
frequently than annually) for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the
taxpayer and his or her designated beneficiary;
o made under an annuity contract that is purchased with a single premium
when the annuity starting date is no later than a year from purchase
of the annuity and substantially equal periodic payments are made, not
less frequently than annually, during the annuity period; and
o made under certain annuities issued in connection with structured
settlement agreements.
Other tax penalties may apply to certain distributions under a Qualified
Contract, as well as to certain contributions to, loans from, and other
circumstances, applicable to the Qualified Plan of which the Qualified Contract
is part.
POSSIBLE CHANGES IN TAXATION
Although the likelihood of legislative changes is uncertain, there is
always the possibility that the tax treatment of the Policy could change by
legislation or other means (such as IRS regulations, revenue rulings, judicial
decisions, etc.). Moreover, it is also possible that any change could be
retroactive (that is, effective prior to the date of the change). You should
consult a tax adviser with respect to legislative developments and their effect
on the Policy.
TRANSFERS, ASSIGNMENTS OR EXCHANGES OF A CONTRACT
A transfer of ownership or assignment of a Contract, the designation of an
Annuitant, Payee or other Beneficiary who is not also the Owner, or the exchange
of a Contract may result in certain tax consequences to the Owner that are not
discussed herein. An Owner contemplating any such transfer, assignment, or
exchange of a Contract should contact a competent tax adviser with respect to
the potential tax effects of such a transaction.
WITHHOLDING
Pension and annuity distributions generally are subject to withholding for
the recipient's Federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Recipients, however,
generally are provided
28
<PAGE>
the opportunity to elect not to have tax withheld from distributions. Effective
January 1, 1993, distributions from certain qualified plans are generally
subject to mandatory withholding. Withholding for Contracts issued to retirement
plans established under Section 401 of the Code is the responsibility of the
plan trustee.
MULTIPLE CONTRACTS
Section 72(e)(11) of the Code treats non-qualified deferred annuity
contracts issued by ReliaStar Life (or its affiliates) to the same Owner during
any calendar year as one annuity contract for purposes of determining the amount
includible in gross income under Code Section 72(e). The effects of this rule
are not yet clear; however, it could affect the time when income is taxable and
the amount that might be subject to the 10% penalty tax described above. In
addition, the Treasury Department has specific authority to issue regulations
that prevent the avoidance of Section 72(e) through the serial purchase of
annuity contracts or otherwise. There may also be other situations in which the
Treasury may conclude that it would be appropriate to aggregate two or more
annuity contracts purchased by the same Owner. Accordingly, an Owner should
consult a competent tax adviser before purchasing more than one annuity
contract.
TAXATION OF QUALIFIED PLANS
The Contracts are designed for use with several types of Qualified Plans.
The tax rules applicable to participants in these Qualified Plans vary according
to the type of plan and the terms of the plan itself. Favorable tax treatment
may be available for certain types of contributions and distributions. Adverse
tax consequences can result from contributions in excess of specified limits;
distributions prior to age 59 1/2 (subject to certain exceptions); distributions
that do not conform to specified commencement and minimum distribution rules;
aggregate distributions in excess of a specified annual amount; and in other
specified circumstances. Therefore, no attempt is made to provide more than
general information about the use of the Contracts with the various types of
Qualified Plans. Contract Owners, the Annuitants, and Beneficiaries are
cautioned that the rights of any person to any benefits under these Qualified
Plans will be subject to the terms and conditions of the plans themselves,
regardless of the terms and conditions of the Contracts issued in connection
with the plans. ReliaStar Life is not bound by the terms and conditions of such
plans to the extent such terms contradict the Contract, unless ReliaStar Life
consents. Brief descriptions follow of the various types of Qualified Plans in
connection with a Contract.
PENSION AND PROFIT SHARING PLANS
Section 401(a) of the Code permits employers and self-employed persons to
establish various types of retirement plans for employees. Such retirement plans
may permit the purchaser of the Contract to provide benefits under the plans.
Persons intending to use the Contract with such plans should seek competent
advice.
INDIVIDUAL RETIREMENT ANNUITIES
Section 408 and 408A of the Code permits eligible individuals to contribute
to an individual retirement program known as an "Individual Retirement Annuity"
or "IRA". All IRAs are subject to limits on the amount that may be contributed,
the persons who are eligible, and on the time when distributions may commence.
TRADITIONAL IRAs -- Section 408 of the Code 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 reaches age 701/2 for the traditional IRA, but not
for the Roth IRA (see below). Distributions from certain other types of
qualified retirement plans may be "rolled over" on a tax-deferred basis into a
traditional IRA.
ROTH IRAs -- Section 408A of the Code permits individuals to contribute to
a special type of IRA called a Roth IRA. The IRA must be designated as a "Roth
IRA" at the time it is established, in accordance with IRS rules. Contributions
to a Roth IRA are not deductible. If certain conditions are met, qualified
distributions from a Roth IRA are tax free. Subject to special limitations, a
distribution from a traditional IRA or another Roth IRA may be rolled over to a
Roth IRA.
Sales of a Contract for use with traditional or Roth IRAs may be subject to
special requirements of the IRS. The IRS has not reviewed the contract for
qualification as an IRA, and has not addressed in a ruling of general
applicability whether a death benefit provision such as the provision in the
Contract comports with IRS qualification requirements.
TAX SHELTERED ANNUITIES
Section 403(b) of the Code allows employees of certain Section 501(c)(3)
organizations and public schools to exclude from their gross income the premiums
paid, within certain limits, on a Contract that will provide an annuity for the
employee's retirement. Code section 403(b)(11) restricts the distribution under
Code section 403(b) annuity contracts of elective contributions
29
<PAGE>
and earnings on those contributions; and Distribution may only occur upon death
of the employee, attainment of age 59 1/2, separation from service, disability,
or financial hardship. In addition, income attributable to elective
contributions may not be distributed in the case of hardship.
POSSIBLE CHARGE FOR RELIASTAR'S TAXES
At the present time, ReliaStar Life makes no charge to the Sub-Accounts for
any Federal, state, or local taxes that ReliaStar Life incurs which may be
attributable to such Sub-Accounts or to the Contracts. ReliaStar Life, however,
reserves the right in the future to make a charge for any such tax laws that it
determines to be properly attributable to the Sub-Accounts or the Contracts.
OTHER TAX CONSEQUENCES
As noted above, the foregoing comments about the Federal tax consequences
under these Contracts are not exhaustive, and special rules are provided with
respect to other tax situations not discussed in this Prospectus. Further, the
Federal income tax consequences discussed herein reflect ReliaStar Life's
understanding of current law and the law may change. Federal estate and state
and local estate, inheritance, and other tax consequences of ownership or
receipt of distributions under a Contract depend on the individual circumstances
of each Owner or recipient of the distribution. A competent tax adviser should
be consulted for further information.
VOTING OF FUND SHARES
As long as the Variable Account is registered as a unit investment trust
under the Investment Company Act of 1940 and the assets of the Variable Account
are allocated to Sub-Accounts that are invested in Investment Fund shares, the
Investment Fund shares held in the Sub-Accounts will be voted by ReliaStar Life
in accordance with instructions received from the person having voting interests
under the Contracts as described below. If ReliaStar Life determines pursuant to
applicable law or regulation that Investment Fund shares held in the
Sub-Accounts and attributable to the Contracts need not be voted pursuant to
instructions received from persons otherwise having the voting interests, then
ReliaStar Life may vote such Investment Fund shares held in the Sub-Accounts in
its own right.
Before the Annuity Commencement Date, the Owner shall have the voting
interest with respect to the Investment Fund shares attributable to the
Contract. On and after the Annuity Commencement Date, the person then entitled
to receive annuity payments shall have the voting interest with respect to the
Investment Fund shares. Such voting interest will generally decrease during the
annuity payout period.
Any Investment Fund shares held in the Variable Account for which we do not
receive timely voting instructions, or which are not attributable to Contract
Owners, will be voted by us in proportion to the instructions received from all
Contract Owners having a voting interest in the Investment Fund. Any Investment
Fund shares held by us or any of our affiliates in general accounts will, for
voting purposes, be allocated to all separate accounts having voting interests
in the Investment Fund in proportion to each account's voting interest in the
respective Investment Fund and will be voted in the same manner as are the
respective account's vote.
All Investment Fund proxy material will be sent to persons having voting
interests together with appropriate forms which may be used to give voting
instructions. Persons entitled to voting interests and the number of votes which
they may cast shall be determined as of a record date, to be selected by
ReliaStar Life, not more than 90 days before the meeting of the applicable Fund.
Persons having voting interests under the Contracts as described above will
not, as a result thereof, have voting interests with respect to meetings of the
stockholders of ReliaStar Life.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be distributed by the General Distributor, Washington
Square Securities, Inc., 20 Washington Avenue South, Minneapolis, Minnesota
55401, which is an affiliate of ReliaStar Life. The Contracts will be sold by
licensed insurance agents in those states where the Contracts can be lawfully
sold. Such agents will be registered representatives of broker-dealers
registered under the Securities Exchange Act of 1934 who are members of the
National Association of Securities Dealers, Inc. Commissions and other
distribution compensation will be paid by ReliaStar Life. Generally such
payments will not exceed 7.5% of the purchase payments. In some cases a trail
commission based on the Contract Value may also be paid.
30
<PAGE>
REVOCATION
The Contract Owner may revoke the contract at any time between the date of
Application and the date 10 days after receipt of the Contract and receive a
refund of the Contract Value unless otherwise required by state and/or federal
law. All Individual Retirement Annuity refunds will be for a return of purchase
payments. In order to revoke the Contract, it must be mailed or delivered to
ReliaStar Life's Contract Administrator at the mailing address shown below or
the agent through whom it was purchased. Mailing or delivery must occur on or
before 10 days after receipt of the Contract for revocation to be effective. In
order to revoke the Contract written notice must be mailed or delivered to:
ReliaStar Life Insurance Company
c/o Variable Annuity Administration Center
Route 4300
P.O. Box 59218
Minneapolis, MN 55429-0218
The liability of the Variable Account under this provision is limited to
the Contract Value in each Sub-Account on the date of revocation. Any additional
amounts refunded to the Contract Owner will be paid by ReliaStar Life.
REPORTS TO OWNERS
ReliaStar Life will mail to the Contract Owner, at the last known address
of record at the home office of ReliaStar Life, at least annually after the
first Contract Year, a report containing such information as may be required by
any applicable law or regulation and a statement showing the Contract Value.
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed to your household, even if you or other persons in
your household have more than one Contract. Call 1-800-621-3750 if you need
additional copies of financial reports, prospectuses, or annual and semi-annual
reports.
PREPARING FOR YEAR 2000
Like all financial services providers, ReliaStar Life 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 Life 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 Life.
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 Life currently anticipates that its systems will be
Year 2000 compliant by the end of the second quarter of 1999, but there can be
no assurance that it will be successful, or that interaction with other service
providers will not impair ReliaStar's services at that time.
LEGAL PROCEEDINGS
ReliaStar Life 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 Life 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 Life.
31
<PAGE>
FINANCIAL STATEMENTS AND EXPERTS
The annual financial statements of ReliaStar Select Variable Account as of
December 31, 1998 and for each of the two years in the period then ended are
included in the Statement of Additional Information. The annual financial
statements of ReliaStar Life Insurance Company are incorporated by reference in
the Statement of Additional Information. The financial statements for the
Variable Account and Reliastar Life have been audited by Deloitte & Touche,
independent auditors, as stated in their reports which are included or
incorporated by reference and have been so included or incorporated by reference
in reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.
FURTHER INFORMATION
A Registration Statement under the Securities Act of 1933 has been filed
with the Securities and Exchange Commission, with respect to the Contracts
described herein. The Prospectus does not contain all of the information set
forth in the Registration Statement and exhibits thereto, to which reference is
hereby made for further information concerning the Variable Account, ReliaStar
Life and the Contracts. The information so omitted may be obtained from the
Commission's principal office in Washington, D.C., upon payment of the fee
prescribed by the Commission, or examined there without charge. Statements
contained in this Prospectus as to the provisions of the Contracts and other
legal documents are summaries, and reference is made to the documents as filed
with the Commission for a complete statement of the provisions thereof.
INFORMATION ABOUT THE FIXED ACCOUNT CAN BE FOUND IN APPENDIX A, AND
CONDENSED FINANCIAL INFORMATION CAN BE FOUND IN APPENDIX B.
32
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Introduction ........................................................... SAI-2
Administration of the Contracts ........................................ SAI-2
Custody of Assets ...................................................... SAI-2
Independent Auditors ................................................... SAI-2
Distribution of the Contracts .......................................... SAI-2
Calculation of Yield and Return ........................................ SAI-3
Financial Statements ................................................... SAI-16
- --------------------------------------------------------------------------------
If you would like to receive a copy of the ReliaStar Select Variable Account
Statement of Additional Information, please call 1-800-621-3750 or return this
request to:
RELIASTAR LIFE INSURANCE COMPANY
VARIABLE ANNUITY ADMINISTRATION CENTER
ROUTE 4300
P.O. BOX 59218
MINNEAPOLIS, MN 55429-0218
Your name ______________________________________________________________________
Address ________________________________________________________________________
City _____________________________ State ___________________ Zip _____________
Please send me a copy of the ReliaStar Select Variable Account Statement of
Additional Information.
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR ACCOMPANYING
INVESTMENT FUND PROSPECTUSES AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
33
<PAGE>
APPENDIX A
THE FIXED ACCOUNT
CONTRIBUTIONS UNDER THE FIXED PORTION OF THE CONTRACT AND TRANSFERS TO THE
FIXED PORTION BECOME PART OF THE GENERAL ACCOUNT OF RELIASTAR LIFE (THE "FIXED
ACCOUNT"), WHICH SUPPORTS INSURANCE AND ANNUITY OBLIGATIONS. INTERESTS IN THE
FIXED ACCOUNT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 ("1933
ACT") NOR IS THE FIXED ACCOUNT REGISTERED AS AN INVESTMENT COMPANY UNDER THE
INVESTMENT COMPANY ACT OF 1940 ("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED
ACCOUNT NOR ANY INTEREST THEREIN ARE GENERALLY SUBJECT TO THE PROVISIONS OF THE
1933 OR 1940 ACT AND RELIASTAR LIFE HAS BEEN ADVISED THAT THE STAFF OF THE
SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED THE DISCLOSURES IN THIS
PROSPECTUS WHICH RELATE TO THE FIXED PORTION OF THE CONTRACT. DISCLOSURES
REGARDING THE FIXED PORTION OF THE ANNUITY CONTRACT AND THE FIXED ACCOUNT,
HOWEVER, MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE
FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY AND COMPLETENESS OF STATEMENTS
MADE IN PROSPECTUSES.
The Fixed Account is made up of all of the general assets of ReliaStar Life
other than those allocated to any separate account. Purchase payments will be
allocated to the Fixed Account as elected by the Owner at the time of purchase
or as subsequently changed. ReliaStar Life will invest the assets of the Fixed
Account in those assets chosen by ReliaStar Life and allowed by applicable law.
ReliaStar Life guarantees that it will credit interest at a rate of not
less than 3% per year, compounded annually, to amounts allocated to the Fixed
Account under the Contract. ReliaStar Life may credit interest at a rate in
excess of 3% per year; however, ReliaStar Life is not obligated to do so. ANY
INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF 3% PER
YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF RELIASTAR LIFE. THE OWNER
ASSUMES THE RISK THAT INTEREST CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT
EXCEED THE MINIMUM GUARANTEE OF 3% FOR ANY GIVEN YEAR.
A-1
<PAGE>
APPENDIX B
PERFORMANCE INFORMATION AND CONDENSED FINANCIAL INFORMATION
PERFORMANCE INFORMATION
From time to time, ReliaStar Life may advertise or include in sales
literature yields, effective yields, and total returns for the available
Sub-Accounts. THESE FIGURES ARE BASED ON HISTORICAL EARNINGS AND DO NOT INDICATE
OR PROJECT FUTURE PERFORMANCE.
Yields, effective yields and total returns for the Sub-Accounts are based
on the investment performance of the corresponding portfolios of the Investment
Funds. The performance in part reflects the Investment Funds' expenses. See the
prospectuses for the Investment Funds.
The yield of the Sub-Account investing in Fidelity's VIP Money Market
Portfolio refers to the annualized income generated by an investment in the
Sub-Account over a specified seven-day period. The yield is calculated by
assuming that the income generated for that seven-day period is generated each
seven-day period over a 52-week period and is shown as a percentage of the
investment. The effective yield is calculated similarly but, when annualized,
the income earned by an investment in the Sub-Account is assumed to be
reinvested. The effective yield will be slightly higher than the yield because
of the compounding effect of this assumed reinvestment.
The yield of a Sub-Account (except the Money Market Sub-Account investing
in Fidelity's VIP Money Market Portfolio) refers to the annualized income
generated by an investment in the Sub-Account over a specified 30-day or
one-month period. The yield is calculated by assuming that the income generated
by the investment during that 30-day or one-month period is generated each
period over a 12-month period and is shown as a percentage of the investment.
Total returns generally will be presented in "standardized" format. This
means, among other things, that performance will be shown from the date of
inception of the Variable Account, or, if later, the inception date of the
applicable Investment Fund. In some instances, "non-standardized" returns may be
shown from prior to the inception date of the Variable Account. Non-standardized
information will be accompanied by standardized information.
When a Sub-Account has been in operation for one, five, and ten years,
respectively, the average annual total return for these periods will be
provided. For periods prior to the date the Sub-Account commenced operations,
performance information for Contracts funded by the Sub-Accounts will be
calculated based on the performance of the Investment Funds' portfolios and the
assumption that the Sub-Accounts were in existence for the same periods as those
indicated for the Investment Funds' portfolios, with the level of Contract
charges that were in effect at the inception of the Sub-Accounts for the
Contracts.
ReliaStar Life may, from time to time, also disclose yield and total
returns for the portfolios of the Investment Funds, including such disclosure
for periods prior to the dates the Sub-Accounts commenced operations.
ReliaStar Life may also report other information including the effect of
tax-deferred compounding on a Sub-Account's investment returns, or returns in
general, which may be illustrated by tables, graphs or charts.
Advertising and sales literature may compare the performance of each
Sub-Account to the Standard & Poor's Composite Index of 500 Stocks, a widely
used measure of stock performance. This unmanaged index assumes the reinvestment
of dividends but does not reflect any "deduction" for the expense of operating
or managing an investment portfolio. Other independent ranking services and
indices may also be used as a source of performance comparison.
Each Sub-Account may, from time to time, advertise or include in sales
literature performance relative to certain performance rankings and indices
compiled by independent organizations. More detailed information as to the
calculation of performance information, as well as comparisons with unmanaged
market indices, appears in the Statement of Additional Information.
B-1
<PAGE>
SUB-ACCOUNT ACCUMULATION UNIT VALUES
The following table shows, for each Sub-Account of the Variable Account,
the value of a Sub-Account Accumulation Unit as they are invested in portfolios
at the dates shown, and the total number of Sub-Account Accumulation Units
outstanding at the end of each period:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------------------------------
SUB-ACCOUNT INVESTING IN 1998 1997 1996 1995 1994
------------------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
THE ALGER AMERICAN FUND:
ALGER AMERICAN GROWTH PORTFOLIO
(Since August 8, 1997)
Beginning of period ............................. $ 9.8005 $ 10.0000 -- -- --
End of period ................................... $ 14.3117 $ 9.8005 -- -- --
Units outstanding at end of period .............. 651,530 63,728 -- -- --
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
(Since August 8, 1997)
Beginning of period ............................. $ 9.7711 $ 10.0000 -- -- --
End of period ................................... $ 12.5561 $ 9.7711 -- -- --
Units outstanding at end of period .............. 204,638 59,897 -- -- --
ALGER AMERICAN SMALL CAPITALIZATION
PORTFOLIO
(Since August 8, 1997)
Beginning of period ............................. $ 10.0159 $ 10.0000 -- -- --
End of period ................................... $ 11.4116 $ 10.0159 -- -- --
Units outstanding at end of period .............. 254,748 73,647 -- -- --
FIDELITY VARIABLE INSURANCE PRODUCTS FUND (VIP):
VIP EQUITY-INCOME PORTFOLIO
(Since January 6, 1994)
Beginning of period ............................. $ 19.9442 $ 15.7861 $ 14.0081 $ 10.5139 $ 10.0000
End of period ................................... $ 21.9558 $ 19.9442 $ 15.7861 $ 14.0081 $ 10.5139
Units outstanding at end of period .............. 4,241,041 3,998,716 3,108,409 1,874,623 709,023
VIP GROWTH PORTFOLIO
(Since January 6, 1994)
Beginning of period ............................. $ 18.1281 $ 14.8863 $ 13.1611 $ 9.8584 $ 10.0000
End of period ................................... $ 24.9380 $ 18.1281 $ 14.8863 $ 13.1611 $ 9.8584
Units outstanding at end of period .............. 2,946,876 2,789,628 2,484,915 1,527,407 747,558
VIP HIGH INCOME PORTFOLIO
(Since January 6, 1994)
Beginning of period ............................. $ 14.9486 $ 12.8821 $ 11.4563 $ 9.6317 $ 10.0000
End of period ................................... $ 14.1041 $ 14.9486 $ 12.8821 $ 11.4563 $ 9.6317
Units outstanding at end of period .............. 1,879,281 1,472,019 1,104,232 608,287 239,723
VIP MONEY MARKET PORTFOLIO
(Since January 6, 1994)
Beginning of period ............................. $ 11.6055 $ 11.1555 $ 10.7316 $ 10.2767 $ 10.0000
End of period ................................... $ 12.0719 $ 11.6055 $ 11.1555 $ 10.7316 $ 10.2767
Units outstanding at end of period .............. 2,569,427 2,122,382 1,558,218 1,002,405 427,592
</TABLE>
B-2
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------------------------------
SUB-ACCOUNT INVESTING IN 1998 1997 1996 1995 1994
------------------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II (VIP II):
VIP II CONTRAFUND PORTFOLIO
(Since May 1, 1995)
Beginning of period ................................... $ 17.7248 $ 14.4777 $ 12.1031 $ 10.0000 --
End of period ......................................... $ 22.7206 $ 17.7248 $ 14.4777 $ 12.1031 --
Units outstanding at end of period .................... 3,002,878 2,297,899 1,419,399 440,844 --
VIP II INDEX 500 PORTFOLIO
(Since January 6, 1994)
Beginning of period ................................... $ 21.3328 $ 16.3012 $ 13.4594 $ 9.9476 $ 10.0000
End of period ......................................... $ 26.9978 $ 21.3328 $ 16.3012 $ 13.4594 $ 9.9476
Units outstanding at end of period .................... 2,817,908 1,881,104 1,010,296 314,004 89,274
VIP II INVESTMENT GRADE BOND PORTFOLIO
(Since January 6, 1994)
Beginning of period ................................... $ 12.0011 $ 11.1581 $ 10.9662 $ 9.4774 $ 10.0000
End of period ......................................... $ 12.8823 $ 12.0011 $ 11.1581 $ 10.9662 $ 9.4774
Units outstanding at end of period .................... 1,152,135 711,350 709,332 668,429 306,289
JANUS ASPEN SERIES:
AGGRESSIVE GROWTH PORTFOLIO
(Since August 8, 1997)
Beginning of period ................................... $ 10.8997 $ 10.0000 -- -- --
End of period ......................................... $ 14.4318 $ 10.8997 -- -- --
Units outstanding at end of period .................... 121,462 47,593 -- -- --
GROWTH PORTFOLIO
(Since August 8, 1997)
Beginning of period ................................... $ 10.1310 $ 10.0000 -- -- --
End of period ......................................... $ 13.5540 $ 10.1310 -- -- --
Units outstanding at end of period .................... 922,227 64,297 -- -- --
INTERNATIONAL GROWTH PORTFOLIO
(Since August 8, 1997)
Beginning of period ................................... $ 9.5723 $ 10.0000 -- -- --
End of period ......................................... $ 11.0672 $ 9.5723 -- -- --
Units outstanding at end of period .................... 435,553 150,857 -- -- --
WORLDWIDE GROWTH PORTFOLIO
(Since August 8, 1997)
Beginning of period ................................... $ 9.7821 $ 10.0000 -- -- --
End of period ......................................... $ 12.4373 $ 9.7821 -- -- --
Units outstanding at end of period .................... 2,148,224 590,783 -- -- --
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------------------
SUB-ACCOUNT INVESTING IN 1998 1997 1996 1995 1994
------------------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST ("AMT"):
LIMITED MATURITY BOND PORTFOLIO
(Since August 8, 1997)
Beginning of period ....................... $10.1977 $10.0000 -- -- --
End of period ............................. $10.4985 $10.1977 -- -- --
Units outstanding at end of period ........ 483,372 44,381 -- -- --
PARTNERS PORTFOLIO
(Since August 8, 1997)
Beginning of period ....................... $10.2690 $10.0000 -- -- --
End of period ............................. $10.5535 $10.2690 -- -- --
Units outstanding at end of period ........ 1,291,067 337,731 -- -- --
SOCIALLY RESPONSIVE PORTFOLIO
(Since April 30, 1999)
Beginning of period ....................... -- -- -- -- --
End of period ............................. -- -- -- -- --
Units outstanding at end of period ........ -- -- -- -- --
NORTHSTAR GALAXY TRUST (NORTHSTAR):
EMERGING GROWTH PORTFOLIO
(Since January 3, 1995)
Beginning of period ....................... $15.3827 $13.4910 $12.0224 $10.0000 --
End of period ............................. $17.7950 $15.3827 $13.4910 $12.0224 --
Units outstanding at end of period ........ 323,803 261,038 143,393 38,118 --
GROWTH + VALUE PORTFOLIO
(Since January 3, 1995)
Beginning of period ....................... $16.9801 $15.0172 $12.3714 $10.0000 --
End of period ............................. $19.9820 $16.9801 $15.0172 $12.3714 --
Units outstanding at end of period ........ 595,830 613,041 376,557 16,298 --
HIGH YIELD BOND PORTFOLIO
(Since August 8, 1997)
Beginning of period ....................... $10.3496 $10.0000 -- -- --
End of period ............................. $10.0955 $10.3496 -- -- --
Units outstanding at end of period ........ 389,807 55,079 -- -- --
INTERNATIONAL VALUE FUND PORTFOLIO
(Since August 8, 1997)
Beginning of period ....................... $10.0738 $10.0000 -- -- --
End of period ............................. $11.6165 $10.0738 -- -- --
Units outstanding at end of period ........ 232,846 59,173 -- -- --
RESEARCH ENHANCED INDEX PORTFOLIO
(Since January 3, 1995)
Beginning of period ....................... $13.6825 $12.7208 $11.3881 $10.0000 --
End of period ............................. $13.4190 $13.6825 $12.7208 $11.3881 --
Units outstanding at end of period ........ 480,880 286,906 152,651 21,964 --
</TABLE>
B-4
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------------------------------
SUB-ACCOUNT INVESTING IN 1998 1997 1996 1995 1994
------------------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
OCC ACCUMULATION TRUST:
EQUITY PORTFOLIO
(Since August 8, 1997)
Beginning of period ........................ $ 10.6414 $ 10.0000 -- -- --
End of period .............................. $ 11.7390 $ 10.6414 -- -- --
Units outstanding at end of period ......... 248,818 57,717 -- -- --
GLOBAL EQUITY PORTFOLIO
(Since August 8, 1997)
Beginning of period ........................ $ 9.4596 $ 10.0000 -- -- --
End of period .............................. $ 10.5687 $ 9.4596 -- -- --
Units outstanding at end of period ......... 29,458 10,483 -- -- --
MANAGED PORTFOLIO
(Since August 8, 1997)
Beginning of period ........................ $ 10.0805 $ 10.0000 -- -- --
End of period .............................. $ 10.6494 $ 10.0805 -- -- --
Units outstanding at end of period ......... 1,513,567 278,744 -- -- --
SMALL CAP PORTFOLIO
(Since August 8, 1997)
Beginning of period ........................ $ 10.1963 $ 10.0000 -- -- --
End of period .............................. $ 9.1478 $ 10.1963 -- -- --
Units outstanding at end of period ......... 369,821 94,123 -- -- --
PUTNAM VARIABLE TRUST:
PUTNAM VT GROWTH AND INCOME FUND -
CLASS IA SHARES
(Since January 6, 1994)
Beginning of period ........................ $ 19.6008 $ 16.0091 $ 13.3162 $ 9.8762 $ 10.0000
End of period .............................. $ 22.3107 $ 19.6008 $ 16.0091 $ 13.3162 $ 9.8762
Units outstanding at end of period ......... 2,774,779 2,521,656 1,639,863 719,095 228,484
PUTNAM VT NEW OPPORTUNITIES FUND -
CLASS IA SHARES
(Since May 1, 1995)
Beginning of period ........................ $ 17.6345 $ 14.5039 $ 13.3506 $ 10.0000 --
End of period .............................. $ 21.6313 $ 17.6345 $ 14.5039 $ 13.3506 --
Units outstanding at end of period ......... 2,296,799 1,954,936 1,312,658 279,170 --
PUTNAM VT VOYAGER FUND - CLASS IA SHARES
(Since January 6, 1994)
Beginning of period ........................ $ 19.3572 $ 15.5144 $ 13.9272 $ 10.0386 $ 10.0000
End of period .............................. $ 23.7408 $ 19.3572 $ 15.5144 $ 13.9272 $ 10.0386
Units outstanding at end of period ......... 3,502,135 3,036,855 2,244,324 1,090,262 338,970
</TABLE>
B-5
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
-----------------
INDIVIDUAL DEFERRED VARIABLE/FIXED ANNUITY CONTRACTS
ISSUED BY
RELIASTAR SELECT VARIABLE ACCOUNT
AND
RELIASTAR LIFE INSURANCE COMPANY
This Statement of Additional Information is not a Prospectus, but should be
read in conjunction with the Prospectus dated April 30, 1999 (the "Prospectus")
relating to the Individual Deferred Variable/Fixed Annuity Contracts issued by
ReliaStar Select Variable Account (the "Variable Account") and ReliaStar Life
Insurance Company ("ReliaStar Life"). Much of the information contained in this
Statement of Additional Information expands upon subjects discussed in the
Prospectus. A copy of the Prospectus may be obtained from Washington Square
Securities, Inc., 20 Washington Avenue South, Minneapolis, Minnesota 55401.
Capitalized terms used in this Statement of Additional Information that are
not otherwise defined herein shall have the meanings given to them in the
Prospectus.
-----------------
TABLE OF CONTENTS
PAGE
----
Introduction .......................................................... SAI-2
Administration of the Contracts ....................................... SAI-2
Custody of Assets ..................................................... SAI-2
Independent Auditors .................................................. SAI-2
Distribution of the Contracts ......................................... SAI-2
Calculation of Yield and Return ....................................... SAI-3
Financial Statements .................................................. SAI-16
-----------------
The date of this Statement of Additional Information is April 30, 1999.
SAI-1
<PAGE>
INTRODUCTION
The Individual Deferred Variable/Fixed Annuity Contracts described in the
Prospectus are flexible purchase payment contracts. The Contracts are sold both
as non-qualified contracts and/or in connection with retirement plans which may
qualify for special federal tax treatment under the Internal Revenue Code. (See
"Federal Tax Status" in the Prospectus.) Annuity payouts under the Contracts are
deferred until a selected later date.
Purchase payments may be allocated to one or more of the available
Sub-Accounts of the Variable Account, a separate account of ReliaStar Life,
and/or to the Fixed Account (which is the general account of ReliaStar Life).
Purchase payments allocated to one or more of the available Sub-Accounts of the
Variable Account, as selected by the Contract Owner, will be invested in shares
at net asset value of one or more of a group of investment funds (the
"Investment Funds").
ADMINISTRATION OF THE CONTRACTS
ReliaStar Life performs certain administrative functions ("Administrative
Functions") relating to the Contracts and the Variable Account in Minneapolis,
Minnesota. These functions include, among other things, maintaining the books
and records of the Variable Account and the Sub-Accounts, and maintaining
records of the name, address, taxpayer identification number, Contract number,
type of Contract issued to each Owner, Contract Value and other pertinent
information necessary to the administration and operation of the Contracts.
ReliaStar Life receives no payment for performing any of the Administrative
Functions. Prior to July 14, 1997, Continuum Administrative Services
Corporation, Kansas City, Missouri ("CASC"), performed, by agreement, many of
the Administrative Functions. For the years ended December 31, 1996 and 1997,
ReliaStar Life paid fees to CASC under the agreement in the amounts of $638,881
and $700,208 respectively, in connection with administration of the Contracts.
CUSTODY OF ASSETS
ReliaStar Life maintains custody of the assets of the Variable Account. As
Custodian, Reliastar Life holds cash balances for the Variable Account pending
investment in the Investment Funds or distribution. The Investment Fund shares
owned by the Sub-accounts are reflected only on the records of the Funds, and
are not issued in certificated form.
INDEPENDENT AUDITORS
The annual financial statements of ReliaStar Select Variable Account, which
are included in this Statement of Additional Information, and the Financial
Statements of ReliaStar Life Insurance Company, which are incorporated by
reference in this Statement of Additional Information, have been audited by
Deloitte & Touche, independent auditors, as stated in their reports which are
included or incorporated by reference herein, and have been so included or
incorporated by reference in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.
DISTRIBUTION OF THE CONTRACTS
The Contracts are distributed by the General Distributor, Washington Square
Securities, Inc., which is a direct wholly-owned subsidiary of ReliaStar
Financial Corp. and is an affiliate of ReliaStar Life. The Contracts will be
sold by licensed insurance agents in those states where the Contracts can be
lawfully sold. Such agents will be registered representatives of broker-dealers
registered under the Securities Exchange Act of 1934 who are members of the
National Association of Securities Dealers, Inc.
For the years ended December 31, 1996, 1997, and 1998 the General
Distributor was paid fees by ReliaStar Life with respect to distribution of the
Contracts aggregating $666,703, $1,309,426, and $1,856,879, respectively.
No deduction for a sales charge is made from the purchase payments for the
Contracts. However, if part or all of a Contract's value is surrendered,
surrender charges (which may be deemed to be contingent deferred sales charges)
may be made by ReliaStar Life. The method used to determine the amount of such
charge is described in the Prospectus under the heading "Charges Made By
ReliaStar Life -- Surrender Charge (Contingent Deferred Sales Charge)."
CALCULATION OF YIELD AND RETURN
CURRENT YIELD AND EFFECTIVE YIELD. Current yield and effective yield will
be calculated only for the VIP Money Market Portfolio Sub-Account.
The current yield is based on a seven-day period (the "base period") and is
calculated by determining the "net change in value" on a hypothetical account
having a balance of one Accumulation Unit at the beginning of the period,
dividing the net change in account value by the value of the account at the
beginning of the base period to obtain the base period return,
SAI-2
<PAGE>
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 VIP Money
Market Portfolio, less daily expense and contract charges to the account) for
the period, but will not include realized or unrealized gains or losses on its
underlying fund shares.
The VIP Money Market Portfolio Sub-Account's yield and effective yield will
vary in response to any fluctuations in interest rates and expenses of the
Sub-Account.
The yield and effective yield of the Sub-Account for the seven day period
ending December 31, 1998 were as follows:
Yield: 3.63%
Effective Yield: 3.69%
STANDARDIZED YIELD. A standardized yield computation may be used for bond
Sub-Accounts. The yield quotation will be based on a recent 30 day (or one
month) period, and is computed by dividing the net investment income per
Accumulation Unit earned during the period by the maximum offering price on the
last day of the period according to the following formula:
Yield = 2 [(a - b + 1) 6 - 1]
-----
cd
Where:
a = net investment earned during the period by the Fund or Portfolio
attributable to shares owned by the Sub-Account.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of Accumulation Units outstanding during the
period.
d = the maximum offering price per Accumulation Unit on the last day of the
period.
Yield on each Sub-Account is earned from dividends declared and paid by the
underlying Fund or Portfolio, which are automatically reinvested in Fund or
Portfolio shares.
AVERAGE ANNUAL TOTAL RETURNS. From time to time, sales literature or
advertisements may also quote average annual total returns for one or more of
the Sub-Accounts for various periods of time.
Average annual total returns represent the average annual compounded rates
of return that would equate an initial investment of $1,000 under a Contract to
the redemption value of that investment as of the last day of each of the
periods. The ending date for each period for which total return quotations are
provided will be for the most recent month-end practicable, considering the type
and media of the communication and will be stated in the communication.
Average annual total returns will be calculated using Sub-Account unit
values which ReliaStar Life calculates on each Valuation Date based on the
performance of the Sub-Account's underlying Portfolio, the deductions for the
Mortality and Expense Risk Premiums, the Administration Charge, and the Annual
Contract Charge. The calculation assumes that the Annual Contract Charge is $30
per year per Contract deducted at the end of each Contract Year. For purposes of
calculating average annual total return, an average per dollar Annual Contract
Charge attributable to the hypothetical account for the period is used. The
calculation also assumes surrender of the Contract at the end of the period for
the return quotation. Total returns will therefore reflect a deduction of the
Surrender Charge for any period less than six years. The total return will then
be calculated according to the following formula:
TR = ((ERV/P) 1/N) - 1
Where:
TR = The average annual total return net of Sub-Account recurring charges.
ERV = the ending redeemable value (net of any applicable surrender charge)
of the hypothetical account at the end of the period.
P = a hypothetical initial payment of $1,000.
SAI-3
<PAGE>
N = the number of years in the period.
Such average annual total return information for the Sub-Accounts is as
follows:
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR FOR THE 10-YEAR FOR THE PERIOD FROM
PERIOD ENDED PERIOD ENDED PERIOD ENDED DATE OF INCEPTION OF
SUB-ACCOUNT 12/31/98 12/31/98 12/31/98 SUB-ACCOUNT TO 12/31/98
- ----------- -------------- -------------- --------------- ----------------------
<S> <C> <C> <C> <C>
Alger American Growth Portfolio 40.56% N/A N/A 25.64%
(Sub-Account Inception: 8/8/97)
Alger American MidCap Growth Portfolio 23.03% N/A N/A 13.95%
(Sub-Account Inception: 8/8/97)
Alger American Small Capitalization Portfolio 8.47% N/A N/A 6.06%
(Sub-Account Inception: 8/8/97)
Fidelity VIP Equity-Income Portfolio 4.62% N/A N/A 16.64%
(Sub-Account Inception: 1/6/94)
Fidelity VIP Growth Portfolio 32.10% N/A N/A 19.71%
(Sub-Account Inception: 1/6/94)
Fidelity VIP High Income Portfolio (11.12)% N/A N/A 6.53%
(Sub-Account Inception: 1/6/94)
Fidelity VIP II Contrafund Portfolio 22.72% N/A N/A 24.32%
(Sub-Account Inception: 5/1/95)
Fidelity VIP II Index 500 Portfolio 21.09% N/A N/A 21.66%
(Sub-Account Inception: 1/6/94)
Fidelity VIP II Investment Grade Bond Portfolio 1.88% N/A N/A 4.55%
(Sub-Account Inception: 1/6/94)
Janus Aggressive Growth Portfolio 26.94% N/A N/A 26.43%
(Sub-Account Inception: 8/8/97)
Janus Growth Portfolio 28.32% N/A N/A 20.65%
(Sub-Account Inception: 8/8/97)
Janus International Growth Portfolio 10.15% N/A N/A 3.65%
(Sub-Account Inception: 8/8/97)
Janus Worldwide Growth Portfolio 21.68% N/A N/A 13.15%
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust
Limited Maturity Bond Portfolio (2.52)% N/A N/A (0.39)%
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust
Partners Portfolio (2.70)% N/A N/A 0.00%
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust
Socially Responsive Portfolio** N/A N/A N/A N/A
(Sub-Account Inception: 4/30/99)
Northstar Galaxy Trust Emerging Growth Portfolio* 10.21% N/A N/A 14.73%
(Sub-Account Inception: 1/3/95)
Northstar Galaxy Trust Growth + Value Portfolio 12.21% N/A N/A 18.19%
(Sub-Account Inception: 1/3/95)
Northstar Galaxy Trust High Yield Bond Portfolio (6.27)% N/A N/A (3.30)%
(Sub-Account Inception: 8/8/97)
Northstar Galaxy Trust International Value Portfolio 9.85% N/A N/A 7.50%
(Sub-Account Inception: 8/8/97)
Northstar Galaxy Trust Research Enhanced
Index Portfolio* (5.51)% N/A N/A 6.67%
(Sub-Account Inception: 1/3/95)
</TABLE>
SAI-4
<PAGE>
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR FOR THE 10-YEAR FOR THE PERIOD FROM
PERIOD ENDED PERIOD ENDED PERIOD ENDED DATE OF INCEPTION OF
SUB-ACCOUNT 12/31/98 12/31/98 12/31/98 SUB-ACCOUNT TO 12/31/98
- ----------- -------------- -------------- --------------- -----------------------
<S> <C> <C> <C> <C>
OCC Equity Portfolio*** 4.85% N/A N/A 8.35%
(Sub-Account Inception: 8/8/97)
OCC Global Equity Portfolio 6.26% N/A N/A 0.11%
(Sub-Account Inception: 8/8/97)
OCC Managed Portfolio*** 0.18% N/A N/A 0.69%
(Sub-Account Inception: 8/8/97)
OCC Small Cap Portfolio*** (15.75)% N/A N/A (10.27)%
(Sub-Account Inception: 8/8/97)
Putnam VT Growth and Income Fund -
Class IA Shares 8.36% N/A N/A 17.03%
(Sub-Account Inception: 1/6/94)
Putnam VT New Opportunities Fund -
Class IA Shares 17.20% N/A N/A 22.63%
(Sub-Account Inception: 5/1/95)
Putnam VT Voyager Fund - Class IA Shares 17.18% N/A N/A 18.52%
(Sub-Account Inception: 1/6/94)
</TABLE>
From time to time, sales literature or advertisements may quote average
annual total returns for periods prior to the date the Sub-Accounts commenced
operations. Such performance information for the Sub-Accounts will be calculated
based on the performance of the Portfolios and the assumption that the
Sub-Accounts were in existence for the same periods as those indicated for the
Portfolios, with the level of Contract charges currently in effect.
Such average annual total return information for the Sub-Accounts is as
follows:
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR FOR THE 10-YEAR FOR THE PERIOD FROM
PERIOD ENDED PERIOD ENDED PERIOD ENDED DATE OF INCEPTION OF FUND
SUB-ACCOUNT 12/31/98 12/31/98 12/31/98 PORTFOLIO TO 12/31/98
- ----------- -------------- -------------- --------------- -------------------------
<S> <C> <C> <C> <C>
Alger American Growth Portfolio 40.56% 21.81% N/A 20.30%
(Portfolio Inception: 1/9/89)
Alger American MidCap Growth Portfolio 23.03% 16.90% N/A 21.50%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio 8.47% 11.00% 18.16% 17.19%
(Portfolio Inception: 9/21/88)
Fidelity VIP Equity-Income Portfolio 4.62% 16.70% 13.98% 12.79%
(Portfolio Inception: 10/9/86)
Fidelity VIP Growth Portfolio 32.10% 19.65% 17.72% 15.69%
(Portfolio Inception: 10/9/86)
Fidelity VIP High Income Portfolio (11.12)% 6.68% 9.48% 9.52%
(Portfolio Inception: 9/19/85)
Fidelity VIP II Contrafund Portfolio 22.72% N/A N/A 26.24%
(Portfolio Inception: 1/3/95)
Fidelity VIP II Index 500 Portfolio 21.09% 21.64% N/A 19.44%
(Portfolio Inception: 8/27/92)
Fidelity VIP II Investment Grade Bond Portfolio 1.88% 4.57% 6.81% 6.79%
(Portfolio Inception: 12/5/88)
Janus Aggressive Growth Portfolio 26.94% 17.27% N/A 19.87%
(Portfolio Inception: 9/13/93)
Janus Growth Portfolio 28.32% 19.33% N/A 18.82%
(Portfolio Inception: 9/13/93)
Janus International Growth Portfolio 10.15% N/A N/A 16.73%
(Portfolio Inception: 5/2/94)
Janus Worldwide Growth Portfolio 21.68% 19.23% N/A 21.96%
(Portfolio Inception: 9/13/93)
</TABLE>
SAI-5
<PAGE>
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR FOR THE 10-YEAR FOR THE PERIOD FROM
PERIOD ENDED PERIOD ENDED PERIOD ENDED DATE OF INCEPTION OF FUND
SUB-ACCOUNT 12/31/98 12/31/98 12/31/98 PORTFOLIO TO 12/31/98
- ----------- -------------- -------------- --------------- -------------------------
<S> <C> <C> <C> <C>
Neuberger Berman Advisers Management Trust
Limited Maturity Bond Portfolio (2.52)% 3.03% 5.26% 6.37%
(Portfolio Inception: 9/10/84)
Neuberger Berman Advisers Management Trust
Partners Portfolio (2.70)% N/A N/A 17.60%
(Portfolio Inception: 3/22/94)
Neuberger Berman Advisers Management Trust
Socially Responsive Portfolio** N/A N/A N/A N/A
(Portfolio Inception: 8/19/98)
Northstar Galaxy Trust Emerging Growth Portfolio* 10.21% N/A N/A 12.76%
(Portfolio Inception: 5/6/94)
Northstar Galaxy Trust Growth + Value Portfolio 12.21% N/A N/A 16.00%
(Portfolio Inception: 5/6/94)
Northstar Galaxy Trust High Yield Bond Portfolio (6.27)% N/A N/A 7.36%
(Portfolio Inception: 5/6/94)
Northstar Galaxy Trust International Value Portfolio 9.85% N/A N/A 7.50%
(Portfolio Inception: 8/8/97)
Northstar Galaxy Research Enhanced
Index Portfolio* (5.51)% N/A N/A 5.97%
(Portfolio Inception: 5/6/94)
OCC Equity Portfolio*** 4.85% 18.21% 15.89% 15.35%
(Portfolio Inception: 8/1/88)
OCC Global Equity Portfolio 6.26% N/A N/A 13.50%
(Portfolio Inception: 3/1/95)
OCC Managed Portfolio*** 0.18% 17.08% 17.67% 17.32%
(Portfolio Inception: 8/1/88)
OCC Small Cap Portfolio*** (15.75)% 6.42% 11.61% 11.26%
(Portfolio Inception: 8/1/88)
Putnam VT Growth and Income Fund -
Class IA Shares 8.36% 17.02% 14.40% 14.88%
(Portfolio Inception: 2/1/88)
Putnam VT New Opportunities Fund -
Class IA Shares 17.20% N/A N/A 20.99%
(Portfolio Inception: 5/2/94)
Putnam VT Voyager Fund - Class IA Shares 17.18% 18.28% 18.47% 16.96%
(Portfolio Inception: 2/1/88)
</TABLE>
ReliaStar Life may also disclose average annual total returns for the
Investment Fund's Portfolios since their inception, including such disclosure
for periods prior to the date the Variable Account commenced operations.
Such average annual total return information for the Portfolios of the
Investment Funds is as follows:
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR FOR THE 10-YEAR FOR THE PERIOD FROM
PERIOD ENDED PERIOD ENDED PERIOD ENDED DATE OF INCEPTION OF FUND
SUB-ACCOUNT 12/31/98 12/31/98 12/31/98 PORTFOLIO TO 12/31/98
- ----------- -------------- -------------- --------------- -------------------------
<S> <C> <C> <C> <C>
Alger American Growth Portfolio 48.07% 23.90% N/A 22.02%
(Portfolio Inception: 1/9/89)
Alger American MidCap Growth Portfolio 30.30% 18.98% N/A 23.50%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio 15.53% 13.09% 19.85% 18.86%
(Portfolio Inception: 9/21/88)
Fidelity VIP Equity-Income Portfolio 11.63% 18.77% 15.62% 14.41%
(Portfolio Inception: 10/9/86)
</TABLE>
SAI-6
<PAGE>
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR FOR THE 10-YEAR FOR THE PERIOD FROM
PERIOD ENDED PERIOD ENDED PERIOD ENDED DATE OF INCEPTION OF FUND
SUB-ACCOUNT 12/31/98 12/31/98 12/31/98 PORTFOLIO TO 12/31/98
- ----------- -------------- -------------- --------------- -------------------------
<S> <C> <C> <C> <C>
Fidelity VIP Growth Portfolio 39.49% 21.74% 19.41% 17.35%
(Portfolio Inception: 10/9/86)
Fidelity VIP High Income Portfolio (4.33)% 8.80% 11.08% 11.09%
(Portfolio Inception: 9/19/85)
Fidelity VIP II Contrafund Portfolio 29.98% N/A N/A 28.62%
(Portfolio Inception: 1/3/95)
Fidelity VIP II Index 500 Portfolio 28.33% 23.72% N/A 21.16%
(Portfolio Inception: 8/27/92)
Fidelity VIP II Investment Grade Bond Portfolio 8.85% 6.70% 8.35% 8.34%
(Portfolio Inception: 12/5/88)
Janus Aggressive Growth Portfolio 34.26% 19.35% N/A 21.91%
(Portfolio Inception: 9/13/93)
Janus Growth Portfolio 35.66% 21.41% N/A 20.86%
(Portfolio Inception: 9/13/93)
Janus International Growth Portfolio 17.23% N/A N/A 18.86%
(Portfolio Inception: 5/2/94)
Janus Worldwide Growth Portfolio 28.92% 21.32% N/A 24.01%
(Portfolio Inception: 9/13/93)
Neuberger Berman Advisers Management Trust
Limited Maturity Bond Portfolio 4.39% 5.18% 6.79% 7.90%
(Portfolio Inception: 9/10/84)
Neuberger Berman Advisers Management Trust
Partners Portfolio 4.21% N/A N/A 19.71%
(Portfolio Inception: 3/22/94)
Neuberger Berman Advisers Management Trust
Socially Responsive Portfolio** N/A N/A N/A N/A
(Portfolio Inception: 8/19/98)
Northstar Galaxy Trust Emerging Growth Portfolio* 17.30% N/A N/A 14.90%
(Portfolio Inception: 5/6/94)
Northstar Galaxy Trust Growth + Value Portfolio 19.33% N/A N/A 18.13%
(Portfolio Inception: 5/6/94)
Northstar Galaxy Trust High Yield Bond Portfolio 0.59% N/A N/A 9.92%
(Portfolio Inception: 5/6/94)
Northstar Galaxy Trust International Value Portfolio 16.93% N/A N/A 12.88%
(Portfolio Inception: 8/8/97)
Northstar Galaxy Trust Research Enhanced
Index Portfolio* 1.35% N/A N/A 8.59%
(Portfolio Inception: 5/6/94)
OCC Equity Portfolio*** 11.86% 20.41% 17.62% 17.06%
(Portfolio Inception: 8/1/88)
OCC Global Equity Portfolio 13.29% N/A N/A 16.08%
(Portfolio Inception: 3/1/95)
OCC Managed Portfolio*** 7.12% 19.25% 19.40% 19.04%
(Portfolio Inception: 8/1/88)
OCC Small Cap Portfolio*** (9.03)% 8.53% 13.21% 12.85%
(Portfolio Inception: 8/1/88)
Putnam VT Growth and Income Fund -
Class IA Shares 15.42% 19.10% 16.04% 16.52%
(Portfolio Inception: 2/1/88)
Putnam VT New Opportunities Fund -
Class IA Shares 24.38% N/A N/A 23.12%
(Portfolio Inception: 5/2/94)
Putnam VT Voyager Fund - Class IA Shares 24.36% 20.36% 20.17% 18.64%
(Portfolio Inception: 2/1/88)
</TABLE>
SAI-7
<PAGE>
OTHER TOTAL RETURNS. From time to time, sales literature or advertisements
may quote average annual total returns for the Sub-Accounts that do not reflect
the Surrender Charge. Such performance information may quote average annual
total returns for periods during which the Sub-Accounts were operating and for
periods prior to the date the Sub-Accounts commenced operations. These returns
are calculated in exactly the same way as average annual total returns described
above, except that the ending redeemable value of the hypothetical account for
the period is replaced with an ending value for the period that does not take
into account any charges on amounts surrendered or withdrawn.
Such information is as follows:
RETURNS SINCE DATE SUB-ACCOUNTS COMMENCED OPERATIONS
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR FOR THE 10-YEAR FOR THE PERIOD FROM
PERIOD ENDED PERIOD ENDED PERIOD ENDED DATE OF INCEPTION OF
SUB-ACCOUNT 12/31/98 12/31/98 12/31/98 SUB-ACCOUNT TO 12/31/98
- ----------- -------------- -------------- --------------- -----------------------
<S> <C> <C> <C> <C>
Alger American Growth Portfolio 45.96% N/A N/A 29.15%
(Sub-Account Inception: 8/8/97)
Alger American MidCap Growth Portfolio 28.43% N/A N/A 17.60%
(Sub-Account Inception: 8/8/97)
Alger American Small Capitalization Portfolio 13.87% N/A N/A 9.81%
(Sub-Account Inception: 8/8/97)
Fidelity VIP Equity-Income Portfolio 10.02% N/A N/A 17.03%
(Sub-Account Inception: 1/6/94)
Fidelity VIP Growth Portfolio 37.50% N/A N/A 20.06%
(Sub-Account Inception: 1/6/94)
Fidelity VIP High Income Portfolio (5.72)% N/A N/A 7.08%
(Sub-Account Inception: 1/6/94)
Fidelity VIP II Contrafund Portfolio 28.12% N/A N/A 25.00%
(Sub-Account Inception: 5/1/95)
Fidelity VIP II Index 500 Portfolio 26.49% N/A N/A 21.99%
(Sub-Account Inception: 1/6/94)
Fidelity VIP II Investment Grade Bond Portfolio 7.28% N/A N/A 5.15%
(Sub-Account Inception: 1/6/94)
Janus Aggressive Growth Portfolio 32.34% N/A N/A 29.93%
(Sub-Account Inception: 8/8/97)
Janus Growth Portfolio 33.72% N/A N/A 24.22%
(Sub-Account Inception: 8/8/97)
Janus International Growth Portfolio 15.55% N/A N/A 7.44%
(Sub-Account Inception: 8/8/97)
Janus Worldwide Growth Portfolio 27.08% N/A N/A 16.80%
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust
Limited Maturity Bond Portfolio 2.88% N/A N/A 3.45%
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust
Partners Portfolio 2.70% N/A N/A 3.83%
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust
Socially Responsive Portfolio** N/A N/A N/A N/A
(Sub-Account Inception: 4/30/99)
Northstar Galaxy Trust Emerging Growth Portfolio* 15.61% N/A N/A 15.47%
(Sub-Account Inception: 1/3/95)
Northstar Galaxy Trust Growth + Value Portfolio 17.61% N/A N/A 18.87%
(Sub-Account Inception: 1/3/95)
Northstar Galaxy Trust High Yield Bond Portfolio (0.87)% N/A N/A 0.59%
(Sub-Account Inception: 8/8/97)
</TABLE>
SAI-8
<PAGE>
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR FOR THE 10-YEAR FOR THE PERIOD FROM
PERIOD ENDED PERIOD ENDED PERIOD ENDED DATE OF INCEPTION OF
SUB-ACCOUNT 12/31/98 12/31/98 12/31/98 SUB-ACCOUNT TO 12/31/98
- ----------- -------------- -------------- --------------- -----------------------
<S> <C> <C> <C> <C>
Northstar Galaxy Trust International Value Portfolio 15.25% N/A N/A 11.23%
(Sub-Account Inception: 8/8/97)
Northstar Galaxy Trust Research Enhanced
Index Portfolio* (0.11)% N/A N/A 7.58%
(Sub-Account Inception: 1/3/95)
OCC Equity Portfolio*** 10.25% N/A N/A 12.07%
(Sub-Account Inception: 8/8/97)
OCC Global Equity Portfolio 11.66% N/A N/A 3.94%
(Sub-Account Inception: 8/8/97)
OCC Managed Portfolio*** 5.58% N/A N/A 4.51%
(Sub-Account Inception: 8/8/97)
OCC Small Cap Portfolio*** (10.35)% N/A N/A (6.27)%
(Sub-Account Inception: 8/8/97)
Putnam VT Growth and Income Fund -
Class IA Shares 13.76% N/A N/A 17.41%
(Sub-Account Inception: 1/6/94)
Putnam VT New Opportunities Fund -
Class IA Shares 22.60% N/A N/A 23.34%
(Sub-Account Inception: 5/1/95)
Putnam VT Voyager Fund - Class IA Shares 22.58% N/A N/A 18.88%
(Sub-Account Inception: 1/6/94)
</TABLE>
RETURNS INCLUDING PERIOD PRIOR TO DATE SUB-ACCOUNTS COMMENCED OPERATIONS
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR FOR THE 10-YEAR FOR THE PERIOD FROM
PERIOD ENDED PERIOD ENDED PERIOD ENDED DATE OF INCEPTION OF FUND
SUB-ACCOUNT 12/31/98 12/31/98 12/31/98 PORTFOLIO TO 12/31/98
- ----------- -------------- -------------- --------------- -------------------------
<S> <C> <C> <C> <C>
Alger American Growth Portfolio 45.96% 22.13% N/A 20.30%
(Portfolio Inception: 1/9/89)
Alger American MidCap Growth Portfolio 28.43% 17.29% N/A 21.75%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio 13.87% 11.47% 18.16% 17.19%
(Portfolio Inception: 9/21/88)
Fidelity VIP Equity-Income Portfolio 10.02% 17.08% 13.98% 12.79%
(Portfolio Inception: 10/9/86)
Fidelity VIP Growth Portfolio 37.50% 20.00% 17.72% 15.69%
(Portfolio Inception: 10/9/86)
Fidelity VIP High Income Portfolio (5.72)% 7.23% 9.48% 9.52%
(Portfolio Inception: 9/19/85)
Fidelity VIP II Contrafund Portfolio 28.12% N/A N/A 26.80%
(Portfolio Inception: 1/3/95)
Fidelity VIP II Index 500 Portfolio 26.49% 21.96% N/A 19.44%
(Portfolio Inception: 8/27/92)
Fidelity VIP II Investment Grade Bond Portfolio 7.28% 5.16% 6.81% 6.79%
(Portfolio Inception: 12/5/88)
Janus Aggressive Growth Portfolio 32.34% 17.65% N/A 20.18%
(Portfolio Inception: 9/13/93)
Janus Growth Portfolio 33.72% 19.68% N/A 19.14%
(Portfolio Inception: 9/13/93)
Janus International Growth Portfolio 15.55% N/A N/A 17.16%
(Portfolio Inception: 5/2/94)
</TABLE>
SAI-9
<PAGE>
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR FOR THE 10-YEAR FOR THE PERIOD FROM
PERIOD ENDED PERIOD ENDED PERIOD ENDED DATE OF INCEPTION OF FUND
SUB-ACCOUNT 12/31/98 12/31/98 12/31/98 PORTFOLIO TO 12/31/98
- ----------- -------------- -------------- --------------- -------------------------
<S> <C> <C> <C> <C>
Janus Worldwide Growth Portfolio 27.08% 19.59% N/A 22.25%
(Portfolio Inception: 9/13/93)
Neuberger Berman Advisers Management Trust
Limited Maturity Bond Portfolio 2.88% 3.67% 5.26% 6.37%
(Portfolio Inception: 9/10/84)
Neuberger Berman Advisers Management Trust
Partners Portfolio 2.70% N/A N/A 18.00%
(Portfolio Inception: 3/22/94)
Neuberger Berman Advisers Management Trust
Socially Responsive Portfolio** N/A N/A N/A N/A
(Portfolio Inception: 8/19/98)
Northstar Galaxy Trust Emerging Growth Portfolio* 15.61% N/A N/A 13.25%
(Portfolio Inception: 5/6/94)
Northstar Galaxy Trust Growth + Value Portfolio 17.61% N/A N/A 16.44%
(Portfolio Inception: 5/6/94)
Northstar Galaxy Trust High Yield Bond Portfolio (0.87)% N/A N/A 7.95%
(Portfolio Inception: 5/6/94)
Northstar Galaxy Trust International Value Portfolio 9.85% N/A N/A 7.50%
(Portfolio Inception: 8/8/97)
Northstar Galaxy Trust Research Enhanced
Index Portfolio* (0.11)% N/A N/A 6.59%
(Portfolio Inception: 5/6/94)
OCC Equity Portfolio*** 10.25% 18.58% 15.89% 15.35%
(Portfolio Inception: 8/1/88)
OCC Global Equity Portfolio 11.66% N/A N/A 14.31%
(Portfolio Inception: 3/1/95)
OCC Managed Portfolio*** 5.58% 17.46% 17.67% 17.32%
(Portfolio Inception: 8/1/88)
OCC Small Cap Portfolio*** (10.35)% 6.98% 11.61% 11.26%
(Portfolio Inception: 8/1/88)
Putnam VT Growth and Income Fund -
Class IA Shares 13.76% 17.41% 14.40% 14.88%
(Portfolio Inception: 2/1/88)
Putnam VT New Opportunities Fund -
Class IA Shares 22.60% N/A N/A 21.37%
(Portfolio Inception: 5/2/94)
Putnam VT Voyager Fund - Class IA Shares 22.58% 18.65% 18.47% 16.96%
(Portfolio Inception: 2/1/88)
</TABLE>
- -----------------
* The Northstar Galaxy Trust Emerging Growth Portfolio (formerly the Northstar
Galaxy Trust Income and Growth Portfolio) operated under an investment
objective of seeking income balanced with capital appreciation from
inception through November 8, 1998, when the investment objective was
modified to seeking long-term capital appreciation. The Northstar Galaxy
Trust Research Enhanced Index Portfolio (formerly the Northstar Galaxy Trust
Multi-Sector Bond Portfolio) operated under an investment objective of
seeking current income while preserving capital through April 29, 1999, when
the investment objective was modified to seeking long-term capital
appreciation.
** The Neuberger Berman Advisers Management Trust Socially Responsive Portfolio
had not commenced operations as of December 31, 1998.
*** On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two
investment funds, the Old Trust and the present OCC Accumulation Trust (the
"Trust") at which time the Trust commenced operations. The total net assets
for the Equity, Managed, and Small Cap Portfolios immediately after the
transaction were $86,789,755, $682,601,380, and $139,812,573, respectively,
with respect to the Old Trust and for the Equity, Managed, and Small Cap
Portfolios, $3,764,598, $51,345,102, and $8,129,274, respectively with
respect to the Trust. For the period prior to September 14, 1994, the
performance figures for each of the Equity, Managed, and Small Cap
Portfolios reflect the performance of the corresponding Portfolios of the
Old Trust.
SAI-10
<PAGE>
The Investment Funds have provided the total return information for the
Portfolios, including the Portfolio total return information used to calculate
the total returns of the Sub-Accounts for periods prior to the inception of the
Sub-Accounts. The Alger American Fund, Fidelity's Variable Insurance Products
Fund, Fidelity's Variable Insurance Products Fund II, Janus Aspen Series,
Neuberger Berman Advisers Management Trust, OCC Accumulation Trust, and Putnam
Variable Trust are not affiliated with ReliaStar Life.
ReliaStar Life may disclose Cumulative Total Returns in conjunction with
the standard formats described above. The Cumulative Total Returns will be
calculated using the following formula:
CTR = ERV/P - 1
Where:
CTR = the Cumulative Total Return net of Sub-Account recurring charges for
the period.
ERV = the ending redeemable value of the hypothetical investment at the end
of the period.
P = a hypothetical single payment of $1,000.
EFFECT OF THE ANNUAL CONTRACT CHARGE ON PERFORMANCE DATA. The Contract
provides for a $30 Annual Contract Charge to be deducted annually at the end of
each Contract Year, from the Sub-Accounts and the Fixed Account based on the
proportion that the value of each such account bears to the total Contract
Value. For purposes of reflecting the Annual Contract Charge in yield and total
return quotations, the annual charge is converted into an annual charge per
$1,000 invested based on the Annual Contract Charges collected from the average
total assets of the Variable Account and Fixed Account during the calendar year
ending December 31, 1998.
COMPARATIVE ADVERTISING. In advertising and sales literature, the
performance of each Sub-Account may be compared to the performance of other
variable annuity issuers in general or to the performance of particular types of
variable annuities investing in mutual funds, or investment series of mutual
funds with investment objectives similar to each of the Sub-Accounts. Lipper
Analytical Services, Inc. ("Lipper") and the Variable Annuity Research Data
Service ("VARDS") are independent services which monitor and rank the
performance of variable annuity issuers in each of the major categories of
investment objectives on an industry-wide basis.
Lipper's rankings include variable life insurance issuers as well as
variable annuity issuers. VARDS rankings compare only variable annuity issuers.
The performance analyses prepared by Lipper and VARDS each rank such issuers on
the basis of total return, assuming reinvestment of distributions, but do not
take sales charges, redemption fees or certain expense deductions at the
separate account level into consideration. In addition, VARDS prepares risk
adjusted rankings, which consider the effects of market risk on total return
performance. This type of ranking provides data as to which funds provide the
highest total return within various categories of funds defined by the degree of
risk inherent in their investment objectives.
FINANCIAL STATEMENTS
This Statement of Additional Information includes audited Financial
Statements for the Variable Account as of December 31, 1998 and for each of the
two years in the period then ended. Deloitte & Touche serves as independent
auditors for the Variable Account. Although the financial statements are
audited, the period they cover is not necessarily indicative of the longer term
performance of the assets held in the Variable Account.
ReliaStar Life's statements of financial condition as of December 31, 1998
and 1997, and the related statements of operations, shareholder's equity and
cash flows for the years ended December 31, 1998 and 1997 which are incorporated
by reference in this Statement of Additional Information, should be considered
only as bearing on ReliaStar Life's ability to meet its obligations under the
Contracts. They should not be considered as bearing on the investment
performance of the assets held in the Variable Account.
SAI-11
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
ReliaStar Life Insurance
Company and Contract Owners of
ReliaStar Select Variable Account:
We have audited the accompanying statement of assets and liabilities of
ReliaStar Select Variable Account as of December 31, 1998 and the related
statements of operations and changes in contract owners' equity for the years
ended December 31, 1998 and 1997 (consisting of the portfolios listed within the
statements of operations and changes in contract owners' equity). These
financial statements are the responsibility of the management of ReliaStar Life
Insurance Company. 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, 1998, 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 each of the respective
portfolios constituting ReliaStar Select Variable Account as of December 31,
1998 and the results of its operations and changes in its contract owners'
equity for the years ended December 31, 1998 and 1997, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
February 19, 1999
SAI-12
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
(In Thousands, Except Shares)
<TABLE>
<CAPTION>
ASSETS: SHARES COST MARKET VALUE
- ------- ----------- ---------- ------------
<S> <C> <C> <C>
Investments in mutual funds at market value:
The Alger American Fund:
Alger American Growth Portfolio ....................... 194,288 $ 8,863 $ 10,340
Alger American MidCap Growth Portfolio ................ 95,235 2,417 2,749
Alger American Small Capitalization Portfolio ......... 70,700 2,942 3,109
Fidelity's Variable Insurance Products Fund (VIP) and
Variable Insurance Products Fund II (VIP II):
Equity-Income Portfolio ............................... 6,749,831 132,609 171,581
Growth Portfolio ...................................... 3,931,410 119,363 176,402
High Income Portfolio ................................. 3,684,927 44,768 42,487
Money Market Portfolio ................................ 39,543,197 39,543 39,543
Asset Manager Portfolio ............................... 3,707,048 56,528 67,320
Contrafund Portfolio .................................. 2,826,106 54,068 69,070
Index 500 Portfolio ................................... 636,803 73,338 89,948
Investment Grade Bond Portfolio ....................... 1,570,606 19,636 20,355
Overseas Portfolio .................................... 1,716,126 31,100 34,409
Janus Aspen Series:
Aggressive Growth Portfolio ........................... 72,943 1,694 2,013
Growth Portfolio ...................................... 576,276 12,626 13,566
International Growth Portfolio ........................ 250,679 5,024 5,332
Worldwide Growth Portfolio ............................ 998,637 26,493 29,050
Neuberger&Berman Advisers Management Trust:
Limited Maturity Bond Portfolio ....................... 378,327 5,172 5,229
Partners Portfolio .................................... 763,178 14,536 14,447
Northstar Galaxy Trust:
Northstar Growth + Value Portfolio .................... 641,386 9,677 12,032
Northstar High-Yield Bond Portfolio ................... 840,802 4,321 4,095
Northstar Emerging Growth Portfolio ................... 412,564 5,235 5,825
Northstar International Value Portfolio ............... 289,102 3,123 3,203
Northstar Multi-Sector Bond Portfolio ................. 1,344,179 6,882 6,492
OCC Accumulation Trust:
Equity Portfolio ...................................... 78,069 2,935 3,021
Global Equity Portfolio ............................... 22,669 352 350
Managed Portfolio ..................................... 386,683 16,513 16,914
Small Cap Portfolio ................................... 156,784 3,977 3,622
Putnam Variable Trust:
Putnam VT Asia Pacific Growth Fund .................... 308,398 2,707 2,569
Putnam VT Diversified Income Fund ..................... 1,115,832 12,098 11,705
Putnam VT Growth and Income Fund ...................... 2,424,435 61,352 69,751
Putnam VT Utilities Growth and Income Fund ............ 768,167 12,449 13,973
Putnam VT New Opportunities Fund ...................... 1,907,417 36,964 49,707
Putnam VT Voyager Fund ................................ 2,104,774 74,621 96,504
-------- ----------
Total Investments ..................................... $903,926
Total Assets ........................................ $1,096,713
==========
LIABILITIES AND CONTRACT OWNERS' EQUITY:
- ----------------------------------------
Due to ReliaStar Life Insurance Company
for contract charges and reserve transfers ............ $ 1,194
Contract Owners' Equity ................................ 1,095,519
----------
Total Liabilities and Contract Owners' Equity ........ $1,096,713
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-13
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY
For the years ended December 31, 1998 and 1997
(In Thousands)
<TABLE>
<CAPTION>
TOTAL ALL FUNDS
----------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
Net investment income (loss):
Reinvested dividend income ...................................... $ 15,873 $ 12,539
Reinvested capital gains ........................................ 54,817 26,840
Administrative expenses ......................................... (13,358) (10,031)
--------------- ---------------
Net investment income (loss) and capital gains ................ 57,332 29,348
--------------- ---------------
Realized and unrealized gains (losses):
Net realized gains (losses) on redemptions
of fund shares ................................................. 50,273 26,546
Increase (decrease) in unrealized appreciation
of investments ................................................. 44,042 67,581
--------------- ---------------
Net realized and unrealized gains (losses) .................... 94,315 94,127
--------------- ---------------
Additions (reductions) from operations ........................ 151,647 123,475
--------------- ---------------
Contract Owners' transactions:
Net premium payments ............................................ 218,047 166,899
Surrenders ...................................................... (72,846) (42,379)
Transfers between sub-accounts and fixed account ................ (853) 940
Annuity payments ................................................ (8) (3,586)
Death benefit payments .......................................... (4,145) --
Transfers to (from) required reserves ........................... 56 24
--------------- ---------------
Additions (reductions) for Contract Owners' transactions ...... 140,251 121,898
--------------- ---------------
Net additions (reductions) for the year ....................... 291,898 245,373
Contract Owners' Equity, beginning of the year ................... 803,621 558,248
--------------- ---------------
Contract Owners' Equity, end of the year ......................... $ 1,095,519 $ 803,621
=============== ===============
Units Outstanding, beginning of the year ......................... 41,286,715.494 32,298,080.615
Units Outstanding, end of the year ............................... 52,647,697.630 41,286,715.494
Net Asset Value per Unit:
Select*Annuity II ............................................... -- --
Select*Annuity III .............................................. -- --
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-14
<PAGE>
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
<TABLE>
<CAPTION>
ALGER AMERICAN ALGER AMERICAN ALGER AMERICAN FIDELITY'S VIP
GROWTH PORTFOLIO MIDCAP GROWTH PORTFOLIO SMALL CAPITALIZATION PORTFOLIO EQUITY-INCOME PORTFOLIO
- ------------------------------ ------------------------------ ------------------------------ ------------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 8 $ -- $ -- $ -- $ -- $ -- $ 2,219 $ 2,076
454 -- 100 -- 204 -- 7,898 10,438
(57) (2) (19) (1) (25) (3) (2,349) (2,078)
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
405 (2) 81 (1) 179 (3) 7,768 10,436
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
28 7 (25) -- (75) 3 11,855 6,166
1,493 (16) 358 (26) 182 (15) (3,667) 15,945
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
1,521 (9) 333 (26) 107 (12) 8,188 22,111
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
1,926 (11) 414 (27) 286 (15) 15,956 32,547
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
3,642 302 1,209 280 1,389 501 15,844 21,353
(306) (9) (65) -- (52) (10) (15,860) (10,884)
4,327 457 560 375 661 347 (6,165) (338)
-- -- -- -- -- -- 22 (293)
-- -- -- -- -- -- (383) --
-- -- -- -- -- -- 1 5
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
7,663 750 1,704 655 1,998 838 (6,541) 9,843
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
9,589 739 2,118 628 2,284 823 9,415 42,390
739 -- 628 -- 823 -- 161,977 119,587
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
$ 10,328 $ 739 $ 2,746 $ 628 $ 3,107 $ 823 $ 171,392 $ 161,977
============== ============== ============== ============== ============== ============== ============== ==============
75,409.182 -- 64,303.871 -- 82,159.255 -- 6,230,260.582 5,527,634.758
721,573.165 75,409.182 218,514.420 64,303.871 272,076.480 82,159.255 6,169,130.096 6,230,260.582
$ 14.328489 $ 9.803796 $ 12.570818 $ 9.774396 $ 11.424987 $ 10.019229 $ 40.594836 $ 36.844577
$ 14.311723 $ 9.800529 $ 12.556091 $ 9.771143 $ 11.411597 $ 10.015887 $ 21.955818 $ 19.944206
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-15
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
For the years ended December 31, 1998 and 1997
(In Thousands)
<TABLE>
<CAPTION>
FIDELITY'S VIP
GROWTH PORTFOLIO
--------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Net investment income (loss):
Reinvested dividend income ......................................... $ 703 $ 765
Reinvested capital gains ........................................... 18,381 3,426
Administrative expenses ............................................ (2,147) (1,860)
-------------- --------------
Net investment income (loss) and capital gains ................... 16,937 2,331
-------------- --------------
Realized and unrealized gains (losses):
Net realized gains (losses) on redemptions of fund shares .......... 12,799 8,791
Increase (decrease) in unrealized appreciation of investments ...... 19,246 13,579
-------------- --------------
Net realized and unrealized gains (losses) ....................... 32,045 22,370
-------------- --------------
Additions (reductions) from operations ........................... 48,982 24,701
-------------- --------------
Contract Owners' transactions:
Net premium payments ............................................... 10,562 11,137
Surrenders ......................................................... (15,436) (9,493)
Transfers between sub-accounts and fixed account ................... (3,776) (3,803)
Annuity payments ................................................... (118) (553)
Death benefit payments ............................................. (530) --
Transfers to (from) required reserves .............................. 50 49
-------------- --------------
Additions (reductions) for Contract Owners' transactions ......... (9,248) (2,663)
-------------- --------------
Net additions (reductions) for the year .......................... 39,734 22,038
Contract Owners' Equity, beginning of the year ...................... 136,560 114,522
-------------- --------------
Contract Owners' Equity, end of the year ............................ $ 176,294 $ 136,560
============== ==============
Units Outstanding, beginning of the year ............................ 5,008,779.521 4,887,336.339
Units Outstanding, end of the year .................................. 4,872,231.319 5,008,779.521
Net Asset Value per Unit:
Select*Annuity II .................................................. $ 53.455402 $ 38.825611
Select*Annuity III ................................................. $ 24.937964 $ 18.128084
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-16
<PAGE>
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
<TABLE>
<CAPTION>
FIDELITY'S VIP FIDELITY'S VIP FIDELITY'S VIP FIDELITY'S VIP II
HIGH INCOME PORTFOLIO MONEY MARKET PORTFOLIO OVERSEAS PORTFOLIO ASSET MANAGER PORTFOLIO
- ------------------------------ ------------------------------ ------------------------------ ------------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 2,934 $ 2,239 $ 1,946 $ 1,511 $ 718 $ 576 $ 1,948 $ 1,879
1,864 277 -- -- 2,117 2,285 5,844 4,713
(625) (543) (517) (435) (523) (535) (907) (853)
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
4,173 1,973 1,429 1,076 2,312 2,326 6,885 5,739
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
351 1,059 -- -- 2,574 1,437 1,164 1,152
(7,228) 2,332 -- -- (721) (509) 100 3,218
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
(6,877) 3,391 -- -- 1,853 928 1,264 4,370
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
(2,704) 5,364 1,429 1,076 4,165 3,254 8,149 10,109
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
12,749 7,454 32,390 18,651 2,011 3,932 5,658 4,589
(3,811) (1,963) (6,949) (3,216) (3,763) (2,506) (5,759) (4,285)
(4,564) (1,364) (17,800) (9,630) (4,856) (522) (2,422) (2,515)
(1) (262) (8) (711) -- (191) 46 (274)
(166) -- (1,274) -- (132) -- (223) --
(5) 7 2 -- -- (1) 5 (15)
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
4,202 3,872 6,361 5,094 (6,740) 712 (2,695) (2,500)
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
1,498 9,236 7,790 6,170 (2,575) 3,966 5,454 7,609
40,941 31,705 31,707 25,537 36,942 32,976 61,780 54,171
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
$ 42,439 $ 40,941 $ 39,497 $ 31,707 $ 34,367 $ 36,942 $ 67,234 $ 61,780
============== ============== ============== ============== ============== ============== ============== ==============
2,157,231.781 1,838,171.642 2,586,887.001 2,109,840.660 2,247,722.094 2,135,892.647 3,532,686.923 3,625,602.544
2,490,960.729 2,157,231.781 3,103,490.872 2,586,887.001 1,903,639.243 2,247,722.094 3,452,264.054 3,532,686.923
$ 26.083267 $ 27.621993 $ 15.893469 $ 15.266482 $ 23.325077 $ 20.959332 $ 23.219359 $ 20.447163
$ 14.104051 $ 14.948644 $ 12.071937 $ 11.605459 $ 14.690775 $ 13.211845 $ 16.186750 $ 14.266154
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-17
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
For the years ended December 31, 1998 and 1997
(In Thousands)
<TABLE>
<CAPTION>
FIDELITY'S VIP II
CONTRAFUND PORTFOLIO
--------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Net investment income:
Reinvested dividend income ......................................... $ 302 $ 185
Reinvested capital gains ........................................... 2,222 488
Administrative expenses ............................................ (764) (494)
-------------- --------------
Net investment income (loss) and capital gains ................... 1,760 179
-------------- --------------
Realized and unrealized gains (losses):
Net realized gains (losses) on redemptions of fund shares .......... 4,222 931
Increase (decrease) in unrealized appreciation of investments ...... 7,879 4,858
-------------- --------------
Net realized and unrealized gains (losses) ....................... 12,101 5,789
-------------- --------------
Additions (reductions) from operations ........................... 13,861 5,968
-------------- --------------
Contract Owners' transactions:
Net premium payments ............................................... 15,904 13,753
Surrenders ......................................................... (1,894) (1,061)
Transfers between sub-accounts and fixed account ................... 404 1,701
Annuity payments ................................................... (1) (85)
Death benefit payments ............................................. (138) --
Transfers to (from) required reserves .............................. (9) 9
-------------- --------------
Additions (reductions) for Contract Owners' transactions ......... 14,266 14,317
-------------- --------------
Net additions (reductions) for the year .......................... 28,127 20,285
Contract Owners' Equity, beginning of the year ...................... 40,860 20,575
-------------- --------------
Contract Owners' Equity, end of the year ............................ $ 68,987 $ 40,860
============== ==============
Units Outstanding, beginning of the year ............................ 2,310,029.259 1,419,399.210
Units Outstanding, end of the year .................................. 3,063,212.741 2,310,029.259
Net Asset Value per Unit:
Select*Annuity II .................................................. $ 13.192976 $ 10.283480
Select*Annuity III ................................................. $ 22.720573 $ 17.724777
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-18
<PAGE>
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
<TABLE>
<CAPTION>
FIDELITY'S VIP II
FIDELITY'S VIP II INVESTMENT GRADE JANUS ASPEN SERIES JANUS ASPEN SERIES
INDEX 500 PORTFOLIO BOND PORTFOLIO AGGRESSIVE GROWTH PORTFOLIO GROWTH PORTFOLIO
- ------------------------------ ------------------------------ ------------------------------ ------------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 623 $ 287 $ 674 $ 888 $ -- $ -- $ 99 $ 2
1,444 582 80 -- -- -- 77 --
(975) (552) (235) (203) (21) (1) (63) (2)
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
1,092 317 519 685 (21) (1) 113 --
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
7,384 2,908 839 1 297 1 (197) 2
7,553 6,209 (259) 306 269 50 949 (9)
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
14,937 9,117 580 307 566 51 752 (7)
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
16,029 9,434 1,099 992 545 50 865 (7)
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
20,268 15,647 4,633 2,830 716 244 2,121 509
(3,827) (1,437) (1,465) (1,447) (69) (2) (744) --
6,987 4,569 1,585 (2,951) (308) 834 10,600 281
(1) (220) -- (174) -- -- -- --
(206) -- (94) -- -- -- (73) --
14 (18) -- (2) -- -- -- --
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
23,235 18,541 4,659 (1,744) 339 1,076 11,904 790
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
39,264 27,975 5,758 (752) 884 1,126 12,769 783
50,577 22,602 14,572 15,324 1,126 -- 783 --
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
$ 89,841 $ 50,577 $ 20,330 $ 14,572 $ 2,010 $ 1,126 $ 13,552 $ 783
============== ============== ============== ============== ============== ============== ============== ==============
2,341,423.909 1,361,319.400 1,104,695.485 1,229,103.009 103,337.260 -- 77,261.368 --
3,298,146.247 2,341,423.909 1,485,056.102 1,104,695.485 139,266.463 103,337.260 999,754.701 77,261.368
$ 28.867007 $ 22.790727 $ 16.484567 $ 15.344020 $ 14.448721 $ 10.903326 $ 13.569864 $ 10.134410
$ 26.997774 $ 21.332832 $ 12.882327 $ 12.001084 $ 14.431797 $ 10.899696 $ 13.554003 $ 10.131035
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-19
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
For the years ended December 31, 1998 and 1997
(In Thousands)
<TABLE>
<CAPTION>
JANUS ASPEN SERIES
INTERNATIONAL GROWTH PORTFOLIO
------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Net investment income (loss):
Reinvested dividend income ......................................... $ 75 $ 2
Reinvested capital gains ........................................... 11 --
Administrative expenses ............................................ (57) (5)
------------ ------------
Net investment income (loss) and capital gains ................... 29 (3)
------------ ------------
Realized and unrealized gains (losses):
Net realized gains (losses) on redemptions of fund shares .......... 116 (26)
Increase (decrease) in unrealized appreciation of investments ...... 284 24
------------ ------------
Net realized and unrealized gains (losses) ....................... 400 (2)
------------ ------------
Additions (reductions) from operations ........................... 429 (5)
------------ ------------
Contract Owners' transactions:
Net premium payments ............................................... 2,019 692
Surrenders ......................................................... (112) --
Transfers between sub-accounts and fixed account ................... 943 1,392
Annuity payments ................................................... -- --
Death benefit payments ............................................. (32) --
Transfers to (from) required reserves .............................. -- --
------------ ------------
Additions (reductions) for Contract Owners' transactions ......... 2,818 2,084
------------ ------------
Net additions (reductions) for the year .......................... 3,247 2,079
Contract Owners' Equity, beginning of the year ...................... 2,079 --
------------ ------------
Contract Owners' Equity, end of the year ............................ $ 5,326 $ 2,079
============ ============
Units Outstanding, beginning of the year ............................ 217,144.911 --
Units Outstanding, end of the year .................................. 481,160.237 217,144.911
Net Asset Value per Unit:
Select*Annuity II .................................................. $ 11.080211 $ 9.575532
Select*Annuity III ................................................. $ 11.067242 $ 9.572341
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-20
<PAGE>
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
<TABLE>
<CAPTION>
NEUBERGER&BERMAN NEUBERGER&BERMAN
JANUS ASPEN SERIES ADVISERS MANAGEMENT TRUST ADVISERS MANAGEMENT TRUST NORTHSTAR GALAXY TRUST
WORLDWIDE GROWTH PORTFOLIO LIMITED MATURITY BOND PORTFOLIO PARTNERS PORTFOLIO GROWTH + VALUE PORTFOLIO
- ------------------------------ ------------------------------ ------------------------------ ------------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 486 $ 13 $ 69 $ -- $ 19 $ -- $ 3 $ 60
191 -- -- -- 596 -- 90 113
(244) (16) (37) (1) (144) (7) (156) (124)
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
433 (3) 32 (1) 471 (7) (63) 49
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
282 (3) (26) 1 (585) 2 277 133
2,565 (8) 54 3 (128) 39 1,504 769
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
2,847 (11) 28 4 (713) 41 1,781 902
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
3,280 (14) 60 3 (242) 34 1,718 951
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
13,095 3,081 3,693 321 8,482 1,439 1,778 4,795
(741) (42) (32) (3) (225) (25) (340) (167)
7,054 3,400 1,025 156 2,672 2,296 (1,554) (788)
-- (80) -- -- -- -- -- (17)
(17) -- -- -- -- -- (14) --
-- -- -- -- -- -- -- --
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
19,391 6,359 4,686 474 10,929 3,710 (130) 3,823
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
22,671 6,345 4,746 477 10,687 3,744 1,588 4,774
6,345 -- 477 -- 3,744 -- 10,429 5,655
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
$ 29,016 $ 6,345 $ 5,223 $ 477 $ 14,431 $ 3,744 $ 12,017 $ 10,429
============== ============== ============== ============== ============== ============== ============== ==============
648,637.588 -- 46,783.512 -- 364,555.535 -- 614,981.443 376,556.658
2,332,771.519 648,637.588 497,439.859 46,783.512 1,367,283.810 364,555.535 605,152,039 614,981.443
$ 12.451932 $ 9.785399 $ 10.510776 $ 10.201102 $ 10.565841 $ 10.272424 $ 11.938676 $ 10.136622
$ 12.437347 $ 9.782137 $ 10.498452 $ 10.197704 $ 10.553450 $ 10.268995 $ 19.982048 $ 16.980135
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-21
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
For the years ended December 31, 1998 and 1997
(In Thousands)
<TABLE>
<CAPTION>
NORTHSTAR GALAXY TRUST
HIGH-YIELD BOND PORTFOLIO
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Net investment income (loss):
Reinvested dividend income ......................................... $ 231 $ 5
Reinvested capital gains ........................................... 5 4
Administrative expenses ............................................ (37) (1)
----------- -----------
Net investment income (loss) and capital gains ................... 199 8
----------- -----------
Realized and unrealized gains (losses):
Net realized gains (losses) on redemptions of fund shares .......... (66) 1
Increase (decrease) in unrealized appreciation of investments ...... (217) (9)
----------- -----------
Net realized and unrealized gains (losses) ....................... (283) (8)
----------- -----------
Additions (reductions) from operations ........................... (84) --
----------- -----------
Contract Owners' transactions:
Net premium payments ............................................... 3,337 196
Surrenders ......................................................... (78) (5)
Transfers between sub-accounts and fixed account ................... 334 390
Annuity payments ................................................... -- --
Death benefit payments ............................................. -- --
Transfers to (from) required reserves .............................. -- --
----------- -----------
Additions (reductions) for Contract Owners' transactions ......... 3,593 581
----------- -----------
Net additions (reductions) for the year .......................... 3,509 581
Contract Owners' Equity, beginning of the year ...................... 581 --
----------- -----------
Contract Owners' Equity, end of the year ............................ $ 4,090 $ 581
=========== ===========
Units Outstanding, beginning of the year ............................ 57,089.696 --
Units Outstanding, end of the year .................................. 405,137.900 57,089.696
Net Asset Value per Unit:
Select*Annuity II .................................................. $ 10.107387 $ 10.353033
Select*Annuity III ................................................. $ 10.095547 $ 10.349575
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-22
<PAGE>
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
<TABLE>
<CAPTION>
NORTHSTAR GALAXY TRUST NORTHSTAR GALAXY TRUST NORTHSTAR GALAXY TRUST OCC ACCUMULATION TRUST
EMERGING GROWTH PORTFOLIO INTERNATIONAL VALUE PORTFOLIO MULTI-SECTOR BOND PORTFOLIO EQUITY PORTFOLIO
- --------------------------- --------------------------- --------------------------- ---------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 147 $ 114 $ 42 $ 2 $ 397 $ 241 $ 10 $ --
253 25 119 -- 2 21 42 --
(70) (45) (27) (3) (76) (43) (26) (1)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
330 94 134 (1) 323 219 26 (1)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
78 43 16 (15) (36) 9 24 2
353 235 85 (5) (323) (82) 67 19
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
431 278 101 (20) (359) (73) 91 21
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
761 372 235 (21) (36) 146 117 20
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
1,126 1,617 1,093 498 3,009 1,745 1,763 525
(156) (116) (45) -- (198) (76) (28) --
94 259 1,004 442 (135) 135 525 101
27 (46) -- -- -- (16) -- --
(56) -- -- -- (33) -- (5) --
(2) -- -- -- -- -- -- --
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
1,033 1,714 2,052 940 2,643 1,788 2,255 626
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
1,794 2,086 2,287 919 2,607 1,934 2,372 646
4,020 1,934 919 -- 3,876 1,942 646 --
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 5,814 $ 4,020 $ 3,206 $ 919 $ 6,483 $ 3,876 $ 3,018 $ 646
============ ============ ============ ============ ============ ============ ============ ============
261,508.753 143,393.073 91,244.985 -- 289,376.509 152,650.871 60,658.878 --
325,761.924 261,508.753 275,953.626 91,244.985 484,075.787 289,376.509 257,082.760 60,658.878
$ 11.998261 $ 10.363074 $ 11.630089 $ 10.077123 $ 10.031623 $ 10.219977 $ 11.752768 $ 10.644931
$ 17.795032 $ 15.382720 $ 11.616470 $ 10.073768 $ 13.419018 $ 13.682458 $ 11.738993 $ 10.641387
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-23
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
For the years ended December 31, 1998 and 1997
(In Thousands)
<TABLE>
<CAPTION>
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Net investment income (loss):
Reinvested dividend income ..................................... $ 4 $ 1
Reinvested capital gains ....................................... 13 7
Administrative expenses ........................................ (4) --
----------- -----------
Net investment income (loss) and capital gains ................ 13 8
----------- -----------
Realized and unrealized gains (losses):
Net realized gains (losses) on redemptions of fund shares ...... (6) --
Increase (decrease) in unrealized appreciation of investments .. 8 (10)
----------- -----------
Net realized and unrealized gains (losses) ................... 2 (10)
----------- -----------
Additions (reductions) from operations ....................... 15 (2)
----------- -----------
Contract Owners' transactions:
Net premium payments ........................................... 126 41
Surrenders ..................................................... (13) --
Transfers between sub-accounts and fixed account ............... 94 87
Annuity payments ............................................... -- --
Death benefit payments ......................................... -- --
Transfers to (from) required reserves .......................... -- --
----------- -----------
Additions (reductions) for Contract Owners' transactions ...... 207 128
----------- -----------
Net additions (reductions) for the year ....................... 222 126
Contract Owners' Equity, beginning of the year .................. 126 --
----------- -----------
Contract Owners' Equity, end of the year ........................ $ 348 $ 126
=========== ===========
Units Outstanding, beginning of the year ........................ 13,331.124 --
Units Outstanding, end of the year .............................. 33,070.482 13,331.124
Net Asset Value per Unit:
Select*Annuity II .............................................. $ 10.581111 $ 9.462786
Select*Annuity III ............................................. $ 10.568707 $ 9.459622
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-24
<PAGE>
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
<TABLE>
<CAPTION>
OCC ACCUMULATION TRUST OCC ACCUMULATION TRUST PUTNAM VT PUTNAM VT
MANAGED PORTFOLIO SMALL CAP PORTFOLIO ASIA PACIFIC GROWTH FUND DIVERSIFIED INCOME FUND
- ------------------------------ ------------------------------ ------------------------------ ------------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 63 $ -- $ 5 $ -- $ 133 $ 68 $ 500 $ 514
217 -- 57 -- -- -- 212 81
(161) (6) (39) (3) (40) (52) (167) (145)
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
119 (6) 23 (3) 93 16 545 450
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
4 3 (58) 1 (702) 2 40 210
372 29 (350) (5) 395 (652) (917) (63)
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
376 32 (408) (4) (307) (650) (877) 147
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
495 26 (385) (7) (214) (634) (332) 597
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
7,009 764 2,152 675 242 1,090 2,271 3,464
(259) (14) (69) (1) (125) (98) (819) (417)
6,614 2,263 782 471 (690) (75) (747) (947)
28 -- -- -- -- -- -- (68)
(30) -- -- -- (21) -- (106) --
(1) -- -- -- -- (1) -- --
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
13,361 3,013 2,865 1,145 (594) 916 599 2,032
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
13,856 3,039 2,480 1,138 (808) 282 267 2,629
3,039 -- 1,138 -- 3,375 3,093 11,424 8,795
- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
$ 16,895 $ 3,039 $ 3,618 $ 1,138 $ 2,567 $ 3,375 $ 11,691 $ 11,424
============== ============== ============== ============== ============== ============== ============== ==============
301,435.488 -- 111,567.266 -- 367,695.459 281,444.550 905,748.817 738,230.029
1,583,422.608 301,435.488 395,445.630 111,567.266 299,876.673 367,695.459 953,100.912 905,748.817
$ 10.661881 $ 10.083884 $ 9.158493 $ 10.199662 $ -- $ -- $ 12.823366 $ 13.172574
$ 10.649385 $ 10.080521 $ 9.147757 $ 10.196263 $ 8.554708 $ 9.177973 $ 12.230260 $ 12.573872
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-25
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
For the years ended December 31, 1998 and 1997
(In Thousands)
<TABLE>
<CAPTION>
PUTNAM VT
GROWTH AND INCOME FUND
--------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Net investment income (loss):
Reinvested dividend income ........................................ $ 1,037 $ 766
Reinvested capital gains .......................................... 6,772 1,865
Administrative expenses ........................................... (921) (659)
-------------- --------------
Net investment income (loss) and capital gains .................. 6,888 1,972
-------------- --------------
Realized and unrealized gains (losses):
Net realized gains (losses) on redemptions of fund shares ......... 2,145 1,322
Increase (decrease) in unrealized appreciation of investments ..... (1,009) 5,172
-------------- --------------
Net realized and unrealized gains (losses) ...................... 1,136 6,494
-------------- --------------
Additions (reductions) from operations .......................... 8,024 8,466
-------------- --------------
Contract Owners' transactions:
Net premium payments .............................................. 10,913 17,423
Surrenders ........................................................ (3,399) (1,780)
Transfers between sub-accounts and fixed account .................. (2,418) 2,300
Annuity payments .................................................. (3) (348)
Death benefit payments ............................................ (360) --
Transfers to (from) required reserves ............................. 5 (8)
-------------- --------------
Additions for Contract Owners' transactions ..................... 4,738 17,587
-------------- --------------
Net additions for the year ...................................... 12,762 26,053
Contract Owners' Equity, beginning of the year ..................... 56,904 30,851
-------------- --------------
Contract Owners' Equity, end of the year ........................... $ 69,666 $ 56,904
============== ==============
Units Outstanding, beginning of the year ........................... 2,892,975.508 1,917,929.188
Units Outstanding, end of the year ................................. 3,114,690.632 2,892,975.508
Net Asset Value per Unit:
Select*Annuity II ................................................. $ 22.959652 $ 20.154053
Select*Annuity III ................................................ $ 22.310696 $ 19.600831
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-26
<PAGE>
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
<TABLE>
<CAPTION>
PUTNAM VT
PUTNAM VT UTILITIES GROWTH AND PUTNAM VT
NEW OPPORTUNITIES FUND INCOME FUND VOYAGER FUND
- ------------------------------ ------------------------------ ------------------------------
1998 1997 1998 1997 1998 1997
- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
$ -- $ -- $ 293 $ 244 $ 185 $ 101
536 -- 506 333 4,510 2,182
(589) (399) (158) (106) (1,178) (853)
- -------------- -------------- -------------- -------------- -------------- --------------
(53) (399) 641 471 3,517 1,430
- -------------- -------------- -------------- -------------- -------------- --------------
1,165 491 1,136 259 5,253 1,653
7,474 5,307 (288) 1,052 7,959 9,844
- -------------- -------------- -------------- -------------- -------------- --------------
8,639 5,798 848 1,311 13,212 11,497
- -------------- -------------- -------------- -------------- -------------- --------------
8,586 5,399 1,489 1,782 16,729 12,927
- -------------- -------------- -------------- -------------- -------------- --------------
9,004 10,483 2,664 1,831 15,175 15,037
(1,526) (741) (485) (229) (4,196) (2,352)
(826) 330 923 (23) (1,780) 1,310
(1) (60) (1) (112) 3 (76)
(62) -- (22) -- (168) --
(8) 9 -- (1) 4 (9)
- -------------- -------------- -------------- -------------- -------------- --------------
6,581 10,021 3,079 1,466 9,038 13,910
- -------------- -------------- -------------- -------------- -------------- --------------
15,167 15,420 4,568 3,248 25,767 26,837
34,479 19,059 9,387 6,139 70,618 43,781
- -------------- -------------- -------------- -------------- -------------- --------------
$ 49,646 $ 34,479 $ 13,955 $ 9,387 $ 96,385 $ 70,618
============== ============== ============== ============== ============== ==============
1,954,935.865 1,312,658.043 542,787.706 444,807.852 3,622,068.960 2,796,110.142
2,296,798.944 1,954,935.865 713,087.494 542,787.706 4,037,068.162 3,622,068.960
$ -- $ -- $ 20.474582 $ 18.051233 $ 24.833168 $ 20.230934
$ 21.631274 $ 17.634520 $ 19.476236 $ 17.185467 $ 23.740783 $ 19.357233
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-27
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION:
ReliaStar Select Variable Account (the "Account") is a separate account of
ReliaStar Life Insurance Company ("ReliaStar Life"), a wholly owned
subsidiary of ReliaStar Financial Corp. The Account is registered as a unit
investment trust under the Investment Company Act of 1940.
Payments received under the contracts are allocated to sub-accounts of the
Account, each of which invested in one of the following funds during the
year:
<TABLE>
<CAPTION>
THE ALGER AMERICAN FUND FIDELITY VIP FIDELITY VIP II
------------------------------ ----------------------- -------------------------------
<S> <C> <C>
Growth Portfolio Equity-Income Portfolio Asset Manager Portfolio
MidCap Growth Portfolio Growth Portfolio Contrafund Portfolio
Small Capitalization Portfolio High Income Portfolio Index 500 Portfolio
Money Market Portfolio Investment Grade Bond Portfolio
Overseas Portfolio
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN SERIES NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST
------------------------------- ------------------------------------------
<S> <C>
Aggressive Growth Portfolio Limited Maturity Bond Portfolio
Growth Portfolio Partners Portfolio
International Growth Portfolio
Worldwide Growth Portfolio
</TABLE>
<TABLE>
<CAPTION>
NORTHSTAR GALAXY TRUST OCC ACCUMULATION TRUST PUTNAM VARIABLE TRUST
----------------------------- ----------------------- ----------------------------------
<S> <C> <C>
Growth+Value Portfolio Equity Portfolio Putnam VT Asia Pacific Growth Fund
High-Yield Bond Portfolio Global Equity Portfolio Putnam VT Diversified Income Fund
Emerging Growth Portfolio Managed Portfolio Putnam VT Growth and Income Fund
International Value Portfolio Small Capitalization Putnam VT Utilities Growth and
Multi-Sector Bond Portfolio Portfolio Income Fund
Putnam VT New Opportunities Fund
Putnam VT Voyager Fund
</TABLE>
Fred Alger Management, Inc. is the investment adviser for the three
portfolios of The Alger American Fund and is paid fees for its services by
The Alger American Funds Portfolios. Fidelity Management & Research Company
is the investment adviser for Fidelity Variable Insurance Products Fund (VIP)
and Variable Insurance Products Fund II (VIP II) and is paid for its services
by the VIP and VIP II Portfolios. Janus Capital Corporation is the investment
adviser for the four portfolios of Janus Aspen Series and is paid fees for
its services by the Janus Aspen Series Portfolios. Neuberger&Berman
Management is the investment adviser for the two portfolios of the Advisers
Management Trust and is paid fees for its services by the Neuberger Berman
Advisers Management Trust Funds. Northstar Investment Management Corporation,
an affiliate of ReliaStar Life, is the investment adviser for the five
Northstar Galaxy Trust Portfolios and is paid fees for its services by the
portfolios. OpCap Advisors is the investment adviser for the four portfolios
of the OCC Accumulation Trust and is paid fees for its services by the OCC
Accumulation Trust Funds. Putnam Investment Management, Inc. is the
investment adviser for Putnam Variable Trust and is paid fees for its
services by Putnam Variable Trust. See the related Funds' prospectuses for
further information.
On May 3, 1993, ReliaStar Life added the sub-accounts investing in shares of
Index 500 Portfolio. On January 6, 1994, ReliaStar Life established
sub-accounts investing in Putnam Variable Trust which were made available to
purchasers of ReliaStar Life's Select*Annuity III variable annuity contracts.
On May 2, 1994, sub-accounts investing in Putnam Variable Trust were also
made available to purchasers of ReliaStar Life's Select*Annuity II variable
annuity contracts. On December 30, 1994, sub-accounts investing in the
Northstar Galaxy Trust Portfolios were made available to purchasers of
ReliaStar Life's Select*Annuity III contracts. On April 30, 1995,
Sub-Accounts investing in the VIP II Contrafund Portfolio, Putnam VT Asia
Pacific Growth Fund and Putnam VT New Opportunities Fund were made available
to purchasers of ReliaStar
SAI-28
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Life's Select*Annuity III variable annuity contracts. On August 8, 1997,
sub-accounts investing in Northstar Galaxy Trust Growth Portfolio, Northstar
Galaxy Trust High-Yield Portfolio, Northstar Galaxy Trust International Value
Portfolio, Alger American, Janus Aspen Series, OCC Accumulation Trust and
Neuberger&Berman Management Trust were made available to purchasers of
ReliaStar Life's Select*Annuity contracts.
On July 29, 1998, Northstar Variable Trust Portfolio's changed its name to
Northstar Galaxy Trust Portfolios (GT). Also on July 29, 1998, the Northstar
Variable Trust Growth Portfolio changed its name to Northstar Galaxy Trust
Growth + Value Portfolio.
On November 9, 1998, Northstar Galaxy Trust Income and Growth Portfolio
changed its name to Northstar Galaxy Trust Emerging Growth Portfolio.
2. SIGNIFICANT ACCOUNTING POLICIES:
SECURITIES VALUATION TRANSACTIONS AND RELATED INVESTMENT INCOME:
The market value of investments in the sub-accounts is based on the closing
net asset values of the fund shares held at the end of the year. Investment
transactions are accounted for on the trade date (date the order to purchase
or redeem is executed) and dividend income and capital gain distributions are
recorded on the ex-dividend date. Net realized gains and losses on
redemptions of shares of the funds are determined on the basis of specific
identification of fund share costs.
VARIABLE ANNUITY RESERVES:
The amount of the reserves for contracts in the distribution year is
determined by actuarial assumptions which meet statutory requirements. Gains
or losses resulting from actual mortality experience, the full responsibility
for which is assumed by ReliaStar Life, are offset by transfers to, or from,
ReliaStar Life.
3. FEDERAL INCOME TAXES:
ReliaStar Life is taxed as a life insurance company under the Internal
Revenue Code of 1986, as amended (the "Code"). Since the Separate Account is
not a separate entity from ReliaStar Life, and its operations form a part of
ReliaStar Life, it is not 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 Account, 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.
4. CONTRACT CHARGES:
No deduction is made for a sales charge from the purchase payments made for
the contracts. However, on certain surrenders, ReliaStar Life will deduct
from the contract value a surrender charge as set forth in the contract.
Certain charges are made by ReliaStar Life to Contract Owners' Variable
Accumulation Values in the Account in accordance with the terms of the
contracts. These charges may include: an annual administrative/contract
charge of $30 from each contract on the anniversary date or at the time of
surrender if other than the anniversary date; and a daily administrative
charge for mortality and expense risk assumed by ReliaStar Life.
Various states and other governmental units levy a premium tax on annuity
contracts issued by insurance companies. If the owner of a contract lives in
a state which levies such a tax, ReliaStar Life may deduct the amount of the
tax from the purchase payments received or the value of the contract at
annuitization.
SAI-29
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
5. INVESTMENTS:
For the year ended December 31, 1998, investment activity in the funds was
as follows (in thousands):
<TABLE>
<CAPTION>
COST OF PROCEEDS
INVESTING FUND PURCHASES FROM SALES
-------------- --------- ----------
<S> <C> <C>
The Alger American Fund:
Alger American Growth Portfolio ....................... $ 9,181 $ 1,111
Alger American MidCap Growth Portfolio ................ 2,280 490
Alger American Small Capitalization Portfolio ......... 3,148 968
Fidelity's VIP and VIP II:
Equity-Income Portfolio ............................... 34,619 33,335
Growth Portfolio ...................................... 48,071 40,347
High Income Portfolio ................................. 24,060 15,603
Money Market Portfolio ................................ 129,308 121,400
Asset Manager Portfolio ............................... 13,691 9,501
Contrafund Portfolio .................................. 30,041 14,007
Index 500 Portfolio ................................... 47,046 22,626
Investment Grade Bond Portfolio ....................... 16,903 11,714
Overseas Portfolio .................................... 20,291 24,771
Janus Aspen Series:
Aggressive Growth Portfolio ........................... 4,952 4,642
Growth Portfolio ...................................... 34,948 22,918
International Growth Portfolio ........................ 6,616 3,696
Worldwide Growth Portfolio ............................ 22,929 3,032
Neuberger&Berman Advisers Management Trust:
Limited Maturity Bond Portfolio ....................... 5,621 891
Partners Portfolio .................................... 20,134 8,709
Northstar Galaxy Trust:
Northstar Growth+Value Portfolio ...................... 2,184 2,391
Northstar High-Yield Bond Portfolio ................... 5,248 1,452
Northstar Emerging Growth Portfolio ................... 2,073 716
Northstar International Value Portfolio ............... 4,125 1,952
Northstar Multi-Sector Bond Portfolio ................. 4,840 1,885
OCC Accumulation Trust:
Equity Portfolio ...................................... 2,935 659
Global Equity Portfolio ............................... 327 135
Managed Portfolio ..................................... 15,890 2,464
Small Cap Portfolio ................................... 3,324 451
Putnam Variable Trust:
Putnam VT Asia Pacific Growth Fund .................... 1,760 2,264
Putnam VT Diversified Income Fund ..................... 3,685 2,547
Putnam VT Growth and Income Fund ...................... 19,869 8,189
Putnam VT Utilities Growth and Income Fund ............ 9,376 5,636
Putnam VT New Opportunities Fund ...................... 10,875 4,354
Putnam VT Voyager Fund ................................ 28,120 15,587
-------- --------
Total ................................................. $588,470 $390,443
======== ========
</TABLE>
SAI-30
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF RELIASTAR FINANCIAL CORP.)
INDEPENDENT AUDITORS' REPORT*
CONSOLIDATED BALANCE SHEETS*
CONSOLIDATED STATEMENTS OF INCOME*
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY*
CONSOLIDATED STATEMENTS OF CASH FLOWS*
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS*
DECEMBER 31, 1998
- -----------------
* Incorporated by reference to the financial statements contained in the
Prospectus filed as part of Pre-effective Amendment No.1 to the Form S-6
Registration Statement of Select*Life Variable Account, File No. 333-69431,
filed April 5, 1999.
SAI-31
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Part A: None
Part B: RELIASTAR SELECT VARIABLE ACCOUNT.
Independent Auditors' Report Combined Statement of Assets
and Liabilities, December 31, 1998
Combined Statements of Operations and Changes in Contract
Owners' Equity, Years Ended December 31, 1998 and 1997
Notes to Financial Statements
RELIASTAR LIFE INSURANCE COMPANY.(1)
Independent Auditors' Report Consolidated Balance Sheets
December 31, 1998 and 1997
Consolidated Statements of Income, Years Ended December 31,
1998 and 1997
Consolidated Statements of Shareholders' Equity, Years Ended
December 31, 1998 and 1997
Consolidated Statements of Cash Flows, Years Ended December
31, 1998 and 1997
Notes to Consolidated Financial Statements
(b) Exhibits:
1. Resolution of the Board of Directors of ReliaStar Life Insurance
Company ("Depositor") authorizing the establishment of NWNL Select
Variable Account ("Registrant").(2)
Resolution of the Board of Directors of Depositor changing the name of
Registrant to ReliaStar Select Variable Account.(4)
2. Not Applicable.
3. (a) Form of General Distributor Agreement between Depositor and
Washington Square Securities, Inc. ("WSSI").(2)
(b) Forms of agreements between Depositor and broker-dealers with
respect to the sale of Contracts.(8)
(c) Form of Broker-Dealer Agency Compensation Schedule.(7)
4. (a) Form of Contract.(2)
(b) Form of Roth IRA Rider.(7)
(c) Form of Waiver of Contingent Deferred Sales Charge Rider.(7)
(d) Form of Partial Waiver of Contingent Deferred Sales Charge
Rider.(7)
(e) Form of Waiver of Annual Contract Charge Rider.(7)
(f) Form of Modification Rider.
(g) Form of Death Benefit and Owner Amendment.
5. (a) Contract Application Form.(2)
(b) Supplemental Application.
6. (a) Amended Articles of Incorporation of Depositor.(3)
(b) Amended Bylaws of Depositor.(3)
7. Not Applicable.
8. (a) Form of Participation Agreement by and between ReliaStar Life
Insurance Company and Fred Alger Management, Inc.(5)
(b) Participation Agreement with Fidelity's Variable Insurance
Products Fund and Fidelity Distributors Corporation and
Amendments Nos. 1-8.(3)
(c) Participation Agreement with Fidelity's Variable Insurance
Products Fund II and Fidelity Distributors Corporation and
Amendments Nos. 1-7.(3)
(d) Form of Participation Agreement by and between ReliaStar Life
Insurance Company and Janus Aspen Series.(5)
(e) Form of Participation Agreement by and between ReliaStar Life
Insurance Company and Neuberger Berman Advisers Management, Inc.,
Advisers Managers Trust and Neuberger Berman Management Inc.(5)
Amendment No. 1 dated February 1, 1999.(9)
<PAGE>
(f) Form of Participation Agreement by and between ReliaStar Life
Insurance Company and OpCap Advisors.(5)
(g) Participation Agreement with Putnam Capital Manager Trust and
Putnam Mutual Funds Corp. and Amendments Nos. 1-2.(3)
(h) Form of Service Agreement by and between ReliaStar Life Insurance
Company and Fred Alger Management, Inc.(5)
(i) Form of Service Agreement and Contract between ReliaStar Life
Insurance Company, WSSI, and Fidelity Investments Institutional
Operations Company and Fidelity Distributors Corporation dated
January 1, 1997.(4)
(j) Form of Service Agreement by and between ReliaStar Life Insurance
Company and Janus Capital Corporation.(5)
(k) Form of Service Agreement by and between ReliaStar Life Insurance
Company and Neuberger Berman Management Inc., Neuberger Berman
Advisers Management, Inc., and Advisers Managers Trust.(5)
(l) Form of Service Agreement by and between ReliaStar Life Insurance
Company and OpCap Advisors.(5)
9. Consent and Opinion of Stewart D. Gregg as to the legality of the
securities being registered.
10. Independent Auditors' Consent of Deloitte & Touche.
11. Not Applicable.
12. Not Applicable.
13. Schedules for Computation of Performance Quotations.
14. Powers of Attorney.
R. Michael Conley(2) Wayne R. Huneke(2) William R. Merriam(2)
Richard R. Crowl(2) Mark S. Jordahl(6) James R. Miller(6)
Michael J. Dubes(6) Kenneth U. Kuk(2) Robert C. Salipante(2)
John H. Flittie(2) Susan W.A. Mead(10) John G. Turner(2)
- -----------------
(1) Incorporated by reference to the financial statements contained in the
Prospectus filed as part of Pre-effective Amendment No. 1 of the Form S-6
Registration Statement of Select*Life Variable Account, File No. 333-69431,
filed April 5, 1999.
(2) Incorporated by reference to Post-effective Amendment No. 3 to the
Registrant's Form N-4 Registration Statement File No. 33-69892, filed April
16, 1996.
(3) Incorporated by reference to the Form S-6 Registration Statement of
Select*Life Variable Account, File No. 333-18517, filed December 23, 1996.
(4) Incorporated by reference to Post-Effective Amendment No. 4 to the
Registrant's Form N-4 Registration Statement File No. 33-69892, filed April
14, 1997.
(5) Incorporated by reference to Post-effective Amendment No. 21 to Select*Life
Variable Account, File No. 2-95392, filed August 4, 1997.
(6) Incorporated by reference to the Form S-6 Registration Statement of
Select*Life Variable Account, File No. 333-18517, filed April 16, 1998.
(7) Incorporated by reference to Post-Effective Amendment No. 8 to the
Registrant's Form N-4 Registration Statement File No. 33-69892, filed April
27, 1998.
(8) Incorporated by reference to Post-effective Amendment No. 3 of the Form S-6
Registration Statement of Select*Life Variable Account, File No. 333-18517,
filed April 15, 1998.
(9) Incorporated by reference to Pre-effective Amendment No. 1 of the Form S-6
Registration Statement of Select*Life Variable Account, File No. 333-69431,
filed April 5, 1999.
(10) Incorporated by reference to the initial Form S-6 Registration Statement of
Select*Life Variable Account, File No. 333-69431, filed December 22, 1998.
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES WITH DEPOSITOR
---- ------------------------------------
<S> <C>
John G. Turner Director, Chairman, and Chief Executive Officer
John H. Flittie Director, Vice Chairman, President, and Chief Operating Officer
Susan M. Bergen Secretary
Richard R. Crowl Director, Senior Vice President, and General Counsel
Michael J. Dubes Director
Wayne R. Huneke Director and Senior Vice President -- ReliaStar Financial Markets
Mark S. Jordahl Director, Senior Vice President and Chief Investment Officer
Kenneth U. Kuk Director and Senior Vice President -- Worksite Financial Services
Susan W.A. Mead Director and Vice President -- Strategic Marketing and Planning
William R. Merriam Director and Senior Vice President -- ReliaStar Reinsurance Group
James R. Miller Director, Senior Vice President, Chief Financial Officer and Treasurer
Robert C. Salipante Director and Senior Vice President -- Personal Financial Services
</TABLE>
The principal business address of each of the foregoing executive officers,
except Michael J. Dubes, is 20 Washington Avenue South, Minneapolis, Minnesota
55401. The principal business address of Michael J. Dubes is 1501 Fourth Avenue,
Seattle, Washington 98111.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Registrant is a separate account of Depositor, established by the Board of
Directors of Depositor in 1981 pursuant to the laws of the State of Minnesota.
Depositor is a direct, wholly-owned subsidiary of ReliaStar Financial Corp., a
Delaware Corporation.
A chart identifying the subsidiaries of ReliaStar Financial Corp. and their
relationship to one another is incorporated by reference to the Amendment No. 1
to Form N-4 Registration Statement of ReliaStar Life Insurance Company of New
York Variable Annuity Separate Account II, File No. 333-61879 filed April 9,
1999.
The financial statements of the Depositor and each subsidiary of Depositor
are consolidated with those of ReliaStar Financial. The financial statements of
the mutual funds controlled by ReliaStar Financial are separately filed with the
Securities and Exchange Commission.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of February 15, 1999, there were 17,241 owners of the Contracts, 10,813
of which were owners of qualified Contracts.
ITEM 28. INDEMNIFICATION
Reference is hereby made to Section 5.01 of Depositor's Bylaws, filed as an
Exhibit to this Registration Statement. The Bylaws of Depositor mandate
indemnification by Depositor of its directors, officers and certain others,
including directors, officers, employees and agents of Management, under certain
conditions. Section 4.01 of the Bylaws mandates indemnification by Management of
its directors and officers under certain conditions. Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of Depositor or Management, pursuant
to the foregoing provisions or otherwise, Depositor and Management 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 Depositor of expenses incurred or
paid by a director or officer or controlling person of Depositor or Management
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person of Depositor or Management in connection
with the securities being registered, Depositor or Management, as the case may
be, will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether or not such indemnification by it is against public policy
as expressed in the Act and will be governed by the final adjudication of such
issue.
An insurance company blanket bond is maintained providing $25,000,000
coverage for Depositor and Management, subject to a $500,000 deductible.
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) WSSI is the principal underwriter of the Contracts. WSSI also acts as
the principal underwriter of other variable annuity contracts issued by
Depositor through the ReliaStar Select Variable Account; flexible premium
variable life insurance contracts issued by Depositor through Select*Life
Variable Account, a separate account of Depositor registered as a unit
investment trust under the Investment Company Act of 1940; variable annuity
contracts issued by Northern Life Insurance Company ("Northern"), a subsidiary
of Depositor, through Separate Account One, a separate account of Northern
registered as a unit investment trust under the Investment Company Act of 1940;
and variable annuity and flexible premium variable life contracts issued by
ReliaStar Life Insurance Company of New York ("RLNY"), an indirect subsidiary of
Depositor, through ReliaStar Life Insurance Company of New York Variable Life
Separate Account I and ReliaStar Life Insurance Company of New York Variable
Annuity Separate Account II, separate accounts of RLNY registered as unit
investment trusts under the Investment Company Act of 1940.
(b) The directors and officers of WSSI are as follows:
NAME POSITIONS AND OFFICES WITH WSSI
--------------------- -------------------------------
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
Susan M. Bergen Secretary
Margaret B. Wall Treasurer and Chief Financial Officer
Kenneth S. Cameranesi Executive Vice President and Chief Operations Officer
Gene Grayson Vice President -- National Sales and Marketing
David R. Braun Assistant Vice President
Karin Callanan Assistant Vice President
Loralee A. Renelt Assistant Secretary
Allen L. Kidd Assistant Secretary
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: Michael J. Dubes, 1501 Fourth Avenue, Seattle, Washington
98101; James R. Gelder, 20 Security Drive, Avon, Connecticut 06001, Allen L.
Kidd, 222 North Arch Road, Richmond, Virginia 23236.
(c) For the year ended December 31, 1998, WSSI received $1,856,879 in fees
in connection with distribution of the Contracts.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts and records of Registrant are located at the offices of
Depositor at 20 Washington Avenue South, Minneapolis, Minnesota 55401.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
Registrant will file a post-effective amendment to this Registration
Statement as frequently as is necessary to ensure that the audited financial
statements in this Registration Statement are never more than 16 months old for
so long as payments under the Contracts may be accepted.
Registrant will include either (1) as part of any application to purchase a
Contract offered by the Prospectus, a space that an applicant can check to
request a Statement of Additional Information, or (2) a 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.
<PAGE>
Registrant will deliver any Statement of Additional Information and any
financial statements required to be made available under this form promptly upon
written or oral request.
The Depositor and the Registrant rely on a no-action letter issued by the
Division of Investment Management to the American Council of Life Insurance on
November 28, 1988 and represent that the conditions enumerated therein have been
or will be compiled with.
The Depositor represents that the fees and charges deducted under the
Contract in the aggregate are reasonable in relation to the services rendered,
the expenses expected to be incurred, and the risks assumed by ReliaStar Life
Insurance Company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Registrant certifies that it meets the requirements of Securities Act Rule
485(b) for effectiveness of this Amendment to Registration Statement 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,
1999.
RELIASTAR SELECT VARIABLE ACCOUNT
(Registrant)
By RELIASTAR LIFE INSURANCE COMPANY
(Depositor)
By /s/ John G. Turner
-----------------------------------
John G. Turner, Chairman
and Chief Executive Officer
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, 1999.
RELIASTAR LIFE INSURANCE COMPANY
(Depositor)
By /s/ John G. Turner
-----------------------------------
John G. Turner, Chairman
and Chief Executive Officer
As required by the Securities Act of 1933, this Amendment to the Registration
Statement has been signed on this 16th day of April, 1999 by the following
directors and officers of Depositor in the capacities indicated:
/s/ John G. Turner Chairman and Chief Executive Officer
- -----------------------------
John G. Turner
/s/ James R. Miller Senior Vice President, Chief Financial
- ------------------------------ Officer and Treasurer
James R. Miller
*Richard R. Crowl *Mark S. Jordahl *James R. Miller
*Michael J. Dubes *Kenneth U. Kuk *Robert C. Salipante
*John H. Flittie *Susan W.A. Mead *John G. Turner
*Wayne R. Huneke *William R. Merriam
*A majority of the Board of Directors
Stewart D. Gregg, by signing his name hereto, does hereby sign this document on
behalf of each of the above-named directors of ReliaStar Life Insurance Company
pursuant to powers of attorney duly executed by such persons.
/s/ Stewart D. Gregg
-----------------------------------
Stewart D. Gregg, Attorney-In-Fact
<PAGE>
EXHIBIT INDEX
EX-99.4f Form of Modification Rider
EX-99.4g Form of Death Benefit and Owner Amendment
EX-99.5b Form of Supplemental Application
EX-99.9 Consent and Opinion of Stewart D. Gregg as to the legality of the
securities being registered.
EX-99.10 Independent Auditors' Consent of Deloitte & Touche
EX-99.13 Schedules for Computation of Performance Quotations
EXHIBIT 99.4f
Modification Rider
This rider is a part of the base contract whose number is shown below. If not
shown below, the Base Contract Number is shown on the Contract Data Page.
Base Contract Number
Definitions
You, Your
The current owner of the base contract.
We, Us, Our
ReliaStar Life Insurance Company at our Home Office in Minneapolis, Minnesota.
The Amount of Death Benefit section of the Death Benefit Before The Annuity
Commencement Date provision of the contract has been revised to read as follows:
If an owner (including the Annuitant) dies, the amount of the death benefit is
the amount that would have been payable on surrender as of the Death Benefit
Valuation Date.
The Annuity Commencement Date section of the Annuity Benefits provision of the
contract has been revised to read as follows:
You specified the Annuity Commencement Date for this contract in the
application. It is the date on which annuity payments are to start. The date
will be the first day of the month following the Annuitant's 75th birthday
unless you select another date. In no event may the Annuity Commencement Date be
later than the Annuitant's 85th birthday or 10 years from issue, whichever is
later. You may change the Annuity Commencement Date at any time if we receive
written notice at least 30 days before both the current Annuity Commencement
Date and the new Annuity Commencement Date.
If the Annuity Commencement Date does not occur on a Valuation Date that is at
least 60 days after the Issue Date, we reserve the right to change the Annuity
Commencement Date to the first Valuation Date that is at least 60 days after the
Issue Date. If the Annuity Commencement Date is less than two years from the
Issue Date, we may apply Surrender Charges.
The Purchase Payments section of the Purchase Payments provision of the contract
has been revised to read as follows:
<PAGE>
You may make Purchase Payments any time before the Annuity Commencement Date
while the contract is in force. The Minimum Initial Purchase Payment we will
accept is $1,000,000. Subsequent Purchase Payments must equal at least the
applicable minimum as shown on the Contract Data Page.
The Mortality Risk Premium section of the Variable Account provision of the
contract has been amended by adding the following sentences:
A portion of the mortality risk premium will be credited to the Contract Value
on the Valuation Date next following each Contract Anniversary prior to the
Annuity Commencement Date. The amount of the credit is equal to .05% of the
Contract Value on the Contract Anniversary.
The first paragraph of the Transfers provision of the contract has been revised
to read:
You may transfer Contract Value among Sub-Accounts, from one or more
Sub-Accounts to the Fixed Account, and from the Fixed Account to one or more
Sub-Accounts subject to certain limitations. We make a transfer on the next
Valuation Date after we receive your written instructions requesting the
transfer. Transfers are subject to any charge imposed by the investment funds
invested in by the Sub-Accounts involved in the transfer. All transfers are
subject to any conditions the investment fund whose shares are involved may
impose.
[logo]
ReliaStar Life Insurance Company
Box 20
Minneapolis
Minnesota 55440
Executed at our Home Office
Robert C. Salipante President
/s/ Robert C. Salipante
Susan M. Bergen Secretary
/s/ Susan M. Bergen
EXHIBIT 99.4g
Death Benefit and Owner Amendment
This amendment is a part of the contract to which it is attached. If not shown
below, the Amendment Data is shown on the Contract Data Page. In the case of a
conflict with any provisions in the Contract, the provisions of this amendment
will control.
Amendment Data
Base Policy Number
Amendment Issue Date
Amendment Effective Date
The Amount of Death Benefit section of the Death Benefit Before the Annuity
Commencement Date provision is changed to read as follows:
Amount of Death Benefit
The amount of the Death Benefit is defined as follows:
1.
If an Owner dies on or before the first day of the month following such Owner's
85th birthday, the Death Benefit is the greatest of:
a.
The Contract Value on the Death Benefit Valuation Date, or
b.
The Adjusted Purchase Payment Total, or
c.
The Reset Death Benefit
2.
If an Owner dies after the first day of the month following such Owner's 85th
birthday, the Death Benefit is the Contract Value on the Death Benefit Valuation
Date.
The Adjusted Purchase Payment Total is defined as follows. The initial Adjusted
Purchase Payment Total is equal to the amount of the first Purchase Payment we
receive. The Adjusted Purchase Payment Total is increased by the amount of each
subsequent Purchase Payment. For each Partial Surrender, the Adjusted Purchase
Payment Total is reduced by multiplying by the fraction A divided by B, (A/B),
where:
A. Is the Contract Value immediately after the Partial Surrender, and
B. Is the Contract Value immediately before the Partial Surrender.
<PAGE>
The Reset Death Benefit is defined as follow. On the Reset Contract Anniversary,
the Reset Death Benefit is equal to the Contract Value. The Reset Death Benefit
is increased by the amount of each Purchase Payment made after the Reset
Contract Anniversary. For each Partial Surrender taken after the Reset Contract
Anniversary, the Reset Death Benefit is reduced by multiplying by the fraction A
divided by B, (A/B), where:
A. Is the Contract Value immediately after the Partial Surrender, and
B. Is the Contract Value immediately before the Partial Surrender.
The Reset Contract Anniversary is defined as the latest Specified Contract
Anniversary before the death of an Owner. Specified Contract Anniversary is
defined on the Contract Data Page.
The last sentence of the definition of Owner in the Definitions section is
changed to read as follows:
You may make a request to change the Owner of this Contract by sending us
written notice. We reserve the right to deny a request to change the Owner,
unless we receive written proof, satisfactory to us, that each proposed Owner is
insurable.
[logo]
ReliaStar Life Insurance Company
Box 20
Minneapolis
Minnesota 55440
Executed at our Home Office
Robert C. Salipante President
/s/ Robert C. Salipante
Susan M. Bergen Secretary
/s/ Susan M. Bergen
EXHIBIT 99.5b
RELIASTAR
SUPPLEMENT TO RELIASTAR LIFE INSURANCE COMPANY
VARIABLE ANNUITY APPLICATION P.O. Box 20, Minneapolis, Minnesota 55440
ALLOCATION OF PREMIUM PAYMENTS: ALLOCATION MUST BE IN WHOLE PERCENTAGE POINTS
TOTALING 100%.
<TABLE>
<S> <C> <C>
a. [ %] Fixed Account (SFA) JANUS ASPEN SERIES OCC ACCUMULATION TRUST
l. [ %] Aggressive Growth x. [ %] Equity
THE ALGER AMERICAN FUND Portfolio (JAG) Portfolio (OEP)
b. [ %] Alger American Growth m. [ %] Growth y. [ %] Global Equity
Portfolio (AGR) Portfolio (JGP) Portfolio (OGE)
c. [ %] Alger American Midcap n. [ %] International Growth z. [ %] Managed
Growth Portfolio (AMG) Portfolio (JIG) Portfolio (OMP)
d. [ %] Alger American Small o. [ %] Worldwide Growth aa. [ %] Small Cap
Capitalization Portfolio (ASC) Portfolio (JWG) Portfolio (OSC)
FIDELITY VARIABLE INSURANCE NEUBERGER BERMAN ADVISERS PUTNAM VARIABLE TRUST
PRODUCTS FUNDS MANAGEMENT TRUST
bb. [ %] Putnam VT Growth &
e. [ %] VIP Equity Income p. [ %] Limited Maturity Bond Income Fund (PGI)
Portfolio (FEI) Portfolio (NLM)
cc. [ %] Putnam VT New
f. [ %] VIP Growth q. [ %] Partners Opportunities Fund (PNO)
Portfolio (FGP) Portfolio (NPP)
dd. [ %] Putnam VT Voyager
g. [ %] VIP High Income r. [ %] Socially Responsive Fund (PVY)
Portfolio (FHI) Portfolio (NSR)
OTHER INVESTMENT COMPANIES/FUNDS
h. [ %] VIP Money Market NORTHSTAR GALAXY TRUST
Portfolio (FMM) SPECIFY BOTH THE INVESTMENT COMPANY
s. [ %] Emerging Growth AND FUND NAMES.
FIDELITY VARIABLE INSURANCE Portfolio (NIG)
PRODUCTS FUNDS II ee. [ %] ________________________
t. [ %] Growth + Value
i. [ %] VIP II Contrafund Portfolio (NGF) ff. [ %] ________________________
Portfolio (FCF)
u. [ %] High Yield Bond gg. [ %] ________________________
j. [ %] VIP II Index 500 Portfolio (NHY)
Portfolio (FIN) hh. [ %] ________________________
v. [ %] International Value
k. [ %] VIP II Investment Grade Portfolio (NIV)
Bond Portfolio (FIG)
w. [ %] Research Enhanced
Index Portfolio (NMS)
</TABLE>
We will allocate all future payments as shown above. You may change this
allocation by giving us written notice.
We reserve the right to limit your participation to a total of seventeen
Sub-Account funds over the lifetime of your Contract. Upon participation in the
seventeenth Sub-Account fund, you would be able to allocate premiums to and
transfer within the seventeen Sub-Account funds already used and which are still
available, but could not participate in any other Sub-Account funds.
I understand and agree that this supplement is part of my application for a
variable annuity and will be considered part of my Contract with ReliaStar Life
Insurance Company.
Date Signature of Agent Signature of Proposed Contract Owner
- ---------- ---------------------------- ------------------------------------
EXHIBIT 99.9
[RL logo]
April 16, 1999
ReliaStar Life Insurance Company
20 Washington Avenue South
Minneapolis, Minnesota 55401
Madam/Sir:
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 Select Variable Account (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 (the "Company") as a
separate account for assets applicable to variable annuity contracts, pursuant
to Minnesota Statutes Sections 61A.13 to 61A.21, as amended, and the
Registration Statement, on Form N-4, as amended by Post-Effective Amendment No.
10 thereto, File No. 33-69892 (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 Minnesota.
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 references to me wherever appearing therein.
Very truly yours,
/s/ Stewart D. Gregg
- ------------------------------
Stewart D. Gregg, Counsel
EXHIBIT 99.10
INDEPENDENT AUDITORS' CONSENT
Board of Directors and Contract Holders
ReliaStar Select Variable Account
We consent to the use in this Post-Effective Amendment No. 10 to Registration
Statement on Form N-4 (File No. 33-69892) of the ReliaStar Select Variable
Account filed under the Securities Act of 1933, and Amendment No. 11 to the
Registration Statement under the Investment Company Act of 1940, respectively,
of our report dated February 19, 1999 on the audit of the financial statements
of ReliaStar Select Variable Account as of December 31, 1998 and for each of the
two years in the period then ended, appearing in the Statement of Additional
Information, and our report dated February 4, 1999 on the audit of the
consolidated financial statements of ReliaStar Life Insurance Company and
subsidiaries as of and for the years ended December 31, 1998 and 1997
incorporated by reference in the Statement of Additional Information of such
Registration Statement, and to the references to us under the heading "Financial
Statements and Experts" appearing in the Prospectus and under the heading
"Independent Auditors" and "Financial Statements" appearing in the Statement of
Additional Information, all of which are part of such Registration Statement.
/s/ Deloitte & Touche
Minneapolis, Minnesota
April 14, 1999
EXHIBIT 99.13
ALGER GROWTH
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
08/08/97 $1,000.00 10.000000 100.000
08/08/98 12.265967 100.000 $1,226.60 $1,225.93 99.945
12/31/98 14.311723 99.945 $1,430.39 $1,429.72 99.899
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,429.72 $54.00 $1,375.72
Total Return Incep to Date 42.97% 37.57%
Average Annual Return 29.15% 25.64%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 9.800529 102.035
12/31/98 14.311723 102.035 $1,460.30 $1,459.63 101.988
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,459.63 $54.00 $1,405.63
Total Return Incep to Date 45.96% 40.56%
Average Annual Return 45.96% 40.56%
</TABLE>
<PAGE>
ALGER MID CAP GROWTH
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
08/08/97 $1,000.00 10.000000 100.000
08/08/98 11.182789 100.000 $1,118.28 $1,117.61 99.940
12/31/98 12.556091 99.940 $1,254.86 $1,254.19 99.887
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,254.19 $54.00 $1,200.19
Total Return Incep to Date 25.42% 20.02%
Average Annual Return 17.60% 13.95%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 9.771143 102.342
12/31/98 12.556091 102.342 $1,285.02 $1,284.35 102.289
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,284.35 $54.00 $1,230.35
Total Return Incep to Date 28.43% 23.03%
Average Annual Return 28.43% 23.03%
</TABLE>
<PAGE>
ALGER SMALL CAP
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
08/08/97 $1,000.00 10.000000 100.000
08/08/98 10.368611 100.000 $1,036.86 $1,036.19 99.935
12/31/98 11.411597 99.935 $1,140.42 $1,139.75 99.877
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,139.75 $54.00 $1,085.75
Total Return Incep to Date 13.98% 8.58%
Average Annual Return 9.81% 6.06%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 10.015887 99.841
12/31/98 11.411597 99.841 $1,139.35 $1,138.68 99.783
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,138.68 $54.00 $1,084.68
Total Return Incep to Date 13.87% 8.47%
Average Annual Return 13.87% 8.47%
</TABLE>
<PAGE>
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>
01/06/94 $1,000.00 10.000000 100.000
01/06/95 10.572735 100.000 $1,057.27 $1,056.60 99.937
01/06/96 13.960766 99.937 $1,395.19 $1,394.52 99.889
01/06/97 15.835032 99.889 $1,581.74 $1,581.07 99.846
01/06/98 19.808248 99.846 $1,977.78 $1,977.11 99.813
12/31/98 21.955818 99.813 $2,191.47 $2,190.80 99.782
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $2,190.80 $36.00 $2,154.80
Total Return Incep to Date 119.08% 115.48%
Average Annual Return 17.03% 16.64%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 19.944206 50.140
12/31/98 21.955818 50.140 $1,100.86 $1,100.19 50.109
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,100.19 $54.00 $1,046.19
Total Return Incep to Date 10.02% 4.62%
Average Annual Return 10.02% 4.62%
</TABLE>
<PAGE>
FIDELITY GROWTH PORTFOLIO
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
01/06/94 $1,000.00 10.000000 100.000
01/06/95 9.719394 100.000 $971.94 $971.27 99.931
01/06/96 12.806119 99.931 $1,279.73 $1,279.06 99.879
01/06/97 14.968966 99.879 $1,495.08 $1,494.41 99.834
01/06/98 18.079980 99.834 $1,805.00 $1,804.33 99.797
12/31/98 24.937964 99.797 $2,488.73 $2,488.06 99.770
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $2,488.06 $36.00 $2,452.06
Total Return Incep to Date 148.81% 145.21%
Average Annual Return 20.06% 19.71%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 18.128084 55.163
12/31/98 24.937964 55.163 $1,375.65 $1,374.98 55.136
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,374.98 $54.00 $1,320.98
Total Return Incep to Date 37.50% 32.10%
Average Annual Return 37.50% 32.10%
</TABLE>
<PAGE>
FIDELITY HIGH INCOME
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
01/06/94 $1,000.00 10.000000 100.000
01/06/95 9.647019 100.000 $964.70 $964.03 99.931
01/06/96 11.576790 99.931 $1,156.87 $1,156.20 99.873
01/06/97 12.858559 99.873 $1,284.22 $1,283.55 99.821
01/06/98 15.044284 99.821 $1,501.73 $1,501.06 99.776
12/31/98 14.104051 99.776 $1,407.25 $1,406.58 99.729
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,406.58 $36.00 $1,370.58
Total Return Incep to Date 40.66% 37.06%
Average Annual Return 7.08% 6.53%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 14.948644 66.896
12/31/98 14.104051 66.896 $943.50 $942.83 66.848
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $942.83 $54.00 $888.83
Total Return Incep to Date -5.72% -11.12%
Average Annual Return -5.72% -11.12%
</TABLE>
<PAGE>
FIDELITY CONTRAFUND
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
05/01/95 $1,000.00 10.000000 100.000
05/01/96 12.989201 100.000 $1,298.92 $1,298.25 99.948
05/01/97 14.507671 99.948 $1,450.02 $1,449.35 99.902
05/01/98 20.155168 99.902 $2,013.55 $2,012.88 99.869
12/31/98 22.720573 99.869 $2,269.08 $2,268.41 99.840
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $2,268.41 $45.00 $2,223.41
Total Return Incep to Date 126.84% 122.34%
Average Annual Return 25.00% 24.32%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 17.724777 56.418
12/31/98 22.720573 56.418 $1,281.85 $1,281.18 56.389
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,281.18 $54.00 $1,227.18
Total Return Incep to Date 28.12% 22.72%
Average Annual Return 28.12% 22.72%
</TABLE>
<PAGE>
FIDELITY INDEX
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
01/06/94 $1,000.00 10.000000 100.000
01/06/95 9.980301 100.000 $998.03 $997.36 99.933
01/06/96 13.477119 99.933 $1,346.81 $1,346.14 99.883
01/06/97 16.434588 99.883 $1,641.54 $1,640.87 99.842
01/06/98 21.238464 99.842 $2,120.50 $2,119.83 99.811
12/31/98 26.997774 99.811 $2,694.67 $2,694.00 99.786
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $2,694.00 $36.00 $2,658.00
Total Return Incep to Date 169.40% 165.80%
Average Annual Return 21.99% 21.66%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 21.332832 46.876
12/31/98 26.997774 46.876 $1,265.55 $1,264.88 46.851
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,264.88 $54.00 $1,210.88
Total Return Incep to Date 26.49% 21.09%
Average Annual Return 26.49% 21.09%
</TABLE>
<PAGE>
FIDELITY INVESTMENT GRADE
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
01/06/94 $1,000.00 10.000000 100.000
01/06/95 9.474873 100.000 $947.49 $946.82 99.929
01/06/96 10.928088 99.929 $1,092.04 $1,091.37 99.868
01/06/97 11.119064 99.868 $1,110.44 $1,109.77 99.808
01/06/98 12.132093 99.808 $1,210.88 $1,210.21 99.752
12/31/98 12.882327 99.752 $1,285.04 $1,284.37 99.700
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,284.37 $36.00 $1,248.37
Total Return Incep to Date 28.44% 24.84%
Average Annual Return 5.15% 4.55%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 12.001084 83.326
12/31/98 12.882327 83.326 $1,073.43 $1,072.76 83.274
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,072.76 $54.00 $1,018.76
Total Return Incep to Date 7.28% 1.88%
Average Annual Return 7.28% 1.88%
</TABLE>
<PAGE>
JANUS AGGRESSIVE GROWTH
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
08/08/97 $1,000.00 10.000000 100.000
08/08/98 12.187205 100.000 $1,218.72 $1,218.05 99.945
12/31/98 14.431797 99.945 $1,442.39 $1,441.72 99.899
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,441.72 54.00 $1,387.72
Total Return Incep to Date 44.17% 38.77%
Average Annual Return 29.93% 26.43%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 10.899696 91.746
12/31/98 14.431797 91.746 $1,324.06 $1,323.39 91.699
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,323.39 $54.00 $1,269.39
Total Return Incep to Date 32.34% 26.94%
Average Annual Return 32.34% 26.94%
</TABLE>
<PAGE>
JANUS GROWTH
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
08/08/97 $1,000.00 10.000000 100.000
08/08/98 11.731128 100.000 $1,173.11 $1,172.44 99.943
12/31/98 13.554003 99.943 $1,354.63 $1,353.96 99.893
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,353.96 $54.00 $1,299.96
Total Return Incep to Date 35.40% 30.00%
Average Annual Return 24.22% 20.65%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 10.131033 98.707
12/31/98 13.554003 98.707 $1,337.87 $1,337.20 98.657
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,337.20 $54.00 $1,283.20
Total Return Incep to Date 33.72% 28.32%
Average Annual Return 33.72% 28.32%
</TABLE>
<PAGE>
JANUS INTERNATIONAL
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
08/08/97 $1,000.00 10.000000 100.000
08/08/98 11.445242 100.000 $1,144.52 $1,143.85 99.941
12/31/98 11.067242 99.941 $1,106.08 $1,105.41 99.881
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,105.41 $54.00 $1,051.41
Total Return Incep to Date 10.54% 5.14%
Average Annual Return 7.44% 3.65%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 9.572341 104.468
12/31/98 11.067242 104.468 $1,156.17 $1,155.50 104.407
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,155.50 $54.00 $1,101.50
Total Return Incep to Date 15.55% 10.15%
Average Annual Return 15.55% 10.15%
</TABLE>
<PAGE>
JANUS WORLDWIDE
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
08/08/97 $1,000.00 10.000000 100.000
08/08/98 12.068635 100.000 $1,206.86 $1,206.19 99.944
12/31/98 12.437347 99.944 $1,243.04 $1,242.37 99.891
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,242.37 $54.00 $1,188.37
Total Return Incep to Date 24.24% 18.84%
Average Annual Return 16.80% 13.15%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 9.782137 102.227
12/31/98 12.437347 102.227 $1,271.43 $1,270.76 102.173
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,270.76 $54.00 $1,216.76
Total Return Incep to Date 27.08% 21.68%
Average Annual Return 27.08% 21.68%
</TABLE>
<PAGE>
NEUBERGER BERMAN LIMITED MATURITY BOND FUND
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
08/08/97 $1,000.00 10.000000 100.000
08/08/98 10.442426 100.000 $1,044.24 $1,043.57 99.936
12/31/98 10.498452 99.936 $1,049.17 $1,048.50 99.872
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,048.50 $54.00 $994.50
Total Return Incep to Date 4.85% -0.55%
Average Annual Return 3.45% -0.39%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 10.197704 98.061
12/31/98 10.498452 98.061 $1,029.49 $1,028.82 97.997
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,028.82 $54.00 $974.82
Total Return Incep to Date 2.88% -2.52%
Average Annual Return 2.88% -2.52%
</TABLE>
<PAGE>
NEUBERGER BERMAN PARTNERS PORTFOLIO
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
08/08/97 $1,000.00 10.000000 100.000
08/08/98 10.135751 100.000 $1,013.58 $1,012.91 99.934
12/31/98 10.553450 99.934 $1,054.65 $1,053.98 99.870
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,053.98 $54.00 $999.98
Total Return Incep to Date 5.40% -0.00%
Average Annual Return 3.83% -0.00%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 10.268995 97.381
12/31/98 10.553450 97.381 $1,027.70 $1,027.03 97.317
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,027.03 $54.00 $973.03
Total Return Incep to Date 2.70% -2.70%
Average Annual Return 2.70% -2.70%
</TABLE>
<PAGE>
NORTHSTAR GROWTH + VALUE PORTFOLIO
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
01/03/95 $1,000.00 10.000000 100.000
01/03/96 12.390501 100.000 $1,239.05 $1,238.38 99.946
01/03/97 14.919464 99.946 $1,491.14 $1,490.47 99.901
01/03/98 16.871709 99.901 $1,685.50 $1,684.83 99.861
12/31/98 19.982048 99.861 $1,995.43 $1,994.76 99.828
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,994.76 $45.00 $1,949.76
Total Return Incep to Date 99.48% 94.98%
Average Annual Return 18.87% 18.19%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 16.980133 58.892
12/31/98 19.982048 58.892 $1,176.79 $1,176.12 58.859
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,176.12 $54.00 $1,122.12
Total Return Incep to Date 17.61% 12.21%
Average Annual Return 17.61% 12.21%
</TABLE>
<PAGE>
NORTHSTAR HIGH YIELD
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
08/08/97 $1,000.00 10.000000 100.000
08/08/98 10.667913 100.000 $1,066.79 $1,066.12 99.937
12/31/98 10.095547 99.937 $1,008.92 $1,008.25 99.871
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,008.25 $54.00 $954.25
Total Return Incep to Date 0.83% -4.57%
Average Annual Return 0.59% -3.30%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 10.176962 98.261
12/31/98 10.095547 98.261 $992.00 $991.33 98.195
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $991.33 $54.00 $937.33
Total Return Incep to Date -0.87% -6.27%
Average Annual Return -0.87% -6.27%
</TABLE>
<PAGE>
NORTHSTAR EMERGING GROWTH
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
01/03/95 $1,000.00 10.000000 100.000
01/03/96 12.051734 100.000 $1,205.17 $1,204.50 99.944
01/03/97 13.546973 99.944 $1,353.94 $1,353.27 99.895
01/03/98 15.440712 99.895 $1,542.45 $1,541.78 99.852
12/31/98 17.795032 99.852 $1,776.86 $1,776.19 99.814
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,776.19 $45.00 $1,731.19
Total Return Incep to Date 77.62% 73.12%
Average Annual Return 15.47% 14.73%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 15.382720 65.008
12/31/98 17.795032 65.008 $1,156.82 $1,156.15 64.970
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,156.15 $54.00 $1,102.15
Total Return Incep to Date 15.61% 10.21%
Average Annual Return 15.61% 10.21%
</TABLE>
<PAGE>
NORTHSTAR INTERNATIONAL VALUE
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
08/08/97 $1,000.00 10.000000 100.000
08/08/98 10.965373 100.000 $1,096.54 $1,095.87 99.939
12/31/98 11.616470 99.939 $1,160.94 $1,160.27 99.881
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,160.27 $54.00 $1,106.27
Total Return Incep to Date 16.03% 10.63%
Average Annual Return 11.23% 7.50%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 10.073768 99.268
12/31/98 11.616470 99.268 $1,153.14 $1,152.47 99.210
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,152.47 $54.00 $1,098.47
Total Return Incep to Date 15.25% 9.85%
Average Annual Return 15.25% 9.85%
</TABLE>
<PAGE>
NORTHSTAR RESEARCH ENHANCED INDEX(FORMERLY MULTI-SECTOR BOND)
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
01/03/95 $1,000.00 10.000000 100.000
01/03/96 11.437543 100.000 $1,143.75 $1,143.08 99.941
01/03/97 12.703515 99.941 $1,269.61 $1,268.94 99.889
01/03/98 13.403064 99.889 $1,338.81 $1,338.14 99.839
12/31/98 13.419018 99.839 $1,339.74 $1,339.07 99.789
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,339.07 $45.00 $1,294.07
Total Return Incep to Date 33.91% 29.41%
Average Annual Return 7.58% 6.67%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 13.425025 74.488
12/31/98 13.419018 74.488 $999.55 $998.88 74.438
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $998.88 $54.00 $944.88
Total Return Incep to Date -0.11% -5.51%
Average Annual Return -0.11% -5.51%
</TABLE>
<PAGE>
OCC EQUITY PORTFOLIO
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
08/08/97 $1,000.00 10.000000 100.000
08/08/98 11.383731 100.000 $1,138.37 $1,137.70 99.941
12/31/98 11.738993 99.941 $1,173.21 $1,172.54 99.884
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,172.54 $54.00 $1,118.54
Total Return Incep to Date 17.25% 11.85%
Average Annual Return 12.07% 8.35%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 10.641387 93.973
12/31/98 11.738993 93.973 $1,103.15 $1,102.48 93.916
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,102.48 $54.00 $1,048.48
Total Return Incep to Date 10.25% 4.85%
Average Annual Return 10.25% 4.85%
</TABLE>
<PAGE>
OCC GLOBAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
08/08/97 $1,000.00 10.000000 100.000
08/08/98 10.330954 100.000 $1,033.10 $1,032.43 99.935
12/31/98 10.568707 99.935 $1,056.19 $1,055.52 99.872
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,055.52 $54.00 $1,001.52
Total Return Incep to Date 5.55% 0.15%
Average Annual Return 3.94% 0.11%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 9.459622 105.712
12/31/98 10.568707 105.712 $1,117.24 $1,116.57 105.649
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,116.57 $54.00 $1,062.57
Total Return Incep to Date 11.66% 6.26%
Average Annual Return 11.66% 6.26%
</TABLE>
<PAGE>
OCC MANAGED PORTFOLIO
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
08/08/97 $1,000.00 10.000000 100.000
08/08/98 10.474920 100.000 $1,047.49 $1,046.82 99.936
12/31/98 10.649385 99.936 $1,064.26 $1,063.59 99.873
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,063.59 $54.00 $1,009.59
Total Return Incep to Date 6.36% 0.96%
Average Annual Return 4.51% 0.69%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 10.080521 99.201
12/31/98 10.649385 99.201 $1,056.43 $1,055.76 99.138
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,055.76 $54.00 $1,001.76
Total Return Incep to Date 5.58% 0.18%
Average Annual Return 5.58% 0.18%
</TABLE>
<PAGE>
OCC SMALL CAP PORTFOLIO
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
08/08/97 $1,000.00 10.000000 100.000
08/08/98 9.202759 100.000 $920.28 $919.61 99.927
12/31/98 9.147757 99.927 $914.11 $913.44 99.854
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $913.44 $54.00 $859.44
Total Return Incep to Date -8.66% -14.06%
Average Annual Return -6.27% -10.27%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 10.196263 98.075
12/31/98 9.147757 98.075 $897.17 $896.50 98.002
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $896.50 $54.00 $842.50
Total Return Incep to Date -10.35% -15.75%
Average Annual Return -10.35% -15.75%
</TABLE>
<PAGE>
PVT GROWTH AND INCOME
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
01/06/94 $1,000.00 10.000000 100.000
01/06/95 9.957652 100.000 $995.77 $995.10 99.933
01/06/96 13.349902 99.933 $1,334.09 $1,333.42 99.883
01/06/97 16.129217 99.883 $1,611.03 $1,610.36 99.841
01/06/98 19.513315 99.841 $1,948.23 $1,947.56 99.807
12/31/98 22.310696 99.807 $2,226.76 $2,226.09 99.777
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $2,226.09 $36.00 $2,190.09
Total Return Incep to Date 122.61% 119.01%
Average Annual Return 17.41% 17.03%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 19.600831 51.018
12/31/98 22.310696 51.018 $1,138.25 $1,137.58 50.988
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,137.58 $54.00 $1,083.58
Total Return Incep to Date 13.76% 8.36%
Average Annual Return 13.76% 8.36%
</TABLE>
<PAGE>
PVT NEW OPPORTUNITIES
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
05/01/95 $1,000.00 10.000000 100.000
05/01/96 15.566161 100.000 $1,556.62 $1,555.95 99.957
05/01/97 13.841757 99.957 $1,383.58 $1,382.91 99.909
05/01/98 20.442433 99.909 $2,042.37 $2,041.70 99.876
12/31/98 21.631274 99.876 $2,160.44 $2,159.77 99.845
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $2,159.77 $45.00 $2,114.77
Total Return Incep to Date 115.98% 111.48%
Average Annual Return 23.34% 22.63%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 17.634520 56.707
12/31/98 21.631274 56.707 $1,226.64 $1,225.97 56.676
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,225.97 $54.00 $1,171.97
Total Return Incep to Date 22.60% 17.20%
Average Annual Return 22.60% 17.20%
</TABLE>
<PAGE>
PVT VOYAGER
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
01/06/94 $1,000.00 10.000000 100.000
01/06/95 9.950048 100.000 $995.00 $994.33 99.933
01/06/96 13.539972 99.933 $1,353.09 $1,352.42 99.883
01/06/97 15.606253 99.883 $1,558.80 $1,558.13 99.840
01/06/98 19.120052 99.840 $1,908.95 $1,908.28 99.805
12/31/98 23.740783 99.805 $2,369.45 $2,368.78 99.777
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $2,368.78 $36.00 $2,332.78
Total Return Incep to Date 136.88% 133.28%
Average Annual Return 18.88% 18.52%
</TABLE>
<TABLE>
<CAPTION>
Yearend Less "Avg" Yearend
Date Deposit NQ UV # Units Value Cont Fee Units
- ---- ------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
12/31/97 $1,000.00 19.357233 51.660
12/31/98 23.740783 51.660 $1,226.46 $1,225.79 51.632
</TABLE>
<TABLE>
<CAPTION>
Contract Value Surrender Charge Surrender Value
-------------- ---------------- ---------------
<S> <C> <C> <C>
Ending Value $1,225.79 $54.00 $1,171.79
Total Return Incep to Date 22.58% 17.18%
Average Annual Return 22.58% 17.18%
</TABLE>
<PAGE>
Current & Effective Yield (net of all contract fees) December, 1998
Unit Value Unit Value Net 7 Day Current Effective
Fund 12/24/98 12/31/98 Change Return Yield Yield
- ---- -------- -------- ------ ------ ----- -----
FMM $12.063390 12.071937 $0.008392 0.0696% 3.63% 3.69%
Note: Net Change = 12/31 Unit Value - 12/24 Unit Value - Hypothetical Weekly Fee
Current Yield = 7 Day Return x 365/7
Effective Yield = [ (7 Day Return + 1) ^ (365/7) ] - 1
Calculation of Average Weekly Contract Fee per Money Market Unit December, 1998
Annual Fee Stated as Unit Value
as Percent of a Weekly 12/24/98 Hypothetical
Avg Invested $ Fee (Invested $) Weekly Fee
-------------- --- ------------ ----------
0.067% 0.0128% $12.063390 $0.001550
<PAGE>
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 Select Annuity III would
be .067%)
AE = Total Separate Account Annual Expenses consisting of the mortality and
expense risk premium and the administration charge. (ie Select Annuity
III would be 1.40%)
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.
