MAY 1, 2000
[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 34 investment
options. The returns on these investment options are not guaranteed and
possibly you can lose money. Currently, there is a $25 charge for each transfer
in excess of 24 transfers per Contract Year.
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.
4. INVESTMENT OPTIONS: You can put your money in up to thirty-four (34)
investment options which are described in the prospectuses for the Funds.
i
<PAGE>
<TABLE>
<CAPTION>
FIDELITY VARIABLE INSURANCE
AIM VARIABLE INSURANCE FUNDS THE ALGER AMERICAN FUND PRODUCTS FUND
- ------------------------------ ------------------------- ----------------------------
<S> <C> <C>
AIM V.I. Dent Demographic Alger American VIP Equity-Income
Trends Fund Growth Portfolio Portfolio --
Alger American Initial Class
Leveraged AllCap VIP Growth Portfolio --
Portfolio Initial Class
Alger American VIP High Income
MidCap Growth Portfolio --
Portfolio Initial Class
Alger American VIP Money Market
Small Capitalization Portfolio --
Portfolio Initial Class
</TABLE>
<TABLE>
<CAPTION>
FIDELITY VARIABLE INSURANCE NEUBERGER BERMAN ADVISERS
PRODUCTS FUND II JANUS ASPEN SERIES MANAGEMENT TRUST
- ----------------------------- ---------------------- --------------------------
<S> <C> <C>
VIP II Contrafund(R) Aggressive Growth Limited Maturity Bond
Portfolio -- Initial Class Portfolio Portfolio
VIP II Index 500 Growth Portfolio Partners Portfolio
Portfolio -- Initial Class International Growth Socially Responsive
VIP II Investment Grade Portfolio Portfolio
Bond Portfolio -- Worldwide Growth
Initial Class Portfolio
</TABLE>
<TABLE>
<CAPTION>
OCC ACCUMULATION TRUST PILGRIM VARIABLE PRODUCTS TRUST PUTNAM VARIABLE TRUST
- ------------------------- --------------------------------- -----------------------
<S> <C> <C>
Equity Portfolio Growth Opportunities Putnam VT Growth and
Global Equity Portfolio Portfolio Income Fund --
Managed Portfolio Growth + Value Portfolio Class IA Shares
Small Cap Portfolio High Yield Bond Putnam VT New
Portfolio Opportunities Fund --
International Value Class IA Shares
Portfolio Putnam VT Voyager
MagnaCap Portfolio Fund -- Class IA
MidCap Opportunities Shares
Portfolio
Research Enhanced Index
Portfolio
SmallCap Opportunities
Portfolio
</TABLE>
Depending upon market conditions, you can make or lose money in any of these
Funds.
ii
<PAGE>
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.
There are also investment fund annual expenses which range from 0.27% to
1.53% 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 .06% below), the 1.40%
insurance charges, 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.
iii
<PAGE>
<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>
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Dent Demographic Trends Fund ................. 1.46% 1.40% 2.86% $88 $365
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio ....................... 1.46% 0.79% 2.25% $82 $308
Alger American Leveraged AllCap Portfolio ............. 1.46% 0.93% 2.39% $83 $321
Alger American MidCap Growth Portfolio ................ 1.46% 0.85% 2.31% $82 $314
Alger American Small Capitalization Portfolio ......... 1.46% 0.90% 2.36% $83 $319
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:
VIP Equity-Income Portfolio -- Initial Class .......... 1.46% 0.56% 2.02% $80 $286
VIP Growth Portfolio -- Initial Class ................. 1.46% 0.65% 2.11% $80 $294
VIP High Income Portfolio -- Initial Class ............ 1.46% 0.69% 2.15% $81 $298
VIP Money Market Portfolio -- Initial Class ........... 1.46% 0.27% 1.73% $77 $256
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II:
VIP II Contrafund Portfolio -- Initial Class .......... 1.46% 0.65% 2.11% $80 $294
VIP II Index 500 Portfolio -- Initial Class ........... 1.46% 0.28% 1.74% $77 $257
VIP II Investment Grade Bond Portfolio --
Initial Class ........................................ 1.46% 0.54% 2.00% $79 $284
JANUS ASPEN SERIES:
Aggressive Growth Portfolio ........................... 1.46% 0.67% 2.13% $81 $296
Growth Portfolio ...................................... 1.46% 0.67% 2.13% $81 $296
International Growth Portfolio ........................ 1.46% 0.76% 2.22% $82 $305
Worldwide Growth Portfolio ............................ 1.46% 0.70% 2.16% $81 $299
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST:
Limited Maturity Bond Portfolio ....................... 1.46% 0.76% 2.22% $82 $305
Partners Portfolio .................................... 1.46% 0.87% 2.33% $83 $316
Socially Responsive Portfolio ......................... 1.46% 1.53% 2.99% $89 $377
OCC ACCUMULATION TRUST:
Equity Portfolio ...................................... 1.46% 0.91% 2.37% $83 $319
Global Equity Portfolio ............................... 1.46% 1.10% 2.56% $85 $337
Managed Portfolio ..................................... 1.46% 0.83% 2.29% $82 $312
Small Cap Portfolio ................................... 1.46% 0.89% 2.35% $83 $318
PILGRIM VARIABLE PRODUCTS TRUST:
Growth Opportunities Portfolio ........................ 1.46% 0.90% 2.36% $83 $319
Growth + Value Portfolio .............................. 1.46% 0.80% 2.26% $82 $309
High Yield Bond Portfolio ............................. 1.46% 0.80% 2.26% $82 $309
International Value Portfolio ......................... 1.46% 1.00% 2.46% $84 $328
MagnaCap Portfolio .................................... 1.46% 0.90% 2.36% $83 $319
MidCap Opportunities Portfolio ........................ 1.46% 0.90% 2.36% $83 $319
Research Enhanced Index Portfolio ..................... 1.46% 0.89% 2.35% $83 $318
SmallCap Opportunities Portfolio ...................... 1.46% 0.90% 2.36% $83 $319
PUTNAM VARIABLE TRUST:
Putnam VT Growth and Income Fund --
Class IA Shares ...................................... 1.46% 0.50% 1.96% $79 $280
Putnam VT New Opportunities Fund --
Class IA Shares ...................................... 1.46% 0.59% 2.05% $80 $289
Putnam VT Voyager Fund -- Class IA Shares ............. 1.46% 0.57% 2.03% $80 $287
</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.
iv
<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 591/2 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, 1999, 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,
and 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.
v
<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
1999 1998
------------- -------------
<S> <C> <C>
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Dent Demographic Trends Fund ................. N/A N/A
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio ....................... 31.84% 45.96%
Alger American Leveraged AllCap Portfolio ............. N/A N/A
Alger American MidCap Growth Portfolio ................ 29.97% 28.43%
Alger American Small Capitalization Portfolio ......... 41.38% 13.87%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:
VIP Equity-Income Portfolio -- Initial Class .......... 4.81% 10.02%
VIP Growth Portfolio -- Initial Class ................. 35.48% 37.50%
VIP High Income Portfolio -- Initial Class ............ 6.61% (5.72)%
VIP Money Market Portfolio -- Initial Class ........... 3.67% 3.93%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II:
VIP II Contrafund Portfolio -- Initial Class .......... 22.48% 28.12%
VIP II Index 500 Portfolio -- Initial Class ........... 18.79% 26.49%
VIP II Investment Grade Bond Portfolio -- Initial Class (2.47)% 7.28%
JANUS ASPEN SERIES:
Aggressive Growth Portfolio ........................... 122.24% 32.34%
Growth Portfolio ...................................... 41.94% 33.72%
International Growth Portfolio ........................ 79.71% 15.55%
Worldwide Growth Portfolio ............................ 62.13% 27.08%
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio ....................... 0.02% 2.88%
Partners Portfolio .................................... 5.83% 2.70%
Socially Responsive Portfolio ......................... N/A N/A
OCC ACCUMULATION TRUST:
Equity Portfolio ...................................... 1.07% 10.25%
Global Equity Portfolio ............................... 24.72% 11.66%
Managed Portfolio ..................................... 3.49% 5.58%
Small Cap Portfolio ................................... (3.24)% (10.35)%
PILGRIM VARIABLE PRODUCTS TRUST:
Growth Opportunities Portfolio ........................ N/A N/A
Growth + Value Portfolio .............................. 92.24% 17.61%
High Yield Bond Portfolio ............................. (4.61) (0.87)%
International Value Portfolio ......................... 48.05% 15.25%
MagnaCap Portfolio .................................... N/A N/A
MidCap Opportunities Portfolio ........................ N/A N/A
Research Enhanced Index Portfolio ..................... 4.30% (0.11)%
SmallCap Opportunities Portfolio ...................... 137.66% 15.61%
PUTNAM VARIABLE TRUST:
Putnam VT Growth and Income Fund - Class IA Shares .... 0.13% 13.76%
Putnam VT New Opportunities Fund - Class IA Shares .... 66.96% 22.60%
Putnam VT Voyager Fund - Class IA Shares .............. 55.98% 22.58%
</TABLE>
<TABLE>
<CAPTION>
CALENDAR YEAR
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Dent Demographic Trends Fund ................. N/A N/A N/A
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio ....................... N/A N/A N/A
Alger American Leveraged AllCap Portfolio ............. N/A N/A N/A
Alger American MidCap Growth Portfolio ................ N/A N/A N/A
Alger American Small Capitalization Portfolio ......... N/A N/A N/A
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:
VIP Equity-Income Portfolio -- Initial Class .......... 26.26% 12.60% 33.12%
VIP Growth Portfolio -- Initial Class ................. 21.70% 13.02% 33.39%
VIP High Income Portfolio -- Initial Class ............ 15.96% 12.36% 18.83%
VIP Money Market Portfolio -- Initial Class ........... 3.96% 3.86% 4.31%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II:
VIP II Contrafund Portfolio -- Initial Class .......... 22.35% 19.53% N/A
VIP II Index 500 Portfolio -- Initial Class ........... 30.79% 21.02% 35.19%
VIP II Investment Grade Bond Portfolio -- Initial Class 7.48% 1.66% 15.60%
JANUS ASPEN SERIES:
Aggressive Growth Portfolio ........................... N/A N/A N/A
Growth Portfolio ...................................... N/A N/A N/A
International Growth Portfolio ........................ N/A N/A N/A
Worldwide Growth Portfolio ............................ N/A N/A N/A
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio ....................... N/A N/A N/A
Partners Portfolio .................................... N/A N/A N/A
Socially Responsive Portfolio ......................... N/A N/A N/A
OCC ACCUMULATION TRUST:
Equity Portfolio ...................................... N/A N/A N/A
Global Equity Portfolio ............................... N/A N/A N/A
Managed Portfolio ..................................... N/A N/A N/A
Small Cap Portfolio ................................... N/A N/A N/A
PILGRIM VARIABLE PRODUCTS TRUST:
Growth Opportunities Portfolio ........................ N/A N/A N/A
Growth + Value Portfolio .............................. 12.99% 21.30% N/A
High Yield Bond Portfolio ............................. N/A N/A N/A
International Value Portfolio ......................... N/A N/A N/A
MagnaCap Portfolio .................................... N/A N/A N/A
MidCap Opportunities Portfolio ........................ N/A N/A N/A
Research Enhanced Index Portfolio ..................... 5.46% 11.61% N/A
SmallCap Opportunities Portfolio ...................... 13.94% 12.13% N/A
PUTNAM VARIABLE TRUST:
Putnam VT Growth and Income Fund - Class IA Shares .... 22.36% 20.13% 34.72%
Putnam VT New Opportunities Fund - Class IA Shares .... 21.51% 8.55% N/A
Putnam VT Voyager Fund - Class IA Shares .............. 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. 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.
vi
<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
ReliaStar Service Center
P.O. Box 5050
Minot, ND 58702-5050
1-877-884-5050
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.
vii
<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>
AIM Variable Insurance Funds Neuberger Berman Advisers Management Trust
The Alger American Fund OCC Accumulation Trust
Fidelity Variable Insurance Products Fund Pilgrim Variable Products Trust
Fidelity Variable Insurance Products Fund II Putnam Variable Trust
Janus Aspen Series
</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 May
1, 2000, 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 ReliaStar Life Insurance Company, ReliaStar Service Center, P.O. Box
5050, Minot, North Dakota 58702-5050 or by calling 1-877-884-5050. 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 AIM VARIABLE INSURANCE FUNDS, THE ALGER AMERICAN FUND,
FIDELITY VARIABLE INSURANCE PRODUCTS FUND, FIDELITY VARIABLE INSURANCE PRODUCTS
FUND II, JANUS ASPEN SERIES, NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST, OCC
ACCUMULATION TRUST, PILGRIM VARIABLE PRODUCTS TRUST, AND PUTNAM VARIABLE TRUST,
AND IT IS VALID ONLY WHEN ACCOMPANIED BY THESE PROSPECTUSES.
THE DATE OF THIS PROSPECTUS IS MAY 1, 2000.
<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 .............................................. 21
Transfers ........................................................... 22
Written Transfers ................................................... 22
Assignments ......................................................... 23
Contract Owner and Beneficiaries .................................... 23
Contract Inquiries .................................................. 24
Annuity Provisions ................................................... 24
Annuity Commencement Date ........................................... 24
Annuity Form Selection .............................................. 24
Annuity Forms ....................................................... 24
Frequency and Amount of Annuity Payments ............................ 25
Annuity Payments .................................................... 25
Sub-Account Annuity Unit Value ...................................... 25
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 .................................................. 28
Taxation of Qualified Plans ......................................... 29
Possible Charge for ReliaStar's Taxes ............................... 29
Other Tax Consequences .............................................. 30
Voting of Fund Shares ................................................ 30
Distribution of the Contracts ........................................ 30
Revocation ........................................................... 31
2
<PAGE>
Reports to Owners ...................................................... 31
Legal Proceedings ...................................................... 31
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
<TABLE>
<S> <C>
Transfer Charge(b) .......................................................... $ 25
ANNUAL CONTRACT CHARGE ...................................................... $ 30
VARIABLE ACCOUNT ANNUAL EXPENSES (as a percentage of average account value)
Mortality and Expense Risk Premiums ........................................ 1.25%
Other Account Fees and Expenses (See "Administration Charge") .............. .15%
Total Variable Account Annual Expenses ..................................... 1.40%
</TABLE>
In addition to the costs and expenses shown in this table, state premium
taxes may also be applicable. For more information on state premium taxes, see
"Premium and Other Taxes."
6
<PAGE>
ANNUAL INVESTMENT FUND EXPENSES AFTER REIMBURSEMENTS(e)(f)(g)(h):
(as a percentage of Investment Fund average net assets)
<TABLE>
<CAPTION>
TOTAL INVESTMENT
MANAGEMENT OTHER FUND ANNUAL
FEES EXPENSES EXPENSES
------------ ---------- -----------------
<S> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Dent Demographic Trends Fund (c) ........................... 0.85% 0.55% 1.40%
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio (c) ................................. 0.75% 0.04% 0.79%
Alger American Leveraged AllCap Portfolio (c) ....................... 0.85% 0.08% 0.93%
Alger American MidCap Growth Portfolio (c) .......................... 0.80% 0.05% 0.85%
Alger American Small Capitalization Portfolio (c) ................... 0.85% 0.05% 0.90%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND (VIP):
VIP Equity-Income Portfolio -- Initial Class (c) (e) ................ 0.48% 0.08% 0.56%
VIP Growth Portfolio -- Initial Class (c) (e) ....................... 0.58% 0.07% 0.65%
VIP High Income Portfolio -- Initial Class (c) ...................... 0.58% 0.11% 0.69%
VIP Money Market Portfolio -- Initial Class ......................... 0.18% 0.09% 0.27%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II (VIP II):
VIP II Contrafund Portfolio -- Initial Class (c) (e) ................ 0.58% 0.07% 0.65%
VIP II Index 500 Portfolio -- Initial Class (c) (e) ................. 0.24% 0.04% 0.28%
VIP II Investment Grade Bond Portfolio -- Initial Class (c) ......... 0.43% 0.11% 0.54%
JANUS ASPEN SERIES:
Aggressive Growth Portfolio (c) (f) ................................. 0.65% 0.02% 0.67%
Growth Portfolio (c) (f) ............................................ 0.65% 0.02% 0.67%
International Growth Portfolio (c) (f) .............................. 0.65% 0.11% 0.76%
Worldwide Growth Portfolio (c) (f) .................................. 0.65% 0.05% 0.70%
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio (c) ................................. 0.65% 0.11% 0.76%
Partners Portfolio (c) .............................................. 0.80% 0.07% 0.87%
Socially Responsive Portfolio (c) (g) ............................... 0.85% 0.68% 1.53%
OCC ACCUMULATION TRUST:
Equity Portfolio (c) (h) ............................................ 0.80% 0.11% 0.91%
Global Equity Portfolio (c) (h) ..................................... 0.80% 0.30% 1.10%
Managed Portfolio (c) (h) ........................................... 0.77% 0.06% 0.83%
Small Cap Portfolio (c) (h) ......................................... 0.80% 0.09% 0.89%
PILGRIM VARIABLE PRODUCTS TRUST:
Growth Opportunities Portfolio (d) (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%
MagnaCap Portfolio (d) (i) .......................................... 0.75% 0.15% 0.90%
MidCap Opportunities Portfolio (d) (i) .............................. 0.75% 0.15% 0.90%
Research Enhanced Index Portfolio (i) ............................... 0.75% 0.14% 0.89%
SmallCap Opportunities Portfolio (i) ................................ 0.75% 0.15% 0.90%
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 ................. 0.54% 0.05% 0.59%
Putnam VT Voyager Fund -- Class IA Shares ........................... 0.53% 0.04% 0.57%
</TABLE>
The fee and expense information above regarding the Investment Funds was
provided by the Funds.
Except for the Pilgrim Variable Products 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>
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Dent Demographic Trends Fund ....................... $88 $148 $211 $365
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio ............................. 82 130 181 308
Alger American Leveraged AllCap Portfolio ................... 83 134 188 321
Alger American MidCap Growth Portfolio ...................... 82 132 184 314
Alger American Small Capitalization Portfolio ............... 83 134 187 319
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:
VIP Equity-Income Portfolio -- Initial Class ................ 80 123 170 286
VIP Growth Portfolio -- Initial Class ....................... 80 126 175 294
VIP High Income Portfolio -- Initial Class .................. 81 127 177 298
VIP Money Market Portfolio -- Initial Class ................. 77 115 155 256
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II:
VIP II Contrafund Portfolio -- Initial Class ................ 80 126 175 294
VIP II Index 500 Portfolio -- Initial Class ................. 77 115 156 257
VIP II Investment Grade Bond Portfolio -- Initial Class ..... 79 123 169 284
JANUS ASPEN SERIES:
Aggressive Growth Portfolio ................................. 81 127 176 296
Growth Portfolio ............................................ 81 127 176 296
International Growth Portfolio .............................. 82 129 180 305
Worldwide Growth Portfolio .................................. 81 128 177 299
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio ............................. 82 129 180 305
Partners Portfolio .......................................... 83 133 185 316
Socially Responsive Portfolio ............................... 89 152 217 377
OCC ACCUMULATION TRUST:
Equity Portfolio ............................................ 83 134 187 319
Global Equity Portfolio ..................................... 85 140 197 337
Managed Portfolio ........................................... 82 132 183 312
Small Cap Portfolio ......................................... 83 133 186 318
PILGRIM VARIABLE PRODUCTS TRUST:
Growth Opportunities Portfolio .............................. 83 134 187 319
Growth + Value Portfolio .................................... 82 131 182 309
High Yield Bond Portfolio ................................... 82 131 182 309
International Value Portfolio ............................... 84 137 192 328
MagnaCap Portfolio .......................................... 83 134 187 319
MidCap Opportunities Portfolio .............................. 83 134 187 319
Research Enhanced Index Portfolio ........................... 83 133 186 318
SmallCap Opportunities Portfolio ............................ 83 134 187 319
PUTNAM VARIABLE TRUST:
Putnam VT Growth and Income Fund -- Class IA Shares ......... 79 122 167 280
Putnam VT New Opportunities Fund -- Class IA Shares ......... 80 124 172 289
Putnam VT Voyager Fund -- Class IA Shares ................... 80 124 171 287
</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>
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Dent Demographic Trends Fund ....................... $88 $103 $175 $365
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio ............................. 82 85 145 308
Alger American Leveraged AllCap Portfolio ................... 83 89 152 321
Alger American MidCap Growth Portfolio ...................... 82 87 148 314
Alger American Small Capitalization Portfolio ............... 83 89 151 319
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:
VIP Equity-Income Portfolio -- Initial Class ................ 80 78 134 286
VIP Growth Portfolio -- Initial Class ....................... 80 81 139 294
VIP High Income Portfolio -- Initial Class .................. 81 82 141 298
VIP Money Market Portfolio -- Initial Class ................. 77 70 119 256
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II:
VIP II Contrafund Portfolio -- Initial Class ................ 80 81 139 294
VIP II Index 500 Portfolio -- Initial Class ................. 77 70 120 257
VIP II Investment Grade Bond Portfolio -- Initial Class ..... 79 78 133 284
JANUS ASPEN SERIES:
Aggressive Growth Portfolio ................................. 81 82 140 296
Growth Portfolio ............................................ 81 82 140 296
International Growth Portfolio .............................. 82 84 144 305
Worldwide Growth Portfolio .................................. 81 83 141 299
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio ............................. 82 84 144 305
Partners Portfolio .......................................... 83 88 149 316
Socially Responsive Portfolio ............................... 89 107 181 377
OCC ACCUMULATION TRUST:
Equity Portfolio ............................................ 83 89 151 319
Global Equity Portfolio ..................................... 85 95 161 337
Managed Portfolio ........................................... 82 87 147 312
Small Cap Portfolio ......................................... 83 88 150 318
PILGRIM VARIABLE PRODUCTS TRUST:
Growth Opportunities Portfolio .............................. 83 89 151 319
Growth + Value Portfolio .................................... 82 86 146 309
High Yield Bond Portfolio ................................... 82 86 146 309
International Value Portfolio ............................... 84 92 156 328
MagnaCap Portfolio .......................................... 83 89 151 319
MidCap Opportunities Portfolio .............................. 83 89 151 319
Research Enhanced Index Portfolio ........................... 83 88 150 318
SmallCap Opportunities Portfolio ............................ 83 89 151 319
PUTNAM VARIABLE TRUST:
Putnam VT Growth and Income Fund -- Class IA Shares ......... 79 77 131 280
Putnam VT New Opportunities Fund -- Class IA Shares ......... 80 79 136 289
Putnam VT Voyager Fund -- Class IA Shares ................... 80 79 135 287
</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>
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Dent Demographic Trends Fund ....................... $34 $103 $175 $365
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio ............................. 28 85 145 308
Alger American Leveraged AllCap Portfolio ................... 29 89 152 321
Alger American MidCap Growth Portfolio ...................... 28 87 148 314
Alger American Small Capitalization Portfolio ............... 29 89 151 319
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:
VIP Equity-Income Portfolio -- Initial Class ................ 26 78 134 286
VIP Growth Portfolio -- Initial Class ....................... 26 81 139 294
VIP High Income Portfolio -- Initial Class .................. 27 82 141 298
VIP Money Market Portfolio -- Initial Class ................. 23 70 119 256
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II:
VIP II Contrafund Portfolio -- Initial Class ................ 26 81 139 294
VIP II Index 500 Portfolio -- Initial Class ................. 23 70 120 257
VIP II Investment Grade Bond Portfolio -- Initial Class ..... 25 78 133 284
JANUS ASPEN SERIES:
Aggressive Growth Portfolio ................................. 27 82 140 296
Growth Portfolio ............................................ 27 82 140 296
International Growth Portfolio .............................. 28 84 144 305
Worldwide Growth Portfolio .................................. 27 83 141 299
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio ............................. 28 84 144 305
Partners Portfolio .......................................... 29 88 149 316
Socially Responsive Portfolio ............................... 35 107 181 377
OCC ACCUMULATION TRUST:
Equity Portfolio ............................................ 29 89 151 319
Global Equity Portfolio ..................................... 31 95 161 337
Managed Portfolio ........................................... 28 87 147 312
Small Cap Portfolio ......................................... 29 88 150 318
PILGRIM VARIABLE PRODUCTS TRUST:
Growth Opportunities Portfolio .............................. 29 89 151 319
Growth + Value Portfolio .................................... 28 86 146 309
High Yield Bond Portfolio ................................... 28 86 146 309
International Value Portfolio ............................... 30 92 156 328
MagnaCap Portfolio .......................................... 29 89 151 319
MidCap Opportunities Portfolio .............................. 29 89 151 319
Research Enhanced Index Portfolio ........................... 29 88 150 318
SmallCap Opportunities Portfolio ............................ 29 89 151 319
PUTNAM VARIABLE TRUST:
Putnam VT Growth and Income Fund -- Class IA Shares ......... 25 77 131 280
Putnam VT New Opportunities Fund -- Class IA Shares ......... 26 79 136 289
Putnam VT Voyager Fund -- Class IA Shares ................... 26 79 135 287
</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 imposes a charge of $25 per transfer for transfers
between the Sub-Accounts or to the Fixed Account after 24 transfers per
Contract Year. It reserves the right to impose a fee not to exceed $25 per
transfer on any transfers or to restrict the number of transfers.
10
<PAGE>
(c) 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 some cases, and other
services provided by such parties to the Funds and/or the Funds'
affiliates. Currently, ReliaStar Life has service arrangements with A I M
Advisors, Inc., Fred Alger Management, Inc., Fidelity Investments
Institutional Operations Company and Fidelity Distributors Corporation,
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.
(d) This portfolio had not commenced operations as of December 31, 1999, and
therefore these expenses are estimated.
(e) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, through arrangements with certain
funds', or FMR on behalf of certain funds', custodian, credits realized as
a result of uninvested cash balances were used to reduce a portion of each
applicable fund's expenses. Without these reductions, the total operating
expenses presented in the table would have been .57% for Equity-Income
Portfolio, .66% for Growth Portfolio, and .67% for Contrafund Portfolio.
FMR agreed to reimburse a portion of Index 500 Portfolio's expenses during
the period. Without this reimbursement, the Portfolios' management fee,
other expenses and total expenses would have been .24%, .10%, and .34%,
respectively.
(f) Expenses are based upon expenses for the fiscal year ended December 31,
1999, restated to reflect a reduction in the management fee for Aggressive
Growth, Growth, International Growth, and Worldwide Growth Portfolios. All
expenses are shown without the effect of expense offset arrangements.
(g) 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 through May 1,
2001. There can be no assurance that this policy will be continued. See
"Expense Limitation" in the Socially Responsive Portfolio prospectus for
further information.
(h) 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).
(i) The investment adviser to the Pilgrim Variable Products 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 Growth Opportunities
Portfolio, MagnaCap Portfolio, MidCap Opportunities Portfolio, Research
Enhanced Index Portfolio, and SmallCap Opportunities Portfolio for
expenses in excess of .90% and the International Value Portfolio for
expenses in excess of 1.00%. 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, 1999
would have been: Growth Opportunities Portfolio: 1.09%; Growth + Value
Portfolio: 0.97%; High Yield Bond Portfolio: 1.11%; International Value
Portfolio: 1.52%; MagnaCap Portfolio: 1.09%; MidCap Opportunities
Portfolio: 1.09%; Research Enhanced Index Portfolio: 1.26%; SmallCap
Opportunities Portfolio: 1.09%; Expense reimbursements are voluntary.
There is no assurance of ongoing reimbursement.
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 0.056% 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.
11
<PAGE>
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). Its administrative office is at
P.O. Box 5050, Minot, North Dakota 58702-5050.
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 34 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. 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 SUB-ADVISER MONEY MARKET FIXED INCOME GROWTH & INCOME
============================================================================================================
<S> <C> <C> <C> <C> <C>
AIM AIM V.I. Dent A I M
Variable Demographic Advisors, Inc./
Insurance Trends Fund H.S. Dent
Funds Advisors, Inc.
Houston, TX
===========================================================================================================
Alger Alger American Fred Alger
American Growth Management, Inc.
New York, N.Y. Portfolio
----------------------------------------------------------------------------------------
Alger American Fred Alger
Leveraged Management, Inc.
AllCap Portfolio
----------------------------------------------------------------------------------------
Alger American Fred Alger
MidCap Growth Management, Inc.
Portfolio
----------------------------------------------------------------------------------------
Alger American Fred Alger
Small Management, Inc.
Capitalization
Portfolio
===========================================================================================================
Fidelity VIP Fidelity Management X
Investments(R) Equity-Income & Research Company
Boston, Mass. Portfolio --
Initial Class
----------------------------------------------------------------------------------------
VIP Growth Fidelity Management
Portfolio -- & Research Company
Initial Class
----------------------------------------------------------------------------------------
VIP Fidelity Management X
High Income & Research Company
Portfolio --
Initial Class
----------------------------------------------------------------------------------------
VIP Fidelity Management X
Money Market & Research Company
Portfolio --
Initial Class
----------------------------------------------------------------------------------------
VIP II Fidelity Management
Contrafund & Research Company
Portfolio --
Initial Class
----------------------------------------------------------------------------------------
VIP II Fidelity Management X
Fidelity Index 500 & Research Company
Investments(R) Portfolio --
is a registered Initial Class
trademark of FMR ---------------------------------------------------------------------------------------
Corp. VIP II Fidelity Management X
Investment & Research Company
Grade Bond
Portfolio --
Initial Class
===========================================================================================================
</TABLE>
[WIDE TABLE CONTINUED FROM AOVE]
<TABLE>
<CAPTION>
FUND GROUP INTERNATIONAL BALANCED GROWTH AGGRESSIVE GROWTH OBJECTIVE(S)
=================== =============== ========== ======== ================== ===========================
<S> <C> <C> <C> <C> <C>
AIM X Long-term growth
Variable of capital
Insurance
Funds
Houston, TX
======================================================================================================
Alger X Long-term capital
American appreciation
New York, N.Y. -----------------------------------------------------------------------------------
X Long-term capital
appreciation
-----------------------------------------------------------------------------------
X Long-term capital
appreciation
-----------------------------------------------------------------------------------
X Long-term capital
appreciation
======================================================================================================
Fidelity Reasonable income;
Investments(R) also considers potential
Boston, Mass. for capital appreciation
-----------------------------------------------------------------------------------
X Capital appreciation
-----------------------------------------------------------------------------------
High current income
-----------------------------------------------------------------------------------
High level of
current income consistent
with preservation of
capital and liquidity
-----------------------------------------------------------------------------------
X Capital appreciation
-----------------------------------------------------------------------------------
Total return that
Fidelity corresponds to that of
Investments(R) S&P 500 Index
is a registered -----------------------------------------------------------------------------------
trademark of FMR High current income
Corp. consistent with
preservation of capital
======================================================================================================
</TABLE>
[WIDE TABLE CONTINUED FROM ABOVE]
<TABLE>
<CAPTION>
PRIMARY
FUND GROUP INVESTMENTS
===================================================
<S> <C>
AIM Securities of companies
Variable that are likely to benefit
Insurance from changing demographic,
Funds economic and lifestyle trends
Houston, TX
==================================================
Alger Equity securities of
American large companies
New York, N.Y. ------------------------------
Equity securities of
companies of any size
------------------------------
Equity securities within
the range of S&P(R)
MidCap 400 Index
------------------------------
Equity securities within
the range of Russell(R) 2000
Growth or S&P(R)
SmallCap 600 Indexes
==================================================
Fidelity Income-producing
Investments(R) equity securities and
Boston, Mass. debt obligations
------------------------------
Common stocks
------------------------------
Income-producing
debt securities, preferred
stocks and convertible
securities, with an
emphasis on lower-quality
debt securities
------------------------------
U.S. dollar-
denominated money
market securities
------------------------------
Securities of companies
whose value the adviser
believes is not fully
recognized by the public
------------------------------
Common stocks of
Fidelity S&P 500
Investments(R) ------------------------------
is a registered Investment-grade
trademark of FMR intermediate fixed
Corp. income securities
==================================================
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
ADVISER/
FUND GROUP FUND SUB-ADVISER 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
=========================================================================================================
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
=========================================================================================================
</TABLE>
[WIDE TABLE CONTINUED FROM ABOVE]
<TABLE>
<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 portfolio
capital of common stocks
---------------------------------------------------------------------------------------------------------
Denver, Co.
X Long-term capital Diversified common
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
============================================================================================================================
OCC X Long-term capital Securities of
appreciation undervalued
New York, N.Y. companies
---------------------------------------------------------------------------------------------------------
Long-term capital Global investments in
X appreciation equity securities
---------------------------------------------------------------------------------------------------------
X Growth of capital Common stocks,
bonds and cash
equivalents
---------------------------------------------------------------------------------------------------------
X Capital appreciation Equity securities of
companies under
$1 billion
============================================================================================================================
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
ADVISER/
FUND GROUP FUND SUB-ADVISER MONEY MARKET FIXED INCOME GROWTH & INCOME
===============================================================================================================
<S> <C> <C> <C> <C> <C>
Pilgrim Pilgrim VP Growth Pilgrim
Opportunities Investments, Inc.
Phoenix, AZ Portfolio
------------------------------------------------------------------------------------------
Pilgrim VP Pilgrim Investments,
Growth + Value Inc./Navellier Fund
Portfolio Management, Inc.
------------------------------------------------------------------------------------------
Pilgrim VP Pilgrim X
High Yield Investments, Inc.
Bond Portfolio
------------------------------------------------------------------------------------------
Pilgrim VP Pilgrim Investments,
International Inc./Brandes
Value Portfolio Investment
Partners
------------------------------------------------------------------------------------------
Pilgrim VP Pilgrim X
MagnaCap Investments, Inc.
Portfolio
------------------------------------------------------------------------------------------
Pilgrim VP MidCap Pilgrim
Opportunities Investments, Inc.
Portfolio
------------------------------------------------------------------------------------------
Pilgrim VP Research Pilgrim Investments,
Enhanced Inc./J.P. Morgan
Index Portfolio Investment
Management Inc.
------------------------------------------------------------------------------------------
Pilgrim VP SmallCap Pilgrim
Opportunities Investments, Inc.
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
===============================================================================================================
</TABLE>
[WIDE TABLE CONTINUED FROM ABOVE]
<TABLE>
<CAPTION>
PRIMARY
FUND GROUP INTERNATIONAL BALANCED GROWTH AGGRESSIVE GROWTH OBJECTIVE(S) INVESTMENTS
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Pilgrim X
Phoenix, AZ
------------------------------------------------------------------------------------------------------
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
------------------------------------------------------------------------------------------------------
Capital growth Common stocks
------------------------------------------------------------------------------------------------------
X Long-term capital Common stocks of
appreciation mid-sized U.S. companies
------------------------------------------------------------------------------------------------------
X Long-term capital Common stocks
appreciation
------------------------------------------------------------------------------------------------------
X Long-term capital Common stocks
appreciation
===========================================================================================================================
Putnam Capital growth & Value stocks
Investments, Inc. current income
------------------------------------------------------------------------------------------------------
Boston, Mass. X Long-term capital Growth stocks
appreciation
------------------------------------------------------------------------------------------------------
X Capital appreciation Growth 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
September 1, 1998 where the cumulative purchase payments, less any cumulative
partial
17
<PAGE>
surrenders, 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.
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 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.
18
<PAGE>
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 ReliaStar Service Center, P.O. Box
5050, Minot, North Dakota 58702-5050; Telephone 1-877-884-5050.
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. 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.
If you are purchasing the Contract through a tax favored arrangement,
including IRAs and Roth IRAs, you should carefully consider the costs and
benefits of the Contract (including annuity income benefits) before purchasing
the Contract, since the tax favored arrangement itself provides for tax
sheltered growth.
ALLOCATION OF PURCHASE PAYMENTS
Purchase payments can be allocated by the Owner to up to 34 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 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
19
<PAGE>
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. The Death Benefit will be:
(1) if any Owner (including the Annuitant) dies on or before the first day of
the month following the Owner's 85th birthday, the greater of (i) the
Contract Value on the Death Benefit Valuation Date, or (ii) the sum of the
purchase payments received by ReliaStar Life under the Contract to the
Death Benefit Valuation Date, less any surrender payments previously made
by ReliaStar Life; or (iii) the Contract Value on the Specified Contract
Anniversary (immediately preceding the Owner's death), plus any Purchase
Payments and reduced by any surrender payments since that anniversary;
(2) if any Owner (including the Annuitant) dies after the first day of the
month following the Owner's 85th birthday, the Contract Value on the Death
Benefit Valuation Date.
20
<PAGE>
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.
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. To start Systematic Withdrawals, the Contract
Value must be at least $25,000. 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. The minimum amount of any Systematic Withdrawal is $100.
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
21
<PAGE>
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 if the Contract Value falls below $10,000 or
at any time by writing to ReliaStar Life's administrative office in Minot,
North Dakota.
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 a $25 charge for each transfer in excess of 24 per
Contract Year, plus any charge that may be made by the Funds. For purposes of
this restriction, reallocations pursuant to the ReliaStar Life Dollar Cost
Averaging, Portfolio Rebalancing, and Systematic Withdrawal Services currently
do not constitute transfers, and multiple transfers on a single day currently
constitute a single transfer. The Company reserves the right to charge a
transfer fee not to exceed $25 per transfer on any transfer and to limit the
number of transfers.
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.
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
22
<PAGE>
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.
The minimum transfer amount is $100. 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 Value 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.
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.
23
<PAGE>
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, ReliaStar Service Center, P.O. Box 5050, Minot, North
Dakota 58702-5050, or by calling 1-877-884-5050.
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 issue 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.
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
24
<PAGE>
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.
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.")
25
<PAGE>
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.
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
26
<PAGE>
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.
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.
27
<PAGE>
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 591/2;
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 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.
28
<PAGE>
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 591/2 (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 70 1/2 for the traditional IRA, but not
for the Roth IRA (see below). Distributions from certain other types of
qualified retirement plans may be "rolled over" on a tax-deferred basis into a
traditional IRA.
ROTH IRAs -- Section 408A of the Code permits individuals to contribute to
a special type of IRA called a Roth IRA. The IRA must be designated as a "Roth
IRA" at the time it is established, in accordance with IRS rules. Contributions
to a Roth IRA are not deductible. If certain conditions are met, qualified
distributions from a Roth IRA are tax free. Subject to special limitations, a
distribution from a traditional IRA or another Roth IRA may be rolled over to a
Roth IRA.
Sales of a Contract for use with traditional or Roth IRAs may be subject
to special requirements of the IRS. The IRS has not reviewed the contract for
qualification as an IRA, and has not addressed in a ruling of general
applicability whether a death benefit provision such as the provision in the
Contract comports with IRS qualification requirements.
TAX SHELTERED ANNUITIES
Section 403(b) of the Code allows employees of certain Section 501(c)(3)
organizations and public schools to exclude from their gross income the
premiums paid, within certain limits, on a Contract that will provide an
annuity for the employee's retirement. Code section 403(b)(11) restricts the
distribution under Code section 403(b) annuity contracts of elective
contributions and earnings on those contributions; and Distribution may only
occur upon death of the employee, attainment of age 59 1/2, separation from
service, disability, or financial hardship. In addition, income attributable to
elective contributions may not be distributed in the case of hardship.
POSSIBLE CHARGE FOR RELIASTAR'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.
29
<PAGE>
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 8.0% 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
ReliaStar Service Center
P.O. Box 5050
Minot, North Dakota 58702-5050
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 administrative 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, including reports and prospectuses for the Investment Funds, will
be mailed to your household, even if you or other persons in your household
have more than one contract issued by ReliaStar Life or an affiliate. Call
1-877-884-5050 if you need additional copies of financial reports,
prospectuses, or annual and semi-annual reports, or if you would like to
receive one copy for each contract in all future mailings.
LEGAL PROCEEDINGS
The Variable Account is not a party to any pending legal proceedings.
The Company is a defendant in various lawsuits in connection with the
normal conduct of its insurance operations. Some of the claims seek to be
granted class action status and many of the claims seek both compensatory and
punitive damages. In the opinion of management, the ultimate resolution of such
litigation will not have a material adverse impact to the financial position of
the Company. It should be noted, however, that a number of financial services
companies have been subjected to significant awards in connection with punitive
damages claims and the Company can make no assurances that it will not be
subjected to such an award. The defense of the putative class actions pending
against the Company may require the commitment of substantial internal
resources and the retention of legal counsel and expert advisors.
The Company is a defendant in litigation in New York State court regarding
an alleged reinsurance contract. The plaintiff alleges damages in excess of
$100 million. The Company believes that no contract exists and the suit is
without merit. The Company filed a motion for summary judgment on February 18,
2000. If the court does not grant the Company's motion, the case may go to
trial later this year.
31
<PAGE>
EXPERTS
The financial statements of ReliaStar Select Variable Account as of
December 31, 1999 and for each of the two years in the period then ended are
included in the Statement of Additional Information. The financial statements
of ReliaStar Life Insurance Company as of and for the years ended December 31,
1999, and 1998 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 LLP, 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
Experts ................................. SAI-2
Distribution of the Contracts ........... SAI-2
Calculation of Yield and Return ......... SAI-2
Financial Statements .................... SAI-16
- --------------------------------------------------------------------------------
If you would like to receive a copy of the ReliaStar Select Variable Account
Select-Annuity III Variable Annuity Statement of Additional Information, please
call 1-877-884-5050 or return this request to:
RELIASTAR LIFE INSURANCE COMPANY
RELIASTAR SERVICE CENTER
P.O. BOX 5050
MINOT, ND 58702-5050
Your name ____________________________________________________________________
Address _______________________________________________________________________
City ____________________________ State ___________________
Zip __________________
Please send me a copy of the ReliaStar Select Variable Account Select-Annuity
III 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>
(This page has been left blank intentionally.)
<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 1999 1998 1997 1996 1995 1994
- -------------------------------------- ------------- ------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
(Since May 1, 2000)
Beginning of period ................. -- -- -- -- -- --
End of period ....................... -- -- -- -- -- --
Units outstanding at end of period .. -- -- -- -- -- --
THE ALGER AMERICAN FUND:
ALGER AMERICAN GROWTH PORTFOLIO
(Since August 8, 1997)
Beginning of period ................. $ 14.3117 $ 9.8005 $ 10.0000 -- -- --
End of period ....................... $ 18.8769 $ 14.3117 $ 9.8005 -- -- --
Units outstanding at end of period .. 2,499,069 651,530 63,728 -- -- --
ALGER AMERICAN LEVERAGED ALLCAP
PORTFOLIO
(Since May 1, 2000)
Beginning of period ................. -- -- -- -- -- --
End of period ....................... -- -- -- -- -- --
Units outstanding at end of period .. -- -- -- -- -- --
ALGER AMERICAN MIDCAP GROWTH
PORTFOLIO
(Since August 8, 1997)
Beginning of period ................. $ 12.5561 $ 9.7711 $ 10.0000 -- -- --
End of period ....................... $ 16.3264 $ 12.5561 $ 9.7711 -- -- --
Units outstanding at end of period .. 455,927 204,638 59,897 -- -- --
ALGER AMERICAN SMALL CAPITALIZATION
PORTFOLIO
(Since August 8, 1997)
Beginning of period ................. $ 11.4116 $ 10.0159 $ 10.0000 -- -- --
End of period ....................... $ 16.1404 $ 11.4116 $ 10.0159 -- -- --
Units outstanding at end of period .. 408,867 254,748 73,647 -- -- --
FIDELITY VARIABLE INSURANCE PRODUCTS
FUND (VIP):
VIP EQUITY-INCOME PORTFOLIO
(Since January 6, 1994)
Beginning of period ................. $ 21.9558 $ 19.9442 $ 15.7861 $ 14.0081 $ 10.5139 $ 10.0000
End of period ....................... $ 23.0232 $ 21.9558 $ 19.9442 $ 15.7861 $ 14.0081 $ 10.5139
Units outstanding at end of period .. 3,543,768 4,241,041 3,998,716 3,108,409 1,874,623 709,023
VIP GROWTH PORTFOLIO
(Since January 6, 1994)
Beginning of period ................. $ 24.9380 $ 18.1281 $ 14.8863 $ 13.1611 $ 9.8584 $ 10.0000
End of period ....................... $ 33.8011 $ 24.9380 $ 18.1281 $ 14.8863 $ 13.1611 $ 9.8584
Units outstanding at end of period .. 3,189,119 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 ................. $ 14.1041 $ 14.9486 $ 12.8821 $ 11.4563 $ 9.6317 $ 10.0000
End of period ....................... $ 15.0436 $ 14.1041 $ 14.9486 $ 12.8821 $ 11.4563 $ 9.6317
Units outstanding at end of period .. 1,761,781 1,879,281 1,472,019 1,104,232 608,287 239,723
VIP MONEY MARKET PORTFOLIO
(Since January 6, 1994)
Beginning of period ................. $ 12.0719 $ 11.6055 $ 11.1555 $ 10.7316 $ 10.2767 $ 10.0000
End of period ....................... $ 12.5217 $ 12.0719 $ 11.6055 $ 11.1555 $ 10.7316 $ 10.2767
Units outstanding at end of period .. 5,232,470 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 1999 1998 1997 1996 1995 1994
- --------------------------------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FIDELITY VARIABLE INSURANCE PRODUCTS
FUND II (VIP II):
VIP II CONTRAFUND PORTFOLIO
(Since May 1, 1995)
Beginning of period .................. $ 22.7206 $ 17.7248 $ 14.4777 $ 12.1031 $ 10.0000 --
End of period ........................ $ 27.8416 $ 22.7206 $ 17.7248 $ 14.4777 $ 12.1031 --
Units outstanding at end of period ... 3,388,151 3,002,878 2,297,899 1,419,399 440,844 --
VIP II INDEX 500 PORTFOLIO
(Since January 6, 1994)
Beginning of period .................. $ 26.9978 $ 21.3328 $ 16.3012 $ 13.4594 $ 9.9476 $ 10.0000
End of period ........................ $ 32.0860 $ 26.9978 $ 21.3328 $ 16.3012 $ 13.4594 $ 9.9476
Units outstanding at end of period ... 3,625,706 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 .................. $ 12.8823 $ 12.0011 $ 11.1581 $ 10.9662 $ 9.4774 $ 10.0000
End of period ........................ $ 12.5711 $ 12.8823 $ 12.0011 $ 11.1581 $ 10.9662 $ 9.4774
Units outstanding at end of period ... 1,302,913 1,152,135 711,350 709,332 668,429 306,289
JANUS ASPEN SERIES:
AGGRESSIVE GROWTH PORTFOLIO
(Since August 8, 1997)
Beginning of period .................. $ 14.4318 $ 10.8997 $ 10.0000 -- -- --
End of period ........................ $ 32.0819 $ 14.4318 $ 10.8997 -- -- --
Units outstanding at end of period ... 907,599 121,462 47,593 -- -- --
GROWTH PORTFOLIO
(Since August 8, 1997)
Beginning of period .................. $ 13.5540 $ 10.1310 $ 10.0000 -- -- --
End of period ........................ $ 19.2465 $ 13.5540 $ 10.1310 -- -- --
Units outstanding at end of period ... 1,266,464 922,227 64,297 -- -- --
INTERNATIONAL GROWTH PORTFOLIO
(Since August 8, 1997)
Beginning of period .................. $ 11.0672 $ 9.5723 $ 10.0000 -- -- --
End of period ........................ $ 19.8947 $ 11.0672 $ 9.5723 -- -- --
Units outstanding at end of period ... 767,811 435,553 150,857 -- -- --
WORLDWIDE GROWTH PORTFOLIO
(Since August 8, 1997)
Beginning of period .................. $ 12.4373 $ 9.7821 $ 10.0000 -- -- --
End of period ........................ $ 20.1712 $ 12.4373 $ 9.7821 -- -- --
Units outstanding at end of period ... 3,705,358 2,148,224 590,783 -- -- --
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST ("AMT"):
LIMITED MATURITY BOND PORTFOLIO
(Since August 8, 1997)
Beginning of period .................. $ 10.4985 $ 10.1977 $ 10.0000 -- -- --
End of period ........................ $ 10.5065 $ 10.4985 $ 10.1977 -- -- --
Units outstanding at end of period ... 653,472 483,372 44,381 -- -- --
PARTNERS PORTFOLIO
(Since August 8, 1997)
Beginning of period .................. $ 10.5535 $ 10.2690 $ 10.0000 -- -- --
End of period ........................ $ 11.1748 $ 10.5535 $ 10.2690 -- -- --
Units outstanding at end of period ... 1,101,648 1,291,067 337,731 -- -- --
SOCIALLY RESPONSIVE PORTFOLIO
(Since April 30, 1999)
Beginning of period .................. -- -- -- -- -- --
End of period ........................ $ 10.6549 -- -- -- -- --
Units outstanding at end of period ... 22,281 -- -- -- -- --
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------------------------------------------------------
SUB-ACCOUNT INVESTING IN 1999 1998 1997 1996 1995 1994
- ------------------------------------------ ------------- ------------- ------------- ------------- ------------- -----
<S> <C> <C> <C> <C> <C> <C>
OCC ACCUMULATION TRUST:
EQUITY PORTFOLIO
(Since August 8, 1997)
Beginning of period ..................... $ 11.7390 $ 10.6414 $ 10.0000 -- -- --
End of period ........................... $ 11.8711 $ 11.7390 $ 10.6414 -- -- --
Units outstanding at end of period ...... 284,469 248,818 57,717 -- -- --
GLOBAL EQUITY PORTFOLIO
(Since August 8, 1997)
Beginning of period ..................... $ 10.5687 $ 9.4596 $ 10.0000 -- -- --
End of period ........................... $ 13.1877 $ 10.5687 $ 9.4596 -- -- --
Units outstanding at end of period ...... 40,473 29,458 10,483 -- -- --
MANAGED PORTFOLIO
(Since August 8, 1997)
Beginning of period ..................... $ 10.6494 $ 10.0805 $ 10.0000 -- -- --
End of period ........................... $ 11.0271 $ 10.6494 $ 10.0805 -- -- --
Units outstanding at end of period ...... 967,119 1,513,567 278,744 -- -- --
SMALL CAP PORTFOLIO
(Since August 8, 1997)
Beginning of period ..................... $ 9.1478 $ 10.1963 $ 10.0000 -- -- --
End of period ........................... $ 8.8561 $ 9.1478 $ 10.1963 -- -- --
Units outstanding at end of period ...... 407,689 369,821 94,123 -- -- --
PILGRIM VARIABLE PRODUCTS TRUST (PILGRIM):
GROWTH OPPORTUNITIES PORTFOLIO
(Since May 1, 2000)
Beginning of period ..................... -- -- -- -- -- --
End of period ........................... -- -- -- -- -- --
Units outstanding at end of period ...... -- -- -- -- -- --
GROWTH + VALUE PORTFOLIO
(Since January 3, 1995)
Beginning of period ..................... $ 19.9820 $ 16.9801 $ 15.0172 $ 12.3714 $ 10.0000 --
End of period ........................... $ 38.4240 $ 19.9820 $ 16.9801 $ 15.0172 $ 12.3714 --
Units outstanding at end of period ...... 666,517 595,830 613,041 376,557 16,298 --
HIGH YIELD BOND PORTFOLIO
(Since August 8, 1997)
Beginning of period ..................... $ 10.0955 $ 10.3496 $ 10.0000 -- -- --
End of period ........................... $ 9.6354 $ 10.0955 $ 10.3496 -- -- --
Units outstanding at end of period ...... 368,743 389,807 55,079 -- -- --
INTERNATIONAL VALUE FUND PORTFOLIO
(Since August 8, 1997)
Beginning of period ..................... $ 11.6165 $ 10.0738 $ 10.0000 -- -- --
End of period ........................... $ 17.2046 $ 11.6165 $ 10.0738 -- -- --
Units outstanding at end of period ...... 284,973 232,846 59,173 -- -- --
MAGNACAP PORTFOLIO
(Since May 1, 2000)
Beginning of period ..................... -- -- -- -- -- --
End of period ........................... -- -- -- -- -- --
Units outstanding at end of period ...... -- -- -- -- -- --
MIDCAP OPPORTUNITIES PORTFOLIO
(Since May 1, 2000)
Beginning of period ..................... -- -- -- -- -- --
End of period ........................... -- -- -- -- -- --
Units outstanding at end of period ...... -- -- -- -- -- --
RESEARCH ENHANCED INDEX PORTFOLIO
(Since January 3, 1995)
Beginning of period ..................... $ 13.4190 $ 13.6825 $ 12.7208 $ 11.3881 $ 10.0000 --
End of period ........................... $ 14.0038 $ 13.4190 $ 13.6825 $ 12.7208 $ 11.3881 --
Units outstanding at end of period ...... 464,405 480,880 286,906 152,651 21,964 --
</TABLE>
B-4
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------------------------------------------------
SUB-ACCOUNT INVESTING IN 1999 1998 1997 1996 1995 1994
- ------------------------------------ ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
SMALLCAP OPPORTUNITIES PORTFOLIO
(Since January 3, 1995)
Beginning of period ............... $ 17.7950 $ 15.3827 $ 13.4910 $ 12.0224 $ 10.0000 --
End of period ..................... $ 42.3014 $ 17.7950 $ 15.3827 $ 13.4910 $ 12.0224 --
Units outstanding at end of period 434,003 323,803 261,038 143,393 38,118 --
PUTNAM VARIABLE TRUST:
PUTNAM VT GROWTH AND INCOME FUND -
CLASS IA SHARES
(Since January 6, 1994)
Beginning of period ............... $ 22.3107 $ 19.6008 $ 16.0091 $ 13.3162 $ 9.8762 $ 10.0000
End of period ..................... $ 22.3517 $ 22.3107 $ 19.6008 $ 16.0091 $ 13.3162 $ 9.8762
Units outstanding at end of period 2,732,587 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 ............... $ 21.6313 $ 17.6345 $ 14.5039 $ 13.3506 $ 10.0000 --
End of period ..................... $ 36.1280 $ 21.6313 $ 17.6345 $ 14.5039 $ 13.3506 --
Units outstanding at end of period 2,094,825 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 ............... $ 23.7408 $ 19.3572 $ 15.5144 $ 13.9272 $ 10.0386 $ 10.0000
End of period ..................... $ 37.0449 $ 23.7408 $ 19.3572 $ 15.5144 $ 13.9272 $ 10.0386
Units outstanding at end of period 3,567,503 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 May 1, 2000 (the "Prospectus")
relating to the Select-Annuity III 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 ReliaStar Life's Service Center at P.O. Box 5050, Minot, North Dakota
58702-5050, by calling 1-877-884-5050, or 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
Experts .............................................................. SAI-2
Distribution of the Contracts ........................................ SAI-2
Calculation of Yield and Return ...................................... SAI-2
Financial Statements ................................................. SAI-16
-----------------
The date of this Statement of Additional Information is May 1, 2000.
SAI-1
<PAGE>
INTRODUCTION
The Select-Annuity III Contracts (the "Contracts") are flexible purchase
payment Individual Deferred Variable/Fixed Annuity 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 Minot, North
Dakota. 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.
EXPERTS
The financial statements of ReliaStar Select Variable Account as of and
for each of the two years ended December 31, 1999, which are included in this
Statement of Additional Information, and the Financial Statements of ReliaStar
Life Insurance Company as of and for each of the two years ended December 31,
1999, which are incorporated by reference in this Statement of Additional
Information, have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their reports which are 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, 1997, 1998, and 1999 the General
Distributor was paid fees by ReliaStar Life with respect to distribution of the
Select-Annuity III Contracts aggregating $1,309,426, $1,856,879, and
$1,457,606, 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
SAI-2
<PAGE>
net change in account value by the value of the account at the beginning of the
base period to obtain the base period return, and multiplying the base period
return by 365/7 with the resulting yield figure carried to the nearest
hundredth of one percent. The effective yield is computed in a similar manner,
except that the base period return is compounded by adding 1, raising the sum
to a power equal to 365 divided by 7, and subtracting 1 from the result,
according to the following formula:
Effective Yield = [(Base Period Return + 1) ] 365/7 - 1
Net changes in value of a hypothetical account will include net investment
income of the account (accrued daily dividends as declared by the 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, 1999 were as follows:
Yield: 4.89%
Effective Yield: 5.01%
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, and the deductions for
Mortality and Expense Risk Premiums, the Administration Charge, and the Annual
Contract Charge. The calculation assumes that the $30 Annual Contract Charge is
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 assumes surrender of the Contract at the end of
the period
SAI-3
<PAGE>
for the return quotation. Total returns will therefore reflect a deduction of
the Surrender Charge for any period less than six years. The total return will
then be calculated according to the following formula:
TR = ((ERV/P) 1/N) - 1
Where:
TR = The average annual total return net of Sub-Account recurring charges.
ERV = the ending redeemable value (net of any applicable surrender charge)
of the hypothetical account at the end of the period.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
SAI-4
<PAGE>
Such average annual total return information for the Sub-Accounts is as follows:
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR
PERIOD ENDED 12/31/99 PERIOD ENDED 12/31/99
----------------------- ----------------------
SUB-ACCOUNT
- -----------
<S> <C> <C>
AIM V.I. Dent Demographic Trends Fund N/A N/A
(Sub-Account Inception: 5/1/00)
Alger American Growth Portfolio 26.44% N/A
(Sub-Account Inception: 8/8/97)
Alger American Leveraged AllCap Portfolio N/A N/A
(Sub-Account Inception: 5/1/00)
Alger American MidCap Growth Portfolio 24.57% N/A
(Sub-Account Inception: 8/8/97)
Alger American Small Capitalization Portfolio 35.98% N/A
(Sub-Account Inception: 8/8/97)
Fidelity VIP Equity-Income Portfolio -- Initial Class (0.59)% 16.55%
(Sub-Account Inception: 1/6/94)
Fidelity VIP Growth Portfolio -- Initial Class 30.08% 27.64%
(Sub-Account Inception: 1/6/94)
Fidelity VIP High Income Portfolio -- Initial Class 1.21% 8.77%
(Sub-Account Inception: 1/6/94)
Fidelity VIP II Contrafund Portfolio -- Initial Class 17.08% N/A
(Sub-Account Inception: 5/1/95)
Fidelity VIP II Index 500 Portfolio -- Initial Class 13.39% 26.07%
(Sub-Account Inception: 1/6/94)
Fidelity VIP II Investment Grade Bond Portfolio -- Initial Class (7.87)% 5.18%
(Sub-Account Inception: 1/6/94)
Janus Aspen Aggressive Growth Portfolio 116.84% N/A
(Sub-Account Inception: 8/8/97)
Janus Aspen Growth Portfolio 36.54% N/A
(Sub-Account Inception: 8/8/97)
Janus Aspen International Growth Portfolio 74.31% N/A
(Sub-Account Inception: 8/8/97)
Janus Aspen Worldwide Growth Portfolio 56.73% N/A
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust Limited Maturity Bond Portfolio (5.38)% N/A
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust Partners Portfolio 0.43% N/A
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust Socially Responsive Portfolio N/A N/A
(Sub-Account Inception: 4/30/99)
OCC Accumulation Trust Equity Portfolio* (4.33)% N/A
(Sub-Account Inception: 8/8/97)
OCC Accumulation Trust Global Equity Portfolio 19.32% N/A
(Sub-Account Inception: 8/8/97)
OCC Accumulation Trust Managed Portfolio* (1.91)% N/A
(Sub-Account Inception: 8/8/97)
OCC Accumulation Trust SmallCap Portfolio* (8.64)% N/A
(Sub-Account Inception: 8/8/97)
Pilgrim VP Growth Opportunities Portfolio N/A N/A
(Sub-Account Inception: 5/1/00)
Pilgrim VP Growth + Value Portfolio 86.84% N/A
(Sub-Account Inception: 1/3/95)
Pilgrim VP High Yield Bond Portfolio (10.01)% N/A
(Sub-Account Inception: 8/8/97)
Pilgrim VP International Value Portfolio 42.65% N/A
(Sub-Account Inception: 8/8/97)
Pilgrim VP MagnaCap Portfolio N/A N/A
(Sub-Account Inception: 5/1/00)
Pilgrim VP MidCap Opportunities Portfolio N/A N/A
(Sub-Account Inception: 5/1/00)
Pilgrim VP Research Enhanced Index Portfolio** (1.10)% N/A
(Sub-Account Inception: 1/3/95)
Pilgrim VP SmallCap Opportunities Portfolio** 132.26% N/A
(Sub-Account Inception: 1/3/95)
Putnam VT Growth and Income Fund - Class IA Shares (5.27)% 17.33%
(Sub-Account Inception: 1/6/94)
Putnam VT New Opportunities Fund - Class IA Shares 61.56% N/A
(Sub-Account Inception: 5/1/95)
Putnam VT Voyager Fund - Class IA Shares 50.58% 29.55%
(Sub-Account Inception: 1/6/94)
</TABLE>
SAI-5
<PAGE>
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
FOR THE 10-YEAR DATE OF INCEPTION OF
PERIOD ENDED 12/31/99 SUB-ACCOUNT TO 12/31/99
----------------------- ------------------------
SUB-ACCOUNT
- -----------
<S> <C> <C>
AIM V.I. Dent Demographic Trends Fund N/A N/A
(Sub-Account Inception: 5/1/00)
Alger American Growth Portfolio N/A 28.98%
(Sub-Account Inception: 8/8/97)
Alger American Leveraged AllCap Portfolio N/A N/A
(Sub-Account Inception: 5/1/00)
Alger American MidCap Growth Portfolio N/A 21.20%
(Sub-Account Inception: 8/8/97)
Alger American Small Capitalization Portfolio N/A 20.60%
(Sub-Account Inception: 8/8/97)
Fidelity VIP Equity-Income Portfolio -- Initial Class N/A 14.61%
(Sub-Account Inception: 1/6/94)
Fidelity VIP Growth Portfolio -- Initial Class N/A 22.30%
(Sub-Account Inception: 1/6/94)
Fidelity VIP High Income Portfolio -- Initial Class N/A 6.58%
(Sub-Account Inception: 1/6/94)
Fidelity VIP II Contrafund Portfolio -- Initial Class N/A 24.12%
(Sub-Account Inception: 5/1/95)
Fidelity VIP II Index 500 Portfolio -- Initial Class N/A 21.23%
(Sub-Account Inception: 1/6/94)
Fidelity VIP II Investment Grade Bond Portfolio -- Initial Class N/A 3.34%
(Sub-Account Inception: 1/6/94)
Janus Aspen Aggressive Growth Portfolio N/A 61.60%
(Sub-Account Inception: 8/8/97)
Janus Aspen Growth Portfolio N/A 30.05%
(Sub-Account Inception: 8/8/97)
Janus Aspen International Growth Portfolio N/A 31.90%
(Sub-Account Inception: 8/8/97)
Janus Aspen Worldwide Growth Portfolio N/A 32.68%
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust Limited Maturity Bond Portfolio N/A 0.16%
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust Partners Portfolio N/A 2.89%
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust Socially Responsive Portfolio N/A N/A
(Sub-Account Inception: 4/30/99)
OCC Accumulation Trust Equity Portfolio* N/A 5.63%
(Sub-Account Inception: 8/8/97)
OCC Accumulation Trust Global Equity Portfolio N/A 10.55%
(Sub-Account Inception: 8/8/97)
OCC Accumulation Trust Managed Portfolio* N/A 2.30%
(Sub-Account Inception: 8/8/97)
OCC Accumulation Trust SmallCap Portfolio* N/A (7.06)%
(Sub-Account Inception: 8/8/97)
Pilgrim VP Growth Opportunities Portfolio N/A N/A
(Sub-Account Inception: 5/1/00)
Pilgrim VP Growth + Value Portfolio N/A 30.64%
(Sub-Account Inception: 1/3/95)
Pilgrim VP High Yield Bond Portfolio N/A (3.55)%
(Sub-Account Inception: 8/8/97)
Pilgrim VP International Value Portfolio N/A 23.96%
(Sub-Account Inception: 8/8/97)
Pilgrim VP MagnaCap Portfolio N/A N/A
(Sub-Account Inception: 5/1/00)
Pilgrim VP MidCap Opportunities Portfolio N/A N/A
(Sub-Account Inception: 5/1/00)
Pilgrim VP Research Enhanced Index Portfolio** N/A 6.37%
(Sub-Account Inception: 1/3/95)
Pilgrim VP SmallCap Opportunities Portfolio** N/A 33.20%
(Sub-Account Inception: 1/3/95)
Putnam VT Growth and Income Fund - Class IA Shares N/A 14.03%
(Sub-Account Inception: 1/6/94)
Putnam VT New Opportunities Fund - Class IA Shares N/A 31.33%
(Sub-Account Inception: 5/1/95)
Putnam VT Voyager Fund - Class IA Shares N/A 24.21%
(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.
SAI-6
<PAGE>
Such average annual total return information for the Sub-Accounts is as follows:
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR
PERIOD ENDED 12/31/99 PERIOD ENDED 12/31/99
----------------------- ----------------------
SUB-ACCOUNT
- -----------
<S> <C> <C>
AIM V.I. Dent Demographic Trends Fund N/A N/A
(Portfolio Inception: 12/29/99)
Alger American Growth Portfolio 26.44% 28.83%
(Portfolio Inception: 1/9/89)
Alger American Leveraged AllCap Portfolio 70.15% N/A
(Portfolio Inception: 1/25/95)
Alger American MidCap Growth Portfolio 24.57% 24.06%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio 35.98% 20.57%
(Portfolio Inception: 9/21/88)
Fidelity VIP Equity-Income Portfolio -- Initial Class (0.59)% 16.55%
(Portfolio Inception: 10/9/86)
Fidelity VIP Growth Portfolio -- Initial Class 30.08% 27.64%
(Portfolio Inception: 10/9/86)
Fidelity VIP High Income Portfolio -- Initial Class 1.21% 8.77%
(Portfolio Inception: 9/19/85)
Fidelity VIP II Contrafund Portfolio -- Initial Class 17.08% N/A
(Portfolio Inception: 1/3/95)
Fidelity VIP II Index 500 Portfolio -- Initial Class 13.39% 26.07%
(Portfolio Inception: 8/27/92)
Fidelity VIP II Investment Grade Bond Portfolio -- Initial Class (7.87)% 5.18%
(Portfolio Inception: 12/5/88)
Janus Aspen Aggressive Growth Portfolio 116.84% 34.08%
(Portfolio Inception: 9/13/93)
Janus Aspen Growth Portfolio 36.54% 27.79%
(Portfolio Inception: 9/13/93)
Janus Aspen International Growth Portfolio 74.31% 31.13%
(Portfolio Inception: 5/2/94)
Janus Aspen Worldwide Growth Portfolio 56.73% 31.48%
(Portfolio Inception: 9/13/93)
Neuberger Berman Advisers Management Trust Limited Maturity Bond Portfolio (5.38)% 3.39%
(Portfolio Inception: 9/10/84)
Neuberger Berman Advisers Management Trust Partners Portfolio 0.43% 18.96%
(Portfolio Inception: 3/22/94)
Neuberger Berman Advisers Management Trust Socially Responsive Portfolio N/A N/A
(Portfolio Inception: 2/18/99)
OCC Accumulation Trust Equity Portfolio* (4.33)% 17.93%
(Portfolio Inception: 8/1/88)
OCC Accumulation Trust Global Equity Portfolio 19.32% N/A
(Portfolio Inception: 3/1/95)
OCC Accumulation Trust Managed Portfolio* (1.91)% 17.64%
(Portfolio Inception: 8/1/88)
OCC Accumulation Trust SmallCap Portfolio* (8.64)% 6.25%
(Portfolio Inception: 8/1/88)
Pilgrim VP Growth Opportunities Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP Growth + Value Portfolio 86.84% 30.44%
(Portfolio Inception: 5/6/94)
Pilgrim VP High Yield Bond Portfolio (10.01)% 6.16%
(Portfolio Inception: 5/6/94)
Pilgrim VP International Value Portfolio 42.65% N/A
(Portfolio Inception: 8/8/97)
Pilgrim VP MagnaCap Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP MidCap Opportunities Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP Research Enhanced Index Portfolio** (1.10)% 6.33%
(Portfolio Inception: 5/6/94)
Pilgrim VP SmallCap Opportunities Portfolio** 132.26% 33.02%
(Portfolio Inception: 5/6/94)
Putnam VT Growth and Income Fund - Class IA Shares (5.27)% 17.33%
(Portfolio Inception: 2/1/88)
Putnam VT New Opportunities Fund - Class IA Shares 61.56% 30.70%
(Portfolio Inception: 5/2/94)
Putnam VT Voyager Fund - Class IA Shares 50.58% 29.55%
(Portfolio Inception: 2/1/88)
</TABLE>
SAI-7
<PAGE>
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
FOR THE 10-YEAR DATE OF INCEPTION OF FUND
PERIOD ENDED 12/31/99 PORTFOLIO TO 12/31/99
----------------------- --------------------------
SUB-ACCOUNT
- -----------
<S> <C> <C>
AIM V.I. Dent Demographic Trends Fund N/A N/A
(Portfolio Inception: 12/29/99)
Alger American Growth Portfolio 21.16% 21.32%
(Portfolio Inception: 1/9/89)
Alger American Leveraged AllCap Portfolio N/A 44.19%
(Portfolio Inception: 1/25/95)
Alger American MidCap Growth Portfolio N/A 22.96%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio 16.55% 19.16%
(Portfolio Inception: 9/21/88)
Fidelity VIP Equity-Income Portfolio -- Initial Class 12.87% 12.17%
(Portfolio Inception: 10/9/86)
Fidelity VIP Growth Portfolio -- Initial Class 18.24% 17.09%
(Portfolio Inception: 10/9/86)
Fidelity VIP High Income Portfolio -- Initial Class 10.84% 9.32%
(Portfolio Inception: 9/19/85)
Fidelity VIP II Contrafund Portfolio -- Initial Class N/A 25.65%
(Portfolio Inception: 1/3/95)
Fidelity VIP II Index 500 Portfolio -- Initial Class N/A 19.36%
(Portfolio Inception: 8/27/92)
Fidelity VIP II Investment Grade Bond Portfolio -- Initial Class 5.66% 5.93%
(Portfolio Inception: 12/5/88)
Janus Aspen Aggressive Growth Portfolio N/A 32.51%
(Portfolio Inception: 9/13/93)
Janus Aspen Growth Portfolio N/A 22.51%
(Portfolio Inception: 9/13/93)
Janus Aspen International Growth Portfolio N/A 26.15%
(Portfolio Inception: 5/2/94)
Janus Aspen Worldwide Growth Portfolio N/A 27.87%
(Portfolio Inception: 9/13/93)
Neuberger Berman Advisers Management Trust Limited Maturity Bond Portfolio 4.35% 5.95%
(Portfolio Inception: 9/10/84)
Neuberger Berman Advisers Management Trust Partners Portfolio N/A 15.50%
(Portfolio Inception: 3/22/94)
Neuberger Berman Advisers Management Trust Socially Responsive Portfolio N/A N/A
(Portfolio Inception: 2/18/99)
OCC Accumulation Trust Equity Portfolio* 13.84% 14.04%
(Portfolio Inception: 8/1/88)
OCC Accumulation Trust Global Equity Portfolio N/A 15.98%
(Portfolio Inception: 3/1/95)
OCC Accumulation Trust Managed Portfolio* 14.96% 16.05%
(Portfolio Inception: 8/1/88)
OCC Accumulation Trust SmallCap Portfolio* 9.54% 9.91%
(Portfolio Inception: 8/1/88)
Pilgrim VP Growth Opportunities Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP Growth + Value Portfolio N/A 27.04%
(Portfolio Inception: 5/6/94)
Pilgrim VP High Yield Bond Portfolio N/A 5.13%
(Portfolio Inception: 5/6/94)
Pilgrim VP International Value Portfolio N/A 23.96%
(Portfolio Inception: 8/8/97)
Pilgrim VP MagnaCap Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP MidCap Opportunities Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP Research Enhanced Index Portfolio** N/A 5.71%
(Portfolio Inception: 5/6/94)
Pilgrim VP SmallCap Opportunities Portfolio** N/A 28.92%
(Portfolio Inception: 5/6/94)
Putnam VT Growth and Income Fund - Class IA Shares 12.38% 13.57%
(Portfolio Inception: 2/1/88)
Putnam VT New Opportunities Fund - Class IA Shares N/A 28.21%
(Portfolio Inception: 5/2/94)
Putnam VT Voyager Fund - Class IA Shares 20.59% 19.83%
(Portfolio Inception: 2/1/88)
</TABLE>
ReliaStar Life may also disclose average annual total returns for the
Investment Fund Portfolios since their inception, including such disclosure for
periods prior to the date the Variable Account commenced operations.
SAI-8
<PAGE>
Such average annual total return information for the Portfolios of the
Investment Funds is as follows:
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR
PERIOD ENDED 12/31/99 PERIOD ENDED 12/31/99
----------------------- ----------------------
SUB-ACCOUNT
- -----------
<S> <C> <C>
AIM V.I. Dent Demographic Trends Fund N/A N/A
(Portfolio Inception: 12/29/99)
Alger American Growth Portfolio 33.74% 30.94%
(Portfolio Inception: 1/9/89)
Alger American Leveraged AllCap Portfolio 78.06% N/A
(Portfolio Inception: 1/25/95)
Alger American MidCap Growth Portfolio 31.85% 26.14%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio 43.42% 22.64%
(Portfolio Inception: 9/21/88)
Fidelity VIP Equity-Income Portfolio -- Initial Class 6.33% 18.61%
(Portfolio Inception: 10/9/86)
Fidelity VIP Growth Portfolio -- Initial Class 37.44% 29.74%
(Portfolio Inception: 10/9/86)
Fidelity VIP High Income Portfolio -- Initial Class 8.16% 10.86%
(Portfolio Inception: 9/19/85)
Fidelity VIP II Contrafund Portfolio -- Initial Class 24.25% N/A
(Portfolio Inception: 1/3/95)
Fidelity VIP II Index 500 Portfolio -- Initial Class 20.51% 28.16%
(Portfolio Inception: 8/27/92)
Fidelity VIP II Investment Grade Bond Portfolio -- Initial Class (1.05)% 7.30%
(Portfolio Inception: 12/5/88)
Janus Aspen Aggressive Growth Portfolio 125.40% 36.23%
(Portfolio Inception: 9/13/93)
Janus Aspen Growth Portfolio 43.98% 29.89%
(Portfolio Inception: 9/13/93)
Janus Aspen International Growth Portfolio 82.27% 33.25%
(Portfolio Inception: 5/2/94)
Janus Aspen Worldwide Growth Portfolio 64.45% 33.60%
(Portfolio Inception: 9/13/93)
Neuberger Berman Advisers Management Trust Limited Maturity Bond Portfolio 1.48% 5.52%
(Portfolio Inception: 9/10/84)
Neuberger Berman Advisers Management Trust Partners Portfolio 7.37% 21.03%
(Portfolio Inception: 3/22/94)
Neuberger Berman Advisers Management Trust Socially Responsive Portfolio N/A N/A
(Portfolio Inception: 2/18/99)
OCC Accumulation Trust Equity Portfolio* 2.54% 19.94%
(Portfolio Inception: 8/1/88)
OCC Accumulation Trust Global Equity Portfolio 26.53% N/A
(Portfolio Inception: 3/1/95)
OCC Accumulation Trust Managed Portfolio* 5.00% 19.69%
(Portfolio Inception: 8/1/88)
OCC Accumulation Trust SmallCap Portfolio* (1.83)% 8.35%
(Portfolio Inception: 2/18/99)
Pilgrim VP Growth Opportunities Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP Growth + Value Portfolio 94.98% 32.56%
(Portfolio Inception: 5/6/94)
Pilgrim VP High Yield Bond Portfolio (3.22)% 8.63%
(Portfolio Inception: 5/6/94)
Pilgrim VP International Value Portfolio 50.18% N/A
(Portfolio Inception: 8/8/97)
Pilgrim VP MagnaCap Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP MidCap Opportunities Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP Research Enhanced Index Portfolio** 5.82% 8.84%
(Portfolio Inception: 5/6/94)
Pilgrim VP SmallCap Opportunities Portfolio** 141.03% 35.16%
(Portfolio Inception: 5/6/94)
Putnam VT Growth and Income Fund -- Class IA Shares 1.59% 19.39%
(Portfolio Inception: 2/1/88)
Putnam VT New Opportunities Fund - Class IA Shares 69.35% 32.82%
(Portfolio Inception: 5/2/94)
Putnam VT Voyager Fund - Class IA Shares 58.22% 31.66%
(Portfolio Inception: 2/1/88)
</TABLE>
SAI-9
<PAGE>
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
FOR THE 10-YEAR DATE OF INCEPTION OF FUND
PERIOD ENDED 12/31/99 PORTFOLIO TO 12/31/99
----------------------- --------------------------
SUB-ACCOUNT
- -----------
<S> <C> <C>
AIM V.I. Dent Demographic Trends Fund N/A N/A
(Portfolio Inception: 12/29/99)
Alger American Growth Portfolio 22.89% 23.05%
(Portfolio Inception: 1/9/89)
Alger American Leveraged AllCap Portfolio N/A 46.41%
(Portfolio Inception: 1/25/95)
Alger American MidCap Growth Portfolio N/A 24.72%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio 18.22% 20.85%
(Portfolio Inception: 9/21/88)
Fidelity VIP Equity-Income Portfolio -- Initial Class 14.49% 13.78%
(Portfolio Inception: 10/9/86)
Fidelity VIP Growth Portfolio -- Initial Class 19.94% 18.76%
(Portfolio Inception: 10/9/86)
Fidelity VIP High Income Portfolio -- Initial Class 12.43% 10.88%
(Portfolio Inception: 9/19/85)
Fidelity VIP II Contrafund Portfolio -- Initial Class N/A 27.73%
(Portfolio Inception: 1/3/95)
Fidelity VIP II Index 500 Portfolio -- Initial Class N/A 21.07%
(Portfolio Inception: 8/27/92)
Fidelity VIP II Investment Grade Bond Portfolio -- Initial Class 7.19% 7.46%
(Portfolio Inception: 12/5/88)
Janus Aspen Aggressive Growth Portfolio N/A 34.40%
(Portfolio Inception: 9/13/93)
Janus Aspen Growth Portfolio N/A 24.27%
(Portfolio Inception: 9/13/93)
Janus Aspen International Growth Portfolio N/A 28.17%
(Portfolio Inception: 5/2/94)
Janus Aspen Worldwide Growth Portfolio N/A 29.69%
(Portfolio Inception: 9/13/93)
Neuberger Berman Advisers Management Trust Limited Maturity Bond Portfolio 5.86% 7.47%
(Portfolio Inception: 9/10/84)
Neuberger Berman Advisers Management Trust Partners Portfolio N/A 17.47%
(Portfolio Inception: 3/22/94)
Neuberger Berman Advisers Management Trust Socially Responsive Portfolio N/A N/A
(Portfolio Inception: 2/18/99)
OCC Accumulation Trust Equity Portfolio* 15.46% 15.66%
(Portfolio Inception: 8/1/88)
OCC Accumulation Trust Global Equity Portfolio N/A 18.06%
(Portfolio Inception: 3/1/95)
OCC Accumulation Trust Managed Portfolio* 16.60% 17.70%
(Portfolio Inception: 8/1/88)
OCC Accumulation Trust SmallCap Portfolio* 11.12% 11.48%
(Portfolio Inception: 8/1/88)
Pilgrim VP Growth Opportunities Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP Growth + Value Portfolio N/A 29.07%
(Portfolio Inception: 5/6/94)
Pilgrim VP High Yield Bond Portfolio N/A 7.47%
(Portfolio Inception: 5/6/94)
Pilgrim VP International Value Portfolio N/A 27.15%
(Portfolio Inception: 8/8/97)
Pilgrim VP MagnaCap Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP MidCap Opportunities Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP Research Enhanced Index Portfolio** N/A 8.09%
(Portfolio Inception: 5/6/94)
Pilgrim VP SmallCap Opportunities Portfolio** N/A 30.97%
(Portfolio Inception: 5/6/94)
Putnam VT Growth and Income Fund -- Class IA Shares 14.00% 15.19%
(Portfolio Inception: 2/1/88)
Putnam VT New Opportunities Fund - Class IA Shares N/A 30.24%
(Portfolio Inception: 5/2/94)
Putnam VT Voyager Fund - Class IA Shares 22.31% 21.54%
(Portfolio Inception: 2/1/88)
</TABLE>
OTHER TOTAL RETURNS. From time to time, sales literature or advertisements
may quote average annual total returns for the Sub-Accounts that do not reflect
the Surrender Charge. 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:
SAI-10
<PAGE>
RETURNS SINCE DATE SUB-ACCOUNTS COMMENCED OPERATIONS
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR
PERIOD ENDED 12/31/99 PERIOD ENDED 12/31/99
----------------------- ----------------------
SUB-ACCOUNT
- -----------
<S> <C> <C>
AIM V.I. Dent Demographic Trends Fund N/A N/A
(Sub-Account Inception: 5/1/00)
Alger American Growth Portfolio 31.84% N/A
(Sub-Account Inception: 8/8/97)
Alger American Leveraged AllCap Portfolio N/A N/A
(Sub-Account Inception: 5/1/00)
Alger American MidCap Growth Portfolio 29.97% N/A
(Sub-Account Inception: 8/8/97)
Alger American Small Capitalization Portfolio 41.38% N/A
(Sub-Account Inception: 8/8/97)
Fidelity VIP Equity-Income Portfolio -- Initial Class 4.81% 16.93%
(Sub-Account Inception: 1/6/94)
Fidelity VIP Growth Portfolio -- Initial Class 35.48% 27.91%
(Sub-Account Inception: 1/6/94)
Fidelity VIP High Income Portfolio -- Initial Class 6.61% 9.28%
(Sub-Account Inception: 1/6/94)
Fidelity VIP II Contrafund Portfolio -- Initial Class 22.48% N/A
(Sub-Account Inception: 5/1/95)
Fidelity VIP II Index 500 Portfolio -- Initial Class 18.79% 26.36%
(Sub-Account Inception: 1/6/94)
Fidelity VIP II Investment Grade Bond Portfolio -- Initial Class (2.47)% 5.77%
(Sub-Account Inception: 1/6/94)
Janus Aspen Aggressive Growth Portfolio 122.24% N/A
(Sub-Account Inception: 8/8/97)
Janus Aspen Growth Portfolio 41.94% N/A
(Sub-Account Inception: 8/8/97)
Janus Aspen International Growth Portfolio 79.71% N/A
(Sub-Account Inception: 8/8/97)
Janus Aspen Worldwide Growth Portfolio 62.13% N/A
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust Limited Maturity Bond Portfolio 0.02% N/A
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust Partners Portfolio 5.83% N/A
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust Socially Responsive Portfolio N/A N/A
(Sub-Account Inception: 4/30/99)
OCC Accumulation Trust Equity Portfolio* 1.07% N/A
(Sub-Account Inception: 8/8/97)
OCC Accumulation Trust Global Equity Portfolio 24.72% N/A
(Sub-Account Inception: 8/8/97)
OCC Accumulation Trust Managed Portfolio* 3.49% N/A
(Sub-Account Inception: 8/8/97)
OCC Accumulation Trust SmallCap Portfolio* (3.24)% N/A
(Sub-Account Inception: 8/8/97)
Pilgrim VP Growth Opportunities Portfolio N/A N/A
(Sub-Account Inception: 5/1/00)
Pilgrim VP Growth + Value Portfolio 92.24% N/A
(Sub-Account Inception: 1/3/95)
Pilgrim VP High Yield Bond Portfolio (4.61)% N/A
(Sub-Account Inception: 8/8/97)
Pilgrim VP International Value Portfolio 48.05% N/A
(Sub-Account Inception: 8/8/97)
Pilgrim VP MagnaCap Portfolio N/A N/A
(Sub-Account Inception: 5/1/00)
Pilgrim VP MidCap Opportunities Portfolio N/A N/A
(Sub-Account Inception: 5/1/00)
Pilgrim VP Research Enhanced Index Portfolio** 4.30% N/A
(Sub-Account Inception: 1/3/95)
Pilgrim VP SmallCap Opportunities Portfolio** 137.66% N/A
(Sub-Account Inception: 1/3/95)
Putnam VT Growth and Income Fund - Class IA Shares 0.13% 17.71%
(Sub-Account Inception: 1/6/94)
Putnam VT New Opportunities Fund - Class IA Shares 66.96% N/A
(Sub-Account Inception: 5/1/95)
Putnam VT Voyager Fund - Class IA Shares 55.98% 29.80%
(Sub-Account Inception: 1/6/94)
</TABLE>
SAI-11
<PAGE>
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
FOR THE 10-YEAR DATE OF INCEPTION OF
PERIOD ENDED 12/31/99 SUB-ACCOUNT TO 12/31/99
----------------------- ------------------------
SUB-ACCOUNT
- -----------
<S> <C> <C>
AIM V.I. Dent Demographic Trends Fund N/A N/A
(Sub-Account Inception: 5/1/00)
Alger American Growth Portfolio N/A 30.29%
(Sub-Account Inception: 8/8/97)
Alger American Leveraged AllCap Portfolio N/A N/A
(Sub-Account Inception: 5/1/00)
Alger American MidCap Growth Portfolio N/A 22.62%
(Sub-Account Inception: 8/8/97)
Alger American Small Capitalization Portfolio N/A 22.03%
(Sub-Account Inception: 8/8/97)
Fidelity VIP Equity-Income Portfolio -- Initial Class N/A 14.91%
(Sub-Account Inception: 1/6/94)
Fidelity VIP Growth Portfolio -- Initial Class N/A 22.52%
(Sub-Account Inception: 1/6/94)
Fidelity VIP High Income Portfolio -- Initial Class N/A 7.01%
(Sub-Account Inception: 1/6/94)
Fidelity VIP II Contrafund Portfolio -- Initial Class N/A 24.47%
(Sub-Account Inception: 5/1/95)
Fidelity VIP II Index 500 Portfolio -- Initial Class N/A 21.46%
(Sub-Account Inception: 1/6/94)
Fidelity VIP II Investment Grade Bond Portfolio -- Initial Class N/A 3.85%
(Sub-Account Inception: 1/6/94)
Janus Aspen Aggressive Growth Portfolio N/A 62.56%
(Sub-Account Inception: 8/8/97)
Janus Aspen Growth Portfolio N/A 31.34%
(Sub-Account Inception: 8/8/97)
Janus Aspen International Growth Portfolio N/A 33.17%
(Sub-Account Inception: 8/8/97)
Janus Aspen Worldwide Growth Portfolio N/A 33.94%
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust Limited Maturity Bond Portfolio N/A 2.01%
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust Partners Portfolio N/A 4.67%
(Sub-Account Inception: 8/8/97)
Neuberger Berman Advisers Management Trust Socially Responsive Portfolio N/A N/A
(Sub-Account Inception: 4/30/99)
OCC Accumulation Trust Equity Portfolio* N/A 7.35%
(Sub-Account Inception: 8/8/97)
OCC Accumulation Trust Global Equity Portfolio N/A 12.17%
(Sub-Account Inception: 8/8/97)
OCC Accumulation Trust Managed Portfolio* N/A 4.09%
(Sub-Account Inception: 8/8/97)
OCC Accumulation Trust SmallCap Portfolio* N/A (5.01)%
(Sub-Account Inception: 8/8/97)
Pilgrim VP Growth Opportunities Portfolio N/A N/A
(Sub-Account Inception: 5/1/00)
Pilgrim VP Growth + Value Portfolio N/A 30.89%
(Sub-Account Inception: 1/3/95)
Pilgrim VP High Yield Bond Portfolio N/A (1.61)%
(Sub-Account Inception: 8/8/97)
Pilgrim VP International Value Portfolio N/A 25.33%
(Sub-Account Inception: 8/8/97)
Pilgrim VP MagnaCap Portfolio N/A N/A
(Sub-Account Inception: 5/1/00)
Pilgrim VP MidCap Opportunities Portfolio N/A N/A
(Sub-Account Inception: 5/1/00)
Pilgrim VP Research Enhanced Index Portfolio** N/A 6.93%
(Sub-Account Inception: 1/3/95)
Pilgrim VP SmallCap Opportunities Portfolio** N/A 33.43%
(Sub-Account Inception: 1/3/95)
Putnam VT Growth and Income Fund - Class IA Shares N/A 14.34%
(Sub-Account Inception: 1/6/94)
Putnam VT New Opportunities Fund - Class IA Shares N/A 31.61%
(Sub-Account Inception: 5/1/95)
Putnam VT Voyager Fund - Class IA Shares N/A 24.41%
(Sub-Account Inception: 1/6/94)
</TABLE>
SAI-12
<PAGE>
RETURNS INCLUDING PERIOD PRIOR TO DATE SUB-ACCOUNTS COMMENCED OPERATIONS
<TABLE>
<CAPTION>
FOR THE 1-YEAR FOR THE 5-YEAR
PERIOD ENDED 12/31/99 PERIOD ENDED 12/31/99
----------------------- ----------------------
SUB-ACCOUNT
- -----------
<S> <C> <C>
AIM V.I. Dent Demographic Trends Fund N/A N/A
(Portfolio Inception: 12/29/99)
Alger American Growth Portfolio 31.84% 29.09%
(Portfolio Inception: 1/9/89)
Alger American Leveraged All Cap Portfolio 75.55% N/A
(Portfolio Inception: 1/25/95)
Alger American MidCap Growth Portfolio 29.97% 24.36%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio 41.38% 20.91%
(Portfolio Inception: 9/21/88)
Fidelity VIP Equity-Income Portfolio -- Initial Class 4.81% 16.93%
(Portfolio Inception: 10/9/86)
Fidelity VIP Growth Portfolio -- Initial Class 35.48% 27.91%
(Portfolio Inception: 10/9/86)
Fidelity VIP High Income Portfolio -- Initial Class 6.61% 9.28%
(Portfolio Inception: 9/19/85)
Fidelity VIP II Contrafund Portfolio -- Initial Class 22.48% N/A
(Portfolio Inception: 1/3/95)
Fidelity VIP II Index 500 Portfolio -- Initial Class 18.79% 26.36%
(Portfolio Inception: 8/27/92)
Fidelity VIP II Investment Grade Bond Portfolio -- Initial Class (2.47)% 5.77%
(Portfolio Inception: 12/5/88)
Janus Aspen Aggressive Growth Portfolio 122.24% 34.30%
(Portfolio Inception: 9/13/93)
Janus Aspen Growth Portfolio 41.94% 28.05%
(Portfolio Inception: 9/13/93)
Janus Aspen International Growth Portfolio 79.71% 31.37%
(Portfolio Inception: 5/2/94)
Janus Aspen Worldwide Growth Portfolio 62.13% 31.72%
(Portfolio Inception: 9/13/93)
Neuberger Berman Advisers Management Trust Limited Maturity Bond Portfolio 0.02% 4.01%
(Portfolio Inception: 9/10/84)
Neuberger Berman Advisers Management Trust Partners Portfolio 5.83% 19.32%
(Portfolio Inception: 3/22/94)
Neuberger Berman Advisers Management Trust Socially Responsive Portfolio N/A N/A
(Portfolio Inception: 2/18/99)
OCC Accumulation Trust Equity Portfolio* 1.07% 18.30%
(Portfolio Inception: 8/1/88)
OCC Accumulation Trust Global Equity Portfolio 24.72% N/A
(Portfolio Inception: 3/1/95)
OCC Accumulation Trust Managed Portfolio* 3.49% 18.02%
(Portfolio Inception: 8/1/88)
OCC Accumulation Trust SmallCap Portfolio* (3.24)% 6.81%
(Portfolio Inception: 2/18/99)
Pilgrim VP Growth Opportunities Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP Growth + Value Portfolio 92.24% 30.69%
(Portfolio Inception: 5/6/94)
Pilgrim VP High Yield Bond Portfolio (4.61)% 6.72%
(Portfolio Inception: 5/6/94)
Pilgrim VP International Value Portfolio 48.05% N/A
(Portfolio Inception: 8/8/97)
Pilgrim VP MagnaCap Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP MidCap Opportunities Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP Research Enhanced Index Portfolio** 4.30% 6.89%
(Portfolio Inception: 5/6/94)
Pilgrim VP SmallCap Opportunities Portfolio** 137.66% 33.25%
(Portfolio Inception: 5/6/94)
Putnam VT Growth and Income Fund - Class IA Shares 0.13% 17.71%
(Portfolio Inception: 2/1/88)
Putnam VT New Opportunities Fund - Class IA Shares 66.96% 30.94%
(Portfolio Inception: 5/2/94)
Putnam VT Voyager Fund - Class IA Shares 55.98% 29.80%
(Portfolio Inception: 2/1/88)
</TABLE>
SAI-13
<PAGE>
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
FOR THE 10-YEAR DATE OF INCEPTION OF FUND
PERIOD ENDED 12/31/99 PORTFOLIO TO 12/31/99
----------------------- --------------------------
SUB-ACCOUNT
- -----------
<S> <C> <C>
AIM V.I. Dent Demographic Trends Fund N/A N/A
(Portfolio Inception: 12/29/99)
Alger American Growth Portfolio 21.16% 21.32%
(Portfolio Inception: 1/9/89)
Alger American Leveraged All Cap Portfolio N/A 44.36%
(Portfolio Inception: 1/25/95)
Alger American MidCap Growth Portfolio N/A 22.96%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio 16.55% 19.16%
(Portfolio Inception: 9/21/88)
Fidelity VIP Equity-Income Portfolio -- Initial Class 12.87% 12.17%
(Portfolio Inception: 10/9/86)
Fidelity VIP Growth Portfolio -- Initial Class 18.24% 17.09%
(Portfolio Inception: 10/9/86)
Fidelity VIP High Income Portfolio -- Initial Class 10.84% 9.32%
(Portfolio Inception: 9/19/85)
Fidelity VIP II Contrafund Portfolio -- Initial Class N/A 25.93%
(Portfolio Inception: 1/3/95)
Fidelity VIP II Index 500 Portfolio -- Initial Class N/A 19.36%
(Portfolio Inception: 8/27/92)
Fidelity VIP II Investment Grade Bond Portfolio -- Initial Class 5.66% 5.93%
(Portfolio Inception: 12/5/88)
Janus Aspen Aggressive Growth Portfolio N/A 32.51%
(Portfolio Inception: 9/13/93)
Janus Aspen Growth Portfolio N/A 22.51%
(Portfolio Inception: 9/13/93)
Janus Aspen International Growth Portfolio N/A 26.36%
(Portfolio Inception: 5/2/94)
Janus Aspen Worldwide Growth Portfolio N/A 27.87%
(Portfolio Inception: 9/13/93)
Neuberger Berman Advisers Management Trust Limited Maturity Bond Portfolio 4.35% 5.95%
(Portfolio Inception: 9/10/84)
Neuberger Berman Advisers Management Trust Partners Portfolio N/A 15.81%
(Portfolio Inception: 3/22/94)
Neuberger Berman Advisers Management Trust Socially Responsive Portfolio N/A N/A
(Portfolio Inception: 2/18/99)
OCC Accumulation Trust Equity Portfolio* 13.84% 14.04%
(Portfolio Inception: 8/1/88)
OCC Accumulation Trust Global Equity Portfolio N/A 16.40%
(Portfolio Inception: 3/1/95)
OCC Accumulation Trust Managed Portfolio* 14.96% 16.05%
(Portfolio Inception: 8/1/88)
OCC Accumulation Trust SmallCap Portfolio* 9.54% 9.91%
(Portfolio Inception: 2/18/99)
Pilgrim VP Growth Opportunities Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP Growth + Value Portfolio N/A 27.24%
(Portfolio Inception: 5/6/94)
Pilgrim VP High Yield Bond Portfolio N/A 5.62%
(Portfolio Inception: 5/6/94)
Pilgrim VP International Value Portfolio N/A 25.33%
(Portfolio Inception: 8/8/97)
Pilgrim VP MagnaCap Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP MidCap Opportunities Portfolio N/A N/A
(Portfolio Inception: 4/30/00)
Pilgrim VP Research Enhanced Index Portfolio** N/A 6.19%
(Portfolio Inception: 5/6/94)
Pilgrim VP SmallCap Opportunities Portfolio** N/A 29.12%
(Portfolio Inception: 5/6/94)
Putnam VT Growth and Income Fund - Class IA Shares 12.38% 13.57%
(Portfolio Inception: 2/1/88)
Putnam VT New Opportunities Fund - Class IA Shares N/A 28.41%
(Portfolio Inception: 5/2/94)
Putnam VT Voyager Fund - Class IA Shares 20.59% 19.83%
(Portfolio Inception: 2/1/88)
</TABLE>
SAI-14
<PAGE>
- -----------------
* On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two
investment funds, the Old Trust and the present OCC Accumulation Trust (the
"Trust") at which time the Trust commenced operations. The total net assets
for the Equity, Managed, and Small Cap Portfolios immediately after the
transaction were $86,789,755, $682,601,380, and $139,812,573, respectively,
with respect to the Old Trust and for the Equity, Managed, and Small Cap
Portfolios, $3,764,598, $51,345,102, and $8,129,274, respectively with
respect to the Trust. For the period prior to September 14, 1994, the
performance figures for each of the Equity, Managed, and Small Cap
Portfolios reflect the performance of the corresponding Portfolios of the
Old Trust.
** The Pilgrim VP Trust SmallCap Opportunities 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 Pilgrim VP 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 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 AIM Variable Insurance Funds, The Alger American Fund,
Fidelity Variable Insurance Products Fund, Fidelity Variable Insurance Products
Fund II, Janus Aspen Series, Neuberger Berman Advisers Management Trust, OCC
Accumulation Trust, and Putnam Variable Products 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, 1999.
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.
SAI-15
<PAGE>
FINANCIAL STATEMENTS
This Statement of Additional Information includes audited Financial
Statements for the Variable Account as of December 31, 1999 and for each of the
two years in the period then ended. Deloitte & Touche LLP 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, 1999
and 1998, and the related statements of operations, shareholder's equity and
cash flows for the years ended December 31, 1999 and 1998 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-16
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
ReliaStar Life Insurance Company:
We have audited the accompanying statement of assets and liabilities of
ReliaStar Select Variable Account as of December 31, 1999 and the related
statements of operations and changes in contract owners' equity (including the
individual sub-accounts which comprise the Account) for the years ended
December 31, 1999 and 1998. 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,
1999, 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
sub-accounts constituting ReliaStar Select Variable Account as of December 31,
1999 and the results of its operations and changes in its contract owners'
equity for the years ended December 31, 1999 and 1998, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
February 18, 2000
SAI-17
<PAGE>
(This page has been left blank intentionally.)
SAI-18
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
SHARES COST MARKET VALUE
ASSETS: ------------ ---------- -------------
<S> <C> <C> <C>
Investments in mutual funds at market value:
The Alger American Fund:
Alger American Growth Portfolio ....................................... 798,811 $ 43,115 $ 51,428
Alger American MidCap Growth Portfolio ................................ 266,121 7,250 8,577
Alger American Small Capitalization Portfolio ......................... 127,602 5,307 7,037
Fidelity's Variable Insurance Products Fund (VIP):
VIP Equity-Income Portfolio -- IC Shares .............................. 5,716,455 124,814 146,970
VIP Growth Portfolio -- IC Shares ..................................... 4,042,632 141,689 222,062
VIP High Income Portfolio -- IC Shares ................................ 3,449,118 40,560 39,009
VIP Money Market Portfolio -- IC Shares ............................... 74,446,298 74,446 74,446
VIP Overseas Portfolio -- IC Shares ................................... 1,137,418 21,721 31,212
Fidelity's Variable Insurance Products Fund II (VIP II):
VIP II Asset Manager Portfolio -- IC Shares ........................... 2,910,484 46,314 54,339
VIP II Contrafund Portfolio -- IC Shares . ............................ 3,324,051 71,830 96,896
VIP II Index 500 Portfolio -- IC Shares ............................... 783,861 102,698 131,227
VIP II Investment Grade Bond Portfolio -- IC Shares ................... 1,711,466 21,305 20,812
Janus Aspen Series:
Aggressive Growth Portfolio ........................................... 558,945 23,029 33,363
Growth Portfolio ...................................................... 806,307 21,625 27,132
International Growth Portfolio ........................................ 428,006 12,549 16,551
Worldwide Growth Portfolio ............................................ 1,721,792 55,697 82,216
Neuberger Berman Advisers Management Trust:
AMT Limited Maturity Bond Portfolio ................................... 535,802 7,216 7,094
AMT Partners Portfolio ................................................ 657,993 12,384 12,923
AMT Socially Responsive Portfolio ..................................... 20,596 225 238
Northstar Galaxy Trust:
Northstar Emerging Growth Portfolio ................................... 664,182 12,461 19,420
Northstar Growth + Value Portfolio .................................... 882,279 18,455 26,504
Northstar International Value Portfolio ............................... 387,159 5,248 5,718
Northstar Research Enhanced Index Portfolio ........................... 1,329,357 6,573 6,633
Northstar High Yield Bond Portfolio ................................... 860,698 4,168 3,701
OCC Accumulation Trust:
Equity Portfolio ...................................................... 93,940 3,526 3,528
Global Equity Portfolio ............................................... 36,528 597 605
Managed Portfolio ..................................................... 287,118 12,091 12,532
Small Cap Portfolio ................................................... 170,422 4,074 3,838
Putnam Variable Trust:
Putnam VT Asia Pacific Growth Fund -- Class IA Shares ................. 224,520 2,124 3,882
Putnam VT Diversified Income Fund -- Class IA Shares .................. 882,507 9,510 8,763
Putnam VT Growth and Income Fund -- Class IA Shares ................... 2,516,326 66,038 67,438
Putnam VT New Opportunities Fund -- Class IA Shares ................... 1,739,311 35,973 75,730
Putnam VT Utilities Growth and Income Fund -- Class IA Shares ......... 646,178 10,838 10,965
Putnam VT Voyager Fund -- Class IA Shares ............................. 2,293,906 88,830 151,971
----------
Total Assets ......................................................... $1,464,760
==========
LIABILITIES AND CONTRACT OWNERS' EQUITY:
Due to ReliaStar Life Insurance Company
for contract charges and reserve transfers ............................. $ 1,732
Contract Owners' Equity ................................................. 1,463,028
----------
Total Liabilities and Contract Owners' Equity ........................ $1,464,760
==========
</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
For the years ended December 31, 1999 and 1998
(In Thousands)
<TABLE>
<CAPTION>
ALGER AMERICAN
TOTAL ALL FUNDS GROWTH PORTFOLIO
------------------------------- -------------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net investment income (loss):
Reinvested dividend income .............. $ 18,419 $ 15,873 $ 37 $ 8
Reinvested capital gains ................ 59,879 54,817 2,511 454
Administrative expenses ................. (17,430) (13,358) (451) (57)
----------- ----------- ----------- -----------
Net investment income (loss) and
capital gains ........................ 60,868 57,332 2,097 405
----------- ----------- ----------- -----------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares ............. 85,545 50,273 849 28
Increase (decrease) in unrealized
appreciation of investments ............ 157,693 44,042 6,836 1,493
----------- ----------- ----------- -----------
Net realized and unrealized gains
(losses) ............................. 243,238 94,315 7,685 1,521
----------- ----------- ----------- -----------
Additions (reductions) from
operations ........................... 304,106 151,647 9,782 1,926
----------- ----------- ----------- -----------
Contract Owners' transactions:
Net premium payments .................... 207,079 218,047 17,463 3,642
Surrenders .............................. (135,461) (72,846) (1,976) (306)
Transfers between sub-accounts and
fixed account .......................... (895) (853) 15,972 4,327
Annuity payments ........................ (142) (8) -- --
Death benefit payments .................. (7,187) (4,145) (207) --
Transfers to (from) required reserves ... 9 56 -- --
----------- ----------- ----------- -----------
Additions (reductions) for Contract
Owners' transactions ................. 63,403 140,251 31,252 7,663
----------- ----------- ----------- -----------
Net additions (reductions) for the year 367,509 291,898 41,034 9,589
Contract Owners' Equity,
beginning of the year ................... 1,095,519 803,621 10,328 739
----------- ----------- ----------- -----------
Contract Owners' Equity, end of the year . $ 1,463,028 $ 1,095,519 $ 51,362 $ 10,328
=========== =========== =========== ===========
Units Outstanding, beginning of the year . 52,647,697.630 41,286,715.494 721,573.165 75,409.182
Units Outstanding, end of the year ....... 58,642,239.503 52,647,697.630 2,720,473.802 721,573.165
Net Asset Value per Unit:
Select-Annuity II ....................... $ -- $ -- $ 18.914842 $ 14.328489
Select-Annuity III ...................... $ -- $ -- $ 18.876863 $ 14.311723
</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>
FIDELITY'S VIP
ALGER AMERICAN ALGER AMERICAN EQUITY-INCOME PORTFOLIO
MIDCAP GROWTH PORTFOLIO SMALL CAPITALIZATION PORTFOLIO IC SHARES
- ----------------------------------------- --------------------------------------- ---------------------------------------------
1999 1998 1999 1998 1999 1998
- --------------------- ------------------- ------------------- ------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C> <C>
$ -- $ -- $ -- $ -- $ 2,512 $ 2,219
762 100 491 204 5,553 7,898
(74) (19) (65) (25) (2,272) (2,349)
-------------- --------------- --------------- --------------- ---------------- -----------------
688 81 426 179 5,793 7,768
-------------- --------------- --------------- --------------- ---------------- -----------------
41 (25) (33) (75) 18,982 11,855
995 358 1,563 182 (16,816) (3,667)
-------------- --------------- --------------- --------------- ---------------- -----------------
1,036 333 1,530 107 2,166 8,188
-------------- --------------- --------------- --------------- ---------------- -----------------
1,724 414 1,956 286 7,959 15,956
-------------- --------------- --------------- --------------- ---------------- -----------------
2,672 1,209 1,536 1,389 9,094 15,844
(199) (65) (181) (52) (20,393) (15,860)
1,627 560 637 661 (20,506) (6,165)
-- -- -- -- 15 22
(3) -- (25) -- (757) (383)
-- -- -- -- (5) 1
-------------- --------------- --------------- --------------- ---------------- -----------------
4,097 1,704 1,967 1,998 (32,552) (6,541)
-------------- --------------- --------------- --------------- ---------------- -----------------
5,821 2,118 3,923 2,284 (24,593) 9,415
2,746 628 3,107 823 171,392 161,977
-------------- --------------- --------------- --------------- ---------------- -----------------
$ 8,567 $ 2,746 $ 7,030 $ 3,107 $ 146,799 $ 171,392
============== =============== =============== =============== ================ =================
218,514.420 64,303.871 272,076.480 82,159.255 6,169,130.096 6,230,260.582
524,557.971 218,514.420 435,387.471 272,076.480 5,074,648.033 6,169,130.096
$ 16.359297 $ 12.570818 $ 16.172885 $ 11.424987 $ 42.604065 $ 40.594836
$ 16.326426 $ 12.556091 $ 16.140392 $ 11.411597 $ 23.023195 $ 21.955818
</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, 1999 and 1998
(In Thousands)
<TABLE>
<CAPTION>
FIDELITY'S VIP
GROWTH PORTFOLIO
IC SHARES
-------------------------------------------
1999 1998
--------------------- ---------------------
<S> <C> <C>
Net investment income (loss):
Reinvested dividend income ................... $ 310 $ 703
Reinvested capital gains ..................... 19,477 18,381
Administrative expenses ...................... (2,676) (2,147)
----------------- -----------------
Net investment income (loss) and
capital gains ............................. 17,111 16,937
----------------- -----------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares .................. 19,389 12,799
Increase (decrease) in unrealized
appreciation of investments ................. 23,334 19,246
----------------- -----------------
Net realized and unrealized gains
(losses) .................................. 42,723 32,045
----------------- -----------------
Additions (reductions) from
operations ................................ 59,834 48,982
----------------- -----------------
Contract Owners' transactions:
Net premium payments ......................... 13,870 10,562
Surrenders ................................... (25,681) (15,436)
Transfers between sub-accounts and
fixed account ............................... (1,562) (3,776)
Annuity payments ............................. (194) (118)
Death benefit payments ....................... (679) (530)
Transfers to (from) required reserves ........ 35 50
----------------- -----------------
Additions (reductions) for Contract
Owners' transactions ...................... (14,211) (9,248)
----------------- -----------------
Net additions (reductions) for the year..... 45,623 39,734
Contract Owners' Equity,
beginning of the year ........................ 176,294 136,560
----------------- -----------------
Contract Owners' Equity, end of the year ...... $ 221,917 $ 176,294
================= =================
Units Outstanding, beginning of the year ...... 4,872,231.319 5,008,779.521
Units Outstanding, end of the year ............ 4,762,952.891 4,872,231.319
Net Asset Value per Unit:
Select-Annuity II ............................ $ 72.514634 $ 53.455402
Select-Annuity III ........................... $ 33.801091 $ 24.937964
</TABLE>
[WIDE TABLE CONTINUED FROM ABOVE]
<TABLE>
<CAPTION>
FIDELITY'S VIP
HIGH INCOME PORTFOLIO
IC SHARES
---------------------------------------------
1999 1998
--------------------- -----------------------
<S> <C> <C>
Net investment income (loss):
Reinvested dividend income ................... $ 3,842 $ 2,934
Reinvested capital gains ..................... 144 1,864
Administrative expenses ...................... (592) (625)
----------------- ----------------
Net investment income (loss) and
capital gains ............................. 3,394 4,173
----------------- ----------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares .................. (1,333) 351
Increase (decrease) in unrealized
appreciation of investments ................. 730 (7,228)
----------------- ----------------
Net realized and unrealized gains
(losses) .................................. (603) (6,877)
----------------- ----------------
Additions (reductions) from
operations ................................ 2,791 (2,704)
----------------- ----------------
Contract Owners' transactions:
Net premium payments ......................... 5,180 12,749
Surrenders ................................... (5,357) (3,811)
Transfers between sub-accounts and
fixed account ............................... (5,693) (4,564)
Annuity payments ............................. -- (1)
Death benefit payments ....................... (397) (166)
Transfers to (from) required reserves ........ -- (5)
----------------- ----------------
Additions (reductions) for Contract
Owners' transactions ...................... (6,267) 4,202
----------------- ----------------
Net additions (reductions) for the year..... (3,476) 1,498
Contract Owners' Equity,
beginning of the year ........................ 42,439 40,941
----------------- ----------------
Contract Owners' Equity, end of the year ...... $ 38,963 $ 42,439
================= ================
Units Outstanding, beginning of the year ...... 2,490,960.729 2,157,231.781
Units Outstanding, end of the year ............ 2,210,041.533 2,490,960.729
Net Asset Value per Unit:
Select-Annuity II ............................ $ 27.844250 $ 26.083267
Select-Annuity III ........................... $ 15.043638 $ 14.104051
</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>
FIDELITY'S VIP FIDELITY'S VIP FIDELITY'S VIP II
MONEY MARKET PORTFOLIO OVERSEAS PORTFOLIO ASSET MANAGER PORTFOLIO
IC SHARES IC SHARES IC SHARES
- ------------------------------------ ------------------------------------ ------------------------------------
1999 1998 1999 1998 1999 1998
- --------------- --------------- --------------- --------------- --------------- ---------------
<C> <C> <S> <C> <C> <C>
$ 2,997 $ 1,946 $ 522 $ 718 $ 2,199 $ 1,948
-- -- 842 2,117 2,785 5,844
(833) (517) (423) (523) (835) (907)
- --------------- --------------- --------------- --------------- --------------- ---------------
2,164 1,429 941 2,312 4,149 6,885
- --------------- --------------- --------------- --------------- --------------- ---------------
-- -- 2,810 2,574 3,786 1,164
-- -- 6,182 (721) (2,767) 100
- --------------- --------------- --------------- --------------- --------------- ---------------
-- -- 8,992 1,853 1,019 1,264
- --------------- --------------- --------------- --------------- --------------- ---------------
2,164 1,429 9,933 4,165 5,168 8,149
- --------------- --------------- --------------- --------------- --------------- ---------------
27,374 32,390 466 2,011 1,392 5,658
(18,268) (6,949) (4,226) (3,763) (9,528) (5,759)
24,255 (17,800) (9,287) (4,856) (9,614) (2,422)
(8) (8) -- -- (15) 46
(647) (1,274) (82) (132) (370) (223)
3 2 -- -- (8) 5
- --------------- --------------- --------------- --------------- --------------- ---------------
32,709 6,361 (13,129) (6,740) (18,143) (2,695)
- --------------- --------------- --------------- --------------- --------------- ---------------
34,873 7,790 (3,196) (2,575) (12,975) 5,454
39,497 31,707 34,367 36,942 67,234 61,780
- --------------- --------------- --------------- --------------- --------------- ---------------
$ 74,370 $ 39,497 $ 31,171 $ 34,367 $ 54,259 $ 67,234
=============== =============== =============== =============== =============== ===============
3,103,490.872 2,586,887.001 1,903,639.243 2,247,722.094 3,452,264.054 3,532,686.923
5,768,828.570 3,103,490.872 1,230,966.965 1,903,639.243 2,586,887.948 3,452,264.054
$ 16.499505 $ 15.893469 $ 32.836446 $ 23.325077 $ 25.460017 $ 23.219359
$ 12.521740 $ 12.071937 $ 20.663987 $ 14.690775 $ 17.733873 $ 16.186750
</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, 1999 and 1998
(In Thousands)
<TABLE>
<CAPTION>
FIDELITY'S VIP II FIDELITY'S VIP II
CONTRAFUND PORTFOLIO INDEX 500 PORTFOLIO
IC SHARES IC SHARES
--------------------------------- ---------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net investment income (loss):
Reinvested dividend income.................... $ 343 $ 302 $ 926 $ 623
Reinvested capital gains...................... 2,513 2,222 629 1,444
Administrative expenses....................... (1,174) (764) (1,618) (975)
--------------- --------------- --------------- ---------------
Net investment income (loss) and
capital gains............................... 1,682 1,760 (63) 1,092
--------------- --------------- --------------- ---------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares................... 5,351 4,222 7,845 7,384
Increase (decrease) in unrealized
appreciation of investments.................. 10,064 7,879 11,919 7,553
--------------- --------------- --------------- ---------------
Net realized and unrealized gains
(losses)................................... 15,415 12,101 19,764 14,937
--------------- --------------- --------------- ---------------
Additions (reductions) from
operations................................. 17,097 13,861 19,701 16,029
--------------- --------------- --------------- ---------------
Contract Owners' transactions:
Net premium payments.......................... 15,166 15,904 27,123 20,268
Surrenders.................................... (4,795) (1,894) (9,106) (3,827)
Transfers between sub-accounts and
fixed account................................ 752 404 3,814 6,987
Annuity payments.............................. -- (1) 29 (1)
Death benefit payments........................ (431) (138) (341) (206)
Transfers to (from) required reserves......... -- (9) (2) 14
--------------- --------------- --------------- ---------------
Additions (reductions) for Contract
Owners' transactions....................... 10,692 14,266 21,517 23,235
--------------- --------------- --------------- ---------------
Net additions (reductions) for the year..... 27,789 28,127 41,218 39,264
Contract Owners' Equity,
beginning of the year......................... 68,987 40,860 89,841 50,577
--------------- --------------- --------------- ---------------
Contract Owners' Equity, end of the year....... $ 96,776 $ 68,987 $ 131,059 $ 89,841
=============== =============== =============== ===============
Units Outstanding, beginning of the year....... 3,063,212.741 2,310,029.259 3,298,146.247 2,341,423.909
Units Outstanding, end of the year............. 3,541,924.350 3,063,212.741 4,058,675.374 3,298,146.247
Net Asset Value per Unit:
Select-Annuity II............................. $ 16.180149 $ 13.192976 $ 34.336317 $ 28.867007
Select-Annuity III............................ $ 27.841617 $ 22.720573 $ 32.085997 $ 26.997774
</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>
FIDELITY'S VIP II
INVESTMENT GRADE BOND PORTFOLIO JANUS ASPEN SERIES JANUS ASPEN SERIES
IC SHARES AGGRESSIVE GROWTH PORTFOLIO GROWTH PORTFOLIO
- -------------------------------- -------------------------------- --------------------------------
1999 1998 1999 1998 1999 1998
- --------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
$ 803 $ 674 $ 122 $ -- $ 39 $ 99
252 80 210 -- 71 77
(293) (235) (165) (21) (236) (63)
- --------------- --------------- --------------- --------------- --------------- ---------------
762 519 167 (21) (126) 113
- --------------- --------------- --------------- --------------- --------------- ---------------
(33) 839 2,456 297 2,082 (197)
(1,212) (259) 10,015 269 4,567 949
- --------------- --------------- --------------- --------------- --------------- ---------------
(1,245) 580 12,471 566 6,649 752
- --------------- --------------- --------------- --------------- --------------- ---------------
(483) 1,099 12,638 545 6,523 865
- --------------- --------------- --------------- --------------- --------------- ---------------
5,510 4,633 8,846 716 8,774 2,121
(2,581) (1,465) (2,113) (69) (3,553) (744)
(1,728) 1,585 11,936 (308) 1,855 10,600
- --------------- --------------- --------------- --------------- --------------- ---------------
(263) (94) -- -- (57) (73)
- --------------- --------------- --------------- --------------- --------------- ---------------
- --------------- --------------- --------------- --------------- --------------- ---------------
938 4,659 18,669 339 7,019 11,904
- --------------- --------------- --------------- --------------- --------------- ---------------
455 5,758 31,307 884 13,542 12,769
20,330 14,572 2,010 1,126 13,552 783
- --------------- --------------- --------------- --------------- --------------- ---------------
$ 20,785 $ 20,330 $ 33,317 $ 2,010 $ 27,094 $ 13,552
=============== =============== =============== =============== =============== ===============
1,485,056.102 1,104,695.485 139,266.463 103,337.260 999,754.701 77,261.368
1,576,590.990 1,485,056.102 1,038,286.694 139,266.463 1,407,686.821 999,754.701
$ 16.099793 $ 16.484567 $ 32.146417 $ 14.448721 $ 19.285137 $ 13.569864
$ 12.571072 $ 12.882327 $ 32.081891 $ 14.431797 $ 19.246456 $ 13.554003
</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, 1999 and 1998
(In Thousands)
<TABLE>
<CAPTION>
JANUS ASPEN SERIES JANUS ASPEN SERIES
INTERNATIONAL GROWTH PORTFOLIO WORLDWIDE GROWTH PORTFOLIO
-------------------------------- --------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net investment income (loss):
Reinvested dividend income.................. $ 18 $ 75 $ 100 $ 486
Reinvested capital gains.................... -- 11 -- 191
Administrative expenses..................... (110) (57) (712) (244)
--------------- --------------- --------------- ---------------
Net investment income (loss) and
capital gains............................ (92) 29 (612) 433
--------------- --------------- --------------- ---------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares................. 2,623 116 6,136 282
Increase (decrease) in unrealized
appreciation of investments................ 3,694 284 23,962 2,565
--------------- --------------- --------------- ---------------
Net realized and unrealized gains
(losses)................................. 6,317 400 30,098 2,847
--------------- --------------- --------------- ---------------
Additions (reductions) from
operations............................... 6,225 429 29,486 3,280
--------------- --------------- --------------- ---------------
Contract Owners' transactions:
Net premium payments........................ 1,117 2,019 16,536 13,095
Surrenders.................................. (676) (112) (2,540) (741)
Transfers between sub-accounts and
fixed account.............................. 4,538 943 9,900 7,054
Annuity payments............................ -- -- -- --
Death benefit payments...................... -- (32) (292) (17)
Transfers to (from) required reserves....... -- -- -- --
--------------- --------------- --------------- ---------------
Additions (reductions) for Contract
Owners' transactions..................... 4,979 2,818 23,604 19,391
--------------- --------------- --------------- ---------------
Net additions (reductions) for the year... 11,204 3,247 53,090 22,671
Contract Owners' Equity,
beginning of the year....................... 5,326 2,079 29,016 6,345
--------------- --------------- --------------- ---------------
Contract Owners' Equity, end of the year..... $ 16,530 $ 5,326 $ 82,106 $ 29,016
=============== =============== =============== ===============
Units Outstanding, beginning of the year..... 481,160.237 217,144.911 2,332,771.519 648,637.588
Units Outstanding, end of the year........... 830,816.812 481,160.237 4,069,756.446 2,332,771.519
Net Asset Value per Unit:
Select-Annuity II........................... $ 19.934708 $ 11.080211 $ 20.211791 $ 12.451932
Select-Annuity III.......................... $ 19.894700 $ 11.067242 $ 20.171221 $ 12.437347
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-26
<PAGE>
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY (Continued)
<TABLE>
<CAPTION>
NEUBERGER BERMAN NEUBERGER BERMAN NEUBERGER BERMAN
ADVISERS MANAGEMENT TRUST ADVISERS MANAGEMENT TRUST ADVISERS MANAGEMENT TRUST
LIMITED MATURITY BOND PORTFOLIO PARTNERS PORTFOLIO SOCIALLY RESPONSIVE PORTFOLIO
- ---------------------------------------- -------------------------------------------- ------------------------------
1999 1998 1999 1998 1999 1998
- ------------------- ------------------- --------------------- --------------------- -------------------- --------
<S> <C> <C> <C> <C> <C>
$ 319 $ 69 $ 160 $ 19 $ -- $ --
-- -- 278 596 -- --
(95) (37) (192) (144) (2) --
--------------- --------------- ----------------- ----------------- ------------- -----
224 32 246 471 (2) --
--------------- --------------- ----------------- ----------------- ------------- -----
(38) (26) (147) (585) -- --
(179) 54 628 (128) 13 --
--------------- --------------- ----------------- ----------------- ------------- -----
(217) 28 481 (713) 13 --
--------------- --------------- ----------------- ----------------- ------------- -----
7 60 727 (242) 11 --
--------------- --------------- ----------------- ----------------- ------------- -----
3,124 3,693 2,286 8,482 91 --
(309) (32) (535) (225) (1) --
(924) 1,025 (3,919) 2,672 137 --
-- -- -- -- -- --
(36) -- (82) -- -- --
-- -- -- -- -- --
--------------- --------------- ----------------- ----------------- ------------- -----
1,855 4,686 (2,250) 10,929 227 --
--------------- --------------- ----------------- ----------------- ------------- -----
1,862 4,746 (1,523) 10,687 238 --
5,223 477 14,431 3,744 -- --
--------------- --------------- ----------------- ----------------- ------------- -----
$ 7,085 $ 5,223 $ 12,908 $ 14,431 $ 238 $ --
=============== =============== ================= ================= ============= =====
497,439.859 46,783.512 1,367,283.810 364,555.535 -- --
674,365.964 497,439.859 1,154,928.606 1,367,283.810 22,281.304 --
$ 10.527628 $ 10.510776 $ 11.197287 $ 10.565841 $ -- $ --
$ 10.506459 $ 10.498452 $ 11.174766 $ 10.553450 $ 10.654931 $ --
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-27
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY (Continued)
For the years ended December 31, 1999 and 1998
(In Thousands)
<TABLE>
<CAPTION>
NORTHSTAR GALAXY TRUST NORTHSTAR GALAXY TRUST
EMERGING GROWTH PORTFOLIO GROWTH + VALUE PORTFOLIO
-------------------------------- --------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net investment income (loss):
Reinvested dividend income................... $ -- $ 147 $ -- $ 3
Reinvested capital gains..................... 2,535 253 4,599 90
Administrative expenses...................... (130) (70) (228) (156)
--------------- --------------- --------------- ---------------
Net investment income (loss) and
capital gains............................. 2,405 330 4,371 (63)
--------------- --------------- --------------- ---------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares.................. 747 78 1,592 277
Increase (decrease) in unrealized
appreciation of investments................. 6,369 353 5,694 1,504
--------------- --------------- --------------- ---------------
Net realized and unrealized gains
(losses).................................. 7,116 431 7,286 1,781
--------------- --------------- --------------- ---------------
Additions (reductions) from
operations................................ 9,521 761 11,657 1,718
--------------- --------------- --------------- ---------------
Contract Owners' transactions:
Net premium payments......................... 2,038 1,126 3,082 1,778
Surrenders................................... (677) (156) (1,042) (340)
Transfers between sub-accounts and
fixed account............................... 2,757 94 788 (1,554)
Annuity payments............................. (10) 27 -- --
Death benefit payments....................... (51) (56) (29) (14)
Transfers to (from) required reserves........ (6) (2) -- --
--------------- --------------- --------------- ---------------
Additions (reductions) for Contract
Owners' transactions...................... 4,051 1,033 2,799 (130)
--------------- --------------- --------------- ---------------
Net additions (reductions) for the year.... 13,572 1,794 14,456 1,588
Contract Owners' Equity,
beginning of the year........................ 5,814 4,020 12,017 10,429
--------------- --------------- --------------- ---------------
Contract Owners' Equity, end of the year...... $ 19,386 $ 5,814 $ 26,473 $ 12,017
=============== =============== =============== ===============
Units Outstanding, beginning of the year...... 325,761.924 261,508.753 605,152.039 614,981.443
Units Outstanding, end of the year............ 467,036.865 325,761.924 703,937.868 605,152.039
Net Asset Value per Unit:
Select-Annuity II............................ $ 28.545501 $ 11.998261 $ 22.976395 $ 11.938676
Select-Annuity III........................... $ 42.301411 $ 17.795032 $ 38.423978 $ 19.982048
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-28
<PAGE>
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY (Continued)
<TABLE>
<CAPTION>
NORTHSTAR GALAXY TRUST
NORTHSTAR GALAXY TRUST RESEARCH ENHANCED NORTHSTAR GALAXY TRUST
INTERNATIONAL VALUE PORTFOLIO INDEX PORTFOLIO HIGH YIELD BOND PORTFOLIO
- ---------------------------------------- ---------------------------------------- ----------------------------------------
1999 1998 1999 1998 1999 1998
- ------------------- ------------------- ------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
$ 68 $ 42 $ 148 $ 397 $ 383 $ 231
528 119 -- 2 -- 5
(60) (27) (90) (76) (59) (37)
--------------- --------------- --------------- --------------- --------------- ---------------
536 134 58 323 324 199
--------------- --------------- --------------- --------------- --------------- ---------------
985 16 (228) (36) (274) (66)
390 85 450 (323) (241) (217)
--------------- --------------- --------------- --------------- --------------- ---------------
1,375 101 222 (359) (515) (283)
--------------- --------------- --------------- --------------- --------------- ---------------
1,911 235 280 (36) (191) (84)
--------------- --------------- --------------- --------------- --------------- ---------------
848 1,093 1,344 3,009 457 3,337
(198) (45) (292) (198) (371) (78)
(37) 1,004 (876) (135) (266) 334
-- -- -- -- -- --
(20) -- (315) (33) (17) --
-- -- -- -- -- --
--------------- --------------- --------------- --------------- --------------- ---------------
593 2,052 (139) 2,643 (197) 3,593
--------------- --------------- --------------- --------------- --------------- ---------------
2,504 2,287 141 2,607 (388) 3,509
3,206 919 6,483 3,876 4,090 581
--------------- --------------- --------------- --------------- --------------- ---------------
$ 5,710 $ 3,206 $ 6,624 $ 6,483 $ 3,702 $ 4,090
=============== =============== =============== =============== =============== ===============
275,953.626 91,244.985 484,075.787 289,376.509 405,137.900 57,089.696
331,847.364 275,953.626 476,021.418 484,075.787 384,213.712 405,137.900
$ 17.239172 $ 11.630089 $ 10.477608 $ 10.031623 $ 9.654803 $ 10.107387
$ 17.204562 $ 11.616470 $ 14.003837 $ 13.419018 $ 9.635390 $ 10.095547
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-29
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY (Continued)
For the years ended December 31, 1999 and 1998
(In Thousands)
<TABLE>
<CAPTION>
OCC ACCUMULATION TRUST OCC ACCUMULATION TRUST
EQUITY PORTFOLIO GLOBAL EQUITY PORTFOLIO
----------------------------------- -----------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net investment income (loss):
Reinvested dividend income................ $ 31 $ 10 $ 8 $ 4
Reinvested capital gains.................. 142 42 84 13
Administrative expenses................... (49) (26) (6) (4)
--------------- --------------- --------------- ---------------
Net investment income (loss) and
capital gains.......................... 124 26 86 13
--------------- --------------- --------------- ---------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares............... 1 24 11 (6)
Increase (decrease) in unrealized
appreciation of investments.............. (84) 67 10 8
--------------- --------------- --------------- ---------------
Net realized and unrealized gains
(losses)............................... (83) 91 21 2
--------------- --------------- --------------- ---------------
Additions (reductions) from
operations.............................. 41 117 107 15
--------------- --------------- --------------- ---------------
Contract Owners' transactions:
Net premium payments...................... 953 1,763 123 126
Surrenders................................ (167) (28) (8) (13)
Transfers between sub-accounts and
fixed account............................ (293) 525 37 94
Annuity payments.......................... -- -- -- --
Death benefit payments.................... (27) (5) (2) --
Transfers to (from) required reserves..... -- -- -- --
--------------- --------------- --------------- ---------------
Additions (reductions) for Contract
Owners' transactions................... 466 2,255 150 207
--------------- --------------- --------------- ---------------
Net additions (reductions) for the year. 507 2,372 257 222
Contract Owners' Equity,
beginning of the year..................... 3,018 646 348 126
--------------- --------------- --------------- ---------------
Contract Owners' Equity, end of the year... $ 3,525 $ 3,018 $ 605 $ 348
=============== =============== =============== ===============
Units Outstanding, beginning of the year... 257,082.760 60,658.878 33,070.482 13,331.124
Units Outstanding, end of the year......... 296,855.245 257,082.760 45,802.170 33,070.482
Net Asset Value per Unit:
Select-Annuity II......................... $ 11.894969 $ 11.752768 $ 13.214234 $ 10.581111
Select-Annuity III........................ $ 11.871054 $ 11.738993 $ 13.187681 $ 10.568707
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-30
<PAGE>
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY (Continued)
<TABLE>
<CAPTION>
PUTNAM VT
OCC ACCUMULATION TRUST OCC ACCUMULATION TRUST ASIA PACIFIC GROWTH FUND
MANAGED PORTFOLIO SMALL CAP PORTFOLIO CLASS IA SHARES
- ------------------------------- ----------------------------- ------------------------------
1999 1998 1999 1998 1999 1998
- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
$ 249 $ 63 $ 23 $ 5 $ -- $ 133
559 217 -- 57 -- --
(193) (161) (54) (39) (41) (40)
- -------------- -------------- -------------- -------------- -------------- --------------
615 119 (31) 23 (41) 93
- -------------- -------------- -------------- -------------- -------------- --------------
(261) 4 (209) (58) 304 (702)
40 372 119 (350) 1,896 395
- -------------- -------------- -------------- -------------- -------------- --------------
(221) 376 (90) (408) 2,200 (307)
- -------------- -------------- -------------- -------------- -------------- --------------
394 495 (121) (385) 2,159 (214)
- -------------- -------------- -------------- -------------- -------------- --------------
3,490 7,009 997 2,152 43 242
(771) (259) (141) (69) (179) (125)
(7,405) 6,614 (517) 782 (707) (690)
(7) 28 -- -- -- --
(79) (30) (3) -- (6) (21)
(5) (1) -- -- (1) --
- -------------- -------------- -------------- -------------- -------------- --------------
(4,777) 13,361 336 2,865 (850) (594)
- -------------- -------------- -------------- -------------- -------------- --------------
(4,383) 13,856 215 2,480 1,309 (808)
16,895 3,039 3,618 1,138 2,567 3,375
- -------------- -------------- -------------- -------------- -------------- --------------
$ 12,512 $ 16,895 $ 3,833 $ 3,618 $ 3,876 $ 2,567
============== ============== ============== ============== ============== ==============
1,583,422.608 301,435.488 395,445.630 111,567.266 299,876.673 367,695.459
1,131,871.664 1,583,422.608 432,795.782 395,445.630 221,312.330 299,876.673
$ 11.049267 $ 10.661881 $ 8.873927 $ 9.158493 $ -- $ --
$ 11.027054 $ 10.649385 $ 8.856076 $ 9.147757 $ 17.512049 $ 8.554708
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-31
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY (Continued)
For the years ended December 31, 1999 and 1998
(In Thousands)
<TABLE>
<CAPTION>
PUTNAM VT PUTNAM VT
DIVERSIFIED INCOME FUND GROWTH AND INCOME FUND
CLASS IA SHARES CLASS IA SHARES
-------------------------------- --------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net investment income (loss):
Reinvested dividend income................... $ 775 $ 500 $ 989 $ 1,037
Reinvested capital gains..................... -- 212 4,934 6,772
Administrative expenses...................... (142) (167) (1,026) (921)
--------------- --------------- --------------- ---------------
Net investment income (loss) and
capital gains............................. 633 545 4,897 6,888
--------------- --------------- --------------- ---------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares.................. (255) 40 2,291 2,145
Increase (decrease) in unrealized
appreciation of investments................. (354) (917) (6,999) (1,009)
--------------- --------------- --------------- ---------------
Net realized and unrealized gains
(losses).................................. (609) (877) (4,708) 1,136
--------------- --------------- --------------- ---------------
Additions (reductions) from
operations................................ 24 (332) 189 8,024
--------------- --------------- --------------- ---------------
Contract Owners' transactions:
Net premium payments......................... 315 2,271 8,173 10,913
Surrenders................................... (925) (819) (6,067) (3,399)
Transfers between sub-accounts and
fixed account............................... (2,327) (747) (4,067) (2,418)
Annuity payments............................. -- -- 23 (3)
Death benefit payments....................... (24) (106) (559) (360)
Transfers to (from) required reserves........ -- -- 3 5
--------------- --------------- --------------- ---------------
Additions (reductions) for Contract
Owners' transactions...................... (2,961) 599 (2,494) 4,738
--------------- --------------- --------------- ---------------
Net additions (reductions) for the year.... (2,937) 267 (2,305) 12,762
Contract Owners' Equity,
beginning of the year........................ 11,691 11,424 69,666 56,904
--------------- --------------- --------------- ---------------
Contract Owners' Equity, end of the year...... $ 8,754 $ 11,691 $ 67,361 $ 69,666
=============== =============== =============== ===============
Units Outstanding, beginning of the year...... 953,100.912 905,748.817 3,114,690.632 2,892,975.508
Units Outstanding, end of the year............ 711,639.998 953,100.912 3,007,745.189 3,114,690.632
Net Asset Value per Unit:
Select-Annuity II............................ $ 12.880110 $ 12.823366 $ 23.021151 $ 22.959652
Select-Annuity III........................... $ 12.274077 $ 12.230260 $ 22.351688 $ 22.310696
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-32
<PAGE>
STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY (Continued)
<TABLE>
<CAPTION>
PUTNAM VT PUTNAM VT PUTNAM VT
NEW OPPORTUNITIES FUND UTILITIES GROWTH AND INCOME FUND VOYAGER FUND
CLASS IA SHARES CLASS IA SHARES CLASS IA SHARES
- -------------------------------- -------------------------------- ---------------------------------
1999 1998 1999 1998 1999 1998
- --------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
$ -- $ -- $ 385 $ 293 $ 111 $ 185
680 536 404 506 8,896 4,510
(763) (589) (183) (158) (1,588) (1,178)
- --------------- --------------- --------------- --------------- --------------- ---------------
(83) (53) 606 641 7,419 3,517
- --------------- --------------- --------------- --------------- --------------- ---------------
3,547 1,165 544 1,136 5,984 5,253
27,014 7,474 (1,397) (288) 41,258 7,959
- --------------- --------------- --------------- --------------- --------------- ---------------
30,561 8,639 (853) 848 47,242 13,212
- --------------- --------------- --------------- --------------- --------------- ---------------
30,478 8,586 (247) 1,489 54,661 16,729
- --------------- --------------- --------------- --------------- --------------- ---------------
5,952 9,004 620 2,664 11,024 15,175
(3,382) (1,526) (912) (485) (8,311) (4,196)
(6,671) (826) (2,206) 923 (1,295) (1,780)
-- (1) (1) (1) 26 3
(400) (62) (259) (22) (727) (168)
-- (8) -- -- (5) 4
- --------------- --------------- --------------- --------------- --------------- ---------------
(4,501) 6,581 (2,758) 3,079 712 9,038
- --------------- --------------- --------------- --------------- --------------- ---------------
25,977 15,167 (3,005) 4,568 55,373 25,767
49,646 34,479 13,955 9,387 96,385 70,618
- --------------- --------------- --------------- --------------- --------------- ---------------
$ 75,623 $ 49,646 $ 10,950 $ 13,955 $ 151,758 $ 96,385
=============== =============== =============== =============== =============== ===============
2,296,798.944 1,954,935.865 713,087.494 542,787.706 4,037,068.162 3,622,068.960
2,094,825.390 2,296,798.944 571,326.695 713,087.494 4,074,949.268 4,037,068.162
$ -- $ -- $ 20.075546 $ 20.474582 $ 38.781969 $ 24.833168
$ 36.128041 $ 21.631274 $ 19.080634 $ 19.476236 $ 37.044941 $ 23.740783
</TABLE>
The accompanying notes are an integral part of the financial statements.
SAI-33
<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 VIP Equity-Income Portfolio -- IC Shares Asset Manager Portfolio -- IC Shares
MidCap Growth Portfolio Growth Portfolio -- IC Shares Contrafund Portfolio -- IC Shares
Small Capitalization Portfolio High Income Portfolio -- IC Shares Index 500 Portfolio -- IC Shares
Money Market Portfolio -- IC Shares Investment Grade Bond Portfolio -- IC Shares
Overseas Portfolio -- IC Shares
</TABLE>
<TABLE>
<CAPTION>
Janus Aspen Series Putnam Variable Trust
- ---------------------------------- --------------------------------------------------------------
<S> <C>
Aggressive Growth Portfolio Putnam VT Asia Pacific Growth Fund -- Class IA Shares
Growth Portfolio Putnam VT Diversified Income Fund -- Class IA Shares
International Growth Portfolio Putnam VT Growth and Income Fund -- Class IA Shares
Worldwide Growth Portfolio Putnam VT New Opportunities Fund -- Class IA Shares
Putnam VT Utilities Growth and Income Fund -- Class IA Shares
Putnam VT Voyager Fund -- Class IA Shares
</TABLE>
<TABLE>
<CAPTION>
Northstar Galaxy Trust OCC Accumulation Trust Neuberger Berman Advisers Management Trust
- ------------------------------------- -------------------------------- -------------------------------------------
<S> <C> <C>
Emerging Growth Portfolio Equity Portfolio AMT Limited Maturity Bond Portfolio
Growth + Value Portfolio Global Equity Portfolio AMT Partners Portfolio
International Value Portfolio Managed Portfolio AMT Socially Responsive Portfolio
Research Enhanced Index Portfolio Small Capitalization Portfolio
High Yield Bond Portfolio
</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 Fund 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 Inc. is the investment manager for the three portfolios of the
Neuberger Berman Advisers Management Trust and is paid fees for its services
by the Neuberger Berman Advisers Management Trust Portfolios. Pilgrim
Advisors, Inc., 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.
Fidelity VIP II Contrafund Portfolio is a registered trademark to FMMR
Corporation.
SAI-34
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. ORGANIZATION, CONTINUED:
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.
On April 30, 1999, Northstar Galaxy Trust Multi-Sector Portfolio changed its
name to Northstar Galaxy Trust Research Enhanced Index Portfolio. Also on
April 30, 1999, sub-accounts investing in Neuberger Berman Advisers
Management Trust Socially Responsive Portfolio were made available to
purchasers of ReliaStar Life's Select-Annuity contracts.
On April 30, 1999, Fidelity VIP Overseas Portfolio, Fidelity VIP II Asset
Manager Portfolio, Putnam VT Asia Pacific Growth Fund, Putnam VT Diversified
Income Fund and Putnam VT Utilities Growth and Income Fund were closed to
new premium and transfers.
On November 1, 1999, Northstar Investment Management Corporation changed its
name to Pilgrim Advisors, Inc. Substantially the same personnel are
performing the investment advisory services on behalf of Pilgrim Advisors,
Inc.
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-35
<PAGE>
RELIASTAR SELECT VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
5. INVESTMENTS:
For the year ended December 31, 1999, 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 .......................... $ 37,908 $ 4,505
Alger American MidCap Growth Portfolio ................... 5,637 845
Alger American Small Capitalization Portfolio ............ 4,068 1,670
Fidelity's VIP:
VIP Equity-Income Portfolio -- IC Shares ................. 60,838 87,615
VIP Growth Portfolio -- IC Shares ........................ 56,056 53,119
VIP High Income Portfolio -- IC Shares ................... 13,688 16,563
VIP Money Market Portfolio -- IC Shares .................. 252,613 217,710
VIP Overseas Portfolio -- IC Shares ...................... 30,181 42,370
Fidelity's VIP II:
VIP II Asset Manager Portfolio -- IC Shares .............. 6,712 20,712
VIP II Contrafund Portfolio -- IC Shares ................. 26,438 14,027
VIP II Index 500 Portfolio -- IC Shares .................. 42,652 21,137
VIP II Investment Grade Bond Portfolio -- IC Shares ...... 10,260 8,558
Janus Aspen Series:
Aggressive Growth Portfolio .............................. 42,232 23,353
Growth Portfolio ......................................... 41,501 34,584
International Growth Portfolio ........................... 19,530 14,628
Worldwide Growth Portfolio ............................... 48,996 25,928
Neuberger Berman Advisers Management Trust:
AMT Limited Maturity Bond Portfolio ...................... 3,730 1,648
AMT Partners Portfolio ................................... 2,879 4,884
AMT Socially Responsive Portfolio ........................ 233 8
Northstar Galaxy Trust:
Northstar Emerging Growth Portfolio ...................... 8,302 1,823
Northstar Growth + Value Portfolio ....................... 11,217 4,031
Northstar International Value Portfolio .................. 49,268 48,128
Northstar Research Enhanced Index Portfolio .............. 2,053 2,134
Northstar High Yield Bond Portfolio ...................... 2,072 1,951
OCC Accumulation Trust:
Equity Portfolio ......................................... 1,465 875
Global Equity Portfolio .................................. 306 72
Managed Portfolio ........................................ 5,846 10,007
Small Cap Portfolio ...................................... 1,596 1,290
Putnam Variable Trust:
Putnam VT Asia Pacific Growth Fund -- Class IA Shares..... 1,663 2,550
Putnam VT Diversified Income Fund -- Class IA Shares ..... 1,315 3,648
Putnam VT Growth and Income Fund -- Class IA Shares....... 12,984 10,589
Putnam VT New Opportunities Fund -- Class IA Shares ...... 5,363 9,901
Putnam VT Utilities Growth and Income Fund --
Class IA Shares ......................................... 1,992 4,147
Putnam VT Voyager Fund -- Class IA Shares ................ 24,721 16,496
-------- --------
Total .................................................... $836,315 $711,506
======== ========
</TABLE>
SAI-36
<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, 1999
- -----------------
* Incorporated by reference to the financial statements contained in the
Prospectus filed as part of Amendment No. 11 to the Form S-6 Registration
Statement of Select*Life Variable Account, File No. 33-57244, filed March
31, 2000.
SAI-37
