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1994 PROSPECTUS
IDS Life of New York Employee
Benefit Annuity
Investment flexibility for
403(b) plans
Issued by IDS Life Insurance Company of New York
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IDS Life of New York Employee Benefit Annuity
Prospectus/June 22, 1994
This prospectus describes a flexible premium group deferred annuity
contract (the Contract) offered by IDS Life Insurance Company of
New York (IDS Life of New York). Participation in the Contract
will be accounted for separately by the issuance of a Certificate
showing the Participant's interest under the Contract.
The Contract is a group deferred annuity in which purchase payments
are accumulated on a fixed and/or variable basis and retirement
benefits are paid to the Participant on a fixed or variable basis
or a combination of both. It is available for an
employer-sponsored plan and a salary-reduction plan (the Plan) that
meet the requirements of Section 403(b) of the Internal Revenue
Code of 1986, as amended (the Code).
IDS Life of New York Accounts 4, 5, 6, 9, 10 and 11 Group Deferred
Fixed/Variable Annuity Contracts
Sold by:
IDS Life Insurance Company of New York
20 Madison Avenue Extension
Albany, NY 12203
Telephone: (518) 869-8613
THIS PROSPECTUS SETS FORTH THE INFORMATION ABOUT IDS LIFE OF NEW
YORK ACCOUNTS 4, 5, 6, 9, 10 and 11 THAT SHOULD BE KNOWN BEFORE
INVESTING.
THIS PROSPECTUS IS ACCOMPANIED OR PRECEDED BY THE PROSPECTUS OF IDS
LIFE CAPITAL RESOURCE FUND, IDS LIFE INTERNATIONAL EQUITY FUND, IDS
LIFE AGGRESSIVE GROWTH FUND, IDS LIFE SPECIAL INCOME FUND, INC.,
IDS LIFE MONEYSHARE FUND, INC. AND IDS LIFE MANAGED FUND, INC.
THESE PROSPECTUSES SHOULD BE RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
A Statement of Additional Information dated June 22, 1994,
incorporated herein by reference, has been filed with the
Securities and Exchange Commission (SEC), and is available without
charge by contacting IDS Life of New York at the telephone number
or address shown above.
The Table of Contents of the Statement of Additional Information
appears on page __ of this prospectus.
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Definitions
Accounts (Variable Accounts) - IDS Life of New York Account 4, IDS
Life of New York Account 5, IDS Life of New York Account 6, IDS
Life of New York Account 9, IDS Life of New York Account 10 and IDS
Life of New York Account 11. These are the Variable Accounts from
which you may choose. Each Variable Account invests in shares of a
separate mutual fund. IDS Life of New York Account 4 invests in
shares of IDS Life Capital Resource Fund, IDS Life of New York
Account 5 invests in shares of IDS Life Special Income Fund, Inc.,
IDS Life of New York Account 6 invests in shares of IDS Life
Moneyshare Fund, Inc., IDS Life of New York Account 9 invests in
shares of IDS Life Managed Fund, Inc., IDS Life of New York Account
10 invests in shares of IDS Life International Equity Fund and IDS
Life of New York Account 11 invests in shares of IDS Life
Aggressive Growth Fund.
Accumulation Unit - A measure of the net investment results of each
of the Accounts. Prior to the retirement date, these units are
used to calculate the value of the Certificate.
Annuitant - The Participant named in each Certificate on whose life
retirement payments will be based.
Annuity Unit - A measure of the net investment results of each of
the Accounts used to calculate the value of retirement payments
from the Variable Accounts on and after the retirement date.
Certificate - The document delivered to each Participant that
evidences the Participant's coverage under the Contract.
Certificate Value - The total value of the Certificate before any
applicable surrender charge and any administrative charge has been
deducted.
Certificate Year - A period of 12 months, starting on the effective
date of the Certificate and on each anniversary of the effective
date.
Contract Owner (Owner) - The person or party entitled to ownership
rights stated in the Contract and in whose name the Contract is
issued.
Fixed Account - An additional account to which purchase payments
and certificate values can be allocated. It provides guaranteed
values and periodically adjusted interest rates.
Mutual Funds (Funds) - IDS Life Capital Resource Fund (Capital
Resource Fund), IDS Life International Equity Fund (International
Equity Fund), IDS Life Aggressive Growth Fund (Aggressive Growth
Fund), IDS Life Special Income Fund, Inc. (Special Income Fund),
IDS Life Moneyshare Fund, Inc. (Moneyshare Fund) and IDS Life
Managed Fund, Inc. (Managed Fund). These Funds are referred to as
the IDS Life Retirement Annuity Mutual Funds. Purchase payments
can be allocated to an Account investing in shares of one of these
Funds.
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Participant - The person named in the Certificate who is entitled
to exercise all rights and privileges of ownership under the
Certificate, except as reserved by the Owner.
Purchase Payments (Payments) - Payments made to IDS Life of New
York under a Contract by or on behalf of a Participant.
Retirement Date - The date on which the annuitant begins to receive
retirement payments.
Surrender Charge - A deferred sales charge that may be applied if
the Certificate value is surrendered.
Surrender Value - The total value of the Certificate after any
applicable surrender charge and any administrative charge has been
deducted.
Valuation Date - A normal business day, Monday through Friday,
except for the following holidays: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
Summary of Contents
About the Contract
Purpose of the Contract - The Contract permits investments by or on
behalf of a Participant in any or all of six Variable Accounts, as
well as the Fixed Account. Retirement payments may be variable,
fixed, or a combination of both (page __).
If a Participant returns a Certificate within 10 days after it is
delivered, IDS Life of New York will refund the aggregate purchase
payments (page __).
Who Issues the Contract - IDS Life of New York, a subsidiary of IDS
Life Insurance Company (IDS Life), issues the Contract and related
Certificates (page __).
About the Accounts and Funds
Accounts Available for Investment - There are six separate Variable
Accounts available for investment and a Fixed Account (page __).
About the Accounts - The six Variable Accounts are registered
together as a single unit investment trust under the Investment
Company Act of 1940 (1940 Act) (page __).
Investment Objectives of the Mutual Funds - Each mutual fund has a
different investment objective. Capital Resource Fund invests
primarily in common stocks and securities convertible into common
stocks. International Equity Fund invests primarily in equity
securities of foreign issuers. Aggressive Growth Fund invests
primarily in common stocks of small- and medium-size companies.
Special Income Fund invests primarily in bonds of the four highest
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ratings or the equivalent. Moneyshare Fund invests in money market
securities. Managed Fund invests in common and preferred stock,
securities convertible into common stock, bonds and money-market
instruments (page __).
Using the Contract and Certificates
Buying the Contract - The Owner may obtain an application for the
Contract from an IDS personal financial planner. A Participant may
obtain an enrollment form for the Certificate from an IDS personal
financial planner. Applications and enrollment forms are subject
to acceptance at IDS Life of New York's office in Albany (page __).
Amount of Purchase Payments - Purchase payments may be made either
in a lump sum payment or installment payments. A lump sum payment
to a Certificate must be at least $1,000. Installment payments to
a Certificate must total at least $300 a year. The maximum amount
of purchase payments is determined by any restrictions imposed by
the Plan and the Code. IDS Life of New York reserves the right to
cancel a Certificate if no purchase payments have been made for a
continuous period of 36 months and less than a total of $600 in
purchase payments has been made to the Certificate (page __).
Allocating Purchase Payments to the Accounts - IDS Life of New York
will allocate purchase payments to the Account(s) the Participant
chooses (page __).
Transferring Money between Accounts - Until the retirement date, a
Participant can give instructions to redistribute an investment
among the six Variable Accounts and, subject to certain
restrictions, to and from the Fixed Account. Transfers must be for
at least $250 or, if less, the entire balance in the Account (page
__).
A Participant also may establish automated transfers of certificate
values among the Fixed and Variable Account(s). This service is
subject to restrictions. IDS Life of New York reserves the right
to suspend or modify transfer privileges (page __).
Charges Against the Certificate and Accounts - IDS Life of New York
deducts $30 from the certificate value at the end of each
certificate year for administrative services (page __).
IDS Life of New York charges the Variable Accounts a mortality and
expense risk fee. It is equal to 1 percent of the average daily
net assets of the Variable Accounts annually (page __).
A surrender charge applies to withdrawals within the first 11
certificate years. The surrender charge is 8 percent of the amount
surrendered in the first through fourth certificate years, and then
declines by 1 percent per year from 7 percent in the fifth
certificate year to 1 percent in the eleventh certificate year.
There is no surrender charge on amounts surrendered: after the
eleventh certificate year; due to a Participant's retirement under
the Plan on or after age 55; due to the death of the Participant;
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or upon settlement of the Certificate under an annuity payment
plan. In no event will the surrender charges exceed 8.5 percent of
aggregate purchase payments made to the Certificate (page __).
The above charges are guaranteed not to increase during the term of
the Contract and related Certificates (page __).
Surrendering a Certificate - Subject to certain restrictions
imposed by the Code and any restrictions imposed by the Plan, a
Participant may surrender all or part of the certificate value at
any time before the retirement date. Federal income tax generally
will be imposed on the amount surrendered. In addition, income tax
withholding may be required at the rate of 20 percent and a 10
percent IRS penalty tax may apply (page __).
The Code imposes restrictions on the right to surrender all or part
of the certificate value (page __).
A partial surrender must be for at least $250. A Participant
cannot make a partial surrender that would reduce the certificate
value to less than $600 (page __).
IDS Life of New York may ask the Participant to return the
Certificate upon a full surrender (page __).
IDS Life of New York will mail a surrender check within seven days
after receipt of the surrender request (page __).
Payment in Case of Death Before Retirement Payments Begin - If the
Participant dies before the retirement date and age 75 while the
Certificate is in force, IDS Life of New York will pay to the
beneficiary the greater of:
o the certificate value; or
o the purchase payments made to the Certificate less any amounts
surrendered.
If death occurs on or after the Participant's 75th birthday, IDS
Life of New York will pay the beneficiary the certificate value
(page __).
Beneficiaries may request that IDS Life of New York make payments
under one of the payment plans IDS Life of New York offers (page
__).
In most cases, the Participant's spouse may keep the Certificate in
force (page __).
Settlement Value of the Certificate - The amount available on the
retirement date to apply to an annuity payment plan equals the
certificate value at that time (page __).
Payout Options at Retirement - The Participant may choose one of
several payment plans at retirement, or make other arrangements
with IDS Life of New York. The payment plan must meet requirements
of the Plan and the Code. If no instructions for paying the
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retirement benefits are given, IDS Life of New York will make
payments under Plan B with 120 monthly payments guaranteed unless
this option is contrary to applicable provisions of the Plan or the
Code (page __).
If monthly payments would be less than $20, IDS Life of New York
has the right to pay the certificate value in one payment (page
__).
Payment in Case of Death After Retirement Payments Begin - If the
annuitant dies after the retirement date, the amount payable, if
any, will be as provided in the annuity payment plan then in effect
(page __).
Transfers Between Accounts after Retirement - Transfers of funds
from one Variable Account to another may be made once each year
(page __).
Restrictions on Changing Ownership - Certain restrictions apply
concerning transfer of ownership of rights under a Contract or
Certificate (page __).
Termination of Payments - If purchase payments made by or on behalf
of the Participant are terminated for any reason prior to the
retirement date, the Participant may elect to surrender the
certificate value in accordance with any applicable provisions of
the Plan or the Code or leave the Certificate in force under the
Contract until the certificate value is surrendered, paid upon the
Participant's death or applied to an annuity payment plan. The
Participant also may transfer the Certificate under a Contract
issued by IDS Life of New York that is held by another Owner (page
__).
Federal Tax Information - According to current interpretations of
federal income tax law, generally there is no federal income tax to
Participants on purchase payments made by the Owner on behalf of
the Participants or on any increase in the certificate value until
distributions are made. Under certain circumstances, there also
may be a 10 percent IRS penalty tax and 20 percent income tax
withholding imposed on distributions (page __).
Additional Information about the Contract and Certificates
Accumulation Units - When IDS Life of New York moves purchase
payments to a Variable Account, the payments are converted into
accumulation units. The accumulation unit value increases or
decreases with the performance of the underlying Mutual Fund (page
__).
Annuity Units - When retirement payments begin under an annuity
payment plan, IDS Life of New York computes the number of annuity
units to be credited to the annuity. The annuity unit value
increases or decreases with the performance of the underlying
Mutual Fund (page __).
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Determining Amounts of Payments - IDS Life of New York calculates
any retirement payments due from each Variable Account and the
Fixed Account and combines the results to determine the total
retirement payment. Payments may vary from month to month (page
__).
About the Funds - IDS Life of New York will vote Fund shares held
by the Separate Accounts at meetings of shareholders of the Funds,
but will follow voting instructions received from persons having
the right to give voting instructions (page __).
Under certain circumstances, IDS Life of New York may substitute
shares of another registered open-end management investment company
both for Fund shares already purchased by the Variable Accounts and
for purchases to be made in the future (page __).
Information on the Fixed Account of the Contract
The Contract allows for purchase payments to be allocated to a
Fixed Account where they will earn interest at a rate guaranteed by
IDS Life of New York. Subject to restrictions, a Participant may
establish automated transfers of certificate values among the Fixed
and Variable Accounts in accordance with the terms of the Plan.
Automated transfers from the Fixed Account may not exceed an amount
that, if continued, would deplete the Fixed Account within 12
months.
A Participant may be able to take a loan from the Fixed Account
certificate value.
This prospectus applies only to the variable features of the
Contract and related Certificates.
Information about the Fixed Account is found on page __.
Contract and Certificate Expenses
The purpose of this table is to explain the various direct and
indirect costs and expenses associated with the Contract and
related Certificates. The table shows the expenses of the Separate
Accounts as well as the underlying Mutual Funds. For more
information about surrender charges, see page __.
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Surrender Charge
(as a percentage amount surrendered)
Certificate year Percentage
1 8%
2 8
3 8
4 8
5 7
6 6
7 5
8 4
9 3
10 2
11 1
12 and later 0
Annual Administrative Charge $30
(deducted from certificate value of each Certificate)
Separate Account Annual Expenses
(as a percentage of average daily net assets)
Mortality and Expense Risk Fee 1%
Annual Operating Expenses of Underlying Mutual Funds
<TABLE>
<CAPTION>
(as a percentage of Capital International Aggressive Special
average daily net assets) Resource Equity Growth Income Moneyshare Managed
<S> <C> <C> <C> <C> <C> <C>
Management Fees................. .65% .89% .65% .65% .54% .65%
Other Expenses.................. .04% .14% .07% .04% .05% .04%
Total Operating Expenses of
Underlying Mutual Funds......... .69% 1.03% .72% .69% .59% .69%
Example*
You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and (2)
surrender at the end of each time period:
1 year.......................... $133.70 $136.90 $133.98 $133.70 $132.75 $133.70
3 years......................... 240.44 249.43 241.24 240.44 237.79 240.44
5 years......................... 336.53 350.64 337.78 336.53 332.34 336.53
10 years........................ 549.72 574.54 551.95 549.72 542.26 549.72
You would pay the following expenses on the same investment assuming no surrender:
1 year.......................... $ 54.02 $ 57.50 $ 54.33 $ 54.02 $ 52.99 $ 54.02
3 years......................... 161.40 171.22 162.27 161.40 158.50 161.40
5 years......................... 267.93 283.23 269.29 267.93 263.38 267.93
10 years........................ 530.51 555.99 532.80 530.51 522.85 530.51
This example should not be considered a representation of past or future expenses. Actual expenses may be
more or less than those shown.
*In this example, the $30 Annual Certificate Administrative Charge is approximated as a 3.58% charge
based on IDS Life of New York's initial estimated average contract size.
</TABLE>
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Condensed Financial Information (Unaudited)
The tables below give per-unit information about the financial
history of each Account.
<TABLE>
<CAPTION>
Years Ended Dec. 31,
1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Account 4 (Investing in shares of Capital Resource Fund)
Accumulation unit value at
beginning of period........... $3.35 $3.25 $2.24 $2.25 $1.78 $1.61 $1.44 $1.33 $1.06 $1.12
Accumulation unit value at end
of period..................... $3.43 $3.35 $3.25 $2.24 $2.25 $1.78 $1.61 $1.44 $1.33 $1.06
Number of accumulation units
outstanding at end of period
(000 omitted) ................ 30,089 21,677 13,591 10,058 8,345 7,347 7,342 5,640 3,8971 2,161
________________________________________________________________________________________________________________________
Ratio of operating expense to
average net assets ........... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Account 102 (Investing in shares of International Equity Fund)
Accumulation unit value at
beginning of period .......... $0.98 $1.00 - - - - - - - -
Accumulation unit value at end
of period .................... $1.29 $0.98 - - - - - - - -
Number of accumulation units
outstanding at end of period
(000 omitted) ................ 21,650 3,421 - - - - - - - -
Ratio of operating expense to
average net assets ........... 1.00% 1.00% - - - - - - - -
Account 113 (Investing in shares of Aggressive Growth Fund)
Accumulation unit value at
beginning of period .......... $1.08 $1.00 - - - - - - - -
Accumulation unit value at end
of period .................... $1.21 $1.08 - - - - - - - -
Number of accumulation units
outstanding at end of period
(000 omitted) ................ 19,430 5,961 - - - - - - - -
Ratio of operating expense to
average net assets ........... 1.00% 1.00% - - - - - - - -
Account 5 (Investing in shares of Special Income Fund)
Accumulation unit value at
beginning of period........... $2.67 $2.46 $2.12 $2.05 $1.90 $1.74 $1.74 $1.48 $1.22 $1.09
Accumulation unit value at end
of period..................... $3.06 $2.67 $2.46 $2.12 $2.05 $1.90 $1.74 $1.74 $1.48 $1.22
Number of accumulation units
outstanding at end of period
(000 omitted) ................ 23,259 16,710 12,228 10,315 9,301 7,891 8,093 7,151 3,8304 1,603
________________________________________________________________________________________________________________________
Ratio of operating expense to
average net assets ........... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
1Account 4 includes 1,301,016 accumulation units issued in the merger of Account 1 into Account 4 on Dec. 13, 1985.
2Account 10 commenced operations on Jan. 13, 1992.
3Account 11 commenced operations on Jan. 13, 1992.
4Account 5 includes 1,737,451 accumulation units issued in the merger of Account 2 into Account 5 on Dec. 13, 1985.
Years Ended Dec. 31,
1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
Account 6 (Investing in shares of Moneyshare Fund)
Accumulation unit value at
beginning of period........... $1.83 $1.80 $1.71 $1.61 $1.49 $1.40 $1.33 $1.26 $1.18 $1.08
Accumulation unit value at end
of period..................... $1.86 $1.83 $1.80 $1.71 $1.61 $1.49 $1.40 $1.33 $1.26 $1.18
Number of accumulation units
outstanding at end of period
(000 omitted) ................ 4,113 5,378 7,253 6,487 5,493 2,836 2,125 1,055 8655 281
________________________________________________________________________________________________________________________
Ratio of operating expense to
average net assets ........... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Simple yield6 ................ 1.90% 1.77% 3.24% 6.20% 6.80% 7.30% 5.73% 4.16% 6.39% 7.51%
________________________________________________________________________________________________________________________
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Compound yield6 .............. 1.92% 1.79% 3.29% 6.39% 7.03% 7.57% 5.90% 4.24% 6.59% 7.79%
________________________________________________________________________________________________________________________
Account 97 (Investing in shares of Managed Fund)
Accumulation unit value at
beginning of period........... $1.98 $1.86 $1.45 $1.42 $1.14 $1.06 $1.01 $1.00 - -
Accumulation unit value at end
of period..................... $2.21 $1.98 $1.86 $1.45 $1.42 $1.14 $1.06 $1.01 - -
Number of accumulation units
outstanding at end of period
(000 omitted) ................ 50,761 31,828 20,105 15,292 12,248 11,920 12,219 4,030 - -
Ratio of operating expense to
average net assets ........... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% - -
5Account 6 includes 609,594 accumulation units issued in the merger of Account 3 into Account 6 on Dec. 13, 1985.
6Net of annual contract administrative charge and mortality and expense risk fee.
7Account 9 commenced operations on April 30, 1986.
</TABLE>
Financial Statements
The SAI dated June 22, 1994, contains:
o complete audited financial statements of the variable accounts
including:
- statements of net assets as of Dec. 31, 1993;
- statements of operations for the year ended Dec. 31, 1993;
and
- statements of changes in net assets for the years ended
Dec. 31, 1993 and Dec. 31, 1992 (for Accounts 10 and 11,
the period from Jan. 13, 1992 when they commenced
operations, to Dec. 31, 1992).
o complete audited financial statements for IDS Life of New York
including:
- balance sheets as of Dec. 31, 1993 and Dec. 31, 1992; and
- related statements of income and cash flows for each of
three years in the period ended Dec. 31, 1993.
Performance Information
Yield
Performance information for the Variable Accounts, including the
simple yield, compound yield and average annual total return for
IDS Life of New York Account 6 (investing in Moneyshare Fund), and
yield and average annual total return for the remaining Accounts,
may appear from time to time in advertisements or sales literature.
For Account 6, simple yield is based on income received by a
hypothetical investment (exclusive of capital change) over a given
seven-day period. This income then is "annualized" by assuming
that the seven-day yield would be received for 52 weeks and is
stated in terms of an annual percentage return on the investment.
The compound yield is calculated in a manner similar to that used
to calculate simple yield. However, when annualized, the income
earned by the investment is assumed to be reinvested. The compound
yield will be slightly higher than the simple yield due to the
compounding effect of this assumed reinvestment.
Yield quotations for the remaining Accounts will be based on all
investment income per accumulation unit earned during a given
30-day period, less expenses accrued during the period (net <PAGE>
PAGE 12
investment income). Yield quotations are computed by dividing this
net investment income by the value of an accumulation unit on the
last day of the period.
Total Return
Average annual total return quotations will be expressed in terms
of the average annual compounded rate of return of a hypothetical
investment over a period of one, five and 10 years (or, if less, up
to the life of the Account). The total return quotations will
reflect the deduction of all applicable charges including the
administrative charge and the mortality and expense risk fee.
Total return quotations will be made that reflect the deduction of
the applicable surrender charge (assuming a surrender at the end of
the illustrated period). Additional total return quotations may be
made that do not reflect a surrender charge deduction (assuming no
surrender at the end of the illustrated period).
An Account also may use aggregate total return figures for various
periods, representing the cumulative change in value of an
investment in an Account for the specific period (again reflecting
changes in an Account's accumulation unit value and assuming
reinvestment of investment earnings). Aggregate total returns may
be shown by means of schedules, charts or graphs.
Performance information reflects only the performance of a
hypothetical investment in an Account during the particular time
period on which the calculations are based. Performance
information should be considered in light of the investment
objectives and policies, characteristics and quality of the Fund in
which the Account invests, and the market conditions during the
given time period and is not intended to indicate future
performance. Advertised yields and total return figures for the
Accounts include all charges attributable to the Contract and
related Certificates which has the effect of decreasing the
advertised performance of an Account. For this reason, performance
information for an Account should not be compared to that for
mutual funds that sell their shares directly to the public. See
the Statement of Additional Information for a description of the
methods used to determine yield and total return information for
the Accounts.
About the Contract
Purpose of the Contract
The goal of the Contract and related Certificates is to help
Participants build up funds for retirement. The Contract permits
investments by or on behalf of a Participant in any one or more of
six Variable Accounts and/or in the Fixed Account. Each Variable
Account invests only in shares of a single Mutual Fund.
Participants can choose from a variety of retirement payment plans
to make sure that retirement payments continue for their lifetime.
This Contract is a combination variable and fixed annuity. A
variable annuity differs from a fixed annuity in that the amount of
retirement payments varies from month to month. The investor
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PAGE 13
assumes the risk of gain or loss according to the performance of
the investment. IDS Life of New York cannot guarantee that either
the Certificate's value at the retirement date or the total of the
retirement payments will equal or exceed the total purchase
payments.
This prospectus should be read carefully to decide if the Contract
and related Certificates will help Participants meet their
retirement goals. The separate prospectus on the IDS Life
Retirement Annuity Mutual Funds also should be read to help decide
on the most appropriate investments. These prospectuses should be
kept for future reference.
If a Participant returns a Certificate within 10 days after it is
delivered, IDS Life of New York will refund the aggregate purchase
payments you have made. The Certificate must be returned to an IDS
planner or mailed to IDS Life of New York at its Albany office. No
fees or charges will be deducted.
Use of the Contract and related Certificates as funding vehicles
under the Plan will be subject to applicable federal law and any
rules of the Plan itself.
Who Issues the Contract
IDS Life of New York issues this Contract and Certificate. IDS
Life of New York is a wholly owned subsidiary of IDS Life which
itself is a wholly owned subsidiary of IDS Financial Corporation
(IDS). IDS is a wholly owned subsidiary of the American Express
Company (American Express). American Express is a financial
services company principally engaged through subsidiaries (in
addition to IDS) in travel related services, investment services
and international banking services.
IDS Life of New York is not a bank, and the securities it offers
are not backed or guaranteed by any bank, nor are they insured by
the FDIC.
IDS Life of New York is a stock life insurance company organized in
1972 under the laws of the State of New York. It's home office is
at 20 Madison Avenue Extension Albany, New York. It's address for
mail is P.O. Box 5144, Albany, NY 12205. IDS Life of New York is
licensed in New York and North Dakota and conducts a conventional
life insurance business in the state of New York.
IDS Financial Services Inc. is the principal underwriter for the
Accounts. Its home office is IDS Tower 10, Minneapolis, MN 55440-
0010. IDS Financial Services Inc. is a wholly owned subsidiary of
IDS.
About the Accounts and Funds
Accounts Available for Investment
Purchase payments may be invested in any or all of six Variable
Accounts and/or in the Fixed Account. Each of the Variable
Accounts invests only in a single Mutual Fund:
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o IDS Life of New York Account 4 invests in shares of Capital
Resource Fund;
o IDS Life of New York Account 5 invests in shares of Special
Income Fund;
o IDS Life of New York Account 6 invests in shares of Moneyshare
Fund;
o IDS Life of New York Account 9 invests in shares of Managed
Fund;
o IDS Life of New York Account 10 invests in shares of
International Equity Fund; and
o IDS Life of New York Account 11 invests in shares of Aggressive
Growth Fund.
Income, capital gains and capital losses of each Account are
credited or charged to that Account alone. No Account will be
charged with liabilities of any other Account or of IDS Life of New
York's general business.
Accounts 4, 5 and 6 were established on Nov. 12, 1981. Account 9
was established on Feb. 12, 1986 and Accounts 10 and 11 were
established on Oct. 8, 1991. All Accounts were established under
New York law and are registered together as a single unit
investment trust under the 1940 Act. Each Variable Account meets
the definition of a separate account under federal securities laws.
This registration does not involve any supervision of IDS Life of
New York's management or investment practices and policies by the
SEC.
The Internal Revenue Service (IRS) has issued final regulations
relating to the diversification requirements under Section 817(h)
of the Code. Each Mutual Fund intends to comply with those
diversification requirements.
The U.S. Treasury and the IRS have indicated they may provide
additional guidance concerning investment control. The additional
guidance would address the number of variable accounts offered
under a contract and the number of exchanges among the variable
accounts that would be allowed before the contract owner or
participant would be considered to have investment control and thus
would be currently taxed on the income earned on the underlying
separate account assets. It is not clear at this time what the
additional guidance would be, and the timing of further action is
unknown. IDS Life of New York reserves the right to modify the
Contract and related Certificates, as necessary, to prevent the
Owner and/or Participants from being currently taxed as the owner
of the assets of the Variable Accounts for income tax purposes.
IDS Life of New York intends to comply with all U.S. Treasury
guidance to insure that the Contracts and related Certificates
continue to qualify as annuities for federal income tax purposes.
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PAGE 15
Investment Objectives of the Mutual Funds
The investment objectives of the underlying Mutual Funds are:
o Capital Resource Fund seeks capital appreciation by investing
primarily in U.S. common stocks listed on national securities
exchanges and other securities convertible into common stock.
Stocks and other securities will be selected for capital
appreciation based on the investment manager's assessment of market
conditions. The Fund attempts to reduce overall exposure to risk
from declines in securities prices by spreading its investments
over many different companies in a variety of industries.
o International Equity Fund seeks capital appreciation by
investing primarily in common stock and securities convertible into
common stock of foreign issuers. The Fund may invest in bonds
issued or guaranteed by countries that are members of the
Organization for Economic Cooperation and Development or bonds
issued or guaranteed by international agencies (such as the World
Bank or the European Investment Bank) if the manager believes they
have a greater potential for capital appreciation than equity
securities. The Fund may enter into foreign currency exchange
transactions.
The securities in which the Fund invests may be thought of as
speculative and may involve substantial risk. Risks arising from
investments in foreign securities include fluctuations in currency
exchange rates, adverse political and economic developments and
lack of comparable regulatory requirements applicable to U.S.
companies.
o Aggressive Growth Fund seeks capital appreciation by investing
primarily in common stock and emphasizes investments in small- and
medium-size companies. The Fund also may invest in warrants or
debt securities or in large well-established companies when the
investment manager believes such investments offer the best
opportunity for capital appreciation.
An investment risk of small companies is that they often have
limited product lines, smaller markets or fewer financial
resources. In addition, many of the companies in which the Fund
invests are without business histories. The securities of small
companies also may be subject to more abrupt or erratic market
movements than the securities of large, more established companies
or market averages in general. Some of the securities in which the
Fund invests may be considered speculative and may involve
substantial risk.
o Special Income Fund seeks a high level of current income while
conserving the value of the investment by investing primarily in
corporate bonds of the four highest ratings, in other corporate
bonds that are not rated but that the Fund believes have the same
investment qualities and in government bonds. Bonds in the top
four ratings are of the highest quality and involve less risk than
bonds with lower ratings. The Fund attempts to reduce overall
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PAGE 16
exposure to risk from declines in securities prices by spreading
its investments over many different companies in a variety of
industries.
o Moneyshare Fund seeks maximum current income consistent with
liquidity and conservation of capital by investing in money-market
securities. The Fund intends to use the amortized cost method of
valuing portfolio securities to help maintain a constant net asset
value of $1 per share. In doing so, the Fund will not purchase any
security with a remaining maturity of more than 13 months. The
Fund also will maintain a dollar-weighted average portfolio
maturity not exceeding 90 days and will limit its investments to
those that are denominated in U.S. dollars, are of high quality and
present minimal credit risks.
o Managed Fund seeks to maximize total investment return by
investing primarily in U.S. common stocks listed on national
securities exchanges and other securities convertible into common
stock, warrants, fixed income securities (primarily high-quality
corporate bonds), and money-market instruments. The Fund attempts
to reduce overall exposure to risk from declines in securities
prices by spreading its investments over many different companies
in a variety of industries.
IDS Life of New York does not guarantee that the Funds will meet
their investment objectives. Whether they meet their goals depends
on their management's ability to manage the risks of changing
economic conditions. IDS Life is the investment adviser for each
of the Funds. Detailed information about each Mutual Fund is in a
separate prospectus for the Funds that can be obtained from IDS
Life of New York or an IDS planner. The prospectus for the Funds
should be read carefully. There are deductions from, and expenses
paid out of, the assets of the Funds that are described in the
prospectus.
Using the Contract and Certificates
Buying the Contract
An IDS planner will help the Owner prepare an application for the
Contract. The IDS planner also will help each Participant complete
a participant enrollment form evidencing participation in the
Contract. These forms will be sent to IDS Life of New York's home
office in Albany. If the forms are complete, IDS Life of New York
will apply the purchase payments not later than two days after
receipt. If IDS Life of New York cannot accept an application or
enrollment form within five days, the company will decline the form
and return any related purchase payment. When IDS Life of New York
accepts the application, the company will send the Owner a
Contract. When IDS Life of New York accepts an enrollment form,
the company will send the Participant a Certificate. Purchase
payments will be allocated to the Account(s) selected at the next
close of business after IDS Life of New York accepts the
application or enrollment form or receives the payment, whichever
is later.
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When Participants enroll in the Certificate, they select the
Account(s) in which they want the payments made by them or on their
behalf invested. The Owner selects the frequency with which it
wishes to make purchase payments.
Ownership - Unless otherwise provided in the Contract, the Owner
has all rights under the Contract. Participants' interests under
the Contract, as evidenced by their Certificates, are subject to
the terms of the Owner's Contract and the Plan.
Retirement Date - A retirement date is established when
participants enroll in the Certificate subject to the terms of the
Plan. If a Participant needs to change the retirement date,
written instructions must be sent at least 30 days before the
change.
To avoid penalty taxes, retirement payments generally must not
begin earlier than the date the Participant turns age 59 1/2 or
separates from service after reaching age 55. The maximum
retirement date is the later of:
o April 1 following the calendar year in which the Participant
attains age 70 1/2;
o such other date that satisfies the minimum distribution
requirements under the Code and related regulations and
promulgations; or
o such other date agreed upon by IDS Life of New York.
If the Participant is taking the minimum 403(b) plan distributions
as required by the Code from another tax-qualified investment, or
in the form of partial surrenders under this Contract and related
Certificate, retirement payments may begin the later of the
Certificate anniversary on or preceding the Participant's 85th
birthday or the 10th Certificate anniversary.
Naming a Beneficiary - Each Participant may name a beneficiary in
accordance with the applicable provisions of the Plan and the Code.
If the Participant dies before the retirement date and there is no
beneficiary, then the Participant's estate will be the beneficiary.
Amount of Purchase Payments
Purchase payments may be made either in a lump sum payment or
installment payments. When IDS Life of New York issues a
Certificate, a purchase payment intended as a lump sum must be at
least $1,000. IDS Life of New York will accept installment
payments to a Certificate totaling at least $300 a year. The
maximum amount of purchase payments is determined by any
restrictions imposed by the Plan and the Code.
If IDS Life of New York Receives No Additional Payments - IDS Life
of New York reserves the right to cancel a Certificate if no
purchase payments have been made for a continuous period of 36
months and previous purchase payments total $600 or less. IDS Life
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PAGE 18
of New York will give the Participant 30 days' written notice of
cancellation. If no additional minimum payment is received by the
end of this notice period, IDS Life of New York will pay out the
total value of the Certificate in a lump sum. This right is
subject to the terms of the Plan and the Code.
Allocating Purchase Payments to the Accounts
IDS Life of New York will allocate purchase payment(s) to the
Account(s) the Participant has selected at the next close of
business, currently the same as the close of the New York Stock
Exchange, after the company accepts the application or enrollment
form or receives the payment, whichever is later.
Transferring Money between Accounts
Until the retirement date, a Participant may transfer money from
one Account to another by making a written request. There are some
restrictions on transferring to or from the Fixed Account as
discussed in the section called "Information on the Fixed Account
of the Contract." In addition, any restrictions imposed by the Plan
will apply. IDS Life of New York will make the transfer at the
next close of business after receipt of the transfer request.
There is no charge for transfers, but IDS Life of New York does
require that the transfer be for:
o at least $250; or
o the entire balance in that Account, if less.
A Participant also may establish automated transfers of certificate
values among the Fixed and Variable Account(s) through a one-time
written request or another acceptable method. The minimum
automated transfer amount from any Account is $50, and such
transfers may be made on a monthly, quarterly, semi-annual or
annual basis. A Participant may start or stop this service at any
time after the service has been in effect for a period of 12
consecutive months, but must give 30 day's notice to change any
automated transfer instructions that currently are in place.
For information on restrictions on automated transfers of
certificate values between the Fixed and Variable Account(s) see
the section called "Information on the Fixed Account of the
Contract."
Before transferring funds, a Participant should consider the risks
involved in switching investments. Transfers between Accounts
after retirement are described on page __.
IDS Life of New York reserves the right to suspend or modify
transfer privileges at any time.
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Charges Against the Certificate and Accounts
Administrative Charge - IDS Life of New York deducts a $30 charge
from the certificate value of each Certificate at the end of each
certificate year. This charge is for establishing and maintaining
records for each Certificate under the Contract.
If a Certificate is surrendered, the administrative charge will be
deducted at the time of surrender. The administrative charge
cannot be increased and does not apply after an annuity payment
plan begins. IDS Life of New York reserves the right to reduce or
eliminate the administrative charge. IDS Life of New York does not
expect to profit from the administrative charge.
Mortality and Expense Risk Fee - This charge is applied daily to
the Variable Accounts. The fee equals 1 percent of the average
daily net assets of the Variable Accounts on an annual basis. It
covers IDS Life of New York's mortality risk and expense risk. IDS
Life of New York estimates that approximately two-thirds of this
fee is for assumption of the mortality risk, and one-third is for
assumption of the expense risk.
The mortality risk is IDS Life of New York's guarantee to make
retirement payments according to the terms of the Contract, no
matter how long a specific annuitant lives and no matter how long
the entire group of IDS Life of New York annuitants live. If, as a
group, IDS Life of New York annuitants outlive the life expectancy
the company has assumed in its actuarial tables, IDS Life of New
York must take money from its general assets to meet its
obligations. If, as a group, IDS Life of New York annuitants do
not live as long as expected, the company could profit from the
mortality risk fee.
The expense risk is the risk that the administrative charge, which
cannot be increased, will not cover IDS Life of New York's
expenses. Any deficit would have to be made up from IDS Life of
New York's general assets. IDS Life of New York could profit from
the expense risk fee if the annual administrative charge is more
than sufficient to meet expenses. IDS Life of New York does not
plan to profit from the administrative charge. However, IDS Life
of New York hopes to profit from the mortality and expense risk
fee. Any profits realized by IDS Life of New York from this fee
would be available to it for any proper corporate purpose,
including, among other things, payment of distribution (selling)
expenses. IDS Life of New York does not expect that the surrender
charge, which is discussed in the following paragraphs, will cover
sales and distribution expenses incurred by IDS Life of New York in
connection with the Contract and related Certificates.
Surrender Charge - If part or all of a Certificate is surrendered
within the first 11 certificate years, the following surrender
charge applies:
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Surrender Charge as
Percent of
Certificate Year Amount Surrendered
1 8%
2 8
3 8
4 8
5 7
6 6
7 5
8 4
9 3
10 2
11 1
12 and later 0
The surrender charge is further limited so that it will never
exceed 8.5 percent of aggregate purchase payments made to the
Certificate. IDS Life of New York reserves the right to reduce or
eliminate the surrender charge.
In the case of a partial surrender, the surrender charge is
deducted from the certificate value remaining after the Participant
is paid the partial surrender amount requested. For example, if
the Participant requested a partial surrender net check amount of
$1,000 and the surrender charge rate were 5 percent, the
Participant would receive the $1,000 requested and the surrender
charge amount would be $52.63 for a total withdrawal from the
Certificate of $1,052.63.
No Surrender Charge - There is no surrender charge on amounts
surrendered:
o after the eleventh certificate year;
o due to a Participant's retirement under the Plan on or after age
55;
o due to the death of the Participant; or
o upon settlement of the Certificate under an annuity payment
plan.
Possible Reduction in Charges - In some cases IDS Life of New York
may expect to incur lower sales and administrative expenses or to
perform fewer services due to the size of the group and the average
contribution. Although IDS Life of New York expects this to occur
infrequently, it may be able to reduce or eliminate the contract
administrative and surrender charges.
Surrendering a Certificate
Subject to certain restrictions imposed by the Code and any
restrictions imposed by the Plan, a Participant may surrender all
or part of the certificate value any time before the retirement
date by making a written request. No surrenders may be made after
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PAGE 21
the retirement date. When making a surrender, the Participant may
have to pay surrender charges as previously explained. A
Participant also may have to pay a 10 percent IRS penalty tax for
surrenders made before reaching age 59 1/2 (unless the Participant
has separated from the service of the employer after reaching age
55). In addition, if the amount surrendered is paid to the
Participant instead of being directly rolled over to an IRA or
another eligible 403(b) Plan, 20 percent income tax withholding may
be imposed.
The Code imposes certain restrictions on a Participant's right to
receive early distributions attributable to salary reduction
contributions to a Certificate under a Contract purchased to fund a
Section 403(b) Plan. Distributions attributable to salary
reduction contributions made after Dec. 31, 1988 (plus the earnings
on them) or to transfers or rollovers of such amounts from other
contracts, may be made only if the Participant has attained age
59 1/2, has become disabled as defined in the Code, has separated
from the service of the employer that purchased the Contract or has
died. Additionally, if the Participant should encounter a
financial hardship (within the meaning of the Code), he or she may
receive a distribution of all certificate values attributable to
salary reduction contributions made after Dec. 31, 1988, but not of
the earnings on them. Even though a distribution may be permitted
under these rules (e.g., for hardship or after separation from
service), it may nonetheless be subject to a 10 percent IRS penalty
tax (in addition to income tax) as a premature distribution and 20
percent income tax withholding may be imposed. See the section
called "Federal Tax Information."
This restriction on the right to receive a distribution does not
affect the availability of the certificate values transferred or
rolled over to the Contract as of Dec. 31, 1988. The right to
receive a loan continues to exist. The restrictions do not apply
to transfers or exchanges of certificate values within the
Certificate or to another registered variable annuity contract or
investment vehicle available through the employer. In addition,
for certain types of contributions under the Contract to be
excluded from taxable income, the employer must comply with certain
nondiscrimination requirements.
Partial Surrenders - The minimum amount a Participant may surrender
is $250. A Participant cannot make a partial surrender if it would
reduce the value of the Certificate to less than $600.
If a Participant has a balance in more than one Account and
requests a partial surrender, IDS Life of New York will withdraw
money from all Accounts in the same proportion as the value in each
Account bears to the total certificate value unless otherwise
requested.
Total Surrenders - IDS Life of New York will compute the value of
the Certificate at the close of business, currently the same as the
close of the New York Stock Exchange, after receipt of a request
for a complete surrender. IDS Life of New York may ask the
Participant to return the Certificate.
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Receiving Payment - IDS Life of New York will mail payment to the
Participant within seven days after receiving the request.
However, IDS Life of New York may postpone payment if:
o the surrender value includes a purchase payment check that has
not cleared;
o the New York Stock Exchange is closed, except for normal holiday
and weekend closings;
o trading on the New York Stock Exchange is restricted according
to the rules of the SEC;
o an emergency, as defined by the rules of the SEC, makes it
impracticable to sell securities or to value the Accounts' net
assets; or
o the SEC permits IDS Life of New York to delay payment for the
protection of security holders.
Payment in Case of Death before Retirement Payments Begin
If the Participant dies before the retirement date and age 75 while
the Certificate is in force, IDS Life of New York will pay to the
beneficiary the greater of:
o the certificate value; or
o the purchase payments made to the Certificate less any amounts
surrendered.
If death occurs on or after the Participant's 75th birthday, IDS
Life of New York will pay the beneficiary the certificate value.
If the Spouse is Sole Beneficiary - If the Participant dies before
the retirement date and his or her spouse is the only beneficiary,
the spouse may keep the Certificate in force. To do this, the
spouse must, within 60 days after IDS Life of New York receives
proof of death, give written instructions to keep the Certificate
in force. If the Participant dies before reaching age 70 1/2, the
spouse may keep the Certificate in force until the date on which
the Participant would have reached age 70 1/2.
Paying the Beneficiary - Unless IDS Life of New York has received
other written instructions, IDS Life of New York will pay the
beneficiary in a single payment. If this payment is made to a
surviving spouse instead of being directly rolled over to an IRA it
may be subject to 20 percent income tax withholding. See the
section called "Federal Tax Information." The beneficiary must
elect to receive this payment by December 31 of the year that
contains the fifth anniversary of the Participant's date of death.
However, IDS Life of New York may make payments under any payment
plan available under this Contract if:
o the beneficiary elects a payment plan in writing within 60 days
after IDS Life of New York receives proof of death;
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PAGE 23
o payments begin no later than one year after death; and
o the payment period does not extend beyond the beneficiary's life
or life expectancy.
When paying the certificate value to the beneficiary, IDS Life of
New York will determine the Certificate's value at the next close
of the New York Stock Exchange after the company receives proof of
death and any other required documentation. Interest, if any, is
paid at a rate no less than that required by applicable law and is
paid from the date of death. IDS Life of New York will mail
payment to the beneficiary within seven days after the company's
death claim requirements are fulfilled.
Settlement Value of the Certificate
The amount available on the retirement date to provide payments
under an annuity payment plan is the current value of the
investment at that time, called the certificate value. Because the
Mutual Fund investments fluctuate in value each day, IDS Life of
New York does not guarantee that this certificate value will exceed
or even equal the amount of purchase payments.
Quarterly statements on the value of the investments and statements
on any other required information will be sent at least annually.
Payout Options at Retirement
The Participant has the right to decide how and to whom retirement
payments are to be made. The Participant may select one of the
annuity payment plans outlined below, or the Participant and IDS
Life of New York will mutually agree on other payment arrangements.
Any payment plan selected must meet the requirements of the Code
and the Plan. See the section called "Federal Tax Information."
The Contract and related Certificates allow Participants to
determine whether retirement payments are to be made on a fixed or
variable basis or a combination of both. Retirement payments will
be made under a supplemental immediate annuity in the form
customarily offered by IDS Life of New York at the time. Only
variable payments are described below.
Variable Payments - Amounts of variable payments depend on:
o the table of settlement rates in the Contract and related
Certificates;
o the annuitant's age;
o the annuity payment plan selected; and
o the investment performance of the Account(s) selected.
Because the performance of the underlying Mutual Funds will
fluctuate, payments will vary from month to month.
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PAGE 24
Annuity Payment Plans - A Participant may choose any one of these
payment plans by giving written instructions at least 30 days
before the retirement date:
o Plan A - Life Annuity - No Refund - Monthly payments are made
until the annuitant's death. Payments end with the last monthly
payment before the annuitant's death; no further payments will be
made. Under this plan, if the annuitant dies after even the first
monthly payment, no more payments will be made.
o Plan B - Life Annuity with Five, 10 or 15 Years Certain -
Monthly payments are made until the annuitant's death. However,
payments are guaranteed for five, 10 or 15 years. If the annuitant
dies before those guaranteed payments have been made, then IDS Life
of New York will continue making payments to a secondary designated
payee. If a secondary payee is not named, or if the secondary
payee dies before the annuitant, then the value of the remaining
guaranteed payments, based on the assumed investment rate, will be
paid to the annuitant's estate.
o Plan C - Life Annuity - Installment Refund - Monthly payments
are made until the annuitant's death, with IDS Life of New York's
guarantee that payments will continue for at least the number of
months determined by dividing the amount of the Certificate's value
by the amount of the first monthly payment. If the annuitant dies
before those guaranteed payments have been made, IDS Life of New
York will continue making payments to the designated secondary
payee. If a secondary payee is not named, or if the secondary
payee dies before the annuitant, then the value of the remaining
guaranteed payments, based on the assumed investment rate, will be
paid to the annuitant's estate.
o Plan D - Joint and Last Survivor Life Annuity - No Refund -
Monthly payments are made to the annuitant and a joint annuitant
while both are living. If either annuitant dies, monthly payments
continue at the full amount until the death of the surviving
annuitant. Payments end with the death of the second annuitant,
and no further payments will be made.
Restrictions on Payout Options - Because the Contract was purchased
under the Plan, the Participant must select a payment plan that
provides for payments:
o over the life of the annuitant;
o over the joint lives of the annuitant and designated
beneficiary;
o for a period not exceeding the life expectancy of the annuitant;
or
o for a period not exceeding the joint life expectancies of the
annuitant and designated beneficiary.
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PAGE 25
If the Participant Does Not Give Instructions - The Participant
must give written instructions for paying retirement benefits at
least 30 days before the annuitant's retirement date. If not, IDS
Life of New York will make payments under Plan B, with 120 monthly
payments guaranteed, unless this option is contrary to applicable
provisions of the Plan or the Code.
If Monthly Payments Would be Less than $20 - IDS Life of New York
will calculate the certificate value at the retirement date. If
the calculations show that monthly payments would be less than $20,
IDS Life of New York has the right to pay the certificate value in
one lump sum.
Death After Retirement Payments Begin - If the annuitant dies after
retirement payments begin, any amount payable to the beneficiary
will be as provided in the retirement payment plan in effect.
Transfers Between Accounts after Retirement
After retirement, the annuitant may transfer the value applied to
the annuity payment plan from one Variable Account to another once
each year. The annuitant must send IDS Life of New York written
instructions to do this. IDS Life of New York will make the
exchange at the next close of business, currently the same as the
close of the New York Stock Exchange, after receipt of these
instructions.
Restrictions on Changing Ownership
The Contract and related Certificates cannot be sold, assigned,
transferred, discounted or pledged as collateral for a loan or as
security for the performance of an obligation or for any other
purpose to any person other than IDS Life of New York. The
Participants' vested rights under the Certificate are
nonforfeitable.
Termination of Payments
If purchase payments made by or on behalf of a Participant are
terminated for any reason prior to the retirement date, the
Participant may elect to surrender the certificate value in
accordance with any applicable provisions of the Plan or the Code
or leave the Certificate in force under the Contract until the
certificate value is surrendered, paid upon the Participant's death
or applied to an annuity payment plan. When the Certificate
remains in force under the Contract, any monies allocated to the
Variable Accounts will continue to reflect the net investment
experience of the Funds. If the total certificate value becomes
less than $600, IDS Life of New York reserves the right to pay the
certificate value to the Participant in a lump sum. The
Participant also may transfer the Certificate under a Contract
issued by IDS Life of New York under the same policy form that is
held by another Owner.
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Federal Tax Information
The Contracts and related Certificates described in this prospectus
are designed for use in connection with Plans that qualify under
the provisions of Code Section 403(b). The ultimate effect of
federal income taxes on the increase in certificate value, on
retirement payments and on the economic benefit to the Owner, the
Participant, the annuitant, the joint annuitant, the beneficiary or
any other payee may depend upon a number of different factors. The
following discussion is general in nature, is based upon IDS Life
of New York's understanding of current federal income tax laws and
is not intended as tax advice. Either federal tax laws or current
interpretations of them may change. Participants and other payees
should consult qualified tax advisers. IDS Life of New York does
not make any guarantee regarding the tax status, federal, state or
local, of any Contract or related Certificate or any transaction
involving the Contracts or Certificates.
Generally, there is no tax to the Participant on contributions made
to the Certificate or on any increases in the value of the
Certificate as long as the contributions do not exceed applicable
limits provided under the Code and the Plan. When a distribution
to a Participant occurs, the total distribution generally will be
subject to taxation (unless any contributions were made with
after-tax dollars).
If the Participant surrenders part or all of the Certificate before
the date on which retirement payments begin, that Participant
generally will be taxed on the payments received. Further, the
Participant may have to pay a 10 percent IRS penalty tax for early
withdrawal and 20 percent income tax withholding may be imposed.
If retirement payments begin, the total amount of those payments
generally will be taxable.
As noted above, the Participant may have to pay a 10 percent IRS
penalty tax. This penalty will not apply to any amount received:
o after the Participant reaches age 59 1/2;
o because of the Participant's death;
o because the Participant becomes disabled (as defined in the
Code);
o if the distribution is part of a series of substantially equal
periodic payments made at least annually, over the life or
life expectancy of the Participant (or joint lives or life
expectancies of the Participant and designated beneficiary) after
the Participant separates from the service of the employer; or
o after the Participant separates from service after attaining age
55;
These are the major exceptions to the 10 percent IRS penalty tax.
Other penalties may apply if a Participant surrenders a Certificate
before the Plan specifies that payments can be made under the Plan.
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PAGE 27
If a Participant receives all or a part of the certificate value,
mandatory 20 percent income tax withholding will be imposed at the
time the payment is made. In addition, federal income tax and the
10 percent IRS penalty tax for early withdrawals may apply to
amounts properly includible in income. This mandatory 20 percent
income tax withholding will not be imposed if:
o instead of receiving the payment, a Participant elects to have
the payment rolled over directly to an IRA or another 403(b) plan;
o the payment is one of a series of substantially equal periodic
payments made at least annually, over the life or life expectancy
of the Participant (or joint lives of life expectancies of the
Participant and designated beneficiary) or made over a period of 10
years or more; or
o the payment is a minimum distribution required under the Code.
These are the major exceptions to the mandatory 20 percent income
tax withholding. Payments made directly to a surviving spouse
instead of being rolled over into an IRA also may be subject to 20
percent income tax withholding. For taxable distributions that are
not subject to the mandatory 20 percent withholding, federal income
tax will be withheld from the taxable part of the distribution
unless you elect otherwise. State withholding also may be imposed
on taxable distributions.
Unlike life insurance proceeds, the death benefit paid under the
terms of a Certificate is not tax exempt. Payments generally are
taxable as ordinary income to the beneficiary in the year(s) he or
she receives the payments.
A Participant will receive a tax statement for any year in which
IDS Life of New York makes a taxable distribution from the
Certificate.
Additional Information about the Contract and Certificates
Accumulation Units
When purchase payments are allocated to the Variable Account(s),
they are converted into accumulation units. The number of
accumulation units to be credited to a Certificate is determined by
dividing the purchase payment, after deduction of any premium
taxes, by the accumulation unit value.
Accumulation Unit Value - The accumulation unit value for each
Variable Account was originally set at $1. IDS Life of New York
determines the current accumulation unit value by taking the last
accumulation unit value for that Account and multiplying it by the
current net investment factor.
Net Investment Factor - The net investment factor is determined by:
o adding the Fund's net asset value per share and the per-share
amount of any current dividend or capital gain distribution made by
the Fund and held in the Account;
<PAGE>
PAGE 28
o dividing that sum by the last net asset value per share; and
o subtracting the percentage factor representing the mortality and
expense risk fee from the result.
Because the net investment factor may be greater or less than one,
the accumulation unit value may increase or decrease. The investor
bears this investment risk.
Annuity Units
When retirement payments are to begin, IDS Life of New York will
compute the number of annuity units to be credited to the
annuitant. To do this, IDS Life of New York determines the current
value of the Certificate as of the valuation date seven days before
the retirement date. A valuation date is a normal business day,
Monday through Friday, except for the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The result is applied to the table of settlement rates contained in
the Contract and related Certificates or another table at least as
favorable. IDS Life of New York then calculates lifetime variable
annuity payments according to the annuity payment plan chosen. The
table of settlement rates assumes an investment rate of 3.5 percent
and shows the amount of the first monthly payment for each $1,000
of value according to the age of the annuitant. A unisex table of
settlement rates will apply.
These calculations give the total amount of the first monthly
payment. This amount is divided by the annuity unit value on the
valuation date on or next preceding the seventh calendar day before
the retirement date. The result is the number of annuity units to
be credited to the annuitant.
This calculation will be done separately for each of the six
Variable Accounts. Each of the Variable Accounts will have its own
annuity unit value.
Annuity Unit Value - The annuity unit value for each Variable
Account was originally set at $1. IDS Life of New York determines
current annuity unit values by multiplying the last annuity unit
value by the product of:
o the net investment factor; and
o the neutralizing factor. The purpose of the neutralizing factor
is to offset the effect of the assumed investment rate built into
the table of settlement rates. With an assumed investment rate of
3.5 percent, the neutralizing factor is 0.999906 for a one-day
valuation period.
The value of an annuity unit reflects the investment performance of
the Fund and will vary.
<PAGE>
PAGE 29
Determining Amounts of Payments
The way IDS Life of New York calculates the first monthly payment
is explained in the section "Annuity Units." Subsequent variable
payments will vary according to the investment performance of the
Variable Account(s) in which an annuitant has invested. Amounts of
later monthly payments are calculated by multiplying:
o the annuity unit value on the valuation date on or immediately
preceding the seventh calendar day before the payment is due by
o the fixed number of annuity units credited to an annuitant.
IDS Life of New York makes a separate calculation for each Variable
Account and combines the results, together with any retirement
payments from the Fixed Account, to determine the total payment.
About the Funds
Voting Rights - IDS Life of New York will vote Fund shares held by
the Separate Accounts at meetings of shareholders of the Funds, but
will follow voting instructions received from persons having the
right to give voting instructions. The Owner or Participant is the
person having the right to give voting instructions prior to the
retirement date. Once retirement payments are being made, the
person receiving the payments has voting rights.
Before the retirement date, the number of votes a person has is
determined by applying his or her percentage interest in the
Variable Account to the total number of votes allowed to the
Account.
After the retirement date, the number of votes is equal to:
o the reserve held in the Account for the annuity under the
payment plan; divided by
o the net asset value of one share of the applicable underlying
Mutual Fund.
As IDS Life of New York makes retirement payments, the reserve for
an annuity under a payment plan decreases. Therefore, the number
of votes also will decrease.
IDS Life of New York calculates votes separately for each Account
and will do this not more than 60 days before a shareholders'
meeting. Those with voting rights will receive notice of these
meetings, proxy materials and a statement of the number of votes to
which they are entitled.
IDS Life of New York will vote those shares for which it has not
received voting instructions in the same proportion as the votes
for which it has received instructions. IDS Life of New York also
will vote the shares for which it has voting rights in the same
proportion as the votes for which it has received instructions.
<PAGE>
PAGE 30
Substitution - Shares of any of the underlying Funds may not always
be available for purchase by the Variable Accounts, or IDS Life of
New York may decide that further investment in any such Fund's
shares is no longer appropriate in view of the purposes of the
Variable Account. In either event, shares of another registered
open-end management investment company may be substituted both for
Fund shares already purchased by the Variable Account and for
purchases to be made in the future. In the event of any
substitution pursuant to this provision, IDS Life of New York may
make appropriate endorsement to the Contract and Certificates to
reflect the substitution.
IDS Life of New York reserves the right to split or combine the
value of accumulation units. In effecting such change of unit
values, strict equity will be preserved and no change will have a
material effect on the benefits under the Certificates or on any
other provisions of the Contract and related Certificates.
Information on the Fixed Account of the Contract
In addition to the six Variable Accounts described in this
prospectus, the Contract has a Fixed Account available for
allocation of purchase payments. Generally, the information in the
section called "Using the Contract and Certificates" applies in a
like manner to the Fixed Account. However, there are some
differences.
The Fixed Account operates like traditional annuities. Fixed
annuity cash values increase based on interest rates that may
change from time to time but are guaranteed by IDS Life of New
York. Interest is credited daily and compounded annually.
Purchase payments and transfers to the Fixed Account become part of
the general account of IDS Life of New York. In contrast, purchase
payments and transfers to the Variable Accounts go into segregated
asset accounts; they are not mingled with IDS Life of New York's
main portfolio of investments that support fixed annuity
obligations. The gains achieved or losses suffered by the
segregated asset accounts have no effect on the Fixed Account.
The Contract and related Certificates allow Participants to
transfer certificate values between the Fixed and Variable Accounts
by making a written request. Such transfers are restricted as
follows:
1. Subject to any restrictions imposed by the Plan, Participants
may transfer certificate values from the Variable Account(s)
to the Fixed Account except as described in #3 below.
2. Participants may transfer certificate values from the Fixed
Account to the Variable Account(s) once a year.
3. If a transfer is made from the Fixed Account, no transfers
from any Variable Account back to the Fixed Account may be
made until the next eligible transfer period as defined in
the Plan document, if any, or otherwise until the Certificate
anniversary.
<PAGE>
PAGE 31
4. No transfers may be made to or from the Fixed Account once
retirement payments begin.
At times other than during eligible transfer periods, the Contract
and related Certificates allow Participants to make automated
transfers of certificate values between the Fixed and Variable
Accounts, but such transfers may not exceed an amount that, if
continued, would deplete the Fixed Account within 12 months.
The mortality and expense risk fee does not apply to values
allocated to the Fixed Account.
The Contract and related Certificates contain a provision that
allows Participants to take loans against the certificate values
allocated to the Fixed Account. Loan provisions are described in
detail in the Contract and Certificates.
Because of exemptive and exclusionary provisions, 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 1940 Act. Accordingly, neither the
Fixed Account nor any interests therein generally are subject to
the provisions of the 1933 or 1940 Acts, and IDS Life of New York
has been advised that the staff of the SEC has not reviewed the
disclosures in this prospectus that relate to the Fixed Account.
Disclosures regarding the Fixed Account of the Contract and the
general account of IDS Life of New York, 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.
Table of Contents of the
Statement of Additional Information
Performance Information................................... p.
Rating Agencies........................................... p.
Principal Underwriter..................................... p.
Independent Auditors...................................... p.
Mortality and Expense Risk Charge......................... p.
Prospectus................................................ p.
Financial Statements -
- IDS Life of New York Accounts 4, 5, 6, 9, 10 and
11.................................................... p.
- IDS Life Insurance Company of New York................ p.
Please check the appropriate box to receive a copy of the Statement
of Additional Information for:
_____IDS Life of New York Employee Benefit Annuity
_____Retirement Annuity Mutual Funds
<PAGE>
PAGE 32
Please return this request to:
IDS Life of New York Annuity Service
IDS Life Insurance Company of New York
P.O. Box 5144
Albany, New York 12205
Your name _______________________________________________________
Address _________________________________________________________
City _________________________ State ______ Zip _______________
<PAGE>
PAGE 33
1994 PROSPECTUS
IDS Life of New York Employee
Benefit Annuity
IDS Life Insurance Company of New York
20 Madison Avenue Extension
Albany, New York 12203
Recycled paper with a minimum
of 10% post-consumer waste
<PAGE>
PAGE 34
STATEMENT OF ADDITIONAL INFORMATION
for
EMPLOYEE BENEFIT ANNUITY
IDS LIFE OF NEW YORK ACCOUNTS 4, 5, 6, 9, 10 AND 11
June 22, 1994
IDS Life of New York Accounts 4, 5, 6, 9, 10 and 11 are separate
accounts established and maintained by IDS Life Insurance Company
of New York (IDS Life of New York).
This Statement of Additional Information, dated June 22, 1994, is
not a prospectus. It should be read together with the accounts'
prospectus, dated June 22, 1994, which may be obtained from your
IDS personal financial planner, or by writing or calling IDS Life
of New York Annuity Service at the address or telephone number
below.
IDS Life of New York Annuity Service
20 Madison Avenue Extension
Albany, NY 12203
(518) 869-8613
<PAGE>
PAGE 35
TABLE OF CONTENTS
Performance Information.......................................p. 3
Rating Agencies...............................................p. 5
Principal Underwriter.........................................p. 6
Independent Auditors..........................................p. 6
Mortality and Expense Risk Charge.............................p. 6
Prospectus....................................................p. 6
Financial Statements
- IDS Life of New York Accounts 4, 5, 6, 9, 10
and 11............................................p. 7
- IDS Life Insurance Company of New York............p. 15
<PAGE>
PAGE 36
PERFORMANCE INFORMATION
Calculation of yield for Account 6
IDS Life of New York Account 6, which invests in IDS Life
Moneyshare Fund, Inc., calculates an annualized simple yield and
compound yield based on a seven-day period.
The simple yield is calculated by determining the net change in the
value of a hypothetical account having the balance of one
accumulation unit at the beginning of the seven-day period. (The
net change does not include capital change, but does include a pro
rata share of the annual contract charges, including the annual
contract administrative charge and the mortality and expense risk
fee.) The net change in the account value is divided by the value
of the account at the beginning of the period to obtain the return
for the period. That return is then multiplied by 365/7 to obtain
an annualized figure. The value of the hypothetical account
includes the amount of any declared dividends, the value of any
shares purchased with any dividend paid during the period and any
dividends declared for such shares. The variable account's
(account) yield does not include any realized or unrealized gains
or losses, nor does it include the effect of any applicable
surrender charge.
The account calculates its compound yield according to the
following formula:
Compound Yield = [(return for seven-day period +1) 365/7 ] - 1
On Dec. 31, 1993, the account's annualized yield was 1.88% percent
and its compound yield was 1.90% percent.
The rate of return, or yield, on the account's accumulation unit
may fluctuate daily and does not provide a basis for determining
future yields. Investors must consider, when comparing an
investment in Account 6 with fixed annuities, that fixed annuities
often provide an agreed-to or guaranteed fixed yield for a stated
period of time, whereas the account's yield fluctuates. In
comparing the yield of Account 6 to a money market fund, you should
consider the different services that the annuity provides.
Calculation of yield for non-money market accounts
For an account other than the money market account, quotations of
yield will be based on all investment income earned during a
particular 30-day period, less expenses accrued during the period
(net investment income) and will be computed by dividing net
investment income per accumulation unit by the value of an
accumulation unit on the last day of the period, according to the
following formula:
YIELD = 2[(a-b + 1)6 - 1]
cd
<PAGE>
PAGE 37
where: a = dividends and investment income earned during the
period.
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of accumulation units
outstanding during the period that were entitled to
receive dividends.
d = the maximum offering price per accumulation unit on
the last day of the period.
Yield on the account is earned from the increase in the net asset
value of shares of the fund in which the account invests and from
dividends declared and paid by the fund, which are automatically
invested in shares of the fund.
Calculation of average annual total return
Quotations of average annual total return for an account will be
expressed in terms of the average annual compounded rate of return
of a hypothetical investment in the annuity contract over a period
of one, five and 10 years (or, if less, up to the life of the
Account), calculated according to the following formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a hypothetical $1,000
payment made at the beginning of the one, five,
or ten year (or other) period at the end of the
one, five, or ten year (or other) period (or
fractional portion thereof).
Account total return figures reflect the deduction of the contract
administrative charge and mortality and expense risk fee.
Performance figures will be shown with and may be shown without the
deduction of a surrender charge. The Securities and Exchange
Commission requires that an assumption be made that the contract
owner surrenders the entire contract at the end of the one, five
and ten year periods (or, if less, up to the life of the account)
for which performance is required to be calculated.
Aggregate total return
Aggregate total return represents the cumulative change in the net
asset value of shares of the fund in which the account invests over
a specified period of time and is computed by the following
formula:
ERV - P
P
<PAGE>
PAGE 38
where: P = a hypothetical initial payment of $1,000.
ERV = Ending Redeemable Value of a hypothetical $1,000
payment made at the beginning of the one, five, or
ten year (or other) period at the end of the one,
five, or ten year (or other) period (or fractional
portion thereof).
Performance of the accounts may be quoted or compared to rankings,
yields, or returns as published or prepared by independent rating
or statistical services or publishers or publications such as The
Bank Rate Monitor National Index, Barron's, Business Week,
Donoghue's Money Market Fund Report, Financial Services Week,
Financial Times, Financial World, Forbes, Fortune, Global Investor,
Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report,
Sylvia Porter's Personal Finance, USA Today, U.S. News and World
Report, The Wall Street Journal and Wiesenberger Investment
Companies Service.
RATING AGENCIES
The following chart provides information on ratings* given to IDS
Life of New York by independent rating agencies that evaluate the
financial soundness of insurance companies.
Rating Agency Rating Relevance of Rating
A.M. Best A+ Reflects A.M. Best's opinion
(Superior) regarding IDS Life of New York's
strong distribution network,
favorable overall balance sheet
profile, consistently improving
profitability, adequate level of
capitalization and asset-liability
management expertise.
Duff & Phelps AAA Reflects Duff & Phelps' opinion
regarding IDS Life of New York's
consistently excellent
profitability record, stable
operating leverage, leadership
position in chosen markets and
effective use of asset/liability
management techniques.
Moody's Aa2 Reflects Moody's opinion regarding
IDS Life of New York's leadership
position in financial planning,
strong asset/liability management
and good capitalization. IDS Life
of New York has a strong market
focus and it greatly emphasizes
quality service.
<PAGE>
PAGE 39
A.M. Best rates over 1,600 insurance companies on a 15 level scale
with letters ranging from A++ to F to "NA" ratings based on a
company's financial strength and claims paying ability.
Duff & Phelps rates over 125 companies for claims-paying ability
with 19 rating categories from AAA to CCC-.
Moody's rates over 80 companies for financial strength with 19
rating categories ranging from Aaa to C.
* Ratings relate to IDS Life of New York's ability to fulfill its
obligations under its contracts and not to the management or
performance of the separate accounts.
PRINCIPAL UNDERWRITER
The principal underwriter for the accounts is IDS Financial
Services Inc. which offers the variable annuities on a continuous
basis.
Surrender charges received by IDS Life of New York for 1993, 1992
and 1991, aggregated $151,536, $136,471, and $117,959,
respectively. Commissions paid by IDS Life of New York for 1993,
1992 and 1991, aggregated $1,244,668, $631,691 and $220,527,
respectively. The surrender charges were applied toward payment of
commissions.
INDEPENDENT AUDITORS
Ernst & Young, 1400 Pillsbury Center, Minneapolis, MN 55402, are
the independent auditors of the financial statements of IDS Life of
New York and the Separate Accounts.
MORTALITY AND EXPENSE RISK CHARGE
IDS Life of New York has represented to the SEC that:
IDS Life of New York has reviewed publicly available information
regarding products of other companies. Based upon this review, IDS
Life of New York has concluded that the mortality and expense risk
charge is within the range of charges determined by industry
practice. IDS Life of New York will maintain at its principal
office, and make available on request of the SEC or its staff, a
memorandum setting forth in detail the variable products analyzed
and the methodology, and results of, its comparative review.
IDS Life of New York has concluded that there is a reasonable
likelihood that the proposed distribution financing arrangements
made with respect to the annuities will benefit the variable
account and investors in the annuities. The basis for such
conclusion is set forth in a memorandum which will be made
available to the SEC or its staff on request.
PROSPECTUS
The prospectus dated June 22, 1994, is hereby incorporated in this
Statement of Additional Information by reference.
<PAGE>
PAGE 40
Annual Financial Information
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company of New York
We have audited the accompanying individual and combined statements
of net assets of IDS Life of New York Accounts 4, 10, 11, 5, 6 and
9 as of December 31, 1993, and the related statements of operations
for the year then ended, and the statements of changes in net
assets for each of the two years in the period then ended except
for IDS Life of New York Accounts 10 and 11 which are for the
period January 13, 1992 (commencement of operations) to December
31, 1993. These financial statements are the responsibility of the
management of IDS Life Insurance Company of New York. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We 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 misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our
procedures included confirmation by the underlying affiliated
mutual funds of securities owned at December 31, 1993. 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 individual and combined
financial position of IDS Life of New York Accounts 4, 10, 11, 5, 6
and 9 at December 31, 1993, and the individual and combined results
of their operations and changes in their net assets for the periods
described in the first paragraph, in conformity with generally
accepted accounting principles.
ERNST & YOUNG
Minneapolis, Minnesota
March 18, 1994
<PAGE>
PAGE 41
<TABLE>
<CAPTION>
Statements of Net Assets Dec.31, 1993
Combined
Segregated Asset Account Retirement
Assets 4 10 11 5 6 9 Annuity
<S> <C> <C> <C> <C> <C> <C> <C>
Investments in shares of mutual funds at market value:
IDS Life Capital
Resource Fund -- 4,058,544
shares at net asset value
of $25.43 per share
(cost $91,865,516)..... $103,189,604 $ -- $ -- $ -- $ -- $ -- $103,189,604
IDS Life International
Equity Fund -- 2,215,912
shares at net asset value
of $12.57 per share
(cost $24,690,415)..... -- 27,861,387 -- -- -- -- 27,861,387
IDS Life Aggressive Growth
Fund -- 1,915,556 shares at
net asset value of $12.29
per share
(cost $20,651,203)..... -- -- 23,560,379 -- -- -- 23,560,379
IDS Life Special
Income Fund, Inc. -- 5,943,867
shares at net asset value of
$11.99 per share
(cost $66,955,406)..... -- -- -- 71,252,709 -- -- 71,252,709
IDS Life Moneyshare
Fund, Inc. -- 7,633,034
shares at net asset
value of $1.00 per share
(cost $7,632,422)...... -- -- -- -- 7,632,437 -- 7,632,437
IDS Life Managed
Fund, Inc. -- 7,747,645
shares at net asset value
of $14.46 per share
(cost $101,101,906).... -- -- -- -- -- 112,051,097 112,051,097
103,189,604 27,861,387 23,560,379 71,252,709 7,632,437 112,051,097 345,547,613
Dividends receivable... -- -- -- 401,362 17,877 -- 419,239
Accounts receivable from
IDS Life of New York for
contract purchase
payments............... 80,303 76,537 50,980 160,662 44,939 88,263 501,684
Receivable from mutual funds
for share redemptions.. 23,301 -- -- 4,481 4,500 4,215 36,497
Total assets........... 103,293,208 27,937,924 23,611,359 71,819,214 7,699,753 112,143,575 346,505,033
Liabilities
Payable to IDS Life of New York for:
Mortality and expense
risk fee............... 86,694 22,135 19,098 59,772 6,575 93,031 287,305
Contract terminations.. 23,301 -- -- 4,481 4,500 4,215 36,497
Payable to mutual funds
for investments
purchased.............. 80,303 76,537 50,980 502,252 56,241 88,263 854,576
Total liabilities...... 190,298 98,672 70,078 566,505 67,316 185,509 1,178,378
Net assets applicable to
contracts in accumulation
period................. 103,102,910 27,839,252 23,541,281 71,252,709 7,632,437 111,927,848 345,296,437
Net assets applicable to
contracts in payment
period................. -- -- -- -- -- 30,218 30,218
Total net assets....... $103,102,910 $27,839,252 $23,541,281 $71,252,709 $7,632,437 $111,958,066 $345,326,655
Accumulation units
outstanding............ 30,089,286 21,650,329 19,430,140 23,259,461 4,113,215 50,761,194
Net asset value per
accumulation unit...... $ 3.43 $ 1.29 $ 1.21 $ 3.06 $ 1.86 $ 2.21
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 42
<TABLE>
<CAPTION>
Statements of Operations Year ended Dec. 31, 1993
Combined
Segregated Asset Account Retirement
Investment Income 4 10 11 5 6 9 Annuity
<S> <C> <C> <C> <C> <C> <C> <C>
Dividend income from
mutual funds.......... $5,184,348 $ 400,110 $ 24,937 $4,167,435 $ 221,780 $5,309,806 $15,308,416
Mortality and expense
risk fee (Note 3)..... 856,743 115,511 137,678 585,189 84,561 871,280 2,650,962
Investment income
(loss) -- net......... 4,327,605 284,599 (112,741) 3,582,246 137,219 4,438,526 12,657,454
Realized and Unrealized Gain (Loss) on Investments -- net
Realized gain on sales of investments in mutual funds:
Proceeds from sales... 763,607 40,954 120,075 1,819,157 6,118,533 430,750 9,293,076
Cost of investments
sold.................. 688,066 38,903 105,604 1,718,546 6,118,488 383,113 9,052,720
Net realized gain on
investments........... 75,541 2,051 14,471 100,611 45 47,637 240,356
Net change in unrealized
appreciation or depreciation
of investments........ (1,140,664) 3,187,166 2,213,814 3,853,558 (78) 4,505,085 12,618,881
Net gain (loss) on
investments........... (1,065,123) 3,189,217 2,228,285 3,954,169 (33) 4,552,722 12,859,237
Net increase from
operations............ $3,262,482 $3,473,816 $2,115,544 $7,536,415 $ 137,186 $8,991,248 $25,516,691
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 43
<TABLE>
<CAPTION>
Statements of Changes in Net Assets Year ended Dec. 31, 1993
Combined
Segregated Asset Account Retirement
Operations 4 10 11 5 6 9 Annuity
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income
(loss) -- net........ $ 4,327,605 $ 284,599 $ (112,741) $ 3,582,246 $ 137,219 $ 4,438,526 $ 12,657,454
Net realized gain
on investments....... 75,541 2,051 14,471 100,611 45 47,637 240,356
Net change in unrealized
appreciation or depreciation
of investments....... (1,140,664) 3,187,166 2,213,814 3,853,558 (78) 4,505,085 12,618,881
Net increase from
operations........... 3,262,482 3,473,816 2,115,544 7,536,415 137,186 8,991,248 25,516,691
Contract Transactions
Variable annuity contract
purchase payments.... 18,777,760 10,515,795 7,709,492 24,943,613 3,300,265 27,275,648 92,522,573
Net transfers*....... 10,974,972 10,637,026 7,453,651 (4,049,476) (5,062,298) 14,441,715 34,395,590
Loan repayments...... 48,485 4,310 8,666 15,852 748 55,004 133,065
Annuity payments..... -- -- -- -- -- (1,334) (1,334)
Contract charges
(Note 3)............. (128,063) (14,509) (22,540) (63,354) (8,774) (112,688) (349,928)
Contract terminations:
Surrender benefits... (2,192,846) (116,744) (151,998) (1,502,646) (520,490) (1,580,413) (6,065,137)
Death benefits....... (180,194) (7,620) (25,236) (258,347) (47,363) (210,689) (729,449)
Increase (decrease)
from contract
transactions......... 27,300,114 21,018,258 14,972,035 19,085,642 (2,337,912) 39,867,243 119,905,380
Net assets at beginning
of year.............. 72,540,314 3,347,178 6,453,702 44,630,652 9,833,163 63,099,575 199,904,584
Net assets at end
of year.............. $103,102,910 $27,839,252 $23,541,281 $71,252,709 $7,632,437 $111,958,066 $345,326,655
Accumulation Unit Activity
Units outstanding at
beginning of year.... 21,677,434 3,420,979 5,961,128 16,709,514 5,377,745 31,827,907
Contract purchase
payments............. 5,794,766 9,087,531 6,947,859 8,512,405 1,781,518 12,981,467
Net transfers*....... 3,377,950 9,261,875 6,691,285 (1,340,234) (2,735,160) 6,843,248
Transfers for policy
loans................ 15,002 3,648 7,699 5,322 403 25,991
Contract charges..... (40,290) (12,864) (20,597) (22,070) (5,187) (54,437)
Contract terminations:
Surrender benefits... (679,422) (104,338) (134,780) (517,677) (280,629) (761,379)
Death benefits....... (56,154) (6,502) (22,454) (87,799) (25,475) (101,603)
Units outstanding at
end of year.......... 30,089,286 21,650,329 19,430,140 23,259,461 4,113,215 50,761,194
*Includes transfer activity from (to) other Accounts and transfers (from) to IDS Life of New York for conversion from (to) Fixed
Account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 44
<TABLE>
<CAPTION>
Statements of Changes in Net Assets Year ended Dec. 31, 1992
Combined
Segregated Asset Account Retirement
Operations 4 10** 11** 5 6 9 Annuity
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income
(loss) -- net........ $ 2,197,656 $ 16,901 $ (21,189) $ 2,603,202 $ 263,321 $ 3,189,741 $ 8,249,632
Net realized gain
(loss) on
investments.......... 641,906 (620) (4,938) 18,476 78 161,230 816,132
Net change in
unrealized appreciation
or depreciation
of investments....... 110,221 (16,194) 695,362 323,191 (82) 322,221 1,434,719
Net increase from
operations........... 2,949,783 87 669,235 2,944,869 263,317 3,673,192 10,500,483
Contract Transactions
Variable annuity contract
purchase payments.... 16,762,060 1,779,395 3,386,175 14,264,106 5,713,670 14,804,432 56,709,838
Net transfers*....... 10,473,175 1,593,457 2,432,942 (1,400,075) (8,847,718) 8,507,346 12,759,127
Loan repayments...... 27,958 48 58 11,593 32,888 15,130 87,675
Contract charges
(Note 3)............. (97,821) (2,268) (5,657) (50,047) (12,284) (75,557) (243,634)
Contract terminations:
Surrender benefits... (1,573,252) (22,829) (28,460) (1,139,726) (176,888) (1,043,874) (3,985,029)
Death benefits....... (142,002) (712) (591) (132,615) (130,352) (220,887) (627,159)
Increase (decrease)
from contract
transactions......... 25,450,118 3,347,091 5,784,467 11,553,236 (3,420,684) 21,986,590 64,700,818
Net assets at beginning
of period............ 44,140,413 -- -- 30,132,547 12,990,530 37,439,793 124,703,283
Net assets at end
of period............ $72,540,314 $3,347,178 $6,453,702 $44,630,652 $ 9,833,163 $63,099,575 $199,904,584
Accumulation Unit Activity
Units outstanding at
beginning of period.. 13,590,889 -- -- 12,227,888 7,253,291 20,104,683
Contract purchase
payments............. 5,351,531 1,836,583 3,481,370 5,560,505 3,203,920 7,923,981
Net transfers*....... 3,316,424 1,626,791 2,519,974 (567,994) (4,899,331) 4,520,856
Transfers for policy
loans................ 8,965 49 59 4,499 18,227 8,014
Contract charges..... (31,834) (2,373) (5,945) (19,940) (7,224) (41,427)
Contract terminations:
Surrender benefits... (509,433) (39,314) (33,756) (442,195) (119,334) (565,958)
Death benefits....... (49,108) (757) (574) (53,249) (71,804) (122,242)
Units outstanding at end
of period............ 21,677,434 3,420,979 5,961,128 16,709,514 5,377,745 31,827,907
* Includes transfer activity from (to) other Accounts and transfers (from) to IDS Life for conversion from (to) Fixed Account.
** For the period from Jan. 13, 1992 (commencement of operations) to Dec. 31, 1992.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 45
Notes to Financial Statements
___________________________________________________________________
1. Organization
IDS Life of New York Accounts 4, 5, 6 and 9 (the Accounts) were
established as segregated asset accounts of IDS Life Insurance
Company of New York (IDS Life of New York) under New York law and
are registered collectively as a single unit investment trust under
the Investment Company Act of 1940. Accounts 4, 5 and 6 were
established on Nov. 12, 1981. Account 9 was established on Feb.
12, 1986 and commenced operations on April 30, 1986. Accounts 10
and 11 were established on Oct. 8, 1991 and commenced operations on
Jan. 13, 1992.
The assets of each Account are held for the exclusive benefit of
the Retirement Annuity contract owners and are not chargeable with
liabilities arising out of the business conducted by any other
Account or by IDS Life of New York. Contract owners allocate their
variable purchase payments to one or more of the six segregated
asset accounts. Such funds are then invested in shares of six
mutual funds organized by IDS Life Insurance Company (IDS Life) as
the investment vehicles for variable annuity contracts issued by
IDS Life of New York and by IDS Life. All of the mutual funds,
except IDS Life Managed Fund, Inc., commenced operations Oct. 13,
1981. IDS Life Managed Fund, Inc. commenced operations on April
30, 1986. These mutual funds are registered under the Investment
Company Act of 1940 as diversified, open-end management investment
companies. Funds allocated to IDS Life of New York Account 4 are
invested in the shares of IDS Life Capital Resource Fund; IDS Life
of New York Account 5 invests in the shares of IDS Life Special
Income Fund, Inc.; IDS Life of New York Account 6 invests in the
shares of IDS Life Moneyshare Fund, Inc.; IDS Life of New York
Account 9 invests in the shares of IDS Life Managed Fund, Inc.; IDS
Life of New York Account 11 invests in IDS Life Aggressive Growth
Fund; and IDS Life of New York Account 10 invests in IDS Life
International Equity Fund.
IDS Life, parent company of IDS Life of New York, serves as
manager, investment adviser and underwriter for the underlying six
mutual funds. IDS Financial Services Inc., an affiliated company,
is the principal underwriter for the Accounts. IDS Life of New
York serves as issuer for the Accounts.
___________________________________________________________________
2. Summary of Significant Accounting Policies
Investments in Mutual Funds Investments in shares of the mutual
funds are stated at market value, which is the net asset value per
share as determined by the respective mutual funds.
Investment transactions are accounted for on the date the shares
are purchased and sold. The cost of investments sold and redeemed
is determined on the average cost method. Dividend distributions
<PAGE>
PAGE 46
2. Summary of Significant Accounting Policies (continued)
received from the mutual funds are reinvested, net of any expenses
payable to IDS Life of New York, in additional shares of the mutual
funds and are recorded as income by the Accounts on the ex-dividend
date. Unrealized appreciation or depreciation of investments in
the accompanying financial statements represents the Accounts'
share of the mutual funds' undistributed net investment income,
undistributed realized gain or loss and the unrealized appreciation
or depreciation on their investment securities. Federal Income
Taxes IDS Life of New York is taxed as a life insurance company.
The Accounts are treated as part of IDS Life of New York for
federal income tax purposes. Under existing tax law, no income
taxes are payable with respect to any income of the Accounts.
___________________________________________________________________
3. Mortality and Expense Risk Fee and Administrative Charges
IDS Life of New York makes contractual assurances to the Accounts
that possible future adverse changes in contract expenses and
mortality experience of the annuitants and beneficiaries will not
affect the Accounts. The mortality and expense risk fee paid to
IDS Life of New York is computed daily and is equal, on an annual
basis, to 1 percent of the average daily net assets of the
Accounts.
An annual charge of $20 is deducted from the contract value of each
Variable Retirement Annuity contract. An annual charge of $30 is
deducted from the contract value of each Combination Retirement
Annuity contract. A quarterly charge of $6 is deducted from the
contract value of each Flexible Annuity contract. The annual
charges are deducted at contract year end and the quarterly charges
are deducted at contract quarter end, during the accumulation
period, for administrative services provided to the Accounts by IDS
Life of New York. A contingent deferred sales charge (surrender
charge) will be imposed upon:
a) certain Variable Retirement Annuity contract surrenders during
the first seven years,
b) Combination Retirement Annuity contract surrenders during the
first eleven years and
c) Flexible Annuity contract surrenders of amounts other than those
representing earnings or those representing purchase payments
more than six years old.
Charges by IDS Life of New York for surrenders are not available on
an individual segregated asset account basis. Charges for all
segregated asset accounts amounted to $151,536 in 1993 and $136,470
in 1992. Such charges are not an expense of the Accounts. They
are deducted from contract surrender benefits paid by IDS Life of
New York.
<PAGE>
PAGE 47
___________________________________________________________________
4. Investment Transactions
The Accounts' purchases of mutual fund shares (net of charges),
including reinvestment of dividend distributions, were as follows:
<TABLE>
<CAPTION>
Year Ended Dec. 31,
Account Investment 1993 1992
<C> <C> <C> <C>
4 IDS Life Capital Resource Fund........ $ 32,417,890 $31,752,733
10 IDS Life International Equity Fund.... 21,363,338 3,559,082
11 IDS Life Aggressive Growth Fund....... 14,993,546 5,983,220
5 IDS Life Special Income Fund, Inc..... 24,487,045 17,077,200
6 IDS Life Moneyshare Fund, Inc......... 3,917,840 5,188,593
9 IDS Life Managed Fund, Inc............ 44,777,396 26,743,798
$141,957,055 $90,304,626
</TABLE>
<PAGE>
PAGE 48
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company of New York
We have audited the accompanying balance sheets of IDS Life
Insurance Company of New York (a wholly owned subsidiary of IDS
Life Insurance Company) as of December 31, 1993 and 1992, and the
related statements of income and cash flows for each of the three
years in the period ended December 31, 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We 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 misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. 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 IDS
Life Insurance Company of New York at December 31, 1993 and 1992,
and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1993, in
conformity with generally accepted accounting principles.
Ernst & Young
February 3, 1994
Minneapolis, Minnesota
<PAGE>
PAGE 49
IDS Life of New York Financial Information
___________________________________________________________________
The financial statements shown below are those of the insurance
company and not those of the Fund or the Account. They are included
in the Statement of Additional Information for the purpose of
informing investors as to the financial condition of the insurance
company and its ability to carry out its obligations under the
variable annuity contracts.
<TABLE>
<CAPTION>
IDS Life Insurance Company of New York
______________________________________________________________________________________________________________________________
Balance Sheets Dec. 31, 1993 Dec. 31, 1992
Assets (Thousands)
______________________________________________________________________________________________________________________________
<S> <C> <C>
Investments:
Fixed maturities (Fair value: 1993, $1,240,593; 1992, $1,172,029) $1,171,023 $1,127,809
Mortgage loans on real estate (Fair value: 1993, $124,030; 1992, $64,693) 123,337 62,008
Policy loans 12,952 10,845
Other investments 2,239 2,895
______________________________________________________________________________________________________________________________
Total investments 1,309,551 1,203,557
______________________________________________________________________________________________________________________________
Cash and cash equivalents - 3,248
Accrued investment income 21,342 19,866
Deferred policy acquisition costs 87,891 77,269
Other assets 2,270 1,446
Assets held in segregated asset accounts, primarily common stocks at market 380,796 214,593
______________________________________________________________________________________________________________________________
Total assets $1,801,850 $1,519,979
______________________________________________________________________________________________________________________________
Liabilities and Stockholder's Equity
______________________________________________________________________________________________________________________________
Liabilities:
Fixed annuities - future policy benefits $1,059,005 $ 966,645
Universal life-type insurance - future policy benefits 120,917 114,286
Traditional life, disability income and long-term care insurance - future policy benefits 40,045 40,984
Policy claims and other policyholders' funds 2,347 2,065
Deferred federal income taxes 13,018 13,480
Amounts due to brokers 4,952 15,400
Other liabilities 20,311 15,963
Liabilities related to segregated asset accounts 380,796 214,593
______________________________________________________________________________________________________________________________
Total liabilities 1,641,391 1,383,416
______________________________________________________________________________________________________________________________
Stockholder's equity:
Capital stock, $10 par value per share; 200,000 shares authorized, issued and outstanding 2,000 2,000
Additional paid-in capital 49,000 49,000
Net unrealized appreciation on equity securities 24 12
Retained earnings 109,435 85,551
______________________________________________________________________________________________________________________________
Total stockholder's equity 160,459 136,563
______________________________________________________________________________________________________________________________
Total liabilities and stockholder's equity $1,801,850 $1,519,979
Commitments and contingencies (Note 7)
______________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 50
<TABLE>
<CAPTION>
______________________________________________________________________________________________________________________________
Statements of Income Years ended Dec. 31,
1993 1992 1991
(Thousands)
______________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Revenues:
Traditional life, disability income and long-term care insurance premiums $ 7,110 $ 6,282 $ 5,289
Policyholder and contractholder charges 9,634 8,359 7,356
Mortality and expense risk fees 2,904 1,696 1,081
Net investment income 110,147 102,071 94,630
Net gain (loss) on investments 1,334 2,478 (3,598)
______________________________________________________________________________________________________________________________
Total revenues 131,129 120,886 104,758
______________________________________________________________________________________________________________________________
Benefits and expenses:
Death and other benefits - traditional life, disability income and
long-term care insurance 5,715 5,705 7,359
Death and other benefits - universal life-type insurance
and investment contracts 2,465 2,133 2,058
Decrease in liabilities for future policy benefits for traditional
life, disability income and long-term care insurance (1,343) (855) (2,494)
Interest credited on universal life-type insurance and investment contracts 68,987 68,487 65,232
Amortization of deferred policy acquisition costs 10,434 8,137 6,919
Other insurance and operating expenses 7,652 6,403 4,919
______________________________________________________________________________________________________________________________
Total benefits and expenses 93,910 90,010 83,993
______________________________________________________________________________________________________________________________
Income before income taxes 37,219 30,876 20,765
______________________________________________________________________________________________________________________________
Income taxes 13,335 10,914 6,908
______________________________________________________________________________________________________________________________
Net income $ 23,884 $ 19,962 $ 13,857
______________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 51
<TABLE>
<CAPTION>
______________________________________________________________________________________________________________________________
Statements of Cash Flows Years ended Dec. 31,
1993 1992 1991
(Thousands)
______________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 23,884 $ 19,962 $ 13,857
Adjustments to reconcile net income to net cash provided by operating activities:
Issuance - policy loans, excluding universal life-type insurance (1,044) (635) (290)
Repayment - policy loans, excluding universal life-type insurance 455 327 200
Change in accrued investment income (1,476) (1,797) (812)
Change in deferred policy acquisition costs, net (10,622) (10,974) (8,487)
Change in liabilities for future policy benefits for traditional life, disability
income and long-term care insurance (939) (855) (2,494)
Change in policy claims and other policyholders' funds 282 592 (92)
Change in deferred federal income taxes (449) 1,302 (749)
Change in other liabilities 4,348 466 (276)
Accretion of discount, net (1,598) (1,410) (954)
Net (gain) loss on investments (1,334) (2,478) 3,598
Premiums related to universal life-type insurance 15,141 13,919 14,978
Surrenders and death benefits related to universal life-type insurance (9,785) (5,976) (5,920)
Interest credited to account balances related to universal life-type insurance 6,892 7,168 7,021
Policyholder and contractholder charges, non-cash (5,663) (5,452) (5,129)
Other, net (780) 700 (1,051)
______________________________________________________________________________________________________________________________
Net cash provided by operating activities $ 17,312 $ 14,859 $ 13,400
______________________________________________________________________________________________________________________________
Cash flows from investing activities:
Acquisition of investments, excluding policy loans $(397,102) $(440,037) $(247,841)
Maturities, sinking fund payments and calls of investments, excluding policy loans 264,994 210,179 60,250
Sale of investments, excluding policy loans 31,152 68,537 84,794
Change in amounts due to brokers (10,448) 12,249 (1,193)
______________________________________________________________________________________________________________________________
Net cash used in investing activities (111,404) (149,072) (103,990)
______________________________________________________________________________________________________________________________
Cash flows from financing activities:
Considerations received related to investment contracts 149,269 159,913 111,553
Surrenders and death benefits related to investment contracts (119,158) (80,632) (75,878)
Interest credited to account balances related to investment contracts 62,250 61,319 58,211
Issuance - universal life-type insurance policy loans (3,403) (3,668) (3,061)
Repayment - universal life-type insurance policy loans 1,886 1,548 1,663
Cash dividend to parent - (6,000) -
______________________________________________________________________________________________________________________________
Net cash provided by financing activities 90,844 132,480 92,488
______________________________________________________________________________________________________________________________
Net increase (decrease) in cash and cash equivalents (3,248) (1,733) 1,898
Cash and cash equivalents at beginning of year 3,248 4,981 3,083
______________________________________________________________________________________________________________________________
Cash and cash equivalents at end of year $ - $ 3,248 $ 4,981
______________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 52
Notes to Financial Statements ($ Thousands)
Dec. 31, 1993, 1992 and 1991
1. Summary of significant accounting policies
Nature of business
IDS Life Insurance Company of New York (the Company) is engaged in
the insurance and annuity business in the state of New York and
sells various forms of fixed and variable individual life
insurance, individual disability income and long-term care
insurance, and single and installment premium fixed and variable
annuities.
Basis of presentation
The Company is a wholly owned subsidiary of IDS Life Insurance
Company (IDS Life), which is a wholly owned subsidiary of IDS
Financial Corporation (IDS), which is a wholly owned subsidiary of
American Express Company. The accompanying financial statements
have been prepared in conformity with generally accepted accounting
principles which vary in certain respects from reporting practices
prescribed or permitted by state insurance regulatory authority.
Also, the accompanying financial statements are presented on a
historical cost basis without adjustment of the net assets
attributable to the 1984 acquisition of IDS by American Express
Company.
Investments
Investments in fixed maturities are carried at cost, adjusted where
appropriate for amortization of premiums and accretion of
discounts. Mortgage loans on real estate are carried principally
at the unpaid principal balances of the related loans. Policy
loans are carried at the aggregate of the unpaid loan balances
which do not exceed the cash surrender values of the related
policies. Other investments include interest rate caps and equity
securities. When evidence indicates a decline, which is other than
temporary, in the underlying value or earning power of individual
investments, such investments are written down to the estimated
realizable value by a charge to income. Equity securities are
carried at market value and the related net unrealized appreciation
or depreciation is reported as a credit or charge to stockholder's
equity.
The Company has the ability and the intent to recover the costs of
these investments by holding them for the forseeable future. The
ability to hold investments to scheduled maturity dates is
dependent on, among other things, annuity contract owners
maintaining their annuity contracts in force.
The Company will implement, effective January 1, 1994, Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Under the new rules,
debt securities that the Company has both the positive intent and
ability to hold to maturity will be carried at amortized cost.
<PAGE>
PAGE 53
1. Summary of significant accounting policies (continued)
Debt securities that the Company does not have the positive intent
and ability to hold to maturity and all marketable equity
securities will be classified as available-for-sale and carried at
fair value. Unrealized gains and losses on securites classified as
available-for-sale will be carried as a separate component of
stockholder's equity. The effect of the new rules will be to
increase stockholder's equity by approximately $12 million, net of
taxes, as of January 1, 1994, but the new rules will have no
material impact on the Company's results of operations.
Realized investment gain or loss is determined on an identified
cost basis.
Interest rate cap contracts are purchased to reduce the Company's
exposure to rising interest rates which would increase the cost of
future policy benefits for interest sensitive products. Costs are
amortized over the lives of the agreements and benefits are
recognized when realized.
Prepayments are anticipated on certain investments in
mortgage-backed securities in determining the constant effective
yield used to recognize interest income. Prepayment estimates are
based on information received from brokers who deal in
mortgage-backed securities.
Statement of cash flows
The Company considers investments with a maturity at the date of
their acquisition of three months or less to be cash equivalents.
These securities are carried principally at amortized cost which
approximates fair value.
Supplementary information to the statement of cash flows for the
years ended Dec. 31 is summarized as follows:
1993 1992 1991
Cash paid during the year for:
Income taxes $14,138 $9,193 $7,093
Interest on borrowings 235 132 41
Recognition of profits on annuity contracts and insurance policies
The Company issues single premium deferred annuity contracts that
provide for a service fee (surrender charge) at annually decreasing
rates upon withdrawal of the annuity accumulation value by the
contract owner. No sales fee is deducted from the contract
considerations received on these contracts ("no load" annuities).
Single premium deferred annuities issued prior to 1980 had a sales
fee and no surrender charge. All of the Company's single premium
deferred annuity contracts provide for crediting the contract
owners' accumulations at specified rates of interest. Such rates
are revised by the Company from time to time based on changes in
the market investment yield rates for fixed-income securities.
<PAGE>
PAGE 54
1. Summary of significant accounting policies (continued)
Profits on single premium deferred annuities and installment
annuities are recognized by the Company over the lives of the
contracts and represent the excess of investment income earned
from investment of contract considerations over interest credited
to contract owners and other expenses.
The retrospective deposit method is used in accounting for
universal life-type insurance. This method recognizes profits over
the lives of the policies in proportion to the estimated gross
profits expected to be realized.
Premiums on traditional life, disability income and long-term care
insurance policies are recognized as revenue when collected or due,
and related benefits and expenses are associated with premium
revenue in a manner that results in recognition of profits over the
lives of the insurance policies. This association is accomplished
by means of the provision for future policy benefits and the
deferral and subsequent amortization of policy acquisition costs.
Deferred policy acquisition costs
The costs of acquiring new business, principally sales
compensation, policy issue costs, underwriting and certain sales
expenses, have been deferred on insurance and annuity contracts.
The deferred acquisition costs for single premium deferred
annuities and installment annuities are amortized based upon
surrender charge revenue and a portion of the excess of investment
income earned from investment of the contract considerations over
the interest credited to contract owners. The costs for universal
life-type insurance are amortized over the lives of the policies as
a percentage of the estimated gross profits expected to be realized
on the policies. For traditional life, disability income and
long-term care insurance policies, the costs are amortized over an
appropriate period in proportion to premium revenue.
Liabilities for future policy benefits
Liabilities for universal life-type insurance, single premium
deferred annuities and installment annuities are accumulation
values.
Liabilities for fixed annuities in a benefit status are based on
the Progressive Annuity Table with interest at 5 percent, the 1971
Individual Annuity Table with interest at 7 percent or 8.25
percent, or the 1983a Table with various interest rates ranging
from 5.5 percent to 9.5 percent, depending on year of issue.
Liabilities for future benefits on traditional life insurance have
been computed principally by the net level premium method, based on
anticipated rates of mortality (approximating the 1965-1970 Select
and Ultimate Basic Table for policies issued after 1980 and the
1955-1960 Select and Ultimate Basic Table for policies issued prior
to 1981), policy persistency derived from IDS Life's experience
data (first-year rates ranging from approximately 70 percent to 90
percent and increasing rates thereafter), and estimated future
<PAGE>
PAGE 55
1. Summary of significant accounting policies (continued)
investment yields of 4 percent for policies issued before 1974 and
5.25 percent for policies issued from 1974 to 1980. Cash value
plans issued in 1980 and later assume future investment rates that
grade from 9.5 percent to 5 percent over 20 years. Term insurance
issued from 1981 to 1984 assumes an 8 percent level investment
rate, and term insurance issued after 1984 assumes investment rates
that grade from 10 percent to 6 percent over 20 years.
Liabilities for future disability income policy benefits have been
computed principally by the net level premium method, based on the
1964 Commissioners Disability Table with the 1958 Commissioners
Standard Ordinary Mortality Table at 3 percent interest for 1980
and prior, 8 percent interest for persons disabled from 1981 to
1991 and 6 percent interest for persons disabled after 1991.
Liabilities for future benefits on long-term care insurance have
been computed principally by the net level premium method, using
morbidity rates based on the 1985 National Nursing Home Survey and
mortality rates based on the 1983a Table. The interest rate basis
is 9.5 percent grading to 7 percent over ten years for policies
issued from 1989 to 1992, 7.75 percent grading to 7 percent over
four years for policies issued after 1992, 8 percent for claims
incurred in 1989 to 1991 and 6 percent for claims incurred after
1991.
At Dec. 31, 1993 and 1992, the carrying amount and fair value of
fixed annuities future policy benefits, after excluding life
insurance-related contracts carried at $54,911 and $50,316, were
$1,004,095 and $916,329, and $970,169 and $884,021, respectively.
The fair value is net of policy loans of $1,085 and $488 at Dec.
31, 1993 and 1992, respectively. The fair value of these benefits
is based on the status of the annuities at Dec. 31, 1993 and 1992.
The fair value of deferred annuities is estimated as the carrying
amount less any surrender charges and related loans. The fair
value for annuities in non-life contingent payout status is
estimated as the present value of projected benefit payments at the
rate appropriate for contracts issued in 1993 and 1992,
respectively.
Reinsurance
The maximum amount of life insurance risk retained by the Company
on any one life is $750 of life and waiver of premium benefits plus
$50 of accidental death benefits. The maximum amount of disability
income risk retained by the Company on any one life is $6 of
monthly benefit for benefit periods longer than three years. The
excesses are reinsured with other life insurance companies on a
yearly renewable term basis.
In 1993 the Company adopted Statement of Financial Accounting
Standard (SFAS) No. 113, "Accounting and Reporting for Reinsurance
of Short-Duration and Long-Duration Contracts." Under SFAS No.
113, amounts paid or deemed to have been paid for reinsurance
contracts are recorded as reinsurance receivables. These amounts
<PAGE>
PAGE 56
1. Summary of significant accounting policies (continued)
have been included in other assets on the balance sheet. Prior to
1993, these amounts were recorded as a reduction of the liability
for future insurance policy benefits. The cost of reinsurance is
accounted for over the period covered by the reinsurance contract.
Federal income taxes
The Company's taxable income is included in the consolidated
federal income tax return of American Express Company. The Company
provides for income taxes on a separate return basis, except that,
under an agreement between IDS and American Express Company, tax
benefit is recognized for losses to the extent they can be used on
the consolidated tax return. It is the policy of IDS and its
subsidiaries that IDS will reimburse a subsidiary for any tax
benefit.
Included in other liabilities at Dec. 31, 1993 and 1992 are $3,462
and $3,083, respectively, payable to IDS Life for federal income
taxes.
Segregated asset account business
The segregated asset account assets and liabilities represent funds
held for the exclusive benefit of the variable annuity and variable
life insurance contract owners. The Company receives a monthly
cost of insurance charge and receives a minimum death benefit
guarantee fee from variable life insurance segregated asset
accounts and a mortality and expense assurance fee from the
variable annuity and variable life insurance segregated asset
accounts.
The Company makes contractual mortality assurances to the variable
annuity contract owners that the net assets of the segregated asset
accounts will not be affected by future variations in the actual
life expectancy experience of the annuitants and the beneficiaries
from the mortality assumptions implicit in the annuity contracts.
The Company makes periodic fund transfers to, or withdrawals from,
the segregated asset accounts for such actuarial adjustments for
variable annuities that are in the benefit payment period. The
Company guarantees, for the variable life insurance policyholders,
the cost of the contractual insurance rate and that the death
benefit will never be less than the death benefit at the date of
issuance.
At Dec. 31, 1993 and 1992 the fair value of liabilities related to
segregated asset accounts was $339,122 and $190,300, respectively.
The fair value of these liabilities is estimated as the carrying
amount less variable insurance contracts carried at $23,620 and
$14,010, respectively, and surrender charges, if applicable.
Reclassification
Certain 1992 and 1991 amounts have been reclassified to conform to
the 1993 presentation.
<PAGE>
PAGE 57
2. Investments
Market values of investments in fixed maturities represent quoted
market prices and estimated fair values when quoted prices are not
available. Estimated fair values are determined by established
procedures involving, among other things, review of market indices,
price levels of current offerings of comparable issues, price
estimates and market data from independent brokers and financial
files.
Changes in net unrealized appreciation (depreciation) of fixed
maturities for the years ended Dec. 31, 1993, 1992 and 1991 were
$25,350, $(10,980) and $60,200, respectively.
Net gain (loss) on investments for the years ended Dec. 31 is
summarized as follows:
1993 1992 1991
Fixed maturities $1,809 $ 173 $ (694)
Other investments (37) 26 -
1,772 199 (694)
Net decrease (increase)
in allowance for losses (438) 2,279 (2,904)
$1,334 $2,478 $(3,598)
Fair values of and gross unrealized gains and losses on investments
in fixed maturities carried at amortized cost at Dec. 31 are as
follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
1993 Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 400 $ 40 $ - $ 440
State and municipal obligations 105 15 - 120
Corporate bonds and obligations 747,474 60,482 3,510 804,446
Mortgage-backed securities 424,696 15,265 4,374 435,587
1,172,675 75,802 7,884 1,240,593
Less allowance for losses 1,652 - 1,652 -
$1,171,023 $75,802 $ 6,232 $1,240,593
Gross Gross
Amortized Unrealized Unrealized Fair
1992 Cost Gains Losses Value
U.S. Government agency obligations $ 417 $ 10 $ 4 $ 423
State and municipal obligations 276 7 - 283
Corporate bonds and obligations 634,225 33,634 7,526 660,333
Mortgage-backed securities 494,050 19,500 2,560 510,990
1,128,968 53,151 10,090 1,172,029
Less allowance for losses 1,159 - 1,159 -
$1,127,809 $53,151 $ 8,931 $1,172,029
</TABLE>
<PAGE>
PAGE 58
2. Investments (continued)
The amortized cost and fair value of investments in fixed
maturities at Dec. 31, 1993 by contractual maturity are shown
below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
Amortized Fair
Cost Value
Due in one year or less $ 7,915 $ 8,069
Due from one to five years 124,638 134,461
Due from five to ten years 411,729 444,134
Due in more than ten years 203,697 218,342
Mortgage-backed securities 424,696 435,587
$1,172,675 $1,240,593
Proceeds from sales of investments in fixed maturities during 1993
and 1992 were $26,710 and $67,133, respectively. During 1993 and
1992, gross gains of $4,022 and $6,251, respectively, and gross
losses of $2,213 and $6,078, respectively, were realized on those
sales.
At Dec. 31, 1993, gross and net unrealized appreciation on equity
securities amounted to $18. At Dec. 31, 1992 the amount of net
unrealized appreciation on equity securities included $19 of gross
unrealized appreciation, $1 of gross unrealized depreciation and
deferred taxes of $6. The fair value of equity securities was $190
and $184 at Dec. 31, 1993 and 1992, respectively.
Included in other investments at Dec. 31, 1993 are interest rate
caps at amortized cost of $2,050 with a fair value of $385. These
interest rate caps carry a notional amount of $200,000 and expire
on various dates in 1996 and 1997.
At Dec. 31, 1993, bonds carried at $266 were on deposit with the
state of New York as required by law.
Net investment income for the years ended Dec. 31 is summarized as
follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Interest on fixed maturities $100,940 $ 96,452 $90,935
Interest on mortgage loans 8,424 4,908 3,124
Other investment income 1,220 841 538
Interest on cash equivalents 63 378 389
110,647 102,579 94,986
Less investment expenses 500 508 356
$110,147 $102,071 $94,630
</TABLE>
At Dec. 31, 1993, investments in fixed maturities comprised 89
percent of the Company's total invested assets. Securities are
rated by Moody's and Standard & Poor's (S&P) except for
<PAGE>
PAGE 59
2. Investments (continued)
approximately $154 million which is rated by IDS internal analysts
using criteria similar to Moody's and S&P. A summary of
investments in fixed maturities by rating on Dec. 31 is as follows:
Dec. 31, Dec. 31,
Rating 1993 1992
Aaa/AAA $ 425,404 $ 492,098
Aa/AA 13,285 16,003
Aa/A 14,213 11,634
A/A 139,878 128,084
A/BBB 62,817 38,572
Baa/BBB 343,233 314,047
Baa/BB 55,812 39,444
Below investment grade 118,033 89,086
$1,172,675 $1,128,968
At Dec. 31, 1993, 99 percent of the securities rated Aaa/AAA are
GNMA, FNMA and FHLMC mortgage-backed securities. No holdings of
any other issuer are greater than 1.4 percent of the Company's
total investments in fixed maturities.
At Dec. 31, 1993, approximately 9.4 percent of the Company's
invested assets were mortgage loans on real estate. Summaries of
mortgage loans by region and by type of real estate are as follows:
<TABLE>
<CAPTION>
Dec. 31, 1993 Dec. 31, 1992
On Balance Commitments On Balance Commitments
Region Sheet to Purchase Sheet to Purchase
<S> <C> <C> <C> <C>
West North Central $ 27,349 $ 1,713 $25,305 $ -
East North Central 28,349 2,569 13,525 4,510
South Atlantic 26,423 8,279 10,669 5,261
Middle Atlantic 15,912 8,564 4,709 8,018
Pacific 12,224 - 4,527 3,508
Mountain 6,723 4,568 2,588 1,002
New England 4,858 2,855 1,185 1,754
East South Central 1,646 - - 1,002
West South Central 298 - - -
123,782 28,548 62,508 25,055
Less allowance for losses 445 - 500 -
$123,337 $28,548 $62,008 $25,055
<PAGE>
PAGE 60
2. Investments (continued)
Dec. 31, 1993 Dec. 31, 1992
On Balance Commitments On Balance Commitments
Property type Sheet to Purchase Sheet to Purchase
Apartments $ 47,178 $15,130 $18,710 $12,778
Department/retail stores 38,253 9,706 22,613 9,020
Office buildings 11,475 1,142 8,219 1,002
Industrial buildings 13,781 1,142 7,510 2,255
Medical buildings 5,229 1,428 3,256 -
Nursing/retirement 5,507 - - -
Other 2,061 - 2,081 -
Hotels/motels 298 - - -
Residential - - 119 -
123,782 28,548 62,508 25,055
Less allowance for losses 445 - 500 -
$123,337 $28,548 $62,008 $25,055
</TABLE>
Mortgage loan fundings are restricted by state insurance regulatory
authority to 80 percent or less of the market value of the real
estate at the time of origination of the loan. The Company holds
the mortgage document, which gives the right to take possession of
the property if the borrower fails to perform according to the
terms of the agreement. The fair value of the mortgage loans is
determined by a discounted cash flow analysis using mortgage
interest rates currently offered for mortgages of similar
maturities. Commitments to purchase mortgages are made in the
ordinary course of business. The fair value of the mortgage
commitments is $nil.
3. Income taxes
The Company qualifies as a life insurance company for federal
income tax purposes. As such, the Company is subject to the
Internal Revenue Code provisions applicable to life insurance
companies.
Income tax expense consists of the following:
1993 1992 1991
Federal income taxes:
Current $13,164 $ 9,037 $7,165
Deferred (449) 1,302 (749)
12,715 10,339 6,416
State income taxes-Current 620 575 492
Income tax expense $13,335 $10,914 $6,908
<PAGE>
PAGE 61
3. Income taxes (continued)
Increases (decreases) to the federal tax provision applicable to
pretax income based on the statutory rate are attributable to:
<TABLE>
<CAPTION>
1993 1992 1991
Provision Rate Provision Rate Provision Rate
<S> <C> <C> <C> <C> <C> <C>
Federal income taxes based
on the statutory rate $13,026 35.0% $10,498 34.0% $7,060 34.0%
Increases (decreases) are attributable to:
Tax-excluded interest and dividend income (557) (1.5) (429) (1.4) (452) (2.2)
Other, net 246 0.7 270 0.9 (192) (0.9)
Federal income taxes $12,715 34.2% $10,339 33.5% $6,416 30.9%
</TABLE>
A portion of life insurance company income earned prior to 1984 was
not subject to current taxation but was accumulated, for tax
purposes, in a "policyholders' surplus account." At Dec. 31, 1993,
the Company had a policyholders' surplus account balance of $798.
The policyholders' surplus account is only taxable if dividends to
the stockholder exceed the stockholder's surplus account or if the
Company is liquidated. Deferred income taxes of $279 have not been
established because no distributions of such amounts are
contemplated.
Significant components of the Company's deferred tax assets and
liabilities as of Dec. 31 are as follows:
1993 1992
Deferred tax assets:
Policy reserves $ 15,683 $ 12,088
Other 1,543 893
Total deferred tax assets 17,226 12,981
Deferred tax liabilities:
Deferred policy acquisition costs 27,250 24,102
Investments 2,994 2,359
Total deferred tax liabilities 30,244 26,461
Net deferred tax liabilities $ 13,018 $ 13,480
4. Stockholder's equity
Retained earnings available for distribution as dividends to parent
are limited to the Company's surplus as determined in accordance
with accounting practices prescribed by state insurance regulatory
authority. Statutory unassigned surplus aggregated $52,642 as of
Dec. 31, 1993 and $26,468 as of Dec. 31, 1992 (see Note 3 with
respect to the income tax effect of certain distributions). In
<PAGE>
PAGE 62
4. Stockholder's equity (continued)
addition, any dividend distributions in 1994 in excess of
approximately $5,264 would require approval of the New York
Insurance Department.
Dividends paid to parent were $nil in 1993, $6,000 in 1992 and $nil
in 1991.
The Company is required to maintain a minimum statutory capital and
surplus of $3,000.
5. Retirement plan and services
The Company participates in the retirement plan of IDS which covers
all permanent employees age 21 and over who have met certain
employment requirements. The benefits are based on the number of
years the employee participates in the plan, their final average
monthly salary, the level of social security benefits the employee
is eligible for and the level of vesting the employee has earned in
the plan. IDS' policy is to fund retirement plan costs accrued
subject to ERISA and federal income tax considerations.
The Company's share of the total net periodic pension cost was $nil
in 1993, 1992 and 1991.
The Company has a "Sales Benefit Plan" which is an unfunded,
noncontributory retirement plan for all eligible financial
planners. Total plan costs for 1993, 1992 and 1991, which are
calculated on the basis of commission earnings of the individual
financial planners, were $1,042, $1,164 and $757, respectively.
Such costs are included in deferred policy acquisition costs.
The Company also participates in defined contribution pension plans
of IDS which cover all employees who have met certain employment
requirements. Company contributions to the plans are a percent of
either each employee's eligible compensation or basic
contributions. Costs of these plans charged to operations in 1993,
1992 and 1991 were $201, $144 and $146, respectively.
The Company participates in defined benefit health care plans of
IDS that provide health care and life insurance benefits to retired
employees and retired financial planners. The plans include
participant contributions and service-related eligibility
requirements. Upon retirement, such employees are considered to
have been employees of IDS. IDS expenses these benefits and
allocates the expenses to its subsidiaries. Accordingly, costs of
such benefits to the Company are included in employee compensation
and benefits and cannot be identified on a separate company basis.
Certain commission and marketing services expenses are allocated to
the Company by its affiliates. The expenses for 1993, 1992 and
1991 were $5,338, $4,967 and $3,914, respectively. Certain of the
costs assessed to the Company are included in deferred policy
acquisition costs.
<PAGE>
PAGE 63
6. Incentive plans and operating expenses
The Company maintains a "Persistency Payment Plan." Under the
terms of this plan, financial planners earn additional compensation
based on the volume and persistency of insurance sales. The total
costs for the plan for 1993, 1992 and 1991 were $1,387, $1,252 and
$963, respectively. Such costs are included in deferred policy
acquisition costs.
Charges by IDS Life and IDS for the use of joint facilities and
other services aggregated $7,421, $6,914 and $5,954 for 1993, 1992
and 1991, respectively. Certain of the costs assessed to the
Company are included in deferred policy acquisition costs.
7. Commitments and contingencies
At Dec. 31, 1993 and 1992, traditional life insurance and universal
life-type insurance in force aggregated $2,933,830 and $2,785,218,
respectively, of which $172,973 and $179,976 were reinsured at the
respective year ends.
In addition, the Company has a "stop loss" reinsurance agreement
with IDS Life covering ordinary life benefits. IDS Life agrees to
pay all death benefits incurred each year which exceed 125 percent
of normal claims, where "normal" claims are defined in the
agreement as .095 percent of the mean retained life insurance in
force. Premiums ceded to IDS Life amounted to $67, $60 and $135
for the years ended Dec. 31, 1993, 1992 and 1991, respectively.
Claim recoveries under the terms of this reinsurance agreement were
$nil in 1993, $534 in 1992 and $323 in 1991.
Premiums ceded to reinsurers other than IDS Life amounted to $741,
$773 and $800 for the years ended Dec. 31, 1993, 1992 and 1991,
respectively. Reinsurance recovered from reinsurers other than IDS
Life amounted to $379, $186 and $(50) for the years ended Dec.
31, 1993, 1992 and 1991.
Reinsurance contracts do not relieve the Company from its primary
obligations to policyholders.
The Company has an agreement to assume a block of extended term
life insurance business. The amount of insurance in force related
to this agreement was $512,555 and $592,792 at Dec. 31, 1993 and
1992, respectively. The accompanying statement of income includes
premiums of $nil for the years ended Dec. 31, 1993, 1992 and 1991,
and decrease in liabilities for future policy benefits of $3,032,
$3,825 and $4,088 related to this agreement for the years ended
Dec. 31, 1993, 1992 and 1991, respectively.
8. Line of credit
The Company has an available line of credit with a bank aggregating
$20,000 at 80 basis points over the bank's cost of funds.
Outstanding borrowings under this agreement were $1,519 and $nil at
Dec. 31, 1993 and 1992, respectively.
<PAGE>
PAGE 64
STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the prospectus. prospectus is in two
columns.
2) The page numbers in the 2) The prospectus begins on
electronic document do not page 1; however, it is
correspond to the prospectus. numbered as page 2.
