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IDS Life of New York Employee Benefit Annuity
Prospectus
May 1, 1997
The Employee Benefit Annuity is a flexible premium group deferred fixed/variable
annuity contract (the contract) offered by IDS Life Insurance Company of New
York (IDS Life of New York) a subsidiary of IDS Life Insurance Company (IDS
Life), which is a subsidiary of American Express Financial Corporation (AEFC).
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 that meets
the requirements of Section 403(b) of the Code (the plan).
IDS Life of New York Accounts 4, 5, 6, 9, 10, 11, 12, 13 and 14
Sold by: IDS Life Insurance Company of New York, 20 Madison Avenue
Extension, Albany, NY 12203, Telephone: 800-541-2215.
This prospectus contains the information about the variable
accounts that you should know before investing. Refer to "The
variable accounts" in this prospectus.
The prospectus is accompanied or preceded by the retirement annuity mutual fund
prospectus for IDS Life Aggressive Growth Fund, IDS Life International Equity
Fund, IDS Life Capital Resource Fund, IDS Life Managed Fund, IDS Life Special
Income Fund, IDS Life Moneyshare Fund, IDS Life Growth Dimensions Fund, IDS Life
Global Yield Fund and IDS Life Income Advantage Fund. Please read these
documents carefully and keep them 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.
IDS Life of New York is not a financial institution and the securities it offers
are not deposits or obligations of, or guaranteed or endorsed by any financial
institution nor are they insured by the Federal Deposit Insurance Corporation,
the Federal
Reserve Board or any other agency.
A Statement of Additional Information (SAI) (incorporated by reference into this
prospectus) filed with the Securities and Exchange Commission (SEC) is available
without charge by contacting IDS Life of New York at the telephone number above
or by completing and sending the order form on the last page of this prospectus.
The table of contents of the SAI is on the last page of this prospectus.
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Table of contents
Key terms
The Employee Benefit Annuity in brief
Expense summary
Condensed financial information
Financial statements
Performance information
The variable accounts
The funds
IDS Life Aggressive Growth Fund
IDS Life International Equity Fund
IDS Life Capital Resource Fund
IDS Life Managed Fund
IDS Life Special Income Fund
IDS Life Moneyshare Fund
IDS Life Growth Dimensions Fund
IDS Life Global Yield Fund
IDS Life Income Advantage Fund
The fixed account
Buying the contract and certificate
The retirement date
Beneficiary
How to make purchase payments
Certificate charges
Administrative charge
Mortality and expense risk fee
Surrender charge
Valuing your investment
Number of units
Accumulation unit value
Net investment factor
Factors that affect variable account
accumulation units
Making the most of your certificate
Automated dollar-cost averaging
Transferring money between accounts
Transfer policies
How to request a transfer or a surrender
Surrendering a certificate
Surrender policies
Receiving payment when a participant
requests a surrender
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TSA special surrender provisions
Changing ownership
Benefits in case of death
The annuity payout period
Annuity payout plans
Death after annuity payouts begin
Taxes
Voting rights
Substitution
Distribution of the certificates
About IDS Life of New York
Regular and special reports
Services
Table of contents of the Statement of
Additional Information
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Key terms
These terms can help you understand details about your annuity.
Annuity - A contract purchased from an insurance company that offers
tax-deferred growth of the investment until earnings are withdrawn and that can
be tailored to meet the specific needs of the individual during retirement.
Accumulation unit - A measure of the value of each variable account before
annuity payouts begin.
Annuitant - The participant on whose life or life expectancy the annuity payouts
are based.
Annuity payouts - An amount paid at regular intervals under one of several plans
available to a participant and/or any other payee. This amount may be paid on a
variable or fixed basis or a combination of both.
Annuity unit - A measure of the value of each variable account used to calculate
the annuity payouts a participant receives.
Beneficiary - The person designated to receive annuity benefits in case of a
participant's death. Each participant may name a beneficiary in accordance with
the applicable provisions of any plan and the Code.
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 have 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.
Close of business - When the New York Stock Exchange (NYSE) closes, normally 4
p.m. Eastern time.
Code - Internal Revenue Code of 1986, as amended.
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 account to which a participant may allocate purchase
payments. Amounts allocated to this account earn interest at rates that are
declared periodically by IDS Life of New York.
IDS Life of New York - In this prospectus, "we," "us," "our" and "IDS Life of
New York" refer to IDS Life Insurance Company of New York.
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Mutual funds (funds) - Nine IDS Life Retirement Annuity mutual funds, each with
a different investment objective. (See "The funds.") Purchase payments can be
allocated into variable accounts investing in shares of any or all of these
funds.
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. In this prospectus, "you" and "your" refer to the participant.
Purchase payments - Payments made to IDS Life of New York under the contract by
or on behalf of a participant.
Retirement date - The date when annuity payouts are scheduled to begin. This
date is first established when enrollment in the certificates takes place,
subject to the terms of the plan. It can be changed in the future.
Surrender charge - A deferred sales charge that may be applied if a participant
surrenders the certificate before the retirement date.
Surrender value - The amount a participant is entitled to receive if the
certificate is surrendered. It is the certificate value minus any applicable
surrender charge and administrative charge.
Valuation date - Any normal business day, Monday through Friday, that the NYSE
is open. The value of each variable account is calculated at the close of
business on each valuation date.
Variable accounts - Separate accounts to which a participant may allocate
purchase payments; each invests in shares of one mutual fund. (See "The variable
accounts.") The value of your investment in each variable account changes with
the performance of the particular fund.
The Employee Benefit Annuity in brief
Purpose: The Employee Benefit Annuity is designed to allow you to build up funds
for retirement. This is done by making one or more investments (purchase
payments) that may earn returns that increase the value of your certificate.
Beginning at a specified future date (the retirement date), the contract and
related certificate provide you with lifetime or other forms of annuity payouts.
Ten-day free look: You may return a certificate to the financial advisor or our
Albany office within 10 days after it is delivered and receive a full refund of
the certificate value. No charges will be deducted.
Accounts: You may allocate purchase payments among any or all of:
o nine variable accounts, each of which invests in mutual funds with a
particular investment objective. The value of each variable account varies
with the performance of the particular fund. We cannot guarantee that the
value at the retirement date will equal or exceed the total of purchase
payments allocated to the variable accounts. (p.20)
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o one fixed account, which earns interest at rates that are
adjusted periodically by IDS Life of New York. (p.26)
Buying the contract and certificate: A financial advisor will help the owner
complete and submit an application for a contract and help you complete and
submit an enrollment form for the certificate. Applications and enrollment forms
are subject to acceptance at our Albany office. The maximum amount of purchase
payments is determined by any restrictions imposed by the plan and the Code.
o Minimum purchase payment - ($1,000) unless you pay in installments under a
group billing arrangement such as a payroll deduction.
o Minimum installment payment - $25 monthly or $300 annually.
o Maximum first-year payment(s) - $50,000 to $1,000,000 depending
on your age.
o Maximum payment for each subsequent year - $50,000. (p.27)
Transfers: Subject to certain restrictions, you may redistribute
money among accounts without charge at any time until annuity
payouts begin and once per year among the variable accounts
thereafter. You may establish automated transfers among the fixed
and variable account(s). (p.36)
Surrenders: You may surrender all or part of your certificate
value at any time before the retirement date subject to certain
restrictions imposed by the Code and the plan. Surrenders may be
subject to charges and tax penalties and may have other tax
consequences. (p.39)
Changing ownership: Restrictions apply concerning change of
ownership of rights under a contract or certificate. (p.44)
Benefits in case of death: If the participant dies before annuity
payouts begin, we will pay the beneficiary an amount at least equal
to the certificate value. (p.45)
Annuity payouts: The certificate value of your investment can be applied to an
annuity payout plan that begins on the retirement date. You may choose from a
variety of plans to make sure that payouts continue as long as they are needed.
Payouts may be made on a fixed or variable basis, or both. Total monthly payouts
include amounts from each variable account and the fixed account. During the
annuity payout period, you cannot be invested in more than five variable
accounts at any one time unless we agree otherwise. (p.46)
Taxes: Generally, your certificate value grows tax deferred until
you surrender it or begin to receive payouts. (Under certain
circumstances, IRS penalty taxes may apply.) Even if you direct
payouts to someone else, you will still be taxed on the
distribution. (p.51)
Certificate charges: Your certificate is subject to an annual
administrative charge of $30, a 1% mortality and expense risk fee
and a surrender charge. (p.30)
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Expense summary
The purpose of this summary is to help the owner and participant understand the
various costs and expenses associated with the contract and related
certificates.
There is no sales charge when purchasing the contract or certificate. All direct
and indirect costs for the variable accounts and underlying mutual funds are
shown below. Some expenses may vary as explained under "Certificate charges."
Contract Owner Expenses
Surrender charge*
(Contingent deferred sales charge as 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%
*The surrender charge is further limited so that it will never exceed 8.5% or
aggregate purchase payments made to the certificate.
Annual operating expenses of underlying mutual funds (Management fees and other
expenses deducted as a percentage of average net assets as follows)
<TABLE>
<CAPTION>
IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life
Aggressive International Capital IDS Life Special IDS Life Growth Global Income
Growth Equity Resource Managed Income Moneyshare Dimensions Yield Advantage
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees .60 .82 .60 .59 .59 .50 .63 .84 .63
Other expenses .09 .16 .08 .07 .10 .06 .22 .62 .54
Total* .69 .98 .68 .66 .69 .56 .85 1.46 1.17
</TABLE>
* Annualized operating expenses of underlying mutual funds at Dec.
31, 1996.
Example:* As a participant, you would pay the following expenses on a $1,000
investment, assuming 5% annual return and surrender at the end of each time
period:
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<TABLE>
<CAPTION>
IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life
Aggressive International Capital IDS Life Special IDS Life Growth Global Income
Growth Equity Resource Managed Income Moneyshare Dimensions Yield Advantage
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $101.42 $104.15 $101.32 $101.13 $101.42 $100.19 $102.93 $108.68 $105.94
3 years 146.27 154.51 145.98 145.41 146.27 142.56 150.82 168.04 159.88
5 years 182.30 196.25 181.81 180.84 182.30 175.99 190.02 218.98 205.30
10 years 245.26 275.30 244.21 242.10 245.26 231.51 261.94 323.17 294.52
You would pay the following expenses on the same investment assuming no
surrender or selection of an annuity payout plan at the end of each time period:
IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life
Aggressive International Capital IDS Life Special IDS Life Growth Global Income
Growth Equity Resource Managed Income Moneyshare Dimensions Yield Advantage
1 year $ 18.93 $ 21.90 $ 18.83 $ 18.62 $ 18.93 $ 17.60 $ 20.57 $ 26.82 $ 23.85
3 years 58.58 67.58 58.27 57.64 58.58 54.53 63.55 82.35 73.44
5 years 100.73 115.85 100.20 99.15 100.73 93.89 109.09 140.48 125.66
10 years 218.10 248.92 217.02 214.86 218.10 204.00 235.21 298.02 268.63
</TABLE>
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 administrative charge is approximated as a
.157% charge based on our average certificate size.
Condensed financial information
(unaudited)
The following tables give per-unit information about the financial history of
each variable account.
<TABLE>
<CAPTION>
Years ended Dec. 31,
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
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Account 4 (investing in shares
of Capital Resource Fund)
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation unit value at
beginning of year ............ $4.35 $3.43 $3.43 $3.35 $3.25 $2.24 $2.25 $1.78 $1.61 $1.44
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Accumulation unit value at end
of year ...................... $4.64 $4.35 $3.43 $3.43 $3.35 $3.25 $2.24 $2.25 $1.78 $1.61
- -----------------------------------------------------------------------------------------------------------------------------
Number of accumulation units
outstanding at end of year
(000 omitted) ................ 47,283 44,849 38,283 30,089 21,677 13,591 10,058 8,345 7,347 7,342
- -----------------------------------------------------------------------------------------------------------------------------
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 101 (investing in shares
of International Equity Fund)
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Accumulation unit value at
beginning of period .......... $1.38 $1.25 $1.29 $0.98 $1.00 - - - - -
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Accumulation unit value at end
of period .................... $1.50 $1.38 $1.25 $1.29 $0.98 - - - - -
- -----------------------------------------------------------------------------------------------------------------------------
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Number of accumulation units12
outstanding at end of period
(000 omitted) ................ 77,830 63,576 51,480 21,650 3,421 - - - - -
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Ratio of operating expense to
average net assets ........... 1.00% 1.00% 1.00% 1.00% 1.00% - - - - -
- -----------------------------------------------------------------------------------------------------------------------------
Account 112 (investing in shares
of Aggressive Growth Fund)
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Accumulation unit value at
beginning of period .......... $1.47 $1.12 $1.21 $1.08 $1.00 - - - - -
- -----------------------------------------------------------------------------------------------------------------------------
Accumulation unit value at end
of period .................... $1.69 $1.47 $1.12 $1.21 $1.08 - - - - -
- -----------------------------------------------------------------------------------------------------------------------------
Number of accumulation units
outstanding at end of period
(000 omitted) ................ 77,673 62,233 45,347 19,430 5,961 - - - - -
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of operating expense to
average net assets ........... 1.00% 1.00% 1.00% 1.00% 1.00% - - - - -
- -----------------------------------------------------------------------------------------------------------------------------
Account 5 (investing in shares of
Special Income Fund)
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Accumulation unit value at
beginning of year ............ $3.53 $2.91 $3.06 $2.67 $2.46 $2.12 $2.05 $1.90 $1.74 $1.74
- -----------------------------------------------------------------------------------------------------------------------------
Accumulation unit value at end
of year ...................... $3.73 $3.53 $2.91 $3.06 $2.67 $2.46 $2.12 $2.05 $1.90 $1.74
- -----------------------------------------------------------------------------------------------------------------------------
Number of accumulation units
outstanding at end of year
(000 omitted) ................ 24,424 23,903 21,936 23,259 16,710 12,228 10,315 9,301 7,891 8,093
- -----------------------------------------------------------------------------------------------------------------------------
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 6 (investing in shares
of Moneyshare Fund)
- -----------------------------------------------------------------------------------------------------------------------------
Accumulation unit value at
beginning of year ............ $1.99 $1.91 $1.86 $1.83 $1.80 $1.71 $1.61 $1.49 $1.40 $1.33
- -----------------------------------------------------------------------------------------------------------------------------
Accumulation unit value at end
of year ...................... $2.07 $1.99 $1.91 $1.86 $1.83 $1.80 $1.71 $1.61 $1.49 $1.40
- -----------------------------------------------------------------------------------------------------------------------------
Number of accumulation units
outstanding at end of year
(000 omitted) ................ 5,927 5,445 3,794 4,113 5,378 7,253 6,487 5,493 2,836 2,125
- -----------------------------------------------------------------------------------------------------------------------------
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%
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Simple yield3 ................ 3.78% 4.00% 4.23% 1.90% 1.77% 3.24% 6.20% 6.80% 7.30% 5.73%
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Compound yield3 .............. 3.85% 4.08% 4.32% 1.92% 1.79% 3.29% 6.39% 7.03% 7.57% 5.90%
- -----------------------------------------------------------------------------------------------------------------------------
Account 94 (Investing in shares
of Managed Fund)
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Accumulation unit value at
beginning of year ............ $2.57 $2.09 $2.21 $1.98 $1.86 $1.45 $1.42 $1.14 $1.06 $1.01
- -----------------------------------------------------------------------------------------------------------------------------
Accumulation unit value at end
of year ...................... $2.96 $2.57 $2.09 $2.21 $1.98 $1.86 $1.45 $1.42 $1.14 $1.06
- -----------------------------------------------------------------------------------------------------------------------------
Number of accumulation units
outstanding at end of year
(000 omitted) ................ 75,219 72,999 66,800 50,761 31,828 20,105 15,292 12,248 11,920 12,219
- -----------------------------------------------------------------------------------------------------------------------------
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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 125 (Investing in shares
of Global Yield Fund)
- -----------------------------------------------------------------------------------------------------------------------------
Accumulation unit value at
beginning of year ............ $1.00 -- -- -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Accumulation unit value at end
of year ...................... $1.07 -- -- -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Number of accumulation units
outstanding at end of year
(000 omitted) ................ 2,311 -- -- -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of operating expense to
average net assets ........... 1.00% -- -- -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Account 135 (Investing in shares
of Income Advantage Fund)
- -----------------------------------------------------------------------------------------------------------------------------
Accumulation unit value at
beginning of year ............ $1.00 -- -- -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Accumulation unit value at end
of year ...................... $1.05 -- -- -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Number of accumulation units
outstanding at end of year
(000 omitted) ................ 4,671 -- -- -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of operating expense to
average net assets ........... 1.00% -- -- -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Account 145 (Investing in shares
of Growth Dimensions Fund)
- -----------------------------------------------------------------------------------------------------------------------------
Accumulation unit value at
beginning of year ............ $1.00 -- -- -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Accumulation unit value at end
of year ...................... $1.11 -- -- -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Number of accumulation units
outstanding at end of year
(000 omitted) ................ 27,817 -- -- -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of operating expense to
average net assets ........... 1.00% -- -- -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Account 10 commenced operations on Jan. 13, 1992.
2 Account 11 commenced operations on Jan. 13, 1992.
3 Net of annual contract administrative fee and mortality and expense risk fee.
4 Account 9 commenced operations on April 30, 1986.
5 Account 12, 13 and 14 commenced operations on April 30, 1996.
Financial statements
The SAI dated May 1, 1997, contains:
o complete audited financial statements of the variable accounts
including:
- statements of net assets as of Dec. 31, 1996;
- statements of operations for the year ended Dec. 31, 1996,
except for IDS Life of New York Accounts 12, 13, and 14 which
are for the period April 30, 1996 (commencement of operations)
to Dec. 31, 1996;
and
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- statements of changes in net assets for the years ended Dec.
31, 1996 and Dec. 31, 1995, except for IDS Life of New York
Accounts 12, 13, and 14 which are for the period April 30, 1996
(commencement of operations) to Dec. 31, 1996.
o complete audited financial statements for IDS Life of New York
including:
- balance sheets as of Dec. 31, 1996 and Dec. 31, 1995; and
- related statements of income and cash flows for each of the
three years in the period ended Dec. 31, 1996.
Performance information
Performance information for the variable accounts may appear from time to time
in advertisements or sales literature. In all cases, such information reflects
the performance of a hypothetical investment in a particular account during a
particular time period.
Calculations are performed as follows:
Simple yield - Account 6 (investing in IDS Life Moneyshare Fund): Income over a
given seven-day period (not counting any change in the capital value of the
investment) is annualized (multiplied by 52) by assuming that the same income is
received for 52 weeks. This annual income is then stated as an annual percentage
return on the investment.
Compound yield - Account 6: Calculated like simple yield, except that, when
annualized, the income is assumed to be reinvested. Compounding of reinvested
returns increases the yield as compared to a simple yield.
Yield - For accounts investing in income funds: Net investment income (income
less expenses) per accumulation unit during a given 30-day period is divided by
the value of the unit on the last day of the period. The result is converted to
an annual percentage.
Average annual total return: Expressed as an average annual compounded rate of
return of a hypothetical investment over a period of one, five and 10 years (or
up to the life of the account if it is less than 10 years old). This figure
reflects deduction of all applicable charges, including the administrative
charge, mortality and expense risk fee and surrender charge, assuming a
surrender at the end of the illustrated period. Optional average annual total
return quotations may be made that do not reflect a surrender charge deduction
(assuming no surrender).
Aggregate total return: Represents the cumulative change in the value of an
investment over a specified period of time (reflecting change in an account's
accumulation unit value). The calculation assumes reinvestment of investment
earnings and reflects the deduction of all applicable charges, including the
administrative charge, mortality and expense risk fee and surrender charge,
assuming a surrender at the end of the illustrated period. Optional aggregate
total return quotations may be made that do not
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PAGE 12
reflect a surrender charge deduction (assuming no surrender). Aggregate total
return may be shown by means of schedules, charts or graphs.
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. Such
information is not intended to indicate future performance. Because advertised
yields and total return figures include all charges attributable to the
certificates, which has the effect of decreasing advertised performance, account
performance should not be compared to that of mutual funds that sell their
shares directly to the public. (See the SAI for a further description of methods
used to determine yield and total return for the accounts.)
If you would like additional information about actual performance, contact your
financial advisor.
The variable accounts
Purchase payments can be allocated to any or all of the variable accounts that
invest in shares of the following funds:
IDS Life of
New York Account Established
IDS Life Aggressive Growth Fund 11 Oct. 8, 1991
IDS Life International Equity Fund 10 Oct. 8, 1991
IDS Life Capital Resource Fund 4 Nov. 12, 1981
IDS Life Managed Fund 9 Feb. 12, 1986
IDS Life Special Income Fund 5 Nov. 12, 1981
IDS Life Moneyshare Fund 6 Nov. 12, 1981
IDS Life Growth Dimensions Fund 14 April 17, 1996
IDS Life Global Yield Fund 12 April 17, 1996
IDS Life Income Advantage Fund 13 April 17, 1996
Each variable account meets the definition of a separate account under federal
securities laws. Income, capital gains and capital losses of each account are
credited or charged to that account alone. No variable account will be charged
with liabilities of any other account or of our general business. Each variable
account's net assets are held in relation to the contracts described in this
prospectus as well as other variable annuity contracts that we issue that are
not described in this prospectus. All obligations arising under the contracts
are general obligations of IDS Life of New York.
All variable accounts were established under New York law and are registered
together as a single unit investment trust under the Investment Company Act of
1940 (the 1940 Act). This registration does not involve any supervision of our
management or investment practices and policies by the SEC.
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PAGE 13
The funds
IDS Life Aggressive Growth Fund
Objective: capital appreciation. Invests primarily in common stock
of small- and medium-size companies. The fund also may invest in
warrants or debt securities or in large well-established companies
when the portfolio manager believes such investments offer the best
opportunity for capital appreciation.
IDS Life International Equity Fund
Objective: capital appreciation. Invests primarily in common stock of foreign
issuers and foreign securities convertible into common stock. The fund also may
invest in certain international bonds if the portfolio manager believes they
have a greater potential for capital appreciation than equities.
IDS Life Capital Resource Fund
Objective: capital appreciation. Invests primarily in U.S. common
stocks and other securities convertible into common stock,
diversified over many different companies in a variety of
industries.
IDS Life Managed Fund
Objective: maximum total investment return. Invests primarily in
U.S. common stocks, securities convertible into common stock,
warrants, fixed income securities (primarily high-quality corporate
bonds) and money-market instruments. The fund invests in many
different companies in a variety of industries.
IDS Life Special Income Fund
Objective: to provide a high level of current income while
conserving the value of the investment for the longest time period.
Invests primarily in high-quality, lower-risk corporate bonds
issued by many different companies in a variety of industries and
in government bonds.
IDS Life Moneyshare Fund
Objective: maximum current income consistent with liquidity and conservation of
capital. Invests in high-quality money market securities with remaining
maturities of 13 months or less. The fund also will maintain a dollar-weighted
average portfolio maturity not exceeding 90 days. The fund attempts to maintain
a constant net asset value of $1 per share.
IDS Life Growth Dimensions Fund
Objective: long-term growth of capital. Invests primarily in
common stocks of U.S. and foreign companies showing potential for
significant growth.
IDS Life Global Yield Fund
Objective: high total return through income and growth of capital.
Invests primarily in a non-diversified portfolio of debt securities
of U.S. and foreign issuers.
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PAGE 14
IDS Life Income Advantage Fund
Objective: high current income, with capital growth as a secondary
objective. Invests in long-term, high-yielding, high-risk debt
securities below investment grade issued by U.S. and foreign
corporations.
More comprehensive information regarding each fund is contained in the fund
prospectus. You should read the fund prospectus and consider carefully, and on a
continuing basis, which fund or combination of funds is best suited to your
long-term investment needs. There is no assurance that the investment objectives
of the funds will be attained nor is there any guarantee that the certificate
value will equal or exceed the total purchase payments made. Some funds may
involve more risk than others--please monitor your investments accordingly.
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 these requirements.
The U.S. Treasury and the IRS have indicated that they may provide additional
guidance concerning how many variable accounts may be offered and how many
exchanges among variable accounts may be allowed before the participant is
considered to have investment control and thus is currently taxed on income
earned within variable account assets. We do not know at this time what the
additional guidance will be or when action will be taken. We reserve the right
to modify the contract/certificate, as necessary, to ensure that the participant
will not be subject to current taxation as the owner of the variable account
assets.
We intend to comply with all federal tax laws to ensure that the
contract/certificate continues to qualify as an annuity for federal income tax
purposes. We reserve the right to modify the contract/certificate as necessary
to comply with any new tax laws.
IDS Life is the investment manager and AEFC is the investment advisor for each
of the funds. IDS International, Inc., a wholly-owned subsidiary of AEFC, is the
sub-investment advisor for IDS Life International Equity Fund. The investment
manager and advisors cannot guarantee that the funds will meet their investment
objectives. Please read the Retirement Annuity Mutual Fund prospectus for
complete information on investment risks, deductions, expenses and other facts
you should know before investing. It is available by contacting IDS Life of New
York at the address or telephone number on the front of this prospectus, or from
your financial advisor.
The fixed account
Purchase payments may also be allocated to the fixed account. The cash value of
the fixed account increases as interest is credited to the account. Purchase
payments and transfers to the fixed account become part of the general account
of IDS Life of New York,
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PAGE 15
the company's main portfolio of investments. Interest is credited
daily and compounded annually. We may change the interest rates
from time to time.
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 in it are generally
subject to the provisions of the 1933 or 1940 Acts, and we have 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,
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.
Buying the contract and certificate
A financial advisor will help the owner prepare and submit an application. A
financial advisor will also help each participant prepare and submit an
enrollment form. These forms will be sent to our Albany office. Unless otherwise
provided in the contract, the owner has all rights under the contract. Your
interest under the contract, as evidenced by your certificate, is subject to the
terms of the owner's contract and the plan. Please remember that investment
performance, expenses and deduction of certain charges affect accumulation unit
value.
When you enroll in the certificate, you can select:
o the account(s) in which you want to invest;
o the date you want to start receiving annuity payouts (the
retirement date); and
o a beneficiary.
The owner selects the frequency with which it will make purchase payments.
If the application and enrollment forms are complete, we will process them
within two business days after we receive them at our Albany office. If the
application is accepted, we will send the owner a contract. If your enrollment
form is accepted, we will send you a certificate. If we cannot accept an
application or enrollment form within five business days, we will decline it and
return any payment. We will credit additional purchase payments to the
account(s) at the next close of business after we receive and accept your
payments at our Albany office.
The retirement date
Upon processing your application, we will establish the retirement date to the
maximum age or date as specified below. You can also select a date within the
maximum limits. This date can be aligned with actual retirement from a job, or
it can be a different future date, depending on your needs and goals and on
certain restrictions. You can also change the date, provided you send us written
instructions at least 30 days before annuity payouts begin.
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To avoid IRS penalty taxes, the retirement date generally must be:
o on or after the date you reach age 59 1/2; and
o for all other qualified annuities, by April 1 of the year
following the calendar year when the annuitant reaches age 70 1/2 or, if
later, retires; except that 5% business owners may not select a retirement
date that is later than April 1 of the year following the calendar year when
they reach age 70 1/2.
If you are 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 the certificate, retirement payments can start as late as your 85th
birthday or the 10th contract anniversary.
Beneficiary
If death benefits become payable before the retirement date, your named
beneficiary will receive all or part of the certificate value. If there is no
named beneficiary, then your estate will be the beneficiary. (See "Benefits in
case of death" for more about beneficiaries.)
Minimum purchase payments
$25 monthly
Installments must total at least $300 per year.*
*If no purchase payments have been made on a participant's behalf for 36 months
and previous payments total $600 or less, we have the right to pay the
participant the total value of the certificate in a lump sum.
Minimum lump sum purchase payment
Initial payment: $1,000
Minimum additional purchase payment(s): $50
Maximum first-year payment(s):
This maximum is based on the participant's age on the effective date of the
certificate.
Up to age 75 $1 million
76 to 85 $500,000
86 to 90 $50,000
Maximum payment for each subsequent year: $50,000**
**These limits apply in total to all IDS Life of New York annuities you own. We
reserve the right to increase maximum limits or reduce age limits. The plan's
limits on annual contribution also apply.
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PAGE 17
How to make purchase payments
By scheduled payment plan: A financial advisor can help the owner set up an
automatic salary reduction arrangement.
Certificate charges
Administrative charge
This fee is for establishing and maintaining records for each certificate under
the contract. We deduct $30 from the certificate value at the end of each
certificate year.
If a participant surrenders a certificate, the annual charge will be deducted at
the time of surrender. The annual charge cannot be increased and does not apply
after annuity payouts begin.
Mortality and expense risk fee
This fee is to cover the mortality risk and expense risk and is applied daily to
the variable accounts and reflected in the unit values of the accounts. The
variable accounts pay this fee at the time that dividends are distributed from
the funds in which they invest. Annually, the fee totals 1% of the variable
accounts' average daily net assets. Approximately two-thirds of this amount is
for our assumption of mortality risk and one-third is for our assumption of
expense risk. This fee does not apply to the fixed account.
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract and
certificates, 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 we have assumed in
our actuarial tables, then we must take money from our general assets to meet
our obligations. If, as a group, IDS Life of New York annuitants do not live as
long as expected, we could profit from the mortality risk fee.
Expense risk arises because the administrative charge cannot be increased and
may not cover our expenses. Any deficit would have to be made up from our
general assets.
We may use any profits realized from the mortality and expense risk fee for any
proper corporate purpose, including, among others, payment of distribution
(selling) expenses. We do not expect that the surrender charge, discussed in the
following paragraphs, will cover sales and distribution expenses.
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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PAGE 18
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% of
aggregate purchase payments made to the certificate. IDS Life of New York
reserves the right to reduce or eliminate the surrender charge.
Example of surrender charge:
Owner requests...$1,000 partial surrender = $1,052.63
Total amount surrendered................... $1,052.63
x 0.05
Total surrender charge..................... $ 52.63
No surrender charge: There is no surrender charge on amounts surrendered:
o after the 11th 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 payout plan.
Possible group reductions: In some cases lower sales and administrative expenses
may be incurred due to the size of the group, the average contribution and the
use of group enrollment procedures. In such cases, we may be able to reduce or
eliminate the administrative and surrender charges. However, we expect this to
occur infrequently.
Valuing your investment
Here is how your accounts are valued:
Fixed account: The amounts allocated to the fixed account are valued directly in
dollars and equal the sum of your purchase payments, plus interest earned, less
any amounts surrendered or transferred (including the administrative charge).
Variable accounts: Amounts allocated to the variable accounts are converted into
accumulation units. Each time you make a purchase payment or transfer amounts
into one of the variable accounts, a
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PAGE 19
certain number of accumulation units are credited to your certificate for that
account. Conversely, each time you take a partial surrender, transfer amounts
out of a variable account or are assessed an administrative charge, a certain
number of accumulation units are subtracted from your certificate.
The accumulation units are the true measure of investment value in each account
during the accumulation period. They are related to, but not the same as, the
net asset value of the underlying fund. The dollar value of each accumulation
unit can rise or fall daily depending on the performance of the underlying
mutual fund and on certain fund expenses. Here is how unit values are
calculated:
Number of units
To calculate the number of accumulation units for a particular account, we
divide the investment, by the current accumulation unit value.
Accumulation unit value
The current accumulation unit value for each variable account equals the last
value times the account's current net investment factor.
Net investment factor
o Determined each business day by adding the underlying mutual fund's current
net asset value per share, plus per share amount of any current dividend or
capital gain distribution; then
o dividing that sum by the previous net asset value per share; and
o subtracting the percentage factor representing the mortality and
expense risk fee from the result.
Because the net asset value of the underlying mutual fund may fluctuate, the
accumulation unit value may increase or decrease. The owner bears this
investment risk in a variable account.
Factors that affect variable account accumulation units Accumulation units may
change in two ways; in number and in value. Here are the factors that influence
those changes:
The number of accumulation units you own may fluctuate due to:
o additional purchase payments allocated to the variable
account(s);
o transfers into or out of the variable account(s);
o partial surrenders;
o surrender charges; and/or
o administrative charges.
Accumulation unit values may fluctuate due to:
o changes in underlying mutual fund(s) net asset value;
o dividends distributed to the variable account(s);
o capital gains or losses of underlying mutual funds;
o mutual fund operating expenses; and/or
o mortality and expense risk fees.
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Making the most of your certificate
Automated dollar-cost averaging
You can use automated transfers to take advantage of dollar-cost averaging
(investing a fixed amount at regular intervals). For example, you might have a
set amount transferred monthly from a relatively conservative variable account
to a more aggressive one or to several others.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market value(s) of the underlying
mutual fund(s). Since you invest the same amount each period, you automatically
acquire more units when the market value falls, fewer units when it rises. The
potential effect is to lower the average cost per unit. For specific features
contact your financial advisor.
How dollar-cost averaging works
Amount Accumulation Number of units
Month invested unit value purchased
Jan $100 $20 5.00
Feb 100 18 5.56
March 100 17 5.88
April 100 15 6.67
May 100 16 6.25
June 100 18 5.56
July 100 17 5.88
Aug 100 19 5.26
Sept 100 21 4.76
Oct 100 20 5.00
(footnotes to table) By investing an equal number of dollars each
month...
(arrow in table pointing to April) you automatically buy more units when the per
unit market price is low...
(arrow in table pointing to September) and fewer units when the per unit market
price is high.
You have paid an average price of only $17.91 per unit over the 10 months, while
the average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any variable account will gain in
value, nor will it protect against a decline in value if market prices fall.
Because this strategy involves continuous investing, your success with
dollar-cost averaging will depend upon your willingness to continue to invest
regularly through periods of low price levels. Dollar-cost averaging can be an
effective way to help meet your long-term goals.
Transferring money between accounts
You may transfer money from any one account, including the fixed account, to
another before the annuity payouts begin. If we receive your request before the
close of business, we will process
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PAGE 21
it that day. Requests received after the close of business will be processed the
next business day. There is no charge for transfers. Before making a transfer,
you should consider the risks involved in switching investments.
We may suspend or modify transfer privileges at any time. Certain restrictions
apply to transfers involving the fixed account. In addition, any restriction
imposed by the plan will apply.
Transfer policies
o Subject to any restrictions imposed by the plan, you may
transfer certificate values between the variable accounts, or
from the variable account(s) to the fixed account at any time.
However, if a transfer has been made from the fixed account to
the variable account(s), you may not make a transfer (including
automated transfers) from any variable account back to the fixed
account until the next eligible transfer period as defined in
the plan, if any, or otherwise until the next certificate
anniversary.
o You may transfer certificate values from the fixed account to the variable
account(s) once per certificate year, (except for automated transfers, which
can be set up for transfer periods of your choosing subject to certain
minimums).
o Once annuity payouts begin, no transfers may be made to or from the fixed
account, but transfers may be made once per contract year among the variable
accounts.
How to request a transfer or a surrender
1 By letter
Send your name, account number, Social Security Number or Taxpayer
Identification Number and signed request for a transfer or surrender to:
Regular mail:
IDS Life Insurance Company of New York
Box 5144
Albany, NY 12205
Express mail:
IDS Life Insurance Company of New York
20 Madison Ave. Ext.
Albany, NY 12203
Minimum amount
Mail transfers: $250 or entire account balance
Mail surrenders: $250 or entire account balance
Maximum amount
Mail transfers: None (up to certificate value)
Mail surrenders: None (up to certificate value)
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PAGE 22
2 By automated transfers
Your financial advisor can help you set up automated transfers among your
accounts.
You can start or stop this service by written request or other method acceptable
to IDS Life of New York. You must allow 30 days for IDS Life of New York to
change any instructions that are currently in place.
o Automated transfers from the fixed to variable account(s) may not exceed an
amount that, if continued, would deplete the fixed account within 12 months.
o Automated transfers are subject to all of the contract provisions and terms,
including transfer of certificate values between accounts.
Minimum amount
Automated transfers: $50
Maximum amount
Automated transfers: None (except for automated transfers
from the fixed account)
Surrendering a certificate
Subject to certain restrictions imposed by the Code and any restrictions imposed
by the plan, you may surrender all or part of your certificate at any time
before annuity payouts begin by sending a written request to IDS Life of New
York. For total surrenders, we will compute the value of the certificate at the
close of business after we receive the request. We may ask you to return the
certificate. You may have to pay surrender charges (see "Surrender charge") and
IRS taxes and penalties (see "Taxes"). No surrenders may be made after annuity
payouts begin.
Surrender policies
If you have a balance in more than one account and request a partial surrender,
we will withdraw money from all of your accounts in the same proportion as your
value in each account correlates to the total certificate value, unless
requested otherwise.
Receiving payment when a participant requests a surrender
By regular or express mail:
o Payable to participant;
o Mailed to address of record.
Note: You will be charged a fee if you request express mail
delivery.
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PAGE 23
By wire:
o Request that payment be wired to your bank;
o Bank account must be in the same ownership as your contract; and
o Pre-authorization required. For instructions, contact your
financial advisor.
Payment normally will be sent within seven days after receiving the request.
However, we may postpone the payment if:
- -the surrender amount includes a purchase payment check that has not cleared;
- -the NYSE is closed, except for normal holiday and weekend closings;
- -trading on the NYSE is restricted, according to SEC rules;
- -an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- -the SEC permits us to delay payment for the protection of security holders.
TSA special surrender provisions
The Code imposes certain restrictions on a participant's right to receive early
distributions attributable to salary reduction contributions from a Tax
Sheltered Annuity (TSA):
o 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 from the TSA only if:
- -the participant has attained age 59-1/2;
- -the participant has become disabled as defined in the Code;
- -the participant has separated from the service of the employer who purchased
the contract; or
- -the distribution is made to the participant's beneficiary because of death.
o If you should encounter a financial hardship (within the meaning of the
Code), you may receive a distribution of all certificate values attributable
to salary reduction contributions made after Dec. 31, 1988, but not the
earnings on them.
o Even though a distribution may be permitted under the above
rules, it still may be subject to IRS taxes and penalties. (See
"Taxes.")
o The above restrictions on the right to receive a distribution do not affect
the availability of the amount transferred or rolled over to the certificate
as of Dec. 31, 1988. The restrictions do not apply to transfers or exchanges
of certificate values within the annuity, or to another registered variable
annuity contract or investment vehicle available through the employer.
o If the contract/certificate has a loan provision, the right to receive a loan
from your fixed account continues to exist and is described in detail in your
contract/certificate and is subject to the contract/certificate plan.
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PAGE 24
o For certain types of contributions under a TSA contract to be excluded from
taxable income, the employer must comply with certain nondiscrimination
requirements.
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. Your vested rights under the certificate are
nonforfeitable.
Benefits in case of death
If you die before annuity payouts begin, we will pay your beneficiary as
follows:
If death occurs before your 75th birthday, the beneficiary receives the greater
of:
o the certificate value; or
o purchase payments made to the certificate, minus any surrenders.
If death occurs on or after your 75th birthday, the beneficiary receives the
certificate value.
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the certificate in force. To do this your spouse must, within 60
days after we receive proof of death, give us written instructions to keep the
certificate in force. If you die before the retirement date, your spouse may
keep the certificate in force until the date on which you would have reached age
70 1/2 or any other date permitted by the Code.
Payments: We will pay the beneficiary in a single sum unless you have given us
other written instructions, or the beneficiary may receive payouts under any
annuity payout plan available under this contract if:
o the beneficiary asks us in writing within 60 days after we
receive proof of death;
o payouts begin no later than one year after death, or other date
as permitted by the code; and
o the payout period does not extend beyond the beneficiary's life
or life expectancy.
When paying the beneficiary, we will determine the certificate's
value at the next close of business after our death claim
requirements are fulfilled. Interest, if any, will be paid from
the date of death at a rate no less than required by law. We will
mail payment to the beneficiary within seven days after our death
claim requirements are fulfilled. (See "Taxes.")
The annuity payout period
As the participant, you have the right to decide how and to whom annuity payouts
will be made starting at the retirement date. You may select one of the annuity
payout plans outlined below or we
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PAGE 25
will mutually agree on other payout arrangements. The amount available for
payouts under the plan you select is the certificate value on the retirement
date. No surrender charges are deducted under the payout plans listed below.
The contract and related certificates allow you to determine whether payouts are
to be made on a fixed or variable basis, or a combination of fixed and variable.
Amounts of fixed and variable payouts depend on:
o the annuity payout plan you select;
o your age;
o the annuity table in the contract and related certificates; and
o the amounts allocated to the account(s) at settlement on the
retirement date.
In addition, for variable payouts only, amounts depend on:
o the investment performance of the account(s) selected.
These payouts will vary from month to month because the performance of the
underlying mutual funds will fluctuate. (In the case of fixed annuities, payouts
remain the same from month to month.)
For information with respect to transfers between accounts after annuity payouts
begin, see "Transfer policies."
Annuity payout plans
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before certificate values are to be used to
purchase the payout plan.
o Plan A - Life annuity - no refund: Monthly payouts are made until the
annuitant's death. Payouts end with the last payout before the annuitant's
death; no further payouts will be made. This means that if the annuitant dies
after only one monthly payout has been made, no more payouts will be made.
o Plan B - Life annuity with five, 10 or 15 years certain: Monthly payouts are
made for a guaranteed payout period of five, 10 or 15 years that you elect. This
election will determine the length of the payout period to the beneficiary if
the annuitant should die before the elected period has expired. The guaranteed
payout period is calculated from the retirement date. If the annuitant outlives
the elected guaranteed payout period, payouts will continue until the
annuitant's death.
o Plan C - Life annuity - installment refund: Monthly payouts are made until the
annuitant's death, with our guarantee that payouts will continue for some period
of time. Payouts will be made for at least the number of months determined by
dividing the amount applied under this option by the first monthly payout,
whether or not the annuitant is living.
o Plan D - Joint and last survivor life annuity - no refund:
Monthly payouts are made while both the annuitant and a joint
annuitant are living. If either annuitant dies, monthly payouts
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PAGE 26
continue at the full amount until the death of the surviving
annuitant. Payouts end with the death of the second annuitant.
o Plan E - Payouts for a specified period: Monthly payouts are
made for a specific payout period of 10 to 30 years that you elect.
Payouts will be made only for the number of years specified whether
the annuitant is living or not. Depending on the time period
selected, it is foreseeable that an annuitant can outlive the
payout period selected. In addition, a 10% IRS penalty tax could
apply under this payout plan. (See "Taxes.")
Restrictions on payout options: Because the certificate was purchased under the
plan, you must select a payout plan that provides for payouts:
o over the life of the annuitant;
o over the joint lives of the annuitant and a 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 a designated beneficiary.
If we do not receive instructions: You must give us written instructions for the
annuity payouts at least 30 days before your retirement date. If you do not, we
will make payouts under Plan B, with 120 monthly payouts guaranteed, unless this
option is contrary to applicable provisions of the plan or the Code.
If monthly payouts would be less than $20: We will calculate the amount of
monthly payouts at the time the certificate value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the certificate value to the participant in a lump sum.
Death after annuity payouts begin
If the annuitant dies after annuity payouts begin, any amount payable to the
beneficiary will be as provided in the annuity payout plan in effect.
Taxes
Generally, under current law, any increase in your certificate value is taxable
when you receive a payout or surrender except to the extent that contributions
were made with after-tax dollars. (See detailed discussion below.) Any portion
of the annuity payouts and any surrenders requested that represent ordinary
income are normally taxable. You will receive a 1099 tax information form for
any year in which a taxable distribution was made according to our records.
Annuity payouts: The entire payout generally will be includable as ordinary
income and subject to tax. If you or your employer invested in the certificate
with pre-tax dollars, such amounts are not considered to be part of your
investment in the certificate and will be taxed when paid to you.
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PAGE 27
Surrenders: Generally, if you surrender part or all of the certificate before
annuity payouts begin, the surrender payment will be taxed. You also may have to
pay a 10% IRS penalty for surrenders before reaching age 59 1/2. Other penalties
may apply if you surrender the certificate before the plan specifies that you
can receive payouts.
Death benefits to beneficiaries: The death benefit under an annuity is not tax
exempt. Any amount received by the beneficiary that represents previously
deferred earnings within the certificate, is taxable as ordinary income to the
beneficiary in the year(s) he or she receives the payments.
Penalties: If you receive amounts from the certificate before reaching age 59
1/2, you may have to pay a 10% IRS penalty on the amount includable in your
ordinary income. However, this penalty will not apply to any amount received by
you or your beneficiary:
o because of your death;
o because you become disabled (as defined in the Code);
o if the distribution is part of a series of substantially equal
periodic payments after separation from service, made at least annually, over
your life or life expectancy (or joint lives or life expectancies of you and
your designated beneficiary); or
o after you separate from service during or after the year you
attain age 55.
Other penalties or exceptions may apply if you surrender your certificate before
your plan specifies that payments can be made.
Mandatory withholding: If you receive directly all or part of the certificate
value, mandatory 20% income tax withholding generally will be imposed at the
time the payment is made. Any withholding that is done represents a prepayment
of your tax due for the year and you would take credit for such amounts on the
annual tax return you file. This mandatory withholding will not be imposed if: o
instead of receiving the distribution check, you elect to have
the distribution rolled over directly to an IRA or another
eligible plan;
o the payment is one in a series of substantially equal periodic payments, made
at least annually, over your life or life expectancy (or the joint lives or
life expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more; or
o the payment is a minimum distribution required under the Code.
Payments made to a surviving spouse instead of being directly rolled over to an
IRA may also be subject to mandatory 20% income tax withholding.
Elective withholding: If the distribution is not subject to mandatory
withholding as described above, you can elect not to have any withholding occur.
To do this you must provide us with a valid Social Security Number or Taxpayer
Identification Number.
If you do not make this election and if the payout is part of an annuity payout
plan, the amount of withholding generally is
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PAGE 28
computed using payroll tables. You can provide us with a statement of how many
exemptions to use in calculating the withholding. If the distribution is any
other type of payment (such as a partial or full surrender), withholding is
computed using 10% of the taxable portion.
The state may also impose withholding requirements similar to the federal
withholding described above. Therefore, any payment from which federal
withholding is deducted may also have state withholding deducted.
The withholding requirements may differ if payment is being made to a non-U.S.
citizen or if the payment is being delivered outside the United States.
Important: Our discussion of federal tax laws is based upon our understanding of
these laws as they are currently interpreted. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of the contract
and/or related certificates.
Tax qualification: The contract (and your certificate of participation
thereunder) is intended to qualify as an annuity for Federal income tax
purposes. To that end, the provisions of the contract and your certificate are
to be interpreted to ensure or maintain such tax qualification, notwithstanding
any other provisions to the contrary. We reserve the right to amend the contract
and/or related certificates to reflect any clarifications that may be needed or
are appropriate to maintain such qualification or to conform the contract and/or
certificates to any applicable changes in the tax qualification requirements. We
will send you a copy of any such amendment.
Voting rights
As owner or participant with investments in the variable account(s) you may vote
on important mutual fund policies until annuity payouts begin. Once they begin,
the person receiving them has voting rights. We will vote fund shares according
to the instructions of the person with voting rights.
Before annuity payouts begin, the number of votes is determined by applying the
percentage interest in each variable account to the total number of votes
allowed to the account.
After annuity payouts begin, the number of votes is equal to:
o the reserve held in each account for the contract or
certificate, divided by
o the net asset value of one share of the applicable underlying
mutual fund.
As we make annuity payouts, the reserve for the annuity decreases; therefore,
the number of votes also will decrease.
<PAGE>
PAGE 29
We calculate votes separately for each account not more than 60 days before a
shareholders' meeting. Notice of these meetings, proxy materials and a statement
of the number of votes to which the voter is entitled, will be sent.
We will vote shares for which we have not received instructions in the same
proportion as the votes for which we have received instructions. We also will
vote the shares for which we have voting rights in the same proportion as the
votes for which we have received instructions.
Substitution
Shares of any of the underlying funds may not always be available for purchase
by the variable accounts, or we 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, we may make appropriate endorsement
to the contract and certificates to reflect the substitution.
We reserve 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.
Distribution of the certificates
American Express Financial Advisors Inc., a registered broker/dealer and an
affiliate of IDS Life of New York is the sole distributor of the certificates.
IDS Life of New York pays total commissions of up to 7.0% of the total purchase
payments received on the certificates. A portion of this total commission is
paid to district managers and field vice presidents of the selling
representative.
About IDS Life of New York
The Employee Benefit Annuity is issued by IDS Life of New York, a wholly-owned
subsidiary of IDS Life, which is a wholly-owned subsidiary of AEFC. American
Express Financial Corporation is a wholly-owned subsidiary of the American
Express Company. American Express Company is a financial services company
principally engaged through subsidiaries (in addition to AEFC) in travel related
services, investment services and international banking services.
IDS Life of New York is a stock life insurance company organized in 1972 under
the laws of the State of New York and located at 20 Madison Ave. Ext., Albany,
NY. 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.
<PAGE>
PAGE 30
American Express Financial Advisors Inc. offers mutual funds,
investment certificates and a broad range of financial management
services. IDS Life of New York offers insurance and annuities.
American Express Financial Advisors Inc. serves individuals and businesses
through its nationwide network of more than 175 offices and more than 7,800
financial advisors. Other subsidiaries provide investment management and related
services for pension, profit-sharing, employee savings and endowment funds of
businesses and institutions.
Regular and special reports
Services
To help you track and evaluate the performance of your annuity, we provide:
Quarterly statements showing the value of your investment.
Annual reports containing required information on the annuity and its underlying
investments.
A personalized annuity progress report detailing the cumulative return since the
certificate was purchased and the average annual rate of return on the
investments. This report, which is unique in the industry, is available upon
request from your financial advisor.
Table of contents of the Statement of Additional Information
Performance information............................ 3
Calculating annuity payouts........................ 6
Rating agencies.................................... 7
Principal underwriter.............................. 7
Independent auditors............................... 8
Prospectus......................................... 8
Financial statements - IDS Life of New York Accounts 4, 5, 6, 9, 10, 11, 12, 13
and 14 IDS Life Insurance Company of New York
- -------------------------------------------------------------------
Please check the appropriate box to receive a copy of the Statement of
Additional Information for:
_____ IDS Life of New York Employee Benefit Annuity
_____ IDS Life Retirement Annuity Mutual Funds
Please return this request to:
IDS Life of New York Annuity Service
IDS Life Insurance Company of New York
P.O. Box 5144
Albany, NY 12205
<PAGE>
PAGE 31
Your name _______________________________________________________
Address _________________________________________________________
City ______________________ State ______________ Zip ___________
<PAGE>
PAGE 32
STATEMENT OF ADDITIONAL INFORMATION
for
EMPLOYEE BENEFIT ANNUITY
IDS LIFE OF NEW YORK ACCOUNTS 4, 5, 6, 9, 10, 11, 12, 13 and
14
May 1, 1997
IDS Life of New York Accounts 4, 5, 6, 9, 10, 11, 12, 13 and 14 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 May 1, 1997, is not a
prospectus. It should be read together with the accounts' prospectus, dated May
1, 1997, which may be obtained from your financial advisor, 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 33
TABLE OF CONTENTS
Performance Information.......................................p. 3
Calculating Annuity Payouts...................................p. 6
Rating Agencies...............................................p. 7
Principal Underwriter.........................................p. 7
Independent Auditors..........................................p. 8
Prospectus....................................................p. 8
Financial Statements
- IDS Life of New York Accounts 4, 5, 6, 9, 10, 11, 12, 13 and 14
- IDS Life Insurance Company of New York
<PAGE>
PAGE 34
PERFORMANCE INFORMATION
Calculation of yield for Account 6
IDS Life of New York Account 6, which invests in IDS Life Moneyshare Fund,
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 certificate charges,
including the annual 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, 1996, the account's annualized simple yield was 3.78%
and its compound yield was 3.85%.
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 variable 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 accounts investing in income funds
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 35
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.
On Dec. 31, 1996, the annualized yield for Account 5 was 7.68% for
Account 12 2.79% and for Account 13 9.32%.
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 ten 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 average annual total return figures reflect the deduction of the
administrative charge and mortality and expense risk fee. Performance figures
will be shown with the deduction of the applicable surrender charge; in
addition, performance figures 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.
The following performance figures are calculated on the basis of historical
performance of the funds.
Average Annual Total Return For Period Ended: Dec. 31, 1996
<PAGE>
PAGE 36
Average Annual Total Return with Surrender
<TABLE>
<CAPTION>
Since
Account investing in: 1 Year 5 Year 10 Year Inception
- --------------------
IDS Life
<S> <C> <C> <C> <C>
Aggressive Growth Fund (1/92)* 7.96% --% --% 10.09%
Capital Resource Fund (10/81) -0.21 6.21 12.27 --
International Equity Fund (1/92) 1.38 -- -- 7.33
Managed Fund (4/86) 8.72 8.67 11.28 --
Moneyshare Fund (10/81) -3.09 1.61 4.44 --
Special Income Fund (10/81) -1.20 7.45 7.76 --
Growth Dimensions Fund (4/96) -- -- -- 3.83
Global Yield Fund (4/96) -- -- -- 0.14
Income Advantage Fund (4/96) -- -- -- -2.05
Average Annual Total Return without Surrender
Since
Account Investing in: 1 Year 5 Year 10 Year Inception
- --------------------
IDS Life
Aggressive Growth Fund (1/92) 14.96% --% --% 11.03%
Capital Resource Fund (10/81) 6.79 7.29 12.27 --
International Equity Fund (1/92) 8.38 -- -- 8.37
Managed Fund (4/86) 15.72 9.66 11.28 --
Moneyshare Fund (10/81) 3.91 2.89 4.44 --
Special Income Fund (10/81) 5.80 8.48 7.76 --
Growth Dimensions Fund (4/96) -- -- -- 10.83
Global Yield Fund (4/96) -- -- -- 7.14
Income Advantage Fund (4/96) -- -- -- 4.95
</TABLE>
* inception dates of the funds are shown in parentheses
Aggregate total return
Aggregate total return represents the cumulative change in the value of an
investment over a specified period of time (reflecting change in an account's
accumulation unit value) and is computed by the following formula:
ERV - P
P
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, CDA Technologies, 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, Morningstar, 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.
<PAGE>
PAGE 37
CALCULATING ANNUITY PAYOUTS
The Variable Account
The following calculations are done separately for each of the variable
accounts. The separate monthly payouts, added together, make up your total
variable annuity payout.
Initial Payout: To compute your first monthly payment, we:
o determine the dollar value of your certificate as of the
valuation date seven days before the retirement date.
o apply the result to the annuity table contained in the certificate or another
table at least as favorable. The annuity table shows the amount of the first
monthly payment for each $1,000 of value which depends on factors built into the
table, as described below.
Annuity Units: The value of your account is then converted to annuity units. To
compute the number credited to you, we divide the first monthly payment by the
annuity unit value (see below) on the valuation date on (or next day preceding)
the seventh calendar day before the retirement date. The number of units in your
account is fixed. The value of the units fluctuate with the performance of the
underlying mutual fund.
Subsequent Payouts: To compute later payouts, we multiply:
o the annuity unit value on the valuation date on or immediately
ceding the seventh calendar day before the payout is due; by
o the fixed number of annuity units credited to you.
Annuity Table: The table shows the amount of the first monthly payment for each
$1,000 of certificate value according to the age of the annuitant. (Where
required by law, we will use a unisex table of settlement rates.) The table
assumes that the certificate value is invested at the beginning of the annuity
payout period and earns a 3.5% rate of return, which is reinvested and helps to
support future payouts.
Annuity Unit Values: This value was originally set at $1 for each variable
account. To calculate later values we multiply the last annuity 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 annuity table. With an
assumed investment rate of 3.5%, the neutralizing factor is 0.999906 for a one
day valuation period.
Net Investment Factor:
o Determined each business day by adding the underlying mutual fund's current
net asset value per share plus per share amount of any current dividend or
capital gain distribution; then
o dividing that sum by the previous net asset value per share; and
o subtracting the percentage factor representing the mortality and expense risk
fee from the result.
<PAGE>
PAGE 38
Because the net asset value of the underlying mutual fund may fluctuate, the net
investment factor may be greater or less than one, and the accumulation unit
value may increase or decrease. You bear this investment risk in a variable
account.
The Fixed Account
Your fixed annuity payout amounts are guaranteed. Once calculated, your payout
will remain the same and never change. To calculate your annuity payouts we:
o take the value of your fixed account at the retirement date or the date you
have selected to begin receiving your annuity payouts; then
o using an annuity table we apply the value according to the annuity payout plan
you select; and
o the annuity payout table we use will be the one in effect at the time you
choose to begin your annuity payouts. The table will be equal to or greater than
the table in your certificate.
RATING AGENCIES
The following chart reflects the ratings given to IDS Life of New York by
independent rating agencies. These agencies evaluate the financial soundness and
claims-paying ability of insurance companies based on a number of different
factors. This information does not relate to the management or performance of
the variable accounts of the annuity. This information relates only to the fixed
account and reflects IDS Life of New York's ability to make annuity payouts and
to pay death benefits and other distributions from the annuity.
Rating agency Rating
A.M. Best A+
(Superior)
Duff & Phelps AAA
Moody's Aa2
PRINCIPAL UNDERWRITER
The principal underwriter for the accounts is American Express Financial
Advisors Inc. which offers the variable annuities on a continuous basis.
Surrender charges received by IDS Life of New York for 1996, 1995 and 1994,
aggregated $551,374, $464,724, and $269,275, respectively. Commissions paid by
IDS Life of New York for 1996, 1995 and 1994, aggregated $1,036,511, $681,615,
and $1,130,352, respectively. The surrender charges were applied toward payment
of commissions.
<PAGE>
PAGE 39
INDEPENDENT AUDITORS
The financial statements of IDS Life of New York Accounts 4, 5, 6, 9, 10, 11,
12, 13 and 14, including the statements of net assets as of December 31, 1996,
and the related statements of operations for the year then ended, except for IDS
Life of New York Accounts 12, 13 and 14 which are for the period April 30, 1996
(commencement of operations) to December 31, 1996 and the related 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 12, 13 and 14 which are for the period April
30, 1996 (commencement of operations) to December 31, 1996 and the financial
statements of IDS Life Insurance Company of New York as of December 31, 1996 and
1995, and for each of the three years in the period ended December 31, 1996,
appearing in this SAI, have been audited by Ernst & Young LLP, independent
auditors, as stated in their reports appearing herein.
PROSPECTUS
The prospectus dated May 1, 1997, is hereby incorporated in this Statement of
Additional Information by reference.
<PAGE>
IDS Life of New York Accounts 4, 10, 11, 5, 6, 9, 12, 13 and 14
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, 9, 12, 13 and 14 as of
December 31, 1996, and the related statements of operations for the year then
ended, except for Accounts 12, 13 and 14 which are for the period April 30, 1996
(commencement of operations) to December 31, 1996, and the statements of changes
in net assets for each of the two years in the period then ended, except for
Accounts 12, 13 and 14 which are for the period April 30, 1996 (commencement of
operations) to December 31, 1996. 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 of securities owned at December 31, 1996 with the affiliated mutual
fund manager. 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, 9, 12, 13 and 14 at December 31,
1996, and the individual and combined results of their operations and changes in
their net assets for the periods described above, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Minneapolis, Minnesota
March 21, 1997
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Accounts 4, 10, 11, 5, 6, 9, 12, 13, and 14
- -------------------------------------------------------------------------------------------------------------------------
Statements of Net Assets Dec. 31, 1996
Segregated Asset Account
-------------------------------------------------------------------------
Assets 4 10 11 5 6
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments in shares of mutual funds,
at market value:
IDS Life Capital Resource Fund -
9,296,157 shares at net asset value
of $23.68 per share (cost $221,823,927) ... $220,112,291 $ -- $ -- $ -- $ --
IDS Life International Equity Fund -
8,460,137 shares at net asset value
of $13.77 per share (cost $104,618,790) ... -- 116,517,540 -- -- --
IDS Life Aggressive Growth Fund -
8,375,263 shares at net asset value
of $15.66 per share (cost $108,479,787) ... -- -- 131,159,892 -- --
IDS Life Special Income Fund -
7,690,600 shares at net asset value
of $11.90 per share (cost $87,503,384) .... -- -- -- 91,492,614 --
IDS Life Moneyshare Fund, Inc. -
12,366,654 shares at net asset value
of $1.00 per share (cost $12,364,374) ..... -- -- -- -- 12,366,659
IDS Life Manged Fund, Inc. -
13,381,220 shares at net asset value
of $16.77 per share (cost $185,133,073) ... -- -- -- -- --
IDS Life Global Yield Fund -
236,119 shares at net asset value
of $10.49 per share (cost $2,399,519) ..... -- -- -- -- --
IDS Life Income Advantage Fund -
488,904 shares at net asset value
of $10.04 per share (cost $4,830,882) ..... -- -- -- -- --
IDS Life Growth Dimensions Fund -
2,783,508 shares at net asset value
of $11.11 per share (cost $29,561,245) .... -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
220,112,291 116,517,540 131,159,892 91,492,614 12,366,659
- ------------------------------------------------------------------------------------------------------------------------
Dividends receivable ........................ -- -- -- 575,496 49,582
Accounts receivable from IDS Life of New York
for contract purchase payments .............. 51,509 33,654 25,757 6,414 452,379
Receivable from mutual funds for
share redemptions ........................... 282,812 84,551 83,943 44,198 --
- ------------------------------------------------------------------------------------------------------------------------
Total assets ................................ 220,446,612 116,635,745 131,269,592 92,118,722 12,868,620
- ------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------
Payable to IDS Life of New York for:
Mortality and expense risk fee .............. 193,324 101,548 113,945 80,388 10,329
Contract terminations ....................... 282,812 84,551 83,943 44,198 --
Payable to mutual funds for investments
purchased ................................ 51,509 33,655 25,756 501,522 492,633
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities ........................... 527,645 219,754 223,644 626,108 502,962
- ------------------------------------------------------------------------------------------------------------------------
Net assets applicable to contracts in
accumulation period ...................... 219,568,659 116,414,351 130,982,792 91,167,981 12,263,241
Net assets applicable to contracts in
payment period ........................... 350,308 1,640 63,156 324,633 102,417
- ------------------------------------------------------------------------------------------------------------------------
Total net assets ............................ $219,918,967 $116,415,991 $131,045,948 $ 91,492,614 $ 12,365,658
- ------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding .............. 47,282,795 77,830,409 77,672,683 24,424,365 5,926,901
- ------------------------------------------------------------------------------------------------------------------------
Net asset value per accumulation unit ...... $4.64 $1.50 $1.69 $3.73 $2.07
- ------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Accounts 4, 10, 11, 5, 6, 9, 12, 13, and 14
- ------------------------------------------------------------------------------------------------------------------------
Statements of Net Assets (continued) Dec. 31, 1996
Segregated Asset Account Combined
---------------------------------------------------------- Variable
9 12 13 14 Account
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments in shares of mutual funds,
at market value:
IDS Life Capital Resource Fund -
9,296,157 shares at net asset value
of $23.68 per share (cost $221,823,927) ... $ -- $ -- $ -- $ -- $220,112,291
IDS Life International Equity Fund -
8,460,137 shares at net asset value
of $13.77 per share (cost $104,618,790) ... -- -- -- -- 116,517,540
IDS Life Aggressive Growth Fund -
8,375,263 shares at net asset value
of $15.66 per share (cost $108,479,787) ... -- -- -- -- 131,159,892
IDS Life Special Income Fund -
7,690,600 shares at net asset value
of $11.90 per share (cost $87,503,384) .... -- -- -- -- 91,492,614
IDS Life Moneyshare Fund, Inc. -
12,366,654 shares at net asset value
of $1.00 per share (cost $12,364,374) ..... -- -- -- -- 12,366,659
IDS Life Manged Fund, Inc. -
13,381,220 shares at net asset value
of $16.77 per share (cost $185,133,073) ... 224,451,184 -- -- -- 224,451,184
IDS Life Global Yield Fund -
236,119 shares at net asset value
of $10.49 per share (cost $2,399,519) ..... -- 2,477,817 -- -- 2,477,817
IDS Life Income Advantage Fund -
488,904 shares at net asset value
of $10.04 per share (cost $4,830,882) ..... -- -- 4,906,891 -- 4,906,891
IDS Life Growth Dimensions Fund -
2,783,508 shares at net asset value
of $11.11 per share (cost $29,561,245) .... -- -- -- 30,924,903 30,924,903
- ------------------------------------------------------------------------------------------------------------------------
224,451,184 2,477,817 4,906,891 30,924,903 834,409,791
- ------------------------------------------------------------------------------------------------------------------------
Dividends receivable ........................ -- 5,376 35,654 -- 666,108
Accounts receivable from IDS Life of New York
for contract purchase payments .............. 95,182 8,381 11,055 15,035 699,366
Receivable from mutual funds for
share redemptions ........................... 135 -- -- 33,074 528,713
- ------------------------------------------------------------------------------------------------------------------------
Total assets ................................ 224,546,501 2,491,574 4,953,600 30,973,012 836,303,978
- ------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------
Payable to IDS Life of New York for:
Mortality and expense risk fee .............. 196,435 2,050 4,121 25,400 727,540
Contract terminations ....................... 135 -- -- 33,074 528,713
Payable to mutual funds for investments
purchased ................................ 95,182 11,707 42,586 15,036 1,269,586
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities ........................... 291,752 13,757 46,707 73,510 2,525,839
- ------------------------------------------------------------------------------------------------------------------------
Net assets applicable to contracts in
accumulation period ...................... 222,678,072 2,474,841 4,906,893 30,822,712 831,279,542
Net assets applicable to contracts in
payment period ........................... 1,576,677 2,976 -- 76,790 2,498,597
- ------------------------------------------------------------------------------------------------------------------------
Total net assets ............................ $224,254,749 $ 2,477,817 $ 4,906,893 $ 30,899,502 $833,778,139
- ---------------------------------------------------------------------------------------------------------
Accumulation units outstanding .............. 75,218,566 2,311,440 4,671,075 27,817,069
- ---------------------------------------------------------------------------------------------------------
Net asset value per accumulation unit ...... $2.96 $1.07 $1.05 $1.11
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Accounts 4, 10, 11, 5, 6, 9, 12, 13, and 14
- ----------------------------------------------------------------------------------------------------------------------------------
Statements of Operations Year ended Dec. 31, 1996
Segregated Asset Account
----------------------------------------------------------------------
Investment Income 4 10 11 5 6
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dividend income from mutual funds ...................... $ 34,766,577 $ 4,041,729 $ 13,550,738 $ 6,849,609 $ 548,659
Mortality and expense risk fee ......................... 2,198,649 1,061,164 1,169,568 893,306 112,057
- ----------------------------------------------------------------------------------------------------------------------------------
Investment income (loss) - net ......................... 32,567,928 2,980,565 12,381,170 5,956,303 436,602
- ----------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments - net
- ----------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on sales of investments
in mutual funds:
Proceeds from sales .................................... 13,175,154 879,002 1,327,697 5,967,130 7,658,767
Cost of investments sold ............................... 11,982,866 795,929 1,028,550 5,767,665 7,657,565
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments ....................... 1,192,288 83,073 299,147 199,465 1,202
- ----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation of investments ............................ (19,655,157) 5,168,183 2,596,119 (968,877) (169)
- ----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments ......................... (18,462,869) 5,251,256 2,895,266 (769,412) 1,033
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase from operations ........................... $ 14,105,059 $ 8,231,821 $ 15,276,436 $ 5,186,891 $ 437,635
- ----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Accounts 4, 10, 11, 5, 6, 9, 12, 13, and 14
- -------------------------------------------------------------------------------------------------------------------------------
Statements of Operations (continued) Year ended Dec. 31, 1996
Segregated Asset Account
------------------------------------------------------- Combined
Investment Income 9 12* 13* 14* Variable
Account
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dividend income from mutual funds ...................... $19,241,896 $ 32,460 $ 133,975 $ 65,957 $79,231,600
Mortality and expense risk fee ......................... 2,096,584 11,631 15,866 81,681 7,640,506
- -------------------------------------------------------------------------------------------------------------------------------
Investment income (loss) - net ......................... 17,145,312 20,829 118,109 (15,724) 71,591,094
- -------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments - net
- -------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on sales of investments
in mutual funds:
Proceeds from sales .................................... 7,861,652 100,199 39,008 23,151 37,031,760
Cost of investments sold ............................... 6,472,998 98,943 38,701 22,402 33,865,619
- -------------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments ....................... 1,388,654 1,256 307 749 3,166,141
- -------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation of investments ............................ 12,125,056 78,298 76,009 1,363,658 783,120
- -------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments ......................... 13,513,710 79,554 76,316 1,364,407 3,949,261
- -------------------------------------------------------------------------------------------------------------------------------
Net increase from operations ........................... $30,659,022 $ 100,383 $ 194,425 $ 1,348,683 $75,540,355
- -------------------------------------------------------------------------------------------------------------------------------
*For the period April 30, 1996 (commencement of operations) to Dec. 31, 1996.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life of New York Accounts 4, 10, 11, 5, 6, 9, 12, 13, and 14
- ----------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets
Segregated Asset Account
---------------------------------------------------------------------------------
Operations 4 10 11 5 6
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net ............... $ 32,567,928 $ 2,980,565 $ 12,381,170 $ 5,956,303 $ 436,602
Net realized gain on investments ............. 1,192,288 83,073 299,147 199,465 1,202
Net change in unrealized appreciation or
depreciation of investments .................. (19,655,157) 5,168,183 2,596,119 (968,877) (169)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase from operations ................. 14,105,059 8,231,821 15,276,436 5,186,891 437,635
- ----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ----------------------------------------------------------------------------------------------------------------------------------
Variable annuity contract purchase payments .. 20,330,907 12,049,591 13,404,656 10,398,139 8,607,758
Net transfers**............................... 1,600,158 12,202,696 15,280,912 (2,184,401) (6,469,416)
Loan repayments .............................. 202,501 103,529 109,247 54,947 63,917
Annuity payments ............................. (15,604) (2,155) (1,422) (15,209) --
Contract charges ............................. (202,297) (93,716) (100,503) (71,767) (7,431)
Contract terminations:
Surrender benefits ........................... (10,133,424) (3,283,391) (3,668,917) (5,387,735) (986,101)
Death benefits ............................... (1,010,404) (445,933) (490,164) (969,384) (148,200)
- ----------------------------------------------------------------------------------------------------------------------------------
Increase from contract transactions........... 10,771,837 20,530,621 24,533,809 1,824,590 1,060,527
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of year .............. 195,042,071 87,653,549 91,235,703 84,481,133 10,867,496
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year .................... $ 219,918,967 $ 116,415,991 $ 131,045,948 $ 91,492,614 $ 12,365,658
- ----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ----------------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year ....... 44,849,219 63,576,047 62,233,323 23,903,081 5,445,411
Contract purchase payments ................... 4,567,169 8,408,019 8,509,131 2,970,770 4,416,368
Net transfers**............................... 404,594 8,480,752 9,621,711 (594,109) (3,159,416)
Transfers for policy loans ................... 45,098 71,375 68,531 15,495 31,550
Contract charges ............................. (45,712) (65,492) (63,531) (20,385) (3,814)
Contract terminations:
Surrender benefits ........................... (2,293,619) (2,289,122) (2,326,635) (1,565,420) (731,034)
Death benefits ............................... (243,954) (351,170) (369,847) (285,067) (72,164)
- ----------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of year ............. 47,282,795 77,830,409 77,672,683 24,424,365 5,926,901
- ----------------------------------------------------------------------------------------------------------------------------------
**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>
<TABLE>
<CAPTION>
IDS Life of New York Accounts 4, 10, 11, 5, 6, 9, 12, 13, and 14
- ----------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued) Year ended Dec. 31, 1996
Segregated Asset Account
----------------------------------------------------------------- Combined
Operations 9 12* 13* 14* Variable
Account
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net ............... $ 17,145,312 $ 20,829 $ 118,109 $ (15,724) $ 71,591,094
Net realized gain on investments ............. 1,388,654 1,256 307 749 3,166,141
Net change in unrealized appreciation or
depreciation of investments .................. 12,125,056 78,298 76,009 1,363,658 783,120
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase from operations ................. 30,659,022 100,383 194,425 1,348,683 75,540,355
- ----------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ----------------------------------------------------------------------------------------------------------------------------------
Variable annuity contract purchase payments .. 14,199,518 729,261 1,221,447 4,412,059 85,353,336
Net transfers**............................... 3,533,766 1,658,796 3,530,908 25,471,387 54,624,806
Loan repayments .............................. 250,240 515 663 11,905 797,464
Annuity payments ............................. (53,767) -- -- (1,152) (89,309)
Contract charges ............................. (185,940) (363) (773) (5,767) (668,557)
Contract terminations:
Surrender benefits ........................... (10,923,388) (10,775) (39,777) (337,613) (34,771,121)
Death benefits ............................... (1,123,893) -- -- -- (4,187,978)
- ----------------------------------------------------------------------------------------------------------------------------------
Increase from contract transactions........... 5,696,536 2,377,434 4,712,468 29,550,819 101,058,641
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of year .............. 187,899,191 -- -- -- 657,179,143
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year .................... $ 224,254,749 $ 2,477,817 $ 4,906,893 $ 30,899,502 $ 833,778,139
- ----------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- -----------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year ....... 72,999,139 -- -- --
Contract purchase payments ................... 5,336,610 723,874 1,249,285 4,300,482
Net transfers**............................... 1,346,249 1,611,211 3,491,927 23,898,488
Transfers for policy loans ................... 92,249 483 638 10,893
Contract charges ............................. (69,479) (348) (762) (5,376)
Contract terminations:
Surrender benefits ........................... (4,029,397) (23,780) (70,013) (387,418)
Death benefits ............................... (456,805) -- -- --
- -----------------------------------------------------------------------------------------------------------------
Units outstanding at end of year ............. 75,218,566 2,311,440 4,671,075 27,817,069
- -----------------------------------------------------------------------------------------------------------------
*For the period April 30, 1996 (commencement of operations) to Dec. 31, 1996.
**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>
<TABLE>
<CAPTION>
IDS Life of New York Accounts 4, 10, 11, 5, 6, 9, 12, 13, and 14
- -------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets Year ended Dec. 31, 1995
Segregated Asset Account Combined
------------------------------------------------------------------------------------------ Variable
Operations 4 10 11 5 6 9 Annuity
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income
(loss) - net....... $ 18,196,363 $ 973,652 $ (193,808) $ 5,073,198 $ 377,541 $ 2,853,713 $ 27,280,659
Net realized gain
(loss) on
investments........ 87,786 (57,081) 87,529 (72,398) (2,449) 146,673 190,060
Net change in
unrealized appreciation
or depreciation
of investments..... 19,556,680 6,954,573 18,746,495 8,858,427 2,447 30,533,716 84,652,338
- -------------------------------------------------------------------------------------------------------------------------------
Net increase
from operations.... 37,840,829 7,871,144 18,640,216 13,859,227 377,539 33,534,102 112,123,057
- -------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- -------------------------------------------------------------------------------------------------------------------------------
Variable annuity contract
purchase payments.. 17,774,286 9,647,212 9,970,694 8,824,370 5,766,036 13,779,392 65,761,990
Net transfers*..... 15,429,827 8,077,120 13,841,579 1,677,378 (1,624,726) 7,758,872 45,160,050
Loan repayments.... 119,341 49,312 56,943 43,465 7,715 108,253 385,029
Annuity payments (7,054) (904) (66) (4,097) -- (24,947) (37,068)
Contract charges... (175,972) (79,384) (74,786) (68,007) (6,429) (172,302) (576,880)
Contract terminations:
Surrender benefits. (6,815,254) (2,029,739) (2,019,720) (3,336,084) (842,323) (5,674,574) (20,717,694)
Death benefits..... (568,783) (274,425) (139,773) (421,430) (41,803) (876,643) (2,322,857)
- -------------------------------------------------------------------------------------------------------------------------------
Increase from contract
transactions....... 25,756,391 15,389,192 21,634,871 6,715,595 3,258,470 14,898,051 87,652,570
- -------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning
of year............ 131,444,851 64,393,213 50,960,616 63,906,311 7,231,487 139,467,038 457,403,516
- -------------------------------------------------------------------------------------------------------------------------------
Net assets at end
of year............ $195,042,071 $87,653,549 $91,235,703 $84,481,133 $10,867,496 $187,899,191 $657,179,143
- -------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ---------------------------------------------------------------------------------------------------------------
Units outstanding at
beginning of year.. 38,283,499 51,479,988 45,346,878 21,935,625 3,793,729 66,799,845
Contract purchase
payments........... 4,595,175 7,739,246 7,846,624 2,737,871 2,946,331 5,995,376
Net transfers*..... 3,917,622 6,358,941 10,791,998 486,490 (838,659) 3,316,169
Transfers for
policy loans....... 30,100 38,541 44,002 13,690 3,922 46,329
Contract charges... (45,603) (62,946) (57,886) (21,461) (3,415) (74,760)
Contract terminations:
Surrender benefits. (1,784,376) (1,746,253) (1,636,852) (1,108,257) (435,104) (2,679,553)
Death benefits..... (147,198) (231,470) (101,441) (140,877) (21,393) (404,267)
- ---------------------------------------------------------------------------------------------------------------
Units outstanding at
end of year......... 44,849,219 63,576,047 62,233,323 23,903,081 5,445,411 72,999,139
- ---------------------------------------------------------------------------------------------------------------
*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>
IDS Life of New York Accounts 4, 10, 11, 5, 6, 9, 12, 13 and 14
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Organization
IDS Life of New York Accounts 4, 10, 11, 5, 6, 9, 12, 13 and 14 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. Accounts 12, 13 and
14 were established on April 17, 1996 and commenced operations on April 30,
1996. IDS Life of New York Accounts 4, 10, 11, 5, 6, 9, 12, 13 and 14 are
collectively referred to as "the Accounts."
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 nine
segregated asset accounts. Such funds are then invested in shares of nine 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.
Each Fund is registered under the Investment Company Act of 1940 as a
diversified, (non-diversified for Global Yield) open-end management investment
company. IDS Life Capital Resource Fund, IDS Life Special Income Fund and IDS
Life Moneyshare Fund, Inc. commenced operations on Oct. 13, 1981. IDS Life
Managed Fund, Inc. commenced operations on April 30, 1986. IDS Life Aggressive
Growth Fund and IDS Life International Equity Fund commenced operations on Jan.
13, 1992. IDS Life Global Yield Fund, IDS Life Income Advantage Fund and IDS
Life Growth Dimensions Fund commenced operations on April 30, 1996. 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 10 invests in the
shares of IDS Life International Equity Fund; IDS Life of New York Account 11
invests in the shares of IDS Life Aggressive Growth Fund; IDS Life of New York
Account 5 invests in the shares of IDS Life Special Income Fund; 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 12 invests in the shares of IDS Life Global Yield Fund;
IDS Life of New York Account 13 invests in the shares of IDS Life Income
Advantage Fund and IDS Life of New York Account 14 invests in the shares of IDS
Life Growth Dimension Fund.
IDS Life, parent company of IDS Life of New York, serves as manager, investment
adviser and underwriter for the underlying nine mutual funds. American Express
Financial Advisors 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 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. An annual charge
of $30 is deducted from the certificate value of each Employee Benefit Annuity
Certificate. 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,
c) Employee Benefit Annuity Certificate 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 $551,374 in 1996 and $464,724 in 1995. Such charges are not
an expense of the Accounts. They are deducted from contract surrender benefits
paid by IDS Life of New York.
<PAGE>
- --------------------------------------------------------------------------------
4. Investment Transactions
The Accounts' purchases of mutual fund shares (net of charges), including
reinvestment of dividend distributions, were as follows:
<TABLE>
Year Ended Dec. 31,
Account Investment 1996 1995
- -----------------------------------------------------------------------------
<S> <C> <C>
4 IDS Life Capital Resource Fund........ $ 56,554,274 $ 45,150,464
10 IDS Life International Equity Fund.... 24,422,664 19,597,217
11 IDS Life Aggressive Growth Fund....... 38,284,864 22,015,912
5 IDS Life Special Income Fund.......... 13,748,022 15,921,102
6 IDS Life Moneyshare Fund, Inc......... 9,156,896 9,987,321
9 IDS Life Managed Fund, Inc............ 30,751,777 20,445,428
12 IDS Life Global Yield Fund............ 2,498,462* --
13 IDS Life Income Advantage Fund. ...... 4,869,583* --
14 IDS Life Growth Dimensions Fund....... 29,583,647* --
- -----------------------------------------------------------------------------
$209,870,189 $133,117,444
*For the period April 30, 1996 to Dec. 31, 1996.
</TABLE>
- --------------------------------------------------------------------------------
5. Annuity Contracts in Payment Period
Net assets and annuity units relating to contracts in the payment period
as of Dec. 31, 1996 were as follows:
<TABLE>
Net assets applicable
to contracts in Annuity units in
Account payment period payment period
- ----------------------------------------------------------
<S> <C> <C>
4 $350,308 880
10 1,640 196
11 63,156 167
5 324,633 885
6 102,417 --
9 1,576,677 3,834
12 2,976 --
13 -- --
14 76,790 224
- ----------------------------------------------------
$2,498,597
</TABLE>
<PAGE>
IDS Life of New York Financial Information
The financial statements shown below are those of the insurance company and not
those of any other entity. They are included for the purpose of informing the
investor as to the financial condition of the insurance company and its ability
to carry out its obligations under its variable contracts.
IDS LIFE INSURANCE COMPANY OF NEW YORK
BALANCE SHEETS
Dec. 31, Dec. 31,
ASSETS 1996 1995
- ------ ----------- ------
(thousands)
Investments:
Fixed maturities:
Held to maturity, at amortized cost (Fair value:
1996, $604,635; 1995, $683,147) $ 585,812 $ 642,580
Available for sale, at fair value (Fair value:
1996, $590,608; 1995, $577,068) 601,623 601,298
Mortgage loans on real estate 160,017 158,730
Policy loans 20,077 18,035
Other investments 1,374 1,915
----------- ------
Total investments 1,368,903 1,422,558
Accrued investment income 21,068 22,572
Deferred policy acquisition costs 119,183 109,800
Other assets 3,950 2,108
Separate account assets 950,018 724,212
-------- ---------
Total assets $2,463,122 $2,281,250
======== ========
<PAGE>
IDS LIFE INSURANCE COMPANY OF NEW YORK
BALANCE SHEETS (continued)
Dec. 31, Dec. 31,
LIABILITIES AND STOCKHOLDER'S EQUITY 1996 1995
- ------------------------------------ ---------- ---------
(thousands)
Liabilities:
Future policy benefits:
Fixed annuities $1,054,954 $1,109,167
Universal life-type insurance 142,278 136,475
Traditional life, disability income
and long-term care insurance 45,338 42,477
Policy claims and other policyholders' funds 3,155 3,644
Deferred income taxes 9,046 15,663
Amounts due to brokers 3,007 10,000
Other liabilities 25,463 21,029
Separate account liabilities 950,018 724,212
--------- ---------
Total liabilities 2,233,259 2,062,667
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 gain on investments 6,943 15,341
Retained earnings 171,920 152,242
--------- -----------
Total stockholder's equity 229,863 218,583
-------- -----------
Total liabilities and stockholder's equity $2,463,122 $2,281,250
======== ========
Commitments and contingencies (Note 7)
See accompanying notes.
<PAGE>
IDS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF INCOME
Years ended Dec.31,
1996 1995 1994
--------- ------- -------
(thousands)
Revenues:
Traditional life, disability income
and long-term care insurance
premiums $ 10,931 $ 9,280 $ 7,846
Policyholder and contractholder charges 15,832 13,216 11,607
Mortality and expense risk fees 8,574 6,213 4,562
Net investment income 109,468 110,924 108,143
Net realized gain (loss) on investments (1,424) 1,548 957
------ ------ -------
Total revenues 143,381 141,181 133,115
-------- -------- -------
Benefits and expenses:
Death and other benefits:
Traditional life, disability income
and long-term care insurance 4,182 3,354 6,016
Universal life-type insurance
and investment contracts 4,409 4,548 3,773
Increase in liabilities for future
policy benefits for traditional life,
disability income and
long-term care insurance 2,324 1,958 506
Interest credited on universal life-type
insurance and investment contracts 65,099 68,630 65,018
Amortization of deferred policy
acquisition costs 16,071 13,085 12,994
Other insurance and operating expenses 8,972 7,474 8,359
-------- ------- ------
Total benefits and expenses 101,057 99,049 96,666
------- ------- -------
Income before income taxes 42,324 42,132 36,449
Income taxes 14,640 14,745 12,794
------- ------- -------
Net income $ 27,684 $ 27,387 $ 23,655
====== ====== ======
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
Years ended Dec. 31,
1996 1995 1994
--------- --------- ------
(thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $27,684 $27,387 $23,655
Adjustments to reconcile net income to net
cash provided by operating activities:
Policy loan issuance, excluding universal
life-type insurance (2,473) (2,093) (1,365)
Policy loan repayment, excluding universal
life-type insurance 1,571 881 849
Change in accrued investment income 1,504 (1,055) (175)
Change in deferred policy acquisition
costs, net (9,087) (11,017) (11,522)
Change in liabilities for future policy
benefits for traditional life, disability income
and long-term care insurance 2,861 1,931 501
Change in policy claims and other
policyholders' funds (489) 427 870
Change in deferred income taxes (2,095) (1,301) (4,321)
Change in other liabilities 4,434 2,429 (1,711)
(Accretion of discount)
amortization of premium, net (652) (480) 2,464
Net realized (gain) loss on investments 1,424 (1,548) (957)
Policyholder and contractholder
charges, non-cash (7,831) (6,962) (6,000)
Other, net (1,781) (508) 689
--------- ----- ------
Net cash provided by operating
activities $15,070 $ 8,091 $2,977
------- ------- ------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS (continued)
Years ended Dec. 31,
1996 1995 1994
------- ------- -----
(thousands)
<S> <C> <C> <C>
Cash flows from investing activities:
Fixed maturities held to maturity:
Purchases $ -- $ (37,540) $ (36,560)
Maturities, sinking fund payments and calls 39,082 34,216 78,757
Sales 14,465 28,905 2,649
Fixed maturities available for sale:
Purchases (97,370) (133,503) (117,965)
Maturities, sinking fund payments and calls 71,939 44,234 70,316
Sales 15,669 8,839 14,533
Other investments, excluding policy loans:
Purchases (14,802) (1,939) (47,353)
Sales 12,659 5,993 2,975
Change in amounts due to brokers (6,993) 10,000 (4,952)
------- ------- -------
Net cash provided by (used in)
investing activities 34,649 (40,795) (37,600)
--------- -------- ---------
Cash flows from financing activities:
Activity related to universal life-type insurance
and investment contracts:
Considerations received 131,011 159,431 188,469
Surrenders and death benefits (236,689) (190,695) (212,171)
Interest credited to account balances 65,099 68,630 65,018
Universal life-type insurance policy loans:
Issuance (4,490) (4,870) (3,907)
Repayment 3,350 2,946 2,476
Cash dividend to parent (8,000) (8,000) --
------ ------- ---
Net cash (used in) provided by financing
activities (49,719) 27,442 39,885
-------- ------- -------
Net (decrease) increase in cash and cash
equivalents -- (5,262) 5,262
Cash and cash equivalents at
beginning of year -- 5,262 --
-------- ------ -------
Cash and cash equivalents at
end of year $ -- $ -- $ 5,262
========= ======= =======
See accompanying notes.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ thousands)
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. The Company's
principal products are deferred annuities and universal life insurance
which are issued primarily to individuals. It offers single premium and
flexible premium deferred annuities on both a fixed and variable dollar
basis. Immediate annuities are offered as well. The Company's insurance
products include universal life (fixed and variable), whole life,
single premium life and term products (including waiver of premium and
accidental death benefits). The Company also markets disability income
and long-term care insurance.
Basis of presentation
The Company is a wholly owned subsidiary of IDS Life Insurance Company
(IDS Life), which is a wholly owned subsidiary of American Express
Financial Corporation, 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 the New York Department of Insurance as reconciled in Note
11.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Investments
Fixed maturities that the Company has both the positive intent and the
ability to hold to maturity are classified as held to maturity and
carried at amortized cost. All other fixed maturities and all
marketable equity securities are classified as available for sale and
carried at fair value. Unrealized gains and losses on securities
classified as available for sale are carried as a separate component of
stockholder's equity, net of deferred taxes.
Realized investment gain or loss is determined on an identified cost
basis.
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.
Mortgage loans on real estate are carried at amortized cost less
reserves for mortgage loan losses. The estimated 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.
Impairment of mortgage loans is measured as the excess of the loan's
recorded investment over its present value of expected principal and
interest payments discounted at the loan's effective interest rate, or
the fair value of collateral. The amount of the impairment is recorded
in a reserve for mortgage loan losses. The reserve for mortgage loans
losses is maintained at a level that management believes is adequate to
absorb estimated losses in the portfolio. The level of the reserve
account is determined based on several factors, including historical
experience, expected future principal and interest payments, estimated
collateral values, and current and anticipated economic and political
conditions. Management regularly evaluates the adequacy of the reserve
for mortgage loan losses.
The Company generally stops accruing interest on mortgage loans for
which interest payments are delinquent more than three months. Based on
management's judgement as to the ultimate collectibility of principal,
interest payments received are either recognized as income or applied
to the recorded investment in the loan.
The cost of interest rate caps is amortized to investment income over
the life of the contracts and payments received as a result of these
agreements are recorded as a reduction of investment income when
realized. The amortized cost of interest rate caps is included in other
investments.
Policy loans are carried at the aggregate of the unpaid loan balances
which do not exceed the cash surrender values of the related policies.
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 fair value by a charge to income.
Statements 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 statements of cash flows is summarized
as follows:
1996 1995 1994
-------- -------- ------
Cash paid during the year for:
Income taxes $15,247 $15,026 $17,386
Interest on borrowings 777 742 147
Recognition of profits on annuity contracts and insurance policies
Profits on fixed deferred annuities are recognized by the Company over
the lives of the contracts, using primarily the interest method.
Profits 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 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.
Policyholder and contractholder charges include the monthly cost of
insurance charges and issue and administrative fees. These charges also
include the minimum death benefit guarantee fees received from the
variable life insurance separate accounts. Management and other fees
include investment management fees and mortality and expense risk fees
from the variable annuity and variable life insurance separate accounts
and underlying funds.
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 most single premium deferred annuities and installment
annuities are amortized in relation to 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 and certain
installment annuities are amortized 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 are based
on the net level premium method and anticipated rates of mortality,
policy persistency and interest earnings. Anticipated mortality rates
generally approximate the 1955-1960 Select and Ultimate Basic Table for
policies issued prior to 1980, the 1965-1970 Select and Ultimate Basic
Table for policies issued from 1981-1984 and the 1975-1980 Select and
Ultimate Basic Table for policies issued after 1984. Anticipated policy
persistency rates vary by policy form, issue age and policy duration
with persistency on cash value plans generally anticipated to be better
than persistency on term insurance plans. Anticipated interest rates
are 4% for policies issued before 1974, 5.25% for policies issued from
1974-1980, and range from 10% to 6% depending on policy form, issue
year and policy duration for policies issued after 1980.
Liabilities for future disability income policy benefits include both
policy reserves and claim reserves. Policy reserves are based on the
net level premium method and anticipated rates of morbidity, mortality,
policy persistency and interest earnings. Anticipated morbidity rates
are based on the 1964 Commissioners Disability Table for policies
issued before 1996 and the 1985 CIDA table for policies issued in 1996.
Anticipated mortality rates are based on the 1958 Commissioners
Standard Ordinary Table for policies issued before 1996 and the
1975-1980 Basic Table for policies issued in 1996. Anticipated policy
persistency rates vary by policy form, occupation class, issue age and
policy duration. Anticipated interest rates are 3% for policies issued
before 1996 and grade from 7.5% to 5% over five years for policies
issued in 1996. Claim reserves are calculated on the basis of
anticipated rates of claim continuance and interest earnings.
Anticipated claim continuance rates are based on the 1964 Commissioners
Disability Table for claims incurred before 1993 and the 1985 CIDA
Table for claims incurred after 1992. Anticipated interest rates are 8%
for claims incurred prior to 1992, 7% for claims incurred in 1992 and
6% for claims incurred after 1992.
Liabilities for future long-term care policy benefits include both
policy reserves and claim reserves. Policy reserves are based on the
net level premium method and anticipated rates of morbidity, mortality,
policy persistency and interest earnings. Anticipated morbidity rates
are based on the 1985 National Nursing Home Survey. Anticipated
mortality rates are based on the 1983a Table. Anticipated policy
persistency rates vary by policy form, issue age and policy duration.
Anticipated interest rates are 9.5% grading to 7% over 10 years for
policies issued from 1989-1992 and 7.75% grading to 7% over 4 years for
policies issued after 1992. Claim reserves are calculated on the basis
of anticipated rates of claim continuance and interest earnings.
Anticipated claim continuance rates are based on the 1985 National
Nursing Home Survey. Anticipated interest rates are 8% for claims
incurred prior to 1992, 7% claims incurred in 1992 and 6% for claims
incurred after 1992.
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.
Long-term care policies are primarily reinsured on a coinsurance basis.
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 American Express Financial Corporation 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
American Express Financial Corporation to reimburse subsidiaries for
all tax benefits.
Included in other liabilities at Dec. 31, 1996 and 1995 are $5,161 and
$3,971, respectively, payable to IDS Life for federal income taxes.
Separate account business
The separate account assets and liabilities represent funds held for
the exclusive benefit of the variable annuity and variable life
insurance contract owners.
The Company makes contractual mortality assurances to the variable
annuity contract owners that the net assets of the separate 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 separate accounts
for such actuarial adjustments for variable annuities that are in the
benefit payment period. For variable life insurance, the Company
guarantees that the rates at which insurance charges and administrative
fees are deducted from contract funds will not exceed contractual
maximums. The Company also guarantees that the death benefit will
continue payable at the initial level regardless of investment
performance so long as minimum premium payments are made.
Accounting changes
The Financial Accounting Standards Board's (FASB) Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," was
effective Jan. 1, 1996. The new rule did not have a material impact on
the Company's results of operations or financial condition.
Reclassification
Certain 1995 and 1994 amounts have been reclassified to conform to the
1996 presentation.
2. Investments
Fair values of investments in fixed maturities represent quoted market
prices and estimated values when quoted prices are not available.
Estimated 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.
Net realized gain (loss) on investments for the years ended Dec. 31 is
summarized as follows:
1996 1995 1994
------ ------ -----
Fixed maturities $ (572) $1,997 $948
Mortgage loans (855) (487) -
Other investments 3 38 9
---------- ----- --
$(1,424) $1,548 $957
======== ====== ====
Changes in net unrealized appreciation (depreciation) of investments
for the years ended Dec. 31 are summarized as follows:
1996 1995 1994
---------- --------- --------
Fixed maturities:
Held to maturity $(21,744) $73,970 $(84,244)
Available for sale (13,215) 43,726 (38,226)
<PAGE>
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities and equity securities at Dec. 31, 1996
are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 4,498 $ 144 $ -- $ 4,642
Corporate bonds and obligations 523,807 23,060 2,964 543,903
Mortgage-backed securities 57,507 409 1,826 56,090
--------- --------- ------ ---------
$585,812 $23,613 $4,790 $604,635
======== ======= ====== ========
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
State and municipal obligations $ 105 $ 10 $ -- $ 115
Corporate bonds and obligations 260,966 8,857 1,181 268,642
Mortgage-backed securities 329,537 5,788 2,459 332,866
-------- -------- ------ --------
$590,608 $14,655 $3,640 $601,623
======== ======= ====== ========
</TABLE>
The change in net unrealized loss on available for sale securities
included as a separate component of stockholder's equity was $8,398 in
1996.
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities and equity securities at Dec. 31, 1995
are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 5,003 $ 199 $ -- $ 5,202
State and municipal obligations 150 -- 2 148
Corporate bonds and obligations 578,253 41,939 2,027 618,165
Mortgage-backed securities 59,174 846 388 59,632
--------- --------- ------- ---------
$642,580 $42,984 $2,417 $683,147
======== ======= ====== ========
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
State and municipal obligations $ 105 $ 10 $ -- $ 115
Corporate bonds and obligations 248,973 17,470 497 265,946
Mortgage-backed securities 327,990 9,157 1,910 335,237
-------- -------- ------ --------
Total fixed maturities 577,068 26,637 2,407 601,298
Equity securities 10 -- -- 10
----------- ------- --------- -----------
$577,078 $26,637 $2,407 $601,308
======== ======= ====== ========
</TABLE>
The change in net unrealized gain on available for sale securities
included as a separate component of stockholder's equity was $27,710 in
1995.
<PAGE>
The amortized cost and fair value of investments in fixed maturities at
Dec. 31, 1996 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
Held to maturity Cost Value
Due in one year or less $ 11,777 $ 11,912
Due from one to five years 125,637 132,169
Due from five to ten years 321,472 333,245
Due in more than ten years 69,419 71,219
Mortgage-backed securities 57,507 56,090
--------- ---------
$585,812 $604,635
======== ========
Amortized Fair
Available for sale Cost Value
Due in one year or less $ 39,155 $ 39,695
Due from one to five years 55,313 58,288
Due from five to ten years 127,642 130,246
Due in more than ten years 38,961 40,528
Mortgage-backed securities 329,537 332,866
-------- --------
$590,608 $601,623
======== ========
During the years ended Dec. 31, 1996, 1995 and 1994, fixed maturities
classified as held to maturity were sold with amortized cost of
$14,507, $27,971 and $2,735, respectively. Net gains and losses on
these sales were not significant. The sale of these fixed maturities
was due to significant deterioration in the issuers' creditworthiness.
As a result of adopting the FASB Special Report, "A Guide to
Implementation of Statement 115 on Accounting for Certain Investments
in Debt and Equity Securities," the Company reclassified securities
with a book value of $15,607 and net unrealized gains of $144 from held
to maturity to available for sale in December 1995.
In addition, fixed maturities available for sale were sold during 1996
with proceeds of $15,669 and gross realized gains and losses of $28 and
$1,541, respectively. Fixed maturities available for sale were sold
during 1995 with proceeds of $8,839 and gross realized gains and losses
of $nil and $74, respectively. Fixed maturities available for sale were
sold during 1994 with proceeds of $14,533 and gross realized gains and
losses of $181 and $308, respectively.
At Dec. 31, 1996, bonds carried at $261 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:
1996 1995 1994
---------- --------- -------
Interest on fixed maturities $ 95,574 $ 97,092 $ 93,800
Interest on mortgage loans 14,171 13,888 13,226
Other investment income 1,293 1,291 1,219
Interest on cash equivalents 67 186 363
----------- ---- ------
111,105 112,457 108,608
Less investment expenses 1,637 1,533 465
---------- ------ -------
$109,468 $110,924 $108,143
======== ======== ========
<PAGE>
At Dec. 31, 1996, investments in fixed maturities comprised 87 percent
of the Company's total invested assets. Securities are rated by Moody's
and Standard & Poor's (S&P), except for securities carried at
approximately $130 million which are rated by American Express
Financial Corporation internal analysts using criteria similar to
Moody's and S&P. A summary of investments in fixed maturities, at
amortized cost, by rating on Dec. 31 is as follows:
Rating 1996 1995
---------------------- ------- --------
Aaa/AAA $ 396,097 $ 391,321
Aa/AA 13,996 17,572
Aa/A 10,197 9,950
A/A 196,542 209,483
A/BBB 62,488 61,912
Baa/BBB 336,706 357,445
Baa/BB 51,639 46,029
Below investment grade 108,755 125,936
----------- --------
$1,176,420 $1,219,648
========== ==========
At Dec. 31, 1996, 94 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 percent of the Company's total investments
in fixed maturities.
At Dec. 31, 1996, approximately 11.6 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, 1996 Dec. 31, 1995
------------------------ ----------------------------
On Balance Commitments On Balance Commitments
Region Sheet to Purchase Sheet to Purchase
-------------- ------ ----------- --------- -----------
<S> <C> <C> <C> <C>
West North Central $ 23,191 $1,342 $ 23,705 $ --
East North Central 33,430 1,708 34,207 --
South Atlantic 35,501 -- 38,802 2,033
Middle Atlantic 22,889 -- 23,502 --
Pacific 12,986 -- 13,150 --
Mountain 15,425 -- 14,937 5,084
New England 8,805 -- 8,982 --
East South Central 8,825 -- 1,613 7,407
West South Central 265 -- 277 --
--------- ---------- ---- -------
161,317 3,050 159,175 14,524
Less allowance for losses 1,300 -- 445 --
------ --- ---- -------
$160,017 $3,050 $158,730 $14,524
======== ====== ======== =======
Dec. 31, 1996 Dec. 31, 1995
--------------------- --------------------------
On Balance Commitments On Balance Commitments
Property type Sheet to Purchase Sheet to Purchase
------------------------- -------- ----------- ------- -----------
Apartments $ 70,292 $ 1,708 $ 64,136 $7,988
Department/retail stores 48,476 1,342 55,308 --
Office buildings 18,684 -- 12,367 6,536
Industrial buildings 11,956 -- 13,255 --
Nursing/retirement 6,477 -- 6,565 --
Medical buildings 5,167 -- 5,255 --
Other -- -- 2,012 --
Hotels/motels 265 -- 277 --
------ ---- --- -------
161,317 3,050 159,175 14,524
Less allowance for losses 1,300 -- 445 --
----- ----- ---- -------
$160,017 $ 3,050 $158,730 $14,524
======== ======= ======== =======
</TABLE>
<PAGE>
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.
At Dec. 31, 1996 and 1995, the Company's recorded investment in
impaired loans was $1,327 and $2,052 with a reserve of $1,300 and $445,
respectively. During 1996 and 1995, the average recorded investment in
impaired loans was $1,628 and $3,003, respectively.
The Company recognized $152 and $204 of interest income related to
impaired loans for the year ended Dec. 31, 1996 and 1995, respectively.
The following table presents changes in the reserve for investment
losses related to all loans:
1996 1995
------ -----
Balance, Jan. 1 $ 445 $445
Provision for investment losses 855 --
------ ----
Balance, Dec. 31 $1,300 $445
====== ====
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:
1996 1995 1994
------ ------ ------
Federal income taxes:
Current $15,735 $15,146 $16,419
Deferred (2,095) (1,301) (4,320)
------- ------ -------
13,640 13,845 12,099
State income taxes-current 1,000 900 695
----- ------ -----
Income tax expense $14,640 $14,745 $12,794
======= ======= =======
Increases (decreases) to the federal tax provision applicable to pretax
income based on the statutory rate are attributable to:
<TABLE>
<CAPTION>
1996 1995 1994
-------------------- --------------------- --------------------
Provision Rate Provision Rate Provision Rate
<S> <C> <C> <C> <C> <C> <C>
Federal income taxes based
on the statutory rate $14,813 35.0% $14,746 35.0% $12,757 35.0%
Increases (decreases) are
attributable to:
Tax-excluded interest
and dividend income (458) (1.1) (464) (1.1) (554) (1.5)
Other, net (716) (1.7) (437) (1.0) (104) (0.3)
---- ---- ---- ---- ----- ----
Federal income taxes $13,639 32.2% $13,845 32.9% $12,099 33.2%
======= ==== ======= ==== ======= ====
</TABLE>
<PAGE>
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, 1996, 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:
1996 1995
-------- ------
Deferred tax assets:
Policy reserves $28,809 $26,237
Other 4,018 2,791
------- -----
Total deferred tax assets 32,827 29,028
------ ------
Deferred tax liabilities:
Deferred policy acquisition costs 35,302 33,001
Investments 6,571 11,690
------ ------
Total deferred tax
liabilities 41,873 44,691
------ -------
Net deferred tax liabilities $(9,046) $(15,663)
======= ========
The Company is required to establish a "valuation allowance" for any
portion of the deferred tax assets that management believes will not be
realized. In the opinion of management, it is more likely than not that
the Company will realize the benefit of the deferred tax assets and,
therefore, no such valuation allowance has been established.
4. Stockholder's equity
Retained earnings available for distribution as dividends to the parent
are limited to the Company's surplus as determined in accordance with
accounting practices prescribed by the New York Department of
Insurance. Statutory unassigned surplus aggregated $94,007 as of Dec.
31, 1996 and $85,964 as of Dec. 31, 1995 (see Note 3 with respect to
the income tax effect of certain distributions).
Dividends paid to parent were $8,000 in 1996, $8,000 in 1995 and $nil
in 1994.
5. Retirement plan and services
Until July 1, 1995, the Company participated in the IDS Retirement Plan
of American Express Financial Corporation which covered all permanent
employees age 21 and over who had met certain employment requirements.
Effective July 1, 1995, the IDS Retirement Plan was merged with
American Express Company's American Express Retirement Plan, which
simultaneously was amended to include a cash balance formula and a lump
sum distribution option. Employer contributions to the plan are based
on participants' age, years of service and total compensation for the
year. Funding of retirement costs for this plan complies with the
applicable minimum funding requirements specified by ERISA. The
Company's share of the total net periodic pension cost was $34, $33 and
$33 in 1996, 1995 and 1994, respectively.
The Company has a "Sales Benefit Plan" which is an unfunded,
noncontributory retirement plan for all eligible financial advisors.
Total plan costs for 1996, 1995 and 1994, which are calculated on the
basis of commission earnings of the individual financial advisors, were
$1,474, $1,392 and $1,372, respectively. Such costs are included in
deferred policy acquisition costs.
The Company also participates in defined contribution pension plans of
American Express Company 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 1996, 1995
and 1994 were $248, $231 and $251, respectively.
The Company participates in defined benefit health care plans of
American Express Financial Corporation that provide health care and
life insurance benefits to retired employees and retired financial
advisors. The plans include participant contributions and
service-related eligibility requirements. Upon retirement, such
employees are considered to have been employees of American Express
Financial Corporation. American Express Financial Corporation 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.
6. Incentive plan and operating expenses
The Company maintains a "Persistency Payment Plan." Under the terms of
this plan, financial advisors earn additional compensation based on the
volume and persistency of insurance sales. The total costs for the plan
for 1996, 1995 and 1994 were $1,424, $1,720 and $1,287, respectively.
Such costs are included in deferred policy acquisition costs.
Charges by IDS Life and American Express Financial Corporation for the
use of joint facilities, marketing services and other services
aggregated $12,389, $12,122 and $9,314 for 1996, 1995 and 1994,
respectively. Certain of the costs assessed to the Company are included
in deferred policy acquisition costs.
7. Commitments and contingencies
At Dec. 31, 1996 and 1995, traditional life insurance and universal
life-type insurance in force aggregated $4,053,561 and $3,502,851,
respectively, of which $203,963 and $163,462 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 $98, $85 and $76 for the years ended Dec. 31, 1996, 1995
and 1994, respectively. Claim recoveries under the terms of this
reinsurance agreement were $861, $1,426 and $nil in 1996, 1995 and
1994, respectively.
Premiums ceded to reinsurers other than IDS Life amounted to $747, $667
and $735 for the years ended Dec. 31, 1996, 1995 and 1994,
respectively. Reinsurance recovered from reinsurers other than IDS Life
amounted to $66, $576 and ($107) for the years ended Dec. 31, 1996,
1995 and 1994.
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 $345,943 and $392,106 at Dec. 31, 1996 and 1995,
respectively. The accompanying statement of income includes premiums of
$nil for the years ended Dec. 31, 1996, 1995 and 1994, and decrease in
liabilities for future policy benefits of $2,010, 2,039 and $2,538
related to this agreement for the years ended Dec. 31, 1996, 1995 and
1994, respectively.
8. Lines of credit
The Company has available lines of credit with two banks and American
Express Financial Corporation (AEFC) aggregating $55,000 of which
$25,000 is with AEFC. The lines of credit are at 40 to 80 basis points
over each lender's cost of funds. The $10,000 line of credit with one
bank expired on Dec. 31, 1996 and the Company did not seek renewal. The
$20,000 line of credit with the other bank expires on June 30, 1997 and
the Company expects to seek renewal. Outstanding borrowings under these
agreements were $nil at Dec. 31, 1996 and 1995.
<PAGE>
9. Derivative financial instruments
The Company enters into transactions involving derivative financial
instruments to manage its exposure to interest rate risk, including
hedging specific transactions. The Company does not hold derivative
instruments for trading purposes. The Company manages risks associated
with these instruments as described below.
Market risk is the possibility that the value of the derivative
financial instruments will change due to fluctuations in a factor from
which the instrument derives its value, primarily an interest rate. The
Company is not impacted by market risk related to derivatives held for
non-trading purposes beyond that inherent in cash market transactions.
Derivatives held for purposes other than trading are largely used to
manage risk and, therefore, the cash flow and income effects of the
derivatives are inverse to the effects of the underlying transactions.
Credit risk is the possibility that the counterparty will not fulfill
the terms of the contract. The Company monitors credit exposure related
to derivative financial instruments through established approval
procedures, including setting concentration limits by counterparty and
industry, and requiring collateral, where appropriate. A vast majority
of the Company's counterparties are rated A or better by Moody's and
Standard & Poor's.
Credit exposure related to interest rate caps is measured by
replacement cost of the contracts. The replacement cost represents the
fair value of the instruments.
The notional or contract amount of a derivative financial instrument is
generally used to calculate the cash flows that are received or paid
over the life of the agreement. Notional amounts are not recorded on
the balance sheet. Notional amounts far exceed the related credit
exposure.
The Company's holdings of derivative financial instruments are as
follows:
Notional Carrying Fair Total Credit
Dec. 31, 1996 Amount Value Value Exposure
------------- ------ ------- ----- ---------
Assets:
Interest rate caps $250,000 $1,374 $832 $832
======== ====== ==== ====
Dec. 31, 1995
Assets:
Interest rate caps $300,000 $1,905 $745 $745
======== ====== ==== ====
The fair values of derivative financial instruments are based on market
values, dealer quotes or pricing models. The interest rate caps expire
on various dates from 1997 to 2000.
Interest rate caps are used to manage the Company's exposure to
interest rate risk. These instruments are used primarily to protect the
margin between interest rates earned on investments and the interest
rates credited to related annuity contract holders.
<PAGE>
10. Fair values of financial instruments
The Company discloses fair value information for most on- and
off-balance sheet financial instruments for which it is practicable to
estimate that value. Fair values of life insurance obligations,
receivables and all non-financial instruments, such as deferred
acquisition costs are excluded. Off-balance sheet intangible assets,
such as the value the field force, are also excluded. Management
believes the value of excluded assets is significant. The fair value of
the Company, therefore, cannot be estimated by aggregating the amounts
presented.
<TABLE>
<CAPTION>
1996 1995
------- ------
Carrying Fair Carrying Fair
Financial Assets Value Value Value Value
<S> <C> <C> <C> <C>
Investments:
Fixed maturities (Note 2):
Held to maturity $ 585,812 $ 604,635 $ 642,580 $ 683,147
Available for sale 601,623 601,623 601,298 601,298
Mortgage loans on real estate (Note 2) 160,017 164,444 158,730 168,194
Other:
Equity securities (Note 2) -- -- 10 10
Derivative financial instruments (Note 9) 1,374 832 1,905 745
Separate accounts assets (Note 1) 950,019 950,019 724,212 724,212
Financial Liabilities
Future policy benefits for
fixed annuities 979,030 946,359 1,038,431 1,005,004
Separate account liabilities 880,160 838,492 678,263 645,389
</TABLE>
At Dec. 31, 1996 and 1995, the carrying amount and fair value of future
policy benefits for fixed annuities exclude life insurance-related
contracts carried at $72,252 and $67,843, respectively, and policy
loans of $3,672 and $2,893, respectively. The fair value of these
benefits is based on the status of the annuities at Dec. 31, 1996 and
1995. 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 rates appropriate for
contracts issued in 1996 and 1995.
At Dec. 31, 1996 and 1995, the fair value of liabilities related to
separate accounts is estimated as the carrying amount less applicable
surrender charges and less variable insurance contracts carried at
$69,859 and $45,949, respectively.
<PAGE>
11. Statutory insurance accounting practices
Reconciliations of net income for 1996, 1995 and 1994 and stockholder's
equity at Dec. 31, 1996 and 1995, as shown in the accompanying
financial statements, to that determined using statutory accounting
practices are as follows:
1996 1995 1994
-------- -------- -------
Net income, per accompanying
financial statements $27,684 $27,387 $23,655
Deferred policy acquisition costs (9,087) (11,017) (11,522)
Adjustments of future policy
benefit liabilities (9,683) (10,655) 13,741
Deferred federal income taxes (2,095) (1,301) (4,321)
Provision for losses on investments 877 -- (1,652)
IMR gain/loss transfer and amortization 1,010 (331) (54)
Adjustment to separate account reserves 8,863 20,769 142
Other, net 116 948 144
------- -------- --------
Net income, on basis of
statutory accounting practices $17,685 $25,800 $20,133
======= ======= =======
1996 1995
-------- -------
Stockholder's equity, per accompanying
financial statements $229,863 $218,583
Deferred policy acquisition costs (119,183) (109,800)
Adjustments of future policy benefit liabilities 13,458 23,172
Deferred federal income taxes 9,046 15,663
Securities valuation reserve (19,446) (18,029)
Adjustments of separate account liabilities 43,189 34,326
Net unrealized loss on investments (11,016) (24,231)
Premiums due, deferred and advance 1,149 925
Deferred revenue liability 1,342 794
Allowance for losses 1,349 445
Non-admitted assets (634) (578)
Interest maintenance reserve (1,432) (2,442)
Other, net (281) 347
-------- ------
Stockholder's equity, on basis of statutory
accounting practices $147,404 $139,175
======== ========
<PAGE>
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, 1996 and 1995, and the related statements of income and cash flows
for each of the three years in the period ended December 31, 1996. 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, 1996 and 1995, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.
Ernst & Young LLP
February 7, 1997
Minneapolis, Minnesota
<PAGE>
PAGE 40
STATEMENT OF DIFFERENCES
Difference Description
1) Headings. 1) The headings in the
prospectus are placed
in blue strip at the top
of the page.
2) The page numbers in the 2) The prospectus begins on
electronic document do not page 1 in both documents,
correspond to the printed ends on page 31 in the
prospectus. electronic document, and
page 60 in the printed
prospectus.
3) Financial language. 3) A paragraph was addded on
the first page of the IDS Life Insurance
Company of New York Balance Sheets.
