<PAGE> 1
As filed with the Securities and Exchange Commission on
February 29, 2000
Registration No. 333-15585
======================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Post-Effective Amendment No. 6
to
Form S-6
---------------
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2
----------------
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
(EXACT NAME OF REGISTRANT)
----------------
AMERITAS VARIABLE LIFE INSURANCE COMPANY
(Depositor)
5900 "O" Street
Lincoln, Nebraska 68510
----------------
DONALD R. STADING
Secretary and General Counsel
Ameritas Variable Life Insurance Company
5900 "O" Street
Lincoln, Nebraska 68510
-----------------
Title of Securities Being Registered: Securities of Unit Investment Trust
Approximate Date Of Proposed Public offering: As soon as practicable after
effective date.
It is proposed that this filing will become effective:
Immediately upon filing pursuant to paragraph (b).
----
On pursuant to paragraph (b).
---- ---------------
60 days after filing pursuant to paragraph (a)(1).
----
X On May 1, 2000 pursuant to paragraph (a)(1) of Rule 485.
----
<PAGE> 2
RECONCILIATION AND TIE BETWEEN ITEMS IN FORM N-8B-2
AND THE PROSPECTUS
<TABLE>
<CAPTION>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
<S> <C>
1 Cover Page
2 Cover Page
3 Not Applicable
4 Distribution of the Policies
5 Ameritas Variable Life Insurance Company - Separate Account V
6 Ameritas Variable Life Insurance Company - Separate Account V
7 Not Required
8 Not Required
9 Legal Proceedings
10 Summary; Addition, Deletion of Substitution of Investments; Policy Benefits;
Policy Rights; Payment and Allocation of Premiums; General Provisions;
Voting Rights
11 Summary; The Funds
12 Summary; The Funds
13 Summary; The Funds - Charges and Deductions
14 Summary; Payment and Allocation of Premiums
15 Summary; Payment and Allocation of Premiums
16 Summary; Calvert Variable Series, Inc. Ameritas Portfolios, Calvert Variable
Series, Inc., Variable Insurance Products Fund, Variable Insurance Products Fund
II, The Alger American Fund, MFS Variable Insurance Trust, and The Universal Institutional
Funds, Inc.
17 Summary, Policy Rights
18 Calvert Variable Series, Inc. Ameritas Portfolios, Calvert Variable Series, Inc.,
Variable Insurance Products Fund, Variable Insurance Products Fund II, The
Alger American Fund, MFS Variable Insurance Trust, and The Universal Institutional Funds, Inc.
19 General Provisions; Voting Rights
20 Not Applicable
21 Summary; Policy Rights, Loan Benefits; General Provisions
22 Not Applicable
23 Safekeeping of the Separate Account's Assets
24 General Provisions
25 Ameritas Variable Life Insurance Company
26 Not Applicable
27 Ameritas Variable Life Insurance Company
28 Executive Officers and Directors of AVLIC; Ameritas Variable Life Insurance
Company
29 Ameritas Variable Life Insurance Company
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Not Applicable
36 Not Required
37 Not Applicable
38 Distribution of the Policies
39 Distribution of the Policies
40 Distribution of the Policies
41 Distribution of Policies
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
<S> <C>
42 Not Applicable
43 Not Applicable
44 Cash Value, Payment and Allocation of Premium
45 Not Applicable
46 The Funds; Cash Value
47 The Funds
48 State Regulation of AVLIC
49 Not Applicable
50 The Separate Account
51 Cover Page; Summary; Policy Benefits; Payment and Allocation of Premiums,
Charges and Deductions
52 Addition, Deletion or Substitution of Investments
53 Summary; Federal Tax Matters
54 Not Applicable
55 Not Applicable
56 Not Required
57 Not Required
58 Not Required
59 Financial Statements
</TABLE>
<PAGE> 4
PROSPECTUS
[AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO]
ENCORE! -- A Flexible Premium Variable
Universal Life Insurance Policy 5900 "O" Street
issued by Ameritas Variable Life
Insurance Company P.O. Box 82550/Lincoln, NE 68501
- --------------------------------------------------------------------------------
ENCORE! is a flexible premium variable universal life insurance Policy
("Policy") issued by Ameritas Variable Life Insurance Company ("AVLIC"). Like
traditional life insurance policies, an ENCORE! Policy provides Death Benefits
to Beneficiaries and gives you, the Policy Owner, the opportunity to increase
the Policy's value. Unlike traditional policies, ENCORE! lets you vary the
frequency and amount of premium payments, rather than follow a fixed premium
payment schedule. It also lets you change the level of Death Benefits as often
as once each year.
An ENCORE! Policy is different from traditional life insurance policies in
another important way: you select how Policy premiums will be invested. Although
each Policy Owner is guaranteed a minimum Death Benefit, the value of the
Policy, as well as the actual Death Benefit, will vary with the performance of
investments you select.
The Investment Options available through ENCORE! include investment portfolios
managed by Ameritas Investment Corp., Calvert Asset Management Company, Inc.,
Fidelity Management & Research Company, Fred Alger Management, Inc.,
Massachusetts Financial Services Company, and Morgan Stanley Dean Witter
Investment Management Inc. Each of these portfolios has its own investment
objective and policies. These are described in the prospectuses for each
investment portfolio which must accompany this ENCORE! prospectus. You may also
choose to allocate premium payments to the Fixed Account managed by AVLIC.
An ENCORE! Policy will be issued after AVLIC accepts a prospective Policy
Owner's application. Generally, an application must specify a minimum Death
Benefit of $500,000 ($250,000 if the Insured is 50 or older). ENCORE! Policies
are available to individuals between the ages of 20 and 80 at the time of
purchase. An ENCORE! Policy, once purchased, may generally be canceled within 10
days after you receive it.
This ENCORE! prospectus is designed to assist you in understanding the
opportunity and risks associated with the purchase of an ENCORE! Policy.
Prospective Policy Owners are urged to read the prospectus carefully and retain
it for future reference.
This prospectus includes a summary of the most important features of the ENCORE!
Policy, information about AVLIC, a list of the investment portfolios to which
you may allocate premium payments, as well as a detailed description of the
ENCORE! Policy. The appendix to the prospectus includes tables designed to
illustrate how values and Death Benefits may change with the investment
experience of the Investment Options.
This prospectus must be accompanied by a prospectus for each of the investment
portfolios available through ENCORE!
Although the ENCORE! Policy is designed to provide life insurance, an ENCORE!
Policy is considered to be a security. It is not a deposit with, an obligation
of, or guaranteed or endorsed by any banking institution, nor is it insured by
the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any
other agency. The purchase of an ENCORE! Policy involves investment risk,
including the possible loss of principal. For this reason, ENCORE! may not be
suitable for all individuals. It may not be advantageous to purchase an ENCORE!
Policy as a replacement for another type of life insurance or as a way to obtain
additional insurance protection if the purchaser already owns another flexible
premium variable universal life insurance policy.
The Securities and Exchange Commission ("SEC") maintains a web site
(http://www.sec.gov) that contains other information regarding registrants that
file electronically with the Securities and Exchange Commission.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORY AUTHORITY HAS APPROVED THESE SECURITIES, OR DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
May 1, 2000
ENCORE!
1
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
DEFINITIONS................................................. 3
SUMMARY..................................................... 6
YEAR 2000................................................... 10
AVLIC, THE SEPARATE ACCOUNT AND THE FUNDS................... 11
Ameritas Variable Life Insurance Company............. 11
The Separate Account................................. 12
Performance Information.............................. 12
The Funds............................................ 12
Investment Objectives and Policies of the Funds'
Portfolios........................................... 14
Addition, Deletion or Substitution of Investments.... 17
Fixed Account........................................ 18
POLICY BENEFITS............................................. 18
Purposes of the Policy............................... 18
Death Benefit Proceeds............................... 19
Death Benefit Options................................ 19
Methods of Affecting Insurance Protection............ 21
Duration of the Policy............................... 21
Accumulation Value................................... 21
Net Cash Surrender Value Bonus....................... 22
Benefits at Maturity................................. 22
Payment of Policy Benefits........................... 23
POLICY RIGHTS............................................... 24
Loan Benefits........................................ 24
Surrenders........................................... 25
Partial Withdrawals.................................. 25
Transfers............................................ 25
Systematic Programs.................................. 26
Free Look Privilege.................................. 26
Exchange Privilege................................... 27
PAYMENT AND ALLOCATION OF PREMIUMS.......................... 27
Issuance of a Policy................................. 27
Premiums............................................. 28
Allocation of Premiums and Accumulation Value........ 28
Policy Lapse and Reinstatement....................... 29
CHARGES AND DEDUCTIONS...................................... 30
Deductions From Premium Payments (Percent of Premium
Charge).............................................. 30
Charges From Accumulation Value...................... 30
Surrender Charge..................................... 31
Daily Charges Against the Separate Account........... 32
Fund Expense Summary................................. 33
GENERAL PROVISIONS.......................................... 35
DISTRIBUTION OF THE POLICIES................................ 37
FEDERAL TAX MATTERS......................................... 38
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS................ 41
THIRD PARTY SERVICES........................................ 41
VOTING RIGHTS............................................... 41
STATE REGULATION OF AVLIC................................... 42
EXECUTIVE OFFICERS AND DIRECTORS OF AVLIC................... 42
LEGAL MATTERS............................................... 44
LEGAL PROCEEDINGS........................................... 44
EXPERTS..................................................... 44
ADDITIONAL INFORMATION...................................... 44
FINANCIAL STATEMENTS........................................ 44
AMERITAS VARIABLE LIFE INSURANCE COMPANY SEPARATE ACCOUNT
V......................................................... F-I-1
AMERITAS VARIABLE LIFE INSURANCE COMPANY.................... F-II-1
APPENDICES.................................................. A-1
</TABLE>
The Policy, certain Funds, and/or certain riders are not available in all
states.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESPERSON, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
ENCORE!
2
<PAGE> 6
DEFINITIONS
ACCRUED EXPENSE CHARGES - Any Monthly Deductions that are due and unpaid.
ACCUMULATION VALUE - The total amount that the Policy provides for investment at
any time. It is equal to the total of the Accumulation Value held in Separate
Account V, the Fixed Account, and any Accumulation Value held in the General
Account which secures Outstanding Policy Debt.
ADMINISTRATIVE EXPENSE CHARGE - A charge, which is part of the Monthly
Deduction, to cover the cost of administering the Policy.
ASSET-BASED ADMINISTRATIVE EXPENSE CHARGE - A daily charge that is deducted from
the overall assets of Separate Account V to provide for expenses of ongoing
administrative services to the Policy Owners as a group.
ATTAINED AGE - The Issue Age of the Insured plus the number of complete Policy
Years that the Policy has been in force.
AVLIC ("we, us, our") - Ameritas Variable Life Insurance Company, a Nebraska
stock company. AVLIC's Home Office is located at 5900 "O" Street, P.O. Box
82550, Lincoln, NE 68501.
BENEFICIARY - The person or persons to whom the Death Benefit Proceeds are
payable upon the death of the Insured. (See the sections on Beneficiary and
Change of Beneficiary.)
CONTINGENT DEFERRED ADMINISTRATIVE CHARGE - An administrative charge for the
underwriting, issuance and initial administration of the Policy that is deducted
upon Surrender of the Policy. This charge is part of the Surrender Charge.
CONTINGENT DEFERRED SALES CHARGE - A sales charge, calculated based on a
percentage of premiums received, is deducted upon Surrender of the Policy. This
charge is part of the Surrender Charge.
COST OF INSURANCE - A charge deducted monthly from the Accumulation Value to
provide the life insurance protection. The Cost of Insurance is calculated with
reference to an annual "Cost of Insurance Rate." This rate is based on the
Insured's sex, Issue Age, Policy duration, Specified Amount, and risk class. The
Cost of Insurance is part of the Monthly Deduction.
DEATH BENEFIT - The amount of insurance coverage provided under the selected
Death Benefit option of the Policy.
DEATH BENEFIT PROCEEDS - The proceeds payable to the Beneficiary upon receipt by
AVLIC of Satisfactory Proof of Death of the Insured while the Policy is in
force. It is equal to: (l) the Death Benefit; (2) plus additional life insurance
proceeds provided by any riders; (3) minus any Outstanding Policy Debt; (4)
minus any Accrued Expense Charges, including the Monthly Deduction for the month
of death.
FIXED ACCOUNT - An account that is a part of AVLIC's General Account to which
all or a portion of Net Premiums and transfers may be allocated for accumulation
at fixed rates of interest.
GENERAL ACCOUNT - The General Account of AVLIC includes all of AVLIC's assets
except those assets segregated into separate accounts such as Separate Account
V.
GRACE PERIOD - A 61 day period from the date written notice of lapse is mailed
to the Policy Owner's last known address. If the Policy Owner makes a payment
during the Grace Period such that the Net Cash Surrender Value of the Policy is
sufficient to pay the Monthly Deduction, the Policy will not lapse.
GUARANTEED DEATH BENEFIT (IN MARYLAND, "GUARANTEED DEATH BENEFIT TO PREVENT
LAPSE") PERIOD - The number of years the "Guaranteed Death Benefit" provision
will apply. The period will vary based upon the Insured's Issue Age and rating
class. The period ranges from 3 to 25 years, and may be restricted as a result
of state law. In Massachusetts, state policy restricts the period to no greater
than five years. This benefit is provided without an additional Policy charge.
GUARANTEED DEATH BENEFIT PREMIUM - A specified premium which, if paid in advance
on a monthly prorated basis, will keep the Policy in force during the Guaranteed
Death Benefit Period so long as other Policy provisions are met, even if the Net
Cash Surrender Value is zero or less.
ENCORE!
3
<PAGE> 7
INSURED - The person whose life is insured under the Policy.
INVESTMENT OPTIONS - Refers to the Subaccounts and/or the Fixed Account offered
under this Policy.
ISSUE AGE - The age of the Insured at the Insured's birthday nearest the Policy
Date.
ISSUE DATE - The date that all financial, contractual and administrative
requirements have been met and processed for the Policy.
MATURITY BENEFIT - The amount payable to the Policy Owner, if the Insured is
living, on the Maturity Date. The Maturity Benefit is the Accumulation Value
less any Outstanding Policy Debt.
MATURITY DATE - The date AVLIC pays any Maturity Benefit to the Policy Owner, if
the Insured is still living.
MONTHLY ACTIVITY DATE - The same date in each succeeding month as the Policy
Date except should such Monthly Activity Date fall on a date other than a
Valuation Date, the Monthly Activity Date will be the next Valuation Date.
MONTHLY DEDUCTION - The deductions taken from the Accumulation Value on the
Monthly Activity Date. These deductions are equal to: (1) the current Cost of
Insurance; (2) the Administrative Expense Charge; and (3) rider charges, if any.
MORTALITY AND EXPENSE RISK CHARGE - A daily charge that is deducted from the
overall assets of Separate Account V to provide for the risk that mortality and
expense costs may be greater than expected.
NET CASH SURRENDER VALUE - The Accumulation Value of the Policy on any Valuation
Date (including for this purpose, the date of Surrender), less any Surrender
Charges and any Outstanding Policy Debt.
NET POLICY FUNDING - Net Policy Funding is the sum of all premiums paid, less
any partial withdrawals and less any Outstanding Policy Debt.
NET PREMIUM - Premium paid less the Percent of Premium Charge.
OUTSTANDING POLICY DEBT - The sum of all unpaid Policy loans and accrued
interest on Policy loans.
PERCENT OF PREMIUM CHARGE - The amount deducted from each premium received to
cover certain expenses, expressed as a percentage of the premium. This charge
may include a Premium Charge for Taxes. (See the section on Deductions From
Premium Payment.)
PLANNED PERIODIC PREMIUMS - A selected schedule of equal premiums payable at
fixed intervals. The Policy Owner is not required to follow this schedule, nor
does following this schedule ensure that the Policy will remain in force unless
the payments meet the requirements of the Guaranteed Death Benefit.
POLICY - The flexible premium variable universal life insurance Policy offered
by AVLIC and described in this prospectus.
POLICY ANNIVERSARY DATE - The same day as the Policy Date for each year the
Policy remains in force.
POLICY DATE - The effective date for all coverage provided in the application.
The Policy Date is used to determine Policy Anniversary Dates, Policy Years and
Monthly Activity Dates. Policy Anniversaries are measured from the Policy Date.
The Policy Date and the Issue Date will be the same unless: (1) an earlier
Policy Date is specifically requested, or (2) unless there are additional
premiums or application amendments at time of delivery. (See the section on
Issuance of a Policy.)
POLICY OWNER - ("you, your") The owner of the Policy, as designated in the
application or as subsequently changed. If a Policy has been absolutely
assigned, the assignee is the Policy Owner. A collateral assignee is not the
Policy Owner.
POLICY YEAR - The period from one Policy Anniversary Date until the next Policy
Anniversary Date. A "Policy Month" is measured from the same date in each
succeeding month as the Policy Date.
PREMIUM CHARGE FOR TAXES - This charge, which is part of the Percent of Premium
Charge, represents the amount AVLIC considers necessary to pay all premium taxes
imposed by the states and their subdivisions and to defray the tax cost due to
capitalizing certain Policy acquisition expenses as required under
ENCORE!
4
<PAGE> 8
applicable Federal tax laws. AVLIC does not expect to derive a profit from the
Premium Charge for Taxes.
SATISFACTORY PROOF OF DEATH - Means all of the following must be submitted:
(1) A certified copy of the death certificate;
(2) A Claimant Statement;
(3) The Policy; and
(4) Any other information that AVLIC may reasonably require to establish
the validity of the claim.
SEPARATE ACCOUNT V - This term refers to Separate Account V, a separate
investment account established by AVLIC to receive and invest the Net Premiums
paid under the Policy and allocated by the Policy Owner to Separate Account V.
Separate Account V is segregated from the General Account and all other assets
of AVLIC.
SPECIFIED AMOUNT - The minimum Death Benefit under the Policy, as selected by
the Policy Owner.
SUBACCOUNT - A subdivision of Separate Account V. Each Subaccount invests
exclusively in the shares of a specified portfolio of the Funds.
SURRENDER - The termination of the Policy before the Maturity Date during the
Insured's life for the Net Cash Surrender Value.
SURRENDER CHARGE - This charge is assessed against the Accumulation Value of the
Policy if the Policy is Surrendered on or before the 14th Policy Anniversary
Date or, in the case of an increase in the Specified Amount, on or before the
14th anniversary of the increase. The Surrender Charge is comprised of the
Contingent Deferred Administrative Charge and the Contingent Deferred Sales
Charge.
VALUATION DATE - Any day on which the New York Stock Exchange is open for
trading.
VALUATION PERIOD - The period between two successive Valuation Dates, commencing
at the close of the New York Stock Exchange ("NYSE") on one Valuation Date and
ending at the close of the NYSE on the next succeeding Valuation Date.
ENCORE!
5
<PAGE> 9
SUMMARY
The following summary of prospectus information and diagram of the Policy should
be read along with the detailed information found elsewhere in this prospectus.
Unless stated otherwise, this prospectus assumes that the Policy is in force and
that there is no Outstanding Policy Debt.
DIAGRAM OF POLICY
- ---------------------------------------------------
PREMIUM PAYMENTS
You can vary amount and frequency.
- ---------------------------------------------------
- --------------------------------------------------------------------------------
DEDUCTIONS FROM PREMIUMS
Premium Charge for Taxes -- currently 3.5% (maximum 5.0%)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET PREMIUM
The Net Premium may be invested in the Fixed Account or in Separate Account V
which offers 31 different Subaccounts. The Subaccounts invest in the
corresponding portfolios of Calvert Variable Series, Inc. Ameritas Portfolios,
Calvert Variable Series, Inc., Variable Insurance Products Fund, Variable
Insurance Products Fund II, The Alger American Fund, MFS(R) Variable Insurance
Trust, or The Universal Institutional Funds, Inc. ("Funds").
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DEDUCTIONS FROM ASSETS
Monthly charge for Cost of Insurance and cost of any riders.
Monthly charge for Cost of Insurance and cost of any riders. Monthly charge
for administrative expenses currently $5.00 per month (maximum charge
$9.00/mo).
Daily charge from the Subaccounts for mortality and expense risks and
administrative expenses, at an annual rate of 0.70% for Policy Years 1-20, and
0.45% thereafter (the maximum charge for all years is 1.15%). This charge is
not deducted from Fixed Account assets.
Fund expense charges, which ranged from .28% to 1.79% at the most recent
fiscal year end, are also deducted.
The maximum Surrender Charge on a Policy we issue is $40.00 per $1,000.00 of
the Specified Amount.
- --------------------------------------------------------------------------------
LIVING BENEFITS
You may make partial withdrawals, subject to certain restrictions. The Death
Benefit will be reduced by the amount of the partial withdrawal. Each year you
may make up to 15 free transfers between the Investment Options. Accelerated
payment of up to 50% of the lowest scheduled Death Benefit is available under
certain conditions to Insureds suffering from terminal illness. You may
surrender the Policy at any time for its Net Cash Surrender Value. AVLIC incurs
expenses immediately upon the issuance of the Policy that are recovered over a
period of years. Therefore, a Policy Surrender prior to on or before the 14th
anniversary date will be assessed a Surrender Charge consisting of the
Contingent Deferred Sales Charge and the Contingent Deferred Administrative
Charge. The charge decreases each year until no Surrender Charge is applied
after the 14th Policy Year. Increases in coverage after issue will also have a
Surrender Charge associated with them. (See pages 25 and 31.)
RETIREMENT INCOME
BENEFITS
You may take loans at a net zero interest rate after ten years. Should the
Policy lapse while loans are outstanding, the portion of the loan attributable
to earnings will become taxable distributions. (See page 25.)
You may Surrender the Policy or make a partial withdrawal and take values as
payments under one or more of five different payment options.
DEATH BENEFITS
Generally, Death Benefit Income is income tax free to the Beneficiary. The
Beneficiary may be paid a lump sum or may select any of the five payment
methods available as retirement benefits.
ENCORE!
6
<PAGE> 10
SUMMARY
The following summary is intended to highlight the most important features of an
ENCORE! Policy that you, as a prospective Policy Owner, should consider. You
will find more detailed information in the main portion of the prospectus;
cross-references are provided for your convenience. Capitalized terms are
defined in the Definitions section that begins on page 3 of this prospectus.
This summary and all other parts of this prospectus are qualified in their
entirety by the terms of the ENCORE! Policy, which is available upon request
from AVLIC.
WHO IS THE ISSUER OF AN ENCORE! POLICY?
AVLIC is the issuer of each ENCORE! Policy. AVLIC enjoys a rating of A
(Excellent) for financial strength and operating performance from A.M. Best
Company, a firm that analyzes insurance carriers. This is the third highest of
Best's 15 categories. AVLIC is rated AA (Very Strong) for financial insurance
strength from Standard & Poor's. This is the third highest of Standard & Poor's
21 ratings. A stock life insurance company organized in Nebraska, AVLIC is a
wholly owned subsidiary of AMAL Corporation which is, in turn, owned by Ameritas
Life Insurance Corp. ("Ameritas Life") and AmerUs Life Insurance Company
("AmerUs Life"). Ameritas Life , AmerUs Life and AMAL Corporation guarantee the
obligations of AVLIC, including the obligations of AVLIC under each ENCORE!
Policy; taken together, these companies have aggregate assets of over $15.5
billion as of December 31, 1999. (See the section on Ameritas Variable Life
Insurance Company.)
WHY SHOULD I CONSIDER PURCHASING AN ENCORE! POLICY?
The primary purpose of an ENCORE! Policy is to provide life insurance protection
on the Insured named in the Policy. This means that, so long as the Policy is in
force, it will provide for:
- payment of a Death Benefit, which will never be less than the Specified
Amount the Policy Owner selects (See the section on Death Benefit
Options.)
- Policy loan, Surrender and withdrawal features (See the section on Policy
Rights.)
- the payment of Maturity Benefits to the Policy Owners, if living, on the
Maturity Date. (See the section on Benefits of Maturity.)
An ENCORE! Policy also includes an investment component. This means that, so
long as the Policy is in force, you will be responsible for selecting the manner
in which Net Premiums will be invested. Thus, the value of an ENCORE! Policy
will reflect your investment choices over the life of the Policy.
HOW DOES THE INVESTMENT COMPONENT OF MY ENCORE! POLICY WORK?
AVLIC has established Separate Account V, which is separate from all other
assets of AVLIC, as a vehicle to receive and invest premiums received from
ENCORE! Policy Owners and owners of certain other variable universal life
products offered by AVLIC. Separate Account V is divided into separate
Subaccounts. Each Subaccount invests exclusively in shares of one of the
investment portfolios available through ENCORE! Each Policy Owner may allocate
Net Premiums to one or more Subaccounts, or to AVLIC's Fixed Account in the
initial application. These allocations may be changed, without charge, by
notifying AVLIC's Home Office. The aggregate value of your interests in the
Subaccounts and the Fixed Account will represent the Accumulation Value of your
ENCORE! Policy. (See the section on Accumulation Value.)
WHAT INVESTMENT OPTIONS ARE AVAILABLE THROUGH THE ENCORE! POLICY?
The Investment Options available through ENCORE! include 31 investment
portfolios, each of which is a separate series of a mutual fund managed by
Ameritas Investment Corp., Calvert Asset Management Company, Inc., Fidelity
Management & Research Company, Fred Alger Management, Inc., Massachusetts
Financial Services Company, or Morgan Stanley Dean Witter Investment Management
Inc. On December 1, 1998, Morgan Stanley Asset Management Inc. changed its name
to Morgan Stanley Dean Witter
ENCORE!
7
<PAGE> 11
Investment Management Inc. but continues to do business in certain instances
using the name Morgan Stanley Asset Management. These portfolios are:
- - AMERITAS INVESTMENT CORP.:
Ameritas Money Market
Ameritas Index 500
Ameritas Growth
Ameritas Income & Growth
Ameritas Small Capitalization
Ameritas MidCap Growth
Ameritas Emerging Growth
Ameritas Research
Ameritas Growth With Income
- - CALVERT ASSET MANAGEMENT COMPANY, INC.:
CVS Social Small Cap Growth
CVS Social Mid Cap Growth
CVS Social International Equity
CVS Social Balanced
- - FIDELITY MANAGEMENT & RESEARCH COMPANY:
VIP Equity-Income
VIP Growth
VIP High Income
VIP Overseas
VIP II Asset Manager
VIP II Investment Grade Bond
VIP II Asset Manager: Growth
VIP II Contrafund(R)
- - FRED ALGER MANAGEMENT, INC.:
Balanced
Leveraged AllCap
- - MASSACHUSETTS FINANCIAL SERVICES COMPANY:
Utilities
Global Governments
New Discovery
- - MORGAN STANLEY ASSET MANAGEMENT:
Emerging Markets Equity
Global Equity
International Magnum
Asian Equity
U.S. Real Estate
Details about the investment objectives and policies of each of the available
investment portfolios and management fees and expenses appear in the sections on
Investment Objectives and Policies of the Funds' Portfolios and Fund Expense
Summary. In addition to the listed portfolios you may also elect to allocate Net
Premiums to AVLIC's Fixed Account. (See the section on Fixed Account.).
HOW DOES THE LIFE INSURANCE COMPONENT OF AN ENCORE! POLICY WORK?
An ENCORE! Policy provides for the payment of a minimum Death Benefit upon the
death of the Insured. The amount of the minimum Death Benefit -- sometimes
referred to as the Specified Amount of your ENCORE! Policy -- is chosen by you
at the time your ENCORE! Policy is established. However, Death Benefit
Proceeds -- the actual amount that will be paid after AVLIC receives
Satisfactory Proof of Death of the Insured -- will vary over the life of your
ENCORE! Policy, depending on which of the two available coverage options you
select.
ENCORE!
8
<PAGE> 12
If you choose Option A, Death Benefit Proceeds payable under your ENCORE! Policy
will be the Specified Amount of your ENCORE! Policy or the applicable percentage
of its Accumulation Value, whichever is greater. If you choose Option B, Death
Benefit Proceeds payable under your ENCORE! Policy will be the Specified Amount
of your ENCORE! Policy PLUS the Accumulation Value of your ENCORE! Policy, or if
it is higher, the applicable percentage of the Accumulation Value on the date of
death. In either case, the applicable percentage is established based on the age
of the Insured at the date of death. (See the section on Death Benefit Options.)
If the Extended Maturity Option is in effect, the Death Benefit will be the
Accumulation Value.
ARE THERE ANY RISKS INVOLVED IN OWNING AN ENCORE POLICY?
Yes. Over the life of your ENCORE! Policy, the Subaccounts to which you allocate
your premiums will fluctuate with changes in the stock market and overall
economic factors. These fluctuations will be reflected in the Accumulation Value
of your ENCORE! Policy and may result in loss of principal. For this reason, the
purchase of an ENCORE! Policy may not be suitable for all individuals. It may
not be advantageous to purchase an Encore! Policy to replace or augment your
existing insurance arrangements. Appendix A includes tables illustrating the
impact that hypothetical market returns would have on Accumulation Values under
an ENCORE! Policy.
WHAT IS THE PREMIUM THAT MUST BE PAID TO KEEP AN ENCORE! POLICY IN FORCE?
Like traditional life insurance policies, an ENCORE! Policy requires the payment
of periodic premiums in order to keep the Policy in force. You will be asked to
establish a payment schedule before your ENCORE! Policy becomes effective.
The distinction between traditional life policies and an ENCORE! Policy is that
an ENCORE! Policy will not lapse simply because premium payments are not made
according to that payment schedule. However, an ENCORE! Policy will lapse, even
if scheduled premium payments are made, if the Net Cash Surrender Value of your
ENCORE! Policy falls below zero or premiums paid do not, in the aggregate, equal
the premium necessary to satisfy the Guaranteed Death Benefit. (See the section
on Premiums.)
HOW ARE PREMIUMS PAID, PROCESSED AND CREDITED TO ME?
Your ENCORE! Policy will be issued after a completed application is accepted,
and the initial premium payment is received, by AVLIC at its Home Office.
AVLIC's Home Office is located at 5900 "O" Street, P.O. Box 82550, Lincoln, NE
68501. Your initial premium will be allocated to the Money Market Subaccount for
13 days following the Issue Date, and then will be allocated to the Subaccounts
and/or the Fixed Account, according to selections you made in your application.
You have the right to examine your ENCORE! Policy and return it for a refund for
a limited time, even after the Issue Date. (See the section on Issuance of a
Policy.)
You may make subsequent premium payments according to your Planned Periodic
Premium schedule; although you are not required to do so. AVLIC will send
premium payment notices to you according to any schedule you select. When AVLIC
receives your premium payment at its Home Office, we will deduct any applicable
Percent of Premium Charges and allocate the Net Premium to the Subaccounts
and/or the Fixed Account according to your selections. (See the sections on
Premiums and Allocations of Premiums and Accumulation Value.)
As already noted, ENCORE! provides you considerable flexibility in determining
the frequency and amount of premium payments. This flexibility is not, however,
unlimited. You should keep certain factors in mind in determining the payment
schedule that is best suited to your needs. These include the amount of the
Guaranteed Death Benefit Premium and/or Net Policy Funding requirement needed to
keep your ENCORE! Policy in force; maximum premium limitations established under
the federal tax laws; and the impact that reduced premium payments may have on
the Net Cash Surrender Value of your ENCORE! Policy. (See the section on
Premiums.)
IS THE ACCUMULATION VALUE OF MY ENCORE! POLICY AVAILABLE BEFORE THE MATURITY
DATE WITHOUT SURRENDER?
Yes. You may access the value of your ENCORE! Policy in one of two ways. First,
you may obtain a loan, secured by the Accumulation Value of your ENCORE! Policy
following its first Policy Anniversary. The maximum interest rate on any such
loan is 6% annually; the current rate is 5.5% annually. After the
ENCORE!
9
<PAGE> 13
tenth Policy Anniversary, you may borrow against a limited amount of the Net
Cash Surrender Value of your ENCORE! Policy at a maximum annual interest rate of
4%; the current rate for such loans is 3.5% annually. (See the section on Loan
Benefits.)
You may also access the value of your ENCORE! Policy by making a partial
withdrawal. A partial withdrawal is not subject to Surrender Charges, but is
subject to a maximum charge not to exceed the lesser of $50 or 2% of the amount
withdrawn (currently, the partial withdrawal charge is the lesser of $25 or 2%).
(See the section on Partial Withdrawals.)
ARE THERE ANY OTHER CHARGES ASSOCIATED WITH OWNERSHIP OF AN ENCORE! POLICY?
Certain states impose premium and other taxes in connection with insurance
policies such as ENCORE! AVLIC may deduct up to 5% of each premium as a Premium
Charge for Taxes. Currently, 3.5% is deducted for this purpose. Charges are
deducted against the Accumulation Value to cover the Cost of Insurance under the
Policy and to compensate AVLIC for administering each individual ENCORE! Policy.
These charges, which are part of the Monthly Deduction, are calculated and paid
on each Monthly Activity Date. The Cost of Insurance is calculated based on risk
factors relating to the Insured as reflected in relevant actuarial tables. The
Monthly Deduction also includes a flat Administrative Expense Charge. This
charge, currently fixed at $5 per Policy per month, may be increased during the
life of your ENCORE! Policy, up to a guaranteed $9 maximum. (See the section on
Charges from Accumulation Value.)
For its services in administering Separate Account V and Subaccounts and as
compensation for bearing certain mortality and expense risks, AVLIC is also
entitled to receive fees. These fees are calculated daily during the first 20
years of each ENCORE! Policy, at a combined current annual rate of .70% of the
value of the net assets of Separate Account V. After the 20th Policy Anniversary
Date, the combined current annual rate is expected to decrease to .45% of the
daily net assets of Separate Account V. No Mortality and Expense Risk Charge
will be deducted from the amounts in the Fixed Account. (See the section on
Daily Charges Against the Separate Account.)
Finally, because AVLIC incurs expenses immediately upon the issuance of an
ENCORE! Policy that are recovered over a period of years, an ENCORE! Policy that
is Surrendered on or before its 14th Policy Anniversary Date is subject to a
Surrender Charge. The maximum Surrender Charge is $40 per $1000 of Specified
Amount; additional Surrender Charges may apply if you increase the Specified
Amount of your ENCORE! Policy. Because the Surrender Charge may be significant
upon early Surrender, you should purchase an ENCORE! Policy only if you intend
to maintain your ENCORE! Policy for a substantial period. (See the section on
Surrender Charge.)
Policy Owners who choose to allocate Net Premiums to one or more of the
Subaccounts will also bear a pro rata share of the management fees and expenses
paid by each of the investment portfolios in which the various Subaccounts
invest. No such management fees are assessed against Net Premiums allocated to
the Fixed Account. (See the section on Fund Expense Summary.)
WHEN DOES MY ENCORE! POLICY TERMINATE?
You may terminate your ENCORE! Policy by Surrendering the Policy during the
lifetime of the Insured for its Net Cash Surrender Value. As noted above, your
ENCORE! Policy will terminate if you fail to pay required premiums or maintain
sufficient Net Cash Surrender Value to cover Policy charges. (See the sections
on Surrenders and Premiums.)
Finally, your ENCORE! Policy will terminate on its Maturity Date if the named
Insured is living on that date unless you have elected the Extended Maturity
Option. The Maturity Date is the Policy Anniversary nearest to the Insured's
100th birthday. On the Maturity Date, AVLIC will pay to you, the Policy Owner,
an amount -- referred to as the Maturity Benefit -- equal to the Accumulation
Value of your ENCORE! Policy, less any Outstanding Policy Debt. (See the section
on Benefits at Maturity.)
YEAR 2000
Like other insurance companies and their separate accounts, AVLIC and Separate
Account V could be adversely affected if the computer systems they rely upon do
not properly process date-related information
ENCORE!
10
<PAGE> 14
and data involving the years 2000 and after. This issue arose because both
mainframe and PC-based computer hardware and software have traditionally used
two digits to identify the year. For example, the year 1998 is input, stored and
calculated as "98." Similarly, the year 2000 would be input, stored and
calculated as "00." If computers assume this means 1900, it could cause errors
in calculations, comparisons, and other computing functions.
Like all insurance companies, AVLIC makes extensive use of dates and date
calculations. We began a corporate-wide Year 2000 (Y2K) project in mid-1996. Our
goal is to ensure that our computer systems continue to operate smoothly with no
service disruptions before, during or after the year 2000.
As of April 15, 2000, AVLIC has experienced no known Y2K problems. All of our
computer application and operating systems had been updated for the year 2000 by
December 31, 1998. Continuous testing and monitoring throughout 1999 helped
AVLIC continue to meet our contractual and service obligations to our customers.
In addition to our internal efforts, AVLIC is working closely with vendors and
other business partners to confirm that they too are addressing Y2K issues on a
timely basis. We believe that we are Y2K compliant; however, in the event we or
our service providers, vendors, financial institutions or others with which we
conduct business, fail to be Y2K - compliant, there would be a materially
adverse effect on us. Certain vendors and/or business partners, due to their
exposure to foreign markets, may face additional Y2K issues. Please see the
Funds' prospectuses for information on the Funds' preparedness for Y2K.
AVLIC, THE SEPARATE ACCOUNT AND THE FUNDS
AMERITAS VARIABLE LIFE INSURANCE COMPANY
Ameritas Variable Life Insurance Company ("AVLIC") is a stock life insurance
company organized in the State of Nebraska. AVLIC was incorporated on June 22,
1983 and commenced business December 29, 1983. AVLIC is currently licensed to
sell life insurance in 47 states, and the District of Columbia. AVLIC's
financial statements may be found at page F-II-1.
AVLIC is a wholly owned subsidiary of AMAL Corporation, a Nebraska stock
company. AMAL Corporation is a joint venture of Ameritas Life Insurance Corp.
("Ameritas Life"), a Nebraska stock life insurance company, which owns a
majority interest in AMAL Corporation; and AmerUs Life Insurance Company
("AmerUs Life"), an Iowa stock life insurance company, which owns a minority
interest in AMAL Corporation. The Home Offices of both AVLIC and Ameritas Life
are at 5900 "O" Street, P.O. Box 82550, Lincoln, Nebraska 68501 ("Home Office").
AVLIC's telephone number is 800-745-1112 and its website address is
www.overturelife.com.
On April 1, 1996 Ameritas Life consummated an agreement with AmerUs Life whereby
AVLIC became a wholly owned subsidiary of a newly formed holding company, AMAL
Corporation. Under terms of the agreement AMAL Corporation is 66% owned by
Ameritas Life and 34% owned by AmerUs Life. AmerUs Life has options to purchase
an additional interest in AMAL Corporation if certain conditions are met. There
are no other owners of 5% or more of the outstanding voting securities of AVLIC.
Ameritas Life and its subsidiaries had total assets at December 31, 1999 of over
$4.8 billion. AmerUs Life had total assets as of December 31, 1999 of over $10.7
billion.
AVLIC has a rating of A (Excellent) for financial strength and operating
performance from A.M. Best Company, a firm that analyzes insurance carriers.
This is the third highest of Best's 15 categories. AVLIC is rated AA (Very
Strong) for insurer financial strength from Standard & Poor's. This is the
third-highest of Standard & Poor's 21 ratings. Ameritas Life enjoys a long
standing A+ (Superior) rating from A.M. Best, the second highest of Best's
ratings.
Ameritas Life, AmerUs Life and AMAL Corporation guarantee the obligations of
AVLIC. This guarantee will continue until AVLIC is recognized by a national
rating agency as having a financial rating equal to or greater than Ameritas
Life, or until AVLIC is acquired by another insurance company which has a
financial rating by a national rating agency equal to or greater than Ameritas
Life and which agrees to assume the guarantee. AmerUs Life will be relieved of
its obligations under the guarantee if it sells its interest in AMAL Corporation
to another insurance company which has a financial rating by a national rating
agency equal to or greater than that of AmerUs Life, and the purchaser assumes
the guarantee.
ENCORE!
11
<PAGE> 15
Ameritas Investment Corp. ("AIC"), the principal underwriter of the Policies,
may publish in advertisements and reports to Policy Owners, the ratings and
other information assigned to Ameritas Life and AVLIC by one or more independent
rating services. Published material may also include charts and other
information concerning dollar cost averaging, portfolio rebalancing, earnings
sweep, tax-deference, asset allocation, diversification, long term market
trends, index performance and other investment methods and programs. The purpose
of the ratings is to reflect the financial strength of AVLIC. The ratings do not
relate to the performance of Separate Account V.
THE SEPARATE ACCOUNT
Ameritas Variable Life Insurance Company Separate Account V ("Separate Account
V") was established under Nebraska law on August 28, 1985. The assets of
Separate Account V are held by AVLIC segregated from all of AVLIC's other
assets, are not chargeable with liabilities arising out of any other business
which AVLIC may conduct, and are not affected by income, gains, or losses of
AVLIC. Although the assets maintained in Separate Account V will not be charged
with any liabilities arising out of AVLIC's other business, all obligations
arising under the Policies are liabilities of AVLIC who will maintain assets in
Separate Account V of a total market value at least equal to the reserve and
other contract liabilities of Separate Account V. Separate Account V will at all
times contain assets equal to or greater than Accumulation Values invested in
Separate Account V. Nevertheless, to the extent assets in Separate Account V
exceed AVLIC's liabilities in Separate Account V, the assets are available to
cover the liabilities of AVLIC's General Account. AVLIC may, from time to time,
withdraw assets available to cover the General Account obligations.
Separate Account V is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940 ("1940 Act") as a unit
investment trust, which is a type of investment company. This does not involve
any SEC supervision of the management or investment policies or practices of
Separate Account V. For state law purposes, Separate Account V is treated as a
Division of AVLIC.
PERFORMANCE INFORMATION
Performance information for the Subaccounts of Separate Account V and the Funds
available for investment by Separate Account V may appear in advertisements,
sales literature, or reports to Policy Owners or prospective purchasers. AVLIC
may also provide a hypothetical illustration of Accumulation Value, Net Cash
Surrender Value and Death Benefit based on historical investment returns of the
Funds for a sample Insured based on assumptions as to age, sex, and other Policy
specific assumptions.
AVLIC may also provide individualized hypothetical illustrations of Accumulation
Value, Net Cash Surrender Value and Death Benefit based on historical investment
returns of the Funds. These illustrations will reflect deductions for Fund
expenses and Policy and Separate Account V charges, including the Monthly
Deduction, Percent of Premium Charge, and the Surrender Charge. These
hypothetical illustrations will be based on the actual historical experience of
the Funds as if the Subaccounts had been in existence and a Policy issued for
the same periods as those indicated for the Funds.
THE FUNDS
There are currently 31 Subaccounts within Separate Account V available to Policy
Owners for new allocations. The assets of each Subaccount are invested in shares
of a corresponding portfolio of one of the following mutual Funds (collectively,
the "Funds"): Calvert Variable Series, Inc. Ameritas Portfolios ("Ameritas
Portfolios"); Calvert Variable Series, Inc., ("CVS Social Portfolios"); Variable
Insurance Products Fund and Variable Insurance Products Fund II, (respectively,
"VIP" and "VIP II"; collectively "Fidelity Portfolios"); The Alger American Fund
("Alger American Funds"); MFS Variable Insurance Trust ("MFS Trust"); and The
Universal Institutional Funds, Inc. ("Universal Institutional Funds"). The
Ameritas Portfolios receive investment advisory services from Ameritas
Investment Corp. ("AIC"). AIC is a registered investment adviser under the
Investment Advisers Act of 1940 and is an affiliate of AVLIC.
ENCORE!
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<PAGE> 16
AIC also contracts with subadvisers. The following subadvisers provide
investment subadvisory services to the indicated portfolios:
<TABLE>
<CAPTION>
PORTFOLIO SUBADVISER
- --------- ----------
<S> <C>
Ameritas Money Market Calvert Asset Management Company, Inc.
Ameritas Index 500 State Street Global Advisors
Ameritas Growth Fred Alger Management, Inc. ("Alger Management")
Ameritas Income & Growth Alger Management
Ameritas Small
Capitalization Alger Management
Ameritas MidCap Growth Alger Management
Ameritas Emerging Growth Massachusetts Financial Services Company ("MFS")
Ameritas Research MFS
Ameritas Growth With Income MFS
</TABLE>
CVS Social Portfolios, which is managed by Calvert Asset Management Company,
Inc. ("CAMCO"), offers the following Portfolios: CVS Social Small Cap Growth
Portfolio, CVS Social Mid Cap Growth Portfolio, CVS Social International Equity
Portfolio, and CVS Social Balanced Portfolio. VIP, which is managed by Fidelity
Management & Research Company ("Fidelity"), offers the following portfolios: VIP
Equity-Income, VIP Growth, VIP High Income and VIP Overseas. VIP II, also
managed by Fidelity, offers the following portfolios: VIP II Asset Manager, VIP
II Investment Grade Bond, VIP II Asset Manager: Growth, and VIP II Contrafund.
The Alger American Fund, which is managed by Fred Alger Management, Inc. ("Alger
Management"), offers the following portfolios: Alger American Balanced
("Balanced") and Alger American Leveraged AllCap ("Leveraged AllCap"). The MFS
Trust, managed by Massachusetts Financial Services Company ("MFS"), offers the
following portfolios or series in connection with this Policy: MFS Utilities,
MFS Global Governments, and MFS New Discovery. The Universal Institutional Funds
offer the following portfolios in connection with the Policy, all of which are
managed by Morgan Stanley Asset Management: Emerging Markets Equity, Global
Equity, International Magnum, Asian Equity and U.S. Real Estate. Each Fund is
registered with the SEC under the Investment Company Act of 1940 as an open-end
management investment company.
The assets of each portfolio of the Funds are held separately from the assets of
the other portfolios. Thus, each portfolio operates as a separate investment
portfolio, and the income or losses of one portfolio generally have no effect on
the investment performance of any other portfolio.
The investment objectives and policies of each portfolio are summarized below.
There is no assurance that any of the portfolios will achieve their stated
objectives. More detailed information, including a description of investment
objectives, policies, restrictions, expenses and risks, is in the prospectuses
for each of the Funds, which must accompany or precede this prospectus. All
underlying Fund information, including Fund prospectuses, has been provided to
AVLIC by the underlying Funds. AVLIC has not independently verified this
information. One or more of the portfolios may employ investment techniques that
involve certain risks, including investing in non-investment grade, high risk
debt securities, entering into repurchase agreements and reverse repurchase
agreements, lending portfolio securities, engaging in "short sales against the
box," investing in instruments issued by foreign banks, entering into firm
commitment agreements and investing in warrants and restricted securities. In
addition, certain of the portfolios may invest in securities of foreign issuers.
The Leveraged AllCap portfolio may borrow money to increase its portfolio of
securities, and may purchase or sell options and enter into futures contracts on
securities indexes to increase gain or to hedge the value of the portfolio.
Certain of the portfolios are permitted to invest a portion of their assets in
non-investment grade, high risk debt securities; these portfolios include the
VIP High Income, VIP Equity-Income, VIP II Asset Manager: Growth, VIP II Asset
Manager portfolios of the Fidelity Portfolios, and the Research portfolio of the
Ameritas Portfolios. Certain portfolios are designed to invest a substantial
portion of their assets overseas, such as the VIP Overseas portfolio and the
International Magnum portfolio of the Universal Institutional Funds. Other
portfolios invest primarily in the securities markets of emerging nations.
Investments of this type involve different risks than investments in more
established economies, and will be affected by greater volatility of currency
exchange rates and overall economic and political factors. Such portfolios
include the Emerging Markets Equity and Asian Equity portfolios of the
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<PAGE> 17
Universal Institutional Funds. The Emerging Markets Equity portfolio may also
invest in non-investment grade, high risk debt securities (also known as "junk
bonds") and securities of Russian companies. Investment in Russian companies may
involve risks associated with that nation's system of share registration and
custody. Securities of non-U.S. issuers (including issuers in emerging nations)
may also be purchased by each of the portfolios of the MFS Trust, by the
Emerging Growth, Research, and Growth With Income portfolios of the Ameritas
Portfolios, and by the Global Equity portfolio of the Universal Institutional
Funds. Investments acquired by the U.S. Real Estate portfolio of the Universal
Institutional Funds may be subject to the risks associated with the direct
ownership of real estate and direct investments in real estate investment
trusts. Further information about the risks associated with investments in each
of the Funds and their respective portfolios is contained in the prospectus
relating to that Fund. These prospectuses, together with this prospectus, should
be read carefully and retained.
The investments in the Funds may be managed by Fund managers which manage one or
more other mutual funds that have similar names, investment objectives, and
investment styles as the Funds. You should be aware that the Funds are likely to
differ from the other mutual funds in size, cash flow pattern, and tax matters.
Thus, the holdings and performance of the Funds can be expected to vary from
those of the other mutual funds.
You should periodically consider the allocation among the Subaccounts in light
of current market conditions and the investment risks attendant to investing in
the Funds' various portfolios.
Separate Account V will purchase and redeem shares from the portfolios at the
net asset value. Shares will be redeemed to the extent necessary for AVLIC to
collect charges, pay the Surrender Values, partial withdrawals, and make policy
loans or to transfer assets among Investment Options as you requested. Any
dividend or capital gain distribution received is automatically reinvested in
the corresponding Subaccount.
Since each of the Funds is designed to provide investment vehicles for variable
annuity and variable life insurance contracts of various insurance companies and
will be sold to separate accounts of other insurance companies as investment
vehicles for various types of variable life insurance policies and variable
annuity contracts, there is a possibility that a material conflict may arise
between the interests of Separate Account V and one or more of the separate
accounts of another participating insurance company. In the event of a material
conflict, the affected insurance companies agree to take any necessary steps,
including removing their separate accounts from the Funds, to resolve the
matter. The risks of such mixed and shared funding are described further in the
prospectuses of the Funds.
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS' PORTFOLIOS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AMERITAS PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------------
Ameritas Money Invests in U.S. dollar-denominated money market Seeks as high a level of
Market securities of domestic and foreign issuers, including current income as is
U.S. government securities and repurchase agreements. consistent with
Invests more than 25% of total assets in the financial preservation of capital
services industry and liquidity.
- -------------------------------------------------------------------------------------------------------------------------
Ameritas Under normal circumstances, seeks to track the Standard Seeks investment results
Index 500 500 & Poor's 500. that correspond to the
total return of common
stocks publicly traded in
the United States, as
represented by the
Standard & Poor's 500.
- -------------------------------------------------------------------------------------------------------------------------
Ameritas Growth Focuses on growing companies that generally have broad Seeks long-term capital
product lines, markets, financial resources and depth of appreciation.
management. Under normal circumstances, the portfolio
invests primarily in the equity securities of large
companies. The portfolio considers a large company to
have market capitalization of $1 billion or greater.
- -------------------------------------------------------------------------------------------------------------------------
Ameritas Income Invests in dividend paying equity securities, such as Primarily seeks to
& Growth common or preferred stocks, preferably those which the provide a high level of
subadvisor believes also offer opportunities for capital dividend income. Its
appreciation secondary goal is to
provide capital
appreciation.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 18
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ameritas Small Focuses on small, fast-growing companies that offer Seeks long-term capital
Capitalization innovative products, services or technologies to a
appreciation. rapidly expanding marketplace. Under normal
circumstances, the portfolio invests primarily in the
equity securities of small capitalization companies. A
small capitalization company is one that has a market
capitalization within the range of the Russell 200 Growth
Index or the S&P SmallCap 600 Index.
- -------------------------------------------------------------------------------------------------------------------------
Ameritas MidCap Invests in midsize companies with promising growth Seeks long-term capital
Growth potential. Under normal circumstances, the portfolio appreciation.
invests primarily in the equity securities of companies
having a market capitalization within the range of
companies in the S&P MidCap 400 index.
- -------------------------------------------------------------------------------------------------------------------------
Ameritas Invests, under normal market conditions, at least 65% of Seeks long-term growth of
Emerging Growth its total assets in common stocks and related securities, capital.
such as preferred stocks, convertible securities and
depositary receipts for those securities, of emerging
growth companies
- -------------------------------------------------------------------------------------------------------------------------
Ameritas Research Invests, under normal market conditions, at least 80% of Seeks long-term growth of
its total assets in common stocks and related securities, capital and future
such as preferred stocks, convertible securities and income.
depositary receipts. The portfolio focuses on companies
that the subadvisor believes have favorable prospects for
long-term growth, attractive valuations based on current
and expected earnings or cash flow, dominant or growing
market share and superior management. The fund may invest
in companies of any size. The portfolio's investments may
include securities traded on securities exchanges or in
the over-the-counter markets
- -------------------------------------------------------------------------------------------------------------------------
Ameritas Growth Invests, under normal market conditions, at least 65% of Seeks to provide
With Income its total assets in common stocks and related securities, reasonable current income
such as preferred stocks, convertible securities and and long-term growth of
depositary receipts for those securities. These capital and income.
securities may be listed on a securities exchange or
traded in the over-the-counter markets. While the
portfolio may invest in companies of any size, it may
generally focus on companies with larger market
capitalizations that the subadvisor believes have
sustainable growth prospects and attractive valuations
based on current and expected earnings or cash flow.
- -------------------------------------------------------------------------------------------------------------------------
CVS SOCIAL PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------------
CVS Social Small Cap Invests at least 65% of assets in the common stocks of Seeks to provide
Growth Portfolio small-cap companies. Returns in the portfolio will be long-term capital
mostly from the changes in the price of the portfolio's appreciation by investing
holdings (capital appreciation). The portfolio currently primarily in equity
defines small-cap companies as those with market securities of companies
capitalization of $1 billion or less at the time the that have small market
portfolio initially invests.* capitalizations.
- -------------------------------------------------------------------------------------------------------------------------
CVS Social Mid Cap Invests primarily in the common stocks of mid-size Seeks to provide
Growth Portfolio companies. Returns in the portfolio will be mostly from long-term capital
the changes in the price of the portfolio's holdings appreciation by investing
(capital appreciation). The portfolio currently defines primarily in a non-
mid-cap companies as those within the range of market diversified portfolio of
capitalizations of the S&P's Mid-Cap 400 Index. Most the equity securities of
companies in the Index have a capitalization of $500 mid-sized companies that
million to $10 billion.* are undervalued but
demonstrate a potential
for growth.
- -------------------------------------------------------------------------------------------------------------------------
CVS Social Invests primarily in the common stocks of mid- to Seeks to provide a high
International large-cap companies using a value approach. The portfolio total return consistent
Equity Portfolio identifies those countries with markets and economies with reasonable risk by
that it believes currently provide the most favorable investing primarily in a
climate for investing. The portfolio invests primarily in globally diversified
more developed economies and markets. No more than 5% of portfolio for equity
Portfolio assets are invested in the U.S.* securities.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
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15
<PAGE> 19
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CVS Social Typically invests about 60% of its assets in stocks and Seeks to achieve a
Balanced Portfolio 40% in bonds or other fixed-income investments. Stock competitive total return
investments are primarily common stock in large-cap through an actively
companies, while the fixed-income investments are managed portfolio of
primarily a wide variety of investment grade bonds.* stocks, bonds and money
market instruments which
offer income and capital
growth opportunity and
which satisfy the
investment and social
criteria.
- -------------------------------------------------------------------------------------------------------------------------
*The portfolio invests with the philosophy that long-term
rewards to investors will come from those organizations
whose products, services, and methods enhance the human
condition and the traditional American values of
individual initiative, equality of opportunity and
cooperative effort. Investments are selected on the basis
of their ability to contribute to the dual objectives of
financial soundness and social criteria
- -------------------------------------------------------------------------------------------------------------------------
FIDELITY PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------------
VIP Equity-Income Investing at least 65% in income-producing equity Seeks reasonable income.
securities, which tends to lead to investments in large Will also consider the
cap "value" stocks potential for capital
appreciation. Seeks a
yield which exceeds the
composite yield on the
securities comprising the
Standard & Poor's 500.
- -------------------------------------------------------------------------------------------------------------------------
VIP Growth Investing primarily in common stocks. Investing in Seeks capital
companies that it believes have above-average growth appreciation.
potential (stocks of these companies are often called
"growth" stocks). Investing in domestic and foreign
issuers
- -------------------------------------------------------------------------------------------------------------------------
VIP High Income Investing at least 65% of total assets in Seeks a high level of
income-producing debt securities, preferred stocks and current income while also
convertible securities, with an emphasis on lower-quality considering growth of
debt securities. capital.
- -------------------------------------------------------------------------------------------------------------------------
VIP Overseas Investing at least 65% of total assets in foreign Seeks long-term growth of
securities. Investing primarily in common stocks capital.
- -------------------------------------------------------------------------------------------------------------------------
VIP II Asset Manager Allocating the Fund's assets among stocks, bonds, and Seeks high total return
short-term and money market instruments. Maintaining a with reduced risk over
neutral mix over time of 50% of assets in stocks, 40% of the long term by
bonds, and 10% of assets in short-term and money market allocating its assets in
instruments. stocks, bonds, and short-
term instruments.
- -------------------------------------------------------------------------------------------------------------------------
VIP II Investment Investing in U.S. dollar-denominated investment- grade Seeks as high a level of
Grade Bond bonds. current income as is
consistent with the
preservation of capital.
- -------------------------------------------------------------------------------------------------------------------------
VIP II Asset Allocating the Fund's assets among stocks, bonds, and Seeks to maximize total
Manager: short-term and money market instruments. Maintaining a return by allocating its
Growth neutral mix over time of 70% of assets in stocks, 25% of assets among stocks,
assets in bonds, and 5% of assets in short-term and money bonds, short- term
market instruments instruments and other
investments.
- -------------------------------------------------------------------------------------------------------------------------
VIP II Contrafund Investing primarily in common stocks. Investing in Seeks long-term capital
securities of companies whose value it believes is not appreciation.
fully recognized by the public.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALGER AMERICAN FUND
- -------------------------------------------------------------------------------------------------------------------------
Balanced The portfolio focuses on stocks of companies with growth Seeks current income and
potential and fixed income securities, with emphasis on long-term capital
income-producing securities which appear to have some appreciation by
potential for capital appreciation. Under normal investment in common
circumstances, it invests in common stocks and fixed stocks and fixed income
income securities, which include commercial paper and and convertible
bonds rated within the four highest rating categories by securities, with emphasis
an established rating agency or if not rated, which are on income producing
determined by the manager to be of comparable quality. securities which appear
Ordinarily, at least 25% of the portfolio's net assets to have potential for
are invested in fixed-income securities. capital appreciation.
- -------------------------------------------------------------------------------------------------------------------------
Leveraged AllCap Under normal circumstances, the portfolio invests in the Seeks long-term capital
equity securities of companies of any size which appreciation.
demonstrate promising growth potential. The portfolio can
leverage, that is, borrow money, up to one-third of its
total assets to buy additional securities. By borrowing
money, the portfolio has the potential to increase its
returns if the increase in the value of the securities
purchased exceeds the cost of borrowing, including
interest paid on the money borrowed.
- -------------------------------------------------------------------------------------------------------------------------
MFS TRUST
- -------------------------------------------------------------------------------------------------------------------------
Utilities Series Invests, under normal market conditions, at least 65% of Will seek capital growth
its total assets in equity and debt securities of both and current income
domestic and foreign companies in the utilities industry. (income above that
available from a
portfolio invested
entirely in equity
securities).
- -------------------------------------------------------------------------------------------------------------------------
Global Governments Invests, under normal market conditions, at least 65% of Will seek to provide
Series its total assets in debt obligations that are issued or income and capital
guaranteed as to principal and interest by either (1) the appreciation.
U.S. government, its agencies, authorities or
instrumentalities or (2) the governments of foreign
countries (including emerging markets). May also invest
in corporate bonds (including lower rated bonds commonly
known as junk bonds) and mortgage-backed and
assets-backed securities.
- -------------------------------------------------------------------------------------------------------------------------
New Discovery Invests, under normal market conditions, at least 65% of Will seek capital
its total assets in common stocks and related securities, appreciation.
series such as preferred stocks, convertible securities
and depositary receipts for those securities, of emerging
growth companies.
- -------------------------------------------------------------------------------------------------------------------------
UNIVERSAL INSTITUTIONAL FUNDS
- -------------------------------------------------------------------------------------------------------------------------
Emerging Markets Invests primarily in equity securities of emerging market Long-term capital
Equity country issuers with a focus on those issuers with appreciation.
attractive growth characteristics, reasonable valuations,
and managements with a strong shareholder value
orientation.
- -------------------------------------------------------------------------------------------------------------------------
Global Equity Invests primarily in equity securities of issuers Long-term capital
throughout the world ,including U.S. issuers and emerging appreciation.
market countries, using an approach based on individual
stock selection and emphasizing a bottom up approach to
identify stocks that are undervalued.
- -------------------------------------------------------------------------------------------------------------------------
International Invests primarily in equity securities of non-U.S. Long-term capital
Magnum issuers, domiciled in countries comprising the Morgan appreciation.
Stanley Capital International Europe, Australasia, Far
East Index commonly known as the "EAFE Index."
- -------------------------------------------------------------------------------------------------------------------------
Asian Equity Invests primarily in equity securities of Asian issuers, Long-term capital
excluding Japan, using a disciplined, value-oriented appreciation.
approach to security selections focusing on larger
companies with strong management teams
- -------------------------------------------------------------------------------------------------------------------------
U.S. Real Estate Invests primarily in equity securities of companies in Above-average current
the U.S. real estate industry, including real estate income and long-term
investment trusts and real estate operating companies. capital appreciation.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
AVLIC reserves the right, subject to applicable law, to add, delete, combine, or
substitute investments in Separate Account V if, in our judgment, marketing
needs, tax considerations, or investment conditions
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17
<PAGE> 21
warrant. This may happen due to a change in law or a change in a Fund's
objectives or restrictions, or for some other reason. AVLIC may operate Separate
Account V as a management company under the 1940 Act, it may be deregistered
under that Act if registration is no longer required, or it may be combined with
other AVLIC separate accounts. AVLIC may also transfer the assets of Separate
Account V to another separate account. If necessary, we will notify the SEC
and/or state insurance authorities and will obtain any required approvals before
making these changes.
If any changes are made, AVLIC may, by appropriate endorsement, change the
Policy to reflect the changes. In addition, AVLIC may, when permitted by law,
restrict or eliminate any voting rights of Policy Owners or other persons who
have voting rights as to Separate Account V. AVLIC will determine the basis for
making any new Subaccounts available to existing Policy Owners.
You will be notified of any material change in the investment policy of any Fund
in which you have an interest.
FIXED ACCOUNT
You may elect to allocate all or a portion of your Net Premium payments to the
Fixed Account, and you may also transfer monies between Separate Account V and
the Fixed Account. (See the section on Transfers.)
Payments allocated to the Fixed Account and transferred from Separate Account V
to the Fixed Account are placed in AVLIC's General Account. The General Account
includes all of AVLIC's assets, except those assets segregated in AVLIC's
separate accounts. AVLIC has the sole discretion to invest the assets of the
General Account, subject to applicable law. AVLIC bears an investment risk for
all amounts allocated or transferred to the Fixed Account, plus interest
credited thereto, less any deduction for charges and expenses. The Policy Owner
bears the investment risk that the declared rate, described below, will fall to
a lower rate after the expiration of a declared rate period. Because of
exemptions and exclusionary provisions, interests in the General Account have
not been registered under the Securities Act of 1933 (the "1933 Act"), nor is
the General Account registered as an investment company under the Investment
Company Act of 1940. Accordingly, neither the General Account nor any interest
in it is generally subject to the provisions of the 1933 or 1940 Act. We
understand that the staff of the SEC has not reviewed the disclosures in this
prospectus relating to the Fixed Account portion of the Policy; however, these
disclosures may be subject to generally applicable provisions of the federal
securities laws regarding the accuracy and completeness of statements made in
prospectuses.
AVLIC guarantees that it will credit interest at a declared rate of at least
3.5%. AVLIC may, at its discretion, set a higher declared rate(s). Each month
AVLIC will establish the declared rate for the Policies with a Policy Date or
Anniversary Date that month. Each month is assumed to have 30 days, and each
year to have 360 days for purposes of crediting interest on the Fixed Account.
The Policy Owner will earn interest on the amounts transferred or allocated to
the Fixed Account at the declared rate effective for the month in which the
Policy was issued, which rate is guaranteed for the remainder of the first
Policy Year. During later Policy Years, all amounts in the Fixed Account will
earn interest at the declared rate in effect in the month of the last Policy
Anniversary. Declared interest rates may increase or decrease from previous
periods, but will not fall below 3.5%. AVLIC reserves the right to change the
declaration practice, and the period for which a declared rate will apply.
POLICY BENEFITS
The rights and benefits under the Policy are summarized in this prospectus;
however prospectus disclosure regarding the Policy is qualified in its entirety
by the Policy itself, a copy of which is available upon request from AVLIC.
PURPOSES OF THE POLICY
The Policy is designed to provide the Policy Owner with both lifetime insurance
protection to the Policy Anniversary nearest the Insured's 100th birthday and
flexibility in the amount and frequency of premium payments and with the level
of life insurance proceeds payable under the Policy.
You are not required to pay scheduled premiums to keep the Policy in force, but
you may, subject to certain limitations, vary the frequency and amount of
premium payments. You also may adjust the level of
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18
<PAGE> 22
Death Benefits payable under the Policy without having to purchase a new Policy
by increasing (with evidence of insurability) or decreasing the Specified
Amount. An increase in the Specified Amount will increase the Guaranteed Death
Benefit Premium required. If the Specified Amount is decreased, however, the
Guaranteed Death Benefit Premium will not decrease. Thus, as insurance needs or
financial conditions change, you have the flexibility to adjust life insurance
benefits and vary premium payments.
The Death Benefit may, and the Accumulation Value will, vary with the investment
experience of the chosen Subaccounts of Separate Account V. Thus the Policy
Owner benefits from any appreciation in value of the underlying assets, but
bears the investment risk of any depreciation in value. As a result, whether or
not a Policy continues in force may depend in part upon the investment
experience of the chosen Subaccounts. The failure to pay a Planned Periodic
Premium will not necessarily cause the Policy to lapse, but the Policy could
lapse even if Planned Periodic Premiums have been paid, depending upon the
investment experience of Separate Account V. If the Guaranteed Death Benefit
Premiums are satisfied by Net Policy Funding, AVLIC will keep the Policy in
force during the Guaranteed Death Benefit Period and provide a Death Benefit. In
certain instances, this Net Policy Funding will not, after the payment of
Monthly Deductions, generate positive Net Cash Surrender Values.
DEATH BENEFIT PROCEEDS
As long as the Policy remains in force, AVLIC will pay the Death Benefit
Proceeds of the Policy upon Satisfactory Proof of Death, according to the Death
Benefit option in effect at the time of the Insured's death. The amount of the
Death Benefits payable will be determined at the end of the Valuation Period
during which the Insured's death occurred. The Death Benefit Proceeds may be
paid in a lump sum or under one or more of the payment options set forth in the
Policy. (See the section on Payment Options.)
Death Benefit Proceeds will be paid to the surviving Beneficiary or
Beneficiaries you specified in the application or subsequently changed. If you
do not choose a Beneficiary, the proceeds will be paid to you, as the Policy
Owner, or to your estate.
DEATH BENEFIT OPTIONS
The Policy provides two Death Benefit options, unless the Extended Maturity
Option is in effect. If the Extended Maturity Option is in effect, the Death
Benefit will be the same as the Accumulation Value. Extension of the Maturity
Date may result in adverse tax consequences. (See the section on Benefits at
Maturity.) The Policy Owner selects one of the options in the application. The
Death Benefit under either option will never be less than the current Specified
Amount of the Policy as long as the Policy remains in force. (See the section on
Policy Lapse and Reinstatement.) The minimum initial Specified Amount is
generally $500,000 for Insureds ages 20-49 and $250,000 for those who are 50 or
older. The net amount at risk for Option A will generally be less than the net
amount at risk for Option B. If you choose Option A, your Cost of Insurance
deduction will generally be lower than if you choose Option B. (See the section
on Charges and Deductions.) The following graphs illustrate the differences in
the two Death Benefit options.
OPTION A.
(OMITTED GRAPH ILLUSTRATES PAYOUT UNDER DEATH BENEFIT OPTION A, SPECIFICALLY BY
SHOWING THE RELATIONSHIPS OVER TIME, BETWEEN THE SPECIFIED AMOUNT AND THE
ACCUMULATION VALUE.)
[GRAPH]
Death Benefit Option A. Pays a Death Benefit equal
to the Specified Amount or the Accumulation Value
multiplied by the Death Benefit percentage (as
illustrated at Point A) whichever is greater.
Under Option A, the Death Benefit is the current Specified Amount of the Policy
or, if greater, the applicable percentage of Accumulation Value on the date of
death. The applicable percentage is 250% for
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19
<PAGE> 23
Insureds with an Attained Age 40 or younger on the Policy Anniversary Date prior
to the date of death. For Insureds with an Attained Age over 40 on that Policy
Anniversary Date, the percentage declines. For example, the percentage at
Attained Age 40 is 250%, at Attained Age 50 is 185%, at Attained Age 60 is 130%,
at Attained Age 70 is 115%, at Attained Age 80 is 105%, and at Attained Age 90
is 100%. Accordingly, under Option A the Death Benefit will remain level at the
Specified Amount unless the applicable percentage of Accumulation Value exceeds
the current Specified Amount, in which case the amount of the Death Benefit will
vary as the Accumulation Value varies. Policy Owners who prefer to have
favorable investment performance, if any, reflected in higher Accumulation
Value, rather than increased insurance coverage, generally should select Option
A.
OPTION B.
(OMITTED GRAPH ILLUSTRATES PAYOUT UNDER DEATH BENEFIT OPTION B, SPECIFICALLY BY
SHOWING THE RELATIONSHIPS OVER TIME, BETWEEN THE SPECIFIED AMOUNT AND THE
ACCUMULATION VALUE.)
[GRAPH]
Death Benefit Option B. Pays a Death Benefit equal
to the Specified Amount plus the Policy's
Accumulation Value or the Accumulation Value
multiplied by the Death Benefit percentage,
whichever is greater.
Under Option B, the Death Benefit is equal to the current Specified Amount plus
the Accumulation Value of the Policy or, if greater, the applicable percentage
of the Accumulation Value on the date of death. The applicable percentage is the
same as under Option A: 250% for Insureds with an Attained Age 40 or younger on
the Policy Anniversary Date prior to the date of death. For Insureds with an
Attained Age over 40 on that Policy Anniversary Date the percentage declines.
Accordingly, under Option B the amount of the Death Benefit will always vary as
the Accumulation Value varies (but will never be less than the Specified
Amount). Policy Owners who prefer to have favorable investment performance, if
any, reflected in increased insurance coverage, rather than higher Accumulation
Values, generally should select Option B.
CHANGE IN DEATH BENEFIT OPTION. The Death Benefit option may be changed once per
year after the first Policy Year by sending AVLIC a written request. The
effective date of such a change will be the Monthly Activity Date on or
following the date the change is approved by AVLIC. A change may have federal
tax consequences.
If the Death Benefit option is changed from Option A to Option B, the Specified
Amount after the change will equal the Specified Amount before the change less
the Accumulation Value as of the date of the change. If the Death Benefit option
is changed from Option B to Option A, the Specified Amount under Option A after
the change will equal the Death Benefit under Option B on the effective date of
change.
No charges will be imposed upon a change in Death Benefit option, nor will such
a change in and of itself result in an immediate change in the amount of a
Policy's Accumulation Value. However, a change in the Death Benefit option may
affect the Cost of Insurance because this charge varies depending on the net
amount at risk (i.e. the amount by which the Death Benefit as calculated on a
Monthly Activity Date exceeds the Accumulation Value on that date). Changing
from Option B to Option A generally will decrease the net amount at risk in the
future, and will therefore decrease the Cost of Insurance. Changing from Option
A to Option B generally will result in an increase in the Cost of Insurance over
time because the Cost of Insurance Rate will increase with the Insured's age,
even though the net amount at risk will generally remain level. If, however, the
change was from Option B to Option A, the Cost of Insurance rate may be
different for the increased Death Benefit. On a change from Option A to Option
B, the Specified Amount will decrease so that the Cost of Insurance Rate may be
different. (See the sections on Charges and Deductions and Federal Tax Matters.)
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20
<PAGE> 24
CHANGE IN SPECIFIED AMOUNT. Subject to certain limitations, after the first
Policy Year, a Policy Owner may increase or decrease the Specified Amount of a
Policy. A change in Specified Amount may affect the Cost of Insurance Rate and
the net amount at risk, both of which may affect a Policy Owner's Cost of
Insurance and have federal tax consequences. (See the sections on Charges and
Deductions and Federal Tax Matters.)
Any increase or decrease in the Specified Amount will become effective on the
Monthly Activity Date on or following the date a written request is approved by
AVLIC. The Specified Amount of a Policy may be changed only once per year and
AVLIC may limit the size of a change in a Policy Year. In the first three Policy
Years, the Specified Amount remaining in force after any requested decrease may
not be less than $500,000 for Insureds with an Issue Age of 49 or less and
$250,000 for those with an Issue Age of 50 or more. In Policy Years four through
ten, the Specified Amount remaining in force following a decrease must be at
least $400,000 for Insureds with an Issue Age 20-49 and $200,000 for those with
Issue Ages of 50-80. After the 10th Policy Year, the Specified Amount may not be
less than $100,000, regardless of age. In addition, if a decrease in the
Specified Amount makes the Policy not comply with the maximum premium limits
required by federal tax law, the decrease may be limited or the Accumulation
Value may be returned to you, at your election, to the extent necessary to meet
the requirements. (See the section on Premiums.)
Increases in the Specified Amount will be allowed after the first Policy Year.
For an increase in the Specified Amount, you must submit a written supplemental
application. AVLIC may also require additional evidence of insurability.
Although an increase need not necessarily be accompanied by an additional
premium, in certain cases an additional premium will be required to put the
requested increase in effect. (See the section on Premiums upon Increases in
Specified Amount.) The minimum amount of any increase is $25,000, and an
increase cannot be made if the Insured's Attained Age is over 80. An increase in
the Specified Amount will also increase Surrender Charges. An increase in the
Specified Amount during the time the Guaranteed Death Benefit provision is in
effect will increase the respective premium requirements. (See the section on
Charges and Deductions.)
METHODS OF AFFECTING INSURANCE PROTECTION
You may increase or decrease the pure insurance protection provided by a Policy
- -- the difference between the Death Benefit and the Accumulation Value -- in
several ways as your insurance needs change. These ways include increasing or
decreasing the Specified Amount of insurance, changing the level of premium
payments, and making a partial withdrawal of the Policy's Accumulation Value.
Certain of these changes may have federal tax consequences. The consequences of
each of these methods will depend upon the individual circumstances.
DURATION OF THE POLICY
The duration of the Policy generally depends upon the Accumulation Value. The
Policy will remain in force so long as the Net Cash Surrender Value is
sufficient to pay the Monthly Deduction or if the Guaranteed Death Benefit
provision is in effect. (See the section on Charges from Accumulation Value.)
However, when the Net Cash Surrender Value is insufficient to pay the Monthly
Deduction and the Grace Period expires without an adequate payment by the Policy
Owner, the Policy will lapse and terminate without value. (See the section on
Policy Lapse and Reinstatement.)
ACCUMULATION VALUE
The Accumulation Value will reflect the investment performance of the chosen
Investment Options, the Net Premiums paid, any partial withdrawals, and the
charges assessed in connection with the Policy. You may Surrender the Policy at
any time and receive the Policy's Net Cash Surrender Value. (See the section on
Surrenders.) There is no guaranteed minimum Accumulation Value.
Accumulation Value is determined on each Valuation Date. On the Issue Date, the
Accumulation Value will equal the portion of any Net Premium allocated to the
Investment Options, reduced by the portion of the first Monthly Deduction
allocated to the Investment Options. (See the section on Allocation of
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<PAGE> 25
Premiums and Accumulation Value.) Thereafter, on each Valuation Date, the
Accumulation Value of the Policy will equal:
(1) The aggregate values belonging to the Policy in each of the
Subaccounts on the Valuation Date, determined by multiplying each
Subaccount's unit value by the number of Subaccount units you have
allocated to the Policy; plus
(2) The value of allocations to the Fixed Account; plus
(3) Any Accumulation Value impaired by Outstanding Policy Debt held in
the General Account; plus
(4) Any Net Premiums received on that Valuation Date; plus
(5) Any amounts credited as Net Cash Surrender Value bonus; less
(6) Any partial withdrawal, and its charge, made on that Valuation Date;
less
(7) Any Monthly Deduction to be made on that Valuation Date; less
(8) Any federal or state income taxes charged against the Accumulation
Value.
In computing the Policy's Accumulation Value on the Valuation Date, the number
of Subaccount units allocated to the Policy is determined after any transfers
among Investment Options (and deduction of transfer charges), but before any
other Policy transactions, such as receipt of Net Premiums and partial
withdrawals. Because the Accumulation Value depends on a number of variables, a
Policy's Accumulation Value cannot be predetermined.
THE UNIT VALUE. The unit value of each Subaccount reflects the investment
performance of that Subaccount. The unit value of each Subaccount is calculated
by:
(1) Multiplying the net asset value per share of each Fund portfolio on
the Valuation Date times the number of shares held by that
Subaccount, before the purchase or redemption of any shares on that
Valuation Date; minus
(2) A charge not exceeding an annual rate of .90% for mortality and
expense risk; minus
(3) A charge not exceeding an annual rate of .25% for administrative
service expenses; and
(4) Dividing the result by the total number of units held in the
Subaccount on the Valuation Date, before the purchase or redemption
of any units on that Valuation Date.
(See the section on Daily Charges Against the Separate Account.)
VALUATION DATE AND VALUATION PERIOD. A Valuation Date is each day on which the
New York Stock Exchange ("NYSE") is open for trading. The net asset value for
each Fund portfolio is determined as of the close of regular trading on the
NYSE. The net investment return for each Subaccount and all transactions and
calculations with respect to the Policies as of any Valuation Date are
determined as of that time. A Valuation Period is the period between two
successive Valuation Dates, commencing at the close of the NYSE on each
Valuation Date and ending at the close of the NYSE on the next succeeding
Valuation Date.
NET CASH SURRENDER VALUE BONUS
Beginning with the 21st Policy Anniversary, a bonus equal to .25% of the Net
Cash Surrender Value will be credited to the Fixed Account and/or the
Subaccounts on each Policy anniversary, provided that the Net Cash Surrender
Value of the Policy on the Policy Anniversary is at least $500,000. This bonus
is not guaranteed. The bonus will be credited to the Fixed Account and/or the
Subaccounts based on the premium allocation percentages in effect at that time.
BENEFITS AT MATURITY
If the Insured is living on the Maturity Date, AVLIC will pay the Policy Owner
the Accumulation Value of the Policy, less Outstanding Policy Debt ("Maturity
Benefits"). The Policy will mature on the Policy Anniversary Date nearest the
Insured's 100th birthday, unless the maturity has been extended by election
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<PAGE> 26
of the Extended Maturity Option. The Extended Maturity Option, if elected, has
the effect of continuing the Policy in force for purposes of providing a benefit
at the time of the Insured's death. The Death Benefit will be the Accumulation
Value. The Extended Maturity Option does not, however, extend the Maturity Date
for purposes of determining benefits under any other option or rider. Once the
Extended Maturity Option becomes effective, no further premium payments will be
accepted and no deduction will be made for Cost of Insurance or riders. As long
as the Policy continues in force, all other Policy provisions will remain in
effect. Interest on Policy loans will continue to accrue and become part of the
Outstanding Policy Debt. The Policy may be subject to certain adverse tax
consequences when continued beyond the original scheduled Maturity Date. (See
the discussion below.)
There is no extra premium for the Extended Maturity Option, but it must be
elected by submitting a written request to AVLIC during the 90 days prior to the
Maturity Date. The Extended Maturity Option is not available in all states.
Further, the Internal Revenue Service has not issued a ruling regarding its tax
consequences.
The Policy may be subject to certain adverse tax consequences when continued
beyond the Maturity Date. Due to the lack of specific guidance by the Internal
Revenue Service on this issue, the result is not certain. If the Policy is not
treated as a life insurance contract for federal income tax purposes after the
original scheduled Maturity Date, among other things, the Death Benefit may be
taxable to the recipient. The Policy Owner should consult a qualified tax
advisor regarding the possible adverse tax consequences resulting from extension
of the original scheduled Maturity Date.
PAYMENT OF POLICY BENEFITS
Death Benefit Proceeds under the Policy will usually be paid within seven days
after AVLIC receives Satisfactory Proof of Death. Maturity Benefits will
ordinarily be paid within seven days of receipt of a written request. Payments
may be postponed in certain circumstances. (See the section on Postponement of
Payments.) The Policy Owner may decide the form in which Death Benefit Proceeds
or Maturity Benefits will be paid. During the Insured's lifetime, the Policy
Owner may arrange for the Death Benefit Proceeds to be paid in a lump sum or
under one or more of the optional methods of payment described below. Changes
must be in writing and will revoke all prior elections. If no election is made,
AVLIC will pay Death Benefit Proceeds or Accumulation Value Benefit in a lump
sum. When Death Benefit Proceeds are payable in a lump sum and no election for
an optional method of payment is in force at the death of the Insured, the
Beneficiary may select one or more of the optional methods of payment. Further,
if the Policy is assigned, any amounts due to the assignee will first be paid in
one sum. The balance, if any, may be applied under any payment option. Once
payments have begun, the payment option may not be changed.
PAYMENT OPTIONS FOR DEATH BENEFIT PROCEEDS OR MATURITY BENEFITS ("POLICY
PROCEEDS"). The minimum amount of each payment is $100. If a payment would be
less than $100, AVLIC has the right to make payments less often so that the
amount of each payment is at least $100. Once a payment option is in effect,
Policy Proceeds will be transferred to AVLIC's General Account. AVLIC may make
other payment options available in the future. For additional information
concerning these options, see the Policy itself. The following payment options
are currently available:
INTEREST PAYMENT OPTION. AVLIC will hold any amount applied under this
option. Interest on the unpaid balance will be paid or credited each month
at a rate determined by AVLIC.
FIXED AMOUNT PAYABLE OPTION. Each payment will be for an agreed fixed
amount. Payments continue until the amount AVLIC holds runs out.
FIXED PERIOD PAYMENT OPTION. Equal payments will be made for any period
selected up to 20 years.
LIFETIME PAYMENT OPTION. Equal monthly payments are based on the life of a
named person. Payments will continue for the lifetime of that person.
Variations provide for guaranteed payments for a period of time.
JOINT LIFETIME PAYMENT OPTION. Equal monthly payments are based on the
lives of two named persons. While both are living, one payment will be made
each month. When one dies, the same payment will continue for the lifetime
of the other.
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<PAGE> 27
As an alternative to the above payment options, Death Benefits Proceeds or
Maturity Benefits may be paid in any other manner approved by AVLIC. Further,
one of AVLIC's affiliates may make payments under the above payment options. If
an affiliate makes the payment, it will do so according to the request of the
Policy Owner, using the rules set out above.
POLICY RIGHTS
LOAN BENEFITS
LOAN PRIVILEGES. After the first Policy Anniversary Date, the Policy Owner may
borrow an amount up to the current Net Cash Surrender Value less twelve times
the most recent Monthly Deduction, at regular or reduced loan rates (described
below). Loans usually are funded within seven days after receipt of a written
request. The loan may be repaid at any time while the Insured is living, prior
to the Maturity Date. Policy Owners in certain states may borrow 100% of the Net
Cash Surrender Value after deducting Monthly Deductions and any interest on
Policy loans that will be due for the remainder of the Policy Year. Loans may
have tax consequences. (See the section on Federal Tax Matters.)
INTEREST. AVLIC charges interest to Policy Owners at regular and reduced rates.
Regular loans will accrue interest on a daily basis at a rate of up to 6% per
year; currently the interest rate on regular Policy loans is 5.5%. Each year
after the tenth Policy Anniversary Date, the Policy Owner may borrow a limited
amount of the Net Cash Surrender Value at a reduced interest rate. For those
loans, interest will accrue on a daily basis at a rate of up to 4% per year; the
current reduced loan rate is 3.5%. The amount available at the reduced loan rate
is 10% of the Net Cash Surrender Value as of the most recent Policy Anniversary
Date, plus any loan previously made at a reduced loan rate. If unpaid when due,
interest will be added to the amount of the loan and bear interest at the same
rate. The Policy Owner earns 3.5% interest on the Accumulation Values securing
the loans.
EFFECT OF POLICY LOANS. When a loan is made, Accumulation Value equal to the
amount of the loan will be transferred from the Investment Options to the
General Account as security for the loan. The Accumulation Value transferred
will be allocated from the Investment Options according to the instructions you
give when you request the loan. The minimum amount which can remain in a
Subaccount or the Fixed Account as a result of a loan is $100. If no
instructions are given, the amounts will be withdrawn in proportion to the
various Accumulation Values in the Investment Options. In any Policy Year that
loan interest is not paid when due, AVLIC will add the interest due to the
principal amount of the Policy loan on the next Policy Anniversary. This loan
interest due will be transferred from the Investment Options as set out above.
No charge will be made for these transfers. A Policy loan will permanently
affect the Accumulation Value and may permanently affect the amount of the Death
Benefits, even if the loan is repaid. Policy loans will also affect Net Policy
Funding for determining whether the Guaranteed Death Benefit provision is met.
Interest earned on amounts held in the General Account will be allocated to the
Investment Options on each Policy Anniversary in the same proportion that Net
Premiums are being allocated to those Investment Options at the time. Upon
repayment of loan amounts, the portion of the repayment allocated in accordance
with the repayment of loan provision (see below) will be transferred to increase
the Accumulation Value in that Investment Option.
OUTSTANDING POLICY DEBT. The Outstanding Policy Debt equals the total of all
Policy loans and accrued interest on Policy loans. If the Outstanding Policy
Debt exceeds the Accumulation Value less any Surrender Charge and any Accrued
Expense Charges, the Policy Owner must pay the excess. AVLIC will send a notice
of the amount which must be paid. If you do not make the required payment within
the 61 days after AVLIC sends the notice, the Policy will terminate without
value ("lapse"). Should the Policy lapse while Policy loans are outstanding, the
portion of the loans attributable to earnings will become taxable. You may lower
the risk of a Policy lapsing while loans are outstanding as a result of a
reduction in the market value of investments in the Subaccounts by investing in
a diversified group of lower risk investment portfolios and/or transferring the
funds to the Fixed Account and receiving a guaranteed rate of return. Should you
experience a substantial reduction, you may need to lower anticipated
withdrawals and loans, repay loans, make additional premium payments, or take
other action to
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avoid Policy lapse. A lapsed Policy may later be reinstated. (See the section on
Policy Lapse and Reinstatement.)
REPAYMENT OF LOAN. Unscheduled premiums paid while a Policy loan is outstanding
are treated as repayment of the debt only if the Policy Owner so requests. As a
loan is repaid, the Accumulation Value in the General Account securing the
repaid loan will be allocated among the Subaccounts and the Fixed Account in the
same proportion that Net Premiums are being allocated at the time of repayment.
SURRENDERS
At any time during the lifetime of the Insured and prior to the Maturity Date,
the Policy Owner may partially withdraw a portion of the Accumulation Value or
Surrender the Policy by sending a written request to AVLIC. The amount available
for Surrender is the Net Cash Surrender Value at the end of the Valuation Period
when the Surrender request is received at AVLIC's Home Office. Surrenders will
generally be paid within seven days of receipt of the written request. (See the
section on Postponement of Payments.) SURRENDERS MAY HAVE TAX CONSEQUENCES.
Surrenders may be subject to Surrender Charges. (See the section on Surrender
Charge.) Once a Policy is Surrendered, it may not be reinstated. (See the
section on Tax Treatment of Policy Proceeds.)
If the Policy is being Surrendered in its entirety, the Policy itself must be
returned to AVLIC along with the request. AVLIC will pay the Net Cash Surrender
Value. Coverage under the Policy will terminate as of the date of a total
Surrender. A Policy Owner may elect to have the amount paid in a lump sum or
under a payment option. (See the section on Payment Options.)
PARTIAL WITHDRAWALS
Partial withdrawals are irrevocable. The amount of a partial withdrawal may not
be less than $500. The Net Cash Surrender Value after a partial withdrawal must
be at least $1,000 or an amount sufficient to maintain the Policy in force for
the remainder of the Policy Year.
The amount paid will be deducted from the Investment Options according to your
instructions when you request the withdrawal. However, the minimum amount
remaining in a Subaccount as a result of the allocation is $100. If no
instructions are given, the amounts will be withdrawn in proportion to the
various Accumulation Values in the Investment Options.
The Death Benefit will be reduced by the amount of any partial withdrawal and
may affect the way the Cost of Insurance charge is calculated and the amount of
pure insurance protection under the Policy. (See the sections on Monthly
Deduction -- Cost of Insurance and Death Benefit Options -- Methods of Affecting
Insurance Protection.) If Death Benefit option B is in effect, the Specified
Amount will not change, but the Accumulation Value will be reduced.
In the first three Policy Years, the Specified Amount remaining in force after a
partial withdrawal may not be less than $500,000 for Insureds with an Issue Age
of 49 or less, and $250,000 for those with an Issue Age of 50 or more. In Policy
Years four through ten, the Specified Amount remaining in force following a
partial withdrawal must be at least $400,000 for Insureds with an Issue Age of
20-49 and $200,000 for those with Issue Ages of 50-80. After the 10th Policy
Year, the Specified Amount remaining in force following a partial withdrawal
must be at least $100,000, regardless of age. Any request for a partial
withdrawal that would reduce the Specified Amount below this amount will not be
implemented. A fee which does not exceed the lesser of $50 or 2% of the amount
withdrawn is deducted from the Accumulation Value. Currently, the charge is the
lesser of $25 or 2% of the amount withdrawn. (See the section on Partial
Withdrawal Charge.) Partial withdrawals will also affect Net Policy Funding for
determining whether the Guaranteed Death Benefit provision is met.
TRANSFERS
Accumulation Value may be transferred among the Subaccounts of Separate Account
V and to the Fixed Account as often as desired. However, transfers out of the
Fixed Account may only be made during the 30 day period following the Policy
Anniversary Date, as noted below. The transfers may be ordered in person, by
mail or by telephone. The total amount transferred each time must be at least
$250, or the balance of the Subaccount, if less. The minimum amount that may
remain in a Subaccount or the Fixed Account after a transfer is $100. The first
15 transfers per Policy Year will be permitted free of charge.
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After that, a transfer charge of $10 may be imposed each additional time amounts
are transferred. This amount will be deducted pro rata from each Subaccount (and
if applicable, the Fixed Account) in which the Policy Owner is invested.
Additional restrictions on transfers may be imposed at the Fund level.
Specifically, Fund managers may have the right to refuse sales, or suspend or
terminate the offering of portfolio shares, if they determine that such action
is necessary in the best interests of the portfolio's shareholders. If a Fund
manager refuses a transfer for any reason, the transfer will not be allowed.
First Ameritas will not be able to process the transfer if the Fund manager
refuses. Transfers resulting from Policy loans or exercise of the exchange
privilege will not be subject to a transfer charge and will not be counted
towards the 15 free transfers per Policy Year. AVLIC may at any time revoke or
modify the transfer privilege, including the minimum amount transferable.
Transfers out of the Fixed Account, unless part of the dollar cost averaging
systematic program described below, may be made only during the 30 day period
following the Policy Anniversary Date in any Policy Year. Transfers out of the
Fixed Account are limited to the greater of (1) 25% of the Fixed Account
attributable to the Policy; (2) the largest transfer made by the Policy Owner
out of the Fixed Account during the last 13 months; or (3) $1,000. This
provision is not available while dollar cost averaging from the Fixed Account.
The privilege to initiate transactions by telephone will be made available to
Policy Owners automatically. The registered representative designated on the
application will have the authority to initiate telephone transfers. Policy
Owners who do not wish to authorize AVLIC to accept telephone transactions from
their registered representative must specify so on the application. AVLIC will
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, and if it does not, AVLIC may be liable for any losses
due to unauthorized or fraudulent instructions. The procedures AVLIC follows for
transactions initiated by telephone include, but are not limited to, requiring
the Policy Owner to provide the Policy number at the time of giving transfer
instructions; AVLIC's tape recording of all telephone transfer instructions; and
AVLIC providing written confirmation of telephone transactions.
SYSTEMATIC PROGRAMS
AVLIC may offer systematic programs as discussed below. These programs will be
subject to administrative guidelines AVLIC may establish from time to time. We
will count your transfers in these programs when determining whether the
transfer fee applies. Lower minimum amounts may be allowed to transfer as part
of a systematic program. No other separate fee is assessed when one of these
options is chosen. All other normal transfer restrictions, as described above,
also apply.
You can request participation in the available programs when purchasing the
Policy or at a later date. You can change the allocation percentage or
discontinue any program by sending written notice or calling the Home Office.
Other scheduled programs may be made available. AVLIC reserves the right to
modify, suspend, or terminate such programs at any time. Use of systematic
programs may not be advantageous, and does not guarantee success.
PORTFOLIO REBALANCING. Under the Portfolio Rebalancing program, you can instruct
AVLIC to reallocate the Accumulation Value among the Subaccounts (but not the
Fixed Account) on a systematic basis, according to your specified allocation
instructions.
DOLLAR COST AVERAGING. Under the Dollar Cost Averaging program, you can instruct
AVLIC to automatically transfer, on a systematic basis, a predetermined amount
or specified percentage from the Fixed Account or the Money Market Subaccount to
any other Subaccount(s). Dollar cost averaging is permitted from the Fixed
Account if each monthly transfer is no more than 1/36th of the value of the
Fixed Account at the time dollar cost averaging is established.
EARNINGS SWEEP. This program permits systematic redistribution of earnings among
Investment Options.
FREE-LOOK PRIVILEGE
You may cancel the Policy within 10 days after you receive it, within 10 days
after AVLIC delivers a notice of your right of cancellation, or within 45 days
of completing Part I of the application, whichever is later. When allowed by
state law, the amount of the refund is the Net Premiums allocated to the
Investment Options, adjusted by investment gains and losses, plus the sum of all
charges deducted from
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premiums paid. Otherwise, the amount of the refund will equal the gross premiums
paid. To cancel the Policy, you should mail or deliver it to the selling agent,
or to AVLIC at the Home Office. A refund of premiums paid by check may be
delayed until the check has cleared your bank. (See the section on Postponement
of Payments.)
EXCHANGE PRIVILEGE
During the first 24 Policy Months after the Policy Date of the Policy, you may
exchange the Policy for a flexible premium adjustable life insurance policy
approved for exchange and issued by AVLIC or an affiliate. No new evidence of
insurability will be required.
The Policy Date, Issue Age and rate class for the Insured will be the same under
the new policy as under the old. In addition, the Policy provisions and
applicable charges for the new policy and its riders will be based on the same
policy date and issue age as under the Policy. Accumulation values for the
exchange and payments will be established after making adjustments for
investment gains or losses and after recognizing variance, if any, between
payment or charges, dividends or accumulation values under the flexible contract
and under the new policy. You may elect either the same specified amount or the
same net amount at risk for the new policy as under the old.
To make the change, the Policy, a completed application for exchange and any
required payment must be received by AVLIC. The exchange will be effective on
the valuation date when all financial and contractual arrangements for the new
policy have been completed.
PAYMENT AND ALLOCATION OF PREMIUMS
ISSUANCE OF A POLICY
Individuals wishing to purchase a Policy must complete an application and submit
it to AVLIC's Home Office (5900 "O" Street, P.O. Box 82550, Lincoln, Nebraska
68501). A Policy will generally be issued only to individuals 20-80 years of age
on their nearest birthday who supply satisfactory evidence of insurability to
AVLIC. Acceptance is subject to AVLIC's underwriting rules, and AVLIC reserves
the right to reject an application for any reason.
The Policy Date is the effective date for all coverage in the original
application. The Policy Date is used to determine Policy Anniversary Dates,
Policy Years and Policy Months. The Issue Date is the date that all
financial,contractual and administrative requirements have been met and
processed for the Policy. The Policy Date and the Issue Date will be the same
unless: (1) an earlier Policy Date is specifically requested, or (2) additional
premiums or application amendments are needed. When there are additional
requirements before issue (see below) the Policy Date will be the date the
Policy is sent for delivery and the Issue Date will be the date the requirements
are met.
When all required premiums and application amendments have been received by
AVLIC in its Home Office, the Issue Date will be the date the Policy is mailed
to you or sent to the agent for delivery to you. When application amendments or
additional premiums need to be obtained upon delivery of the Policy, the Issue
Date will be when the Policy receipt and federal funds (monies of member banks
within the Federal Reserve System which are held on deposit at a Federal Reserve
Bank) are received and available to AVLIC, and the application amendments are
received and reviewed in AVLIC's Home Office. On the Issue Date, the initial
premium payment will be allocated to the Money Market Subaccount for 13 days.
After the expiration of the 13-day period, the Accumulation Value will be
reallocated to the Investment Options you select.
Subject to approval, a Policy may be backdated, but the Policy Date may not be
more than six months prior to the date of the application. Backdating can be
advantageous if the Insured's lower Issue Age results in lower Cost of Insurance
Rates. If a Policy is backdated, the minimum initial premium required will
include sufficient premium to cover the backdating period. Monthly Deductions
will be made for the period the Policy Date is backdated.
Interim conditional insurance coverage may be issued prior to the Policy Date,
provided that certain conditions are met, upon the completion of an application
and the payment of the required premium at the time of the application. The
amount of the interim coverage is limited to the smaller of (1) the amount of
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insurance applied for, (2) $100,000, or (3) $25,000 if the proposed Insured is
over age 60 at their nearest birthday.
PREMIUMS
No insurance will take effect before the initial premium payment is received by
AVLIC in federal funds. The initial premium payment must be at least 1/12 of the
first year Guaranteed Death Benefit Premium times the number of months between
the Policy Date and the Issue Date, plus one. Subsequent premiums are payable at
AVLIC's Home Office. A Policy Owner has flexibility in determining the frequency
and amount of premiums. However, unless you have paid sufficient premiums to pay
the Monthly Deduction and Percent of Premium Charges, the Policy may have a zero
Net Cash Surrender Value and lapse. Net Policy Funding, if adequate, may satisfy
Guaranteed Death Benefit Premium requirements. (See the section on Policy
Benefits, Purposes of the Policy.)
PLANNED PERIODIC PREMIUMS. At the time the Policy is issued you may determine a
Planned Periodic Premium schedule that provides for the payment of level
premiums at selected intervals. The Planned Periodic Premium schedule may
include the Guaranteed Death Benefit Premium. You are not required to pay
premiums according to this schedule. You have considerable flexibility to alter
the amount and frequency of premiums paid. AVLIC reserves the right to limit the
number and amount of additional or unscheduled premium payments.
You may also change the frequency and amount of Planned Periodic Premiums by
sending a written request to the Home Office, although AVLIC reserves the right
to limit any increase. Premium payment notices will be sent annually,
semi-annually or quarterly, depending upon the frequency of the Planned Periodic
Premiums. Payment of the Planned Periodic Premiums does not guarantee that the
Policy remains in force unless the Guaranteed Death Benefit provision is in
effect. Instead, the duration of the Policy depends upon the Policy's Net Cash
Surrender Value. (See the section on Duration of the Policy.) Unless the
Guaranteed Death Benefit provision is in effect, even if Planned Periodic
Premiums are paid, the Policy will lapse any time the Net Cash Surrender Value
is insufficient to pay the Monthly Deduction, and the Grace Period expires
without a sufficient payment. (See the section on Policy Lapse and
Reinstatement.)
PREMIUM LIMITS. AVLIC's current minimum premium limit is $45, $15 if paid by
automatic bank draft. AVLIC currently has no maximum premium limit, other than
the current maximum premium limits established by federal tax laws. AVLIC
reserves the right to change any premium limit. In no event may the total of all
premiums paid, both planned and unscheduled, exceed the current maximum premium
limits established by federal tax laws. (See the section on Federal Tax
Matters -- Tax Status of the Policy.)
If at any time a premium is paid which would result in total premiums exceeding
the current maximum premium limits, AVLIC will accept only that portion of the
premium which will make total premiums equal the maximum. Any part of the
premium in excess of that amount will be returned or applied as otherwise agreed
and no further premiums will be accepted until allowed by the current maximum
premium limits allowed by law. AVLIC may require additional evidence of
insurability if any premium payment would result in an increase in the Policy's
net amount at risk on the date the premium is received.
PREMIUMS UPON INCREASES IN SPECIFIED AMOUNT. Depending upon the Accumulation
Value of the Policy at the time of an increase in the Specified Amount of the
Policy and the amount of the increase requested by the Policy Owner, an
additional premium payment may be required. AVLIC will notify you of any premium
required to fund the increase, which premium must be made in a single payment.
The Accumulation Value of the Policy will be immediately increased by the amount
of the payment, less the applicable Percent of Premium Charge.
ALLOCATION OF PREMIUMS AND ACCUMULATION VALUE
ALLOCATION OF NET PREMIUMS. In the application for a Policy, the Policy Owner
allocates Net Premiums to one or more Subaccounts and/or to the Fixed Account.
Allocations must be whole number percentages and must total 100%. The allocation
of future Net Premiums may be changed without charge by providing proper
notification to the Home Office. If there is any Outstanding Policy Debt at the
time of a payment,
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AVLIC will treat the payment as a premium payment unless you instruct otherwise
by proper written notice.
On the Issue Date, the initial premium payment will be allocated to the Money
Market Subaccount for 13 days. Thereafter, the Accumulation Value will be
reallocated to the Investment Options you selected. Premium payments received by
AVLIC prior to the Issue Date are held in the General Account until the Issue
Date and are credited with interest at a rate determined by AVLIC for the period
from the date the payment has been converted into federal funds and is available
to AVLIC. In no event will interest be credited prior to the Policy Date.
The Accumulation Value of the Subaccounts will vary with the investment
performance of these Subaccounts and you, as the Policy Owner, will bear the
entire investment risk. This will affect the Policy's Accumulation Value, and
may affect the Death Benefit as well. You should periodically review your
allocations of premiums and values in light of market conditions and overall
financial planning requirements.
POLICY LAPSE AND REINSTATEMENT
LAPSE. Unlike conventional life insurance policies, the failure to make a
Planned Periodic Premium payment will not itself cause the Policy to lapse.
Lapse will occur when the Net Cash Surrender Value is insufficient to cover the
Monthly Deduction and a Grace Period expires without a sufficient payment,
unless the Guaranteed Death Benefit provision is in effect. The Grace Period is
61 days from the date AVLIC mails a notice that the Grace Period has begun.
AVLIC will notify you at the beginning of the Grace Period by mail addressed to
your last known address on file with AVLIC.
The notice will specify the premium required to keep the Policy in force. The
required premium will equal the greater of (1) the amount necessary to cover the
Monthly Deductions and Percent of Premium Charges for the three Policy Months
after commencement of the Grace Period, or (2) the amount necessary to raise the
Net Cash Surrender Value above zero on the date of reinstatement. Failure to pay
the required premium within the Grace Period will result in lapse of the Policy.
If the Insured dies during the Grace Period, any overdue Monthly Deductions and
Outstanding Policy Debt will be deducted from the Death Benefit Proceeds. (See
the section on Charges and Deductions.)
REINSTATEMENT. A lapsed Policy may be reinstated any time within three years
(five years in Missouri) after the beginning of the Grace Period, but before the
Maturity Date. We will reinstate your Policy based on the Insured's rating class
at the time of the reinstatement.
Reinstatement is subject to the following:
(1) Evidence of insurability of the Insured satisfactory to AVLIC
(including evidence of insurability of any person covered by a
rider to reinstate the rider);
(2) Any Outstanding Policy Debt on the date of lapse will be reinstated
with interest due and accrued;
(3) The Policy cannot be reinstated if it has been Surrendered for its
full Net Cash Surrender Value;
(4) The minimum premium required at reinstatement is the greater of:
(a) the amount necessary to raise the Net Cash Surrender Value as
of the date of reinstatement to equal to or greater than zero;
or
(b) three times the current Monthly Deduction.
The amount of Accumulation Value on the date of reinstatement will equal:
(1) The amount of the Net Cash Surrender Value on the date of lapse,
increased by
(2) The premium paid at reinstatement, less
(3) The Percent of Premium Charges and the amounts stated above, plus
(4) That part of the Contingent Deferred Sales Charge and Contingent
Deferred Administrative Charge that would apply if the Policy were
Surrendered on the date of reinstatement.
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The last addition to the Accumulation Value is designed to avoid duplicate
Surrender Charges. The original Policy Date, and the dates of increases in the
Specified Amount (if applicable), will be used for purposes of calculating the
Surrender Charge. If any Outstanding Policy Debt is reinstated, that debt will
be held in AVLIC's General Account. Accumulation Value calculations will then
proceed as described under the section on Accumulation Value.
The effective date of reinstatement will be the first Monthly Activity Date on
or next following the date of approval by AVLIC of the application for
reinstatement.
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Policy to compensate AVLIC for:
(1) providing the insurance benefits set forth in the Policy and any optional
insurance benefits added by rider; (2) administering the Policy and payment of
applicable taxes; (3) assuming certain risks in connection with the Policy; and
(4) incurring expenses in distributing the Policy. The nature and amount of
these charges are described more fully below.
DEDUCTIONS FROM PREMIUM PAYMENTS (PERCENT OF PREMIUM CHARGE)
SALES CHARGE. There are no sales charges deducted from premium payments in
connection with the Policy. The Policy is, however, subject to a Contingent
Deferred Sales Charge if the Policy is surrendered. (See the section on
Surrender Charge.)
PREMIUM CHARGE FOR TAXES. A deduction of up to 5% of the premium is made from
each premium payment to pay applicable taxes; currently the charge is 3.5%. The
deduction is an amount AVLIC considers necessary to pay all premium taxes
imposed by the states and their subdivisions, and to defray the tax cost due to
capitalizing certain Policy acquisition expenses as required under applicable
federal tax laws. (See the section on Federal Tax Matters.) AVLIC does not
expect to derive a profit from the Premium Charge for Taxes.
CHARGES FROM ACCUMULATION VALUE
MONTHLY DEDUCTION. Charges will be deducted as of the Policy Date and on each
Monthly Activity Date thereafter from the Accumulation Value of the Policy to
compensate AVLIC for administrative expenses and insurance provided. These
charges will be allocated among the Subaccounts, and the Fixed Account on a pro
rata basis. Each of these charges is described in more detail below.
ADMINISTRATIVE EXPENSE CHARGE. To compensate AVLIC for the ordinary
administrative expenses expected to be incurred in connection with a Policy, the
Monthly Deduction includes a $9.00 per Policy charge (currently $5.00.) The
Administrative Expense Charge is levied throughout the life of the Policy and is
guaranteed not to increase above $9.00 per month. AVLIC does not expect to make
any profit from the Administrative Expense Charge.
COST OF INSURANCE. Because the Cost of Insurance depends upon several variables,
the cost for each Policy Month can vary from month to month. AVLIC will
determine the monthly Cost of Insurance by multiplying the applicable Cost of
Insurance Rate by the net amount at risk for each Policy Month. The net amount
at risk on any Monthly Activity Date is based on the amount by which the Death
Benefit which would have been payable on that Monthly Activity Date exceeds the
Accumulation Value on that date.
COST OF INSURANCE RATE. The Annual Cost of Insurance Rate is based on the
Insured's sex, Issue Age, Policy duration, Specified Amount, and rating class.
The rate will vary depending upon tobacco use and other risk factors. For the
initial Specified Amount, the Cost of Insurance Rate will not exceed those shown
in the Schedule of Guaranteed Annual Cost of Insurance Rates shown in the
schedule pages of the Policy. These guaranteed rates are based on the Insured's
Attained Age and are equal to the 1980 Insurance Commissioners Standard Ordinary
Smoker and Non-Smoker, Male and Female Mortality Tables. The current rates range
between 40% and 100% of the rates based on the 1980 Commissioners Standard
Ordinary Tables, based on AVLIC's own mortality experience. Policies issued on a
unisex basis are based on the 1980 Insurance Commissioners Standard Ordinary
Table B assuming 80% male and 20% female lives. The Cost of Insurance Rates,
Surrender Charges, and payment options for Policies issued in Montana and
certain other states are on a sex-neutral (unisex) basis. Any change in the Cost
of Insurance
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Rates will apply to all persons of the same age, sex, Specified Amount and
rating class and whose Policies have been in effect for the same length of time.
If the rating class for any increase in the Specified Amount is not the same as
the rating class at issue, the Cost of Insurance Rate used after such increase
will be a composite rate based upon a weighted average of the rates of the
different rating classes. Decreases may be reflected in the Cost of Insurance
Rate, as discussed earlier.
The actual charges made during the Policy Year will be shown in the annual
report delivered to Policy Owners.
RATING CLASS. The rating class of an Insured will affect the Cost of Insurance
Rate. AVLIC currently places Insureds into both standard rating classes and
substandard rating classes that involve a higher mortality risk. In an otherwise
identical Policy, an Insured in the standard rating class will have a lower Cost
of Insurance Rate than an Insured in a rating class with higher mortality risks.
If, when issued, a Policy is rated with a tabular extra rating, the guaranteed
rate is a multiple of the guaranteed rate for a standard issue Policy. This
multiple factor is shown in the Schedule of Benefits in the Policy, and may be
from 1.18 to 4 times the guaranteed rate for a standard issue Policy.
If appropriate, Insureds may also be assigned a flat extra rating charge to
reflect higher mortality risks. The flat extra rating charge will be added to
the Cost of Insurance Rate and thus will be deducted as part of the Monthly
Deduction on each Monthly Activity Date.
SURRENDER CHARGE
If a Policy is Surrendered prior to the 14th Policy Anniversary Date, AVLIC will
assess a Surrender Charge based upon percentages of the premiums actually paid
and a charge per $1,000 of insurance issued based upon sex and Issue Age.
The total Surrender Charge on the initial Specified Amount is made up of two
parts, the Contingent Deferred Administrative Charge and Contingent Deferred
Sales Charge.
The Contingent Deferred Administrative Charge is an amount per $1,000 of
Specified Amount that varies by Issue Age and sex. It is 60% of the maximum
Surrender Charge not to exceed $24 per $1,000 of Specified Amount.
The Contingent Deferred Sales Charge will be based upon the actual premiums
received. It will be calculated as the lesser of (1) 30% of the premiums
received up to the SEC Guideline Premium, plus 10% of the premiums received in
excess of the SEC Guideline, up to an amount equal to twice the SEC Guideline
Premium, plus 9% of the premiums received in excess of the second SEC Guideline
Premium; or (2) 40% of the maximum Surrender Charge not to exceed $16 per $1,000
of Specified Amount. The SEC Guideline Premium is a benchmark amount, set by SEC
rule, which is relevant in defining the limits of certain charges we may assess.
Your maximum Surrender Charge on a Policy we issue is $40.00 per $1,000 of
Specified Amount.
The Surrender Charge, if applicable, will be applied according to the following
schedule. Because the Surrender Charge may be significant upon early Surrender,
prospective Policy Owners should purchase a Policy only if they do not intend to
Surrender the Policy for a substantial period.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
PERCENT OF SURRENDER PERCENT OF SURRENDER
CHARGE MAXIMUM THAT CHARGE MAXIMUM THAT
WILL APPLY DURING WILL APPLY DURING
POLICY YEAR POLICY YEAR POLICY YEAR POLICY YEAR
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1-5 100% 11 40%
- ------------------------------------------------------------------------------------------------
6 90% 12 30%
- ------------------------------------------------------------------------------------------------
7 80% 13 20%
- ------------------------------------------------------------------------------------------------
8 70% 14 10%
- ------------------------------------------------------------------------------------------------
9 60% 15+ 0%
- ------------------------------------------------------------------------------------------------
10 50%
- ------------------------------------------------------------------------------------------------
</TABLE>
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No Surrender Charge will be assessed on decreases in the Specified Amount of the
Policy or partial withdrawals of Accumulation Value. AVLIC will, however, assess
Surrender Charges due to increases in the Specified Amount. The Contingent
Deferred Sales Charge component of the Surrender Charge will be assessed on such
increases based on the premiums allocated to the increase, at the lesser of (1)
15% of the allocated premiums received up to the SEC Guideline Premium, plus 5%
of the allocated premiums received in excess of the SEC Guideline Premium for
the increase, up to an amount equal to twice the SEC Guideline Premium for the
increase, plus 4.5% of the allocated premiums received in excess of two SEC
Guideline Premium(s) for the increase; or (2) 40% of the maximum Surrender
Charge applicable to the increase. The Contingent Deferred Administrative Charge
component of the Surrender Charge will be assessed on increases in the Specified
Amount as noted above with respect to the initial Specified Amount. It will be
based on the Attained Age at the time of the increase and the amount of the
increase in the Specified Amount. Surrender Charges in increases in the initial
Specified Amount will be applied with respect to Surrenders within 14 years of
the date of the increase.
The sales charges applied in any Policy Year are not necessarily related to
actual distribution expenses incurred in that year. Instead, AVLIC expects to
incur the majority of distribution expenses in the early Policy Years and to
recover amounts to pay such expenses over the life of the Policy. To the extent
that sales and distribution expenses exceed sales charges in any year, AVLIC
will pay such expenses from its other assets or surplus in its General Account,
including amounts from mortality and expense risk charges and other charges made
under the Policy. AVLIC believes that this distribution financing arrangement
will benefit Separate Account V and the Policy Owners.
TRANSFER CHARGE. After 15 transfers among the Investment Options in a Policy
Year, a transfer charge of $10 (guaranteed not to increase) may be imposed for
each additional transfer to compensate AVLIC for the costs of processing the
transfer. Since the charge reimburses AVLIC only for the cost of processing the
transfer, AVLIC does not expect to make any profit from the transfer charge.
This charge will be deducted pro rata from each Subaccount (and, if applicable,
the Fixed Account) in which the Policy Owner is invested. The transfer charge
will not be imposed on transfers that occur as a result of Policy loans or the
exercise of exchange rights.
PARTIAL WITHDRAWAL CHARGE. A charge will be imposed for each partial withdrawal.
This charge will compensate AVLIC for the administrative costs of processing the
requested payment and in making necessary calculations for any reductions in
Specified Amount which may be required because of the partial withdrawal. This
charge is currently the lesser of $25 or 2% of the amount withdrawn (guaranteed
not to be greater than the lesser of $50 or 2% of the amount withdrawn). No
Surrender Charge is assessed on a partial withdrawal and a partial withdrawal
charge is not assessed when a Policy is Surrendered.
DAILY CHARGES AGAINST THE SEPARATE ACCOUNT
A daily Mortality and Expense Risk Charge will be deducted from the value of the
net assets of Separate Account V to compensate AVLIC for mortality and expense
risks assumed in connection with the Policy. This daily charge from Separate
Account V is currently at the rate of 0.001912% (equivalent to an annual rate of
0.70%) for Policy Years 1-4 and 0.001229% (equivalent to an annual rate of
0.45%) for Policy Years 5-20. After the twentieth year the daily charge will be
applied at the rate of 0.000820% (equivalent to an annual rate of 0.30%) and
will not exceed 0.90% of the average daily net assets of Separate Account V. The
daily charge will be deducted from the net asset value of Separate Account V,
and therefore the Subaccounts, on each Valuation Date. Where the previous day or
days was not a Valuation Date, the deduction on the Valuation Date will be the
applicable daily rate multiplied by the number of days since the last Valuation
Date. No Mortality and Expense Risk Charges will be deducted from the amounts in
the Fixed Account.
AVLIC believes that this level of charge is within the range of industry
practice for comparable flexible premium variable universal life policies. The
mortality risk assumed by AVLIC is that Insureds may live for a shorter time
than calculated, and that the aggregate amount of Death Benefits paid will be
greater than initially estimated. The expense risk assumed is that expenses
incurred in issuing and administering the Policies will exceed the
administrative charges provided in the Policies.
ENCORE!
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<PAGE> 36
An Asset-Based Administrative Expense Charge will also be deducted from the
value of the net assets of Separate Account V on a daily basis. Currently, there
is no charge applied for Policy Years 1-4. Thereafter, this charge is applied at
a rate of 0.000683% (equivalent to 0.25% annually) for Policy Years 5-20 and at
a rate of 0.000409% (equivalent to 0.15% annually) for each Policy Year
thereafter. The rate of this charge will never exceed 0.25% annually. No
Asset-Based Administrative Expense Charge will be deducted from the amounts in
the Fixed Account.
FUND EXPENSE SUMMARY
In addition to the charges against Separate Account V described just above,
management fees and expenses will be assessed by AIC, CAMCO, Fidelity, Alger
Management, MFS, and Morgan Stanley Asset Management against the amounts
invested in the various portfolios. No portfolio fees will be assessed against
amounts placed in the Fixed Account.
The information shown below relating to the Funds was provided to AVLIC by the
Funds and AVLIC has not independently verified such information. Each of the
Funds, other than the Ameritas Portfolios and CVS Social Portfolios, is managed
by an investment advisory organization that is not affiliated with AVLIC. Each
such organization is entitled to receive a fee for its services based on the
value of the relevant portfolio's net assets. The Ameritas Portfolios are
managed by AIC, an AVLIC affiliate. CVS Social Portfolios are managed by CAMCO,
also an AVLIC affiliate. Other Calvert companies provide administrative services
to certain of the portfolios. Unless otherwise noted, the amount of expenses,
including the asset based advisory fee referred to above, borne by each
portfolio for the fiscal year ended December 31, 1999, was as follows:
<TABLE>
<CAPTION>
TOTAL
(Reflecting
INVESTMENT WAIVERS WAIVERS AND/OR
ADVISORY & OTHER AND/OR REIMBURSEMENTS,
PORTFOLIO MANAGEMENT EXPENSES TOTAL REIMBURSEMENTS IF ANY)
--------- ---------- -------- ----- -------------- ---------------
<S> <C> <C> <C> <C> <C>
AMERITAS PORTFOLIOS(1)
Ameritas Money Market 0.25% 0.08% 0.33% 0.05% 0.28%
Ameritas Index 500 0.29% 0.11% 0.40% 0.10% 0.30%
Ameritas Growth 0.80% 0.10% 0.90% 0.09% 0.81%
Ameritas Income & Growth 0.675% 0.115% 0.79% 0.09% 0.70%
Ameritas Small Capitalization 0.90% 0.10% 1.00% 0.08% 0.92%
Ameritas MidCap Growth 0.85% 0.12% 0.97% 0.11% 0.86%
Ameritas Emerging Growth 0.80% 0.18% 0.98% 0.11% 0.87%
Ameritas Research 0.80% 0.62% 1.42% 0.54% 0.88%
Ameritas Growth With Income 0.80% 0.46% 1.26% 0.36% 0.90%
CVS Social Portfolios
CVS Social Small Cap Growth 1.00% 0.58%(2) 1.58% -- 1.58%
CVS Social Mid Cap Growth 0.90% 0.21%(2) 1.11% -- 1.11%
CVS Social International Equity 1.10% 0.50%(2) 1.60%(3) -- 1.60%
CVS Social Balanced Portfolio 0.70% 0.19%(2) 0.89% -- 0.89%
FIDELITY PORTFOLIOS
VIP Equity-Income 0.48% 0.09% 0.57% 0.01% 0.56%(4)
VIP Growth 0.58% 0.08% 0.66% 0.01% 0.65%(4)
VIP High Income 0.58% 0.11% 0.69% -- 0.69%
VIP Overseas 0.73% 0.18% 0.91% 0.04% 0.87%(4)
VIP II Asset Manager 0.53% 0.10% 0.63% 0.01% 0.62%(4)
VIP II Investment Grade Bond 0.43% 0.11% 0.54% -- 0.54%
VIP II Asset Manager: Growth 0.58% 0.13% 0.71% 0.01% 0.70%(4)
VIP II Contrafund 0.58% 0.09% 0.67% 0.04% 0.65%(4)
ALGER AMERICAN FUND(5)
Balanced 0.75% 0.18% 0.93% -- 0.93%
Leveraged AllCap 0.85% 0.08% 0.93% -- 0.93%
MFS TRUST
Utilities 0.75% 0.16%(6) 0.91% -- 0.91%
Global Governments 0.75% 0.30%(6) 1.05% 0.14% 0.91%(7)
New Discovery 0.90% 1.59%(6) 2.49% 1.42% 1.07%(7)
</TABLE>
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<PAGE> 37
<TABLE>
<CAPTION>
TOTAL
(Reflecting
INVESTMENT WAIVERS WAIVERS AND/OR
ADVISORY & OTHER AND/OR REIMBURSEMENTS,
PORTFOLIO MANAGEMENT EXPENSES TOTAL REIMBURSEMENTS IF ANY)
--------- ---------- -------- ----- -------------- ---------------
<S> <C> <C> <C> <C> <C>
UNIVERSAL INSTITUTIONAL FUNDS
Emerging Markets Equity 1.25% 1.37% 2.62% 0.83% 1.79%(8)
Global Equity 0.80% 0.68% 1.48% 0.33% 1.15%(8)
International Magnum 0.80% 0.87% 1.67% 0.51% 1.16%(8)
Asian Equity 0.80% 2.23% 3.03% 1.76% 1.27%(8)
U.S. Real Estate 0.80% 1.10% 1.90% 0.80% 1.10%(8)
</TABLE>
- ---------------
(1) The Portfolio's aggregate expenses are limited for a period of one year
following November 1, 1999 (October 29, 1999 for Ameritas Money Market).
Following this one year period, expenses of the Ameritas Portfolios will not
be permitted to exceed an expense ratio which is .10% greater than the prior
expense ratio of the corresponding replaced fund, unless an amendment to the
investment advisory contract is approved modifying or eliminating the
expense guarantee. Total expenses have been restated to reflect the above.
(2) "Other Expenses" reflect an indirect fee. Net fund operating expenses after
reductions for fees paid indirectly would be as follows:
<TABLE>
<S> <C>
CVS Social Small Cap Growth 1.15%
CVS Social Mid Cap Growth 1.02%
CVS Social International Equity 1.50%
CVS Social Balanced Portfolio 0.86%
</TABLE>
(3) Total expenses have been restated to reflect expenses expected to be
incurred in 2000.
(4) A portion of the brokerage commissions that certain Funds pay was used to
reduce Fund expenses. In addition, through arrangements with certain Funds,
or Fidelity on behalf of certain Funds' custodian, credits realized as a
result of uninvested cash balances were used to reduce a portion of each
applicable Fund's expenses. Including these reductions, the total operating
expenses presented in the table would have been:
<TABLE>
<S> <C>
VIP Equity-Income 0.57%
VIP Growth 0.66%
VIP Overseas 0.91%
VIP II Asset Manager 0.63%
VIP II Asset Manager: Growth 0.71%
VIP II Contrafund 0.67%
</TABLE>
(5) Fred Alger Management, Inc. ("Alger Management") has agreed to reimburse the
portfolios to the extent that the aggregate annual expenses (excluding
interest, taxes, fees for brokerage services and extraordinary expenses)
exceed respectively: Alger American Balanced, 1.25%, and Alger American
Leveraged AllCap, 1.50%. Included in "Other Expenses" of Leveraged AllCap is
0.01% of interest expense.
(6) Each MFS Trust series has an expense offset arrangement which reduces the
series' custodian fee based upon the amount of cash maintained by the series
with its custodian and dividend disbursing agent. Each series may enter into
other such arrangements and directed brokerage arrangements (which would
also have the effect of reducing the series' expenses). "Other Expenses" do
not take into account these expense reductions and are therefore higher than
the actual expenses of the series. Had these reductions been taken into
account, "Total (reflecting waivers and/or reimbursements, if any)" would be
lower and would equal 0.90% for Utilities Series and Global Governments
Series and 1.05% for New Discovery Series.
(7) MFS has contractually agreed, subject to reimbursement, to bear expenses for
the Global Governments Series and New Discovery Series such that the each
series "Other Expenses" (after taking into account the expense offset
arrangement described at (4), above) do not exceed 0.15% of the average
daily net assets of the series during the current fiscal year. Utilities
Series has no such limitation. These contracted fee arrangements will
continue until at least May 1, 2001, unless changed with the consent of the
board of trustees which oversees the series.
ENCORE!
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<PAGE> 38
(8) The Portfolios' investment adviser has voluntarily agreed to reduce its
management fee and/or reimburse each Portfolio so that total annual
operating expenses for each Universal Institutional Funds ("UIF") Portfolio
will not exceed:
<TABLE>
<S> <C>
UIF Emerging Markets Equity Portfolio 1.75%
UIF Global Equity Portfolio 1.15%
UIF International Magnum Portfolio 1.15%
UIF Asian Equity Portfolio 1.20%
UIF U.S. Real Estate Portfolio 1.10%
</TABLE>
The investment adviser reserves the right to terminate any waiver and/or
reimbursement at any time and without notice.
In determining the actual amount of voluntary management fee waiver and/or
expense reimbursement for a Portfolio, if any, certain investment related
expenses, such as foreign country tax expense and interest expense on
borrowing are excluded from annual operating expenses. If these expenses
were incurred, the Portfolios' total expenses after voluntary fee waivers
and/or expense reimbursements could exceed the expense ratios shown above.
For the year ended December 31, 1999, after giving effect to the above
voluntary management fee waiver and/or expense reimbursement, the total
expenses for each Portfolio, including certain investment related expenses,
were as stated in the table.
- ---------------
Expense reimbursement agreements are expected to continue in future years but
may be terminated at any time. As long as the expense limitations continue for a
portfolio, if a reimbursement occurs, it has the effect of lowering the
portfolio's expense ratio and increasing its total return.
AVLIC may receive administrative fees from the investment advisers of certain
Funds. AVLIC currently does not assess a separate charge against Separate
Account V or the Fixed Account for any federal, state or local income taxes.
AVLIC may, however, make such a charge in the future if income or gains within
Separate Account V will incur any federal, or any significant state or local
income tax liability, or if the federal, state or local tax treatment of AVLIC
changes.
GENERAL PROVISIONS
THE CONTRACT. The Policy, the application, any supplemental applications, and
any riders, amendments or endorsements make up the entire contract. Only the
President, Vice President, Secretary or Assistant Secretary can modify the
Policy. Any changes must be made in writing, and approved by AVLIC. No agent has
the authority to alter or modify any of the terms, conditions or agreements of
the Policy or to waive any of its provisions. The rights and benefits under the
Policy are summarized in this prospectus; however prospectus disclosure
regarding the Policy is qualified in its entirety by the Policy itself, a copy
of which is available upon request from AVLIC.
CONTROL OF POLICY. The Policy Owner is as shown in the application or subsequent
written endorsement. Subject to the rights of any irrevocable Beneficiary and
any assignee of record, all rights, options, and privileges belong to the Policy
Owner, if living; otherwise to any successor-owner or owners, if living;
otherwise to the estate of the last Policy Owner to die.
BENEFICIARY. Policy Owners may name both primary and contingent Beneficiaries in
the application. Payments will be shared equally among Beneficiaries of the same
class unless otherwise stated. If a Beneficiary dies before the Insured,
payments will be made to any surviving Beneficiaries of the same class;
otherwise to any Beneficiary(ies) of the next class; otherwise to the Policy
Owner; otherwise to the estate of the Policy Owner.
CHANGE OF BENEFICIARY. The Policy Owner may change the Beneficiary by written
request at any time during the Insured's lifetime unless otherwise provided in
the previous designation of Beneficiary. The change will take effect as of the
date the change is recorded at the Home Office. AVLIC will not be liable for any
payment made or action taken before the change is recorded.
CHANGE OF POLICY OWNER OR ASSIGNMENT. In order to change the Policy Owner of the
Policy or assign Policy rights, an assignment of the Policy must be made in
writing and filed with AVLIC at its Home
ENCORE!
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<PAGE> 39
Office. Any such assignment is subject to Outstanding Policy Debt. The change
will take effect as of the date the change is recorded at the Home Office, and
AVLIC will not be liable for any payment made or action taken before the change
is recorded. Payment of Death Benefit Proceeds is subject to the rights of any
assignee of record. A collateral assignment is not a change of ownership.
PAYMENT OF PROCEEDS. The Death Benefit Proceeds are subject first to any debt to
AVLIC and then to the interest of any assignee of record. The balance of any
Death Benefit Proceeds shall be paid in one sum to the designated Beneficiary
unless an Optional Method of Payment is selected. If no Beneficiary survives the
Insured, the Death Benefit Proceeds shall be paid in one sum to the Policy
Owner, if living; otherwise to any successor-owner, if living; otherwise to the
Policy Owner's estate. Any proceeds payable on the Maturity Date or upon
Surrender shall be paid in one sum unless an Optional Method of Payment is
elected.
INCONTESTABILITY. AVLIC cannot contest the Policy or reinstated Policy during
the lifetime of the Insured after it has been in force for two years from the
Policy Date (or reinstatement effective date). After the Policy Date, AVLIC
cannot contest an increase in the Specified Amount or addition of a rider during
the lifetime of the Insured after such increase or addition has been in force
for two years from its effective date. However, this two year provision shall
not apply to riders with their own contestability provision.
MISSTATEMENT OF AGE AND SEX. If the age or sex of the Insured or any person
insured by rider has been misstated, the amount of the Death Benefit and any
added riders provided will be those that would be purchased by the most recent
deduction for the Cost of Insurance and the cost of any additional riders at the
Insured's correct age or sex. The Death Benefit Proceeds will be adjusted
correspondingly.
SUICIDE. The Policy does not cover suicide within two years of the Policy Date
unless otherwise provided by a state's Insurance law. If the Insured, while sane
or insane, commits suicide within two years after the Policy Date, AVLIC will
pay only the premiums received less any partial withdrawals, the cost for riders
and any outstanding Policy debt. If the Insured, while sane or insane, commits
suicide within two years after the effective date of any increase in the
Specified Amount, AVLIC's liability with respect to such increase will only be
its total Cost of Insurance applicable to the increase. The laws of Missouri
provide that death by suicide at any time is covered by the Policy, and further
that suicide by an insane person may be considered an accidental death.
POSTPONEMENT OF PAYMENTS. Payment of any amount upon Surrender, partial
withdrawal, Policy loans, benefits payable at death or maturity, and transfers
may be postponed whenever: (1) the New York Stock Exchange ("NYSE") is closed
other than customary weekend and holiday closings, or trading on the NYSE is
restricted as determined by the SEC; (2) the SEC by order permits postponement
for the protection of Policy Owners; (3) an emergency exists, as determined by
the SEC, as a result of which disposal of securities is not reasonably
practicable or it is not reasonably practicable to determine the value of
Separate Account V's net assets; or (4) Surrenders, loans or partial withdrawals
from the Fixed Account may be deferred for up to 6 months from the date of
written request. Payments under the Policy of any amounts derived from premiums
paid by check may be delayed until such time as the check has cleared the Policy
Owner's bank.
REPORTS AND RECORDS. AVLIC will maintain all records relating to Separate
Account V and will mail to the Policy Owner, at the last known address of
record, within 30 days after each Policy Anniversary, an annual report which
shows the current Accumulation Value, Net Cash Surrender Value, Death Benefit,
premiums paid, Outstanding Policy Debt and other information. Quarterly
statements are also mailed detailing Policy activity during the calendar
quarter. Instead of receiving an immediate confirmation of transactions made
pursuant to some types of periodic payment plan (such as a dollar cost averaging
program, or payment made by automatic bank draft or salary reduction
arrangement), the Policy Owner may receive confirmation of such transactions in
their quarterly statements. The Policy Owner should review the information in
these statements carefully. All errors or corrections must be reported to AVLIC
immediately to assure proper crediting to the Policy. AVLIC will assume all
transactions are accurately reported on quarterly statements unless AVLIC is
notified otherwise within 30 days after receipt of the statement. The Policy
Owner will also be sent a periodic report for the Funds and a list of the
portfolio securities held in each portfolio of the Funds.
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36
<PAGE> 40
ADDITIONAL INSURANCE BENEFITS (RIDERS). Subject to certain requirements, one or
more of the following additional insurance benefits may be added to a Policy by
rider. All riders are not available in all states. The cost, if any, of
additional insurance benefits will be deducted as part of the Monthly Deduction.
(See the section on Charges From Accumulation Value -- Monthly Deduction.)
ACCELERATED BENEFIT RIDER FOR TERMINAL ILLNESS (LIVING BENEFIT
RIDER). Upon satisfactory proof of terminal illness after the two-year
contestable period, (no waiting period in certain states) AVLIC will
accelerate the payment of up to 50% of the lowest scheduled Death
Benefit as provided by eligible coverages, less an amount up to two
guideline level premiums.
Future premium allocations after the payment of the benefit must be
allocated to the Fixed Account. Payment will not be made for amounts
less than $4,000 or more than $250,000 on all policies issued by AVLIC
or its affiliates. AVLIC may charge the lesser of 2% of the benefit or
$50 as an expense charge to cover the costs of administration.
Satisfactory proof of terminal illness must include a written statement
from a licensed physician who is not related to the Insured or the
Policy Owner stating that the Insured has a non-correctable medical
condition that, with a reasonable degree of medical certainty, will
result in the death of the Insured in less than 12 months (6 months in
certain states) from the date of the physician's statement. Further, the
condition must first be diagnosed while the Policy is in force.
The accelerated benefit first will be used to repay any Outstanding
Policy Debt, and will also affect future loans, partial withdrawals, and
Surrenders. The accelerated benefit will be treated as a lien against
the Policy Death Benefit and will thus reduce the Death Benefit
Proceeds. Interest on the lien will be charged at the Policy loan
interest rate. There is no extra premium for this rider.
ACCIDENTAL DEATH BENEFIT RIDER. This rider provides additional insurance
if the Insured's death results from accidental death, as defined in the
rider. Under the terms of the rider, the additional benefits provided in
the Policy will be paid upon receipt of proof by AVLIC that death
resulted directly and independently of all other causes from accidental
bodily injuries incurred before the rider terminates and within 91 days
after such injuries were incurred.
CHILDREN'S PROTECTION RIDER. This rider provides for term insurance on
the Insured's children, as defined in the rider. Under the terms of the
rider, the Death Benefit will be payable to the named Beneficiary upon
the death of any insured child. Upon receipt of proof of the Insured's
death before the rider terminates, the rider will be considered paid up
for the term of the rider.
WAIVER OF MONTHLY DEDUCTIONS ON DISABILITY RIDER. This rider provides
for the waiver of Monthly Deductions for the Policy and all riders while
the Insured is disabled.
GUARANTEED INSURABILITY RIDER. This rider provides that the Policy Owner
can purchase additional insurance for the Insured by increasing the
Specified Amount of the Policy at certain future dates without evidence
of insurability.
DISABILITY BENEFIT PAYMENT RIDER. This rider provides for the payment by
AVLIC of a disability benefit in the form of premiums while the Insured
is disabled. The benefit amount may be chosen by the Policy Owner at the
issue of the rider. In addition, while the Insured is totally disabled,
the Cost of Insurance for the rider will not be deducted from
Accumulation Value.
TERM RIDER FOR COVERED INSURED. This rider provides a specified amount
of insurance to the Beneficiary upon receipt of Satisfactory Proof of
Death of any covered Insured, as identified in the rider.
DISTRIBUTION OF THE POLICIES
The principal underwriter for the Policies is AIC, a wholly owned subsidiary of
AMAL Corporation and an affiliate of AVLIC. AIC was organized under Nebraska law
on December 29, 1983, and is registered as a broker-dealer with the SEC and is a
member of the National Association of Securities Dealers ("NASD"). AVLIC pays
AIC for acting as the principal underwriter under an Underwriting Agreement.
ENCORE!
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<PAGE> 41
In 1999, AIC received gross variable universal life compensation of $12,586,675,
and retained $352,850 in underwriting fees and $2,535 in brokerage commissions
on AVLIC's variable universal life policies.
AIC offers its clients a wide variety of financial products and services and has
the ability to execute stock and bond transactions on a number of national
exchanges. AIC also serves as principal underwriter for AVLIC's variable
annuities, and for Ameritas Life's variable life and variable annuity. AIC is
the underwriter for the Ameritas Portfolios, and also serves as its investment
adviser. It also has executed selling agreements with a variety of mutual funds,
unit investment trusts and direct participation programs.
The Policies are sold through registered representatives of AIC or other
broker-dealers which have entered into selling agreements with AVLIC or AIC.
These registered representatives are also licensed by state insurance officials
to sell AVLIC's variable life policies. Each of the broker-dealers with a
selling agreement is registered with the SEC and is a member of the NASD.
Under these selling agreements, AVLIC pays commission to the broker-dealers,
which in turn pay commissions to the registered representative who sells this
Policy. During the first Policy Year, the commission may equal an amount up to
95% of the first year target premium paid plus the first year cost of any riders
and 2% for premiums paid in excess of the first year target premium. For Policy
Years two through four, the commission may equal an amount up to 2% of premiums
paid. Broker-dealers may also receive a service fee up to an annualized rate of
.25% of the Accumulation Value beginning in the fifth Policy Year. Compensation
arrangements may vary among broker-dealers. In addition, AVLIC may also pay
override payments, expense allowances, bonuses, wholesaler fees, and training
allowances. Registered representatives who meet certain production standards may
receive additional compensation. AVLIC may reduce or waive the sales charge
and/or other charges on any Policy sold to directors, officers or employees of
AVLIC or any of its affiliates, employees and registered representatives of any
broker-dealer that has entered into a sales agreement with AVLIC or AIC and the
spouses or children of the above persons. In no event will any such reduction or
waiver be permitted where it would be unfairly discriminatory to any person.
FEDERAL TAX MATTERS
The following discussion provides a general description of the federal income
tax considerations associated with the Policy and does not purport to be
complete or cover all situations. This discussion is not intended as tax advice.
No attempt has been made to consider in detail any applicable state or other tax
laws except premium taxes. (See discussion in the section on Premium Charge for
Taxes.) This discussion is based upon AVLIC's understanding of the relevant laws
at the time of filing. Counsel and other competent tax advisors should be
consulted for more complete information before a Policy is purchased. AVLIC
makes no representation as to the likelihood of the continuation of present
federal income tax laws nor of the interpretations by the Internal Revenue
Service. Federal tax laws are subject to change and thus tax consequences to the
Insured, Policy Owner or Beneficiary may be altered.
(1) TAXATION OF AVLIC. AVLIC is taxed as a life insurance company under Part I
of Subchapter L of the Internal Revenue Code of 1986, (the "Code"). At this
time, since Separate Account V is not a separate entity from AVLIC, and its
operations form a part of AVLIC, it will not be taxed separately as a
"regulated investment company" under Subchapter M of the Code. Net
investment income and realized net capital gains on the assets of Separate
Account V are reinvested and automatically retained as a part of the
reserves of the Policy and are taken into account in determining the Death
Benefit and Accumulation Value of the Policy. AVLIC believes that Separate
Account V net investment income and realized net capital gains will not be
taxable to the extent that such income and gains are retained as reserves
under the Policy.
AVLIC does not currently expect to incur any federal income tax liability
attributable to Separate Account V with respect to the sale of the
Policies. Accordingly, no charge is being made currently to Separate
Account V for federal income taxes. If, however, AVLIC determines that it
may incur such taxes attributable to Separate Account V, it may assess a
charge for such taxes against Separate Account V.
ENCORE!
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<PAGE> 42
AVLIC may also incur state and local taxes (in addition to premium taxes
for which a deduction from premiums is currently made). At present, they
are not charges against Separate Account V. If there is a material change
in state or local tax laws, charges for such taxes attributable to Separate
Account V, if any, may be assessed against Separate Account V.
(2) TAX STATUS OF THE POLICY. The Code (Section 7702) includes a definition of a
life insurance contract for federal tax purposes which places limitations on
the amount of premiums that may be paid for the Policy and the relationship
of the Accumulation Value to the Death Benefit. AVLIC believes that the
Policy meets the statutory definition of a life insurance contract. If the
Death Benefit of a Policy is changed, the applicable defined limits may
change.
The Code (Section 7702A) also defines a "modified endowment contract" for
federal tax purposes. If a life insurance policy is classified as a
modified endowment contract, distributions from it (including loans) are
taxed as ordinary income to the extent of any gain. This Policy will become
a "modified endowment contract" if the premiums paid into the Policy fail
to meet a 7-pay premium test as outlined in Section 7702A of the Code.
Certain benefits the Policy Owner may elect under this Policy may be
material changes affecting the 7-pay premium test. These include, but are
not limited to, changes in Death Benefits and changes in the Specified
Amount. One may avoid a Policy becoming a modified endowment contract by,
among other things, not making excessive payments or reducing benefits.
Should you deposit excessive premiums during a Policy Year, that portion
that is returned by AVLIC within 60 days after the Policy Anniversary Date
will reduce the premiums paid to avoid the Policy becoming a modified
endowment contract. All modified endowment policies issued by AVLIC to the
same Policy Owner in any 12 month period are treated as one modified
endowment contract for purposes of determining taxable gain under Section
72(e) of the Internal Revenue Code. Any life insurance policy received in
exchange for a modified endowment contract will also be treated as a
modified endowment contract. You should contact a competent tax
professional before paying additional premiums or making other changes to
the Policy to determine whether such payments or changes would cause the
Policy to become a modified endowment contract.
The Code (Section 817(h)) also authorizes the Secretary of the Treasury
(the "Treasury") to set standards by regulation or otherwise for the
investments of Separate Account V to be "adequately diversified" in order
for the Policy to be treated as a life insurance contract for federal tax
purposes. If the Policy is not treated as life insurance because it fails
the diversification requirements, the Policy Owner is then subject to
federal income tax on gain in the Policy as it is earned. Separate Account
V, through the Funds, intends to comply with the diversification
requirements prescribed by the Treasury in regulations published in the
Federal Register on March 2, 1989, which affect how the Fund's assets may
be invested.
While AIC and CAMCO, AVLIC affiliates, are advisers to certain of the
portfolios, AVLIC does not have control over any of the Funds or their
investments. However, AVLIC believes that the Funds will be operated in
compliance with the diversification requirements of the Internal Revenue
Code. Thus, AVLIC believes that the Policy will be treated as a life
insurance contract for federal tax purposes.
In connection with the issuance of regulations relating to the
diversification requirements, the Treasury announced that such regulations
do not provide guidance concerning the extent to which policy owners may
direct their investments to particular divisions of a separate account.
Regulations in this regard may be issued in the future. It is not clear
what these regulations will provide nor whether they will be prospective
only. It is possible that when regulations are issued, the Policy may need
to be modified to comply with such regulations. For these reasons, AVLIC
reserves the right to modify the Policy as necessary to prevent the Policy
Owner from being considered the owner of the assets of Separate Account V
or otherwise to qualify the Policy for favorable tax treatment.
ENCORE!
39
<PAGE> 43
The following discussion assumes that the Policy will qualify as a life
insurance contract for federal tax purposes.
(3) TAX TREATMENT OF POLICY PROCEEDS. AVLIC believes that the Policy will be
treated in a manner consistent with a fixed benefit life insurance policy
for federal income tax purposes. Thus, AVLIC believes that the Death Benefit
payable prior to the original Maturity Date will generally be excludable
from the gross income of the Beneficiary under Section 101(a)(1) of the Code
and the Policy Owner will not be deemed to be in constructive receipt of the
Accumulation Value under the Policy until its actual Surrender. However,
there are certain exceptions to the general rule that death benefit proceeds
are non-taxable. Federal, state and local tax consequences of ownership of
or receipt of proceeds under a Policy depends on the circumstances of each
Policy Owner and Beneficiary.
Distributions From Policies That Are Not "Modified Endowment Contracts."
Distributions (while the Insured is still alive) from a Policy that is not
a modified endowment contract are generally treated as first a recovery of
the investment in the Policy and then only after the return of all such
investment, as disbursing taxable income. However, in the case of a
decrease in the Death Benefit, a partial withdrawal, a change in Death
Benefit option, or any other such change that reduces future benefits under
the Policy during the first 15 years after a Policy is issued and that
results in a cash distribution to the Policy Owner in order for the Policy
to continue complying with the Section 7702 defined limits on premiums and
Accumulation Values, such distributions may be taxable in whole or in part
as ordinary income to the Policy Owner (to the extent of any gain in the
Policy) as prescribed in Section 7702. In addition, upon a complete
Surrender or lapse of a Policy that is not a "modified endowment contract,"
if the amount received plus the amount of any outstanding Policy debt
exceeds the total investment in the Policy, the excess will generally be
treated as ordinary income for tax purposes. Investment in the Policy means
(1) the total amount of any premiums paid for the Policy plus the amount of
any loan received under the Policy to the extent the loan is included in
gross income of the Policy Owner minus (2) the total amount received under
the Policy by the Policy Owner that was excludable from gross income,
excluding any non-taxable loan received under the Policy.
AVLIC also believes that loans received under a Policy that is not a
"modified endowment contract" will be treated as debt of the Policy Owner
and that no part of any loan under a Policy will constitute income to the
Policy Owner so long as the Policy remains in force. Should the Policy
lapse while Policy loans are outstanding the portion of the loans
attributable to earnings will become taxable. Generally, interest paid on
any loan under a Policy owned by an individual will not be tax-deductible.
Except for policies with respect to a limited number of key persons of an
employer (both as defined in the Internal Revenue Code), and subject to
applicable interest rate caps and debt limits, the Health Insurance
Portability and Accountability Act of 1996 (the "Health Insurance Act")
generally repealed the deduction for interest paid or accrued after October
13, 1995 on loans from corporate owned life insurance policies on the lives
of officers, employees or persons financially interested in the taxpayer's
trade or business. Certain transitional rules for then existing debt are
included in the Health Insurance Act. The transitional rules included a
phase-out of the deduction for debt incurred (1) before January 1, 1996, or
(2) before January 1, 1997, for policies entered into in 1994 or 1995. The
phase-out of the interest expense deduction occurred over a transition
period between October 13, 1995 and January 1, 1999. There is also a
special rule for pre-June 21, 1986 policies. The Taxpayer Relief Act of
1997 ("TRA '97"), further expanded the interest deduction disallowance for
businesses by providing, with respect to policies issued after June 8,
1997, that no deduction is allowed for interest paid or accrued on any debt
with respect to life insurance covering the life of any individual (except
as noted above under pre-'97 law with respect to key persons and pre-June
21, 1986 policies). Any material change in a policy (including a material
increase in the death benefit) may cause the policy to be treated as a new
policy for purposes of this rule. TRA '97 also provides that no deduction
is permissible for premiums paid on a life insurance policy if the taxpayer
is directly or indirectly a beneficiary under the policy. Also under TRA
"97 and subject to certain exceptions, for policies issued after June 8,
1997, no deduction is allowed for that portion of a taxpayer's interest
expense that is allocable to un-borrowed policy cash values. This
disallowance generally does not apply to policies
ENCORE!
40
<PAGE> 44
owned by natural persons. Policy Owners should consult a competent tax
advisor concerning the tax implication of these changes for their Policies.
Distributions From Policies That Are "Modified Endowment Contracts." Should
the Policy become a "modified endowment contract" partial withdrawals, full
Surrenders, assignments, pledges, and loans (including loans to pay loan
interest) under the Policy will be taxable to the extent of any gain under
the Policy. A 10% penalty tax also applies to the taxable portion of any
distribution made prior to the taxpayer's age 59 1/2. The 10% penalty tax
does not apply if the distribution is made because the taxpayer is disabled
as defined under the Code or if the distribution is paid out in the form of
a life annuity on the life of the taxpayer or the joint lives of the
taxpayer and Beneficiary.
The right to exchange the Policy for a flexible premium adjustable life
insurance policy (See the section on Exchange Privilege.), the right to
change Policy Owners (See the section on General Provisions.), and the
provision for partial withdrawals (See the section on Surrenders.) may have
tax consequences depending on the circumstances of such exchange, change,
or withdrawal. Upon complete Surrender or when Maturity Benefits are paid,
if the amount received plus any Outstanding Policy Debt exceeds the total
premiums paid (the "basis") that are not treated as previously withdrawn by
the Policy Owner, the excess generally will be taxed as ordinary income.
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Death Benefit Proceeds depend on
applicable law and the circumstances of each Policy Owner or Beneficiary.
In addition, if the Policy is used in connection with tax-qualified
retirement plans, certain limitations prescribed by the Internal Revenue
Service on, and rules with respect to the taxation of, life insurance
protection provided through such plans may apply. Further, the tax
consequences of using the Policy in nonqualified plan arrangements may vary
depending on the particular facts and circumstances of the arrangement. The
advice of competent counsel should be sought in connection with use of life
insurance in a qualified or nonqualified plan.
YOU SHOULD CONSULT QUALIFIED TAX AND/OR LEGAL ADVISORS TO OBTAIN COMPLETE
INFORMATION ON FEDERAL, STATE AND LOCAL TAX CONSIDERATIONS APPLICABLE TO YOUR
PARTICULAR SITUATION.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
AVLIC holds the assets of Separate Account V. The assets are kept physically
segregated and held separately and apart from the General Account assets, except
for the Fixed Account. AVLIC maintains records of all purchases and redemptions
of Funds' shares by each of the Subaccounts.
THIRD PARTY SERVICES
AVLIC is aware that certain third parties are offering investment advisory,
asset allocation, money management and timing services in connection with the
Policies. AVLIC does not engage any such third parties to offer such services of
any type. In certain cases, AVLIC has agreed to honor transfer instructions from
such services where it has received powers of attorney, in a form acceptable to
it, from the Policy Owners participating in the service. Firms or persons
offering such services do so independently from any agency relationship they may
have with AVLIC for the sale of Policies. AVLIC takes no responsibility for the
investment allocations and transfers transacted on a Policy Owner's behalf by
such third parties or any investment allocation recommendations made by such
parties. Policy Owners should be aware that fees paid for such services are
separate and in addition to fees paid under the Policies.
VOTING RIGHTS
AVLIC is the legal holder of the shares held in the Subaccounts of Separate
Account V and as such has the right to vote the shares, to elect Directors of
the Funds, and to vote on matters that are required by the Investment Company
Act of 1940 and upon any other matter that may be voted upon at a shareholder
meeting. To the extent required by law, AVLIC will vote all shares of each of
the Funds held in Separate Account V at regular and special shareholder meetings
of the Funds according to instructions received from Policy Owners based on the
number of shares held as of the record date for such meeting.
ENCORE!
41
<PAGE> 45
The number of Fund shares in a Subaccount for which instructions may be given by
a Policy Owner is determined by dividing the Accumulation Value held in that
Subaccount by the net asset value of one share in the corresponding portfolio of
the Fund. Fractional shares will be counted. Fund shares held in each Subaccount
for which no timely instructions from Policy Owners are received and Fund shares
held in each Subaccount which do not support Policy Owner interests will be
voted by AVLIC in the same proportion as those shares in that Subaccount for
which timely instructions are received. Voting instructions to abstain on any
item to be voted will be applied on a pro rata basis to reduce the votes
eligible to be cast. Should applicable federal securities laws or regulations
permit, AVLIC may elect to vote shares of the Fund in its own right.
DISREGARD OF VOTING INSTRUCTION. AVLIC may, if required by state insurance
officials, disregard voting instructions if those instructions would require
shares to be voted to cause a change in the subclassification or investment
objectives or policies of one or more of the Funds' portfolios, or to approve or
disapprove an investment adviser or principal underwriter for the Funds. In
addition, AVLIC itself may disregard voting instructions that would require
changes in the investment objectives or policies of any portfolio or in an
investment adviser or principal underwriter for the Funds, if AVLIC reasonably
disapproves those changes in accordance with applicable federal regulations. If
AVLIC does disregard voting instructions, it will advise Policy Owners of that
action and its reasons for the action in the next annual report or proxy
statement to Policy Owners.
STATE REGULATION OF AVLIC
AVLIC, a stock life insurance company organized under the laws of Nebraska, is
subject to regulation by the Nebraska Department of Insurance. On or before
March 1 of each year an NAIC convention blank covering the operations and
reporting on the financial condition of AVLIC and Separate Account V as of
December 31 of the preceding year must be filed with the Nebraska Department of
Insurance. Periodically, the Nebraska Department of Insurance examines the
liabilities and reserves of AVLIC and Separate Account V.
In addition, AVLIC is subject to the insurance laws and regulations of other
states within which it is licensed or may become licensed to operate. The
Policies offered by the prospectus are available in the various states as
approved. Generally, the Insurance Department of any other state applies the
laws of the state of domicile in determining permissible investments.
EXECUTIVE OFFICERS AND DIRECTORS OF AVLIC
This list shows name and position(s) with AVLIC followed by the principal
occupations for the last five years. Where an individual has held more than one
position with an organization during the last 5-year period, the last position
held has been given.
LAWRENCE J. ARTH, DIRECTOR, CHAIRMAN OF THE BOARD, AND CHIEF EXECUTIVE OFFICER*
Director, Chairman of the Board, and Chief Executive Officer: Ameritas Life;
also serves as officer and/or director of other subsidiaries and/or affiliates
of Ameritas Life.
WILLIAM J. ATHERTON, DIRECTOR, PRESIDENT, AND CHIEF OPERATING OFFICER*
Director: AMAL Corporation; President: North American Security Life Insurance
Company; also served as officer and/or director of other subsidiaries and/or
affiliates of North American.
KENNETH C. LOUIS, DIRECTOR, EXECUTIVE VICE PRESIDENT*
Director, President and Chief Operating Officer: Ameritas Life; also serves as
officer and/or director of other subsidiaries and/or affiliates of Ameritas
Life.
GARY R. MCPHAIL, DIRECTOR, EXECUTIVE VICE PRESIDENT**
Director, President, and Chief Executive Officer: AmerUs Life***; also serves as
officer and/or director of other subsidiaries and/or affiliates of AmerUs Life;
Executive Vice President -- Marketing and Individual Operations: New York Life
Insurance Company; President: Lincoln National Sales Corporation.
ROBERT C. BARTH, CONTROLLER*
Vice President and Controller: Ameritas Life.
CHARLES J. CAVANAUGH, SENIOR VICE PRESIDENT, NATIONAL SALES MANAGER*
Director, Product Manufacturing and Supply: Merrill Lynch Insurance Group;
Director of Marketing: ITT Hartford Life Insurance Companies.
ENCORE!
42
<PAGE> 46
BRIAN J. CLARK, VICE PRESIDENT -- FIXED ANNUITY PRODUCT DEVELOPMENT**
Senior Vice President -- Product Management: AmerUs Life.***
MICHAEL G. FRAIZER, DIRECTOR**
Controller: AmerUs Life***; also serves as director of an affiliate of AVLIC.
THOMAS C. GODLASKY, DIRECTOR, SENIOR VICE PRESIDENT AND CHIEF INVESTMENT
OFFICER**
Executive Vice President and Chief Investment Officer: AmerUs Life Holdings,
Inc.; Executive Vice President and Chief Investment Officer: AmerUs Life***;
Manager -- Fixed Income and Derivatives Department: Providian Corporation; also
serves as director of an affiliate of AVLIC; also serves as officer and/or
director of other affiliates of AmerUs Life.
JOSEPH K. HAGGERTY, ASSISTANT GENERAL COUNSEL**
Senior Vice President and General Counsel: AmerUs Life Holdings, Inc.; Senior
Vice President and General Counsel: AmerUs Life***; Senior Vice President,
Deputy General Counsel: I.C.H. Corporation; also serves as an officer to an
affiliate of AVLIC, and served as officer and/or director of other subsidiaries
and/or affiliates of I.C.H. Corporation; also serves as officer of other
affiliates of AmerUs Life.
SANDRA K. HOLMES, VICE PRESIDENT -- FIXED ANNUITY CUSTOMER SERVICE**
Senior Vice President: AmerUs Life***.
KENNETH R. JONES, VICE PRESIDENT -- CORPORATE COMPLIANCE AND ASSISTANT
SECRETARY*
Vice President, Corporate Compliance & Assistant Secretary: Ameritas Life; also
serves as officer of other subsidiaries and/or affiliates of Ameritas Life.
ROBERT G. LANGE, ASSISTANT SECRETARY*
Vice President and General Counsel -- Insurance and Assistant Secretary:
Ameritas Life; also serves as officer of other subsidiaries and/or affiliates of
Ameritas Life; Director: Nebraska Department of Insurance.
CYNTHIA J. LAVELLE, VICE PRESIDENT -- PRODUCT, OPERATIONS AND TECHNOLOGY*
Assistant Vice President -- Variable Operations: Ameritas Life.
WILLIAM W. LESTER, TREASURER*
Senior Vice President -- Investments and Treasurer: Ameritas Life; also serves
as officer of affiliates of Ameritas Life.
JOANN M. MARTIN, DIRECTOR, VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
Senior Vice President and Chief Financial Officer: Ameritas Life; also serves as
officer and/or director of other subsidiaries and/or affiliates of Ameritas
Life.
SHIELA SANDY, ASSISTANT SECRETARY**
Manager Annuity Services: AmerUs Life***.
DONALD R. STADING, SECRETARY AND GENERAL COUNSEL*
Senior Vice President, Secretary and Corporate General Counsel: Ameritas Life;
also serves as officer and/or director of other subsidiaries and/or affiliates
of Ameritas Life.
KEVIN WAGONER, ASSISTANT TREASURER**
Director Investment Accounting: AmerUs Life***; Senior Financial Analyst: Target
Stores.
- ---------------
* Principal business address: Ameritas Variable Life Insurance Company, 5900
"O" Street, P.O. Box 82550, Lincoln, Nebraska 68501
** Principal business address: AmerUs Life Insurance Company, 611 Fifth Avenue,
Des Moines, Iowa 50309
*** Central Life Assurance Company merged with American Mutual Life Insurance
Company on December 31, 1994. Central Life Assurance Company was the
survivor of the merger. Contemporaneous with the merger, Central Life
Assurance Company changed its name to American Mutual Life Insurance
Company. (American Mutual Life Insurance Company changed its name to AmerUs
Life Insurance Company on July 1, 1996.)
ENCORE!
43
<PAGE> 47
LEGAL MATTERS
All matters of Nebraska law pertaining to the Policy, including the validity of
the Policy and AVLIC's right to issue the Policy under Nebraska Insurance Law,
have been passed upon by Donald R. Stading, Secretary and General Counsel of
AVLIC.
LEGAL PROCEEDINGS
There are no legal proceedings to which Separate Account V is a party or to
which the assets of Separate Account V are subject. AVLIC is not involved in any
litigation that is of material importance in relation to its ability to meet its
obligations under the Policies, or that relates to Separate Account V. AIC is
not involved in any litigation that is of material importance in relation to its
ability to perform under its underwriting agreement.
EXPERTS
The financial statements of AVLIC as of December 31, 1999 and 1998, and for each
of the three years in the period ended December 31, 1999, and the financial
statements of the subaccounts of Separate Account V as of December 31, 1999, and
for each of the three years in the period then ended, included in this
prospectus have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports appearing herein, and are included in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.
Actuarial matters included in this prospectus have been examined by Russell J.
Wiltgen, Vice President -- Individual Product Management of Ameritas Life
Insurance Corp., as stated in the opinion filed as an exhibit to the
registration statement.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Policy offered hereby. This prospectus does not contain all the information set
forth in the registration statement and the amendments and exhibits to the
registration statement, to all of which reference is made for further
information concerning Separate Account V, AVLIC and the Policy offered hereby.
Statements contained in this prospectus as to the contents of the Policy and
other legal instruments are summaries. For a complete statement of the terms
thereof reference is made to such instruments as filed.
FINANCIAL STATEMENTS
The financial statements of AVLIC which are included in this prospectus should
be considered only as bearing on the ability of AVLIC to meet its obligations
under the Policies. They should not be considered as bearing on the investment
performance of the assets held in Separate Account V.
ENCORE!
44
<PAGE> 48
INDEPENDENT AUDITORS' REPORT
Board of Directors
Ameritas Variable Life Insurance Company
Lincoln, Nebraska
We have audited the accompanying statement of net assets of each of the
subaccounts of Ameritas Variable Life Insurance Company Separate Account V,
(comprising, respectively, the Money Market Portfolio Initial Class,
Equity-Income Portfolio Initial Class, Equity- Income Portfolio Service Class
(commenced November 2, 1999), Growth Portfolio Initial Class, Growth Portfolio
Service Class (commenced November 2, 1999), High Income Portfolio Initial Class,
Overseas Portfolio Initial Class, and Overseas Portfolio Service Class
(commenced December 7, 1999) of the Variable Insurance Products Fund; the Asset
Manager Portfolio Initial Class, Asset Manager Portfolio Service Class
(commenced November 29, 1999), Investment Grade Bond Portfolio Initial Class,
Contrafund Portfolio Initial Class, Contrafund Portfolio Service Class
(commenced November 29, 1999), Index 500 Portfolio Initial Class and Asset
Manager Growth Portfolio Initial Class of the Variable Insurance Products Fund
II; the Small Capitalization Portfolio, Growth Portfolio, Income and Growth
Portfolio, Midcap Growth Portfolio, Balanced Portfolio, and Leveraged Allcap
Portfolio of the Alger American Fund; the Emerging Growth Series Portfolio,
World Governments Series Portfolio, Utilities Series Portfolio, Research Series
Portfolio (commenced April 8, 1997), Growth with Income Series Portfolio
(commenced April 3, 1997), and New Discovery Series Portfolio (commenced
November 12, 1999) of the MFS Variable Insurance Trust; the Asian Equity
Portfolio (commenced April 22, 1997), Emerging Markets Equity Portfolio, Global
Equity Portfolio (commenced April 17, 1997), International Magnum Portfolio
(commenced April 7, 1997), and U.S. Real Estate Portfolio (commenced April 28,
1997) of the Morgan Stanley Dean Witter Universal Funds, Inc.; the Ameritas
Emerging Growth Portfolio (commenced October 29, 1999), Ameritas Growth
Portfolio (commenced October 29, 1999), Ameritas Growth with Income Portfolio
(commenced October 29, 1999), Ameritas Income and Growth Portfolio (commenced
October 29, 1999), Ameritas Index 500 Portfolio (commenced October 29, 1999),
Ameritas Midcap Growth Portfolio (commenced October 29, 1999), Ameritas Money
Market Portfolio (commenced October 28, 1999), Ameritas Research Portfolio
(commenced October 29, 1999), Ameritas Small Capitalization Portfolio (commenced
October 29, 1999) of the Calvert Variable Series, Inc., Ameritas Portfolios; and
the Stock Index Fund Portfolio of the Dreyfus Stock Index Fund) as of December
31, 1999, and the related statements of operations and changes in net assets for
each of the three years in the period then ended. 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. Our procedures included
confirmation of securities owned at December 31, 1999. 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 our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of each of the subaccounts constituting
Ameritas Variable Life Insurance Company Separate Account V as of December 31,
1999, and the results of its operations and changes in net assets for each of
the three years in the period then ended, in conformity with generally accepted
accounting principles.
/s/ DELOITTE & TOUCHE LLP
Lincoln, Nebraska
February 5, 2000
F-I- 1
<PAGE> 49
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENT OF NET ASSETS
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
INVESTMENTS AT NET ASSET VALUE:
VARIABLE INSURANCE PRODUCTS FUND:
Equity-Income Portfolio Initial Class (Equity Income
I-Class) -- 1,200,052.051 shares at $25.71 per share
(cost $21,449,489).................................... $ 30,853,338
Equity-Income Portfolio Service Class (Equity Income
S-Class) -- 23.348 shares at $25.66 per share (cost
$594)................................................. 599
Growth Portfolio Initial Class (Growth
I-Class) -- 1,206,269.664 shares at $54.93 per share
(cost $32,300,729).................................... 66,260,394
Growth Portfolio Service Class (Growth
S-Class) -- 361.373 shares at $54.80 per share (cost
$19,113).............................................. 19,803
High Income Portfolio Initial Class (High Income
I-Class) -- 643,493.640 shares at $11.31 per share
(cost $6,964,598)..................................... 7,277,912
Overseas Portfolio Initial Class (Overseas
I-Class) -- 660,786.721 shares at $27.44 per share
(cost $9,282,319)..................................... 18,131,989
Overseas Portfolio Service Class (Overseas
S-Class) -- 1.414 shares at $27.38 per share (cost
$36).................................................. 39
VARIABLE INSURANCE PRODUCTS FUND II:
Asset Manager Portfolio Initial Class (Asset Manager
I-Class) -- 1,769,690.988 shares at $18.67 per share
(cost $25,080,444).................................... 33,040,130
Asset Manager Portfolio Service Class (Asset Manager
S-Class) -- 21.069 shares at $18.59 per share (cost
$384)................................................. 392
Investment Grade Bond Portfolio Initial Class
(Investment Grade Bond I-Class) -- 310,807.857 shares
at $12.16 per share (cost $3,717,866)................. 3,779,423
Contrafund Portfolio Initial Class (Contrafund
I-Class) -- 714,800.541 shares at $29.15 per share
(cost $13,879,737).................................... 20,836,438
Contrafund Portfolio Service Class (Contrafund
S-Class) -- 299.329 shares at $29.10 per share (cost
$8,528)............................................... 8,710
Asset Manager Growth Portfolio Initial Class (Asset
Manager Growth I-Class) -- 236,100.860 shares at
$18.38 per share (cost $3,489,495).................... 4,339,535
ALGER AMERICAN FUND:
Balanced Portfolio (Balanced) -- 326,807.439 shares at
$15.57 per share (cost $3,861,056).................... 5,088,391
Leveraged Allcap Portfolio (Leveraged
Allcap) -- 367,145.479 shares at $57.97 per share
(cost $12,666,837).................................... 21,283,423
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-I- 2
<PAGE> 50
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENT OF NET ASSETS
DECEMBER 31, 1999
ASSETS, CONTINUED
<TABLE>
<S> <C>
MFS VARIABLE INSURANCE TRUST:
World Governments Series Portfolio (World Governments
Series) -- 40,718.448 shares at $10.03 per share (cost
$411,142)............................................. $ 408,406
Utilities Series Portfolio (Utilities
Series) -- 232,575.290 shares at $24.16 per share
(cost $4,106,211)..................................... 5,619,019
New Discovery Series Portfolio (New Discovery
Series) -- 8,750.402 shares at $17.27 per share (cost
$143,173)............................................. 151,120
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.:
Asian Equity Portfolio (Asian Equity) -- 116,856.034
shares at $9.34 per share (cost $757,264)............. 1,091,435
Emerging Markets Equity Portfolio (Emerging Markets
Equity) -- 157,426.804 shares at $13.84 per share
(cost $1,624,721)..................................... 2,178,789
Global Equity Portfolio (Global Equity) -- 207,539.068
shares at $12.88 per share (cost $2,574,700).......... 2,673,103
International Magnum Portfolio (International
Magnum) -- 126,932.562 shares at $13.89 per share
(cost $1,460,963)..................................... 1,763,093
U.S. Real Estate Portfolio (U.S. Real
Estate) -- 96,540.525 shares at $9.11 per share (cost
$1,036,611)........................................... 879,484
CALVERT VARIABLE SERIES, INC., AMERITAS PORTFOLIOS:
Ameritas Emerging Growth Portfolio (Emerging
Growth) -- 623,113.360 shares at $37.86 per share
(cost $16,161,699).................................... 23,591,072
Ameritas Growth Portfolio (Growth) -- 564,421.258
shares at $64.83 per share (cost $31,702,408)......... 36,591,430
Ameritas Growth with Income Portfolio (Growth with
Income) -- 181,873.924 shares at $21.17 per share
(cost $3,680,933)..................................... 3,850,270
Ameritas Income and Growth Portfolio (Income and
Growth) -- 668,452.484 shares at $17.35 per share
(cost $9,316,921)..................................... 11,597,650
Ameritas Index 500 Portfolio (Index 500) -- 181,738.510
shares at $167.30 per share (cost $28,210,421)........ 30,404,852
Ameritas Midcap Growth Portfolio (Midcap
Growth) -- 505,493.406 shares at $31.50 per share
(cost $13,387,683).................................... 15,923,042
Ameritas Money Market Portfolio (Money
Market) -- 18,688,200.480 shares at $1.00 per share
(cost $18,688,200).................................... 18,688,200
Ameritas Research Portfolio (Research) -- 187,533.532
shares at $22.99 per share (cost $3,784,743).......... 4,311,395
Ameritas Small Capitalization Portfolio (Small
Cap) -- 568,578.051 shares at $56.42 per share (cost
$25,098,528).......................................... 32,079,174
------------
NET ASSETS REPRESENTING EQUITY OF POLICYOWNERS......... $402,722,050
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-I- 3
<PAGE> 51
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
VARIABLE INSURANCE
PRODUCTS FUND
----------------------
MONEY EQUITY
MARKET INCOME
TOTAL I-CLASS I-CLASS
----------- --------- ----------
<S> <C> <C> <C>
1999
INVESTMENT INCOME:
Dividend distributions received.......................... $ 4,242,954 $ 624,763 $ 438,682
Mortality and expense risk charge........................ (2,932,292) (103,738) (285,410)
----------- --------- ----------
NET INVESTMENT INCOME (LOSS)............................... 1,310,662 521,025 153,272
----------- --------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain distributions.......................... 18,596,394 -- 969,719
Net change in unrealized appreciation (depreciation)..... 65,629,180 -- 411,890
----------- --------- ----------
NET GAIN (LOSS) ON INVESTMENTS............................. 84,225,574 -- 1,381,609
----------- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................... $85,536,236 $ 521,025 $1,534,881
=========== ========= ==========
1998
INVESTMENT INCOME:
Dividend distributions received.......................... $ 3,349,781 $ 571,068 $ 350,608
Mortality and expense risk charge........................ (2,163,874) (100,578) (257,976)
----------- --------- ----------
NET INVESTMENT INCOME (LOSS)............................... 1,185,907 470,490 92,632
----------- --------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain distributions.......................... 17,147,973 -- 1,247,753
Net change in unrealized appreciation (depreciation)..... 30,032,940 -- 1,327,445
----------- --------- ----------
NET GAIN (LOSS) ON INVESTMENTS............................. 47,180,913 -- 2,575,198
----------- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................... $48,366,820 $ 470,490 $2,667,830
=========== ========= ==========
1997
INVESTMENT INCOME:
Dividend distributions received.......................... $ 2,670,710 $ 463,675 $ 290,414
Mortality and expense risk charge........................ (1,574,558) (84,611) (201,066)
----------- --------- ----------
NET INVESTMENT INCOME (LOSS)............................... 1,096,152 379,064 89,348
----------- --------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain distributions.......................... 6,045,040 -- 1,460,138
Net change in unrealized appreciation (depreciation)..... 21,418,187 -- 3,371,385
----------- --------- ----------
NET GAIN (LOSS) ON INVESTMENTS............................. 27,463,227 -- 4,831,523
----------- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................... $28,559,379 $ 379,064 $4,920,871
=========== ========= ==========
</TABLE>
- ---------------
(1) Commenced business 11/02/99
(2) Commenced business 11/02/99
(3) Commenced business 12/07/99
The accompanying notes are an integral part of these financial statements.
F-I- 4
<PAGE> 52
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
----------------------------------------------------------------
EQUITY
INCOME GROWTH GROWTH HIGH INCOME OVERSEAS OVERSEAS
S-CLASS(1) I-CLASS S-CLASS(2) I-CLASS I-CLASS S-CLASS(3)
---------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ -- $ 82,737 $ -- $ 792,857 $ 226,340 $ --
-- (489,259) (5) (69,467) (138,144) --
---- ----------- ---- ----------- ---------- ----
-- (406,522) (5) 723,390 88,196 --
---- ----------- ---- ----------- ---------- ----
-- 5,202,111 -- 29,639 365,064 --
5 12,361,324 690 (141,192) 5,444,790 3
---- ----------- ---- ----------- ---------- ----
5 17,563,435 690 (111,553) 5,809,854 3
---- ----------- ---- ----------- ---------- ----
$ 5 $17,156,913 $685 $ 611,837 $5,898,050 $ 3
==== =========== ==== =========== ========== ====
$ -- $ 167,972 $ -- $ 558,849 $ 271,677 $ --
-- (354,109) -- (73,002) (128,820) --
---- ----------- ---- ----------- ---------- ----
-- (186,137) -- 485,847 142,857 --
---- ----------- ---- ----------- ---------- ----
-- 4,393,780 -- 355,102 800,734 --
-- 8,556,162 -- (1,057,850) 959,668 --
---- ----------- ---- ----------- ---------- ----
-- 12,949,942 -- (702,748) 1,760,402 --
---- ----------- ---- ----------- ---------- ----
$ -- $12,763,805 $ -- $ (216,901) $1,903,259 $ --
==== =========== ==== =========== ========== ====
$ -- $ 177,070 $ -- $ 456,382 $ 183,138 $ --
-- (278,073) -- (65,009) (115,217) --
---- ----------- ---- ----------- ---------- ----
-- (101,003) -- 391,373 67,921 --
---- ----------- ---- ----------- ---------- ----
-- 792,600 -- 56,407 727,004 --
-- 5,089,744 -- 585,776 646,688 --
---- ----------- ---- ----------- ---------- ----
-- 5,882,344 -- 642,183 1,373,692 --
---- ----------- ---- ----------- ---------- ----
$ -- $ 5,781,341 $ -- $ 1,033,556 $1,441,613 $ --
==== =========== ==== =========== ========== ====
</TABLE>
F-I- 5
<PAGE> 53
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND II
-----------------------------------------------------
INVESTMENT
ASSET ASSET GRADE
MANAGER MANAGER BOND CONTRAFUND
I-CLASS S-CLASS (1) I-CLASS I-CLASS
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
1999
INVESTMENT INCOME:
Dividend distributions received.............. $1,054,568 $-- $ 178,023 $ 68,862
Mortality and expense risk charge............ (290,374) -- (39,812) (148,735)
---------- -- --------- ----------
NET INVESTMENT INCOME (LOSS)................... 764,194 -- 138,211 (79,873)
---------- -- --------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions.............. 1,335,786 -- 55,850 504,989
Net change in unrealized appreciation
(depreciation)............................ 995,823 8 (290,852) 3,286,645
---------- -- --------- ----------
NET GAIN (LOSS) ON INVESTMENTS................. 2,331,609 8 (235,002) 3,791,634
---------- -- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $3,095,803 $8 $ (96,791) $3,711,761
========== == ========= ==========
1998
INVESTMENT INCOME:
Dividend distributions received.............. $ 882,316 $-- $ 146,622 $ 56,896
Mortality and expense risk charge............ (271,404) -- (39,733) (93,506)
---------- -- --------- ----------
NET INVESTMENT INCOME (LOSS)................... 610,912 -- 106,889 (36,610)
---------- -- --------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions.............. 2,646,949 -- 17,396 418,590
Net change in unrealized appreciation
(depreciation)............................ 637,938 -- 179,497 2,407,939
---------- -- --------- ----------
NET GAIN (LOSS) ON INVESTMENTS................. 3,284,887 -- 196,893 2,826,529
---------- -- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $3,895,799 $-- $ 303,782 $2,789,919
========== == ========= ==========
1997
INVESTMENT INCOME:
Dividend distributions received.............. $ 782,791 $-- $ 138,030 $ 28,971
Mortality and expense risk charge............ (232,839) -- (25,608) (50,896)
---------- -- --------- ----------
NET INVESTMENT INCOME (LOSS)................... 549,952 -- 112,422 (21,925)
---------- -- --------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions.............. 1,963,611 -- -- 76,565
Net change in unrealized appreciation
(depreciation)............................ 1,992,988 -- 89,590 991,738
---------- -- --------- ----------
NET GAIN (LOSS) ON INVESTMENTS................. 3,956,599 -- 89,590 1,068,303
---------- -- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $4,506,551 $-- $ 202,012 $1,046,378
========== == ========= ==========
</TABLE>
- ---------------
(1) Commenced business 11/29/99
(2) Commenced business 11/29/99
The accompanying notes are an integral part of these financial statements.
F-I- 6
<PAGE> 54
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND II ALGER AMERICAN FUND
- --------------------------------------------- --------------------------------------------------------
ASSET
MANAGER
CONTRAFUND INDEX 500 GROWTH SMALL INCOME AND MIDCAP
S-CLASS(2) I-CLASS I-CLASS CAPITALIZATION GROWTH GROWTH GROWTH
----------- ---------- -------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ -- $ 201,036 $ 80,579 $ -- $ 37,125 $ 14,347 $ --
-- (174,834) (32,359) (167,614) (201,618) (57,170) (91,219)
----------- ---------- -------- ---------- ---------- ---------- ----------
-- 26,202 48,220 (167,614) (164,493) (42,823) (91,219)
----------- ---------- -------- ---------- ---------- ---------- ----------
-- 136,418 133,643 2,786,842 2,534,821 426,544 1,862,002
182 2,171,872 333,686 352,557 1,454,079 490,297 (948,010)
----------- ---------- -------- ---------- ---------- ---------- ----------
182 2,308,290 467,329 3,139,399 3,988,900 916,841 913,992
----------- ---------- -------- ---------- ---------- ---------- ----------
$ 182 $2,334,492 $515,549 $2,971,785 $3,824,407 $ 874,018 $ 822,773
=========== ========== ======== ========== ========== ========== ==========
$ -- $ 131,792 $ 49,741 $ -- $ 41,754 $ 17,735 $ --
-- (135,441) (25,300) (169,257) (155,688) (49,041) (81,791)
----------- ---------- -------- ---------- ---------- ---------- ----------
-- (3,649) 24,441 (169,257) (113,934) (31,306) (81,791)
----------- ---------- -------- ---------- ---------- ---------- ----------
-- 305,253 232,615 2,446,741 2,551,580 490,671 742,049
-- 3,342,102 175,258 623,620 4,267,982 1,071,043 1,766,399
----------- ---------- -------- ---------- ---------- ---------- ----------
-- 3,647,355 407,873 3,070,361 6,819,562 1,561,714 2,508,448
----------- ---------- -------- ---------- ---------- ---------- ----------
$ -- $3,643,706 $432,314 $2,901,104 $6,705,628 $1,530,408 $2,426,657
=========== ========== ======== ========== ========== ========== ==========
$ -- $ 32,977 $ -- $ -- $ 32,883 $ 12,791 $ 3,623
-- (71,508) (14,685) (142,416) (98,937) (28,862) (62,763)
----------- ---------- -------- ---------- ---------- ---------- ----------
-- (38,531) (14,685) (142,416) (66,054) (16,071) (59,140)
----------- ---------- -------- ---------- ---------- ---------- ----------
-- 66,916 1,179 550,941 59,552 105,818 88,340
-- 1,946,609 322,064 1,210,960 2,142,136 755,171 768,190
----------- ---------- -------- ---------- ---------- ---------- ----------
-- 2,013,525 323,243 1,761,901 2,201,688 860,989 856,530
----------- ---------- -------- ---------- ---------- ---------- ----------
$ -- $1,974,994 $308,558 $1,619,485 $2,135,634 $ 844,918 $ 797,390
=========== ========== ======== ========== ========== ========== ==========
</TABLE>
F-I- 7
<PAGE> 55
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
MFS VARIABLE INSURANCE
ALGER AMERICAN FUND TRUST
---------------------- -------------------------
EMERGING WORLD
LEVERAGED GROWTH GOVERNMENTS
BALANCED ALLCAP SERIES SERIES
-------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
1999
INVESTMENT INCOME:
Dividend distributions received............... $ 39,415 $ -- $ -- $ 21,210
Mortality and expense risk charge............. (33,636) (99,090) (100,195) (3,721)
-------- ---------- ---------- --------
NET INVESTMENT INCOME (LOSS).................... 5,779 (99,090) (100,195) 17,489
-------- ---------- ---------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions............... 199,925 658,702 -- --
Net change in unrealized appreciation
(depreciation)............................. 769,554 6,672,254 2,583,588 (32,288)
-------- ---------- ---------- --------
NET GAIN (LOSS) ON INVESTMENTS.................. 969,479 7,330,956 2,583,588 (32,288)
-------- ---------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS............................... $975,258 $7,231,866 $2,483,393 $(14,799)
======== ========== ========== ========
1998
INVESTMENT INCOME:
Dividend distributions received............... $ 24,247 $ -- $ -- $ 3,936
Mortality and expense risk charge............. (16,462) (31,317) (83,222) (3,503)
-------- ---------- ---------- --------
NET INVESTMENT INCOME (LOSS).................... 7,785 (31,317) (83,222) 433
-------- ---------- ---------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions............... 107,704 147,338 76,320 --
Net change in unrealized appreciation
(depreciation)............................. 417,950 1,626,709 2,714,274 29,642
-------- ---------- ---------- --------
NET GAIN (LOSS) ON INVESTMENTS.................. 525,654 1,774,047 2,790,594 29,642
-------- ---------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS............................... $533,439 $1,742,730 $2,707,372 $ 30,075
======== ========== ========== ========
1997
INVESTMENT INCOME:
Dividend distributions received............... $ 12,338 $ -- $ -- $ 3,537
Mortality and expense risk charge............. (10,092) (17,451) (44,359) (1,978)
-------- ---------- ---------- --------
NET INVESTMENT INCOME (LOSS).................... 2,246 (17,451) (44,359) 1,559
-------- ---------- ---------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions............... 16,729 -- -- 1,603
Net change in unrealized appreciation
(depreciation)............................. 162,920 298,847 937,800 (6,568)
-------- ---------- ---------- --------
NET GAIN (LOSS) ON INVESTMENTS.................. 179,649 298,847 937,800 (4,965)
-------- ---------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS............................... $181,895 $ 281,396 $ 893,441 $ (3,406)
======== ========== ========== ========
</TABLE>
- ---------------
(1) Commenced business 04/08/97
(2) Commenced business 04/03/97
(3) Commenced business 11/12/99
(4) Commenced business 04/22/97
(5) Commenced business 04/08/97
(6) Commenced business 04/17/97
The accompanying notes are an integral part of these financial statements.
F-I- 8
<PAGE> 56
<TABLE>
<CAPTION>
MORGAN STANLEY DEAN WITTER
MFS VARIABLE INSURANCE TRUST UNIVERSAL FUNDS, INC.
------------------------------------------------ ---------------------------------
GROWTH WITH NEW EMERGING
UTILITIES RESEARCH INCOME DISCOVERY ASIAN MARKETS GLOBAL
SERIES SERIES(1) SERIES(2) SERIES(3) EQUITY(4) EQUITY(5) EQUITY(6)
---------- --------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 45,844 $ 6,589 $ 12,252 $ -- $ 5,861 $ 320 $ 30,920
(35,886) (23,950) (25,262) (37) (5,901) (10,340) (20,462)
---------- -------- -------- ------ -------- --------- --------
9,958 (17,361) (13,010) (37) (40) (10,020) 10,458
---------- -------- -------- ------ -------- --------- --------
230,507 34,817 14,706 1,661 -- -- 119,961
986,318 222,022 (9,958) 7,946 388,267 917,707 (47,308)
---------- -------- -------- ------ -------- --------- --------
1,216,825 256,839 4,748 9,607 388,267 917,707 72,653
---------- -------- -------- ------ -------- --------- --------
$1,226,783 $239,478 $ (8,262) $9,570 $388,227 $ 907,687 $ 83,111
========== ======== ======== ====== ======== ========= ========
$ 24,469 $ 2,571 $ -- $ -- $ 2,129 $ 4,381 $ 14,013
(20,971) (17,327) (19,348) -- (2,084) (7,282) (13,265)
---------- -------- -------- ------ -------- --------- --------
3,498 (14,756) (19,348) -- 45 (2,901) 748
---------- -------- -------- ------ -------- --------- --------
111,249 33,714 -- -- -- -- 12,591
262,317 383,697 490,661 -- (2,798) (219,226) 143,561
---------- -------- -------- ------ -------- --------- --------
373,566 417,411 490,661 -- (2,798) (219,226) 156,152
---------- -------- -------- ------ -------- --------- --------
$ 377,064 $402,655 $471,313 $ -- $ (2,753) $(222,127) $156,900
========== ======== ======== ====== ======== ========= ========
$ -- $ -- $ 6,744 $ -- $ 232 $ 4,896 $ 5,533
(7,542) (2,824) (2,761) -- (495) (3,435) (2,294)
---------- -------- -------- ------ -------- --------- --------
(7,542) (2,824) 3,983 -- (263) 1,461 3,239
---------- -------- -------- ------ -------- --------- --------
-- -- 31,548 -- -- 21,661 11,816
255,610 18,241 3,513 -- (51,298) (144,415) 2,150
---------- -------- -------- ------ -------- --------- --------
255,610 18,241 35,061 -- (51,298) (122,754) 13,966
---------- -------- -------- ------ -------- --------- --------
$ 248,068 $ 15,417 $ 39,044 $ -- $(51,561) $(121,293) $ 17,205
========== ======== ======== ====== ======== ========= ========
</TABLE>
F-I- 9
<PAGE> 57
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
MORGAN STANLEY DEAN WITTER CALVERT VARIABLE SERIES, INC.,
UNIVERSAL FUNDS, INC. AMERITAS PORTFOLIOS
--------------------------- ------------------------------
INTERNATIONAL U.S. REAL EMERGING
MAGNUM(1) ESTATE(2) GROWTH(3) GROWTH(4)
------------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
1999
INVESTMENT INCOME:
Dividend distributions received.............. $ 13,210 $ 48,301 $ -- $ 4,570
Mortality and expense risk charge............ (11,040) (7,470) (29,906) (53,250)
-------- --------- ---------- ----------
Net investment income (loss)................... 2,170 40,831 (29,906) (48,680)
-------- --------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions.............. 5,512 -- -- --
Net change in unrealized appreciation
(depreciation)............................ 307,353 (65,623) 7,429,373 4,889,022
-------- --------- ---------- ----------
NET GAIN (LOSS) ON INVESTMENTS................. 312,865 (65,623) 7,429,373 4,889,022
-------- --------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $315,035 $ (24,792) $7,399,467 $4,840,342
======== ========= ========== ==========
1998
INVESTMENT INCOME:
Dividend distributions received.............. $ 2,795 $ 24,210 $ -- $ --
Mortality and expense risk charge............ (6,689) (6,758) -- --
-------- --------- ---------- ----------
NET INVESTMENT INCOME (LOSS)................... (3,894) 17,452 -- --
-------- --------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions.............. 3,255 6,589 -- --
Net change in unrealized appreciation
(depreciation)............................ 39,545 (110,595) -- --
-------- --------- ---------- ----------
NET GAIN (LOSS) ON INVESTMENTS................. 42,800 (104,006) -- --
-------- --------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $ 38,906 $ (86,554) $ -- $ --
======== ========= ========== ==========
1997
INVESTMENT INCOME:
Dividend distributions received.............. $ 15,852 $ 9,641 $ -- $ --
Mortality and expense risk charge............ (1,903) (1,584) -- --
-------- --------- ---------- ----------
NET INVESTMENT INCOME (LOSS)................... 13,949 8,057 -- --
-------- --------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions.............. 1,056 11,556 -- --
Net change in unrealized appreciation
(depreciation)............................ (44,768) 19,091 -- --
-------- --------- ---------- ----------
NET GAIN (LOSS) ON INVESTMENTS................. (43,712) 30,647 -- --
-------- --------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $(29,763) $ 38,704 $ -- $ --
======== ========= ========== ==========
</TABLE>
- ---------------
(1) Commenced business 04/07/97
(2) Commenced business 04/28/97
(3) Commenced business 10/29/99
(4) Commenced business 10/29/99
(5) Commenced business 10/29/99
(6) Commenced business 10/29/99
(7) Commenced business 10/29/99
(8) Commenced business 10/29/99
(9) Commenced business 10/28/99
(10) Commenced business 10/29/99
(11) Commenced business 10/29/99
The accompanying notes are an integral part of these financial statements.
F-I- 10
<PAGE> 58
<TABLE>
<CAPTION>
CALVERT VARIABLE SERIES, INC.,
AMERITAS PORTFOLIOS DREYFUS
------------------------------------------------------------------------------------------- --------
GROWTH WITH INCOME AND INDEX MIDCAP MONEY SMALL STOCK
INCOME(5) GROWTH(6) 500(7) GROWTH(8) MARKET(9) RESEARCH(10) CAP(11) INDEX
----------- ---------- ---------- ---------- ---------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1,856 $ -- $ 45,131 $ -- $167,556 $ -- $ -- $ --
(5,394) (16,266) (44,210) (23,079) (42,280) (6,148) (45,011) --
-------- ---------- ---------- ---------- -------- -------- ---------- --------
(3,538) (16,266) 921 (23,079) 125,276 (6,148) (45,011) --
-------- ---------- ---------- ---------- -------- -------- ---------- --------
-- 330,344 -- 358,344 -- 48,862 249,625 --
169,338 2,280,729 2,194,432 2,535,359 -- 526,653 6,980,645 --
-------- ---------- ---------- ---------- -------- -------- ---------- --------
169,338 2,611,073 2,194,432 2,893,703 -- 575,515 7,230,270 --
-------- ---------- ---------- ---------- -------- -------- ---------- --------
$165,800 $2,594,807 $2,195,353 $2,870,624 $125,276 $569,367 $7,185,259 $
======== ========== ========== ========== ======== ======== ========== ========
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
-- -- -- -- -- -- -- --
-------- ---------- ---------- ---------- -------- -------- ---------- --------
-- -- -- -- -- -- -- --
-------- ---------- ---------- ---------- -------- -------- ---------- --------
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-------- ---------- ---------- ---------- -------- -------- ---------- --------
-- -- -- -- -- -- -- --
-------- ---------- ---------- ---------- -------- -------- ---------- --------
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
======== ========== ========== ========== ======== ======== ========== ========
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ 9,192
-- -- -- -- -- -- -- (5,350)
-------- ---------- ---------- ---------- -------- -------- ---------- --------
-- -- -- -- -- -- -- 3,842
-------- ---------- ---------- ---------- -------- -------- ---------- --------
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- 54,025
-------- ---------- ---------- ---------- -------- -------- ---------- --------
-- -- -- -- -- -- -- 54,025
-------- ---------- ---------- ---------- -------- -------- ---------- --------
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ 57,867
======== ========== ========== ========== ======== ======== ========== ========
</TABLE>
F-I- 11
<PAGE> 59
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
VARIABLE INSURANCE
PRODUCTS FUND
---------------------------
MONEY EQUITY
MARKET INCOME
TOTAL I-CLASS I-CLASS
------------ ------------ -----------
<S> <C> <C> <C>
1999
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)...................... $ 1,310,662 $ 521,025 $ 153,272
Net realized gain distributions................... 18,596,394 -- 969,719
Net change in unrealized appreciation
(depreciation)................................. 65,629,180 -- 411,890
------------ ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS........................................ 85,536,236 521,025 1,534,881
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS...................................... 34,532,740 (11,626,149) (173,132)
------------ ------------ -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS............. 120,068,976 (11,105,124) 1,361,749
NET ASSETS AT JANUARY 1, 1999....................... 282,653,074 11,105,124 29,491,589
------------ ------------ -----------
NET ASSETS AT DECEMBER 31, 1999..................... $402,722,050 $ -- $30,853,338
============ ============ ===========
1998
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)...................... $ 1,185,907 $ 470,490 $ 92,632
Net realized gain distributions................... 17,147,973 -- 1,247,753
Net change in unrealized appreciation
(depreciation)................................. 30,032,940 -- 1,327,445
------------ ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS........................................ 48,366,820 470,490 2,667,830
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS...................................... 36,557,125 3,082,148 2,101,252
------------ ------------ -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS............. 84,923,945 3,552,638 4,769,082
NET ASSETS AT JANUARY 1, 1998....................... 197,729,129 7,552,486 24,722,507
------------ ------------ -----------
NET ASSETS AT DECEMBER 31, 1998..................... $282,653,074 $ 11,105,124 $29,491,589
============ ============ ===========
1997
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)...................... $ 1,096,152 $ 379,064 $ 89,348
Net realized gain distributions................... 6,045,040 -- 1,460,138
Net change in unrealized appreciation
(depreciation)................................. 21,418,187 -- 3,371,385
------------ ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS........................................ 28,559,379 379,064 4,920,871
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS...................................... 33,090,017 (464,346) 2,617,832
------------ ------------ -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS............. 61,649,396 (85,282) 7,538,703
NET ASSETS AT JANUARY 1, 1997....................... 136,079,733 7,637,768 17,183,804
------------ ------------ -----------
NET ASSETS AT DECEMBER 31, 1997..................... $197,729,129 $ 7,552,486 $24,722,507
============ ============ ===========
</TABLE>
- ---------------
(1) Commenced business 11/02/99
(2) Commenced business 11/02/99
(3) Commenced business 12/07/99
The accompanying notes are an integral part of these financial statements.
F-I- 12
<PAGE> 60
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
-------------------------------------------------------------------------------
EQUITY
INCOME GROWTH GROWTH HIGH INCOME OVERSEAS OVERSEAS
S-CLASS(1) I-CLASS S-CLASS(2) I-CLASS I-CLASS S-CLASS(3)
---------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ -- $ (406,522) $ (5) $ 723,390 $ 88,196 $--
-- 5,202,111 -- 29,639 365,064 --
5 12,361,324 690 (141,192) 5,444,790 3
---- ----------- ------- ----------- ----------- ---
5 17,156,913 685 611,837 5,898,050 3
594 2,880,969 19,118 (1,595,898) (2,386,280) 36
---- ----------- ------- ----------- ----------- ---
599 20,037,882 19,803 (984,061) 3,511,770 39
-- 46,222,512 -- 8,261,973 14,620,219 --
---- ----------- ------- ----------- ----------- ---
$599 $66,260,394 $19,803 $ 7,277,912 $18,131,989 $39
==== =========== ======= =========== =========== ===
$ -- $ (186,137) $ -- $ 485,847 $ 142,857 $--
-- 4,393,780 -- 355,102 800,734 --
-- 8,556,162 -- (1,057,850) 959,668 --
---- ----------- ------- ----------- ----------- ---
-- 12,763,805 -- (216,901) 1,903,259 --
-- 1,105,036 -- 353,039 (628,523) --
---- ----------- ------- ----------- ----------- ---
-- 13,868,841 -- 136,138 1,274,736 --
-- 32,353,671 -- 8,125,835 13,345,483 --
---- ----------- ------- ----------- ----------- ---
$ -- $46,222,512 $ -- $ 8,261,973 $14,620,219 $--
==== =========== ======= =========== =========== ===
$ -- $ (101,003) $ -- $ 391,373 $ 67,921 $--
-- 792,600 -- 56,407 727,004 --
-- 5,089,744 -- 585,776 646,688 --
---- ----------- ------- ----------- ----------- ---
-- 5,781,341 -- 1,033,556 1,441,613 --
-- 382,227 -- 104,745 1,242,175 --
---- ----------- ------- ----------- ----------- ---
-- 6,163,568 -- 1,138,301 2,683,788 --
-- 26,190,103 -- 6,987,534 10,661,695 --
---- ----------- ------- ----------- ----------- ---
$ -- $32,353,671 $ -- $ 8,125,835 $13,345,483 $--
==== =========== ======= =========== =========== ===
</TABLE>
F-I- 13
<PAGE> 61
SEPARATE ACCOUNT V
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND II
---------------------------------------------------
ASSET ASSET INVESTMENT
MANAGER MANAGER GRADE BOND CONTRAFUND
I-CLASS S-CLASS(1) I-CLASS I-CLASS
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
1999
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss).................... $ 764,194 $ -- $ 138,211 $ (79,873)
Net realized gain distributions................. 1,335,786 -- 55,850 504,989
Net change in unrealized appreciation
(depreciation)............................... 995,823 8 (290,852) 3,286,645
----------- ---- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. 3,095,803 8 (96,791) 3,711,761
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS.................................... (1,888,691) 384 (571,758) 3,385,621
----------- ---- ---------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS........... 1,207,112 392 (668,549) 7,097,382
NET ASSETS AT JANUARY 1, 1999..................... 31,833,018 -- 4,447,972 13,739,056
----------- ---- ---------- -----------
NET ASSETS AT DECEMBER 31, 1999................... $33,040,130 $392 $3,779,423 $20,836,438
=========== ==== ========== ===========
1998
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss).................... $ 610,912 $ -- $ 106,889 $ (36,610)
Net realized gain distributions................. 2,646,949 -- 17,396 418,590
Net change in unrealized appreciation
(depreciation)............................... 637,938 -- 179,497 2,407,939
----------- ---- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. 3,895,799 -- 303,782 2,789,919
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS.................................... 353,744 -- 1,166,836 3,190,211
----------- ---- ---------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS........... 4,249,543 -- 1,470,618 5,980,130
NET ASSETS AT JANUARY 1, 1998..................... 27,583,475 -- 2,977,354 7,758,926
----------- ---- ---------- -----------
NET ASSETS AT DECEMBER 31, 1998................... $31,833,018 $ -- $4,447,972 $13,739,056
=========== ==== ========== ===========
1997
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss).................... $ 549,952 $ -- $ 112,422 $ (21,925)
Net realized gain distributions................. 1,963,611 -- -- 76,565
Net change in unrealized appreciation
(depreciation)............................... 1,992,988 -- 89,590 991,738
----------- ---- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. 4,506,551 -- 202,012 1,046,378
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS.................................... 614,816 -- 422,976 3,787,942
----------- ---- ---------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS........... 5,121,367 -- 624,988 4,834,320
NET ASSETS AT JANUARY 1, 1997..................... 22,462,108 -- 2,352,366 2,924,606
----------- ---- ---------- -----------
NET ASSETS AT DECEMBER 31, 1997................... $27,583,475 $ -- $2,977,354 $ 7,758,926
=========== ==== ========== ===========
</TABLE>
- ---------------
(1) Commenced business 11/29/99
(2) Commenced business 11/29/99
The accompanying notes are an integral part of these financial statements.
F-I- 14
<PAGE> 62
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND II ALGER AMERICAN FUND
----------------------------------------- ------------------------------------------------------------
ASSET MANAGER
CONTRAFUND INDEX 500 GROWTH SMALL INCOME AND
S-CLASS(2) I-CLASS I-CLASS CAPITALIZATION GROWTH GROWTH MIDCAP GROWTH
---------- ------------ ------------- -------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ -- $ 26,202 $ 48,220 $ (167,614) $ (164,493) $ (42,823) $ (91,219)
-- 136,418 133,643 2,786,842 2,534,821 426,544 1,862,002
182 2,171,872 333,686 352,557 1,454,079 490,297 (948,010)
------ ------------ ---------- ------------ ------------ ------------ ------------
182 2,334,492 515,549 2,971,785 3,824,407 874,018 822,773
8,528 (22,163,611) 518,100 (25,232,993) (27,172,870) (7,875,584) (12,108,131)
------ ------------ ---------- ------------ ------------ ------------ ------------
8,710 (19,829,119) 1,033,649 (22,261,208) (23,348,463) (7,001,566) (11,285,358)
-- 19,829,119 3,305,886 22,261,208 23,348,463 7,001,566 11,285,358
------ ------------ ---------- ------------ ------------ ------------ ------------
$8,710 $ -- $4,339,535 $ -- $ -- $ -- $ --
====== ============ ========== ============ ============ ============ ============
$ -- $ (3,649) $ 24,441 $ (169,257) $ (113,934) $ (31,306) $ (81,791)
-- 305,253 232,615 2,446,741 2,551,580 490,671 742,049
-- 3,342,102 175,258 623,620 4,267,982 1,071,043 1,766,399
------ ------------ ---------- ------------ ------------ ------------ ------------
-- 3,643,706 432,314 2,901,104 6,705,628 1,530,408 2,426,657
-- 5,349,378 582,288 1,708,481 3,802,750 1,281,319 1,308,265
------ ------------ ---------- ------------ ------------ ------------ ------------
-- 8,993,084 1,014,602 4,609,585 10,508,378 2,811,727 3,734,922
-- 10,836,035 2,291,284 17,651,623 12,840,085 4,189,839 7,550,436
------ ------------ ---------- ------------ ------------ ------------ ------------
$ -- $ 19,829,119 $3,305,886 $ 22,261,208 $ 23,348,463 $ 7,001,566 $ 11,285,358
====== ============ ========== ============ ============ ============ ============
$ -- $ (38,531) $ (14,685) $ (142,416) $ (66,054) $ (16,071) $ (59,140)
-- 66,916 1,179 550,941 59,552 105,818 88,340
-- 1,946,609 322,064 1,210,960 2,142,136 755,171 768,190
------ ------------ ---------- ------------ ------------ ------------ ------------
-- 1,974,994 308,558 1,619,485 2,135,634 844,918 797,390
-- 6,930,829 1,426,686 1,904,475 2,704,106 1,369,132 1,117,517
------ ------------ ---------- ------------ ------------ ------------ ------------
-- 8,905,823 1,735,244 3,523,960 4,839,740 2,214,050 1,914,907
-- 1,930,212 556,040 14,127,663 8,000,345 1,975,789 5,635,529
------ ------------ ---------- ------------ ------------ ------------ ------------
$ -- $ 10,836,035 $2,291,284 $ 17,651,623 $ 12,840,085 $ 4,189,839 $ 7,550,436
====== ============ ========== ============ ============ ============ ============
</TABLE>
F-I- 15
<PAGE> 63
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
ALGER AMERICAN FUND MFS VARIABLE INSURANCE TRUST
------------------------- ----------------------------
WORLD
LEVERAGED EMERGING GOVERNMENTS
BALANCED ALLCAP GROWTH SERIES SERIES
---------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
1999
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)............. $ 5,779 $ (99,090) $ (100,195) $ 17,489
Net realized gain distributions.......... 199,925 658,702 -- --
Net change in unrealized appreciation
(depreciation)........................ 769,554 6,672,254 2,583,588 (32,288)
---------- ----------- ------------ ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................ 975,258 7,231,866 2,483,393 (14,799)
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS............................. 1,387,144 8,506,289 (14,698,847) (138,861)
---------- ----------- ------------ ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS.... 2,362,402 15,738,155 (12,215,454) (153,660)
NET ASSETS AT JANUARY 1, 1999.............. 2,725,989 5,545,268 12,215,454 562,066
---------- ----------- ------------ ---------
NET ASSETS AT DECEMBER 31, 1999............ $5,088,391 $21,283,423 $ -- $ 408,406
========== =========== ============ =========
1998
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)............. $ 7,785 $ (31,317) $ (83,222) $ 433
Net realized gain distributions.......... 107,704 147,338 76,320 --
Net change in unrealized appreciation
(depreciation)........................ 417,950 1,626,709 2,714,274 29,642
---------- ----------- ------------ ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................ 533,439 1,742,730 2,707,372 30,075
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS............................. 844,417 1,370,291 2,799,432 310,132
---------- ----------- ------------ ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS.... 1,377,856 3,113,021 5,506,804 340,207
NET ASSETS AT JANUARY 1, 1998.............. 1,348,133 2,432,247 6,708,650 221,859
---------- ----------- ------------ ---------
NET ASSETS AT DECEMBER 31, 1998............ $2,725,989 $ 5,545,268 $ 12,215,454 $ 562,066
========== =========== ============ =========
1997
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)............. $ 2,246 $ (17,451) $ (44,359) $ 1,559
Net realized gain distributions.......... 16,729 -- -- 1,603
Net change in unrealized appreciation
(depreciation)........................ 162,920 298,847 937,800 (6,568)
---------- ----------- ------------ ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................ 181,895 281,396 893,441 (3,406)
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS............................. 253,322 962,301 3,250,610 41,843
---------- ----------- ------------ ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS.... 435,217 1,243,697 4,144,051 38,437
NET ASSETS AT JANUARY 1, 1997.............. 912,916 1,188,550 2,564,599 183,422
---------- ----------- ------------ ---------
NET ASSETS AT DECEMBER 31, 1997............ $1,348,133 $ 2,432,247 $ 6,708,650 $ 221,859
========== =========== ============ =========
</TABLE>
- ---------------
(1) Commenced business 04/08/97
(2) Commenced business 04/03/97
(3) Commenced business 11/12/99
(4) Commenced business 04/22/97
(5) Commenced business 04/08/97
(6) Commenced business 04/17/97
The accompanying notes are an integral part of these financial statements.
F-I- 16
<PAGE> 64
<TABLE>
<CAPTION>
MORGAN STANLEY DEAN WITTER
MFS VARIABLE INSURANCE TRUST UNIVERSAL FUNDS, INC.
----------------------------------------------------- ------------------------------------
GROWTH WITH EMERGING
UTILITIES RESEARCH INCOME NEW DISCOVERY ASIAN MARKETS GLOBAL
SERIES SERIES(1) SERIES(2) SERIES(3) EQUITY(4) EQUITY(5) EQUITY(6)
---------- ---------- ----------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 9,958 $ (17,361) $ (13,010) $ (37) $ (40) $ (10,020) $ 10,458
230,507 34,817 14,706 1,661 -- -- 119,961
986,318 222,022 (9,958) 7,946 388,267 917,707 (47,308)
---------- ---------- ----------- -------- ---------- ---------- ----------
1,226,783 239,478 (8,262) 9,570 388,227 907,687 83,111
1,095,173 (3,213,305) (3,524,676) 141,550 369,208 447,470 493,021
---------- ---------- ----------- -------- ---------- ---------- ----------
2,321,956 (2,973,827) (3,532,938) 151,120 757,435 1,355,157 576,132
3,297,063 2,973,827 3,532,938 -- 334,000 823,632 2,096,971
---------- ---------- ----------- -------- ---------- ---------- ----------
$5,619,019 $ -- $ -- $151,120 $1,091,435 $2,178,789 $2,673,103
========== ========== =========== ======== ========== ========== ==========
$ 3,498 $ (14,756) $ (19,348) $ -- $ 45 $ (2,901) $ 748
111,249 33,714 -- -- -- -- 12,591
262,317 383,697 490,661 -- (2,798) (219,226) 143,561
---------- ---------- ----------- -------- ---------- ---------- ----------
377,064 402,655 471,313 -- (2,753) (222,127) 156,900
1,222,669 1,600,841 1,428,853 -- 149,362 308,380 1,088,835
---------- ---------- ----------- -------- ---------- ---------- ----------
1,599,733 2,003,496 1,900,166 -- 146,609 86,253 1,245,735
1,697,330 970,331 1,632,772 -- 187,391 737,379 851,236
---------- ---------- ----------- -------- ---------- ---------- ----------
$3,297,063 $2,973,827 $ 3,532,938 $ -- $ 334,000 $ 823,632 $2,096,971
========== ========== =========== ======== ========== ========== ==========
$ (7,542) $ (2,824) $ 3,983 $ -- $ (263) $ 1,461 $ 3,239
-- -- 31,548 -- -- 21,661 11,816
255,610 18,241 3,513 -- (51,298) (144,415) 2,150
---------- ---------- ----------- -------- ---------- ---------- ----------
248,068 15,417 39,044 -- (51,561) (121,293) 17,205
1,057,600 954,914 1,593,728 -- 238,952 858,672 834,031
---------- ---------- ----------- -------- ---------- ---------- ----------
1,305,668 970,331 1,632,772 -- 187,391 737,379 851,236
391,662 -- -- -- -- -- --
---------- ---------- ----------- -------- ---------- ---------- ----------
$1,697,330 $ 970,331 $ 1,632,772 $ -- $ 187,391 $ 737,379 $ 851,236
========== ========== =========== ======== ========== ========== ==========
</TABLE>
F-I- 17
<PAGE> 65
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
MORGAN STANLEY
DEAN WITTER CALVERT VARIABLE SERIES, INC.,
UNIVERSAL FUNDS, INC. AMERITAS PORTFOLIOS
------------------------- -------------------------------
INTERNATIONAL U.S. REAL EMERGING
MAGNUM(1) ESTATE(2) GROWTH(3) GROWTH(4)
------------- --------- -------------- --------------
<S> <C> <C> <C> <C>
1999
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)................... $ 2,170 $ 40,831 $ (29,906) $ (48,680)
Net realized gain distributions................ 5,512 -- -- --
Net change in unrealized appreciation
(depreciation)............................... 307,353 (65,623) 7,429,373 4,889,022
---------- -------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................ 315,035 (24,792) 7,399,467 4,840,342
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS................................... 514,795 44,736 16,191,605 31,751,088
---------- -------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS.......... 829,830 19,944 23,591,072 36,591,430
NET ASSETS AT JANUARY 1, 1999.................... 933,263 859,540 -- --
---------- -------- ----------- -----------
NET ASSETS AT DECEMBER 31, 1999.................. $1,763,093 $879,484 $23,591,072 $36,591,430
========== ======== =========== ===========
1998
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)................... $ (3,894) $ 17,452 $ -- $ --
Net realized gain distributions................ 3,255 6,589 -- --
Net change in unrealized appreciation
(depreciation)............................... 39,545 (110,595) -- --
---------- -------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................ 38,906 (86,554) -- --
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS................................... 363,729 313,960 -- --
---------- -------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS.......... 402,635 227,406 -- --
NET ASSETS AT JANUARY 1, 1998.................... 530,628 632,134 -- --
---------- -------- ----------- -----------
NET ASSETS AT DECEMBER 31, 1998.................. $ 933,263 $859,540 $ -- $ --
========== ======== =========== ===========
1997
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)................... $ 13,949 $ 8,057 $ -- $ --
Net realized gain distributions................ 1,056 11,556 -- --
Net change in unrealized appreciation
(depreciation)............................... (44,768) 19,091 -- --
---------- -------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................ (29,763) 38,704 -- --
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS................................... 560,391 593,430 -- --
---------- -------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS.......... 530,628 632,134 -- --
NET ASSETS AT JANUARY 1, 1997.................... -- -- -- --
---------- -------- ----------- -----------
NET ASSETS AT DECEMBER 31, 1997.................. $ 530,628 $632,134 $ -- $ --
========== ======== =========== ===========
</TABLE>
- ---------------
(1) Commenced business 04/07/97
(2) Commenced business 04/28/97
(3) Commenced business 10/29/99
(4) Commenced business 10/29/99
(5) Commenced business 10/29/99
(6) Commenced business 10/29/99
(7) Commenced business 10/29/99
(8) Commenced business 10/29/99
(9) Commenced business 10/28/99
(10) Commenced business 10/29/99
(11) Commenced business 10/29/99
The accompanying notes are an integral part of these financial statements.
F-I- 18
<PAGE> 66
<TABLE>
<CAPTION>
CALVERT VARIABLE SERIES, INC., AMERITAS PORTFOLIOS DREYFUS
------------------------------------------------------------------------------------------------- -----------
GROWTH WITH INCOME AND MIDCAP MONEY SMALL
INCOME(5) GROWTH(6) INDEX 500(7) GROWTH(8) MARKET(9) RESEARCH(10) CAP(11) STOCK INDEX
----------- ----------- ------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ (3,538) $ (16,266) $ 921 $ (23,079) $ 125,276 $ (6,148) $ (45,011) $ --
-- 330,344 -- 358,344 -- 48,862 249,625 --
169,338 2,280,729 2,194,432 2,535,359 -- 526,653 6,980,645 --
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
165,800 2,594,807 2,195,353 2,870,624 125,276 569,367 7,185,259 --
3,684,470 9,002,843 28,209,499 13,052,418 18,562,924 3,742,028 24,893,915 --
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
3,850,270 11,597,650 30,404,852 15,923,042 18,688,200 4,311,395 32,079,174 --
-- -- -- -- -- -- -- --
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
$3,850,270 $11,597,650 $30,404,852 $15,923,042 $18,688,200 $4,311,395 $32,079,174 $ --
========== =========== =========== =========== =========== ========== =========== ===========
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
========== =========== =========== =========== =========== ========== =========== ===========
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ 3,842
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- 54,025
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
-- -- -- -- -- -- -- 57,867
-- -- -- -- -- -- -- (2,270,889)
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
-- -- -- -- -- -- -- (2,213,022)
-- -- -- -- -- -- -- 2,213,022
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
========== =========== =========== =========== =========== ========== =========== ===========
</TABLE>
F-I- 19
<PAGE> 67
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND ACCOUNTING POLICIES
Ameritas Variable Life Insurance Company Separate Account V (the Account) was
established on August 28, 1985, under Nebraska law by Ameritas Variable Life
Insurance Company (AVLIC), a wholly-owned subsidiary of AMAL Corporation, a
holding company 66% owned by Ameritas Life Insurance Corp. (ALIC) and 34% owned
by AmerUs Life Insurance Company (AmerUs). The assets of the Account are
segregated from AVLIC's other assets and are used only to support variable life
products issued by AVLIC.
The Account is registered under the Investment Company Act of 1940, as amended,
as a unit investment trust. At December 31, 1999, there are thirty-two
subaccounts within the Account. Seven of the subaccounts invest only in a
corresponding Portfolio of Variable Insurance Products Fund and six invest only
in a corresponding Portfolio of Variable Insurance Products Fund II. Both funds
are diversified open-end management investment companies and are managed by
Fidelity Management and Research Company (Fidelity). Two of the subaccounts
invest only in a corresponding Portfolio of Alger American Fund which is a
diversified open-end management investment company managed by Fred Alger
Management, Inc. (Alger Management). Three of the subaccounts invest only in a
corresponding Portfolio of MFS Variable Insurance Trust which is a diversified
open-end management investment company managed by Massachusetts Financial
Services Company (MFS Co.). Five of the subaccounts invest only in a
corresponding Portfolio of Morgan Stanley Dean Witter Universal Funds, Inc.
which is a diversified open-end management investment company managed by Morgan
Stanley Dean Witter Investment Management Inc. Nine of the subaccounts invest
only in a corresponding Portfolio of Calvert Variable Series, Inc. Ameritas
Portfolios (Ameritas Portfolio) which is a diversified open-end management
investment company managed by Ameritas Investment Corp. (see Note 3). Each
Portfolio pays the manager a monthly fee for managing its investments and
business affairs. The assets of the Account are carried at the net asset value
of the underlying Portfolios of the fund.
Pursuant to an order of the SEC allowing for the substitution, all policyowner
funds invested in a Portfolio of Fidelity Money Market were transferred to the
Money Market subaccount of the Ameritas Portfolio as of October 28, 1999. Also,
as of October 29, 1999 pursuant to an order of the SEC allowing for the
substitution, all policyowner funds invested in a Portfolio of Fidelity Index
500 I-Class were transferred to the Index 500 subaccount of the Ameritas
Portfolio; all policyowner funds invested in a Portfolio of Alger Management
Growth were transferred to the Growth subaccount of the Ameritas Portfolio; all
policyowner funds invested in a Portfolio of Alger Management Income and Growth
were transferred to the Income and Growth subaccount of the Ameritas Portfolio;
all policyowner funds invested in a Portfolio of Alger Management Small
Capitalization Fund were transferred to the Small Cap subaccount of the Ameritas
Portfolio; all policyowner funds invested in a Portfolio of Alger Management
MidCap Growth were transferred to the MidCap Growth subaccount of the Ameritas
Portfolio; all policyowner funds invested in a Portfolio of MFS Co. Emerging
Growth Series were transferred to the Emerging Growth subaccount of the Ameritas
Portfolio; all policyowner funds invested in a Portfolio of MFS Co. Research
Series was transferred to the Research subaccount of the Ameritas Portfolio; and
all policyowner funds invested in a Portfolio of MFS Co. Growth with Income
Series were transferred to the Growth with Income subaccount of the Ameritas
Portfolio.
USE OF ESTIMATES
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.
F-I- 20
<PAGE> 68
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
1. ORGANIZATION AND ACCOUNTING POLICIES -- (CONTINUED)
VALUATION OF INVESTMENTS
The assets of the Account are carried at the net asset value of the underlying
Portfolios. The value of the policyowners' units corresponds to the Account's
investment in the underlying subaccounts. The availability of investment
portfolio and subaccount options may vary between products. Share transactions
and security transactions are accounted for on a trade date basis.
FEDERAL AND STATE TAXES
The operations of the Account are included in the federal income tax return of
AVLIC, which is taxed as a life insurance company under the Internal Revenue
Code. AVLIC has the right to charge the Account any federal income taxes, or
provision for federal income taxes, attributable to the operations of the
Account or to the policies funded in the Account. Currently, AVLIC does not make
a charge for income or other taxes. Charges for state and local taxes, if any,
attributable to the Account may also be made.
2. POLICYOWNER CHARGES
AVLIC charges the Account for mortality and expense risks assumed. A daily
charge is made on the average daily value of the net assets representing equity
of policyowners held in each subaccount per each product's current policy
provisions. Additional charges are made at intervals and in amounts per each
product's current policy provisions. These charges are prorated against the
balance in each investment option of the policyowner, including the Fixed
Account option which is not reflected in this separate account.
3. RELATED PARTIES
During October 1999, AVLIC established a variable insurance trust (VIT) which
contains the Ameritas Portfolios. The Ameritas Portfolios are managed by
Ameritas Investment Corp., an affiliate of AVLIC. During the year ended December
31, 1999, the Account incurred advisory fees of approximately $119,000, payable
to Ameritas Investment Corp. Other affiliates of AVLIC also provided
sub-advisory and administrative services to the Ameritas Portfolios during 1999
of approximately $25,000.
F-I- 21
<PAGE> 69
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. SHARES OWNED
The Account invests in shares of mutual funds. Share activity and total
shares were as follows:
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
------------------------------------------------------------------------------
MONEY EQUITY EQUITY
MARKET INCOME INCOME GROWTH GROWTH
I-CLASS I-CLASS S-CLASS(1) I-CLASS S-CLASS(2)
---------------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Shares owned at
January 1, 1999.......... 11,105,124.310 1,160,172.618 -- 1,030,142.884 --
Shares acquired............ 99,920,927.670 476,446.645 23.847 680,116.041 362.428
Shares disposed of......... (111,026,051.980) (436,567.212) (0.499) (503,989.261) (1.055)
---------------- ------------- ------ ------------- -------
Shares owned at
December 31, 1999........ -- 1,200,052.051 23.348 1,206,269.664 361.373
================ ============= ====== ============= =======
Shares owned at
January 1, 1998.......... 7,552,485.910 1,018,225.148 -- 872,066.612 --
Shares acquired............ 96,112,872.130 590,346.286 -- 801,025.403 --
Shares disposed of......... (92,560,233.730) (448,398.816) -- (642,949.131) --
---------------- ------------- ------ ------------- -------
Shares owned at
December 31, 1998........ 11,105,124.310 1,160,172.618 -- 1,030,142.884 --
================ ============= ====== ============= =======
Shares owned at
January 1, 1997.......... 7,637,767.850 817,109.096 -- 841,043.772 --
Shares acquired............ 57,423,437.350 511,389.228 -- 339,254.481 --
Shares disposed of......... (57,508,719.290) (310,273.176) -- (308,231.641) --
---------------- ------------- ------ ------------- -------
Shares owned at
December 31, 1997........ 7,552,485.910 1,018,225.148 -- 872,066.612 --
================ ============= ====== ============= =======
</TABLE>
- ---------------
(1) Commenced business 11/02/99
(2) Commenced business 11/02/99
(3) Commenced business 12/07/99
(4) Commenced business 11/29/99
F-I- 22
<PAGE> 70
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND VARIABLE INSURANCE PRODUCTS FUND II
-------------------------------------------- --------------------------------------------------------
ASSET ASSET INVESTMENT
HIGH INCOME OVERSEAS OVERSEAS MANAGER MANAGER GRADE BOND CONTRAFUND
I-CLASS I-CLASS S-CLASS(3) I-CLASS S-CLASS(4) I-CLASS I-CLASS
-------------- -------------- ---------- ------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
716,563.299 729,187.972 -- 1,752,919.543 -- 343,207.716 562,154.419
2,358,341.689 2,163,832.620 1.699 488,206.777 22.633 352,083.082 441,475.107
(2,431,411.348) (2,232,233.871) (0.285) (471,435.332) (1.564) (384,482.941) (288,828.985)
-------------- -------------- ------ ------------- ------ ------------ ------------
643,493.640 660,786.721 1.414 1,769,690.988 21.069 310,807.857 714,800.541
============== ============== ====== ============= ====== ============ ============
598,367.840 695,077.235 -- 1,531,564.418 -- 237,050.443 389,113.666
2,095,006.665 2,333,977.875 -- 678,058.443 -- 639,413.242 496,047.058
(1,976,811.206) (2,299,867.138) -- (456,703.318) -- (533,255.969) (323,006.305)
-------------- -------------- ------ ------------- ------ ------------ ------------
716,563.299 729,187.972 -- 1,752,919.543 -- 343,207.716 562,154.419
============== ============== ====== ============= ====== ============ ============
558,109.727 565,907.403 -- 1,326,763.623 -- 192,186.776 176,606.628
1,118,068.428 1,175,596.501 -- 598,138.814 -- 120,594.995 358,431.197
(1,077,810.315) (1,046,426.669) -- (393,338.019) -- (75,731.328) (145,924.159)
-------------- -------------- ------ ------------- ------ ------------ ------------
598,367.840 695,077.235 -- 1,531,564.418 -- 237,050.443 389,113.666
============== ============== ====== ============= ====== ============ ============
</TABLE>
F-I- 23
<PAGE> 71
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
4. SHARES OWNED -- (CONTINUED)
The Account invests in shares of mutual funds. Share activity and total shares
were as follows:
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND II ALGER AMERICAN FUND
------------------------------------------ -----------------------------
ASSET MANAGER
CONTRAFUND INDEX 500 GROWTH SMALL
S-CLASS (1) I-CLASS I-CLASS CAPITALIZATION GROWTH
----------- ------------ ------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Shares owned at January 1,
1999.......................... 140,383.148 194,121.333 506,281.724 438,715.956
Shares acquired................. 300.373 106,248.904 130,128.414 484,219.127 314,912.653
Shares disposed of.............. (1.044) (246,632.052) (88,148.887) (990,500.851) (753,628.609)
------- ------------ ----------- ------------ ------------
Shares owned at December 31,
1999.......................... 299.329 -- 236,100.860 -- --
======= ============ =========== ============ ============
Shares owned at January 1,
1998.......................... -- 94,728.864 140,054.018 403,465.664 300,282.630
Shares acquired................. -- 128,107.356 152,783.138 441,926.395 397,157.183
Shares disposed of.............. -- (82,453.072) (98,715.823) (339,110.335) (258,723.857)
------- ------------ ----------- ------------ ------------
Shares owned at December 31,
1998.......................... -- 140,383.148 194,121.333 506,281.724 438,715.956
======= ============ =========== ============ ============
Shares owned at January 1,
1997.......................... -- 21,656.138 42,445.800 345,335.196 233,042.387
Shares acquired................. -- 129,171.432 137,282.584 311,521.638 204,589.158
Shares disposed of.............. -- (56,098.706) (39,674.366) (253,391.170) (137,348.915)
------- ------------ ----------- ------------ ------------
Shares owned at December 31,
1997.......................... -- 94,728.864 140,054.018 403,465.664 300,282.630
======= ============ =========== ============ ============
</TABLE>
- ---------------
(1) Commenced business 11/29/99
F-I- 24
<PAGE> 72
<TABLE>
<CAPTION>
ALGER AMERICAN FUND MFS VARIABLE INSURANCE TRUST
--------------------------------------------------------- ----------------------------------------------
WORLD
INCOME AND MIDCAP LEVERAGED EMERGING GOVERNMENTS
GROWTH GROWTH BALANCED ALLCAP GROWTH SERIES SERIES UTILITIES SERIES
------------ ------------ ------------ ------------ ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
533,655.926 390,902.572 210,014.615 158,890.232 568,954.541 51,660.465 166,350.240
399,442.614 295,894.469 243,382.099 408,802.915 361,380.381 81,155.171 187,829.047
(933,098.540) (686,797.041) (126,589.275) (200,547.668) (930,334.922) (92,097.188) (121,603.997)
------------ ------------ ------------ ------------ ------------ ----------- ------------
-- -- 326,807.439 367,145.479 -- 40,718.448 232,575.290
============ ============ ============ ============ ============ =========== ============
381,241.041 312,259.570 125,291.131 104,973.976 415,653.648 21,729.618 94,348.503
471,468.634 272,665.784 179,874.177 159,683.710 513,918.012 88,429.719 186,751.323
(319,053.749) (194,022.782) (95,150.693) (105,767.454) (360,617.119) (58,498.872) (114,749.586)
------------ ------------ ------------ ------------ ------------ ----------- ------------
533,655.926 390,902.572 210,014.615 158,890.232 568,954.541 51,660.465 166,350.240
============ ============ ============ ============ ============ =========== ============
234,654.249 263,959.188 98,800.487 61,392.043 193,700.823 17,336.705 28,672.191
389,297.914 245,052.311 64,650.229 108,499.936 457,734.629 37,542.368 107,581.620
(242,711.122) (196,751.929) (38,159.585) (64,918.003) (235,781.804) (33,149.455) (41,905.308)
------------ ------------ ------------ ------------ ------------ ----------- ------------
381,241.041 312,259.570 125,291.131 104,973.976 415,653.648 21,729.618 94,348.503
============ ============ ============ ============ ============ =========== ============
</TABLE>
F-I- 25
<PAGE> 73
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
4. SHARES OWNED -- (CONTINUED)
The Account invests in shares of mutual funds. Share activity and total shares
were as follows:
<TABLE>
<CAPTION>
MORGAN STANLEY DEAN WITTER
MFS VARIABLE INSURANCE TRUST UNIVERSAL FUNDS, INC.
------------------------------------------- ---------------------------
GROWTH WITH EMERGING
RESEARCH INCOME NEW DISCOVERY ASIAN MARKETS
SERIES(1) SERIES(2) SERIES(3) EQUITY(4) EQUITY(5)
------------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Shares owned at January 1,
1999....................... 156,106.437 175,680.697 -- 63,862.444 115,841.118
Shares acquired.............. 142,872.200 196,382.213 8,892.132 254,668.590 271,873.580
Shares disposed of........... (298,978.637) (372,062.910) (141.730) (201,675.000) (230,287.894)
------------ ------------ --------- ------------ ------------
Shares owned at December 31,
1999....................... -- -- 8,750.402 116,856.034 157,426.804
============ ============ ========= ============ ============
Shares owned at January 1,
1998....................... 61,452.261 99,317.062 -- 33,225.337 78,194.995
Shares acquired.............. 173,038.858 226,820.471 -- 99,976.563 334,441.671
Shares disposed of........... (78,384.682) (150,456.836) -- (69,339.456) (296,795.548)
------------ ------------ --------- ------------ ------------
Shares owned at December 31,
1998....................... 156,106.437 175,680.697 -- 63,862.444 115,841.118
============ ============ ========= ============ ============
Shares owned at January 1,
1997....................... -- -- -- -- --
Shares acquired.............. 72,826.540 110,180.302 -- 51,430.390 140,386.479
Shares disposed of........... (11,374.279) (10,863.240) -- (18,205.053) (62,191.484)
------------ ------------ --------- ------------ ------------
Shares owned at December 31,
1997....................... 61,452.261 99,317.062 -- 33,225.337 78,194.995
============ ============ ========= ============ ============
</TABLE>
- ---------------
(1) Commenced business 04/08/97
(2) Commenced business 04/03/97
(3) Commenced business 11/12/99
(4) Commenced business 04/22/97
(5) Commenced business 04/08/97
(6) Commenced business 04/17/97
(7) Commenced business 04/07/97
(8) Commenced business 04/28/97
(9) Commenced business 10/29/99
(10) Commenced business 10/29/99
(11) Commenced business 10/29/99
F-I- 26
<PAGE> 74
<TABLE>
<CAPTION>
MORGAN STANLEY DEAN WITTER CALVERT VARIABLE SERIES, INC.,
UNIVERSAL FUNDS, INC. AMERITAS PORTFOLIOS
------------------------------------------- ---------------------------------------
GLOBAL INTERNATIONAL U.S. REAL EMERGING GROWTH WITH
EQUITY(6) MAGNUM(7) ESTATE(8) GROWTH(9) GROWTH(10) INCOME(11)
------------ ------------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
159,586.755 83,104.465 87,708.290 -- -- --
180,054.175 156,678.468 86,347.339 681,160.044 618,142.153 201,328.796
(132,101.862) (112,850.371) (77,515.104) (58,046.684) (53,720.895) (19,454.872)
------------ ------------ ------------ ----------- ----------- -----------
207,539.068 126,932.562 96,540.525 623,113.360 564,421.258 181,873.924
============ ============ ============ =========== =========== ===========
72,507.289 51,120.253 55,401.749 -- -- --
172,405.252 120,740.453 136,182.392 -- -- --
(85,325.786) (88,756.241) (103,875.851) -- -- --
------------ ------------ ------------ ----------- ----------- -----------
159,586.755 83,104.465 87,708.290 -- -- --
============ ============ ============ =========== =========== ===========
-- -- -- -- -- --
93,896.403 77,530.448 97,640.967 -- -- --
(21,389.114) (26,410.195) (42,239.218) -- -- --
------------ ------------ ------------ ----------- ----------- -----------
72,507.289 51,120.253 55,401.749 -- -- --
============ ============ ============ =========== =========== ===========
</TABLE>
F-I- 27
<PAGE> 75
AMERITAS VARIABLE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
4. SHARES OWNED -- (CONTINUED)
The Account invests in shares of mutual funds. Share activity and total shares
were as follows:
<TABLE>
<CAPTION>
CALVERT VARIABLE SERIES, INC.,
AMERITAS PORTFOLIOS
-------------------------------------------------------------
INCOME AND MIDCAP
GROWTH(1) INDEX 500(2) GROWTH(3) MONEY MARKET(4)
----------- ------------ ----------- ---------------
<S> <C> <C> <C> <C>
Shares owned at January 1, 1999........ -- -- -- --
Shares acquired........................ 739,847.832 199,984.145 547,305.396 38,484,753.390
Shares disposed of..................... (71,395.348) (18,245.635) (41,811.990) (19,796,552.910)
----------- ----------- ----------- ---------------
Shares owned at December 31, 1999...... 668,452.484 181,738.510 505,493.406 18,688,200.480
=========== =========== =========== ===============
Shares owned at January 1, 1998........ -- -- -- --
Shares acquired........................ -- -- -- --
Shares disposed of..................... -- -- -- --
----------- ----------- ----------- ---------------
Shares owned at December 31, 1998...... -- -- -- --
=========== =========== =========== ===============
Shares owned at January 1, 1997........ -- -- -- --
Shares acquired........................ -- -- -- --
Shares disposed of..................... -- -- -- --
----------- ----------- ----------- ---------------
Shares owned at December 31, 1997...... -- -- -- --
=========== =========== =========== ===============
</TABLE>
- ---------------
(1) Commenced business 10/29/99
(2) Commenced business 10/29/99
(3) Commenced business 10/29/99
(4) Commenced business 10/28/99
(5) Commenced business 10/29/99
(6) Commenced business 10/29/99
F-I- 28
<PAGE> 76
<TABLE>
<CAPTION>
CALVERT VARIABLE SERIES, INC.,
AMERITAS PORTFOLIOS DREYFUS
------------------------------ ------------
RESEARCH(5) SMALL CAP(6) STOCK INDEX
------------ ------------ ------------
<S> <C> <C> <C>
-- -- --
214,317.878 633,188.695 --
(26,784.346) (64,610.644) --
----------- ----------- ------------
187,533.532 568,578.051 --
=========== =========== ============
-- -- --
-- -- --
-- -- --
----------- ----------- ------------
-- -- --
=========== =========== ============
-- -- 109,123.387
-- -- 2,530.208
-- -- (111,653.595)
----------- ----------- ------------
-- -- --
=========== =========== ============
</TABLE>
F-I- 29
<PAGE> 77
INDEPENDENT AUDITORS' REPORT
Board of Directors
Ameritas Variable Life Insurance Company
Lincoln, Nebraska
We have audited the accompanying balance sheets of Ameritas Variable Life
Insurance Company (a wholly owned subsidiary of AMAL Corporation) as of December
31, 1999 and 1998, and the related statements of operations, comprehensive
income, stockholder's equity, and cash flows for each of the three years in the
period ended December 31, 1999. 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, such financial statements present fairly, in all material
respects, the financial position of Ameritas Variable Life Insurance Company as
of December 31, 1999 and 1998, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1999, in
conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
Lincoln, Nebraska
February 5, 2000
F-II- 1
<PAGE> 78
AMERITAS VARIABLE LIFE INSURANCE COMPANY
BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1999 1998
---------- ----------
<S> <C> <C>
ASSETS
Investments:
Fixed maturity securities, available for sale (amortized
cost $129,567 -- 12/99 and $146,650 -- 12/98).......... $ 124,734 $ 150,462
Equity securities, available for sale (amortized cost
$2,031 -- 12/99 and $2,031 -- 12/98)................... 1,705 2,020
Mortgage loans on real estate............................. 1,392 --
Loans on insurance policies............................... 16,499 10,949
Other invested assets..................................... -- 10,020
---------- ----------
Total investments................................. 144,330 173,451
Cash and cash equivalents................................... 11,970 12,011
Accrued investment income................................... 2,442 2,425
Reinsurance receivable-affiliate............................ 35,921 --
Reinsurance recoverable-affiliates.......................... 153 455
Prepaid reinsurance premium-affiliates...................... 2,537 2,380
Deferred policy acquisition costs........................... 152,297 121,236
Other....................................................... 2,840 1,695
Separate Accounts........................................... 2,394,445 1,709,448
---------- ----------
$2,746,935 $2,023,101
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
Policy and contract reserves.............................. $ 2,185 $ 1,681
Policy and contract claims................................ 755 625
Accumulated contract values............................... 240,050 213,874
Unearned policy charges................................... 2,030 1,814
Unearned reinsurance ceded allowance...................... 3,942 3,596
Federal income taxes--
Current................................................ 2,922 2,941
Deferred............................................... 6,725 8,348
Accounts payable -- affiliates............................ 7,285 3,364
Other..................................................... 6,639 4,722
Separate Accounts......................................... 2,394,445 1,709,448
---------- ----------
Total Liabilities................................. 2,666,978 1,950,413
---------- ----------
STOCKHOLDER'S EQUITY:
Common stock, par value $100 per share; authorized 50,000
shares, issued and outstanding 40,000 shares........... 4,000 4,000
Additional paid-in capital................................ 42,870 40,370
Retained earnings......................................... 34,032 27,434
Accumulated other comprehensive income.................... (945) 884
---------- ----------
Total Stockholder's Equity........................ 79,957 72,688
---------- ----------
$2,746,935 $2,023,101
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II- 2
<PAGE> 79
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
INCOME:
Insurance revenues:
Contract charges.......................................... $51,794 $42,775 $33,717
Premium-reinsurance ceded................................. (8,683) (7,836) (6,840)
Reinsurance ceded allowance............................... 3,594 3,169 2,752
Investment revenues:
Investment income, net.................................... 13,970 14,052 8,277
Realized gains (losses), net.............................. (1,786) 79 368
Other....................................................... 3,016 2,269 980
------- ------- -------
61,905 54,508 39,254
------- ------- -------
BENEFITS AND EXPENSES:
Policy benefits:
Death benefits............................................ 2,805 2,200 1,356
Interest credited......................................... 12,512 13,400 7,258
Increase in policy and contract reserves.................. 504 740 192
Other..................................................... 190 222 92
Sales and operating expenses................................ 22,277 15,980 11,641
Amortization of deferred policy acquisition costs........... 12,760 11,847 9,584
------- ------- -------
51,048 44,389 30,123
------- ------- -------
INCOME BEFORE FEDERAL INCOME TAXES.......................... 10,857 10,119 9,131
------- ------- -------
Income taxes -- current..................................... 4,898 4,000 4,305
Income taxes -- deferred.................................... (639) (1,135) (844)
------- ------- -------
Total income taxes................................... 4,259 2,865 3,461
------- ------- -------
NET INCOME.................................................. $ 6,598 $ 7,254 $ 5,670
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II- 3
<PAGE> 80
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Net income.................................................. $6,598 $7,254 $5,670
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during period
(net of deferred tax of ($1,610), $185 and $378 for
1999, 1998 and 1997 respectively)..................... (2,990) 343 702
Reclassification adjustment for (gains) losses included
in net income (net of deferred tax of $625, ($28) and
($129) for 1999, 1998 and 1997 respectively).......... 1,161 (51) (239)
------ ------ ------
Other comprehensive income (loss)......................... (1,829) 292 463
------ ------ ------
Comprehensive income........................................ $4,769 $7,546 $6,133
====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II- 4
<PAGE> 81
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER
---------------- PAID-IN RETAINED COMPREHENSIVE
SHARES AMOUNT CAPITAL EARNINGS INCOME TOTAL
------ ------ ---------- -------- ------------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1997................. 40,000 $4,000 $40,370 $14,510 $ 129 $59,009
Net unrealized investment gain, net.... -- -- -- -- 463 463
Net income............................. -- -- -- 5,670 -- 5,670
------ ------ ------- ------- ------- -------
BALANCE, December 31, 1997............... 40,000 4,000 40,370 20,180 592 65,142
Net unrealized investment gain, net.... -- -- -- -- 292 292
Net income............................. -- -- -- 7,254 -- 7,254
------ ------ ------- ------- ------- -------
BALANCE, December 31, 1998............... 40,000 4,000 40,370 27,434 884 72,688
Net unrealized investment loss, net.... -- -- -- -- (1,829) (1,829)
Capital contribution................... -- -- 2,500 -- -- 2,500
Net income............................. -- -- -- 6,598 -- 6,598
------ ------ ------- ------- ------- -------
BALANCE, December 31, 1999............... 40,000 $4,000 $42,870 $34,032 $ (945) $79,957
====== ====== ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II- 5
<PAGE> 82
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income.................................................. $ 6,598 $ 7,254 $ 5,670
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization of deferred policy acquisition costs......... 12,760 11,847 9,584
Policy acquisition costs deferred......................... (39,491) (34,820) (30,642)
Interest credited to contract values...................... 12,512 13,400 7,258
Amortization of discounts or premiums..................... 67 (28) (40)
Net gains on other invested assets........................ (2,830) (3,732) (631)
Net realized (gains) losses on investment transactions.... 1,786 (79) (368)
Deferred income taxes..................................... (639) (1,135) (844)
Change in assets and liabilities:
Accrued investment income.............................. (17) (624) (705)
Reinsurance recoverable-affiliates..................... 302 59 (505)
Prepaid reinsurance premium-affiliates................. (157) (82) (142)
Other assets........................................... (1,145) (1,496) 284
Policy and contract reserves........................... 504 740 192
Policy and contract claims............................. 130 (300) 819
Unearned policy charges................................ 216 316 255
Federal income tax payable-current..................... (19) 1,475 591
Unearned reinsurance ceded allowance................... 346 328 129
Other liabilities...................................... 5,838 (2,114) 2,172
-------- -------- --------
Net cash from operating activities........................ (3,239) (8,991) (6,923)
-------- -------- --------
INVESTING ACTIVITIES
Purchase of fixed maturity securities available for sale.... (48,474) (70,904) (92,291)
Purchase of equity securities available for sale............ -- -- (4,311)
Purchase of mortgage loans on real estate................... (1,400) --
Purchase of other invested assets........................... (1,252) (7,760) (1,611)
Proceeds from maturities or repayment of fixed maturity
securities available for sale............................. 11,242 15,289 25,168
Proceeds from sales of fixed maturity securities available
for sale.................................................. 7,762 22,282 16,419
Proceeds from the sale of equity securities available for
sale...................................................... -- 1,979 252
Proceeds from the sale of other invested assets............. 1,162 3,678 35
Net change in loans on insurance policies................... (5,550) (3,467) (3,173)
-------- -------- --------
Net cash from investing activities........................ (36,510) (38,903) (59,512)
-------- -------- --------
FINANCING ACTIVITIES
Capital contribution........................................ 2,500 -- --
Net change in accumulated contract values................... 37,208 46,194 69,462
-------- -------- --------
Net cash from financing activities........................ 39,708 46,194 69,462
-------- -------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............ (41) (1,700) 3,027
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 12,011 13,711 10,684
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 11,970 $ 12,011 $ 13,711
======== ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes.................................. $ 4,917 $ 2,525 $ 3,714
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II- 6
<PAGE> 83
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ameritas Variable Life Insurance Company (the Company), a stock life insurance
company domiciled in the State of Nebraska, is a wholly-owned subsidiary of AMAL
Corporation, a holding company 66% owned by Ameritas Life Insurance Corp. (ALIC)
and 34% owned by AmerUs Life Insurance Company (AmerUs). The Company began
issuing variable life insurance and variable annuity policies in 1987, fixed
premium annuities in 1996 and equity indexed annuities in 1997. The variable
life, variable annuity, fixed premium annuity and equity indexed annuity
policies are not participating with respect to dividends.
USE OF ESTIMATES
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.
The principal accounting and reporting practices followed are:
INVESTMENTS
The Company classifies its securities into categories based upon the Company's
intent relative to the eventual disposition of the securities. The first
category, held to maturity securities, is comprised of fixed maturity securities
which the Company has the positive intent and ability to hold to maturity. These
securities are carried at amortized cost. The second category, available for
sale securities, may be sold to address the liquidity and other needs of the
Company. Securities classified as available for sale are carried at fair value
on the balance sheet with unrealized gains and losses excluded from operations
and reported as a separate component of stockholder's equity, net of related
deferred acquisition costs and income tax effects. The third category, trading
securities, is for debt and equity securities acquired for the purpose of
selling them in the near term. The Company has classified all of its securities
as available for sale. Realized investment gains and losses on sales of
securities are determined on the specific identification method.
Other Invested Assets consist of exchange and privately traded options tied to
the Standard and Poor's Index and are valued at fair value with changes in the
fair value of these investments and realized gains on these investments included
in net investment income.
The Company records write-offs or allowances for its investments based upon an
evaluation of specific problem investments. The Company reviews, on a continual
basis, all invested assets to identify investments where the Company may have
credit concerns. Investments with credit concerns include those the Company has
identified as experiencing a deterioration in financial condition. The Company
has no write-offs or allowances recorded as of December 31, 1999, 1998 and 1997.
CASH EQUIVALENTS
The Company considers all highly liquid debt securities purchased with remaining
maturity of less than three months to be cash equivalents.
F-II- 7
<PAGE> 84
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
SEPARATE ACCOUNTS
The Company operates separate accounts on which the earnings or losses accrue
exclusively to contractholders. The assets (mutual fund investments) and
liabilities of each account are clearly identifiable and distinguishable from
other assets and liabilities of the Company. Assets are reported at fair value.
PREMIUM REVENUE AND BENEFITS TO POLICYOWNERS
RECOGNITION OF UNIVERSAL LIFE-TYPE CONTRACTS REVENUE AND BENEFITS TO
POLICYOWNERS
Universal life-type policies are insurance contracts with terms that are not
fixed and guaranteed. The terms that may be changed could include one or more of
the amounts assessed the policyowner, premiums paid by the policyowner or
interest accrued to policyowners balances. Amounts received as payments for such
contracts are reflected as deposits in accumulated contract values and are not
reported as premium revenues.
Revenues for universal life-type policies consist of charges assessed against
policy account values for deferred policy loading, mortality risk expense, the
cost of insurance and policy administration. Policy benefits and claims that are
charged to expense include interest credited to contracts under the fixed
account investment option and benefit claims incurred in the period in excess of
related policy account balances.
RECOGNITION OF INVESTMENT CONTRACT REVENUE AND BENEFITS TO POLICYOWNERS
Contracts that do not subject the Company to risks arising from policyowner
mortality or morbidity are referred to as investment contracts. Certain deferred
annuities are considered investment contracts. Amounts received as payments for
such contracts are reflected as deposits in accumulated contract values and are
not reported as premium revenues.
Revenues for investment products consist of investment income and policy
administration charges. Contract benefits that are charged to expense include
benefit claims incurred in the period in excess of related contract balances,
and interest credited to contract balances.
POLICY ACQUISITION COSTS
Those costs of acquiring new business, which vary with and are directly related
to the production of new business, have been deferred to the extent that such
costs are deemed recoverable from future premiums. Such costs include
commissions, certain costs of policy issuance and underwriting, and certain
variable distribution expenses.
Costs deferred related to universal life-type policies and investment-type
contracts are amortized generally over the lives of the policies, in relation to
the present value of estimated gross profits from mortality, investment and
expense margins. The estimated gross profits are reviewed periodically based on
actual experience and changes in assumptions.
F-II- 8
<PAGE> 85
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
A roll-forward of the amounts reflected in the balance sheets as deferred
acquisition costs is as follows:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------------
1999 1998 1997
-------- -------- -------
<S> <C> <C> <C>
Beginning balance........................................... $121,236 $ 98,746 $79,272
Acquisition costs deferred.................................. 39,491 34,820 30,642
Amortization of deferred policy acquisition costs........... (12,760) (11,847) (9,584)
Adjustment for unrealized investment (gain)/loss............ 6,145 (483) (1,584)
Balance released under co-insurance agreement (note 4)...... (1,815) -- --
-------- -------- -------
Ending balance.............................................. $152,297 $121,236 $98,746
======== ======== =======
</TABLE>
To the extent that unrealized gains or losses on available for sale securities
would result in an adjustment of deferred policy acquisition costs had those
gains or losses actually been realized, the related unamortized deferred policy
acquisition costs are recorded as an adjustment of the unrealized investment
gains or losses included in stockholder's equity.
FUTURE POLICY AND CONTRACT BENEFITS
Liabilities for future policy and contract benefits left with the Company on
variable universal life and annuity-type contracts are based on the policy
account balance, and are shown as accumulated contract values. In addition, the
Company carries as future policy benefits a liability for additional coverages
offered under policy riders.
INCOME TAXES
The provision for income taxes includes amounts currently payable and deferred
income taxes resulting from the cumulative differences in assets and liabilities
determined on a tax return and financial statement basis at the current enacted
tax rates.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, entitled "Accounting for Derivative
Instruments and Hedging Activities" (SFAS No. 133). The statement requires that
all derivatives (including certain derivatives embedded in contracts) be
recorded on the balance sheet and measured at fair value. SFAS No. 133 requires
that changes in the fair value of derivatives be recognized currently in
operations unless specific hedge accounting criteria are met. If such criteria
are met, the derivative's gain or loss will offset related results of the hedged
item in the statement of operations. A company must formally document, designate
and assess the effectiveness of transactions to apply hedge accounting
treatment.
SFAS No. 133 is effective for fiscal years beginning after June 15, 2000, with
earlier implementation permitted. The statement must be implemented as of the
beginning of a quarter and retroactive application to financial statements of
prior periods is prohibited. The Company has not determined the financial
statement impact of adopting this statement.
RECLASSIFICATIONS
Certain items on the prior year financial statements have been reclassified to
conform to current year presentation.
F-II- 9
<PAGE> 86
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
2. INVESTMENTS
Investment income summarized by type of investment was as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------
1999 1998 1997
------- ------- ------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $ 9,644 $ 9,099 $6,622
Equity Securities available for sale........................ 159 179 156
Mortgage loans on real estate............................... 34 -- --
Loans on insurance policies................................. 845 590 370
Cash equivalents............................................ 681 659 642
Other invested assets....................................... 2,830 3,732 631
------- ------- ------
Gross investment income................................... 14,193 14,259 8,421
Investment expenses......................................... 223 207 144
------- ------- ------
Net investment income..................................... $13,970 $14,052 $8,277
======= ======= ======
</TABLE>
Net pretax realized investment gains (losses) were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------
1999 1998 1997
------- ---- ----
<S> <C> <C> <C>
Net gains (losses) on disposals of fixed maturity securities
available for sale (note 4)............................... $(1,786) $131 $365
Net gains (losses) on disposal of equity securities
available for sale........................................ -- (52) $ 3
------- ---- ----
Net gains (losses) on disposal of securities available for
sale...................................................... $(1,786) $ 79 $368
======= ==== ====
</TABLE>
Proceeds from sales of securities available for sale and gross gains and losses
realized on those sales were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
----------------------------------
PROCEEDS GAINS LOSSES
-------- ----- ------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $7,762 $6 $80
====== == ===
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
--------------------------------
PROCEEDS GAINS LOSSES
-------- ----- ------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $22,282 $242 $301
Equity securities available for sale........................ 1,979 -- 52
------- ---- ----
Total securities available for sale....................... $24,261 $242 $353
======= ==== ====
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
--------------------------------
PROCEEDS GAINS LOSSES
-------- ----- ------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $16,419 $161 $8
Equity securities available for sale........................ 252 2 --
------- ---- --
Total securities available for sale....................... $16,671 $163 $8
======= ==== ==
</TABLE>
F-II- 10
<PAGE> 87
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
2. INVESTMENTS -- (CONTINUED)
The amortized cost and fair value of investments in securities by type of
investment were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999
-------------------------------------------------
GROSS UNREALIZED
AMORTIZED ------------------ FAIR
COST GAINS LOSSES VALUE
--------- ----- ------ --------
<S> <C> <C> <C> <C>
U.S. Corporate.................................... $ 85,653 $35 $3,388 $ 82,300
Mortgage-backed................................... 34,929 12 1,422 33,519
U.S. Treasury securities and obligations of U.S.
government agencies............................. 8,985 40 110 8,915
-------- --- ------ --------
Total fixed maturity securities available for
sale......................................... 129,567 87 4,920 124,734
-------- --- ------ --------
Equity securities available for sale.............. 2,031 -- 326 1,705
-------- --- ------ --------
Total securities available for sale............. $131,598 $87 $5,246 $126,439
======== === ====== ========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1998
--------------------------------------------------
GROSS UNREALIZED
AMORTIZED ------------------- FAIR
COST GAINS LOSSES VALUE
--------- ------ ------ --------
<S> <C> <C> <C> <C>
U.S. Corporate.................................... $ 98,658 $3,146 $159 $101,645
Mortgage-backed................................... 35,314 430 14 35,730
U.S. Treasury securities and obligations of U.S.
government agencies............................. 12,678 409 -- 13,087
-------- ------ ---- --------
Total fixed maturity securities available for
sale......................................... 146,650 3,985 173 150,462
-------- ------ ---- --------
Equity securities available for sale.............. 2,031 -- 11 2,020
-------- ------ ---- --------
Total securities available for sale............. $148,681 $3,985 $184 $152,482
======== ====== ==== ========
</TABLE>
The amortized cost and fair value of fixed maturity securities available for
sale by contractual maturity at December 31, 1999 are shown below. Expected
maturities may differ from contractual maturities because borrowers may have the
right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- --------
<S> <C> <C>
Due in one year or less..................................... $ 3,448 $ 3,453
Due after one year through five years....................... 43,868 42,513
Due after five years through ten years...................... 32,139 31,066
Due after ten years......................................... 15,183 14,183
Mortgage-backed securities.................................. 34,929 33,519
-------- --------
Total..................................................... $129,567 $124,734
======== ========
</TABLE>
The Company purchased exchange and privately traded options to support certain
equity index annuity policyowner liabilities. These derivatives, reflected as
other invested assets, were used to manage fluctuations in the equity market
risk granted to the policyowners of the equity index annuities. These
derivatives involved, to varying degrees, elements of credit risk and market
risk. The options value on the balance sheet reflected the risk of potential
loss to the entity. At December 31, 1998 the Company held options with terms
ranging from 1 to 7 years with a notional amount of $18,655, a cost of $7,096
and a fair value of $10,020. Due to the transfer of these assets as part of the
co-insurance agreement outlined in note 4, there were no options outstanding at
December 31, 1999.
F-II- 11
<PAGE> 88
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
3. INCOME TAXES
The items that give rise to deferred tax assets and liabilities relate to the
following:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31
-----------------
1999 1998
---- ----
<S> <C> <C>
Net unrealized investment gains on securities available for
sale...................................................... $ -- $ 1,365
Deferred policy acquisition costs........................... 45,802 36,031
Prepaid expenses............................................ 888 833
------- -------
Gross deferred tax liability................................ 46,690 38,229
------- -------
Future policy and contract benefits......................... 35,650 27,810
Net unrealized investment losses............................ 1,768 --
Capital loss carryforward................................... 515 --
Deferred future revenues.................................... 2,090 1,894
Other....................................................... 457 177
------- -------
Gross deferred tax asset.................................... 40,480 29,881
Less valuation allowance.................................... 515 --
------- -------
Total deferred tax asset after valuation allowance.......... 39,965 29,881
------- -------
Net deferred tax liability................................ $ 6,725 $ 8,348
======= =======
</TABLE>
The difference between the U.S. federal income tax rate and the tax provision
rate is summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Federal statutory tax rate.................................. 35.0% 35.0% 35.0%
Other....................................................... 4.2 (6.7) 2.9
---- ---- ----
Effective tax rate........................................ 39.2% 28.3% 37.9%
==== ==== ====
</TABLE>
The Company has approximately $1.5 million of capital loss carryforward
available as of December 31, 1999. At December 31, 1999 the Company provided for
a valuation allowance against the deferred tax asset related to the capital loss
carryforward.
The Company's federal income tax returns have been examined by the Internal
Revenue Service (IRS) through 1995. The Company is currently appealing certain
adjustments proposed by the IRS for tax years 1993 through 1995. The IRS is
currently examining the Company's return for the tax period ending March 31,
1996. Management believes adequate provisions have been made for any additional
taxes which may become due with respect to the adjustments proposed by the IRS.
4. RELATED PARTY TRANSACTIONS
Affiliates provide technical, financial, legal, marketing and investment
advisory support to the Company under administrative service agreements. The
cost of these services to the Company for years ended December 31, 1999, 1998
and 1997 was $12,265, $11,737 and $12,082, respectively.
The Company entered into reinsurance agreements (yearly renewable term) with
affiliates. Under this agreement, these affiliates assume life insurance risk in
excess of the Company's retention limit. These reinsurance contracts do not
relieve the Company of its obligations to its policyowners. The Company paid
$4,419, $4,104 and $3,810 of reinsurance premiums, net of ceded allowances, to
affiliates for the years
F-II- 12
<PAGE> 89
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
4. RELATED PARTY TRANSACTIONS -- (CONTINUED)
ended December 31, 1999, 1998 and 1997, respectively. The Company has received
reinsurance recoveries from affiliates of $7,268, $3,310 and $2,260 for the
years ended December 31, 1999, 1998 and 1997, respectively.
Effective June 30, 1999 the Company agreed to 100% co-insure its equity index
annuity business to AmerUs in a non-cash transaction. Under the terms of the
agreement investments with a fair value of $57,648 and amortized cost of $59,390
were transferred to AmerUs. In return AmerUs co-insured the full liability for
this business resulting in a $59,561 reinsurance receivable from affiliate being
recorded. The Company also released the $1,815 of deferred policy acquisition
costs which it was carrying on this block. In December 1999, AmerUs through
assumption reinsurance assumed approximately 40% of this block, reducing the
reinsurance receivable -- affiliate to $35,921. This amount is secured by a
letter of credit.
The Company has entered into guarantee agreements with ALIC, AmerUs and AMAL
Corporation whereby, they guarantee the full, complete and absolute performance
of all duties and obligations of the Company.
The Company's variable life and annuity products are distributed through
Ameritas Investment Corp. (AIC), a wholly-owned subsidiary of AMAL Corporation.
The Company received $93 for the year ended December 31, 1997 from this
affiliate to partially defray the costs of materials and prospectuses. The
Company received no recovery to defray these cost for the years ended December
31, 1999 and 1998. Policies placed by this affiliate generated commission
expense of $35,736, $28,621 and $23,232 for the years ended December 31, 1999,
1998 and 1997, respectively.
Transactions with related parties are not necessarily indicative of revenues and
expenses which would have occurred had the parties not been related.
5. BENEFIT PLANS
The Company provides retirement and postretirement medical benefits to
qualifying employees. Prior to August 1, 1997 these benefits were provided under
plans which covered substantially all employees of Ameritas Life Insurance Corp.
and its subsidiaries. Concurrent with the transfer of a significant number of
employees to the Company, effective August 1, 1997, AMAL Corporation assumed the
benefit obligations associated with these plans.
The Company is included in a multiple employer noncontributory defined benefit
plan that covers substantially all full-time employees of Ameritas Life
Insurance Corp. and its subsidiaries and AMAL Corporation and its subsidiaries.
Pension costs include current service costs, which are accrued and funded on a
current basis, and post service costs, which are amortized over the average
remaining service life of all employees on the adoption date. Total Company
contributions for the years ended December 31, 1999, 1998 and 1997 were $159,
$163 and $29, respectively.
The Company's employees also participate in a defined contribution thrift plan
that covers substantially all full time employees of Ameritas Life Insurance
Corp. and its subsidiaries. Company matching contributions under the plan range
from 1% to 3% of the participant's compensation. Total Company contributions for
the years ended December 31, 1999, 1998 and 1997 were $47, $47 and $24,
respectively.
The Company is also included in the postretirement benefit plan providing group
medical coverage to retired employees of AMAL Corporation and it's subsidiaries.
Prior to August 1, 1997 these benefits were provided under a plan with Ameritas
Life Insurance Corp. These benefits are a specified percentage of premium until
age 65 and a flat dollar amount thereafter. Employees become eligible for these
benefits upon the attainment of age 55, 15 years of service and participation in
the plan for the immediately
F-II- 13
<PAGE> 90
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
5. BENEFIT PLANS -- (CONTINUED)
preceding 5 years. Benefit costs include the expected cost of postretirement
benefits for newly eligible employees, interest cost, and gains and losses
arising from differences between actuarial assumptions and actual experience.
Total Company contributions for the years ended December 31, 1999, 1998 and 1997
were $12, $12 and $5, respectively.
Expenses for the defined benefit plan and postretirement group medical plan are
allocated to the Company based on the number of associates in AMAL Corporation
and its subsidiaries.
6. INSURANCE REGULATORY MATTERS
Net income (loss), as determined in accordance with statutory accounting
practices, was ($4,513), $319, and $2,048 for 1999, 1998 and 1997, respectively.
The Company's statutory surplus was $41,637, $44,589 and $45,265 at December 31,
1999, 1998 and 1997, respectively. The Company is required to maintain a certain
level of surplus to be in compliance with state laws and regulations. Company
surplus is monitored by state regulators to ensure compliance with risk based
capital requirements. Under statutes of the Insurance Department of the State of
Nebraska, the Company is limited in the amount of dividends it can pay to its
stockholder.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures are made regarding fair value information about
certain financial instruments for which it is practicable to estimate that
value. In cases where quoted market prices are not available, fair values are
based on estimates using present value or other valuation techniques. Those
techniques are significantly affected by the assumptions used, including the
discount rate and estimates of future cash flows. In that regard, the derived
fair value estimates, in many cases, may not be realized in immediate settlement
of the instrument. All nonfinancial instruments are excluded from disclosure
requirements. Accordingly, the aggregate fair value amounts presented do not
represent the underlying value of the Company.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1999 and 1998. Although management is
not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since that date; therefore, current estimates of
fair value may differ significantly from the amounts presented herein.
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for each class of financial instrument for which it is
practicable to estimate a value:
FIXED MATURITY SECURITIES AVAILABLE FOR SALE -- For publicly traded
securities, fair value is determined using an independent pricing source.
For securities without a readily ascertainable fair value, the value has
been determined using an interest rate spread matrix based upon quality,
weighted average maturity and Treasury yields.
EQUITY SECURITIES AVAILABLE FOR SALE -- Fair value is determined using
an independent pricing source.
MORTGAGE LOANS ON REAL ESTATE -- Mortgage loans in good standing are
valued on the basis of discounted cash flow. The interest rate that is
assumed is based upon the weighted average term of the mortgage and
appropriate spread over Treasuries. There were no mortgage loans in default
at December 31, 1999.
F-II- 14
<PAGE> 91
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
7. FAIR VALUE OF FINANCIAL INSTRUMENTS -- (CONTINUED)
LOANS ON INSURANCE POLICIES -- Fair values for loans on insurance
policies are estimated using a discounted cash flow analysis at interest
rates currently offered for similar loans with similar remaining terms.
Loans on insurance policies with similar characteristics are aggregated for
purposes of the calculations.
OTHER INVESTED ASSETS -- Fair value is determined using an independent
pricing source.
CASH AND CASH EQUIVALENTS, ACCRUED INVESTMENT INCOME AND REINSURANCE
RECOVERABLE -- The carrying amounts equal fair value.
ACCUMULATED CONTRACT VALUES -- Funds on deposit which do not have
fixed maturities are carried at the amount payable on demand at the
reporting date, which approximates fair value.
Estimated fair values are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------------------
1999 1998
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Financial assets:
Fixed maturity securities, available for sale..... $124,734 $124,734 $150,462 $150,462
Equity securities, available for sale............. 1,705 1,705 2,020 2,020
Mortgage loans on real estate..................... 1,392 1,369 -- --
Loans on insurance policies....................... 16,499 14,557 10,949 10,286
Other invested assets............................. -- -- 10,020 10,020
Cash and cash equivalents......................... 11,970 11,970 12,011 12,011
Accrued investment income......................... 2,442 2,442 2,425 2,425
Reinsurance receivable -- affiliate............... 35,921 35,921 -- --
Reinsurance recoverable -- affiliates............. 153 153 455 455
Financial liabilities:
Accumulated contract values excluding amounts held
under insurance contracts...................... 184,376 184,376 199,585 199,585
</TABLE>
8. SEPARATE ACCOUNTS
The Company is currently marketing variable life and variable annuity products
which have separate accounts as an investment option. Separate Account V
(Account V) was formed to receive and invest premium receipts from variable life
insurance policies issued by the Company. Separate Account VA-2 (Account VA-2)
was formed to receive and invest premium receipts from variable annuity policies
issued by the Company. Both Separate Accounts are registered under the
Investment Company Act of 1940, as amended, as unit investment trusts. Account V
and VA-2's assets and liabilities are segregated from the other assets and
liabilities of the Company.
Amounts in the Separate Accounts are:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1999 1998
---------- ----------
<S> <C> <C>
Separate Account V.......................................... $ 402,722 $ 282,653
Separate Account VA-2....................................... 1,991,723 1,426,795
---------- ----------
$2,394,445 $1,709,448
========== ==========
</TABLE>
F-II- 15
<PAGE> 92
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
8. SEPARATE ACCOUNTS -- (CONTINUED)
During 1999 the Company formed a variable insurance trust (VIT). AIC serves as
the investment advisor and another affiliate provides administrative services to
the VIT. AIC received advisory fees of $702 for the year ended December 31,
1999. At December 31, 1999 separate account assets under the VIT totaled
$1,066,249.
F-II- 16
<PAGE> 93
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS AND VALUES
The following tables illustrate how the values and Death Benefits of a Policy
may change with the investment experience of the Fund. The tables show how the
values and Death Benefits of a Policy issued to an Insured of a given age and
specified underwriting risk classification who pays the given premium at issue
would vary over time if the investment return on the assets held in each
portfolio of the Funds were a uniform, gross, after-tax annual rate of 0%, 6%,
or 12%. The tables on pages A-3 through A-6 illustrate a Policy issued to a
male, age 45, under a preferred rate non-tobacco underwriting risk
classification. This Policy provides for a standard tobacco use and non-tobacco
use, and preferred non-tobacco classification and different rates for certain
specified amounts. The values and Death Benefits would be different from those
shown if the gross annual investment rates of return averaged 0%, 6%, and 12%
over a period of years, but fluctuated above and below those averages for
individual Policy Years, or if the Insured were assigned to a different
underwriting risk classification.
The second column of the tables shows the accumulated value of the premiums paid
at 5%. The following columns show the Death Benefits and the values for uniform
hypothetical rates of return shown in these tables. The tables on pages A-3 and
A-5 are based on the current Cost of Insurance Rates, current expense deductions
and the current percent of premium loads. These reflect the basis on which AVLIC
currently sells its Policies. The maximum allowable Cost of Insurance Rates
under the Policy are based upon the 1980 Commissioner's Standard Ordinary Smoker
and Non-Smoker, Male and Female Mortality Tables (Smoker is referenced for
tobacco use rates; Non-Smoker is referenced for non-tobacco use rates). Since
these are recent tables and are split to reflect tobacco use and sex, the
current Cost of Insurance Rates used by AVLIC are at this time equal to the
maximum Cost of Insurance Rates for many ages. AVLIC anticipates reflecting
future improvements in actual mortality experience through adjustments in the
current Cost of Insurance Rates actually applied. AVLIC also anticipates
reflecting any future improvements in expenses incurred by applying lower
percent of premiums of loads and other expense deductions. The Death Benefits
and values shown in the tables on pages A-4 and A-6 are based on the assumption
that the maximum allowable Cost of Insurance Rates as described above and
maximum allowable expense deductions are made throughout the life of the Policy.
The amounts shown for the Death Benefits, Surrender values and accumulation
values reflect the fact that the net investment return of the Subaccounts is
lower than the gross, after-tax return of the assets held in the Funds as a
result of expenses paid by the Fund and charges levied against the Subaccounts.
The values shown take into account an average of the expenses paid by each
portfolio available for investment at an equivalent annual rate of 0.90% (which
is in excess of the current equivalent annual rate of 0.88% of the aggregate
average daily net assets of the Funds) and the daily charge by AVLIC to each
Subaccount for assuming mortality and expense risks and administrative expenses
(which is equivalent to a charge at an annual rate of 0.70% for Policy Years
1-20 and 0.45% thereafter on pages A-3 and A-5 and at an annual rate of 1.15% on
pages A-4 and A-6 of the average net assets of the Subaccounts). A portion of
the brokerage commissions that certain Fidelity Portfolios pay was used to
reduce Portfolio expenses. In addition, certain Fidelity Portfolios have entered
into arrangements with their custodian whereby interest earned on uninvested
cash balances was used to reduce custodian expenses. Without these reductions,
expenses would have been higher. The Investment Advisor or other affiliates of
the various Funds have agreed to reimburse the portfolios to the extent that the
aggregate operating expenses (certain portfolios may exclude certain items and
the Ameritas Portfolios rates after reimbursement may be increased after
November 1, 2000) were in excess of an annual rate of .30% for the Ameritas
Money Market portfolio, .28% for the Ameritas Index 500 Portfolio, .79% for the
Ameritas Growth portfolio; .70% for the Ameritas Income & Growth portfolio, .89%
for the Ameritas Small Capitalization portfolio, .84% for the Ameritas MidCap
Growth portfolio, .85% for the Ameritas Emerging Growth portfolio, .86% for the
Ameritas Research portfolio, .88% for the Ameritas Growth With Income portfolio,
1.25% for the Alger American Balanced portfolio; 1.50% for the Alger American
Leveraged AllCap portfolio, 1.20% for the UIF Asian Equity, 1.15% for the UIF
Global Equity and UIF International Magnum, 1.10% for the UIF U.S. Real Estate
Portfolios of daily net assets. MFS Co. has agreed to bear expenses for the
Global Governments Series and New Discovery Series, subject to reimbursement by
the series, such that each series "Other Expenses" shall not exceed .25% of the
average daily net assets of the series during the current fiscal year.
ENCORE!
A- 1
<PAGE> 94
These agreements are expected to continue in future years but may be terminated
at any time. As long as the expense limitations continue for a portfolio, if a
reimbursement occurs, it has the effect of lowering the portfolio's expense
ratio and increasing its total return. The illustrated gross annual investment
rates of return of 0%, 6%, and 12% were computed after deducting fund expenses
and correspond to approximate net annual rates of -1.60%, 4.40%, and 10.40%
respectively, for Policy Years 1-20 and -1.35%, 4.65%, and 10.65% for the Policy
Years thereafter respectively, on pages A-3 and A-5 and -2.05%, 3.95%, and 9.95%
respectively, on pages A-4 and A-6.
The hypothetical values shown in the tables do not reflect any charges for
federal income tax burden attributable to Separate Account V, since AVLIC is not
currently making such charges. However, such charges may be made in the future
and, in that event, the gross annual investment rate of return would have to
exceed 0 percent, 6 percent, or 12 percent by an amount sufficient to cover the
tax charges in order to produce the Death Benefits and Accumulation Values
illustrated. (See the section on Federal Tax Matters.)
The tables illustrate the Policy values that would result based upon the
hypothetical investment rates of return if premiums are paid as indicated, if
all Net Premiums are allocated to Separate Account V, and if no Policy loans
have been made. The tables are also based on the assumptions that the Policy
Owner has not requested an increase or decrease in the initial Specified Amount,
that no partial withdrawals have been made, and that no more than fifteen
transfers have been made in any Policy Year so that no transfer charges have
been incurred. Illustrated values would be different if the proposed Insured
were female, a tobacco user, in substandard risk classification, or were another
age, or if a higher or lower premium was illustrated.
Upon request, AVLIC will provide comparable illustrations based upon the
proposed Insured's age, sex and underwriting classification, the Specified
Amount, the Death Benefit option, and planned periodic premium schedule
requested, and any available riders requested. In addition, upon client request,
illustrations may be furnished reflecting allocation of premiums to specified
Subaccounts. Such illustrations will reflect the expenses of the portfolio in
which the Subaccount invests.
ENCORE!
A- 2
<PAGE> 95
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
ENDOWMENT AT AGE 100
Male Issue Age: 45 Nontobacco Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $6000
INITIAL SPECIFIED AMOUNT: $500,000
DEATH BENEFIT OPTION: A
USING CURRENT SCHEDULE OF COST OF INSURANCE RATES
<TABLE>
<CAPTION>
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN ANNUAL INVESTMENT RETURN
(-1.60% NET) (4.40% NET)
ACCUMULATED ------------------------------- -------------------------------
END OF PREMIUMS AT ACCUMU- CASH ACCUMU- CASH
POLICY 5% INTEREST LATION SURRENDER DEATH LATION SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- -------- -------------- ------- --------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 6,300 4,415 0 500,000 4,721 0 500,000
2 12,915 8,654 1,939 500,000 9,542 2,827 500,000
3 19,861 12,716 6,001 500,000 14,465 7,750 500,000
4 27,154 16,606 9,891 500,000 19,497 12,782 500,000
5 34,811 20,322 13,607 500,000 24,641 17,926 500,000
6 42,852 23,870 17,827 500,000 29,906 23,863 500,000
7 51,295 27,244 21,872 500,000 35,290 29,918 500,000
8 60,159 30,452 25,751 500,000 40,807 36,107 500,000
9 69,467 33,488 29,459 500,000 46,458 42,429 500,000
10 79,241 36,353 32,995 500,000 52,246 48,889 500,000
15 135,945 48,033 48,033 500,000 83,467 83,467 500,000
20 208,316 54,307 54,307 500,000 118,428 118,428 500,000
Ages
60 135,945 48,033 48,033 500,000 83,467 83,467 500,000
65 208,316 54,307 54,307 500,000 118,428 118,428 500,000
70 300,681 49,228 49,228 500,000 154,567 154,567 500,000
75 418,565 22,434 22,434 500,000 185,346 185,346 500,000
<CAPTION>
12% HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN
(10.40% NET)
-------------------------------
END OF ACCUMU- CASH
POLICY LATION SURRENDER DEATH
YEAR VALUE VALUE BENEFIT
- -------- ------- --------- -------
<S> <C> <C> <C>
1 5,028 0 500,000
2 10,468 3,753 500,000
3 16,364 9,649 500,000
4 22,766 16,051 500,000
5 29,728 23,013 500,000
6 37,314 31,271 500,000
7 45,586 40,214 500,000
8 54,628 49,928 500,000
9 64,520 60,491 500,000
10 75,355 71,998 500,000
15 147,859 147,859 500,000
20 266,117 266,117 500,000
Ages
60 147,859 147,859 500,000
65 266,117 266,117 500,000
70 468,341 468,341 543,276
75 814,292 814,292 871,292
</TABLE>
- ---------------
1) Assumes an annual $6000 premium is paid at the beginning of each policy year.
Values would be different if premiums with a different frequency or in
different amounts.
2) Assumes that no policy loan has been made. Excessive loans or withdrawals may
cause this policy to lapse because of insufficient cash value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH
VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED O%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS
CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
ENCORE!
A- 3
<PAGE> 96
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
ENDOWMENT AT AGE 100
Male Issue Age: 45 Nontobacco Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $6,000
INITIAL SPECIFIED AMOUNT: $500,000
DEATH BENEFIT OPTION: A
USING MAXIMUM ALLOWABLE SCHEDULE OF COST OF INSURANCE RATES
<TABLE>
<CAPTION>
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN ANNUAL INVESTMENT RETURN ANNUAL INVESTMENT RETURN
(-2.05% NET) (3.95% NET) (9.95% NET)
ACCUMULATED ----------------------------- ----------------------------- -----------------------------
END OF PREMIUMS AT ACCUMU- CASH ACCUMU- CASH ACCUMU- CASH
POLICY 5% INTEREST LATION SURRENDER DEATH LATION SURRENDER DEATH LATION SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ ----------- ------- --------- ------- ------- --------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 6,300 4,392 0 500,000 4,698 0 500,000 5,005 0 500,000
2 12,915 8,041 1,326 500,000 8,906 2,191 500,000 9,810 3,095 500,000
3 19,861 11,488 4,773 500,000 13,153 6,438 500,000 14,965 8,250 500,000
4 27,154 14,730 8,015 500,000 17,431 10,716 500,000 20,498 13,783 500,000
5 34,811 17,752 11,037 500,000 21,728 15,013 500,000 26,433 19,718 500,000
6 42,852 20,551 14,508 500,000 26,035 19,991 500,000 32,806 26,763 500,000
7 51,295 23,100 17,728 500,000 30,324 24,952 500,000 39,635 34,263 500,000
8 60,159 25,372 20,671 500,000 34,565 29,864 500,000 46,939 42,239 500,000
9 69,467 27,344 23,315 500,000 38,731 34,702 500,000 54,750 50,721 500,000
10 79,241 28,983 25,626 500,000 42,782 39,424 500,000 63,088 59,731 500,000
15 135,945 31,247 31,247 500,000 60,129 60,129 500,000 114,242 114,242 500,000
20 208,316 19,520 19,520 500,000 67,585 67,585 500,000 186,888 186,888 500,000
Ages
60 135,945 31,247 31,247 500,000 60,129 60,129 500,000 114,242 114,242 500,000
65 208,316 19,520 19,520 500,000 67,585 67,585 500,000 186,888 186,888 500,000
70 300,681 0* 0* 0* 515,64 51,564 500,000 295,238 295,238 500,000
75 418,565 0* 0* 0* 0* 0* 0* 479,684 479,684 513,262
</TABLE>
- ---------------
* In the absence of an additional premium the Policy would lapse.
1) Assumes an annual $6,000 premium is paid at the beginning of each policy
year. Values would be different if premiums with a different frequency or in
different amounts.
2) Assumes that no Policy loan has been made. Excessive loans or withdrawals may
cause this policy to lapse because of insufficient cash value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH
VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED O%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS
CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
ENCORE!
A- 4
<PAGE> 97
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
ENDOWMENT AT AGE 100
Male Issue Age: 45 Nontobacco Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $20000
INITIAL SPECIFIED AMOUNT:$500,000
DEATH BENEFIT OPTION: B
USING CURRENT SCHEDULE OF COST OF INSURANCE RATES
<TABLE>
<CAPTION>
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN ANNUAL INVESTMENT RETURN ANNUAL INVESTMENT RETURN
(-1.60% NET) (4.40% NET) (10.40% NET)
ACCUMULATED ----------------------------- --------------------------------- ---------------------------------
END OF PREMIUMS AT ACCUMU- CASH ACCUMU- CASH ACCUMU- CASH
POLICY 5% INTEREST LATION SURRENDER DEATH LATION SURRENDER DEATH LATION SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ ----------- ------- --------- ------- ------- --------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 21,000 17,696 10,981 517,696 18,812 12,097 518,812 19,928 13,213 519,928
2 43,050 34,991 28,276 534,991 38,329 31,614 538,329 41,803 35,088 541,803
3 66,203 51,885 45,170 55,1885 58,578 51,863 558,578 65,822 59,107 565,822
4 90,513 68,386 61,671 568,386 79,590 72,875 579,590 92,207 85,492 592,207
5 116,038 84,495 77,780 584,495 101,395 94,680 601,395 121,200 114,485 621,200
6 142,840 100,217 94,174 600,217 124,026 117,983 624,026 153,072 147,028 653,072
7 170,982 115,550 110,178 615,550 147,511 142,139 647,511 188,111 182,739 688,111
8 200,531 130,505 125,804 630,505 171,892 167,191 671,892 226,653 221,953 726,653
9 231,558 145,077 141,048 645,077 197,198 193,169 697,198 269,052 265,023 769,052
10 264,136 159,268 155,910 659,268 223,465 220,107 723,465 315,703 312,346 815,703
15 453,150 224,517 224,517 724,517 370,544 370,544 870,544 629,710 629,710 1,129,710
20 694,385 279,374 279,374 779,374 546,853 546,853 1,046,853 1,137,732 1,137,732 1,637,732
Ages
60 453,150 224,517 224,517 724,517 370,544 370,544 870,544 629,710 629,710 1,129,710
65 694,385 279,374 279,374 779,374 546,853 546,853 1,046,853 1,137,732 1,137,732 1,637,732
70 1,002,269 320,759 320,759 820,759 768,471 768,471 1,268,471 2,000,262 2,000,262 2,500,262
75 1,395,216 336,618 336,618 836,618 1,023,870 1,023,870 1,523,870 3,419,187 3,419,187 3,919,187
</TABLE>
- ---------------
1) Assumes an annual $20,000 premium is paid at the beginning of each policy
year. Values would be different if premiums with a different frequency or in
different amounts.
2) Assumes that no policy loan has been made. Excessive loans or withdrawals may
cause this policy to lapse because of insufficient cash value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH
VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS
CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
ENCORE!
A- 5
<PAGE> 98
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
ENDOWMENT AT AGE 100
Male Issue Age: 45 Nontobacco Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $20000
INITIAL SPECIFIED AMOUNT:$500000
DEATH BENEFIT OPTION: B
USING MAXIMUM ALLOWABLE SCHEDULE OF COST OF INSURANCE RATES
<TABLE>
<CAPTION>
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN ANNUAL INVESTMENT RETURN ANNUAL INVESTMENT RETURN
(-2.01% NET) (3.99% NET) (9.99% NET)
ACCUMULATED ----------------------------- ------------------------------- ---------------------------------
END OF PREMIUMS AT ACCUMU- CASH ACCUMU- CASH ACCUMU- CASH
POLICY 5% INTEREST LATION SURRENDER DEATH LATION SURRENDER DEATH LATION SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ ----------- ------- --------- ------- ------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 21,000 17,613 10,898 517,613 18,728 12,013 518,728 19,845 13,130 519,845
2 43,050 33,986 27,271 533,986 37,281 30,566 537,281 40,712 33,997 540,712
3 66,203 49,881 43,166 549,881 56,419 49,704 556,419 63,503 56,788 563,503
4 90,513 65,297 58,582 565,297 76,155 69,440 576,155 88,399 81,684 588,399
5 116,038 80,225 73,510 580,225 96,493 89,778 596,493 115,590 108,875 615,590
6 142,840 94,665 88,621 594,665 117,447 111,403 617,447 145,292 139,248 645,292
7 170,982 108,592 103,220 608,592 139,004 133,632 639,004 177,719 172,347 677,719
8 200,531 121,983 117,282 621,983 161,154 156,454 661,154 213,106 208,405 713,106
9 231,558 134,819 130,790 634,819 183,890 179,861 683,890 251,716 247,687 751,716
10 264,136 147,066 143,709 647,066 207,188 203,831 707,188 293,822 290,464 793,822
15 453,150 198,702 198,702 698,702 331,624 331,624 831,624 568,838 568,838 1,068,838
20 694,385 230,878 230,878 730,878 466,166 466,166 966,166 991,898 991,898 1,491,898
Ages
60 453,150 198,702 198,702 698,702 331,624 331,624 831,624 568,838 568,838 1,068,838
65 694,385 230,878 230,878 730,878 466,166 466,166 966,166 991,898 991,898 1,491,898
70 1,002,269 235,161 235,161 735,161 601,063 601,063 1,101,063 1,639,281 1,639,281 2,139,281
75 1,395,216 198,373 198,373 698,373 718,295 718,295 1,218,295 2,626,951 2,626,951 3,126,951
</TABLE>
- ---------------
1) Assumes an annual $20000 premium is paid at the beginning of each policy
year. Values would be different if premiums with a different frequency or in
different amounts.
2) Assumes that no policy loan has been made. Excessive loans or withdrawals may
cause this policy to lapse because of insufficient cash value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH
VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED O%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS
CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
ENCORE!
A- 6
<PAGE> 99
INCORPORATION BY REFERENCE
The Registrant, Separate Account V, purchases or will purchase units from the
portfolios of these Funds at the direction of its Policy Owners. The
prospectuses of these Funds will be distributed with this prospectus and are
hereby incorporated by reference. The prospectuses incorporated by reference are
as follows:
Calvert Variable Series, Inc.
Ameritas Portfolios
Registration No. 2-80154
Calvert Variable Series, Inc.
Registration No. 2-80154
Variable Insurance Products Fund
Registration No. 2-75010
Variable Insurance Products Fund II
Registration No. 33-20773
The Alger American Fund
Registration No. 33-21722
MFS Variable Insurance Trust
Registration No. 333-74668
The Universal Institutional Funds, Inc.
Registration No. 333-301
<PAGE> 100
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore, or hereafter duly adopted pursuant to authority conferred
in that section.
Registrant makes the following representation pursuant to the National
Securities Markets Improvements Act of 1996:
Ameritas Variable Life Insurance Company represents that the fees and charges
deducted under the contract, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by the insurance company.
RULE 484 UNDERTAKING
AVLIC'S By-laws provide as follows:
The Company shall indemnify any person who was, or is a party, or is threatened
to be made a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative by reason
of the fact that he is or was a director, officer, or employee of the Company or
is or was serving at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorney's fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
such action, suit or proceeding to the full extent authorized by the laws of
Nebraska.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
REPRESENTATION PURSUANT TO RULE 6E-3(T)
This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment
Company Act of 1940.
<PAGE> 101
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
The prospectus consisting of 87 pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484.
Representations pursuant to Rule 6e-3(T).
The signatures.
Written consents of the following:
(a) Russell J. Wiltgen
(b) Donald R. Stading
(c) Deloitte & Touche LLP
The Following Exhibits:
1. The following exhibits correspond to those required by paragraph A of the
instructions as to exhibits in Form N-8B-2.
(1) Resolution of the Board of Directors of AVLIC Authorizing
Establishment of the Account.*
(2) Not applicable.
(3) (a) Principal Underwriting Agreement. *
(b) Proposed Form of Selling Agreement. *
(c) Commission Schedule. *
(d) Amendment to Principal Underwriting Agreement.**
(4) Not Applicable.
(5) (a) Proposed Form of Policy. **
(b) Proposed Form of Policy Riders. ***
(6) (a) Articles of incorporation of Ameritas Variable Life Insurance
Company, **
(b) Bylaws of Ameritas Variable Life Insurance Company. ***
(7) Not applicable.
(8) (a) Participation Agreement in the Variable Insurance Products
Fund. **
(b) Participation Agreement in the Alger American Fund. **
(c) Participation Agreement in the MFS Variable Insurance Trust. *
(d) Participation Agreement in the Morgan Stanley Universal Funds,
Inc. *
(e) Participation Agreement in the Calvert Variable Series, Inc. ****
(9) Not Applicable.
(10) Application for Policy. ***
(11) Code of Ethics.
2. (a)(b) Opinion and Consent of Donald R. Stading.
3. No financial statements will be omitted from the final Prospectus pursuant
to Instruction 1(b) or (c) or Part I.
4. Not applicable.
5. Not applicable.
6. (a)(b) Opinion and Consent of Russell J. Wiltgen.
7. Consent of Deloitte & Touche LLP.
8. Form of Notice of Withdrawal Right and Refund pursuant to Rule
6e-3(T)(b)(13)(viii) under the Investment Company Act of 1940.**
* Incorporated by reference to the initial Registration Statement for
Ameritas Variable Life Insurance Company Separate Account V, File No.
333-15585, filed November 5, 1996.
** Incorporated by reference to the Pre-Effective Amendment to the
Registration Statement for Ameritas Variable Life Insurance Company
Separate Account V, File No. 333-15585, filed January 17, 1997.
*** Incorporated by Reference to Pre-Effective Amendment No. 1 to the
Registration Statement for Ameritas Variable Life Insurance Company
Separate Account VA-2, File No. 333-36507, filed February 20, 1998.
**** Incorporated by reference to Post-Effective Amendment No. 5 to the
Registration Statement for Ameritas Variable Life Insurance Company
Separate Account V, File No. 333-15585, filed August 30, 1999.
<PAGE> 102
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Ameritas Variable Life Insurance Company Separate Account V, certifies that it
meets all the requirements for effectiveness of this Post-Effective Amendment
No. 6 to the Registration Statement pursuant to Rule 485(a) under the Securities
Act of 1933 and has caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized in the City of
Lincoln, County of Lancaster, State of Nebraska on this 22nd day of February,
2000.
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V, Registrant
AMERITAS VARIABLE LIFE INSURANCE COMPANY, Depositor
Attest: /s/ Donald R. Stading By: /s/ Lawrence J. Arth
--------------------- --------------------
Secretary Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the Directors and Principal Officers of Ameritas
Variable Life Insurance Company on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Lawrence J. Arth Director, Chairman of the Board February 22, 2000
- ------------------------- and Chief Executive Officer
Lawrence J. Arth
/s/ William J. Atherton Director, President and February 22, 2000
- ------------------------- Chief Operating Officer
William J. Atherton
/s/ Kenneth C. Louis Director, Executive Vice President February 22, 2000
- -------------------------
Kenneth C. Louis
/s/ Gary R. McPhail Director, Executive Vice President February 22, 2000
- -------------------------
Gary R. McPhail
/s/ Thomas C. Godlasky Director, Senior Vice President February 22, 2000
- ------------------------- and Chief Investment Officer
Thomas C. Godlasky
/s/ JoAnn M. Martin Director, Controller February 22, 2000
- -------------------------
JoAnn M. Martin
</TABLE>
<PAGE> 103
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Michael G. Frazier Director February 22, 2000
- -------------------------
Michael G. Fraizer
/s/ William W. Lester Treasurer February 22, 2000
- -------------------------
William W. Lester
/s/ Donald R. Stading Secretary and General Counsel February 22, 2000
- -------------------------
Donald R. Stading
</TABLE>
<PAGE> 104
EXHIBIT INDEX
EXHIBIT
1. (A)(11) Code of Ethics
2. (a)(b) Opinion and Consent of Donald R. Stading
6. (a)(b) Opinion and Consent of Russell J. Wiltgen.
7. Consent of Deloitte & Touche LLP.
<PAGE> 1
EXHIBIT 1(A)(11)
CODE OF ETHICS
[AMERITAS LIFE INSURANCE
CORP. LOGO]
AMERITAS INVESTMENT CORP.
CODE OF ETHICS
I. Introduction
A. Rule 17j-1 (the "Rule") under the Investment Company Act of 1940
("1940 Act") requires that each investment adviser and each
principal underwriter for an investment company registered under
the 1940 Act must adopt a written Code of Ethics that contains
provisions reasonably necessary to prevent certain persons
("Access Persons") from:
1. (1) employing any device, scheme or artifice to defraud a
Portfolio;
2. (2) making any untrue statement of a material fact to a
Portfolio or omit to state a material fact necessary in order
to make the statements made to a Portfolio, in light of the
circumstances under which they are made, not misleading;
3. engaging in any act, practice or course of business that
operates or would operate as a fraud or deceit on a
Portfolio; or
4. engaging in any manipulative practice with respect to a
Portfolio.
B. This Code of Ethics is required by Rule 17j-1. As permitted under
Rule 17j-1, this Code provides that those Access persons who,
pursuant to AIC's "Registered Investment Adviser Practices and
Procedures" and "AIC's Registered Broker Dealer Practices and
Procedures" file substantially the same reports as are required by
Section V hereunder, shall be excepted from the quarterly
reporting requirement of Section V.B. All other requirements will,
however, continue to be applicable to each such Access Person.
II. Definitions. In order to understand how this Code of Ethics applies to
particular persons and transactions, familiarity with the key terms and
concepts used in this Code of Ethics is necessary. Those key terms and
concepts are:
A. Access Person(1) means: (i) Any director, officer, general partner
or Advisory Person of AIC.
B. Advisory Person of AIC means: (i) Any AIC employee (or any
employee of any company in a control relationship to AIC) who, in
connection with his or her regular functions or duties, makes,
participates in, or obtains information
- ------------------
(1) persons who, in a single instance or in infrequent, inadvertent
instances, obtain knowledge are not, for purposed of this Code, Access
Persons. Similarly, persons who normally assist in the preparation of
public reports but receive nt information about recommendations or
trading by the Portfolios are not Access Persons for purposes of the
Code. See, interpretive letter from Joel H. Goldberg, Director of the
Division of investment management, to the Investment company Institute,
March 31, 1981. (1981 SEC NoAct LEXIS 3447.)
<PAGE> 2
AIC Code of Ethics
(Pursuant to Rule 17j-1)
November 1, 1999
Page 2
regarding the purchase or sale of Covered Securities by a
Portfolio, or whose functions relate to the making of any
recommendations with respect to the purchases or sales; and (ii)
any natural person in a control relationship to a Portfolio or to
AIC who obtains information concerning recommendations made to a
Portfolio with regard to the purchase or sale of Covered
Securities by a Portfolio
C. Investment Personnel means: (i) Any employee of AIC (or of any
company in a control relationship to a Portfolio or investment
adviser) who, in connection with his or her regular functions or
duties, makes or participates in making recommendations regarding
the purchase or sale of securities by a Portfolio; and (ii) Any
natural person who controls a Portfolio or AIC and who obtains
information concerning recommendations made to a Portfolio
regarding the purchase or sale of securities by a Portfolio.
D. Beneficial ownership has the meaning set forth in Rule 16a-1(a) of
the Securities Exchange Act of 1934, as amended. The determination
of direct or indirect beneficial ownership shall apply to all
securities which an Access Person has or acquires and may, under
appropriate circumstances, be deemed to include securities
beneficially owned by members of the immediate family of an Access
Person sharing his or her household, or by certain partnerships,
corporations, trusts or other arrangements, in accordance with
Rule 16a-1
E. Portfolios means the Ameritas Portfolios of Calvert Variable
Series, Inc.
F. Control has the meaning set forth in Section 2(a)(9) of the 1940
Act.
G. Purchase or sale of a security includes, among other things, the
writing of an option to purchase or sell a security.
H. Covered Security means a security as defined in section 2(a)(36)
of the Act, except that it does not include
1. Direct obligations of the Government of the United States;
2. Bankers' acceptances, bank certificates of deposit,
commercial paper and high quality short-term debt
instruments, including repurchase agreements; and
3. Shares issued by open-end Funds
<PAGE> 3
AIC Code of Ethics
(Pursuant to Rule 17j-1)
November 1, 1999
Page 3
III. Prohibited Transactions; Exemptions
A. Prohibited Purchases and Sales. No Access Person shall purchase or
sell, directly or indirectly, any security in which that Access
Person has, or by reason of the transaction acquires, any direct
or indirect beneficial ownership and which to the actual knowledge
of that Access Person at the time of such purchase or sale:
1. is being considered for purchase or sale or for
recommendation to purchase or sell by a Fund; or
2. is being purchased or sold by a Fund.
B. Prohibited Recommendations. No Access Person shall recommend any
securities transaction to a Fund without having disclosed to the
designated compliance officer his interest, if any, in such
securities or the issuer thereof, including without limitation:
1. his direct or indirect beneficial ownership of any securities
of such issuer;
2. any contemplated transaction by such person in such
securities;
3. any position with such issuer or its affiliates; or
4. any present or proposed business relationship between such
issuer or its affiliates and such person or any party in
which such person has a significant interest.
C. Exemptions. The prohibitions of III.A and III.B above shall not
apply to:
1. Purchases or sales effected in any account over which the
Access Person has no direct or indirect influence or control.
2. Purchases or sales of securities which are not eligible for
purchase or sale by a Fund.
3. Purchases or sales which are non-volitional on the part of
either the Access Person or a Fund.
4. Purchases which are part of an automatic dividend
reinvestment plan.
5. Purchases effected upon exercise of rights issued by an
issuer pro rata to all holders of a class of its securities,
to the extent the rights were acquired from that issuer, and
sales of the rights so acquired.
IV. IPOs and Private Placements. All Investment Personnel must obtain
approval from AIC before directly or indirectly acquiring beneficial
ownership in any securities in an Initial Public Offering or in a
Limited Offering.
<PAGE> 4
AIC Code of Ethics
(Pursuant to Rule 17j-1)
November 1, 1999
Page 4
A. An Initial Public Offering means an offering of securities
registered under the Securities Act of 1933, the issuer of which,
immediately before the registration, was not subject to the
reporting requirements of sections 13 or 15(d) of the Securities
Exchange Act of 1934.
B. A Limited Offering means an offering that is exempt from
registration under the Securities Act of 1933 pursuant to section
4(2) or section 4(6) or pursuant to rule 504, rule 505, or rule
506 under the Securities Act of 1933.
V. Reports Required. Unless excepted by paragraph E of this section, every
Access Person of AIC must report to that Portfolio, investment adviser
or principal underwriter:
A. Initial Holdings Reports. No later than 10 days after the person
becomes an Access Person, the following information: 1. The title,
number of shares and principal amount of each Covered Security in
which the Access Person had any direct or indirect beneficial
ownership when the person became an Access Person; 2. The name of
any broker, dealer or bank with whom the Access Person maintained
an account in which any securities were held for the direct or
indirect benefit of the Access Person as of the date the person
became an Access Person; and 3. The date that the report is
submitted by the Access Person.
B. Quarterly Transaction Reports. No later than 10 days after the end
of a calendar quarter, the following information:
1. With respect to any transaction during the quarter in a
Covered Security in which the Access Person had any direct or
indirect beneficial ownership:
a. The date of the transaction, the title, the interest
rate and maturity date (if applicable), the number of
shares and the principal amount of each Covered Security
involved;
b. The nature of the transaction (i.e., purchase, sale or
any other type of acquisition or disposition);
c. The price of the Covered Security at which the
transaction was effected;
d. The name of the broker, dealer or bank with or through
which the transaction was effected; and
e. The date that the report is submitted by the Access
Person.
<PAGE> 5
AIC Code of Ethics
(Pursuant to Rule 17j-1)
November 1, 1999
Page 5
2. With respect to any account established by the Access Person
in which any securities were held during the quarter for the
direct or indirect benefit of the Access Person:
a. The name of the broker, dealer or bank with whom the
Access Person established the account;
b. The date the account was established; and
c. The date that the report is submitted by the Access
Person.
C. Annual Holdings Reports. Annually, the following information
(which information must be current as of a date no more than 30
days before the report is submitted):
1. The title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct or
indirect beneficial ownership;
2. The name of any broker, dealer or bank with whom the Access
Person maintains an account in which any securities are held
for the direct or indirect benefit of the Access Person; and
3. The date that the report is submitted by the Access Person.
D. Disclaiming Beneficial Ownership. Any report may contain a
statement that the report shall not be construed as an admission
by the person making the report that the person has any direct or
indirect beneficial ownership in the security to which the report
relates.
E. Exemptions from Quarterly Reporting. With respect to Access
Persons who are employees of AIC or any company affiliated with
AIC, and who might be deemed Access Persons solely by reason of
being employees of such company, the quarterly reporting
requirements imposed under Section V.B and V.C shall be deemed to
be satisfied if such persons are required to file reports
("Parallel Reports") of personal securities transactions in
conformity with Rule 204-2(a)(12) or 204-2(a)(13) under the
Investment Advisers Act of 1940, as amended, provided:
1. Parallel Reports are made within the time periods specified
hereunder;
2. copies of Parallel Reports (or confirmations and account
statements) are reviewed by the Designated Compliance Officer
for compliance with this
<PAGE> 6
AIC Code of Ethics
(Pursuant to Rule 17j-1)
November 1, 1999
Page 6
Code and are maintained in accordance with the recordkeeping
requirements applicable hereunder; and
3. Parallel Reports are filed with respect to all securities
transactions involving Covered Securities, without regard to
any "de minimis" exceptions otherwise applicable to such
reporting.
VI. Confidentiality
A. No Access Person shall reveal to any other person (except in
the normal course of his or her duties on behalf AIC, as
investment adviser to the Portfolios) any information regarding
securities transactions by a Portfolio or consideration by a
Portfolio.
B. All information obtained from any Access Person hereunder
shall be kept in strict confidence, except that reports of
securities transactions hereunder will be made available to the
Securities and Exchange Commission or any other regulatory or
self-regulatory organization to the extent required by law or
regulation.
VII. Designated Compliance Officer. The Designated Compliance Officer of AIC
is Kenneth R. Jones, Vice President, Corporate Compliance. His licenses
as of November 1, 1999 are NASD Series 6, 7, 24, 63, and 65.
Responsibilities of the Designated Compliance Officer include:
A. Review and maintenance of RIA Policies and Procedures Manual
B. Review and acceptance of IAR's individual advisory services and
their proposed activities
C. Review and approve advertising
D. Review and resolution of customer complaints
E. Review and approval of correspondence
F. Approval of registrations
G. IAR Activities Inspections
H. Frequent reviews of client accounts to detect and prevent
irregularities, or abuses
I. Quarterly examination of Ameritas Investment Management Accounts
<PAGE> 7
AIC Code of Ethics
(Pursuant to Rule 17j-1)
November 1, 1999
Page 7
J. Suitability and initial fee assessment
K. Disciplinary and Remedial Action
VIII. Review Process. Information reported pursuant to the requirements of
Section IV shall be reviewed for any pattern of transactions involving
parallel transactions (e.g. a Portfolio and an Access Person both
buying or both selling the same Covered Security) generally within a 15
day period before or after the transaction date. Among the factors that
will be considered in the analysis of whether any provision of the Code
has been violated will be the number and dollar value of the
transactions, the trading volume of the securities in question, the
length of time the security is held by the individual and the
individual involvement in the investment process. While the focus of
this procedures is on "patterns," it is important to note that a
violation could result from a single transaction if the circumstance
warrant a finding that the underlying principles of fair dealing have
been violated.
IX Recordkeeping Requirements.
A. AIC will at its principal place of business, maintain records in
the manner and to the extent set out in this paragraph, and must
make these records available to the Commission or any
representative of the Commission at any time and from time to time
for reasonable periodic, special or other examination:
1. A copy of each code of ethics for the organization that is in
effect, or at any time within the past five years was in
effect, must be maintained in an easily accessible place;
2. A record of any violation of the code of ethics, and of any
action taken as a result of the violation, must be maintained
in an easily accessible place for at least five years after
the end of the fiscal year in which the violation occurs;
3. A copy of each report made by an Access Person as required by
this section, including any information provided in lieu of
the reports under paragraph (d)(2)(v) of this section, must
be maintained for at least five years after the end of the
fiscal year in which the report is made or the information is
provided, the first two years in an easily accessible place;
4. A record of all persons, currently or within the past five
years, who are or were required to make reports under
paragraph (d) of this section, or who are or were responsible
for reviewing these reports, must be maintained in an easily
accessible place; and
5. A copy of each report required by paragraph (c)(2)(ii) of
this section must be maintained for at least five years after
the end of the fiscal year in which it is made, the first two
years in an easily accessible place.
<PAGE> 8
AIC Code of Ethics
(Pursuant to Rule 17j-1)
November 1, 1999
Page 8
B. AIC will maintain a record of any decision, and the reasons
supporting the decision, to approve the acquisition by Investment
Personnel of securities under Section IV, for at least five years
after the end of the fiscal year in which the approval is granted.
X. Sanctions. Upon discovering a violation of the Code of Ethics, AIC or
the Board of Directors of The Calvert Variable Series, Inc. may impose
any sanctions it deems appropriate, including a letter of censure or
suspension or termination of the employment of the violator.
<PAGE> 9
The Designated Compliance Officer of AIC is Kenneth R. Jones, Vice President,
Corporate Compliance. His licenses as of November 1, 1999 are NASD Series 6, 7,
24, 63, and 65. Responsibilities of the Designated Compliance Officer include:
A. Review and maintenance of RIA Policies and Procedures Manual
B. Review and acceptance of IAR's individual advisory services and their
proposed activities
C. Review and approve advertising
D. Review and resolution of customer complaints
E. Review and approval of correspondence
F. Approval of registrations
G. IAR Activities Inspections
H. Frequent reviews of client accounts to detect and prevent irregularities,
or abuses
I. Quarterly examination of Ameritas Investment Management Accounts
J. Suitability and initial fee assessment
K. Disciplinary and Remedial Action
<PAGE> 1
EXHIBIT 2 (a)(b)
Opinion and Consent of Donald R. Stading
[AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO]
February 29, 2000
Ameritas Variable Life Insurance Company
5900 "O" Street
Lincoln, Nebraska 68510
Gentlemen:
With reference to the Post-Effective Amendment No. 6 to Registration No.
333-15585 on Form S-6 filed by Ameritas Variable Life Insurance Company and
Ameritas Variable Life Insurance Company Separate Account V with the Securities
and Exchange Commission covering flexible premium life insurance policies, I
have examined such documents and such laws as I considered necessary and
appropriate, and on the basis of such examination, it is my opinion that:
1. Ameritas Variable Life Insurance Company is duly organized and validly
existing under the laws of the State of Nebraska and has been duly
authorized by the Insurance Department of the State of Nebraska to
issue variable life policies.
2. Ameritas Variable Life Insurance Company Separate Account V is a duly
authorized and existing separate account established pursuant to the
provisions of Section 44-402.01 of the Statutes of the State of
Nebraska.
3. The flexible premium variable life policies, when issued as
contemplated by said Form S-6 Registration Statement, will constitute
legal, validly issued and binding obligations of Ameritas Variable Life
Insurance Company.
I hereby consent to the filing of this opinion as an exhibit to the
Post-Effective Amendment No. 6 to said Form S-6 Registration Statement and to
the use of my name under the caption "Legal Matters" in the Prospectus contained
in the Registration Statement.
Sincerely,
/s/ Donald R. Stading
Donald R. Stading
Secretary and General Counsel
<PAGE> 1
EXHIBIT 6 (a)(b)
Opinion and Consent of Russell J. Wiltgen
[AMERITAS LIFE INSURANCE CORP. LOGO]
February 29, 2000
Ameritas Variable Life Insurance Company
5900 "O" Street
Lincoln, Nebraska 68510
Gentlemen:
This opinion is furnished in connection with the registration by Ameritas
Variable Life Insurance Company of a flexible premium variable universal life
insurance policy ("Contract") under the Securities Act of 1933. The prospectus
included in Post-Effective Amendment No. 6 to Registration Statement No.
333-15585 on Form S-6 describes the Contract. The form of Contract was prepared
under my direction and I am familiar with the Registration Statement and
Exhibits thereto. This contract was developed and filed under Securities and
Exchange Commission Rule 6E-3(T), as interpreted at this time by the SEC staff.
In my opinion:
The illustrations of death benefits and accumulation values included in the
section entitled "Illustrations of Death Benefits and Accumulation Values" in
the Appendices of the prospectus, based on the assumptions stated in the
illustrations, are consistent with the provisions of the Contract. The rate
structure of the Contract has not been designed so as to make the
relationship between premiums and benefits, as shown in the illustrations,
appear more favorable to prospective purchasers of the Contract for a male
age 45, than to prospective purchasers of the Contract for other ages or for
females.
I hereby consent to the use of this opinion as an exhibit to the Post-Effective
Amendment No. 6 to the Registration Statement and to the reference to my name
under the heading "Experts" in the prospectus.
Sincerely,
/s/ Russell J. Wiltgen
Russell J. Wiltgen
Vice President - Individual Product Management
<PAGE> 1
EXHIBIT 7
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 6 to Registration
Statement No. 333-15585 of Ameritas Variable Life Insurance Company Separate
Account V of our reports dated February 5, 2000, on the financial statements of
Ameritas Variable Life Insurance Company and the subaccounts of Ameritas
Variable Life Insurance Company Separate Account V appearing in the Prospectus,
which is a part of such Registration Statement, and to the reference to us under
the heading "Experts" in such Prospectus.
/s/ Deloitte & Touche LLP
Lincoln, Nebraska
February 28, 2000
