Supplement to Prospectus
By Supplement to Prospectus ("sticker") dated March 13, 1996, Ameritas Variable
Life Insurance Company discloses the following:
On February 27, 1996, AVLIC determined to postpone the merger with Ameritas Life
Insurance Corp. ("Ameritas Life") indefinitely.
On March 11, 1996, Ameritas Life and American Mutual Life Insurance Company
("American Mutual"), an Iowa mutual life insurance company, announced an
Agreement of Joint Venture ("Agreement").
The terms of the Agreement, which has a closing date of March 29, 1996, require
a holding company (AMAL Corporation) to be formed. Also pursuant to the terms of
the Agreement, the stock of AVLIC and Ameritas Investment Corp. will be
transferred to AMAL Corporation on the closing date. AMAL Corporation will then
issue a controlling ownership of the stock to Ameritas Life and a minority
ownership of the stock to American Mutual.
As of May 1, 1996, The Dreyfus Stock Index Fund is no longer an investment
option under the contract. Funds allocated to the Dreyfus Stock Index Fund as of
April 30, 1996 may remain invested in that portfolio. If transferred out of the
Dreyfus Stock Index portfolio, however, reinvestment into that portfolio will
not be an option. AVLIC eventually intends to file an application with the
Securities and Exchange Commission to substitute the shares of another portfolio
for shares of the Dreyfus Stock Index Fund.
PROSPECTUS COMPANY LOGO
AMERITAS VARIABLE LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM One Ameritas Way / 5900 "O" Street
VARIABLE ANNUITY POLICY P.O. Box 81889 / Lincoln, NE 68501-1889
- --------------------------------------------------------------------------------
This Prospectus describes a Variable Annuity Policy ("Policy") offered by
Ameritas Variable Life Insurance Company ("AVLIC"). The Policy is a deferred
annuity, designed to aid individuals in long-term financial planning, and
provides for the accumulation of capital on a tax deferred basis for retirement
or other long-term purposes. The Policy is offered to individuals on either a
tax qualified or non- tax qualified basis in exchange for first-year premium
payments of $2,000 or more and subsequent premium payments of $500 or more.
Smaller premium payments may be accepted on Bank-O-Matic or at AVLIC's
discretion.
Prior to the annuity date of the policy, the payments accumulate on a completely
variable basis, based on the assets supporting the Policy. The owner will
receive annuity payments on a fixed basis. The owner has significant flexibility
in determining the annuity date on which payments are scheduled to commence.
Full withdrawals may be made at any time, partial withdrawals may be made up to
four times annually, and systematic partial withdrawals may be made up to once
each month, subject to certain restrictions, before the annuity date.
Withdrawals are subject to a contingent deferred sales charge and tax penalty in
certain circumstances. Any withdrawal amount may be paid in a lump sum or, if
elected, all or part may be paid out under an annuity income option. Policy
loans are available from policies purchased in 403(b) plans. The Policy provides
the flexibility necessary to permit an owner to devise an annuity that best fits
his or her needs.
Premium payments will be allocated to the Ameritas Variable Life Insurance
Company Separate Account VA-2 ("Account") or to the Fixed Account. The Account
has twenty Subaccounts, with the assets of each invested in corresponding
portfolios of the Variable Insurance Products Fund, the Variable Insurance
Products Fund II, the Alger American Fund, MFS Variable Insurance Trust and/or
the Dreyfus Stock Index Fund (collectively the "Funds"). The initial premium
payment will be allocated to the Money Market Subaccount, as of the effective
date, for 13 days. After the expiration of the 13-day period (see page 17) the
accumulation value will be allocated to the Subaccounts or to the Fixed Account
as selected by the Policyowner. The Variable Insurance Products Fund is a mutual
fund advised by Fidelity Management & Research Company ("FMR") with five
portfolios: the Money Market, the High Income, the Equity-Income, the Growth and
the Overseas Portfolios. The Variable Insurance Products Fund II is a mutual
fund with five portfolios, the Asset Manager, the Investment Grade Bond, the
Index 500*, the Contrafund*, and the Asset Manager: Growth* Portfolios. It is
also advised by FMR. The Alger American Fund is a mutual fund with six
portfolios, Alger American Income and Growth, Alger American Small
Capitalization, Alger American MidCap Growth, Alger American Growth, Alger
American Leveraged AllCap*, and Alger American Balanced Portfolios. The Alger
American Fund is advised by Fred Alger Management, Inc. ("Alger Management").
MFS Variable Insurance Trust is a Massachusetts business trust. The Trust has
twelve separate portfolios or series, of which, MFS Emerging Growth Series*, MFS
Utilities Series*, and MFS World Governments Series* are offered. MFS Variable
Insurance Trust is advised by Massachusetts Financial Services Company ("MFS
Co."). The Dreyfus Stock Index Fund has one portfolio. It is advised by Wells
Fargo NIKKO Investment Advisors (WFNIA). The accompanying prospectuses of the
four funds describe the investment objectives, policies and risks of each of the
portfolios of the funds. The Policy accumulation value will vary in accordance
with the investment performance of the Subaccounts selected by the owner.
Therefore, the owner bears the entire investment risk of monies placed in the
Account under this Policy prior to the annuity date.
* New funds are only available under newly issued policies. Availability is
expected by May 1, 1996, for all policyholders.
This Prospectus sets forth the information that a prospective investor should
know before investing. A Statement of Additional Information about the Policy
and the Account is available free by writing AVLIC at the address above or by
calling 1-800-745-1112. The Statement of Additional Information, which has the
same date as this Prospectus, has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. The table of contents of the
Statement of Additional Information is included at the end of this Prospectus.
This Prospectus Must Be Accompanied Or Preceded By Current Prospectuses For
Variable Insurance Products Fund, Variable Insurance Products Fund II, Alger
American Fund, MFS Variable Insurance Trust, and Dreyfus Stock Index Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES REGULATORY AUTHORITY NOR HAS THE
COMMISSION OR ANY STATE SECURITIES REGULATORY AUTHORITY PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Please Read This Prospectus Carefully And Retain It For Future Reference.
The Date of This Prospectus is October 2, 1995.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Definitions................................................................ 3
Fee Table.................................................................. 4
Questions and Answers About The Policy..................................... 7
Financial Statements ...................................................... 10
Ameritas Variable Life Insurance Company and the Account............... 12
Ameritas Variable Life Insurance Company............................... 12
Ameritas Variable Life Insurance Company Separate Account VA-2......... 12
The Funds.............................................................. 12
Investment Policies and Objectives of the Funds' Portfolios............ 13
Addition, Deletion or Substitution of Investments.......................... 16
The Fixed Account.......................................................... 16
The Policy................................................................. 16
Policy Application and Premium Payment................................. 17
Allocation of Premium.................................................. 17
Accumulation Value..................................................... 17
Value of Accumulation Units............................................ 18
Transfers.............................................................. 18
Owner Inquiries........................................................ 18
Refund Privilege....................................................... 18
Policy Loans........................................................... 18
Charges and Deductions..................................................... 19
Administrative Charges................................................. 19
Mortality and Expense Risk Charge...................................... 19
Contingent Deferred Sales Charge....................................... 20
Taxes.................................................................. 20
Fund Investment Advisory Fees and Expenses............................. 21
Distributions Under the Policy............................................. 21
Full and Partial Withdrawals........................................... 21
Critical Needs Withdrawals............................................. 21
Annuity Date........................................................... 22
Death of Annuitant Prior to Annuity Date .............................. 22
Election of Annuity Income Options..................................... 22
Annuity Income Options................................................. 23
Deferment of Payment................................................... 23
General Provisions......................................................... 23
Control of Policy...................................................... 23
Beneficiary............................................................ 24
Change of Beneficiary.................................................. 24
Contestability......................................................... 24
Misstatement of Age or Sex............................................. 24
Reports and Records.................................................... 24
Federal Tax Matters........................................................ 24
Introduction........................................................... 24
Taxation of Annuities in General....................................... 25
Distribution of the Policies............................................... 26
Safekeeping of the Account's Assets........................................ 26
Voting Rights.............................................................. 26
Legal Proceedings.......................................................... 27
Statement of Additional Information........................................ 27
The Policy, certain portfolios, and certain provisions 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, SALESMAN, 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.
</TABLE>
<PAGE>
DEFINITIONS
ACCOUNT - Ameritas Variable Life Insurance Company Separate Account VA-2, a
separate investment account established by AVLIC to receive and invest the
premium paid under the Policy. The investment performance of the Account is kept
separate from that of the general assets of AVLIC.
ACCUMULATION UNIT - A unit used to measure the value of the Policy prior to the
annuity date.
ACCUMULATION VALUE - The value of all amounts accumulated under the Policy prior
to the annuity date.
ANNUITANT - The person or persons upon whose life expectancy the Policy is
written. The annuitant may also be the owner of the Policy.
ANNUITY DATE - The date on which annuity payments begin.
ANNUITY INCOME OPTION - One of several ways in which annuity payments may be
made. Payments are based on the cash surrender value as of the annuity date,
less any applicable premium taxes. The dollar amount of each annuity payment
will not change over time, except in the case where the interest payment option
is selected.
ANNUITY PAYMENT - One of a series of payments made under an annuity income
option.
AVLIC ("WE, US, OUR") - Ameritas Variable Life Insurance Company, a Nebraska
stock company.
BENEFICIARY - The person to whom any benefits due upon death of the annuitant
are paid. The beneficiary is designated by the owner in the application. If
changed, the beneficiary is as shown in the latest change filed and recorded
with AVLIC. If no beneficiary survives the annuitant, the owner or the owner's
estate will be the beneficiary. The interest of any beneficiary is subject to
that of any assignee.
CASH SURRENDER VALUE - The amount available for full or partial withdrawal,
which is the accumulation value less any withdrawal charge, and applicable
premium taxes and, in the case of a full withdrawal, less a pro rata amount of
the annual policy fee.
CONTINGENT DEFERRED SALES CHARGE - The charge assessed upon certain withdrawals
and annuitizations to cover certain expenses relating to the sale of the
Policies.
DECLARED RATES - AVLIC guarantees that it will credit interest in the Fixed
Account at an effective annual rate of at least 4.5%. AVLIC may, at its sole
discretion declare higher interest rates for amounts allocated or transferred to
the Fixed Account.
DUE PROOF OF DEATH - 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 require to establish the validity of the
claim.
EFFECTIVE DATE - The date that the premium payment is applied to purchase a
Policy for the owner.
FIXED ACCOUNT - An account that is a part of AVLIC's general account to which
all or a portion of premium payments may be allocated for accumulation at fixed
rates of interest.
FUNDS - The Variable Insurance Products Fund ("Fidelity Fund"), Variable
Insurance Products Fund II ("Fidelity Fund II") (collectively the "Fidelity
Funds"), the Alger American Fund, ("Alger American Fund"), MFS Variable
Insurance Trust ("MFS Fund" or "MFS"), and the Dreyfus Stock Index Fund
("Dreyfus Index Fund or Dreyfus Index") are the funds available for investment
as of the date of this Prospectus. In the future, additional funds may be added
or subtracted by AVLIC as the available funding options. The Funds have one or
more portfolios. There is a portfolio that corresponds to each of the
Subaccounts of the Account.
JOINT ANNUITANT - The person other than the annuitant who may be designated by
the owner and on whose life annuity payments may also be based.
NET CASH SURRENDER VALUE - The cash surrender value less premium tax, if any.
NONQUALIFIED POLICIES - Policies that do not qualify for special federal income
tax treatment.
OWNER - 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 owner. A collateral assignee is not the owner.
PAYEE - The owner, annuitant, beneficiary, or any other person, estate, or legal
entity to whom benefits are to be paid.
POLICY - The variable annuity policy offered by AVLIC and described in this
Prospectus.
POLICY DATE - The date set forth in the Policy that is the date used to
determine policy anniversary dates and policy years. Policy anniversaries are
measured from the policy date.
POLICY YEAR - The period from one policy anniversary date until the next policy
anniversary date.
<PAGE>
PORTFOLIO - The separate investment portfolios of the Fidelity Fund, the
Fidelity Fund II, the Alger American Fund, the MFS Fund and the Dreyfus Index
Fund. The Fidelity Fund currently has five portfolios: The Money Market, the
High Income, the Equity-Income, the Growth, and the Overseas Portfolios. The
Fidelity Fund II has five portfolios: Asset Manager, Investment Grade Bond,
Index 500, Contrafund, and Asset Manager: Growth Portfolios. The Alger American
Fund has six portfolios: the Alger American Income and Growth ("Income and
Growth"), the Alger American Small Capitalization ("Small-Cap"), Alger American
MidCap Growth ("MidCap"), Alger American Growth ("Alger American Growth"), Alger
American Leveraged AllCap ("Leveraged AllCap"), and Alger American Balanced
("Balanced") Portfolios. MFS Variable Insurance Trust, ("MFS Fund" or "MFS"), is
a Massachusetts business trust. The Trust has twelve separate portfolios or
series, of which, MFS Emerging Growth Series ("MFS Emerging Growth"), MFS
Utilities Series ("MFS Utilities"), and MFS World Governments Series ("MFS World
Governments") are offered. The Dreyfus Index Fund has one portfolio.
PREMIUM PAYMENT - Under the Policy, the first-year premium payment must be
$2,000 or more and subsequent payments must be $500 or more. Smaller premium
payments may be accepted on Bank-O-Matic or at AVLIC's discretion.
QUALIFIED POLICIES - Policies purchased in connection with certain plans that
qualify for special federal income tax treatment.
SUBACCONT - A division of the Account. Each Subaccount invests exclusively in
the shares of a specified portfolio of the Fund.
SUCCESSOR OWNER - The person who may be designated by the owner and to whom
Policy ownership passes upon . Valuation date - A valuation date is each day on
which the New York Stock Exchange is open for trading.
VALUATION DATE - A valuation date is each 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 trading on the New York Stock Exchange ("NYSE") on one valuation
date and ending at the close of trading on the NYSE on the next succeeding
valuation date.
FEE TABLE
CONTRACT OWNER TRANSACTION EXPENSES
This table is to assist the Policyowner to understand the various costs and
expenses that the Policyowner will bear, directly and indirectly at both the
Separate Account and portfolio level. The table does not include possible state
premium taxes.
Sales Load Imposed on Purchases......................................... 0%
Contingent Deferred Sales Charge-on premiums paid only (Maximum)........ 6.0%
% Year % Year
6............1 4............5
6............2 3............6
6............3 2............7
5............4 0............8+
Surrender Fees.......................................................... 0%
Exchange Fee............................................................ 0%
Transfer Fee (after 12 free transfers annually)......................... $10
Annual Policy Fee (up to $50, currently $30)............................ $30
Annual Administrative Fees and Expenses................................. .20%
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE ACCOUNT VALUE).
Mortality and Expense Risk Fees......................................... 1.25%
(See "Charges and Deductions," page 19.)
FIDELITY FUND ANNUAL EXPENSES
<TABLE>
<CAPTION>
Money High Equity-
Market Income Income* Growth* Overseas
<S> <C> <C> <C> <C> <C>
Management....... .20% .61% .52% .62% .77%
Other............ .07% .10% .06% .07% .15%
------ ------ ------ ------ ------
Total............ .27% .71% .58% .69% .92%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FIDELITY FUND II ANNUAL EXPENSES
Asset Investment Index Asset Manager:
Manager* Grade Bond 500** Contrafund*** Growth ***
<S> <C> <C> <C> <C> <C>
Management....... .72% .46% .28% .62% .72%
Other............ .08% .21% .00% .27% .21%
------ ------ ------ ------ ------
Total............ .80% .67% .28% .89% .93%
</TABLE>
* A portion of the brokerage commission the fund paid was used to reduce its
expenses. Without this reduction, total operating expenses would have been for
Equity-Income - .60%; Growth - .70%; and for Asset Manager - .81%.
(See "The Funds", page 12 and Portfolios Prospectuses).
** Fund expenses were voluntarily reduced by the fund's investment adviser.
Without this reduction, total operating expenses would have been .81%.
*** Management fee and expenses estimated for 1995. Contrafund and Asset
Manager: Growth commenced operations January 3, 1995.
<TABLE>
<CAPTION>
ALGER AMERICAN FUND ANNUAL EXPENSES
Alger
Income and Small Mid American Leveraged
Growth Cap Cap Growth Balanced AllCap*
<S> <C> <C> <C> <C> <C> <C>
Management...... .625% .85% .80% .75% .75% .85%
Other........... .125% .11% .17% .11% .33% .94%
------- ------ ------ ------ ------ ------
Total........... 0.75% .96% .97% .86% 1.08% 1.79%
*Management fee and expenses estimated for 1995. Inception date for Leveraged
AllCap was January 25, 1995.
</TABLE>
<TABLE>
<CAPTION>
MFS FUND ANNUAL EXPENSES
MFS Emerging MFS Utilities MFS World Dreyfus Index Fund
Growth Series* Series* Governments Series** Annual Expenses***
<S> <C> <C> <C> <C>
Management...... .75% .75% .75% .15%
Other........... .25% .25% .25% .25%
------ ------ ------ ------
Total........... 1.00% 1.00% 1.00% .40%
</TABLE>
* MFS Co. has agreed to bear, subject to reimbursement, expenses for each of the
Emerging Growth Series and the Utilities Series such that each Series' aggregate
operating expenses shall not exceed, on an annualized basis, 1.00% of the
average daily net assets of the Series from November 2, 1994 through December
31, 1996 provided however, that this obligation may be terminated or revised at
any time. Absent this expense arrangement, "Other Expenses" and "Total Operating
Expenses" would be 1.00% and 1.75%, respectively, for the Emerging Growth Series
and 0.93% and 1.68%, respectively, for the Utilities Series, based upon
estimated expenses for the series' current fiscal year.
** MFS Co. has agreed to bear, subject to reimbursement, expenses of the World
Government Series such that the Series' aggregate operating expenses do not
exceed 1.00%, on an annualized basis, of its average daily net assets. Absent
this expense arrangement, "Other Expenses" and "Total Operating Expenses" for
the World Governments Series would be 0.63% and 1.38%, respectively.
*** For the period ended December 31, 1994, if these expenses for the period had
been incurred by the Dreyfus Index Fund Portfolio, the ratio of expenses to
average daily net assets would have been .56%.
Fidelity Management & Research Company (FMR) has agreed to reimburse the various
portfolios if, and to the extent that, the portfolios' aggregate operating
expenses are in excess of .80% (Investment Grade Bond Portfolio), 1.00% (High
Income, Contrafund and Asset Manager: Growth Portfolios), 1.25% (Asset Manager
Portfolio) or 1.50% (Equity-Income, Growth, and Overseas Portfolios) of the
respective Portfolios' average net assets. FMR has voluntarily agreed to
temporarily limit Index 500 Portfolio's total operating expenses to 0.28%. Alger
Management has agreed to reimburse the Portfolios if, and to the extent that,
the Portfolios' aggregate operating expenses (excluding interest, taxes, fees
for brokerage services and extraordinary expenses) are in excess of 1.25%
(Income and Growth, and Balanced Portfolios) and 1.50% (Small Cap, MidCap,
Leveraged AllCap and Growth Portfolios) of the respective Portfolio's average
net assets. WFNIA and Dreyfus Corporations have undertaken to
<PAGE>
reimburse the Dreyfus Index Fund if, and to the extent that, its Portfolio's
aggregate operating expenses exceed .40% of the average net assets of the Fund.
These agreements are expected to continue in the future years. As long as this
expense limitation continues for a portfolio, if a reimbursement occurs, it has
the effect of lowering the portfolio's expense ratio and increasing its total
return.
EXAMPLE: If you surrender your contract at the end of the applicable time period
you would pay the following expenses on a $1,000 investment, assuming 5% annual
return on assets:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market.......... $79 $118 $140 $216
High Income........... $83 $132 $163 $261
Equity-Income......... $82 $128 $156 $248
Growth................ $83 $131 $162 $259
Overseas.............. $85 $138 $173 $282
Asset Manager......... $84 $134 $167 $270
Investment Grade Bond. $83 $131 $161 $257
Index 500............. $79 $119 $141 $217
Contrafund............ $85 $137 $172 $279
Asset Manager: Growth. $86 $138 $174 $283
Income and Growth .... $84 $133 $165 $265
Balanced.............. $87 $143 $181 $298
Small Cap ............ $86 $139 $175 $286
MidCap................ $86 $140 $176 $287
Alger American Growth. $85 $136 $170 $276
Leveraged AllCap...... $94 $164 $216 $365
MFS Emerging Growth... $86 $140 $177 $290
MFS Utilities......... $86 $140 $177 $290
MFS World Governments. $86 $140 $177 $290
Dreyfus Index......... $80 $122 $147 $229
</TABLE>
EXAMPLE: If you annuitize at the end of the applicable time period you would pay
the following expenses on a $1,000 investment, assuming 5% annual return on
assets:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market.......... $79 $ 58 $100 $216
High Income........... $83 $ 72 $123 $261
Equity-Income......... $82 $ 68 $116 $248
Growth................ $83 $ 71 $122 $259
Overseas.............. $85 $ 78 $133 $282
Asset Manager......... $84 $ 74 $127 $270
Investment Grade Bond. $83 $ 71 $121 $257
Index 500............. $79 $ 59 $101 $217
Contrafund............ $85 $ 77 $132 $279
Asset Manager: Growth. $86 $ 78 $134 $283
Income and Growth .... $84 $ 73 $125 $265
Balanced.............. $87 $ 83 $141 $298
Small Cap ............ $86 $ 79 $135 $286
MidCap................ $86 $ 80 $136 $287
Alger American Growth. $85 $ 76 $130 $276
Leveraged AllCap...... $94 $104 $176 $365
MFS Emerging Growth... $86 $ 80 $137 $290
MFS Utilities......... $86 $ 80 $137 $290
MFS World Governments. $86 $ 80 $137 $290
Dreyfus Index......... $80 $ 62 $107 $229
</TABLE>
<PAGE>
EXAMPLE: If you do not surrender your contract you would pay the following
expenses on a $1,000 investment, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market.......... $19 $ 58 $100 $216
High Income........... $23 $ 72 $123 $261
Equity-Income......... $22 $ 68 $116 $248
Growth................ $23 $ 71 $122 $259
Overseas.............. $25 $ 78 $133 $282
Asset Manager......... $24 $ 74 $127 $270
Investment Grade Bond. $23 $ 71 $121 $257
Index 500............. $19 $ 59 $101 $217
Contrafund............ $25 $ 77 $132 $279
Asset Manager: Growth. $26 $ 78 $134 $283
Income and Growth .... $24 $ 73 $125 $265
Balanced.............. $27 $ 83 $141 $298
Small Cap ............ $26 $ 79 $135 $286
MidCap................ $26 $ 80 $136 $287
Alger American Growth. $25 $ 76 $130 $276
Leveraged AllCap...... $34 $104 $176 $365
MFS Emerging Growth... $26 $ 80 $137 $290
MFS Utilities......... $26 $ 80 $137 $290
MFS World Governments. $26 $ 80 $137 $290
Dreyfus Index......... $20 $ 62 $107 $229
</TABLE>
The examples assume an average $30,000 annuity investment. The examples should
not be considered a representation of past or future expenses. Actual expenses
may be greater or lesser than those shown and will vary according to the
portfolio(s) selected.
QUESTIONS AND ANSWERS ABOUT THE POLICY
NOTE: The following section contains brief questions and answers about the
Policy. Reference should be made to the body of this Prospectus for more
detailed information. With respect to qualified policies, it should be noted
that the requirements of a particular retirement plan, an endorsement of the
Policy, or limitations or penalties imposed by the Internal Revenue Code may
impose limits or restrictions on premiums, withdrawals, distributions, or
benefits, or on other provisions of the Policies, and this Prospectus does not
describe any such limitations or restrictions. See "Federal Tax Matters," page
24. Also "you" or "your" refers to the owner; "we," "us" or "our" refers to
Ameritas Variable Life Insurance Company.
1. WHAT IS THE PURPOSE OF THE POLICY?
The Policy seeks to allow you to accumulate funds based on the investment
experience of the assets underlying the Policy, in the Account or the Fixed
Account, on a tax-deferred basis and to receive annuity payments when
desired. Once payments commence under an annuity income option, the annuity
payments do not depend on the investment experience of the Policy's
underlying assets. Instead, the amount of the payments is set as of the
annuity date and does not change over the annuity payment period, unless an
interest payment option is selected. The Policy may be purchased on a non-tax
qualified basis ("nonqualified policy.") The Policy may also be purchased in
connection with certain plans qualifying for favorable federal income tax
treatment ("qualified policy"). The owner can allocate premium payments to
one or more Subaccounts of the Ameritas Variable Life Insurance Company
Separate Account VA-2 (the "Subaccounts"), each of which will invest in a
corresponding portfolio of the Funds, or to the Fixed Account. Because the
accumulation value depends on
<PAGE>
the investment experience of the selected Subaccounts, the owner bears the
investment risk under this Policy for monies placed in Subaccounts prior to
the annuity date.
2.WHAT IS AN ANNUITY AND WHAT ANNUITY OPTIONS ARE AVAILABLE?
An annuity provides for a series of periodic payments beginning on the
annuity date, based on the net cash surrender value on the annuity date, to
be paid to the designated payee. The owner may select from a number of
annuity income options, including annuity payments for the life of an
annuitant (or an annuitant and another person, the joint annuitant) with or
without a guaranteed number of annuity payments, or for a designated period,
for a designated amount, or for an interest payment option. The annuity
payments remain the same throughout the payment period, unless an interest
payment option is selected.
The owner also has some flexibility in choosing the annuity date; however,
without AVLIC's prior approval, payments must begin no later than the first
day of the month after the annuitant's 95th birthday (90th in Oregon). (See
"Annuity Date," page 22 and "Annuity Income Options," page 23.)
3. WHAT TYPES OF INVESTMENTS UNDERLIE THE ACCOUNT?
Currently, the assets supporting the Policies prior to the annuity date are
invested exclusively in shares of the Funds or in the Fixed Account. The
Fidelity Fund currently has five portfolios: the Money Market, High Income,
Equity-Income, Growth, and Overseas Portfolios. The Fidelity Fund II has
five portfolios: the Asset Manager, Investment Grade Bond, Index 500,
Contrafund, and Asset Manager: Growth Portfolios. The Alger American Fund
has six portfolios: the Income and Growth; Small-Cap; MidCap; Alger
American Growth, Leveraged AllCap; and Balanced Portfolios. The MFS Fund
has twelve separate portfolios or series, of which, MFS Emerging Growth,
MFS Utilities, and MFS World Governments are offered. The Dreyfus Index
Fund has one portfolio. Each of the twenty Subaccounts of the Account
invests solely in the corresponding portfolio of the Funds. The assets of
each portfolio are held separately from the other portfolios and each has
distinct investment objectives and policies which are described in the
accompanying prospectuses for the Funds. (See "The Funds," page 12.)
4. INVESTMENTS IN THE FIXED ACCOUNT.
Premium payments allocated to the Fixed Account are placed in the general
account of AVLIC which supports insurance and annuity obligations.
Policyowners are paid interest on the amounts placed in the Fixed Account at
guaranteed rates (4.5%) or at higher "declared rates." (See "Fixed Account,"
page 16).
5. HOW DO I PURCHASE A POLICY?
You may purchase a Policy with a first-year premium payment of at least
$2,000. You may make subsequent premium payments of $500 or more. Smaller
premium payments may be accepted on Bank-O-Matic or at AVLIC's discretion.
The total of all premium payments made under annuity contracts having the
same annuitant may not exceed $1,000,000 without AVLIC's prior approval. (See
"Policy Application and Premium Payment," page 17.)
6. HOW MAY I ALLOCATE THE PREMIUM PAYMENT?
On the effective date of the Policy, the premium paid is allocated to the
Money Market Subaccount. Thirteen days after the effective date, the
accumulation value is allocated among the Subaccounts or Fixed Account in
accordance with the allocation instructions designated by the owner in the
application. (See "Allocation of Premium," page 17.)
7. CAN I TRANSFER AMOUNTS?
Transfers of the accumulation value among the Subaccounts of the Account can
be made 12 times each policy year without charge. A transfer charge may be
imposed each additional time amounts are transferred between Subaccounts and
will be deducted from the amount transferred. The maximum transfer charge is
$10.00 per transfer. Transfers must be at least $250, or, if less, the entire
value of the Subaccount from which the transfer is made. The minimum amount
which can remain in a Subaccount as a result of a transfer is $100.00. Any
amount below this minimum must be included in the amount transferred.
Transfers may also be made from the Subaccounts to the Fixed Account. Up to
one hundred percent of the amount deposited in the Fixed Account plus
interest thereon may be transferred out of the Fixed Account during the 30
day period following the yearly anniversary of the date of the policy.
Transfers from the Fixed Account are free and will not be considered one of
the 12 free yearly transfers. (See "Transfers," page 18.)
<PAGE>
8.CAN I GET TO MY MONEY IF I NEED IT?
All or part of the accumulation value of the Policy may be withdrawn before
the earlier of the annuitant's death or the annuity date. Policy loans are
available from policies purchased in 403(b) plans. The withdrawal right may
be restricted by Section 403(b)(11) of the IRS code, if the annuity is used
in connection with a Section 403(b) retirement plan; and is limited to four
partial withdrawals per year, systematic partial withdrawals may be made up
to once each month. Amounts withdrawn may also be subject to a contingent
deferred sales charge depending upon the size of the withdrawal, the Policy
accumulation value, and the time since the Policy premiums were deposited. A
policyowner may withdraw that portion of the policy accumulation value that
exceeds the total premiums deposited without a contingent deferred sales
charge. Thereafter, unless waived, a contingent deferred sales charge is
assessed only on premiums paid based upon the number of years since the
premiums withdrawn were paid, on a first paid, first withdrawn basis. The
contingent deferred sales charge is a maximum of 6% of the premium payment
withdrawn and grades to 0% after the seventh year after the withdrawn
premiums were deposited. (See "Contingent Deferred Sales Charge," page 20.)
WE GUARANTEE THAT THIS CHARGE WILL NOT BE INCREASED. In addition, upon a full
withdrawal the owner will be assessed a pro rata portion of the annual policy
fee. (See "Annual Policy Fee," page 19.) Certain withdrawals may also be
subject to a federal penalty tax as well as federal income tax. (See,
"Federal Tax Matters," page 24.) Full or partial withdrawals from the Fixed
Account may be deferred for up to 6 months from the date of written request.
9. WHAT ARE THE CHARGES UNDER MY POLICY?
In order to permit investment of the entire premium payment, we currently do
not deduct sales charges at the time of investment. However, unless waived, a
contingent deferred sales charge, as described above, is imposed on certain
full or partial withdrawals of the Policies and annuitization to cover
certain expenses relating to the sale of the Policies, including commissions
to registered representatives and other promotional expenses. (See
"Contingent Deferred Sales Charge," page 20.) We will, when taxes, including
premium taxes, are imposed by state law upon the receipt of the premium
payment, deduct such taxes on receipt of the payment. If, instead, premium
taxes are imposed upon annuitization, such taxes will be deducted at that
time. (See "Taxes," page 20.) In addition, an annual administration fee of
.20% of the year end balance of the accumulation value is deducted to cover
administrative expenses, and the policyowner may be charged a $10.00 per
transfer fee after the 12 free transfers of each policy. (See "Annual
Administration Fee," and "Transfers," pages 19 and 18.) Certain other charges
are deducted under the Policy to cover administrative expenses of operating
the Policy and mortality and expense risks. These charges include a daily
charge at the annual rate of 1.25% of average daily net assets of the Account
plus an annual charge which is currently $30.00. Mortality and expense risk
charges are not charged against the Fixed Account. (See "Mortality and
Expense Risk Charge," page 19 and "Annual Policy Fee," page 19.)
10.WHAT HAPPENS IF THE ANNUITANT DIES BEFORE THE ANNUITY DATE?
In the event that the annuitant dies prior to the annuity date, upon due
proof of death, the death benefit becomes payable. The death benefit may be
paid as either a lump sum cash benefit or under an annuity income option.
(See "Death of Annuitant Prior to Annuity Date," page 22.)
11.WHAT HAPPENS IF THE OWNER DIES BEFORE THE ANNUITY DATE?
In the event that the owner (or joint owner) dies prior to the annuity date,
his or her entire interest in the Policy will be distributed within five
years after the date of death. If the person to whom ownership passes, the
owner's designated beneficiary, chooses to take his or her interest as an
annuity, to be paid to himself or herself or for his or her benefit, then
under certain circumstances, that portion is treated as distributed on the
date distributions begin. Special rules apply where the owner's designated
beneficiary is the surviving spouse of the deceased owner. (These provisions
are described in greater detail in the Statement of Additional Information
see "IRS Required Distributions," page 7.)
12.CAN THE POLICY BE RETURNED AFTER IT IS DELIVERED?
The owner is granted a period of time to examine a Policy and return it for a
refund. The owner may cancel the Policy within the period specified on the
policy form, which is within 10 days after the owner receives the Policy,
unless the particular state in which the Policy is sold requires a longer
period. The refund will be the greater of the premiums paid or the premiums
paid adjusted by investment gains and losses. (See "Refund Privilege," page
18.)
13.WHO DO I CALL IF I HAVE QUESTIONS ABOUT MY ANNUITY?
Any questions about procedures or your Policy will be answered by us at One
Ameritas Way, 5900 "O" Street, P.O. Box 81889, Lincoln, Nebraska, 68501, or
by calling 1-800-745-1112. All inquiries should include the policy number and
the owner's name. In addition, confirmations will be mailed to the owner for
any transactions that take place, and an annual report will be sent once each
policy year showing the accumulation value in each Subaccount, and any
charges, transfers or withdrawals during the year.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS
The financial statements for AVLIC and the Account (as well as the auditors'report thereon) are in the statement of additional
information.
ACCUMULATION UNIT VALUES
- ------------------------
Following are the accumulation unit values for the subaccounts as of October 23, 1987, when the account commenced business; December
31, 1987, 1988, 1989, 1990, 1991, 1992, 1993 and 1994. The number of outstanding accumulation units in each subaccount as of
December 31, 1987, 1988, 1989, 1990, 1991, 1992, 1993 and 1994 are also shown:
ACCUMULATION UNIT
AS OF: 10-23-87 12-31-87 12-31-88 12-31-89 12-31-90 12-31-91 12-31-92 12-31-93 12-31-94
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market - - 1.020 1.099 1.173 1.000 1.262 1.286 1.325
High Income 9.500 9.742 10.750 10.167 9.797 9.550 15.910 18.938 18.414
Equity-Income - - 11.315 13.118 10.971 11.850 16.460 19.217 10.322
Growth 9.840 10.364 11.853 15.380 13.399 18.510 20.795 24.517 24.207
Overseas 9.240 9.457 10.099 12.597 12.216 13.100 11.507 15.601 15.674
Asset Manager* - - - - 10.523 12.550 14.076 16.830 15.609
Inv. Grade Bond** - - - - - 11.080 12.074 13.232 12.577
Index 500***** - - - - - - - - -
Contrafund***** - - - - - - - - -
Asset Manager:
Growth***** - - - - - - - - -
Income and
Growth*** - - - - - - 13.831 15.073 13.654
MidCap**** - - - - - - - 13.563 13.190
Small Cap*** - - - - - - 27.043 30.286 28.603
Balanced**** - - - - - - - 11.499 10.872
Alger American
Growth*** - - - - - - 20.017 24.209 24.259
Leveraged
AllCap***** - - - - - - - - -
MFS Emerging
Growth***** - - - - - - - - -
MFS Utilities***** - - - - - - - - -
MFS World
Governments***** - - - - - - - - -
Dreyfus Index*** - - - - - - 15.757 17.015 16.953
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF ACCUMULATION UNITS
OUTSTANDING
AS OF: 12-31-87 12-31-88 12-31-89 12-31-90 12-31-91 12-31-92 12-31-93 12-31-94
-------- ----------- ----------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market - 157,416.729 208,280.871 11,911,544.496 15,150,911.120 23,516,860.733 24,394,597.763 48,755,227.272
High Income 155.907 15,646.599 52,878.092 75,439.485 429,942.219 404,678.129 780,485.192 1,076,076.694
Equity-Income - 15,337.513 79,609.928 536,146.361 873,089.237 1,090,217.227 1,692,367.958 2,332,200.380
Growth 1,251.918 3,944.769 4,476.273 344,241.440 832,635.695 1,058,120.400 1,930,905.248 2,448,226.330
Overseas 109.209 2,271.707 72,009.171 214,204.062 261,859.646 452,257.534 1,680,013.325 2,050,429.513
Asset Manager* - - - 187,701.160 1,037,390.785 2,461,567.482 5,540,619.649 7,758,786.284
Inv. Grade Bond** - - - - 151,044.569 799,187.033 1,220,611.462 1,185,301.883
Index 500***** - - - - - - - -
Contrafund***** - - - - - - - -
Asset Manager:
Growth***** - - - - - - - -
Income and
Growth*** - - - - - 33,407.531 98,620.982 172,001.664
MidCap**** - - - - - - 91,504.219 268,394.026
Small Cap*** - - - - - 222,600.706 539,880.302 671,144.393
Balanced**** - - - - - - 34,686.690 94,786.818
Alger American
Growth*** - - - - - 61,910.658 166,606.094 641,126.689
Leveraged
AllCap***** - - - - - - - -
MFS Emerging
Growth***** - - - - - - - -
MFS Utilities***** - - - - - - - -
MFS World
Governments***** - - - - - - - -
Dreyfus Index*** - - - - - 50,585.228 176,454.414 229,756.110
* No activity prior to December 31, 1989.
** No activity prior to December 31, 1990.
*** No activity prior to December 31, 1991.
**** No activity prior to December 31, 1992.
*****No activity prior to December 31, 1994.
</TABLE>
<PAGE>
AVLIC AND THE ACCOUNT
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 46 states and the District of Columbia. AVLIC's financial
statements may be found at page 11 of the Statement of Additional Information.
AVLIC is a wholly-owned subsidiary of Ameritas Life Insurance Corp. ("Ameritas
Life"). Ameritas Life is a mutual life insurance company domiciled in Nebraska
since 1887. AVLIC, as a wholly-owned subsidiary of Ameritas Life, has a rating
of A+ (Superior) from A.M. Best Company, a firm that analyzes insurance
carriers. Ameritas Life enjoys a long standing A+ (Superior) rating from A.M.
Best. Ameritas Life also has been rated A ("Excellent") by Weiss Research, Inc.,
and has an AA ("Excellent") rating from Standard & Poor's for claims paying
ability. The Home Offices of both AVLIC and Ameritas Life are at One Ameritas
Way, 5900 "O" Street, P.O. Box 81889, Lincoln, Nebraska 68501. Ameritas Life and
subsidiaries had total assets at December 31, 1994 of over $2.0 billion.
Ameritas Life guarantees 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 who has a financial rating equal to or greater than
Ameritas Life and who agrees to assume the guarantee.
AVLIC voted to approve a Merger Agreement with Ameritas Life ("Agreement") at
its December 5, 1994, board meeting. The merger was scheduled to occur on May 1,
1995, or such later date as the required regulatory approvals could be obtained.
On March 31, 1995, the company determined to postpone the merger to evaluate its
options in light of the present regulatory climate. The effective date of the
merger is currently postponed until May 1, 1996.
AVLIC may publish in advertisements and reports to Policyowners, the ratings and
other information assigned it, by one or more independent rating services. The
purpose of the ratings is to reflect the financial strength and/or claims-paying
ability of AVLIC. The ratings do not relate to the performance of the separate
account. Further AVLIC may publish charts and other information concerning
dollar cost averaging, tax-deference and other investment methods.
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-2
AVLIC established the Ameritas Variable Life Insurance Company Separate Account
VA-2 (the "Account") on May 28, 1987, under Nebraska law as a separate
investment account. This Account holds assets that are segregated from all of
AVLIC's other assets and are not chargeable with liabilities arising out of any
other business AVLIC may conduct. Income, gains, or losses of the Account are
credited without regard to other income, gains, or losses of AVLIC. Although the
assets maintained in the Account 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 at all times maintain assets in the Account
with a total market value at least equal to the reserve and other contract
liabilities for the Account. The Account will at all times contain assets equal
to or greater than account values invested in the separate account.
Nevertheless, to the extent assets in the Account exceed AVLIC's liabilities in
the Account, AVLIC may, from time to time, withdraw the assets available to
cover general account obligations.
The Account 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 the
Account. For state law purposes, the Account is treated as a Division of AVLIC.
THE FUNDS
There are currently twenty Subaccounts within the Account which support the
Policies, and each invests only in a corresponding portfolio of the Fidelity
Fund, the Fidelity Fund II, the Alger American Fund, the MFS Fund, and/or the
Dreyfus Index Fund, (collectively the "Funds").
The Funds are registered with the SEC under the 1940 Act as open-end diversified
management investment companies. The registrations do not involve SEC
supervision of the management or investment practices or policies of the Funds.
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.
<PAGE>
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 about the Funds, including a description
of risks, charges and expenses is in the prospectuses for the Funds, which must
accompany or precede this Prospectus. 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 reserve 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. The Alger American Leveraged AllCap
Portfolio may employ "leverage" by borrowing 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. The
High Income, Equity-Income, Asset Manager: Growth and Asset Manager Portfolios
may invest in non-investment grade, high risk debt securities. These
Prospectuses should be read carefully together with this Prospectus and
retained.
Each owner 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.
Since the Funds are designed to provide an investment vehicle 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 the Account and one or more of the separate accounts of
another participating insurance company. In the event of a material
irreconcilable conflict, the affected insurance companies agree to take any
necessary steps, including removing its 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
FIDELITY FUNDS
- --------------
PORTFOLIO INVESTMENT POLICY OBJECTIVES
- ------------------ --------------------------- -------------------------
Money Market1 High-quality U.S. dollar Seeks to obtain as high
denominated money market a level of current income
instruments of domestic and as is consistent with
foreign Issuers.(Commercial preserving capital and
Paper, Certificate of providing liquidity.
Deposit).
High Income1 At least 65% in income Seeks to obtain a high
producing debt securities level of current income
and preferred stocks, up to by investing in high
20% in common stocks and income producing lower-
other equity securities, rated debt securities
and up to 15% in securities (sometimes called "junk
subject to restriction on bonds"), preferred stocks
resale. including convertible
securities and restricted
securities.
Equity-Income1 At least 65% in income Seeks reasonable income
producing common or prefer- by investing primarily in
red stock. The remainder income producing equity
will normally be invested securities. The goal is
in convertible and non- to achieve a yield in
convertible debt obligations. excess of the composite
yield of the Standard &
Poor's 500 Composite
Stock Price Index.
Growth1 Portfolio purchases normally Seeks to achieve capital
will be common stocks of appreciation.
both well-known established
companies and smaller, less-
known companies, although
the investments are not
restricted to any one type
of security. Dividend
income will only be consid-
ered if it might have an
effect on stock values.
Overseas1 At least 65% invested in Seeks long-term growth
securities of issuers of capital primarily
outside of North America. through investments in
Most issuers will be foreign securities.
located in developed coun-
tries in the Americas, the
Far East and Pacific Basin,
Scandinavia and Western
Europe. While the primary
purchases will be common
stocks, all types of
securities may be purchased.
<PAGE>
Asset Manager2 Equities (Growth, High Div- Seeks to obtain high
idends, Utility), bonds total return with
(Government, Agency, Mort- reduced risk over the
gage backed, Convertible long term by allocating
and Zero Coupon) and money its assets among domes-
market instruments. tic and foreign stocks,
bonds, and short-term
fixed-income securities.
Investment
Grade Bond2 A portfolio of investment Seeks as high a level of
grade fixed-income secu- current income as is con-
rities with an average mat- sistent with the preser-
urity of ten years or less. vation of capital.
Index 500 2 At least 80% (65% if fund Seeks investment results
assets are below $20 that correspond to the
million) in equity secu- total return of common
rities of companies that stocks publicly traded in
compose the Standard & the United States, as
Poor's 500. Also purchases respresented by the
short-term debt securities Standard & Poor's 500.
for cash management pur-
poses and uses various in-
vestment techniques, such
as futures contracts, to
adjust its exposure to the
Standard & Poor's 500.
Contrafund2 Portfolio purchases will Seeks long-term capital
normally be common stock or appreciation.
securities convertible into
common stock of companies
believed to be undervalued
due to an overly pessimis-
tic appraisal by the public.
Asset Manager:
Growth2 Focuses on stocks for high Seeks to maximize total
potential returns but also return by allocating its
purchases bonds and short- assets among stocks,
term instruments. bonds, short-term instru-
ments and other invest-
ments.
ALGER AMERICAN
- --------------
FUNDS
- -----
PORTFOLIO INVESTMENT POLICY OBJECTIVES
- ------------------ --------------------------- -------------------------
Income and The Portfolio attempts to Seeks to provide a high
Growth invest 100% of its assets, level of dividend income
except during temporary to the extent consistent
defensive periods, and it with prudent investment
is a fundamental policy of management. Capital ap-
the Portfolio to invest at preciation is a secondary
least 65% of its assets in objective of the Port-
dividend paying equity folio.
securities that are listed
on a national exchange or
in securities convertible
into dividend paying equity
securities.
<PAGE>
Balanced The Portfolio will invest Seeks current income and
its assets in common stocks long-term capital apprec-
and investment grade pre- iation by investing in
ferred stock and debt sec- common stocks and fixed
urities as well as sec- income securities, with
urities convertible into emphasis on income pro-
common stocks. Except dur- ducing securities which
ing defensive periods, it appear to have some
is anticipated that 25% of potential for capital
the portfolio assets will appreciation.
be invested in fixed income
senior securities.
Small-Cap The Portfolio will invest Seeks long-term capital
its assets in equity appreciation.
securities of companies
whose securities are traded
on domestic stock exchanges
or in the over-the-counter
market. These companies may
still be in the develop-
mental stage. The Portfolio
will invest at least 65% of
its assets in the secur-
ities of companies who
have total market capital-
ization of less than $1
billion. The Portfolio may
also purchase restricted
securities, lend its sec-
urities or sell securities
short. Investing in small,
newer issues generally
involves greater risk than
investing in larger, more
established issues. Accord-
ingly, an investment in the
Portfolio may not be appro-
priate for all investors.
<PAGE>
MidCap The Portfolio will invest Seeks long-term capital
Growth its assets in equity sec- appreciation.
urities of companies whose
securities are traded on
domestic exchanges or in
the over-the-counter market.
These companies may still
be in the developmental
stage, they may also be
older companies that appear
to be entering a new stage
of growth. The Portfolio
will invest at least 85% of
its net assets in equity
securities and at least 65%
of its total assets in
securities of companies who
have total market capital-
ization of between $750
million and $3.5 billion.
Growth The Portfolio will invest Seeks long-term capital
its assets in companies appreciation.
whose securities are traded
on domestic stock exchange
or in the over-the-counter
market. The Portfolio will
invest at least 85% of its
net assets in equity sec-
urities and at least 65%
of its total assets in the
securities of companies
that have a total market
capitalization of $1
billion or greater.
Leveraged Invests at least 85% of net Seeks long-term capital
All Cap assets in equity securities appreciation.
of companies of any size,
except during defensive
periods. May purchase put
and call options and sell
covered options to increase
gain and hedge. May enter
into futures contracts and
purchase and sell options
on these futures contracts.
May also borrow money
for purchase of additional
securities.
.
MFS FUNDS
- ---------
PORTFOLIO INVESTMENT POLICY OBJECTIVES
- ------------------ ---------------------------- -------------------------
Emerging Growth At least 80% normally will Seeks to provide long-
Series be invested in common term capital growth. Div-
stocks of small and medium idend and interest income
sized emerging growth com- is incidental.
panies. From 10% to 25% may
be invested in foreign
securities not including
ADR's.
Utilities Series At least 65%, but up to Seeks capital growth and
100%, normally will be in- current income (above
vested in equity and debt that available from a
securities of both domestic portfolio invested en-
and foreign companies in tirely in equity secur-
the utilities industry. ities).
Normally, not more than 35%
will be invested in equity
and debt securities of
issuers in other industries,
including foreign securi-
ties, emerging market sec-
urities and non-dollar den-
ominated securities.
World Governments At least 80% normally will Seeks capital preser-
Series be invested in debt secur- vation and growth with
ities. May invest up to moderate current income.
100% of assets in foreign
securities, including
emerging markets secur-
ities.
DREYFUS FUND
PORTFOLIO INVESTMENT POLICY OBJECTIVES
- ------------------ ---------------------------- -------------------------
Dreyfus The Fund attempts to dupli- Seeks to provide invest-
Index Fund cate the investment results ment results that cor-
of the Standard & Poor's 500 respond to the price and
Composite Stock Price Index yield performance of
(the "Index"). The Fund publicly traded common
attempts to be fully invest- stocks in the aggregate,
ed at all times and, in any as represented by the
event, at least 80% of the Standard & Poor's 500
Fund's net assets will be Composite Stock Index.
invested, in stocks that
comprise the Index.
1 Variable Insurance Products Fund Portfolio.
2 Variable Insurance Products Fund II Portfolio.
<PAGE>
Each portfolio pays the Manager a monthly fee for managing its investments and
business affairs. In addition, each portfolio's total operating expenses will
include fees for shareholder services and other expenses, such as custodial,
legal, accounting and other miscellaneous fees. (See "Fee Table" page 4). A
complete description of the expenses, fees and charges of the portfolios is
found in the Funds' prospectuses and Statements of Additional Information.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
AVLIC reserves the right, subject to applicable law, and if necessary, after
notice to and prior approval from the SEC and/or state insurance authorities, to
make additions to, deletions from, or substitutions for the shares that are held
in the Account or that the Account may purchase. The Account may, to the extent
permitted by law, purchase other securities for other Policies or permit a
conversion between Policies upon request by the owners.
AVLIC also reserves the right, in its sole discretion, to establish additional
Subaccounts of the Account, each of which would invest in shares corresponding
to a new portfolio of the Fund or in shares of another investment company having
a specified investment objective. AVLIC may, in its sole discretion, establish
new Subaccounts or eliminate one or more Subaccounts if marketing needs, tax
considerations or investment conditions warrant. Any new Subaccounts may be made
available to existing owners on a basis to be determined by AVLIC.
If any of these substitutions or changes are made, AVLIC may by appropriate
endorsement change the Policy to reflect the substitution or change. If AVLIC
deems it to be in the best interest of owners, and subject to any approvals that
may be required under applicable law, the Account may be operated 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. To the extent permitted by applicable law, AVLIC may also
transfer the assets of the Account associated with the Policies to another
separate account. In addition, AVLIC may, when permitted by law, restrict or
eliminate any voting rights of owners or other persons who have voting rights as
to the Account. The owner will be notified of any material change in the
investment policy of any portfolio in which the owner has an interest.
FIXED ACCOUNT
Owners may elect to allocate all or a portion of their premium payments to the
Fixed Account and they may also transfer monies from the Separate Account to the
Fixed Account or from the Fixed Account to the Separate Account.
Payments allocated to the Fixed Account and transfers from the Separate Account
to the Fixed Account are placed in the general account of AVLIC, which supports
insurance and annuity obligations. The general account includes all of AVLIC's
assets, except those assets segregated in the 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 and interest credited thereto, less any
deduction for charges and expenses, whereas the owner bears the investment risk
that the declared rate described below, may fall to a lower rate after the
expiration of a declared rate period. Because of exemptive 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 (the "1940 Act").
Accordingly, neither the general account nor any interest therein 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 Contract; however,
disclosures regarding the Fixed Account portion of the Contract 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 an effective annual rate of at
least 4.5%. AVLIC may, at its discretion, declare higher interest rate(s) for
amounts allocated or transferred to the general account. ("Declared Rate(s)").
Each month AVLIC will establish the declared rate for the monies transferred or
allocated to the Fixed Account that month. The owner will earn interest on the
amount transferred or allocated at the rate declared for a 12-month period
effective the month of transfer or allocation. After the end of the 12-month
period, the monies will earn interest at the rate established by AVLIC for each
month.
THE POLICY
The Policy is a variable annuity policy. The rights and benefits of the Policy
are described below and in the policy form; however, AVLIC reserves the right to
make any modification to conform the Policy to, or to give the owner the benefit
of, any federal or state statute or any rule or regulation thereunder.
<PAGE>
This Policy may be purchased on a non-tax qualified basis ("nonqualified
policy"). The Policy may also be purchased in connection with certain plans
qualifying for favorable federal income tax treatment ("qualified policy").
POLICY APPLICATION AND PREMIUM PAYMENT
Individuals wishing to purchase a Policy must complete an application and submit
it to AVLIC's Home Office (One Ameritas Way, 5900 "O" Street, P.O. Box 81889,
Lincoln, Nebraska 68501). The application must be submitted with an initial
premium payment of not less than $2,000 unless other provisions for payment of
the $2,000 premium are made. Acceptance is subject to AVLIC's underwriting
rules, and AVLIC reserves the right to reject an application for any reason.
After the policy is issued, an owner may make additional premium payments of
$500 or more. Smaller premium payments may be accepted on Bank-O-Matic or at
AVLIC's discretion. Also, AVLIC has the right not to accept total premiums
greater than $1,000,000, or a premium payment where the total premium payments
made under AVLIC annuity contracts having the same annuitant exceed $1,000,000.
If the application and initial premium payment can be accepted in the form
received, the initial premium payment will be applied to the purchase of a
Policy within two business days after receipt by AVLIC at its Home Office. In
those instances where other provisions for the payment of the initial premium
are made, the initial premium will be applied after the application has been
accepted and within two business days after AVLIC has received the initial
premium in its home office in Federal Funds. The date that the initial premium
is applied to the purchase of the Policy is the effective date of the Policy.
If an incomplete application is received, AVLIC will request the information
necessary to complete the application. Once the application is completed and the
initial premium received, the initial premium payment will be applied to the
purchase of a Policy within two business days. If after five business days after
its receipt with the initial premium the application remains incomplete, AVLIC
will return the applicant's premium payment unless it obtains the applicant's
permission to retain the premium payment pending completion of the application.
The policy date for the Policy will be the same day as the effective date for
the Policy, unless it falls on the 29th, 30th or 31st of a month, in which case
the policy date will be set at the 28th day of that month. The policy date is
used to determine policy anniversary dates and policy years.
ALLOCATION OF PREMIUM
In the application for a Policy, the owner allocates the premium to one or more
Subaccounts of the Account or to the Fixed Account. The minimum percentage that
may be allocated to any one Subaccount, or to the Fixed Account, is 10% of the
premium, and fractional percentages may not be used. The allocations must total
100%.
The initial premium is allocated on the effective date of the Policy to the
Money Market Subaccount. The initial premium, less any applicable premium taxes,
will be used to purchase accumulation units of the Money Market Subaccount at
the price next computed on the effective date.
Thirteen days after the effective date, the accumulation value of the Policy
will be allocated among the Subaccounts, or to the Fixed Account, as selected by
the owner in the application.
The value of amounts allocated to Subaccounts of the Account will vary with the
investment performance of these Subaccounts and the owner bears the entire
investment risk. This will affect the Policy's cash surrender value which on the
annuity date affects the level of annuity payments payable. Owners should
periodically review their allocation of values in light of market conditions and
overall financial planning requirements.
ACCUMULATION VALUE
The accumulation value of the policy is equal to the total premiums received,
reduced by any applicable premium taxes, as affected by charges, withdrawals,
and the investment experience of the designated Subaccounts and the interest
earned in the Fixed Account.
On the effective date, the accumulation value of the Policy is equal to the
initial premium received, reduced by any applicable premium taxes. Thereafter,
the accumulation value of the Policy is determined as of the close of trading on
the New York Stock Exchange on each valuation date by multiplying the number of
accumulation units of each Subaccount credited to the Policy by the current
value of an accumulation unit for each Subaccount and by adding the accumulation
value in the Fixed Account. The current value of an accumulation unit reflects
the increase or decrease in value due to investment results of the Subaccount
and certain charges, as described below. The number of accumulation units
credited to the Policy is decreased by any annual administrative fee and the
annual policy fee, any withdrawals, and any charges upon withdrawal and, upon
annuitization, any applicable premium taxes and charges.
The accumulation value is expected to change from valuation period to valuation
period, reflecting the net investment experience of the selected portfolios of
the Funds, interest earned in the Fixed Account, additional premium payments,
partial withdrawals as well as the deduction of any applicable charges under the
Policy.
<PAGE>
VALUE OF ACCUMULATION UNITS
The accumulation units of each Subaccount are valued separately. The value of an
accumulation unit may change each valuation period according to the net
investment performance of the shares purchased by each Subaccount and the daily
charge under the Policy for mortality and expense risks and, if applicable, any
federal and state income tax charges.
TRANSFERS
Accumulation value may be transferred among the Subaccounts 12 times each policy
year without charge. A transfer charge of $10.00 may be imposed each additional
time amounts are transferred between Subaccounts and will be deducted from the
amount transferred. The total amount transferred each time must be at least
$250, or the balance of the Subaccount, if less. Accumulation values may also be
transferred from the Subaccounts of the separate account to the Fixed Account
without limitation. Transfers of up to 100% of the accumulation value may be
made from the Fixed Account to the various Subaccounts during the 30 day period
following the yearly anniversary date of the policy. Transfers from the Fixed
Account are free and will not count as one of the 12 free transfers. The minimum
amount that may remain in a Subaccount or the Fixed Account after a transfer is
$100. AVLIC will effect transfers and determine all values in connection with
transfers on the later of the date designated in the request or at the end of
the valuation period during which the transfer request is received at the Home
Office.
The privilege to initiate transactions by telephone will be made available to
Policyowners automatically. 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 Policyowner to provide
the policy number at the time of giving transfer instructions; AVLIC's tape
recording of all telephone transfer instructions; and the provision, by AVLIC,
of written confirmation of telephone transactions.
Transfers may be subject to additional limitations at the fund level.
OWNER INQUIRIES
Inquiries should be addressed to Ameritas Variable Life Insurance Company, One
Ameritas Way, 5900 "O" Street, P.O. Box 81889, Lincoln, Nebraska 68501 or made
by calling 1-800-745-1112. All inquiries should include the policy number and
the owner's name.
REFUND PRIVILEGE
The owner is given a period of time to examine a Policy and return it for a
refund. The owner may cancel the Policy within the period of time stated on the
policy form, which is 10 days after receipt of the Policy, unless state law
requires a longer period of time. The refund is equal to the greater of the
premiums paid or the premiums adjusted by investment gains and losses. To cancel
the Policy, the owner should mail or deliver it to AVLIC at the Home Office. A
refund, if the premium was paid by check, may be delayed until the check has
cleared the owner's bank.
POLICY LOANS
After the first policy anniversary the policyowner of a policy purchased in a
403(b) qualified plan may borrow up to the lesser of: $50,000 (including all
loans outstanding during the preceding year); or 50% of the cash surrender value
of the policy; or 50% of the present value of the non-forfeitable accrued
benefits of the owner under the policy. One loan may be taken each year and the
minimum initial loan amount is $2,500. The loans usually are funded within 7
days of the receipt of a written request.
All loans must be repaid within five years with substantially level amortized
payments made at least quarterly. Repayment for loans to purchase a dwelling to
be used, within a reasonable time, as a residence may be made over a longer
period. If any repayment due under the loan is unpaid for ninety (90) days, the
balance will become due without notice. The loan will be repaid by deducting the
balance and any applicable charges and taxes from the accumulation value.
The current loan interest rate will be 7.5% and is guaranteed not to exceed 8%
per annum. When a loan is made, accumulation values equal to the amount of the
loan will be transferred from the Account and/or Fixed Account to
<PAGE>
the General Account of AVLIC as security for the indebtedness. The policyowner
is currently earning 4.5% and is guaranteed to earn 4.5% on the amount securing
the indebtedness. The accumulation values transferred out of the Account will be
allocated among the subaccounts or Fixed Account as instructed by the
policyowner when the loan is requested. If no instructions are given, the
amounts will be withdrawn in proportion to the various accumulation values in
the subaccounts or the Fixed Account. Upon repayment of the loan, the transfers
back into the Account or Fixed Account will be allocated in accordance with the
allocation instructions in effect when the payments are made.
The loans to policyowners of a policy purchased in 403(b) qualified plans will
be considered distributions from the policy and subject to taxation unless the
requirements of IRS Code Section 72(p), including repayment, are met. In
addition, policies purchased in plans subject to ERISA may be subject to ERISA
requirements. AVLIC may refuse to make a loan which violates these requirements.
AVLIC may be required to report the loan as income to the policyowner if the
loan violates the IRS requirements or is not repaid according to the IRS
requirements and the loan terms. This provision is not available in all states.
CHARGES AND DEDUCTIONS
Charges will be deducted periodically from the accumulation value of the Policy
to compensate AVLIC for, among other things: (1) issuing and administering the
Policy; (2) assuming certain risks in connection with the Policy; and (3)
incurring expenses in distributing the Policy. The nature and amount of these
charges are described more fully below.
No deductions are made from the premium payments before they are allocated to
the Account or Fixed Account, unless taxes are imposed by state law upon the
receipt of a premium payment. In that case AVLIC will deduct the premium tax due
when the premiums are received. Other charges, such as transfer and contingent
deferred sales charges, may be levied upon, respectively transfers or
withdrawals or, in some cases, upon annuitization, as described more fully
below.
ADMINISTRATIVE CHARGES
ANNUAL POLICY FEE. An annual policy fee of up to $50.00 (currently $30.00) is
deducted from the accumulation value on the last valuation date of each policy
year. This charge, reimburses AVLIC for the administrative costs of maintaining
the Policy on AVLIC's system.
ANNUAL ADMINISTRATION FEE. A charge of .20% of the accumulation value is
calculated and deducted from the accumulation value on the last valuation date
of each policy year. This charge, which is guaranteed not to be increased, is
designed to reimburse AVLIC for administrative expenses incurred in connection
with issuing the Policies and ongoing administrative expenses incurred in
connection with servicing and maintaining the Policies. These expenses include
the cost of processing the application and premium payments, establishing policy
records, processing and servicing owner transactions and policy changes,
recordkeeping, preparing and mailing reports, processing death benefit claims
and overhead.
AVLIC does not expect to make a profit on the charges for the annual policy and
annual administrative fees.
MORTALITY AND EXPENSE RISK CHARGE
AVLIC imposes a charge to compensate it for bearing certain mortality and
expense risks under the Policies. For assuming these risks, AVLIC makes a daily
charge equal to an annual rate of 1.25% of the value of the average daily net
assets of the Account. Of that amount, approximately .55% is charged to cover
the mortality risks and .70% is charged to cover the expense risks assumed under
the Policies. This charge is subtracted when determining the daily accumulation
unit value. AVLIC guarantees that this charge will never increase. If this
charge is insufficient to cover assumed risks, the loss will fall on AVLIC.
Conversely, if the charge proves more than sufficient, any excess will be added
to AVLIC's surplus. No mortality and risk expense charge is imposed on the Fixed
Account.
The mortality risk borne by AVLIC under the Policies, assuming the selection of
one of the forms of life annuities, is to make monthly annuity payments
(determined in accordance with the annuity tables and other provisions
<PAGE>
contained in the Policies) regardless of how long all annuitants may live. This
undertaking assures that neither an annuitant's own longevity, nor an
improvement in life expectancy greater than expected, will have any adverse
effect on the monthly annuity payments the annuitant will receive under the
Policy. It therefore relieves the annuitant from the risk that he will outlive
the funds accumulated for retirement. In addition, AVLIC bears a mortality risk
under the Policies, regardless of the annuity option selected, in that it
guarantees the purchase rates for the annuity income options available under the
Policy and it guarantees the death benefit of the Policy prior to the annuity
date to be the greater of the accumulation value or the premium payments made.
These risks are AVLIC's. The expense risk undertaken by AVLIC, with respect to
the Account, is that the deductions for administrative costs under the Policies
may be insufficient to cover the actual future costs incurred by AVLIC for
providing policy administration services.
If the contingent deferred sales charge on withdrawals is insufficient to cover
the distribution expenses, the deficiency will be met from AVLIC's general
account funds, including the amount derived from the charge levied for mortality
and expense risks.
CONTINGENT DEFERRED SALES CHARGE
Since no deduction for a sales charge is made from the premium payment, unless
waived, a contingent deferred sales charge is imposed on certain partial and
full withdrawals and upon certain annuitizations to cover certain expenses
relating to the distribution of the Policy, including commissions to registered
representatives and other promotional expenses. No charge is assessed for the
withdrawal of that portion of the policy accumulation value that exceeds the
total premiums deposited. The contingent deferred sales charge is assessed only
on premiums paid based upon the number of years since the policy year in which
the premiums withdrawn, were paid, on a first paid, first withdrawn basis. The
contingent deferred sales charge is a maximum of 6% of the premium payment
withdrawn and grades to 0% after the seventh policy year after the withdrawn
premiums were deposited.
Those annuitants whose policies have been in force for at least one year and
meet certain conditions may make withdrawals without surrender charges (See
"Critical Needs Withdrawals," page 21).
Where a partial or full withdrawal is taken or amounts are applied under an
annuity option, which are subject to a contingent deferred sales charge, the
contingent deferred sales charge will be expressed as a percentage of the
premium payments withdrawn or annuitized as follows:
<TABLE>
<CAPTION>
% Year % Year
<S> <C> <C> <C>
6................1 4.................5
6................2 3.................6
6................3 2.................7
5................4 0.................8+
</TABLE>
In the case of a partial withdrawal or annuitization, the contingent deferred
sales charge will be deducted from the amounts remaining under the Policy. The
charge will be allocated pro rata among the Subaccounts (or the Fixed Account)
based on the accumulation value in each prior to the withdrawal or annuitization
unless an owner requests a partial withdrawal or annuitization from particular
Subaccounts or the Fixed Account in which case the charge will be allocated
among those Subaccounts or the Fixed Account in the same manner as the
withdrawal. A contingent deferred sales charge will not be assessed on premium
payments withdrawn at least two years after deposit, if withdrawn and applied
under annuity income option c or d. (See "Annuity Income Options," page 23.)
Full or partial withdrawals from the Fixed Account may be deferred for up to 6
months from the date of written request.
TAXES
AVLIC will, where such taxes are imposed by state law of the Policyowner's
residence as made known to AVLIC upon the receipt of a premium payment, deduct
premium taxes. If instead, premium taxes are imposed upon annuitization by said
state, AVLIC will deduct applicable premium taxes at that time. Applicable
premium tax rates depend upon such factors as the owner's current state of
residency, and the insurance laws and the status of AVLIC in states where
premium taxes are incurred. Currently, premium taxes range from 0% to 3.5% of
the premium paid. Applicable premium tax rates are subject to change by
legislation, administrative interpretations or judicial acts. The owner will be
notified of any applicable premium taxes. Owners are responsible for informing
AVLIC in writing of changes of residence.
<PAGE>
Under present laws, AVLIC will incur state or local taxes (in addition to the
premium taxes described above) in several states. At present, these taxes are
not significant; thus, AVLIC is not currently making a charge. If they increase,
however, AVLIC may make charges for such taxes. Such charges would be deducted
from the accumulation unit value.
AVLIC does not expect to incur any federal income tax liability attributable to
investment income or capital gains retained as part of the reserves under the
Policies. (See "Federal Tax Matters," page 24.) Based upon these expectations,
no charge is being made currently to the Account for corporate federal income
taxes which may be attributable to the Account.
AVLIC will periodically review the question of a charge to the Account for
corporate federal income taxes related to the Account. Such a charge may be made
in future years for any federal income taxes incurred by AVLIC. This might
become necessary if the tax treatment of AVLIC is ultimately determined to be
other than what AVLIC currently believes it to be, if there are changes made in
the federal income tax treatment of annuities at the corporate level, or if
there is a change in AVLIC's tax status. In the event that AVLIC should incur
federal income taxes attributable to investment income or capital gains retained
as part of the reserves under the Policy, the accumulation unit value would be
correspondingly adjusted by any provision or charge for such taxes.
FUND INVESTMENT ADVISORY FEES AND EXPENSES
Because the Account purchases shares of the Funds, the net assets of the Account
will reflect the value of Funds' shares and, therefore, the investment advisory
fees and other expenses incurred by the Funds. A complete description of the
expenses and deductions from the Funds' portfolios is found in the Funds'
prospectuses and Statements Of Additional Information.
AVLIC may receive administrative fees from the investment advisers of certain
funds.
DISTRIBUTIONS UNDER THE POLICY
FULL AND PARTIAL WITHDRAWALS
The owner may make up to four partial withdrawals each policy year or a full
withdrawal of the Policy to receive part or all of the accumulation value (less
any applicable charges), at any time before the annuity date and while the
annuitant is living, by sending a written request to AVLIC. The partial
withdrawals may also be established on a predetermined, systematic basis of no
more than one per month. The withdrawal right may be restricted by Section
403(b)(11) of the IRS Code and, should the withdrawal be an eligible rollover
distribution from a qualified plan or an annuity in a 403(b) plan, it will be
subject to a mandatory 20% withholding under the IRS Code unless the
distribution is paid directly by AVLIC into an eligible retirement plan in a
direct rollover. (See "Federal Tax Matters," page 24.) No partial or full
withdrawals may be made after the annuity date except as permitted under the
particular annuity option. The amount available for full or partial withdrawal
("cash surrender value") is the accumulation value at the end of the valuation
period during which the written request for withdrawal is received, less any
contingent deferred sales charge, any applicable premium taxes, and in the case
of a full withdrawal, less a pro rata amount of the annual policy fee that would
be due on the last valuation date of the policy year. The cash surrender value
may be paid in a lump sum to the owner, or, if elected, all or any part may be
paid out under an annuity income option. (See "Annuity Income Options," page
23.)
CRITICAL NEEDS WITHDRAWALS. Annuitants whose policies have been in force for at
least one year may, under certain conditions, make withdrawals without surrender
charges. These conditions include: the annuitant must be 65 or younger when the
policy was issued; the policy accumulation value must exceed $5,000; the
annuitant must provide a medical doctor's verification of diagnosis of terminal
illness with less than 12 months to live; or verification of 90 consecutive days
of confinement in a medical facility for an approved medical reason; and no
additional premium payments are made during the waiver period. The waiver of
withdrawal charges during confinement will continue for 90 days after release.
This waiver of withdrawal charges is not available in all states.
In the absence of specific direction from the owner, amounts will be withdrawn
from the Subaccounts and the Fixed Account on a pro rata basis. Any partial
withdrawal that would reduce the cash surrender value to less than $100 will be
considered a request for full withdrawal. Any partial annuitization will be
allocated first to earnings and then to principal.
All withdrawals of amounts held in the Account will be paid within seven days of
receipt of written request, subject to postponement in certain circumstances.
(See "Deferment of Payment," page 23.) Payments under the Policy of any amounts
derived from a premium paid by check may be delayed until such time as the check
has cleared the
<PAGE>
payor's bank. If, at the time the owner makes a partial or full withdrawal
request, he or she has not provided AVLIC with a written election not to have
federal income taxes withheld, AVLIC must by law withhold such taxes from the
taxable portion of any full or partial withdrawal and remit that amount to the
federal government. At the owner's request, AVLIC will provide a form to request
a withdrawal and to notify AVLIC of the owner's election whether to have federal
income taxes withheld. Moreover, the Internal Revenue Code provides that a 10%
penalty tax may be imposed on certain early withdrawals. (See "Federal Tax
Matters - Taxation of Annuities in General," page 25.)
Since the owner assumes the investment risk with respect to amounts held in the
Account and because certain withdrawals are subject to a contingent deferred
sales charge, the total amount paid upon withdrawals under the Policy (taking
into account any prior withdrawals) may be more or less than the premium
payments made.
ANNUITY DATE
The owner may specify an annuity date by written request, which can be no later
than the first day of the month nearest annuitant's 95th birthday (90th birthday
in Oregon) without AVLIC's prior approval. The 29th, 30th or 31st day of any
month may not be selected as the annuity date. If no annuity date is specified,
the annuity date will be the later of the fifth policy anniversary date (Seventh
policy anniversary date in Oregon) or the policy anniversary nearest the
annuitant's 85th birthday. The annuity date is the date that annuity payments
are scheduled to commence under the policy, unless the policy has been
surrendered or an amount has been paid as proceeds to the designated beneficiary
prior to that date. In selecting an annuity date, the owner may wish to consider
the applicability of a contingent deferred sales charge, which is imposed upon
an annuitization prior to the third policy year where a life annuity is selected
and prior to the seventh policy year if any other annuity option is selected.
The owner may advance or defer the annuity date; however, the annuity date may
not be advanced to a date prior to 30 days after the date of a written request,
or, without AVLIC's prior approval, deferred to a date beyond the first policy
anniversary date nearest the annuitant's 95th birthday (90th birthday in
Oregon). An annuity date may only be changed by written request during the
annuitant's lifetime. Request must be made at least 30 days before the then
scheduled annuity date. The annuity date and annuity income options available
for qualified contracts may also be controlled by endorsements, the plan or
applicable law.
DEATH OF ANNUITANT PRIOR TO ANNUITY DATE
If the annuitant dies prior to the annuity date, an amount will be paid as
proceeds to the beneficiary. Upon receipt of due proof of death of the
annuitant, the death benefit becomes payable. The death benefit paid will equal
the greater of the accumulation value or total premiums paid less withdrawals,
on the date due proof of death is received by AVLIC at its Home Office. The
death benefit is payable as a lump sum cash benefit or under one of the annuity
income options. The owner may elect an annuity income option for the
beneficiary, or if no such election was made by the owner and a cash benefit has
not been paid, the beneficiary may make this election after the annuitant's
death. Since "due proof of death" includes a "Claimant's Statement," which
specifies how the beneficiary wishes to receive the benefit (unless the owner
previously selected an option), the amount of the death benefit will continue to
reflect the investment performance of the Account until that information is
supplied to AVLIC. In order to take advantage of the favorable tax treatment
accorded to receiving the death benefit as an annuity, the beneficiary must
elect to receive the benefits under an annuity option within 60 days "after the
day on which such lump sum became payable," as defined in the Internal Revenue
Code. The death benefit will be paid to the beneficiary within seven days of
when it becomes payable.
ELECTION OF ANNUITY INCOME OPTIONS
The amounts of any annuity payments payable will be set on the annuity date
based on the net cash surrender value on that date that is applied under an
annuity income option. The net cash surrender value is equal to the cash
surrender value less any premium taxes, if applicable. Thereafter, the monthly
annuity payment will not change, except in the event option (ai), Interest
Payment, is elected in which case the payment will vary based on the rate of
interest determined by AVLIC. All or part of the net cash surrender value may be
placed under one or more annuity income options. If annuity payments are to be
paid under more than one option, AVLIC must be told what part of the net cash
surrender value is to be paid under each option.
The annuity income options are shown below. Election of an annuity income option
must be made by written request to AVLIC at least thirty (30) days in advance of
the annuity date. If no election is made, payments will be made beginning on the
annuity date as an annuity under option c, as shown below. Subject to AVLIC's
approval, the
<PAGE>
owner (or after the annuitant's death, the beneficiary) may select any other
annuity income option AVLIC then offers. Annuity income options are not
available to: (1) an assignee; or (2) any other than a natural person except
with AVLIC's consent. If an annuity option selected does not generate monthly
payments of at least $20, AVLIC reserves the right to pay the net cash surrender
value as a lump sum payment.
If an annuity income option is chosen which depends on the continuation of life
of the annuitant or of a joint annuitant, proof of birth date may be required
before annuity payments begin. For annuity income options involving life income,
the actual age of the annuitant or joint annuitant will affect the amount of
each payment. Since payments to older annuitants are expected to be fewer in
number, the amount of each annuity payment shall be greater. For annuity income
options that do not involve life income, the length of the payment period will
affect the amount of each payment, with the shorter the period, the greater the
amount of each annuity payment.
ANNUITY INCOME OPTIONS
(ai) INTEREST PAYMENT. 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.
(aii) Designated Amount Annuity. Monthly annuity payments will be for a fixed
amount. Payments continue until the amount AVLIC holds runs out.
(b) Designated Period Annuity. Monthly annuity payments are paid for a period
certain as the owner elects up to 20 years.
(c) Life Annuity. Monthly annuity payments are paid for the life of an
annuitant, ceasing with the last annuity payment due prior to his or
her death. Variations provide for guaranteed payments for a period of
time.
(d) Joint and Last Survivor Annuity. Monthly annuity payments are paid based
on the lives of the two annuitants and thereafter for the life of the
survivor, ceasing with the last annuity payment due prior to the
survivor's death.
The rate of interest payable under options ai, aii or b will be guaranteed at 3%
compounded yearly. Payments under options c and d will be based on the 1983
Table "a" Annuity Table at 3 1/2% interest. AVLIC may, at any time of election
of an annuity income option, offer more favorable rates in lieu of the
guaranteed rates specified in the Annuity Tables. These rates may be based on
Annuity Tables which distinguish between males and females.
Under current administrative practice, AVLIC allows the beneficiary to transfer
amounts applied under options ai, aii, and b to either option c or d after the
annuity date. However, there is no guarantee that AVLIC will continue this
practice, which practice can be changed at any time at AVLIC's discretion.
DEFERMENT OF PAYMENT
Payment of any cash withdrawal or lump sum death benefit due from the Account
will occur within seven days from the date the amount becomes payable, except
that AVLIC may be permitted to defer such payment if:
a) the New York Stock Exchange is closed other than customary weekend and
holiday closing or trading on the New York Stock Exchange is restricted as
determined by the SEC; or
b) the SEC by order permits the postponement for the protection of owners; or
c) 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 the net assets of the
Account; or
d) surrenders or partial withdrawals from the Fixed Account may be deferred
for up to 6 months from the date of written request.
GENERAL PROVISIONS
CONTROL OF POLICY
The 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 owner, if living; otherwise to
any successor-owner or owners, if living; otherwise to the estate of the last
owner to die.
<PAGE>
BENEFICIARY
The owner may name both primary and contingent beneficiaries. The
beneficiary(ies) and their designated class are specified in the application.
Payments will be shared equally among beneficiaries of the same class unless
otherwise stated. If a beneficiary dies before the annuitant, payments will be
made to any surviving beneficiaries of the same class; otherwise to any
beneficiary(ies) of the next class; otherwise to the owner; otherwise to the
estate of the owner.
CHANGE OF BENEFICIARY
The owner may change the beneficiary by written request on a Change of
Beneficiary form at any time during the annuitant's lifetime unless otherwise
provided in the previous designation of beneficiary. AVLIC, at its option, may
require that the Policy be returned to the Home Office for endorsement of any
change, or that other forms be completed. 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. No limit is placed
on the number of changes that may be made.
CONTESTABILITY
AVLIC cannot contest the validity of this Policy after the policy date, subject
to the "Misstatement of Age or Sex" provision. However, if the annuitant commits
suicide within two years of the policy date, the death benefit under the Policy
will be limited to the Cash Surrender Value of the policy.
MISSTATEMENT OF AGE OR SEX
AVLIC may require proof of age and sex before making annuity payments. If the
age or sex of the annuitant has been misstated, we will adjust the benefits and
amounts payable under this Policy.
If the misstatement of age or sex is not found until after the income payments
have started:
1. if we made any overpayments, we will add interest at the rate of 6% per
year compounded yearly and charge them against payments to be made in the
future.
2. if we made underpayments, the balance due plus interest at the rate of 6%
per year compounded yearly will be paid in a lump sum.
REPORTS AND RECORDS
AVLIC will maintain all records relating to the Account and will mail the owner,
at the last known address of record, within 30 days after each policy
anniversary, an annual report which shows the current accumulation value as
allocated among the Subaccounts or the Fixed Account, and charges made during
the policy year. The owner may ask for more frequent reports, but except for the
annual report, AVLIC reserves the right to charge a fee for each report. The
owner will also be sent confirmations of transactions under the Policy, such as
the purchase payment and transfers and withdrawals, and a periodic report for
the Fund and a list of the portfolio securities held in each portfolio of the
Fund and any other information required by the 1940 Act.
FEDERAL TAX MATTERS
INTRODUCTION
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE.
This discussion is not intended to address the tax consequences resulting from
all of the situations in which a person may be entitled to or may receive a
distribution under a contract. Any person concerned about these tax implications
should consult a competent tax adviser before making a premium payment. This
discussion is based upon AVLIC's understanding of the present federal income tax
laws as they are currently interpreted by the Internal Revenue Service.
No representation is made as to the likelihood of the continuation of the
present federal income tax laws or of the current interpretation by the Internal
Revenue Service. Moreover, no attempt has been made to consider any applicable
state or other tax laws, other than premium taxes. (See "Taxes," page 20.)
<PAGE>
The qualified policies are designed for use by individuals in connection with
retirement plans which are intended to qualify as plans qualified for special
income tax treatment under Sections 401, 403(a), 403(b), 408 or 457 of the
Internal Revenue Code (the "Code"). The ultimate effect of federal income taxes
on the contributions, on the accumulation value, on annuity payments and on the
economic benefit to the owner, the annuitant or the beneficiary depends on the
type of retirement plan, on the tax and employment status of the individual
concerned and on AVLIC's tax status. In addition, certain requirements must be
satisfied in purchasing a qualified policy in connection with a tax qualified
plan in order to receive favorable tax treatment. With respect to qualified
policies an endorsement of the policy and/or limitations or penalties imposed by
the Internal Revenue Code may impose limits on premiums, withdrawals,
distributions or benefits, or on other provisions of the policies. Therefore,
purchasers of qualified policies should seek competent legal and tax advice
regarding the suitability of the Policy for their situation, the applicable
requirements and the tax treatment of the rights and benefits of a Policy.
Section 403(b)(11) of the IRS Code requires that no distribution be made from a
plan under Section 403(b) except after age 59 1/2, separation from service,
death or disability, or in the case of hardship, except in a tax free exchange
to another qualified contract.
The following discussion assumes the qualified policies are purchased in
connection with retirement plans that qualify for the special federal income tax
treatment described above.
TAXATION OF ANNUITIES IN GENERAL
NONQUALIFIED POLICIES. The following discussion assumes that the Policy will
qualify as an annuity policy for federal income tax purposes. The Statement of
Additional Information discusses such qualifications.
Section 72 of the Code governs taxation of annuities in general. AVLIC believes
that an annuity owner generally is not taxed on increases in the value of a
Policy until distribution occurs either in the form of a lump sum received by
withdrawing all or part of the accumulation value (i.e., "withdrawals") or as
annuity payments under the annuity income option elected. The exception to this
rule is the treatment afforded to owners that are not natural persons.
Generally, an owner of a Policy who is not a natural person must include in
income any increase in the excess of the owner's cash value over the owner's
"investment in the policy" during the taxable year, even if no distribution
occurs. There are, however, exceptions to this rule which you may wish to
discuss with your tax counsel. The following discussion applies to Policies
owned by natural persons.
The taxable portion of a distribution (in the form of an annuity or lump sum
payment) is taxed as ordinary income, subject to any income averaging rules
applicable to taxpayers generally. For this purpose, the assignment, pledge, or
agreement to assign or pledge any portion of the accumulation value generally
will be treated as a distribution.
Generally, in the case of a withdrawal under a nonqualified policy, amounts
received are first treated as taxable income to the extent that the accumulation
value immediately before the withdrawal exceeds the "investment in the policy"
at that time. Any additional amount is not taxable.
Although the tax consequences may vary depending on the annuity income option
elected under the Policy, in general, only the portion of the annuity payment
that represents the amount by which the accumulation value exceeds the
"investment in the policy" will be taxed. For fixed annuity payments, in
general, there is no tax on the amount of each payment which represents the same
ratio that the "investment in the policy" bears to the total expected value of
the annuity payment for the term of the payment; however, the remainder of each
annuity payment is taxable. Any distribution received subsequent to the
investment in the policy being recovered will be fully taxable.
In the case of a distribution pursuant to a nonqualified policy, there may be
imposed a federal penalty tax equal to 10% of the amount treated as taxable
income. In general, however, there is no penalty tax on distributions: (1) made
on or after the date on which the owner is actual age 59-1/2, (2) made as a
result of death or disability of the owner, or (3) received in substantially
equal payments as a life annuity subject to Internal Revenue Service
requirements, including special "recapture" rules.
QUALIFIED POLICIES. The rules governing the tax treatment of distributions under
qualified plans vary according to the type of plan and the terms and conditions
of the plan itself. Generally, in the case of a distribution to a participant or
beneficiary under a Policy purchased in connection with these plans, only the
portion of the payment in excess of the "investment in the policy" allocated to
that payment is subject to tax. The "investment in the policy" equals the
portion of plan contributions invested in the Policy that was not excluded from
the participant's gross income, and may be zero. In general, for allowed
withdrawals, a ratable portion of the amount received is taxable, based on the
ratio of the investment in the policy to the total Policy value. The amount
excluded from a taxpayer's income will be limited to an aggregate cap equal to
the investment in the policy. The taxable portion of annuity
<PAGE>
payments is generally determined under the same rules applicable to nonqualified
policies. However, special favorable tax treatment may be available for certain
distributions (including lump sum distributions). Adverse tax consequences may
result from: distributions prior to age 59 1/2 (subject to certain exceptions),
distributions that do not conform to specified commencement and minimum
distribution rules, aggregate distributions in excess of a specified annual
amount, and in certain other circumstances. Distributions from qualified plans
are subject to specific tax withholding rules. Eligible rollover distributions
from a qualified plan or annuities used in 403(b) plans are subject to income
tax withholding at a rate of 20% unless the policyowner elects to have the
distribution paid directly by AVLIC to an eligible retirement plan in a direct
rollover. If the distribution is not an eligible rollover distribution, it is
generally subject to the same withholding rules as distributions from
non-qualified policies.
DISTRIBUTION OF THE POLICIES
Ameritas Investment Corp. ("Investment Corp."), a wholly-owned subsidiary of
Ameritas Life Insurance Corp. and an affiliated company of AVLIC, will act as
the principal underwriter of the Policies pursuant to an Underwriting Agreement
between itself and AVLIC. Investment Corp. was organized under the laws of the
State of Nebraska on December 29, 1983, and is a broker/dealer registered
pursuant to the Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc. The Policies are sold by individuals who
are registered representatives of Investment Corp. and who are licensed as life
insurance agents for AVLIC. Investment Corp. and AVLIC may authorize registered
representatives of other registered broker/dealers to sell the Policies subject
to applicable law.
Registered Representatives who sell the Policy will receive commissions based
upon a commission schedule. After issuance of the Policy, commissions will
equal, at most, 5% of premiums paid. Further, Registered Representatives who
meet certain production standards may receive additional compensation, and
managers receive override commissions with respect to the policies.
SAFEKEEPING OF THE ACCOUNT'S ASSETS
AVLIC holds the assets of the Account. The assets are kept physically segregated
and held separate and apart from the general account assets. AVLIC maintains
records of all purchases and redemptions of the Funds' shares by each of the
Subaccounts.
VOTING RIGHTS
To the extent required by law, the portfolio shares held in the Account will be
voted by AVLIC at shareholder meetings of the Funds in accordance with
instructions received from persons having voting interests in the corresponding
Subaccount. The 1940 Act currently requires shareholder voting on matters such
as the election of the Board of Trustees of the Funds, the approval of the
investment advisory contract, changes in the fundamental investment policies of
the Funds, and approval of the independent accountants. If, however, the 1940
Act or any regulation thereunder should be amended, or if the present
interpretation thereof should change, and, as a result, AVLIC determines that it
is allowed to vote the portfolio shares in its own right, AVLIC may elect to do
so.
The number of votes which are available to an owner will be calculated
separately for each Subaccount of the Account. That number will be determined by
applying his or her percentage interest, if any, in a particular Subaccount to
the total number of votes attributable to the Subaccount. Prior to the annuity
date, the owner holds a voting interest in each Subaccount to which the
accumulation value is allocated. The number of votes which are available to an
owner will be determined by dividing the accumulation value attributable to a
Subaccount by the net asset value per share of the applicable portfolio. In
determining the number of votes, fractional shares will be recognized. The
number of votes of the portfolio which are available will be determined as of
the date coincident with the date established by that portfolio for determining
shareholders eligible to vote at the meeting of the Funds. Voting instructions
will be solicited by written communication prior to such meeting in accordance
with procedures established by the Funds.
<PAGE>
Shares of Funds as to which no timely instructions are received, or shares held
by AVLIC as to which owners have no beneficial interest will be voted in
proportion to the voting instructions which are received with respect to all
Policies participating in that Subaccount. Each person having a voting interest
in a Subaccount will receive proxy material, reports and other materials
relating to the appropriate portfolio.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Account is a party or to which the
assets of the Account are subject. AVLIC is not involved in any litigation that
is of material importance in relation to its total assets or that relates to the
Account.
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available that contains more details
concerning the subjects discussed in this Prospectus. This can be obtained by
writing to the address on the first page or by calling 1-800-745-1112. The
following is the Table of Contents for that Statement:
<TABLE>
<CAPTION>
Page
<S> <C>
GENERAL INFORMATION AND HISTORY...... 2
THE POLICY........................... 2
GENERAL MATTERS...................... 6
FEDERAL TAX MATTERS.................. 8
DISTRIBUTION OF THE POLICY........... 9
SAFEKEEPING OF ACCOUNT ASSETS........ 9
AVLIC................................ 9
STATE REGULATION..................... 10
LEGAL MATTERS........................ 10
EXPERTS.............................. 10
OTHER INFORMATION.................... 10
FINANCIAL STATEMENTS................. 10
</TABLE>
<PAGE>
APPENDIX A
LONG TERM MARKET TRENDS
The information below covering the period of 1926-1994 is an examination of the
basic relationship between risk and return among the different asset classes,
and between nominal and real (inflation adjusted) returns. The information is
provided because the Policyowners have varied investment portfolios available
which have different investment objectives and policies. The chart generally
demonstrates how different classes of investments have performed during the
period. The study of asset returns provides a period long enough to include most
of the major types of events that investors have experienced in the past and may
experience in the future. This is a historical record and is not intended as a
projection of future performance.
The graph depicts the growth of a dollar invested in common stocks, small
company stocks, long-term government bonds, Treasury bills, and a hypothetical
asset returning the inflation rate over the period from the end of 1925 to the
end of 1994. All results assume reinvestment of dividends on stocks or coupons
on bonds and no taxes. Transaction costs are not included, except in the small
stock index starting in 1982. Charges associated with a variable insurance
policy are not reflected in the chart.
Each of the cumulative index values is initiated at $1.00 at year-end 1925. The
graph illustrates that common stocks and small stocks gained the most over the
entire 69-year period: investments of one dollar would have grown to $810.54
and $2,842.77 respectively, by year-end 1994. This growth, however, was earned
by taking substantial risk. In contrast, long-term government bonds (with an
approximate 20-year maturity), which exposed the holder to less risk, grew to
only $25.86.
The lowest risk strategy over the past 69 years was to buy U.S. Treasury bills.
Since Treasury bills tended to track inflation, the resulting real
(inflation-adjusted) returns were near zero for the entire 1926-1994 period.
(OMITTED GRAPH ILLUSTRATES LONG TERM MARKET TRENDS AS DESCRIBED IN THE NARRATIVE
ABOVE.)
Year End 1925 = $1.00
Source: Stocks, Bonds, Bills, and Inflation 1995 Yearbook
(C)Ibbotson Associates, Chicago. All Rights Reserved.
<PAGE>
APPENDIX B
STANDARD & POOR'S 500
The Standard and Poor's (S & P 500) is a weighted index of 500 widely held
stocks: 400 Industrials, 40 Financial Company Stocks, 40 Public Utilities, and
20 Transportation stocks, most of which are traded on the New York Stock
Exchange. This information is provided because the Policyowners have varied
investment options available. The investment options, except the Fixed Account
and the Money Market Account, involve investments in the stock market. The S & P
500 is generally regarded as an accurate composite of the overall stock market.
<TABLE>
<CAPTION>
%
YEAR CHANGE
- ----------------------------------
<S> <C> <C>
1 1970 3.93
2 1971 14.56 (OMITTED GRAPH DEPICTS THE ACTIVITY
3 1972 18.90 OF THE S&P 500 INDEX FOR THE YEARS
4 1973 -14.77 1970-1994.)
5 1974 -26.39
6 1975 37.16
7 1976 23.57
8 1977 -7.42
9 1978 6.38
10 1979 18.20
11 1980 32.27
12 1981 -5.01
13 1982 21.44
14 1983 22.38
15 1984 6.10
16 1985 31.57
17 1986 18.56
18 1987 5.10
19 1988 16.61
20 1989 31.69
21 1990 -3.14
22 1991 30.45
23 1992 7.61
24 1993 10.08
25 1994 -1.32
</TABLE>
THE CHART ASSUMES THE RETURN EXPERIENCED BY THE STANDARD & POOR'S 500 INDEX FOR
THE LAST 25 YEARS. FUTURE 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. THE INFORMATION IN THE CHART IS NOT NECESSARILY INDICATIVE OF
FUTURE PERFORMANCE.
