PROFILE OF THE
DREYFUS/TRANSAMERICA
TRIPLE ADVANTAGE(R)
VARIABLE AND FIXED ANNUITY
Issued by
TRANSAMERICA OCCIDENTAL LIFE
INSURANCE COMPANY
May 1, 1997
This Profile is a summary of some of the more
important points that you should know and consider
before purchasing a Contract.
The Contract is more fully described in the full
Prospectus which accompanies this Profile. Please
read the Prospectus carefully.
1. The Annuity Contract. The Dreyfus/Transamerica Triple Advantage is a contract
between you and Transamerica Occidental Life Insurance Company with both
"variable" and "guaranteed" investment options. In the Contract, you can invest,
in your choice of fifteen mutual funds ("Portfolios") in the Variable Account or
in the Guaranteed Periods of the Fixed Account from Transamerica. You could gain
or lose money you invest in the Portfolios, but you could also earn more than
investing in the Fixed Account options. Transamerica guarantees the safety of
money invested in the Fixed Account options.
The Fixed Account and some of the Portfolios may not be available in all states.
The Contract is a deferred annuity, which means it has two phases: the
accumulation phase and the annuity phase. During the accumulation phase you can
make additional purchase payments to the Contract, transfer your money among the
investment options, and withdraw some or all of your investment. During this
phase earnings accumulate on a tax-deferred basis for individuals, but if you
withdraw money some or all of it may be taxable. Tax deferral is not available
for corporations and some trusts.
During the annuity phase Transamerica will make periodic payments to
you. The dollar amount of the payments may depend on the amount of money
invested and earned during the accumulation phase (and other factors, such as
age and sex).
2. The Annuity Payments. You can generally decide when to end the accumulation
phase and begin receiving annuity payments from Transamerica. You can choose
fixed annuity payments, where the dollar amount of each payment generally stays
the same, or variable payments that go up or down in dollar amount based on the
investment performance of the Portfolios you select. You can choose among
payments for the lifetime of an individual, or payments for the longer of one
lifetime or a guaranteed period of 10, 15, or 20 years, or payments for one
lifetime and the lifetime of another individual.
3. Purchasing a Contract. Generally, you must invest at least $5,000 to purchase
a Contract, and then you can make more investments of at least $500 each ($100
each if made under the automatic payment plan and deducted from your bank
account). You may cancel your Contract during the Free Look Period. This right
is explained in item 10 on page 5 of this Profile.
The Triple Advantage variable annuity is designed for long-term
tax-deferred accumulation of assets, generally for retirement or other long-term
goals. Individuals in high tax brackets get the most benefit from the tax
deferral feature. You should not make an investment in the Contract for
short-term purposes or if you cannot take the risk of losing some of your
investment.
4. Investment Options. VARIABLE ACCOUNT: You can invest in any of the
following fifteen Portfolios:
Money Market Capital Appreciation
Managed Assets Stock Index
Zero Coupon 2000 Socially Responsible Growth
Quality Bond Growth and Income
Small Cap International Equity
International Value
Disciplined Stock
Small Company Stock
<PAGE>
Balanced
Limited Term High Income
These Portfolios are described in their own prospectuses. You can earn
or lose money in any of these Portfolios. All Portfolios may not be available in
all states.
FIXED ACCOUNT: In most states, you can also invest in a Fixed Account
option, where Transamerica guarantees the principal invested plus at least 3%
annual interest.
5. Expenses. The Contract provides many benefits and features that you do not
get with a regular mutual fund or CD investment. It costs Transamerica money to
provide these benefits, so there are charges in connection with this Contract.
If you withdraw your money within seven years of investing it, there may be a
withdrawal charge of up to 6% of the amount invested. Once each Contract year we
deduct an account fee of no more than $30 (there is no fee if your Contract
value is over $50,000). Insurance and administrative charges of 1.40% per year
are charged against your average daily value in the Variable Account. Advisory
fees are also deducted by the Portfolios' manager, and the Portfolios pay other
expenses which, in total, vary from 0.30% to 1.35% per year of the amounts in
the Portfolios. Finally, there might be premium taxes ranging from 0 to 3.5% of
your investment and/or on amounts you use to purchase annuity benefits
(depending on your state's law).
The following chart shows these charges (except premium taxes). The $30
annual account fee is not included in the first column because the fee is waived
for contract values over $50,000 and the approximate average contract value for
these contracts value is more than $50,000. The third column is the sum of the
first two. The examples in the last two columns show the total amounts you would
be charged, in dollars, if you invested $1000, the investment grew 5% each year,
and you withdrew your entire investment after one year or ten years. Year one
includes the withdrawal charge and year 10 does not.
EXAMPLES:
<TABLE>
<CAPTION>
Total
Variable Account Annual Annual Expenses at Total Expenses
Portfolio/ Insurance Portfolio Total Annual end of One at end of 10
Sub-Account Charges Charges Charges Year Years
<S> <C> <C> <C> <C> <C>
Money Market 1.40% 0.62% 2.02% $73.29 $234.80
Managed Assets 1.40% 0.93% 2.33% $76.21 $266.60
Zero Coupon 2000 1.40% 0.66% 2.06% $73.67 $238.97
Quality Bond 1.40% 0.81% 2.21% $74.89 $252.37
Small Cap 1.40% 0.79% 2.19% $74.89 $252.37
Capital Appreciation 1.40% 0.84% 2.24% $75.37 $257.48
Stock Index 1.40% 0.30% 1.70% $70.26 $200.86
Socially Responsible 1.40% 0.99% 2.39% $76.78 $272.63
Growth & Income 1.40% 0.83% 2.23% $75.27 $256.46
International Equity 1.40% 1.28% 2.68% $79.50 $301.24
International Value 1.40% 1.35% 2.75% $80.16 $308.01
Disciplined Stock 1.40% 0.96% 2.36% $76.50 $269.62
Small Company 1.40% 0.94% 2.34% $76.31 $267.60
Balanced 1.40% 1.25% 2.65% $79.22 $298.32
Limited Term High 1.40% 1.00% 2.40% $76.87 $273.63
Income
</TABLE>
2
<PAGE>
The Annual Portfolio Charges above are for 1996 and do not reflect expense
reimbursements or fee waivers, except for the Balanced and Limited Term High
Income Portfolios which did not commence operations in 1996; the numbers for
these funds are annualized estimates for 1997. Expenses may be higher or lower
in the future. See the Variable Account Fee Table on page 11 of the Triple
Advantage prospectus for more detailed information.
6. Federal Income Taxes. Individuals generally are not taxed on increases in the
contract value until a distribution occurs (e.g., a withdrawal or annuity
payment) or is deemed to occur (e.g., a pledge, loan, or assignment of the
contract). If you withdraw money, earnings come out first and are taxed.
Generally, some portion (sometimes all) of any distribution or deemed
distribution is taxable as ordinary income. In some cases, income taxes will be
withheld from distributions. If you are under age 59 1/2 when you withdraw
money, an additional 10% federal tax penalty may apply on the withdrawn
earnings. Certain owners that are not individuals may be currently taxed on
increases in the contract, whether distributed or not.
7. Access to Your Money. You can generally take money out at any time during the
accumulation phase. A withdrawal charge of up to 6% of a purchase payment may be
assessed by Transamerica, but no withdrawal charge will be assessed on money
that has been in the Contract for seven years. In certain cases, the withdrawal
charge may be waived if you are in a hospital or nursing home for a long period
or, in some states, if you are diagnosed with a terminal illness. Additionally,
you can withdraw accumulated earnings on your purchase payments not previously
withdrawn at any time without a withdrawal charge. After the first Contract
Year, for only the first withdrawal in a Contract Year, you may withdraw the
greater of accumulated earnings or 15% of Purchase Payments received at least
one but less than seven years ago. (See Page 41 of the prospectus for a more
detailed discussion.)
You may have to pay income taxes on amounts you withdraw and there may also be a
10% tax penalty if you make withdrawals before you are 59 1/2 years old.
If you withdraw money from the fixed account option prematurely, you will
generally forfeit some of the interest that you earned, but will always receive
the principal you invested plus 3% interest.
8. Past Investment Performance. The value of the money you allocate to the
Portfolio(s) will go up or down, depending on the investment performance of the
Portfolios you pick. The following chart shows the past investment performance
on a year by year basis for each Sub-Account. These figures have already been
reduced by the insurance charges, the account fee, the fund manager's fee and
all the expenses of the mutual fund portfolio. But these figures do not include
the withdrawal charge, which would reduce performance if it applied. Remember,
past performance is no guarantee of future performance or earnings.
CALENDAR YEAR
<TABLE>
<CAPTION>
SUB-ACCOUNT 1996 1995 1994 1993 1992 1991 1990 1989
- ----------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Money Market(1) 3.53% 4.21% 3.00% 1.86% 2.71% 4.54% N/A N/A
Managed Assets(1) (5.67%) (0.48%) (3.48%) 26.74% (0.41%) 8.99% N/A N/A
Zero Coupon 2000(1) 1.10% 16.35% (5.41%) 13.52% 7.29% 17.14% N/A N/A
Quality Bond(1) 1.63% 18.91% (6.17%) 13.66% 10.45% 12.47% N/A N/A
Small Cap(1) 15.06% 28.84% 4.95% 65.77% 68.98% 156.07% N/A N/A
Capital Appreciation(2) 22.71% 32.82% 1.45% N/A N/A N/A N/A N/A
Stock Index(3) 19.80% 35.92% (0.60%) 7.75% 5.55% 27.98% (6.52%) N/A
Socially Responsible(4) 19.00% 33.67% (0.08%) N/A N/A N/A N/A N/A
Growth and Income(5) 18.63% 59.58% N/A N/A N/A N/A N/A N/A
International Equity(5) 9.82% 6.62% N/A N/A N/A N/A N/A N/A
</TABLE>
(1) Portfolio Inception 8-31-90 (3) Portfolio Inception 9-29-89
(5) Portfolio Inception 12-15-94
(2) Portfolio Inception 4-5-93 (4) Portfolio Inception 10-7-93
3
<PAGE>
Data is for full years only. Therefore, no performance is reported for the
International Value, Disciplined Stock and Small Company Stock Sub-Accounts
because these Sub-Accounts had not been in operation for a full year in 1996.
Additionally, the Balanced and Limited Term High Income Sub-Accounts did not
commence operations in 1996 and, therefore, no performance is reported for these
Sub-Accounts. The figures for the Money Market, Managed Assets, Zero Coupon
2000, Quality Bond, Small Cap and Stock Index Sub-Accounts include data for
periods before the Sub-Accounts commenced operations, based on the actual
performance of the corresponding Portfolios since they commenced operations.
9. Death Benefit. If you or the annuitant dies during the accumulation phase,
then the appropriate beneficiary is guaranteed by Transamerica to receive a
death benefit of at least the amount you invested (less any amounts you have
already withdrawn), even if your investment has lost money because of the
investment performance of the Portfolios you picked.
The death benefit will be the greatest of: (1), the Account Value; (2)
a "seven-year step-up" death benefit, which is the highest Account Value on any
seven year anniversary of your purchase of the Contract (adjusted for additional
investments and any withdrawals since that anniversary less premium taxes
applicable to those withdrawals); or (3) your investments, less withdrawals and
any premium taxes applicable to that withdrawal, compounded at 5% annual
effective interest (the 5% interest stops when you, your joint owner, or the
annuitant reaches age 75, or when it has doubled the amount of your investment,
whichever is earlier).
10. Other Information. The Triple Advantage variable annuity offers other
features you might be interested in. These
features may not be available in all states and may not be suitable for your
particular situation. Some of these features
include:
FREE LOOK. After you get your Contract, you have ten days to look it
over and decide if it is really right for you (this period may be longer in
certain states). If you decide not to keep the Contract, you can cancel it
during this period, and you will get back the amount of your investment that you
allocated to the Fixed Account and the current value of the amounts you
allocated to the Variable Account (without any withdrawal charges). Certain laws
may require that if you cancel during this period, you are entitled to get back
the greater of your full investment or the Contract value. If one of these laws
apply, then during this "free look" period your investment allocated to the
Variable Account, may be placed in the Money Market Portfolio (depending upon
the state in which the Contract is sold).
TELEPHONE TRANSFERS. You can generally arrange to transfer money
between the investments in your contract
by telephone.
DOLLAR COST AVERAGING. You can instruct Transamerica to automatically
transfer amounts from the Purchase Payments you allocated to the Money Market or
Quality Bond Sub-Accounts, or possibly from another Sub-Account or a Guarantee
Period of the Fixed Account, to any of the other Sub-Accounts each month. Dollar
Cost Averaging is intended to give you a lower average cost per share or unit
than a single, one time investment.
AUTOMATIC ASSET REBALANCING. The performance of each Sub-Account may
cause the allocation of value among the Sub-Accounts to change. You may instruct
Transamerica to periodically automatically rebalance the amounts in the
Sub-Accounts by reallocating amounts among them.
SYSTEMATIC WITHDRAWAL OPTION. You can arrange to have Transamerica send
you money automatically each month out of your Contract during the accumulation
phase. There are limits on the amounts, but the withdrawal charge will not apply
(the payments may be taxable and subject to the penalty tax if you are under age
59 1/2).
AUTOMATIC PAYOUT OPTION. If you have a Qualified Contract (an IRA),
you can arrange to have the
minimum distributions required by the IRS to be automatically paid to you.
11. INQUIRIES. You can get more information and have your questions
answered by writing or calling:
Transamerica Annuity Service Center
P.O. Box 31848
Charlotte, North Carolina 28231-1848
(800) 258-4260
4
<PAGE>
["Front Green Cover"]
LOGO
PROSPECTUS FOR
DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE(R)
May 1, 1997
A Variable Annuity Issued by
Transamerica Occidental
Life Insurance Company
Including Fund Prospectuses for
DREYFUS VARIABLE INVESTMENT FUND
May 1, 1997
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
May 1, 1997
DREYFUS STOCK INDEX FUND
May 1, 1997
<PAGE>
DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE(R)
VARIABLE ANNUITY
Issued by
TRANSAMERICA OCCIDENTAL LIFE INSURANCE
COMPANY 1150 South Olive Street, Los Angeles,
California 90015, 213-742-2111.
This Prospectus describes the Dreyfus/Transamerica Triple Advantage
Variable Annuity, a variable annuity contract (the "Contract") issued by
Transamerica Occidental Life Insurance Company ("Transamerica"). The Contract is
designed to aid individuals in long-term financial planning and for retirement
or other long-term purposes.
The Owner may allocate Purchase Payments to one or more Sub-Accounts of
Separate Account VA-2L (the "Variable Account"), to the available Guarantee
Periods of the Fixed Account (which credit interest at guaranteed annual rates),
or to both.
The Account Value, except for amounts in the Fixed Account, will vary
in accordance with the investment performance of the Portfolios in which the
selected Sub-Accounts are invested. The Owner bears the entire investment risk
for all amounts allocated to the Variable Account. Amounts allocated to the
Fixed Account are guaranteed by Transamerica to accrue at a Guaranteed Interest
Rate if held for the entire Guarantee Period chosen by the Owner. There is no
guaranteed or minimum withdrawal value for amounts in the Variable Account; the
Cash Surrender Value or Annuity Purchase Amount could be less than the Purchase
Payments invested in the Contract.
This Prospectus sets forth the basic information that a prospective
investor should know before investing. A "Statement of Additional Information"
containing more detailed information about the Contract is available free by
writing Transamerica Occidental Life Insurance Company, Annuity Service Center,
at P.O. Box 31848, Charlotte, North Carolina 28231-1848, or by calling
800-258-4260. The Statement of Additional Information, which has the same date
as this Prospectus, as it may be supplemented from time to time, 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Please read this prospectus carefully and keep it for future reference.
The date of this Prospectus is May 1, 1997,
This Prospectus must be accompanied by current prospectuses for Dreyfus Variable
Investment Fund, Dreyfus Stock Index Fund, and The Dreyfus Socially Responsible
Growth Fund, Inc.
- -----------------------------------------------------------------------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING
MAY NOT LAWFULLY BE 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.
- -------------------------------------------------------------------------------
An investment in the Contract is not a deposit or obligation of, or
guaranteed or endorsed by, any bank, nor is the Contract federally insured by
the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other government agency. Investing in the Contract involves certain investment
risks, including possible loss of principal.
<PAGE>
The Contract provides for monthly Annuity Payments to be made by
Transamerica on a fixed or a variable basis or combination of a fixed and
variable basis for the life of the Annuitant or for some other period, beginning
on the first day of the month following the Annuity Date selected by the Owner.
Prior to the Annuity Date, the Owner can transfer amounts between and among the
Guarantee Periods of the Fixed Account and the Sub-Accounts of the Variable
Account. Some prohibitions and restrictions apply. After the Annuity Date, some
transfers are permitted among the Sub-Accounts if the Owner selects a Variable
Annuity Payment Option. Before the Annuity Date, the Owner can also elect to
withdraw all or a portion of the Cash Surrender Value in exchange for a cash
payment from Transamerica; however, withdrawals may be subject to a Contingent
Deferred Sales Load, premium taxes, federal tax and/or a tax penalty, an
interest adjustment (for Fixed Account withdrawals) and, upon surrender, the
annual Account Fee may also be deducted.
The Variable Account is divided into Sub-Accounts. Each Sub-Account is
invested in shares of a specific Portfolio. Fifteen Portfolios are currently
available for investment under the Contract: the Money Market, Managed Assets,
Zero Coupon 2000, Quality Bond, Small Cap, Capital Appreciation, Growth and
Income, International Equity, International Value, Disciplined Stock, Small
Company Stock, Balanced and Limited Term High Income Portfolios of Dreyfus
Variable Investment Fund; Dreyfus Stock Index Fund; and The Dreyfus Socially
Responsible Growth Fund, Inc. Certain fees and expenses are charged against the
assets of each Portfolio. The Account Value and the amount of any variable
Annuity Payments will vary to reflect the investment performance of the
Sub-Account(s) selected by the Owner and the deduction of the Contract charges
described under "Charges and Deductions" (page 31). For more information about
the Funds, see "The Funds" (page 20) and the accompanying Funds' prospectuses.
The Fixed Account is divided into Guarantee Periods, each of which has
its own Guaranteed Interest Rate and its own Expiration Date. Purchase Payments
allocated or Account Value transferred to the Guarantee Periods of the Fixed
Account will be credited with interest of at least 3% per year. Transamerica
may, in its discretion, declare interest rates for Guarantee Periods in excess
of the 3% minimum annual rate; it is never obligated to declare more than a 3%
annual rate. Amounts withdrawn or transferred from a Guarantee Period prior to
its Expiration Date will generally be subject to an interest adjustment which
will reduce the interest credited to the minimum 3% annual rate. (See "The Fixed
Account" page 23.)
The Initial Purchase Payment for each Contract must generally be at
least $5,000 unless, with the prior permission of Transamerica, the Contract is
sold as a Qualified Contract to certain retirement plans. Generally, each
additional Purchase Payment must be at least $500, unless an automatic payment
plan is selected. The prior approval of Transamerica is required before it will
accept total Purchase Payments for any Contract in excess of $1,000,000.
The Dreyfus/Transamerica Triple Advantage Variable Annuity will be
issued as a certificate under a group annuity contract in some states and as an
individual annuity contract in other states. The term "Contract" as used herein
refers to both the individual contract and the certificates issued under the
group contract.
2
<PAGE>
TABLE OF CONTENTS Page
DEFINITIONS.............................................................5
SUMMARY.................................................................8
CONDENSED FINANCIAL INFORMATION........................................16
PERFORMANCE DATA.......................................................18
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND THE
VARIABLE ACCOUNT......................................................19
Transamerica Occidental Life Insurance Company................19
Published Ratings.............................................19
The Variable Account..........................................19
THE FUNDS..............................................................20
THE FIXED ACCOUNT......................................................23
Guarantee Periods.............................................24
Interest Adjustment...........................................24
Expiration of a Guarantee Period..............................24
THE CONTRACT...........................................................24
APPLICATION AND PURCHASE PAYMENTS......................................25
Purchase Payments.............................................25
Allocation of Purchase Payments...............................25
ACCOUNT VALUE..........................................................26
TRANSFERS..............................................................27
Before the Annuity Date.......................................27
Telephone Transfers...........................................27
Possible Restrictions.........................................27
Dollar Cost Averaging.........................................28
Automatic Asset Rebalancing...................................28
After the Annuity Date........................................28
CASH WITHDRAWALS.......................................................28
Withdrawals...................................................28
Systematic Withdrawal Option..................................30
Automatic Payout Option ......................................30
Restrictions under Section 403(b) Programs....................30
DEATH BENEFIT..........................................................30
Payment of Death Benefit......................................31
Designation of Beneficiaries..................................31
Death of Annuitant Prior to the Annuity Date..................31
Death of Owner Prior to the Annuity Date......................31
Death of Annuitant or Owner After the Annuity Date............31
CHARGES AND DEDUCTIONS.................................................31
Contingent Deferred Sales Load................................32
Administrative Charges........................................33
Mortality and Expense Risk Charge.............................33
Premium Taxes.................................................34
Transfer Fee..................................................34
Systematic Withdrawal Option..................................34
Taxes.........................................................34
Portfolio Expenses............................................34
Interest Adjustment...........................................34
ANNUITY PAYMENTS.......................................................34
Annuity Date..................................................34
Annuity Payment...............................................35
Election of Annuity Forms and Payment Options.................35
Annuity Payment Options.......................................35
Fixed Annuity Payment Option..................................36
3
<PAGE>
TABLE OF CONTENTS CONTINUED
Variable Annuity Payment Option..............................36
Annuity Forms................................................36
Alternate Fixed Annuity Rates................................37
QUALIFIED CONTRACTS...................................................37
Withholding..................................................37
Automatic Payout Option ("APO")..............................37
Restrictions under 403(b) Programs...........................38
FEDERAL TAX MATTERS...................................................38
Introduction.................................................38
Taxation of Annuities........................................39
Qualified Contracts..........................................41
Possible Changes in Taxation.................................42
Other Tax Consequences.......................................42
General......................................................42
DISTRIBUTION OF THE CONTRACT..........................................42
LEGAL PROCEEDINGS.....................................................42
LEGAL MATTERS.........................................................42
ACCOUNTANTS...........................................................43
VOTING RIGHTS.........................................................43
AVAILABLE INFORMATION.................................................43
STATEMENT OF ADDITIONAL
INFORMATION - TABLE OF CONTENTS.......................................44
APPENDIX A...........................................................A-1
Example of Variable Accumulation Unit Value Calculations....A-1
Example of Variable Annuity Unit Value Calculations.........A-1
Example of Variable Annuity Payment Calculations............A-1
The Contract is not available in all
states.
4
<PAGE>
DEFINITIONS
Account: The account established and maintained under the Contract to which the
Owner's Net Purchase Payments are credited. Account Value: The Account Value is
equal to the sum of: (a) the Fixed Accumulated Value, plus (b) the Variable
Accumulated Value. Active Sub-Account: A Sub-Account of the Variable Account in
which the Contract has current value. Annuitant: The person: (a) whose life is
used to determine the amount of monthly annuity payments on the Annuity Date;
and (b) who is the Payee designated to receive monthly annuity payments, unless
such Payee is changed by the Owner. The Annuitant cannot be changed after this
Certificate has been issued, except upon the Annuitant's death prior to the
Annuity Date if a Contingent Annuitant has previously been named. In the case of
a Qualified Contract used to fund an IRA, the Owner must be the Annuitant.
Annuitant's Beneficiary: The person or persons named by the Owner who may
receive the Death Benefit under the Contract, if: (a) the Annuitant is not the
Owner, there is no named Contingent Annuitant and the Annuitant dies before the
Annuity Date and before the death of the Owner(s); or (b) the Annuitant dies
after the Annuity Date under an Annuity Form containing a period certain option.
Annuity Date: The date on which the Annuity Purchase Amount will be applied to
provide an Annuity under the Annuity Form and Payment Option selected by the
Owner. Unless a different Annuity Date is elected under the annuity provisions,
the Annuity Date will be as shown in the Contract. Annuity Payment: An amount
paid by Transamerica at regular intervals to the Annuitant and/or any other
Payee specified by the Owner. It may be on a variable or fixed basis. Annuity
Purchase Amount: The Annuity Purchase Amount is the amount applied as a single
premium to provide an annuity under the Annuity Form and Payment Option elected
by the Owner. The Annuity Purchase Amount is equal to: (a) the Account Value;
less (b) any applicable interest adjustment; less (c) any applicable Contingent
Deferred Sales Load; and less (d) any applicable premium taxes. In determining
the Annuity Purchase Amount, Transamerica will waive the Contingent Deferred
Sales Load if the Annuity Form elected involves life contingencies and the
Annuity Date occurs on or after the third Contract Anniversary. Annuity Year: A
one-year period starting on the Annuity Date and, after that, each succeeding
one-year period. Cash Surrender Value: The amount payable to the Owner if the
Contract is surrendered on or before the Annuity Date. The Cash Surrender Value
is equal to: (a) the Account Value; less (b) reductions for the annual Account
Fee, if any; less (c) any applicable interest adjustment; less (d) any
applicable Contingent Deferred Sales Load; and less (e) any applicable premium
taxes. Code: The U.S. Internal Revenue Code of 1986, as amended, and the rules
and regulations issued thereunder. Contingent Annuitant: The person who: (a)
becomes the Annuitant if the Annuitant dies before the Annuity Date; or (b) may
receive benefits under the Contract if the Annuitant dies after the Annuity Date
under an Annuity Form containing a contingent annuity option. The contingent
annuitant may be changed by the Owner at any time while the Annuitant is living
and before the Annuity Date. Contract: An individual annuity contract issued by
Transamerica, or a certificate issued by Transamerica which evidences an
individual's coverage under a group annuity contract. Contract Anniversary: The
same month and day as the Contract Date in each calendar year after the calendar
year in which the Contract Date occurs. Contract Date: The effective date of the
Contract as shown on the Contract. Contract Year: The 12-month period from the
Contract Date and ending with the day before the Contract Anniversary and each
twelve month period thereafter. The first Contract Year for any particular net
Purchase Payment is the Contract Year in which the Purchase Payment is received
by the Service Center. Death Benefit: The benefit that may be payable by
Transamerica to the Owner's or Annuitant's Beneficiary, as applicable, if an
Owner or the Annuitant dies before the Annuity Date. The Death Benefit is equal
to the greatest of (1) the Account Value, (2) the greatest Account Value
determined as of the seventh Contract Anniversary and at each succeeding
Contract Anniversary occurring at subsequent seven year intervals thereafter
(adjusted for any subsequent Purchase Payments and less the sum of all
subsequent withdrawals and any premium taxes applicable to those withdrawals),
or (3) the sum of all Purchase Payments, less withdrawals and any premium taxes
applicable to those withdrawals, plus interest thereon equal to a 5% annual
effective rate, credited on a daily basis up to (i) the Contract Anniversary
following the earlier of any Owner's or Annuitant's 75th birthday, or (ii) the
date the sum of all Purchase Payments (less the sum of all withdrawals and any
premium taxes applicable to those withdrawals), together with credited interest,
has grown to two times the amount of all Purchase Payments (less all withdrawals
and any premium taxes applicable to those withdrawals) as a result of such
interest accumulation, if
5
<PAGE>
earlier. The Death Benefit will be determined as of the end of the Valuation
Period during which the last of the following items is received by us at our
Service Office: (i) proof of death of the Owner or Annuitant; and (ii) the
written notice of the method of settlement elected by the beneficiary.
Expiration Date: The last day of a Guarantee Period. Fixed Account: The Fixed
Account contains one or more Guarantee Periods to which all or portions of Net
Purchase Payments and transfers may be allocated. The Fixed Account assets are
general assets of Transamerica and are distinguishable from those allocated to a
separate account of Transamerica. Fixed Accumulated Value: The total dollar
amount of all Guarantee Amounts held under the Fixed Account for the Contract
prior to the Annuity Date. The Fixed Accumulated Value is determined without
regard to any interest adjustment. Fixed Annuity: An annuity with predetermined
payment amounts. Free Look Period: The period of time, beginning on the date the
Owner receives the Contract, during which the Owner has the right to cancel the
Contract. The length of this period depends upon the state of issuance. Funds:
Dreyfus Variable Investment Fund, Dreyfus Stock Index Fund, and The Dreyfus
Socially Responsible Growth Fund, Inc., in which the Variable Account currently
invests. Guarantee Amount: The Guarantee Amount is equal to: (a) the amount of
the Net Purchase Payment or transfer allocated to a particular Guarantee Period
with a particular Expiration Date; less (b) any withdrawals or transfers made
from that Guarantee Period; less (c) any applicable Transfer Fees; less (d) any
reductions for the annual Account Fee; and plus (e) interest credited. Guarantee
Period: The period for which a Guaranteed Interest Rate is credited which shall
not be less than one year. Guaranteed Interest Rate: The effective annual rate
of interest credited by Transamerica to a Guarantee Amount during any Guarantee
Period. Inactive Sub-Account: A Sub-Account of the Variable Account in which the
Contract has a zero balance. Net Investment Factor: An index that measures the
investment performance of a Sub-Account from one Valuation Period to the next.
Net Purchase Payment: A Purchase Payment reduced by any applicable premium tax
(including retaliatory premium taxes). Non-Qualified Contract: A Contract other
than a Qualified Contract. Owner (Joint Owners): The person(s) who, while
living, control(s) all rights and benefits under the Contract. Joint Owners own
the Contract equally with right of survivorship. The right of survivorship means
that if a Joint Owner dies, his or her interest in the Contract will pass to the
surviving Joint Owner in accordance with the Death Benefit provisions. Joint
Owners must be husband and wife as of the Contract Date (except in
Pennsylvania). Qualified Contracts cannot have Joint Owners. Owner's
Beneficiary: If the Owner is an individual, the Owner's Beneficiary is the
person(s) who may receive the Death Benefit if the Owner dies before the Annuity
Date and before the death of the Annuitant. If the Contract has Joint Owners,
the surviving Joint Owner will be the Owner's Beneficiary. Payee: The person who
receives the annuity payments after the Annuity Date. The Payee will be the
Annuitant, unless otherwise changed by the Owner. Portfolio: Dreyfus Stock Index
Fund, The Dreyfus Socially Responsible Growth Fund, Inc., or any one of the
Series of Dreyfus Variable Investment Fund underlying a Sub-Account of the
Variable Account. Proof of Death: May be: (a) a copy of a certified death
certificate; (b) a copy of a certified decree of a court of competent
jurisdiction as to the finding of death; (c) a written statement by a medical
doctor who attended the deceased; or (d) any other proof satisfactory to
Transamerica. Qualified Contract: A Contract used in connection with an
individual retirement annuity (an "IRA") which receives special federal income
tax treatment under Section 408 of the Code and whose initial Purchase Payment
is derived from a rollover of amounts from a qualified retirement plan(s)
receiving special tax treatment under Sections 401(a), 403(b) or 408 of the Code
(a "rollover IRA") or, with Transamerica's prior permission, an IRA which
receives special tax treatment under Section 408 of the Code and whose initial
Purchase Payment is limited by the contribution limits of the Code (a
"contributory IRA"), an annuity under Section 403(b) of the Code, or a qualified
pension, retirement or profit-sharing plan which receives special tax treatment
under Section 401(a) of the Code. Receipt: Receipt and acceptance by
Transamerica at its Service Center. Series: Any of the Portfolios of Dreyfus
Variable Investment Fund available for investment by a Sub-Account under the
Contract. Service Center: Transamerica's Annuity Service Center, at P.O. Box
31848 Charlotte, North Carolina 28231-1848, and at telephone (800) 258-4260.
Socially Responsible Fund: The Dreyfus Socially Responsible Growth Fund, Inc., a
diversified open-end management investment company. Source Account: A
Sub-Account of the Variable Account or a Guarantee Period of the Fixed Account,
as permitted, from which Dollar Cost Averaging transfers are being made.
6
<PAGE>
Stock Index Fund: Dreyfus Stock Index Fund, a non-diversified open-end
management investment company. Sub-Account: A subdivision of the Variable
Account investing solely in shares of one of the Portfolios. Valuation Day: Any
day the New York Stock Exchange is open for trading. Valuation occurs currently
as of 4:00 p.m. ET each Valuation Day. Valuation Period: The time interval
between the closing of the New York Stock Exchange on consecutive Valuation
Days. Variable Account: Separate Account VA-2L, a separate account established
and maintained by Transamerica for the investment of a portion of its assets
pursuant to Section 10506 of the California Insurance Code. The Variable Account
contains several Sub-Accounts to which all or portions of Net Purchase Payments
and transfers may be allocated. Variable Accumulated Value: The total dollar
amount of all Variable Accumulation Units under each Sub-Account of the Variable
Account held for the Contract prior to the Annuity Date. The Variable
Accumulated Value prior to the Annuity Date is equal to: (a) Net Purchase
Payments allocated to the Sub-Accounts; plus or minus (b) any increase or
decrease in the value of the assets of the Sub-Accounts due to investment
results; less (c) the daily Mortality and Expense Risk Charge; less (d) the
daily Administrative Expense Charge; less (e) any reductions for the annual
Account Fee; plus or minus (f) amounts transferred from or to the Fixed Account;
less (g) any applicable Transfer Fees and Systematic Withdrawal fees; and less
(h) withdrawals from the Sub- Accounts less any premium taxes applicable to
those withdrawals. Variable Accumulation Unit: A unit of measure used to
determine the Account Value prior to the Annuity Date. The value of a Variable
Accumulation Unit varies with each Sub-Account. Variable Annuity: An annuity
with payments which vary as to dollar amount in relation to the investment
performance of specified Sub-Accounts of the Variable Account. Variable Annuity
Unit: A unit of measure used to determine the amount of the second and each
subsequent payment under a Variable Annuity Payment Option. The value of a
Variable Annuity Unit varies with each Sub-Account. Variable Fund: Dreyfus
Variable Investment Fund, an open-end management investment company.
Withdrawals: Refers to partial withdrawals, including systematic withdrawals,
and full surrenders that are paid in cash to the Owner or person(s) the Owner
specifies.
7
<PAGE>
SUMMARY
The Contract
The Flexible Purchase Payment Multi-Funded Deferred Annuity Contract described
in this Prospectus is designed to aid individuals in long-term financial
planning and for retirement or other long-term purposes. The Contract may be
used with non-qualified plans and as an individual retirement annuity that
qualifies for special tax treatment under Section 408 of the Code and whose
initial Purchase Payment is a rollover of amounts from a qualified retirement
plan(s) receiving special tax treatment under Sections 401(a), 403(b) and 408 of
the Code (a "rollover IRA"). Additionally, with Transamerica's prior permission,
the Contract may be used as an IRA whose initial Purchase Payment is limited to
the contribution limitations of the Code (a "contributory IRA"), as an annuity
under Section 403(b) of the Code, and with various types of qualified pension
and profit-sharing plans under Section 401(a) of the Code. The Contract is
issued by Transamerica Occidental Life Insurance Company ("Transamerica"), a
wholly-owned subsidiary of Transamerica Insurance Corporation of California,
which in turn is a direct subsidiary of Transamerica Corporation. Its principal
office is at 1150 South Olive Street, Los Angeles, California 90015, telephone
(213) 742-2111.
The term "Contract" as used herein refers to either an individual
annuity contract or to a certificate issued under a group annuity contract. The
term "Owner" refers to the Owner or any Joint Owner of the individual contract
or the certificate, as appropriate.
Transamerica will establish and maintain an Account for each individual
annuity contract and for each certificate issued under a group contract. Each
Owner will receive either an individual annuity contract, or a certificate
evidencing the Owner's coverage under a group annuity contract. The Contract
provides that the Account Value, after certain adjustments, will be applied to
an Annuity Form and Payment Option on a selected future date ("Annuity Date").
The Owner may allocate all or portions of Net Purchase Payments to one
or more Sub-Accounts of the Variable Account, to the available Guarantee Periods
of the Fixed Account which guarantees a minimum fixed return, or to both.
The Account Value prior to the Annuity Date, except for amounts in the
Fixed Account, will vary depending on the investment experience of each
Sub-Account of the Variable Account selected by the Owner. All payments and
values provided under the Contract when based on the investment experience of
the Variable Account are variable and are not guaranteed as to dollar amount.
Therefore, prior to the Annuity Date the Owner bears the entire investment risk
under the Contract for amounts allocated to the Variable Account.
There is no guaranteed or minimum Cash Surrender Value, so the proceeds
of a surrender could be less than the total Purchase Payments.
The initial Purchase Payment for each Contract must generally be at
least $5,000 unless, with Transamerica's permission, the Contract is sold as a
Qualified Contract to certain retirement plans. Generally each additional
Purchase Payment must be at least $500 unless an automatic payment plan is
selected. In no event, however, may the total of all Purchase Payments under a
Contract exceed $1,000,000 without the prior approval of Transamerica. The
minimum Net Purchase Payment that may be allocated to an Inactive Sub-Account is
$500 and to a new Guarantee Period is $1,000. (See "Application and Purchase
Payments" page 25.) The Variable Account
The Variable Account is a separate account (Separate Account VA-2L)
that is subdivided into Sub-Accounts. (See "The Variable Account" page 19.)
Assets of each Sub-Account are invested in a specified mutual fund Portfolio.
Each Sub-Account uses its assets to purchase, at their net asset value, shares
of a specific Series of Dreyfus Variable Investment Fund or shares in Dreyfus
Stock Index Fund or The Dreyfus Socially Responsible Growth Fund, Inc. (together
"The Funds"). The following fifteen Portfolios are currently available for
investment in the Variable Account.
Money Market Capital Appreciation International Value
Managed Assets Stock Index Disciplined Stock
Zero Coupon 2000 Socially Responsible Growth Small Company Stock
Quality Bond Growth and Income Balanced
Small Cap International Equity Limited Term High Income
Each Portfolio has distinct investment objectives and policies which are
described in the accompanying prospectuses for the
Funds. (See "The Funds" page 21.) Some Portfolios may not be available in all
states.
The Funds pay their investment adviser and administrators certain fees
charged against the assets of each Portfolio. The Account Value, if any, of a
Contract and the amount of any Variable Annuity Payments will vary to reflect
the investment performance of all of the Sub-Accounts selected by the Owner and
the deduction of the charges described under "Charges and Deductions" (page 31).
For more information about the Funds, see "The Funds" (page 20) and the
accompanying Funds' prospectuses.
8
<PAGE>
The Fixed Account
Each Net Purchase Payment, or portion thereof, allocated to the Fixed
Account, as well as each amount transferred to the Fixed Account, will establish
a new Guarantee Period. Each Guarantee Period will have its own Guaranteed
Interest Rate (which will be at least 3% per year) and its own Expiration Date.
Amounts allocated to a new Guarantee Period must be at least $1,000. Amounts
withdrawn or transferred from a Guarantee Period prior to its Expiration Date
will generally be subject to an interest adjustment which will reduce the
interest credited to the amount withdrawn to the minimum 3% annual rate. (See
"The Fixed Account" page 23.) Transfers Before the Annuity Date
Prior to the Annuity Date, the Owner may make transfers between and
among the Guarantee Periods of the Fixed Account and the Sub-Accounts of the
Variable Account. A "transfer" is the reallocation of amounts between the
Guaranteed Period(s) of the Fixed Account and the Sub-Account(s) of the Variable
Account, among the Guarantee Periods of the Fixed Account, and among
Sub-Accounts of the Variable Account. All reallocations on any one day are
considered one transfer. Total transfers are limited to eighteen during a
Contract Year. This limit includes all transfers except those specifically
excluded under certain programs. Amounts transferred from a Guarantee Period
prior to its Expiration Date will generally be subject to an interest adjustment
which will reduce the interest credited to the minimum 3% annual rate. (See
"Transfers" on page 27.)
Transamerica currently does not impose a Transfer Fee, but it reserves
the right to charge a Transfer Fee for each
transfer in excess of six made during the same Contract Year. (See "Transfer
Fee" page 38.) (See "The Fixed Account" page
23.) (For Transfers after the Annuity Date, see "After the Annuity Date" page
31.)
Withdrawals
All or part of the Cash Surrender Value for a Contract may be withdrawn
by the Owner on or before the Annuity Date. Amounts withdrawn may be subject to
a Contingent Deferred Sales Load depending upon how long the withdrawn Purchase
Payments have been held under the Contract. (See "Contingent Deferred Sales
Load" below and at page 32.) Amounts withdrawn may be subject to a premium tax
or similar tax, depending upon the state in which the Owner lives. Withdrawals
may further be subject to any federal, state or local income tax, and subject to
a penalty tax. Withdrawals from Qualified Contracts may be subject to severe
restrictions. (Except for rollover IRAs, Qualified Contracts are sold only with
Transamerica's prior permission.) (See "Qualified Contracts" page 37 and
"Federal Tax Matters" page 38.) The annual Account Fee generally will be
deducted on a full surrender of a Contract. (See "Withdrawals" page 28.) Only
one, and in some states no partial withdrawal, will be permitted while the
Systematic Withdrawal Option is in effect.
Amounts withdrawn from a Guarantee Period prior to its Expiration Date
will generally be subject to an interest
adjustment which will reduce the interest credited to the amount withdrawn to
the minimum 3% annual rate. (See "The Fixed
Account" page 23.) Transamerica may delay payment of any withdrawal from the
Fixed Account for up to six months. (See
"Cash Withdrawals" page 28.)
Contingent Deferred Sales Load
Transamerica does not deduct a sales charge from Purchase Payments
(although premium taxes may be deducted). However, if any part of the Account
Value is withdrawn, a Contingent Deferred Sales Load of up to 6% of Purchase
Payments may be assessed by Transamerica to cover certain expenses relating to
the sale of the Contracts, including commissions to registered representatives
and other promotional expenses. TRANSAMERICA GUARANTEES THAT THE AGGREGATE
CONTINGENT DEFERRED SALES LOAD WILL NEVER EXCEED 6% OF THE PURCHASE PAYMENTS.
After a Purchase Payment has been held by Transamerica for seven Contract Years,
it may be withdrawn without charge. In addition, no Contingent Deferred Sales
Load is assessed on death, on transfers, or on certain annuitizations. (See
Contingent Deferred Sales Load" page 32.)
Certain amounts may be withdrawn free of any Contingent Deferred Sales
Load. The Owner may make withdrawals up to the "Allowed Amount" (described
below) without incurring a Contingent Deferred Sales Load each Contract Year
before the Annuity Date. During the first Contract Year, the Allowed Amount is
equal to accumulated earnings not previously withdrawn. For the first
withdrawal, and only the first withdrawal, in a Contract Year after the first
Contract Year, the available Allowed Amount is equal to the sum of: (a) 100% of
Purchase Payments not previously withdrawn and received at least seven Contract
Years before the date of withdrawal; plus (b) the greater of (i) the accumulated
earnings not previously withdrawn or (ii) 15% of Purchase Payments received at
least one but less than seven complete Contract Years before the date of
withdrawal not reduced by any withdrawals deemed to have been made from such
Purchase Payments. After the first withdrawal in a Contract Year, after the
first Contract Year, the available Allowed Amount is equal to the sum of: (a)
100% of Purchase Payments, not previously withdrawn and received at least seven
complete Contract Years before the date of withdrawal; plus (b) accumulated
earnings not previously withdrawn. Withdrawals will always be made first from
accumulated earnings, and then from Purchase Payments on a first in first out
basis. Therefore, accumulated earnings could be withdrawn as part of the first
withdrawal in a Contract Year and, therefore, not be available for withdrawals
made later
9
<PAGE>
that Contract Year. If an Allowed Amount is not withdrawn during a Contract
Year, it does not carry over to the next Contract Year. However, accumulated
earnings, if any, in an Owner's Account Value are always available as the
Allowed Amount. No withdrawals are allowed with regard to Purchase Payment made
by a check which has not cleared. The Contingent Deferred Sales Load is waived
on a withdrawal if the Owner is confined to a hospital or nursing care facility
for 45 days (30 days in Pennsylvania) out of a continuous 60 day period and
other conditions are met. Additionally, in some states, the Contingent Deferred
Sales Load is waived if the Owner is diagnosed with a terminal illness,
reasonably expected to result in death within twelve months after the first
Contract Year. (See "Contingent Deferred Sales Load" page 32.)
Other Charges and Deductions
Transamerica deducts a daily charge (the "Mortality and Expense Risk
Charge") equal to a percentage of the value of the net assets in the Variable
Account for the mortality and expense risks assumed. The effective annual rate
of this charge is 1.25% of the value of the net assets in the Variable Account
attributable to the Contracts. (See "Mortality and Expense Risk Charge" page
33.) TRANSAMERICA GUARANTEES THAT THIS MORTALITY AND EXPENSE RISK CHARGE WILL
NOT BE INCREASED.
Transamerica also deducts a daily charge (the "Administrative Expense
Charge") equal to a percentage of the value of the net assets in the Variable
Account corresponding to an effective annual rate of 0.15% to help cover some of
the costs of administering the Contracts and the Variable Account. This charge
may change, but it is guaranteed not to exceed a maximum effective annual rate
of 0.25% (See "Administrative Charges" page 33.)
There is also an administrative charge (the "Account Fee") each year
for Contract maintenance. This fee currently is $30 (or 2% of the Account Value,
if less) deducted at the end of the Contract Year. This fee may change but it is
guaranteed not to exceed $60 (or 2% of the Account Value, if less) per Contract
Year. If the Account Value is over $50,000 on the last business day of the
Contract Year, or as of the date the Contract is surrendered the Account Fee
will be waived for that year. After the Annuity Date this fee is referred to as
the Annuity Fee. The Annuity Fee is $30 and will not change.
(See "Administrative Charges" page 33.)
Currently, no Transfer Fees or fees for the Systematic Withdrawal
Option are imposed. However, for each transfer in excess of six during a
Contract Year, a Transfer Fee of the lesser of 2% of the amount transferred or
$10 may be imposed (see "Transfer Fee" page 34) and a fee of $25 per Contract
Year may be imposed for the Systematic Withdrawal Option (see page 30).
Charges for state premium taxes (including retaliatory premium taxes)
will be imposed in some states. Depending on the applicability of such state
taxes, the charges could be deducted from premiums, from amounts withdrawn,
and/or from the Annuity Purchase Amount upon annuitization. (See "Premium Taxes"
page 34.)
In addition, amounts withdrawn or transferred out of a Guarantee Period
of the Fixed Account prior to its Expiration Date will generally be subject to
an interest adjustment which will reduce the interest earned on that amount to
the minimum 3% annual rate.
10
<PAGE>
Variable Account Fee Table
The purpose of this table is to assist in understanding the various
costs and expenses that the Owner will bear directly and indirectly. The table
reflects expenses of the Variable Account as well as of the Portfolios. The
table assumes that the entire Account Value is in the Variable Account. The
information set forth should be considered together with the narrative provided
under the heading "Charges and Deductions" on page 3 of this Prospectus, and
with the Funds' prospectuses. In addition to the expenses listed below, premium
taxes may be applicable.
Contract Transaction Expenses(1)
Sales Load Imposed on Purchase Payments 0
Maximum Contingent Deferred Sales Load(2) 6%
- -------------------------------------------------------------------------
Range of Contingent Deferred Sales Load Over Time
Contingent Deferred
Contract Years since Sales Load
Purchase Payments Receipt Percentage
Less than 2 years 6%
2 years but less than 4 years 5%
4 years but less than 6 years 4%
6 years but less than 7 years 2%
7 or more 0%
- -------------------------------------------------------------------------
Transfer Fee(3) 0
Systematic Withdrawal Fee(3) 0
Account Fee(4) $30
Variable Account Annual Expenses(1)
Mortality and Expense Risk Charges 1.25%
Administrative Expense Charge(5) .15%
Other Fees and Expenses of the Variable Account 0.00%
Total Variable Account Annual Expenses 1.40%
<TABLE>
<CAPTION>
Zero Stock
Portfolio Money Managed Coupon Quality Small Capital Index
- ---------
Annual Expenses Market Assets 2000 Bond Cap Appreciation Fund(6)
- ---------------- ------ ------ ---- ---- --- ------------ -------
(as a percentage of Portfolio
average net assets)
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fees 0.50% 0.75% 0.45% 0.65% 0.75% 0.75% 0.25%
Other Expenses 0.12% 0.18% 0.21% 0.14% 0.04% 0.09% 0.05%
Total Portfolio Annual 0.62% 0.93% 0.66% 0.79% 0.79% 0.84% 0.30%
Expenses
</TABLE>
<TABLE>
<CAPTION>
Socially Growth Small
Portfolio Responsible and International International Disciplined Company
Annual Expenses Fund(6) Income Equity Value(6)(7) Stock(6)(7) Stock(6)(7)
(as a percentage of Portfolio
average net assets)
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.75% 0.75% 0.75% 1.00% 0.75% 0.75%
Other Expenses 0.24% 0.08% 0.53% 0.35% 0.21% 0.19%
Total Portfolio Annual 0.99% 0.83% 1.28% 1.35% 0.96% 0.94%
Expenses
</TABLE>
Portfolio Limited Term
Annual Expenses Balanced(6) High Income(6)
(as a percentage of Portfolio
average net assets)
Management Fees 0.75% 0.65%
Other Expenses 0.50% 0.35%
Total Portfolio Annual 1.25% 1.00%
Expenses
11
<PAGE>
Expense information regarding the Portfolios has been provided by the Funds.
Transamerica has no reason to doubt the accuracy of that information, but
Transamerica has not verified those figures. In preparing the table above and
the examples that follow, Transamerica has relied on the figures provided by the
Funds. Actual expenses in future years may be higher or lower than the figures
above.
Notes to Fee Table:
(1) The Contract Transaction Expenses apply to each Contract, regardless of
how Account Value is allocated between the Variable Account and the
Fixed Account. The Variable Account Annual Expenses do not apply to the
Fixed Account.
(2) A portion of the Purchase Payments may be withdrawn each year after the
first Contract Year without imposition of any Contingent Deferred Sales
Load; after a Purchase Payment has been held by Transamerica for seven
Contract Years, the remaining Purchase Payment may be withdrawn free of
any Contingent Deferred Sales Load ("CDSL"); accumulated earnings may
always be withdrawn without imposition of a CDSL.
(See Contingent Deferred Sales Load" page 32.)
(3) Transamerica currently does not impose a Transfer Fee. However, a
Transfer Fee of $10 may be imposed for each transfer in excess of six in
a Contract Year. Transamerica may also impose a fee (of up to $25 per
year) if the systematic withdrawal option is elected. (See "Charges and
Deductions" page 31.)
(4) The current annual Account Fee is $30 (or 2% of the Account Value, if
less) per Contract Year. The fee may be changed annually, but it may
not exceed $60 (or 2% of the Account Value, if less). (See "Charges and
Deductions" page 31.)
(5) The current annual Administrative Expense Charge is 0.15%; it may be
increased to 0.25%. The total of the charges described in notes (2),
(3) and (4) will never exceed the anticipated or estimated costs to
administer the Contract and the Variable Account. (See "Charges and
Deductions" page 31.)
(6) From time to time, the Portfolios' investment adviser, in its sole
discretion, may waive all or part of their fees and/or voluntarily
assume certain Portfolio expenses. For fiscal year 1996, certain fees
were waived or expenses assumed, in each case on a voluntary basis.
With such waivers or reimbursements, the Management Fees, Other
Expenses and Total Portfolio Annual Expenses that were paid for the
last completed fiscal year, December 31, 1996, for the Socially
Responsible Fund were 0.72%, 0.24% and 0.96%. The International Value,
Disciplined Stock, and Small Company Stock Portfolios did not commence
operations until April 30, 1996. The Management Fee, Other Expenses and
Total Portfolio Annual Expenses that were paid, on an annualized basis
because of such waivers or reimbursements, for the last completed
fiscal year, December 31, 1996, for these Portfolios were:
International Value: 0.66%, 0.35%, 1.01%; Disciplined Stock: 0.59%,
0.21%, 0.80%; and Small Company Stock: 0.56%; 0.19%; and 0.75%. During
Calendar year 1997, the adviser has undertaken to waive fees and
reimburse expenses as follows: Stock Index with a cap at 0.40%;
Balanced with a cap of 1.25% on an annualized basis; and Limited Term
High Income with a cap of 1% on an annualized basis. For a more
complete description of the Portfolios' fees and expenses, see the
Funds' prospectuses.
(7) The International Value, Disciplined Stock and Small Company Stock
Portfolios did not commence operations until April 30, 1996. These
numbers show the expenses annualized as though the Portfolio had been
in operation throughout 1996.
(8) The Balanced and Limited Term High Income Portfolios did not commence
operations during 1996. These numbers are annualized estimates of the
expenses that each of these Portfolios expects to incur with waivers
and reimbursements during fiscal year 1997.
12
<PAGE>
Examples*
The following three examples reflect no Account Fee deduction because
the approximate average Account Value is more than $50,000 and the Account Fee
is waived for Account Values of $50,000. The tabular information assumes that
the entire Account Value is allocated to the Variable Account.
These examples all assume no Transfer Fees, systematic withdrawal fee
or premium tax have been assessed. Premium
taxes may be applicable. (See "Premium Taxes" page 34.)
These examples show expenses without reflecting fee waivers and
reimbursements for 1996. Except for the Stock Index, Balanced and Limited Term
High Income Portfolios, it is not anticipated that there will be any fee waivers
or expense reimbursements in the future.
Example 1
If the Owner surrenders the Contract at the end of the applicable time
period, he/she would pay the following expenses on a $1,000 Initial Purchase
Payment assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
Sub-Account One Year Three Years Five Years Ten Years
- ----------- -------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Money Market $73.29 $110.46 $148.80 $234.80
Managed Assets $76.21 $119.35 $164.16 $266.60
Zero Coupon 2000 $73.67 $111.61 $150.84 $238.97
Quality Bond $74.89 $115.35 $157.40 $252.37
Small Cap $74.89 $115.35 $157.40 $252.37
Capital Appreciation $75.37 $116.78 $159.82 $257.48
Stock Index $70.26 $101.19 $132.30 $200.86
Socially Responsible $76.78 $121.07 $176.92 $272.63
Growth and Income $75.27 $116.49 $159.34 $256.46
International Equity $79.50 $129.30 $180.85 $301.24
International Value $80.16 $131.27 $184.15 $308.01
Disciplined Stock $76.50 $120.21 $165.61 $269.62
Small Company Stock $76.31 $119.64 $164.64 $267.60
Balanced $79.22 $128.45 $179.43 $298.32
Limited Term High Income $76.87 $121.35 $167.53 $273.63
</TABLE>
Example 2
If the Owner does not surrender and does not annuitize the Contract,
they would pay the following expenses on a $1,000 Initial Purchase Payment
assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
Sub-Account One Year Three Years Five Years Ten Years
- ----------- -------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Money Market $20.50 $63.35 $108.80 $234.80
Managed Assets $23.61 $72.74 $124.53 $266.60
Zero Coupon 2000 $20.90 $64.57 $110.84 $238.97
Quality Bond $22.21 $68.51 $117.46 $252.37
Small Cap $22.21 $68.51 $117.46 $252.37
Capital Appreciation $22.71 $70.02 $119.99 $257.48
Stock Index $17.28 $53.57 $92.30 $200.86
Socially Responsible $24.21 $74.55 $127.55 $272.63
Growth and Income $22.61 $69.72 $119.48 $256.46
International Equity $27.11 $83.23 $141.99 $301.24
International Value $27.81 $85.32 $145.45 $308.01
Disciplined Stock $23.91 $73.65 $126.04 $269.62
Small Company Stock $23.71 $73.04 $125.03 $267.60
Balanced $26.81 $82.34 $140.51 $298.32
Limited Term High Income $24.31 $74.85 $128.05 $273.63
</TABLE>
13
<PAGE>
Example 3
If the Owner elects to annuitize at the end of the applicable period
under an Annuity Form with life contingencies,** they would pay the following
expenses on a $1,000 Initial Purchase Payment assuming a 5% annual return on
assets:
<TABLE>
<CAPTION>
Sub-Account One Year Three Years Five Years Ten Years
- ----------- -------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Money Market $73.29 $63.35 $108.80 $234.80
Managed Assets $76.21 $72.74 $124.53 $266.60
Zero Coupon 2000 $73.67 $64.57 $110.84 $238.97
Quality Bond $74.89 $68.51 $117.46 $252.37
Small Cap $74.89 $68.51 $117.46 $252.37
Capital Appreciation $75.37 $70.02 $119.99 $257.48
Stock Index $70.26 $53.57 $92.30 $200.86
Socially Responsible $76.78 $74.55 $127.55 $272.63
Growth and Income $75.27 $69.72 $119.48 $256.46
International Equity $79.50 $83.23 $141.99 $301.24
International Value $80.16 $85.32 $145.45 $308.01
Disciplined Stock $76.50 $73.65 $126.04 $269.62
Small Company Stock $76.31 $73.04 $125.03 $267.60
Balanced $79.22 $82.34 $140.51 $298.32
Limited Term High Income $76.87 $74.85 $128.05 $273.63
</TABLE>
*In preparing the examples above, Transamerica has relied on the data provided
by the Funds. Transamerica has no reason to doubt the accuracy of that
information, but Transamerica has not verified those figures. **For
annuitizations before the third Contract Anniversary, or for annuitization under
a form that does not include life contingencies, a Contingent Deferred Sales
Load may apply.
THESE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE
EXPENSES.
ACTUAL EXPENSES PAID MAY BE GREATER OR LESS THAN THOSE SHOWN, SUBJECT TO THE
GUARANTEES
IN THE CONTRACT. The assumed 5% annual return is only hypothetical. It is not
a representation of past or future returns.
Actual returns could be greater or less than this assumed rate.
Annuity Payments
Annuity Payments will be made either on a fixed basis or a variable
basis or a combination of a fixed and variable basis as the Owner selects. The
Owner has flexibility in choosing the Annuity Date for his or her Contract. In
no event may the Annuity Date be a date later than the first day of the month
immediately preceding the month of the Annuitant's 85th birthday or the first
day of the month coinciding with or next following the tenth Contract
Anniversary, whichever occurs last. This extension of the Annuity Date to the
tenth Contract Anniversary may not be available in all states. The Annuity Date
may not be earlier than the first day of the month coinciding with or
immediately following the third Contract Anniversary except for Qualified
Contracts. Annuity Payments will begin on the first day of the calendar month
following the Annuity Date. (See "Annuity Payments" page 38.)
Four Annuity Forms are available under the Contract: (1) Life Annuity;
(2) Life and Contingent Annuity; (3) Life
Annuity with Period Certain; and (4) Joint and Survivor Annuity. (See "Annuity
Forms" page 40.)
Payments on Death Before the Annuity Date
The Death Benefit for a Contract will be equal to the greatest of (1)
the Account Value; (2) a "seven-year step-up" benefit, which is the greatest
Account Value determined as of the seventh Contract Anniversary and at each
succeeding Contract Anniversary occurring at seven year intervals thereafter
(adjusted for additional Purchase Payments and withdrawals since that
anniversary less premium taxes applicable to those withdrawals); or (3) Purchase
Payments, less withdrawals and premium taxes applicable to those withdrawals,
compounded at 5% annual effective interest rate (the 5% interest stops when an
Owner or the Annuitant reaches age 75, or when it has doubled the amount of your
investment less withdrawals and any premium taxes applicable to those
withdrawals, whichever is earlier). (See "Death Benefit" page 30.) The death
benefit will generally be paid within seven days of receipt of the required
Proof of Death of an Owner or the Annuitant and election of the method of
settlement or as soon thereafter as Transamerica has sufficient information
about the Beneficiary to make the payment, but if no settlement method is
elected the death benefit will be paid no later than one year from the date of
death.
14
<PAGE>
No Contingent Deferred Sales Load or interest adjustment is imposed. The death
benefit may be paid as either a lump sum
or as an annuity. (See "Death Benefit" page 30.)
Federal Income Tax Consequences
An Owner who is a natural person generally should not be taxed on
increases in the Account Value until a distribution under the Contract occurs
(e.g., a withdrawal or Annuity Payment) or is deemed to occur (e.g., a pledge,
loan, or assignment of a Contract). Generally, a portion (up to 100%) of any
distribution or deemed distribution is taxable as ordinary income. The taxable
portion of distributions is generally subject to income tax withholding unless
the recipient elects otherwise except that mandatory withholding may apply for
certain Qualified Contracts. In addition, a federal penalty tax may apply to
certain distributions. (See "Federal Tax Matters" page 38.) Right to Cancel
The Owner has the right to examine the Contract for a limited period,
known as a "Free Look Period." The Owner can cancel the Contract by delivering
or mailing a written notice of cancellation, or sending a telegram to the
Service Center and by returning the Contract before midnight of the tenth day
(or longer if required by state law) after receipt of the Contract. Notice given
by mail and the return of the Contract by mail will be effective on the date
received by Transamerica. The amount of the refund may depend on the state of
issuance. In most cases, Transamerica will refund the Purchase Payments
allocated to the Fixed Account plus the Variable Accumulated Value as of the
date the written notice and the Contract are received by Transamerica. In other
cases, including for certain ages of Owners in some states, and in all states
for IRAs, Transamerica will refund the greater of the Purchase Payments or the
Account Value as of the date the written notice and the Contract are received by
Transamerica. In certain situations, the Purchase Payments received before or
during the Free Look period will be allocated among the Guarantee Period(s) of
the Fixed Account and Sub-Account(s) of the Variable Account in accordance with
the Owner's instructions. In certain situations, the Purchase Payment(s)
received before or during the Free Look Period which the Owner has allocated to
the Fixed Account will be allocated to the Guarantee Period(s) in accordance
with the Owner's instructions, but Purchase Payments which are to be allocated
to the Sub-Accounts of the Variable Accounts will be held in the Money Market
Sub-Account until the estimated end of the Free Look Period (allowing 5 days for
delivery of the Contract by mail). Owners should consult their registered
representative or investment adviser (or see their Contract) for the applicable
provision. (See "Application and Purchase Payments" page 25 and "Account Value"
page 26.) Questions
Any questions about procedures or the Contract will be answered by the
Transamerica Annuity Service Center ("Service Center"), at P.O. Box 31848,
Charlotte, North Carolina 28231-1848, or call 800-258-4260. All inquiries should
include the Contract Number and the Owner's and Annuitant's names.
NOTE: The foregoing summary is qualified in its entirety by the
detailed information in the remainder of this Prospectus and in the prospectuses
for Dreyfus Variable Investment Fund, Dreyfus Stock Index Fund and The Dreyfus
Socially Responsible Growth Fund, Inc., which should be referred to for more
detailed information. With respect to Qualified Contracts, it should be noted
that the requirements of a particular retirement plan, an endorsement to the
Contract, or limitations or penalties imposed by the Code or the Employee
Retirement Income Security Act of 1974, as amended, may impose additional limits
or restrictions on Purchase Payments, Withdrawals, distributions, or benefits,
or on other provisions of the Contract. This Prospectus does not describe such
limitations or restrictions. (See "Federal Tax Matters" page 41.)
15
<PAGE>
CONDENSED FINANCIAL INFORMATION
The following condensed financial information is derived from the financial
statements of the Variable Account. The data should be read in conjunction with
the financial statements, related notes, and other financial information
included in the Statement of Additional Information.
The following table sets forth certain information regarding the
Sub-Accounts for the period from commencement of business operations of the
Sub-Account through December 31, 1996. The Balanced Fund and Limited Term High
Income Fund are not included because these Sub-Accounts did not commence
operations during 1996.
The Variable Accumulation Unit values and the number of Variable
Accumulation Units outstanding for each Sub-Account for the periods shown are as
follows:
<TABLE>
<CAPTION>
Year Ending December 31, 1993
-----------------------------------------------------------------
Money Managed Zero Coupon Quality
Market Assets 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
(Inception 1/4/93)(Inception 1/4/93)(Inception 1/4/93)(Inception 1/4/93) (Inception 1/4/93)
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period $1.00 $10.09 $11.85 $11.00 $22.54
Accumulation Unit Value
at End of Period $1.018 $12.861 $13.373 $12.445 $37.702
Number of Accumulation
Units Outstanding
at End of Period 3,654,791.776 287,4509.768 206,103.348 255,350.340 254,839.860
</TABLE>
<TABLE>
<CAPTION>
Capital Appreciation Stock Index Socially Responsible
Sub-Account Sub-Account Sub-Account
(Inception- (Inception- (Inception-
April 5, January 4 October 7,
1993) 1993) 1993)
Accumulation Unit Value at
<S> <C> <C> <C>
Beginning of Period $12.50 $15.31 $12.49
Accumulation Unit Value at
End of Period $13.160 $16.521 $13.326
Number of Accumulation Units
Outstanding at End of Period 237,733.021 93,536.733 26,089.821
</TABLE>
<TABLE>
<CAPTION>
Year Ending December 31, 1994
---------------------------------------------------------------------------------
Money Managed Zero Coupon Quality
Market Assets 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period $1.018 $12.861 $13.373 $12.445 $37.702
Accumulation Unit Value
at End of Period $1.048 $12.496 $12.672 $11.711 $40.064
Number of Accumulation
Units Outstanding
at End of Period 23,559,789.7951,486,438.137 476,355.738 931,527.691 1,250,237.625
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
International
Growth and Income Equity
Sub-Account Sub-Account
Capital Appreciation Stock Index Socially Responsible (Inception (Inception
Sub-Account Sub-Account Sub-Account December 15, 1994) December 15, 1994)
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period $13.160 $16.521 $13.326 $12.177 $12.247
Accumulation Unit Value
at End of Period $13.373 $16.437 $13.377 $12.167 $12.240
Number of Accumulation
Units Outstanding
at End of Period 919,622.615 348,937.285 135,018.350 4,300.380 8,552.073
</TABLE>
<TABLE>
<CAPTION>
Year Ending December 31, 1995
---------------------------------------------------------------------------------
Money Managed Zero Coupon Quality
Market Assets 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period $1.048 $12.496 $12.672 $11.711 $40.064
Accumulation Unit Value
at End of Period $1.093 $12.292 $14.740 $13.908 $51.121
Number of Accumulation
Units Outstanding
at End of Period 31,807,563.947 1,288,429.555 903,799.152 2,052,313.888 2,155,879.198
International
Capital Appreciation Stock Index Socially Responsible Growth and Income Equity
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $13.373 $16.437 $13.377 $12.167 $12.240
Accumulation Unit Value
at End of Period $17.610 $22.172 $17.752 $19.426 $12.964
Number of Accumulation
Units Outstanding
at End of Period 2,077,029.504 997,271.816 295,077.936 2,565,038.589 530,374.642
</TABLE>
<TABLE>
<CAPTION>
Year Ending December 31, 1996
---------------------------------------------------------------------------------
Money Managed Zero Coupon Quality
Market Assets 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period $1.093 $12.292 $14.740 $13.908 $51.121
Accumulation Unit Value
at End of Period $1.132 $11.682 $14.911 $14.142 $58.773
Number of Accumulation
Units Outstanding
at End of Period 38,983,053.941 1,232,530.711 1,320,168.687 3,072,774.847 2,736,720.675
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
International
Capital Appreciation Stock Index Socially Responsible Growth and Income Equity
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period $17.610 $22.172 $17.752 $19.426 $12.964
Accumulation Unit Value
at End of Period $21.802 $26.791 $21.221 $23.131 $14.267
Number of Accumulation
Units Outstanding
at End of Period 3,665,146.389 2,030,280.057 708,680.320 6,332,649.215 1,480,395.223
</TABLE>
<TABLE>
<CAPTION>
International Value Disciplined Stock Small Company Stock
Sub-Account Sub-Account Sub-Account
(Inception 5/1/96) (Inception 5/1/96) (Inception 5/1/96)
Accumulation Unit Value
<S> <C> <C> <C>
at Beginning of Period $10.00 $10.00 $10.00
Accumulation Unit Value
at End of Period $10.244 $11.776 $10.772
Number of Accumulation
Units Outstanding
at End of Period 23,868.491 618,809.191 543,949.419
</TABLE>
Financial Statements for the Variable Account and Transamerica
The financial statements and reports of independent auditors for the
Variable Account and Transamerica are contained in the Statement of Additional
Information.
PERFORMANCE DATA
From time to time, Transamerica may advertise yields and average annual
total returns for the Sub-Accounts of the Variable Account. In addition,
Transamerica may advertise the effective yield of the Money Market Sub-Account.
These figures will be based on historical information and are not intended to
indicate future performance.
The yield of the Money Market Sub-Account refers to the annualized
income generated by an investment in that Sub-Account over a specified seven-day
period. The yield is calculated by assuming that the income generated for that
seven-day period is generated each seven-day period over a 52-week period and is
shown as a percentage of the investment. The effective yield is calculated
similarly but, when annualized, the income earned by an investment in that
Sub-Account is assumed to be reinvested. The effective yield will be slightly
higher than the yield because of the compounding effect of this assumed
reinvestment.
The yield of a Sub-Account (other than the Money Market Sub-Account)
refers to the annualized income generated by an investment in the Sub-Account
over a specified thirty-day period. The yield is calculated by assuming that the
income generated by the investment during that thirty-day period is generated
each thirty-day period over a twelve-month period and is shown as a percentage
of the investment.
The yield calculations do not reflect the effect of any Contingent
Deferred Sales Load or premium taxes that may be applicable to a particular
Contract. To the extent that the Contingent Deferred Sales Load is applicable to
a particular Contract, the yield of that Contract will be reduced. For
additional information regarding yields and total returns calculated using the
standard formats briefly described herein, please refer to the Statement of
Additional Information.
The average annual total return of a Sub-Account refers to return
quotations assuming an investment has been held in the Sub-Account for various
periods of time including, but not limited to, a period measured from the date
the Sub-Account commenced operations. When a Sub-Account has been in operation
for 1, 5, and 10 years, respectively, the average annual total return for these
periods will be provided. The average annual total return quotations will
represent the average annual compounded rates of return that would equate an
initial investment of $1,000 to the redemption value of that investment
(including the deduction of any applicable Contingent Deferred Sales Load but
excluding deduction of any premium taxes) as of the last day of each of the
periods for which total return quotations are provided.
Performance information for any Sub-Account reflects only the
performance of a hypothetical Contract under which Account Value is allocated to
a Sub-Account during a particular time period on which the calculations are
based. Performance information should be considered in light of the investment
objectives and policies and characteristics of the Portfolios in which the
Sub-Account invests, and the market conditions during the given time period, and
should not be considered as a
18
<PAGE>
representation of what may be achieved in the future. For a description of the
methods used to determine yield and total returns, see the Statement of
Additional Information.
Reports and promotional literature may also contain other information
including (1) the ranking of any Sub-Account derived from rankings of variable
annuity separate accounts or their investment products tracked by Lipper
Analytical Services, Inc., VARDS, IBC/Donoghue's Money Fund Report, Financial
Planning Magazine, Money Magazine, Bank Rate Monitor, Standard and Poor's
Indices, Dow Jones Industrial Average, and other rating services, companies,
publications, or other persons who rank separate accounts or other investment
products on overall performance or other criteria, and (2) the effect of tax
deferred compounding on Sub-Account investment returns, or returns in general,
which may be illustrated by graphs, charts, or otherwise, and which may include
a comparison, at various points in time, of the return from an investment in a
Contract (or returns in general) on a tax-deferred basis (assuming one or more
tax rates) with the return on a currently taxable basis. Other ranking services
and indices may be used.
In its advertisements and sales literature, Transamerica may discuss,
and may illustrate by graphs, charts, or otherwise, the implications of longer
life expectancy for retirement planning, the tax and other consequences of
long-term investment in the Contract, the effects of the Contract's lifetime
payout option, and the operation of certain special investment features of the
Contract -- such as the Dollar Cost Averaging option. Transamerica may explain
and depict in charts, or other graphics, the effects of certain investment
strategies, such as allocating purchase payments between the Fixed Account and
an equity Sub-Account. Transamerica may also discuss the Social Security system
and its projected payout levels and retirement plans generally, using graphs,
charts and other illustrations.
Transamerica may from time to time also disclose average annual total
return in non-standard formats and cumulative (non-annualized) total return for
the Sub-Accounts. The non-standard average annual total return and cumulative
total return will assume that no Contingent Deferred Sales Load is applicable.
Transamerica may from time to time also disclose yield, standard total returns,
and non-standard total returns for any or all Sub-Accounts.
All non-standard performance data will only be disclosed if the
standard performance data is also disclosed. For additional information
regarding the calculation of other performance data, please refer to the
Statement of Additional Information.
Transamerica may also advertise performance figures for the
Sub-Accounts based on the performance of a Portfolio prior to the time the
Variable Account commenced operations.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE
COMPANY AND THE VARIABLE ACCOUNT
Transamerica Occidental Life Insurance Company
Transamerica Occidental Life Insurance Company ("Transamerica") is a
stock life insurance company incorporated under the laws of the State of
California in 1906. It is principally engaged in the sale of life insurance and
annuity policies. Transamerica is a wholly-owned subsidiary of Transamerica
Insurance Corporation of California, which in turn is a direct subsidiary of
Transamerica Corporation. The address of Transamerica is 1150 South Olive
Street, Los Angeles, California, 90015. Published Ratings
Transamerica may from time to time publish in advertisements, sales
literature and reports to Owners, the ratings and other information assigned to
it by one or more independent rating organizations such as A.M. Best Company,
Standard & Poor's, Moody's, and Duff & Phelps. The purpose of the ratings is to
reflect the financial strength and/or claims-paying ability of Transamerica and
should not be considered as bearing on the safety or investment performance of
assets held in the Variable Account. Each year the A.M. Best Company reviews the
financial status of thousands of insurers, culminating in the assignment of
Best's Ratings. These ratings reflect their current opinion of the relative
financial strength and operating performance of an insurance company in
comparison to the norms of the life/health insurance industry. In addition, the
claims-paying ability of Transamerica as measured by Standard & Poor's Insurance
Ratings Services, Moody's, or Duff & Phelps may be referred to in advertisements
or sales literature or in reports to Owners. These ratings are opinions of an
operating insurance company's financial capacity to meet the obligations of its
insurance and annuity policies in accordance with their terms, including its
obligations under the Fixed Account provisions of this Contract. Such ratings do
not reflect the investment performance of the Variable Account or the degree of
risk associated with an investment in the Variable Account. The Variable Account
Separate Account VA-2L of Transamerica (the "Variable Account") was
established by Transamerica as a separate account under the laws of the State of
California on May 22, 1992 pursuant to resolutions of Transamerica's Board of
Directors. The Variable Account is registered with the Securities and Exchange
Commission ("Commission") under the Investment Company Act of 1940 (the "1940
Act") as a unit investment trust. It meets the definition of a separate account
19
<PAGE>
under the federal securities laws. However, the Commission does not supervise
the management or the investment practices or policies of the Variable Account.
The assets of the Variable Account are owned by Transamerica but they
are held separately from the other assets of Transamerica. Section 10506 of the
California Insurance Law provides that the assets of a separate account are not
chargeable with liabilities incurred in any other business operation of the
insurance company (except to the extent that assets in the separate account
exceed the reserves and other liabilities of the separate account). Income,
gains and losses incurred on the assets in the Variable Account, whether or not
realized, are credited to or charged against the Variable Account without regard
to other income, gains or losses of Transamerica. Therefore, the investment
performance of the Variable Account is entirely independent of the investment
performance of Transamerica's general account assets or any other separate
account maintained by Transamerica.
The Variable Account has fifteen Sub-Accounts, each of which invests
solely in a specific corresponding Portfolio.
(See "The Funds" below.) Changes to the Sub-Accounts may be made at the
discretion of Transamerica. (See "Addition,
Deletion, or Substitution" page 22.) All Sub-Accounts may not be available in
all states.
THE FUNDS
The Variable Account invests exclusively in Series of Dreyfus Variable
Investment Fund (the "Variable Fund"), Dreyfus Stock Index Fund (the "Stock
Index Fund") and The Dreyfus Socially Responsible Growth Fund, Inc. (the
"Socially Responsible Fund"). The Variable Fund was organized as an
unincorporated business trust under Massachusetts law pursuant to an Agreement
and Declaration of Trust dated October 29, 1986, commenced operations on August
31, 1990, and is registered with the Commission as an open-end management
investment company under the 1940 Act. Currently, thirteen Series (i.e.,
Portfolios) of the Variable Fund are available for the Contracts. Each of these
Portfolios has separate investment objectives and policies. As a result, each
Portfolio operates as a separate investment Portfolio, and the investment
performance of one Portfolio has no effect on the investment performance of any
other Portfolio. The Stock Index Fund was incorporated under Maryland law on
January 24, 1989, commenced operations on September 29, 1989, and is registered
with the Commission as an open-end, non-diversified, management investment
company. The Socially Responsible Fund was incorporated under Maryland law on
July 20, 1992, commenced operations on October 7, 1993, and is registered with
the Commission as an open-end, diversified, management investment company.
However, the Commission does not supervise the management or the investment
practices and policies of any of the Funds. The assets of the Variable Fund, the
Socially Responsible Fund and the Stock Index Fund are each separate from the
assets of the other Funds.
The Dreyfus Corporation provides investment advisory and administrative
services to the Variable Fund and the Socially Responsible Fund. Mellon Equity
Associates provides index fund management services to the Stock Index Fund, with
The Dreyfus Corporation serving as the manager, in accordance with applicable
agreements with the Fund. Fayez Sarofim & Co. provides sub-investment advisory
services for the Capital Appreciation Portfolio. NCM Capital Management Group,
Inc., provides sub-investment advisory services for the Socially Responsible
Fund.
The Portfolios are described below. See the Variable Fund, the Stock
Index Fund and the Socially Responsible Fund
prospectuses for more information.
Money Market Portfolio
The Money Market Portfolio's investment objective is to achieve as high
a level of current income as is consistent with the preservation of capital and
the maintenance of liquidity. It seeks to achieve its objective by investing in
short-term money market instruments. The investment advisory fee is payable
monthly at the annual rate of 0.50 of 1% of the value of the Portfolio's average
daily net assets. This Portfolio is neither insured nor guaranteed by the United
States Government, and there can be no assurance that it will be able to
maintain a stable net asset value of $1.00 per share. Managed Assets Portfolio
The Managed Assets Portfolio's investment objective is to maximize
total return, consisting of capital appreciation and current income. It seeks to
achieve its objective by investing in a wide range of equity and debt securities
and money market instruments. An investment advisory fee is payable monthly to
The Dreyfus Corporation at the annual rate of 0.75% of 1% of the value of the
Portfolio's average daily net assets. Zero Coupon 2000 Portfolio
The Zero Coupon 2000 Portfolio's investment objective is to provide as
high an investment return as is consistent with the preservation of capital. It
seeks to achieve its objective by investing primarily in debt obligations of the
U.S. Treasury that have been stripped of their unmatured interest coupons,
interest coupons that have been stripped from debt obligations issued by the
U.S. Treasury and receipts and certificates for stripped debt obligations and
stripped coupons including U.S. Government trust certificates (collectively,
"Stripped Treasury Securities"). The Portfolio also may purchase certain other
types of stripped government or corporate securities. The Portfolio's assets
will consist primarily of Portfolio securities which will mature on or about
December 31, 2000. The investment advisory fee is payable monthly at the annual
rate of 0.45 of 1% of
20
<PAGE>
the value of the Portfolio's average daily net assets.
Quality Bond Portfolio
The Quality Bond Portfolio's investment objective is to provide the
maximum amount of current income to the extent consistent with the preservation
of capital and the maintenance of liquidity. It seeks to achieve its objective
by investing principally in debt obligations of corporations, the U.S.
Government and its agencies and instrumentalities, and major banking
institutions. The investment advisory fee is payable monthly at the annual rate
of 0.65 of 1% of the value of the Portfolio's average daily net assets. Small
Cap Portfolio
The Small Cap Portfolio's investment objective is to maximize capital
appreciation. It seeks to achieve its objective by investing principally in
common stocks; under normal market conditions, the Series will invest at least
65% of its total assets in companies with market capitalizations of less than
$1.5 billion at the time of purchase which The Dreyfus Corporation believes to
be characterized by new or innovative products, services or processes which
should enhance prospects for growth in future earnings. The investment advisory
fee is payable monthly at the annual rate of 0.75 of 1% of the value of the
Portfolio's average daily net assets. Capital Appreciation Portfolio
The Capital Appreciation Portfolio's primary investment objective is to
provide long-term capital growth consistent with the preservation of capital;
current income is a secondary goal. It seeks to achieve its goals by investing
in common stocks of domestic and foreign issuers. An investment advisory fee is
payable monthly to The Dreyfus Corporation and a sub-investment advisory fee is
payable monthly to Fayez Sarofim & Co. at the aggregate annual rate of 0.75 of
1% of the value of the Portfolio's average daily net assets. Growth and Income
Portfolio
The Growth and Income Portfolio's investment objective is to provide
long-term capital growth, current income and growth of income, consistent with
reasonable investment risk. This Portfolio invests primarily in equity and debt
securities and money market instruments of domestic and foreign issuers. The
proportion of the Portfolio's assets invested in each type of security will vary
from time to time in accordance with The Dreyfus Corporation's assessment of
economic conditions and investment opportunities. An investment advisory fee is
payable monthly to The Dreyfus Corporation at the annual rate of 0.75 of 1% of
the value of the Portfolio's average daily net assets. International Equity
Portfolio
The International Equity Portfolio's investment objective is to
maximize capital appreciation. This Portfolio invests
primarily in the equity securities of foreign issuers located throughout the
world. An investment advisory fee at an annual rate
of 0.75 of 1% of the value of the Portfolio's average daily net assets is
payable monthly to The Dreyfus Corporation.
International Value Portfolio
The International Value Portfolio's investment objective is long-term
capital growth. This Series invests primarily in a portfolio of publicly traded
equity securities of foreign issuers which would be characterized as "value"
companies according to criteria established by the Portfolio's investment
adviser. An investment advisory fee is payable monthly to The Dreyfus
Corporation at the annual rate of 1.00% of the value of the Portfolio's average
daily net assets. Disciplined Stock Portfolio
The Disciplined Stock Portfolio's investment objective is to provide
investment results that are greater than the total return performance of
publicly traded common stocks in the aggregate, as presented by the Standard &
Poor's 500 Composite Stock Price Index. This Portfolio will use quantitative
statistical modeling techniques to construct a portfolio in an attempt to
achieve its investment objective, without assuming undue risk relative to the
broad stock market. An investment advisory fee is payable monthly to The Dreyfus
Corporation at the annual rate of 0.75 of 1% of the value of the Portfolio's
average daily net assets. Small Company Stock Portfolio
The Small Company Stock Portfolio's investment objective is to provide
investment results that are greater than the total return performance of
publicly traded common stocks in the aggregate, as represented by the Russell
2500(TM) Index. This Portfolio invests primarily in a portfolio of equity
securities of small- to medium-sized domestic issuers, while attempting to
maintain volatility and diversification similar to that of the Russell 2500(TM)
Index. An investment advisory fee is payable monthly to The Dreyfus Corporation
at the annual rate of 0.75 of 1% of the value of the Portfolio's average daily
net assets. Balanced Portfolio
The Balanced Portfolio's investment objective is to provide investment
results that are greater than the total return performance of common stocks and
bonds in the aggregate, as represented by a hybrid index 60% of which is
composed of the common stocks in the Standard & Poor's 500 Composite Stock Price
Index and 40% of which is composed of the bonds in the Lehman Brothers
Intermediate Government/Corporate Bond Index. This Portfolio invests primarily
in common stocks and bonds in proportion consistent with their expected returns
and risks as determined by The Dreyfus Corporation. An
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investment advisory fee is payable monthly to The Dreyfus Corporation at the
annual rate of 0.75% of 1% of the value of
the Portfolio's average daily net assets.
Limited Term High Income Portfolio
The Limited Term High Income Portfolio's investment objective is to
maximize total return, consisting of capital appreciation and current income.
This Portfolio seeks to achieve its objective by investing up to all of its
assets in a portfolio of lower rated fixed-income securities, commonly known as
"junk bonds" that, under normal market conditions, has an effective duration of
three and one-half years or less and an effective average portfolio maturity of
four years or less. Investments of this type are subject to a greater risk of
loss of principal and non-payment of interest. Investors should carefully assess
the risks associated with an investment in the Portfolio (those risks are
described in the Portfolio's Prospectus). An investment advisory fee is payable
monthly to The Dreyfus Corporation at the annual rate of 0.65% of 1% of the
value of the Portfolio's average daily net assets. Stock Index Fund
The Stock Index Fund's investment objective is to provide investment
results that correspond to the price and yield performance of publicly traded
common stocks in the aggregate, as represented by the Standard & Poor's 500
Composite Stock Price Index. The Stock Index Fund is neither sponsored by nor
affiliated with Standard & Poor's Corporation. The Stock Index Fund pays a
monthly management fee to The Dreyfus Corporation at the annual rate of 0.245%
of the value of the Stock Index Fund's average daily net assets. The Dreyfus
Corporation has agreed to pay Mellon Equity Associates a monthly fee at the
annual rate of 0.095% of the value of the Fund's average daily net assets. The
Socially Responsible Fund
The Socially Responsible Fund's primary goal is to provide capital
growth. It seeks to achieve this goal by investing principally in common stocks,
or securities convertible into common stock, of companies which, in the opinion
of the Fund's management, not only meet traditional investment standards, but
also show evidence that they conduct their business in a manner that contributes
to the enhancement of the quality of life in America. Current income is a
secondary goal. A management fee is payable monthly to The Dreyfus Corporation
at the annual rate of 0.75 of 1% of the value of the Socially Responsible Fund's
average daily net assets. The Dreyfus Corporation pays NCM Capital Management
Group, Inc. a subinvestment advisory fee at the annual rate of 0.10 of 1% of the
Portfolio's average daily net assets up to $32 million; 0.15 of 1% of the
Portfolio's average daily net assets in excess of $32 million up to $150
million; 0.20 of 1% of the Portfolio's average daily net assets in excess of
$150 million up to $300 million; and 0.25 of 1% of the Portfolio's average daily
net assets in excess of $300 million.
Meeting objectives depends on various factors, including, but not
limited to, how well the Portfolio managers
anticipate changing economic and market conditions. THERE IS NO ASSURANCE THAT
ANY OF THESE PORTFOLIOS
WILL ACHIEVE THEIR STATED OBJECTIVES.
An investment in the Contract is not a deposit or obligation of, or
guaranteed or endorsed, by any bank, nor is the Contract federally insured by
the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any
other government agency. Investing in the Contract involves certain investment
risks, including possible loss of principal.
Since all of the Portfolios are available to registered separate
accounts offering variable annuity and variable life products of Transamerica as
well as other insurance companies, there is a possibility that a material
conflict may arise between the interests of the Variable Account and one or more
other separate accounts investing in the Funds. In the event of a material
conflict, the affected insurance companies will take any necessary steps to
resolve the matter, including stopping their separate accounts from investing in
the Funds. See the Funds' prospectuses for greater details.
Transamerica receives fees from The Dreyfus Corporation or its
affiliates for providing certain administrative and or other services.
Additional information concerning the investment objectives and
policies of all of the Portfolios, the investment advisory services and
administrative services and charges can be found in the current prospectuses for
the Funds which accompany this Prospectus. The Funds' prospectuses should be
read carefully before any decision is made concerning the allocation of Purchase
Payments to, or transfers among, the Sub-Accounts. Addition, Deletion, or
Substitution
Transamerica does not control the Funds and cannot guarantee that any
of the Sub-Accounts of the Variable Account or any of the Portfolios will always
be available for allocation of Purchase Payments or transfers. Transamerica
retains the right to make changes in the Variable Account and in its
investments.
Transamerica reserves the right to eliminate the shares of any
Portfolio held by a Sub-Account and to substitute shares of another Portfolio or
of another investment company for the shares of any Portfolio, if the shares of
the Portfolio are no longer available for investment or if, in Transamerica's
judgment, investment in any Portfolio would be inappropriate in view of the
purposes of the Variable Account. To the extent required by the 1940 Act, a
substitution of shares attributable to the Owner's interest in a Sub-Account
will not be made without prior notice to the Owner and the prior approval of the
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Commission. Nothing contained herein shall prevent the Variable Account from
purchasing other securities for other series or classes of variable annuity
policies, or from effecting an exchange between series or classes of variable
policies on the basis of requests made by Owners.
New Sub-Accounts may be established when, in the sole discretion of
Transamerica, marketing, tax, investment or other conditions so warrant. Any new
Sub-Accounts will be made available to existing Owners on a basis to be
determined by Transamerica. Each additional Sub-Account will purchase shares in
a Portfolio or in another mutual fund or investment vehicle. Transamerica may
also eliminate one or more Sub-Accounts if, in its sole discretion, marketing,
tax, investment or other conditions so warrant. In the event any Sub-Account is
eliminated, Transamerica will notify Owners and request a re-allocation of the
amounts invested in the eliminated Sub-Account.
In the event of any substitution or change, Transamerica may make such
changes in the Contract as may be necessary or appropriate to reflect such
substitution or change. Furthermore, if deemed to be in the best interests of
persons having voting rights under the Contracts, the Variable Account may be
operated as a management company under the 1940 Act or any other form permitted
by law, may be de-registered under such Act in the event such registration is no
longer required, or may be combined with one or more other separate accounts.
THE FIXED ACCOUNT
This Prospectus is generally intended to serve as a disclosure document
only for the Contract and the Variable Account. For complete details regarding
the Fixed Account, see the Contract itself. The Fixed Account is not available
in all states.
Purchase Payments allocated to and amounts transferred to the Fixed
Account become part of the general account of Transamerica, which supports
insurance and annuity obligations. 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 1940 Act. Accordingly, neither the general
account nor any interests therein are generally subject to the provisions of the
1933 Act or the 1940 Act, and Transamerica has been advised that the staff of
the Securities and Exchange Commission has not reviewed the disclosures in this
Prospectus which relate to the Fixed Account.
The Guarantee Periods of the Fixed Account are part of the general
account of Transamerica. The general account of Transamerica consists of all the
general assets of Transamerica, other than those in the Variable Account, or in
any other segregated asset account. Instead of the Owner bearing the investment
risk as is the case for values in the Variable Account, Transamerica bears the
full investment risk for all values in the Fixed Account. Transamerica has sole
discretion to invest the assets of its general account subject to applicable
law.
The allocation or transfer of funds to the Fixed Account does not
entitle the Owner to share in the investment experience of Transamerica's
general account. Instead, Transamerica guarantees that the funds allocated or
transferred to the Fixed Account will accrue a specified annual rate of interest
for a specific duration. The rate of interest credited will always be at least
3% per year. Consequently, if the Owner allocates all Net Purchase Payments only
to the Fixed Account and makes no transfers or withdrawals, the minimum amount
of the Account Value will be determinable and guaranteed.
The Owner bears the risk that, after the initial Guarantee Period, Transamerica
will not credit interest in excess of 3% per year to amounts allocated to the
Fixed Account.
Net Purchase Payments allocated to the Fixed Account will establish a
new Guarantee Period of a duration selected by the Owner from among those then
being offered by Transamerica. Every Guarantee Period offered by Transamerica
will have a duration of at least one year. The minimum amount that may be
allocated or transferred to a Guarantee Period is $1,000. Net Purchase Payments
allocated to the Fixed Account will be credited on the date the payment is
received at the Service Center. Any amount transferred from another Guarantee
Period or from a Sub-Account of the Variable Account to the Fixed Account will
establish a new Guarantee Period as of the effective date of the transfer.
Transamerica may delay payment of any withdrawal from the Fixed Account
for up to six months after Transamerica receives the request for such
withdrawal. If Transamerica delays payment for more than 30 days, Transamerica
will pay interest on the withdrawal amount up to the date of payment. (See "The
Fixed Account" page 23.)
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Guarantee Periods
Each Guarantee Period will have its own Guaranteed Interest Rate and
Expiration Date. The Guaranteed Interest Rate applicable to a Guarantee Period
will depend on the date the Guarantee Period is established and the duration
chosen by the Owner. A Guarantee Period chosen may not extend beyond the Annuity
Date.
Transamerica reserves the right to change the maximum number of
Guarantee Periods that may be in effect at any one time.
Transamerica will establish effective annual rates of interest for each
Guarantee Period. The effective annual rate of interest established by
Transamerica for a Guarantee Period will remain in effect for the duration of
the Guarantee Period.
Interest will be credited to a Guarantee Period based on its daily
balance at a daily rate which is equivalent to the Guaranteed Interest Rate
applicable to that Guarantee Period for amounts held during the entire Guarantee
Period. Amounts withdrawn or transferred from a Guarantee Period prior to its
Expiration Date will be subject to an interest adjustment as described below. In
no event will the effective annual rate of interest applicable to a Guarantee
Period be less than 3% per year. Interest Adjustment
Except in certain circumstances, an interest adjustment will be made to
any amount withdrawn or transferred from a Guarantee Period before its
Expiration Date. ANY SUCH AMOUNT WITHDRAWN OR TRANSFERRED FROM A GUARANTEE
PERIOD WILL BE CREDITED WITH INTEREST AT A RATE OF ONLY 3% PER YEAR FROM THE
DATE THE GUARANTEE PERIOD WAS ESTABLISHED TO THE DATE OF PAYMENT OR TRANSFER,
REGARDLESS OF THE GUARANTEED INTEREST RATE. THIS MEANS THAT ANY INTEREST IN
EXCESS OF 3% WILL BE FORFEITED ON THE AMOUNT WITHDRAWN OR TRANSFERRED.
Exceptions to the interest adjustment include : 1) amounts withdrawn
within 30 days before the Expiration Date of
the Guarantee Period; 2) amounts withdrawn from a Guarantee Period serving as
the Source Account, if available, for Dollar
Cost Averaging transfers (see "Dollar Cost Averaging", page 28); and 3) amounts
paid as part of a Death Benefit (see "Death
Benefit" page 30). A Contingent Deferred Sales Load may apply to withdrawals
made at the end of a Guarantee Period even
if there is no interest adjustment made.
Expiration of Guarantee Period
At least 45 days, but not more than 60 days, prior to the Expiration
Date of a Guarantee Period, Transamerica will notify the Owner as to the options
available when a Guarantee Period expires. The Owner may elect one of the
following options:
(a) transfer the Guarantee Amount of that Guarantee Period to a
new Guarantee Period from among those being offered by
Transamerica at such time. The new Guarantee Period will be
established on the later of (i) the date selected by the
Owner, or (ii) the date the notice, in a form and manner
acceptable to Transamerica, is received by Transamerica at the
Service Center, but in no event later than the day immediately
following the Expiration Date of the previous Guarantee
Period; or
(b) transfer the Guarantee Amount of that Guarantee Period to one
or more Sub-Accounts of the Variable
Account.
Transamerica must receive the Owner's notice electing one of these
options at the Service Center by the expiration date of the Guarantee Period. If
such election has not been received by Transamerica at the Service Center, the
Guarantee Amount of that Guarantee Period will remain in the Fixed Account and a
new Guarantee Period of the same duration as the expiring Guarantee Period, if
offered, will automatically be established by Transamerica with a new Guaranteed
Interest Rate declared by Transamerica for that Guarantee Period. The new
Guarantee Period will start on the day following the expiration date of the
previous Guarantee Period.
If Transamerica is not currently offering Guarantee Periods having the
same duration as the expiring Guarantee Period, the new Guarantee Period will be
the next longer duration, or if Transamerica is not offering Guarantee Periods
longer than the duration of the expiring Guarantee Period, the next shorter
duration.
If the Guarantee Amount of an expiring Guarantee Period is less than
$1,000, Transamerica reserves the right to transfer such amount to the Money
Market Sub-Account of the Variable Account.
A transfer from a Guarantee Period made within the 30-day period ending
on its Expiration Date will not be counted for the purpose of determining the
eighteen allowable transfers per Contract Year, nor will such transfer be
subject to any interest adjustment.
THE CONTRACT
The Contract is a Flexible Purchase Payment Multi-Funded Deferred
Annuity Contract. The rights and benefits are described below and in the
individual contract or in the certificate and group contract; however,
Transamerica reserves the right to make any modification to conform the
individual contract and the group contract and certificates thereunder to, or
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give the Owner the benefit of, any federal or state statute or rule or
regulation. The obligations under the Contract are obligations of Transamerica.
The Contracts are available on a non-qualified basis and as individual
retirement annuities (IRAs) that qualify for special federal income tax
treatment and whose initial Purchase Payment is a rollover from a qualified
retirement plan. With Transamerica's prior permission, the Contracts may also be
available as contributory IRAs, as Section 403(b) annuities and for use in
qualified pension and profit sharing plans established by corporate employers.
Generally, Qualified Contracts contain certain restrictive provisions limiting
the timing and amount of payments to and distributions from the Qualified
Contract. The Owner designates the Annuitant. The Annuitant can be the same
person as the Owner and must be the same person in the case of a Qualified
Contract.
Annuity Payments will be made to the Annuitant after the Annuity Date
unless, in the case of a Non-Qualified Contract, the Owner changes the Payee
after the Annuity Date.
For each Contract, a different Account will be established and values,
benefits and charges will be calculated separately. The various administrative
rules described below will apply separately to each Contract, unless otherwise
noted.
APPLICATION AND PURCHASE PAYMENTS
Purchase Payments
All Purchase Payments must be paid to the Service Center. A
confirmation will be issued to the Owner upon the acceptance of each Purchase
Payment.
The Initial Purchase Payment for each Contract must generally be at
least $5,000. Only upon its grant of prior permission will Transamerica accept
lower initial Purchase Payments for certain Qualified Contracts.
The Contract will be issued and the Net Purchase Payment derived from
the Initial Purchase Payment will generally be accepted and credited within two
business days after the later of receipt of sufficient information to issue a
Contract and receipt of the Initial Purchase Payment at the Service Center. (A
Net Purchase Payment is the Purchase Payment less any applicable premium taxes,
including retaliatory premium taxes.) Acceptance is subject to sufficient
information being provided in a form acceptable to Transamerica, and
Transamerica reserves the right to reject any application or Purchase Payment.
Contracts normally will not be issued with respect to Annuitants more than 80
years old, although Transamerica in its discretion may waive this restriction in
certain cases.
If the Initial Purchase Payment cannot be credited within two days of
receipt of the Purchase Payment and information requesting issuance of a
Contract because the information is incomplete or for any other reason, then
Transamerica will contact the Owner, explain the reason for the delay and will
refund the Initial Purchase Payment within five business days, unless the Owner
consents to Transamerica retaining the Initial Purchase Payment and crediting it
as soon as the requirements are fulfilled.
Each Contract provides for a Free Look Period of 10 days (or longer if
required by state law) after receipt of the Contract during which the Owner may
cancel the Contract. To cancel, the Contract must be returned to Transamerica
with a written notice of cancellation. In some states, including for some ages
of Owners in some states, and in all states for IRAs, Transamerica will refund
the greater of the Purchase Payments or Account Values of the date the written
notice and the Contract are received by Transamerica. In other states, the
Purchase Payments allocated to the Fixed Account plus the Variable Accumulated
Value will be returned with any adjustments required by applicable law or
regulation (and without imposition of any Contingent Deferred Sales Load) as of
the date the notice and Contract are received. Owners should consult their
registered representative or investment adviser (or see their Contract) for the
applicable provision.
Additional Purchase Payments may be made at any time prior to the
Annuity Date, as long as the Annuitant or Contingent Annuitant is living.
Additional Purchase Payments must be at least $500, or at least $100 if made
pursuant to an automatic payment plan under which the Additional Purchase
Payment is automatically deducted from a bank account. In addition, minimum
allocation amounts apply (see "Allocation of Purchase Payments" on page 25).
Additional Net Purchase Payments are credited to the Contract as of the date the
payment is received.
Total Purchase Payments for any Contract may not exceed $1,000,000
without prior approval of Transamerica. In no event may the sum of all
Purchase Payments for a Contract during any taxable year exceed the
limits imposed
by any applicable federal or state law, rules, or regulations.
Allocation of Purchase Payments
The Owner specifies how Purchase Payments will be allocated under the
Contract. The Owner may allocate the Net Purchase Payments between and among one
or more of the Sub-Accounts of the Variable Account and the Guarantee Periods of
the Fixed Account as long as the portions are whole number percentages and any
allocation percentage for a Sub-Account is at least 10%. In addition, the
initial allocation to any Inactive Sub-Account is subject to a minimum of $500;
the initial allocation to a new Guarantee Period is subject to a minimum of
$1,000. The Owner may choose to allocate nothing to a particular Sub-Account or
Guarantee Period.
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With regard to the allocation of Purchase Payments during the Free Look
Period for any portion of the Net Purchase Payments allocated to the Fixed
Account, the amounts specified by the Contract Owner will be allocated to the
Guarantee Period(s) specified by the Contract Owner. With regard to Purchase
Payments allocated to the Variable Account, in most situations where the
Purchase Payment allocated to the Fixed Account plus Variable Accumulation Value
will be refunded upon exercise of the Free Look right, the Net Purchase
Payment(s) derived from the Initial Purchase Payment(s) will be allocated
between and among the Sub-Accounts of the Variable Account and the Guarantee
Periods of the Fixed Account in accordance with the allocation percentages
selected by the Owner. In most situations where the greater of Purchase Payments
or Account Value will be refunded on exercise of the Free Look right, the Net
Purchase Payment derived from the portion of Initial Purchase Payment allocated
to the Variable Account will first be allocated to the Money Market Sub-Account
of the Variable Account and will remain in that Sub-Account until the estimated
end of the Free Look Period (allowing 5 days for delivery of the Contract by
mail). The dollar value of the Variable Accumulation Units held in the Money
Market Sub-Account attributable to such Net Purchase Payment will then be
allocated among the Sub-Accounts of the Variable Account in accordance with the
allocation percentages selected by the Owner. This initial allocation after the
Free Look Period from the Money Market Sub-Account to the Sub-Account(s)
selected by the Owner does not count toward the limit of 18 transfers per
Contract Year.
Each Net Purchase Payment will be subject to the allocation percentages
in effect at the time of receipt of such Purchase Payment. The allocation
percentages for new Purchase Payments between and among the Sub-Accounts of the
Variable Account and the Guarantee Period of the Fixed Account may be changed by
the Owner at any time by submitting a request for such change, in a form and
manner acceptable to Transamerica, to the Service Center. Any changes to the
allocation percentages are subject to the limitation above. Any change will take
effect with the first Purchase Payment received with or after receipt by the
Service Center of the request for such change, in a form and manner acceptable
to Transamerica and will continue in effect until subsequently changed.
If an allocation of an additional Net Purchase Payment is directed to
an Inactive Sub-Account of the Variable Account, then the amount allocated must
be at least $500. If an allocation of an additional Net Purchase Payment is
directed to a new Guaranteed Period of the Fixed Account, then the amount
allocated must be at least $1000.
ACCOUNT VALUE
Before the Annuity Date, the Account Value is equal to: (a) the Fixed
Accumulated Value plus (b) the Variable Accumulated Value. The Fixed Accumulated
Value is the total dollar amount of all Guarantee Amounts held under the Fixed
Account for the Contract prior to the Annuity Date. The Fixed Accumulated Value
is determined without regard to any interest adjustment. The Variable
Accumulated Value is the total dollar amount of all Variable Accumulation Units
under each Sub-Account of the Variable Account held for the Contract prior to
the Annuity Date. The Variable Accumulated Value prior to the Annuity Date is
equal to: (a) Net Purchase Payments allocated to the Sub-Accounts; plus or minus
(b) any increase or decrease in the value of the assets of the Sub-Accounts due
to investment results; less (c) the daily Mortality and Expense Risk Charge;
less (d) the daily Administrative Expense Charge; less (e) any reductions for
the annual Account Fee; plus or minus (f) amounts transferred from or to the
Fixed Account; less (g) any applicable Transfer Fees and Systematic Withdrawal
Option fees; and less (h) any withdrawals from the Sub-Accounts less any premium
tax applicable to those withdrawals.
A Valuation Period is the period between successive Valuation Days. It
begins at the close of the New York Stock Exchange (generally 4:00 p.m. ET) on
each Valuation Day and ends at the close of the New York Stock Exchange on the
next succeeding Valuation Day. A Valuation Day is each day that the New York
Stock Exchange is open for regular business. The value of the Variable Account
assets is determined at the end of each Valuation Day. To determine the value of
an asset on a day that is not a Valuation Day, the value of that asset as of the
end of the next Valuation Day will be used.
The Variable Accumulated Value is expected to change from Valuation
Period to Valuation Period, reflecting the investment experience of all of the
selected Portfolios as well as the deductions for charges.
Net Purchase Payments which the Owner allocates to a Sub-Account of the
Variable Account are used to purchase Variable Accumulation Units in that
Sub-Account. The number of Variable Accumulation Units to be credited for each
Sub-Account will be determined by dividing the portion of each Net Purchase
Payment allocated to the Sub-Account by the Variable Accumulation Unit Value
determined at the end of the Valuation Period during which the Net Purchase
Payment was received. In the case of the Initial Net Purchase Payment, Variable
Accumulation Units for that payment will be credited to the Account Value within
two Valuation Days of the later of: (a) the date an acceptable and properly
completed application is received at our Service Center; or (b) the date our
Service Center receives the Initial Purchase Payment. In the case of any
subsequent Purchase Payment, Variable Accumulation Units for that payment will
be credited at the end of the Valuation Period during which Transamerica
receives the payment. The value of a Variable Accumulation Unit for each
Sub-Account for a Valuation Period is established at the end of each Valuation
Period and is calculated by multiplying the value of that
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unit at the end of the prior Valuation Period by the Sub-Account's Net
Investment Factor for the Valuation Period. The value of a Variable Accumulation
Unit may go up or down.
The Net Investment Factor is used to determine the value of
Accumulation and Annuity Unit Values for the end of a Valuation Period. The
applicable formula can be found in the Statement of Additional Information.
Transfers involving Sub-Accounts will result in the purchase and/or
cancellation of Variable Accumulation Units having a total value equal to the
dollar amount being transferred to or from a particular Sub-Account. The
purchase and cancellation of such units generally are made using the Variable
Accumulation Unit value of the applicable Sub-Account as of the end of the
Valuation Day in which the transfer is effective.
TRANSFERS
Before the Annuity Date
Before the Annuity Date, the Owner may transfer all or any portion of
the Account Value among and between the Sub-Accounts of the Variable Account and
the Guarantee Periods of the Fixed Account currently being offered by
Transamerica.
Transfers among and between the Sub-Accounts and the Guarantee Periods
of the Fixed Account may be made by submitting a request, in a form and manner
acceptable to Transamerica, to the Service Center. No transfers will be
processed until the later of (a) 30 days after the Contract Date or (b) the
estimated end of the Free Look Period (allowing 5 days for delivery of contract
by mail). The transfer request must specify: (a) the Sub-Account(s) and/or
Guarantee Period(s) from which the transfer is to be made; (b) the amount of the
transfer, subject to the minimum transfer amount described in the Contract; and
(c) the Sub-Account(s) and/or Guarantee Period(s) to receive the transferred
amount. The transfer request is subject to the following conditions: (1) not
more than 18 transfers between and among the Guarantee Periods of the Fixed
Account and the Sub-Accounts may be made in any Contract Year; (2) the minimum
amount which may be transferred is $500; (3) the minimum transfer to an Inactive
Sub-Account is $500; and (4) the minimum transfer required to establish a new
Guarantee Period under the Fixed Account is $1,000. Transfers among the
Sub-Accounts are also subject to such terms and conditions as may be imposed by
the Portfolios.
Currently, there is no charge for transfers. However, Transamerica
reserves the right to impose a charge of the lesser of 2% of the amount
transferred or $10 for each transfer after six in any Contract Year. All
requests received during a single Valuation Period will be treated as a single
transfer. A transfer generally will be effective on the date the request for
transfer is received by the Service Center. Transfers involving the Fixed
Account are counted as transfers for purposes of assessing the Transfer Fee
charge for more than six (6) transfers in a Contract Year.
When a transfer is made from a Guarantee Period before its Expiration
Date, the amount transferred will generally be subject to an interest
adjustment. (See "The Fixed Account" page 23.) A transfer from a Guarantee
Period made within the 30-day period ending on its Expiration Date will not be
counted for the purpose of the eighteen allowable transfers per Contract Year,
nor will such transfer be subject to any interest adjustment.
If a transfer reduces the value in a Sub-Account to less than $500,
then Transamerica reserves the right to transfer
the remaining amount along with the amount requested to be transferred in
accordance with the transfer instructions provided
by the Owner. Under current law, there will not be any tax liability to the
Owner if the Owner makes a transfer.
Telephone Transfers
Transamerica will allow telephone transfers if the Owner has provided
proper authorization for such transfers in a form and manner acceptable to
Transamerica. Limitations and rules for these transfers will be provided to the
Owner by Transamerica. Transamerica reserves the right to suspend telephone
transfer privileges at any time, for some or all Contracts, for any reason.
Withdrawals are not permitted by telephone.
Transamerica will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine and if it follows such
procedures it will not be liable for any losses due to unauthorized or
fraudulent instructions. Transamerica, however, may be liable for such losses if
it does not follow those reasonable procedures. The procedures Transamerica will
follow for telephone transfers may include requiring some form of personal
identification prior to acting on instructions received by telephone, providing
written confirmation of the transaction, and/or tape recording the instructions
given by telephone. Possible Restrictions
Transamerica reserves the right without prior notice to modify,
restrict, suspend or eliminate the transfer privileges (including telephone
transfers) at any time and for any reason. For example, restrictions may be
necessary to protect Owners from adverse impacts on Portfolio management of
large and/or numerous transfers by market timers or others. Transamerica has
determined that the movement of significant Sub-Account values from one
Sub-Account to another may prevent the underlying Portfolio from taking
advantage of investment opportunities because the Portfolio must maintain a
significant cash
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position in order to handle redemptions. Such movement may also cause a
substantial increase in Portfolio transaction costs which must be indirectly
borne by Contract Owners. Therefore, Transamerica reserves the right to require
that all transfer requests be made by the Contract Owner and not by a third
party holding a power of attorney and to require that each transfer request be
made by a separate communication to Transamerica. Transamerica also reserves the
right to request that each transfer request be submitted in writing and be
manually signed by the Contract Owner(s); facsimile transfer requests may not be
allowed. Dollar Cost Averaging
Prior to the Annuity Date, the Owner may request that amounts be
automatically transferred from one (and only one) of the Sub-Accounts which
invest in the Money Market or Quality Bond Portfolios (the "Source Account"), to
any of the Sub-Accounts of the Variable Account on a monthly basis by submitting
a request to the Service Center in a form and manner acceptable to Transamerica.
Transfers may be allowed from Source Accounts in addition to the Money Market
and Quality Bond Sub-Accounts and may include the shortest Guarantee Period of
the Fixed Account; call the Service Center for the availability of other Source
Account options. The transfers will begin the month following, but no sooner
than one week following, receipt of such request, provided that Dollar Cost
Averaging transfers will not commence until the later of (a) 30 days after the
Contract Date, or (b) the estimated end of the Free Look Period (allowing 5 days
for delivery of the Contract by mail). Transfers will continue for twelve
consecutive months unless (1) terminated by the Owner, (2) Transamerica has
provided for a longer term, (3) automatically terminated by Transamerica because
there are insufficient funds in the Source Account, or (4) for other reasons as
set forth in the Contract. The Owner may request that monthly transfers be
continued for a term then available by giving notice to the Service Center in a
form and manner acceptable to Transamerica within 30 days prior to the last
monthly transfer. If no request to continue the monthly transfers is made by the
Owner, this option will terminate automatically with the last transfer.
In order to be eligible for Dollar Cost Averaging, the Owner must meet
the following conditions: (1) the value of the Source Account must be at least
$5,000; (2) the minimum amount that can be transferred out of the Source Account
is $250 per month; and (3) the minimum amount transferred into any other
Sub-Account is the greater of $250 or 10% of the amount being transferred.
Dollar Cost Averaging transfers can not be made from a Source Account from which
Systematic Withdrawals or Automatic Payouts are being made.
There is no charge for the Dollar Cost Averaging service and transfers
due to Dollar Cost Averaging will not count toward the number of transfers
allowed without charge or the limit of 18 transfers per Contract Year. There
will be no interest adjustments on Dollar Cost Averaging transfers from the
Fixed Account, if allowed as a Source Account by Transamerica.
Dollar Cost Averaging transfers may not be made to the Fixed Account.
Automatic Asset Rebalancing
After Purchase Payments have been allocated among the variable
Sub-Accounts, the performance of each SubAccount may cause this allocation to
change. The Owner may instruct Transamerica to automatically rebalance the
amounts in the Variable Accumulated Value by reallocating amounts among the
variable Sub-Accounts, at the time, and in the percentages, specified in the
Owner instructions to Transamerica and accepted by Transamerica. The Owner may
elect to have the rebalancing done on an annual, semi-annual or quarterly basis.
The Owner may elect to have amounts allocated among the Sub-Accounts using whole
percentages, with a minimum of 10% allocated to each Sub-Account.
The Owner may elect to establish, change or terminate the Automatic
Asset Rebalancing by submitting a request to the Service Center in a form and
manner acceptable to Transamerica. Automatic Asset Rebalancing will not count
towards the limit of 18 transfers in a Contract Year. There is currently no
charge for the Automatic Asset Rebalancing, however, Transamerica reserves the
right to charge a nominal amount for this feature. Transamerica reserves the
right to discontinue offering Automatic Asset Rebalancing any time for any
reason. After the Annuity Date
If a Variable Annuity Payout Option is elected, the Owner may make
transfers among Sub-Accounts after the Annuity Date by giving a request to the
Service Center in a form acceptable to Transamerica, subject to the following
provisions: (1) transfers after the Annuity Date may be made no more than four
times during any Annuity Year; and (2) the minimum amount transferred from one
Sub-Account to another is the amount supporting a then current $75 monthly
payment.
Transfers among Sub-Accounts during the Annuity Period will be
processed based on the formula outlined in the Statement of Additional
Information.
CASH WITHDRAWALS
Withdrawals
The Owner may withdraw all or part of the Cash Surrender Value for a
Contract at any time during the life of the Annuitant(s) and prior to the
Annuity Date by giving a written request to the Service Center and subject to
the rules below.
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Federal or state laws, rules or regulations may also apply. No Withdrawals may
be made after the Annuity Date. The amount payable to the Owner if the Contract
is surrendered on or before the Annuity Date is the Cash Surrender Value which
is equal to the Account Value, less the Account Fee, less any interest
adjustment, less any applicable Contingent Deferred Sales Load, and less
applicable premium taxes. If the Account Value exceeds $50,000 on the date the
Contract is surrendered, and where permitted by state law, the Account Fee will
be waived.
Partial withdrawals must be at least $500. In some states, only one
partial withdrawal will be permitted while the Systematic Withdrawal Option is
in effect. In other states, no partial withdrawals will be permitted while the
Systematic Withdrawal Option is in effect.
In the case of a partial withdrawal, the Owner may direct the Service
Center to withdraw amounts from specific SubAccount(s) and/or from the Fixed
Account. If the Owner does not specify the Sub-Account(s) from which the
withdrawal is to be made, the withdrawal will be taken pro rata from all
Sub-Accounts of the Variable Account with current values. If the requested
withdrawal reduces the value of a Sub-Account from which the withdrawal was made
to less than $500, Transamerica reserves the right to transfer the remaining
value of that Sub-Account pro rata among the other Active Sub-Accounts with
values equal to or greater than $500. If no such Sub-Accounts exist, such
transfer will be made to the Money Market Sub-Account. The Owner will be
notified in writing of any such transfer.
A partial withdrawal request will not be processed if it would reduce
the Account Value to less than $2,000. In that case, the Owner will be notified
that he or she will have 10 days from the date notice is mailed to: (a) withdraw
a lesser amount (subject to the $500 minimum), leaving an Account Value of at
least $2,000; or (b) surrender the Contract for its Cash Surrender Value.
(Amounts payable will be determined as of the end of the Valuation Period during
which the subsequent instructions are received.) If, after the expiration of the
10-day period, no written election is received from the Owner, the withdrawal
request will be considered null and void, and no withdrawal will be processed.
A full surrender will result in a cash withdrawal payment equal to the
Cash Surrender Value at the end of the Valuation Period during which the
election is received along with all completed forms. Any applicable Contingent
Deferred Sales Load will be deducted from the amount paid.
The Account Fee, unless waived, will be deducted from a full surrender
before the application of any Contingent Deferred Sales Load (see "Charges and
Deductions" page 31).
Withdrawals may be taxable transactions. The Code requires Transamerica
to withhold federal income tax from withdrawals. Generally, an Owner will be
entitled to elect, in writing, not to have tax withholding apply. Withholding
applies to the portion of the withdrawal which is includible in income and
subject to federal income tax. The federal income tax withholding rate is
currently 10% of the taxable amount of the withdrawal. Withholding applies only
if the taxable amount of the withdrawal is at least $200. Some states also
require withholding for state income taxes. Moreover, the Code provides that a
10% penalty tax may be imposed on the taxable portions of distributions for
certain early withdrawals. (See "Federal Tax Matters" page 38.)
Withdrawal (including surrender) requests generally will be processed
as of the end of the Valuation Period during which the request, including all
completed forms, is received. Payment of any cash withdrawal or lump sum death
benefit due from the Variable Account will occur within seven days from the date
the election is received, except that Transamerica may postpone such payment if:
(1) the New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted; or (2) an
emergency exists as defined by the Commission, or the Commission requires that
trading be restricted; or (3) the Commission permits a delay for the protection
of Owners. The withdrawal request will be effective when all appropriate
withdrawal request forms are received. Payments of any amounts derived from a
Purchase Payment paid by check may be delayed until the check has cleared the
Owner's bank.
When a withdrawal is made from a Guarantee Period before its Expiration
Date, the amount withdrawn will generally be subject to an interest adjustment.
(See "Interest Adjustment" page 24.)
Transamerica may delay payment of any withdrawal from the Fixed Account
for up to six months after Transamerica receives the request for such
withdrawal. If Transamerica delays payment for more than 30 days, Transamerica
will pay interest on the withdrawal amount up to the date of payment. (See "The
Fixed Account" page 23.)
SINCE THE OWNER ASSUMES THE INVESTMENT RISK AND BECAUSE CERTAIN
WITHDRAWALS ARE SUBJECT TO A CONTINGENT DEFERRED SALES LOAD, THE TOTAL AMOUNT
PAID UPON SURRENDER OF THE CONTRACT (TAKING INTO ACCOUNT ANY PRIOR WITHDRAWALS)
MAY BE MORE OR LESS THAN THE TOTAL PURCHASE PAYMENTS PAID.
After a withdrawal of the total Cash Surrender Value, or at any time
that the Account Value is zero, all rights of the Owner will terminate.
An Owner may elect, under the Systematic Withdrawal Option or Automatic
Payout Option (but not both), to withdraw certain amounts on a periodic basis
from the Sub-Accounts prior to the Annuity Date.
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Systematic Withdrawal Option
Prior to the Annuity Date, the Owner, by giving Written Notice to the
Service Center, may elect to have withdrawals automatically made from one or
more Sub-Account(s) of the Variable Account on a monthly basis. (Other
distribution modes may be permitted.) The withdrawals will commence the month
following, but no sooner than one week following, receipt of Written Notice,
except that they will not commence sooner than the later of (a) 30 days after
the Contract Date or (b) the end of the Free Look Period. Upon written notice to
the Owners, Transamerica may change the day of the month on which withdrawals
are made under this option. Withdrawals will be from the Sub-Account(s) and in
the percentage allocations specified by the Owner. If no specifications are
made, withdrawals will be pro-rata from all Sub-Account(s) with value.
Systematic Withdrawals can not be made from a Sub-Account from which Dollar Cost
Averaging transfers are being made.
To be eligible for the Systematic Withdrawal Option, the Account Value
must be at least $12,000 at the time of election. The minimum monthly amount
that can be withdrawn is $100. The maximum monthly amount that can be withdrawn
on an annual basis is equal to the sum, as of the date of the first withdrawal,
of (a) 10% of Purchase Payments that are less than seven Contract Years old and
(b) 10% of remaining Purchase Payments that are at least seven Contract Years
old.
Systematic withdrawals are not subject to the Contingent Deferred Sales
Load but can be reduced by any applicable
premium tax. Systematic withdrawals may be taxable, subject to withholding, and
subject to the 10% penalty tax. (See
"Federal Tax Matters" page 38.)
The systematic withdrawals will continue unless terminated by the Owner
or automatically terminated by Transamerica as set forth in the Contract. If
this option is terminated it may not be elected again until the next Contract
Anniversary. In some states, no partial withdrawal may be made while the
Systematic Withdrawal Option is in effect and any partial withdrawal will
automatically terminate the Systematic Withdrawal Option and any portion of such
partial withdrawal, which exceeds the Allowed Amount for withdrawals after the
first withdrawal in a Contract Year will be subject to a Contingent Deferred
Sales Load (see page 40). In other states, only one partial withdrawal can be
made while the Systematic Withdrawal Option is in effect and more than one
partial withdrawal while this option is in effect will automatically terminate
the Systematic Withdrawal Option and the amounts taken as the first and second
partial withdrawals which exceed the Allowed Amount for withdrawals after the
first withdrawal in a Contract Year, will be subject to a Contingent Deferred
Sales Load (see page 32).
Transamerica reserves the right to impose an annual fee of an amount
not to exceed $25 per Contract year for administrative expenses associated with
processing the systematic withdrawals. This fee, which is currently waived, will
be deducted from each systematic withdrawal in equal installments during a
Contract Year.
The Systematic Withdrawal Option is not available with respect to the
Fixed Account. Consult your tax adviser and,
if applicable, the particular retirement plan, before requesting withdrawals
from a Qualified Contract. There may be severe
restrictions with regard to withdrawals from Qualified Contracts.
Automatic Payout Option
Prior to the Annuity Date, the Owner may elect the Automatic Payout
Option ("APO") to satisfy minimum distribution requirements under the Code for
Qualified Contracts, including under Section 408(b)(3) of the Code with regard
to IRA's. See the Automatic Payout Option discussion under Qualified Plans on
page 37.
DEATH BENEFIT
If an Owner or Annuitant dies before the Annuity Date, a death benefit
is payable.
The death benefit will be equal to the greatest of (1) the Account
Value, (2) the greatest Account Value determined as of the seventh Contract
Anniversary and at each succeeding Contract Anniversary occurring at subsequent
seven year intervals thereafter, adjusted for any subsequent Purchase Payments
paid by the Owner (less the sum of all subsequent withdrawals and any premium
taxes applicable to those withdrawals), or (3) the sum of all Purchase Payments,
less withdrawals and any premium taxes applicable to those withdrawals, plus
interest thereon equal to a 5% annual effective rate, credited on a daily basis
up to (i) the Contract Anniversary following the earlier of any Owner's or
Annuitant's 75th birthday, or (ii) the date the sum of all Purchase Payments,
(less the sum of all withdrawals and any premium taxes), together with credited
interest, has grown to two times the amount of all Purchase Payments (less all
withdrawals and any premium taxes) as a result of such interest accumulation, if
earlier. For Contracts purchased by any Owner or with an Annuitant age 75 or
older, the death benefit available under option three above will be the sum of
all Purchase Payments, less withdrawals and any premium taxes applicable to
these withdrawals.
The death benefit will be determined as of the end of the Valuation
Period during which the later of (a) Proof of Death of the Owner or Annuitant is
received by the Service Center and (b) a written notice of the method of
settlement elected by the Beneficiary is received at the Service Center. If no
settlement method is elected, the death benefit will be paid no later than one
year after the date of death. No Contingent Deferred Sales Load will apply.
Until the death benefit is paid, the
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Account Value allocated to the Variable Account will remain in the Sub-Accounts
as previously specified by the Owner or in the Sub-Accounts as reallocated
pursuant to instructions received by Transamerica from all Beneficiaries.
Therefore, the value of the Variable Account will fluctuate with investment
performance of the applicable Sub-Account(s), and accordingly, the amount of the
death benefit depends on the Account Value at the time the death benefit is
paid.
There is no extra charge for the death benefit, and it applies
automatically (i.e. no election by the Owner is
necessary).
Payment of Death Benefit
The death benefit is generally payable upon receipt of Proof of Death
of the Annuitant or Owner. Where the Owner is not an individual, the death
benefit is generally payable upon receipt of Proof of Death of the Annuitant.
Upon receipt of this proof and an election of a method of settlement, the death
benefit generally will be paid within seven days, or as soon thereafter as
Transamerica has sufficient information about the Beneficiary to make the
payment. The Beneficiary may receive the amount payable in a lump sum cash
benefit or, subject to any limitations under any state or federal law, rule, or
regulation, under one of the Annuity Forms unless a settlement agreement is
effective under the Contract preventing such election. If no settlement method
is elected within one year of the date of death, the death benefit will be paid
in a lump sum. The payment of the death benefit may be subject to certain
distribution requirements under the federal income tax laws. (See "Federal Tax
Matters" page 38.) Designation of Beneficiaries
The Owner may select one or more Beneficiaries and name them in a form
and manner acceptable to Transamerica. If the Owner selects more than one
Beneficiary, unless otherwise indicated by the Owner they will share equally in
any death benefits payable in the event of the Annuitant's death before the
Annuity Date if there is no Contingent Annuitant, or the Owner's death if there
is no Joint Owner and the Owner is an individual other than the annuitant.
Different Beneficiaries may be named with respect to the Annuitant's death
(Annuitant's Beneficiary) and the Owner's death (Owner's Beneficiary). Before
the Annuitant's death, the Owner may change the Beneficiary by notice to the
Service Center. The Owner may also make the designation of Beneficiary
irrevocable by sending notice to and obtaining approval from the Service Center.
Irrevocable Beneficiaries may be changed only with the written consent of the
designated Irrevocable Beneficiaries, except to the extent required by law.
The interest of any Beneficiary who dies before the Owner or Annuitant
will terminate at the death of the Beneficiary. The interest of any Beneficiary
who dies at the time of, or within 30 days after, the death of the Owner or
Annuitant will also terminate if no benefits have been paid unless the Contract
has been endorsed to provide otherwise. The benefits will then be paid as though
the Beneficiary had died before the Owner or Annuitant. If the interest of all
Beneficiaries has terminated, any benefits payable will be paid to the Owner's
or Owners' estate.
Transamerica may rely on an affidavit by any responsible person in
determining the identity or non-existence of any Beneficiary not identified by
name.
Death of Annuitant Prior to the Annuity Date
If the Annuitant dies prior to the Annuity Date and the Annuitant is
not an Owner and there is no Contingent Annuitant, a death benefit under the
Contract relating to that Annuitant will be paid to the Annuitant's Beneficiary.
If there is a Contingent Annuitant, then upon the death of the Annuitant the
Contingent Annuitant will become the Annuitant and no death benefit will be paid
at that time. Death of Owner Prior to the Annuity Date
If an Owner die before the Annuity Date, a death benefit will be paid
to that Owner's Beneficiary. If the Contract has Joint Owner's, the surviving
Joint Owner will be the Owner's Beneficiary. If the surviving Owner's
Beneficiary is the deceased Owner's spouse, then that spouse may elect to treat
the Contract as his or her own or receive payment of the Death Benefit. The
payment of the death benefit may be subject to certain distribution requirements
under the federal income tax laws. (See "Federal Tax Matters," page 38.)
Death of Annuitant or Owner After the Annuity Date
If the Annuitant or an Owner dies after the annuity starts, the
remaining undistributed portion, if any, of the Contract will be distributed at
least as rapidly as under the method of distribution being used as of the date
of such death. Under some Annuity Forms, there will be no death benefit. If the
Owner is not the Annuitant, upon an Owner's death, any remaining ownership
rights will pass to the Owner's Beneficiary.
CHARGES AND DEDUCTIONS
No deductions are made from Purchase Payments except for any applicable
premium taxes. Therefore, the full amount, less any premium taxes, of the
Purchase Payments are invested in one or more of the Sub-Accounts of the
Variable Account and/or in the Guarantee Periods of the Fixed Account.
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As more fully described below, charges under the Contract are assessed
in three ways: (1) as deductions for the Account (or Annuity) Fees, any Transfer
Fees, any Systematic Withdrawal Option or Asset Rebalancing fees, any interest
adjustment (for withdrawals from the Fixed Account) and, if applicable, for
premium taxes; (2) as charges against the assets of the Variable Account for the
assumption of mortality and expense risks and administrative expenses; and (3)
as Contingent Deferred Sales Loads. In addition, certain deductions are made
from the assets of the Portfolios for investment management fees and expenses.
These fees and expenses are described in the Funds' prospectuses and in their
statements of additional information. Contingent Deferred Sales Load
No deduction for sales charges is made from Purchase Payments (although
premium tax may be deducted). However, a Contingent Deferred Sales Load of up to
6% of Purchase Payments made may be imposed on certain withdrawals or surrenders
from the Account Value to partially cover certain expenses incurred by
Transamerica relating to the sale of the Contract, including commissions paid to
salespersons, the costs of preparation of sales literature and other promotional
costs and acquisition expenses.
The Contingent Deferred Sales Load percentage varies according to the
number of Contract Years between the Contract Year in which a Net Purchase
Payment was credited to the Contract and the Contract Year in which the
withdrawal is made. The amount of the Contingent Deferred Sales Load is
determined by multiplying the amount withdrawn subject to the Contingent
Deferred Sales Load by the Contingent Deferred Sales Load percentage in
accordance with the following table. In no event shall the aggregate Contingent
Deferred Sales Load assessed against the Contract exceed 6% of the aggregate
Purchase Payments.
Number of Contingent Deferred
Contract Years Sales Load As a
Since Receipt of Each Percentage of
Purchase Payment Purchase Payment
Less than one year 6%
1 year but less than 2 years 6%
2 years but less than 3 years 5%
3 years but less than 4 years 5%
4 years but less than 5 years 4%
5 years but less than 6 years 4%
6 years but less than 7 years 2%
7 or more years 0%
The Owner may make withdrawals from the Account Value up to the
"Allowed Amount" (described below) without incurring a Contingent Deferred Sales
Load each Contract Year before the Annuity Date. During the first Contract Year,
the Allowed Amount is equal to accumulation earnings not previously withdrawn.
For the first withdrawal, and only the first withdrawal, in a Contract Year
after the first Contract Year, the available Allowed Amount is equal to the sum
of: (a) all Purchase Payments not previously withdrawn and received at least
seven Contract Years before the date of withdrawal; plus (b) the greater of (i)
the accumulated earnings not previously withdrawn or (ii) 15% of Purchase
Payments received at least one but less than seven complete Contract Years
before the date of withdrawal not reduced to take into account any withdrawals
deemed to be made from such purchase payments. For withdrawals after the first
withdrawal in a Contract Year after the first Contract Year, the available
Allowed Amount is equal to the sum of: (a) all Purchase Payments, not previously
withdrawn and received at least seven complete Contract Years before the date of
withdrawal; plus (b) accumulated earnings not previously withdrawn. Withdrawals
will always be made first from accumulated earnings, and then from Purchase
Payments on a first in first out basis. Therefore, accumulation earnings could
be withdrawn as part of the first withdrawal in a Contract Year and, therefore,
not be available for withdrawals made later that Contract Year. If an Allowed
Amount is not withdrawn during a Contract Year, it does not carry over to the
next Contract Year. However, accumulated earnings, if any, in an Owner's Account
Value are always available as the Allowed Amount. No withdrawals are allowed
with regard to Purchase Payments made by a check which has not cleared. A
withdrawal not subject to a Contingent Deferred Sales Load will generally
receive an interest adjustment if made from a Guarantee Period before its
expiration (see "Interest Adjustment" page ).
Some Contract Owners may hold Contracts which, when originally issued,
provided for an Allowed Amount which was equal to the sum of (1) all Purchase
Payments, not previously withdrawn and held more then seven Contract Years plus
(2) 10% of Purchase Payments held between one and seven Contract Years not
reduced by any withdrawals made from such Purchase Payments. Under these
Contracts, withdrawals were made first to Purchase Payments (on a first in first
out basis). The Allowed Amount applicable to these Contract Owners will be
determined by whichever formula provides them with the larger amount available,
for full surrenders only, without a Contingent Deferred Sales Load.
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No Contingent Deferred Sales Load will be charged on the Allowed Amount
if a Contract is surrendered and the Owner was eligible to withdraw the amount
without charge but had not made such a withdrawal during the Contract Year in
which the date of surrender occurs. In addition, no Contingent Deferred Sales
Load is assessed: (a) upon annuitization after the first three Contract Years to
an option involving life contingencies; (b) upon payment of the Death Benefit;
(c) upon transfers of Account Value among and between the Sub-Accounts of the
Variable Account and the Guarantee Periods of the Fixed Account; (d) under the
Systematic Withdrawal Option; (e) or, in some circumstances, under the Automatic
Payout Option. Any applicable Contingent Deferred Sales Load will be deducted
from the amount requested for both partial withdrawals and full surrenders. The
Contingent Deferred Sales Load and any premium tax applicable to a withdrawal
from the Fixed Account will be deducted from the amount withdrawn after the
interest adjustment, if any, is applied and before payment is made to the Owner.
The Contingent Deferred Sales Load arising from a withdrawal or
surrender of the Contract will be waived if the Owner receives extended medical
care in a licensed hospital or nursing care facility for a least 45 days (30
days for Contracts issued in Pennsylvania) during any continuous 60 day period
beginning on or after the first Contract Anniversary and the request for the
withdrawal or surrender, together with proof of such extended care, is received
at the Service Center during the term of such care or within 90 days after the
last day upon which the Owner received such extended care. This waiver of the
Contingent Deferred Sales Load may not be available in all states and does not
apply if the Owner is receiving extended medical care in a licensed hospital or
nursing care facility at the time the Owner applied for the Contract or at the
Contract Date.
Additionally, in some states, the Contingent Deferred Sales Load
arising from a withdrawal or surrender of the Contract will be waived if the
Owner is diagnosed with a terminal illness, reasonably expected to result in
death within twelve months, after the first Contract Year. Proof of the terminal
illness must be received by the Service Center at the time the withdrawal or
surrender request is received. Administrative Charges
At the end of each Contract Year before the Annuity Date, Transamerica
deducts an annual Account Fee as partial compensation for expenses relating to
the issue and maintenance of the Contract, and the Variable Account. The annual
Account Fee is equal to the lesser of $30 or 2% of the Account Value. The
Account Fee may be changed upon 30 days advance written notice, but in no event
may it exceed the lesser of $60 or 2% of the Account Value. Such increases in
the Account Fee will apply only to future deductions after the effective date of
the change. If the Contract is surrendered on other than the end of a Contract
Year, the Account Fee will be deducted in full at the time of such surrender.
The Account Fee will be deducted on a pro rata basis from each Sub-Account in
which the Account is invested at the time of such deduction. If the entire
Account is in the Fixed Amount, then the annual Account Fee will be deducted on
a pro rata basis from all Guarantee Periods under the Fixed Account. The Account
Fee for a Contract Year may be waived if the Account Value exceeds $50,000 on
the last business day of that Contract Year or as of the date the Contract is
surrendered. This waiver of the Account Fee may not be available in all states.
After the Annuity Date, an annual Annuity Fee of $30 will be deducted
in equal amounts from each Variable Annuity Payment made during the year ($2.50
each month if monthly payments). This fee will not be changed. No Annuity Fee
will be deducted from Fixed Annuity Payments.
Transamerica also makes a deduction (the Administrative Expense Charge)
from the Variable Account at the end of each Valuation Period (both before and
after the Annuity Date) at an effective current annual rate of 0.15% of assets
held in each Sub-Account for those administrative expenses attributable to the
Contract and the Variable Account which exceed the revenues received from the
Account Fee, any Transfer Fee, and any fee imposed for Systematic Withdrawals.
Transamerica has the ability to increase or decrease this charge, but the charge
is guaranteed not to exceed 0.25%. Transamerica will provide 30 days written
notice of any change in fees. The administrative charges do not bear any
relationship to the actual administrative costs of a particular Contract. The
Administrative Expense Charge is reflected in the Variable Accumulation or
Variable Annuity Unit Values for each Sub-Account. Mortality and Expense Risk
Charge
Transamerica imposes a charge called the Mortality and Expense Risk
Charge to compensate it for bearing certain mortality and expense risks under
the Contract. For assuming these risks, Transamerica makes a daily charge equal
to .003403% corresponding to an effective annual rate of 1.25% of the value of
the net assets in the Variable Account. This charge is imposed before the
Annuity Date and if an Annuity Purchase Amount is applied to a Variable Payment
Option, also after the Annuity Date. Transamerica guarantees that this charge of
1.25% will never increase.
The Mortality and Expense Risk Charge is reflected in the Variable
Accumulation and Variable Annuity Unit Values for each Sub-Account.
Variable Accumulated Values and Variable Annuity Payments are not
affected by changes in actual mortality experience incurred by Transamerica. The
mortality risks assumed by Transamerica arise from its contractual obligations
to
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make Annuity Payments (determined in accordance with the annuity tables and
other provisions contained in the Contract) and to pay death benefits prior to
the Annuity Date. Thus Owners are assured that neither the Annuitant's own
longevity nor an unanticipated improvement in general life expectancy will
adversely affect the Annuity Payments under the Contract.
Transamerica also bears substantial risk in connection with the death
benefit before the Annuity Date, since it will pay a death benefit that may
exceed the Cash Surrender Value. In this way, Transamerica bears the risk of
unfavorable experience in the Sub-Accounts.
The expense risk assumed by Transamerica is the risk that
Transamerica's actual expenses in administering the Contracts and the Variable
Account will exceed the amount recovered through the Administrative Expense
Charge, Account Fees, Transfer Fees and any fees imposed for Systematic
Withdrawals.
If the Mortality and Expense Risk Charge is insufficient to cover
actual costs and risks assumed, the loss will fall on Transamerica. Conversely,
if this charge is more than sufficient, any excess will be profit to
Transamerica. Currently, Transamerica expects a profit from this charge.
Transamerica anticipates that the Contingent Deferred Sales Load will
not generate sufficient funds to pay the cost of distributing the Contracts. To
the extent that the Contingent Deferred Sales Load is insufficient to cover the
actual cost of Contract distribution, the deficiency will be met from
Transamerica's general corporate assets which may include amounts, if any,
derived from the Mortality and Expense Risk Charge. Premium Taxes
Transamerica may be required to pay premium or retaliatory taxes
currently ranging from 0% to 3.5% in connection with Purchase Payments or values
under the Contracts. Depending upon applicable state law, Transamerica may
deduct the premium taxes which are payable with respect to a particular Contract
from the Purchase Payments, from amounts withdrawn, or from amounts applied on
the Annuity Date. In some states, charges for both direct premium taxes and
retaliatory premium taxes may be imposed at the same or different times with
respect to the same Purchase Payment, depending upon applicable state law.
In certain limited circumstances, a broker-dealer or other entity
distributing the Contracts may elect to pay to
Transamerica an amount equal to the premium taxes that would otherwise be
attributable to that entity's customers. In such
cases, Transamerica will not impose a premium tax charge on those Contracts.
Transfer Fees
Transamerica currently does not charge for transfers including
Automatic Asset Rebalancing. However, Transamerica may impose a fee for each
transfer in excess of the first six in a single Contract Year. Transamerica will
deduct the charge from the amount transferred. This fee would be no more than
$10 and would be used to help cover Transamerica's costs of processing
transfers.
Currently, no fee is charged for Automatic Asset Rebalancing. However,
Transamerica reserves the right to impose
a nominal fee.
Systematic Withdrawal Option
Transamerica reserves the right to impose an annual fee of an amount
not to exceed $25 for administrative expenses
associated with processing systematic withdrawals. This fee, which is currently
waived, will be deducted from each systematic
withdrawal in equal installments during a Contract Year.
Taxes
Under present laws, Transamerica will incur state or local taxes (in
addition to the premium taxes described above) in several states. No charges are
currently made for taxes other than state premium taxes. However, Transamerica
reserves the right to deduct charges in the future for federal, state, and local
taxes or the economic burden resulting from the application of any tax laws that
Transamerica determines to be attributable to the Contracts. Portfolio Expenses
The value of the assets in the Variable Account reflects the value of
Portfolio shares and therefore the fees and
expenses paid by each Portfolio. A complete description of the fees, expenses,
and deductions from the Portfolios are found
in the Funds' prospectuses. (See "The Funds" page 20.)
Interest Adjustment
For a description of the interest adjustment applicable to early
withdrawals and transfers from the Guarantee Periods of the Fixed Account, see
"The Fixed Account" page 23.
ANNUITY PAYMENTS
Annuity Date
Initially, the Annuity Date is selected by the Owner at the time the
Initial Purchase Payment is made. Thereafter, the Annuity Date may be changed
from time to time by the Owner by giving notice, in a form and manner acceptable
to
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Transamerica, to the Service Center, provided that notice of each change is
received by the Service Center at least thirty (30) days prior to the
then-current Annuity Date. The Annuity Date must not be earlier than the third
Contract Anniversary, except for IRAs. The latest Annuity Date which may be
elected is the later of (a) the first day of the calendar month immediately
preceding the month of the Annuitant's 85th birthday, or (b) the first day of
the month coinciding with or next following the tenth Contract Anniversary. This
Annuity Date extension to the tenth Contract Anniversary may not be available in
all states.
The Annuity Date must be the first day of a calendar month. The first
Annuity Payment will be made on the first
day of the month immediately following the Annuity Date.
Annuity Payment
The Annuity Date is the date that the Annuity Purchase Amount is
applied to provide the Annuity Payments under the Contract under the selected
Annuity Form and Payment Option, unless the entire Account Value has been
withdrawn or the death benefit has been paid to the Beneficiary prior to that
date. The Annuity Purchase Amount is the Account Value, less any interest
adjustment, less any applicable Contingent Deferred Sales Load and less any
applicable premium taxes. Any Contingent Deferred Sales Load will be waived if
values are applied to an Annuity Form involving life contingencies on or after
the third Contract Anniversary.
If the amount of the monthly Annuity Payment from any of the Payment
Options selected by the Owner would result in a monthly annuity payment of less
than $150, or if the Annuity Purchase Amount is less than $5,000, Transamerica
reserves the right to offer a less frequent mode of payment or pay the Cash
Surrender Value in a cash payment. Monthly Annuity Payments from the Variable
Annuity Payment Option will further be subject to a minimum monthly annuity of
$75 from each Sub-Account of the Variable Account from which such payments are
made.
The Owner may choose from the Annuity Forms below. Transamerica may
consent to other plans of payment before the Annuity Date. For Annuity Forms
involving life income, the actual age and/or sex of the Annuitant, or a Joint or
Contingent Annuitant will affect the amount of each payment. Sex-distinct rates
generally are not allowed under certain Qualified Contracts. Transamerica
reserves the right to ask for satisfactory proof of the Annuitant's (or Joint or
Contingent Annuitant's) age. Transamerica may delay Annuity Payments until
satisfactory proof is received. Since payments to older Annuitants are expected
to be fewer in number, the amount of each Annuity Payment shall be greater for
older Annuitants than for younger Annuitants.
The Owner may choose from the two Annuity Payment Options described
below. The Annuity Date and Annuity Forms available for Qualified Contracts may
also be controlled by endorsements, the plan or applicable law.
A portion or the entire amount of the Annuity Payments may be taxable
as ordinary income. If, at the time the Annuity Payments begin, Transamerica has
not received a proper written election not to have federal income taxes
withheld, Transamerica must by law withhold such taxes from the taxable portion
of such annuity payments and remit that amount to the federal government.
Federal income tax withholding is mandatory for certain distributions from
Section 401 retirement plans and 403(b) annuities. State income tax withholding
may also apply. (See "Federal Tax Matters" page 38.)
Election of Annuity Forms and Payment Options
The Annuity Form and Payment Option for each Contract is set as a 120
month period certain and life Annuity Form, under the Variable Payment Option.
Before the Annuity Date, and while the Annuitant is living, the Owner
may, by Written Request, change the Annuity Form or Annuity Payment Option or
may request payment of the Cash Surrender Value for the Contract. The request
for change of the Annuity Date or Annuity Payment Option must be received by the
Service Center at least 30 days prior to the Annuity Date.
In the event that an Annuity Form and Payment Option is not selected at
least 30 days before the Annuity Date,
Transamerica will make Variable Annuity Payments in accordance with the 120
month period certain and life Annuity Form
and the applicable provisions of the Contract.
Annuity Payment Options
The Annuity Forms may be paid under Fixed or Variable Annuity Payment
Options. Under the Fixed Annuity Payment Option, the amount of each payment will
be determined on the Annuity Date and will not subsequently be affected by the
investment performance of the Sub-Accounts. Under the Variable Annuity Payment
Option, the Annuity Payments, after the first Annuity Payment, will reflect the
investment experience of the Sub-Account or Sub-Accounts chosen by the Owner.
Owners may elect a Fixed Annuity, a Variable Annuity, or a combination
of both (in 25% increments of the Annuity Purchase Amount). If the Owner elects
a combination, he or she must specify what part of the Annuity Purchase Amount
is to be applied to the Fixed and Variable Payment Options. Unless specified
otherwise, the applied Annuity Purchase Amount will be used to provide a
Variable Annuity. In this event, the initial allocation of Variable Annuity
Units to the Variable Sub-Accounts will be in the proportion of the Account
Value to the value in the Sub-Accounts on the Annuity Date.
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Fixed Annuity Payment Option
A Fixed Annuity provides for Annuity Payments which will remain
constant pursuant to the terms of the Annuity Form elected. If a Fixed Annuity
is selected, the portion of the Annuity Purchase Amount used to provide the
Fixed Annuity will be transferred to the general account assets of Transamerica,
and the amount of Annuity Payments will be established by the fixed annuity
provisions selected and the age and sex (if sex-distinct rates are allowed by
law) of the Annuitant and will not reflect investment experience after the
Annuity Date. The Fixed Annuity Payment amounts are determined by applying the
Annuity Purchase Rate specified in the Contract to the portion of the Annuity
Purchase Amount applied to the Fixed Annuity Option by the Owner. Payments may
vary after the death of the Annuitant under some Annuity Options; the amounts of
these variances are fixed on the Annuity Date. Variable Annuity Payment Option
A Variable Annuity provides for payments that vary in dollar amount,
based on the investment performance of the selected Sub-Account(s) of the
Variable Account. The Variable Annuity Purchase Rate Tables in the Contract
reflect an assumed annual interest rate of 4%, so if the actual net investment
performance of the Sub-Account(s) is less than this rate, then the dollar amount
of the actual Annuity Payments will decrease. If the actual net investment
performance of the Sub-Account(s) is higher than this rate, then the dollar
amount of the actual Annuity Payments will increase. If the net investment
performance exactly equals the 4% rate, then the dollar amount of the actual
Annuity Payments will remain constant.
Variable Annuity Payments will be based on the Sub-Accounts selected by
the Owner, and on the allocations among the Sub-Accounts.
For further details as to the determination of Variable Annuity
Payments, see the Statement of Additional Information.
Annuity Forms
The Owner may choose any of the Annuity Forms described below. Subject
to approval by Transamerica, the Owner may select any other Annuity Forms then
being offered by Transamerica.
(1) Life Annuity. Payments start on the first day of the month
immediately following the Annuity Date, if the Annuitant is living. Payments end
with the payment due just before the Annuitant's death. There is no death
benefit under this form. It is possible that only one payment will be made under
this form if the Annuitant dies before the second payment is due; only two
payments will be made if the Annuitant dies before the third payment is due, and
so forth.
(2) Life and Contingent Annuity. Payments start on the first day of the
month immediately following the Annuity Date, if the Annuitant is living.
Payments will continue for as long as the Annuitant lives. After the Annuitant
dies, payments will be made to the Contingent Annuitant, if living, for as long
as the Contingent Annuitant lives. The continued payments can be in the same
amount as the original payments, or in an amount equal to one-half or two-thirds
thereof. Payments will end with the payment due just before the death of the
Contingent Annuitant. There is no death benefit after both die. If the
Contingent Annuitant does not survive the Annuitant, payments will end with the
payment due just before the death of the Annuitant. It is possible that only one
payment or very few payments will be made under this form, if the Annuitant and
Contingent Annuitant die shortly after payments begin.
The written request for this form must: (a) name the Contingent
Annuitant; and (b) state the percentage of payments for the Contingent
Annuitant. Once Annuity Payments start under this Annuity Form, the person named
as Contingent Annuitant for purposes of being the measuring life, may not be
changed. Transamerica will require proof of age for the Annuitant and for the
Contingent Annuitant before payments start.
(3) Life Annuity With Period Certain. Payments start on the first day
of the month immediately following the Annuity
Date, if the Annuitant is living. Payments will be made for the longer of: (a)
the Annuitant's life; or (b) the period certain.
The period certain may be 120 or 180 or 240 months, but in no event may it
exceed the life expectancy of the Annuitant.
If the Annuitant dies after all payments have been made for the period
certain, payments will cease with the payment due just before the Annuitant's
death. No benefit will then be payable to the Annuitant's Beneficiary.
If the Annuitant dies during the period certain, the rest of the period
certain payments will be made to the Annuitant's Beneficiary, unless the Owner
provides otherwise. The Owner may elect to have the commuted value of these
payments paid in a single sum. Transamerica will determine the commuted value by
discounting the rest of the payments at the then current rate of interest used
for commuted values.
If the Owner does not elect to have the commuted value paid in a single
sum after the Annuitant's death, the Owner may designate a Payee to receive any
remaining payments payable if the Annuitant's Beneficiary dies before all of the
payments under the period certain have been made. If the Annuitant's Beneficiary
dies before receiving all of the remaining period certain payments and a
designated Payee does not survive the Annuitant's Beneficiary for at least 30
days, then the remaining payments will be paid to the Owner, if living,
otherwise in a single sum to the Owner's estate.
The written request for this form must: (a) state the length of the
period certain; and (b) name the Annuitant's
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Beneficiary.
(4) Joint and Survivor Annuity. Payments will be made, starting on the
first day of the month immediately following the Annuity Date, if and for as
long as the Annuitant and Joint Annuitant are living. After the Annuitant or
Joint Annuitant dies, payments will continue as long as the survivor lives. The
continued payments can be in the same amount as the original payments, or in an
amount equal to one-half or two-thirds thereof. It is possible that only one
payment or very few payments will be made under this form if the Annuitant and
Joint Annuitant both die shortly after payments begin.
The written request for this form must: (a) name the Joint Annuitant;
and (b) state the percentage of continued payments for the survivor. Once
payments start under this Annuity Form, the person named as Joint Annuitant, for
the purpose of being the measuring life, may not be changed. Transamerica will
need proof of age for the Joint Annuitant before payments start.
(5) Other Forms of Payment. Benefits can be provided under any other
Annuity Form not described in this section subject to Transamerica's agreement
and any applicable state or federal law or regulation. Requests for any other
Annuity Form must be made in writing to the Service Center at least 30 days
before the Annuity Date.
Once payments start under the Annuity Form and Payment Option selected
by the Owner: (a) no changes can be made in the Annuity Form and Payment Option;
(b) no additional Purchase Payment will be accepted under the Contract; and (c)
no further withdrawals will be allowed.
The Owner may, at any time after the Annuity Date by written notice to
us at our Service Center, change the Payee
of annuity benefits being provided under the Contract. The effective date of
change in Payee will be the later of: (a) the date
we receive the Written Request for such change; or (b) the date specified by
the Owner. If the Contract is issued as an IRA,
the Owner may not change the Payee on or after the Annuity Date.
Alternate Fixed Annuity Rates
The amount of any Fixed Annuity Payments will be determined on the
Annuity Date by using either the guaranteed fixed annuity rates or
Transamerica's current single premium fixed annuity rates at the time, whichever
would result in a higher amount of monthly Fixed Annuity Payments.
QUALIFIED CONTRACTS
The Contracts may be used to fund IRA rollovers and, with
Transamerica's prior permission, to fund contributory IRA's, for use in
connection with Section 408(b) of the Code. A rollover IRA is one whose initial
Purchase Payment is from the rollover of certain kinds of distributions from
qualified plans, Section 403(b) tax sheltered annuities and individual
retirement plans, following the rules set out in the Code to maintain favorable
tax treatment for the individual retirement annuity. A contributory IRA is one
to which initial and subsequent Purchase Payments are subject to limitations
imposed by the Code.
With Transamerica's prior permission, the Contracts may also be used
for various types of qualified pension and profit sharing plans under Section
401 of the Code, which permits corporate employers to establish various types of
retirement plans for employees, and as Section 403(b) annuities. The tax rules
applicable to distribution from qualified retirement plans, including
restrictions on contributions and benefits, taxation of distributions, any tax
penalties, vary according to the type of plan and the terms and conditions of
the plan itself. Various tax penalties may apply to contributions in excess of
specified limits, aggregate distributions in excess of specified amount,
distributions prior to age 59 1/2 (subject to certain exceptions), distributions
that do not satisfy specified requirements and certain other transactions with
subject to qualified plans. Purchasers of the contracts for use in qualified
plans should seek competent advice regarding the suitability of the proposed
plan documents and the Contract to their specific needs. Transamerica reserves
the right to decline to sell the Contract to certain qualified plans or
terminate the contract if in Transamerica's judgment the Contract is not
appropriate for the plan. If a Contract is purchased to fund an IRA, the
Annuitant must also be the Owner. In addition, under current tax law, minimum
distributions from IRA's must commence not later than April 1st of the calendar
year following the calendar year in which the Owner attains age 70 1/2. The
Owner should consult his/her tax adviser concerning these matters. Withholding
A distributee receiving withdrawals from certain Qualified Contracts
may not be entitled to elect, not to have income tax withholding apply. The
federal income withholding rate in the case of certain Qualified Contracts, but
not IRA's, is 20% of the taxable amount of the withdrawal.
Since the Qualified Contracts offered by the Prospectus, with
Transamerica's prior permission, will be issued in connection with retirement
plans which meet the requirements of Sections 401, 403(b), or 408(b) of the
Code, reference should be made to the terms of the particular retirement plan
and the Code for any additional limitations or restrictions on cash withdrawals.
Automatic Payout Option ("APO")
Prior to the Annuity Date, for Qualified Contracts only, the Owner may
elect the Automatic Payout Option ("APO")
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to satisfy minimum distribution requirements under Sections 401(a)(9), 403(b),
and 408(b)(3) of the Code with regard to this Contract. This may be elected no
earlier than six months prior to the calendar year in which the Owner attains
age 701/2, but payments may not begin earlier than January of such calendar
year. Additionally, APO withdrawals may not begin before the later of (a) 30
days after the Contract Date or (b) the end of the Free Look Period. APO may be
elected in any calendar month, but no later than the month in which the Owner
attains age 84. APO withdrawals will not be made from the Fixed Account.
APO withdrawals will be from the Sub-Account(s) and in the percentage
allocations specified by the Owner. If no specifications are made, withdrawals
will be pro-rata from all Sub-Account(s) with value. Withdrawals cannot be made
from a Sub-Account from which Dollar Cost Averaging transfers are being made.
Payments will be made annually, and will continue unless terminated by
the Owner or automatically terminated by Transamerica as set forth in the
Contract. Once terminated, APO may not be elected again.
If only APO withdrawals are made, no Contingent Deferred Sales Load
will apply, regardless of the "Allowed Amount" (described on page 40). However,
if a partial withdrawal is taken, that partial withdrawal and any subsequent
withdrawals that Contract Year will be subject to a CDSL to the extent they
exceed the "Allowed Amount." (See "Contingent Deferred Sales Load" page 35.)
To be eligible for this option, the following conditions must be met:
(1) the Account Value must be at least $12,000 at the time of election; (2) the
annual withdrawal amount is the larger of the required minimum distribution
under Code Sections 401(a)(9) or 408(b)(3) or $500; and (3) the minimum amount
per payment (if not annual) must be at least $100.
APO allows the required minimum distribution to be paid from the
Sub-Account(s) of the Variable Account. If there are insufficient funds in the
Variable Account to make a withdrawal, or for other reasons as set forth in the
Contract, this option will terminate. In which case, if there are amounts in a
Contract's Account Value remaining in the Fixed Account, the minimum
distribution requirements with regard to the Account Value may not be met. If
amounts are transferred to SubAccounts from a Guaranteed Period before its
Expiration Date, an interest adjustment will be made to such amounts.
If you have more than one qualified plan subject to the Code's minimum
distribution requirements, you must consider all such plans in the calculation
of your minimum distribution requirement, but Transamerica will make
calculations and distribution with regard to this Contract only. Restrictions
Under Section 403(b) Programs
Certain restrictions apply to annuity contracts used in connection with
Internal Revenue Code Section 403(b) retirement plans. Section 403(b) of the
Internal Revenue Code provides for tax-deferred retirement savings plans for
employees of certain non-profit and educational organizations. In accordance
with the requirements of the Code, Section 403(b) annuities generally may not
permit distribution of (i) elective contributions made in years beginning after
December 31, 1988, and (ii) earnings on those contributions and (iii) earnings
on amounts attributable to elective contributions held as of the end of the last
year beginning before January 1, 1989. Distributions of such amounts will be
allowed only upon death of the employee, on or after attainment of age 591/2,
separation from service, disability, or financial hardship, except that income
attributable to elective contributions may not be distributed in the case of
hardship.
FEDERAL TAX MATTERS
Introduction
The following discussion is a general description of federal tax
considerations relating to the Contract 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 the Contract. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction. This discussion is based upon Transamerica'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.
The Contract may be purchased on a non-tax qualified basis
("Non-Qualified Contract") or purchased and used in connection with plans
qualifying for special tax treatment ("Qualified Contract"). Qualified Contracts
are designed for use in connection with plans entitled to special income tax
treatment under Sections 401, 403(b), and 408 of the Code. The ultimate effect
of federal income taxes on the amounts held under a Contract, on Annuity
Payments, and on the economic benefit to the Owner, the Annuitant, or the
Beneficiary may depend on the type of retirement plan, and on the tax status of
the individual concerned. In addition, certain requirements must be satisfied in
purchasing a Qualified Contract with proceeds from a tax qualified retirement
plan and receiving distributions from a Qualified Contract in order to continue
receiving special tax treatment. Therefore, purchasers of Qualified Contracts
should seek competent legal and tax advice regarding the suitability
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of the Contract for their situation, the applicable requirements, and the tax
treatment of the rights and benefits of the Contract. The following discussion
assumes that a Qualified Contract is purchased with proceeds from and/or
contributions under retirement plans that qualify for the intended special
federal income tax treatment.
The following discussion is based on the assumption that the Contract
qualifies as an annuity contract for federal income tax purposes. The Statement
of Additional Information discusses the requirements for qualifying as an
annuity.
Taxation of Annuities
In General
Section 72 of the Code governs taxation of annuities in general.
Transamerica believes that the Owner who is a natural person generally is not
taxed on increases in the value of an Account until distribution occurs by
withdrawing all or part of the Account Value (e.g., withdrawals or Annuity
Payments under the Annuity Option elected). For this purpose, the assignment,
pledge, or agreement to assign or pledge any portion of the Account Value (and
in the case of a Qualified Contract, any portion of an interest in the plan)
generally will be treated as a distribution. The taxable portion of a
distribution (in the form of a single sum payment or an annuity) is taxable as
ordinary income.
The Owner of any Non-Qualified Contract who is not a natural person
generally must include in income any increase in the excess of the Account Value
over the "investment in the contract" (discussed below) during the taxable year.
There are some exceptions to this rule and a prospective Owner that is not a
natural person may wish to discuss these with a competent tax adviser.
The following discussion generally applies to Contracts owned by
natural persons. Withdrawals In the case of a withdrawal under a
Qualified Contract, including withdrawals under the Systematic
Withdrawal
Option or the Automatic Payout Option, a ratable portion of the amount received
is taxable, generally based on the ratio of the "investment in the contract" to
the individual's total accrued benefit under the retirement plan. The
"investment in the contract" generally equals the amount of any non-deductible
Purchase Payments paid by or on behalf of any individual. For a Qualified
Contract , the "investment in the contract" can be zero. Special tax rules may
be available for certain distributions from a Qualified Contract.
With respect to Non-Qualified Contracts, partial withdrawals, including
withdrawals under the Systematic Withdrawal Option, are generally treated as
taxable income to the extent that the Account Value immediately before the
withdrawal exceeds the "investment in the contract" at that time. The
"investment in the contract" is generally equal to the amount of non-deductible
Purchase Payments made. If a partial withdrawal from the Fixed Account is
subject to an interest adjustment, the Account Value immediately before the
withdrawal will not be altered to take into account the interest adjustment. As
a result, for purposes of determining the taxable portion of the partial
withdrawal, the Account Value will be treated as including the amount deducted
from the Fixed Account due to the interest adjustment. Full surrenders are
treated as taxable income to the extent that the amount received exceeds the
"investment in the contract."
Annuity Payments
Although the tax consequences may vary depending on the Annuity Payment
elected under the Contract, in general, only the portion of the Annuity Payment
that represents the amount by which the Account Value exceeds the "investment in
the contract" will be taxed; after the "investment in the contract" is
recovered, the full amount of any additional Annuity Payments is taxable. For
Variable Annuity Payments, the taxable portion is generally determined by an
equation that establishes a specific dollar amount of each payment that is not
taxed. The dollar amount is determined by dividing the "investment in the
contract" by the total number of expected periodic payments. However, the entire
distribution will be taxable once the recipient has recovered the dollar amount
of his or her "investment in the contract." For Fixed Annuity Payments, in
general there is no tax on the portion of each payment which represents the same
ratio that the "investment in the contract" bears to the total expected value of
the Annuity Payments for the term of the payments; however, the remainder of
each Annuity Payment is taxable. Once the "investment in the contract" has been
fully recovered, the full amount of any additional Annuity Payments is taxable.
If Annuity Payments cease as a result of an Annuitant's death before full
recovery of the "investment in the contract," consult a competent tax advisor
regarding deductibility of the unrecovered amount.
Penalty Tax
In the case of a distribution pursuant to a Non-Qualified Contract,
there may be imposed a federal income tax penalty 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 attains age
591/2; (2) made as a result of death or disability of the Owner; or (3) received
in substantially equal periodic payments as a life annuity or a joint and
survivor annuity for the lives or life expectancies of the Owner and a Joint
Owner. Other tax penalties may apply to certain distributions pursuant to a
Qualified Contract.
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Taxation of Death Benefit Proceeds
Amounts may be distributed from the Contract because of the death of an
Owner or Annuitant. Generally such amounts are includible in the income of the
recipient as follows: (1) if distributed in a lump sum, they are taxed in the
same manner as a full surrender as described above, or (2) if distributed under
an Annuity Option, they are taxed in the same manner as Annuity Payments, as
described above. For these purposes, the investment in the Contract is not
affected by the Owner's or Annuitant's death. That is, the investment in the
Contract remains the amount of any Purchase Payments paid which are not excluded
from gross income. Other rules relating to distributions at death apply to
Qualified Contracts. You should consult your legal counsel and tax adviser
regarding these rules and their impact on Qualified Contracts.
Required Distributions upon Owner's Death
Notwithstanding any provision of the Contract or this prospectus to the
contrary, no payment of benefits provided under the Contract will be allowed
that does not satisfy the requirements of Section 72(s) of the Code.
Notwithstanding any other provision of the Contract or this prospectus,
if the Owner dies before the Annuity Date, the Death Benefit payable to the
Owner's Beneficiary will be distributed as follows:
(a) the Death Benefit must be completely distributed within five years
of the Owner's date of death; or (b) the Owner's Beneficiary may elect,
within the one year period after the Owner's date of death, to receive
the Death Benefit in the form of an annuity from us, provided
that: (1) such annuity is distributed in substantially equal
installments over the life of such Owner's Beneficiary or over
a period not extending beyond the life expectancy of such
Owner's Beneficiary; and (2) such distributions begin not
later than one year after the Owner's date of death.
Notwithstanding (a) and (b) above, if the sole Owner's Beneficiary is
the deceased Owner's surviving spouse, then such spouse may elect, within the
one year period after the Owner's date of death, to continue the contract under
the same terms as before the Owner's death. Upon receipt of such election from
the spouse, in a form and manner acceptable to us, at our Service Office: (1)
all rights of the spouse as Owner's Beneficiary under the contract in effect
prior to such election will cease; (2) the spouse will become the Owner of the
contract and will also be treated as the Contingent Annuitant, if none has been
named and only if the deceased Owner was the Annuitant; and (3) all rights and
privileges granted by the Contract or allowed by Transamerica will belong to the
spouse as Owner of the Contract. This election will be deemed to have been made
by the spouse if such spouse makes a Purchase Payment to the Contract or fails
to make a timely election as described in this paragraph.
If the Owner's Beneficiary is a nonspouse, the distribution provisions
described in subparagraphs (a) and (b) above, will apply even if the Annuitant
and/or Contingent Annuitant are alive at the time of the Owner's death. If the
nonspouse Owner's Beneficiary is not an individual, then only a cash payment
will be paid.
If no election is received by us from a nonspouse Owner's Beneficiary
within the one year period after the Owner's date of death, then we will pay the
Death Benefit to the Owner's Beneficiary in a cash payment. The Death Benefit
will be determined as of the date we make the cash payment. Such cash payment
will be in full settlement of all our liability under the contract.
If Annuitant Dies After Annuity Starts - If the Annuitant dies after
the annuity starts, any benefit payable will be distributed at least as rapidly
as under the Annuity Form then in effect.
If Owner Dies After Annuity Starts - If the Owner dies after the
annuity starts, any benefit payable will continue to be distributed at least as
rapidly as under the Annuity Form then in effect. All of the Owner's rights
granted under the contract or allowed by us will pass to the Owner's
Beneficiary.
Joint Ownership - For purposes of this section, if the contract has
Joint Owners we will consider the date of death of the first Joint Owner as the
death of the Owner and the surviving Joint Owner will become the Owner of the
Contract.
Transfers, Assignments, or Exchanges of the Contract
A transfer of ownership of a Non-Qualified Contract, the designation of
an Annuitant, Payee, or other Beneficiary who is not also the Owner, or the
exchange of a Contract may result in certain tax consequences to the Owner that
are not discussed herein. An Owner contemplating any such designation, transfer,
assignment, or exchange should contact a competent tax adviser with respect to
the potential tax effects of such a transaction. Certain Qualified Contracts
cannot be transferred or assigned.
Multiple Contracts
All deferred non-qualified annuity contracts that are issued by
Transamerica (or its affiliates) to the same Owner during any calendar year are
treated as one annuity contract for purposes of determining the amount
includible in gross income under Section 72(e) of the Code. In addition, the
Treasury Department has specific authority to issue regulations that prevent the
avoidance of Section 72(e) through the serial purchase of annuity contracts or
otherwise. Congress has also indicated that the Treasury Department may have
authority to treat the combination purchase of an immediate annuity contract and
separate deferred annuity contracts as a single annuity contract under its
general authority to prescribe rules as may be necessary to
40
<PAGE>
enforce the income tax laws.
Qualified Contracts
In General
The Qualified Contract is designed for use as a rollover IRA. With
Transamerica's prior permission, the Contract may also be used as a contributory
IRA, as a Section 403(b) annuity, and for use in qualified pension and profit
sharing plans established by Corporate employers. The tax rules applicable to
participants and beneficiaries in retirement plans vary according to the type of
plan and the terms and conditions of the plan. Special favorable tax treatment
may be available for certain types of contributions and distributions. Adverse
tax consequences may result from contributions in excess of specified limits;
distributions prior to age 591/2 (subject to certain exceptions); distributions
that do not conform to specified commencement and minimum distribution rules;
aggregate distributions in excess of a specified annual amount; and in other
specified circumstances. We make no attempt to provide more than general
information about use of the Contracts with the various types of retirement
plans. Owners and participants under retirement plans as well as annuitants and
beneficiaries are cautioned that the rights of any person to any benefits under
Qualified Contracts may be subject to the terms and conditions of the plans
themselves, regardless of the terms and conditions of the Contract issued in
connection with such a plan. Some retirement plans are subject to distribution
and other requirements that are not incorporated in the administration of the
Contracts. Owners are responsible for determining that contributions,
distributions and other transactions with respect to the Contracts satisfy
applicable law. Purchasers of Contracts for use with any retirement plan should
consult their legal counsel and tax adviser regarding the suitability of the
Contract.
Qualified Pension and Profit Sharing Plans
Section 401(a) of the Code permits employers to establish various types
of retirement plans for employees. Such retirement plans may permit the purchase
of the Contract in order to provide retirement savings under the plans. The
Self-Employed Individuals' Tax Retirement Act of 1962, as amended, commonly
referred to as "H.R. 10," also permits self-employed individuals to establish
qualified plans for themselves and their employees. Adverse tax consequences to
the plan, to the participant or to both may result if this Contract is assigned
or transferred to any individual as a means to provide benefits payments.
Purchasers of a Contract for use with such plans should seek competent advice
regarding the suitability of the proposed plan documents and the Contract to
their specific needs. The Contract is designed to invest retirement savings and
not to distribute retirement benefits.
Individual Retirement Annuities
The Contract is designed for use with IRA rollovers and direct
transfers. Section 408 of the Code permits eligible individuals to contribute to
an individual retirement program known as an Individual Retirement Annuity or
Individual Retirement Account (each hereinafter referred to as an "IRA"). Also,
distributions from certain other types of qualified plans may be "rolled over"
on a tax-deferred basis into an IRA. The sale of a Contract for use with an IRA
may be subject to special disclosure requirements of the Internal Revenue
Service. Purchasers of a Contract for use with IRAs will be provided with
supplemental information required by the Internal Revenue Service or other
appropriate agency. Such purchasers will have the right to revoke their purchase
within 7 days of the earlier of the establishment of the IRA or their purchase.
Various tax penalties may apply to contributions in excess of specified limits,
aggregate distributions in excess of certain annual limits, distributions that
do not satisfy specified requirements, and certain other transactions. A
Qualified Contract will be amended as necessary to conform to the requirements
of the Code. Purchasers should seek competent advice as to the suitability of
the Contract for use with IRAs.
Section 403(b) Plans
Under Code Section 403(b), payments made by public school systems and
certain tax exempt organizations to purchase annuity contracts for their
employees are excludable from the gross income of the employee, subject to
certain limitations. However, these payments may be subject to FICA (Social
Security) taxes.
Code Section 403(b)(11) restricts the distribution under Code Section
403(b) annuity contracts of: (1) elective contributions made in years beginning
after December 31, 1988; (2) earnings on those contributions; and (3) earnings
in such years on amounts held as of the last year beginning before January 1,
1989. Distribution of those amounts may only occur upon death of the employee,
attainment of age 59 1/2, separation from service, disability, or financial
hardship. In addition, income attributable to elective contributions may not be
distributed in the case of hardship.
Withholding
Pension and annuity distributions generally are subject to withholding
for the recipient's federal income tax liability at rates that vary according to
the type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions. Federal income tax withholding is mandatory for certain
distributions from Section 401 or Section 403(b) retirement plans.
Restrictions under Qualified Contracts
Other restrictions with respect to the election, commencement, or
distribution of benefits may apply under Qualified
41
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Contracts or under the terms of the plans in respect of which Qualified
Contracts are issued.
Possible Changes in Taxation
In past years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of non-qualified annuities that
did not have "substantial life contingencies" by taxing income as it is credited
to the annuity. Although as of the date of this prospectus Congress is not
actively considering any legislation regarding the taxation of annuities, there
is always the possibility that the tax treatment of annuities could change by
legislation or other means (such as IRS regulations, revenue rulings, judicial
decisions, etc.). Moreover, it is also possible that any change could be
retroactive (that is, effective prior to the date of the change). Other Tax
Consequences
As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with respect to
other tax situations not discussed in this Prospectus. Further, the federal
income tax consequences discussed herein reflect Transamerica's understanding of
current law and the law may change. Federal estate and gift tax consequences and
state and local estate, inheritance, and other tax consequences of ownership or
receipt of distributions under the Contract depend on the individual
circumstances of each Owner or recipient of the distribution. A competent tax
adviser should be consulted for further information. General
At the time the Initial Purchase Payment is paid, a prospective
purchaser must specify whether he or she is purchasing a Non-Qualified Contract
or a Qualified Contract. If the Initial Premium is derived from an exchange or
surrender of another annuity contract, Transamerica may require that the
prospective purchaser provide information with regard to the federal income tax
status of the previous annuity contract. Transamerica will require that persons
purchase separate Contracts if they desire to invest monies qualifying for
different annuity tax treatment under the Code. Each such separate Contract
would require the minimum Initial Purchase Payment stated above. Additional
Purchase Payments under a Contract must qualify for the same federal income tax
treatment as the Initial Purchase Payment under the Contract; Transamerica will
not accept an additional Purchase Payment under a Contract if the federal income
tax treatment of such Purchase Payment would be different from that of the
Initial Purchase Payment.
DISTRIBUTION OF THE CONTRACT
Transamerica Securities Sales Corporation ("TSSC") is the principal
underwriter of the Contracts. TSSC may also serve as an underwriter and
distributor of other contracts issued through the Variable Account and certain
other separate accounts of Transamerica and affiliates of Transamerica. TSSC is
a wholly-owned subsidiary of Transamerica Insurance Corporation of California,
which is a subsidiary of the Transamerica Corporation. TSSC is registered with
the Commission as a broker/dealer and is a member of the National Association of
Securities Dealers, Inc. ("NASD"). Its principal offices are located at 1150
South Olive Street, Los Angeles, California 90015. Transamerica pays TSSC for
acting as the principal underwriter under a distribution agreement.
TSSC has entered into sales agreements with other broker/dealers to
solicit applications for the Contracts through registered representatives who
are licensed to sell securities and variable insurance products. These
agreements provide that applications for the Contracts may be solicited by
registered representatives of the broker/dealers appointed by Transamerica to
sell its variable life insurance and variable annuities. These broker/dealers
are registered with the Commission and are members of the NASD. The registered
representatives are authorized under applicable state regulations to sell
variable life insurance and variable annuities.
Under the agreements, Contracts will be sold by broker/dealers which
will generally receive compensation of up to 6.25% of any Initial and additional
Purchase Payments made (although higher amounts may be paid in certain
circumstances). Additional amounts may be paid in certain circumstances (such as
upon certain annuitizations, when an additional commission of 2.5% of the
Account Value annuitized may be paid). Additional amounts, including asset based
trail commissions, may be paid in some situations.
Transamerica Financial Resources, Inc. ("TFR") also is an underwriter
and distributor of the Contracts. TFR is a
wholly-owned subsidiary of Transamerica Insurance Corporation of California and
is registered with the Commission and the
NASD as a broker/dealer.
LEGAL PROCEEDINGS
There is no pending material legal proceeding affecting the Variable
Account. Transamerica is involved in various kinds of routine litigation which,
in management's judgment, are not of material importance to Transamerica's
assets or to the Variable Account.
42
<PAGE>
LEGAL MATTERS
Advice regarding certain legal matters concerning the federal
securities laws applicable to the issue and sale of the
Contract has been provided by Sutherland, Asbill & Brennan, LLP. The
organization of Transamerica, its authority to issue
the Contract and the validity of the form of the Contract have been passed upon
by James W. Dederer, Executive Vice
President, Secretary and General Counsel of Transamerica.
ACCOUNTANTS
The consolidated financial statements of Transamerica for each of the
three years in the period ended December 31, 1996, and the financial statements
for the Variable Account at December 31, 1996, have been audited by Ernst &
Young LLP, Independent Auditors, as set forth in their reports appearing in the
Statement of Additional Information, and are included in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
VOTING RIGHTS
To the extent required by applicable law, all Portfolio shares held in
the Variable Account will be voted by Transamerica at regular and special
shareholder meetings of the respective Funds in accordance with instructions
received from persons having voting interests in the corresponding Sub-Account.
If, however, the 1940 Act or any regulation thereunder should be amended, or if
the present interpretation thereof should change, or if Transamerica determines
that it is allowed to vote all Portfolio shares in its own right, Transamerica
may elect to do so.
The person with the voting interest is the Owner. The number of votes
which are available to an Owner will be calculated separately for each
Sub-Account of the Variable Account. Before the Annuity Date, that number will
be determined by applying his or her percentage interest, if any, in a
particular Sub-Account to the total number of votes attributable to that
Sub-Account. The Owner holds a voting interest in each Sub-Account to which the
Account Value is allocated. After the Annuity Date, the number of votes
decreases as Annuity Payments are made and as the reserves for the Contract
decrease.
The number of votes of a Portfolio 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 respective Funds.
Shares as to which no timely instructions are received and shares held
by Transamerica as to which Owners have no beneficial interest will be voted in
proportion to the voting instructions which are received with respect to all
Contracts participating in the Sub-Account. Voting instructions to abstain on
any item to be voted upon will be applied on a pro rata basis to reduce the
votes eligible to be cast.
Each person or entity having a voting interest in a Sub-Account will
receive proxy material, reports and other material relating to the appropriate
Portfolio.
It should be noted that the Funds are not required, and do not intend,
to hold annual or other regular meetings of shareholders.
AVAILABLE INFORMATION
Transamerica has filed a registration statement (the "Registration
Statement") with the Securities and Exchange Commission under the 1933 Act
relating to the Contract offered by this Prospectus. This Prospectus has been
filed as a part of the Registration Statement and does not contain all of the
information set forth in the Registration Statement and exhibits thereto, and
reference is hereby made to such Registration Statement and exhibits for further
information relating to Transamerica and the Contract. Statements contained in
this Prospectus, as to the content of the Contract and other legal instruments,
are summaries. For a complete statement of the terms thereof, reference is made
to the instruments filed as exhibits to the Registration Statement. The
Registration Statement and the exhibits thereto may be inspected and copied at
the office of the Commission, located at 450 Fifth Street, N.W., Washington,
D.C.
43
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available which contains more
details concerning the subjects discussed in this Prospectus. The following is
the Table of Contents for that Statement:
TABLE OF CONTENTS Page
THE CONTRACT................................................................3
DOLLAR COST AVERAGING.......................................................3
NET INVESTMENT FACTOR.......................................................3
ANNUITY PERIOD..............................................................3
Variable Annuity Units and Payments................................4
Variable Annuity Unit Value........................................4
Transfers After the Annuity Date...................................4
GENERAL PROVISIONS..........................................................4
IRS Required Distributions.........................................4
Non-Participating..................................................4
Misstatement of Age or Sex.........................................4
Proof of Existence and Age.........................................5
Assignment.........................................................5
Annuity Data.......................................................5
Annual Report......................................................5
Incontestability...................................................5
Ownership..........................................................5
Entire Contract....................................................5
Changes in the Contract............................................5
Protection of Benefits.............................................6
Delay of Payments..................................................6
Notices and Directions.............................................6
CALCULATION OF YIELDS AND TOTAL RETURNS.....................................6
Money Market Sub-Account Yield Calculation.........................6
Other Sub-Account Yield Calculations...............................7
Standard Total Return Calculations.................................7
Hypothetical Performance Data......................................8
Other Performance Data.............................................8
HISTORIC PERFORMANCE DATA...................................................8
General Limitations................................................8
Sub-Account Performance Figures....................................9
Hypothetical Sub-Account Performance Figures.......................9
FEDERAL TAX MATTERS........................................................11
Taxation of Transamerica..........................................11
Tax Status of the Contract........................................11
DISTRIBUTION OF THE CONTRACT...............................................12
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS.....................................13
TRANSAMERICA...............................................................13
General Information and History...................................13
STATE REGULATION...........................................................13
RECORDS AND REPORTS........................................................13
FINANCIAL STATEMENTS.......................................................13
44
<PAGE>
Appendix A
Example of Variable Accumulation Unit Value Calculations
Suppose the net asset value per share of a Portfolio at the end of the
current Valuation Period is $20.15; at the end of the immediately preceding
Valuation Period it was $20.10; the Valuation Period is one day; and no
dividends or distributions caused the Portfolio to go "ex-dividend" during the
current Valuation Period. $20.15 divided by $20.10 is 1.002488. Subtracting the
one day risk factor for Mortality and Expense Risk Charge and the Administrative
Expense Charge of .003814% (the daily equivalent of the current charge of 1.40%
on an annual basis) gives a Net Investment Factor of 1.002449. If the value of
the Variable Accumulation Unit for the immediately preceding Valuation Period
had been 15.500000, the value for the current Valuation Period would be
15.537966 (15.5 x 1.002449). Example of Variable Annuity Unit Value Calculations
Suppose the circumstances of the first example exist, and the value of
a Variable Annuity Unit for the immediately preceding Valuation Period had been
13.500000. If the first Variable Annuity Payment is determined by using an
annuity payment based on an assumed interest rate of 4% per year, the value of
the Variable Annuity Unit for the current Valuation Period would be 13.531613
(13.5 x 1.002449 (the Net Investment Factor) x 0.999893). 0.999893 is the
factor, for a one day Valuation Period, that neutralizes the assumed rate of
four percent (4%) per year used to establish the Variable Annuity Rates found in
the Contract. Example of Variable Annuity Payment Calculations
Suppose that the Account is currently credited with 3,200.000000
Variable Accumulation Units of a particular Sub-Account.
Also suppose that the Variable Accumulation Unit Value and the Variable
Annuity Unit Value for the particular Sub-Account for the Valuation Period which
ends immediately preceding the first day of the month is 15.500000 and 13.500000
respectively, and that the Variable Annuity Rate for the age and option elected
is $5.73 per $1,000. Then the first Variable Annuity Payment would be:
3.200 x 15.5 x 5.73 divided by 1,000 = $284.21,
and the number of Variable Annuity Units credited for future payments
would be:
284.21 divided by 13.5 = 21.052444.
For the second monthly payment, suppose that the Variable Annuity Unit
Value on the 10th day of the second month is 13.565712. Then the second Variable
Annuity Payment would be $285.59 (21.052444 x 13.565712).
A-1
<PAGE>
"BACK COVER"
Issued by:
Transamerica Occidental
Life Insurance Company
(Certificate Form GNC-33, Individual Contract Form 1-502)
1150 South Olive
Los Angeles, CA 90015
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION FOR
DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE
VARIABLE ANNUITY
Issued By
Transamerica Occidental Life Insurance Company
The Statement of Additional Information expands upon subjects discussed
in the current Prospectus for the Dreyfus/Transamerica Triple Advantage Variable
Annuity (Contract) issued by Transamerica Occidental Life Insurance Company. The
Owner may obtain a copy of the Prospectus dated May 1, 1997, as supplemented
from time to time, by writing to Transamerica Occidental Life Insurance Company,
Annuity Service Center, at P.O. Box 31848 Charlotte, North Carolina 28231or
calling 800-258-4260. Terms used in the current Prospectus for the Contract are
incorporated in this Statement.
The Contract will be issued as a certificate under a group annuity
contract in some states and as an individual annuity contract in other states.
The term "Contract" as used herein refers to both the individual contract and
the certificates issued under the group contract. THIS STATEMENT OF ADDITIONAL
INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ ONLY IN CONJUNCTION WITH THE
PROSPECTUS FOR THE CONTRACT.
Dated May 1, 1997
<PAGE>
TABLE OF CONTENTS
Page
THE CONTRACT (page 26)....................................................3
DOLLAR COST AVERAGING (page 30)...........................................3
NET INVESTMENT FACTOR (page 29)...........................................3
ANNUITY PERIOD (page 38)..................................................3
Variable Annuity Units and Payments..............................4
Variable Annuity Unit Value......................................4
Transfers After the Annuity Date.................................4
GENERAL PROVISIONS........................................................4
IRS Required Distributions.......................................4
Non-Participating................................................4
Misstatement of Age or Sex.......................................5
Proof of Existence and Age.......................................4
Assignment.......................................................5
Annuity Data.....................................................5
Annual Report....................................................5
Incontestability.................................................5
Ownership........................................................5
Entire Contract..................................................5
Changes in the Contract..........................................5
Protection of Benefits...........................................6
Delay of Payments................................................6
Notices and Directions...........................................6
CALCULATION OF YIELDS AND TOTAL RETURNS (page 19).........................6
Money Market Sub-Account Yield Calculation.......................6
Other Sub-Account Yield Calculations.............................7
Standard Total Return Calculations...............................7
Hypothetical Performance Data....................................8
Other Performance Data...........................................8
HISTORIC PERFORMANCE DATA.................................................8
General Limitations..............................................8
Sub-Account Performance Data.....................................9
Hypothetical Sub-Account Performance Figures.....................9
FEDERAL TAX MATTERS (page 41)............................................11
Taxation of Transamerica........................................11
Tax Status of the Contract......................................11
DISTRIBUTION OF THE CONTRACT (page 45)...................................12
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS (page 20).........................13
TRANSAMERICA (page 20)...................................................13
General Information and History.................................13
STATE REGULATION (page 21)...............................................13
RECORDS AND REPORTS......................................................13
FINANCIAL STATEMENTS.....................................................13
(Additional page references refer to the current
Prospectus.)
<PAGE>
THE CONTRACT
As a supplement to the description in the Prospectus, the following
provides additional information about the Contract which may be of interest to
some Owners.
DOLLAR COST AVERAGING
We reserve the right to send written notification to the Owner as to
the options available if termination of Dollar Cost Averaging, either by the
Owner or by Transamerica, results in the value of the receiving Sub-Account(s)
to which monthly transfers were made to be less than $500. The Owner will have
10 days from the date our notice is mailed to:
(a) transfer the value of the Sub-Account(s) to another Sub-Account
with a value equal to or greater than $500; or (b) transfer funds from
another Sub-Account into the receiving Sub-Account(s) to bring the
value of that Sub-Account to at least $500; or (c) submit an additional
Purchase Payment to make the value of the Sub-Account equal to or
greater than $500; or (d) transfer the entire value of the receiving
Sub-Account(s) back into the Source Account from which the automatic
transfers were made. If no election, in a form and manner acceptable to
Transamerica, is made by the Owner prior to the end
of the 10 day period, we reserve the right to transfer the value of the
receiving Sub-Account(s) back into the Source Account from which the automatic
transfers were made. Transfers made as a result of (a), (b), or (d) above will
not be counted for purposes of the eighteen allowable transfers per Contract
Year limitation.
NET INVESTMENT FACTOR
For any Sub-Account of the Variable Account, the Net Investment Factor
for a Valuation Period, before the Annuity Date, is (a) divided by (b), minus
(c) minus (d).
Where (a) is
The net asset value per share held in the Sub-Account, as of the
end of the Valuation Period,
plus or minus
The per-share amount of any dividend or capital gain distributions
if the "exdividend" date occurs in the Valuation Period, plus or minus
A per-share charge or credit as Transamerica may determine, as of
the end of the Valuation Period,
for taxes.
Where (b) is
The net asset value per share held in the Sub-Account as of the
end of the last prior Valuation
Period.
Where (c) is
The daily charge of 0.003403% (1.25% annually) for the Mortality
and Expense Risk Charge under the Contract times the number of calendar
days in the current Valuation Period. Where (d) is
The daily Administrative Expense Charge, currently 0.000411% (0.15%
annually) times the number of calendar days in the current Valuation
Period. This charge may be increased, but will not exceed 0.000684%
(0.25% annually).
A Valuation Day is defined as any day that both the New York Stock
Exchange and our Service Office are open. We currently expect that
there are no days in which the Exchange is open and our Service Office
is closed.
ANNUITY PERIOD
The Variable Annuity Options provide for payments that fluctuate or
vary in dollar amount, based on the investment performance of the elected
Variable Account Sub-Account(s).
3
<PAGE>
Variable Annuity Units and Payments
For the first monthly payment, the number of Variable Annuity Units
credited in each Sub-Account will be determined by dividing (a) the product of
the portion of the value to be applied to the Sub-Account and the Variable
Annuity Purchase Rate specified in the Contract by (b) the value of one Variable
Annuity Unit in that Sub-Account on the Annuity Date.
The amount of each subsequent Variable Annuity Payment equals the
product of the number of Variable Annuity Units in each Sub-Account and the
Sub-Account's Variable Annuity Unit Value as of the tenth day of the month
before the payment due date. The amount of each payment may vary.
Variable Annuity Unit Value
The value of a Variable Annuity Unit in a Sub-Account on any Valuation
Day is determined as described below.
The Net Investment Factor for the Valuation Period (for the appropriate
Annuity Payment frequency) just ended is multiplied by the value of the Variable
Annuity Unit for the Sub-Account on the preceding Valuation Day. The Net
Investment Factor after the Annuity Date is calculated in the same manner as
before the Annuity Date and then multiplied by an interest factor. The interest
factor equals (.999893)n where n is the number of days since the preceding
Valuation Day. This compensates for the 4% interest assumption built into the
Variable Annuity Purchase Rates.
Transfers After the Annuity Date
After the Annuity Date, the Owner may transfer Variable Annuity Units
from one Sub-Account to another, subject to certain limitations. (See
"Transfers" page 27 of the Prospectus.) The dollar amount of each subsequent
monthly Variable Annuity Payment after the transfer must be determined using the
new number of Variable Annuity Units multiplied by the Sub-Account's Variable
Annuity Unit Value.
The formula used to determine a transfer after the Annuity Date can be
found in the Appendix to this Statement of Additional Information.
GENERAL PROVISIONS
IRS Required Distributions
The Contract is intended to qualify as an annuity contract for federal
income tax purposes. All provisions in the Contract will be interpreted to
maintain such tax qualification. We may make changes in order to maintain this
qualification or to conform the Contract to any applicable changes in the tax
qualification requirements. We will provide you with a copy of any changes made
to the Contract. If any Owner under a Non-Qualified Contract dies before the
entire interest in the Contract is distributed, the value generally must be
distributed to the designated Beneficiary so that the Contract qualifies as an
annuity under the Code. (See "Federal Tax Matters" page 11.)
Non-Participating
The Contract is non-participating. No dividends are payable and the
Contract will not share in the profits or surplus earnings of Transamerica.
Misstatement of Age or Sex
If the age or sex of the Annuitant or any other measuring life has been
misstated in the application, the Annuity Payments under the Contract will be
whatever the Annuity Purchase Amount applied on the Annuity Date would purchase
on the basis of the correct age or sex of the Annuitant and/or other measuring
life. Any overpayments or underpayments by Transamerica as a result of any such
misstatement may be respectively charged against or credited to the Annuity
Payment or Annuity Payments to be made after the correction so as to adjust for
such overpayment or underpayment.
4
<PAGE>
Proof of Existence and Age
Before making any payment under the Contract, Transamerica may require
proof of the existence and/or proof of the age of the Annuitant or any other
measuring life, or any other information deemed necessary in order to provide
benefits under the Contract.
Assignment
No assignment of a Contract will be binding on Transamerica unless made
in writing and given to Transamerica at its Service Office. Transamerica is not
responsible for the adequacy of any assignment. The Owner's rights and the
interest of any Annuitant or non-irrevocable Beneficiary will be subject to the
rights of any assignee of record.
Annuity Data
Transamerica will not be liable for obligations which depend on
receiving information from a Payee or measuring life until such information is
received in a satisfactory form.
Annual Report
At least once each Contract Year prior to the Annuity Date, the Owner
will be given a report of the current Account Value allocated to each
Sub-Account of the Variable Account and each Guarantee Period of the Fixed
Account. This report will also include any other information required by law or
regulation. After the Annuity Date, a confirmation will be provided with every
Variable Annuity Payment.
Incontestability
Each Contract is incontestable from the Contract Date.
Ownership
Only the Owner(s) will be entitled to the rights granted by the
Contract, or allowed by Transamerica under the Contract. If an Owner dies, the
rights of the Owner belong to the estate of the Owner unless the Owner has
previously named an Owner's Beneficiary. A surviving Joint Owner automatically
becomes the Owner's Beneficiary.
Entire Contract
Transamerica has issued the Contract in consideration and acceptance of
the payment of the Initial Purchase Payment and, where state law requires, the
application. In those states that require a written application, a copy of the
application is attached to and is part of the Contract and along with the
Contract constitutes the entire contract. All statements made by the Owner are
considered representations and not warranties. Transamerica will not use any
statement in defense of a claim unless it is made in the application and a copy
of the application is attached to the Contract when issued.
The group annuity contract has been issued to a trust organized under
Missouri law. However, the sole purpose of the trust is to hold the group
annuity contract. The Owner has all rights and benefits under the individual
certificate issued under the group contract.
Changes in the Contract
Only two authorized officers of Transamerica, acting together, have the
authority to bind Transamerica or to make any change in the individual contract
or the group contract or individual certificates thereunder and then only in
writing. Transamerica will not be bound by any promise or representation made by
any other persons.
Transamerica may not change or amend the individual contract or the
group contract or individual certificates thereunder, except as expressly
provided therein, without the Owner's consent. However, Transamerica may change
or amend the individual contract or the group contract or individual
certificates thereunder if such change or amendment is necessary for the
individual contract or the group contract or individual certificates thereunder
to comply with any state or federal law, rule or regulation.
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<PAGE>
Protection of Benefits
To the extent permitted by law, no benefit (including death benefits)
under the Contract will be subject to any claim or process of law by any
creditor.
Delay of Payments
Payment of any cash withdrawal or lump sum death benefit due from the
Variable Account will occur within seven days from the date the election becomes
effective, except that Transamerica may be permitted to postpone such payment
if: (1) the New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted; or (2) an
emergency exists as defined by the Securities and Exchange Commission
(Commission), or the Commission requires that trading be restricted; or (3) the
Commission permits a delay for the protection of Owners.
In addition, while it is our intention to process all transfers from
the Sub-Accounts immediately upon receipt of a transfer request, the Contract
gives us the right to delay effecting a transfer from a Sub-Account for up to
seven days, but only in certain limited circumstances. However, the staff of the
Commission currently interprets the Investment Company Act of 1940 to require
the immediate processing of all transfers, and in compliance with that
interpretation we will process all transfers immediately unless and until the
Commission or its staff changes its interpretation or otherwise permits us to
exercise this right. Subject to such approval, we may delay effecting such a
transfer only if there is a delay of payment from an affected Portfolio. If this
happens, and if the prior approval of the Commission or its staff is obtained,
then we will calculate the dollar value or number of units involved in the
transfer from a Sub-Account on or as of the date we receive a written transfer
request, but will not process the transfer to the transferee Sub-Account until a
later date during the seven-day delay period when the Portfolio underlying the
transferring Sub-Account obtains liquidity to fund the transfer request through
sales of portfolio securities, new Purchase Payments, transfers by investors or
otherwise. During this period, the amount transferred would not be invested in a
Sub-Account.
Transamerica may delay payment of any withdrawal from the Fixed Account
for a period of not more than six months after Transamerica receives the request
for such withdrawal. If Transamerica delays payment for more than 30 days,
Transamerica will pay interest on the withdrawal amount up to the date of
payment. (See "Cash Withdrawals" page 31 of the Prospectus.)
Notices and Directions
Transamerica will not be bound by any authorization, direction,
election or notice which is not in writing, in a form and manner acceptable to
Transamerica, and received at our Service Office.
Any written notice requirement by Transamerica to the Owner will be
satisfied by our mailing of any such required written notice, by first-class
mail, to the Owner's last known address as shown on our records.
CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Sub-Account Yield Calculation
In accordance with regulations adopted by the Commission, Transamerica
is required to compute the Money Market Sub-Account's current annualized yield
for a seven-day period in a manner which does not take into consideration any
realized or unrealized gains or losses on shares of the Money Market Series or
on its portfolio securities. This current annualized yield is computed by
determining the net change (exclusive of realized gains and losses on the sale
of securities and unrealized appreciation and depreciation) in the value of a
hypothetical account having a balance of one unit of the Money Market
Sub-Account at the beginning of such seven-day period, dividing such net change
in Account Value by the value of the account at the beginning of the period to
determine the base period return and annualizing this quotient on a 365-day
basis. The net change in Account Value reflects the deductions for the annual
Account Fee, the Mortality and Expense Risk Charge and Administrative Expense
Charges and income and expenses accrued during the period. Because of these
deductions, the yield for the Money Market Sub-Account of the Variable Account
will be lower than the yield for the Money Market Portfolio or any comparable
substitute funding vehicle.
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<PAGE>
The Commission also permits Transamerica to disclose the effective
yield of the Money Market Sub-Account for the same seven-day period, determined
on a compounded basis. The effective yield is calculated by compounding the
unannualized base period return by adding one to the base period return, raising
the sum to a power equal to 365 divided by 7, and subtracting one from the
result.
The yield on amounts held in the Money Market Sub-Account normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The Money Market Sub-Account's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
Money Market Portfolio or substitute funding vehicle, the types and quality of
portfolio securities held by the Money Market Series or substitute funding
vehicle, and operating expenses. In addition, the yield figures do not reflect
the effect of any Contingent Deferred Sales Load (of up to 6% of Purchase
Payments) that may be applicable to a Contract.
Other Sub-Account Yield Calculations
Transamerica may from time to time disclose the current annualized
yield of one or more of the Sub-Accounts (except the Money Market Sub-Account)
for 30-day periods. The annualized yield of a Sub-Account refers to the income
generated by the Sub-Account over a specified 30-day period. Because this yield
is annualized, the yield generated by a Sub-Account during the 30-day period is
assumed to be generated each 30-day period. The yield is computed by dividing
the net investment income per Variable Accumulation Unit earned during the
period by the price per unit on the last day of the period, according to the
following formula:
YIELD = 2{a-b 1}6 - 1
cd
Where:
a = net investment income earned during the period by the
Portfolio attributable to the shares
owned by the Sub-Account.
b = expenses for the Sub-Account accrued for the period (net of
reimbursements).
c = the average daily number of Variable Accumulation Units
outstanding during the period.
d = the maximum offering price per Variable Accumulation Unit on
the last day of the period.
Net investment income will be determined in accordance with rules
established by the Commission. Accrued expenses will include all recurring fees
that are charged to all Contracts. The yield calculations do not reflect the
effect of any Contingent Deferred Sales Load that may be applicable to a
particular Contract. Contingent Deferred Sales Load range from 6% to 0% of the
amount of Account Value withdrawn depending on the elapsed time since the
receipt of each Purchase Payment attributable to the portion of the Account
Value withdrawn.
Because of the charges and deductions imposed by the Variable Account,
the yield for the Sub-Account will be lower than the yield for the corresponding
Portfolio. The yield on amounts held in the Sub-Accounts normally will fluctuate
over time. Therefore, the disclosed yield for any given period is not an
indication or representation of future yields or rates of return. The
Sub-Account's actual yield will be affected by the types and quality of
portfolio securities held by the Portfolio, and its operating expenses.
Standard Total Return Calculations
Transamerica may from time to time also disclose average annual total
returns for one or more of the Sub-Accounts for various periods of time. Average
annual total return quotations are computed by finding the average annual
compounded rates of return over one, five and ten year periods that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
P{1 T}n = ERV
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<PAGE>
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the one, five or ten-year period at
the end of the one, five, or ten-year period (or fractional
portion thereof).
All recurring fees are recognized in the ending redeemable value. The
standard average annual total return calculations will reflect the effect of any
Contingent Deferred Sales Loads that may be applicable to a particular period.
Hypothetical Performance Data
Transamerica may also disclose "hypothetical" performance data for a
Subaccount, for periods before the Subaccount commenced operations. Such
performance information for the Subaccount will be calculated based on the
performance of the corresponding Portfolio and the assumption that the
Subaccount was in existence for the same periods as those indicated for the
Portfolio, with a level of Contract charges currently in effect. The Portfolio
used for these calculations will be the actual Portfolio that the Subaccount
will invest in.
This type of hypothetical performance data may be disclosed on both an
average annual total return and a cumulative total return basis. Moreover, it
may be disclosed assuming that the Contract is not surrendered (i.e., with no
deduction for the Contingent Deferred Sales Load) and assuming that the Contract
is surrendered at the end of the applicable period (i.e., reflecting a deduction
for any applicable Contingent Deferred Sales Load).
Other Performance Data
Transamerica may from time to time also disclose average annual total
returns in a non-standard format in conjunction with the standard described
above. The non-standard format will be identical to the standard format except
that the Contingent Deferred Sales Load percentage will be assumed to be 0%.
Transamerica may from time to time also disclose cumulative total
returns in conjunction with the standard format described above. The cumulative
returns will be calculated using the following formula assuming that the
Contingent Deferred Sales Load percentage will be 0%.
CTR = {ERV/P} - 1
Where:
CTR = the cumulative total return net of Sub-Account recurring charges
for the period. ERV = ending redeemable value of a hypothetical $1,000
payment at the beginning of the one, five, or
ten-year period at the end of the one, five, or ten-year
period (or fractional portion thereof). P = a hypothetical initial
payment of $1,000. All non-standard performance data will be advertised
only if the standard performance data is also disclosed.
HISTORIC PERFORMANCE DATA
General Limitations
The figures below represent the past performance of the Sub-Accounts
and are not indicative of future performance. The figures may reflect the waiver
of advisory fees and reimbursement of other expenses.
The Variable Fund has provided the performance data for the Money
Market, Managed Assets, Zero
Coupon 2000, Quality Bond, Small Cap, Capital Appreciation, Growth and Income,
International Equity,
International Value, Disciplined Stock and Small Company Stock Sub-Accounts..
The Stock Index Fund and
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<PAGE>
Socially Responsible Fund have provided their performance data. The Sub-Account
performance data is derived from the data provided by the Funds. None of the
Funds are affiliated with Transamerica. In preparing the tables below,
Transamerica has relied on the data provided by the Funds. While Transamerica
has no reason to doubt the accuracy of the figures provided by the Funds,
Transamerica has not verified those figures. No data is provided for the
Balanced and Limited Term High Income Sub-Accounts and Portfolios since, prior
to May 1, 1997, these Sub-Accounts, and their related Portfolios, had not yet
commenced operations.
Money Market Sub-Account Yields
The annualized yield for the Money Market Sub-Account for the seven-day
period ending December 31, 1996 was 3.59%. The effective yield for the Money
Market Sub-Account for the seven-day period ending December 31, 1996 was 3.65%.
Sub-Account Performance Figures Including Hypothetical Performance
The charts below show historical performance data for the Sub-Accounts,
including, for six SubAccounts, "hypothetical" data for the periods prior to the
inception of the Sub-Accounts, based on the performance of the corresponding
Portfolios since their inception date, with a level of charges equal to those
currently assessed under the Contracts. These figures are not an indication of
the future performance of the SubAccounts. Some of the figures reflect the
waiver of advisory fees and reimbursement of other expenses for part or all of
the periods indicated.
The dates to the left of the Sub-Account names below indicate the date
of commencement of operation of the Portfolios, which coincide with the date of
commencement of operation of the corresponding Sub-Account, with these six
exceptions: the Money Market; Managed Assets, Zero Coupon 2000, Qualify Bond,
Small Cap and Stock Index Sub-Accounts commenced operations January 4, 1993.
Hence, the performance data given for these six Sub-Accounts which precedes the
date of January 4, 1993, is "hypothetical."
Standard average annual total returns for periods since inception of
the Portfolio, including hypothetical performance, for each Sub-Account are as
follows. These figures include mortality and expenses charges deducted at 1.25%,
the administrative expenses charge of 0.15% per annum, the administration charge
of $30 per annum adjusted for average account size and the maximum contingent
deferred sales load of 6%.
<TABLE>
<CAPTION>
SUB-ACCOUNT For the 1-year For the 5-year For the period from
(date of commencement of period ending period ending commencement of Portfolio
operation of Corresponding Portfolio) 12/31/96 12/31/96 operations to 12/31/96
------------------------------------- -------- -------- --------------------
<S> <C> <C> <C> <C> <C>
Money Market (8/31/90) (2.09%) 2.28% 3.12%
Managed Assets (8/31/90) (11.07%) 2.00% 3.51%
Zero Coupon 2000 (8/31/90) (4.37%) 5.64% 8.41%
Quality Bond (8/31/90) (3.87%) 6.72% 7.84%
Small Cap (8/31/90) 9.06% 34.03% 46.73%
Capital Appreciation (4/5/93) 16.71% n/a 15.16%
Stock Index (9/29/89) 13.80% 12.49% 12.05%
Socially Responsible (10/7/93) 13.00% n/a 16.64%
Growth & Income (12/15/94) 12.63% n/a 35.20%
International Equity (12/15/94) 3.83% n/a 5.91%
</TABLE>
Data for the International Value, Disciplined Stock, and Small Company Stock
Sub-Accounts is not included since the related Portfolios were not in
operartions for all of 1996.
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<PAGE>
Nnon-standard cumulative total returns for periods since inception of the
Portfolio, including hypothetical performance, for each Sub-Account are as
follows. These figures include mortality and expenses charges deducted at 1.25%,
the administrative expenses charge of 0.15% per annum, the administration charge
of $30 per annum adjusted for average account size but do not reflect the
maximum contingent deferred sales load of 6%, which if reflected would reduce
the figures. Nonstandard performance data will only be disclosed if standard
performance data for the required periods is also disclosed.
<TABLE>
<CAPTION>
For the period from
SUB-ACCOUNT For the 1-year For the 3-year For the 5-year commencement of
(date of commencement of period ending period ending period ending Portfolio operations
operation of Corresponding Portfolio) 12/31/96 12/31/96 12/31/96 to 12/31/96
- ------------------------------------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Money Market (8/31/90) 3.53% 10.96% 15.93% 23.55%
Managed Assets (8/31/90) (5.67%) (9.39%) 14.43% 26.48%
Zero Coupon 2000 (8/31/90) 1.10% 11.27% 35.58% 68.88%
Quality Bond (8/31/90) 1.63% 13.40% 42.44% 63.33%
Small Cap (8/31/90) 15.06% 55.61% 336.48% 1036.31%
Capital Appreciation (4/5/93) 22.71% 65.39% n/a 74.69%
Stock Index (9/29/89) 19.80% 61.87% 84.14% 128.83%
Socially Responsible (10/7/93) 19.00% 58.97% n/a 69.61%
Growth & Income (12/15/94) 18.63% n/a n/a 90.41%
International Equity (12/15/94) 9.82% n/a n/a 17.48%
International Value (5/1/96) n/a n/a n/a 2.44%
Disciplined Stock (5/1/96) n/a n/a n/a 17.76%
Small Company Stock (5/1/96) n/a n/a n/a 7.72%
</TABLE>
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FEDERAL TAX MATTERS
The Dreyfus/Transamerica Triple Advantage Variable Annuity may be
purchased on a non-tax qualified basis ("Non-Qualified Contract") or purchased
and used in connection with plans qualifying for special tax treatment
("Qualified Contract"). Qualified Contracts are designed for use by retirement
plans qualified for special tax treatment under Sections 401, 403(b) or 408 of
the Internal Revenue Code of 1986, as amended (the "Code"). The ultimate effect
of federal income taxes on the Account Value, on Annuity Payments, and on the
economic benefit to the Owner, the Annuitant or the Beneficiary may depend on
the type of retirement plan for which the Contract is purchased, on the tax and
employment status of the individual concerned and on Transamerica's tax status.
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. Any
person concerned about these tax implications should consult a competent tax
adviser. This discussion is based upon Transamerica's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service ("IRS"). No representation is made as to the likelihood
of continuation of these present federal income tax laws or of the current
interpretations by the Internal Revenue Service. Moreover, no attempt has been
made to consider any applicable state or other tax laws.
Taxation of Transamerica
Transamerica is taxed as a life insurance company under Part I of
Subchapter L of the Code. Since the Variable Account is not an entity separate
from Transamerica, and its operations form a part of Transamerica, it will not
be taxed separately as a "regulated investment company" under Subchapter M of
the Code. Investment income and realized capital gains are automatically applied
to increase reserves under the Contracts. Under existing federal income tax law,
Transamerica believes that the Variable Account investment income and realized
net capital gains will not be taxed to the extent that such income and gains are
applied to increase the reserves under the Contracts.
Accordingly, Transamerica does not anticipate that it will incur any
federal income tax liability attributable to the Variable Account and,
therefore, Transamerica does not intend to make provisions for any such taxes.
However, if changes in the federal tax laws or interpretations thereof result in
Transamerica being taxed on income or gains attributable to the Variable
Account, then Transamerica may impose a charge against the Variable Account
(with respect to some or all Contracts) in order to set aside provisions to pay
such taxes.
Tax Status of the Contract
Section 817(h) of the Code requires that with respect to
Non-Qualified Contracts, the investments of the Funds be "adequately
diversified" in accordance with Treasury regulations in order for the Contracts
to qualify as annuity contracts under federal tax law. The Variable Account,
through the Funds, intends to comply with the diversification requirements
prescribed by the Treasury in Reg. Sec. 1.817-5, which affect how the Funds'
assets may be invested.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their contracts. In those circumstances,
income and gains from the separate account assets would be includible in the
variable contract owner's gross income. The IRS has stated in published rulings
that a variable contract owner will be considered the owner of separate account
assets if the contract owner possesses incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. The Treasury
Department has also announced, in connection with the issuance of regulations
concerning diversification, that those regulations "do not provide guidance
concerning the circumstances in which investor control for the investments of a
segregated asset account may cause the investor (i.e., the Owner), rather than
the insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular Sub-Accounts without being treated as owners of the
underlying assets."
The ownership rights under the Contract are similar to, but different
in certain respects from, those described by the IRS in rulings in which it was
determined that Contract owners were not owners of separate account assets. For
example, the Owner has additional flexibility in allocating premium payments and
Account values. These differences could result in an Owner being treated as the
owner of a pro rata portion of the assets
11
<PAGE>
of the Variable Account. In addition, Transamerica does not know what standards
will be set forth, if any, in the regulations or rulings which the Treasury
Department has stated it expects to issue. Transamerica therefore reserves the
right to modify the Contract as necessary to attempt to prevent an Owner from
being considered the owner of a pro rata share of the assets of the Variable
Account.
In order to be treated as an annuity contract for federal income tax
purposes, section 72(s) of the Code requires any Non-Qualified Contract to
provide that (a) if any Owner dies on or after the Annuity Date but prior to the
time the entire interest in the Contract has been distributed, the remaining
portion of such interest will be distributed at least as rapidly as under the
method of distribution being used as of the date of that Owner's death; and (b)
if any Owner dies prior to the Annuity Date, the entire interest in the Contract
will be distributed within five years after the date of the Owner's death. These
requirements will be considered satisfied as to any portion of the Owner's
interest which is payable to or for the benefit of a "designated beneficiary"
and which is distributed over the life of such "designated beneficiary" or over
a period not extending beyond the life expectancy of that Beneficiary, provided
that such distributions begin within one year of the Owner's death. The Owner's
"designated beneficiary" refers to a natural person designated by such Owner as
a Beneficiary and to whom ownership of the Contract passes by reason of death.
However, if the Owner's "designated beneficiary" is the surviving spouse of the
deceased Owner, the Contract may be continued with the surviving spouse as the
new owner.
The Non-Qualified Contracts contain provisions which are intended to
comply with the requirements of section 72(s) of the Code, although no
regulations interpreting these requirements have yet been issued. Transamerica
intends to review such provisions and modify them if necessary to assure that
they comply with the requirements of Code section 72(s) when clarified by
regulation or otherwise. Other rules may apply to Qualified Contract.
DISTRIBUTION OF THE CONTRACT
Transamerica Securities Sales Corporation ("TSSC") is principal
underwriter of the Contracts. TSSC may also serve as principal underwriter and
distributor of other contracts issued through the Variable Account and certain
other separate accounts of Transamerica and any affiliates of Transamerica. TSSC
is a wholly owned subsidiary of Transamerica Insurance Corporation of
California, which is a subsidiary of Transamerica Corporation. TSSC is
registered with the Commission as a broker/dealer and is a member of the
National Association of Securities Dealers, Inc. ("NASD"). Transamerica pays
TSSC for acting as the principal underwriter under a distribution agreement.
TSSC has entered into sales agreements with other broker/dealers to
solicit applications for the Contracts through registered representatives who
are licensed to sell securities and variable insurance products. These
agreements provide that applications for the Contracts may be solicited by
registered representatives of the broker/dealers appointed by Transamerica to
sell its variable life insurance and variable annuities. These broker/dealers
are registered with the Commission and are members of the NASD. The registered
representatives are authorized under applicable state regulations to sell
variable life insurance and variable annuities.
Transamerica Financial Resources, Inc. ("TFR") is an underwriter and
distributor of the Contracts. TFR
is a wholly-owned subsidiary of Transamerica Insurance Corporation of California
and is registered with the
Commission and the NASD as a broker/dealer.
Under the agreements, applications for the Contracts will be sold by
broker/dealers which will receive compensation as described in the Prospectus.
The offering of the Contracts is expected to be continuous and neither
TSSC nor TFR anticipate discontinuing the offering of the Contracts. However,
TSSC and TFR reserve the right to discontinue the offering of the Contracts.
During fiscal year 1996, $15,506,834.71 in commissions were paid to
TSSC as underwriter of the Contracts; no amounts were retained by TSSC. During
fiscal year 1996, $2,283,845.07 in commissions were paid to TFR as underwriter
of the Contracts; no amounts were retained by TFR. During fiscal year 1995,
$9,421,052.81 in commissions were paid to TSSC as underwriter of the Contracts;
no amounts were retained by TSSC. During fiscal year 1995, $1,485,889.71 in
commissions were paid to TFR as underwriter of the Contracts; $496,781.00 was
retained by TFR. During fiscal year 1994, Dreyfus Service Corporation served as
12
<PAGE>
co-underwriter until August 24, 1994; thereafter, TSSC served as underwriter.
Throughout fiscal year 1994, TFR served as principal underwriter. Total
commissions paid these three entities during 1994 were $5,926,028.01.
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS
Title to assets of the Variable Account is held by Transamerica. The
assets of the Variable Account are kept separate and apart from Transamerica
general account assets. Records are maintained of all purchases and redemptions
of Portfolio shares held by each of the Sub-Accounts.
TRANSAMERICA
General Information and History
Transamerica Occidental Life Insurance Company was formerly known as
Occidental Life Insurance Company of California. The name change occurred on or
about September 1, 1981.
Transamerica is wholly-owned by Transamerica Insurance Corporation of
California, which is in turn, wholly-owned by Transamerica Corporation.
Transamerica Corporation is a financial services organization which engages
through its subsidiaries in two primary businesses: finance and insurance.
Finance consists of consumer lending, commercial lending, leasing and real
estate services. Insurance comprises life insurance, asset management, and
insurance brokerage.
STATE REGULATION
Transamerica is subject to the insurance laws and regulations of all
the states where it is licensed to operate. The availability of certain Contract
rights and provisions depends on state approval and/or filing and review
processes. Where required by state law or regulation, the Contract will be
modified accordingly.
RECORDS AND REPORTS
All records and accounts relating to the Variable Account will be
maintained by Transamerica or by its Service Office. As presently required by
the provisions of the 1940 Act and regulations promulgated thereunder which
pertain to the Variable Account, reports containing such information as may be
required under the 1940 Act or by other applicable law or regulation will be
sent to Owners semi-annually at their last known address of record.
FINANCIAL STATEMENTS
This Statement of Additional Information contains the financial
statements of the Variable Account as of December 31, 1996.
The consolidated financial statements of Transamerica included in this
Statement of Additional Information should be considered only as bearing on the
ability of Transamerica to meet its obligations under the Contract. They should
not be considered as bearing on the investment performance of the assets held in
the Variable Account.
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