File No. 33-73058
- --------------------------------------------------------------------------------
File No. 811-8224
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.__ [ ]
Post-Effective Amendment No. 3 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 4 [X]
NORTHSTAR VARIABLE ACCOUNT
(formerly Northstar/NWNL Variable Account)
(Exact Name of Registrant)
RELIASTAR LIFE INSURANCE COMPANY
(formerly NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY)
(Name of Depositor)
20 Washington Avenue South, Minneapolis, Minnesota 55401
Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (612)372-5512
Stewart D. Gregg
ReliaStar Life Insurance Company
20 Washington Avenue South
Minneapolis, Minnesota 55401
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
As soon as practicable after the Registration Statement becomes effective.
It is proposed that this filing will become effective
(check appropriate space)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on April 30, 1997 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] on (date) pursuant to paragraph (a) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has chosen to register an indefinite amount of securities in
accordance with Rule 24f-2. The Rule 24f-2 Notice for Registrant's most recent
fiscal year was filed on or about February 21, 1997.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NORTHSTAR VARIABLE ACCOUNT
Cross Reference Sheet Pursuant to Rule 495(a)
FORM N-4
ITEM NUMBER PART A HEADING IN PROSPECTUS
----------- ----------------------------
1. Cover Page
2. Definitions
3. Summary
4. Condensed Financial Information
5. The Company; The Variable Account; Investment of the
Variable Account
6. Charges Made by the Company
7. The Contracts
8. Annuity Provisions
9. The Contracts
10. The Contracts
11. The Contracts
12. Federal Tax Status
13. Legal Proceedings
14. Statement of Additional Information Table of Contents
PART B HEADING IN STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------------------------
15. Cover Page
16. Table of Contents
17. Introduction
18. Administration of the Contracts
19. Distribution of the Contracts
20. Distribution of the Contracts
21. Calculation of Yield and Return
22. Annuity Provisions (In Prospectus)
23. Financial Statements
PART C HEADINGS
---------------
24. Financial Statements and Exhibits
25. Directors and Officers of the Depositor
26. Persons Controlled by or Under Common Control with
the Depositor or Registrant
27. Number of Contract Owners
28. Indemnification
29. Principal Underwriters
30. Location of Accounts and Records
31. Not Applicable
32. Undertakings
[GRAPHIC OMITTED]
RELIASTAR LIFE INSURANCE COMPANY
20 WASHINGTON AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55401
INDIVIDUAL DEFERRED VARIABLE/FIXED ANNUITY CONTRACTS
ISSUED BY
NORTHSTAR VARIABLE ACCOUNT
AND
RELIASTAR LIFE INSURANCE COMPANY
The Individual Deferred Variable/Fixed Annuity Contracts described in this
Prospectus are flexible purchase payment contracts. The Contracts are sold to or
in connection with retirement plans which may or may not qualify for special
federal tax treatment under the Internal Revenue Code. (See "Federal Tax Status"
on page 20.) Annuity payments under the Contracts are deferred until a selected
later date.
Purchase payments may be allocated to one or more of the available
Sub-Accounts of Northstar Variable Account (the "Variable Account"), a separate
account of ReliaStar Life Insurance Company (the "Company"), and/or to the Fixed
Account (which is the general account of the Company). The Fixed Account is not
available to Contract Owners in the State of Maryland, Oregon, South Carolina
and Washington.
Purchase payments allocated to one or more of the available Sub-Accounts of
the Variable Account, as selected by the Contract Owner, will be invested in
shares at net asset value of one or more of a group of investment funds (the
"Investment Funds"). The Investment Funds are currently the four funds of the
Northstar Variable Trust which are managed by Northstar Investment Management
Corporation of Greenwich, Connecticut, and two portfolios of the Variable
Insurance Products Fund and two portfolios of the Variable Insurance Products
Fund II which are managed by Fidelity Management & Research Company of Boston,
Massachusetts. Each Investment Fund pays its investment adviser certain fees
charged against the assets of the Investment Fund. The Variable Account Contract
Value and the amount of variable annuity payments will vary, primarily based on
the investment performance of the Investment Funds whose shares are held in the
Sub-Accounts selected. (For more information about the Investment Funds, see
"Investments of the Variable Account" on page 10.)
Additional information about the Contracts, the Company and the Variable
Account, contained in a Statement of Additional Information dated April 30,
1997, has been filed with the Securities and Exchange Commission. The Statement
of Additional Information relating to the Contracts having the same date as this
Prospectus is incorporated by reference in this Prospectus. The Table of
Contents for the Statement of Additional Information may be found on page 26 of
this Prospectus. The Statement of Additional Information is available without
charge upon request by writing to ReliaStar at the above address or by calling
(800) 621-3750, and it may also be obtained by accessing the SEC's internet web
site (http://www.sec.gov). Information about the Fixed Account may be found in
Appendix A, on page A-1.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR ACCOMPANYING
FUND PROSPECTUSES AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER
OR SOLICITATION WOULD BE UNLAWFUL.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE CONTRACTS
THAT A PROSPECTIVE INVESTOR OUGHT TO KNOW BEFORE INVESTING AND SHOULD BE
RETAINED FOR FUTURE REFERENCE.
THIS PROSPECTUS IS ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE
NORTHSTAR VARIABLE TRUST, THE VARIABLE INSURANCE PRODUCTS FUND AND THE VARIABLE
INSURANCE PRODUCTS FUND II AND IS VALID ONLY WHEN ACCOMPANIED BY SUCH
PROSPECTUSES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE INVESTMENT FUNDS AND INTERESTS IN THE CONTRACTS ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY A BANK, AND THE SHARES
AND INTERESTS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
THE DATE OF THIS PROSPECTUS IS APRIL 30, 1997.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
Definitions............................................... 3 Federal Tax Status................................... 20
Summary of Contract Expenses ............................. 4 Introduction.................................... 20
Summary 6 Tax Status of the Contract...................... 21
Condensed Financial Information .......................... 8 Taxation of Annuities........................... 21
Performance Information................................... 9 Transfers, Assignments or Exchanges of a 22
Contract ............................................
The Company............................................... 10 Withholding..................................... 22
The Variable Account...................................... 10 Multiple Contracts.............................. 23
Investments of the Variable Account....................... 10 Taxation of Qualified Plans..................... 23
Charges Made by the Company............................... 12 Possible Charge for the Company's Taxes......... 23
Surrender Charge (Contingent Deferred Sales Charge).. 12 Other Tax Consequences.......................... 23
Charge)..............................................
Annual Contract Charge............................... 13 Voting of Fund Shares................................ 23
Mortality Risk Premium............................... 13 Distribution of the Contracts........................ 24
Expense Risk Premium................................. 14 Revocation........................................... 24
Administration Charge................................ 14 Reports to Owners.................................... 24
Premium and Other Taxes.............................. 14 Legal Proceedings.................................... 24
Reduction of Charges................................. 14 Financial Statements and Experts..................... 25
Expenses of the Investment Funds..................... 14 Further Information.................................. 25
Administration of the Contracts........................... 14 Statement of Additional Information Table of Contents 26
The Contracts............................................. 14 Appendix A........................................... A-1
Allocation of Purchase Payments...................... 15 Investment Fund Prospectuses
Sub-Account Accumulation Unit Value.................. 15 Northstar Variable Trust (Northstar):
Net Investment Factor................................ 15 Northstar Income and Growth Fund........... Northstar-1
Death Benefit Before the Annuity Commencement Date... 16 Northstar Growth Fund...................... Northstar-1
Death Benefit After the Annuity Commencement Date.... 16 Northstar Multi-Sector Bond Fund........... Northstar-1
Surrender (Redemption)............................... 16 Northstar High Yield Bond Fund............. Northstar-1
Systematic Withdrawals............................... 17 Fidelity's Variable Insurance Products Fund (VIP):
Transfers............................................ 17 Money Market Portfolio.......................... VIP-1
Written Transfers................................ 17 Overseas Portfolio.............................. VIP-1
Telephone/Fax Transfers.......................... 18 Fidelity's Variable Insurance Products Fund II (VIP
II):
Dollar Cost Averaging Transfers.................. 18 Asset Manager Portfolio......................... VIPII-1
Assignments.......................................... 18 Index 500 Portfolio............................. VIPII-1
Contract Owner and Beneficiaries..................... 18
Contract Inquiries................................... 19
Annuity Provisions........................................ 19
Annuity Commencement Date............................ 19
Annuity Form Selection............................... 19
Annuity Forms........................................ 19
Frequency and Amount of Annuity Payments............. 19
Annuity Payments..................................... 19
Sub-Account Annuity Unit Value....................... 20
Assumed Investment Rate.............................. 20
</TABLE>
DEFINITIONS
ANNUITANT - The person who is named by the Owner to receive annuity payments and
whose life determines the annuity benefits payable.
ANNUITY COMMENCEMENT DATE - (COMMENCEMENT DATE) The date on which the annuity
payments begin, which must be the first day of a month. The date will be
the first day of the month following the Annuitant's 75th birthday unless
an earlier or later date has been selected by the Owner and, if the date is
later, it has been agreed to by the Company. If the Annuity Commencement
Date selected by the Owner does not occur on a Valuation Date at least 60
days after the date on which the Contract was issued, the Company reserves
the right to adjust the Commencement Date to the first Valuation Date after
the Commencement Date selected by the Owner that is at least 60 days after
the Contract issue date.
BENEFICIARY - The person who is named by the Owner to receive the Contract Value
upon the death of the Owner before the Annuity Commencement Date or to
receive the balance of the annuity payments, if any, under the Annuity Form
in effect at the Annuitant's death.
CODE - The Internal Revenue Code of 1986, as amended.
CONTRACT ANNIVERSARY - Occurs yearly on the same day and month the Contract was
issued.
CONTRACT OWNER (OWNER) - The person who controls all the rights and privileges
under the Contract. The Annuitant owns the Contract unless another Owner is
named as provided for in the Contract. The Contract may be owned by one,
but no more than two, natural persons only, except when it is held under a
retirement plan described in Section 401(a) or 403(a), or a program
described in Section 403(b) of the Code.
CONTRACT VALUE - The sum of (a) the Variable Account Contract Value, which is
the value of the Sub-Account Accumulation Units under the Contract plus (b)
the Fixed Account Contract Value, which is the sum of purchase payments
allocated to the Fixed Account under the Contract, plus credited interest,
minus surrenders, surrender charges previously applied, and any annual
administrative charges applicable to the Fixed Account, and minus any
transfers to the Variable Account.
CONTRACT YEAR - Each twelve-month period starting with the date the Contract was
issued and each Contract Anniversary after that.
DEATH BENEFIT - The amount payable upon the death of a Contract Owner before the
Annuity Commencement Date. (See "Death Benefit Before the Annuity
Commencement Date" on page 16.)
DEATH BENEFIT VALUATION DATE - The Death Benefit Valuation Date is the Valuation
Date next following the date the Company receives proof of death and a
written request from the Beneficiary for a single sum payment or an Annuity
Form permitted by Section 72(s) of the Code.
FIXED ACCOUNT - The Fixed Account is the general account of the Company, which
consists of all assets of the Company other than those assets allocated to
separate accounts of the Company.
FIXED ANNUITY - An annuity with payments which do not vary as to dollar amount.
INVESTMENT FUNDS - Any open-end management investment company (or portfolio
thereof) or unit investment trust (or series thereof) in which a
Sub-Account invests as described herein.
NORTHSTAR - Northstar Variable Trust
Northstar Income and Growth Fund
Northstar Growth Fund
Northstar Multi-Sector Bond Fund
Northstar High Yield Bond Fund
QUALIFIED PLAN - A retirement plan under Sections 401, 403 or 408 or similar
provisions of the Code.
SPECIFIED CONTRACT ANNIVERSARY - The seventh Contract anniversary and each
consecutive one year anniversary date measured from the date of the seventh
Contract anniversary. The Specified Contract Anniversary is used to
determine the Death Benefit payable if the Contract Owner dies before the
Annuity Commencement Date. (See "Death Benefit Before the Annuity
Commencement Date" on page 16.)
SUB-ACCOUNT - That portion of the Variable Account available under the Contract
which invests in shares of a specific Investment Fund.
SUB-ACCOUNT ACCUMULATION UNIT - A unit of measure used to determine the Variable
Account Contract Value before annuity payments start.
SUCCESSOR BENEFICIARY - The person named to become the Beneficiary if the
Beneficiary is not alive.
VALUATION DATE - Each day on which the New York Stock Exchange is open for
business except for a day that a Sub-Account's corresponding fund does not
value its shares. The New York Stock Exchange is currently closed on
weekends and on the following holidays: New Year's Day; President's Day;
Good Friday; Memorial Day; July Fourth; Labor Day; Thanksgiving Day; and
Christmas Day.
VALUATION PERIOD - The time interval between a Valuation Date and the next
Valuation Date.
VARIABLE ACCOUNT - A separate account of the Company consisting of assets set
aside by the Company, the investment performance of which is kept separate
from that of the general assets of the Company.
VARIABLE ANNUITY - A series of periodic payments to the Annuitant which will
vary in amount, primarily based on the investment results of the Variable
Account Sub-Accounts under the Contract.
VARIABLE ANNUITY UNIT - A unit of measure used in the calculation of the second
and each subsequent variable annuity payment from the Variable Account.
VIP - Variable Insurance Products Fund
Money Market Portfolio
Overseas Portfolio
VIP II - Variable Insurance Products Fund II
Asset Manager Portfolio
Index 500 Portfolio
SUMMARY OF CONTRACT EXPENSES
CONTRACT OWNER TRANSACTION EXPENSES
Sales Charge Imposed on Purchases.................................. None
Surrender Charge (as a percentage of amounts surrendered attributable to
purchase payments made in the last six Contract years) (a)
CONTRACT YEAR OF SURRENDER SURRENDER CHARGE
MINUS CONTRACT YEAR OF AS A PERCENTAGE OF
PURCHASE PAYMENT EACH PURCHASE PAYMENT
----------------- ---------------------
0 7%
1 7
2 5
3 5
4 4
5 3
6 2
7 and later 0
Transfer Charge(b)................................................. None
ANNUAL CONTRACT CHARGE............................................. $35
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Premiums................................. 1.25%
Other Account Fees and Expenses (See "Administration Charge" on page 14.).. .15%
---
Total Separate Account Annual Expenses............................. 1.40%
=====
ANNUAL INVESTMENT FUND EXPENSES
(as a percentage of Investment Fund average net assets)
<TABLE>
<CAPTION>
TOTAL INVESTMENT
MANAGEMENT OTHER FUND ANNUAL
FEES EXPENSES EXPENSES
---- -------- --------
<S> <C> <C> <C>
Northstar Income and Growth Fund(c)............................... 0.75% 0.05% 0.80%
Northstar Growth Fund(c).......................................... 0.75% 0.05% 0.80%
Northstar Multi-Sector Bond Fund(c)............................... 0.75% 0.05% 0.80%
Northstar High Yield Bond Fund(c)................................. 0.75% 0.05% 0.80%
TOTAL INVESTMENT
MANAGEMENT OTHER FUND ANNUAL
FEES EXPENSES EXPENSES
---- -------- --------
VIP Money Market Portfolio........................................ 0.21% 0.09% 0.30%
VIP Overseas Portfolio (d)........................................ 0.76% 0.17% 0.93%
VIP II Asset Manager Portfolio(d)................................. 0.64% 0.10% 0.74%
VIP II Index 500 Portfolio(e)..................................... 0.13% 0.15% 0.28%
</TABLE>
If you surrender your Contract at the end of the applicable time period,
you would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Northstar Income and Growth Fund.................................. $86 $115 $148 $259
Northstar Growth Fund............................................. 86 115 148 259
Northstar Multi-Sector Bond Fund.................................. 86 115 148 259
Northstar High Yield Bond Fund.................................... 86 115 148 259
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
VIP Money Market Portfolio........................................ $81 $100 $122 $206
VIP Overseas Portfolio............................................ 24 74 127 272
VIP II Asset Manager Portfolio.................................... 85 114 145 253
VIP II Index 500 Portfolio........................................ 81 100 121 204
If you annuitize your contract at the end of the applicable time period,
you would pay the following expenses on a $1,000 investment assuming a 5% annual
return on assets:
1 YEAR* 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Northstar Income and Growth Fund.................................. $23 $70 $121 $259
Northstar Growth Fund............................................. 23 70 121 259
Northstar Multi-Sector Bond Fund.................................. 23 70 121 259
Northstar High Yield Bond Fund.................................... 23 70 121 259
1 YEAR* 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
VIP Money Market Portfolio........................................ $18 $55 $95 $206
VIP Overseas Portfolio............................................ 24 74 127 272
VIP II Asset Manager Portfolio.................................... 22 69 118 252
VIP II Index 500 Portfolio........................................ 18 55 94 204
* If the Contract's Annuity Commencement Date occurs during the first two
Contract years following the date the Contract was issued a Surrender Charge is
deducted and the expenses shown in year 1 reflect this deduction.
If you do not surrender or annuitize your Contract at the end of the
applicable time period, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return on assets:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Northstar Income and Growth Fund.................................. $23 $70 $121 $259
Northstar Growth Fund............................................. 23 70 121 259
Northstar Multi-Sector Bond Fund.................................. 23 70 121 259
Northstar High Yield Bond Fund.................................... 23 70 121 259
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
VIP Money Market Portfolio........................................ $18 $55 $95 $206
VIP Overseas Portfolio............................................ 24 74 127 272
VIP II Asset Manager Portfolio.................................... 22 69 118 252
VIP II Index 500 Portfolio........................................ 18 55 94 204
</TABLE>
(a) Under certain situations amounts may be surrendered free of any surrender
charge. For more information on the Surrender Charge, see page 12,
"Surrender Charge (Contingent Deferred Sales Charge)". The Company reserves
the right to charge a partial surrender processing fee not to exceed the
lesser of 2% of the partial surrender amount or $25. For more information
on the processing fee, see page 16, "Surrender (Redemption)".
(b) The Company currently does not impose a charge on transfers between the
Sub-Accounts or to the Fixed Account, although the Company reserves the
right to impose a charge not to exceed $25 per transfer.
(c) The investment adviser to the Northstar Variable Trust has agreed to
reimburse the four Northstar Funds for any expenses in excess of 0.80% of
each Fund's average daily net assets. In the absence of the investment
adviser's expense reimbursements, the actual expenses that would have been
paid by each Fund during its fiscal year ended December 31, 1996 would have
been: Income and Growth Fund - 1.40%; Growth Fund - 1.70%; Multi-Sector
Bond Fund - 1.68%; and High Yield Bond Fund - 1.73%.
(d) During 1996, a portion of the brokerage commissions paid by the Overseas
Portfolio and the Asset Manager Portfolio was used to reduce the funds'
expenses. In addition, these Funds have entered into arrangements with
their custodian and transfer agent whereby interest earned on uninvested
cash balances was used to reduce custodian and transfer agent expenses.
Including these reductions, the total operating expenses presented in the
table would have been .92% for Overseas Portfolio and .73% for Asset
Manager Portfolio. For more information on the portfolio's Management Fees
and Expenses, see the prospectus for the Fund.
(e) During 1996, FMR agreed to reimburse a portion of Index 500 Portfolio's
expenses. Without this reimbursement, the fund's management fees, other
expenses, and total operating expenses would have been .28%, .15%, and
.43%, respectively. For more information on the portfolio's Management Fees
and Expenses, see the prospectus for the Fund.
THE EXAMPLES SHOWN IN THE TABLE ABOVE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN. THE 5% ANNUAL RETURN ASSUMED IS HYPOTHETICAL AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE
GREATER OR LESS THAN THE ASSUMED RATES.
The purpose of this table is to assist the Contract Owner in understanding
the various costs and expenses that a Contract Owner will bear either directly
or indirectly. The table reflects the expenses of the Variable Account as well
as those of the Investment Funds. The $35 Annual Contract Charge is reflected as
an annual percentage charge in this table based on an anticipated average net
assets in the Variable Account and Fixed Account, which translates to a charge
equal to an annual rate of 0.051% of the Variable Account and Fixed Account
values.
In addition to the costs and expenses shown in this table, state premium
taxes may also be applicable. For more information on state premium taxes, see
page 14, "Premium and Other Taxes".
SUMMARY
The Contracts are flexible premium individual deferred variable/fixed
retirement annuity contracts issued by the Variable Account and the Company.
(See "The Company" on page 10 and "The Variable Account" on page 10.) They are
sold to or in connection with retirement plans which may or may not qualify for
special federal tax treatment under the Internal Revenue Code. (See "Federal Tax
Status" on page 20.) Annuity payments under the Contracts are deferred until a
later date.
Purchase payments may be allocated to one or more of the available
Sub-Accounts of the Variable Account and/or to the Fixed Account (the Fixed
Account is not available to Contract Owners in the State of Maryland, Oregon,
South Carolina and Washington). Purchase payments allocated to one or more
Sub-Accounts of the Variable Account will be invested in shares at net asset
value of one or more of the Investment Funds. The Variable Account Contract
Value and the amount of variable annuity payments will vary, primarily based on
the investment performance of the Investment Funds whose shares are held in the
Sub-Accounts selected. (See "Investments of the Variable Account" on page 10.)
No deduction for a sales charge is made from the purchase payments for the
Contracts. However, a surrender charge (contingent deferred sales charge) may,
with certain exceptions, apply to whole or partial surrenders of purchase
payments that have been credited under the Contract for less than seven Contract
years. A surrender charge will also be deducted if the Contract's Annuity
Commencement Date occurs within the first two years after the date the Contract
was issued. The amount of the surrender charge will vary as follows:
CONTRACT YEAR OF SURRENDER SURRENDER CHARGE
MINUS CONTRACT YEAR OF AS A PERCENTAGE OF
PURCHASE PAYMENT EACH PURCHASE PAYMENT
0 - 1 7%
2 - 3 5
4 4
5 3
6 2
7 and later 0
(See "Surrender Charge (Contingent Deferred Sales Charge)" on page 12.)
In addition, on each Contract Anniversary (and on the surrender of the
Contract for its full value if it is not surrendered on a Contract Anniversary)
the Company will deduct from the Contract Value an Annual Contract Charge of
$35. During the annuity period the Annual Contract Charge will be separately
assessed against fixed annuity payments and variable annuity payments and will
be deducted from each fixed annuity payment and from each variable annuity
payment in equal installments if both forms of annuity payment are selected.
Otherwise such charge will be deducted from each fixed annuity or variable
annuity payment as applicable. The Annual Contract Charge is to reimburse the
Company for administrative expenses relating to the issue and maintenance of the
Contracts. (See "Annual Contract Charge" on page 13.)
The Company also deducts a Mortality Risk Premium, an Expense Risk Premium
and an Administration Charge, equal to an annual rate of 1.40% of the daily net
assets of the available Sub-Accounts of the Variable Account. (See "Mortality
Risk Premium", "Expense Risk Premium" and "Administration Charge" on pages 13
and 14.)
The initial purchase payment must be $5,000 or more for a Non-qualified
Contract and no subsequent individual payment may be less than $500. If the
Contract is being purchased by or in connection with a Qualified Plan, the
minimum initial purchase payment is $2,000, and no subsequent individual payment
may be less than $200. The Company may choose not to accept any subsequent
purchase payment if the additional purchase payment, when added to the Contract
Value at the next Valuation Date would exceed $1,000,000. The Company reserves
the right to accept smaller initial and subsequent purchase payments in
connection with special circumstances, including sales through group or
sponsored arrangements.
If the Contract Value at the Annuity Commencement Date is less than $5,000,
the Contract Value may be distributed in a single sum payment in lieu of annuity
payments. If any annuity payment would be less than $50, the Company has the
right to change the frequency of payments to such intervals as will result in
payments of at least $50 each. (See "Frequency and Amount of Annuity Payments"
on page 19.)
Premium taxes payable to any governmental entity will be charged against
the Contracts. (See "Premium and Other Taxes" on page 14.)
The Contract Owner may request early withdrawal of all or part of the
Contract Value before the Annuity Commencement Date. (See "Surrender
(Redemption)" on page 16.) Under the Code, penalty taxes may apply to the early
withdrawal of amounts accumulated under a Contract whether or not such Contract
is part of a Qualified Plan. (See "Taxation of Annuities" on page 21.)
The Contract Owner may return the Contract within ten days after it was
delivered to the Owner, and receive a refund of the Contract Value unless
otherwise required by law. (See "Revocation" on page 24.)
CONDENSED FINANCIAL INFORMATION
The following table shows, for each Sub-Account of the Variable Account,
the value of a Sub-Account Accumulation Unit as it is invested in portfolios at
the dates shown, and the total number of Sub-Account Accumulation Units
outstanding at the end of each period:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
-----------
1996 1995 1994
---- ---- ----
SUB-ACCOUNT INVESTING IN
NORTHSTAR'S:
(all Sub-Accounts from May 6, 1994):
Income and Growth Fund
<S> <C> <C> <C>
Beginning of period........................................................ $12.0916 $10.1101 $10.0000
End of period.............................................................. $13.5687 $12.0916 $10.1101
Units outstanding at end of period......................................... 416,758 301,285 100,955
Growth Fund
Beginning of period........................................................ $12.6072 $10.2534 $10.0000
End of period.............................................................. $15.3034 $12.6072 $10.2534
Units outstanding at end of period......................................... 150,737 27,043 8,739
Multi-Sector Bond Fund
Beginning of period........................................................ $11.4356 $10.0748 $10.0000
End of period.............................................................. $12.7738 $11.4356 $10.0748
Units outstanding at end of period......................................... 52,944 37,704 15,492
High Yield Bond Fund
Beginning of period........................................................ $11.5675 $9.8476 $10.0000
End of period.............................................................. $13.2795 $11.5675 $9.8476
Units outstanding at end of period......................................... 182,653 149,292 8,985
FIDELITY'S VIP:
(all Sub-Accounts from May 1, 1995):
Money Market Portfolio
Beginning of period........................................................ $10.2889 $10.0000 --
End of period.............................................................. $10.6953 $10.2889 --
Units outstanding at end of period......................................... 20,824 -- --
Overseas Portfolio
Beginning of period........................................................ $10.6517 $10.0000 --
End of period.............................................................. $11.8917 $10.6517 --
Units outstanding at end of period......................................... 5,473 -- --
FIDELITY'S VIP II:
(all Sub-Accounts from May 1, 1995):
Asset Manager Portfolio
Beginning of period........................................................ $11.1433 $10.0000 --
End of period.............................................................. $12.5930 $11.1433 --
Units outstanding at end of period......................................... 3,425 -- --
Index 500 Portfolio
Beginning of period........................................................ $12.0488 $10.0000 --
End of period.............................................................. $14.5928 $12.0488 --
Units outstanding at end of period......................................... 7,115 335 --
</TABLE>
PERFORMANCE INFORMATION
From time to time, the Company may advertise or include in sales literature
yields, effective yields, and total returns for the available Sub-Accounts.
THESE FIGURES ARE BASED ON HISTORICAL EARNINGS AND DO NOT INDICATE OR PROJECT
FUTURE PERFORMANCE. Each Sub-Account may, from time to time, advertise or
include in sales literature performance relative to certain performance rankings
and indices compiled by independent organizations. More detailed information as
to the calculation of performance information, as well as comparisons with
unmanaged market indices, appears in the Statement of Additional Information.
Yields, effective yields and total returns for the Sub-Accounts are based
on the investment performance of the corresponding portfolios of the Investment
Funds. The performance in part reflects the Investment Funds' expenses. See the
Prospectuses for the Investment Funds.
The yield of the Sub-Account investing in the VIP Money Market Portfolio
refers to the annualized income generated by an investment in the 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 the 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 (except the Money Market Sub-Account investing
in the VIP Money Market Portfolio) refers to the annualized income generated by
an investment in the Sub-Account over a specified 30-day or one-month period.
The yield is calculated by assuming that the income generated by the investment
during that 30-day or one-month period is generated each period over a 12-month
period and is shown as a percentage of the investment.
The total return of a Sub-Account refers to return quotations assuming an
investment under a Contract 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. Average annual total return refers to total
return quotations that are annualized based on an average return over various
periods of time.
The average annual total return quotations represent the average annual
compounded rates of return that would equate an initial investment of $1,000
under a Contract to the redemption value of that investment as of the last day
of each of the periods for which total return quotations are provided. Average
annual total return information shows the average percentage change in the value
of an investment in the Sub-Account from the beginning date of the measuring
period to the end of that period. This version of average annual total return
reflects all historical investment results, less all charges and deductions
applied against the Sub-Account (including any surrender charge that would apply
if an Owner terminated the Contract at the end of each period indicated, but
excluding any deductions for premium taxes).
When a Sub-Account has been in operation for one, five, and ten years, the
average annual total return for these periods will be provided. For periods
prior to the date the Sub-Account commenced operations, performance information
for Contracts funded by the Sub-Accounts will be calculated based on the
performance of the Investment Funds' Portfolios and the assumption that the
Sub-Accounts were in existence for the same periods as those indicated for the
Investment Funds' Portfolios, with the level of Contract Charges that were in
effect at the inception of the Sub-Accounts for the Contracts.
Average total return information may be presented and computed on the same
basis as described above, except deductions will not include the surrender
charge. In addition, the Company may from time to time disclose average annual
total return in non-standard formats and cumulative total return for Contracts
funded by the Sub-Accounts.
The Company may, from time to time, also disclose yield and total returns
for the portfolios of the Investment Funds, including such disclosure for
periods prior to the dates the Sub-Accounts commenced operations.
For additional information regarding the calculation of other performance
data, please refer to the Statement of Additional Information.
In advertising and sales literature, the performance of each Sub-Account
may be compared to the performance of other variable annuity issuers in general
or to the performance of particular types of variable annuities investing in
mutual funds, or investment series of mutual funds with investment objectives
similar to each of the Sub-Accounts.
Lipper Analytical Services, Inc. ("Lipper") and the Variable Annuity
Research Data Service ("VARDS") are independent services which monitor and rank
the performance of variable annuity issuers in each of the major categories of
investment objectives on an industry-wide basis. Lipper's rankings include
variable life insurance issuers as well as variable annuity issuers. VARDS
rankings compare only variable annuity issuers. The performance analyses
prepared by Lipper and VARDS each rank such issuers on the basis of total
return, assuming reinvestment of distributions, but do not take sales charges,
redemption fees, or certain expense deductions at the separate account level
into consideration. In addition, VARDS prepares risk adjusted rankings, which
consider the effects of market risk on total return performance. This type of
ranking provides data as to which funds provide the highest total return within
various categories of funds defined by the degree of risk inherent in their
investment objectives.
Advertising and sales literature may also compare the performance of each
Sub-Account to the Standard & Poor's Composite Index of 500 Stocks, a widely
used measure of stock performance. This unmanaged index assumes the reinvestment
of dividends but does not reflect any "deduction" for the expense of operating
or managing an investment portfolio. Other independent ranking services and
indices may also be used as a source of performance comparison.
The Company may also report other information including the effect of
tax-deferred compounding on a Sub-Account's investment returns, or returns in
general, which may be illustrated by tables, graphs, or charts. All income and
capital gains derived from Sub-Account investments are reinvested and can lead
to substantial long-term accumulation of assets, provided that the underlying
portfolio's investment experience is positive.
THE COMPANY
The Company, organized in 1885, is a stock life insurance company
incorporated under the laws of the State of Minnesota. The Company is a direct,
wholly-owned subsidiary of ReliaStar Financial Corp. (formerly known as The NWNL
Companies, Inc.), a publicly-traded holding company incorporated under the laws
of the State of Delaware, whose shares are listed on the New York Stock
Exchange. The Company offers individual life insurance and annuities, employee
benefits, and retirement contracts. The Company is admitted to do business in
the District of Columbia and all states except New York. Its home office is at
20 Washington Avenue South, Minneapolis, Minnesota 55401 (telephone
612/372-5507).
The Contracts described in this Prospectus are nonparticipating. The
capital and surplus of the Company should be considered as bearing only upon the
ability of the Company to meet its obligations under the Contracts.
THE VARIABLE ACCOUNT
The Variable Account is a Separate Account of the Company established by
the Board of Directors of the Company on November 12, 1992, pursuant to the laws
of the State of Minnesota. The Variable Account is registered with the
Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940, as amended ("1940 Act"). Such registration does
not involve supervision by the Commission of the management or investment
policies or practices of the Variable Account, the Company or the Investment
Funds. The Company has complete ownership and control of the assets in the
Variable Account, but these assets are held separately from the Company's other
assets and are not part of the Company's General Account.
The portion of the assets of the Variable Account equal to the reserves and
other contract liabilities of the Variable Account will not be charged with
liabilities incurred in any other business that the Company may conduct. The
Company has the right to transfer to its General Account any assets of the
Variable Account which are in excess of such reserves and other liabilities. The
income, if any, and gains and losses, realized or unrealized, of the Variable
Account will be credited to or charged against the amount allocated to the
Variable Account, in accordance with the contracts supported by the Variable
Account, without regard to the other income, gains, or losses of the Company.
Purchase payments allocated to the Variable Account under a Contract are
invested in one or more Sub-Accounts of the Variable Account. The purchase
payments under a Contract are allocated to the Sub-Account or Sub-Accounts
selected by the Owner, and the future Variable Account Contract Value depends
primarily on the investment performance of the Investment Funds whose shares are
held in the Sub-Accounts selected.
INVESTMENTS OF THE VARIABLE ACCOUNT
When a Contract is applied for, the Owner may elect to have purchase
payments allocated to one or more of the available Sub-Accounts each of which
invests in shares of one of the Investment Funds at its net asset value. The
Owner may change a purchase payment allocation for future purchase payments and
may at any time transfer all or part of any existing values in a Sub-Account to
another Sub-Account that invests in shares of another Investment Fund.
Northstar Investment Management Corporation, an affiliate of the Company,
is the investment adviser for the four funds of Northstar. Fidelity Management &
Research Company is the investment adviser for the two portfolios of VIP and the
two portfolios of VIP II offered through the Contracts. The investment advisers
are paid fees for their services by the Investment Funds. The Investment Funds
currently offered, together with their investment objectives are briefly
described below. More detailed information concerning the investment objectives,
policies and restrictions pertaining to the Investment Funds and the expenses,
investment advisory services and charges and the risks attendant to investing in
the Investment Funds and other aspects of their operations can be found in the
current prospectus for each Investment Fund which accompany this Prospectus and
the current Statement of Additional Information for each Investment Fund. The
Investment Fund prospectuses should be read carefully before any decision is
made concerning the allocation of purchase payments or transfers among the
Sub-Accounts.
The Company or its affiliates may receive compensation from an affiliate or
affiliates of certain of the Investment Funds based upon an annual percentage of
the average net assets held in that Investment Fund by the Company and certain
of the Company's insurance company affiliates. These amounts are intended to
compensate the Company or the Company's affiliates for administrative, record
keeping, distribution, and other services provided by such parties to the
Investment Funds and/or the Investment Funds' affiliates. Payments of such
amounts by an affiliate or affiliates of the Investment Funds do not increase
the fees paid by the Investment Funds or their shareholders.
NORTHSTAR VARIABLE TRUST (NORTHSTAR)
Northstar is a diversified management investment company currently offering
four investment funds, each with a different investment objective. The
following four Northstar Funds are available under this Contract:
NORTHSTAR INCOME AND GROWTH FUND is a diversified portfolio with an
investment objective of seeking current income balanced with the objective
of achieving capital appreciation. This Fund will seek to achieve its
objective through investments in common and preferred stocks, convertible
securities, investment grade corporate debt securities, and government
securities, selected for their prospects of producing income and capital
appreciation. Wilson/Bennett Capital Management, Inc. ("Wilson/Bennett") is
the sub-adviser to this Fund and is responsible for the day-to-day
investment management of the Fund, subject to the supervision of the
investment adviser and the Trustees of the Fund. All fees and expenses of
the sub-advisory agreement are borne by the investment adviser.
NORTHSTAR GROWTH FUND is a diversified portfolio with an investment
objective of long-term growth of capital through investments in equity
securities of companies that are believed to provide above average
potential for capital appreciation. Navellier Fund Management, Inc. serves
as sub-adviser to the Fund and is responsible for the day-to-day investment
management of the Fund, subject to the supervision of the investment
adviser and the Trustees of the Fund. All fees and expenses of the
sub-advisory arrangement are borne by the investment adviser.
NORTHSTAR MULTI-SECTOR BOND FUND is a diversified portfolio with an
investment objective of maximizing current income. This Fund will seek to
achieve its objective by investment in the following sectors of the fixed
income securities markets: (a) securities issued or guaranteed as to
principal and interest by the U.S. Government, its agencies, authorities or
instrumentalities; (b) investment grade corporate debt securities; (c)
investment grade or comparable quality debt securities issued by foreign
corporate issuers, and securities issued by foreign governments and their
political subdivisions, limited to 35% of assets determined at the time of
investment; and (d) high yield-high risk fixed income securities of U.S.
and foreign issuers, limited to 50% of assets determined at the time of
investment.
NORTHSTAR HIGH YIELD BOND FUND is a diversified portfolio with an
investment objective of seeking high income consistent with the
preservation of capital. Under normal market conditions, this Investment
Fund invests predominantly in high yield, high risk lower-rated U.S.
dollar-denominated debt securities. These securities are commonly known as
"junk bonds."Most of the securities in which the Investment Fund invests
are rated, at the time of investment, at least Caa by Moody's Investors
Service, Inc. ("Moody's") or CCC by Standard & Poor's Corporation ("S&P")
or, if not rated, are of comparable quality in the opinion of the
investment adviser. The Investment Fund may, however, invest in securities
in the lowest ratings categories of Moody's and S&P, which are C in the
case of Moody's and D in the case of S&P.
VARIABLE INSURANCE PRODUCTS FUND (VIP)
VIP is a mutual fund trust currently including five investment portfolios,
each with a different investment objective. The following two portfolios
are available within this Contract:
MONEY MARKET PORTFOLIO seeks to obtain as high a level of current income as
is consistent with preserving capital and providing liquidity. The
portfolio will invest only in high-quality U.S. dollar denominated money
market instruments of domestic and foreign issuers. An investment in the
portfolio is not insured or guaranteed by the U.S. Government, and there
can be no assurance that the portfolio will maintain a stable asset value
per share of $1.00.
OVERSEAS PORTFOLIO seeks long term growth of capital primarily through
investments in foreign securities. Overseas Portfolio provides a means for
investors to diversify their own portfolios by participating in companies
and economies outside of the United States.
VARIABLE INSURANCE PRODUCTS FUND II (VIP II)
VIP II is a mutual fund trust currently including five investment
portfolios, each with a different investment objective. The following two
portfolios are available within this Contract:
ASSET MANAGER PORTFOLIO seeks high total return with reduced risk over the
long-term by allocating its assets among domestic and foreign stocks, bonds
and short-term, fixed-income instruments.
INDEX 500 PORTFOLIO seeks to provide investment results that correspond to
the total return (i.e., the combination of capital changes and income) of
common stocks publicly traded in the United States. In seeking this
objective, the portfolio attempts to duplicate the composition and total
return of the Standard & Poor's Composite Index of 500 Stocks while keeping
transaction costs and other expenses low. The portfolio is designed as a
long-term investment option.
THERE IS NO ASSURANCE THAT THE STATED OBJECTIVES AND POLICIES OF ANY OF THE
INVESTMENT FUNDS WILL BE ACHIEVED.
An investment in the Variable Account, or in any Investment Fund, is not
insured or guaranteed by the U.S. Government.
REINVESTMENT
The Investment Funds described above have as a policy the distribution of
income dividends and capital gains. However, under the Contracts described in
this Prospectus there is an automatic reinvestment of such distributions.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENT FUND SHARES
The Company reserves the right, subject to applicable law, to make
additions to, deletions from, or substitutions for the shares that are held in
the Variable Account or that the Variable Account may purchase. If the shares of
an Investment Fund are no longer available for investment or if in the Company's
judgment further investment in any Investment Fund should become inappropriate
in view of the purposes of the Variable Account, the Company may redeem the
shares, if any, of that Investment Fund and substitute shares of another
registered open-end management investment company. The Company will not
substitute any shares attributable to a Contract's interest in a Sub-Account of
the Variable Account without notice and prior approval of the SEC and state
insurance authorities, as required by law.
The Company also reserves the right to establish additional Sub-Accounts of
the Variable Account, each of which would invest in shares corresponding to a
new Investment Fund or in shares of another investment company having a
specified investment objective. Subject to applicable law and any required SEC
approval, the Company may, in its sole discretion, establish new Sub-Accounts or
eliminate one or more Sub-Accounts if marketing needs, tax considerations or
investment conditions warrant. Any new Sub-Accounts may be made available to
existing Contract Owners on a basis to be determined by the Company.
There are currently eight Sub-Accounts whose Investment Funds are available
for investment under the Variable Account. We reserve the right to establish
additional Sub-Accounts of the Variable Account, each of which could invest in a
new fund with a specified investment objective. We contemplate that if we add
additional Sub-Accounts, you would only be permitted to participate in a total
of seventeen investment options over the lifetime of your Contract. You would
not have to choose your investment options in advance, but upon participation in
the seventeenth Fund since the issue of the Contract you would only be able to
transfer within the seventeen Funds already utilized and which are still
available.
For example, assume there are more than seventeen selections and that you
select seven investment options. Later, you transfer out of all of your seven
initial selections and choose ten different Sub-Accounts, none of which are the
same as your original seven selections. You have now used your maximum selection
of seventeen Sub-Accounts. You may still allocate purchase payments or transfer
Contract Values among any of the seventeen Sub-Accounts you have previously
selected. However, you may not allocate funds to the remaining Sub-Accounts at
any time. An Owner may transfer partial or complete Contract Values to the Fixed
Account from the Variable Account at any time.
If any of these substitutions or changes are made, the Company may by
appropriate endorsement change the Contract to reflect the substitution or
change. If the Company deems it to be in the best interest of Contract Owners
and Annuitants, and subject to any approvals that may be required under
applicable law, the Variable Account may be operated as a management investment
company under the 1940 Act, it may be deregistered under the Act if registration
is no longer required, or it may be combined with other separate accounts of the
Company.
If a purchase payment for a selected Sub-Account is unable to be invested
because shares of the applicable Investment Fund are no longer available for
investment or if in the judgment of the Company's management further investment
in such Investment Fund shares would be inappropriate in view of the purposes of
the Contract, the portion of the purchase payment designated to be invested in
such Investment Fund will be returned to the Owner. The Owner may then direct
investment of such purchase payment to a different Sub-Account.
CHARGES MADE BY THE COMPANY
SURRENDER CHARGE (CONTINGENT DEFERRED SALES CHARGE)
No deduction for a sales charge is made from the purchase payments for the
Contracts. However, the surrender charge described below (which may be deemed a
contingent deferred sales charge), when it is applicable, is intended to
reimburse the Company for expenses relating to the sale of the Contracts,
including commissions to sales personnel, costs of sales material and other
promotional activities and sales administration costs.
If part or all of a Contract's value is surrendered, or if the Contract's
Annuity Commencement Date occurs within the first two years after the Contract
was issued, surrender charges may be made by the Company. For purposes of the
following surrender charge description, "New Purchase Payments" are those
Contract purchase payments received by the Company during the Contract Year in
which the surrender occurs or in the six immediately preceding Contract Years;
"Old Purchase Payments" are those Contract purchase payments not defined as New
Purchase Payments; and "Contract Earnings" at any Valuation Date is the Contract
Value less the sum of New Purchase Payments and Old Purchase Payments.
For purposes of determining surrender charges, surrenders shall first be
taken from Old Purchase Payments until they are exhausted, then from New
Purchase Payments until they are exhausted, and thereafter from Contract
Earnings.
Surrenders taken from the following amounts ("Free Surrenders") are not
subject to a surrender charge during any Contract Year: (a) any Old Purchase
Payments not already surrendered; (b) 10% of all New Purchase Payments that have
been received by the Company (with the exception of Systematic Withdrawals, this
does not apply to surrenders made during the first Contract Year nor to any
surrenders after the first surrender made in each Contract Year thereafter); and
(c) any Contract Earnings being surrendered.
TOTAL SURRENDERS - The surrender charge for a total surrender is determined
by multiplying the amount of each New Purchase Payment surrendered, that is not
eligible for a free surrender, by the applicable surrender charge percentage as
set forth in the following table:
SURRENDER CHARGE PERCENTAGE TABLE
CONTRACT YEAR OF SURRENDER SURRENDER CHARGE
MINUS CONTRACT YEAR OF AS A PERCENTAGE OF
PURCHASE PAYMENT EACH PURCHASE PAYMENT
---------------- ---------------------
0 7%
1 7
2 5
3 5
4 4
5 3
6 2
7 and later 0
PARTIAL SURRENDERS - The amount of the partial surrender subject to a
surrender charge is determined by dividing (a) the portion of each New Purchase
Payment to be surrendered which is not eligible for a Free Surrender by (b) one
minus the applicable surrender charge percentage from the Surrender Charge
Percentage Table set forth above. The resulting amount for each New Purchase
Payment to be surrendered is then multiplied by the applicable surrender charge
percentage from the Surrender Charge Percentage Table shown above to arrive at
the amount of surrender charge to be assessed by the Company.
If the surrender charge is less than the Contract Value that remains
immediately after surrender, it will be deducted proportionately from the
Sub-Accounts that make up such Contract Value. If the surrender charge is more
than such remaining Contract Value, the portion of the surrender charge that can
be deducted from such remaining Contract Value will be so deducted and the
balance will be deducted from the surrender payment. In computing surrenders,
any portion of a surrender charge that is deducted from the remaining Contract
Value will be deemed a part of the surrender.
ANNUAL CONTRACT CHARGE
Each year on the Contract Anniversary, the Company deducts an Annual
Contract Charge of $35 from the Contract Value to reimburse it for
administrative expenses relating to the Contract, the Variable Account and the
Sub-Accounts. The Company will not increase the Annual Contract Charge. In any
Contract Year when a Contract is surrendered for its full value on other than
the Contract Anniversary, the Annual Contract Charge will be deducted at the
time of such surrender. During the annuity period if both a fixed annuity
payment and a variable annuity payment are selected, then an Annual Contract
Charge will be separately assessed against each payment type. The charges will
be deducted in equal installments from each such payment made during a
twelve-month period. If only a fixed annuity payment or a variable annuity
payment is selected, then only one Annual Contract Charge will be assessed and
deducted in equal installments.
MORTALITY RISK PREMIUM
The variable annuity payments made to Annuitants will vary in accordance
with the investment performance of the Sub-Accounts selected by the Owner.
However, they will not be affected by the mortality experience (death rate) of
persons receiving annuity payments from the Variable Account. The Company
assumes this "mortality risk" and has guaranteed the annuity rates incorporated
in the Contract, which cannot be changed.
To compensate the Company for assuming this mortality risk and the
mortality risk that Beneficiaries of Annuitants dying before the Annuity
Commencement Date may receive amounts in excess of the then current Contract
Value (see "Death Benefit Before the Annuity Commencement Date" on page 16), the
Company deducts a Mortality Risk Premium from the Variable Account Contract
Value. The deduction is made daily in an amount that is equal to an annual rate
of .85% of the daily Contract Values under the Variable Account. The Company may
not change the rate charged for the Mortality Risk Premium under any Contract.
EXPENSE RISK PREMIUM
The Company will not increase charges for administrative expenses
regardless of its actual expenses. To compensate the Company for assuming this
expense risk, the Company deducts an Expense Risk Premium from the Variable
Account Contract Value. The deduction is made daily in an amount that is equal
to an annual rate of .40% of the daily Variable Account Contract Values. The
Company may not change the rate of the Expense Risk Premium under any Contract.
ADMINISTRATION CHARGE
The Company deducts a daily Administration Charge from the Variable Account
Contract Value in an amount equal to an annual rate of .15% of the daily
Contract Values under the Variable Account. This charge is deducted to reimburse
the Company for the cost of providing administrative services under the
Contracts and the Variable Account. The Company may not change the rate of the
Administration Charge under any Contract.
PREMIUM AND OTHER TAXES
Various states and other governmental entities levy a premium tax,
currently ranging up to 3.50%, on annuity contracts issued by insurance
companies. If the Owner of the Contract lives in a governmental jurisdiction
that levies such a tax, the Company will pay the taxes when due but reserves the
right to deduct the amount of the tax either from purchase payments as they are
received or from the Contract Value at a later date.
The current range of premium tax rates is a guide only and should not be
relied on to determine actual premium taxes on any purchase payment or Contract
because the taxes are subject to change from time to time by legislative and
other governmental action. The timing of tax levies also varies from one taxing
authority to another. Consequently, in many cases the purchaser of a Contract
will not be able to accurately determine the premium tax applicable to the
Contract by reference to the range of tax rates described above. The Company
reserves the right to deduct charges for any other tax or economic burden
resulting from the application of the tax laws that it determines to be
applicable to the Contract.
REDUCTION OF CHARGES
Any of the charges under the Contract, as well as the minimum purchase
payment requirements set forth in this Prospectus, may be reduced due to special
circumstances that result in lower sales, administrative or mortality expenses.
For example, special circumstances may exist in connection with group or
sponsored arrangements, sales to the Company's policy and Contract Owners or
those of affiliated insurance companies, or sales to employees or clients of the
Company's affiliates. The amount of any reductions will reflect the reduced
sales effort and administrative costs resulting from, or the different mortality
experience expected as a result of, the special circumstances. Reductions will
not be unfairly discriminatory against any person, including the affected policy
or Contract Owners and owners of all other contracts funded by the Variable
Account.
EXPENSES OF THE INVESTMENT FUNDS
There are fees deducted from and expenses paid out of the assets of the
Investment Funds that are described in the accompanying prospectuses for the
Funds.
ADMINISTRATION OF THE CONTRACTS
The Company has entered into a contract with Continuum Administrative
Services Corporation (formerly known as Vantage Computer Systems, Inc.), Kansas
City, Missouri ("CASC") under which CASC has agreed to perform certain
administrative functions relating to the Contracts and the Variable Account.
These functions include, among other things, maintaining the books and records
of the Variable Account and the Sub-Accounts, and maintaining records of the
name, address, taxpayer identification number, Contract number, type of Contract
issued to each Owner, Contract Value and other pertinent information necessary
to the administration and operation of the Contracts.
THE CONTRACTS
The Contracts described in this Prospectus are designed for retirement
plans which may or may not be Qualified Plans. Often a single purchase payment
is made for a deferred annuity, but this Contract freely permits subsequent
purchase payments up to the maximum level of funding set forth below. The
minimum amount the Company will accept as an initial purchase payment is $5,000
for Non-Qualified Contracts and $2,000 for Qualified Contracts. The Company may
choose not to accept any subsequent purchase payment for a Non-Qualified
Contract if it is less than $500 and for a Qualified Contract if it is less than
$200. The Company may also choose not to accept any subsequent purchase payment
if the purchase payment together with the Contract Value at the next Valuation
Date exceeds $1,000,000. Any purchase payment not accepted by the Company will
be refunded. The Company reserves the right to accept smaller or larger initial
and subsequent purchase payments in connection with special circumstances, such
as sales through group or sponsored arrangements.
ALLOCATION OF PURCHASE PAYMENTS
Purchase payments may be allocated to the available Sub-Accounts of the
Variable Account selected by the Owner and/or the Fixed Account. (See Appendix
A). The Fixed Account is not available to Contract Owners in the states of
Maryland, Oregon, South Carolina and Washington. Any purchase payment or portion
thereof for which no allocation election is made will be returned to the Owner.
The initial purchase payment will be allocated to the selected Sub-Accounts
and/or the Fixed Account not later than two business days after receipt, if the
application and all information necessary for processing the Contract are
complete. The Company may retain purchase payments for up to five business days
while attempting to complete an incomplete application. If the application
cannot be made complete within this period, the applicant will be informed of
the reasons for the delay and the purchase payment will be returned immediately
unless the applicant consents to retention of the payment by the Company until
the application is made complete. Once the completed application is received,
the payment must be allocated within two business days. For any subsequent
purchase payments, the payments will be credited at the Sub-Account Accumulation
Unit Value next determined after receipt of the purchase payment.
Upon allocation to Sub-Accounts of the Variable Account, a purchase payment
is converted into Accumulation Units of the Sub-Account. The amount of the
purchase payment allocated to a particular Sub-Account is divided by the value
of an Accumulation Unit for the Sub-Account to determine the number of
Accumulation Units of the Sub-Account to be held in the Variable Account with
respect to the Contract. The net investment results of each Sub-Account vary
primarily with the investment performance of the Investment Fund whose shares
are held in the Sub-Account.
An Investment Fund may impose a minimum purchase requirement. If that
minimum purchase requirement exceeds the aggregate of all purchase payments
received by the Company, less any redemption of Investment Fund shares resulting
from transfers or surrenders, on any given day that are to be applied to a
Sub-Account for the purchase of shares of such Investment Fund, such purchase
payments will be refunded.
SUB-ACCOUNT ACCUMULATION UNIT VALUE
Each Sub-Account Accumulation Unit was initially valued at $10 when the
first Investment Fund shares were purchased. Thereafter the value of each
Sub-Account Accumulation Unit will vary up or down according to a Net Investment
Factor, which is primarily based on the investment performance of the applicable
Investment Fund. Investment Fund shares in the Sub-Accounts will be valued at
their net asset value.
Dividend and capital gain distributions from an Investment Fund will be
automatically reinvested in additional shares of such Investment Fund and
allocated to the appropriate Sub-Account. The number of Sub-Account Accumulation
Units does not increase because of the additional shares, but the Accumulation
Unit value may increase.
NET INVESTMENT FACTOR
The Net Investment Factor is an index number which reflects charges under
the Contract and the investment performance during a Valuation Period of the
Investment Fund whose shares are held in the particular Sub-Account. If the Net
Investment Factor is greater than one, the value of a Sub-Account Accumulation
Unit has increased. If the Net Investment Factor is less than one, the value of
a Sub-Account Accumulation Unit has decreased. The Net Investment Factor is
determined by dividing (1) by (2) then subtracting (3) from the result, where:
(1) is the net result of:
(a) the net asset value per share of the Investment Fund shares held
in the Sub-Account, determined at the end of the current
Valuation Period, plus
(b) the per share amount of any dividend or capital gain
distributions made on the Investment Fund shares held in the
Sub-Account during the current Valuation Period, plus or minus
(c) a per share charge or credit for any taxes reserved for which the
Company determines to have resulted from the investment
operations of the Sub-Account and to be applicable to the
Contract;
(2) is the net result of:
(a) the net asset value per share of the Investment Fund shares held
in the Sub-Account, determined at the end of the last prior
Valuation Period, plus or minus
(b) a per share charge or credit for any taxes reserved for during
the last prior Valuation Period which the Company determines to
have resulted from the investment operations of the Sub-Account
and to be applicable to the Contract; and
(3) is a factor representing the Mortaility Risk Premium, the Expense Risk
Premium and the Administration Charge deducted from the Sub-Account
which factor is equal, on an annual basis, to 1.40% of the daily net
asset value of the Sub-Account.
DEATH BENEFIT BEFORE THE ANNUITY COMMENCEMENT DATE
If the Owner, including any joint Owner, dies before the Annuity
Commencement Date, the Beneficiary will be entitled to receive the Death
Benefit. For this purpose the Death Benefit will be:
(1) if any Owner (including Annuitant) dies on or before the first day of
the month following the Owner's 85th birthday, the greatest of (i)the
contract Value on the Death Benefit Valuation Date; or (ii) the sum of
the purchase payments received by the Company under the Contract to
the Death Benefit Valuation Date, less any surrender payments
previously made by the Company; or (iii) the Contract Value on the
Specified Contract Anniversary (immediately preceding the Owner's
death), plus any purchase payments and less any surrender payments
since that anniversary;
(2) if any Onwer (including the Annuitant) dies after the first dayof the
month following the Onwer's 85th birthday, the Contract Value on the
Death Benefit Valuation date.
If a single sum is requested, it will be paid within seven days after the
Death Benefit Valuation Date. If an Annuity Form is requested, it may be any
Annuity Form permitted by Section 72(s) of the Code and which the Company is
willing to issue. An Annuity Form selection must be in writing and must be
received by the Company within 60 days after the date of the Owner's death,
otherwise the Death Benefit as of the Death Benefit Valuation Date will be paid
in a single sum to the Beneficiary and the Contract will be canceled.
If the only Beneficiary is the Owner's surviving spouse, such spouse may
continue the Contract as the Owner, and then (1) select a single sum payment, or
(2) select any Annuity Form which does not exceed such spouse's life expectancy.
If the Beneficiary elects to receive annuity payments under an Annuity
Form, the amount and duration of payments may vary depending on the Annuity Form
selected and whether fixed and/or variable annuity payments are requested. (See
"Annuity Provisions" beginning on page 19.)
DEATH BENEFIT AFTER THE ANNUITY COMMENCEMENT DATE
If the Annuitant dies after the Annuity Commencement Date, the Death
Benefit, if any, shall be as stated in the Annuity Form in effect.
SURRENDER (REDEMPTION)
If a written request therefor from the Owner is received by the Company
before the Annuity Commencement Date, all or part of the Contract Value will be
paid to the Owner after deducting any applicable surrender charge and taxes.
(See "Surrender Charge (Contingent Deferred Sales Charge)" on page 12.) Partial
surrenders may be made in amounts not less than $500 and no partial surrender
may cause the Contract Value to fall below $1,000. In addition, if a total
surrender occurs other than on a Contract Anniversary the Annual Contract Charge
will be deducted from the Contract Value before the surrender payment is made.
Surrenders must be consented to by each collateral assignee. The Company
reserves the right to require that surrenders in excess of $50,000 be Signature
Guaranteed by a member firm of the New York, American, Boston, Midwest,
Philadelphia, or Pacific Stock Exchange, or by a commercial bank (not a savings
bank) which is a member of the Federal Deposit Insurance Corporation, or, in
certain cases, by a member firm of the National Association of Securities
Dealers, Inc. that has entered into an appropriate agreement with the Company.
The Company may require that the Contract be returned before a surrender
takes place. A surrender will take place on the next Valuation Date after the
requirements for surrender are completed and payment will be made within seven
days after such Valuation Date. Unless the Owner requests a partial surrender to
be made from the Fixed Account or particular Sub-Accounts, a partial surrender
will be taken proportionately from the Fixed Account and all Sub-Accounts on a
basis that reflects their proportionate percentage of the Contract Value.
The Company reserves the right to limit the number of partial surrenders,
and to assess a processing fee not to exceed the lesser of 2% of the partial
surrender amount or $25. No processing fee will be charged in connection with
total surrenders.
The Company may cancel the Contract on any Contract Anniversary, or if such
Contract Anniversary is not a Valuation Date, on the next Valuation Date
thereafter, by paying to the Owner the Contract Value as of such Valuation Date
if such Contract Value after all charges is less than $1,000.
If this Contract is purchased as a "tax-sheltered annuity" under Section
403(b) of the Internal Revenue Code (the "Code"), it is subject to certain
restrictions on redemption imposed by Section 403(b)(11) of the Code. (See
"Tax-Sheltered Annuities" on page 23.) These restrictions on redemption are
imposed by the Variable Account and the Company in full compliance with and in
reliance upon the terms and conditions of a no-action letter issued by the
Office of Insurance Products and Legal Compliance of the Securities and Exchange
Commission to the American Council of Life Insurance (publicly available
November 28, 1988).
For tax purposes, surrender payments may be taxable. Such payments shall be
deemed to be from earnings and then gains until cumulative surrender payments
equal all accumulated earnings and gains, and thereafter from purchase payments
received by the Company. Consideration should be given to the tax implications
of a surrender prior to making a surrender request, including a surrender in
connection with a Qualified Plan.
SYSTEMATIC WITHDRAWALS
A Systematic Withdrawal is a specialized form of partial surrender. (See
"Surrender (Redemption)" on page 16.) The Owner may elect to take Systematic
Withdrawals by surrendering a specified dollar amount or percentage of
cumulative purchase payments on a monthly, quarterly, semi-annual or annual
basis from Sub-Accounts. Systematic Withdrawals may be taken from Variable
Account Contract Value and/or Fixed Account Contract Value, but are limited
annually to 10% of total cumulative purchase payments made under the Contract. A
Surrender Charge will be imposed on the amount of any Systematic Withdrawal,
partial surrender or any combination thereof which is not a Free Surrender. (See
"Surrender Charge (Contingent Deferred Sales Charge)" on page 12.) Systematic
Withdrawals may be discontinued by the Owner at any time by notifying the
Company in writing.
The Company reserves the right to modify or discontinue offering Systematic
Withdrawals, however, any such modification or discontinuation will not affect
any Systematic Withdrawal programs already commenced. While the Company does not
currently charge a processing fee for partial surrenders under this program, it
reserves the right to charge a processing fee not to exceed the lesser of 2% of
the Systematic Withdrawal payment or $25.
Systematic Withdrawals may be subject to tax, including a penalty tax, and
the Owner should consult with his or her tax adviser before requesting any
Systematic Withdrawal. (See "Taxation of Annuities" on page 21.)
Contract Owners interested in participating in the Systematic Withdrawal
program may obtain a separate application form and full information concerning
the program and its restrictions from their registered representative.
TRANSFERS
Before the Annuity Commencement Date, the Owner may transfer amounts
between the Sub-Accounts or from the Sub-Accounts to the Fixed Account. Subject
to certain restrictions, amounts may also be transferred from the Fixed Account
to the Sub-Accounts. Currently, there are three methods by which transfers may
be made: in writing, by telephone and by Dollar Cost Averaging.
WRITTEN TRANSFERS - Before the Annuity Commencement Date the Owner may
request a transfer in writing, subject to any conditions or charges the
Investment Funds whose shares are involved may impose, of all or part of a
Sub-Account's value to other Sub-Accounts or to the Fixed Account. The transfer
will be made by the Company on the first Valuation Date after the request for
such a transfer is received by the Company. Currently, there is no charge for
such a transfer, other than those that may be made by the Investment Funds. The
Company reserves the right, however, to charge a transfer fee not to exceed $25
per transfer and to limit the number of transfers made by the Owner. To
accomplish the transfer, the Variable Account will surrender Accumulation Units
in the particular Sub-Accounts and reinvest that value in Accumulation Units of
one or more of the available Sub-Accounts as directed in the request. After the
Annuity Commencement Date, an Annuitant who has selected Variable Annuity
Payments may request transfer of Annuity Unit values in the same manner and
subject to the same requirements as for an Owner-transfer of Sub-Account
Accumulation Unit values. However, no transfers may be made to the Fixed Account
after the Annuity Commencement Date.
Before the Annuity Commencement Date, transfers may also be made from the
Fixed Account to the Variable Account, provided, however, that (a) transfers may
only be made during the period starting 30 days before and ending 30 days after
the Contract Anniversary, and only one transfer may be made during each such
period, (b) no more than 50% of the Fixed Account Contract Value may be the
subject of any such transfer (unless the balance, after such transfer, would be
less than $1,000, in which case the full Fixed Account Contract Value may be
transferred), and (c) such transfer must involve at least $500 (or the total
Fixed Account Contract Value, if less). No transfers may be made from the Fixed
Account after the Annuity Commencement Date.
The conditions applicable to written transfers also apply to telephone/fax
transfers and Dollar Cost Averaging transfers.
TELEPHONE/FAX TRANSFERS - Telephone/fax transfers are available when the
Owner completes a telephone/fax transfer form. If the Owner elects to complete
the telephone/fax transfer form, the Owner thereby agrees that the Company and
its Contract Administrator will not be liable for any loss, liability, cost or
expense when the Company, and/or the Contract Administrator act in accordance
with the telephone/fax transfer instructions which are received and, if received
by telephone, are recorded on voice recording equipment. If a telephone/fax
transfer, processed after the Owner has completed the telephone/fax transfer
form, is later determined not to have been made by the Owner or was made without
the Owner's authorization, and a loss results from such unauthorized transfer,
the Owner bears the risk of this loss. Any requests via fax are considered
telephone requests and are bound by the conditions in the telephone/fax transfer
authorization form you sign. Any fax request should include your name, daytime
telephone number, Contract number and the names of the Sub-Accounts from which
and to which money will be transferred and the allocation percentage. The
Company will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. In the event the Company does not employ
such procedures, the Company may be liable for any losses due to unauthorized or
fraudulent instructions. Such procedures may include, among others, requiring
forms of personal identification prior to acting upon telephone instructions,
providing written confirmation of such instructions and/or tape recording
telephone instructions.
DOLLAR COST AVERAGING TRANSFERS - The Owner may direct the Company to
automatically transfer a fixed dollar amount or a specified percentage of
Sub-Account Value to any one or more other Sub-Accounts or to the Fixed Account.
No transfers from the Fixed Account are permitted under this service. Transfers
of this type may be made on a monthly, quarterly, semi-annual or annual basis.
This service is intended to allow the Owner to utilize "Dollar Cost Averaging,"
a long-term investment method which provides for regular, level investments over
time. The Company makes no guarantees that Dollar Cost Averaging will result in
a profit or protect against loss. The Owner may discontinue Dollar Cost
Averaging at any time by notifying the Company in writing.
Contract Owners interested in Dollar Cost Averaging may obtain a separate
application form and full information concerning this service and its
restrictions from their registered representatives.
The Company reserves the right to modify or discontinue offering Dollar
Cost Averaging. Any such modification or discontinuation would not affect Dollar
Cost Averaging transfer programs already commenced. Although the Company
currently charges no fees for transfers made under the Dollar Cost Averaging
program, the Company reserves the right to charge a processing fee for Dollar
Cost Averaging transfers not to exceed $25 per such transfer.
ASSIGNMENTS
If the Contract is issued pursuant to or in connection with a Qualified
Plan, it may not be sold, transferred, pledged or assigned to any person or
entity other than the Company. In other circumstances, an assignment of the
Contract is permitted, but only before the Annuity Commencement Date, by giving
the Company the original or a certified copy of the assignment. The Company
shall not be bound by any assignment until it is actually received by the
Company and shall not be responsible for the validity of any assignment. Any
payments made or actions taken by the Company before the Company actually
receives any assignment shall not be affected by the assignment.
CONTRACT OWNER AND BENEFICIARIES
Unless someone else is named as the Owner in the application for the
Contract, the applicant is the Owner of the Contract and before the Annuity
Commencement Date may exercise all of the Owner's rights under the Contract. No
more than two (2) natural persons may be named as Owner.
The Owner may name a Beneficiary and a Successor Beneficiary. In the event
an Owner dies before the Annuity Commencement Date, the Beneficiary shall
receive a Death Benefit as provided in the Contract. In the event an Owner dies
on or after the Annuity Commencement Date, the Beneficiary, if the Annuity Form
in effect at the Owner's death so provides, may continue receiving payments, be
paid a lump sum, or be paid nothing. If the Beneficiary or Successor Beneficiary
is not living on the date payment is due or if no Beneficiary or Successor
Beneficiary has been named, the Owner's estate will receive the applicable
proceeds.
A person named as an Annuitant, a Beneficiary or a Successor Beneficiary
shall not be entitled to exercise any rights relating to the Contract or to
receive any payments or settlements under the Contract or any Annuity Form,
unless such person is living on the earlier of (a) the day due proof of death of
the Owner, the Annuitant or the Beneficiary, whichever is applicable, is
received by the Company or (b) the tenth day after the death of the Owner, the
Annuitant or the Beneficiary, whichever is applicable.
Unless different arrangements have been made with the Company by the Owner,
if more than one Beneficiary is entitled to payments from the Company the
payments shall be in equal shares.
Before the Annuity Commencement Date, the Owner may change the Annuitant,
the Beneficiary or the Successor Beneficiary by giving the Company written
notice of the change, but the change shall not be effective until actually
received by the Company. Upon receipt by the Company of a notice of change, it
will be effective as of the date it was signed but shall not affect any payments
made or actions taken by the Company before the Company received the notice, and
the Company shall not be responsible for the validity of any change.
CONTRACT INQUIRIES
Inquiries regarding a Contract may be made by writing to the Annuity
Service Center, P.O. Box 419275, Kansas City, Missouri 64141-6275.
ANNUITY PROVISIONS
ANNUITY COMMENCEMENT DATE
The Owner selects the Annuity Commencement Date, which must be the first
day of a month, when making application for the Contract. The date will be the
first day of the month following the Annuitant's 75th birthday unless an earlier
or later date has been selected by the Owner and, if the date is later, it has
been agreed to by the Company. The Owner may change an Annuity Commencement Date
selection by written notice received by the Company at least 30 days before both
the Annuity Commencement Date currently in effect and the new Annuity
Commencement Date. The new date selected must satisfy the requirements for an
Annuity Commencement Date. If the Annuity Commencement Date selected by the
Owner does not occur on a Valuation Date at least 60 days after the date on
which the Contract was issued, the Company reserves the right to adjust the
Annuity Commencement Date to the first Valuation Date after the Annuity
Commencement Date selected by the Owner which is at least 60 days after the
Contract issue date. If the Annuity Commencement Date occurs before the second
Contract Anniversary, the Company will deduct Surrender Charges. (See "Surrender
Charge (Contingent Deferred Sales Charge)" on page 12.)
ANNUITY FORM SELECTION
The Owner may select a Variable Annuity Form, a Fixed Annuity Form, or
both, with payments starting at the Annuity Commencement Date when making
application for the Contract. Thereafter, the Owner may change the Annuity
Form(s) by written notice received by the Company before the Annuity
Commencement Date. If no election has been made before the Annuity Commencement
Date, the Company will apply the Fixed Account Contract Value to provide a Fixed
Annuity and the Variable Account Contract Value to provide a Variable Annuity,
both in the form of a Life Annuity with Payments Guaranteed for 10 years (120
Months), which shall be automatically effective.
ANNUITY FORMS
Variable annuity payments and fixed annuity payments are available in any
of the following Annuity Forms:
LIFE ANNUITY - An annuity payable on the first day of each month during the
Annuitant's life, starting with the first payment due according to the Contract.
Payments cease with the payment made on the first day of the month in which the
Annuitant's death occurs. IT WOULD BE POSSIBLE UNDER THIS ANNUITY FORM FOR THE
ANNUITANT TO RECEIVE ONLY ONE PAYMENT IF HE OR SHE DIED BEFORE THE SECOND
ANNUITY PAYMENT, ONLY TWO PAYMENTS IF HE OR SHE DIED BEFORE THE THIRD ANNUITY
PAYMENT, ETC.
LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 YEARS (120 MONTHS) OR 20 YEARS
(240 MONTHS) - An annuity payable on the first day of each month during the
Annuitant's life, starting with the first payment due according to the Contract.
If the Annuitant receives all of the guaranteed payments, payments will continue
thereafter but cease with the payment made on the first day of the month in
which the Annuitant's death occurs. If all of the guaranteed payments have not
been made before the Annuitant's death, the unpaid installments of the
guaranteed payments will be continued to the Beneficiary.
JOINT AND FULL SURVIVOR ANNUITY - An annuity payable on the first day of
each month during the Annuitant's life and the life of a named person (the
"Joint Annuitant"), starting with the first payment due according to the
Contract. Payments will continue while either the Annuitant or the Joint
Annuitant is living and cease with the payment made on the first day of the
month in which the death of the Annuitant or the Joint Annuitant, whichever
lives longer, occurs. THERE IS NO MINIMUM NUMBER OF PAYMENTS GUARANTEED UNDER
THIS ANNUITY FORM. PAYMENTS CEASE UPON THE DEATH OF THE LAST SURVIVOR OF THE
ANNUITANT AND THE JOINT ANNUITANT REGARDLESS OF THE NUMBER OF PAYMENTS RECEIVED.
The Company also has other annuity forms available and information about
them can be obtained by writing to the Company.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Annuity payments will be paid as monthly installments, unless the Annuitant
and the Company agree to a different payment schedule. However, if the Contract
Value at the Annuity Commencement Date is less than $5,000, the Company may pay
the Contract Value in a single sum and the Contract will be canceled. Also if a
monthly payment would be or become less than $50, the Company may change the
frequency of payments to intervals that will result in payments of at least $50
each.
ANNUITY PAYMENTS
The amount of the first fixed annuity payment is determined by applying the
Contract Value to be used for a fixed annuity at the Annuity Commencement Date
to the annuity table in the Contract for the Fixed Annuity Form selected. The
table shows the amount of the initial annuity payment for each $1,000 applied
and all subsequent payments shall be equal to this amount. The amount of the
first variable annuity payment is determined by applying the Contract Value to
be used for a variable annuity at the Annuity Commencement Date to the annuity
table in the Contract for the Annuity Form selected.
Subsequent variable annuity payments vary in amount in accordance with the
investment performance of the applicable Sub-Account. Assuming annuity payments
are based on the unit values of a single Sub-Account, the dollar amount of the
first annuity payment, determined as set forth above, is divided by the
Sub-Account Annuity Unit Value as of the Annuity Commencement Date to establish
the number of Variable Annuity Units representing each annuity payment. This
number of Variable Annuity Units remains fixed during the annuity payment
period. The dollar amount of the second and subsequent payments is not
predetermined and may change from month to month. The dollar amount of the
second and each subsequent payment is determined by multiplying the fixed number
of Variable Annuity Units by the Sub-Account Annuity Unit Value for the
Valuation Period with respect to which the payment is due. If the monthly
payment is based upon the Annuity Unit Values of more than one Sub-Account, the
foregoing procedure is repeated for each applicable Sub-Account and the sum of
the payments based on each Sub-Account is the amount of the monthly annuity
payment.
The Annual Contract Charge is deducted in equal installments from each
annuity payment. When a fixed annuity payment is made in conjunction with a
variable annuity payment, an Annual Contract Charge is assessed against each
type of payment and is deducted in equal installments from each annuity payment.
The annuity tables in the Contracts are based on the 1983 Individual
Annuity Mortality Table (set back three years).
The Company guarantees that the dollar amount of each variable annuity
payment after the first payment will not be affected by variations in expenses
(including those related to the Variable Account) or in mortality experience
from the mortality assumptions used to determine the first payment.
SUB-ACCOUNT ANNUITY UNIT VALUE
A Sub-Account's Variable Annuity Units will initially be valued at $10 each
at the time Accumulation Units with respect to the Sub-Account are first
converted into Variable Annuity Units. The Sub-Account Annuity Unit Value for
any subsequent Valuation Period is determined by multiplying the Sub-Account
Annuity Unit Value for the immediately preceding Valuation Period by the Net
Investment Factor for the Sub-Account for the Valuation Period for which the
Sub-Account Annuity Unit Value is being calculated, and multiplying the result
by an interest factor to neutralize the assumed investment rate of 4% per annum
built into the annuity tables contained in the Contracts. (See "Net Investment
Factor" on page 15.)
ASSUMED INVESTMENT RATE
A 4% assumed investment rate is built into the annuity tables contained in
the Contracts. If the actual net investment rate on the assets of the Variable
Account is the same as the assumed investment rate of 4% per year, variable
annuity payments will remain level. If the actual net investment rate exceeds
the assumed investment rate, variable annuity payments will increase and
conversely, if it is less than the assumed investment rate the payments will
decrease.
FEDERAL TAX STATUS
INTRODUCTION
THIS DISCUSSION IS GENERAL AND NOT INTENDED AS TAX ADVICE. The 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. The Contracts are designed for use by individuals in
connection with retirement plans which may or may not be Qualified Plans under
the provisions of the Internal Revenue Code (the "Code"). The ultimate effect of
federal income taxes on the Contract Value, on annuity payments and on the
economic benefit to the Owner, the Annuitant or the Beneficiary depends upon the
type of retirement plan for which the Contract is purchased, and upon the tax
and employment status of the individual concerned. No attempt is made to
consider any applicable state or other tax laws. The discussion is based on the
Company's understanding of Federal Income Tax Laws as currently interpreted. No
representation is made regarding the likelihood of the continuation of the
present Federal Income Tax Laws or the current interpretation by the Internal
Revenue Service ("IRS").
The Contract may be purchased on a non-qualified basis ("Non-Qualified
Contract") or purchased and used in connection with plans qualifying for
favorable tax treatment ("Qualified Contract"). The Qualified Contract is
designed for use by individuals whose premium payments are comprised solely of
proceeds from and/or contributions under retirement plans which are intended to
qualify as plans entitled to special income tax treatment under Sections 401(a),
403(b), or 408 of the Code. The ultimate effect of federal income taxes on the
amounts held under a Contract, or annuity payments, and on the economic benefit
to the Owner, the Annuitant, or the Beneficiary depends on the type of
retirement plan, on the tax and employment status of the individual concerned,
and on the Company's tax status. In addition, certain requirements must be
satisfied in purchasing a Qualified Contract with proceeds from a tax-qualified
plan and receiving distributions from a Qualified Contract in order to continue
receiving favorable tax treatment. Therefore, purchasers of Qualified Contracts
should seek competent legal and tax advice regarding the suitability of a
Contract for their situation, the applicable requirements, and the tax treatment
of the rights and benefits of a Contract. The following discussion assumes that
Qualified Contracts are purchased with proceeds from and/or contributions under
retirement plans that qualify for the intended special federal income tax
treatment.
TAX STATUS OF THE CONTRACT
DIVERSIFICATION REQUIREMENTS. Section 817(h) of the Code provides that
separate account investments underlying a contract must be "adequately
diversified" in accordance with Treasury regulations in order for the contract
to qualify as an annuity contract under Section 72 of the Code. The Variable
Account, through each of the Investment Funds, intends to comply with the
diversification requirements prescribed in regulations under Section 817(h) of
the Code, which affect how the assets in the various Sub-Accounts may be
invested. The Company expects that each Investment Fund in which the Variable
Account owns shares will meet the diversification requirements and that the
Contract will be treated as an annuity contract under the Code.
The Treasury has also announced that the diversification regulations do not
provide guidance concerning the extent to which Owners may direct their
investments to particular Sub-Accounts of a variable account or how concentrated
the investments of the Investment Funds underlying a variable account may be. It
is possible that if additional guidance in this regard is issued, the Contract
may need to be modified to comply with such additional guidance. For these
reasons, the Company reserves the right to modify the Contract as necessary to
attempt to prevent the Owner from being considered the owner of the assets of
the Investment Funds or otherwise to qualify the Contract for favorable tax
treatment.
REQUIRED DISTRIBUTIONS. In order to be treated as an annuity contract for
federal income tax purposes, Section 72(s) of the Code also requires any
Non-Qualified Contract to provide that: (a) if any Owner dies on or after the
Annuity Commencement 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 Commencement 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 Beneficiary or over a period not
extending beyond the life expectancy of that Beneficiary, provided that such
distributions begin within one year of that Owner's death. The Owner's
"designated Beneficiary" is the person designated by such Owner as a Beneficiary
and to whom ownership of the Contract passes by reason of death and must be a
natural person. However, if the Owner's "designated Beneficiary" is the
surviving spouse of the Owner, the Contract may be continued with the surviving
spouse as the new Owner. If the Owner is not an individual, any change in the
primary Annuitant is treated as a change of Owner for tax purposes.
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. The Company 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 Contracts.
TAXATION OF ANNUITIES
IN GENERAL. Section 72 of the Code governs taxation of annuities in
general. The Company believes that an Owner who is a natural person generally is
not taxed on increases in the value of a Contract until distribution occurs by
withdrawing all or part of the Contract Value (e.g., partial withdrawals and
complete surrenders) or as annuity payments under the Annuity Form selected. For
this purpose, the assignment, pledge, or agreement to assign or pledge any
portion of the Contract Value (and in the case of a Qualified Contract, any
portion of an interest in the qualified plan) generally will be treated as a
distribution. The taxable portion of a distribution (in the form of a single sum
payment or annuity) is taxable as ordinary income.
The Owner of any annuity contract who is not a natural person generally
must include in income any increase in the excess of the net surrender value
over the "investment in the contract" during the taxable year. The Company
restricts ownership of Non-Qualified Contracts to no more than two natural
persons.
The following discussion generally applies to Contracts owned by natural
persons.
SURRENDERS. In the case of a surrender from a Qualified Contract, under
Section 72(e) of the Code a ratable portion of the amount received is taxable,
generally based on the ratio of the "investment in the contract" to the
participant's total accrued benefit or balance under the retirement plan. The
"investment in the contract" generally equals the portion, if any, of any
premium payments paid by or on behalf of any individual under a Contract which
was not under excluded from the individual's gross income. For Contracts issued
in connection with qualified plans, the "investment in the contract" can be
zero. Special tax rules may be available for certain distributions from
Qualified Contracts.
In the case of a surrender (including Systematic Withdrawals) from a
Non-Qualified Contract before the Annuity Commencement Date, under Code Section
72(e) amounts received are generally first treated as taxable income to the
extent that the Contract Value immediately before surrender exceeds the
"investment in the contract" at that time. Any additional amount surrendered is
not taxable.
In the case of a full surrender under a Qualified or Non-Qualified
Contract, the amount received generally will be taxable only to the extent it
exceeds the "investment in the contract."
A Federal penalty tax may apply to certain surrenders from Qualified and
Non-Qualified Contracts. (See "Penalty Tax on Certain Distributions" on page
22.)
ANNUITY PAYMENTS. Although tax consequences may vary depending on the
Annuity Form selected under the Contract, in general, only the portion of the
Annuity Payment that represents the amount by which the Contract 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 until the recovery of
the investment in the Contract, and thereafter the full amount of each annuity
payment is taxable.
TAXATION OF DEATH BENEFIT PROCEEDS. Amounts may be distributed from a
Contract because of the death of an Owner or an Annuitant. Generally, such
amounts are includible in the income of the recipient as follows: (i) if
distributed in a lump sum, they are taxed in the same manner as a full surrender
of the Contract; or (ii) if distributed under a payment option, they are taxed
in the same way as annuity payments.
PENALTY TAX ON CERTAIN DISTRIBUTIONS. In the case of a distribution
pursuant to a Non-Qualified Contract, a Federal penalty equal to 10% of the
amount treated as taxable income may be imposed. In general, however, there is
no penalty on distributions:
1. made on or after the taxpayer reaches age 59-1/2;
2. made on or after the death of the holder (a holder is considered an
Owner) (or if the holder is not an individual, the death of the
primary annuitant);
3. attributable to the taxpayer's becoming disabled;
4. a part of a series of substantially equal periodic payments (not less
frequently than annually) for the life ( or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the
taxpayer and his or her designated beneficiary;
5. made under an annuity contract that is purchased with a single premium
when the annuity starting date is no later than a year from purchase
of the annuity and substantially equal periodic payments are made, not
less frequently than annually, during the annuity period; and
6. made under certain annuities issued in connection with structured
settlement agreements.
Other tax penalties may apply to certain distributions under a Qualified
Contract, as well as to certain contributions to, loans from, and other
circumstances, applicable to the Qualified Plan of which the Qualified Contract
is part.
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 considering any legislation regarding the taxation
of annuities, there is always the possibility that 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).
TRANSFERS, ASSIGNMENTS OR EXCHANGES OF A CONTRACT
A transfer of ownership or assignment of a 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 transfer, assignment, or
exchange of a Contract should contact a competent tax adviser with respect to
the potential tax effects of such a transaction.
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. Effective January 1, 1993, distributions from certain qualified
plans are generally subject to mandatory withholding. Withholding for Contracts
issued to retirement plans established under Section 401 of the Code is the
responsibility of the plan trustee.
MULTIPLE CONTRACTS
Section 72(e)(11) of the Code treats all non-qualified deferred annuity
contracts entered into after October 21, 1988 that are issued by the Company (or
its affiliates) to the same Owner during any calendar year as one annuity
contract for purposes of determining the amount includible in gross income under
Code Section 72(e). The effects of this rule are not yet clear; however, it
could affect the time when income is taxable and the amount that might be
subject to the 10% penalty tax described above. 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. There may also be other situations in which the Treasury may conclude
that it would be appropriate to aggregate two or more annuity contracts
purchased by the same Owner. Accordingly, an Owner should consult a competent
tax adviser before purchasing more than one annuity contract.
TAXATION OF QUALIFIED PLANS
The Contracts are designed for use with several types of qualified plans.
The tax rules applicable to participants in these qualified plans vary according
to the type of plan and the terms and conditions of the plan itself. 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 59-1/2 (subject to certain
exceptions); distributions that do not conform to specified commencement and
minimum distribution rules; aggregate distributions in excess of a specified
annual amount; and in other specified circumstances. Therefore, no attempt is
made to provide more than general information about the use of the Contracts
with the various types of qualified retirement plans. Contract Owners, the
Annuitants, and Beneficiaries are cautioned that the rights of any person to any
benefits under these qualified retirement plans may be subject to the terms and
conditions of the plans themselves, regardless of the terms and conditions of
the Contract, but the Company shall not be bound by the terms and conditions of
such plans to the extent such terms contradict the Contract, unless the Company
consents. Brief descriptions follow of the various types of qualified retirement
plans in connection with a Contract. The Company will amend the Contract as
necessary to conform it to the requirements of such plan.
PENSION AND PROFIT SHARING PLANS. Section 401(a) of the Code permits
employers and self-employed persons to establish various types of retirement
plans for employees. Such retirement plans may permit the purchaser of the
Contract to provide benefits under the plans. Persons intending to use the
Contract with such plans should seek competent advice.
INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits eligible
individuals to contribute to an individual retirement program known as an
"Individual Retirement Annuity" or "IRA". These IRAs are subject to limits on
the amount that may be contributed, the persons who may be eligible, and on the
time when distributions may commence. Also, distributions from certain other
types of qualified retirement plans may be "rolled over" on a tax-deferred basis
into an IRA. Sales of the Contract for use with IRAs may be subject to special
requirements of the IRS.
TAX SHELTERED ANNUITIES. Section 403(b) of the Code allows employees of
certain Section 501(c)(3) organizations and public schools to exclude from their
gross income the premiums paid, within certain limits, on a Contract that will
provide an annuity for the employee's retirement. 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.
POSSIBLE CHARGE FOR THE COMPANY'S TAXES
At the present time, the Company makes no charge to the Sub-Accounts for
any Federal, state, or local taxes that the Company incurs which may be
attributable to such Sub-Accounts or to the Contracts. The Company, however,
reserves the right in the future to make a charge for any such tax that it
determines to be properly attributable to the Sub-Accounts to the Contracts.
OTHER TAX CONSEQUENCES
As noted above, the foregoing comments about the Federal tax consequences
under these Contracts are 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 the Company's
understanding of current law and the law may change. Federal estate and state
and local estate, inheritance, and other tax consequences of ownership or
receipt of distributions under a Contract depend on the individual circumstances
of each Owner or recipient of the distribution. A competent tax adviser should
be consulted for further information.
VOTING OF FUND SHARES
As long as the Variable Account is registered as a unit investment trust
under the Investment Company Act of 1940 and the assets of the Variable Account
are allocated to Sub-Accounts that are invested in Investment Fund shares, the
Investment Fund shares held in the Sub-Accounts will be voted by the Company in
accordance with instructions received from the person having voting interests
under the Contracts as described below. If the Company determines pursuant to
applicable law or regulation that Investment Fund shares held in the
Sub-Accounts and attributable to the Contracts need not be voted pursuant to
instructions received from persons otherwise having the voting interests, then
the Company may vote such Investment Fund shares held in the Sub-Accounts in its
own right.
Before the Annuity Commencement Date, the Owner shall have the voting
interest with respect to the Investment Fund shares attributable to the
Contract.
On and after the Annuity Commencement Date, the person then entitled to
receive annuity payments shall have the voting interest with respect to the
Investment Fund shares. Such voting interest will generally decrease during the
annuity payout period.
Any Investment Fund shares held in the Variable Account for which we do not
receive timely voting instructions, or which are not attributable to Contract
Owners, will be voted by us in proportion to the instructions received from all
Contract Owners having a voting interest in the Investment Fund. Any Investment
Fund shares held by us or any of our affiliates in general accounts will, for
voting purposes, be allocated to all separate accounts having voting interests
in the Investment Fund in proportion to each account's voting interest in the
respective Investment Fund and will be voted in the same manner as are the
respective account's vote.
All Investment Fund proxy material will be sent to persons having voting
interests together with appropriate forms which may be used to give voting
instructions. Persons entitled to voting interests and the number of votes which
they may cast shall be determined as of a record date, to be selected by the
Company, not more than 90 days before the meeting of the applicable Fund.
Persons having voting interests under the Contracts as described above will
not, as a result thereof, have voting interests with respect to meetings of the
stockholders of the Company.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be sold by licensed insurance agents in those states
where the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
The Contracts will be distributed by the General Distributor, Northstar
Distributors, Inc., Two Pickwick Plaza, Greenwich, Connecticut 06830, which is
an affiliate of the Company. Commissions and other distribution compensation
will be paid by the Company. Generally such payments will not exceed 7.00% of
the purchase payments. In some cases a trail commission based on the Contract
Value may also be paid.
REVOCATION
The Contract Owner may revoke the Contract at any time between the date of
Application and the date 10 days after receipt of the Contract and receive a
refund of the Contract Value unless otherwise required by state and/or federal
law. All Individual Retirement Annuity refunds will be return of purchase
payments. In order to revoke the Contract, it must be mailed or delivered to the
Company's Contract Administrator at the mailing address shown below or the agent
through whom it was purchased. Mailing or delivery must occur on or before 10
days after receipt of the Contract for revocation to be effective. In order to
revoke the Contract if it has not been received, written notice must be mailed
or delivered to the Company's Contract Administrator at the mailing address
shown below.
ReliaStar Life Insurance Company
c/o Annuity Service Center
P.O. Box 419275
Kansas City, Missouri 64199-6275
The liability of the Variable Account under this provision is limited to
the Contract Value in each Sub-Account on the date of revocation. Any additional
amounts refunded to the Contract Owner will be paid by the Company.
REPORTS TO OWNERS
The Company will mail to the Contract Owner, at the last known address of
record at the home office of the Company, at least annually after the first
Contract Year, a report containing such information as may be required by any
applicable law or regulation and a statement showing the Contract Value.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party.
The Company is a defendant in various lawsuits in connection with the normal
conduct of its operations. In the opinion of management, the ultimate resolution
of such litigation will not result in any significant liability to the Company.
FINANCIAL STATEMENTS AND EXPERTS
The financial statements of Northstar Variable Account as of December 31,
1996 and 1995, and for the period from May 6, 1994 to December 31, 1994 and the
annual financial statements of ReliaStar Life Insurance Company, which are
incorporated by reference in the Statement of Additional Information, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
FURTHER INFORMATION
A Registration Statement under the Securities Act of 1933 has been filed
with the Securities and Exchange Commission, with respect to the Contracts
described herein. The Prospectus does not contain all of the information set
forth in the Registration Statement and exhibits thereto, to which reference is
hereby made for further information concerning the Variable Account, the Company
and the Contracts. The information so omitted may be obtained from the
Commission's principal office in Washington, D.C., upon payment of the fee
prescribed by the Commission, or examined there without charge. Statements
contained in this Prospectus as to the provisions of the Contracts and other
legal documents are summaries, and reference is made to the documents as filed
with the Commission for a complete statement of the provisions thereof.
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Introduction........................................................... S-2
Administration of the Contracts........................................ S-2
Custody of Assets...................................................... S-3
Independent Auditors................................................... S-3
Distribution of the Contracts.......................................... S-3
Calculation of Yield and Return........................................ S-4
Financial Statements................................................... S-9
- --------------------------------------------------------------------------------
If you would like to receive a copy of the Northstar Variable Account Statement
of Additional Information, please call (800) 621-3750 or return this request to:
RELIASTAR LIFE INSURANCE COMPANY
C/O ANNUITY SERVICE CENTER
P.O. BOX 419275
KANSAS CITY, MISSOURI 64141-6275
Your name_______________________________________________________________________
Address_________________________________________________________________________
City State Zip__________________________________________________________________
Please send me a copy of the Northstar Variable Account Statement of Additional
Information.
- --------------------------------------------------------------------------------
APPENDIX A
THE FIXED ACCOUNT
CONTRIBUTIONS UNDER THE FIXED PORTION OF THE CONTRACT AND TRANSFERS TO THE
FIXED PORTION BECOME PART OF THE GENERAL ACCOUNT OF THE COMPANY (THE "FIXED
ACCOUNT"), WHICH SUPPORTS INSURANCE AND ANNUITY OBLIGATIONS. BECAUSE OF
EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS IN THE FIXED ACCOUNT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") NOR IS THE FIXED
ACCOUNT REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF
1940 ("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTEREST
THEREIN ARE GENERALLY SUBJECT TO THE PROVISIONS OF THE 1933 OR 1940 ACTS AND THE
COMPANY 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 PORTION OF THE CONTRACT. DISCLOSURES REGARDING THE FIXED PORTION OF
THE ANNUITY CONTRACT AND THE FIXED ACCOUNT, HOWEVER, MAY BE SUBJECT TO CERTAIN
GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO THE
ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN PROSPECTUSES.
The Fixed Account is made up of all of the general assets of the Company
other than those allocated to any separate account. Purchase payments will be
allocated to the Fixed Account as elected by the Owner at the time of purchase
or as subsequently changed. The Company will invest the assets of the Fixed
Account in those assets chosen by the Company and allowed by applicable law.
Investment income from such Fixed Account assets will be allocated between the
Company and the Contracts participating in the Fixed Account, in accordance with
the terms of such Contracts.
Fixed annuity payments made to Annuitants under the Contract will not be
affected by the mortality experience (death rate) of persons receiving such
payments or of the general population. The Company assumes this "mortality risk"
by virtue of annuity rates incorporated in the Contract which cannot be changed.
In addition, the Company guarantees that it will not increase charges for
maintenance of the Contracts regardless of its actual expenses.
Investment income from the Fixed Account allocated to the Company includes
compensation for mortality and expense risks borne by the Company in connection
with Fixed Account Contracts. The Company expects to derive a profit from this
compensation. The amount of such investment income allocated to the Contracts
will vary from year to year in the sole discretion of the Company. However, the
Company guarantees that it will credit interest at a rate of not less than 3%
per year, compounded annually, to amounts allocated to the Fixed Account under
the Contract. The Company may credit interest at a rate in excess of 3% per
year; however, the Company is not obligated to credit any interest in excess of
3% per year. There is no specific formula for the determination of excess
interest credits. Such credits, if any, will be determined by the Company based
on information as to expected investment yields. Some of the factors that the
Company may consider in determining whether to credit interest to amounts
allocated to the Fixed Account and the amount thereof, are general economic
trends, rates of return currently available and anticipated on the Company's
investments, regulatory and tax requirements and competitive factors. ANY
INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF 3% PER
YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF THE COMPANY. THE OWNER ASSUMES
THE RISK THAT INTEREST CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT EXCEED THE
MINIMUM GUARANTEE OF 3% FOR ANY GIVEN YEAR.
The Company is aware of no statutory limitations on the maximum amount of
interest it may credit, and the Board of Directors has set no limitations.
However, inherent in the Company's exercise of discretion in this regard is the
equitable allocation of distributable earnings and surplus among its various
policyholders and Contract Owners and to its stockholders.
Excess interest, if any, will be credited on the Fixed Account Contract
Value. The Company guarantees that, at any time, the Fixed Account Contract
Value will not be less than the amount of purchase payments and transfers
allocated to the Fixed Account, plus interest at the rate of 3% per year,
compounded annually, plus any additional interest which the Company may, in its
discretion, credit to the Fixed Account, less the sum of all annual
administrative or surrender charges levied, any applicable premium taxes, and
less any amounts surrendered or transferred from the Fixed Account. If the Owner
surrenders the Contract the amount available from the Fixed Account will be
reduced by any applicable surrender charge and annual administration charge.
(See "Charges Made by the Company" on page 12).
[GRAPHIC OMITTED] NORTHSTAR VARIABLE ACCOUNT
RELIASTAR LIFE INSURANCE COMPANY INDIVIDUAL DEFERRED
VARIABLE/FIXED ANNUITY CONTRACT
GENERAL DISTRIBUTOR
Northstar Distributors, Inc.
Two Pickwick Plaza
Greenwich, Connecticut 06830
NORTHSTAR VARIABLE ACCOUNT
INDIVIDUAL DEFERRED
VARIABLE/FIXED ANNUITY CONTRACT
P R O S P E C T U S
STATEMENT OF ADDITIONAL INFORMATION
----------
INDIVIDUAL DEFERRED VARIABLE/FIXED ANNUITY CONTRACTS
ISSUED BY
NORTHSTAR VARIABLE ACCOUNT
(Formerly Northstar NWNL Variable Account)
AND
RELIASTAR LIFE INSURANCE COMPANY
(Formerly Northwestern National Life Insurance Company)
This Statement of Additional Information is not a Prospectus, but should be
read in conjunction with the Prospectus, dated April 30, 1997 (the "Prospectus")
relating to the Individual Deferred Variable/Fixed Annuity Contracts issued by
Northstar Variable Account (the "Variable Account") and ReliaStar Life Insurance
Company (the "Company"). Much of the information contained in this Statement of
Additional Information expands upon subjects discussed in the Prospectus. A copy
of the Prospectus may be obtained from Northstar Distributors, Inc., Two
Pickwick Plaza, Greenwich, Connecticut 06830.
Capitalized terms used in this Statement of Additional Information that are
not otherwise defined herein shall have the meanings given to them in the
Prospectus.
-------------
TABLE OF CONTENTS
Page
----
Introduction............................................................... S-2
Administration of the Contracts............................................ S-2
Custody of Assets.......................................................... S-3
Independent Auditors....................................................... S-3
Distribution of the Contracts.............................................. S-3
Calculation of Yield and Return............................................ S-4
Financial Statements ..................................................... S-9
---------
The date of this Statement of Additional Information is April 30, 1997.
INTRODUCTION
The Individual Deferred Variable/Fixed Annuity Contracts described in the
Prospectus are flexible purchase payment contracts. The Contracts are sold to or
in connection with retirement plans which may or may not qualify for special
federal tax treatment under the Internal Revenue Code. (See "Federal Tax Status"
on page 20 of the Prospectus.) Annuity payments under the Contracts are deferred
until a selected later date.
Purchase payments may be allocated to one or more of the available
Sub-Accounts of the Variable Account, a separate account of the Company, and/or
to the Fixed Account (which is the general account of the Company).
Purchase payments allocated to one or more of the available Sub-Accounts of
the Variable Account, as selected by the Contract Owner, will be invested in
shares at net asset value of one or more of a group of investment funds (the
"Investment Funds"). The Investment Funds are currently the four portfolios of
the Northstar Variable Trust which are managed by Northstar Investment
Management Corporation of Greenwich, Connecticut, which is an affiliate of the
Company, and the two portfolios of The Variable Insurance Products Fund and the
two portfolios of the Variable Insurance Products Fund II which are managed by
Fidelity Management and Research Company of Boston, Massachusetts. Each
Investment Fund pays its investment adviser certain fees charged against the
assets of the Investment Fund. The Variable Account Contract Value and the
amount of variable annuity payments will vary, primarily based on the investment
performance of the Investment Funds whose shares are held in the Sub-Accounts
selected. (For more information about the Investment Funds, see "Investments of
the Variable Account" on page 10 of the Prospectus.)
Purchase payments allocated to the Fixed Account, which is the general
account of the Company, will be credited with interest at a rate not less than
3% per year. Interest credited in excess of 3%, if any, will be determined at
the sole discretion of the Company. That part of the Contract relating to the
Fixed Account is not registered under the Securities Act of 1933 and the Fixed
Account is not subject to the restrictions of the Investment Company Act of
1940. (See Appendix A of the Prospectus.)
ADMINISTRATION OF THE CONTRACTS
The Company has entered into a contract with Continuum Administrative
Services Corporation (formerly known as Vantage Computer Systems, Inc.), Kansas
City, Missouri ("CASC") under which CASC as assignee of the Company's contract
with State Street Bank and Trust Company, Boston, Massachusetts has agreed to
perform certain administrative functions relating to the Contracts and the
Variable Account. These functions include, among other things, maintaining the
books and records of the Variable Account and the Sub-Accounts, and maintaining
records of the name, address, taxpayer identification number, Contract number,
type of Contract issued to each Owner, Contract Value and other pertinent
information necessary to the administration and operation of the Contracts. For
the years ended December 31, 1994, 1995 and 1996, the Company paid fees to CASC
under the agreement in the amount of $1,711, $4,249 and $12,484, respectively,
in connection with administration of the Contracts.
CUSTODY OF ASSETS
The Company, whose address appears on the cover of the Prospectus,
maintains custody of the assets of the Variable Account.
INDEPENDENT AUDITORS
The financial statements of Northstar Variable Account and ReliaStar Life
Insurance Company, which are incorporated by reference in the Statement of
Additional Information, have been audited by Deloitte & Touche LLP, 400 One
Financial Plaza, 120 South 6th Street, Minneapolis, Minnesota 55402, independent
auditors, as stated in their reports which are incorporated herein by reference,
and have been so incorporated in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be sold by licensed insurance agents in those states
where the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
The Contracts will be distributed by the General Distributor, Northstar
Distributors, Inc., which is an affiliate of the Company. For the year ended
December 31, 1994, General Distributor was paid fees by the Company with respect
to the distribution of the Contracts, in the amount of $4,000. For the year
ended December 31, 1995, General Distributor was not paid any fees by the
Company with respect to the distribution of the Contracts. For the year ended
December 31, 1996, General Distributor was paid $22,927.
The offering of the Contracts is continuous.
There are no special purchase plans or exchange privileges not described in
the Prospectus. (See "Transfers" at page 17 of the Prospectus.)
No deduction for a sales charge is made from the purchase payments for the
Contracts. However, if part or all of a Contract's value is surrendered,
surrender charges (which may be deemed to be contingent deferred sales charges)
may be made by the Company. The method used to determine the amount of such
charge is described in the Prospectus under the heading "Charges Made By The
Company - Surrender Charge (Contingent Deferred Sales Charge)" on page 12.
Any of the charges under the Contract, as well as the minimum purchase
payment requirements set forth in the Prospectus, may be reduced due to special
circumstances that result in lower sales, administrative or mortality expenses.
For example, special circumstances may exist in connection with group or
sponsored arrangements, sales to the Company's policy and Contract Owners or
those of affiliated insurance companies, or sales to employees or clients of the
Company's affiliates. The amount of any reductions will reflect the reduced
sales effort and administrative costs resulting from, or the different mortality
experience expected as a result of, the special circumstances. Reductions will
not be unfairly discriminatory against any person, including the affected policy
or Contract owners and owners of all other contracts funded by the Variable
Account.
CALCULATION OF YIELD AND RETURN
CURRENT YIELD AND EFFECTIVE YIELD. Current yield and effective yield will
be calculated only for the VIP Money Market Portfolio Sub-Account.
The current yield is based on a seven-day period (the "base period") and is
calculated by determining the "net change in value" on a hypothetical account
having a balance of one Accumulation Unit at the beginning of the period,
dividing the net change in account value by the value of the account at the
beginning of the base period to obtain the base period return, and multiplying
the base period return by 365/7 with the resulting yield figure carried to the
nearest hundredth of one percent. The effective yield is computed in a similar
manner, except that the base period return is compounded by adding 1, raising
the sum to a power equal to 365 divided by 7, and subtracting 1 from the result,
according to the following formula:
EFFECTIVE YIELD = [(Base Period Return + 1)^ 365/7 ] - 1
Net changes in value of a hypothetical account will include net investment
income of the account (accrued daily dividends as declared by the VIP Money
Market Portfolio, less daily expense and contract charges to the account) for
the period, but will not include realized or unrealized gains or losses on its
underlying fund shares.
The VIP Money Market Portfolio Sub-Account's yield and effective yield will
vary in response to any fluctuations in interest rates and expenses of the
Sub-Account.
The yield and effective yield of the Sub-Account for the seven day period
ended December 31, 1996 were as follows:
Yield: 3.83%
Effective Yield: 3.90%
STANDARDIZED YIELD. A standardized yield computation may be used for bond
Sub-Accounts. The yield quotation will be based on a recent 30 day (or one
month) period, and is computed by dividing the net investment income per
Accumulation Unit earned during the period by the maximum offering price on the
last day of the period according to the following formula:
YIELD = 2[((((a - b)/cd) + 1)^6) - 1]
Where:
a = net investment earned during the period by the Fund or Portfolio
attributable to shares owned by the Sub-Account.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of Accumulation Units outstanding during
the period.
d = the maximum offering price per Accumulation Unit on the last day of
the period.
Yield on each Sub-Account is earned from dividends declared and paid by the
underlying Fund or Portfolio, which are automatically reinvested in Fund or
Portfolio shares.
Following are the standardized yields for the bond sub-accounts for the
month ended December 31, 1996:
Northstar Northstar
Multi-Sector High Yield
Bond Fund Bond Fund
--------- ---------
6.83% 7.81%
AVERAGE ANNUAL TOTAL RETURNS. From time to time, sales literature or
advertisements may also quote average annual total returns for one or more of
the Sub-Accounts for various periods of time.
Average annual total returns represent the average annual compounded rates
of return that would equate an initial investment of $1,000 under a Contract to
the redemption value of that investment as of the last day of each of the
periods. The ending date for each period for which total return quotations are
provided will be for the most recent month-end practicable, considering the type
and media of the communication and will be stated in the communication.
Average annual total returns will be calculated using Sub-Account unit
values which the Company calculates on each Valuation Date based on the
performance of the Sub-Account's underlying Portfolio, the deductions for the
Mortality and Expense Risk Premiums, the Administration Charge, and the Annual
Contract Charge. The calculation assumes that the Annual Contract Charge is $35
per year per Contract deducted at the end of each Contract Year. For purposes of
calculating average annual total return, an average per dollar Annual Contract
Charge attributable to the hypothetical account for the period is used. The
calculation also assumes surrender of the Contract at the end of the period for
the return quotation. Total returns will therefore reflect a deduction of the
Surrender Charge for any period less than seven years. The total return will
then be calculated according to the following formula:
TR = ((ERV/P)^1/N) - 1
Where:
TR = The average annual total return net of Sub-Account recurring
charges.
ERV = the ending redeemable value (net of any applicable surrender charge)
of the hypothetical account at the end of the period.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
Such average annual total return information for the Sub-Accounts is as
follows:
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
DATE OF INCEPTION
FOR THE 1-YEAR PERIOD FOR THE 5-YEAR PERIOD FOR THE 10-YEAR PERIOD OF SUB-ACCOUNT
SUB-ACCOUNT ENDED 12/31/96 ENDED 12/31/96 ENDED 12/31/96 TO 12/31/96
- ----------- -------------- -------------- -------------- -----------
<S> <C> <C> <C> <C>
Northstar Income and Growth Fund
(Sub-Account Inception: 05/06/94) 5.86% N/A N/A 10.70%
Northstar Growth Fund
(Sub-Account Inception: 05/06/94) 15.03% N/A N/A 16.00%
Northstar Multi-Sector Bond Fund
(Sub-Account Inception: 05/06/94) 5.35% N/A N/A 8.12%
Northstar High Yield Bond Fund
(Sub-Account Inception: 05/06/94) 8.45% N/A N/A 9.77%
VIP Overseas Portfolio
(Sub-Account Inception: 05/01/95) 5.29% N/A N/A 3.64%
VIP II Asset Manager Portfolio
(Sub-Account Inception: 05/01/95) 6.66% N/A N/A 5.27%
VIP II Index 500 Portfolio
(Sub-Account Inception: 05/01/95) 14.76% N/A N/A 12.65%
</TABLE>
From time to time, sales literature or advertisements may quote average
annual total returns for periods prior to the date the Sub-Accounts commenced
operations. Such performance information for the Sub-Accounts will be calculated
based on the performance of the Portfolios and the assumption that the
Sub-Accounts were in existence for the same periods as those indicated for the
Portfolios, with the level of Contract charges currently in effect.
Such average annual total return information for the Sub-Accounts is as
follows:
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
DATE OF INCEPTION
FOR THE 1-YEAR PERIOD FOR THE 5-YEAR PERIOD FOR THE 10-YEAR PERIOD OF SUB-ACCOUNT
SUB-ACCOUNT ENDED 12/31/96 ENDED 12/31/96 ENDED 12/31/96 TO 12/31/96
- ----------- -------------- -------------- -------------- -----------
<S> <C> <C> <C> <C>
Northstar Income and Growth Fund
(Portfolio Inception: 05/06/94) 5.86% N/A N/A 10.70%
Northstar Growth Fund
(Portfolio Inception: 05/06/94) 15.03% N/A N/A 16.00%
Northstar Multi-Sector Bond Fund
(Portfolio Inception: 05/06/94) 5.35% N/A N/A 8.12%
Northstar High Yield Bond Fund
(Portfolio Inception: 05/06/94) 8.45% N/A N/A 9.77%
VIP Overseas Portfolio
(Portfolio Inception: 01/28/87) 5.29% 7.03% N/A 6.36%
VIP II Asset Manager Portfolio
(Portfolio Inception: 09/06/89) 6.66% 9.18% N/A 10.12%
VIP II Index 500 Portfolio
(Portfolio Inception: 08/27/92) 14.76% N/A N/A 14.92%
</TABLE>
The Company may also disclose average annual total returns for the
Investment Funds' Portfolios since their inception, including such disclosure
for periods prior to the date the Variable Account commenced operations.
Such average annual total return information for the Portfolios of the
Investment Funds is as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
DATE OF INCEPTION
FOR THE 1-YEAR PERIOD FOR THE 5-YEAR PERIOD FOR THE 10-YEAR PERIOD OF SUB-ACCOUNT
SUB-ACCOUNT ENDED 12/31/96 ENDED 12/31/96 ENDED 12/31/96 TO 12/31/96
- ----------- -------------- -------------- -------------- -----------
<S> <C> <C> <C> <C>
Northstar Income and Growth Fund
(Portfolio Inception: 05/06/94) 13.80% N/A N/A 13.75%
Northstar Growth Fund
(Portfolio Inception: 05/06/94) 22.78% N/A N/A 18.76%
Northstar Multi-Sector Bond Fund
(Portfolio Inception: 05/06/94) 13.28% N/A N/A 11.27%
Northstar High Yield Bond Fund
(Portfolio Inception: 05/06/94) 16.20% N/A N/A 12.66%
VIP Overseas Portfolio
(Portfolio Inception: 01/28/87) 13.22% 9.13% N/A 7.91%
VIP II Asset Manager Portfolio
(Portfolio Inception: 09/06/89) 14.60% 11.26% N/A 11.70%
VIP II Index 500 Portfolio
(Portfolio Inception: 08/27/92) 22.82% N/A N/A 17.11%
</TABLE>
OTHER TOTAL RETURNS. From time to time, sales literature or advertisements
may quote average annual total returns for the Sub-Accounts that do not reflect
the Surrender Charge. Such performance information may quote average annual
total returns for periods during which the Sub-Accounts were operating and for
periods prior to the date the Sub-Accounts commenced operations. These returns
are calculated in exactly the same way as average annual total returns described
above, except that the ending redeemable value of the hypothetical account for
the period is replaced with an ending value for the period that does not take
into account any charges on amounts surrendered or withdrawn. Such information
is as follows:
<TABLE>
<CAPTION>
RETURNS SINCE DATE SUB-ACCOUNTS COMMENCED OPERATIONS
----------------------------------------------------
FOR THE PERIOD FROM
DATE OF INCEPTION
FOR THE 1-YEAR PERIOD FOR THE 5-YEAR PERIOD FOR THE 10-YEAR PERIOD OF SUB-ACCOUNT
SUB-ACCOUNT ENDED 12/31/96 ENDED 12/31/96 ENDED 12/31/96 TO 12/31/96
- ----------- -------------- -------------- -------------- -----------
<S> <C> <C> <C> <C>
Northstar Income and Growth Fund
(Sub-Account Inception: 05/06/94) 12.16% N/A N/A 12.12%
Northstar Growth Fund
(Sub-Account Inception: 05/06/94) 21.33% N/A N/A 17.31%
Northstar Multi-Sector Bond Fund
(Sub-Account Inception: 05/06/94) 11.65% N/A N/A 9.60%
Northstar High Yield Bond Fund
(Sub-Account Inception: 05/06/94) 14.75% N/A N/A 11.21%
VIP Overseas Portfolio
(Sub-Account Inception: 05/01/95) 11.59% N/A N/A 7.28%
VIP II Asset Manager Portfolio
(Sub-Account Inception: 05/01/95) 12.96% N/A N/A 8.87%
VIP II Index 500 Portfolio
(Sub-Account Inception: 05/01/95) 21.06% N/A N/A 16.09%
</TABLE>
<TABLE>
<CAPTION>
RETURNS INCLUDING PERIOD PRIOR TO DATE SINCE SUB-ACCOUNTS COMMENCED OPERATIONS
------------------------------------------------------------------------------
FOR THE PERIOD FROM
DATE OF INCEPTION
FOR THE 1-YEAR PERIOD FOR THE 5-YEAR PERIOD FOR THE 10-YEAR PERIOD OF SUB-ACCOUNT
SUB-ACCOUNT ENDED 12/31/96 ENDED 12/31/96 ENDED 12/31/96 TO 12/31/96
- ----------- -------------- -------------- -------------- -----------
<S> <C> <C> <C> <C>
Northstar Income and Growth Fund
(Portfolio Inception: 05/06/94) 12.16% N/A N/A 12.12%
Northstar Growth Fund
(Portfolio Inception: 05/06/94) 21.33% N/A N/A 17.31%
Northstar Multi-Sector Bond Fund
(Portfolio Inception: 05/06/94) 11.65% N/A N/A 9.60%
Northstar High Yield Bond Fund
(Portfolio Inception: 05/06/94) 14.75% N/A N/A 11.21%
VIP Overseas Portfolio
(Portfolio Inception: 01/28/87) 11.59% 7.58% N/A 6.36%
VIP II Asset Manager Portfolio
(Portfolio Inception: 09/06/89) 12.96% 9.68% N/A 10.12%
VIP II Index 500 Portfolio
(Portfolio Inception: 08/27/92) 21.06% N/A N/A 15.44%
</TABLE>
The Investment Funds have provided the total return information for the
Portfolios, including the Portfolio total return information used to calculate
the total returns of the Sub-Accounts for periods prior to the inception of the
Sub-Accounts. The Variable Insurance Products Fund and the Variable Insurance
Products Fund II are not affiliated with the Company.
The Company may disclose Cumulative Total Returns in conjunction with the
standard formats described above. The Cumulative Total Returns will be
calculated using the following formula:
CTR = ERV/P - 1
Where:
CTR = the Cumulative Total Return net of Sub-Account recurring charges for
the period.
ERV = the ending redeemable value of the hypothetical investment at the
end of the period.
P = a hypothetical single payment of $1,000.
EFFECT OF THE ANNUAL CONTRACT CHARGE ON PERFORMANCE DATA. The Contract
provides for a $35 Annual Contract Charge to be deducted annually at the end of
each Contract Year, from the Sub-Accounts and the Fixed Account based on the
proportion that the value of each such account bears to the total Contract
Value. For purposes of reflecting the Annual Contract Charge in yield and total
return quotations, the annual charge is converted into an annual charge per
$1,000 invested based on the Annual Contract Charges collected from the average
total assets of the Variable Account and Fixed Account during the calendar year
ending December 31, 1996.
FINANCIAL STATEMENTS
The Statement of Additional Information incorporates by reference Financial
Statements for the Variable Account for the period of May 6, 1994 (the date on
which the Variable Account commenced operations) to December 31, 1996. Deloitte
& Touche LLP serves as independent auditors for the Variable Account. Although
the financial statements are audited, the period they cover is not necessarily
indicative of the longer term performance of the assets in the Variable Account.
The Company's statements of financial condition as of December 31, 1996 and
1995, and the related statements of operations, shareholder's equity and cash
flows for the years ended December 31, 1996 and 1995 which are incorporated by
reference in this Statement of Additional Information, should be considered only
as bearing on the Company's ability to meet its obligations under the Contracts.
They should not be considered as bearing on the investment performance of the
assets held in the Variable Account.
NORTHSTAR VARIABLE ACCOUNT
Independent Auditors' Report*
Statement of Assets and Liabilities*
Statement of Operations and Changes in Contract Owners' Equity*
Notes to Financial Statements*
December 31, 1996
* Incorporated by reference to the Registrant's 1996 Annual Report to
Contract Holders filed on February 23, 1997.
RELIASTAR LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF RELIASTAR FINANCIAL CORP.)
Independent Auditors' Report**
Consolidated Balance Sheets**
Consolidated Statements of Income**
Consolidated Statements of Shareholder's Equity**
Consolidated Statements of Cash Flows**
Notes to Consolidated Financial Statements**
December 31, 1996
** Incorporated by reference to the financial statements contained in the
Prospectus filed as part of Pre-effective Amendment No. 1 to the Form S-6
Registration Statement of Select*Life Variable Account, File No. 333-18517,
filed on March 31, 1997.
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Part A: None
Part B: NORTHSTAR VARIABLE ACCOUNT*
-----------------------------------
Independent Auditors' Report
Statement of Assets and Liabilities, December 31, 1996
Combined Statements of Operations and Changes in
Contract Owners' Equity, Yeares Ended December 31, 1996 and
1995 and for the Period from May 6, 1994 to
December 31, 1994
Notes to Financial Statements
RELIASTAR LIFE INSURANCE COMPANY**
----------------------------------
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1996 and 1995
Consolidated Statements of Operations, Years Ended
December 31, 1996 and 1995
Consolidated Statements of Shareholders' Equity, Years Ended
December 31, 1996 and 1995
Consolidated Statements of Cash Flows, Years Ended
December 31, 1996 and 1995
Notes to Consolidated Financial Statements
(b) Exhibits:
(1) Resolution of the Board of Directors of Depositor changing the name of
Registrant to Northstar Variable Account. Insurance Company
("Depositor") establishing the NSR/NWNL Variable Account
("Registrant") and changing its name to Northstar/NWNL Variable
Account.+
Resolutions of the Board of Directors of Depositor changing the name
of Registrant to Northstar Variable Account.
2. Not Applicable.
3. (a) General Distribuor Agreement between Depositor and Northstar
Distributors, Inc.+
(b) Form of agreement between Depositor and broker-dealers with
respect to the sale of contracts. +
4. Form of Contract.+
5. Contract Application Form.+
6. (a) Amended Articles of Incorporation of Depositor.++
(b) Amended Bylaws of Depositor.++
7. Not Applicable.
8. (a) Agreement with Continuum Administrative Services Corporation
(formerly known as Vantage Computer Systems, Inc.).+
(b) Participation Agreement with Fidelity's Variable Insurance
Products Fund and Fidelity Distributors Corporation and Amendment
numbers 1 through 8.++
(c) Participation Agreement with Fidelity's Variable Insurance
Products Fund II and Fidelity Distributors Corporation and
Amendment numbers 1 through 7.++
(d) Form of Service Agreement and Service Contract with Fidelity
Investments Institutional Operations Company, Inc. dated January
1, 1997.
9. Opinion and consent of Stewart D. Gregg as to the legality of the
securities being registered.
10. Independent Auditors' Consent.
11. Not Applicable.
12. Not Applicable.
13. Schedules for Computation of Performance Quotations.
14. Financial Data Schedule, filed hereto electronically as Exhibit 27
pursuant to Rule 401 of Regulation S-T.
15. Powers of Attorney.++
* Incorporated by reference to the Registrant's 1996 Annual Report to
Contract Holders filed on February 23, 1997.
** Incorporated by reference to the financial statements contained in the
Prospectus filed as part of Pre-effective Amendment No. 1 to the Form S-6
Registration Statement of Select*Life Variable Account, File No. 333-18517,
filed on March 31, 1997 .
+ Incorporated by reference to Post-effective Amendment No. 2 to the
Registrant's Form N-4 Registration Statement, File No. 33-73058, filed on
April 23, 1996.
++ Incorporated by reference to the Form S-6 Registration Statement of
Select*Life Variable Account, File No. 333-18517, filed on December 23,
1996.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES WITH DEPOSITOR
---- ------------------------------------
<S> <C>
John G. Turner Director, Chairman, and Chief Executive Officer
John H. Flittie Director, Vice Chairman, President, and Chief Operating Officer
Susan M. Bergen Secretary
R. Michael Conley Director and Senior Vice President - ReliaStar Employee Benefits
Richard R. Crowl Director, Senior Vice President, and General Counsel
Wayne R. Huneke Director, Senior Vice President, Chief Financial Officer, and Treasurer
William R. Merriam Director and Senior Vice President - ReliaStar Reinsurance Group
Robert C. Salipante Director and Senior Vice President - Personal Financial Operations
Donald L. Swanson Director and Senior Vice President - ReliaStar Retirement Plans
Steven W. Wishart Director, Senior Vice President, and Chief Investment Officer
Kenneth U. Kuk Director and Senior Vice President - ReliaStar Asset Division and Strategic
Marketing
</TABLE>
The principal business address of each of the foregoing directors and
executive officers is 20 Washington Avenue South, Minneapolis, Minnesota 55401.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Registrant is a separate account of Depositor, established by the Board of
Directors of Depositor in 1992 pursuant to the laws of the State of Minnesota.
Depositor is a direct, wholly-owned subsidiary of ReliaStar Financial Corp., a
Delaware Corporation.
A chart identifying the subsidiaries of ReliaStar Financial Corp. and their
relationship to one another, is incorporated by reference to Item 26 of
Post-effective Amendment No. 11 to the Form N-4 Registration Statement of
ReliaStar Bankers Security Variable Annuity Funds M, P, and Q, File No.
33-11489, filed February 28, 1997.
The financial statements of each subsidiary of Depositor, other than those
of the mutual funds, are consolidated with those of Depositor. The financial
statements of the mutual funds are separately filed with the Securities and
Exchange Commission.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of February 28, 1997, there were 183 owners of the Contracts, 82 of
which were owners of qualified contracts.
ITEM 28. INDEMNIFICATION
Reference is hereby made to Section 5.01 of Depositor's Bylaws, filed as an
Exhibit to this Registration Statement. The Bylaws of Depositor mandate
indemnification by Depositor of its directors, officers and certain others,
including directors, officers, employees and agents under certain conditions.
Section 4.01 of the Bylaws of Management mandates indemnification by Management
of its directors and officers under certain conditions. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of Depositor or
Management, pursuant to the foregoing provisions or otherwise, Depositor and
Management have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Depositor of expenses
incurred or paid by a director or officer or controlling person of Depositor or
Management in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person of Depositor or
Management in connection with the securities being registered, Depositor or
Management, as the case may be, will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether or not such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
An insurance company blanket bond is maintained providing $25,000,000
coverage for Depositor and Management, subject to a $500,000 deductible.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Northstar Distributors, Inc. ("Distributors"), the principal
underwriter of the Contracts, also acts as the principal underwriter of the
Northstar Variable Trust, an open-end, diversified management investment company
registered under the Investment Company Act of 1940.
(b) The directors and officers of Distributors are as follows:
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES WITH DISTRIBUTORS
---- ---------------------------------------
<S> <C>
John H. Flittie Director
Mark L. Lipson Director and Chairman
Robert J. Adler President
John G. Turner Director
Stephen Vondrak Vice President
Mark Sfarra Vice President
Gertrude Purus Vice President
Richard Francis Regional Vice President
Richard Galloway Regional Vice President
Hyman Glasman Regional Vice President
Charles Dolce Regional Vice President
Mark Blinder Regional Vice President
Dan Leonard Regional Vice President
Steven K. O'Brien Regional Vice President
David Linton Regional Vice President
Scott Castleberry Regional Vice President
Agnes Mullady Vice President and Treasurer
</TABLE>
The principal business address of each of the foregoing directors and
executive officers, except Messrs. Flittie, Turner and Huneke, is Two Pickwick
Plaza, Greenwich, Connecticut, 06830. The principal business address for Messrs.
Flittie, Turner and Huneke, is 20 Washington Avenue South, Minneapolis,
Minnesota 55401.
(c) For the year ended December 31, 1996, Northstar Distributors received
$22,927 in connection with distribution of the Contracts.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts and records of Registrant are located at the offices of
Depositor at 20 Washington Avenue South, Minneapolis, Minnesota 55401 and at the
offices of Continuum Administrative Services Corporation (formerly known as
Vantage Computer Systems, Inc.), 301 West 11th Street, Kansas City, Missouri
64105.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
Registrant will file a post-effective amendment to this Registration
Statement as frequently as is necessary to ensure that the audited financial
statements in this Registration Statement are never more than 16 months old for
so long as payments under the Contracts may be accepted.
Registrant will include either (1) as part of any application to purchase a
Contract offered by the Prospectus, a space that an applicant can check to
request a Statement of Additional Information, or (2) a postcard or similar
written communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional Information.
Registrant will deliver any Statement of Additional Information and any
financial statements required to be made available under this form promptly upon
written or oral request.
The Company and the Variable Account rely on a no-action letter issued by
the Division of Investment Management to the American Council of Life Insurance
on November 28, 1988 and represent that the conditions enumerated therein have
been or will be compiled with.
The fees and charges deducted under the Contract in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by ReliaStar Life Insurance Company.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Registrant certifies that it meets all of the requirements of
effectiveness of this Amendment to the Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has caused this Amendment to the
Registration Statement to be signed on its behalf, in the City of Minneapolis
and State of Minnesota, on this 18th day of April, 1997.
NORTHSTAR VARIABLE ACCOUNT
(Registrant)
By RELIASTAR LIFE INSURANCE COMPANY
(Depositor)
By /S/ JOHN G. TURNER
-------------------------
John G. Turner, Chairman
and Chief Executive Officer
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Depositor has caused this Amendment to the Registration Statement to be
signed on its behalf, in the City of Minneapolis and State of Minnesota, on this
18th day of April, 1997.
RELIASTAR LIFE INSURANCE COMPANY
(Depositor)
By /S/ JOHN G. TURNER
---------------------------
John G. Turner, Chairman
and Chief Executive Officer
As required by the Securities Act of 1933, this Amendment to the Registration
Statement has been signed on this 18th day of April, 1997 by the following
directors and officers of Depositor in the capacities indicated:
/S/ JOHN G. TURNER Chairman and Chief Executive Officer
------------------
John G. Turner
/S/WAYNE R. HUNEKE Senior Vice President, Chief Financial
------------------ Officer and Treasurer
Wayne R. Huneke
/S/ CHRIS D. SCHREIER Second Vice President and Controller
---------------------
Chris D. Schreier
R. Michael Conley Wayne R. Huneke Robert C. Salipante
Richard R. Crowl Kenneth U. Kuk Donald L. Swanson
John H. Flittie William R. Merriam John G. Turner
Steven W. Wishart
A majority of the Board of Directors
Stewart D. Gregg, by signing his name hereto, does hereby sign this document on
behalf of each of the above-named directors of ReliaStar Life Insurance Company
pursuant to powers of attorney duly executed by such persons.
/S/ STEWART D. GREGG
----------------------------------
Stewart D. Gregg, Attorney-In-Fact
EXHIBIT INDEX
(b) Exhibits:
1. Resolution of the Board of Directors of Depositor changing the name of
Registrant to Northstar Variable Account.
8(d).Form of Service Agreement and Service Contract with Fidelity Investments
Institutional Operations Company, Inc. dated January 1, 1997.
9. Opinion and consent of Stewart D. Gregg as to the legality of the
securities being registered.
10. Independent Auditors' Consent of Deloitte & Touche LLP.
13. Schedules for Computation of Performance Quotations.
14. Financial Data Schedule, filed hereto electronically as Exhibit 27 pursuant
to Rule 401 of Regulation S-T.
NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY
BOARD RESOLUTIONS
WHEREAS, Effective August 1, 1996 the name of Northwestern National Life
Insurance Company (the "Corporation") will be changed to ReliaStar Life
Insurance Company;
WHEREAS, The Corporation has determined that it is in its best interest to
change the names of its separate accounts in accordance with the Corporation's
new name;
NOW, THEREFORE, BE IT RESOLVED, That the names of the Corporation's
separate accounts be changed as follows, effective August 1, 1996:
NAME PRIOR TO AUGUST 1, 1996 NAME EFFECTIVE AUGUST 1, 1996
- ---------------------------- -----------------------------
MFS/NWNL Variable Account MFS/ReliaStar Variable Account
NWNL Select Variable Account ReliaStar Select Variable Account
Northstar/NWNL Variable Account Northstar Variable Account
NWNL Variable Annuity Account B ReliaStar Variable Annuity Account B
FURTHER RESOLVED, That the officers of the Corporation are hereby
authorized to execute or cause to be executed all such documents, and to take
all such other actions as such officers may deem necessary, to give effect to
the foregoing resolution.
SERVICE CONTRACT
WITH RESPECT TO SHARES OF:
( ) Variable Insurance Products Fund - High Income Portfolio
( ) Variable Insurance Products Fund - Equity-Income Portfolio
( ) Variable Insurance Products Fund - Growth Portfolio
( ) Variable Insurance Products Fund - Overseas Portfolio
( ) Variable Insurance Products Fund II - Investment Grade Bond Portfolio
( ) Variable Insurance Products Fund II - Asset Manager Portfolio
( ) Variable Insurance Products Fund II - Contrafund Portfolio
( ) Variable Insurance Products Fund II - Asset Manager: Growth Portfolio
( ) Variable Insurance Products Fund III - Growth Opportunities Portfolio
( ) Variable Insurance Products Fund III - Balanced Portfolio
( ) Variable Insurance Products Fund III - Growth & Income Portfolio
To Fidelity Distributors Corporation:
We desire to enter into a Contract with you for activities in connection with
the distribution of shares and the servicing of shareholders of the Fund noted
above (the "Fund") of which you are the principal underwriter as defined in the
Investment Company Act of 1940 (the "Act") and for which you are the agent for
the continuous distribution of shares.
THE TERMS AND CONDITIONS OF THIS CONTRACT ARE AS FOLLOWS:
1. We shall provide distribution and certain shareholder services for our
clients who own Fund shares ("clients"), which services may include, without
limitations: sale of shares of the Fund; answering client inquiries regarding
the Fund; assistance to clients in changing dividend options, account
designations and addresses; performance of subaccounting; processing purchase
and redemption transactions, including automatic investment and redemption of
client account cash balances; providing periodic statements showing a client's
account balance and the integration of such statements with other transactions;
arranging for bank wires; and providing such other information and services as
you reasonably may request.
2. We shall provide such office space and equipment, telephone facilities and
personnel (which may be all or any part of the space, equipment and facilities
currently used in our business, or all or any personnel employed by us) as is
necessary or beneficial for providing information and services to shareholders
of the Fund, and to assist you in servicing accounts of clients.
3. We agree to indemnify and hold you, the Fund, and the Fund's adviser and
transfer agent harmless from any and all direct or indirect liabilities or
losses resulting from requests, directions, actions or inactions, of or by us or
our officers, employees or agents regarding the purchase, redemption, transfer
or registration of shares for our clients. Such indemnification shall survive
the termination of this Contract.
Neither we nor any of our officers, employees or agents are authorized to make
any representation concerning Fund shares except those contained in the then
current Fund Prospectus, copies of which will be supplied by you to us; and we
shall have no authority to act as agent for the Fund or for you.
4. In consideration of the services and facilities described herein, we shall be
entitled to receive, and you shall cause to be paid to us by yourself or by
Fidelity Management & Research Company, investment adviser of the Fund, such
fees as are set forth in the accompanying "Fee Schedule for Qualified
Recipients." We understand that the payment of such fees has been authorized
pursuant to a Service Plan approved by the Board of Trustees of the Fund, and
those Trustees who are not "interested persons" of the Fund (as defined in the
Act) and who have no direct or indirect financial interest in the operation of
the Service Plan or in any agreements related to the Service Plan (hereinafter
referred to as "Qualified Trustees"), and shareholders of the Fund, that such
fees will be paid out of the fees paid to the Fund's investment adviser, said
adviser's past profits or any other source available to said adviser; that the
cost of the Fund for such fees shall not exceed the amount of the advisory and
service fee; and that such fees are subject to change during the term of this
Contract and shall be paid only so long as this Contract is in effect.
5. We agree to conduct our activities in accordance with any applicable federal
or state laws, including securities laws and any obligation thereunder to
disclose to our clients the receipt of fees in connection with their investment
in the Fund.
6. You reserve the right, at your discretion and without notice, to suspend the
sale of shares or withdraw the sale of shares of the Fund.
7. This Contract shall continue in force for one year from the effective date
(see below), and thereafter shall continue automatically for successive annual
periods, provided such continuance is specifically subject to termination
without penalty at any time if a majority of the Fund's Qualified Trustees vote
to terminate or not to continue the Service Plan. This Contract is also
terminable without penalty at any time the Service Plan is terminated by vote of
a majority of the Fund's outstanding voting securities upon 60 days' written
notice thereof to us. This Contract may also be terminated by us, for any
reason, upon 15 days' written notice to you. Notwithstanding anything contained
herein, in the event that the Service Plan shall terminate or we shall fail to
perform the distribution and shareholder servicing functions contemplated by
this Contract, such determination to be made in good faith by the Fund or you,
this Contract is terminable effective upon receipt of notice thereof by us. This
Contract will also terminate automatically in the event of its assignment (as
defined in the Act).
8. All communications to you shall be sent to you at your offices, 82 Devonshire
Street, Boston, MA 02109. Any notice to us shall be duly given if mailed or
telegraphed to us at the address shown in this Contract.
9. This Contract shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.
Very truly yours,
________________________________________________________________________________
Name of Qualified Recipient (Please Print or Type)
________________________________________________________________________________
Street City State Zip Code
By:_____________________________________________________________________________
Authorized Signature
Date:________________________
NOTE: Please return two signed copies of this Service Contract to Fidelity
Distributors Corporation. Upon acceptance, one countersigned copy will be
returned to you/
FOR INTERNAL USE ONLY:
EFFECTIVE DATE: JANUARY 1, 1997
SERVICE AGREEMENT
This Agreement is entered into and effective as of the 1st day of January,
1997, by and between FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC.
("FIIOC") and RELIASTAR LIFE INSURANCE COMPANY, ("Company").
WHEREAS, FIIOC provides transfer agency and other services to Fidelity's
Variable Insurance Products Fund, Variable Insurance Products Fund II and
Variable Insurance Products Fund III (collectively "Funds"); and
WHEREAS, the services provided by FIIOC on behalf of the Funds include
responding to inquires about the Funds, including the provision of information
about the Funds' investment objectives, investment policies, portfolio holdings,
etc.; and
WHEREAS, Company, ReliaStar Bankers Security Life Insurance Company and
Northern Life Insurance Company (together "Affiliates") hold shares of the Funds
in order to fund certain variable annuity contracts, group annuity contracts,
and/or variable life insurance policies, the beneficial interests in which are
held by individuals, plan trustees, or others who look to Affiliates to provide
information about the Funds similar to the information provided by FIIOC; and
WHEREAS, Affiliates and one or more of the Funds have entered into one or
more Participation Agreements, under which Affiliates agree not to provide
information about the Funds except for information provided by the Funds or
their designees; and
WHEREAS, FIIOC desires that Company shall cause Affiliates to be able to
respond to inquiries about the Funds from individual variable annuity owners,
participants in group annuity contracts issued by Affiliates and owners and
participant under variable life insurance polices issued by Affiliates, and
prospective customers for any of the above; and
WHEREAS, FIIOC and Company recognize that Affiliates' efforts in responding
to customer inquiries will reduce the burden that such inquires would place on
FIIOC should such inquiries be directed to FIIOC; and
WHEREAS, FIIOC and Company have previously entered into a similar agreement
and are desirous of replacing said agreement with a new agreement.
NOW, THEREFORE, the parties do agree as follows:
1. INFORMATION TO BE PROVIDED TO AFFILIATES. FIIOC agrees to provide to
Affiliates, on a periodic basis, directly or through a designee, information
about the Funds' investment objectives, investment policies, portfolio holdings,
performance, etc. The content and format of such information shall be as FIIOC,
in its sole discretion, shall choose. FIIOC may change the format and/or content
of such informational reports, and the frequency with which such information is
provided. For purposes of Section 4.2 of each of Affiliates' Participation
Agreement(s) with the Funds, FIIOC represents that it is the designee of the
Funds, and Affiliates may therefore use the information provided by FIIOC
without seeking additional permission from the Funds.
2. USE OF INFORMATION BY AFFILIATES. Affiliates may use the information
provided by FIIOC in communications to individuals, plan trustees, or others who
have legal title or beneficial interest in the annuity or life insurance
products issued by Affiliates, and to prospective purchasers of such products or
beneficial interests thereunder. If such information is contained as part of
larger pieces of sales literature, advertising, etc., such pieces shall be
furnished for review to the Funds in accordance with the terms of Affiliates'
Participation Agreements with the Funds. Nothing herein shall give Affiliates
the right to expand upon, reformat or otherwise alter the information provided
by FIIOC. Affiliates acknowledge that the information, provided them by FIIOC
may need to be supplemented with additional qualifying information, regulatory
disclaimers, or other information before it may be conveyed to persons outside
Affiliates.
3. COMPENSATION TO COMPANY. In recognition of the fact that Company will
cause Affiliates to respond to inquiries that otherwise would be handled by
FIIOC, FIIOC agrees to pay the Affiliates, in proportion to their Fund holdings,
a quarterly fee computed as follows:
At the close of each calendar quarter, FIIOC will determine the Average
Daily Assets held in the Funds by Affiliates. Average Daily Assets shall be the
sum of the daily assets for each calendar day in the quarter divided by the
number of calendar days in the quarter. The Average Daily Assets shall be
multiplied by 0.0004 (4 basis points) and that sum shall be divided by four. The
resulting number shall be the quarterly fee for that quarter, which shall be
paid to Company during the following month.
Should any Participation Agreement(s) between an Affiliate and any Fund(s)
be terminated effective before the last day of a quarter, Company shall be
entitled to a fee for that portion of the quarter during which the Participation
Agreement was still in effect, unless such termination is due to misconduct on
the part of the Affiliate. For such a stub quarter, Average Daily Assets shall
be the sum of the daily assets for each calendar day in the quarter through and
including the date of termination of the Participation Agreement(s), divided by
the number of calendar days in that quarter for which the Participation
Agreement was in effect. Such Average Daily Assets shall be multiplied by 0.0004
(4 basis points) and that number shall be multiplied by the number of days in
such quarter that the Participation Agreement was in effect, then divided by
three hundred sixty-five. The resulting number shall be the quarterly fee for
the stub quarter, which shall be paid to Company during the following month.
Notwithstanding the foregoing, compensation for each calendar quarter will
not exceed one million dollars ($1,000,000).
4. TERMINATION. This Agreement may be terminated by Company at any time
upon written notice to FIIOC. FIIOC may terminate this Agreement at any time
upon ninety (90) days' written notice to Company. FIIOC may terminate this
Agreement immediately upon written notice to Company (1) if required by any
applicable law or regulation, (2) if so required by action of the Fund(s) Board
of Trustees, (3) if Company engages in any material breach of this Agreement or
(4) if an Affiliate engages in any conduct which would constitute a material
breach of this Agreement were the Affiliate a party to the Agreement. This
Agreement shall terminate immediately and automatically with respect to an
Affiliate upon the termination of that Affiliate's Participation Agreement(s)
with the Funds, and in such event no notice need be given hereunder.
5. INDEMNIFICATION. Company agrees to indemnify and hold harmless FIIOC for
any misuse by any Affiliate, their agents and/or brokers, and any persons
controlling Company, under common control with Company, or controlled by
Company, of the information provided by FIIOC under this Agreement.
6. APPLICABLE LAW. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
7. ASSIGNMENT. This Agreement may not be assigned, except that it shall be
assigned automatically to any successor to FIIOC as the Funds' transfer agent,
and any such successor shall be bound by the terms of this Agreement.
8. TERMINATION OF EARLIER AGREEMENT. Company and FIIOC agree that the
previous Service Agreement between the parties, dated November 1, 1995, be, and
it hereby is, terminated as of the date of this Agreement.
IN WITNESS WHEREOF, the parties have set their hands as of the date first
written above.
FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC.
By: ___________________________
Thomas J. Fryer
Vice President
RELIASTAR LIFE INSURANCE COMPANY
By: ___________________________
Name: ___________________________
Title: ___________________________
FEE SCHEDULE FOR QUALIFIED RECIPIENTS OF
Variable Insurance Products Fund - High Income Portfolio
Variable Insurance Products Fund - Equity-Income Portfolio
Variable Insurance Products Fund - Growth Portfolio
Variable Insurance Products Fund - Overseas Portfolio
Variable Insurance Products Fund II - Investment Grade Bond Portfolio
Variable Insurance Products Fund II - Asset Manager Portfolio
Variable Insurance Products Fund II - Contrafund Portfolio
Variable Insurance Products Fund II - Asset Manager: Growth Portfolio
Variable Insurance Products Fund III - Growth Opportunities Portfolio
Variable Insurance Products Fund III - Balanced Portfolio
Variable Insurance Products Fund III - Growth & Income Portfolio
(1) Those who have signed the Service Agreement, who meet the requirements
of paragraph (4) below, and who render distribution, administrative support and
recordkeeping services as described therein, will hereafter be referred to as
"Qualified Recipients."
(2) Qualified Recipients who perform distribution services for their
clients including, without limitations, sale of Portfolio shares, answering
routine client inquiries about the Portfolio(s), completing Portfolio
applications for the client, and producing Portfolio sales brochures or other
marketing materials, will earn a quarterly fee at an annualized rate of 0.06%
(six basis points) of the average aggregate net assets of their clients invested
in the Portfolios.
(3) The fees paid to each Qualified Recipient will be calculated and paid
quarterly. Checks will be mailed to each Qualified Recipient by the 30th of the
following month.
(4) In order to be assured of receiving payment under this Agreement for a
given calendar quarter, a Qualified Recipient must have insurance company
clients with a minimum of $100 million of average net assets in the aggregate in
the mutual fund portfolios shown below. For any calendar quarter during which
assets in these portfolios are in the aggregate less than $100 million, the
amount of qualifying assets may be considered to be zero for the purpose of
computing the payments due.
Variable Insurance Products Fund - Equity-Income Portfolio
Variable Insurance Products Fund - Growth Portfolio
Variable Insurance Products Fund - Overseas Portfolio
Variable Insurance Products Fund II - Asset Manager Portfolio
Variable Insurance Products Fund II - Contrafund Portfolio
Variable Insurance Products Fund II - Asset Manager: Growth Portfolio
Variable Insurance Products Fund III - Growth Opportunities Portfolio
Variable Insurance Products Fund III - Balanced Portfolio
Variable Insurance Products Fund III - Growth & Income Portfolio
ReliaStar Life Insurance Company
20 Washington Avenue South
Minneapolis, Minnesota 55401
April 18, 1997
ReliaStar Life Insurance Company
20 Washington Avenue South
Minneapolis, Minnesota 55401
Dear Madam/Sir:
In connection with the proposed registration under the Securities Act of 1933,
as amended, of individual variable annuity contracts (the "Contracts") and
interests in Northstar Variable Account (the "Separate Account"), I have
examined documents relating to the establishment of the Separate Account by the
Board of Directors of ReliaStar Life Insurance Company (the "Company") as a
separate account for assets applicable to variable annuity contracts, pursuant
to Minnesota Statutes Sections 61A.13 to 61A.21, as amended, and the
Registration Statement on Form N-4, as amended by Post-Effective Amendment No. 3
thereto, File No. 33-73058 (the "Registration Statement"), and I have examined
such other documents and have reviewed such matters of law as I deemed necessary
for this opinion, and I advise you that in my opinion:
1. The Separate Account is a separate account of the Company duly created
and validly existing pursuant to the laws of the State of Minnesota.
2. The contracts, when issued in accordance with the Prospectus
constituting a part of the Registration Statement and upon compliance with
applicable local law, will be legal and binding obligations of the Company in
accordance with their respective terms.
3. The portion of the assets held in the Separate Account equal to reserves
and other contract liabilities with respect to the Separate Account are not
chargeable with liabilities arising out of any other business the Company may
conduct.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of my name under the heading "Legal Opinions" in the
Prospectus constituting a part of the Registration Statement and to the
references to me wherever appearing therein.
Very truly yours,
/s/ Stewart D. Gregg
- --------------------
Stewart D. Gregg
Counsel
INDEPENDENT AUDITORS' CONSENT
Board of Directors and Contract Holders
Northstar Variable Account
We consent to the incorporation by reference in this Post-Effective Amendment
No. 3 to Registration Statement on Form N-4 (File No. 33-73058) of the Northstar
Variable Account filed under the Securities Act of 1933 and the Investment
Company Act of 1940, respectively, of our report dated February 7, 1997 on the
audit of the financial statements of Northstar Variable Account as of December
31, 1996 and 1995 and for the period May 6, 1994 to December 31, 1994, and our
report dated January 31, 1997, except for Note 14, as to which the date is
February 23, 1997, on the audit of the consolidated financial statements of
ReliaStar Life Insurance Company and subsidiaries as of and for the years ended
December 31, 1996 and 1995 appearing in the Statement of Additional Information
of such Registration Statement, and to the references to us under the heading
"Financial Statements and Experts" appearing in the Prospectus and under the
headings "Independent Auditors" and "Financial Statements" appearing in the
Statement of Additional Information, all of which are part of such Registration
Statement.
Minneapolis, Minnesota
April 23, 1997
NORTHSTAR ANNUITY
<TABLE>
<CAPTION>
NORTHSTAR INCOME AND GROWTH FUND
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
<S> <C> <C> <C> <C> <C>
05/06/94 $1,000.00 $10.000000 100.000
05/06/95 $10.773830 100.000 $1,077.38 $1,076.87 99.953
05/06/96 $12.098712 99.953 $1,209.30 $1,208.79 99.911
12/31/96 $13.568696 99.911 $1,355.66 $1,355.15 99.873
Contract Value Surrender Value
Ending Value $1,355.15 $1,310.15
Total Return Incep to Date 35.51% 31.01%
Average Annual Return 12.12% 10.70%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 12.091637 82.702
12/31/96 $13.568696 82.702 $1,122.16 $1,121.65 82.664
Contract Value Surrender Value
Ending Value $1,121.65 $1,058.65
Total Return One Year 12.16% 5.86%
Average Annual Return 12.16% 5.86%
NORTHSTAR MULTI-SECTOR BOND FUND
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
05/06/94 $1,000.00 10.000000 100.000
05/06/95 $10.830825 100.000 $1,083.08 $1,082.57 99.953
05/06/96 $11.679686 99.953 $1,167.42 $1,166.91 99.909
12/31/96 $12.773825 99.909 $1,276.22 $1,275.71 99.869
Contract Value Surrender Value
Ending Value $1,275.71 $1,230.71
Total Return Incep to Date 27.57% 23.07%
Average Annual Return 9.60% 8.12%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $11.435577 87.446
12/31/96 $12.773825 87.446 $1,117.02 $1,116.51 87.406
Contract Value Surrender Value
Ending Value $1,116.51 $1,053.51
Total Return One Year 11.65% 5.35%
Average Annual Return 11.65% 5.35%
NORTHSTAR HIGH YIELD FUND
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
05/06/94 $1,000.00 $10.000000 100.000
05/06/95 $10.712227 100.000 $1,071.22 $1,070.71 99.952
05/06/96 $12.194817 99.952 $1,218.90 $1,218.39 99.911
12/31/96 $13.279497 99.911 $1,326.76 $1,326.25 99.872
Contract Value Surrender Value
Ending Value 1,326.25 $1,281.25
Total Return Incep to Date 32.63% 28.13%
Average Annual Return 11.21% 9.77%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $11.567470 86.449
12/31/96 $13.279497 86.449 $1,148.00 $1,147.49 86.411
Contract Value Surrender Value
Ending Value $1,147.49 $1,084.49
Total Return One Year 14.75% 8.45%
Average Annual Return 14.75% 8.45%
NORTHSTAR GROWTH FUND
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
05/06/94 $1,000.00 $10.000000 100.000
05/06/95 $11.104031 100.000 $1,110.40 $1,109.89 99.954
05/06/96 $15.058413 99.954 $1,505.15 $1,504.64 99.920
12/31/96 $15.303387 99.920 $1,529.12 $1,528.61 99.887
Contract Value Surrender Value
Ending Value $1,528.61 $1,483.61
Total Return Incep to Date 52.86% 48.36%
Average Annual Return 17.31% 16.00%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $12.607218 79.320
12/31/96 $15.303387 79.320 $1,213.86 $1,213.35 79.286
Contract Value Surrender Value
Ending Value $1,213.35 $1,150.35
Total Return One Year 21.33% 15.03%
Average Annual Return 21.33% 15.03%
FIDELITY MONEY MARKET PORTFOLIO
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
05/01/95 $1,000.00 $10.000000 100.000
05/01/96 $10.425706 100.000 $1,042.57 $1,042.06 99.951
12/31/96 $10.695325 99.951 $1,069.01 $1,068.50 99.903
Contract Value Surrender Value
Ending Value $1,068.50 $1,005.50
Total Return Incep to Date 6.85% 0.55%
Average Annual Return 4.04% 0.33%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $10.288920 97.192
12/31/96 $10.695325 97.192 $1,039.50 $1,038.99 97.144
Contract Value Surrender Value
Ending Value $1,038.99 $975.99
Total Return One Year 3.90% -2.40%
Average Annual Return 3.90% -2.40%
FIDELITY OVERSEAS PORTFOLIO
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
05/01/95 $1,000.00 $10.000000 100.000
05/01/96 $11.250976 100.000 $1,125.10 $1,124.59 99.955
12/31/96 $11.891717 99.955 $1,188.63 $1,188.12 99.912
Contract Value Surrender Value
Ending Value $1,124.59 $1,061.59
Total Return Incep to Date 12.46% 6.16%
Average Annual Return 7.28% 3.64%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $10.651696 93.882
12/31/96 $11.891717 93.882 $1,116.42 $1,115.91 93.839
Contract Value Surrender Value
Ending Value $1,115.91 $1,052.91
Total Return One Year 11.59% 5.29%
Average Annual Return 11.59% 5.29%
FIDELITY ASSET MANAGER PORTFOLIO
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
05/01/95 $1,000.00 $10.000000 100.000
05/01/96 $11.531830 100.000 $1,153.18 $1,152.67 99.956
12/31/96 $12.592959 99.956 $1,258.74 $1,258.23 99.915
Contract Value Surrender Value
Ending Value $1,152.67 $1,089.67
Total Return Incep to Date 15.27% 8.97%
Average Annual Return 8.87% 5.27%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $11.143293 89.740
12/31/96 $12.592959 89.740 $1,130.09 $1,129.58 89.700
Contract Value Surrender Value
Ending Value $1,129.58 $1,066.58
Total Return One Year 12.96% 6.66%
Average Annual Return 12.96% 6.66%
FIDELITY INDEX 500 PORTFOLIO
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
05/01/95 $1,000.00 $10.000000 100.000
05/01/96 $12.836899 100.000 $1,283.69 $1,283.18 99.960
12/31/96 $14.592823 99.960 $1,458.70 $1,458.19 99.925
Contract Value Surrender Value
Ending Value $1,283.18 $1,220.18
Total Return Incep to Date 28.32% 22.02%
Average Annual Return 16.09% 12.65%
Year end Less "Avg" Year end
Date Deposit NQ UV # Units Value Cont Fee Units
12/31/95 $1,000.00 $12.048834 82.996
12/31/96 $14.592823 82.996 $1,211.14 $1,210.63 82.961
Contract Value Surrender Value
Ending Value $1,210.63 $1,147.63
Total Return One Year 21.06% 14.76%
Average Annual Return 21.06% 14.76%
</TABLE>
Standardized Yield for Bond Funds (net of all fees) December, 1996
<TABLE>
<CAPTION>
Standardized
Fund "a" "b" "c" "d" Yield
<S> <C> <C> <C> <C> <C>
NMB $4,658.43 $853.53 53,081.016 $12.773825 6.83%
NHY $18,361.42 $2,929.74 181,440.471 $13.279497 7.81%
</TABLE>
Note: Yield = 2 x [ (Y + 1)^6 - 1 ] where Y = (a - b)/(c x d)
"a" is the net investment income per share (provided by Northstar) multiplied by
the number of NWNL shares invested in the Fund as of 12/31/96 "b" is the accrued
expenses, i.e. December's mortality and expense charges plus a hypothetical fee
representing the effect of the Annual Contract Fee (see below)
"c" is the average number of accumulation units (see below)
"d" is the 12/31/96 Unit Value
Taking into Account the Effect of the $35 Annual Contract Fee by Calculating a
Hypothetical December Fee (included in "b" above)
Annual Fee Stated as Avg Dollars Hypothetical
as Percent of a Monthly Invested in December
Avg Invested $ Fee December Fee
NMB 0.051% 0.0043% $676,311 $28.74
NHY 0.051% 0.0043% $2,391,949 $101.66
Calculation of Average # Units Outstanding for December, 1996 ("c" above)
11/30/96 12/31/96 Average
Fund # Units # Units # Unit O/S
NMB 53,218.211 52,943.821 53,081.016
NHY 180,227.874 182,653.068 181,440.471
Note: Average # Units Outstanding = (Ending # Units O/S + Beginning # Units O/S)
/ 2
Unit Value Unit Value
Fund 11/30/96 12/31/96
NMB 12.708562 12.773825
NHY 13.085418 13.279497
Current & Effective Yield (net of all contract fees) December, 1996
<TABLE>
<CAPTION>
Unit Value Unit Value Net 7 Day Current Effective
Fund 12/24/96 12/31/96 Change Return Yield Yield
<S> <C> <C> <C> <C> <C> <C>
FMM $10.687378 $10.695325 $0.007842 0.0734% 3.83% 3.90%
</TABLE>
Note: Net Change = 12/31 Unit Value - 12/24 Unit Value - Hypothetical Weekly Fee
Current Yield = 7 Day Return x 365/7
Effective Yield = [ (7 Day Return + 1) ^ (365/7) ] - 1
Calculation of Average Weekly Contract Fee per Money Market Unit December, 1996
Annual Fee Stated as Unit Value
as Percent of a Weekly 12/24/96 Hypothetical
Avg Invested $ Fee (Invested $) Weekly Fee
0.051% 0.0010% $10.687378 $0.000105
DESCRIPTION OF RETURNS BASED ON UNDERLYING FUND PERFORMANCE
The company may at times quote average annual returns for periods prior to the
Sub-Accounts commenced operations. Such performance information for the
Sub-Accouns will be calculated based on the performance of the Portfolios and
the assumption that the Sub-Accounts were in existence for the same periods as
those indicated for the portfolios, with the level of Contract charges currently
in effect. The following provides the details in providing such returns.
AVERAGE ANNUAL TOTAL RETURNS
The company may at times quote average annual returns that reflect net recurring
charges and any applicable surrender charges. The following is the formula used
to provide such returns.
TR = ((1 + TRsa - SC) ^ (1/N)) - 1
Where:
TR = The average annual total return of the Sub-Account net of recurring
charges and any applicable surrender charge for the period.
TRf = Total return of the fund for the period, provided by the investment
company.
TRsa = Total return of the fund for the period, provided by the investment
company, adjusted for the annual contract charge (AP) and separate
acccount annual expenses (AE) or the following formula:
((1 + TRf) * (((1 - AE) * (1 - AP)) ^ N)) - 1.
SC = Applicable surrender charge at the end of period.
AP = Annual Contract Charge as an equivalent annual percent charge (AP) based
on the average net assets in the Variable Account and Fixed Account
during the preceeding year. (ie Northstar Annuity would be 0.51%)
AE = Total Seperate Account Annual Expenses consisting of the mortality and
expense risk premium and the administration charge. ie Northstar Annuity
would be 1.40%)
N = The number of years (N) in the period.
OTHER AVERAGE ANNUAL RETURNS
In addition, the company may at times quote average annual returns that do not
reflect the Surrender Charge. These are calculated in exactly the same way as
the average anual total returns described above, except that the surrender
charge is ignored as the following formula demonstrates.
TR = ((1 + TRsa) ^ (1/N)) - 1
Where:
TR = The average annual total return of the Sub-Account net of recurring
charges for the period.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INOFRMATION EXTRACTED FROM THE
NORTHSTAR VARIABLE ACCOUNT ANNUAL REPORT FOR THE YEAR ENDED 12/31/96, ANNUAL
REPORT (FORM N-SAR) FILING PURSUANT TO SECTION 15(D) OF THE 1934 ACT AND SECTION
30(B) OF THE 1940 ACT, FORM 24F-2 ANNUAL NOTICE OF SECURITIES SOLD PURSUANT TO
RULE 24F-2 AND IS QUALIFIED IN ITS ENIRETY BY REFERNCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000916201
<NAME> NORTHSTAR VARIABLE ANNUNITY
<SERIES>
<NUMBER> 1
<NAME> NORTHSTAR VARIABLE ACCOUNT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> DEC-31-1996
<PERIOD-END> JAN-01-1996
<INVESTMENTS-AT-COST> 11,107
<INVESTMENTS-AT-VALUE> 11,502
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11,502
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4
<TOTAL-LIABILITIES> 4
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,107
<SHARES-COMMON-STOCK> 839,930
<SHARES-COMMON-PRIOR> 515,660
<ACCUMULATED-NII-CURRENT> 702
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 262
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 395
<NET-ASSETS> 11,502
<DIVIDEND-INCOME> 399
<INTEREST-INCOME> 0
<OTHER-INCOME> 441
<EXPENSES-NET> 138
<NET-INVESTMENT-INCOME> 702
<REALIZED-GAINS-CURRENT> 219
<APPREC-INCREASE-CURRENT> 133
<NET-CHANGE-FROM-OPS> 1,054
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 380,628
<NUMBER-OF-SHARES-REDEEMED> 56,358
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,351
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
