As filed with the Securities and Exchange Commission on December 31, 1996
File No. 33-83354
File No. 811-8732
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933 [ ]
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Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 4 [x]
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REGISTRATION STATEMENT
Under
THE INVESTMENT COMPANY ACT OF 1940 [x]
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Amendment No. 5
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FIRST CITICORP LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
(Exact Name of Registrant)
FIRST CITICORP LIFE INSURANCE COMPANY
(Name of Depositor)
One Court Square, 24th Floor, Long Island City, New York 11120
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number: (718) 248-5505
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Richard M. Zuckerman, Esq.
Associate General Counsel
First Citicorp Life Insurance Company
800 Silver Lake Boulevard
Dover, Delaware 19904
(Name and Address of Agent for Service of Process)
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Copy to:
Stephen E. Roth, Esquire
Sutherland, Asbill & Brennan
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
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Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of the registration statement.
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[x] on January 29, 1997 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on _______________ pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on _______________ pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
[x] this Post-Effective Amendment designates a new effective date for a
previously filed Post-Effective Amendment.
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DECLARATION PURSUANT TO RULE 24f-2
The registrant has previously filed a declaration of indefinite
registration of its shares pursuant to Rule 24f-2 under the Investment
Company Act of 1940. The registrant filed a Rule 24f-2 Notice on February 27,
1996 for its most recent fiscal year ended December 31, 1995.
<PAGE>
Cross Reference Sheet
Pursuant to Rules 481(a) and 495(a)
Showing location in Part A (prospectus) and Part B (statement of additional
information) of registration statement of information required by Form N-4
<TABLE>
<CAPTION>
PART A
Item of Form N-4 Prospectus Caption
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<S> <C> <C>
1. Cover Page Cover Page
2. Definitions Definitions
3. Synopsis Expense Tables; Summary
4. Condensed Financial Information Condensed Financial Information;
Yields and Total Returns
5. General
(a) Depositor First Citicorp Life Insurance Company
(b) Registrant The Separate Account
(c) Portfolio Company The Funds
(d) Fund Prospectus The Funds
(e) Voting Rights Voting Privileges
(f) Administrators N/A
6. Deductions and Expenses
(a) General Charges and Deductions; Summary
(b) Sales Load Charges and Deductions; Summary
(c) Special Purchase Plan N/A
(d) Commissions Distribution of the Contracts
(e) Expenses--Registrant Charges and Deductions; Summary
(f) Fund Expenses Charges and Deductions
(g) Organizational Expenses N/A
7. Contracts
(a) Persons with Rights Summary; Addition, Deletion or Substitution of
Investments; Description of the Contract; Annuity
Payment Options; Voting Privileges; Death Benefit
Before the Annuity Income Date; Modification;
Election of Annuity Payment Options
(b) (i) Allocation of Purchase Payments Summary; Purchase Payments; Free-Look Period;
Allocation of Purchase Payments
(ii) Transfers Summary; Transfer Privileges
(iii) Exchanges Transfers, Assignments
(c) Changes Additions, Deletions or Substitutions of
Investments; Description of the Contract;
Modification
(d) Inquiries Cover page; Inquiries
8. Annuity Period Summary; Annuity Payment Options
9. Death Benefit Death Benefit Before the Annuity Date
10. Purchases and Contract Value
(a) Purchases Summary; Issuance of a Contract; Purchase Payments;
Free Look Period; Allocation of Purchase Payments;
Variable Contract Value; Transfer Privileges
(b) Valuation Definitions; Variable Contract Value
(c) Daily Calculation Definitions; Variable Contract Value
(d) Underwriter Issuance of a Contract; Distribution of the
Contracts
11. Redemptions
(a) - By Owners Summary; Transfer Privilege; Surrenders and Partial
Withdrawals; Annuity Payments on the Annuity Date;
Payments; Annuity Payment Options; Federal Tax
Matters
- By Annuitant Summary; Transfer Privilege; Surrenders and Partial
Withdrawals; Proceeds on the Annuity Date; Payments;
Annuity Payment Options; Federal Tax Matters
<PAGE>
PART A
Item of Form N-4 Prospectus Caption
- ---------------- ------------------
(b) Texas ORP N/A
(c) Check Delay Purchase Payments
(d) Lapse N/A
(e) Free Look Summary; Free Look Period
12. Taxes Summary; Federal Tax Matters
13. Legal Proceedings Legal Proceedings
14. Table of Contents for the Statement of Additional Statement of Additional Information Table of
Information Contents
</TABLE>
PART B
<TABLE>
<CAPTION>
Item of Form N-4 Part B Caption
- ---------------- ------------------
<S> <C> <C>
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History N/A
18. Services
(a) Fees and Expenses of Registrant Charges and Deductions (prospectus)
(b) Management Contracts N/A
(c) Custodian N/A
Independent Public Accountant Experts
(d) Assets of Registrant The Separate Account
(e) Affiliated Persons First Citicorp Life Insurance Company (prospectus)
(f) Principal Underwriter Distribution of the Contracts (prospectus)
19. Purchase of Securities Being Offered Distribution of the Contracts (prospectus)
Offering Sales Load N/A
20. Underwriters Distribution of the Contracts (prospectus)
21. Calculation of Performance Data Calculation of Yields and Total Returns; Yields and
Total Returns (prospectus)
22. Annuity Payments Variable Annuity Payments; Annuity Payment Options
(prospectus)
23. Financial Statements Financial Statements
</TABLE>
PART C --OTHER INFORMATION
<TABLE>
<CAPTION>
Item of Form N-4 Part C Caption
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<S> <C> <C>
24. Financial Statements and Exhibits Financial Statements and Exhibits
(a) Financial Statements (a) Financial Statements
(b) Exhibits (b) Exhibits
25. Directors and Officers of the Depositor Directors and Officers of First Citicorp Life
Insurance Company
26. Persons Controlled By or Under Common Control with Persons Controlled By or Under Common Control with
the Depositor or Registrant the Depositor or Registrant
27. Number of Contractowners Number of owners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriter
30. Location of Accounts and Records Location of Books and Records
31. Management Services Management Services
32. Undertakings Undertakings and Representations
Signature Page Signatures
</TABLE>
INCORPORATION BY REFERENCE
This Post-Effective Amendment No. 4 on Form N-4 for the First Citicorp
Life Variable Annuity Separate Account (the "Account") incorporates by
reference the Prospectus, Statement of Additional Information and Part C
(Other Information) contained in Post-Effective Amendment No. 2 for the
Account filed on April 29, 1996 with the Securities and Exchange Commission.
<PAGE>
PART A
PROSPECTUS
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM
DEFERRED VARIABLE ANNUITY CONTRACT
FIRST CITICORP LIFE INSURANCE COMPANY
One Court Square
24th Floor
Long Island City, New York 11120
Telephone: (800) 497-4857
PROSPECTUS
February 3, 1997
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM
DEFERRED VARIABLE ANNUITY CONTRACT
FIRST CITICORP LIFE INSURANCE COMPANY
One Court Square
24th Floor
Long Island City, New York 11120
Telephone: (800) 497-4857
This Prospectus describes the individual flexible premium deferred variable
annuity contract (the "Contract") being offered by First Citicorp Life Insurance
Company. The Contract may be sold to or in connection with retirement plans,
including those that qualify for special federal tax treatment under Sections
403(b) or 408 of the Internal Revenue Code.
Purchase payments and Contract Values are allocated, as designated by you, to
one or more of the subaccounts of First Citicorp Life Variable Annuity Separate
Account (the "Separate Account"), or to the Fixed Account, or both. The assets
of each subaccount will be invested in a corresponding portfolio of the Landmark
VIP Funds, the Variable Annuity Portfolios, the Fidelity Variable Insurance
Products Fund, the Fidelity Variable Insurance Products Fund II, the AIM
Variable Insurance Funds, Inc., or the MFS Variable Insurance Trust (the
"Funds"). The portfolios of the Landmark VIP Funds include the Landmark VIP U.S.
Government Fund, the Landmark VIP Equity Fund, the Landmark VIP Balanced Fund
and the Landmark VIP International Equity Fund. The subaccounts invested in the
Landmark VIP Funds, however, are no longer available for investment and,
therefore, those subaccounts will not accept new premium payments or transfers
from other subaccounts and the Fixed Account.
The available portfolios of the Variable Annuity Portfolios include
CitiSelect(SM) VIP Folio 200, CitiSelect(SM) VIP Folio 300, CitiSelect(SM) VIP
Folio 400, CitiSelect(SM) VIP Folio 500 and Landmark Small Cap Equity VIP Fund,
and are available for investment under the Contract. The Growth, High Income,
Equity Income and Overseas Portfolios of the Fidelity Variable Insurance
Products Fund, the Contrafund and Index 500 Portfolios of the Fidelity Variable
Insurance Products Fund II, the V.I. Capital Appreciation Fund, V.I. Government
Securities Fund, V.I. Growth Fund, V.I. International Equity Fund, V.I. Value
Fund and V.I. Growth and Income Fund of the AIM Variable Insurance Funds, Inc.
and the MFS World Governments Series, the MFS Money Market Series, the MFS Bond
Series, the MFS Total Return Series, the MFS Research Series and the MFS
Emerging Growth Series of the MFS Variable Insurance Trust are also available
for investment under the Contract. The accompanying prospectuses for the Funds
describe the investment objectives of the available portfolios. The Contract
Value prior to the Annuity Income Date, except for amounts in the Fixed Account,
will vary according to the investment performance of the portfolios in which the
selected subaccounts are invested. You bear the entire investment risk on
amounts allocated to the Separate Account.
This Prospectus sets forth basic information about the Contract and the
Separate Account that a prospective investor should know before investing.
Additional information about the Contract and the Separate Account is contained
in the Statement of Additional Information, which has been filed with the
Securities and Exchange Commission. The Statement of Additional Information has
the same date as this Prospectus and is incorporated herein by reference. The
table of contents for the Statement of Additional Information is on page 40 of
this prospectus. You may obtain a copy of the Statement of Additional
Information free of charge by writing to or calling the Company at the address
or phone number shown above.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. THIS
PROSPECTUS MUST BE ACCOMPANIED BY CURRENT PROSPECTUSES FOR VARIABLE ANNUITY
PORTFOLIOS, LANDMARK VIP FUNDS, THE FIDELITY VARIABLE INSURANCE PRODUCTS FUND,
THE FIDELITY VARIABLE INSURANCE PRODUCTS FUND II, THE AIM VARIABLE INSURANCE
FUNDS, INC. AND THE MFS VARIABLE INSURANCE TRUST.
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.
CONTRACTS AND SHARES OF THE FUNDS ARE NOT INSURED BY THE FDIC OR ANY OTHER
AGENCY. THEY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK
GUARANTEED. THEY ARE SUBJECT TO MARKET FLUCTUATION, REINVESTMENT RISK AND
POSSIBLE LOSS OF PRINCIPAL INVESTED.
YOUR RIGHT TO LOOK TO A DELAWARE BANK OR TRUST COMPANY FOR PAYMENT ON ANY
INSURANCE POLICY IS LIMITED BY LAW. INSURANCE POLICIES ISSUED BY THE
SUBSIDIARIES OR DIVISIONS OF DELAWARE BANKS OR TRUST COMPANIES ARE NOT DIRECT
LIABILITIES OF SUCH BANKS OR TRUST COMPANIES. ONLY THE ASSETS OF THE INSURANCE
DIVISION OR SUBSIDIARY ISSUING A POLICY ARE APPLICABLE TO THE PAYMENT AND
SATISFACTION OF SUCH POLICY OR CLAIMS MADE THEREUNDER.
INSURANCE POLICIES ISSUED BY A SUBSIDIARY OR DIVISION OF A DELAWARE BANK OR
TRUST COMPANY ARE NOT BANK DEPOSITS AND ARE NOT FDIC INSURED.
February 3, 1997
<PAGE>
TABLE OF CONTENTS
Page
DEFINITIONS 4
EXPENSE TABLES 6
SUMMARY 14
The Contract 14
Charges and Deductions 14
Annuity Provisions 15
Federal Tax Status 15
CONDENSED FINANCIAL INFORMATION 16
THE COMPANY, THE SEPARATE ACCOUNT AND THE FUNDS 18
First Citicorp Life Insurance Company 18
First Citicorp Life Variable Annuity Separate Account 18
The Funds 18
Addition, Deletion or Substitution of Investments 22
DESCRIPTION OF THE CONTRACT 22
Issuance of a Contract 22
Purchase Payments 22
Free-Look Period 22
Allocation of Purchase Payments 23
Variable Contract Value 23
Transfer Privileges 24
Surrenders and Partial Withdrawals 25
Death Benefit Before the Annuity Income Date 26
Annuity Payments on the Annuity Income Date 27
Payments 27
Modification 27
Owner 28
Reports to Owners 28
Inquiries 28
THE FIXED ACCOUNT 28
Fixed Account Value 28
CHARGES AND DEDUCTIONS 29
Surrender Charge (Contingent Deferred Sales Charge) 29
Annual Contract Fee 30
Asset-Based Administration Charge 30
Transfer Processing Fee 30
Mortality and Expense Risk Charge 30
Fund Expenses 30
Premium Taxes 30
Other Taxes 31
2
<PAGE>
TABLE OF CONTENTS
(Continued)
ANNUITY PAYMENT OPTIONS 31
Election of Annuity Payment Options 31
Fixed Annuity Payments 31
Legal Developments Regarding Unisex Actuarial Tables 31
Variable Annuity Payments 31
Description of Annuity Payment Options 32
YIELDS AND TOTAL RETURNS 33
FEDERAL TAX MATTERS 34
Introduction 34
Tax Status of the Contract 34
Taxation of Annuities 35
Transfers, Assignments or Exchange of a Contract 36
Withholding 37
Multiple Contracts 37
Taxation of Qualified Plans 37
Possible Charge for the Company's Taxes 37
Other Tax Consequences 38
DISTRIBUTION OF THE CONTRACTS 38
LEGAL PROCEEDINGS 38
VOTING PRIVILEGES 38
COMPANY HOLIDAYS 39
FINANCIAL STATEMENTS 39
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS 40
3
<PAGE>
DEFINITIONS
<TABLE>
<S> <C>
Account Any of the subaccounts or the Fixed Account.
Accumulation Unit A unit of measure used to calculate Variable Contract Value. We use
Accumulation Units to calculate the value of a subaccount before annuity
payments.
Age Your age on your last birthday.
Annuitant The Annuitant is the person upon whose life annuity benefits are based and to
whom payments are made under this contract, commencing on the Annuity Income
Date. The Annuitant must be a natural person.
Annuity Income Date The date on which annuity payments begin.
Annuity Unit A unit of measure used to calculate variable annuity payments.
Attained Age Your age on the prior Contract Anniversary.
Beneficiary The person who becomes the Owner of the Contract upon any Owner's death prior
to the Annuity Income Date and who receives the Death Benefit. The Contingent
Beneficiary is the person who will become the Beneficiary if the named
Beneficiary is not living. An Irrevocable Beneficiary is one whose consent is
necessary to change Beneficiaries and exercise certain other rights under the
Contract.
The Code The Internal Revenue Code of 1986, as amended.
Contract Anniversary The same date each year after the Contract Date.
Contract Date The Contract Date is the date the Contract becomes effective.
Contract Owner The person(s) who owns the Contract and who is entitled to exercise all rights
and privileges provided in the Contract.
Contract Value The total amount invested under the Contract. It is the sum of the Variable
Contract Value and the value of the Contract in the Fixed Account.
Dollar Cost Averaging A series of systematic monthly transfers from either the Money Market
Subaccount or the Fixed Account to the available subaccounts.
Fixed Account An allocation option under our General Account. Under the Fixed Account, we
credit any portion of the initial purchase payment allocated to the Fixed
Account with the Initial Fixed Account Interest Rate shown in the Contract
Schedule. We may declare different initial interest rates for each subsequent
purchase payment or transfer to the Fixed Account. After the initial one year
period, the interest rate earned will be the Current Fixed Account Interest
Rate. The Current Fixed Account Interest Rate is determined by us in our
discretion and is guaranteed for one year.
General Account Our assets other than those allocated to the Separate Account or any other
separate account.
Home Office Our principal office at One Court Square, 24th Floor, Long Island City, NY
11120.
"In writing" and "written A written form satisfactory to us and received by us at our Home Office. We
request" have the right to require a signature guarantee from an institution qualified
to give such a guarantee before acting on any written request.
Net Asset Value per Share The share value of any portfolio as of any Valuation Day reflecting investment
performance and decreased by any expenses and fees assessed against the
portfolio.
4
<PAGE>
Net Investment Factor An index used to measure the investment performance of a subaccount from one
Valuation Period to the next.
Non-Qualified Contract A Contract that is not a "qualified contract."
Premium Taxes Taxes charged by a state or municipality on purchase payments. We deduct
premium taxes from the Contract Value either: (1) at the time the Contract is
surrendered; (2) on the Annuity Income Date; or (3) at such other date as the
taxes are assessed.
Qualified Contract A Contract that is issued in connection with retirement plans that qualify for
special federal income tax treatment under Sections 403(b) or 408 of the Code.
SEC U.S. Securities and Exchange Commission.
Subaccount A subdivision of the Separate Account, the assets of which are invested in a
corresponding portfolio.
Surrender Value The Contract Value less any applicable surrender charges payable, premium taxes
not previously deducted and the Annual Contract Fee for that year.
Valuation Day For each subaccount, each day on which both we and the New York Stock Exchange
are open for business.
Valuation Period The period that starts following the close of regular trading on the New York
Stock Exchange on any Valuation Day and ends at the close of regular trading on
the next succeeding Valuation Day.
Separate Account First Citicorp Life Variable Annuity Separate Account. Assets of the Separate
Account equal to the reserves and other contract liabilities with respect to
the Separate Account are separate from our other assets and are not chargeable
with liabilities arising out of any other business we may conduct.
Variable Contract Value The value of the Contract in the Separate Account.
"We", "Our", "Us" and the First Citicorp Life Insurance Company.
"Company"
"You" and "Your" The Owner of the Contract. In the event of Joint Ownership, you and your apply
equally to either Joint Owner unless the context clearly indicates otherwise.
</TABLE>
5
<PAGE>
EXPENSE TABLES
The following expense information assumes that the entire Contract Value
is Variable Contract Value.
Owner Transaction Expenses
<TABLE>
<S> <C>
Sales Charge Imposed on Purchase Payments None
Maximum Surrender Charge (contingent deferred sales charge)
as a percentage of the premium payment withdrawn 7%
Surrender Fee None*
Transfer Processing Fee (imposed after the 18th transfer in any Contract Year) $25**
Annual Contract Fee $30***
Separate Account Annual Expenses
(as a percentage of net assets)
Mortality and Expense Risk Charge 1.25%
Administration Charge 0.15%
Total Separate Account Expenses 1.40%
Annual Fund Expenses****
(as percentage of average net assets)
</TABLE>
Landmark VIP U.S. Government Fund
Management Fees (investment advisory fees) 0.40%
Other Expenses (after fee waivers and reimbursements) 0.20%
Total Annual Fund Expenses (after fee waivers and reimbursements) 0.60%
Landmark VIP Equity Fund
Management Fees (investment advisory fees) 0.50%
Other Expenses (after fee waivers and reimbursements) 0.25%
Total Annual Fund Expenses (after fee waivers and reimbursements) 0.75%
Landmark VIP Balanced Fund
Management Fees (investment advisory fees) 0.40%
Other Expenses (after fee waivers and reimbursements) 0.30%
Total Annual Fund Expenses (after fee waivers and reimbursements) 0.70%
* We reserve the right to assess a processing charge equal to the lesser of
$25 or 2% of the amount withdrawn for each withdrawal (including the
final surrender) after the first 12 withdrawals in any Contract Year. See
"Charges and Deductions."
** We reserve the right to charge a $25 transfer fee on each transfer after
the first 12 transfers in any Contract Year. See "Charges and
Deductions."
*** We will waive the Annual Contract Fee in its entirety if, at the time
this charge would be deducted, the Contract Value is at least $25,000.
The Annual Contract Fee will also be waived in its entirety for any
Contract Year during which purchase payments of at least $2,500 ($2,000
for Qualified Contracts), excluding the initial purchase payment, are
paid.
****Certain of the unaffiliated investment advisers reimburse First Citicorp
Life for administrative costs incurred in connection with administering
the funds as variable funding options. These reimbursements are paid out
of the advisers' investment advisory fees as a percentage of assets under
management.
6
<PAGE>
Landmark VIP International Equity Fund
<TABLE>
<S> <C>
Management Fees (investment advisory fees) 1.00%
Other Expenses (after fee waivers and reimbursements) 0.20%
Total Annual Fund Expenses (after fee waivers and reimbursements) 1.20%
CitiSelect VIP Folio 200
Management Fees (investment management fees) 0.75%
Other Expenses (after fee waivers and reimbursements) 0.20%
Total Annual Fund Expenses (after fee waivers and reimbursements) 0.95%
CitiSelect VIP Folio 300
Management Fees (investment management fees) 0.75%
Other Expenses (after fee waivers and reimbursements) 0.20%
Total Annual Fund Expenses (after fee waivers and reimbursements) 0.95%
CitiSelect VIP Folio 400
Management Fees (investment management fees) 0.75%
Other Expenses (after fee waivers and reimbursements) 0.50%
Total Annual Fund Expenses (after fee waivers and reimbursements) 1.25%
CitiSelect VIP Folio 500
Management Fees (investment management fees) 0.75%
Other Expenses (after fee waivers and reimbursements) 0.50%
Total Annual Fund Expenses (after fee waivers and reimbursements) 1.25%
Landmark Small Cap Equity VIP Fund
Management Fees (investment advisory fees) 0.75%
Other Expenses (after fee waivers and reimbursements) 0.15%
Total Annual Fund Expenses (after fee waivers and reimbursements) 0.90%
Fidelity Growth Portfolio
Management Fees (investment advisory fees) 0.61%
Other Expenses 0.09%
Total Annual Fund Expenses 0.70%
Fidelity High Income Portfolio
Management Fees (investment advisory fees) 0.60%
Other Expenses 0.11%
Total Annual Fund Expenses 0.71%
7
<PAGE>
Fidelity Equity Income Portfolio
Management Fees (investment advisory fees) 0.51%
Other Expenses 0.10%
Total Annual Fund Expenses 0.61%
Fidelity Overseas Portfolio
Management Fees (investment advisory fees) 0.76%
Other Expenses 0.15%
Total Annual Fund Expenses 0.91%
Fidelity Contrafund Portfolio
Management Fees (investment advisory fees) 0.61%
Other Expenses 0.11%
Total Annual Fund Expenses 0.72%
Fidelity Index 500 Portfolio
Management Fees (investment advisory fees after fee waivers and reimbursements) 0.09%
Other Expenses 0.19%
Total Annual Fund Expenses (after fee waivers and reimbursements) 0.28%
AIM V.I. Capital Appreciation Fund
Management Fees (investment advisory fees) 0.65%
Other Expenses 0.10%
Total Annual Fund Expenses 0.75%
AIM V.I. Government Securities Fund
Management Fees (investment advisory fees) 0.50%
Other Expenses 0.69%
Total Annual Fund Expenses 1.19%
AIM V.I. Growth Fund
Management Fees (investment advisory fees) 0.65%
Other Expenses 0.19%
Total Annual Fund Expenses 0.84%
AIM V.I. International Equity Fund
Management Fees (investment advisory fees) 0.75%
Other Expenses 0.40%
Total Annual Fund Expenses 1.15%
8
<PAGE>
AIM V.I. Value Fund
Management Fees (investment advisory fees) 0.65%
Other Expenses 0.10%
Total Annual Fund Expenses 0.75%
AIM V.I. Growth and Income Fund
Management Fees (investment advisory fees after fee waivers and reimbursements) 0.26%
Other Expenses 0.52%
Total Annual Fund Expenses (after fee waivers and reimbursements) 0.78%
MFS World Governments Series
Management Fees (investment advisory fees) 0.75%
Other Expenses (after fee reduction) 0.25%
Total Annual Fund Expenses (after fee reduction) 1.00%
MFS Money Market Series
Management Fees (investment advisory fees) 0.50%
Other Expenses (after fee reduction) 0.10%
Total Annual Fund Expenses (after fee reduction) 0.60%
MFS Bond Series
Management Fees (investment advisory fees) 0.60%
Other Expenses (after fee reduction) 0.40%
Total Annual Fund Expenses (after fee reduction) 1.00%
MFS Total Return Series
Management Fees (investment advisory fees) 0.75%
Other Expenses (after fee reduction) 0.25%
Total Annual Fund Expenses (after fee reduction) 1.00%
MFS Research Series
Management Fees (investment advisory fees) 0.75%
Other Expenses (after fee reduction) 0.25%
Total Annual Fund Expenses (after fee reduction) 1.00%
MFS Emerging Growth Series
Management Fees (investment advisory fees) 0.75%
Other Expenses (after fee reduction) 0.25%
Total Annual Fund Expenses (after fee reduction) 1.00%
</TABLE>
Premium taxes may be applicable, depending on the laws of various
jurisdictions. Various states and other governmental entities levy a premium
tax, currently ranging up to 3.5%, on annuity contracts issued by insurance
companies.
9
<PAGE>
The above tables are intended to assist the Owner in understanding the costs
and expenses that he or she will bear directly or indirectly. The tables reflect
fiscal year 1995 expenses for the Separate Account and fiscal year 1995 expenses
for the Landmark VIP U.S. Government Fund, the Landmark VIP Equity Fund, the
Landmark VIP Balanced Fund, the Landmark VIP International Equity Fund, the
Fidelity Growth, Fidelity High Income, Fidelity Equity Income, Fidelity
Overseas, Fidelity Contrafund and Fidelity Index 500 Portfolios, the AIM V.I.
Capital Appreciation, AIM V.I. Government Securities, AIM V.I. Growth, AIM V.I.
International Equity, AIM V.I. Value and AIM V.I. Growth and Income Funds and
the MFS World Governments, MFS Money Market, MFS Bond, MFS Total Return, MFS
Research and MFS Emerging Growth Series. CitiSelect VIP Folio 200, CitiSelect
VIP Folio 300, CitiSelect VIP Folio 400, CitiSelect Folio 500 and Landmark Small
Cap Equity VIP Fund commenced operations during the current fiscal year.
Therefore, their "Other Expenses" are estimates and not based on past
performance. Absent fee waivers and reimbursements, "Other Expenses" and "Total
Annual Fund Expenses" that are estimated to be incurred in the current fiscal
year would be: CitiSelect VIP Folio 200--8.67% and 9.42%; CitiSelect VIP Folio
300--6.92% and 7.67%; CitiSelect VIP Folio 400--6.92% and 7.67%; CitiSelect VIP
Folio 500--3.84% and 4.59% and Landmark Small Cap Equity VIP Fund--1.75% and
2.50%, respectively. Absent fee waivers and reimbursements, "Other Expenses" and
"Total Annual Fund Expenses" incurred for fiscal year 1995 were: Landmark VIP
U.S. Government Fund--8.67% and 9.07%; Landmark VIP Equity Fund--7.33% and
7.83%; Landmark VIP Balanced Fund--6.92% and 7.32%; Landmark VIP International
Equity Fund--3.84% and 4.84%, MFS World Governments Series 1.24% and 1.99%; MFS
Money Market Series 21.04% and 21.54%; MFS Bond Series 43.25% and 43.85%; MFS
Total Return Series 2.02% and 2.77%; MFS Research Series 3.15% and 3.90% and MFS
Emerging Growth Series 2.16% and 2.91%, respectively. The Investment Advisor for
the Fidelity Index 500 Portfolio also voluntarily agreed to limit the fund's
operating expenses to 0.28% of average net assets. Absent this agreement, the
"Management Fees" and "Total Annual Fund Expenses" incurred for fiscal year 1995
were 0.28% and 0.46%, respectively. Similarly, the Investment Advisor for the
AIM V.I. Growth and Income Fund voluntarily agreed to waive or reduce their
advisory fees to 0.26% of average net assets. Absent this waiver or reduction,
the "Management Fees" and "Total Annual Fund Expenses" incurred for fiscal year
1995 were 0.78% and 1.17%, respectively. There can be no assurance that the fee
waivers and reimbursements reflected in the table will continue at their
reflected levels. However, the MFS Investment Advisor has agreed to bear,
subject to reimbursement, until December 31, 2004, expenses such that the
aggregate expenses of the MFS World Governments Series and the MFS Money Market
Series do not exceed, on an annualized basis 1.00% and 0.60% of the average
daily net assets, respectively. In addition, the MFS investment advisor has
agreed to bear, subject to reimbursement, expenses such that the aggregate
expenses of the MFS Bond Series, the MFS Total Return Series, the MFS Research
Series and the MFS Emerging Growth Series do not exceed, on an annualized basis,
1.00% of the average daily net assets until December 31, 1996, 1.25% of the
average daily net assets from January 1, 1996 through December 31, 1998 and
1.50% of the average daily net assets from January 1, 1999 through December 31,
2004, respectively. For a more complete description of the various costs and
expenses see "Charges and Deductions" and the prospectuses for the Funds.
10
<PAGE>
Examples
An owner would pay the following expenses on a $1,000 investment, assuming
a 5% annual return on assets:
1.If the Contract is surrendered or annuitized under an annuity option not
providing a life annuity or a life annuity with a period certain of at least
five years at the end of the applicable time period:
<TABLE>
<CAPTION>
Subaccount 1 Year 3 Years 5 Years 10 Years
- ----------------------------------------- -------- --------- --------------------
<S> <C> <C> <C> <C>
Landmark VIP U.S. Government Fund $ 89 $ 122 $ 157 $ 270
Landmark VIP Equity Fund $ 90 $ 127 $ 165 $ 285
Landmark VIP Balanced Fund $ 90 $ 125 $ 162 $ 280
Landmark VIP International Equity Fund $ 94 $ 140 $ 187 $ 330
CitiSelect VIP Folio 200* $ 92 $ 133 -- --
CitiSelect VIP Folio 300* $ 92 $ 133 -- --
CitiSelect VIP Folio 400* $ 95 $ 142 -- --
CitiSelect VIP Folio 500* $ 95 $ 142 -- --
Landmark Small Cap Equity VIP Fund* $ 92 $ 133 -- --
Fidelity Growth Portfolio $ 90 $ 125 $ 162 $ 280
Fidelity High Income Portfolio* $ 90 $ 126 -- --
Fidelity Equity Income Portfolio* $ 89 $ 123 -- --
Fidelity Overseas Portfolio* $ 92 $ 132 -- --
Fidelity Contrafund Portfolio* $ 90 $ 126 -- --
Fidelity Index 500 Portfolio* $ 86 $ 113 -- --
AIM V.I. Capital Appreciation Fund $ 90 $ 127 $ 165 $ 285
AIM V.I. Government Securities Fund* $ 92 $ 134 -- --
AIM V.I. Growth Fund* $ 89 $ 122 -- --
AIM V.I. International Equity Fund* $ 92 $ 134 -- --
AIM V.I. Value Fund* $ 92 $ 134 -- --
AIM V.I. Growth and Income Fund* $ 92 $ 134 -- --
MFS World Governments Series $ 92 $ 134 $ 177 $ 311
MFS Money Market Series $ 89 $ 122 $ 157 $ 270
MFS Bond Series* $ 92 $ 134 -- --
MFS Total Return Series* $ 92 $ 134 -- --
MFS Research Series* $ 92 $ 134 -- --
MFS Emerging Growth Series* $ 92 $ 134 -- --
</TABLE>
11
<PAGE>
2.If the Contract is annuitized under an annuity option providing either a
life annuity or a life annuity with a period certain of at least five years
at the end of the applicable time period:
<TABLE>
<CAPTION>
Subaccount 1 Year 3 Years 5 Years 10 Years
--------------------------------------------- ----------------------- ------------ -------------
<S> <C> <C> <C> <C>
Landmark VIP U.S. Government Fund $ 24 $ 74 $ 126 $ 270
Landmark VIP Equity Fund $ 26 $ 79 $ 134 $ 285
Landmark VIP Balanced Fund $ 25 $ 77 $ 132 $ 280
Landmark VIP International Equity Fund $ 30 $ 92 $ 157 $ 330
CitiSelect VIP Folio 200* $ 28 $ 85 -- --
CitiSelect VIP Folio 300* $ 28 $ 85 -- --
CitiSelect VIP Folio 400* $ 31 $ 94 -- --
CitiSelect VIP Folio 500* $ 31 $ 94 -- --
Landmark Small Cap Equity VIP Fund* $ 28 $ 85 --
Fidelity Growth Portfolio $ 25 $ 77 $ 132 $ 280
Fidelity High Income Portfolio* $ 25 $ 77 -- --
Fidelity Equity Income Portfolio* $ 24 $ 74 -- --
Fidelity Overseas Portfolio* $ 27 $ 83 -- --
Fidelity Contrafund Portfolio* $ 25 $ 78 -- --
Fidelity Index 500 Portfolio* $ 21 $ 64 -- --
AIM V.I. Capital Appreciation Fund $ 26 $ 79 $ 134 $ 285
AIM V.I. Government Securities Fund* $ 28 $ 86 -- --
AIM V.I. Growth Fund* $ 24 $ 74 -- --
AIM V.I. International Equity Fund* $ 28 $ 86 -- --
AIM V.I. Value Fund* $ 28 $ 86 -- --
AIM V.I. Growth and Income Fund* $ 28 $ 86 -- --
MFS World Governments Series $ 28 $ 86 $ 147 $ 311
MFS Money Market Series $ 24 $ 74 $ 126 $ 270
MFS Bond Series* $ 28 $ 86 -- --
MFS Total Return Series* $ 28 $ 86 -- --
MFS Research Series* $ 28 $ 86 -- --
MFS Emerging Growth Series* $ 28 $ 86 -- --
</TABLE>
12
<PAGE>
3.If the Contract is not surrendered or annuitized at the end of the
applicable time period:
<TABLE>
<CAPTION>
Subaccount 1 Year 3 Years 5 Years 10 Years
--------------------------------------------- ----------------------- ------------ -------------
<S> <C> <C> <C> <C>
Landmark VIP U.S. Government Fund $ 24 $ 74 $ 126 $ 270
Landmark VIP Equity Fund $ 26 $ 79 $ 134 $ 285
Landmark VIP Balanced Fund $ 25 $ 77 $ 132 $ 280
Landmark VIP International Equity Fund $ 30 $ 92 $ 157 $ 330
CitiSelect VIP Folio 200* $ 28 $ 85 -- --
CitiSelect VIP Folio 300* $ 28 $ 85 -- --
CitiSelect VIP Folio 400* $ 31 $ 94 -- --
CitiSelect VIP Folio 500* $ 31 $ 94 -- --
Landmark Small Cap Equity VIP Fund* $ 28 $ 85 -- --
Fidelity Growth Portfolio $ 25 $ 77 $ 132 $ 280
Fidelity High Income Portfolio* $ 25 $ 77 -- --
Fidelity Equity Income Portfolio* $ 24 $ 74 -- --
Fidelity Overseas Portfolio* $ 27 $ 83 -- --
Fidelity Contrafund Portfolio* $ 25 $ 78 -- --
Fidelity Index 500 Portfolio* $ 21 $ 64 -- --
AIM V.I. Capital Appreciation Fund $ 26 $ 79 $ 134 $ 285
AIM V.I. Government Securities Fund* $ 28 $ 86 -- --
AIM V.I. Growth Fund* $ 24 $ 74 -- --
AIM V.I. International Equity Fund* $ 28 $ 86 -- --
AIM V.I. Value Fund* $ 28 $ 86 -- --
AIM V.I. Growth and Income Fund* $ 28 $ 86 -- --
MFS World Governments Series $ 28 $ 86 $ 147 $ 311
MFS Money Market Series $ 24 $ 74 $ 126 $ 270
MFS Bond Series* $ 28 $ 86 -- --
MFS Total Return Series* $ 28 $ 86 -- --
MFS Research Series* $ 28 $ 86 -- --
MFS Emerging Growth Series* $ 28 $ 86 -- --
</TABLE>
* These subaccounts became available for investment as of the date of this
prospectus.
The examples provided above assume that no transfer charges or premium
taxes have been assessed. The examples also assume that the Annual Contract
Fee is $30 and that the average Contract Value is $10,000, which translates
the Annual Contract Fee into an assumed .30% charge for the purposes of the
examples based on a $1,000 investment.
The examples should not be considered a representation of past or future
expenses. The assumed 5% annual rate of return is hypothetical and should not
be considered a representation of past or future annual returns, which may be
greater or less than this assumed rate.
13
<PAGE>
SUMMARY
UNLIKE BANK ACCOUNTS, CONTRACT VALUE IS NOT INSURED. INVESTMENT OF
CONTRACT VALUE INVOLVES CERTAIN RISKS INCLUDING LOSS OF PURCHASE PAYMENTS
(PRINCIPAL). CONTRACT VALUE IS NOT DEPOSITED IN OR GUARANTEED BY ANY BANK AND
IS NOT GUARANTEED BY ANY GOVERNMENT AGENCY.
The Contract
Issuance of a Contract. Contracts may be issued in connection with
retirement plans that may or may not qualify for special federal tax
treatment under the Code. The maximum age for Owners on the Contract date is
90. (See "Issuance of a Contract.")
Free-Look Period. You have the right to return the Contract within 10 days
(or longer in certain states) after you receive it. We will consider the
Contract received five days after it is mailed to your last known address.
The returned Contract will become void. We will return to you an amount equal
to the Contract Value on the date the Contract is received either at our home
office or by the sales representative who sold it, plus any premium taxes
deducted. Where required, we will instead return the greater of the Contract
Value or purchase payment(s) (See "Free-Look Period.")
Purchase Payments. The minimum amount we will accept as an initial
purchase payment is $5,000 for Non-Qualified Contracts and $2,000 for
Qualified Contracts. Subsequent purchase payments may be paid under the
Contract at any time before the Annuity Income Date; however, we reserve the
right not to accept payments less than $500 for Non-Qualified Contracts and
less than $100 for Qualified Contracts. Our approval is required for payments
that exceed $1,000,000 per Contract Year. (See "Purchase Payments", page 20.)
Allocation of Purchase Payments. Purchase payments under a Contract will be
allocated, as designated by you, to one or more of the subaccounts of the
Separate Account or to the Fixed Account or to both except that purchase
payments may not be allocated to any subaccount invested in the Landmark VIP
Funds. In states where we must refund purchase payments in the event you
exercise the free-look right, any portion of the initial net purchase payment to
be allocated to any subaccount will be allocated to the subaccount investing in
the MFS Money Market Series (the "Money Market Subaccount") during the
"free-look" period. At the end of that period, the value in the Money Market
Subaccount will be allocated to the subaccounts as selected by you. The assets
of each subaccount will be invested solely in a corresponding portfolio. The
Contract Value, except for amounts in the Fixed Account, will vary according to
the investment performance of the portfolio(s) in which the selected
subaccount(s) is invested. Interest will be credited to amounts in the Fixed
Account at a guaranteed minimum rate of 3% per year, or a higher current
interest rate declared by us. (See "Allocation of Purchase Payments.") The Fixed
Account may not be available in all states.
Transfers. On or before the Annuity Income Date, you may transfer all or
part of the value in a subaccount or the Fixed Account to another subaccount
or the Fixed Account subject to certain restrictions. However, transfers to
subaccounts invested in the Landmark VIP Funds are no longer permitted.
The maximum amount that may be transferred from the Fixed Account during
any Contract Year equals the greatest of: (1) 40% of the Fixed Account Value
as of the later of the Contract Date or last Contract Anniversary; (2) the
Contract Value in the Fixed Account attributable to interest earnings; or (3)
the greatest transfer from the Fixed Account during the prior Contract Year.
We reserve the right to defer transfers from the Fixed Account for up to 6
months following the date of request.
Currently, a $25 fee is assessed on the 19th and each subsequent transfer
during a Contract Year. We reserve the right, however, to charge this fee for
the 13th and each subsequent transfer during a Contract Year. (See "Transfer
Privilege.")
Partial Withdrawal. Before the Annuity Income Date, you may, by written
notice, withdraw part of the surrender value subject to certain limitations.
Any withdrawal request must be in writing and must specify from which
Account(s) the withdrawal will be made. (See "Partial Withdrawals.")
Surrender. Upon written notice before the Annuity Income Date, you may
surrender the Contract and receive its surrender value. (See "Surrender.")
Charges and Deductions
The following charges and deductions are assessed under the Contract:
Surrender Charge (Contingent Deferred Sales Charge). No charge for sales
expenses is deducted from purchase payments at the time purchase payments are
made. However, a surrender charge may be deducted from amounts surrendered or
withdrawn. A surrender charge also may be deducted from amounts applied to
annuity payment options not providing a life annuity or a life
14
<PAGE>
annuity with a period certain of at least five years. Surrender charges are not
deducted upon payment of a death benefit.
The surrender charge imposed on partial withdrawals, surrenders and upon
application of proceeds to certain annuity options equals a specified
percentage of the purchase payments withdrawn or applied. The surrender
charge is calculated by multiplying the applicable specified percentages by
the purchase payments withdrawn. For purchase payments withdrawn or
surrendered within one year of having been paid, the charge is 7% of the
amount of purchase payments withdrawn or surrendered. For each purchase
payment, the surrender charge decreases each full year that has elapsed since
the payment was made. Surrenders and withdrawals are considered to come first
from earnings and then from the oldest purchase payment, then the next oldest
payment, and so forth. No surrender charge is assessed upon the withdrawal or
surrender of earnings or purchase payments made more than 5 years prior to
the withdrawal or surrender. (See "Charges for Surrender or Partial
Withdrawals.")
During each Contract Year, up to 10% of purchase payments less any prior
withdrawal of purchase payments may be withdrawn without a Surrender Charge.
The surrender charge also may be waived in certain circumstances as
provided in the Contracts. (See "Waiver of Surrender Charge.")
We reserve the right to assess a processing charge equal to the lesser of
$25.00 or 2% of the amount withdrawn for each withdrawal (including the final
surrender) after the first 12 withdrawals in any Contract Year.
Annual Contract Fee. On the last day of each Contract Year prior to the
Annuity Income Date, or the surrender of the Contract, if earlier, we will
deduct an Annual Contract Fee of $30 from the Contract Value. A pro-rated
portion of the fee is deducted from all active Accounts. (See "Annual
Contract Fee.")
The Annual Contract Fee will be waived in its entirety if, at the time of
deduction, the Contract Value is $25,000 or more. In addition, the Annual
Contract Fee will be waived in its entirety for any Contract Year in which
purchase payments of at least $2,500 ($2,000 for Qualified Contracts),
exclusive of the initial purchase payment, are paid.
Mortality and Expense Risk Charge. We deduct a daily mortality and expense
risk charge to compensate us for assuming certain mortality and expense
risks. The charge is deducted from the assets of the Separate Account at an
annual rate of 1.25% (approximately 0.50% for mortality risk and 0.75% for
expense risks). (See "Mortality and Expense Risk Charge.")
Asset-Based Administration Charge. We deduct a daily administration charge
to compensate us for certain expenses we incur in administration of the
Contract and the Separate Account. The charge is deducted from the assets of
the Separate Account at an annual rate of 0.15%. (See "Asset-Based
Administration Charge".) We do not expect to make a profit from this charge.
Premium Taxes. If state or other premium taxes are applicable to a
Contract, they will be deducted from the Contract Value. Premium taxes will
be deducted from the Contract Value either: (1) at the time the Contract is
surrendered; (2) on the Annuity Income Date; or (3) at such other date as the
taxes are assessed.
Annuity Provisions
The Annuity Income Date may be elected by you at the time of application
or anytime thereafter. If no Annuity Income Date is elected, it will be the
first day of the calendar month following the Annuitant's 65th birthday or
ten years after the Contract Date, if later. The Annuity Income Date may not
be later than the first day of the month following the Annuitant's 85th
birthday.
On the Annuity Income Date, the Contract Value (adjusted as described
below) will be applied to an Annuity Income Option, unless you choose to
receive the surrender value in a lump sum. The Contract Value is adjusted by
deducting applicable premium tax not yet deducted, and for annuity options
other than a life annuity or a life annuity with a period certain of at least
five years, less any applicable surrender charge. (See "Annuity Payment
Options.")
Federal Tax Status
Generally, a distribution (including a surrender, partial withdrawal or
death benefit payment) may result in taxable income. In certain
circumstances, a 10% penalty tax may apply. For a further discussion of the
federal income status of variable annuity contracts, see "Federal Tax
Status."
15
<PAGE>
CONDENSED FINANCIAL INFORMATION
The following tables set forth certain information pertaining to the net
assets of the Separate Account, as represented by the accumulation unit
values and number of accumulation units for the period from the commencement
of business through September 30, 1996. This condensed financial information
is derived from the financial statements of the Separate Account and should
be read in conjunction with the financial statements, related notes and other
financial information contained in the Statement of Additional Information.
<TABLE>
<CAPTION>
Accumulation Unit Value
---------------------------------------------
Period
Commencement Year Ending Ending
Subaccount Date* (12/31/95) (9/30/96)
--------------------------------------------- ---------------- --------------- ------------
<S> <C> <C> <C>
Landmark VIP U.S. Government Fund 1.00 1.07 1.04
Landmark VIP Equity Fund 1.00 1.15 1.28
Landmark VIP Balanced Fund 1.00 1.11 1.17
Landmark VIP International Equity Fund 1.00 1.03 1.05
CitiSelect VIP Folio 200** -- -- --
CitiSelect VIP Folio 300** -- -- --
CitiSelect VIP Folio 400** -- -- --
CitiSelect VIP Folio 500** -- -- --
Landmark Small Cap Equity VIP Fund** -- -- --
Fidelity Growth Portfolio 1.00 1.31 1.45
Fidelity High Income Portfolio** -- -- --
Fidelity Equity Income Portfolio** -- -- --
Fidelity Overseas Portfolio** -- -- --
Fidelity Contrafund Portfolio** -- -- --
Fidelity Index 500 Portfolio** -- -- --
AIM V.I. Capital Appreciation Fund 1.00 1.29 1.48
AIM V.I. Government Securities Fund** -- -- --
AIM V.I. Growth Fund** -- -- --
AIM V.I. International Equity Fund** -- -- --
AIM V.I. Value Fund** -- -- --
AIM V.I. Growth and Income Fund** -- -- --
MFS World Governments Series 1.00 1.10 1.10
MFS Money Market Series 1.00 1.03 1.05
MFS Bond Series** -- -- --
MFS Total Return Series** -- -- --
MFS Research Series** -- -- --
MFS Emerging Growth Series** -- -- --
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Number of Accumulation Units
Outstanding
---------------------------------
Year Ending Period Ending
Subaccount (12/31/95) (9/30/96)
--------------------------------------------- --------------- -----------------
<S> <C> <C>
Landmark VIP U.S. Government Fund 207,248 279,434
Landmark VIP Equity Fund 649,011 1,088,693
Landmark VIP Balanced Fund 640,046 1,083,436
Landmark VIP International Equity Fund 377,945 727,426
CitiSelect VIP Folio 200** -- --
CitiSelect VIP Folio 300** -- --
CitiSelect VIP Folio 400** -- --
CitiSelect VIP Folio 500** -- --
Landmark Small Cap Equity VIP Fund** -- --
Fidelity Growth Portfolio 1,237,930 2,441,185
Fidelity High Income Portfolio** -- --
Fidelity Equity Income Portfolio** -- --
Fidelity Overseas Portfolio** -- --
Fidelity Contrafund Portfolio** -- --
Fidelity Index 500 Portfolio** -- --
AIM V.I. Capital Appreciation Fund 1,345,513 2,773,303
AIM V.I. Government Securities Fund** -- --
AIM V.I. Growth Fund** -- --
AIM V.I. International Equity Fund** -- --
AIM V.I. Value Fund** -- --
AIM V.I. Growth and Income Fund** -- --
MFS World Governments Series 241,914 311,640
MFS Money Market Series 115,908 56,865
MFS Bond Series** -- --
MFS Total Return Series** -- --
MFS Research Series** -- --
MFS Emerging Growth Series** -- --
</TABLE>
* The Landmark VIP U.S. Government Fund, Landmark VIP Equity Fund, Landmark
VIP Balanced Fund, Landmark VIP International Equity Fund, Fidelity Growth
Portfolio, AIM V.I. Capital Appreciation Fund, MFS World Governments
Series and MFS Money Market Series subaccounts commenced operations on
February 21, 1995. All other subaccounts commenced operations on February
3, 1997.
** As of the date of this Prospectus, the CitiSelect VIP Folio 200, the
CitiSelect VIP Folio 300, the CitiSelect VIP Folio 400, the CitiSelect VIP
Folio 500, the Landmark Small Cap Equity VIP Fund, the Fidelity High
Income Portfolio, the Fidelity Equity Income Portfolio, the Fidelity
Overseas Portfolio, the Fidelity Contrafund Portfolio, the Fidelity Index
500 Portfolio, the AIM V.I. Government Securities Fund, the AIM V.I.
Growth Fund, the AIM V.I. International Equity Fund, the AIM V.I. Value
Fund, the AIM V.I. Growth and Income Fund, the MFS Bond Series, the MFS
Total Return Series, the MFS Research Series and the MFS Emerging Growth
Series subaccounts had not yet commenced operations, had no assets or
liabilities and had received no income and incurred no expenses.
Accordingly, no condensed financial information is included for these 19
subaccounts and these subaccounts are not included in the financial
statement. The Landmark VIP U.S. Government Fund, the Landmark VIP Equity
Fund, the Landmark VIP Balanced Fund and the Landmark VIP International
Equity Fund subaccounts were offered prior to the date of this prospectus
as part of the Separate Account and included in the condensed financial
information and financial statements. However, such subaccounts are no
longer available for investment.
17
<PAGE>
THE COMPANY, THE SEPARATE ACCOUNT AND THE FUNDS
First Citicorp Life Insurance Company
First Citicorp Life Insurance Company is a stock life insurance company
organized under the laws of the State of New York in 1978. First Citicorp Life
is wholly owned by Citicorp Life Insurance Company, an Arizona insurer, which in
turn, is wholly owned by Citibank Delaware. Citibank Delaware is a wholly owned
subsidiary of Citicorp Holdings Inc., which in turn, is a wholly owned
subsidiary of Citicorp, one of the world's largest bank holding companies.
First Citicorp Life primarily engages in the reinsurance of credit life
insurance issued by other insurance companies. First Citicorp Life also issues
modest amounts of term life insurance and fixed annuities on a direct basis.
As of December 31, 1995, First Citicorp Life Insurance Company had statutory
assets in excess of $200,416,000. First Citicorp Life Insurance Company's
financial statements can be found in the Statement of Additional Information and
should only be considered in the context of its ability to meet any obligations
it may have under the Contract.
First Citicorp Life Variable Annuity Separate Account
The Separate Account was established by us as a separate account on July 6,
1994. The Separate Account will receive and invest purchase payments made under
the Contracts. In addition, the Separate Account may receive and invest purchase
payments for other variable annuity contracts we may issue in the future.
Although the assets in the Separate Account are our property, the assets in
the Separate Account attributable to the Contracts are not chargeable with
liabilities arising out of any other business that we may conduct. The assets of
the Separate Account are available to cover our general liabilities only to the
extent that the Separate Account's assets exceed the liabilities arising under
the Contracts and any other contracts supported by the Separate Account. We have
the right to transfer to the General Account any assets of the Separate Account
which are in excess of reserves and other contract liabilities. All obligations
arising under the Contracts are our general corporate obligations.
The Separate Account currently is divided into twenty-seven (27) subaccounts
but may, in the future, include additional subaccounts. Each subaccount invests
exclusively in shares of a single corresponding portfolio. The Landmark VIP U.S.
Government Fund, the Landmark VIP Equity Fund, the Landmark VIP Balanced Fund
and the Landmark VIP International Equity Fund subaccounts are closed to new
investment. The income, gains and losses, realized or unrealized, from the
assets allocated to each subaccount are credited to or charged against that
subaccount without regard to income, gains or losses from any other subaccount.
The Separate Account has been registered with the SEC as a unit investment
trust under the Investment Company Act of 1940 (the "1940 Act") and meets the
definition of a separate account under the federal securities laws. Registration
with the SEC does not involve supervision of the management or investment
practices or policies of the Separate Account by the SEC. The Separate Account
is also subject to the laws of the State of New York which regulate the
operations of insurance companies domiciled in New York.
The Funds
The Separate Account invests in shares of the Landmark VIP Funds, the
Variable Annuity Portfolios, the Fidelity Variable Insurance Products Fund, the
Fidelity Variable Insurance Products Fund II, the AIM Variable Insurance Funds,
Inc. and the MFS Variable Insurance Trust. The Funds are management investment
companies of the series type with one or more investment portfolios. Each Fund
is registered with the SEC as an open-end, management investment company. Such
registration does not involve supervision of the management or investment
practices or policies of the Company or the portfolios by the SEC.
The Funds may, in the future, create additional portfolios that may or may
not be available as investment options under the Contracts. Each portfolio has
its own investment objectives and the income and losses for each portfolio are
determined separately for that portfolio.
The investment objectives and policies of each portfolio are summarized
below. There is no assurance that any portfolio will achieve its stated
objectives. More detailed information, including a description of risks and
expenses, may be found in the prospectuses for the Funds which must accompany or
precede this prospectus and which should be read carefully and retained for
future reference.
Landmark VIP Funds. The Landmark VIP Funds currently include four funds
available as investment options under the Contracts. However, as of the date of
this prospectus, the Landmark VIP Funds are no longer available for investment.
The Landmark
18
<PAGE>
VIP Funds include the Landmark VIP U.S. Government Fund, the Landmark VIP
Equity Fund, the Landmark VIP Balanced Fund and the Landmark VIP
International Equity Fund.
Landmark VIP U.S. Government Fund. This portfolio seeks current income as
well as preservation of capital by investing, under normal circumstances, at
least 65% of its assets in obligations issued or guaranteed as to principal
and interest by the U.S. Government or any of its agencies and
instrumentalities and repurchase agreements involving U.S. Government
securities.
Landmark VIP Equity Fund. This portfolio seeks long-term capital growth.
Dividend income, if any, is incidental to the fund's investment objective of
increasing long-term value. Under normal circumstances, at least 65% of the
fund's total assets are invested in equity securities. Investments are
primarily in common stocks of domestic companies with medium to large market
capitalizations, i.e. $750 million or more, and seasoned management teams.
Appreciation may be sought in other types of securities such as fixed income
securities, convertible and non-convertible bonds, preferred stocks and
warrants.
Landmark VIP Balanced Fund. This portfolio seeks to earn high current income
by investing in a broad range of securities, to preserve capital, and to
provide growth potential with reduced risk. The fund is invested in a broadly
diversified portfolio of income producing securities, including common
stocks, preferred stocks and bonds. Under normal circumstances, at least 25%
of the portfolio's total assets are invested in fixed income securities.
Landmark VIP International Equity Fund. This portfolio seeks long-term
capital growth. Dividend income, if any, is incidental to the portfolio's
investment objective of increasing long-term value. Investments are primarily
in common stocks in countries other than the United States. Under normal
circumstances, at least 65% of the fund's assets are invested in equity
securities. Appreciation may be sought in other types of securities such as
fixed income securities, convertible and non-convertible bonds, preferred
stocks and warrants.
Citibank, N.A. serves as investment adviser to these portfolios and manages
their assets in accordance with general policies and guidelines established by
the trustees of the Landmark VIP Funds.
Variable Annuity Portfolios. The Variable Annuity Portfolios currently
include five funds, all of which are available as investment options under the
Contracts. The Variable Annuity Portfolios include CitiSelect VIP Folio 200,
CitiSelect VIP Folio 300, CitiSelect VIP Folio 400, CitiSelect VIP Folio 500 and
Landmark Small Cap Equity VIP Fund.
CitiSelect VIP Folio 200. This portfolio seeks high total return over time,
consistent with a primary emphasis on income and a secondary emphasis on
capital appreciation by allocating portfolio assets among a diversified,
professionally managed mix of equity, fixed income and money market
securities. Under normal circumstances, 25%-45% of the portfolio's assets
will be invested in equity securities, 35%-55% of the portfolio's assets will
be invested in fixed income securities, and 10%-30% of the portfolio's assets
will be invested in Money Market securities.
CitiSelect VIP Folio 300. This portfolio seeks high total return over time,
consistent with a balanced emphasis on income and capital appreciation by
allocating assets among a diversified, professionally managed mix of equity,
fixed income and money market securities. Under normal circumstances, 40%-60%
of the portfolio's assets will be invested in equity securities, 35%-55% of
the portfolio's assets will be invested in fixed income securities, and
1%-10% of the portfolio's assets will be invested in Money Market securities.
CitiSelect VIP Folio 400. This portfolio seeks high total return over time,
consistent with a primary emphasis on capital appreciation and a secondary
emphasis on income for risk reduction purposes by allocating assets among a
diversified, professionally managed mix of equity, fixed income and money
market securities. Under normal circumstances, 55%-85% of the portfolio's
assets will be invested in equity securities, 15%-53% of the portfolio's
assets will be invested in fixed income securities, and 1%-10% of the
portfolio's assets will be invested in Money Market securities.
CitiSelect VIP Folio 500. This portfolio seeks the highest total return over
time, consistent with a primary emphasis on capital appreciation and a
secondary emphasis on income for risk reduction purposes by allocating assets
among a diversified, professionally managed mix of equity, fixed income and
money market securities. Under normal circumstances, 70%-95% of the
portfolio's assets will be invested in equity securities, 5%-20% of the
portfolio's assets will be invested in fixed income securities, and 1%-10% of
the portfolio's assets will be invested in Money Market securities.
Landmark Small Cap Equity VIP Fund. This fund seeks long-term capital growth
by investing in a diversified portfolio of equity securities of U.S.
companies with capitalization of $750 million or less. Under normal
circumstances, at least 65% of the fund's total assets will be invested in
such companies. Dividend income, if any, is incidental to this investment
objective.
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Citibank, N.A. serves as Investment Manager to these portfolios and manages
their assets in accordance with general policies and guidelines established by
the Trustees of the Variable Annuity Portfolios.
With respect to the CitiSelect Portfolios, Citibank, N.A. expects that, in
general, each Fund's assets will be allocated among the equity, fixed income and
money market class as provided above. However, cash flows of a Fund or changes
in market valuations could produce different results. Citibank, N.A. will review
each Fund's asset allocation quarterly and expects, in general, to rebalance the
Fund's investments, if necessary, at that time. Rebalancing may be accomplished
over a period of time and may be limited by tax and regulatory requirements.
Fidelity Variable Insurance Products Fund. The Fidelity Variable Insurance
Products Fund currently has five portfolios, four of which, the Fidelity Growth
Portfolio, the Fidelity High Income Portfolio, the Fidelity Equity Income
Portfolio, and the Fidelity Overseas Portfolio are available as investment
options under the Contracts.
Fidelity Growth Portfolio. This portfolio seeks to achieve capital
appreciation. The portfolio normally purchases common stocks, although its
investments are not restricted to any one type of security. Capital
appreciation may also be found in other types of securities, including bonds
and preferred stocks.
Fidelity High Income Portfolio*. This portfolio seeks to achieve high current
income by investing, under normal circumstances, at least 65% of its assets
in income producing debt securities, preferred stocks and convertible
securities. The Fidelity High Income Portfolio typically invests in longer
term, lower quality fixed income securities but may invest in common stocks,
other equity securities and debt securities not currently paying interest but
which are expected to do so in the future. In choosing investments, the
Fidelity High Income Portfolio also considers growth of capital.
Fidelity Equity Income Portfolio. This portfolio seeks reasonable income by
investing, under normal circumstances, at least 65% of its assets in income
producing equity securities. The remainder of the Fidelity Equity Income
Portfolio's assets will tend to be invested in debt obligations, many of
which are expected to be convertible into common stock. In choosing
investments, the portfolio also considers the potential for capital
appreciation.
Fidelity Overseas Portfolio. This portfolio seeks long term growth of capital
by investing, under normal circumstances, at least 65% of its assets in
securities of issuers from at least three different countries, whose
principal activities are outside of North America (the U.S., Canada, Mexico
and Central America). The majority of the portfolio's assets will be invested
in equity securities. However, the portfolio may also invest in debt
securities of any quality.
Fidelity Management & Research Company serves as investment adviser to these
portfolios and manages their assets in accordance with general policies and
guidelines established by the trustees of the Fidelity Variable Insurance
Products Fund.
Fidelity Variable Insurance Products Fund II. The Fidelity Variable Insurance
Products Fund II currently has five portfolios, two of which, the Fidelity
Contrafund Portfolio and the Fidelity Index 500 Portfolio are available as
investment options under the Contracts.
Fidelity Contrafund Portfolio. Under normal circumstances, this portfolio
seeks capital appreciation by investing mainly in common stocks and
securities convertible into common stock believed to be undervalued by an
overly pessimistic public appraisal but has the flexibility to invest in any
type of security that may produce capital appreciation. The portfolio's
investment strategy may lead to investment in small and mid-sized companies.
Fidelity Index 500 Portfolio. This portfolio seeks to match the total return
of the S&P 500 by investing, under normal circumstances, at least 80% of its
assets (65% if portfolio assets are below $20 million) in equity securities
of companies that compose the S&P 500, while keeping expenses low.
Fidelity Management & Research Company serves as investment adviser to these
portfolios and manages their assets in accordance with general policies and
guidelines established by the trustees of the Fidelity Variable Insurance
Products Fund II.
AIM Variable Insurance Funds, Inc. AIM Variable Insurance Funds, Inc.
currently has nine portfolios, six of which, the AIM V.I. Capital Appreciation
Fund, the AIM V.I. Government Securities Fund, the AIM V.I. Growth Fund, the AIM
V.I. International Equity Fund, the AIM V.I. Value Fund and the AIM V.I. Growth
and Income Fund are available as investment options under the Contracts.
AIM V.I. Capital Appreciation Fund. This portfolio seeks capital appreciation
through investments in common stocks, with emphasis on medium-sized and
smaller emerging growth companies.
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AIM V.I. Government Securities Fund. This portfolio seeks to achieve a
high level of current income consistent with reasonable concern for safety
of principal by investing in debt securities issued, guaranteed or
otherwise backed by the United States Government.
AIM V.I. Growth Fund. This portfolio seeks growth of capital principally
through investment in common stocks of seasoned and bettered capitalized
companies considered by AIM Advisors, Inc ("AIM") to have strong earnings
momentum.
AIM V.I. International Equity Fund. This portfolio seeks to provide
long-term growth of capital by investing in a diversified portfolio of
international equity securities, the issuers of which are considered by
AIM to have strong earnings momentum.
AIM V.I. Value Fund. This portfolio seeks to achieve long-term growth of
capital by investing primarily in equity securities judged by AIM to be
undervalued relative to the current or projected earnings of the companies
issuing the securities, or relative to current market value of assets
owned by the companies issuing the securities or relative to the equity
market generally. Income is a secondary objective.
AIM V.I. Growth and Income Fund. This portfolio seeks growth of capital,
with current income as a secondary objective. The fund invests primarily
in stocks believed by AIM to have the potential for above average
prospects for both growth of capital and dividend income.
AIM serves as investment adviser to these portfolios and manages their
assets in accordance with general policies and guidelines established by the
trustees of the AIM V.I. Capital Appreciation Fund.
MFS Variable Insurance Trust. MFS Variable Insurance Trust currently has
twelve portfolios, six of which, the MFS World Governments Series, the MFS
Money Market Series, the MFS Bond Series, the MFS Total Return Series, the
MFS Research Series and the MFS Emerging Growth Series are available as
investment options under the Contracts.
MFS World Governments Series. This portfolio seeks preservation and growth of
capital, together with moderate current income. Objectives are achieved
through an internationally diversified portfolio consisting primarily of debt
securities (normally at least 80%) and to a lesser extent equity securities.
MFS Money Market Series. This portfolio seeks as high a level of current
income as is considered consistent with the preservation of capital and
liquidity. Objectives are achieved by investing primarily (normally at
least 80%) in U.S. Government Securities, obligations of banks, commercial
paper and short-term corporate obligations. An investment in the Money
Market Series is neither insured nor guaranteed by the U.S. Government,
and there can be no assurance that the Fund will be able to maintain a
stable net asset value of $1 per share.
MFS Bond Series*. This portfolio seeks primarily to provide as high a
level of current income as is believed consistent with prudent investment
risk and secondarily to protect capital. Under normal conditions, at least
65% of the portfolio's total assets will be invested in convertible and
non-convertible debt securities and preferred stocks, U.S. Government
securities, commercial paper, repurchase agreements and cash or cash
equivalents (such as certificates of deposit, and banker's acceptances).
MFS Total Return Series*. This portfolio's primary investment objective is to
provide above average income (compared to a portfolio invested entirely in
equity securities) consistent with the prudent employment of capital, and
secondarily, to provide a reasonable opportunity for growth of capital and
income. Under normal market conditions, at least 25% of the portfolio's
assets will be invested in fixed income securities and at least 40% and no
more than 75% of its assets will be invested in equity securities.
MFS Research Series*. This portfolio seeks to provide long term growth of
capital and future income by investing a substantial portion of its total
assets in the common stocks or securities convertible into common stocks of
companies believed to possess better than average prospects for long term
growth. A smaller proportion of the MFS Research Series' assets may be
invested in bonds, short term obligations, preferred stocks or common stocks
whose principal characteristic is income production rather than growth.
MFS Emerging Growth Series. This portfolio seeks primarily to provide long
term growth of capital. Dividend and interest income from portfolio
securities, if any, is incidental to the primary investment objective of long
term growth of capital. Under normal circumstances, at least 80% of the
portfolio's total assets will be invested in common stocks of companies that
Massachusetts Financial Service Company ("MFS") believes are early in their
life cycle but which have the potential to become major enterprises.
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MFS serves as investment adviser to these portfolios and manages their
assets in accordance with general policies and guidelines established by the
trustees of the MFS Variable Insurance Trust.
* The portfolios' investment strategy may provide the opportunity of
higher than average yields by investing in securities with higher than
average risk, such as lower and unrated debt and comparable equity
instruments. Please consult each portfolio's Fund prospectus accompanying
this Prospectus for more information about the risk associated with such
investments.
Addition, Deletion or Substitution of Investments
We reserve the right, subject to applicable law, to make additions to,
deletions from, or substitutions for the shares of a portfolio that are held
in the Separate Account or that the Separate Account may purchase. If the
shares of a portfolio are no longer available for investment or if, in our
judgment, further investment in any portfolio should become inappropriate, we
may redeem the shares, if any, of that portfolio and substitute shares of
another portfolio. We will not substitute any shares attributable to a
Contract's interest in a subaccount without notice and prior approval of the
SEC and state insurance authorities, to the extent required by the 1940 Act
or other applicable law.
We also reserve the right to establish additional subaccounts of the
Separate Account, each of which would invest in shares of a new corresponding
portfolio having a specified investment objective. We may, in our sole
discretion, establish new subaccounts or eliminate or combine one or more
subaccounts if marketing needs, tax considerations or investment conditions
warrant. Any new subaccounts may be made available to existing Contract
Owners on a basis to be determined by us. Subject to obtaining any approvals
or consents required by applicable law, the assets of one or more subaccounts
may be transferred to any other subaccount if, in our sole discretion,
marketing, tax, or investment conditions warrant.
In the event of any such substitution or change, we may (by appropriate
endorsement, if necessary) change the Contract to reflect the substitution or
change. If we consider it to be in the best interest of Owners and
Annuitants, and subject to any approvals that may be required under
applicable law, the Separate Account may be operated as a management
investment company under the 1940 Act, it may be deregistered under that Act
if registration is no longer required, it may be combined with other separate
accounts, or its assets may be transferred to another separate account. In
addition, we may, when permitted by law, restrict or eliminate any voting
privileges of Owners or other persons who have such privileges under the
Contracts.
DESCRIPTION OF THE CONTRACT
Issuance of a Contract
In order to purchase a Contract, application must be made to us through
our licensed representative who is also a registered representative of
Citicorp Investment Services, Inc., a registered broker-dealer which has a
selling agreement with The Landmark Funds Broker-Dealer Services, Inc.
Contracts may be sold to or in connection with retirement plans that do not
qualify for special tax treatment as well as retirement plans that qualify
for special tax treatment under the Code. The maximum age for Owners on the
Contract Date is 90.
Purchase Payments
The minimum amount that we will accept as an initial purchase payment is
$5,000 for Non-Qualified Contracts, $2,000 for Qualified Contracts.
Subsequent purchase payments may be paid at any time during the Annuitant's
lifetime and before the Annuity Income Date.
We reserve the right not to accept purchase payments in excess of $1
million per Contract Year. We also reserve the right not to accept payments
of less than $500 for Non-Qualified Contracts or less than $100 for Qualified
Contracts.
Under our automatic purchase payment plan, you can select a monthly
payment schedule pursuant to which purchase payments will be automatically
deducted from a bank account or other source. We reserve the right not to
accept such monthly payments if less than $500 for Non-Qualified Contracts or
less than $100 for Qualified Contracts.
Free-Look Period
The Contract provides for an initial "free-look" period. You have the
right to return the Contract within 10 days of receiving it. In some
jurisdictions, this period may be longer than 10 days. When we receive the
returned Contract at our home office or when the sales representative who
sold the Contract receives it before the end of this period, we will cancel
the Contract and refund to
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you an amount equal to the Contract Value as of the date the returned Contract
is received plus any premium taxes deducted. This amount may be more or less
than the aggregate amount of purchase payments made up to that time. In certain
jurisdictions, we instead return the greater of the Contract Value plus any
premium tax deducted or aggregate purchase payment(s) less any prior
withdrawals. In those cases, we will allocate initial purchase payments to the
Money Market Subaccount for the free-look period following the Contract Date.
The free-look period begins on the date following your receipt of the Contract.
We will consider the Contract received five days after it is mailed to your last
known address.
Allocation of Purchase Payments
At the time of application, you select the allocation of the initial net
purchase payment among the subaccounts and the Fixed Account. Any allocation
must be for at least $100 and be a whole percentage of a purchase payment.
If the application for a Contract is properly completed and is accompanied by
all the information necessary to process it, including payment of the initial
purchase payment, the initial purchase payment will be allocated, as designated
by you, to one or more of the subaccounts or to the Fixed Account within two
valuation days of receipt of such purchase payment by us at our home office. If
the application is not properly completed, we reserve the right to retain the
purchase payment for up to five valuation days while we attempt to complete the
application. If the application is not complete at the end of the 5-day period,
we will inform the applicant of the reason for the delay and the initial
purchase payment will be returned immediately, unless the applicant specifically
consents to our retaining the purchase payment until the application is
complete. Once the application is complete, the initial purchase payment will be
allocated as designated by you within two valuation days.
Notwithstanding the foregoing, in jurisdictions where we must refund the
greater of aggregate purchase payments or Contract Value in the event you
exercise the free-look right, any portion of the initial purchase payment to be
allocated to a subaccount will be allocated to the Money Market Subaccount for
the free-look period following the Contract Date. At the end of that period, the
amount in the Money Market Subaccount will be allocated to the subaccounts as
designated by you based on the proportion that the allocation percentage for
each such subaccount bears to the sum of the allocation percentages set forth in
the purchase payment allocation schedule then in effect. However, allocations to
the subaccounts invested in the Landmark VIP Funds are no longer permitted.
Any subsequent purchase payments will be allocated as of the end of the
valuation period in which the subsequent purchase payment is received by us and
will be allocated in accordance with the purchase payment allocation schedule in
effect at the time the purchase payment is received. However, you may direct
individual payments to a specific subaccount or to the Fixed Account (or any
combination thereof) without changing the existing allocation schedule. The
allocation schedule may be changed by you at any time by written notice.
Changing the purchase payment allocation schedule will not change the allocation
of existing Contract Value among the subaccounts or the Fixed Account.
The Contract Values allocated to a subaccount will vary with that
subaccount's investment experience, and you bear the entire investment risk.
You should periodically review your purchase payment allocation schedule in
light of market conditions and your overall financial objectives.
Variable Contract Value
The Variable Contract Value will reflect the investment experience of the
selected subaccounts, any purchase payments paid, any surrenders or partial
withdrawals, any transfers, and any charges assessed in connection with the
Contract. There is no guaranteed minimum Variable Contract Value, and,
because a Contract's Variable Contract Value on any future date depends upon
a number of variables, it cannot be predetermined.
Calculation of Variable Contract Value. The Variable Contract Value is
determined at the end of each valuation period prior to the Annuity Income Date.
The value will be the aggregate of the values attributable to the Contract in
each of the subaccounts, determined for each subaccount by multiplying that
subaccount's accumulation unit value for the relevant valuation period by the
number of accumulation units of that subaccount allocated to the Contract.
Determination of Number of Accumulation Units. Prior to the Annuity Income
Date, any amounts allocated or transferred to the subaccounts will be converted
into subaccount accumulation units. The number of accumulation units to be
credited to a Contract is determined by dividing the dollar amount being
allocated or transferred to a subaccount by the accumulation unit value for that
subaccount at the end of the valuation period during which the amount is
allocated or transferred. The number of accumulation units in any subaccount
will be increased at the end of the valuation period by any purchase payments
allocated to the subaccount during the current valuation period and by any
amounts transferred to the subaccount from another subaccount or from the Fixed
Account during the current valuation period.
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Any amounts transferred, surrendered or deducted from a subaccount will be
processed by cancelling or liquidating accumulation units. The number of
accumulation units to be cancelled is determined by dividing the dollar
amount being removed from a subaccount by the accumulation unit value for
that subaccount at the end of the valuation period during which the amount
was removed. The number of accumulation units in any subaccount will be
decreased at the end of the valuation period by: (a) any amounts transferred
(and any applicable transfer fee) from that subaccount to another subaccount
or to the Fixed Account; (b) any amounts withdrawn or surrendered during that
valuation period; (c) any surrender charge, Annual Contract Fee or premium
tax assessed upon a partial withdrawal or surrender; and (d) the Annual
Contract Fee, if assessed during that valuation period.
Determination of Accumulation Unit Value. The accumulation unit value for
each subaccount's first Valuation Period was set at $1.00. The accumulation
unit value for a subaccount is calculated for each subsequent Valuation
Period by multiplying that subaccount's accumulation unit value on the
preceding Valuation Day by the net investment factor for that sub-account for
the Valuation Period then ended.
The net investment factor for each subaccount for any Valuation Period is
calculated by dividing (1) by (2) and subtracting (3) from the result, where:
(1) Is the net asset value per share of the corresponding portfolio at the
end of the Valuation Period plus the per share amount of any declared
and unpaid dividends or capital gains accruing to that portfolio plus
(or minus) a per share credit (or charge) for any taxes resulting from
the investment operations of the subaccount;
(2) Is the portfolio's net asset value per share at the beginning of the
Valuation Period; and
(3) Is a factor representing the daily mortality and expense risk charge
and the administration charge deducted from the subaccount.
Transfer Privileges
General. Before the Annuity Income Date and subject to the restrictions
described below, you may transfer all or part of the amount in a subaccount
or the Fixed Account to another subaccount or the Fixed Account. However,
transfers to the subaccounts invested in the Landmark VIP Funds are no longer
permitted.
The maximum amount transferable from the Fixed Account during any Contract
Year is limited to the greater of: (1) 40% of the Fixed Account Value as of
the later of the Contract Date or last Contract Anniversary; (2) the Contract
Value in the Fixed Account attributable to interest earnings; and (3) the
greatest transfer from the Fixed Account during the prior Contract Year. We
also reserve the right to defer transfers from the Fixed Account for up to 6
months following the date of the request.
If the value remaining in any Account after a transfer is less than $100,
we have the right to transfer the entire amount instead of the requested
amount. In the absence of any other directions, such transfer will be
allocated in the same proportion as the transfer request resulting in this
action.
Subject to the foregoing restrictions, there currently is no limit on the
number of transfers that can be made among or between subaccounts or to or
from the Fixed Account.
Transfers may be made based upon instructions given by written request or
by telephone. We will only honor telephone transfer requests if we have a
currently valid telephone transfer authorization form on file signed by you.
A telephone transfer authorization form received by us at our home office is
valid until it is rescinded or revoked in writing by you or until a
subsequently dated form signed by you is received at our home office. You may
provide a telephone transfer authorization with the application or pursuant
to a written request after the Contract Date.
We employ reasonable procedures to confirm that instructions communicated
by telephone are genuine and if we follow such procedures we will not be
liable for any losses due to unauthorized or fraudulent instructions. We,
however, may be liable for such losses if we do not follow those reasonable
procedures. The procedures we follow for telephone transfers include
confirming the correct name, contract number and social security number code
for each telephone transfer.
We reserve the right to modify, restrict, suspend or eliminate the
transfer privileges (including the telephone transfer facility) at any time,
for any class of Contracts, for any reason. In particular, we reserve the
right to not honor transfers requested by a third party holding a power of
attorney from an Owner where that third party requests simultaneous transfers
on behalf of the Owners of two or more Contracts.
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Transfer Fee. Currently, a $25 fee is assessed on the 19th and each
subsequent transfer during a Contract Year. We reserve the right, however, to
charge $25 for the 13th and each subsequent transfer during a Contract Year.
(See "Charges and Deductions".)
Dollar-Cost Averaging. If elected at the time of the application and at any
time thereafter by written request, you may systematically or automatically
transfer (on a monthly basis) specified dollar amounts from the Money Market
Subaccount or the Fixed Account, but not from both Accounts at the same time, to
other subaccounts for any period of time greater than six months. This is known
as the dollar-cost averaging method of investment. The fixed dollar amount will
purchase more accumulation units of a subaccount when their value is lower and
fewer units when their value is higher. Over time, the cost per unit averages
out to be less than if all purchases of units had been made at the highest value
and greater than if all purchases had been made at the lowest value. The
dollar-cost averaging method of investment reduces the risk of making purchases
only when the price of accumulation units is high. It does not assure a profit
or protect against a loss in declining markets.
The minimum transfer amount to a subaccount for dollar-cost averaging is $100
per month (or the equivalent). Each transfer from the Money Market Subaccount
must be equal to or less than 1/6 of the Money Market Subaccount value at the
time the automatic transfers begin. The maximum per transfer amount for transfer
from the Fixed Account is 1/30 of the Fixed Account value at the time the
automatic transfers begin. Once elected, dollar-cost averaging remains in effect
for a Contract until the Contract Value in the Money Market Subaccount or the
Fixed Account is inadequate to execute the requested transfers or until you
cancel the election by providing us with at least 6 days prior written notice.
You may exercise your right to cancel the election at any time. There is no
additional charge for using dollar-cost averaging. However, automatic transfers
will be treated as any other transfer in determining the number of transfers in
any Contract Year. We reserve the right to discontinue offering the dollar-cost
averaging facility at any time and for any reason. A dollar-cost averaging
program in effect at the time of such discontinuance will continue unless
terminated by the Contract Owner.
Surrenders and Partial Withdrawals
Surrender. At any time before the Annuity Income Date, you may surrender the
Contract for its surrender value. The surrender value will be determined as of
the end of the Valuation Period during which written notice requesting surrender
is received at our home office. The surrender value will be paid in a lump sum.
A surrender may have adverse federal income tax consequences, including a
penalty tax. (See "Taxation of Annuities.")
Partial Withdrawals. At any time before the Annuity Income Date, you may make
partial withdrawals of the surrender value. Partial withdrawal requests must be
in writing and specify from which Account(s) the withdrawal is to be made. The
amount withdrawn must equal at least $500 except for systematic withdrawals.
When a withdrawal is made, you will receive the amount requested to be withdrawn
less any applicable surrender charge. If a partial withdrawal request would
reduce the Contract Value to less than $2,000, we may pay the full Contract
Value and terminate the Contract. We will withdraw the amount requested from the
Contract Value as of the end of the Valuation Period during which written notice
requesting the partial withdrawal is received. (See "Surrender Charge.")
A partial withdrawal may have adverse federal income tax consequences,
including a penalty tax. (See "Taxation of Annuities.")
We currently do not impose a processing charge for withdrawals, however, we
reserve the right to assess a processing charge equal to the lesser of $25.00 or
2% of the amount withdrawn for the 13th and each subsequent withdrawal during a
Contract Year. The processing charge will be in addition to any applicable
surrender charge. This charge will be deducted from the Account from which the
withdrawal is made and will reduce the Account value available for withdrawal
accordingly. If a withdrawal is made from more than one Account at the same
time, the processing charge would be deducted pro-rata from the remaining
Contract Value in such Account(s).
Surrender and Partial Withdrawal Restrictions. Your right to make surrenders
and partial withdrawals is subject to any restrictions imposed by applicable law
or employee benefit plan. We may defer payments from the Fixed Account for up to
six months.
Restrictions on Distributions from Certain Types of Contracts. There are
certain restrictions on surrenders of and partial withdrawals from Contracts
used as funding vehicles for Code Section 403(b) retirement programs. Section
403(b)(11) of the Code restricts the distribution under Section 403(b) annuity
contracts of: (i) elective contributions made in years beginning after December
31, 1988; (ii) earnings on those contributions; and (iii) earnings in such years
on amounts held as of the last year beginning before January 1, 1989.
Distributions of those amounts may only occur upon the 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.
Systematic Withdrawals. You may elect in writing at the time of the
application or any time after the first Contract Anniversary to receive periodic
partial withdrawals under our systematic withdrawal plan. Under the systematic
withdrawal plan, we will make
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partial withdrawals on a monthly, quarterly, semi-annual or annual basis from
designated Accounts as specified by you. Withdrawals from an Account must be
at least $50 each.
The withdrawals may be requested on the following basis: (1) as a
specified dollar amount; and (2) as a specified whole percent of Contract
Value.
Participation in the systematic withdrawal plan will terminate on the
earliest of the following events: (1) the value in an Account from which
partial withdrawals are being made becomes zero; (2) a termination date
specified by you is reached; or (3) you request that your participation in
the plan cease. Withdrawals under the systematic withdrawal plan are subject
to a surrender charge. (See "Surrender Charge").
Systematic withdrawals may have adverse federal income tax consequences
and you should, therefore, consult with your tax adviser before electing to
participate in the plan. We reserve the right to discontinue offering the
systematic withdrawal plan at any time. A systematic withdrawal plan in
effect at the time of such discontinuance will continue unless terminated by
the Contract owner.
Death Benefit Before the Annuity Income Date
Death of the Owner. Upon receipt of due proof of your death (or in the
case of Joint Owners, the death of the first Joint Owner to die) while the
Contract is in force and before the Annuity Income Date, we will pay the
Beneficiary the Death Benefit. In the case of Joint Owners, the surviving
Joint Owner will be the primary beneficiary. You may specify the manner in
which the Death Benefit is to be paid. If you do not specify how the Death
Benefit is to be paid, the Beneficiary may elect the manner in which the
Death Benefit is to be distributed.
In either case, the Death Benefit under a Non-Qualified Contract must be
distributed in full within 5 years after the deceased Owner's death unless:
1. The benefit is paid as a life annuity or an annuity with a period
certain not exceeding the Beneficiary's life expectancy with payments
beginning within one year of the deceased Owner's death; or
2. The Beneficiary is the surviving spouse of the deceased Owner, in which
case he or she may continue this Contract as the Owner.
If the Beneficiary is not a natural person, the benefit must be
distributed within 5 years of your death. Similar rules apply to Qualified
Contracts.
Death Benefit. If you die prior to age 75, the Death Benefit will be the
greatest of:
1. The Contract Value on the date we receive due proof of your death;
2. The Contract Value on the most recent 5th Contract Anniversary
immediately preceding the date of death, increased by the dollar amount
of any purchase payments and reduced by the dollar amount of any
withdrawals made since that Contract Anniversary; or
3. 100% of all purchase payments made less the dollar amount of any
purchase payment withdrawals since the date this Contract was issued.
If you die on or after your 75th birthday, the Death Benefit will equal
the greater of:
1. The Contract Value on the date we receive due proof of your death; or
2. The Death Benefit on your 75th birthday, less the dollar amount of any
subsequent withdrawals.
3. 100% of all purchase payments made less the dollar amount of any
purchase payment withdrawals since the date this Contract was issued.
If the Death Benefit is paid immediately in one lump sum, the Contract
will end on the date of payment. If the Death Benefit is not taken
immediately in one lump sum, the Death Benefit will become the new Contract
Value. Any resulting increase in the Contract Value will be allocated to each
Account in proportion to the distribution of the Contract Value on the date
we receive due proof of your death.
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If you die (or in the case of Joint Owners, the first Owner to die) prior
to the Annuity Income Date and there are two or more Beneficiaries, each
Beneficiary will receive an equal share of the Death Benefit unless you
specify otherwise in writing. If a named Beneficiary dies before you, the
interest of that Beneficiary will end on his or her death. If no Beneficiary
is named or no Beneficiary survives you, the commuted value of the Death
Benefit will be paid to your estate.
Death of the Annuitant Prior to the Annuity Income Date: If the Annuitant
dies prior to the Annuity Income Date, you may designate a new Annuitant. If
no new Annuitant is named within 30 days after the death of the Annuitant,
you will become the Annuitant under the Contract. If you are the Annuitant,
upon receipt of due proof of your death, we will pay the Beneficiary the
Death Benefit, as described above.
Annuity Payments on the Annuity Income Date
The Annuity Income Date may be elected by you at the time of the
application or any time thereafter. You may change the Annuity Income Date at
any time provided you give us 30 days prior written notice. If no Annuity
Income Date is elected, it will be the first day of the calendar month
following the Annuitant's 65th birthday or ten years after the Contract Date,
if later. The Annuity Income Date may not be later than the first day of the
month following the Annuitant's 85th birthday.
On the Annuity Income Date, the Contract Value, less any applicable prior
undeducted premium taxes, will be applied under the life income annuity
payment option with ten years guaranteed, unless you elect to have the
proceeds paid under another payment option or to receive the surrender value
in a lump sum. (See "Annuity Payment Options.") Unless you instruct us
otherwise, amounts in the Fixed Account will be used to provide a
fixed-annuity payment option and amounts in the Separate Account will be used
to provide a variable annuity payment option.
Any time prior to the Annuity Income Date, you may designate or change the
payee (Annuitant) to receive payments under the applicable annuity payment
option.
Payments
Any surrender, partial withdrawal, or death benefit will usually be paid
within seven days of receipt of a written request, any information or
documentation reasonably necessary to process the request, and (in the case
of a Death Benefit) receipt and filing of due proof of death. However,
payments may be postponed if:
1. the New York Stock Exchange is closed, other than customary weekend and
holiday closings, or trading on the exchange is restricted as
determined by the SEC; or
2. the SEC permits by an order the postponement for the protection of
Contract Owners; or
3. the SEC determines that an emergency exists that would make the
disposal of securities held in the subaccount or the determination of
the value of the subaccount's net assets not reasonably practicable.
If a recent check or draft has been submitted, we have the right to delay
payment until we have assured ourselves that the check or draft has been
honored.
We have the right to defer payment of any surrender or partial withdrawal
or transfer from the Fixed Account for up to six months from the date of
receipt of written notice for such a surrender or transfer. If payment is not
made within 10 days after receipt of documentation necessary to complete the
transaction, interest will be added to the amount paid from the date of
receipt of documentation at the minimum rate required by law or the Current
Fixed Account Interest Rate, if greater.
Modification
Upon notice to you, or the Annuitant, we may modify the Contract if:
1. necessary to permit the Contract or the Separate Account to comply with
any applicable law or regulation issued by a government agency; or
2. necessary to reflect a change in the operation of the Separate Account
or a subaccount; or
3. necessary to add, delete or modify an Account; or
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4. necessary to add, modify or delete subaccounts or portfolios.
In the event of most such modifications, we will make appropriate
endorsement to the Contract.
Owner
You are the Owner of the Contract. You are also the Annuitant unless a
different Annuitant is named. Any Joint Owner must be your spouse unless we
agree otherwise. For Qualified Contracts, the Owner must be the Annuitant and
Joint Owners are not permitted. Before the Annuity Income Date you have all
the rights under the Contract, subject to the rights of any assignee of
record. This includes the right to:
1. Transfer values between Accounts and designate or change the allocation
of purchase payments to each Account;
2. Name and/or change the Beneficiaries, Owner or Annuitant;
3. Surrender the Contract in whole or in part for cash;
4. Assign the Contract Value, in whole or in part;
5. Designate and change the Annuity Income Date; and
6. Elect or change the Annuity Payment Option.
All elections, authorizations and change requests must be made to us in
writing. Upon receipt by us, any change will be effective as of the date it
was signed by you, except that any values or amounts payable under the
Contract will be determined as of the Valuation Day on or next following the
date of receipt. Payment made or action taken by us prior to the time written
notice is received will discharge our liability under this Contract to the
extent of such action or payment. The consent of any irrevocable Beneficiary
is required to exercise any right. If Joint Owners are named, both must
consent to any change.
Reports to Owners
At least annually, we will mail to each Owner, at such Owner's last known
address of record, a report setting forth the Contract Value, subaccount
values, and Fixed Account Value, as well as your current purchase payment
allocation directions. We will also provide you with shareholder reports of
the Funds as well as other notices, reports or documents as required by law.
Inquiries
Inquiries regarding a Contract may be made by writing to us at our home
office.
THE FIXED ACCOUNT
You may allocate some or all of the purchase payments and transfer some or
all of the Contract Value to the Fixed Account, which is part of our General
Account and pays interest at declared rates guaranteed for one year. Our
General Account supports our insurance and annuity obligations. Since the
Fixed Account is part of the General Account, we assume the risk of
investment gain or loss on this amount. All assets in the General Account are
subject to our general liabilities from business operations. The Fixed
Account may not be available in all states.
The Fixed Account has not been, and is not required to be, registered with
the SEC under the Securities Act of 1933, and neither the Fixed Account nor
our General Account has been registered as an investment company under the
1940 Act. Therefore, neither our General Account, the Fixed Account, nor any
interests therein are generally subject to regulation under the 1933 Act or
the 1940 Act. The disclosures relating to the Fixed Account which are
included in this prospectus are for your information and have not been
reviewed by the SEC. However, such disclosures may be subject to certain
generally applicable provisions of federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
Fixed Account Value
The Fixed Account Value is credited with interest, as described below. The
Fixed Account Value reflects interest credited, the allocation of purchase
payments, transfers of Contract Value from the Fixed Account, surrenders and
partial withdrawals from the
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Fixed Account and charges assessed in connection with the Contract. The Fixed
Account Value is guaranteed to accumulate at a minimum effective annual
interest rate of 3%.
Beginning on the date we issue the Contract, we will credit any portion of
the initial purchase payment allocated to the Fixed Account with a specified
interest rate, known as the Initial Fixed Account Interest Rate. We may
declare different initial interest rates for each subsequent purchase payment
or transfer into the Fixed Account. We will guarantee the initial rate
credited for one year from the date the purchase payment is received or
transfer is effective. Thereafter, the interest rate earned will be the
applicable Current Fixed Account Interest Rate as we may declare.
The Current Fixed Account Interest Rate is a rate we establish from time
to time for all amounts under the Contract that have been allocated to the
Fixed Account for more than one year. We may change the Current Fixed Account
Interest Rate from time to time to reflect prevailing market conditions but
not more often than once every twelve months. The Initial Fixed Account
Interest Rate and the Current Fixed Account Interest Rate will vary but will
always be equal to or greater than an effective annual rate of 3%.
The maximum amount transferable from the Fixed Account during any Contract
Year is limited to the greatest of: (1) 40% of the Fixed Account Value as of
the later of the Contract Date or last Contract Anniversary; (2) the Contract
Value in the Fixed Account attributable to interest earnings; and (3) the
greatest transfer from the Fixed Account during the prior Contract Year. If
the value remaining in the Fixed Account after a transfer is less than $100,
we have the right to transfer the entire amount instead of the requested
amount. We also reserve the right to defer transfers from the Fixed Account
for up to 6 months following the date of the request.
CHARGES AND DEDUCTIONS
Surrender Charge (Contingent Deferred Sales Charge)
General. No charge for sales expenses is deducted from purchase payments
at the time purchase payments are paid. However, a surrender charge may be
deducted upon surrender or partial withdrawal of purchase payments. A
surrender charge also may be deducted from amounts applied to annuity options
not providing a life annuity or a life annuity with a period certain of at
least five years. Surrender charges are not deducted upon payment of a death
benefit or from withdrawals or surrender of earnings under the Contract. (See
"Annuity Payments on the Annuity Income Date".)
In the event surrender charges are not sufficient to cover sales expenses,
the loss will be borne by us; conversely, if the amount of such charges
proves more than enough to cover such expenses, the excess will be retained
by us. We do not currently believe that the surrender charges imposed will
cover the expected costs of distributing the Contracts. Any shortfall will be
made up from our general assets which may include amounts derived from the
mortality and expense risk charge.
Charge for Partial Withdrawal or Surrender. A charge is imposed on partial
withdrawals and surrenders equal to a specified percentage of the purchase
payments withdrawn. The surrender charge is calculated by multiplying the
applicable percentages specified in the table below by the purchase payments
withdrawn. The number of years since the date of a purchase payment being
withdrawn will determine the surrender charge percentage that will apply to
that purchase payment. The surrender charge is calculated using the
assumption that all earnings are withdrawn first and then all purchase
payments are withdrawn on a first-in-first-out basis.
Number of Years Since Charge as Percentage
Date of Purchase Payment of Purchase Payment Withdrawn
------------------------------ ------------------------------------
0-1 7%
1-2 6%
2-3 5%
3-4 4%
4-5 3%
5+ 0%
Any applicable surrender charge is deducted from the amount withdrawn.
Amounts Not Subject to Surrender Charge. During each Contract Year, up to
10% of all purchase payments not previously withdrawn, less any prior
withdrawal of purchase payments, may be withdrawn without the imposition of a
surrender charge. Purchase payments surrendered or withdrawn in excess of
this 10% will be assessed a surrender charge. This right is not cumulative
from Contract Year to Contract Year.
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Annual Contract Fee
On the last day of each Contract Year prior to the Annuity Income Date, we
deduct from the Contract Value an Annual Contract Fee of $30 to reimburse us
for administrative expenses relating to the Contract. The fee will be charged
by reducing the value of all active Accounts on a pro-rata basis. With
respect to each subaccount, we deduct this fee by cancelling accumulation
units. The number of accumulation units deducted from each subaccount will be
determined by dividing the pro-rata portion of the fee applicable to that
subaccount by the accumulation unit value of that subaccount on the date the
fee is assessed. We do not expect to make a profit on this fee. The Annual
Contract Fee also is deducted upon surrender of a Contract if other than on
the last day of each Contract Year. We do not deduct the Annual Contract Fee
under Contracts with a Contract Value of $25,000 or more on the date of
deduction. In addition, we do not deduct the Annual Contract Fee under
Contracts for which purchase payments of at least $2,500 ($2,000 for
Qualified Contracts), exclusive of the initial purchase payment, are received
during the Contract Year.
Asset-Based Administration Charge
We deduct a daily administration charge to compensate us for certain
expenses we incur in administration of the Contract and the Separate Account.
The charge is deducted from the assets of the Separate Account at an annual
rate of 0.15%. We do not expect to make a profit from this charge.
Transfer Processing Fee
We reserve the right to charge $25 for the 13th and each subsequent
transfer during a Contract Year. Currently, no fee is assessed until the 19th
transfer during a Contract Year. For the purpose of assessing such a transfer
fee, each transfer from any Account, including monthly transfers under the
dollar-cost averaging facility, would be considered to be one transfer,
regardless of the number of subaccounts into which value is transferred. The
transfer fee would be deducted from the Account from which the transfer is
made and will reduce the Account Value available for transfer accordingly. If
a transfer is made from more than one Account at the same time, separate
transfer fees would be deducted from the remaining Contract Value in each
Account.
Mortality and Expense Risk Charge
To compensate us for assuming mortality and expense risks, we deduct a
daily mortality and expense risk charge from the assets of the Separate
Account. The charge is at a daily rate of 0.0034462%. If applied on an annual
basis this rate would be 1.25% (approximately 0.50% for mortality risk and
0.75% for expense risk).
The mortality risk we assume is that Annuitants may live for a longer
period of time than estimated when the guarantees in the Contract were
established. Because of these guarantees, each payee is assured that
longevity will not have an adverse effect on the annuity payments received.
The mortality risk that we assume also includes a guarantee to pay a Death
Benefit if an Owner dies before the Annuity Income Date. The expense risk
that we assume is the risk that the administrative fees and transfer fees (if
imposed) may be insufficient to cover actual future expenses.
If the mortality and expense risk charge is insufficient to cover the
actual cost of the mortality and expense risks undertaken by us, we will bear
the shortfall. Conversely, if the charge proves more than sufficient, the
excess will be profit to us and will be available for any proper corporate
purpose including, among other things, payment of sales expenses.
Fund Expenses
Because the Separate Account purchases shares or units of the Landmark VIP
Funds, the Variable Annuity Portfolios, the Fidelity Variable Insurance
Products Fund, the Fidelity Variable Insurance Products Fund II, the AIM
Variable Insurance Funds, Inc. and the MFS Variable Insurance Trust, the net
assets of each subaccount of the Separate Account will reflect the investment
advisory fees and other operating expenses incurred by the corresponding
portfolio of the relevant Fund. See the accompanying current Prospectuses for
the Funds.
Premium Taxes
A state and other governmental entities may levy a premium tax, currently
ranging up to 3.5%, on annuity contracts issued by insurance companies.
Premium tax rates are subject to change from time to time by legislative and
other governmental action. In addition, other government units within a state
may levy such taxes.
The timing of tax levies varies from one taxing authority to another. If
premium taxes are applicable to a Contract, we will deduct such premium taxes
against Contract Value in a manner determined by us in compliance with
applicable state law. Premium
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taxes deducted from Contract Value currently are assessed either: (1) at the
time the Contract is surrendered; (2) on the Annuity Income Date; or (3) at
such other date as the taxes are assessed.
Other Taxes
Currently, no charge is made against the Separate Account for any federal,
state or local taxes (other than premium taxes) that we incur or that may be
attributable to the Separate Account or the Contracts. We may, however, make
such a charge in the future from surrender value, death benefits or annuity
payments, as appropriate. Such taxes may include taxes (levied by any
government entity) which we determine to have resulted from: (1) the
establishment or maintenance of the Separate Account; (2) receipt by us of
purchase payments; (3) issuance of the Contracts; or (4) the payment of
annuity payments.
ANNUITY PAYMENT OPTIONS
Election of Annuity Payment Options
On the Annuity Income Date, the Contract Value less any premium tax
previously unpaid and less any applicable surrender charge will be applied
under an annuity payment option. (See "Annuity Payments on the Annuity Income
Date.") If an election of an annuity payment option is not on file at our
home office on the Annuity Income Date, the proceeds will be paid as a life
income annuity with payments for ten years guaranteed. The value of each
subaccount will be applied to provide a variable annuity and the value of the
Fixed Account shall be applied to provide a fixed dollar annuity. An annuity
payment option may be elected, revoked, or changed by you at any time before
the Annuity Income Date upon 30 days prior written notice. You may elect to
apply any portion of the Contract Value less any premium tax previously
unpaid to provide either variable annuity payments or fixed annuity payments
or a combination of both. The annuity payment options available are described
below. In addition, you may elect any other method of payment that is
mutually agreeable to you and us.
We reserve the right to refuse the election of an annuity payment option
other than paying the Contract Value, less any applicable surrender charge
and premium tax previously unpaid, in a lump sum if the total amount applied
to an annuity payment option would be less than $2,000. If the amount of any
annuity payment for each affected Account would be or becomes less than
$50.00, we may reduce the frequency of payments to an interval that would
result in payments of at least $50.00
Fixed Annuity Payments
Fixed annuity payments are periodic payments from us to the designated
payee, the amount of which is fixed and guaranteed by us. The amount of each
payment depends only on the form and duration of the annuity payment option
chosen, the age of the Annuitant, the sex of the Annuitant (if applicable),
the amount applied to purchase the annuity payments and the applicable
annuity purchase rates in the Contract. The annuity purchase rates in the
Contract are based on a minimum guaranteed interest rate of 3.0%. We may, in
our sole discretion, make annuity payments in an amount based on a higher
interest rate.
Legal Developments Regarding Unisex Actuarial Tables
In 1983, the United States Supreme Court held in Arizona Governing
Committee v. Norris that optional annuity benefits provided under an
employee's deferred compensation plan could not, under Title VII of the Civil
Rights Act of 1964, vary between men and women on the basis of sex. In
addition, legislative, regulatory, or decisional authority of some states may
prohibit use of sex-distinct mortality tables under certain circumstances.
Accordingly, employers and employee organizations should consider, in
consultation with legal counsel, the impact of these authorities on any
employment-related insurance or benefits program before purchasing the
Contract.
Variable Annuity Payments
The dollar amount of the first monthly variable annuity payment is
determined by dividing the Value of the Accounts to be applied to a variable
annuity on the Annuity Income Date by 1,000 and multiplying the result by the
appropriate factor in the annuity tables provided in the Contract. The
appropriate factor is based on annual net investment return of 3.0%. The
amount of each payment will depend on the age of the Annuitant(s) at the time
the first payment is due, and the sex of the Annuitant(s), if applicable,
unless otherwise required by law.
The net investment performance of a subaccount is translated into a
variation in the amount of variable annuity payments through the use of
annuity units. The amount of the first variable annuity payment associated
with each subaccount is applied to purchase subaccount annuity units at the
annuity unit value for the subaccount on the Annuity Income Date. The number
of annuity
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units of each subaccount attributable to a Contract then remains fixed. Each
subaccount has a separate subaccount annuity unit value that changes with
each valuation period in substantially the same manner as do accumulation
units of the subaccount.
The dollar value of each variable annuity payment after the first is equal
to the sum of the amounts determined by multiplying the number of subaccount
annuity units under a Contract for a particular subaccount by the annuity
unit value for the subaccount for the valuation period which ends no earlier
than the fifth Valuation Day preceding the date of each such payment. If the
net investment return of the subaccount for a payment period is equal to the
pro-rated portion of the 3.0% annual assumed investment rate, the variable
annuity payment attributable to that subaccount for that period will equal
the payment for the prior period. To the extent that such net investment
return exceeds an annualized rate of 3.0% for a payment period, the payment
for that period will be greater than the payment for the prior period and to
the extent that such return for a period falls short of an annualized rate of
3.0%, the payment for that period will be less than the payment for the prior
period.
Once every three months, after the Annuity Income Date, the Annuitant may
elect, in writing, to transfer among the selected subaccount(s) on which
variable annuity payments are based. If such a transfer is elected, the
number of annuity units will change and be determined by "a" times "b," less
any applicable fees, divided by "c" where:
"a" is the number of annuity units being transferred;
"b" is the subaccount annuity unit value from which the transfer is made;
and
"c" is the annuity unit value of the subaccount to which the transfer is
made.
Thereafter, the number of annuity units will remain fixed until transferred.
After the Annuity Income Date, no transfers may be made between the
subaccounts and the Fixed Account. In addition, transfers to the subaccounts
investing in the Landmark VIP Funds are no longer permitted.
Description of Annuity Payment Options
Option 1: Income for a Fixed Period. We will make annuity payments to a
payee each month for a fixed number of years. The number of years must be
at least 5 and no more than 30. If the Annuitant dies before the end of
the designated period, payments will continue to be made to the person(s)
named by the Annuitant to receive such guaranteed payments for the
remainder of the fixed period. If no such person is named or none survive
the Annuitant, the remainder of the guaranteed payments will be paid to
the Annuitant's estate. This option is available only as a fixed dollar
annuity and only if the Contract has been in force for 5 years, unless we
agree otherwise.
Option 2: Life Annuity. We will make annuity payments to a payee each
month as long as the Annuitant is alive. When the Annuitant dies, all
payments will cease.
Option 3: Life Annuity with Period Certain. We will make annuity payments
to a payee each month as long as the Annuitant is alive. If the Annuitant
dies prior to the end of the guaranteed period, payments will continue to
be made to the person(s) named by the Annuitant to receive such guaranteed
payments for the remainder of the fixed period. If no such person is named
or none survive the Annuitant, the remainder of the guaranteed payments
will be paid to the Annuitant's estate.
Option 4: Joint and Survivor Annuity. We will make annuity payments to a
payee each month for the joint lifetime of the Annuitant and another
person. At the death of either, payments will continue to be made to the
payee. When the survivor dies, all payments will cease.
The amount of each payment will be determined from the tables in the
Contract that apply to the particular option using the Annuitant's age and
sex (if applicable). Age will be determined from the last birthday at the
due date of the first payment.
Note Carefully: Under annuity payment options 2 and 4 it would be possible
for only one annuity payment to be made if the Annuitant(s) were to die
before the due date of the second annuity payment; only two annuity
payments if the Annuitant(s) were to die before the due date of the third
annuity payment; and so forth.
Alternate Payment Option. In lieu of one of the above options, the
Contract Value, less any applicable surrender charge and premium taxes
previously unpaid, or Death Benefit, as applicable, may be applied to any
other payment option made available by us or requested and agreed to by us.
However, such method must provide for the payment of any benefits remaining
due at the Annuitant's death (or Contract owner's death after the Annuity
Income Date) to be paid at least as rapidly as the method in effect at the
date of death.
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YIELDS AND TOTAL RETURNS
From time to time, we may advertise or include in sales literature yields,
effective yields and total returns for the subaccounts of the Separate
Account. These figures are based on historical earnings and do not indicate
or project future performance. We also may, from time to time, advertise or
include in sales literature subaccount performance relative to certain
performance rankings and indices compiled by independent organizations. More
detailed information as to the calculation of performance appears in the
Statement of Additional Information.
Effective yields and total returns for the subaccounts are based on the
investment performance of the corresponding portfolio. The performance of a
portfolio in part reflects its expenses. See the prospectuses for the
portfolios.
The yield of the Money Market Subaccount refers to the annualized income
generated by an investment in the subaccount 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 subaccount 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 subaccount (except the Money Market Subaccount) refers to
the annualized income generated by an investment in the subaccount 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 subaccount refers to return quotations assuming an
investment under a Contract has been held in the subaccount for various
periods of time. For periods prior to the date the Separate Account commenced
operations, performance information will be calculated based on the
performance of the corresponding portfolios and the assumption that the
subaccounts were in existence for the same periods as those indicated for the
portfolios, with the level of Contract charges that were in effect at the
inception of the subaccounts. When a subaccount or portfolio has been in
operation for one, five, and ten years, respectively, the total return for
these periods will be provided.
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 annual percentage
change in the value of an investment in the subaccount from the beginning
date of the measuring period to the end of that period. This standardized
version of average annual total return reflects all historical investment
results, less all charges and deductions applied against the subaccount
(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).
In addition to the standard version described above, total return
performance information computed on two different non-standard bases may be
used in advertisements or sales literature. Average annual total return
information may be presented, computed on the same basis as described above,
except deductions will not include the surrender charge. In addition, we may
from time to time disclose cumulative total return for Contracts funded by
subaccounts.
From time to time, yields, standard average annual total returns, and
non-standard total returns for the portfolios may be disclosed, including
such disclosures for periods prior to the date the Separate Account commenced
operations.
Non-standard performance data will only be disclosed if the standard
performance data for the required periods is also disclosed. 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 subaccount
may be compared with 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 portfolios of mutual funds with
investment objectives similar to the subaccount. Lipper Analytical Services,
Inc. ("Lipper"), Variable Annuity Research Data Service ("VARDS") and
Morningstar, Inc. ("Morningstar") 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 and Morningstar'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, VARDS
and Morningstar 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 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.
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Advertising and sales literature may also compare the performance of each
subaccount to the Standard & Poor's Index of 500 Common 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.
We may also report other information including the effect of tax-deferred
compounding on a subaccount's investment returns, or returns in general, which
may be illustrated by tables, graphs, or charts. All income and capital gains
derived from subaccount investments are reinvested and can lead to substantial
long-term accumulation of assets, provided that the subaccount investment
experience is positive.
FEDERAL TAX MATTERS
The Following Discussion is General and
Is Not Intended as Tax Advice
Introduction
This discussion is not intended to address the tax consequences resulting
from all of the situations in which a person may be entitled to or may receive a
distribution under the annuity contract issued by us. Any person concerned about
these tax implications should consult a competent tax advisor before initiating
any transaction. This discussion is based upon our understanding of the present
federal income tax laws, as they are currently interpreted by the Internal
Revenue Service ("IRS"). No representation is made as to the likelihood of the
continuation of the present federal income tax laws or of the current
interpretation by the IRS. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
The Contract may be purchased on a non-qualified basis or purchased and used
in connection with plans qualifying for favorable tax treatment. The Qualified
Contract is designed for use by individuals whose purchase 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 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 you, 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 investment 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 Separate
Account, through each underlying portfolio, 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 subaccounts may be
invested. Although we do not have direct control over the portfolios in which
the Separate Account invests, we believe that each portfolio in which the
Separate Account owns shares will meet the diversification requirements, and
therefore, the Contract will be treated as an annuity contract under the Code.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their contracts. In those circumstances, income
and gains from the separate account assets would be includible in the variable
annuity contract owner's gross income. The IRS has stated in published rulings
that a variable contract owner will be considered the owner of separate account
assets if the contract owner possesses incident of ownership in those assets,
such as the ability to exercise investment control over the assets. The Treasury
Department has also announced, in connection with the issuance of regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor (i.e., the
contract owner), rather than the insurance company, to be treated as the owner
of the assets in the account." This announcement also states that guidance will
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular subaccounts without being treated as
owners of the underlying assets."
The ownership rights under the Contracts are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of separate account assets.
These differences could result
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in an owner being treated as the owner of the assets of the Separate Account.
In addition, we do not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. We therefore reserve the right to modify the Contract as necessary to
attempt to prevent the contract owner from being considered the owner of any
portion of the assets of the Separate Account.
Required Distributions. In order to be treated as an annuity contract for
federal income tax purposes, Section 72(s) of the Code requires any
Non-Qualified Contract to provide that: (a) if any owner dies on or after the
Annuity Income 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
Income 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 individual designated
by the owner as a beneficiary and to whom ownership of the contract passes by
reason of death of the owner. However, if the owner's "designated beneficiary"
is the surviving spouse of the deceased owner, the Contract may be continued
with the surviving spouse as the new owner.
The Non-Qualified Contracts contain provisions which are intended to
comply with the requirements of Section 72(s) of the Code, although no
regulations interpreting these requirements have yet been issued. 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.
The following discussion assumes that the Contracts will qualify as annuity
contracts for federal income tax purposes.
Taxation of Annuities
In General. Section 72 of the Code governs taxation of annuities in general.
We believe that an owner who is a natural person 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 surrenders) or as annuity
payments under the payment option elected. 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 payment option) 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 contract value over the
"investment in the contract" during the taxable year. There are some exceptions
to this rule, and a prospective owner that is not a natural person may wish to
discuss these with a competent tax advisor.
The following discussion generally applies to Contracts owned by natural
persons.
Partial Withdrawals. In the case of a partial withdrawal 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 purchase payments paid by or on behalf of the individual under a
Contract which was not 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 partial withdrawal (including systematic withdrawals) from a
Non-Qualified Contract, under Section 72(e), any amounts received are generally
first treated as taxable income to the extent that the contract value
immediately before the partial withdrawal exceeds the "investment in the
contract" at that time. Any additional amount withdrawn 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."
Exchanges. Section 1035 of the Code generally provides that no gain or loss
shall be recognized on the exchange of one annuity contract for another. If the
surrendered contract was issued prior to August 14, 1982, the tax rules formerly
provided that the surrender was taxable only to the extent the amount received
exceeds the owner's investment in the contract will continue to apply to amounts
allocable to investments in that contract prior to August 14, 1982. In contrast,
contracts issued after January 19, 1985 in a Code Section
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1035 exchange are treated as new contracts for purposes of the penalty and
distribution-at-death rules. Special rules and procedures apply to Section
1035 transactions. Prospective owners wishing to take advantage of Section
1035 should consult their tax adviser.
Annuity Payments. Although tax consequences may vary depending on the
payment option elected under an annuity contract, under Code Section 72(b),
generally (prior to recovery of the investment in the contract) gross income
does not include that part of any amount received as an annuity under an
annuity contract that bears the same ratio to such amount as the investment
in the contract bears to the expected return at the annuity starting date.
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. If death occurs before full recovery of the
investment in the contract, the unrecovered amount may be deducted on the
Annuitant's final tax return.
Taxation of Death Benefit Proceeds. Amounts may be distributed from a
Contract because of the death of an owner. 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. For these purposes, the investment in the
Contract is not affected by the owner's death. That is, the investment in the
Contract remains the amount of any purchase payments paid which were not
excluded from gross income.
Penalty Tax on Certain Withdrawals. In the case of a distribution pursuant
to a Non-Qualified Contract, there may be imposed a federal penalty tax equal
to 10% of the amount treated as taxable income. In general, however, there is
no penalty on distributions:
1. made on or after the taxpayer reaches age 59-1/2;
2. made on or after the death of the holder (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 certain annuities issued in connection with structured
settlement agreements; and
6. made under an annuity contract that is purchased with a single purchase
payment when the Annuity Income 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 payment
period.
Other tax penalties may apply to certain distributions under a Qualified
Contract.
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. As of the date of this
prospectus, Congress is not entertaining legislation that would change the
taxation of annuities; there is always the possibility that the tax treatment
of annuities could change by legislation or other means (such as IRS
regulations, revenue rulings, judicial decisions, etc.). Moreover, it is also
possible that any change could be effective prior to the date of the change.
Transfers, Assignments or Exchanges of a Contract
A transfer of ownership of a Contract, the designation of an annuitant,
payee or other beneficiary who is not also the owner, the selection of
certain Annuity Income Dates 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 advisor with respect to the potential tax effects of
such a transaction.
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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. Certain
states also require withholding of state income tax whenever federal income
tax is withheld.
Multiple Contracts
All non-qualified deferred annuity contracts entered into after October
21, 1988 that are issued by us (or our affiliates) to the same owner during
any calendar year are treated as one annuity Contract for purposes of
determining the amount includible in gross income under Section 72(e). The
effects of this rule are not yet completely 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, you should consult a competent tax advisor before
purchasing more than one annuity contract in any calendar year.
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 we shall not be bound by the terms and conditions of such
plans to the extent such terms contradict the Contract, unless we consent.
Some retirement plans are subject to distribution and other requirements that
are not incorporated into our Contract administration procedures. Owners,
participants and beneficiaries are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts comply with applicable law. Brief descriptions follow of the
various types of qualified retirement plans in connection with a Contract. We
will amend the Contract as necessary to conform it to the requirements of the
Code.
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 Internal Revenue Service. Employers
may establish Simplified Employee Pension (SEP) Plans to provide IRA
contributions on behalf of their employees.
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 purchase payments paid, within certain limits, on a
Contract that will provide an annuity for the employee's retirement. These
purchase payments may be subject to FICA (social security) tax.
Restrictions Under Qualified Plans. Other restrictions with respect to the
election, commencement or distribution of benefits may apply under Qualified
Contracts or under the terms of the plan in respect of which Qualified
Contracts are issued.
Possible Charge for the Company's Taxes
At the present time, we make no charge to the subaccounts for any Federal,
state, or local taxes that we incur which may be attributable to such
subaccounts or the Contracts. We, however, reserve the right in the future to
make a charge for any such tax or other economic burden resulting from the
application of the tax laws that we determine to be properly attributable to
the subaccounts or to the Contracts.
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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 the Prospectus. Further, the
Federal income tax consequences discussed herein reflect our 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 advisor should be
consulted for further information.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be offered to the public on a continuous basis. We do
not anticipate discontinuing the offering of the Contracts, but reserve the
right to do so. Applications for Contracts are solicited by agents who are
licensed by applicable state insurance authorities to sell our variable
annuity contracts and who are also registered representatives of Citicorp
Investment Services, Inc. which entered into a selling agreement with The
Landmark Funds Broker-Dealer Services, Inc. Citicorp Investment Services,
Inc. is registered with the SEC under the Securities Exchange Act of 1934 as
a broker-dealer and is a member of the National Association of Securities
Dealers, Inc.
The Landmark Funds Broker-Dealer Services, Inc. acts as the principal
underwriter, as defined in the 1940 Act, of the Contracts for the Separate
Account pursuant to an Underwriting Agreement with us. The Landmark Funds
Broker-Dealer Services, Inc. is not obligated to sell any specific number of
Contracts. The Landmark Funds Broker-Dealer Services, Inc. principal business
address is 6 St. James Avenue, Suite 900, Boston, Massachusetts 02116.
We may pay sales commissions to broker-dealers up to an amount equal to 6%
of the purchase payments paid under a Contract. These broker-dealers are
expected to compensate sales representatives in varying amounts from these
commissions. We also may pay other distribution expenses such as production
incentive bonuses, agent's insurance and pension benefits, and agency expense
allowances. These distribution expenses do not result in any additional
charges under the Contracts that are not described under "Charges and
Deductions."
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or
the assets of the Separate Account are subject. The Company is not involved
in any litigation that is of material importance in relation to its total
assets or that relates to the Separate Account.
VOTING PRIVILEGES
In accordance with our view of current applicable law, we will vote
portfolio shares held in the Separate Account at regular and special
shareholder meetings of the portfolios in accordance with instructions
received from persons having voting interests in the corresponding
subaccounts. If, however, the 1940 Act or any regulation thereunder should be
amended, or if the present interpretation thereof should change, or we
otherwise determine that we are allowed to vote the shares in our right, we
may elect to do so.
The number of votes that an Owner or Annuitant has the right to instruct
will be calculated separately for each subaccount of the Separate Account,
and may include fractional votes. Prior to the Annuity Income Date, an Owner
holds a voting interest in each subaccount to which the Contract Value is
allocated. After the Annuity Income Date, the Annuitant has a voting interest
in each subaccount from which variable annuity payments are made.
For each Owner, the number of votes attributable to a subaccount will be
determined by dividing the contract value attributable to that Owner's
Contract in that subaccount by the net asset value per share of the portfolio
in which that subaccount invests. For each Annuitant, the number of votes
attributable to a subaccount will be determined by dividing the liability for
future variable annuity payments to be paid from that subaccount by the net
asset value per share of the portfolio in which that subaccount invests. This
liability for future payments is calculated on the basis of the mortality
assumptions, the 3.0% assumed investment rate used in determining the number
of annuity units of that subaccount credited to the Annuitant's Contract and
annuity unit value of that subaccount on the date that the number of votes is
determined. As variable annuity payments are made to the Annuitant, the
liability for future payments decreases as does the number of votes.
The number of votes available to an Owner or Annuitant will be determined
as of the date coincident with the date established by the portfolio for
determining shareholders eligible to vote at the relevant meeting of the
portfolio's shareholders. Voting instructions
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will be solicited by written communication prior to such meeting in
accordance with procedures established for the portfolio. Each Owner or
Annuitant having a voting interest in a subaccount will receive proxy
materials and reports relating to any meeting of shareholders of the
portfolio in which that subaccount invests.
Portfolio shares as to which no timely instructions are received and
shares held by us in a subaccount as to which no Owner or Annuitant has a
beneficial interest will be voted in proportion to the voting instructions
which are received with respect to all Contracts participating in that
subaccount. Voting instructions to abstain on any item to be voted upon will
be applied to reduce the total number of votes eligible to be cast on a
matter.
COMPANY HOLIDAYS
We are closed on the following holidays: New Years Day, Civil Rights Day
(Martin Luther King Day), President's Day, Memorial Day, Independence Day,
Labor Day, Columbus Day, Thanksgiving Day, Day After Thanksgiving and
Christmas Day. Holidays which fall on a Saturday will be recognized on the
previous Friday. Holidays which fall on a Sunday will be recognized on the
following Monday.
FINANCIAL STATEMENTS
The audited Statutory Financial Statements of the Company as of December
31, 1995 and 1994 and for the years ended December 31, 1995, 1994, and 1993
as well as the Independent Auditors' Report appear in the Statement of
Additional Information to Post-Effective Amendment No. 2 to the Separate
Account's registration statement filed on April 29, 1996 with the SEC and are
incorporated by reference in the Statement of Additional Information to this
registration statement. The financial statements for the Separate Account as
of December 31, 1995 as well as the Auditor's Report also appear in the
Statement of Additional Information to Post-Effective Amendment No. 2 to the
Separate Account's registration statement filed on April 29, 1996 with the
SEC and are incorporated by reference in the Statement of Additional
Information to this registration statement.
The unaudited statutory financial statements of the Company as of September
30, 1996 are contained in the Statement of Additional Information dated the same
date as this prospectus. The unaudited financial statements of the Separate
Account as of September 30, 1996 are also contained in this Statement of
Additional Information.
YOUR RIGHT TO LOOK TO A DELAWARE BANK OR TRUST COMPANY FOR PAYMENT ON ANY
INSURANCE POLICY IS LIMITED BY LAW. INSURANCE POLICIES ISSUED BY THE
SUBSIDIARIES OR DIVISIONS OF DELAWARE BANKS OR TRUST COMPANIES ARE NOT DIRECT
LIABILITIES OF SUCH BANKS OR TRUST COMPANIES. ONLY THE ASSETS OF THE
INSURANCE DIVISION OR SUBSIDIARY ISSUING A POLICY ARE APPLICABLE TO THE
PAYMENT AND SATISFACTION OF SUCH POLICY OR CLAIMS MADE THEREUNDER.
INSURANCE POLICIES ISSUED BY A SUBSIDIARY OR DIVISION OF A DELAWARE BANK OR
TRUST COMPANY ARE NOT BANK DEPOSITS AND ARE NOT FDIC INSURED.
39
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STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
---------
ADDITIONAL CONTRACT PROVISIONS 3
The Contract 3
Incontestability 3
Misstatement of Age or Sex 3
Participation 3
Assignment 3
DISTRIBUTION OF THE CONTRACTS 3
CALCULATION OF YIELDS AND TOTAL RETURNS 3
Money Market Subaccount Yields 3
Other Subaccount Yields 4
Average Annual Total Returns 5
Effect of the Annual Contract Fee on Performance Data 12
VARIABLE ANNUITY PAYMENTS 12
Assumed Investment Rate 12
Amount of Variable Annuity Payments 12
Annuity Unit Value 13
LEGAL MATTERS 14
EXPERTS 14
OTHER INFORMATION 14
FINANCIAL STATEMENTS 14
If you would like a free copy of the Statement of Additional Information for
this prospectus, please fill out this form and mail it to First Citicorp Life
Insurance Company, 800 Silver Lake Boulevard, P.O. Box 7031, Dover, Delaware
19903.
Please send a copy of the Statement of Additional Information pertaining to
the First Citicorp Life Insurance Company Variable Annuity and the First
Citicorp Life Variable Annuity Separate Account to:
Name: _____________________________________________________________________
Mailing Address: __________________________________________________________
__________________________________________________________
__________________________________________________________
- ------------------------------------------------------------------------------
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PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
FIRST CITICORP LIFE INSURANCE COMPANY
One Court Square
24th Floor
Long Island City, NY 11120
(800) 497-4857
FIRST CITICORP LIFE VARIABLE
ANNUITY SEPARATE ACCOUNT
INDIVIDUAL FLEXIBLE PREMIUM
DEFERRED VARIABLE ANNUITY CONTRACT
February 3, 1997
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
First Citicorp Life Insurance Company
One Court Square
24th Floor
Long Island City, NY 11120
(800) 497-4857
FIRST CITICORP LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
This Statement of Additional Information contains information in addition
to the information described in the Prospectus for the flexible premium
deferred variable annuity contract (the "Contract") offered by First Citicorp
Life Insurance Company ("we", "our" and "us"). This Statement of Additional
Information is not a prospectus, and it should be read only in conjunction
with the prospectuses for the Contract, the Landmark VIP Funds, the Variable
Annuity Portfolios, the Fidelity Variable Insurance Products Fund, the
Fidelity Variable Insurance Products Fund II, the AIM Variable Insurance
Funds, Inc. and the MFS Variable Insurance Trust. The Prospectus for the
Contract is dated the same as this Statement of Additional Information. You
may obtain a copy of the prospectuses by writing or calling us at our address
or phone number shown above.
February 3, 1997
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
---------
ADDITIONAL CONTRACT PROVISIONS 3
The Contract 3
Incontestability 3
Misstatement of Age or Sex 3
Participation 3
Assignment 3
DISTRIBUTION OF THE CONTRACTS 3
CALCULATION OF YIELDS AND TOTAL RETURNS 3
Money Market Subaccount Yields 3
Other Subaccount Yields 4
Average Annual Total Returns 5
Effect of the Annual Contract Fee on Performance Data 12
VARIABLE ANNUITY PAYMENTS 12
Assumed Investment Rate 12
Amount of Variable Annuity Payments 12
Annuity Unit Value 13
LEGAL MATTERS 14
EXPERTS 14
OTHER INFORMATION 14
FINANCIAL STATEMENTS 14
2
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ADDITIONAL CONTRACT PROVISIONS
The Contract
The application, endorsements and all other attached papers are part of
the Contract. The statements made in the application are deemed
representations and not warranties. We will not use any statement in defense
of a claim or to void the Contract unless it is contained in the application.
Incontestability
We will not contest the Contract.
Misstatement of Age or Sex
If the age or sex (if applicable) of the payee has been misstated, the
amount which will be paid is that which the proceeds would have purchased at
the correct age and sex (if applicable). Any underpayments, plus interest
credited thereto at an annual rate of 3.0%, will be included with the next
benefit payment. Any overpayments, credited thereto at an annual rate of
3.0%, will be deducted from future benefit payments until the overpayments
are repaid in full.
Participation
The Contract does not participate in our divisible surplus.
Assignment
Upon written notice to us, you may assign your rights under this Contract.
We assume no responsibility for the validity of any such assignment.
Assignments will not apply to any payments or actions taken prior to the time
it is recorded by us.
DISTRIBUTION OF THE CONTRACTS
The Landmark Funds Broker-Dealer Services, Inc. acts as the principal
underwriter and distributor of the Contract, pursuant to an Underwriting
Agreement with us. Applications for the Contracts are solicited by agents who
are licensed by applicable state insurance authorities to sell our variable
annuity contracts and who are also licensed representatives of Citicorp
Insurance Services, Inc. which entered into a selling agreement with The
Landmark Funds Broker-Dealer Services, Inc.
The Landmark Funds Broker Dealer Services, Inc. is an indirect wholly
owned subsidiary of Citicorp and an affiliate of First Citicorp Life
Insurance Company. For fiscal year 1995, no underwriting commissions were
paid to, or retained by, The Landmark Funds Broker-Dealer Services, Inc.
CALCULATION OF YIELDS AND TOTAL RETURNS
From time to time, we may disclose yields, total returns, and other
performance data pertaining to the Contracts for a subaccount. Such
performance data will be computed, or accompanied by performance data
computed, in accordance with the standards defined by the SEC. Because of the
fees and charges assessed under the Contract, the yield for each subaccount
will be lower than the yield for the investment portfolio supporting that
subaccount. The calculation of yields, total returns and other performance
data do not reflect the effect of any premium tax that may be applicable.
Most states and political subdivisions do not assess premium taxes, however,
where state premium taxes are assessed, we will deduct the amount of the tax
due from each payment at rates ranging from a minimum of 0.5% to a maximum of
3.5% of such payment at the time annuity payments begin. Premium taxes levied
by political subdivisions, generally at rates of less than 1.00%, will
likewise be deducted in the same manner.
Money Market Subaccount Yields
From time to time, advertisements and sales literature may quote the
current annualized yield of the Money Market Subaccount for a seven-day
period in a manner which does not take into consideration any realized or
unrealized gains or losses on shares of the MFS Money Market Series or on
that portfolio's securities.
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This current annualized yield is computed by determining the net change
(exclusive of realized gains and losses on the sale of securities and
unrealized appreciation and depreciation) at the end of the seven-day period
in the value of a hypothetical account under a Contract having a balance of 1
unit of the Money Market Subaccount at the beginning of the period, dividing
such net change in subaccount value by the value of the hypothetical account
at the beginning of the period to determine the base period return, and
annualizing this quotient on a 365-day basis. The net change in subaccount
value reflects: 1) net income from the portfolio attributable to the
hypothetical account; and 2) charges and deductions imposed under the
Contract which are attributable to the hypothetical account. The charges and
deductions include the per unit charges for the hypothetical account for: 1)
the annual contract fee; 2) the mortality and expense risk charge; and 3) the
asset-based administration charge. For purposes of calculating current yields
for a Contract, an average per unit contract fee is used based on the $30
annual contract fee deducted at the end of each Contract Year. Current Yield
is calculated according to the following formula:
Current Yield = ((NCS - ES)/UV) X (365/7)
Where:
NCS = the net change in the value of the MFS Money Market Series
(exclusive of realized gains or losses on the sale of securities and
unrealized appreciation and depreciation) for the seven-day period
attributable to a hypothetical account having a balance of 1
subaccount unit.
ES = per unit expenses attributable to the hypothetical account for the
seven-day period.
UV = the unit value for the first day of the seven-day period.
The seven-day Effective Yield is calculated by compounding the
unannualized base period return according to the following formula:
Effective Yield = (1 + ((NCS - ES)/UV)) 365/7 - 1
Where:
NCS = the net change in the value of the MFS Money Market Series
(exclusive of realized gains or losses on the sale of securities and
unrealized appreciation and depreciation) for the seven-day period
attributable to a hypothetical account having a balance of 1
subaccount unit.
ES = per unit expenses attributable to the hypothetical account for the
seven-day period.
UV = the unit value for the first day of the seven-day period.
Based on the method of calculation described above, the Current Yield and
Effective Yield on amounts held in the MFS Money Market Subaccount for the
seven-day period ending September 30, 1996 were:
Current Yield--3.29%
Effective Yield--3.34%
The current and effective yields on amounts held in this subaccount
normally fluctuate on a daily basis. Therefore, the disclosed yield for any
given past period is not an indication or representation of future yields or
rates of return. The Money Market Subaccount's actual yield is affected by
changes in interest rates on money market securities, average portfolio
maturity of the MFS Money Market Series, the types and quality of portfolio
securities held by the MFS Money Market Series and the MFS Money Market
Series' operating expenses. Yields on amounts held in the Money Market
Subaccount may also be presented for periods other than a seven-day period.
Yield calculations do not take into account the surrender charge under the
Contract equal to a maximum of 7% of the amount of purchase payments
withdrawn for certain withdrawals. During each Contract Year, up to 10% of
all purchase payments, less any prior withdrawal of purchase payments, may be
withdrawn without the imposition of a surrender charge.
Other Subaccount Yields
From time to time, sales literature or advertisements may quote the
current annualized yield of the Bond Subaccount for a Contract for 30-day or
one-month periods. The annualized yield generated by the Bond Subaccount
refers to income generated by
4
<PAGE>
the subaccount during a 30-day or one-month period and is assumed to be
generated each 30-day or one month period over a 12-month period.
The yield is computed by: 1) dividing the net investment income of the
portfolio attributable to the subaccount units less subaccount expenses for
the period; by 2) the maximum offering price per unit on the last day of the
period times the daily average number of units outstanding for the period; by
3) compounding that yield for a six-month period; and by 4) multiplying that
result by 2. Expenses attributable to the subaccount include the annual
contract fee, the asset-based administration charge and the mortality and
expense risk charge. The yield calculation assumes a contract fee of $30 per
year per Contract deducted at the end of each Contract Year for Contracts
with less than $25,000 of Contract Value. For purposes of calculating the
30-day or one-month yield, an average contract fee based on the average
Contract Value in the Separate Account is used to determine the amount of the
charge attributable to the subaccount for the 30-day or one-month period. The
30-day or one-month yield is calculated according to the following formula:
Yield = 2 X (((NI - ES)/(U X UV)) + 1)(6) - 1)
Where:
NI = net income of the portfolio for the 30-day or one-month period
attributable to the subaccount's units.
ES = expenses of the subaccount for the 30-day or one-month period.
U = the average number of units outstanding.
UV = the unit value at the close (highest) of the last day in the 30-day
or one-month period.
Based on the method of calculation described above, for the thirty-day
period ending September 30, 1996, the yield for the Bond Subaccount was:
Yield = N/A
The yield on the amounts held in the Bond Subaccount normally fluctuates
over time. Therefore, the disclosed yield for any given past period is not an
indication or representation of future yields or rates of return. The Bond
Subaccount's actual yield is affected by the types and quality of securities
held by the MFS Bond Series and that portfolio's operating expenses.
Yield calculations do not take into account the surrender charge under the
Contract equal to a maximum of 7% of the amount of purchase payments
withdrawn for certain withdrawals. During each Contract Year, up to 10% of
all purchase payments, less any prior withdrawal of purchase payments, may be
withdrawn without the imposition of a surrender charge.
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 subaccounts for various
periods of time.
When a subaccount or portfolio has been in operation for 1, 5, and 10
years, respectively, the average annual total return for these periods will
be provided. Average annual total returns for other periods of time may, from
time to time, also be disclosed.
Standard 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 calendar
quarter-end practicable, considering the type of the communication and the
media through which it is communicated.
Standard average annual total returns are calculated using subaccount unit
values which we calculate on each Valuation Day based on the performance of
the subaccount's underlying portfolio, the deductions for the mortality and
expense risk charge, the deductions for the asset-based administration charge
and the annual contract fee. The calculation assumes that the contract fee is
$30 per year per Contract deducted at the end of each Contract Year for
Contracts with less than $25,000 of Contract Value. For purposes of
calculating average annual total return, an average per-dollar per-day
contract fee 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 five years since
the date of the purchase payment being withdrawn. The total return is
calculated according to the following formula:
5
<PAGE>
TR = ((ERV/P)(1/N)) - 1
Where:
TR = the average annual total return net of subaccount 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.
6
<PAGE>
Based on the method of calculation described above, the Standardized
Average Annual Total Returns for the Subaccounts for the periods ending
September 30, 1996 were:
<TABLE>
<CAPTION>
Subaccount Standardized
Average Annual Total Return Table
- ---------------------------------------------------------------------------------------------
For the
For the For the period
one-year 5-year from
period period inception
Subaccount (date of inception of ending ending to
corresponding portfolio) 9/30/96 9/30/96 9/30/96
- ----------------------------------------------------- ------------ ------------ -------------
<S> <C> <C> <C>
LANDMARK VIP FUNDS
U.S. Government Fund (3/10/95) -3.34% N/A -0.93%
Balanced Fund (3/10/95) 5.15% N/A 6.62%
Equity Fund (3/10/95) 12.69% N/A 12.71%
International Equity Fund (3/10/95) -3.31% N/A -0.18%
VARIABLE ANNUITY PORTFOLIOS
CitiSelect(SM) VIP Folio 200 (11/25/96) N/A N/A N/A
CitiSelect(SM) VIP Folio 300 (11/25/96) N/A N/A N/A
CitiSelect(SM) VIP Folio 400 (11/25/96) N/A N/A N/A
CitiSelect(SM) VIP Folio 500 (11/25/96) N/A N/A N/A
Landmark Small Cap Equity VIP Fund (11/25/96)(a) 60.91% N/A 66.72%
AIM VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 4.48% N/A 18.33%
Government Securities Fund (5/05/93) -3.24% N/A 1.57%
Growth Fund (5/05/93) 4.22% N/A 12.94%
International Equity Fund (5/05/93) 8.61% N/A 10.95%
Value Fund (5/05/93) -1.53% N/A 14.80%
Growth and Income Fund (5/02/94) 6.26% N/A 14.87%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 0.41% 15.22% 13.31%
High Income Portfolio (9/19/85) 6.85% 13.89% 10.45%
Equity Income Portfolio (10/9/86) 6.05% 15.91% 11.41%
Overseas Fund (1/28/87) 2.91% 6.67% 6.02%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 4.31% N/A 23.15%
Index 500 Portfolio (8/27/92) 11.99% N/A 13.51%
MFS VARIABLE INSURANCE TRUST
World Governments Series (6/14/94) -1.96% N/A 3.50%
Money Market Series (1/03/95) -2.46% N/A -0.28%
Bond Series (10/24/95) N/A N/A -6.69%
Total Return Series (1/03/95) 7.29% N/A 14.67%
Research Series (7/26/95) 15.46% N/A 16.46%
Emerging Growth Series (7/24/95) 19.85% N/A 24.62%
</TABLE>
[boxed text]
a. For this subaccount, the information is so-called "synthetic" performance
data. As of 9/30/96, the underlying portfolio for this subaccount either had
less than one year of actual performance data, or had not commenced operations,
so no historical performance data exists for the actual portfolio in which this
subaccount will invest. However, the investment advisor for this portfolio
manages another comparable mutual fund portfolio (Landmark Small Cap Equity
Fund); although this comparable portfolio is not the actual portfolio in which
the Separate Account will invest, it has the same investment objectives, and
uses the same investment strategies and techniques as are contemplated for the
actual portfolio in which the Separate Account will invest. The figures
represent what the investment performance of this subaccount would have been IF
this subaccount had been in existence since the inception of the comparable
portfolio and IF this subaccount had been invested in that portfolio. Since the
subaccounts will not invest in this comparable portfolio, these are not actual
performance figures for the applicable subaccount. These are "synthetic" average
annual total return figures which represent the performance of the comparable
portfolio (which is NOT available under the Contract).
The data presented may not necessarily be an indicator of future performance.
The "synthetic" data is based on the actual performance and expenses of the
comparable portfolio, adjusted to reflect the Surrender Charge, Mortality and
Expense Risk Charge, Administrative Expense Charge and the Annual Contract Fee.
[end boxed text]
7
<PAGE>
We 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 subaccount 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.
8
<PAGE>
Based on the method of calculation described above, the Cumulative Total
Returns for the Subaccounts for the periods ending September 30, 1996 were:
<TABLE>
<CAPTION>
Subaccount Standardized
Cumulative Total Return Table
- ---------------------------------------------------------------------------------------------
For the
For the For the period
one-year 5-year from
period period inception
Subaccount (date of inception of ending ending to
corresponding portfolio) 9/30/96 9/30/96 9/30/96
- ----------------------------------------------------- ------------ ------------ -------------
<S> <C> <C> <C>
LANDMARK VIP FUNDS
U.S. Government Fund (3/10/95) -3.34% N/A -1.45%
Balanced Fund (3/10/95) 5.15% N/A 10.55%
Equity Fund (3/10/95) 12.69% N/A 20.59%
International Equity Fund (3/10/95) -3.31% N/A -0.28%
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 (11/25/96) N/A N/A N/A
CitiSelect VIP Folio 300 (11/25/96) N/A N/A N/A
CitiSelect VIP Folio 400 (11/25/96) N/A N/A N/A
CitiSelect VIP Folio 500 (11/25/96) N/A N/A N/A
Landmark Small Cap Equity VIP Fund (11/25/96)(a) 60.91% N/A 92.31%
AIM VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 4.48% N/A 77.47%
Government Securities Fund (5/05/93) -3.24% N/A 5.46%
Growth Fund (5/05/93) 4.22% N/A 51.39%
International Equity Fund (5/05/93) 8.61% N/A 42.50%
Value Fund (5/05/93) -1.53% N/A 60.07%
Growth and Income Fund (5/02/94) 6.26% N/A 39.79%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 0.41% 103.03% 248.28%
High Income Portfolio (9/19/85) 6.85% 91.57% 199.43%
Equity Income Portfolio (10/9/86) 6.05% 109.18% 194.12%
Overseas Fund (1/28/87) 2.91% 38.11% 76.10%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 4.31% N/A 43.75%
Index 500 Portfolio (8/27/92) 11.99% N/A 68.03%
MFS VARIABLE INSURANCE TRUST
World Governments Series (6/14/94) -1.96% N/A 8.24%
Money Market Series (1/03/95) -2.46% N/A -0.49%
Bond Series (10/24/95) N/A N/A -6.28%
Total Return Series (1/03/95) 7.29% N/A 26.93%
Research Series (7/26/95) 15.46% N/A 19.77%
Emerging Growth Series (7/24/95) 19.85% N/A 29.92%
- ----------------------------------------------------- ------------ ------------ -------------
a. This is "synthetic" data. See footnote "a" of the "Subaccount Standardized Average Annual
Total Return Table."
</TABLE>
From time to time, sales literature or advertisements may also quote
average annual total returns and cumulative total returns that do not reflect
the surrender charge or the Annual Contract Fee. These are calculated in
exactly the same way as the standardized average annual total returns and
standardized cumulative 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 or the payment of the annual contract fee.
9
<PAGE>
Based on this non-standardized method of calculation, the Non-Standardized
Average Total Returns and Non-Standardized Cumulative Total Returns for the
Subaccounts for the periods ending September 30, 1996 were:
<TABLE>
<CAPTION>
Subaccount Non-Standardized
Average Annual Total Return Table
----------------------------------------------------------------------------------------------
For the
For the For the period
one-year 5-year from
period period inception
Subaccount (date of inception of ending ending to
corresponding portfolio) 9/30/96 9/30/96 9/30/96
- ------------------------------------------------------ ------------ ------------ -------------
<S> <C> <C> <C>
LANDMARK VIP FUNDS
U.S. Government Fund (3/10/95) 2.23% N/A 2.70%
Balanced Fund (3/10/95) 11.21% N/A 10.53%
Equity Fund (3/10/95) 19.18% N/A 16.84%
International Equity Fund (3/10/95) 2.26% N/A 3.48%
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 (11/25/96) N/A N/A N/A
CitiSelect VIP Folio 300 (11/25/96) N/A N/A N/A
CitiSelect VIP Folio 400 (11/25/96) N/A N/A N/A
CitiSelect VIP Folio 500 (11/25/96) N/A N/A N/A
Landmark Small Cap Equity VIP Fund (11/25/96)(a) 70.18% N/A 74.20%
AIM VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 10.50% N/A 19.67%
Government Securities Fund (5/05/93) 2.34% N/A 2.72%
Growth Fund (5/05/93) 10.22% N/A 14.22%
International Equity Fund (5/05/93) 14.87% N/A 12.21%
Value Fund (5/05/93) 4.14% N/A 16.10%
Growth and Income Fund (5/02/94) 12.38% N/A 17.14%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 6.19% 15.27% 13.37%
High Income Portfolio (9/19/85) 13.01% 13.94% 10.50%
Equity Income Portfolio (10/9/86) 12.16% 15.86% 11.47%
Overseas Fund (1/28/87) 8.83% 6.72% 6.07%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 10.32% N/A 27.20%
Index 500 Portfolio (8/27/92) 18.44% N/A 14.33%
MFS VARIABLE INSURANCE TRUST
World Governments Series (6/14/94) 3.69% N/A 5.65%
Money Market Series (1/03/95) 3.16% N/A 3.00%
Bond Series (10/24/95) N/A N/A 0.07%
Total Return Series (1/03/95) 13.47% N/A 18.44%
Research Series (7/26/95) 22.12% N/A 22.12%
Emerging Growth Series (7/24/95) 26.75% N/A 30.65%
- ------------------------------------------------------ ------------ ------------ -------------
a. This is "synthetic" data. See footnote "a" of the "Subaccount Standardized Average Annual
Total Return Table."
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Subaccount Non-Standardized
Cumulative Total Return Table
-----------------------------------------------------------------------------------
For the
For the For the period
one-year 5-year from
period period inception
Subaccount (date of inception of ending ending to
corresponding portfolio) 9/30/96 9/30/96 9/30/96
- -------------------------------------------------- --------- --------------------
<S> <C> <C> <C>
LANDMARK VIP FUNDS
U.S. Government Fund (3/10/95) 2.23% N/A 4.26%
Balanced Fund (3/10/95) 11.21% N/A 16.96%
Equity Fund (3/10/95) 19.18% N/A 27.57%
International Equity Fund (3/10/95) 2.26% N/A 5.50%
VARIABLE ANNUITY PORTFOLIOS
CitiSelect VIP Folio 200 (11/25/96) N/A N/A N/A
CitiSelect VIP Folio 300 (11/25/96) N/A N/A N/A
CitiSelect VIP Folio 400 (11/25/96) N/A N/A N/A
CitiSelect VIP Folio 500 (11/25/96) N/A N/A N/A
Landmark Small Cap Equity VIP Fund (11/25/96)(a) 70.18% N/A 103.42%
AIM VARIABLE INSURANCE FUNDS, INC.
Capital Appreciation Fund (5/05/93) 10.50% N/A 84.42%
Government Securities Fund (5/05/93) 2.34% N/A 9.58%
Growth Fund (5/05/93) 10.22% N/A 57.32%
International Equity Fund (5/05/93) 14.87% N/A 48.07%
Value Fund (5/05/93) 4.14% N/A 66.33%
Growth and Income Fund (5/02/94) 12.38% N/A 46.55%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Growth Portfolio (10/9/86) 6.19% 103.54% 250.02%
High Income Portfolio (9/19/85) 13.01% 92.05% 201.09%
Equity Income Portfolio (10/9/86) 12.16% 109.70% 195.60%
Overseas Fund (1/28/87) 8.83% 38.46% 76.96%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Contrafund Portfolio (1/03/95) 10.32% N/A 52.09%
Index 500 Portfolio (8/27/92) 18.44% N/A 73.05%
MFS VARIABLE INSURANCE TRUST
World Governments Series (6/14/94) 3.69% N/A 13.47%
Money Market Series (1/03/95) 3.16% N/A 5.28%
Bond Series (10/24/95) N/A N/A 0.06%
Total Return Series (1/03/95) 13.47% N/A 34.29%
Research Series (7/26/95) 22.12% N/A 26.68%
Emerging Growth Series (7/24/95) 26.75% N/A 37.42%
- -------------------------------------------------- --------- --------------------
a. This is "synthetic" data. See footnote "a" of the "Subaccount Standardized
Average Annual Total Return Table."
</TABLE>
Non-standard performance data will only be disclosed if the standard
performance data for the required periods is also disclosed.
In advertising and sales literature, the performance of each subaccount
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 mutual fund portfolios with investment
objectives similar to each of the subaccounts. Lipper Analytical Services,
Inc. ("Lipper") and the Variable Annuity Research Data Services ("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 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
11
<PAGE>
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
subaccount to the Standard & Poor's Index of 500 Common Stocks, a widely used
measure of stock performance. This unmanaged index assumes the reinvestment
of dividends but does not reflect any "deductions" for the expenses of
operating or managing an investment portfolio. Other independent ranking
services and indices may also be used as a source of performance comparison.
Comparison may also report other information including the effect of
tax-deferred compounding on a subaccount's investment returns, or returns in
general, which may be illustrated by tables, graphs, or charts. All income
and capital gains derived from subaccount investments are reinvested and can
lead to substantial long-term accumulation of assets, provided that the
underlying portfolio's investment experience is positive.
Effect of the Annual Contract Fee on Performance Data
The Contract provides for a $30 annual contract fee to be deducted
annually at the end of each Contract Year from the Accounts based on the
proportion of the Contract Value invested in each such Account. For purposes
of reflecting the contract fee in yield and total return quotations, the
annual charge is converted into a per-dollar per-day charge based on the
average Contract Value of all Contracts on the last day of the period for
which quotations are provided. The per-dollar per-day average charge will
then be adjusted to reflect the basis upon which the particular quotation is
calculated. This fee is waived for Contracts having a Contract Value of at
least $25,000 or if, during the Contract Year, purchase payments of at least
$2,500 ($2,000 for Qualified Contracts), exclusive of the initial purchase
payment, are paid.
VARIABLE ANNUITY PAYMENTS
Assumed Investment Rate
The discussion concerning the amount of variable annuity payments which
follows is based on an assumed investment rate of 3.0% per year. The assumed
net investment rate is used merely in order to determine the first monthly
payment per thousand dollars of applied value. This rate does not bear any
relationship to the actual net investment experience of the Separate Account
or of any subaccount.
Amount of Variable Annuity Payments
The amount of the first variable annuity payment is determined by dividing
the Contract Value on the Annuity Income Date by 1,000 and multiplying the
result by the appropriate factor in the annuity tables provided in the
Contract. These tables are based upon the 1983 IAM Tables (promulgated by the
Society of Actuaries). The appropriate factor is based on the annual net
investment return of 3.0%. The amount of each payment will depend on the age
of the Annuitant(s) at the time the first payment is due, and the sex of the
Annuitant(s).
The dollar amount of the second and subsequent variable annuity payments
will vary and is determined by multiplying the number of subaccount annuity
units by the subaccount annuity unit value as of a date no earlier than the
fifth Valuation Day preceding the date the payment is due. The number of such
units will remain fixed during the annuity period, assuming you or the
Annuitant, if you are deceased, make no exchanges of annuity units for
annuity units of another subaccount or to provide a fixed annuity payment.
Once every 3 months after annuity payments have commenced, the Annuitant may
elect in writing, to transfer among any subaccounts. After the Annuity Income
Date, no transfers may be made between the subaccounts and the Fixed Account.
The annuity unit value will increase or decrease from one payment to the
next in proportion to the net investment return of the subaccount or
subaccounts supporting the variable annuity payments, less an adjustment to
neutralize the 3.0% assumed net investment rate referred to above. Therefore,
the dollar amount of annuity payments after the first will vary with the
amount by which the net investment return of the appropriate subaccounts is
greater or less than 3.0% per year. For example, for a Contract using only
one subaccount to generate variable annuity payments, if that subaccount has
a cumulative net investment return of 5% over a one year period, the first
annuity payment in the next year will be approximately 2% greater than the
payment on the same date in the preceding year. If such net investment return
is 1% over a one year period, the first annuity payment in the next year will
be approximately 2 percentage points less than the payment on the same date
in the preceding year. (See also "Variable Annuity Payments" in the
Prospectus.)
12
<PAGE>
Fixed annuity payments are determined at annuitization by multiplying the
values allocated to the Fixed Account by a rate to be determined by First
Citicorp Life which is no less than the rate specified in the annuity tables
in the Contract. The annuity payment will remain level for the duration of
the annuity.
The annuity payments will be made on the fifteenth day of each month. The
annuity unit value used in calculating the amount of the variable annuity
payments will be based on an annuity unit value determined as of the close of
business on a day no earlier than the fifth Valuation Day preceding the date
of the annuity payment.
Annuity Unit Value
The annuity unit value is calculated at the same time that the value of an
accumulation unit is calculated and is based on the same values for portfolio
shares and other assets and liabilities. (See "Variable Contract Value" in
the Prospectus.) The annuity unit value for each subaccount's first valuation
period was set at $1.00. The annuity unit value for a subaccount is
calculated for each subsequent Valuation Period by multiplying the subaccount
annuity unit value on the preceding day by the product of 1 times 2 where:
(1) is the subaccount's net investment factor on the Valuation Day the
Annuity Unit Value is being calculated; and
(2) is 0.999919 (which is the daily factor that will produce the 3.0%
annual investment rate assumed in the annuity tables), adjusted by the
number of days since the previous Valuation Day.
The following illustration shows, by use of hypothetical example, the
method of determining the annuity unit value.
Illustration of Calculation of Annuity Unit Value
1. Net Investment Factor for period 1.003662336
2. Adjustment for 3% Assumed Investment Rate 0.999919016
3. 2x1 1.003581055
4. annuity unit value, beginning of valuation period 10.743769
5. annuity unit value, end of valuation period (3x4) 10.782243
13
<PAGE>
LEGAL MATTERS
All matters relating to New York law pertaining to the Contracts,
including the validity of the Contracts and our authority to issue the
Contracts, have been passed upon by Richard M. Zuckerman, Associate General
Counsel of the Company. Sutherland, Asbill & Brennan of Washington, D.C. has
provided advice on certain matters relating to the federal securities laws.
EXPERTS
The statutory financial statements of First Citicorp Life Insurance
Company as of December 31, 1995 and 1994, and for each of the years in the
three-year period ended December 31, 1995, and the financial statements for
the Separate Account as of December 31, 1995, have been included herein and
in the registration statement in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, and upon the authority
of said firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP covering the financial statements of
First Citicorp Life Insurance Company contains an explanatory paragraph which
states that the financial statements are presented in conformity with
accounting practices prescribed or permitted by the Department of Insurance
of the State of New York. These practices differ in some respects from
generally accepted accounting principles. The financial statements do not
include any adjustments that might result from the differences.
OTHER INFORMATION
A registration statement has been filed with the SEC under the Securities
Act of 1933, as amended, with respect to the Contracts discussed in this
Statement of Additional Information. Not all the information set forth in the
registration statement, amendments and exhibits thereto has been included in
this Statement of Additional Information. Statements contained in this
Statement of Additional Information concerning the content of the Contracts
and other legal instruments are intended to be summaries. For a complete
statement of the terms of these documents, reference should be made to the
instruments filed with the SEC.
FINANCIAL STATEMENTS
The audited Statutory Financial Statements of the Company as of December
31, 1995 and 1994 and for the years ended December 31, 1995, 1994, and 1993,
as well as the Independent Auditor's Report appear in the Statement of
Additional Information to Post-Effective Amendment No. 2 to the Separate
Account's registration statement filed on April 29, 1996 with the SEC and are
incorporated by reference in this Statement of Additional Information. The
financial statements for the Separate Account as of December 31, 1995 as well
as the Auditor's Report also appear in the Statement of Additional
Information to Post-Effective Amendment No. 2 to the Separate Account's
registration statement filed on April 29, 1996 with the SEC and are
incorporated by reference in this Statement of Additional Information.
The unaudited statutory financial statements of the Company as of September
30, 1996 are contained in this Statement of Additional Information. The
unaudited financial statements of the Separate Account as of September 30, 1996
are also contained in this Statement of Additional Information.
14
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
Statutory Statement of Admitted Assets, Liabilities, and Capital and Surplus
(Unaudited)
September 30, 1996
Admitted Assets
-------------------------------------------------------------------------
Cash and investments:
Bonds $233,744,608
Mortgage loans 1,425,753
Cash on hand and on deposit 1,544,912
Short-term investments 16,796,535
- --------------------------------------------------------- ---------------
Total cash and investments 253,511,808
Net deferred and uncollected premiums 661,319
Due from reinsurers 654,018
Accrued investment income 3,618,052
Due from affiliates 1,630,607
Other 16,711
Separate account assets 11,788,758
- --------------------------------------------------------- ---------------
Total admitted assets $271,881,273
- --------------------------------------------------------- ---------------
- --------------------------------------------------------- ---------------
Liabilities and Capital and Surplus
-------------------------------------------------------------------------
Liabilities:
Future policy benefits:
Life insurance and annuities 231,604,033
Accident and health insurance 242,419
Supplementary contracts without life contingencies 731,030
Policy and contract claims:
Life insurance 1,813,021
Accident and health insurance 1,100,009
Federal income taxes accrued 1,030,170
Asset valuation reserve 570,021
Interest maintenance reserve 1,679,401
Other liabilities 3,928,754
Separate account liabilities 11,403,508
- --------------------------------------------------------- ---------------
Total liabilities 254,102,366
- --------------------------------------------------------- ---------------
Commitments and contingencies
Capital and surplus:
Capital stock--$5 par value per share; 400,000 shares
authorized, issued and outstanding 2,000,000
Surplus:
Paid-in 4,000,000
Unassigned 11,778,907
- --------------------------------------------------------- ---------------
Total capital and surplus 17,778,907
- --------------------------------------------------------- ---------------
Total liabilities and capital and surplus $271,881,273
- --------------------------------------------------------- ---------------
F-1
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
Statutory Statement of Operations
(Unaudited)
For the Period Ended September 30, 1996
- -------------------------------------------------------- --------------
Revenues:
Net premiums earned $82,135,684
Net investment income 11,678,239
Amortization of interest maintenance reserve 23,591
Other 80,491
- -------------------------------------------------------- --------------
Total revenues 93,918,005
- -------------------------------------------------------- --------------
Benefits and expenses:
Death and other policy benefits:
Life insurance and annuities 4,501,560
Accident and health insurance 1,476,281
Surrenders 11,154,021
Change in future policy benefits:
Life insurance and annuities 63,956,534
Accident and health insurance 6,655
Other 47,509
Other operating costs and expenses:
Commissions 4,594,330
General insurance expenses and taxes, licenses and
fees 3,076,267
Other 288
Net transfers to separate accounts 5,535,181
- -------------------------------------------------------- --------------
Total benefits and expenses 94,348,626
- -------------------------------------------------------- --------------
(Loss) from operations before federal income tax expense
and net realized capital gains (430,621)
Federal income tax (benefit) (73,190)
- -------------------------------------------------------- --------------
(Loss) from operations before net realized capital gains (357,431)
Net realized capital gains 0
- -------------------------------------------------------- --------------
Net (Loss) $ (357,431)
- -------------------------------------------------------- --------------
F-2
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
Statutory Statement of Capital and Surplus
(Unaudited)
For the Period Ended September 30, 1996
------------------------------------------- --------------
Capital and surplus at beginning of year $17,951,102
Net (loss) (357,431)
Change in non-admitted assets 197
Change in surplus in separate accounts 185,039
------------------------------------------- --------------
Capital and surplus at end of period $17,778,907
------------------------------------------- --------------
F-3
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
Statutory Statement of Cash Flow
(Unaudited)
For the Period Ended September 30, 1996
<TABLE>
- ------------------------------------------------------------------------------ ---------------
<S> <C>
Cash provided:
From operations:
Premiums and annuity considerations $ 82,056,624
Net investment income received 10,352,125
Other income received 80,491
Life and accident and health claims, and other benefits paid (16,286,114)
Commissions, other expenses, and taxes paid (7,177,482)
Net transfers to separate accounts (5,535,181)
Federal income taxes paid (1,018,237)
Other 43,080
- ------------------------------------------------------------------------------ ---------------
Net cash from operations 62,515,306
- ------------------------------------------------------------------------------ ---------------
Proceeds from investments sold, matured or repaid:
Bonds 22,752,077
Mortgage loans 392,503
Other 612
- ------------------------------------------------------------------------------ ---------------
Total investment proceeds 23,145,192
- ------------------------------------------------------------------------------ ---------------
Other cash provided 2,521,778
- ------------------------------------------------------------------------------ ---------------
Total cash provided 88,182,276
- ------------------------------------------------------------------------------ ---------------
Cash applied:
Cost of investments acquired--bonds 81,157,016
Other cash applied, net 1,433,509
- ------------------------------------------------------------------------------ ---------------
Total cash applied 82,590,525
- ------------------------------------------------------------------------------ ---------------
Net change in cash on hand and on deposit and short-term investments 5,591,751
Cash on hand and on deposit and short-term investments, beginning of year 12,749,698
- ------------------------------------------------------------------------------ ---------------
Cash on hand and on deposit and short-term investments, end of period $ 18,341,449
- ------------------------------------------------------------------------------ ---------------
</TABLE>
F-4
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF NET ASSETS (Unaudited)
September 30, 1996
<TABLE>
<CAPTION>
Landmark Landmark Landmark Landmark
Equity U.S. Gov't. International Balanced
------------- -------------- ---------------- ------------
<S> <C> <C> <C> <C>
Net Assets:
Investments in Landmark
VIP Funds, AIM Variable
Insurance Funds, Inc., Fidelity
Investments Variable Insurance
Products Fund, and MFS Variable
Insurance Trust, at Market Value
(See Schedule of Investments) $1,389,168 291,393 767,618 1,267,399
Payable to First Citicorp Life
Insurance Company 743 151 401 678
------------- -------------- ---------------- ------------
Total Net Assets $1,388,425 291,242 767,217 1,266,721
============= ============== ================ ============
Total Net Assets Represented By:
Variable Annuity Cash
Value Invested in Separate
Account 1,388,425 291,242 767,217 1,266,721
------------- -------------- ---------------- ------------
Total Net Assets
Represented $1,388,425 291,242 767,217 1,266,721
============= ============== ================ ============
Total Units Held 1,088,693 279,434 727,426 1,083,436
Accumulated Unit Value $ 1.28 1.04 1.05 1.17
Cost of Investments $1,231,109 286,674 751,381 1,177,616
============= ============== ================ ============
</TABLE>
[table restubbed]
<TABLE>
<CAPTION>
AIM Fidelity MFS MFS
Cap. Apprec. Growth Money Mkt. World Gov't.
------------- -------------- ---------------- ------------
<S> <C> <C> <C> <C>
Net Assets:
Investments in Landmark
VIP Funds, AIM Variable
Insurance Funds, Inc., Fidelity
Investments Variable Insurance
Products Fund, and MFS Variable
Insurance Trust, at Market Value
(See Schedule of Investments) 4,109,475 3,551,510 59,704 343,730
Payable to First Citicorp Life
Insurance Company 2,188 1,888 32 176
------------- -------------- ---------------- ------------
Total Net Assets 4,107,287 3,549,622 59,672 343,554
============= ============== ================ ============
Total Net Assets Represented By:
Variable Annuity Cash
Value Invested in Separate
Account 4,107,287 3,549,622 59,672 343,554
------------- -------------- ---------------- ------------
Total Net Assets
Represented 4,107,287 3,549,622 59,672 343,554
============= ============== ================ ============
Total Units Held 2,773,303 2,441,185 56,865 311,640
Accumulated Unit Value 1.48 1.45 1.05 1.10
Cost of Investments 3,635,452 3,374,340 59,704 349,064
============= ============== ================ ============
</TABLE>
[end restubbed table]
See Notes to Financial Statements.
F-5
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF OPERATIONS (Unaudited)
For the Nine Months Ended September 30, 1996
<TABLE>
<CAPTION>
Landmark Landmark Landmark Landmark
Equity U.S. Gov't. International Balanced
----------- -------------- ---------------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends $ 901 -- 600 975
Expenses:
Mortality & Expense Risk
Fees 9,686 2,126 5,426 9,439
Daily Administrative
Charges 1,159 254 653 1,130
----------- -------------- ---------------- -----------
Total Expenses 10,845 2,380 6,079 10,569
----------- -------------- ---------------- -----------
Net Investment Income
(Loss) (9,944) (2,380) (5,479) (9,594)
----------- -------------- ---------------- -----------
Realized and Unrealized
Gain (Loss) on
Investments:
Realized Gain on Sale of
Investments 6,196 63 862 7,862
Net Unrealized Gain
(Loss) on Investments 108,184 (2,789) 16,601 54,500
----------- -------------- ---------------- -----------
Net Gain (Loss) on
Investments 114,380 (2,726) 17,463 62,362
----------- -------------- ---------------- -----------
Increase in Net Assets
Resulting From
Operations $104,436 (5,106) 11,984 52,768
=========== ============== ================ ===========
</TABLE>
[table restubbed]
<TABLE>
<CAPTION>
AIM MFS
Cap. Fidelity MFS World
Apprec. Growth Money Mkt. Gov't.
----------- -------------- ---------------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends -- 128,270 2,608 --
Expenses:
Mortality & Expense Risk
Fees 25,993 23,241 730 2,652
Daily Administrative
Charges 3,115 2,796 89 318
----------- -------------- ---------------- -----------
Total Expenses 29,108 26,037 819 2,970
----------- -------------- ---------------- -----------
Net Investment Income
(Loss) (29,108) 102,233 1,789 (2,970)
----------- -------------- ---------------- -----------
Realized and Unrealized
Gain (Loss) on
Investments:
Realized Gain on Sale of
Investments 27,496 17,497 -- (6,578)
Net Unrealized Gain
(Loss) on Investments 408,572 143,345 -- 11,549
----------- -------------- ---------------- -----------
Net Gain (Loss) on
Investments 436,068 160,842 -- 4,971
----------- -------------- ---------------- -----------
Increase in Net Assets
Resulting From
Operations 406,960 263,075 1,789 2,001
=========== ============== ================ ===========
</TABLE>
[end restubbed table]
See Notes to Financial Statements.
F-6
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS (Unaudited)
For the Nine Months Ended September 30, 1996
<TABLE>
<CAPTION>
Landmark Landmark Landmark Landmark
Equity U.S. Gov't. International Balanced
------------- -------------- ---------------- ------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net
Assets Operations:
Net Investment Income
(Loss) $ (9,944) (2,380) (5,479) (9,594)
Realized Gain on Sale of
Investments 6,196 63 862 7,862
Change in Unrealized
Appreciation
(Depreciation) of
Investments 108,184 (2,789) 16,601 54,500
------------- -------------- ---------------- ------------
Increase in Net Assets
Resulting From
Operations 104,436 (5,106) 11,984 52,768
------------- -------------- ---------------- ------------
Capital Transactions:
Contract Deposits 563,506 95,247 387,444 550,310
Transfers Between Funds 5,400 3,600 (1,186) (19,824)
Transfers From First
Citicorp Life Insurance
Company 9,905 -- 7,376 5,520
Annual Administrative
Charges (274) (33) (170) (341)
Contract Withdrawals (40,948) (24,602) (28,264) (32,860)
------------- -------------- ---------------- ------------
Increase in Net Assets
Resulting From Capital
Transactions 537,589 74,212 365,200 502,805
------------- -------------- ---------------- ------------
Total Increase in Net
Assets 642,025 69,106 377,184 555,573
Net Assets, at Beginning of
Period 746,400 222,136 390,033 711,148
------------- -------------- ---------------- ------------
Net Assets, at End of
Period $1,388,425 291,242 767,217 1,266,721
============= ============== ================ ============
</TABLE>
[restubbed table]
<TABLE>
<CAPTION>
AIM Fidelity MFS MFS
Cap. Apprec. Growth Money Mkt. World Gov't.
------------- -------------- ---------------- ------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net
Assets Operations:
Net Investment Income
(Loss) (29,108) 102,233 1,789 (2,970)
Realized Gain on Sale of
Investments 27,496 17,497 -- (6,578)
Change in Unrealized
Appreciation
(Depreciation) of
Investments 408,572 143,345 -- 11,549
------------- -------------- ---------------- ------------
Increase in Net Assets
Resulting From
Operations 406,960 263,075 1,789 2,001
------------- -------------- ---------------- ------------
Capital Transactions:
Contract Deposits 2,038,147 1,737,587 15,845 147,095
Transfers Between Funds 56,329 32,844 (41,120) (36,043)
Transfers From First
Citicorp Life Insurance
Company 57,154 47,496 -- --
Annual Administrative
Charges (944) (765) (27) (95)
Contract Withdrawals (181,041) (149,437) (35,673) (34,518)
------------- -------------- ---------------- ------------
Increase in Net Assets
Resulting From Capital
Transactions 1,969,645 1,667,725 (60,975) 76,439
------------- -------------- ---------------- ------------
Total Increase in Net
Assets 2,376,605 1,930,800 (59,186) 78,440
Net Assets, at Beginning of
Period 1,730,682 1,618,822 118,858 265,114
------------- -------------- ---------------- ------------
Net Assets, at End of
Period 4,107,287 3,549,622 59,672 343,554
============= ============== ================ ============
</TABLE>
See Notes to Financial Statements.
F-7
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
1. History
The Variable Annuity Separate Account (the "Account") is a separate
investment account maintained under the provisions of New York Insurance Law
by First Citicorp Life Insurance Company (the "Company"), a subsidiary of
Citicorp Life Insurance Company. The Account operates as a unit investment
trust registered under the Investment Company act of 1940, as amended, and
supports the operations of the Company's individual flexible premium deferred
variable annuity contracts (the "contracts"). The Account invests in
portfolios of the Landmark VIP Funds, the AIM Variable Insurance Funds, Inc.,
the Fidelity Investments Variable Insurance Products Fund, and the MFS
Variable Insurance Trust (the "Funds"). The available portfolios of the
Landmark VIP Funds include the Landmark VIP Equity Fund, the Landmark VIP
U.S. Government Fund, the Landmark VIP International Equity Fund and the
Landmark VIP Balanced Fund. The AIM V.I. Capital Appreciation Fund of the AIM
Variable Insurance Funds, Inc., the Growth Portfolio of the Fidelity
Investments Variable Insurance Products Fund, the MFS Money Market Series and
the MFS World Governments Series of the MFS Variable Insurance Trust are also
available for investment.
The account had no assets or operations until March 6, 1995, when the initial
investment was made.
The assets of the Account are the property of the Company. The portion of the
Account's assets applicable to the contracts are not chargeable with
liabilities arising out of any other business conducted by the Company.
In addition to the Account, a contract owner may also allocate funds to the
General Account, which is part of the Company's general account. Amounts
allocated to the General Account are credited with a guaranteed rate for one
year. Because of exemptive and exclusionary provisions, interests in the
General Account have not been registered under the Securities Act of 1933 and
the General Account has not been registered as an investment company under
the Investment Company Act of 1940.
2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by the
Account in preparation of the financial statements in conformity with
generally accepted accounting principles.
A. Investment Valuation--The investment in the Fund is stated at market
value which is the net asset value of each of the respective series as
determined at the close of business on the last working day of the
period by the Fund.
B. Accounting for Investments--Investment transactions are accounted for
on the trade date. Dividend income is recorded on the ex-dividend date.
C. Federal Income Taxes--The Company is taxed under federal law as a life
insurance company. The Account is part of the Company's total
operations and is not taxed separately. Under existing law, no taxes
are payable on investment income and realized capital gains of the
Account.
3. Contract Charges
Daily charges for mortality and expense risks assumed by the Company are
assessed through the daily unit value calculation and are equivalent on an
annual basis to 1.25% of the value of the contracts.
An annual contract fee of $30 is assessed against each contract on its
anniversary date by surrendering units. Daily charges for administrative
expenses are assessed through the daily unit value calculation and are
equivalent on an annual basis to 0.15% of the value of the contracts.
The contracts provide that in the event that a contract owner withdraws all
or a portion of the contract value within five contract years there will be
assessed a deferred sales charge. The deferred sales charge is based on a
table of charges of which the maximum charge is currently 7% of the contract
value. During each contract year, up to 10% of purchase payments less any
prior withdrawal of purchase payments may be withdrawn without a deferred
sales charge.
F-8
<PAGE>
Premium taxes may be applicable, depending on the laws of various
jurisdictions. Various states and other governmental entities levy a premium
tax on annuity contracts issued by insurance companies.
4. Purchases of Investments
For the nine months ended September 30, 1996, investment activity in the
Funds was as follows:
<TABLE>
<CAPTION>
Cost of Proceeds
Shares of Purchases From Sales
---------------------------------------------------------------------- -------------
<S> <C> <C>
Landmark VIP Funds:
Landmark VIP Equity Fund $ 564,439 $ 36,535
Landmark VIP U.S. Government Fund 96,348 24,507
Landmark VIP International Equity Fund 378,796 18,928
Landmark VIP Balanced Fund 568,784 75,363
AIM Variable Insurance Funds, Inc.:
AIM V.I. Capital Appreciation Fund 2,048,905 107,293
Fidelity Investments Variable Insurance Products Fund:
Growth Portfolio 1,840,569 87,719
MFS Variable Insurance Trust:
MFS Money Market Series 21,540 80,532
MFS World Governments Series 178,159 80,119
</TABLE>
5. Net Increase in Accumulation Units
For the nine months ended September 30, 1996, transactions in accumulation
units of the Account were as follows:
<TABLE>
<CAPTION>
Landmark Landmark Landmark Landmark
Equity U.S. Gov't. International Balanced
------------ -------------- ---------------- ------------
<S> <C> <C> <C> <C>
Units Purchased 461,104 92,604 370,546 485,116
Units Withdrawn (33,785) (23,883) (26,806) (29,426)
Units Transferred Between Funds 12,363 3,465 5,741 (12,300)
------------ -------------- ---------------- ------------
Net Increase 439,682 72,186 349,481 443,390
Units, at Beginning of Period 649,011 207,248 377,945 640,046
------------ -------------- ---------------- ------------
Units, at End of Period 1,088,693 279,434 727,426 1,083,436
============ ============== ================ ============
</TABLE>
<TABLE>
<CAPTION>
AIM Fidelity MFS MFS
Cap. Apprec. Growth Money Mkt. World Gov't.
------------ -------------- ---------------- ------------
<S> <C> <C> <C> <C>
Units Purchased 1,477,281 1,253,198 15,247 135,153
Units Withdrawn (130,104) (106,745) (34,625) (31,930)
Units Transferred Between Funds 80,613 56,802 (39,665) (33,497)
------------ -------------- ---------------- ------------
Net Increase 1,427,790 1,203,255 (59,043) 69,726
Units, at Beginning of Period 1,345,513 1,237,930 115,908 241,914
------------ -------------- ---------------- ------------
Units, at End of Period 2,773,303 2,441,185 56,865 311,640
============ ============== ================ ============
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS
September 30, 1996
Number Market
of Shares Value Cost
------------ ------------- -------------
<S> <C> <C> <C>
Landmark VIP Funds:
Landmark VIP Equity Fund 107,771 $1,389,168 $1,231,109
Landmark VIP U.S. Government Fund 28,291 291,393 286,674
Landmark VIP International Equity Fund 72,145 767,618 751,381
Landmark VIP Balanced Fund 108,232 1,267,399 1,177,616
AIM Variable Insurance Funds, Inc.:
AIM V.I. Capital Appreciation Fund 213,368 4,109,475 3,635,452
Fidelity Investments Variable Products Fund:
Growth Portfolio 116,405 3,551,510 3,374,340
MFS Variable Insurance Trust:
MFS Money Market Series 59,704 59,704 59,704
MFS World Governments Series 33,243 343,730 349,064
</TABLE>
F-9
<PAGE>
PART C
OTHER INFORMATION
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
<TABLE>
<S> <C>
(a) Financial Statements
All required financial statements are included in Part B.
(b) Exhibits
(1) Certified resolution of the board of directors of First Citicorp Life Insurance Company
(the "Company") establishing First Citicorp Life Variable Annuity Separate Account (the
"Separate Account").*
(2) Not Applicable.
(3) Form of underwriting agreement among the Company, the Separate Account and The Landmark
Funds Broker- Dealer Services, Inc.*
(4) (a) Contract Form.*
(b) Individual Retirement Annuity Endorsement.*
(c) 403(b) Tax Sheltered Annuity Endorsement.*
(d) Annuity Contract Endorsement: Amendment of Annuity Income Option Tables.*
(e) Variable Annuity Endorsement: Amendment of Contract Provisions.**
(5) Contract Application.**
(6) (a) Certificate of Incorporation of the Company.*
(b) By-Laws of the Company.*
(7) None.
(8) (a) Participation Agreement Among Variable Insurance Products Fund, Fidelity Distributors
Corporation and First Citicorp Life Insurance Company.*
(b) Participation Agreement Among Variable Insurance Products Fund II, Fidelity
Distributors Corporation and First Citicorp Life Insurance Company.**
(c) Participation Agreement Among MFS Variable Insurance Trust, First Citicorp Life
Insurance Company and Massachusetts Financial Services Company.**
(d) Participation Agreement By and Among AIM Variable Insurance Funds, Inc. and First
Citicorp Life Insurance Company, on Behalf of Itself and First Citicorp Life Variable
Annuity Separate Account.**
(e) Participation Agreement Among Landmark VIP Funds and First Citicorp Life Insurance
Company.**
(f) Participation Agreement Between Variable Annuity Portfolios and First Citicorp Life
Insurance Company.**
(g) Administrative Services Agreement between Citicorp Insurance Services, Inc. and First
Citicorp Life Insurance Company with Addendums.*
(9) Opinion and Consent of Richard M. Zuckerman, Esq.
(10) (a) Consent of Sutherland, Asbill & Brennan.
(b) Consent of KPMG Peat Marwick LLP.
(11) Not Applicable.
(12) None.
(13) Not Applicable.
(14) Not Applicable
</TABLE>
* Incorporated herein by reference to the registrant's Post-Effective
Amendment No. 2 to the Registration Statement filed with the Securities
and Exchange Commission via EDGARLINK on April 29, 1996 (File 33-83354).
** Incorporated herein by reference to the registrant's Post-Effective
Amendment No. 3 to the Registration Statement filed with the Securities
and Exchange Commission via EDGARLINK on November 8, 1996 (File 33-83354).
2
<PAGE>
Item 25. Directors and Officers of the Company.
<TABLE>
<CAPTION>
Directors**
<S> <C>
Jack S. Berger Joseph E. Madalon
Frederick W. Bradley, Jr.* Charles H. Masland, IV
Carl W. Desch* Frederic W. Thomas*
Steven J. Freiburg John M. Walbridge*
Charles R. Haskins Larry D. Williams
Alan F. Liebowitz
* Outside Director
Officers**
Alan F. Liebowitz President and Chief Executive Officer
Joseph E. Madalon Senior Vice President and Chief Financial Officer
Charles H. Masland, IV Senior Vice President
Larry D. Williams Senior Vice President
Elizabeth C. Craig Vice President
Richard P. Elder Vice President
Daniel F. Forcade Vice President and Treasurer
Charles R. Haskins Vice President
Mark C. Lovejoy Vice President and Chief Underwriter
Eric S. Miller Vice President
Frederick K. Molen Vice President and Chief Valuation Actuary
Richard M. Zuckerman Vice President/Associate General Counsel/Secretary
</TABLE>
** One Court Square, 24th Floor, Long Island City, New York 11120.
3
<PAGE>
Item 26. Persons Controlled by or Under Common Control With the Depositor or
Registrant
ORGANIZATION CHART
[typeset representation of graphic]
-------------------------------
CITICORP
(Delaware Corporation)
-------------------------------
|
|
| 100%
|
|
-------------------------------
CITICORP HOLDINGS, INC.
(Delaware Corporation)
-------------------------------
|
|
| 100%
|
|
-------------------------------
CITIBANK DELAWARE
(Delaware Corporation)
-------------------------------
|
|
|-------------------------| 100%
|100% |
| |
------------------------------- -------------------------------
CITICORP LIFE CITICORP ASSURANCE CO.
INSURANCE COMPANY (Delaware Corporation)
(Arizona Corporation)
------------------------------- -------------------------------
|
|
| 100%
|
|
-------------------------------
FIRST CITICORP LIFE
INSURANCE COMPANY
(New York Corporation)
-------------------------------
[end graphic]
Item 27. Number of Contract owners
As of December 31, 1995, there were 267 contract owners.
Item 28. Indemnification
<TABLE>
<S> <C>
The Bylaws of First Citicorp Life Insurance Company provide in Article VIII as follows:
(a) The Corporation shall indemnify any person made a party to an action or proceeding by or in the right of
the Corporation to procure a judgment in its favor, by reason of the fact that he, his testator or
intestate, is or was a director or officer or employee of the Corporation against the reasonable
expenses, including attorneys' fees, actually and necessarily incurred by him in connection with the
defense of such action or proceeding, or in connection with an appeal therein, except in relation to
matters as to which such person is adjudged to have breached his duty to the Corporation; and
(b) The Corporation shall indemnify any person made, or threatened to be made a party to an action or
proceeding other than one by or in the right of the Corporation to procure a judgement in its favor,
whether civil or criminal, including an action by or in the right of any other corporation of any type
or kind domestic or foreign, which any director or officer or employee of the Corporation served in any
capacity at the request of the Corporation, by reason of the fact that he, his testator or intestate,
was a director or officer or employee of the Corporation, or served such other corporation in any
capacity, against judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees, actually and necessarily incurred as a result of such action or proceeding, or any
appeal therein, if such person acted in good faith, for a purpose which he reasonably believed to be in
the best interests of the Corporation and, in criminal actions, or proceedings, in addition, had no
reasonable cause to believe that his conduct was unlawful.
4
<PAGE>
Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such issue.
</TABLE>
Item 29. Principal Underwriter
<TABLE>
<S> <C>
(a) The Landmark Funds Broker-Dealer Services, Inc. ("LFBDS"), the Registrant's Distributor, is also
the distributor for Landmark Cash Reserves, Premium Liquid Reserves, Landmark Tax Free Reserves,
Landmark New York Tax Free Reserves, Landmark California Tax Free Reserves, Landmark Connecticut
Tax Free Reserves, Landmark New York Tax Free Income Fund, Landmark Balanced Fund, Landmark
Equity Fund, Landmark U.S. Government Income Fund, Landmark Intermediate Income Fund, Landmark
U.S. Treasury Reserves, Premium U.S. Treasury Reserves, Landmark Institutional Liquid Reserves
and Landmark Institutional U.S. Treasury Reserves. LFBDS is also the placement agent for
Balanced Portfolio, Cash Reserves Portfolio, U.S. Treasury Reserves Portfolio, Tax Free Reserves
Portfolio, International Equity Portfolio, Equity Portfolio and Government Income Portfolio.
(b) The information required by this item 29 with respect to each director and officer of LFBDS is
incorporated by reference to Schedule A or Form BD filed by LFBDS pursuant to the Securities and
Exchange Act of 1934 (File No. 8-32417).
(c) Not applicable.
</TABLE>
Item 30. Location Books and Records
<TABLE>
<S> <C>
All of the accounts, books, records or other documents required to be kept by Section 31(a) of
the Investment Company Act of 1940 and rules thereunder, are maintained by the Company at One
Court Square, Long Island City, New York.
</TABLE>
Item 31. Management Services
Not applicable.
Item 32. Undertakings and Representations
<TABLE>
<S> <C>
(a) The registrant undertakes that it will file a post-effective amendment to this registration
statement as frequently as is necessary to ensure that the audited financial statements in the
registration statement are never more than 16 months old for as long as purchase payments under
the contracts offered herein are being accepted.
(b) The registrant undertakes that it 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 post card or similar written communication affixed to or
included in the prospectus that the applicant can remove and send to the Company for a statement
of additional information.
(c) The registrant undertakes to deliver any statement of additional information and any financial
statements required to be made available under this Form N-4 promptly upon written or oral
request to the Company at the address or phone number listed in the prospectus.
(d) The Company represents that in connection with its offering of the contracts as funding vehicles
for retirement plans meeting the requirements of Section 403(b) of the Internal Revenue Code of
1986, it is relying on a no-action letter dated November 28, 1988, to the American Council of
Life Insurance (Ref. No. IP-6-88) regarding Sections 22(e), 27(c)(1), and 27(d) of the
Investment Company Act of 1940, and that paragraphs numbered (1) through (4) of that letter will
be complied with.
(e) First Citicorp Life Insurance Company hereby represents that the fees and charges deducted under
the Contract, in the aggregate, are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by First Citicorp Life Insurance
Company.
</TABLE>
5
<PAGE>
As required by the Securities Act of 1933 and the Investment Company Act
of 1940, the registrant certifies that this Amendment to the Registration
Statement meets the requirements for effectiveness pursuant to paragraph (b)
of Rule 485 and has caused this Amendment to the Registration Statement to be
signed on its behalf, in the City of New York, and the State of New York, on
this 27th day of December, 1996.
FIRST CITICORP LIFE VARIABLE ANNUITY
SEPARATE ACCOUNT
(Registrant)
Attest:/s/Richard D. Zuckerman By:/s/Larry D. Williams
Senior Vice President of First
Citicorp Life Insurance Company
BY: FIRST CITICORP LIFE INSURANCE COMPANY
(Depositor)
Attest:/s/Richard D. Zuckerman By:/s/Larry D. Williams
Senior Vice President
As required by the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
------------------------------- -----------------------------------------
/s/Larry D. Williams Director, SVP December 27, 1996
/s/Charles H. Masland, IV Director, SVP December 27, 1996
/s/Charles R. Haskins Director, VP December 27, 1996
/s/Daniel F. Forcade Treasurer, VP December 27, 1996
6
<PAGE>
As required by the Securities Act of 1933 and the Investment Company Act
of 1940, the registrant certifies that this Amendment to the Registration
Statement meets the requirements for effectiveness pursuant to paragraph (b)
of Rule 485 and has caused this Amendment to the Registration Statement to be
signed on its behalf, in the City of New York, and the State of New York, on
this 27th day of December, 1996.
FIRST CITICORP LIFE VARIABLE ANNUITY
SEPARATE ACCOUNT
(Registrant)
Attest:/s/Richard D. Zuckerman By:/s/Larry D. Williams
Senior Vice President of First
Citicorp Life Insurance Company
BY: FIRST CITICORP LIFE INSURANCE COMPANY
(Depositor)
Attest:/s/Richard D. Zuckerman By:/s/Larry D. Williams
Senior Vice President
As required by the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
--------------------------------------------------------- -------------------
/s/Alan F. Liebowitz Director, President, CEO December 27, 1996
/s/Steven J. Freiberg Director December 27, 1996
/s/Joseph E. Madalon Director, SVP, CFO December 27, 1996
7
<PAGE>
EXHIBIT INDEX
9. Opinion and Consent of Richard M. Zuckerman, Esq.
10(a). Consent of Sutherland, Asbill & Brennan.
10(b). Consent of KPMG Peat Marwick LLP.
8
<PAGE>
EXHIBIT 9
9
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY LETTERHEAD
With reference to Form N-4 Registration Statement filed on behalf of First
Citicorp Life Insurance Company and the First Citicorp Life Variable Annuity
Separate Account with the Securities and Exchange Commission covering
flexible premium variable deferred annuity policies, I have examined such
documents and such law and have made due inquiries as I considered necessary
and appropriate, and on the basis of such examination and inquiries, it is my
opinion that:
1.The First Citicorp Life Insurance Company is duly organized and validly
existing under the laws of the State of New York and has been duly
authorized to issue flexible premium variable deferred annuity policies
by the Department of Insurance of the State of New York.
2.The First Citicorp Life Variable Annuity Separate Account is a duly
authorized and existing separate account established pursuant to the
provisions of the Revised Statutes of the state of New York;
3.The flexible premium variable deferred annuity policies, when issued as
contemplated by said Form N-4 Registration Statement, will constitute
legal, validly issued and binding obligations of First Citicorp Life
Insurance Company.
I hereby consent to the filing of this opinion as an exhibit to
Post-Effective Amendment No. 4 to the Form N-4 Registration Statement.
First Citicorp Life Insurance Company
/s/Richard M. Zuckerman
Richard M. Zuckerman
Vice President, Associate General Counsel
December 27, 1996
(Date)
10
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY LETTERHEAD
I hereby consent to the use of my name under the caption "Legal Matters" in
the Statement of Additional Information contained in this Post-Effective
Amendment to the Form N-4 Registration Statement, filed on behalf of First
Citicorp Life Insurance Company and the First Citicorp Life Variable Annuity
Separate Account with the Securities and Exchange Commission
First Citicorp Life Insurance Company
/s/Richard M. Zuckerman
Richard M. Zuckerman
Vice President, Associate General Counsel
December 27, 1996
(Date)
11
<PAGE>
EXHIBIT 10(a)
12
<PAGE>
Sutherland, Asbill & Brennan, L.L.P.
Atlanta (bullet) Austin (bullet) New York (bullet) Washington
1275 PENNSYLVANIA AVENUE, N.W. TEL: (202) 383-0100
WASHINGTON, D.C. 20004-2404 FAX: (202) 637-3593
STEPHEN E. ROTH
DIRECT LINE: (202) 383-0158
Internet: [email protected]
December 12, 1996
VIA EDGARLINK
Board of Directors
First Citicorp Life Insurance Company
One Court Square--25th Floor
Long Island City, NY 11120
Ladies and Gentlemen:
We hereby consent to the reference to our name under the caption "Legal
Matters" in the Statement of Additional Information filed as part of
Post-Effective Amendment No. 4 to the registration statement on Form N-4 for
First Citicorp Life Variable Annuity Separate Account (File No. 33-83354). In
giving this consent, we do not admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN, L.L.P.
By:/s/ Stephen E. Roth
Stephen E. Roth
13
<PAGE>
EXHIBIT 10(b)
14
<PAGE>
Independent Auditors' Consent
The Board of Directors
First Citicorp Life Insurance Company:
We consent to the use of our report included herein and to the reference of
our firm under the heading "Financial Statements" in the Prospectus and under
the heading "Experts" in the Registration Statement for First Citicorp Life
Variable Annuity Separate Account.
Our report dated April 19, 1996, covering the financial statements of First
Citicorp Life Insurance Company, contains an explanatory paragraph which
states that the financial statements are presented in conformity with
accounting practices prescribed or permitted by the State of New York
Department of Insurance. These practices differ in some respects from
generally accepted accounting principles. The financial statements do not
include any adjustments that might result from the differences.
/s/KPMG Peat Marwick LLP
Chicago, Illinois
December 31, 1996
15
