STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL DEFERRED VARIABLE/FIXED ANNUITY CONTRACTS
ISSUED BY
SEPARATE ACCOUNT ONE
AND
NORTHERN LIFE INSURANCE COMPANY
This Statement of Additional Information is not a Prospectus, but should be read
in conjunction with the Prospectus, dated August 8, 1997 (the "Prospectus")
relating to the Individual Deferred Variable/Fixed Annuity Contracts issued by
Separate Account One (the "Variable Account") and Northern Life Insurance
Company (the "Company"). Much of the information contained in this Statement of
Additional Information expands upon subjects discussed in the Prospectus. A copy
of the Prospectus may be obtained from Washington Square Securities, Inc., 20
Washington Avenue South, Minneapolis, Minnesota 55401.
Capitalized terms used in this Statement of Additional Information that are not
otherwise defined herein shall have the meanings given to them in the
Prospectus.
-----------------------
TABLE OF CONTENTS
PAGE
----
Introduction .......................................................... 2
Custody of Assets ..................................................... 2
Independent Auditors .................................................. 2
Distribution of the Contracts ......................................... 2
Calculation of Yields and Total Returns ............................... 3
Company Holidays ...................................................... 12
Financial Statements .................................................. 12
-----------------------
The date of this Statement of Additional Information is August 8, 1997.
<PAGE>
INTRODUCTION
The Individual Deferred Variable/Fixed Annuity Contracts described in the
Prospectus are flexible Purchase Payment Contracts. The Contracts are sold to or
in connection with retirement plans which may or may not qualify for special
federal tax treatment under the Internal Revenue Code. (See "Federal Tax Status"
on page 37 of the Prospectus.) Annuity Payouts under the Contracts are deferred
until a later date selected by the Contract Owner.
Purchase Payments may be allocated to one or more of the available Sub-Accounts
of the Variable Account, a separate account of the Company, and/or to Fixed
Account A and/or Fixed Account B (which are part of the general account of the
Company).
Purchase payments allocated to one or more of the available Sub-Accounts of the
Variable Account, as selected by the Contract Owner, will be invested in shares
at net asset value of one or more of a group of investment funds ("Funds"). The
Funds currently are: Alger American Growth Portfolio, Alger American Leveraged
AllCap Portfolio, Alger American MidCap Growth Portfolio and Alger American
Small Capitalization Portfolio of the Alger American Fund which are managed by
Fred Alger Management, Inc.; the Equity-Income Portfolio, Growth Portfolio,
Money Market Portfolio and Overseas Portfolio of the Variable Insurance Products
Fund and the Asset Manager: Growth Portfolio, Asset Manager Portfolio,
Contrafund Portfolio and Index 500 Portfolio of the Variable Insurance Products
Fund II, all of which are managed by Fidelity Management & Research Company; the
Aggressive Growth Portfolio, Growth Portfolio, International Growth Portfolio
and Worldwide Growth Portfolio of the Janus Aspen Series which are managed by
Janus Capital Corporation; the Limited Maturity Bond Portfolio and Partners
Portfolio of the Neuberger&Berman Advisers Management Trust, which are managed
by Neuberger&Berman Management with assistance of Neuberger&Berman LLC; the
Northstar High Yield Bond Fund, Northstar Income and Growth Fund, Northstar
International Value Fund and Northstar Multi-Sector Bond Fund of the Northstar
Variable Trust which are managed by Northstar Investment Management Corporation;
and the Equity Portfolio, Global Equity Portfolio, Managed Portfolio and
SmallCap Portfolio of the OCC Accumulation Trust which are managed by
OpCapAdvisers, a subsidiary of Oppenheimer Capital.
Purchase Payments allocated to Fixed Account A or Fixed Account B, which are
part of the general account of the Company, will be credited with interest at a
rate not less than 3% per year. Interest credited in excess of 3%, if any, will
be determined at the sole discretion of the Company. That part of the Contract
relating to Fixed Account A and Fixed Account B is not registered under the
Securities Act of 1933 and the Fixed Accounts are not subject to the
restrictions of the Investment Company Act of 1940. (See Appendix A to the
Prospectus.)
CUSTODY OF ASSETS
The Company, whose address appears on the cover of the Prospectus, maintains
custody of the assets of the Variable Account.
INDEPENDENT AUDITORS
The financial statements of Separate Account One and Northern Life Insurance
Company, which are incorporated by reference in the Statement of Additional
Information, have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their reports which are included herein, and have been so included
in reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be sold by licensed insurance agents in those states where
the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
The Contracts will be distributed by Washington Square Securities, Inc.
("WSSI"), the principal underwriter which is an affiliate of the Company.
For the years ended December 31, 1995 and 1996, WSSI was paid fees by the
Company in connection with distribution of the Contracts aggregating $750 and
$1,123,993, respectively.
The offering of the Contracts is continuous.
<PAGE>
There are no special purchase plans or exchange privileges not described in
the Prospectus. (See "Reduction of Charges" at page 28 of the Prospectus.)
No deduction for a sales charge is made from the Purchase Payments for the
Contracts. However, if part or all of a Contract's value is withdrawn,
Withdrawal Charges (which may be deemed to be Contingent Deferred Sales Charges)
may be made by the Company. The method used to determine the amount of such
charges is described in the Prospectus under the heading "Charges Made By The
Company -- Withdrawal Charge (Contingent Deferred Sales Charge)" on page 25.
There is no difference in the amount of this charge or any of the other charges
described in the Prospectus as between Contracts purchased by members of the
public as individuals or groups, and Contracts purchased by any class of
individuals, such as officers, directors or employees of the Company or of the
Principal Underwriter.
CALCULATION OF YIELDS AND TOTAL RETURNS
From time to time, the Company may disclose yields, total returns, and other
performance data pertaining to the Contracts for a Sub-Account. Such performance
data will be computed, or accompanied by performance data computed, in
accordance with the standards defined by the Securities and Exchange Commission.
Because of the charges and deductions imposed under a Contract, the yield for
the Sub-Accounts will be lower than the yield for their respective portfolios.
The calculations of yields, total returns, and other performance data do not
reflect the effect of any premium tax that may be applicable to a particular
Contract. Premium taxes currently range from 0% to 3.5% of premium based on the
state in which the Contract is sold.
VIP MONEY MARKET PORTFOLIO SUB-ACCOUNT YIELD. From time to time, advertisements
and sales literature may quote the current annualized yield of the Money Market
Sub-Account 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 VIP
Money Market Portfolio or on its portfolio securities.
The 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 one Accumulation
Unit of the Money Market Sub-Account at the beginning of the period dividing
such net change in account value of the hypothetical account to determine the
base period return, and annualizing this quotient on a 365-day basis. The net
change in account 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 Charge; 2) Administration Charge; and 3) the Mortality and
Expense Risk Charges. For purposes of calculating current yields for a Contract,
an average per unit administration fee is used based on the $30 Annual Contract
Charge deducted at the end of each Contract Year. Current Yield will be
calculated according to the following formula:
Current Yield = ((NCS - ES)/UV) X (365/7)
Where:
NCS = the net change in the value of the Portfolio (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 Sub-Account Accumulation
Unit.
ES = per unit expenses attributable to the hypothetical account for the
seven-day period.
UV = The Accumulation Unit value on the first day of the seven-day period.
The current yield of the sub-account for the seven day period ended December 31,
1996 was 4.17%.
EFFECTIVE YIELD. The effective yield of the Money Market Sub-Account
determined on a compounded basis for the same seven-day period may also be
quoted.
<PAGE>
The 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 Portfolio (exclusive of realized
gains and 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 Sub-Account unit.
ES = per Accumulation Unit expenses attributable to the hypothetical account
for the seven-day period.
UV = the Accumulation Unit value for the first day of the seven-day period.
The effective yield of the sub-account for the seven day period ended December
31, 1996 was 4.26%.
Because of the charges and deductions imposed under the Contracts, the yield for
the Money Market Sub-Account will be lower than the yield for the VIP Money
Market Portfolio.
The current and effective yields on amounts held in the Money Market Sub-Account
normally will fluctuate on a daily basis. THEREFORE, THE DISCLOSED YIELD FOR ANY
GIVEN PAST PERIOD IS NOT AN INDICATION OR REPRESENTATION OF FUTURE YIELDS OR
RATES OF RETURN. The Money Market Sub-Account's actual yield is affected by
changes in interest rates on money market securities, average portfolio maturity
of the VIP Money Market Portfolio, the types and quality of portfolio securities
held by VIP Money Market Portfolio and the VIP Money Market Portfolio's
operating expenses. Yields on amounts held in the Money Market Sub-Account may
also be presented for periods other than a seven-day period.
OTHER SUB-ACCOUNT YIELDS. From time to time, sales literature or advertisements
may quote the current annualized yield of one or more of the Sub-Accounts
(except the Money Market Sub-Account) for a Contract for 30-day or one-month
periods. The annualized yield of a Sub-Account refers to income generated by the
Sub-Account over a specific 30-day or one-month period. Because the yield is
annualized, the yield generated by a Sub-Account during a 30-day or one-month
period is assumed to be generated each period over a 12-month period.
The yield is computed by: 1) dividing the net investment income of the Fund
attributable to the Sub-Account Accumulation Units less Sub-Account expenses for
the period; by 2) the maximum offering price per Accumulation 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 Sub-Account include
the Administration Charge and the Mortality and Expense Risk Charges. The yield
calculation assumes an Annual Contract Charge of $30 per year per Contract
deducted at the end of each Contract Year. For purposes of calculating the
30-day or one-month yield, an average Annual Contract Charge per dollar of
Contract Value in the Variable Account is used to determine the amount of the
charge attributable to the Sub-Account 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 Sub-Account's Accumulation Units.
ES = expenses of the Sub-Account for the 30-day or one-month period.
U = the average number of Accumulation Units outstanding.
UV = the Accumulation Unit value of the close (highest) of the last day in
the 30-day or one-month period.
The annualized yield for the Northstar Multi-Sector Bond Fund Sub-Account for
the month ended December 31, 1996 was 6.18%.
<PAGE>
Because of the charges and deductions imposed under the Contract, the yield for
the Sub-Account will be lower than the yield for the corresponding Fund.
The yield on the amounts held in the Sub-Accounts normally will fluctuate 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
Sub-Account's actual yield is affected by the types and quality of portfolio
securities held by the Fund and its operating expenses.
Yield calculations do not take into account the Withdrawal Charges under the
Contracts. The Withdrawal Charge for Transfer Series Contracts is equal to 2% to
6% of Purchase Payments paid during the six years prior to the withdrawal
(including the year in which the withdrawal is made) on amounts withdrawn or
withdrawn under the Contract. The Withdrawal Charge for Flex Series Contracts is
equal to 1% to 8% of amounts withdrawn under the Contracts during the first 10
Contract Years.
AVERAGE ANNUAL TOTAL RETURNS. From time to time, sales literature or
advertisements may also quote average annual total returns for one or more of
the Sub-Accounts for various periods of time, excluding the money market
Sub-Account.
Average annual total returns represent the average annual compounded rates of
return that would equate an initial investment of $1,000 under a Contract to the
redemption value of that investment as of the last day of each of the periods.
The ending date for each period for which total return quotations are provided
will be for the most recent month-end practicable, considering the type and
media of the communication and will be stated in the communication.
Average annual total returns will be calculated using Sub-Account Accumulation
Unit values which the Company calculates on each Valuation Date based on the
performance of the Sub-Account's underlying Fund, the deductions for the
Mortality and Expense Risk Charges, the Administration Charge, and the Annual
Contract Charge. The calculation assumes that the Annual Contract Charge is $30
per year per Contract deducted at the end of each Contract Year. For purposes of
calculating average annual total return, an average per dollar Annual Contract
Charge attributable to the hypothetical account for the period is used. The
calculation also assumes full withdrawal of the Contract at the end of the
period for the return quotation. Total returns will therefore reflect a
deduction of the Withdrawal Charge in the case of the Transfer Series Contracts,
for any period less than six years and in the case of the Flex Series Contracts,
for any period less than 11 years. The total return will then be calculated
according to the following formula:
TR = ((ERV/P) 1/N) - 1
Where:
TR = The average annual total return net of Sub-Account recurring charges.
ERV = the ending redeemable value (net of any applicable surrender charge) of
the hypothetical account at the end of the period.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
<PAGE>
Following are the Average Annual Total Returns for Sub-Accounts as of December
31, 1996. The following chart does not include the newly added Funds, which were
added effective the date of this prospectus: Janus Aspen Series: Janus
Aggressive Growth Portfolio, Janus Growth Portfolio, Janus International Growth
Portfolio, Janus Worldwide Growth Portfolio; Neuberger&Berman Adviser Management
Trust: Neuberger&Berman AMT Limited Maturity Bond Portfolio, Neuberger&Berman
AMT Partners Portfolio; Northstar Variable Trust: Northstar High Yield Bond
Fund, Northstar International Value Fund; OCC Accumulation Trust: OCC Equity
Portfolio, OCC Global Equity Portfolio, OCC Managed Portfolio, OCC Small Cap
Portfolio.
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
FROM DATE OF FROM DATE OF
FOR THE 1-YEAR FOR THE 1-YEAR INCEPTION OF INCEPTION OF
PERIOD ENDED PERIOD ENDED SUB-ACCOUNT TO SUB-ACCOUNT TO
SUB-ACCOUNT 12/31/96 12/31/96 12/31/96 12/31/96
- ----------- ------------ ------------ -------------- --------------
+++T.S. F.S. T.S. F.S.
<S> <C> <C> <C> <C>
Alger American Growth Portfolio 6.07% 3.44% 4.02% 1.92%
(Sub-Account Inception: 10/20/95)
Alger American Leveraged AllCap Portfolio 4.78% 2.24% 4.66% 2.52%
(Sub-Account Inception: 10/20/95)
Alger American MidCap Growth Portfolio 4.64% 2.12% 36.39% 32.12%
(Sub-Account Inception: 10/20/95)
Alger American Small Capitalization Portfolio (2.95)% (4.93)% (5.94)% (7.36)%
(Sub-Account Inception: 10/20/95)
Fidelity VIP Equity-Income Portfolio 6.98% 4.29% 11.07% 8.49%
(Sub-Account Inception: 10/20/95)
Fidelity VIP Growth Portfolio 7.40% 4.68% 3.22% 1.17%
(Sub-Account Inception: 10/20/95)
Fidelity VIP Overseas Portfolio 5.87% 3.26% 6.98% 4.68%
(Sub-Account Inception: 10/20/95)
Fidelity VIP II Asset Manager: Growth 12.64% 9.54% 12.68% 9.99%
Portfolio
(Sub-Account Inception: 10/20/95)
Fidelity VIP II Asset Manager Portfolio 7.29% 4.58% 9.32% 6.85%
(Sub-Account Inception: 10/20/95)
Fidelity VIP II Contrafund Portfolio 13.80% 10.62% 12.90% 10.20%
(Sub-Account Inception: 10/20/95)
Fidelity VIP II Index 500 Portfolio 15.38% 12.08% 17.43% 14.42%
(Sub-Account Inception: 10/20/95)
Northstar Growth Fund 15.54% 12.24% 15.02% 12.18%
(Sub-Account Inception: 10/20/95)
Northstar Income and Growth Fund 6.32% 3.68% 8.60% 6.18%
(Sub-Account Inception: 10/20/95)
Northstar Multi-Sector Bond Fund 5.26% 2.69% 7.24% 4.92%
Sub-Account Inception: 10/20/95)
</TABLE>
++ Key: T.S. = Transfer Series Contract; F.S. = Flex Series Contract. (See
"Withdrawal Charge (Contingent Deferred Sale Charge)" on page 25 of the
Prospectus.)
From time to time, sales literature or advertisements may quote average annual
total returns for periods prior to the date the Sub-Accounts commenced
operations. Such performance information for the Sub-Accounts will be calculated
based on the performance of the Funds and the assumption that the Sub-Accounts
were in existence for the same periods as those indicated for the Funds, with
the level of Contract charges currently in effect.
<PAGE>
Such average annual total return information for the Sub-Accounts is as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
DATE OF INCEPTION
FOR THE 1-YEAR FOR THE 5-YEAR FOR THE 10-YEAR OF
PERIOD ENDED PERIOD ENDED PERIOD ENDED PORTFOLIO TO
SUB-ACCOUNT 12/31/96 12/31/96 12/31/96 12/31/96
- ----------- ------------------- ------------------ --------------- ---------------
+++T.S. F.S. T.S. F.S. T.S. F.S. T.S. F.S.
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alger American Growth Portfolio 6.07% 3.44% 14.27% 13.43% N/A N/A 16.68% 16.28%
(Portfolio Inception: 1/9/89)
Alger American Leveraged AllCap Portfolio 4.78% 2.24% N/A N/A N/A N/A 36.93% 33.73%
(Portfolio Inception: 1/25/95)
Alger American MidCap Growth Portfolio 4.64% 2.12% N/A N/A N/A N/A 21.31% 19.89%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio (2.95)% (4.93)% 8.66% 7.97% N/A N/A 18.21% 17.95%
(Portfolio Inception: 9/21/88)
Fidelity VIP Equity-Income Portfolio 6.98% 4.29% 15.62% 14.74% N/A N/A 11.54% 11.54%
(Portfolio Inception: 10/9/86)
Fidelity VIP Growth Portfolio 7.40% 4.68% 12.81% 12.00% N/A N/A 12.90% 12.90%
(Portfolio Inception: 10/9/86)
Fidelity VIP Overseas Portfolio 5.87% 3.26% 6.78% 6.15% N/A N/A 6.09% 6.00%
(Portfolio Inception: 1/28/87)
Fidelity VIP II Asset Manager: Growth 12.64% 9.54% N/A N/A N/A N/A 17.27% 15.17%
Portfolio
(Portfolio Inception: 1/3/95)
Fidelity VIP II Asset Manager Portfolio 7.29% 4.58% 8.90% 8.20% N/A N/A 9.84% 9.43%
(Portfolio Inception: 9/6/89)
Fidelity VIP II Contrafund Portfolio 13.80% 10.62% N/A N/A N/A N/A 25.94% 23.36%
(Portfolio Inception: 1/3/95)
Fidelity VIP II Index 500 Portfolio 15.38% 12.08% N/A N/A N/A N/A 14.63% 13.69%
(Portfolio Inception: 8/27/92)
Janus Aggressive Growth Portfolio 0.75% (1.49)% N/A N/A N/A N/A 18.33% 16.92%
(Portfolio Inception: 9/13/93)
Janus Growth Portfolio 11.08% 8.09% N/A N/A N/A N/A 13.22% 12.00%
(Portfolio Inception: 9/13/93)
Janus International Growth Portfolio 27.07% 22.93% N/A N/A N/A N/A 16.32% 14.37%
(Portfolio Inception: 5/2/94)
Janus Worldwide Growth Portfolio 21.49% 17.76% N/A N/A N/A N/A 20.20% 18.72%
(Portfolio Inception: 9/13/93)
Neuberger&Berman AMT Limited (d) (2.82)% (4.81)% 2.93% 2.42% 4.90% 4.81% 6.48% 6.48%
Maturity Bond Portfolio
(Portfolio Inception: 9/10/84)
Neuberger&Berman AMT Partners Portfolio (d) 22.02% 18.24% N/A N/A N/A N/A 18.52% 16.53%
(Portfolio Inception: 3/22/94)
Northstar Growth Fund 15.54% 12.24% N/A N/A N/A N/A 15.71% 13.78%
(Portfolio Inception: 5/6/94
Northstar High Yield Bond Fund 8.43% 5.63% N/A N/A N/A N/A 8.93% 7.32%
(Portfolio Inception: 5/6/94)
Northstar Income and Growth Fund 6.32% 3.68% N/A N/A N/A N/A 10.35% 8.68%
(Portfolio Inception: 5/6/94)
Northstar International Value Fund N/A N/A N/A N/A N/A N/A N/A N/A
(Portfolio Inception: 8/8/97)
Northstar Multi-Sector Bond Fund 5.26% 2.69% N/A N/A N/A N/A 7.43% 5.90%
(Portfolio Inception: 5/6/94)
OCC Equity Portfolio (a) 15.95% 12.61% 15.36% 14.49% N/A N/A 14.59% 14.34%
(Portfolio Inception: 8/1/88)
OCC Global Equity Portfolio 7.69% 4.95% N/A N/A N/A N/A 13.96% 11.93%
(Portfolio Inception: 3/1/95)
OCC Managed Portfolio (b) 15.36% 12.06% 16.79% 15.88% N/A N/A 18.10% 17.85%
(Portfolio Inception: 8/1/88)
OCC Small Cap Portfolio (c) 11.33% 8.32% 12.12% 11.33% N/A N/A 12.77% 12.53%
(Portfolio Inception: 8/1/88)
</TABLE>
+++ Key: T.S. = Transfer Series Contract; F.S. = Flex Series Contract. (See
"Withdrawal Charge (Contingent Deferred Sale Charge)" on page 25 of the
Prospectus.)
(a) On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, called Quest for Value Accumulation Trust
(the "Old Trust") was effectively divided into two investment funds --
The Old Trust and the present OCC Accumulation Trust (the "Present
Trust") -- at which time the Present Trust commenced operations. The
total net assets of the Equity Portfolio immediately after the
transaction were $86,789,755 in the Old Trust and $3,764,598 in the
Present Trust. For the period prior to September 16, 1994, the
performance figures for the Equity Portfolio of the Present Trust
reflect the performance of the Equity Portfolio of the Old Trust.
<PAGE>
(b) On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, called Quest for Value Accumulation Trust
(the "Old Trust") was effectively divided into two investment funds --
The Old Trust and the present OCC Accumulation Trust (the "Present
Trust") -- at which time the Present Trust commenced operations. The
total net assets of the Managed Portfolio immediately after the
transaction were $682,601,380 in the Old Trust and $51,345,102 in the
Present Trust. For the period prior to September 16, 1994, the
performance figures for the Managed Portfolio of the Present Trust
reflect the performance of the Managed Portfolio of the Old Trust.
(c) On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, called Quest for Value Accumulation Trust
(the "Old Trust") was effectively divided into two investment funds --
The Old Trust and the present OCC Accumulation Trust (the "Present
Trust") -- at which time the Present Trust commenced operations. The
total net assets of the Small Cap Portfolio immediately after the
transaction were $139,812,573 in the Old Trust and $8,129,274 in the
Present Trust. For the period prior to September 16, 1994, the
performance figures for the Small Cap Portfolio of the Present Trust
reflect the performance of the Small Cap Portfolio of the Old Trust.
(d) Neuberger&Berman Advisers Management Trust is divided into portfolios
("Portfolios"), each of which invests all of its net investable assets
in a corresponding series ("Series") of Advisers Managers Trust. The
figures reported under "Investment Management and Administration Fees"
include the aggregate of the administration fees paid by the Portfolio
and the management fees paid by its corresponding Series. Similarly,
"Other Expenses" includes all other expenses of the Portfolio and its
corresponding Series.
The Company may also disclose average annual total returns for the Funds since
their inception, including such disclosure for periods prior to the date the
Variable Account commenced operations.
Such average annual total return information for the Funds is as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE FROM DATE OF
FOR THE 1-YEAR FOR THE 5-YEAR 10-YEAR INCEPTION OF
PERIOD ENDED PERIOD ENDED PERIOD ENDED PORTFOLIO TO
PORTFOLIO 12/31/96 12/31/96 12/31/96 12/31/96
- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Alger American Growth Portfolio 13.35% 16.63% N/A 18.65%
(Portfolio Inception: 1/9/89)
Alger American Leveraged AllCap Portfolio 12.04% N/A N/A 41.35%
(Portfolio Inception: 1/25/95)
Alger American MidCap Growth Portfolio 11.90% N/A N/A 24.10%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio 4.18% 11.02% N/A 20.21%
(Portfolio Inception: 9/21/88)
Fidelity VIP Equity-Income Portfolio 14.28% 17.98% N/A 13.42%
(Portfolio Inception: 10/9/86)
Fidelity VIP Growth Portfolio 14.71% 15.16% N/A 14.81%
(Portfolio Inception: 10/9/86)
Fidelity VIP Overseas Portfolio 13.15% 9.15% N/A 7.89%
(Portfolio Inception: 1/28/87)
Fidelity VIP II Asset Manager: Growth 20.04% N/A N/A 21.58%
Portfolio
(Portfolio Inception: 1/3/95)
Fidelity VIP II Asset Manager Portfolio 14.60% 11.26% N/A 11.69%
(Portfolio Inception: 9/6/89)
Fidelity VIP II Contrafund Portfolio 21.22% N/A N/A 30.24%
(Portfolio Inception: 1/3/95)
Fidelity VIP II Index 500 Portfolio 22.82% N/A N/A 17.10%
(Portfolio Inception: 8/27/92)
Janus Aggressive Growth Portfolio 7.95% N/A N/A 21.26%
(Portfolio Inception: 9/13/93)
Janus Growth Portfolio 18.45% N/A N/A 16.17%
(Portfolio Inception: 9/13/93)
Janus International Growth Portfolio 34.71% N/A N/A 19.61%
(Portfolio Inception: 5/2/94)
Janus Worldwide Growth Portfolio 29.04% N/A N/A 23.13%
(Portfolio Inception: 9/13/93)
Neuberger&Berman AMT Limited 4.31% 5.32% 6.68% 8.28%
Maturity Bond Portfolio (d)
(Portfolio Inception: 9/10/84)
Neuberger&Berman AMT Partners Portfolio (d) 29.57% N/A N/A 21.73%
(Portfolio Inception: 3/22/94)
Northstar Growth Fund 22.99% N/A N/A 19.01%
(Portfolio Inception: 5/6/94)
Northstar High Yield Bond Fund 15.75% N/A N/A 12.25%
(Portfolio Inception: 5/6/94)
Northstar Income and Growth Fund 13.61% N/A N/A 13.67%
(Portfolio Inception: 5/6/94)
<PAGE>
FOR THE PERIOD
FOR THE FROM DATE OF
FOR THE 1-YEAR FOR THE 5-YEAR 10-YEAR INCEPTION OF
PERIOD ENDED PERIOD ENDED PERIOD ENDED PORTFOLIO TO
PORTFOLIO 12/31/96 12/31/96 12/31/96 12/31/96
- --------- -------- -------- -------- --------
Northstar International Value Fund N/A N/A N/A N/A
(Since Inception 8/8/97)
Northstar Multi-Sector Bond Fund 12.53% N/A N/A 10.76%
(Portfolio Inception: 5/6/94)
OCC Equity Portfolio (a) 23.40% 17.72% N/A 16.53%
(Portfolio Inception: 8/1/88)
OCC Global Equity Portfolio 15.00% N/A N/A 18.54%
(Portfolio Inception: 3/1/95)
OCC Managed Portfolio (b) 22.80% 19.15% N/A 20.10%
(Portfolio Inception: 8/1/88)
OCC Small Cap Portfolio (c) 18.70% 14.48% N/A 14.68%
(Portfolio Inception: 8/1/88)
</TABLE>
+++ Key: T.S. = Transfer Series Contract; F.S. = Flex Series Contract. (See
"Withdrawal Charge (Contingent Deferred Sale Charge)" on page 25 of the
Prospectus.)
(a) On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, called Quest for Value Accumulation Trust
(the "Old Trust") was effectively divided into two investment funds --
The Old Trust and the present OCC Accumulation Trust (the "Present
Trust") -- at which time the Present Trust commenced operations. The
total net assets of the Equity Portfolio immediately after the
transaction were $86,789,755 in the Old Trust and $3,764,598 in the
Present Trust. For the period prior to September 16, 1994, the
performance figures for the Equity Portfolio of the Present Trust
reflect the performance of the Equity Portfolio of the Old Trust.
(b) On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, called Quest for Value Accumulation Trust
(the "Old Trust") was effectively divided into two investment funds --
The Old Trust and the present OCC Accumulation Trust (the "Present
Trust") -- at which time the Present Trust commenced operations. The
total net assets of the Managed Portfolio immediately after the
transaction were $682,601,380 in the Old Trust and $51,345,102 in the
Present Trust. For the period prior to September 16, 1994, the
performance figures for the Managed Portfolio of the Present Trust
reflect the performance of the Managed Portfolio of the Old Trust.
(c) On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, called Quest for Value Accumulation Trust
(the "Old Trust") was effectively divided into two investment funds --
The Old Trust and the present OCC Accumulation Trust (the "Present
Trust") -- at which time the Present Trust commenced operations. The
total net assets of the Small Cap Portfolio immediately after the
transaction were $139,812,573 in the Old Trust and $8,129,274 in the
Present Trust. For the period prior to September 16, 1994, the
performance figures for the Small Cap Portfolio of the Present Trust
reflect the performance of the Small Cap Portfolio of the Old Trust.
(d) Neuberger&Berman Advisers Management Trust is divided into portfolios
("Portfolios"), each of which invests all of its net investable assets
in a corresponding series ("Series") of Advisers Managers Trust. The
figures reported under "Investment Management and Administration Fees"
include the aggregate of the administration fees paid by the Portfolio
and the management fees paid by its corresponding Series. Similarly,
"Other Expenses" includes all other expenses of the Portfolio and its
corresponding Series.
OTHER TOTAL RETURNS. From time to time, sales literature or advertisements may
quote average annual total returns that do not reflect the Withdrawal Charge.
These returns are calculated in exactly the same way as average annual total
returns described above, except that the ending redeemable value of the
hypothetical account for the period is replaced with an ending value for the
period that does not take into account any charges on amounts withdrawn. Because
the Withdrawal Charge will not be reflected in those quotations, there is no
differentiation between the Transfer Series Contracts and the Flex Series
Contracts. Listed in the chart below are the Average Annual Total Returns for
the Sub-Accounts for the indicated periods. The following chart does not include
the newly added Funds, which were added effective the date of this Statement of
Additional Information: Janus Aspen Series: Janus Aggressive Growth Portfolio,
Janus Growth Portfolio, Janus International Growth Portfolio, Janus Worldwide
Growth Portfolio; Neuberger&Berman Advisers Management Trust: Neuberger&Berman
AMT Limited Maturity Bond Portfolio, Neuberger&Berman AMT Partners Portfolio;
Northstar Variable Trust: Northstar High Yield Bond Fund, Northstar
International Value Fund; OCC Accumulation Trust: OCC Equity Portfolio, OCC
Global Equity Portfolio, OCC Managed Portfolio, OCC Small Cap Portfolio.
<PAGE>
FOR THE PERIOD
FROM DATE OF
FOR THE 1-YEAR INCEPTION OF
PERIOD ENDED SUB-ACCOUNT TO
SUB-ACCOUNT 12/31/96 12/31/96
- ----------- -------- --------
Alger American Growth Portfolio 11.47% 8.46%
(Sub-Account Inception: 10/20/95)
Alger American Leveraged AllCap Portfolio 10.18% 9.10%
(Sub-Account Inception: 10/20/95)
Alger American MidCap Growth Portfolio 10.04% 40.60%
(Sub-Account Inception: 10/20/95)
Alger American Small Capitalization Portfolio 2.45% (1.41)%
(Sub-Account Inception: 10/20/95)
Fidelity VIP Equity-Income Portfolio 12.38% 15.46%
(Sub-Account Inception: 10/20/95)
Fidelity VIP Growth Portfolio 12.80% 7.67%
(Sub-Account Inception: 10/20/95)
Fidelity VIP Overseas Portfolio 11.27% 11.40%
(Sub-Account Inception: 10/20/95)
Fidelity VIP II Asset Manager Growth 18.04% 17.06%
Portfolio
(Sub-Account Inception: 10/20/95)
Fidelity VIP II Asset Manager Portfolio 12.69% 13.72%
(Sub-Account Inception: 10/20/95)
Fidelity VIP II Contrafund Portfolio 19.20% 17.28%
(Sub-Account Inception: 10/20/95)
Fidelity VIP II Index 500 Portfolio 20.78% 21.77%
(Sub-Account Inception: 10/20/95)
Northstar Growth Fund 20.94% 19.38%
(Sub-Account Inception: 10/20/95)
Northstar Income and Growth Fund 11.72% 13.01%
(Sub-Account Inception: 10/20/95)
Northstar Multi-Sector Bond Fund 10.66% 11.66%
(Sub-Account Inception: 10/20/95)
<PAGE>
The Average Annual Total Returns listed below do not reflect deduction of the
withdrawal charge and are calculated based on the assumption that the
Sub-Accounts were in existence for the same periods as those indicated for the
funds:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE FROM DATE OF
FOR THE 1-YEAR FOR THE 5-YEAR 10-YEAR INCEPTION OF
PERIOD ENDED PERIOD ENDED PERIOD ENDED PORTFOLIO TO
SUB-ACCOUNT 12/31/96 12/31/96 12/31/96 12/31/96
- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Alger American Growth Portfolio 11.47% 14.69% N/A 16.68%
(Portfolio Inception: 1/9/89)
Alger American Leveraged AllCap Portfolio 10.18% N/A N/A 38.99%
(Portfolio Inception: 1/25/95)
Alger American MidCap Growth Portfolio 10.04% N/A N/A 22.04%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio 2.45% 9.17% N/A 18.21%
(Portfolio Inception: 9/21/88)
Fidelity VIP Equity-Income Portfolio 12.38% 16.02% N/A 11.54%
(Portfolio Inception: 10/9/86)
Fidelity VIP Growth Portfolio 12.80% 13.25% N/A 12.90%
(Portfolio Inception: 10/9/86)
Fidelity VIP Overseas Portfolio 11.27% 7.33% N/A 6.09%
(Portfolio Inception: 1/28/87)
Fidelity VIP II Asset Manager: Growth 18.04% N/A N/A 19.56%
Portfolio
(Portfolio Inception: 1/3/95)
Fidelity VIP II Asset Manager Portfolio 12.69% 9.41% N/A 9.84%
(Portfolio Inception: 9/6/89)
Fidelity VIP II Contrafund Portfolio 19.20% N/A N/A 28.07%
(Portfolio Inception: 1/3/95)
Fidelity VIP II Index 500 Portfolio 20.78% N/A N/A 15.15%
(Portfolio Inception: 8/27/92)
Janus Aggressive Growth Portfolio 6.15% N/A N/A 19.25%
(Portfolio Inception: 9/13/93)
Janus Growth Portfolio 16.48% N/A N/A 14.23%
(Portfolio Inception: 9/13/93)
Janus International Growth Portfolio 32.47% N/A N/A 17.62%
(Portfolio Inception: 5/2/94)
Janus Worldwide Growth Portfolio 26.89% N/A N/A 21.08%
(Portfolio Inception: 9/13/93)
Neuberger&Berman AMT Limited 2.58% 3.57% 4.90% 6.48%
Maturity Bond Portfolio (d)
(Portfolio Inception: 9/10/84)
Neuberger&Berman AMT Partners Portfolio (d) 27.42% N/A N/A 19.70%
(Portfolio Inception: 3/22/94)
Northstar Growth Fund 20.94% N/A N/A 17.03%
(Portfolio Inception: 5/6/94)
Northstar High Yield Bond Fund 13.83% N/A N/A 10.38%
(Portfolio Inception: 5/6/94)
Northstar Income and Growth Fund 11.72% N/A N/A 11.78%
(Portfolio Inception: 5/6/94)
Northstar International Value Fund N/A N/A N/A N/A
(Portfolio Inception: 8/8/97)
Northstar Multi-Sector Bond Fund 10.66% N/A N/A 8.92%
(Portfolio Inception: 5/6/94)
OCC Equity Portfolio (a) 21.35% 15.77% N/A 14.59%
(Portfolio Inception: 8/1/88)
OCC Global Equity Portfolio 13.09% N/A N/A 16.57%
(Portfolio Inception: 3/1/95)
OCC Managed Portfolio (b) 20.76% 17.17% N/A 18.10%
(Portfolio Inception: 8/1/88)
OCC Small Cap Portfolio (c) 16.73% 12.58% N/A 12.77%
(Portfolio Inception: 8/1/88)
</TABLE>
+++ Key: T.S. = Transfer Series Contract; F.S. = Flex Series Contract. (See
"Withdrawal Charge (Contingent Deferred Sale Charge)" on page 25 of the
Prospectus.)
<PAGE>
(a) On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, called Quest for Value Accumulation Trust
(the "Old Trust") was effectively divided into two investment funds --
The Old Trust and the present OCC Accumulation Trust (the "Present
Trust") -- at which time the Present Trust commenced operations. The
total net assets of the Equity Portfolio immediately after the
transaction were $86,789,755 in the Old Trust and $3,764,598 in the
Present Trust. For the period prior to September 16, 1994, the
performance figures for the Equity Portfolio of the Present Trust
reflect the performance of the Equity Portfolio of the Old Trust.
(b) On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, called Quest for Value Accumulation Trust
(the "Old Trust") was effectively divided into two investment funds --
The Old Trust and the present OCC Accumulation Trust (the "Present
Trust") -- at which time the Present Trust commenced operations. The
total net assets of the Managed Portfolio immediately after the
transaction were $682,601,380 in the Old Trust and $51,345,102 in the
Present Trust. For the period prior to September 16, 1994, the
performance figures for the Managed Portfolio of the Present Trust
reflect the performance of the Managed Portfolio of the Old Trust.
(c) On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, called Quest for Value Accumulation Trust
(the "Old Trust") was effectively divided into two investment funds --
The Old Trust and the present OCC Accumulation Trust (the "Present
Trust") -- at which time the Present Trust commenced operations. The
total net assets of the Small Cap Portfolio immediately after the
transaction were $139,812,573 in the Old Trust and $8,129,274 in the
Present Trust. For the period prior to September 16, 1994, the
performance figures for the Small Cap Portfolio of the Present Trust
reflect the performance of the Small Cap Portfolio of the Old Trust.
(d) Neuberger&Berman Advisers Management Trust is divided into portfolios
("Portfolios"), each of which invests all of its net investable assets
in a corresponding series ("Series") of Advisers Managers Trust. The
figures reported under "Investment Management and Administration Fees"
include the aggregate of the administration fees paid by the Portfolio
and the management fees paid by its corresponding Series. Similarly,
"Other Expenses" includes all other expenses of the Portfolio and its
corresponding Series.
The Company may disclose Cumulative Total Returns in conjunction with the
standard formats described above. The Cumulative Total Returns will be
calculated using the following formula:
CTR = ERV/P - 1
Where:
CTR = the Cumulative Total Return net of Sub-Account recurring charges for
the period.
ERV = the ending redeemable value of the hypothetical investment at the end
of the period.
P = a hypothetical single payment of $1,000.
EFFECT OF THE ANNUAL CONTRACT CHARGE ON PERFORMANCE DATA. The Contract provides
for a $30 Annual Contract Charge to be deducted annually at the end of each
Contract Year, from the Sub-Accounts and the Fixed Accounts based on the
proportion that the value of each such account bears to the total Contract
Value. For purposes of reflecting the Annual Contract Charge in yield and total
return quotations, the annual charge is converted into a per-dollar of per-day
charge based on the Annual Contract Charges collected from the average total
assets of the Variable Account and the Fixed Accounts during the calendar year.
COMPANY HOLIDAYS
The Company is closed on the following holidays: New Year's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. Holidays that
fall on a Saturday will be recognized on the previous Friday. Holidays that fall
on a Sunday will be recognized on the following Monday.
FINANCIAL STATEMENTS
The Statement of Additional Information incorporates by reference the Financial
Statements for the Separate Account One as of December 31, 1996 and for the
period of October 20, 1995 (the date on which the Separate Account One commenced
operations) to December 31, 1995. Deloitte & Touche LLP serves as independent
auditors for the Separate Account One. Although the financial statements are
audited, the period they cover is not necessarily indicative of the longer term
performance of the assets held in the Separate Account One.
The financial statements of the Company, which are incorporated by reference
into this Statement of Additional Information should be considered only as
bearing on the ability of the Company to meet its obligations under the
Contracts. They should not be considered as bearing on the investment
performance of the assets held in the Separate Account One.
The financial statements for the Company for the years ended December 31, 1996
and 1995 have been prepared on the basis of statutory accounting principles
("STAT") rather than generally accepted accounting principles ("GAAP").
