FILE NO. 33-90474
811-9002
As Filed with the Securities and Exchange Commission
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 4 [x]
and /or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [x]
Amendment No. 5 [x]
SEPARATE ACCOUNT ONE
(Exact Name of Registrant as Specified in its Charter)
NORTHERN LIFE INSURANCE COMPANY
(Name of Depositor)
1110 Third Avenue, Seattle, Washington 98101
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (206) 292-1111
James E. Nelson
Northern Life Insurance Company
1110 Third Avenue
Seattle, Washington 98101
(Name and Address of Agent for Service)
Approximate date of proposed Public Offering: As soon as
practicable after the Registration Statement becomes effective.
It is proposed that this filing will become effective
(check appropriate space)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[x] on August 8, 1997 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] on (date), pursuant to paragraph (a) of Rule 485.
If appropriate, check the following box:
[x] This Post-Effective Amendment designates a new effective date of a
previously filed Post-Effective Amendement.
Registrant has chosen to register an indefinite amount of securities pursuant to
Rule 24f-2 under the Investment Company Act of 1940. The Rule 24f-2 Notice for
Registrant's most recent fiscal year was filed on or about February 19, 1997.
<PAGE>
SEPARATE ACCOUNT ONE
CROSS REFERENCE SHEET PURSUANT TO RULE 495(a)
FORM N-4
ITEM NUMBER PART A HEADING IN PROSPECTUS
- ----------- ----------------------------
1 Cover Page
2 Definitions
3 Summary
4 Condensed Financial Information
5 The Company; The Variable Account; Investments of the
Variable Account
6 Charges Made by the Company
7 The Contracts
8 Annuity Provisions
9 The Contracts
10 The Contracts
11 The Contracts
12 Federal Tax Status
13 Legal Proceedings
14 Statement of Additional Information Table of Contents
PART B HEADING IN STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------------------------
15 Cover Page
16 Table of Contents
17 Introduction
18 Not Applicable
19 Distribution of the Contracts
20 Distribution of the Contracts
21 Calculation of Yields and Total Returns
22 Annuity Provisions (In Prospectus)
23 Financial Statements
PART C HEADINGS
---------------
24 Financial Statements and Exhibits
25 Directors and Officers of the Depositor
26 Persons Controlled by or Under Common Control with the
Depositor or Registrant
27 Number of Contract Owners
28 Indemnification
29 Principal Underwriter
30 Location of Accounts and Records
31 Not Applicable
32 Undertakings
<PAGE>
VARIABLE ANNUITY
PROSPECTUS
THE NORHTERN LIFE
ADVANTAGE
[PROSPECUTS COVER PHOTO/GRAPHIC]
August 8, 1997
NORTHERN LIFE
A ReliaStar Company
<PAGE>
SEPARATE ACCOUNT ONE
INDIVIDUAL DEFERRED VARIABLE/FIXED ANNUITY CONTRACTS
ISSUED BY
NORTHERN LIFE INSURANCE COMPANY
1110 THIRD AVENUE, SEATTLE, WASHINGTON 98101
TELEPHONE: (206) 292-1111
The Individual Deferred Variable/Fixed Annuity Contracts described in this
Prospectus ("Contracts") are offered by Northern Life Insurance Company (the
"Company") for use in connection with retirement plans qualifying for special
tax treatment under Sections 401(a), 403(b), and 408 of the Internal Revenue
Code of 1986, as amended (the "Code"). In addition, one of the Contracts
described in this Prospectus is offered on a non-qualified basis.
This Prospectus offers two series of flexible premium annuity Contracts which
differ in the amount of Purchase Payments required, when Purchase Payments can
be made and certain charges imposed under the Contracts.
The Contracts provide for accumulation of Contract Value and payment of annuity
benefits on a variable or fixed basis, or a combination variable and fixed
basis. Annuity Payouts under the Contracts are deferred until a selected later
date.
Purchase Payments may be allocated to one or more of the available Sub-Accounts
of Separate Account One (the "Variable Account"), a separate account of the
Company and/or to one or both Fixed Account options, Fixed Account A and Fixed
Account B, which are part of the general account of the Company. Information
about Fixed Account A and Fixed Account B is contained in Appendix A, on page
A-1.
Additional information about the Contracts, the Company and the Variable Account
is contained in a Statement of Additional Information dated August 8, 1997,
which has been filed with the Securities and Exchange Commission ("SEC") and is
available upon request without charge by writing to Northern Life Insurance
Company, P.O. Box 12530, Seattle, Washington 98111, by calling (800) 333-6965,
or by accessing the SEC's internet web site (http://www.sec.gov). The Statement
of Additional Information is incorporated by reference in this Prospectus. The
Table of Contents for the Statement of Additional Information may be found on
page 44 of this Prospectus.
(Continued on next page)
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE CONTRACTS THAT
A PROSPECTIVE INVESTOR OUGHT TO KNOW BEFORE INVESTING AND SHOULD BE RETAINED
FOR FUTURE REFERENCE.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR ACCOMPANYING FUND PROSPECTUSES
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUNDS AND INTERESTS IN THE CONTRACTS AND FIXED ACCOUNTS ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, A BANK, AND THE SHARES
AND INTERESTS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. ANY INVESTMENT IN
THE CONTRACT INVOLVES CERTAIN RISK WHICH MAY INCLUDE THE POSSIBLE LOSS OF
PRINCIPAL.
THE DATE OF THIS PROSPECTUS IS AUGUST 8, 1997.
15500 8-97
<PAGE>
Purchase Payments allocated to one or more of the available Sub-Accounts of the
Variable Account, as selected by the Contract Owner, will be invested in shares
at net asset value of one or more of a group of investment funds (the "Funds").
The Funds are currently four portfolios of The Alger American Fund, four
portfolios of the Fidelity Variable Insurance Products Fund, four portfolios of
the Fidelity Variable Insurance Products Fund II, four portfolios of Janus Aspen
Series, two portfolios of Neuberger&Berman Advisers Management Trust, five funds
of the Northstar Variable Trust, and four portfolios of the OCC Accumulation
Trust. The Variable Account Contract Value and the amount of Variable Annuity
Payouts will vary, depending on the investment performance of the Funds whose
shares are held in the Sub-Accounts selected. This Prospectus is valid only when
accompanied by Prospectuses for the Funds located in "The Northern Life
Advantage Variable Annuity Mutual Funds" Book, Part II Prospectuses.
<PAGE>
TABLE OF CONTENTS
PART I
Definitions .............................................................. 6
Summary Of Contract Expenses ............................................. 9
Summary .................................................................. 13
Purpose of Contracts ..................................................... 13
Series of Contract ....................................................... 13
Investment Alternatives .................................................. 13
Purchasing a Contract .................................................... 13
Withdrawals .............................................................. 14
Withdrawal Charge ........................................................ 14
Other Charges ............................................................ 14
Reallocations ............................................................ 14
Fixed and Variable Annuity Payouts ....................................... 14
Revocation ............................................................... 14
Condensed Financial Information .......................................... 15
Performance Information .................................................. 17
The Company .............................................................. 19
The Variable Account ..................................................... 19
Investments Of The Variable Account ...................................... 19
Reinvestment ............................................................. 24
Addition, Deletion or Substituion of Fund Shares ......................... 24
Charges Made By The Company .............................................. 25
Withdrawal Charge (Contingent Deferred Sales Charge) ..................... 25
Partial Waiver of Withdrawal Charge ...................................... 26
Reduction of Withdrawal Charge ........................................... 27
Annual Contract Charge ................................................... 27
Mortality Risk Charge .................................................... 27
Expense Risk Charge ...................................................... 27
Administrative Charge .................................................... 27
Sufficiency of Charges ................................................... 27
Premium and Other Taxes .................................................. 28
Reduction of Charges ..................................................... 28
Expenses of the Funds .................................................... 28
Administration ........................................................... 28
The Contracts ............................................................ 28
Contract Application and Purchase Payments ............................... 28
Revocation ............................................................... 29
Allocation of Purchase Payments .......................................... 29
Accumulation Unit Value .................................................. 29
Net Investment Factor .................................................... 29
Death Benefit Before the Start Date ...................................... 30
Payment of Death Benefit Before the Start Date ........................... 30
Death Benefit After Start Date ........................................... 31
Withdrawal (Redemption) .................................................. 31
Systematic Withdrawals ................................................... 31
Loans Available from Certain Qualified Contracts ......................... 32
Reallocations ............................................................ 33
Written Reallocations .................................................... 33
Telephone/Reallocations .................................................. 33
Automatic Reallocations .................................................. 33
Dollar Cost Averaging Reallocations ...................................... 34
Reallocations from the Fixed Accounts .................................... 34
Assignments .............................................................. 34
Contract Owner and Beneficiaries ......................................... 35
Contract Inquiries ....................................................... 35
<PAGE>
Annuity Provisions ....................................................... 35
Start Date ............................................................... 35
Annuity Payout Selection ................................................. 35
Forms of Annuity Payouts ................................................. 36
Frequency and Amount of Annuity Payouts .................................. 36
Annuity Payouts .......................................................... 36
Sub-Account Annuity Unit Value ........................................... 37
Assumed Investment Rate .................................................. 37
Partial Annuitization .................................................... 37
Federal Tax Status ....................................................... 37
Introduction ............................................................. 37
Tax Status of the Contract ............................................... 38
Taxation of Annuities .................................................... 39
Possible Changes in Taxation ............................................. 40
Transfers, Assignments or Exchanges of a Contract ........................ 40
Withholding .............................................................. 40
Multiple Contracts ....................................................... 40
Taxation of Qualified Plans .............................................. 40
Corporate Pension and Profit-Sharing Plans and H.R. 10 Plans ............. 41
Individual Retirement Annuities .......................................... 41
Tax Sheltered Annuities .................................................. 41
Possible Charge for the Company's Taxes .................................. 41
Other Tax Consequences ................................................... 41
Voting of Fund Shares .................................................... 42
Distribution Of The Contracts ............................................ 42
Reports To Contract Owners ............................................... 42
Legal Proceedings ........................................................ 42
Financial Statements And Experts ......................................... 42
Further Information ...................................................... 43
Statement of Additional Information Table of Contents .................... 44
Appendix A ............................................................... A-1
PART II PROSPECTUSES -- "THE NORTHERN LIFE ADVANTAGE VARIABLE ANNUITY MUTUAL
FUNDS" BOOK
The Alger American Fund:
Alger American Growth Portfolio ..................................... Alger-1
Alger American Leveraged AllCap Portfolio ........................... Alger-1
Alger American MidCap Growth Portfolio .............................. Alger-1
Alger American Small Capitalization Portfolio ....................... Alger-1
Fidelity's Variable Insurance Products Fund (VIP):
Equity-Income Portfolio ............................................. VIP
Growth Portfolio .................................................... VIP
Money Market Portfolio .............................................. VIP
Overseas Portfolio .................................................. VIP
Fidelity's Variable Insurance Products Fund II (VIP II):
Asset Manager: Growth Portfolio ..................................... VIPII
Asset Manager Portfolio ............................................. VIPII
Contrafund Portfolio ................................................ VIPII
Index 500 Portfolio ................................................. VIPII
Janus Aspen Series:
Agressive Growth Portfolio .......................................... JANUS-1
Growth Portfolio .................................................... JANUS-1
International Growth Portfolio ...................................... JANUS-1
Worldwide Growth Portfolio .......................................... JANUS-1
Neuberger&Berman Advisers Management Trust ("AMT"):
Limited Maturity Bond Portfolio ..................................... N&B-1
Partners Portfolio .................................................. N&B-1
<PAGE>
Northstar Variable Trust (Northstar):
Northstar Growth Fund .......................................... Northstar-1
Northstar High Yield Bond Fund ................................. Northstar-1
Northstar Income and Growth Fund ............................... Northstar-1
Northstar International Value Fund ............................. Northstar-1
Northstar Multi-Sector Bond Fund ............................... Northstar-1
OCC Accumulation Trust:
Equity Portfolio .................................................... OCC-1
Global Equity Portfolio ............................................. OCC-1
Managed Portfolio ................................................... OCC-1
Small Cap Portfolio ................................................. OCC-1
<PAGE>
DEFINITIONS
ACCUMULATION UNIT. A unit of measure used to determine the Variable Account
Contract Value.
ALGER. The Alger American Fund.
Alger American Growth Portfolio
Alger American Leveraged AllCap Portfolio
Alger American MidCap Growth Portfolio
Alger American Small Capitalization Portfolio
ANNUITANT. The person whose life determines the annuity payouts payable at
the Start Date under a Contract.
ANNUITY PAYOUT DATE. Unless otherwise agreed to by the Company, the first
business day of any calendar month in which a Fixed or Variable Annuity Payout
is made under a Contract.
ANNUITY UNIT. A unit of measure used to determine the amount of a Variable
Annuity Payout after the first Variable Annuity Payout.
BENEFICIARY. The person(s) named by the Contract Owner to receive the Death
Benefit upon the death of the Contract Owner or Annuitant, if applicable, before
the Start Date and to receive the balance of annuity payouts, if any, under the
annuity payout(s) in effect at the Annuitant's death.
CODE. The Internal Revenue Code of 1986, as amended.
CONTINGENT BENEFICIARY. The person(s) named to become the Beneficiary if the
Beneficiary dies.
CONTRACT ANNIVERSARY. The same day and month as the Issue Date each year.
CONTRACT EARNINGS. For a Transfer Series Contract, the Contract Value on any
Valuation Date, plus the aggregate Purchase Payments withdrawn up to that date,
minus the aggregate Purchase Payments made up to that date.
CONTRACT OWNER. The person who controls all the rights and privileges under a
Contract.
CONTRACT VALUE. The sum of the Variable Account Contract Value, plus the sum
of the Fixed Account A and Fixed Account B Contract Values.
CONTRACT YEAR. Each twelve-month period starting with the Issue Date and each
Contract Anniversary thereafter.
DEATH BENEFIT. The amount payable, if any, upon the death, before the Start Date
of the Contract Owner of a qualified Contract or the Annuitant or Contract Owner
in the case of a non-qualified Contract.
DEATH BENEFIT VALUATION DATE. The Valuation Date next following the date the
Company receives proof of death and an appropriate written request for payment
of the Death Benefit from the Beneficiary.
FIDELITY VIP. Variable Insurance Products Fund.
Equity-Income Growth Portfolio
Growth Portfolio
Money Market Portfolio
Overseas Portfolio
FIDELITY VIP II. Variable Insurance Products Fund II.
Asset Manager: Growth Portfolio
Asset Manager Porftolio
Contrafund 500 Portfolio
Index 500 Portfolio
FIXED ACCOUNT A. Part of the general account of the Company, which consists of
all assets of the Company, other than those assets allocated to separate
accounts of the Company.
FIXED ACCOUNT A CONTRACT VALUE. An amount equal to the sum of Purchase Payments
allocated to Fixed Account A, increased by reallocations made to Fixed Account A
(including amounts reallocated to the Loan Account) and interest credited to
Fixed Account A, less reallocations out of Fixed
<PAGE>
Account A, withdrawals from Fixed Account A (including amounts applied to
purchase annuity payouts, withdrawal charges and applicable premium taxes) and
deductions for the Annual Contract Charge.
FIXED ACCOUNT B. Part of the general account of the Company, which consists of
all assets of the Company, other than those assets allocated to separate
accounts of the Company.
FIXED ACCOUNT B CONTRACT VALUE. An amount equal to the sum of Purchase
Payments allocated to Fixed Account B, increased by reallocations made to
Fixed Account B and interest credited to Fixed Account B, less reallocations out
of Fixed Account B, withdrawals from Fixed Account B (including amounts applied
to purchase annuity payouts, withdrawal charges and applicable premium taxes)
and deductions for the Annual Contract Charge.
FIXED ANNUITY PAYOUT. A series of periodic payments to the Payee which do not
vary in amount, are guaranteed as to principal and interest, and are paid from
the general account of the Company.
FUND. Any open-end management investment company (or portfolio thereof) or unit
investment trust (or series thereof) in which a Sub-Account invests as described
herein.
ISSUE DATE. The date on which the Contract is issued as shown on the Contract
data page.
JANUS ASPEN SERIES.
Agressive Growth Portfolio
Growth Portfolio
International Growth Portfolio
Worldwide Growth Portfolio
LOAN ACCOUNT. The portion of Contract Value segregated within Fixed Account A
which is designated as security for a loan under the Contract.
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST ("AMT").
Limited Maturity Bond Portfolio
Partners Portfolio
NORTHSTAR VARIABLE TRUST.
Northstar Growth Fund
Northstar High Yield Bond Fund
Northstar Income and Growth Fund
Northstar International Value Fund
Northstar Multi-Sector Bond Fund
OCC ACCUMULATION TRUST.
Equity Portfolio
Global Equity Portfolio
Managed Portfolio
Small Cap Portfolio
OUTSTANDING LOAN BALANCE. The aggregate value of all existing loans, plus any
accumulated loan interest, less any loan repayments.
PAYEE. The person to whom the Company will make Annuity Payouts.
PURCHASE PAYMENT. A payment made to the Company under a Contract which, if
permitted under a Contract includes periodic, single lump sum, rollover and
transfer payments.
QUALIFIED PLAN. A retirement plan under Sections 401(a), 403(b), or 408 of
the Code.
SEC. The Securities and Exchange Commission.
SPECIFIED CONTRACT ANNIVERSARY. Each sixth Contract Anniversary.
START DATE. The date on which all of the Contract Value is used to purchase a
Fixed and/or Variable Annuity Payout.
SUB-ACCOUNT. A subdivision of the Variable Account available under a Contract
which invests in shares of a specific Fund.
<PAGE>
SUB-ACCOUNT CONTRACT VALUE. For any Sub-Account, an amount equal to the number
of accumulation units of that Sub-Account under a Contract when the Sub-Account
Contract Value is computed, multiplied by the accumulation unit value for that
Sub-Account.
WITHDRAWAL VALUE. The Contract Value less any applicable Withdrawal Charge, any
Outstanding Loan Balance and in the case of a full withdrawal, less the Annual
Contract Charge.
VALUATION DATE. Each day on which the New York Stock Exchange is open for
business except for a day that a Sub-Account's corresponding Fund does not value
its shares. The New York Stock Exchange is currently closed on weekends and on
the following holidays: Martin Luther King Holiday; New Year's Day; President's
Day; Good Friday; Memorial Day; July Fourth; Labor Day; Thanksgiving Day; and
Christmas Day.
VALUATION PERIOD. The period of time between a Valuation Date and the next
Valuation Date.
VARIABLE ACCOUNT. Separate Account One, which is a separate investment
account of the Company.
VARIABLE ACCOUNT CONTRACT VALUE. The sum of all Sub-Account Contract Values
under a Contract.
VARIABLE ANNUITY PAYOUT. A series of periodic payments to the Payee which will
vary in amount based on the investment performance of the Sub-Accounts selected
under a Contract.
<PAGE>
SUMMARY OF CONTRACT EXPENSES
CONTRACT OWNER TRANSACTION EXPENSES
Sales Charge Imposed on Purchases None
Maximum Withdrawal Charge Transfer Series (a) 6%
Maximum Withdrawal Charge Flex Series (a) 8%
Reallocation Charge (b) None
ANNUAL CONTRACT CHARGE (C) $30
VARIABLE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Charges 1.25%
Other Account Fees and Expenses (See "Administrative Charge" on page 27.) .15%
Total Variable Account Annual Expenses 1.40%
<TABLE>
<CAPTION>
ANNUAL INVESTMENT FUND EXPENSES AFTER REIMBURSEMENTS (D)*
(as a percentage of Fund average net assets)
MANAGEMENT TOTAL FUND
(ADVISORY) INTEREST ANNUAL
FEES(d) OTHER EXPENSES EXPENSE EXPENSE
------- -------------- ------- -------
<S> <C> <C> <C> <C>
Alger American Growth Portfolio (d) 0.75% 0.04% -- 0.79%
Alger American Leveraged AllCap Portfolio (d) 0.85% 0.21% 0.03% 1.09%
Alger American MidCap Growth Portfolio (d) 0.80% 0.04% -- 0.84%
Alger American Small Capitalization Portfolio (d) 0.85% 0.03% -- 0.88%
Fidelity VIP Equity-Income Portfolio (d)(e) 0.51% 0.07% -- 0.58%
Fidelity VIP Growth Portfolio (d)(e) 0.61% 0.08% -- 0.69%
Fidelity VIP Money Market Portfolio (d) 0.21% 0.09% -- 0.30%
Fidelity VIP Overseas Portfolio (d)(e) 0.76% 0.17% -- 0.93%
Fidelity VIP II Asset Manager: Growth
Portfolio (d)(e) 0.65% 0.22% -- 0.87%
Fidelity VIP II Asset Manager Portfolio (d)(e) 0.64% 0.10% -- 0.74%
Fidelity VIP II Contrafund Portfolio (d)(e) 0.61% 0.13% -- 0.74%
Fidelity VIP II Index 500 Portfolio (d)(f) 0.13% 0.15% -- 0.28%
Janus Aggressive Growth Portfolio (d)(g) 0.72% 0.04% -- 0.76%
Janus Growth Portfolio (d)(g) 0.65% 0.04% -- 0.69%
Janus International Growth Portfolio (d)(g) 0.05% 1.21% -- 1.26%
Janus Worldwide Growth Portfolio (d)(g) 0.66% 0.14% -- 0.80%
Neuberger&Berman AMT Limited Maturity
Bond Portfolio (d)(j) 0.65% 0.13% -- 0.78%
Neuberger&Berman AMT Partners Portfolio (d)(j) 0.84% 0.11% -- 0.95%
Northstar Growth Fund (h) 0.75% 0.05% -- 0.80%
Northstar High Yield Bond Fund (h) 0.75% 0.05% -- 0.80%
Northstar Income and Growth Fund (h) 0.75% 0.05% -- 0.80%
Northstar International Value Fund (h) 0.75% 0.05% -- 0.80%
Northstar Multi-Sector Bond Fund (h) 0.75% 0.05% -- 0.80%
OCC Equity Portfolio (d)(i) 0.80% 0.22% -- 1.02%
OCC Global Equity Portfolio (d)(i) 0.80% 0.63% -- 1.43%
OCC Managed Portfolio (d)(i) 0.80% 0.10% -- 0.90%
OCC Small Cap Portfolio (d)(i) 0.80% 0.22% -- 1.02%
</TABLE>
- ---------------------
* The Fees and Expense information regarding the Funds was provided by the
Funds. Except for the Northstar Variable Trust, neither the Funds nor their
advisers are affiliated with the Company.
<PAGE>
EXAMPLES
If a full withdrawal of the Contract Value is made at the end of the applicable
time period, the following expenses on a $1,000 investment, assuming a 5% annual
return on assets, would be paid:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------ ------------------ ------------------ ----------------
TRANSFER FLEX TRANSFER FLEX TRANSFER FLEX TRANSFER FLEX
SERIES SERIES SERIES SERIES SERIES SERIES SERIES SERIES
-------- ---- -------- ---- -------- ---- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alger American Growth Portfolio $79 $ 99 $122 $144 $149 $182 $279 $279
Alger American Leveraged
AllCap Portfolio 82 101 131 153 164 196 309 309
Alger American MidCap
Growth Portfolio 79 99 123 146 151 184 284 284
Alger American Small
Capitalization Portfolio 80 100 124 147 153 186 288 288
Fidelity VIP Equity-Income Portfolio 77 100 115 139 138 172 258 258
Fidelity VIP Growth Portfolio 78 98 119 142 144 177 269 269
Fidelity VIP Money Market Portfolio 74 94 107 131 124 158 229 229
Fidelity VIP Overseas Portfolio 80 100 126 148 156 189 293 293
Fidelity VIP II Asset Manager:
Growth Portfolio 80 99 124 147 153 186 287 287
Fidelity VIP II Asset Manager
Portfolio 78 98 120 143 146 180 274 274
Fidelity VIP II Contrafund Portfolio 78 98 120 143 146 180 274 274
Fidelity VIP II Index 500 Portfolio 74 94 106 130 123 157 227 227
Janus Aggresive Growth Portfolio 79 98 121 144 147 180 276 276
Janus Growth Portfolio 78 98 119 142 144 177 269 269
Janus International Growth Portfolio 84 103 136 158 172 204 325 325
Janus Worldwide Growth Portfolio 79 99 122 145 149 182 280 280
Neuberger&Berman AMT Limited
Maturity Bond Portfolio 79 99 121 144 148 181 278 278
Neuberger&Berman
AMT Partners Portfolio 80 100 126 149 157 189 295 295
Northstar Growth Fund 79 99 122 145 149 182 280 280
Northstar High Yield
Bond Fund 79 99 122 145 149 182 280 280
Northstar Income and
Growth Fund 79 99 122 145 149 182 280 280
Northstar International
Value Fund 79 102 122 145 149 182 280 280
Northstar Multi-Sector
Bond Fund 79 99 122 145 149 182 280 280
OCC Equity Portfolio 81 101 128 151 160 193 302 302
OCC Global Equity Portfolio 85 105 141 162 180 212 341 341
OCC Managed Portfolio 80 100 125 148 154 187 290 290
OCC Small Cap Portfolio 81 101 128 151 160 193 302 302
</TABLE>
<PAGE>
If the Contract is annuitized at the end of the applicable time period or if it
is not surrendered, the following expenses on a $1,000 investment assuming a 5%
annual return would be paid:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------ ------------------ ------------------ ----------------
TRANSFER FLEX TRANSFER FLEX TRANSFER FLEX TRANSFER FLEX
SERIES SERIES SERIES SERIES SERIES SERIES SERIES SERIES
-------- ---- -------- ---- -------- ---- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alger American Growth Portfolio $25 $25 $77 $77 $131 $131 $279 $279
Alger American Leveraged AllCap
Portfolio 28 28 86 86 146 146 309 309
Alger American MidCap
Growth Portfolio 25 25 78 78 133 133 284 284
Alger American Small
Capitalization Portfolio 26 26 79 79 135 135 288 288
Fidelity VIP Equity-Income Portfolio 23 23 70 70 120 120 258 258
Fidelity VIP Growth Portfolio 24 24 74 74 126 126 269 269
Fidelity VIP Money Market Portfolio 20 20 62 62 106 106 229 229
Fidelity VIP Overseas Portfolio 26 26 81 81 138 138 293 293
Fidelity VIP II Asset Manager:
Growth Portfolio 26 26 79 79 135 135 287 287
Fidelity VIP II Asset Manager
Portfolio 24 24 75 75 128 128 274 274
Fidelity VIP II Contrafund Portfolio 24 24 75 75 128 128 274 274
Fidelity VIP II Index 500 Portfolio 20 20 61 61 105 105 227 227
Janus Aggressive Growth Portfolio 25 25 76 76 129 129 276 276
Janus Growth Portfolio 24 24 74 74 126 126 269 269
Janus International Growth Portfolio 30 30 91 91 154 154 325 325
Janus Worldwide Growth Portfolio 25 25 77 77 131 131 280 280
Neuberger&Berman AMT Limited
Maturity Bond Portfolio 25 25 76 76 130 130 278 278
Neuberger&Berman AMT Partners
Portfolio 26 26 81 81 139 139 295 295
Northstar Growth Fund 25 25 77 77 131 131 280 280
Northstar High Yield Bond Fund 25 25 77 77 131 131 280 280
Northstar Income and
Growth Fund $25 $25 $77 $77 $131 $131 $280 $280
Northstar International
Value Fund 25 25 77 77 131 131 280 280
Northstar Multi-Sector Bond Fund 25 25 77 77 131 131 280 280
OCC Equity Portfolio 27 27 83 83 142 142 302 302
OCC Global Equity Portfolio 31 31 96 96 162 162 341 341
OCC Managed Portfolio 26 26 80 80 136 136 290 290
OCC Small Cap Portfolio 27 27 83 83 142 142 302 302
</TABLE>
(a) The Withdrawal Charge for the Transfer Series Contracts applies to each
Purchase Payment. The Withdrawal Charge is 6% in the Contract Year a
Purchase Payment is received by the Company and the Contract Year
immediately following. It decreases to 0% beginning the sixth year
after a Purchase Payment was received by the Company. For the Flex
Series Contracts, the Withdrawal Charge is based on Contract Years. It
decreases from 8% in the first three Contract Years to 0% after the
tenth Contract Year. Under certain situations amounts may be withdrawn
free of any Withdrawal Charge or the Withdrawal Charge may be reduced
or waived. For more information on the Withdrawal Charge, see
"Withdrawal Charge (Contingent Deferred Sales Charge)" on page 25. The
Company reserves the right to charge a partial withdrawal processing
fee not to exceed the lesser of 2% of the partial withdrawal amount or
$25. For more information on the processing fee, see "Withdrawal Charge
(Contingent Deferred Sales Charge)" on page 25.
(b) The Company currently does not assess a charge on reallocations between
Sub-Accounts or to or from the Fixed Accounts, although the Company
reserves the right to assess a charge not to exceed $25 per each
reallocation.
<PAGE>
(c) The Company currently deducts an Annual Contract Charge of $30 from the
Contract Value, but reserves the right to waive the charge where the
Contract Value exceeds $25,000.
(d) The Company or its affiliates may receive compensation from an
affiliate or affiliates of certain of the Funds based upon an annual
percentage of the average net assets held in that Fund by the Company
and by certain of the Company's insurance company affiliates. These
amounts are intended to compensate the Company or the Company's
affiliates for administrative, recordkeeping, and in some cases,
distribution, and other services provided by the Company and its
affiliates to Funds and/or the Funds' affiliates. Payments of such
amounts by an affiliate or affiliates of the Funds do not increase the
fees paid by the Funds or their shareholders.
(e) A portion of the brokerage commissions that certain funds pay was used
to reduce funds expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby interest
earned on uninvested cash balances was used to reduce custodian and
transfer agent expenses. Including these reductions, the total
operating expenses presented in the table would have been .56% for
VIP's Equity Income Portfolio, .67% for VIP's Growth Portfolio, .92%
for VIP's Overseas Portfolio, .73% for VIP II's Asset Manager
Portfolio, .85% for VIP II's Asset Manager: Growth Portfolio, and .71%
for VIP II's Contrafund Portfolio.
(f) FMR agreed to reimburse a portion of VIP II's Index 500 Portfolio's
expenses during the period. Without this reimbursement, the funds'
management fee, other expenses and total expenses would have been .28%,
.15% and .43% respectively.
(g) The fees and expenses of the Janus Aspen Series are based on gross
expenses before expense offset arrangements for the fiscal year ended
December 31, 1996. The information for each Portfolio is net of fee
waivers or reductions from Janus Capital. Fee reductions for the
Growth, Aggressive Growth, International Growth, and Worldwide Growth
Portfolios reduce the management fee to the level of the corresponding
Janus retail fund. Other waivers, if applicable, are first applied
against the management fee and then against other expenses. Without
such waivers or reductions, the Management Fee, Other Expenses and
Total Operating Expenses would have been: 0.79%, 0.04%, and 0.83% for
the Growth Portfolio; 0.79%, 0.04%, and 0.83% for the Aggressive Growth
Portfolio; 1.00%, 1.21%, and 2.21% for the International Growth
Portfolio; and 0.77%, 0.14%, and 0.91% for the Worldwide Growth
Portfolio. Janus Capital may modify or terminate the waivers or
reductions at any time upon at least 90 days notice to the trustees of
Janus Aspen Series.
(h) The investment adviser to the Northstar variable trust has agreed to
reimburse the five Northstar Funds for any expenses in excess of 0.80%
of each Fund's average daily net assets. In the absence of the
investment adviser's expense reimbursements, the actual expenses that
would have been paid by each Fund during its fiscal year ended December
31, 1996 would have been: Income and Growth Fund -- 1.40%; Growth Fund
-- 1.70%; Multi-Sector Bond Fund -- 1.68%; and High Yield Bond Fund --
1.73%. The International Value Fund commenced operations on August 8,
1997, and so has no historical expense information. Absent the expense
reimbursement, actual expenses for this Fund would be projected to be
1.90%. Expense reimbursements are voluntary. There is no assurance of
ongoing reimbursement.
(i) The annual expenses of OCC Accumulation Trust Portfolio (the
"Portfolios") as of December 31, 1996 have been restated to reflect new
management fee and expense limitation arrangements in effect as of May
1, 1996. Additionally, Other Expenses are shown gross of certain
expense offsets afforded the Portfolios which effectively lowered
overall custody expenses. Effective May 1, 1996, the expenses of the
Portfolios were contractually limited by OpCap Advisors so that their
respective annualized operating expenses (net of any expense offsets)
do not exceed 1.25% of their respective average daily net assets.
Furthermore, through December 31, 1997, the annualized operating
expenses of the Equity, Managed, and Small Cap Portfolios will be
voluntarily limited by OpCap Advisors so that annualized operating
expenses (net of any expense offsets) of these Portfolios do not exceed
1.00% of their respective average daily net assets. Without such
contractual and voluntary expense limitations and without giving effect
to any expense offsets, the Management Fees, Other Expenses and Total
Investment Fund Annual Expenses incurred for the fiscal year ended
December 31, 1996 would have been .80%, .31% and 1.11% respectively,
for the Equity Portfolio; .80%, 1.04% and 1.84% respectively, for the
Global Equity Portfolio; .80%, .10% and .90%
<PAGE>
respectively, for the Managed Portfolio; and .80%, .26% and 1.06%
respectively, for the Small Cap Portfolio. Expense reimbursements are
voluntary. There is no assurance of ongoing reimbursement.
(j) 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 EXAMPLES SHOWN IN THE TABLE ABOVE SHOULD NOT BE CONSIDERED REPRESENTATIONS
OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN. THE 5% ANNUAL RETURN ASSUMED IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED
A REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE GREATER OR LESS
THAN THE ASSUMED RATE.
The purpose of this table is to assist a Contract Owner in understanding the
various costs and expenses that a Contract Owner will bear either directly or
indirectly. The table reflects the anticipated expenses of the Variable Account
as well as the actual expenses of the Funds. The $30 Annual Contract Charge is
reflected as an annual percentage charge in this table based on an anticipated
average Contract Value of $10,000.
In addition to the costs and expenses shown in this table, state premium taxes
may also be applicable. For more information on state premium taxes, see page
28, "Premium and Other Taxes".
SUMMARY
PURPOSE OF CONTRACTS
The Contracts are designed to provide individuals with retirement benefits
through the accumulation of Purchase Payments on a fixed or variable basis, and
by applying such accumulations to provide Fixed, Variable, or combination Fixed
and Variable Annuity Payouts. The purpose of variable accumulation and Variable
Annuity Payouts is to provide returns to Contract Owners which offset or exceed
the effects of inflation. There is, however, no assurance that this purpose will
be achieved.
SERIES OF CONTRACTS
This Prospectus describes two series of individual deferred variable/fixed
annuity Contracts. Transfer Series Contracts include an individual deferred tax
sheltered annuity contract, an individual deferred retirement annuity contract
and an individual deferred annuity contract ("Transfer Series"). The Flex Series
Contracts include a flexible premium individual deferred tax sheltered annuity
contract and a flexible premium individual retirement annuity contract ("Flex
Series"). For Transfer Series Contracts and Flex Series Contracts which are
Qualified Plans, the Company will accept periodic, single sum, rollover and
transfer Purchase Payments as permitted by the Code which are not less than the
specific contract minimum Purchase Payment. For the non-qualified Transfer
Series Contract, the Company will accept periodic and single sum Purchase
Payments, as well as amounts transferred under Section 1035 of the Code, which
are not less than the specified Contract minimum Purchase Payment. The Transfer
Series and Flex Series Contracts differ in terms of the amount of Purchase
Payments required, when Purchase Payments can be made and certain charges. (See
"Contract Application and Purchase Payments" on page 28, and "Charges Made by
the Company" on page 25.)
INVESTMENT ALTERNATIVES
Purchase Payments may be allocated to one or more of the available Sub-Accounts
of the Variable Account and to Fixed Account A and/or Fixed Account B. Purchase
Payments allocated to one or more Sub-Accounts will be invested in shares of one
or more of the Funds at net asset value. The Variable Account Contract Value and
the amount of Variable Annuity Payouts will vary, primarily based on the
investment performance of the Funds whose shares are held in the Sub-Accounts
selected. (See "Investments of the Variable Account" on page 19.) Amounts in
Fixed Account A and Fixed Account B earn various rates of interest, with the
minimum being the guaranteed rate.
PURCHASING A CONTRACT
Individuals who want to purchase a Contract must complete an application and
provide an initial Purchase Payment which will be sent to the Company's Home
Office. The minimum and maximum
<PAGE>
amount of Purchase Payments vary depending on the type and series of Contract
purchased. (See "Contract Application and Purchase Payments" on page 28.)
WITHDRAWALS
The Contract Owner may, subject to applicable law, make a total or partial
withdrawal at any time prior to the Start Date by giving a written request to
the Company. (See "Withdrawal (Redemption)" on page , and "Taxation of
Annuities" on page 31.)
WITHDRAWAL CHARGE
No deduction for a sales charge is made from Purchase Payments. A Withdrawal
Charge (Contingent Deferred Sales Charge) may, however, apply to full or partial
withdrawals, with certain exceptions. The maximum Withdrawal Charge on a full or
partial withdrawal under a Transfer Series Contract is 6% of the amount
withdrawn. The maximum Withdrawal Charge on a full or partial withdrawal under a
Flex Series Contract is 8% of the amount withdrawn. The Company may decrease or
eliminate the Withdrawal Charge applicable to Contracts sold in certain
circumstances if it estimates that its sales expenses will be lower. (See
"Withdrawal Charge (Contingent Deferred Sales Charge)" on page 25.)
OTHER CHARGES
On each Contract Anniversary before the Start Date (and upon full withdrawal of
the Contract Value on a date other than a Contract Anniversary) the Company will
deduct from the Contract Value an Annual Contract Charge of $30. The Company
reserves the right to waive the Annual Contract Charge where the Contract Value
exceeds $25,000. The Annual Contract Charge is to reimburse the Company for
administrative expenses relating to the issue and maintenance of the Contracts.
The Company may decrease or eliminate the Annual Contract Charge applicable to a
particular Contract sold in certain circumstances if it estimates that its
administrative expenses will be lower. (See "Annual Contract Charge" on page
27.)
The Company also deducts a Mortality Risk Charge, an Expense Risk Charge and an
Administrative Charge, equal to an annual rate of 1.40% of the daily net assets
of the available Sub-Accounts of the Variable Account. (See "Mortality Risk
Charge", "Expense Risk Charge" and "Administrative Charge" on page 27.)
Additionally, in certain states a deduction for premium tax is made. (See
"Premium and Other Taxes" on page 28.)
A daily charge, based on a percentage of average daily net assets, is paid by
each Fund to its investment adviser for investment management. These charges,
and other Fund charges and expenses, are more fully described in the
prospectuses for the Funds and are summarized in the Summary of Contract
Expenses on page 9. All of these charges and expenses are borne indirectly by
Contract Owners.
REALLOCATIONS
The Contract Owner may reallocate Contract Value among the Sub-Accounts, and
from one or more Sub-Accounts to the Fixed Accounts. Reallocations may also be
made from the Fixed Accounts subject to certain limitations. After Annuity
Payouts begin, Annuity Unit Values may be reallocated among the Sub-Accounts,
but no reallocations may be made to or from the Fixed Accounts. The Company
reserves the right to impose a charge of up to $25 for each reallocation and to
limit the amount and number of reallocations that may be made. (See
"Reallocations" on page 33.)
FIXED AND VARIABLE ANNUITY PAYOUTS
At the Contract Owner's option, the Annuitant may receive Fixed Annuity
Payouts, Variable Annuity Payouts or a combination of Fixed and Variable
Annuity Payouts.
REVOCATION
The Contract Owner may return the Contract within ten days after it was
delivered to the Contract Owner. In such cases the Company will refund the
Contract Value. However, if required by applicable law, the Company will refund
all Purchase Payments it has received under the Contract. (See "Revocation" on
page 29.)
<PAGE>
CONDENSED FINANCIAL INFORMATION
The following table shows, for each Sub-Account of the Variable Account, the
value of a Sub-Account Accumulation Unit as it is invested in portfolios at the
dates shown, and the total number of Sub-Account Accumulation Units outstanding
at the end of each period:
YEAR ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
----------- -----------
1995 1996
----------- -----------
ALGER AMERICAN FUND'S:
(From October 20, 1995):
Growth Portfolio
Beginning of period $10.0000 $10.0072
End of period $10.0072 $11.1841
Units outstanding at end of period 7,531 162,852
Leveraged AllCap Portfolio
Beginning of period $10.0000 $10.2636
End of period $10.2636 $11.3381
Units outstanding at end of period 3,864 130,393
MidCap Growth Portfolio
Beginning of period $10.0000 $ 9.8937
End of period $ 9.8937 $10.9156
Units outstanding at end of period 2,208 227,029
Small Capitalization Portfolio
Beginning of period $10.0000 $ 9.8255
End of period $ 9.8255 $10.0929
Units outstanding at end of period 9,498 261,902
FIDELITY'S VIP:
(From October 20, 1995):
Equity-Income Portfolio
Beginning of period $10.0000 $10.7172
End of period $10.7172 $12.0764
Units outstanding at end of period 3,922 370,036
Growth Portfolio
Beginning of period $10.0000 $ 9.8237
End of period $ 9.8237 $11.1103
Units outstanding at end of period 5,112 210,258
Money Market Portfolio
Beginning of period $10.0000 $10.0743
End of period $10.0743 $10.4712
Units outstanding at end of period -- 104,844
Overseas Portfolio
Beginning of period $10.0000 $10.3139
End of period $10.3139 $11.5134
Units outstanding at end of period 1,765 106,840
FIDELITY'S VIP II:
(From October 20, 1995):
Asset Manager: Growth Portfolio
Beginning of period $10.0000 $10.3997
End of period $10.3997 $12.2981
Units outstanding at end of period 6,432 58,201
Asset Manager Portfolio
Beginning of period $10.0000 $10.4586
End of period $10.4586 $11.8181
Units outstanding at end of period 1,960 64,183
<PAGE>
YEAR ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
----------- -----------
1995 1996
----------- -----------
Contrafund Portfolio
Beginning of period $10.0000 $10.2935
End of period $10.2935 $12.3118
Units outstanding at end of period 7,417 314,103
Index 500 Portfolio
Beginning of period $10.0000 $10.5862
End of period $10.5862 $12.8201
Units outstanding at end of period 702 231,904
JANUS ASPEN SERIES:
(All Sub-Accounts From August 8, 1997)
Janus Aggressive Growth Portfolio
Beginning of period N/A N/A
End of period N/A N/A
Units outstanding at end of period N/A N/A
Janus Growth Portfolio
Beginning of period N/A N/A
End of period N/A N/A
Units outstanding at end of period N/A N/A
Janus International Growth Portfolio
Beginning of period N/A N/A
End of period N/A N/A
Units outstanding at end of period N/A N/A
Janus Worldwide Growth Portfolio
Beginning of period N/A N/A
End of period N/A N/A
Units outstanding at end of period N/A N/A
NEUBERGER&BERMAN ADVISERS MANAGEMENT
TRUST:
(All Sub-Accounts From August 8, 1997)
AMT Limited Maturity Bond Portfolio
Beginning of period N/A N/A
End of period N/A N/A
Units outstanding at end of period N/A N/A
AMT Partners Portfolio
Beginning of period N/A N/A
End of period N/A N/A
Units outstanding at end of period N/A N/A
NORTHSTAR VARIABLE TRUST:
Growth Fund
(From October 20, 1995):
Beginning of period $10.0000 $10.1010
End of period $10.1010 $12.2600
Units outstanding at end of period 1,068 318,138
High Yield Bond Fund
(From August 8, 1997)
Beginning of period N/A N/A
End of period N/A N/A
Units outstanding at end of period N/A N/A
Income and Growth Fund
(From October 20, 1995):
Beginning of period $10.0000 $10.3844
End of period $10.3844 $11.6518
Units outstanding at end of period 2,292 62,237
<PAGE>
YEAR ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
----------- -----------
1995 1996
----------- -----------
International Value Fund
(From August 8, 1997):
Beginning of period N/A N/A
End of period N/A N/A
Units outstanding at end of period N/A N/A
Multi-Sector Bond Fund
(From October 20, 1995):
Beginning of period $10.0000 $10.2402
End of period $10.2402 $11.4373
Units outstanding at end of period 1,937 52,791
OCC ACCUMULATION TRUST
(All Sub-Accounts From August 8, 1997)
OCC Equity Portfolio
Beginning of period N/A N/A
End of period N/A N/A
Units outstanding at end of period N/A N/A
OCC Global Equity Portfolio
Beginning of period N/A N/A
End of period N/A N/A
Units outstanding at end of period N/A N/A
OCC Managed Portfolio
Beginning of period N/A N/A
End of period N/A N/A
Units outstanding at end of period N/A N/A
OCC Small Cap Portfolio
Beginning of period N/A N/A
End of period N/A N/A
Units outstanding at end of period N/A N/A
The Sub-Accounts investing in The Alger American Fund, Fidelity's Variable
Insurance Products Fund, Fidelity's Variable Insurance Products Fund II and
Northstar Variable Trust were not available under the Contracts prior to 1995.
The Sub-Accounts investing in the Janus Aspen Series, Neuberger&Berman Advisers
Management Trust, the Northstar High Yield Bond Fund, the Northstar
International Value Fund and OCC Accumulation Trust were not available under the
contracts prior to August 8, 1997.
PERFORMANCE INFORMATION
From time to time, the Company may advertise or include in sales literature
yields, effective yields, and total returns for the available Sub-Accounts.
THESE FIGURES ARE BASED ON HISTORICAL EARNINGS AND DO NOT INDICATE OR PROJECT
FUTURE PERFORMANCE. Each Sub-Account may, from time to time, advertise or
include in sales literature performance relative to certain performance rankings
and indices compiled by independent organizations. More detailed information as
to the calculation of performance information, and comparisons with unmanaged
market indices appears in the Statement of Additional Information.
Yields, effective yields and total returns for the Sub-Accounts are based on the
investment performance of the corresponding portfolios of the Funds. The
performance, in part, reflects the Funds' expenses. See the Prospectuses for the
Funds.
The yield of the Sub-Account investing in the VIP Money Market Portfolio refers
to the annualized income generated by an investment in the Sub-Account over a
specified seven-day period. The yield is calculated by assuming that the income
generated for that seven-day period is generated each seven-day period over a
52-week period and is shown as a percentage of the investment. The effective
yield is calculated similarly but, when annualized, the income earned by an
investment in the Sub-Account is assumed to be reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
The yield of a Sub-Account (except the Money Market Sub-Account investing in the
VIP Money Market Portfolio) refers to the annualized income generated by an
investment in the Sub-Account over
<PAGE>
a specified 30 day or one-month period. The yield is calculated by assuming that
the income generated by the investment during that 30-day or one-month period is
generated each period over a 12-month period and is shown as a percentage of the
investment.
The total return of a Sub-Account refers to return quotations assuming an
investment under a Contract has been held in the Sub-Account for various periods
of time including, but not limited to, a period measured from the date the
Sub-Account commenced operations. Average annual total return refers to total
return quotations that are annualized based on an average return over various
periods of time.
The average annual total return quotations represent the average annual
compounded rates of return that would equate an initial investment of $1,000
under a Contract to the redemption value of the investment as of the last day of
each of the periods for which total return quotations are provided. Average
annual total return information shows the average percentage change in the value
of an investment in the Sub-Account from the beginning date of the measuring
period to the end of that period. This version of average annual total return
reflects all historical investment results, less all charges and deductions
applied against the Sub-Account (including any Withdrawal Charge that would
apply if a Contract Owner terminated the Contract at the end of each period
indicated, but excluding any deductions for premium taxes).
When a Sub-Account has been in operation for one, five, and ten years,
respectively, the average annual total return for these periods will be
provided. For periods prior to the date the Sub-Account commenced operations,
performance information for Contracts funded by the Sub-Accounts will be
calculated based on the performance of the Funds' Portfolios and the assumption
that the Sub-Accounts were in existence for the same periods as those indicated
for the Funds' Portfolios, with the level of Contract Charges that were in
effect at the inception of the Sub-Accounts for the Contracts.
Average total return information may be presented, computed on the same basis as
described above, except deductions will not include the Withdrawal Charge. In
addition, the Company may from time to time disclose average annual total return
in non-standard formats and cumulative total return for Contracts funded by the
Sub-Accounts.
The Company may, from time to time, also disclose yields and total returns for
the Portfolios of the Funds, including such disclosure for periods prior to the
dates the Sub-Accounts commenced operations.
For additional information regarding the calculation of other performance data,
please refer to the Statement of Additional Information.
In advertising and sales literature, the performance of each Sub-Account may be
compared to the performance of other variable annuity issuers in general or to
the performance of particular types of variable annuities investing in mutual
funds, or investment series of mutual funds with investment objectives similar
to each of the Sub-Accounts. Lipper Analytical Services, Inc. ("Lipper"),
Morningstar, Inc. ("Morningstar") and the Variable Annuity Research Data Service
("VARDS") are independent services which monitor and rank the performance of
variable annuity issuers in each of the major categories of investment
objectives on an industry-wide basis.
Lipper's 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, Morningstar and VARDS each
rank such issuers on the basis of total return, assuming reinvestment of
distributions, but do not take sales charges, redemption fees, or certain
expense deductions at the separate account level into consideration. In
addition, VARDS prepares risk adjusted rankings, which consider the effects of
market risk on total return performance. This type of ranking provides data as
to which funds provide the highest total return within various categories of
funds defined by the degree of risk inherent in their investment objectives.
Advertising and sales literature may also compare the performance of each
Sub-Account to the Standard & Poor's Composite Index of 500 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.
The Company may also report other information including the effect of
tax-deferred compounding on a Sub-Account's investment returns, or returns in
general, which may be illustrated by tables, graphs,
<PAGE>
or charts. The Company may also illustrate the accumulation of Contract Value
and payment of annuity benefits on a variable or fixed basis, or a combination
variable and fixed basis, based on hypothetical rates of return, and compare
those illustrations to mutual fund hypothetical illustrations, using charts,
tables, and graphs, including software programs utilizing such charts, tables,
and graphs. All income and capital gains derived from Sub-Account investments
are reinvested and can lead to substantial long-term accumulation of assets,
provided that the underlying portfolio's investment experience is positive.
THE COMPANY
The Company, organized in 1906, is a stock life insurance company incorporated
under the laws of the State of Washington. The Company is an indirect,
wholly-owned subsidiary of ReliaStar Financial Corp., formerly known as The NWNL
Companies, Inc., a publicly-traded holding company incorporated under the laws
of the State of Delaware, whose subsidiaries specialize in the life insurance
and related financial services businesses. The Company offers individual and
group annuity contracts. The Company is admitted to do business in the District
of Columbia and all states except New York. Its Home Office is at 1110 Third
Avenue, Seattle, Washington 98101.
THE VARIABLE ACCOUNT
The Variable Account is a separate account of the Company established under the
insurance laws of the State of Washington on March 22, 1994. The Variable
Account is registered with the SEC as a unit investment trust under the
Investment Company Act of 1940, as amended ("1940 Act"). Such registration does
not involve supervision by the SEC of the management or investment policies or
practices of the Variable Account, the Company or the Funds. The Company has
complete ownership and control of the assets in the Variable Account, but these
assets are held separately from the Company's other assets and are not part of
the Company's general account.
The portion of the assets of the Variable Account equal to its reserves and
other Contract liabilities will not be chargeable with liabilities arising out
of any other business of the Company. The income, gains and losses, realized or
unrealized, from assets allocated to the Variable Account will be credited to or
charged against the Variable Account, without regard to the other income, gains,
or losses of the Company.
Purchase Payments allocated to the Variable Account are allocated to one or more
Sub-Accounts selected by the Contract Owner. Each Sub-Account invests in shares
of a specific Fund at net asset value. The future Variable Account Contract
Value will depend, primarily, on the investment performance of the Funds whose
shares are held in the Sub-Accounts.
INVESTMENTS OF THE VARIABLE ACCOUNT
When a Contract is applied for, the Contract Owner may elect to have Purchase
Payments allocated to one or more of the available Sub-Accounts. The Contract
Owner may also, subject to the limits discussed below, change a Purchase Payment
allocation for future Purchase Payments and may reallocate all or part of any
Sub-Account Contract Value to another Sub-Account that invests in shares of
another Fund.
There are currently twenty-seven Sub-Accounts, each of which invests in shares
of one of the Funds. The Company reserves the right, subject to compliance with
applicable law, to offer additional Sub-Accounts, each of which could invest in
a new fund with a specified investment objective. The Company contemplates that
if it adds additional Sub-Accounts to the Variable Account, a Contract Owner
would be limited to participating in a maximum of sixteen Sub-Accounts over the
lifetime of the Contract. The Contract Owner would not be required to select the
Sub-Accounts in advance, but upon reaching participation in sixteen Sub-Accounts
since issue of the Contract, the Contract Owner would only be able to transfer
within the sixteen Sub-Accounts already selected and which are still available
under the Variable Account.
For example, assume a Contract Owner selects six Sub-Accounts. Later, the
Contract Owner transfers out of all of the six initial selections and chooses
ten different Sub-Accounts, none of which are the same as the original six
selections. The Contract Owner has now used the maximum selection of sixteen
Sub-Accounts. The Contract Owner may still allocate Purchase Payments or
transfer Contract Values among any of the sixteen Sub-Accounts that were
previously selected. However, the Contract
<PAGE>
Owner may not allocate funds to the remaining Sub-Accounts at any time. A
Contract Owner may transfer partial or complete Contract Values from the
Variable Account to Fixed Accounts A and B at any time.
The Company has entered into service agreements with the managers or
distributors of certain of the Funds pursuant to which the Company or its
affiliates may receive from affiliates of the Funds compensation for providing
administrative, recordkeeping, and in some cases distribution services to the
Funds or their affiliates. Such compensation is paid based upon assets invested
in the particular Funds, or based upon aggregated net asset goals. Currently,
the Company has service arrangements with Alger, Fidelity, Janus, Neuberger, and
OpCap Advisors.
The Funds currently offered are described below. A brief summary of investment
objectives is contained in the description of each Fund. In addition, you should
read the prospectuses of the Funds, which are contained in the accompanying "The
Northern Life Advantage Variable Annuity Mutual Funds" book, for more detailed
information and particularly, a more thorough explanation of investment
objectives of the Funds. There is no assurance that any Fund will achieve its
investment objective(s). There is a possibility that one Fund might become
liable for any misstatement, inaccuracy or incomplete disclosure in another
Fund's prospectus.
WHO ARE THE INVESTMENT ADVISERS OF THE FUNDS?
Fred Alger Management, Inc. ("Alger Management") is the investment manager
for the four Alger American Portfolios and is responsible for the overall
administration of The Alger American Fund, subject to the supervision of its
Board of Trustees.
Fidelity Management & Research Company is the investment adviser of VIP's
four portfolios and of VIP II's four portfolios.
Janus Capital Corporation ("Janus Capital") is the investment adviser of four
portfolios of Janus Aspen Series.
Neuberger&Berman Management Inc. is the investment manager, with the
assistance of Neuberger&Berman, LLC, as sub-adviser for AMT Partners
Portfolio and AMT Limited Maturity Bond Portfolio.
Northstar Investment Management Corporation, an affiliate of the Company, is
the investment adviser for the five funds of the Northstar Variable Account.
Certain of the Northstar Funds are sub-advised by third-party investment
advisers.
OpCap Advisors is the investment manager for each of the four OCC
Accumulation Trust Portfolios and is a subsidiary of Oppenheimer Capital, a
registered investment adviser.
THE FUND PROSPECTUSES SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
CONCERNING THE ALLOCATION OF PURCHASE PAYMENTS OR REALLOCATIONS AMONG THE
SUB-ACCOUNTS.
THE ALGER AMERICAN FUND
The Alger American Fund is a mutual fund offering six investment portfolios, of
which the following four portfolios are offered under the Contract.
ALGER AMERICAN GROWTH PORTFOLIO seeks to obtain long-term capital appreciation.
The Portfolio will invest its assets primarily in companies whose securities are
traded on domestic stock exchanges or in the over-the-counter market. Except
during temporary defensive periods, the Portfolio will invest at least 65% of
its total assets in the securities of companies that, at the time of purchase of
the securities, have a total market capitalization of $1 billion or greater.
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO seeks long-term capital appreciation.
The Portfolio may purchase put and call options and sell (write) covered call
and put options on securities and securities indexes to increase gain and to
hedge against the risk of unfavorable price movements, and may enter into
futures contracts on securities indexes and purchase and sell call and put
options on these futures contracts. The Portfolio may also borrow money for the
purchase of additional securities. The Portfolio may borrow only from banks and
may not borrow in excess of one-third of the market value of its assets, less
liabilities other than such borrowing. The Portfolio will invest 85% of its net
assets in equity securities of companies of any size.
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO seeks long-term capital appreciation.
Except during temporary defensive periods, the Portfolio invests at least 65% of
its total assets in equity securities of
<PAGE>
companies that, at the time of purchase of the securities, have total market
capitalization within the range of companies included in the S&P MidCap 400
Index, updated quarterly. The S&P MidCap 400 Index is designed to track the
performance of medium capitalization companies. As of March 31, 1997, the range
of market capitalization of these companies was $100 million to $9.149 billion.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO seeks to obtain long-term capital
appreciation. Except during temporary defensive periods, the Portfolio invests
at least 65% of its total assets in equity securities of companies that, at the
time of purchase of the securities, have total market capitalization within the
range of companies included in the Russell 2000 Growth Index ("Russell Index")
or the S&P SmallCap 600 Index ("S&P Index"), updated quarterly. Both indexes are
broad indexes of small capitalization stocks. As of June 30, 1997, the range of
market capitalization companies in the Russell Index was $13 million to $1.56
billion; the range of market capitalization of the companies in the S&P Index at
that date was $35 million to $3.025 billion. The combined range was $13 million
to $3.025 billion.
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND (VIP)
VIP is a mutual fund trust currently including five investment portfolios,
each with a different investment objective. Presently the following four
portfolios are offered in the Contracts.
EQUITY-INCOME PORTFOLIO seeks reasonable income by investing primarily in
income-producing equity securities. In choosing these securities the portfolio
will also consider the potential for capital appreciation. The Portfolio's goal
is to achieve a yield which exceeds the composite yield on the securities
comprising the Standard & Poor's Composite Index of 500 Stocks.
GROWTH 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.
OVERSEAS PORTFOLIO seeks long term growth of capital primarily through
investments in foreign securities. The Overseas Portfolio provides a means for
investors to diversify their own portfolios by participating in companies and
economies outside of the United States.
MONEY MARKET PORTFOLIO seeks to obtain as high a level of current income as is
consistent with preserving capital and providing liquidity. The portfolio will
invest only in high-quality U.S. dollar denominated money market investments of
domestic and foreign issuers. An investment in the Portfolio is not insured or
guaranteed by the U.S. Government, and there can be no assurance that the
portfolio will maintain a stable net asset value per share of $1.00.
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II (VIP II)
VIP II is a mutual fund trust currently including five investment portfolios,
each with a different investment objective. Presently the following four
portfolios are offered in the Contracts.
ASSET MANAGER: GROWTH PORTFOLIO seeks to maximize long-term total return with
less risk than a pure stock investment. The Portfolio seeks maximum total return
by allocating its assets among stocks offering the greatest growth potential for
long-term goals; bonds which provide balance and income to offset the volatility
of stocks; and short term instruments adding liquidity and stability to the
overall mix.
ASSET MANAGER PORTFOLIO seeks high total return with reduced risk over the
long-term by allocating its assets among domestic and foreign stocks, bonds and
short-term, fixed-income, instruments.
CONTRAFUND PORTFOLIO seeks capital appreciation by investing in companies
believed to be undervalued due to an overly pessimistic appraisal by the public.
The portfolio usually invests primarily in common stock and securities
convertible into common stock, but it has the flexibility to invest in any type
of security that may produce capital appreciation.
INDEX 500 PORTFOLIO seeks to provide investment results that correspond to the
total return (i.e., the combination of capital changes and income) of common
stocks publicly traded in the United States. In seeking this objective, the
Portfolio attempts to duplicate the composition and total return of the Standard
& Poor's Composite Index of 500 Stocks while keeping transaction costs and other
expenses low.
JANUS ASPEN SERIES
Janus Aspen Series is a mutual fund offering multiple investment portfolios,
of which the following four portfolios are offered in the Contracts.
<PAGE>
AGGRESSIVE GROWTH PORTFOLIO is a nondiversified fund that seeks long-term growth
of capital by investing primarily in common stocks. The Portfolio intends to
normally invest at least 50% of its equity assets in securities issued by
medium-sized companies.
GROWTH PORTFOLIO is a diversified fund that seeks long-term growth of capital in
a manner consistent with the preservation of capital by investing in common
stocks of issuers of any size. Generally, this Portfolio emphasizes issuers with
larger market capitalizations.
INTERNATIONAL GROWTH PORTFOLIO is a diversified fund that seeks long-term growth
of capital by investing primarily in common stocks of foreign issuers of any
size. The Portfolio normally invests at least 65% of its total assets in issuers
from at least five different countries excluding the United States.
WORLDWIDE GROWTH PORTFOLIO is a diversified fund that seeks long-term growth of
capital in a manner consistent with the preservation of capital by investing
primarily in common stocks of foreign and domestic issuers of any size.
Worldwide Growth Portfolio normally invests in issuers from at least five
different countries including the United States.
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST ("AMT")
AMT is a mutual fund offering multiple investment portfolios, of which the
following two portfolios are offered in the Contracts.
NEUBERGER&BERMAN AMT LIMITED MATURITY BOND PORTFOLIO seeks to provide the
highest current income consistent with low risk to principal and liquidity; and
secondarily, total return. The Portfolio's investments are diversified;
primarily consisting of U.S. Government and Agency securities and investment
grade debt securities issued by financial institutions, corporations, and
others. "Investment grade" debt securities are those receiving one of the four
highest ratings from Moody's Investors Service, Inc. ("Moody's"), Standard &
Poor's Rating Group ("S&P"), or another nationally recognized statistical ration
organization ("NRSRO"). Securities in which the Portfolio may invest include
mortgage-backed and asset backed securities, repurchase agreements with respect
to U.S. Government and Agency securities, and foreign investments. The Portfolio
may also invest in fixed, variable or inflation-indexed debt securities.
NEUBERGER&BERMAN AMT PARTNERS PORTFOLIO seeks capital growth through an
investment approach that is designed to increase capital with reasonable risk.
The Portfolio invests principally in common stocks of medium to large
capitalization established companies, using a value-oriented approach. N&B
management looks for securities believed to be undervalued based on strong
fundamentals, including a low price-to-earnings ratio, consistent cash flow, and
the company's track record through all parts of the market cycle. The Portfolio
may buy and hold securities, measured at the time of investment, which are
corporate debt securities that are below investment grade or in comparable
unrated securities. Securities rated below investment grade, as well as
comparable unrated securities, are often considered to be speculative and
usually entail greater risk.
NORTHSTAR VARIABLE TRUST (NORTHSTAR)
Northstar is a mutual fund offering multiple investment portfolios, of which
the following five portfolios are offered under the Contracts.
NORTHSTAR GROWTH FUND is a diversified portfolio with an investment objective of
long-term capital growth primarily through investments in equity securities
diversified over industries and companies which are believed to provide above
average potential for capital appreciation. Navellier Fund Management, Inc.
serves as sub-adviser to the Fund and is responsible for the day-to-day
investment management of the Fund, subject to the supervision of the investment
adviser and the Trustees of the Fund. All fees and expenses of the subadvisory
arrangement are borne by the investment adviser.
NORTHSTAR HIGH YIELD BOND FUND is a diversified portfolio with an investment
objective of seeking high income consistent with the preservation of capital.
Under normal market conditions, this Investment Fund invests predominantly in
high-yield, high-risk, lower-rated U.S. dollar denominated debt securities.
These securities are commonly known as "junk bonds." Most of the securities in
which the Investment Fund invests are rated, at the time of investment, at lease
Caa by Moody's Investors Service, Inc. ("Moody's") or CCC by Standard & Poor's
Corporation ("S&P") or, if not rated, are of comparable quality in the opinion
of the investment adviser. The Investment Fund may, however, invest in
securities in the lowest ratings categories of Moody's and S&P, which are "C" in
the case of Moody's and "D" in the case of S&P.
<PAGE>
NORTHSTAR INCOME AND GROWTH FUND is a diversified portfolio with an investment
objective of seeking current income balanced with the objective of achieving
capital appreciation. The Fund seeks to achieve its objective through
investments in common and preferred stocks, convertible securities, and
investment grade debt securities of corporate and government issues, selected
for their prospects of producing income and growth of capital. Wilson/Bennett
Capital Management, Inc. is the sub-advisor to this Fund and is responsible for
the day-to-day investment management of the Fund, subject to the supervision of
the investment adviser and the Trustees of the Fund. All fees and expenses of
the subadvisory arrangement are borne by the investment adviser.
NORTHSTAR INTERNATIONAL VALUE FUND FUND is a diversified portfolio with the
objective of long-term capital appreciation. The Fund invests primarily in
foreign companies with a market capitalization of greater than $1 billion, but
may hold up to 25% of its assets in companies with smaller market
capitalization. This Fund will seek to achieve its objective through investments
in common stocks, preferred stocks, American, European and Global depository
receipts, as well as convertible securities. It may also invest in other
higher-risk securities of companies located in at least three countries other
than the U. A., located in Western Europe, North and South America, Australia,
Asia and other nations. Up to 25% of its assets may be invested in securities of
issuers located in countries with emerging markets. Brandes Investment Partners,
L.P. ("Brandes") is the sub-adviser to this Fund and is responsible for the
day-to-day investment management of the Fund, subject to the supervision of the
investment adviser and the Trustees of the Fund. All fees and expenses of the
sub-advisory agreement are borne by the investment adviser.
NORTHSTAR MULTI-SECTOR BOND FUND is a diversified portfolio with an investment
objective of maximizing current income consistent with the preservation of
capital. The Fund will seek to achieve its objective by investment in a number
of sectors of the fixed income securities markets.
OCC ACCUMULATION TRUST
OCC ACC is a mutual fund offering multiple investment portfolios, of which
the following four portfolios are offered in the Contracts.
EQUITY PORTFOLIO seeks long term capital appreciation through investment in
securities (primarily equity securities) of companies that are believed by the
Manager to be undervalued in the marketplace in relation to factors such as the
companies' assets or earnings. It is the manager's intention to invest in
securities of companies which in the Manager's opinion possess one or more of
the following characteristics: undervalued assets, valuable consumer or
commercial franchises, securities valuation below peer companies, substantial
and growing cash flow and/or a favorable price to book value relationship. The
Portfolio will invest primarily in stocks listed on the New York Stock Exchange.
In addition, it may also purchase securities listed on other domestic securities
exchanges, securities traded in the domestic over-the-counter market and foreign
securities provided that they are listed on a domestic or foreign securities
exchange or represented by American depository receipts listed on a domestic
securities exchange or traded in domestic or foreign over-the-counter markets.
GLOBAL EQUITY PORTFOLIO seeks long term capital appreciation through pursuit of
a global investment strategy primarily involving equity securities. The
Portfolio may invest anywhere in the world with no requirement that any specific
percentage of its assets be committed to any given country. Under normal
circumstances, at least 65 percent of the Portfolio's total assets will be
invested in equity securities in at least three different countries, one of
which may be the United States. Opportunities for capital appreciation may also
be presented by debt securities. The Portfolio may invest up to 35 percent of
its total assets in debt obligations with remaining maturities of one year or
more of U.S. or foreign corporate, governmental or bank issuers. It is the
present intention of the Portfolio, although not a fundamental policy, not to
invest more than 5 percent of its total assets in debt securities rated below
investment grade. Although there is no minimum rating for this category of debt
instruments of the Portfolio, the Portfolio does not intend to invest in bonds
which are in default.
MANAGED PORTFOLIO seeks to achieve growth of capital over time through
investment in a portfolio consisting of common stocks, bonds and cash
equivalents, the percentages of which will vary based on the Manager's
assessments of the relative outlook for such investments. In seeking to achieve
its investment objective, the types of equity securities in which the Portfolio
may invest are likely to be the same as those in which the Equity Portfolio
invests, although securities of the type in which the Small Cap Portfolio
invests may, to a lesser extent, be included. Debt securities are expected to be
<PAGE>
predominately investment grade intermediate to long term U.S. Government and
corporate debt, although the Portfolio will also invest in high quality short
term money market and cash equivalent securities and may invest almost all of
its assets in such securities when the Manager deems it advisable in order to
preserve capital. In addition, the Portfolio may also purchase foreign
securities provided that they are listed on a domestic or foreign securities
exchange or are represented by American depository receipt listed on a domestic
securities exchange or traded in domestic or foreign over-the-counter markets.
SMALL CAP PORTFOLIO seeks capital appreciation through investments in a
diversified portfolio consisting primarily of equity securities of companies
with market capitalizations of under $1 billion. The Portfolio may purchase
securities in initial public offerings, or shortly after such offerings have
been completed, when the Manager believes that such securities have
greater-than-average market appreciation potential. Under normal circumstances
at least 65% of the Portfolio's assets will be invested in equity securities.
The majority of securities purchased by the Portfolio will be traded on the New
York Stock Exchange, the American Stock Exchange or in the over-the-counter
market, and will also include options, warrants, bonds, notes and debentures
which are convertible into or exchangeable for, or which grant a right to
purchase or sell securities. In addition, the Portfolio may also purchase
foreign securities provided that they are listed on a domestic or foreign
securities exchange or are represented by American depositary receipts lised on
a domestic securities exchange or traded in domestic or foreign over-the-counter
markets.
THERE IS NO ASSURANCE THAT THE STATED OBJECTIVES AND POLICIES OF ANY OF THE
FUNDS WILL BE ACHIEVED.
The Company or its affiliates may receive compensation from an affiliate or
affiliates of certain of the Funds based upon an annual percentage of the
average net assets held in that Fund by the Company and certain of the Company's
insurance company affiliates. These amounts are intended to compensate the
Company or the Company's affiliates for administrative, record keeping,
distribution, and other services provided by such parties to the Funds and/or
the Funds' affiliates. Payments of such amounts by an affiliate or affiliates of
the Funds do not increase the fees paid by the Funds or their shareholders.
The Funds are available to registered separate accounts of insurance companies,
other than the Company, offering variable annuity Contracts and variable life
insurance policies. The Company currently does not foresee any disadvantages to
Contract Owners resulting from the Funds selling shares to fund products other
than the Contracts. However, there is a possibility that a material conflict may
arise between Contract Owners whose Contract Values are allocated to the
Variable Account and the Contract Owners of variable life insurance policies and
variable annuity Contracts issued by the Company or by such other companies
whose assets are allocated to one or more other separate accounts investing in
any one of the Funds. In the event of a material conflict the Company will take
any necessary steps, including removing the Variable Account's investment in the
Fund, to resolve the matter. The Board of Directors or Trustees of each Fund
will monitor events in order to identify any material conflicts that possibly
may arise and determine what action, if any, should be taken in response to
those events or conflicts. See each individual Fund prospectus for more
information.
REINVESTMENT
The Funds described above have as a policy the distribution of income dividends
and capital gains. However, under the Contracts described in this Prospectus
there is an automatic reinvestment of such distributions.
ADDITION, DELETION OR SUBSTITUTION OF FUND SHARES
The Company reserves the following rights:
* The Company may add to, delete from or substitute shares that may be
purchased for or held in the Variable Account. If the shares of a Fund
are no longer available for investment or if in the Company's judgment
further investment in a Fund should become inappropriate in view of the
purposes of the Variable Account, the Company may redeem the shares, if
any, of that portfolio and substitute shares of another registered
open-end management investment company.
* The Company may establish additional Sub-Accounts, each of which would
invest in shares of a new portfolio of a Fund or in shares of another
investment company having a specified investment objective. The Company
may, in its sole discretion, establish new Sub-Accounts or
<PAGE>
eliminate one or more Sub-Accounts if marketing, tax considerations or
investment conditions warrant. Any new Sub-Accounts may be made
available to existing Contract Owners on a basis to be determined by
the Company.
* The Company may, if it deems it to be in the best interests of Contract
Owners and Annuitants:
(a) manage the Variable Account as a management investment company
under the 1940 Act;
(b) deregister the Variable Account under the 1940 Act if
registration is no longer required;
(c) combine the Variable Account with other separate account(s) of
the Company; or
(d) reallocate assets of the Variable Account to another Separate
Account.
* Make any changes required by the 1940 Act.
* Restrict or eliminate any voting privileges of Contract Owners or other
persons who have voting privileges as to the Variable Account.
* In the event any of the foregoing changes or substitutions are made,
the Company may endorse the Contracts to reflect the change or
substitution.
The Company's reservation of rights is expressly subject to the following when
required:
* Applicable Federal and state laws and regulations.
* Notice to Contract Owners.
* Approval of the SEC and/or state insurance authorities.
CHARGES MADE BY THE COMPANY
WITHDRAWAL CHARGE (CONTINGENT DEFERRED SALES CHARGE)
No deduction for a sales charge is made from Purchase Payments. However, if part
or all of the Purchase Payments made under a Transfer Series Contract, or part
or all of Contract Value under a Flex Series Contract, are withdrawn, a
Withdrawal Charge (Contingent Deferred Sales Charge) may be made by the Company.
Withdrawal Charges are deducted from the amount being withdrawn and are
considered a part of the withdrawal.
The Withdrawal Charge is intended to reimburse the Company for expenses relating
to the sale of the Contracts, including commissions to sales personnel, costs of
sales material and other promotional activities and sales administration costs.
TRANSFER SERIES CONTRACT. For purposes of determining Withdrawal Charges,
withdrawals will be taken first from Purchase Payments on a first-in, first-out
basis, then from Contract Earnings as of the Valuation Date next following the
date of the Company's receipt of the withdrawal request.
The Withdrawal Charge for full or partial withdrawal is determined by
multiplying the amount of each Purchase Payment withdrawn that is not eligible
for a free withdrawal, by the applicable Withdrawal Charge percentage as set
forth in the following table:
WITHDRAWAL CHARGE PERCENTAGE TABLE
------------------------------------------------------
CONTRACT YEAR OF
WITHDRAWAL MINUS WITHDRAWAL CHARGE AS A
CONTRACT YEAR OF PURCHASE PERCENTAGE OF EACH
PAYMENT PURCHASE PAYMENT
------------------------- ----------------------
0 6%
1 6
2 5
3 5
4 4
5 2
6 and later 0
<PAGE>
FLEX SERIES CONTRACTS. If a Flex Series Contract is withdrawn in full or in part
before the eleventh Contract Year, the Company may deduct a Withdrawal Charge
from the Contract Value. The Withdrawal Charge is determined by multiplying the
Contract Value subject to the charge by the applicable Withdrawal Charge
percentage as set forth in the following table:
CONTRACT YEAR WITHDRAWAL CHARGE
1 8%
2 8
3 8
4 7
5 6
6 5
7 4
8 3
9 2
10 1
11+ 0
PARTIAL WAIVER OF WITHDRAWAL CHARGE
During any 12-month period after the Issue Date, the Contract Owner may withdraw
a portion of the Contract Value without a Withdrawal Charge. The 12-month period
begins with the Contract Owner's first withdrawal. For the first withdrawal, the
amount available without a Withdrawal Charge will be determined on the date of
the requested withdrawal and will be the greater of:
1. 10% of the Contract Value less any Outstanding Loan Balance; or
2. For Transfer Series Contracts, the Purchase Payments remaining which
are no longer subject to a Withdrawal Charge, and for Flex Series
Contracts, the Contract Value no longer subject to a Withdrawal Charge.
We call this amount the "Free Surrender Amount".
If the first withdrawal equals the Free Surrender Amount, other withdrawals
during the 12-month period are subject to the Withdrawal Charge. If the first
withdrawal exceeds the Free Surrender Amount, the excess is subject to the
Withdrawal Charge, as are all other Withdrawals requested during the 12-month
period.
If the first withdrawal is less than the Free Surrender Amount, the Company will
keep track of the unused portion of the Free Surrender Amount for the 12-month
period. The unused portion of the Free Surrender Amount may be applied against
no more than three (3) additional withdrawals during the 12-month period.
The unused portion of the Free Surrender Amount available for withdrawal will be
computed by the Company on the date of any withdrawal request made after the
first withdrawal in the 12-month period and will be based upon:
10% x [(Greater of A or B) - C] D
Where:
A= Contract Value on the date of the first withdrawal in the 12-month period;
B= Contract Value on the date of the withdrawal request;
C= Outstanding Loan Balance on the date of the withdrawal request;
D= Any prior withdrawals made during the same 12-month period.
GENERAL INFORMATION. The Withdrawal Charges described above will be waived in
the event of the death of the Contract Owner or in the case of a non-qualified
Contract, the death of the Annuitant. In addition, for Contracts qualified under
Section 403(b) of the Code only, Withdrawal Charges may be waived under certain
circumstances.
The Company reserves the right to charge a partial withdrawal processing fee not
to exceed the lesser of 2% of the amount withdrawn or $25.
<PAGE>
Withdrawals may be subject to a 10% federal penalty tax if made by the Contract
Owner before age 59-1/2 . (See "Taxation of Annuities" on page 39.)
Contracts purchased as "tax sheltered annuities", and Contracts purchased under
state optional retirement programs are subject to certain withdrawal
restrictions. (See "Withdrawal (Redemption)" on page 31.)
REDUCTION OF WITHDRAWAL CHARGE
The Company may, at its option, provide a reduction in the Withdrawal Charge for
specific classes of Contract purchasers. Currently, the Company provides a
reduced Withdrawal Charge for purchasers of Tax Sheltered Annuities issued
pursuant to Section 403(b) of the Code to employees of certain school districts
which, in the judgment of the company, have provided cost reduction benefits to
the Company in the distribution of its contracts. For such purchasers, the
Withdrawal Charge on Flex Series contracts is reduced to 5% in each of the first
five Contract Years. The withdrawal charge on the transfer series contract is
reduced to 5% in each of the first two contract years following receipt of a
purchase payment.
ANNUAL CONTRACT CHARGE
On each Contract Anniversary prior to the Start Date, the Company deducts an
Annual Contract Charge of $30 from the Contract Value to reimburse it for
administrative expenses relating to the Contract, the Variable Account and the
Sub-Accounts. The Company will not increase the Annual Contract Charge. The
Company reserves the right to waive the Annual Contract Charge where the
Contract Value exceeds $25,000, however, the Company reserves the right to
reinstate the Charge on Contracts qualifying for the waiver. For all Contract
Values, in any Contract Year when a full withdrawal of Contract Value is made on
other than the Contract Anniversary, the Annual Contract Charge will be deducted
at the time of such withdrawal.
MORTALITY RISK CHARGE
The Variable Annuity Payouts made to Annuitants will vary in accordance with the
investment performance of the Sub-Account selected by the Contract Owner.
However, they will not be affected by the mortality experience (death rate) of
persons receiving Variable Annuity Payouts. The Company assumes this "mortality
risk" and has guaranteed the annuity rates incorporated in the Contract, which
cannot be changed.
To compensate the Company for assuming this mortality risk and the mortality
risk that Beneficiaries of Annuitants dying before the Start Date may receive
amounts in excess of the then current Contract Value, the Company deducts a
Mortality Risk Charge from the Variable Account Contract Value. (See "Death
Benefit Before Start Date" on page 30.) This deduction is made daily in an
amount that is equal to an annual rate of .85% of the daily Contract Values
under the Variable Account. The Company may not increase the rate charged for
the Mortality Risk Charge under any Contract.
EXPENSE RISK CHARGE
The Company will not increase charges for administrative expenses regardless of
its actual expenses. To compensate the Company for assuming this expense risk,
the Company deducts an Expense Risk Charge from the Variable Account Contract
Value. This deduction is made daily in an amount that is equal to an annual rate
of .40% of the daily Variable Account Contract Values. The Company may not
increase the rate of the Expense Risk Charge under any Contract.
ADMINISTRATIVE CHARGE
The Company deducts a daily Administrative Charge from the Variable Account
Contract Value in an amount equal to an annual rate of .15% of the daily
Variable Account Contract Values. This charge is deducted to reimburse the
Company for the cost of providing administrative services under the Contracts
and the Variable Account. The Company may not increase the rate of the
Administrative Charge under any Contract. Although there is not necessarily a
relationship between the amount of the Administrative Charge imposed on a given
Contract and the amount of expenses that may be attributable to that Contract.
SUFFICIENCY OF CHARGES
If the amount of the Withdrawal Charge assessed in connection with the Contracts
is not enough to cover all distribution expenses incurred in connection
therewith, the loss will be borne by the Company.
<PAGE>
Any excess distribution expenses borne by the Company will be paid out of its
general account which may include, among other things, proceeds derived from the
Mortality Risk Charge and the Expense Risk Charge deducted from the Variable
Account.
The Company does not currently believe that the Withdrawal Charges imposed will
cover the expected costs of distributing the Contracts.
If the amount derived from the Mortality Risk Charge and the Expense Risk Charge
is not sufficient to cover the actual cost of the mortality and expense risks
assumed by the Company, the Company will bear the shortfall. Conversely, if the
charges prove more than sufficient, the excess will be profit to the Company and
will be available for any proper corporate purpose including, among other
things, payment of distribution expenses.
PREMIUM AND OTHER TAXES
Various states and other governmental entities levy a premium tax, currently
ranging up to 3.50%, on annuity Contracts issued by insurance companies. If a
Contract Owner lives in a jurisdiction that levies such a tax, the Company will
pay the taxes when due and reserves the right to deduct the amount of the tax
either from Purchase Payments as they are received or from the Contract Value
immediately before Contract Value is applied to an Annuity Payout as permitted
or required by applicable law.
The current range of premium tax rates is a guide only and should not be relied
on to determine actual premium taxes on any Purchase Payment or Contract because
the taxes are subject to change from time to time by legislative and other
governmental action. The timing of tax levies also varies from one taxing
authority to another. Consequently, in many cases the Contract Owner will not be
able to accurately determine the premium tax applicable to the Contract by
reference to the range of tax rates described above. The Company reserves the
right to deduct charges for any other tax or economic burden resulting from the
application of the tax laws that it determines to be applicable to the Contract.
REDUCTION OF CHARGES
The Withdrawal and Contract Charges described above (except the Mortality Risk
Charge) may be reduced or eliminated for Contracts issued in circumstances where
the Company estimates that it will incur lower distribution or administrative
expenses or perform fewer sales or administrative services than those originally
contemplated in establishing the level of those charges. Lower distribution and
administrative expenses may be the result of economics associated with (a) the
use of mass enrollment procedures, (b) the performance of administrative or
enrollment functions by an employer, (c) the use by an employer of automated
techniques in submitting Purchase Payments or information related to Purchase
Payments on behalf of its employees, or (d) any other circumstances which reduce
distribution or administrative expenses. The exact amount of Withdrawal and
Contract Charges applicable to a particular Contract will be stated in that
Contract.
EXPENSES OF THE FUNDS
There are investment advisory fees, direct operating expenses and investment
related expenses of the Funds that are reflected in each Fund's daily share
price. These fees and expenses are described in the accompanying prospectuses
for the Funds.
ADMINISTRATION
The Company has primary responsibility for all administration of the Contracts
and the Variable Account. The Company's Administrative Service Center is located
at the Home Office of the Company, P.O. Box 12530, Seattle, Washington
98111-4530, and its telephone number is 1-800-426-7050.
The administrative services provided include, but are not limited to: issuance
of the Contracts; maintenance of Contract Owner records; Contract Owner
services; calculation of Accumulation Unit Values; and preparation of Contract
Owner reports.
THE CONTRACTS
CONTRACT APPLICATION AND PURCHASE PAYMENTS
Individuals who want to purchase a Contract must complete an application and
provide an initial Purchase Payment which will be sent to the Company's Home
Office. The initial Purchase Payment will be credited within two business days
after receipt at the Company's Home Office if accompanied by a complete
application. The Company may retain Purchase Payments for up to five business
days while attempting to complete an incomplete application. If an incomplete
application cannot be completed
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within five days of its receipt, the applicant will be notified of the reasons
for the delay and any Purchase Payments received will be returned immediately
unless the applicant specifically consents to have the Company retain them
pending completion of the application.
For Transfer Series Contracts and Flex Series Contracts which are Qualified
Plans, the Company will accept periodic, single sum, rollover and transfer
Purchase Payments as permitted by the Code. For the non-qualified Transfer
Series Contract, the Company will accept periodic and single sum Purchase
Payments, as well as amounts transferred under Section 1035 of the Code. The
minimum initial Purchase Payment the Company will accept under a Transfer Series
Contract is $15,000 and subsequent payments may not be less than $5,000. The
minimum amount of the initial and subsequent Purchase Payments the Company will
accept under a Flex Series Contract is $50.
The Company may choose not to accept any subsequent Purchase Payment under the
Transfer Series Contracts and Flex Series Contracts if the Purchase Payment,
together with the Contract Value at the next Valuation Date, exceeds $1,000,000.
Any Purchase Payment not accepted by the Company will be refunded. The Company
reserves the right to accept smaller or larger initial and subsequent Purchase
Payments in connection with special circumstances, including, but not limited to
sales through group or sponsored arrangements.
REVOCATION
The Contract Owner may revoke a Contract by sending the Contract and written
notice of revocation to the Company, P.O. Box 12530, Seattle, Washington
98111-4530, or to the agent from whom a Contract was purchased, no later than
the 10th day after the Contract Owner's receipt of the Contract. As soon as the
Company receives the Contract, it will be deemed void. The Company will refund
the Contract Value as of the next Valuation Date after receipt of the Contract
and written notice of revocation. If required by applicable law, the Company
will refund all Purchase Payments it has received under the Contract.
The liability of the Variable Account under this provision is limited to the
Contract Value in each Sub-Account on the date of revocation. Any additional
amounts refunded to the Contract Owner will be paid by the Company.
ALLOCATION OF PURCHASE PAYMENTS
The Contract Owner may allocate Purchase Payments among Sub-Accounts, Fixed
Account A and/or Fixed Account B. (See Appendix A.)
Upon allocation to Sub-Accounts of the Variable Account, a Purchase Payment is
converted into Accumulation Units of the Sub-Account, by dividing the amount of
the Purchase Payment allocated to the Sub-Account by the value of an
Accumulation Unit for the Sub-Account.
ACCUMULATION UNIT VALUE
Each Accumulation Unit of a Sub-Account was initially valued at $10 when the
first Fund shares were purchased. Thereafter the value of each Accumulation Unit
will vary up or down according to a Net Investment Factor, described below.
Dividend and capital gain distributions from a Fund will be automatically
reinvested in additional shares of such Fund and allocated to the appropriate
Sub-Account. The number of Accumulation Units does not increase because of the
additional shares, but the Accumulation Unit value may increase.
NET INVESTMENT FACTOR
The Net Investment Factor is an index number which reflects charges under the
Contract and the investment performance during a Valuation Period of the Fund
whose shares are held in the particular Sub-Account. If the Net Investment
Factor is greater than one, the Accumulation Unit or Annuity Unit value has
increased. If the Net Investment Factor is less than one, Accumulation Unit or
Annuity Unit value has decreased. The Net Investment Factor for a Sub-Account is
determined by dividing (1) by (2) then subtracting (3) from the result, where:
(1) Is the net result of:
(a) The net asset value per share of the Fund shares held in the
Sub-Account, determined at the end of the current Valuation
Period;
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(b) PLUS the per share amount of any dividend or capital gain
distributions made on the Fund shares held in the Sub-Account
during the current Valuation Period;
(c) PLUS a per share credit or minus a per share charge for any
taxes reserved for which the Company determines to have
resulted from the operations of the Sub-Account and to be
applicable to a Contract.
(2) Is the net result of:
(a) The net asset value per share of the Fund shares held in the
Sub-Account, determined at the end of the last prior Valuation
Period;
(b) PLUS a per share credit or minus a per share charge for any
taxes reserved for the last prior Valuation Period which the
Company determines to have resulted from the investment
operations of the Sub-Account and to be applicable to the
Contract.
(3) Is a daily factor representing the Mortality Risk Charge, the Expense
Risk Charge and the Administrative Charge adjusted for the number of
days in the period, which is equal to, on an annual basis, 1.40% of the
daily net asset value of the Sub-Account.
DEATH BENEFIT BEFORE THE START DATE
Before the Start Date, the Beneficiary will be entitled to receive the Death
Benefit described below. The Death Benefit will be:
(1) If the Contract owner dies before the first day of the month following
the Contract owner's 80th birthday, or in the case of a non-qualified
Contract, the Annuitant dies on or before the first day of the month
following the Annuitant's 80th birthday, then as of the Death Benefit
Valuation Date, the greatest of:
(a) The Contract Value less any Outstanding Loan Balance;
(b) The sum of the Purchase Payments received by the Company under
the Contract, less any withdrawals, amounts used to purchase
annuity payouts, any Outstanding Loan Balance, and the amount
of previously deducted Annual Contract Charges; or
(c) The Contract Value on the Specified Contract Anniversary
immediately preceding the Contract Owner's or the Annuitant's
death, whichever is applicable, plus any Purchase Payments
since that Anniversary, less any withdrawals or amounts used
to purchase annuity payouts since that Anniversary, less the
amount of any previously deducted Annual Contract Charges
since that Anniversary and less the Outstanding Loan Balance.
(2) If the Contract Owner, or in the case of a non-qualified Contract, the
Annuitant, dies after the first day of the month following the Contract
Owner's or Annuitant's 80th birthday, the Contract Value less the
Outstanding Loan Balance as of the Death Benefit Valuation Date.
(3) If the Contract Owner of a non-qualified Contract dies, the Withdrawal
Value as of the Death Benefit Valuation Date.
PAYMENT OF DEATH BENEFIT BEFORE THE START DATE
The Beneficiary may elect to have any portion of the Death Benefit:
(1) Paid in a single sum;
(2) Applied to any of the annuity payouts (in no event may annuity payouts
to a Beneficiary extend beyond the Beneficiary's life expectancy or any
period certain greater than the Beneficiary's life expectancy); or
(3) Paid by another distribution method acceptable to the Company.
The timing and manner of payment must satisfy certain requirements under the
Code. In general, the Death Benefit must either be applied to an annuity payout
within one year of the Contract Owner's or Annuitant's death, or the entire
Contract Value must be distributed within five years of the Contract Owner's or
Annuitant's date of death. An exception to this provision applies if the
Beneficiary is the surviving spouse, in which case the Beneficiary may continue
the Contract as the Contract Owner and generally may exercise all rights to the
Contract. (See "Federal Tax Status" on page 37.)
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If the Beneficiary requests payment of the Death Benefit in a single sum, it
will be paid to the Beneficiary within seven days after the Death Benefit
Valuation Date. An annuity payout selection or request for another form of
distribution method must be in writing and received by the Company within a time
period permitted under the Code, or the Death Benefit as of the Death Benefit
Valuation Date will be paid in a single sum to the Beneficiary and the Contract
will be canceled.
DEATH BENEFIT AFTER START DATE
If the Annuitant dies after the Start Date, remaining annuity payouts, if any,
will be as stated in the form of annuity payout in effect.
WITHDRAWAL (REDEMPTION)
If permitted by law or any applicable Qualified Plan, the Contract Owner may
withdraw all or part of the Withdrawal Value of the Contract by sending a
properly completed withdrawal request to the Company. (See "Federal Tax Status"
on page 37.) The Contract Owner may request withdrawal of either (a) a gross
amount, in which case the applicable Withdrawal Charge and taxes will be
deducted from the gross amount requested, or (b) a specific amount after
deduction of the applicable Withdrawal Charge and taxes. If a full withdrawal
occurs on a date other than the Contract Anniversary, a deduction will be made
for the Annual Contract Charge in addition to the deduction made on the previous
Contract Anniversary. (See "Withdrawal Charge (Contingent Deferred Sales
Charge)" on page 25, and "Annual Contract Charge" on page 27.) Partial
withdrawals may be made in amounts not less than $1,000 and no partial
withdrawal may cause the Contract Value to fall below the greater of (a) $1,000,
or (b) the Outstanding Loan Balance divided by 85%. The Company will not honor
requests that do not meet these requirements.
A withdrawal will be processed on the next Valuation Date after a properly
completed withdrawal request is received by the Company and payment will be made
within seven days after such Valuation Date. Unless otherwise agreed to by the
Company, a partial withdrawal will be taken proportionately from the Fixed
Accounts and Sub-Accounts on a basis that reflects their proportionate
percentage of the Withdrawal Value.
The Company reserves the right to assess a processing fee not to exceed the
lesser of 2% of the partial withdrawal amount or $25. No processing fee will be
charged in connection with full withdrawals.
The Company may cancel the Contract when: (a) the entire Withdrawal Value is
withdrawn on or before the Start Date or (b) the Outstanding Loan Balance is
equal to or greater than the Contract Value less applicable Withdrawal Charges.
If a Contract is purchased as a "tax-sheltered annuity" under Code Section
403(b), it is subject to certain restrictions on withdrawals imposed by Section
403(b)(11) of the Code. (See "Tax-Sheltered Annuities" on page .) Section 403
(b)(11) of the Code restricts the distribution under Section 403(b) annuity
contracts of: (i) contributions made pursuant to a salary reduction agreement in
years beginning after December 31, 1988; (ii) earnings on those contributions;
and (iii) earnings in such years on amounts held as of the first year beginning
before January 1, 1989. Distributions of the foregoing amounts may only occur
upon the death of the employee, attainment of age 59-1/2 , separation from
service, disability or hardship. In addition, income attributable to salary
reduction contributions may not be distributed in the case of hardship. Similar
restrictions may apply on distributions from Contracts used in connection with
state optional retirement programs.
Withdrawal payments may be taxable. For tax purposes such payments shall be
deemed to be from earnings until cumulative withdrawal payments equal all
accumulated earnings and thereafter from Purchase Payments received by the
Company. Consideration should be given to the tax implications of a withdrawal
prior to making a withdrawal request, including a withdrawal in connection with
a Qualified Plan.
SYSTEMATIC WITHDRAWALS
A Systematic Withdrawal is an automatic form of partial withdrawal. (See
"Withdrawal (Redemption)" on page 31.) The Contract Owner may elect to take
Systematic Withdrawals by withdrawing a specified dollar amount or percentage of
the Contract Value on a monthly, quarterly, semi-annual or annual basis.
Withdrawal Charges are not waived on Systematic Withdrawals. (See "Withdrawal
Charge (Contingent Deferred Sales Charge)" on page 25.) Systematic Withdrawals
may be discontinued by the Contract Owner at any time by notifying the Company
in writing.
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The Company reserves the right to modify or discontinue offering Systematic
Withdrawals, however, any such modification or discontinuation will not affect
any Systematic Withdrawal programs already commenced. While the Company does not
currently charge a processing fee for partial withdrawals under this program, it
reserves the right to charge a processing fee not to exceed the lesser of 2% of
each Systematic Withdrawal payment or $25.
Systematic Withdrawals may be included in the Contract Owner's gross income in
the year in which the Systematic Withdrawal occurs. Systematic Withdrawals
occurring before the Contract Owner reaches age 59-1/2 may also be subject to a
10% Federal tax penalty. The Contract Owner should consult with his or her tax
adviser before requesting any Systematic Withdrawal. (See "Taxation of
Annuities" on page 39.)
Contract Owners interested in participating in the Systematic Withdrawal program
may obtain a separate application form and full information concerning the
program and its restrictions from their registered representative.
LOANS AVAILABLE FROM CERTAIN QUALIFIED CONTRACTS
Loans may be available from Contracts issued for use with Qualified Plans
qualified under Section 403(b) of the Code, provided that the loans are
permitted by the Contract Owner's Qualified Plan. A loan generally will not be
treated as a taxable distribution provided that the term is no longer than five
years (except for certain home loans) and the loan amount does not exceed
certain limits discussed below. Loans are subject to the limitations, interest
rates, and repayment procedures set forth in the loan document and Contract. The
loan must be repaid, in substantially equal payments, by the earlier of five
years from the date of approval of the loan or the Start Date, or if used to
purchase a primary residence of the Contract Owner, the earlier of 20 years or
the Start Date.
Under the Code, the maximum amount that may be borrowed, including loans from
other Qualified Plans of the employer, generally may not exceed the lesser of
$50,000 or 50% of the current value of an employee's interest in the Plans. For
Plans other than Plans subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), up to $10,000 may be borrowed even if it is more
than 50% of the value of the employee's accrued benefit under the Qualified
Plans. The $50,000 dollar limit is reduced by the highest loan balances owed
during the prior one-year period. The Company allows loan amounts (minimum
$1,000) that do not exceed the Withdrawal Value less an amount representing
annual loan interest, provided such amount does not exceed the maximum loan
amount set by law.
Upon the Company's receipt of a properly completed loan document, an amount
equal to the loan will be reallocated from the Contract Value, on a pro rata
basis, to the Loan Account, which is part of Fixed Account A. The Contract Value
reallocated to the Loan Account will be used to secure the loan. Amounts
reallocated from the Sub-Accounts to the Loan Account will be valued on the next
Valuation Date following the Company's receipt of the loan document. Amounts
transferred from the Sub-Accounts to the Loan Account will result in a reduction
of Variable Account Contract Value and will not participate in the investment
experience of any Sub-Account. A loan document can be obtained by writing to the
Company at P.O. Box 12530, Seattle, Washington 98111-4530.
The amounts reallocated to the Loan Account may earn an interest rate less than
that credited to other amounts allocated to Fixed Account A, but it will never
earn less than the guaranteed rate of three percent (3%). The annual interest
rate assessed by the Company on the loan will not exceed 8% in arrears and will
never be less than 5.5% in arrears.
If any loan repayment due under a loan is not paid within 90 days of the
scheduled payment date, the Company will declare the Outstanding Loan Balance
immediately due and payable without notice to the Contract Owner. Unless
prohibited by law, the Outstanding Loan Balance, along with any applicable
Withdrawal Charges will be withdrawn from the Loan Account. Such forfeiture of
Contract Value is a taxable event, and may be subject to a 10% penalty tax for
early withdrawal or adversely affect the treatment of the Contract under Section
403(b) of the Code. (See "Tax Sheltered Annuities" on page 41.)
The Company reserves the right to charge a loan service fee not to exceed $25
for each loan and to limit loans in the first Contract Year and after the
Contract Owner reaches age 70-1/2.
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The foregoing discussion of Contract loans is general and does not address the
tax consequences resulting from all situations in which a person may receive a
Contract loan. A competent tax adviser should be consulted before obtaining a
Contract loan.
REALLOCATIONS
Prior to the Start Date, the Contract Owner may transfer Variable Account
Contract Value among and between the Sub-Accounts and may transfer Fixed Account
Contract Value to various Sub-Accounts. Likewise, Variable Contract Value may be
transferred from a Sub-Account to either Fixed Account A or Fixed Account B.
Transfers of Variable Contract Values from one Sub-Account to another involve
the exchange of accumulation units of one Sub-Account for another on a
dollar-equivalent basis. Subject to certain limitations, Fixed Account Contract
Value may be transferred from either Fixed Account to the other Fixed Account or
to a Sub-Account. (See "Reallocations from the Fixed Accounts", on page 34.)
Currently, there are four methods by which a Contract Owner may make the
transfers described above ("Reallocations"): in writing, by telephone, Automatic
Reallocations and by Dollar Cost Averaging.
WRITTEN REALLOCATIONS. The Contract Owner may request a reallocation in writing.
All or part of a Sub-Account's value may be reallocated to other Sub-Accounts or
to the Fixed Accounts. The reallocations will be made by the Company on the
first Valuation Date after the request for such a reallocation is received by
the Company. Currently, there is no charge for such a reallocation. The Company
reserves the right, however, to charge a reallocation fee not to exceed $25 per
reallocation and to limit the amount and number of reallocations made by the
Contract Owner. After the Start Date, an Annuitant who has selected Variable
Annuity Payouts may request reallocation of Annuity Unit values in the same
manner and subject to the same requirements as for a reallocation of
Accumulation Unit values. However no reallocations of Annuity Unit values may be
made to or from the Fixed Accounts after the Start Date.
The conditions applicable to written reallocations also apply to telephone
reallocations, Automatic Reallocations and Dollar Cost Averaging Reallocations.
TELEPHONE REALLOCATIONS. Telephone reallocations are available when the Contract
Owner completes a telephone reallocation form and a personal identification
number has been assigned. If the Contract Owner elects to complete the telephone
reallocation form, the Contract Owner thereby agrees that the Company will not
be liable for any loss, liability, cost or expense when the Company acts in
accordance with the telephone reallocation instructions which are received and
recorded on voice recording equipment. If a telephone reallocation, processed
after the Contract Owner has completed the telephone reallocation form is later
determined not to have been made by the Contract Owner or was made without the
Contract Owner's authorization, and a loss results from such unauthorized
reallocation, the Contract Owner bears the risk of this loss. The Company will
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. In the event the Company does not employ such procedures,
the Company may be liable for any losses due to unauthorized or fraudulent
instructions. Such procedures may include, among others, requiring forms of
personal identification prior to acting upon telephone instructions, providing
written confirmation of such instructions and/or tape recording telephone
instructions.
AUTOMATIC REALLOCATIONS. The Contract Owner may elect to have the Company
automatically reallocate Contract Value on each quarterly anniversary of the
Issue Date or other date as permitted by Company practice to maintain a certain
percentage of Contract Value in particular Sub-Accounts. The Contract Value
allocated to each Sub-Account, as selected by the Contract Owner, will grow or
decline in value at different rates during the quarter. Automatic reallocation
is intended to reallocate Contract Value from those Sub-Accounts that have
increased in value to those Sub-Accounts that have declined in value or
increased at a slower rate. This investment method does not guarantee profits
nor does it assure that a Contract Owner will avoid losses.
To elect automatic reallocations, the Contract Value must be at least $10,000
and an automatic reallocation application in proper form must be received at the
Home Office of the Company. An automatic reallocation application can be
obtained by writing to the Company's Home Office at P.O. Box 12530, Seattle,
Washington 98111-4530. The Contract Owner must indicate on the application the
applicable Sub-Accounts and the percentage of Contract Value to be maintained on
a quarterly basis in each Sub-Account. All Contract Value in a selected
Sub-Account will be available for the automatic reallocations.
<PAGE>
Automatic reallocation of Contract Value will occur on each quarterly
anniversary of the Issue Date or other date as permitted by Company practice,
which the Company received the automatic reallocation application in proper
form. The amounts reallocated will be credited at the Accumulation Unit value as
of the end of the Valuation Dates on which the reallocations are made.
A Contract Owner may instruct the Company at any time to terminate automatic
reallocations by written request to the Company's Home Office. Any Contract
Value in a Sub-Account that has not been reallocated will remain in that
Sub-Account regardless of the percentage allocation unless the Contract Owner
instructs otherwise. If a Contract Owner wants to continue automatic
reallocations after they have been terminated, a new automatic reallocation
application must be completed and sent to the Company's Home Office and the
Contract Value at the time the request is made must be at least $10,000.
The Company reserves the right to discontinue, modify or suspend automatic
reallocations and it reserves the right to charge a fee not to exceed $25 per
each reallocation between Sub-Accounts or from the unencumbered portion of Fixed
Account A Contract Value. Contract Value in Fixed Account B is not eligible for
automatic reallocations.
DOLLAR COST AVERAGING REALLOCATIONS. The Contract Owner may direct the Company
to automatically transfer a fixed dollar amount or a specified percentage of
Sub-Account Contract Value or Fixed Account A Contract Value to any one or more
other Sub-Accounts or to the Fixed Accounts. No reallocations from Fixed Account
B are permitted under this service. Reallocations of this type may be made on a
monthly, quarterly, semi-annual or annual basis. This service is intended to
allow the Contract Owner to utilize "Dollar Cost Averaging," a long term
investment method which provides for regular investments over time in a level or
variable amount. The Company makes no guarantees that dollar cost averaging will
result in a profit or protect against loss. The Contract Owner may discontinue
dollar cost averaging at any time by notifying the Company in writing.
Contract Owners interested in dollar cost averaging may obtain a separate
application form and full information concerning this service and its
restrictions from their registered representatives.
The Company reserves the right to discontinue, modify or suspend dollar cost
averaging. Although the Company currently charges no fees for reallocations made
under the dollar cost averaging program, the Company reserves the right to
charge a processing fee not to exceed $25 for each dollar cost averaging
reallocation between Sub-Accounts or from Fixed Account A.
REALLOCATIONS FROM THE FIXED ACCOUNTS. Subject to the conditions applicable to
reallocations among Sub-Accounts, reallocations of amounts from Fixed Account A
not designated to the Loan Account may be made to the Sub-Accounts or to Fixed
Account B any time before the Start Date. After the Start Date, amounts
supporting Fixed Annuity Payouts cannot be reallocated.
Reallocations of Fixed Account B Contract Value to the Sub-Accounts or to Fixed
Account A are subject to the following conditions:
(a) Reallocations may only be made during the period starting 30 days
before and ending 30 days after the Contract Anniversary, and only one
reallocation may be made during such period;
(b) The Company must receive the reallocation request no more than 30 days
before the start of the reallocation period and not later than 10 days
before the end of the reallocation;
(c) Reallocations not in excess of the greater of 25% of Fixed Account B
Contract Value or $1,000 may be made (unless the balance after such
reallocation would be less than $1,000, in which case the full Fixed
Account B Contract Value may be reallocated); and
(d) Such reallocation must involve at least $250 of the total Fixed Account
B Contract Value (or the total Fixed Account B Contract Value, if
less).
After the Start Date, reserves supporting Fixed Annuity Payouts cannot be
reallocated.
The Company reserves the right to permit reallocations from Fixed Accounts A and
B in excess of the limits described above on a non-discriminatory basis.
ASSIGNMENTS
If the Contract is issued pursuant to or in connection with a Qualified Plan, it
may not be sold, transferred, pledged or assigned to any person or entity other
than the Company. In other circumstances,
<PAGE>
an assignment of the Contract is permitted, but only before the Start Date, by
giving the Company the original or a certified copy of the assignment. The
Company shall not be bound by any assignment until it is actually received by
the Company and shall not be responsible for the validity of any assignment. Any
payments made or actions taken by the Company before the Company actually
receives any assignment shall not be affected by the assignment.
CONTRACT OWNER AND BENEFICIARIES
Unless someone else is named as the Contract Owner in the application for the
Contract, the applicant is the Contract Owner of the Contract and before the
Start Date may exercise all of the Contract Owner's rights under the Contract.
The Contract Owner may name a Beneficiary and a Contingent Beneficiary. In the
event a Contract Owner or the Annuitant in the case of a non-qualified Contract,
dies before the Start Date, the Beneficiary shall receive a Death Benefit as
provided in the Contract. In the event the Payee dies on or after the date
Annuity Payouts commence, the Beneficiary, if the Annuity Payout in effect at
the Contract Owner's death so provides, may continue receiving payouts or be
paid a lump sum. If the Beneficiary or Contingent Beneficiary is not living on
the date payment is due or if no Beneficiary or Contingent Beneficiary has been
named, the Payee's estate will receive the applicable proceeds.
A person named as an Annuitant, a Payee, a Beneficiary or a Contingent
Beneficiary shall not be entitled to exercise any rights relating to the
Contract or to receive any payments or settlements under the Contract or any
Annuity Payout, unless such person is living on the day due proof of death of
the Contract Owner, the Annuitant or the Beneficiary, whichever is applicable,
is received by the Company.
Unless different arrangements have been made with the Company by the Contract
Owner, if more than one Beneficiary is entitled to payments from the Company the
payments shall be in equal shares.
Before the Start Date, the Contract Owner may change the Beneficiary or the
Contingent Beneficiary by giving the Company written notice of the change, but
the change shall not be effective until actually received by the Company. Upon
receipt by the Company of a notice of change, it will be effective as of the
date it was signed but shall not affect any payments made or actions taken by
the Company before the Company received the notice, and the Company shall not be
responsible for the validity of any change.
CONTRACT INQUIRIES
Inquiries regarding a Contract may be made by writing to the Company's Home
Office, P.O. Box 12530, Seattle, Washington 98111-4530.
ANNUITY PROVISIONS
START DATE
Unless otherwise agreed to by the Company, the Start Date must be the first
business day of any calendar month. The Contract Owner may change the Start Date
by giving written notice received by the Company at least 30 days before the
Start Date currently in effect and the new Start Date. The new Start Date must
satisfy the requirements for a Start Date. If the Contract Owner does not select
a Start Date, the Start Date will be the Contract Owner's 85th birthday. If the
Start Date selected by the Contract Owner does not occur on a Valuation Date at
least 60 days after the date on which the Contract was issued, the Company
reserves the right to adjust the Start Date to the first Valuation Date after
the Start Date selected by the Contract Owner which is at least 60 days after
the Contract issue date. For Contracts issued in connection with Qualified
Plans, the Start Date and form of payout must satisfy certain requirements under
the Code. (See "Federal Tax Status" on page 37.)
ANNUITY PAYOUT SELECTION
The Contract Owner may select a Variable Annuity Payout, a Fixed Annuity Payout,
or both, with payments starting at the Start Date selected by the Contract
Owner. The Contract Owner may change the form of Annuity Payout(s) by giving
written notice received by the Company before the Start Date. If the Contract
Owner has not selected the form of Annuity Payout(s) before the Start Date, the
Company will apply the Fixed Account Contract Value to provide Fixed Annuity
Payouts and the Variable Account Contract Value to provide Variable Annuity
Payouts, both in the form of a Life Annuity with Payments Guaranteed for 10
years (120 months) which will be automatically effective.
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FORMS OF ANNUITY PAYOUTS
Variable Annuity Payouts and Fixed Annuity Payouts are available in any of the
following Annuity Forms:
LIFE ANNUITY. Unless otherwise agreed to by the Company, an annuity payable on
the first business day of each calendar month during the Annuitant's life,
starting with the first payment due according to the Contract. Payments cease
with the payment made on the first business day of the calendar month in which
the Annuitant's death occurs. IT WOULD BE POSSIBLE UNDER THIS ANNUITY PAYOUT FOR
THE ANNUITANT TO RECEIVE ONLY ONE PAYMENT IF HE OR SHE DIED BEFORE THE SECOND
ANNUITY PAYMENT, ONLY TWO PAYMENTS IF HE OR SHE DIED BEFORE THE THIRD ANNUITY
PAYMENT, ETC.
LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 YEARS (120 MONTHS). Unless
otherwise agreed to by the Company, an annuity payable on the first business day
of each calendar month during the Annuitant's life, starting with the first
payment due according to the Contract. If the Annuitant receives all of the
guaranteed payments, payments will continue thereafter but cease with the
payment made on the first business day of the calendar month in which the
Annuitant's death occurs. If all of the guaranteed payments have not been made
before the Annuitant's death, the unpaid installments of the guaranteed payments
will be continued to the Beneficiary.
JOINT AND FULL SURVIVOR ANNUITY. Unless otherwise agreed to by the Company, an
annuity payable on the first business day of each month during the Annuitant's
life and the life of a named person (the "Joint Annuitant"), starting with the
first payment due according to the Contract. Payments will continue while either
the Annuitant or the Joint Annuitant is living and cease with the payment made
on the first business day of the calendar month in which the death of the
Annuitant or the Joint Annuitant, whichever lives longer, occurs. THERE IS NO
MINIMUM NUMBER OF PAYMENTS GUARANTEED UNDER THIS ANNUITY PAYOUT. PAYMENTS CEASE
UPON THE DEATH OF THE LAST SURVIVOR OF THE ANNUITANT AND THE JOINT ANNUITANT
REGARDLESS OF THE NUMBER OF PAYMENTS RECEIVED.
The Company will pay Fixed and Variable Annuity Payouts under other Annuity
Forms that may be offered by the Company. Your registered representative can
provide you with the details.
FREQUENCY AND AMOUNT OF ANNUITY PAYOUTS
Annuity Payouts will be paid as monthly installments, unless the Annuitant and
the Company agree to a different payout schedule. However, if the Contract Value
less any Outstanding Loan Balance at the Start Date is less than $5,000, the
Company may pay the difference in a single sum and the Contract will be
canceled. Also if a monthly payout would be or become less than $100, the
Company may change the frequency of payouts to intervals that will result in
payouts of at least $100 each.
ANNUITY PAYOUTS
The amount of the first Fixed Annuity Payout is determined by applying the
Contract Value to be used for a fixed annuity at the Start Date to the annuity
table in the Contract for the Fixed Annuity Payout selected. The table shows the
minimum guaranteed amount of the initial annuity payment for each $1,000
applied. All subsequent payments shall be equal to the initial annuity payment.
The amount of the first Variable Annuity Payout is determined by applying the
Contract Value to be used for a variable annuity at the Start Date to the
annuity table in the Contract for the Annuity Payout selected. Subsequent
Variable Annuity Payouts vary in amount in accordance with the investment
performance of the applicable Sub-Account. Assuming annuity payouts are based on
the Annuity Unit Values of a single Sub-Account, the dollar amount of the first
annuity payout, determined as set forth above, is divided by the Sub-Account
Annuity Unit Value as of the Start Date to establish the number of Annuity Units
representing each annuity payout. This number of Annuity Units remains fixed
during the annuity payout period. The dollar amount of the second and subsequent
payouts is not predetermined and may change from month to month. The dollar
amount of the second and each subsequent annuity payout is determined by
multiplying the fixed number of Annuity Units by the Sub-Account Annuity Unit
Value for the Valuation Period with respect to which the annuity payout is due.
If the monthly payout is based upon the Annuity Unit Values of more than one
Sub-Account, the foregoing procedure is repeated for each applicable Sub-Account
and the sum of the payments based on each Sub-Account is the amount of the
monthly annuity payout.
<PAGE>
The annuity tables in the Contracts are based on the 1983 Mortality Table and a
3% interest rate. Unisex rates will apply for Contracts issued under Qualified
Plans and sex distinct rates will apply for non-qualified Transfer Series
Contracts.
The Company guarantees that the dollar amount of each Variable Annuity Payout
after the first payout will not be affected by variations in expenses (including
those related to the Variable Account) or in mortality experience from the
mortality assumptions used to determine the first payout.
SUB-ACCOUNT ANNUITY UNIT VALUE
Each Sub-Account's Annuity Units were initially valued at $10 each at the time
Accumulation Units with respect to the Sub-Account were first converted into
Annuity Units. The Sub-Account Annuity Unit value for any subsequent Valuation
Period is determined by multiplying the Sub-Account Annuity Unit value for the
immediately preceding Valuation Period by the Net Investment Factor for the
Sub-Account for the Valuation Period for which the Sub-Account Annuity Unit
Value is being calculated, and multiplying the result by an interest factor to
neutralize the assumed investment rate of 3% per annum built into the annuity
tables contained in the Contracts. (See "Net Investment Factor" on page 29.)
ASSUMED INVESTMENT RATE
A 3% assumed investment rate is built into the annuity tables contained in the
Contracts. If the actual net investment rate on the assets of the Variable
Account is equal to the assumed investment rate, Variable Annuity Payouts will
remain level. If the actual net investment rate exceeds the assumed investment
rate, Variable Annuity Payouts will increase and conversely, if it is less, then
the payouts will decrease.
PARTIAL ANNUITIZATION
Any time before the Start Date, a Contract Owner may apply a portion of the
Contract Value to the purchase of Fixed or Variable Annuity Payouts or to a
combination of Fixed and Variable Annuity Payouts. This is called a partial
annuitization and occurs in the same manner as described above for application
of the entire Contract Value to Annuity Payouts at the Start Date except that
values as of the Valuation Date immediately following receipt by the Company of
a written request for a partial annuitization are used in place of values as of
the Start Date.
Upon the occurrence of a partial annuitization, the Contract Value applied to
purchase Annuity Payouts is considered a withdrawal from the Contract. (See
"Withdrawals (Redemptions)" on page 31 and "Taxation of Annuities" on page 39.)
The Company reserves the right to deduct the amount of any premium taxes not
already paid under a Contract.
After a partial annuitization, Annuity Payouts based on the Contract Value
applied and the annuity options selected are made in the same manner as if the
Start Date had occurred and no Contract Value remained under the Contract. Any
remaining Contract Value not applied to purchase Annuity Payouts, the Contract
continues as if no partial annuitization had occurred.
FEDERAL TAX STATUS
INTRODUCTION
THIS DISCUSSION IS GENERAL AND NOT INTENDED AS TAX ADVICE. This discussion is
not intended to address the tax consequences resulting from all of the
situations in which a person may be entitled to or may receive a distribution
under a Contract. The Contracts are designed for use by individuals in
connection with retirement plans which may or may not be Qualified Plans under
the provisions of the Code. The ultimate effect of federal income taxes on the
Contract Value, on Annuity Payouts and on the economic benefit to the Contract
Owner, the Annuitant, as Payee or the Beneficiary depends upon the type of
retirement plan for which the Contract is purchased, and upon the tax and
employment status of the individual concerned. No attempt is made to consider
any applicable state or other tax laws. The discussion is based on the Company's
understanding of Federal Income Tax Laws as currently interpreted. No
representation is made regarding the likelihood of the continuation of the
present Federal Income Tax Laws or the current interpretation by the Internal
Revenue Service ("IRS").
A Contract may be purchased on a non-qualified basis ("Non-Qualified Contract")
or purchased and used in connection with plans qualifying for favorable tax
treatment ("Qualified Contract"). A Qualified Contract is designed for use by
individuals whose Purchase Payments are comprised solely of
<PAGE>
proceeds from and/or contributions under retirement plans which are intended to
qualify as plans entitled to special income tax treatment under Sections 401(a),
403(b), or 408 of the Code. The ultimate effect of federal income taxes on the
amounts held under a Contract, or Annuity Payouts, and on the economic benefit
to the Contract Owner, the Annuitant, the Payee 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
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 and proceeds from and/or
contributions under retirement plans that qualify for the intended special
federal income tax treatment.
TAX STATUS OF THE CONTRACT
DIVERSIFICATION REQUIREMENTS
Section 817(h) of the Code provides that separate account investments underlying
a Contract must be "adequately diversified" in accordance with Treasury
regulations in order for the Contract to qualify as an annuity Contract under
Section 72 of the Code. The Variable Account, through each of the Funds, intends
to comply with the diversification requirements prescribed in regulations under
Section 817(h) of the Code, which affect how the assets in the various
Sub-Accounts may be invested. The Company expects that each Fund in which the
Variable Account owns shares will meet the diversification requirements and that
the Contract will be treated as an annuity Contract under the Code.
The Treasury has also announced that the diversification regulations do not
provide guidance concerning the extent to which Contract Owners may direct their
investments to particular Sub-Accounts of the Variable Account or how
concentrated the investments of the Funds underlying a variable account may be.
The number of underlying investment options available under a variable contract
may also be relevant in determining whether the product qualifies for the
desired tax treatment. It is possible that if additional rules, regulations or
guidance in this regard are issued, the Contract may need to be modified to
comply with such additional rules or guidance. For these reasons, the Company
reserves the right to modify the Contracts as necessary to attempt to prevent
the Contract Owner from being considered the owner of the assets of the Funds or
otherwise to qualify the Contract for favorable tax treatment.
REQUIRED DISTRIBUTIONS
In order to be treated as an annuity Contract for federal income tax purposes,
Section 72(s) of the Code also requires any Non-Qualified Contract to provide
that: (a) if any Contract Owner dies on or after the Start 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 Contract Owner's death;
and (b) if any Contract Owner dies prior to the Start Date, the entire interest
in the Contract will be distributed within five years after the date of the
Contract Owner's death. These requirements will be considered satisfied as to
any portion of the Contract 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
Contract Owner's death. The Contract Owner's "designated Beneficiary" is the
person designated by such Contract Owner as a Beneficiary and to whom ownership
of the Contract passes by reason of death and must be a natural person. However,
if the Contract Owner's "designated Beneficiary" is the surviving spouse of the
Contract Owner, the Contract may be continued with the surviving spouse as the
new Contract Owner. If the Contract Owner is not an individual, any change in
the primary Annuitant is treated as a change of Contract Owner for tax purposes.
The Non-Qualified Contracts contain provisions which are intended to comply with
the requirements of Section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. The Company intends to
review such provisions and modify them if necessary to assure that they comply
with the requirements of Code Section 72(s) when clarified by regulation or
otherwise. Other rules may apply to Qualified Contracts.
<PAGE>
TAXATION OF ANNUITIES
IN GENERAL
Section 72 of the Code governs taxation of annuities in general. The Company
believes that a Contract Owner who is a natural person generally is not taxed on
increases in the value of a Contract until distribution occurs by withdrawing
all or part of the Contract Value (e.g., partial withdrawals and complete
withdrawals) or as Annuity Payouts under the form of Annuity Payout selected.
For this purpose, the assignment, pledge, or agreement to assign or pledge any
portion of the Contract Value (and in the case of a Qualified Contract, any
portion of an interest in the qualified plan) generally will be treated as a
distribution. The taxable portion of a distribution (in the form of a single sum
payment or annuity) is taxable as ordinary income.
A Contract Owner who is not a natural person generally must include in income
any increase in the excess of the net withdrawal value over the "investment in
the Contract" during the taxable year.
The following discussion generally applies to Contracts owned by natural
persons.
WITHDRAWALS
In the case of a 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 any individual under a Contract which was not under excluded from the
individual's gross income. For Contracts issued in connection with Qualified
Plans, the "investment in the Contract" can be zero. Special tax rules may be
available for certain distributions from Qualified Contracts.
In the case of a withdrawal (including Systematic Withdrawals) from a
Non-Qualified Contract before the Start Date, under Code Section 72(e) amounts
received are generally first treated as taxable income to the extent that the
Contract Value immediately before withdrawal exceeds the "investment in the
Contract" at that time. Any additional amount withdrawn is not taxable.
In the case of a full withdrawal under a Qualified or Non-Qualified Contract,
the amount received generally will be taxable only to the extent it exceeds the
"investment in the Contract."
A Federal penalty tax may apply to certain withdrawals from Qualified and
Non-Qualified Contracts. (See "Penalty Tax on Certain Distributions" below.)
ANNUITY PAYOUTS
Although tax consequences may vary depending on the annuity form selected under
the Contract, in general, only the portion of the Annuity Payout that represents
the amount by which the Contract Value exceeds the investment in the Contract
will be taxed; after the investment in the Contract is recovered, the full
amount of any additional Annuity Payouts is taxable. For Variable Annuity
Payouts, 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 Annuity Payouts. 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 Payouts, in general
there is no tax on the portion of each payout which represents the same ratio
that the investment in the Contract bears to the total expected value of the
Annuity Payouts for the term of the payouts; however, the remainder of each
Annuity Payout is taxable until the recovery of the investment in the Contract,
and thereafter the full amount of each Annuity Payout is taxable.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a Contract because of the death of a Contract
Owner or an Annuitant. Generally, such amounts are includible in the income of
the recipient as follows: (i) if distributed in a lump sum, they are taxed in
the same manner as a full withdrawal from the Contract; or (ii) if distributed
under a payout option, they are taxed in the same way as Annuity Payouts.
PENALTY TAX ON CERTAIN DISTRIBUTIONS
In the case of a distribution pursuant to a Non-Qualified Contract, a Federal
penalty equal to 10% of the amount treated as taxable income may be imposed. In
general, however, there is no penalty on distributions:
<PAGE>
1. Made on or after the taxpayer reaches age 59-1/2 ;
2. Made on or after the death of the holder (a holder is considered a
Contract Owner) (or if the holder is not an individual, the death of
the primary annuitant);
3. Attributable to the taxpayer becoming disabled;
4. A part of a series of substantially equal periodic payments (not less
frequently than annually) for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the
taxpayer and his or her designated beneficiary;
5. Made under an annuity Contract that is purchased with a single premium
when the annuity starting date is no later than a year from purchase of
the annuity and substantially equal periodic payments are made, not
less frequently than annually, during the annuity period; and
6. Made under certain annuities issued in connection with structured
settlement agreements.
Other tax penalties may apply to certain distributions under a Qualified
Contract, as well as to certain contributions to, loans from, and other
circumstances, applicable to the Qualified Plan of which the Qualified Contract
is part.
POSSIBLE CHANGES IN TAXATION
In past years, legislation has been proposed that would have adversely modified
the Federal taxation of certain annuities. For example, one such proposal would
have changed the tax treatment of non-qualified annuities that did not have
"substantial life contingencies" by taxing income as it is credited to the
annuity. Although as of the date of this prospectus Congress is not considering
any legislation regarding the taxation of annuities, there is always the
possibility that tax treatment of annuities could change by legislation or other
means (such as IRS regulations, revenue rulings, judicial decisions, etc.).
Moreover, it is also possible that any change could be retroactive (that is,
effective prior to the date of the change).
TRANSFERS, ASSIGNMENTS OR EXCHANGES OF A CONTRACT
A transfer of ownership or assignment of a Contract, the designation of an
Annuitant, Payee or other Beneficiary who is not also the Contract Owner, or the
exchange of a Contract may result in certain tax consequences to the Contract
Owner that are not discussed herein. A Contract Owner contemplating any such
transfer, assignment, or exchange of a Contract should contact a competent tax
adviser with respect to the potential tax effects of such a transaction.
WITHHOLDING
Pension and annuity distributions generally are subject to withholding for the
recipient's Federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions. Effective January 1, 1993, distributions from certain qualified
plans are generally subject to mandatory withholding. Withholding for Contracts
issued to retirement plans established under Section 401 of the Code is the
responsibility of the plan trustee.
MULTIPLE CONTRACTS
Section 72(e)(11) of the Code treats all non-qualified deferred annuity
Contracts entered into after October 21, 1988 that are issued by the Company (or
its affiliates) to the same Contract Owner during any calendar year as one
annuity Contract for purposes of determining the amount includible in gross
income under Code Section 72(e). The effects of this rule are not 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 Contract Owner. Accordingly, a Contract Owner should
consult a competent tax adviser before purchasing more than one annuity
Contract.
TAXATION OF QUALIFIED PLANS
The Contracts are designed for use with several types of Qualified Plans. The
tax rules applicable to participants in these Qualified Plans vary according to
the type of Plan and the terms and conditions of the Plan itself. Special
favorable tax treatment may be available for certain types of contributions and
<PAGE>
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 Plans. Contract Owners, Annuitants Payees
and Beneficiaries are cautioned that the rights of any person to any benefits
under these Qualified Plans will be subject to the terms and conditions of the
Plans themselves, regardless of the terms and conditions of the Contracts issued
in connection with the Plans. The Company shall not be bound by the terms and
conditions of such Qualified Plans to the extent such terms contradict the
Contract, unless the Company consents. Some retirement plans are subject to
distribution and other requirements that are not incorporated into the Company's
Contract administration procedures. Contract 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 Plans in connection
with a Contract.
CORPORATE PENSION AND PROFIT-SHARING PLANS AND H.R. 10 PLANS
Code Section 401(a) permits employers to establish various types of retirement
plans for employees, and permit self-employed individuals to establish
retirement plans for themselves and their employees. These retirement plans may
permit the purchase of the Contracts to accumulate retirement savings under the
plans. Adverse tax consequences to the plan, to the participant or to both may
result if this Contract is assigned or transferred to any individual as a means
to provide benefit payments.
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 a
Contract for use with IRAs may be subject to special requirements of the IRS.
The IRS has not reviewed the Contract for qualification as an IRA, and has not
addressed in a ruling of general applicability whether a death benefit provision
such as the provision in the Contract comports with IRA qualification
requirements.
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. Code Section 403(b)(11) restricts the
distribution under Code 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. Distribution of those amounts may
only occur upon death of the employee, attainment of age 59-1/2, separation
from service, disability, or financial hardship. In addition, income
attributable to elective contributions may not be distributed in the case of
hardship.
POSSIBLE CHARGE FOR THE COMPANY'S TAXES
At the present time, the Company makes no charge to the Sub-Accounts for any
Federal, state, or local taxes that the Company incurs which may be attributable
to such Sub-Accounts or to the Contracts. The Company, however, reserves the
right in the future to make a charge for any such tax that it determines to be
properly attributable to the Sub-Accounts of the Contracts.
OTHER TAX CONSEQUENCES
As noted above, the foregoing comments about the Federal tax consequences under
these Contracts are not exhaustive, and special rules are provided with respect
to other tax situations not discussed in this Prospectus. Further, the Federal
income tax consequences discussed herein reflect the Company's understanding of
current law and the law may change. Federal estate and state and local estate,
inheritance, and other tax consequences of ownership or receipt of distributions
under a Contract depend on the individual circumstances of each Contract Owner
or recipient of the distribution. A competent tax adviser should be consulted
for further information.
<PAGE>
VOTING OF FUND SHARES
As long as the Variable Account is registered as a unit investment trust under
the Investment Company Act of 1940 and the assets of the Variable Account are
allocated to Sub-Accounts that are invested in Fund shares, the Fund shares held
in the Sub-Accounts will be voted by the Company in accordance with the
instructions received from the person having voting interests under the
Contracts as described below. If the Company determines pursuant to applicable
law or regulation that Fund shares held in the Sub-Accounts and attributable to
the Contracts need not be voted pursuant to instructions received from persons
otherwise having the voting interests, then the Company may vote such Fund
shares held in the Sub-Accounts in its own right.
Before Variable Annuity Payouts begin, the Contract Owner will have the voting
interest with respect to the Fund shares attributable to a Contract. After
Variable Annuity Payouts begin, the Annuitant will have the voting interest with
respect to the Fund shares attributable to the Annuity Units under a Contract.
Such voting interest will generally decrease during the Variable Annuity Payout
period.
Any Fund shares held in the Variable Account for which the Company does not
receive timely voting instructions, or which are not attributable to Contract
Owners, will be voted by the Company in proportion to the instructions received
from all Contract Owners having a voting interest in the Fund. Any Fund shares
held by the Company or any of its affiliates in general accounts will, for
voting purposes, be allocated to all separate accounts having voting interests
in the Fund in proportion to each account's voting interest in the respective
Fund and will be voted in the same manner as are the respective account's votes.
All Fund proxy material will be sent to persons having voting interests together
with appropriate forms which may be used to give voting instructions. Persons
entitled to voting interests and the number of votes which they may cast shall
be determined as of a record date, to be selected by the Fund.
Persons having voting interests under the Contracts as described above will not,
as a result thereof, have voting interests with respect to meetings of the
stockholders of the Company.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be sold by licensed insurance agents in those states where
the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
The Contracts will be distributed by the Principal Underwriter, Washington
Square Securities, Inc., 20 Washington Avenue South, Minneapolis, Minnesota
55401, which is an affiliate of the Company. Commissions and other distribution
compensation will be paid by the Company. Generally such payments will not
exceed 7.00% of the Purchase Payments. In some cases a trail commission based on
the Contract Value may also be paid.
REPORTS TO CONTRACT OWNERS
The Company will mail to the Contract Owner, at the last known address of record
at the Home Office of the Company, an annual report after the first Contract
Year containing such information as may be required by any applicable law or
regulation and a statement showing the Contract Value. The Company will also
provide to Contract Owners immediate written confirmation of every financial
transaction made under their Contracts; however, Contract Owners who make
Purchase Payments through salary reduction arrangements with their employers
will receive quarterly confirmations of Purchase Payments made to their
Contracts.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party. The
Company is a defendant in various lawsuits in connection with the normal conduct
of its operations. In the opinion of management, the ultimate resolution of such
litigation will not result in any significant liability to the Company.
FINANCIAL STATEMENTS AND EXPERTS
The annual financial statements of Separate Account One as of December 31, 1996
and the annual financial statements of Northern Life Insurance Company, which
are incorporated by reference in the Statement of Additional Information, have
been audited by Deloitte & Touche LLP, independent
<PAGE>
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.
FURTHER INFORMATION
A Registration Statement under the Securities Act of 1933 has been filed with
the Securities and Exchange Commission, with respect to the Contracts described
herein. The Prospectus does not contain all of the information set forth in the
Registration Statement and exhibits thereto, to which reference is hereby made
for further information concerning the Variable Account, the Company and the
Contracts. The information so omitted may be obtained from the Commission's
principal office in Washington, D.C., upon payment of the fee prescribed by the
Commission, or examined there without charge. Statements contained in this
Prospectus as to the provisions of the Contracts and other legal documents are
summaries, and reference is made to the documents as filed with the Commission
for a complete statement of the provisions thereof.
<PAGE>
SEPARATE ACCOUNT ONE
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
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
If you would like to receive a copy of the Separate Account One Statement of
Additional Information, please call 1-800-333-6965 or return this request to:
WASHINGTON SQUARE SECURITIES, INC.
20 WASHINGTON AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55401
Your name
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Address
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City State Zip
--------------------------------- ------------ ------------
Please send me a copy of the Separate Account One Statement of Additional
Information.
- -------------------------------------------------------------------------------
<PAGE>
APPENDIX A
THE FIXED ACCOUNTS
CONTRIBUTIONS AND REALLOCATIONS TO FIXED ACCOUNT A AND FIXED ACCOUNT B
(COLLECTIVELY, THE "FIXED ACCOUNTS") UNDER THE CONTRACTS BECOME PART OF THE
GENERAL ACCOUNT OF THE COMPANY (THE "GENERAL ACCOUNT"), WHICH SUPPORTS INSURANCE
AND ANNUITY OBLIGATIONS. BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS,
INTERESTS IN THE FIXED ACCOUNTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 ("1933 ACT") NOR ARE THE FIXED ACCOUNTS REGISTERED AS INVESTMENT
COMPANIES UNDER THE INVESTMENT COMPANY ACT OF 1940 ("1940 ACT"). ACCORDINGLY,
NEITHER THE FIXED ACCOUNTS NOR ANY INTERESTS THEREIN ARE GENERALLY SUBJECT TO
THE PROVISIONS OF THE 1933 OR 1940 ACTS AND THE COMPANY HAS BEEN ADVISED THAT
THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED THE
DISCLOSURES IN THIS PROSPECTUS WHICH RELATE TO THE FIXED PORTION OF THE
CONTRACTS. DISCLOSURES REGARDING THE FIXED PORTION OF THE CONTRACTS AND THE
FIXED ACCOUNTS, HOWEVER, MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE
PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY AND
COMPLETENESS OF STATEMENTS MADE IN PROSPECTUSES.
The Fixed Accounts are part of the General Account, which is made up of all of
the general assets of the Company other than those allocated to any separate
account. We offer the option of having all or a portion of Purchase Payments
allocated to the Fixed Accounts as selected by the Contract Owner at the time of
purchase or as subsequently changed. The Company will invest the assets
allocated to the Fixed Accounts in those assets chosen by the Company and
allowed by applicable law. Investment income from such Fixed Accounts' assets
will be allocated between the Company and the Contracts participating in the
Fixed Accounts, in accordance with the terms of such Contracts.
Fixed Annuity Payouts made to Annuitants under the Contracts will not be
affected by the mortality experience (death rate) of persons receiving such
payments or of the general population. The Company assumes this "mortality risk"
by virtue of annuity rates incorporated in the Contracts which cannot be
changed. In addition, the Company guarantees that it will not increase charges
for maintenance of the Contracts regardless of its actual expenses.
Investment income from the Fixed Accounts allocated to the Company includes
compensation for mortality and expense risks borne by the Company in connection
with Fixed Account Contracts. The Company expects to derive a profit from this
compensation.
The Company may credit interest in excess of the guaranteed rate of 3%. Any
interest rate in effect when an amount is allocated or reallocated to the Fixed
Accounts is guaranteed for that amount until the end of the calendar year in
which it is received. After the end of that calendar year, the Company may
change the amount of interest credited at its discretion. All amounts in the
Fixed Accounts after the end of the calendar years referenced above are credited
with excess interest at the rates then in effect for the then current calendar
year. Such rates are established at the beginning of each calendar year and are
guaranteed for the entire calendar year. There is no specific formula for the
determination of excess interest credits. Such credits, if any, will be
determined by the Company based on many factors, including, but not limited to:
investment yield rates, taxes, Contract persistency, and other experience
factors. ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNTS IN
EXCESS OF 3% PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF THE COMPANY.
THE CONTRACT OWNER ASSUMES THE RISK THAT INTEREST CREDITED TO FIXED ACCOUNT
ALLOCATIONS MAY NOT EXCEED THE MINIMUM GUARANTEE OF 3% FOR ANY GIVEN YEAR.
The Company is aware of no statutory limitations on the maximum amount of
interest it may credit, and the Board of Directors has set no limitations.
However, inherent in the Company's exercise of discretion in this regard is the
equitable allocation of distributable earnings and surplus among its various
Contractholders and Contract Owners and to its stockholder.
Excess interest, if any, will be credited on the Fixed Account Contract Value.
The Company guarantees that, at any time, the Fixed Account Contract Value will
not be less than the amount of Purchase Payments and transfers allocated to the
Fixed Accounts, plus interest at the rate of 3% per year, compounded annually,
plus any additional interest which the Company may, in its discretion, credit to
the Fixed Accounts, less the sum of all annual administrative charges or
Withdrawal Charges levied, any applicable premium taxes, and less any amounts
withdrawn or reallocated from the Fixed Accounts. If the Contract Owner makes a
full withdrawal, the amount available from the Fixed Accounts will be reduced by
any applicable Withdrawal Charge and Annual Contract Charge. (See "Charges Made
by the Company" on page 25).
<PAGE>
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
$641,620.59, 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").
<PAGE>
NORTHERN LIFE
A RELIASTAR COMPANY
P.O. Box 12530
Seattle, WA 98111-4530
For marketing information call:
1-800-426-7050
For policy administration call:
1-800-870-0453
A Variable Annuity Issued by Northern Life Insurance Company
FORM NO. 15500 R8-97
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Part A: None
Part B: SEPARATE ACCOUNT ONE*
Independent Auditors' Report
Statement of Assets and Liabilities, December 31, 1996
Combined Statements of Operations and Changes in
Contract Owners' Equity, Year Ended December 31, 1996 and
Period from October 20, 1995 to December 31, 1995
Notes to Financial Statements
NORTHERN LIFE INSURANCE COMPANY*
Independent Auditors' Report
Statutory-Basis Balance Sheets, Years Ended December 31, 1996
and 1995
Statutory-Basis Statements of Operations, Years Ended
December 31, 1996 and 1995
Statutory-Basis Statements of Changes in Capital and Surplus,
Years Ended December 31, 1996 and 1995
Statutory-Basis Statement of Cash Flows, Years Ended December
31, 1996 and 1995
Independent Auditor's Report on Supplemental Schedule of
Assets and Liabilities
Supplemental Schedule of Assets and Liabilities, Year Ended
December 31, 1996
(b) Exhibits:
1. Resolution of the Executive Committee of the Board of Directors of
Northern Life Insurance Company ("Depositor") authorizing the
establishment of Separate Account One ("Registrant"). (Filed with
registration statement on Form N-4 on March 20, 1995.) Not Applicable.
2. Not Applicable.
3. (a) Form of Distribution and Administrative Services Agreement
between Washington Square Securities, Inc. and Depositor.
(Filed with registration statement on Form N-4 on March 20,
1995.)
(b) Form of selling group (or distribution) agreement between
Washington Square Securities, Inc. and selling group members.
(Filed with registration statement on Form N-4 on March 20,
1995.)
4. (a) Individual Deferred Tax Sheltered Annuity Contract (Transfer
Series). (Filed with registration statement on Form N-4 on
March 20, 1995.)
(b) Individual Deferred Annuity Contract (Transfer Series) for use
with non-qualified plans. (Filed with registration statement
on Form N-4 on March 20, 1995.)
(c) Individual Deferred Retirement Annuity Contract (Transfer
Series). (Filed with registration statement on Form N-4 on
March 20, 1995.)
(d) Flexible Premium Individual Deferred Tax-Sheltered Annuity
Contract. (Filed with registration statement on Form N-4 on
March 20, 1995.)
(e) Flexible Premium Individual Deferred Retirement Annuity
Contract. (Filed with registration statement on Form N-4 on
March 20, 1995.)
(f) ERISA Endorsement. (Filed with Securities Act of 1933
Post-Effective Amendment No. 1)
(g) TSA Endorsement. (Filed previously.)
(h) Form of Contract No. 13000 2-95 as amended. Filed as an
exhibit hereto.
* Incorporated by reference to Post-Effective Amendment No. 2 to
Registrants Form N-4 Registration Statement, File #33-90474, filed on
April 28, 1997.
<PAGE>
(i) Form of Contract No. 13004 2-95 as amended. Filed as an
exhibit hereto.
5. Contract Application Form. (Filed with registration statement on Form
N-4 on March 20, 1995.)
6. (a) Articles of Incorporation of Depositor. (Filed with
registration statement on Form N-4 on March 20, 1995.)
(b) Bylaws of Depositor. (Filed with registration statement on
Form N-4 on March 20, 1995.)
7. Not Applicable.
8. (a) Participation Agreement with The Alger American Fund and Fred
Alger and Company. (Filed with Securities Act of 1933
Pre-Effective Amendment No. 1.)
(b) Amendment to Participation Agreement among Fidelity's Variable
Insurance Products Fund, Fidelity Distributors Corporation,
and Northern Life Insurance Company, dated July 24, 1997.
Filed as an Exhibit hereto.
(c) Amendment to Participation Agreement among Fidelity's Variable
Insurance Products Fund II, Fidelity Distributors Corporation,
and Northern Life Insurance Company, dated July 24, 1997.
Filed as an Exhibit hereto.
(d) Participation Agreement by and between the Janus Aspen Trust
and Northern Life Insurance Company, dated August 8, 1997.
Filed as an Exhibit hereto.
(e) Participation Agreement by and among Northern Life Insurance
Company, Neuberger&Berman Advisers Management Trust, Advisers
Managers Trust and Neuberger&Berman Management Incorporated,
dated August 8, 1997. Filed as an Exhibit hereto.
(f) Participation Agreement by and among OCC Accumulation Trust,
Northern Life Insurance Company and OCC Distributors, dated
August 8, 1997. Filed as an Exhibit hereto.
(g) Service Agreement by and between Fred Alger Management, Inc.
and Northern Life Insurance Company, dated as of August 8,
1997. Filed as an Exhibit hereto.
(h) Service Agreement by and between Janus Capital Corporation and
Northern Life Insurance Company, dated August 8, 1997. Filed
as an Exhibit hereto.
(i) Service Agreement by and between Neuberger&Berman Management
Inc. and Northern Life Insurance Company, effective August 8,
1997. Filed as an Exhibit hereto.
(j) Service Agreement by and between OpCap Advisors and Northern
Life Insurance Company, dated as of August 8, 1997. Filed as
an Exhibit hereto.
9. Consent and Opinion of James E. Nelson as to the legality of the
securities being registered.
10. Consent of Deloitte & Touche LLP, dated July 30, 1997. Filed as an
exhibit hereto.
11. No financial statements are omitted from Item 23.
12. Not Applicable.
13. Schedule of computation of performance data. Filed as an exhibit
hereto.
14. Financial Data Schedule. Incorporated by reference to Post-Effective
Amendment No. 2 to Registrants Form N-4 Registration Statement, File
No. 33-90474, filed on April 28, 1997.
15. Powers of Attorney for Michael J. Dubes, John H. Flittie, Wayne R.
Huneke, Robert C. Salipante, John G. Turner and Steven W. Wishart.
(Filed with registration statement on Form N-4 on March 20, 1995.)
Power of Attorney for Richard R. Crowl (Filed with Securities Act of
1933 Post-Effective Amendment No. 1.)
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
DIRECTORS
NAME AND PRINCIPAL
PRINCIPAL BUSINESS ADDRESS POSITIONS AND OFFICES WITH DEPOSITOR
- -------------------------- ------------------------------------
Michael J. Dubes Director; President and Chief Executive
1110 Third Avenue Officer
Seattle, Washington 98111
Richard R. Crowl Director; Senior Vice President,
20 Washington Avenue South General Counsel and Assistant Secretary
Minneapolis, Minnesota 55401
John H. Flittie Director; Vice Chairman
20 Washington Avenue South
Minneapolis, Minnesota 55401
Wayne R. Huneke Director; Assistant Treasurer
20 Washington Avenue South
Minneapolis, Minnesota 55401
Kenneth U. Kuk Director; Assistant Treasurer
20 Washington Avenue South
Minneapolis, Minnesota 55401
Robert C. Salipante Director
20 Washington Avenue South
Minneapolis, Minnesota 55401
John G. Turner Director; Chairman
20 Washington Avenue South
Minneapolis, Minnesota 55401
Steven W. Wishart Director; Assistant Treasurer
20 Washington Avenue
South Minneapolis, Minnesota 55401
EXECUTIVE OFFICERS
NAME POSITIONS AND OFFICES WITH DEPOSITOR
- ---- ------------------------------------
Michael J. Dubes President and Chief Executive Officer
James R. Miller Executive Vice President and Chief Operating Officer
Richard R. Crowl Senior Vice President, General Counsel and Assistant
Secretary
Paul R. Beeghly Vice President
Garth A. Bernard Vice President and Chief Actuary
Richard Contreras Vice President, Marketing
Douglas R. Kaufman Vice President, Chief Financial Officer and Treasurer
Jerome A. Mills Vice President, Advance Marketing
Eric M. Onderdonk Vice President and Chief Information Officer
Brad J. Corbin Vice President, Sales
Elizabeth R. Bennett Vice President and Medical Director
The principal business address of each of the foregoing executive officers is
1110 Third Avenue, Seattle, Washington 98101, with the exception of Mr. Crowl
and Ms. Bennett whose principal business address is 20 Washington Avenue South,
Minneapolis, Minnesota 55401.
<PAGE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Registrant is a separate account of Depositor. Depositor is an indirect,
wholly-owned subsidiary of ReliaStar Financial Corp., formerly known as The NWNL
Companies, Inc., a Delaware Corporation.
A chart identifying the subsidiaries of ReliaStar Financial Corp. and their
relationship to one another, all of which, except where indicated, are either
directly or indirectly wholly-owned by ReliaStar Financial Corp. except for
directors qualifying shares, was filed as an exhibit to Post-Effective
Amendment No. 4 to Form N-4 of Northstar Variable Account, on July 9, 1997,
File No. 33-73058 and is incorporated herein by reference.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of May 31, 1997, there were 7,503 owners of the Contracts, 6,999 which
were owners of qualified Contracts.
ITEM 28. INDEMNIFICATION
Reference is hereby made to Article VII, Section 6 of Depositor's Bylaws, filed
as an Exhibit to the registration statement filed on Form N-4 on March 20, 1995.
The Bylaws of Depositor mandate indemnification by Depositor of its directors,
officers and certain others, and permit indemnification of directors, officers,
employees and agents of Washington Square Securities, Inc. ("WSSI") under
certain conditions. Section 4.01 of the Bylaws of WSSI mandates indemnification
by WSSI of its directors and officers under certain conditions.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of
Depositor or WSSI, pursuant to the foregoing provisions or otherwise, Depositor
and WSSI have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Depositor of expenses
incurred or paid by a director or officer or controlling person of Depositor or
WSSI in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person of Depositor or WSSI in connection
with the securities being registered, Depositor or WSSI, as the case may be,
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether or not such indemnification by it is against public policy
as expressed in the Act and will be governed by the final adjudication of such
issue.
An insurance company blanket bond is maintained providing $25,000,000 coverage
for Depositor and the Principal Underwriter, subject to a $500,000 deductible.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) WSSI, an affiliate of the Company, is the principal underwriter of the
Contracts. WSSI also acts as the principal underwriter for variable annuity
contracts issued by ReliaStar Life Insurance Company ("ReliaStar Life"), an
affiliate of the Depositor, through the ReliaStar Life Select Variable Account
and variable life insurance policies issued by ReliaStar Life through the
Select*Life Variable Account. Both of these variable accounts are separate
accounts of ReliaStar Life and are registered as unit investment trusts under
the Investment Company Act of 1940. WSSI also distributes, but is not the
principal underwriter of, variable annuity Contracts issued by ReliaStar Life
through the MFS/ReliaStar Variable Account and the Northstar/ReliaStar Variable
Account, each of which is a separate account of and is registered as a unit
investment trust under the Investment Company Act of 1940.
<PAGE>
(b) The directors and officers of WSSI are as follows:
DIRECTORS
NAME PRINCIPAL OCCUPATION
- ---- --------------------
John H. Flittie Vice Chairman, President and Chief Operating Officer
of ReliaStar Financial Corp. and ReliaStar Life
Insurance Company
Roger W. Arnold Vice President, Individual Sales of ReliaStar Life
Insurance Company
Michael J. Dubes President and Chief Executive Officer of Depositor
Robert C. Salipante Senior Vice President of Personal Financial Services
of ReliaStar Financial Corp.
Steven W. Wishart Senior Vice President and Chief Investment Officer of
ReliaStar Financial Corp. and ReliaStar Life
Insurance Company
EXECUTIVE OFFICERS
NAME POSITIONS AND OFFICES WITH WSSI
- ---- -------------------------------
John H. Flittie Chairman
James R. Gelder President
Michael R. Fanning Executive Vice President
Robert B. Saginaw Vice President
Susan M. Bergen Secretary
David Braun Assistant Vice President
David P. Wilken Treasurer
Jeffrey A. Montgomery Chief Operating Officer
(c) For the year ended December 31, 1996 WSSI received $641,620.59 in fees,
including gross concessions, in connection with distribution of the Contracts.
ITEMS 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts and records of Registrant are located at the offices of Depositor
at 1110 Third Avenue, Seattle, Washington 98101.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
Registrant will file a post-effective amendment to this Registration Statement
as frequently as is necessary to ensure that the audited financial statements in
this Registration Statement are never more than 16 months old for so long as
payments under the Contracts may be accepted.
Registrant will include either (1) as part of any application to purchase a
Contract offered by the Prospectus, a space that an applicant can check to
request a Statement of Additional Information, or (2) a postcard or similar
written communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional Information.
Registrant will deliver any Statement of Additional Information and any
financial statements required to be made available under this form promptly upon
written or oral request.
The Depositor and the Registrant rely on a no-action letter issued by the
Division of Investment Management to the American Council of Life Insurance on
November 28, 1988 and represent that the conditions enumerated therein have been
or will be complied with.
The Depositor represents that the fees and charges deducted under the Advantage
series variable annuity contracts, in the aggregate, are reasonable in relation
to the services rendered, the expenses expected to be incurred, and the risks
assumed by the Company.
<PAGE>
With regard to restricted distributions to plan participants in accordance with
the requirements of IRC Section 403(b)(11), the Registrant, in respect to a
no-action letter issued by the Division of Investment Management (No.
IP-6-88, November 28, 1988"), undertakes to:
(a) Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including
the prospectus, used in connection with the offer of the contract;
(b) Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in
connection with the offer of the contract;
(c) Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by
Section 403(b)(11) to the attention of the potential participants;
(d) Obtain from each plan participant who purchases a Section 403(b)
annuity contract, prior to or at the time of such purchase, a signed
statement acknowledging the participant's understanding of (1) the
restrictions on redemption imposed by Section 403(b)(11), and (2) the
investment alternatives available under the employer's Section 403(b)
arrangement, to which the participant may elect to transfer his
contract value;
(e) The Registrant represents that this said no-action letter is being
relied upon and that the provisions of paragraphs (a)-(d) above have
been complied with.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Registrant has caused this Post-Effective Amendment No. 4 to the
Registration Statement to be signed on its behalf, in the City of Seattle and
State of Washington, on this 31st day of July, 1997.
SEPARATE ACCOUNT ONE
(Registrant)
By NORTHERN LIFE INSURANCE COMPANY
(Depositor)
By /s/ Michael J. Dubes
Michael J. Dubes
President and Chief Executive Officer
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Depositor has caused this Post-Effective Amendment No. 4 to the
Registration Statement to be signed on its behalf, in the City of Seattle and
State of Washington, on this 31st day of July, 1997.
NORTHERN LIFE INSURANCE COMPANY
By /s/ Michael J. Dubes
Michael J. Dubes
President and Chief Executive Officer
As required by the Securities Act of 1933, Post-Effective Amendment No. 4 to
the Registration Statement has been signed on this 31st day of July, 1997 by
the following directors and officers of Depositor in the capacities
indicated:
SIGNATURE TITLE
--------- -----
/s/ Michael J. Dubes President and Chief Executive Officer
Michael J. Dubes
/s/ James R. Miller Executive Vice President and
James R. Miller Chief Operating Officer
/s/ Douglas R. Kaufman Vice President, Chief Financial Officer,
Douglas R. Kaufman Treasurer and Comptroller
Richard R. Crowl Wayne R. Huneke John G. Turner
Michael J. Dubes Kenneth U. Kuk Steven W. Wishart
John H. Flittie Robert C. Salipante
A majority of the Board of Directors.
James E. Nelson, by signing his name hereto, does hereby sign this document on
behalf of each of the above-named directors of Northern Life Insurance Company
pursuant to powers of attorney duly executed by such persons.
/s/ James E. Nelson
James E. Nelson, Attorney-In-Fact
[LOGO]
NORTHERN LIFE
A RELIASTAR COMPANY
Northern Life Insurance Company ANNE BROWN
1110 Third Avenue / P.O. Box 12530 Contract Specialist
Seattle, Washington 98111-4530
(206) 292-1111
July 15, 1997
Honorable Bill Nelson NAIC CODE:
Insurance Commissioner and Treasurer Group No.: 0534
State of Florida Co. No.: 87734
Department of Insurance
200 East Gaines Street
Tallahassee, FL 32399-0300
Re: Form No. 13000(FL-PBC) 2-95, Contract Data Page for Flexible Premium
Individual Deferred Annuity Contract
Form No. 13058 3-97, Table of Sample Values Endorsement
Dear Commissioner Nelson:
Enclosed for filing are the required number of copies of the above-captioned
forms. Form No. 13000(FL-PBC) 2-95, when combined with contract Form No.
13000(FL) 2-95 has a Flesch score of 63. Form No. 13058 3-97 has a Flesch score
of 72.
Form No. 13000(FL-PBC) 2-95 is intended to replace the Contract Data Page
previously filed for use with Form No. 13000(FL) 2-95 (FLA-95.17638, approved
March 26, 1996) when that contract is sold to employees of the Palm Beach County
School District ("District"). The differences between this data page (Form No.
13000(FL-PBC) 2-95) and the one previously filed with Form No. 13000(FL) 2-95
are as follows:
1. We have amended the data page form number from Form No. 13000(FL)
2-95 to Form No. 13000(FL-PBC) 2-95 to differentiate the two versions
of the Contract Data Page; and
2. We have reduced the Withdrawal Charges shown on page 2A from 6% to
5% for the first Contract Year. Thereafter, the Withdrawal Charges
remain the same as previously filed.
Form No. 13058 3-97 is a new form which is intended to amend the Table of Sample
Values in contract Form No. 13000(FL) 2-95 to reflect the Withdrawal Charge
schedule for Contract Data Page 13000(FL-PBC) 2-95. This endorsement will only
be attached to the contract when it is issued in conjunction with Contract Data
Page 13000(FL-PBC) 2-95.
<PAGE>
Florida Department of Insurance
July 15, 1997
Page Two
The District has imposed rules restricting the availability of certain contracts
and carriers in an effort to reduce its payroll service expenses. The decrease
in the number of carriers eligible to service the District has created a
substantial savings in sales related costs to carriers, such as Northern Life,
which can now be transferred back to the employees. Consequently, since
Withdrawal Charges are intended to reimburse the Company for expenses relating
to the sale of the Contracts and since the District has reduced Northern Life's
sales related expenses for this contract, Northern Life can afford to reduce the
Withdrawal Charges when this contract is sold to employees of the District. The
District is a well defined class consisting of a group of employees all working
for the same employer within the same geographic region.
The decrease in Withdrawal Charges afforded this group of employees via the
enclosed endorsement and new Contract Data Page is done in accordance with the
terms of Section 7J of the contract, Reduction in Withdrawal Charges, and the
Prospectus, both of which were previously filed with your Department. The
Prospectus states, "The Company may decrease or eliminate the Withdrawal Charge
applicable to Contracts sold in certain circumstances if it estimates that its
sales expenses will be lower." [April 30, 1997, Prospectus, p. 8.] Page 18 of
the Prospectus further addresses the Company's right to reduce Withdrawal and
Contract Charges under the Reduction of Charges section. Copies of the contract,
Form No. 13000(FL) 2-95, and the relevant pages of the Prospectus, Form No.
15500 5-97, have been enclosed for reference purposes.
If this endorsement and Contract Data Page are satisfactory, we would appreciate
receiving notification at your earliest convenience. We have enclosed the
required number of postage-paid envelopes. If you have any questions or need
additional information, please call me at (800) 426-7050, extension 2512.
Sincerely,
Anne Brown
Contract Specialist
Enclosures
<PAGE>
CONTRACT DATA PAGE
INDIVIDUAL DEFERRED TAX SHELTERED ANNUITY CONTRACT
PURCHASE PAYMENTS:
Minimum Initial Purchase Payment [$15,000]
Minimum Subsequent Payment(s) [$ 5,000]
Purchase Payments are allocated to the Fixed Account and Separate
Account One (the "Variable Account") as shown below unless changed as
provided in this contract:
VARIABLE ACCOUNT
[MUTUAL FUNDS] INITIAL ALLOCATION
[NORTHSTAR/NWNL TRUST]
Northstar Income and Growth Fund [0%]
Northstar Multi-Sector Bond Fund [0%]
Northstar Growth Fund [0%]
[FIDELITY: VARIABLE INSURANCE PRODUCT FUND]
Money Market Portfolio [0%]
Equity Income Portfolio [0%]
Growth Portfolio [0%]
Overseas Portfolio [0%]
[FIDELITY: VARIABLE INSURANCE PRODUCT FUND II]
Asset Manager Portfolio [0%]
Asset Manager: Growth Portfolio [0%]
Index 500 Portfolio [0%]
Contrafund Portfolio [0%]
FIXED ACCOUNT
Fixed Account A [100%]
Fixed Account B [0%]
---------------------------------------------------------------
Total Allocation [100%]
TABLE OF WITHDRAWAL CHARGES
CONTRACT YEAR OF TOTAL/PARTIAL WITHDRAWAL CHARGE AS
WITHDRAWAL MINUS CONTRACT YEAR OF PERCENTAGE OF EACH
PURCHASE PAYMENT PURCHASE PAYMENT
0-3 5%
4 4%
5 2%
6+ 0%
OTHER CHARGES:
Mortality Risk Charge: [.85%] of the daily net asset value
Expense Risk Charge: [.40%] of the daily net asset value
Administrative Charge: [.15%] of the daily net asset value
Annual Contract Charge: [$30]
SPECIFIED CONTRACT ANNIVERSARY: Consecutive six year anniversary dates measured
from the Issue Date.
OWNER: [John Doe]
ISSUE DATE: [December 1, 1995]
CONTRACT NO.: [VA00123456]
Form No. 13000(FL-PBC) 2-95 Page 2A
<PAGE>
[GRAPHIC OMITTED]
NORTHERN LIFE INSURANCE COMPANY
P.O. Box 12530, Seattle, Washington 98111-4530
"We" are the Northern Life Insurance Company. "You" are the owner of an
individual contract according to our records.
This Endorsement is a part of the contract to which it is attached by us. This
Endorsement amends the contract by deleting the Table of Sample Guaranteed
Withdrawal Values on page 14 and replacing it with the table shown below.
TABLE OF SAMPLE GUARANTEED WITHDRAWAL VALUES
10% PENALTY - CONTRACT VALUE TOTAL
CONTRACT YEAR CONTRACT FREE WITHDRAWAL SUBJECT TO WITHDRAWAL WITHDRAWAL
OF WITHDRAWAL VALUE AMOUNT WITHDRAWAL CHARGE CHARGE VALUE
- --------------------------------------------------------------------------------
1 20,570 2,057 18,513 896 19,674
2 26,307 2,631 23,676 1,115 25,192
3 32,216 3,222 28,995 1,334 30,882
4 38,303 3,830 34,473 1,552 36,750
5 44,572 4,457 40,115 1,616 42,956
6 45,879 4,588 41,291 1,255 44,624
7 47,225 4,723 42,503 800 46,425
8 48,612 4,861 43,751 550 48,062
9 50,041 5,004 45,036 300 49,741
10 51,512 5,151 46,361 100 51,412
11 53,027 N/A 53,027 0 53,027
12 54,588 N/A 54,588 0 54,588
13 56,196 N/A 56,196 0 56,196
14 57,851 N/A 57,851 0 57,851
15 59,557 N/A 59,557 0 59,557
16 61,314 N/A 61,314 0 61,314
17 63,123 N/A 63,123 0 63,123
18 64,987 N/A 64,987 0 64,987
19 66,906 N/A 66,906 0 66,906
20 68,884 N/A 68,884 0 68,884
THESE FIGURES ARE ROUNDED TO THE NEAREST DOLLAR.
All other terms and conditions of this contract remain unchanged.
The Effective Date of this Endorsement is the Issue Date of the contract.
/s/ Susan M. Bergen
Secretary
TABLE OF SAMPLE VALUES ENDORSEMENT
Form No. 13058 3-97
[LOGO]
NORTHERN LIFE
A RELIASTAR COMPANY
Northern Life Insurance Company ANNE BROWN
1110 Third Avenue / P.O. Box 12530 Contract Specialist
Seattle, Washington 98111-4530
(206) 292-1111
July 15, 1997
Honorable Bill Nelson NAIC CODE:
Insurance Commissioner and Treasurer Group No.: 0534
State of Florida Co. No.: 87734
Department of Insurance
200 East Gaines Street
Tallahassee, FL 32399-0300
Re: Form No. 13004(FL-PBC) 2-95, Contract Data Page for Flexible Premium
Individual Deferred Annuity Contract
Form No. 13059 3-97, Table of Sample Values Endorsement
Dear Commissioner Nelson:
Enclosed for filing are the required number of copies of the above-captioned
forms. Form No. 13004(FL-PBC) 2-95, when combined with contract Form No.
13004(FL) 2-95 has a Flesch score of 63. Form No. 13059 3-97 has a Flesch score
of 72.
Form No. 13004(FL-PBC) 2-95 is intended to replace the Contract Data Page
previously filed for use with Form No. 13004(FL) 2-95 (FLA-95.17669, approved
March 26, 1996) when that contract is sold to employees of the Palm Beach County
School District ("District"). The differences between this data page (Form No.
13004(FL-PBC) 2-95) and the one previously filed with Form No. 13004(FL) 2-95
are as follows:
1. We have amended the data page form number from Form No. 13004(FL)
2-95 to Form No. 13004(FL-PBC) 2-95 to differentiate the two versions
of the Contract Data Page; and
2. We have reduced the Withdrawal Charges shown on page 2B from 8% to
5% for the first six Contract Years. Thereafter, the Withdrawal Charges
remain the same as previously filed.
Form No. 13059 3-97 is a new form which is intended to amend the Table of Sample
Values in contract Form No. 13004(FL) 2-95 to reflect the Withdrawal Charge
schedule for Contract Data Page 13004(FL-PBC) 2-95. This endorsement will only
be attached to the contract when it is issued in conjunction with Contract Data
Page 13004(FL-PBC) 2-95.
<PAGE>
Florida Department of Insurance
July 15, 1997
Page Two
The District has imposed rules restricting the availability of certain contracts
and carriers in an effort to reduce its payroll service expenses. The decrease
in the number of carriers eligible to service the District has created a
substantial savings in sales related costs to carriers, such as Northern Life,
which can now be transferred back to the employees. Consequently, since
Withdrawal Charges are intended to reimburse the Company for expenses relating
to the sale of the Contracts and since the District has reduced Northern Life's
sales related expenses for this contract, Northern Life can afford to reduce the
Withdrawal Charges when this contract is sold to employees of the District. The
District is a well defined class consisting of a group of employees all working
for the same employer within the same geographic region.
The decrease in Withdrawal Charges afforded this group of employees via the
enclosed endorsement and new Contract Data Page is done in accordance with the
terms of Section 7I of the contract, Reduction in Withdrawal Charges, and the
Prospectus, both of which were previously filed with your Department. The
Prospectus states, "The Company may decrease or eliminate the Withdrawal Charge
applicable to Contracts sold in certain circumstances if it estimates that its
sales expenses will be lower." [April 30, 1997, Prospectus, p. 8.] Page 18 of
the Prospectus further addresses the Company's right to reduce Withdrawal and
Contract Charges under the Reduction of Charges section. Copies of the contract,
Form No. 13004(FL) 2-95, and the relevant pages of the Prospectus, Form No.
15500 5-97, have been enclosed for reference purposes.
If this endorsement and Contract Data Page are satisfactory, we would appreciate
receiving notification at your earliest convenience. We have enclosed the
required number of postage-paid envelopes. If you have any questions or need
additional information, please call me at (800) 426-7050, extension 2512.
Sincerely,
Anne Brown
Contract Specialist
Enclosures
<PAGE>
CONTRACT DATA PAGE
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED
TAX SHELTERED ANNUITY CONTRACT
PURCHASE PAYMENTS:
Minimum Purchase Payment [$50]
Purchase Payments are allocated to the Fixed Account and Separate Account
One (the "Variable Account") as shown below unless changed as provided in
this contract:
VARIABLE ACCOUNT
[MUTUAL FUNDS] INITIAL ALLOCATION
[NORTHSTAR/NWNL TRUST]
Northstar Income and Growth Fund [0%]
Northstar Multi-Sector Bond Fund [0%]
Northstar Growth Fund [0%]
[FIDELITY: VARIABLE INSURANCE PRODUCT FUND]
Money Market Portfolio [0%]
Equity Income Portfolio [0%]
Growth Portfolio [0%]
Overseas Portfolio [0%]
[FIDELITY: VARIABLE INSURANCE PRODUCT FUND II]
Asset Manager Portfolio [0%]
Asset Manager: Growth Portfolio [0%]
Index 500 Portfolio [0%]
Contrafund Portfolio [0%]
FIXED ACCOUNT
Fixed Account A [100%]
Fixed Account B [0%]
--------------------------------------------------------------
Total Allocation [100%]
SPECIFIED CONTRACT ANNIVERSARY: Consecutive six year anniversary dates measured
from the Issue Date.
OWNER: [John Doe]
ISSUE DATE: [December 1, 1995]
CONTRACT NO.: [VA00123456]
Form No. 13004(FL-PBC) 2-95 Page 2A
<PAGE>
CONTRACT DATA PAGE
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED
TAX SHELTERED ANNUITY CONTRACT
TABLE OF WITHDRAWAL CHARGES
CONTRACT YEAR OF WITHDRAWAL CHARGE
WITHDRAWAL PERCENTAGE
1 - 6 5%
7 4%
8 3%
9 2%
10 1%
11+ 0
OTHER CHARGES:
Mortality Risk Charge: [.85%] of the daily net asset value
Expense Risk Charge: [.40%] of the daily net asset value
Administrative Charge: [.15%] of the daily net asset value
Annual Contract Charge: [$30]
Form No. 13004(FL-PBC) 2-95 Page 2B
<PAGE>
[GRAPHIC / LOGO]
NORTHERN LIFE INSURANCE COMPANY
P.O. Box 12530, Seattle, Washington 98111-4530
"We" are the Northern Life Insurance Company. "You" are the owner of an
individual contract according to our records.
This Endorsement is a part of the contract to which it is attached by us. This
Endorsement amends the contract by deleting the Table of Sample Guaranteed
Withdrawal Values on page 14 and replacing it with the table shown below.
TABLE OF SAMPLE GUARANTEED WITHDRAWAL VALUES
10% PENALTY - CONTRACT VALUE TOTAL
CONTRACT YEAR CONTRACT FREE WITHDRAWAL SUBJECT TO WITHDRAWAL WITHDRAWAL
OF WITHDRAWAL VALUE AMOUNT WITHDRAWAL CHARGE CHARGE VALUE
- --------------------------------------------------------------------------------
1 1,000 100 900 45 955
2 2,030 203 1,827 91 1,939
3 3,091 309 2,782 139 2,952
4 4,184 418 3,765 188 3,995
5 5,309 531 4,778 239 5,070
6 6,468 647 5,822 291 6,177
7 7,662 766 6,896 276 7,387
8 8,892 889 8,003 240 8,652
9 10,159 1,016 9,143 183 9,976
10 11,464 1,146 10,317 103 11,361
11 12,808 N/A 12,808 0 12,808
12 14,192 N/A 14,192 0 14,192
13 15,618 N/A 15,618 0 15,618
14 17,086 N/A 17,086 0 17,086
15 18,599 N/A 18,599 0 18,599
16 20,157 N/A 20,157 0 20,157
17 21,762 N/A 21,762 0 21,762
18 23,414 N/A 23,414 0 23,414
19 25,117 N/A 25,117 0 25,117
20 26,870 N/A 26,870 0 26,870
THESE FIGURES ARE ROUNDED TO THE NEAREST DOLLAR.
All other terms and conditions of this contract remain unchanged.
The Effective Date of this Endorsement is the Issue Date of the contract.
/s/ Susan M. Bergen
Secretary
TABLE OF SAMPLE VALUES ENDORSEMENT
Form No. 13059 3-97
AMENDMENT TO PARTICIPATION AGREEMENT AMONG
VARIABLE INSURANCE PRODUCTS FUND
FIDELITY DISTRIBUTORS CORPORATION
and
NORTHERN LIFE INSURANCE COMPANY
WHEREAS, NORTHERN LIFE INSURANCE COMPANY (the "Company), VARIABLE
INSURANCE PRODUCTS FUND (the "Fund") and FIDELITY DISTRIBUTORS CORPORATION have
previously entered into a Participation Agreement (the "Agreement") containing,
among other things, certain arrangements concerning the formats in which the
Company can receive Fund prospectuses and Statements of Additional Information;
and
WHEREAS, the Company desires to receive electronic versions of the
Fund's prospectus and Statement of Additional Information and supplements
thereto;
NOW, THEREFORE, the parties do hereby agree to amend the Agreement to
add the following to the provisions of Article III;
The Company may also choose to receive the Fund's prospectus and
Statement of Additional information in electronic format. The file format shall
be such as may be mutually agreed to by the Fund and the Company from time to
time. The Company shall make no changes whatsoever to the file, or to the
material constituting the printed output of the file, unless such changes shall
have been approved in writing by the Fund or its designee. The Company shall be
responsible for compliance with all regulatory requirements related to delivery
of electronic prospectuses, including, without limitation, the 1940 Act, the
1933 Act, and related SEC releases.
IN WITNESS WHEREOF we have set our hand as of the 24th day of July,
1997.
NORTHERN LIFE INSURANCE COMPANY
By: /s/ Wayne R. Huneke
Name: Wayne R. Huneke
Title: Assistant Treasurer
VARIABLE INSURANCE PRODUCTS FUND FIDELITY DISTRIBUTORS CORPORATION
By: ________________________________ By: ___________________________
J. Gary Burkhead Paul J. Hondros
Senior Vice President President
AMENDMENT TO PARTICIPATION AGREEMENT AMONG
VARIABLE INSURANCE PRODUCTS FUND II
FIDELITY DISTRIBUTORS CORPORATION
and
NORTHERN LIFE INSURANCE COMPANY
WHEREAS, NORTHERN LIFE INSURANCE COMPANY (the "Company"), VARIABLE
INSURANCE PRODUCTS FUND II (the "Fund") and FIDELITY DISTRIBUTORS CORPORATION
have previously entered into a Participation Agreement (the "Agreement")
containing, among other things, certain arrangements concerning the formats in
which the Company can receive Fund prospectuses and Statements of Additional
Information; and
WHEREAS, the Company desires to receive electronic versions of the
Fund's prospectus and Statement of Additional Information and supplements
thereto;
NOW, THEREFORE, the parties do hereby agree to amend the Agreement to
add the following to the provisions of Article III;
The Company may also choose to receive the Fund's prospectus and
Statement of Additional information in electronic format. The file format shall
be such as may be mutually agreed to by the Fund and the Company from time to
time. The Company shall make no changes whatsoever to the file, or to the
material constituting the printed output of the file, unless such changes shall
have been approved in writing by the Fund or its designee. The Company shall be
responsible for compliance with all regulatory requirements related to delivery
of electronic prospectuses, including, without limitation, the 1940 Act, the
1933 Act, and related SEC releases.
IN WITNESS WHEREOF we have set our hand as of the 24th day of July,
1997.
NORTHERN LIFE INSURANCE COMPANY
By: /s/ Wayne R. Huneke
Name: Wayne R. Huneke
Title: Assistant Treasurer
VARIABLE INSURANCE PRODUCTS FUND II FIDELITY DISTRIBUTORS CORPORATION
By: ________________________________ By: ___________________________
J. Gary Burkhead Paul J. Hondros
Senior Vice President President
JANUS ASPEN SERIES
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made this 8th day of August, 1997, between JANUS
ASPEN SERIES, an open-end management investment company organized as a Delaware
business trust (the "Trust"), and NORTHERN LIFE INSURANCE COMPANY, a life
insurance company organized under the laws of the State of Washington (the
"Company"), on its own behalf and on behalf of each segregated asset account of
the Company set forth on Schedule A, as may be amended from time to time (the
"Accounts").
W I T N E S S E T H:
WHEREAS, the Trust has registered with the Securities and Exchange
Commission as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), and has registered the offer
and sale of its shares under the Securities Act of 1933, as amended (the "1933
Act"); and
WHEREAS, the Trust desires to act as an investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts to be offered by insurance companies that have entered into
participation agreements with the Trust (the "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each series representing an interest in a particular managed
portfolio of securities and other assets (the "Portfolios"); and
WHEREAS, the Trust has received an order from the Securities and
Exchange Commission granting Participating Insurance Companies and their
separate accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a)
and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder,
to the extent necessary to permit shares of the Trust to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans (the "Exemptive Order"); and
WHEREAS, the Company has registered or will register (unless
registration is not required under applicable law) certain variable life
insurance policies and/or variable annuity contracts under the 1933 Act (the
"Contracts"); and
WHEREAS, the Company has registered or will register (unless
registration is not required under applicable law) each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Company desires to utilize shares of one or more
Portfolios as an investment vehicle of the Accounts;
<PAGE>
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I
Sale of Trust Shares
1.1 The Trust shall make shares of its Portfolios available to the
Accounts at the net asset value next computed after receipt of such purchase
order by the Trust (or its agent), as established in accordance with the
provisions of the then current prospectus of the Trust. Shares of a particular
Portfolio of the Trust shall be ordered in such quantities and at such times as
determined by the Company to be necessary to meet the requirements of the
Contracts. The Trustees of the Trust (the "Trustees") may refuse to sell shares
of any Portfolio to any person, or suspend or terminate the offering of shares
of any Portfolio if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of the Trustees acting in good
faith and in light of their fiduciary duties under federal and any applicable
state laws, necessary in the best interests of the shareholders of such
Portfolio.
1.2 The Trust will redeem any full or fractional shares of any
Portfolio when requested by the Company on behalf of an Account at the net asset
value next computed after receipt by the Trust (or its agent) of the request for
redemption, as established in accordance with the provisions of the then current
prospectus of the Trust. The Trust shall make payment for such shares in the
manner established from time to time by the Trust, but in no event shall payment
be delayed for a greater period than is permitted by the 1940 Act.
1.3 For the purposes of Sections 1.1 and 1.2, the Trust hereby appoints
the Company as its agent for the limited purpose of receiving and accepting
purchase and redemption orders resulting from investment in and payments under
the Contracts. Receipt by the Company shall constitute receipt by the Trust
provided that i) such orders are received by the Company in good order prior to
the time the net asset value of each Portfolio is priced in accordance with its
prospectus and ii) the Trust receives notice of such orders by 11:00 a.m. New
York time on the next following Business Day. "Business Day" shall mean any day
on which the New York Stock Exchange is open for trading and on which the Trust
calculates its net asset value pursuant to the rules of the Securities and
Exchange Commission.
1.4 Purchase orders that are transmitted to the Trust in accordance
with Section 1.3 shall be paid for no later than 12:00 noon New York time on the
same Business Day that the Trust receives notice of the order. Payments shall be
made in federal funds transmitted by wire.
1.5 Issuance and transfer of the Trust's shares will be by book entry
only. Stock certificates will not be issued to the Company or the Account.
Shares ordered from the Trust will be recorded in the appropriate title for each
Account or the appropriate subaccount of each Account.
<PAGE>
1.6 The Trust shall furnish prompt notice to the Company of any income
dividends or capital gain distributions payable on the Trust's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional shares of
that Portfolio. The Trust shall notify the Company of the number of shares so
issued as payment of such dividends and distributions.
1.7 The Trust shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 6 p.m. New York
time.
1.8 The Trust agrees that its shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain qualified pension
and retirement plans to the extent permitted by the Exemptive Order. No shares
of any Portfolio will be sold directly to the general public. The Company agrees
that Trust shares will be used only for the purposes of funding the Contracts
and Accounts listed in Schedule A, as amended from time to time.
1.9 The Trust agrees that all Participating Insurance Companies shall
have the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding to those contained in Section 2.8 and
Article IV of this Agreement.
ARTICLE II
Obligations of the Parties
2.1 The Trust shall prepare and be responsible for filing with the
Securities and Exchange Commission and any state regulators requiring such
filing all shareholder reports, notices, proxy materials (or similar materials
such as voting instruction solicitation materials), prospectuses and statements
of additional information of the Trust. The Trust shall bear the costs of
registration and qualification of its shares, preparation and filing of the
documents listed in this Section 2.1 and all taxes to which an issuer is subject
on the issuance and transfer of its shares.
2.2 At the option of the Company, the Trust shall either (a) provide
the Company (at the Company's expense) with as many copies of the Trust's
current prospectus, annual report, semi-annual report and other shareholder
communications, including any amendments or supplements to any of the foregoing,
as the Company shall reasonably request; or (b) provide the Company with a
camera ready copy of such documents in a form suitable for printing. At the
Company's request, the Trust will also provide such materials on computer
diskette in such "read-only" format as mutually agreed upon by the parties. The
Trust shall provide the Company with a copy of its statement of additional
information in a form suitable for duplication by the Company. The Trust (at its
expense) shall provide the Company with copies of any Trust-sponsored proxy
materials in such quantity as the Company shall reasonably require for
distribution to Contract owners.
<PAGE>
2.3 The Company shall bear the costs of printing or otherwise
reproducing and distributing the Trust's prospectus, statement of additional
information, shareholder reports and other shareholder communications to owners
of and applicants for policies for which the Trust is serving or is to serve as
an investment vehicle. The Company shall bear the costs of distributing proxy
materials (or similar materials such as voting solicitation instructions) to
Contract owners. The Company assumes sole responsibility for ensuring that such
materials are delivered to Contract owners in accordance with applicable federal
and state securities laws. If the Company elects to include any such materials
on its Website, the Company assumes sole responsibility for maintaining such
materials in the form provided by the Trust and for promptly replacing such
materials with all updates provided by the Trust.
2.4 The Company agrees and acknowledges that the Trust's adviser, Janus
Capital Corporation ("Janus Capital"), is the sole owner of the name and mark
"Janus" and that all use of any designation comprised in whole or part of Janus
(a "Janus Mark") under this Agreement shall inure to the benefit of Janus
Capital. Except as provided in Section 2.5, the Company shall not use any Janus
Mark on its own behalf or on behalf of the Accounts or Contracts in any
registration statement, advertisement, sales literature or other materials
relating to the Accounts or Contracts without the prior written consent of Janus
Capital. Upon termination of this Agreement for any reason, the Company shall
cease all use of any Janus Mark(s) as soon as reasonably practicable.
2.5 The Company shall furnish, or cause to be furnished, to the Trust
or its designee, a copy of each Contract prospectus or statement of additional
information in which the Trust or its investment adviser is named prior to the
filing of such document with the Securities and Exchange Commission. The Company
shall furnish, or shall cause to be furnished, to the Trust or its designee,
each piece of sales literature or other promotional material in which the Trust
or its investment adviser is named, at least fifteen Business Days prior to its
use. No such material shall be used if the Trust or its designee reasonably
objects to such use within fifteen Business Days after receipt of such material.
2.6 The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust or
its investment adviser in connection with the sale of the Contracts other than
information or representations contained in and accurately derived from the
registration statement or prospectus for the Trust shares (as such registration
statement and prospectus may be amended or supplemented from time to time),
reports of the Trust, Trust-sponsored proxy statements, or in sales literature
or other promotional material approved by the Trust or its designee, except as
required by legal process or regulatory authorities or with the written
permission of the Trust or its designee.
2.7 The Trust shall not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, the Accounts or the Contracts other than information or representations
contained in and accurately derived from the registration statement or
prospectus for the Contracts (as such registration statement and prospectus may
be amended
<PAGE>
or supplemented from time to time), or in materials approved by the Company for
distribution including sales literature or other promotional materials, except
as required by legal process or regulatory authorities or with the written
permission of the Company.
2.8 So long as, and to the extent that the Securities and Exchange
Commission interprets the 1940 Act to require pass-through voting privileges for
variable policyowners, the Company will provide pass-through voting privileges
to owners of policies whose cash values are invested, through the Accounts, in
shares of the Trust. The Trust shall require all Participating Insurance
Companies to calculate voting privileges in the same manner and the Company
shall be responsible for assuring that the Accounts calculate voting privileges
in the manner established by the Trust. With respect to each Account, the
Company will vote shares of the Trust held by the Account and for which no
timely voting instructions from policyowners are received as well as shares it
owns that are held by that Account, in the same proportion as those shares for
which voting instructions are received. The Company and its agents will in no
way recommend or oppose or interfere with the solicitation of proxies for Trust
shares held by Contract owners without the prior written consent of the Trust,
which consent may be withheld in the Trust's sole discretion.
2.9 The Company shall notify the Trust of any applicable state
insurance laws that restrict the Portfolios' investments or otherwise affect the
operation of the Trust and shall notify the Trust of any changes in such laws,
provided that the Company shall incur no liability to the Trust by reason of
this section.
ARTICLE III
Representations and Warranties
3.1 The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of Washington
and that it has legally and validly established each Account as a segregated
asset account under such law on the date set forth in Schedule A.
3.2 The Company represents and warrants that each Account (1) has been
registered or, prior to any issuance or sale of the Contracts, will be
registered as a unit investment trust in accordance with the provisions of the
1940 Act or, alternatively (2) has not been registered in proper reliance upon
an exclusion from registration under the 1940 Act.
3.3 The Company represents and warrants that the Contracts or interests
in the Accounts (1) are or, prior to issuance, will be registered as securities
under the 1933 Act or, alternatively (2) are not registered because they are
properly exempt from registration under the 1933 Act or will be offered
exclusively in transactions that are properly exempt from registration under the
1933 Act. The Company further represents and warrants that the Contracts will be
issued and sold in compliance in all material respects with all applicable
federal and state laws;
<PAGE>
and the sale of the Contracts shall comply in all material respects with state
insurance suitability requirements.
3.4 The Trust represents and warrants that it is duly organized and
validly existing under the laws of the State of Delaware.
3.5 The Trust represents and warrants that the Trust shares offered and
sold pursuant to this Agreement will be registered under the 1933 Act and the
Trust shall be registered under the 1940 Act prior to any issuance or sale of
such shares. The Trust shall amend its registration statement under the 1933 Act
and the 1940 Act from time to time as required in order to effect the continuous
offering of its shares. The Trust shall register and qualify its shares for sale
in accordance with the laws of the various states only if and to the extent
deemed advisable by the Trust.
3.6 The Trust represents and warrants that the investments of each
Portfolio will comply with the diversification requirements set forth in Section
817(h) of the Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder.
ARTICLE IV
Potential Conflicts
4.1 The parties acknowledge that the Trust's shares may be made
available for investment to other Participating Insurance Companies. In such
event, the Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
Participating Insurance Companies. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Trustees shall promptly inform the Company if they determine that an
irreconcilable material conflict exists and the implications thereof.
4.2 The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist the
Trustees in carrying out their responsibilities under the Exemptive Order by
providing the Trustees with all information reasonably necessary for the
Trustees to consider any issues raised including, but not limited to,
information as to a decision by the Company to disregard Contract owner voting
instructions.
<PAGE>
4.3 If it is determined by a majority of the Trustees, or a majority of
its disinterested Trustees, that a material irreconcilable conflict exists that
affects the interests of Contract owners, the Company shall, in cooperation with
other Participating Insurance Companies whose contract owners are also affected,
at its expense and to the extent reasonably practicable (as determined by the
Trustees) take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (a) withdrawing the
assets allocable to some or all of the Accounts from the Trust or any Portfolio
and reinvesting such assets in a different investment medium, including (but not
limited to) another Portfolio of the Trust, or submitting the question of
whether or not such segregation should be implemented to a vote of all affected
Contract owners and, as appropriate, segregating the assets of any appropriate
group (i.e., annuity contract owners, life insurance contract owners, or
variable contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected Contract owners
the option of making such a change; and (b) establishing a new registered
management investment company or managed separate account.
4.4 If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be limited
to the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested Trustees. Any such withdrawal and
termination must take place within six (6) months after the Trust gives written
notice that this provision is being implemented. Until the end of such six (6)
month period, the Trust shall continue to accept and implement orders by the
Company for the purchase and redemption of shares of the Trust.
4.5 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Trust and terminate this Agreement with
respect to such Account within six (6) months after the Trustees inform the
Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
Trustees. Until the end of such six (6) month period, the Trust shall continue
to accept and implement orders by the Company for the purchase and redemption of
shares of the Trust.
4.6 For purposes of Sections 4.3 through 4.6 of this Agreement, a
majority of the disinterested Trustees shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Company be required to establish a new funding medium for the Contracts
if an offer to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In the
event that the Trustees determine that any proposed action does not adequately
remedy any
<PAGE>
irreconcilable material conflict, then the Company will withdraw the Account's
investment in the Trust and terminate this Agreement within six (6) months after
the Trustees inform the Company in writing of the foregoing determination;
provided, however, that such withdrawal and termination shall be limited to the
extent required by any such material irreconcilable conflict as determined by a
majority of the disinterested Trustees.
4.7 The Company shall at least annually submit to the Trustees such
reports, materials or data as the Trustees may reasonably request so that the
Trustees may fully carry out the duties imposed upon them by the Exemptive
Order, and said reports, materials and data shall be submitted more frequently
if deemed appropriate by the Trustees.
4.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Exemptive Order) on terms and conditions materially
different from those contained in the Exemptive Order, then the Trust and/or the
Participating Insurance Companies, as appropriate, shall take such steps as may
be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3,
as adopted, to the extent such rules are applicable.
ARTICLE V
Indemnification
5.1 Indemnification By the Company. The Company agrees to indemnify and
hold harmless the Trust and each of its Trustees, officers, employees and agents
and each person, if any, who controls the Trust within the meaning of Section 15
of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Article V) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in a
registration statement or prospectus for the Contracts or in the
Contracts themselves or in sales literature generated or approved by
the Company on behalf of the Contracts or Accounts (or any amendment or
supplement to any of the foregoing) (collectively, "Company Documents"
for the purposes of this Article V), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this indemnity shall not apply as
to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and was accurately
derived from written information furnished to the
<PAGE>
Company by or on behalf of the Trust for use in Company Documents or
otherwise for use in connection with the sale of the Contracts or Trust
shares; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Trust Documents as defined in Section 5.2(a)) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or acquisition of the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Trust
Documents as defined in Section 5.2(a) or the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading if such
statement or omission was made in reliance upon and accurately derived
from written information furnished to the Trust by or on behalf of the
Company; or
(d) arise out of or result from any failure by the Company to
provide the services or furnish the materials required under the terms
of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company.
5.2 Indemnification By the Trust. The Trust agrees to indemnify and
hold harmless the Company and each of its directors, officers, employees and
agents and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes
of this Article V) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Trust) or
expenses (including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable legal counsel
fees incurred in connection therewith) (collectively, "Losses"), to which the
Indemnified Parties may become subject under any statute or regulation, or at
common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or prospectus for the Trust (or any amendment or
supplement thereto), (collectively, "Trust Documents" for the purposes
of this Article V), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this indemnity shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and was accurately
derived from written information furnished to the Trust by or on behalf
of the Company for use in Trust Documents or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
<PAGE>
(b) arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Company Documents) or wrongful conduct of the Trust or
persons under its control, with respect to the sale or acquisition of
the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Company
Documents or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was
made in reliance upon and accurately derived from written information
furnished to the Company by or on behalf of the Trust; or
(d) arise out of or result from any failure by the Trust to
provide the services or furnish the materials required under the terms
of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Trust.
5.3 Neither the Company nor the Trust shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any Losses incurred or assessed against an Indemnified Party that arise from
such Indemnified Party's willful misfeasance, bad faith or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
5.4 Neither the Company nor the Trust shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified the other party in writing within a reasonable time after
the summons, or other first written notification, giving information of the
nature of the claim shall have been served upon or otherwise received by such
Indemnified Party (or after such Indemnified Party shall have received notice of
service upon or other notification to any designated agent), but failure to
notify the party against whom indemnification is sought of any such claim shall
not relieve that party from any liability which it may have to the Indemnified
Party in the absence of Sections 5.1 and 5.2.
5.5 In case any such action is brought against the Indemnified Parties,
the indemnifying party shall be entitled to participate, at its own expense, in
the defense of such action. The indemnifying party also shall be entitled to
assume the defense thereof, with counsel reasonably satisfactory to the party
named in the action. After notice from the indemnifying party to the Indemnified
Party of an election to assume such defense, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
indemnifying party will not be liable to the Indemnified Party under this
Agreement for any legal or other expenses subsequently
<PAGE>
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
ARTICLE VI
Termination
6.1 This Agreement may be terminated by either party for any reason by
sixty (60) days advance written notice delivered to the other party.
6.2 Notwithstanding any termination of this Agreement, the Trust shall,
at the option of the Company, continue to make available additional shares of
the Trust (or any Portfolio) pursuant to the terms and conditions of this
Agreement for all Contracts in effect on the effective date of termination of
this Agreement, provided that the Company continues to pay the costs set forth
in Section 2.3.
6.3 The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.8 shall survive the
termination of this Agreement as long as shares of the Trust are held on behalf
of Contract owners in accordance with Section 6.2.
ARTICLE VII
Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust:
Janus Aspen Series
100 Fillmore Street
Denver, Colorado 80206
Attention: General Counsel
If to the Company:
Northern Life Insurance Company
5th Floor
20 Washington Ave. South
Minneapolis, Minnesota 55401
Attention: Stewart Gregg
<PAGE>
ARTICLE VIII
Miscellaneous
8.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
8.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
8.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of State of Colorado.
8.5 The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer, agent or holder of shares of
beneficial interest of the Trust shall be personally liable for any such
liabilities.
8.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the National Association of Securities
Dealers, Inc., and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
8.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
8.8 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
8.9 Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the prior written approval of the other
party.
8.10 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
<PAGE>
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Participation Agreement as of the date and year first
above written.
JANUS ASPEN SERIES
By:____________________________________
Name:__________________________________
Title:_________________________________
NORTHERN LIFE INSURANCE COMPANY
By:____________________________________
Name:__________________________________
Title:_________________________________
<PAGE>
Schedule A
Separate Accounts
Name of Separate Account
Separate Account One
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the 8th day of August, 1997, by and between
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST ("TRUST"), a Delaware business trust,
ADVISERS MANAGERS TRUST ("MANAGERS TRUST"), a New York common law trust,
NEUBERGER&BERMAN MANAGEMENT INCORPORATED ("N&B MANAGEMENT"), a New York
corporation, and NORTHERN LIFE INSURANCE COMPANY ("LIFE COMPANY"), a life
insurance company organized under the laws of the State of Washington.
WHEREAS, TRUST and MANAGERS TRUST are registered with the Securities
and Exchange Commission ("SEC") under the Investment Company Act of 1940, as
amended ("40 Act") as open-end, diversified management investment companies; and
WHEREAS, TRUST is organized as a series fund comprised of several
portfolios ("Portfolios"), the currently available of which are listed on
Appendix A hereto; and
WHEREAS, MANAGERS TRUST is organized as a series fund, comprised of
several portfolios ("Series"), the currently operational of which are listed on
Appendix A hereto; and
WHEREAS, each Portfolio of TRUST will invest all of its net investable
assets in a corresponding Series of MANAGERS TRUST; and
WHEREAS, TRUST was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable Contracts")
offered by life insurance companies through separate accounts of such life
insurance companies ("Participating Insurance Companies") and also offers its
shares to certain qualified pension and retirement plans; and
WHEREAS, TRUST has received an order from the SEC, dated May 5,1995
(File No. 812-9164), granting Participating Insurance Companies and their
separate accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a)
and 15(b) of the '40 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder,
to the extent necessary to permit shares of the Portfolios of the TRUST to be
sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated life insurance companies and
certain qualified pension and retirement plans (the "Order"); and
WHEREAS, LIFE COMPANY has established or will establish one or more
separate accounts ("Separate Accounts") to offer Variable Contracts and is
desirous of having TRUST as one of the underlying funding vehicles for such
Variable Contracts; and
<PAGE>
WHEREAS, N&B MANAGEMENT is registered with the SEC as an investment
adviser under the Investment Advisers Act of 1940 and as a broker-dealer under
the Securities Exchange Act of 1934, as amended; and
WHEREAS, N&B MANAGEMENT is the administrator and distributor of the
shares of each Portfolio of TRUST and investment manager of the corresponding
Series of MANAGERS TRUST; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase shares of TRUST to fund the
aforementioned Variable Contracts and TRUST is authorized to sell such shares to
LIFE COMPANY at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, LIFE
COMPANY, TRUST, MANAGERS TRUST and N&B MANAGEMENT agree as follows:
Article I. SALE OF TRUST SHARES
1.1 TRUST agrees to make available to the Separate Accounts of LIFE
COMPANY shares of the selected Portfolios as listed in Appendix B for investment
of proceeds from Variable Contracts allocated to the designated Separate
Accounts, such shares to be offered as provided in TRUST's Prospectus.
1.2 TRUST agrees to sell to LIFE COMPANY those shares of the selected
Portfolios of TRUST which LIFE COMPANY orders, executing such orders on a daily
basis at the net asset value next computed after receipt by TRUST or its
designee of the order for the shares of TRUST. For purposes of this Section 1.2,
LIFE COMPANY shall be the designee of TRUST for receipt of such orders from LIFE
COMPANY and receipt by such designee shall constitute receipt by TRUST; provided
that TRUST receives notice of such order by 8:30 a.m. New York time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which TRUST calculates its net asset
value pursuant to the rules of the SEC.
1.3 TRUST agrees to redeem for cash, on LIFE COMPANY's request, any
full or fractional shares of TRUST held by LIFE COMPANY, executing such requests
on a daily basis at the net asset value next computed after receipt by TRUST or
its designee of the request for redemption. For purposes of this Section 1.3,
LIFE COMPANY shall be the designee of TRUST for receipt of requests for
redemption from LIFE COMPANY and receipt by such designee shall constitute
receipt by TRUST; provided that TRUST receives notice of such request for
redemption by 8:30 a.m. New York time on the next following Business Day.
<PAGE>
1.4 TRUST shall furnish, on or before the ex-dividend date, notice to
LIFE COMPANY of any income dividends or capital gain distributions payable on
the shares of any Portfolio of TRUST. LIFE COMPANY hereby elects to receive all
such income dividends and capital gain distributions as are payable on a
Portfolio's shares in additional shares of the Portfolio. TRUST shall notify
LIFE COMPANY of the number of shares so issued as payment of such dividends and
distributions.
1.5 TRUST shall make the net asset value per share for the selected
Portfolio(s) available to LIFE COMPANY on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated but shall use its
best efforts to make such net asset value available by 6:30 p.m. New York time.
If TRUST provides LIFE COMPANY with materially incorrect share net asset value
information through no fault of LIFE COMPANY, LIFE COMPANY on behalf of the
Separate Accounts, shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct share net asset value. Any material
error in the calculation of net asset value per share, dividend or capital gain
information shall be reported promptly upon discovery to LIFE COMPANY.
1.6 At the end of each Business Day, LIFE COMPANY shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, LIFE COMPANY shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. New York time) to determine the net dollar amount
of TRUST shares which shall be purchased or redeemed at that day's closing net
asset value per share. The net purchase or redemption orders so determined shall
be transmitted to TRUST by LIFE COMPANY by 8:30 a.m. New York Time on the
Business Day next following LIFE COMPANY's receipt of such requests and premiums
in accordance with the terms of Sections 1.2 and 1.3 hereof.
1.7 If LIFE COMPANY's order requests the purchase of TRUST shares, LIFE
COMPANY shall pay for such purchase by wiring federal funds to TRUST or its
designated custodial account on the day the order is transmitted by LIFE
COMPANY. If LIFE COMPANY's order requests a net redemption resulting in a
payment of redemption proceeds to LIFE COMPANY, TRUST shall wire the redemption
proceeds to LIFE COMPANY by the next Business Day, unless doing so would require
TRUST to dispose of portfolio securities or otherwise incur additional costs,
but in such event, proceeds shall be wired to LIFE COMPANY within seven days and
TRUST shall notify the person designated in writing by LIFE COMPANY as the
recipient for such notice of such delay by 3:00 p.m. New York Time the same
Business Day that LIFE COMPANY transmits the redemption order to TRUST. If LIFE
COMPANY's order requests the application of redemption
<PAGE>
proceeds from the redemption of shares to the purchase of shares of another fund
administered or distributed by N&B MANAGEMENT, TRUST shall so apply such
proceeds the same Business Day that LIFE COMPANY transmits such order to TRUST.
1.8 Notwithstanding Section 1.7, TRUST reserves the right to suspend
the right of redemption or postpone the date of payment or satisfaction upon
redemption consistent with Section 22(e) of the '40 Act and any rules
thereunder.
1.9 TRUST agrees that all shares of the Portfolios of TRUST will be
sold only to Participating Insurance Companies which have agreed to participate
in TRUST to fund their Separate Accounts and/or to certain qualified pension and
other retirement plans, all in accordance with the requirements of Section
817(h) of the Internal Revenue Code of 1986, as amended ("Code") and Treasury
Regulation 1.817-5. Shares of the Portfolios of TRUST will not be sold directly
to the general public.
1.10 TRUST may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of the shares of any Portfolio if such action
is required by law or by regulatory authorities having jurisdiction or is, in
the sole discretion of the Board of Trustees of TRUST, acting in good faith and
in light of its fiduciary duties under federal and any applicable state laws,
deemed necessary and in the best interests of the shareholders of such
Portfolios.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 LIFE COMPANY represents and warrants that it is an insurance
company duly organized and in good standing under the laws of Minnesota and that
it has legally and validly established each Separate Account as a segregated
asset account under such laws, and that Washington Square Securities, Inc., the
principal underwriter for the Variable Contracts, is registered as a
broker-dealer under the Securities Exchange Act of 1934.
2.2 LIFE COMPANY represents and warrants that it has registered or,
prior to any issuance or sale of the Variable Contracts, will register each
Separate Account as a unit investment trust ("UIT") in accordance with the
provisions of the '40 Act and cause each Separate Account to remain so
registered to serve as a segregated asset account for the Variable Contracts,
unless an exemption from registration is available.
2.3 LIFE COMPANY represents and warrants that the Variable Contracts
will be registered under the Securities Act of 1933 (the "`33 Act") unless an
exemption from registration is available prior to any issuance or sale of the
Variable Contracts and that the
<PAGE>
Variable Contracts will be issued and sold in compliance in all material
respects with all applicable federal and state laws and further that the sale of
the Variable Contracts shall comply in all material respects with state
insurance law suitability requirements.
2.4 LIFE COMPANY represents and warrants that the Variable Contracts
are currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will maintain such treatment and that it will notify TRUST immediately upon
having a reasonable basis for believing that the Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.
2.5 LIFE COMPANY represents and warrants that it shall deliver such
prospectuses, statements of additional information, proxy statements and
periodic reports of the Trust as required to be delivered under applicable
federal or state law and interpretations of federal and state securities
regulators thereunder in connection with the offer, sale or acquisition of the
Variable Contracts.
2.6 LIFE COMPANY represents and warrants that no existing text or
formatting of TRUST'S prospectus as delivered to LIFE COMPANY in electronic
format will be revised or altered by LIFE COMPANY or any employee or agent of
LIFE COMPANY.
2.7 TRUST represents and warrants that the Portfolio shares offered and
sold pursuant to this Agreement will be registered under the '33 Act and sold in
accordance with all applicable federal and state laws, and TRUST shall be
registered under the '40 Act prior to and at the time of any issuance or sale of
such shares. TRUST shall amend its registration statement under the '33 Act and
the '40 Act from time to time as required in order to effect the continuous
offering of its shares. TRUST shall register and qualify its shares for sale in
accordance with the laws of the various states only if and to the extent deemed
advisable by TRUST.
2.8 TRUST represents and warrants that each Portfolio will comply with
the diversification requirements set forth in Section 817(h) of the Code, and
the rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify LIFE COMPANY immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply or might not
so comply and will immediately take all reasonable steps to adequately diversify
the Portfolio to achieve compliance within the grace period afforded by
Regulation 1.817-5.
2.9 TRUST represents and warrants that each Portfolio
invested in by the Separate Account is currently qualified as a
<PAGE>
"regulated investment company" under Subchapter M of the Code, that it will make
every effort to maintain such qualification and will notify LIFE COMPANY
immediately upon having a reasonable basis for believing it has ceased to so
qualify or might not so qualify in the future.
Article III. PROSPECTUS AND PROXY STATEMENTS
3.1 TRUST shall prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of TRUST.
TRUST shall bear the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this Section 3.1
and all taxes to which an issuer is subject on the issuance and transfer of its
shares.
3.2 TRUST will bear the printing costs (or duplicating costs with
respect to the statement of additional information) and mailing costs associated
with the delivery of the following TRUST (or individual Portfolio) documents,
and any supplements thereto, to existing Variable Contract owners of LIFE
COMPANY:
(i) prospectuses and statements of additional
information;
(ii) annual and semi-annual reports; and
(iii) proxy materials.
LIFE COMPANY will submit any bills for printing, duplicating
and/or mailing costs, relating to the TRUST documents described above, to TRUST
for reimbursement by TRUST. LIFE COMPANY shall monitor such costs and shall use
its best efforts to control these costs. LIFE COMPANY will provide TRUST on a
semi-annual basis, or more frequently as reasonably requested by TRUST, with a
current tabulation of the number of existing Variable Contract owners of LIFE
COMPANY whose Variable Contract values are invested in TRUST. This tabulation
will be sent to TRUST in the form of a letter signed by a duly authorized
officer of LIFE COMPANY attesting to the accuracy of the information contained
in the letter. If requested by LIFE COMPANY, the TRUST shall provide such
documentation (including a final copy of the TRUST's prospectus as set in type
or in camera-ready copy) and other assistance as is reasonably necessary in
order for LIFE COMPANY to print together in one document the current prospectus
for the Variable Contracts issued by LIFE COMPANY and the current prospectus for
the TRUST. Should LIFE COMPANY wish to print any of these documents in a format
different from that provided by TRUST, LIFE COMPANY shall
<PAGE>
provide Trust with sixty (60) days' prior written notice and LIFE COMPANY shall
bear the cost associated with any format change.
3.3 TRUST will provide, at its expense, LIFE COMPANY with the following
TRUST (or individual Portfolio) documents, and any supplements thereto, with
respect to prospective Variable Contract owners of LIFE COMPANY:
(i) camera-ready copy of the current prospectus for
printing by the LIFE COMPANY;
(ii) a copy of the statement of additional information
suitable for duplication;
(iii) camera-ready copy of proxy material suitable
for printing; and
(iv) camera-ready copy of the annual and semi- annual
reports for printing by the LIFE COMPANY.
3.4 TRUST will provide LIFE COMPANY with at least one complete copy of
all prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Portfolios promptly after the
filing of each such document with the SEC or other regulatory authority. TRUST,
upon request of LIFE COMPANY, will provide LIFE COMPANY with electronic copies
of TRUST'S prospectus for use by LIFE COMPANY in the delivery of the TRUST'S
prospectus on an individual basis to current and prospective Variable Contract
Owners. LIFE COMPANY will provide TRUST with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to a Separate Account promptly after
the filing of each such document with the SEC or other regulatory authority.
Article IV. SALES MATERIALS
4.1 LIFE COMPANY will furnish, or will cause to be furnished, to TRUST
and N&B MANAGEMENT, each piece of sales literature or other promotional material
in which TRUST, MANAGERS TRUST or N&B MANAGEMENT is named, at least fifteen (15)
Business Days prior to its intended use. No such material will be used if TRUST,
MANAGERS TRUST or N&B MANAGEMENT objects to its use in writing within ten (10)
Business Days after receipt of such material.
4.2 TRUST and N&B MANAGEMENT will furnish, or will cause to be
furnished, to LIFE COMPANY, each piece of sales literature or
<PAGE>
other promotional material in which LIFE COMPANY or its Separate Accounts are
named, at least fifteen (15) Business Days prior to its intended use. No such
material will be used if LIFE COMPANY objects to its use in writing within ten
(10) Business Days after receipt of such material.
4.3 TRUST and its affiliates and agents shall not give any information
or make any representations on behalf of LIFE COMPANY or concerning LIFE
COMPANY, the Separate Accounts, or the Variable Contracts issued by LIFE
COMPANY, other than the information or representations contained in a
registration statement or prospectus for such Variable Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports of the Separate Accounts or reports prepared for
distribution to owners of such Variable Contracts, or in sales literature or
other promotional material approved by LIFE COMPANY or its designee, except with
the written permission of LIFE COMPANY.
4.4 LIFE COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of TRUST or concerning TRUST
other than the information or representations contained in a registration
statement or prospectus for TRUST, as such registration statement and prospectus
may be amended or supplemented from time to time, or in sales literature or
other promotional material approved by TRUST or its designee, except with the
written permission of TRUST.
4.5 For purposes of this Agreement, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for use, in
a newspaper, magazine or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures or other
public media), sales literature (such as any written communication distributed
or made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts, or
reprints or excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees, registration
statements, prospectuses, statements of additional information, shareholder
reports and proxy materials, and any other material constituting sales
literature or advertising under National Association of Securities Dealers, Inc.
rules, the '40 Act or the '33 Act.
Article V. POTENTIAL CONFLICTS
<PAGE>
5.1 The Board of Trustees of TRUST and MANAGERS TRUST (the "Boards")
will monitor TRUST and MANAGERS TRUST, respectively, (collectively the "Funds"),
for the existence of any material irreconcilable conflict between the interests
of the Variable Contract owners of Participating Insurance Company Separate
Accounts investing in the Funds. A material irreconcilable conflict may arise
for a variety of reasons, including: (a) state insurance regulatory authority
action; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling, or
any similar action by insurance, tax, or securities regulatory authorities; (c)
an administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of the Funds are being managed; (e) a difference
in voting instructions given by variable annuity and variable life insurance
contract owners or by contract owners of different Participating Insurance
Companies; or (f) a decision by a Participating Insurance Company to disregard
voting instructions of Variable Contract owners.
5.2 LIFE COMPANY will report any potential or existing conflicts to the
Boards. LIFE COMPANY will be responsible for assisting each appropriate Board in
carrying out its responsibilities under the Conditions set forth in the notice
issued by the SEC for the Funds on April 12, 1995 (the "Notice") (Investment
Company Act Release No. 21003), which LIFE COMPANY has reviewed, by providing
each appropriate Board with all information reasonably necessary for it to
consider any issues raised. This responsibility includes, but is not limited to,
an obligation by LIFE COMPANY to inform each appropriate Board whenever Variable
Contract owner voting instructions are disregarded by LIFE COMPANY. These
responsibilities will be carried out with a view only to the interests of the
Variable Contract owners.
5.3 If a majority of the Board of a Fund or a majority of its
disinterested trustees or directors, determines that a material irreconcilable
conflict exists, affecting the LIFE COMPANY, LIFE COMPANY, at its expense and to
the extent reasonably practicable (as determined by a majority of disinterested
trustees or directors), will take any steps necessary to remedy or eliminate the
irreconcilable material conflict, including: (a) withdrawing the assets
allocable to some or all of the Separate Accounts from the Funds or any series
thereof and reinvesting those assets in a different investment medium, which may
include another series of TRUST or MANAGERS TRUST, or another investment company
or submitting the question as to whether such segregation should be implemented
to a vote of all affected Variable Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., Variable Contract owners
of one or more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected Variable Contract owners the option of
<PAGE>
making such a change; and (b) establishing a new registered management
investment company or managed separate account. If a material irreconcilable
conflict arises because of LIFE COMPANY's decision to disregard Variable
Contract owner voting instructions, and that decision represents a minority
position or would preclude a majority vote, LIFE COMPANY may be required, at the
election of the relevant Fund, to withdraw its Separate Account's investment in
such Fund, and no charge or penalty will be imposed as a result of such
withdrawal. The responsibility to take such remedial action shall be carried out
with a view only to the interests of the Variable Contract owners.
For the purposes of this Section 5.3, a majority of the disinterested
members of the applicable Board shall determine whether or not any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the relevant Fund or N&B MANAGEMENT (or any other investment adviser of the
Funds) be required to establish a new funding medium for any Variable Contract.
Further, LIFE COMPANY shall not be required by this Section 5.3 to establish a
new funding medium for any Variable Contract if any offer to do so has been
declined by a vote of a majority of Variable Contract owners materially affected
by the irreconcilable material conflict.
5.4 Any Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to LIFE COMPANY.
5.5 No less than annually, LIFE COMPANY shall submit to the Boards such
reports, materials or data as such Boards may reasonably request so that the
Boards may fully carry out the obligations imposed upon them by these
Conditions. Such reports, materials, and data shall be submitted more frequently
if deemed appropriate by the applicable Boards.
Article VI. VOTING
6.1 LIFE COMPANY will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the '40 Act
as requiring pass-through voting privileges for Variable Contract owners. This
condition will apply to UIT Separate Accounts investing in TRUST and to managed
separate accounts investing in MANAGERS TRUST to the extent a vote is required
with respect to matters relating to MANAGERS TRUST. Accordingly, LIFE COMPANY,
where applicable, will vote shares of a Fund held in its Separate Accounts in a
manner consistent with voting instructions timely received from its Variable
Contract owners. LIFE COMPANY will be responsible for assuring that each of its
Separate Accounts that participates in any Fund calculates voting privileges in
a manner consistent with other participants as
<PAGE>
defined in the Conditions set forth in the Notice ("Participants"). The
obligation to calculate voting privileges in a manner consistent with all other
Separate Accounts investing in a Fund will be a contractual obligation of all
Participants under the agreements governing participation in the Funds. Each
Participant will vote shares for which it has not received timely voting
instructions, as well as shares it owns, in the same proportion as its votes
those shares for which it has received voting instructions.
6.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the '40
Act or the rules thereunder with respect to mixed and shared funding on terms
and conditions materially different from any exemptions granted in the Order,
then TRUST, MANAGERS TRUST and/or the Participants, as appropriate, shall take
such steps as may be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as
amended, and Rule 6e-3, as adopted, to the extent such Rules are applicable.
Article VII. INDEMNIFICATION
7.1 Indemnification by LIFE COMPANY. LIFE COMPANY agrees to indemnify
and hold harmless TRUST, MANAGERS TRUST, N&B MANAGEMENT and each of their
Trustees, directors, officers, employees and agents and each person, if any, who
controls TRUST or MANAGERS TRUST or N&B MANAGEMENT within the meaning of Section
15 of the '33 Act (collectively, the "Indemnified Parties" for purposes of this
Article VII) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of LIFE COMPANY, which
consent shall not be unreasonably withheld) or litigation (including legal and
other expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the offer, sale or acquisition of TRUST's shares or the Variable
Contracts and:
(a) arise out of or are based upon any untrue
statements or alleged untrue statements of any
material fact contained in the Registration
Statement or prospectus for the Variable Contracts
or contained in the Variable Contracts (or any
amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or
the alleged omission to state therein a material
fact required to be stated therein or necessary to
make the statements therein not misleading,
provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement
<PAGE>
or omission or such alleged statement or omission was
made in reliance upon and in conformity with
information furnished to LIFE COMPANY by or on behalf
of TRUST for use in the registration statement or
prospectus for the Variable Contracts or in the
Variable Contracts or sales literature (or any
amendment or supplement) or otherwise for use in
connection with the sale of the Variable Contracts or
TRUST shares; or
(b) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement, prospectus or sales literature of TRUST
not supplied by LIFE COMPANY, or persons under its
control) or wrongful conduct of LIFE COMPANY or
persons under its control, with respect to the sale
or distribution of the Variable Contracts or TRUST
shares; or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, or sales
literature of TRUST or any amendment thereof or
supplement thereto or the omission or alleged
omission to state therein a material fact required
to be stated therein or necessary to make the
statements therein not misleading if such statement
or omission or such alleged statement or omission
was made in reliance upon and in conformity with
information furnished to TRUST by or on behalf of
LIFE COMPANY; or
(d) arise as a result of any failure by LIFE COMPANY to
substantially provide the services and furnish the
materials under the terms of this Agreement; or
(e) arise out of or result from any material breach of
any representation and/or warranty made by LIFE
COMPANY in this Agreement or arise out of or result
from any other material breach of this Agreement by
LIFE COMPANY.
7.2 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such
<PAGE>
Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to TRUST, whichever is applicable.
7.3 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified LIFE COMPANY in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify LIFE COMPANY of any
such claim shall not relieve LIFE COMPANY from any liability which it may have
to the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, LIFE COMPANY shall be entitled to participate at
its own expense in the defense of such action. LIFE COMPANY also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from LIFE COMPANY to such party of LIFE
COMPANY's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and LIFE
COMPANY will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
7.4 Indemnification by N&B MANAGEMENT. N&B MANAGEMENT agrees to
indemnify and hold harmless LIFE COMPANY and each of its directors, officers,
employees, and agents and each person, if any, who controls LIFE COMPANY within
the meaning of Section 15 of the '33 Act (collectively, the "Indemnified
Parties" for the purposes of this Article VII) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of N&B MANAGEMENT which consent shall not be unreasonably
withheld) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the
offer, sale or acquisition of TRUST's shares or the Variable Contracts and:
(a) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the registration statement or
prospectus or sales literature of TRUST (or any
amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or
the alleged omission to state therein a material
fact required to be stated therein or necessary to
<PAGE>
make the statements therein not misleading, provided
that this agreement to indemnify shall not apply as
to any Indemnified Party if such statement or
omission or such alleged statement or omission was
made in reliance upon and in conformity with
information furnished to N&B MANAGEMENT or TRUST by
or on behalf of LIFE COMPANY for use in the
registration statement or prospectus for TRUST or in
sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Variable Contracts or TRUST shares; or
(b) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement, prospectus or sales literature for the
Variable Contracts not supplied by N&B MANAGEMENT
or persons under its control) or wrongful conduct
of TRUST or N&B MANAGEMENT or persons under their
control, with respect to the sale or distribution
of the Variable Contracts or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, or sales
literature covering the Variable Contracts, or any
amendment thereof or supplement thereto or the
omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, if such statement or omission or such
alleged statement or omission was made in reliance
upon and in conformity with information furnished
to LIFE COMPANY for inclusion therein by or on
behalf of TRUST; or
(d) arise as a result of (i) a failure by TRUST to
substantially provide the services and furnish the
materials under the terms of this Agreement; or
(ii) a failure by a Portfolio(s) invested in by
the Separate Account to comply with the
diversification requirements of Section 817(h) of
the Code; or (iii) a failure by a Portfolio(s)
invested in by the Separate Account to qualify as
a "regulated investment company" under Subchapter M
of the Code; or
(e) arise out of or result from any material breach of
any representation and/or warranty made by N&B
<PAGE>
MANAGEMENT in this Agreement or arise out of or
result from any other material breach of this
Agreement by N&B MANAGEMENT.
7.5 N&B MANAGEMENT shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
LIFE COMPANY.
7.6 N&B MANAGEMENT shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified N&B MANAGEMENT in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify N&B MANAGEMENT of
any such claim shall not relieve N&B MANAGEMENT from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, N&B MANAGEMENT shall be entitled to participate
at its own expense in the defense thereof. N&B MANAGEMENT also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from N&B MANAGEMENT to such party of N&B MANAGEMENT's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and N&B MANAGEMENT
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
Article VIII. TERM; TERMINATION
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the
following provisions:
(a) At the option of LIFE COMPANY or TRUST at any time
from the date hereof upon 60 days' notice, unless a
shorter time is agreed to by the parties;
<PAGE>
(b) At the option of LIFE COMPANY, if TRUST shares are
not reasonably available to meet the requirements
of the Variable Contracts as determined by LIFE
COMPANY. Prompt notice of election to terminate
shall be furnished by LIFE COMPANY, said
termination to be effective ten days after receipt
of notice unless TRUST makes available a sufficient
number of shares to reasonably meet the
requirements of the Variable Contracts within said
ten-day period;
(c) At the option of LIFE COMPANY, upon the institution
of formal proceedings against TRUST by the SEC, or
any other regulatory body, the expected or
anticipated ruling, judgment or outcome of which
would, in LIFE COMPANY's reasonable judgment,
materially impair TRUST's ability to meet and
perform Trust's obligations and duties hereunder.
Prompt notice of election to terminate shall be
furnished by LIFE COMPANY with said termination to
be effective upon receipt of notice;
(d) At the option of TRUST, upon the institution of
formal proceedings against LIFE COMPANY by the SEC,
the National Association of Securities Dealers,
Inc., or any other regulatory body, the expected or
anticipated ruling, judgment or outcome of which
would, in TRUST's reasonable judgment, materially
impair LIFE COMPANY's ability to meet and perform
its obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished
by TRUST with said termination to be effective upon
receipt of notice;
(e) In the event TRUST's shares are not registered,
issued or sold in accordance with applicable state or
federal law, or such law precludes the use of such
shares as the underlying investment medium of
Variable Contracts issued or to be issued by LIFE
COMPANY. Termination shall be effective upon such
occurrence without notice;
(f) At the option of TRUST if the Variable Contracts
cease to qualify as annuity contracts or life
insurance contracts, as applicable, under the Code,
or if TRUST reasonably believes that the Variable
Contracts may fail to so qualify. Termination shall
be effective upon receipt of notice by LIFE COMPANY;
<PAGE>
(g) At the option of LIFE COMPANY, upon TRUST's breach of
any material provision of this Agreement, which
breach has not been cured to the satisfaction of LIFE
COMPANY within ten days after written notice of such
breach is delivered to TRUST;
(h) At the option of TRUST, upon LIFE COMPANY's breach of
any material provision of this Agreement, which
breach has not been cured to the satisfaction of
TRUST within ten days after written notice of such
breach is delivered to LIFE COMPANY;
(i) At the option of TRUST, if the Variable Contracts
are not registered, issued or sold in accordance
with applicable federal and/or state law.
Termination shall be effective immediately upon
such occurrence without notice;
(j) In the event this Agreement is assigned without the
prior written consent of LIFE COMPANY, TRUST,
MANAGERS TRUST and N&B MANAGEMENT, termination shall
be effective immediately upon such occurrence without
notice.
8.3 Notwithstanding any termination of this Agreement pursuant to
Section 8.2 hereof, TRUST at its option may elect to continue to make available
additional TRUST shares, as provided below, for so long as TRUST desires
pursuant to the terms and conditions of this Agreement, for all Variable
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, if TRUST so elects to make additional TRUST shares available, the
owners of the Existing Contracts or LIFE COMPANY, whichever shall have legal
authority to do so, shall be permitted to reallocate investments in TRUST,
redeem investments in TRUST and/or invest in TRUST upon the payment of
additional premiums under the Existing Contracts. In the event of a termination
of this Agreement pursuant to Section 8.2 hereof, TRUST and N&B MANAGEMENT, as
promptly as is practicable under the circumstances, shall notify LIFE COMPANY
whether TRUST elects to continue to make TRUST shares available after such
termination. If TRUST shares continue to be made available after such
termination, the provisions of this Agreement shall remain in effect and
thereafter either TRUST or LIFE COMPANY may terminate the Agreement, as so
continued pursuant to this Section 8.3, upon sixty (60) days prior written
notice to the other party.
8.4 Except as necessary to implement Variable Contract owner initiated
transactions, or as required by state insurance laws or regulations, LIFE
COMPANY shall not redeem the shares attributable
<PAGE>
to the Variable Contracts (as opposed to the shares attributable to LIFE
COMPANY's assets held in the Separate Accounts), and LIFE COMPANY shall not
prevent Variable Contract owners from allocating payments to a Portfolio that
was otherwise available under the Variable Contracts, until thirty (30) days
after the LIFE COMPANY shall have notified TRUST of its intention to do so.
Article IX. NOTICES
Any notice hereunder shall be given by registered or certified mail
return receipt requested to the other party at the address of such party set
forth below or at such other address as such party may from time to time specify
in writing to the other party.
If to TRUST, MANAGERS TRUST or N&B MANAGEMENT:
Neuberger&Berman Management Incorporated
605 Third Avenue
New York, NY 10158-0006
Attention: Ellen Metzger, General Counsel
If to LIFE COMPANY:
Northern Life Insurance Company
20 Washington Avenue South
5th Floor
Minneapolis, MN 55401
Attention: Stewart Gregg, Esq.
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article X. MISCELLANEOUS
10.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
<PAGE>
10.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York. It
shall also be subject to the provisions of the federal securities laws and the
rules and regulations thereunder and to any orders of the SEC granting exemptive
relief therefrom and the conditions of such orders.
10.5 The parties agree that the assets and liabilities of each Series
are separate and distinct from the assets and liabilities of each other Series.
No Series shall be liable or shall be charged for any debt, obligation or
liability of any other Series. No Trustee, officer or agent shall be personally
liable for such debt, obligation or liability of any Series or Portfolio and no
Portfolio or other investor, other than the Portfolio or other investors
investing in the Series which incurs a debt, obligation or liability, shall be
liable therefor.
10.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
National Association of Securities Dealers, Inc. and state insurance regulators)
and shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
10.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
10.8 No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by TRUST,
MANAGERS TRUST, N&B MANAGEMENT and the LIFE COMPANY.
<PAGE>
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Fund Participation Agreement as of the date and year
first above written.
NEUBERGER&BERMAN
ADVISERS MANAGEMENT TRUST
By:________________________________
Name:
Title:
ADVISERS MANAGERS TRUST
By:________________________________
Name:
Title:
NEUBERGER&BERMAN
MANAGEMENT INCORPORATED
By:________________________________
Name:
Title:
NORTHERN LIFE INSURANCE COMPANY
By:________________________________
Name:
Title:
<PAGE>
APPENDIX A
<TABLE>
<CAPTION>
Neuberger&Berman Advisers Corresponding Series of
Management Trust and its Series (Portfolios) Advisers Managers Trust (Series)
- -------------------------------------------- --------------------------------
<S> <C>
Balanced Portfolio AMT Balanced Investments
Government Income Portfolio AMT Government Income Investments
Growth Portfolio AMT Growth Investments
Limited Maturity Bond Portfolio AMT Limited Maturity Bond Investments
Liquid Asset Portfolio AMT Liquid Asset Investments
Partners Portfolio AMT Partners Investments
International Portfolio AMT International Investments
<PAGE>
APPENDIX B
Separate Accounts Selected Portfolios
- ----------------- -------------------
Separate Account One Partners Portfolio
Limited Maturity Bond Portfolio
</TABLE>
PARTICIPATION AGREEMENT
By and Among
OCC ACCUMULATION TRUST
And
NORTHERN LIFE INSURANCE COMPANY
And
OCC DISTRIBUTORS
THIS AGREEMENT, made and entered into this 8th day of August
1997 by and among Northern Life Insurance Company, a Washington corporation
(hereinafter the "Company"), on its own behalf and on behalf of each separate
account of the Company named in Schedule 1 to this Agreement, as may be amended
from time to time (each account referred to as the "Account"), OCC ACCUMULATION
TRUST, an open-end diversified management investment company organized under the
laws of the State of Massachusetts (hereinafter the "Fund") and OCC
DISTRIBUTORS, a Delaware general partnership (hereinafter the "Underwriter").
WHEREAS, the Fund engages in business as an open-end
diversified, management investment company and was established for the purpose
of serving as the investment vehicle for separate accounts established for
variable life insurance contracts and variable annuity contracts to be offered
by insurance companies which have entered into participation agreements
substantially identical to this Agreement (hereinafter "Participating Insurance
Companies"); and
<PAGE>
WHEREAS, beneficial interests in the Fund are divided into
several series of shares, each representing the interest in a particular managed
portfolio of securities and other assets (the "Portfolios"); and
WHEREAS, the Fund has obtained an order from the Securities &
Exchange Commission (alternatively referred to as the "SEC" or the
"Commission"), dated February 22, 1995 (File No. 812-9290), granting
Participating Insurance Companies and variable annuity separate accounts and
variable life insurance separate accounts relief from the provisions of Sections
9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity separate accounts and variable life insurance
separate accounts of both affiliated and unaffiliated Participating Insurance
Companies and qualified pension and retirement plans (hereinafter the "Mixed and
Shared Funding Exemptive Order");and
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Company has registered or will register certain
variable annuity and variable life contracts (the "Contracts") under the 1933
Act; and
WHEREAS, the Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors of
the Company under the insurance laws of the State of Washington, to set aside
and invest assets attributable to the Contracts; and
<PAGE>
WHEREAS, the Company has registered the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker-dealer with
the SEC under the Securities Exchange Act of 1934, as amended (hereinafter the
"1934 Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, the Company intends to purchase shares in the Portfolios named
in Schedule 2 on behalf of the Account to fund the Contracts and the Underwriter
is authorized to sell such shares to unit investment trusts such as the Account
at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. The Underwriter agrees to sell to the Company those
shares of the Fund which the Company orders on behalf of the Account, executing
such orders on a daily basis at the net asset value next computed after receipt
and acceptance by the Fund or its agent of the order for the shares of the Fund.
For purposes of this Section 1.1, the Company shall be the designee of the Fund
for receipt of such orders from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
order by 10:00 a.m. Eastern Time on the next following Business Day. "Business
Day" shall mean any day on which
<PAGE>
the New York Stock Exchange is open for trading and on which the Fund calculates
its net asset value pursuant to the rules of the SEC.
1.2. The Company shall pay for Fund shares on the next
Business Day after it places an order to purchase Fund shares in accordance with
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
1.3. The Fund agrees to make its shares available indefinitely
for purchase at the applicable net asset value per share by Participating
Insurance Companies and their separate accounts on those days on which the Fund
calculates its net asset value pursuant to rules of the SEC; provided, however,
that the Board of Trustees of the Fund (hereinafter the "Directors") may refuse
to sell shares of any Portfolio to any person, or suspend or terminate the
offering of shares of any Portfolio if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole discretion of the
Directors, acting in good faith and in light of their fiduciary duties under
federal and any applicable state laws, necessary in the best interests of the
shareholders of any Portfolio.
1.4. The Fund and the Underwriter agree that shares of the
Fund will be sold only to Participating Insurance Companies and their separate
accounts, qualified pension and retirement plans or such other persons as are
permitted under applicable provisions of the Internal Revenue Code of 1986, as
amended, (the "Internal Revenue Code"), and regulations promulgated thereunder,
the sale to which will not impair the tax treatment currently afforded the
contracts. No shares of any Portfolio will be sold to the general public.
1.5. The Fund and the Underwriter will not sell Fund shares to
any insurance company or separate account unless an agreement containing
provisions substantially the same as
<PAGE>
Articles I, III, V, and VII of this Agreement are in effect to govern such
sales. The Fund shall make available upon written request from the Company (i) a
list of all other Participating Insurance Companies and (ii) a copy of the
Participation Agreement executed by any other Participating Insurance Company.
1.6. The Fund agrees to redeem for cash, upon the Company's
request, any full or fractional shares of the Fund held by the Company,
executing such requests on a daily basis at the net asset value next computed
after receipt and acceptance by the Fund or its agent of the request for
redemption. For purposes of this Section 1.6, the Company shall be the designee
of the Fund for receipt of requests for redemption from each Account and receipt
by such designee shall constitute receipt by the Fund; provided the Fund
receives notice of request for redemption by 10:00 a.m. Eastern Time on the next
following Business Day. Payment shall be in federal funds transmitted by wire to
the Company's account as designated by the Company in writing from time to time,
on the same Business Day the Fund receives notice of the redemption order from
the Company except that the Fund reserves the right to delay payment of
redemption proceeds, but in no event may such payment be delayed longer than the
period permitted under Section 22(e) of the 1940 Act. Neither the Fund nor the
Underwriter shall bear any responsibility whatsoever for the proper disbursement
or crediting of redemption proceeds; the Company alone shall be responsible for
such action. If notification of redemption is received after 10:00 a.m. Eastern
Time, payment for redeemed shares will be made on the next following Business
Day.
1.7. The Company agrees to purchase and redeem the shares of
the Portfolios named in Schedule 2 offered by the then current prospectus of the
Fund in accordance with the provisions of such prospectus. The Company agrees
that all net amounts available under the
<PAGE>
Contracts shall be invested in the Fund, or in the Company's general account;
provided that such amounts may also be invested in an investment company other
than the Fund if (a) such other investment company, or series thereof, has
investment objectives or policies that are substantially different from the
investment objectives and policies of the Portfolios of the Fund named in
Schedule 2; or (b) the Company gives the Fund and the Underwriter 45 days
written notice of its intention to make such other investment company available
as a funding vehicle for the Contracts; or (c) such other investment company was
available as a funding vehicle for the Contracts prior to the date of this
Agreement and the Company so informs the Fund and Underwriter prior to their
signing this Agreement; or (d) the Fund or Underwriter consents in writing to
the use of such other investment company.
1.8. Issuance and transfer of the Fund's shares will be by
book entry only. Stock certificates will not be issued to the Company or any
Account. Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Account or the appropriate subaccount of each
Account.
1.9. The Fund shall furnish notice as soon as reasonably
practicable to the Company of any income, dividends or capital gain
distributions payable on the Fund's shares. The Company hereby elects to receive
all such dividends and distributions as are payable on the Portfolio shares in
the form of additional shares of that Portfolio. The Company reserves the right
to revoke this election and to receive all such dividends and distributions in
cash. The Fund shall notify the Company of the number of shares so issued as
payment of such dividends and distributions.
<PAGE>
1.10. The Fund shall make the net asset value per share for
each Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 5:30 p.m.,
Eastern Time, each business day.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the Contracts
are or will be registered under the 1933 Act and that the Contracts will be
issued and sold in compliance with all applicable federal and state laws. The
Company further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally and
validly established each Account as a segregated asset account under applicable
state law and has registered each Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as segregated investment
accounts for the Contracts, and that it will maintain such registration for so
long as any Contracts are outstanding or will comply with applicable no-action
positions of the Securities and Exchange Commission staff. The Company shall
amend the registration statement under the 1933 Act for the Contracts and the
registration statement under the 1940 Act for the Account from time to time as
required in order to effect the continuous offering of the Contracts or as may
otherwise be required by applicable law. The Company shall register and qualify
the Contracts for sale in accordance with the securities laws of the various
states only if and to the extent deemed necessary by the Company.
2.2. The Company represents that it believes that the
Contracts are currently and at the time of issuance will be treated as annuity
contracts or life insurance contracts under
<PAGE>
applicable provisions of the Internal Revenue Code and that it will make every
effort to maintain such treatment and that it will notify the Fund and the
Underwriter immediately upon having a reasonable basis for believing that the
Contracts have ceased to be so treated or that they might not be so treated in
the future.
2.3. The Fund represents and warrants that Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act and duly
authorized for issuance in accordance with applicable law and that the Fund is
and shall remain registered under the 1940 Act for as long as the Fund shares
are sold. The Fund shall amend the registration statement for its shares under
the 1933 Act and the 1940 Act from time to time as required in order to effect
the continuous offering of its shares. The Fund shall register and qualify the
shares for sale in accordance with the laws of the various states only if and to
the extent deemed advisable by the Fund or the Underwriter.
2.4. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code,
and that it will make every effort to maintain such qualification (under
Subchapter M or any successor or similar provision) and that it will notify the
Company immediately upon having a reasonable basis for believing that it has
ceased to so qualify or that it might not so qualify in the future.
2.5. The Fund represents that its investment objectives,
policies and restrictions comply with applicable state investment laws as they
may apply to the Fund. The Fund makes no representation as to whether any aspect
of its operations (including, but not limited to, fees and expenses and
investment policies) complies with the insurance laws and regulations of any
state. The Company alone shall be responsible for informing the Fund of any
insurance restrictions
<PAGE>
imposed by state insurance laws which are applicable to the Fund; however,
neither the Company nor the Fund shall have any liability to each other in
connection with the provision of notice of or compliance with any such
restrictions. To the extent feasible and consistent with market conditions, the
Fund will adjust its investments to comply with the aforementioned state
insurance laws upon written notice from the Company of such requirements and
proposed adjustments, it being agreed and understood that in any such case the
Fund shall be allowed a reasonable period of time under the circumstances after
receipt of such notice to make any such adjustment.
2.6. The Fund currently does not intend to make any payments
to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. To the extent that
it decides to finance distribution expenses pursuant to Rule 12b-1, the Fund
undertakes to have its Board of Trustees, a majority of whom are not interested
persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.7. The Underwriter represents and warrants that it is a
member in good standing of the National Association of Securities Dealers, Inc.,
("NASD") and is registered as a broker-dealer with the SEC. The Underwriter
further represents that it will sell and distribute the Fund shares in
accordance with all applicable federal and state securities laws, including
without limitation the 1933 Act, the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and
validly existing under the laws of Massachusetts and that it does and will
comply with applicable provisions of the 1940 Act.
<PAGE>
2.9. The Underwriter represents and warrants that the Fund's
Adviser, OpCap Advisors, is and shall remain duly registered under all
applicable federal and state securities laws and that the Adviser will perform
its obligations to the Fund in accordance with the laws of Massachusetts and any
applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all
of their directors, officers, employees, investment advisers, and other
individuals/entities having access to the funds and/or securities of the Fund
are and continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
includes coverage for larceny and embezzlement and is issued by a reputable
bonding company.
2.11. The Company represents and warrants that all of its
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
covered by a blanket fidelity bond or similar coverage, in an amount not less
than $5 million. The aforesaid includes coverage for larceny and embezzlement
and is issued by a reputable bonding company. The Company agrees to make all
reasonable efforts to see that this bond or another bond containing these
provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. The Underwriter shall provide the Company, at the
Company's expense, with as many copies of the Fund's current prospectus as the
Company may reasonably request for use
<PAGE>
with prospective contractowners and applicants. The Underwriter shall print and
distribute, at the Fund's or Underwriter's expense, as many copies of said
prospectus as necessary for distribution to existing contractowners or
participants. If requested by the Company in lieu thereof, the Fund shall
provide such documentation including a final copy of a current prospectus set in
type (or in computer format) at the Fund's expense and other assistance as is
reasonably necessary in order for the Company at least annually (or more
frequently if the Fund prospectus is amended more frequently) to have the new
prospectus for the Contracts and the Fund's new prospectus printed together in
one document. In such case the Fund shall bear its share of expenses as
described above.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or
alternatively from the Company (or, in the Fund's discretion, the Prospectus
shall state that such Statement is available from the Fund), and the Underwriter
(or the Fund) shall provide such Statement, at its expense, to the Company and
to any owner of or participant under a Contract who requests such Statement or,
at the Company's expense, to any prospective contractowner and applicant who
requests such statement.
3.3. The Fund, at its expense, shall provide the Company with
copies of its proxy material, if any, reports to shareholders and other
communications to shareholders in such quantity as the Company shall reasonably
require and shall bear the costs of distributing them to existing contractowners
or participants.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from contractowners or
participants;
<PAGE>
(ii) vote the Fund shares held in the Account in
accordance with instructions received from
contractowners or participants; and
(iii) vote Fund shares held in the Account for which no
timely instructions have been received, in the
same proportion as Fund shares of such Portfolio
for which instructions have been received from the
Company's contractowners or participants;
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass through voting privileges for variable contractowners. The Company
reserves the right to vote Fund shares held in any segregated asset account in
its own right, to the extent permitted by law. Participating Insurance Companies
shall be responsible for assuring that each of their separate accounts
participating in the Fund calculates voting privileges in a manner consistent
with other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular as required, the Fund will
either provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further,
the Fund will act in accordance with the SEC interpretation of the requirements
of Section 16(a) with respect to periodic elections of directors and with
whatever rules the Commission may promulgate with respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be
furnished, to the Fund or the Underwriter, each piece of sales literature or
other promotional material in which the Fund or the Fund's adviser or the
Underwriter is named, at least fifteen business days prior to its use. No
<PAGE>
such material shall be used if the Fund or the Underwriter reasonably objects in
writing to such use within fifteen business days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or by
the Underwriter, except with the permission of the Fund or the Underwriter. The
Fund and the Underwriter agree to respond to any request for approval on a
prompt and timely basis.
4.3. The Fund or the Underwriter shall furnish, or shall cause
to be furnished, to the Company or its designee, each piece of sales literature
or other promotional material in which the Company or its separate account is
named, at least fifteen business days prior to its use. No such material shall
be used if the Company reasonably objects in writing to such use within fifteen
business days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any
information or make any representations on behalf of the Company or concerning
the Company, each Account, or the Contracts other than the information or
representations contained in a registration statement or prospectus for the
Contracts, as such registration statement and prospectus may be amended or
supplemented from time to time, or in published reports for each Account which
are in the public domain or approved by the Company for distribution to
contractowners or participants, or in sales literature or other promotional
material approved by the Company, except with the permission of
<PAGE>
the Company. The Company agrees to respond to any request for approval on a
prompt and timely basis.
4.5. The Fund will provide to the Company at least one
complete copy of all registration statements, prospectuses, statements of
additional information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Fund or its
shares, contemporaneously with the filing of such document with the SEC or other
regulatory authorities. The Fund will provide to the Company annual and
semi-annual reports to shareholders in computer format, if requested by the
Company.
4.6. The Company will provide to the Fund at least one
complete copy of all registration statements, prospectuses, statements of
additional information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Contracts or each Account, contemporaneously with the filing of
such document with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published
<PAGE>
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees, registration
statements, prospectuses, statements of additional information, shareholder
reports, and proxy materials and any other material constituting sales
literature or advertising under NASD rules, the 1940 Act or the 1933 Act.
ARTICLE V. FEES AND EXPENSES
5.1. The Fund and Underwriter shall pay no fee or other
compensation to the Company under this Agreement, except that if the Fund or any
Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then, subject to obtaining any required exemptive orders
or other regulatory approvals, the Underwriter may make payments to the Company
or to the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund of this
Agreement shall be paid by the Fund to the extent permitted by law. All Fund
shares will be duly authorized for issuance and registered in accordance with
applicable federal law and to the extent deemed advisable by the Fund, in
accordance with applicable state law, prior to sale. The Fund shall bear the
expenses for the cost of registration and qualification of the Fund's shares,
preparation and filing of the Fund's prospectus and registration statement, Fund
proxy materials and reports, setting in type, printing and distributing the
prospectuses, the proxy materials and reports to existing shareholders and
contractowners, the preparation of all statements and notices required by any
federal or state law, all taxes on the issuance or transfer of the Fund's
shares, and any
<PAGE>
expenses permitted to be paid or assumed by the Fund pursuant to a plan, if any,
under Rule 12b-1 under the 1940 Act.
ARTICLE VI. DIVERSIFICATION
6.1. The Fund will at all times invest money from the
Contracts in such a manner as to ensure that the Contracts will be treated as
variable contracts under the Internal Revenue Code and the regulations issued
thereunder. Without limiting the scope of the foregoing, the Fund will comply
with Section 817(h) of the Internal Revenue Code and Treasury Regulation
1.817-5, relating to the diversification requirements for variable annuity,
endowment, or life insurance contracts and any amendments or other modifications
to such Section or Regulations in accordance with guidelines provided by the
Company prior to the execution of this Agreement and as necessary thereafter. In
the event of a breach of this Article VI by the Fund, it will take all
reasonable steps (a) to notify the Company of such breach and (b) to adequately
diversify the Fund so as to achieve compliance with the grace period afforded by
Treasury Regulation 1.817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board of Trustees of the Fund (the "Fund Board") will
monitor the Fund for the existence of any material irreconcilable conflict among
the interests of the contractowners of all separate accounts investing in the
Fund. An irreconcilable material conflict may arise for a variety of reasons,
including: (a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance,
<PAGE>
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by Participating Insurance Companies or by variable annuity contract and
variable life insurance contractowners; or (f) a decision by an insurer to
disregard the voting instructions of contractowners. The Board shall promptly
inform the Company if it determines that an irreconcilable material conflict
exists and the implications thereof. A majority of the Fund Board shall consist
of persons who are not "interested" persons of the Fund.
7.2. The Company has reviewed a copy of the Mixed and Shared
Funding Exemptive Order, and in particular, has reviewed the conditions to the
requested relief set forth therein. As set forth in the Mixed and Shared Funding
Exemptive Order, the Company will report any potential or existing conflicts of
which it is aware to the Fund Board. The Company agrees to assist the Fund Board
in carrying out its responsibilities under the Mixed and Shared Funding
Exemptive Order, by providing the Fund Board with all information reasonably
necessary for the Fund Board to consider any issues raised. This includes, but
is not limited to, an obligation by the Company to inform the Fund Board
whenever contractowner voting instructions are disregarded. The Fund Board shall
record in its minutes or other appropriate records, all reports received by it
and all action with regard to a conflict.
7.3. If it is determined by a majority of the Fund Board, or a
majority of its disinterested Directors, that an irreconcilable material
conflict exists, the Company and other Participating Insurance Companies shall,
at their expense and to the extent reasonably practicable (as determined by a
majority of the disinterested Directors), take whatever steps are necessary to
<PAGE>
remedy or eliminate the irreconcilable material conflict, up to and including:
(1) withdrawing the assets allocable to some or all of the separate accounts
from the Fund or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of the Fund,
or submitting the question whether such segregation should be implemented to a
vote of all affected contractowners and, as appropriate, segregating the assets
of any appropriate group (i.e., variable annuity contractowners or variable life
insurance contractowners, of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected contractowners
the option of making such a change; and (2) establishing a new registered
management investment company or managed separate account.
7.4. If the Company's disregard of voting instructions could
conflict with the majority of contractowner voting instructions, and the
Company's judgment represents a minority position or would preclude a majority
vote, the Company may be required, at the Fund's election, to withdraw the
Account's investment in the Fund and terminate this Agreement with respect to
such Account. Any such withdrawal and termination must take place within 60 days
after the Fund gives written notice to the Company that this provision is being
implemented. Until the end of such 60 day period the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.5. If a particular state insurance regulator's decision
applicable to the Company conflicts with the majority of other state insurance
regulators, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement with respect to such Account. Any such withdrawal
and termination must take place within 60 days after the Fund gives written
notice to the Company that this provision is being implemented. Until the end of
such 60 day
<PAGE>
period the Underwriter and Fund shall continue to accept and implement orders by
the Company for the purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this
Agreement, a majority of the disinterested members of the Fund Board shall
determine whether any proposed action adequately remedies any irreconcilable
material conflict, but in no event will the Fund or OpCap Advisors be required
to establish a new funding medium for the Contracts. The Company shall not be
required by Section 7.3 to establish a new funding medium for the Contracts if
an offer to do so has been declined by vote of a majority of contractowners
materially adversely affected by the irreconcilable material conflict.
7.7. The Company shall at least annually submit to the Fund
Board such reports, materials or data as the Fund Board may reasonably request
so that the Fund Board may fully carry out the duties imposed upon it as
delineated in the Mixed and Shared Funding Exemptive Order, and said reports,
materials and data shall be submitted more frequently if deemed appropriate by
the Fund Board.
7.8. If and to the extent that Rule 6e-2 and Rule 6e-3 (T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3 (T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4,
and 7.5 of this Agreement shall
<PAGE>
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the
Fund, the Underwriter, and each of the Fund's or the Underwriter's directors,
officers, employees or agents and each person, if any, who controls or is
associated with the Fund or the Underwriter within the meaning of such terms
under the federal securities laws (collectively, the "indemnified parties" for
purposes of this Section 8.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company) or litigation (including reasonable legal and other expenses), to
which the indemnified parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue
statements or alleged untrue statements of any
material fact contained in the registration
statement, prospectus or statement of additional
information for the Contracts or contained in the
Contracts or sales literature or other promotional
material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged
omission to state therein a material fact required
to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances in which they were made; provided
that this agreement to indemnify shall not apply
as to any indemnified party if such statement or
omission or such alleged statement or omission was
made in reliance upon and in conformity with
information furnished to the Company by or on
behalf of the Fund for use in the registration
statement, prospectus or statement of additional
information for the Contracts or in the Contracts
or sales literature or other
<PAGE>
promotional material for the Contracts (or any
amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or
representations by or on behalf of the Company
(other than statements or representations
contained in the Fund registration statement, Fund
prospectus, Fund statement of additional
information or sales literature or other
promotional material of the Fund not supplied by
the Company or persons under its control) or
wrongful conduct of the Company or persons under
its control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in
the Fund registration statement, Fund prospectus,
statement of additional information or sales
literature or other promotional material of the
Fund or any amendment thereof or supplement
thereto or the omission or alleged omission to
state therein a material fact required to be
stated therein or necessary to make the statements
therein not misleading in light of the
circumstances in which they were made, if such a
statement or omission was made in reliance upon
and in conformity with information furnished to
the Fund by or on behalf of the Company or persons
under its control; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials or
to make any payments under the terms of this
Agreement; or
(v) arise out of any material breach of any
representation and/or warranty made by the Company
in this Agreement or arise out of or result from
any other material breach by the Company of this
Agreement;
except to the extent provided in Sections 8.1(b) and 8.3 hereof. This
indemnification shall be in addition to any liability which the Company may
otherwise have.
(b) No party shall be entitled to indemnification if such
loss, claim, damage, liability or litigation is due to the willful misfeasance,
bad faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
<PAGE>
(c) The indemnified parties will promptly notify the Company
of the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund shares or the Contracts or the operation
of the Fund.
8.2. Indemnification By the Underwriter
(a) The Underwriter, on its own behalf and on behalf of the
Fund, agrees to indemnify and hold harmless the Company and each of its
directors, officers, employees or agents and each person, if any, who controls
or is associated with the Company within the meaning of such terms under the
federal securities laws (collectively, the "indemnified parties" for purposes of
this Section 8.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Underwriter) or litigation (including reasonable legal and other expenses) to
which the indemnified parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of any
material fact contained in the registration
statement, prospectus or statement of additional
information for the Fund or sales literature or
other promotional material of the Fund (or any
amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or
the alleged omission to state therein a material
fact required to be stated therein or necessary to
make the statements therein not misleading in
light of the circumstances in which they were
made; provided that this agreement to indemnify
shall not apply as to any indemnified party if
such statement or omission or such alleged
statement or omission was made in reliance upon
and in conformity with information furnished to
the Underwriter or Fund by or on behalf of the
Company for use in the registration statement,
prospectus or statement of additional information
for the Fund or in sales literature or other
promotional material of the Fund (or any amendment
or supplement thereto) or otherwise for use in
connection with the sale of the Contracts or Fund
shares; or
<PAGE>
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Contracts or in
the Contract or Fund registration statement, the
Contract or Fund prospectus, statement of
additional information, or sales literature or
other promotional material for the Contracts or of
the Fund not supplied by the Underwriter or the
Fund or persons under the control of the
Underwriter or the Fund respectively) or wrongful
conduct of the Underwriter or the Fund or persons
under the control of the Underwriter or the Fund
respectively, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, statement of
additional information or sales literature or
other promotional material covering the Contracts
(or any amendment thereof or supplement thereto),
or the omission or alleged omission to state
therein a material fact required to be stated
therein or necessary to make the statement or
statements therein not misleading in light of the
circumstances in which they were made, if such
statement or omission was made in reliance upon
and in conformity with information furnished to
the Company by or on behalf of the Underwriter or
the Fund or persons under the control of the
Underwriter or the Fund; or
(iv) arise as a result of any failure by the Fund to
provide the services and furnish the materials
under the terms of this Agreement (including a
failure, whether unintentional or in good faith or
otherwise, to comply with the diversification
requirements and procedures related thereto
specified in Article VI of this Agreement except
if such failure is a result of the Company's
failure to comply with the notification procedures
specified in Article VI); or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the
Underwriter or the Fund in this Agreement or arise
out of or result from any other material breach of
this Agreement by the Underwriter or the Fund;
except to the extent provided in Sections 8.2(b) and 8.3 hereof. This
indemnification shall be in addition to any liability which the Underwriter may
otherwise have.
<PAGE>
(b) No party shall be entitled to indemnification if such
loss, claim, damage, liability or litigation is due to the willful misfeasance,
bad faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
(c) The indemnified parties will promptly notify the
Underwriter of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Contracts or the operation of the
Account.
8.3. Indemnification Procedure
Any person obligated to provide indemnification under this
Article VIII ("indemnifying party" for the purpose of this Section 8.3) shall
not be liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to indemnification under this
Article VIII ("indemnified party" for the purpose of this Section 8.3) unless
such indemnified party shall have notified the indemnifying party in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
indemnified party (or after such party shall have received notice of such
service on any designated agent), but failure to notify the indemnifying party
of any such claim shall not relieve the indemnifying party from any liability
which it may have to the indemnified party against whom such action is brought
under the indemnification provision of this Article VIII, except to the extent
that the failure to notify results in the failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a result of
failure to give such notice. In case any such action is brought against the
indemnified party, the indemnifying party will be entitled to participate, at
its own expense, in the defense thereof. The indemnifying party also shall be
entitled to assume the defense thereof, with
<PAGE>
counsel satisfactory to the party named in the action. After notice from the
indemnifying party to the indemnified party of the indemnifying party's election
to assume the defense thereof, the indemnified party shall bear the fees and
expenses of any additional counsel retained by it, and the indemnifying party
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation, unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment.
A successor by law of the parties to this Agreement shall be
entitled to the benefits of the indemnification contained in this Article VIII.
The indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
8.4. Contribution
In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Article VIII is
due in accordance with its terms but for any reason is held to be unenforceable
with respect to a party entitled to indemnification ("indemnified party" for
purposes of this Section 8.4) pursuant to the terms of this Article VIII, then
each party
<PAGE>
obligated to indemnify pursuant to the terms of this Article VIII shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and litigations in such proportion
as is appropriate to reflect the relative benefits received by the parties to
this Agreement in connection with the offering of Fund shares to the Account and
the acquisition, holding or sale of Fund shares by the Account, or if such
allocation is not permitted by applicable law, in such proportions as is
appropriate to reflect the relative net benefits referred to above but also the
relative fault of the parties to this Agreement in connection with any actions
that lead to such losses, claims, damages, liabilities or litigations, as well
as any other relevant equitable considerations.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the State of New
York.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant (including, but not limited to the Mixed and Shared Funding Exemptive
Order) and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party upon sixty days advance written
notice to the other parties unless otherwise agreed in a separate written
agreement among the parties; or
<PAGE>
(b) at the option of the Company if shares of the Portfolios
delineated in Schedule 2 are not reasonably available to meet the requirements
of the Contracts as determined by the Company; or
(c) at the option of the Fund upon institution of formal
proceedings against the Company by the NASD, the SEC, the insurance commission
of any state or any other regulatory body regarding the Company's duties under
this Agreement or related to the sale of the Contracts, the administration of
the Contracts, the operation of the Account, or the purchase of the Fund shares,
which would have a material adverse effect on the Company's ability to perform
its obligations under this Agreement; or
(d) at the option of the Company upon institution of formal
proceedings against the Fund or the Underwriter by the NASD, the SEC, or any
state securities or insurance department or any other regulatory body, which
would have a material adverse effect on the Fund's or the Underwriter's ability
to perform its obligations under this Agreement; or
(e) at the option of the Company or the Fund upon receipt of
any necessary regulatory approvals and/or the vote of the contractowners having
an interest in the Account (or any subaccount) to substitute the shares of
another investment company for the corresponding Portfolio shares of the Fund in
accordance with the terms of the Contracts for which those Portfolio shares had
been selected to serve as the underlying investment media. The Company will give
30 days prior written notice to the Fund of the date of any proposed vote or
other action taken to replace the Fund's shares; or
(f) at the option of the Company or the Fund upon a
determination by a majority of the Fund Board, or a majority of the
disinterested Fund Board members, that an
<PAGE>
irreconcilable material conflict exists among the interests of (i) all
contractowners of variable insurance products of all separate accounts or (ii)
the interests of the Participating Insurance Companies investing in the Fund as
delineated in Article VII of this Agreement; or
(g) at the option of the Company if the Fund ceases to qualify
as a Regulated Investment Company under Subchapter M of the Internal Revenue
Code, or under any successor or similar provision, or if the Company reasonably
believes that the Fund may fail to so qualify; or
(h) at the option of the Company if the Fund fails to meet the
diversification requirements specified in Article VI hereof; or
(i) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement; or
(j) at the option of the Company, if the Company determines in
its sole judgment exercised in good faith, that either the Fund or the
Underwriter has suffered a material adverse change in its business, operations
or financial condition since the date of this Agreement or is the subject of
material adverse publicity which is likely to have a material adverse impact
upon the business and operations of the Company; or
(k) at the option of the Fund or Underwriter, if the Fund or
Underwriter respectively, shall determine in its sole judgment exercised in good
faith, that the Company has suffered a material adverse change in its business,
operations or financial condition since the date of this Agreement or is the
subject of material adverse publicity which is likely to have a material adverse
impact upon the business and operations of the Fund or Underwriter; or
<PAGE>
(l) at the option of the Fund in the event any of the
Contracts are not issued or sold in accordance with applicable federal and/or
state law. Termination shall be effective immediately upon such occurrence
without notice.
10.2. Notice Requirement
(a) In the event that any termination of this Agreement is
based upon the provisions of Article VII, such prior written notice shall be
given in advance of the effective date of termination as required by such
provisions.
(b) In the event that any termination of this Agreement is
based upon the provisions of Sections 10.1(b) - (d) or 10.1(g) - (i), prompt
written notice of the election to terminate this Agreement for cause shall be
furnished by the party terminating the Agreement to the non-terminating parties,
with said termination to be effective upon receipt of such notice by the
non-terminating parties.
(c) In the event that any termination of this Agreement is
based upon the provisions of Sections 10.1(j) or 10.1(k), prior written notice
of the election to terminate this Agreement for cause shall be furnished by the
party terminating this Agreement to the non-terminating parties. Such prior
written notice shall be given by the party terminating this Agreement to the
non-terminating parties at least 30 days before the effective date of
termination.
10.3. It is understood and agreed that the right to terminate
this Agreement pursuant to Section 10.1(a) may be exercised for any reason or
for no reason.
10.4. Effect of Termination
(a) Notwithstanding any termination of this Agreement pursuant
to Section 10.1 of this Agreement, and subject to Section 1.3 of this Agreement,
the Company may
<PAGE>
require the Fund and the Underwriter to, continue to make available additional
shares of the Fund for so long after the termination of this Agreement as the
Company desires pursuant to the terms and conditions of this Agreement as
provided in paragraph (b) below, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.4 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
(b) If shares of the Fund continue to be made available after
termination of this Agreement pursuant to this Section 10.4, the provisions of
this Agreement shall remain in effect except for Section 10.1(a) and thereafter
the Fund, the Underwriter, or the Company may terminate the Agreement, as so
continued pursuant to this Section 10.4, upon written notice to the other party,
such notice to be for a period that is reasonable under the circumstances but,
if given by the Fund or Underwriter, need not be for more than 60 days.
10.5. Except as necessary to implement contractowner initiated
or approved transactions, or as required by state insurance laws or regulations,
the Company shall not redeem Fund shares attributable to the Contracts (as
opposed to Fund shares attributable to the Company's assets held in the
Account), and the Company shall not prevent contractowners from allocating
payments to a Portfolio that was otherwise available under the Contracts, until
60 days after the Company shall have notified the Fund or Underwriter of its
intention to do so.
<PAGE>
ARTICLE XI. NOTICES
Any notice shall be deemed duly given only if sent by hand, evidenced
by written receipt or by certified mail, return receipt requested, to the other
party at the address of such party set forth below or at such other address as
such party may from time to time specify in writing to the other party. All
notices shall be deemed given three business days after the date received or
rejected by the addressee.
If to the Fund:
Mr. Bernard H. Garil
President
OpCap Advisors
200 Liberty Street
New York, NY 10281
If to the Company:
Stewart Gregg, Esq.
Counsel
ReliaStar Financial Corporation
20 Washington Avenue South
5th floor
Minneapolis, MN 55401
If to the Underwriter:
Mr. Thomas E. Duggan
Secretary
OCC Distributors
200 Liberty Street
New York, NY 10281
<PAGE>
ARTICLE XII. MISCELLANEOUS
12.1. All persons dealing with the Fund must look solely to
the property of the Fund for the enforcement of any claims against the Fund as
neither the Directors, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2. Subject to law and regulatory authority, each party
hereto shall treat as confidential all information reasonably identified as such
in writing by any other party hereto (including without limitation the names and
addresses of the owners of the Contracts) and, except as contemplated by this
Agreement, shall not disclose, disseminate or utilize such confidential
information until such time as it may come into the public domain without the
express prior written consent of the affected party; provided that each party
hereto may disclose such information to an affiliated company of the party if
the affiliated company agrees to treat such information as confidential.
12.3. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and the
same instrument.
12.5. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6. This Agreement shall not be assigned by any party hereto
without the prior written consent of all the parties.
<PAGE>
12.7. Each party hereto shall cooperate with each other party
and all appropriate governmental authorities (including without limitation the
SEC, the NASD and state insurance regulators) and shall permit each other and
such authorities reasonable access to its books and records in connection with
any investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
12.8. Each party represents that the execution and delivery of
this Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate or trust action, as applicable,
by such party and when so executed and delivered this Agreement will be the
valid and binding obligation of such party enforceable in accordance with its
terms.
12.9. The parties to this Agreement may amend the schedules to
this Agreement from time to time to reflect changes in or relating to the
Contracts, the Accounts or the Portfolios of the Fund.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed in its name and behalf by its duly authorized
representative as of the date and year first written above.
Company:
NORTHERN LIFE INSURANCE COMPANY
SEAL By:
---------------------------------
Fund:
OCC ACCUMULATION TRUST
SEAL By: /s/ (illegible)
---------------------------------
Underwriter:
OCC DISTRIBUTORS
By: /s/ (illegible)
---------------------------------
<PAGE>
SCHEDULE 1
Participation Agreement
Among
OCC Accumulation Trust, Northern Life Insurance Company
and
OCC Distributors
The following separate accounts of Northern Life Insurance Company are
permitted in accordance with the provisions of this Agreement to invest in
Portfolios of the Fund shown in Schedule 2:
Separate Account One
<PAGE>
SCHEDULE 2
Participation Agreement
Among
OCC Accumulation Trust, Northern Life Insurance Company
and
OCC Distributors
The Separate Account(s) shown on Schedule 1 may invest in the following
Portfolios of the OCC Accumulation Trust:
Equity Portfolio
Global Equity Portfolio
Managed Portfolio
Small Cap Portfolio
SERVICE AGREEMENT
AGREEMENT dated as of August 8, 1997, between Fred Alger Management,
Inc. ("Alger"), a New York Corporation with its principal offices at 75 Maiden
Lane, New York, NY 10038, as Investment Adviser for The Alger American Fund (the
"Fund"), and Northern Life Insurance Company ("Northern Life"), a Washington
corporation having its principal office and place of business at 1100 Third
Avenue, Seattle, WA, 98101-2930.
In consideration of the promises and mutual covenants set forth in this
Agreement, the Parties agree as follows:
1. SERVICES PROVIDED
Northern Life agrees to provide services to the Fund including the
following:
a) responding to inquiries from Northern Life Contract owners
using one or more Portfolios of the Fund as an investment
vehicle regarding the services performed by Northern Life as
they relate to the Fund;
b) providing information to Alger and to Contract owners with
respect to shares attributable to Contract owner accounts;
c) printing and mailing of shareholder communications from the
Fund (such as proxies, shareholder reports, annual and
semi-annual financial statements and dividend, distribution
and tax notices) as may be required;
d) communication directly with Contract owners concerning the
Fund's operations;
e) providing such other similar services as Alger may reasonably
request pursuant to the extent permitted or required under
applicable statutes, rules and regulations.
2. EXPENSE ALLOCATION
Subject to Paragraph 3 hereof, Northern Life or its affiliates shall
initially bear the costs of the following:
a) printing and distributing the Fund's prospectus, statement of
additional information and any amendments or supplements
thereto, periodic reports to shareholders, Fund proxy material
and other shareholder communications (collectively, the "Fund
Materials") to be distributed to prospective Contract owners;
<PAGE>
b) printing and distributing all sales literature or promotional
material developed by Northern Life or its affiliates and
relating to the contracts;
c) servicing Contract owners who have allocated Contract value to
a Portfolio, which servicing shall include, but is not limited
to, the items listed in Paragraph 1 of this Agreement.
3. PAYMENT OF EXPENSES
a) Alger will pay Northern Life a quarterly fee equal to a
percentage of the average daily net assets of the Portfolio
attributable to Contracts, at the annual rate set fourth in
the following schedule ("Portfolio Servicing Fee"), in
connection with the expenses incurred by Northern Life under
Paragraph 2 hereof: .10% of all assets in Portfolio of the
Fund.
b) From time to time, the Parties hereto shall review the
Portfolio Servicing Fee to determine whether it reasonably
approximates the incurred and anticipated costs, over time of
Northern Life in connection with its duties hereunder. The
Parties agree to negotiate in good faith any change to the
Portfolio Servicing Fee proposed by a Party in good faith.
4. TERM OF AGREEMENT
Either Party may terminate this Agreement, without penalty, on 60 days'
written notice to the other Party. Unless so terminated, this Agreement
shall continue in effect for so long as Alger or its successor(s) in
interest, or any affiliate thereof, continues to perform in a similar
capacity for the Fund, and for so long as any Contract value or any
monies attributable to Northern Life is allocated to a Portfolio.
5. INDEMNIFICATION
a) Northern Life agrees to indemnify and hold harmless Alger and
its officers, directors and affiliates from any and all loss,
liability and expense resulting from the gross negligence or
willful wrongful act of Northern Life under this Agreement,
except to the extent such loss, liability or expense is the
result of the willful misfeasance, bad faith or gross
negligence of Alger in the performance of its duties, or by
reason of the reckless disregard of its obligations and duties
under this Agreement.
b) Alger agrees to indemnify and hold harmless Northern Life and
its officers, directors and affiliates from any and all loss,
liability and expense resulting from the gross negligence or
willful wrongful act of Alger under this Agreement, except to
the extent such loss, liability or expense is the result of
the willful misfeasance, bad faith or gross negligence of
Northern Life in the performance of
<PAGE>
its duties, or by reason of the reckless disregard of its
obligations and duties under this Agreement.
6. NOTICE
Notices and communications required or permitted hereby will be given
to the following persons at the following addresses and facsimile
numbers, or such other persons, addresses or facsimile numbers as the
Party receiving such notices or communications may subsequently direct
in writing:
Fred Alger Management, Inc.
75 Maiden Lane
New York, NY 10038
Attn: Gregory S. Duch
Fax: (201) 434-1459
Northern Life Insurance Company
c/o ReliaStar Life Insurance Company
20 Washington Avenue South
Minneapolis, MN. 55401
Attn: Stewart Gregg, Esq.
Fax: (612) 372-5512
7. APPLICABLE LAW
Except insofar as the Investment Company Act of 1940 or other federal
laws and regulations may be controlling, this Agreement will be
construed and the provisions hereof interpreted under and in accordance
with New York law, without regard for that state's principles of
conflict of laws.
<PAGE>
8. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement
will not be affected thereby.
9. RIGHTS CUMULATIVE
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, that the Parties are entitled to
under federal and state laws.
10. ASSIGNMENT
Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written consent of the other
party thereto.
11. AMENDMENT
This Agreement may be amended or modified in whole or in part only by a
written agreement executed by both parties.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized officers signing below.
FRED ALGER MANAGEMENT, INC.
By:______________________________
Name:____________________________
Title:___________________________
NORTHERN LIFE LIFE INSURANCE
COMPANY
By:______________________________
Name:____________________________
Title:___________________________
August 8, 1997
Northern Life Insurance Company
5th Floor
20 Washington Ave. South
Minneapolis, MN 55401
Dear Sirs or Madams:
This letter sets forth the agreement between Northern Life Insurance
Company (the "Company"), and Janus Capital Corporation (the "Adviser"),
concerning certain administrative services.
1. Administrative Services and Expenses. Administrative services for the
separate accounts of the Company (the "Accounts") which invests in one
or more portfolios (collectively, the "Portfolios") of Janus Aspen
Series (the "Trust") pursuant to the Participation Agreement between
the Company and the Trust dated August 8, 1997 (the "Participation
Agreement"), and for purchasers of variable annuity or life insurance
contracts (the "Contracts") issued through the Accounts are the
responsibility of the Company. Administrative services for the
Portfolios, in which the Accounts invest, and for purchasers of shares
of the Portfolios, are the responsibility of the Trust. The
administrative services the Company intends to provide to the Trust and
its Portfolios are set forth in Schedule A attached to this letter
agreement, which may be amended from time to time.
2. Service Fee. In consideration of the anticipated administrative expense
savings resulting to the Trust from the Company's services, the Adviser
agrees to pay the Company a fee ("Service Fee"), computed daily and
paid monthly in arrears, at an annual rate equal to fifteen (15) basis
points (0.15%) of the average monthly value of the shares of the
Portfolios held in the Accounts, such payments to commence following
the month in which the average monthly value of investments by the
Accounts, together with investments in the Portfolios by separate
accounts of ReliaStar Life Insurance Company and ReliaStar Bankers
Security Life Insurance Company, reaches $50 million. The Service Fee
will be correspondingly suspended if the average monthly value of such
investments drops below $50 million in any month.
For purposes of this Paragraph 2, the average monthly value of the
shares of the Portfolios will be based on the sum of the daily net
asset values (as calculated by the Portfolios) for each calendar day in
a month divided by the number of calendar days in the month.
<PAGE>
3. Nature of Payments. The parties to this letter agreement recognize and
agree that the Adviser's payments to the Company relate to
administrative services to the Trust only and do not constitute payment
in any manner for administrative services provided by the Company to
the Account or to the Contracts, for investment advisory services or
for costs of distribution of Contracts or of shares of the Portfolios,
and that these payments are not otherwise related to investment
advisory or distribution services or expenses.
4. Representations and Warranties.
a. The Adviser represents and warrants that in the event the
Trustees of the Trust approve the payment of all or any
portion of the Service Fee by the Trust, the Trust will
calculate in the same manner the Service Fee to all insurance
companies that have entered into Service Fee arrangements with
the Adviser and/or the Trust (the "Participating Insurance
Companies").
b. The Company represents and warrants that: (1) it and its
employees and agents meet the requirements of applicable law,
including but not limited to federal and state securities law
and state insurance law, for the performance of services
contemplated herein; and (2) it will not purchase Trust shares
of the Portfolios with Account assets derived from
tax-qualified retirement plans except indirectly, through
Contracts purchased in connection with such plans, and the
Company is not a fiduciary with respect to the Contracts for
purposes of the Employee Retirement Income Securities Act of
1974 ("ERISA").
c. The Company represents, warrants and agrees that: (1) the
Company's receipt of the Service Fee is in compliance with
Section 26 of the Investment Company Act of 1940 ("1940 Act")
to the extent Section 26 is applicable to the Contracts; (2)
no portion of the Service Fee will be rebated by the Company
to any Contract owner; and (3) if required by applicable law,
the Company will disclose to each Contract owner the existence
of the Service Fee received by the Company pursuant to this
letter agreement in a form consistent with the requirements of
applicable law and will disclose the amount of the Service
Fee, if any, that is paid by the Trust.
5. Indemnification
a. The Company agrees to indemnify and hold harmless the Adviser
and its directors, officers, and employees from any and all
loss, liability and expense resulting from any gross
negligence or willful wrongful act of the Company in
performing its services under this letter agreement, from the
inaccuracy or breach of any representation made in this letter
agreement, or from a breach of a material provision of this
letter agreement, except to the extent such loss, liability or
expense is the result of the Adviser's willful misfeasance,
bad faith or gross negligence in the performance of its
duties.
<PAGE>
b. The Adviser agrees to indemnify and hold harmless the Company
and its directors, officers, agents and employees from any and
all loss, liability and expense resulting from any gross
negligence or willful wrongful act of the Adviser in
performing its services under this letter agreement, from the
inaccuracy or breach of any representation made in this letter
agreement, or from a breach of a material provision of this
letter agreement, except to the extent such loss, liability or
expense is the result of the Company's willful misfeasance,
bad faith or gross negligence in the performance if its
duties.
6. Termination.
a. Either party may terminate this letter agreement, without
penalty, on sixty (60) days' written notice to the other
party.
b. This letter agreement will terminate at the option of either
party in the event of the termination of the Participation
Agreement.
c. This letter agreement will terminate immediately upon the
determination of either party, with the advice of counsel,
that the payment of the Service Fee is in conflict with
applicable law.
7. Amendment. This letter agreement may be amended only upon mutual
agreement of the parties hereto in writing.
8. Confidentiality. The terms of this letter agreement will be treated as
confidential and will not be disclosed to the public or any outside
party (other than affiliates of the Company) except with each party's
prior written consent, as required by law or judicial process, or as
provided in paragraph 4c herein.
9. Assignment. This letter agreement may not be assigned (as that term is
defined in the 1940 Act) by either party without the prior written
approval of the other party, which approval will not be unreasonably
withheld, except that the Adviser may assign its obligations under this
letter agreement, including the payment of all or any portion of the
Service Fee, to the Trust upon thirty (30) days' written notice to the
Company.
10. Governing Law. This letter agreement will be construed and the
provisions hereof interpreted under and in accordance with the laws of
the State of Colorado.
11. Counterparts. This letter agreement may be executed in counterparts,
each of which will be deemed an original but all of which will together
constitute one and the same instrument.
<PAGE>
If this letter agreement is consistent with your understanding of the matters we
discussed concerning administrative expense payments, kindly sign below and
return a signed copy to us.
Very truly yours,
JANUS CAPITAL CORPORATION
By: _______________________________
Name: _______________________________
Title: _______________________________
NORTHERN LIFE INSURANCE COMPANY
By: _______________________________
Name: _______________________________
Title: _______________________________
Attachment: Schedule A
<PAGE>
SCHEDULE A
Pursuant to the letter agreement to which this Schedule is attached, the Company
or an affiliate will perform administrative services including, but not limited
to, the following:
1. Print and mail to Contract owners or otherwise disseminate copies of
the Portfolios' prospectuses, proxy materials, periodic fund reports to
shareholders and other materials that the Trust is required by law or otherwise
to provide to its shareholders.
2. Provide Contract owner services including, but not limited to,
financial consultants' advice with respect to inquiries related to the
Portfolios (not including information about performance or related to sales) and
communicating with Contract owners about Portfolio (and subaccount) performance.
3. Provide other administrative support for the Trust as mutually
agreed to by the Company and the Adviser and relieve the Trust of other usual or
incidental administrative services provided to individual Contract owners.
July 28, 1997
Northern Life Insurance Company
20 Washington Avenue South
Minneapolis, MN 55401
Ladies and Gentlemen :
This letter sets forth the terms and conditions of the services agreement
between NEUBERGER&BERMAN MANAGEMENT INC. ("NBMI") and NORTHERN LIFE INSURANCE
COMPANY (the "Company") effective as of the 8th day of August, 1997.
The Company, NBMI, Neuberger&Berman Advisers Management Trust (the "Trust") and
Advisers Managers Trust have entered into a FUND PARTICIPATION AGREEMENT dated
the 8th day of August, 1997, as may be amended from time to time (the
"Participation Agreement"), pursuant to which the Company, on behalf of certain
of its separate accounts (the "Separate Accounts"), purchases shares ("Shares")
of certain Portfolios of the Trust ("Portfolios") to serve as an investment
vehicle under certain variable annuity and/or variable life insurance contracts
("Variable Contracts") offered by the Company, which Portfolios may be one of
several investment options available under the Variable Contracts.
NBMI recognizes that in the course of soliciting applications for its Variable
Contracts and in servicing owners of the Variable Contracts, the Company and its
agents that are registered representatives of broker-dealers provide information
about the Trust and its Portfolios (and Series of Advisers Managers Trust) from
time to time, answer questions concerning the Trust and its Portfolios (and
Series), including questions respecting Variable Contract owners' interests in
one or more Portfolios, and provide services respecting investments in the
Portfolios.
NBMI desires that the efforts of the Company and its agents in providing written
and oral information and services regarding the Trust to current and prospective
Variable Contract owners shall continue.
Accordingly, the following represents the collective intention and understanding
of the services agreement between NBMI and the Company.
The Company and/or its affiliates agree to provide services ("Services") to
current owners of Variable Contracts including, but not limited to:
teleservicing support in connection
<PAGE>
with the Portfolios; delivery of current Trust prospectuses, reports, notices,
proxies and proxy statements and other informational materials; facilitation of
the tabulation of Variable Contract owners' votes in the event of a meeting of
Trust shareholders; maintenance of Variable Contract records reflecting Shares
purchased and redeemed and Share balances, and the conveyance of that
information to the Trust, its transfer agent, or NBMI as may be reasonably
requested; provision of support services including providing information about
the Trust and its Portfolios (and Series of Advisers Managers Trust) and
answering questions concerning the Trust and its Portfolios (and Series),
including questions respecting Variable Contract owners' interests in one or
more Portfolios; provision and administration of Variable Contract features for
the benefit of Variable Contract owners participating in the Trust including
fund transfers, dollar cost averaging, asset allocation, portfolio rebalancing,
earnings sweep, and pre-authorized deposits and withdrawals; and provision of
other services as may be agreed upon from time to time.
In consideration of the Services, NBMI agrees to pay to the Company a service
fee at an annual rate equal to fifteen (15) basis points (0.15%) of the average
daily value of the Shares held in Separate Accounts. For purposes of computing
the payment to the Company under this paragraph, the average daily value of
Shares held in Separate Accounts over a monthly period shall be computed by
totaling such Separate Accounts' aggregate investment (Share net asset value
multiplied by total number of Shares held by such Separate Accounts) on each
business day during the calendar month, and dividing by the total number of
business days during such month. The payment to the Company under this paragraph
shall be calculated by NBMI at the end of each calendar month and will be paid
to the Company within thirty (30) days thereafter.
The services agreement shall remain in full force and effect for an initial term
of one year, and shall automatically renew for successive one year periods. The
services agreement may be terminated by either the Company or NBMI upon sixty
(60) days' written notice to the other, and shall terminate automatically upon
redemption of all Shares held in Separate Accounts, upon termination of the
Participation Agreement, or upon assignment of the Participation Agreement by
either the Company or NBMI.
Notwithstanding the termination of the services agreement, NBMI will continue to
pay the
<PAGE>
service fees in accordance with the preceding paragraph so long as net assets of
the Company or a Separate Account remain in a Portfolio, provided such continued
payment is permitted in accordance with applicable law and regulation. The
services agreement may be amended only upon mutual agreement of the Company and
NBMI in writing.
Nothing in the services agreement shall amend, modify or supersede any
contractual terms, obligations or covenants among or between any of the Company,
NBMI, the Trust or Advisers Managers Trust previously or currently in effect,
including those contractual terms, obligations or covenants contained in the
Participation Agreement.
If the services agreement is consistent with your understanding of the matters
we discussed concerning the Company's provision of the Services, please sign
below.
Very truly yours,
NEUBERGER&BERMAN MANAGEMENT INC.
By: Peter Sundman
Title: Senior Vice President
ACKNOWLEDGED AND AGREED TO:
NORTHERN LIFE INSURANCE COMPANY
______________________________
By:
Title:
Northern Life Insurance Company
20 Washington Street
Avenue South, Route 1237
Minneapolis, MN 55401
Attn: Stewart Gregg, Esq.
Gentlemen:
This letter sets forth the agreement between OpCap Advisors (the "Adviser") and
Northern Life Insurance Company (the "Company") concerning certain
administrative services to be provided by you on a sub-administration basis,
with respect to OCC Accumulation Trust (the "Fund").
1. Administrative Services and Expenses. Administrative services for the
Company's Separate Account entitled Separate Account One (the "Separate
Account"), which invests in Series of the Fund pursuant to the
Participation Agreement between the Company and the Fund (the
"Participation Agreement") and for purchasers of variable annuity/life
contracts issued through the Separate Account (the "Contracts"), are the
responsibility of the Company. Administrative services of the Fund, in
which the Separate Account invests, and for purchasers of Fund shares, are
the responsibility of the Fund or the Adviser.
You have agreed to assist us, as we may request from time to time, with the
provision of administrative services ("Administrative Services") to the
Fund, on a sub-administration basis, as they may relate to the investment
in the Fund by the Separate Account. It is anticipated that Administrative
Services may include (but shall not be limited to) the mailing of Fund
reports, notices, proxies and proxy statements and other informational
materials to holders of the Contracts supported by the Separate Account
with allocations to the Fund; the preparation of various reports for
submission to the Fund's Board of Trustees; the provision of shareholder
support services with respect to the portfolios serving as funding vehicles
for the Contracts; such services listed on Schedule A attached hereto and
made a part hereof.
2. Administrative Expense Payments. In consideration of the anticipated
administrative expense savings resulting to the Adviser from the
arrangements set forth in this Agreement, the Adviser agrees to pay the
Company on a quarterly basis, from the Adviser's own resources, including
its bona fide profits, an amount set forth in Schedule B attached hereto
and made a part hereof.
For purposes of computing the payment to the Company contemplated under
this Paragraph 2, the average daily net assets invested by the Company over
a quarterly period shall be computed by totaling the Company's aggregate
investment (share net
<PAGE>
asset value multiplied by the total number of shares held by the Company)
on each calendar day during the quarterly period, and dividing by the total
number of calendar days during such quarterly period.
The payment contemplated by this Paragraph 2 shall be calculated by the
Adviser at the end of each quarter and will be paid to the Company within
30 days thereafter. Payment will be accompanied by a statement showing the
calculation of the quarterly amount payable by the Adviser and such other
supporting data as may be reasonably requested by the Company.
3. Nature of Payments. The parties to this letter agreement recognize and
agree that the Adviser's payments to the Company relate to Administrative
Services only. The amount of administrative expense payments made by the
Adviser to the Company pursuant to Paragraph 2 of this letter agreement
shall not be deemed to be conclusive with respect to actual administrative
expenses or savings of the Adviser.
4. Term. This letter agreement shall remain in full force and effect for so
long as the assets of the Fund are attributable to amounts invested by the
Company under the Participation Agreement, unless terminated in accordance
with Paragraph 5 of this letter agreement.
5. Termination. This letter agreement will be terminated by either party upon
60 days advance written notice or immediately upon the mutual agreement of
the parties hereto in writing.
6. Representation. The Company represents and agrees that it will maintain and
preserve all records as required by law to be maintained and preserved in
connection with providing the Administrative Services, and will otherwise
comply with all laws, rules and regulations applicable to the
Administrative Services.
7. Subcontractors. The Company may, with the consent of the Adviser, contract
with or establish relationships with other parties for the provision of the
Administrative Services or other activities of the Company required by this
letter agreement, provided that the Company shall be fully responsible for
the acts and omission of such other parties.
8. Authority. This letter agreement shall in no way limit the authority of the
Fund or OCC Distributors, the Fund's Distributor, to take such action as
any of such parties may deem appropriate or advisable in connection with
all matters relating to the operations of the Funds and/or sale of its
shares. The Company understands and agrees that the obligations of the
Adviser under this letter agreement are not binding upon the Fund. It is
further understood and agreed that in performing the Administrative
Services, the Company, acting in its capacity described herein, shall at no
time be acting as an agent for the Adviser.
<PAGE>
9. Miscellaneous. This letter agreement may be amended only upon mutual
agreement of the parties hereto in writing. This letter agreement may not
be assigned by a party hereto, by operation of law or otherwise, without
the prior written consent of the other party. This letter agreement,
including Schedule A and Schedule B, constitutes the entire agreement
between the parties with respect to the matters dealt with herein, and
supersedes any previous agreements and documents with respect to such
matters. This letter agreement may be executed in counterparts, each of
which shall be deemed an original but all of which shall together
constitute one and the same instrument. The Company agrees to notify the
Adviser promptly if for any reason it is unable to perform fully and
promptly any of its obligations under the letter agreement.
10. Notice. Any notices required to be sent hereunder shall be sent in
accordance with the Participation Agreement.
If this letter agreement is consistent with your understanding of the
matters we discussed concerning administrative expense payments, kindly sign
below and return a signed copy to us.
Very truly yours,
OpCap Advisors
By:/s/ (illegible)
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Acknowledged and Agreed:
Northern Life Insurance Company
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Attachment: Schedule A
Schedule B
<PAGE>
SCHEDULE A
I. Fund-related contractowner services
- Printing and mailing costs associated with dissemination of Fund
prospectus to existing contractowners
- Telephonic support for contract owners with respect to inquiries
about the Fund (not including information related to sales)
- Fund proxies (including facilitating distribution of proxy
material to contractowners, tabulation and reporting)
II. Other administrative support
- Sub-accounting services
- Relieving the Fund of other usual or incidental administrative
services provided to individual shareholders
- Providing other administrative support to the Fund as mutually
agreed between insurer and the Fund
<PAGE>
SCHEDULE B
The Adviser agrees to pay the Company a quarterly amount that is equal
on an annual basis to the following percentage of the average aggregate daily
net assets invested by the Company, ReliaStar Bankers Security Life Insurance
Company and ReliaStar Life Insurance Company in the Fund:
AVERAGE DAILY NET ASSETS ANNUAL RATE
INVESTED BY THE COMPANY
First $300 million 0.15%
Next $300 million 0.20%
Over $600 million 0.25%
NORTHERN LIFE JAMES E. NELSON
A ReliaStar Company Counsel
Tel: 206-292-1111, Ext. 2513
Northern Life Insurance Company Fax: 800-531-5022
1110 Third Avenue / P.O. Box 12530
Seattle, Washington 98111-4530
(206) 292-1111
July 29, 1997
Northern Life Insurance Company
1110 Third Avenue
Seattle, WA 98101
Dear Madam/Sir:
In connection with the proposed registration under the Securities Act of 1933,
as amended, of variable/fixed annuity contracts ("the Contract") and interests
in Separate Account One (the "Variable Account"). I have examined documents
relating to the establishment of the Variable Account by the Board of Directors
of Northern Life Insurance Company (the "Company") as a separate account for
assets applicable to variable contracts, pursuant to RCW 48.18A.010 et seq., as
amended, and the Registration Statement, on Form N-4, amended by Post-Effective
Amendment No. 4 thereto, File No. 33-90474 (the "Registration Statement"), and
I have examined such other documents and have reviewed such matters of law as I
deemed necessary for this opinion, and I advise you that in my opinion:
1. The Variable Account is a separate account of the Company duly created and
validly existing pursuant to the laws of the State of Washington.
2. The Contracts, when issued in accordance with the Prospectus constituting a
part of the Registration Statement and upon compliance with applicable
local law, will be legal and binding obligations of the Company in
accordance with their respective terms.
3. The portion of the assets held in the Variable Account equal to reserves
and other contract liabilities with respect to the Variable Account are not
chargeable with liabilities arising out of any other business the Company
might conduct.
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ James E. Nelson
James E. Nelson
Counsel
INDEPENDENT AUDITORS' CONSENT
Board of Directors and Contract Holders
Northern Life Separate Account One
We consent to the incorporation by reference in this Post-Effective Amendment
No. 4 to Registration Statement on Form N-4 (File No. 33-90474) of the Northern
Life Separate Account One filed under the Securities Act of 1933 and Amendment
No. 5 to the Registration Statement filed under the Investment Company Act of
1940, respectively, of our report dated February 7, 1997 on the audit of the
financial statements of Northern Life Separate Account One as of December 31,
1996 and for the year ended December 31, 1996 and the period from October 20,
1995 to December 31, 1995, and our report dated February 9, 1997, on the audit
of the statutory-basis financial statements of Northern Life Insurance Company
as of and for the years ended December 31, 1996 and 1995 incorporated by
reference in the Statement of Additional Information of such Registration
Statement, and to the references to us under the heading "Financial Statements
and Experts" appearing in the Prospectus and under the headings "Independent
Auditors" and "Financial Statements" appearing in the Statement of Additional
Information, all of which are part of such Registration Statement.
/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
July 30, 1997
<TABLE>
<CAPTION>
FUND: JAG JANUS AGGRESSIVE GROWTH PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C>
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.267%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 88.99%
Total Return incl M&E 80.39%[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 78.81%[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
13-Sep-93 $1,000 10.000000 100.00 $1,803.95 $1,788.12 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,789.12 $1,743.12 $1,675.47
Total Return Inception 88.99% 78.81% 74.31% 67.55%
Average Annual Return 21.26% 19.25% 18.33% 16.92%
------------------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
<PAGE>
OVER 3 YEARS:
Total Return of Fund 60.08%
Total Return incl M&E 53.45%
Total Return incl M&E and Cont Fee 52.23%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.000000 100.00 $1,534.50 $1,522.27 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,522.27 $1,477.27 $1,412.66
Total Return 5 Years 60.08% 52.23% 47.73% 41.27%
Average Annual Return 16.98% 15.04% 13.89% 12.21%
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 7.95%
Total Return incl M&E 6.44%
Total Return incl M&E and Cont Fee 6.15%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,064.39 $1,061.55 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,061.55 $1,007.55 $985.12
Total Return 1 Year 7.95% 6.15% 0.75% -1.49%
Average Annual Return 7.95% 6.15% 0.75% -1.49%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 7.95%
Total Return incl M&E 6.44% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 6.15% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,064.39 $1,061.55 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,061.55 $1,007.55 $985.12
Total Return Yr to Date 7.95% 6.15% 0.75% -1.49%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: JGP JANUS GROWTH PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.267%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 64.00%
Total Return incl M&E 56.54% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 55.17% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
13-Sep-93 $1,000 10.000000 100.00 $1,566.41 $1,551.68 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,551.68 $1,506.68 $1,453.93
Total Return Inception 64.00% 55.17% 50.67% 45.39%
Average Annual Return 16.17% 14.23% 13.22% 12.00%
------------------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
<PAGE>
OVER 3 YEARS:
Total Return of Fund 58.44%
Total Return incl M&E 51.88%
Total Return incl M&E and Cont Fee 50.67%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.000000 100.00 $1,518.78 $1,506.67 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,506.67 $1,461.67 $1,398.19
Total Return 5 Years 58.44% 50.67% 46.17% 39.82%
Average Annual Return 16.58% 14.64% 13.49% 11.82%
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 18.45%
Total Return incl M&E 16.79%
Total Return incl M&E and Cont Fee 16.48%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,167.92 $1,164.80 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,164.80 $1,110.80 $1,080.94
Total Return 1 Year 18.45% 16.48% 11.08% 8.09%
Average Annual Return 18.45% 16.48% 11.08% 8.09%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 18.45%
Total Return incl M&E 16.79% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 16.48% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,167.92 $1,164.80 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,164.80 $1,110.80 $1,080.94
Total Return Yr to Date 18.45% 16.48% 11.08% 8.09%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: JIG JANUS INTERNATIONAL GROWTH PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.267%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 61.25%
Total Return incl M&E 55.30% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 54.19% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
02-May-94 $1,000 10.000000 100.00 $1,552.96 $1,541.94 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,541.94 $1,496.94 $1,430.92
Total Return Inception 61.25% 54.19% 49.69% 43.09%
Average Annual Return 19.61% 17.62% 16.32% 14.37%
------------------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
<PAGE>
OVER 3 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 34.71%
Total Return incl M&E 32.82%
Total Return incl M&E and Cont Fee 32.47%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,328.24 $1,324.70 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,324.70 $1,270.70 $1,229.32
Total Return 1 Year 34.71% 32.47% 27.07% 22.93%
Average Annual Return 34.71% 32.47% 27.07% 22.93%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 34.71%
Total Return incl M&E 32.82% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 32.47% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,328.24 $1,324.70 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,324.70 $1,270.70 $1,229.32
Total Return Yr to Date 34.71% 32.47% 27.07% 22.93%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: JWG JANUS WORLDWIDE GROWTH PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.267%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 98.75%
Total Return incl M&E 89.71% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 88.05% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
13-Sep-93 $1,000 10.000000 100.00 $1,897.11 $1,880.47 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,880.47 $1,835.47 $1,762.00
Total Return Inception 98.75% 88.05% 83.55% 76.20%
Average Annual Return 23.13% 21.08% 20.20% 18.72%
------------------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
<PAGE>
OVER 3 YEARS:
Total Return of Fund 66.86%
Total Return incl M&E 59.95%
Total Return incl M&E and Cont Fee 58.67%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.000000 100.00 $1,599.50 $1,586.74 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,586.74 $1,541.74 $1,472.49
Total Return 5 Years 66.86% 58.67% 54.17% 47.25%
Average Annual Return 18.61% 16.64% 15.52% 13.77%
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 29.04%
Total Return incl M&E 27.23%
Total Return incl M&E and Cont Fee 26.89%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,272.33 $1,268.94 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,268.94 $1,214.94 $1,177.58
Total Return 1 Year 29.04% 26.89% 21.49% 17.76%
Average Annual Return 29.04% 26.89% 21.49% 17.76%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 29.04%
Total Return incl M&E 27.23% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 26.89% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,272.33 $1,268.94 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,268.94 $1,214.94 $1,177.58
Total Return Yr to Date 29.04% 26.89% 21.49% 17.76%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: NLM NEUBERGER & BERMAN LIMITED MATURITY BOND PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.267%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 166.47%
Total Return incl M&E 124.00[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 116.75[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
10-Sep-84 $1,000 10.000000 100.00 $2,239.97 $2,167.54 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $2,167.54 $2,167.54 $2,167.54
Total Return Inception 166.47% 116.75% 116.75% 116.75%
Average Annual Return 8.28% 6.48% 6.48% 6.48%
------------------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund 90.88%
Total Return incl M&E 65.78%
Total Return incl M&E and Cont Fee 61.41%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.000000 100.00 $1,657.79 $1,614.13 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,614.13 $1,614.13 $1,599.60
Total Return 10 Years 90.88% 61.41% 61.41% 59.96%
Average Annual Return 6.68% 4.90% 4.90% 4.81%
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 29.57%
Total Return incl M&E 20.75%
Total Return incl M&E and Cont Fee 19.15%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.000000 100.00 $1,207.51 $1,191.50 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,191.50 $1,155.50 $1,127.16
Total Return 5 Years 29.57% 19.15% 15.55% 12.72%
Average Annual Return 5.32% 3.57% 2.93% 2.42%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 3 YEARS:
Total Return of Fund 15.53%
Total Return incl M&E 10.75%
Total Return incl M&E and Cont Fee 9.86%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.000000 100.00 $1,107.45 $1,098.62 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,098.62 $1,053.62 $1,019.52
Total Return 5 Years 15.53% 9.86% 5.36% 1.95%
Average Annual Return 4.93% 3.18% 1.76% 0.65%
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 4.31%
Total Return incl M&E 2.85%
Total Return incl M&E and Cont Fee 2.58%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,028.50 $1,025.76 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,025.76 $971.76 $951.90
Total Return 1 Year 4.31% 2.58% -2.82% -4.81%
Average Annual Return 4.31% 2.58% -2.82% -4.81%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 4.31%
Total Return incl M&E 2.85% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 2.58% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,028.50 $1,025.76 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,025.76 $971.76 $951.90
Total Return Yr to Date 4.31% 2.58% -2.82% -4.81%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: NPP NEUBERGER & BERMAN PARTNERS PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.267%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 72.76%
Total Return incl M&E 66.12[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 64.89[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
22-Mar-94 $1,000 10.000000 100.00 $1,661.18 $1,648.89 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,648.89 $1,603.89 $1,530.17
Total Return Inception 72.76% 64.89% 60.39% 53.02%
Average Annual Return 21.73% 19.70% 18.52% 16.53%
------------------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
<PAGE>
OVER 3 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.000000 100.OO #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 29.57%
Total Return incl M&E 27.76%
Total Return incl M&E and Cont Fee 27.42%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,277.56 $1,274.15 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,274.15 $1,220.15 $1,182.42
Total Return 1 Year 29.57% 27.42% 22.02% 18.24%
Average Annual Return 29.57% 27.42% 22.02% 18.24%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 29.57%
Total Return incl M&E 27.76% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 27.42% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,277.56 $1,274.15 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,274.15 $1,220.15 $1,182.42
Total Return Yr to Date 29.57% 27.42% 22.02% 18.24%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: NHY NORTHSTAR HIGH YIELD BOND FUND
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.267%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 35.95%
Total Return incl M&E 30.95[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 30.02[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
06-May-94 $1,000 10.000000 100.00 $1,309.50 $1,300.25 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,300.25 $1,255.25 $1,206.63
Total Return Inception 35.95% 30.02% 25.52% 20.66%
Average Annual Return 12.25% 10.38% 8.93% 7.32%
------------------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
<PAGE>
OVER 3 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 15.75%
Total Return incl M&E 14.13%
Total Return incl M&E and Cont Fee 13.83%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,141.30 $1,138.25 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,138.25 $1,084.25 $1,056.30
Total Return 1 Year 15.75% 13.83% 8.43% 5.63%
Average Annual Return 15.75% 13.83% 8.43% 5.63%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 15.75%
Total Return incl M&E 14.13% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 13.83% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,141.30 $1,138.25 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,138.25 $1,084.25 $1,056.30
Total Return Yr to Date 15.75% 13.83% 8.43% 5.63%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: NIV NORTHSTAR INTERNATIONAL VALUE FUND
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.267%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund #N/A
Total Return incl M&E #N/A[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee #N/A[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
08-Aug-97 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return Inception #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
<PAGE>
OVER 3 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 1 Year #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund #N/A
Total Return incl M&E #N/A [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee #N/A [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return Yr to Date #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
<PAGE>
FUND: OEP OCC EQUITY PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.267%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 262.64%
Total Return incl M&E 222.04[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 214.88[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Aug-88 $1,000 10.000000 100.00 $3,220.38 $3,148.80 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $3,148.80 $3,148.80 $3,092.12
Total Return Inception 262.64% 214.88% 214.88% 209.21%
Average Annual Return 16.53% 14.59% 14.59% 14.34%
------------------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 126.11%
Total Return incl M&E 110.72%
Total Return incl M&E and Cont Fee 107.93%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.000000 100.00 $2,107.19 $2,079.26 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $2,079.26 $2,043.26 $1,966.98
Total Return 5 Years 126.11% 107.93% 104.33% 96.70%
Average Annual Return 17.72% 15.77% 15.36% 14.49%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 3 YEARS:
Total Return of Fund 77.82%
Total Return incl M&E 70.46%
Total Return incl M&E and Cont Fee 69.10%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.000000 100.00 $1,704.56 $1,690.96 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,690.96 $1,645.96 $1,569.21
Total Return 5 Years 77.82% 69.10% 64.60% 56.92%
Average Annual Return 21.15% 19.14% 18.07% 16.21%
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 23.40%
Total Return incl M&E 21.67%
Total Return incl M&E and Cont Fee 21.35%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,216.72 $1,213.48 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,213.48 $1,159.48 $1,126.11
Total Return 1 Year 23.40% 21.35% 15.95% 12.61%
Average Annual Return 23.40% 21.35% 15.95% 12.61%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 23.40%
Total Return incl M&E 21.67% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 21.35% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,216.72 $1,213.48 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,213.48 $1,159.48 $1,126.11
Total Return Yr to Date 23.40% 21.35% 15.95% 12.61%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: OGE OCC GLOBAL EQUITY PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.267%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 36.71%
Total Return incl M&E 33.21[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 32.56[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Mar-95 $1,000 10.000000 100.00 $1,332.12 $1,325.60 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,325.60 $1,271.60 $1,230.16
Total Return Inception 36.71% 32.56% 27.16% 23.02%
Average Annual Return 18.54% 16.57% 13.96% 11.93%
------------------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
<PAGE>
OVER 3 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 15.00%
Total Return incl M&E 13.39%
Total Return incl M&E and Cont Fee 13.09%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,133.90 $1,130.88 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,130.88 $1,076.88 $1,049.45
Total Return 1 Year 15.00% 13.09% 7.69% 4.95%
Average Annual Return 15.00% 13.09% 7.69% 4.95%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 15.00%
Total Return incl M&E 13.39% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 13.09% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,133.90 $1,130.88 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,130.88 $1,076.88 $1,049.45
Total Return Yr to Date 15.00% 13.09% 7.69% 4.95%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: OMP OCC MANAGED PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.267%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 367.55%
Total Return incl M&E 315.20[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 305.97[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Aug-88 $1,000 10.000000 100.00 $4,152.02 $4,059.73 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $4,059.73 $4,059.73 $3,986.66
Total Return Inception 367.55% 305.97% 305.97% 298.67%
Average Annual Return 20.10% 18.10% 18.10% 17.85%
------------------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 140.16%
Total Return incl M&E 123.81%
Total Return incl M&E and Cont Fee 120.85%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.000000 100.00 $2,238.13 $2,208.46 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $2,208.46 $2,172.46 $2,089.20
Total Return 5 Years 140.16% 120.85% 117.25% 108.92%
Average Annual Return 19.15% 17.17% 16.79% 15.88%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 3 YEARS:
Total Return of Fund 83.37%
Total Return incl M&E 75.78%
Total Return incl M&E and Cont Fee 74.37%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.000000 100.00 $1,757.76 $1,743.74 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,743.74 $1,698.74 $1,618.19
Total Return 5 Years 83.37% 74.37% 69.87% 61.82%
Average Annual Return 22.40% 20.36% 19.32% 17.40%
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 22.80%
Total Return incl M&E 21.08%
Total Return incl M&E and Cont Fee 20.76%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,210.81 $1,207.58 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,207.58 $1,153.58 $1,120.63
Total Return 1 Year 22.80% 20.76% 15.36% 12.06%
Average Annual Return 22.80% 20.76% 15.36% 12.06%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 22.80%
Total Return incl M&E 21.08% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 20.76% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,210.81 $1,207.58 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,207.58 $1,153.58 $1,120.63
Total Return Yr to Date 22.80% 20.76% 15.36% 12.06%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: OSC OCC SMALL CAP PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.267%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 216.96%
Total Return incl M&E 181.47[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 175.22[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Aug-88 $1,000 10.000000 100.00 $2,814.73 $2,752.16 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $2,752.16 $2,752.16 $2,702.62
Total Return Inception 216.96% 175.22% 175.22% 170.26%
Average Annual Return 14.68% 12.77% 12.77% 12.53%
------------------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 96.63%
Total Return incl M&E 83.25%
Total Return incl M&E and Cont Fee 80.82%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.000000 100.00 $1,832.46 $1,808.17 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,808.17 $1,772.17 $1,710.53
Total Return 5 Years 96.63% 80.82% 77.22% 71.05%
Average Annual Return 14.48% 12.58% 12.12% 11.33%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 3 YEARS:
Total Return of Fund 35.42%
Total Return incl M&E 29.81%
Total Return incl M&E and Cont Fee 28.78%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.000000 100.00 $1,298.12 $1,287.76 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,287.76 $1,242.76 $1,195.04
Total Return 5 Years 35.42% 28.78% 24.28% 19.50%
Average Annual Return 10.64% 8.80% 7.51% 6.12%
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 18.70%
Total Return incl M&E 17.04%
Total Return incl M&E and Cont Fee 16.73%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,170.38 $1,167.26 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,167.26 $1,113.26 $1,083.22
Total Return 1 Year 18.70% 16.73% 11.33% 8.32%
Average Annual Return 18.70% 16.73% 11.33% 8.32%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 18.70%
Total Return incl M&E 17.04% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 16.73% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,170.38 $1,167.26 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,167.26 $1,113.26 $1,083.22
Total Return Yr to Date 18.70% 16.73% 11.33% 8.32%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: FEI VIPF EQUITY INCOME PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.27%
M&E and Admin Charge 1.40%
SINCE SUB-ACCOUNT INCEPTION:
Total Return of Fund 21.24%
Total Return incl M&E 19.20[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 18.82[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
20-Oct-95 $1,000 10.00 100.00 $1,192.04 $1,188.23 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,188.23 $1,134.23 $1,102.67
Total Return Inception 21.24% 18.82% 13.42% 10.27%
Average Annual Return 17.41% 15.46% 11.07% 8.49%
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 14.28%
Total Return incl M&E 12.68%
Total Return incl M&E and Cont Fee 12.38%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,126.80 $1,123.80 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,123.80 $1,069.80 $1,042.88
Total Return 1 Year 14.28% 12.38% 6.98% 4.29%
Average Annual Return 14.28% 12.38% 6.98% 4.29%
------------------------------------------------------------------------------------------------
SINCE FUND INCEPTION:
Total Return of Fund 171.02%
Total Return incl M&E 120.10[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 111.59[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Apr-82 $1,000 10.00 100.00 $2,200.97 $2,115.94 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $2,115.94 $2,115.94 $2,115.94
Total Return Inception 171.02% 111.59% 111.59% 111.59%
Average Annual Return 6.99% 5.21% 5.21% 5.21%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 10 YEARS:
Total Return of Fund 78.38%
Total Return incl M&E 54.92%
Total Return incl M&E and Cont Fee 50.84%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.00 100.00 $1,549.23 $1,508.43 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,508.43 $1,508.43 $1,494.85
Total Return 10 Years 78.38% 50.84% 50.84% 49.48%
Average Annual Return 5.96% 4.20% 4.20% 4.10%
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 24.78%
Total Return incl M&E 16.29%
Total Return incl M&E and Cont Fee 14.75%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.00 100.00 $1,162.87 $1,147.45 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,147.45 $1,111.45 $1,085.49
Total Return 5 Years 24.78% 14.75% 11.15% 8.55%
Average Annual Return 4.53% 2.79% 2.14% 1.65%
------------------------------------------------------------------------------------------------
OVER 3 YEARS:
Total Return of Fund 16.34%
Total Return incl M&E 11.52%
Total Return incl M&E and Cont Fee 10.63%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.00 100.00 $1,115.22 $1,106.32 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,106.32 $1,061.32 $1,026.67
Total Return 5 Years 16.34% 10.63% 6.13% 2.67%
Average Annual Return 5.17% 3.43% 2.00% 0.88%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 1 YEAR:
Total Return of Fund 5.41%
Total Return incl M&E 3.93%
Total Return incl M&E and Cont Fee 3.66%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,039.34 $1,036.57 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,036.57 $982.57 $961.94
Total Return 1 Year 5.41% 3.66% -1.74% -3.81%
Average Annual Return 5.41% 3.66% -1.74% -3.81%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund #N/A
Total Return incl M&E #N/A [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee #N/A [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return Yr to Date #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
<PAGE>
FUND: FGP VIPF GROWTH PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.27%
M&E and Admin Charge 1.40%
SINCE SUB-ACCOUNT INCEPTION:
Total Return of Fund 11.50%
Total Return incl M&E 9.63[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 9.27[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
20-Oct-95 $1,000 10.00 100.00 $1,096.25 $1,092.75 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,092.75 $1,038.75 $1,014.07
Total Return Inception 11.50% 9.27% 3.87% 1.41%
Average Annual Return 9.49% 7.67% 3.22% 1.17%
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 14.71%
Total Return incl M&E 13.10%
Total Return incl M&E and Cont Fee 12.80%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,131.04 $1,128.03 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,128.03 $1,074.03 $1,046.81
Total Return 1 Year 14.71% 12.80% 7.40% 4.68%
Average Annual Return 14.71% 12.80% 7.40% 4.68%
------------------------------------------------------------------------------------------------
SINCE FUND INCEPTION:
Total Return of Fund 263.01%
Total Return incl M&E 214.23[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 205.76[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
09-Oct-86 $1,000 10.00 100.00 $3,142.28 $3,057.60 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $3,057.60 $3,057.60 $3,057.60
Total Return Inception 263.01% 205.76% 205.76% 205.76%
Average Annual Return 13.42% 11.54% 11.54% 11.54%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 10 YEARS:
Total Return of Fund 262.28%
Total Return incl M&E 214.64%
Total Return incl M&E and Cont Fee 206.35%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.00 100.00 $3,146.40 $3,063.53 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $3,063.53 $3,063.53 $3,035.96
Total Return 10 Years 262.28% 206.35% 206.35% 203.60%
Average Annual Return 13.74% 11.85% 11.85% 11.75%
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 128.56%
Total Return incl M&E 113.00%
Total Return incl M&E and Cont Fee 110.18%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.00 100.00 $2,130.03 $2,101.79 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $2,101.79 $2,065.79 $1,988.29
Total Return 5 Years 128.56% 110.18% 106.58% 98.83%
Average Annual Return 17.98% 16.02% 15.62% 14.74%
------------------------------------------------------------------------------------------------
OVER 3 YEARS:
Total Return of Fund 65.30%
Total Return incl M&E 58.45%
Total Return incl M&E and Cont Fee 57.19%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.00 100.00 $1,584.54 $1,571.90 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,571.90 $1,526.90 $1,458.73
Total Return 5 Years 65.30% 57.19% 52.69% 45.87%
Average Annual Return 18.24% 16.27% 15.15% 13.41%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 1 YEAR:
Total Return of Fund 14.28%
Total Return incl M&E 12.68%
Total Return incl M&E and Cont Fee 12.38%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,126.80 $1,123.80 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,123.80 $1,069.80 $1,042.88
Total Return 1 Year 14.28% 12.38% 6.98% 4.29%
Average Annual Return 14.28% 12.38% 6.98% 4.29%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 14.28%
Total Return incl M&E 12.68[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 12.38[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,126.80 $1,123.80 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,123.80 $1,069.80 $1,042.88
Total Return Yr to Date 14.28% 12.38% 6.98% 4.29%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: FOS VIPF OVERSEAS PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.27%
M&E and Admin Charge 1.40%
SINCE SUB-ACCOUNT INCEPTION:
Total Return of Fund 16.15%
Total Return incl M&E 14.20[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 13.83[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
20-Oct-95 $1,000 10.00 100.00 $1,142.00 $1,138.35 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,138.35 $1,084.35 $1,056.39
Total Return Inception 16.15% 13.83% 8.43% 5.64%
Average Annual Return 13.29% 11.40% 6.98% 4.68%
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 13.15%
Total Return incl M&E 11.57%
Total Return incl M&E and Cont Fee 11.27%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,115.66 $1,112.69 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,112.69 $1,058.69 $1,032.57
Total Return 1 Year 13.15% 11.27% 5.87% 3.26%
Average Annual Return 13.15% 11.27% 5.87% 3.26%
------------------------------------------------------------------------------------------------
SINCE FUND INCEPTION:
Total Return of Fund 311.23%
Total Return incl M&E 255.97[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 246.38[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
09-Oct-86 $1,000 10.00 100.00 $3,559.68 $3,463.75 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $3,463.75 $3,463.75 $3,463.75
Total Return Inception 311.23% 246.38% 246.38% 246.38%
Average Annual Return 14.81% 12.90% 12.90% 12.90%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 10 YEARS:
Total Return of Fund 310.00%
Total Return incl M&E 256.08%
Total Return incl M&E and Cont Fee 246.71%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.00 100.00 $3,560.84 $3,467.06 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $3,467.06 $3,467.06 $3,435.86
Total Return 10 Years 310.00% 246.71% 246.71% 243.59%
Average Annual Return 15.15% 13.24% 13.24% 13.14%
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 102.58%
Total Return incl M&E 88.79%
Total Return incl M&E and Cont Fee 86.29%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.00 100.00 $1,887.91 $1,862.88 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,862.88 $1,826.88 $1,762.29
Total Return 5 Years 102.58% 86.29% 82.69% 76.23%
Average Annual Return 15.16% 13.25% 12.81% 12.00%
------------------------------------------------------------------------------------------------
OVER 3 YEARS:
Total Return of Fund 55.24%
Total Return incl M&E 48.81%
Total Return incl M&E and Cont Fee 47.62%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.00 100.00 $1,488.11 $1,476.24 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,476.24 $1,431.24 $1,369.95
Total Return 5 Years 55.24% 47.62% 43.12% 37.00%
Average Annual Return 15.79% 13.86% 12.69% 11.06%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 1 YEAR:
Total Return of Fund 14.71%
Total Return incl M&E 13.10%
Total Return incl M&E and Cont Fee 12.80%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,131.04 $1,128.03 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,128.03 $1,074.03 $1,046.81
Total Return 1 Year 14.71% 12.80% 7.40% 4.68%
Average Annual Return 14.71% 12.80% 7.40% 4.68%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 14.71%
Total Return incl M&E 13.10[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 12.80[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,131.04 $1,128.03 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,128.03 $1,074.03 $1,046.81
Total Return Yr to Date 14.71% 12.80% 7.40% 4.68%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: FAM VIPF II ASSET MANAGER PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.27%
M&E and Admin Charge 1.40%
SINCE SUB-ACCOUNT INCEPTION:
Total Return of Fund 19.05%
Total Return incl M&E 17.05[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 16.68[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
20-Oct-95 $1,000 10.00 100.00 $1,170.55 $1,166.80 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,166.80 $1,112.80 $1,082.79
Total Return Inception 19.05% 16.68% 11.28% 8.28%
Average Annual Return 15.64% 13.72% 9.32% 6.85%
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 14.60%
Total Return incl M&E 13.00%
Total Return incl M&E and Cont Fee 12.69%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,129.96 $1,126.94 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,126.94 $1,072.94 $1,045.80
Total Return 1 Year 14.60% 12.69% 7.29% 4.58%
Average Annual Return 14.60% 12.69% 7.29% 4.58%
------------------------------------------------------------------------------------------------
SINCE FUND INCEPTION:
Total Return of Fund 112.54%
Total Return incl M&E 84.77[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 79.94[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
28-Jan-87 $1,000 10.00 100.00 $1,847.69 $1,799.36 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,799.36 $1,799.36 $1,783.16
Total Return Inception 112.54% 79.94% 79.94% 78.32%
Average Annual Return 7.89% 6.09% 6.09% 6.00%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.00 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 54.89%
Total Return incl M&E 44.35%
Total Return incl M&E and Cont Fee 42.43%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.00 100.00 $1,443.47 $1,424.34 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A 1,424.34 $1,388.34 $1,347.42
Total Return 5 Years 54.89% 42.43% 38.83% 34.74%
Average Annual Return 9.15% 7.33% 6.78% 6.15%
------------------------------------------------------------------------------------------------
OVER 3 YEARS:
Total Return of Fund 26.31%
Total Return incl M&E 21.08%
Total Return incl M&E and Cont Fee 20.11%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.00 100.00 $1,210.79 $1,201.13 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,201.13 $1,156.13 $1,114.65
Total Return 5 Years 26.31% 20.11% 15.61% 11.47%
Average Annual Return 8.10% 6.30% 4.95% 3.68%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 1 YEAR:
Total Return of Fund 13.15%
Total Return incl M&E 11.57%
Total Return incl M&E and Cont Fee 11.27%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,115.66 $1,112.69 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,112.69 $1,058.69 $1,032.57
Total Return 1 Year 13.15% 11.27% 5.87% 3.26%
Average Annual Return 13.15% 11.27% 5.87% 3.26%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 13.15%
Total Return incl M&E 11.57[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 11.27[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,115.66 $1,112.69 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,112.69 $1,058.69 $1,032.57
Total Return Yr to Date 13.15% 11.27% 5.87% 3.26%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: FMG VIPF II ASSET MANAGER: GROWTH PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.27%
M&E and Admin Charge 1.40%
SINCE SUB-ACCOUNT INCEPTION:
Total Return of Fund 23.26%
Total Return incl M&E 21.20[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 20.81[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
20-Oct-95 $1,000 10.00 100.00 $1,211.96 $1,208.08 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,208.08 $1,154.08 $1,121.10
Total Return Inception 23.26% 20.81% 15.41% 12.11%
Average Annual Return 19.04% 17.06% 12.68% 9.99%
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 20.04%
Total Return incl M&E 18.36%
Total Return incl M&E and Cont Fee 18.04%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,183.59 $1,180.44 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,180.44 $1,126.44 $1,095.45
Total Return 1 Year 20.04% 18.04% 12.64% 9.54%
Average Annual Return 20.04% 18.04% 12.64% 9.54%
------------------------------------------------------------------------------------------------
SINCE FUND INCEPTION:
Total Return of Fund 124.77%
Total Return incl M&E 102.72[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 98.80[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
06-Sep-89 $1,000 10.00 100.00 $2,027.20 $1,987.96 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,987.96 $1,987.96 $1,934.29
Total Return Inception 124.77% 98.80% 98.80% 93.43%
Average Annual Return 11.69% 9.84% 9.84% 9.43%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.00 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 70.47%
Total Return incl M&E 58.87%
Total Return incl M&E and Cont Fee 56.76%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.00 100.00 $1,588.67 $1,567.61 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,567.61 $1,531.61 $1,482.95
Total Return 5 Years 70.47% 56.76% 53.16% 48.30%
Average Annual Return 11.26% 9.41% 8.90% 8.20%
------------------------------------------------------------------------------------------------
OVER 3 YEARS:
Total Return of Fund 25.87%
Total Return incl M&E 20.66%
Total Return incl M&E and Cont Fee 19.69%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.00 100.00 $1,206.57 $1,196.95 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,196.95 $1,151.95 $1,110.77
Total Return 5 Years 25.87% 19.69% 15.19% 11.08%
Average Annual Return 7.97% 6.18% 4.83% 3.56%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 1 YEAR:
Total Return of Fund 14.60%
Total Return incl M&E 13.00%
Total Return incl M&E and Cont Fee 12.69%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,129.96 $1,126.94 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,126.94 $1,072.94 $1,045.80
Total Return 1 Year 14.60% 12.69% 7.29% 4.58%
Average Annual Return 14.60% 12.69% 7.29% 4.58%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 14.60%
Total Return incl M&E 13.00[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 12.69[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,129.96 $1,126.94 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,126.94 $1,072.94 $1,045.80
Total Return Yr to Date 14.60% 12.69% 7.29% 4.58%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: FCF VIPF II CONTRAFUND PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.27%
M&E and Admin Charge 1.40%
SINCE SUB-ACCOUNT INCEPTION:
Total Return of Fund 23.54%
Total Return incl M&E 21.47[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 21.08[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
20-Oct-95 $1,000 10.00 100.00 $1,214.65 $1,210.77 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,210.77 $1,156.77 $1,123.59
Total Return Inception 23.54% 21.08% 15.68% 12.36%
Average Annual Return 19.26% 17.28% 12.90% 10.20%
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 21.22%
Total Return incl M&E 19.52%
Total Return incl M&E and Cont Fee 19.20%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,195.23 $1,192.04 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,192.04 $1,138.04 $1,106.22
Total Return 1 Year 21.22% 19.20% 13.80% 10.62%
Average Annual Return 21.22% 19.20% 13.80% 10.62%
------------------------------------------------------------------------------------------------
SINCE FUND INCEPTION:
Total Return of Fund 47.67%
Total Return incl M&E 43.58[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 42.81[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
03-Jan-95 $1,000 10.00 100.00 $1,435.75 $1,428.13 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,428.13 $1,374.13 $1,325.30
Total Return Inception 47.67% 42.81% 37.41% 32.53%
Average Annual Return 21.58% 19.56% 17.27% 15.17%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.00 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.00 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 3 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.00 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
<PAGE>
OVER 1 YEAR:
Total Return of Fund 20.04%
Total Return incl M&E 18.36%
Total Return incl M&E and Cont Fee 18.04%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,183.59 $1,180.44 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,180.44 $1,126.44 $1,095.45
Total Return 1 Year 20.04% 18.04% 12.64% 9.54%
Average Annual Return 20.04% 18.04% 12.64% 9.54%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 20.04%
Total Return incl M&E 18.36[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 18.04[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,183.59 $1,180.44 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,180.44 $1,126.44 $1,095.45
Total Return Yr to Date 20.04% 18.04% 12.64% 9.54%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: FIN VIPF II INDEX 500 PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.27%
M&E and Admin Charge 1.40%
SINCE SUB-ACCOUNT INCEPTION:
Total Return of Fund 29.24%
Total Return incl M&E 27.07[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 26.67[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
20-Oct-95 $1,000 10.00 100.00 $1,270.74 $1,266.68 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,266.68 $1,212.68 $1,175.48
Total Return Inception 29.24% 26.67% 21.27% 17.55%
Average Annual Return 23.83% 21.77% 17.43% 14.42%
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 22.82%
Total Return incl M&E 21.10%
Total Return incl M&E and Cont Fee 20.78%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,211.01 $1,207.78 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,207.78 $1,153.78 $1,120.82
Total Return 1 Year 22.82% 20.78% 15.38% 12.08%
Average Annual Return 22.82% 20.78% 15.38% 12.08%
------------------------------------------------------------------------------------------------
SINCE FUND INCEPTION:
Total Return of Fund 69.37%
Total Return incl M&E 64.67[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 63.80[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
03-Jan-95 $1,000 10.00 100.00 $1,646.74 $1,637.99 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,637.99 $1,583.99 $1,520.06
Total Return Inception 69.37% 63.80% 58.40% 52.01%
Average Annual Return 30.24% 28.07% 25.94% 23.36%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.00 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.00 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 3 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.00 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
<PAGE>
OVER 1 YEAR:
Total Return of Fund 21.22%
Total Return incl M&E 19.52%
Total Return incl M&E and Cont Fee 19.20%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,195.23 $1,192.04 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,192.04 $1,138.04 $1,106.22
Total Return 1 Year 21.22% 19.20% 13.80% 10.62%
Average Annual Return 21.22% 19.20% 13.80% 10.62%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 21.22%
Total Return incl M&E 19.52[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 19.20[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,195.23 $1,192.04 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,192.04 $1,138.04 $1,106.22
Total Return Yr to Date 21.22% 19.20% 13.80% 10.62%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: NIG NORTHSTAR INCOME AND GROWTH FUND
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.27%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 18.16%
Total Return incl M&E 16.18[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 15.81[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
20-Oct-95 $1,000 10.00 100.00 $1,161.77 $1,158.05 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,158.05 $1,104.05 $1,074.67
Total Return Inception 18.16% 15.81% 10.41% 7.47%
Average Annual Return 14.92% 13.01% 8.60% 6.18%
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 13.61%
Total Return incl M&E 12.02%
Total Return incl M&E and Cont Fee 11.72%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,120.19 $1,117.21 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,117.21 $1,063.21 $1,036.77
Total Return 1 Year 13.61% 11.72% 6.32% 3.68%
Average Annual Return 13.61% 11.72% 6.32% 3.68%
------------------------------------------------------------------------------------------------
SINCE FUND INCEPTION:
Total Return of Fund 98.62%
Total Return incl M&E 86.81[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 84.65[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
27-Aug-92 $1,000 10.00 100.00 $1,868.10 $1,846.55 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,846.55 $1,810.55 $1,746.83
Total Return Inception 98.62% 84.65% 81.05% 74.68%
Average Annual Return 17.10% 15.15% 14.63% 13.69%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.00 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.00 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 3 YEARS:
Total Return of Fund 70.25%
Total Return incl M&E 63.20%
Total Return incl M&E and Cont Fee 61.90%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.00 100.00 $1,631.99 $1,618.98 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,618.98 $1,573.98 $1,502.41
Total Return 5 Years 70.25% 61.90% 57.40% 50.24%
Average Annual Return 19.41% 17.42% 16.32% 14.53%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 1 YEAR:
Total Return of Fund 22.82%
Total Return incl M&E 21.10%
Total Return incl M&E and Cont Fee 20.78%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,211.01 $1,207.78 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,207.78 $1,153.78 $1,120.82
Total Return 1 Year 22.82% 20.78% 15.38% 12.08%
Average Annual Return 22.82% 20.78% 15.38% 12.08%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 22.82%
Total Return incl M&E 21.10[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 20.78[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,211.01 $1,207.78 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,207.78 $1,153.78 $1,120.82
Total Return Yr to Date 22.82% 20.78% 15.38% 12.08%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: NGF NORTHSTAR GROWTH PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.27%
M&E and Admin Charge 1.40%
SINCE SUB-ACCOUNT INCEPTION:
Total Return of Fund 26.20%
Total Return incl M&E 24.09[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 23.69[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
20-Oct-95 $1,000 10.00 100.00 $1,240.87 $1,236.90 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,236.90 $1,182.90 $1,147.84
Total Return Inception 26.20% 23.69% 18.29% 14.78%
Average Annual Return 21.40% 19.38% 15.02% 12.18%
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 22.99%
Total Return incl M&E 21.27%
Total Return incl M&E and Cont Fee 20.94%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,212.68 $1,209.45 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,209.45 $1,155.45 $1,122.37
Total Return 1 Year 22.99% 20.94% 15.54% 12.24%
Average Annual Return 22.99% 20.94% 15.54% 12.24%
------------------------------------------------------------------------------------------------
SINCE FUND INCEPTION:
Total Return of Fund 40.55%
Total Return incl M&E 35.38[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 34.42[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
06-May-94 $1,000 10.00 100.00 $1,353.81 $1,344.24 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,344.24 $1,299.24 $1,247.46
Total Return Inception 40.55% 34.42% 29.92% 24.75%
Average Annual Return 13.67% 11.78% 10.35% 8.68%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.00 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.00 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 3 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.00 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
<PAGE>
OVER 1 YEAR:
Total Return of Fund 13.61%
Total Return incl M&E 12.02%
Total Return incl M&E and Cont Fee 11.72%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,120.19 $1,117.21 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,117.21 $1,063.21 $1,036.77
Total Return 1 Year 13.61% 11.72% 6.32% 3.68%
Average Annual Return 13.61% 11.72% 6.32% 3.68%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 13.61%
Total Return incl M&E 12.02[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 11.72[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,120.19 $1,117.21 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,117.21 $1,063.21 $1,036.77
Total Return Yr to Date 13.61% 11.72% 6.32% 3.68%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: NMS NORTHSTAR MULTI-SECTOR BOND PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.27%
M&E and Admin Charge 1.40%
SINCE SUB-ACCOUNT INCEPTION:
Total Return of Fund 16.47%
Total Return incl M&E 14.51[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 14.15[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
20-Oct-95 $1,000 10.00 100.00 $1,145.13 $1,141.47 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,141.47 $1,087.47 $1,059.28
Total Return Inception 16.47% 14.15% 8.75% 5.93%
Average Annual Return 13.55% 11.66% 7.24% 4.92%
------------------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 12.53%
Total Return incl M&E 10.95%
Total Return incl M&E and Cont Fee 10.66%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,109.55 $1,106.59 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,106.59 $1,052.59 $1,026.91
Total Return 1 Year 12.53% 10.66% 5.26% 2.69%
Average Annual Return 12.53% 10.66% 5.26% 2.69%
------------------------------------------------------------------------------------------------
SINCE FUND INCEPTION:
Total Return of Fund 58.79%
Total Return incl M&E 52.95[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 51.87[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
06-May-94 $1,000 10.00 100.00 $1,529.50 $1,518.69 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,518.69 $1,473.69 $1,409.35
Total Return Inception 58.79% 51.87% 47.37% 40.93%
Average Annual Return 19.01% 17.03% 15.71% 13.78%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.00 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.00 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
OVER 3 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-94 $1,000 10.00 100.00 #N/A #N/A 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
------------------------------------------------------------------------------------------------
<PAGE>
OVER 1 YEAR:
Total Return of Fund 22.99%
Total Return incl M&E 21.27%
Total Return incl M&E and Cont Fee 20.94%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,212.68 $1,209.45 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,209.45 $1,155.45 $1,122.37
Total Return 1 Year 22.99% 20.94% 15.54% 12.24%
Average Annual Return 22.99% 20.94% 15.54% 12.24%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 22.99%
Total Return incl M&E 21.27[(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 20.94[(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.00 100.00 $1,212.68 $1,209.45 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value #N/A $1,209.45 $1,155.45 $1,122.37
Total Return Yr to Date 22.99% 20.94% 15.54% 12.24%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: ASC ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.267%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 359.16%
Total Return incl M&E 308.56% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 299.62% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
21-Sep-88 $1,000 10.000000 100.00 $4,085.56 $3,996.24 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $3,996.24 $3,996.24 $3,924.30
Total Return Inception 359.16% 299.62 299.62 292.43%
Average Annual Return 20.21% 18.21 18.21 17.95%
------------------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund N/A
Total Return incl M&E -13.15%
Total Return incl M&E and Cont Fee -15.44%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.000000 100.00 $868.50 $845.62 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $845.62 $845.62 $838.01
Total Return 10 Years N/A -15.44% -15.44% -16.20%
Average Annual Return 0.00% -1.66% -1.66% -1.75%
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 68.64%
Total Return incl M&E 57.16%
Total Return incl M&E and Cont Fee 55.08%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.000000 100.00 $1,571.61 $1,550.78 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $1,550.78 $1,514.78 $1,467.04
Total Return 5 Years 68.64% 55.08% 51.48% 46.70%
Average Annual Return 11.02% 9.17% 8.66% 7.97%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 1 YEAR:
Total Return of Fund 4.18%
Total Return incl M&E 2.72%
Total Return incl M&E and Cont Fee 2.45%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,027.21 $1,024.48 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $1,024.48 $970.48 $950.71
Total Return 1 Year 4.18% 2.45% -2.95% -4.93%
Average Annual Return 4.18% 2.45% -2.95% -4.93%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 4.18%
Total Return incl M&E 2.72% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 2.45% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,027.21 $1,024.48 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $1,024.48 $970.48 $950.71
Total Return Yr to Date 4.18% 2.45% -2.95% -4.93%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: AGR ALGER AMERICAN GROWTH PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.267%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 291.53%
Total Return incl M&E 249.86% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 242.49% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
09-Jan-89 $1,000 10.000000 100.00 $3,498.63 $3,424.89 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $3,424.89 $3,424.89 $3,332.42
Total Return Inception 291.53% 242.49% 242.49% 233.24%
Average Annual Return 18.65% 16.68% 16.68% 16.28%
------------------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund N/A
Total Return incl M&E -13.15%
Total Return incl M&E and Cont Fee -15.44%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.000000 100.00 $868.50 $845.62 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $845.62 $845.62 $838.01
Total Return 10 Years N/A -15.44% -15.44% -16.20%
Average Annual Return 0.00% -1.66% -1.66% -1.75%
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 115.81%
Total Return incl M&E 101.12%
Total Return incl M&E and Cont Fee 98.45%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.000000 100.00 $2,011.20 $1,984.54 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $1,984.54 $1,948.54 $1,877.38
Total Return 5 Years 115.81% 98.45% 94.85% 87.74%
Average Annual Return 16.63% 14.69% 14.27% 13.43%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 1 YEAR:
Total Return of Fund 13.35%
Total Return incl M&E 11.76%
Total Return incl M&E and Cont Fee 11.47%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,117.63 $1,114.65 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $1,114.65 $1,060.65 $1,034.40
Total Return 1 Year 13.35% 11.47% 6.07% 3.44%
Average Annual Return 13.35% 11.47% 6.07% 3.44%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 13.35%
Total Return incl M&E 11.76% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 11.47% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,117.63 $1,114.65 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $1,114.65 $1,060.65 $1,034.40
Total Return Yr to Date 13.35% 11.47% 6.07% 3.44%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: AMG ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.267%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 120.68%
Total Return incl M&E 109.56% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 107.52% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
03-May-93 $1,000 10.000000 100.00 $2,095.64 $2,075.24 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $2,075.24 $2,030.24 $1,944.50
Total Return Inception 120.68% 107.52% 103.02% 94.45%
Average Annual Return 24.10% 22.04% 21.31% 19.89%
------------------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund N/A
Total Return incl M&E -13.15%
Total Return incl M&E and Cont Fee -15.44%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.000000 100.00 $868.50 $845.62 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $845.62 $845.62 $838.01
Total Return 10 Years N/A -15.44% -15.44% -16.20%
Average Annual Return 0.00% -1.66% -1.66% -1.75%
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund N/A
Total Return incl M&E -6.81%
Total Return incl M&E and Cont Fee -8.04%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.000000 100.00 $931.93 $919.58 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $919.58 $883.58 $869.92
Total Return 5 Years N/A -8.04% -11.64% -13.01%
Average Annual Return 0.00% -1.66% -2.45% -2.75%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 1 YEAR:
Total Return of Fund 11.90%
Total Return incl M&E 10.33%
Total Return incl M&E and Cont Fee 10.04%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,103.33 $1,100.39 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $1,100.39 $1,045.39 $1,021.16
Total Return 1 Year 11.90% 10.04% 4.64% 2.12%
Average Annual Return 11.90% 10.04% 4.64% 2.12%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 11.90%
Total Return incl M&E 10.33% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 10.04% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,103.33 $1,100.39 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $1,100.39 $1,046.39 $1,021.16
Total Return Yr to Date 11.90% 10.04% 4.64% 2.12%
------------------------------------------------------------------------------------------------
<PAGE>
FUND: ALA ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.267%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 95.29%
Total Return incl M&E 90.04% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 89.06% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
25-Jan-95 $1,000 10.000000 100.00 $1,900.36 $1,890.58 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $1,890.58 $1,836.58 $1,754.46
Total Return Inception 95.29% 89.06% 83.66% 75.45%
Average Annual Return 41.35% 38.99% 36.93% 33.73%
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OVER 10 YEARS:
Total Return of Fund N/A
Total Return incl M&E -13.15%
Total Return incl M&E and Cont Fee -15.44%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-87 $1,000 10.000000 100.00 $868.50 $845.62 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $845.62 $845.62 $838.01
Total Return 10 Years N/A -15.44% -15.44% -16.20%
Average Annual Return 0.00% -1.66% -1.66% -1.75%
------------------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund N/A
Total Return incl M&E -6.81%
Total Return incl M&E and Cont Fee -8.04%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-92 $1,000 10.000000 100.00 $931.93 $919.58 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $919.58 $883.58 $869.92
Total Return 5 Years N/A -8.04% -11.64% -13.01%
Average Annual Return 0.00% -1.66% -2.45% -2.75%
------------------------------------------------------------------------------------------------
<PAGE>
OVER 1 YEAR:
Total Return of Fund 12.04%
Total Return incl M&E 10.47%
Total Return incl M&E and Cont Fee 10.18%
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,104.71 $1,101.77 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $1,100.39 $1,047.77 $1,022.44
Total Return 1 Year 12.04% 10.18% 4.78% 2.24%
Average Annual Return 12.04% 10.18% 4.78% 2.24%
------------------------------------------------------------------------------------------------
YEAR TO DATE:
Total Return of Fund 12.04%
Total Return incl M&E 10.47% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 10.18% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" YEAREND ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE UNITS DATE
01-Jan-96 $1,000 10.000000 100.00 $1,104.71 $1,101.77 100.00 31-Dec-96
---------------------------------
Less Surrender Charge
------------------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
---- -------------- ---- ----
Ending Value N/A $1,101.77 $1,047.77 $1,022.44
Total Return Yr to Date 12.04% 10.18% 4.78% 2.24%
------------------------------------------------------------------------------------------------
</TABLE>
