Proposed Rule:
Proposed Form N-6
Text of proposed Form N-6 added, 03-23-98
Download the proposed Form N-6 (MS Word 6.0 document; file name formn6.doc)
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-6
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ( )
Pre-Effective Amendment No. ( )
Post-Effective Amendment No. ( )
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 ( )
Amendment No. ( )
(Check appropriate box or boxes.)
______________________________________________________________
(Exact Name of Registrant)
_____________________________________________________________
(Name of Depositor)
_______________________________________________________________
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code_____________
______________________________________________________________
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering__________________
It is proposed that this filing will become effective (check
appropriate box)
( ) immediately upon filing pursuant to paragraph (b)
( ) on (date) pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(1)
( ) on (date) pursuant to paragraph (a)(1) of Rule 485.
If appropriate, check the following box:
( ) This post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.
Omit from the facing sheet reference to the other Act if
the registration statement or amendment is filed under only
one of the Acts. Include the `Approximate Date of Proposed
Public Offering' only where securities are being registered
under the Securities Act of 1933.
Form N-6 is to be used by separate accounts that are unit
investment trusts that offer variable life insurance
contracts to register under the Investment Company Act of
1940 and to offer their securities under the Securities Act
of 1933. The Commission has designed Form N-6 to provide
investors with information that will assist them in making a
decision about investing in a variable life insurance
contract. The Commission also may use the information
provided in Form N-6 in its regulatory, disclosure review,
inspection, and policy making roles.
A Registrant is required to disclose the information
specified by Form N-6, and the Commission will make this
information public. A Registrant is not required to respond
to the collection of information contained in Form N-6
unless the Form displays a currently valid Office of
Management and Budget (`OMB') control number. Please direct
comments concerning the accuracy of the information
collection burden estimate and any suggestions for reducing
the burden to Secretary, Securities and Exchange Commission,
450 5th Street, N.W., Washington, D.C. 20549-6009. The OMB
has reviewed this collection of information under the
clearance requirements of 44 U.S.C. 3507.
CONTENTS OF FORM N-6
GENERAL INSTRUCTIONS
A. Definitions
References to sections and rules in this Form N-6 are to the Investment Company Act of 1940 (15 U.S.C.
80a-1 et seq.) (the ‘Investment Company Act’), unless otherwise indicated. Terms used in this Form N-6 have the same meaning as in the Investment Company Act or the related rules, unless otherwise indicated. As used in this Form N-6, the terms set out below have the following meanings:
‘Depositor’ means the person primarily responsible for the organization of the Registrant and the person, other than the trustee or custodian, who has continuing functions or responsibilities for the administration of the affairs of the Registrant. ‘Depositor’ includes the sponsoring insurance company that establishes and maintains the Registrant. If there is more than one Depositor, the information called for in this Form about the Depositor must be provided for each Depositor.
‘Portfolio Company’ means any company in which the Registrant invests.
‘Registrant’ means the separate account (as defined in section 2(a)(37) of the Investment Company Act
(15 U.S.C. 80a-2(a)(37))) that offers the Variable Life Insurance Contracts.
‘SAI’ means the Statement of Additional Information required by Part B of this Form.
‘Securities Act’ means the Securities Act of 1933 (15 U.S.C. 77a et seq.).
‘Securities Exchange Act’ means the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
‘Variable Life Insurance Contract’ or ‘Contract’ means a life insurance contract that provides for death benefits and cash values that may vary with the investment experience of any separate account. Unless the context otherwise requires, ‘Variable Life Insurance Contract’ or ‘Contract’ refers to the Variable Life Insurance Contracts being offered pursuant to the registration statement prepared on this Form.
B. Filing and Use of Form N-6
1. What is Form N-6 used for?
Form N-6 is used by all separate accounts that are registered under the Investment Company Act as unit investment trusts and offering Variable Life Insurance Contracts to file:
(a) An initial registration statement under the Investment Company Act and amendments to the registration statement;
(b) An initial registration statement under the Securities Act and amendments to the registration statement, including amendments required by section 10(a)(3) of the Securities Act (15 U.S.C. 77j(a)(3)); or
(c) Any combination of the filings in paragraph (a) or (b).
2. What is included in the registration statement?
(a) For registration statements or amendments filed under both the Investment Company Act and the Securities Act or only under the Securities Act, include the facing sheet of the Form, Parts A, B, and C, and the required signatures.
(b) For registration statements or amendments filed only under the Investment Company Act, include the facing sheet of the Form, responses to all Items of Parts A (except Items 1, 2, 3, and 14), B, and C (except Items 27 (c), (k), (l), (n), and (o)), and the required signatures.
3. What are the fees for Form N-6?
No registration fees are required with the filing of Form N-6 to register as an investment company under the Investment Company Act or to register securities under the Securities Act. If Form N-6 is filed to register securities under the Securities Act and securities are sold to the public, registration fees must be paid on an ongoing basis after the end of the Registrant’s fiscal year. See section 24(f) (15 U.S.C. 80a-24f-2) and related rule 24f-2 (17 CFR 270.24f-2).
4. What rules apply to the filing of a registration statement on Form N-6?
(a) For registration statements and amendments filed under both the Investment Company Act and the Securities Act or only under the Securities Act, the general rules regarding the filing of registration statements in Regulation C under the Securities Act (17 CFR 230.400 - 230.497) apply to the filing of Form N-6. Specific requirements concerning investment companies appear in rules 480 - 485 and 495 - 497 of Regulation C.
(b) For registration statements and amendments filed only under the Investment Company Act, the general provisions in rules 8b-1 - 8b-32 (17 CFR 270.8b-1 - 270.8b-32) apply to the filing of Form N-6.
(c) The plain English requirements of rule 421 under the Securities Act (17 CFR 230.421) apply to prospectus disclosure in Part A of Form N-6.
(d) Regulation S-T (17 CFR 232.10 - 232.903) applies to all filings on the Commission's Electronic Data Gathering, Analysis, and Retrieval system (‘EDGAR’).
C. Preparation of the Registration Statement
1. Administration of the Form N-6 requirements:
(a) The requirements of Form N-6 are intended to promote effective communication between the Registrant and prospective investors. A Registrant’s prospectus should clearly disclose the fundamental features and risks of the Variable Life Insurance Contracts, using concise, straightforward, and easy to understand language. A Registrant should use document design techniques that promote effective communication.
(b) The prospectus disclosure requirements in Form N-6 are intended to elicit information for an average or typical investor who may not be sophisticated in legal or financial matters. The prospectus should help investors to evaluate the risks of an investment and to decide whether to invest in a Variable Life Insurance Contract by providing a balanced disclosure of positive and negative factors. Disclosure in the prospectus should be designed to assist an investor in comparing and contrasting a Variable Life Insurance Contract with other Contracts.
(c) Responses to the Items in Form N-6 should be as simple and direct as reasonably possible and should include only as much information as is necessary to enable an average or typical investor to understand the particular characteristics of the Variable Life Insurance Contracts. The prospectus should avoid including lengthy legal and technical discussions and simply restating legal or regulatory requirements to which Contracts generally are subject. Brevity is especially important in describing the practices or aspects of the Registrant’s operations that do not differ materially from those of other separate accounts. Avoid excessive detail, technical or legal terminology, and complex language. Also avoid lengthy sentences and paragraphs that may make the prospectus difficult for many investors to understand and detract from its usefulness.
(d) The requirements for prospectuses included in Form N-6 will be administered by the Commission in a way that will allow variances in disclosure or presentation if appropriate for the circumstances involved while remaining consistent with the objectives of Form N-6.
2. Form N-6 is divided into three parts:
(a) Part A. Part A includes the information required in a Registrant’s prospectus under section 10(a) of the Securities Act. The purpose of the prospectus is to provide essential information about the Registrant and the Variable Life Insurance Contracts in a way that will help investors to make informed decisions about whether to purchase the securities described in the prospectus. In responding to the Items in Part A, avoid cross-references to the SAI. Cross-references within the prospectus are most useful when their use assists investors in understanding the information presented and does not add complexity to the prospectus.
(b) Part B. Part B includes the information required in a Registrant’s SAI. The purpose of the SAI is to provide additional information about the Registrant and the Variable Life Insurance Contracts that the Commission has concluded is not necessary or appropriate in the public interest or for the protection of investors to be in the prospectus, but that some investors may find useful. Part B affords the Registrant an opportunity to expand discussions of the matters described in the prospectus by including additional information that the Registrant believes may be of interest to some investors. The Registrant should not duplicate in the SAI information that is provided in the prospectus, unless necessary to make the SAI comprehensible as a document independent of the prospectus.
(c) Part C. Part C includes other information required in a Registrant’s registration statement.
3. Additional Matters:
(a) Organization of Information. Organize the information in the prospectus and SAI to make it easy for investors to understand. Disclose the information required by Items 2 and 3 (the Risk/Benefit Summary) in numerical order at the front of the prospectus. Do not precede these Items with any other Item except the Cover Page (Item 1) or a table of contents meeting the requirements of rule 481(c) under the Securities Act (17 CFR 230.481(c)).
(b) Other Information. A Registrant may include, except in the Risk/Benefit Summary, information in the prospectus or the SAI that is not otherwise required. For example, a Registrant may include charts, graphs, or tables so long as the information is not incomplete, inaccurate, or misleading and does not, because of its nature, quantity, or manner of presentation, obscure or impede understanding of the information that is required to be included. Specifically, Registrants are free to include in the prospectus financial statements required to be in the SAI, and may include in the SAI financial statements that may be placed in Part C. The Risk/Benefit Summary may not include disclosure other than that required or permitted by Items 2 and 3.
(c) Use of Form N-6 to Register Multiple Contracts or Contracts Sold in Both the Group and Individual Markets.
(i) When disclosure is provided in a single prospectus for more than one Variable Life Insurance Contract, or for a Contract that is sold in both the group and individual markets, the disclosure should be presented in a format designed to communicate the information effectively. Registrants may order or group the response to any Item in any manner that organizes the information into readable and comprehensible segments and is consistent with the intent of the prospectus to provide clear and concise information about the Registrants or Variable Life Insurance Contracts. Registrants are encouraged to use, as appropriate, tables, side-by-side comparisons, captions, bullet points, or other organizational techniques when presenting disclosure for multiple Variable Life Insurance Contracts or for Contracts sold in both the group and individual markets.
(ii) Paragraph (a) requires Registrants to disclose the information required by Items 2 and 3 in numerical order at the front of the prospectus and not to precede the Items with other information. As a general matter, Registrants providing disclosure in a single prospectus for more than one Variable Life Insurance Contract, or for Contracts sold in both the group and individual markets, may depart from the requirement of paragraph (a) as necessary to present the required information clearly and effectively (although the order of information required by each Item must remain the same). For example, the prospectus may present all of the Item 2 information for several Variable Life Insurance Contracts followed by all of the Item 3 information for the Contracts, or may present Items 2 and 3 for each of several Contracts sequentially. Other presentations also would be acceptable if they are consistent with the Form's intent to disclose the information required by Items 2 and 3 in a standard order at the beginning of the prospectus.
(d) Dates. Rule 423 under the Securities Act (17 CFR 230.423) applies to the dates of the prospectus and the SAI. The SAI should be made available at the same time that the prospectus becomes available for purposes of rules 430 and 460 under the Securities Act (17 CFR 230.430 and 230.460).
(e) Sales Literature. A Registrant may include sales literature in the prospectus so long as the amount of this information does not add substantial length to the prospectus and its placement does not obscure essential disclosure.
D. Incorporation by Reference
1. Specific rules for incorporation by reference in Form N-6:
(a) A Registrant may not incorporate by reference into a prospectus information that Part A of this Form requires to be included in a prospectus, except as specifically permitted by Part A of the Form.
(b) A Registrant may incorporate by reference any or all of the SAI into the prospectus (but not to provide any information required by Part A to be included in the prospectus) without delivering the SAI with the prospectus.
(c) A Registrant may incorporate by reference into the SAI or its response to Part C information that Parts B and C require to be included in the Registrant’s registration statement.
2. General Requirements:
All incorporation by reference must comply with the requirements of this Form and the following rules on incorporation by reference: rule 10(d) of Regulation S-K under the Securities Act (17 CFR 229.10(d)) (general rules on incorporation by reference, which, among other things, prohibit, unless specifically required by this Form, incorporating by reference a document that includes incorporation by reference to another document, and limits incorporation to documents filed within the last 5 years, with certain exceptions); rule 411 under the Securities Act (17 CFR 230.411) (general rules on incorporation by reference in a prospectus); rule 303 of Regulation S-T
(17 CFR 232.303) (specific requirements for electronically filed documents); and rules 0-4, 8b-23, and 8b-32 (17 CFR 270.0-4, 270.8b-23, and 270.8b-32) (additional rules on incorporation by reference for investment companies).
PART A: INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Front and Back Cover Pages
(a) Front Cover Page. Include the following information, in plain English under rule 421(d) under the Securities Act (17 CFR 230.421(d)), on the outside front cover page of the prospectus:
(1) The Registrant’s name.
(2) The Depositor’s name.
(3) The types of Variable Life Insurance Contracts offered by the prospectus (e.g., group, individual, scheduled premium, flexible premium).
(4) The date of the prospectus.
(5) The statement required by rule 481(b)(1) under the Securities Act.
Instruction. A Registrant may include on the front cover page any additional information, subject to the requirement set out in General Instruction C.3.(b).
(b) Back Cover Page. Include the following information, in plain English under rule 421(d) under the Securities Act (17 CFR 230.421(d)), on the outside back cover page of the prospectus:
(1) A statement that the SAI includes additional information about the Registrant. Explain that the SAI is available, without charge, upon request, and explain how contractowners may make inquiries about their Contracts. Provide a toll-free (or collect) telephone number for investors to call: to request the SAI; to request other information about the Contracts; and to make contractowner inquiries.
Instructions.
1. A Registrant may indicate, if applicable, that the SAI and other information are available on its Internet site and/or by E-mail request.
2. A Registrant may indicate, if applicable, that the SAI and other information are available from an insurance agent or financial intermediary (such as a broker-dealer or bank) through which the Contracts may be purchased or sold.
3. When a Registrant (or an insurance agent or financial intermediary through which Contracts may be purchased or sold) receives a request for the SAI, the Registrant (or insurance agent or financial intermediary) must send the SAI within 3 business days of receipt of the request, by first-class mail or other means designed to ensure equally prompt delivery.
(2) A statement whether and from where information is incorporated by reference into the prospectus as permitted by General Instruction D. Unless the information is delivered with the prospectus, explain that the Registrant will provide the information without charge, upon request (referring to the telephone number provided in response to paragraph (b)(1)).
Instruction. The Registrant may combine the information about incorporation by reference with the statements required under paragraph (b)(1).
(3) A statement that information about the Registrant (including the SAI) can be reviewed and copied at the Commission's Public Reference Room in Washington, D.C. Also state that information on the operation of the public reference room may be obtained by calling the Commission at 1-800-SEC-0330. State that reports and other information about the Registrant are available on the Commission's Internet site at http://www.sec.gov and that copies of this information may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the Commission, Washington, D.C. 20549-6009.
(4) The Registrant’s Investment Company Act file number on the bottom of the back cover page in type size smaller than that generally used in the prospectus (e.g., 8-point modern type).
Item 2. Risk/Benefit Summary: Benefits and Risks
Include the following information, in plain English under rule 421(d) under the Securities Act (17 CFR 230.421(d)), in the order indicated:
(a) Contract Benefits. Summarize the benefits available under the Contract, including death benefits, withdrawal and surrender benefits, and loans.
(b) Use of Premiums. Disclose that part of the premium is allocated to insurance coverage, part of the premium is invested, and part of the premium payment is used to pay sales loads and other charges.
(c) Contract Risks. Summarize the principal risks of purchasing a Contract, including the risks of poor investment performance, that Contracts are unsuitable as short-term savings vehicles, the risks of Contract lapse, limitations on access to cash value through withdrawals, and the possibility of adverse tax consequences.
Item 3. Risk/Benefit Summary: Fee Table
Include the following information, in plain English under rule 421(d) under the Securities Act (17 CFR 230.421(d)), after Item 2:
The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Policy. The first table describes the fees and expenses that you will pay at the time that you buy the Policy, surrender the Policy, or transfer cash value between investment options.
Transaction Fees
Charge
When Charge is Deducted
Amount Deducted
Policies from Which Charge is Deducted
Maximum Sales Charge Imposed on Premiums (Load)
Premium Taxes
Maximum Deferred Sales Charge (Load)
Other Surrender Fees
Transfer Fees
The next table describes the fees and expenses that you will pay periodically during the time that you own the Policy, not including (Portfolio Company) fees and expenses.
Annual Charges Other Than (Portfolio Company) Operating Expenses
Charge
When Charge is Deducted
Amount Deducted
Policies from Which Charge is Deducted
Cost of Insurance
Annual Maintenance Fee
Mortality and Expense Risk Fees
Administrative Fees
The next table describes the (Portfolio Company) fees and expenses that you will pay periodically during the time that you own the Policy. The table shows the minimum and maximum fees and expenses charged by any of the (Portfolio Companies). More detail concerning each (Portfolio Company’s) fees and expenses is contained in the prospectus for each (Portfolio Company).
Annual (Portfolio Company) Operating Expenses
Charge
When Charge is Deducted
Amount Deducted
Policies from Which Charge is Deducted
Management Fees
Distribution (and/or Service) (12b-1) Fees
Other Expenses
Total (Portfolio Company) Annual Expenses
Instructions.
1. General.
(a) Include the narrative explanations in the order indicated. A Registrant may modify a narrative explanation if the explanation contains comparable information to that shown.
(b) A Registrant may omit captions if the Registrant does not charge the fees or expenses covered by the captions.
(c) If a Registrant uses one prospectus to offer a Contract in both the group and individual variable life markets, the Registrant may include narrative disclosure in a footnote or following the tables identifying markets where certain fees are either inapplicable or waived or lower fees are charged. In the alternative, a Registrant may present the information for group and individual contracts in another format consistent with General Instruction C.3.(c).
(d) The ‘When Charge is Deducted’ column must be used to show when a charge is deducted, e.g., upon purchase, surrender or partial surrender, policy anniversary, monthly, or daily.
(e) Under the ‘Amount Deducted’ column, the Registrant must disclose the maximum charge unless a specific instruction directs otherwise. The Registrant should include the basis on which the charge is imposed (e.g., 0.95% of average daily net assets, $5 per exchange, $5 per thousand dollars of face amount). In addition, the Registrant may include in a footnote to the table a tabular, narrative, or other presentation providing further detail regarding variations in the charge. For example, if deferred sales charges decline over time, the Registrant may include in a footnote a presentation regarding the scheduled reductions in the deferred sales charges. Charges assessed on the basis of the face amount should be disclosed as the charge per $1000 of face amount. Round all dollar figures to the nearest dollar and all percentages to the nearest hundredth of one percent.
(f) If a charge is deducted from all Contracts, the word ‘All’ should be placed in the ‘Policies from Which Charge is Deducted’ column. Otherwise, Registrant should specify the Contracts from which the charge is deducted.
2. Transaction Fees.
(a) ‘Other Surrender Fees’ include any fees charged for surrender or partial surrender, other than sales charges imposed upon surrender or partial surrender.
(b) ‘Transfer Fees’ include any fees charged for any transfer or exchange of cash value from the Registrant to another investment company, from one sub-account of the Registrant to another sub-account or the Depositor’s general account, or from the Depositor’s general account to the Registrant.
(c) If the Registrant (or any other party pursuant to an agreement with the Registrant) charges any other transaction fee, add another caption describing it and complete the other columns of the table for that fee.
3. Annual Charges Other Than (Portfolio Company) Operating Expenses.
(a) The Registrant may substitute the term used in the prospectus to refer to the Portfolio Companies for the bracketed portion of the caption provided.
(b) For ‘Cost of Insurance,’ the Registrant should disclose the minimum and maximum charges that may be imposed for a Contract.
(c) ‘(Annual) Maintenance Fee’ includes any Contract, account, or similar fee imposed on any recurring basis. Any non-recurring Contract, account, or similar fee should be included in the ‘Transaction Fees’ table.
(d) ‘Mortality and Expense Risk Fees’ may be listed separately on two lines in the table.
(e) If the Registrant (or any other party pursuant to an agreement with the Registrant) imposes any other recurring charge other than annual Portfolio Company Operating Expenses, add another caption describing it and complete the other columns of the table for that charge.
4. Annual (Portfolio Company) Operating Expenses.
(a) The Registrant may substitute the term used in the prospectus to refer to the Portfolio Companies for the bracketed portion of the caption provided.
(b) If a Registrant has multiple sub-accounts, it should disclose the minimum and maximum expenses of any Portfolio Companies for each line item. For example, if a Registrant has five sub-accounts with management fees of 0.50%, 0.70%, 1.00%, 1.10%, and 1.25%, respectively, it should disclose that management fees range from 0.50% to 1.25%. The minimum and maximum amounts disclosed for ‘Total (Portfolio Company) Annual expenses’ should be the minimum and maximum ‘Total (Portfolio Company) Annual Expenses’ for any Portfolio Company, and not the sum of the minimum and maximum amounts disclosed for the individual line items. For example, assume a Registrant has three sub-accounts. Sub-account 1 has management fees of 0.50%, 12b-1 fees of 0.25%, and other expenses of 0.30%; sub-account 2 has management fees of 0.90%, 12b-1 fees of 0.00%, and other expenses of 0.25%; and sub-account 3 has management fees of 1.00%, 12b-1 fees of 0.00%, and other expenses of 0.25%. The minimum and maximum amounts to be disclosed in the table are: management fees - 0.50%-1.00%; 12b-1 fees: 0.00%-0.25%; other expenses - 0.25%-0.30%; total (Portfolio Company) annual expenses - 1.05%-1.25%. The total (Portfolio Company) annual expenses are the expenses of sub-accounts 1 and 3, respectively, not the sum of the minimum and maximum amounts disclosed for the individual line items, which would be 0.75%-1.55%.
(c) ‘Management Fees’ include investment advisory fees (including any fees based on a Portfolio Company’s performance), any other management fees payable to a Portfolio Company’s investment adviser or its affiliates, and administrative fees payable to a Portfolio Company’s investment adviser or its affiliates that are not included as ‘Other Expenses.’
(d) ‘Distribution (and/or Service) (12b-1) Fees’ include all distribution or other expenses incurred during the most recent fiscal year under a plan adopted pursuant to rule 12b-1 (17 CFR 270.12b-1). Under an appropriate caption or subcaption of ‘Other Expenses,’ disclose the amount of any distribution or similar expenses deducted from a Portfolio Company’s assets other than pursuant to a rule 12b-1 plan.
(e)(i) ‘Other Expenses’ include all expenses not otherwise disclosed in the table that are deducted from a Portfolio Company’s assets. The amount of expenses deducted from a Portfolio Company’s assets are the amounts shown as expenses in the Portfolio Company’s statement of operations (including increases resulting from complying with paragraph 2(g) of rule 6-07 of Regulation S-X (17 CFR 210.6-07)).
(ii) ‘Other Expenses’ do not include extraordinary expenses as determined under generally accepted accounting principles (see Accounting Principles Board Opinion No. 30). If extraordinary expenses were incurred by any Portfolio Company that would, if included, materially affect the minimum or maximum amounts shown in the table, disclose in a footnote to the table what the minimum and maximum ‘Other Expenses’ would have been had the extraordinary expenses been included.
(f)(i) Base the percentages of ‘Annual (Portfolio Company) Operating Expenses’ on amounts incurred during the most recent fiscal year, but include in expenses amounts that would have been incurred absent expense reimbursement or fee waiver arrangements. If a Portfolio Company has a fiscal year different from that of the Registrant, base the expenses on those incurred during either the period that corresponds to the fiscal year of the Registrant, or the most recently completed fiscal year of the Portfolio Company. If the Registrant or a Portfolio Company has changed its fiscal year and, as a result, the most recent fiscal year is less than three months, use the fiscal year prior to the most recent fiscal year as the basis for determining ‘Annual (Portfolio Company) Operating Expenses.’
(ii) If there have been any changes in ‘Annual (Portfolio Company) Operating Expenses’ that would materially affect the information disclosed in the table:
(A) Restate the expense information using the current fees as if they had been in effect during the previous fiscal year; and
(B) In a footnote to the table, disclose that the expense information in the table has been restated to reflect current fees.
(iii) A change in ‘Annual (Portfolio Company) Operating Expenses’ means either an increase or a decrease in expenses that occurred during the most recent fiscal year or that is expected to occur during the current fiscal year. A change in ‘Annual (Portfolio Company) Operating Expenses’ does not include a decrease in operating expenses as a percentage of assets due to economies of scale or breakpoints in a fee arrangement resulting from an increase in a Portfolio Company’s assets.
(g) A Registrant may reflect minimum and maximum actual (Portfolio Company) operating expenses that include expense reimbursement or fee waiver arrangements in a footnote to the table. If the Registrant provides this disclosure, also disclose the period for which the expense reimbursement or fee waiver arrangement is expected to continue, or whether it can be terminated at any time at the option of a Portfolio Company.
5. New Registrants. For purposes of this Item, a ‘New Registrant’ is a Registrant (or sub-account of the Registrant) that does not include in Form N-6 financial statements reporting operating results or that includes financial statements for the Registrant’s (or sub-account’s) initial fiscal year reporting operating results for a period of 6 months or less. The following Instructions apply to New Registrants.
(a) Base the percentages in ‘Annual (Portfolio Company) Operating Expenses’ on payments that will be made, but include in expenses amounts that will be incurred without reduction for expense reimbursement or fee waiver arrangements, estimating amounts of ‘Other Expenses.’ Disclose in a footnote to the table that ‘Other Expenses’ are based on estimated amounts for the current fiscal year.
(b) A New Registrant may reflect in a footnote to the table expense reimbursement or fee waiver arrangements that are expected to reduce any minimum or maximum (Portfolio Company) operating expense or the estimate of minimum or maximum ‘Other Expenses’ (regardless of whether the arrangement has been guaranteed). If the New Registrant provides this disclosure, also disclose the period for which the expense reimbursement or fee waiver arrangement is expected to continue, or whether it can be terminated at any time at the option of a Portfolio Company.
Item 4. General Description of Registrant, Depositor, and Portfolio Companies
Concisely discuss the organization and operation or proposed operation of the Registrant. Include the information specified below.
(a) Depositor. Provide the name and address of the Depositor.
(b) Registrant. Briefly describe the Registrant. Include a statement indicating that:
(1) income, gains, and losses credited to, or charged against, the Registrant reflect the Registrant’s own investment experience and not the investment experience of the Depositor’s other assets;
(2) the assets of the Registrant may not be used to pay any liabilities of the Depositor other than those arising from the Contracts; and
(3) the Depositor is obligated to pay all amounts promised to Contractowners under the Contracts.
(c) Portfolio Companies. Briefly describe the Registrant’s sub-accounts and each Portfolio Company. For each Portfolio Company, include:
(1) its name;
(2) its type (e.g., money market fund, bond fund, balanced fund, etc.) or a brief statement concerning its investment objectives; and
(3) its investment adviser and any sub-investment adviser.
Instructions.
1. Do not describe sub-accounts that fund obligations of the Depositor under contracts that are not offered by this prospectus.
2. Registrants are not required to include detailed information about Portfolio Companies in the prospectus. If a Portfolio Company’s name describes its type, a Registrant need not separately provide the Portfolio Company’s type or a statement concerning its investment objectives.
(d) Portfolio Company Prospectus. State conspicuously how investors may obtain a prospectus and, if available, a fund profile, containing more complete information on each Portfolio Company.
(e) Voting. Concisely discuss the rights of Contractowners to instruct the Depositor on the voting of shares of the Portfolio Companies, including the manner in which votes will be allocated.
Item 5. Charges
(a) Description. Briefly describe all charges deducted from premiums, cash value, assets of the Registrant, or any other source (e.g., sales loads, premium and other taxes, administrative and transaction charges, risk charges, contract loan charges, cost of insurance, and rider charges). Indicate whether each charge will be deducted from premium payments, cash value, the Registrant’s assets, the proceeds of withdrawals or surrenders, or some other source. When possible, specify the amount of any charge as a percentage or dollar figure (e.g., 0.95% of average daily net assets, $5 per exchange, $5 per thousand dollars of face amount). For recurring charges, specify the frequency of the deduction (e.g., daily, monthly, annually). Identify the person who receives the amount deducted, briefly explain what is provided in consideration for each charge, and explain the extent to which the charge can be modified.
Instructions.
1. Describe the sales loads applicable to the Contract and how sales loads are charged and calculated, including the factors affecting the computation of the amount of the sales load. If the Contract has a front-end sales load, describe the sales load as a percentage of the applicable measure of premium payments (e.g., actual premiums paid, target or guideline premiums). For Contracts with a deferred sales load, describe the sales load as a percentage of the applicable measure of premium payments (or other basis) that the deferred sales load may represent. Percentages should be shown in a table. Identify any events on which a deferred sales load is deducted (e.g., surrender, partial surrender, increase or decrease in face amount). The description of any deferred sales load should include how the deduction will be allocated among sub-accounts of the Registrant and when, if ever, the sales load will be waived (e.g., if the Contract provides a free withdrawal amount).
2. Identify the factors upon which the cost of insurance charge will be based, including the insurer's amount at risk and the expected longevity of the insureds. Identify the factors reflected in the rate scale, and specify whether the mortality charges guaranteed in the contracts differ from the current charges. Identify the factors that affect the amount at risk, including investment performance, payment of premiums, and charges. If the Depositor intends to use simplified underwriting or other underwriting methods that would cause healthy individuals to pay higher cost of insurance charges than they would pay if the insurance company used conventional underwriting methods, state that the cost of insurance charges are higher for healthy individuals when this method of underwriting is used.
3. If the Contract’s charge for premium or other taxes varies according to jurisdiction, identification of the range of current premium or other taxes is sufficient.
4. Identify charges that may be different in amount or method of computation when imposed in connection with, or subsequent to, increases in face amount of a Contract and briefly describe the differences.
(b) Portfolio Company Charges. State that charges are deducted from and expenses paid out of the assets of the Portfolio Companies that are described in the prospectuses for those companies.
(c) Incidental Insurance Charges. If incidental insurance benefits (as defined in Rules 6e-2 and 6e-3(T) (17 CFR 270.6e-2, 17 CFR 270.6e-3(T))) are offered along with the Contract, state that charges also will be made for those benefits.
(d) Operating and Organizational Expenses. Describe the type of operating expenses for which the Registrant is responsible. If organizational expenses of the Registrant are to be paid out of its assets, explain how the expenses will be amortized and identify the period over which the amortization will occur.
Item 6. General Description of Contracts
(a) Contract Rights. Identify the person or persons (e.g., the Contractowner, insured, or beneficiary) who have material rights under the Contracts, and the nature of those rights.
(b) Contract Limitations. Briefly describe any provisions for and limitations on:
(1) allocation of premiums among sub-accounts of the Registrant;
(2) transfer of Contract values between sub-accounts of the Registrant; and
(3) conversion or exchange of Contracts for another contract, including a fixed or variable annuity or life insurance contract.
Instruction. In discussing conversion or exchange of Contracts, the Registrant should include any time limits on conversion or exchange, the name of the company issuing the other contract and whether that company is affiliated with the issuer of the Contract, and how the cash value of the Contract will be affected by the conversion or exchange.
(c) Contract or Registrant Changes. Briefly describe the changes that can be made in the Contracts or the operations of the Registrant by the Registrant or the Depositor, including:
(1) why a change may be made (e.g., changes in applicable law or interpretations of law);
(2) who, if anyone, must approve any change (e.g., the Contractowner or the Commission); and
(3) who, if anyone, must be notified of any change.
Instruction. Describe only those changes that would be material to a purchaser of the Contracts, such as a reservation of the right to deregister the Registrant under the Investment Company Act. Do not describe possible non-material changes, such as changing the time of day at which Contract values are determined.
(d) Other Benefits. Identify any other material incidental benefits in the Contracts.
(e) Class of Purchasers. Disclose any limitations on the class or classes of purchasers to whom the Contracts are being offered.
Item 7. Premiums
(a) Purchase Procedures. Describe the provisions of the Contract that relate to premiums and the procedures for purchasing a Contract, including:
(1) the minimum initial and subsequent premiums required and any limitations on the amount and the frequency of premiums that will be accepted. If there are separate limits for each sub-account, state these limits;
(2) whether required premiums, if any, are payable for the life of the Contract or some other term;
(3) whether payment of certain levels of premiums will guarantee that the Contract will not lapse regardless of the Contract’s cash value;
(4) if applicable, under what circumstances premiums may be required in order to avoid lapse and how the amount of the additional premiums will be determined;
(5) if applicable, under what circumstances nonpayment of a required premium will not cause the Contract to lapse;
(6) if applicable, under what circumstances premiums in addition to the required premiums will be permitted; and
(7) if applicable, whether the level of the Contract’s required premiums may change and, if so, how the amount of the change will be determined.
(b) Premium Amount. Briefly describe the factors that determine the amount of any required premiums (e.g., face amount, death benefit option, and charges and expenses).
(c) Premium Payment Plans. Identify the premium payment plans available. Include the available payment frequencies, payment facilities such as employee payroll deduction plans and preauthorized checking arrangements, and any special billing arrangements. Indicate whether the premium payment plan or schedule may be changed.
(d) Premium Due Dates. Briefly explain the provisions of the Contract that relate to premium due dates and the operation of any grace period, including the effect of the insured’s death during the grace period.
(e) Automatic Premium Loans. If applicable, briefly describe the circumstances under which required premiums may be paid by means of an automatic premium loan.
(f) Sub-Account Valuation. Describe the procedures for valuing sub-account assets, including:
(1) an explanation of when the required premiums and additional premiums are credited to the Contract’s cash value in the sub-accounts, and the basis (e.g., accumulation unit value) on which premiums are credited;
(2) an explanation, to the extent applicable, that premiums are credited to the Contract’s cash value on the basis of the sub-account valuation next determined after receipt of a premium;
Instruction. If, in any case, a delay occurs between the receipt of premiums and the crediting of premiums to the sub-accounts (e.g., a delay during the ‘free-look’ period), describe where the premiums are held in the interim.
(3) an explanation of when valuations of the assets of the sub-accounts are made; and
(4) a statement identifying in a general manner any national holidays when sub-account assets will not be valued and specifying any additional local or regional holidays when sub-account assets will not be valued.
Instruction. In responding to this paragraph, a Registrant may use a list of specific days or any other means that effectively communicates the information (e.g., explaining that sub-account assets will not be valued on the days on which the New York Stock Exchange is closed for trading).
Item 8. Death Benefits and Contract Values
(a) Death Benefits. Briefly describe the death benefits available under the Contract.
Instruction. Include:
(i) when insurance coverage is effective;
(ii) when the death benefit is calculated and payable;
(iii) how the death benefit is calculated;
(iv) who has the right to choose the form of benefit and the procedure for choosing the form of benefit, including when the choice is made and whether the choice is revocable;
(v) the forms the benefit may take and the form of benefit that will be provided if a particular form has not been elected; and
(vi) whether there is a minimum death benefit guarantee associated with the Contract.
Also describe if and how a Contractowner may increase or decrease the face amount, including the minimum and the maximum amounts, any requirement of additional evidence of insurability, and whether charges, including sales load, are affected.
(b) Charges and Contract Values. Explain how the investment performance of the Portfolio Companies, expenses, and deduction of charges affect Contract values and death benefits.
Item 9. Surrenders, Partial Surrenders, and Partial Withdrawals
(a) Surrender. Briefly describe how a Contractowner can surrender a Contract, including any limits on the ability to surrender, how the proceeds are calculated, and when they are payable.
(b) Partial Surrender and Withdrawal. Indicate generally whether and under what circumstances partial surrenders and partial withdrawals are available under a Contract, including the minimum and maximum amounts that may be surrendered or withdrawn, any limits on their availability, how the proceeds are calculated, and when the proceeds are payable.
(c) Effect of Partial Surrender and Withdrawal. Briefly describe whether partial surrenders or partial withdrawals will affect a Contract’s cash value or death benefit and whether any charge(s) will apply.
(d) Sub-Account Allocation. Describe how partial surrenders and partial withdrawals will be allocated among the sub-accounts.
Instruction. The Registrant should generally describe the terms and conditions that apply to these transactions. Technical information regarding the determination of amounts available to be surrendered or withdrawn should be included in the SAI.
(e) Revocation Rights. Briefly describe any revocation rights (e.g., ‘free-look’ provisions), including a description of how the amount refunded is determined, the method for crediting earnings to premiums during the free-look period, and whether investment options are limited during the free look period.
Item 10. Loans
Briefly describe the loan provisions of the Contract, including any of the following that are applicable.
(a) Availability of Loans. A brief statement that a portion of the Contract’s cash surrender value may be borrowed.
(b) Limitations. Any limits on availability of loans (e.g., a prohibition on loans during the first contract year).
(c) Interest. A statement of the amount of interest charged on the loan and the amount of interest credited to the Contract in connection with the loaned amount.
(d) Effect on Cash Value and Death Benefit. A brief explanation that amounts borrowed under a Contract do not participate in a Registrant’s investment experience and that loans, therefore, can affect the Contract’s cash value and death benefit whether or not the loan is repaid. Also, a brief explanation that the cash surrender value and the death proceeds payable will be reduced by the amount of any outstanding Contract loan plus accrued interest.
(e) Procedures. The loan procedures, including how and when amounts borrowed are transferred out of the Registrant and how and when amounts repaid are credited to the Registrant.
Item 11. Lapse and Reinstatement
(a) Lapse. State when and under what circumstances a Contract will lapse.
(b) Lapse Options. Describe briefly any lapse options available. Indicate those that will not apply unless they are elected and those that will apply in the absence of an election. Indicate whether the availability of any of the lapse options is limited.
(c) Effect of Lapse. Describe briefly the factors that will determine the amount of insurance coverage provided under the available lapse options. Describe concisely how the cash value, surrender value, and death benefit will be determined. If these values and benefits will be determined in the same manner as prior to lapse, a statement to that effect is sufficient.
(d) Reinstatement. State under what circumstances a Contract may be reinstated. Explain any requirements for reinstatement, including charges to be paid by the Contractowner, outstanding loan repayments, and evidence of insurability.
Item 12. Taxes
(a) Tax Consequences. Describe the material tax consequences to the Contractowner and beneficiary of buying, holding, exchanging, or exercising rights under the Contract.
Instruction. Discuss the taxation of death benefit proceeds, periodic and non- periodic withdrawals, loans, and any other distribution that may be received under the Contract, as well as the tax benefits accorded the contract and other material tax consequences. Describe, if applicable, whether the tax consequences vary with different uses of the Contract.
(b) Effect. Describe the effect, if any, of taxation on the determination of cash values or sub-account values.
Item 13. Legal Proceedings
Describe any material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Registrant, the Registrant’s principal underwriter, or the Depositor is a party. Include the name of the court in which the proceedings are pending, the date instituted, the principal parties involved, a description of the factual basis alleged to underlie the proceeding, and the relief sought. Include similar information as to any legal proceedings instituted, or known to be contemplated, by a governmental authority.
Instruction. For purposes of this requirement, legal proceedings are material only to the extent that they are likely to have a material adverse effect on the Registrant, the ability of the principal underwriter to perform its contract with the Registrant, or the ability of the Depositor to meet its obligations under the Contracts.
Item 14. Financial Statements
If all of the required financial statements of the Registrant and the Depositor (see Item 24) are not in the prospectus, state, under a separate caption, where the financial statements may be found. Briefly explain how investors may obtain any financial statements not in the Statement of Additional Information.
PART B: INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 15. Cover Page and Table of Contents
(a) Front Cover Page. Include the following information on the outside front cover page of the SAI:
(1) The Registrant’s name.
(2) The Depositor’s name.
(3) A statement or statements:
(A) That the SAI is not a prospectus;
(B) How the prospectus may be obtained; and
(C) Whether and from where information is incorporated by reference into the SAI, as permitted by General Instruction D.
Instruction. Any information incorporated by reference into the SAI must be delivered with the SAI.
(4) The date of the SAI and of the prospectus to which the SAI relates.
(b) Table of Contents. Include under appropriate captions (and subcaptions) a list of the contents of the SAI and, when useful, provide cross-references to related disclosure in the prospectus.
Item 16. General Information and History
(a) Depositor. Provide the date and form of organization of the Depositor, the name of the state or other jurisdiction in which the Depositor is organized, and a description of the general nature of the Depositor’s business.
Instruction. The description of the Depositor’s business should be short and need not list all of the businesses in which the Depositor engages or identify the jurisdictions in which it does business if a general description (e.g., ‘life insurance’ or ‘reinsurance’) is provided.
(b) Registrant. Provide the date and form of organization of the Registrant and the Registrant’s classification pursuant to Section 4 (15 U.S.C. 80a-4) (i.e., a separate account and a unit investment trust).
(c) History of Depositor and Registrant. If the Depositor’s name was changed during the past five years, state its former name and the approximate date on which it was changed. If, at the request of any state, sales of contracts offered by the Registrant have been suspended at any time, or if sales of contracts offered by the Depositor have been suspended during the past five years, briefly describe the reasons for and results of the suspension. Briefly describe the nature and results of any bankruptcy, receivership, or similar proceeding, or any other material reorganization, readjustment, or succession of Depositor during the past five years.
(d) Ownership of Sub-Account Assets. If 10 percent or more of the assets of any sub-account are not attributable to Contracts or to accumulated deductions or reserves (e.g., initial capital contributed by the Depositor), state what percentage those assets are of the total assets of the Registrant. If the Depositor, or any other person controlling the assets, has any present intention of removing the assets from the sub-account, so state.
(e) Control of Depositor. State the name of each person who controls the Depositor and the nature of its business.
Instruction. If the Depositor is controlled by another person that, in turn, is controlled by another person, give the name of each control person and the nature of its business.
Item 17. Services
(a) Expenses Paid by Third Parties. Describe all fees, expenses, and costs of the Registrant that are to be paid by persons other than the Depositor or the Registrant, and identify those persons.
(b) Service Agreements. Summarize the substantive provisions of any management-related service contract that may be of interest to a purchaser of the Registrant’s securities, under which services are provided to the Registrant, unless the contract is described in response to some other item of this form. Indicate the parties to the contract, and the total dollars paid and by whom for each of the past three years.
Instructions.
1. The term ‘management-related service contract’ includes any contract with the Registrant to keep, prepare, or file accounts, books, records, or other documents required under federal or state law, or to provide any similar services with respect to the daily administration of the Registrant, but does not include the following:
(a) Any agreement with the Registrant to act as custodian or agent to administer purchases and redemptions under the Contracts; and
(b) Any contract with the Registrant for outside legal or auditing services, or contract for personal employment entered into with the Registrant in the ordinary course of business.
2. In summarizing the substantive provisions of any management-related service contract, include the following:
(a) The name of the person providing the service;
(b) The direct or indirect relationships, if any, of the person with the Registrant, its Depositor, or its principal underwriter; and
(c) The nature of the services provided, and the basis of the compensation paid for the services for the Registrant’s last three fiscal years.
(c) Other Service Providers.
(1) Unless disclosed in response to paragraph (b) or another item of this form, identify and state the principal business address of any person who provides significant administrative or business affairs management services for the Registrant (e.g., an ‘Administrator,’ ‘Sub-Administrator,’ ‘Servicing Agent’), describe the services provided, and the compensation paid for the services.
(2) State the name and principal business address of the Registrant’s custodian and independent public accountant and describe generally the services performed by each.
(3) If the Registrant’s assets are held by a person other than the Depositor, a commercial bank, trust company, or depository registered with the Commission as custodian, state the nature of the business of that person.
(4) If an affiliated person of the Registrant or the Depositor, or an affiliated person of the affiliated person, acts as administrative or servicing agent for the Registrant, describe the services the person performs and the basis for remuneration. State, for the past three years, the total dollars paid for the services, and by whom.
Instruction. No disclosure need be given in response to paragraph (c)(4) of this item for an administrative or servicing agent who is also the Depositor.
(5) If the Depositor is the principal underwriter of the Contracts, so state.
Item 18. Premiums
(a) Administrative Procedures. Discuss generally the Registrant’s administrative rules applicable to premium payments, to the extent that they are not discussed in the prospectus.
Instruction. Examples include information regarding any condition applicable to changes in premium payment schedules, any limitations on prepayments of premiums, any relevant rules for classifying payments made other than in response to a bill or in an amount other than the amount billed for, etc.
(b) Automatic Premium Loans. If the contract provides an automatic premium loan option, describe the option, including the circumstances under which it will be used to pay a required premium and whether, and how, interest will be charged on the loan. Describe any effect not described in the prospectus that an automatic premium loan could have on the Contract (e.g., how automatic premium loans affect cash value).
Item 19. Additional Information About Operation of Contracts and Registrant
(a) Incidental Benefits. To the extent not described in the prospectus, explain the manner in which the purchase or operation of other incidental benefits affects the exercise of rights and the determination of benefits under the Contract such as whether the Contract or any rider provides for a change of insured or for all or a portion of the death benefit to be paid while the insured is still alive.
(b) Surrender and Withdrawal. To the extent not described in the prospectus, explain the Contract’s surrender and withdrawal provisions.
(c) Material Contracts Relating to the Registrant. Disclose any material contract relating to the operation or administration of the Registrant.
Item 20. Underwriters
(a) Identification. Identify each principal underwriter (other than the Depositor) of the Contracts, and state its principal business address. If the principal underwriter is affiliated with the Registrant, the Depositor, or any affiliated person of the Registrant or the Depositor, identify how they are affiliated (e.g., the principal underwriter is controlled by the Depositor).
(b) Offering and Commissions. For each principal underwriter distributing Contracts of the Registrant, state:
(1) whether the offering is continuous; and
(2) the aggregate dollar amount of underwriting commissions paid to, and the amount retained by, the principal underwriter for each of the Registrant’s last three fiscal years.
(c) Other Payments. With respect to any payments made by the Registrant to an underwriter of or dealer in the Contracts during the Registrant’s last fiscal year, disclose the name and address of the underwriter or dealer, the amount paid and basis for determining that amount, the circumstances surrounding the payments, and the consideration received by the Registrant. Do not include information about:
(1) Payments made through deduction from premiums paid at the time of sale of the Contracts; or
(2) Payments made from cash values upon full or partial surrender of the Contracts or from an increase or decrease in the face amount of the Contracts.
Instructions.
1. Information need not be given about the service of mailing proxies or periodic reports of the Registrant.
2. Information need not be given about any service for which total payments of less than $5,000 were made during each of the Registrant’s last three fiscal years.
3. Information need not be given about payments made under any contract to act as administrative or servicing agent.
4. If the payments were made under an arrangement or policy applicable to dealers generally, describe only the arrangement or policy.
(d) Commissions to Dealers. State the commissions paid to dealers as a percentage of premiums.
Item 21. Additional Information About Charges
(a) Sales Load. Describe the method that will be used to determine the sales load on the Contracts offered by the Registrant.
(b) Special Purchase Plans. Describe any special purchase plans (e.g., group life insurance plans) or methods that reflect scheduled variations in, or elimination of, any applicable charges (e.g., group discounts, waiver of deferred sales loads for a specified percentage of cash value, investment of proceeds from another Contract, exchange privileges, employee benefit plans, or the terms of a merger, acquisition, or exchange offer made pursuant to a plan of reorganization). Identify each class of individuals or transactions to which the plans or methods apply, including officers, directors, members of the board of managers, or employees of the Depositor, underwriter, Portfolio Companies, or investment adviser to Portfolio Companies, and the amount of the reductions, and state from whom additional information may be obtained. For special purchase plans or methods that reflect variations in, or elimination of, charges other than according to a fixed schedule, describe the basis for the variation or elimination (e.g., the size of the purchaser, a prior existing relationship with the purchaser, the purchaser's assumption of certain administrative functions, or other characteristics that result in differences in costs or services).
(c) Underwriting Procedures. Briefly identify underwriting procedures used in connection with the Contract and any effect of different types of underwriting on the charges in the Contract. Specify the basis of the mortality charges guaranteed in the Contracts.
(d) Increases in Face Amount. Describe in more detail the charges assessed on increases in face amount, including the procedures used following an increase in face amount to allocate cash values and premium payments between the original Contract and incremental Contracts.
Item 22. Lapse and Reinstatement
To the extent that the prospectus does not do so, describe the lapse and reinstatement provisions of the Contract. Include a discussion of any time limits that apply, how the charge to reinstate is determined, and any other conditions that apply to reinstatement. Describe the features of any lapse options not described in the prospectus, including any factors that will determine the amount or duration of the insurance coverage, and the limitations and conditions on availability of each lapse option. Identify which contract transactions (e.g., loans, partial withdrawals and surrenders, transfers) are available while the Contract is continued under a lapse option. Indicate when limits on contract transactions are different from those that apply prior to lapse.
Item 23. Loans
(a) Loan Provisions. To the extent that the prospectus does not do so, explain the loan provisions of the Contract.
(b) Amount Available. State how the amount available for a policy loan is calculated.
(c) Effect on Cash Value and Sub-Accounts. Describe how loans and loan repayments affect cash value and how they are allocated among the sub-accounts.
(d) Interest. Describe how interest accrues on the loan, when it is payable, and how interest is treated if not paid. Explain how interest earned on the loaned amount is credited to the Contract and allocated to the sub-accounts.
(e) Other Effects. Describe any other effect not already described in the prospectus that a loan could have on the Contract (e.g., the effect of a Contract loan in excess of cash value).
Item 24. Financial Statements
(a) Registrant. Provide financial statements of the Registrant.
Instruction. Include, in a separate section, the financial statements and schedules required by Regulation
S-X (17 CFR 210). Financial statements of the Registrant may be limited to:
(i) An audited balance sheet or statement of assets and liabilities as of the end of the most recent fiscal year;
(ii) An audited statement of operations for the most recent fiscal year conforming to the requirements of Rule 6-07 of Regulation S-X (17 CFR 210.6-07);
(iii) An audited statement of cash flows for the most recent fiscal year if necessary to comply with generally accepted accounting principles; and
(iv) Audited statements of changes in net assets conforming to the requirements of Rule 6-09 of Regulation S-X (17 CFR 210.6-09) for the two most recent fiscal years.
(b) Depositor. Provide financial statements of the Depositor.
Instructions.
1. Include, in a separate section, the financial statements and schedules of the Depositor required by Regulation S-X. If the Depositor would not have to prepare financial statements in accordance with generally accepted accounting principles except for use in this registration statement or other registration statements filed on Forms N-3, N-4, or N-6, its financial statements may be prepared in accordance with statutory requirements. The Depositor’s financial statements must be prepared in accordance with generally accepted accounting principles if the Depositor prepares financial information in accordance with generally accepted accounting principles for use by Depositor’s parent.
2. All statements and schedules of the Depositor required by Regulation S-X, except for the consolidated balance sheets described in Rule 3-01 of Regulation S-X (17 CFR 210.3-01), and any notes to these statements or schedules, may be omitted from Part B and instead included in Part C of the registration statement. If any of this information is omitted from Part B and included in Part C, the consolidated balance sheets included in Part B should be accompanied by a statement that additional financial information about the Depositor is available, without charge, upon request. When a request for the additional financial information is received, the Registrant should send the information within 3 business days of receipt of the request, by first-class mail or other means designed to ensure equally prompt delivery.
3. Notwithstanding Rule 3-12 of Regulation S-X (17 CFR 210.3-12), the financial statements of the Depositor need not be more current than as of the end of the most recent fiscal year of the Depositor. In addition, when the anticipated effective date of a registration statement falls within 90 days subsequent to the end of the fiscal year of the Depositor, the registration statement need not include financial statements of the Depositor more current than as of the end of the third fiscal quarter of the most recently completed fiscal year of the Depositor unless the audited financial statements for such fiscal year are available. The exceptions to Rule 3-12 of Regulation S-X contained in this Instruction 3 do not apply when:
(i) The Depositor's financial statements have never been included in an effective registration statement under the Securities Act of a separate account that offers variable annuity contracts or variable life insurance contracts; or
(ii) The balance sheet of the Depositor at the end of either of the two most recent fiscal years included in response to this Item shows a combined capital and surplus, if a stock company, or an unassigned surplus, if a mutual company, of less than $1,000,000; or
(iii) The balance sheet of the Depositor at the end of a fiscal quarter within 135 days of the expected date of effectiveness under the Securities Act (or a fiscal quarter within 90 days of filing if the registration statement is filed solely under the Investment Company Act) would show a combined capital and surplus, if a stock company, or an unassigned surplus, if a mutual company, of less than $1,000,000. If two fiscal quarters end within the 135 day period, the Depositor may choose either for purposes of this test.
4. Any interim financial statements required by this Item need not be comparative with financial statements for the same interim period of an earlier year.
Item 25. Performance Data
(a) Calculation. If the Registrant advertises any performance data, include an explanation of how performance is calculated, whether the data reflects all charges, the nature of any charges that are not reflected in the data, and the effect on performance of excluding those charges. If the Registrant advertises its performance calculated in more than one manner, briefly explain the material differences between the calculations.
(b) Quotation. For each sub-account for which the Registrant advertises any performance data, furnish:
(1) a quotation of performance, computed by each of the methods used in advertising; and
(2) the length of and the last day in the period used in computing the quotation.
Item 26. Illustrations
The Registrant may, but is not required to, include a table of hypothetical illustrations of death benefits, cash surrender values, and cash values in either the prospectus or the SAI. The following standards should be used to prepare any table of hypothetical illustrations that is included in the prospectus or the SAI:
(a) Narrative Information. A clear and concise explanation of the illustrations should precede the illustrations.
(b) Headings. The headings should contain the following information: sex, age, rating classification (e.g., nonsmoker, smoker, preferred, or standard), premium amount and payment schedule, face amount, and death benefit option.
(c) Premiums, Ages. Premium amounts used in the illustrations should not be unduly larger or smaller than the actual or expected average Contract size. Ages used in the illustrations should be representative of actual or expected Contract sales.
(d) Rating Classifications. Illustrations should be shown for the rating classification with the greatest number of outstanding Contracts (or expected Contracts in the case of a new Contract).
(e) Years. Illustrated values should be provided for Contract years one through ten, for every five years beyond the tenth Contract year, and for the year of Contract maturity.
(f) Illustrated Values. Death benefits and cash surrender values should be illustrated at two rates of return and two levels of charges (described in paragraphs (g) and (i)). The Registrant may also illustrate cash values, but cash values must be accompanied by corresponding cash surrender values. All illustrated values should be determined as of the end of the Contract year.
(g) Rates of Return. The Registrant should use gross rates of return of 0% and one other rate not greater than 10%. Additional gross rates of return no greater than 10% may be used. Explain that the gross rates of return used in the illustrations do not reflect the deductions of the charges and expenses of the Portfolio Companies.
(h) Portfolio Company Charges. Portfolio Company management fees and other Portfolio Company charges and expenses should be reflected using the arithmetic average of those charges and expenses incurred during the most recent fiscal year for all of the available Portfolio Companies or any materially greater amount expected to be incurred during the current fiscal year. In determining charges and expenses incurred during the most recent fiscal year or expected to be incurred during the current fiscal year, include amounts that would have been incurred absent expense reimbursement or fee waiver arrangements.
(i) Other Charges. Values should be illustrated using both current and guaranteed maximum charges at both the 0% rate of return and one other rate of return no greater than 10%. Illustrated values should accurately reflect all charges deducted under the Contract (e.g., mortality and expense risk, administrative, cost of insurance) as well as the actual timing of the deduction of those charges (e.g., daily, monthly, annually). For example, for a Contract with a mortality and expense risk charge that is deducted from sub-account assets at a given annual rate, the illustrated values will be lower if the charge is deducted from assets on a daily basis rather than on a monthly or annual basis.
(j) Additional Information. Subject to the requirement set out in General Instruction C.3.(b), additional information may be shown as part of the illustrations, provided that it is consistent with the standards of this Item 26.
PART C: OTHER INFORMATION
Item 27. Exhibits
Subject to General Instruction D regarding incorporation by reference and rule 483 under the Securities Act (17 CFR 230.483), file the exhibits listed below as part of the registration statement. Letter or number the exhibits in the sequence indicated and file copies rather than originals, unless otherwise required by rule 483. Reflect any exhibit incorporated by reference in the list below and identify the previously filed document containing the incorporated material.
(a) Board of Directors Resolution. The resolution of the board of directors of the Depositor authorizing the establishment of the Registrant.
(b) Custodian Agreements. All agreements for custody of securities and similar investments of the Registrant, including the schedule of remuneration.
(c) Underwriting Contracts. Underwriting or distribution contracts between the Registrant or Depositor and a principal underwriter and agreements between principal underwriters or the Depositor and dealers.
(d) Contracts. The form of each Contract, including any riders or endorsements.
(e) Applications. The form of application used with any Contract provided in response to (d) above.
(f) Depositor’s Certificate of Incorporation and By-Laws. The Depositor’s current certificate of incorporation or other instrument of organization and by-laws and any related amendment.
(g) Reinsurance Contracts. Any contract of reinsurance related to a Contract.
(h) Participation Agreements. Any participation agreement or other contract relating to the investment by the Registrant in a Portfolio Company.
(i) Administrative Contracts. Any contract relating to the performance of administrative services in connection with administering a Contract.
(j) Other Material Contracts. Other material contracts not made in the ordinary course of business to be performed in whole or in part on or after the filing date of the registration statement.
(k) Legal Opinion. An opinion and consent of counsel regarding the legality of the securities being registered, stating whether the securities will, when sold, be legally issued and represent binding obligations of the Depositor.
(l) Actuarial Opinion. If illustrations are included in the registration statement as permitted by Item 26, an opinion of an actuarial officer of the Depositor as to those illustrations indicating that:
(1) the illustrations of cash surrender values, cash values, death benefits, and/or any other values illustrated are consistent with the provisions of the Contract and the Depositor’s administrative procedures;
(2) the rate structure of the Contract, and the assumptions selected for the illustrations (including sex, age, rating classification, and premium amount and payment schedule), do not result in the relationship between premiums and benefits, as shown in the illustrations, being materially more favorable than for a substantial majority of other prospective Contractowners; and
(3) the illustrations are based on a commonly used rating classification and premium amounts and ages appropriate for the markets in which the Contract is sold.
(m) Calculation. If illustrations are included in the registration statement as permitted by Item 26, one sample calculation for each item illustrated, e.g., cash surrender value, cash value, and death benefits, showing how the illustrated values for the fifth Contract year have been calculated. Demonstrate how the annual investment returns of the sub-accounts were derived from the hypothetical gross rates of return, how charges against sub-account assets were deducted from the annual investment returns of the sub-accounts, and how the periodic deductions for cost of insurance and other Contract charges were made to arrive at the illustrated values. Describe how the calculation would differ for other years.
(n) Other Opinions. Any other opinions, appraisals, or rulings, and related consents relied on in preparing the registration statement and required by section 7 of the Securities Act (15 U.S.C. 77g).
(o) Omitted Financial Statements. Financial statements omitted from Item 24.
(p) Initial Capital Agreements. Any agreements or understandings made in consideration for providing the initial capital between or among the Registrant, Depositor, underwriter, or initial Contractowners and written assurances from the Depositor or initial Contractowners that purchases were made for investment purposes and not with the intention of redeeming or reselling.
(q) Redeemability Exemption. Disclosure (if not provided elsewhere in the registration statement) of insurance procedures for which the Registrant and Depositor claim any exemption pursuant to rule 6e-2(b)(12)(ii) or rule 6e-3(T)(b)(12)(iii) under the Investment Company Act.
Item 28. Directors and Officers of the Depositor
Provide the following information about each director or officer of the Depositor:
________________________________________________________________
(1) (2)
Name and Principal Positions and Offices
Business Address with Depositor
________________________________________________________________
Instruction. Registrants are required to provide the above information only for officers or directors who are engaged directly or indirectly in activities relating to the Registrant or the Contracts, and for executive officers including the Depositor’s president, secretary, treasurer, and vice presidents who have authority to act as president in his or her absence.
Item 29. Persons Controlled by or Under Common Control with the Depositor or the Registrant
Provide a list or diagram of all persons directly or indirectly controlled by or under common control with the Depositor or the Registrant. For any person controlled by another person, disclose the percentage of voting securities owned by the immediately controlling person or other basis of that person's control. For each company, also provide the state or other sovereign power under the laws of which the company is organized.
Instructions.
1. Include the Registrant and the Depositor in the list or diagram and show the relationship of each company to the Registrant and Depositor and to the other companies named, using cross-references if a company is controlled through direct ownership of its securities by two or more persons.
2. Indicate with appropriate symbols subsidiaries that file separate financial statements, subsidiaries included in consolidated financial statements, or unconsolidated subsidiaries included in group financial statements. Indicate for other subsidiaries why financial statements are not filed.
Item 30. Indemnification
State the general effect of any contract, arrangements, or statute under which any underwriter or affiliated person of the Registrant is insured or indemnified against any liability incurred in his or her official capacity, other than insurance provided by any underwriter or affiliated person for his or her own protection.
Item 31. Principal Underwriters
(a) Other Activity. State the name of each investment company (other than the Registrant) for which each principal underwriter currently distributing the Registrant’s securities also acts as a principal underwriter, depositor, sponsor, or investment adviser.
(b) Management. Provide the information required by the following table for each director, officer, or partner of each principal underwriter named in the response to Item 20:
________________________________________________________________
(1) (2)
Name and Principal Positions and Offices
Business Address with Underwriter
________________________________________________________________
Instruction. If a principal underwriter is the Depositor or an affiliate of the Depositor, and is also an insurance company, the above information for officers or directors need only be provided for officers or directors who are engaged directly or indirectly in activities relating to the Registrant or the Contracts, and for executive officers including the Depositor’s or its affiliate’s president, secretary, treasurer, and vice presidents who have authority to act as president in his or her absence.
(c) Compensation From the Registrant. Provide the information required by the following table for all commissions and other compensation received, directly or indirectly, from the Registrant during the Registrant’s last fiscal year by each principal underwriter:
(1)
(2)
(3)
(4)
(5)
Name of
Principal Underwriter
Net Underwriting Discounts and Commissions
Compensation on Events Occasioning the Deduction of a Deferred Sales Load
Brokerage Commissions
Other Compensation
Instructions.
1. Disclose the type of services rendered in consideration for the compensation listed under column (5).
2. Exclude information about bona fide contracts with the Registrant or its Depositor for outside legal or auditing services, or bona fide contracts for personal employment entered into with the Registrant or its Depositor in the ordinary course of business.
3. Exclude information about any service for which total payments of less than $5,000 were made during each of the Registrant’s last three fiscal years.
4. Exclude information about payments made under any agreement whereby another person contracts with the Registrant or its Depositor to perform as custodian or administrative or servicing agent.
Item 32. Location of Accounts and Records
State the name and address of each person maintaining physical possession of each account, book, or other document required to be maintained by section 31(a) (15 U.S.C. 80a-30(a)) and the rules under that section.
Item 33. Management Services
Provide a summary of the substantive provisions of any management-related service contract not discussed in Part A or B, disclosing the parties to the contract and the total amount paid and by whom for the Registrant’s last three fiscal years.
Instructions.
1. The instructions to Item 17 also apply to this Item.
2. Exclude information about any service provided for payments totaling less than $5,000 during each of the Registrant’s last three fiscal years.
Item 34. Fee Representation
Provide a representation of the Depositor that the fees and charges deducted under the Contracts, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the Depositor.
SIGNATURES
Pursuant to the requirements of (the Securities Act and) the Investment Company Act, the Registrant (certifies that it meets all of the requirements for effectiveness of this registration statement under rule 485(b) under the Securities Act and) has duly caused this registration statement to be signed on its behalf by the undersigned, duly authorized, in the City of........................, and State of.....................on the day of........., .................
(Year)
............................................
Registrant
By............................................
(Signature and Title)
By............................................ (Depositor)
By............................................
(Name of officer of Depositor)
.............................................
(Title)
Instruction. If the registration statement is being filed only under the Securities Act or under both the Securities Act and the Investment Company Act, it should be signed by both the Registrant and the Depositor. If the registration statement is being filed only under the Investment Company Act, it should be signed only by the Registrant.
Pursuant to the requirements of the Securities Act, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.
.............................................................................................
(Signature) (Title) (Date)
By the Commission.
Jonathan G. Katz
Secretary
Dated: March 13, 1998
Appendix A
(Note: Appendix A to the preamble will not appear in the Code of Federal Regulations.)
REGULATORY FLEXIBILITY ACT CERTIFICATION
I, Arthur Levitt, Chairman of the Securities and Exchange Commission, hereby certify, pursuant to 5 U.S.C. 605(b), that proposed Form N-6, if adopted, would not have a significant economic impact on a substantial number of small entities. Form N-6 would be used by insurance company separate accounts registered as unit investment trusts that offer variable life insurance policies for registration under the Investment Company Act of 1940 and offer securities under the Securities Act of 1933.
Proposed Form N-6 generally would not have a significant economic impact on small entities. Few, if any, registered insurance company separate accounts have assets of less than $50,000,000, when separate account assets are aggregated with the assets of the sponsoring insurance company. As a result, few, if any, small entities within the definitions contained in rule 0-10 under the Investment Company Act and rule 157 under the Securities Act would be affected by proposed Form N-6.
Arthur Levitt
Chairman
Dated: March 2, 1998
Return to Part 1 (Proposed Rule)
http://www.sec.gov/rules/proposed/33-7514f.htm
